The Indian market opened positive, mirroring the positive opening
of most of the Asian markets. US markets moved notably higher over the course
of the trading day on Thursday after moving sideways over the past few days.
The rally came following the release of upbeat employment and housing reports.
The jobless claims fell to 335,000 (estimated 368,000), a five-year low, in the
week ended January 12th from the previous week's revised figure of 372,000.
Another report from the Commerce Department stated that the housing
starts jumped 12.1% to an annual rate
of 954,000 in December from the revised November estimate of 851,000. The
European markets also finished in the green on Thursday, after the release of
better than expected economic data in the US. Indian markets rose notable
higher yesterday on reports that the government has permitted fuel price
revision to reduce its fiscal deficit. Comments by Finance Minister, P.
Chidambaram, on the implementation of the Goods and Service Tax and on the need
for further economic reforms also boosted investor appetite.
LPG cap raised to 9
cylinders; diesel price likely to increase gradually
The government on Thursday allowed state-run oil marketers to
raise diesel prices in “small quantities” over several months till their
under-recoveries on sale of the fuel are eliminated, but raised the cap on
subsidised LPG cylinders to 9. The diesel price “deregulation”, if implemented
in earnest, can help reduce the oil subsidy burden to a large extent — OMCs’
under-recovery on diesel is R9.60/litre or an estimated R98,000 crore this
fiscal — while hiking the number of subsidised LPG refills will result in
additional under-recoveries of R9,300 crore. The government has asked OMCs to
hike diesel prices by 50 paise per litre monthly from Friday, Reuters reported,
quoting an official source. This would mean that it would take about 20 months
for the subsidy on the fuel to be nullified, given the current level of
under-recoveries. The government also freed the pricing of bulk diesel, which
would reduce the subsidy on the fuel by 18%. “As far as diesel is concerned,
oil marketing companies have been authorised to make price corrections from
time to time,” oil minister Veerappa Moily said after a Cabinet Committee on
Political Affairs meeting, adding, “It (price correction) can commence even
from today.” The minister did not elaborate on the quantum of price hikes or
the periodicity, but the Kelkar panel had recommended diesel price hike of
R1-1.50/litre per month. The CCPA obviously sought to be politically savvy by
combining the two decisions. Oil companies were cautious on hailing the
decision, given their disappointing experience with a similar “deregulation” of
petrol in June 2010. The government’s continued influence on pricing petrol led
to a situation where the companies could not always raise prices in line with
global oil prices till lately, while losses from the lag has not been
compensated. “We have not received any communication from the ministry yet. We
will go by the ministry’s directions,” said RK Singh, chairman, BPCL. Unhappy
with the lack of real freedom to hike petrol prices, Indian Oil Corporation
chairman RS Butola had told FE in an interview in December that considering the
difficulties in increasing petrol price and lack of compensation, the company
would rather accept a rollback of the deregulation. Under-recoveries in the
current fiscal are estimated to be Rs 1.67 lakh crore. For domestic LPG and
kerosene, under-recoveries stand at Rs 490.50/cylinder and Rs 30.64/litre
respectively. OMCs are currently incurring daily under-recoveries of about Rs
384 crore on the sale of diesel, kerosene and domestic LPG. Cutting these
subsidies (compensation for these losses) is crucial for the Centre’s fiscal
consolidation road map and avoiding a downgrade of India’s sovereign credit
rating to junk status.The CCPA raised the annual ceiling on subsidised LPG
cylinders to 9 (from previous 6) effective next fiscal and raised the
entitlement for this year to 8. Subsidised LPG costs Rs 410.50 per 14.2-kg
cylinder and any household requirement beyond the new limit of 9 cylinders will
cost a near market price of Rs 895.50 per bottle. Finance minister P
Chidambaram said oil companies have been allowed to make “small correction... I
am looking at the same subsidy bill as was expected earlier.” “Given the
experience faced by OMCs on account of petrol and on LPG, we have a difficult
situation in hand. We have not seen the notification. If the government has
decontrolled diesel, there will be no question of subsidy either,” said
Deloitte senior director oil and gas Kalpana Jain. The price of diesel was last
revised on September 14 when it was hiked by a steep Rs 5.63 per litre. At
present, diesel costs Rs 47.15 per litre in Delhi. Even petroleum secretary GC
Chaturvedi was not willing to term the decision deregulation. He said: “If we
are to deregulate, then diesel price will have to be raised by Rs 9.60 per
litre, which is not the case.” Essar Oil MD and CEO LK Gupta said: “Private oil
marketing companies have invested substantially in setting up retail outlets,
but due to lack of level playing fields, these assets were under utilized. Once
price parity is reached between retail and market prices, it will not only
benefit consumers by providing them choice, but also help in demand management
of diesel. “As FE reported earlier, the petroleum ministry is also considering
asking bulk consumers of diesel to buy at market rates. Currently, bulk
consumers – power plants based on diesel, companies with captive power units,
the railways and road transport corporations – buy the fuel at subsidised rates
but at slightly lower rates than the retail consumer, thanks to a waiver of
dealers’ commission and discounts offered by oil companies which compete to get
the tenders. The subsidy bill on diesel would come down by around 18% if the
ministry’s proposal is implemented. Source: FinancialExpress
National Investment Fund
aligned to enhance divestment policy
The Cabinet Committee of Economic Affairs (CCEA) on Thursday
authorised the National Investment Fund (NIF) to buy shares of public
sector enterprises, including banks and insurance companies. The move will
enable the government to utilise the disinvestment proceeds
for recapitalisation of banks and public sector insurance companies.
The CCEA, headed by Prime Minister Manmohan Singh, also imposed 2.5 per
cent import duty on crude edible oil to protect domestic farmers. However,
duties on refined cooking oil remain unchanged at 7.5 per cent. At present, crude
edible oil attracts no import duty. It has also lifted the freeze in tariff
value of edible oils, for the first time in more than six years, and aligned
them with international prices. “An alignment of notified tariff values with
international prices will have a positive impact on the duty collected from
import of edible oils and will provide an even-field to the domestic refining
industry, while enhancing the import duty will be negligible at less than Rs 1
per kg,” the government said in a statement released after the Cabinet meeting.
India imports more than half of its total domestic requirement of cooking oil,
estimated to be around 12 million tonnes. The government said with effect from
FY14, the disinvestment proceeds will be credited to the public account under
the head NIF, and they would remain there until withdrawn or invested for the
approved purposes. According to the official statement, the fund will be used
to subscribe to shares issued by the Central Public Sector Enterprise
( CPSEs), including public sector banks and public sector insurance
companies, on rights basis so as to ensure the overall government holding does
not fall below 51 per cent. Besides, the fund will be used for preferential
allotment of shares of CPSE to promoters so that government holding does not go
below 51 per cent, in all cases where CPSE is going to raise fresh equity to
meet its capital expenditure programme. The funds managers presently managing
the NIF will stand discharged of their responsibility from the date the funds
and the interest income are transferred to the fund. NIF, set up in 2005, is
being managed by three fund managers — UTI Asset Management Company, SBI Funds
Management Company and LIC Mutual Fund Asset Management Company. As much as 75
per cent of the income from NIF is used to finance selected social sector
schemes, while the rest is utilised to meet the capital investment requirements
of profitable and revivable central PSU. However, in 2009, the government had
decided to put a moratorium on putting disinvestment money in NIF. Since then,
all the proceeds have been used for funding six social sector schemes. The
government also gave its nod to the proposal of the Department of Commerce,
allowing export of processed and value-added agricultural products, even in the
event of ban on export of basic farm produce. The CCEA also approved the
recommendations of the inter-ministerial task force headed by Planning
Commission member B K Chaturvedi on budgetary ceilings for annuity commitments
under public private partnership (PPP) projects across sectors. This would
ensure that future budgetary options are not restricted due to annuity payments
for PPP projects, the government said. “The guidelines would be communicated to
ministries for adoption within two weeks. These guidelines will streamline the
process of structuring and sanction of projects under annuity mode of PPP,” it
said. Apart from this, the CCEA also approved the extension of the Jawaharlal
Nehru National Urban Renewal Mission (JNNURM) to sanction new projects and
capacity building activities till March 2014. The proposal would enable
provisioning of creation of urban infrastructure, particularly in small and
medium towns. These projects would be subsumed in the next phase of the JNNURM
for the 12th Plan.Source:
Business Standard
BHEL wins `730cr order
from Bhutan
Bharat Heavy Electricals Ltd (BHEL) has secured
a contract for supplying electro-mechanical equipment for a 720 mw
hyydroelectric project in Bhutan. The order envisages manufacture, supply,
erection and commissioning of the electro-mechanical equipment for Mangdechhu
hydroelectric project. The value of the contract will be in the range of Rs 730
crore to Rs 750 crore, an official statement said. The project is being
set-up under a bilateral agreement between India and the Bhutan. The order
has been placed on BHELBSE 0.27 % by Mangdechhu Hydroelectric Project
Authority ( MHPA), Bhutan. After the 1,200-mw Punatsangchhu-I 1200-mw and
Punatsangchhu- II projects, this is BHEL's third consecutive contract for the
main electro-mechanical package in Bhutan. The company has installed its
electro-mechanical equipment in Chhukha (336 mw), Kurichhu (60 mw) and Tala
(1020 mw) hydroelectric projects in Bhutan. These projects today account for
95% of the total power generating capacity in that country. On
commissioning of these projects alongwith Mangdechhu project, BHEL supplied
electro-mechanical equipment will account for around 4,350 MW
in Bhutan by 2017. For the present contract, four turbines and
generators of 170 mw each and associated equipment will be manufactured and
supplied by BHEL's Bhopal facility while the control system will be
manufactured and supplied by BHEL's electronic division at
Bangalore. Besides, Bhutan, BHEL overseas hydro installations include
projects in Thailand, Malaysia, New Zealand, Taiwan, Tajikistan and Nepal. BHEL
also has ongoing hydro projects in Rwanda, Afghanistan, Tajikistan and DR
Congo.Source: Economic
Times
HCL Tech signs a
long-term IT services agreement with Nokia
Tata Consultancy Services (TCS), the country’s leading IT
services, consulting and business solutions organisation, on Thursday announced
that it has entered into a long-term agreement with Nokia, a global leader in
mobile communications, to help transform its IT landscape. It has been selected
as a global IT partner after a rigorous selection process aimed at
consolidating Nokia’s global internal applications suite with a single
provider. The day also saw HCL Technologies announcing that it has entered into
a long-term, global IT infrastructure management outsourcing services (IMS)
agreement with Nokia. The scope of the engagement includes data centre, network
management, end user computing services and cross-functional service management
across Nokia's global IT infrastructure operations. Nokia said it will
outsource the IT function to Indian technology firms TCS and HCL Technologies,
a move that will see the Finnish handset maker cutting up to 300 jobs. Nokia
plans to transfer certain activities and up to 820 employees to HCL Tech and
Tata Consultancy Services as part of the process, it said in a statement. In
the case of TCS, it will support and develop Nokia’s core applications for
enterprise resource planning (ERP), customer relationship management (CRM), product
lifecycle management (PLM), supply chain management (SCM), enterprise
information management (EIM) and corporate functions (COF) across the world. As
a part of this engagement, TCS will work with Nokia in realizing its future IT
roadmap, driving consolidation, rationalisation and simplification of
applications and also enabling business transformation across the core
portfolios, TCS said in a statement. “Over the years, TCS has built a strong
reputation as a partner that drives simplification and business enablement
using its transformational framework that allows companies to drive significant
next generation benefits. This deal with Nokia reflects our capability and
commitment to the Nordic region. We are delighted to partner with Nokia and
contribute to its future evolution,” said, Amit Bajaj, head — Nordic and Baltic
Region, TCS. TCS’ Nordic operations comprise over 4,500 professionals working
across Sweden, Finland, Norway, Denmark and Iceland, servicing leading Nordic
companies such as Nokia, Ericsson, TDC, ABB, Telenor, NETS and SAS. It had
recently been recognized by a KPMG survey of 340 top Nordic companies as the
No. 1 company in terms of customer satisfaction for the third consecutive year,
the statement added. On the other, HCL will be deploying its MTaaS and MyCloud
solutions with Nokia. The associated IT infrastructure transformation programme
will leverage HCL’s enterprise of the future (EoF) framework to provide a new
infrastructure-operating platform for Nokia. The deal is an extension of HCL’s
engagement with Nokia, wherein it was delivering global service desk and
desktop management outsourcing services since 2009. R Srikrishna, executive
vice president and head - global infrastructure services for HCL Technologies,
said, “This new extended engagement is a testimonial of the business impact,
delivery excellence, continuous improvement and the trust that we have
delivered to Nokia ever since the start of our relationship with them. Nokia
has a very large, diversified and complex IT operations landscape and we are
confident that our ability to align IT operations with business processes will
enable us to take the end user experience at Nokia to a new level.”Source: Mydigitalcf
PNB to issue shares
upto `1,250cr on preferential basis to GoI
State-owned Punjab National Bank (PNB) Thursday approved a fund
infusion of Rs 1,250 crore through preferential issue of shares to the
government. PNB has approved issuance of shares of face value of Rs 10 each for
raising up to Rs 1,250 crore on preferential basis in favour of Government of
India, PNB said in a filing to the BSE. The proposed preferential allotment
will be subject to necessary approvals and the price for issue would be decided
by as per market regulator SEBI rules, it said. The bank will hold an
extraordinary general meeting of shareholders on March 4 to take up approval
for the same. Last year, PNB got capital infusion of Rs 1,285 crore from the
government. Earlier this month, the government approved infusion of Rs 12,517
crore in around 10 state-owned banks over the next three months. "Pursuant
to the Budget announcement made by the Finance Minister on March 16, 2012, we
are infusing additional capital into the public sector banks. We will infuse
before the end of this fiscal year a sum of Rs 12,517 crore," Finance
Minister P Chidambaram had said. "We think about 9-10 banks will get the
money...This will enable the banks to maintain the Tier I CRAR (capital to
risk-weighted assets ratio) at a comfortable level and will be compliant to
stricter capital adequacy norms of Basel III whenever Basel III is
implemented," he had said.The government infused about Rs 20,117 crore in
public sector banks during 2010-11, and Rs 12,000 crore in 2011-12. Source: Zeenews
Result Update 3QFY2013
Yes Bank
During 3QFY2013, Yes Bank reported a strong performance,
posting a net profit growth of 34.7% yoy, exceeding our estimates, due to
higher-than-estimated growth in non-interest income, contributed largely by
‘financial advisory’ fees. Key positive takeaways from the results were strong
momentum in savings deposits, maintenance of healthy asset quality and strong
loan growth during the quarter. Yes Bank has taken the challenge of building a
retail deposit base head-on, nearly doubling its branch network over the past
two years to 412 branches now and aggressively increasing savings rate to 7% as
a smart customer-acquisition strategy. In our view, the bank is in a sweet
spot, wherein retail franchise growth is likely to remain strong as large banks
cede some market share to it rather than offering higher savings rates to their
entire customer base. Though retail growth prospects appear stronger
now, it currently trades at a valuation of 2.6x FY2014E
ABV, which in our view, offers decent upside from current levels. Source: Angel Broking
Result Update 3QFY2013 Axis
Bank
During 3QFY2013, Axis Bank reported a 22.2%
yoy growth in its net profit, which was in-line with ours’ and ahead of
streets’ estimates. Sequential improvement in NIMs, robust growth in fee income
and stable NPA ratios, were the key highlights from the results. Axis Bank is trading at
1.9x FY2014E ABV – more than 50% discount to HDFC Bank vs. an average discount
of around 35% over the past five years (which we believe over-discounts asset
quality concerns). We remain positive on the bank, owing to its attractive CASA
franchise, multiple sources of sustainable fee income and reasonable growth
outlook. Source: Angel Broking
Result Update 3QFY2013 Electrosteel
For 3QFY2013, Electrosteel Castings (ECL) reported a
strong growth in operating profit mainly due to decline in raw material costs
as a percentage of sales. We maintain our Buy recommendation on the stock. ECL’s
3QFY2013 net sales increased by 6.5% yoy to `473cr. The company reported a
positive EBITDA of `47cr in 3QFY2013 as compared to an EBITDA loss of `1cr in
3QFY2012 due to lower raw material costs and lower other expenditure. The company’s interest costs increased by 142.3%
yoy to `27cr whereas the other income
rose by 397.5% yoy to `38cr. Consequently,
the company posted a positive PAT of
`33cr compared to a PAT loss of `11cr in 3QFY2012. We maintain our
positive stance on the company’s initiatives of venturing into steel making
through its associate ESL. Further, the company’s backward integration
initiatives through the allocation of iron ore (although not factored in our
estimates currently) and coking coal
mines are expected to result in cost savings from FY2014-15. Source: Angel Broking
Result Update 3QFY2013 TATA
Consultancy Services (TCS)
For 3QFY2013, TCS reported yet another set of healthy
quarterly results, outperforming street as well as our expectations on the
operating margin as well as the profit front. The only disappointment in the
result was sluggish volume growth of 1.25% qoq. TCS closed seven large deals
during 3QFY2013. The Management sounded confident of FY2014 being a better year
than FY2013 as clients seem to have a better handle on the kind of projects
they want to execute. TCS remains one of the defensive bets in the IT pack. Source: Angel Broking
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