ALL'S well that ends well? That should sum up the last 12 months in Ratan Tata's life. They were peppered with controversy over issues like charging group companies a price for using the Tata name and the ill-fated airline project, but ended on a triumphant note. Despite a poor year for the automobile industry at large,'Tata's flagship company Telco has turned in stunning results for 1996-97, crossing the Rs 10,000-crore mark in turnover and remaining the largest private sector company in the country. At Rs 10,128 crore, Telco's turnover is 29 per cent higher than last year. Profits before and after tax have jumped 32 per cent and 44 per cent, respectively. Volume sales of vehicles have risen 19 per cent. Telco has maintained its dominance in the medium and heavy commercial vehicle (HCV) segment, with a 72 per cent marketshare and sales exceeding one lakh vehicles. The construction equipment division grew 52 per cent in volume to sell 907 machines. Exports grew 5 per cent to Rs 675 crore. Even in the light commercial vehicle (LCV) segment, which actually shrank 5 per cent last year, Telco's sales rose 3 per cent. While Telco was expected to do well, the final figures have been beyond the projections of most observers. Says Narender Nagpal, head of research, BWZ Asia: "We expected (a net profit of about) Rs 720 crore against the performance of Rs 762 crore." A market expert estimates Telco's net profit percentage to be the highest in the automobile industry this year. Volumes too slightly exceeded analysts' average estimate of 2.12 lakh units. Nagpal attributes the profits largely to Telco's pricing strategy. In 1995-96 Telco raised prices significantly but in a phased manner. This stood it in good stead in 1996-97. While the industry went into a slump, Telco could maintain profit margins without major price hikes. Also, prices of raw material like steel and aluminium didn't rise, with the latter actually becoming cheaper. Besides, Telco's decision to get into a range of segments, from HCVS to cars, has reduced its dependence on the vagaries of cyclical markets. This year's low in the LCV market, for instance, hasn't left Telco debilitated. It has over 25 products and maintains a lead in almost every segment except cars. So, a lot of brownie points are accruing to Ratan Tata as industry watchers praise Telco for its "market orientation and flexible, aggressive marketing". Among Telco's various models, the Sumo emerged as the star performer, with an almost 20 per cent contribution to the volumes-against 12 per cent last year. Launched in 1994, the diesel-powered vehicle filled the potential niche of an urban area utility vehicle which others like Mahindra & Mahindra couldn't successfully plug. Currently there's a waiting list on Sumo, and Telco is upping production. However, investors and analysts are also looking for some explanations. A sizeable part of the profits is being attributed to the extremely low tax rate. Says an analyst: "Our estimates would have been right if Telco paid the expected rate of 30 per cent instead of the 24 per cent (it actually paid)." Adds K.S. Sreenivasan, investment analyst, Jardine Fleming India Broking: "The most likely possibilities are a 100 per cent tax break on major equipment and changing of depreciation norms to pro-rata basis." Again, market watchers wonder how Telco's sales in March 1997 were about 29,000 vehicles, against the average sale of 19,000 in the second half of 1996-97. Moreover, observers wonder if the tax rate can be sustained. With the poor period yet to end, Telco's sales in April 1997 weren't very good compared to last April, according to market information. They are also wary of the impact of likely fuel price hikes. Sreenivasan expects real recovery of commercial vehicle markets only by the end of 1997-98. Actual sales are expected to begin even later. But the likes of Nagpal are confident that a weak beginning won't impact overall performance since auto sales peak in the second and fourth quarters due to depreciation benefits. Telco's small car project is said to be proceeding as scheduled. It is ready with its HCV model to take on main competitor Ashok Leyland's fastest growing range. New products in intermediary commercial and sports utility vehicle segments are in the pipeline. Says a Telco spokesperson: "We expect a 10 to 13 per cent volume growth in 1997-98." But Reliance, at Rs 9,020 crore, is just around Rs 1,000 crore behind Telco in turnover, and hopes to go over the Rs 15,000-crore mark in 1997-98. So the coming year will also see the race for the top slot among private sector companies get hotter. Ratan Tata is being praised for Telco's "market orientation and aggressive marketing".