Did the speculators fuel the bonus rumour on their own or did they do it at the behest of some `insiders'? Well, when the stakes are very high, no possibility can be ruled out in a hurry. Whosoever might have been behind the TCIL scrip's unholy travel to stratosphere and back, there is no gain saying the fact that they did a thorough `professional' job.

The scrip was still available at around Rs 900 a piece even after the audited accounts were signed in February. Its movement to about Rs 1000 by March 21 coincided with the general post-Budget rally. However, the real action began on March 22 andlasted for 32 trading days.

In the first leg, all eulogies were heaped on TCIL as being ripe for yet another bonus issue and that TCIL was considering the same seriously! The hype rocketed the scrip to a high of Rs 1500 on April 5- within just 8 trading days. The next 8 trading days upto April 16 witnessed sidewise movement in the counter at around Rs 1400 per share.

Then came the political instability in mid-April. And that came in handy for the punters to hammer the scrip down in the next 16 trading day's back to Rs 1000 by May 11. With a falling Sensex, no one had the temerity to question the whereabouts of the impending bonus! Thus, in a cycle of just 32 trading days, the TCIL scrip had gained about 50 per cent in value, that is over a whopping Rs 500 on a Rs 10 paid-up share, and also surrendered it in full.

There are many reasons why TCIL's course appeared orchestrated. For one, ever since its first bonus in 1987-88, TCIL had invariably capitalised its reserves at a gap of every 2 or 3 years. Thelast bonus having been announced in March 1997 along with 1996 results, any rumour on an impending bonus now was very likely to be easily swallowed. For another, though TCIL had clubbed its bonus proposals with its regular AGM agenda on at least the two previous occasions, it was too much to expect ordinary investors to be fastidious about this finer point. That the market got neatly hooked on the rumour makes it inescapable that `experts' had been at play!

Does the performance of the company justify the consideration of a bonus offer?

Well, at the time of its last bonus announcement, TCIL had posted a net profit of Rs 13.65 crore on a total income base of Rs 54.18 crore. On its the then equity of Rs 5.25 crore, the EPS was at to Rs 26 and the book value was at Rs 92.08. In 1998, though the total income moved up by 39 per cent to Rs 75.24 crore, the growth in profitability was muted at only 26 per cent to Rs 17.25 crore. On TCIL's current equity of Rs 8.75 crore, the latest EPS and book value workout to Rs 19.71 and Rs 81.05 respectively. Thus, only those who went through the figures on record with a fine tooth comb would have crunched that a bonus in March-April 1999 was clearly premature.

Notwithstanding the ownership tangos in the recent past concerning its parentage overseas, operationally TCIL has a strong Indian presence in the tours and travel business.

TCIL's major business activities include foreign exchange, corporate travel and leisure travel. Foreign exchange is the predominant contributor, around 75 per cent to its total turnover. The company's latest focus though is on the leisure travel segment, here it is a late entrant.

However, in recent times, the company has given an impression of being laid-back. Two years ago, TCIL had to recruit Ashwini Kakkar, managing director and chief executive officer, from outside its rank and file. The arrival of Kakkar marked the old faithful Pradip Madhavji, chairman, being reduced to a mere figurehead of the two decade old company. Kakkar andMadhavji are contrasting personalities like chalk and cheese. While the former subscribed to a more venturesome modern style of management, the latter is always known to play by the book.

Under Kakkar, has TCIL done any better? In 1998, the first full year that Kakkar oversaw, though the turnover edged up by only 32.5 per cent, the "other expenses" increased by 55 per cent. Chiefly, the advertising and business promotional expenses and brokerage/incentives went up by over 76 per cent. Disturbingly, the provision for bad debts and remittances lost in transit too showed a marked increase.

According to the company, the increased advertising and business promotional expenses were on account of its aggressive entry into the leisure travel market. And, brokerage & incentives were directly correlated to increase in the volume of forex business. If indeed so, the implication would be that margins were under pressure.

Another area where TCIL has been sloppy is cash management. TCIL's remittances in transitconstitute the major component of its cash and bank balances and has been consistently on the increase. According to the company, normally the cycle of currency collection and converting them into rupee funds takes around 8 to 10 days.

Even now, the company reportedly acquires foreign exchange in bulk and physically exports the same under a license from RBI. In the era of electronic banking, it is difficult to digest a multinational dealing physically in such huge volume of currencies.

TCIL expects to save over Rs 1 crore a year hereafter, using SAP's newly installed treasury management software, which in itself is a tacit admission of poor cash management so far!

In difficult times, like in 1998-99 when the travel industry shrank about 20 per cent, keeping the overheads, even the tempting one on "media management", on a tight leash is a must. While the TCIL juggernaut might have got away in the recent past with such profligacy, it is time the company buckled up back to improve the retention of profitand enhance the earnings befitting its multinational status.

[E-mail feedback to:investar@bol.net.in]

(Arranged by INVESTAR - The Aarthik News & Research Syndicate)