The fall in profits is mainly due to the labour strike which lasted for 70 days and resulted in production loss. However, with a bumper harvest and early signs of economic recovery, things are looking up for the company.

Escorts, which in the last fiscal had to content with a market share of 17.7 per cent of the total tractor market, has increased its share to 20.5 per cent in the current fiscal. In the last fiscal, Escorts had negotiated a long term settlement with its workforce. The agreement encompasses new industrial engineering norms and productivity levels commensurate with machine output standards and working hours.

Thisagreement gives Escorts greater operational flexibility in resource utilisation and higher productivity. This will be reflected in the current fiscal's balance sheet.

The Escorts board has also decided to slam brakes on investments in its third tractor manufacturing unit in Ranjangaon near Pune. The investment in the plant has been delayed for one year. With the new labour agreement, the company hopes to improve volumes by higher productivity levels to meet the market demands in the current fiscal. The plant, which was earlier expected to be operational by July, 1999, will now commence operations by 2000.

Marketmen expect the stock to move up in the next few sessions. In the month of June, the stock has moved from Rs 61 to a high of Rs 74.8; a technical correction has seen the stock trading at Rs 65.3.

BoI, BoB take a beating on BSE

Bank of India and Bank of Baroda's financial performances have disappointed marketmen. While Bank of Baroda fell 4.34 per cent on Friday, Bank of India hit thelower end of the circuit filter on BSE. On the back of a sharp fall of 44.7 per cent in net profit to Rs 201 crore, the Bank of India scrip fell to Rs 20.05 on Friday against Rs 21.75 on Thursday. BoB's net profit fell by 8.07 per cent to Rs 421 crore and the scrip shed Rs 2.5 to Rs 57.5 against Rs 55 on Thursday.

The fall in BoI's net profit would have been sharper had it not been for an income of Rs 177.5 crore on account of interest on the refund from the IT department. The effect of this interest income on BoI's net profit is to the tune of Rs 131.5 crore of the total PAT of Rs 201 crore. As BoI has a higher net NPA ratio of 7.28 per cent against the last year's figure of 7.34 per cent, provisions for bad loans has shot up from Rs 316.04 crore to Rs 351.63 crore.

Also, BoI has been hit by a shortfall in BoI Double Square Plus '90 (an assured return scheme) which accounted for nearly Rs 32 crore; nearly Rs 290 crore is contingent liability on account of BoI Double Square and another scheme, RMI-60. Theeffect of this will be felt in the current fiscal. BoI's operating expenses also shot up due to Rs 50 crore on account of wage revision.

Although BoB's operating profit rose to Rs 945 crore from Rs 806 crore in FY 1998, net profit fell to Rs 421 crore from Rs 461 crore last year. The drop in net profit is mainly due to the enhanced outlay of Rs 95 crore for wages and salaries and higher provisioning for NPAs. Total provisions shot up to Rs 523 crore from Rs 344 crore last year. The net NPA ratio increased to 7.7 per cent from 6.6 per cent.

Equity dilution in Global Telesystems

Fears of yet another round of stock options from Global Tele-Systems Limited has led to sharp fall in the stock price. In less than 20 trading sessions, the scrip has fallen from Rs 272.9 to Rs 220 notwithstanding the recent rally of 350 points in the Sensex. The company is planning to issue 14,95,000 equity shares under its ESOP-II, to be created for the benefit of the employees of its international subsidiaries.

Thecompany's current equity stands at Rs 28.4 crore and with the proposed fresh ESOP this is likely to further rise. Global Telesystems had issued 9,91,000 warrants. Each warrant carries the right to be allotted one equity share of at an excercise price of Rs 100 each, at any time during the exercise period, which varies between 12 and 48 months.