Turnover, however, fell by 11 per cent to Rs 512.14 crore, from Rs 576.14 crore, which according to the company was "mainly owing to competitive pressures, which have induced price-erosion in a shrunk market." New orders during the six months slumped by 26 per cent to Rs 420.6 crore, compared to Rs 565.1 crore last year.

Operating profit before interest and depreciation increased by 161 per cent to Rs 58.4 crore, from Rs 22.4 crore. Interest was lower at Rs 21.12 crore, compared to Rs 44.88 crore the previous year. In a statement issued here on Tuesday, managing director J Schubert said: "Although considerable efforts have resulted in reducing the losses, we have to further bring about an improvement in our productivity, cost structure and the quality of products and services.This will help us to maximise customer benefits and attain our goal of becoming a world-class company."

As for the decline in orders, Siemens has stated: "The infrastructure business, in particular power generation, was negatively affected owing to the continuing slowdown in the core sector as a result of project delays and lack of clarity in the reform process."

The release says the net loss has reduced as a result of the ongoing four-point programme for turnaround. The restructuring was initiated to identify areas of concern and implement actions related to a) improving cost structure, productivity and quality; b) reviewing the business portfolio; c) restructuring balance sheet and asset disposal and d) an amplified focus on human-resources development. In its endeavour to further reduce expenditure, the company launched its second voluntary-retirement scheme (VRS) last month. The first scheme, introduced last year, was availed of by 1,300 employees, resulting in the staff strength coming down to 5,625as on March 31, 1998. A similar scheme was relaunched in April this year and is in progress.

The restructuring may entail a further readjustment of its existing manufacturing facilities and capacities in line with the present market requirement, said the release.The company expects a better performance next year, provided there is a revival of the economy, particularly the capital-goods industry, it added.

INSIGHT

Scrip price should flare up

The hiving off of the telecom division and cost-cutting has resulted in improved operating margins. The company has managed to post a positive bottomline, once the net extraordinary outgo is left out of consideration.

The order book at Rs 420.6 crore (Rs 565.1 crore) is lower, and government spending on infrastructure, even if kickstarted in the budget, will have an effect only in the last quarter of the financial year. However, the improved performance, and a sooner-than-anticipated return to a positive bottomline should result in an improvementin the price of the scrip.