While the implementation of the Sengupta Committee report will have a favourable impact on the petroleum sector as a whole, BPCL and IBP will be the major beneficiaries. The committee has asked BPCL to pick up stake in IBP and Cochin Refinery. This will not only give it extra refining capacity but also a readymade marketing network. Further, the company also has the option to pick up the Government's stake in MRL at a later date. BPCL will also benefit indirectly, though to a smaller extent by the recommendation that Oil India pick up 10 per cent stake in Numaligarh Refinery. This will assure oil supply to the refinery in which BPCL has a 32 per cent stake. As other refineries in the area have raw material problems, the company will benefit to that extent.

HPCL has surprisingly been left out of the whole deal at least for the short term. The reason given is that the company is doing very well on its own. Further, the company already has two refineries one in Mumbai and theother in Vizag, as against only one Mumbai-based refinery owned by BPCL. In spite of this the market shares of the two companies BPCL and HPCL are at 20 per cent each. As for Indian Oil, the company has been asked to pick up stake in BRPL. Though there is very little for IOC to gain from the deal, BRPL will benefit a lot. BRPL will have problems not only to sell its product after Numaligarh Refinery is commissioned, but will also face problem of selling its product. In such a scenario, a deal with IOC makes a lot of sense.

The recommendation also has a lot in store for the only marketing company in the sector--IBP. The company has been in all sorts of trouble. It has been short of cash, with the Government doing little by delaying its rights issue. Further, its joint venture with Caltex was broken this did further harm to its image. However, with BPCL being asked to pick up 33 per cent stake the company is likely to benefit a lot.

Bajaj Auto

The markets seem to have got early wind of Bajaj Auto'sstellar fourth quarter performance. How else can one explain, the stocks northward spiral from the Rs 450 levels in late February, close to its fifty two week high at Rs 650 currently. Importantly, though the two-wheeler major has not disappointed. Bajaj Auto has posted total two- and three-wheeler sales of 14.23 lakh units, which marks a strong 6.7 per cent increase over last year. More importantly, sales of the auto major have surpassed its previous all time record of 14.22 lakh units set way back in 1996-97, which in trying times is good going indeed!

However, the star performer for Bajaj has been its Japanese made motorcycle product range, which has clocked impressive volumes, which stood at an impressive 3.33 lakh units for the period upto February 1999. Important for Bajaj has been the market acceptance of its new offerings like the Caliber - which is a variant for its Japanese motorcycle range and other new products like the Legend and Bravo. In fact, the success of the Caliber is easily reflected inthe fact that Bajaj sold 27,660 units in the motorcycle segment in the month of March 1999, of which the Caliber model accounts for almost 21,800 vehicles.

Additionally, while Bajaj might have been slow to respond to changing market trends in the past, it has now definitely got its act together. The company is now ready to claw back its lost market share with a host of new product launches. In fact the company is slated to invest nearly Rs 850 crore in the next few years for new product launches and capacity expansions. Of this, Rs 350 crore will fund the design and development of new models and Rs 500 crore will be invested in the expansion of its manufacturing plant located at Aurangabad.

Through this investment, Bajaj, hopes to roll out 10 new models in the next three years. More importantly, after having, largely been dubbed a production company, Bajaj is now turning into a marketing company which anticipates the needs of customers and develops products accordingly. The Legend a four-stroke scooter(the first ever in India) will help Bajaj meet the year 2000 emission norms.

The company's strategy now seems intent on having a product, to suit every need--the Classic SL, Chetak and Super will cover the range in scooters. While in motorcycles, Bajaj will be represented in almost every segment starting from the low end M-80 to the stylish and high powered segment with the 110cc Mercury and the upmarket 175cc Eliminator. Also with the third plant planned at Chakan near Pune, Bajaj's total production of two- and three-wheelers, could well touch the prestigious 2 million vehicle mark. A corollary of which would be the enormous pricing cushion that the company would enjoy, due to the truly world scale of operations and the resultant lower costs.

Chambal Fertilisers & Chemicals

Chambal Fertilisers & Chemicals' software division, India Software Group may be miniscule in size. All that the division, which came into being about a year ago, can boast of is a 12,000 square foot software developmentcentre at Chennai and an order book of about Rs 2.5 crore. However, given the craze for software stocks, it is unlikely that the company's decision to acquire a US-based software unit will go unnoticed by the markets. So far, of course, the "software effect" has not begun acting on the company's stock and it has been hovering at around Rs 11-12 per share.

Even without the software division, the stock appears to be attractive at the current market price. Despite the fact that for the nine-month period ending December 1998, the company's sales were 12.5 per cent lower at Rs 710 crore, net profit rose by 24.5 per cent to Rs 13.8 crore. The improvement in the company's profitability is, therefore, clearly evident. For the year ending March 1999, expectations are that though sales would fall by about 10 per cent, net profit would rise by more than 15 per cent. The company paid out a dividend of Rs 1.25 per share last year and considering the expected rise in profits it is unlikely to cut dividends. At a price ofRs 11, the dividend yield works out to be 11.36 per cent, tax-free.

(With contributions from Shishir Asthana, Percy Dubash and Sarad Saraf)