SEBI Proposes New Recommendations on “Audit & Accounting Standards”:)

An expert panel of Securities and Exchange Board of India has proposed disclosure of audited balance sheet on a half-yearly basis by listed companies.

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At present, a listed company discloses audited accounts once a year at the annual general meeting.

This is among a slew of recommendations made by the Sebi committee on disclosure and accounting standards (Scoda).

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“The accounting irregularities at Satyam Computer Services reiterate the need for having greater internal checks and controls in an organisation,” the Sebi committee said in a discussion paper put out on Monday inviting public comments till September 25.

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Sebi will take a final decision on the new disclosure norms proposed by the committee after getting public comments.

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Pinning the responsibility of ensuring the independence of the external auditor and its partners on the audit committee of the company, Scoda has also proposed that the partner of the audit firm of a listed firm be rotated every five years to avoid management-auditor connivance.

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Citing scope for improvements in accounting norms, following the Satyam Computer scam, Sebi had asked Scoda to look into the possibility of carrying out internal checks and balances in firms by external auditors.

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“Sebi panel proposals are expected to bring transparency in the corporate governance.

It is expected to lift the corporate governance standards in the country.

The need to upgrade standards was felt since the Satyam scam hit the market.

The guideline to rotate auditors after every five years is welcomed decision.

The decision to ask listed companies to report audited results twice a year may also lift investors’ confidence in the markets” said Jagannadham Thunuguntla, head of research at SMC Capital.

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Another issue, which Scoda felt may best remain unchanged is prescribing professional qualifications or financial literacy for chief executive officers and chief financial officers of companies.

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The committee suggested that the responsibility of selecting CFOs with adequate qualification be given to the audit committees of companies.

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The Scoda was of the view that the appointment of CFO should be approved by the audit committee, which while doing so shall be required to assess the qualifications, experience and background,” it said.

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Further, in order to prepare India Inc to adopt International Financial Reporting Standards (IFRS) that are expected to take effect from financial year 2011, Sebi had asked the committee to look into the possibility of allowing companies to voluntarily implement the practice.

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The committee has also proposed a uniform timeline for submission of financial results by listed entities.

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It has put forward that listed entities shall be required to submit their quarterly and year-to-date audited and standalone financial results or quarterly and year-to-date unaudited standalone results accompanied by limited review report of the auditor within 45 days from the end of the quarter.

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This is applicable to all quarters except the last one.

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Future Venture to Re-File for IPO Soon :)

Future Venture is likely to approach Sebi again for an initial public offering soon, as the validity of the earlier approval by the market watchdog lapsed this month.

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“We are going for a fresh filing (for IPO) with Sebi,” Future Group Chairman Kishore Biyani told PTI.

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The company, which is a part of diversified Future Group, had received the Securities and Exchanges Board of India (Sebi) approval for IPO on September 4, 2008.

As per regulations, a company has to hit the capital markets within 12 months of receiving the Sebi nod.

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Last year, the company had planned to raise up to Rs 1,000 crore through a public offering of about 374 crore shares so as to fund the group’s expansion plans.

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However this time amount to be raised from the capital market would be less than the previously planned Rs 1000 crore.

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Liquidity crunch and volatility in recent times had forced many companies including Future Venture to either postpone or shelve their plans to mop up funds from the capital market.

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“The planned IPO by Future Venture was actually a by-product of the bull market.”

“After the success of Future Capital IPO last year, the Future group thought of tapping the capital market with another offer, although there was no actual necessity of fund raising,” SMC Capital Equity Head Jagannadham Thunuguntla said.

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The Future Group, which is into various businesses apart from retail, is currently looking at ways to raise funds.

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uture Venture is likely to approach Sebi again for an initial public offering soon, as the validity of the earlier approval by the market watchdog lapsed this month.

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“We are going for a fresh filing (for IPO) with Sebi,” Future Group Chairman Kishore Biyani told PTI.

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The company, which is a part of diversified Future Group, had received the Securities and Exchanges Board of India (Sebi) approval for IPO on September 4, 2008.

As per regulations, a company has to hit the capital markets within 12 months of receiving the Sebi nod.

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Last year, the company had planned to raise up to Rs 1,000 crore through a public offering of about 374 crore shares so as to fund the group’s expansion plans.

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However this time amount to be raised from the capital market would be less than the previously planned Rs 1000 crore.

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Liquidity crunch and volatility in recent times had forced many companies including Future Venture to either postpone or

Select Pharma Stocks Gain On Tamiflu Demand :)

As the Government is looking at ramping up procurement of the generic version of Tamiflu (oseltamivir), the share prices of those Indian pharma companies which might begin producing the drug, surged on Tuesday.

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The share prices of these companies gained between two per cent and 19 per cent.

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As the virus has reached pandemic levels with the death toll rising to fifteen and a large number of people having tested positive across the country, the Government is looking at stockpiling about another two crore capsules of the drug.

Tamiflu is currently being imported from Swiss drug maker, Roche.

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Ranbaxy, Cipla, Natco Pharma, Strides Acrolabs and Panacea Biotech are vying to produce the generic version of the drug.

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Strides closed up 4.78 per cent, Ranbaxy 6.71 per cent, Panacea Biotech 1.59 per cent and Natco Pharma 18.93 per cent.
Though Cipla closed the day down 0.48 per cent, it was up more than three per cent during the day.

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Mr Jagannadham Thunuguntla, Equity Head at SMC Capital said that the Government looking at stocking up the drug immediately would boost the reputation of these companies.
“This will not impact the bottomlines of these companies much.”

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The Swine flu virus, which emerged in Mexico and the US first in April, has been spreading to other countries. 😦

It is a global pandemic which has hit India much later than other countries. Globally more than 1.6 lakh people have been affected and 1154 deaths have been recorded, according to the World Health Organisation.

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The swine flu scare didn’t seem to affect the stock markets much as it ended the day flat; the Sensex closed up 64 points.

The BSE Health Care index was up 0.95 per cent, as 14 scrips advanced and 8 declined on Tuesday.

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Strong earnings reports boost markets :)

Stronger housing and labour data in the US as well as better-than-expected earnings from domestic companies indicates that the robustness in the markets will continue, says J. Thunuguntla of  SMC Capital.

The Bombay Stock Exchange 30-share benchmark, the Sensex,was down on Monday, 27 July, slightly led by Reliance Industries, after its quarterly results came out lower than expected.

The rose to a record high on expectations that government spending will boost demand for consumer goods. Hindustan Lever and ITC both gained as well as DLF ahead of its quarterly results report.

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On Tuesday, the market ended relatively flat again. Banks ended the day lower after the RBI kept interest rates unchanged on inflation fears. Tata Motors stock surged after earnings came out better than expected. Q1 profits soared 58%.

The Sensex has rallied 88% since it’s March 9th low. 🙂

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The Sensex fell for a 3rd straight day on Wednesday after investors judged the recent run up in the market as excessive.

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The BSE index has seen the market rise over the last 2 weeks as several companies reporting their Q1 earnings have beaten analyst expectations.

Stocks that took a hit included Tata Motors, DLF, Tata Steel and Sterlite Industries. Jindal Stainless rose over 5% on news that its first quarter profit more than tripled.

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The BSE 30-share barometer rose on Thursday after 3 days of losses led by banking stocks.

State bank of India and ICICI Bank both rose after better than expected Q1 earnings.

The Sensex had risen 6.2% this month as of 30th July, driven primarily by positive earnings reports.

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The Sensex surged on Friday closing at a 52-week high on strong earnings reports and global cues. Both the Sensex and the NSE Nifty were up 8% for the month of July.

Top gainers for the week were Hindalco, Tata Motors, ONGC, SBI and HUL. Top losers included Bharti Airtel, Reliance Communications, Hero Honda, DLF, and NTPC.

Barring Oil & Gas and Pharma, other BSE sector indices closed in the green for the week.

To learn more on what to expect from the markets, we have with us J Thunuguntla of SMC Capital.

Companies Go Slow on Share Buy-Backs.

Companies go slow on share buy-backs

In a tight money market, companies that have moved to buy back their shares are going slow on these efforts either because they do not have the money or are saving it for a better use, according to analysts and executives at some of the firms.

Currently, 22 companies have ongoing offers to buy back their own shares and, according to SMC Capitals Ltd, the merchant banking arm of New Delhi-based financial services house SMC Global Securities Ltd, they have spent less than 25% of the aggregate Rs 4,559.47 crore they would have to spend if they bought back all the shares they set out to at the maximum buy-back price.

To be sure, buy-back offers are typically open for several months and many of the 22 companies still have time to repurchase their shares.

Companies buy back shares in an effort to boost investor sentiment and prop up the share price, and increase the return on equity (money for the buy-back usually comes from reserves which is part of the shareholders’ funds or equity) and earnings per share (the shares bought back are destroyed, leaving fewer shares among which the earnings have to be shared).

No companies launched buy-back programmes in 2007, when the equity markets were on a roll. Several companies, however, announced such programmes as the markets started melting last year.

India’s benchmark equity index, Sensex, has lost nearly 50% of its value since January 2008, in the wake of the global credit crunch and an economic slowdown.

Delhi-based real estate firm DLF Ltd, which had announced one of the biggest buy-back plans last year at a total maximum cost of Rs1,100 crore, has thus far repurchased shares worth only Rs 51.3 crore, according to SMC. The offer closes on 9 July.

“The money we have deployed in the buy-back is a reflection of the general market conditions and the liquidity crisis worldwide,” said Saurabh Chawla, executive director, finance, DLF.

Similarly, Reliance Infrastructure Ltd, owned by the Reliance Anil Dhirubhai Ambani Group (R-Adag), has bought back shares worth Rs806 crore in an offer capped at Rs2,000 crore, according to SMC data.

“At a time when cash is king, many companies may not be as committed to their buy-backs as they would have been otherwise,” said Jagannadham Thunuguntla, head of equity at SMC Capitals.

Usually, a firm specifies a maximum price for the buy-back and a maximum amount it will utilize for the buy-back.

But it doesn’t necessarily use this amount, and the buy-back happens at the prevailing market price.

“If the maximum buy-back price is Rs600, but the current market price is only Rs 300, the firm will naturally buy back at Rs 300,” said Thunuguntla of SMC Capitals.

A buy-back gives investors the option of liquidating their position in a market that doesn’t have too many buyers.
More read on SMC Capitals : http://www.smccapitals.com/index.htm