The basic reason for the negative growth in the toplineis that the share of cosmetics (seamless tubes) has grown from 22 per cent in 1996 to above 30 per cent in 1998-99. The demand from the premium segment in cosmetics has, however, declined owing to pile-up of stock of last year's production with manufacturers. The seamless tubes division, which had just managed to reach the break-even point, has been badly hurt as a consequence of that. One major cosmetics company had virtually stopped buying tubes and a multinational with large cosmetics exports to Russia stopped exports since August, and at least in the third quarter, this company did not export at all. The positive factors are that the Silvassa capacity will reach its full capacity utilisation by March 1999, polymer prices will remain low, and the interest burden will be lower. The interest outgo in the third quarter is the lowest for the year, and with repayment of loans worth Rs 34.5 crore and no fresh debt being raised, at least on this front, the company will be very comfortable.

Though 1998-99 willbarely result in double-digit growth in the bottomline, the next year will be better. The Silvassa plant will start contributing to the bottomline, the German joint venture (for 60 million tubes) will go on stream, and by September 1999, the capacity there will be hiked to 140 million tubes. The Nepal subsidiary (97 million units) will also start production, and the volumes of the Chinese subsidiary will pick up (the Chinese unit has posted marginal net profit in the first full year of production). It will result in better web (the main raw material for tubes) exports. Besides, there has been a further softening of polymer prices in January 1999, which is a good sign as far as the final quarter goes.Further, in all probability, the buyback of shares will be completed in 1999-2000. The bottomline is that the Essel Packaging scrip will decline only marginally, and at every dip, there will surely be buying support.Software trends: The news about the two major software stocks Pentafour Software and SatyamComputers reaching their FII investment ceiling was greeted with a lot of selling at the beginning of the day. Even though FII funds themselves were big sellers in the market, the news also was a trigger for speculators to dump the stock. The fact that this particular news acted as a dampener on these two stocks was obvious as the other software stocks did not react negatively at all. Both Satyam Computers and Pentafour Software, however, closed higher than their opening prices.

Stocks such as DSQ Software were heavily traded. In the absence of demand for Pentafour Software and Satyam Computers, speculators turned to other stocks. HCL Infosys was a major gainer, and was traded at the circuit filter. In part, this demand stems from the fabulous growth figures shown by these companies for the third quarter. DSQ for its part has doubled its net profit in the third quarter and has also proposed to become a debt-free company by the next financial year, holding out hopes of increased profitability.