For the year ended March 2000, the topline grew by 24 per cent to Rs 678.56 crore. The corresponding increase in excise duty by the same percentage shows that a higher turnover was achieved through higher volumes. The company has to produce and sell more vehicles to justify the near doubling of capacity expansion undertaken three years ago. The present capacity for automobiles remains unutilised to the extent of around 50 per cent. Though the consumption of raw materials was higher by 36 per cent to Rs 400 crore, operating profits were saved from falling by a drastic change in inventory levels which actually increased by Rs 1 crore as compared to a decrease of around Rs 17 crore in the year 1998-99. That might have happened due to a change in the method of valuing inventory according to AS-2 wherein apportioned fixed costs are also taken into account. Whatever may be the reason, this meant that the increase in total expenditure was restricted to 23 per cent, resulting in a one percentage point improvement inmargins to 3.42 per cent. Operational profits rose by 74 per cent to Rs 23 crore.

Interest and depreciation figures remained almost stagnant. The bottomline stood in the red again with losses of Rs 15 crore, which was almost half of the previous year's losses. However, the help of other income in doing so must also be taken into account, which was 30 per cent more at Rs 15.40 crore.

Many people mistake this company as being part of the Bajaj group, but this is not so. However, the Bajaj family originally promoted it. Once a settlement is reached between the two families, the Firodias, the company's present management, will have to give up using of the Bajaj prefix.

Presently, the Bajaj family, along with Bajaj Auto, has around 26 per cent stake in Bajaj Tempo. Since its inception as a three wheeler player, it has diversified into four wheelers as well. In a further diversification move, it has recently introduced 35 hp agricultural tractors.

The stock price is surprisingly very high at Rs 250, considering the company's fundamentals. The book value is nearly Rs 109. Perhaps, the interest in the stock has been maintained due to rumours that the Bajaj family will opt for the open market route to hike their stake in the company. As far as common investors are concerned, they can utilise the opportunity to make an exit at the current price of Rs 250. Technically, the support level for the stock is Rs 230 and resistance at Rs 300.

Glaxo
Will this pharmaceutical giant make a come back on the growth chart? In the first two quarters ended on March 2000 and June 2000, the company staged a smart recovery in both sales and operating profit margins. The second quarter brought better hopes since sales grew by 28 per cent and operating profit margins improved by 36 per cent during this period.

The company is a market leader in the anti-ulcerant and vitamins segment which lacked demand until the end of the first quarter. The company also maintained its leading position in the anti-infectives segment, demand for which was flat until recently.

However, the company benefitted from the recent revision of bulk drug prices of Betamethasome which is one of Glaxo's major drugs. Betamethasone is under DPCO control and its price was revised upward by 16 per cent. The impact of this upward revision was visible in the results of the second quarter of the current fiscal.

The second major contributing factor for growth was the company's revamping of its marketing systems. The company divided its field force of 1,350 sales representatives into seven groups which were further supported by 400 medical representatives for different therepeutic segments.

The company has maintained its leading position for more than three decades now. Eleven of its brands are listed in the ORG list of top 100 brands. These contribute Rs 395 crore or roughly half of the topline. Therefore, the main strength of the company lies in these brands.

The company has many generic compounds in each therapeutic segment and each generic compound has many brands. Post-revamping, marketing costs will escalate but the market share in each class can see a rapid increase which will further help them in brand building.

Out of the 11 brands listed in top 100 ORG list, three brands have registered a decline in sales. The introduction of new drugs will compensate the decline in topline drugs.

The company has launched only a few new brands in the previous year as compared to Cipla which introduced 82 brands. It could garner only Rs 62 lakh from these brands while Cipla amassed Rs 18 crore from its new brands. Therefore, the company has to expand its product profile and introduce new drugs to compete with other industry giants which are creating a dent in its market share.

KSESH (with contributions from Manish Joshi and Dhruv Rathi)