United Spirits Falls on Inquiry Over Vijay Mallya's Kingfisher Airlines

United Spirits shares traded down for a second consecutive session, falling as much as 1.6 per cent against 0.8 per cent gain in the broader markets on Wednesday. Traders attributed the selling in United Spirits - India's biggest liquor company- to the ongoing investigation in former group firm Kingfisher Airlines over alleged diversion of funds.

The Serious Fraud Investigation Office or SFIO is probing alleged mismanagement of over Rs 8,000 crore of funds since 2005, when liquor baron Vijay Mallya's UB Group-controlled Kingfisher Airlines and United Spirits, according to media reports.

Kingfisher Airlines, which owes $1.5 billion to lenders, has not flown since 2012; United Spirits was acquired by London-based Diageo in 2013, though Dr Mallya continues to be its chairman.

An auditor's inquiry into United Spirits' financial accounts, conducted after Diageo took control, showed that between 2010 and 2013, funds were allegedly diverted illegally from the company to some of Mallya's group firms, including Kingfisher.

"The SFIO noted that the company (United Spirits) had conducted an inquiry wherein possible fund diversions were identified, and requested some information from the company in relation to that," United Spirits said in a statement to the Bombay Stock Exchange on Tuesday. The company is cooperating with the investigating authority, it added.

The board of United Spirits began a procedure in April to remove Dr Mallya from his position as chairman. Dr Mallya has denied the allegations and in April said in a statement to Reuters that he would not resign as chairman of United Spirits.

A spokesman for Dr Mallya's UB group declined to comment on the SFIO probe on Tuesday. 

Big B’s blockbuster run continues in stock market

Often called the smart stock investor of Bollywood, Bachchan’s current portfolio is a ‘super hit’ on the bourses. Amitabh Bachchan’s investment in shares of as many as 5 companies have outperformed significantly amid high volatility in the fiscal so far.

Just like he is ruling the Indian box-office with strong performances one after another, Bollywood superstar Amitabh Bachchan’s portfolio, too, remains as charismatic as the superstar’s presence on the silver screen.
 
Often called the smart stock investor of Bollywood, Bachchan’s current portfolio is a ‘super hit’ on the bourses. Amitabh Bachchan’s investment in shares of as many as 5 companies have outperformed significantly amid high volatility in the fiscal so far. We do not have an exhaustive or complete list of his holdings and the estimates are based on published figures available in the media.  
 
This fiscal so far, the S&P BSE Sensex has plunged by 8.05% to 25,705.93 level. Similarly, the CNX Nifty has fallen by 7.79% to 7,829.10 level. However, contradicting the negative trends, Bachchan’s investment sees nearly 400% surge.
 
His investment in the Mumbai-based speciality chemical producer Fineotex Chemical Ltd has spurted by 396.58%. As per the company’s shareholding pattern, Bachchan held 12,23,414 shares (equivalent to 5.45% stake) as on March-15 and his holding stands at 59,42,070 (5.29%) as on June-15. In value term, Bachchan’s holding of Rs. 2.72 cr has jumped to Rs. 13.54 cr at present.
 
In Stampede Capital Ltd, Bachchan’s investment is running blockbuster with 108% increase in the fiscal so far. The value of Bachchan’s investment in the company has soared to Rs. 30.38 cr from Rs. 14.60 cr as on March-15. His current share holding in the company stands at 3.42%.
 
Just Dial Ltd had given Amitabh Bachchan 62,794 shares at Rs. 10 for becoming its brand ambassador. After the company’s successful IPO in 2013, Bachchan has maintained its investment. Now, with the company’s stock at Rs. 914.10, the value of his holding has skyrocketed to Rs. 5.73 cr from Rs. 6.27 lk.
 
In August this year, the Bollywood megastar bought 15,00,000 shares of Nitin Fire Protection Industries Ltd at Rs. 42.99. The current price of the stock takes Bachchan’s investment of Rs. 6.44 cr to Rs. 6.96 cr, a moderate rise of 8%.

Shanghai Composite rallies 4.9%; US Fed to decide on rate hike

Shanghai Composite surged 4.91%, after a cumulative two day loss of 6.1%, which is bound to give the investors some sense of relief. CSI 300 gained 4.99%.

Following a rally in the US equity market based on speculation that the Fed will hike rates in its meeting, Chinese markets showed resilience and bounced back from its slump yesterday to close 4% up today.

Shanghai Composite surged 4.91%, after a cumulative two day loss of 6.1%, which is bound to give the investors some sense of relief. CSI 300 gained 4.99%.

Overall, the Asian market showed an upward trajectory, with Japan's Nikkei 225 climbing 0.85%, while TOPIX gaining 0.71%. Hang Seng Index rallied 2.65% from its previous close.

The U.S. Federal Reserve is meeting on 16th and 17th of September, to decide if it is time to hike rates for the first time in nine years. Any decision by the Fed will have a spiralling impact on the world's economy.  

Biocon opens new facility for insulin devices

The company said that it has the capacity to manufacture 10 million devices a year.

Biocon has opened a new manufacturing facility in Bangaluru to make insulin devices. The 1-lakh-square-feet new facility will make pen-like devices for diabetes patients.

The company said that it has the capacity to manufacture 10 million devices a year.

India currently imports 80% of its insulin, which translates into a Rs. 750-crore market.

This facility has the potential to create several thousands of jobs, according to Biocon Chairpersn Kiran Mazumdar.
“Our aim is to provide insulin products to one-in-five diabetics using it anywhere in the world,” Shaw said.

Further, these products will be sold in other emerging markets (EM) followed by the developed markets in 2018, depending on regulatory approvals.

The stock is currently trading at Rs. 451, up by 2.85 points or 0.64% from its previous closing of Rs. 448.15 on the BSE.

The scrip opened at Rs. 451.5 and has touched a high and low of Rs. 453.75 and Rs. 446.25 respectively. So far 168224 shares were traded on the counter. The current market cap of the company is Rs. 8963 crore.

The BSE group 'A' stock of face value Rs. 5 has touched a 52 week high of Rs. 515 on 19-Sep-2014 and a 52 week low of Rs. 395.3 on 24-Aug-2015. Last one week high and low of the scrip stood at Rs. 453.55 and Rs. 429.6 respectively.

The promoters holding in the company stood at 61.02 % while Institutions and Non-Institutions held 19.91 % and 19.06 % respectively.

The stock is currently trading above its 50 DMA.
The device is called Basalog One, and it has been positioned as part of Biocon's ‘Make in India’ initiative. Biocon has partnered with the US-based Becton Dickinson to help it in designing the device.

Govt opens FDI route through partly paid shares

The move will provide an easier route to foreign players to invest in India, as they would not have to wait for the Government's permission for raising money.

Government has permitted foreign investments through partly paid shares and warrants to facilitate FDI in the country, according to reports.

“The government has reviewed the provisions of the extant FDI policy,” the Department of Industrial Policy and Promotion (DIPP) said in a notification.

DIPP also reportedly said that the nature of these instruments are also of equity and the move would help in attracting FDI.

DIPP also clarified that the facility sharing agreements within two group companies will not be treated as real estate business.

12 Stocks in focus today

Check out the companies which will be in focus during trade today based on recent and latest news developments.

Sun Pharma: Sun Pharmaceutical Industries has bid to acquire US eye care company InSite Vision to expand its basket of specialty products and boost sales.

Orchid Chemicals & Pharmaceuticals Ltd: The company expects to break even in FY17 with the help of new product launches and conversion of rupee loans to foreign currency ones.

Biocon: The company has opened a new manufacturing facility in Bangaluru to make insulin devices. The 1-lakh-square-feet new facility will make pen-like devices for diabetes patients.

National Aluminium Company Ltd: The company has informed BSE that the Ministry of Coal, Govt. of India has issued a direction to the nominated authority for allotment of Utkal - D & E coal mines in favour of NALCO under Rule 8(2)(a)(ii) and Rule 11(1) of the Coal mines (Special Provisions) Rules, 2014.

Indian Oil Corp: IOC will invest Rs. 1.75 trillion over the next 5-7 years, Chairman & MD B. Ashok said on Tuesday. Out of this, Rs. 50,000 crore will go into its core business of refining, which will involve capacity expansion across its four refineries - Koyali in Gujarat, Mathura in Uttar Pradesh, Panipat in Haryana and Barauni in Bihar.

Jubilant Life Sciences Ltd: Jubilant DraxImage Inc, a wholly-owned subsidiary of Jubilant Life Sciences Ltd, entered into an agreement with the Australia-based Cyclopharm Limited granting DraxImage an exclusive license to market and distribute Technegas in the US.

Vascon Engineers: The company is raising Rs. 100 crore through the sale of its non-core assets, as per media reports.

ABB India: The company has won orders worth around Rs. 1.19 billion to provide plant electrification, automation and substation solutions for solar power plants. Spread across Karnataka, Tamil Nadu and Andhra Pradesh, these projects will connect over 850 megawatts (MW) of solar energy to the grid and will be among the biggest solar projects worldwide.

Natco Pharma: The pharma company has raised Rs. 340.88 crore by issuing shares to qualified institutional buyers. The company issued 16 lakh shares at a price of Rs. 2,130.55 apiece.

Vedanta, Cairn India: Vedanta has received approval from BSE and NSE on the proposed merger of Cairn India with itself.

Indiabulls Housing Finance Ltd: The company board on Tuesday approved an allotment of over 5.6 crore equity shares worth Rs 3,996.79 crore to qualified institutional buyers (QIBs). 

RBI mulling cap on no of banks in lenders consortium

The suggestion is to have a regulatory limit on the number of members in a consortium or multiple banking arrangements so that every member has at least 10% of the exposure and will have serious independent credit appraisal and credit monitoring, R Gandhi said.

The Reserve Bank of India (RBI) is considering a proposal whereby it could limit the number of banks in a single lenders’ consortium to check the rise in non-performing assets (NPAs).

RBI deputy governor R Gandhi said on Tuesday that the suggestion is to have a regulatory limit on the number of members in a consortium or multiple banking arrangements so that every member has at least 10% of the exposure and will have serious independent credit appraisal and credit monitoring.

“A suggestion that has come relates to limiting the number of banks and financial institutions that should be permitted in a consortium or even in a multiple banking arrangement,” Gandhi said in a speech at an industry event in Mumbai.
He said that there was an urgent need for banks to reduce their stressed assets, given the impact on liquidity and capital.

Top Corporate news of the day - September 16, 2015

Check out the most important news stories which captured the headlines at the corporate level in India and internationally.

National Aluminium Co said that the ministry of coal has allotted Utkal -D & E coal mines located in Odisha in favour of the company for it to be able to meet its captive requirements at the Angul district. 

A total of 16 stranded gas-based power plants including the likes of GMR, GVK,Lanco and NTPC will be eligible for Rs15.9bn of Government subsidy for running their plants at 50% plant load factor on imported natural gas or re-gasified liquefied natural gas (RLNG). 

Biocon has opened a manufacturing facility to make devices for its insulin portfolio. The 100,000 square feet new devices facility will make pen-like devices that diabetes patients can use for their insulin needs. 

Tata Motors is planning to open three new assembly plants for its medium and small trucks this year. Tata Motors will be opening new assembly plants in Nigeria, Mauritius, Vietnam this year. The company will be spending around Rs1.2-1.5bn in the process. 

ABB has won orders worth around Rs1.19bn to provide plant electrification, automation and substation solutions for solar power plants. Spread across Karnataka, Tamil Nadu and Andhra Pradesh, these projects will connect over 850 megawatts (MW) of solar energy to the grid and will be among the biggest solar projects worldwide. 

ONGC may bid for some of the smaller fields it earlier surrendered as unviable following the unveiling of a new government policy to develop marginal oil and gas blocks. 

Tata Motors-owned Jaguar Land Rover (JLR) has entered the SUV market with the launch of F-Pace model here which is expected to hit the Indian market in the second half of 2016. 

Leading diagnostic chain Dr Lal PathLabs is planning to go public and has filed draft papers with market regulator Sebi to raise funds through an IPO. 

Jubilant DraxImage Inc, a wholly-owned subsidiary of Jubilant Life Sciences Ltd, entered into an agreement with the Australia-based Cyclopharm Limited granting DraxImage an exclusive license to market and distribute Technegas in the US. 

Orchid Chemicals and Pharmaceuticals Ltd is planning to convert most its Rupee term loans of over Rs15bn into foreign currency loans, in order to save the higher interest paid at present. 

Govt short-lists 13 gas-based power projects for subsidy

The projects were shortlisted after they participated in a reverse e-bidding process conducted by MSTC on Tuesday for the supply of power to state power discoms.

The Government on Tuesday shortlisted 13 power projects with an installed capacity of 8,262.08 megawatts (MW) for receiving natural gas subsidy.

Approximately 13.5 million metric standard cubic metres per day (mmscmd) of The Government on Tuesday shortlisted 13 power projects with an installed capacity of 8,262.08 megawatts (MW) for receiving natural gas subsidy.

Approximately 13.5 million metric standard cubic metres per day (mmscmd) of liquified natural gas (LNG) will be imported and cash-strapped state power distribution companies (state power discoms) will be financially supported to buy electricity from them.

The projects were shortlisted after they participated in a reverse e-bidding process conducted by MSTC on Tuesday for the supply of power to state power discoms.

These plants will generate 11.03 billion units of electricity, which will be supplied at or below Rs. 4.70 per unit to the discoms during 1st October 2015 to 31st March 2016.

This will involve government support of INR 1,590.09 crore from the Power System Development Fund (PSDF), the Power Ministry said in a statement. (LNG) will be imported and cash-strapped state power distribution companies (state power discoms) will be financially supported to buy electricity from them.

The projects were shortlisted after they participated in a reverse e-bidding process conducted by MSTC on Tuesday for the supply of power to state power discoms.

These plants will generate 11.03 billion units of electricity, which will be supplied at or below Rs. 4.70 per unit to the discoms during 1st October 2015 to 31st March 2016.

This will involve government support of INR 1,590.09 crore from the Power System Development Fund (PSDF), the Power Ministry said in a statement.

Government to give Unified License to winners of Marginal Oil & Gas Fields Auction

The 69 fields are estimated to hold about 51 million tons of oil and 53 billion cubic meters of gas. Out of these, 27 are in Mumbai Offshore region while another 15 are in the Krishna Godavari basin.

The government is planning to give a free hand to winners of the auction of marginal oil and gas fields. Winning bidders will be given unified licenses, which give them the right to produce conventional oil & gas as well as unconventional resources like shale oil & gas. In addition to this, the government is also offering pricing and marketing freedom to the developers.
 
The 69 fields are estimated to hold about 51 million tons of oil and 53 billion cubic meters of gas. Out of these, 27 are in Mumbai Offshore region while another 15 are in the Krishna Godavari basin. The biggest block which is being put up for auction holds about 29% of the total reserves of the 69 blocks.
 
Government is also trying to group adjacent blocks to reduce the total number of blocks going under the hammer. Till now, this number has been reduced to 48 and is further expected to go down to around 40. Both ONGC and OIL, which have surrendered 63 and 6 fields respectively, will be reimbursed by winning bidders after successful closure of the auctions.
 
The new operators will be allowed to explore their blocks for a period of 20 years. After winning the rights, developers will have 3 years to begin production. The timeline for starting production from the more complex deep-sea fields is 6 years. An important change has been made in the new policy, which allows exploration in the area, where discoveries have already been made. This was not the case earlier where exploration had to be stopped as soon as a discovery was made in the block.

The winners of the unified license will also have deal with new revenue sharing model, where bidders are required to quote the revenue they will share with government, at both lower as well as higher end of production band. This is in stark contrast with the earlier contracts, where developers were allowed to recover their investments, before any profits were shared with the government. Though the government did accuse developers of inflating costs to reduce the revenue available for sharing, the developers have long been denying it.

IOC to invest Rs. 1.75 trillion in next 5-7 years

IOC will invest an additional INR 50,000 crore to expand its pipeline network to 17,000 km from 11,000 km, besides into marketing of fuel and distribution of liquefied petroleum gas (LPG).

Indian Oil Corp. Ltd (IOC) will invest INR 1.75 trillion over the next 5-7 years, Chairman & MD B. Ashok said on Tuesday.

Out of this, INR 50,000 crore will go into its core business of refining, which will involve capacity expansion across its four refineries - Koyali in Gujarat, Mathura in Uttar Pradesh, Panipat in Haryana and Barauni in Bihar.

This will add capacity almost equivalent to its yet-to-be-operational 15 million tonnes per annum (mtpa) Paradip refinery in Odisha.

“Going by anticipated growth of the country, we believe there is going to be definitive requirement of energy in future, and we are operating in an industry where we have to create capacity before the demand. Therefore, we are definitely going to invest very heavily, probably much higher than earlier,” Ashok said.

IOC will invest an additional INR 50,000 crore to expand its pipeline network to 17,000 km from 11,000 km, besides into marketing of fuel and distribution of liquefied petroleum gas (LPG).

Asian Shares, US Bond Yields Rise Ahead of Fed Rate Decision

Tokyo: Asian shares followed Wall Street higher on Wednesday, albeit in thin volume, and short-term US bond yields held near 4-1/2-year highs as investors braced for the possibility of the first interest rate hike in the United States in almost a decade.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.3 per cent, while Japan's Nikkei gained 1.1 per cent.

China shares rose 0.6 per cent after sliding 6 per cent early in the week on concerns about its slowing economy.

Markets remain mixed on the likelihood of a rate increase by the Fed at its two-day meeting starting later in the day, and US economic data published on Tuesday did little to either back, or douse, expectations of one.

"Sentiment is shifting on a 5-cent piece right now," said Ben Le Brun, markets analyst at trading platform provider optionsXpress in Sydney.

"Although futures markets are pricing in a less than 30 per cent chance of a rate hike on Thursday, the US dollar continues to strengthen, meaning that traders might be having an each-way bet on the outcome."

US shares rose 1 per cent overnight, in part helped by data showing healthy growth in consumer spending, although retail sales for August were slightly below market expectations.

Manufacturing remained soft, pressured by the impact of the strong dollar on exporters, slack economies oversees and lower oil prices.

US Treasuries yields jumped on Tuesday, with the policy-sensitive two-year yield rising about 8 basis points to 0.815 per cent, its highest level since April 2011.

It last traded at 0.7863 per cent.

The 10-year US notes' yield stood at 2.2634 per cent, having risen to a 1-1/2-month high of 2.294 per cent on Tuesday.

"Those moves do not seem to be caused by any leaks on the Fed's meeting," Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities, said in a report.

"They are probably triggered by nervousness among those who are taking positions" ahead of the Fed's policy announcement.

The dollar index extended its rebound from Monday's three-week low of 95.125 to stand at 95.513. But it is essentially staying within its well-worn range of the last few weeks.

The euro traded up 0.2 per cent at $1.1284 while the dollar slipped 0.1 per cent to 120.23 yen.

Emerging market currencies remained under pressure near multi-year lows on worries of capital outflows as US yields rise and by concerns over China's slowdown.

Oil prices extended gains made on Tuesday, driven by rallying stocks, higher gasoline prices and on a report showing strong stockpile draw compared with expectations for a build.

US crude futures rose 0.8 per cent to $44.94 per barrel while Brent futures rose 0.2 per cent to $47.85. 

Bharat Forge, L&T, Ambuja Cements to be Under Pressure Today

Continued selloff by foreign investors pressured the Nifty (7,829) on Tuesday. Selling pressure is likely to weigh on markets on Wednesday as well, though Nifty futures are trading higher in pre-open trade.

Open interest (outstanding position) in the September Nifty future increased by 90,000 shares with the premium on futures turning negative 0.55 points from 2.95 points earlier. This indicates fresh addition of bearish bets to the Nifty September futures.

The option open interest data also seems to suggest the same view. Open interest of in-the-money (options having positive intrinsic value) 7,800 call options increased by 3.4 lakhs, while open interest in the 7,800 strike put fell by 2.1 lakh shares. Open interest in the 7,900 strike call also increased by 1.9 lakhs. This suggests bulls are losing confidence in the market and preparing themselves for another fall.

Total open interest in put options fell by 5.6 lakh shares whereas calls added 7.3 lakh shares to open interest pushing the Nifty put-call-ratio (PCR) to 0.93 from 0.94 earlier.

However, large concentration of open interest at 7,500 and 7,600 strike puts suggest that there will be support for Nifty between 7,500-7,600 level in case of any big fall.

Among individual stocks, Bharat Forge, Larsen & Toubro and Ambuja Cements saw addition of bearish bets.        

BSE Sensex Moves Higher Ahead of Fed Rate Decision

BSE Sensex and Nifty moved higher on Wednesday, tracking gains in most Asian markets. The Sensex rose over 200 points while Nifty jumped to 7,887 at its day's high.

Here are top 10 developments:

1) Analysts say Indian markets are likely to remain volatile today ahead of the US Fed rate decision on Thursday. Indian markets will be closed on Thursday for a holiday.

2) Although the Fed has signalled it plans to lift interest rates in 2015 - which would be its first hike in nearly a decade - some analysts say turbulence in the global financial markets could prompt the US central bank to delay the rate hike. Worries over the growth of China's economy have added uncertainty to global financial markets.

3) An interest rate hike in the US could accelerate the selling from foreign investors in Indian stock markets. Besides, a rate hike in the US would strengthen the dollar, putting further pressure on rupee.

4) The rupee traded lower at 66.47/dollar today against its Tuesday's close of 66.36/dollar.

5) Foreign investors sold a record Rs 16,877 crore worth of domestic stocks in August, leading to the recent selloff in Indian markets. On top of that, they sold nearly Rs 7,000 crore this month.

7) Analysts say after the Fed rate decision the next trigger for markets would be the Reserve Bank of India policy review on September 29. Most analysts say that if the Fed rate decision does not trigger a turmoil in global markets, the RBI may cut rates by at least 25 bps.

8) RBI chief Raghuram Rajan had earlier indicated the central bank may take a mid-policy rate action if needed.

9) Asian shares followed Wall Street higher on Wednesday, albeit in thin volume, and short-term U.S. bond yields held near 4 1/2-year highs as investors braced for the possibility of the first interest rate hike in the United States in almost a decade.

10) China shares rose 0.6 per cent after sliding 6 per cent early in the week while Japan's Nikkei gained nearly 1 per cent. US shares rose 1 per cent overnight, in part helped by data showing healthy growth in consumer spending.