The income from operations has increased by 21 per cent to Rs 586 crore in the quarter to September 2000. Approvals and disbursements have recorded growth rates of 28.7 per cent and 25.5 per cent respectively, quite impressive in view of a rather sluggish realty sector.

However, margins have come under pressure owing to intense competition. Interest outgo has exceeded the growth in income. Interest outgo has increased by 22.2 per cent to Rs 421 crore. As a result, the growth in operational profit has been 16.9 per cent. Operating profit margin (OPM) has fallen to 24.2 per cent, down a percentage point. Other income of Rs 3.8 crore has helped to achieve a decent growth of 20 per cent in bottomline to Rs 116 crore.

HDFC, with over two decades of experience, is the market leader in housing finance. HDFC and LIC Housing Finance account for 75 per cent of the market.

HDFC has taken the acquisition route to achieve further growth. Home Trust Housing Finance and Gruh Finance have been made subsidiaries of the company through additional investment during the first half.

Still, the financial institution's price earnings multiple (PEM) has been low in the stock market. The company is keen on changing for the better since the focus of the premier housing finance company in India is gradually shifting from mortgages to other areas of the financial market. The stock quoting close to Rs 500 has remained reasonably firm even in a volatile market. If analysts are to be believed, the infotech services, life insurance, asset management and commercial banking will account for 46 per cent of HDFC's earnings over the next five years.

According to Merrill Lynch, HDFC's proposed venture into call centers with Tata Consultancy Services (TCS) can potentially provide the company with strong revenue streams. The potential value of the firm can be placed at between $330-560 million in three years down the line.

The call centre, which is being set up at a cost of Rs 15 crore at Navi Mumbai, is expected to start operations by year-end. Investment may increase to around Rs 30-40 crore depending on the need for setting up additional call centres. The Merrill Lynch report has also mentioned that propertymartindia.com - its property portal set up jointly with e-Mahindra, a subsidiary of Mahindra & Mahindra - may be one of the foremost sites in India on property. The registrations on the sites have been converted into 30 per cent mortgage loans.

Berger Paints
The odds have been against the paint industry in general lately. Paints have been put into the open general license (OGL) list and the threat of cheaper imports looms large over the industry. Moreover, cheaper water-based paints from the developed countries have prompted the industry to call for imposition of anti-dumping duty. And if this was not enough the slowdown in the economy is sending ominous signals for the industry.

About 75 per cent of the total consumption of paints in the country comes from the decorative sector. The exterior and automotive segment are the other important constituents for demand. And traditionally, the per-capita consumption of paints has been very low in India.

Berger Paints reported a satisfactory performance for the quarter ended September, 2000. The turnover improved 20 per cent to Rs 152 crore (Rs 127 crore). The ability of the company to absorb a rise in the raw material costs and a tight leash over expenditure helped the company in the current quarter. The prices of key raw material like pthalic anhydride and titanium dioxide remained firm. Despite that, the raw material-to-sales ratio improved from 72 per cent to 62 per cent in the quarter.

Much of the growth seems to have come from a rise in prices in the absence of evidence of volume growth. This is disturbing, since the industry is volume driven and margins are on the lower side. Lower costs and a rise in prices may not come to the rescue very often.

Operationally, the company performed well and hence, operating profit margin increased to 10.3 per cent from 9.4 per cent. Interest cost, at Rs 2.7 crore (2.5 crore) went up marginally and depreciation charges went up by 35 per cent. But for the higher tax provision, the net profit could have been higher. The net leaped to Rs 7.52 crore (5.87 crore) showing a 28 per cent rise.

The company comes third in terms of turnover, behind Asian paints and Goodlass Nerolac, who are stronger in the decorative paint and the industrial paint segments respectively. Growing competition and very low per-capita consumption of paint in the country have prompted the company to opt for the acquisition route for growth. The company has acquired a 100 per cent stake in Jenson & Nicholson, Nepal, which will give the company an access to the markets in that country.

Exports to Bangladesh would also come through. Berger has been eyeing Sri Lanka, which has a higher per capita consumption of paint than in India. Apart from it, the company is also in talks with certain companies in Russia and South Africa.

Domestically, Berger is trying to enhance its product portfolio by tie-ups. Partly because, the company lags behind in the decorative paint as well as the industrial paint segments. It has entered into technical collaboration with Nippon Paint of Japan, which would provide it with sophisticated coatings for the automotive sector. Another Australian company Orica would help in the protective coating segment.

Also, the company is trying to position its `Colorbank' brand in the markets as brands are crucial for the growth in the industry. The exterior wall coating is another lucrative segment and the company is trying to get a toe-hold with its `Weathercoat and Walmasta' brands.

Manish Joshi and Sachchidanand Shukla