Not only the growth has slowed down, the margins too were under pressure. For December 1997, as against a 12.2 per cent growth in sales, profit at the operational level marginally improved from Rs 27.24 crore to Rs 27.94 crore. As a result, margins at the operational level have fallen from 5.83 per cent to 5.32 per cent. Pressure on margins should be blamed on rising overheads.

With fall in other income from Rs 6.44 crore to Rs 4.71 crore, profit at the net level was down by 63 per cent to Rs 6.51 crore.

While inventories have remained stable in line with the sales growth, the average credit period given to the customers have risen from 64 days during 1996 to 75 days during 1997.

Though the profit and loss account paints a grimpicture, the company is highly optimistic and expects an exponential jump in revenues in the next three years. According to reports, while the current year's revenue are expected to be in the region of around Rs 750 crore, it is expected to touch the magic figure of Rs 4,000 crore by year 2002. For this, the company will have to achieve an annual growth rate of more than 40 per cent. Though appears unachievable, even if it manages to reach somewhere near these figures it will be at the cost of lower margins which are already under pressure on account of mounting competition. The recent jump in import duty and the falling value of rupee will continue to play its role. The company imports around 55 per cent of its raw material requirements. During 1997, imports stood at Rs 53 crore.

From stock market point of view, although the stock has been on a long downward spiral since August 1994 there is a silver lining to it.

Incidently, at the current level of Rs 58, the stock price enjoys a 9-year support. If onewere to believe in technical analysis, there are greater chances of a trend-reversal. Perhaps, the market might believe in the company's optimism.

Britannia: Healthy trend

Britannia's performance during 1997-98 was impressive to say the least. Indications of an improved performance were already evident in the first half's results.

For March 1998, when sales grew by 12.7 per cent, profit at the net level was up by 62 per cent. All the credit goes to improved cost measures as a result of restructuring programme. A focus on its core business -- food and beverage seems to be paying off. With the support of Danone, France which holds 22 per cent stake, the company has launched Cheese and Dairy Whitener last year. Besides, the launch of Tiger Biscuits have also yielded good results. The introduction of new packaging for most of its products apart from adoption of a new slogan `Eat healthy, think better', are also making its impact.

Operating profit was up 56 per cent. In turn, operating profitmargins have improved from 4.06 per cent to 5.63 per cent. Reduced borrowings have also helped to curtail its interest burden by 10.12 per cent.

In fact, performance was better in the second half. Operating profit margins in improved from 5.32 per cent in the first half to 5.92 per cent in the second half. Sales during the second half was up 9.65 per cent compared to first half's sale of Rs 443.35 crore.

For the future growth, the company is entering areas like snacks and other segment of mass consumption like flavoured yogurt, mineral water and new varieties of biscuits, cakes and breads. Strong product portfolio will continue to ensure a decent sales growth at Britannia. With the restructuring, the margins are also expected to remain stable in the current year.

As for stock market, the results are already discounted as the stock has more than doubled during past 12 months. While the current discounting for the stock is around 37, it is unlikely to fall below 30. Thus, a decline near this level isexpected to attract strong buying support.