Category: Breaking Corporate India Earnings News

Punj Lloyd Upstream, a subsidiary of Punj Lloyd Ltd. hasi nformed us that the company has received a Letter of Intent for a contract worth USD 42 million in Libya for deploying two onshore rigs.

It said,

The contract requires drilling exploratory wells in the Gialo oilfield of the prolific Sirte Basin for Waha Oil Company, a Joint Venture between State-owned National Oil Company and Conoco Phillips, Amerada Hess, and Marathon Corporation of the United States. Waha Oil Company is the second largest crude oil producer in Libya. Punj Lloyd is already present in Libya through a pipeline project for Sirte Oil Company.

Last week apart from raising interest rates on Foreign Currency Deposits, the RBI also took a some more measures. Permitting back to access the Liquidity Adjustment Facility (LAF) to the extent of 1% of net demand and time liabilities which amounts to an indirect reduction in the SLR and conducting the LAF twice daily. Over the week, the RBI injected liquidity to the tune of Rs 655bn.

RBI has sufficient ammunition to minimize the impact of the financial turmoil on the real economy. Tools include – The un-wind of the market stabilization bonds where the o/s amount is currently Rs1.8trillion. Domestic savings, which are currently at 34.8% of GDP is an additional cushion of liquidity.

India is not insulated from the current turmoil. However, the direct impact is limited and would depend on timely policy response in areas such as easing capital account norms and reduction in SLR/CRR to ensure that adequate credit is available for the real economy.

The IT spending in US Financial companies is likely to see a drop of 4% YoY [Dec-08] This contraction will continue for at least a year and the turnaround could happen only by 2010. Volumes for India IT companies are likely to be severely affected in F2010, although too uncertain to estimate as of now.

Even in the best case for Indian IT companies if the spending is unlikely to be cut down, due to collapse and M&A activities, BSFI segment will easily contract by 2-3%. The business environment has deteriorated considerably faster than what the street may have expected.

Ahead of th results, Analysts expect Infosys to lower its F2009 organic USD revenue guidance by ~2.5% to at least US$4,850mn in the worst case (vs. current guidance of US$4,970-5,050mn). Likewise, Satyam may also lower its F2009 USD revenue guidance to US$2,600mn (21.5% YoY revenue growth) from current guidance of 24-26% YoY revenue growth.

With 10% depreciation of the INR, IT companies are likely to stay on target for their earnings in Rupee terms.

India’s overall textile exports to the US fell by 3.6% while overall US imports fell by 1.7% in July 2008. China’s textile exports in July were up 0.7% yoy. In the apparel category, imports by the US fell by 0.5% while India’s apparel exports fell by 4.9% and China apparel exports grew by 1.1%.

India’s market share in textile export slipped 9bps yoy. China continued to regain market share in August, as its share rose to 37.0%, up about 89 bps yoy.

Despite 12% depreciation of the Indian Rupee versus RMB from Jan 2008 to July 2008. However, India does not seem to have benefited from this relative improvement in competitiveness yet.

With the rupee weakening to a low of Rs46.8/US$1 and call money rates spiking to 16%, the RBI announced a host of measures late last evening to stem market volatility.

• Reserve Bank will continue to sell foreign exchange (US dollar) through agent banks to augment supply in the domestic foreign exchange market or intervene directly to meet any demand-supply gaps.
• Increase, with immediate effect, the interest rate ceiling on FCNR (B) deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates minus 25 basis points.
• Increase, with immediate effect, the interest rate ceiling on NR(E)RA deposits by 50 basis points, i.e., to Libor/Euribor/Swap rates plus 50 basis points.

Given the volatile market situation, near term rupee weakness is likely to continue and could trade in the Rs45-47 range. Although portfolio flows will likely remain negative, FDI remains buoyant and hence by March 09 INR is likely to be around Rs 43 levels to the USD.

We have obtained information about Advance Tax numbers by various corporates in India paid for Q2 of FY09. Here is the list [All figures in Rs Crore],

• State Bank of India – 1,560 Vs 1,054
• ICICI Bank pays Rs 250 Cr vs Rs 125 Cr
• HDFC Bank pays Rs 250 Cr vs Rs 165 Cr
• Bank Of India pays Rs 191 Cr vs Rs 150 Cr
• Union Bank pays Rs 130 Cr vs Rs 100 Cr
• Central Bank pays Rs 220 Cr vs Nil
• Tata Steel pays Rs 300 Cr vs Rs 350 Cr
• Tata Motors pays Rs 75 Cr vs Rs 190 Cr
• TCS pays Rs 115 Cr vs Rs 20 Cr
• MRPL pays Rs 100 Cr vs Rs 20 Cr
• Indian Hotel pays Rs 44 Cr vs Rs 2 Cr
• L&T pays Rs 170 Cr vs Rs 80 Cr
• Videocon 25 Cr vs 20 Cr
• Reliance 680 cr vs 650 cr
• HDFC 290 Cr

Except Tata Steel and Tata Motors, rest have seen an increase in the numbers compared YoY basis.

Advance Tax Numbers for Q1- FY2009.

Update:
Macquarie analysis shows that advance taxes paid in a quarter by a company has no correlation. 75% of the time the advance tax paid in a particular quarter is different from the accounting tax by more than 25%. There is absolutely no pattern – not even a normal distribution, not even a systemic understatement.