Cadbury India derives around 65 per cent of its revenue from chocolate confectionery, 12 per cent from sugar confectionery while the balance 24 per cent comes from malted food drinks.

Competition from Nestle has restricted the growth of the company, which is a market leader in the chocolate confectionery market with around 70 per cent share. A new set of competitors is emerging for Cadbury India apart from the local ones. These are the other multinational giants including Mars and Hershey's which are evincing interest in this lucrative Indian market and pose a threat to the company.

The operating profit has moved up significantly despite a modest growth in the revenue. Lower cocoa prices in the second half of the previous year has increased the operating profit by 24 per cent to Rs 107 crore. Cocoa powder/beans account for about 35 per cent of the total material cost. The net profit has shot up by 27 per cent to Rs 52 crore due to higher other income from sale of property as well as lower raw material costs.

What would be interesting to see is whether the company would be able to continue this performance in the future? The price of cocoa which was hovering at around $700-$750 per tonne in the second half of 2000 has shot up to around $1,000. This coupled with competition from other multinational giants could affect the performance of Cadbury India in the coming year.

ICICI
The financial institution's counter has been witnessing hectic activity over the last couple of days. Share price has shown smart appreciation from Rs 94 to Rs 86 with a corresponding surge in volumes. Although there is no overnight change in the financials, probably the market has found some reason to get excited. It could be the ICICI's decision to sell a 15 per cent stake in ICICI Bank to a "strategic partner".

It is more of a forced decision than a voluntary one. The primary reason for the step is the new policy of the Reserve Bank of India (RBI). The policy requires all private sector banks to reduce the promoters' stake to 40 per cent. A rough calculation indicates that ICICI could get a consideration of between Rs 450 crore to Rs 500 crore for its 15 per cent stake in the bank. Gains that will come particularly useful in a year of flat earnings growth. There has been speculation about whether ICICI is looking for a `strategic partner' or a portfolio investor. Although ICICI may give a little more than 15 per cent of its stake in the bank, it will still retain control of the management with a 40 per cent stake. So the new investor is more likely to be a portfolio investor.

ICICI's profit growth has been under severe pressure this year. Net profits for the nine-month period ended December 31, 2000, had actually dipped by nearly 7 per cent to Rs 794.32 crore. Based on this figure, it is quite likely that profits for the full fiscal could dip by 5 per cent to 10 per cent from the previous year's profit of Rs 1,249.90 crore. The scenario could get even worse if there is no sharp rise in provisioning for bad debts, a concern that can't be ruled out when the economy has been doing badly for some time now.

RBI policy may also force some consolidation in the banking industry. Those promoters, who are averse to direct sale of stake, could go for the merger route. IndusInd Bank, for instance, is planning a reverse merger with an NBFC in its group. UTI Bank has solved the problem through a merger with Global Trust Bank and an ADR issue is expected within the next one year.

Budget 2001: A Primer