Lanco Infratech Ltd has announced that consequent upon the approval of the members for the sub-division of the equity shares by passing the Resolutions through Postal Ballot and Minutes of the same recorded on December 14, 2009, the Board of Directors of the Company vide Resolution passed by Circulation, approved and fixed January 05, 2010, as the record date for giving effect to the Sub-division of One Fully paid up Equity Share of Face Value of Rs. 10/- (Rupees Ten only) each into Ten Equity Shares of Face Value of Re. 1/- (Rupee One only) each fully paid up.
The stock closed the day at Rs.536.35, down by Rs.14.60 or 2.65%. The stock hit an intraday high of Rs.558.65 and low of Rs.532.
The total traded quantity was 423049 compared to 2 week average of 366438.
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Friday, December 18, 2009
Wells Fargo Common Stock Offering Raises $12.25 Billion through offer of 489.9 million shares
SAN FRANCISCO: Wells Fargo & Company (NYSE: WFC) said today that underwriters in Wells Fargo's public offering of 426 million shares of common stock have fully exercised their option to purchase an additional 63.9 million shares. This represents 15 percent of the shares purchased in the original offering.
The combination of the original offering of 426 million shares of common stock plus the additional 63.9 million shares results in a total offering of 489.9 million shares of common stock valued at $12.25 billion.
"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," said Wells Fargo Chief Financial Officer Howard Atkins.
Under terms of the TARP redemption agreement approved by U.S. banking regulators, this increase in size eliminates the requirement to execute asset sales to generate $1.5 billion in equity.
The offering is expected to be complete and proceeds received December 18, 2009. The original offering was announced December 14 and priced December 15. Wells Fargo will use the proceeds of this offering to redeem its series D preferred stock from the U.S. Treasury for $25 billion, repaying in full the government's TARP investment.
Wells Fargo Securities and Goldman Sachs & Co. are acting as lead underwriters for the offering.
Copies of the registration statement (including the base prospectus), the prospectus supplement and other documents Wells Fargo has filed with the SEC containing more complete information about Wells Fargo and the offering are available for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Wells Fargo, any underwriter or any dealer participating in the offering will arrange to send investors the prospectus if requested by contacting Wells Fargo Securities, LLC, 375 Park Avenue, New York, NY 10152-4077, toll-free telephone: 1-800- 326-5897, or by emailing equity.syndicate@wachovia.com or Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004, toll-free telephone: 1-866-471-2526, facsimile: 1-212-902-9316, or by emailing prospectus-ny@ny.email.gs.com.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Wells Fargo, including statements about when and how the Company will repay TARP. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from forward-looking statements including our ability to access capital markets on favorable terms. For a discussion of factors that could cause actual results to differ from expectations, refer to our reports filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended by our Current Report on Form 8-K filed May 11, 2009.
The combination of the original offering of 426 million shares of common stock plus the additional 63.9 million shares results in a total offering of 489.9 million shares of common stock valued at $12.25 billion.
"We are very pleased with the positive reception for this equity offering, and we appreciate the confidence investors have demonstrated in Wells Fargo's strength and future prospects," said Wells Fargo Chief Financial Officer Howard Atkins.
Under terms of the TARP redemption agreement approved by U.S. banking regulators, this increase in size eliminates the requirement to execute asset sales to generate $1.5 billion in equity.
The offering is expected to be complete and proceeds received December 18, 2009. The original offering was announced December 14 and priced December 15. Wells Fargo will use the proceeds of this offering to redeem its series D preferred stock from the U.S. Treasury for $25 billion, repaying in full the government's TARP investment.
Wells Fargo Securities and Goldman Sachs & Co. are acting as lead underwriters for the offering.
Copies of the registration statement (including the base prospectus), the prospectus supplement and other documents Wells Fargo has filed with the SEC containing more complete information about Wells Fargo and the offering are available for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Wells Fargo, any underwriter or any dealer participating in the offering will arrange to send investors the prospectus if requested by contacting Wells Fargo Securities, LLC, 375 Park Avenue, New York, NY 10152-4077, toll-free telephone: 1-800- 326-5897, or by emailing equity.syndicate@wachovia.com or Goldman, Sachs & Co., Prospectus Department, 85 Broad Street, New York, NY 10004, toll-free telephone: 1-866-471-2526, facsimile: 1-212-902-9316, or by emailing prospectus-ny@ny.email.gs.com.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about Wells Fargo, including statements about when and how the Company will repay TARP. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from forward-looking statements including our ability to access capital markets on favorable terms. For a discussion of factors that could cause actual results to differ from expectations, refer to our reports filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov, including our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, as amended by our Current Report on Form 8-K filed May 11, 2009.
Citi Partners with India Post for Landmark Remittances Solution
Hong Kong รข€“ Citi has announced a landmark partnership with the Department of Post, Government of India (India Post) to enhance its recently launched MO Videsh remittance product. This international remittance service is powered by Citi's innovative WorldLink® Payment Services, and provides India Post the ability to send payments in more than 130 currencies globally through its existing Eurogiro payments platform.
Under the partnership, India Post will provide global remittance services to its customers in more than 800 head post offices across the country within three months. India Post plans to extend the service to more than 8,000 post offices nationwide within one year.
This deal is significant for both Citi and India Post, leveraging the Citi and Eurogiro partnership to provide India Post with the widest range of currencies globally. Citi's partnership with Eurogiro was established in August 2007 to enable members of Eurogiro, a low value payments network of postal organizations and financial institutions, access to Citi's existing distribution capacity and payment solutions.
With more than 25 years of experience, WorldLink Payment Services is at the forefront of the cross-border payments industry with its powerful and flexible multicurrency platform. Processing more than US$750 billion in transactions annually, WorldLink is the entrusted provider of cross border payment solutions to more than 2,700 client relationships globally, including the public sector, financial institutions, corporations and third party administrators.
Anthony Nappi, Managing Director, Regional Head of Global Transaction Services, Asia Pacific, Citi, said, "This innovative service launch between Citi Global Transaction Services and India Post represents a landmark in the Indian remittances space and clearly sets a new market standard. We are proactively taking a unique approach to meeting the needs of key client segments and remain committed to creating partnerships with post offices regionally and globally based on their future business needs."
"The payments partnership between India Post and Citi demonstrates Eurogiro's strength to bring together the postal and the banking world through the Eurogiro payments platform and global community," notes Juanita Woodward, Director, Customer Relations Asia Pacific, Eurogiro A/S. India Post is the most recent postal organization to join the Eurogiro payments network community, which has members located in more than 50 countries, and illustrates an increased focus by postal organizations around the globe to expand international payment services to the local community through the Eurogiro payments network and community.
Under the partnership, India Post will provide global remittance services to its customers in more than 800 head post offices across the country within three months. India Post plans to extend the service to more than 8,000 post offices nationwide within one year.
This deal is significant for both Citi and India Post, leveraging the Citi and Eurogiro partnership to provide India Post with the widest range of currencies globally. Citi's partnership with Eurogiro was established in August 2007 to enable members of Eurogiro, a low value payments network of postal organizations and financial institutions, access to Citi's existing distribution capacity and payment solutions.
With more than 25 years of experience, WorldLink Payment Services is at the forefront of the cross-border payments industry with its powerful and flexible multicurrency platform. Processing more than US$750 billion in transactions annually, WorldLink is the entrusted provider of cross border payment solutions to more than 2,700 client relationships globally, including the public sector, financial institutions, corporations and third party administrators.
Anthony Nappi, Managing Director, Regional Head of Global Transaction Services, Asia Pacific, Citi, said, "This innovative service launch between Citi Global Transaction Services and India Post represents a landmark in the Indian remittances space and clearly sets a new market standard. We are proactively taking a unique approach to meeting the needs of key client segments and remain committed to creating partnerships with post offices regionally and globally based on their future business needs."
"The payments partnership between India Post and Citi demonstrates Eurogiro's strength to bring together the postal and the banking world through the Eurogiro payments platform and global community," notes Juanita Woodward, Director, Customer Relations Asia Pacific, Eurogiro A/S. India Post is the most recent postal organization to join the Eurogiro payments network community, which has members located in more than 50 countries, and illustrates an increased focus by postal organizations around the globe to expand international payment services to the local community through the Eurogiro payments network and community.
McDonough to retire from Bank of America Merrill Lynch
NEW YORK - Bank of America (NYSE:BAC) announced the retirement of William J. McDonough, effective December 31. The former president of the Federal Reserve Bank of New York and former chairman of the Public Company Accounting Oversight Board, McDonough joined Merrill Lynch & Co. nearly four years ago as vice chairman and special advisor to the chairman and continued in this role at Bank of America Merrill Lynch. McDonough advised senior management and was actively involved in business development efforts with governments and financial institutions around the world.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
McDonough to retire from Bank of America Merrill Lynch
NEW YORK - Bank of America (NYSE:BAC) announced the retirement of William J. McDonough, effective December 31. The former president of the Federal Reserve Bank of New York and former chairman of the Public Company Accounting Oversight Board, McDonough joined Merrill Lynch & Co. nearly four years ago as vice chairman and special advisor to the chairman and continued in this role at Bank of America Merrill Lynch. McDonough advised senior management and was actively involved in business development efforts with governments and financial institutions around the world.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
While at the Fed from 1993 to 2003, McDonough played a key role in efforts to preserve liquidity in the financial markets after the attacks of September 11, 2001, and was instrumental in successful efforts to recapitalize Long Term Capital Management after its financial problems in 1998. During this time, he also served as vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy. McDonough also was a member of the Board of Directors of the Bank for International Settlements and chairman of the Basel Committee on Banking Supervision. Earlier he was vice chairman of First Chicago Corp., and its bank, First National Bank of Chicago. McDonough is also a senior member of the Group of Thirty, an influential Washington-based financial advisory body.
"Bill McDonough has been at the pinnacle of financial services industry for decades," stated Kenneth D. Lewis, chief executive officer of Bank of America Corporation. "Having known Bill for many years, I'd like to thank him for his many contributions, specifically to our company and more broadly to our industry as a leader in both the public and private sectors."
"Bill McDonough has one of the finest minds in public policy," said Anne Finucane, global chief strategy and marketing officer at Bank of America. "Our company, the legacy Merrill Lynch firm, and the senior managers who have worked with Bill have greatly benefited from his expert insights, thoughtful counsel and wealth of relationships."
Prior to his career with First Chicago, McDonough was with the U.S. State Department from 1961 to 1967 and the U.S. Navy from 1956 to 1961.
McDonough is currently a member of the board of directors of the New York Philharmonic Orchestra. He is also Chairman of the Investments Committee for the United Nations Joint Staff Pension Fund.
McDonough earned a master's degree in economics from Georgetown University in Washington, D.C. and a bachelor's degree, also in economics, from Holy Cross College in Worcester, Massachusetts.
Aurobindo Pharma gets final approval for Cetirizine Hydrochloride Syrup (Rx)
Aurobindo Pharma Ltd is pleased to announce that it has received the final approval for Cetirizine Hydrochloride Syrup 1mg/mL (ANDA No 090751) from the US Food & Drug Administration (USFDA). This approval of Cetirizine Hydrochloride Syrup is under Prescription drug product category.
Cetirizine Hydrochloride Syrup 1mg/mL is the generic equivalent of McNeil Consumer Healthcare Zyrtec Syrup 1mg/mL. Cetirizine Hydrochloride Syrup is indicated for the relief of symptoms associated with seasonal allergic rhinitis in adults and children above 2 years of age and falls under the Anti-Allergic segment.
Aurobindo has a total of 110 ANDA approvals (82 Final approvals and 28 Tentative approvals) from USFDA.
The stock was trading at Rs.891, up by Rs.11.65 or 1.32%. The stock hit an intraday high of Rs.894.20 and low of Rs.875.15.
The total traded quantity was 20109 compared to 2 week average of 41335.
Cetirizine Hydrochloride Syrup 1mg/mL is the generic equivalent of McNeil Consumer Healthcare Zyrtec Syrup 1mg/mL. Cetirizine Hydrochloride Syrup is indicated for the relief of symptoms associated with seasonal allergic rhinitis in adults and children above 2 years of age and falls under the Anti-Allergic segment.
Aurobindo has a total of 110 ANDA approvals (82 Final approvals and 28 Tentative approvals) from USFDA.
The stock was trading at Rs.891, up by Rs.11.65 or 1.32%. The stock hit an intraday high of Rs.894.20 and low of Rs.875.15.
The total traded quantity was 20109 compared to 2 week average of 41335.
KEC International secures six new projects worth Rs 550 crores
KEC International Ltd. (KEC), a global leader in the power transmission EPC business and a part of the Rs. 15,000 crore RPG Group, has won major orders in Algeria and Abu Dhabi worth Rs. 474 crore and Rs. 76 crore respectively, against international competition.
In Algeria, for CEEG Spa, KEC will undertake five turnkey projects of 400 KV, 200 KV and 60 KV covering both single and double circuit transmission lines worth Rs. 474 crore. The total length of these five projects is 858 km and the completion period ranges from 12 to 18 months.
In Abu Dhabi. KEC will execute a project of modification and realiocation on existing lines with design and supply of Emergency Line Restoration System (ERS) in Ruwais & Shuweihat for Abu Dhabi Transport Authority / Ghantoot Transport & Gen. Cont. Est. This project is to be completed within 12 months. The value of this order is Rs. 76 crore.
"In Abu Dhabi we are diversifying our client base and we will perform our first International ERS (Emergency Line Restoration System) project," said Mr. Ramesh Chandak, MD & CEO, KEC International Ltd.
The stock was trading at Rs.583.05, up by Rs.15.55 or 2.74%. The stock hit an intraday high of Rs.589.90 and low of Rs.571.
The total traded quantity was 47221 compared to 2 week average of 28258.
In Algeria, for CEEG Spa, KEC will undertake five turnkey projects of 400 KV, 200 KV and 60 KV covering both single and double circuit transmission lines worth Rs. 474 crore. The total length of these five projects is 858 km and the completion period ranges from 12 to 18 months.
In Abu Dhabi. KEC will execute a project of modification and realiocation on existing lines with design and supply of Emergency Line Restoration System (ERS) in Ruwais & Shuweihat for Abu Dhabi Transport Authority / Ghantoot Transport & Gen. Cont. Est. This project is to be completed within 12 months. The value of this order is Rs. 76 crore.
"In Abu Dhabi we are diversifying our client base and we will perform our first International ERS (Emergency Line Restoration System) project," said Mr. Ramesh Chandak, MD & CEO, KEC International Ltd.
The stock was trading at Rs.583.05, up by Rs.15.55 or 2.74%. The stock hit an intraday high of Rs.589.90 and low of Rs.571.
The total traded quantity was 47221 compared to 2 week average of 28258.
ONGC Board declares Interim Dividend of 180% for 2009-10
Oil & Natural Gas Corporation Ltd (ONGC) has announced that the Board of Directors of the Company at its meeting held on December 18, 2009, have declared an Interim Dividend of Rs. 18 (Rs. Eighteen) per equity share of Rs. 10 each for the Financial Year 2009-10.
The stock closed the day at Rs.1185.50, down by Rs.14.10 or 1.18%. The stock hit an intraday high of Rs.1205 and low of Rs.1182.
The total traded quantity was 44294 compared to 2 week average of 76016.
The stock closed the day at Rs.1185.50, down by Rs.14.10 or 1.18%. The stock hit an intraday high of Rs.1205 and low of Rs.1182.
The total traded quantity was 44294 compared to 2 week average of 76016.
Websol Energy to approve allotment of bonus shares on Dec 30, 2009
Websol Energy Systems Ltd has announced that a meeting of the Board of Directors of the Company will be held on December 30, 2009 to approve the allotment of Bonus Shares to the Members of the Company whose names appear on the Register of Members as on the Record Date.
The stock was trading at Rs.365, up by Rs.0.70 or 0.19%. The stock hit an intraday high of Rs.370 and low of Rs.360.10.
The total traded quantity was 4881 compared to 2 week average of 3629.
The stock was trading at Rs.365, up by Rs.0.70 or 0.19%. The stock hit an intraday high of Rs.370 and low of Rs.360.10.
The total traded quantity was 4881 compared to 2 week average of 3629.
Jaiprakash Hydro-Power
With reference to the earlier announcement dated December 14, 2009 regarding (Sanction of Scheme of Amalgamation of Jaiprakash Power Ventures Ltd. with Jaiprakash Hydro Power Ltd), Jaiprakash Hydro Power Ltd has informed BSE that formal order dated December 14, 2009, has been received from Hon'ble High Court of Himachal Pradesh at Shimla and the same has been filed with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh on December 14, 2009 making the Scheme of Amalgamation effective from December 14, 2009. Necessary formalities of change of name of the Company to Jaiprakash Power Ventures Ltd., in terms of the Scheme, are being carried out with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh.
Saturday, December 5, 2009
Goldman likely to pay annual bonus in stock
Goldman Sachs Chief Lloyd Blankfein is weighing plans to increase the share of compensation paid out in equity to executives in a bid to quell public anger over the probability of large pay-outs, the Financial Times said.
Senior executives, including Blankfein, could be awarded all annual bonus in company stock, the Financial Times said, citing people familiar with Goldman's thinking.
On Wednesday, the Wall Street Journal had reported that the company was meeting with major investors in an effort to head off a possible backlash over its record bonuses.
Goldman officials said the meetings were an effort to explain why the company's pay levels are reasonable in light of its performance and to get feedback from key stakeholders.
The Financial Times said on Friday that Goldman's board, however, seemed hesitant to grant shareholders a non-binding, advisory vote on pay policy as it could lead to investors pushing for a bigger say on other policies.
Goldman Sachs could not be contacted by Reuters outside regular US. business hours to confirm the Financial Times report.
UK bank bailout cost hits £850 billion
The price tag for bailing out UK banks has hit 850 billion pounds (USD1.4 trillion) but Britain's spending watchdog says the final cost to taxpayers will not be known for years.
The independent National Audit Office (NAO) said on Friday the government was justified in asking the public to shore up the shaken sector at the height of last year's financial crisis -- although lending to businesses was likely to miss targets.
"It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse," said the NAO's head Amyas Morse."But the big question is what all of this will eventually cost the taxpayer.
"As the crisis begins to subside ... the authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers."
Britain, along with other countries, partly nationalised some banks and offered quarantees, insurance and loans to the industry after the credit crisis pitched the world into recession in the wake of the collapse of Wall Street giant Lehman Brothers last year.
The UK government has put the potential loss to the taxpayer at between 20 billion and 50 billion pounds, depending on losses on bad assets held by Royal Bank of Scotland and the price at which the state sells stakes in RBS and Lloyds Banking Group.
And the costs keep mounting. The finance ministry expects to have spent 107 million pounds on advisers alone by next April, with Credit Suisse and Deutsche Bank each appointed on retainers of 200,000 pounds per month for a year, the NAO said. Success fees could reach 5.8 million pounds.
RBS and Lloyds have agreed to lend more to consumers and businesses as part of their bailout. But although both are on target for mortgage lending, lending to businesses is likely to fall short of targets, the NAO said.
RBS agreed to lend an additional 25 billion pounds in 2009-2010, while Lloyds agreed to lend an additional 14 billion to help businesses and consumers weather the credit crisis.
The NAO is an independent body funded by parliament, rather than the government of the day. But it has limited powers and its role is largely to draw attention to cases where it feels public money has been misused.
No engineer in India good enough for Infy prize?
New Delhi: India churns out around seven lakh engineers every year. And yet how many of them are actually good enough to win some of the prestigious domestic and global awards? The issue has come to the forefront with Infosys Technologies reportedly having failed to find a worthy candidate for its Infosys Engineering Science Prize 2009. 
The company has decided not to give the prize in that category to anyone this year. Infosys' Chief Operating Officer (COO), SD Shibulal, told that there were 34 nominees for the engineering and computer science prize but even after relaxing the age limit to 55 years, the jury could not find anyone who met all the criteria of the Infosys Prize. So, the jury took the unanimous decision to not award the prize for the engineering sciences discipline this year.
Infosys Science Foundation is a not-for-profit trust set up by Infosys Technologies. The company has named three scientists and two academic experts as winners of Infosys Prize 2009 for outstanding contributions to scientific research.
The winner in physical sciences is Thanu Padmanabhan of Inter-University Centre for Astronomy and Astrophyics, Pune, in recognition of his contribution to a deeper understanding of Einstein's theory of gravity in the context of thermodynamics. For mathematical sciences, Ashoke Sen of Harish Chandra Research Institute at Allahabad was given the prize in recognition for his contributions to mathematical physics. For life sciences, K VijayRaghavan of National Centre of Biological Sciences in Bangalore got the award.
The winner in the social sciences and economics category is Abhijit Vinayak Banerjee of Massachusetts Institute of Technology for his contributions to the economic theory of development. Upinder Singh of the University of Delhi won an award for her contributions as an outstanding historian of ancient and early medieval India.
The company has decided not to give the prize in that category to anyone this year. Infosys' Chief Operating Officer (COO), SD Shibulal, told that there were 34 nominees for the engineering and computer science prize but even after relaxing the age limit to 55 years, the jury could not find anyone who met all the criteria of the Infosys Prize. So, the jury took the unanimous decision to not award the prize for the engineering sciences discipline this year.
Infosys Science Foundation is a not-for-profit trust set up by Infosys Technologies. The company has named three scientists and two academic experts as winners of Infosys Prize 2009 for outstanding contributions to scientific research.
The winner in physical sciences is Thanu Padmanabhan of Inter-University Centre for Astronomy and Astrophyics, Pune, in recognition of his contribution to a deeper understanding of Einstein's theory of gravity in the context of thermodynamics. For mathematical sciences, Ashoke Sen of Harish Chandra Research Institute at Allahabad was given the prize in recognition for his contributions to mathematical physics. For life sciences, K VijayRaghavan of National Centre of Biological Sciences in Bangalore got the award.
The winner in the social sciences and economics category is Abhijit Vinayak Banerjee of Massachusetts Institute of Technology for his contributions to the economic theory of development. Upinder Singh of the University of Delhi won an award for her contributions as an outstanding historian of ancient and early medieval India.
CAT goes online, students go offline
Bangalore: After a disappointing start to the online CAT, the authorities have given different theories to the problem ranging from a virus attack to server crash. However, in the eyes of students who are left in the lurch, things seem to be different.
With his eyes set on the top B-schools in the country, Srinath R.P. had prepared hard to bell the Common Admission Test (CAT) this year. His exam was scheduled to be held at R.V. College of Engineering, Bangalore at 10 am on 28 November. But, after reaching the centre, during the process of checking, Srinath got the shock of his life when he was informed by the authorities that his name was not downloading in the Prometric site. 
"The authorities got in touch with Prometric/IIM authorities for more than three hours, but could not solve the problem. Then they told me that I can't take my CAT exam since my name is not downloading into the test site Roster," says Srinath. After the poor response, the authorities gave him Prometric Candidate Care contact number and asked him to call them for rescheduling the exam.
With a shimmer of hope left in his heart to take the exam this time, Srinath tried contacting Prometric, but this didn't put an end to his misery. "Even though I have tried contacting the number more than 20 times. There is no response and it only goes for redialing," says a dismayed Srinath, who is among thousands of candidates facing similar kinds of problem after the CAT went online. The students are also unsure about the rescheduled dates for their exam. The irony is that though India is touted as a technology hub, the dream of one of the prestigious exams in the country to go online is short-lived and the students are left in the dark.
Students who arrived at Garden City College in Bangalore were shocked when officials told them that the test had been called off because of a faulty server. There was complete confusion at the venue as none of the administrative officers knew what was happening and why the server was not working. Students held a dharna inside the exam hall.
Around 5,000 students will now have to take the CAT afresh at new dates throwing the original 10-day schedule into disarray. Technical experts blamed U.S. based Prometric - the agency entrusted with carrying out the first online version of CAT - for underestimating the magnitude of the task. "They didn't even have a Plan B," said a top official of another firm that runs online examinations, on condition of anonymity. Prometric said it has quarantined 50 labs across 14 centres on Sunday, and blamed the fiasco on a virus attack that went undetected.
The agency said that the problem was being sorted out, and the test was being rescheduled for the several affected candidates who would be informed through SMS and emails. A new date however, brings in new set of problems for the aspirants many of whom are employed and find it difficult to reschedule.
The seven IIMs and about 150 top B-schools base their admissions on CAT scores, and this year the exams were moved online hoping that it would speed up the process for the institutes and the 2.4 lakh candidates. IIMs' CAT panel gave the task to Prometrics, which runs online exams like GRE and TOEFL. However, with the situation taking a chaotic turn, IIM directors took stock of the situation and held a video conference on Sunday.
IIM Ahmedabad Director Samir Barua said computer labs were being sanitized. "We need to find out from where the virus attack happened," he said. Around 100 Prometric engineers have been pressed into service, said IIM Bangalore Director Pankaj Chandra.
"We, along with Prometric and NIIT, are trying to figure out where the problem lies. Since these computers were located in institutes, their backbone was used to download the software. In some places there were serious virus attacks. So we blocked some affected centres and others which we felt might get affected to clean up the computer system, remove viruses and reload the software," he said.
With his eyes set on the top B-schools in the country, Srinath R.P. had prepared hard to bell the Common Admission Test (CAT) this year. His exam was scheduled to be held at R.V. College of Engineering, Bangalore at 10 am on 28 November. But, after reaching the centre, during the process of checking, Srinath got the shock of his life when he was informed by the authorities that his name was not downloading in the Prometric site.
"The authorities got in touch with Prometric/IIM authorities for more than three hours, but could not solve the problem. Then they told me that I can't take my CAT exam since my name is not downloading into the test site Roster," says Srinath. After the poor response, the authorities gave him Prometric Candidate Care contact number and asked him to call them for rescheduling the exam.
With a shimmer of hope left in his heart to take the exam this time, Srinath tried contacting Prometric, but this didn't put an end to his misery. "Even though I have tried contacting the number more than 20 times. There is no response and it only goes for redialing," says a dismayed Srinath, who is among thousands of candidates facing similar kinds of problem after the CAT went online. The students are also unsure about the rescheduled dates for their exam. The irony is that though India is touted as a technology hub, the dream of one of the prestigious exams in the country to go online is short-lived and the students are left in the dark.
Students who arrived at Garden City College in Bangalore were shocked when officials told them that the test had been called off because of a faulty server. There was complete confusion at the venue as none of the administrative officers knew what was happening and why the server was not working. Students held a dharna inside the exam hall.
Around 5,000 students will now have to take the CAT afresh at new dates throwing the original 10-day schedule into disarray. Technical experts blamed U.S. based Prometric - the agency entrusted with carrying out the first online version of CAT - for underestimating the magnitude of the task. "They didn't even have a Plan B," said a top official of another firm that runs online examinations, on condition of anonymity. Prometric said it has quarantined 50 labs across 14 centres on Sunday, and blamed the fiasco on a virus attack that went undetected.
The agency said that the problem was being sorted out, and the test was being rescheduled for the several affected candidates who would be informed through SMS and emails. A new date however, brings in new set of problems for the aspirants many of whom are employed and find it difficult to reschedule.
The seven IIMs and about 150 top B-schools base their admissions on CAT scores, and this year the exams were moved online hoping that it would speed up the process for the institutes and the 2.4 lakh candidates. IIMs' CAT panel gave the task to Prometrics, which runs online exams like GRE and TOEFL. However, with the situation taking a chaotic turn, IIM directors took stock of the situation and held a video conference on Sunday.
IIM Ahmedabad Director Samir Barua said computer labs were being sanitized. "We need to find out from where the virus attack happened," he said. Around 100 Prometric engineers have been pressed into service, said IIM Bangalore Director Pankaj Chandra.
"We, along with Prometric and NIIT, are trying to figure out where the problem lies. Since these computers were located in institutes, their backbone was used to download the software. In some places there were serious virus attacks. So we blocked some affected centres and others which we felt might get affected to clean up the computer system, remove viruses and reload the software," he said.
Create 10 jobs in U.S., get green card for family
New Delhi: The Obama administration extended the regional centre investment EB-5 program, which entitles investors who put in $1 million into regional centre real estate projects and create at least 10 jobs in the U.S., to green cards along with their families.
Simply put, this program allows investors a fast-track to U.S. green cards and permanent residency. If investors are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000, reports Economic Times. 
The EB-5 program is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the U.S. Many of the Gujarati hotel entrepreneurs also have strong family links in the U.S.
"The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40 percent discount. This is definitely the time to buy as the U.S. real estate market is slowly recovering," says Sachin U Patel, Managing Principal of real estate development company American Life, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett.
The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest.
Most immigration experts are seeing a growing interest in the EB-5 category of visas. Mumbai-based Immigration Attorney Sudhir Shah says, "This is certainly a good time to apply for the EB-5 programme. There are several schemes on offer wherein you merely have to invest money and in return you get a green card without having to actively participate in the business. For those who are looking at moving to the U.S. to run a motel or store there, the reduced property prices are a big attraction too, as they can get more value for their dollar investments."
The EB-5 scheme, though proving to be very attractive, is however not without glitches. Proving that the funds available for investment are from lawful sources can be a challenge for some Indian investors.
Simply put, this program allows investors a fast-track to U.S. green cards and permanent residency. If investors are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000, reports Economic Times.
The EB-5 program is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the U.S. Many of the Gujarati hotel entrepreneurs also have strong family links in the U.S.
"The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40 percent discount. This is definitely the time to buy as the U.S. real estate market is slowly recovering," says Sachin U Patel, Managing Principal of real estate development company American Life, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett.
The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest.
Most immigration experts are seeing a growing interest in the EB-5 category of visas. Mumbai-based Immigration Attorney Sudhir Shah says, "This is certainly a good time to apply for the EB-5 programme. There are several schemes on offer wherein you merely have to invest money and in return you get a green card without having to actively participate in the business. For those who are looking at moving to the U.S. to run a motel or store there, the reduced property prices are a big attraction too, as they can get more value for their dollar investments."
The EB-5 scheme, though proving to be very attractive, is however not without glitches. Proving that the funds available for investment are from lawful sources can be a challenge for some Indian investors.
Major Events
- HDFC Ltd. launched a dual rate home loan product where it offers fixed rate of interest of 8.25% valid for two years (i.e. upto March 31, 2012) and thereafter applicable floating rate for the balance term.
- The National Stock Exchange’s (NSE) Mutual Fund Service System (MFSS) started on Monday – November 30, 2009 with UTI schemes making its debut onto the new mutual fund trading system with a turnover of Rs 78 lakh. Birla Sunlife Mutual Fund was the second one to join the NSE’s MFSS platform. The rest of the fund houses are expected to join later since they are in the process of creating their technology infrastructure to list their schemes on the exchange.
- The Bombay Stock Exchange (BSE) launched its mutual fund trading platform today (Friday – December 4, 2009) named BSE StAR MF (Bombay Stock Exchange Platform for Allotment and Redemption of Mutual Fund units), with Tata Mutual Fund schemes making its debut onto the mutual fund trading system from Friday. Big fund houses such as HDFC, ICICI Prudential, DSP BlackRock too have signed up for this platform.
- The start of the tax saving season has seen some of the mutual fund companies stepping up commissions. Some of the mutual fund companies are offering as high as 5% commissions to distributors, which are mostly on tax saving schemes. This initiative by the mutual fund companies is despite the fact that SEBI banned commissions to be deducted from investors’ money.
- The Pension Fund Regulatory & Development Authority (PFRDA) unveiled its Tier II account for its New Pension Scheme. Under this account investors will be allowed to enter and exit at will (just like savings account). However, the account will be available for investors of NPS who already hold Tier I account.
- With gold making waves, it is turning out to be an important asset for wealth managers. Religare Mutual Fund has sought the approval from SEBI to launch a gold Monthly Income Plan (MIP). The fund will be a first of its kind in the country.
- Gold prices hit a record high breaching the Rs 18,000 mark. In the Mumbai market standard (99.5 purity) gold closed at Rs 18,220 (for 10 gm) on Wednesday, Dec 2, 2009.
- Employers may soon be required to make mandatory provident fund contribution to their employees with a salary upto a sum of Rs 15,000 a month, instead of Rs 6,500 at present.
SMS tariff war
The battle continues - will the customer win the war? The tariff war in the mobile telecom industry has now extended and shifted its focus to the Short Messaging Services (SMSes). Dual technology player Reliance Communications (RCom) has triggered a tariff war in the SMS segment. The company has launched two SMS plans which are available to both pre-paid and post paid users of the GSM and CDMA service.
SMSes under one plan will be charged at 1 paisa per SMS, but in order to avail of the same, users would have to pay a monthly fee of Rs 11. In another plan the users can avail of 15,000 SMSes free, by paying Re 1 per day as a fee. In other words it means 500 SMSes per day for a rupee charged; a great offer.
The above plans will be appealing to customers with high SMS usage – typically youth and professionals across India.
The tariff war is likely to continue till consolidation sets in the mobile telecom industry.
Since the mobile telecom industry is more voice driven, the move may not have too much impact on the industry. However, it will indeed be pro-customer as it will lead to increase in savings.
SMSes under one plan will be charged at 1 paisa per SMS, but in order to avail of the same, users would have to pay a monthly fee of Rs 11. In another plan the users can avail of 15,000 SMSes free, by paying Re 1 per day as a fee. In other words it means 500 SMSes per day for a rupee charged; a great offer.
The above plans will be appealing to customers with high SMS usage – typically youth and professionals across India.
The tariff war is likely to continue till consolidation sets in the mobile telecom industry.
Since the mobile telecom industry is more voice driven, the move may not have too much impact on the industry. However, it will indeed be pro-customer as it will lead to increase in savings.
IPO subscription to be made easy for HNIs & firms
From January 2010, HNIs and firms will be eligible to use the banking channel called Application Supported by Blocked Amount (ASBA) to buy stocks in the primary (IPO) market.
Under this channel, when an investor applies to an IPO, the funds do not immediately flow out from his account. The bank blocks the value of the shares applied for and the funds are not disbursed till the shares are allotted. Customers cannot use this money, since it is blocked.
Earlier in July 2008, SEBI allowed only retail investors to subscribe to IPOs through this channel, but capped the maximum amount of bid at Rs 1 lakh.
As a second phase, the channel will now be thrown open to a wider group of investors who will be able to make multiple applications at different prices within the price band of an IPO.
SEBI has asked banks to be ready with their software and to make necessary changes in their software.
We believe that the move will reduce the time taken between the public issue and listing. This will be in the interest of investors as it will make IPO subscriptions easy and ensure hassle-free transactions. Investors will no longer have to wait for the receipt of refund cheques.
Dubai debt trap
Dubai, which is seen as the global financial hub, got into a debt trap with Dubai World struggling with liabilities to the tune of USD 59 billion. The Dubai Government too hasn’t guaranteed the debt of Dubai World. As per a government statement, the company has received financing based on a project schedule basis and not on government guarantees.
This sent shock waves across the financial markets, significantly impacting stock prices across the globe. S&P too has cut the credit ratings of six Dubai government-linked companies, including ports operator DP World, to junk status. S&P also placed the ratings of four Dubai-based banks on negative outlook, due to their exposure to Dubai World.
This sent shock waves across the financial markets, significantly impacting stock prices across the globe. S&P too has cut the credit ratings of six Dubai government-linked companies, including ports operator DP World, to junk status. S&P also placed the ratings of four Dubai-based banks on negative outlook, due to their exposure to Dubai World.
Banning insurance commissions
The panel constituted last year, chaired by D Swarup, the Chairman of the Pension Fund Regulatory and Development Authority (PFRDA) presented its report to the Government. The panel was asked among other things:
- How to stop mis-selling of financial products
- How to raise financial literacy among citizens
With respect to the insurance industry, the panel has recommended in its report, that the up-front commissions embedded in the premium should be done away in a phased manner as under:
| Year | Commissions |
| 2009 | 15% |
| 2010 | 7% |
| 2011 | 0% |
The main intention of the panel is to stop mis-selling of products as agents and financial advisors often push financial products where they can earn more, without the investors in mind.
The move has been opposed by the Insurance Regulatory & Development Authority (IRDA) and Life Insurance Council, the industry lobby for the insurance sector.
We believe that if the recommendations to do away with insurance commissions go through government approvals, it will be in the interest of the investors.
Banking made easy?
PersonalFN Impact Indicator
In a move to make banking transactions more easy and convenient, the Reserve Bank of India (RBI) permitted banks to adopt the ‘Business Correspondents Model’ from Monday – November 30, 2009.
It means banks will now be able to appoint ‘Business Correspondents’ (BCs) enabling them (banks) to deepen the banking system. RBI has allowed entities like individual kirana/medical/fair price shop owners, PCO operators, agents of government-sponsored small savings schemes, insurance agents, petrol pumps owners and retired teachers to act as BCs of banks.
The principle for appointing such BCs are:
- Experience of these individuals in cash handling (cash inflow and outflow)
- Being residents of the area in which they propose to operate
According to RBI, the charges for services provided by the BCs, will be levied in a transparent manner and BCs will not be allowed to charge customers directly.
The model has evolved after experiencing limitations in the traditional ‘brick and mortar' banking model. As per RBI notification, the new model (Business Correspondents Model) will enable banks to accelerate their goal of financial inclusion.
However, we believe that though the move seems to make banking easier and convenient, there are some serious operational glitches like cash management, security and technology, which need to be considered for safe banking.
India's GDP beats forecast
The Gross Domestic Product (GDP) expanded during the second quarter (July – September) of the fiscal year 2010 by 7.9%. The key drivers for this strong figure are:
- Pickup in manufacturing sector
- Increased government expenditure
- Robust investments
- Lower interest rates
- Higher government salaries & pay commission arrears
- Increased incomes especially in the rural areas due to greater social spending and high farm goods prices
- Modest growth in farm output despite drought
In the first quarter (April – June) of the present fiscal year, the economy had expanded 6.1%. Interestingly now, the growth is close to the same level (i.e. 7.7%), of the second quarter (July – September 2008) of the fiscal year 2009, thus indicating that the economy is back on the health track. The stock market too has cheered this news during the week.
Given the attractive GDP numbers, we believe there are likely chances of:
- Government withdrawing stimulus – certainly beginning the phasing out over next few months
- RBI tightening interest rates soon
How to select a mutual fund?
Mutual funds offer the most convenient way of investing in equity, debt and money markets. The increased participation of Indian investors bears testimony to the fact that there is a widespread realisation of the same. Also over the years, the Indian mutual fund industry has grown manifolds, not only in terms of size but also in terms of offerings. While on one hand that is good; the increased number of offerings has also given rise to a state of dilemma in the mind of investors. They often get confused when it comes to selecting the right fund from the plethora of funds available. And even worse, many investors think that 'any' mutual fund can help them achieve their desired goals.
The fact is, not all funds are the same. There are various aspects within a fund that an investor must carefully consider before short-listing it for making investments. In this article we highlight some of those aspects.
- Performance: The past performance of a fund is important in analysing a mutual fund. However, one must remember that simply because a fund has performed well in the past does not mean that it will perform well in the future as well. It simply indicates the fund’s ability to clock returns across market conditions. And if the fund has a well-established track record, the likelihood of it performing well in the future is higher than a fund which has not performed well.
The following factors should be considered while evaluating a fund’s performance:
1) Comparisons: A fund’s performance in isolation does not indicate anything. Hence, it becomes crucial to compare the fund with its benchmark index and its peers, so as to deduce a meaningful inference. Again, one must be careful while selecting the peers for comparison. For instance, it doesn’t make sense comparing the performance of a midcap fund to that of a largecap.
‘Don’t compare apples with oranges’
2) Time period: It’s pertinent for investors to have a long term (atleast 3-5 years) horizon if they wish to invest in equity oriented funds. Hence, it becomes important for them to evaluate the long term performance of the funds. This does not imply that the short term performance be ignored. Performance over the short term should also be evaluated; however, the focus should be more on the long term performance. Besides, it is equally important to evaluate how a fund has performed over different market cycles (especially during the downturn). During a rally it is easy for a fund to deliver above-average returns; but the true measure of its performance is when it posts superior returns than its benchmark and peers during the downturn.
Choose a fund like you choose a wife – one that will stand by you in sickness and in health
3) Returns: Returns are obviously one of the important parameters that one must look at while evaluating a fund. But remember, although it is one of the most important, it is not the only parameter. Many investors simply invest in a fund because it has given higher returns. In our opinion, such an approach for making investments is flawed. In addition to the returns, investors must also look at the risk parameters, which in-turn explain how much risk the fund has taken to clock higher returns.
4) Risk: Risk is normally measured by Standard Deviation. It signifies the degree of risk the fund has exposed its investors to. Higher the Standard Deviation, higher the risk taken by the fund to clock returns. From an investor’s perspective, evaluating a fund on risk parameters is important because it will help them to check whether the fund’s risk profile is in line with their risk profile or not. For example, if two funds have delivered similar returns, then a prudent investor will invest in the fund which has taken less risk.
5) Risk-adjusted return: This is normally measured by Sharpe Ratio. It signifies how much return a fund has delivered vis-ร -vis the risk taken. Higher the Sharpe Ratio, better is the fund’s performance. From an investor’s perspective it is important because they should choose a fund which has delivered higher risk-adjusted returns. Infact, this ratio tells us whether the high returns of a fund are attributed to good investment decisions, or to higher risk.
6) Portfolio Concentration: Funds that have a high concentration in particular stocks or sectors tend to be very risky and volatile. Hence, investors should invest in these funds only if they have a high risk appetite. Ideally, a well diversified fund should hold no more than 40% of its assets in its top 10 stock holdings.
Make sure your fund does not put all its eggs in one basket
7) Portfolio Churning: The portfolio turnover rate measures the frequency with which stocks are bought and sold. Higher the churning, higher the volatility. The fund might not be able to compensate the investors adequately for the higher risk taken.
Invest in funds with a low turnover rate
- Fund Management: The performance of a mutual fund scheme is largely linked to the Fund Manager and his team. Hence, it’s important that the team managing the fund should have considerable experience in dealing with market ups and downs. Also, investors should avoid fund’s that owe their performance to a ‘star’ fund manager. Even if the fund manager is present today, he might quit tomorrow, and then the fund will be unable to deliver its ‘star’ performance without its ‘star’ fund manager. Therefore, the focus should be on the fund houses which are strong in their systems and processes.
Fund house should be process-driven and not 'star' fund-manager driven
- Costs: If two funds are similar in most contexts, it might not be worth buying the high cost fund if it is only marginally better than the other. Simply put, there is no reason for an AMC to incur higher costs, other than its desire to have higher margins.
The two main costs incurred are:
1) Expense Ratio: Annual expenses involved in running the mutual fund include administrative costs, management salary, overheads etc. Expense Ratio is the percentage of assets that go towards these expenses. Every time the fund manager churns his portfolio, he pays a brokerage fee, which is ultimately borne by investors in the form of an Expense Ratio. Therefore, higher churning not only leads to higher risk but also higher cost for the investor.
2) Exit Load: Due to SEBI’s recent ban on entry loads, investors now have only exit loads to worry about. An exit load is charged to investors when they sell units of a mutual fund within a particular tenure; most funds charge if the units are sold before a year. As exit load is a fraction of the NAV, it eats into your investment.
Try investing in a fund with a low expense ratio and stay invested in them for longer duration.
Among the factors listed above, while few can be easily gauged by investors, there are others on which information is not widely available in public domain. This makes analysis of a fund difficult for investors and this is where the importance of taking the help of a mutual fund advisor comes into fore. At Personal FN, we spend a lot of time and effort in short-listing funds which are best for investors, by using various qualitative and quantitative techniques.
Tuesday, October 27, 2009
Commercial real estate loans to get costlier
RBI has tightened the screws on bank lending to the real estate sector - a move that did not go down favourably with the stocks of real estate companies. The BSE realty index fell by over six per cent.
All the realty stocks ended in the red. Sensex stock, Unitech plunged 7.5 per cent to Rs 86 after toucing a low of Rs 84. DLF tumbled 6.5 per cent to Rs 402. Omaxe crashed 10 per cent to Rs 107. HDIL tanked 8.6 per cent to Rs 341. Ansal Infrastructure shed 8.5% to Rs 69. Parsvnath, Phoenix Mills, Peninsular Land, Ackruti City and Orbitco slumped 5-7 per cent each.
Last December, real estate developers heaved a sigh of relief when the RBI allowed restructuring of loans up to June 30, 2009 as a part of its stimulus package. Since then, all major companies rescheduled loans worth crores to avoid default. but now, the RBI has had a change of heart.
Today the RBI says, “In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances, it would be prudent to build cushion against likely NPAs.”
The central bank has concerns on the ability of developers to repay loans even at a later date. So, the provisioning requirement for advances to the sector has been increased from its present 0.4 to 1 per cent. This means the interest cost for developers is set to increase. DLF and Unitech have an average interest cost of about 12 per cent which is set to rise to about 12.75 or 13 per cent.
Developers are yet to get clarity on whether this provisioning will increase on existing bank loans. In fact, in the past six months, very few fresh loans have been sanctioned to real estate companies. So the RBI is sending out a clear signal for banks to be cautious even before the cycle of fresh lending begins
Brokerages point out that RBI's move may trigger a second round of equity funding for listed players. Listed companies have lapped up more than Rs 13000 crore rupees via qualified institutional placements in the past seven months. Some of these funds have been directed towards working capital needs. What’s more, about $ 3 billion is waiting in the wings to be raised via the IPO route by six companies. But for unlisted companies, funding options may be far lesser. for consumers, this move seals all possibilities for a further dip in prices. In fact, it is all set to increase
Sarang Wadhawan, Managing Director, HDIL, said, “You have to understand that the sector was just recovering, this will definitely affect developers in a way that projects which were under execution. Now we will have to increase prices to compensate for this cost that will be incurred, at the same time, affordable housing segment will be hit because of this.”
Even as companies have clocked in good volume in sales over the past two quarters, it remains to be seen whether an imminent price increase will sustain the recent uptick in demand.
All the realty stocks ended in the red. Sensex stock, Unitech plunged 7.5 per cent to Rs 86 after toucing a low of Rs 84. DLF tumbled 6.5 per cent to Rs 402. Omaxe crashed 10 per cent to Rs 107. HDIL tanked 8.6 per cent to Rs 341. Ansal Infrastructure shed 8.5% to Rs 69. Parsvnath, Phoenix Mills, Peninsular Land, Ackruti City and Orbitco slumped 5-7 per cent each.
Last December, real estate developers heaved a sigh of relief when the RBI allowed restructuring of loans up to June 30, 2009 as a part of its stimulus package. Since then, all major companies rescheduled loans worth crores to avoid default. but now, the RBI has had a change of heart.
Today the RBI says, “In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances, it would be prudent to build cushion against likely NPAs.”
The central bank has concerns on the ability of developers to repay loans even at a later date. So, the provisioning requirement for advances to the sector has been increased from its present 0.4 to 1 per cent. This means the interest cost for developers is set to increase. DLF and Unitech have an average interest cost of about 12 per cent which is set to rise to about 12.75 or 13 per cent.
Developers are yet to get clarity on whether this provisioning will increase on existing bank loans. In fact, in the past six months, very few fresh loans have been sanctioned to real estate companies. So the RBI is sending out a clear signal for banks to be cautious even before the cycle of fresh lending begins
Brokerages point out that RBI's move may trigger a second round of equity funding for listed players. Listed companies have lapped up more than Rs 13000 crore rupees via qualified institutional placements in the past seven months. Some of these funds have been directed towards working capital needs. What’s more, about $ 3 billion is waiting in the wings to be raised via the IPO route by six companies. But for unlisted companies, funding options may be far lesser. for consumers, this move seals all possibilities for a further dip in prices. In fact, it is all set to increase
Sarang Wadhawan, Managing Director, HDIL, said, “You have to understand that the sector was just recovering, this will definitely affect developers in a way that projects which were under execution. Now we will have to increase prices to compensate for this cost that will be incurred, at the same time, affordable housing segment will be hit because of this.”
Even as companies have clocked in good volume in sales over the past two quarters, it remains to be seen whether an imminent price increase will sustain the recent uptick in demand.
Tata Steel India Q2 net down 49.5 pct, lags forecast
MUMBAI, Oct 27 (Reuters) - Tata Steel Ltd (TISC.BO: Quote, Profile, Research), the world's No. 8 steel maker by output, on Tuesday reported a 49.5 percent fall in September quarter profit from its Indian operations, as prices tumbled on the back of the global economic crisis. The company, which acquired Europe's second-largest steelmaker Corus in 2007, said standalone net profit fell to 9.03 billion rupees ($192 million) for the fiscal second quarter, from 17.88 billion reported a year earlier. Net sales fell to 56.3 billion rupees from 67.3 billion. A Reuters poll of 11 analysts had estimated a standalone net profit of 10.2 billion rupees on net sales of 60.67 billion rupees. Tata Steel bought European steel maker Corus in 2007. The Indian operations account for about a quarter of the group's annual global capacity of 30 million tonnes. Global steel production has tumbled this year, as demand from key industries such as construction and automotive shrank. But as macroeconomic data improves and inventories deplete, demand is gradually coming back, encouraging steelmakers to restart some idled capacity. Shares in Tata Steel, valued at about $10.1 billion, fell as much 7.3 percent to 501.35. The shares rose 30.6 percent in the September quarter, outperforming the benchmark index that improved 18.2 percent. ($1=47 rupees) (Reporting by Prashant Mehra; Editing by Jarshad Kakkrakandy)
Kotak Mahindra net surges 86% to Rs 299 cr
Private sector lender Kotak Mahindra Bank today reported 86.22 per cent rise in its net profit at 299.76 crore for the second quarter ended September 30, 2009, over the same period last year.
Total income rose to Rs 2,312.91 crore in the latest quarter ended September 30, 2009, up 25.05 per cent from Rs 1,849.51 crore in the same period corresponding fiscal, Kotak Mahindra Bank said in a filing to the Bombay Stock Exchange(BSE).
On standalone basis, the bank reported a net profit of Rs 125.90 crore for the July-September quarter, jumped over two-folds to Rs 47.86 crore in the same period last fiscal.
Shares of Kotak Mahindra Bank were trading at Rs 764.10 on the BSE, down 2.18 per cent from its previous close.
Total income rose to Rs 2,312.91 crore in the latest quarter ended September 30, 2009, up 25.05 per cent from Rs 1,849.51 crore in the same period corresponding fiscal, Kotak Mahindra Bank said in a filing to the Bombay Stock Exchange(BSE).
On standalone basis, the bank reported a net profit of Rs 125.90 crore for the July-September quarter, jumped over two-folds to Rs 47.86 crore in the same period last fiscal.
Shares of Kotak Mahindra Bank were trading at Rs 764.10 on the BSE, down 2.18 per cent from its previous close.
Rupee ended down at a three-week low against the US dollar
Rupee ended down at a three-week low against the US dollar today because banks bought the greenback noting the decline in local share indices and also to meet importers' month-end dollar demand, dealers said.
The Indian unit ended at 46.9200 rupees compared with 46.6500 per dollar Monday. Rupee swayed in the 46.7700-47.0050 per dollar band intraday today.
"The fall in local shares today triggered some FII outflows today. There was no direct impact of the RBI policy on rupee. Intraday, rupee purely tracked local share," said a dealer with a large UK bank.
Today, the Bombay Stock Exchange's Sensex and the National Stock Exchange's Nifty ended down 2.31% and 2.50%, respectively, on disappointment over the Reserve Bank of India's mid-term monetary policy review for 2009-10
(Apr-Mar).
RBI kept the Repo, Reverse Repo, and Cash Reserve Ratio unchanged as per market expectations, Statutory Liquidity Ratio was hiked to 25%. Gross domestic product growth projection for 2009-10 (Apr-Mar) was kept unchanged
at 6.0% with an upside bias.
RBI also discontinued the refinance windows for banks and foreign exchange swap facility for banks today.
"It (foreign exchange swap facility) was a measure introduced last year when market faced the problem of dollar crunch. Not many banks used it. So it may not have an impact on the forex market," said S. Rajendran, general manager treasury, Union Bank of India.
"Importers were persistently buying dollars in the market today to meet their month-end needs that added to the fall and dragged rupee to the 47 level," said a dealer with a state-owned bank.
Banks also purchased the greenback noting its rise against other Asian currencies, dealers said.
Euro's fall below the $1.5000 mark in the overnight market also added to the Indian units' woes, dealers said.
However, dollar sales from exporters prevented a further decline in the Indian currency, dealers said.
"Exporters had to step in to sell dollars with rupee weakening to 47.00 today. Those exporters who had missed a chance to sell dollars in the past few days, sold it today," said a dealer with a US bank.
Bouts of profit booking also limited the slide in the Indian currency today, dealers said.
The Indian unit ended at 46.9200 rupees compared with 46.6500 per dollar Monday. Rupee swayed in the 46.7700-47.0050 per dollar band intraday today.
"The fall in local shares today triggered some FII outflows today. There was no direct impact of the RBI policy on rupee. Intraday, rupee purely tracked local share," said a dealer with a large UK bank.
Today, the Bombay Stock Exchange's Sensex and the National Stock Exchange's Nifty ended down 2.31% and 2.50%, respectively, on disappointment over the Reserve Bank of India's mid-term monetary policy review for 2009-10
(Apr-Mar).
RBI kept the Repo, Reverse Repo, and Cash Reserve Ratio unchanged as per market expectations, Statutory Liquidity Ratio was hiked to 25%. Gross domestic product growth projection for 2009-10 (Apr-Mar) was kept unchanged
at 6.0% with an upside bias.
RBI also discontinued the refinance windows for banks and foreign exchange swap facility for banks today.
"It (foreign exchange swap facility) was a measure introduced last year when market faced the problem of dollar crunch. Not many banks used it. So it may not have an impact on the forex market," said S. Rajendran, general manager treasury, Union Bank of India.
"Importers were persistently buying dollars in the market today to meet their month-end needs that added to the fall and dragged rupee to the 47 level," said a dealer with a state-owned bank.
Banks also purchased the greenback noting its rise against other Asian currencies, dealers said.
Euro's fall below the $1.5000 mark in the overnight market also added to the Indian units' woes, dealers said.
However, dollar sales from exporters prevented a further decline in the Indian currency, dealers said.
"Exporters had to step in to sell dollars with rupee weakening to 47.00 today. Those exporters who had missed a chance to sell dollars in the past few days, sold it today," said a dealer with a US bank.
Bouts of profit booking also limited the slide in the Indian currency today, dealers said.
Mahindra Renault clarifies on 'Sandero' brand
Hyundai Motor India has taken Mahindra Renault to the Delhi High Court objecting to the latter's plan to launch a compact car in the country with the name 'Sandero' alleging that the rival was trying to cash in on its popular brand Santro with a similar sounding product. They (Mahindra Renault) are planning to launch Sandero, which is very similar sounding to our Santro. Both are hatchbacks and Santro is an established trademark and they are trying to get mileage out of it," a senior Hyundai Motor India (HMIL) official told PTI.
HMIL's plea requests the court not to allow Mahindra Renault to launch the car under the name Sandero, he added.
Neither a call made to Mahindra Renault Chief Executive Officer Nalin Mehta nor an e-mail sent to Mahindra & Mahindra group spokesperson seeking comments on the development got a reply.
'Santro' is HMIL's flagship brand and a total of over 15 lakh units have been sold both in the domestic and the overseas markets since its launch in September 1998.
On the other hand, Mahindra Renault has been struggling to mark its presence in the Indian car market with its sole product Logan failing miserably sparking speculations of a break-up of the joint venture between Mahindra & Mahindra and French auto major Renault.
Market analysts pointed out that the firm desperately needs another product to keep the JV alive.
HMIL's plea requests the court not to allow Mahindra Renault to launch the car under the name Sandero, he added.
Neither a call made to Mahindra Renault Chief Executive Officer Nalin Mehta nor an e-mail sent to Mahindra & Mahindra group spokesperson seeking comments on the development got a reply.
'Santro' is HMIL's flagship brand and a total of over 15 lakh units have been sold both in the domestic and the overseas markets since its launch in September 1998.
On the other hand, Mahindra Renault has been struggling to mark its presence in the Indian car market with its sole product Logan failing miserably sparking speculations of a break-up of the joint venture between Mahindra & Mahindra and French auto major Renault.
Market analysts pointed out that the firm desperately needs another product to keep the JV alive.
GMR Energy drags Ministry of Power, REC, PFC to Delhi HC
GMR Energy has filed three petitions against the ministry of power and two PSUs — Rural Electrification Corporation and Power Finance Corporation — which had invited bids from the private sector to set up three transmission projects.
According to the petition, GMR Energy was disqualified on the ground that the formula for calculation of Internal Resource Generation (IRG), one of the criteria for qualification, was not correct.
In its petition filed through law firm Link Legal, GMR submitted before the court that it had sought an opinion from the Institute of Charted Accountants (ICAI) on the issue.
The ICAI said the formula adopted by it for calculation of IRG is correct and acceptable, and in fact, compliant with well-established accounting standards, GMR Energy submitted in the petition.
The company submitted that it was disqualified on a faulty criteria adopted for calculating the IRG and requested the court to stay the tendering process.
Admitting it, a division bench comprising Justice B D Ahmed and Justice Veena Birbal has issued notice to the Centre, REC and PFC directing them to file their replies.The court has listed the matter for next hearing in November.
According to the petition, GMR Energy was disqualified on the ground that the formula for calculation of Internal Resource Generation (IRG), one of the criteria for qualification, was not correct.
In its petition filed through law firm Link Legal, GMR submitted before the court that it had sought an opinion from the Institute of Charted Accountants (ICAI) on the issue.
The ICAI said the formula adopted by it for calculation of IRG is correct and acceptable, and in fact, compliant with well-established accounting standards, GMR Energy submitted in the petition.
The company submitted that it was disqualified on a faulty criteria adopted for calculating the IRG and requested the court to stay the tendering process.
Admitting it, a division bench comprising Justice B D Ahmed and Justice Veena Birbal has issued notice to the Centre, REC and PFC directing them to file their replies.The court has listed the matter for next hearing in November.
Wednesday, October 14, 2009
Stock-split plan electrifies Bajaj Electricals
Bajaj Electricals gained 4.38% to Rs 762 at 13:58 IST on BSE, after the company’s board approved a 5-for-1 stock split.
The company made this announcement during trading hours today, 12 October 2009.
Meanwhile, the BSE Sensex was up 303.17 points, or 1.82%, to 16,945.83.
On BSE, 57,310 shares were traded in the counter as against an average daily volume of 11,938 shares in the past one quarter.
The stock hit a high of Rs 780.20 so far during the day, which is a record high for the counter. The stock hit a low of Rs 735 so far during the day. The stock had hit a 52-week low of Rs 135 on 6 March 2009.
The stock has risen 24.36% in just five trading sessions from a recent low of Rs 612.75 on 5 October 2009.
The mid-cap stock outperformed the market over the past one month till 9 October 2009, rising 19.69% as compared to the Sensex’s 2.84% rise. It had also outperformed the market in the past one quarter, soaring 94.34% as compared to the Sensex’s return of 20.97%.
The company’s equity capital is Rs 17.44 crore. Face value per share is Rs 10.
The current price of Rs 762 discounts the company’s Q1 June 2009 annualized EPS of Rs 37.85, by a PE multiple of 20.13.
The board has also decided to raise Rs 175 crore through qualified institutional placements (QIPs). If one assumes that the company raises Rs 175 crore at the current market price of Rs 762, there will be a equity dilution of 13.17%.
Bajaj Electricals’ net profit surged 63.4% to Rs 16.36 crore on 15.1% rise in net sales to Rs 365.38 crore in Q1 June 2009 over Q1 June 2008.
Bajaj Electricals manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures. The company also manufactures consumer durables like small electrical appliances.
Promoters have pledged 2.50 lakh shares representing 1.45% of the equity capital of the company (as on 30 June 2009). Total promoters shareholding in the company is 74.14% (as on 30 June 2009).
The company made this announcement during trading hours today, 12 October 2009.
Meanwhile, the BSE Sensex was up 303.17 points, or 1.82%, to 16,945.83.
On BSE, 57,310 shares were traded in the counter as against an average daily volume of 11,938 shares in the past one quarter.
The stock hit a high of Rs 780.20 so far during the day, which is a record high for the counter. The stock hit a low of Rs 735 so far during the day. The stock had hit a 52-week low of Rs 135 on 6 March 2009.
The stock has risen 24.36% in just five trading sessions from a recent low of Rs 612.75 on 5 October 2009.
The mid-cap stock outperformed the market over the past one month till 9 October 2009, rising 19.69% as compared to the Sensex’s 2.84% rise. It had also outperformed the market in the past one quarter, soaring 94.34% as compared to the Sensex’s return of 20.97%.
The company’s equity capital is Rs 17.44 crore. Face value per share is Rs 10.
The current price of Rs 762 discounts the company’s Q1 June 2009 annualized EPS of Rs 37.85, by a PE multiple of 20.13.
The board has also decided to raise Rs 175 crore through qualified institutional placements (QIPs). If one assumes that the company raises Rs 175 crore at the current market price of Rs 762, there will be a equity dilution of 13.17%.
Bajaj Electricals’ net profit surged 63.4% to Rs 16.36 crore on 15.1% rise in net sales to Rs 365.38 crore in Q1 June 2009 over Q1 June 2008.
Bajaj Electricals manufactures electric fans and general lighting items, such as lamps, special lamps, fluorescent tubes, and lighting fixtures. The company also manufactures consumer durables like small electrical appliances.
Promoters have pledged 2.50 lakh shares representing 1.45% of the equity capital of the company (as on 30 June 2009). Total promoters shareholding in the company is 74.14% (as on 30 June 2009).
Buying gold? Consider this instead...
Meanwhile, the yellow metal gold continues to flirt with its all time high levels. Last heard, it was comfortably perched well above the US$ 1,000 per ounce mark. And it may not be done yet by any stretch of imagination. Experts are of the opinion that it could easily double from here. And that includes Jim Rogers, one of the world's most respected commodity investors. Speaking to Moneynews, the fiery Rogers opined, "If you go back and adjust . . . for inflation back in 1980, gold should be over $2,000 an ounce. In my view it will get there again sometime in the next decade." Please note the last few words. He believes that gold would double sometime in the next decade. In other words, it may have started to look stretched from a near term perspective. In fact, even Rogers is not buying at current levels. But he also mentioned that if it goes down from here, he could once again start buying.
While awaiting a dip in gold prices could be the best thing to do right now, you may not want to do the same for silver and instead start buying today itself. Yes, you've read that right. Taking into account the fundamentals, silver is looking more attractive than gold from a long term perspective. In fact, it has already beaten the yellow metal so far this year, rising three times more than the 17% returns earned by gold. Moreover, the fundamentals of silver seem to be more compelling than that of the yellow metal. As per DNA Money, the amount of silver out there is just 20% of the gold and secondly, silver due to its best in class heat and electrical conductivity and versatility could be used into a lot of applications, thus making it far more useful than just being a storehouse of value. In view of these factors, silver definitely needs to be considered seriously if one has to diversify away from fiat currencies.
While awaiting a dip in gold prices could be the best thing to do right now, you may not want to do the same for silver and instead start buying today itself. Yes, you've read that right. Taking into account the fundamentals, silver is looking more attractive than gold from a long term perspective. In fact, it has already beaten the yellow metal so far this year, rising three times more than the 17% returns earned by gold. Moreover, the fundamentals of silver seem to be more compelling than that of the yellow metal. As per DNA Money, the amount of silver out there is just 20% of the gold and secondly, silver due to its best in class heat and electrical conductivity and versatility could be used into a lot of applications, thus making it far more useful than just being a storehouse of value. In view of these factors, silver definitely needs to be considered seriously if one has to diversify away from fiat currencies.
IPOs are trading below their offer price
IPOs in India, which were pushed under the carpet when the stock markets plunged, have started resurfacing now that markets have rallied. Given the buoyant mood in the markets, we are hardly surprised at companies wanting to capitalize on this opportunity. The interesting thing, however, is that many of the recent IPOs that have come in the market are trading below the offer price. And this could probably be because the underlying businesses do not have much to offer that can be justified by the price asked for. Investors are also getting savvier and are not interested in investing in IPOs merely for listing gains. This is a wakeup call for other companies lining up to be listed on the bourses as it highlights the fact that a mere revival in the stock markets is not a good enough reason to expect investors to invest in their issues.
Pipavav Shipyard to bid for defence, oil and gas projects
Talking on the listing, Pipavav Shipyard’s Chairman Nikhil Gandhi said the company was in the process of putting bids for defence and oil and gas projects.
The company, he said, had put tenders worth Rs 7,500 crore for defence projects. Gandhi added that he saw FY10 revenues at Rs 800–1,000 crore. Ravi Kapoor, Managing Director and Head, Equity Capital Markets, Citigroup, said that the company may see additional USD 15 billion fund raising by FY10. Here is a verbatim transcript of the exclusive interview with Nikhil Gandhi, Luv Chhabra, Director-Corporate Affairs, Punj Lloyd and Ravi Kapoor on CNBC-TV18. Also watch the accompanying video. Q: We heard yesterday about the two large deals that you were in conversations with, with naval forces both in Oman and in India- what are the chances at this point that they fructify and what would that mean to your order book? Q: Which ones do you think have higher chances of coming through because the Q: Are you expecting to see a bit of supply pressure though in the first few days before Pipavav finally settles down? Q: You will be more at liberty now to talk about growth as you see it, not so much for FY10 what kind of target can you hold out for FY11 and FY12 now to your investors? Since we have built first of its kind in the country, a most modern state of art engineering complex, fabrication complex and dry dock attached to it, people are not only excited about building their assets here. It is because of the kind of infrastructure we have set up for example loss of wastage of steel, etc. which will be very less compared to any other similar facilities in the country. We are quite upbeat about ramping up the revenues. The current year revenue is likely to be in the region of Rs 800–1000 crore. The ramping-up would be pretty rapid because we do have the capacity and the potential clients want fast forward the deliveries of their requirements and there is a huge pent up demand in the country. I think we would be in for a significant excitement going forward. Q: What's in your eyes the possibility of Pipavav bagging the Chhabra: I would leave that to Mr. Gandhi to reply. I think there is much or equally large opportunity that we have spoken about and that’s really the offshore oil and gas opportunity. If you look at the spends, just by ONGC, that are planned on the offshore side over the next five–years it is likely to be in excess of USD 20 billion. The combination of Pipavav and Punj Lloyd will be a formidable combination to address this market. The facilities in Pipavav are world-class. They are one of a kind; certainly unmatched in So the opportunities will be on the naval side as Nikhil Gandhi mentioned. There will be an equally large opportunity that Pipavav will address on the offshore oil and gas side and then going forward as the shipyard develops and gets more experience there will be another opportunity which is really on static equipment and on the nuclear side which is really to fabricate nuclear components for reactors and other pressure vessels. Q: Last we spoke you said you were expecting to see a USD 12–15 billion by way of paper that will hit the primary market in whatever form for the rest of this year. Do you think that figure might actually get surpassed and how much of this is impacting what is happening in the currency markets because you are in a good place to talk about that? I would imagine that it would primarily comprise of QIPs and IPOs, essentially, from the real estate sector, power sector infrastructure construction sector. The QIP also the pipeline is quite heavy and you have seen new structures are coming up to clear the QIP pipeline. Finally, as I have been maintaining on your programme that the government disinvestment is inevitable you must have seen RECs going through the process and couple of other companies will come up for disinvestment in the next six months of this financial year. So there would be a fairly busy pipeline. The flows are coming in and needless to say it is going to help the currency upwards, the currency is likely to appreciate in the short-term because lot of liquidity is coming in. |
REC board meet on October 16 to mull follow on public offer
A meeting of the board of directors of Rural Electrification Corporation (REC) will be held on October 16, 2009, inter alia, to consider the proposal for issue of fresh Equity Shares through Follow on Public Offer (FPO), pending receipt of approval of the Government of India, and to seek approval of shareholders for the same by convening Extra Ordinary General Meeting (EGM), as per BSE announcement.
Euro Multivision to list on Oct 15
It came out with an initial public offering (IPO) of 88 lakh equity shares during September 22-24, 2009. The company fixed the issue price at Rs 75 per share which was subscribed 1.81 times. The company raised Rs 66 crore via this issue.
Promoters' shareholding has been reduced to 51.12% from 81.11% post the issue. Euro Multivision is the second largest company among few companies that are into manufacturing of CDRs and DVDRs (Source: Optical Disk Manufacturers Welfare Association). The other companies in the existing business are MoserBaer, Jupitar Innovations, Optek Disc manufacturing and Lizer Technologies etc. It is a part of EURO group which was promoted by Shri Nenshi Shah. |
Euro Multivision, manufacturer of compact disc recordables (CDRs) and digital versatile disc recordables (DVDRs), will list its equity shares issued via public issue on the exchanges on October 15, 2009.IL&FS to list transport network arm, raise Rs 700cr
IL&FS wants to raise around Rs 700 crore by taking its surface transportation arm, IL&FS Transportation Network, to the bourses. Anumeet Kaur Bisen reports.
IL&FS Transport Network,
Of the proceeds, Rs 500 crore will be used to repay part of the Rs 1,854 crore consolidated debt on its books.
The loans that will be paid off are: a Rs 100-crore short-term unsecured loan from Allahabad Bank, Rs 100 crore unsecured loan from Canara Bank, Rs 100 crore from group company IL&FS Securities Services. And two loans of Rs 100 crore rupees each from United Bank of
Paying off this debt will serve two purposes. One, it will bring the company's debt-equity ratio down from the current 1.9. Two, it will improve its debt leveraging capacity and provide better opportunity for funding future projects.
The issue is expected to hit the markets by late 2009 or early 2010. The company says it may also go in for a pre-IPO placement exercise.
Some of the proceeds may also be used to expand low-margin overseas operations. That's because its overseas operations under Spanish arm Elsamex provides ITNL with the bulk of its revenues.
However, there is a question over the company's revenue generation capacity. Considering Elsamex has been generating losses in the past and may continue to do so for a while yet.
Man Infraconstruction files DRHP for IPO
Man Infraconstruction has filed a draft red herring prospectus (DRHP) for its proposed 100% book built public issue of 5,625,150 equity shares of face value of Rs 10 each.
It has been promoted by Parag Shah and Mansi Shah and is headquartered in Mumbai. The company provides construction services for port infrastructure, residential, industrial, commercial and road infrastructure projects.
The book running lead managers to the proposed IPO are IDFC-SSKI Ltd and Edelweiss Capital Ltd.
Should you subscribe to I'bulls Power IPO?
Indiabulls Power's initial public offer (IPO) has received an overwhelming response from the first day itself. The issue has been subscribed 7.2 times so far with the QIB (qualified institutional investors) portion being subscribed 13.3 times. The price band has been fixed at Rs 40-45 per equity share. The minimum bid lot is 150 equity shares and in multiples of 150 shares thereafter. The issue will close on October 15, 2009.
Here is a verbatim transcript of the exclusive interview with Bhargav Vuddhadev and SP Tulsian on CNBC-TV18. Also see the accompanying video.
Q: From your assessment of the issue and its valuations do you think it’s an attractive one or you would rather pass?
Vuddhadev: We are recommending clients not to subscribe to Indiabulls Power mainly because of three reasons, (1) we anticipate equity dilution risk in the near-term because we do not think there would be any operational capacity until FY12 and hence there won’t be any internal accruals to meet the USD 12 billion equity requirement for the Bhaiyathan power project (2) there are uncertainties over power purchase agreements (PPA) for Amravati Phase-I and Nashik power project. Also, the pricing for the former is not known. The PPAs is still not signed and (3) there is little value creation that we see from the Bhaiyathan power project given that 65% of the capacity is sold at 81 paise per unit as against cash operating cost of 65 paise per unit. Because of these three reasons we are recommending clients not to subscribe for this initial public offering (IPO).
Q: What is your call on the Indiabulls Power IPO?
Tulsian: I do not think that the issuers or the merchant bankers have really leant the lessons. If we see the four issues which have hit the capital market in last maybe three months or so, 75% have disappointed the in the form of two power IPOs being Adani and National Hydroelectric Power Corporation (NHPC) and third Pipavav. Only the Oil India Ltd (OIL) has awarded shareholders.
If one compares Indiabulls Power with Adani Power, the latter has a capacity of 6,600 MW while Indiabulls Power has been talking of 6,600 MW. However, Indiabulls Power has only two power projects of 1,320 mw each, which means the real capacity or the serious creation is in respect to 2,640 MW.
If I go by the same parameters of Adani Power in terms of the marketcap, Rs 22,000 crore because financing pattern has been broadly on the lines of 70:30 which we have seen in case of Adani Power, same here in case of Indiabulls Power. I go by the marketcap parameters Rs 22,000 crore market cap has been given to Adani Power. So, 40% of that gives 8,800 crore. If I go by the total number of issue share, that gives me a valuation of Rs 43 per share.
Since the price band has been fixed at Rs 40-45, I don’t think there is any justification for the share price or the book to get discovered more than Rs 40. In the case of the retail category, we see that all of them go for the cut off and for some reason we have seen that the issue has subscribed by about 7.2 times on an overall basis. But entire contribution is coming from qualified institutional buyers (QIB) category.
In any situation, firstly there is no compulsion on part of the investors to go for the issue. If they opt to and make a strict comparison with Adani Power, the right price at which it should get discovered is Rs 40 since they have already fixed the price band of Rs 40-45 because otherwise there are all the chances of prospective investors making losses in the issue.
Q: How would you put or ascribe a valuation given the two points that you made about the PPA concerns and the pricing issues. Given cash flow expectations from FY12 to FY14, what is a fair value in your eyes?
Vuddhadev: We have done a discounted cash flow (DCF) valuation for all the three power projects
Q: What you have worked in by way of a merchant power capacity and a merchant power price per unit as well?
Vuddhadev: We are assuming a merchant power price per unit of roughly Rs 5 per unit starting FY13 and we are reducing that by 50 paise per unit every year until FY17. From FY17, we will have a constant merchant power price of roughly Rs 3 per unit.
Q: In terms of capacity and price for merchant power, how does it compare with Adani Power?
Tulsian: I don’t think one can take a price of more than Rs 3.50 for merchant power if you take the project completion time after FY12 which is happening in case of Indiabulls Power. When I compare that with Adani Power, the same thing has got factored in because you have the correct indication of Adani Power in the form of the share having listed and that’s the reason I have compared that with the market cap of the company and given 40% of that because you do not see any big jump happening in case of merchant power realisation from FY12 onwards.
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