Significantly, the company recorded a half-yearly profit of around Rs 480 crore for the period April-September, implying that the latter half of the current fiscal has not been good for the company. However, it is understood that from October till January, the company suffered operational losses.

MUL's other income is expected to increase to Rs 280 crore this fiscal as against Rs 230 crore registered in 1997-98. According to the company projections, other income for 1999-2000 is expected to be around Rs 200 crore.

The company's total turnover is expected to touch Rs 8,000 crore this fiscal, substantially lower than Rs 8,473 crore recorded in 1997-98. MUL has projected sales of over four lakh vehicles in1999-2000. By the end of this fiscal, it is expected to sell 3.4 lakh units as against 3.54 units sold in the previous year.

The company's third plant, which adds around one lakh to the total capacity, was commissioned late last month.

The decline in MUL's profitability is on account of the financial burden which the company suffered primarily because of the huge price cuts announced in December last year. The passenger car market has also been in the throes of a recession for the last two years.

For the first time in recent years, MUL suffered a drop of nearly 20 per cent in November last year over the previous month. MUL sold 19,738 vehicles in November as against 24,338 cars in October.

Driven into a corner by increasing competition and sagging sales, MUL slashed prices of its popular 800cc and Zen models while launching a new version of both models. The price of the diesel Zen, which failed to attract buyers, was also sharply cut to Rs 4.26 lakh, a drop of Rs 36,000. The price of the Omni-E wasalso reduced.

The pricing strategy of the company seems to have paid off to some extent with the Zen and Maruti 800 recording an increase in sales after the cuts. The price cuts have helped the company prop up sales, with the waiting period coming back in the case of Omni, Zen and 800. The standard 800 has a waiting period of six to seven weeks, while the Zen has a waiting period of five weeks.