The Operating Profit was maintained at Rs.126.25 crores in the quarter ended June 30, 2001, as compared to that for the same period last year, on lower sales revenues, due to continued focus on cost reduction and productivity improvement initiatives. Despite lower sales by 16% in numbers in a depressed market, the decline in sales revenues at Rs.1697 crores was limited to 5.6% due to better product mix and improved price realization. After lower Other Income of Rs.6.66 crores (Previous Period - Rs.28.46 crores) and charge towards interest, depreciation and amortization of Rs.223.80 crores (Previous Period - Rs.228.98 crores), the loss before Extraordinary items was Rs.90.89 crores (Previous Period - Rs.74.34 crores). The loss for the first quarter after taking an extraordinary charge of Rs.8.01 crores (Previous Period - Rs.Nil) was Rs.98.90 crores (Previous Period – Rs.74.34 crores).

The market for Commercial Vehicles continued to be affected by the economic slowdown, resulting in a 14% decline in overall industry volumes, with M&HCV volumes being severely depressed in the first two months and the LCV sector seeing a decline of 26%. Various marketing and product strategies have been initiated and the success of the Company’s 25 ton, Cummins-powered, multi-axle vehicle has been encouraging, making it India’s largest selling Commercial Vehicle model in its class.

The market for Passenger Cars and Utility Vehicles remained virtually stagnant during the quarter compared to the corresponding period in the previous year. The momentum gained by the sale of Indica V2 and the launch of the CNG version of Indica in Delhi and Mumbai will enable the Company to consolidate its position in the Passenger Car Segment.

The Company continues to remain focussed on its strategic initiatives - Big Scale Cost Reductions, New Product Introductions and Continuous Restructuring of assets and manpower. Market conditions are difficult, both in India and globally, but these measures will help to minimise the adverse impact on the Company.