Brakes On For Telco

After the euphoria of launching the indigenous Mint car, the Tata Engineering and Locomotive Company (Telco) is not so upbeat anymore. Telco is expected to close the current financial year with a 30 per cent plummet in sales volume "" having sold about 60,000 vehicles less than in the preceding year. Executive director (automobiles) V M Raval, attributes the drop to government instability, a lack of investment in infrastructure and little improvement in freight rates. Telco has seen a fall in demand for heavy duty and medium size vehicles, as well as light commercial vehicles. The only vehicles that saw increased sales were the utility vehicles, namely the Sumo and Safari models. Although Telcos foray into the small car market needed a sizeable Rs 1,700 for the development of an indigenous model, Raval feels the returns will be forthcoming, pointing out that the car segment offers the greatest volumes in the future of the automobile industry. To cope with all this, Telco has kickstarted a cost-cutting exercise freezing recruitment and cutting expenditure on materials, fuel and electricity; sources say Telco has cut production to curb the build up of inventory. Also, Telco will not subscribe to the upcoming rights issue of Mercedes Benz India, the joint venture with Daimler-Benz. The latter will up its stake from 76 to 81 per cent, while Telcos stake will fall from 24 to 18 per cent.