16 November 2013 - 18:10 pm
Stating that the overall asset restructuring in the banking system has touched Rs 3.25 lakh crore as of June, RBI Executive Director B Mahapatra today said loan recast has gone “out of control” and all stakeholders need to tackle the problem jointly.
“Till March 2011, things were manageable. We had around Rs 1.1 lakh crore in recast loans, but now if you see, things are quite out of control. It has gone up to Rs 2.7 lakh crore. This is only CDR (corporate debt restructuring) and if you put both (CDR and bilateral restructuring cases between banks and companies) together, may be it might exceed Rs 3.25 lakh crore,” he said at the annual Bancon here.
Mahapatra said the Reserve Bank of India was willing to “tolerate a bit of restructuring,” but he exhorted banks to provide more against potential asset quality troubles and promoters to get more equity and personal guarantees.
“We’ll tolerate a bit of restructuring, we will give the regulatory forbearance, offer more time — that is the loss or the sacrifice that we as regulators are willing to make. But you as bankers should also be willing to make more provisions…And the borrowers should also sacrifice, he should bring in more equity,” he said.
“It is a loss-sharing arrangement. In a system, when there is a problem, all the stakeholders should share the loss,” the executive director said.
Mahapatra pointed out that the RBI has increased the provisioning requirements for banks from 2% earlier to up to 5% in some cases. >> Read More
23 September 2013 - 6:50 am
India’s top builders seem to be sitting on a huge unsold real estateinventory, worth nearly Rs 58,000 crore, which could take more than two years to sell, a Business Standard analysis of 19 listed realty firms on the BSE-500 index shows.
At the end of March, the combined unsold inventory of these companies rose 25 per cent from a year earlier. Their net sales remained almost flat during the same period (see chart).
Of the Rs 58,000-crore pile-up, DLF, India’s largest real estate developer, accounted for almost a third. As of March-end, the Delhi-based company reported an inventory worth Rs 17,600 crore, 18 per cent more than that two years earlier. The company’s consolidated net sales declined from Rs 9,561 crore to Rs 7,773 crore during this period. Following DLF is HDIL, which reported an inventory of Rs 12,043 crore at the end of March this year, more than six times its net sales last financial year.
Third on the list is Indiabulls Real Estate, with an unsold inventory worth Rs 5,111 crore, nearly four times its 2012-13 net sales.
The situation might look even grimmer if the figures for unfinished projects or those under construction (capital work in progress) were to be included. At March-end, the 19 firms in the sample reported Rs 12,300 crore of capital work in progress (see chart). >> Read More
19 September 2013 - 12:07 pm
This 19 year old business entity is one of the largest debt syndicators in the country. In the recently closed Debt offering of REC, they raised Rs 750 crore as lead managers. Operating from 10 offices across India, the corporate has built up a huge clientele of cash rich corporate entities and HNIs. With more offerings coming in the next 6 months from HUDCO, IIFL, PFC, Muthoot, Manappuram, Nabard, NHAI, ILFS Transportation the second half of FY14 should turn out to be exceptionally strong.
FY13 Revenues were placed at Rs 190 crore on a consolidated level and after tax profits of Rs 46 crore. This resulted into an EPS of Rs 70 per share and the corporate maintained dividend at Rs 6 per share.
60 per cent of the Equity is held by the promoters, and just 55 shareholders own 87 per cent of the company. The corporate has moved into Wealth management, stock broking and NBFC operations through the setting up of 4 WOS.
At CMP of Rs 116, the stock quotes at a PE of 1.2 and a PBV of 0.24. This valuation is substantially lower than even the worst PSU Banks and the stock can easily move up 50 per cent from here by March 2014.
17 September 2013 - 6:35 am
In line with macro environment, the advance tax collections from the top-100 corporates from the financial capital showed a muted growth for the September quarter, with the outgoes increasing by only up to 8 per cent, a senior official said today.
“For the top-100 companies, the advance tax payments have increased by 7-8 per cent,” the official said. Cumulatively for the first two quarters till now, the advance tax collections from the Mumbai zone, which contributes over a third of the income tax collections nationally, have grown 11 per cent, the official said.
Leading the pack in the financial capital was Mukesh Ambani-led Reliance Industries which paid Rs1,670 crore as against the Rs1,534 crore in the same period year ago, the official said.
Insurance giant Life Insurance Corporation paid Rs1,624 crore as against the Rs1,307 crore paid in the same period last year, the official said.
The country’s largest software exporter TCS paid Rs1,030 crore as against Rs810 crore in the same period last year, the official said. >> Read More
17 September 2013 - 0:39 am
Even as rumours continue to swirl around the Indian National Congress’ choice of advertising agency for its electoral campaign ( JWT India , The Economic Times reported on 11 September, but the agency and the party continue to deny it), the party has a proxy-campaign running for it—the government’s Rs. 100 crore campaign for its entitlement driven Bharat Nirman programme.
Conceptualized last year, the campaign has so far seen its creators, film director Pradeep Sarkar and hisApocalypso Filmworks Pvt. Ltd, and advertising agency Percept/H, create 22 commercials, many featuring a continuing character—a young woman, Priya, who is born into an underprivileged background but, through hard work and a helping hand from the government’s policies, travels to Delhi to study engineering from her remote village, becomes an entrepreneur, acquires land in and around her village (at the new rates announced by the government, 4 times the market value), and is an all-round busybody and do-gooder.
Ads have aired across major television channels and FM stations. >> Read More 15 September 2013 - 14:21 pm
Sounding an alarm of the detoriating asset quality of banks, ratings agency CrisilBSE -0.49 % has said gross non-performing assets will touch 4.4 per cent and the restructured book will balloon to Rs 4 lakh crore by the end of this fiscal.
“Gross NPAs (non-performing assets) were at 3.3 per cent in March 2013 and grew to 3.7 per cent by the June quarter. We feel they will grow to 4.4 per cent by March 2014,” CRISIL Managing Director and Chief Executive Roopa Kudva said here over the weekend.
An NPA is a debt obligation where the borrower has not paid the interest and principal repayments to the lender for an extended period of time. Corporate Debt Restructuring (CDR) allows the reorganisation of a company’s outstanding obligations.
Kudva said restructured assets, under which an account’s repayment period is extended or interest payment delayed without classifying it as an NPA, will touch Rs 4 lakh crore this fiscal, up from the Rs 3.1 lakh crore in March, 2013.
“The system will add up to Rs 1 trillion (lakh crore) of restructured assets during the fiscal and considering some assets will be reclassified during the fiscal, we feel the total component will touch Rs 4 trillion by March 2014,” Kudva said. >> Read More
15 September 2013 - 13:42 pm
Overseas investors have pumped in nearly Rs 6,000 crore in the Indian capital markets in a fortnight ended September 13, mainly on the back of newRBI Governor Raghuram Rajan announcing various measures to boost the depreciating local currency and revive economic growth.
Inflows in equities were about Rs 6,372 crore ($966 million) during September 2-13, while there was a pull-out of Rs 382 crore ($64 million) from the debt market, translating into net inflows of Rs 5,990 crore ($922 million), as per latest data available with market regulator Sebi.
In August there was a net withdrawal of nearly Rs 16,000 crore (about $2.5 billion) from the domestic capital markets. >> Read More
15 September 2013 - 13:28 pm
The country’s largest lender State Bank of India today said it has paid Rs 1,120 crore in advance tax for the second quarter as against Rs 1,820 crore in the corresponding period last year, down nearly 40%.
Its foreign offices have paid an additional Rs 192 crore in tax during the period, a bank statement issued here said.
On last Friday, a senior official from the the Income Tax had said that the department is witnessing a “muted growth” in collections from the Mumbai region, which accounts for over a third of the total collections nationally. >> Read More
10 September 2013 - 6:34 am
The first wake-up call for the United Progressive Alliance, keen to shower entitlements on an India it believed was not Shining, came in early 2007. Food grain prices started shooting up. Received wisdom places the start of the food price spiral a year later, but grains went up 15 per cent and all foods by 11 per cent in 2007. I had addressed a farmers’ meeting in April 2007 on ABCD (atta-besan-chawal-daal) inflation. A global supply contraction affected India as well, but our economic wizards chose to treat it through their monetary policy toolkit designed to control demand. The alarm met with a snooze response.
The rash of farmer suicides in Vidarbha and Andhra Pradesh that year also tragically highlighted agrarian distress. The government responded to the deep-rooted structural problems by offering a palliative of a one-time debt-waiver of Rs 52,000 crore to 40 million farm families. In its avowed quest for inclusiveness, it also committed simultaneously to spending Rs 20,000 crore annually on 5.5 million families of government employees and retirees. States had to follow suit, staring at bankruptcy, but overdrafts from the central government could come to their rescue! While one hand of the government tightened money to control inflation, the other opened the floodgates.
Two fortuitous (but unintended) results ensued. One, the bumper crop of 2008 temporarily paused food inflation. Food prices continued their upward march the very next year, not checked till date. Between 2007 and 2011, food inflation was 80 per cent, and fruit and vegetables doubled in prices. That trend continues to exacerbate, as is evident from onion prices literally causing tears lately. The government is entirely clueless. More on this in the next column. >> Read More
09 September 2013 - 0:27 am
A total of 50 corporate debt securities got the top investment grade credit ratings in the first four months of the current fiscal — the lowest number of such high ratings for this period in over ten years.
The number of debt issues that got non-investment grade ratings between April-July period of current fiscal 2013-14 also declined to 377, from as many as 1,249 in the same period of the previous financial year, according to data compiled by Sebi, which regulates credit rating agencies (CRAs) in India.
Various CRAs assigned a total of 720 long term corporate debt securities between April-July this fiscal, including ‘highest safety investment grade (AAA)’ rating for 50 of them.
The 50 AAA-rated issues together involved debt securities worth about Rs 4.52 lakh crore, as against a total amount of about Rs 6,084 crore for 377 issues that were assigned ‘non-investment grade’ ratings.
AAA rating is assigned to highest-quality bonds that face the lowest risk of default, while ‘non-investment grade’ applies to the low-quality issues. An AAA rating is followed by ‘High Safety (AA)’, Adequate Safety (A)’ and ‘Moderate Safety (BBB)’.
For April-July period, 102 issues got high-safety (AA) rating, 47 were ‘adequate safety (A)’ and 144 got ‘moderate safety (BBB)’ ratings. >> Read More