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MUMBAI, Jan. 22

TATA Engineering on Tuesday reported a 54.26 per cent reduction in loss for the quarter ended December 31, 2001 (Q3), to Rs 55.54 crore from the previous corresponding Rs 121.44 crore.

``The operating profit margin of 8.49 per cent is the highest achieved in the last seven quarters,'' Mr Praveen Kadle, Executive Director, Tata Engineering, said at a press briefing.

The company, which returned a Rs 500.34 crore loss in 2000-2001, had posted a Rs 61.83 crore loss at end-Q2 this fiscal. Third quarter operating profit more than doubled to Rs 176.53 crore (Rs 77.42 crore for the yea-ago period).

The cut in Q3 loss is despite a steep fall in other income and a rise in amortisation and depreciation. Mr Kadle ascribed it in the main to reductions in material/direct conversion costs, improved product mix and the marginal rise in product prices effected earlier this fiscal. Deferred tax credit as at end-Q3 is estimated at Rs 84.97 crore.

``We have not taken the credit for that while considering the performance of the first three quarters,'' he said. Net sales/income from operations for the quarter was Rs 2,080.27 crore (Rs 1,762.02 crore) while other income, bereft of receipts like the previous quarter's inflow from divestment at Tata Elxsi, was a mere Rs 15 lakh (Rs 31.26 crore). Tata Engineering's export turnover dipped to Rs 146.65 crore (Rs 192.15 crore).Total expenditure amounted to Rs 1,03.74 crore (Rs 1,84.60 crore).

Net interest was Rs 97.94 crore (Rs 110.92 crore), amortisation of deferred revenue expenditure, Rs 33.42 crore (Rs 28.88 crore) and depreciation, Rs 92.20 crore (Rs 85.18 crore). Increases in the last two parameters were described as "routine.'' Employee separation cost accounted for Rs 8.66 crore (Rs 5.14 crore).

The company's new wage agreement will result in a rise in staff cost by Rs 50 crore per annum, Mr Kadle said. As in Q2, the Indica project made cash profit in Q3 too. At the assigned sales target of 60,000 units this fiscal, cash break-even and perhaps a small cash profit should be possible, he said.

Indica sales zoomed by 97 per cent in Q3 to 13,851 units (7,039 units). Sales for the 9 month-period was up by 29 per cent, to 41,431 units (32,123 units). The car's market share in the Rs 3-5 lakh hatchback segment improved from 18 per cent to 22 per cent, during Q3.

Similar rise in medium and heavy commercial vehicles (M&HCVs), was from 63 per cent to 68 per cent. M&HCV sales for the 9 month period was 33,958 units (33,766 units). However, in light commercial vehicles (LCVs) and multi-utility vehicles (MUVs), Q3 market share eroded from 59 per cent to 53 per cent and from 25 per cent to 22 per cent, respectively. Total vehicle production for Q3 was 42,306 units (32,007 units) and sales, 42,931 units (35,908 units). Including estimated cost cuts of Rs 70 crore in Q3, total cost reduction so far this fiscal is Rs 159 crore against a full fiscal target of Rs 200 croreOf Rs 300 crore receipts targeted by way of divestment, Rs 250 crore is already in place.

From the identified Rs 500 crore baggage of high cost debt, the company has restructured — by repaying or resetting interest — borrowings worth Rs 258 crore, so far. Interest resetting covered Rs 25 crore, the balance being repayment.

Should there be a shortfall in funds available (post rights issue and after meeting capex needs) for its debt restructuring plan, Tata Engineering may raise funds afresh for the purpose, Mr Kadle said.

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