Category: Breaking Corporate India Earnings News

Orchid Research Laboratories (i.e. ORLL – the wholly-owned drug discovery subsidiary of Orchid) and Merck will work to identify and develop novel antibacterial and anti fungal compounds as clinically validated drug candidates. Orchid will undertake discovery and candidate development through Phase IIa human clinical trials. Merck will conduct late-stage clinical development and commercialization if regulatory approval is granted.

Orchid will get an undisclosed upfront sum, and is eligible to receive payments totaling more than US$100 million associated with the achievement of various research and development milestones.

The collaborative pact with Merck – a global innovator, is an landmark achievement for Orchid’s research arm as it had been undertaking efforts to secure business alliances with pharmaceutical multinational corporations. So far as ORLL is concerned, its been developing its pipeline of new chemical entities (NCEs) in the fields of oncology, inflammation, diabetes and anti-infectives.

Dish TV expects the Indian DTH market to grow five times in the next 4 years. Dish TV CEO Vinay Agarwal said,

We believe that the DTH market will grow exponentially and is estimated to touch 30 million subscribers by 2012 from 6-7 million now. We aim to add five million subscribers by March 2009.

In a separate yet related development, the contentious issue of
payment of carriage fees by broadcasters to the cable industry for carrying their channels has brought forward divisions among the various stakeholders while the Telecom Regulatory Authority of India (TRAI) remains undecided on the subject. Some of the new broadcasters have suggested auctioning parts of cable spectrum as a possible solution towards fixing the ground rules for carriage fees that is charged by the large cable operators from broadcasters, Multi System Operators (MSOs) have called for terming carriage fees as placement fees. The direct-to-home (DTH) firms are not keen on fixing any sort of legal norms for carriage fees.

Suzlon Energy will hold a board meeting on Sep 27, 2008 to consider a rights issue of equity shares to the extent of Rs18bn.

The target ceiling amount of Rs18 bn from the proposed rights issue corresponds to the 270 mn pounds consideration payable to Martifer by Dec 15, 2008 for acquiring its ~22.5% stake in REpower. Suzlon’s management had then indicated that the company had secured an in-principle tie-up for euro-denominated funding for the transaction. Accordingly, we view the decision to raise funds via any form of equity offering as a negative surprise.

Further, Suzlon Green Power (100% owned by the Tanti family), has committed to set up 3,500MW requiring investments of US$5bn in green assets over five years, in India and China. One has to view these developments cautiously as it might not be very easy for Suzlon Green Power/Honiton Energy to raise funding for investments in wind farms under the backdrop of the global credit crisis.

For the week ending 13 Sep ’08, headline (wholesale price index, WPI) inflation was 12.14%. The alarming part is the change to provisional inflation data for 19 Jul ’08 which has been raised 56bps to 12.54%. This revision is unexpectedly high and almost across-the-board.

The fall in the manufactured price index for two successive weeks is encouraging as such prices are generally more downwardly rigid than primary prices. If this trend continues, inflation could soften much faster than our current projection.

Vegetables, pulses, oil seeds and oil cake prices declined on a w-o-w basis. At the broader level, manufactured prices fell, primary prices rose and fuel remained unchanged.

Check out our Detailed Post on What Commodities and Materials make up the Indian Inflation Index.

Two big shocks for the Indian Economy were – High Commodity prices and Inflation thereof combined with Global credit crisis. The former had the most negative consequences on the health of Indian economy while the latter will have a minor impact on it.

The interest rates have peaked, and in the current global environment, the central bank will remain in liquidity injection mode. Second, lower oil prices takes away a significant risk. Third, the monsoons, another critical concern for agriculture and overall growth, have been near normal and spread widely. the financial sector remains essentially sound, mortgages are a fraction of total credit, and exposure to inflated real estate is small.

However we are still into the downturn of the business cycle, with growth slowing and earnings downgrades yet to come, valuations are still not too cheap. Concerns remain on the fiscal deficit and political risks, corporate spreads have increased significantly, and the deterioration in the global environment with continued risk aversion suggests that the forecast is still far from sunny.

Cairn India has hired two custom-made drilling rigs from Weatherford International, built by NOV, Houston, Texas, especially for Cairn to assist it in the process of extracting oil in Barmer in Rajasthan. The cost of hiring is estimated at $86 million.

The first rig has already reached the Haldia port and the second is expected to reach Mundra port today.

These rigs, which are highly automated, require very less human intervention and are designed to move rapidly from slot to slot on a pad location and also in between the pad locations. It is from these slots that the wells will be drilled.

The Barmer field is expected to produce 175,000 barrels per day of oil equivalent by 2010. The oil reserves discovered in 2004, is estimated to contain 3.7 billion barrels of oil equivalent, of which one billion is extractable.