Companies & Sectors
Fundamentals of domestic IT industry strong says NASSCOM

Rupee depreciation against the US dollar helps the IT industry only in the long term perspective and businesses do not gain much during short term

 

Chennai: Admitting that the global economic environment was still 'uncertain', industry body NASSCOM on Tuesday said the fundamentals of the domestic IT industry are strong but there was a need to 'wait' and 'watch' its performance in the next two quarters, reports PTI.

"..market is really uncertain. But I think the fundamentals of our industry are also very strong.... It is true that economic environment is uncertain and we will watch the next two quarters", NASSCOM President Som Mittal told reporters.

Speaking on the sidelines of a one day seminar "Surge 2012" organised by NASSCOM, he said the Indian Rupee depreciation against the US dollar helps the industry only in the long term perspective and businesses do not gain much during short term.

"Well, Rupee depreciation helps us in the long term. Because it ensures competitivesness for the industry.But in the short run, we do not really gain because as an industry we do not want currency movement to be in the centre of loss or profit. Because most people want to get what they have projected in terms of pricing", he said.

"We need a stable currency, rather than guessing how far Dollar and Rupee will be. We hope the government will bring more stability", he said.

Asked about IT companies entering new geographies, Mittal whose term as NASSCOM chief was extended for two more years yesterday, said "people are now picking up new geographies. Natural growth is happening in Europe, Latin America and Middle East".

"For short term opportunities.....we will be going to newer geographies like Latin America and Middle East and Asia. But in the longer term, we will be focusing on places were the need is higher", he said.

To a query on their expectations from the Government,he said stability in policies was needed because it would build trust between government and the business.

"I think this is the time we need the government to offer some support -- not in terms of any incentives, but as much as stable policies and more positive relationship between business and industry", he said.

On employment in the IT industry, he said projections were that 160,000 to 180,000 jobs should be created this year. "We have given offers to more than 100,000 students in engineering colleges", he said.

Last year, NASSCOM had predicted that 200,000 new jobs would be created in the industry.

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India Inc’s Q1 revenue growth to touch 6-quarter low says CRISIL

According to the ratings agency, revenue growth in the April-June quarter is forecast to drop to around 14% from 17.5% a year ago, given the slowdown in economic activity and gross fixed investments

 

Mumbai: With 15 out of 26 sectors facing severe margin pressure due to higher interest cost and slowing sales in the current quarter, ratings agency CRISIL said it expects revenue growth of leading corporates to report their weakest quarterly numbers in the past six quarters, reports PTI.

"While policy logjam and higher cost of capital have severely dented the investment cycle, persistent inflation, economic uncertainty and high retail lending rates are weighing on consumer sentiment, thereby affecting consumption growth. We believe demand growth will continue to remain weak going forward, as interest rates are likely to remain high for longer than anticipated. The deceleration in fixed capital investments growth may lead to further slowing of consumption demand,” said Mukesh Agarwal, president, CRISIL Research.

Revenue growth in the April-June quarter is forecast to drop to around 14% from 17.5% a year ago, given the slowdown in economic activity and gross fixed investments. "Accordingly, earnings before interest, taxes, depreciation and amortisation (EBIDTA) margins are projected to decline by 100-150 basis points (bps) or 1-1.5 percentage points on a y-o-y to 19-20%, but remain flat compared sequential (Q4 of FY12)," CRISIL said in a report.

Although, overall EBITDA margins are expected to remain flat for Q1 FY13 on a q-o-q basis, 15 of the 26 sectors will continue to face margin pressure. “For sectors like commercial vehicles, cement, construction and real estate, EBITDA margins are forecast to contract by 100-200 bps q-o-q, due to slower demand growth and high input costs,” said Prasad Koparkar, senior director, industry and customised research.  

The revenue growth in first quarter (Q1) of FY13 is expected to be much weaker due to a sharp deceleration in airlines, auto components, commercial vehicles, hotels, metals, organised retail, real estate and textiles, the ratings agency said.

The report is based on the analysis of aggregate financial performance of 247 large companies across 26 key sectors, excluding banks and oil & gas companies and constitute around 65% of the BSE 500 Index.

On the other hand, export-oriented sectors like IT services and pharma are expected to report strong q-o-q margin expansion aided by a 7.4% q-o-q fall in the rupee, the agency said, adding the telecom sector is expected to see a modest expansion in margins on account of lower competition coupled with cost control measures adopted by the companies.

The ratings agency also said reflecting weak demand due to the ongoing slowdown, y-o-y revenue growth in Q4 of FY12, moderated slightly to 17.2 from 17.7% in the same quarter previous year, while EBIDTA margins fell 270 bps y-o-y, which however was higher by 35 bps q-o-q, largely due to strong seasonal performance by commercial vehicles, construction, power, cement and sugar sectors.

Accordingly, net margins rose by 90 bps q-o-q, supported by the decline in depreciation charges.

Depreciation charges as a percentage of revenues fell to its lowest level in the last 10 years while growth in fixed asset creation was at its lowest in the last five years, reflecting the sharp deceleration in the investment cycle, said the agency.

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BHEL wins Rs950 crore contract from Bhutan

The order envisages manufacture, supply, erection and commissioning of the electro-mechanical equipment for the 1,020 MW Punatsangchhu-II Hydroelectric project

 

New Delhi, June 26 (PTI) State-owned BHEL on Tuesday said it won a contract worth Rs950 crore for supplying equipment for 1,020 MW hydel project in Bhutan, reports PTI.

"BHEL has secured a contract from Punatsangchhu Hydroelectric Project Authority (PHPA), Bhutan for the electro-mechanical equipment package for a 1,020MW (6x170 MW) Hydroelectric project in Bhutan," the company said in a statement.

"Valued at Rs950 Crore, the order envisages manufacture, supply, erection and commissioning of the electro-mechanical equipment for the 1,020 MW Punatsangchhu-II Hydroelectric project," it said.

BHEL is also executing the 1,200 MW Punatsangchhu-I project in Bhutan. It is being set-up under a bilateral agreement between India and Bhutan.

Located around 80 Km from Thimphu on the banks of the Punathsangchu River in Western Bhutan, the project is an environment friendly run-of-the-river scheme.

BHEL has, so far, executed three hydro projects -- 336 MW Chukha, 60 MW Kurichu and 1,020 MW Tala in Bhutan. These projects account for nearly 95 per cent of the total power generating capacity in Bhutan.

For this contract, the six turbines and generators of 170 MW each and associated equipment will be manufactured and supplied by BHEL's Bhopal facility while the Control system will be manufactured and supplied by the company's Electronic Division at Bangalore.

BHEL has established its footprints in six continents of the world spanning over 75 countries. This contract will further strengthen BHEL's presence in the overseas Hydro business segment, the company said.

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