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)
Sunday, September 26, 2010
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.
Friday, September 24, 2010
L&T to capitalise on SA power transmission biz
India's leading engineering and contruction giant, Larsen & Toubro (L&T) has joined hands with a South African company, Befula Investments to capitalize on the Power Transmission and Distribution opportunities in South Africa.
South Africa is a great marked for power as the country, which has an installed capacity close to 44000 MW, an installed capacity close to 44000 MW. The current peak demand shortage is approximately 3,000 MW and this is expected to grow 6 per cent every year.
Sizeable investments are lined up by the Government to cater to major generation capacity addition and augmentation of Transmission & Distribution Network in the next five years, L&T said in a statement elaborating on the business opportunity.
The Transmission Lines are expected to be in 400 / 765 kV class to service the major load centers and strengthen the National Grid for balancing of power and to minimize instances of shut downs, the press statement issued on Sep 23 added.
The companies have signed a Share Holders Agreement to incorporate a Joint venture company ‘Larsen & Toubro T&D SA (PTY) Ltd’.
South Africa is a great marked for power as the country, which has an installed capacity close to 44000 MW, an installed capacity close to 44000 MW. The current peak demand shortage is approximately 3,000 MW and this is expected to grow 6 per cent every year.
Sizeable investments are lined up by the Government to cater to major generation capacity addition and augmentation of Transmission & Distribution Network in the next five years, L&T said in a statement elaborating on the business opportunity.
The Transmission Lines are expected to be in 400 / 765 kV class to service the major load centers and strengthen the National Grid for balancing of power and to minimize instances of shut downs, the press statement issued on Sep 23 added.
SBI Life tops global list of 'million dollar round table' agents
SBI Life Insurance said on Tuesday it had topped the list of global insurers by increasing ‘million dollar round table’ (MDRT) members to 2,904 in 2010 from 2,677 in 2009.
The MDRT includes agents who have done insurance business of more than $one million in a year. Less than one per cent of the world’s life insurers achieved the so-called MDRT membership, it said in a statement. MDRT was a global association of about 36,000 life insurance and financial services professionals from 76 countries, it said.
No plan to cap conventional life insurance charges: IRDA
The Insurance Regulatory and Development Authority (IRDA) has said it has no plans to cap the charges levied by life insurers on traditional savings policies.
The insurance regulator also said it would approve the new Unit Linked Insurance Plan (ULIP) in time for the players to sell from Sep 1 onwards and it is not out to micro manage the sector.
Satyam case: Court refuses to postpone hearing
Citing that the deferment petitions were without merit, a special court on Friday, Sep 24 refused to postpone the hearing in multi-crore Satyam accounting fraud case.
However, the XXI Additional Chief Metropolitan Magistrate (ACCM) court agreed with CBI’s Special Public Prosecutor K Surender's arguments and dismissed the pleas.
The petions were filed by former Chief Financial Officer Vadlamani Srinivas, and two former Satyam employees D Venkatapathi Raju, Senior Manager (Finance) and Ch Srisailam, Assistant Manager, on Tuesday, Sep 14 on the grounds that the CBI probe was still pending and the agency is still to file the fourth chargesheet.
However, the XXI Additional Chief Metropolitan Magistrate (ACCM) court agreed with CBI’s Special Public Prosecutor K Surender's arguments and dismissed the pleas.
Tata Aria To Be Launched In October
Tata Motors had sent away its multi-utility cross over vehicle Aria to Jaguar and Land Rover plant in UK for an interiors makeover and now there is news that the vehicle would be launched in India within the next 4 weeks, for a reported price tag of Rs 10 lakh. Unveiled at the 2010 Auto Expo in New Delhi it is billed as a four-wheeler built for Indians by Indian engineers.
The Aria sports a 2.2-litre common rail diesel engine and blends the functionality and comfort of a mid-range MPV with the all-terrain assurance and premiums of an SUV. Safety features include 6 airbags and Electronic Stability Program (ESP), offered by an Indian manufacturer for the first time.
Tata Motors spokesperson has confirmed that the Aria would be launched within a month and the company is keen on cashing in on the festive season. The company plans to pack the vehicle with lot of features to take on utility vehicles like Innova, Scorpio, Bolero and Xylo.
The Aria sports a 2.2-litre common rail diesel engine and blends the functionality and comfort of a mid-range MPV with the all-terrain assurance and premiums of an SUV. Safety features include 6 airbags and Electronic Stability Program (ESP), offered by an Indian manufacturer for the first time.
Tata Motors spokesperson has confirmed that the Aria would be launched within a month and the company is keen on cashing in on the festive season. The company plans to pack the vehicle with lot of features to take on utility vehicles like Innova, Scorpio, Bolero and Xylo.
Indian Bank to expand global footprint
Indian Bank is set to expand its global footprint-step by step. As starters, the Chennai-headquartered bank is opening a full scale branch in Jaffna, the capital of Sri Lanka’s northern province. It may be mentioned that Indian Bank already has a branch in the Sri Lankan capital Colombo. The next port of call for Indian Bank outside India will be Jakarta in Indonesia, which in all likelihood will be a representative office, and then another branch in some Sri Lankan industrial town.
“We have got all necessary clearances from different departments of the Indian government including the Finance Ministry’s go ahead to RBI. We are expecting to get the license within a fortnight’s time. In such an eventuality, we are hopeful of setting up a branch there by November,” T M Bhasin, Chairman & Managing Director, Indian Bank said.
Justifying their decision to go to Jaffna, Bhasin said, “There are a lot of opportunities coming in Jaffna. About Rs 1,000 crore has been earmarked for housing development in Jaffna—mostly for rehabilitation of the Indians. Besides, there are a lot of opportunities for entrepreneurship development”.
It may be mentioned here that the bank mostly caters to the banking needs of the Tamil Diaspora in overseas locations.
A S Bhattacharya, Executive Director, Indian Bank, said that Indian Bank actually had its operations in that part of Sri Lanka way back in 1914 but that branch had to be closed afterwards. It decided to start afresh its operations in the country after Sri Lankan president Mahinda Rajapaksa asked the bank to open branch there during his recent visit to India.
Meanwhile, the bank has clocked a net profit of Rs 100 crore from its Singapore operation and Rs 32 crore from Colombo branch. “I expect that this will also become a Rs 1,000 crore branch within a few years,” Bhasin said. With the Jaffna branch being fully operational the bank is eyeing a net profit of Rs 200 crore from its global operations within a year’s time.
On the proposed Rep Office in Jakarta, Bhasin said “From our experience we have seen that lot of business originating from that region comes to our Singapore branch. We find lot of opportunities wherever there is ethnic Tamil population.”
Addressing a press conference in Kolkata, he said that the bank is hopeful of achieving 24 per cent growth in credit and deposit this year. While its credit has grown by 24 per cent during the first two quarters of the fiscal deposit has grown by 19-20 per cent. As on date total business of the bank has crossed Rs 1.62 lakh crore with deposits over Rs 96,000 crore and advances over Rs 66,000 crore. With a provision coverage ratio of 83 per cent, Indian bank is planning to bring down its gross NPA to 1.25 per cent and net NPA to 0.5 per cent. Net interest margin (NIM) of the bank stands at 3.71 as on June 2010.
“We have got all necessary clearances from different departments of the Indian government including the Finance Ministry’s go ahead to RBI. We are expecting to get the license within a fortnight’s time. In such an eventuality, we are hopeful of setting up a branch there by November,” T M Bhasin, Chairman & Managing Director, Indian Bank said.
Justifying their decision to go to Jaffna, Bhasin said, “There are a lot of opportunities coming in Jaffna. About Rs 1,000 crore has been earmarked for housing development in Jaffna—mostly for rehabilitation of the Indians. Besides, there are a lot of opportunities for entrepreneurship development”.
It may be mentioned here that the bank mostly caters to the banking needs of the Tamil Diaspora in overseas locations.
A S Bhattacharya, Executive Director, Indian Bank, said that Indian Bank actually had its operations in that part of Sri Lanka way back in 1914 but that branch had to be closed afterwards. It decided to start afresh its operations in the country after Sri Lankan president Mahinda Rajapaksa asked the bank to open branch there during his recent visit to India.
Meanwhile, the bank has clocked a net profit of Rs 100 crore from its Singapore operation and Rs 32 crore from Colombo branch. “I expect that this will also become a Rs 1,000 crore branch within a few years,” Bhasin said. With the Jaffna branch being fully operational the bank is eyeing a net profit of Rs 200 crore from its global operations within a year’s time.
On the proposed Rep Office in Jakarta, Bhasin said “From our experience we have seen that lot of business originating from that region comes to our Singapore branch. We find lot of opportunities wherever there is ethnic Tamil population.”
Addressing a press conference in Kolkata, he said that the bank is hopeful of achieving 24 per cent growth in credit and deposit this year. While its credit has grown by 24 per cent during the first two quarters of the fiscal deposit has grown by 19-20 per cent. As on date total business of the bank has crossed Rs 1.62 lakh crore with deposits over Rs 96,000 crore and advances over Rs 66,000 crore. With a provision coverage ratio of 83 per cent, Indian bank is planning to bring down its gross NPA to 1.25 per cent and net NPA to 0.5 per cent. Net interest margin (NIM) of the bank stands at 3.71 as on June 2010.
Monday, September 6, 2010
BSE Sensex hits 31-mth high on U.S. data relief rally
Lenders contributed the most to the gains, as investors placed bets on bullish loan demand outlook in the world’s second-fastest growing major economy after China.
The Sensex gained 1.86 percent or 338.62 points to 18.560.05, with 26 of its components closing in the green. It logged its best single-day gain since May 26.
The benchmark index rose as much as 2.1 percent to 18,600.30 points, its highest since February 2008.
The benchmark index is up 6.3 percent so far in 2010, with foreign funds investing a net $13 billion in Indian equities, including primary market offerings.
For the year to date, it has outperformed its emerging BRIC powerhouses. Russia’s RTS index is up 1.8 percent so far in 2010, while Brazil’s Bovespa and China’s Shanghai Composite index are down 2.8 percent and 17.7 percent respectively.
Emerging market equity and bond funds saw a 14th straight week of inflows last week, although investors were cautious about further increasing their equity holdings in emerging economies, with net inflows into that category at $250 million, data from fund tracker EPFR showed late last Friday.
"It is really reflecting the euphoric sentiment in other markets and stronger data from the U.S. Let us not forget that, the rise we are seeing today is in response to a gain in world markets," said V.P. Chaturvedi, managing director of Tata Asset Management.
"I don’t know if the global sentiment has turned decisively because we have the situation that we have some positive news flow on one day and negative on another."
Reliance Communications shed 0.3 percent, as the second-largest mobile carrier’s plan to sell its telecoms tower business to GTL Infrastructure fell through, dealing a blow to its efforts to nearly halve its debt.
"In our view, the GTL deal would have resulted in a healthier balance sheet for RCOM, thereby making it easier to attract strategic investors," Daiwa Capital Markets said in a note, adding the failure raises uncertainty over the firm’s future restructuring efforts.
GTL Infrastructure closed 0.9 percent higher after declining as much as 6.3 percent in the day.
Leading lender State Bank of India firmed 3.1 percent while rivals ICICI Bank and HDFC Bank rose 3.8 percent and 0.6 percent respectively. Leading mortgage lender Housing Development Finance Corp firmed 0.7 percent.
Top car maker Maruticlimbed 2.5 percent after its parent, Japan’s Suzuki Motor Co, said it would build its fourth plant in India boosting output to 1.5 million units a year.
Outsourcers that reap most of their revenue from the United States rose after the better-than-expected U.S. payrolls data last Friday.
Sector leader Tata Consultancy Services rose 1.9 percent, while Infosys Technologies and Wipro firmed 2.2 percent and 0.8 percent respectively.
Firm metal prices in Shanghai and London pushed the metal makers higher.
Aluminium maker Hindalco Industries firmed 4.8 percent, after its chairman said last Friday the company plans to spend $2.1 billion in the current financial year ending in March.
Non-ferrous metals producer Sterlite Industries gained 3.7 percent while Tata Steel, world’s seventh-largest maker of the alloy, jumped 6.6 percent.
Advancing shares outpaced declining ones in a ratio of 2.3:1 in a relatively better volume of 497 million shares.
The 50-share NSE index gained 1.8 percent to 5,576.95 points. It rose to as much as 5,589.40 in the day, its highest level since January 2008.
At 1025 GMT, MSCI’s all-country world stock index rose 0.5 percent, while the more volatile emerging markets index gained 0.7 percent.
STOCKS THAT MOVED
* Hospital operator Fortis Healthcare firmed 1.3 percent to 161.50 rupees after a senior company executive said it is looking to list a real estate investment trust in Singapore in the next six months to house its property assets and is looking at a valuation of $600 million to $700 million.
* Drugmaker Aurobindo Pharma rose 1.8 percent to 1,063.75 rupees, after it signed licensing and supply agreements with AstraZeneca.
* IT services firm Persistent Systems gained 5 percent to 467.50 rupees, after BNP Paribas kicked off its coverage on the stock with a "buy" rating.
MAIN TOP 3 BY VOLUME
* Karuturi Global on nearly 13 million shares
* Prakash Steelage on 8.6 million shares
* Ispat Industries on 8.6 million shares
SBI raises BLR; loans to get costlier
"The bank has revised the benchmark prime lending rate upwards by 50 basis points from 11.75 per cent per annum to 12.25 percent per annum effective from August 17," SBI said in a statement to the Bombay Stock Exchange.
In a separate statement,, the country’s largest lender said it would also raise deposit rates between 25 to 150 basis points depending on the maturity period.
The highest increase of 150 basis points will be for the term deposits with maturity period between 15 to 45 days. While the interest rates on fixed deposit with a maturity period of 5 to 8 years will witness the lowest increase of 25 basis points.
This is the first increase in lending and deposit rates by SBI since the Reserve Bank of India (RBI) started tightening monetary policy in March.
The country’s central bank has raised reverse repo rate (the rate at which RBI borrows money from banks) by 125 basis points, and repo rate (the rate at which the central bank lends money to bank), cash reserve ratio and statutory liquidity ratio by 100 basis points each since March.
The most recent hike was on July 27, when the RBI raised the short-term borrowing rate by 50 basis points and lending rate by 25 basis points.
Meanwhile, the bank announced that it would launch a new scheme linked to base rate. "The bank announces launching of floating rate term deposit products linked to base rate effective from September 06, 2010," SBI said in a statement.
In response to the RBI’s tight monetary policy, several other public sector banks have also revised upwards their lending and deposit rates. Punjab National Bank, the country’s second largest lender, has increased its benchmark prime lending rate by 75 basis points. This is the sharpest increase among all lenders.
Bank of Baroda, Corporation Bank and Oriental Bank of Commerce have also increased their benchmark lending rates by 50 basis points.
Saturday, September 4, 2010
Aviva Life Insurance launches 3 new products
"... The two ULIP plans -- Aviva Freedom Life Advantage, Aviva Life Saver Advantage -- offer enhanced value to the customers and meet the new ULIP guidelines," the company said in a release.
Besides, a term plan -- Aviva Life Shield Advantage -- offers a return on the premium, with optional protection against disease and disability, it added.
As per the new IRDA guidelines, the commission paid to distributors and expenses charged by insurers will no longer be front-loaded and will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.
Aviva Life Insurance is a joint venture between Dabur Group and UK-based Aviva Group. Dabur Group is the 74 per cent shareholder, while Aviva Group holds 26 per cent.
Munjals to buy Honda stake in JV
According to highly-placed sources, the Japanese auto major has decided to exit the highly-profitable Hero Honda JV — which controls more than 50% of the Indian two-wheeler market — as it focuses more on its fully-owned two-wheeler subsidiary, Honda Motorcycle and Scooter India (HMSI). HMSI has been growing rapidly and is in the process of setting up a second factory in the country.
Rising friction between the two partners and HMSI's growing competition with Hero Honda were the reasons that has prompted the two partners to go separate ways, said market sources. When contacted, a spokesperson for Honda Motor Japan said, ''There is no such plan at the moment."
A spokesman for the Hero group said, ''The information is incorrect. The Hero Group and Honda Motor Co, Japan, have for years enjoyed a very cordial and fruitful relationship, resulting in millions of satisfied Hero Honda customers across the country. Contrary to market speculation, there has been no change in this relationship."
However, sources in the banking sector told TOI that the deal would be completed through an SPV formed by the Munjal family. According to the arrangement being worked out, a foreign bank will extend a loan to the SPV to buy Honda's 26% stake. When the equity transfer is completed, the shares will be pledged as collateral to the financing bank.
In the second leg of the deal, the Munjal family will seek funding in the SPV from a number of private equity funds through quasi-equity route. A banker said negotiations were at an ''advanced stage" with a number of funds. According to sources, funds like KKR, Blackstone and Texas Pacific Group are among those in fray.
Importantly, Honda may offload its stake at a discount to Hero Honda's existing market price. The company's scrip closed at Rs 1,736 on the Bombay Stock Exchange, up 2.14%. At the current market price, Honda's 26% stake in the company is valued at Rs 9,000 crore. However, the banker refused to give the discounted price of the deal, though, it is learnt, that it would be substantial enough for the Munjals to complete the deal without any margin money to the SPV.
Market analysts said Honda's exit from the company is likely to drive down the valuation of the Hero Honda scrip on concerns that the company may not have access to the latest two-wheeler technology. Sources within Hero Honda, however, insisted that the company had adequate R&D to sustain operations competitively. After the deal, the Munjal family will own 52% in the company. As the deal is between the two promoters, Munjal will not have to make an open offer to the public.
Read more: Munjals to buy Honda stake in JV - India Business - Business - The Times of India http://timesofindia.indiatimes.com/business/india-business/Munjals-to-buy-Honda-stake-in-JV/articleshow/6488626.cms#ixzz0yY3lE1hj
Navi Mumbai airport likely to get green signal soon
Prime Minister Manmohan Singh has promised to stay engaged in pushing the required clearances for the Navi Mumbai airport project.
Mr Singh told Maharashtra chief minister Ashok Chavan on Friday that efforts would be made to iron out differences between the civil aviation ministry and the ministry of environment and forests.
Mr Chavan led a delegation of Congress ministers and elected representatives to the prime minister to seek environmental clearance for the greenfield airport on the outskirts of Navi Mumbai. Members of the delegation told ET that the prime minister assured early breakthrough in the impasse.
Another positive signal came in Mumbai when the officials of civil aviation ministry and Maharashtra government's Cidco expressed their willingness to modify project modalities to minimise environmental damage at the project site. The civil aviation and Cidco officials told a visiting team of the union environment ministry that the project site would be moved a bit away from the coastal zone to save some part of the mangrove forests and prevent altering the course of one of the two rivers on the site.
The Union ministry for environment and forests (MoEF) under Jairam Ramesh held back clearance for the `9,700 crore project on the ground that it would lead to the destruction of eco system in the area. The state government is now showing willingness to make changes for minimal environmental damage.
Maharashtra government sources told ET that all efforts would be made to get environmental a clearance at the meeting of environment ministry's Experts Appraisal Committee or EAC on September 22. The chief minister told the prime minister that the delay in getting environmental clearance was making the project costlier. "The chief minister pointed out that hold up in getting clearance was causing cost escalation and also putting the project behind schedule.
According to the initial plan, the first runway was supposed to get commissioned in early 2012 but that does not look possible now," a senior bureaucrat who accompanied the chief minister told ET. Last month, the aviation ministry had made a detailed presentation to the EAC and pointed out that delay was putting enormous burden on the Chhatrapati Shivaji International Airport in Mumbai.
Mr Singh told Maharashtra chief minister Ashok Chavan on Friday that efforts would be made to iron out differences between the civil aviation ministry and the ministry of environment and forests.
Mr Chavan led a delegation of Congress ministers and elected representatives to the prime minister to seek environmental clearance for the greenfield airport on the outskirts of Navi Mumbai. Members of the delegation told ET that the prime minister assured early breakthrough in the impasse.
Another positive signal came in Mumbai when the officials of civil aviation ministry and Maharashtra government's Cidco expressed their willingness to modify project modalities to minimise environmental damage at the project site. The civil aviation and Cidco officials told a visiting team of the union environment ministry that the project site would be moved a bit away from the coastal zone to save some part of the mangrove forests and prevent altering the course of one of the two rivers on the site.
The Union ministry for environment and forests (MoEF) under Jairam Ramesh held back clearance for the `9,700 crore project on the ground that it would lead to the destruction of eco system in the area. The state government is now showing willingness to make changes for minimal environmental damage.
Maharashtra government sources told ET that all efforts would be made to get environmental a clearance at the meeting of environment ministry's Experts Appraisal Committee or EAC on September 22. The chief minister told the prime minister that the delay in getting environmental clearance was making the project costlier. "The chief minister pointed out that hold up in getting clearance was causing cost escalation and also putting the project behind schedule.
According to the initial plan, the first runway was supposed to get commissioned in early 2012 but that does not look possible now," a senior bureaucrat who accompanied the chief minister told ET. Last month, the aviation ministry had made a detailed presentation to the EAC and pointed out that delay was putting enormous burden on the Chhatrapati Shivaji International Airport in Mumbai.
HCL Info net jumps 11.27% to Rs 67 crore
Hardware and systems integrator HCL Infosystems today posted an 11.2 per cent rise in net profit for the fourth quarter ended June 30. Net profit stood at Rs 67.2 crore, compared to Rs 60.4 crore in the year-ago quarter. Gross sales at Rs 3,234 crore were up by 3.2 per cent from Rs 3,132.9 crore in the year-ago period.The company plans to invest up to Rs 300 crore over the next two-three years on consolidating facilities and expanding software business. “We have bought 25 acres in Greater Noida and the plan is to consolidate our properties, which are scattered across various units. Also, it will house our software business,” said HCL Infosystems Chairman and CEO Ajai Chowdhry.
Friday, September 3, 2010
Tata Steel in talks with banks for 3.5 bn pounds loan
Tata Steel is in talks with 11 banks for loans to the tune of 3.5 billion pounds for the company's UK unit, according to a Bloomberg report.
BNP Paribas SA, Credit Agricole CIB, HSBC Holdings Plc and Royal Bank of Scotland Group Plc are among the banks that may lend 2.5 billion pounds over a period of five years, it said.
According to the report, Citigroup Inc, Deutsche Bank AG, Standard Chartered Plc and ING Vysya Bank may also provide funds to Tata Steel.
Quoting people familiar with the development, Bloomberg said that State Bank of India may arrange a 1 billion pound loan over a period of seven years.
However, the Tata Steel officials declined to comment on the issue.
Going by the report, Tata Steel Chief Financial Officer Koushik Chatterjee on August 12 said the steel-maker plans to refinance as much as $6.5 billion of long-term debt.
The company had taken loans to fund its $12.9 billion acquisition of Corus Group Plc in 2007, just before the global economic slump pared demand for steel and forced banks to curtail lending.
Shares of Tata Steel closed marginally down at Rs 539.95 on the Bombay Stock Exchange today
Infosys open to foreigner as Chairman: Murthy
Infosys Chairman and Chief Mentor Narayana Murthy today said the company is open to a foreigner becoming his successor."Well, given that we have a significant percentage of foreign holdings in Infosys, I don't think it should matter whether it is an Indian or a foreigner who chairs the company," Murthy told a private TV news channel.
He was responding to a query on how Infosys' shareholders would react to a foreigner as his successor.
"What they (shareholders) would look for is a person who can guide the company in a proper direction, who can manage the board well, who has the support of all the people in the company, so I don't think it would matter," he added.
The hunt for a replacement for Murthy has already started as he would retire in August next year after he turns 65.
"I am sure we will see in the years to come... One of the members of the executive council become the CEO. There is no doubt about that at all.
"But, whether it is going to happen in the next two years, five years or seven years, that is not for me to comment," Murthy noted.
Earlier, Murthy had said that it would not be difficult for an outsider to succeed him.
Infosys' nominations committee has started the search for Murthy's successor. The committee has ICICI Bank Non-Executive Chairman K V Kamath, Cornell University Professor Jeffrey Lehman and HDFC Standard Life Insurance CEO Deepak M Satwalekar as members.
The search for a successor to Murthy comes at a time when India's top business group, the Tatas, has begun to look for a replacement for its Chairman, Ratan Tata, who is to retire in December, 2012.
HSBC warns UK bank break-up could force exodus
HSBC Holdings, Europe's biggest bank, warned that Britain's big banks could move overseas if a government review decides that lenders should be broken up. Stuart Gulliver, head of investment banking, said HSBC was "genuinely concerned" that a UK government appointed commission would recommend big banks must split retail banking from riskier investment banking. Gulliver said it was "clearly possible" the Commission will recommend a break up, which could have implications for itself, Barclays and Standard Chartered. "That has significant implications for where we may choose to headquarter our institution and that would probably also be the case for the other two institutions," Gulliver said at a conference held on Thursday, which was webcast. "Our absolute wish is to stay here in the UK, but we won't know until we see how the Commission responds." HSBC Chief Executive Michael Geoghegan moved to Hong Kong earlier this year to be in the bank's key region. The CEO of Asia-focused rival Standard Chartered warned last month that the rationale for keeping its headquarters in London was weakening as UK banks face being at a disadvantage to rivals on taxes, pay and regulation. Gulliver also said he expects HSBC's annual profit in the Middle East, which plunged to $455 million last year from $1.7 billion in 2008 due to troubles in Dubai, should recover to between $1 billion and $1.2 billion by 2012 at the latest.
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