Infosys Q1 Profit Declines, Sensex Gains

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
13 Jul, 2010
New York City

Stocks in Mumbai traded higher after fluctuating several times during the day. Infosys reports lower-than-estimated first quarter earnings. Salem Steel plant to produce stainless steel slabs. Parabolic Drugs gets European Union certification for three of its molecules.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded higher after fluctuating several times during the day. Infosys reports lower-than-estimated first quarter earnings. Salem Steel plant to produce stainless steel slabs. NTPC shifts it 4,000 MW project to Madhya Pradesh. Parabolic Drugs gets European Union certification for three of its molecules.[/R]

Stocks in India fluctuated and declined in the first session after Infosys reported lower-than-expected profit in the first quarter but pared all earlier losses in the later session to end higher.

The Sensex Index gained 0.27% or 48.70 to close at 17,985.90 very close to the 18,000 mark threshold. It was also the only major index in Asia to have had a gain in the day’s trading.

BSE Realty index gained over 4%. Out of 3,000 scrips traded nearly 1,690 logged gains. Reliance Industries, DLF, Tata Steel, Jaiprakash Associates, HDFC, Tata Motors, Hindalco and SBI closed with gains. Infosys declined over 3% and was the most active counter on the BSE.

Bangalore-based Infosys Technologies Ltd reported that profit fell in the first quarter after it cut prices to retain contracts.

Net income fell 2.6% to Rs 1,490 crore in the first quarter ended June 30 compared to a net income of Rs 1,530 crore a year earlier. Income tax rose 30% and the euro’s 6.3% decline against the rupee dragged down the value of sales in Europe, which accounts for about 20% of the business, said Infosys today.

The company raised its estimate for the second quarter to be in the range of Rs 6,563 crore to Rs 6,626 crore, with a year-over-year growth of 16.3% to 18.2%.

The Reserve Bank of India is likely to announce a sunset clause with a deadline of June 30, 2011, for all loans in the erstwhile benchmark prime lending rate system to help banks migrate to the new base rate model for all its loans.

Banks had approached the RBI for such a clause for all BPLR-linked loans, which would otherwise have forced them to administer two types of benchmarks for many years if a borrower refused to switch to the base rate model.

The Rs 1,902 crore expansion project of the Salem Steel Plant, a special steel unit of the Steel Authority of India Ltd, is expected to be commissioned by September this year.

The commissioning will enable SSP to get into the production of stainless steel slabs. SSP pioneered the supply of wider-width stainless steel sheets and coils in India. It also has the nation’s first stainless steel blanking facility with a capacity of 3,600 tons of coin blanks, utility blanks, and circles.

NTPC has dumped the proposed 4,000 megawatt power project from Bundelkhand in Uttar Pradesh and has instead opted for putting up the plant in Madhya Pradesh due to reported refusal of the Uttar Pradesh government to cooperate in setting up the plant.

“One of the reasons for shifting this project to Madhya Pradesh is that the state government has gone out of the way to assure us that land, water, and fuel for the project would not be a problem. NTPC is now conducting site-specific studies for the 3,960 megawatt project,’ a senior official of the company remarked in New Delhi yesterday.

Parabolic Drugs has secured European Union certification for its manufacturing facility in Derabassi, Punjab. According to a release, its active pharmaceutical ingredients unit was inspected by German Auditors in April and found to be compliant with the principles of good manufacturing practice for active substances.

The company has received approval for three of its molecules. This will enable the company to sell its products in Europe, Canada and Australian markets.