Detroit to Pay $77 Million in Swaps Accord With UBS,

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Detroit agreed to pay $77.6 million to UBS AG (UBSN) and Bank of America Corp.’s Merrill Lunch unit to end interest-rate swaps that have cost taxpayers more than $200 million since 2009, according to a court filing in the city’s bankruptcy.
The settlement, which is a 70 percent reduction in the amount the city was liable for under the 2009 agreement, will release Detroit from claims by the banks and provide “greater certainty with respect to the city’s cash flows and liquidity,” Detroit’s attorneys said in a filing yesterday seeking approval for the accord from U.S. Bankruptcy Judge Steven Rhodes. The payments will be made over time, rather than in a lump sum, the lawyers said.
“The settlement also contains an agreement by the swap counterparties to vote their impaired claims in favor of a plan of adjustment,” the city said in the filing.
Rhodes in January rejected as too costly a proposal by the city to pay $165 million. Under the 2009 swaps agreement, the banks have the right to seek control of Detroit’s casino taxes, which the city pledged as collateral.
The swaps are tied to pension obligation bonds issued in 2005 and 2006. They were designed to protect against rising interest rates by requiring the banks to pay the city if rates rose above a certain level. When rates fell, Detroit was required to make monthly payments. The agreement is with Zurich-based UBS and Merrill Lynch, a unit of Charlotte, North Carolina-based Bank of America.
Detroit owed $288 million under the swap agreement. The city will pay another $85 million once it emerges from bankruptcy if it’s able to raise exit financing, or if financing isn’t found, will get another 180 days to repay any remaining balance, according to the filing.
Detroit filed a record $18 billion municipal bankruptcy in July, saying decades of economic decline had left it without enough money to pay creditors and still provide basic services.
                                                                                                          NAME RAHUL SINGH 2
                                                                                                                   PGDM 2 SEM

 

SBI average salary at Rs 10 lakh exceeds ICICI Bank’s by 67 per cent

 

 Summary :-State Bank of India (SBI) has raised salaries by 47% from fiscal 2011 to December quarter FY14.

 

 State Bank of India (SBI) has raised salaries by 47% from fiscal 2011 to December quarter FY14. In fact, SBI’s average salary per employee at Rs 10 lakh is 67% more than Rs 6 lakh paid by ICICI Bank.
In a report, IDFC Institutional Securities said SBI’s average employee salary has risen 47% over FY11 (after the impact of pay hikes), while its better performing private sector peer ICICI Bank’s average salary has declined 22% over the same period.
The report added that most of the sharp increase in employee costs for PSU banks has come after a hike in compensation levels in FY11 and also because part of employee compensation for PSU banks is directly linked to inflation indices.
For the three months ended December 31, 2013, SBI’s total payment to employees at Rs 4,512 crore was up 25.05% from R3,608 crore in the same period last year. SBI had reported net profit of Rs 2,234.34 crore for the quarter ended December 31, down 34% from a year ago, on higher bad loans and increased provisioning. The bank saw provisions worth Rs 3,429 crore for non-performing assets (NPAs) during the quarter, up 24% from a year ago.
“While ICICI has clearly been tightening its belt, SBI’s salaries are to some extent indirectly linked to inflation in the domestic economy, preserving the employee’s purchasing power over the longer term,” the report said.
A part of SBI’s salaries are in the form of long-term retiral benefits and, therefore, are not a part of take-home salaries. Retiral benefits were close to 22% of SBI’s employee costs in April-January period of fiscal 2014.

Tanay Tapas
PGDM 1st
Source :-

Microsoft to take on Android with low-cost tablets

 

NEW DELHI: Microsoft will launch low-cost Windows tablets in the coming months, specifically made for consumers in India. The tablets, which could sell for as low as Rs 10,000, will help Microsoft achieve price parity with Android devices in the market.

The tablets will likely be made by Microsoft's traditional computer partners like HP and Dell as well as by local Indian firms like Karbonn and Lava.

In India, the market is dominated by devices running on Google's Android, mostly because these tablets are cheap, affordable and easy to find. In developed countries like the US, Microsoft competes with Android tablets with Surface devices, which the company believes are too expensive for markets like India.

"We are reducing our required hardware specification for Windows to bare minimum that is needed for good experience. We want to be price competitive with Android. We want to get the bill of material for Windows tablets down," Amrish Goyal, director of Windows business group, told TOI.

"We will probably not sell a tablet for Rs 5,000. But yes, we will sell tablets with a price of around Rs 10,000 by middle of this year," Goyal added.

While Goyal refused to confirm that Microsoft was slashing licence fee it charges from its hardware partner for Windows 8.1, there were reports that to help companies create low-cost tablets the software giant might slash its Windows licence price by up to 70%. For devices that cost less than $250, the company would reportedly charge $15 for Windows instead of usual $50.

With the personal computer market, where Microsoft is very strong, almost entering negative growth phase, for Microsoft as well as its hardware partners, tablet market is very crucial. So far, Microsoft has been slow to address this market. Most of the Windows tablets available in the market currently are targeted at "pro" users and sell for a hefty premium compared to iPad and Android tablets. Most of these tablets cost around Rs 30,000 or more. In comparison, Android tablets like Nexus 7 (older version) are available for less than Rs 10,000.

According to Gartner figures released on Monday, Microsoft sold 4 million tablets worldwide in 2013. This gave the company a market share of 2.1%. In comparison, Apple sold 70 million tablets and Google's Android powered 121 million tablets.

Vishal Tripathi, Gartner's principal analyst who tracks the tablet market, said if Microsoft can deliver on its promise, it will definitely benefit. "The Windows brand still resonates with people. They use Windows computers in offices. They are comfortable with it and if they have an option to get a Windows tablet at price that is similar to an Android tablet, they will likely pick it," he said. "A low-cost Windows tablet is not going to shake the market but it will help Microsoft gain some consumers who will otherwise go to Android."

PRASHANT SHARMA

PGDM-IIsem

Sensex recovers slightly as Ukraine crisis continues to weigh

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At 9.20am, the Sensex was trading up 0.18%, or 37.15 points, at 20,983.8 points. Photo: Mint

Mumbai: The 30-share bellwether BSE Sensex on Tuesday was trading marginally higher tracking mixed global cues amid Ukraine crisis.

At 9.20am, the Sensex was trading up 0.18%, or 37.15 points, at 20,983.8 points, while the National Stock Exchange’s (NSE’s) broader 50-share Nifty was trading higher 0.23%, or 14.1 points, at 6,235.55 points.

The gainers included Hindalco Industries Ltd that rose 1.28% to Rs.106.85 and Oil and Natural Gas Corp. Ltd (ONGC) that jumped 1.02% to Rs.292.8.

Among the losers, Maruti Suzuki India Ltd shares lost 1.38% to Rs.1,560 and Dr Reddy’s Laboratories Ltd fell 1.04% to Rs.2,786.10.

The BSE consumer durable index rose 1.06% to be the biggest gainer, while the realty index fell 0.12%, the most among sectoral indices.

Fears over intensifying conflict in Ukraine have sparked a stampede into haven assets such as the dollar, gold and bonds, and has driven equity prices lower. Overnight US markets ended lower with the S&P 500 falling 0.7%, Nasdaq Composite down 0.7% and Dow Jones Industrial Average declining 0.9%.

Asian markets were trading mixed on Tuesday as risk aversion continued after Western powers scrambled to deal with Russia seizing Crimea and US threatening sanctions. Japan’s Nikkei Stock Average gained 0.32%, Hong Kong’s Hang Seng was up 0.2%, while China’s Shanghai Composite was down 0.68%.

RAHUL KUMAR

PGDM 1st year

IRDA permits insurers to invest in equity ETFs

 

 

Insurance regulator IRDA on Monday allowed insurance companies to invest in equity Exchange Traded Funds (ETFs) with certain conditions, a move which would help boost inflows into the country's stock market.

Only passively managed schemes of the mutual funds which are registered with SEBI and governed by SEBI are eligible, IRDA said in a notification.

ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

"These schemes are benchmarked and tracked to publicly available index," it said, adding, these instruments would be listed on at least one exchange which is having connectivity with nationwide terminals.

"Investments ETFs may mitigate the concentration risk and ETFs also offer management of funds with operational convenience," it said.

Exposure to stocks through ETF would not be reckoned for the overall exposure norms prescribed for individual stocks, it added.

The valuation of ETFs shall be in line with the equity shares.

ETFs were introduced in India in 2001. Currently, there are about 33 ETFs with assets under management of close to Rs 11,500 crore held by 6.2 lakh investors. Gold ETFs dominate the market in India.

anand maurya

pgdm-1sem

 

Jaiprakash shares slump; asset sale value disappoints

(Reuters) - Shares of Jaiprakash Power Ventures Ltd(JAPR.NS) fell more than 16 percent on Monday on worries the power company had sold two hydroelectric power plants to a consortium led by Abu Dhabi National Energy Co TAQA.AD for less than expected.
The consortium, which includes Canadian institutional investor PSP Investments, agreed to spend $616 million on equity in the plants. Adding their non-recourse project debt, the total enterprise value of the deal would be around $1.6 billion, a TAQA spokesman told Reuters.
J.P.Morgan downgraded Jaiprakash Power Ventures to "neutral" from "overweight" and reduced its target price to 19 rupees from 25 rupees on Monday, saying the implied deal equity valuation was 30 percent lower than expected at $616 million.
"The risk-return trade off is no longer attractive, in our view," JP Morgan said in the research note, calling investors to switch to Jaiprakash rival Tata Power (TTPW.NS) on which it has an "overweight" rating.
Profit-taking also played a role in the falls, traders said. Jaiprakash Power shares were down 13.6 percent at 0525 GMT, wiping out its 12.2 percent surge on Friday in anticipation of the deal.
The falls, if sustained, could also erase the power and infrastructure company's gains of 27.8 percent in February.
Parent company Jaiprakash Associates Ltd (JAIA.NS) shares also fell 4.2 percent.
(Reporting by Abhishek Vishnoi and Indulal PM; Editing by Prateek Chatterjee)


name - SHYAM KISHOR SINGH
            PGDM 2sem

Investing in Dunkin’ Brands: Relative valuation and your dividend

The coffee industry is difficult to understand in terms of the relative valuation. Industry stock prices per share range from 46.0x to 15.4x earnings per share, with the average at 26.4 times earnings. This means that investors have historically been willing to pay a sizable premium for future earnings of certain companies within the industry. The range of market values and enterprise values within this industry are very wide. Frankly, enterprise value is a poor metric to use to compare the sizes of companies within this industry because it assumes the debt structures are all similar. This is not the case. There’s an example of this below, where Dunkin’ Brands Group has over five times more total debt compared to total equity versus the industry average of 1.17 times more debt to equity.

Dunkin’ Brands has the highest industry return on equity. This is no surprise, considering the company’s capital structure, which highly favors debt as a source of funding. At first glance, you might take this to mean the company is efficiently using this debt to generate returns for investors. However, the strongest portion of the industry isn’t that far off. McDonald’s and Starbucks boast returns on equity over 30%, with significantly less debt. Frankly, the IPO is what left McDonald’s with excess debt. Now, the company’s relying on organic growth to offset the risks associated with this debt acquisition.

Recently, Dunkin’ Brands’ stock price has underperformed Starbucks and the rest of the industry average. Of the companies that pay dividends within this industry (DNKN, SBUX, MCD, and THI), Dunkin’ Brands’ dividend yield is very close to the industry average of 1.33%, with plans to increase the dividend for investors in the near term. Competitors’ dividend yields range between 1.35% and 3.40% for Starbucks and McDonald’s, respectively. This industry isn’t the right fit for an investor with an appetite for steady income streams as opposed to the prospect of organic growth.

                                                                                               NAME  HIMANSHU CHAUDHARY

                                                                                                            PGDM 1 YEAR