Telco Skids As Dec Sales Drop 44.33%

Telco, the countrys second largest private sector company, suffered a 44.33 per cent fall in domestic vehicle sales in December 1997 over the corresponding period of the previous year as the ongoing recession continued to take its toll on the Tata auto major.

Telcos sale of heavy and medium commercial vehicles, light commercial vehicles and Sumos and passenger cars fell to 8,600 units in December last against 15,450 nos in December 1996.

Sumo sales dropped 44.88 per cent to 2,160 units against 3,919 for the same period in 1996. The dip in Sumo sales is even sharper at 51.91 per cent if one compares the December figure with the 4,492 units sold in August 1997.

 

Senior Telco executives confirmed the December figures. They said Sumo had posted a cumulative sales growth of 22 per cent in 1997 over 1996. They added there was no cut in production schedule and the levels were being maintained. There was no inventory build-up at the company end, the officials maintained.

Telcos slide has also started affecting downstream companies. The Pune-based Bharat Forge, a key Telco supplier, saw sales drop 50 per cent in 1997. Against 17,000 forgings in 1996, Bharat Forge sold Telco only 8,500 forgings in 1997. Sales to another auto major and Telco competitor, Ashok Leyland, dropped to 9,000 tonnes in 1997 from 11,000 tonnes the previous year.

Of the 8,600 Telco vehicles sold in December 1997, 3,590 units were medium and heavy commercial vehicles and 2,160 were Sumos and cars. LCVs accounted for the rest.

In December 1996, the figure stood at 9,007 HCVs, 7,069 LCVs, 3,919 Sumos, and 305 passenger cars. Telco sold 21,918 Sumos during April-November last year. It sold 2,550 Sumos in April, 4,075 in May, 4,020 in June, 4,086 in July, 4,492 units in August, 4,225 units in September, 3150 in October and 3,320 in November.

Analysts said while the companys five per cent finance scheme, started last year, has been highly successful and helped in cutting inventory levels, commercial vehicles had been oversold in 1995 and 1996.

Growth in sales in the 1995-96 had outstripped the overall economic growth of the country, and such sales could not be sustained, they said. Besides, with a recession on, freight availability is low and rates are under pressure leading to lower vehicle sales, they added. Also December sales are generally down as it is the end of a model year, and people wait for newer models to be launched, analysts said.

They pointed out that the Sumos growth so far has been above expectations. Such phenomenal sales growth cannot be sustained, and the current drop shows a correction is on. Sales are expected to stabilise at the present levels which are more realistic, they said.

The companys sports utility vehicle, Safari, seems to have evoked fairly good response, analysts said.