There has been a reduction in operating costs as a result of a process re-engineering exercise. Further, through an increase in orders for higher margin products (margins have increased to 34 per cent from 28 per cent) and a steep fall in interest costs there has been an improvement in the bottomline by 20.5 per cent year-on-year. Interest costs were lower by 76.5 per cent YoY from Rs 0.85 crore to Rs 0.2 crore and the intention is to make the balance sheet completely debt free by March 1999.

However, concerns over topline growth rates persist. And the indications are that last year's cumulative revenues might not be exceeded, despite the expectations of a strong growth in revenues in the last quarter. A major contribution in the nine months of the current year has come from theconstruction and mining equipment division which supplies products such as drills, soil compactors, etc. The performance of the other divisions have been constrained by the slowdown.

The company's performance so far may not be fully comparable to last years performance as those figures were buoyed by the substantial completion of ONGC orders during 1997-98. During the first nine months of 1998-99 no revenues were booked on account of this Rs 140 crore order (the order is to be executed over a three -year period beginning in 1997-98). The absence of those revenues made the first-half performance appear very pedestrian.

However, the first six months of calendar 1999 will see Rs 44 crore of these orders being executed, some of which will reflect in the last quarter of 1998-99.

The stock market has been reacting to these developments. The stock was hammered to a low of Rs 290 by the end of the first quarter has now been on a recovery path for most of the third quarter, having gained by 13 per cent from alow of Rs 408 to Rs 462. The third quarter performance should help sentiment for the stock further especially with the improved outlook for the last quarter.

Despite the loss of some export markets the expectation is that Ingersoll Rand will maintain last years level of Rs 59 crore of physical exports (services and deemed exports last year added another Rs 40 crore and this figure varies annually).

From last year onwards new markets had been developed in South Africa and Israel, from which the company has been receiving repeat orders. The discovery of new markets was necessary in order to compensate for the loss of its usual markets in South East Asia.

Georg Fischer DISA

Though this particular company has a very small presence in India and its outstanding traded stock is minuscule, it attracts considerable attention from market watchers due to its earnings and multinational status. Despite having an outstanding equity capital of just Rs 1.5 crore and despite the very large book value themanagement has resisted pressure to split its stock. As a consequence, illiquidity is a major constraint to investing here as the floating stock is almost negligible.

The company is a leading manufacturer of foundry chemicals and consequently the fall in demand has hit volume growth. The first half has been very poor for GFD and though the company has covered some ground in the third quarter which is traditionally better it has not been enough. Unusually enough (compared to the other corporate results coming in) the third quarter has been better than the first two quarters cumulative performance. Almost half the total revenues for the nine months has come in Q3 and almost the entire profit after tax has come from the same quarter. However, YoY the earnings have taken a hit falling by 20.6 per cent. This is not as bad as the fall for the nine months YoY of 73 per cent, thus indicating the extent of recovery in the third quarter.

The market had anticipated the poor performance from the company frommid-August 1997. At that point the stock was trading at a price of Rs 330. Since then the stock has lost nearly two thirds of its value to the current price of Rs 105, which is a five-and a half year low for GFD.