Other expenses also increased by 13.7 per cent to Rs 214.37 crore. Profit on sale of Livogen trademark to E. Merck would soften the impact of high costs. Two brands, Annovate and Derobin, were sold to US Vitamins and two other brands, Macraberin and Multivate FM to Banner Pharma. The sale of brands generated additional income of Rs 23.50 crore. Operating profits improved by 3.6 per cent to Rs 136 crore. Tax provision increased by 35.5 per cent to Rs 37.80 crore but net profit fell by 8 per cent to Rs 37.80 crore.

The company is a market leader in the anti-ulcerant and vitamins segment which suffered sluggish demand during the year. Demand of anti-infectives was below expectations. The company suffered because of primary sales in the third quarter was depressed on account of extended trade boycotts in certain southern states and reduced purchases by the trade in certain other states, primarily because of several changes in sales tax rates.

However, the company benefitted from a 16 per cent price revision of bulk drug, `Betamethasome' in January 2000. The revamped marketing force may see an increase in the market share in each product segment that will help brand building and accelerated sales growth. The company has to face real competition from the multinational companies and unbranded generics.

Glaxo's drawback is its major topline drugs were introduced in the pre-1990 era that account for more than half of its total turnover. In the fast changing pharmaceutical market, Glaxo may have to change the strategy for better growth.

Philips India
The year ended December 2000 has been a depressing one for Philips India, which reported a negative growth in its revenue from operations for the first time in the past four years. The total income for the year was down 14 per cent to Rs 1,508 crore from Rs 1,746 crore in the corresponding year.

Philips' consumer and business electronics division has been facing tough times since the past one-year. This division contributes around 50 per cent to the revenue. Onslaught of cheaper and high-tech products from competitors such as Aiwa, Sony and others has been primarily responsible for the negative growth in this division. The company has, however, been able to maintain its leadership in the lighting business, which contributes around 38 per cent to the revenue from operations.

Higher competition has taken its toll on the operating profit, which went down by 50 per cent to Rs 49 crore while the net profit before taxation turned red at Rs 4 crore from Rs 31 crore in the previous year.

This disappointing performance is also reflected in the share price of Philips, which has fallen down by around 20 per cent in the past two months to Rs 83. This price is much lower than the open offer price of Rs 105 through which the parent raised its stake in the company to 83 per cent.

One of the justifications given by Royal Philips Electronics (the parent company) for increasing its stake in Philips was to enable it to have a better commitment in terms of resources, technology and new products. It would be interesting to track the performance of the company in the coming quarters keeping this objective in mind. However, it will take some time for Philips to regain its lost market share.

The entire scenario would be more interesting to keep a watch on, considering stiff competition from Chinese manufacturers, which has already seen the Indian manufacturers scouting for cover from the government.

Dhruv Rathi & Prashant Kothari