The Hindu Business Line : Cost pressures tell upon TVS Motor's performance

OTHER income of Rs 37 crore, which came from reduction in tax liability arising out of the company prepaying sales tax, helped TVS Motor Company post 14 per cent growth in net profit for the fourth quarter; nevertheless the company reported a lower net for the full 2004-05 fiscal.

The fourth-quarter net amounted to Rs 47.92 crore, compared to Rs 41.93 crore in the corresponding previous period.

The company clocked post-tax profit of Rs 137.57 crore for the full year against Rs 138.49 crore earlier.

The board of directors has declared a second interim dividend of 60 paise for each share (of Re 1 value), taking the total dividend for the year to Rs 1.30 (130 per cent).

"During the year, the company opted for prepayment of deferred sales tax liability of Rs 69.18 crore at a discounted value. The resultant reduction in liability of tax of Rs 36.94 crore has been included under `other income'," said the company in a footnote to the statement of results.

On why the company decided to prepay deferred sales tax, although the benefits of doing so had always been known, Mr Venu Srinivasan, Chairman and Managing Director, said that it took time to convince the Tamil Nadu Government to accept the offer of prepayment.

Turnover for the fourth quarter stood at Rs 718 crore, marginally lower than Rs 721 crore earlier.

Increase in steel and nickel prices and lower sales of two-stroke vehicles were behind the lower net profit for the year, Mr Venu Srinivasan told newspersons.

The company sold 70,000 two-stroke vehicles compared with about 2,00,000 last year. "We were not able to make up for this loss with increased sales in other vehicles."

TVS Motor Company had been hoping to be able to sell 25,000 Centra motorcycles a month, but the vehicle sells only about 12,000.

Mr Venu Srinivasan said that the current year would be a better one, partly because he foresees easing of steel prices and partly because of products' performance in the market.

The company's latest offering, the TVS Star, is selling "very well", some 40,000 a month, which it hopes to raise to 50,000.

Also, the company intends to launch a variant of the Star, two variants of the Victor, and a completely redone Fiero.

The company will also launch its three-wheeler in about a year from now.

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Cost pressures tell upon TVS Motor's performance