ITC extend fall; Maharashtra bans loose cigarette sale

The stock has tanked over 9 percent in the last two days following buzz of ban on sale of loose cigarettes in Maharashtra. 

ITC has plunged to a fresh 52-week low of Rs. 301 in trades today amid buzz of likely ban on sale of loose cigarettes in Maharashtra.

 According to media reports, following the Budget proposals 

Maharashtra government is looking to implement the ban on sale of loose cigarettes and chewing tobacco in public places. Reports add that Chandigarh recently became the first state to implement ban the sale of loose cigarettes.

 The stock is now down 4.3 percent at Rs. 305. The counter has seen over three-fold jump in volume with trades of around 1.8 million shares as against the two-week daily average volume of around 581,000 shares on the BSE. In the process, the stock has slumped 9.3 percent in the last two trading days.

 Another Cigarette-maker, Godfrey Philips too is trading with a loss of over 3 percent at Rs. 494. Meanwhile, the Sensex has tanked 342 points to 26,847.

SBI falls after slashing base rate

So far, the stock has plunged almost 5 percent from the day's high. 

State Bank of India (SBI) continues to trade near the lowest level of the day at Rs. 255 - with a loss of over 3 percent at Rs. 257, after the bank reduced its base rate by 15 basis points to 9.7 percent from 9.85 percent with effect from 08 June 2015.

The stock had touched a high of Rs. 268 in the morning.

So far 1.7 million shares have been traded at the counter as compared to its two-week daily average volume of 2.6 million.

Meanwhile, the BSE Sensex has recouped some of its losses, but still trade lower by almost 300 points at 26,896.

India HSBC May service PMI at 49.6

HSBC India Services Business Activity Index recorded below the crucial 50.0 threshold for the first time in 13 months.

Registering 49.6 in May, from 52.4 in April, the seasonally adjusted HSBC India Services Business Activity Index recorded below the crucial 50.0 threshold for the first time in 13 months. Although indicative of falling output, the latest reading pointed to a marginal rate of contraction.

Commenting on the India Services PMI survey,Pollyanna De Lima, Economist at Markit said:“Disappointing May PMI data for India services indicated that the sector fell back into contraction after experiencing growth for six successive months. Restrained demand accompanied by sweltering heat and the earthquake led to falling new work.

 

Nonetheless, the sector is expected to see a rebound in coming months, as these factors fade away. An upturn in employment combined with improved business confidence further add to the evidence thatprospects may brighten.

Leading services activity to decline was a reduction in incoming new work, the first since April 2014. Competitive pressures and natural disasters were blamed for the decrease in new business inflows.Nonetheless, the rate of contraction was marginal overall. With manufacturing order books increasing at the quickest pace in four months, private sector new work rose. Nonetheless, the rate of expansion was the slowest in the current 13-month sequence of growth.

Moody's: Tata Motors' FY2015 results buoyed by Jaguar Land Rover

"As proceeds from the recently concluded rights issue of Rs. 75 bn will be used towards retiring INR 40 billion of debt and the balance to fund Tata Motors' capital expenditure for its India business and towards building liquidity reserves for its other small businesses, we anticipate minimal incremental debt for the company's non-JLR businesses," says Kaustubh Chaubal, a Moody's Vice President and Senior Analyst. 

Moody's Investors Service says that Tata Motors Limited's (Ba2 stable) consolidated results for the fiscal year ended 31 March 2015 (FY2015) were higher than its expectations, mainly on account of the better operating performance of Jaguar Land Rover Automotive Plc (JLR, Ba2 positive).

"As proceeds from the recently concluded rights issue of Rs. 75 bn will be used towards retiring INR 40 billion of debt and the balance to fund Tata Motors' capital expenditure for its India business and towards building liquidity reserves for its other small businesses, we anticipate minimal incremental debt for the company's non-JLR businesses," says Kaustubh Chaubal, a Moody's Vice President and Senior Analyst.

"However, we expect JLR's debt to rise to partly fund its announced capital expenditure of GBP3.6 billion-GBP3.8 billion, resulting in consolidated leverage of 2.3x-2.6x over the next 12 months," adds Chaubal.

Chaubal was speaking on the release of a Moody's issuer comment, "India - Tata Motors Limited: Rights Issue and Improving Commercial Vehicles Sales in India Will Limit Tata Motors' Drag on JLR in FY2016". The report was authored by Chaubal and Vincent Tordo, a Moody's Associate Analyst.

Looking ahead, Moody's expects Tata Motors' standalone leverage to improve in March 2016, mainly on account of lower debt and a substantial turnaround in its standalone operations.

Moody's further expects that the ramp-up of the new Jaguar XE, which entered the market in March 2015; the launch of the new lightweight Jaguar XF, the 2016 model year Evoque -- including a convertible variant, the F-PACE -- and the full-year contribution from Discovery Sport will support JLR's volume growth over the next 12-18 months.

However, weaker demand from China and mixed demand conditions in Europe, markets that account for almost 25% and 19% respectively of JLR's volumes, are expected to weigh on performance in FY2016.

Sales in China were affected most in January-March, down 20% year-on-year. Furthermore, a change in model mix and launch costs associated with the new products will likely exert pressure on JLR's margins. In India, demand for medium and heavy commercial vehicles (M&HCV) will continue to drive the recovery for Tata Motors India.

Furthermore, new product launches from the Prima LX and Ultra range, and bus orders under the Jawaharlal Nehru National Urban Renewal Mission -- a city modernization scheme launched by the Indian government -- are expected to provide the fillip for M&HCV growth over the next 12-18 months.

Looking back over FY2015, Moody's notes that Tata Motors' consolidated net sales of INR2,607 billion and reported EBITDA of INR421 billion were both up 13% from FY2014. EBITDA margins were flat at 16% and consolidated leverage at March 2015 increased marginally to 1.71x from 1.59x last year, due to increased borrowings.

Tata Motors also reported standalone EBITDA of INR3.0 billion for January-March, positive for the first time in the last six quarters, mainly due to an uptick in replacement demand for M&HCVs. A further pickup in M&HCVs and recovery in the light commercial vehicles segment in H2 FY2016 should drive improvement in standalone EBITDA.

Top corporate news of the day - June 3, 2015

Apollo Hospitals Enterprise has announced acquisition of majority stake in Guwahati-based Assam Hospitals for a consideration of around Rs.572mn. The acquisition is expected to strengthen Apollo Hospitals' presence in the Northeast 

Apollo Hospitals Enterprise Ltd (AHEL) has announced acquisition of majority stake in Guwahati-based Assam Hospitals Ltd for a consideration of around Rs.572mn. The acquisition is expected to strengthen Apollo Hospitals' presence in the Northeast

Sun Pharmaceutical and AstraZeneca Pharma India (AZPIL) said they have entered into a distribution services agreement to distribute AstraZeneca's heart disease treatment drug 'Axcer' in India.

In keeping up with its brand acquisition spree, Emami Ltd has acquired Kesh King - anayurvedic hair oil brand - the biggest of Himachal Pradesh-based SBS Biotech. The deal has been valued at Rs16.51bn.

BHEL has bagged its largest order amounting to Rs179.5bn from Telangana State Power Generation Corp (TSGENCO) to set up a 4,000 MW plant at Yadadri.

Reliance Industries will produce 23 mn standard cubic meters per day of more gas from five discoveries in the flagging KG-D6 block by 2016-17, the Oil Ministry said in its latest annual report.

Tata Global Beverages is planning to make its acquired coffee brand from Australia, Map, a power brand in its portfolio. 

Reliance Industries will sell its 49.9 % stake in a US joint venture that owns a pipeline network for transportation of shale oil and gas to New York-listed Enterprise Products Partners for US$1.07bn.

Reliance Communications is pursuing multiple deleveraging options, especially in non-core assets, which should help it lower net debt-to-EBITDA ratio to almost 3.5 by March 2017.

Corporation Bank is keen to raise its current account savings account (CASA) ratio to 25 % by end March 2016, its Chairman and Managing Director S R Bansal has said.

Jet Airways has handed over pink slips to 50 of its expat pilots by prematurely terminating their contracts, bringing their number to 88, as part of its cost-cutting measures as well as reducing dependency on the high-cost overseas flight crew.

Godrej Properties has launched a residential project on the Doddaballapur Yelahanka main road in North Bengaluru under profit-sharing model. 

Private banks’ compensation now based on new RBI guidelines

According to the guidelines, unveiling remuneration paid to directors in the annual financial statements would be mandatory for banks, as per RBI guidelines.

The non-executive director of private banks could receive remuneration up to Rs 10 lakhs per annum in the form of profit-related commission from the banks, as per guidelines issued by the Reserve Bank of India.

The compensation of non-executive part-time chairman would need to take approval beforehand from the Central Bank, says an ET report.

According to the guidelines, unveiling remuneration paid to directors in the annual financial statements would be mandatory for banks, as per RBI guidelines.

A sitting fee could be offered to non executive directors by banks apart from the compensation. This should naturally be in sync with the provisions of the Companies Act, 2013. Any expenses for participation in the board could also be reimbursed by the banks, the report said.

Due to the guidelines issued, private banks will have to look at their compensation policy for independent directors of their boards, from a fresh perspective, the report stated.

"Deficiencies would have the effect of increasing the risk profile of banks with attendant consequences, including a requirement of additional capital if the deficiencies are very significant," the banking regulator said.

Presence of professional directors in the boards of banks is non negotiable hence the move would be helpful in attracting and retaining the same, RBI said. 

Top Economy news of the day- June 3, 2015

With the forecast of monsoon rainfalls revised downwards, the Ministry of Agriculture has directed states to be ready with contingency plan and start preparations for short duration crops this kharif season. 

With the forecast of monsoon rainfalls revised downwards, the Ministry of Agriculture has directed states to be ready with contingency plan and start preparations for short duration crops this kharif season.

RBI Governor Raghuram Rajan delivered the first policy rate cut of the current financial year, paring the interest rate at which banks can borrow from the central bank to 7.25 % from 7.50%

The Reserve Bank will issue licences to either small finance banks or payment banks by the end of August end, said RBI Governor Raghuram Rajan.

Infosys sets up investment panel to oversee acquisitions: Reports

A report says that the committee is being chaired by new board member and managing director of Omidyar Network's India operations Roopa Kudva.

Infosys has formed an investment committee on its board to oversee new acquisitions and large investments, according to reports.

A report says that the committee is being chaired by new board member and managing director of Omidyar Network's India operations Roopa Kudva.

Infosys had cash and cash equivalents of about $5.2 bn, as of March 31, 2015.

The company is eyeing an ambitious target of $20 billion of revenue by 2020.