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Telco's 98-99 net profit falls 67 pc to Rs 974.6 million

Automobile giant Tata Engineering and Locomotive Company Limited has reported a steep decline in the net profit by 67 per cent at Rs 974.6 million in the financial year 1998-99 as against Rs 2.94 billion reported in fiscal 1997-98.

The board of directors of Telco which met in Bombay today have recommended a lower dividend of 30 per cent as against last year's 55 per cent, in line with substantial reduction in the profit after tax.

Acccording to a company release, total income of the company stood at Rs 67.39 billion, down 8 per cent than that of the previous year.

The total profit before tax at Rs 1.07 billion (including the profit of Rs 1.02 billion on the transfer of its construction equipment business) was 67 per cent lower, compared to Rs 3.27 billion for the previous year.

After a lower tax charge of Rs 97 million, the profit after tax was down by 67 per cent, at Rs 974.6 million.

The company significantly improved its position in the fourth quarter of 1998-99 and was able to turn the cumulative loss at the end of the third quarter into a modest profit before tax of Rs 47.8 million, before considering the profit on the sale of construction equipment business unit for the financial year 1998-99.

The results reflect the effects of its ongoing programmes for cost reduction, restructuring, greater fiscal discipline and higher market share.

The company has claimed that the financial performance for 1998-99 is significant, given that the year witnessed a continuous slowdown in industrial growth, with key sectors of the economy showing a moderate to negative rate of growth.

The commercial vehicle segment of the automobile industry by far was the worst affected, with a substantial shrinkage of market demand for the second year in succession.

Meanwhile, on the expectations of better financial performance, the Telco scrip rose by Rs 4.05 to Rs 169 from the previous close at the Bombay Stock Exchange, while it gained by Rs 4.75 to Rs 168.75 at the National Stock Exchange.

The release further stated that the automated assembly line of Indica achieved commercial operations in early March 1999.

The rest of the plant was operated on a batch basis. During the current financial year, the company will be in a position to commission the full plant to meet the market demand.

The annual general meeting of the company will be held on August 2, 1999 to consider the accounts for 1998-99.

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