The company operates in the areas of e-business application services, engineering services and software development. It boasts of clients like HLL, Dabur and ITC. However, its association with such large companies does not seem to have much impact on its performance.

Revenue growth in the past four quarters has been in the range of 20 per cent, far behind that of other companies. Operating margin (excluding interest income) has also been under pressure and stood at 31 per cent, more or less the same as in the corresponding quarter.

However, the revenue is expected to increase in the coming quarters as the company has shifted its focus from hardware to software. The hiving-off of the consumer telecom business rhymes well with this strategy of the company.Expansion into the business of developing and operating call centres has the potential to further increase revenue. However, margins may come under pressure due to the huge initial cost incurred on setting up the requisite infrastructure.

Control over costs is another major issue to be considered by the company. Operating costs have shot up by 31 per cent in the current quarter compared to a 30 per cent growth in revenue. While the staff cost has jumped over four-fold to Rs 21 crore (5 crore), interest cost has become nil (Rs 9 crore) due to the liquidation of debts through the proceeds of sale of its stake in Global E-commerce Services Ltd.

Global Tele-systems' share price is quoting at Rs 762. This is close to its 52-week low of Rs 626. A positive response to its new initiatives would boost investor sentiment, which could trigger an upward movement in the stock.IPCLIPCL has done reasonably during the quarter to December 2000, judged by the high prices of naphtha and the depreciation of rupee. The prices of finished products particularly of polymers have seen a modest rise. The operating profit margin (OPM) has consequently come down from 21.3 per cent to 19.1 per cent.Turnover has jumped by 52 per cent to Rs 1,167.8 crore, thanks largely to higher volumes. Despite higher output and sales in quantity, raw material consumption has increased by a mere 12.7 per cent to Rs 517.6 crore. It is not that the prices of raw material have dipped.How could this happen then? A possible explanation could be the high opening WIP (Work in Progress) at the start of the quarter. It has made the picture look rosier than actually what it is. Operating profit has risen by 36.2 per cent to Rs 222.7 crore.Interest cost witnessed 43.6 per cent increase to Rs 126.2 crore. Depreciation was up by only 14.2 per cent to Rs 103.3 crore as no major capital expenditure has taken place. The bottomline has more than doubled to Rs 23.2 crore (Rs 10.6 crore), aided by higher `other income' of Rs 30.1 crore. However, even with this profit, the net profit margin (NPM) is a measly 2 per cent.The company has been constantly in the news for dithering on its divestment. Recently, it decided to sell the Baroda plant to Indian Oil Corporation (IOC). According to the valuation report of Deloitte, Haskins and Sells, the plant is worth Rs 3,456 crore.If the deal goes through, there are a couple of reasons for the shareholders to cheer up. One, the move may solve the problem of excess manpower. More than half of the total employee strength of 7,000 are from the Baroda unit.Two, the funds generated from sale may be used for declaring special dividend and for enhancing facilities at Gandhar and Nagothane plants. However, this may dismay investors who were looking forward to total privatisation. Although the sale of Baroda plant augurs well, it remains to be seen how IPCL stock will move sans divestment.Prashant Kothari and Manish Joshi