For the quarter ended March 2018, Ultratech reported net profits of Rs.488 crore, slightly lower than street expectations. Even as its domestic sales volumes grew by 32%, there was pressure coming from higher input costs. The good news for Ultratech could be that the realizations are up by 5% during the quarter ended March. Inputs costs are up for a variety of reasons. There has been a sharp rise in the price of petcoke and coal, with petcoke prices increasing by nearly 20% during the quarter. Above all, the energy costs were up by 17% for the quarter. It is currently in a battler to acquire Binani Cements.
Wipro posted Q4 net profits at Rs.1800 crore but top line growth missed estimates. The performance for the quarter was largely dragged by the insolvency of two of its major clients. For the full year ended March 2018, the revenues fell by 1% while the net profits fell by 5.2%. The margins from the IT services business fell by 40 basis points to 14.40%. The company also took a hit on HPS which ran into problems after Donald Trump scrapped the Obamacare Act. India and West Asia were the only two geographies which showed positive growth with all segments showing negative growth.
The INR cracked by 52 paisa against the dollar to a 14-month low of 66.90/$. The rupee depreciation has been intensely sharp in the last few days when it lost more than Rs.2/$. Apart from surging crude prices, the rise in trade deficit and a worsening CAD situation are also responsible for the sharp crack in the rupee. There was also a rush from banks and importers to cover their dollar exposures which put further pressure on the INR value. There was panic dollar buying from corporates and importers. Markets are also expecting a massive exodus of capital flows if the Fed continues its hawkish policy.
There is a new twist in the Essar Steel bidding saga as lenders have found more reasons to disqualify the bids put in by Numetal and Arcelor Mittal. It may be recollected that Numetal had bid along with JSW Steel after its original bid was rejected due to a Ruia family member being on the board of Numetal. Arcelor bid was rejected due to its holding in Uttam Galva, a bankrupt company. The forensic auditors who have reviewed these bids have found some serious lapses leading to the banks once again calling for rejecting the bids for Essar Steel. Arcelor Mittal had bid higher than Numetal in Round 1.
The problems for the sugar sector may be far from over as the sugar output is likely to increase sharply during the year on the back of improved yields. Timely showers this year will also help the cause. During the sugar year beginning in October, the total sugar output is likely to be 31.5 million metric tonnes nearly 2 million metric tonnes higher than the original full year production estimate. Sugar prices are already trading at their lowest level since September 2015 and the record output is only going to worsen matters. The sugar glut is not just an India specific phenomenon with a global glut of sugar. The price of sugar in the global ICE market has also been consistently falling. The sugar mills already owe huge dues to sugar farmers and this is only likely to worsen in the months to come.
Net premium income for ICICI Lombard during the March quarter grew by 14% to Rs.1817 crore. The actual growth should have been closer to 20% if the crop insurance losses had not been higher than the total premiums collected. The incurred claims ratio for the crop insurance scheme stood at 135% and the situation becomes serious because crop insurance accounts for nearly 20% of the total product portfolio. This could also be a little misleading as the full extent of losses for the Kharif season was realized and booked in this particular quarter only. ROE fell marginally from 19.7% to 19.1%.
