An interesting aspect of the overall results is that they do not show the attributes of other software giants. Especially in these three figures: a topline growth of 48.21 per cent, low staff costs 14 per cent of the topline and the relatively low operating profit margins (OPM) of 21.84 per cent. Even this OPM figure is after a 6 percentage point improvement over the corresponding period.

A division-wise study is even more interesting. A look at Wipro Technologies, the global IT services division, which contributes 90 per cent to the bottomline, reflects the traits of an infotech company. The turnover has grown by 82 per cent, which puts the company in the same league as pure infotech companies. With a high OPM of 31 per cent, the PAT has shot up by 146 per cent. The return on capital employed (ROCE) is way above a three digit percentage figure.

Wipro Technologies has added 15 new clients and upped its billing rates by around 25 per cent for new customers. This has led to improved revenue levels and profitability in the current quarter. On the domestic front, Wipro Infotech's figures include the sales of high of its peripherals division, which is a high volume-low margin business. The division has been a laggard in the company's performance. But with that business being spun off into a separate company during the quarter, the company expects the division's margins to touch double digits. The signs are already visible with margins doubling to a still pitiable level of 4 per cent. This improvement was mainly driven by the services component of Wipro Infotech. The division's personal computer business also throws up opportunities to offer services such as systems integration (SI) and facilities management.

The non-IT segment of consumer care and lighting has been flat in terms of income from operations. The only silverlining is the 1 percentage point improvement in margins. Considering the minor contribution it makes, that has not made a material difference to the PAT. There have been suggestions that Wipro should hive off its non-IT business. The quarterly performance shows that the non-IT business is not holding up the growth either in the topline or bottomline.

There was a minor inflow of interest as against an outgo of Rs 6.40 crore. This was mainly due to its high working capital business going off the balance sheet. The previous year's huge extra ordinary income of Rs 52.30 crore, received from the sale of partial stake in Wipro Net Ltd, has also helped to reduce the debt. The company has launched new solutions for convergent networks called Wipro OSS Smart and Wipro WAP Smart targeted at Internet and telecom service providers. It is also forging ahead in the growing segments of multimedia and graphics.

Glaxo India Ltd
After a lacklustre performance during previous year 1999, the company bounced back on the growth chart.

The Q2 sales for the period ended June 30 2000, registered a 28 percent rise and stood at Rs 286.78 Crore. A less than proportionate increase in the operating expenditure provided better operating profit margin, which increased by 75 percent. The company exercised better control in financial management which saw an increase of interest by only 12.2 percent to Rs 2.57 crore. After providing a higher taxation of Rs 13.93 crore against Rs 8.27 crore in the corresponding period of previous year, the company registered a more than 103 percent rise in net profit. The net profit of the company increased from Rs 14.51 crore to Rs 29.52 crore in the current fiscal. However, it was the Q2 performance which improved the overall performance of the first-half (H1) year's results. Overall half-year's sales increased by only 19 per cent and the net profit by 56 percent.

One of the main reason for rapid growth in the sales and profits were the upward revision of the prices of three major products - betamethasone alcohol, betamethasone valerate and betamethasone phosphate. These anti-inflammatory and anti-allergic drugs are under the Drug Price Control Order (DPCO). Prices of betamethasone alcohol were revised upward by 17.89 percent to Rs 224 per gram. The prices of betamethasone valerate stands revised upwards by 18.4 percent to Rs 212 per gram and betamethasone phospate increased by 11.5 percent to Rs 185 per gram. The DPCO has revised the prices during the first week of February 2000. The prices were revised by DPCO after two years. The company uses these materials extensively in its drug formulations. The major brands which use betamethasone are Betnesol, Betnovate-N, Betnovate-c and Betnelan. These are well known brands and they are among the top 300 brands in the country. The growth of betamethasone is around 20 per cent and demand of this drug is likely to increasefrom 2,790 kg in 1997-98 to 5,000 kg in the current year.

Recently, the government reduced the prices of another major raw material sulphamethaxazole. The international prices of this drug declined by more than 40 per cent to $5 per kg. The DPCO has also reduced the prices from Rs 419 per Kg to Rs 330 per Kg.

However, the company would have to pass on the benefit of declined prices to the consumers. In the beginning of the current fiscal, the company also re-organised its marketing force of more than 1,400 field representatives with a view to focus on the different therapeutic segments. This has helped the company to achieve better sales per representative.

The company's main strength lies in its topline brands. The company has the largest number of brands in the prestigious list of top 300 brands compiled by ORG. Twenty two brands are covered in the list with a total sales of Rs 550 crore which amounts to 58 percent of the total turnover of the company. These brands alone account for 4 per cent of total formulation sales in India.

KSESH (with contributions from Manish Joshi and Dhruv Rathi)