NEW DELHI, Nov 7: Believe it or not! At a time when most companies are struggling to remain afloat with wafer-thin margins, Vatsa Corporations is growing by leaps and bounds. With a `helping hand' from its group companies, the Mumbai-based company has managed to earn a net profit of Rs 71.60 crore on a total income of Rs 75.33 crore for fiscal 1996-97. However, an NPM of 95 per cent notwithstanding, the scrip languishes at Rs 1.30, albeit on very high volumes.

Clearly, there is more to the results than meets the eye. While the company refuses to divulge the break-up of the income, a major chunk of the turnover has in the past accrued from miscellaneous sercives. Director (Finance) Khandelwal says this includes income earned through consultancy fees. The low expenses of Rs 2.82 crore Khandelwal attributes to the fact that Vatsa Corporations sources its products from other group companies free of charge. ``These group companies are bearing the burden,'' he added. He, however, refused to name these companies.

Vatsa Corporations, which created corporate history by declaring a dividend of 0.1 per cent last year, has also continued with its tradition of changing its accounting year. The company changed its accounting year from August 31 to June 30 in 1995-96, and this year it is again back to August 31.

Khandelwal refused to comment on the reason behind this move, but said it had nothing to do with the profitability figures.

More fascinating than the fabulous margins is Vatsa Corporations' equity growth. The company has a history of tapping the market for funds with amazing regularity. Beginning with an equity base of Rs 30 lakh in 1991-92, the paid-up capital of the company today stands at Rs 500 crore. Vatsa Corporation first tapped the market with a public issue in June 1993 followed by a rights issue in 1994. Then came another public issue in 1995 followed by a Rs 315 crore private placement in 1996 to group companies and promoters. According to critics, the company frequently changes its name and taps the market for funds.

In September 1994, the name was changed to Vatsa Industries from Vatsa Finance and then again to Vatsa Corporation in 1995.

Vatsa Corporation now plans to hive off 29 divisions as separate companies. At the same time, it would continue to operate in the same line of business as these new companies. Khandelwal refused to comment on the reason for the de-merger although he said it would help the company to focus on its core competency. He also ruled out the possibility of these companies tapping the market individually to raise resources.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.