On a topline of Rs 385.5 crore, the operational loss is Rs 10.6 crore. Cloth forms a major chunk of sales. While the realisations are difficult to improve in view of acute competition, there is no respite on the cost front.

Wool, a key raw material, has seen its prices moving upward. Other income was substantial at Rs 19.4 crore, up from Rs 6.5 crore for the year ended June 99. However, it was partially offset by provision for diminution in value of investments of Rs 5.7 crore.

Interest has catapulted to Rs 94.1 crore and loss before depreciation was Rs 85.3 crore. Depreciation policy was changed for Amritsar spinning plant, and consequently there was a writeback of Rs 16.2 crore. It has also meant lower charge for current period by Rs 9.3 crore. These two figures together have avoided flaring up of losses by another Rs 25 crore. There was also a change in method of inventory valuation as per AS-2. This has resulted in decrease in value of inventories by Rs 27.1 crore and to that extent, has increased the loss.

The possibility of a sizable one-time cash inflow for Birla VXL is unlikely to enthuse market sentiment for the stock. The company is to sell 83,20,000 equity shares (26 per cent of the equity) of VXL Landis and Gyr Ltd to Siemens India.

The company is selling the shares at a price of Rs 27.05 per share and as a consequence, Birla VXL would get an inflow of Rs 22.5 crore. Though this is a sizable inflow given the lacklustre profitability levels of Birla VXL, it is unlikely to lead to any one-time dividend payout to the shareholders. The funds may be ploughed back into the other businesses of the company such as textiles and yarn. Given this prospect, the Birla VXL share may continue to stay range-bound at around the current price of around Rs 5.70.

Siemens
Siemens has been plagued by the "investment famine", especially in the infrastructure facilities, besides the over capacity hangover in the domestic markets. Despite facing a slowdown in the user industry, the company has clawed its way back through a prolonged restructuring exercise.

What with hiving off unrelated businesses, cost cutting measures including a VRS policy that saw the number of employees dip to 4,308 from an excess of 8,000 employees in 1996.

The results for the first quarter to December 2000 reflect the piquant situation Siemens is in. Sales dipped by 5.7 per cent to Rs 214.5 crore, owing mainly to the slowdown in the energy and industry divisions, which are expected to remain muted. However, the operating profits remained flat at Rs 1.7 crore. OPM continued to be below a percentage point. Other income saw a 82 per cent jump to Rs 23 crore, rescuing the company once again. Lower interest costs, besides lower depreciation and tax provisions, ensured a higher earnings growth. Net profit leapfrogged by 184 per cent to Rs 15.9 crore. However, Siemens witnessed a decline of 6.2 per cent in new orders valued at Rs 227 crore (Rs 242 crore) on q-o-q basis.

During the second quarter, the company has sold 30 per cent holding in Siemens Public & Communication Network to its German parent for Rs 5 crore.

This is close on the heels of disinvestment of stakes in three subsidiaries during the previous accounting year. That included Siemens Telecom, Siemens Nixdorf Information System and one automotive division converted into a subsidiary. These three sales put together did not make a difference to the company's financials. It resulted in a small loss of Rs 50 lakh.

The company's performance is a function of the infrastructure and industrial growth. Hence, any boost to these sectors from the budget may salvage the fortunes of the company.

Manish Joshi & Sachchidanand Shukla