The foray into the export markets with the Indica would commence only after meeting the initial requirements of the domestic market, company sources said here on Friday.

"We do propose to export the Indica, but we will wait to satisfy domestic demand first," the sources added.

However, the company would commence development of the export model, work on homologation and ensure that the car meets all the norms of the markets abroad.

Telco had booked close to 1.15 lakh orders for the Indica, of which 60,000 have been retained for supply till March 31, 2000.

The company had targetted production levels of 5,000 units per month to meet the demand. But it has been able to achieve only 3,000-4,000 units per month as yet.

Meanwhile, Telco has estimated around Rs 50,000 surge in production cost per vehicle for the modifications required to make itspassenger cars, particularly Indica, conform to Euro-II emission norms.

The sources said that the company is working aggressively towards making all its passenger vehicles Euro-II compliant. "Though no dates can be given at present, we are confident of making our vehicles meet the emission norms soon."

Though the production cost is expected to go up, it is yet to be decided whether this would translate into an increase in the final price tag of the vehicle.

The sources further pointed out that though the company is in talks with its vendors for supplying the specialised components for meeting the norms, "we are also open to direct imports if need be."

"Our cars already meet the Euro-I norms and it would not be much of a problem for us to make them Euro-II compliant. It will be done soon."

Meanwhile, Telco has reported a steep 67 per cent decline in net profit during the 1998-99 fiscal at Rs 97.46 crore as against Rs 294.66 crore in the previous year. In line with the substantial drop in the profitafter tax, the company's board of directors recommended a lower dividend of 30 per cent as against last year's 55 per cent.

Its total income stood at Rs 6,739.43 crore, down 8 per cent from the previous year.

The total profit before tax at Rs 107.16 crore (including the profit of Rs 102.38 crore on the transfer of its construction equipment business) was 67 per cent lower as compared to Rs 327.66 crore for the previous year.

After a lower tax charge of Rs 9.70 crore, the profit after tax was down by 67 per cent, at Rs 97.46 crore.

The company significantly improved its position in the fourth quarter of the fiscal and was able to turn the cumulative loss at the end of the third quarter into a modest profit before tax of Rs 4.78 crore before considering the profit on the sale of construction equipment business unit.

The results reflect the effects of its ongoing programmes of cost reduction, restructuring exercises, greater fiscal discipline and improved market share.

The company claimed that theperformance for 1998-99 was significant, given that the year witnessed a continuous slowdown in industrial growth, with key sectors of the economy showing a moderate to negative rate of growth.

The commercial vehicle segment of the automobile industry by far was the worst affected, with a substantial shrinkage of market demand for the second year in succession.

The automated assembly line of Indica achieved commercial operations in early March 1999. The rest of the plant was operated on a batch basis. During the current financial year, the company will be in a position to commission the full plant to meet the market demand.