The market has hit 20k once again, the first time since January 2008. Those who missed the bus this time can still invest in mutual funds and book some profits.
The question in the minds of most investors today is: Is this the right time to invest in mutual funds? And my answer to them is a resounding “Yes”.
The answer is simple and there are many reasons to it. It is always the right time to invest as long as you know why you are investing, what you wish to achieve with each of your investments in definite terms and based on that do you have the right investment strategy.
Mutual funds help you allocate your investments across stock markets, bonds, commodities like gold and also real estate. In a way that provides you with an optimal combination of liquidity, safety and returns. Think hard—what does one expect from any investment that one makes? Anything and everything you can think of will be a manifestation of either your need for liquidity, safety or for higher post tax returns.
(ET)
Sunday, September 26, 2010
Ambani truce just a pause, not end of story, says new book
The truce between the wrangling billionaire Ambani brothers is merely a "pause" and not the end of the story, says a new book on them.
The siblings' declaration in May this year of working for a harmonious environment was partly due to two influences -- Prime Minister Manmohan Singh and mother Kokilaben, who implemented the division of the multi-billion dollar Reliance empire in 2005, the author Hamish McDonald has written in the new book 'Ambani and Sons'.
Terming the two brothers as "real life slumdog billionaires", McDonald notes that the continuing story of Mukesh and Anil was "unlikely to become dull." According to the author, it is not the end of the Ambani story -- "merely a pause".
His previous book 'Polyester Prince', published in 1998 and focussed mostly on Ambani family patriarch Dhirubhai Ambani, generated a lot of controversy and could never be released in India after Ambani group moved court against its publication here.
However, the new book, which takes forward the story of Ambani family and talks about the feud between the two Ambani brothers Mukesh and Anil as also their recent truce, has managed to get published in India.
The book says that two influences, that is Prime Minister's Office and Kokilaben, were partly responsible for the joint statement that spoke about striving for an environment of harmony, co-operation and collaboration.
"One was the office of the Prime Minister Manmohan Singh, which had been urging the brothers to stop their public fighting in the overall interests of India.
"The other was Kokilaben, who was undoubtedly anguished by the continuing rift in her family and the unfavourable attention it was bringing," the book points out.
As per the book, even without these influences, "commercial realism" would have impelled the modification of the family agreement and the pledge of cooperation". In the new book, the author opines that the master agreement for the sale of gas from Mukesh's offshore field to younger Anil's power plant at Dadri seemed more like a "truce, a reaching for a modus vivendi, than a firm peace, let along a rebuilt alliance". "The sniping had stopped, but the signs of active collaboration were yet to come," he writes in the book that has come within months of the two group announcing a truce.
The author says that Mukesh and Anil showed a hungry ambition, more often found in a first generation entrepreneur, perhaps because they had been involved from very young ages in their father Dhirubhai Ambani's business life.
Regarding the two empires led by Mukesh and Anil, McDonald wonders, "Had the entrepreneurial drive of Dhirubhai been dissipated? Each of the brothers se out to show the world that the spirit lay with him".
As per the book, the two brothers played a constant game of "one-upmanship" against the other, citing instances such as Mukesh buying an IPL cricket team and during the same time, reports had suggested that Anil was eyeing a English football club. On the infamous years-long succession battle that led to the division of Reliance empire, McDonald says that communication between the two siblings came down to stiff press comments by spokesmen and mounting number of court actions.
"However, both were said to put on a display of politeness at weekly breakfasts with their mother at Sea Wind," according to the book.
The siblings' declaration in May this year of working for a harmonious environment was partly due to two influences -- Prime Minister Manmohan Singh and mother Kokilaben, who implemented the division of the multi-billion dollar Reliance empire in 2005, the author Hamish McDonald has written in the new book 'Ambani and Sons'.
Terming the two brothers as "real life slumdog billionaires", McDonald notes that the continuing story of Mukesh and Anil was "unlikely to become dull." According to the author, it is not the end of the Ambani story -- "merely a pause".
His previous book 'Polyester Prince', published in 1998 and focussed mostly on Ambani family patriarch Dhirubhai Ambani, generated a lot of controversy and could never be released in India after Ambani group moved court against its publication here.
However, the new book, which takes forward the story of Ambani family and talks about the feud between the two Ambani brothers Mukesh and Anil as also their recent truce, has managed to get published in India.
The book says that two influences, that is Prime Minister's Office and Kokilaben, were partly responsible for the joint statement that spoke about striving for an environment of harmony, co-operation and collaboration.
"One was the office of the Prime Minister Manmohan Singh, which had been urging the brothers to stop their public fighting in the overall interests of India.
"The other was Kokilaben, who was undoubtedly anguished by the continuing rift in her family and the unfavourable attention it was bringing," the book points out.
As per the book, even without these influences, "commercial realism" would have impelled the modification of the family agreement and the pledge of cooperation". In the new book, the author opines that the master agreement for the sale of gas from Mukesh's offshore field to younger Anil's power plant at Dadri seemed more like a "truce, a reaching for a modus vivendi, than a firm peace, let along a rebuilt alliance". "The sniping had stopped, but the signs of active collaboration were yet to come," he writes in the book that has come within months of the two group announcing a truce.
The author says that Mukesh and Anil showed a hungry ambition, more often found in a first generation entrepreneur, perhaps because they had been involved from very young ages in their father Dhirubhai Ambani's business life.
Regarding the two empires led by Mukesh and Anil, McDonald wonders, "Had the entrepreneurial drive of Dhirubhai been dissipated? Each of the brothers se out to show the world that the spirit lay with him".
As per the book, the two brothers played a constant game of "one-upmanship" against the other, citing instances such as Mukesh buying an IPL cricket team and during the same time, reports had suggested that Anil was eyeing a English football club. On the infamous years-long succession battle that led to the division of Reliance empire, McDonald says that communication between the two siblings came down to stiff press comments by spokesmen and mounting number of court actions.
"However, both were said to put on a display of politeness at weekly breakfasts with their mother at Sea Wind," according to the book.
Kingfisher owes Bharat Petroleum Rs 245 crore
Kingfisher Airlines owes Rs 245 crore to Bharat Petroleum Corporation (BPCL) on account of buying Aviation Turbine fuel (ATF), BPCL's Chairman and Managing Director S Radhakrishnan, said.
According to a recent Court order, the entire amount has to be paid by this November and Vijay-Mallya owned airline is paying it in instalments, he told reporters on the sidelines of a press conference here.
Though BPCL stopped credit and started cash-and-carry mode for Kingfisher, the airline is now not buying from BPCL, he said.
The state-owned NACIL (merged entity of Air India and Indian Airlines) owes Rs 250 crore plus Rs 50 crore on interest, he said, adding that the total credit of Jet Airways is close to Rs 50 crore.
BPCL has opened ATF outlets at seven more airports in the country and as of now has a presence in 30 airports in the country.
BPCL's in and out retail formats started making profits and its total turnover has reached Rs 350 crore, he said.
The company will add more such outlets in second rung cities to take the total number of such outlets from 280 to 350, Radhakrishnan said.
According to a recent Court order, the entire amount has to be paid by this November and Vijay-Mallya owned airline is paying it in instalments, he told reporters on the sidelines of a press conference here.
Though BPCL stopped credit and started cash-and-carry mode for Kingfisher, the airline is now not buying from BPCL, he said.
The state-owned NACIL (merged entity of Air India and Indian Airlines) owes Rs 250 crore plus Rs 50 crore on interest, he said, adding that the total credit of Jet Airways is close to Rs 50 crore.
BPCL has opened ATF outlets at seven more airports in the country and as of now has a presence in 30 airports in the country.
BPCL's in and out retail formats started making profits and its total turnover has reached Rs 350 crore, he said.
The company will add more such outlets in second rung cities to take the total number of such outlets from 280 to 350, Radhakrishnan said.
Indian consumers interested in using prepaid cards: Visa
According to the survey conducted by global payment technology company Visa, which had respondents in six major cities in India, the current penetration of pre-paid cards at two per cent gives a huge opportunity for Indian banks in this field.
More than eighty per cent of the respondents like to own pre-paid cards as they enjoy the benefits of cash-less transactions and convenience of carrying such cards instead of money. Easy availability and convenience in reducing ATM visits are two other major factors that attract consumers to pre-paid cards, the survey said.
According to Visa's international pre-paid products' Regional Director, Neel Nilakantan, the potential of India in the pre-paid payment card segment is as huge as $93-billion per annum.
Visa's pre-paid card segment including travel cards, pay-roll cards and gift cards are a huge success globally and the company is hoping to replicate the same in India though this sector is at a nascent stage here, he said.
Visa sees $93 billion opportunity on the cards
At present, debit and credit cards account for only 3% of personal consumption expenditure and cash is still used as a large part of the payments. According to Visa, pre-paid cards are best placed to displace cash. “Credit and debit cards can only go so far. There is a need for a new instrument that competes with credit and debit cards to attract new segments,” said Neel Nilakantan, regional director — Pre-paid Products, International, Visa.
Policymarkets and regulators have been championing the cause of electronic payments. The central bank is keen on migrating payments to the electronic mode because this would also bring down the cost of currency management for the economy. But one of the main impediments has been the high cost of transactions which make card payments uneconomical for low value.
“The charges on card payments are largely determined by banks who control that part of the value chain,” said Mr Nilkantan. But pre-paid cards offer an opportunity for banks to bring down costs as they would stand to earn a large float on unused balances. There is also the potential to get large volumes. “We do perceive that banks would come with attractive pricing to get a larger share of the market,” he added.
In India, pre-paid cards have achieved a very low market penetration. These cards are popular largely in overseas travel. According to a survey conducted by Visa, pre-paid payment card ownership in India was very low with only 2% of those polled ever using a pre-paid payment instrument. However, there is potential for growth, given that four out of 10 respondents were aware of the product (40%), and eight out of 10 (84%) said they would like to own such a product in the near future.
According to Mr Nilkantan, there is a huge opportunity in using pre-paid cards for payroll purpose, particularly in case of contract labour. “A contractor making payments through pre-paid cards would save on the cost of salary processing. It will also save them the hassle of opening bank accounts, considering that the pre-paid card is reusable,” he said. He pointed out that in the US, several employers use pre-paid cards as they improve administrative jobs and replace manual tasks like cheque processing.
Visa tests smartphone payments in mass transit
MasterCard said in June that it was working with New York and New Jersey mass transit agencies on a six-month pilot program to test "contactless" payments on certain commuter routes.
The program allows consumers to buy a subway, bus or train ticket by tapping or waving their credit or debit card, or a sticker attached to the back of their phone, over a turnstile electronic reader, instead of buying a separate ticket.
The program was initially exclusive only to MasterCard users, but is now open to Visa. The world's largest credit and debit card processing network plans to say on Tuesday that consumers can now use their Visa cards, or in certain cases their smartphones, to buy some subway, train or bus tickets in New York and New Jersey.
Visa told Reuters in August that it was working with Bank of America Corp to test smartphone payments in New York. Bank of America's New York pilot-enabled phones "can be used for contactless payments on mass transit," spokeswoman Tara Burke said on Monday.
Visa also started a separate test of contactless transit payments in Los Angeles this month, the company plans to say on Tuesday. Consumers in that program will have to buy special prepaid debit cards, which they can tap to ride a subway or bus, and which can also be used to buy goods or services from other retailers.
Loans set to pinch more as RBI hikes repo rate
Loans for corporates and individuals are set to be costlier soon while deposits may yield higher returns as the Reserve Bank of India, or RBI, raised interest rates higher than expected to tame inflation.
For the fifth time this year, the central bank raised the repo rate, the rate at which it lends to banks, by 25 basis points to 6%, and the reverse repo rate, at which it absorbs funds from banks, by 50 basis points to 5%, prompting lenders to review the rates they charge both retail and corporate customers.
This narrowing of the differential between the two policy rates is now expected to ensure greater stability in the call money market, where banks either borrow or lend overnight.
“The signal that RBI has given by narrowing the corridor is that banks have to certainly raise deposit rates. Once we do that, it will reflect in the base rate, may be after a quarter or so,” said SA Bhat, CMD of state-run Indian Overseas Bank.
But what is encouraging, especially for industry, is that the central bank has signalled that it is almost done with interest rate tightening. In typical RBIspeak, it has said the bank believes that the tightening carried out over the last eight months has taken the monetary situation close to normal. The latest move caps a series of rate increases that takes the policy rates back to levels prevailing prior to the global financial crisis of 2008.
“We are now about 25-50 bps away from the end of the ‘rate hike’ cycle by RBI,” said Mohan Shenoi, group head, treasury, Kotak Mahindra Bank. Most bankers feel that interest rates will rise very gradually and do not expect a sudden spike in rates.
No bank has immediately responded by hiking its base rate, but most lenders are expected to reset the benchmark upwards when they review it next month. “I don’t expect that benchmark lending rates will go up immediately, but interest rates will inch up over a period,” said Neeraj Swaroop, CEO, Standard Chartered Bank.
A statement issued by RBI on Thursday said the latest rate action was aimed at controlling inflation without disrupting growth. It said inflation rates have reached a plateau, but are likely to remain at unacceptably high levels for some months.
Headline inflation is now 8%, and finance ministry officials have been saying they expect inflation to cool to 6% by the end of the year.
Food inflation is still high, having risen to 15.1% for the week ended September 4 from 11.47% in the previous week. However, Planning Commission deputy chairman Montek Singh Ahluwalia struck a different note.
“The notion that by raising some 25 basis points (of key rates), you will bring down the inflation... is wrong... If you see the graph of inflation and repo rate, there is no correlation between both. I don’t believe that by doing little more (hiking interest rate)... they (rates) could have much of effect on inflation,” he said in New Delhi.
For the fifth time this year, the central bank raised the repo rate, the rate at which it lends to banks, by 25 basis points to 6%, and the reverse repo rate, at which it absorbs funds from banks, by 50 basis points to 5%, prompting lenders to review the rates they charge both retail and corporate customers.
This narrowing of the differential between the two policy rates is now expected to ensure greater stability in the call money market, where banks either borrow or lend overnight.
“The signal that RBI has given by narrowing the corridor is that banks have to certainly raise deposit rates. Once we do that, it will reflect in the base rate, may be after a quarter or so,” said SA Bhat, CMD of state-run Indian Overseas Bank.
But what is encouraging, especially for industry, is that the central bank has signalled that it is almost done with interest rate tightening. In typical RBIspeak, it has said the bank believes that the tightening carried out over the last eight months has taken the monetary situation close to normal. The latest move caps a series of rate increases that takes the policy rates back to levels prevailing prior to the global financial crisis of 2008.
“We are now about 25-50 bps away from the end of the ‘rate hike’ cycle by RBI,” said Mohan Shenoi, group head, treasury, Kotak Mahindra Bank. Most bankers feel that interest rates will rise very gradually and do not expect a sudden spike in rates.
No bank has immediately responded by hiking its base rate, but most lenders are expected to reset the benchmark upwards when they review it next month. “I don’t expect that benchmark lending rates will go up immediately, but interest rates will inch up over a period,” said Neeraj Swaroop, CEO, Standard Chartered Bank.
A statement issued by RBI on Thursday said the latest rate action was aimed at controlling inflation without disrupting growth. It said inflation rates have reached a plateau, but are likely to remain at unacceptably high levels for some months.
Headline inflation is now 8%, and finance ministry officials have been saying they expect inflation to cool to 6% by the end of the year.
Food inflation is still high, having risen to 15.1% for the week ended September 4 from 11.47% in the previous week. However, Planning Commission deputy chairman Montek Singh Ahluwalia struck a different note.
“The notion that by raising some 25 basis points (of key rates), you will bring down the inflation... is wrong... If you see the graph of inflation and repo rate, there is no correlation between both. I don’t believe that by doing little more (hiking interest rate)... they (rates) could have much of effect on inflation,” he said in New Delhi.
Bajaj Allianz launches health card to promote healthy lifestyle
"Health insurance as a concept is associated with illness and hospitalisation. But JiyoFit is an endeavour to shift from managing customers' illness to promoting a healthy and fit lifestyle," Bajaj Allianz General Insurance Chief Executive Hemant Kaul told reporters here, while launching the health card, which the company claims is the first of its kind in the country.
The health card is not bundled with a new Mediclaim policy but additional facility offered to a Bajaj Allianz health policyholder, he added.
The initiative will be initially available in 15 cities which will be expanded further as the demand for the card grows, Kaul said.
(ET)
LIC settles claims worth of Rs 539540 crores
Life Insurance Corporation of India (LIC) has settled over 2.11 lakh claims during the 2009-10 fiscal amounting over Rs 53,954 crore.
Speaking to “The ET” here on the sidelines of opening the new office building of Bhubaneswar divisional office on Tuesday, LIC chairman T.S. Vijayan said at least 97.47% total maturity claims were settled on or before the date of maturity while 95.16 per cent of non-early death claims were settled within 15 days of intimation.
“LIC is fastest in claims settlement. Our outstanding claims – both maturity and survival benefit – ratio is just 1.13%. Similarly, our outstanding death claims stands at 1.41%,” Mr Vijayan said.
Stating that the LIC has grown by leaps and bounds in the challenging and dynamic phase of the life insurance industry, the Total Premium Income (TPI) for the fisal 2009-2010 was Rs01,85, 986 crore and gross total income stood at Rs 2,98,721 crore,” Mr Vijayan added.
To a query on the demand by LIC employees of Orissa for setting of a zonal office in the state, the chairman said the proposal was under active consideration and necessary initiatives would be taken in that regard once the zone achieve the targets of 45 lakh police holders. “Bhubaneswar office has 15 lakh policy holders. We hope to enroll 30 lakh more customers in the next couple of years,” he added.
The LIC employees of Orissa have been demanding for a zonal office because of the long distance of the present office at Patna in Bihar. Elaborating about the performance of Bhubaneswar division, Mr Vijayan said it procured 198385 policies and collected Rs 150.22 crore as first premium income.
“Bhubaneswar division is doing exceedingly well. Apart from good collection of first premium income, the divisional settled 104209 of claims and paid Rs 174.48 crore towards claim proceeds. In the current fiscal, Bhubaneswar division has target of 24, 0000 policies and Rs 190 crore first premium Income,” he said.
Speaking to “The ET” here on the sidelines of opening the new office building of Bhubaneswar divisional office on Tuesday, LIC chairman T.S. Vijayan said at least 97.47% total maturity claims were settled on or before the date of maturity while 95.16 per cent of non-early death claims were settled within 15 days of intimation.
“LIC is fastest in claims settlement. Our outstanding claims – both maturity and survival benefit – ratio is just 1.13%. Similarly, our outstanding death claims stands at 1.41%,” Mr Vijayan said.
Stating that the LIC has grown by leaps and bounds in the challenging and dynamic phase of the life insurance industry, the Total Premium Income (TPI) for the fisal 2009-2010 was Rs01,85, 986 crore and gross total income stood at Rs 2,98,721 crore,” Mr Vijayan added.
To a query on the demand by LIC employees of Orissa for setting of a zonal office in the state, the chairman said the proposal was under active consideration and necessary initiatives would be taken in that regard once the zone achieve the targets of 45 lakh police holders. “Bhubaneswar office has 15 lakh policy holders. We hope to enroll 30 lakh more customers in the next couple of years,” he added.
The LIC employees of Orissa have been demanding for a zonal office because of the long distance of the present office at Patna in Bihar. Elaborating about the performance of Bhubaneswar division, Mr Vijayan said it procured 198385 policies and collected Rs 150.22 crore as first premium income.
“Bhubaneswar division is doing exceedingly well. Apart from good collection of first premium income, the divisional settled 104209 of claims and paid Rs 174.48 crore towards claim proceeds. In the current fiscal, Bhubaneswar division has target of 24, 0000 policies and Rs 190 crore first premium Income,” he said.
(ET)
Baroda Pioneer PSU Equity Fund: Invest if you want to benefit from the divestment story
Investors, who are looking for an opportunity to own pubic sector undertakings (PSUs) due to their long-term growth prospects and strong balance sheets, can look at investing in Baroda Pioneer PSU Equity Mutual Fund.
Baroda Pioneer PSU Equity Fund is similar to SBI PSU Equity Fund and Religare PSU Equity Fund. The fund aims to provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of PSUs.
The scheme will invest 65% to 100% of assets in equity and equity-related securities covered under the universe of PSUs including derivatives with medium-to-high risk profile. It will further allocate up to 0% to 35% of assets in debt and money market instruments with a low-to-medium risk profile. The scheme’s will be benchmarked against BSE’s PSU Index.
The fund manager will invest in shares of PSUs across sectors and market capitalisations, with not more than 10% in any single company. The total portfolio will consist of around 30-35 PSU stocks.
The Big Opportunity: Many PSU companies are leaders in their sectors and in many cases have a virtual monopoly in their line of business. Most PSU companies exist in sectors, core to India’s growth story. A lot of PSUs have clean balance sheets which are virtually debt-free. They also have huge cash on their books, which could come in handy for funding expansion. Investors prefer PSUs due to good corporate governance, higher dividend payment and yields.
Risks: Investing in PSU space is considered a thematic investment. However, PSUs are perceived as low-risk when compared to a sector fund which invests in a number of PSU companies across various sectors. However, investors must note that the working results of a number of PSU companies depend on government policies. In a lot of cases, optimising returns for shareholders will not be their only objective.
Why invest?: If you want to own a chunk of PSU bluechips and benefit from the divestment story
Why not invest: The fund can miss out on opportunities coming in the private sector due to its mandate
(ET)
Baroda Pioneer PSU Equity Fund is similar to SBI PSU Equity Fund and Religare PSU Equity Fund. The fund aims to provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of PSUs.
The scheme will invest 65% to 100% of assets in equity and equity-related securities covered under the universe of PSUs including derivatives with medium-to-high risk profile. It will further allocate up to 0% to 35% of assets in debt and money market instruments with a low-to-medium risk profile. The scheme’s will be benchmarked against BSE’s PSU Index.
The fund manager will invest in shares of PSUs across sectors and market capitalisations, with not more than 10% in any single company. The total portfolio will consist of around 30-35 PSU stocks.
The Big Opportunity: Many PSU companies are leaders in their sectors and in many cases have a virtual monopoly in their line of business. Most PSU companies exist in sectors, core to India’s growth story. A lot of PSUs have clean balance sheets which are virtually debt-free. They also have huge cash on their books, which could come in handy for funding expansion. Investors prefer PSUs due to good corporate governance, higher dividend payment and yields.
Risks: Investing in PSU space is considered a thematic investment. However, PSUs are perceived as low-risk when compared to a sector fund which invests in a number of PSU companies across various sectors. However, investors must note that the working results of a number of PSU companies depend on government policies. In a lot of cases, optimising returns for shareholders will not be their only objective.
Why invest?: If you want to own a chunk of PSU bluechips and benefit from the divestment story
Why not invest: The fund can miss out on opportunities coming in the private sector due to its mandate
(ET)
Bharti AXA declares dividends for its Equity Fund and Short Term Income Fund
Bharti AXA Investment Managers, a joint venture between Bharti Ventures Ltd, AXA Investment Managers (AXA IM) and AXA Asia Pacific Holdings (AXA APH, through its wholly owned subsidiary National Mutual International Pty Limited) declared a dividends for Bharti AXA Equity Fund and Bharti AXA Short Term Income fund, the record date for which has been fixed as September 27, 2010.
Pursuant to payment of dividend, the NAV of the Schemes / Options would fall to the extent of payout and statutory levy, if applicable. Distribution of dividend is subject to availability of distributable surplus and statutory levy (if any). All unit holders registered in the Plans / options of the above mentioned Schemes and whose names appear in the records of the Registrar on the aforesaid record date, will be entitled to receive dividend. For investors in the Dividend Re-investment Option/facility, and investors in Dividend Pay-out Option/facility where the amount of dividend payable is less than or equal to Rs.500/-, the dividend declared shall be automatically / compulsorily re-invested at the first ex-dividend NAV.
Significantly, this is the sixth dividend announcement in Bharti AXA Equity Fund (Quarterly Dividend Option) (Since Inception–date of first NAV- October 29 2008. For complete dividend details see at the bottom). It is an Open-ended Equity Growth Fund and the investment performance of the fund is benchmarked against S&P CNX Nifty Index.
Speaking on this, Sandeep Dasgupta, CEO, Bharti AXA Investment Managers said “We have been paying regular dividends on our Equity Schemes because of our astute fund management skills and stringent risk practices, which are inherent to the AMC’s principles.” “By having a focused portfolio on growth sector, we derive the best for our investors through this fund.” Mr Dasgupta said.
(ET)
Pursuant to payment of dividend, the NAV of the Schemes / Options would fall to the extent of payout and statutory levy, if applicable. Distribution of dividend is subject to availability of distributable surplus and statutory levy (if any). All unit holders registered in the Plans / options of the above mentioned Schemes and whose names appear in the records of the Registrar on the aforesaid record date, will be entitled to receive dividend. For investors in the Dividend Re-investment Option/facility, and investors in Dividend Pay-out Option/facility where the amount of dividend payable is less than or equal to Rs.500/-, the dividend declared shall be automatically / compulsorily re-invested at the first ex-dividend NAV.
Significantly, this is the sixth dividend announcement in Bharti AXA Equity Fund (Quarterly Dividend Option) (Since Inception–date of first NAV- October 29 2008. For complete dividend details see at the bottom). It is an Open-ended Equity Growth Fund and the investment performance of the fund is benchmarked against S&P CNX Nifty Index.
Speaking on this, Sandeep Dasgupta, CEO, Bharti AXA Investment Managers said “We have been paying regular dividends on our Equity Schemes because of our astute fund management skills and stringent risk practices, which are inherent to the AMC’s principles.” “By having a focused portfolio on growth sector, we derive the best for our investors through this fund.” Mr Dasgupta said.
(ET)
Reliance Life bets on renewal premium to break even next fiscal
Reliance Life Insurance is expecting to break even next fiscal when renewal premium is expected to outstrip new business premium. The company also plans to increase its paid-up capital by around Rs 260 crore during the current fiscal.
Reliance Life Insurance president and executive director Malay Ghosh told ET the company was fully prepared in terms of documentation for its initial public offering. The promoters have invested Rs 3,040 crore in the company and will invest a further Rs 260 crore during the year, which according to Mr Ghosh would be the last line of funding the business would require.
“Our break-even target is 2011-12. So far this year, we are doing very well compared to our plan and there is a possibility of our breaking even this year itself, if we can continue to do the product mix of traditional and Ulip products in equal measure and achieve our growth target of 55%.”
Reliance Life has managed to trim its losses from around Rs 1,000 crore in FY09 to Rs 260 crore in FY10. A few life insurance companies, including Bajaj Allianz, ICICI Prudential Life Insurance and SBI Life Insurance have already started reporting profits. “The difference between us and other large companies is that they have been around 10 years while we have crossed only four years as Reliance Life. We took over AMP Sanmar in 2005-06, which is why our assets under management at Rs 16,000 crore are relatively low compared to others,” said Mr Ghosh.
Although Reliance took over an existing life business in 2005-06, AMP Sanmar had restricted its operations to Tier-II cities in the south and the lowest level of business among insurance companies at that time. “In terms of new business and number of policies, we have caught up with others, but other companies are much ahead of us in AUM. As a result, their income from fund management is much higher. They have policies that have been around for 10 years, which is why they have a higher denominator effect,” he said.
Reliance Life has put in place preparations for its promoters diluting stake through IPO or strategic stake sale. It has got its books audited by domestic and international auditors and actuaries. “We have calculated our embedded value but Irda has not come out with a standard, which is why we are not disclosing to the public.
But we do declare New Business Achieved Profit (NBAP) every quarter and it was 17.75% last quarter,” said Mr Ghosh. He added that the NBAP would come down to around 16% with the new norms. He added that although talks for a strategic divestment were on with several life insurance companies, none of them were close to concluding a deal.
According to Mr Ghosh, Irda’s new norms would not impact Reliance Life’s valuation. “We were not among those companies selling pension products very aggressively. None of our products would comprise on our expectation of profitability. So while as a percentage it may go down, in volume I do not think profitability will be affected.”
(ET)
Reliance Life Insurance president and executive director Malay Ghosh told ET the company was fully prepared in terms of documentation for its initial public offering. The promoters have invested Rs 3,040 crore in the company and will invest a further Rs 260 crore during the year, which according to Mr Ghosh would be the last line of funding the business would require.
“Our break-even target is 2011-12. So far this year, we are doing very well compared to our plan and there is a possibility of our breaking even this year itself, if we can continue to do the product mix of traditional and Ulip products in equal measure and achieve our growth target of 55%.”
Reliance Life has managed to trim its losses from around Rs 1,000 crore in FY09 to Rs 260 crore in FY10. A few life insurance companies, including Bajaj Allianz, ICICI Prudential Life Insurance and SBI Life Insurance have already started reporting profits. “The difference between us and other large companies is that they have been around 10 years while we have crossed only four years as Reliance Life. We took over AMP Sanmar in 2005-06, which is why our assets under management at Rs 16,000 crore are relatively low compared to others,” said Mr Ghosh.
Although Reliance took over an existing life business in 2005-06, AMP Sanmar had restricted its operations to Tier-II cities in the south and the lowest level of business among insurance companies at that time. “In terms of new business and number of policies, we have caught up with others, but other companies are much ahead of us in AUM. As a result, their income from fund management is much higher. They have policies that have been around for 10 years, which is why they have a higher denominator effect,” he said.
Reliance Life has put in place preparations for its promoters diluting stake through IPO or strategic stake sale. It has got its books audited by domestic and international auditors and actuaries. “We have calculated our embedded value but Irda has not come out with a standard, which is why we are not disclosing to the public.
But we do declare New Business Achieved Profit (NBAP) every quarter and it was 17.75% last quarter,” said Mr Ghosh. He added that the NBAP would come down to around 16% with the new norms. He added that although talks for a strategic divestment were on with several life insurance companies, none of them were close to concluding a deal.
According to Mr Ghosh, Irda’s new norms would not impact Reliance Life’s valuation. “We were not among those companies selling pension products very aggressively. None of our products would comprise on our expectation of profitability. So while as a percentage it may go down, in volume I do not think profitability will be affected.”
(ET)
ICICI Bank unit raises $50 mn for private equity fund
ICICI Investment Management, a subsidiary of ICICI Bank, has raised $ 50 mn (about Rs 225 crore) for its Emerging India Fund, a private equity player that is looking at total size of $ 100 mn.
The rupee equivalent of $ 50 mn has been raised from domestic investors as part of the fund's first closure, the bank said in a statement.
The fund seeks to invest in growth capital of mid market and emerging corporates primarily through equity and equity-linked instruments. It will invest across sectors including segments related to services, consumption and infrastructure development.
The investors to the fund are mostly domestic institutional and corporate investors.
It is targeting a final closure at $ 100 mn rupee equivalent and is in discussions with various institutional investors, the bank said.
The fund will primarily focus on investments in the sub $ 10 mn segment, it added.
(ET)
The rupee equivalent of $ 50 mn has been raised from domestic investors as part of the fund's first closure, the bank said in a statement.
The fund seeks to invest in growth capital of mid market and emerging corporates primarily through equity and equity-linked instruments. It will invest across sectors including segments related to services, consumption and infrastructure development.
The investors to the fund are mostly domestic institutional and corporate investors.
It is targeting a final closure at $ 100 mn rupee equivalent and is in discussions with various institutional investors, the bank said.
The fund will primarily focus on investments in the sub $ 10 mn segment, it added.
(ET)
Ashoka Buildcon — IPO: Invest
Investors may subscribe to the initial public offer of infrastructure player Ashoka Buildcon. At the upper end of its price band of Rs 297-324, the offer discounts FY-10 consolidated earnings by 22 times and estimated FY-11 earnings by 14 times. Larger players in this space such as Jaypee Infratech and IRB Infrastructure trade at valuations of 21-22 times the trailing earnings. However, Ashoka may have scope for higher growth.
Ashoka doubles up as a construction contractor for third parties in roads and electrical works, whilst developing its own road projects, allowing it to get the most out of the sizeable potential of both segments. It already has a clutch of operational road projects on which it is collecting the toll, with a good number in the pipeline. It has an RMC and bitumen division through which it meets its entire requirement besides sales to other entities.
Double presence
Ashoka has an order book of Rs 1,615 crore (2.9 times FY-10 contract revenues), of which, contracts from third parties account for 87 per cent, in the roads and power segments. With an execution period of about 30 months, the order book provides medium-term earnings visibility. The order book also has reasonable geographic diversification, spread across the States of Chattisgarh, Maharashtra, Madhya Pradesh and Rajasthan among others. The remaining order book pertains to the construction of its own Build-Operate-Transfer (BOT) contracts.
It has ten operational road projects on which tolls are being collected; toll revenues make up about 20 per cent of total revenues. Six projects are in the pipeline, of which, three will turn operational in the last quarter of this financial year and will thus fully contribute to revenues from FY12 onwards. Ashoka also has joint ventures with players such as IVRCL Infrastructures to secure projects.
BOT projects are typically executed through subsidiaries, especially since some of them are secured in consortium. Equity infusion for projects such as its Durg Bypass and Bhandara road project has come from institutions such as IDFC and India Infrastructure Fund.
Hitherto, contracts were primarily secured from the State governments of Maharashtra and Madhya Pradesh. Orders in the pipeline now include those from the NHAI, besides geographically diversifying into Karnataka and Orissa, boding well for the company to secure large-sized orders across the country while also holding a favourable position with the State governments.
A presence in both contracting and developing allows Ashoka to better capture opportunities thrown up in the road infrastructure space than as a developer or a contractor alone. Executing own projects will also help maintain healthy operating margins. The company has a track record of completing projects well ahead of schedule, which, in the case of BOT contracts, is especially beneficial since it indicates earlier inflow of toll revenues.
Backward integration
Besides revenues from tolls and construction, Ashoka derives about 10 per cent of revenues from sale of RMC and bitumen, which offers two benefits.
One, it provides a degree of risk mitiqation in the revenue mix. Two, the division addresses the entire requirement of the company for its contracts, helping reduce operating costs and boosting margins, while ensuring that critical raw material is available on time. The company also owns a fleet of construction equipment, which again serves to better operating margins. Rs 25 crore of issue proceeds will fund the acquisition of new equipment.
Financials
Consolidated revenues grew at annual compounded rate of 25 per cent for the past three years, while net profits have grown 49 per cent on the back of lower material costs. Operating margins are healthy, at 27 per cent for FY10, though they are lower than the 32 per cent of FY-09, due to higher contract costs.
OPM for the BOT segment is healthy at about 49 per cent, on par with other large developers such as IRB Infrastructure. Rs 45 crore of issue proceeds will part-finance working capital requirements. Turnover of working capital improved from 1.5 times in FY-07 to 2.4 times in FY-10.
However, debt taken on to fund project development led to high interest outgo, with interest costs eating over 10 per cent of sales from FY-07 to FY09, before falling to 6 per cent in FY-10. Operational BOT projects are converted into intangible assets and amortised over the concession period. Depreciation and amortisation costs are thus on the higher side.
Net margins, therefore, dropped to 8 per cent in FY-10, though this is an improvement over the 4 per cent margins the year earlier. Depreciation costs are likely to remain high, given the planned investments in capital equipment and the three BOT projects that will convert into assets when they are commissioned in 2011.
The consolidated debt-equity pre-issue stands at 2.4 times. Rs 55 crore of issue proceeds will be used to repay Ashoka's debt, while Rs 60 crore will be provided to subsidiaries to repay debt on their books.
Post-issue, consolidated debt will drop to 1.5 times. Interest cover is healthy at 4.7 times in FY-10. This will help it raise debt and achieve financial closure for its other BOT projects.
(Hema Deepak Katariya has filed a civil application before Civil Judge Junior Division, Nasik, on July 31, 2010, to obtain interim injunction against the Issue. Hema Deepak Katariya has filed another application on September 20, before the court as a continuation of the application dated July 23 for an interim stay on the issue. The matter has been scheduled to be heard by the court on September 28, 2010).
(The Hindu Business Line)
Bulls charge ahead; Sensex, Nifty hit historic figures
The BSE benchmark Sensex crossed the psychologically crucial 20,000-mark and the NSE Nifty 6,000-level in the week, as foreign investors bet big on robust economic growth in India.
Foreign institutional investors (FIIs) are on a buying spree in India,one of the fastest-growing major economies. FII inflow in the current-month September totalled `18,649.23 crore till Sept 24.
Hefty FII-driven buying and higher Q2 advance tax payments from frontline companies underpinned the highly positive sentiment pre-vailing in the market. The government doubled foreign investment limits in government securities to $10 billion from $5 billion and increased the limit for corporate bonds to $20 billion from $15 billion, a move that also boosted the market sentiment.
Cumulative rainfall in the country between June 1 to Sept 22 was 4% above normal, a factory which added cheers in the stock market. The 30-share Sensex resumed lower at 19,445.42, but recovered immediately to cross the 20,000-mark to 20,105.54 before ending the week at 20,045.18, posting a sharp gain of 450.43 points, or 2.30%, from its weekend’s close.
The 50-scrip Nifty shot up by 133.35 points, or 2.275, to settle the week at 6,018.30 from its last weekend’s close. Both the land-marks were regained for the first time in 32 months.
Among the sectoral indices, the BSE-FMCG index shot up by 189.07 points, or 5.31%, the BSE-Consumer Durable moved up by 164.59 points, or 2.67%, the BSE-Auto rose 231.91 points, or 2.5% and the BSE-Teck gained 81.15 points, or 2.22%. The Dollex-30 shot up by 3.48%.
(ET)
Foreign institutional investors (FIIs) are on a buying spree in India,one of the fastest-growing major economies. FII inflow in the current-month September totalled `18,649.23 crore till Sept 24.
Hefty FII-driven buying and higher Q2 advance tax payments from frontline companies underpinned the highly positive sentiment pre-vailing in the market. The government doubled foreign investment limits in government securities to $10 billion from $5 billion and increased the limit for corporate bonds to $20 billion from $15 billion, a move that also boosted the market sentiment.
Cumulative rainfall in the country between June 1 to Sept 22 was 4% above normal, a factory which added cheers in the stock market. The 30-share Sensex resumed lower at 19,445.42, but recovered immediately to cross the 20,000-mark to 20,105.54 before ending the week at 20,045.18, posting a sharp gain of 450.43 points, or 2.30%, from its weekend’s close.
The 50-scrip Nifty shot up by 133.35 points, or 2.275, to settle the week at 6,018.30 from its last weekend’s close. Both the land-marks were regained for the first time in 32 months.
Among the sectoral indices, the BSE-FMCG index shot up by 189.07 points, or 5.31%, the BSE-Consumer Durable moved up by 164.59 points, or 2.67%, the BSE-Auto rose 231.91 points, or 2.5% and the BSE-Teck gained 81.15 points, or 2.22%. The Dollex-30 shot up by 3.48%.
(ET)
India-BlackBerry deal possible: Canada
The two ministers met as part of the 'First Annual Ministerial Dialogue on Trade and Investment' to deepen their 'strategic partnership' and triple bilateral trade to $15 billion in the next five years.
India has extended the Aug 31 deadline by two months to allow BlackBerry - which has one million subscribers in the country - to allow access to its encrypted email message for security reasons.
Sharma reportedly reiterated India's decision to ban BlackBerry if RIM does not allow its access to secure emails by the next deadline. RIM has given some options to the Indian government to stay in the world's second fastest growing economy.
Loan said India's demand for access to BlackBerry encrypted data for security investigations is the same that Canadian security agencies already possess.
"As you know in Canada, when the police or security agencies present evidence to a judge and obtain a warrant, they are able to intercept telephone calls and other forms of communication," the Canadian trade minister told the media in the presence of Anand Sharma.
India is also seeking the same power to access emails for security reasons, Van Loan said, "We believe that RIM can arrive at a resolution on that basis - that protects freedom, protects those fundamental values of privacy but at the same time allows legitimate security interests to be represented."
During their meeting, the two ministers released the Canada-India Joint Study Group Report on the feasibility of a comprehensive economic partnership agreement (CEPA), a government statement in Ottawa said.
"The ministers agreed that there is significant potential for sustained growth in trade and investment flows between the two countries, and reiterated their prime ministers' commitment to increasing trade to $15 billion annually in the next five years," the statement added.
After entering into similar agreements with Japan, South Korea, Japan and members of the Association of Southeast Asian Nations (ASEAN), Sharma said India would soon finalise the accord with Canada.
They also discussed the proposed social security agreement, foreign investment promotion and protection agreement and audio-visual co-production agreement between the two countries to raise their business ties.
The two sides agreed to set up a Canada-India CEO Forum to offer policy suggestions. They also decided to set up working groups on the private sector-public sector partnership (PPP) in areas of infrastructure, energy and mining, agro-processing, information and communication technologies, and education.
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