Bank Finance India: Feb 16, 2011

Wednesday, February 16, 2011

SBI to offer 15-year retail bonds at 9.95%

Source :MUMBAI: TNN, Feb 15, 2011, 12.44am IST

State Bank of India will sell bonds to retail investors offering returns of 9.75% and 9.95% on 10- and 15-year bonds, respectively.

In a letter to the Bombay Stock Exchange, the bank said its central board has approved raising funds through the issue of subordinated debt (lower tier II bonds). It has approved selling bonds worth Rs 1,000 crore, with an option to retain oversubscription of up to Rs 1,000 crore. In case of retail demand, SBI can retain the oversubscription beyond Rs 2,000 crore up to Rs 10,000 crore.

This time around the bank is offering different rates for retail and non-retail investors. Non-retail investors, who include institutions and high net-worth individuals who invest in bulk, will receive 9.3% for 10 years and 9.45% for 15-year investments. The bank also has an option to pre-pay investors in the 10-year bonds after 5 years and after 10 years for 15-year bondholders.

Senior officials of the bank said that details regarding the opening of the issue would be announced on Tuesday. Although these investments are long-term in nature, investors are assured liquidity through the listing of these bonds.

Investment bankers who are distributing the issue say earlier experience suggests that SBI is bound to receive a huge oversubscription on the first day itself. "There are many banks that are offering 9.5% and above on fixed deposits. But these investments typically are for one-two years and interest rates are widely expected to come down in the long-term," said an investment banker.

SBI`s earlier retail bond issue, which offered a much lower return, was a huge success with the bonds being sold out on the first day. Successful investors got an opportunity to make equity-like gains as the bonds were listed at a 5% premium on listing. While the returns on the bonds are even better, the listing position would depend on the extent of unsatisfied demand in the public issue. Prices of SBI`s earlier bonds fell marginally on Monday, but the securities continue to trade at a significant premium over the issue price.

Although the size of the issue is minuscule compared to the bank`s balance sheet, the issue is part of an ongoing programme to develop a market for long-term resources. The bank presently funds all its long-term loans, which include home loans and loans to the infrastructure sector, through core savings deposits and medium-term deposits. The long-term bonds will enable the bank to match some of its long-term fixed liabilities
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Antrix-showered-gold-coins-on-DoS-Isro-official

Source :NEW DELHI: Pradeep Thakur, TNN, Feb 16, 2011, 01.44am IST

Antrix Corporation, the commercial arm of Indian Space Research Organisation (Isro), gifted gold coins to officials of Department of Space (DoS) — the body which controls all its activities and is directly under the Prime Minister's Office (PMO).

Raising objection to the expensive gifts which cost Antrix 7% of its profit, Comptroller and Auditor General (CAG) has said that in violation of laid down norms and Central Vigilance Commission (CVC) guidelines, Antrix had gifted more than 15,600 gold coins measuring 4 grams each to officials of DoS and ISRO. A CVC order of September 2004 prohibits any public sector undertaking from giving gifts to government servants.

Interestingly, the expenditure of Rs 7.36 crore incurred for this generosity was 7% of the profit of Isro's commercial arm in that particular year. The gold coins were distributed to celebrate Antrix's 15th anniversary. The organizer also paid an amount of Rs 37 lakh as fringe benefit tax to the exchequer to make this possible.

Antrix's partnership with a private company, Devas, has already embarrassed the PMO as a perception is gaining ground that the latter is favouring the private entity by not annulling the Antrix-Devas contract despite a recommendation from DoS secretary and Isro chairman K Radhakrishnan.

Though the Isro chairman had sought cancellation of the Antrix-Devas deal citing undue favour granted to Devas as the reason, way back in July 2010, government is yet to scrap it. To complicate matters further, the PMO has constituted another committee to review it.

Raising concern, CAG observed that since DoS and Isro employees were "permanent government servants who were also eligible for special cash incentives at the time of every successful launch of satellites, giving gifts to them was not justified".

Justifying its actions, DoS, in its response, said, "It was a small gesture shown by the company to DoS personnel to continue their contributions in this area."

CAG, however, rejected the contention saying the reply of the management should be seen in the light of the fact that the value of gifts constituted approximately 7% of the profit after tax and that it violated CVC guidelines.

Other beneficiaries of the gold coins included officials from Vikram Sarabhai Space Centre, National Remote Sensing Agency, Isro Satellite Tracking Centre and Master Control Facility.

DoS is the administrative department in all matters relating to space systems. Antrix Corporation Limited was incorporated in September 1992 to function as the commercial arm of DoS with access to resources of DoS and ISRO to promote commercial exploitation of space products and to transfer technology developed by Isro.

Not aware of methods used in FCFS spectrum allocation: PM

The Prime Minister, Dr Manmohan Singh (file photo). -- R.V. Moorthy

Source ; PTI :NEW DELHI, FEB. 16:2011

The Prime Minister, Dr Manmohan Singh, today asserted that he was not aware of the methodology of the controversial first-come, first-serve (FCFS) policy followed for 2G spectrum allocation by former Telecom Minister, Mr A. Raja, which resulted in a huge scam estimated to be up to Rs 1.76 lakh crore.

“Who got the licences... how FCFS was implemented, this was never discussed with me nor was it brought to the Cabinet. This was exclusively the Telecom Minister’s decision,” Dr Singh said in an interaction with the editors from the electronic media.

He, however, said that since the Ministries of Finance and Telecom had agreed to continue with the existing policy of allocating 2G spectrum, “I did not feel that I was in a position to insist that auction must be insisted.”

The government auditor CAG had estimated a presumptive loss of up to Rs 1.76 lakh crore due to sale of spectrum in 2008 at 2001 prices.

This had forced Mr Raja to resign from the Union Cabinet in November last year and was followed by his arrest on spectrum 2G scam charges.

On retaining Mr Raja as the Telecom Minister in UPA-II, the Prime Minister said in a coalition government, the choices of the leaders of the alliance partners have to be accepted and that the DMK had suggested the induction of Mr Raja and Mr Dayanidhi Maran into the Union Cabinet.

“At that moment, there was no reason to feel that anything wrong had been done,” the Prime Minister said.

Anil Ambani at CBI headquarters

Anil Ambani, Chairman of Reliance Anil Dhirubhai Ambani Group, speaks during a press conference in Mumbai. PTI photo

Source :PTI :NEW DELHI, FEB 16: 2011

Reliance Infocomm head Mr Anil Ambani on Wednesday appeared at the CBI headquarters and remained with the agency officials for nearly two hours in connection with the probe in the 2G scam. Mr Ambani?s visit pertained to the agency seeking clarification on certain documents relating to Swan telecom.

Reliance Infocomm had 9.9 per cent equity in Swan Telecom before Swan applied for new licence for 2G spectrum. Swan was promoted by DB Realty group headed by Shahid Usman Balwa, who is at present in CBI custody. The CBI is probing the financial trail between Swan Telecom and DMK owned Kalaignar television.

An ADAG statement said, ?During the course of his weekly visit to New Delhi, Mr Ambani met CBI officials today to clarify ongoing issues, relating to telecom matters for the years 2001 to 2010, and virtually every telecom operator in the country.? It said no summons of any kind have been issued by CBI to Mr Ambani.

The ADAG statement said, ?Neither Reliance Telecom nor RCOM nor any Reliance ADA Group individual, company or affiliate held even a single share in Swan Telecom Ltd at the time of grant of the 2G licence to them in January 2008,or at any time thereafter?.

Devas threatens legal action if deal with Antrix is annulled

Devas Multimedia Private Limited office at Jayanagar in Bangalore.
File Photo-V Sreenivasa Murthy

Source :PTI :NEW DELHI, FEB 16:

2011

Objecting to a government move to annul its contract with Antrix following the S-band spectrum controversy, Devas Multimedia on Wednesday said it would take “strong” legal steps to protect its rights and interests.

Contending that it had a legally binding agreement with ISRO’s commercial arm Antrix, Devas said it expected the government to fulfil all its obligations under the agreement and will take strong steps, including legal, to protect its rights.

“We have grave concerns regarding the government’s statement today on pre-meditated annulment of the agreement, despite pending high-power committee and CAG reviews which are still in the preliminary stages,” a statement issued by the Bangalore-based company said here.

It termed as “disturbing and inappropriate” the government’s “unilateral” decision to terminate the agreement “without due investigative process and without following the principles of natural justice”.

“In spite of the company’s willingness to co-operate and assist in required government reviews without prejudice to our legal rights, we have not yet heard from the government in this regard,” the statement said.

“The Devas-DOS/ISRO/Antrix Agreement is in line with the government’s 1997 SatCom Policy. The company has complied with all its obligations under this agreement and is in compliance with all laws and rules in respect of conducting its business,” it said.

“The company also notes the increasing public awareness of the vested political and business interests in conjunction with certain media organisations that have been instrumental in bringing about an intentional gross misrepresentation of the facts of Devas-DOS/ISRO/Antrix satellite transponder capacity lease and tying it inappropriately to unrelated telecom spectrum issues for their own purposes,” the statement said.