Not looking at fresh equity issue in near-term: Oil India

The Oil India offer for sale (OFS) has been fully according to both the stock exchanges. There is news that it has raked in about Rs 3,100 crore. The government was hoping to sell 6 crore shares, about 10 percent in Oil India to rake in Rs 3000 crore.

This is the government's third disinvestment this fiscal. The government has a target to raise Rs 30000 crore, so next on the block is going to be NTPC. The EGoM we understand will be meeting next week.

TK Ananth Kumar, Director-Finance, Oil India in an interview to CNBC-TV18, said overall the OFS saw a good participation from all segments like foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It was 2.6 times over subscribed, so it can be called an overall success, he added.

The indicative average price he said was around Rs 517.99. Since they have adequate cash reserve, they won't be going in for any fresh equity at the moment, he asserted.

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

Q: Oil India OFS has been a hit, if you can take us through the details and the indicative price?

A: It is an overwhelming success. We have got 15.41 core shares at an average price of Rs 518. There has been demand from foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It has been a good participation from all the segments. Overall, we are happy and satisfied; certainly it can be called a very successful OFS.

Q: I understand that the indicative price is higher than the reserve price of Rs 510 a share. Could you shed some light on that?

A: The indicative price average has been Rs 517.99. So, close to Rs 518.

Q: You sell about 15 crore shares so that is more than a subscription of over two times?

A: Yes 2.6 times. 15.41 crore share have been subscribed.

Q: Totally how much has been mapped up?

A: Around Rs 3113 crore.

Q: After seeing this OFS issue going through, you don't really need cash now but seeing this do you now have any plans of perhaps issuing fresh equity, going in for any fund-raising activity. This has been purely a disinvestment by the government?

A: We have adequate cash reserve available with us. So, we don't think we will be going for any equity issue at the moment.

Q: If you can also shed some light on the road show that you went through because it is critical to get an understanding of the oil sector. There have been plenty of positive cues that have come in recently for the oil sector, for example we have seen partial deregulation of diesel. Dr Rangarajan has submitted a report which now talks about USD 8 gas price for administered pricing mechanism (APM) gas. Anything that you are picking up from the government on that front, what your future gas price is going to be?

A: The road show as part of our investor interaction has been extremely successful. The response has been overwhelmingly encouraging. The business plans, performance, strategy etc presented by the company has been very well appreciated. Of course they had concerns regarding the subsidy sharing and lack of clarity on the same but considering the recent reforms introduced right from September we have given them adequate comfort that government is proceeding in the right line to reduce the under recovery.

Q: These days we are seeing a kind of tug of war between the finance ministry and the oil ministry on the pricing of petro products, whether it should be export parity, trade parity. Can you tell us what the subsidy burden for this fiscal is going to be? Have you received any communication from the government? You did provide USD 56 a barrel realisation, you did that on a provisional basis so any clarity you have got from the government?

A: We have been given to understand that this USD 56 per barrel shall be the applicable subsidy burden of upstream company. So, taking USD 56, our burden should be around Rs 8000 crore.

Q: How much will the total upstream burden be for FY13?

A: As a percentage it is about 36.5 percent but this year it has been per barrel 56 on production. So, our share should be around Rs 8000 crore.

Q: Your realizations are about USD 109 a barrel, do you expect that to continue in the last quarter as well?

A: Yes the current crude price is ruling around USD 114-115 per barrel. So we certainly expect Q4 realisation should be at least equal to first nine months.

21.03 | 0 komentar | Read More

Working hard to regain clients' trust: Deutsche Bank

Anshu Jain, co-chief executive officer of Deutsche Bank spoke exclusively to CNBC-TV18 about the bank's clean up mission . Remember, yesterday, the bank posted a dismal set of fourth quarter numbers after setting aside four billion dollars to settle litigations. Jain said that clients have lost trust in the bank and the banking system and they are working hard to win it back.

Assuring clients, Jain said, "This is our assessment of what we think the future of our litigation settlements will be. It is our estimate for what the carrying values on the impairments needed to be and ofcourse the de-risking in the non-core bank, which is a straight loss from selling securities. I would not characterise it as the worst case scenario and I would think the market reaction, which we have been watching this morning, is really driven by a core tier one capital story which is, understandably, the number one question everyone asks."

21.03 | 0 komentar | Read More

Realty, broking firms can apply for new bank licences

Fri, Feb 01, 2013 at 21:49

Real estate and stock broking firms may be eligible to apply for new bank licences, CNBC-TV18 learns that RBI has agreed to drop explicit prohibition on new bank eligibility.

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Real estate and stock broking firms may be eligible to apply for new bank licences, CNBC-TV18 learns that RBI has agreed to drop explicit prohibition on new bank eligibility. The central bank will however critically evaluate business model and the promoters.

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21.03 | 0 komentar | Read More

All decisions on 2G spectrum auction finalised: Kapil Sibal

The Empowered Group of Ministers met today to discuss the 2G auction. Speaking after the meeting, telecom minister, Kapil Sibal said all decisions regarding the auction have been finalised. He also added that there will be no cap on the maximum number of blocks any company can bid for.

Also read: SC defers 2G scam hearing; cancelled licenses extended

Kapil Sibal, telecom minister, said, "The EGoM met today to approve the notice for the invitation of the auction and the whole agenda has been approved. We are now going ahead with the auction as proposed. Whatever are the other procedural decisions that had to be taken, have been taken. You can find out all the details from us."

21.03 | 0 komentar | Read More

HP to close site in Germany, cutting 850 jobs

Computer maker Hewlett-Packard Co said on Friday it is planning to close a site in Germany by the end of October as part of its multi-year restructuring plan.

HP said it was closing its site in Ruesselsheim, Germany, southwest of Frankfurt, and that around 850 jobs would be cut. The remaining 250 employees may be able to transfer to HP partners or clients.

The restructuring of its enterprise services business will not affect HP's other major sites in Germany, the company said, adding that it would continue to employ about 10,000 people in Europe's largest economy.

HP said last year that it was planning to lay off 29,000 employees over two years as it tries to return to growth.

The company, which employs more than 300,000 people globally, began a multi-year restructuring last year aimed at focusing the sprawling company on services targeted at corporations.

HP shares were up 16 cents at USD 16.67 in morning trading.

21.03 | 0 komentar | Read More

Not looking at fresh equity issue in near-term: Oil India

The Oil India offer for sale (OFS) has been fully according to both the stock exchanges. There is news that it has raked in about Rs 3,100 crore. The government was hoping to sell 6 crore shares, about 10 percent in Oil India to rake in Rs 3000 crore.

This is the government's third disinvestment this fiscal. The government has a target to raise Rs 30000 crore, so next on the block is going to be NTPC. The EGoM we understand will be meeting next week.

TK Ananth Kumar, Director-Finance, Oil India in an interview to CNBC-TV18, said overall the OFS saw a good participation from all segments like foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It was 2.6 times over subscribed, so it can be called an overall success, he added.

The indicative average price he said was around Rs 517.99. Since they have adequate cash reserve, they won't be going in for any fresh equity at the moment, he asserted.

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

Q: Oil India OFS has been a hit, if you can take us through the details and the indicative price?

A: It is an overwhelming success. We have got 15.41 core shares at an average price of Rs 518. There has been demand from foreign institutional investors (FIIs), local institutions, retail, and high net worth individuals (HNI). It has been a good participation from all the segments. Overall, we are happy and satisfied; certainly it can be called a very successful OFS.

Q: I understand that the indicative price is higher than the reserve price of Rs 510 a share. Could you shed some light on that?

A: The indicative price average has been Rs 517.99. So, close to Rs 518.

Q: You sell about 15 crore shares so that is more than a subscription of over two times?

A: Yes 2.6 times. 15.41 crore share have been subscribed.

Q: Totally how much has been mapped up?

A: Around Rs 3113 crore.

Q: After seeing this OFS issue going through, you don't really need cash now but seeing this do you now have any plans of perhaps issuing fresh equity, going in for any fund-raising activity. This has been purely a disinvestment by the government?

A: We have adequate cash reserve available with us. So, we don't think we will be going for any equity issue at the moment.

Q: If you can also shed some light on the road show that you went through because it is critical to get an understanding of the oil sector. There have been plenty of positive cues that have come in recently for the oil sector, for example we have seen partial deregulation of diesel. Dr Rangarajan has submitted a report which now talks about USD 8 gas price for administered pricing mechanism (APM) gas. Anything that you are picking up from the government on that front, what your future gas price is going to be?

A: The road show as part of our investor interaction has been extremely successful. The response has been overwhelmingly encouraging. The business plans, performance, strategy etc presented by the company has been very well appreciated. Of course they had concerns regarding the subsidy sharing and lack of clarity on the same but considering the recent reforms introduced right from September we have given them adequate comfort that government is proceeding in the right line to reduce the under recovery.

Q: These days we are seeing a kind of tug of war between the finance ministry and the oil ministry on the pricing of petro products, whether it should be export parity, trade parity. Can you tell us what the subsidy burden for this fiscal is going to be? Have you received any communication from the government? You did provide USD 56 a barrel realisation, you did that on a provisional basis so any clarity you have got from the government?

A: We have been given to understand that this USD 56 per barrel shall be the applicable subsidy burden of upstream company. So, taking USD 56, our burden should be around Rs 8000 crore.

Q: How much will the total upstream burden be for FY13?

A: As a percentage it is about 36.5 percent but this year it has been per barrel 56 on production. So, our share should be around Rs 8000 crore.

Q: Your realizations are about USD 109 a barrel, do you expect that to continue in the last quarter as well?

A: Yes the current crude price is ruling around USD 114-115 per barrel. So we certainly expect Q4 realisation should be at least equal to first nine months.

21.03 | 0 komentar | Read More

Budget 2013-14: FM will get a bigger bank recap bill, courtesy RBI

by R Jagannathan

The finance minister is not going to get his free lunch from Duvvuri Subbaro, despite the fact that the latter cut both repo and cash reserve ratio on 29 January to please him.

The obverse side of easier money and credit is always a higher complement of bad loans. And more bad loans means more capital. What P Chidambaram gained by way of cheaper loans will have to be repaid to banks as higher capital infusion from the government.

In a tail-sting to the monetary policy, the Reserve Bank of India yesterday announced a stringent prudential measure for banks that are restructuring bad loans with gay abandon in order to make their balance-sheets look prettier. Restructured loans are essentially loans on which the borrower has defaulted and sought the bank's acquiescence in either stretching the repayment period or reducing the loan rate, or both.

Banks are eager to restructure because otherwise they have to take a hit on profits or provide more capital. Rating agency Icra says banks bad loans are set to cross Rs 2,00,000 crore .

The RBI's new prudential guidelines on provisioning for restructured loans says that banks have to write off 5 percent of the value of restructured assets instead of the current 2.75 percent. The rate was revised to 2.75 percent only last November, and the further hike to 5 percent means that banks have to provide more capital in the balance-sheet and more provisions in their P&L account.

For all new restructured loans, the provisioning norm will be 5 percent from 1 April 2013. For the existing stock of restructured assets, the RBI has suggested a phased coverage. Provisioning in 2013-14 will rise from 2.75 percent to 3.75 percent, and in the year after from 3.75 percent to 5 percent. The crunch will thus come in 2014-15.

Not surprisingly, bank shares were swooning all over, with the BSE Bankex and NSE Bank Nifty dropping by 0.7 percent on Friday. A Bank of America Merrill Lynch report on the new RBI prudential norms said that "the biggest impact may be for Punjab National Bank (PNB), Indian Bank and Oriental Bank of Commerce (OBC) having 10 percent of loans in the restructured category. In contrast, SBI, followed by Union Bank, may be less impacted." The report says the earnings hit could be 3-8 percent for some public sector banks through 2014-15, while the impact on private banks will be negligible.

The real message of the RBI's prudential changes is simple: banks cannot merrily keep restructuring loans as though everything is fine. They have to provide more capital.

Since the government is the largest owner of banks in India, the finance ministry will surely get a big bill for bank recapitalisation shortly, and especially in 2013-14 and 2014-15. In 2012-13, the centre provided around Rs 15,000 crore for recapitalising public sector banks, but Subbarao's new prudential guidelines for restructured loans will make the bill bigger next year and the year after that.

Between prudential norms and Basel III another international capital adequacy norm that is kicking in shortly banks may have to provide over Rs 5 lakh crore of additional capital in the coming years.

In its annual report for 2012, the RBI said that public sector banks would require Rs 4.5 lakh crore of equity and long-term loans to meet Basel III requirements. For private sector banks, the figures were around Rs 75,000-80,000 crore, including both equity and loans.

The prudential norms on restructured assets will make public sector banks' capital requirements larger than ever. Public sector banks account for nearly 70 percent of the banking sector.

Perhaps aware of the likely demands for funding, the UPA government has decided that proceeds from public sector disinvestment in 2013-14 can also be used for bank and insurance companies' recapitalisation. The money may also be used to recapitalise other public sector companies outside the banking sector.

This will lead us to an incongruous situation where more public sector shares will be sold in the coming years to finance reinvestment in banks and other public sector companies.

Disinvestment money will go towards investment in the public sector. Money will go from one pocket to another for no reason other than budgetary convenience.

One wonders whether it would not have been simpler to ask banks and public sector companies to fend for themselves by tapping the market and reducing the government's stake. Isn't the time ripe for the government to start letting go of at least the smaller public sector banks?

Chidambaram should thank Subbarao for bringing that day nearer by forcing him to rethink the UPA's flawed strategy of first disinvestment, then asking LIC and banks to take up part of the disinvestment offer, and then using the same proceeds to recapitalise the insurance and banking sector. If it was anybody else but the government, it would be called a Ponzi scheme. Wonder who is fooled.

Isn't it time to abandon the charade?

21.03 | 0 komentar | Read More

Eicher Motor Jan sales up 1% at 3,736 units

Moneycontrol Bureau  

VECV Commercial Vehicles, a 50-50 joint venture between Sweden's Volvo Group and Eicher Motors , sold 3,736 Eicher branded trucks and buses in January, up 1 percent from a year ago.

The company's domestic sales rose 2.5 percent to 3,638 units, while exports fell 38 percent to 98 units.

VECV's domestic bus sales were up 39 percent to 506 units, while heavy duty trucks saw 16 percent growth at  674 units.

However, light and medium trucks sales declined 6 percent to 2,458 units.

Eicher Motors shares closed at Rs 2,841.20 on Friday, up about 1 percent on NSE.

21.03 | 0 komentar | Read More

IOB sees better NIM in Q4 as it sheds bulk deposits

Indian Overseas Bank is likely to see improvement in net interest margin (NIM) in the current quarter as it is repricing its bulk deposits, a top bank official said today.

"We have around Rs 19,000 crore of bulk deposit which will be matured in the current quarter and will subsequently repriced. This is likely to boost our NIM by around 20-25 basis points and we hope have a NIM of around 2.8 percent in the fourth quarter," bank's Executive Director ADM Chavali told reporters on the sidelines of an analyst meet here.

The NIM of the Chennai-based public sector bank was at 2.51 percent in the third quarter of the current financial year, when it reported a 7 percent growth in net profit at Rs 116.50 crore against Rs 108.27 crore a year ago.

Bank Chairman and Managing Director M Narendra attributed the growth in net profit to shedding of bulk deposits, which stood at 21.23 percent as against 34 percent in the corresponding period last fiscal.

On the move to trim the share of bulk deposit further, Chavali said the bank is trying to reduce it to around 15 percent by the end of the fiscal as directed by the government. The bank also informed that the government will infuse Rs 1,000 crore into the bank this fiscal.

"The government will infuse Rs 1,000 crore into the bank, which will take the tier-I capital to over 8 percent from the present 7.33 percent," Narendra said.

He also said the bank is reorienting its strategy to have more retail focus in the near future. In this effort, the bank has announced recently to give home loans up to Rs 75 lakh at its base rate of 10.5 percent, which has come out after the RBI cut repo and CRR rates by 0.25 percent each in January 29 policy review.

21.03 | 0 komentar | Read More

Working hard to regain clients' trust: Deutsche Bank

Anshu Jain, co-chief executive officer of Deutsche Bank spoke exclusively to CNBC-TV18 about the bank's clean up mission . Remember, yesterday, the bank posted a dismal set of fourth quarter numbers after setting aside four billion dollars to settle litigations. Jain said that clients have lost trust in the bank and the banking system and they are working hard to win it back.

Assuring clients, Jain said, "This is our assessment of what we think the future of our litigation settlements will be. It is our estimate for what the carrying values on the impairments needed to be and ofcourse the de-risking in the non-core bank, which is a straight loss from selling securities. I would not characterise it as the worst case scenario and I would think the market reaction, which we have been watching this morning, is really driven by a core tier one capital story which is, understandably, the number one question everyone asks."

21.03 | 0 komentar | Read More