Arcil aims to raise Rs2,000 crore for boosting business plans

Of the total corpus, the company has already mopped up Rs400 crore from six to seven investors at its first close

In a bid to support its business operations, the country's first asset reconstruction firm Asset Reconstruction Company of India (Arcil) is in the process of raising around Rs2,000 crore through a fund from domestic and foreign investors, reports PTI.

Of the total corpus, the company has already mopped up Rs400 crore from six to seven investors at its first close, Arcil managing director and CEO S Khasnobis told reporters today.

"This is a multi-close fund and a host of investors are involved. At the first close, we raised Rs400 crore," Khasnobis said on the sidelines of a seminar in Chennai.

Arcil, which had also raised Rs300 crore through another fund recently, would use the capital to enhance its business operations, Khasnobis said.

In the last financial year, Arcil had bought bad assets from banks and other financial institutions for around Rs600-700 crore through cash and security receipts, he said.

Khasnobis observed that the non-performing assets of banks are unlikely to rise steeply this year owing to improving economic conditions, but there could be issues with sectors like real estate and export-related segments.

Arcil's sponsors include State Bank of India and IDBI Bank (holding over 19% each), ICICI Bank (13.26%) and Punjab National Bank (10.01%).

At present, there are 13 asset reconstruction companies (ARCs) operating in the country. Banks and other financial institutions, which have lending operations, sell a part of their bad loans at a discounted rate to ARCs with the intention of cleaning up their balance sheets.

Arcil's retail debt recovery division, Arms, currently has a portfolio of around Rs2,000 crore, of which Rs400 crore has been recovered by the company, Khasnobis said.

The retail arm, which was launched last year, operates through 16 offices across the country.

Another leading ARC, the International Asset Reconstruction Company, bought bad assets worth Rs500 crore in FY'10 from five to six banks, the company's managing director and CEO, Birendra Kumar, said.


India pips China to become UAE's largest trade partner

Two-way trade between the UAE and India climbed to a record high of about 118 billion dirhams last year, nearly 15% of the UAE's commercial activity

India became the United Arab Emirates’ (UAE) largest trading partner in 2009, ousting China from the top position and accounting for nearly 15% of the country’s total commercial exchanges, reports PTI.

"India was the top trading partner of the UAE last year after overtaking China for the first time, accounting for nearly 15% of the country's total commercial exchange," an Emirates Industrial Bank (EIB) study has said.

The UAE's non-oil trade hit a new peak of more than 692 billion dirhams, indicating there was growth in the country's non-hydrocarbon sectors, the study said.

The report showed that two-way trade between the UAE and India climbed to a record high of about 118 billion dirhams, nearly 15% of the UAE's commercial activity.

It was followed by China, the US, Germany and Japan, the report said.

Indian figures also showed the UAE was the second-largest exporter to the sub-continent last year, with shipments totalling about $17 billion (62.44 billion dirhams).

Figures released by the Indian Department of Commerce showed that the surge in the UAE's exports to India turned it into the second largest exporter to the country after Saudi Arabia.

The increase in the UAE's imports from India also boosted the UAE's share of imports from India to a record 10.8% of the South Asian country's total exports of nearly $153 billion.

"There has been a noticeable shift in the trade of the UAE and other members of the Gulf Co-operation Council (GCC) with the West, as the balance is gradually tilting towards Asia," the report said.

"This shift is extremely imports for the Gulf's future economy, including the monetary and fiscal policy, as well as the exchange rates and the Gulf single currency," it added.

"As for 2010, the UAE's trade is expected to maintain its growth, particularly after most of the effects of the global crisis have been tackled. This will have a positive impact on the overall economy this year," the report said.

The EIB study showed the UAE's non-oil trade swelled by about 10.6% to a new peak of nearly 692.9 billion dirhams in 2009 from about 626.1 billion dirhams in 2008.


Retail’s sad tale: Sector still in turmoil

Most of the big retail brands are struggling to survive in India, as they are still figuring out which revenue models will work in the country

Remember when organised retail made its entry into the country, it was touted as the best thing that had ever happened to the industry? Now, the dust is settling and a number of large players in this segment are taking a serious re-look at their plans and are re-examining their revenue models as push has finally come to shove.

The Indian organised retail industry is in turmoil, as most big retailers are still trying to figure out which revenue model will work in India. Indiabulls, one of the largest real-estate players, has shut down one of its largest lifestyle stores—‘Centre One’ at Pune and is now evaluating whether this format of retail merchandising will work in the country. Retailers like Aditya Birla Retail, Future Group, Reliance Retail and Spencer’s Retail have either closed down or shifted hundreds of their stores in the recent past to stem losses. 
In recent months, several retail firms have either gone bust or have been closing down some stores, scaling back expansion plans and even laying off employees in an attempt to cut costs and to beat the continuing acute downturn in the business, which began with the slowdown in the economy.

“In our view, the only thing that works is a price advantage; rentals can be absorbed if they are not exorbitant. The lifestyle format does hinge on price advantage, and hence is not successful. In the long run, we believe that the wholesale format is the one that will be able to achieve some scale,” said Gagan Banga, chief executive officer, Indiabulls Financial Services.

Indiabulls took over the retail business from Piramyd Stores and re-branded it as Indiabulls Megastore (lifestyle) and Indiabulls Mart (supermarkets).

In March 2010, Indiabulls’ retail arm—Store One Retail had forayed into wholesale trading. “We have already exited our small format model (and we have converted it into a cash-and-carry model). We have now come to realise that only the cash-and-carry model will really work in the long term (in India),” added Mr Banga.

Consulting firm KPMG had predicted in March that the slowdown in the retail business is expected to last for another 12-18 months.

Spencer’s Retail Ltd also shut down its retail store in Shivaji Nagar at Pune. According to the company, rentals were not the issue for shutting down the store. “The catchment (the number of footfalls) was unviable in that area. The rental was not a major issue for shutting down the store,” said Shakuntala Sarkar, head, corporate communications, Spencer’s Retail.

In the past one year, Aditya Birla Retail has closed 39 stores (which include supermarkets and hypermarkets). The company wants to discontinue unprofitable stores.

Thomas Varghese, CEO, Aditya Birla Retail had earlier told Moneylife, “This decision of shutting down stores was a part of the company’s policy to close down unviable retail stores.” 

Reliance Industries Ltd (RIL) was also very aggressive on expansion when it entered the retail sector in 2006. It opened around 1,000 stores in 86 cities over three years. But its retail arm faced political turmoil in Uttar Pradesh and West Bengal.

The company is again back with a new plan of hypermarkets, which will have a floor space of minimum 80,000 sq ft. Reliance Retail currently has stores in many formats, including small neighbourhood stores (Reliance Fresh), consumer goods (Reliance Digital) and clothing (Reliance Trends). It will use the Reliance Mart brand for its hypermarkets.




7 years ago

it is very usefull information to the management studying students.

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