JK Lakshmi Cement

Performance Review (Quarter & 9 months ended Dec 08)

Comments
The company achieved marginal revenue growth of around 5 per cent for the quarter as well as nine months period. Although the sales volumes were higher by around 10%, lower realisations led to lower sales growth.

The operating margin (EBIDTA) has been largely impacted by higher power & fuel costs (27 per per cent of net sales during 9 months ended December 31, 2008 vis-a-vis 22 per cent in the corresponding period in the last year).

Lower operating margin led to lower net profits.

NIIT Technologies Limited

Performance Update (Quarter & 9 months ended Dec, 08)



Comments
NIIT Technologies Limited is a global IT solution provider. Amidst the global financial crisis, the company recorded marginal growth of around 8 per cent for the quarter ended December 31, 08 vis-a-vis corresponding quarter in the last year. However, on a cumulative basis, the revenue for nine months was higher by around 21 per cent vis-a-vis corresponding period in last year.

Operating profitability represented by EBIDTA margin almost halved to around 15 per cent during Dec 08 quarter. The profitability was mainly impacted by higher other operating expenses (INR 412.8 Mn, against INR 257.7 Mn), which in turn was higher on account of charge towards development cost of INR 121.3 Mn and Foreign Exchange Loss of INR 117.3 Mn. However, the EBIDTA margin for nine months was higher at around 24 per cent (though lower than 33 per cent of last year).

Net Profit was lower on account of lower EBIDTA margins.

Jay Bharat Maruti Limited - December 08

Performance Update (Quarter & 9 Months ended Dec 31,08)

Comments
During the quarter ended December 31, 2008 , the company registered marginal decline in revenue vis-a-vis the corresponding quarter in the last year. However, on a cumulative basis, sales for nine months grew by around 9 per cent.

Similarly, the EBIDTA margin for the current quarter was lower at 5.6 per cent (vis-a-vis 8 per cent in the corresponding quarter). The lower margin was mainly on account of higher raw material cost as a percentage of net sales. However, the operating margin for the nine months was largely similar to that of previous year.

Net Margin for the quarter was lower on the back of lower EBIDTA margin.

Important Note to the Quarterly Results
The company, based on a legal opinion, has continued to adjust the foreign currency exchange difference on amounts borrowed for acquisition of fixed assets, to the carrying cost of fixed assets in compliance with schedule VI to the Companies Act, 1956, which is at variance to the treatment prescribed in Accounting Standard 11. Had the treatment as per the AS 11 been followed, the net profit after tax for the current quarter and current nine months would have been lower by INR 18.2 MM and INR 32.9 MM respectively.

Re-Emergence of Corporate Fixed Deposits

Fixed Deposits, once a very popular instrument of raising funds by the Indian corporates, were almost out of fashion and trend on account of various reasons to include comparatively higher cost of funds, stricter norms under Companies Act requiring regular interval disclosures and compliances, low investor interest (due to past experiences of default), and availability of alternate and cheaper sources of finance to the corporates.

The recent economic slowdown and the overall liquidity crisis, wherein corporates are facing difficulties in raising funds from the alternate sources viz. capital markets/banking system, the trend of deposits issuances has re-emerged. Reportedly 60, companies have offered public deposit schemes in the month of December 08 itself including big names like Tata Motors, United Spirits etc. One can spot one new advertisement almost every day/every alternate day, seeking such deposits from the public.

While these deposits carry attractive returns (interest rates as high as 11-12.5% in some cases), it is important for the investors to not get carried away solely by the attractive returns such deposits offer; and carry out a thorough analysis of the background, management, and financial health of the companies raising such deposits, to ascertain the interest and principal repayment abilities.