×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

The Week in Review 21 October 2011

The Week in Review 21 October 2011
Comment E-mail Print Share
First Published: Sat, Oct 22 2011. 12 17 AM IST

Updated: Sat, Oct 22 2011. 12 17 AM IST
India’s IT industry continues to show steady growth, but there’s uncertainty ahead. On Monday India’s biggest software firm post numbers that were slightly below most estimates. Net profit for the second quarter grew 2.5% to Rs2,439 crore. And revenue shot up 7.7% to Rs11,633 crore. TCS reported it won 10 deals during the quarter worth a minimum of $100 million. And CEO N. Chandrasekaran said the company had added a total of 35 new clients during the period. He also said he expected strong growth from the firm’s full service segment.
Also in corporate, there more trouble for India’s beleaguered micro-finance industry. Kotak Mahindra bank is suing the owners of Trident Microfin for defaulting on a loan. It has sent Trident a legal notice that gives it a fortnight to pay up its dues. Trident had been repaying its four crore loan until January, after which it started defaulting. India’s micro-finance industry has been hit by an ordinance in Andhra last year, which made it hard for them to collect repayments from borrowers.
In related news, RBI has told the finance ministry it’s opposed to letting MFIs collect so-small deposits called thrifts. It said it was concerned about the safety of such deposits. Non-banking finance companies like MFIs are not allowed to collect deposits under Indian law. But the draft micro-finance bill allows for it.
Switching back to earnings, mortgage lending giant HDFC met street expectations with its second quarter earnings.] Profit rose 20.2% to Rs971 crore. And income from operations jumped up 40% to Rs4,077 crore. HDFC said that while rising interest rates had hurt demand, approvals for new loans had gone up 18% over the first two quarters. But the company’s margins have been hurt. They fell by 5 basis points to 2.29% from 2.34%.
Also during the week, sister company HDFC Bank did better than expected in the second quarter. It reported a 31% increase in net profit to Rs1,199 crore. The profit was fuelled by a 34% increase in retail loans. Overall, HDFC Bank’s loan book increased 20%. The bank said it expected the rapid growth in retail loans to continue for another two quarters. What’s more, it has managed to keep it non-performing assets under control through the current slow down. Its NPAs fell a notch to Rs1,841 crore from Rs1,894 crore. On the downside, net interest margins went down to 4.1% from 4.2%.
Moving to the economy, finance minister Pranab Mukherjee has made it clear he’s much less optimistic about growth this fiscal. He said the government would have a hard time meeting its current fiscal deficit target of 4.6%. He added that GDP growth may not reach the 8% level. Mukherjee blamed high oil prices and volatility in commodities costs. He also admitted RBI’s campaign of monetary tightening had taken its toll.
And while the rate hikes may be slowing down growth, the Prime Minister’s office has made it clear it supports more of them. The Prime Minister’s chief economic advisor C. Rangarajan said inflation remained above the comfort level and that it was necessary for RBI to act. On another note, Rangarajan said the government needed to raise diesel prices to help reduces the losses of state-run oil firms. But he added that this would only happen after inflation started slowing down.
Comment E-mail Print Share
First Published: Sat, Oct 22 2011. 12 17 AM IST