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Tuesday, Jan 03, 2006


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Corporate - Outlook

Jessop upbeat about higher profits

Pratim Ranjan Bose

Mr P.K. Ruia

Kolkata , Jan. 2

JESSOP & Co is expecting to end the year with higher profits on a marginally lower or same turnover from last year.

Having received the highest ever order for 809 wagons from Indian Railways this year against 305 in the last year, the company produced 71 wagons in December, which is a record. The previous best monthly production was 45 wagons.

"We are targeting production of 150 wagons a month by the end of this fiscal to clear the entire backlog for delivery of the wagons ordered in the last year," the Chairman, Mr P.K. Ruia, told Business Line. The delivery was delayed due to lack of availability of bogie and couplers.

An essential component of wagons, the total production of the Railways' approved manufacturers of bogie and couplers fell substantially short of the wagon procurement projections, resulting in delayed delivery of wagons till the middle of this fiscal.

"To solve the problem, the Railways recently brought the component of `free supplies'. We are now geared to make the most of it by setting stiff delivery targets of 150 wagons a month to clear the backlog as well as maintain the delivery schedule for fresh orders," said Mr Ruia.

Keeping in tune with enhanced production and delivery rate of wagons, Jessop is also expecting a substantial rise in net profit. The company ended 2004-05 with a net profit of Rs 4.82 crore on a turnover of Rs 77 crore.

"We are expecting substantial rise in profitability. However, the turnover of the wagon division will come down substantially as Railways has included bogie and couplers in the list of free supplies," Mr Ruia said.

Wagon being the single largest contributor to Jessop's total sales revenue, the company's turnover may drop. Mr Ruia, however, expressed hope that other divisions such as coach and crane would help maintain the turnover at last year's level.

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