Wednesday, April 30, 2014
s high on Jupiter success
Lending business remains sluggish for Kotak Mahindra Bank
d
Kotak Mahindra Bank Ltd’s
capital markets business has done pretty well in the March quarter as
equity markets rallied, but a weakening economy continued to take a toll
on its lending business.
Net profit of the broking business doubled to Rs.44
crore although that increase is partly due to a low base. Indian equity
markets have been hovering at an all-time high and turnover,
particularly from retail investors, has increased, boosting broking
profits. Other fee-based businesses have done well, too. The life
insurance business continued to maintain a 12% year-on-year growth rate
in profit while the investments business profits also doubled to Rs.16 crore in the March quarter.
The financing business—Kotak Mahindra Bank (stand-alone) and Kotak Mahindra Prime Ltd—continued
to struggle because of low economic growth. While consolidated loan
growth at 8% over a year ago was better than the 6% pace seen in the
December quarter, it was still lower than industry growth.
The slowdown in credit growth, however, can be construed
as a prudential measure. It is mostly owing to a 30% decline in the
commercial vehicle and construction equipment loan book, a segment
particularly susceptible to bad loans. Excluding this, advances growth
was a decent 17%. Auto loans grew at 4%, while the corporate book saw a
pick-up in growth to 19% from 6% in the previous quarter.
The bank was able to boost its net interest income thanks
to 20 basis points year-on-year increase in net interest margins (NIMs)
to 4.9%. However, operating and net profits remained little changed
from a year ago because of an increase in operating expenses.
One basis point is one-hundredth of a percentage point.
The bank’s asset quality improved slightly. Gross bad
loans as a proportion of the loan book stood at 1.63%. Restructured
loans also fell to Rs.10 crore at the end of March compared with Rs.42 crore three months ago.
While asset quality and NIMs are positives, the bank has
to improve loan and earnings growth. The management has guided for a
15-20% loan growth in the current fiscal year, but fell short of a
similar target in 2013-14.
Kotak shares have lagged S&P BSE Bankex returns since
the start of 2014. Given that they trade at an expensive 4.4 times
estimated book value for 2014-15, earnings have to grow faster for the
bank to have a chance of outperforming the Bankex.
PRAVEEN SHARMA
PGDM 2nd
Lending business remains sluggish for Kotak Mahindra Bank
Lending business remains sluggish for Kotak Mahindra Bank
Kotak Mahindra Bank Ltd’s
capital markets business has done pretty well in the March quarter as
equity markets rallied, but a weakening economy continued to take a toll
on its lending business.
Net profit of the broking business doubled to Rs.44
crore although that increase is partly due to a low base. Indian equity
markets have been hovering at an all-time high and turnover,
particularly from retail investors, has increased, boosting broking
profits. Other fee-based businesses have done well, too. The life
insurance business continued to maintain a 12% year-on-year growth rate
in profit while the investments business profits also doubled to Rs.16 crore in the March quarter.
The financing business—Kotak Mahindra Bank (stand-alone) and Kotak Mahindra Prime Ltd—continued
to struggle because of low economic growth. While consolidated loan
growth at 8% over a year ago was better than the 6% pace seen in the
December quarter, it was still lower than industry growth.
The slowdown in credit growth, however, can be construed
as a prudential measure. It is mostly owing to a 30% decline in the
commercial vehicle and construction equipment loan book, a segment
particularly susceptible to bad loans. Excluding this, advances growth
was a decent 17%. Auto loans grew at 4%, while the corporate book saw a
pick-up in growth to 19% from 6% in the previous quarter.
The bank was able to boost its net interest income thanks
to 20 basis points year-on-year increase in net interest margins (NIMs)
to 4.9%. However, operating and net profits remained little changed
from a year ago because of an increase in operating expenses.
One basis point is one-hundredth of a percentage point.
The bank’s asset quality improved slightly. Gross bad
loans as a proportion of the loan book stood at 1.63%. Restructured
loans also fell to Rs.10 crore at the end of March compared with Rs.42 crore three months ago.
While asset quality and NIMs are positives, the bank has
to improve loan and earnings growth. The management has guided for a
15-20% loan growth in the current fiscal year, but fell short of a
similar target in 2013-14.
Kotak shares have lagged S&P BSE Bankex returns since
the start of 2014. Given that they trade at an expensive 4.4 times
estimated book value for 2014-15, earnings have to grow faster for the
bank to have a chance of outperforming the Bankex.
Rahul kumar Gupta
PGDM,1st year
Source:- Mint.
Abnormal Volatility Index is an aberration
Abnormal Volatility I
ndex is an aberration
The volatility in the stock market is expected to rise
significantly in the coming days as we move closer to the counting of
votes on 16 May for the ongoing Lok Sabha elections. The Volatility
Index, or India VIX, which shows the expected volatility in next 30
days, has risen significantly. The index touched a high of 34.39 on 21
April compared with the level of 16.19 on 21 March.
The Volatility Index is defined by National Stock Exchange (NSE) as
“a measure of the amount by which an underlying index is expected to
fluctuate, in the near term, (calculated as annualized volatility,
denoted in percentage, for example 20%) based on the order book of the
underlying index options.”
Normally, the correlation between CNX Nifty and VIX is
negative. Put differently, when the market is falling, the expected
volatility is higher and when the market is on its way up, the expected
volatility is lower. However, the correlation has turned positive in
recent months, indicating that expected volatility has gone up along
with the underlying index (Nifty). So what brought about the change in
the normal behaviour of VIX?
Clearly, the ongoing election is a big event for the
market and depending on the outcome on 16 May, stocks can move in either
direction in a big way, at least in the short run.
The consensus view is that market will go up if the
opinion polls are proved correct and the Bharatiya Janata Party-led
National Democratic Alliance comes to power. However, the outcome is not
certain and if it is not in line with the opinion polls, the market can
fall significantly in the short run.
Talk of the Congress party’s willingness to support a
coalition of regional parties after the results are declared is also
adding to the fear. Therefore, the rise in the expected volatility
indicates that investors and traders are hedging their portfolios.
Siddharth Bhamre, head (derivatives and technical research), Angel
Broking Pvt. Ltd, said, “There are more speculative positions than hedge
positions. People use events such as this (elections) to speculate.”
Should you be worried?
Markets are moving towards a big event and the outcome of
the general election will play a significant role in deciding the
direction of the market in the short- to medium-term. So, as we move
closer to the counting day, the volatility is expected to rise as
investors and traders will position themselves in different ways
depending on their view of the outcome.
However, as an investor holding stocks with a long-term
view, you need not worry. Prasanth Prabhakaran, president (retail
broking), India Infoline Ltd, said, “People with leveraged positions
should be cautious, but normal stock investors should not be worried.”
As a long-term stock investor, you would have bought
stocks that you are holding on the basis of the fundamentals of the
company and not necessarily with a view on election outcome in mind.
Therefore, you don’t need to do anything different at this stage. If
stock markets fall in the short run after the results are announced,
depending on the stocks you are holding, it can, in fact, be treated as a
buying opportunity.
md.aquil alam
pgdm 1st year
source.live mint
Twitter user growth slide drives stock to lowest since Wall Street debut
Twitter fell as low as $37.24 a share, the lowest since it started trading, and was down 9.8% to $38.45
Twitter reported a $132.4 million loss for the quarter, or 23 cents per share. Photo: AP
San Francisco:
Twitter Inc.’s
slowing user growth pushed the stock to the lowest since last year’s
market debut. The company on Tuesday said that membership in the first
quarter reached 255 million, with year-over-year growth decelerating to
25% from 30% in the previous period. The stock plunged as much as 13% in
early trading even as sales more than doubled to $250 million, topping
analysts’ estimates.
Twitter’s efforts to move past microblogging and into image and video sharing have failed to spur a surge in users in a market where Snapchat Inc. and Facebook Inc.’s Instagram
application are gaining popularity. The company needs more consumers
adopting the service and staying on longer as it vies for marketing
dollars in web and mobile advertising.
“Wall Street is laser-focused on that user number,” said
Thomas Forte, an analyst at Telsey Advisory Group in New York. “For
Twitter to maximize its value as investment they need to get in front of
as many people as possible and do a good job of monetizing that
audience.”
Twitter’s stock plunge magnifies recent drop of many Internet stocks, with Linkedin Corp. and Google Inc.
also down on Wednesday and for the year. Investors are questioning
whether the web companies, many of which are richly valued, can keep up
revenue expansion. The Nasdaq Internet Index is off 18% from a March
peak, hovering close to the threshold for a bear market.
Twitter fell as low as $37.24 a share, the lowest since
it started trading in November, and was down 9.8% to $38.45 as of
11:35am New York time.
No appetite
“The appetite for growth stocks has just completely
unravelled in the last few weeks, and Twitter is at the top of that
list,” said Rob Sanderson, an analyst at MKM Partners LLC.
Twitter’s chief financial officer Mike Gupta said on a conference call with analysts that the San Francisco-based company has no plans to pursue a secondary share sale.
Twitter’s net loss widened to $132.4 million, or 23 cents
a share, from $27 million, or 21 cents, a year earlier. Excluding some
items, the company broke even, beating the three-cent loss predicted by
analysts. Even as user growth slowed, people viewed their Twitter
timelines more often, with 157 billion views, up 15% from a year
earlier.
NITESH KUMAR SINGH
PGDM 2ND
SOURCE-- MINT LIVE NEWS
Pfizer's designs on AstraZeneca stir tax envy among rivals
yahoofinance
NEW YORK (Reuters) - Rumors about a
massive healthcare deal were circulating in industry circles, months
before Pfizer Inc disclosed its $100 billion pursuit of Britain's
AstraZeneca Plc, according to several industry bankers and lawyers.
As
rivals and bankers assessed what it could mean for different companies
in the industry, one aspect touched nearly everyone: what it could mean
for an increasingly popular U.S. tax loophole.U.S. healthcare companies worried that if a household name like Pfizer changed its domicile to Britain to lower its tax rate as a result of a deal with AstraZeneca, it would spur Congress into action and close the tax arbitrage opportunity, called tax inversion, for everyone else, these people said.
The fear of such an outcome - even though it is likely many months, if not years, away - added new urgency to companies such as Botox-maker Allergan Inc and generic drugmaker Mylan Inc that were already looking at European targets, people familiar with these situations said.
Allergan declined to comment. Its CEO David Pyott has said that he would be uncomfortable doing a deal where the tax benefit, and not strategy, was the principal driver. Mylan could not be immediately reached for comment.
Now that Pfizer's plans are out in the open, pitching by bankers on inversion targets has reached a fever pitch. While tax arbitrage deals have so far largely been in the pharmaceutical sector, bankers and lawyers said U.S. technology, consumer and industrial companies are also now looking into the possibility of doing a tax inversion deal.
One banker, who declined to be identified because he is actively advising companies on such deals, said the Pfizer plan "will get people to try to move a lot quicker" so that they can get a deal "grandfathered in" before any possible law change.
WASHINGTON WORRIES
Tax inversions allow U.S. companies, which face one of the highest tax rates in the world - a federal tax rate of 35 percent, and an overall rate that can be close to 40 percent including state and local taxes - to move to a lower-tax country by buying or creating a new holding company.
Since 2008, about two dozen U.S. companies have used the strategy, versus about the same number over the previous 25 years, according to a Reuters review of transactions.
Ireland, the Netherlands, Switzerland, Canada and Britain lately have been the most common destinations of U.S. companies seeking new tax domiciles. The U.K. tax rate for companies is due to drop to 20 percent from 21 percent next year.
This year, most of those deals have happened in healthcare, which is in the midst of an unprecedented bout of deal-making. More than a $153 billion worth of deals have already been announced so far this year in the sector, the highest since Thomson Reuters began tracking data. Several more are in the works, and many of those have tax arbitrage as one of the crucial drivers for the transaction as well.
As the industry had feared, Pfizer's plans have triggered concerns in Washington, with lawmakers calling for comprehensive tax reform. On Wednesday, a U.S. Treasury official said the Obama administration is seeking ways to curb tax-dodging by U.S. businesses that reincorporate overseas.
"Inversion transactions illustrate the need for comprehensive business tax reform that would lower corporate tax rates and limit the ability of multinationals to shift income outside the U.S.," the Treasury official said, noting that the administration knows such deals "are occurring and aren't being caught by the current rules."
Analysts and lawmakers say the chances of Congress passing a new law anytime before the November mid-term U.S. elections are slim given the gridlock between Democrats and Republicans over the tax reform question. They expect Congress to take up tax reform sometime next year.
"Without some kind of tax reform in this country, there are huge benefits to large multinationals re-domiciling into more tax-friendly jurisdictions," Ray McGuire, Citigroup Inc's global head of corporate and investment banking, told an M&A panel at the Milken Institute Global Conference in Los Angeles earlier this week.
NOT ALL ARBITRAGE
While
tax advantages have become a major driver for deals, bankers and
lawyers said their clients in general are thinking of business needs
first when assessing potential targets.
The frenzied dealmaking
in healthcare comes as the industry restructures amid healthcare
spending cuts and competition from cheap generics."People may be pitching clients to do inversions now because of a concern that the rules may change over time, but the companies we deal with every day are thoughtful about these things and do not just chase deals for tax purposes alone," said Gordon Caplan, a partner at Wilkie Farr & Gallagher LLP.
Buying AstraZeneca, for example, would boost Pfizer's pipeline of cancer drugs and generate significant cost savings. But it would also allow it to re-domicile to Britain and enjoy lower tax rates.
U.S. drugmaker Mylan, which has been seeking to buy Swedish drugmaker Meda AB, was looking to do an inversion deal because it was at a disadvantage compared to foreign generic rivals, people close to the matter said. Major competitors include Teva Pharmaceuticals Industries Ltd, which is based in Israel, and Actavis Plc, which re-domiciled to Ireland through a 2013 acquisition of Warner Chilcott. Both face lower tax rates.
Mylan,
these people said, is also worried that if it doesn't complete an
acquisition, it would be bought by another company that has already
completed an inversion.
Similarly,
Allergan first approached Shire Plc in recent months in part because of
the tax arbitrage opportunity. But now it, too, faces the prospect of
being swallowed up by an unwanted bidder, Valeant Pharmaceuticals
International Inc in partnership with activist investor Bill Ackman.
That has prompted Allergan to consider once again making a bid for
Shire, despite being rebuffed when it made a previous overture, sources
told Reuters earlier this week.
"There is a sense that the
government will change the tax rules, when and if they get around to
rewriting the tax code as they have talked about doing," said one
M&A lawyer who is working on these deals and therefore did not want
to be identified. "So if people want to do these deals they better do
them soon."prince bikram shah
pgdm 1st
Sun Pharma, Ranbaxy shares decline after court stalls merger
Purchase of Ranbaxy shares by Silverstreet Developers, a Sun Pharma subsidiary, comes under scrutiny
The Andhra
Pradesh high court on Tuesday asked the stock exchanges and Sebi not to
approve the merger deal between Sun Pharma and Ranbaxy, untill
allegations of insider trading involving Sun Pharma’s promoters are
investigated. Photo: Hemant Mishra/Mint
Mumbai: Shares of Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd
fell after the Andhra Pradesh high court on Tuesday temporarily halted
the proposed merger between the two companies until allegations of
insider trading involving Sun Pharma’s promoters are investigated.
The high court, acting on a writ petition filed by some investors,
asked the stock exchanges and capital markets regulator Securities and
Exchange Board of India (Sebi) not to approve the merger deal announced
in April.
Shares of Sun Pharma fell 1.22% to Rs.631.55 on BSE, while India’s benchmark Sensex dropped 0.22% to 22,417.80 points. Shares of Ranbaxy declined 2.3% to Rs.472.10 on Wednesday.
Silverstreet Developers Llp, a Sun Pharma subsidiary, purchased a large volume of Ranbaxy shares just a few days before Sun Pharma and Ranbaxy announced an all-stock merger deal valued at $3.2 billion.
There
is a possibility that executives at Silverstreet had access to
information about the transaction that were not disclosed publicly, said
Anoop Narayanan, a Mumbai-based corporate lawyer and founder of ANA Law Group.
“Prima
facie, it appears from the reports that the people on board at
Silverstreet are apparently closely related to Sun Pharma’s top
management and people in such roles are likely to be involved in the
decision making of Sun Pharma,” said Narayanan.
“Thus, there is a possibility that Silverstreet may have been in
possession of the unpublished price-sensitive information prior to its
announcement. If these are proved, the facts of this case will satisfy
the two key aspects that triggers action under Sebi regulations on
insider trading
MUNTAZIR ALAM
PGDM 2ND SEM
IIMT COLLEGE OF MANAGEMENT
MCX discontinues gold, silver contracts expiring 2015
MCX asks traders to square off their trading positions in 3 contracts —
gold February 2015, kapas March 2015 and kapas April 2015
New Delhi: Leading commodity bourse MCX on
Wednesday said it discontinued six futures trading contracts in gold and
silver expiring in 2015, effective Tuesday, due to procedural problems.
The exchange also asked traders to square off their trading
positions in three contracts — gold February 2015, kapas March 2015 and
kapas April 2015.
“All these contracts will be made available for trading
after obtaining the requisite approval from the Forward Markets
Commission (FMC) for launching the contracts expiring in the calendar
year 2015 onwards,” Multi Commodity Exchange of India Ltd said in a statement.
The exchange withdrew one gold contract expiring in April
2015 and three ‘silver 1000’ contracts each set to expire in January,
February and March of next year, it said.
MCX discontinued one ‘silver mini’ contract and one
‘silver’ contract that were to expire in February and March next year
with effect from 29 April.
The exchange said the withdrawal of the six far-month
contracts in the two commodities is a “procedural issue” and “is not in
relation with FMC’s 17 December 2013, order.”
In the order, the FMC declared erstwhile promoter Financial Technologies India Ltd (FTIL) as “not fit and proper’ to hold more than a 2% stake in the bourse.
The regulator had given MCX a deadline till Wednesday to ensure FTIL pares its stake from the current 26%.
The regulator has warned MCX that it would not renew
contracts, allow new contracts and eventually take away the licence to
run the bourse if it does not ensure FTIL complies with the regulatory
norms.
Source- Livemint.com
By
Shah Mohammad Abdul Qadir
PGDM 1st year
IIMTCollege Of Management
IIMTCollege Of Management
Greater Noida, U.P.
Tuesday, April 29, 2014
India now world's third largest economy in terms of purchasing power parity
SummaryAs perW orld Bank report, India is ahead of Japan and only behind US and China which hold top 2 spotsIndia is now the world's third largest economy in terms of purchasing power parity, ahead of Japan and behind eth US and China which hold the top two spots. This was revealed by the 2011 round of the World Bank's International Comparison Program (ICP) released on Tuesday.
"The United States remained the world’s largest economy, but it was closely followed by China when measured using PPPs. India was now the world’s third largest economy, moving ahead of Japan," the report said. (Read report)
It highlighted the fact that the largest economies were not the richest, as shown in the ranking of GDP per capita. The middle-income economies with large economies also had large populations, setting the stage for continued growth, it added.
The report says India "went from the 10th largest economy in 2005 to the third largest in 2011.
praveen sharma
pgdm 2nd sem
Sun Pharma, Ranbaxy stocks slip on court stay on merger
30th april 2014
Mumbai: Shares of Sun Pharmaceuticals Industries Ltd and Ranbaxy Laboratories Ltd
fell in early trade on BSE after Andhra Pradesh high court put the
proposed merger between the two drug makers on hold on Tuesday.
At 10.22am, shares of Sun Pharma were trading at Rs.631.95
apiece on BSE, down 1.16% from their previous close even as India’s
benchmark Sensex Index rose 0.79% to 22,643.41 points. Shares of Ranbaxy
were trading at Rs.473.4 apiece on the exchange, down 2.03%.
The Andhra Pradesh high court, acting on a writ petition
filed by a group of investors, on Tuesday asked the stock exchanges and
market regulator Securities and Exchange Board of India (Sebi) not to
approve the merger deal announced in April, untill allegations of
insider trading involving Sun Pharma’s promoters are investigated.
A Sun Pharma subsidiary, Silverstreet Developers LLP,
purchased a large volume of Ranbaxy shares just a few days before Sun
Pharma and Ranbaxy announced an all stock merger deal, which was valued
at $3.2 billion.
A group of investors, who approached the Andhra Pradesh
high court last week, alleged that Sun Pharma promoters or people
directly related to Sun Pharma, who were privy to the soon-to- be-
announced merger, were involved in the share purchase and profited from
it, violating Sebi’s insider trade rules.
“There shall be interim status quo as prayed for,” said justice P. Naveen Rao in response to the petition.
Mint has reviewed the interim order.
A spokesperson for Sun Pharma said that the company has not received any such communication.
“At Sun Pharma, we hold ourselves to the highest
standards of corporate governance and business ethics. Our code of
conduct serves as a compass that guide the actions of our employees and
directors ensuring consistent and uncompromising integrity as we build
trusted relationships around the world. The matter related to purchase
of shares of Ranbaxy Laboratories Ltd does not violate insider trading
rules,” he said in an email, adding that the company would take
appropriate action as advised by its legal counsel.
The writ petition was filed by two individual investors
Tammali Shiva Kumar and Undi Venkatasubbaraju seeking the court to
“restrain” for any scheme of amalgamation or merger during the pendency
of the petition.
The petitioner alleged “insider trading” in Ranbaxy shares before announcement of the deal on 6 April.
The petitioners requested the court to direct Sebi not to
give its in-principle approval to the merger or an arrangement or an
amalgamation of Sun Pharma and Ranbaxy. They sought court to direct Sebi
to “ investigate” insider trading in Ranbaxy shares and take
appropriate action under the law.
The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers.
The court has issued notices to Sebi , BSE, NSE, Sun
Pharma, Ranbaxy and its owner Daichii Sankyo Co. Ltd, and Silverstreet
to respond to the petitioners’ charges.
Mumbai: Shares of Sun Pharmaceuticals Industries Ltd and Ranbaxy Laboratories Ltd
fell in early trade on BSE after Andhra Pradesh high court put the
proposed merger between the two drug makers on hold on Tuesday.
At 10.22am, shares of Sun Pharma were trading at Rs.631.95
apiece on BSE, down 1.16% from their previous close even as India’s
benchmark Sensex Index rose 0.79% to 22,643.41 points. Shares of Ranbaxy
were trading at Rs.473.4 apiece on the exchange, down 2.03%.
The Andhra Pradesh high court, acting on a writ petition
filed by a group of investors, on Tuesday asked the stock exchanges and
market regulator Securities and Exchange Board of India (Sebi) not to
approve the merger deal announced in April, untill allegations of
insider trading involving Sun Pharma’s promoters are investigated.
A Sun Pharma subsidiary, Silverstreet Developers LLP,
purchased a large volume of Ranbaxy shares just a few days before Sun
Pharma and Ranbaxy announced an all stock merger deal, which was valued
at $3.2 billion.
A group of investors, who approached the Andhra Pradesh
high court last week, alleged that Sun Pharma promoters or people
directly related to Sun Pharma, who were privy to the soon-to- be-
announced merger, were involved in the share purchase and profited from
it, violating Sebi’s insider trade rules.
“There shall be interim status quo as prayed for,” said justice P. Naveen Rao in response to the petition.
Mint has reviewed the interim order.
A spokesperson for Sun Pharma said that the company has not received any such communication.
“At Sun Pharma, we hold ourselves to the highest
standards of corporate governance and business ethics. Our code of
conduct serves as a compass that guide the actions of our employees and
directors ensuring consistent and uncompromising integrity as we build
trusted relationships around the world. The matter related to purchase
of shares of Ranbaxy Laboratories Ltd does not violate insider trading
rules,” he said in an email, adding that the company would take
appropriate action as advised by its legal counsel.
The writ petition was filed by two individual investors
Tammali Shiva Kumar and Undi Venkatasubbaraju seeking the court to
“restrain” for any scheme of amalgamation or merger during the pendency
of the petition.
The petitioner alleged “insider trading” in Ranbaxy shares before announcement of the deal on 6 April.
The petitioners requested the court to direct Sebi not to
give its in-principle approval to the merger or an arrangement or an
amalgamation of Sun Pharma and Ranbaxy. They sought court to direct Sebi
to “ investigate” insider trading in Ranbaxy shares and take
appropriate action under the law.
The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers.
The court has issued notices to Sebi , BSE, NSE, Sun
Pharma, Ranbaxy and its owner Daichii Sankyo Co. Ltd, and Silverstreet
to respond to the petitioners’ charges.
Mumbai: Shares of Sun Pharmaceuticals Industries Ltd and Ranbaxy Laboratories Ltd
fell in early trade on BSE after Andhra Pradesh high court put the
proposed merger between the two drug makers on hold on Tuesday.
At 10.22am, shares of Sun Pharma were trading at Rs.631.95
apiece on BSE, down 1.16% from their previous close even as India’s
benchmark Sensex Index rose 0.79% to 22,643.41 points. Shares of Ranbaxy
were trading at Rs.473.4 apiece on the exchange, down 2.03%.
The Andhra Pradesh high court, acting on a writ petition
filed by a group of investors, on Tuesday asked the stock exchanges and
market regulator Securities and Exchange Board of India (Sebi) not to
approve the merger deal announced in April, untill allegations of
insider trading involving Sun Pharma’s promoters are investigated.
A Sun Pharma subsidiary, Silverstreet Developers LLP,
purchased a large volume of Ranbaxy shares just a few days before Sun
Pharma and Ranbaxy announced an all stock merger deal, which was valued
at $3.2 billion.
A group of investors, who approached the Andhra Pradesh
high court last week, alleged that Sun Pharma promoters or people
directly related to Sun Pharma, who were privy to the soon-to- be-
announced merger, were involved in the share purchase and profited from
it, violating Sebi’s insider trade rules.
“There shall be interim status quo as prayed for,” said justice P. Naveen Rao in response to the petition.
Mint has reviewed the interim order.
A spokesperson for Sun Pharma said that the company has not received any such communication.
“At Sun Pharma, we hold ourselves to the highest
standards of corporate governance and business ethics. Our code of
conduct serves as a compass that guide the actions of our employees and
directors ensuring consistent and uncompromising integrity as we build
trusted relationships around the world. The matter related to purchase
of shares of Ranbaxy Laboratories Ltd does not violate insider trading
rules,” he said in an email, adding that the company would take
appropriate action as advised by its legal counsel.
The writ petition was filed by two individual investors
Tammali Shiva Kumar and Undi Venkatasubbaraju seeking the court to
“restrain” for any scheme of amalgamation or merger during the pendency
of the petition.
The petitioner alleged “insider trading” in Ranbaxy shares before announcement of the deal on 6 April.
The petitioners requested the court to direct Sebi not to
give its in-principle approval to the merger or an arrangement or an
amalgamation of Sun Pharma and Ranbaxy. They sought court to direct Sebi
to “ investigate” insider trading in Ranbaxy shares and take
appropriate action under the law.
The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers.
The court has issued notices to Sebi , BSE, NSE, Sun
Pharma, Ranbaxy and its owner Daichii Sankyo Co. Ltd, and Silverstreet
to respond to the petitioners’ charges.
Mumbai: Shares of Sun Pharmaceuticals Industries Ltd and Ranbaxy Laboratories Ltd
fell in early trade on BSE after Andhra Pradesh high court put the
proposed merger between the two drug makers on hold on Tuesday.
At 10.22am, shares of Sun Pharma were trading at Rs.631.95
apiece on BSE, down 1.16% from their previous close even as India’s
benchmark Sensex Index rose 0.79% to 22,643.41 points. Shares of Ranbaxy
were trading at Rs.473.4 apiece on the exchange, down 2.03%.
The Andhra Pradesh high court, acting on a writ petition
filed by a group of investors, on Tuesday asked the stock exchanges and
market regulator Securities and Exchange Board of India (Sebi) not to
approve the merger deal announced in April, untill allegations of
insider trading involving Sun Pharma’s promoters are investigated.
A Sun Pharma subsidiary, Silverstreet Developers LLP,
purchased a large volume of Ranbaxy shares just a few days before Sun
Pharma and Ranbaxy announced an all stock merger deal, which was valued
at $3.2 billion.
A group of investors, who approached the Andhra Pradesh
high court last week, alleged that Sun Pharma promoters or people
directly related to Sun Pharma, who were privy to the soon-to- be-
announced merger, were involved in the share purchase and profited from
it, violating Sebi’s insider trade rules.
“There shall be interim status quo as prayed for,” said justice P. Naveen Rao in response to the petition.
Mint has reviewed the interim order.
A spokesperson for Sun Pharma said that the company has not received any such communication.
“At Sun Pharma, we hold ourselves to the highest
standards of corporate governance and business ethics. Our code of
conduct serves as a compass that guide the actions of our employees and
directors ensuring consistent and uncompromising integrity as we build
trusted relationships around the world. The matter related to purchase
of shares of Ranbaxy Laboratories Ltd does not violate insider trading
rules,” he said in an email, adding that the company would take
appropriate action as advised by its legal counsel.
The writ petition was filed by two individual investors
Tammali Shiva Kumar and Undi Venkatasubbaraju seeking the court to
“restrain” for any scheme of amalgamation or merger during the pendency
of the petition.
The petitioner alleged “insider trading” in Ranbaxy shares before announcement of the deal on 6 April.
The petitioners requested the court to direct Sebi not to
give its in-principle approval to the merger or an arrangement or an
amalgamation of Sun Pharma and Ranbaxy. They sought court to direct Sebi
to “ investigate” insider trading in Ranbaxy shares and take
appropriate action under the law.
The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers.
The court has issued notices to Sebi , BSE, NSE, Sun
Pharma, Ranbaxy and its owner Daichii Sankyo Co. Ltd, and Silverstreet
to respond to the petitioners’ charges.
ajay singh thakur
pgdm 2nd sem
Mining and electricity output to help industrial growth in FY15
Mining and electricity output to help industrial growth in FY15
Industrial growth has remained fragile since financial year (FY) 2013 due to depressed consumption and sluggish investment demand. The growth decline in consumption (68.8% share in gross domestic product, or GDP, in FY13) is worrisome though not surprising given the subdued consumer sentiment, sustained high inflation and elevated financing costs. In a classic industrial revival, the impact is first felt in the consumer goods sector followed by basic/intermediate goods and finally in the capital goods sector. However, the current performance trend of the use-based sectors does not indicate such a trajectory.
Nevertheless, industrial growth is expected to improve to 4.1% in
FY15 (FY14: 0.7%). This improvement will be on the back of
election-related expenditure, excise duty cut for the auto sector and
project clearances by the Cabinet Committee on Investment. Project
clearances so far by the Committee are estimated to be around 4.6% of
GDP. Assuming that only 25% of this investment materializes in FY15, it
will result in investment growth of 4.1% (FY14: 0.2%). Also, there has
been reasonable progress on Delhi-Mumbai Industrial Corridor and
Dedicated Freight Corridor projects.
With the settlement of some legal issues, resumption of iron ore mining in Karnataka and Goa and projects worth Rs.233
billion cleared (up to 18 February 2014) in the sector by the
Committee, the mining sector is poised for growth in FY15. This will
also positively impact India’s external trade, balance of payment and
currency by curbing coal import. Since November 2013, the sector has
seen four consecutive months of positive growth.
The electricity sector has performed strongly lately and
grew by 6.2% year-on-year over April-February FY14. This robust
performance is expected to continue in the near term in view of the
fast-track clearance of many coal mining projects and projects worth Rs.3.81 trillion being cleared in the power sector.
Rate cut and inflation
Inflation in FY15 will be largely governed by the
evolving demand conditions guided by a gradual revival of investment,
monsoon and the economic policy pursued by the new government. The
average wholesale inflation (based on Wholesale Price Index, or WPI) and
retail inflation (based on Consumer Price Index, or CPI) are expected
to be 5.5% and 8.0%, respectively, in FY15.
Both the CPI and WPI declined in FY14. The WPI inflation
declined by 150 basis points (bps) to 5.9%. In the short term, the
seasonal factors could influence the headline inflation. But unless
structural factors such as agricultural productivity and bottlenecks in
the agricultural supply chain are adequately addressed, keeping food
inflation at moderate levels in the medium-to-long-term will remain
elusive. The CPI inflation declined by 70 bps in FY14 to 9.5%. Core
inflation, a reflection of domestic demand conditions, too, declined in
FY14 (core retail: 8.0% and core wholesale: 2.8%).
The 25 bps repo rate hike by the Reserve Bank of India
(RBI) in January 2014 signalled that the nominal anchor has changed from
the WPI to CPI. In its first bi-monthly monetary policy review on 1
April 2014, RBI maintained a status quo on policy rates. It is expected
to remain in the pause mode for an extended period and at best cut
policy rate by 25 bps in the second half of FY15. Despite some decline
in CPI in FY14, it is still uncertain if the retail inflation will reach
RBI’s target of below 8% by January 2015.MUNTAZIR ALAM
PGDM 2ND SEM
Veerappa Moily reworks ministry order, recommends higher gas price for Reliance Industries from April
Less than a month before demitting office as petroleum minister, M Veerappa Moily made a desperate attempt to ensure that Reliance Industries (RIL) does not lose out on getting higher price for natural gas that it sells during April-June 2014.
Moily’s pitch for higher price to RIL gas comes after his officials informed the company that the new price to gas producers would only be applicable from July 1, 2014.
“As per the notified guidelines, the earliest possible date for applying the revised prices is 1st July 2014. Till that time, the contractor should charge price as mentioned in the order dated 28th March, 2014,” the ministry wrote to RIL on April 21. A day later, Moily wrote on file that he had “reconsidered the matter” and that the new higher price should be available to gas producers, including RIL, from April 1, 2014, and not from July 1, 2014, as it was the ministry’s fault for not notifying the new piece “well in advance” of the announcement of the Lok Sabha elections on March 5.
“It was expected that the ministry would notify the price well in advance and if the same was done, the model code of conduct would not have come in the way,” Moily argued. Under the Rangarajan formula, approved by the Cabinet Committee on Economic Affairs (CCEA) last June, gas prices would have doubled from current $4.2 per million British thermal units from April 1, 2014. But its notification, slated for March 7, got delayed and the issue was referred to the Election Commission which deferred the notification until the end of model code of conduct on May 18.
“The EC order is to defer the proposal to notify natural gas price which should have no bearing on the decision of the CCEA to give effect the revised guidelines from 1st April 2014. In the given situation, the ministry may be right in notifying the price applicable from 1st July 2014 for July-September 2014 after the model code of conduct is lifted,” Moily wrote on April 22.
“However, the revised price effective 1st April, 2014, for April-June 2014 quarter will have to be notified on the basis of the approved guidelines after the model code of conduct is lifted. Not doing so will be in contravention of the decisions of the CCEA,” he added. The ministry officials have countered Moily saying that paragraph 1.8 of the Domestic
Sumit Kumar Singh
PGDM1st
Chipotle's price hike to hit steak lovers harder
yahoofinance
NEW YORK (AP) — Chipotle's coming price hikes could hit steak lovers particularly hard.
"There's a very narrow gap between our steak burrito and our chicken burrito. We're going to widen that," Hartung said at the Barclays Retail and Consumer Discretionary Conference in New York City. "We're going to allow our customers to choose whether they want to pay the higher price of steak."
Hartung also said the price hike would be more like 4 percent to 6 percent, or 32 cents to 48 cents, assuming the cost of a burrito is $8. In the past, executives had said they were considering a hike of 3 percent to 5 percent, or 24 cents to 40 cents. Chipotle says it will be the first national price hike in three years.
He did not specify how much more prices would rise for steak than for chicken.
Fast-food and restaurant chains are facing rising costs for beef, given the reductions in U.S. cattle inventory in recent years. In April, Hartung said Chipotle's beef prices were up 25 percent compared with the prices it was paying in the fourth quarter of last year.
Chipotle, which has more than 1,600 locations, isn't the only one encouraging customers to switch to chicken as the cost of beef climbs. Burger King's head of North American operations, Alex Macedo, has also noted that the chain has been able to maintain its profitability in part by marketing chicken items more aggressively.
This week, Miami-based Burger King is bringing back its popular "Subservient Chicken" advertising campaign from a decade ago to promote a chicken version of its Big King sandwich.
Even if Chipotle Mexican Grill's higher prices for steak push customers to trade down to chicken or other options, Hartung noted that those alternatives are more profitable for the company because the ingredients don't cost as much.
Exactly
how much of a price increase customers see at Chipotle in coming weeks
will depend on where they live. The company has said the price hike
should be in place by this summer.
___
prince bikram shah
pgdm 1st
Alstom accepts €10 billion GE bid for its energy unit
GE is not in exclusive talks with Alstom, says sources; Alstom is also set to receive an offer from Siemens
Alstom
is expected to make a statement about the two offers early on
Wednesday, before its shares, suspended since late last week, resume
trading. Photo: Bloomberg
Paris/Frankfurt: The board of Alstom SA accepted General Electric Co’s (GE) €10 billion ($13.82 billion) bid for its energy unit on Tuesday, several sources familiar with the situation told Reuters.
Sources said GE is not in exclusive talks with Alstom. The French
transport-to-turbines group is also set to receive an offer from its
much larger German competitor Siemens AG , which said it had sent a letter to Alstom after its managing and supervisory boards had decided to make an offer.
Alstom is expected to make a statement about the two
offers early on Wednesday, before its shares, suspended since late last
week, resume trading.
The rival bids have triggered a fierce national debate
about the fate of power turbine and train manufacturing in France—both
integral to the country’s engineering pedigree. The French government
has said it favours the Siemens offer, which via an asset swap would
create two European sector champions: Siemens in electricity and Alstom
in trains.
“Alstom’s board has accepted the GE offer, it will be examined by an independent committee,” one source close to the talks told Reuters.
“The two groups will not enter into exclusive
negotiations. This means Alstom cannot go and look for other offers, but
there is nothing to stop it from examining offers it receives without
soliciting them,” the source added.
Earlier on Tuesday, Germany’s Siemens said it would make
an offer to Alstom if given four weeks to examine its books and draw up a
detailed plan to rival a move by GE.
“The prerequisite is that Alstom agrees to give Siemens
access to the company’s data room and permission to interview the
management during a period of four weeks, to enable Siemens to carry out
a suitable due diligence,” Siemens said.
It gave no further details of its plans, but at the
weekend Siemens approached Alstom with a proposal to exchange part of
its train business plus cash for Alstom’s power arm. In a short letter,
it had outlined its proposal worth $14.5 billion.
French concerns
In a letter to French president Francois Hollande, published by financial daily Les Echos and authenticated by GE, GE chief executive Jeffrey Immelt responded to several of the French government’s key concerns about the US-based firm’s offer.
Immelt said that if GE were to buy Alstom’s energy unit,
it would boost employment in France and locate global headquarters for
several key businesses in the country, including for grids, hydro power,
offshore wind and steam turbines.
GE would also work with the French government, utility
EDF and nuclear group Areva to protect France’s strategic nuclear sector
and its exports and would be willing to sell Alstom’s wind turbine
activities to French investors.
GE also offered France a representative for its board,
and offered to look into the possibility of a transportation
joint-venture with the remaining transport activities of Alstom, which
are widely considered to be too small to survive independently.
Defensive move
France’s Socialist government has declared that it must
have a say in the outcome of the bidding war, as thousands of jobs are
at stake and state-owned utility EDF and the national railways are major
clients of Alstom.
“There aren’t only financial interests at stake in this
matter; there are also industrial, social and human interests,” economy
minister Arnaud Montebourg said after a meeting with unions. “The government does indeed intend to defend our country’s interests.”
Alstom CEO Patrick Kron informed Montebourg of GE’s interest last week.
Just over a week before Siemens boss Joe Kaeser presents
his future vision for the Munich-based conglomerate, investors in
Siemens were sceptical about a potential deal.
“We would have preferred a less risky strategy of organic growth,” said Tim Albrecht, fund manager at DWS Investment.
A fund manager who declined to be named said: “Until last
week, Alstom was seen as dead, and its products were not thought to be
competitive.”
He said a purchase would be a 180-degree turn and Siemens would need very good arguments to justify it strategically.
Some investors may also be wary of a French-German deal,
given problems with previous cross-border tie-ups, such as defence and
aerospace company EADS and drugmaker Aventis, which have both been
plagued by battles for control.
Many analysts and investors said they believed the Siemens move was primarily defensive.
Rob Virdee, analyst at Espirito Santo Investment Bank, said the offer looked like a move to stop GE’s expansion in Europe.
Industry veterans say Alstom and Siemens have very
different corporate cultures, and have competed aggressively against one
another for decades.
An industry insider told Reuters that no one at
Alstom wants a deal with Siemens because everyone, from the low-level
worker to Kron, recalls how Siemens lobbied aggressively against state
aid for Alstom when it almost went belly-up in 2004.
Siemens shares closed up 0.6 percent compared with a 1.5% rise in shares on the blue-chip DAX index. Reuters
Madras high court sets aside Tamil Nadu govt's Rs 2,400 crore tax demand on Nokia
CHENNAI: The Madras high court on Tuesday set aside the Tamil Nadu government's commercial taxes demand on mobile handset maker Nokia, totalling a whopping amount of Rs 2,400 crore. The court held that issuing demand notices onNokia without affording an opportunity of hearing was not correct.
Justice B Rajendran, who set aside all the three separate notices issued by the commercial taxes department, however, directed the Finnish handset maker to deposit 10% of the total demand immediately.
According to the state government, handsets manufactured in India but not exported would entail 4% VAT, payable to the state government. In the absence of proof of export of handsets worth more than Rs 44,000 crore during three assessment years — 2009-10, 2010-11 and 2011-12 — the government was constrained to issue notices to Nokia.Nokia approached the high court saying the department had not given it an opportunity to explain its stand. "The deputy commissioner had worked with a single-minded goal to confirm the tax demand," Nokia said in its petition.
As for the state government's stand that despite being given an opportunity, Nokia failed to furnish all documents to prove exports, Nokia said it had submitted only sample documents because exports data was voluminous. "However, even without conveying that the entire documentation was required to be submitted, and without giving any further opportunity to Nokia, the deputy commissioner passed the order on February 28, 2014, in a biased manner and in undue haste," Nokia said.
On Tuesday, Justice Rajendran said: "The department is not correct in passing the impugned order without affording an opportunity of hearing to Nokia, especially when it sought time to produce voluminous documents running to 69 lakh pages."
He then directed the handset maker to deposit 10% of the deposit amount saying it was necessary to safeguard the interests of revenue.
jawed eqbal
pgdm 1st yr
Sensex trades 170 points higher; auto, oil and gas shares rise
Sensex trades 170 points higher; auto, oil and gas shares rise
Mumbai: The 30-share bellwether BSE Sensex on Wednesday was trading over 170 points higher led by shares of auto and oil and gas firms.
At 9.28am, the Sensex was trading up 0.76%, or 170.01 points, at
22,636.2 points, while the National Stock Exchange’s (NSE’s) broader
50-share Nifty was trading higher by 0.78%, or 52.2 points, at 6,767.45
points.
The gainers included Bharti Airtel Ltd that was trading up 1.49% at Rs.340.15 after it reported 89% growth in its net profit to Rs.962 crore for the March quarter. Oil and Natural Gas Corp. Ltd (ONGC) rose 0.95% to Rs.323.05.
Among the losers, Sun Pharmaceutical Industries Ltd fell 1.27% to Rs.631.25 after Andhra Pradesh high court asked stock exchanges not to approve Sun Pharma’s all-share transaction to buy Ranbaxy Laboratories Ltd until it decides on a petition alleging insider trading before the Rs.24,000 crore deal. Ranbaxy was trading at Rs.471.85, down 2.35%. Bharat Heavy Electricals Ltd (Bhel) fell 1.02% to Rs.184.8.
The BSE oil and gas index was the top sectoral gainer, up
0.78%. The auto and FMCG indices were up 0.61% and 0.5%, respectively.
The metal index was the top sectoral loser, down 0.53%.
Multi Commodity Exchange of India Ltd (MCX) was trading at Rs.565 on BSE, down 1.59%, while Financial Technologies India Ltd (FTIL) was trading 0.78% lower at Rs.329.75
after MCX on Tuesday gave in to demands by potential investors and
released the findings of a special audit conducted on it by
PricewaterhouseCoopers (PwC) that raised questions around so-called
related party transactions and questioned whether dealings between the
exchange and its parent FTIL had been conducted at “arm’s length”.
Kotak Mahindra Bank Ltd, Marico Ltd, IDBI Bank Ltd, Petronet LNG Ltd, Oriental Bank of Commerce, Shriram City Union Finance Ltd, Kansai Nerolac Paints Ltd, Dewan Housing Finance Corp. Ltd, Raymond Ltd, Polaris Financial Technology Ltd, Sterlite Technologies Ltd, Orient Cement Ltd will be in focus on account of March quarter earnings announcement.
Since the beginning of this year, the BSE Sensex has
gained 6.36%, while foreign institutional investors have bought $5.08
billion from local equity markets.
Asian markets were trading marginally higher on Wednesday
ahead of the Bank of Japan and the US Federal Reserve reporting on
monetary policy and upbeat global cues. China’s Shanghai Composite was
trading up 0.11%, Hong Kong’s Hang Seng was down 1.18% while Japan’s
Nikkei Stock Average was up 0.23%.
Rahul kumar Gupta
PGDM,1st Year.
Source:-Mint.
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