As per the draft norms, only insurance companies that have completed 10 years of operation and have strong financials will be allowed to access the capital market. Currently, there are 24 players in both the life and non-life insurance industry
New Delhi: The Insurance Regulatory and Development Authority (IRDA) today said the guidelines for listing of non-life insurance companies will be issued by March 2012, reports PTI.
“General/non-life insurance listing rules will be issued by March,” IRDA chairman J Hari Narayan told reporters here.
According to the Insurance Act, promoters with 26% stake can offload equity after 10 years of operation. The legislation also empowers the government to reduce the mandatory period.
As far as the life insurance companies are concerned, the draft norms for listing have already been issued by the IRDA.
As per the draft norms, only insurance companies that have completed 10 years of operation and have strong financials will be allowed to access the capital market. Currently, there are 24 players in both the life and non-life insurance industry.
The National Housing Bank has instructed Housing Finance Corporations to charge the same rate on loans for both old and new customers, a blow for the customer and the industry. Debt-plagued builders, inflation and high interest rates are also not helping the sector
The realtors really need a bright Diwali this time, but it looks like things are not going to be so easy. It is a difficult time, with soaring inflation, uncertain markets and high interest rates—with talks of another rate hike starting to circulate.
No wonder, the outlook is not that optimistic. Unlike other years, this Diwali is seeing hardly any new offers. A Thane-based broker told Moneylife, “We are not offering much discounts; and a lot of the stock is left over. We are not expecting sales like we saw earlier.”
On top of that, the National Housing Bank has instructed Housing Finance Corporations to charge the same rate on loans for both old and new customers. The blow has been softened by a waiver of prepayment charges, but experts believe that sales will be impacted negatively. An IDFC Securities report says, “With the price of a new home loan going up, the growth in new home sales and mortgage portfolios would be impacted negatively in the current high interest rate scenario.”
Buyers too, seem to be unsure about their purchases, because they are hoping for price cuts instead of other offers. Builders, however, are in no mood to slash prices, citing several reasons. “Most builders have run up huge debts, and so are holding back in the hope of realising their investments and recovering high construction costs,” said an analyst preferring anonymity.
Mr Anuj Puri, chairman and country head of Jones Lang LaSalle India told Moneylife, “The festive season looks a bit subdued for property buyers this year. The price corrections that were anticipated in the primary cities have not materialised, at least not in the hoped-for magnitude.”
Delayed approvals, too, seem to have added to the woes. Mumbai’s civic body BMC (Brihanmumbai Municipal Corporation) seems to have held back a lot of approvals, as the restructuring of floor space index (FSI) norms is yet to be finalised. As a result, there have been very few launches this season; as was seen in the MCHI exhibition. In fact, some developers say that prices may go up after Diwali, and in the exhibition, some builders had raised the price up to 15%, while offering discounts on spot payments.
The real-estate sector is yet to pick up pace after the disastrous ‘Shraadh’ season—an inauspicious time. According to a Prabhudas Lilladher report, sales registrations for the month of September are down 10% month-on-month and 22% year-on-year, to 4,137—which is a 29-month low. The report adds, “The response to the festive season would only be visible in the December 2011 registration numbers as registrations happen with a two-month lag.”
M and B Switchgear, with ‘below average’ fundamentals, closed at a premium of 71% after falling 34% from its listing price on 20th October. Five firms controlled by a common director seem to have made a consolidated profit of Rs8.41 crore from the opening day's trading alone
Yesterday (Is IPO price manipulation back? Two recent issues have witnessed extreme gains & losses ), we had reported on how newly-listed company M and B Switchgears, had closed at a premium of 71% (after falling 34% from its listing price during the course of the day). Moneylife has highlighted cases of IPO (initial public offering) manipulation a number of times in the past—and the article on 20th October had analysed three IPOs, to examine whether the players are back at their game again.
Now that really seems to be the case.
After going through the bulk deals available on the website of the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), we unearthed some startling facts. Three firms —A Jain and Company Pvt Ltd, Prabudh Securities Pvt Ltd and Satvik Securities Pvt Ltd, traded 1 lakh shares (of M and B Switchgear) each on the BSE and another two firms—Eshan Financial Services Pvt Ltd and Vimal Finstock Pvt Ltd traded 1 lakh shares each of the same company on the NSE.
This may seem like no big deal to some. However, all of the above firms entered within a price band of Rs128-Rs130—the intraday low for M and B Switchgear on the BSE was Rs118 on 20th October. Not only did all these entities enter at the same price, they shockingly exited within a price band of Rs296-Rs298.
And here’s the clincher. The director of all the five firms is the same person—Anoop Jain. All the mentioned companies are registered in Delhi and made a consolidated profit of Rs8.41 crore from this IPO deal on 20th October. And of course, all this is happening right under the nose of the market regulator and the stock exchange.
Why is this case suspicious? First, why would anyone sink Rs6.50 crore into an IPO, which by nature is a volatile offering? And more important, M and B Switchgear’s IPO was rated with ‘Grade 2’, indicating ‘Below Average’ fundamentals. On 19th October, Taksheel Solutions’ IPO had tanked from Rs150 to Rs55 after listing. Seeing the volatility and risk in the IPO market only a brave—or very foolish—person or entity would have invested in these offerings, unless they had some prior information that the share price would shoot up.
Further research by Moneylife showed that stockbroker A Jain and Company has been charged by market regulator SEBI (the Securities and Exchange Board of India) for committing irregularities in respect of contract notes, not maintaining segregation between client funds and own funds, dealt with brokers of other exchanges without SEBI registration as a sub-broker, did not report off-the-floor transactions to the exchange and defaulted in maintenance of stock register. However, no regulatory action has been taken so far. A Jain and Company had been suspended in 2003—for just 6 months—by the market regulator.
Moneylife has reported many times in the past that SEBI has made a mockery with its consent orders. We have often seen that offences—that required strict corrective action—were let off with a slap on the wrist. The regulator has been somnolent throughout these price-riggings in the past—and sadly, it has not yet woken up to the reality if this case is any indication.