Wipro result Q4 net up 14% at Rs 1,375 cr, announces 200% dividend

Source : PTI | Apr 27, 2011, 10.40am IST


The country's third largest software exporter Wipro on Wednesday reported a growth of 13.77 per cent in consolidated net profit for the quarter ended March 31, 2011, to Rs 1,375.4 crore. 

Last year, the company had posted a net profit of Rs 1,208.9 crore for the fourth quarter.

"We have made good progress in creating a leaner, simpler and more customer-centric organisation structure. We believe our business strategy along with the new structure will deliver industry leading growth," Wipro chairman Azim Premji said in a statement.

IT services, which contributed 76 per cent to the company's revenues in FY'11, stood at USD 1,400 million, a sequential increase of 4.2 per cent and a year-on-year increase of 20.1 per cent.

The company said it expected its revenues from the IT services business to be in the range of USD 1,394 million to USD 1,422 million for the first quarter ending June 30, 2011.

The IT services segment hired 2,894 people this quarter and 14,314 people during the financial year, taking the total headcount to 1,22,385 employees as of March 31, 2011. It added 68 new customers for the reporting quarter and 155 new customers during the year.

"The business environment is positive and we are focusing on growth by directing investments on momentum verticals. We have announced wage hikes effective June 1, 2011, which would have an impact on the operating margins," Wipro executive director and chief financial officer Suresh Senapaty said.

Net income from sales for the reporting quarter stood at Rs 8,302.4 crore as against Rs 7,016.1 crore in Q4, FY2009-10, up 18.33 per cent.

For the fiscal ended March, 2011, the company has registered a net profit of Rs 5,297.7 crore, compared to Rs 4,593.1 crore during the previous fiscal, up 15.34 per cent.

Net income from sales in the 2010-11 fiscal grew 14.51 per cent to Rs 31,098.7 crore from Rs 27,157.4 in the previous fiscal.

On a standalone basis, the company has reported a net profit of Rs 1,337.6 crore for the quarter, a growth of 8.15 per cent vis-a-vis the same period last year.

"Our journey of building the new Wipro is based on the foundation of customer focus, domain and technology leadership directed toward the customer needs and providing enriching career opportunities for our employees," Wipro executive director and CEO (IT Business) T K Kurien said.

The company's cash and cash equivalents stood at Rs 6,114.1 crore as on March 31, 2011.

IT products comprised 12 per cent of the total company revenue at Rs 3,691 crore for the year, a decline of 3 per cent Y-o-Y. Revenue for the quarter stood at Rs 911 crore.

PAC setback for RBI governor Subbarao

Source :TNN:April 29:2011:4.05am IST




Questions over Duvurri Subbarao's role in the 2G spectrum scam could be a setback to the former IAS officer's chances of getting a second term in the Reserve Bank of India in September.

In fact, the names of economic affairs secretary R Gopalan and chief economic advisor Kaushik Basu have already started doing the rounds as a possible successor. 


Both joined the finance ministry afterPranab Mukherjee moved into North Block in late 2008.

Apart from having been in charge of the financial sector department in the ministry, Gopalan was a public sector bank employee before joining the IAS. Basu is an economist who is on leave from Cornell University.

When Subbarao moved to Mumbai in September 2008, he was given a three-year term and he was widely expected to get a two-year extension. 


Yaga Venugopal Reddy, Subbarao's predecessor on Mint Road, had served a five-year term while Bimal Jalan's three-year term had been extended though he decided to resign midway to become a Rajya Sabha member.

The draft PAC report, which was not accepted by all the committee members, had said Subbarao should be asked to explain why he did not raise questions over telecom ministry's move to ignore finance ministry's recommendations.

Officials said there was no formal proposal to either extend the present governor's tenure or find a replacement. A final call would be taken by Prime Minister Manmohan Singh and finance minister Pranab Mukherjee closer to the expiry of Subbarao's term.

In 2008, in a first, a committee headed by P Chidambaram, then finance minister, with C Rangarajan, chairman of the Prime Minister's economic advisory council, as a member shortlisted possible candidates and zeroed in on Subbarao.

Though Subbarao is seen to have handled the impact of the global financial crisis well, he has publicly opposed the government on at least two issues. The first area of difference was the establishment of a joint committee of regulators for dispute resolution that is headed by the finance minister. Similarly, he was severely critical of the government's decision to set up the Financial Stability & Development Council, which is again headed by the finance minister.

On both occasions, however, he was placated by the government after signals from the North Block that RBI governor is the first among equals when it comes to financial sector regulation.

After Chidambaram's departure from the finance ministry, the government has stayed away from reappointments in regulatory agencies with former Sebi chairman C B Bhave and former RBI deputy governor Usha Thorat being examples. At least two senior finance ministry officials - revenue secretary P V Bhide and finance secretary Ashok Chawla - were not given extensions and were allowed to retire just a month before the budget was presented.

In case of banks and financial institutions, too, the government has decided that any reappointment will take place only after the incumbent's performance is reviewed by a specially-appointed panel.

Exim Bank to begin new lines of biz in export finance

Source : BL:MUMBAI, APRIL 28:2011

In a strategic move, the Export-Import Bank of India (Exim Bank) has decided to gradually get out of businesses where it is in direct competition with commercial banks.

Towards this end, Exim Bank, according to its Chairman & Managing Director, Mr T.C.A. Ranganathan, is whittling down its portfolio of short-term loans and exiting the packing credit business.

Instead of competing with commercial banks, Exim Bank will concentrate on its core competencies in the field of export finance.

While lines of credit and project exports will continue to be its bread and butter businesses, the development financial institution (DFI) will also focus on new lines of business such as Buyers' Credit (non-recourse lending) and R&D financing.

“We want to play the role of a catalyst. As a development financial institution, we will seed new lines of business in the export finance area so that commercial banks can enter the same,” said Mr Rangathan.

Buyers' Credit has been launched by Exim Bank in association with the Export Credit Guarantee Corporation of India under the Government's National Export Insurance Account to boost exports.

To support R&D by export-oriented units in fields such as pharmaceuticals, engineering and hi-technology, the DFI will offer term loans or a hybrid facility to the extent of 80 per cent of the R&D cost.

On new initiatives, the Exim Bank chief said the bank has started giving loans that are benchmarked to the government security, with one-year residual maturity, to companies with active treasury operations.

The DFI has moved the government to increase its authorised capital to Rs 10,000 crore so that it can support exporters in a big way. Currently, its paid-up capital is at Rs 2,000, the same as its authorised capital.

Meanwhile, Exim Bank has reported a 12 per cent increase in profit after tax at Rs 868 crore in the financial year ended March 31, 2011, against Rs 772 crore in the corresponding period last year.

Loan assets increased by 17 per cent in FY2011 to Rs 46,041 crore from Rs 39,371 crore as of March-end 2010.

Kamakodi elevated as MD and CEO of City Union Bank

Source :BL::COIMBATORE, APRIL 28:L. N. REVATHY:

Within four months of assuming office as Executive President of Kumbakonam-headquartered City Union Bank, Dr N. Kamakodi has been elevated as Managing Director and Chief Executive Officer of the bank.

 He is to take charge from May 1.

He will replace Mr S. Balasubramanian, who has been appointed Non-Executive Chairman (Part-time) from the date of assuming office. 

Mr Balasubramanian takes the place of Mr P. Vaidyanathan, who demitted office as Non-Executive Chairman on April 26 on completion of two years.

Savings accounts to offer higher interest?

Source :TNN | Apr 29, 2011, 12.47am IST


 The Reserve Bank of India (RBI) has finally set the ball rolling on the issue of deregulating interest on savings accounts —- a move which large banks like SBI and HDFC Bankfiercely oppose and lenders like Yes Bank look forward to. 

Deregulation would essentially give banks the freedom to set interest rates on savings accounts, which is currently fixed at 3.5%. Theoretically, a consumer could get a higher interest rate on a savings account due to the move, but it all depends on the RBI's final decision. 

On Thursday, the central bank floated a discussion paper highlighting the pros and cons of deregulation, seeking public opinion on whether rates should be freed. 


The central bank has also pointed out that real interest rates — interest rates adjusted for inflation — have been largely negative for savings account holders. 


It said that savers would benefit from deregulation as rates are likely to rise. It has also said that freeing of interest rates would improve transmission of monetary policy by pushing up interest rates on savings accounts whenever the central bank raised policy rates. 

In the past Aditya Puri, MD, HDFC Bank, and Shikha Sharrma, MD, Axis Bank, had said that savings rate should not be deregulated when there is a liquidity shortage and interest rates are rising. 


Former SBI chairman O P Bhatt had also said that deregulation would not benefit small depositors as banks that offer high interest rates would also seek a higher minimum balance to make up for transaction costs.


 Similarly, former RBI governor Y V Reddy was strongly opposed to savings rate deregulation stating that common people don't have time to apply their mind and shift money from one account to another and was strongly in favour of a uniform savings rate. 

However, the extent to which deregulation will benefit small depositors is not yet clear. So far banks have been offering around the same return on 7- to 15-day term deposits which they pay on savings deposits (3.5%). But bankers say that this cannot be an indication. Although interest on savings deposits is calculated on a daily basis, savings accounts tend to be more 'sticky' than term deposits as savings accounts form the core of the retail customer's relationship with the bank. 

Following the recent liquidity crunch many banks have realized the importance of having a higher share of current and savings account deposits (which are termed CASA deposits by the industry). Banks such as Yes Bank and IDBI Bank have been making all-out efforts to raise their share of CASA deposits and are seen as most likely to offer higher rates following deregulation. 

"The effect on competition is still nebulous. It may be noted that movement of savings deposits and associated schemes amongst banks is constrained by inertia on the part of savers and barriers in the system in terms of minimum lock-in periods, penal interest rate, etc," said Madan Sabnavis, chief economist, Care Ratings. While banks would be induced to raise interest rates to mobilize savings deposits, funds may not flow freely as there would always be scepticism about changes in the interest rates structure unlike term deposits where the rates are fixed for a tenure, he added. 

The questions asked by the RBI include: 


Should savings deposit interest rate be deregulated at this point of time? 


Should it be deregulated completely or in a phased manner, subject to a minimum floor for some time? 


How can the concerns with regard to savers (senior citizens, pensioners, small savers, particularly in rural and semi-urban areas) be addressed in case savings deposit interest rate is deregulated? 


How serious are concerns relating to a possible intense competition amongst banks and asset-liability mismatches if savings deposit interest rate is deregulated? 


Should higher interest rate be paid on savings deposits without a cheque book facility?

Bankers point out that even in the current environment savers have alternatives to savings deposits such as sweep-in accounts (where funds are transferred to FDs on a daily basis). 


There are also liquid funds where investors can park funds for a couple of days. Considering that the per capita savings deposit is around Rs 7,767, a one percentage point increase would add only Rs 6 per month on an average. 

SBP, SBH on merger list: SBI

Source :TNN, Apr 27, 2011, 07.03am IST

 State Bank of Patiala and State Bank of Hyderabad are expected to be next in line for merger with State Bank of India, SBI chief Pratip Chaudhuri said on Tuesday.

Chaudhuri, who was in the national capital to attend the review meeting of state-run banks convened by the finance ministry, said both associate banks were 100% owned by SBI and it would provide some flexibility if these two banks were taken up for merger.

"It is easier to merge when you have 100% ownership," Chaudhuri told TOI. He said the discussions were on and a decision was expected soon.