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The first
flush of quarterly results rarely disappoint, but the surge in
revenues and profits registered by 265 companies (till January
19) for the three months between October and December came as
a pleasant surprise for market watchers. The top line surged 41
per cent and net profits spurted by 67 per cent. In comparison
with the previous quarter, the increase is 2 per cent in net sales
and 6 per cent in net profits. Says Avinash Gorakshakar, Head
of Research (PCG), Emkay Shares and Stock Brokers: "The first
batch of results has been good across sectors."
Reliance Industries was clearly the surprise. For the third
quarter ended December 31, 2006, the company posted a 58 per cent
rise in net profit to Rs 2,799 crore (Rs 1,776 crore), on a 46
per cent jump in net sales to Rs 26,472 crore (Rs 18,168 crore).
Impressive refining margins have been the reason for the jump
in bottom line growth for Reliance Industries. Refining margins
for the company improved to $11.7 per barrel from $9.1 per barrel
even as petrochemical margins dipped.
Among the other major companies, Sterlite Industries, UltraTech
Cement, Wipro, TCS, HDFC Bank and Siemens continued their impressive
run. It remains to be seen whether the giants of the old economy-Tata
Steel, Tata Motors, Hindalco et al-can maintain the blistering
pace.
-Mahesh Nayak
Battle
In The Skies
Air Deccan claws back to #2 slot. Can it
stay there?
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| Air Deccan: It's still losing money,
but it is gaining passengers |
Air Deccan
has booked itself into the second spot again. It was for the second
time in 2006 that Air Deccan managed to pip government-owned Indian
to become the country's second largest domestic carrier. (See
Following the Leader). Air Deccan's market share for the crucial
festive season month of November is at 19.7, which is marginally
ahead of Indian which is at 19.1. Jet Airways, meanwhile, continues
to remain the country's largest airline.
An upbeat Captain G.R. Gopinath, Managing Director, Deccan Aviation,
told BT that Air Deccan's new position in the charts was just
the beginning of a "tectonic paradigm shift" in the
Indian domestic aviation industry. "We are flying on routes
that nobody else is. Our low-cost model has removed the price
barrier to flying. The way we are going we hope to displace Jet,
and be number one by 2008," says Gopinath. Industry sources
reveal that Air Deccan has maintained its slim lead on Indian
in December 2006 also. The budget carrier occupied the #2 slot,
for the first time, in June 2006 when it showed a market share
of 21.2 per cent as compared to Indian's at 20.8 per cent.
Some like Kapil Kaul, CEO of Centre for Asia Pacific Aviation
(CAPA) for the Indian subcontinent and West Asia, believe that
Air Deccan's recent performance can be attributed to the fleet
underutilisation of Indian (formerly Indian Airlines). "If
you look behind the numbers, it is clear that it's Indian's fleet
underutilisation which has caused the problem. Otherwise, there
is no way in which an airline like Indian with 73-odd aircraft
can lag behind an airline with 40-odd aircraft," says Kaul.
It's a fact that's not lost on Captain Gopinath. "An advantage
of being a private airline is, of course, efficiency. We have
faster turnarounds as a result of which we fly an aircraft more
than Indian. We have 68 crew per aircraft as compared to 420 in
Indian," quips Gopinath. Air Deccan's move up the rankings
is also representative of a larger trend where low-cost carriers
are gaining market over their full service competitors. According
to CAPA, the market share of low-cost carriers will reach 70 per
cent by 2010. Of course, now all Air Deccan has to do is to maintain
its #2 position over the medium term.
-T.V. Mahalingam
Problem
Of Plenty
Few are celebrating the lifting of
the ban on sugar exports.
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| Bountiful sugar supply: But exports
are another story |
The union
cabinet's recent decision to reverse a seven-month-old ban on
sugar exports has attracted, at best, a lukewarm response from
domestic sugar mill owners and international markets alike. This,
when India is expected to have a record sugar output of around
23 million tonnes in the new season (up from 19.3 million tonnes
in the previous season), thereby leaving the country, the world's
second largest producer of the sweetener, with an exportable surplus
of 4 million tonnes.
Exports, say mill owners, are not viable at the prevailing international
rates of $320-330 (Rs 14,400-14,850) a tonne. For one, they point
out, a global bumper harvest has ensured that the international
market has a plentiful supply of sugar. Moreover, Pakistan, the
largest buyer of Indian sugar (it had bought 650,000 tonnes of
the 1.1 million tonnes exported till July last year; exports were
banned after that), is no longer in the market, following its
own bumper harvest. Even Bangladesh, another significant importer,
is shoring up its own processing facilities. No wonder, the London
futures market was cold to this announcement, and settled at a
13-month low. Experts, however, say that India could tap non-traditional
markets such as Yemen, Sri Lanka, Thailand and Africa.
"This is certainly a welcome step, but to make exports
viable, the government should subsidise inland transport and ocean
freight," says Vinay Kumar, Managing Director, National Federation
of Cooperative Sugar Mills. Privately, however, several players
contend that not all is lost. "With Brazilian exports not
hitting the global market before April this year, India can still
hope to export at least up to 2.5 million tonnes, including the
export obligation of 1 million tonnes," says an industry
veteran on condition of anonymity. India, say experts, would also
be helped by the fact that the European Union would post a shortfall
in export surplus of 4 million tonnes.
-Aman Malik
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