Saturday, February 19, 2011

Humour in Results

It is my honest belief that there is a lot of humour all around us if we look at things with a slightly open mind.
As I was browsing through announcements on the BSE site, I came across a interesting announcement made by Gujarat Alkalies and Chemicals ltd regarding their results.
In the Press release Shri Guruprasad Mohapatra, IAS, MD of the company announced that financial ratios have improved significantly at the end of the third quarter as compared to year end March 10
1) Price Earning Ratio - 13.15 times from 5.37 times
2) Current Ratio - 1.68 times to 1.56 times
3) Debt Equity Ratio - 0.13 times to 0.17:1 times
4) Book Value - Rs 193 from Rs 185
Now you would wonder what magic did the management did to improve PE ratio. It is news to me that management’s are now beginning to be judged by how well they can talk to the markets and improve their PE ratios.
Coming down to the magic that the management did to improve this PE ratio. It was a goal that they achieved by reducing the nine months profits of the company from 86 crores to 58 crores. Forget the price just reduce the earnings. I m waiting for the day they bring down the profits to zero and increase the PE ratio to infinity :-).