MTNL, riding on this upsurge in the fourth quarter, managed to post a marginal full year turnover growth of 2.4 per cent to Rs 5,386 crore compared to the Rs 5,259 crore in the previous year. With a substantial increase of 6.7 per cent in operating expenses, the operating profit declined by about 2 per cent to Rs 2,579 crore, down from Rs 2,629 crore in the previous year. The operating profit margin has reduced by 2 percentage points to about 46 per cent from 48 per cent during the last fiscal.

The much lower provision for tax and the significant reduction in interest burden catapulted the net profit by over 30 per cent to Rs 1,694 crore. In fact, the company has written back Rs 82.5 crore of tax provision made in the previous quarters. MTNL expects to benefit from the rebate under section 801A, putting it on par with the other telecom service providers in India. Meanwhile, the company has conveniently made no provisions for the on-going dispute concerning the tax claim of Rs 20.9 crore filed by the I-T department regarding the tax on license fee paid by them.

MTNL is planning to enter the lucrative business of telecom software using the acquisition route. Globally, there is huge potential for telecom billing and maintenance software. The company also unveiled several new initiatives, including the decision to set up a venture fund. The proposed venture fund will invest in telecom and IT related domestic ventures. Moreover, it has earmarked a certain portion of its profit for the proposed research and development centre. Moreover, the company is believed to be scouting to acquire stake in private cellular service operator.

The earning per share has improved to Rs 26.9 from Rs 20.5 at the end of previous fiscal. With the post budget hammering of the technology stocks, the scrip has been beaten down to Rs 206 from the high of Rs 378 achieved during the second week of February this year. The scrip has a strong support at around Rs 200 levels and is not expected to show any significant movement in the short term.

Supreme Industries
The numero uno company in the plastic industry, Supreme Industries has ended the third quarter on a disappointing note. Sales remained flat at Rs 145.67 crore. Sales of plastic products grew just by 7.6 per cent to Rs 141 crore and sales of other products declined from Rs 14.45 crore to Rs 4.65 crore. Sales from plastic products account for 97 per cent of the total sales. The operating margins are under pressure declining from 14.43 per cent to 12.75 per cent. Net profit margin is down from 3.16 per cent to 2.41 per cent. The main reason for the decline in operating profit is the sharp rise in raw material cost which grew by 14.86 per cent to Rs 80.20 crore at 55 per cent of total sales.

The company managed to reduce its interest cost from Rs 10.58 crore to 8.58 crore and other costs were also not allowed to increase but that did not help to buoy up its net profit which declined from Rs 4.15 crore to Rs 3.52 crore. The substantial loss of Rs 1.08 crore is attributed to the plastic mat business where the export prices have fallen sharply.

For the nine-month period ended March 2000, operating profit margin went down from 15.73 per cent to 14.14 per cent and net profit margin from 3.14 per cent to 2.85 per cent. The capacity utilisation has improved and company processed 51,289 metric tonnes on polymers as compared to 48,149 metric tonnes in the previous year. The larger number of new entrants from the unorganised sector and higher production from the organised sector is exerting pressure on profit margins.

Its polymer processing capacity increased from 37,568 tonnes in 1994-95 to 66,858 tonnes in 1998-99 and it achieved a CAGR of 15.5 per cent during the last five years. Sales also witnessed an increase from Rs 349.37 crore in 1994-95 to Rs 554.41 crore in 1998-99. The company has on its product portfolio, a large range of plastic furniture. It has an additional advantage of procuring raw material from its sister company, Supreme Petrochem. Earlier, the import content of raw material was as high as 70-80 per cent of total raw material which has now come down to below 14 per cent. The company has paid liberal dividends of 60 per cent during 1993-94 to 1997-98 which was increased to 70 per cent in the previous year. For the last fiscal, the company has already declared a 50 per cent interim dividend.

Ranbaxy Laboratories
The results of Ranbaxy Laboratories for the first quarter ended March 2000 could come as a severe disappointment to many of its investors. Sales increased just by 3.7 per cent to Rs 375.6 crore from Rs 362.2 crore for the same quarter last year. For the quarter ended December 1999, it posted a sale of Rs 416.8 crore, with net profit at Rs 32.1 crore. The operating profit margin was 13.4 per cent. Coming back to the latest quarter, profit before interest, depreciation and R&D expenditure went down 12.7 per cent from Rs 77.1 crore to Rs 67.3 crore. The company derives more than 40 per cent of its sales from exports. Exports for the quarter increased by just 8 per cent. This is disappointing because Ranbaxy has a huge network abroad in terms of joint ventures and marketing offices. It has outlets in US, UK, Russia and China.

Ranbaxy's concentration has been on anti-infectives, which forms around 43 per cent of its sales. The inability to raise sales must mean competitive pressures in markets abroad as well as at home. Nutritives provide around 8.5 per cent of sales, GI tract related drugs around 8 per cent, NSAs 7.4 per cent and CNS 2.1 per cent. The low concentration of 2.1 per cent in CNS and 1.8 per cent in cardiovascular is a weakness for the company. The strength however lies in some of the ongoing research activities.

The company reportedly incurred higher expenditure during the quarter on new product launches and also higher business development expenses abroad. Ranbaxy's spreading of wings beyond the domestic markets has always been its unique selling proposition for the investors. Investors have always hoped that it will be able to cash in into a higher growth rate by targeting the global markets and not be restricted to the domestic markets. The results for the latest quarter therefore comes as a dampener. If Ranbaxy holds its own on the bourses it could only be in recognition of its R&D strength, and the future potential of that outcome.

-- KSESH (with contributions from Gaurav Dua and Dhruv Rathi)