However, SPIC defaulted on the interest payment, which was due in July this fiscal. The company however, has been quick to initiate a restructuring programme a couple of months earlier and appointed BankAm Securities to advise on the restructuring of the FRN.

As of now, the modus operandi adopted for the restructuring holds the key and even the investors of the FRN option are holding their horses. The stock is already looking down the barrel with the price hitting 52 week low of Rs 10. The main products of the company are urea and ammonium phosphate. As is common knowledge, fortunes of all the fertiliser and pesticides companies are dependent on monsoons and the government.

Moreover the hike in crude oil prices have had a major bearing on the industry. As for the company the major raw material is naphtha, a derivative of crude oil. The company's performance for the quarter ended June 2000 is a replica of Tata Chemicals' performance. The topline has fallen by 2 per cent to Rs 221.57 crore. The reason was low sales volumes. This, in turn, could be attributed to the steep increase in government duties and taxes.

There was a steep increase in excise duty on pesticides from 8 per cent to 16 per cent alongwith sales tax increases in some states. The delay in sowing due to the late monsoon has also not helped the company's cause. To add to the woes, the government reduced the retention price of fertiliser (urea) in the last week of May 2000 by Rs 463 a tonne with retrospective effect from the start of the current financial year.

This is a big blow as the fertiliser accounts for roughly 50 per cent of the total sales of the company. The outcome of operations, however, could remain positive with Rs 37.84 crore profit.

The company was further handicapped by the delayed recovery of fertiliser subsidies from Government of India. This resulted into inflated finance cost of Rs 49.79 crore, 31 per cent more than the corresponding figure. Due to this, the net loss soared by 113.8 per cent to Rs 18.86 crore.

There is little hope for improved performance in the second quarter. The crude oil prices are shooting through the roof and would make operating profit margins thinner. So, the overall outlook for the rest of the year looks bleak. This is also true in the wake of huge reduction in the urea and other fertiliser prices effected by the government. And in the event, even the restructuring exercise would hardly make any difference.

Voice over Internet Protocol
The rate of technological obsolescence is fast increasing. So are the problems faced by entrepreneurs who invest huge sums in setting up the infrastructure. Telecommunication industry has been undergoing rapid changes over the past few years.

Part of which can be attributed to the progress made in information technology, especially in the Internet.

Usage of Internet has generated demand for faster data transfer. This gave rise to frantic rush for laying optical fibre cable everywhere instead of jelly-filled cables. It was thought that this would increase the quality of telephony and Internet access speed.

But with the advent of the Voice over Internet Protocol (VoIP) or Internet telephony, the very survival of basic telephony service providers, especially of the long distance one, has come under threat. The reason being, VoIP allows long distance telecommunication at very nominal rates.

They are protected as long as the government does not legalise VoIP. US is the only country to allow the use of this technology. However, many people in other countries are using it as the cheapest mode for making international calls. At the same time, demands are being made to recognise the new technology.

In India too, NASSCOM is giving warnings to the government that if the ban is not lifted, then it will be difficult to achieve targeted growth in software exports. However, the dilemma for the government is how to compensate the basic telecom operators who have paid huge amount of license fees. In fact, it will be a tough task for the government to do a balancing act.

Sachchidanand Shukla and Manish Joshi