Birla Sun Life MF eyes Rs 6,000 cr equity assets next fiscal

Birla Sun Life Mutual Fund aims to garner around Rs 6,000 crore of equity assets in the next financial year, an increase of 40 per cent from the current level, to raise the overall pie of this segment.

With Rs 90,000 crore of average assets under management (AUM), Birla Sun Life is the fourth largest fund house with an equity asset of over Rs 12,000 crore as of now. This makes it the seventh largest MF in terms of equity base.“We have seen net inflows of around Rs 600 crore in equities from April till date...we want to cross $1 billion-mark (Rs 6,000 crore) under this asset base by next fiscal,” Birla Sun Life MF Chief Executive A Balasubramanian told PTI.

Referring to the steps taken up by Birla Sun Life to expand asset base, Balasubramanian said: “We are stepping up our efforts with more distribution engagement...our focus is also to increase penetration in B-15 markets.”He said the private MF house is looking at increasing the equity investor base by turning inactive folios into active ones. The fund house is also opening zero account folios of investors who can invest in MF schemes in future.

RBI to hold rates tomorrow; see GDP sub-5% in Q4FY14: HSBC

All eyes are once again on Reserve Bank’s Raghuram Rajan as he gets ready to announce year end policy on Tuesday. Leif Eskesen, Chief Economist-India & Asean, HSBC expects the RBI to maintain status quo tomorrow. However, he does not think the central bank’s tightening cycle has ended.

 He says HSBC's PMI indicator has firmed to some extent and inflation is moving in the right direction - headline inflation has come down though a significant part of it is food inflation and core inflation continues to remain relatively stable, which is a problem. But disinflationary tendencies that RBI was looking at in its forward guidance as a precondition for remaining on hold last time, seems to have been fulfilled, hence maybe RBI will maintain status quo, he explains.

He says RBI’s monetary policy needs to be tighter going ahead than it is now if it wants inflation to be 6 percent or lower from 2016 onwards. He expects consumer price index or CPI to be below 8 percent by 2014-end. He expects to see some easing in core inflation, but not much. Eskesen further expects gross domestic product or GDP to be sub-5 percent in the fourth quarter of 2014.

Current account deficit may be contained at $33 b this fiscal

The current account deficit (CAD) for 2013-14 is likely to be contained at around $33 billion, much lower than the initial projection of $70 billion and around $88 billion of 2012-13.

One of the two primary components of the balance of payments, CAD is the sum of the balance of trade (net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers.

“The year could end with CAD of 1.8 per cent of GDP,” Saumitra Chaudhuri, Planning Commission Member, told Business Line. The deficit is down mainly due to significantly lower gold import and recovery in exports. This new estimate has also come amidst the rupee strengthening and breaching the 60/$ mark, and the RBI adding dollars to the forex reserves. Now, it is expected that lower CAD will further boost the rupee.

The latest estimate is better than the $40 billion Finance Minister P Chidambaram had projected in a statement on March 7. It is also close to Nomura’s projection of $34.7 billion. It may be noted that CAD in first nine months (April-December) of current fiscal stood at $31.2 billion.

PE funds to buy 49% stake in PNB Housing Finance

Private equity (PE) funds General Atlantic Partners and Apax Partners are planning to buy 49% stake owned by Destimoney in Punjab National Bank's (PNB’s) housing finance company PNB Housing Finance.  New Silk Route (NSR), which owns majority stake in Destimoney, has appointed Morgan Stanley to find a buyer for the PNB stake.

Housing companies are generally valued at 1.2 times of their net worth. PNB Housing Finance has a net worth of Rs 620 crore until fiscal March 31, 2013. This benchmark will offer PNB Housing Finance a valuation of roughly Rs 744 crore. Punjab National Bank has reported 42.14% fall in its net profit at Rs 755.41 crore for third quarter ended December 31, 2013 as compared to Rs 1305.62 crore for the same quarter in the previous year. However, total income of the bank has increased by 3.68% at Rs 11922.30 crore for quarter under review as compared to Rs 11499.27 crore for the quarter ended December 31, 2012.

RBI extends Basel III deadline to March 2019

Giving some respite to the Indian banks, the Reserve Bank of India (RBI) extended deadline for banks to implement global capital norms, Basel III, by a year to March 2019 amid concerns over the asset quality and profitability of the banks.

The RBI notified that prevailing slowdown in Indian industries has been putting pressure on the asset quality and thus impacting performance/profitability of the banks. Therefore, RBI decided to extend time for banks to raise capital within the internationally agreed timeline for full implementation of the Basel III capital regulations. Indian banks will now align full implementation of Basel III norms closer to the internationally agreed date of 1 January 2019.

The central bank has also revised certain aspects of guidelines like Minimum Common Equity Tier 1, Capital conservation buffer (CCB) and loss absorption features of non-equity capital instruments. However, the central bank issued more strict norms for Indian banks as compared to Basel Committee on Banking Supervision (BCBS). Under Basel III, total capital (Tier 1 and Tier 2) of a bank in India must be at least 9 per cent of risk weighted assets (RWAs) while, the BCBS requirement is minimum 8 per cent of RWAs.The RBI suggested Indian banks that capital requirements are substantially lower during the initial years as compared to later years for full implementation of Basel III Guidelines and therefore banks should consider this aspect carefully while undertaking their capital planning exercise. Referring to the dividend distribution, the RBI recommended that the dividend on common shares and perpetual non-cumulative preference shares (PNCPS) will be paid out of current year's profit only. If the coupon payment on perpetual debt instrument (PDI) would lead to result in losses in the current year, then declaration should be precluded to that extent. Coupons on perpetual debt instruments should not be paid out of retained earnings or reserves.

Lupin enters Mexico through an acquisition

Lupin Ltd has acquired Mexico’s speciality pharmaceutical company Laboratorios Grin, for an undisclosed sum. The move marks Lupin’s entry into the Mexican and larger Latin American market.

Mexico is one of the fast-growing pharmaceutical markets, valued at over $13.5 billion and growing at 9-10 per cent annually.Incorporated in 1955, Grin makes and sells branded ophthalmic products, and recorded revenues of approximately $28 million in 2013. The company has over 275 employees.

Vinita Gupta, Lupin’s Chief Executive Officer, said the acquisition is a reflection of Lupin’s commitment to expand into the Latin American market and build its global specialty business. “We see a lot of synergies in this acquisition and plan to bring our ophthalmic pipeline to build the Grin business as well as leverage their commercial presence to enter other promising therapy segments,” she said in a company statement.

Investment limit in CPI-linked bonds hiked to Rs10 lakh for individuals

The Reserve Bank of India (RBI) has doubled the maximum limit for investment in inflation-indexed bonds to Rs10 lakh per annum for individuals. Further, the investment limit for institutions like Hindu undivided family (HUF), Charitable Trusts, Education Endowments and similar institutions that are not profit-seeking in nature has been increased from Rs 5 lakh to Rs 25 lakh per annum.  The subscription for the inflation indexed national savings securities-cumulative will remain open till March 31.

The central bank has introduced Inflation Indexed bonds in December 2013 for retail investors with a view to provide a positive rate of return on their investment. Interest rate on these bonds is linked to Consumer Price Index (CPI).

Inflation-indexed bond is similar to any other government security. While, interest rate payable on these bonds comprise two parts  include 1.5% fixed rate per annum and an inflation rate based on the final combined CPI compounded in the principal on a half-yearly basis and paid at the time of maturity. Final combined CPI with a lag of three months is used to calculate incremental inflation rate.

Shriram City's Rs 200-crore NCD to open on April 16

Shriram City union Finance's Rs 200 crore non-convertible debentures (NCDs) will open for subscription on April 16. The company is aiming to garner Rs 100 crore through NCDs with an option to retain over subscription to the extent of another Rs 100 crore, aggregating to a total of Rs 200 crore.

NCDs are loan-linked securities issued by a company and cannot be converted into stocks and usually carry a higher interest rate than a convertible debenture. The issue would open on April 16 and close on May 16, as per draft prospectus filed with Sebi. The funds raised through the issue are to be used for financing and lending activities, to repay existing loans and meet business operations, including for capital expenditure and working capital requirements.

"Public issue by Shriram City of secured redeemable NCDs of face value of Rs 1,000 each, aggregating up to Rs 100 crore, with an option to retain over subscription up to Rs 100 crore for issuance of additional NCDs aggregating to a total of up to Rs 200 crore," the company said.

Corporate Affairs Ministry notifies 183 more sections in new company law

Corporate India will have to brace up for a comprehensively new company law regime from April 1 with the Corporate Affairs Ministry notifying most of the provisions under this new legislation enacted last year.On Wednesday, the Ministry notified 183 sections of this law including those concerning auditor rotation, one-person company and mandatory secretarial audit.This is in addition to the nearly 98 sections that were notified in the first phase. With the latest move, the company law will be substantially operalitionalised from April 1.The rules for the provisions are expected in the next few days.

The areas which are yet to be notified are compromise and arrangement, oppression and mismanagement, winding up, sick companies, special courts, national company law tribunal, national financial reporting authority and investor education and protection fund.With the latest changes, the responsibilities of Boards, committees and those of directors, including independent directors has significantly been enhanced, said Sai Venkateshwaran, Partner and Head, Accounting Advisory Services, KPMG in India.

Auditors’ reporting responsibilities have also been significantly enhanced together with more stringent penalties and independence requirements, he added.Companies will have to ensure compliance from April 1 as there is no specific transition period for most of the provisions, said Lalit Kumar, Partner, J Sagar Associates, a law firm.The exception will only be for the transition period provided in the company law itself (for example one year in the case of Board composition), he pointed out.Dolphy D’ Souza, senior partner, S.R.Batliboi & Co, said it’s absolutely clear that corporate boards will now have to gear up for the new regime from April 1.

L&T inches up as its arm bags orders worth Rs 1981 crore in March

L&T is currently trading at Rs. 1276.40, up by 1.20 points or 0.09% from its previous closing of Rs. 1275.20 on the BSE.

The Buildings a Factories Business of L&T Construction, subsidiary of Larsen and Toubro (L&T) has bagged new housing orders worth Rs 1981 crore in March 2014. A major residential order has been bagged in Bangalore from one of south India’s leading property developers which is also the company’s biggest residential order in this financial year. The scope of work involves civil, structural, MEP and finishing for 24 towers and 271 villas. The towers will comprise of two basements plus ground floor with levels varying from 18 floors to 29 floors and the project is scheduled to be completed in 42 months.

Another order has been received from an esteemed customer for construction of residential township in Gujarat. The project involves turnkey construction of 134 housing units. The construction includes civil, structural, MEP, finishes and other associated works.The Buildings a Factories Business caters to design a build construction of residential buildings including high rise towers, airports, information technology and institutional space, holistic health care centres, hotels, malls, cement plants, other factories and other commercial structures in domestic and international market.