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Telco to push exports, non-cyclical business

India's largest truck and bus maker, Telco Ltd, says it is pushing to increase exports and revenues from its non-vehicular business to help dilute the impact of a cyclical decline in vehicle sales.

Tata Engineering and Locomotive Company Ltd, which makes heavy and light trucks, buses, cars and utility vehicles, unveiled a Rs 5-billion loss last week, hit by sliding sales on the back of a slowing economy.

A Telco official, who declined to be identified, said that the company was aiming to increase the share of exports in revenues to 20 per cent in the next three to four years from 9 per cent in 2000-01 (April-March).

The company would also try to increase the contribution from its non-vehicular and non-cyclical businesses -- reconditioning of vehicles, spare parts, annual maintenance contracts and fleet management -- to about 5 per cent in the current year to March from last year's 2.5 per cent.

"We are hoping that the share of the non-cyclical, non-vehicular business will make up a reasonable percentage of our revenues in the future," he said.

The company will also push its modified 697 diesel engine for marine applications for which it sees a sizeable demand considering India's long coastline, and as power generating sets.

Telco's exports grew 19 per cent in 2000-01 (April-March) to 15,917 vehicles, up from 13,425 in the year ago, making it one of the country's largest exporter of engineering goods.

Almost 38 per cent of exports were directed to Europe and Australia, 22 per cent to South Asia, 20 per cent to South East Asia, while the rest was distributed between South America, Africa and west Asia.

Medium and heavy commercial vehicles contributed 29 per cent of exports, light commercial vehicles 48 per cent, cars 3 per cent and multi-utility vehicles 20 per cent.

He said Telco had begun pushing its non-vehicular businesses aggressively towards the end of 2000-01 and had already won a few annual maintenance contracts.

Telco's net sales fell 7.9 per cent in the last year to March to Rs 80.96 billion due to a 19.8 per cent decline in commercial vehicle sales, its mainline business.

Car and utility vehicle sales fell 13.2 per cent to 71,880 units.

Telco officials told an analysts' meeting last week that they expected a 5 per cent improvement in commercial vehicle sales this year and an 18.3 per cent increase in cars and utility vehicle sales.

Analysts said they estimated medium and heavy commercial vehicles accounted for about 43 per cent of Telco's revenues in 2000-01, light commercial vehicles 22 per cent and cars and utility vehicles equally to the rest.

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