ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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MUKAND-Growing Exports

Hurt by Recession EPW Research Foundation TELCO is the country's largest manufacturer as well as exporter of commercial vehicles. The profitability of this Tata group company has been severely affected by the deepening recession and the government's anti-inflationary measures. While net sales fell by 4 per cent from Rs 2,573 crore in 1991-92 to Rs 2,471 crore in 1992-93, profit before tax declined by 85.6 per cent from Rs 209 crore to Rs 30 crore. The rising costs of fuel and other inputs led to a 6.4 per cent rise in manufacturing expenses. Remuneration to employees increased by 14.4 per cent to Rs 320 crore (Rs 280 crore) taking its share of gross value added to 48.7 per cent (40.9 per cent). Consequently operating profit declined by 31.8 per cent to Rs 253 crore (Rs 371 crone) and accounted for only 38.6 per cent (54.4 per cent) of gross value added. A higher finished vehicles inventory coupled with a rise in capital expenditure led to a sharp increase of 58.5 per cent in interest cost which touched Rs 216 crore (Rs 136 crore). The debt-equity ratio deteriorated considerably from 63.2 per cent to 86.9 per cent following a 37.1 per cent rise in term loans from Rs 1,052 crore to Rs 1,441 crore. The depreciation charge was also higher by 15.2 per cent. Though the tax provision was nil (Rs 75 crore), net profit fell by 77.6 per cent to Rs 30 crore (Rs 134 crore). The company had to dip into its reserves in order to pay a 30 per cent dividend (40 per cent) which absorbed Rs 36 crore. Despite the global recession in the automobile industry, the company's exports rose by 26 per cent to 7,544 vehicles. In value terms, exports rose from Rs 244 crore to Rs 303 crore. The company's imports almost doubled to Rs 177 crore (Rs 89 crore). Tight credit and reduced government expenditure resulted in a fall in demand for commercial vehicles. The industry's sales of medium and heavy commercial vehicles came down by 21 per cent while those of light commercial vehicles grew fractionally by 0.1 per cent. Production of commercial vehicles was 82,352 vehicles, which was 8 per cent lower than last year, and sales fell by 16 per cent to 71,791 vehicles. Production of passenger cars (Tata Sierra and Estate) increased to 3,850. The company's new Lucknow plant assembled its first 827 vehicles during the year.

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