Archives of “board of directors” Tag

Is Aurobindo A Value Trap?

Aurobindo has corporate governance issues such as inferior financial reporting, less than ideal disclosures and taxation issues relating to promoters. Moreover, the company also faces structural issues around absence of ‘moated’ revenue/profit streams and long-term growth drivers. Also, it faces potential revenue/margin erosion as incumbents return and regain market share post FY18 through competitive pricing in complex injectables, controlled substances and cephalosporin. 
Accounting quality  
Low cash flow generation and high loans and advances as a percentage of net worth Corporate governance  Opaque tie-ups with relatively unknown companies  Capital allocation   Vertical integration and improvement in product mix is a positive; gross block turnover in line with peers.
Lack of investment in innovation and no moats around its business; revenues exposed to return of competition Source: Company, Ambit Capital research. Note: = rating of 4/4; = rating of 3/ 4 and so on. Accounting quality – Poor cash flow generation Aurobindo has poor cash flow generation (CFO/EBITDA of 56% vs peer average of 85%) led by an extended working capital cycle (93 days vs peer average of 65 days).
Its accounting practices have raised issues before, leading to undisclosed income of `300mn during raids by income tax authorities in 2012 (click here).  Capital allocation – Improvement in product mix and vertical integration Aurobindo moved up the value chain from an API manufacturer to a formulation manufacturer. Its acquisition track record is yet to be established; though the Actavis acquisition looks promising, we would wait before giving too much credit as pharma companies have struggled with profitability in Western Europe. Corporate governance – Distribution agreement impairs upsides Mr. Nithyanand Reddy (Chairman, ex-MD) appears to be a connected person.

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Breaking-China imposes 6-month ban on stock sales

China on Wednesday said it was banning major shareholders, executives and directors of listed companies from selling any of their stakes for six months – the latest in long line of measures the country has introduced in recent days to stop a brutal market sell-off that has wiped more than $3 trillion off its main exchanges.

In a statement, the China Securities Regulatory Commission said investors who own stakes exceeding 5 per cent must maintain their positions.

The ban is aimed at safeguarding the market from what the regulator had earlier described as panic and irrational selling.

It comes after another bout of sharp selling in Chinese shares on Wednesday, with the Shanghai Composite closing down 5.9 per cent, the Shenzhen index losing 2.5 per cent and Hong Kong’s Hang Seng index tumbling 5.8 per cent to erase all its gains over the previous 12 months.

In a further effort to halt the rout, Beijing has already suspended initial public offerings, used state funds to buy shares directly, cut trading fees in a bid to improve market liquidity and instructed government-owned companies not to sell shares.

Here is a rough translation of the statement (via Google Translate):

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A Delicate Corporate Matter

All of the ten senior members of the Board of Directors of the company were called into the chairman’s office one by one until only Bob, the junior member, was left sitting outside.

Finally it was his turn to be summoned. He entered the office to find the chairman and the ten other directors seated around a table.

He was invited to join them, which he did.

As soon as he had sat down the chairman turned to Bob looking him squarely in the eye, and with a stern voice, asked, “Have you ever had sex with Mrs. Foyt, my secretary?”

“Oh, no sir, positively not!” Bob replied.

“Are you absolutely sure?” asked the chairman.

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Maruti to seek minority shareholders’ nod for Gujarat Plant

Maruti Suzuki India on Saturday decided to seek the approval of minority shareholders for its Gujarat plant, which it has decided would be built and owned by its parent firm Suzuki Motor (SMC). As reported earlier by FE, the company does not need any such approval, as the relevant provisions of the Companies Act, 2013, have not yet been notified, but Maruti said it would do so “as a measure of good corporate governance”.

However, it remains to be seen whether the amended proposal finds favour with the fund houses, who were the first to raise objections. “We will convince all the domestic institutional investors to vote against the proposal so that it gets defeated, ” a fund manager from a public sector fund told FE.

A senior fund manager of a large fund conceded the changes made to the proposal were welcome. However, the fund manager said opposition to the plant being housed in Suzuki Motor Corporation’s wholly-owned subsidiary rather than in Read More  

IDFC :Decrease in Foreign investment limit/ceiling in an Indian Company under PIS – FIIs- From 54% to 52.50%

The Reserve Bank of India today notified that Foreign Institutional Investors (FIIs), through primary market and stock exchanges, can now purchase up to 52.50 per cent of the paid up capital of M/s IDFC Limited under the Portfolio Investment Scheme (PIS). M/s IDFC Limited has passed resolutions at the board of directors’ level and a special resolution by the shareholders, agreeing for decreasing the limit from 54 per cent to 52.50 per cent for the purchase of its equity shares and convertible debentures by Foreign Institutional Investors (FIIs). The Reserve Bank has notified this under FEMA 1999, regarding raising of aggregate ceiling for investments by FIIs in Indian companies under Portfolio Investment Scheme (PIS).

Further the Reserve Bank advise that the foreign share holding by FIIs in M/s IDFC Limited has crossed the overall limit of its paid-up capital. Therefore, please note that no further purchases of shares of this company would be allowed through stock exchanges in India on behalf of FIIs.

Can Google Hack Death Itself?

At the moment Google is preparing an especially uncertain and distant shot. It is planning to launch Calico, a new company that will focus on health and aging in particular. The independent firm will be run by Arthur Levinson, former CEO of biotech pioneer Genentech, who will also be an investor. Levinson, who began his career as a scientist and has a Ph.D. in biochemistry, plans to remain in his current roles as the chairman of the board of directors for both Genentech and Apple, a position he took over after its co-founder Steve Jobs died in 2011. In other words, the company behind YouTube and Google+ is gearing up to seriously attempt to extend human lifespan.

Sure, why not? Do your magic.


Google vs. Death (TIME)


Microsoft CEO Steve Ballmer announces retirement,Stock Spurts up 8%



Microsoft’s CEO Steve Ballmer announced his retirement today, saying he would step down within 12 months, once a successor is found.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said in a company-issued statement.

“We have embarked on a new strategy with a new organization and we have an amazing Senior Leadership Team. My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”

Microsoft shares rose 9.02% pre-open in the minutes after the announcement.

Microsoft’s board of directors has built a committee to choose Ballmer’s successor, made up of several high-ranking Microsoft executives, including Bill Gates. Read More  

JPMorgan Beats Earnings Estimates

The nation’s largest bank JPMorgan Chase released fourth quarter earnings results this morning. 

 For Q4, JPMorgan delivered EPS of $1.39.

Net-income came in at $5.7 billion and revenue came in at $24.4 billion.

Net-income for the fourth quarter was expected to come in at $4.82 billion and sales was expected to come in at $24.33 billion, according to data compiled by Bloomberg.

JPMorgan’s stock was last trading lower in the pre-market.

Here’s an excerpt from the bank’s release: 

JPMorgan Chase & Co. (NYSE: JPM) today reported net income for the fourth-quarter of 2012 of $5.7 billion, compared with net income of $3.7 billion in the fourth quarter of  2011. Earnings per share were $1.39, compared with $0.90 in the fourth quarter of 2011. Revenue for the quarter was $24.4 billion, up 10% compared with the prior year. The Firm’s return on tangible  common equity for the fourth quarter of 2012 was 15%, compared with 11% in the prior year. Net income for full-year 2012 was a record $21.3 billion, compared with $19.0 billion for the prior year. Read More  

Non-corporates should get preference in bank licences: C Rangarajan, PMEAC chairman

The Reserve Bank should give preference to the non-corporate sector for new bank licences, Prime Minister’s Economic Advisory Council ChairmanC Rangarajan said. 

“It is possible for the Reserve Bank to start with initially non-corporate business and find out whether there are suitable applicants and thereafter proceed to look at the other applicants,” he said in an interview. 

The RBI is in the process of finalising the guidelines for giving new bank licences after Parliament approved Banking Laws (Amendment) Bill last month. 

The central bank, Rangarajan said, “should look at various types of financial institutions that are available currently and decide”. 

“…. many of the strong private sector banks today have been at one time or other in the financial system. They can look at it first and look at the other later on,” he said.  Read More  

Aid to Spain banks to be disbursed next week

The 39.5 billion euros ($51 billion) Spain’s euro-zone partners agreed to provide for recapitalizing four nationalized Spanish banks will be disbursed next week, Eurogroup President Jean-Claude Juncker said here Monday.

“The implementation of the program is well on track, meeting all required conditionality steps as enshrined in the memorandum of understanding,” the Luxembourg prime minister said after a meeting of euro-zone officials in Brussels.

“We have also welcomed the decision by the ESM (European Stability Mechanism) board of directors to authorize the first tranche of the program of up to 39.5 billion (euros). The disbursements will be made in mid next week,” Juncker said.

The four nationalized Spanish banks will receive 36.97 billion euros in European aid. Read More