The Cost of Taking It Easy

March 9, 1968 RECESSION has cut into sales of commercial vehicles and most of the manufacturers have had to drastically reduce production. Bajaj-Tempo, which commenced production of its 4-wheerer delivery vans in October 1966, has been working much below its installed capacity of 4,000 vehicles (3-wheeiers and 4-wheelers), although it introduced in the market several new models such as station wagons, mini-buses, amburances and pick-up vans. The company has had to take on other work to keep its machine shop busy. Sales of commercial vehicles have lately started to pick up following appointment of additional dealers and inclusion of the Tempo Viking 4-wheelers in the DGS and D rate contract. The company is seeking a foreign exchange loan of Rs 28 lakhs from IFCl for import of balancing equipment to reach the installed capacity and to increase the indigenous content of vehicles. Efforts are also being made to further diversify the manufacturing programme. Results for the year to September 1967 turned out to be poor. Sales and machining charges together fetched 14 per cent more at Rs 2.54 crores but, with margins dropping by 4 points to around 61/2 per cent, gross profits fell by 13 per cent to Rs 16 lakhs. After providing for lull depreciation of Rs 23 lakhs-(Rs 9 lakhs), there is a deficit of Rs 6 lakhs. No dividend is recommended, therefore, for the fourth consecutive year.