Indica Break-Even Level At 53,000 Units

Tata Engineering has reduced the cash break-even level on its Indica project to 53,000 units at the end of fiscal 2002, against that of 70,000 units at the time of inception. Also, the net break-even level on the project has come down to around 80,000 units from around 90,000 units earlier, PP Kadle, executive director (finance & corporate affairs) of the company said.

The break-even has come down to these levels primarily due to the company's various cost rationalisation measures, and prior to the proposed launch of new models on the Indica platform, including a three-box sedan, an estate version and a high-end sports version.

The break-even level will go up following the launch of these new models due to the additional expenditure incurred on their development and production. However, Kadle declined to reveal the extent by which the break-even point will rise, saying that it would depend on the pricing and volume sales of the proposed variants.

Tata Engineering, which has spent in excess of Rs 1,700 crore on the Indica project already, achieved cash break-even in 2001-02, when it sold over 64,000 Indicas. The company is now planning to sell 1 lakh units during the current fiscal, including the sales of utility vehicles -- Tata Safari and Tata Sumo.

Meanwhile, the company is targeting to become economic value added (EVA) positive by the end of fiscal 2003-04, Kadle said at a recent analyst meet in Mumbai. He also added that the company was hopeful of a return to profitability during the current fiscal, aided by a 10 per cent growth in volume sales. The company is hoping for a growth of 4-5 per cent for its commercial vehicles division, plus about a 10-15 per cent growth for its passenger cars business.

Out of the company's balance sheet size of Rs 4,773 crore at the end of fiscal 2002, a capital of around Rs 1,500-1,600 crore is employed with the company's commercial vehicles division and around Rs 1,700-1,800 crore with the passenger car business unit, while the balance is in the form of financial investments, Kadle said.