Patni Computer Net Falls 38% to . 90 cr

Patni Computer Systems’ profits fell 37.5% to . 90.2 crore for the quarter ended September 30 as compared to . 144.4 crore in the corresponding quarter last year, but the decline was less than analysts’ expectations. Patni, which was acquired by iGATE in January, saw revenue grow 4.5% sequentially to . 914.3 crore and 7.6% year on year.
“While we do not see any cutback in existing projects, we still retain a cautious outlook for the 2012 budgets in some verticals,” chief executive Phaneesh Murthy said in a statement. The share of revenue from its top-10 clients decreased from 48.5% to 46.4%, the statement said.
Patni employs 17,853 people. Its shares closed at . 337.95 on the Bombay Stock Exchange, up 15.8 % on Tuesday.
“Our integration efforts with iGATE are progressing smoothly. Measurable outcomes like attrition rate and pipeline building are trending in the right direction,” Murthy said. Earlier, Murthy had said the company’s results are expected to stabilise in 2012 after integration expenses and accounting charges related to the acquisition have evened out.

HCL Tech Q1 Profit Rises 49% to . 497 cr

Co misses revenue expectations, but crosses $1-billion mark in quarterly sales

OUR BUREAU NEW DELHI

HCL Technologies, the country’s fifth-largest software exporter, missed revenue expectations but crossed the $1-billion mark in quarterly sales to post a 49% growth in net profit for the July to September period.
The company, which counts companies such as Xerox, Mecom, Microsoft and the controversial News of the World among its clients, grew revenues for its first quarter ended September by nearly 25% to . 4,651 crore. Its net profit grew 49%to . 497 crore during the review period.
The company will credit the equivalent price of its five shares in the payroll of its 80,500 employees for this month’s salary, on achieving the billion-dollar-sales mark. Net profit for the company since last quarter, however, declined in dollar terms by 6% on account of a 12-14% salary hike, currency movements, and a capital expenditure incurred in its first quarter ended September 30 to open new centres overseas.
The Noida-based company’s stock declined 8.5% on the BSE on Tuesday in a weak market. HCL’s bigger rival TCS which had posted weaker-than-expected results on Monday, declined 8.2%, making the IT indices tumble.
“The macro-economic situation is bad. But it is not necessarily translating into weaker business. A lot of churn in the existing deals in the market is translating into new business for us,” said HCL Technologies CEO Vineet Nayar. The company won 12 new deals in the quarter, from companies like EMI Music, Vancouver City Savings Union and renewed existing ones such as Deutsche Bank.
“The world IT budgets are either static or declining. The industry is operating at billing rates pre-recession in 2008. Its time IT services moved into a declining cost scenario as with IT hardware and electronics which become cheaper every year,” he added.
The company has about $500 million in cash, and a hedge position of $713 million. It incurred an impact of about $3.8 million on forex losses. HCL Tech has projected $230 million to be spent in capex for this year.
The stock options programme will cost the company about . 25 crore. Analysts remain underweight on IT sector. and companies.

Hero Moto Net Up 19% on Record Sales

Co confident of maintaining tempo despite inflation

OUR BUREAU NEW DELHI

Hero MotoCorp, the country's largest two-wheeler maker, clocked a better-than-expected 19.3% rise in its quarterly net profit driven by record sales, and said it is confident of maintaining the tempo despite concerns over rising inflation and fuel costs. The net profit of the Munjals-controlled company rose to . 604 crore in the three months to September from . 506 crore a year-ago, the Delhibased company said in a statement on Tuesday.
Hero, which donned a new brand identity this quarter after its split with Honda, its partner of 26 years, sold a record 15.44 lakh two-wheelers during the July-September period, a growth of 20% over a year-ago. The festival season, which begins a month-and-a-half before Diwali, boosted sales of Splendor and Passion to a record for the third straight quarter.
Rising inflation and high interest and fuel costs benefit two-wheeler makers as firsttime car buyers hold back their purchases, preferring the cheaper option of a motorcycle or scooter. Two-wheelers sales are expected to grow 12-14% this year, according to the Society of Indian Automobile Manufacturers.
“Our performance improved despite rising food inflation and fuel prices, which are the two major areas of concern for the industry and might adversely impact consumer spending in the coming months,” said Hero MotoCorp managing director and CEO Pawan Munjal.
The company has targeted sales of over six million vehicles in this fiscal, Munjal had said in July. But analysts say Hero sales may slow in the coming months.
“Hero MotoCorp sales may slow down as the company has itself said that inflation and interest rates are a major concern. It may face pressure on sales with disposable incomes getting hurt by these macro economic indices and RBI's upswing in lending rates,” said Mahantesh Sabarad, senior vice-president, research, Fortune Securities.
Hero's net sales jumped 28% to . 5,784 crore from . 4,511 crore a year ago. During the quarter, it reported a record total income at . 5,909.07 crore, up 27.62% from . 4,630.30 crore a year ago. Its operating margins, an indicator of operational profitability, grew to 17.13% from 15.08%. Munjal said sales are expected to remain buoyant during the festival month of October. The company is betting on new launches to grow demand. Hero launched a new 150cc sports bike on Monday.

Harley-Davidson Falls After Cheaper Bikes Cut Into Margins

MARK CLOTHIER MICHIGAN

Harley-Davidson Inc, the biggest US motorcycle maker, fell as much as 8.9% after profit margins fell with increased sales of lower-priced models and limited availability of pricier bikes. Third-quarter gross margin narrowed to 33.7% from 34.9% a year ago. Sharon Zackfia, an analyst with William Blair & Co., estimated gross margin of 36.8 percent in the quarter. That shift toward lower-priced bikes, such as the $8,000 SuperLow, lowered gross margin by $26.6 million, Harley said in a presentation on its Web site.
“Sales skewed more toward the Sportsters, and of all the possible reasons for a margin decline, mix shift is one of the more innocuous,” Zackfia said in an interview.
The shift toward lower-priced bikes was a product of the reworking of the York, Pennsylvania, factory that makes the brand's high-end bikes. The plant is consolidating from four lines to one, and the new line isn't up to speed yet, so there were fewer of the pricey, high-margin motorcycles to sell.
The changes at York will be “largely complete” by the end of next year, Chief Financial Officer John Olin said in a conference call today. U.S. output will be limited until the end of 2013, he added.
Sales increased 13% to $1.23 billion, short of the $1.28 billion average of 13 analysts' estimates. Harley, the maker of the Fat Boy and VRod motorcycles, sells fewer bikes in the coldweather months. The company has reported quarterly losses in each of the last two fourth quarters, typically its slowest sales period.
Net income in the three months ended Sept. 25 rose 107% to $183.6 million, or 78 cents a share, compared with $88.8 million, or 38 cents a share, a year earlier, Harley said today in a statement. The average estimate of eight analysts surveyed by Bloomberg was 75 cents.
“We are pleased with our sustained progress and we continue to realize strong momentum in the transformation our business,” CEO Keith Wandell said in the statement.
Retail sales rose 5.4% in the US and 5.1% worldwide, the company said. The worldwide sales gain was the second consecutive quarter of increasing deliveries. Before the second quarter, the company last reported an increase in U.S. sales in the fourth quarter of 2006. The company reaffirmed its forecast of 228,000-235,000 motorcycle shipments this year.
Bloomberg

Retailers Shed Stock, Yr-Round Discounts

Awareness among shoppers about jacked up prices & high excise duty trigger the change

SARAH JACOB, PRAMUGDHA MAMGAIN & SAGAR MALVIYA
BANGALORE | NEW DELHI | MUMBAI

    Indian retailers are turning leaner and meaner, chipping away at the average time stock stays in stores before it is sold and doing away with the too-good-to-be-true discount deals that no longer lure buyers.
Apparel retailers Cotton County, Cantabil, TNG, John Hill and Koutons have given up on their year-round discounts model and schemes such as ‘buy one, get two free’ or ‘flat 70% off ’ that helped them stitch a steady following in their early years.
Several multi-product retailers, such as Shoppers Stop, Lifestyle International, Trent, Raymond, Provogue and Bata have cut down the stock days, or the average number of days goods remain in stores before being sold, by 15%-20% to free up capital.
Retailers realise customers have cottoned on to the fact that regular prices are simply marked up before deducting the so-called discounts. Moreover, they say, with the 10% excise duty on maximum retail price introduced this fiscal on branded textiles, inflating prices before selling goods at sharp discounts is no longer viable.
"The pull of discounts models was already waning. Excise duty imposition only gave impetus to it," says Babar Naqvi, chief executive of Cotton County Retail, which did away with its discounts model soon after the new excise duty regime kicked in.
"The discounts model is not feasible now," says Vijay Bansal, MD of Cantabil Retail, which has shut over 150 stores of its casual menswear brand Lafanso over the past year and entered the semi-premium segment.
The future for the retail industry is flat prices, with nominal discount schemes during the festive season and at times when seasons change, says Anil Khatri, director at Coralbay Advisory, which is advising Koutons on corporate debt restructuring. He says all retail chains are passing on the excise levy to the consumers. That has translated into slightly higher retail prices across the board.
Earlier, the inflated MRP, despite discounts up to 75%, allowed apparel retailers to maintain 13%-18% operating profit margin before interest and depreciation, says Rohit Inamdar, senior VP and head corporate ratings at ICRA. But growing awareness among shoppers and the new excise regime changed all that.
Inamdar says discount retailers are shutting unviable stores but continue to price their products lower than the conventional brands.
The 115-store chain John Hill, which moved to a full-priced model in January, is a case in point as its prices are still 30% lower than brands such as John Players and Peter England.
Larger value retailers, such as Reliance Retails’ Trends and menswear brand Turtle, say customers now trust their brand more. "Now, full price is the right price. The industry as a whole will start looking more genuine," says Amit Ladsaria, director of Turtle.
While discount retailers are shutting unviable stores, multi-product retailers are scaling down their inventory. This allows them to reduce their net working capital cycle, which helps free up some capital and thereby improves their balance sheets, says Hardik Shah, senior analyst at Mumbai-based brokerage KR Choksey.
Shoppers Stop has reduced its inventory, for example, from 45 days to 30 days, its lowest level in five years. Besides, now the company is buying half the goods on returnable basis if they remain unsold, unlike a decade ago when it used to buy the entire merchandise.
    Analysts point to at least three large retailers – Subhiksha, Vishal Retail and Koutons – which saw higher inventory resulting in choked cash flows, leaving them either bankrupt or heavily debt-ridden.
But even as several multi-product large retailers have taken steps to avoid these pitfalls, inventory at the country’s largest retailer Pantaloon has risen to more than 135 days on a consolidated basis. However, it plans to reduce its stocks by 10 days each year. "We are seeing same stores sales slowing down in the recent quarter for Pantaloon and the inventory level is alarming," says Sangeeta Tripathi, senior analyst at Sharekhan Broking.
Lifestyle and Provogue are also bracing for the possible slowdown by cutting down on inventory.
Retailers, though, are divided on just how much inventory is optimum, given the ongoing festive season and the possible slowdown in consumer sales. "Higher inventory impacts profitability, but we also don’t want to be in a situation where we lose out on sales due to less stock," says Kabir Lumba, managing director at Lifestyle International. Similarly, retailers switching from the perpetual discounts model are finding the going tough to begin with. At Cotton County footfalls converting into sales dropped around 10% initially .
With inputs from Jwalit Vyas
New Retail Story APPAREL RETAILERS Cotton County, Cantabil, TNG, John Hill and Koutons give up year-round discounts model and schemes
DISCOUNT RETAILERS realise that Inflating prices before selling goods at sharp discounts is no longer viable, especially after the new excise regime
MULTI-PRODUCT retailers such as Shoppers Stop, Lifestyle, Trent, Raymond, Provogue and Bata cut down stock days

Corporate Image TV Ads See 40% Jump

ADDING MORE VALUE 

 

 

Companies are working harder this year to preserve or refine their projected image, with a 40% jump in volumes of corporate image advertising on television over the corresponding period of the previous year.
According to data released by media measurement organisation TAM Adex, Hero MotoCorp, which went in for an advertising blitz after a change of corporate identity, tops the list of advertisers in the corporate brand and image category between January and September.
At a time when questions are increasingly being raised over corporate governance and corporate greed, companies are turning to advertising that focuses on their core values and contribution to society rather than just the products or services they seek to sell. Corporate image advertising seeks to reassure consumers as much as to convert them to the intended perception of brands.
Maruti, Adidas and Mahindra & Mahindra are some of the other companies that figure among the top ten advertisers in the category. Aditya Birla Group and Life Insurance Corporation of India are the only two advertisers among this year’s top ten that featured in last year’s list of top advertisers as well.
FMCG company Reckitt Benckiser, which topped the list last year, does not figure among the top ten advertisers this time round. Neither does any telecom company, despite the 2G telecom scam taking the sector by storm ever since it broke out last November. Just before that, however, Essar Group, a diversified conglomerate with interests in communications among other sectors, was the second biggest advertiser during January-September 2010.
“With the growth in economy, companies are paying greater attention to building their corporate brand equity. Moreover, with so many brands available today, a consumer will prefer to know what he is buying and where the brand really comes from,” says Madhukar Kamath, group CEO, Mudra Group.
This year’s leading advertiser launched its new corporate identity with the campaign ‘Hum Mein Hai Hero’ on Independence Day across television, print, radio and cinema. “We preceded it with a period where we did not advertise at all. The result was quite effective as it led to a very smooth transition for us,” says Anil Dua, senior VP, marketing and sales, Hero MotoCorp.
Dua reasons that corporate image advertising is all the more necessary for companies that sell products such as twowheelers. “For a category like ours, there is more involvement on behalf of the customers. Hence, they need more assurance and tend to see the company from closer quarters,” he says.
India’s biggest utility vehicles maker Mahindra & Mahindra turned to corporate image advertising early this year when it went in for an image makeover with its ‘Rise’ campaign focusing on the core values of the group. The group plans to have two-three rounds in a year of such advertising which will be a mix of mass media, digital and PR-driven communication.
“Consumers are asking questions to corporates about their philosophy, practised values, stance on sustainability and contribution to the society,” says B Karthik, GM– corporate brand management and business transformation, M&M.

 

Samsung, BigFlix Launch Video-on-Demand Service

 NEW DELHI Handset manufacturer Samsung and movie renting firm BigFlix on Tuesday launched a video-on-demand application, My Movies, offering free video content for the first 2,000 hours. My Movies will be available for users of Samsung Galaxy S, SII and Galaxy Tab 750 offering consumers full length feature films, trailers, TV shows and music videos up to first 2000 hours during first phase of its launch from BigFlix, the statement said.