INDIAN HOTELS-Profiting from Conspicuous Consumption

TELCO Tie-up with Daimler-Benz in Offing TATA ENGINEERING AND LOCOMOTIVE COMPANY (TELCO) has fared so fell during 1987-88 that the equity dividend, slashed from 23 per cent to 10 per cent last year following a severe setback, is being restored to the 1985-86 level even though it is payable on an enlarged capital. Vehicle sales increased to 56,168 (including 8,830 LCVs) from 50,754 (including 5,045 LCVs) in the previous year. The value of exports went up by 31 per cent to reach Rs 50 crore. Spare part sales climbed to Rs 64.77 crore, a 22 per cent increase. Excavator sales were lower at 168 machines compared to 184 in the previous year. Sales amounted to Rs 1,163 crore against Rs 993 crore in the previous year and yielded a gross profit of Rs 70.27 crore against Rs 24.50 crore. With the tax liability taking away Rs 5.10 crore (nil), net profit stood at Rs 26.93 crore against a mere Rs 2.93 crore previously. Whereas nearly one-half of last year's dividend distribution was short earned, this time it is covered twice by the year's earnings. Higher sales volume and tight control on all expenditure resulted in this encouraging outcome, Telco is reviewing its facilities in the light of a possible collaboration with Daimler-Benz, for the manufacture of the 'world-concept-truck' being developed by the German firm. For Daimler-Benz, this will be an additional line of vehicles which will be produced and sold outside Europe, where it will further strengthen Daimler- Benz's position in the medium and heavy truck markets. Extensive studies are under way to determine the capital investment Telco would progressively require to be made for manufacturing these types of trucks in India for export and domestic needs. The project could earn substantial foreign exchange for India and benefit Telco greatly through the access it would provide the company to the latest technology and manufacturing processes.