Friday, May 29, 2009
DEALWATCH: Bharti/MTN: Empire-Building Over Value-Building
NEW YORK (Dow Jones)--As market observers try to parse the byzantine structure of Bharti Airtel (532454.BY) and MTN Group Ltd.'s (MTN.JO) proposed tie-up, one thing is missing: a strong economic case in favor of a deal, whatever the structure.
The proposed arrangement entails the Indian and South African wireless firms exchanging cash payments and issuing new shares. Bharti will end up with 49% of MTN, and MTN and its shareholders with 36% of Bharti. A full merger is the goal "as soon as it is practicable," Bharti said.
The deal's circular structure has analysts disagreeing about the value it puts on MTN. Its enterprise value is currently $30 billion. HSBC argues the deal implies a value of $44 billion for MTN, while Macquarie Research sees $38 billion.
An acquisition premium of 30%, or nearly $9 billion, would not be extreme, should Bharti end up buying MTN outright.
What would Bharti be buying for this? The company points to efficiencies of scale and sharing of best practices. There is reason for skepticism on both counts.
Wireless telecom is a scale business. But both companies are already big, with nearly 100 million subscribers apiece, and lean, with earnings before interest, taxes, and depreciation (Ebitda) margins above 40%. This is profitability that wireless firms worldwide would be proud of.
There could be efficiencies to be harvested in handset procurement, where the same suppliers could be used regardless of the continent where the handset ends up. In networking equipment, on the other hand, operators hesitate to depend too much on any single supplier.
Operating cost synergies are presumably harder to achieve across separate continents. The advantages of increased market share or decreased promotional spending, available in single-market consolidations, are not a possibility.
Consider, for example, Vodafone PLC (VOD). The intercontinental wireless giant's margins outside of Western Europe, solidly below Bharti/MTN levels, don't appear to reflect cross-continental leverage.
Transferring best practices looks even trickier. Will MTS' experience operating 3G networks, or managing the transition to number portability, translate to the Indian market, with its unique regulatory environment?
Bharti's aggressive approach should not come as a surprise. The company has stated outright that multinational expansion is a worthwhile end in itself. Last year, when the first Bharti/MTM negotiations broke down, Bharti stated that the deal structure proposed by MTN was unacceptable because it was not synergistic, but "more importantly," would threaten "Bharti's vision of transforming itself from a homegrown Indian company into a true Indian multinational giant, symbolizing the pride of India."
One might think that a deal should be done only when it offers the best available returns on capital. For Bharti, apparently, things are a bit more complicated, due to patriotic concerns. The same goes for some South Africans. The 49% in MTN was reportedly chosen to keep nominal control of MTN in local hands, and the political aspirations of MTN Chairman Cyril Ramaphosa have been mentioned as a barrier to foreign control.
So the deal negotiations offer the possibility of an acquisition attempt, motivated in part by irrational economic nationalism, being scuttled by irrational economic nationalism.
Both companies have balance sheet capacity and participate in the most robust part of a growth industry where scale matters. Someone should advise them that companies contribute to the health of nations, and their own, by focusing on value. (Source:DJ)
Tuesday, May 26, 2009
KALINDEE RAIL NIRMAN CMP Rs 150 --- BUY
Book Value Rs 87.16 Debt/Equity 0.88 EPS Rs 10.27
Kalindee Rail Nirman (Engineers) Limited, popularly known as “ KALINDEE”, today stands as the forerunner in the execution of the major Railway Signaling & Telecommunication projects in India. Kalindee has executed with distinction and quality various prestigious projects spread far and wide in the country including Gauge Conversion Project from Meter Gauge to Broad Gauge, New Railway Line Construction, Modernization of Railway yards. Up-gradation of Railway Sidings in ports, Power plants, Petroleum Sidings, Access Control Systems for Metro Rail, Fiber Optic Networks, etc.
Indian Railways have launched an ambitious program to enhance capacity to handle more traffic with speed and safety and have sanctioned a large number of signaling, telecom, track and bridge works. Urban Transport Authorities are introducing Metro Rail Systems.
In order to meet these growing challenges, KALINDEE is already participating in a large number of works and has further diversified into Ballasted and Ballast-less Railway Track , Access Control Systems for Metro Rail, Roads, Buildings and Bridges. Kalindee has also developed links with internationally reputed organizations to provide the latest state of the art technology and construction methods.
The financial services unit of Larsen and Toubro Ltd has raised its stake in Kalindee Rail Nirman (Engineers) Ltd to 14.76%. It is a strategic stake below 15% as L&T intends to bid for contracts, including those related to a dedicated railway freight corridor project, metro and mono rail projects, and make railway wagons.
With Indian Railways executing more projects through PPP (Public Private Partnership) Model, Kalindee stands to benefit a lot. L&T holding just below 15% gives a possibility of a takeover but for now it is a strategic stake and L&T being a leader in engineering, Kalindee may have an upper hand in implementing the projects. The stock trades around Rs 154 and short-term target can be Rs 184-188, the stock is a value-buy and one can hold for a longer term also for bigger returns.
Tuesday, May 19, 2009
The scary phase for employees in the broking industry seem to be over at least for the moment. For a while, business was lacklustre with targets not being met and clients not easy to retain. All this led to salaries being cut, no bonuses and a series of layoffs across the industry. Now, with the prospect of a stable government at the Centre and the market reacting to that by surging over 2,000 points, the scenario is expected to change. This is expected to translate to increasing volumes and the return of the investor which, in turn, will increase the need for manpower.
“The mood has turned euphoric and positive. Layoffs will be reversed in retail broking and broking houses will expand, leading to more demand for people,” says Devesh Kumar, head of equities, Centrum Broking. With a stable government at the Centre, investors are expected to be confident and get back to the equities market.
Dinesh Thakkar, founder chairman and MD of Angel Broking is very optimistic as far as job creation in the broking industry is concerned over the next five-year period. “We anticipate a series of financial reforms by the new government, which will see the broking industry grow 30%,” he adds. This could lead to demand for manpower across the spectrum of the broking business as well as the financial services industry at large. Importantly, the recruitment process, he added, will not take off in a big way this year since 15% of the broking industry remains under utilised.
“With markets going up, times will be good for investors and volumes will move up. In the process, brokers will need to expand and there will be demand for good people,” said Anish Jhaveri, head of equities, Antique Broking. It is, however, felt across the industry that broking outfits will be a wee bit more cautious while recruiting people. “They will have to learn to work with a lean and fit team,” said a broker. According to Reliance Money managing director Sudip Bandyopadhyay, the broking industry will definitely start relooking at expansion opportunities. “Cautious optimism will be the guiding factor in deciding issues like hiring of manpower,” he adds.
According to Motilal Oswal Securities chairman and MD Motilal Oswal, it is still early to speak of the changing scenario. “The job market is cyclical. It will take time to pick up and one will have to wait and watch for 2-3 months, before expanding operations,” he said.
Friday, May 15, 2009
J K Lakshmi Cement (CMP Rs 78):-
The name J.K. Organisation, which today is one of the leading Private Sector Groups in India, was founded over 100 years ago. For J.K. Organisation it's been a century of multi-business, multi-product and multi-location business operation. The companies in the Group have a diverse portfolio, including Automotive Tyres & Tubes, Paper & Pulp, Cement, V-Belts, Oil Seals, Power Transmission Systems, Hybrid Seeds, Woollen Textiles, Readymade Apparels, Sugar, Food & Dairy Products, Cosmetics, etc. JK Organisation has more companies to its name like JK Paper, JK Tyre, JK Seeds, JK Sugar, CliniRx Research, JK Insurance Brokers and many more. Other member companies include Raymond Ltd, JK Cement, JK Files & Tools etc (http://www.jkorg.in/index.php)
About JK Lakshmi Cement: - (http://www.jklakshmicement.com/)
Book Value Rs 103.74 EPS Rs 36.56 P/E Ratio 2.06 Debt/Equity Ratio 1.09
Promoted by the HS Singhania Group, J K Lakshmi Cement has an installed capacity of 4.75mn MT with plants located in Sirohi (Rajasthan). Its key markets comprise Rajasthan and Gujarat. The company has recently expanded its cement capacity to 4.8mn MT from 3.7mn tonnes in FY08. It also has captive power plants of 36MW and 9 ready mix concrete plants with a capacity of 0.56mn cubic metres.
FY09 Performance: - During the fiscal year 2008-09, the company’s gross turnover increased by 9% to Rs. 1404 crore against the turnover of Rs. 1286 crore in the previous financial year. The production during the year has gone up by 11% thereby achieving a capacity utilization of 104%. The net profit at Rs. 178.59 crore was lower against Rs. 223.67 crore posted in the previous financial year due to high input costs during the first three quarters FY 2008-09.
Q4FY09 was very good for JK Lakshmi as it reported a net profit of Rs. 104.08 crores which is 54% increase over the Rs. 67.63 crores net profit posted during Q4FY08. The sales and production during the quarter has registered an impressive growth of 18%.
“When compared on a sequential basis, during the fourth quarter we have been able to effectively reverse the slide in profitability witnessed in the first three quarters. Increased volume, all-round improvement in the efficiencies and reduction in the input costs have helped us to improve the profitability. We have also been able to complete our expansion projects in time and in this quarter by addition of 11 lac MT our capacity has grown by 30%” said Ms Vinita Singhania, Managing Director, JK Lakshmi Cement.
FIIs raising stake: - As at 31 March, 2009 Promoters hold 45.7% stake (45.6% in Dec-08) and FIIs hold 7.4% stake (5.9% in Dec-08).
Valuation: - The stock looks quite cheap at current valuations as it trades at a P/E multiple of just around 2, with dividend yield of more than 5% and Book Value of Rs 103.74. (The company announced Rs 4 divided per share for FY2008-09)
The company has taken up the work of Waste Heat Recovery system which would generate 12 MW power and which would bring further savings in the power cost after its commissioning in the year 2011. The project entails an investment of Rs. 125 crore. Commenting on the progress of the greenfield site at Durg in Chattisgarh, she said “Satisfactory progress has been made in the area of land acquisition and we expect our Greenfield plant at Durg to be completed by 2011-12.”
JK Lakshmi has formed a rounding bottom over the last 8 months and now after impressive results, it has given a breakout with highest volumes in many months. Buy the stock around CMP of Rs 78 for short-term target of Rs 95. Risk-averse investors can keep stops below Rs 69; long-term investors can accumulate the stock and hold for handsome returns.
Wednesday, May 13, 2009
What to expect out of new government?
By A K Prabhakar & Tanmay G Purohit
After 5 years of U.P.A government where does India stand and what more should new Government do to sustain and grow faster?
In the last 5 years I strongly have a feeling that reforms didn’t proceed and India has wasted 5 precious years due to pulls & pressures of coalition politics. There are many urgent reforms which would keep India on the fast growth path. (Nothing special has happened except for Nuclear Deal and Domestic Civil Aviation reforms)
I would like to first quote a few instances in today's context to express my views better; Hyundai Chennai factory strike for 17 days has forced the company to rethink its export strategy from India. The company has planned to produce i20 meant for Europe in Europe itself. (http://www.business-standard.com/india/news/hyundai-to-shift-i20-productionchennai-to-europe/60995/on)
Dirty politics and hopeless union pressures:-
MAH & MAH strike in Nashik plant where a single person problem has kept production in abeyance. (http://profit.ndtv.com/2009/05/07223248/Strike-at-MampMs-Nashik-pla.html ) And earlier we have seen HEROHONDA and TATAMOTOR NANO project in West Bengal facing huge hurdle. Auto companies in USA and other developed parts of the world are getting slowed down because of recession but Indians are buying more vehicles as we see from the stats. Such strikes and plant shifting is prospects of the nation and India with more than 100cr of population can’t miss opportunity to become a Global manufacturing hub.
General Motors Corp will shift more production of U.S. bound vehicles to plants in China, South Korea, Mexico and Japan and away from plants in Europe, Canada and Australia-----and there is no mention of India. (http://www.detnews.com/article/20090509/AUTO01/905090337/1148/GM+plans+to+shift+overseas+production)
India has failed to reform the labour law which is outdated and so rusted. If we need growth and want to find more jobs for fast growing younger generation, India should move in quickly to reform on an urgent basis. Whatever progress we are witnessing is on Technological front, it is also necessary, but we got to have the employment rate higher as we are a labour-abundant nation.
Justice delayed is justice denied and this is forcing many to rethink Indian business strategy. Madoff Ponzi Scheme came out even after Satyam Scam but now Madoff has been sentenced and his punishment is already started, what has happened to Mr Raju? Why can't he be brought to justice sooner? We still have Kasab in custody and until last week he is shouting that he is not guilty. Now it’s almost 6 months after 26/11 and no justice so far for the dead!
Growth will get muted if Banks and FI slow their lending programme due to fear of growing Non-performing assets. There have been many rejoinders as well as court rulings which have virtually stopped any collecting method by Banks and lending institutions making already delayed justice system with more overload. If FIs can't even get back their principal money from defaulting borrowers, how will new loan-creation happen even if we have minimum 3% CRR and zero-interest rates across the economy? (Many NBFCs have resorted to criminal proceedings [Section 138 of Negotiable Instruments Act] without understanding the implications and lost precious time missing the time limit for filing civil suits)
Land reforms hindrance we are seeing and many experience also, already I had written about ills of POA-Power of attorney where many lands in India are held using this mode and once there was a proposal to abolish this way of holding land as Government was losing revenue and which increased legal complication. (POA- has landed many complicated issue. Land owner A gives Power to a Buyer B and without assigning any reason A can cancel the Power where a simple paper notification and a notice of intimation is only required and this becomes a valid cancellation and consent of B is never required)
And if you recollect I had warned many on Realty stocks 15 months before as most of the Land bank were just a POA or Agreement and not a proper registered Sale deed.
Because of fragmented land and growing urbanization, agriculture is also lagging.
Agriculture is an unavoidable element of Indian Economy, India ranks 2nd worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing account for nearly 16% of India GDP and employ nearly 2/3rd of the workforce. Current agricultural practices are neither economically nor environmentally sustainable and India's yields for many agricultural commodities are low. Poorly maintained irrigation systems and almost universal lack of good extension services are among the factors responsible. Farmers' access to markets is hampered by poor roads, rudimentary market infrastructure, and excessive regulation. Even after showering so many subsidies and exchequer-burdening debt waiver programs, Indian Agriculture sector has grown by only about 2.5% a year for many years.
Farmers have to depend on Monsoon but many times even after good Monsoon, lack of irrigation facilities make farming difficult. Corporate farming is one thing which is yet to catch and it can bring large pieces of land under cultivation which will make farming much more viable than it is now with fragmented lands.
Agricultural Exports as a %age of Total Exports from India were above 20% in 1996-97 but have come down to 10.92% in 2006-07. Sugar Rates are at 30-year highs and last year many countries along with India faced food shortage. If we take out pampering subsidies and debt-waivers, there haven’t been any special programmes for Agriculture after Green Revolution. India occupies 28% of the world area for agriculture (2006 figures) and has share of 21.51% in world agriculture production, whereas China has 19% of world area and produces 29% of the whole production in the world – now numbers speak for themselves!
Indians don't have a unique identity, yes, we have Ration Cards, PAN cards, Election IDs but those are just like contemporary documents right now. There has to be a unique ID Card which has got all the info of the citizen like they have in USA - Social Security Numbers. Crime is progressing very fast and for grabbing the criminals we need such systems to track them down wherever they go. Entering India is very easy as we see so many infiltrations through Bangladesh,Pakistan by all kinds of routes, and we have not done enough to stop them from coming, no wonder we witness so many bomb-blasts! Some days back there was a proposal to allow reservations in private sector, but that looks against the notion “right person for the right job”, already reservations are losing relevance as rich are becoming richer with no benefit for the poor.
In some parts of India, people are given free Television Sets, free electricity for demand of votes. Any mishap like floods and you will have a reward of Rs 50,000 or Rs 1,00,000 to all the affected people. Superficially it looks great but it is making people lazy, they know that even if they don't work, government will always feed them with subsidies. Free water, free food and what not! For just getting the votes and sustaining the government, the population is being made disinclined to work.
There is a lot more to talk about but until these things don't get fixed, how can we say India is truly shining? The other day only a joke was being circulated in Yahoo - "What a funny nation India we are living in! People buying shoes from A/C show rooms and vegetables from road side carts, here Pizza reaches faster than ambulance/police, Car loan @ 5% and education loan @ 12% ... India shining!" Alas, this is a reality.
There is development and India is growing, but if government doesn't perform its part of the game well, it will be a crippled economy in no time once again. Any new government, irrespective of its so-called sacrosanct document "manifesto", has to take care of these issues as these are basic elements of any society and we must not remain deprived of such fundamental developments. Median Age of population in India is very low around 25 years as compared to ageing population of other countries like China, USA and Japan. Real tragedy will unfold when these young Indians start performing at their best but lack of reforms won’t bear fruits to those industrious efforts, who is to be blamed at that point of time? Aren’t the people coming through Votes more dangerous than the people coming through Boats?
Data Sources: - World Bank, India Ministry databases, Wikipedia, Various Web Sites
Saturday, May 09, 2009
Japan confirmed its first cases of swine flu Saturday in three people who recently returned from Canada, even as the disease's spread appeared to slow in the rest of the world.Health and Welfare Minister Yoichi Masuzoe said the three Japanese were quarantined upon arrival in Tokyo after testing positive in preliminary checks performed on all travelers flying from countries hit by the virus.
Corus, a unit of Tata Steel, announced that some big buyers of slab had terminated an offtake agreement for its Teesside Cast Products (TCP) plant, putting under cloud the future of the plant. The world’s sixth-largest steelmaker said it might have to mothball TCP, in northeast England, which employs 1,920 people.
State Bank of India (SBI), the country's largest bank, may review interest rates on deposits by May-end. "We will review interest rates at May-end. In general, there seems to be a trend of softening interest rates on the deposit side," said Chairman and Managing Director O P Bhatt on the sidelines of the inauguration of an inward remittance cell in Kolkata on Friday.
Singapore-based lender DBS Bank today sold off its entire stake in HDFC Bank, while Deutsche Securities Mauritius picked up 3.78 million shares in the country’s second largest private sector bank. “We have divested our 2.7 per cent stake in HDFC, a portfolio investment, as we believe that this is an opportune time to divest the shares,” a DBS spokesperson said. Sources said that the sale did not reflect diminished interest in India and DBS would go ahead with its plans for the country.
Crisil has downgraded its rating on Reliance Infrastructure’s long-term debt on concerns of business restructuring and the resultant restriction in cash flow. The Indian subsidiary of credit rating firm Standard and Poor’s, Crisil, has lowered the rating to AA+/Negative from AAA, while the company’s rating on the short-term debt reaffirmed at ‘P1+’.
Billionaire Warren Buffett's investment firm Berkshire Hathaway said it lost $1.5 billion in the first quarter amid market turmoil as the value of its assets fell by $6.1 billion. The investment company controlled by Buffett, the world's second richest person, took a hit from its insurance holdings and a loss as it sold a big stake in oil giant ConocoPhillips.
Larsen & Toubro (L&T) will sell its 11.5% stake in the Aditya Birla group company UltraTech Cement by December. Pegged at around Rs 800 crore at Friday's market price, the sale proceeds will prop up L&T's bottomline in 2009-10. The company will also realise a further Rs 100 crore of other income from the sale of its ready-mix concrete assets in 2009-10. It had sold that business to Lafarge in 2008 for Rs 1,480 crore, and around Rs 100 crore has been pending from this transaction.
Indian professionals aspiring to go to the US to work may now find it more difficult to get H-1B visas with Washington deciding on stricter screening following complaints of misuse of the facility. Acting on the complaints, the US has adopted “fraud prevention tactics” to prevent such misuse. “We’ve added fraud prevention tactics. We’ve begun looking at other more standard fraud investigatory techniques that weren’t being used in H-1B that we are now going to employ. It includes things like sites visits and worksites visits,” Janet Napolitano, secretary of the Department of Homeland Security, said.
Few passengers may have taken to the skies in April, making it the third straight month that airlines have witnessed traffic declining on a year-on-year basis, as the industry struggles to cut costs and shed excess capacity. Air passenger traffic in the domestic sector may have fallen by 8% in April 2009 compared with last year, according to market experts and travel industry officials. The official figures for the month will be released by the civil aviation ministry next week.
State-run Union Bank of India, in joint venture with Belgium-based company, plans to enter the mutual funds business by December this year and hopes to receive the market regulator Sebi's approval to set up the firm by June 30, a top bank official said. "The bank expects to receive the Sebi nod for JV by December. We would be able to enter the market with our first product by December this year," Union Bank General Manager Personal Banking & Operations S Govindan said here.
Inflationary pressure is very high in India, says Reddy
The monetary and fiscal packages announced by RBI and the government, according to him, are “on track”, but the challenge before the authorities is unwinding the packages in due course.
Thursday, May 07, 2009
Tata Steel has recorded a 39 per cent increase in the sales of long products, used by the construction industry, in the month of April at Jamshedpur Works, over the same period last year. It also expects Indian steel demand to rise between 4.5 and 6 percent in the year to March 2010, and sees prices rising in the second half, a senior official said on Thursday. "We have a positive outlook for steel demand in general in India. We see a strong construction segment, we also think the automotive segment will grow," Anand Sen, a vice president, told reporters at a conference.
Industrial recovery may remain elusive with factory production likely to contract again in March by nearly one per cent due to slackening demand and weak export orders, Moody's said. "I'm expecting a fall of about one per cent year-on-year in March," Moody's Economy.com economist Sherman Chan told PTI.
Union Bank of India has reported a 10.77 per cent decline in its net profit to Rs 465 crore for the quarter ended March 31, 2009, compared to Rs 521.13 crore for the same quarter, year ago. However, its total income increased by 32 per cent to Rs 3,848.73 crore for the quarter ended March 31, 2009, as compared to Rs 2,913.10 crore for the quarter ended March 31, 2008.
DLF issued final notice to shareholders for payment of the balance amount for the shares allotted to them in the company's initial public offer two years ago. DLF had sent to the shareholders a 'confirmation-cum- allocation note-cum-notice' seeking payment of balance amount on partly-paid shares alloted in the IPO on June 28, 2007. After this, subsequent reminders were sent on September 5, October 24, December 3, 2007, March 4 and May 7, 2008.
The special auditor of the income tax department has reassessed nearly Rs 1,200 crore of revenues of property developer DLF in financial year 2005-06 as additional income, the company said in a statement to the BSE. In the event of appellate authorities not reversing the order of assessing officer, then the company has a tax liability of Rs 300 crore to Rs 400 crore, the company said.
Oil and Natural Gas Corporation (ONGC) wants to exit Cairn India's prolific Rajasthan oilfields as it has found the project economically unviable due to the government levies that it will have to bear. As per licence conditions for the Rajasthan block, ONGC has the right to take 30 per cent in any discovery without any cost but the state-run firm has to pay not only its share of royalty but also the 70 per cent share of the operator.
BHEL said it is scouting for a third partner for its existing joint venture with the Nuclear Power Corporation and is in talks with foreign companies, including Alstom and Siemens, for manufacturing turbines for nuclear power plants. "The joint venture (JV) company will identify the partner in a month's time...We are talking to a number of European and German players to join as a third (partner) in BHEL-NPCIL alliance," BHEL CMD K Ravi Kumar told PTI.
After vehemently seeking natural gas from Reliance Industries (RIL), state-run NTPC is now opposed to the fuel being sold to its joint venture Dabhol power plant. NTPC, which vehemently opposed RIL's plea for not selling its Bay of Bengal field gas to the state-run firm due to the ongoing court case, is now pointing at the same dispute in opposing sale of KG-D6 gas to Ratnagiri Gas and Power (RGPPL).
JSW Steel Ltd, India's No. 3 steel producer, on Thursday posted a consolidated net loss for the quarter ended March, but forecast a 78 percent rise in output for 2009/10, pushing the shares up more than 17 percent. For 2009/10, the company expects production to rise to 6.1 million tonnes on 'strong' signs of revival in demand.
General Motors Corp said it burned through $10.2 billion in the first quarter, operating under a federal bailout, as auto sales fell across the globe and it scrambled to cut costs. The automaker on Thursday posted a quarterly net loss of $6 billion, compared with a loss of $3.3 billion a year earlier. Revenue dropped by almost half to $22.4 billion as sales plunged in North America and fell in Europe, Asia and Latin America.
Tyre maker Apollo Tyres is all set to fully acquire Dutch company Vredestein Banden, a Mumbai based daily newspaper said in a report on Thursday. The deal is expected to be closed in a fortnight for a consideration of around $300 million, the paper said.
The H1N1 flu has spread across Illinois at an alarming pace with 225 confirmed cases being reported in the state by public health officials as compared to just three less than a week ago. The Illinois Department of Public Health (IDPH) reported 225 confirmed cases of H1N1 flu and 20 probable cases in Illinois. Only three confirmed and 51 probable cases were reported in the state on May 1.
Planned job cuts announced by US employers totalled 132,590 in April, a 12 per cent drop from the 150,411 layoffs recorded the previous month. This is the third consecutive decline in monthly job cut announcements and the lowest total since 112,884 cuts were announced last October, a report by global outplacement consultancy firm Challenger, Gray & Christmas said.
Metal mogul Anil Agarwal-led Vedanta Resources today said it has reported a steep 75 per cent dip in profit at $219.4 million for the year ended March 31, on account of waning demand and crashing commodity prices amid the global economic downturn. The company had a profit of $879 million in 2008, Vedanta Resources said in a filing to London Stock Exchange.The company's operating profit in 2009 dipped 57.3 per cent to $1,107 from $2,592.4 in the year-ago period. Its revenue, however, surged 19.8 per cent to $6,578.9 million from $8,203.7 million.
Collected by: Tanmay G Purohit
Sunday, May 03, 2009
Bharat Electronics (BEL)CMP Rs 955
Result Update first:-
BEL’s Q4FY2009 net sales increased by 19.3% year on year (yoy) to Rs2,735 crore, accounting for nearly 60% of the FY2009 net sales. Adjusted profit after tax (PAT) of Rs559.4 crore implied a growth of 15.7% in Q4FY2009 on a year-on-year (y-o-y) basis. Operating Profit Margin (OPM) declined to 30.2% from 31.3% (in last year 4th Quarter) on the back of higher raw material costs.
BEL’s net sales grew by 12.5% yoy to Rs4,733.7 crore in FY2009 while its operating profit increased by 6.4% yoy Rs1,157.7 crore during the year. Despite a 6.4% growth in the operating profit, the company witnessed a flat growth in its adjusted PAT to Rs815.3 crore in FY2009 as the higher operating profit was offset by the increase in the interest and depreciation expenses and the lower other income.
Order Book as on 1st April 2009 is projected to be around Rs 10,000 Crore, gives revenue visibility of next 2 years.
Signing of important MoUs:- BEL has signed an MoU with BHEL to explore formation of a joint venture company for Solar Photo voltaic business. The JVC, besides export, will cater to Indian solar products requirements. A capacity of 250 MW is being envisaged to achieve economies of scale. Other MoU include - one with Boeing to jointly develop an analysis and experimentation centre in India, MoU with SELEX Galileo and Astra Microwave Products to explore opportunities in Electronic Warfare and for design and manufacture of Microwave components & assemblies, respectively. BEL has been selected by Northrop Grumman for the manufacture of F-16 Radar components. Just recently, BEL has finalized a JV with French Company Thales to jointly produce radars. The negotiations for the same are complete and agreement is likely to be signed in a month or two.
BEL aims to do a business turnover of Rs 5,200 crore during the year 2009-10, a growth of 12.7 per cent over the last year. The company is looking at new growth opportunities in areas aligned with BEL’s core strengths through both organic and inorganic growth. BEL chairman and managing director, V V R Sastry, said the company was looking at reducing its dependency on defence contracts to 70% from the present 80-85% in the next two to three years. “The new focus areas for us are homeland security, railways, ports, airports, e-governance, nuclear power instrumentation and energy efficient solutions. We are discussing with reputed foreign and Indian players for forming Indian joint ventures in the areas of defence electronics, namely missile electronics and guidance systems, microwave super components, electro optics, airborne electronic warfare among others,” he said.
BHARAT ELECTRONICS (BEL) CMP Rs 955 looks is in an up-channel and can target Rs 1080-1100 in short-term. Buy with Stop Below Rs 900.
Investors may soon have Rs 25,000 crore in hand to buy shares, real estate and gold, thanks to the redemption of fixed maturity plans (FMPs), a kind of close-ended mutual funds, in the first quarter of the current fiscal. According to the data provided by Value Research India, a firm tracking mutual funds in India, more than Rs 10,000 crore is going to come into the hands of investors in the next two months, which is currently locked up in the FMPs. Also, Rs 16,492 crore worth of FMPs had already matured in April alone.
Life Insurance Corporation of India appears to have taken a shine to investing in Indian banks in financial year 2008-09. India’s largest life insurer’s investment pattern in bank stocks indicates that it, to an extent, acted as a counterbalance to foreign institutional investors who were relentlessly hitting the sell button in the Indian market to salvage their investments in the wake of the sub-prime crisis in the US and elsewhere.
Corporation Bank proposes to raise Rs 500 crore to augment its Upper Tier-II capital by issuing unsecured redeemable non convertible subordinated upper Tier-II bonds in the nature of promissory notes. The face value of the bond issue is Rs 10 lakh per bond with a tenor of 15 years.
Cement manufacturer ACC has said that it has no plans to increase the prices of the commodity in Delhi, even as it clarified that it has not increased the prices in the capital.
Warren Buffett dismissed the importance of the government’s stress tests of major US financial institutions in helping him assess banks he invested in. “I think I know their future, frankly, better than somebody that comes in to take a look,” Buffett said before the start of Omaha, Nebraska-based Berkshire’s annual shareholder meeting today. “They may be using more of a checklist type approach.”
With companies curtailing their expansion plans and people cutting down expenses, the premium income of the general insurance industry went up by 9.09 per cent to Rs 30,601 crore in FY09 against Rs 28,051 crore collected in FY08.
India’s exports fell the most on record in March, extending the longest declining streak in a decade as the worst global recession since World War II damped demand for the nation’s products. Merchandise shipments dropped 33% from a year earlier to $11.5 billion last month, the government said. That was the biggest fall since at least April 1995, when Bloomberg data began. Exports slid 21.7% in February.
DLF Ltd. reported a record 93% decline in fourth-quarter profit, as demand for homes, offices and shops fell following an economic slowdown.
Net income fell to 1.59 billion rupees ($32 million) in the three months ended March 31, from 21.8 billion rupees a year earlier, the company said in a release. The profit was lower than the 3.13 billion rupee median estimate of nine analysts surveyed by Bloomberg News.
DLF Ltd, the country’s largest real estate developer, plans to raise Rs 5,500 crore through the sale of non-core assets such as power units and hotels to help it reduce its debt. In addition, it is banking on another Rs 2,000 crore of additional inflows from group company DLF Assets (DAL), the company said in a presentation to analysts.
Suzlon Energy Ltd. paid 30 million euros ($40 million) to Martifer SGPS SA as part payment for a stake in a German unit, the Portuguese company said in a statement on its Web site. Suzlon needs to pay the remaining 175 million euros this month to complete the purchase of the 22.4 percent stake in REpower Systems AG, Martifer said.
Taking benefit of the abundant liquidity, State Bank of India has reduced the interest rate on domestic term deposits by 25 basis points across maturities. “There is lot of liquidity, while credit off-take remains subdued. This has provided us the opportunity to revise deposit rates,” a top SBI executive said. While the new rates will be effective May 4, this is the second time in three weeks that the public sector lender has lowered deposit rates. On April 13, it had lowered term deposit rates by 25-50 basis points across maturities.
Government filed an affidavit in the Supreme Court on the action taken by it on the issue of black money stashed in foreign banks. The affidavit was filed in response to a PIL filed by former Law Minister and eminent jurist Ram Jethmalani and five others who have been seeking a direction for the government to take action to bring back money to the tune of Rs 70 lakh crore stashed in foreign banks.
Drug manufacturer Ranbaxy Laboratories on Saturday said it has recalled all lots of Nitrofurantoin capsules, used in the treatment of infections. In a filing to the Bombay Stock Exchange, Ranbaxy Labs said Ranbaxy Pharmaceutical Inc (RPI), a wholly-owned US subsidiary, has recalled all lots of Nitrofurantoin (Monohydrate/Macrocrystals) capsules, United States Pharmacopeia (USP) 100 mg, available in the market there.
The first case of swine flu was confirmed in Asia as health experts said the world appeared better prepared to fight an epidemic now than a few years ago and vowed a vaccine was only months away. Confirmation by Hong Kong authorities that a traveller who arrived from Mexico, via Shanghai, had tested positive for A(H1N1) flu virus saw an entire hotel quarantined. And the news sent shivers through the territory that was at the center of the 2003 S ARS crisis, with Beijing responding swiftly by suspending flights from Mexico to Shanghai, China's state media reported today.
The World Health Organization may designate the outbreak of H1N1 influenza as a pandemic by raising its six-stage alert level to its highest step even as many cases of swine flu show symptoms no more severe than seasonal flu, health officials said. The WHO isn’t seeing sustained community transmission of the virus, known formally as influenza A H1N1, outside of North America, said Michael Ryan, the WHO’s director of global alert and response, at a news conference yesterday in Geneva where the UN health agency is based.
Unemployment in the U.S. probably climbed in April to a 25-year high, showing the labor market will be one of the last areas to emerge from the worst recession in at least 50 years, economists said before reports this week. The jobless rate jumped to 8.9 percent last month from 8.5 percent in March and employers cut at least 600,000 workers from payrolls for a fifth straight time, according to the median estimate in a Bloomberg News survey ahead of a May 8 Labor Department report. Other figures may show service industries shrank at a slower pace.
What is the New Pension System (NPS)?
(Collected by: Tanmay G Purohit)