Total revenue for the period was Rs 454.50 crore, a 23.2 per cent growth over Rs 368.90 crore. Sales in volume terms was 22,522 tractors up from 18,936 units in the previous year. Consequently, the company's market share has increased to 18.3 per cent from 15.5 per cent posted in the first half of 1997-98.

Material cost and expenditure for the current financial was Rs 367.40 crore as against Rs 306.73 crore and depreciation Rs 6.80 crore compared to Rs 4.57 crore. The cash profit, according to the figures provided by the company, was Rs 88.80 crore (Rs 62.97 crore) and pre-tax profit Rs 82 crore (Rs 58.40 crore). Corporate tax for the period was Rs 23.30 crore, up from Rs 17.20crore.

The release states that offtake of harvester combines was buoyant and total despatches increased to 127 units from 75 units in the previous year. Forklift sales, however, remained flat at 30 (35 last year) due to poor demand conditions.

INSIGHT
Capacity expansion should improve revenue collections

Beneficial agrarian trends, a good monsoon, increased capacities, demographics of the region the company services and a potent product-mix geared towards medium and higher HP tractors, have all helped Punjab Tractors (PTL) post an impressive performance for the half year ended September, 1998.

A fact amply reflected by the 18.9 per cent growth achieved in unit tractor sales which improved to 22,522 units. More importantly, the increased offtakes are against a virtually flat volume aggregate for tractor sales in the first half which improved a mere 2 per cent. The company has also managed to garner important market share which stood at 18.3 per cent (15.5 per cent last year), despiteincreasing competition from market leaders like Mahindra & Mahindra (where offtakes have actually dipped 4.5 per cent).

Furthermore with PTL able to keep input costs in control, operating margins have also remained buoyant improving from 17.49 per cent to 14.87 per cent. In line with this, net profits were also up 42.48 per cent to Rs 58.70 crore.

For the future, PTL's capacity expansion should definitely help improve revenue collections. A very real fear of an over-supply situation due to recent capacity expansions could worsen the impact of the slowdown in agricultural production which is slated for a mere single digit growth this year. This coupled with slackening offtakes which would be an obvious corollary, should definitely affect the market valuations of PTL in the short run.