REPORTS

Investment Strategy: Living in the present

Many small caps have not adequately provided for expenses or write-offs, which could impact financial performance

Along with the quarterly results of a company, it is also essential to carefully study the accompanying notes to accounts. No doubt the numbers are critical for investors as they reveal the financial performance. The notes, too, can, provide significant and crucial information to the shareholders.

The notes to accounts share a standard set of information with investors. This includes investors' grievances, segmental results and matters decided at the board meeting. This does not mean the notes do not add value to financial information and also to the information kitty of investors. Two to three companies out of 10 share some or other kind of off-the-track information through the notes to accounts which could be vital to investors.

The proportion of companies sharing information through the notes could be small. But the quality of information shared could be crucial. Quantitative information such as exceptional items of gains or losses is of great help to arrive at profit or loss from core operating activities. Information on components of other income could help to understand whether it is recurring or one-off items of income. This also reveals performance of its core business.

The qualitative information shared can also assist in evaluating the financial performance of a company in the right perspective. The qualitative information shared includes pricing trend in raw material or finished products, market environment and so on. Many companies disclose reasons for poor performance such as plant shutdown or production disruption. Moreover companies also talk about future outlook for the industry and firm as well.

The notes to accounts help investors in apple-to-apple comparison. For example, companies have included a good quantum of profit made on sale of long-term investment or fixed assets or immovable properties in 'Other income' (OI). Moreover firms have also accounted gain or loss on foreign exchange movement to OI. Further, gain on change in the fair value of derivative instrument is also considered as OI. The notes to account could aid in understanding such unusual movement in OI.

Also, prior or earlier period items could have an impact on the bottom line. Change in accounting policy needs to be factored to facilitate fair comparison. Information on exceptional items of gains or expenses is critical while evaluating financial performance of companies. Besides, firms have shared developments post reporting date of 30 September 2010 through notes to accounts.

Capital Market went through the notes to accounts of over 1,200 companies that are fairly liquid on the trading floor. The focus of this exercise was to capture off-the-track information disclosed by companies that can add value to investors' decision making. For the convenience of the readers, companies were divided into three categories: large caps with market capitalisation of Rs 10000 crore and above, mid caps with market capitalisation of Rs 500 crore to Rs 10000, and small caps with market capitalisation of less than Rs 500 crore. However, small caps with market capitalisation below Rs 50 crore were ignored. This is the third part of a series of three articles. In the previous editions, large-cap and mid-cap companies were covered. This article is the first of the two-part article on small-cap companies.

The prominent trends noticed among small-caps include impact – negative or positive – owing to provisioning. Many companies have not adequately provided for expenses or write-offs. In several cases, this could have significant impact on financial performance. The various instances of non-provisioning include liabilities on account of outstanding guarantees, bad debts, accumulated Cenvat credits, contractual damages, income tax liabilities, demands of municipal corporation, statutory levies of earlier years such as fringe benefit tax sales tax and works contract tax, gratuity liabilities, non performing assets and so on. Many companies would be considering current income tax liabilities and deferred tax liabilities at the end of the financial year. On the positive side many firms have not recognised deferred tax assets on account of unabsorbed losses and depreciation as matter of accounting prudence. Also, one firm has provided for impairment in value of assets of a division.

As with the case of mid-cap companies, fluctuation in exchange rates has been a matter of concern for small-cap companies also. A few firms have gained, while others have incurred losses. But the bottom line is that the fluctuation in the currency rates has made financial performance unpredictable to a certain extent. Besides, it goes without saying, there is no linear relationship between currency movement and financial performance as the accounting treatment varies extensively. There is no uniform approach adopted by Indian Inc and, hence, it is difficult to comment on aggregate numbers. Moreover, ensuring apple-to-apple comparison is difficult.

Following are a few examples of accounting heads influenced by foreign currency movement and the treatment given :

* Adjustment of difference owing to fluctuation to OI or other expenditure.

* Difference owing to fluctuation treated as exceptional item.

* Adjusted change in to interest and financial charges.

* Exchange related losses treated as contingent liability.

* Companies have adopted amended Accounting Standard (AS)-11 to adjusted gain or loss to value of fixed assets acquired through foreign exchange loans.

* Effects of foreign exchange fluctuation on outstanding loans will be recognised at the year end

* No marked-to-market (MTM) losses provided and auditors have commented on the matter

Statutory auditors have made certain comments and observations in their limited review report for the quarter. In certain cases, these comments are old in the sense that auditors have already commented on the issues either for annual accounts or the earlier quarter, that is the June 2010 quarter or both. The auditor comments cover areas such as significant exposure to subsidiaries which are doubtful, outstanding guarantees, non-provision for MTM loss on derivatives contracts, recoverability of advances and sundry debtors, non-provision for diminution in value of investment in subsidiaries, use of capital reserves instead of the profit and loss (P&L) account, statutory levies, write-offs and impairment, write-offs of disputes with customers, diminution in the value of investment, and recognition of deferred tax assets.

These notes to accounts are gold mines of information. Many small firms have enthusiastically shared positive developments with their shareholders and investors at large. This also includes future plans. These developments could change the fortunes of small-cap companies and such companies could be on the way to become mid- or large-cap companies of future. However, be careful as there could also be wolves hiding among the herd of sheep. Dubious companies also attempt to create hype by talking big about themselves through the notes to accounts. With positive developments also check the corporate governance record of companies.

The following company-wise information should be treated as initial pointers. Investors need to dig deeper to determine the real impact of the information shared. For instance, many companies have shared information about their future plans including expansion, capacity addition and so on. Out here, the crucial question is: what will be the contribution to business? When will the benefits be visible? The quarter and half year refers to period ended 30 September 2010 unless specified otherwise. Following is the company-wise information extracted from the notes to accounts.

Timex Group India: Managerial remuneration paid in the previous year pending with the Central government for approval.

GHCL: The employees' stock option scheme (ESOS) is administered by the ESOS trust, which purchases shares from the market to grant stock options to eligible employees. The market value of the shares held by the trust end September 2010 was lower than the cost of acquisition by Rs 49.78 crore. The fall in value was on account of market volatility.

* No provision made on outstanding guarantees of Rs 364.01 crore provided to Dan River, US, and Rosebys, UK, which would be accounted for in subsequent years on reasonable certainty as the amount cannot be quantified at this stage. It will be adjusted against the business development reserve. The auditors have commented on this issue in their limited review report.

* Of the US$79 million foreign currency convertible bonds (FCCBs), so far bought back US$57.25-million FCCBs at a significant discount on par value. Any premium payable on the remaining US$21.75 million would be adjusted against the securities premium account (SPA). Hence, does not expect any impact on the P&L account on account of premium. The auditors have commented on this issue in their limited review report.

Asian Hotels (East): As on date, held 58.99% stake in subsidiary, Regency Convention Centre and Hotels (RCC). Also, made an advance of Rs 3.34 crore for acquiring further shares of RCC from the existing shareholders and incurred expenditure on behalf of RCC of Rs 69.17 lakh up to 30 September 2010, which has been disclosed as recoverable advance. The principal assets of RCC comprise land in Mumbai, which is subject matter of legal dispute pending before the Bombay High Court (HC). However, RCC has been legally advised by its lawyers that it has good chance of success or the defendants would settle the matter commercially. The value of the assets primarily dependent on the legal dispute and subject matter of uncertainty. No impairment in value considered.

* Fully convertible preference shares (FCPS) outstanding liable to be converted into equity shares any time during the period commencing 4 March 2011 and ending 30 April 2011. In the event any subscriber does not exercise the option to convert FCPS within this period, FCPS held by each subscriber would be compulsorily converted into equity shares. Conversion would be made at a price computed in accordance with the provisions relating to preferential allotment under the Securities and Exchange Board of India regulations. In view of the uncertainties on the price of the FCPS, diluted earning per share cannot be worked out.

Western India Shipyard: As the negotiation with major debtors (ONGC and DCI) is in the final stage, no provision on account of settlement discount or bad debts been made. To be considered at the year end.

PVR: Applied to the Central government for approval of excess remuneration of Rs 1.28 crore paid to its directors for 2008-09 and 2009-10.

Rane Holdings: Exceptional item represented profit on sale of agricultural land near Chennai.

* Reserves and surplus for the half year included Rs 22.61-lakh profit on sale of investments arising out of disposal of equity shares in the company held by REVL-KML Open Offer Trust, of which the company is the beneficiary.

Surya Pharmaceutical: Other expenditure included exchange fluctuation loss of Rs 33.90 lakh.

* Surya Healthcare, a subsidiary, has set up 11 retail pharmacy stores under the brand, Viva. Starting with Delhi and the National Capital Region, the company is targeting to create pan India presence in the next three years by setting up about 500 stores.

* In the process of launching its branded formulation division.

* Successfully concluded its maiden global depository receipts issue of UIS$25 million on the Luxembourg Stock Exchange.

RSWM: Other expenses included provision of Rs 14.42 crore for devolvement of corporate guarantee given by the company in favour of Exim Bank for securing term loan sanctioned to RSWM International, a wholly-owned subsidiary, which has intimated to the lender bank of its inability to repay the instalments in view of losses and non-availability of funds. Other expenses also included provision of Rs 2.08 crore for advances given to RSWM International as recovery is doubtful.

Abhishek Industries: In the past, had hedged its foreign currency fluctuation exposure by taking various derivatives options from various banks with maturity up to January 2013. These options are proprietary products of banks, which do not have a ready market and the MTM model is usually bank-specific. Considering significant uncertainties associated with the options, whose ultimate outcome depends on future events, loss on these cannot be determined at this stage.

Premier: Margin for the period not comparable with previous periods due to change in product mix, increase in orders 'with materials' as against 'pure value addition' previously, increase in temporary outsourcing of production capacity pending completion of in-house capacity, and increase in salaries and wages due to a three-year wage settlement.

* Deferred tax asset of Rs 67 crore not recognised as a measure of prudence.

* The promoters have pledged their shares solely to facilitate borrowings by the company to fund its operating needs.

Vindhya Telelinks: In view of excise duty tariff rates on finished products being lower than cenvatable customs duty on imported inputs, accumulated cenvat credits of Rs 6.46 crore. The management has devised an alternative mechanism for utilisation of balances. The statutory auditors have commented on this in their report for 2009-10. As there is no time limit for utilisation of balances and based on the alternative mechanism, the management has not provided for them.

TV Today Network: Investments and loans and advances for equity subscription end September 2010 included Rs 27.75 crore (previous period: Rs nil) and Rs 9.25 crore (previous period: Rs nil), respectively, in Mail Today Newspapers Pvt Ltd as part of strategic investment.

Parabolic Drugs: Filed three drug master files, one each in the US, Canada and European Union.

* Executed bulk orders for exports to Europe

* Successfully cleared customer audits by three US MNCs and three of the top 10 Indian MNCs and Japanese innovator partner.

Sona Koyo Steering Systems: Exceptional item included provisions for diminution in value of long-term investment.

Hindustan Motors: Exceptional item included profit on sale of immovable properties and investment.

Dolphin Offshore Enterprises (India): In the previous quarters, incurred additional expenditure on executing additional work under the engineering, procurement and construction (EPC) contracts for which no revenues were recognised as extra claims were not finalised. During the quarter, quantified and submitted some of its claims and commenced discussions with the clients for finalising them. As a matter of caution, only a portion of these extra claims amounting to Rs 33.59 crore recognised as revenue. Further, will be submitting balance portion of claims as and when they are quantified.

* The auditors' report for the previous financial year contained qualification pertaining to debtors. Debtors included outstanding from a customer of Rs 47.9 crore for a subcontract job done in 2006-07 and amount outstanding due to change in orders that are still under process of resolution by the client. The management is hopeful of recovery and no provision made.

* Completed two of its EPC contracts beyond scheduled contract completion date as had to execute significant additional work and also on account of delays not of its making. The potential liability for liquidated damages resulting from delay as on 31 March 2010 stood at Rs 23.89 crore. Further liability for the period ending September 2010 stood at Rs 3.51 crore. Believes damages would be waived and, hence, no provision made.

Mangalam Cement: Work of setting up of captive thermal power plant of 17.5 MW is going on in full swing and is to be commissioned in the current financial year.

* As per the November 2007 order of the Rajasthan HC, deferred tax liability for 2010-11 to be adjusted against the SPA at the year end. Hence, no provision considered now.

Madras Fertilizers: Ammonia and urea plants were shut down for 32 days and 39 days, respectively, during the quarter and 36 days and 48 days during the half year on account of statutory inspection of boilers, annual maintenance, compressor maintenance, and power failure.

* Produced 8,530 tonnes and 13,395 tonnes during the quarter and half year, respectively, on tolling basis with Indian Potash.

* In view of the carry-forward losses and allowances available for set-off, provision for tax not considered. Also, as a prudent policy no deferred tax asset recognised as per AS-22 on accounting for taxes on income.

Indian Hume Pipe Company: Orders on hand stood at Rs1159 crore as against Rs 1419 crore end September 2009.

* Net reduction on account of changes in estimate relating to escalations of certain contracts with the public health departments in Andhra Pradesh amounted to Rs 5.65 crore and been given effect in the September 2010 quarter.

* The board accorded in-principle approval to the proposal of Dosti Realty for development of its industrial land of 48,289 square meters at Hadapsar, Pune, Maharashtra, subject to approvals. Will be entitled to 40% revenue or area sharing of the total developable floor space index of 52,538 square meters. Saleable area will be 73,881 square meters. In addition to the land, to buy additional transfer development rights of 8,112 square meters. The development is expected to be completed within 48 months in phases from getting commencement certificate from the Pune Municipal Corporation. The memorandum of understanding with Dosti Realty to be signed in due course provided negotiations crystallise.

Greenply Industries: The medium density fibreboard unit situated at Pantnagar, Uttarakhand, continued to be inoperative during the second quarter due to an unfortunate incident causing damage to the Thermax boiler during synchronisation of machineries in the continuous manufacturing process of the fully automated plant. However, the plant resumed normal operations in October 2010.

Nirlon: The auditors had qualified the report for 2009-10 for pension payment, which since has been legally resolved.

* In the process of discontinuing its operations at Tarapur, Thane, Maharashtra.

* Provision for current tax and deferred tax to be accounted for at the end of the financial year.

Hyderabad Industries: Commercial production of fiber cement sheeting plant at Balasore, Orissa, started from 18 July 2010

Astral Poly Technik: Exceptional items reflected gain or loss due to changes in foreign exchange rates on repayment of borrowings, which have been accounted as per AS-11.

* In view of prevailing volatility in the foreign exchange market gain arising on foreign exchange rate fluctuation on outstanding balances on foreign currency borrowings and corresponding forward contracts not been given effect. To accounted at the end of the financial year. Such gain for the quarter is Rs 2.72 crore and loss for the half year was Rs 14.78 lakh.

Orient Abrasives: One 1.5-MW wind turbine commissioned in Jaisalmer, Rajasthan, in September 2010 and another in Kalmangi, Karnataka, in October 2010. Two more wind turbines of 1.5 MW each to be commissioned in Karnataka by December 2010.

* The abrasives grains plant at Porbander, Gujarat, remained closed for about a month pursuant to a directive of the Gujarat Pollution Control Board. The plant resumed following an order of the Gujarat HC on 14 September 2010. The writ petition in public interest filed in the matter in 2006 was dismissed by the HC in October 2010.

Modern India: Demands raised by the Municipal Corporation of Greater Mumbai for property taxes and penalty for regularisation of change of user amounting Rs 6.88 crore and Rs 5.98 crore, respectively, not been provided as these have been disputed by the company. The auditors have commented on this in their limited review report and also in the annual accounts.

ZF Steering Gear: Received allotment of 5-MW solar power project from the Gujarat government.

Paper Products: Exceptional income of Rs 13.98 crore for the nine months ended September 2010 represented net gain realised on sale of the Nagpur factory property in Maharashtra. Current tax for the nine months included Rs 2.86 crore on the sale.

Zee News: New businesses consisting of Zee News UP, Zee 24 Gantalu and Zee Tamil reported operating loss of Rs 26.07 crore in the six-month period.

EIH Associated Hotels: Travel advisories issued by several countries after the terrorist attacks on Mumbai continued to adversely affect travel and tourism.

Astra Microwave Products: Orders on hand stood at Rs 313 crore.

Nahar Industrial Enterprises: Exceptional item comprised notional foreign exchange fluctuations on restatement of FCCBs to mature in February 2011.

Hinduja Foundries: Workmen at the Hyderabad unit stopped work from 17 July 2010 onwards consequent to a dispute on long-term wage agreement despite advice from the state government's labour department to restore normalcy. The management was forced to declare temporary suspension of operations from 23 July 2010. Subsequently, the matter was resolved and the company resumed operations on 2 September 2010.

* Interest expense for the six months net of interest capitalisation of Rs 3.07 crore relating to prior years.

KSL and Industries: Implementing expansion project under the Textile Upgration Fund Scheme at an estimated capital cost of Rs 489.69 crore.

* Reward Real Estate Company, a 100% subsidiary, developing and constructing shopping malls, IT park, multiplex and residential complexes at Empress City, Nagpur, and other locations in Maharashtra.

Southern Petrochemicals Industries Corporation: Pen G operations of the pharma division shut down from 15 January 2010 due to the then prevailing unremunerative prices on account of Chinese competition and not restarted due to liquidity constraints.

* Secured lenders covering approximately 84% in value had assigned financial assistance granted by them along with attendant security interest in favour of Asset Reconstruction Company (India) (Arcil). Arcil and other financial institutions approved a rework package through the corporate debt restructuring mechanism. While the company has commenced payment of dues as per the rework package, credit not taken for expected relief in loan and interest liabilities pending satisfactory completion of the conditions stipulated in the package.

* Technical problems encountered during the start up of the ammonia and urea plants in April 2010 were rectified during the quarter and the start-up activities recommenced on 29 September 2010. Trial production of urea commenced on 9 October 2010 and stabilisation of production in progress.

* The nutrient-based subsidy scheme (NBS) implemented for phosphatic fertilizers effective from 1 April 2010. Concessions allowable under NBS were recognised at the rates notified by the government for 2010-11. Concession recognised on the basis of the receipt of material at the warehouse or sale at the factory gate to dealers.

* Deferred tax assets not recognised.

* Other expenditure included provision for impairment in value of assets of the pharma division amounting to Rs 9.42 crore.

Asian Hotels (North): In August 2010, the Jatia group acquired shares held in the company by other two promoter groups, Gupta and Saraf.

* In October 2010, entered into a joint venture-cum-subscription agreement with Darius Holdings, Mauritius (Darius), and made a strategic investment of Rs 391 crore for acquiring controlling interest of 53% as well as preference share capital in Darius. Darius is in the hospitality business providing consultancy, project development and offshore hotel and project management. Through subsidiaries, Most Prof Hospitality and Consultancy Pte Ltd, Mauritius, and Lexon Ventures Ltd, BVI, also has controlling interest in a domestic company, Magus Estates and Hotels, a Jatia group company, which owns and operates the Four Seasons hotel in Mumbai. Darius has been renamed as Fineline Hospitality & Consultancy Pte Ltd.

* 49 lakh 1% cumulative redeemable non-convertible preference shares (NCPS) were due for redemption on 30 June 2010. NCPS have been rescheduled for redemption on 30 June 2011 with the consent of the shareholders.

* Constructing a new tower, comprising serviced apartments and commercial space as part of expansion of existing facilities at Hotel Hyatt Regency, Delhi. Subsequent to the quarter, paid Rs 107.99 crore to the Municipal Corporation of Delhi as additional FAR charges and labour cess.

Sical Logistics: Opted for amended AS-11. As a result of this change in accounting for exchange difference in the long-term monetary items, charge back to the P&L account for the quarter was Rs 4.68 crore.

Binny: Income tax, wealth tax and deferred tax liability would be considered at the year end. Also, provision for diminution value of investment and advances in subsidiary company to be considered at the year end.

Sundaram Multi Pap: Sundaram Edusys Pvt. Ltd, a wholly-owned subsidiary, completed development and creation of educational content for 8th, 9th and 10th standards of the Maharastra SSC board for Marathi and English medium and initiated development of educational content for 1st to 7th standards for Marathi and English medium.

PVP Ventures: Due to waiver of interests on debentures held by Platex and waiver of interests by the company for debentures held in its subsidiary, got a net benefit of Rs 1.08 crore for the quarter. However, as per the practice, benefit not recognised.

Balaji Telefilms: In 2009-10, invested Rs 47.95 crore in three adjacent plots of land, approximately admeasuring 38,870 square meters in aggregate, within the limits of Mira Bhayander Municipal Corporation in Maharashtra. Was made a party in the dispute for two of the three plots between the original owner and another party, who claimed to have purchased the plots at an earlier date. The matter is under litigation and the company is pursuing all legal remedies available.

* In the June 2009 quarter, received a showcause-cum-demand notice for payment of service tax of Rs 63.48 crore for 2006-07 and 2007-08 on exports made. The adjudicating authority dropped the proceedings and demand notice in September 2010. Subsequent to the quarter end, received another showcause-cum-demand notice from the authorities for Rs 28.97 crore as service tax for 2008-09 and 2009-10 on similar grounds. Also received another notice for Rs 4.03 crore as service tax for 2006-07 to 2009-10 on certain other procedural matters. Is in the process of responding to the notices and hopeful of success.

Nitco: Power and fuel figures of Rs 1.53 crore and Rs 3.95 crore are net of power generated through windmill for the quarter and six months ended September 2010, respectively (previous periods: Rs 1.98 crore and Rs 4.69 crore).

* Interest and other financial charges are net of foreign exchange gain of Rs 1.93 crore and Rs 2.58 crore for the quarter and half year ended September 2010 (previous-period gain: Rs 31.5 lakh, and loss: Rs 49.09 lakh).

Navin Fluorine International: No income from sale of carbon credits.

* In the process of restructuring its organic chemicals activities including dismantling and redeploying some of the assets of its Dewas, Madhya Pradesh, unit in other projects currently under implementation at Surat in Gujarat. The Dewas site is being utilised to set up a contract manufacturing facility. As per the company, this does not constitute discontinuation of operations under AS-24. This was referred to by the auditors in their report for 2009-10.

Emami Paper Mills: Considering volatility in foreign exchange rates, effects of foreign exchange fluctuation on outstanding loans to be recognised at the year end.

Nagarjuna Agrichem: Commissioned its wind power project of 6.3-MW capacity in September 2010.

APL Apollo Tubes: Hosur project in Tamil Nadu became fully operational and to manufacture complete range of products for customers in the southern and western parts of India

Wheels India: Adopted amended AS-11.

DCM: In textiles, margins improved due to judicious management policies of cotton stocking and rise in yarn prices in export markets.

* Profitability of the information technology (IT) division adversely affected by the US dollar exchange rate and increased cost of manpower. Operations in India continued to show a healthy growth with new order bookings.

* Subsequent to the approval of Scheme of Restructuring and Arrangement (SORA), certain financial institutions delayed vacation of charges on identified assets for encashment, consequently impacting their realisation, and prevented the company from discharging its obligations under SORA towards creditors. However, to avoid any litigation, was forced to file an application under Section 392(1) of the Companies Act, 1956, in the Delhi HC, requesting for revision in the schedule of repayment.

Gillanders Arbuthnot & Company: Provision for current and deferred tax to be considered at the year end.

ITD Cementation India: Referring to the qualifications in the auditors' report, the company noted it had recognised variation claims of Rs 50.42 crore in prior years. During the September 2010 quarter, settled certain claims along with interest of Rs 3.61 crore. Sundry debtors end September 2010 included Rs 42.19 crore for the remaining amounts of variation claims, disputed by the customer. Of this amount, claims amounting to Rs 28.01 crore subject to arbitration. For the balance of Rs 14.18 crore, received arbitration awards of Rs 11.09 crore and Rs 3.09 crore in its favour by the district court. The arbitration award of Rs 11.09 crore to be challenged by the customer and the period within which the customer can challenge the award of Rs 3.09 crore not elapsed. Considering the legal advice, the management is confident of recovery of the amounts awarded.

* Debtors end September 2010 included Rs 33.84 crore representing interim work bills for work done and not certified. Reasonably confident of certification and recovery based on past experience, assessment of work done, and the fact that these amounts are not disputed by the customer.

* Debtors end September 2010 included Rs 12.25 crore recognised as income in the earlier years. Based on the payment schedule originally agreed with the customer, the claim was expected to be received over a period of time commencing from 2008-09. No amounts received till date. A revised payment schedule agreed upon, based on which the management is confident of recovery from June 2011 to January 2017.

Denso India: In August 2010, decided to establish a new factory, unit III, within the existing premises of its Haridwar, Uttarakhand, plant. No investments envisaged in the initial stage and only some existing lines at unit –I at the Greater Noida plant in Uttar Pradesh to be shifted to new plant to cater to the two-wheeler industry. However, no transfer of machineries initiated till September 2010.

Borosil Glass Works: Sold its Marol, Mumbai, property for Rs 830 crore. Extraordinary item for the quarter and half year ended 30 September 2010 represented profit on this sale.

* Exceptional items represented loss on sale and discarding of fixed assets.

Emkay Global Financial Services: Other operating income included Rs 2.39-crore provision written back for receivables made in the earlier years

* In the process of transferring the wealth management services business to its wholly-owned subsidiary, Emkay Investment Managers, incorporated in June 2010.

Heritage Foods (India): The drop in dairy profitability was mainly due to increase in the cost of milk procurement.

Kale Consultants: The board in September 2010 approved the sale of the logistics business to Kale Logistics Solutions Pvt Ltd on a slump-sale basis. This resulted in a loss of Rs 4.46 crore, which was treated as exceptional item in the quarter.

Technocraft Industries: Book value end September 2010 stood at Rs 126.67.

Venus Remedies: Received one more good manufacturing practices approval for its seven facilities including oncology liquid, oncology lyophilised, cephalosporin, cabapenem, cardiovascular, small volume infusion and other specialty injection from the National Medicine and Poison Board, Sudan.

* Received another marketing authorisation from Portugal for its high specialty antibiotic penmen pharmaceutical product.

* Received European Union patent for its researched anti-infection product, Sulbactomax, which is India's first researched anti-infection product for catering bacterial resistance to get EU patent.

* Submitted 18 product dossiers for registration in nine countries with a total submission of 417 product dossiers in 35 countries.

Sequent Scientific: In the process seeking approval of the Central government for excess managerial remuneration.

* Various firms became subsidiary or stepdown subsidiaries including Vedic Fanxipang Pharma Cheimic Company, Elysian Life Sciences Pvt Ltd, Sequent Oncolytics Pvt Ltd, Sequent Antibiotics Pvt Ltd, Elysian Healthcare Pvt Ltd, and Sequent Penems Pvt Ltd

Ramkrishna Forgings: Dispatches of Rs 12.55 crore under vendor management inventory still to be recognised as exports and to be recognised in the subsequent quarters.

Cat Technologies: Bagged an order from Book World, Botswana, to set up computer training centers in 350 schools across the South African Development Community Region. The project, worth Rs 175 crore, to be completed in three years.

* Due to the excellent performance in IT consultancy and software development in the US market, chosen as preferred vendor by reputed companies on various ongoing software projects. Anticipates a growth in the bottom line of US$30 million.

* Is working on cloud computing, with had an estimated market of US$100 billion last year. Also, aims to speed up the game development services by investing around US$2 million in 3D animation and game development, foreseeing the global market for gaming software to be US$91.96 billion by 2015.