The ACC results did come as a disappointment to market expectations. Against an expectation of a net profit of Rs 31 crore, ACC reported just Rs 13 crore PBT. Moreover, against a small profit expected in the second half of the year the company has reported a loss of Rs 8 crore, therefore reducing the first half profit of Rs 21 crore. These figures would have been much worse had ACC reflected the interest and depreciation of its Kymore, Sindri and Lakheri expansions. These will be reflected in the current year. In addition the company's sale of assets which yielded Rs 14.86 crore and a write back of a provision no longer required of Rs 19.37 crore were cumulatively twice the profit before tax. The pre-tax cost of debt has been reduced by 300 basis points to 13 per cent. In all probability this is the result of the retail shift of fixed deposits from NBFCs to the better known manufacturing companies. In addition there has been a shift to CPs where rates have come down during the last year.

Thestock market had got wind of the results before the announcement and the ACC stock reacted by three per cent to Rs 1,685. With the fall on the day of the results and the following day by and large the results have been discounted by the fall from Rs 1,805 for anyway ACC was expected to have a disastrous year. By Friday the stock had recovered covering up some losses.

The market expectations that will be reflected from now on are the current year's performance and the budget sops expected for the cement industry. The expectations from the railway budget of a 10 per cent lower freight rate for cement did not materialise instead freight on cement has been reduced through a re-classification. But the benefit will be negligible as freight for cement has gone up. The current year earnings will have to reflect substantially higher interest and depreciation from its new expansions and greenfield plants. But the company will have the advantage of having two 25mw power plants operating in the current year whichshould serve to reduce its power costs.

Viagra deaths

Newspapers have reported the death of six persons in the USA on consumption of Viagra, the anti-impotence drug developed by Pfizer. However, both Pfizer and the US FDA have said that they are uncertain about the role of Viagra in the deaths of these consumers.

Pfizer has stressed that patients taking nitrates in any form, including nitroglycerin and long-acting nitrates commonly used for chest pain, should not take Viagra. Large and sudden drops of blood pressure can occur with the co-administration of these two drugs, the company said. Around one million Viagra prescriptions have been written since its launch in early April making it one of the most fastest growing drugs. Eighty five per cent of these prescription has been taken by men over the age of 50 who are more prone to heart diseases. Along with Pfizer, Indian companies like Orchid Chemicals, Ranbaxy Labs (newspaper reports say that the company is planning to go in for manufacture ofsildenafil citrate, the key raw material for Viagra) and Cipla will have to do a wait-and-watch scenario before the reports are out. If the reports are negative share prices of these scrips which had spurted on mere announcements of their plans will plummet again. This will specially be the case for Orchid who has reported a mediocre growth rate.

Wipro

Wipro Ltd has posted encouraging results for 1997-98 with a 14 per cent jump in income from operations to Rs 1,373.15 crore. The bottomline has followed suit with an 87 per cent jump from Rs 57.73 crore to Rs 107.88 crore.

This results have been primarily fuelled by the major thrust on the software exports business, claim analysts. The company has been able to manage a 44 per cent jump in the software exports business to Rs 392 crore with exports to mainly Japan and the US. This was responsible for the 40 per cent jump in operating profits to Rs 180.16 crore. The diversified nature of its business has however been responsible for the lowmargins.

The company's portfolio includes software, hardware, consumer products, lighting products and fluid power and this uneasy mix is responsible for the low operating margins.

The hardware business has not been able to match the software business growth and has clocked a 30 per cent jump to Rs 624 crore. Wipro is now contemplating relaunching its own branded personal computers and servers which it expects to price and position with greater freedom.

The company had earlier lowered its focus on this line of business as it clashed with the joint venture with Acer. This move was prompted by the inability of the Wipro-Acer brand to command a premium that other MNC brands could. However it is surprising to see the company using its resources towards a business which is plagued with overcapacity and cut throat competition. The other business have also been a drag on the company's financials and are primarily responsible for the 11 per cent jump in expenditure. In the vanaspati/hydrogenated oils business,despite having the `Sunflower' brand, an aggressive capacity build-up and consumer resistance the returns have not been commensurate with expectations. This has been complimented by the difficulties in penetrating the lighting products market and the sluggish economic growth has affected the fluid power business.Analyst claim that the company could do well if it could exit out of its other line of business and concentrate on its core competence of software exports.

(With contributions from Aaron Chaze, Shishir Asthana and Vikram Bhat)