Silverline Industries' financial results for the year ending March are in line with the projections made by the company in January. Operating revenues have risen by 32.85 per cent to Rs 110.15 crore. However, the 12.41 per cent increase in expenditure to Rs 60.94 crore has been less than proportionate. As a result, operating profit has grown by 71.46 per cent to Rs 49.21 crore. Operating margins have improved from 34.62 per cent to 44.68 per cent and this can be attributed to greater focus on higher value-added services. The company has also been concentrating on building alliances with large players in order to generate assured long-term cash flows. Its strategic alliance with Platinum Technology holds a business potential of at least Rs 35 crore for the calender year 1999.

Besides, the company is also in the process of putting up new development centres in Chennai (1,50,000 square feet) and Mumbai (1,10,000 square feet). These will ultimately serve as offshore developmentcentres for overseas assignments. With proper communication infrastructure, including a 512 kbps link from Mumbai to Piscataway (the US) and a 128 kbps link between Chennai and Mumbai in place, these centres could turn out to be major drivers of growth. As the company has developed good business relations with its international clients which include the likes of Bell Atlantic, First Data Corporation, JP Morgan, Philip Morris, NEC Corporation and British Telecom, it would not be difficult for it to bag high margin overseas projects.

Having paid off all its long-term debt, Silverline Industries will cut down its interest expenses to a bare minimum. Interest and financial charges have already fallen by 14 per cent to Rs 3.61 crore. Cash profit has risen 65.46 per cent to Rs 50.45 crore and cash margins have improved from 34.29 per cent to 43.87 per cent. Though there has been a 13.88 per cent rise in depreciation to Rs 7.22 crore, the company's post-tax profit has witnessed a 79 per cent growth to Rs 43.23crore. However, it is unlikely that such a growth rate would be maintained in the current year. Even the company has projected a net profit figure in the range of Rs 50-55 crore, translating into a growth rate of less than 30 per cent.

Satyam Computer Services

Satyam Computer's performance in the year ended March 1999 has been impressive to say the least. Revenues from operations have grown by 111.85 per cent to Rs 378.13 crore. As usual, exchange rate fluctuations have helped bolster the company's income by Rs 24.27 crore. Operating profit, however, has risen 118.79 per cent to Rs 146.37 crore as the rise in expenditure has not risen proportionately. Hence, operating margins have improved from 37.48 per cent to 38.71 per cent. Other income accounted for a mere Rs 32 lakh as compared with Rs 11.64 crore during the previous year. This is, of course, easily explained as the previous year's figure includes an extraordinary income of about Rs 12 crore arising from the divestment of the company's stakein Dun & Bradstreet Satyam Software.

Despite the lower other income, gross profit has risen by 86.77 per cent to Rs 146.69 crore. Gross margins have, however, declined from 41.31 per cent to 38.76 per cent. Interest and financial charges for the year were 120.62 per cent higher at Rs 26.43 crore while cash profit has grown 80.68 per cent to Rs 120.26 crore. Cash margins have declined from 35.01 per cent to 31.78 per cent. Provision for depreciation is 87.64 per cent higher at Rs 42.95 crore following the adoption of the accelerated depreciation policy last year. Pre-tax profit has, nevertheless, risen 77.03 per cent to Rs Rs 77.31 crore. Despite a marginally lower provision for tax, post tax profit has risen 86.36 per cent to Rs 72.81 crore.

The Satyam Computer stock, which was buoyant on expectations of a 1:1 bonus and an impressive financial performance closed at Rs 1,337 as against a previous close of Rs 1,375 after touching a high of Rs 1,460.

Vikas WSP

The Vikas WSP scrip has been one ofthe star performers in the recent bull run. The scrip has moved from the Rs 133 levels to Rs 449 within a span of three months. In spite of the market slide, it has more or less held its ground and is currently traded at Rs 408.75.

The company's results have lived up to the market expectations. Vikas WSP has shown a 45 per cent jump in its bottom line from Rs 28.28 crore in 1997-98 to Rs 40.94 crore in 1998-99. Turnover of the company increased by 41.43 per cent from Rs 112.08 crore to Rs 158.52 crore. Operating margins have remained stagnant at 35.8 per cent. As the company's turnover is from exports, considering the fact that the rupee has depreciated, margins have declined. Higher prices for its raw material, a result of crop failure in Pakistan, was one of the reason for the flat margins.

Vikas WSP's product, guar polymer, finds application in food processing industry, which has been one of the few industries that has not been affected by the general slowdown. Though the company currently has nopresence in the domestic market, it is considering venturing into it given the high growth rate enjoyed by the food processing industry as well as the special attention being paid to the sector in the current budget. Vikas WSP intends to touch a turnover of Rs 5 crore in the current fiscal.

An important point that will affect the company's valuation is that it is contemplating to be a debt-free company by the end of the first quarter of the current fiscal. Vikas has already pre-paid a loan amount of Rs 4.67 crore and it intends to further prepay Rs 11.63 crore worth of loan.

Though the company's order book position for the current fiscal is the same as that of the previous year, Vikas WSP could see good growth rate from the domestic market. A debt free balance sheet will also help bottom line growth of the company, currently around 15 per cent of its operating profit is taken away by way of interest.

(With contributions from Sarad Saraf & Shishir Asthana)