Maruti Suzuki Profit Beats Estimate on Record Car Sales By Siddharth Philip - Apr 28, 2012

Maruti Suzuki India Ltd. (MSIL), India’s biggest carmaker, reported profit that beat analysts’ estimates as a revival in demand in Asia’s third-biggest automobile market led to record sales. Fourth-quarter net income at Suzuki Motor Corp. (7269)’s Indian unit declined 3 percent to 6.4 billion rupees ($122 million) from 6.6 billion rupees a year earlier, the New Delhi-based company said in a statement today. That exceeded the 5.56 billion-rupee median of 43 analysts’ estimates compiled by Bloomberg. Chief Executive Officer Shinzo Nakanishi is adding new models and expanding diesel engine capacity as demand shifts to cars that run on the fuel, which is cheaper than gasoline in India. The automaker, which introduced its Ertiga van this month, may earn higher margins from the vehicle as it shares a platform and components with Swift and Dzire models, according to Umesh Karne, an analyst at Brics Securities Ltd. in Mumbai. “Record sales are propelling profit at Maruti as demand increases for higher margin products such as the Swift and also for more expensive diesel models,” said Karne. “We see a slow and steady increase in demand as interest rates come down and consumer sentiment improves.” Sales rose 17 percent to 114.9 billion rupees, according to the statement. That compares with the 118.1 billion-rupee median of 43 analysts’ estimates compiled by Bloomberg. The automaker expects deliveries to rise by as much as 12 percent in the year started in April, Mayank Pareek, Maruti’s head of sales, told reporters in New Delhi today. Special Trading Maruti rose 1 percent to 1,397.45 rupees at the close of a special trading session in Mumbai today, before the earnings were released. The stock has increased 52 percent this year, compared with the benchmark Sensitive Index’s 11 percent gain. The automaker, 54 percent owned by Suzuki Motor, sold 360,334 vehicles in the quarter, with sales reaching a record in March, Maruti said. Raw material costs increased 18 percent to 88.7 billion rupees, according to the statement. Industrywide car sales rose to records in January, February and March, after sales had declined 2.3 percent in the nine months ended in December from a year earlier, according to the Society of Indian Automobile Manufacturers. Maruti’s sales in the nine-month period ended Dec. 31 declined 17 percent because a labor dispute at its Manesar factory resulted in an output loss. Rate Cut The central bank cut its key interest rate this month for the first time since 2009, seeking to bolster an economy the government estimates expanded 6.9 percent in the 12 months through March, the least in three years. “Interest rate softening is a positive for the consumer sentiment,” Ajay Seth, chief financial officer of Maruti, told reporters. “But the rise in fuel prices remains a concern.” The end of government controls sent gasoline prices to a record, prompting more car buyers to opt for vehicles that run on diesel. India’s fuel pricing policy has widened the gap between diesel and gasoline prices to 60 percent from 28 percent in June 2010. India subsidizes diesel, which is used by freight companies and accounts for a higher weight in the inflation index. Maruti’s sales of diesel vehicles jumped 37 percent in the fourth quarter, while demand for gasoline-powered cars declined by 14 percent, Seth said. The automaker aims to increase diesel engine capacity to 400,000 units annually this fiscal year from 250,000, Nakanishi said in a conference call after the earnings. The company plans to spend 17 billion rupees to set up a new diesel-engine factory that will be ready by 2014. The plant, near New Delhi, will have a capacity to produce as many as 300,000 engines a year, Seth said. To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

Gold Traders Get More Bullish as Central Banks Hoard More By Nicholas Larkin - Apr 27, 2012

Gold traders are more bullish after central banks expanded their bullion reserves and hedge funds increased bets on a rally for the first time in three weeks. Fourteen of 28 analysts surveyed by Bloomberg expect prices to gain next week and nine were neutral, the highest proportion in two weeks. Mexico, Russia and Turkey added about 44.8 metric tons valued at $2.4 billion to reserves in March, International Monetary Fund data show. Fund managers raised their so-called net-long positions by 2.5 percent in the week ended April 17, according to the Commodity Futures Trading Commission. Federal Reserve Chairman Ben S. Bernanke said April 25 that he’s prepared to “do more” if needed to spur the economy, and the Bank of Japan (8301) today expanded its bond-purchase plan by 10 trillion yen ($124 billion). Gold rose about 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing ending in June 2011. The U.K. fell into its first double- dip recession since the 1970s, data showed April 25, while the IMF predicts the 17-nation euro region will contract. “Ultra-loose monetary policies of recent years don’t look like they’re going to end any time soon,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “The problems in the euro zone don’t look like they’re going to end any time soon. We’ve had a dip, and our advice to clients is always to buy the dip.” Gold Gains Gold rose 6.2 percent to $1,664.40 an ounce this year on the Comex in New York, and is now 7.2 percent below this year’s peak. The Standard & Poor’s GSCI gauge of 24 raw materials climbed 5.8 percent as the MSCI All-Country World Index (MXWD) of equities added 9.9 percent. Treasuries gained less than 0.1 percent, a Bank of America Corp. index shows. Options traders are also bullish, with the most widely held contract on futures traded on the Comex conferring the right to buy at $2,200 by July, 32 percent above prices now. The seven most popular options give owners the right to buy at prices ranging from $1,800 to $2,300, bourse data show. Central banks are joining investors in buying gold, adding 439.7 tons in 2011, the most in almost five decades, the London- based World Gold Council estimates. They may buy a similar amount this year, it predicts. Mexico bought 16.8 tons last month as Russia added 16.5 tons and Turkey’s holdings expanded by 11.5 tons. Kazakhstan, Ukraine, Tajikistan and Belarus also raised reserves, according to the IMF. Hedge Funds Speculators increased wagers on price gains to 112,275 futures and options, from a three-year low the previous week, CFTC data show. The net-long position is still 56 percent below the peak reached in August. That provides “ample room” for new long positions, Edel Tully, an analyst at UBS AG in London, wrote yesterday in a report. Investors own 2,389.6 tons in bullion-backed exchange- traded products, within 0.9 percent of the record reached on March 13, data compiled by Bloomberg show. Demand for bullion coins is weakening, with the U.S. Mint selling 17,000 ounces so far this month, compared with an average 75,917 ounces in the previous 12 months, data on its website show. The Fed said two days ago that growth will “pick up gradually” as the labor and housing markets show signs of improvement. About $4.99 trillion was added to the value of global equities this year on optimism the world will skirt another recession. The IMF raised its global growth outlook to 3.5 percent from 3.3 percent on April 17, while forecasting a 0.3 percent contraction in the euro area. U.S. Recovery “If people really believe that the U.S. recovery is coming through, I think they will buy equities,” said Carole Ferguson, an analyst at Fairfax IS in London. “Gold is more likely to go sideways.” Other investors may also be shunning gold. Open interest, or contracts outstanding, in U.S. futures declined to 395,389 on April 24, the lowest level since September 2009, bourse data show. That contrasts with combined open interest across the 24 commodities in the S&P GSCI, which rose 18 percent this year. Bullion slid from a record $1,923.70 in September, taking it below the 200-day moving average, a sign of more declines to some investors. That may present a “buying opportunity,” GoldCore’s O’Byrne said. Prices held above the measure from the beginning of 2009 through the end of last year. The metal will trade at $1,940 in 12 months, Goldman Sachs Group Inc. said in an April 24 report. The bank maintained a neutral outlook on raw materials in the near term, partly because of European debt concerns. Benchmark Contract In other commodities, 12 of 28 traders and analysts surveyed by Bloomberg expect copper to climb next week and eight were neutral. The metal for delivery in three months, the London Metal Exchange’s benchmark contract, rose 11 percent to $8,400.50 a ton this year. Six of 13 people surveyed said raw sugar will decline next week and three were neutral. The commodity dropped 10 percent this year to 20.94 cents a pound on ICE Futures U.S. in New York. Eighteen of 29 people surveyed anticipate higher corn prices next week, while 16 of 30 said soybeans will advance. Corn slipped 2.9 percent to $6.28 a bushel this year as soybeans climbed 24 percent to $14.9525 a bushel. “It should be the macro factors and political uncertainties that influence the markets most, and less the fundamental factors,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “The sovereign debt crisis should stay in focus. I think it’s premature to say that we have seen the worst.” Gold survey results: Bullish: 14 Bearish: 5 Hold: 9 Copper survey results: Bullish: 12 Bearish: 8 Hold: 8 Corn survey results: Bullish: 18 Bearish: 5 Hold: 6 Soybean survey results: Bullish: 16 Bearish: 6 Hold: 8 Raw sugar survey results: Bullish: 4 Bearish: 6 Hold: 3 White sugar survey results: Bullish: 4 Bearish: 7 Hold: 2 White sugar premium results: Widen: 5 Narrow: 2 Neutral: 6 To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net ®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

India Said to Extend Deadline for Owners to Meet Holding By Anto Antony and Santanu Chakraborty - Apr 26, 2012

Indian companies may delay share sales worth about 400 billion rupees ($7.6 billion) after a government official said the regulator plans to extend a deadline for owners to trim their holdings amid a market slump. The benchmark Sensitive Index (SENSEX)’s 12 percent decline in the past year makes it difficult for companies to sell shares, according to the official, who declined to be identified citing rules. A new date has yet to be decided, the official said. Prime Minister Manmohan Singh’s government in June 2010 ordered founders of private companies to reduce their holding to at least 75 percent by June 2013, and state-run companies by August next year. The requirement would have prompted firms including Bharat Heavy Electricals Ltd. (BHEL), India’s biggest maker of power equipment, and Wipro Ltd. (WPRO), chaired by billionaire Azim Premji, to sell about 400 billion rupees of stock, U.K. Sinha, chairman of the market regulator said on April 13. “The intention is to help state-owned companies struggling to offload shares,” said R.K. Gupta, the New Delhi-based managing director of Taurus Asset Management Ltd., which oversees $1 billion of assets. “Companies planning to delist will get more time.” The extension may result in a drop in shares of companies including Novartis India Ltd., BASF India Ltd. and BOC India Ltd., which have risen on speculation the owners may take the company private to avoid having to reduce stake, said Kishor Ostwal, managing director of CNI Research Ltd. BASF has risen 30 percent, while BOC has surged 71 percent this year. An e-mail sent to the press office of the regulator, the Securities & Exchange Board of India, wasn’t answered. D S Malik, a spokesman for the finance ministry, declined to comment. The government raised 139 billion rupees selling stakes in state-owned companies in the year ended March 31, missing a 400- billion rupee target, amid a 25 percent decline in the Sensex in 2011. It plans to sell stakes in state-owned companies including Bharat Heavy, Hindustan Aeronautics Ltd., Steel Authority of India Ltd. (SAIL) and Hindustan Copper Ltd. (HCP) To contact the reporters on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net; Anto Antony in New Delhi at aantony1@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net ®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Asian Stocks Rise for Second Day as Won, Euro Strengthen By Lynn Thomasson and Norie Kuboyama - Apr 25, 2012

Asian stocks rose for a second day and the won gained as Federal Reserve Chairman Ben S. Bernanke said he’s prepared to do more to stimulate growth and data showed South Korea’s economy grew at the fastest pace in a year. The MSCI Asia Pacific Index (MXAP) climbed 0.5 percent as of 9:41 a.m. in Tokyo. Standard & Poor’s 500 Index futures were little changed after the equity gauge rallied 1.4 percent yesterday. The Nikkei 225 Stock Average added 0.4 percent. The euro traded near a three-week high, gaining 0.1 percent to $1.3231, and the won strengthened against all of its 16 major counterparts. South Korea’s gross domestic product rose 0.9 percent in the first quarter from the previous three months, matching economist estimates. The Fed said policy makers expect the economy to accelerate gradually, increasing forecasts for 2012 growth and reducing projections for the jobless rate. PetroChina Co., Komatsu Ltd., Nintendo Co. and Japan Tobacco Inc. are among Asian companies scheduled to report earnings today. “The Federal Reserve didn’t rule out the possibility of additional monetary easing,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That’s leading to confidence among investors.” Asian stocks extended a global rally spurred by better- than-estimated profits at companies from Apple Inc. to Boeing Co. The Nasdaq-100 Index jumped 2.7 percent yesterday, the most since Dec. 20, with Apple surging 8.9 percent for its best gain in more than three years. Earnings Season Quarterly earnings-per-share have risen 10 percent for the 192 companies in the S&P 500 that reported since April 10, with results beating analysts’ forecasts by 9.6 percent, according to data compiled by Bloomberg. Before the start of the earnings season, analysts had predicted earnings growth of 0.8 percent. Fanuc Corp. (6954) slumped 5.2 percent in Tokyo. The maker of factory automation equipment said operating profit will fall 3.1 percent for the six months ending September. The fiscal year has started “with a downward risk in the economy,” the company said. The won climbed 0.3 percent to 1,137.88 per dollar. South Korea’s Kospi index added 0.7 percent. To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net ®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Emirates Says India Carriers Unappealing Without Greater Control

By Andrea Rothman - Apr 24, 2012

Dubai-based Emirates, the world’s largest airline by international traffic, won’t invest in Indian carriers unless the government there gives outside investors ultimate control, President Tim Clark said in an interview.

The imminent removal of a ban on foreign stakes won’t in itself be enough to persuade Emirates to bid given the limited influence on offer versus the poor financial records of Indian airlines and the prices likely to be demanded, Clark said today.

“Part of the deal would be a requirement to do certain things,” Clark said. “If we put money into an Indian carrier and then said we wanted to take down the labor force by 50 percent would they let us do it? No. If we wanted to drop airports that were uneconomic, would they let us? Probably not.”

India may delay a decision to allow foreign airlines to buy 49 percent of local operators until the parliamentary session ends on May 22, a civil aviation ministry official said April 20. Emirates, which will next month report a decline in annual earnings, according to Clark, has avoided major airline holdings since selling a stake in SriLankan Airlines back to the island’s government in 2010 following a failed a 10-year investment.

“Frankly it’s not something we’d be prepared to do at this stage,” Clark said of an Indian investment, adding that his company isn’t in talks about a stake in New Delhi-based SpiceJet Ltd. (SJET), the country’s only listed discount airline, as reported last week by CNBC TV-18, which cited sources it didn’t identify.
A380 Block

There’s also little prospect of Emirates being allowed to serve India with the Airbus SAS (EAD) A380 superjumbo, given that the government “has its hands full trying to keep its own aviation sector afloat,” Clark said, adding that he’s still hopeful of achieving an increase on the 54,000 weekly seats it flies there.

Earnings in the year ended March 31 were hurt by high fuel costs and currency volatility involving the euro, pound and rupee, which has damaged yields or average fares, Clark said.

That’s after net income rose 43 percent to a record 5.93 billion dirhams ($1.6 billion) in fiscal 2011 as the company deployed the world’s biggest fleet of superjumbos to establish Dubai as a global travel hub and strip traffic from Air France- KLM Group (AF), Deutsche Lufthansa AG and British Airways.

“You’ll see our profits are down,” he said. “We’ve got to start earning our living, working for our keep, because in the old days it was easy. Now it’s hard.”

To contact the reporter on this story: Andrea Rothman in Barcelona at aerothman@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Tata Consultancy Net Beats Estimates on Outsourcing Wins

By Ketaki Gokhale - Apr 23, 2012

Tata Consultancy Services Ltd. (TCS), Asia’s largest computer services provider by market value, reported fourth-quarter profit that beat analysts’ estimates after customers outsourced more information-technology work.

Net income rose 23 percent to 29.3 billion rupees ($556 million) in the three months ended March 31, from 23.9 billion rupees a year earlier, Tata Consultancy said in a statement yesterday. The median of 44 analysts’ estimates compiled by Bloomberg was profit of 28.3 billion rupees.

Tata Consultancy joins larger rival Accenture Plc (ACN) in reporting profits that exceeded analysts’ estimates, as businesses outsource more information technology services to cut costs amid economic uncertainty. Tata Consultancy, which formed a joint venture with Mitsubishi Corp. (8058) to boost orders in Japan, is seeking to expand in new regions as sales slow down in its traditional markets of North America and Europe.

“It’s impressive,” said Pralay Kumar Das, an analyst at Elara Securities India Pvt. in Mumbai. “Their peers who had less exposure to customers in the banking, financial services industries struggled. TCS was able to hold BFSI revenue steady during a tough time in spite of having greater exposure.”

Tata Consultancy fell 2.2 percent to 1,064.25 rupees at close in Mumbai yesterday, while the benchmark Sensitive Index declined 1.6 percent. Infosys Ltd., India’s second-largest software company, lost 4 percent.
‘Deal Momentum’

Revenue rose 31 percent to 132.6 billion rupees, from 101.6 billion rupees a year earlier. That compared with the 132.3 billion rupees median of 51 analysts’ estimates.

“We have kept our focus on profitability and consolidated our market leadership,” Chief Executive Officer N. Chandrasekaran said in the statement. “Deal momentum is good, so we are pretty positive,” he said in a press conference.

Tata Consultancy, which provides computer services and back-office support to clients including Citigroup Inc. and U.K.-based Friends Life, added 42 customers last quarter. The company said it won orders from a U.S.-based insurance company and an international automotive retailer among others.

The software company derived 53.3 percent of its revenue from companies in North America, 15.2 percent from the U.K., and 10.1 percent from continental Europe in the year ended March 31, Tata Consultancy said in an analyst presentation on its website. Banking, financial services contributed 43.1 percent of annual sales, while telecommunications clients gave 10.5 percent and retail and distribution provided 12.2 percent.

Infosys (INFO) slumped the most in almost three years on April 13 after forecasting sales that missed analyst estimates.

Sales in the year that began April 1 may be between 384.3 billion rupees and 391.4 billion rupees, Bangalore, India-based Infosys said. That lagged behind the 396.3 billion-rupee median of 64 analysts’ estimates compiled by Bloomberg. Infosys also reported fourth-quarter sales that trailed estimates.
Hiring Plans

Tata Consultancy added a net 11,832 employees during the quarter, for a total of 238,583, according to the statement.

The company plans to hire as many as 50,000 graduates in the financial year that started April 1, Chandrasekaran said.

“We understand the company has adequate visibility on customer spends and its own market share within that spend,” Dipen Shah, head of fundamental research at Kotak Securities Ltd. in Mumbai, said in e-mailed comments. “TCS remains our preferred pick in the large cap space.”

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED

Asian Stocks Advance on IMF Pledges While Dollar Weakens By Lynn Thomasson and Adam Haigh - Apr 22, 2012

Copper fell, paring the biggest weekly gain in two months, on speculation that China’s imports dropped last month. The dollar strengthened against most major counterparts, while Asian shares retreated. Copper for delivery in three months declined 1 percent to $8,107 a metric ton on the London Metal Exchange as of 11:14 a.m. in Tokyo. The MSCI Asia Pacific Index (MXAP) slipped 0.3 percent and the Hang Seng China Enterprises Index lost 0.8 percent. Standard & Poor’s 500 Index futures fell 0.3 percent. Japan’s 10-year bond yield dropped 1 1/2 basis points to 0.915 percent, the lowest level since November 2010. The dollar rose 0.2 percent against the euro. HSBC Holdings Plc and Markit Economics are set to release data on Chinese factory output in April today and other reports may show Europe’s manufacturing and services industries contracted this month. China Vanke Co., the nation’s biggest developer by sales, and Alibaba.com Ltd. are among companies scheduled to release earnings. International Monetary Fund members pledged more than $430 billion to safeguard the global economy as meetings ended yesterday in Washington. The Nikkei 225 Stock Average (NKY) fell 0.3 percent after earlier gaining as much as 0.9 percent. South Korea’s Kospi index slid 0.3 percent and Australia’s S&P/ASX 200 Index lost 0.3 percent. Yakult Honsha Co. jumped 12 percent in Tokyo after the Nikkei newspaper reported Danone may increase its stake in Japan’s largest non-alcoholic beverages maker by market value. Paris-based Danone owns about 20 percent of Yakult, according to data compiled by Bloomberg. Copper dropped for the first time in three days before the release of Chinese refined copper import data today. To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net ®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.