Omaxe ltd

Omaxe ltd recently announced its annual results which came as a pleseant surprise for the holders of the stock. The company managed a turnover of Rs 2281 crores and a consolidated profit of Rs 498.4 crores on an equity base of 173.56 crores resulting in an eps of Rs 29 after extraordinarly items. Its resrves stood at Rs 1239.6 crores. The public shareholding is just 10.72 percent. The company has been in news over the past for good. In feb the company won a contract from Naya raipur developement autourity to build a township which would include resdiential and commercial buildings, golf villas and a hotel and the project cost stands at Rs 1200 crores. It then tied up with thai based company for spa franchasie in north india. Then came the news that the company had floated a subsidiary National Affordable Housing and Infrastructure which will be building the affordable houses. In all, Omaxe plans to build about 10 lakh low-cost houses. Proposals have already been sent to the state governments of Delhi, Madhya Pradesh, Punjab and Rajasthan. The company has earmarked Rs 200 crore for slum rehab projects. Such projects will help Omaxe in acquiring land at a cost which will make development of affordable or low-cost houses a feasible option. The latest new around is that the promoters are scouting buyers to sell a part of their stake in the company to raise around Rs 1500 crore. If this deal goes through this would be big boost for the stock and one can expect fireworks here. I personally am keeping a close watch on the stock and would be putting money here in tranches.

stock markets in for a tough time

With the govt having a tough time taming inflation the indian stockmarket is going to have a tough time in the near term. What is even more worring is that the govt has till date artificially controlled inflation by keeping a controlled price on petrol, diesel, kerosene and LPG. But with the subsidy burden balloning beyond control we can expect an increase in the prices soon which is going to add to the already heavy inflation. This price hike may well take inflation near double digits forcing the govt to take further corrective action which could be by cutting of the money supply leading to heigher interest rates and inturn would hurt growth. All this scenerio is going to bring in bad days for the stock market. Todays results in karnatka elections could just make thing worse and there would be more pressure to take politically correct actions forcing the govt to keep growth at bay for the time being and purely focus on politics which is demanding lower inflation. So its time to be careful before investing in the market.

depreciating rupee

The rupee has been depreciating and this is likely to change the economics for many. The depreciating ruppee is going to jack up the bill for the govt as far as imports of crude oil is concerned and add to it the rising crude prices, the govt is most likely to now take steps to attract foreign investments. The purpose is simple try to control the deprecaiting ruppee. This could be good news for companies who plan to raise foreign loans as some relaxation is expected on this front. FII's too can hope for some change in rules which could ease investments in the capital markets. This depreciated ruppee could also be good news for the companies and banks who had made provisions for the losses on forex derivatives. It could well be a windfall gain in their balance sheets in the current quarter.

Govt likely to approve merger of NMDC and SIIL

The government is likely to consider tomorrow the merger of Sponge Iron India Limited with country's third most valued company National Mineral Development Corporation. The proposal of merger of SIIL with state-owned blue chip NMDC is slated to be considered by the union cabinet tomorrow, sources said. SIIL, manufacturer of sponge iron, has been facing acute raw material shortage for a couple of years. "The company has been facing acute shortage of iron ore during the year. This problem would be permanently solved once the company merges with NMDC," SIIL Chairman and Manging Director V K Uppal said in his message on the company's website. The merger of SIIL was recommended by the expert group constituted by Ministry of Steel under the chairmanship of former steel secretary B L Das.

poly medicure results

Poly medicure has announced its results for the quarter ending march 08. It managed sales of Rs 232 million and a net profit of 14.69 million which is quite lower than its previous quarter when it clocked a net profit of Rs 22.21 million. A close analysis shows that the interest cost has risen by 0.72 million and depreciation by 2.87 million resulting in a fall in the eps from 3.87 to 2.59. The cash eps too has fallen from 6.52 to 5.67 which reflects that there has been a fall in the margins of the company. The good news is that the china project is expected to commence production in the current quarter which would have positive effect on the topline as well as bottomline. The board of directors have also recommended a dividend of 25% i.e Rs 2.50 for the year 07-08.

cement firms to be effected by price control

Cement companies' latest quarterly performance shows that they have begun to feel the pinch of the government's anti-inflationary measures.

The latest price cut of 1.5 to 3 per cent at the government's persuasion and a decision to hold prices for the next three months could impact earnings even more.

An analysis of the 2007-08 fourth-quarterly performance of major manufacturers points to the lower profitability over the corresponding quarter of 2006-07.

Compared to the steep rise in net profit in Q4 2006-07, the corresponding quarter of 2007-08 has seen either significantly slower growth or a fall for all the companies concerned.

The trend change is primarily due to the inability of cement companies to increase prices since April 2007 despite an increase in raw material and fuel costs.

Over the last one and a half years, the government has taken several measures to check cement prices to control inflation, which has mostly stayed above the central bank's target level of 5 to 5.5 per cent.

The latest restrictions have been an export ban and a 12 per cent ad-valorem duty on cement selling above Rs 250 per 50 kg bag.

Last year, the government made cement import duty free. Cement has a weight of 1.73 per cent in the wholesale price index (WPI).

"Continuous government intervention has resulted in an uncertain price environment, which together with a significant increase in input costs will have an adverse impact on margins," an Ultratech Cement release said.

According to ACC, India's largest cement producer, production costs went up 12 per cent during the quarter due to significant cost pressures in respect of major inputs such as coal, gypsum, power, freight and so on. Coal prices alone increased around 31 per cent.

"Despite all these unprecedented cost-push factors, the company absorbed most of this escalation and our cement prices went up by only 3 per cent quarter-on-quarter," an ACC spokesman said.

The cement industry added a capacity of 10 million tonnes in 2007-08, taking total capacity to 175.6 million tonnes. According to the Cement Manufacturers Association (CMA), the industry is likely to create an additional capacity of 32 million tonnes in 2008-09.

Garden silk mills to double yarn capacity

With demand for polyester yarn and chips increasing in South American and European markets, Surat-based Garden Silk Mills is planning to double its capacity by March 2009.
A one-time leader in polyester sarees and dress materials under the brand name Garden Vareli, the textile company is now focusing on yarn and chips, demand for which has risen in domestic and global markets. Garden Silk Mills will invest Rs 350 crore for the expansion, said a company official.
According to the capex plan, Garden Silk Mills will double the existing capacities of 700 tonnes per day of polyester chips, 300 tonnes per day of partially oriented yarn (POY) and 120 tonnes per day of polyester textured yarn (PTY).
The company will increase the share of exports in its total turnover from 5-10 per cent to 30-40 per cent, the official added. Currently, polyester yarn and chips form 95 per cent of the company's total production. Garden Silk also manufactures filament yarn.
Meanwhile, the company has decided to maintain a status quo in the capacity of polyester fabric and finished products such as sarees and dress materials at 50 lakh metres per month and 25 lakh metres per month, respectively.
Post-expansion, Garden Silk Mills is expecting its turnover to rise significantly from over Rs 400 crore that the company registered in the financial year 2007-08.