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Wednesday, October 27, 2010

Strides Arcolab Q3 PAT clocks 85% growth; revenue up 35%

Strides Arcolab has announced its second quarter results. It has reported a consolidated net profit at Rs 40 crore which is an 85% growth over the previous year. The company saw its revenues at Rs 430 crore, a quantum jump of 35%.

Arun Kumar, group CEO & vice chairman, Strides Arcolab, in an interview with CNBC-TV18’s Latha Venkatesh and Reema Tendulkar spoke about the results and his outlook for the company.

Below is a verbatim transcript. Also watch the accompanying video.

Q: Can you take us through the highlights of this quarter because we only have your topline and bottomline numbers. How did the margins pan out and the Rs 19 crore that you are referring to year ago, deducts an extraordinary inflow, because the reported PAT was Rs 44 crore?

A: There is a mix up between the standalone and the consolidated numbers. Consolidated sales were Rs 430 crore, that’s a 35% growth compared to last year. EBITDA grew at 108% to Rs 88 crore and a profit after tax is Rs 40 crore which is an 85% growth over the previous year. EPS accretion is over 60% and that’s on the consolidated basis.

Q: Can you give us the standalone as well?

A: The standalone revenues for India were Rs 135 crore and PAT was at Rs 10 crore. The standalone is not comparable as we did a restructuring of our businesses to specialties in sterile. The standalone is from a boarding standpoint. The consolidated numbers will truly reflect the performance of the company.

Q: Could you walk us through how the specialties division and the pharma division have done in terms of revenue and margin picture?

A: Specialties continue to have a very solid growth. In the quarter we had a significant growth where that growth has increased from Rs 81 crore in the last year to Rs 126 crore. That is a 55% growth in specialty. Pharmaceuticals grew from Rs 237 crore to Rs 303 crore, that’s a 28% growth.

Combined both these divisions grew on an average of 35%. EBITDA growth in specialties far out beats our guidance. We continue to have a year-to-date EBITDA in our specialties business and 36% was our EBITDA for the quarter.

Q: Earlier, you had indicated a guidance of about 35% to 37% growth in terms of your revenue for the entire calendar year. Would you like to up that given the numbers are looking good for the first three quarters?

A: We would like to stay with our revenue guidance because obviously the exchange rate has a dampening impact. When we issued our guidance, on the dollar terms definitely we will reach the high end of our guidance.

What is more satisfying for Strides is that our EBITDA margins are far superior than the high-end of our guidance. We believe there is merit to up our EBITDA guidance but on the revenue considering the dollar scenario we would like to retain those numbers.

Q: What did you report in Q3 and what would your EBITDA margin guidance be?

A: For the first three quarters EBITDA is Rs 304-305 crore against the guidance of Rs 370 crore for the whole year. We are already a little ahead of that from a run rate standpoint. For the fourth quarter, traditionally, it is a very strong quarter for Strides so that should be good. On a dollar term that’s very strong. We are at about 3 percentage points more than our guidance in terms of EBITDA which is what the company’s key focus is.

Q: By way of margins, I think you had guided something around 20%, are you likely to keep the margins at 20%?

A: Yes, in fact currently our YTD is a lot more than 20%, its 23%.

Q: So you would be able to operate for the full year as well?

A: Yes.

Q: Can you give us an update in your partnership with Pfizer?

A: Our press release today reports a total licensing income from all partners including Pfizer. We have already received about Rs 265 crore of licensing income from various partners.

What is more heartening is that we would have product launches in the fourth quarter. So we have a first product going to Pfizer in Q4 which is very important for Strides. We expect the new sites to be inspected and approved soon when the ramp up happens. From our existing sites we have three product launches in Q4 for the US market to Pfizer.

UK's BT Planning To Sell Part Or Full Stake In Tech Mahindra - Sources

MUMBAI (Dow Jones)--U.K. telecommunications company BT Group PLC (BT) is planning to sell a part or all of its stake in India's Tech Mahindra Ltd. (532755.BY) and has mandated investment banker Credit Suisse Group (CS) for the deal, two people familiar with the matter said Tuesday.

"The firm [BT Group] is looking at various options to exit its current holding of Tech Mahindra," one of the people familiar with the matter told Dow Jones Newswires, without elaborating. Both people didn't want to be named.

At least two private-equity investors are keen to purchase at least a part of BT's stake in Tech Mahindra, the second person said, but didn't name the interested buyers.

BT Group spokesman Dan Thomas said the company doesn't comment on rumours and speculation.

"BT has operations and investments worldwide which we regularly review. India remains a critical market both for BT and our customers," Thomas said via email.

The U.K. company owns a 30.9% stake in the Indian outsourcing firm, he added.

India's Mahindra & Mahindra Ltd. (500520.BY) holds 42.77% of Tech Mahindra, stock exchange data showed.

Tech Mahindra spokesman Prasenjit Roy said in response to an emailed query that the company doesn't comment on market speculation.

Tuesday, October 19, 2010

Russian tycoon offers coal mines to NMDC

India's largest iron ore miner NMDC has been offered to buy coal mines in Russia's Siberian region for $400 million by Intergeo, which is owned by tycoon Mikhail Prokhorov, a media report said.

Intergeo, a mining subsidiary of billionaire Mikhail Prokhorov's Onexim Group private equity fund is in talks with India's largest iron miner National Mineral [ Get Quote ] Development Corporation (NMDC) to sell the Yakutia-based Kolmar coal company, leading business daily Kommersant reported on Tuesday.

"NMDC, Asia's third iron ore producer, is currently conducting due diligence of Kolmar, and will formulate its offer by December 1," Intergeo CEO Maxim Finsky was quoted as saying by the daily.

The Kolmar will hold IPO to attract investors if NMDC refuses to acquire it, it added. Intergeo expects to raise the amount of $400 million through Kolmar sale, USD 100 million more than the company paid for the asset, Kommersant writes.

NMDC had earlier said it was in talks to buy coking coal mines from Kolmar in Russia to feed its proposed steel plants in Chhattisgarh and Karnataka [ Images ]. However, when contacted, a top NMDC official said, "We have nothing to offer at this moment."

NMDC CMD Rana Som had earlier confirmed that talks are on, but said that Kolmar's coal mines were one of the many coal assets NMDC is looking at and nothing has yet been finalised.

The PSU has been trying to acquire mining assets overseas for the last few years to secure raw material supplies for its steel making business.

NMDC along with two other companies had submitted a $230-million non-binding bid to buy 70 per cent stake in an Australian mine owned by Perth-based Atlas Iron.

Also, the company is looking for acquiring coal assets through International Coal Ventures Ltd--the consortium of five leading PSUs, including SAIL [ Get Quote ], NTPC and RINL. The firm is also looking at developing iron ore mines in Africa in joint venture with world's largest steel maker ArcelorMittal.

It is also in partnership talks with Japan's [ Images ] Nippon Steel for a Rs 10,000-crore (Rs 100 billion) project in Karnataka, and with Kobe Steel for another project in Andhra Pradesh. The company has proposed to set up a 2-million tonne per annum (mtpa) plant in Karnataka. Besides these JVs, NMDC plans to commission its 3-mtpa integrated steel plant in Chhattisgarh by 2014.

The miner is investing Rs 3,400 crore (Rs 34 billion) to augment its annual iron ore production to about 41 million tonnes from around 22 million tonnes at present.

Rice Climbs for a Sixth Day on Speculation About Smaller Crops

Oct. 19 (Bloomberg) -- Rice gained for a sixth day in Chicago on speculation that adverse weather may curb production in the U.S., the world’s third-biggest exporter of the grain, and the Philippines, the largest importer.

No rain has fallen in parts of Arkansas, the biggest U.S. rice producer, in the past 60 days, National Weather Service data show. Plants in the Philippines may have been “severely affected” by Typhoon Megi, the strongest to hit the country this year, the Department of Agriculture said today.

“The big story in rice is the extremely poor field yields in” U.S. growing regions, said Dennis DeLaughter, owner of Progressive Farm Marketing and a rice grower based in Edna, Texas. “We are now hearing 20 percent loss and going up.”

Rice futures for January delivery advanced 9 cents, or 0.6 percent, to $14.07 per hundred pounds at 11:21 a.m. London time on the Chicago Board of Trade. Prices have climbed 12 percent this month. A higher close today would mark the contract’s longest winning streak in more than two months.

The Philippines may lose 600,000 metric tons from its rice crop, Agriculture Undersecretary Antonio Fleta said yesterday. Potential crop losses may boost the island archipelago’s import needs by 500,000 tons, pushing prices higher in Chicago and Thailand, Chookiat Ophaswongse, former president of the Thai Rice Exporters Association, said yesterday.

Thai rice prices may rise by as much as $20 a metric ton, Chookiat said.

Crop losses may widen in areas affected by the typhoon, potentially increasing import needs and pushing global prices higher, said Kiattisak Kanlayasirivat, a director at Novel Commodities SA’s Thai office, which trades about $600 million worth of rice every year.

Monday, October 18, 2010

Why People Distribute Apta Tree Leaves on Dussehra and Vijayadasami day?

In North and Western parts of India people distribute leaves of Apta, or Apati, tree leaves on Dussehra and Vijayadasami day. In this ritual, Apta tree leaves symbolically represents gold or sona. People present Apta tree leaves to friends, relatives and neighbors and wish happy Dasara. There is an interesting story on why Apati tree leaves are presented on Dussehra.




Legend has it that a young man named Kautsa in Ayodhya once after attaining education from Guru Varatantu asked his Guru to accept a Guru Daskhina – a present offered by students to Guru after completing their studies.




Guru Varatantu at first said he did not want any Dakshina. But young Kautsa insisted that He should take a Dakshina.




Guru Varatantu to get rid of Kautsa asked him for 14 crore (140 million) gold coins. One hundred million for each subject taught.




The student then went to Lord Ram who was ruling Ayodhya and asked for the gold coins needed to pay his Guru Dakshina. Lord Ram promised to help Kautsa and asked him to wait near the Shanu and Apta Tree in his village




In three days time, Lord Ram with the help of Lord Kuber, the God wealth, showered gold coins from the leaves of Shanu and Apati Tree. The leaves of the trees became gold coins.




Kautsa collected the coins and gave 140 million gold coins to Guru Varatantu. The rest of coins were distributed to the needy by Kautsa. This happened on a Dussehra day. To commemorate this event even today people collect leaves of Apta tree and present it as sona or gold.

Alstom's India Growth May Outpace Economy on Rail Buildup

Alstom SA, the world’s second- largest trainmaker, said Indian sales growth may surpass local economic expansion as the government works on a 14 trillion rupee ($317 billion) plan to expand and modernize railroads.

The company has to be prepared for India growth “which is equal to if not higher than GDP,” Sunand Sharma, 61, Alstom’s local head, said in an Oct. 15 interview at his office in Noida, near New Delhi. He declined to give specific sales numbers.

Alstom, which also makes power-plant systems, expects to eventually get a third of India sales from transportation as the government expands the railroads 10 percent a year to support economic growth. The Paris-based company has been shortlisted with General Electric Co., Bombardier Inc. and Siemens AG as a possible partner in an Indian trainmaking venture and is considering building a rail-car plant in the country.

“India is an opportunity but not without hiccups,” said Jagannadham Thunuguntla, chief strategist at SMC Global Securities Ltd., which manages $100 million in assets in New Delhi. “For companies, it may be better to sacrifice profit margin for scale because whoever comes in now will have first- mover advantage.”

The planned trainmaking venture will produce about 120 electric locomotives a year, according to the rail ministry. Bids have to be submitted by Oct. 25, A.K. Saxena, a ministry spokesman, said by phone Oct. 15 in New Delhi. He declined to say when a decision will be made.

Railway Expansion

Indian Railways, the state-owned rail operator, has proposed to add 25,000 kilometers (15,534 miles) of new lines by 2020, compared with the 10,000 kilometers added in the past six decades, according to the rail ministry. The nation’s economy, Asia’s third-largest, will probably expand at a 9 percent annual pace by the year ending March 2012, Prime Minister Manmohan Singh said in June.

Alstom may build an Indian rail-car factory after last month winning a 14.7 billion-rupee contract from Chennai Metro Rail Ltd. to supply 168 carriages, Sharma said. He declined to say where the factory may be built or when a decision will be made.

Alstom’s India operations have mainly focused on the power sector to date. Alstom Projects India Ltd., a subsidiary, generated 97 percent of its 20.4 billion rupees of sales in the year ended March from its power division and the rest from transportation, according to data compiled by Bloomberg. Alstom has other ventures and businesses in India. Sharma declined to comment on local sales numbers.

Alstom’s power operations may boost India sales to more than 1 billion euros a year from several hundred million euros, Denis Cochet, senior vice president of sales and marketing for Alstom’s power division, said Oct. 12.

The company is building two factories with Pune, India- based Bharat Forge Ltd. that will make equipment for so-called super-critical power plants, which use less energy and generate higher pressure for greater efficiency than traditional plants. The factories will start operations in phases from April 2012, Bharat Forge said in its annual report for the year ended March.

Sunday, October 10, 2010

Indian Exchanges to Start Pre-Open Session, Express Says

Oct. 8 (Bloomberg) -- The National Stock Exchange and the Bombay Stock Exchange will start a 15-minute pre-trading session from Oct. 18, the Indian Express reported, citing Ravi Narain, managing director of the National Stock Exchange.

The session will be a call auction, where participants place orders before the opening of trade and will run from 9 a.m. to 9:15 a.m., the newspaper said.

The two bourses will introduce the session on a “pilot” basis, and only stocks on the Bombay Stock Exchange Sensitive Index and S&P CNX Nifty Index will be available for trading, the newspaper said.

Monday, October 04, 2010

Billionaire Jhunjhunwala-Backed Delta Plans Casinos in Sri Lanka

Oct. 4 (Bloomberg) -- Billionaire Rakesh Jhunjhunwala- backed Delta Corp. plans to open casinos in Sri Lanka in the next six months to tap a surge in tourist arrivals to the island nation after the end of a 26-year civil war.

Casino operator-Delta, which also develops property and runs an aircraft charter service, will spend 10 billion rupees ($225 million) in the next three years in opening casinos in the region as well as at home in Sikkim, Daman, and Goa, Chief Financial Officer Hardik Dhebar said in an interview in Mumbai. Gambling is not allowed in most Indian states.

Delta wants to benefit from a revival in Sri Lanka’s tourist arrivals, which surged 47 percent in the first eight months of the year, according to the nation’s tourism agency. Shares of companies including John Keells Holdings Plc and Aitken Spence & Co. have more than doubled as tourist incomes boosts earnings at their hotels and resorts.

“We have not even scratched the surface yet” for casino opportunities in the region, Dhebar said. “Sri Lanka is in a hurry to start speed up the process of development and is taking steps to ensure investment flows into the country.”

Delta shares, which have risen 84 percent this year, rose 2 percent to a record 83.8 rupees in Mumbai at 11:08 a.m.

Faster economic growth in India and Sri Lanka is helping boost salaries in the region increasing demand for leisure spending, Dhebar said.

India’s economy grew 8.8 percent in the quarter ended June 30, the fastest pace in two-and-a-half years. Sri Lanka’s $42 billion economy may grow as much as 8 percent in 2010, the central bank said on Sept. 21. The nation’s troops defeated the separatist Liberation Tigers of Tamil Eelam in May last year, ending their 26-year quest for a separate homeland helping attract tourists and investors to the nation.

Billionaire Jhunjhunwala and investor Radhakrishna Damani bought an 11 percent stake in the company last month. Jhunjhunwala, with $1.15 billion in assets is India’s 57th richest man, according to Forbes magazine.

RIL's crude reservoirs not performing as per predictions

NEW DELHI: Reliance Industries has seen crude oil production falling by more than 31 per cent from its MA oilfield in the predominantly gas-rich KG-D6 block off the east coast.

"The reservoir is not performing as per its predictions," a source in know of the development said. "Production has dropped from about 32,000 barrels per day achieved in May to around 22,000 bpd currently."

A company spokesperson declined to comment on the issue. Currently six wells are on production in MA field in the eastern offshore KG-DWN-98/3 (or KG-D6) block. RIL, which commenced commercial oil production from MA field in September 2008, had in its field development plan (FDP) envisaged a plateau oil output of 34,041 bpd in the 2nd year of production and 28,684 bpd in the 3rd year.

So far, the maximum production level of about 32,000 bpd was achieved for few days only during May 2010, thereafter oil production has declined gradually.

Besides crude oil, the MA oilfield produces 7-8 million standard cubic meters per day of natural gas. This output together with Dhirubhai-1 and 3 gas fields, take natural gas production from the KG-D6 block to around 60 mmscmd.

Even D1 and D3 fields have seen a two-year delay in reaching plateau output of 80 mmscmd. The fields are now estimated to hit the peak production towards end of 2012.

The source said RIL has been forced to cut output at MA oilfields because of sudden rise in water and gas production from the wells meant to produce crude oil.

Increase in gas production means the natural pressure of the reservoir, which helps push oil up to shore, is dropping. If gas comes out too quickly, crude oil, even though lying in the well pit, cannot be produced.

RIL, he said, has informed the oil regulator DGH that it will not recklessly produce oil at the cost of reservoir. It will judiciously produce from existing wells and look at raising output only by drilling at least two additional wells.

Sources said RIL and its minority partner, Canada's Niko Resources , had installed a floating production system (FPSO) to produce oil from MA fields. The FPSO, designed to process 60,000 bpd of oil, is also grossly underutilised due to the lower level of oil production.

RIL was studying the pressure at the oil and gas reservoir, he said adding the company plans to drill 2-3 more wells on D1 and D3 fields. These will be besides what the company was doing in MA field.

L&T sells 2.4% in Satyam for Rs 295 cr

MUMBAI: Engineering conglomerate Larsen & Toubro has sold 2.4 per cent stake in Mahindra Satyam in September, the outsourcer said in a statement to the stock exchange.

Larsen raised Rs 295 crore ($66.3 million) from the stake sale and now holds 2.16 per cent in Satyam. It had last sold a third of its holding in the outsourcer in November 2009 for about $66 million.

L&T had built a 12 per cent holding in Satyam, but the expansion of share capital following the takeover meant it held 6.9 per cent in Mahindra Satyam.

Last April, L&T lost the race for control of Satyam to Tech Mahindra Ltd, a unit of India's Mahindra & Mahindra Ltd.