The only areafor restructuring was in labour cost, which the company has been trying to reduce through a voluntary retirement scheme (VRS). For the first half of the current year, the company took a Rs 4.4 crore charge against the VRS and wrote back Rs 4.55 crore from an earlier provision for contingencies, thereby maintaining its bottomline. The stock has been reflecting some bearish sentiment of late, having fallen by 41 per cent from its 1998 high of Rs 550 to Rs 325.

Synthetics & Chemicals:

The full impact of the devastation the cyclone caused to the Kandla port was felt by companies that were dependent on the port for import of raw materials. Synthetics & Chemicals was struggling for its survival even before the cyclone closed down the Kandla port. The company has a dual set of problems facing it. One, there has been large-scale dumping of styrene butadiene rubber into the country leading to underutilisation of capacities, and two, domestic prices have not been remunerative at all. Synthetics & Chemicalsis the single-largest manufacturer of SBR in the country with a 70,000-tonne capacity, with an expansion to 100,000 tonnes coming on stream.

With the closure of the port, the company has been deprived of a cost- effective source of raw materials (styrene) as well. Raw materials now have to be brought in from more distant ports which have increased the cost of production and almost wiped out operating margins. Losses in the second quarter increased to Rs 8.42 crore from Rs 4.77 crore in the first quarter, a 77 per cent rise.

The stock has reacted negatively to the news of the Kandla port being closed, which would affect the fortunes of the company. Therefore, there has not been too much of a negative reaction to the results declared by the company. In reality, the long-term solution to the company's problems lies in the imposition of an anti-dumping duty on SBR, which should help in stabilising prices.

Kirloskar Brothers:

For the first half of the current year, Kirloskar Brothers reported a 34per cent rise in net profit--but a marginal rise in revenues--powered mainly by a strong growth in the first quarter. But keeping in line with the performance seen by companies like Ingersoll Rand and Chicago Pneumatic, which are industry leaders in pumps and compressors, there has been an identical slowdown in the case of Kirloskar Brothers as well in the second quarter of the current year. Second-quarter revenues have fallen by 14 per cent from Rs 92 crore in the corresponding period in the previous year to Rs 79 crore. A fall in operating margins as compared both to the first quarter as well as the corresponding quarter in the previous year led to a fall in the profit after tax to the extent of 49 per cent, and if compared to the first quarter's performance, the fall in profits is to the extent of 55 per cent. The stock has, however, reacted only marginally to the fall in the second-half revenues and profits.