The Weekly Recap: 11th-16th Jan

The Weekly Recap: 11th-16th Jan
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First Published: Fri, Jan 16 2009. 05 37 PM IST

Updated: Fri, Jan 16 2009. 05 37 PM IST
The inflation rate continues to head southward for the tenth consecutive week and was at 5.24% for the week ended third January. This was below what most analysts expected and many are of the opinion that inflation could drop as low as 2% in the near future.
Analyst D.K. Joshi said, “While falling inflation is good news for the common man and retailers, some economists see it differently. They are warning of deflation, where prices drift lower, which leads to consumers perpetually postponing buying decisions in the hope that prices will fall further. Isn’t that odd? Just a few weeks ago economists were fretting about skyrocketing inflation, and now they are worried about the plunging rate of inflation.”
Moving on, not everything about Satyam is frightening. First, newly appointed board member Deepak Parekh has said the company has Rs1,700 crore of receivables that are yet to come in. Secondly, Minister for company affairs Prem Chand Gupta has said most of Satyam’s customers are willing to stay with the company. And finally, he has appointed three new directors - CII’s chief mentor Tarun Das, chartered accountant, former ICAI president T.N. Manoharan and S. Balkrishna Mainak of LIC, a major investor in Satyam, who are all stalwarts in their own fields and could help speed up Satyam’s recovery. With Thursday’s addition, the strength of the board now goes up to six.
In a related development, the Institute of Chartered Accountants of India has made a host of recommendations to Sebi and the ministry of company affairs on the role of auditors.
Ved Jain, president of ICAI said, “ICAI has recommended to SEBI that firms whose partners are found guilty should be debarred from being appointed auditirs of listed companies.”
Incidentally a special report in Mint points out that ICAI, investigating the role of audit firm Price Waterhouse in the Satyam Computer Services Ltd fraud, is unlikely to conclude this anytime soon. Going by the fact that ICAI’s probe in Global Trust Bank- Price Waterhouse has been on for four years. In 2004, the Reserve Bank of India had filed a complaint with ICAI following which the regulator of accounting firms found prima facie negligence.
And the earnings season kicks off with Infosys and TCS declaring their third quarter results in the shadow of the Satyam scam. Infosys on Friday posted a 25.22% increase in consolidated net profit at Rs 1,231 crore helped by a falling rupee for the quarter ended December 31. This is compared with Rs 983 crore in 2006. The company cut its revenue forecast for the current fiscal and warned it could be 2010 before the struggling Indian tech sector gets back on its feet.
TCS’s net was up 7.17% at Rs 1,352 crore rupees, from 1261.5 crore rupees in the previous quarter. Revenue grew 4.65% to Rs 7,277 crore, which was below the 5.7% rate expected by market analysts.
And in more shocking news for the IT industry, Wipro Technologies on Monday announced that in June 2007, the World Bank had banned it from contesting for its contracts till 2011 because the company had offered shares to the Bank’s employees during its US IPO in the year 2000.
The disclosure follows a similar ban on Satyam that World Bank had announced a few weeks ago. Wipro said the disclosure follows World Bank’s revised disclosure policies. The company however said the offer of shares to employees and clients was part of the Securities Exchange Commission-approved directed share program.
Truckers called off their strike unconditionally on Monday after the government said it would set up a committee to look into their demands. The assurance came as a saving race for the truckers as the government had earlier made it clear that it wouldn’t accept any of their demands and instead would come down on the strikers with a heavy hand.
Union road transport minister, T.R. Baalu said, “They want to have their leaders released so we said ok, you call off the strike and we’ll press upon the authorities to release them.”
Former President, AIMTC, Gurinder Singh said, “ We are partly satisfied. First the results have to come only then we will be fully satisfied.”
The committee to be chaired by transport secretary Brahm Dutt who will submit a report within eight weeks on the demands raised by the transporters.
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First Published: Fri, Jan 16 2009. 05 37 PM IST