Gaining ground

New private banks have been aggressive in expanding market share

An analysis of Indian banks during the last five years shows that new private banks have gained the most market share, while the share of foreign banks has shrunk. (Adjustments have been made for the impact of the ICICI-ICICI Bank merger , stripping out the extra deposits and advances that entered the banking system as a result of the merger).

On advances, the share of new private banks has increased from 3.4 per cent to 6.5 per cent during 1998 to 2003, while that of foreign banks has fallen from 9 per cent to 7.5 per cent.

Old private banks have seen their share fall from 7.4 per cent in 1998 to 7.1 per cent in 2003. The State Bank group too has seen its share of advances fall from 30 per cent in 1998 to 27.2 per cent in 2003, while nationalised banks increased their share from 50 per cent to 51.7 per cent.

Clearly, private and nationalised banks have gained market share at the expense of foreign banks. The same trend has occurred in deposits as well.

The share of foreign banks in deposits has fallen from 6.6 per cent to 5.3 per cent, while that of new private banks has gone up from 3.4 per cent to 5.6 per cent.

Further, new private banks' share of advances has gone up more than their share in deposits. Although the State Bank group's share in advances has come down, its share in deposits has gone up from 26.9 per cent in 1998 to 29.8 per cent in 2003.

Also, while nationalised banks' share in advances has gone up, their share of deposits has fallen from 55.6 per cent to 52.4 per cent. Old private banks have seen their share of deposits fall from 7.4 per cent to 6.9 per cent.

GlaxoSmithKline Pharma

GlaxoSmithKline Pharmaceuticals has reported a 60 per cent jump in net profit after tax ( before exceptional items) to Rs 56.08 crore for the quarter ended March 2004. Net sales during the quarter have shown a growth of 17.5 per cent to Rs 332.31 crore.

The company's strategy of focusing on its 30 priority products has started paying dividends, in the form of optimising marketing costs, greater customer focus and improved efficiencies in the supply chain.

The pharmaceutical division has witnessed an upsurge in its performance during the quarter "" segment revenues have jumped 21.5 per cent to Rs 292.07 crore. Key brands/product categories of GSK's pharmaceutical division that did well in March quarter '04 include Augmentin (an antibiotic) and its vaccine business.

The company has sought to aggressively expand market share in the booming vaccines business, by recently widening its range from one to eight. In addition, sales of its medications for dermatological and thyroid segment have also witnessed an improvement in the March quarter.

As a result, profitability of the pharmaceutical segment rose 70 per cent to Rs 80.09 crore in the March quarter and operating profit margins rose 781 basis points to 27.42 per cent.

Meanwhile, revenues from other businesses of GSK, which include veterinary formulations, diagnostics, feed supplements and laboratory equipment, increased marginally to Rs 47.78 crore. Analysts, however, point out that the growth in other businesses is minimal as competition has grown """" segment profits of the division declined 4.5 per cent to Rs 6.56 crore.

The company plans to launch at least three new products each year, either from its parent's portfolio or from co-marketing/in-licensing arrangements, and that should help grow the top line significantly. Also, profits from the sale of the company's property at Worli, which was sold in April for Rs 107.6 crore, will accrue in the current fiscal and should help the company improve its liquidity.

With contributions from Amriteshwar Mathur