Mumbai. In an unprecedented development, Reliance Telecommunications has announced its results for all the remaining quarters of the year, even though there are another eleven months left in the year. Explaining the move to Faking News business reporter SK Wimwian, the company’s VP, Corporate Affairs, Mr. Rajan Sajnani said that this was meant to send a strong signal to the stock markets, the government, and to all the customers of Reliance Telecommunications about the management’s firm belief in the company’s future prospects.
“In fact, we strongly believe that we shall earn exactly Rs. 3,958 crores in the fourth quarter, and make an operating profit of Rs. 878 crores. Taking into account unexpected gains of Rs. 312 crores from sale of old handsets that were lying in the company’s godown, the company shall declare a profit before tax of Rs. 1190 crores for the fourth quarter.” said Sajnani. This is a 43% jump over the profits for the third quarter, which were also declared at the same time. The company had made a loss of Rs. 945 crores in the second quarter, for which results were declared last week.
Corporate observers were not sure how the Company’s board could declare the results with such confidence. Professor Nani Dholkivala of IIM Ahmedabad stated that he believed there was more to this than meets the eye, “How can they expect today what the ‘unexpected gains’ will be six months from now? Even my MBA students won’t make such an elementary error”.
However, Mr. Tarun Bannerjee of the Kolkata chapter of the Institute of Chartered Accountants of India, dismissed any such speculation, saying, “This is perfectly possible. Why, all these years all these companies have been paying advance tax and nobody said a thing – what’s the problem if one company declared Revenue and Profits in advance as well? Every CA knows that advance tax calculations are usually exactly right. After all, the management and the board have reasonable flexibility in these things.”
Stock market circles are still unsure how to deal with this announcement. The stock rose 13% in the morning but later retreated to its overnight price of Rs 42. Mr. Kumar Gadharba, leading stock market analyst from CNBC-Profit and Loss, had this to say, “This is unfair – if all this information is routinely disclosed to all investors so far in advance, then analysts like myself will have no role left!”
The SEBI Chairman refused to comment, saying that his office was still studying the announcement. “However, prima facie it appears to be OK because the information was disclosed to all investors at the same time, and no insider trading seems to have occurred.”