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Cairn India may decline after declaring weak Q3 outcome

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Cairn India's consolidated net profit fell 53.2% to Rs 1349.64 crore on 19.76% decline in total income to Rs 4020.57 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours yesterday, 22 January 2015.

Cairn India's revenue and profits declined sharply due to lower crude oil price realization as global crude oil prices fell sharply. Cairn India said that the company is well positioned in the current crude price environment, with low operating costs of $6 per barrel. Cairn India's Managing Director and CEO Mayank Ashar said that the company's cash rich balance sheet and best-in-class cost profile provide a solid foundation to operate its high margin core fields. This gives the company the optionality to be selective about growth projects, contingent upon the oil price environment, Ashar said. He further said that the company is uniquely positioned to generate positive free cash flows. The company has a strong balance sheet with net cash of Rs 17784 crore providing resilience.

Net revenue for Q3 December 2014, post profit sharing with the Government of India and the royalty expense in the Rajasthan block, was Rs 3504 crore down 12% over Q2 September 2014, on account of lower realizations of $68.1 per boe, which was down 25%, due to the softer crude prices. This was partially offset by 13% higher volumes and 2% rupee depreciation on sequential basis. During the quarter, total profit petroleum was Rs 1113 crore including Rs 949 crore for Rajasthan block. For the quarter, royalty for the RJ block was Rs 694 crore.

Earnings before Interest, Tax, Depreciation and Amortisation was Rs 2113 crore for Q3 December 2014 compared to Rs 2701 crore in Q2 September 2014, impacted by softer realizations, higher cess on account of higher production and an increase in exploration expense in seismic surveys. The EBITDA margins came in lower at 60%. The company's operating costs at Rajasthan continue to remain in single digits at $5.7 per barrel.

Depreciation and Depletion charge for the quarter was higher at Rs 891 crore, compared to Rs 703 crore in Q2 September 2014, as a result of an increase in production, capitalization of assets and the impact of the accounting policy basis unit of production method. Other income for the quarter was lower at Rs 163 crore due to relatively lower realized gains. Total other income including unrealized gains is Rs 457 crore compared to Rs 464 crore in previous quarter.

Shares of fertilizer companies will be in focus after the Ministry of Consumer Affairs, Food & Public Distribution after trading hours yesterday, 22 January 2015, said that the High Level Committee (HCL) on restructuring of Food Corporation of India (FCI) has in its report submitted to the government has suggested that farmers should be given direct cash subsidy of about Rs 7,000 per hectare and fertilizer sector can then be deregulated. This would help plug diversion of urea to non-agricultural uses as well as to neighbouring countries and help raise the efficiency of fertilizer use, the HLC said in its report. This type of direct cash subsidy to farmers will go a long way to help those who take loans from money lenders at exorbitant interest rates to buy fertilizers or other inputs, thus relieving some distress in the agrarian sector, the HLC said. Since the whole system of food management operates within the ambit of providing food security at a national as well as at household level, it must be realized that farmers need due incentives to raise productivity and overall food production in the country, the HLC said in its report. In India, urea prices are administered at a very low level compared to prices of DAP and MOP, creating highly imbalanced use of N, P and K, the HLC said.

Dr Reddy's Laboratories (DRL)'s wholly owned subsidiary Aurigene Discovery Technologies and Curis Inc. after trading hours in India yesterday, 22 January 2015, announced that they have entered into an exclusive collaborative agreement focused on immune-oncology and selected precision oncology targets. The collaboration provides for inclusion of multiple programs, with Curis having the option to exclusively license compounds once a development candidate is nominated within each respective program. The partnership draws from each company's respective areas of expertise, with Aurigene having the responsibility for conducting all discovery and preclinical activities, including Investigational New Drug (IND)-enabling studies and providing Phase 1 clinical trial supply, and Curis having responsibility for all clinical development, regulatory and commercialization efforts worldwide, excluding India and Russia, for each program for which it exercises an option to obtain a license.

The first two programs under the collaboration are an orally-available small molecule antagonist of programmed death ligand-1 (PD-L1) in the immuno-oncology field and an orally-available small molecule inhibitor of Interleukin-1 receptor-associated kinase 4 (IRAK4) in the precision oncology field. Curis expects to exercise its option to obtain exclusive licenses to both programs and file IND applications for a development candidate from each in 2015.

In connection with the transaction, Curis has agreed to issue to Aurigene approximately 17.1 million shares of its common stocks, or 19.9% of its outstanding common stock immediately prior to the transaction, in partial consideration for the rights granted to Curis under the collaboration agreement. The shares to be issued to Aurigene will be subject to a lock-up agreement until 18 January 2017, with a portion of the shares being released from such lock-up in equal installments between now and such date.

The agreement provides that the two companies will collaborate exclusively in immuno-oncology for an initial period of approximately two years, with the option for Curis to extend the broad immuno-oncology exclusivity.

In addition, Curis has agreed to make a payment of up to $52.5 million per program to Aurigene for the first two programs, including $42.5 million per program for approval and commercial milestones, plus specified approval milestone payments for additional indications, if any. For the third and fourth programs, Curis has agreed to make a payment of up to $50 million per program, including $42.5 million per program for approval and commercial milestones, plus specified approval milestone payments for additional indications, if any. For any program thereafter, Curis has agreed to make payment of up to $140.5 million per program, including $87.5 million per program in approval and commercial milestones, plus specified approval milestone payments for additional indications, if any.

Curis has agreed to pay Aurigene royalties on any net sales ranging from high single digits to 10% in territories where it successfully commercializes products and will also share in amounts that it receives from sublicensees depending upon the stage of development of the respective molecule.

UltraTech Cement, Colgate-Palmolive (India), Atul, Liberty Shoes, Omaxe Auto and Wabco India are set to announce their October-December 2014 earnings today, 23 January 2015.

Biocon reported 13.39% fall in consolidated net profit to Rs 90.93 crore on 8.25% rise in total income to Rs 778.99 crore in Q3 December 2014 over Q3 December 2013.

Commenting on the quarterly performance and highlights, Chairman and Managing Director, Kiran Mazumdar Shaw stated, A significant ramp up in R&D expenses this quarter reflects advances made in multiple R&D programs. Two programs viz. trastuzumab and glargine are progressing well in global Phase III clinical trials, while two other biosimilar programs have entered the clinical stage globally. This clearly positions Biocon as having one of the largest portfolio of Biosimilars in the clinic. Our Research Services arm, Syngene, has reported the best quarter thus far at Rs 220 crore which bodes well as the company prepares for a public listing. I am also pleased to announce the expansion of Biocon's Board with the induction of two new distinguished Board members: Dr. Jeremy Levin, former CEO of TEVA and Prof. Vijay Kuchroo, renowned immunologist and Director of the Evergrande Centre, Harvard Medical School. Biocon continues to invest in its uniquely differentiated Biosimilars portfolio, which straddles both Insulins and Monoclonal Antibodies. We are confident this will deliver short term growth in the emerging markets and drive markets and drive long term value creation across global markets.

Essar Ports' consolidated net profit rose 5% to Rs 98.30 crore on 9% rise in revenues to Rs 434.30 crore in Q3 December 2014 over Q3 December 2013. Earnings before interest, tax, depreciation and amortization (EBITDA) rose 11% to Rs 359.60 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours yesterday, 22 January 2015.

The company said that the final forest clearance for Salaya terminal has been received and bund construction from land side is in full swing. Expected commercial operation date (COD) is in October 2015. Financial closure for Visakhapatnam iron ore terminal has been completed. The project is expected to be taken over as an operating berth during Q4 March 2015. The project will significantly enhance third party mix of the company and will give strategic presence on the east coast after Paradip. The project site for the development of coal terminal at Paradip Port is expected to be handed over by the Paradip Port Trust soon, post which project construction will start.

VST Industries reported 21.6% fall in net profit to Rs 30.36 crore on 5.7% fall in total income to Rs 202.38 crore in Q3 December 2014 over Q3 December 2013.

On a consolidated basis, HCL Infosystems reported net loss of Rs 50.82 crore in Q2 December 2014, higher than net loss of Rs 44.15 crore in Q2 December 2013. Total income fell 25% to Rs 1468.81 crore in Q2 December 2014 over Q2 December 2013.

Rane (Madras)' net profit fell 52.45% to Rs 2.52 crore on 21.82% rise in sales and operating revenues to Rs 196.85 crore in Q3 December 2014 over Q3 December 2013. Profit before tax dropped 61.36% to Rs 2.50 crore in Q3 December 2014 over Q3 December 2013. The result was announced after market hours yesterday, 22 January 2015.

Insecticides (India) said after market hours yesterday, 22 January 2015, that the board of directors of the company at its meeting held on 21 January 2015, have taken the decision to raise funds through various modes including qualified institutional placement / GDR / ADR / preferential allotment / private equity or any other mode for the purposes meeting the requirement of funds to implement the business plan of the company.

Supreme Industries' consolidated net profit fell 43.71% to Rs 35.25 crore on 9.39% rise in total income to Rs 1066.93 crore in Q2 December 2014 over Q2 December 2013. The result was announced after market hours yesterday, 22 January 2015.

Rico Auto Industries announced after market hours yesterday, 22 January 2015. that a meeting of the board of directors of the company will be held on 28 January 2015, inter-alia, to approve as part of its going on financial restructuring the transfer of investments held in the subsidiary companies to the newly incorporated subsidiary company formed as Core Investment Company (CIC) in terms of regulations of Reserve Bank of India for the purpose of holding investments of the said subsidiary companies. The board will also consider disposal / transfer of Ferrous Auto Component Business located at Gurgaon & Manesar and also Aluminium Auto Component Business located at Sanand to its one of the subsidiary companies.

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First Published: Fri, January 23 2015. 08:41 IST