|
|
|
|
|
            
|
CORPORATE RESULTS Stretching The Rupee With sales disappointing, corporates had to bring out the scalpel to boost profits and keep shareholders happy.
But fortune didn't smile equally on all. While the biggies of the it world-Infosys, Satyam Computers, and Wipro-managed to rake in significantly more revenues and earnings, the smaller bunch-like Polaris and BFL Mphasis-took a hit. For instance, Polaris' topline rose 40 per cent to Rs 71 crore, but the bottomline grew by less than a quarter. In contrast, Infosys bettered revenue expectations with a 70 per cent growth, but couldn't deliver any surprises in earnings, which grew by 50 per cent. What do these contrasting figures mean? Explains Sanjeev Goswami, Senior Analyst, SSKI: ''No doubt bigger companies are facing pricing pressure too, but the good part seems to be that more clients are preferring bigger suppliers.'' The fast moving consumer goods (FMCG) sector's cup of woes continued to brim over. Giants Hindustan Lever and Marico watched helplessly as their toplines refused to budge. While the Unilever subsidiary's sales grew by a minuscule 1.8 per cent, Marico managed just 1.3 per cent. Although HLL cranked up profits by 63 per cent over the same quarter last year, there's been a decline in its sales of food products, which account for a fifth of its turnover. Things should brighten up for the sector if the monsoon proves adequate and properly distributed. Says Rajesh Kothari, Senior Analyst (FMCG), Khandwala Securities: ''Though there's been no major departure from the recent trend, some categories such as soaps and tea have shown encouraging signs.'' In the auto sector, Hero Honda turned in a strong performance. Revenue grew 31 per cent and earnings by as much. Pharma companies brought good tidings, mainly because of the growth in domestic sales. Ranbaxy managed a 25 per cent growth in earnings on a lower revenue growth, but Cipla upped sales 23 per cent, but could boost profits only by 14 per cent. If the slowdown worsens, corporates may have to push their scalpel closer to the bone. -Vinod Mahanta TECHNOLOGY With an eye on markets abroad, CAD/CAM design centres are mushrooming. Apparently, there's room enough for all. The next time you hitch a ride in the new three-seat variant of Smart car, don't forget to lift the hood to get a closer look at its cylinder head. A significant part of its designing was done-no, not in Germany-but a modest 14-seat computer aided design/manufacturing (CAD/CAM) centre in Delhi. Surprised? Well, expect more of it, because there's a virtual explosion in the number of such design centres in India. An array of corporates, big and small, is making a beeline to tap into the $6-billion (Rs 28,200 crore) global cad/cam design market.
Pankaj Munjal of the Hero group set up a new company-Hero Global Design-in October last year, and has coughed up Rs 18 crore for a 42-seat centre located in Ghaziabad. LML opened one of its own, called N-Ablers Infotech (India), for its software application and e-design businesses. Its Rs 15-crore outfit in Delhi has 13 design stations. Sunjay J. Kapur, a 29-year-old scion of the Sona Steering group, has formed his own company, Three S Solutions, which, at an investment of Rs 2.25 crore, is already working its 14-seat facility in two shifts. Similarly, Hi-Tech Gears has pumped Rs 4 crore into Hi-Tech eSoft, which is a 30-seat engineering-cum-design centre. Almost all of them are looking to rope in customers from abroad. Here's why: not only are opportunities bigger, but also the time difference between markets make for a seamless design cycle. For instance, when designers in America sign off, their Indian counterparts take over. The next morning when the American designers return to work, most of the algorithmic, but low-end, work (like converting 2D designs to 3D or reverse engineering) is already done. ''This considerably reduces the product development cycle for these foreign companies,'' says Bhupesh Lall, Director (Marketing), Parametric Technology (India). According to Munjal, who has racked up Rs 13 crore in billings in just the first nine months, profit margins are as high as 70 per cent. And Sunjay Kapur-who made Rs 6.75 crore in the first year from clients such as Daimler Chrysler, Krupp Presta, and Valeo-says his profit margins vary from 30 to 300 per cent. Unlike other engineering services firms, who are restricting themselves to low-end work, Munjal is looking at designing products for Indian firms. So is Rico Auto, whose 40-seat engineering department has done work for General Motors, Cummins, and NEC of Japan. As long as the cash register keeps ringing, it shouldn't matter who the customer is. -Swati Prasad EXPORTS The government's rosy export projections are going to go awry, given that buyers abroad are cutting back on purchases.
Sanjay K. Kothari is normally a brave man. But these days, the chairman of Gems and Jewellery Export Councils (GJEC) is a bundle of nerves. Exports of precious stones, on which his and the livelihood of an estimated 2.5 million workers depends, have crashed by 15 per cent in the first quarter of this fiscal. A slowdown in the key markets of North America and Europe has led to people saving up instead of splurging on diamonds. ''We are keeping our fingers crossed for Christmas sales,'' says a worried Sanjay Kothari. If it's any consolation to Kothari, he isn't the only exporter suffering. Across India's basket of trade items, orders are being cancelled or scaled down. Which means that the government's ambitious $49.7 billion (Rs 23,35,90 crore) export projection for 2001-02 will fall to about $47.6 billion (Rs 21,37,20.20 crore) or so.
The reasoning is simple. Last fiscal (2000-01), when India achieved an export growth rate of 20 per cent in dollar terms-$44.10 billion (Rs 20,16,74 crore)-the world economy was growing at a healthy 4 per cent and international trade by 12 per cent. Today, the situation has changed dramatically. The slowdown is in full bloom, world economy is barely crawling at 2.5 per cent and international trade has contracted to 5.5 per cent from the 12 per cent growth last year. ''It would be extremely difficult for Indian exports to touch the double-digit mark,'' argues well-known trade analyst, Bibek Debroy. What is worse is that India's big export destinations-the US, the European Union or even Japan-have been slammed the hardest by the slowdown. Moreover, this year India does not even have the advantage of currency devaluation since other countries too-such as Germany and Thailand-have devalued their currencies. It is just four items-gems and jewellery (export share: 17 per cent), chemicals and related products (14 per cent), engineering products (13 per cent) and textiles (24 per cent)-make up more than two-thirds of the export income. The rest are just too insignificant to impact trade revenue. Last year's robust export rise was largely fuelled by an 18 per cent growth in textiles, 26 per cent growth in basic chemicals and pharmaceuticals and a 30 per cent rise in engineering exports. But this year, engineering goods would be lucky to score a 5 per cent growth, and that's about as much gems and jewellery exporters think they will achieve. The downturn has all exporters worried. Says a member of the Engineering Export Promotion Council: ''Because of the downturn and the anti-dumping measures taken by the US, steel from Korea, Thailand and other countries will now compete with Indian steel. That's going to put enormous pressure on the price and may even trigger distress selling.'' Textiles and the garment exporters are worse off. In the first month itself of this fiscal, their exports fell by almost 15 per cent. Unless there is an upturn in the US and EU economy, garment exports may not meet the $13.7 billion (Rs 64,390 crore) target. The only traders sitting pretty are those of chemicals and pharmaceuticals. ''We have already achieved a 21 per cent growth in the first quarter,'' says a smug Kishore Chokhani, Chairman of Chemexil, an apex trade body. But for the others, the government's export target may remain just that-a target. - Ashish Gupta
|
|
Issue Contents Write to us Subscription Syndication INDIA TODAY | INDIA TODAY PLUS | COMPUTERS TODAY |
TEENS TODAY
© Living Media India Ltd |
 |
 |
As India inc.
starts putting its report card together for the first quarter, one fact
has become clear: that consumption slowdown is very real. But guess what?
Profits are still growing. A BT analysis of 100 first quarter results
shows that toplines grew by 7 per cent, just about enough to beat
inflation. But net profits grew by a sharp 22 per cent, thanks to cost
cutting and better efficiencies.
