After tasting success with its swadeshi brand Indica, Telco is now gearing up to demolish the myth that the commercial vehicle manufacturer is just a one-car wonder .

The initial problem that we faced while marketing the Indica was sceptism, on whether Telco can truly become a car-maker and whether we could deliver on the quality aspect. The overwhelming response, however, has given us the much needed confidence. We can now tell the world that our range of cars will be technologically as good, if not better than what is available to the consumer, says a beaming Telco general manager, Rajiv Dube.

The company is now planning a series of launches - largely variants on the Indica platform to start with, followed by its large Midi. The big question is whether the new models will be able to generate the kind of hype and hoopla that followed the first launch. Why not? asks Dube, We are confident of repeating the success with our new models as well.

Although the initial euphoria was mainly because Indica was the first swadeshi car, the customer soon realised that the car meets his aspirations - contemporary looks, safety features, space and power. Telco is possibly the only player which tried to read the needs of the Indian consumer. We packed the Indica with features of a mid-size car, but at the price of a small car. Even our large mid-size car will sport innovative features that are generally associated with vehicles in the luxury segment, says Dube.

The company realised early that for the Indica to succeed, it should be positioned at the entry level. Although crucial, pricing is not the only factor that appeals to the customer. We tried to deliver value at a decent price which the customer could appreciate and that is precisely the reason why we could carve a niche despite being a late entrant, maintains Dube.

Similarly with its Midi, Telco promises to offer a large car. The car will be much bigger than any of the cars available today. The car will not only offer the same level of technology, but we will try to give the customers much more, says Dube.

Telco is in no mood to admit that the success of the Indica will be difficult to replicate in the premium segment. Even today the Safari, which is a niche lifestyle vehicle, outsells the other three-box Sedans. Success of the vehicle demonstrates our ability to compete in the premium segment, asserted Dube.

While the Indica gave Telco a new identity, its overwhelming success provided the much-needed boost to the passenger car segment. Telco rejuvenated the automobile market. For, despite the prevailing lull Telco received an unprecedented response for the Indica with total bookings touching 1.15 lakh within 7 days of launch. Around 55,000 customers were suddenly in the market to buy cars, which led to a tremendous surge in sales for our competitors as well, Dube said.

The surge in demand came as a big bonus for Hyundai Motors, which has had a successful ride in India with its 999 cc Santro. It would, however, be unfair to attribute Hyundai’s success to the Indica wave, as the company, having sold 50,000 Santros since its launch last year, is posing a serious threat to market leader Maruti Udyog in the super mini segment.

On the financial front, the Rs 1,700 crore Indica project continues to eat into Telco’s profits from the commercial vehicle segment. Riding a recovery wave in the commercial and utility vehicle segment, Telco turned the corner with a net profit of Rs 33.95 crore during the second quarter of the current fiscal ended September 30,1999 as against a net loss of Rs 18.84 crore in the same period last year.

Due to the losses in the Indica project, Telco was unable to restrict expenses which increased by a whopping 36.14 per cent to Rs 3,424.08 crore lowering the operating margins to 6.9 per cent (7.32 per cent in the same period last year). The company’s profitability got a big boost with its main business, commercial vehicles, contributing significantly during the second quarter. These profits and other income were absorbed by the new small car project which was in its early ramp up stage and was fully commissioned in the second quarter, the company has said.

Telco, which was earlier confident of breaking even for the Indica project once sales touched 60,000 units, has since reworked its breakeven sales at around 85,000. Analysts say that the Indica, with a sales target of 60,000 units in the current fiscal, may contribute to Telco’s bottomlines by next year. After the project breaks even, full integration of the car manufacturing facility will revitalise Telco’s bottomline, analysts say.