The company has just managed to hold its bottomline, which increased marginally to Rs 70.5 crore from Rs 69.08 crore posted in the first half of last year.

Net sales increased to Rs 628.33 crore from Rs 319.22 crore in the same period last year, to which the copper division contributed around Rs 280.92 crore.

The fertilisers division showed in improved performance by increasing its turnover from Rs 319.22 crore last year to Rs 347.41 crore. The company said its "Shaktiman" brand continued to maintain its leadership position.

Other income dipped marginally to Rs 18.09 crore, as compared with Rs 20.73 crore last year. Gross profit was higher at Rs 137.89 crore, against Rs 103.27 crore in the first half of the previous year.

The company's interest burden wassubstantially higher, on account of the increased borrowing to fund the copper project, at Rs 27.06 crore, against Rs 6.58 crore in the first half of 1997-98. Interest for Birla Copper alone was Rs 23.9 crore.

Depreciation, for similar reasons, was higher at Rs 32.06 crore, as compared with Rs 19.5 crore in the same period last year. The company provided for a marginally higher tax at Rs 8.27 crore against Rs 8.11 crore in the first half of the previous fiscal.

The trial production at the Birla Copper division production began in mid-May, and the company says the built-up at the smelter has been "very encouraging". It has notched up a marketshare of 35 per cent, it claimed.

However, analysts maintain that due to a sharp fall in international copper prices - London Metal Exchange prices have now dipped to below $1,600 per tonne - sales realisation and margins will be under pressure.

The company has targeted a turnover of Rs 840 crore from the copper business in the first year of operation, at 60 percent capacity utilisation and LME prices of $1,775 per tonne.

Insight:

Results mirror market expectations

Indo Gulf Corporation's financial results for the first half has largely mirrored market expectations. The company's margins has come down drastically as compared with the corresponding period in the previous year. But, that was a time when Indo Gulf was a pure agri-products and urea producer, and the ones with relatively newer manufacturing facilities, were known to enjoy high margins. Copper smelting being a low-margin business, the decline in margins was inevitable and the first signs to the effect were already established when the company announced its first quarter results this year. Operating margins stand reduced from over 25 per cent to around 19 per cent and the slide in profitability is likely to continue as the contribution from copper to total sales increases. The copper division currently contributes about 45 per cent of its sales.