Happy New Year to all the readers. I'd taken a week's break and now it's back to the posting board.
Today's airwaves are full of Satyam founder R. Raju's resignation after admitting a massive financial fraud. In a letter to the Board of Directors, Raju explains how there is a huge mistmatch in the actual operating profits and that reflected in the books - apparently inflated profits have been shown for the past several years. In fact, the deal with Maytas (which broke down as we all know) was a last-ditch attempt to bridge the gap with real assets instead of the fictitious ones. What's more none of the board members had an inkling of what was going on.
The consequences: Satyam shares plunged by 80% (!!) after market sentiments understandably turned bearish - the BSE is back at around the 9,500 mark after a good start to the year had seen the sensex rise upwards of 10k again. The Nifty is also down today - by over 7 percent. The Ministry of Corporate Governance will look into the matter along with SEBI, and things don't look bright for either Satyam or its founder. Ram Mynampati, who took over as Interim CEO of the company, has released a statement saying that they will explore all avenues to secure the future of the copmany and he also reaffirmed the company's commitment towards associates, customers and shareholders. We'll have to keep a tab on how this story unfurls.
Showing posts with label news. Show all posts
Showing posts with label news. Show all posts
Wednesday, January 7, 2009
Sunday, December 28, 2008
Weekend Scoop : Satyam Chairman's Shares Mortgaged, Inflation Going Down, RPL Gains
The sensex was obviously closed over the weekend, so we'll just look at some of the financial effects of events earlier in the week.
The Satyam fiasco keeps getting gloomier; apparently Ramalinga Raju had mortgaged his shares (he and his family hold about 8.61% stake in the company) to institutional lenders, who might have sold them already. This has put added pressure on the board of directors, who were already under duress after academician Mangalam Srinivasan, an independent board member, had resigned on Dec 25.
Inflation is down to 6.61%; and with news of a possible reduction in repo rates, reverse repo rates and the CRR by RBI, experts predict that inflation can reach as low as 2% in March next year.
I had mentioned RIL's new venture in Jamnagar - Reliance Petroleum Limited (RPL) gained over 6 percent a day after the refinery started. Although Mukesh Ambani had to deal with the Petroleum Ministy's decision to turn down RPL's request to export LPG, citing that the country still has LPG deficit.
Also, business magnate Vijay Mallya announced that with approximately 500 crores turnover in December, Kingfisher airlines will break-even the losses it had sustained earlier.
The Satyam fiasco keeps getting gloomier; apparently Ramalinga Raju had mortgaged his shares (he and his family hold about 8.61% stake in the company) to institutional lenders, who might have sold them already. This has put added pressure on the board of directors, who were already under duress after academician Mangalam Srinivasan, an independent board member, had resigned on Dec 25.
Inflation is down to 6.61%; and with news of a possible reduction in repo rates, reverse repo rates and the CRR by RBI, experts predict that inflation can reach as low as 2% in March next year.
I had mentioned RIL's new venture in Jamnagar - Reliance Petroleum Limited (RPL) gained over 6 percent a day after the refinery started. Although Mukesh Ambani had to deal with the Petroleum Ministy's decision to turn down RPL's request to export LPG, citing that the country still has LPG deficit.
Also, business magnate Vijay Mallya announced that with approximately 500 crores turnover in December, Kingfisher airlines will break-even the losses it had sustained earlier.
Thursday, December 25, 2008
Maruti, TATA Motors incorporate production cuts, Oil Majors prepare for losses
The market is showing no signs of improving as the Sensex continued its slide for the third day in succession - 118 points down from yesterday's close. Profit bookings remain the major culprit, while hope festers for an improvement in the next earning season starting January 13.
The auto market is perhaps one of the worst hit from the recession. TATA Motors announced their 4th block closure of the year - from December 28th to 31st. This is because they have to match production with demand, and right now most people are postponing purchases due to the financial crunch.
Close on its heels follows Maruti - who had already taken a production cut of around 6% in November. If sales continue to fall as they are right now, Maruti is likely to go in for more production cuts this month-end, somewhere in the range of 5-7%.
The three major oil companies IOC, HPCL and BPCL are getting ready to receive net losses in the third quarter of this fiscal. After a bad first quarter where only IOC netted barely any profit and then huge losses in Q2 (especially where the IOC was badly hit), things are not looking up for the big three in the third quarter either. Even though crude oil prices have fallen to $35 a barrel, the irony is that these companies have the burden of still holding stocks which they had bought at over $100 a barrel, and which are depleting gradually - hopefully by January-end they'll have exhausted those stocks. Even if the fourth quarter does bring some respite, it'll not be enough and they'll have to deal with annual net losses for this fiscal - which will be a new experience for the three oil companies.
On a different note altogether, Reliance Industries Ltd began processing crude oil in a refinery in Jamnagar, Gujarat which will probably become the world's single biggest supplier of fuel - it also has an advantage over other export-oriented rivals in Europe and Asia.
The auto market is perhaps one of the worst hit from the recession. TATA Motors announced their 4th block closure of the year - from December 28th to 31st. This is because they have to match production with demand, and right now most people are postponing purchases due to the financial crunch.
Close on its heels follows Maruti - who had already taken a production cut of around 6% in November. If sales continue to fall as they are right now, Maruti is likely to go in for more production cuts this month-end, somewhere in the range of 5-7%.
The three major oil companies IOC, HPCL and BPCL are getting ready to receive net losses in the third quarter of this fiscal. After a bad first quarter where only IOC netted barely any profit and then huge losses in Q2 (especially where the IOC was badly hit), things are not looking up for the big three in the third quarter either. Even though crude oil prices have fallen to $35 a barrel, the irony is that these companies have the burden of still holding stocks which they had bought at over $100 a barrel, and which are depleting gradually - hopefully by January-end they'll have exhausted those stocks. Even if the fourth quarter does bring some respite, it'll not be enough and they'll have to deal with annual net losses for this fiscal - which will be a new experience for the three oil companies.
On a different note altogether, Reliance Industries Ltd began processing crude oil in a refinery in Jamnagar, Gujarat which will probably become the world's single biggest supplier of fuel - it also has an advantage over other export-oriented rivals in Europe and Asia.
Tuesday, December 23, 2008
In Today's News: Satyam going downhill
Satyam has felt the backlash of its controversial near deal with Maytas. Although the deal has been called off, investors have definitely lost their confidence in the company - resulting in a 14% plunge in the exchange market at the end of trade this Tuesday on the BSE. To add insult to injury, the World Bank debarred the company from doing business with it for eight years, on the charges of data theft. There's also rumours flying about a possible resignation from the Chairman, Ramalinga Raju.
In other news, the Bajaj brothers have finally reached a mutual agreement after six years of dispute. Rahul has agreed to give younger brother Shishir control of Bajaj Hindusthan, with a stake of 32.47% in the company.
Also, Wipro is all set to buy the technological arm of Citigroup Inc., i.e. Citi Technology Services Ltd (Citos). The deal has been reportedly fixed at $127 million - this would be a mutually beneficial acquisition, helping Wipro to get assured business of about half a billion dollars in software services and infrastructure management over the next six years, while Citigroup can focus on core business operations. This is similar to the deal that they had earlier inked with TCS - in Ocotber, TCS had acquired Citigroup Global Services Ltd (CGSL), the backoffice centre of Citigroup, for $505 million.
In other news, the Bajaj brothers have finally reached a mutual agreement after six years of dispute. Rahul has agreed to give younger brother Shishir control of Bajaj Hindusthan, with a stake of 32.47% in the company.
Also, Wipro is all set to buy the technological arm of Citigroup Inc., i.e. Citi Technology Services Ltd (Citos). The deal has been reportedly fixed at $127 million - this would be a mutually beneficial acquisition, helping Wipro to get assured business of about half a billion dollars in software services and infrastructure management over the next six years, while Citigroup can focus on core business operations. This is similar to the deal that they had earlier inked with TCS - in Ocotber, TCS had acquired Citigroup Global Services Ltd (CGSL), the backoffice centre of Citigroup, for $505 million.
Monday, December 22, 2008
Fall against the Dollar and Sensex below 10k
Monday turned out to be a bad day for the Indian market - the BSE's Sensex fell below the 10,000 mark to end the day at 9,928.35, down 171.56 points from Friday. The major factor responsible for this would be that the selling pressure intensified on heavyweights like Reliance Industries and ICICI. Traders resorted to profit booking in oil, gas and banking stocks in the last hour, which resulted in the tripping of indices. The Asian markets were also subdued, and the European market saw a weak opening.
The rupee also didn't have a field day on Monday - the Indian currency declined 1.6 per cent to 48.02 against the dollar. Apparently this happened as a result of importers stepping up purchases to meet their dollar needs. There has been an apparent spurt in demand from importers, including petroleum companies, who purchased dollars to meet their month-end payment requirements. Of course, The rupee has appreciated over 8 per cent from an all-time low of 50.615 on December 2.
In other news, the OECD (Organisation for Economic Co-operation and Development) has predicted that upto 25 million more people would become jobless by 2010, lending credence to International Labour Organisation's forecast that the total unemployed people at the end of 2009 would be around 210 million. Not a very exciting prospect.
The rupee also didn't have a field day on Monday - the Indian currency declined 1.6 per cent to 48.02 against the dollar. Apparently this happened as a result of importers stepping up purchases to meet their dollar needs. There has been an apparent spurt in demand from importers, including petroleum companies, who purchased dollars to meet their month-end payment requirements. Of course, The rupee has appreciated over 8 per cent from an all-time low of 50.615 on December 2.
In other news, the OECD (Organisation for Economic Co-operation and Development) has predicted that upto 25 million more people would become jobless by 2010, lending credence to International Labour Organisation's forecast that the total unemployed people at the end of 2009 would be around 210 million. Not a very exciting prospect.
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