Satyam cuts FY09 rev guidance due to forex fluctuation

Satyam Computer has announced its Q2 FY09 numbers. The company has reported a growth of 6.05% in net profit of Rs 580.85 crore as against Rs 547.70 crore, QoQ. Revenues were up by 7.6% at Rs 2819.29 crore versus Rs 2620.83 crore. Satyam has met its second quarter guidance; revenues went up by 2.3% to USD 652 million while guidance was USD 645 – 651.9 million. EPS stood at $0.39 per share, wherein also the company met its guidance.Rupee guidance changed only for rupee move from 43- 47 per dollar.

Satyam has cut its FY09 revenue dollar guidance to USD 2.55-2.59 billion versus USD 2.65-2.69 billion. Ramalinga Raju said that 3% was due to cross currency movement and 2% on account of reduction in volumes that he expects.

The Satyam Management including Ramalinga Raju, Founder and Chairman, Ram Mynampati, President, CHB and Srinivas Vadlamani, CFO spoke in an exclusive interview with CNBC-TV18.

The management said that the company’s dollar guidance was impacted 3% due to cross currency and 2% due to business conditions. It expects a 100-150 bps expansion in margins, which has helped in enhancing the dollar EPS guidance. It added that there had been some reduction in licences in ERP and said it was premature to quantify medium term prospects. The gross employee additions guidance of the company has been scaled down to 10000 from 14000-15000.

The management informed CNBC-TV18 that the company’s legal dispute with Upaid was status-quo and said that the hearing was slated for next year. It feels that it is too early to quantify the impact of the BFSI consolidation in the US.


Ramalinga Raju feels the near-term environment remains challenging. He added that forex fluctuations have impacted their US GAAP revenues by 3%. He does not see a dramatic slowdown and added that clients were circumspect over the 2009 budgets.

Here is a verbatim transcript of the exclusive interview with the Satyam Management on CNBC-TV18. Also watch the accompanying video.

Q: Could you start by explaining your dollar guidance, the revenue guidance- why has that been lowered? How much of it is because of cross currency issues and how much of it is because of the tough environment that you see around you?

Raju: It is a combination of factors. We have enhanced our guidance at the consolidated numbers at rupee level from 34% to about 35.4%.

At the dollar level we have reduced our revenue guidance from 26% to 21% at the upper end of the guidance. About 3% of that can be explained by the cross currency movement and 2% on account of reduction in volumes that we expect.

So under the current circumstances we believe we have done well for the quarter and we feel this is number that we are able to give confidently.


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Liquidity adequate, global exposure small: ICICI Bk

Chanda Kochhar, Joint MD and CFO, ICICI Bank, said the bank has adequate rupee and global liquidity of Rs 12,000 crore. "We have no international investments, only loans on our balance sheet. We do not use rupee liquidity to fund global activities."


Kochhar said the bank has not seen a scale-down in deposit growths. "The focus this year is on current and savings accounts."



According to her, the bank has not seen an increase in NPAs, or Non Performing Assets, as the corporate sector is holding up. "About 90% of total loans are India related."

She feels the current investment pipeline is strong enough to ensure a 7.5% GDP growth.

Commenting on the banks' UK operations, Kochhar said exposures in the market there are very small given our size and profitability. "NPAs at 0% in UK subsidiary. Over 90% of investment in UK market are to companies with atleast 'A' rating."

She said there is a cash collateral of USD 45 million from the Bumi Group. "The net loan stands at USD 100 million for which there is adequate cover."

Here is a verbatim transcript of the exclusive interview with Chanda Kochhar on CNBC-TV18. Also watch the accompanying video.

Q: You have made four clarifications in the last fortnight or so. The RBI has clarified your liquidity position, but your stock is down 25% today. Is there any reason that you can think of why the stock market is hammering your stock down?

A: We have always believed that we would concentrate on our performance. The other thing we would do as a responsible bank is talk about facts. The rest of the movement if it happens is on the basis of rumours – we are on the point where we have to concentrate on our performance and on facts.

Q: You have actually spoken quite a bit about your liquidity position etc, obviously the market is worried about something. Are there any issues which might affect your performance or your balance sheets significantly in the foreseeable future – something that you’ve not had reason to report yet?

A: One of the things – the rumour that has been going around is about liquidity and as mentioned even in the morning that we have adequate and more than adequate rupee liquidity. We also have adequate global liquidity worth more than Rs 12,000 crore and also we do not use rupee liquidity to fund the growth of our international operations. So that’s one clear statement of fact and every rumour going around it which is not true has to be kind of discounted.

Secondly, in the recent past people have had questions on our international book on which we have clarified in the past. So I again clarify that in the ICICI Bank balance sheet we have no international investments as such. There are only loans which are primarily to Indian companies for their global operations. While they are foreign currency loans, they are related to the global operations on the Indian companies. As far as our UK subsidiary is concerned, yes, we do have certain amount of investments.


We have more than clarified about what the size of those investments is. Also more than 90% of those investments are still A minus and above ratings and given the context of our size of the group, having a balance sheet of Rs 4,84,000 crore and a net worth of Rs 47,000 crore – these exposures are very, very small. We have to look at them in that context. So if people have fears around that, I am only re-clarifying that these are small exposures given our size and our profitability.


Q: Have you seen a sharp increase in NPAs for ICICI Bank that you might report this quarter or in the next few?


A: No. The NPA levels continue to remain where they have been even in the last quarter. Even as we report earnings for Q2, you will not see anything untoward as far as the NPAs are concerned. In that context, even our UK subsidiary – as far as its entire loans and advances book is concerned there is actually zero NPA there.



Q: The other set of rumours doing the rounds is ICICI has lent to international companies, very clean loans at that time when they were lent with adequate collateral in terms of shares. But those shares have fallen and therefore some of those loans are now backed by inadequate collateral, and one of the names being mentioned is the Bumi Group. Are there generally fears that loans lent to global companies either from your global branches or from the Indian units are now being threatened that the stock market has fallen and not for any other reason?

A: Our total loans and advances even globally, 90% is India related. So, first of all global loans are very small even if a few of the loans exist.



The total amount of loan that Bumi Group loan has borrowed is USD 150 million. We have cash collateral against it to the extent of USD 45 million. So, the net loan amount is close to USD 100 million. Against that, we have more than adequate cover.



So, the non-India related loans are very few transactions – less than 10% of our global loans and advances, maybe a few transactions again which in some way or the other are related to India because again this is a company that exports a lot of coal to India and there is a whole lot of Indian linkage in terms of people buying coal from this company into India.



We have adequate security not just in the form of shares or other security, but in the form of pure cash collateral. Also, this is a company which has EBITDA of more than USD 500 million. So, there are underlying cash flows, there are other forms of securities, and we have a cash collateral sitting against it.


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RBI cuts CRR by 150 bps

In an anticipated move, the Reserve Bank of India, or RBI, has cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% with effect from tomorrow in a bid to infuse liquidity into the markets.

On October 6, the RBI had cut the CRR by 50 bps to 8.5%. Today's 150-bps cut includes October 11's cut. The cut will inject liquidity into the system to the tune of Rs 60,000 crore.

Nilesh Shah of Envision Capital said, “The CRR cut is definitely a positive move, which is going to soothe some liquidity fears. The stock market also needs liquidity and this (the rate cut) will help to some extent. Whether this is going to help us beyond a day or beyond an intra-day basis is something that remains to be seen.”

“Directionally, the CRR cut is a positive move that helps the banking system, helps the overall economy and will probably help the market in short-term or intra-day,” Shah added.

The announcement came close on the heels of a sharp fall of over 1,000 points on the Sensex on Friday morning amid cues from falling global markets. Soon after the announcement, the Sensex recovered a bit, before falling again later.

Udayan Mukherjee, Managing Editor, CNBC-TV18, said, “The announcement will get gobbled up, or maybe prompt or induce a bit of short covering with the market going up.”

Mukherjee said that it was a welcome move but added he didn’t see it affecting the stock market substantially. “Of course, it aids the money market and injects a bit of liquidity to the system — 150 bps is a fairly meaningful chunk of money coming in,” he said, adding that from a stock-market perspective, the cut would produce some kind of positive sentiment for a short while, "but the problems of the stock market are different."

Finance Minister P Chidambaram also issued a statement on the CRR cut and welcomed the RBI's decision.

source: http://www.moneycontrol.com

Sensex to bottom at 12000 levels: Religare Secs

Amitabh Chakraborty of Religare Securities feels that the Sensex may bottom at around 12000 levels, while the Nifty may bottom at 3800 levels. The swing could be around 400-500 on either side, he added. His estimates are based on the analysis of the last bear market analysis. Chakraborty suggests that the Q1 results need to be watched closely now.

Excerpts from CNBC-TV18's exclusive interview with Amitabh Chakraborty:

Q: Do you think that the market is anywhere near finding support and are you sensing panic amongst your retail and HNI crowd?

A: At Religare, we are of the opinion that probably we are coming to the end of the whole fall. Basically our view is that around 12,000 Sensex levels or 3,800 Nifty levels, market will find a bottom probably. This is based on last bear market analysis, which actually happened in February 2000. Market fell from trailing PE of 20.6 to a trailing PE of about 12.8 in September 2001. Then market remained at that level upto about June 2003 and from there a four years bull market happened.

January 10, when the peak happened this year, we were around 28.6 trailing PE and currently assuming 10% growth in Sensex earnings then we get around 12,000 level. So we believe that 12,000 or 3,800 is the level at which the market will bottom out. Should that be the case of course the swing can be 500-600 points on this side, so it can be 11,500 nobody can catch the exact point. But the point that we want to make is that probably we are coming very near to the bottom where the long-term funds should get into all those A group stocks. When we say long-term, we are saying more than one-year horizon. But on a shorter-term, if we see probably there would be a bounce back from these levels and as they begin the market will come down.

We will be watching very closely Q1 results, our analysis shows and our report will be coming out tomorrow, that already we are seeing a slowdown for the last three quarters. So this will be a continuation of the same trend, but we will not be degrowing. So once that result comes out in Q1, there is no degrowth, but it is a slowdown from a high double digit. Probably it would be a single digit growth, but growth is still there and Q2 also we are expecting a same kind of trend, no degrowth but slowdown of the growth. If that is the case then I think market will trade positively.

Q: If you have to make up your mind and buy now, can you give us two to three clusters, which you would like to buy into if given your call that the markets are nearing in on a bottom?

A: Public sector banks, which are less than the adjusted book value that is a sector that we will be looking at. Also some of those capital goods sectors where a lot of selling has happened, I think we will be looking at that sector.

The sector that we will not be looking immediately though it has come down significantly is the real estate sector. We believe that real estate sector will be under pressure for some more time.

Source: moneycontrol.com

Niraj Cement IPO Listing: Share closes at issue price

Niraj Cement Structurals an engineering and construction company focusing on road construction development, closes at Rs 190.15 on the BSE which is marginally above its issue price of Rs 190. Its intraday high was at Rs 197.90 and intraday low was at Rs 169.70. The total traded quantity was 1,77,56,320 shares. The share had opened at Rs 185 on the BSE against the issue price of Rs 190 at a discount of 2.63%.

The Company proposes to utilize the net proceeds of the Issue to finance its plan for investment in capital equipment on a recurring basis, fund long term working capital requirements and for general corporate purposes. It intends to bid for road related infrastructure projects - leveraging and building the specialization and pre-qualification and thereby participating in more states and regions and gaining access to more complex projects.