(Recasts with details from news conference, background)
By Rosemary Arackaparambil
BOMBAY, Jan 22 (Reuters) - India's largest truck maker, Tata Engineering and Locomotive Company Ltd (TELCO), reported on Wednesday a profit for the past quarter, compared with a loss a year earlier, driven by strong vehicle sales. TELCO, part of the Tata group, India's second largest conglomerate by sales, has now posted a profit for the fourth straight quarter after losing money in the preceding seven quarters.
The company, which also makes buses and cars, said that its third-quarter net profit was 757.1 million rupees ($15.8 million), compared with a loss of 555.4 million rupees a year earlier. Net sales rose 23.7 percent to 21.93 billion rupees.
"This has been achieved through sustained improvement in turnover, market share and continuation of significant cost reduction," the company said in a statement.
TELCO said its market share in the truck and bus segment was now 70 percent, the highest in five years.
Its truck and bus sales in the third quarter rose 35 percent from a year earlier to 27,692 units, while sales of cars and utility vehicles rose 15 percent to 21,903 units.
"Given the trend of strong industry growth and the market share gained, we expect overall growth (for trucks and buses) in the current year to be 25 percent as against the earlier estimate of 15 to 18 percent," Praveen Kadle, director of finance, told a news conference.
"We are in line with our turnaround strategy objective of returning to profit in the financial year ended 2003."
Kadle said the company was also on track to achieve its target of selling 100,000 cars and utility vehicles this fiscal year.
But TELCO's third-quarter profit fell short of analysts' expectations.
A Reuters poll of 16 brokerages had forecast a net profit of 805 million rupees on sales of 21.1 billion rupees.
"The net profit is definitely below expectations, although the sales are in line," said Pramod Amthe, analyst with Cholamandalam Securities.
But Kadle pointed out that TELCO, which did not pay any tax a year earlier due to its losses, provided 555.2 million rupees as tax this quarter, including 482.1 million rupees as deferred tax.
TELCO also said its operating margins had improved to 13.1 percent, the highest in 15 quarters, up from 12.1 percent in the preceding quarter and 10 percent in the year-ago quarter.
"Operating margins have improved, but we were looking for more benefits from interest cost management," Amthe said.
TELCO said its net interest costs fell to 671.4 million rupees from 979.4 million rupees a year earlier, but they were almost unchanged from the previous quarter.
Ahead of the results, TELCO's shares ended down 1.41 at 164.85 rupees on the Bombay Stock Exchange, whose key index closed nearly flat.