Monday, 1 June 2015

CG announced as No. 1 Company in Power Equipments by Dun & Bradstreet

The award recognised and feliciated corporate India's leading companies from various sectors and is closely tied to D&B's premium publication, India's Top 500 Companies2015.

Avantha Group Company CG was announced as the top Indian Indian Company in Power Equipment for the 2nd time by Dun & Bradstreet (D&B) held in Mumbai. The award recognised and feliciated corporate India's leading companies from various sectors and is closely tied to D&B's premium publication, India's Top 500 Companies2015.

At 2:57 PM, the stock of the company is trading at Rs. 169. The stock is trading up 1.2% from its previous close which was at Rs. 167. It hit a high at Rs. 172.10 and low at Rs. 168. The total trad 
ed quantity is 272,000 and two-week average quantity is 3.70 lakh. 

Coal India hopes to maintain EBITDA at 30% in FY16: Bipin Kumar Saxena

The company's provision numbers were around Rs. 93 crore as compared to Rs. 900 crore and on other quarters the provision was around Rs. 300 crore. 

Coal India
Coal India posted results for the fourth quarter ended 31st March, 2015. The company posted a net profit after taxes, Minority interest and Share of Profit/(Loss) of Associates of Rs. 42385.50 million for the quarter ended March 31, 2015 as compared to Rs. 44341.80 million for the quarter ended March 31, 2014. Total Income has increased from Rs. 223823.50 million for the quarter ended March 31, 2014 to Rs. 230656.50 mn for the quarter ended March 31, 2015.

The Group has posted a net profit after taxes, Minority interest and Share of Profit/(Loss) of Associates of Rs. 137267.00 million for the year ended March 31, 2015 as compared to Rs. 151116.70 million for the year ended March 31, 2014.

Total Income has increased from Rs. 777794.00 million for the year ended March 31, 2014 to Rs. 806907.10 mn for the year ended March 31, 2015.

In an interview with CNBC TV18, Bipin Kumar Saxena, Director, Coal India, said that in FY15, the e-auction volumes were around 46 million tonnes as compared to a level of 58 million tonnes in 2013-2014. For the year FY16, the company is planning coal level between 7-10 percent which will be the range for the auction.

Moving forward, in terms of incentives which the company received in the final quarter was around Rs. 800-1000 crore as compared to Rs. 1200 crore in FY14. Talking about the volumes in the last quarter, he said, "I do not know the volume but the total year was 46 and in fact in the first half of the year, it was less but the second half of the year, the power plants got stocks build up to a level of 26 million tonnes. The e-auctions volumes also increase subsequently".

With the planned level of production which is at 550 million tonnes, the company is targeting around 30% EBITDA to sales ratio. In terms of growth, they believe to maintain the EBITDA growth at 26-30% in FY16.

Moreover, the company's provision numbers were around Rs. 93 crore as compared to Rs. 900 crore and on other quarters the provision was around Rs. 300 crore. Talking about the reason for the sharp decline in the provisions, he said, "This is because the provisions they have already been settled maybe probably during the three quarters, that is why the provision is less in fourth quarter". Saxena believes that the company would be able to see the provision numbers at around Rs. 100-200 crore.

Lastly, the total receivables on the books were around Rs. 11000 crore. The company is not looking at price hike in the first half of FY16, but the board might take call at the appropriate time. 

ONGC plans to invest Rs. 5000 crores: reports

D K Sarraf, chairman and managing director ONGC reported, "We have decided to expedite development in our CBM blocks." 

ONGC3
Oil and Natural Gas Corporation is reportedly planning to invest Rs 5,000 crores.

D K Sarraf, chairman and managing director ONGC reported, "We have decided to expedite development in our CBM blocks."

The company stated that it has invested about Rs 510 crore on the four CBM blocks.

Sarraf stated that the company may look for options if the companies are interested in an partnership, says report.

What is Sherlock Holmes were a central banker?

n a note titled - 1Q GDP, RBI policy and the art of being Sherlock Holmes, HSBC Global Research says, low inflation at present coupled with a possible Fed exit later in the year, suggest a final rate cut now could be an opportunistic move. Considering all, HSBC forecasts a 25bp rate cut in the June 2 RBI policy meeting.

If Sherlock Holmes were a central banker, he may have remarked, "elementary, my dear Watson". Stronger than expected 1Q2015 GDP growth at 7.5% y-o-y and some inflation risks on the horizon are a logical mix for the central bank to not cut rates. But the truth is, factually speaking, Holmes never uttered those words, (at least going by Doyle's books). And it may not be so elementary a decision after all. Look closer. Majority activity indicators and GDP's own supply side estimates are in fact pointing to continued weakness in recovery. Furthermore, low inflation at present coupled with a possible Fed exit later in the year, suggest a final rate cut now could be an opportunistic move. Considering all, HSBC forecasts a 25bp rate cut in the June 2 RBI policy meeting.
 
The note authored by Pranjul Bhandari, Chief India Economist, Prithviraj Srinivas, Economist and Stuti Saksena, Economics Associate says while India's 1Q2015 GDP (on the demand side) grew 7.5% y-o-y, showing an almost 100bp increase from the (downward revised) 6.6% growth of the previous quarter, the same message was not carried on the supply side of GDP (known as GVA at basic prices), which grew 6.1% y-o-y, 60 bps slower than the 6.8% y-o-y growth in the previous quarter.
 
The note states that “Finally, we don't foresee a CRR cut just yet. Liquidity conditions currently are tight with a system deficit of over Rs 1 trillion, at about 1.2% of NDTL. This is absurd as during this time, seasonal tightness generally eases off. Following this tightness, a section of the market is calling for a Cash Reserve Ratio (CRR) cut on June 2. However, we don't think the RBI will cut CRR this time. 

There are several reasons for this. First, CRR is currently low at 4% and the RBI might want to preserve this as ammunition in case Fed exit late in the year warrants liquidity support. Second, there are other routes such as open market operations, which can be used to bring liquidity back to normal mode. Third, CRR is only a marginal player. Estimates suggest that a 25bp CRR cut reduces cost of funds only by about 2bp. Finally, CRR cuts amount to a permanent liquidity injection. 

The RBI may want to avoid making a permanent change at this point, when much is unknown about future liquidity.” 

Coal kills Indians. Can the sun power India?

About 115,000 people die prematurely from pollution caused by Indian coal-fired plants, including 10,000 children below age five. The health costs to India are about $4.6 billion (Rs 29,400 crore) annually, which is the cost of setting up five power plants of 1,000 mega watts (MW) each, or 2% of India’s installed capacity, every year. 

The first and second part of this series largely argued that India–the world’s third-largest emitter of greenhouse gases but 127th in per capita emissions–had few short-term economic options to using coal as its main energy source.
 
What is not frequently considered in India are the health and environmental impacts of using coal, which generates 75% of the country’s electricity. Let’s consider some impacts:
 
About 115,000 people die prematurely from pollution caused by Indian coal-fired plants, including 10,000 children below age five.
 
The health costs to India are about $4.6 billion (Rs 29,400 crore) annually, which is the cost of setting up five power plants of 1,000 mega watts (MW) each, or 2% of India’s installed capacity, every year.
 
The death toll and health costs were estimated in a 2013 study by a former World Bank pollution analyst.
 
Emissions from an Indian power plant were estimated to kill 650 people, said this study of emissions between 2000 and 2008, conducted by Harvard University researchers.
 
“Air pollution produced by coal-fired power plants has been linked to premature deaths from lung cancer, respiratory illness and heart disease,” said another 2012 study on the health effects of coal generation in India.
 
Although emissions from coal-fired plants are expected to double by 2030, according to this projection by Urban Emissions, a non-profit, there are no emissions standards fixed for sulphur dioxide (SO2) and nitrogen oxide (NOx), two of the three main pollutants from such plants.
 
These studies make it evident that not only do coal-fired power plants come at a cost, which is likely to skyrocket, but a detailed national accounting of the health and environmental impacts is not available.
 
Timing is right for Modi’s great solar-wind push
 
Zero green-house gas emissions. Zero fuel costs.
 
The advantages of solar and wind energy are well known (hydro-power shares similar characteristics, but as we previously discussed, they face significant hurdles.
 
India’s power sector added 22,566 MW (225 gigawatts, or GW) of conventional capacity–92% from coal-fired plants–during financial year 2014-15 and 18,846 MW (188 GW) during 2013-14. Bearing in mind capacity additions in thermal, nuclear and hydropower over the next seven years, renewable energy is likely to account for between 10% and 15% of India’s total energy need.
 
With up to 400 million Indians without reliable energy, and industrial demand growing, the need for coal-fired electricity is estimated to increase three times by 2030, with consequent environmental impacts.
 
In talking about what he calls the “seven horses of energy“–coal, nuclear, hydro, gas, solar, wind and biogas–Prime Minister Narendra Modi has declared that India’s efforts should increasingly move towards the latter three.
 
This support for renewable energy is in line with steps around the world to shift out of fossil fuels. This transition would get a boost from far-off Norway as legislators there consider changing the way their wealth fund works. The sovereign wealth fund—the world’s largest at Rs 57.6 lakh crore ($900 billion)—could start divesting its stake in companies that earn more than 30% of their revenues from coal. This move would send a strong message to corporations–and countries–everywhere about the need for change.
 
In his latest budget speech, Finance Minister Arun Jaitley referred to a renewable-energy capacity target of 175,000 MW by 2022, against a current base of 33,750 MW (refer table 1). This would be primarily solar (100,000 MW) and wind (60,000 MW), the two big hopes for a clean, carbon-free future.
Table 1: Renewable power capacity in India (Dec 2014)
SourceInstalled Capacity (MW)Share (%)Capital Cost 
(Rs crore/MW)
Cost of Electricity (Rs/unit)
Wind22,50067.05.5-63.5-4
Small hydropower3,99011.97.5-83-3.75
Biomass4,20012.64.5-53.5-4
Solar3,0609.068-127-11
Source: MNRELok Sabha
 
Over the last 10 years, from 2005-06 to 2014-15, the renewable-energy installed capacity rose five times to reach 12% (according to the Ministry of New and Renewable Energy; the Press Information Bureau says it is 8%) of India’s installed power capacity, or 33 GW, as on December 2014.
 
Small hydropower and biogas are good for local needs, but they are not an answer to large-scale energy demands.
 
Currently, wind accounts for 67% of renewable-energy generation capacity in India, contributing 22 GW, followed by biogas (4 MW), small hydro (4 MW) and solar (3 MW).
 
This sounds promising, but it really isn’t.
 
The answer is not blowing in the wind
 
Wind energy is well-established in India with a capacity of 22,500 MW (and a potential of 102,788 MW, or 102.7 GW), 40% of India’s current power-generation capacity. India ranks fifth in the world in wind-energy capacity, as these data indicate:

Source: World Wind Energy Association
 
But wind energy needs, well, windy areas, and the wind, obviously, does not blow all the time. As a result, a typical wind mill generates less than one-fourth the electricity of a coal-based power plant of same capacity (see box “An explanation of energy efficiency” at the bottom.)
 
Almost 90% of India’s installed wind-mills are in just five states: Tamil Nadu, Gujarat, Maharashtra, Karnataka and Rajasthan, all states that have mandated that a share of energy (between 5% and 10%) from utilities must come from renewable energy.
 
Even if India were to generate its full potential of wind energy, that would only be equivalent to a year’s addition of conventional electricity, which was 22,566 MW (225 GW) in 2014-15.
 
Wind energy is clean and quiet, but it cannot replace coal.The renewable-energy holy grail is solar power.
 
The sun shines bright over India, but the outlook is still cloudy
 
The real potential in a sunny country to replace fossil fuels is solar: India has a renewable-energy potential of about 895 GW, of which 750 GW is solar, as IndiaSpend previously reported.
 
By 2022, solar energy could achieve grid-parity in India, meaning it would cost the same as other sources of electricity. That is the year, as another IndiaSpend report said, renewable-energy sector, primarily solar, could generate 1 million jobs.
 
Solar power plants can be built faster than either coal, nuclear or hydropower plants. Solar power installations rose 10-fold globally between 2008 to 2014, largely because of falling costs and improving solar-cell technology.

Source: IEA PVPS
 
Several Indian state governments have identified sites to set up large-scale solar-power plants: 17 solar parks in 12 states, with a capacity of 17,500 MW are proposed. Apart from zero emissions, job creation is another benefit.
Most of this will be from small-scale, rooftop solar power plants, not grid-scale mega projects. Several public and private sector firms, including NTPC, Adani, Welspun Energy and Azure Power have already announced plans for large-scale solar-power plants, while some large-scale projects have also been completed.
Solar power faces four major challenges; three related to economics and logistics can be addressed, while the last appears to be beyond current technology frontiers.
 
1. High (but falling) costs: Solar electricity in India currently costs between Rs 7 to Rs 11 per unit (refer table 1), compared to a cost of between Rs 2.7 to Rs 3.3 per unit for nuclear, coal and hydropower. At these costs, solar energy is not commercially viable. But technology is improving and costs are dropping.
 
For instance, NTPC, India’s largest electricity company, recently signed an agreement to build a 1,000 MW solar-power plant in Andhra Pradesh. The 250-MW first phase will supply electricity at Rs 6.16 per unit, which is high, but it will stay the same for 25 years, while the cost of coal-based power will rise as the mining and coal prices increase.
 
2. Lots of land needed in land-starved India: Solar power needs a large area to tap relatively modest amounts of energy. For instance, the 1,000-MW NTPC project mentioned earlier will be spread over 5,400 acres of land, or 5.4 acres per MW. Since 4 MW of solar power replaces 1 MW of coal or nuclear power (an explanation later), this means 20-25 acres of land will be needed to replace 1 MW of conventional energy.
 
India added 22,000 MW of generation capacity during 2014-15; replacing that with solar energy will mean 475,200 acres of land–a hot-button issue–on which no plants can grow.
 
There are two ways of getting around the land block. First, rooftop-solar power (mandatory for new buildings in France), which is becoming increasingly popular in cities such as Pune and Bangalore. Tata Solar estimates that the potential of rooftop solar power at all India level could be 57,000 MW to 76,000 MW, or 20-30% of India’s installed power capacity. The government can encourage rooftop-solar solutions that allow consumers to feed surplus energy to the grid at the same price that they pay for electricity.
 
Second, wastelands and deserts can host solar plants. Four such areas, desert swathes of Rajasthan, the Rann of Kutch and the cold deserts of Ladakh and Lahul-Spiti were identified in this report by the Power Grid Corporation of India. The solar power potential that can be harnessed by using a small fraction of waste or desert land in these four areas could be 284 GW, or 108% of India’s installed power capacity.
 
3. Missing manufacturing base: India has limited manufacturing capacities for solar photovoltaic cells, the raw material of the solar-energy industry. To ensure its ambitious solar-energy targets are met, the government is persuading foreign manufacturers to make solar panels in India. During his recent visit to China, Prime Minister Narendra Modi saw 26 agreements signed between Indian and Chinese firms, four for the manufacture of solar photovoltaic cells in India. Germany, which intends for 45% of its energy to be solar by 2030, promised technical and financial support.
 
4. When the sun sets: While the economics and logistics appear to be falling into place, the biggest problem with solar power is that it is generated only during hours of peak sunlight (and wind energy, as we said, only if there is wind). As long as solar-power is small-scale, as it is now, this does not matter. But when thousands of megawatts of solar energy pushes into the grid in great spurts, the grid will need modification. Meanwhile, outside the peak sunshine hours, fossil fuels will still be needed. In theory, batteries can store power, but battery technology has lagged solar-power-generation technology. Even the latest high-storage capacity batteries, most notably a state-of-the-art line launched by Tesla, does not, yet, make economic sense. Until it does, and until this technology is available in India, solar energy can only supplement coal and other conventional power sources, not supplant them.
 
In terms of efficiency, coal–despite its environmental and health costs–is a winner. Generating the same amount of electricity as 1 MW of coal or nuclear power requires 4 MW to 5 MW of wind or solar power, as we explain in the footnote. This may change, but that is for the future.
 
Is India then left with no option but to produce more coal, cause environmental damage (most of India’s coal is under its richest forests), harm more of its citizens and play a major part in making the planet more unlivable?
 
A realistic option: Cleaning up India’s coal plants
 
Until solar-generation and battery technology evolves adequately, coal will continue to be India’s energy mainstay. Renewable energy, especially solar, will grow in importance, but India can do much more than it does currently to mitigate the harmful effects of coal.
 
India’s coal-fired power plants use poor-quality coal, low on energy content and high on waste, according to a two-year study of 47 Indian power plants (half of India’s installed capacity) by the non-profit Centre for Science and Environment.
 
“As a result the coal-power sector is one of the most polluting and resource wasteful,” said the study. “No country in the world uses coal as poor in quality as India, so our pollution challenges are huge. But our practices to overcome this challenge were found wanting. India’s standards for pollution and resource-use lag far behind global norms, but its power plants fail to meet even such relaxed levels of performance, lacking the basic technologies to control pollution.”
 
If India must use coal, it can reduce the health and environmental impacts by washing the low-quality, high-ash coal used by Indian plants and installing scrubbers in smokestacks, as this 2012 Harvard University study (referred to earlier) showed, analysing emissions of 89 Indian power plants over eight years.
 
Sulphur dioxide (SO2), nitrogen oxide (NOx) and fine particulate matter are the chief pollutants from power plants, with SO2 accounting for 500 of 650 deaths per plant in India, according to the Harvard study. Only one Indian plant (at Dahanu, Maharashtra) had a scrubber to reduce SO2 emissions, when the study was released, compared to a fourth of all US plants.
 
Analysing the Dahanu plant, a 500-MW plant, another study found the scrubber raised the cost of electricity by 9% but reduced SO2 emissions by 80%. Examining a much-larger plant, the 2,000-MW plant at Rihand, Uttar Pradesh, without a scrubber, the same study found that washing its poor-quality coal would reduce ash by 35%, save 250 lives annually and raise electricity prices by 16%.
 
These studies make a clear point: India can greatly improve reduce the environmental and health impacts of its dirty coal-fired plants at a marginal to modest increase in the cost of electricity.
 
With electricity demand set to rise from 1,028 billion units (BU) in FY15 to 8,000 BU by 2050, this clean-air investment–as the data we have presented show–should go hand in hand with the push for solar energy.
 
If India is to save lives, clean up its air, create jobs, boost growth–and help save the planet–business as usual is not an option. 

RBI Monetary Policy: A rate cut could well be on the cards

There is a compelling reason for the central bank to trim interest rates further after two unscheduled rate cuts earlier this year. RBI needs to initiate a few measures in order to enhance liquidity, ensure credit growth and in the process stimulate economic recovery. 

All eyes are focused on the key RBI monetary policy meeting on June 2nd, wherein market participants and economists are unanimously yearning for an interest rate cut. Expectations are calling for 25 basis points cut in the repo rate and some relaxation on the cash reserve requirements. Moderation in inflation and slower growth provides the much needed maneuverability to the central bank to reduce interest rates. In this respect, growth in consumer prices has eased to 4.87% in April, compared with the reading of 5.25% in March. Meanwhile, wholesale inflation contracted for the sixth consecutive month. Food prices have softened notwithstanding a series of unseasonal rains in most parts of the nation this year.

Source: Bloomberg, India Infoline Research. Note: CPI numbers are from the new data series, beginning from 2014

Source: Bloomberg, India Infoline Research
 
On growth side, India’s industrial output growth during March slowed to five-month low of 2.1%, compared with a reading of 4.1% in February. On broader terms, although India’s economy grew 7.5% during the last quarter of the fiscal year 2014-15, the third quarter GDP growth was downwardly revised to 6.7 from the previous estimate of 7.5%. In addition, consolidation on the fiscal side also provides the central bank more leeway to act. The fiscal deficit for the year 2014-15 was reported at 4% of GDP, lower than the government’s initial target of 4.1%. For the fiscal year 2015-16, the government aims to moderate the deficit further to 3.9%.  On current account balance as well,  the deficit has been moderated to a larger extent,  thanks to sharp descent in energy prices. Resilience in the domestic currency is also a positive signal. Of late, healthy capital inflows in equity and debt markets and sufficient FOREX reserves have insulated Indian rupee from the volatility in the international currency markets. Meanwhile, recent action in the bond markets also exhibit the probability of an interest rate cut, wherein 10-year benchmark sovereign bond yields have retreated back from the highs of 8%. The yields for old benchmark 8.4 G-Sec 2024 is quoted at 7.82%, while the yield for new benchmark 7.72 G-Sec 2015 is trading at 7.64%.
 
However, the probability of poor monsoon can play a spoilsport, as far as the broader interest rate trajectory is concerned. India’s Meteorological Department has warned that there is a strong possibility of monsoon being below normal this year, with the total rainfall expected at 93% of the normal monsoon. IMD will update the forecasts this month, however they have ruled out any major changes to the projections.

Source: Bloomberg, India Infoline Research

RBI needs to initiate few measures in order to enhance liquidity, ensure credit growth and in the process stimulate economic recovery. Culmination of the mentioned factors can prove compelling for the central bank to trim interest rates further after two unscheduled rate cuts earlier this year.

Atul Auto eyes double digit growth in FY16: JV Adhia

The company is planning to launch a gasoline three-wheeler which will be available on all three fuels, that is petrol, CNG and LPG. 

Atul Auto
Atul Auto posted 4.12% growth in the sales for the month of April, 2015. The company has sold 2,502 units during the month as compared to 2,403 units sold during April 2014.

In an interview with CNBC TV18, JV Adhia, VP-Finance, Atul Auto, said that the company expects to  register good numbers in terms of sales, once company will have correct product to address the overseas market.

For the quarter, the standalone net profit of the company rose 2.37% to Rs 8.63 crore in the quarter ended March 2015 as against Rs 8.43 crore during the previous quarter ended March 2014. Sales rose 8.41% to Rs 121.75 crore in the quarter ended March 2015 as against Rs 112.30 crore during the previous quarter ended March 2014.

For the full year,net profit rose 36.19% to Rs 40.57 crore in the year ended March 2015 as against Rs 29.79 crore during the previous year ended March 2014. Sales rose 14.17% to Rs 490.07 crore in the year ended March 2015 as against Rs 429.25 crore during the previous year ended March 2014.

In FY15, the company reported 10% growth in terms of total volumes. For FY16, company is optimistic and anticipates that for the full year, the company will be able to maintain a double digit growth momentum. Having said that, Adhia believes that H1FY16 will be more tricky for all the players in the industry because of low sentiments of the audience.

The margins improved from 10 and a half percent to close to 12 percent mark. Talking about the margin outlook for FY16, he said, "Since, we are scaling higher as far as volume is concerned, we will be definitely gaining better on operating leverage; that is the area where we expect that we will keep doing this upward journey somewhere between 50-75 basis points year-on-year".

The company is planning to launch a gasoline three-wheeler which will be available on all three fuels, that is petrol, CNG and LPG. For the launch, they have already started conducting a market clinic. The launches are expected to happen after second quarter of FY16.

Stock Price:

At 9:20 AM the stock of the company is trading at Rs. 456.20. The stock of the company is trading down 0.59% from its previous close which was at Rs. 458.90. It hit a high at Rs. 460.40 and low at Rs. 456.20. The total traded quantity is 35 and two-week average quantity is 30,000. 

Top Economy news of the day- June 1, 2015

Beating its own financial target, the government has contained the fiscal deficit at 3.99 % of GDP in 2014-15.

Economic News
Beating its own financial target, the government has contained the fiscal deficit at 3.99 % of GDP in 2014-15.

With conditions not favouring its progress, Southwest Monsoon is expected to hit the Kerala coast by June 4, three days after its normal onset date, the MET department said. 

The Finance Ministry came out with new three-page income tax return (ITR) forms, dropping the controversial provision for mandatory disclosure of foreign trips and dormant bank accounts, while it also extended the last date of filing to August 31 

Strong dollar remains headwind to revenues for US multinationals: Fitch

Despite efforts by management to defray the impact on the bottom line through hedging agreements or operational adjustments, the profitability of companies with significant international exposure remains vulnerable to currency swings.

Dollar and other currencies
Many U.S. multinational companies cited the strong dollar as a headwind to revenues during 1Q15 earnings calls; the dollar has climbed 9% this year against most major currencies. Companies with significant international sales and operating exposure are experiencing pressure not faced by peers with a domestic focused business, according to Fitch Ratings. 

Despite efforts by management to defray the impact on the bottom line through hedging agreements or operational adjustments, the profitability of companies with significant international exposure remains vulnerable to currency swings. When accompanied by other operational or capital structure challenges, the impact on a company's credit profile may be great enough to influence ratings.

In early May, Fitch downgraded Avon Products Inc. to 'BB-' with a Negative Rating Outlook. Avon generates more than 80% of revenues internationally, with a strong orientation toward the emerging markets of Brazil and Russia. The value of the real and the ruble dropped by 9% and 21%, respectively, against the dollar in 2014, and the company absorbed $315 million of foreign exchange (FX) translation and transaction costs. In the first quarter of 2015, negative FX translation took 19% off the top line and dampened operating profits and EBITDA by $135 million. 

Companies with a greater degree of financial flexibility and a stronger operating outlook are better able to withstand the pressure of FX headwinds on the credit profile. At Coca-Cola Enterprises (CCE), FX has pressured cash generation, but CCE's focus on improving working capital has offset some of the headwind. Cuts to capital expenditures could also be used as a safety valve if needed for CCE to meet free cash flow (FCF) guidance. Furthermore, both CCE and its competitor, PepsiCo Inc. (PEP), have a good deal of operating costs in international markets, which provides a natural hedge to the impact of FX on operating income. 

Some other industries benefit from a similar natural hedge. Most auto manufacturers build where they sell, and although there are some transactional effects on imported parts, the rise of global suppliers means that many of the parts are built in the same locations as the cars. Of greater concern is the advantage that the strong dollar creates for international competitors that can cut prices due to a cheaper local currency. A significant increase in yen-driven price competition has yet to occur in the U.S. for auto makers, but there are circumstances where Japanese manufacturers may be adding content without raising prices. A significant number of the Japanese nameplate vehicles sold in the U.S. are also built in the U.S., lessening opportunity to be overly aggressive on price. 

Aside from the price strategies used by international competitors to exploit the FX advantage, currency fluctuations will have an organic influence on customer demand in some industries. Lodging C-Corps will likely feel a negative impact, as Fitch expects currency translation losses caused by U.S. dollar strength to temper systemwide RevPAR growth by 100-200 bps (i.e. 4%-6% versus 5%-7% in constant currency). The strong dollar also is likely to lower inbound international visitation rates to the U.S. and prompt more Americans to travel abroad. Lodging REITs' predominantly domestic focus protects them from currency losses but not lower visitation rates. The global focus of most lodging C-Corps will balance the effect from lower net visitation to the U.S.

Dollar strength clearly makes it more affordable for Americans to travel abroad, which amplifies the hit to demand from currency movements. Fitch views gateway markets, such as New York, Los Angeles, San Francisco and Miami, as the most exposed. Few companies have reported weaker demand from international visitors to the U.S.; however, the effect will primarily be felt in the transient demand segment, which has shorter booking lead times and skews toward the summer months.

The strong dollar has created a headwind for airlines with large international networks. However, lower jet fuel is set to be a major benefit to the airlines this year. Companies like Delta have even said it believes the strong dollar might be a net positive and projected second-quarter operating margins of 16%-18%, with over $1.5 billion of FCF. Domestic-focused airlines like Southwest, Alaska, JetBlue and Spirit will not likely see much of a negative impact from a stronger dollar as they have less international business in comparison to other airlines. 

Losing Shine! Sun Pharma crashes almost 10%

The Group has posted a net profit after minority interest of Rs. 8880.50 mn for the Quarter ended March 31, 2015 where as the same was at Rs. 15871.20 million for the Quarter ended March 31, 2014. 

Sun Pharma
Shares of Sun Pharmaceutical Industries was lower by 10% at Rs. 870 after the company posted Q4 results.
The stock has hit a high of Rs. 918  and a low of Rs. 870.
The Group has posted a net profit after minority interest of Rs. 8880.50 mn for the Quarter ended March 31, 2015 where as the same was at Rs. 15871.20 mn for the Quarter ended March 31, 2014. 
Total Income is Rs. 65407.40 mn for the Quarter ended March 31, 2015 where as the same was at Rs. 42524.40 mn for the Quarter ended March 31, 2014.


Dilip Shanghvi, Managing Director of the Company said, “Post the completion of the merger, we have commenced the integration of Ranbaxy. Our performance has been impacted due to various one-time charges, mainly on account of the Ranbaxy merger as well as due to price erosion for some of our products in the US. It also reflects the impact of supply constraints related to the on-going remediation efforts at some of our facilities. We are pledged to being 100% cGMP compliant and are fully responsible towards our customers and patients across the world who rely on us for quality products.”

Market start on a nervous note

Sun Pharma, Bharti Airtel, Lupin are the major losers this morning. The BSE Mid-cap Index is trading down 0.04% at 10,712, whereas BSE Small-cap Index is trading up 0.10% at 11,292. 

Stock-Market
Following Friday's strong gains, the market has started the week on a nervous note a day ahead of the RBI policy meet.

At 9:32 AM, the S&P BSE Sensex is trading at 27,825 mere four points, while NSE Nifty is trading at 8,429 down mere four points.
The BSE Mid-cap Index is trading down 0.04% at 10,712, whereas BSE Small-cap Index is trading up 0.10% at 11,292.

Some buying activity is seen in banking, metal, fmcg, IT, consumer durable goods and relty sectors, while pharma, auto and capital goods sector is showing weakness on BSE.

Cipla, Infosys, ITC, State Bank of India, NTPC, Coal India and HDFC are among the gainers, whereas Sun Pharma, Bharti Airtel, GAIL, Tata Motore and L&T are losing sheen on BSE.

Domestic institutions turned net sellers on Friday while FIIs were buyers. HSBC Manufacturing PMI will be announced today. The GDP numbers, which came after market hours on Friday will be given a consideration as the Indian economy saw an expansion of 7.3% in FY15. The market will also react to a host of results which were announced over the weekend including L&T, which remains upbeat about the domestic market despite a disappointing quarter.

Crude oil prices fell early today on expectations OPEC output would remain high after rising in May. Crude oil prices jumped almost 5 per cent on Friday, their biggest rally in over a month, as a bigger than expected drop in U.S. oil rigs in operation set off a renewed rush of bullish bets, says a report.

The CNX Pharma index has crashed nearly 3 percent to 12,148.

The breadth is marginally positive - out of 1,688 stocks traded on the NSE, 690 have advanced and 618 have declined.

Cipla is the top gainer in the Nifty-50, up 2 percent at RS. 663.

Infosys, HDFC, Yes Bank, ITC and Coal India are up over a percent each.

On the flip side, Sun Pharma has slumped over 7 percent to Rs. 896 on the back of brokerage downgrade.

Bharti Airtel has tanked 3.3 percent to Rs. 411, and Lupin has slipped over 2 percent to Rs. 1,794.

HCL Technologies, Mahindra & Mahindra, BPCL and Gail India are the other major losers.