BOMBAY -- Tata Engineering and Locomotive Company Ltd, India's largest truckmaker, said on Tuesday that aggressive cost-cutting and higher sales had helped it bounce back into the black from two loss-making years.
The company, part of the Tata conglomerate, India's No 2 group by sales, posted a net profit of 2.99 billion rupees ($63.8 million) in the past year to March, against a loss of 1.07 billion rupees the preceding year.
Revenue rose 22 percent to 108.37 billion rupees on the back of sales of 219,859 vehicles, the highest tally ever in its history, while its operating profit margin rose to 12.5 percent from 9.9 percent.
"The quality of earnings is fantastic," said Imran Contractor, head of research at Stratcap Securities.
"The company's future is positive. Commercial vehicles are expected to grow by nine to 10 percent and the market trend is towards higher tonnage vehicles where it is a market leader."
Tata Engineering and Locomotive Company (TELCO), which also makes cars and utility vehicles, slipped into a loss in the year to March 2001, two years after it started selling the Indica hatchback, the first car to be entirely built in India.
The company posted a profit of 1.38 billion rupees in the fourth quarter, the fifth straight quarter of profit, after reporting losses in the preceding seven quarters.
But its January-March earnings were down 15 percent from a year earlier, mainly due to a huge deferred tax outgo of 792.4 million rupees, against a deferred tax credit a year earlier.
STRATEGY PAYS OFF
The company's focus on saving money and operating more efficiently as well as developing new products had paid off, TELCO's executive director of finance, Praveen Kadle, told a press conference.
TELCO has saved 9.47 billion rupees over the past three years, of which 65 percent came from savings in raw materials, 25 percent in interest costs and 10 percent in variable costs.
The firm's domestic sales of trucks and buses soared 30 percent in the past year to March as transport companies sought to replace ageing fleets, after two years of tightening their belts, and due to demand from construction companies. The growth will slow to nine percent percent off a high base, but will still be more than the industry growth of seven to eight percent, officials said.
V. Sumantran, executive director of the passenger car business, said the company was equipped to take on the increasing competition in the car market.
Among new models that it will roll out this year are a station wagon and a Sports version of the Indica, he said.
Kadle said TELCO would spend four to five billion rupees on developing models and working capital.