Justice Grinds Slowly

Those of us who watched with fascination how Subrata Roy seemed to get away with full-page advertisements and interviews attacking the capital market regulator are relieved that the word ‘contempt’ is even being discussed in the apex court.

It is said, “the wheels of justice grind slowly, but they grind exceedingly fine.” This is especially true in India and a change in judges or forum can make all the difference. Those of us who watched with fascination how Subrata Roy seemed to get away with full-page advertisements and interviews attacking the capital market regulator are relieved that the word ‘contempt’ is even being discussed in the apex court. A day before the July-end hearings, Sahara again publicly attacked SEBI and the SEBI chairman, accusing them of trying to ‘destroy Sahara’ with patently false claims and being ‘singled out for punishment’.
Such public attacks prior to court hearings were unheard of in India.

Sahara dared to publish its version of events leading up to the court battle, even though there is a path-breaking and extremely detailed Supreme Court judgement (31 August 2012) ordering it to refund over Rs24,000 crore raised through Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd. A quick reading of Sahara’s release only reveals how many senior bureaucrats, officers of the court and those in regulatory positions were willing to blindly endorse Sahara’s stand that it could raise thousands of crores of rupees, without scrutiny. It claimed to have received favourable legal opinions from “five legal luminaries, including two former Chief Justices of India and one ex-Chairman of Securities Appellate Tribunal (SAT)”;  in addition to the law ministry “with the signature of the Minister Veerappa Moily”. The company deliberately obfuscates the fact that the issue is not about whether money is raised from an unlisted entity, but the quantum and number of people from whom it is raised that puts it in the domain of the capital market regulator.

Such is Sahara’s influence over the Indian judicial system that, on 18th July, the two-judge bench of the Supreme court declared: "No court or tribunal will interfere with our August 31, 2012, order. We are annoyed by the SAT order. What business does SAT have to interfere with the Supreme Court judgement.” In another signal of displeasure, it also transferred Sahara cases pending before the Allahabad High Court to itself. The contempt issue itself has been adjourned for another hearing.

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    Slowing growth remains a key issue for Jubilant Foodworks

    According to Nomura, a weak macro environment combined with Jubilant Foodworks’ aggressive expansion plans bode ill for the company's cash generation ability in near term while SSSG remains a cause of concern

    Jubilant Foodworks Ltd, the master franchise for Domino's Pizza in India, Nepal, Sri Lanka and Bangladesh, and for Dunkin' Donuts in India, reported 26% growth in its June quarter revenues. However, according to Nomura Financial Advisory and Securities (India) Pvt Ltd slowing same-store-sales-growth (SSSG) remains a cause of concern for Jubilant Foodworks.


    "Moreover, with the Dunkin’ expansion picking up steam, we expect the margin pressure to intensify. A weak macro environment combined with the company’s aggressive expansion plans bode ill for its cash generation ability near term, in our view. We maintain our Reduce rating," Nomura said in a report.


    During the first quarter to end-June, the food services company reported a net profit of Rs34 crore while its total revenues, including sales, grew 26% to Rs396.5 crore, over same period last year.


    Nomura said, EBITDA came in at Rs66.7 crore, against its estimate of Rs68 crore, while EBITDA margin came in at 16.8%, down 140 basis points. Another key negative surprise was a sharp rise in depreciation expenses that rose 54% to Rs17.9 crore.


    "SSSG of 6.3% (for Jubilant) is below street estimates of 8%. Given that SSSG has come down from 7.7% in 4QFY13 to 6.3% in first quarter of FY14, the urban consumption slowdown is yet to bottom out, Nomura said.


    During the June quarter, network for both Domino’s Pizza and Dunkin’ Donuts has been on growth track with the food services company opening 26 and 4 new restaurants, respectively.


    Jubilant Foodworks closed Monday marginally down at Rs1,135.9 on the BSE, while the 30-share Sensex ended marginally up at 19,182.

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    Tata Chemicals Q1 net profit up 47% on robust domestic sales

    The management, however, acknowledged that currency and its fertiliser business have been impacted, coupled with plant stoppages and higher energy prices

    Tata Chemicals Ltd reported standalone net profit of Rs100.43 crore, for the April-June period, compared with Rs68.13 crore same period last year, on robust sales and stable realisations in the consumer business segment. However, the Tata Group company’s fertilisers and agri-business were affected. During the June quarter, Tata Chemical said its total revenues increased Rs1,738.64 crore from Rs1,586.34 a year ago period.

    R Mukundan, managing director, Tata Chemicals said, “(During the quarter) Fertilisers and agri-business had an adverse impact of foreign exchange volatility and raw material shortages. International entities are challenged with issues of softening demand, lower realisations, plant stoppages and increasing energy prices.”

    The company’s global chemical performance was impacted due to softening demand, lower realisations and plant stoppages. Haldia production suffered due to non-availability of phosphoric acid during the quarter. Tata Salt sales is up 3.4% while the company is the market leader with 65.2% market share in the national branded salt segment.

    The company repaid $95 million in June 2013 as part of the ECB-$475 million loan pay off.

    The company’s urea production is inline with expectation, with higher urea imports during the quarter. Despite lower urea prices, the weak Indian rupee cancelled the gains.  The DAP/NPK was impacted due to ambiguity on the subsidies and raw material stoppages. Neem coated urea accounted for 35.7% of the total urea production. The officials are, however, playing the watch and watch game.

     “We remain cautious on global demand scenario going forward domestically as well as internationally and while prices may remain at the same levels margins remains under pressure. Subsidy outstanding has come down as compared to March 2013 levels, but will continue to remain a challenge in the balance portion of the year,” Mukundan added.

    Tata Chemicals closed Monday 2.3% down at Rs258.8 on the BSE while the benchmark Sensex ended marginally higher at 19,182.

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