Thursday, August 9, 2012

Adani Posts drop in Profit in line with Market Expectations.

Adani Enterprises, the flagship firm of the Adani Group has posted its consolidated net profit to Rs 402.88 crore for the first quarter ended June 30, 2012.  This is down by 29% on Y-o-Y basis . AEL had posted a net profit of Rs 569.81 crore in the Q1 last year.

Bad Days are nearing end for ADANI?
The consolidated net sales of the company in this quarter was Rs 11,024.59 crore  vis-a-vis Rs 9,596.13 crore of the first quarter of FY'12, it said in a filing to the BSE. This is an increase of about 15%. The AEL standalone performance has shown remarkable performance. Its standalone net profit for the quarter ended June rose a whopping 344 per cent to Rs 421.6 crore, against Rs 94.9 crore in the corresponding period last year.

Reasons cited for the drop in profit were known and anticipated by the invetors. Market had  already discounted  the likely impact of Fuel cost to its power business. Till June AEL stock was traded in the range of 210-260,   but it slipped to the current range of  171-196 in July. Going forward  if there are no fresh shockers to the market,  AEL share can bounce back to the previous range soon.

There are two reasons to this. First,  in this quarter drop in profit has absorbed an increased cost of finance.  It's finance cost in April-June quarter of 2011-12 was at Rs 222.97 crore. This quarter it rose to to Rs 927.19 crore.  The impact was of more than Rs 700 cr.  If  this factor is ignored  there is a  45% rise in the net profit.  (402.88 + 704.22 - 281.69  =  Rs 825.41 Cr).

Share Performance on 9th August'12
Second reason is that the  financing cost will come down as   promoters have to reduce their  stake to below  the threshold level of 75% in the three group companies  as per the directives of the  regulators.  Promoter holding  in Adani Power is pegged at 76.63%, in Adani Port and SEZ at 77.5% and about 80% in Adani Enterprises.  This dilution is expected to raise about US$ one  billion.  Which will be used in financing the upcoming mining projects in Australia.

Environment and other regulatory clearances for  its Australian coal venture will also be obtained by fiscal-end.  The operations of overburden removal at Australian mine is expected to begin in November 2013.

Most bleeding of business plans has happened in power sector. Group Chairman Gautam Adani is optimist there. He said the company is working with concerned authorities to arrive at a solution and "are confident that our power business shall generate the envisaged return shortly, creating value for its stakeholders."

But, nothing will  happen till the government is willing to take tough reforms in the power sector, which may not be liked by the managements of the DISCOMS.  Unless that happens major  break through in revival would be slow. 


Sunday, August 5, 2012

Anna is no more Mahatma : Team Anna missed opportunity

Last year, Ralegaon Siddhi village Gram Sabha had passed a resolution on Gandhi Jayanti  conferring the title of 'Mahatma' to Anna Hazare, in recognition of his contributions to the nation. Like the people of Ralegaon Siddhi village  many in India had started to look another Gandhi or atleast JP (Jai Narayan Prakash) in him.  Politicians might have been divided on him and so was media, but none  could dare to ignore him.

A  day after the “Gram Sabha” resolution was passed, Anna told  his villagers that he could not be called Mahatma (Saint, equating him to the father of nation – Mahtma Gandhi). He said to a news agency PTI, "I am a simple Indian trying to follow the path of greats like Gandhiji, Mahatma Phule and Dr B R Ambedkar. People should try to follow the ethics and values of these 'Mahatmas' in their lives to elevate themselves."

Recalling this incidence after ten months one can say that Anna had an  intuition of the events to come. Probably he had seen the future  or these events were coining some where his mind. Luke response of public during Mumbai show in December’11. Infighting among his core team members. Deserting support of media and  indifferent UPA government.

All this led to the events  post 23rd July till 3rd  of August. This time when Anna team went for fasting, the UPA government boycotted and refused to take notice of the protest.  The electronic media which gave uninterrupted 675 hour long marathon coverage a year ago, gave a cold shoulder.

This was the major blow to team Anna, which was under the impression that media needs the realty show at Jantar Mantar to get higher TRP.  They forgot that it was their need to get proper focus and publicity to bring in the middle class supporters to reach Jantar Mantar and pressurise the government and other political parties.

Frustrated  team Anna  this time  attacked  media too, along  with  politicians.  There is no denial that today’s many reporters and editors are not different  from "government babus  and “politicians” in moral behaviour. But, one should not fight at multiple borders. Had Anna’s  core team read history, they could take lessons from the debacle of German army in second world war.

By declaring to form the political outfit, Anna has lost the opportunity  to be next Gandhi or JP.  The behaviour of his team probably  will not give  him a chance even to reach to the level of VP Singh.  When VP Singh came out of Congress  and  led the campaign highlighting the corruption in Bofors deal,  he did not disclose his liking or disliking for any  “ism”.  It was only later when the fear of growing popularity of BJP forced him to take out the “Ginny of Mandal Commission”. But, later in countering the forces who made him prime minister,  he pulled down curtain on his own political career.

The Gram Sabha when conferred  mandate of Mahatma to Anna  it was hoping that the son of Ralegaan will reform the society and make it corruption free. By personal conduct Anna tried to behave in Gandhian style. But his insistence to reform governance is a misfit to the role.  He  has done a great job by bringing  the issue of corruption to the centre stage. Saints reform the society in the process government can change. But, this time Anna has taken reverse path.

In our democracy, politics runs in a different way. This can be seen from the fact that even when Jan Lokpal bill movement was considered to be a success, Mulayam Singh and his party came back to power in UP with a majority not predicted by and poll pundit. In neighbouring state, Uttarakhand where BJP  had  passed the Lokayukta bill  was routed.

The criteria to vote are not issue based. Team Anna had enough time, they could try to educate people to vote for the honest candidates when five states had gone to poll early this year. That could stop “Raja Bhaiya” and many criminals from reaching Lucknow and become the minister. 

Member of team Anna are having different political ideology.  To keep them united will be more difficult than is seen in last one year. We have watched many prominent faces leaving the team due to different reasons.  Brand Anna is saleable only  if there is a solid performing team behind  it. The two TV anchors of team Anna can get the headlines, so was Mallika Sarabhai getting in last election, yet she lost her deposit.

Having succeeded in deviating Anna from the focus of corruption, UPA will not hesitate to misuse all its resources, including governing agencies like – CBI, Income Tax, ED and many more  to break the moral of the team.

Judiciary will deliver its verdict on false fabricated case  after many years, out come of 2014 will come before that in two years. It was an opportunity lost by Anna alias Baburao Hazare. Political Ocean has bigger sharks- can small fish named Team Anna Survive there?

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