BoR becomes part of ICICI, integration process starts

New Delhi: Udaipur-based Bank of Rajasthan (BoR) today became part of the country's largest private sector lender ICICI Bank following the Reserve Bank of India (RBI) approval to merger proposal of the two lenders, reports PTI.

All 463 branches of BoR have started functioning as ICICI Bank's as per the directive of the RBI.

"With this, ICICI Bank will have a branch network of about 2,500 branches, by far the largest among private sector banks. This will position the bank well to capitalise on the growth opportunities in the Indian economy," ICICI Bank CEO and managing director Chanda Kochhar said.

The merger "creates a good strategic fit, combining ICICI Bank's capital base and product suite with Bank of Rajasthan's branch network", she added.

This is the third acquisition by ICICI Bank. It had earlier acquired Bank of Madura way back in 2001 and Maharashtra-based Sangli Bank in 2007.

The integration, according sources, will take some time as IT systems will have to be integrated with the ICICI Bank network.

"The integration will be completed this month," Pravin Tayal, the promoter of the BoR had said.

With the merger, the balance sheet of ICICI Bank would cross Rs4 lakh crore. BoR has a total business of over Rs23,000 crore, against nearly Rs3,84,000 crore of ICICI Bank.

Meanwhile, the Reserve Bank has fixed Rs154.50 per share as price for dissenting shareholders of Bank of Rajasthan, BoR informed the Bombay Stock Exchange (BSE).

The BoR filing further said that its managing director and CEO G Padmanabhan, who was appointed by the RBI in November, stepped down yesterday.

It further said that meeting of the BoR board, scheduled to be held today, to approve the quarterly results, has been cancelled.

Earlier in May, the boards of both the banks approved a share-swap deal that valued BoR at over Rs3,000-crore.

The share swap ratio was fixed at one ICICI Bank share for every 4.72 shares of BoR.

Post approval by the shareholders, the banks moved RBI on 25th June for regulatory clearance.

The merger process, which was mired in controversy, moved ahead after the Calcutta High Court dismissed a petition by minority shareholders against the amalgamation.

The High Court also asked the petitioner to pay a cost of Rs50,000 for a frivolous case.


Post IPO, CIL to be largest listed employer

New Delhi: State-owned Coal India Ltd (CIL) today said it would become India's largest listed employer among the firms registered on the bourses, after completion of its public issue, reports PTI.

"Post listing, Coal India will become the largest employer amongst listed entities in the country," the world's largest coal producer said here in a statement.

The PSU had earlier this week filed the draft papers for its initial public offering (IPO), billed to be India's biggest issue, through which the government expects to raise up to Rs15,000 crore.

As per the Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI) by the company, it has offered 631,636,440 equity shares with a face value of Rs 10 each.

The mega issue of CIL would hit the market on 18th October and close on 21st October.

As on 31 March, 2010, Coal India had the workforce of over 3.97 lakh employees. Its human resource includes 3,43,571 miners, besides 15,092 executives, 38,475 supervisors, it said.

Sources say the government is looking to raise between Rs12,000 crore and Rs15,000 crore from selling its 10% stake in the firm through the public issue. Currently, government owns 100% stake in the company.

Coal India said that out of the 10%, 1% shares were reserved for employees.

Meanwhile, the coal major is helping its employees open demat account where shares in electronic form are kept.

Nationalised banks like State Bank of India (SBI), Union Bank of India among others are completing the procedures with employees of the company spread across the country to open such accounts.

With the help of its huge workforce, Coal India produced 4301.5 million tonnes of coal in the last fiscal, when the total output of the country was at 532 million tonnes.


Natural resources funds, unnatural returns

Another scheme — the Tata Natural Resources Fund — has entered this space, but there is nothing which this fund can deliver that existing equity funds cannot

Three are three natural resources funds which were all launched in 2008 when the commodities boom was at its peak. Two of the three have beaten their respective benchmarks. A fourth one is now being launched - by Tata Mutual Fund. Is it worth investing in it? Not really. Look at how the existing natural resources funds have invested their money. The label is a misnomer.

DSP BlackRock Natural Resources & New Energy Fund manages a corpus of Rs180.50 crore as on 30th July. The fund has mainly invested in Indian companies. Its top five picks are Castrol India (10.12% net investments), SRF (4.86%), Hindustan Petroleum Corporation (4.54%), Indian Oil Corporation (4.52%) and Coromandel International (4.49%). The fund has 26.71% exposure towards mid-caps, 47.11% in small-caps and 23.88% in large-caps. The fund launched in April 2008 has posted a net asset value (NAV) return of 16% when its benchmark BSE Metal Index slipped by -0.74%, outperforming its benchmark by far. However, why a natural resources fund should have the BSE Metal Index as the benchmark is unclear.

Reliance Natural Resources Fund launched in February 2008 has been an underperformer. The fund has delivered 0.17% return since inception while its benchmark BSE 200 edged up 1.35% during the same period. Again, why should a natural resources fund have BSE 200 as the benchmark is a question. The fund had a corpus of Rs3,296.88 crore as on July 2010. Its major exposure was in Indian companies like Oil & Natural Gas Corporation, Reliance Industries, Hindustan Petroleum Corporation, Tata Steel and Bharat Petroleum Corporation, etc. The fund also has investments in foreign firms like Potash Corp of Saskatchewan, Peabody Energy Corp, General Electric Company, CSX CORP, Caterpillar, Macarthur Coal, BP Global, JGC ORD, Xstrata Plc and Atlas Energy Inc. It is impossible for Indian investors to know whether these stocks are worth the investment or not.

The third scheme, Sahara Power & Natural Resources Fund launched in June 2008 has been the top performer. The fund posted NAV return of 19% since inception while its benchmark S&P Nifty is up 12.34% between the same period. As on July 2010, the fund had a tiny corpus of Rs6.72 crore. Its top picks are Uflex Ltd (3.93% net investments), Gas Authority of India Ltd (3.59%), Rallis India Ltd (3.47%), Bharat Heavy Electricals Ltd (3.26%) and Hindustan Petroleum Corporation Ltd (3.22%).

The latest to join the natural resources bandwagon is Tata Mutual Fund, which recently filed a draft offer document with the Securities and Exchange Board of India (SEBI) to launch its open-ended equity scheme called 'Tata Natural Resources Fund' (TNRF). The fund comes with two plans - 'Plan A' and 'Plan B'.
The fund (Plan A) aims to invest in companies principally engaged in the discovery, development, production or distribution of natural resources in various economies of the world including India. At least 51% of the corpus would be invested outside India while the 'Plan B' would invest predominantly in India.
The Plan A scheme will be benchmarked against the 'MSCI World Energy Index' (70%) and 30% against the BSE 200. 'Plan B' will be benchmarked against the BSE 200 to the extent of 65% and MSCI World Energy Index to the extent of 35%. The benchmark is a complex concoction designed to justify the label. But investors don't really need it. There is nothing which this can fund can deliver that existing equity funds cannot.




7 years ago

In India, its always the customer beware...

Investors need to spend some time to know about the schemes and not put the money based on some shiny powerpoint slides & curves.

For a normal investor in India, a plain diversified equity scheme will do the job of wealth creation.


7 years ago




7 years ago

From the above, it is clear that the Bench mark mentioned in the official documents of the scheme is a misleading fact inasmuch as it does not correctly match with the investment pattern or name of the scheme.


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