Automobile major Telcos strong 29 per cent growth in sales last year was funded in large part by credit sales. The credit sales sales on which price is not fully realised contributed handsomely to the companys turnover of Rs 10,128 crore in 1996-97.
Consequently, Telcos sundry debts spiralled by 133.69 per cent in 1996-97 to Rs 1,808.12 crore from Rs 773.7 crore in 1995-96. Analysts consider the increase unprecedented. According to them, the increase is largely on account of stocks that the company sold to its dealers against unsecured credit to boost its sales last year.
Telco officials were not available for comment.
Together with Rs 310.05 crore (Rs 173.43 crore) locked up in stock in trade and Rs 92.74 crore (Rs 81.69 crore) worth of goods in transit, the companys total stocks which were in the system as on March 31, 1997, were worth nearly Rs 2,073 crore, an analyst told Business Standard.
At an average realisation of Rs 4 lakh per vehicle, this translates to around 45,000 vehicles that the auto major pushed into the system in the last six months of 1996-97, the analyst said.
The companys latest annual
report, which unveiled 29 per cent higher sales at Rs 10,128 crore in 1996-97, up from Rs 7,881.08 crore in the previous year, also qualifies earlier assessments about Telcos robust growth in the commercial vehicles market.
In the chairmans statement to shareholders, Ratan Tata said that Telco had another outstanding year, despite adverse conditions in the markets.
Telcos net current assets rose to Rs 2,405.79 crore from Rs 943.44 crore during the year, this is indicative of a difficult year and, it may be mentioned that in 1991-92, which was a bad year for the company, the current assets of the company had jumped to Rs 813 crore from Rs 430.98 crore, the analyst said.
The companys gross sales to working capital ratio too dropped to 4 from 8.12 during the year, the analyst added.
The companys capital employed for the year went up to Rs 6,184.74 crore from Rs 3,696 crore in the previous year. The working capital increment during 1996-97 was Rs 1,462.32 crore, and this would largely be the additional funds blocked in working capital as a result of the stocks the company pushed into the system, the analyst said.
Telcos working capital requirement rose to Rs 2,406 crore during the year from Rs 943 crore in the previous year. The increase was largely funded by cash credit, loans and bank overdrafts which rose to Rs 1,037.96 crore from Rs 428 crore in the previous year.
The companys long-term debt too rose to Rs 615.26 crore from Rs 367.74 crore and the company raised Rs 248 crore as additional bank loans during the year. The long-term funds are expected to be employed in expansion projects and the companys prestigious small car project, the analyst felt.