Sensex plunges 256 points; Bank, consumer durables stocks slump

Indian equities plunged over 1.2 per cent at the closing session on Wednesday due to weak global cues and profit-booking by investors.

The 30-share BSE index Sensex ended at 20,635.13, down 255.69 points or 1.22 per cent and the 50-share NSE index Nifty ended at 6,122.90, down 80.45 points or 1.3 per cent.

On the BSE, Banking, Consumer Durables, Auto and TECk indices succumbed to heavy selling pressure and were down 1.76 per cent, 1.63 per cent, 1.23 per cent and 1.21 per cent, respectively. Only Metal index was up 0.16 per cent.

Coal India, SSLT, Tata Power and Tata Steel were the only Sensex gainers, while the top five losers were ICICI Bank, Bharti Airtel, Hindalco, Hero MotoCorp and Bajaj Auto.

European stocks were down as investors awaited reports on US retail and housing to gauge the health of the world’s biggest economy before minutes from the latest Federal Reserve meeting.

Asian shares were down after valuations on the regional benchmark index reached the highest level since May and as Samsung Electronics Co fell and WorleyParsons Ltd cut its profit forecast.

Without giving any indication of when the Fed would begin winding down its quantitative easing programme, Bernanke had said yesterday that the Fed was "committed to maintaining highly accommodative policies for as long as they are needed."

Ben Bernanke, Chairman of the US Federal Reserve, in his speech on Tuesday said: “Market participants may have taken the communication in June as indicating a general lessening of the committee's (Federal Open Market Committee-FOMC) commitment to maintain a highly accommodative stance of policy in pursuit of its objectives.

Looking forward, we will of course continue to monitor the incoming data. As reflected in the latest Summary of Economic Projections and the October FOMC statement, the FOMC still expects that labour market conditions will continue to improve and that inflation will move toward the 2 percent objective over the medium term. If these views are supported by incoming information, the FOMC will likely begin to moderate the pace of purchases.

The FOMC remains committed to maintaining highly accommodative policies for as long as they are needed. Communication about policy is likely to remain a central element of the Federal Reserve's efforts to achieve its policy goals.”

IFC issues $160 mn rupee bond to prop up Indian capital markets

The bond is IFC's first rupee issuance, and the first bond issued under its $1 billion offshore rupee bond program

IFC, a member of the World Bank Group, today issued a Rs 1,000 crore (around $160 million) global Indian rupee bond to strengthen India’s capital markets. The bond is IFC’s first rupee issuance, and the first bond issued under its $1 billion offshore rupee bond program.

IFC said that this will attract greater foreign investment in a time of renewed economic uncertainty across the world.

The three-year benchmark bond is offered and settled in US dollars. The initial subscription and the principal and coupon payments are in US dollars, with all amounts tied to the US dollar-rupee exchange rate. IFC will convert bond proceeds from dollars into rupees on the domestic spot exchange market, and use the rupees to finance private sector investment in the country.

“IFC is committed to supporting the Government of India in deepening the country’s capital markets,” commented Jingdong Hua, IFC Vice President and Treasurer in a statement. He added the IFC Global Rupee bond will help attract other foreign investors to the offshore rupee market and provide an alternative source of Rupee funding for investment in the country.

The bond was strongly oversubscribed, with orders reaching Rs 20 billion. Investors from across the globe participated in the transaction, including asset managers, insurance companies, central and private banks, corporates, pension funds, and real money investors in Asia, Europe and the US, HSBC, JP Morgan and Bank of America-Merrill Lynch acted as lead managers for the bond.

Over the years, IFC has issued bonds in 13 local currencies, including the Brazilian real, the Chinese renminbi, the Nigerian naira, and the Russian ruble. Often, IFC is the first international or corporate issuer of local-currency bonds in a market. When issuing local-currency bonds, IFC works closely with regulators and market participants to refine the regulatory framework, encouraging greater participation in the local markets and providing a model for other international issuers.

India accounted for $4.5 billion of IFC’s committed investment portfolio as of June 30, 2013—more than any other country. In FY13, IFC invested $1.38 billion in India to achieve several strategic priorities such as promoting inclusive growth in India’s low-income states, addressing climate change, and supporting global economic integration.

NTPC seeks Sebi nod to raise tax-free bonds worth Rs 1,750 cr

Lead managers to the issue are ICICI Securities, A K Capital Services, Axis Capital, SBI Capital Markets and Kotak Mahindra Capital Company

Country's largest power producer, NTPC, has sought market regulator Sebi's approval to raise up to Rs 1,750 crore through tax free bonds in the current financial year.

"Public issue by NTPC of tax free secured redeemable non-convertible bonds of face value of Rs 1,000 each in the nature of debentures having tax benefits... For an amount aggregating up to Rs 1,000 crore with an option to retain over subscription up to Rs 750 crore for issuance of additional bonds aggregating to a total of up to Rs 1,750 crore in fiscal 2014," as per draft prospectus filed with Sebi.

The funds raised through the issue would be utilised towards funding of capital expenditure and refinancing for meeting the debt requirement in on-going projects.

The lead managers to the issue are ICICI Securities, A K Capital Services, Axis Capital, SBI Capital Markets and Kotak Mahindra Capital Company.

Currently, NTPC has a capacity of nearly 42,000 MW and targets to add about 14,000 MW to its total capacity by the end of 2016-17.

HDFC to mop up Rs 250 cr via debentures

Mortgage lender HDFC will raise Rs 250 crore through non-convertible debentures for general corporate requirements.

Non-convertible debentures are loan-linked bonds issued by a company that cannot be converted into stocks and usually offer higher interest rate than convertible debentures.

According to sources, the one-day NCD issue would open and close on November 26.

The funds were raised to meet general corporate needs, sources said.

Investors are being offered an annualised interest of 9.8 per cent per annum through the NCDs.

“HDFC issues 14th month NCD of Rs 250 crore with a green shoe option at 9.8 per cent annual coupon rate,” a source said.

Standard Chartered Bank is the arranger of the issue.

Rating agencies like Crisil and ICRA have assigned ‘AAA’ score, which indicates highest safety, to HDFC’s NCD.

Overall, Indian companies mopped up over Rs 16,000 crore in the current fiscal by issuing NCDs to retail investors, garnering nearly three times the amount that was targeted.

For the quarter ended September 30, 2013, HDFC reported a 10 per cent increase in net profit at Rs 1,266.33 crore, while total income increased to Rs 5,945.94 crore from Rs 5,269.45 crore in the corresponding period last fiscal.

Etihad checks in as 24% owner of Jet Airways

Deal took place 7 months after Naresh Goyal, Etihad CEO inked the deal, now amounting to Rs 2,060 cr

Jet Airways on Wednesday concluded its stake sale with Etihad Airways giving the Abu Dhabi airline 24% equity worth Rs 2,060 crore.The share allotment took place seven months after airline's chairman Naresh Goyal and Etihad CEO inked the deal in Abu Dhabi.

The deal missed closure deadlines twice and has courted controversy from day one  with the simultaneous increase in traffic rights to Abu Dhabi. The Competition Commission of India clearance last week, the last of the regulatory approvals, paved way for the closure.

On Wednesday, Jet Airways board approved the preferential issue of 27.26 million equity shares to Etihad at Rs 754 per share (a premium of Rs 744 per share). Post transaction Goyal holds 51% stake in the airline and balance 25 share holders are with public and other institutional investors. Etihad too has been treated as a public share holder.

The transaction formally concluded on Wednesday but Etihad has been driving changes in Jet for the last few months. The Indian airline has several high profile exits including that of its then CEO Nikos Kardassis, its investor relations head, K G Vishwanath,  and two key finance executives.

While these are administrative changes the deal will also see Jet Airways integrate its network with that of Etihad and work jointly in areas such as sales, marketing, ground handling and cargo. While Etihad has already announced doubling of services from Abu Dhabi to Delhi and Mumbai, Jet is yet to announce additional flights to Abu Dhabi.

The commercial co-operation agreement signed between two airlines also states that Jet would use Abu Dhabi as its hub for services to and from "exclusive territories'' ( Africa, North and South America excluding Canada and the UAE). Consequently Jet has also agreed to timely transition of all its current services to and form Dubai and Sharjah to Abu Dhabi when the same becomes economically viable. Also under the agreement Jet will refrain from entering into any code share agreements with other airlines which would result in bypassing Abu Dhabi.

"“It (the deal) is expected to bring immediate revenue growth and cost synergy opportunities, with our initial estimates of a contribution of several hundred million dollars for both airlines over the next five years. The Indian market is fundamental to our business model of organic growth partnerships and equity investments. This deal will allow us to compete more effectively in one of the largest and fastest-growing markets in the world,'' Hogan had said after the signing the alliance in April.

Markets remain range-bound; broader markets gain

The market breadth in BSE remains positive with 1,209 shares advancing and 995 shares declining

Benchmark indices have trimmed early losses and are trading on a flat note with Sensex and Nifty oscillating between negative and positive zone. .

At 1300 hrs, the Sensex was down 48 points at 20,843 and the Nifty slipped 13 points to trade at 6,190.

According to Chandan Taparia, Derivative Analyst at Anand Rathi Fin Service, “Nifty future if sustains above 6240 levels then only this momentum may continue in the market. On downside it has support around 6180 then 6120 levels.”

On the global front, Asian shares mostly tracked Wall Street stocks lower on Wednesday but dovish comments from Federal Reserve Chairman Ben Bernanke helped to limit their losses, lifting commodity prices, and putting pressure on the dollar.

Chinese policymakers set the yuan's midpoint at the highest level since the 2005 revaluation, a day after China's central bank said it would gradually withdraw from regular intervention in the foreign exchange market.

Back home, the rupee weakened today due to dollar buying by banks. At 12:50 pm, the rupee was trading at Rs 62.46 compared with previous close of Rs 62.38 per dollar.

On the sectoral front, BSE Realty, Power, PSU and Metal indices gained between 1-2%. However, BSE Bankex has declined by 0.5%.

The main gainers on the Sensex at this hour include Tata Power, Sesa Sterlite, BHEL, ONGC, Coal India and NTPC.

On the losing side, Cipla, ICICI Bank, Bajaj Auto, Bharti Airtel and L&T have declined between 1-2%.

Shares of companies engaged in online retail portals and e-commerce business such as Just Dial and Info Edge (India) are in focus and has rallied up to 14% in an otherwise subdued market on the Bombay Stock Exchange (BSE).

Info Edge (India), the owners of Naukri.com which  operates as an on-line classifieds company, has surged 14% to Rs 477 on back of heavy volumes on BSE.

The stock has rallied 25% over past two weeks, after the company said it has made additional investments in Zomato Media Private Limited. Zomato Media owns and operates an online food guide portal Zomato.com.

Ceat has rallied 9% to Rs 257 in early noon deals, extending it’s month long rally on BSE, after reporting a strong set of numbers for the quarter ended September 30, 2013.

The broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are up by nearly 1%.

The market breadth in BSE remains positive with 1,209 shares advancing and 995 shares declining.

Ranbaxy Lab completes 20 years in Ukraine

Over the past two decades, Ranbaxy has established a robust distribution network in Ukraine and is today catering to 25 regions.

Ranbaxy Laboratories Limited (Ranbaxy), India’s largest pharmaceutical company, is celebrating its 20th anniversary in Ukraine. Establishing its operation in the Ukraine market in 1993, Ranbaxy is today the No. 1 player in the target market segment with key brands such as Cifran (Ciprofloxacin), Zanocin (Ofloxacin) and Ketanov (Ketorolac) and a market share of 10.3% (Morion, MAT Q3, 2013).

Over the past two decades, Ranbaxy has established a robust distribution network in Ukraine and is today catering to 25 regions. The company markets branded generic and over-the-counter (OTC) products and is well known for its innovative marketing capabilities with a number of brands in leadership position.
The therapeutic segments cover anti-infectives, gastrointestinal, cardiovascular, non-steroidal anti-inflammatory drugs (NSAID), urology, OTC and Anti-retrovirals (ARVs).  Some of the leading brands in Ukraine include Ketanov, Pylobact NEO, Candesar range, Cifran, Synerpen and Faringosept. The company has in the past, bagged the prestigious Panacea Award for Ketanov, Cifran and Faringosept.

Arun Sawhney, CEO & Managing Director, Ranbaxy said, “Ranbaxy has been providing high quality, affordable generic medicines to the citizens of Ukraine for the last two decades, thereby supporting the Government to bring down healthcare costs. We remain committed to the Ukraine market and its people and will continue to operate from our paradigm of Quality and Patients First”.
Alok Batra, MD, Ranbaxy Ukraine said, “The Ukraine pharmaceutical market is driven by generics and there is immense potential for growth. We have strong professional team with established brands in the market and most of brands rank amongst the top three in their respective segments. In the coming years, we will be introducing more products in the CVS, GI, OTC, Anti-Infectives etc segments to benefit doctors and patients in Ukraine.”
The Ukraine pharmaceutical retail market is estimated at around US $ 3.7 billion (Morion, MAT Q3, 2013) and is growing at a CAGR (MAT 3Q 2011- MAT 3Q 2013) of around 15%.

Bernanke: Fed committed to easy policy for as long as needed

Echoes Yellen's comments that US economy still far from where officials wanted it to be

Federal Reserve Chairman Ben Bernanke said on Tuesday the Fed will maintain ultra-easy US monetary policy for as long as needed, which could mean holding interest rates near zero until "well after" US unemployment falls under 6.5%.

In a speech to the National Economists Club that echoed dovish comments by his nominated successor, Janet Yellen, Bernanke also said that while the economy had made significant progress, it was still far from where officials wanted it to be.

"The FOMC remains committed to maintaining highly accommodative policies for as long as they are needed," he told the club, referring to the policy-setting Federal Open Market Committee.

President Barack Obama nominated Yellen, the Fed's current vice chair, to replace Bernanke when his term ends on January 31.

The Fed has held interest rates near zero since late 2008 and quadrupled its balance sheet to $3.9 trillion through three massive rounds of bond buying.

It decided in October to maintain asset purchases at an $85 billion monthly pace. Bernanke said officials want evidence of durable job growth before scaling back buying.

"The FOMC still expects that labor market conditions will continue to improve and that inflation will move toward the 2% objective over the medium term. If these views are supported by incoming information, the FOMC will likely begin to moderate the pace of purchases," he said.

Fed officials meet next on December 17-18, although most economists don't think they will begin to scale back the bond buying until their meeting in either January or March.

FORWARD GUIDANCE

However, possibly indicating some wariness with the bond buying, Bernanke said policymakers were not quite sure of the impact on the economy of changes in the pace of purchases, or in the size of the Fed's balance sheet.

The Fed has also promised to hold rates near zero until unemployment hits 6.5%, provided the outlook for inflation stays under 2.5%. But Bernanke said the Fed could be patient in waiting to start raising rates.

"The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the unemployment threshold is crossed."

Economists felt the distinction that the chairman drew between bond buying and its so-called forward rate guidance was telling.

"His remarks indicated a clear preference for forward guidance over asset purchases as a means to stimulate growth, and several references were made to the costs and risks of asset purchases," wrote JP Morgan economist Michael Feroli in a note.

MESSAGE RECEIVED

The Fed stunned markets in September when it decided to keep buying bonds, after Bernanke said back in June it expected to start scaling the program back later this year. Those expectations were allowed to harden over the summer.

The chairman noted this decision caused market volatility -- which many economists blame on poor communication by Bernanke himself -- but he said market expectations for future rate hikes were now better aligned with the Fed's own forward guidance on future rate hikes.

Fed fund interest rate futures currently indicate a higher than 50% chance of a first rate hike in September 2015, and the move is not fully priced in until November, 2015.

Before September's Fed announcement, markets had pulled expectations for the first rate hike forward into 2014.

"Although the FOMC's decision came as a surprise to some market participants, it appears to have strengthened the credibility of the Committee's forward rate guidance," Bernanke said.

"Following the decision, longer-term rates fell and expectations of short-term rates derived from financial market prices showed, and continue to show, a pattern more consistent with the guidance."

SPEAKING AND WRITING

The Senate Banking Committee, which held a hearing for Yellen last week, will vote on her nomination on Thursday to pass it to the full Senate for consideration. Yellen, who is seen as a dove who is less concerned about inflation than some peers, is expected to win confirmation with relative ease.

Bernanke, in his first public comments on what life after the Fed will hold for him, suggested that he might follow in the footsteps of his predecessor, Alan Greenspan, by writing and hitting the highly lucrative speakers circuit.

"I look forward to writing and speaking and having a little more time to contemplate some interesting issues," he said.

Rupee weakens to 62.57 on fresh dollar demand

The rupee erased its initial gains and was trading weak by 21 paise at 62.57 against the dollar at 11.27 a.m. local time on fresh bouts of dollar demand from banks and importers.

The rupee opened a tad strong at 62.30 per dollar against the previous close of 62.36 on initial selling of dollar by banks and exporters in view of persistent capital inflows from foreign funds.

However, it failed to maintain its early gains and was trading weak at 62.57 per dollar.

The domestic unit hovered in the range of 62.25 and 62.57 during the late morning deals.

Forex dealers said the dollar’s weakness against other overseas currencies, after US Federal Reserve chief Ben Bernanke indicated that the bank’s stimulus programme would remain in place until the economy is back on track, also supported the rupee.

However, a lower opening in the equity market capped the rupee’s gain, they said.

Reserve Bank of India Governor Raghuram Rajan had recently said that most of the dollar demand of oil companies is being routed back through the forex market instead of the special swap window opened after the rupee slumped to its life-time low in late August.

Yuan trading band

Also, China’s central bank chief’s comments that the country will gradually expand the yuan trading band to help make the currency more flexible and market-driven, boosted the Asian markets thereby helping the rupee, dealers said.

Call rates, G-secs

The overnight call money rate, the rate at which banks borrow short-term funds from each other, opened down at 8.7 per cent against the previous close of 8.80 per cent.

Yield on the 10-year benchmark government security, 7.16 per cent maturing in 2023, hardened a tad to 9.02 against the previous close of 9 per cent.

Yield on the widely traded 8.28 per cent security, maturing in 2027, hardened to 9.01 against the previous close of 8.99 per cent.

Finance Minister P. Chidamabaram said: “The interest rate in G-Secs has risen temporarily, but we hope that some measures the RBI will take and the next set of inflation figures that come…it would moderate and the yields on G-Secs will come down.”

Govt approves 20 FDI proposals worth Rs 916 crore

The Foreign Investment Promotion Board (FIPB) has approved 20 proposals worth Rs 916 crore including Singapore Airlines proposal of Rs 303.18 crore to form a partnership with Tata Sons to start a full service airline.

Among other major proposals, FIPB cleared Rs 179.43-crore proposal of Religare Enterprises to issue warrants to carry out the business of Investment Advisory Services and Financial Consultancy, JM Financial proposal of Rs 22.19 crore to issue warrants to set up a core investment company and Rs 130 crore Perrigo API India's proposal to increase the foreign equity participation from 85 percent to 100 percent by way of issue of fresh equity shares and transfer of equity shares in a pharma sector company. Meanwhile, FIPB has referred to the Cabinet Committee on Economic Affairs (CCEA) the Rs 1,400 crore proposal of Federal Bank to increase the foreign equity to 74 percent and for post facto approval for exceeding the foreign equity cap of 49 percent by 7.16 percent.

FDI is considered crucial for economic development of a country and to attract maximum FDI into the country, the government has been liberalizing the foreign investment policy. The government has relaxed FDI norms in around 12 sectors which include telecom, tea, pension and petroleum and natural gas. Now, it has also started exercise in allowing FDI in railways sector besides liberalising FDI norms for construction and housing sector. Further, a rise in FDI will help support the rupee, which depreciated over 15 percent against US dollar in 2013. Despite the government's various efforts to increase foreign investment, FDI during the April-August period of 2013-14 has grown by a marginal 4 percent to $8.46 billion, from $8.16 billion in the first five months of 2012-13, reflecting the need to take more measures to improve the business environment in the country.

New Bond may Create Optical Illusion on Yield

Demand for the new benchmark bond is expected to rein in surging yields

The Reserve Bank of India’s decision to sell 10-year government bonds on November 22 will leave the market with a new benchmark security, but that could also be creating an optical illusion as the demand for those bonds could keep the surging yields under check.
RBI is coming out with new benchmark bond to replace the current 10-year 7.16% bond which traded above the 9% yield which many believe is the Lakshman Rekha for the central bank as well as the government.
When a new 10-year bond becomes a benchmark, the yields on it is usually lower by 15 to 20 basis points because of demand. That bond will be sought after since that will be the most liquid bonds. “This is a good strategy to ensure that at least in the public eye the bond yields do not shoot up,’’ said a fund manager who did not want to be identified. “With the current 10-year at 9%, when the new benchmark comes into force, it could be around 8.8% or so for a few months before the security gets widely held.’’
Although governor Raghuram Rajan sounds hawkish, there seems to be a conflicting signal on yields. Interest rates might have been raised twice since he took charge on September 4, but the open market operations, where RBI buys bonds to enhance liquidity in the system, and the new bonds are seen as an attempt to keep a lid on yields.
“Rising yield could be one of the considerations but whenever the basket touches . 70,000 crore, RBI comes out with new benchmark bond,” said Nirakar Pradhan, CIO, Future Generali Life Insurance.
The new bond was traded at 8.69%-8.71% in the when issued market, which is trading before the auction takes place. Whereas the present 10-year benchmark 7.16% closed at 9.01%. It was issued in May. Even the government is worried about the high yields. “No one is comfortable paying higher interest rates,’’ said finance minister P Chidambaram. “How can I be comfortable? We hope that the RBI will take some measures. It is possible that government securities rates will go down. We hope that they will moderate.’’
Investors are getting conflicting signals from the central bank on the possible interest rate increases to contain inflation. Whileconsumer prices rose past 10% for October, prices as measured by the Wholesale Price Index climbed to an eight month high of 7%.
The yield on benchmark 10-year government bonds has surpassed the psychological 9% mark 36 times in the last five years since 2008 and the Reserve Bank of India
    has prevented it from shooting up sharply from that level There will be a burden on the government to pay . 70,000 crore-80,000 crore on the redemption date in 2023.
“One of the reasons the Reserve Bank of India is coming with new benchmark bond could be amount of outstanding stock on 2023 paper which has exceeded . 77,000 crore,” said Harihar Krishnamoorthy, head, treasury, FirstRand Bank. “From ALM point of view, it makes sense for government to spread maturity.”

Merrill Lynch buys 21.90 lakh shares of HDIL

Merrill Lynch Capital Markets ESPANA S.A. SVB has reportedly bought 21.90 lakh shares or 0.52% stake of Housing Development and Infrastructure (HDIL) through the open market route. The shares were purchased on an average price of Rs 47.21 valuing the transaction to Rs 10.34 crore.

HDIL is a real estate development company. Its business activity comprises of construction and development of residential projects, commercial, retail and slum rehabilitation projects. It is also engaged in construction of special economic zone (SEZ).

Public debt rises 6.7% in Sept quarter

The total debt of the government increased by 6.7 per cent in the second quarter ended September 2013.

The total public debt (excluding liabilities under the ’Public Account’) of the government increased to Rs 45,80,472 crore at end-September 2013 from Rs 42,92,870 crore at end-June 2013. This represented a quarter-on-quarter increase of 6.7 per cent compared with an increase of 4.4 per cent in the previous quarter, an official statement said.

Internal debt constituted 90.8 per cent of public debt, compared with 90.6 per cent at the end of the previous quarter, it said.

Internal debt constitutes government borrowing from the market to bridge fiscal deficit for the current fiscal.

The gross fiscal deficit of the the government in budget estimates 2013-14 was placed at Rs 5,42,499 crore (4.8 per cent of GDP) as against Rs 5,20,925 crore (5.2 per cent of GDP) in the revised estimates for 2012-13.

The gross and net market borrowing requirements of the government in at Rs 5,79,009 crore and Rs 4,84,000 crore, respectively.

About 31 per cent of outstanding dated securities have a residual maturity of up to 5 years compared with about 34 per cent a quarter ago, reflecting a decline in the rollover risk in the debt portfolio.

In the secondary market, it said, bond yields went-up during the quarter mainly due to capital outflows from debt market triggered by uncertainty regarding Quantitative Easing (QE) programme of the US Federal Reserve and subsequent monetary tightening by RBI to support the Rupee as well as rise in inflation rate.

Bond yield curve steepened in the above 10-year maturity segment, while it remained flat in the below 10 years maturity segment, it said.

Trading volumes declined during the quarter amidst rising yields and uncertainty regarding economic outlook, it added.

Canara Bank opens 7 new branches in West Bengal

Canara Bank has reportedly opened seven more new branches in West Bengal on November 19, 2013. Besides, as part of its financial inclusion programme the bank has also brought Uttar Rajapur village in South 24 Parganas district under the ‘Canara Gramodaya Village Adoption Scheme’.

The bank has reported a fall of 5.29% in its net profit at Rs 625.94 crore for the quarter ended September 30, 2013 as compared to Rs 660.97 crore for the same quarter in the previous year. However, total income of the bank increased by 13.29% at Rs 10427.48 crore for quarter under review as compared to Rs 9203.61 crore for the quarter ended September 30, 2012.

Gross non-performing assets (NPAs) increased to 2.64% in the July-September quarter as against 2.58% in the same quarter previous year, while net NPAs has increased to 2.30%.

Ashok Leyland speeds up on the plans of merging Ashley Services with itself

Ashok Leyland has received an approval for scheme of amalgamation of Ashley Services (100% subsidiary - transferor company) with Ashok Leyland (transferee company), subject to approval of regulatory authorities as required and the High Court of Judicature, Madras. The board of directors at its meeting held on November 19, 2013 has approved for the same.

Ashok Leyland, the Hinduja Group flagship company in India, is engaged in the manufacturing of commercial vehicles and related components. The company’s products include buses, trucks, engines, defense and special vehicles.

The company has reported a net loss of Rs 25.05 crore or the second quarter ended September 30, 2013 as compared to a net profit of Rs 142.59 crore for the same quarter in the previous year. Total income of the company has decreased by 23.05% at Rs 2572.73 crore for quarter under review as compared to Rs 3343.34 crore for the quarter ended September 30, 2012.

Jet Airways surges on inking code share agreement with Garuda Indonesia

Jet Airways, India’s premier international airline, and Garuda Indonesia, the national carrier of Indonesia, have concluded a code share agreement and simultaneously launched a reciprocal frequent flyer programme. This would offer guests of both airlines with a variety of options and seamless access when traveling throughout the combined networks.

Under the codeshare arrangement, Jet Airways will place its marketing code on Garuda Indonesia’s flights between Singapore and Jakarta. In turn, Garuda will place its marketing code on Jet Airways’ operations between Singapore and Mumbai, Delhi and Chennai. The codeshare will provide more choice for customers between India and Indonesia, with seamless and convenient connections over the international gateway, Singapore.

Jet Airways currently operates a fleet of 113 aircraft, which include 10 Boeing 777-300 ER aircraft, 10 Airbus A330-200 aircraft, 4 Airbus A330-300 aircraft, 72 next generation Boeing 737-700/800/900/900 ER aircraft and 15 ATR 72-500 and 2 ATR72-600.

Shriram EPC surges on Rs 214 crore fresh orders

The stock has rallied 8% to Rs 33.90 in early morning deals on BSE.

Shriram EPC has rallied  8% to Rs 33.90 in early morning deals on BSE after the company said it has received multiple orders amounting to Rs 214 crore.

An order amounting to Rs 157 crore from Bharat Petroleum Corporation Limited (BPCL) for undertaking civil, structural & underground piping works of  fluid catalytic cracking units (FCCU) for the Integrated Refinery Expansion Project (IREP) at their Kochi Refinery. The project is to be completed over a period of 15 of Months.

The two orders amounting to Rs 57 crore are from Municipal Corporation of Brihanmumbai (Sewerage Operations Department), Mumbai for rehabilitation of underground sewers using trenchless technology with GRP liners. Both the orders are to be executed over a period of 21 months, Shriram EPC said in a statement.

Bharatiya Mahila Bank starts with 7 branches

Doubts remain over objective in achieving women empowerment

Bharatiya Mahila Bank, the country’s first all-women commercial bank, commenced its operations on Tuesday with seven branches. However, doubts remain if the bank will succeed in achieving its objective of economic empowerment of women in remote villages.

“The setting up of the Bharatiya Mahila Bank is a small step towards the economic empowerment of women. It is also a reflection of our commitment to this cause. I am sure that the bank will fulfil the objective with which it is being established, namely financial inclusion of women and providing them equal and easy access of financial services,” said Prime Minister Manmohan Singh while inaugurating the bank's first branch in Mumbai's Nariman Point.

Analysts believe the bank will find it tough to differentiate itself from rivals and will face stiff competition from state-run and private-sector lenders, and microfinance companies, which already have an established presence in rural India.

“For a successful business model, the balance between profitability and responsibility is important. While providing access to banking services is the responsible objective, improving customer experience or value for the discerning woman will be key to profitability. However, this segment is also being targeted by other banks and, therefore, driving the balance may take some effort,” said Shinjini Kumar, executive director for tax and regulatory services at Pricewater-houseCoopers in India.

Bharatiya Mahila Bank has been set up with an initial paid-up capital of Rs 1,000 crore. Led by Usha  Ananthasubramanian, all the eight on the board of directors of the bank are women. The bank aims to increase its branch count to 25 by March 2014.

Currently, all the seven branches of the bank are in urban centres — Kolkata, Mumbai, Lucknow, Guwahati, Chennai, Bangalore and Ahmedabad. This could also prove to be a hindrance, at least in the short-term, in reaching out to rural women.

"While we appreciate the initiative of the government to open an all-women bank, we would have been more satisfied if at least three or four branches were opened in rural centres during the inauguration. A bank like this is more needed in rural villages,” said a senior woman member of a self-help group in Maharashtra.

The government, however, does not appear to share such a concern. Finance Minister P Chidambaram told reporters that the bank aspires to have branches abroad. "I sincerely hope the private sector will also emulate this model.”

According to industry analysts, the bank might need to appoint external consultants to understand the actual needs of rural women and women entrepreneurs.

The upcoming elections in 2014 also cast a shadow on the bank's future, according to some experts. “We are not sure about the changes that would be made after elections. If the opposition party comes to power, there is a fear that the sops will be rolled back,” said the founder member of a Mumbai-based non-government organisation, which works for economic rights of women.

Chidambaram said the bank would get listed in due course, but before that, it needs to get critical mass (of business and branch network).

According to the bank’s business plan, the bank envisages a business mix (deposits plus advances) of Rs 60,000 crore with 771 branches by 2020.

The bank has sought regulatory forbearance for one year in opening branches in rural areas.  Meanwhile, the bank has reconstituted its board with nine-directors. They include: Chhavi Rajawat, a sarpanch from Rajasthan; Kalpana Saroj-Mumbai-based entrepreneur who turned around Kamani Limited; Renuka Ramnath, founder of private equity firm Multiples; Tanya Dubash, a Mumbai-based industrialist and daughter of Adi Godrej; and Nupur Mitra, ex-CMD of Dena Bank.

Investors see green shoots in capital goods sector

Sectoral index up 10% in past month, as market takes hope from higher order book, revenue and operating margins in September quarter

Stock investors are betting highly on recovery in the capital goods sector, noting the top 10 companies in the sector have shown good results in all the three key parameters of order book growth, revenue growth and operating margins in the September quarter.

The stocks of most capital goods firms have seen a rebound. The big ones such as Larsen & Toubro (L&T) and Crompton Greaves have surged 14 per cent and 11 per cent, respectively (see chart) in the past month. The others are not far behind. Since mid-October, the BSE Capital goods index was up 10.15 per cent.

Analysts say when compared to preceding quarters, the green shoots are visible in the margins and in revenue growth, as the government is taking steps to re-start stalled projects, invites bids for new airports and plans a bailout package for ailing road projects.

Citing an example, analysts say from the recent lows in March this year, Crompton’s standalone margins recovered by 210 basis points to nine per cent, aided by higher exports and the rupee depreciation  in September.

The biggest surprise for the investors came from the big boy of the industry, L&T, which reported a growth of 27 per cent in order book at Rs 26,533 crore during the quarter. The book grew mainly due to the company’s focus on international markets, as orders from India had dried up in recent quarters.

L&T’s revenue also grew by 10 per cent to Rs 14,509 crore, taking analysts by surprise.

L&T officials say the domestic market continues to be challenging and the investment climate continues to hamper the order book growth, especially in the power and metal sectors. However, company officials say the rest of the year will be good in terms of revenue growth.

“The revenue growth is in line with our plans, as revenues have improved compared to the first quarter. These (revenues) would gather momentum in the next two quarters, to fulfil our guidance of 15 per cent revenue growth through the year,” said Chief Financial Officer Shankar Raman, while announcing the company results last month. “The domestic market is still challenging, with depressed conditions in the power and metals sector. The government is trying to improve the sentiment but for this to translate into orders for a company like ours is still a few quarters away,” said Raman.

ABB India also surprised investors when it reported a healthy 71 per cent growth in its third quarter net profit to Rs 36 crore for the quarter ended September, as compared to the corresponding previous quarter, riding primarily on heightened efficiencies and increased localisation. ABB India’s MD, Bazmi Husain, said savings from these initiatives helped balance the adverse impact of continuing price erosion and a weak market condition.

The one biggie not showing a good turnaround is government-owned Bharat Heavy Electricals Ltd. The company was one of the worst performers during the sector in the September quarter but it is expecting the rest of the financial year to be better. The management is expecting revenue to gather steam with the pick-up in a few slow-moving projects. The company says of the total order tenders of 15 Gw to be awarded, five Gw were in an advanced stage.  It is also expecting some stalled power projects to start and help it bag new orders.

Tata Motors lines up two car launches in 2014

Hatchback and compact sedan to be unveiled at Auto Expo will have new DNA

After a three-year hiatus, Tata Motors, India’s fourth-largest car maker, will launch two all-new products next year.

The new products — a hatchback and compact sedan — will be launched at the Auto Expo in February. This would be followed by their commercial launch. The new hatchback (codenamed Falcon 4) will sit alongside the existing Indica and Vista models; the company has ruled out phasing out either of the two models.

Similarly, the new compact sedan (codenamed Falcon 5) will complement the Indigo CS, the country’s first compact sedan. “We are not looking to replace any of our current brands. There are opportunities and spaces for us to address. These are high-performance vehicles, with a differentiated feature and new driving dynamics,” said Ranjit Yadav, president (passenger vehicle business unit), Tata Motors.

“We have planned a portfolio where we will be bringing new vehicles every year up to 2020. Next year, we will launch completely new cars. It will have a completely new DNA, with modified platforms, new attributes, powertrains and design language. Actually, these cars are for the global markets. So, we will launch them first in India and then take these to select international markets from 2015,” Yadav said.

The design and style of both the models will be very different from any existing Tata Motors model. Yadav said feedback from potential customers and dealers would also play a part in developing the new vehicles.

The new model in the hatchback segment will be the company’s first in about five years. Tata Motors has been slow in bringing new products to the market. Multi-seater premium utility vehicle Aria was launched as a completely new product three years ago.

By comparison, the gap between the launch of General Motors models Sail, Sail UVA and the Enjoy was less than a year. Maruti Suzuki, India’s largest car maker, launched two new models, the Alto 800 and the Stingray, in a gap of less than ten months.

Tata Motors refused to specify the price points of the new vehicles.

While the Indica is priced at Rs 4,53,480, the Vista is available at Rs 472,474 (both ex-showroom, Mumbai).

The Indigo CS uses the same platform as the Indica and is priced at Rs 5,10,340 (ex-showroom, Mumbai). This compact sedan, launched in 2008, eventually replaced the regular Indigo, as sales of the latter dwindled. The new compact sedan will boost the company’s presence in the segment, which sees monthly sales of more than 10,000 units. Apart from the Indigo CS, Honda’s Amaze is the other model in the segment.

Tata Motors has developed a new turbo-charged 1.2-litre petrol engine for the two new models, looking at the demand trend swinging back in favour of petrol. The company had developed this engine in partnership with companies in the UK and Korea. Also on offer will be the 1.3-litre Fiat-developed multi-jet diesel engine seen in the Vista and the Manza.

“We have been working on a portfolio for a while. So, we have sharpened and crafted it. Most of the work done on these new models is in-house. We will see a difference in design. We believe we have designs that would be contemporary for the next five years,” Yadav said.

For the quarter ended September, Tata Motors recorded it biggest quarterly stand-alone net loss---Rs  803 crore.

According to data released by the Society of Indian Automobile Manufacturers, at 128,263 units, Tata Motors recorded a 35 per cent drop in sales during the April-October period, compared to the corresponding period last year. The company is looking to regain lost ground with the help of these two new launches.

From being the third largest passenger vehicle manufacturer the company slipped to fourth position overtaken by Mahindra & Mahindra.

Maharashtra sugar industry seeks bailout

Bats for transport subsidy, interest subvention, rise in import duty

Amid falling sugar prices and various farmer organisations seeking higher prices for cane, the sugar sector in Maharashtra has sought bailout packages from the central and state governments.

It has asked for transport subsidies of Rs 500 a quintal from the Centre and Rs 300 a quintal from the state government and demanded the import duty be raised from 15 per cent to 60 per cent. The sector also wants export subsidy of Rs 5,000 a tonne to bridge the gap between the cost of production and prices in the international market. Currently, ex-mill sugar prices in Maharashtra stand at Rs 2,655 a quintal, compared to production costs of about of Rs 3,400 a quintal.

Various farmer organisations are agitating, demanding cane prices of Rs 2,700-3,500 a tonne. To enable sugar factories to pay cane prices, the Federation of Cooperative Sugar Factories in Maharashtra, a representative body of about 200 units, has approached term lending institutions for loans with subvention of interest. It has submitted separate memoranda to the prime minister and the Maharashtra Chief Minister, seeking urgent intervention to provide relief to the crisis-ridden sugar sector in the state.

The federation cited the instance of the interest subvention schemes launched in 2007-08 and 2008-09, through which banks extended loans to sugar factories against the excise duty for the last two seasons; the loans were to be repaid in four years. According to the interest subvention scheme, the government could bear annual interest up to 12 per cent.

To avoid huge cane arrears and defaults in payments, the sector has urged the Centre to create a buffer stock of five million tonnes (mt). This will also help recover interest costs.

On condition of anonymity, a member of the federation told Business Standard, “Against our estimate of 160 mills, 75 sugar mills, including cooperative and private ones, have initiated cane-crushing in the state and produced three mt so far. The others are in a wait-and-watch mode. They expect the bailout package will help them start cane crushing.”

According to the officials, industry wants the Centre to increase mandatory blending of ethanol with petrol to 10 per cent from the present level of five per cent.

WISH LIST

* Transport subsidies of Rs 500 a quintal from the Centre and Rs 300 a quintal from the state government

* Raise import duty from 15 per cent to 60 per cent

* Export subsidy of Rs 5,000 a tonne to bridge the gap between the cost of production and prices in the international market

* Cane prices of Rs 2,700-3,500 a tonne

Markets likely to get a soft start on weak global cues

The Indian markets despite volatility and few dips into red, managed to extend their gaining momentum in last session. Today, the start is likely to be soft-to-cautious tailing the global indices and traders will be waiting for more cues for further course of action. There will be some somberness in the markets, as the Paris-based Organisation for Economic Co-operation and Development (OECD) has said that Indian economy is expected to improve marginally in the current financial year with its GDP at market price projected to expand by 3.4 percent from 3.3 percent in the previous fiscal. There will be some buzz in the NBFCs segment as the Supreme Court has issued notice to the Centre on a writ petition for a direction seeking the constitution of an expert committee of SEBI, RBI, Finance Ministry, Enforcement Directorate and Serious Fraud Investigation Office officials to devise a long-term plan to end all the unauthorised and illegal deposit schemes. There will be some action in infra sector too as the Finance Ministry is firming up plans for a new Infrastructure Trust Fund aimed at accelerating the flow of long-term investments in various projects. 

The US markets ended lower ahead of the Fed Chairman Ben Bernanke’s speech and traders largely shrugged off a report from the Labor Department showing that employee compensation costs rose by slightly less than expected in the third quarter. The Asian markets are mostly in red after Ben Bernanke said low US interest rates will continue long after the central bank ends its program of bond buying.

Back home, Tuesday was the day of consolidation for the Indian markets when bulls taking a breather from their last session’s rally, just tried to hold their gains. The global cues were not very supportive and traders opted to remain on sidelines to get some cues. However, there were some instances of profit booking too that dragged the markets in red for a couple of time, though there was simultaneous bounce back that took the markets back into green. The market sentiments were supported by rupee strength for the second straight session as stronger rupee could help to reduce import bill and current account deficit. Also, PMEAC Chairman C Rangarajan stated that country’s current account deficit (CAD) will be contained well below the targeted limit. The global cues remained sluggish since morning as the US markets ended mostly lower overnight on profit booking, while the Asian pack made a mixed start and despite some recovery ended in the same state. The European markets too made a soft start and pressured the local markets. Back home, despite some volatility the markets managed to extend their gaining streak for the third consecutive session, albeit marginally. The rupee strength supported equity markets which traded near the 62/$ level with the Reserve Bank of India’s ongoing bonds purchase worth Rs 8,000 crore this week under the open market operations (OMO) to inject liquidity in the system. There was some cautiousness in the early deals of the markets related to stock market regulator Securities & Exchange Board of India (Sebi) tightening disclosure norms for listed companies. The regulator has empowered stock exchanges to make its current system more effective while monitoring disclosures made on shareholding pattern, financial results and on other price-sensitive information. While there was a pause in the surge what the markets have been witnessing since last two sessions, but the rate sensitives’ once again remained on forefront, though there was some somberness in the defensive. Realty and Capital Goods counter added another over a percent for the day, while the Consumer Durables and FMCG lost about half a percent. The non sectoral aviation pack too was in jubilant mood on report that the domestic airlines flew 50.08 lakh passengers in October this year, up by almost 10 percent increase over the 45.55 lakh passengers carried by them in the same period last year. Finally, the BSE Sensex surged by 40.08 points or 0.19%, to settle at 20890.82, while the CNX Nifty added 14.35 points or 0.23% to settle at 6,203.35.