But that is not the root of IDBI's malaise. As the table shows, IDBI has been reeling under the twin pressures of slow bottomline growth, on the one hand, and a shrinking of spreads on the other. We have taken gross instead of net profit in order to eliminate the effect of tax and depreciation, and the effects continue to be dismal. Consider this one vital statistic -- in Q1 1998, during the depths of the recession, IDBI's gross profit was Rs 486 crore, compared to Rs 305 crore in Q3 this fiscal. The topline this last quarter was only 6.7 per cent higher, compared to Q1 1998-99. Clearly, so far as IDBI is concerned, the recession is still on.

IDBI is a long-term lender, and the results show that the recovery so far has been entirely led by consumption demand. Investment demand is yet to pick up-that accounts for the lack of growth in IDBI's topline.

No discussion about IDBI can be complete without an awed comparison with what ICICI has been able to achieve. The latter's timely shift away from long-term lending, its embrace of the Internet, and its long-term vision contrast completely with IDBI's myopia.

Will the 34.7 per cent growth in sanctions help? Unlikely, as a slew of projects are yet to get off the ground. More heartening is the increase in disbursements. As investment demand increases, topline growth will occur at the FI. But only when interest rates turn back up will that growth get translated into the bottomline. But the real malaise with IDBI lies in its government ownership.

Indo Gulf Corporation
The 91.93 per cent increase in revenues from its copper business in the quarter ended December has seen Indo Gulf's topline swell by 47.17 per cent to Rs 558.50 crore. Yet, despite the fact that copper prices have been higher than the previous year, the company's operating margin has not shown any significant improvement. Total expenditure, at Rs 443.73 crore, has risen by 46.41 per cent, negating the gains from higher realisations. As against the previous year's 20.14 per cent, operating margin for the current year's third quarter was only a shade higher at 20.55 per cent.

The company has continued to fully utilise its urea capacity and there is little reason to believe that the profitability of this business has been impacted negatively in any way. Hence, it can be concluded that although there has been good volume growth owing to the copper business, it is yet to add to the profitability of the company. This is more so at the pre-tax margin level as the high interest and depreciation expenses pertaining to the copper business has brought down the overall profitability further.

Pre-tax margin has declined from 13.42 per cent to 10.79 per cent. However, as copper prices have continued to show an increasing trend, the following quarters may bring out a different picture.

German Remedies
Like most other pharmaceutical companies, German Remedies has also reported double digit growth in turnover in the third quarter of the current fiscal. Sales in Q3 grew by 13.9 per cent to Rs 48.95 crore and net profit by 38.49 per cent to Rs 5.63 crore. The company has improved its performance as compared to the same period in the previous year. Operating profit margins improved from 14.96 per cent to 16.8 per cent and net profit margins from 9.4 per cent to 11.51 per cent. The nine month figures also point to better performance. Sales rose by 12.1 per cent to Rs 155.97 crore and profit by 31 per cent to Rs 19.88 crore.

Though the operating margin for the nine months was almost flat at 19 per cent compared to 18.6 per cent in the previous year, net profit margin has improved from 10.9 per cent to 12.75 per cent. Though the periodical comparison gives a picture of better performance, if compared with the previous year's annual performance it may not look so impressive because the company had achieved a 21.9 per cent OPM and a 13.62 per cent NPM for the last year. It is clear that being in a seasonal products line, the fourth quarter is always better than the first three quarters. That is because the company manufactures various products used for gastro-intestinal ailments.These water-borne diseases are caused by the supply of water from low level of lakes which mainly occurs in February onwards.

The company had introduced 6 new products during last year. These are "Adamon" Analgestic, "Jonac-suppositories" Anti-inflammatory analgestic, "Nivant" Antihypertensive, "Platics" Anticancer and "Ursofalk-GR" Bile aid preparation. Having introduced in the market in the last year, these products are gaining momentum and helped to increase sales in the current year. The company had to spend substantial amounts for promoting these drugs which brought down operating profit margins in the last year. But in the current year promotional expenses may be saved to a larger extent. The company has major tie up of marketing products of major German companies like Boehringer Ingelheim Intl, Astra Medica AG, Knoll AG, Schering AG, SmithKline Beecham and others and covers large number of medicines in various thereupatic groups.

On the flip side, R&D expenses incurred by the company are very few as compared to other reputed pharma company. Now a days, most reputed pharma companies spend around 6-8 per cent of turnover in R&D for developing new molecules and formulations against only 0.47 per cent of this company. Therefore, in order to compete, the company has to spend substantial amounts for R&D because with patent laws coming into force in the next few years, survival without own R&D will be difficult. However, one can rest assured that at least the last quarter of current fiscal will be better than the rest of the year.

-- With contributions from Sarad Saraf and Dhruv Rathi