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Wednesday, September 10, 2008
Subbarao defends tight monetary regime
Defending the Reserve Bank's tight credit policy, its new Governor D Subbarao on Tuesday said the apex bank would push financial sector reforms to accelerate high growth, but watch the scenario before unveiling any further monetary measures.
"Not tightening the monetary policy...would have eroded confidence in the economy...we will be monitoring the situation continuously and closely and take appropriate action," he said in his maiden press conference as RBI Governor here.
On financial sector reforms, Subbarao said that it was a key factor in financing our nine per cent growth over the last few years. "To sustain and accelerate this growth, financial sector reforms will remain important," he said.
However, he made it clear that financial sector reforms should promote inclusive growth through efficient and easily accessible financial services.
Elaborating on the runaway inflation, Subbarao said that without tightening of monetary policy, the impact on growth and the impact on the poor may have been severe.
He maintained that the inflation now at 12.34 per cent was, however, a short-term and global phenomenon and that its momentum has come down in the recent past.
The apex bank will watch those sectors which drive demand, in particular, those driving growth, Subbarao said.
Monetary policy transmission takes time, the RBI Governor said, adding that, "besides, we will also have to watch developments in the global markets and their potential impact on our economic management."
"The current high inflation is primarily an outcome of supply-side pressures as well as demand-side factors and is a short-term phenomenon, largely driven by international commodities, crude oil, metals and food prices," he said.
To support a healthy growth, inflation and inflationary expectations are to be contained, he said.
"The current high inflation is primarily an outcome of supply-side pressures as well as demand-side factors and is a short-term phenomenon, largely driven by international commodities, crude oil, metals and food prices,"Subbarao said.
In a bid to contain inflation, the apex bank had hiked its Cash Reserve Ratio (CRR) and short-term repo rates by 1.5 per cent and 1.25 per cent respectively since April.
Subbarao said the recent moderation in growth was only a cyclical down-turn, adding that,"the structural India growth story is still intact and credible."
The Government and the RBI would shortly bring out a comprehensive report of the committee on Financial sector assessment, he said.
"We need to draw a roadmap that responds to our immediate and medium term needs. Obviously this is a shared responsibility of the Government, the RBI and indeed all other regulators," Subbarao said.
An average 9 per cent growth in the economy in the past few years waas mainly led by the rise in private consumption, increasing private investment and surge in exports, Subbarao said.
"I believe these engines of growth are still on track," he said.
Rupee ends at over 45 per dollar
At 45.12/13
Rupee weakened past 45 per dollar for the first time since November 2006 on Wednesday as stock market losses raised expectations of more foreign fund outflows while strong dollar demand from foreign banks weighed.
Rupee ended at 45.12/13 per dollar, 0.62 percent weaker than Tuesday's close of 44.84/85
BSE Bulk Deals to Watch - Sep 10 2008
Deal Date Scrip Code Company Client Name Deal Type * Quantity Price **
10/9/2008 533016 AUSTRAL COKE OPG SECURITIES PVT LTD B 1273819 242.10
10/9/2008 533016 AUSTRAL COKE H.J. SECURITIES PVT. LTD. B 151835 247.64
10/9/2008 533016 AUSTRAL COKE MATRIX EQUITRADE PVT LTD B 402510 243.82
10/9/2008 533016 AUSTRAL COKE MATRIX EQUITRADE PVT LTD S 402510 243.87
10/9/2008 533016 AUSTRAL COKE OPG SECURITIES PVT LTD S 1273819 242.23
10/9/2008 533016 AUSTRAL COKE H.J. SECURITIES PVT. LTD. S 151835 247.50
10/9/2008 505506 AXON INFOTEC HASMUKHLAL M GANDHI S 5153 20.74
10/9/2008 590061 BRUSHMAN IND BLUE SQUARE CORP SERV P LTD B 150000 132.54
10/9/2008 590024 FERT CHEM LATIN MANHARLAL SEC PVT LTD B 34731 34.04
10/9/2008 513059 G.S. AUTO SPJSTOCK B 41669 83.31
10/9/2008 513059 G.S. AUTO SPJSTOCK S 42669 83.46
10/9/2008 513059 G.S. AUTO SHARDA C PUJARA S 30900 82.37
10/9/2008 531137 GEMSTONE INV BHUPESH RATHOD B 45000 55.35
10/9/2008 531137 GEMSTONE INV BHARAT S THAKKAR S 101000 55.34
10/9/2008 532980 GOKUL REFOIL OPG SECURITIES PVT LTD B 213675 331.04
10/9/2008 532980 GOKUL REFOIL OPG SECURITIES PVT LTD S 213675 331.10
10/9/2008 531602 KOFF BR PICT LAXMI CAP BROKING PVT LTD S 47555 33.73
10/9/2008 531366 KOHINOOR BRO BASMATI SECURITIES PVT LTD B 572529 6.60
10/9/2008 531366 KOHINOOR BRO JMP SECURITIES PVT. LTD. B 556899 6.55
10/9/2008 531366 KOHINOOR BRO S V ENTERPRISES B 3659872 6.39
10/9/2008 531366 KOHINOOR BRO JMP SECURITIES PVT. LTD. S 556899 6.52
10/9/2008 531366 KOHINOOR BRO S V ENTERPRISES S 3659872 6.35
10/9/2008 523475 LOTUS CHOC C PRASHANTHA ACHARYA B 300000 24.99
10/9/2008 523475 LOTUS CHOC C H.H. JAVERI S 200000 24.62
10/9/2008 512047 NATRAJ FIN NARENDRA VALLABJI BAHUVA S 50000 28.91
10/9/2008 533015 NUTEK INDIA OPG SECURITIES PVT LTD B 169455 175.27
10/9/2008 533015 NUTEK INDIA OPG SECURITIES PVT LTD S 169455 175.34
10/9/2008 532884 REFEX REFRIG TUSHAR RAMESHBHAI PATEL B 115000 242.95
10/9/2008 533017 RESURGERE OPG SECURITIES PVT LTD B 299355 290.14
10/9/2008 533017 RESURGERE OPG SECURITIES PVT LTD S 299355 290.56
10/9/2008 532886 SEL MANUF MBL AND COMPANYA LIMITED B 179110 233.72
10/9/2008 532886 SEL MANUF HARDIK M MITHANI B 285357 239.99
10/9/2008 532886 SEL MANUF OPG SECURITIES PVT LTD B 214201 237.24
10/9/2008 532886 SEL MANUF PRIYANKA DARSHAN DESAI B 208656 230.20
10/9/2008 532886 SEL MANUF SPJSTOCK B 639932 233.50
10/9/2008 532886 SEL MANUF B K SHAH CO B 181625 231.65
10/9/2008 532886 SEL MANUF MBL AND COMPANYA LIMITED S 179110 235.62
10/9/2008 532886 SEL MANUF HARDIK M MITHANI S 285357 232.05
10/9/2008 532886 SEL MANUF OPG SECURITIES PVT LTD S 214201 237.31
10/9/2008 532886 SEL MANUF PRIYANKA DARSHAN DESAI S 158656 227.14
10/9/2008 532886 SEL MANUF SPJSTOCK S 640432 231.90
10/9/2008 532886 SEL MANUF B K SHAH CO S 180624 230.86
10/9/2008 505075 SETCO AUTO SETCO ENGINEERING PVT LTD B 275000 189.27
10/9/2008 505075 SETCO AUTO HARISH KIRITBHAI SHETH HUF S 275000 189.27
10/9/2008 532765 USHER AGRO MANHARLALNSHAH B 855708 186.16
10/9/2008 532765 USHER AGRO SWISS FINANCE CORPORATION MAURITIUS LIMITED S 188550 184.14
10/9/2008 532765 USHER AGRO MANHARLALNSHAH S 855708 184.93
10/9/2008 532411 VISESH INFOT IVORY CONSULTANTS PVT LTD B 216013 16.54
10/9/2008 533011 VISHAL INFO OPG SECURITIES PVT LTD B 155225 318.35
10/9/2008 533011 VISHAL INFO OPG SECURITIES PVT LTD S 155225 318.38
10/9/2008 531249 WELL PACK PA SUBHKARAN TILOKCHAND AGARWAL B 40000 28.70
NSE Bulk Deals to Watch - Sep 10 2008
Date,Symbol,Security Name,Client Name,Buy/Sell,Quantity Traded,Trade Price / Wght. Avg. Price,Remarks
10-SEP-2008,APARINDS,Apar Industries Limited,RELIANCE CAPITAL TRUSTEE CO LTD-A/C RELIANCE DIVERSIFIED POW,BUY,362600,164.50,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,BUY,320307,239.55,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,325714,238.61,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,CPR CAPITAL SERVICES LTD.,BUY,164605,241.35,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,DINESH MUNJAL,BUY,204314,240.50,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,286028,244.75,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,MANIPUT INVESTMENTS PVT LTD,BUY,227880,244.80,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,PRASHANT JAYANTILAL PATEL,BUY,295435,246.29,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,R.M. SHARE TRADING PVT LTD,BUY,145151,241.58,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,TRANSGLOBAL SECURITIES LTD.,BUY,299610,239.60,-
10-SEP-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,BUY,8567703,48.34,-
10-SEP-2008,JINDALSAW,Jindal Saw Limited,MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. SVB,BUY,396884,628.30,-
10-SEP-2008,PIONEEREMB,Pioneer Embroideries Limi,SARJEET GOYAL,BUY,59136,40.56,-
10-SEP-2008,RESURGERE,Resurgere Mines & Mineral,DKG SECURITIES PVT. LTD.,BUY,94797,292.34,-
10-SEP-2008,RESURGERE,Resurgere Mines & Mineral,R.M. SHARE TRADING PVT LTD,BUY,155346,294.05,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,B K SHAH CO KETAN BHAILAL SHAH,BUY,203868,234.52,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,DYNAMIC STCOK BROKING (I) PVT LTD,BUY,129390,235.61,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,HARDIK M MITHANI,BUY,92777,235.53,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,MBL & COMPANY LTD.,BUY,197001,235.40,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,YUVAK SHARE TRADING PVT LTD,BUY,136858,236.31,-
10-SEP-2008,VINCARDS,Vintage Cards & Creations,MUKUL RAMVALLABH TIBREWALA,BUY,5317,88.82,-
10-SEP-2008,VISESHINFO,Visesh Infotecnics Limite,IVORY CONSULTANTS PVT LTD.,BUY,224757,16.50,-
10-SEP-2008,VITLINFO,Vishal Information Techno,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,78406,319.40,-
10-SEP-2008,APARINDS,Apar Industries Limited,ALLIANZ BAJAJ LIFE INSURANCE CO.LTD.,SELL,362859,164.50,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,AMBIT SECURITIES BROKING PVT. LTD.,SELL,320307,239.56,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,325714,238.70,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,CPR CAPITAL SERVICES LTD.,SELL,164605,241.41,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,DINESH MUNJAL,SELL,204314,240.78,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,286028,244.70,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,MANIPUT INVESTMENTS PVT LTD,SELL,227880,244.82,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,PRASHANT JAYANTILAL PATEL,SELL,295435,245.76,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,R.M. SHARE TRADING PVT LTD,SELL,145151,241.35,-
10-SEP-2008,AUSTRAL,Austral Coke & Projects L,TRANSGLOBAL SECURITIES LTD.,SELL,299608,239.41,-
10-SEP-2008,IFCI,IFCI Ltd.,CLEAN FINANCE & INVESTMENT LTD,SELL,8567703,48.35,-
10-SEP-2008,PIONEEREMB,Pioneer Embroideries Limi,SARJEET GOYAL,SELL,59136,40.33,-
10-SEP-2008,RESURGERE,Resurgere Mines & Mineral,DKG SECURITIES PVT. LTD.,SELL,168941,290.35,-
10-SEP-2008,RESURGERE,Resurgere Mines & Mineral,R.M. SHARE TRADING PVT LTD,SELL,155346,295.82,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,B K SHAH CO KETAN BHAILAL SHAH,SELL,203861,231.98,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,DYNAMIC STCOK BROKING (I) PVT LTD,SELL,125592,232.53,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,HARDIK M MITHANI,SELL,92777,238.63,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,MBL & COMPANY LTD.,SELL,197001,233.70,-
10-SEP-2008,SELMCL,SEL Manufacturing Company,YUVAK SHARE TRADING PVT LTD,SELL,136858,234.49,-
10-SEP-2008,VINCARDS,Vintage Cards & Creations,MUKUL RAMVALLABH TIBREWALA,SELL,1591,88.45,-
10-SEP-2008,VINCARDS,Vintage Cards & Creations,SETU SECURITIES LTD,SELL,6500,88.70,-
10-SEP-2008,VISESHINFO,Visesh Infotecnics Limite,BNP PARIBAS ARBITRAGE,SELL,196106,16.69,-
10-SEP-2008,VISESHINFO,Visesh Infotecnics Limite,IVORY CONSULTANTS PVT LTD.,SELL,1136,15.00,-
10-SEP-2008,VITLINFO,Vishal Information Techno,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,78406,319.46,-
Post Session Commentary - Sep 10 2008
Domestic markets closed the day with losses as it witnessed sustained selling pressure for the second straight day. The negative opening on European markets also weighed on sentiment. Indian market opened sharply lower tracking weak cues from global markets. Further market continued to trade with pressure in negative terrain. During last trading hours, markets extended its losses and plunged sharply to close lower on profit booking. Rise in crude prices in Asian trade also fueled to the negative attitude of investors. Crude oil for October delivery rose to $104.03 a barrel on the New York Mercantile Exchange mid afternoon in Singapore. NSE Nifty ended around 4,400 mark and BSE Sensex below 14,700 level. Mid cap and Small cap stocks also remained under pressure. From the sectoral front, all indices closed with losses and Metal stocks were worst performers as closed with deep cut of more than 5%. Along with that, Oil & Gas, Capital Goods, Reality, Power and Bank stocks pulled the markets lower. The market breadth was negative as 1722 stocks closed in red while 931 stocks closed in green and 77 stocks remained unchanged.
The BSE Sensex closed lower by 238.15 points at 14,662.61 and NSE Nifty ended down by 68.45 points at 4,400.25. The BSE Mid Caps and Small Caps closed with cut of 69.27 points at 5,708.93 and 61.19 points at 6,903.42 respectively. The BSE Sensex touched intraday high of 14,866.32 and intraday low of 14,609.83.
Ministers of the Organization of Petroleum Exporting Countries agreed to keep output steady until mid-December. OPEC members agreed to cut more than 500,000 barrels a day of production that exceed its self-imposed output quotas and left its production target unchanged at 28.8 million barrels a day after concluding its meeting in Vienna.
Losers from the BSE are Sterlite In (11.78%), Tata Steel (5.21%), Tata Power (3.44%), Reliance Infra (3.36%), Bharti Airtel (2.93%), Reliance (2.77%), HDFC (2.44%), JP Associates (2.33%), ONGC Ltd (2.23%) and BHEL (2.05%).
The BSE Metal index lost 647.18 points to close at 11,154.00. Major losers are Sterlite In (11.78%), Jindal Steel (8.04%), Guajrat NRE C (7.58%), JSW SL (7.48%), Steel Authority (6.50%) and Tata Steel (5.21%).
The BSE Oil & Gas index closed lower by 215.78 points at 9,667.38 as Essar Oil Ltd (3.87%), Reliance (2.77%), IOC Ltd (2.57%), ONGC Ltd (2.23%), Cairn India (2.03%) and Aban Offshore (2.41%) ended in negative territory.
The BSE Capital Goods index ended down by 132.59 points at 12,233.80. Major losers are Gammon Indi (5.58%), Jyoti Struct (3.90%), Crompton Greaves (3.81%), Walchand In (3.61%), Havells India (2.68%) and BHEL (2.05%).
The BSE Reality index plunged 77.17 points to close at 4,999.99. As Orbit Co In (5.62%), Housing Dev (4.80%), Anant Raj In (2.43%), Unitech Ltd (2.43%), Pheonix Mill (2.30%) and Ansal Infra (2.06%) closed in negative territory.
The BSE Consumer Durables index closed lower by 47.49 points at 3,688.91. Losers are Rajesh Export (2.77%), Gitanjali GE (2.68%), Titan Ind (1.00%), Blue Star L (0.98%) and Videocon Ind (0.39%).
The BSE Power index dropped by 45.00 points to close at 2,655.24. As Crompton Greaves (3.81%), GMR Infrast (3.55%), Tata Power (3.44%), Reliance Infra (3.36%) and Lanco Infra (2.87%) closed in negative territory.
Metal stocks play spoil sport
Taking lead from weak global markets, the Sensex was 183 points below its previous close at the opening bell. It traded lower all through the day due to selling in metal, oil & gas and power stocks. Though at one point of time, it was just 34 points below ( which is the day’s high) the previous close, it never managed to cross the previous close level. The lowest of the day was 290 points below the previous close. The Sensex finally closed the day 238 points lower. Following almost a similar pattern, the Nifty ended the day 68 points lower at 4000.
Market breadth was negative, as of the 2,730 stocks traded on the BSE, around 63% shares (1,721 stocks) declined, while only 34% shares (931 stocks) advanced. The remaining 3% stocks (78 stocks) remained unchanged for the day. Of the 30 shares that make the index, 24 shares declined, while only six advanced.
All the 13 sectoral indices of the BSE traded lower, with the BSE Metal ending 5.48% lower followed by BSE Oil & Gas and BSE Power that shed 2.18% and 1.67% respectively. Metal stocks came under sharp hammering. Sterlite Industries shed 11.78% at Rs507.90, Jindal Steel fell 8.04% at Rs1,655.45, Gujarat NRE Coke declined lost 7.58% at Rs79.90 and JSW was down nearly 7.48% at Rs661.65. Among the other losers Tata Steel dipped 5.21% at Rs535, Tata Power slipped by 3.44% at Rs1,049.10, Reliance Infrastructure dropped 3.36% at Rs1,034.95, Bharti Airtel slumped 2.93% at Rs811.95 and Reliance Industries shed 2.77% at Rs2,083.55. Grasim Industries however, rose 0.85% at Rs2,046.75, ACC advanced 0.74% at Rs601.10 and Infosys moved up 0.68% at Rs1,759.15.
Over 2.12 crore IFCI shares changed hands on the BSE followed by Austral Coke (1.14 crore shares), Reliance Natural Resources (93.55 lakh shares), Kohinoor Foods (80.15 lakh shares) and Tata Teleservices Maharashtra (72.63 lakh shares).
Austral Coke was the most actively traded counter and clocked a turnover of Rs275 crore followed by Sterlite Industries (Rs212 crore), Reliance Industries (Rs204 crore), Reliance Capital (Rs184 crore) and ICICI Bank (Rs159 crore).
Metal shares lead 238-point Sensex slide
Weak global markets weighed heavily on the domestic bourse pulling the BSE Sensex down 238.15 points. Nevertheless, the key benchmark indices cut losses in late trade led by recovery in banking stocks. Volatility was high
As per provisional data released by the stock exchanges after trading hours, foreign funds today, 10 September 2008, sold shares worth a net Rs 1,037.28 crore. Domestic funds bought shares worth a net Rs 492.56 crore.
Metal shares were the chief casualty of the day with Sterlite Industries plunging over 11% and Tata Steel sliding 5%. Index heavyweight Reliance Industries dropped little under 3%. The market breadth was extremely weak.
US stocks slumped on Tuesday, 9 September 2008 as financial shares sold off on worries about Lehman Brothers' ability to raise much-needed cash. The Dow Jones industrial average plunged 280.01 points, or 2.43%, to 11,230.73. The S&P 500 index fell 43.28 points, or 3.41%, to 1,224.51, and the Nasdaq Composite index declined 59.95 points, or 2.64%, to 2,209.81.
European markets which opened after Indian market were subdued. Key benchmark indices in UK, Germany and France were down by between 0.50% and 1.17%.
Asian markets which opened before Indian market were mixed today, 10 September 2008. Key benchmark indices in Japan, Hong Kong, Singapore were down by between 0.44% and 2.40%. Indices in China, South Korea, and Taiwan rose between 0.23% and 0.72%.
The BSE 30-share Sensex slipped 238.15 points or 1.6%, to settle at 14,662.61. It opened 188.23 points lower at 14,717.53. At the day's low of 14,609.83 hit in late trade, the Sensex lost 290.93 points. At the day’s high of 14,866.32 hit in mid-morning trade, the Sensex fell 34.44 points.
The S&P CNX Nifty slipped 68.45 points or 1.53% at 4400.25. Nifty September 2008 futures were at 4415.30, at a premium of 15.05 points as compared to spot closing. NSE's futures & options (F&O) segment turnover was Rs 52,717.79 crore, which was higher than Rs 43,958.71 crore on Tuesday, 9 September 2008.
The BSE Sensex is down 5624.38 points or 27.72% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6554.16 points or 30.85% away from its all-time high of 21,206.77 struck on 10 January 2008.
Reliance Power was down 0.03% to Rs 169.35. The stock replaced Dr Reddy’s Labs in Nifty index from today. Dr Reddy’s Labs slipped 1.97% to Rs 567.05.
The market breadth was weak on BSE with 1716 shares declining as compared to 944 that advanced. 77 remained unchanged.
The total turnover on BSE amounted to Rs 5152 crore on BSE as compared to Rs 4,587.35 crore on Tuesday, 9 September 2008.
The BSE Mid-cap index fell 1.20% at 5,708.93 and the BSE Small-cap index slipped 0.88% to 6,903.42
Among the 30-member Sensex pack, 21 declined while the rest advanced.
The BSE Metal index lost the most among the sectoral indices on BSE, sliding 5.48% to 11,154 weighed by steep fall in Sterlite Industries. Aluminium and copper maker Sterlite Industries tanked 11.76% to Rs 508 after plunging 7.50% to Rs 575.70 yesterday, 9 September 2008. It was the top loser from the Sensex pack. The Sterlite ADR tumbled 16.23% yesterday, 9 September 2008 on the New York Stock Exchange (NYSE) after the Vedanta group on Tuesday, 9 September 2008 announced a restructuring to simplify its corporate structure into three commodity-focused groups: copper and zinc-lead, aluminium-energy and iron ore.
As per the restructuring scheme, which will be effective from April 2009, Sterlite will demerge its aluminium and energy businesses to Madras Aluminium Company (Malco) to be simultaneously renamed Sterlite Aluminium. Vedanta will transfer its 79.4% equity interest in Konkola Copper Mines Plc (KCM) to Sterlite.
Malco will issue seven shares of Rs 2 each to the shareholders of Sterlite for every four shares of Rs 2 each held by them. Sterlite will issue one share of Rs 2 each to Malco shareholders for every 51 shares of Rs 2 each held by them.
Madras Aluminium Company (Malco) was down 5.72% to Rs 201.95 on 26.87 lakh shares
Worlds sixth largest steel producer by capacity Tata Steel plunged 5.10% to Rs 535.60.
Other metal stocks JSW Steel (down 7.43% to Rs 662), Jindal Steel & Power (down 7.97% to Rs 1656.70), Sesa Goa (down 3.73% to Rs 142), Hindustan Zinc (down 3.57% to Rs 529.75), and Steel Authority of India (down 6.40% to Rs 140.30), slumped.
India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) lost 2.93% to Rs 2080 on 9.70 lakh shares. The stock came off its day’s high of Rs 2135 hit in early trade. As per reports, the Prime Minister’s Office (PMO) may recommend levy of export tax or even ban petroleum product exports from Reliance's export oriented refineries in Jamnagar. The BSE Oil & Gas index slipped 2.18% to 9,667.38.
Banking shares staged a comeback in late trade. The Bankex slipped 0.58% to 7,325.35. India's largest private sector bank in terms of net profit ICICI Bank was down 1.52% to Rs 702, off day’s low of Rs 686.60. HDFC Bank, India's second largest private sector bank in terms of net profit was down 0.62% to Rs 1285.05, off day’s low of Rs 1250.10. India’s largest state run bank in terms of net assets State Bank of India rose 0.35% to Rs 1566 after sliding to a low of Rs 1534.35.
Capital goods heavyweights slipped, leading a 1.07% fall to 12,233.80 in BSE Capital Goods index. India’s largest power equipment maker by sales, Bharat Heavy Electricals declined 1.95% to Rs 1712.90. The company on Tuesday, 9 September 2008, said it won a contract worth Rs 2,200 crore for setting up a combined cycle power plant in Tripura on turnkey basis.
India’s largest engineering & construction firm by outstanding order book position Larsen & Toubro fell 0.97% to Rs 2710. Larsen & Tobro today, 10 September 2008, said it had received an order worth $160 million from Brazil's Petrobras
Telecom pivotals were also subdued. India’s second largest cellular services provider in terms of market capitalisation Reliance Communications (RCom) slipped 0.68% to Rs 402.50. As per recent reports, RCom’s subsidiary Reliance Big Entertainment has acquired a majority stake in the US-based cricket webcasting portal, Willow TV, for an undisclosed amount.
Bharti Airtel, the country’s largest cellular services provider in terms of market capitalisation declined 3.04% to Rs 811
Reliance Infrastructure (down 3.17% to Rs 1037), Tata Power (down 3.54% to Rs 1048), and Jaiprakash Associates (down 2.44% to Rs 167.60), edged lower from Sensex pack.
North India’s largest cement maker by sales ACC gained 1.30% to Rs 604.45 and was the top gainer from Sensex pack.
Real estate heavyweights slipped with the BSE Realty index sliding 1.52% to 4,999.99. DLF, the country’s largest realty company by market capitalisation slipped 0.19% to Rs 502.90. On Monday, 8 September 2008, the company received a clearance from the Securities and Exchange Board of India (Sebi) to go ahead with a buyback plan. In July 2008, DLF had announced its Rs 1,100-crore plan to buy back shares from existing shareholders at a price not exceeding Rs 600 a share.
Unitech, the country’s second largest realty company by market capitalisation, fell 2.55% to Rs 158.45.
Ranbaxy Laboratories, India’s top drug maker by sales fell 0.32% to Rs 455. The Japanese drug maker Daiichi Sankyo’s open offer to acquire an additional 20% stake at Rs 737 a share in the company ended on 4 September 2008.
IT pivotals were mixed despite the rupee sliding past the 45 mark per dollar today, 10 September 2008. India’s second largest software services exporter Infosys Technologies rose 0.68% to Rs 1758.95. The stock came off day’s low of Rs 1726.
Other IT pivotals Satyam Computer Services (down 0.79% to Rs 421.65), Wipro (down 0.24% to Rs 433.10), and TCS (down 1.98% to Rs 849.05), edged lower. IT firms derive a lion's share of revenue by way of exports and therefore fall in the domestic currency benefits the IT sector.
Austral Coke & Projects topped the turnover chart on BSE with a turnover of Rs 275.65 crore followed by Sterlite Industries (Rs 212.85 crore), Reliance Industries (Rs 204.30 crore), Reliance Capital (Rs 184.30 crore) and ICICI Bank (Rs 159.60 crore), in that order.
IFCI led the volumes chart on BSE clocking volumes of 2.12 crore shares followed by Reliance Natural Resources (93.55 lakh shares), Tata Teleservices (Maharashtra) (72.60 lakh shares), Reliance Power (46.75 lakh shares) and Sterlite Industries (40.65 lakh shares), in that order.
SEL Manufacturing Company plunged 8.35% to Rs 215.65. The company said it would set up a technical textile park in Himachal Pradesh. The company made this announcement during trading hours today, 10 September 2008.
Usher Agro surged 12.05% to Rs 192 after company entered into a memorandum of understanding with Satake Corporation, Japan for expansion of rice milling capacity by another 1 million tonne. The company announced the expansion plans during market hours today, 10 September 2008.
Hydro S&S Industries galloped 20% to Rs 41.45 after the company said its board will meet on 16 September 2008 to consider buyback of equity shares. The company made this announcement after trading hours on Tuesday, 9 September 2008.
Madras Cements gained 4.16% to Rs 2620.10 after the company’s board fixed 10 October 2008 as the record date for 1:1 bonus issue and 10-for-1 stock split. The company fixed the record date after trading hours on Tuesday, 9 September 2008.
The central bank governor Duvvuri Subbarao said on Tuesday, 9 September 2008 that India's inflation is showing signs of moderating but it is too early to conclude whether this is a trend and signaled that he would wait and see before taking any fresh steps.
US crude for October 2008 delivery rose 52 cents at $103.78 a barrel today, 10 September 2008, after the Organisation of Petroleum Exporting Countries (Opec) surprised traders with a deal to effectively cut production by just over 500,000 barrels per day (bpd). US crude for October 2008 delivery had touched a 5-month low of $103.72 yesterday, 9 September 2008.
Wall Street Surrender Gains
Weakness In Financial Sector Sent The Market Lower
Stocks on Wall Street ended the session sharply lower, with the Dow closing down 280 points erasing nearly all of the gains posted in the previous session. Weakness in the financial sector sent the markets lower on negative news on Lehman Brothers.
The major averages which fell further in the final hour of the session, closed at their worst levels of the day. The Dow closed down 280.01 points or 2.4% at 11,230.73, the Nasdaq closed down 59.95 points or 2.6% at 2,209.81 and the S&P 500 closed down 43.28 points or 3.4% at 1,224.51, marking the largest one day percent decline since February 2007.
Weakness was broad-based, 91% of the S&P 500 components posted a loss and all ten of the economic sectors settled in negative territory. Volume was on the heavy side, with 1.7 billion shares exchanging hands on the NYSE.
If we look sector wise the financial sector, which fell by 6.6%, acted as the main drag on the market, with Lehman Brothers sparking much of the selling interest. Lehman Brothers plunged 45% as traders speculated about the firm's capital position after reports indicated that a state-run Korean bank is no longer in talks to buy some or all of Lehman. However, Reuters said that a Korean official denied the reports. Shares of Lehman Brothers fell further after Standard & Poor’s put the investment bank’s credit ratings on Credit Watch with negative implications. S&P stated that the drop in Lehman’s stock could hinder the company’s ability to raise capital.
The energy sector plunged by 6.4% got clipped as energy commodities fell 3.6%. The losses came on expectations that Hurricane Ike would spare production in the Gulf of Mexico and OPEC would leave its oil output unchanged. Crude prices fell a steep 4.2% to $101.87 per barrel, which is the lowest level since April.
Adding to the selling pressure, the National Association of Realtors released a key report on pending home sales. In the report, the NAR said that that pending home sales fell by 3.2% in July following an upwardly revised 5.8% increase in June. Pending sales fell 7.5% in the Northeast and 10.6% in the West, while the Midwest was up 2.8% and the South was flat. Hurt by the disappointing report on pending home sales, housing stocks showed considerable weakness as well. The Philadelphia Housing Index fell 6.9 percent, reversing the gain posted in the previous session.
Going in detail index wise, the majority of the Dow Jones stocks ended the session with notable losses, sending the blue chip index sharply lower. Of the 30 stocks that make up the Dow, only 5 ended the session with gains.
AIG led the Dow lower on fears that the company’s exposure to the mortgage markets may force the company to raise fresh capital. Shares of the insurer ended the day down 19.3 percent. With the decline, the stock gave back all of the gains posted in the previous two sessions, closing at its worst level in well over ten years.
Other financial stocks inside the Dow closed sharply lower as well, including Citigroup, Bank of America and JP Morgan Chase. Citigroup closed down 7.1%, Bank of America closed down 6.4% and JP Morgan Chase closed down 5%.
Reversing most of a gain posted in the previous session, American Express also saw significant selling pressure. Shares of the credit card issuer fell 5.6%, although they remain in a nearly two-week trading range.
Amid fears a global economic slowdown, Caterpillar posted a substantial loss as well. The construction equipment manufacturer ended the session 5 percent lower, extending a recent downtrend. With the decline, the stock closed at its worst level in well over a year.
Pfizer, Exxon Mobil and Home Depot also showed considerable weakness. Pfizer ended the session 4.7 percent lower on news that it will withdraw all marketing applications globally for its skin treatment drug dalbavancin. Exxon Mobil closed down 4.6 percent, compared to a 3.4 percent decline by Home Depot.
On the other hand, Coca Cola ended the session with a notable gain. Shares of the beverage maker closed up 0.9%, extending a recent up trend. McDonald’s also ended the day sharply higher. The stock saw a gain of 1.2%, adding to gains posted in the past two sessions. Earlier in the day, the company reported 8.5% growth in its global comparable sales for the month of August, helped by its popular breakfast menu, Olympic-related marketing, and extended hours.
In Commodity market, the gold closed lower for a seventh straight session, hurt by a stronger dollar and lower crude oil prices. December gold ended down $10.50 at $792 an ounce, its lowest closing mark of 2008. Gold touched as low as $780.20 an ounce earlier in the day.
The Crude-oil futures dropped almost 3% to close at their lowest level since April as concerns waned over potential damage to energy infrastructure in the Gulf of Mexico from Hurricane Ike, and comments from a key oil producers' meeting in Vienna indicated a likely decision to leave output quotas unchanged. Crude for October delivery fell $3.08, or 2.9%, to close at $103.26 a barrel on the New York Mercantile Exchange. It dropped as far as $103.15 during the session to mark a fresh five-month low. Prices extended their decline into electronic trading evening to drop below $102 per barrel.
Earlier on the day, the stock markets across the Asian region closed sharply lower, as traders did some profit taking following Monday's rally. The Japanese Nikkei 225 average closed down 1.8%. Hang Seng China Enterprises tracked Shanghai stocks lost 2.79% to 10,825.25 while the benchmark Hang Seng index closed down 1.46% at 20,491.1. The BSE Sensex declined 0.41% to 14,883.4.
The major European markets also ended the session lower after trading in a mixed fashion earlier in the day. The French CAC 40 Index closed down 1.1%, while the German DAX Index ended the session 0.5% lower. The U.K’s FTSE 100 Index finished the day down 0.6%.
Looking ahead the economic calendar features the Mortgage Bankers Association weekly report on mortgage applications, which will be followed by the Energy Information Administration weekly data on crude oil inventories.
Pre Session Commentary - Sep 10 2008
The Indian Market is expected to have negative opening as US markets closed in deep red and Asian markets are trading lower. On Tuesday, domestic markets made a smart recovery to give up its earlier losses and closed off the day’s low but slightly in red. After a lower opening on unfavorable cues from Asian markets, markets continued to decline. Further, firm European markets triggered a sharp recovery in afternoon trade, lifting the market above dotted line. The market once again slipped into the red on fresh selling at higher level to finish with a modest loss. NSE Nifty ended below 4,500 mark and BSE Sensex around 14,900 level. From the sectoral front, most of the selling was visible in Metal, Bank, Reality, Capital Goods and Auto stocks. However, Oil & Gas stocks were in investor’s eye as witnesses most of the buying from this basket. The BSE Sensex closed lower by 44.21 points at 14,900.76 and NSE Nifty ended down by 13.60 points at 4,468.70. The BSE Mid Caps and Small Caps closed with cut of 41.69 points at 5,778.20 and by 18.19 points at 6,964.61. We expect that market may decline further during the trading session.
Crude oil fell in New York on Saudi Arabia''s oil minister statement that supplies are sufficient to meet demand, which raised speculation for OPEC to maintain production levels on its meeting in Vienna. Further, ministers of the Organization of Petroleum Exporting Countries agreed to keep output steady until mid-December. OPEC members agreed to cut excess production and left its production target unchanged at 28.8 million barrels a day after concluding its meeting in Vienna.
On Tuesday, the US market closed lower on housing and financial sector worries. The pending home sales data fell 3.2% also added to the market''s nervousness. Crude Oil for October delivery settled 2.9% lower, losing $3.08 to $103.26 a barrel on the New York Mercantile Exchange, its lowest close since 1st April
The Dow Jones Industrial Average (DJIA) closed lower by 280.01 points to close at 11,230.73 followed by the NASDAQ index ended down by 59.95 points to close at 2,209.81 and the S&P 500 (SPX) lost 43.28 points to close at 1,224.51.
Indian ADRs ended downward. In technology sector, Patni Computers ended lower by (4.62%) followed by Wipro plunged by (2.75%), Infosys dropped by (2.53%) and Satyam lost (2.30%). In banking sector HDFC Bank and ICICI Bank lost (7.61%) and (5.77%). In telecommunication sector, Tata Communication and MTNL fell by (3.25%) and (1.80%). Sterlite industries decreased by (16.23%).
Today the major stock markets in Asia are trading lower tracking Wall Street losses overnight. Hang Seng index is trading weaker by 435.31 points at 20,055.80 along with Japan’s Nikkei trading down by 131.11 points at 12,269.54 and Singapore''s Straits plunged 26.94 points at 2,646.27. However, Taiwan Weighted gained 50.51 points at 6,475.28.
The FIIs on Tuesday stood as net buyer in equity and in debt. Gross equity purchased stood at Rs3,356.40 Crore and gross debt purchased stood at Rs170.00 Crore while the gross equity sold stood at Rs2,598.40 Crore and gross debt sold stood at Rs162.80 Crore. Therefore, the net investment of equity reported was Rs758.10 Crore and net debt was Rs7.20 Crore.
The Indian rupee dropped to a fresh two year low on Tuesday. The partially convertible rupee ended at 44.84/85 per dollar, 0.5% weaker than 44.60/61 of Monday, but stronger than intraday low of 44.93, a level it last traded on November, 2006.
Today, Nifty has support at 4,354 and resistance at 4,536 and BSE Sensex has support at 14,432 and resistance at 15,156.
Slide may continue
Market may slide further on account of weak Asian markets in morning trades and overnight fall in the US markets. Political uncertainties and continued selling pressure may also drag the domestic indices further down. Key indices, the Nifty may get support at 4420 level and on the upside it could test higher levels at 4500. The Sensex has a likely support at 14,750 and may face resistance at 15,100.
US indices declined on Tuesday as worries about Lehman Brothers' ability to raise capital, and about the extent of AIG's mortgage-related losses, exacerbated broad recession fears. While the Dow Jones slipped 280 points at 11231, while the Nasdaq lost 60 points to close at 2210.
All the Indian ADRs fell in tune with the broader market. Rediff led the slump and tumbled 11.69% followed by HDFC Bank (down 7.61%), ICICI Bank (down 5.77%), Patni Computer (down 4.62%), Dr Reddy (down 4.31%) and VSNL (down 3.25%) while Infosys, Satyam, Wipro, Tata Motors and MTNL slipped by over 1-2% each.
Crude oil prices lost sharply as investors believed OPEC will keep production at current levels, and as Hurricane Ike lost strength over Cuba. With the Nymex light crude oil for October delivery moved down by $3.08 to close at $103.26 a barrel. In the commodity space, the Comex gold for December series lost $10.50 to settle at $792 a troy ounce.
Morning Call - Sep 10 2008
Market Grape Wine :
In House:
Nifty at a support of 4400 and 4325 with resistance at 4525 and 4560 levels.
Cash: Buy ONGC above 1125 target 1160 with S/L 1110.
Cash: Sell SBIN target 1510 with S/L 1580.
Future: Sell PNB below 503 targets 490 with S/L 510.
Future: Sell KOTAK BANK below 625 target 595 with S/L 636.
Out House:
Markets at a support of 14786 & 14591 and resistance at 14986 & 15091 levels .
Buy : RIL at dips
Buy : Corerproject at dips
Buy : RPower at dips
Buy : RComm
Buy : Jayshreetea & Mcleodrussel
Buy : SBIN
Buy : Titan
Buy : LNT at dips
Dark Horse : Titan , GTOFFshore , Sbin , Kohinoor , Bhel , NTPC & Aban
Market seen under pressure on weak global cues
Key benchmark indices are likely to open lower today, 10 September 2008 on weak cues from global markets. Volatility is likely to remain high.
Meanwhile the Central bank governor Duvvuri Subbarao said on Tuesday, 9 September 2008 that India's inflation is showing signs of moderating but it is too early to conclude whether this is a trend and signaled that he would wait and see before taking any fresh steps.
US crude for October 2008 delivery rose 52 cents at $103.78 a barrel today, 10 September 2008 after organisation of petroleum exporting countries surprised traders with a deal to effectively cut production by just over 500,000 barrels per day (bpd) from July 2008 levels.
Most Asian markets were trading lower today, 10 September 2008, tracking losses on the Wall Street. China's Shanghai Composite plunged 1.93% or 41.35 points at 2,104.43, Japan's Nikkei slipped 1.06% or 131.11 points at 12,269.54, Hong Kong's Hang Seng tumbled 2.12% or 435.31 points at 20,055.80, Singapore's Straits Times fell 1.01% or 26.94 points at 2,646.27, South Korea's Seoul Composite was down 0.02% or 0.35 points at 1,454.15. However, Taiwan's Taiwan Weighted gained 0.79% or 50.51 points at 6,475.28
US stocks slumped on Tuesday, 9 September 2008 as financial shares sold off on worries about Lehman Brothers' ability to raise much-needed cash. The Dow Jones industrial average plunged 280.01 points, or 2.43%, to 11,230.73. The S&P 500 index fell 43.28 points, or 3.41%, to 1,224.51, and the Nasdaq Composite index declined 59.95 points, or 2.64%, to 2,209.81.
Back home, key benchmark indices ended a choppy session lower on Tuesday, 9 September 2008, weighed by weak Asian markets. The BSE 30-share Sensex declined 44.21 points or 0.3%, to settle at 14,900.76 and the S&P CNX Nifty slipped 13.6 points or 0.3%, to 4468.70, on that day.
The BSE Sensex is down 5386.23 points or 26.55% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6306.01 points or 29.73% away from its all-time high of 21,206.77 struck on 10 January 2008.
Foreign institutional investors (FIIs) were net equity sellers worth Rs 391.53 crore while mutual funds bought shares worth Rs 106.27 crore on Tuesday, 9 September 2008, according to provisional data on NSE.
FIIs were net buyers of Rs 33.39 crore in the futures & options segment on Tuesday, 9 September 2008. They were net buyers of index futures to the tune of Rs 450.28 crore and bought index options worth Rs 43.99 crore. They were net sellers of stock futures to the tune of Rs 577.41 crore and bought stock options worth Rs 49.75 crore.
Trading Calls - Sep 10 2008
Nifty (4469) Sup 4400 Res 4550
Buy Jindal Saw (603) SL 597 Target 615, 618
Buy ONGC (1101) SL 1085
Target 1130, 1140
Buy GAIL (426) SL 421
Target 436, 438
Sell Nalco (385) SL 390
Target 375, 373
Sell Bajaj Auto (593) SL 599 Target 582, 580
No big bang here…
I believe in the 'Big Bang' theory. God spoke and 'BANG', it was.
Scientists are set to smash protons together in a 27-kilometre tunnel deep underground. They are hoping to detecting 'dark matter' and the mysterious Higgs boson what is otherwise known as 'God particle.' These experiments are designed to re-create what happened immediately after the Big Bang.
For our markets, even the God's seem to be away. Bulls banged the bears on Monday after India pulled off a historic triumph at the NSG and the US announced bailout of Fannie Mae and Freddie Mac. But their joy, as expected seemed short-lived as the euphoria lost steam on Tuesday and stock benchmarks across the world lost ground in the absence of fresh catalysts.
The market is currently at the mercy of daily triggers, local or global. On days when there is no market moving news, the main indices tend to turn choppy and rangebound. Ecstasy turns into agony, as fundamentals (which are still fragile across world equity markets) resurface to haunt the bulls.
Another trend that is visible is that the large caps are hogging the limelight. The small and mid-cap shares seem to have gone out of favour. This trend is likely to continue, as the frontline stocks have historically led any major change in market trend. Stick to the big stocks in the current uncertain times. Be very careful while making any investments in small or mid-caps.
Today, we see another weak opening. US stocks slumped overnight. Asian markets too are down 1-2%. Any recovery in global trend could swing the mood in favour of the bulls.
Crude oil is hovering around $104 per barrel mark. OPEC members have agreed to roll back production quotas to September 2007 level of 28.8mn barrels per day, a cut of more than 500,000 barrels a day in what the oil producers' cartel calls "overproduction." An Associated Press (AP) report cited OPEC president Chakib Khelil as saying that the quota meant that member countries have agreed cut back production by 530,000 bpd.
Meanwhile, the new RBI governor is still bullish on the India growth story, which he says remains in track. Duvvuri Subbarao sees FY09 GDP growing at 8%. On inflation, he is less hawkish, but adds that it is too premature to say if inflation has peaked out.
On the rupee, Subbarao says it cannot defy underlying economic fundamentals. Expect the local currency to weaken, as deficits are on the rise, the dollar is strengthening and FIIs remain negative on Indian stocks. A moderation in inflation due to falling commodity prices could lead to some improvement in the macro outlook.
Indian Hotels could witness some action, as it is set to make a strategic announcement on Thursday. United Breweries will declare interim dividend today.
US stocks ended sharply lower on Tuesday, as falling oil prices revived worries over economic downturn and amid heightened anxieties over the financial condition of Wall Street major Lehman Brothers.
Rekindling concerns about the impact of the credit crisis on the world's largest economy, shares of Lehman Brothers plunged 44.6% after hopes of a capital injection from Korea Development Bank were dashed.
After chalking up its largest one-day gain in a month, the Dow Jones Industrial Average nearly wiped out the prior day's gains, dropping 280.01 points, or 2.4%, to end at 11,230.73, with 24 of its 30 components finishing in the red. Financials weighed heavily on the blue-chip barometer. Concerns about Lehman Brothers' ability to raise capital rattled financial stocks.
The S &P 500 Index slumped 3.4%, its biggest drop since February 2007, a day after the US government's bailout of Fannie Mae and Freddie Mac sparked the best rally in a month. The S&P 500 decreased 43.28 points to 1,224.51. Energy and financials gave up the most ground among the S&P's 10 industry groups, with the former off 8.3% and the latter down 6.1%.
The Nasdaq Composite Index sank 59.95 points, or 2.6%, to 2,209.81. Small caps were hit too, with the Russell 2000 index falling 3.5%. The day's decline was in reaction to the previous day's huge rally, when the Dow had jumped 290 points.
Market breadth was negative. About 10 stocks dropped for each that rose on the New York Stock Exchange.
Lehman Brothers said it will announce its Q3 results a week ahead of schedule on Wednesday before the US market opens. It will also key strategic initiatives for the firm. Shares of Lehman Brothers, which had been scheduled to report results on Sept. 18, fell about 45% on Tuesday, to $7.79. It was the company's biggest one-day percentage decline ever, dragging the share price down 85% from a year ago.
The sell-off in Lehman Brothers shares accelerated on reports that talks aimed at securing an investment from government-owned Korea Development Bank have fallen through without reaching an agreement. Ratings agency S &P put Lehman's debt on CreditWatch Negative. The company is expected to post a loss of between $2 billion and $4 billion.
A weak reading on pending home sales in July demonstrated the persistent problems in the housing market, while the battering of AIG and Lehman Brothers shares reminded investors that the credit crisis is far from over.
Meanwhile, regional banks and insurers tumbled in the wake of the government takeover of the two mortgage giants. Rating agency Standard & Poor's (S&P) said that Fannie and Freddie will be removed from the S&P 500 index after the close of trade on Wednesday. The news is likely to send these stocks lower, as managers of index funds need to dump the stocks and buy their replacements.
Also after the close, FedEx lifted its fiscal first-quarter earnings forecast, saying it now expects to earn $1.23 per share versus current expectations for a profit of 95 cents. Shares gained 5% after the close.
US light crude oil for October delivery slid $3.08 to settle at $103.26 a barrel on the New York Mercantile Exchange, the lowest close since April 1. Prices have fallen more than $40 a barrel from a record high of $147.20 in July.
Gas prices declined for a ninth straight day, according to a national survey of credit-card activity.
In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.59% from 3.67% late on Monday. The dollar slumped versus the yen and was barely lower versus the euro. COMEX gold for December delivery fell $10.50 to $792 an ounce.
Apple announced a new version of iTunes and new models of its iPods. But shares tumbled on the announcement. Dell founder Michael Dell bought $100mn of Dell shares last week, it was announced after the close of trade on Monday. Shares of the PC-maker ended lower, giving up morning gains.
McDonald's said that August sales at its stores open a year or more rose 8.5% in the month, topping forecasts. Shares gained 1.6%.
Across the Atlantic, European stocks couldn't hold early gains, with a big decline in the commodity shares pacing a downturn. The pan-European Dow Jones Stoxx 600 index ended 0.6% lower to 279.59. Germany's DAX 30 fell 0.5% to 6,233.41, while the French CAC-40 dropped 1.1% to 4,293.94 and the UK's FTSE 100 ended 0.6% lower to 5,415.60.
Bulls may turn to global cues
Markets had a weak start mirroring losses in the Asian markets. The banking, realty and capital goods stocks were among the major laggards in the early trades. However, after hitting an intra-day low of 14,714 the BSE benchmark index gradually gained momentum led by the oil & gas, IT and select telecom stocks.
As the day progressed, a sharp recovery in European markets and a sudden slide in crude oil prices lifted the sentiments. The BSE benchmark Sensex recovered over 280 points and the NSE Nifty index recouped 50 points from their respective lows.
Finally, the BSE benchmark Sensex closed at 14,900 losing 44 points and the NSE Nifty index gained 13 points to close at 4,468.
Shares of Sterlite Industries fell over 7.5% to Rs575 as the demerger was perceived to be negative for the company. The aluminium and the power assets which were seen as major driver for future earnings growth have been hived off to its aluminium subsidiary Madras Aluminium Co. Ltd. (MALCO). Also, the share exchange ratio with its other subsidiary THL KCM is higher than expected.
However, MALCO on the other hand surged by over 17% to end at Rs214. The stock recovered smartly after falling initially post the announcement of the restructuring. Click here to read more...
Meanwhile, oil marketing stocks were in momentum after crude oil prices fell amid market speculation that OPEC would leave production unchanged at its meeting in Vienna today. Prices also declined amid expectations that Hurricane Ike will lose its strength as it hurtles towards the US gulf coast. A strong dollar continued to have a sobering effect on oil prices.
Crude oil for October delivery fell as much as US$1.57, or 1.5%, to US$104.77/bbl in electronic trading on the New York Mercantile Exchange and traded at US$104.51. Oil is down 29% from the record US$147.27 reached on July 11. HPCL, BPCL and IOC were among the major gainers.
Shares of RPower recovered from its day’s low gaining by 0.5% to close at Rs169.4 as the NSE announced that Reliance Power would be replacing Dr Reddy's Laboratories in the S&P CNX Nifty index with effect from September 10. Similar changes will be made in the CNX 100 index as well. The scrip touched an intra-day high of Rs171 and a low of Rs164 and recorded volumes of over 58,00,000 shares on BSE.
Shares of Tech Mahindra surged by over 3% to Rs796 after reports stated that the company secured system integration 5 year deal worth US$250mn contract from existing US client. The scrip touched an intra-day high of Rs809 and a low of Rs765 and recorded volumes of over 1,000,000 shares on NSE.
Shares of Shreyas Shipping surged by over 7.5% to Rs54.7 after the company announced that it sold its vessel 'M V OEL India' for consideration of US$28.5mn. The scrip touched an intra-day high of Rs56 and a low of Rs50 and recorded volumes of over 44,000 shares on NSE.
Shares of Stone India further gained ground and was locked at 10% upper circuit to Rs64.9 after the company announced that it was eyeing an acquisition in Europe. The target company manufactures products for the railways, stated reports. The scrip touched an intra-day high of Rs64.9 and a low of Rs62 and recorded volumes of over 1,00,000 shares on NSE.
Blue Bird was up 2.5% to Rs35.9 after the company received an order worth US$4.40mn for export of notebooks to USA. The Company expects to complete these orders by the end of the current financial year. The scrip touched an intra-day high of Rs37.9 and a low of Rs35.5 and recorded volumes of over 3,00,000 shares on NSE.
Reliance Industries to set up wholly owned subsidiary in London and Singapore to sell petroleum product abroad. (BS)
Telenor, a Norway based Telecom firm is likely to pick up 26% stake in Unitech’s Telecom arm for US$500mn. (ET)
Vedenta revamps its corporate structure by consolidating its copper, zinc, aluminium and iron ore under separate verticals with Sterlite Industries operating copper and zinc businesses. (ET)
Malco to be renamed Sterlite Aluminium, to be listed on NYSE exchange. (ET)
IT majors like Infosys, Satyam, HCL Tech and TCS bids for Rs5bn deploying ERP solutions for BSNL. (BL)
Vedanta plans to invest US$9.8bn to increase its aluminium capacity to 2.6mn tons by 2012. (BL)
Unitech and Datacom has been allotted spectrum in four circles including Mumbai, Maharashtra, Punjab and Uttar Pradesh (East). (BS)
BHEL wins Rs22bn turnkey project for setting up a combined cycle power plant in Tripura. (ET)
Tech Mahindra bags two multi-year contracts worth US$250mn. (BS)
L&T, NPCIL enters into a JV for making forging equipments for nuclear power plants. (DNA)
Satyam Computer has given pink slips to 150 experienced employees at the Hyderabad centre. (FE)
Japan’s NTT DoCoMo and France Telecom short listed as a strategic partner in Tata Tele Services. (ET)
Oil India in talks with Coal India to set-up a US$1.5bn plant to extract oil from coal in Assam. (ET)
3i-Infotech has bagged large contract from various state government to set up 12,000 kiosks across the country. (ET)
Mauritius Investment Company buys 17% stake in BPL Mobile. (ET)
IOC raises bonds worth Rs15bn. (BS)
Punj Lloyd gets order from Singapore worth Rs1.67bn. (BS)
GlaxoSmithKline files lawsuit against Lupin for infringing a patent for AIDS drugs Combivir in US. (BS)
Dolphin Offshore in advanced talks with Brunei based company to form a JV and acquire two offshore support vessels. (DNA)
HCL Tech in talks with banks to raise US$1bn for future acquisition. (BS)
GVK Power to buy reactors and equipment from GE and Westinghouse Electric Company. (BS)
GVK Power plans to sell 20% of its electricity business to fund expansion. (BS)
Swan Telecom has finalized a deal to offload 51% equity stake to Etisalat. (FE)
Hero Honda forms a JV with OMVL, an Italian manufacturing company to make an alternate fuel kits in India. (DNA)
BEML bags order worth Rs310mn from Indian Railways. (DNA)
KEC International expects order from nuclear power plants to double its transmission lines business in next two years. (DNA)
Economy Front page
DoT plans to increase the spectrum usage charges for all Telecom companies planning to offer 3G services. (ET)
Government has frozen its plan to amend export duty structure of steel product. (ET)
Steel Minister is rooting for a hike in export duty on iron-ore to 20% from current 15%. (ET)
Gold imports in August rose 47% MoM to 100 tons. (BL)
Maharashtra Government could alter its sales tax incentives for the wind energy projects in the near future. (BL)
Pratibha Industries - Annual Report - 2007 - 2008
PRATIBHA INDUSTRIES LIMITED
ANNUAL REPORT 2007-2008
DIRECTOR'S REPORT
To,The Members
Your Directors have great pleasure in presenting the 13th Annual Report together with the Statement of Accounts for the financial year ended 31st March, 2008.
The performance of the Company for the financial year ended 31st March, 2008, is summarised below:
FINANCIAL RESULTS: (Rupees in Millions) Consolidated 31.03.2008 31.03.2007
Income 5651.07 3007.77
EBIDTA 662.75 370.28
Less: Interest & Finance Charges 225.05 123.40
Less: Depreciation & Amortisation 35.99 11.26
Profit Before Tax 401.71 235.62
Provision for Tax 59.10 31.33
Profit After Tax (PAT) 342.61 204.29
Earning Per Share- Basic & Diluted (in Rs.) 22.88 14.30
PERFORMANCE REVIEW:
The performance of the Company was robust during the last year and company has clocked a record turnover of Rs.565 Crores, which has increased by phenomenal 85% compared to Rs.301 cores in the previous year. The order book position of the company has also seen a substainal growth. The order book has surged to a record level and crossed the psychological land mark of Rs. 2000 Crores and stood at Rs. 2050 Crores. The execution period of these orders ranges from one year to four years. Your company is very confident and bullish on getting more big size orders, which will have substantial positive impact on the working, profitability and standing of the company in the industry.
Traditionally, the water segment plays an important and crucial role in the performance of the company and contributes substantially towards the turnover and profitability of the company. It constitutes approximately 60- 70% of total turnover of the Company and the order book also consists of substainal projects from the water segment. During the financial year the company has successfully commissioned the crucial and sizeable first phase of the New Mumbai Municipal Corporation (NMMC) water pipeline project. In addition to water projects, roads, tunnelling, airports, urban infrastructure etc. are also contributing towards the encouraging performance of the company.
In a conscious deviation move, your company is exploring various options to expand the base of activities. Accordingly, in recent past, the company has aggressively and consciously ventured into relatively new segments viz. building and modernisation of airports, tunnelling, construction of high rises, shopping malls, development of urban infrastructure etc. In pursuit of this, the Company is executing two major airport projects viz., Amritsar Airport and Ahmedabad Airport, two tunnel projects for the Brihanmumbai Municipal Corporation, Mumbai. The Company's foray into relatively new fields is an indication of the Company's desire to diversify itself and play a role of full fledged infrastructure development Company. The efforts for diversifying activities will enable company to execute more extreme engineering projects in future. The Company, despite increasing its base and diversifying activities, has maintained its edge and efficiency in niche water segments. Your Company further wishes to diversify and embark upon lucrative and complex highway construction projects of NHAI, Hydrocarbon, civil work for power generation and waste water treatment in near future.
The Company has been awarded the following contracts during the year under review.
Sr. Name of work
1. Construction of a Tunnel and allied works from Malabar Hill to Cross Maidan for transportation of water in joint venture with Patel Engineering Limited. The project involves construction of a 3.5 k.m. Tunnel of 2800 mm diameter with shafts and allied works from Malabar Hill to Cross maidan
Department
Municipal Corporation of Brihanmumbai Mumbai Maharashtra
Value of Contract in INR
1,566,803,000.00
Sr. Name of work
2. Construction of a tunnel and allied works at Modak Sagar for transportation of water in joint venture with Ostu- Stettin Hoch u. Tiefbau GmbH and Austrian company. The project involves construction of a 7.5 km Tunnel of 4100 mm diameter with allied work.
Department
Municipal Corporation of Brihanmumbai Mumbai Maharashtra
Value of Contract in INR
2,225,237,638.00
Sr. Name of work
3. Improvement of Nishant & Doodhganga Water supply schemes by providing, laying of D.I. pipe lines including allied works at Srinagar in the State of Jammu & Kashmir
Department
Project Manager Project Implementation Unit-Urban Srinagar J&K Economic Reconstruction Agency Shrinagar (J & K)
Value of Contract in INR
196,906,623.00
Sr. Name of work
4. Providing, laying, Jointing, Testing & Commissioning of clear water rising mains and feeder mains at Jabalpur.
Department
The Commissioner, Municipal Corporation, Jabalpur. Madhya Pradesh
Value of Contract in INR
264,380,414.00
Sr. Name of work
5. Supply, laying & jointing of feeders mains and all allied works in Indore city
Department
The Commissioner, Indore Municipal Corporation, P I U MP Urban (ADB) Project Musakhedi, Indore, Madhya Pradesh
Value of Contract in INR
641,697,162.26
Sr. Name of work
6. Supply and laying of pure water pumping main and all allied works from water treatment plant to break pressure tank
Department
The Commissioner, Indore Municipal Corporation, P I Unit MP Urban (ADB) Project Indore, Madhya Pradesh
Value of Contract in INR
336,109,669.90
Sr. Name of work
7. Providing & laying 3000mm Internal diameter M.S. above ground water main including cement mortar lining from inside & allied works, Section-I from Aghai to Jamboli
Department
Municipal Corporation of Brihanmumbai, Mumbai, Maharashtra
Value of Contract in INR
2,737,144,760.04
Sr. Name of work
8. Providing & laying 3000mm Internal diameter M.S. above ground water main including cement mortar lining from inside & allied works, Section- III from Pogon to Gundvali
Department
Municipal Corporation of Brihanmumbai, Mumbai, Maharashtra
Value of Contract in INR
1,611,411,796.18
Sr. Name of work
9. Construction of link road MR-9 (MR- 10 to bye By-pass via Electronic Complex) Indore.
Department
Indore Development Authority, Indore, Madhya Pradesh
Value of Contract in INR
311,800,000.00
Sr. Name of work
10. Construction of Link Road from White Church to Bye Road.
Department Indore Vikas Pradhikari, Indore, Madhya Pradesh
Value of Contract in INR
162,200,000.00
Sr. Name of work
11. Construction of Pilot corridor on A.B. Road, (Niranjanpur to Rajiv Gandhi Square) under BRTS, Indore, M.P.
Department
Indore Development Authority, Indore, Madhya Pradesh
Value of Contract in INR
1,377,014,087.47
Sr. Name of work
12. Construction/Expansion of Domestic Arrival Terminal Building for Delhi International Airport (P) Ltd. Delhi.
Department
Delhi International Airport Pvt. Ltd. , New Delhi
Value of Contract in INR
413,500,000.00
Sr. Name of work
13. Design and construction of storm water pumping station including supply, delivery, erection, commissioning of mechanical, electrical instrumentation and automation works and comprehensive operation and maintenance of pumping plant at Irla, Mumbai
Department
Municipal Corporation of Brihanmumbai, Mumbai, Maharashtra
Value of Contract in INR
770,667,300.00
Sr. Name of work
14. Construction of Imperial Height at Oshiwara embracing podium upto 4th floor above G.L. & 4 towers of 44 floors above podium P1 to P4 & Deck level P5.
Department
Vijay Associate Constructions Pvt. Ltd. ,Mumbai ,Maharashtra
Value of Contract in INR
589,185,798.00
Sr. Name of work
15. Replacement of worn out rising mains and laying of New Rising mains and gravity mains in various part of Jammy City (Strengthening of existing system Phase-III)
Department
Project Manager (Urban), PIU, J&K ERA, 13, C/C Gandhi Nagar, Jammu & Kashmir
Value of Contract in INR
454,873,261.00
Sr. Name of work
16. Civil Mechanical & Electrical works for 900 MLD capacity water pumping station at Bhandup Complex.
Department
Municipal Corporation of Brihanmumbai, Mumbai, Maharashtra
Value of Contract in INR
489,157,832.72
Sr. Name of work
17. Proposed Commercial Tower on plot bearing F.P. No. 616 (PT) OF T.P.S., IV, Mahim Division, on Tulsi Pipe Road, Dadar, (West), Mumbai. (Sunshine Tower)
Department
Sunshine Housing Devl. Pvt. Ltd. , Mumbai , Maharashtra
Value of Contract in INR
370,252,089.00
Value of Contract in INR
TOTAL 14,518,341,431.57
SAW PIPE DIVISION
During the year under review, the Company has commissioned its SAW Pipes Division and commercial production has been started. With commissioning of the plant, the company is in position to manufacture Spirally Welded Mild Steel Pipes H-Saw Pipes). The Saw Pipes division has a capacity of 92000 TPA. The Pipe division also has a coating division viz., 3 LP coating plant, which is on schedule. The commercial productions are likely to be started in second quarter of the next fiscal. The capacity of 3 LP coating plant is 1.7 million sq. mtrs.
The encouraging response of existing pipe division and long term requirements of high quality pipes, lead the management to contemplate further expansion of pipe division in big way.
CERTIFICATION
Recently, the Company has received prestigious and crucial API certifications from American Petroleum Institute for its SAW Pipe Manufacturing Unit. These certifications will enable Company to supply and undertake work order for lucrative Oil and Gas Industries.
SCHEME OF ARRANGEMENT AND AMALGAMATION
To augment synergies between the group companies and to improve the working of the companies and also to concentrate on two business segments (viz. infrastructure and pipe manufacturing) more judiciously and efficiently, a scheme of amalgamation and reconstruction is proposed.
The Board of Directors of the Company in their meeting held on 17th March, 2008 has approved the Scheme of Amalgamation of Pratibha Shareholding Private Limited (PSPL) and One Metro India Private Limited (OMIPL) with the Company and also to de-merger of Saw Pipes division of the Company to Pratibha Pipes & Structural Limited (PPSL)
On Amalgamation of PSPL and OMIPL with the Company, PPSL will become the wholly owned subsidiary of the Company. Demerger of Saw pipes divisions into PPSL will help the Company to concentrate on infrastructure business and ultimately will substantially enhance the stakeholders! value.
The Company has also received approval from the BSE and NSE in respect of the Composite Scheme of Merger and Demerger.
DIVIDEND
The Board recommends dividend @ 20% on equity shares of Rs. 10 each. The total outgo on this account shall be Rs. 3.90 Crores including dividend distribution tax.
TRANSFER TO RESERVE
Your directors propose to transfer a sum of Rs. 350.00 Lacs to the General Reserve account.
QIP ISSUE
During the year under review, to augment the source and expedite the execution of the various projects, the Company has issued and allotted 24,00,000 equity shares to qualified institutional buyers at a price of Rs.253.00 (Including premium of Rs.243/-) per shares on QIP (Qualified Institutional Placement) basis. The company has raised Rs. 60.72 Crores by the QIP issue. The shares were allotted to Reliance Capital Asset Management Limited and Merrill Lynch Capital Markets Espana S.A.
FIXED DEPOSITS
The Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956, during the period under review.
DIRECTORS
Mrs. Usha B. Kulkarni and Mr. Awinash M. Arondekar retire by rotation at the forthcoming Annual General Meeting and are eligible for reappointment.
The information on the particulars of Directors seeking re-appointment as required under Clause 49 of the Listing Agreement with the Stock Exchanges have been given under Corporate Governance of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:
(i) In the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2008 and of the profit of the Company for the year ended on that date;
(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
(iv) The Directors have prepared the annual accounts of the Company on a going concern basis.
SUBSIDIARY
The Company is having a wholly owned subsidiary Company i.e. Pratibha Infrastructure Private Limited (PIPL). A statement pursuant to Section 212 of the Companies Act, 1956, related to the accounts of the subsidiary is annexed as part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-27 on Accounting for Investments in Joint Ventures, your Directors provide the audited Consolidated Financial Statements in the Annual Report.
PERSONNEL
In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219(1)(b) (v) of the Companies Act, 1956, the Report and Accounts is being sent to all the shareholders of the Company excluding the aforesaid information.
Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.
AUDITORS AND AUDITORS' REPORT
M/s. Jayesh Sanghrajka & Co., Chartered Accountants, Statutory Auditors of the Company, holds office until the conclusion of the ensuing Annual General Meeting and being eligible for re-appointment.
The Company has received letter from them to the effect that their appointment/re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956, and that they are not disqualified for such re-appointment within the meaning of Section 226 of the said Act.
The Notes on Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further comments.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Your Company is dedicated for Conservation of Energy for its manufacturing division. Conservation of energy is an on going process in the Company!s construction divisions. The Company has commenced manufacturing activities during the year; therefore, the Company is exploring the various areas for conservation of energy by implementation of various proposals. Your company is confident to get better results for such measures in coming years.
Power and Fuel Consumption
Particular Units Total cost Rs. Per (Rs.) Uniti. Electricity
(a) Purchased - Saw pipes Division 1011540 4,999,664 4.94
(b) Own Generation
Diesel Generator 383675 4,185,540 10.91
ii. Coal Nil Nil Nil
ii. Furnace Oil Nil Nil NilConsumption per unit of Production
Particulars Total Unit Total Unit/MT Production(MT)
Electricity 1395215 26121 53.41
Coal Nil Nil Nil
Furnace Oil Nil Nil Nil
There is no information to be furnished regarding Technology Absorption as your Company has not undertaken any research and development activity in manufacturing activity nor any specific technology is obtained from any external sources which needs to be absorbed or adapted. Innovation is a culture in the Company to achieve cost efficiency in the construction activity to be more and more competitive in the prevailing environment that cannot be quantified.
During the period under review, the Company had incurred Rs. 332,947,178 expenses in Foreign Currency. Out of these INR 1,586,000, is incurred on foreign travel and INR 325,186,820 being the CIF Value of capital goods, materials & stores imported, rest is incurred on professional fees, registration fees and training of staff.
There are no foreign exchange earnings in the period under review.
CORPORATE GOVERNANCE
Being observant and responsible, the company is committed to high standards of the corporate ethics, professionalism and transparency. As per Clause 49 of the Listing Agreement with the stock exchanges, a separate section on Corporate Governance forms part of the Annual Report
A certificate from the Statutory Auditors of the Company confirming the compliance of conditions of corporate governance under Clause 49 of the Listing Agreement is also attached to this Report.
EMPLOYEE RELATIONSHIP
The Company enjoyed very cordial and fruitful relations with the employees during the year under review and the Management wishes to place on record its sincere appreciation of the efforts put in by the Company's workers, staff and executives for achieving excellent results under demanding circumstances.
The company is proud to place on record that the company has very low attrition rate as compared to its peers in the industries.
ACKNOWLEDGMENT
Your Directors would like to express their sincere appreciation and gratitude for the continued support and cooperation received from the Central and State Governments, civic corporations and authorities, Financial Institutions, Banks, Customers, Suppliers, Associates, Vendors, Sub-Contractors and Members during the year under review.
The Directors also wish to thank all the employees for their committed and sincere services and continued cooperation throughout the year.
For and on behalf of the Board of DirectorsDate : 2nd May, 2008 Usha B. KulkarniPlace : Mumbai, Chairperson
MANAGEMENT DISCUSSION AND ANALYSIS
Industry Structure - General
Infrastructure Industry in India has been experiencing a rapid growth in different segments due to the increase in urbanization and ever increasing foreign investments in this sector as a whole. With rapid growth of the economy in recent years, the importance and urgency of putting in place a quality infrastructure has increased. The Indian infrastructure/ construction industry is expected to continue its northward movement in the future as well. As per estimated figure the infrastructure and construction industries will contribute 16.98% to Indian GDP by 2012.
In the past few years, the Indian government!s focus has been directed towards improvement of road, housing infrastructure, urban water supply & sanitation and development of airports. As per the estimates of the Planning Commission, about US$ 500 billion needs to be spent over the 11th Five Year Plan period of 2007-08 to 2011- 12 on building India!s infrastructure. The Government has increased allocations for power, road, water etc, which would augur good times for construction companies in terms of healthy order book growth and better revenues. CRISIL Research estimates suggest that these allocations would translate into construction investments of INR 290.86 billion in the segments of roads, urban infrastructure and irrigation [including water].
In Water sector, the prevailing conditions and trends in Urban India indicates that 85 percent of population in general have access to safe water supply, which is even less (65 percent) in slums. Urban Water and Sanitation Services are characterized by inefficiency and poor service quality. So far there is no provision for 24 hour quality water supply in any Indian city. In fact most cities are having intermittent water supply of varying periodicity and quantity. Government of India has created fund for assisting the State Governments and the Urban Local Bodies in the economic reform, with the water and sanitation reforms forming a core of the approach.
In Road sector, substantial development has been taken place. The Government has earmarked about INR 14000 billion for construction and upgradation of various roads. A further investment of INR 31415 billion has been earmarked by the Central Government for the roads and bridges sector during the Eleventh Five Year Plan. Apart from construction of Highways, the Government is also upgrading thousand of kilometers of NHDP under Phase-III.
In recent times, major initiatives have been taken to maximize the role of public-private partnerships (PPPs). The government has provided a large number of incentives to attract private sector investment. This includes creation of Special Purpose Vehicles and a Viability Gap Funding scheme for financing infrastructure projects. Barring aviation, all infrastructure sectors have also been opened up for 100 per cent FDI. There is a growing trend of Public-Private Partnership (PPP) in implementation of infrastructure projects in India.
The Central Government, in 2005-06, has launched a scheme Jawaharlal 'Nehru National Urban Renewal Mission' for urban infrastructure development. This scheme ensures and encourages public-private participation in the areas where it is feasible. Under the scheme, the highest priority has been accorded to sectors namely water supply, sanitation and storm water drainage etc. A total investment of INR 33535 billion has been envisaged for the development of urban services.
Industry Structure - Specific to Pratibha Industries Limited
Pratibha Industries Limited has continued to exhibit its abilities to undertake more challenging and complex project(s) involving serious engineering and executed various project(s) during the year under review. The endeavor to venture into more engineering based projects which currently have lower penetration from competition perspective, ensured that your company was successful in maintaining profitability projections even as the topline grew 80% and despite of huge volatility in the commodity markets.
Pratibha Industries Limited will continue to strive to explore new areas which fall in the ambit of its core competence. The entry into the lucrative hydrocarbons division is well on track. With the commissioning of the HSAW pipe division in 2007-08 and with the coating division slated to start commercial production from August 2008, your Company will be amongst the first to have world class pipe manufacturing and coating facilities to fully back up the piping needs arising from its operations in water and hydro-carbon segments, as also to cater to the ever increasing market which is currently witnessing serious demand supply mismatch. We are convinced that efforts taken over the past two years will put your company well and truly on the road to realize its goal of being a leading player in its area of operation.
In view of the new manufacturing facilities built during the financial year under review, which have already been accorded with ISO/TS 29001 certification for Design and Manufacture of Line Pipe by American Petroleum Institute and owing to the enhanced execution abilities of construction projects, your Company will continue to focus with enhanced vigor and greater determination on the following segments, on both $ EPC and PPP basis;
1. Water Projects including treatment, re-cyclanation, storage & distribution, with special focus on water management projects.
2. Irrigation Projects.
3. Urban Infrastructure
a. Airports,b. Malls and retail infrastructure,c. High Rise buildings,d. Specialty buildings,e. Mass rapid transit systems,f. Car parks,g. Tunneling projects,h. Construction of modern age railway stations.
4. Surface transportation segment - roads and highways.
5. Construction activities in thermal power plants.
6. Hydrocarbons.
Opportunities - Specific to Pratibha Industries Limited
Infrastructure & Construction
The government is committed to improve infrastructure of the country and has earmarked substantial funds for growth of the sector. With the committed efforts and investment, India is likely to witness next two decades of massive infrastructure activities to meet the increasing needs of a developing nation and a growing population.
The rapidly growing urban population and the massive existing shortage of modern housing and commercial space have thus created nearly limitless opportunities making it almost a trillion dollar business opportunity in mid term. The commitment for improved infrastructure will ensure all round development of infrastructure facilities, these includes urban infrastructure, highways, roads, mass housing, airports, irrigation projects, drinking water projects etc. With projects of thousands of crores in the infrastructure and construction segment, the company poised to benefit substantially. There are few players to take up jobs in the sector and your company has over a period developed an expertise in executing these projects effectively and efficiently. Further, the company!s adaptability to blend with other company of different culture will certainly help the company to form an alliance for executing specialised projects.
Saw Pipes division
The recently commissioned pipe manufacturing unit of the company will ensure the company to tap the tremendous opportunities lies in pipes segment. There is huge requirement for supply of quality pipes for transportation of oil, gas and water. Many companies including public sector companies are opting for transportation of the Hydro Carbon through pipe lines. These create huge demand of pipes of various diameter and specifications. Considering the current and future prospectus of this business, the company has commissioned its state-of-the-art pipe manufacturing plant. The Company has obtained various certification including prestigious American Petroleum Institute (API) certifications for its manufacturing facilities, these will enable company to meet the qualification criteria of various prospective tenders.
Industry concerns and Company!s perspective
Risk is inherent in every business, whether internal or external. Global slowdown, resultant of which India too could witness some slowdown, though a hypothetical thought at this moment, could translate into a potential risk. Allied risks like inflationary trends in commodity prices, higher interest rates, volatility in forex rates and shortage of skilled human resource are issues which need to be addressed and processes have been formalized for identifying and assessing such business risks. For one, having your own manufacturing base for the commodity substantially used by your infrastructure division, cuts down risk posed by volatility related to this commodity, to a large extent. Similarly, long term contracts with main producers of other commodities [DI Pipes, Valves etc], also helps in addressing the price escalation risks. We now address each concern specific to the industry in which Pratibha operates, followed by your Company!s perspective and subsequent preparedness in respect to such risks;
Concern -1
The prices of commodities [fuel, steel & cement] have risen substantially over the past four months. This will impact the profitability of the Company.
Company's Perspective
There is no denying the fact that the prices of all important commodities consumed in our projects have increased substantially. However, alongside such increase the inflation index, both Wholesale Price Index & Commodity Based Index have also increased likewise. Since, all the projects being currently executed for the public sector utilities / bodies carry escalation clauses [majority being commodity linked], a major part of such increase in bound to be realized. Similarly, for all projects being executed in the Private sector, your Company has pass through clauses, which means that any & all increases in commodities [steel / cement] will be reimbursed in totality by such private sector clients. Inspite of such indemnity by virtue of the existing price escalation clauses, there is bound to be some minor impact, due to which margin expansion in the financial year 2008-09 is not foreseen, inspite of the fact that revenues will grow and direct costs as a percentage to turnover will reduce.
Concern - 2
Interest rates have been increasing, which are not reimbursable in contracts taken up by the Company, This could have adverse impact on the margins.
Company's Perspective
The interest costs have been more or less stable over the past 12-14 months. Owing to the robust growth and better margins the Company as a fact has been able to reduce the commissions on the non fund based limits [bank guarantees & letter of credits]. Further, your Company has been rated as A-/Stable for long term loans and P2 + for short term loans by CRISIL, which will enable it to negotiate better and favorably with banks / financial institutions in respect to the rate of interest being currently charged.
Concern - 3
Prevailing liquidity crunch in the global markets could result in inadequate financial arrangements, resultant of which projects under execution could be delayed and result in cost overruns.
Company's Perspective
The year under consideration [2007-08] saw your company reducing the debt-equity ratio from 1.44:1 to 0.72:1. In view of reduced debt-equity ratio, enhanced net worth, free cash reserves and better margin guidelines for Infrastructure Companies, the balance sheet of your Company is well leveraged to raise substantial funds as required to maintain the CAGR.
Further, all the public private partnership [PPP] projects will be executed at SPV level, thereby ensuring that the balance sheet of the Company remains well leveraged at all times.
Concern - 4
Complex infrastructures projects are by nature have long gestation periods. While project execution is planned after taking into consideration all possible factors, unexpected events may still cause delays. For instance in the case of Tunnel Projects, which is currently under execution, there could be geological surprises causing the projects to be delayed.
Company's Perspective
Your Company has been executing complex projects successfully for years together and such risks, as mentioned hereinabove, are inherent to the business in which it operates. However, your Company has ensured an order book with geological spread [pan India presence] and clients from both $ public and private sector and orders from practically all segments in which it operates. Further, tunneling projects being executed are in technical joint venture will established global partners, who have more than three decades of experience in similar activities. Moreover, execution of such projects is started only once proper study on geological front is conducted. It is essential to add that projects like tunneling are equipment based / lesser dependent on human skills and your Company has acquired all such critical equipments as necessary to execute such projects involving extreme engineering.
Concern - 5
Shortage of skilled manpower could derail the Company!s expansion plans and result in time & subsequent cost overruns
Company's perspective
Your company has placed serious emphasis on human resource, its training and growth. Lower rates of attrition amongst all level of its employee!s bear testimony of having successfully created an environment conducive to overall growth of the most priced asset of the organization $ its people. The company is and shall remain committed to providing its work force with a setting, which guarantees mutual development. The Company has identified and put in place experience and youth which augur well for the future growth plans of the company. On the basis of the above submission, it can be safely concluded that the Company has requisite human resource to achieve the targeted revenues
Outlook
Your company has shown robust growth over the past five years and will continuously focus to achieve similar growth in future as well. Pratibha believes in increasing the value of all its stakeholders and will endeavor to do so by enhancing qualitative presence in all the segments of infrastructure sector it currently operates in and by adding hydrocarbons to the list in the current fiscal.
With opportunities galore in the construction and infrastructure space, your Company is well equipped to further strengthen its position in the Industry.
Segment Wise Performance
Segment wise performance is indicated hereunder [Amount in million]Sl. Segment Turnover % - Turnover
1. Water & Environmental Engineering 3707.55 65.61%
2. Urban Infrastructure 810.56 14.35%
3. Roads 140.56 2.49%
4. Manufacturing - SAW Pipes 991.83 17.55%
Total 5650.50 100.00%
Adequacy of Internal Control
Your Company has appropriate internal control system for business processes, with regards to efficiency of operations, financial reporting, compliance with applicable laws and regulations. Clearly defined roles and responsibilities down the line for all managerial positions have been institutionalized. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The audit committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them, from time to time. The ERP program has been partially implemented and some departments have already been linked. The SAW Pipe division will be totally integrated by August 2008.
Financial Performance
Your Company recorded remarkable increase in profits through twin approach of growth in top-line and effective cost management.
The Company has achieved turn over of Rs.565.05 crores during the years ended 31st March, 2008 as compared to Rs.300.39 crores lat years reflecting growth of 88% in turnover. Profit after tax, is Rs. 34.26 crores as compared to Rs. 20.42 crores during the previous year reflecting growth of 67.70%.
Basic earning per shares for the year is Rs. 22.88 as compared to Rs. 14.36 per shares during the previous year.
Conclusion
To conclude, your Company has delivered a healthy performance, particularly viewed in the backdrop of the challenging environment the entire Industry faced during the year under discussion. The outlook appears bright on the back of growth initiatives planned in the pipe manufacturing business and the positive outlook for the Infrastructure business.
Cautionary Statement
Statement in this Management Discussion and Analysis report regarding the Company!s objective, projections about the future, estimates, expectations or predictions including, but not limited to, statements about the Company's strategy for growth, products development, market position and expenditures may be 'forward - looking statements within the meaning of applicable securities laws and regulations.
Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company!s operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statues or other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events or otherwise.
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