India’s IT industry has good reason to be worried. On Friday, the country’s second biggest software firm, Infosys, kicked off the earnings season. Trouble was its fourth quarter results were worse than expected. Net profit went up by 17% to Rs1,818 crore. Revenues meanwhile, gained 22% to Rs7,250 crore. Analysts say lower margins are the culprit. In its guidance, Infosys said it expects revenue growth to remain modest because of global uncertainty.
Infosys also announced a shakeup in top management. The company’s HR director T.V. Mohandas Pai said he would resign from his position in June and make way for new people. Pai also resigned from the company’s board.
All the bad news didn’t do Infosys’ stocks any good. Its shares plunged on the BSE finishing the day 9.6% lower.
The IMF says there are indications India’s economy is over heating. Its new World Economic Outlook says it’s one of several countries now operating above potential. Not surprisingly, the IMF cut its projection for economic growth. Its forecast for 2011 is now down to 8.2% instead of the earlier 8.4%. What’s more, in 2012 it expects that number to go tumble further to 7.8% compared to its initial forecast of 8% growth.
Economies start overheating when production can’t keep up with demand. The Reserve Bank has been trying to curb inflation by increasing its policy rates by some 200 basis points since March of last year. But that’s been to no avail. Numbers released on Friday show the wholesale price index soared a much-higher than-expected 8.98% in March. In February it stood at 8.31%.
While inflation is still high, the RBI’s rate hikes could also be putting the squeeze on industrial production. According to new figures, the index of industrial production in February slowed down to just 3.6%. In January the index was at 3.95%.
Back in corporate, Sun Pharmaceuticals is now in a joint venture with American company Merck. The two firms say they will collaborate to make and sell generic drugs in developing countries. Their merger will take place through subsidiaries, but financial details are not known.
A group of lenders headed by State Bank of India is getting a seat on Kingfisher. They’ll now be able to appoint one member to the airline’s board. The consortium of 13 banks got a 23.4% stake in Kingfisher in return for loaning it Rs750 crore.
Aviation regulator DGCA says it’s taking action against four carriers for landing their planes at Goa’s airport during prohibited timings. The DGCA had previously told carriers not to use the Goa airport at times when an important navigational aide was being repaired.