Ford reduces loss, but topline stays flat

Ford India Pvt Ltd has reported a lower net loss on a near stagnant topline. The company had reported a total income of Rs 1,064.79 crore for the fiscal 2001-02 against Rs 1,064.84 crore for the fiscal 2000-01.

Net loss for the financial year 2001-02 was Rs 60.52 crore against Rs 101.01 crore for the year ending March 31, 2001, recording a fall of 40.11 per cent.

Ford India's vice president - marketing sales and service, Vinay K Piparsania, said, "We will turnaround in the fiscal 2004-05 with the launch of a new car that would offer the same volume as Ikon series does." He however did not disclose the segment to which the new car would be addressed.

Financial results of Ford India, for the year 2002-03, was not available for our perusal. The cut in the net loss had been possible mainly due to fall in the excise duty (32.68 per cent) and cut in the financial expenditure by 12.99 per cent.

Accumulated loss as of the end of year 2001-02 was Rs 528.13 crore or 62 per cent of the total equity of Rs 850 crore. The company for the year 2001-02 had generated net cash from operating activities of Rs 142.02 crore.

Piparsania said though the company was confident of turning around in 2004-05, a report was sent to the Board of Industrial and Financial Reconstruction (BIFR).

"We wrote to the BIFR on the cash flow and financial status in 2003 to comply with statutory requirements."

A financial consultant, who spoke to Business Standard said any company in which shareholders fund is eroded by more than 50 per cent would be termed as a potentially sick company and hence must report to the BIFR.

He added that 'referring to BIFR' as a sick company would happen only when the entire shareholders fund is eroded.

Both production and sales during 2001-02 was lower than the year 2000-01. Production and sales for the year 2001-02 stood at 14,871 cars and 15,153 cars respectively, against a production and sales of 18,634 cars and 17,995 cars respectively for 2000-01.

The company, in June 2003, had modified its Memorandum of Association to allow it expand its export operations by sourcing components from India for Ford's plant in North America and Europe.

The resolution passed at the extraordinary general meeting (EGM) held in Chennai in June 2003 said, "Chairman (Lewis William Killcross Booth) informed that the company proposes to expand its exports operations by sourcing components from India for Ford Motor Company plants in North America and Europe."

The resolution further stated that "The company is also considering venturing into the business of engineering services in the areas of design development for automobile industry and providing allied services in connection therewith. This is a significant opportunity for the company, besides facilitating optimum utilisation of the company specialised skills and resources."

The Memorandum of Association was also amended to change the company's name from Ford India Ltd to Ford India Pvt Ltd.