Short-takes: Kingfisher flies low; Ranbaxy's woes continue; MCX::Business Line

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Kingfisher flies low

Freezing of bank accounts by the tax authorities; flight cancellations galore; banks playing hardball on further funding; and rumours of the CEO quitting — Kingfisher Airlines once again made news for all the wrong reasons. Amidst the sombre headlines, the airline managed to provide moments of mirth, when it claimed that ‘bird hits' had also led to the flight cancellations.

Passengers though were not amused with many stranded and airfares rising sharply. With the airline regulator, DGCA, taking it to task, Kingfisher came out with a revised truncated flight schedule. The airline is fire-fighting on many fronts and is seeking funds to douse the flames. But banks, which have already burnt their fingers, seem ambivalent about lending more.

It now remains to be seen whether allowing direct imports of aviation turbine fuel (deemed impractical by many) will aid the ailing airline. What may help is infusion of funds by foreign airlines when they are allowed to do so. But with its state of finances being what it is, will Kingfisher manage to attract serious investors? If yes, at what cost?

Ranbaxy's woes continue

Ranbaxy reported its biggest ever quarterly loss after the company took a $500 million charge to settle a legal dispute with US FDA in December. Marked-to-marked loss on foreign currency loans of about Rs 838 crore, besides a substantial jump (123 per cent) in ‘other operating expenses' to Rs 1,438 crore, due to payment of an undisclosed amount to Teva Pharmaceuticals (it had tied up with Teva for the launch of generic Lipitor), drove the company to report a loss of Rs 2,983 crore.

Its topline growth, however, was healthy, driven by the exclusive sales of generic Lipitor in the US since December — the company now enjoys a share of about 42 per cent (ahead of Pfizer and Watson). It reported consolidated sales of Rs 3,792 crore, registering a whopping 78 per cent growth over the corresponding quarter last year. This helped operating margins that jumped to 23 per cent from 11 per cent earlier.

For the full year, while sales grew by about 16 per cent to Rs 9877 crore, Ranbaxy reported a loss of Rs 2,686 crore. For the coming year, Ranbaxy has guided towards a base case sales of $2.2 billion for 2012. This is without taking any upside from FTF exclusivity launched during the year into account. While the guidance instils confidence, it will be the on-time resolution of its issues with the US FDA that would be the real sentiment booster.

Huge demand for MCX offer

Multi Commodity Exchange (MCX), the first company to tap the primary market in 2012, has re-ignited the IPO market with interest coming from all segments and the issue getting over-subscribed by a whopping 54 times. The issue of Rs 663 crore (at the upper-end of the price band) garnered bids in excess of Rs 35,000 crore. MCX, India's largest commodity exchange, managed to attract this interest given reasonable valuation and lack of peers in the secondary market. There is expectation of listing gains given the low valuations and high demand for the issue (scarcity premium).