In the south, no signs of a cartel breakdown are evident yet. However, the fall in cement consumption in Tamil Nadu and Andhra Pradesh in August and particularly in September does not present a favourable picture for cement prices. These two states together account for between 60 and 65 per cent of the cement consumption in the region. In October, dispatches are bound to be worse than in September, which was worse than August. July and June dispatches were better than the following months. This is applicable to all the regions. But consider clinker stocks company-wise in Gujarat and of ICL and L&T in the south.

In Gujarat, it is a case of rising clinker stocks and falling cement dispatches. In the south, the fall in dispatches is worse. A bad monsoon in Gujarat is no excuse, as clinker is not produced and stocked in August to grind in November. Yet, poor cash crops in the region only indicate a fall in cement prices. As for the south -- in Andhra Pradesh, consumption in September is lower by 93,000 tonnes, compared with August, in which consumption was lower by 40,000 tonnes, compared with July. In Tamil Nadu, in September, consumption was down by 115,000 tonnes, compared with August, in which consumption was lower by 21,300 tonnes. In the south, consumption was expected to be better till September-October, when the north-east monsoon sets in. With the last two months being horrible and October not being any better, the market is not discounting the impressive results posted by cement companies for the quarter ended September.

Sun Pharma
Sun Pharma is one of the few scrips in the pharmaceutical sector that had moved up substantially without any landmark benefits from its research division, which has been the case with companies like Ranbaxy, Dr Reddy's, Wockhardt, and Cipla. Sun Pharma increased from levels of Rs 500 in August to a high of Rs 1,479, just before the Sensex saw one of the steepest declines ever.

The sharp jump in the scrip is apparent from the half-yearly results announced by the company. For the first half of the current fiscal, Sun Pharma grew 41 per cent to Rs 215.81 crore, against Rs 152.84 crore in the previous year. Part of the reason is that the current year's sales includes Rs 25 crore from sale of brands acquired by Natco and the erstwhile Milmet, without which, turnover from sales of Sun Pharma's own brands has grown by 25 per cent.

The bottomline, on the other hand, has increased by 61 per cent from Rs 26.67 crore to Rs 42.82 crore in the first half. In the second quarter, the company has recorded a turnover growth of 36 per cent, while net profit has increased by 53 per cent.

Sun Pharma has maintained the trend of its first quarter as far as growth in the domestic market is concerned. The dmestic formulation market has risen by 65 per cent in the second quarter, from Rs 50.68 crore to Rs 83.54. For the first half, domestic formulation sales have increased by 57.6 per cent from Rs 100.41 crore to Rs 158.25 crore. However, if the sales of Natco and Milmet are excluded, domestic formulation for the first half of the company has increased by 32.70 per cent, which is quite good considering the growth seen in other companies. However, bulk sales in the domestic market for the second quarter have come down slightly from Rs 18.97 crore to Rs 17.16 crore, though the half-yearly figure shows a growth. This is because of lower realisation from the segment.

As far as export performance is concerned, the 100 per cent subsidiary has donw well, specially in the bulk drug segment. Export of bulk from the 100 per cent subsidiary has increased from Rs 1.49 crore to Rs 7.65 crore for the second quarter, while exports of bulk done by the company has declined from Rs 12.25 crore to Rs 10.10 crore. Formulation exports have more or less remained flat in both the cases.

Overall, exports of the 100 per cent subsidiary have also come down because of lower trading income, which has been a deliberate excercise by the management, as it wanted to cut down on DEPB exports.

As far as operations of the company are concerned, operating margins of the company have improved from 16.73 per cent to 24 per cent in the second quarter. Importantly, this improvement is on account of better logistics in raw-material procurement and inventory control, rather than reduction in raw-material prices. In other words, the changes are long term in nature. On the interest front, issuance of preference shares has resulted in bringing down gross interest charges from Rs 2.72 crore to Rs 2.53 crore in the second quarter. For the first half, the company has interest expenditure of Rs 5.02 crore, against Rs 4.90 crore in the previous year.

The company has improved its domestic market share from 1.56 per cent to 2.18 per cent, with the company's own products showing an increase of 30 per cent. The company now has five products in the top 300 formulations in the country. These are Monotrate, rank 116, having a growth of 14 per cent, Alzolam, rank 169, 16.5 per cent growth; Glucored, 241, 58.6 per cent, Zeptol, 267, 111.8 per cent, Coldact, rank 255. In the first half the company has launched 12 new products, through its 8 divisions. Almost all the theraputic segments have maintained their position. However, the comparativley newer segment of orthopeadics have done relatively better.

Considering the strong performance of the company and the fact that it is increasing its stress on research and development, the company is worth being invested in specially after the current correction in the stock.

With contributions from Urmik Chhaya & Shishir Asthana