According to BSE data, Concurrent’s OPM has shown a boost of 9.38% during the March quarter from 2.12% and 1.15% recorded during the December and September quarters, respectively
Concurrent (India) Infrastructure Ltd, earlier known as Kushagra Software Ltd, reported revenues of Rs65.1 crore and a net profit of Rs4.9 crore for the year to end-March 2010. Out of the total revenues, it earned Rs51.5 crore of its revenues from the March quarter alone. At the same time, Concurrent's expenses in this quarter were also its highest at Rs46.7 crore.
Surprisingly, during the December and September quarters of FY10, the company's total revenues were just Rs5.3 crore and Rs4.5 crore, respectively.
According to Koneru Sudhir Babu, the chairman and managing director of Concurrent who met Moneylife on Wednesday, in the March quarter, the company had added revenues from its infrastructure activities whereas in the previous quarters, its main business was software along with a few infrastructure projects.
However, with the kind of jump in revenues in the March quarter, Concurrent's earnings per share (EPS) rose to 1.1 from 0.02 and 0.01 recorded in preceding quarters. Similarly, according to BSE data, the company's operating margins (OPM) have shown a hike of 9.38% during the March quarter from 2.12% and 1.15% recorded during the December and September quarters, respectively.
Although strict comparison of Concurrent with other infrastructure companies is not possible, let's see how one of its peer group companies has performed. During the December quarter, Brahmaputra Infraproject Ltd had total revenues of Rs59.2 crore and net profit of Rs4.1 crore translating into an EPS of 5.84 and OPM of 11.35%. In the quarter to end-September, Brahmaputra recorded total revenues of Rs43.9 crore; net profit of Rs3.2 crore; EPS of 4.56 and OPM of 13.1%.
During the five quarters from December 2008 to December 2009, Brahmaputra has recorded an average OPM of 12.6%. Concurrent, on the other hand, has recorded an average OPM of 1.7% during the reported preceding quarters, excluding the March quarter. When you include the March quarter performance, Concurrent's average OPM for the five quarters rises to 3.26%. (There are no financial records of Concurrent for almost a year from September 2008 to September 2009).
Concurrent also does not provide balance sheets for any reporting period. When we clicked on the 'quarterly results' link on its website, we were transferred to its results page on the BSE site. The company has promised to send a copy of its balance sheet to Moneylife and said it will also make the same available on its website for all investors.
Separately, Mr Babu denied having any knowledge of the bunch of investors (mentioned in our previous article, read here: http://www.moneylife.in/article/8/6391.html). Contrary to the claims made by Arun K Mukherjee, self-styled stocks guru, Mr Babu said that he does not even know him and had never interacted with him. He, however, said he had a discussion with some investors, after he took over the company, and Mr Mukherjee may have been present there.
Some readers, who had commented on our previous article, wanted to know about Concurrent's projects. Although we discussed the same with Mr Babu, we think it is apt for the company itself to disclose this information through the regulatory channel.
Meanwhile, Concurrent shares continued their downward journey on Wednesday as well. The share hit the lower circuit and closed 4.8% down at Rs26.65 while the benchmark Sensex ended the day 0.04% down at 17,743 points.
The regulator is currently working on various proposals to contain mis-selling while CII is working on a policy paper for the mutual fund industry which is expected to come out in a couple of months
Market regulator Securities and Exchange Board of India (SEBI) seems to be in no mood to increase the penetration of the mutual fund industry and is first working towards eliminating toxic products and addressing the issue of mis-selling.
Speaking at the sidelines of a CII conference on mutual funds, KN Vaidyanathan, executive director of SEBI said,"Financial inclusion is a noble goal which I think is a long way off. It should not run ahead of ourselves. I don't think as a country we are ready for financial inclusion. Financial inclusion connotes including the bottom of the pyramid. The bottom of the MF industry should not be exposed to mutual funds."
Mr Vaidyanathan also spoke about the proposed guidelines for right selling versus mis-selling which will chalk out measures to prevent mis-selling at the institutional level. The guidelines will be first implemented by national distributors and banks and then for independent financial advisors. Moneylife had first reported about SEBI's plans. (Read here: http://www.moneylife.in/article/81/5764.html).
The regulator is working on two key aspects of mis-selling like distorted commissions and selling & alignment of products with customer risk profile. These proposals are expected to come out in the next three months and will be evaluated by the mutual fund advisory committee. The mutual fund industry is also planning to create a blueprint in terms of a policy paper for the entire industry.
"The industry needs to refer to a policy paper. What is the role and function and where does the mutual fund industry stand. I am happy that CII has already started working on it and hopefully in a couple of months we will be able to have a policy on this," said UK Sinha, chairman of UTI Mutual Fund.
Besides, the regulator is also working on a platform with registrar & transfer agents CAMS and KARVY which will provide a single view of all mutual fund investments to investors.
Charges fund companies with launching too many schemes but having very little connect with investors
Securities and Exchange Board of India (SEBI) chairman CB Bhave has spoken on why the mutual fund industry finds itself in its current mess. Speaking at the CII Mutual Fund Summit yesterday, he said, "The rationale of this industry as professional fund managers and aggregators of savings is to provide better returns through expertise and cost reduction. So why is it that we have difficulty in convincing investors that they can get better returns? Is something lacking in our delivery? Unless this fundamental issue is addressed, we cannot move forward.
Unless it is carried through to the investors with all the conviction that it is in their interest, they will not come. We need to focus on why is it that the communication is not going through and where do we have difficulty in communicating."
Mr Bhave also highlighted that various incentive structures in place in different institutions are posing a lot of problems for the industry. "Such incentive structures tend to drive institutions away from addressing customers' needs. This focus on short-term incentives ultimately results in a loss to investors."
He also pointed out the frivolity in launching a slew of products in the name of innovation. "Between the few mutual fund companies in the country, we have a few thousand schemes. I have no idea which scheme is good for me. Are these schemes really so different from each other? How much innovation is real and how much is driven by the tendency to look at short-term benefit?"
About 60% of schemes in the market today are suboptimal, pointed out Mr Bhave. "Investments in such schemes will not allow you to justify your claim that you are giving the benefit of aggregation of savings. The basic argument of why this industry exists is that we are able to aggregate savings on such a large scale that our costs of operating the portfolios are much less than what the individual's cost will be. And if that is not right, then who are we serving? Unless we ask these questions to ourselves, we will not find the right answers for long-term growth."