The turnover has increased by 8 per cent to Rs 456 crore, mainly on the back of volume growth. Soda ash and urea the two main products, influence the performance. Price realisations depend on the retention price fixed by the Government. The government slashed the retention price for urea by Rs 463 with effect from 1st April 2000, based on its own interim reassessment of capacity. Lower urea price has had an adverse fallout on both topline and bottomline to the extent of Rs 14 crore. This has happened at a time when the input costs of urea have been on the rise.

Raw material consumption has gone up by 45 per cent to Rs 84 crore. A firm-up in crude oil prices pushing up naphtha has resulted in a 51 per cent increase in power and fuel cost to Rs 99 crore. As a result, operational profit has slipped to Rs 114 crore (Rs 141 crore). Operating profit margin (OPM) has gone down to 25 per cent.

Tata Chemicals has proposed a merger of wholly owned investment subsidiary, Sabras, a cash-rich company with itself. Another positive move of the company is to make an exit from the detergent business, which has been highly competitive and a non-core activity. A significantly lower tax provision of Rs 7 crore (Rs 17 crore) has halted net profit from going down.Higher investment and other income have taken care of VRS expenses, an extraordinary item. PAT, after extraordinary items, has declined by 15.2 per cent to Rs 47 crore.

There is little for the company to look forward to in the rest of the year. Urea sales are determined under the Essential Commodities Act. That may restrict the growth of sales income as urea is the main product of the company. The company's sales in the first half of the current fiscal have already exceeded the 50 per cent of annual allocation. So, the turnover will be lower in the second half. This may be the reason why the Tata Chemicals stock has few takers. The share price is near its 52 week low of Rs 32.

Global Trust Bank
Global Trust scrip has witnessed some firm-up in its price, fired mostly by the rumour about a foreign bank taking a stake in the company than justified by its the quarterly performance.

Global Trust Bank (GTB) increased its total income by 20 per cent to Rs 228 crore (Rs 190 crore) during the quarter ended September, 2000. The growth rate is much lower than the 27 per cent achieved in the previous quarter and 68 per cent and 42 per cent in the previous quarters ended March and June, 2000 respectively.

Apparently, GTB is feeling the pressure of competition. Although deposits have increased by 45 per cent from Rs 4,600 crore to Rs 6,641 crore the spread has fallen sharply owing to a poor offtake of funds from the industry. Analysts feel the ongoing slowdown in the Indian economy may have a negative fallout on the banking sector. GTB may have to reckon this reality This in turn may further affect the bank's topline.

Operating profit of GTB has taken a severe beating and is down 23 per cent to Rs 41 crore from Rs 53 crore in Q2 even as operating expenditure is up 37 per cent to Rs 187 crore. High operating expenses owe to a large proportion of fixed deposits in the total deposits that increase the cost of funds. However, the same trend is not likely to continue since the bank has already slashed a substantial portion of high cost fixed deposits.

Net profit has risen by 29 per cent thanks to lower tax and other provisions including that for non-performing assets. However, net profit growth rates in the previous two quarters ended March and June 2000 were 76 per cent and 88 per cent respectively, exceeding the current quarter's growth rate by a wide margin.

GTB's performance may improve if it enters related areas such as insurance, asset management by teaming up with a foreign partner with experience in these areas. At the same time it should not lose sight of its core competence ie banking that needs beefing up by way of innovative products to ward off competitive pressure and spruce up its performance.

Manish Joshi and Prashant Kothari