But there is every likelihood of the company bouncing back in the third andparticularly the fourth quarter. The main reason is the commissioning of anew production line for welding electrodes which is nearing itspre-commissioning trials. The plant is expected to be operational in thesecond half and the impact will be fully felt in the last quarter of thecurrent financial year.

Aside from welding consumables, which is Esab's basic business and which hassuffered under the ongoing business re-organisation, the export business toEsab affiliates worldwide as well as the domestic medical gases business hasdone well and should continue to perform into the next two quarters.

According to company sources, the working capital position which hadworsened last year has improved considerably. But the real and as yetuncalculated benefit will come to the company from renewed spending oninfrastructure. The fortunes of Esab India are directly linked toinfrastructure spending and any activity here will result in an immediateboost to earnings in the second half.

Birla Corporation

Birla Corporation, on the other hand, is one company where the stockvaluations reflected a hope of improvement since the begining of thefinancial year. The expectation here was that the company would benefit froma boom in cement prices.

Though the company continued to make losses for the quarter ended September1999, these were considerably reduced, with a dramatic improvement inoperating margins. The net loss has been reduced from Rs 19 crore in Q2 lastyear to Rs 4.7 crore. More significantly, there has been a markedimprovement between the first and second quarters of the current year. Inthe first quarter, Birla Corp recorded a net loss of Rs 10.29 crore, a fallby over 50 per cent in Q2.

Of all its businesses, the company's cement and auto trims divisions haveimproved in recent months. Cement volumes were up by 24 per cent in thefirst half of the current year. The stock has appreciated by 45 per centsince the announcement of the second quarter performance a few days ago toRs 63. The auto trims business will benefit from the increase in automobilemanufacture.

But the company has been plagued with constant labour trouble at its variousplants, the latest being the unrest at Birla Synthetics, which has hamperedits performance to some extent. However, the much-needed capitalrestructuring is yet to take place and interest cost continues to consume alarge proportion of the operating profit.

But the recent performance does point to a major improvement in thefinancial situation and with an emphasis on the cement and auto trimsbusinesses, the remainder of the year should also be good, though a lotwould depend on any further movement in cement prices.