The country's largest truck maker announced on Monday that it sold 3,745 medium and heavy commercial vehicles, as against 3,082 units sold a year ago. Sales of light commercial vehicles also rose to 1,901 units from 1,846 units in April last year.

Tata Engineering's senior vice-president (commercial) Ravi Kant told The Financial Express: ``We are hoping that we will be able to match last year's volumes. The effect of the drought is already being felt and the levy of the uniform sales tax is also negatively affecting volumes. Besides, the small operators, who use the light and medium commercial vehicles, are yet to come to terms with the last hike in diesel prices.''

Tata Engineering, analysts say, will find it difficult to maintain its volumes of May last year as sales will to a large extent be affected by the drought in the northern and western states.

``We have started to feel the impact of the drought. However, there are two ways of looking at it. While truck sales, on the one hand, will fall due to the dip in overall economic activity, there will also be a surge in volumes for movement of items to the drought-hit areas. It is very difficult to say which effect will be stronger,'' Kant said.

However, the drop in demand for core items like steel and cement, Kant says, is having an adverse effect on the demand for commercial vehicles, which is integrally linked to the state of the economy. ``Another worrying factor is that bulk of the volumes for truck makers come from medium commercial vehicles, which is generally run by small operators. The last hike in the diesel prices almost broke the back of the small operators affecting the sales volumes MCVs,'' Kant said.

Last month, the production of commercial vehicles was, however, lower. The company produced 2,883 medium and heavy commercial vehicles, as against 3,902 units a year ago. Production of light commercial vehicles also dropped from 2,926 units to 1,726 units during the period.

Tata Engineering, however, increased the output of both its passenger cars and utility vehicles which stood at 4,412 units (1,755 units in April last year) and 2,466 units (1,940 units) respectively. Total production at 12,487 units was higher than the company's last April's output of 10,523 units.During 1999-2000, Tata Engineering produced 76,337 units of medium and heavy commercial vehicles, up from 53,917 units the previous fiscal.

Production of light commercial vehicles dropped marginally from 38,649 to 38,526 units during the period. Sales (including exports) of MCVs and HCVs last fiscal shot up from 54,118 units to 73,628 units, while the sales of LCVs declined from 38,640 units to 37,751 units during the period.