Sebi should implement recos than wait for Cos Bill: SES

Market regulator Sebi has called for overhauling the corporate governance norms for listed companies. In a discussion paper, Sebi has proposed several key changes including curbs on what it calls unjustifiable CEO pay and more stringent norms for appointing independent directors. JN Gupta, founder and managing director, Stakeholders Empowerment Services shares his views on the discussion paper.

Q: This is in a way Securities and Exchange Board of India (SEBI) aligning itself to what the new companies bill, which is still pending in one house of parliament, attempts to do. It is also Sebi's way of perhaps aligning corporate governance norms in India to best international practices. Do you think that a lot of this is practical? A lot of this is warranted at this point in time. Or do you think that this is may be to extreme and too heavy handed?

A: I must congratulate the Sebi for putting such a path breaking paper. If all the recommendations are implemented, the level of corporate governance in Indian companies would, if not best, be atleast at par with the best in the world. Whether they will be practical or not it depends upon the intention of the regulator, because at present this concept paper has been put in the public domain for comments. It is upto Sebi to see how strongly they feel about the implemention of the recommendations.

Secondly, this is a pro-active approach of Sebi, because rather than waiting for the companies bill to be passed by both houses and then being enacted, they have taken a pro-active action. They should implement all those recommendations which are practical before waiting for the companies bill.

However, there should be some provision for transition, because today if you say that the listing limit is changed, then from tomorrow itself, the company will not be able to comply with this. Three months or six months transit time should be given to them.

Q: Sebi is discussing that independent directors should be appointed by minority shareholders. Do you see that facing significant opposition from corporate India?

A: There will be significant opposition from corporate India and I myself am not in agreement with this for the simple reason that you cannot take away the rights of the majority. The second thing is, if the independent directors are truly independent, it will not matter whether they are appointed by majority or minority. So, rather than focusing on how they are appointed, the focus should be to make sure and make an independent director accountable for their independence. Then, no matter whether X appoints or Y appoints or whether they are source from my friend or your friend, it is immaterial as long as they are independent.

08.11 | 0 komentar | Read More

Hudco issues tax free bonds, offers 7.34-8.01% coupon

Moneycontrol Bureau

State owned Housing and Urban Development Corporation (Hudco) is issuing tax free bonds with a face value of Rs 1,000 each to raise Rs 5,000 crore. Those secured redeemable non-convertible debentures are offering interest rates in the range of 7.34% - 8.01% per annum for the tenures of 10 and 15 years.

However, the core size of the issue is just at Rs 750 crore leaving a huge room for oversubscription of Rs 4,250 crore.

"If we cannot raise the sum in first tranche, we will go for the second tranche before March 31," said V P Baligar, CMD, Hudco.

"In 2011-12, our bonds were oversubscribed. So far in this year, we are offering the highest coupon rate wherein pre-tax yields are more than 11%. In our current issue, we have introduced a provision for NRI and FII for the first time. Moreover, bonds are tradable from the day one in NSE. Soon, we will get it listed in BSE as well."

Retail investors can subscribe the issue to tune of 40% of the total size. The minimum investment is Rs 5,000 (or five bonds) with an upper limit upto Rs 10 lakh. They can earn an additional interest of 50 basis points. A retail investor can get a coupon of 7.84% for 10 years and 8.01% for 15 years. The issue will open on January 9, 2013 and close on January 22, 2013. 

Not more than 10% of the overall issue size will be allocated to investors who are foreign institutional investors and eligible non-resident Indians.

In 2011-12, the outstanding loan book of the company stood at Rs 25,004 crore, wherein urban infrastructure credit sanctions formed around 69% and housing loans were at 31%. However, the rate of bad loans increased in 2012-13.  Net non-performing ratio rose to 4.66% for the quarter ended September 30, 2012 as against 1.44% in FY12. During the same period gross NPA ratio was at 9.55% compared with 6.07%.

"We aim to bring down the composition between urban infra and housing loans at 50:50 by 2020. Our NPAs are generally higher in the first half of the year while the rate of recovery goes up in the second half of the year. We expect net NPA ratio below 2% by March, 2013," Baligar said replying to a moneycontrol.com's query.

The company with "mini-navratna" status intends to use the issue proceeds for lending book expansion, working capital requirements and augmenting the capital. However, proceeds from FII and NRI are not supposed to be utilized in these purposes.

08.11 | 0 komentar | Read More

Retail FDI to control wastage: Rakesh Bharti Mittal

Over the past few months and especially since P Chidambaram took over as finance minister, there has been renewed optimism about India's growth prospects. This optimism has come on the back of the government's recent reform measures hoping to boost investment in the country and kick start in the economy.

In an interview to CNBC-TV18, Rakesh Bharti Mittal, vice chairman and managing director of Bharti Enterprises and chairman, CII National Council on Agriculture speaks about the recent reforms.

Also read: Big bang FDI reforms likely to spur investments in 2013

Below is the edited transcript of his interview on CNBC-TV18.

Q: Is 2013 going to be a better year? We have seen some big ticket policy decisions being taken by the government—foreign direct investment (FDI) in multi-brand retail. Even though that decision has actually been taken, we haven't really seen too much activity on the ground. I understand that retail global giants will need to assess and revaluate India's opportunity carefully before they put any money. In your case, you have an existing joint venture, Wal-Mart still hasn't applied yet for a multi-brand licence. Are we really seeing things turnaround?

A: I must compliment the Government of India and the minister Anand Sharma for having delivered the policy of FDI in multi-brand retail. That was very much required. To my mind this is not only just getting the investment into the sector, but, more importantly, looking at meeting the requirements from end to end, right from the farmer's level on the farming side to the consumer on the consumption side.

I believe until and unless we have large scale multi-brand retail formats rolling out in the country, investments in cold chain will not come. The policy clearly stipulates that the money has to be set aside for setting up the cold chains, supply chain logistics. To my mind that is going to be a great game changer for two reasons. One, the perishable produce will move in very hygienic and controlled temperature conditions thereby reducing the wastages. In a way, this will help us in containing inflation. It's been left to the state governments to take this forward.

Q: There continues to be a regulatory overhang on multi-brand in retail because the state government's approval is needed. A majority of states have actually said no to FDI in multi brand retail as of today. Your joint venture partner Wal-Mart has not yet begun the process of actually operationalising multi-brand retail. So, is there still the continued sense of regulatory overhang as far as retail is concerned?

A: I wouldn't say that. We are preparing for doing the needful. It will take some time. Our partners, Wal-Mart are studying the entire policy in its entirety and very soon you will start seeing action from our side.

Q: When you say very soon, how soon can we actually expect you and Wal-Mart to move the Foreign Investment Promotion Board (FIPB) and then individual state governments to get multi-brand retail stores off the ground?

A: While only eight or nine governments have given a go ahead, I am absolutely convinced that going forward all the state governments will look at this as a positive step. The concern about the kirana shops, or the small mom-and-pop shops who are into retailing, is not valid to the extent which is being made out be. Most importantly, we need to see how the consumer gets the best quality products.

Q: CII has been pushing for FDI in multi-brand retail, but as a part of CII have you had any conversation with individual state governments? Are they now more amenable to looking at opening up policy for FDI in multi-brand retail?

A: I believe so. The matter of fact is, once these actions start emanating in the states who have already approved it, we will see positive results coming out of that. As a matter of fact, the farmers who are supplying produce to our stores, their productivity has gone up, the quality of produce has gone up.

Another thing that I have been pushing for is to take the perishable produce out of the Agricultural Produce Market Committees (APMC) act, which has not happened so far. My understanding is, the government of Haryana has just gone ahead and notified the perishable produce, where the farmers have been given the freedom to sell directly to food processing companies, retailers and aggregators. That is one area of concern because the policy issues on the agriculture side need to be amended in view of the changing scenario.

For the farmer digging the produce from the field to the mandi, who is waiting there for couple of hours for the middle man to close the transaction, for him, the perishable produce is losing its shelf life with every passing hour.

08.11 | 0 komentar | Read More

Inter-ministerial group to study TRAI recommendations

An inter ministerial group has been set up to examine recommendations made by Telecom Regulatory Authority of India (TRAI) on whether the Centre or state governments should be allowed to enter broadcasting.

Officials said that the panel set by Information and Broadcasting ministry would be headed by J S Mathur, Additional Secretary in the ministry.
 The I&B ministry will form its views on the TRAI recommendations after the panel studies them following which the future course of action will be decided.

The ministry had earlier through a letter written on November 30th last year sought clarifications from TRAI on whether state or central governments or entities on which they have control could be allowed to enter broadcasting or distribution of channels In reply to the letter, TRAI had said that central government ministries, departments, companies, joint ventures or entities which belong to or are funded by centre or state governments "should not be allowed to enter in to the business of broadcasting and or distribution of TV channels."

TRAI's recommendations hold implications for the Tamil Nadu government's Arasu Cable TV Corporation Private Limited as it needs to obtain fresh permission from the I&B ministry after Digitisation of cable services is implemented in Chennai. Punjab, Gujarat and Andhra Pradesh governments have also approached the I&B ministry for proposals related to broadcasting.

08.11 | 0 komentar | Read More

YV Reddy to head 14th Finance Commission

The finance minister today announced the formation of the 14th Finance Commission. Former RBI governor, YV Reddy will be the chairman of the commission.

The finance minister said that the commission will look into issues like divestment, GST compensation, sale of non-priority PSUs and subsidies.

The commission will also suggest steps for pricing public utilities like electricity and water in an independent manner. The commission will submit its report by the 31st October, 2014.

08.11 | 0 komentar | Read More

Analyst cautious on Avantha Group's listing of its 2 arms

Paper-to-power conglomerate Avantha Group is on a restructuring drive in an attempt to ensure fresh capital infusion, cost-trimming and improvement in margins. So while Avantha Power will make a second attempt at launching its initial public offering (IPO), the company's transformer manufacturing arm, Crompton Greaves , will substantially trim its international workforce. But analysts remain skeptical whether these measures will be enough in reviving the fortunes of the group. CNBC-TV18's Farah Bookwala and Gopika Gopakumar report.

Two years ago, adverse market conditions forced Avantha Power, to scrap plans to launch its Rs 1,500 crore IPO . However, the group company of the USD 4 billion Avantha Group is now powering up to hit the bourses again. It looks to infuse capital to expand its power generation capacity from the current 191 MW to 3971 MW over the next few years.

B Hariharan, director-finance, Avantha Group said, "We will raise about Rs 1,250-1,500 crore. We will come with the issue around July-August this year."

Similarly, the group has also revived plans to list two other companies. One, Sabah Forest Industries, the Malaysian subsidiary of its pulp-and-paper business Ballarpur Industries will be listed on the London Stock Exchange to raise USD 330 million to fund expansion and reduce debts in Q2FY14.

A separate listing is on the cards for BILT Graphic Paper Products on the Singapore Stock Exchange to boost the company's valuations; this too, will take place in Q2FY14.

But analysts remain cautious with Ballarpur Industries seeing its EBIDTA slip to 16-17% from 25% over the last few quarters, .as input costs remain steadily high.

Meanwhile, Avantha Group is also undertaking a severe cost-cutting exercise in the European operations of its transformer manufacturing business, Crompton Greaves. The company, which began shifting its operations in FY13 from Belgium to Hungary to rationalise costs, will slash its European workforce this fiscal.

B Hariharan, director-finance, Avantha Group said, "We have done major restructuring in Belgium. We have finalized that and getting rid of about 200 employees there. That is going to save the company USD 15 million on an annual basis."

While the management believes this move will restore Crompton Greaves'' margins, the analysts do not see any recovery in sight. They argued that the one-time settlement fee, the company would have to discharge to its terminated workers coupled with declining domestic prices of transformers, and stiff competition from Chinese manufacturers that are setting up plants in India, will keep margins under pressure for the next two years.

08.11 | 0 komentar | Read More

Auto sales: MM, Ford, Honda, Hero beat back year-end blues

It was a mixed bag for the auto industry in the last month of 2012 with Mahindra & Mahindra , Ford, Honda Cars and Hero posting growth, while Hyundai Motor, Toyota Kirloskar and TVS saw their domestic sales fall during the month that is usually low-key for the sector. Sales are generally low in December as customers stay away from new purchases to avoid losing out on re-sale when the year of manufacture comes into consideration.

In December 2012, the country's second-largest car maker Hyundai Motor India recorded a decline of 9.55 per cent in sales in the domestic market at 26,697 units compared to 29,516 units in the year-ago period. Homegrown auto major M&M's total sales of passenger vehicles including Scorpio, XUV500, Xylo, Bolero and Verito stood at 22,761 units, as against 19,341 units in December 2011 -- up 17.68 per cent.

Mahindra & Mahindra Chief Executive (Automotive Division) Pravin Shah said: "High interest rates, rising fuel prices and an overall slowdown in economic growth has kept consumer sentiment low during 2012. This is also evident in the auto industry sales performance for December, which traditionally has been a lean month."

Car maker Ford India sold 6,517 units in December 2012 in the domestic market as against 5,978 units sold during the same month of the previous year, up 9.02 per cent. "Despite a tough business environment, we have seen record exports and sustained customer interest in December," Ford India President and MD Joginder Singh said.

Honda Cars India reported nearly four-fold increase in its total sales for December 2012 at 4,242 units. It had sold 1,072 units in the same month previous year.

Toyota Kirloskar Motor posted 24.31 per cent decrease in its car sales at 12,071 units in last month compared to 15,948 units in the corresponding month in 2011. TKM Deputy Managing Director and COO (Marketing and Commercial) Sandeep Singh said: "Though we are satisfied with the overall growth in our sales volume of last year, the passenger car market continues to be slow, as has been in the last few months." The company hopes that the new year will usher in good times with economic revival and better market sentiments, he added.

General Motors India reported 21.82 per cent decline in sales at 7,067 units last month. It had sold 9,039 units in the same month of 2011. "Despite offering various schemes on purchase of every car, market continues to remain depressed on account of various negative factors, including high interest rates and poor economic conditions," GM India Vice President P Balendran said.

If the current macro economic uncertainties continue, the market is not expected to turn around in the short term, he added. "The only hope now is on a good Union Budget to address some of the concerns of the industry, combined with the announcement of some positive measures to bolster the economic recovery," Balendran said. Boosted by its new models, Renault India reported over 32-fold jump in sales in December at 5,924 units. In the same month in 2011, the company had only two models - sedan Fluence and sports utility vehicle Koleos - in the Indian market and had sold 185 units.

Commenting on the sales performance, Renault India Managing Director Marc Nassif said: "...the market continues to remain sluggish with high inflation, fuel price hike and high interest rates. If the market dynamics improve, the automotive industry is sure to get a boost in the coming year."

In the two-wheeler space, the country's largest manufacturer Hero MotoCorp reported a marginal increase in its sales at 5,41,615 units in December 2012. It had sold 5,40,276 units in December 2011. Hero MotoCorp Senior Vice President (Marketing and Sales) Anil Dua said: "December being the last month of the calendar year usually witnesses sluggish retails as customers tend to postpone their purchases to the new year. Despite that, we have been able to despatch over five lakh two-wheelers during the month."

Chennai-based TVS Motor Company's domestic sales of two-wheelers witnessed a decline of 8.30 per cent at 1,34,566 units in December 2012, from 1,46,747 units sold in same month of the previous year.

08.11 | 0 komentar | Read More

Costly ride: Cars to get expensive in 2013

If you are planning to buy a car this year, get ready to shell out a few extra bucks. Small cars, SUVs, sedans, almost everything will now cost more. Maruti Suzuki has announced that it will go in for a hike of upto Rs 20,000 across all models.

Also read:  M&M, Ford, Honda, Hero beat back year-end blues

Toyota has also announced that prices of its vehicles will go up by 1 to 2%.

Today, Mercedes-Benz has announced a 1 to 3% hike in the prices of its cars starting January 14.

BMW has also announced a steep 10% hike in the prices of its models.

Audi, Honda and Volkswagen have also made their intention clear to hike prices but the quantum of the hike is yet to be announced.

08.11 | 0 komentar | Read More

IOB to raise funds through rights issue

State-owned Indian Overseas Bank (IOB) said the board has approved raising of funds through a rights issue. The board of the bank at its meeting held on December 29, approved a rights issue of 20 crore equity shares of face value of Rs 10 each at a premium to be decided based on the market conditions, IOB said in a filing on the BSE.

At today's closing price, the bank will be able to raise about Rs 1,713 crore from the market. Shares of the bank closed at Rs 85.65 per unit, up 0.59 per cent on the BSE. Rights issue is offered to the existing shareholders of the bank. Government of India holds 69.62 per cent stake in the Chennai-based bank.

Also Read: Five stocks that can give big bang returns in 2013

The board in principle has also approved issue of "20 crore fully convertible preference shares of face value of Rs 10 each at par to be converted into equity shares of Rs 10 face value at premium (to be decided at the time of issue) at a future period not exceeding five years from date of issue by way of private placement," it said. This is enabling provision for raising the fund to enhance its capital base.

Meanwhile, another public sector lender Syndicate Bank said it has raised Rs 1,000 crore through bonds. The funds were raised by issue of unsecured, non-convertible lower Tier II bonds, Syndicate Bank said in a separate filing on the BSE. The bond was priced at 9 per cent payable annually, it added. Besides, Bank of Maharashtra has raised Rs 1,000 crore by issue of lower Tier II bonds.

08.11 | 0 komentar | Read More

Kingfisher says flying permit expiry not a problem

Kingfisher Airlines said expiration of its operating licenses, set for Monday, was not a cause for concern as the grounded Indian carrier has two years to renew the license and permits required to fly.

"Despite the impending expiry of its license tonight, there is no cause for concern as the regulations permit license renewal within two years of expiry," the company said in a statement.

It also added that it was "confident" of securing approval from civil aviation regulator to re-start operations and that it was in the process of replying to concerns raised by the regulator.

08.11 | 0 komentar | Read More