Telco Net Plunges 35 Per Cent At Rs 213.9 Crore

Telcos growth engine sputtered and stalled in the first six months of 1997-98 as sales fell 18 per cent and net profit plunged 35 per cent to touch Rs 213.93 crore.

Net sales fell to Rs 3,850.17 crore, an 18 per cent drop from Rs 4,661.75 crore, though the weight of Tata Sumo, the companys saviour with sales of growth of 40 per cent, managed to prop it up somewhat.

Announcing the results after a late evening, three hour board meeting yesterday in Mumbai, Telco blamed recessionary economic conditions for the slippage but vowed to recoup in the second half.

After dizzying growth in 1996-97, when it emerged as Indias largest private sector company, Telcos fall has been sudden and swift. At Rs 3,850.17 crore, Telcos net sales has been eclipsed by Reliance which posted net sales of Rs 6,330 crore in the first six months. Vehicle production fell to 91,155 from 103,883 last year, while domestic sales fell 17 per cent to 77,094 from 93,320 last year. The companys operating margin dropped to 12.32 per cent from 14.2 per cent last year, while EPS fell to Rs 8.3 from Rs 12.9. Operating profit was lower at Rs 474.27 crore from Rs 658.24 crore last year.

Telcos other income also fell to Rs 31.4 crore from Rs 43.82 crore last year. Lower interest did not help matters much as depreciation rose to Rs 124.65 crore from Rs 99.53 crore. Last years interest cost was Rs 130 crore.

The main culprit was Telcos heavy and medium commercial vehicles which saw a major decline in sales and production. Tata Sumo posted a 40 per cent sales growth and maintained its market share of 37 per cent.

The companys performance during the first half of this financial year reflects the impact of the slowdown in economic activity which has now continued for over nine months, said the company in a statement.

Telcos performance mirrors that of the auto industry, which has continued to do badly. Bajaj Auto which announced its results yesterday saw a nine per cent fall in net profit.