Excluding this non-recurring income, the topline growth has faltered to about 13 per cent in the last quarter of FY2000. This is much lower compared to the growth of 36 per cent in the first three quarters. In fact, on a Q4 to Q4 basis, operating margin has fallen considerably from 38 per cent to about 28 per cent.

According to a senior analyst, Taheer Badshah, ZTL might not be able repeat its impressive past performances and show any significant topline growth in the near future. This is because advertisement revenue is expected to grow in the range of 30 to 35 per cent and competition has now intensified. Moreover, the recently launched channel Alpha and two English channels are expected to stabilise and generate substantial revenues only late next year.During the last quarter, the company paid $153.11 million in cash and issued about 1.61 crore shares at a premium of Rs 399 per share to the Newscorp Group of companies to acquire the remaining stakes in Siticable, Winterhealth, ATL and Programme Asia.

The equity base has bloated further with the conversion of 80 lakh convertible warrants, which were issued to Goldman Sachs at a premium of Rs 999 per share. The consolidated net profit, excluding the non-recurring income, has increased by 15.6 per cent to Rs 148 crore.

Considering the current PE multiple of about 100 the scrip enjoys (on the fully diluted equity), the growth appears to be much below market expectations. However, the market appears to have ignored the earning potential of the Rs 2,634 crore valued content library. With the present market sentiments, the script is expected to move downwards in the near future.

Indian Rayon
Analysing Indian Rayon's financial results for the fiscal ended March 2000 is a little complicated. In the last two years, the business portfolio of the conglomerate has changed significantly. Comparison of financial figures would therefore not necessarily be in the right perspective. Yet, so far as individual segments are concerned, such comparisons can be made at least at the turnover level. Comparing the turnover of individual segments reveals that there hasn't been any positive growth except in the carbon black business, which has grown by nearly 50 per cent to Rs 262.7 crore. VFY contributed Rs 244.7 crore to the topline, a fall of 12 per cent from the previous year. Unlike VSF, which can be used with polyester in blended yarn (as a substitute to cotton), the same is not possible in case of VFY.

Although Indian Rayon's VFY plant is fully depreciated, it needs to be recognised that VFY demand continues to slow down. Textiles turnover is up by 9 per cent to Rs 341.6 crore, but mainly due to the Rs 57.21crore from Madura garments business acquired during the year.

The year saw the company exiting from cement. In the last fiscal, it was sea water magnesia's turn to face the axe and rightly so. Insufficient demand, cheaper imports and a costly manufacturing process had made running the plant an unviable proposition. The division's unsold assets have been brought down to their realisable value in the company's books and the resulting loss of Rs 299 crore has been charged to the P & L account as an extraordinary item. Besides, to further its interests in branded garments, the company acquired leading brands such as Louis Phillipe, Allen Solly, Van Heusen, etc from Madura Coates. The management is hopeful of achieving Rs 500 crore sales in FY 2002-03 from the garments business alone.

The company is saddled with huge investments of Rs 306 crore in group and associate companies, yielding meagre returns. To clear the balance sheet, there were plans to sell off these investments to a holding company of the group and thereby book profits. However, this has not materialised. During the year, the company had offered buy-back facility to shareholders at Rs 85. The offer evoked limited response even when the price offered was at a substantial premium to the market price. Instead of the maximum permissible limit of 25 per cent in one financial year, only 10 per cent equity capital could be cancelled. Currently, the stock trades at about Rs 50 per share.

Celltel
The recent explosion in the subscriber base of cellular operators indicates a boom in the celltel business. In addition to the decline in rental charges and the proposed CPP (calling party pays) regime, it is the value added services like the smart messaging service that have triggered the upsurge in the domestic demand. But the sweeping changes in the technology might cut short the euphoria, as the very basic ground rules of the game are expected to change in the near future. Evolving technologies have forced the cellular operators to continuously review their business model. The feasibility studies carried out by the cellular license bidders in the early nineties indicated that subscription income was perceived as the main source of revenue generation. But the operators need to explore other revenue streams.

Competition will result in a decline in the rental and call tariffs. Developed countries like US have rock bottom tariff charges which do not form significant part of their earnings.

The convergence phenomenon appears to have bitten into everything. Thanks to technologies like WAP (Wireless Application Protocol) and GPRS, in future cellular operators will graduate to being Internet access providers. It is true that there are nagging doubts concerning low cellular penetration, market potential and the billing structure of the WAP services. Yet, several leading cellphone operators like Tata Teleservices, Hutchison, Airtel, Essar and the like have already unveiled their plans to offer WAP based services. All doubts remaining, WAP will provide plethora of opportunities for cellular operators.

Cellular operators can also benefit by exploiting other elements in the WAP value chain - commerce and WAP content. Currently, due to the absence of graphics and multi media, WAP content is not as rich and attractive as the world wide web. Experts predict a slew of wortals (WAP portals) being set up by intermediaries and the cellular operators themselves. According to Rediff.com CEO Ajit Balakrishnan, WAP content offers different kind of opportunities as compared to those existing at present. Delhi based Jaldi.com has already made its portal WAP enabled and it is easily accessible by WAP phones. Although the demand will be depend upon various factors like the affordable cost of the handset and the quality of services, consumers might opt to wait for the tariff structure to fall in place.

-- KSESH (with contributions from Gaurav Dua and Manish Joshi)