Dodge into Fiat Reviewed work(s): Source: Economic and Political Weekly, Vol. 3, No. 3 (Jan.

20, 1968), p. 185 Published by: Economic and Political Weekly Stable URL: http://www.jstor.org/stable/4358145 . Accessed: 25/01/2013 17:33
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ECONOMIC AND POLITICAL WEEKLY duction, sales and despatches of HMT have gone up. It now produces a range of over 17 families of standard machine tools and a steadily widening range of special purpose machine tools. That the range of diversification is still limited is, however, clearly indicated by the continuing large volume of imports. The impact of the recession has been felt not by sales but by profits. Profitability in 1966-67 has been halved as compared with 1964-65, though it is fractionally higher than in 1965-66. The proportion of cost of sales to salles has increased steadily and the turnover of capital has been declining. Stock of finished goods and work-in-progress have also increased as a proportion of sales. At the beginning of the Third Plati, HMT had a scheme to set up one new machine tool plant every year. Starting with only one plant at Bangalore during the period 1953 to 1960, it went on to add the second Bangalore plant in 1961, Pinjore in 1963, Kalamassery in 1964 and Hyderabad in 1966. It also set up a watch factory at Bangalore in 1962. The recession has dampened this straight line expansion; plans for diupli. cating Pinjore and Kalamassery lhave been deferred. Instead, the accent now is on diversification. Foundries are expected to be commissioned in Kalamassery and Hyderabad shortly. The watch factory is being expanded and a new company is being form'ed in collaboration with Verson of US for the manufacture of medium and heavy presses for automoble and other engineering industries. Another company with the participation of Albert of West Germany will mamnfacturecylinder letterpresses and offset presses for single and multi-colour printing. This will represent the country's first venture in large scale manufacture of printing machinery, which has made very little progress so far. in the corresponding period of the previous year. Thrice during the year, the company had to lay off abotit 1,000 workers for a total period of 10 weeks. To make its trucks more popular, the company has introduced a new high-powered engine and also intends to make certain changes in sheet metal components. Part of the idle capacity of the plant has been utilised for the manufacture of Fiat cars whose production during 1966-67 rose to 8,661 against 5,739 in the previous year and in the four months ended October last to 3,724 against 2,471 in the same period of the previous year. Car production is expected to rise still fuirther but the price is still fixed at an "unreasonably low" level. PAL hopes that its Fiat 600 may find acceptance in the elusive search for a "small car". It is a four-seater, rearengine car with a maximum speed of 70 miles an hour and fuel consumptioii of 45-50 miles per gallon. Commcnting on its price, chairman Lalchand Hirachand says that a car of this type

January 20, 1968 costs Rs 7,700 to 8,100 in foreign countries and that in India it would cost more owing to the low volume of production and the high cost of imported materials and equipment. Since the price limit for the "small car" (which was originally fixed at Rs 6,000) is Rs 7,000, PAL, has little chance of getting Fiat 600 accepted by Government. PAL's results for 1966-67 are disappointing. No surplus is available for depreciation and development rebate; arrears on these accounts come to Rs 1.67 crores and Rs 89 lakhs, respectively. The 6 per cent dividend declared for 1965-66 was challenged by a member in the Court and the mnatter is sub judice. US AID has informned the company that the divid nd distribution of Rs 45 lakhs would violate the conditions of the loan granted by it and that the company should not pay a dividend in excess of Rs 19 lakhs. For payment of this amount, too, it has first to obtain the written consent of the Indian guarantor bank.

LETTERS TO EDITOR

Copper in Search of Ashlands

WE should be grateful to K V Subrahmanyam for drawing attention to the copper muddlq that the National Mineral Development Corporation has landed itself in ("Copper in Search of Ashlands", November 11). The NMDC's Khetri-Kolihan project which is expected to supply 31,000 tonnes of copper per annum, is likely to end up as a white elephant. The original estimate of capital cost of Rs 24.44 crores has now soared to Rs. 78.52 crores. This is a serious matter and Members of Parliament would do well to look into the affairs of this project closely. Along with the rise in total cost, the foreign exchange compo. nent must also have gone up substantially. The Annual Report for 1965-66 on the Working of Commercial and Industrial Undertakings of the Union Government is, however, silent on the actual amount of foreign exchange required for the project. The foreign exchange component was estimated at Rs 13 crores in the Report for 1964-65, but then the total cost was expected to be only about Rs 38 crores. Production is now scheduled to commence in 1969-70, but the date has been pushed forward every year. The NMDC's credentials for undertaking the project are far from satisfactory, if one is to judge by its performance so far. It has two rich iron ore mines at Bailadila and Kiribluru. Bailadila is being developed on the basis of a contract for supplying 4 million tonnes of ore annually to Japan for 15 years from 1966. Kiriburu also has an assured offtake of 2 million tonnes of ore for 10 years from 1964, again by way of exports to Japan. But, in spite of the assured market, the performance of Bailadila and Kiriburu mines has been dismal. With total capital employed of Rs 9 crores, the
185

Dodge into Fiat

REMOVAL of control on the distribution and prices of commercial vehicles is little consolation to Premier Automobiles, which has been finding it increasingly difficult to sell Dodge trucks. Its production in the year to June last dropped to 3,765 trucks from 6,726 in the preceding year and in the subsequent four months to 817 from 1,583

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