Ajanta Pharma gets UK MHRA approval for Aurangabad facility

Ajanta Pharma formulation plant at Paithan in Aurangabad has received approval from Medicines and Healthcare products Regulatory Agency of UK

Ajanta Pharma said it has received approval from the UK health regulator for its formulation manufacturing facility in Aurangabad.

The company's formulation plant at Paithan in Aurangabad has received approval from Medicines and Healthcare products Regulatory Agency (MHRA) of United Kingdom, Ajanta Pharma said in a filing to the Bombay Stock Exchange (BSE).

Ajanta Pharma managing director Yogesh Agrawal said: "We continue to build expertise in the quality standards and approvals from the most stringent regulatory authorities like USA, UK and WHO pre-qualification are testimony to our commitment towards quality."

The company's Paithan facility has already been approved by the US Food and Drug Administration (USFDA).

On Thursday, Ajanta ended 1.15% down at Rs304.15 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.85% to 16,146.33.


IOC introduces India’s 1st pump with self service facility

The first self-refuelling petrol pump opened in Delhi

State-owned Indian Oil Corp (IOC) has introduced the nation's first petrol pump with self service refuelling facility as is prevalent in several developed nations.

The first self-refuelling petrol pump opened in Delhi. It was inaugurated by Amresh Kapoor, general manager in-charge of IOC Delhi State Office.

"Under the concept, the customer shall be provided the option of refuelling his vehicle either through the preloaded automation tags or the manual option by feeding the quantity to be dispensed by the dispensing unit," a company press brief said.

However, an attendant will be available at the bay for assistance and to educate the customer on refuelling system, nozzle handling and collection of the automation bill. He will also collect the payment.

"However, the customer will have an option of choosing between the conventional way of service through pump attendants or opting for self service," IOC said.

The self dispensing system is quite popular at the fuel stations abroad and is expected to generate lot of interest, especially among the youth.

On Thursday, IOC ended 2.69% down at Rs309.85 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.85% to 16,146.33.


June quarter results threaten the groupthink of the last few months that the market is undervalued

Indian companies have reported extremely poor profit growth which explains why the market is unable to show any recovery. In fact, there could be further downside due to poor earnings growth. We had suggested in June that analysts and fund managers were too optimistic

For months together, we have been sceptical about the forecasted EPS (earnings per share) of the analysts and fund managers arguing that a slowdown is not being factored into it. The consensus EPS of the Sensex for March 2010 was Rs1,250 (around April). This meant that at a Sensex level of 18,000, the market appeared "reasonably valued" to many people given the historical trend. It was not so obvious to us. (See Market valuation: Is the Sensex undervalued? ). However, the Sensex is now at 16,000. And now we know why. Earnings growth of Corporate India has slowed down to a crawl. As a result, the March 2012 EPS assumption looks grossly optimistic.

So far, 1,245 companies out of 1,300 companies in the Moneylife database have declared their quarterly results. For the first quarter of FY2011-12, revenues have grown by 28% over the previous year but aggregate operating profit and net profit (NP) fell by 10% and 3% respectively. Operating profit margin (OPM) for the companies for the June quarter was just 14%. The June quarter last year had an OPM of 16% and for the previous December and for the March quarter OPM was 17% and 16% respectively. Despite the good sales growth of the 1,245 companies reviewed, the profits of the companies took a beating due to the increase in costs and the rise in interest rates.

The Index of Industrial Production (IIP) growth, for April-June 2010 was 9.7% compared to a significantly lower growth of 6.8% for April to June 2011. This just shows there is a slowdown in the industry.

Out of the 1,245 companies, 975 companies registered a positive revenue growth for the June quarter year-on-year (y-o-y) and 760 companies registered a positive OP (operating profit). There were 68 companies that had a positive OP for the June quarter of 2010, but turned negative in the June 2011 quarter. As many as eleven of these companies are from the textiles sector.

Out of 107 companies that had registered an operating loss in the June 2010 quarter, just 57 of these were able to generate operating profits in the June 2011 quarter.

The 29 major sectors (out of 49) which are tracked by Moneylife in its database of 1,300 companies registered a revenue growth of 27% for the June quarter y-o-y, growth in OP and NP (net profit) was 11% and 3% respectively.

Companies in the lifestyle & leisure sector continued to show good growth for this quarter y-o-y. Sales grew by 43% y-o-y, whereas OP and NP grew by 28% and 21% respectively. Banks and financial services as well showed good growth in sales, showing a quarterly growth 30% y-o-y.

Among the laggards, sales of sugar companies grew by just 2% y-o-y. The revenues of the shipping sector grew marginally by just 3% with the OP and NP growth being in the negative. The telecom services sector registered a sales growth of just 7%.

The June quarter results should have put the analysts and fund managers on the edge. In our June 30th article we had mentioned that the consensus looks like a prime example of 'groupthink'.

We had argued that in FY10-11, a year of robust recovery, the EPS was probably Rs1,013. If the EPS estimate of Rs1,240 for FY11-12 has to be achieved, EPS had to grow by 22%. We had asked "on how many occasions has the Sensex achieved an earnings growth of 22%, especially when the first three months of the year have been a washout? In fact, assumption of such growth is simply absurd. Last year, which was great for earnings growth, EPS expanded by 21% or so. Battling the headwinds of higher interest and rising raw material cost, it is a pipedream to think that EPS growth would be 22%. Actual growth would probably be half of that. What if EPS growth is only about 11%? This is not unlikely, given how badly Sensex companies have done in the March quarter without any plausible reason and warning. And, if the growth is lower at 10% (not impossible), EPS will be Rs1,120-way off the Bloomberg consensus estimates. This would be a shocker for the market."

The shock has come. This explains why the Indian market is simply not able to bounce back after such a hard fall. Conviction has been shaken and groupthink is at a peril.


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