However, TVSE director Gopal Srinivasan told The Financial Express in an interview that the new subsidiary company had only been mooted now and it could be a year or more before it became a reality.

The idea is to become market driven, not just globally but also in the country. For this, TVSE may even opt for a public offering to enable it to focus on exposure among domestic shareholders. The final decision will depend on how the company charters its course in the year ahead.

But Gopal Srinivasan is upbeat with the success achieved by the company for year ended March 31, 1998. Despite a downtrend in overall sales, both profit before tax (PBT) and profit after tax (PAT) have shown commendable growth.

For instance,PBT rose by a whopping 106 per cent to Rs 4.24 crore, against Rs 2.05 crore in 1996-97. PAT at Rs 3.02 crore increased 70 per cent from the last year's figure of Rs 1.76 crore. Printer sales registered a 24 per cent growth from 77,000 units to 96,000 units this year, while the domestic sales of the UPS segment jumped 500 per cent with sales of 3,000 units.

The tremendous performance comes inspite of a massive increase in tax provision from Rs 27 lakh in 1996-97 to Rs 1.22 crore in the year under review. Interest costs has come down from Rs 4.41 crore to Rs 2.86 crore and depreciation has risen marginally to Rs 2.10 crore from Rs 2.02 crore.

The company enjoys a distinct advantage in having Victron as its foreign collaborator for UPS. The association has to some extent insulated the the company from the Far East currency crisis. Export volumes of UPS saw a sharp 28 per cent decline to 32,000 units this year from 40,000 units last year.

Despite this, the Netherlands-based collaborator ensured that TVSEcontinued to manufacture nearly 100 per cent of its UPS requirements. So, fortunately for TVSE the bulk of its export bills were settled within 30 days. Most of TVSE export orders are routed through its Dutch partner. Since the L/Cs are raised in Victron's name, the Far East payment crisis did not have such a severe impact on TVSE as it perhaps had on others.

Significantly, the company has taken a strategic decision to shift its operations base from Bangalore to Chennai. Close to 120 employees will be relocated in Chennai. Among the key advantages the company hopes to derive from the shift is huge savings in entry tax (Karnataka has 1 per cent of raw material costs as entry tax whereas Tamil Nadu has no such levy) and savings in transportation costs.