It’s earnings season in India, but most companies aren’t earning a dime so I like to call it “losing season.” People are rapidly losing trust and the latest revelations from Satyam that over 14,000 employees were really just phantom employees doesn’t help. The biggest company in India Reliance Industries announced their quarterly numbers on Thursday and as expected they were good. And that is the problem, if Satyam can manage 14,000 “employees” then what is really happening behind the scenes at Maker Chambers 4, the HQ for Reliance. Actually people do know what is happening but rather not talk about it, Reliance is too big to fail. After the Satyam scam research analysts were all over the books of other IT companies, but when Reliance announced their numbers not a single question. To ask a question is the equivalent of suicide, the Reliance machine is too big and powerful. Reliance = India = Reliance.
Other companies that are reporting their numbers seem to be using the “forex losses” line item to account for their pathetic performance. It’s almost comical how they say it with a straight face, it’s similar to “the dog ate my homework” excuse. As I’ve said before many of these companies were using their excess cash to speculate in the markets and now that the market has gone against them they are screwed. Currency fluctuations can slam a company but that is what currency hedging is all about if it’s done correctly. Instead many tried to speculate in the currency markets as well and ended with “forex losses” that would appear legitimate in a companies normal business operation. Of course, they can’t say they were speculating so they just use the “forex loss” line item to wash away their sins…for now.