The dawning of the new millennium could well prove to be a blessing for the country's numerous floriculture units. Analysts worldwide predict a severe shortage of cut flowers during the November-March period this fiscal. It is expected that a rose stem, which currently retails at around 25 cents in the international market, will sell for $1.50 - $1.75 this Christmas. The expected shortage of cut flowers in the international market could mean that importers would be forced to turn to India for their requirements and floriculture units in the country would be able to do brisk business in the second half of the fiscal. Since the importers would be willing to pay much higher prices than usual, Indian exporters would not only see higher sales but higher profits as well.

The arrival of the new millennium is being promoted heavily worldwide and market experts claim that the exchange of flowers on New Year Eve will be at an all-time high. As the forthcoming Christmas will be the lastfestival of the current millennium, flower consumption during the last week of December is also expected to be much higher than normal. Besides, Valentine's Day is likely to be celebrated with a new fervour in the year 2000. After all, it will be promoted extensively as the first Valentine's Day of the millennium. As far as the US market is concerned, demand for cut flowers will begin to shoot up even earlier as on the last Friday of November, the Americans will celebrate the last Thanksgiving Day of the current millennium.

Expectations of higher and more profitable export orders already appear to have begun fuelling interest in floriculture stocks. Though most of such stocks are still not traded in, it is only a matter of time before investors identify the companies that are still in the business and begin to make their purchases. That the activity has begun is clearly borne out by the fact that stocks like Indo-Holland Agritech, which found no takers during the last six months, have once again begun to betraded in. For Indo-Holland, trading resumed on August 13 after a gap of over five months. Volumes have quickly risen from 200 shares to over 1,000 shares in the last three trading sessions. Stocks like Indrayani Biotech and Micro Plantations have also been witnessing a steady increase in volumes. Perhaps the biggest beneficiary has been Nath Seeds that has appreciated from Rs 14 to Rs 26 during the period August 6-18.

India Cements

The largest cement company in South India, India Cements, has seen its stock appreciate by more than 100 per cent from Rs 41.5 in the first week of July to Rs 95. The rise could be attributed to the successive hikes in cement prices in the region but what is strange is that the company's results for last two quarters - the last quarter of 1998-99 and the first quarter of the current year are yet to be published. It may be noted that the first quarter results of Madras Cements were not as good as that of the first quarter of the previous year. The reason could be thatthe cement prices in the first quarter in South were lower than the corresponding period of the previous year and prices in Andhra Pradesh, where MCL sells one-third of its production were particularly depressed.

The price hike in ICL coincides with the price hikes in the region and is more on the expectations of a good second quarter performance. Though Raasi Cements is located in AP, the prices in AP have also firmed up significantly - from Rs 95 per bag to Rs 115-120 per bag. The issue involved is also that the companies have an option of not declaring separate results pending court approval of merger/scheme of arrangement. ICL, in its third quarter results had specifically disclosed RCL figures. According to ICL management, the reason for not going for separate results is that the scheme of arrangement is effective from April 98 and all operational decisions have been taken by the company as a joint entity and separate results would not reflect the true position of both the companies.

In any case, thecourt-convened meeting for Raasi shareholders is on August 30 and ICL is likely to keep the board meeting in the first week of September for both 1998-99 and Q1 results. There is nothing more than an issue of corporate governance involved. However, Sebi needs to deal specifically with this issue. Just as the permission from DCA cannot be an excuse for not providing quantitative information, approval from local stock exchange and Sebi or decisions taken as a joint entity should not be allowed as the excuse for not declaring results for two quarters.

United Phosphorus

In spite of a marginal drop in its turnover from Rs 103.99 crore to Rs 98.05 crore, United Phosphorus has posted a robust bottomline growth of 27 per cent from Rs 4.62 crore to Rs 5.88 crore in the first quarter of the current fiscal. The main reason for the jump is the improvement in operating margins from 9.35 per cent to 11.45 per cent.

The drop in turnover of the company is because it has gone through a major reshuffling of itsproducts. The company is decreasing its reliance on technicals and bulks and increasing it in formulations. This has also helped in improving its operating margins.

During the first quarter, the company recorded a turnover of Rs 24.06 crore in the agro-formulation business, technicals recorded a turnover of Rs 14.51 crore, speciality chemicals saw a turnover of Rs 11.94 crore and exports during the first quarter stood at Rs 24.06 crore.

Insecticides continue to be the major contributor to its turnover with a lion's share of 82 per cent, while fumigants contribution is the second highest at 11 per cent. With a new product patented in the US, contribution from the fumigants segment is expected to increase in future.

Importantly, United Phosphorus has received a US patent for a Fumigation System for aluminium phosphide. In the agro-chemical industry, United Phosphorus is the first Indian company to have received a US patent. The system developed by United Phosphorus reduces the time taken for the effect offumigation to take place from four days to just 24 hours, that too at 50 per cent of the conventional cost of which is around $400 per kilo. The market for this fumigation system is huge and the company already has the potential to tap the international market.

During the first quarter, the company has launched two new products in the market. Considering the twelfth consecutive good monsoon in the country, United Phosphorus is expected to do well in the current fiscal too. Further, with the launch of Kisan credit cards, farmers are in a position to avail of higher credit, which augurs well for United Phosphorus. Contribution of dividends from its subsidiary is also on the rise, which further adds on to a strong bottomline. After strengthening its domestic base, United Phosphorus is increasing its focus in the international market. The company is registering new products in the international market as well as developing new brands. In order to promote its products, the company is directly working with thefarmers not only in improving its sales but also towards improving product yields, as in the case of sugarcane where it has met with tremendous results. With a conscious decision to increase contribution of formulations and the recently patented fumigation system, United Phosphorus is expected to post a decent bottomline growth in the current fiscal.

With contributions from Sarad Saraf, Urmik Chhaya & Shishir Asthana