Category: Earnings

ICICI Bank CEO Chanda Kochhar refuses to comment on tenure, probe into loans to Videocon

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Chanda Kochhar, the embattled chief executive officer of ICICI Bank, on Monday refused to comment on probing questions from reporters on her tenure at a press conference called to announce the bank’s fourth quarter results.

“In results presentations, we do not discuss about a CEO’s tenure,” said Kochhar.

Kochhar has in recent weeks faced a flurry of allegations over the alleged conflict of interest over ICICI Bank providing loans to Videocon Group.  Media reports said Videocon Group chairman Venugopal Dhoot invested in Nu Power Renewables, a company that Deepak Kochhar, the husband of the ICICI Bank CEO, owns.

The investment happened soon after Videocon secured a loan from a consortium of banks, including ICICI, according to the reports. The Central Bureau of Investigation has reportedly launched a preliminary investigation into Deepak Kochhar as well as officials at ICICI Bank and Videocon.

Given that the ICICI Bank earnings were being announced against this backdrop, the main focus of the press conference was anything but the earnings. But Kochhar dodged most of the questions regarding the investigation by referring to the board’s comments made on March 20.

Despite calls for Kochhar to step down, ICICI, India’s third-largest lender, said its board stands by the CEO.

On the Videocon probe, Kochhar said the bank had fully cooperated with the regulatory authorities and investigating agencies and will continue to do so in the future.

ICICI Bank reported that its fourth quarter net profit fell 50% to Rs 1,020 crore.

Here is the transcript from the press conference on Monday:

We understand and we acknowledge what the Board has said on its stance on the Videocon case but given the fact that investigations externally are still on. In the interest of maintaining the stability of the bank, has the Board at any point discussed in bringing in an interim CEO or laid out a succession plan in the event of a change in leadership?

I think the Board has made its stand very clear in the March 20^th Board meeting. And as far as the operations of the bank are concerned, you can see the stability, the enhancement and the franchise and the results.

Also Read: Would have liked greater clarification on Videocon loan, says former ICICI Bank chairman

Would you stay on till the end of your term in March 2019? Is that a given?

Well, I think today we are talking of Q4 results. We have never talked about any CEO’s tenure in any results presentations.

Also Read: I’m only focused on my job, says ICICI Bank CEO Chanda Kochhar

In the past one and a half months, we have seen this significant erosion of investor’s wealth. What steps is ICICI Bank taking to address this?

We focus on our performance and I think, the markets respond to the performance. I think we have been focusing on 4×4 agenda, and as I mentioned, the past few years, in terms of asset quality have been challenging but at the same time we are focused on de-risking our balance sheets and what we are very clear about is that the steps that we have taken in the past few years, as I have mentioned about changing the proportion of our loan mix, improving the ratings of the incremental portfolio, reducing the concentration risks, have created now a very strong position which will allow us to now attain growth with stability.

This time investor’s confidence seems to be shaken, not so much by asset quality issues but more about perceived loopholes as far the corporate governance of the bank is concerned. Is this something that will be taken up by the Board meeting tomorrow, where you will evaluate strategy?

Tomorrow’s Board meeting is a usual Board meeting that happens every year where we focus on strategy, budget and planning for the coming year.

There have been plenty of questions raised by news reports wherein there are disputes within the Board and members not agreeing with each other. Do you think it is prudent for an ambient CEO to take a step back, allow for an outside investigation to conclude and then take over the bank again?

First, I would say that the Board has made its stand very clear and second is that ICICI Bank has always fully cooperated with all the regulatory and investigating agencies in any matter and we would continue to cooperate.

Also Read: Videocon-ICICI Bank loan controversy: Here’s what experts have to say

The Board didn’t discuss the entire Videocon controversy at today’s meeting. Tomorrow as well you plan not to discuss it. Why at a time like this when it is of utmost concern to shareholders, do you think, the Board ever plans to revisit this controversy anytime soon?

I would repeat what I had said, the Board has made its stand very clear.

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I’m only focused on my job, says ICICI Bank CEO Chanda Kochhar

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank’s Managing Director and Chief Executive Officer Chanda Kochhar on Monday made it clear that as a professional, she is only focused on her job.

Addressing the first media interaction since the Videocon loan controversy, she said board has made its stand very clear that ICICI Bank will continue to co-operate with investigative agencies and nothing was discussed on Monday’s meeting.

Read also: ICICI Bank Q4 net profit falls 50% to Rs 1,020 crore

Kochhar said tomorrow’s board meeting is a usual one that happens annually to focus on strategy and annual plans.

Soothing investors in the backdrop of a series of allegations of impropriety in ICICI Bank, she added that there is no risk to the stability of the bank.

Talking on non-performing assets (NPA), she said additions may happen but will be less than past year.

Kochhar confirmed that government nominee Lok Ranjan, a joint secretary in the department of financial services, was not able to attend the board meeting.

“Don’t see any future impact from Reserve bank of India’s February Circular on stressed assets,” she said in the press conference.

ICICI Bank on Monday reported 45% decline in consolidated net profit to Rs 1,142 crore for the fourth quarter ended March 31, 2017-18.

It had a net profit of Rs 2,083 crore in the January-March quarter of the preceding fiscal, 2016-17.

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We expect to be cash positive by year-end, says Reliance Infrastructure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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“With the Adani transaction and Delhi Metro Rail Corporation (DMRC) award, we expect to move to cash positive by the end of the year,” said Lalit Jalan, Chief Executive Officer, Reliance Infrastructure Ltd.

Speaking on infrastructure business, he said that with the current order, our order book moves up to Rs 27,000 crore and added that company has a debt of Rs 12,000 crore.

Edited excerpts:

What is your stake in the joint venture? what is the timeline, when will construction begin and what will be the revenue contribution and so on?

This is the Bandra-Versova sea-link. It is one of the largest urban infrastructure projects in India. It is 17.2 km sea-link with four outlets connecting to the mainland between Bandra and Versovoa.

The timeline for the project is 60 months from letter of award, which is Saturday.

We have already started the pre-work and immediately after monsoon, we will start work on construction and we expect to finish the project ahead of the schedule.

The total revenue of the project over the next 4-4.5 years would be Rs 7,000 crore, which would be straight engineering, procurement and construction
(EPC) revenues for us.

What is your stake in the joint venture?

It is a 50:50 joint venture with Astaldi of Italy. It is one of the largest EPC contractor, largest bridge contractor with revenues in excess of three billion euros.

With regards to infrastructure business, your order books is burgeoning at around Rs 20,000 crore. You are getting orders right from the power business, the roads, railways – where do you see the strongest outlook coming from and how is demand looking like?

With the current order, our order book moves up to Rs 27,000 crore. Over the last year and half, we have taken orders in the power sector, including the nuclear power sector.

We have got award from Nuclear Power Corporation of India Limited (NPCIL), we have also got an award from National Thermal Power Corporation (NTPC) for flue gas desulphurisation (FGD).

In the transportation sector, we have won awards from metros, railways, roads and in heavy civil, we have won awards in tunnels and mega infra projects likes this Bandra-Versova sealink.

Given the current situation of private sector in the infrastructure space, we see huge demand for EPC orders. In fact, between mainly government of India projects and big state projects, we see almost Rs 300,000 crore worth of contracts been given out year after year and these will be across these spaces.

The other thing that I wanted to check with you was regarding the deal that you had signed with Adani Group for the Mumbai power distribution business. Now, there was some concerns that the deal might not go through given there was some red flags raised regarding the power tariff hikes. Can you tell us if you have got the approvals from MERC or the Mumbai Electric board and have you received any cash consideration for the transaction?

I am saying let us just focus on the EPC business for this call. Since you have asked the question, the deal is totally on track and we expect to close it in the first quarter by June.

Other think I wanted to check regrading infrastructure business was that there was a plan to bring in the InvIT, it was filed last year as well. Has that plan been shelved because we haven’t heard any update regarding that?

On the InvIT, what has happened is the market has not appreciated the product. So if you see the existing InvIT, which are listed are selling substantially discount, to the value at which they had giving out. So, we have shelved the idea of the InvIT.

What are you doing now, are you looking to sell these assets on a piecemeal basis? What are you doing to bring down your debt because you have been talking about getting to zero level when it comes to net debt?

Even without doing anything, our debts have come down substantially last year and with this Adani transaction and DMRC award, we expect to move to cash positive by the end of the year. We are separately working to monetise our road assets and getting discussion with some strategic players.

What exactly is the total debt on your books as we speak?

The debt is to the tune of Rs 12,000 crore.

Are you going to focus on the hybrid annuity mode (HAM) projects as well that have been flaunted by NHAI and what is the equity requirement for the order book that you have in right now? Is funding in place for the order book that you have right now?

EPC business by the very nature is a negative working capital business. The equity requirement is not there. Whatever equity that we needed for having equipment etc. is all already in place. The only thing that is needed is some initial non-fund limits, which we have in place so which is performance bank guarantees and advanced bank guarantees. It will be a self-funding business, so no separate equity requirement is there. We have all the approvals in place.

The reason I ask that because you had recently taken an approval for qualified institutional placement (QIP) of around Rs 2,000 crore. So is that something that might happen given the requirement or if you are saying there is not requirement they might be no QIP in the near future then?

QIP is an enabling resolution and we do it for strengthening our balance sheet.

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ICICI Bank Q4 net profit falls 50% to Rs 1,020 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank on Monday reported 49.6% Y-o-Y drop in standalone net profit at Rs 1,020 crore for the March quarter.

The bank had reported Rs 2024.64 crore profit in the year-ago quarter.

ICICI Bank’s net interest income (NII) for Q4FY18 has improved by 1% to Rs 6,022 crore against Rs 5,962 crore a year ago.

The asset quality of ICICI Bank worsened as its gross non-performing assets (NPAs) reached Rs 54,062 crore during the fourth quarter of FY18 against Rs 46,038.7 crore in the year-ago quarter.

Slippages in the March quarter was much higher at Rs 15,737 crore against Rs 4,380 crore in in the previous quarter last year.

The board also recommended a dividend of Rs 1.50 per equity share on face value of Rs 2 each.

Speaking on Videocon loan controversy, CEO and Managing Director Chanda Kochhar said board has made the stance very clear on Videocon and we have nothing more to add.

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Inox Leisure reports Rs 58 crore profit in Q4

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Multiplex operator Inox Leisure today reported a consolidated net profit of Rs 57.69 crore in the March quarter, owing to tax credit of Rs 53.70 crore.

The company had posted a net profit of Rs 34 lakh in the same period of 2016-17.

Total income stood at Rs 329.85 crore, up from Rs 290.81 crore in the year-ago quarter, Inox Leisure said in a regulatory filing.

It said in view of the assessments and appellate order received by the company during the year, the tax liability for earlier years is re-computed and consequential reduction in taxation in respect of earlier years of Rs 53.70 crore and Rs 1.59 crore is recognised during 2017-18 and 2016-17, respectively.

For the entire 2017-18, Inox Leisure posted a net profit of Rs 114.63 crore, as against Rs 30.62 crore in the previous year.

Its total income was at Rs 1,362.58 crore as compared to Rs 1,229.83 crore in 2016-17.

Shares of Inox Leisure settled 5.92 per cent higher at Rs 282.70 on BSE.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The reason why Tainwala market cap packs a punch

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The market cap of Tainwala Chemicals & Plastics (India), a small cap chemicals company, has doubled in the past year to Rs 115 crore.

What is the secret sauce of the company, which primarily makes plastic sheet and profile extrusion?

It is certainly not the finances:

As you can see, the company’s high other income is very interesting. It pushed us to probe a little more.

The balance sheet has been burnished because nearly 35% of its m-cap is available in non-current financial assets.

The non-current financial assets primarly  comprise two assets.

One, mutual funds. And two, Samsonite South Asia Private Ltd

Ah! This is where it gets even more interesting. Samsonite is an important player in the organised luggage market in India with a market share of 35% after VIP, which tops the list at 50%. Here is what the market looks like:

The Samsonite Connection

Let’s take a closer look at the Tainwala’s links with Samsonite. Turns out Tainwala Group holds a 40% stake in Samsonite South Asia Pvt Ltd with the balance 60% held by Samsonite Corp of the US.

Ramesh Tainwala, the chief executive officer of Samsonite International S.A., was also part of Tainwala Chemicals and Plastics (India) Limited.

Samsonite is growing at a fast clip in India. The company clocked sales of about Rs 1,250 crore in 2017 and expects sales to grow about 18-20% in India to touch Rs 1,600 crore in 2018, by growing its Kamillant brand of luggage, according to reports.

Stacked against these numbers, the BSE-listed Tainwala ’s 9% stake in Samsonite would be valued at about Rs 400 crore.

For American Tourister specifically, Samsonite got Virat Kohli on board last year as a brand ambassador. In 2018, Christiano Ronaldo also got on board.

The focal points going ahead for Samsonite are utilisation of cash in books, listing of Samsonite in India and a way of growing its core business in the country.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow