The Hindu Business Line : Tata Engg PAT at Rs 300 cr on higher volumes, recast

TATA Engineering & Locomotive Company Ltd (Tata Engineering) has reported a PAT of Rs 300.11 crore for the year ended March 31, 2003, as against the previous corresponding loss of Rs 53.73 crore.

The turnaround was attributed to volume rise, cost saving, restructuring and new product introduction. Its board has recommended a dividend of Rs 4 per ordinary share of Rs 10.

With FY03 PBT at Rs 510.37 crore (Rs 109.21 crore loss in FY02), the swing in PBT since the company reported a FY01 loss of Rs 500 crore is in excess of Rs 1,000 crore. ''

By any standard, this is a significant turnaround,'' Mr Praveen Kadle, Executive Director, Tata Engineering, said at a press briefing on Tuesday, adding the company was back to being EVA-positive.

Riding an all-time high, vehicle sales of 219,859 units (183,224 units), net sales/income from operations for FY03 peaked at Rs 10,837.01 crore (Rs 8891.95 crore); revenues split 60:40 between CVs and passenger cars. Including last fiscal's cost reduction of Rs 334 crore, total cost savings in last three years aggregates to Rs 947 crore.

Total capital employed was Rs 4,161 crore (Rs 4,773 crore) and for the first time in its history Tata Engineering's net working capital was negative to the extent of Rs 433 crore in FY03.

Free cash flows increased to Rs 1,130 crore (Rs 734 crore) and the company's debt stood reduced to Rs 1,458 crore (Rs 2,308 crore) with debt equity ratio at 0.56.

According to Mr Kadle, Tata Engineering's break-even levels have come down considerably in all three product categories — cars, UVs and CVs.

In CVs, it is now 32-33 per cent of capacity (60 per cent, couple of years ago) and in passenger cars, 49 per cent (75 per cent). Overall capacity utilisation now straddles 55-60 per cent, in cars alone, 55 per cent.

While EBIDTA margins overall improved to 12.5 per cent (9.9 per cent), he said on the car project, ``its EBIDTA margins are healthy and comparable to the best worldwide in the industry.''

The Indica and UV platforms together give the company presence in segments spanning 71 per cent of the domestic passenger vehicles market.

In CVs, credit sales to the dealer segment has stopped since April. The company's car sales have traditionally been on cash basis.

For Q4 FY03, Tata Engineering returned a PAT of Rs 137.57 crore (Rs 161.68 crore) on net sales / income from operations of Rs 3588.27 crore (Rs 3059.82 crore). Figures are not strictly comparable herein, as FY02's Rs 55.48 crore-full year deferred tax credit was considered in Q4 that fiscal, Mr Kadle said.

FY03 Q4 PBT was Rs 232.38 crore (Rs 106.20 crore). Tax impact for full fiscal was Rs 210.26 crore (Rs 55.48 crore).

Rupee appreciation does not immediately impact exports, but the dollar's trend has to be watched, Mr Kadle said. Besides regular export, Tata Engineering's car shipments to Rover start later this year and talks are on with Iran Kodro.

The attempt to manufacture a Rs 1 lakh-car is still at study stage.

``A project of this nature is really a Holy Grail in automotive engineering. Many global majors, despite resources, have failed to crack it,'' Dr V. Sumantran, Executive Director, Tata Engineering, said. The company needs to develop an unconventional approach. Two wheeler companies showed interest in the Tata project but it is not serious yet, he said.

Though the earlier 30 per cent growth won't be sustainable, the CV sector's uptrend should ``hopefully continue'' for four years, Mr Ravi Kant, Executive Director, Tata Engineering, said.

According to him, the company is now less sensitive to sectoral cycles, courtesy reduced stock, higher cash sales, focus on less cyclical vehicle models and growing non-vehicle business.

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