Depreciation has increased 65 per cent to Rs 12 crore and interest by 14 per cent to Rs 11.68 crore for the six months ended September 30, 1998 on account of investment in additional capacities in Ankleshwar, Patancheru and Kasna plants, the release added. The company has recommissioned its plant at Bhandup. The company's joint venture operations at Mauritius got a boost when it had got approval for the plant. The Mauritian unit will be operationalwithin 18 months from now.

Vice-chairman Aswin Dani said: "The healthy growth in sales is encouraging. The approvals received for joint venture will give a significant boost to international operations."

Our research bureau adds: Inspite of sales increasing by 14.9 per cent, Asian Paints has managed a flat growth in the bottomline. This was on account of higher interest and depreciation due to commissioning of its various plants. The company's margins have been affected highlighting the tight scenario in the industry. With phthalic anhydride prices depressed, the company's margins were further affected.

What is surprising is that the company has not managed to show higher growth in the festival season, which reflects on the low growth rate that could be expected in the second half from the company. With new plants being commissioned depreciation and interest could further eat into the company's profit in the second half.

Lupin Labs Q1 net spurts to Rs 10 crore: Lupin Laboratorieshas reported a 51 per cent increase in net profit to Rs 9.86 crore for the first quarter ended September 30, 1998, as compared with Rs 6.55 crore in the corresponding period last year. Turnover surged 25 per cent to Rs 185.81 crore from Rs 149.05 crore.

A company release on Wednesday said, the greatest sales growth was observed in bulk business where the focus was to achieve volume growth in order to substitute drop in margins due to continued pressure of bulk drug margins in Asia. Besides this, growth in bulk business also came from developed markets where quality standards are higher.

Increased bulk business was also due to additional business received from Canada. Clarithromycin was supplied for the first time to the Canadian market, establishing a new standard of quality for the product.

On the productivity front, substantial yield improvements were achieved in some products. Of the key raw materials, cost of PenG and 2CP declined to Lupin's advantage. Meanwhile 7ACA, a key raw material forCephalosporin bulk manufacturing (for injectable Cephalosporins), was in constant short supply leading to hardening in prices and some loss of profit which was made up by productivity improvements and change of markets.

While attributing improved financial performance to increase in margin through better product mix and efficient working capital management through inventory control and debtor level improvement, chairman and managing director DB Gupta said: "The focus area in the current year is to reshuffle the product portfolio in favour of lower volumes but higher margin products. During the year we will introduce at least three new oral and two new injectible Cephalosporins. We will also augment the capacities of key bulk drugs such as Lisinopril and Ethambutol, and thus ensure greater volume growth in these products."

Our research bureau adds: The increase in volume sales helped the company post a 51 per cent increase in bottomline and 24 per cent increase in topline. In addition, enhancedexports saw the company offset the decrease in price by DPCO of Rifampicin -- the anti-TB drug. Exports as a percentage of sales turnover increased from 31 per cent in the first quarter of last year to 44 per cent in the first quarter this fiscal. Moreover domestic sales for bulk drugs have fallen have fallen by 14 per cent in the same period.

Nevertheless, the export realisations would not be much greater than those in India. Thus inspite of higher exports in this quarter, operating margins have fallen from 13.98 per cent in the first quarter of last year to 13.58 per cent in the first quarter of this year. Even a favourable exchange rate has not been able to prop up the operating margins.