Tata Engineering and Locomotive Company Ltd, India's largest truckmaker, said on Tuesday that aggressive cost-cutting and higher sales had helped it bounce back into the black from two loss-making years.

The company, part of the Tata conglomerate, India's No 2 group by sales, posted a net profit of Rs 299 crore (Rs 2.99 billion) in the past year to March, against a loss of Rs 107 crore (Rs 1.07 billion) the preceding year.

Revenue rose 22 per cent to Rs 10,837 crore (Rs108.37 billion) on the back of sales of 219,859 vehicles, the highest tally ever in its history, while its operating profit margin rose to 12.5 per cent from 9.9 per cent.

"The quality of earnings is fantastic," said Imran Contractor, head of research at Stratcap Securities.

"The company's future is positive. Commercial vehicles are expected to grow by nine to 10 per cent and the market trend is towards higher tonnage vehicles where it is a market leader."

Tata Engineering and Locomotive Company, which also makes cars and utility vehicles, slipped into a loss in the year to March 2001, two years after it started selling the Indica hatchback, the first car to be entirely built in India.

The company posted a profit of Rs 138 crore (Rs 1.38 billion) in the fourth quarter, the fifth straight quarter of profit, after reporting losses in the preceding seven quarters.

But its January-March earnings were down 15 per cent from a year earlier, mainly due to a huge deferred tax outgo of Rs 79.24 crore (Rs 792.4 million), against a deferred tax credit a year earlier.

Sales rose 17 per cent to Rs 3,588 crore (Rs 35.88 billion).

A Reuters poll released in April had forecast the firm would post a fourth-quarter net profit of Rs 158 crore (Rs1.58 billion) on revenue of Rs 2,897 crore (Rs 28.97 billion).

Telco's shares ended down 3.12 per cent before the results were announced, at Rs 167.75 on the Bombay Stock Exchange, whose benchmark index lost 0.48 per cent.

Strategy pays off

The company's focus on saving money and operating more efficiently as well as developing new products had paid off, Telco's executive director of finance, Praveen Kadle, told a press conference.

Telco has saved Rs 947 crore (Rs 9.47 billion) over the past three years, of which 65 per cent came from savings in raw materials, 25 per cent in interest costs and 10 per cent in variable costs.

The firm's domestic sales of trucks and buses soared 30 per cent in the past year to March as transport companies sought to replace ageing fleets, after two years of tightening their belts, and due to demand from construction companies.

The growth will slow to nine percent off a high base, but will still be more than the industry growth of seven to eight per cent, officials said.

V Sumantran, executive director of the passenger car business, said the company was equipped to take on the increasing competition in the car market.

Among new models that it will roll out this year are a station wagon and a sports version of the Indica, he said.