(From L to R) Infosys' Murthy, Nilekani & Gopalakrishnan:
All's well, but...
The first flush of results this
season looks good. Software bellwether Infosys Technologies reported
a 69.98 per cent growth in net profit for the quarter ended March
31, 2007 to Rs 1,144 crore compared to Rs 673 crore in the previous
corresponding quarter. The figure was boosted by an extraordinary
income of Rs 124 crore from a reversal of tax provisions. Revenues
for the quarter rose 43.75 per cent to Rs 3,772 crore from Rs
2,624 crore. For the full year ended March 31, 2007, its net sales
and profits were up 45.92 per cent and 56.88 per cent, respectively,
to Rs 13,893 crore and Rs 3,856 crore. The BSE it Index gained
nearly 4 per cent on Friday (April 13, 2007), but this rise had
more to do with the future outlook of the company, whose guidance
is expected to be the benchmark for the overall it sector.
A report by Morgan Stanley says: "As feared, the rupee-denominated
EPS growth guidance came in the low-20s, while the dollar guidance
and overall commentary on the demand environment and margins were
positive." Meanwhile, there are two key concerns-slowdown
in demand in the US and an erosion of margins due to the appreciation
of the rupee and a rise in wage costs.
Meanwhile, the 23 companies that have come out with their results
(till April 13, 2007), have reported a 90 per cent rise in their
combined net profit to Rs 1,421.09 crore compared to Rs 748.6
crore in the previous corresponding quarter. Revenues rose 37
per cent to Rs 5,347.7 crore from Rs 3,896 crore.
Among others, Ballarpur Industries, Mastek, iGate Global Solutions,
Gujarat NRE Coke and Prism Cement also came out with their fourth
quarter and annual results. Barring Gujarat NRE Coke, which reported
a 220.5 per cent fall in net profit to Rs 51 crore, the others
reported profits that were higher by 22 per cent to 375 per cent.
(see The Results Look Good).
Says Sangeeta Purushottam, Head (Institutional Business), Religare
Securities, an investment and research firm: "India Inc.
will continue to roll out a strong performance for the fourth
quarter of 2006-07 on the back of strong sales growth."
According to estimates by Motilal Oswal Securities, another
stockbroking and research firm, the Sensex companies, on aggregate,
will report a 33.3 per cent growth in net profits; it pegs the
Sensex EPS at Rs 709 (FY 2006-07). The surge is expected to be
on the back of a strong revenue growth of 22.3 per cent and the
operating profit growth of 26.1 per cent. Rajat Rajgarhia, Head
(Institutional Research), Motilal Oswal, says: "Companies
in the cement and telecom industries will witness the highest
growth in net profits and the largest jump in EBITDA, while retail,
telecom and it companies will record impressive topline growth."
Adds Purushottam: "Only the sugar sector is expected to put
up a dismal show."
If the trend of the first flush of results holds, then India
Inc. will give the markets lots to cheer about. Growth in top
and bottom lines has so far been robust and largely in line with
market expectations. But, the bulk of results are still to come
out. And remember, these are last year's numbers; this year, high
interest rates and the resultant price increases threaten to spoil
the overall feel good mood (see Are the Good Times Over? page
66). And though Prime Minister Manmohan Singh and Finance Minister
P. Chidambaram will be hoping otherwise, this year could well
The fortnight's burning question.
IS THE BOARD OF CONTROL FOR CRICKET IN
INDIA (BCCI) JUSTIFIED IN PLACING A CAP ON PLAYER ENDORSEMENTS?
No. Latika Khaneja, Director, Collage
Sports Management (she manages Virender Sehwag)
It is important to understand how the endorsement market evolved.
The money comes from the public. Today, the endorsement market
is dead. Advertisements are a by-product of successful cricket.
If there is no successful cricket, there are no advertisements.
No. Syed Kirmani, former India
wicketkeeper and member of the 1983 World Cup squad
I do not see this as a big problem. It is not an embargo; and
the board has indicated that it is open to revisiting the issue.
So it is not as if the decision has been set in stone. There has
already been talk of a dialogue between the parties and I am sure
that the issue can be resolved once that is done.
Yes. Venugopal Dhoot,
Chairman, Videocon Group
It is a good decision for the moment. The man on the street is
very unhappy after India's early exit from the World Cup. Everyone
was looking forward to India's participation in the Super 8s.
However, I think it is a temporary phase and the issue will be
"Growth Alone is not Enough"
Campbell, director (Employment
Strategy Department), ILO, was in Delhi in early April to attend
a conference on the link between growth and employment in South
Asia. He spoke to BT's on a range of issues. Excerpts:
ILO has expressed concern over the growing
disconnect between growth, investment and employment the world
over. Why is this happening?
There's been a weakening of the link between growth and job creation.
A 4 per cent growth in the world economy today doesn't create
as many jobs as it did 25 years ago. The interdependence of economies
has altered the traditional trade theory. The competition in the
global markets is increasingly favouring higher-skilled labour,
even in sectors like garments which have traditionally employed
large numbers of low-skilled workers in the developing world.
Why is that so?
You cannot compromise on technology if you want to compete in
the global markets. In the closed economies of the past, you could
have hired more people instead of buying new machines, but not
any more. And the best technologies are specifically designed
to cut down labour costs.
What's happening in India?
India has seen an absolute decline in manufacturing jobs. So
growth alone is not enough. You need the right labour policies
at the right time.
Three new cars were launched
within two days of the start of the new financial year, and the
year ahead will see a lot more cars roll out. So, what has already
come and what is expected in the future? We take a look at the
cars that have already come and some that are about to come.
Make no mistake; this is the same old Palio with slightly updated
interiors. The base model has a smaller 1100 cc engine, that promises
to take care of the Fiat's bugbear, fuel economy.
USP: Still the same underpinnings, meaning drivability
will remain excellent.
Price: Rs 3.5-4.3 lakh (ex-showroom New Delhi).
Launch date: end-2007.
This is the most important car that Skoda will introduce in India;
so important that the Czech division of Volkswagen has put off
the launch for years. Honda City, watch out.
USP: Skoda plans to bring in a modern diesel engine that,
along with fantastic build quality, should hold the car in great
stead. And remember, in reality, what you're getting is a VW Polo.
Expected Price: Rs 6.5-7.5 lakh.
Launch date: mid-to-late 2007.
The old Elantra was one of those unfortunate vehicles that didn't
do too well despite being a good car.
USP: Hyundai plans to give the new, much better looking
Elantra an efficient diesel motor. It is the badge that is Hyundai's
Expected Price: Rs 9-11 lakh.
Launch date: Early May.
Maruti is ruining its staid image-first the Swift and now this?
This car might actually give the Honda City a run for its money.
USP: It is a Maruti, so reliability and economy should
not be issues, but how will it be to drive? That is the 30,000-cars-a-year
EXPECTED PRICE: Rs 6.5-7.5 lakh.
BENZ CL CLASS
So what if BMW and Audi are making inroads in India? Mercedes
has fired a shot across their bows by launching the superfast
CL class. This is no poor man's Mercedes and even though its delightful
clean lines might seduce road users, you'll have to have an IPO
to afford one of these babies.
USP: 0-100 kmph in five seconds! Need we say more?
Price: Rs 1.2-1.6 crore (ex-showroom Delhi).
The Getz gets (pun unintended!) a makeover and a smaller
1100 cc engine; the production of the existing 1300 cc model will
continue. And a diesel one is on its way before the end of the
USP: Fresher car, decent performance and better mileage
as well. But the diesel will be worth the wait.
Price: Rs 3.9-5.2 lakh (ex-showroom New Delhi).
Launch date: April-May.
The old Daewoo Matiz reborn from General Motors. It certainly
looks funkier, but one has to wait and see what engine, and most
importantly, which gearbox GM India puts inside the car.
USP: GM claims that the car has been modified all over,
so what if the bodyshell looks similar. The car will be slap-bang
in Zen Estilo territory.
Expected Price: Rs 3.25-4 lakh.