Tuesday, October 19, 2010

IPO- coal India

Source : Mint :Mumbai/Kolkata: pramit.b@livemint.comAshwin Ramarathinam contributed to this story




The initial public offer (IPO) of state-owned Coal India Ltd (CIL) received bids for around one-third of its shares after it opened for subscription on Monday.

The sale of 10% of the company's equity is the biggest ever in India and is expected to fetch the government between Rs13,923 crore and Rs15,160 crore.Market participants have been wary about the issue because of fears that liquidity in the secondary market may be affected by the huge cash institutions and individuals are likely to deploy for this issue.

At the upper end of the price band, the issue size is only 9% less than the Rs16,712 crore that has been raised so far in India's primary market this year. On Monday, the bellwether Sensex index fell to a low of 19,870 points in early trade before closing at 20,168.9, a 0.24% rise

."We are getting a good response although it is difficult to say right now how large the subscription would be," said Nandip Vaidya, president, retail broking at the IIFL group. "Retail investors typically come in only at the later stage of the book-building process and we see very healthy appetite among them for this issue."On Monday, the subscription in the qualified institutional buyer (QIB) category was 63% of the allotted quota, while that in the retail investors category was 10%. Overall bids were 34% of shares on offer.The issue of more than 631.6 million shares closes on Wednesday for investors in all categories except retail investors, who get an extra day at a 5% discount.

Ten per cent of the issue is reserved for employees and retail investors can subscribe up to 35% of the balance.Employees haven't been enthusiastic about the issue. Only 87,425 of the 63 million shares, or the 10% reserved quota, have been subscribed so far, data from the National Stock Exchange showed.CILchairman Partha S. Bhattacharyya expects employee subscription to remain muted because of opposition from trade unions.

The management had expected at least half of the over 400,000 employees on the payroll to subscribe to the IPO, but that is unlikely to happen, he said.The CIL issue may prove to be a litmus test for the government's disinvestment programme, especially since past issues such as those of NMDC Ltd and SJVNL Ltd got lukewarm responses from investors owing to pricing concerns.At least three other state-owned firms-the Shipping Corp. of India Ltd, Hindustan Copper Ltd and MOIL Ltd, another mining company, have filed their draft prospectus with the market regulator.CIL's issue is priced at Rs225-245 a share.

This, plus a strong cash flow, rising profitability and a near monopoly position in coal have ensured the firm has received rave reviews from most analysts despite risks of regulatory obstacles and left-wing extremism.A key risk is a government proposal to share 26% of profits with local people that could bring down net earnings.Bhattacharyya, however, ruled out a major impact, saying his firm needed to raise coal prices by only around 5.5-6% to mitigate its effects.

He also pointed out that the proposed introduction of International Financial Reporting Standards (IFRS) from April could shore up CIL's net profit this year by up to Rs3,000 crore.
Coal miners in India have been making financial provisions in their accounts towards in increase in mining costs as the life of a mine advanced, but under the IFRS norms, there is no scope to make such provision and they would be able to report that portion as part of their profits.

SBI retail bond issue oversubscribed 17 times

Source:Busibess Line :PTI:19-10-2010:NEW DELHI:


 State Bank of India’s first retail bond issue of Rs 1,000 crore was subscribed over 17 times on the opening day, showing enthused participation from investors. The issue, which opened for subscription on Monday, will close on October 25.

Market sources said that the portion reserved for wealthy individuals (High Networth Individuals) was subscribed by over 16 times, while that reserved for retail investors was oversubcribed 6.4 times.

The offering comprises issue of bonds worth Rs 500 crore, with an option to raise it further up to Rs 500 crore by issuing additional bonds. The bonds would offer an interest of 9.25 per cent for 10 years and 9.5 per cent for 15 years.

Citigroup, Kotak Mahindra Capital and SBI Capital Markets are the managers for the issue. The bonds are proposed to be listed on the National Stock Exchange.

The application size for retail investors is Rs 5 lakh, HNIs Rs 250 crore and for qualified institutional buyers Rs 250 crore.

According to the market sources, electronic subscriptions were not available for retail investors.

The Securities and Exchange Board of India has barred electronic subscription for retail investors to avoid confusion at the time of allotment. The bonds would be allotted to all categories on “first come first serve basis” based on the date of applicati on.

Meanwhile, the SBI scrip was trading 0.13 per cent higher at Rs 3,171.25 in the morning trade on the BSE.

World Bank: East Asia growth strong, faces risks

Source :Written by Associated Press :Monday, 18 October 2010 17:15
Business News AP BEIJING (AP)
The World Bank raised its growth forecast for East Asia's developing countries Tuesday but said governments need to control rising risks from surging capital inflows and currency strains.


Output has rebounded to above pre-crisis levels and regional growth should hit 8.9 percent this year, up from a previous forecast of 8.7 percent, the bank said. Last year's expansion was 7.3 percent.

"The economic recovery in East Asia and the Pacific is robust, but attention must now turn to managing emerging risks which may pose challenges to macroeconomic stability," the bank said in a twice-a-year outlook for the region's economies, excluding Japan.

Asia's rebound has attracted an influx of capital that is pushing up the value of some currencies, which might hurt exports. Some governments have intervened in foreign exchange markets to slow the rise of their currencies, raising fears of a potential "currency war" that might disrupt trade and growth.

The World Bank called for the region's governments to work out a common approach.

"So far, export growth has remained robust, but with continued real appreciation of East Asian currencies this growth could slow," the bank said.

Prospects for China "look bright" but Beijing must push ahead the rebalancing of its economy away from exports and investment to sustain its expansion, the bank said. It said China's economy is expected to grow by 9.5 percent this year.

"Rebalancing the economy by altering the pattern of growth and investment is becoming increasingly critical to ensure sustainability - structurally, socially, and globally," the report said.

The report also covers Indonesia, Malaysia, the Philippines, Thailand, Cambodia, Laos, Mongolia, Myanmar, Brunei Papua New Guinea, Timor Leste, Vietnam, Hong Kong, South Korea, Singapore, Taiwan, the Solomon Islands and smaller Pacific island nations.

Regional economies need to cope with sharp price rises and possible strains to their financial systems from the influx of capital, the World Bank said.


Inflation is being driven by a rise in the cost of food and industrial materials, the report said. Price rises in China and Indonesia have exceeded targets and Thailand is warning of a similar danger there.

Rice prices were up 10 percent in August over a year ago due to poor harvests in Russia and supply disruptions in China and Pakistan, the bank said. Vegetable prices in Thailand were up 38 percent in July from a year earlier because of drought.


The dramatic rise in the flow of money into Asian banks might be passed through to borrowers, raising the threat of an increase in nonperforming loans and harm to banking systems, the World Bank said.