New Delhi, April 20
Mukesh Ambani led Reliance Industries Ltd on Friday reported its March quarter net profit at Rs 4,236 crore — the lowest quarterly profit in more than two years — versus Rs 5,376 crore in the year-ago period, down 21%. Profit after tax for fiscal 2011-12 was reported at Rs 20,040 crore versus Rs 20,286 crore year-on-year. The company's results lagged market estimates.

Reliance announced a dividend of Rs 8.5 per share. Earnings per share fell to Rs 12.9 versus Rs 16.4 year-on-year. The company reported its second consecutive quarterly drop in profit, hurt by weak refining margins and declining gas output from its offshore fields.

The company has embarked on a diversification spree, venturing recently into the media business and expanding its supermarkets business.

Reliance, which operates the world's biggest refining complex, in western India, plans to make fresh investments in its core business while continuing to grow its retail footprint and work towards rolling out wireless data services, Ambani said in a statement on Friday. The company tied up with BP last year to increase output from some of its oil and gas blocks and is awaiting government approval for investment plans.

"Somewhere, somehow, Reliance has lost that Midas touch," said Jagannadham Thunuguntla, strategist at brokerage SMC Global Securities in New Delhi.

"It is high time they gave clear indication to the analyst, investor community on how they are going to deploy that cash. Otherwise it is going to be a huge overhang," he said.

The company held cash of $13.8 billion at March-end. Gas output from Reliance's fields off India's east coast may decline to an average 27.6 million standard cubic meters a day in 2012/13, about a third of what was initially estimated, a government source said in February.

Net sales rose 16.7 per cent to Rs 878.33 billion. After profit fell for the first time in more than two years in the December quarter, Reliance moved to bolster its shares by announcing a share buyback of up to $2.1 billion, the biggest ever in India.

Reliance reported gross refining margins of $7.60 per barrel for the March quarter, compared with $9.20 a year earlier, but more than the $6.80 it posted in the December quarter.

Still, the stock has underperformed on the Bombay Stock Exchange over the past 15 months. The shares have risen 5.5% so far this year, lagging a 12.4 per cent rise in the benchmark BSE Sensex index, in which they have the second heaviest weight. Ahead of the results, the stock closed down 1.5%. — Agencies

New Delhi, April 20
Following a huge furore over his statement, Kaushik Basu, chief economic advisor in the finance ministry, on Friday sought to clarify his remarks made in Washington, D.C. on India’s economic reforms process which had put the government in a spot.

Basu had been quoted as saying at a lecture at Carnegie Endowment that no major reforms were likely till the general elections in 2014. This was seen as an embarrassing admission by the government that reforms were grinding to a halt and also seemed to validate the opposition charge that there was a policy paralysis in the government.

As the remarks came out, the principal opposition party — the BJP, -—attacked the government, saying they only validated its stand that there was a policy paralysis in the government and now even a senior government functionary was admitting it.

Basu is accompanying Finance Minister Pranab Mukherjee at the annual International Monetary Fund-World Bank annual meetings in Washington.

In a statement issued today, Basu clarified he had been quoted out of context and had in fact said that the year 2014 was important for Europe as several banks would have to repay US $1.3 trillion loans given by the European Central Bank. He added he had the made the point that 2014 could spark another global economic crisis after those in 2008 and 2011. “Soon after the 2014 European crisis, India could emerge as the world’s fastest growing economy, even overtaking China”, he said.

“Some of this was reported on poorly, juxtaposing my comments on Europe in 2014 with the Indian election of 2014. This is unfortunate because the central message of my talk was the possible European crisis of 2014 and India’s major rise thereafter, likely overtaking China”, the statement said.

Basu added he had mentioned, as he had done several times earlier in India, that, due to coalition politics, there was some slowdown in economic reforms and decision-making.

“I specifically mentioned that the problem with GST (general sales tax) reform was that the opposition realized that was a good reform. Hence, it was reluctant to let it happen under the current regime. A single party majority government wouldn’t have faced this problem. If there is a single party majority in the next election, it will facilitate such reforms,” he said.

Basu said he had argued that some reforms, such as foreign direct investments in multibrand retail, were likely to happen sooner because in principle they did not need the support of the opposition and this would give a boost to the economy.

Seeking to insulate the government from the heat of any of his remarks, Basu said in the statement: “As the chief economic adviser I’ve often expressed opinions that weren’t necessarily those of the government. This is one of the strengths of India that it allows us to generate and discuss new ideas without the government having to first endorse them”.

While reforms are not moving ahead and government functioning has slowed down due to fear of scams, the remarks made by Basu— being one of the government’s prominent economic policy managers — saying it in as many words that nothing major would happen for the next two years had come as a surprise and ignited fears of more pessimism for the economy.

Mumbai, April 20
The BSE Sensex provisionally closed down 0.8 percent on Friday, dragged by a drop in Nifty futures in the afternoon session that traders attributed to a trading error.

Nifty futures dropped as much as 6.7 percent in afternoon trade, dragging down spot indices, which several dealers attributed to a trading mistake sparked by an attempt to sell both Infosys futures and index futures.

A National Stock Exchange official told Reuters the exchange was looking into the matter, though they would not confirm whether the sudden drop in the futures index was due to a trading mistake.

Nifty futures were last down 0.9%. The 30-share Sensex also fell as much as 1.56% and the 50-share Nifty fell 1.64%, following the suspected erroneous trading. Traders said it appeared to be a case of a dealer looking to sell both Nifty futures and Infosys futures in the NSE, citing an examination of the unusual price and volume action.

However, while inputting the trade, the dealer is believed to have neglected to put in the selling price, according to these traders.

That meant futures for both trades were sold at the best available selling prices at that time when the order book was shallow. — Reuters

Zürich, April 20
Swiss global financial services company UBS on Friday downgraded Indian shares to "neutral" from "overweight," saying China is the better bet. The investment bank said India was unlikely to see big downside surprises on inflation, and hence no aggressive rate cuts.

By contrast, China, the bank's biggest overweight market, offers an opportunity to benefit from expected policy easing, a more stable economy, and more attractive valuations.

"We continue to think the best theme in the region is to be tilted towards policy easing. Our preference here is now China rather than India," said UBS in the report.

The RBI cut interest rates by 50 basis points on Tuesday but warned of a limited scope for further rate cuts.

A subsequent poll of economies done by Reuters showed analysts expect another half of percentage of easing in the fiscal year ending in March 2012.

By contrast, China is expected to cut the reserve requirement ratio for banks by 50 basis points in each of the last three quarters of 2012.

Earlier this week, CLSA cut its target for benchmark index Sensex, to 19,000 from 20,000 citing risks such as the widening current account and fiscal deficits, as well as the uncertainty over foreign taxation.

However, CLSA said the Sensex was trading at a P/E forward of 13.5 times for fiscal 2012-13, an 8% discount to the past 10-year average, maintaining its "Overweight" rating on the index.

"While we’ve turned less bullish on the market due to adverse macro developments over the past few weeks," CLSA said, before adding: "We still expect 10-12 per cent market returns over the next one year.” — Reuters

Chandigarh, April 20
The economic slowdown that hit the Indian economy last year, is now casting its spell on the financials of the lending institutions. State Bank of Patiala (SBoP), the first of the state-owned banks to announce its financial results on Friday, declared its gross nonperforming assets rose from 2.64% in March 2011 to 2.94% in March 2012.

Though the bank maintains it had been able to bring down its NPAs significantly from 3.46% (July-Sept quarter) to 2.94%, the fact remains that the slowdown in the economic activity has led to higher NPAs for the bank. Top officials of the bank said the main stressed sectors leading to higher NPAs this year were iron and steel, textiles, diamond jewellery trade and manufacturing and infrastructure (mainly power and roads). Together, these four segments have accounted for 28% of total NPAs.

A.K. Basu, who is officiating as the bank’s MD, conceded NPAs in the agriculture sector too had gone up substantially. “Gross NPAs in agriculture advances are almost 7.5%. The bank’s exposure to the farm sector is to the tune of Rs 11,000 crore”, he added.

However, the bank’s aggregate business has grown by almost 19% between FY11 and FY12. “Total business now stands at Rs 143,300 crore.Net profit is up from Rs 653 crore to Rs 796 crore”, said Basu.

Asked if the bank was looking at lowering interest rates in the wake of the RBI’s CRR cut, he said a decision would be taken only in May. “We’ll review our interest rates after two to three weeks,” he added.