The total order from ONGC was for Rs 140 crore spread over three years (beginning 1997-98), and the expectation is that between January and June 1999, the company would book around Rs 44 crore worth of revenues. Against this, Ingersoll Rand has booked revenue worth Rs 23 crore up to March, 1999, and the balance will be booked in the first quarter of the current financial year, thus keeping up current earnings as well.

Thanks to two developments: one, the presence of additional revenues and, two, due to the fact that its operations have become completelydebt-free, gross margins increased from 10 per cent to 17 per cent in the last quarter. Post tax profit in the last quarter has increased by 82 per cent year-on-year.

Apart from these orders the performance has been marked by the success of both its process re-engineering programme and voluntary retirement scheme (VRS). A major contribution in 1998-99, especially the earlier months, has come from the construction and mining equipment division which supplies products such as drills, soil compactors etc, which are higher margin products. The performance of the other divisions has been constrained by the slowdown. Exports have stabilised at around last year's levels since new markets have been developed in South Africa and Israel, from where it has received repeat orders. These new markets have compensated for the loss of its markets in south-east Asia.

The full year's operating margins have increased from 18 per cent to 25 per cent.

And despite a dip in the full year's revenue from Rs 393 crore to Rs 348crore, profit before tax has increased from Rs 73.48 crore to Rs 79.02 crore. Last year's PBT was dragged down as a result of an extraordinary charge on account of the VRS amounting to Rs 7.5 crore.

Foseco India

The Foseco India stock has begun the post results pattern of behaviour that it exhibited when the third-quarter results were last announced in end-February. The company has reported a minuscule pre-tax profit, which is better than the loss it reported in the corresponding period last year. The minuscule profit has come from the fact that the company has fully provided for the voluntary retirement scheme (VRS) at one of its plants incurred in March 1999. Adjusted for this amount, the company would have reported a decent pre-tax profit figure for the last quarter. The charge on account of the VRS was Rs 2.68 crore.

From the third quarter onwards, the company had begun to make amends and reported a genuine profit before tax. In the earlier periods the company had been reporting profitsthanks to accounting entries. During these periods the company had benefited from a write back of excess depreciation after a change in the accounting method to the written down value (WDV). The market had reacted badly to this development and the stock had lost a lot of value. In fact, almost 80 per cent of the full year's pre-tax profit of Rs 5.32 crore has come from these accounting entries.

However, in the aftermath of the third quarter performance, the stock had returned 50 per cent to investors, as it reported a Rs 3.5-crore profit before tax for the third quarter against a small adjusted loss for the earlier period. Now, in the wake of its fourth quarter performance, the stock has begun a speculative rally once again.

Further, the company has completed the process of allotting 0.9 million shares to the parent company at Rs 220 per share. With the completion of this exercise the stock now has a floor, though any subsequent strength in the stock will only be determined by an increase in demand forfoundries from the automobile industry which, in turn, will determine the demand for foundry chemicals, the product manufactured by Foseco India.