How consumers should file effective complaints and how they should devise an effective...
The brokerage, however, has advised clients to buy on declines
HDFC Bank has been downgraded to 'accumulate' from 'buy, by brokerage firm Kotak Securities. It believes that HDFC Bank has outperformed the Sensex during last one month by giving 12.6% return vis-à-vis 6.5% return given by the Sensex during the same period, and therefore has limited upside from current levels (Rs548). It has given a target price of Rs590, based on four times its estimate of the bank's 2013 adjusted book value of Rs146.7 per share.
According to the report, one of the characteristics of HDFC Bank, which keeps it way above its peers, is its liability franchise. It said, "It has consistently delivered one of the highest Current Account-Savings Account (CASA) mix in the industry (48.4% as of 4th quarter of the 2011-12 fiscal). Its healthy liability franchise has been aiding in delivering one of the best net interest margins (NIM) in the industry." Its NIM stood at 4.2% during the most recent quarter on back of improvement in lending yields.
CASA ratio is the proportion of current accounts to savings account. A higher CASA is better for the bank as it keeps down the costs of funds, as current account costs nothing, whereas savings account attracts deposit fees towards customers. While, NIM is the key profitability yardstick by which various banks are compared.
Most banks depend on the retail segment to attract deposits. In HDFC Bank's case, according to the report, the retail segment has driven the loan growth during last three to four quarters. "They (HDFC Bank) have the ability to gain market share in advances by leveraging its distribution networks. Over the years, they have grown their loan book 4%-5% faster than the system growth. We believe future loan growth is likely to track its deposit mobilization," said the report. The share of retail book has grown to 54.8% at the end of Q4FY12 as compared to 49.9% at the end of Q4FY11.
In times of difficulty, much of the bank's future profitability hinges on its ability to manage bad loans, or non-performing assets (NPA) in banking parlance. The report said, "HDFC Bank's asset quality is comfortable with gross and net NPAs coming at 1% and 0.2% respectively at the end of FY12. Slippage was also contained at around 1% during FY12, well below the industry average." In HDFC Bank's case, it seems to be controlling its NPAs while its peers are not doing so well.
The higher the provision coverage ratio, the better, as it provides some breathing room in case the economy gets worse. According to the report, it said, "Its provision coverage ratio is also healthy at 82.4% at the end of Q4FY12, which provides a cushion to its earnings with any unforeseen deterioration in its asset quality in the future. Lower restructured book (0.4% at the end of FY12) further reduces the risk of any big negative surprise in the future."
Being based in Lebanon, the writer was also engaged in resolving disputes in other Gulf nations. The 53rd part of a series describing the unknown triumphs and travails of doing international business
In the summer we had a number of Arab visitors, who came to the office, brought in by a local agent, mostly to obtain reassurance that the goods ordered by them from India will be shipped, and not have any further delays.
To be honest, such requests covered a number of items that were non-engineering in character, but the buyers felt that we should be able to help. Even before these requests came from buyers, whenever I received enquiries for items not covered by the Export Promotion Council (EEPC), I began to pass them to the Embassy so that commerce secretary VP Singh could tackle the issue regarding commission or shipment delays. But when enquiries were received, I began passing them directly to the concerned council. I had already quite a few friends in the Chemical Export Promotion Council, as I had dealt with them, while working for Dunlop in Calcutta, but for other items I passed on for appropriate action by the concerned organisation.
As it is the work was increasing, and the extra hours was not sufficient to cope with the deluge of letters and documents that we were receiving. Since I knew that it would take some time for getting government sanctions, I made appeals to the head office, that we must move to a bigger premises and be in line with STC offices, which had moved from the Embassy building to Piccadeli Building on the Hamra street itself. Besides, we needed an extra hand to handle the volume of work and be more helpful to the buyers when they needed our help. Newer items like bright steel bars, hand-tools, a number of auto parts besides diesel engine parts were catching up and the volume was increasing.
Our exports to Kuwait had also increased and I had met a lot of our buyers while they stopped over in Beirut en route to Europe or were on a summer holiday in the mountains. I felt that it would be in order for me to take a trip to Kuwait and submit my report. When I went there for a week, I was able to meet a great number of importers, some of whom I have had the pleasure of being associated much before I had joined the Council. Arabi WLL was our agent for Indian Cable Co and Paper Cable Consortium which procured the single largest cable contract, way back in 1967 and for which I had acted as the secretary, though I was working for the Incab company. Luckily for us, the shipments, the first lot of which I myself made, carrying the cargo of cables from all the manufacturers not only went on time, but subsequent orders as extension of the original contract came, much to the delight of Indian consortium, which was the British domain for a long time. The British manufacturers were totally surprised by this successful bid by Indians.
I decided that Kuwait would be my next target country for study. I obtained the visa and went on a research mission and thanks to the support that I received from the Embassy and the large number of importers, I was able to prepare and submit a report that was well received following which the Council published a handy reference book on Kuwait. As it is Kuwait was involved in tremendous building construction activity and a wide variety of goods and services from India were already in place. The influx of Indian executives as support staff greatly helped the situation, as invariably, they were able to trigger and generate interest and enquiries for Indian products and services.
One morning I received a surprise message from our head office that they wanted me to come to India for a special meeting not only with our own offices, but with other related government departments, the Reserve Bank of India (RBI), etc, because of the urgent need to overcome many problems that had cropped up, relating to delays in shipments, payment of commissions, non clearance of documents due to L/C expiry and consignments sent on good faith, incurring demurrage because the importer did not clear the goods, etc. After a brief visit, I returned back to Beirut, having established even more closer rapport with all the officials concerned, since I left India a couple of years earlier.
While in India, I took up the issue of the need to move to a bigger office space and additional staff to cope up with the increased volume of trade and work, at least in line with the STC office, thankfully they assured me that this would be taken up on a priority basis.
This was the time when GEC of Calcutta had a serious problem with an exporter operating from Mecca, known as Al Bamanie, who had placed orders for a 1,000 fans but because of some delay in actual shipment, had simply not cleared the document and the goods were lying in the port. Bala Menon, the export manager, who was known to me, had taken up the issue with Dr RK Singh, our executive director, for our assistance but apparently there were some problems in meeting Bamanie's claims.
The importer had refused to meet the Embassy officials, and I received instructions to proceed to Jeddah and sort the issue and settle the matter. It was not an easy task; but I managed to get the cargo removed from the docks and have it stored in a bank's godown, and ensured, that the fans were disposed off with the least amount of loss. It is unbelievable, but I had to physically deliver complete fan by fan, in terms of motor, blades, regulator, rod and accessories box, so that we could count up; 999 fans were delivered, and one was found damaged!
After this incident, it was in store for me to visit Jeddah couple of more times to settle disputes. One thing I must say of buyers, that when they liked you or trusted you, they went out of the way to accommodate you and support you by placing orders and opening Letters of Credit. The satisfaction derived from this is an unforgettable experience.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at email@example.com.)