Singapore, June 21: Malaysian car manufacturer Perusahaan Otomobile Nasional Bhd (Proton) recorded a 126 per cent rise in group pre-tax profit to RM1 billion for the financial year ended March 31, 1997.

The record profit was achieved on the back of an increase in group turnover of 20.4 per cent to RM6,222 billion for the period. The company recently reached an agreement with the Andhra Pradesh government to start a manufacturing plant in the state. Proton chairman Saleh Sulong said the company's good financial performance was attributable to ongoing cost-reduction programmes, high margins derived from a good model mix and enhanced plant efficiency.The company's component cost-reduction scheme had hit double-digit figures but was at the tail-end of its objectives.

Any further reductions, Saleh said, could be achieved only wben a Proton car was made entirely locally as this would cut engine design and development costs paid to foreign partners.

For the year ended March 31, 1997, Proton manufactured 186,000 units, of which 28,000 were shipped abroad. With the commencement of operations of Proton's medium-volume factory, production is expected to hit an annualised figure of 220,000 units in the current financial year. When the second Proton plant is completed in 1999, the total production will increase to 500,000 units annually. What is even more remarkable is that Proton has achieved over 90 per cent local content in terms of parts for its Iswara and Wira models and 56 per cent for the Perdana model since 1995.

Proton City, due to open before the end of the decade, is touted to be Southeast Asia's Detroit.

The company's newly-acquired Lotus Group of Britain - which could be listed in the future - would play a major part in future design works of a truly made-in-Malaysia car, Saleh told reporters after releasing Proton's financial results in Shah Alam on Friday. "We have ongoing plans to continue our localisation of main components and child parts but a totally made-in-Malaysia car would not be here at least until the turn of the century," he said. He said the Japanese yen, which accounted for about 20 to 30 per cent of the total cost of producing a car, was not an issue as the current exchange rate was acceptable to the company.

Two major parts still imported from Japan are engine and gear transmission, although about 80 per cent of the engine is made locally now.On the company's plan to increase export penetration, Saleh said Proton would have to be more focused and aggressive in this area.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.