Year: 2008

Gail India has been selected as the top Indian company in the gas-processing, transmission and marketing sector for the Dun & Bradstreet Corporate Awards 2007. U D Choubey, chairman and managing director, GAIL received the award on behalf of GAIL from Manoj Vaish, president & CEO, Dun & Bradstreet, India. This is the second time that GAIL has received this award.

The corporate awards have been launched to recognize the twin virtues of size and growth in the top organizations of corporate India. The awards recognized the best organizations spread across various sectors such as oil and gas exploration, power generation, banks, software and IT, fertilizers, cement, FMCG and others.

Citi has revised FY09 GDP Estimates – from 8.3% to 7.7%. out: Earlier this year, when Citi cut our FY09 GDP estimate from 9% to 8.3%, they said that the two key risks to the growth outlook were

• on the domestic front, an extended pause in policy rates which would further dampen both consumption and investments and
• global developments taking a further downturn. With both these risks panning out, we are further cutting our GDP estimates from 8.3% to 7.7%.

Continued rise in volatility and risk premium in the financial markets is likely to result in a deceleration in capital flows and financing becoming more costly as spreads are widening. This in turn will have spillover effects to the real sector.

The India story has been largely investment-led rising 15% on a YoY basis with the Investment GDP ratio increasing to 36% of GDP from 25% in FY03. With the increase in risk aversion, low appetite for public offerings coupled with high domestic rates could dampen/delay investment demand.

Indiainfoline in a research note has said additional costs due to H-1B Visa applications and salary hikes will take ~200bps off Infosys’s EBITDA margin in 1QFY09, resulting in a 4% QoQ decline in PAT. Infosys is to release its FY09 guidance on 15 April. Expect FY09 guidance would be revenue growth of 20% and PAT growth of 15% as against consensus estimate of 19%, which means an EPS upgrade cycle is unlikely. Given management’s none-too-encouraging comments in the recent past and clients’ weak business outlook, Infosys could even guide conservatively for a 10% PAT growth. This is really shocking and if that is the case then expect a MASSIVE SELL off in IT stocks.

Now are you shocked that how come H-1B Visa’s can take a toll on its margins ? In 2007, Infosys Technologies processed 1,734 Visa applications excluding BPO, Consluting etc The Visa processing charges + Attorney Fees + Employee Relocation cost will all add up.

ICICI Prudential Life Insurance hosted a conference call to clarify the new business margin calculations on its life insurance business – This was prompted by Prudential plc’s disclosure that its Indian life insurance business (which is a JV with ICICI Bank) had a new business margin of 12%, compared to ICICI Bank’s disclosure that the margin is 19%. We depend on the insurance company to disclose margins – it’s impossible to calculate it ourselves – and if Prudential was correct, this would have reduced life insurance values by 35%.

However, the difference is due to accounting; the underlying margin is closer to 19%. The key reason for the difference in margins is expense ratio assumptions. New business margins reflect the present value of all profits on a particular policy; its calculation requires various assumptions like discount rate, return, expense ratio. For the expense ratio, the correct assumption is to take expenses over the life of the policy – which will imply a meaningfully lower expense ratio compared to the current ratio.