The consumer products business of the company registered a healthy growth of 17 per cent to Rs 83 crore. The company has successfully launched various products in the consumer products segment to increase its market share which stands at 8 per cent.

The management has made a policy decision to move out from low margin activities. As a fall out, the commodities trading business which contributed 15 crore to the Q2 topline has been considerably reduced.The operating profit margin has gone up from 13 per cent to 15 per cent due to the restructuring carried on by the company. The operating profit stood at Rs 30 crore up from Rs 24.5 crore in Q2.

The interest cost of the company has fallen down significantly by 28 per cent to Rs 10 crore. The company has retired a part of its debt with the proceeds of the divestment in Godrej Sara Lee Ltd which fetched it around Rs 100 crore.

With depreciation remaining stable at Rs 5.5 crore and provision for tax growing by a meagre 18 per cent to Rs 80 lakhs, the net profit jumped by a phenomenal 176 per cent to Rs 14.4 crore from Rs 5.2 crore in Q2. The board of directors of Godrej Soaps has decided to demerge the consumer products business to a new company This restructuring would create a FMCG focussed company and has the potential to increase shareholder value since the consumer products division is growing at an average of 25 per cent and would invite a lot of attraction from big investors.

Bajaj Auto That the company has reported a far from flattering growth has surprised no one. All along, it was evident that the company has been struggling to cope with the slowdown in volumes in various segments. Also, the company has been hit hard by the decisive shift in consumer preference against scooters. The company's dilemma is accentuated by the slip in market share in a falling demand scenario. The company has posted a 15.89 per cent growth in the topline for the quarter ended June in the present fiscal.

Total income from operations in the company has touched Rs 927.52 crore as against Rs 800.30 crore in the corresponding period of the previous year. The company produced 3,27,075 two and three wheelers against the previous corresponding figure of 3,32,974 vehicles.

The growth in volumes in the motorcycle segment has salvaged the situation for the company to the extent where, against the industry growth of 34 per cent the company has reported an 80 per cent increase. However, scooter sales have witnessed a negative growth in tandem with the industry.

Moreover, volumes are hard to come by in the three wheeler segment where the company is the market leader. Net profit for the company has risen moderately from Rs 111.09 crore in the previous corresponding period to Rs 116.32 crore in the present quarter, a rise of 4.70 per cent. Margins are naturally increasingly under pressure. The company has shown a negative 2.6 per cent growth in its operating profits for the quarter. The company attributes this fall to a dip in scooter sales and an increase in sales tax by about 5-7 per cent in the northern parts of the country. However, the company has not been able to curtail expenditure especially in an increasingly competitive market. Total expenditure has increased from Rs 681.90 crore to Rs 828.90 per cent, a 21.55 per cent rise. Interest costs have spurted by about 120 per cent in the quarter, although these are miniscule considering the company's operations.

In the two wheeler segment, product innovation and segmentation are keys to maintaining volumes. The company's competitors have been eating into the Bajaj's market share with competitive pricing and innovative product launches. Bajaj Auto on the other hand, has been lacking the market savvy to counter this. Bajaj Chetak scooters are a good example of the company's lackadaisical attitude.

These scooters, which have a huge demand in the northern states especially Punjab, have not seen any new features nor has there had been a marketing or sales push through advertisements untill recently. However, in the scooterettes segment, the company has a new product - Sunny Spice which is being sold since April this year. The company has also recently launched Saffire, a new scooter and proposes to launch M 80, a 4-stroke variant by September.

In a low demand scenario the company is trying to juggle the product mix in favour of motor-cycles and is also striving hard to re-establish itself with new product launches. However, with the CII survey indicating hard times for the automobile sector in general, the going seems tough for Bajaj Auto in the near future.

KSESH (with contributions from Prashant Kothari and Sachchidanand Shukla)