The result is: a 78 per cent drop in earnings to Rs 28.5 crore (Rs 129 crore) on a turnover of Rs 898 crore (Rs 997 crore). The topline shrank by 10 per cent, but saved somewhat because of growth in motorcycle and ungeared scooter segments that notched up a 89 per cent and 19 per cent growth respectively. The geared scooter segment continued its downward trend with a 37 per cent dip in sales quarter-on-quarter basis.

Operating profit and cash profits have dipped by 61 per cent and 54 per cent respectively during the quarter. Bajaj Auto bought back shares worth Rs 730 crore, affecting its bottomline. The VRS scheme claimed a further Rs 26.5 crore to shred the bottomline. Return on net worth and that on capital employed ratios has declined over the years. This means the company has been destroying shareholder value. While the ROCE has shrunk to 13 per cent in 2000 from 42 per cent in 1996, RONW has halved to 17 per cent from 34 per cent during the same period. Profit margins have followed the same course. Moreover, Bajaj Auto has been sitting over on a warchest of over Rs 1000 crore as reserves making it seem more of an investment company. The share of investments in total assets was around 35 per cent in 2000. Not surprisingly, the scrip trades at a P/E of 4.8 as compared to Hero Honda's 19.5.

Television 18
Television 18 (TV 18) has, once again, failed to enthuse investors by posting disappointing results for the quarter ended December, 2000. The operating revenue of the company jumped 92 per cent to Rs 9 crore (4.65 crore). However, the operating income failed to keep pace with the revenue and is up only 35 per cent to Rs 2.8 crore from Rs 2 crore. The results for the year ended September, 2000 were also not as per expectations. The net profit excluding extra-ordinary item stood at Rs 3.5 crore, down 13 per cent from Rs 4 crore in the previous year. TV 18 earns its revenue by providing news content to CNBC India as well as entertainment content to other channels like Star Plus, Zee TV etc. It provides 9 hours of original programming to CNBC India on weekdays that goes up to 11 hours if repeat telecasts are included.

The operating margin of TV 18 has fallen down drastically from 44 per cent to 31 per cent. The billing to CNBC India is done at cost plus 33 per cent. However, the current quarter's margin of 31 per cent signifies that the company's margins in the entertainment content business have been squeezed as compared to those in the corresponding quarter.In spite of this fall in the operating margin, the net profit has gone up by 80 per cent to Rs 2.4 crore from Rs 1.35 crore due to huge other income. Interest cost has fallen down by 12 per cent to Rs 51 lakh, while the proceeds of the IPO generated an interest income of Rs 61 lakh (net of tax). However, dilution of equity 37 per cent during the IPO has resulted in the EPS growing up by only 31 per cent to Rs 2.21.The stock market has also taken note of this weak performance and hammered the company's stock to Rs 194, which is close to its 52-week low of Rs 187 touched on Tuesday.

While the company has an assured business of providing news content to CNBC, future growth in terms of revenue would come only by focussing on other business areas.At the same time, control over costs is another important area which should be looked into.

Sachchidanand Shukla and Prashant Kothari