Dolphin Offshore wins contract worth Rs270 crore from ONGC

The scheduled completion date of the contract is 15 May 2013 and the contract value is approximately Rs270 crore.

Dolphin Offshore Enterprises (India) has received a notification of award of contract for OGIP Power to ESP Project from Oil & Natural Gas Corporation.
The scheduled completion date of the contract is 15 May 2013 and the contract value is approximately Rs270 crore.

In the early afternoon, Dolphin Offshore Enterprises was trading at around Rs87.35 per share on the Bombay Stock Exchange, 3.74% up from the previous close.

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RBI move on gold loan will trim companies’ margins: Analysts

Muthoot Fincorp said the RBI measures would help curb the reckless practices of the recent entrants

Gold financing companies welcomed the latest measures by the Reserve Bank of India (RBI), saying they will strengthen the industry, but analysts pointed out that the clampdown will erode the margins of these companies and curtail growth.

While the three largest pure-play gold loan finance companies, Manappuram Finance, Muthoot Finance and Muthoot Fincorp, welcomed the new RBI measures saying they will help regulate the uninitiated newcomers, analysts said these players will see margin squeeze apart from pressure on growth.

The Kerala-based Muthoot Fincorp said the RBI measures would help curb the reckless practices of the recent entrants.

“The stipulated higher 14% CAR and capping LTV (loan to value ratio) at 60% will strengthen the well-managed existing gold financiers and curb the reckless practices of recent entrants,” the Thiruvananthapuram-based Muthoot Fincorp director George Muthoot told PTI.

He also pointed out the 60% cap on LTV is not a dampener for his company as he lends only under 60%, apart from maintaining a much higher CAR of 15%.
Similarly, the largest player by asset base, Kochi-based Muthoot Finance said its LTV is well under the new regulation and it has a higher CAR of 13.37%. It further said its gold loans are worth around Rs24,000 crore while their value is over Rs40,000 crore.

“As a matter of caution we had been progressively reducing our lending rate per gram as a risk management measure, seeing the volatility in the gold prices during the last couple of months,” the company statement said.

All these companies also said they do not finance against bullion/primary gold and gold coins and lend money only against security of jewellery. However, analysts said the RBI measures would squeeze their margins and curtail growth.
“The RBI measures are negative for the gold financing NBFCs as it will erode their margins and curtail their future growth rate,” Angel Research vice-president for banking Vaibhav Agrawal told PTI.

The RBI issued a notification restricting the loan to value ratio of all non-banking finance companies (NBFCs) engaged in gold loan business at 60%. Presently, LTV ratio for most gold loan companies stand at more than 60%, according to industry experts.

The Thrissur-based Manappuram Finance while welcoming the RBI move admitted that its LTV is 66%.

“The average LTV offered by us amounts to 66%. As a result of the latest RBI directive, this will come down. But with the proposed consolidation of our branch network and consequent optimisation of operating expenses at the branch level, the impact of the LTV reduction on yield will be mitigated,” Manappuram Finance executive chairman VP Nandakumar said, adding his CAR is a high 18.37%.

However, Nandakumar said, “We are of the opinion that these measures will ultimately strengthen the well-capitalised established players in the business with sound operating and risk management practices. It addresses the risks to the sector arising from the entry of multiple new players lacking the experience or the required understanding of the nuances of the business.”

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Capital requirements for co-ops to jump manifold: RBI

“Well-managed credit societies and financially sound credit societies will be converted into co-operative banks provided they satisfy certain norms on capital adequacy, NPAs, technology adoption etc,” RBI executive director S Karuppasamy said

The Reserve Bank of India (RBI) said the minimum capital requirements for cooperative banks will soon go up to as much as Rs3 crore from the present Rs15 lakh.

“Depending on the location and area... we are coming up (with the guidelines for cooperative banks). There will be liberal norms for setting up a bank in backward areas and slightly tougher norms in the banked areas,” RBI executive director S Karuppasamy told reporters. He said under the existing norms, a cooperative bank can be set up with a minimum capital of Rs15 lakh, which will now be increased to Rs50 lakh for banks in the backward areas and Rs3 crore for urban areas which already have banking infrastructure.

About the timeline for new guidelines, Mr Karuppasamy said, “We are in the final stage... will come out with it shortly.”

Cooperative banks have a strong presence in Maharashtra, which is home to the biggest of the banks in the sector, while other states such as Tamil Nadu, Karnataka and Gujarat also have strong co-op sector.

The new guidelines will also include a provision under which well-managed cooperative credit societies can turn into co-operative banks, Karuppasamy said.

“Well-managed credit societies and financially sound credit societies will be converted into co-operative banks provided they satisfy certain norms on capital adequacy, NPAs, technology adoption etc,” he said.

Mr Karuppasamy, who oversees cooperative banks at the Mint Road, said the RBI notification for gold loan companies capping the maximum amount to be lent against gold is not applicable to co-operative banks as of now.

The cooperative banks, which are also present in the gold-lending space, are well regulated and all the ceilings are put in place by registrar of co-operatives, he said. However, if necessary, the central bank can come out with an order extending the cap to cooperative banks as well.

Mr Karuppasamy was speaking after unveiling the new logo of city-based Greater Bombay Cooperative Bank as a part of its diamond jubilee celebrations.

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