To decide on Taro stake post 2007-09 restated nos: Mobius

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To decide on Taro stake post 2007-09 restated nos: Mobius

In an interview with CNBC-TV18, Mark Mobius, Chairman, Templeton Asset Management, spoke about his reading of the market and his outlook.

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Taro has posted revenues of USD 252 million and a loss of USD 82.67 million for year ended 2006. The 2006 audited numbers are in line with analyst estimates.

The company has also restated its accounts for 2004 and 2005. It has restated revenues and net profit to USD 288.6 million and USD 84,000 for 2005. For 2004, restated revenues and net loss stood at USD 270.98 million and USD 37.5 million, respectively.

When Sun Pharma agreed to buy Taro, a 2006 loss was indicated. The move is seen as positive for Taro as the management is adhering to its stand of auditing numbers. There is no likely impact on Sun Pharma as it is still awaiting the Supreme Court of Israel's judgement on the special tender offer.

Commenting on the same, Mark Mobius, MD, Templeton Asset Management, which holds 10% stake in Taro, said he is not surprised with Taro's restated audited numbers. "We will have to wait for 2007-09 restated audited numbers and will decide on Taro's stake after seeing the audited numbers."

Reiterating his stance taken in December last year, Mobius said he will not support Taro's management. He stated that the Supreme Court of Israel will look closely at Taro's contract.

Here is a verbatim transcript of the exclusive interview with Mark Mobius on CNBC-TV18. Also watch the accompanying video.

Q: How are you feeling about global equities now, emerging market equities primarily because we had a bit of a correction in February, but we had just an 8-10% kind of correction, do you think a more meaningful correction is likely or are things okay?

A: As I had mentioned, big corrections can be expected along the line in what is still a bull market. So thankfully we haven't seen a very big correction, but I think we have to be ready for that. Valuations are not that high, we are more or less in the middle of the range for all of the history of emerging markets. So that doesn't concern us so much. So we think yes, correction is on the way, but it is still a bull market atmosphere.

Q: We have been hearing that emerging market funds have been pulling more by way of money and we are seeing that in more buying as well in this market, has that been your experience as well in the funds that you run for India in the EM space?

A: We have seen a lot of money coming in on a continuous basis in our BRIC funds which of course impact India a lot.

Q: What do you think that is a feeder of, is India becoming a more preferred market or are risk levels generally going down so money is being spread out across equity?

A: India is looking very good and we have seen more and more interest in India, but the biggest push is BRIC countries and whenever you mention BRIC (Brazil, Russia, India, and China), India of course is very large. So we are going to continue to see interest in India going forward. If we see faster action on a part of the government in India on infrastructure and other investments then we will see a lot of very good interest. But as I say, even without anyone taking any action in any direction, the interest in India is very high.

Q: The Templeton Strategic Emerging Market Fund has recently picked up a sizeable stake in an oil exploration company in India called Shiv Vani Oil & Gas Exploration Services , is that a space which interests you, the oil and gas exploration space?

A: Yes and we are very interested in the oil and gas service industry. In fact, here in Singapore, we have made an investment in a company called Halcyon that does offshore oil and gas equipment insulation and service. That is why Shiv Vani Oil & Gas Exploration Services is a very nice fit into that and of course we are putting these people together. In fact we also have investments in Brazil in the same area. So we help to be able to help these companies grow.