Bajaj Auto
Aided primarily by three new product launches Bajaj Auto has sales rose 11.65 per cent to Rs 1820.94 crore in the first half of 1998-99. Subsequently, the net profit has also risen 10.13 per cent to Rs 266.20 crore during the period. Sales value improved largely due to higher sales of high priced products like motorcycles (up 26.2 per cent) and scooters (up 10.5 per cent). Bajaj launched the Caliber, Legend and Spirit during the year.
Margins have been slightly hit, operating margins have fallen from 17 per cent to 16.75 per cent due to the hike in raw material cost. Due to a 18 per cent rise in depreciation to Rs 80.9 crore and a 9 per cent in other income, the profit before tax has grown only 8.2 per cent. The 10.1 per cent growth in net profit however was largely due to the tax rate declining to 31.3 per cent as compared to 32.5 per cent in the first half of last year.
Bajaj's two wheelers sales volume rose 14 per cent to around six lakh vehicles against 5.27 lakh vehicles last year. However, the company has lost some of its market share in this segment.
Market share fell marginally to 36.5 per cent from 36.7 per cent. Sales of three-wheelers, however, continued to fall by 10 per cent. The second half is also bound to see some market activity from Bajaj. It will launch the upgraded Super, Chetak, Classic-SL and M-80, a new 150 CC scooter a 50 cc moped for the Tamil Nadu market. The company estimates sales of about 675,000 two-wheelers in the second half including its newly launched Caliber, Legend and Spirit. While in the three wheeler segment it expects to sell another 100,000 vehicles, including the new diesel three wheeler.
ACC
In spite of the sluggish condition in the cement industry, ACC has been able post a 32.74 per cent growth in operating profit to Rs 81.80 crore in the second quarter ended September 1998. Though its net sales were stagnant in the second quarter at Rs 575.22 crore, its realisation improved 2.83 per cent to Rs 2,804 per tonne. Its sale in first six months grew by 1.55 per cent to Rs 1191.15 crore.
The major factor which has moved in ACC's favour is firmer cement prices in the east region, where the prices have move by 30 per cent on a year-on-year basis. ACC controls around 19 per cent of the market in this region with a volume sale in the region of 24.7 lakh tonnes. With no capacity expansion in this region in the last two years, prices in the region will continue to remain firm.
Apart from realisations, the company has been able to cut its costs. In the second quarter, total expenditure declined by 3.5 per cent to Rs 522.28 crore. This can be attributed to no rise in input cost, mainly coal and freight rates. Also, to the fact the ACC has now shifted to the more cost effective dry process which now accounts for 94 per cent of its installed capacity. Last year, the company reduced its labour productivity by 12.2 per cent of the total labour force of 1,780 worker.
The combined impact of these factors is reflected on its operating profit margin (OPM). In the second half, OPM improved to 14.22 per cent from 10.68 per cent in the corresponding previous year.
However, ACC's interest and depreciation costs were higher due to the on going modernisation-cum-expansion projects. The net profit grew Rs 12.62 crore compared to Rs 3.73 crore in the corresponding second quarter. The net profit in the first half had declined to Rs 2.48 crore from Rs 2.50 crore in the corresponding previous year. The stock is still trading below the Rs 1,000 mark.
HCL Infosystems
HCL Infosystems has recorded a net profit of Rs 12.5 crore on a turnover of Rs 207 crore in the first quarter ending September 30, compared to a net profit of Rs 2 crore on a turnover of Rs 140 crore during the same period last year. If this is annualised, it will turn into a net profit of about Rs 48 crore which translates to an EPS of Rs 15.48. The stock is currently trading at Rs. 242. It has been rising with very heavy volumes since August when it was trading at Rs 171.
This is an increase in net profit margin to 6 per cent from 1.42 per cent in the same quarter last year. Last year the company had an operating profit margin of about 6 per cent so this is a significant improvement considering that this quarter is also a lean quarter in this business.
This has come about because the company has cut costs and is significantly increasing margins through services. This had begun to show in the annual report as on June 1998 as well. The income from services had increased from Rs 65.03 crore in 1996-97 to Rs 104.53 crore in 1997-98.
HCL has also got into retailing consumer software products either sourced from overseas or developing its own software products. One of the products that the company plans to retail is a speech recognition software from Dragon Systems which is a market leader in this segment.
There are also plans on cards to support smaller Indian companies which want to develop products for the Indian market and market them in a big way. A brokers' software which was developed by a Madras based company is already being marketed by HCL. Immediately on the cards is an accounting package which has been developed in-house. If this effort is successful, it could increase margins significantly.
TVS Electronics
TVS Electronics (TVSE), the computer peripherals manufacturer, has announced that its first half turnover is Rs 53.18 crore as against Rs 51.26 crore last year. The company had expected a slowdown this year and has managed to increase turnover marginally. This is also accompanied with net profits increasing from Rs 0.33 crore for the same period last year to Rs 0.46 crore this year.
In 1997-98, the company reported a turnover of Rs 114 crore and a net profit of Rs 3.02 crore. This translated to an EPS of Rs 1.76 on a relatively large equity of Rs 17 crore. So it has a long way to go if it has to begin servicing this equity capital.
The company almost made losses in 1993 and was unsteady till 1997-98. This was because duty structures for finished electronic equipment kept dropping every budget, making manufacturing of electronic goods with imported components unviable.
The company has now re-structured itself. It is now a market leader in dot matrix printers. In addition to dot matrix printers, it designs and manufactures non-impact printers like inkjet printers. The core parts of these printers will be sourced from the US-based Lexmark Corp. A 600 dpi inkjet printer is expected to be introduced into the Indian market for as low as Rs 8000. It is also reported that Lexmark is the only brand of 1200 dpi inkjet printer available in the market.
TVSE which also offers complete solutions for uninterrupted power supply (UPS) in the domestic market has managed to garner 10 per cent market share in just a year. It also has contracts to export UPSs to the European leader, Invertomatic Victron. The company was to focus on exports to beat the recession in the domestic market. It claims that exports is growing but it does not seem to have made a significant impact yet.
TVSE's product range also consists of keyboards and storage devices. It is making all efforts to indigenise all its components and also is targeting to enter the export market in a big way. This stock is trading in hovering in the range of little over Rs 20 and is current changing hands at Rs 24.
