As a result, the year-on-year revenue growth was barely higher by 6.7 per cent, compared with a 78 per cent year-on-year growth in the second quarter. Partly, the third-quarter performance will be offset by the fact that the previous third-quarter earnings already began to reflect revenue streams from both rigs and the offshore productionplatform. So, to that extent, the revenue base was already higher. However, the loss of revenues cannot be underestimated, and growth prospects from now appear very dim. The only positive development is that the Marine 201 had a higher operating cost. So, the absence of this rig will improve margins. Operating margins did creep up from 46 per cent in the second quarter to 50 per cent in the third quarter. In addition to operating costs, Hitech paid out lease rentals on account of the Marine 201, which will now cease.

On a quarter-to-quarter basis, revenues are down by 11 per cent, while net profit is down marginally. A significant amount of accretion to profits has also come from rupee depreciation. Growth will be difficult to come about in the last quarter. But it will come about in the next financial year through price revisions for its drill rig HitDrill 1, which is due in October 1999. The next price revision is for the production platform, which is due in July 2000.

The stock was up on the day theresults were announced in anticipation of a better performance. As the results had nothing to cheer the market pushed the stock lower by 5 per cent the next day.

Kirloskar Oil Engines

In Kirloskar Oil Engines' case, once again, the markets have been sorely disappointed. Last year was a loss-making one, but the company managed to report a profit thanks to a huge profit of Rs 179 crore on sale of investments. For the nine months ended on December 31, 1998, the company reported a Rs 7.8-crore net profit, but the other income for the period was Rs 10.18 crore. Essentially, what has happened is that profit on sale of assets has been replaced to some extent by other income. But the real culprit behind KOEL's losses has been interest costs. There has been some reduction in interest in the third quarter, but not by much.

The anticipation was that the extra-ordinary cash flow would be used to reduce the huge debt pile-up, servicing which absorbed most of the operating profit. Even in its operations, therehas been little improvement, as margins are still under pressure. Further, like a number of other companies, KOEL will only provide for taxes in the last quarter, which should affect incremental growth in profits.

Political factors discounted

The latest political factors have been discounted. A cross-section of equity traders have said that the political uncertainty has been dealt with in stock prices with the 60-point fall in the Sensex. But the market to a large extent has been buoyed by buying in just a couple of heavyweight stocks. On Monday, it was HLL and ITC which halted the fall in the indices, and on Tuesday, it was HLL once again.

There continues to be some interest in software stocks, even though there has been a reduction in outstanding positions. But most significantly, very strong movement has been seen in multinational pharmaceutical stocks. Four of these pharma multinationals have hit new 52-week highs. These are Parke Davis, Rhone Poulenc, Smithkline Pharma, and Duphar Interfran.Apart from these, other stocks such as Novartis, Glaxo, Burroughs Wellcome, E Merck and Pfizer were major gainers in a falling market. Pfizer, in particular, was a surprise gainer considering that the results were very disappointing. Pfizer lost 10 per cent of its stock value over four days in a row following the announcement of its results, before participating in the rally with the other multinational pharma stocks.