There is a lot of confusion over the present and impending performance of the company, the depreciation incentive to commercial-vehicle buyers notwithstanding. First of all, gross sales (total of all types and categories of vehicles) jumped from 43,000 vehicles in August to 53,000 vehicles in September, which is largely because it is the cutoff month for claiming depreciation for the full year. Second, the information available right now points to a surge in heavy vehicle sales from Telco, and that the company is gearing up to produce 5,200 heavy vehicles inNovember, up from 3,000 units in October, indicating a major increase in demand being envisaged. But despite these two factors, there is no other evidence of demand for heavy vehicles picking up based on growth in economic activity, though there has been marginal improvement in freight rates.

In addition to the risk of higher commerical-vehicle production in an uncertain economic environment, there is the small-car factor. Recent trends indicate that the market for the smaller budget cars is becoming quality conscious, and widespread opinion is that Telco may not be able to match these expectations. There will also be a higher incidence of interest and depreciation to be factored in the last quarter, since the car project goes on stream at the end of the third quarter.

Adding to the uncertainty over the direction of Telco's stock is the feeling that there is a large stake-hiking exercise going on with Tata Sons, the ultimate holding company, taking advantage of the creeping-acquisition norms. On Thursday,the Telco stock recorded one of its highest volumes ever, accounting for over 2.7 million shares on the BSE alone, sending the stock close to the maximum allowable price for the day.

Ranbaxy Laboratories: Ranbaxy Laboratories has lost the confidence of the stock market, at least it seems so, considering the manner in which the stock is being treated. Thursday saw the stock fall firmly to a five-year low on a fairly large volumes, signifying a serious break in its long-term trend. The talk spreading in market circles is that the present family-controlled management led by Parvinder Singh is seeking an exit from the company. The implications of such a development could be enormous, and could signal the beginning of the exit of Indian-controlled managements from the pharmaceutical business. A few months ago, the news spread in the market that Hameed, the promoter of Cipla, was considering an exit from that company. However, at that time, it sent the Cipla stock skyrocketing. Just the opposite seems tobe happening in Ranbaxy. However, a lot of the bearishness in the stock also stems from the disappointing performance put in by Ranbaxy for the first half of the current year. Net profit was lower by 9 per cent, the catalyst for which is the fall in exports to Russia, and the imposition of an anti-dumping duty imposed by the European Union.

Blow for ABB: Because of the refusal of the MP government to give first charge on the receivables of the SEB to the independent power producers, FIs are unlikely to fund the projects. The first charge was to be given subject to the approval of SBI which has refused to do so. As a result, the financial closures of four projects in the state will be indefinitely delayed. The projects are 2*535 MW, Daewoo projects at Korba, 400 MW Maheshwar power project promoted by S Kumars (boiler supplied by Bhel), 500 MW Pench project promoted by Soros Fund and the 500 MW Bina Power. In the first three projects, ABB is the EPC contractor and the delay of financial closure willensure that the company won't be able to book any profit from the projects (EPC contract for Korba was finalised in 1997 and included in the order book) even in 1998 as the company follows percentage completion of contract method for accounting the profit of the project.

The inflow of orders was expected in the last quarter of the current year and though profit would have been reflected post first half of 2000, the further delay will mean that the bottomline will continue to remain depressed. Coming immediately on the declaration of expected poor results, the impact on the stock will be negative.