According to the unaudited results announced by the company on Friday, its net sales dipped by 6.2 per cent to Rs 1218.14 crore to March 31, 1999, as against Rs 1298.73 crore in the previous year.

Interestingly, the automobile manufacturer had projected a net profit of Rs 34.25 crore in its letter of offer to its shareholders last year, trying to sell its Rs 54 crore fully-convertible debentures placed on a rights basis.

In the notes accompanying the results, the management has noted that demand recession and severe competition had affected the company's profitability. In fact, the company has been unable to sell its main product -- Ambassador cars -- manufactured at its oldest unit at Uttarpara in West Bengal.

According to the results, while its total turnover dipped by a mere 7.34 per centduring 1998-99 as compared to the previous year, its expenditure also dipped by 4.45 per cent during the fiscal year to March 31, 1999, when compared with the performance of 1997-98.

The company had embarked on a massive Rs 503-crore modernisation-cum-expansion plan last year, of which financial institutions loans amounted to Rs 320 crore. The management had estimated a Rs 75 crore expenditure for modernising and upgrading the Uttarpara unit.

The notable increases were the interest and depreciation components. Interest expenditure jumped up by 43.14 per cent to Rs 83.48 crore to March 31, 1999, against Rs 58.32 crore in previous accounting year.

Similarly, depreciation also increased by 28.41 per cent to Rs 32.05 crore to March 31, 1999, as compared to Rs 24.96 crore in the previous year.

Though it had managed to post a gross profit of Rs 3.88 crore to March 31, 1999, as compared to Rs 73.26 crore to March 31, 1998, interest and depreciation components which together increased by 38.72 per cent (Rs32.25 crore) to Rs 115.53 crore to March 31, 1999, against Rs 83.28 crore in the previous year.

The board at its meeting held on Friday has earmarked an expenditure of Rs 1 crore for making its hardware and software systems Y2K complaint. It is expected that the exercise will be completed by July 1999.

It has also noted that both its newly launched products -- Lancer and Rural Transport Vehicles -- have been satisfactory and commercial production has already commenced.