Of all the players in the passenger car segment, Maruti's share grew the highest by 22 per cent. Maruti is caught in a dilemma. In an expanding market, its market share is on a steep decline. The market share of the company has fallen down to 54 per cent from the high 74 per cent last year.

For the FY 2000, the bottomline has declined by over 36 per cent despite the sales having witnessed an 18 per cent increase over the last year. The company sold 4,06,290 cars for the year as against the last year sales of 3,09,094 cars. Exports too, have declined to 21,447 from last year's figures of 24,410 cars. The company claims that this year's financials seem worse because of price cuts across the models and a 12 per cent appreciation in the value of yen as against the US dollar. The appreciation in yen has resulted in an increase in the material cost, increase in depreciation on investments of over Rs 1,800 crore. However, reasons for the performance are different altogether. The company has not been able to withstand the onslaught of the newer players and its response seems jaded and lacking strategic initiative.

At a time when the nimble-footed competitors were coming out with newer products, innovations and competitive prices, Maruti, the then undisputed market leader, took ages to launch its Wagon R and effect price cuts. Not surprisingly, the company resorted to another round of price cuts on its products last Saturday. This is an indirect admission of the Wagon R not doing as well as expected, also, the price cuts now have pitched the Wagon R in direct competition with the Zen, which is one of the better doing models.

No wonder, Maruti finds itself in a soup. Maruti must understand that short-term strategies of price cuts won't take it far. Any further success eventually has come through newer product launches and value-addition in the existing models as well. After all, the competitors have been able to expand the markets through new variants.

Moreover, Maruti is in a fix, neither is it being able to offer new variants like the other players nor is it being able to retain the market share in the basic version category, where, the Maruti 800, once the king, is fast losing market share. The present fiscal also has started on an ominous note for Maruti, the sales have dipped in April as well as May. This may just be the beginning of further bad news for Maruti.

Ipca Laboratories
The annual results of Ipca Laboratories for the year ended March 2000 are not as encouraging as those of the previous year's. During the year 1999-2000, the total income rose by 8.2 per cent to Rs 372.34 crore whereas in the previous year, it grew by 15 per cent. Operating profit increased by 5.7 per cent from Rs 47.58 crore to Rs 50.33 crore. Operating profit margins have been at the same levels. During 1998-99, the OPM was 13.83 per cent which declined marginally to 13.51 per cent in the current year. The net profit also improved by 5.7 per cent to Rs 26.12 crore.

The company is emerging as one of the leading pharmaceutical companies by consistently performing well for the last few years. During the last five years, the company's turnover has increased by CAGR of 13.6 per cent and net profits have risen by CAGR of 7 per cent. A majority of the company's turnover comes through export sales which account for 51 per cent of total turnover.

The company manufactures both formulations and bulk drugs. Formulations contribute 90 per cent to the domestic turnover while the balance comes from bulk drugs. However, its exports comprise mainly of bulk drugs. The company is now shifting its strategy to increase the share of formulation in the total turnover as the bulk drug industry is facing severe competition since the last couple of years. Sale of formulations accounts for 68 per cent of the total turnover, up from 65 per cent in the previous year.

Hepatitis - B vaccine
The recent drive towards Hepatitis-B vaccination aided by the Union and state governments is likely to come as a boon for vaccine manufacturers. Also, the government is likely to include this vaccine in the list of compulsory immunisation.

In 1997, the share of Hepatitis-B vaccine was only 14.4 per cent of the total vaccines which is now likely to exceed to 35 to 38 per cent. The Hepatitis-B vaccines have registered fastest growth in the last five years and grew by a compounded annual growth rate of 114 per cent. In 1995, the demand of these vaccines was only one million doses which increased manifold to 45 million doses in 2000. Some analysts estimate this market to increase to 75 million doses.

In India, most vaccines for Hepatitis-B are based on the DNA recombinant technique which is banned in some of the advanced countries. The other medicines for Hepatitis-B are based on plasma-derived vaccines.

Plasma-derived vaccines are much cheaper than the DNA recombinant vaccines and are also approved by the World Health Organisation (WHO).

The market for these vaccines is rapidly expanding. The current market value is likely to exceed Rs 150-200 crore. There are five major manufacturers who market these drugs from imported material. This rapid growth may improve the bottomline of these industry majors. SmithKline Beecham is the largest player in this industry which once commanded more than 70 per cent of the market share. However, it has now lost substantially as the price of their brand "Engerix - B" is comparatively higher than its rivals. The other players in this market are Shanta Biotech, Wockhardt and Cadila. Most of the players sell DNA-recombinant vaccines. In contrast, Alkem industry is marketing plasma derived Heppacin-B vaccines.

KSESH (with contributions from Sachchidanand Shukla and Dhruv Rathi)