Nik's Diary
The Indian markets opened flat to negative
tracking negative opening in most of the Asian markets and SGX Nifty.US markets
were under pressure in early trading on Wednesday and stocks remained firmly in
negative territory throughout the session. Renewed concerns about the outlook
for the Federal Reserve's stimulus program weighed on the markets. The major
averages ended the day in the red but well off their lows for the session.
Meanwhile the European markets ended Wednesday's session solidly in negative territory,
reversing the gains of the previous session. The strong housing and consumer
confidence data released by the U.S. yesterday gave rise to concerns that the
Federal Reserve may scale down the stimulus program in the coming months. Meanwhile,
Indian shares fell modestly on Wednesday as investors took some profits off the
table following three days of gains, awaiting the expiry of near month F&O
contracts on Thursday and the release of March-quarter GDP data on Friday.
Electrosteel gets nod from lenders to
restructure `6,000cr loan
The Kolkata-based Electrosteel Steels BSE -2.43 % has approached lenders to recast its Rs
6,000-crore loan, indicating rising stress in the books of banks due to a
slowdown in the economy. Lenders have in-principle agreed to restructure the
company's loan, a move that will give Electrosteel more time to repay its dues,
said people who were present at the meeting. Officials from the banking circle said the lead bank would refer the loan
to the corporate debt restructuring (CDR) cell — a forum where lenders and
borrowers mutually decide to restructure loans — sometime in mid-June . Lenders
will have to sacrifice close to Rs 800-1 ,000 crore, while the company will
have to infuse about Rs 200 crore, said a senior bank official , who did not
want be named. Meanwhile, Electrosteel board on May 20 cleared the
proposal to approach CDR to
recast the loan. Massive expansion undertaken by several companies during the
boom period and the subsequent slowdown in the economy in the following years has resulted in several
corporates facing liquidity crunch. Many large companies such as Tulip
Telecom BSE 0.74 %and Gammon
India BSE -2.80 %, an infrastructure
company , have recently approached lenders to recast their loan. According to
data provided by CDR, as on March 2013, loans of 401 companies, amounting to Rs
229,013 crore, have been restructured . Bankers expect stress to continue for a
while as they expect a huge pipeline of debt recast in the first quarter.
Kapil Sibal okays DoT's call to impose
Rs 650 cr penalty on Bharti Airtel for offering SLD services
Communications Minister Kapil Sibal has
approved a telecom department proposal to slap a Rs 650-crore penalty on India's
largest mobile phone company, Bharti Airtel BSE -1.78 %, for
providing subscriber local dialling (SLD)
services in 13 regions between 2003 and 2005. SLD is a facility that allows roaming customers to
be on the local network and thereby avoid paying roaming and STD
charges. The telecom ministry had directed Bharti and Hutch (now Vodafone)
to stop providing this facility in June 2003, saying SLD amounted to violation
of the national routing plan and helped companies avoid a levy charged with
every long-distance call. However, the Sunil Mittal-promoted company continued
offering this service till 2005, officials in the ministry said. Apart
from the penalty, Sibal has cleared DoT's plan to 'recover the loss incurred to
the exchequer in the form of licence fee and spectrum charges', according to an
internal note of the telecom department. ET has reviewed this May 27
note. Telecom department officials said Bharti would be issued a
show-cause notice soon while adding they would also seek Sibal's approval for
initiating action against Vodafone for
the alleged violation. The Bharti spokesperson declined comment and said
the company had not got any notice on this issue so far. But an executive close
to Bharti said the telco had offered this facility to benefit consumers by
lowering their bills. "There was no revenue or profit gain to Bharti by
offering this facility to its customers," this executive added. The
move will spell fresh trouble for Bharti Airtel, which is already confronted
with penalties to the tune of several thousand crores for a slew of alleged
violations. Indeed, every telecom operator is facing some penalty from some
government arm.
PENALTIES PLAGUE TELECOM INDUSTRY
A back-of-the-envelope
calculation shows that collectively these penalties and claims add up to about
Rs 20,300 crore. To put that in perspective, the penalties amount to about 15%
of the industry's revenues in 2011-12, or 22% of the exposure of Indian banks
to the sector as of January. Mobile phone companies have challenged all demands
in courts. ET had also reported last week that Bharti, Vodafone and Idea Cellular BSE -0.63 % would soon be slapped with another round of
show-cause notices and penalties for 'giving' their 3G airwaves, or sharing
these frequencies with each other. Earlier this year, DoT had slapped penalties totalling Rs 1,200 crore
on the three telcos for offering high-end data services in areas where they did
not have 3G airwaves and permits, or being 'takers' of 3G spectrum where they
did not have these frequencies. The latest penalty relates to the SLD
facility, under which customers who were on roaming could prefix a code before
their mobile number enabling them to make local calls in that area without
paying roaming charges. Sibal had cleared the DoT plan after an internal
department panel looking into this issue had recommended a penalty of Rs 50
crore in each of the 13 circles where Bharti offered SLD services. The panel
also said Bharti must provide its call records during that period to enable the
government establish the alleged loss to the exchequer in the form of licence
fee and spectrum charges.
Sundaram Finance to deepen presence in
FY14, logs 15% rise in net
Non-banking finance
company Sundaram Finance BSE 0.21 % will lay focus on
penetrating market segments like financing light commercial vehicles and by
deepening its presence in the country in 2013-14, a top official today
said. Society of Indian
Automobile Manufacturers forecast for
2013-14 is not particularly rosy, Sundaram Finance, Managing
Director, T T Srinivasaraghavan told reporters here. "Those are
challenges we are faced with. We believe in 2013-14 also like 2012-13, going to
be lot of headwinds. So, we have to depend on our own abilities to find
opportunities within the available market spaces. And then to find growth
either penetrating into new market segments or through increasing market
share," he said. The company for the financial year ending March 31,
2013 reported a 15.4 per cent growth in net profit at Rs 410 crore as compared
to Rs 355 crore registered during the same period of previous year, he
said. Besides, the company was able to increase its disbursements by six
per cent to Rs 9,991 crore for the financial year ending March 31, 2013 from Rs
9,432 crore. "Last year (2012-13) we crossed one milestone. Our
networth gone past the Rs 2,000 crore mark", he said. On the proposal
to deepen the company's presence in the country, he said the company has about
100 stores in Maharashtra, Gujarat, and close to 50 in Punjab, New Delhi,
Hyderabad and Uttaranchal. "We will be looking at opening up of new
branches. We will also deepen our presence in North, West and Central India
where we already have a strong presence. Actually, it will be a combination of
many things...", he said. To a query, he said: "We have recently
entered into LCV segment. There is a lot of headroom to grow in the LCV space.
Volumes are large in this space and we believe that opportunity presents itself
for growth". Noting that the company's asset quality continues to be
the best in the industry, he said: "The company last year gained market
share in medium and commercial vehicle
space around 10 per cent." The board of Sundaram Finance at its
meeting today have recommended a final dividend of Rs 4.50 per share. This
along with interim dividend of Rs 4.50 per share, takes the total dividend for
financial year 2012-13 to Rs 9 per share. The company had issued bonus
shares in the ratio of 1:1 during financial year 2012-13. Shares of
Sundaram Finance closed 2.94 per cent down at Rs 553.85 apiece on the BSE after touching a new 52-week high of Rs 575.00. Source: TheEconomicTimes
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