Category: Breaking Corporate India Earnings News

The much awaited monsoon is now likely to be three weeks late and will be below normal compared to the long term average. The development may slowdown recovery of the Indian economy, which, otherwise has been rather rapid than in most of its peers.

According to the Indian Meteorological Department (IMD), 2009 monsoon rainfall would be 93% of the long-term average, lower than an earlier forecast of 96%. Even worse part of the development is that the north-western region, which includes India’s food-basket region of Punjab and Haryana, could be the most affected one.

The agriculture sector accounts for 17% of the gross domestic product (GDP), and more importantly, provides livelihood to more than 60% of India’s 1.1 billion plus population.In this wake, current year’s monsoon becomes even crucial for the economy as buoyant rural consumption has been a key driver of growth during the economic downturn. Even the partial failure of monsoon can result in significant decline in farm income, which will hit rural demand. Further, while the country has sufficient food stocks to tide over any crisis, the macro economic situation may worsen further with food inflation rising even higher from the present levels of close to 9%.

Another calamity of the delayed rain would be power availability in the country. Summer months are the peak power demand months due to greater demand from both the domestic and the farm sectors. However, delay in rains will lower the electricity production, thus raising the supply-demand gap in energy availability.

The overall impact of poor monsoon on agriculture, industry and broader economy can be substantial. If there are choppy rains this season, it will bring down the newly found momentum in economy and the GDP growth for the present fiscal, which is expected to range between 6.5-7% may fall down to 5% or even lower levels.

Oil & Natural Gas Corporation (ONGC) has announced its results for the quarter & year ended March 31, 2009.

The company has posted a net profit of Rs 2,206.76 crore for the quarter ended March 31, 2009 against Rs 2,627.10 crore for the quarter ended March 31, 2008, down 16%. The total income for the quarter has decreased to Rs 15,113.13 crore from Rs 17,659.78 crore reported in corresponding quarter of the last fiscal, registering a 14.42% fall.

For the entire fiscal the state-run company has posted a net profit of Rs 16,126.31 crore against Rs 16,701.65 crore in the previous fiscal, down 3.44%. The total income for the fiscal has showed a moderate growth of 6.20% to Rs 68,769.29 crore from Rs 64,752.24 crore reported in FY08.

On a consolidated basis, the Group’s net profit has dipped marginally to Rs 19,795.34 crore for the year ended March 31, 2009 against Rs 19,872.26 crore for the year ended March 31, 2008. The total income of the group has increased to Rs 109,615.60 crore from Rs 101,336.49 crore, registering a Year-on-Year (YoY) growth of 8.16%.

The board of the company has recommended a final dividend of Rs 14 per share for the financial year 2008-09, subject to shareholders approval.

Private sector shipbuilder Bharati Shipyard has made an upward revision in its open offer price to acquire 20% stake in the exploration services major, Great Offshore.

The company has hiked its open offer price to Rs 404 per share from earlier Rs 344 a share.

The move comes close on the heels of competitor shipbuilder ABG Shipyard making a counter bid to the company’s earlier announcement to acquire 20% stake of Great Offshore at Rs 344 per share.

ABG Shipyard has made an open offer to acquire up to 1,25,71,072 equity shares representing 32.12% of the diluted share capital of Great Offshore at Rs 375 per share through its wholly-owned subsidiary Eleventh Land Developers which will increase their stake in the company to 34.14%.

At present, Bharati Shipyard holds 14.89% stake in Great Offshore and its proposed open offer is scheduled to begin on July 25.

ABG Shipyard has made an open offer to acquire up to 1,25,71,072 equity shares representing 32.12% of the diluted share capital of Great Offshore at Rs 375 per share through its wholly-owned subsidiary Eleventh Land Developers.

At present, ABG Shipyard along with its subsidiary holds 7,89,502 equity shares of Great Offshore and if the current open offer is accepted its holding in the latter will go up to 34.14%.

The company’s move is a step towards realizing its vision to become integrated marine services entity which will provide services like ship building, ship repair as well as shipping operations services under an integrated platform of ABG Shipyard and Great Offshore.

This open offer will work as a counter bid to Bharati Shipyard’s earlier announcement to acquire 20% of the diluted share capital of Great Offshore at Rs 344 per share.

While news on the monsoon front remains bleak (rainfall during June 1-17 coming in 45% below normal), another worry is that water levels in reservoirs across the country are dwindling. Latest data monitoring the water stock in 81 key reservoirs across the country that account for 72% of India’s total reservoir stock indicate that current storage is 15 bcm – just 10% of full reservoir capacity and 20% of last year’s storage. While reservoir levels are typically lower at the onset of the monsoon, they are lower this year even in comparison to the past due to average rainfall last year and the absence of pre-monsoon showers this year.

A much further delay in the monsoons could result in states reducing the supply of water for irrigation, and conserving it for drinking purposes instead (individual states manage the water levels in their respective reservoirs). Thus while 58% of India’s net sown area is dependent on the monsoons, dwindling water reservoir levels could impact even the balance 42% of the area not dependent on the monsoons.

Insider sales hit a nine-month high in May as markets recovered and June will also be a month of high insider selling. The spike in sales betrays a likely lack of confidence in the current rally.

Stocks that have outperformed but seen large insider sales could face more downside potential if markets correct. Bharti, DLF, L&T, ITC, Kotak Bank, Shriram Transport, HDFC and HDFC Bank are among the companies that have seen relatively large insider selling in Apr-09 to Jun-09.

Insider selling in the region[Asia Pac] accelerated in May as market rally continued, hitting a record US$2.2bn (a 4x increase from April) – the highest since Sept-08. Even removing the big deals in May – the selling by promoters of DLF and Suzlon – the insider selling in May and Jun will be the highest in the last ten-months.