Bank Finance India: Mar 22, 2010

Monday, March 22, 2010

Pradip Overseas fixes IPO issue price at Rs 110

Source:Press Trust of India / New Delhi March 22, 2010, 13:04 IST

Home linen products maker Pradip Overseas today

said it has fixed the issue price of its initial public offer (IPO),

which was subscribed over 14 times, at Rs 110 a share --

the upper end of its price range.

The company has fixed the issue price at Rs 110 a equity share,
Pradip Overseas said in a statement.

The company has entered the capital market with an issue size
of 1.06 crore shares of Rs 10 each in the price range of Rs 100-110 apiece.

The Rs 116-crore issue that was open between March 11 and
March 15 had received good demand from the investors and
was subscribed over 14.08 times.

The company intends to use the IPO proceeds to part
fund a manufacturing facility in a textile SEZ and partly
finance the incremental margin money requirement for working capital.

Anand Rathi Advisors is acting as the sole book running
lead manager to the offer.

Pradip Overseas is a textile maker with niche focus on
home linen products.

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IFC to invest $10 million in Azure Power for solar projects

Source:Press Trust of India / New Delhi March 22, 2010, 14:23 IST

In the first ever investment of its kind by World Bank's arm IFC,

the agency will invest $10 million (around 46 crore) in renewable

power company Azure Power to help set up solar plants to

generate electricity for Indian villages.

"IFC, a member of the World Bank Group, will provide
a $10 million equity investment to an independent solar
power company, Azure Power Private Ltd, to help implement
new megawatt scale grid-connected solar plants to bolster
clean energy output," International Finance Corporation said in a release.

IFC further said it is the first solar project under the
lending agency's new clean technology investment programme.

"Once fully operational, the project will expand capacity
to produce over 20,000 megawatt hours of clean energy
annually to reach hundred villages in several Indian states,
and more than 10,000 tonnes of carbon dioxide emissions will be avoided annually," it added.

Helion Venture Partners and Foundation Capital,
leading venture capital investors in clean technology companies
also funded Azure's solar power initiative in September 2008.

"The support from IFC, Helion, and Foundation Capital is
recognition of the potential of megawatt scale solar
power generation in India," Azure Power's Chief Executive
Officer Inderpreet S Wadhwa said.

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Tata Motors to set up truck plant in Myanmar

Sources:Reuters / Mumbai March 22, 2010, 14:39 IST
Tata Motors, said on Monday it has signed a contract with
Myanmar Automobile & Diesel Industries Ltd
to set up a heavy truck plant in the country.

The plant, to be set up at Magwe about 480 kilometres
from Yangon, will have an annual capacity of 1,000 vehicles
and is expected to be operational by the last quarter of 2010/11,
the company said in a statement.

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IPL: Sahara, pvt group winners

Source:BS Reporters / Mumbai/chennai March 22, 2010, 0:36 ISTRs 3,235 cr paid for Pune, Kochi teams,
almost as much as for all eight in 2008.

speculation on who’d win the two new franchises for the
Indian Premier League’s (IPL’s) fourth cricket season in
2011 came to an end, as both the Videocon Group and
Adani Enterprises, touted as frontrunners, lost.

Instead, in a morning full of surprises in Chennai today, the
Sahara Adventure Sports Group emerged top bidder,
paying $370 million (Rs 1,702 crore) as the franchise price
for Pune. This was 64 per cent higher than the base price se
t for the auction, at $225 million (Rs 1,035 crore).

The other franchise on offer was bagged by a Kochi-based
consortium of businessmen, Rendezvous Sports World Ltd,
which won the Kochi franchise for $333.33 million (Rs 1,533.3 crore).

For the first season, in 2008, when the existing eight teams
were brought under the hammer, Reliance Industries had made
the highest bid at $112 million (Rs 515 crore) for Mumbai Indians.

While the existing eight teams had been sold for a
total of Rs 3,330 crore in 2008, the two new teams
managed to bag Rs 3,235 crore for IPL.

“This clearly shows IPL is recession-proof and I hope they will
make good business,” said its chairman and commissioner, Lalit Modi.

He said five bidders had participated in the auction — Rendezvous,
Sahara, Adani Group, VC Digital Solution (Videocon) and
Amonar Pvt Ltd. The cities on offer were Cuttack, Ahmedabad,
Nagpur, Dharamsala, Indore, Visakhapatnam, Pune and Kochi.

While the franchisee fee would be paid over the next 10 years
by the winning bidders in equal instalments, both Sahara and

Rendezvous are to also pay $37 million (Rs 170 crore) and $33.33 million

(Rs 152 crore), respectively, as bank guarantees to IPL by Tuesday.

Sahara had placed competitive bids for three cities
— Ahmedabad, Nagpur and Pune —
and eventually chose Pune.

The other bidders which showed interest for
Pune was Amonar, which quoted $261.3 million (Rs 1,203.36 crore) and
Videocon, joined by Bollywood superstars Saif Ali Khan and Kareena
Kapoor, which quoted $319.9 million (Rs 1,471.5 crore).

The Adani Group had quoted $315 million for Ahmedabad.

Rendezvous World Sports had placed its bid for Kochi with
consortium partners Pavinee Developers, Anchor Earth, Filmwoves
and Anandshah Developers. “At present, Kerala does not have any
cricket stadium, but Kerala Cricket Association has said they are in
the process of building one. Till that time, the bidder
(Rendezvous Sports World Ltd) will be provided with an alternative venue,
anywhere in India,” said Modi.

He added that IPL would now feature 10 teams and a total of 94 games,
from the existing 60 games. “The Twenty20 tournament will not see any
more expansion in the near future. In fact, I don't foresee an expansion in
many, many years to come but, then, you never know," Modi said.

Now are there plans to hold the IPL abroad in future, although we
will play exhibition matches in foreign countries, said Modi.

IPL had invited bids for the franchises for two new teams in February
and was supposed to declare the winners on March 7.
However, it had to modify its tender norms after getting only
two bids for the two teams on offer. Most prospective bidders
balked at the stiff financial terms of the earlier tender.

IPL later made three major changes for the new tender.
The $100-million (Rs 460 crore) performance guarantee
was brought down to $10-million (Rs 46 crore), to be given
24 hours before the bid. The bank guarantee, to be given
within 48 hours of winning the bid, was brought down
to 10 per cent of the winning amount, from 100 per cent earlier.

The most important change was the withdrawal of the net
worth clause.

In the earlier tender it was $1 billion (Rs 4,600 crore).

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Sugar Sector : Not so sweet anymore

Sources:;Bs/Vishal Chhabria & Sunaina Vasudev / Mumbai March 13, 2010, 0:44 IST

Analysts see a probable
down cycle for the Sugar.
The sharp downswing in international and domestic
sugar prices in the last couple of weeks has soured the
performance of sugar stocks, and it may get worse as
analysts call a probable down cycle for the commodity.

With sugar production expected to rise globally and domestically,
the price of refined sugar has dipped 20 per cent to around $590
per tonne in the international market after touching a 25-year high
of $740 per tonne this year, propelled by a 10-million tonne (MT)
demand-supply deficit. Additionally, analysts say that announcements
of India and other importers like Egypt deferring purchases, even as
an improving 2010-11 supply outlook will narrow the deficit considerably
(subject to normal weather patterns), have also impacted prices.

Domestic sugar prices are down over 20 per cent from peak
levels in January 2010, partly because of an upward revision
in production estimates for the current sugar season ending
September 2010 and also because of tight inventory restrictions
imposed by the government on buyers and changes in release norms
(from monthly to weekly) for free sale sugar.

Indian production for the 2009-10 season is expected to be
around 16.8 MT according to Indian Sugar Mills Association,
against its earlier estimates of 15 MT; however, analysts expect
it to be around 15.5 MT. By March-end though, more accurate
production numbers will be available to gauge the net additional
sugar imports by India (estimates peg it at about 2 MT), which
will have to be concluded in the next one or two months.

For 2010-11, production is expected to jump 40 per cent in
India, according to a Morgan Stanley report, to 23.5 MT matching
consumption levels.

Meanwhile, Brazil has had a good cane crop as well.
There may be 10 per cent year-on-year increase in sugar
production (about 4 MT) in 2009-10 (ending May) according
to a Rabo Bank report. This has set the stage for a softening in prices.

However, a CLSA analyst notes in a recent report that their discussions
with industry participants suggest ethanol exports from
Brazil could also rise significantly if crude oil prices were to
stay above $85 a barrel. It further says strong crude oil prices and
the recent fall in sugar price have improved the relative attractiveness
of ethanol, and this may limit the increase in Brazilian sugar production.

Meanwhile, sugar stocks have fallen by about 15 per cent
on average in the last month and are expected to fall further,
given the near-universal downgrades. Individual stock performance
would vary due to the diversified revenue streams (sugar, power generation)
and the margin impact of raw sugar imported at higher prices earlier in the year.

However, higher cane costs paid to farmers when sugar prices
earlier this year were sky-high would pinch margins
of all companies, going ahead.

Bajaj Hindusthan and Shree Renuka would face closer investor
scrutiny as debt levels go up, even as cash flows slow because of lower prices.

Balrampur Chini may bottom out sooner given its healthier
cash flow outlook, led by an expected increase in
co-generation revenues, which will also allow it to reduce leverage levels.

Triveni Engineering, however, has held up, well powered
by its successful engineering business.

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NEW CMDs, EDs for11 banks -FinMin list ready

SOURCE:Vrishti Beniwal / New Delhi March 22, 2010, 0:29 IST

PSB may get its first non-Sikh at the helm,
vigilance clearances awaited.

M V Tanksale of Punjab National Bank (PNB) may head
Punjab & Sind Bank (PSB) and R M Malla of the Small Industries
Development Bank of India may take charge at IDBI Bank if the
Central Vigilance Commission (CVC) and the Cabinet approve the
list for public sector bank chiefs prepared by the finance ministry.

The ministry selected 10 executive directors to fill the top slots at
public sector banks, since 10 Chairmen-cum-Managing Directors (CMDs)
retire this year. It also prepared a list of 12 general managers to be elevated
to the post of EDs at 11 banks.

The committee, headed by financial services secretary R Gopalan,
recommended Tanksale for heading Delhi-based PSB, which had hitherto always had a member from the Sikh community as its head. The bank’s current CMD, G S Vedi, retires in June. Tanksale’s colleague in PNB, Nagesh Pydah, has been identified for replacing T Y Prabhu at Delhi-based Oriental Bank of Commerce (OBC).

A finance ministry official said, “The selection of PSB chief was on merit
and the government is open to a non-Sikh heading the bank.” An executive in PSB said the bank staff, which mainly comprises Sikhs, did not seem to have any concerns about the appointment of a non-Sikh at the bank’s helm.

The panel suggested M Narendra of Bank of Baroda for Indian
Overseas Bank, H S U Kamath of Canara Bank for Vijaya Bank,
Pradeep Ramnath of Central Bank for Corporation Bank, Arun Kaul of
Central Bank for UCO Bank, A S Bhattacharya of Indian
Bank for Bank of Maharashtra, R Ramachandran of Syndicate
Bank for Andhra Bank, and S Raman of Union Bank for Syndicate Bank.

Of the 18 people the selection panel interviewed last month for the
post of CMD, 10 were identified for heading specific banks,
whereas two executive directors (S C Kalia of Union Bank and
B A Prabhakar of Bank of India) were kept as standby,
if there was a problem with the first lot of names.
A shortlisted candidate would need CVC clearance before
his name is put up to the Appointments Committee of the Cabinet.

For the post of executive director, the committee interviewed
about 40 general managers and shortlisted 16, of which four
are in the waiting list. While Ravi Chatterjee of UCO Bank
may move to Syndicate Bank, his colleague R K Murgai is
yet to be assigned a bank, along with M S Raghavan of IOB,
A P Ghuggal of Bank of India and B Rajkumar of Andhra Bank.
V R Iyyar of Union Bank and R K Dubey of PNB
may go to Central Bank, while PNB’s Archana Bhargav has
been selected for Canara Bank.

Besides, the panel selected Ashwani Kumar of Allahabad Bank for
Corporation Bank, Rakesh Sethi of Andhra Bank for PNB,
S S Mundra of Bank of Baroda for Union Bank,
N Badrinarayan of Bank of Baroda for UCO Bank,
N Kannan of Bank of Maharashtra for OBC,
N Seshadri of Canara Bank for Bank of India,
Rajiv Rishi of OBC for Indian Bank and
A K Bansal of Union Bank for IOB.

This time, the government had relaxed the selection criteria.
It reduced the period of residual service from two years to a
year and three months, and the total experience as an executive
director to six months from the earlier one year.

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Avoid bailout of financial firms, says Bernanke

Source:Bloomberg / March 21, 2010, 0:17 IST

Federal Reserve Chairman Ben S Bernanke said government
bailouts of large financial firms were “unconscionable” and must
be ended as part of a regulatory overhaul following the worst
financial crisis since the 1930s.

“It is unconscionable that the fate of the world economy should
be so closely tied to the fortunes of a relatively small number of giant
financial firms,” Bernanke said today in a speech in Orlando, Florida.
“If we achieve nothing else in the wake of the crisis, we must ensure
that we never again face such a situation.”

Congress is considering a resolution mechanism for financial firms
that are so large or interconnected to other institutions that their failure
could damage the financial system. A plan by Senate Banking Committee
Chairman Christopher Dodd, a Connecticut Democrat, would allow
the Federal Deposit Insurance Corp to liquidate a large firm after a panel
of bankruptcy judges determines the company is insolvent and with approval
of the Fed, FDIC and the Treasury Department.

The Fed chairman has faced criticism from Congress for bailouts
that he said were intended to prevent a possible depression.
Lawmakers including Dodd have criticized the Fed’s purchase of $29 billion
of securities in March 2008 to facilitate the merger of Bear Stearns Cos
with JPMorgan Chase & Co, and loans to keep American International Group
Inc from default.

All large financial firms rather than just big banks should be subject
to stronger regulation, Bernanke told bankers gathered for the
Independent Community Bankers of America convention.
Shareholders and creditors should not be protected from losses
in any plan, he said.

The Fed is revamping its approach to supervision of large banks,
using economists and quantitative analysts to help with horizontal
reviews targeting risks across the financial system, Bernanke said.

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Capital infusion in PSBs to be in cash: govt

Source:BS Reporter / Mumbai March 21, 2010, 0:13 IST

The government will infuse Rs 16,500 crore of capital into

public sector banks (PSBs) in the cash form in the next

financial year, according to Financial Services Secretary

R Gopalan, who was speaking at a function to inaugurate

State Bank of India’s (SBI’s) 1000th branch in 2009-10.

The government had subscribed to SBI’s rights issue
in 2008 by issuing special bonds.

This clarity on mode of capital infusion assumes significance,
since SBI had to make provision for erosion in the value of SBI
bonds due to hardening of yields at end of March 2009.
This portfolio of SBI bonds of about Rs 10,000 crore is marked-to-market.

Gopalan said the government would decide the amount to be
infused depending on the credit outstanding, Tier-I capital
requirement, and the risk-weighted average of individual banks
at the end of March.

The budgeted amount (Rs 16,500 crore) does not take into
account the capital needs of SBI. Though the bank expressed
preference for rights issue to maintain the government holding,
it is yet to convey specific requirements to the government.

The government has signed a pact with the World Bank for $3-billion loans
to recapitalise public sector banks. According to rating agency Icra, public
sector banks will require capital of over Rs 1 lakh crore
over the next two years to maintain a capital adequacy of 12 per cent
and meet their business plans.

On the performance targets for public sector banks,
Gopalan said credit growth should be around 20 per cent
for the next financial year. The government expect banks
to have a net interest margin of about 3 per cent and return on
assets at 1 per cent.

On new banking licences, he said they should not pose a
disadvantage to existing banks. "We do not have enough
banks in our country. So, we have started this financial inclusion.
The government wanted additional footprints, so we requested
the Reserve Bank of India whether additional banks could be opened," he said.

However, the only question remained as to who should get
the licence, which would be revealed only when RBI comes up
with the guidelines, he said, adding that RBI would ensure a
level-playing field for existing banks, while allowing new players
who have to operate on a pan-India basis.

In the Union Budget, Finance Minister Pranab Mukherjee
had said RBI would consider giving licences to private
sector players and non-banking finance companies to foray
into the commercial banking space

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