Maruti mulls options to counter yen impact

Maruti Suzuki India will consider taking different measures after April to protect its margins due to fluctuation of Japanese yen, post the devastating earthquake and tsunami

The country's largest car maker Maruti Suzuki India (MSI) said it will consider taking different measures after April to protect its margins due to fluctuation of Japanese yen, post the devastating earthquake and tsunami.

"For this month, we are completely protected. In fact, we are covered till April. Beyond that if yen continues to appreciate, then we will have to take a call to counter it," MSI chief financial officer Ajay Seth said. He said the company's margins are affected whenever the yen appreciates, while it is beneficial if it depreciates.

After the natural disaster that struck the island nation on 11th March, the Japanese currency is quoted at about 81 yen against a US dollar compared to that of about 83 yen earlier, Mr Seth added. He said there is strong volatility going on at present, with yen appreciating as much as to 76 yen against a dollar recently.

While Mr Seth did not elaborate on how MSI would counter the yen fluctuation, market analysts pointed out that currency hedging is a strong possibility.
"Usually, Maruti hedges yen against the euro instead of rupee to mitigate the impact," an analyst with a leading brokerage firm, who asked not to be identified, said.

On the component sourcing from Japan, Mr Seth said: "Of our total raw material procurement, about 25% are imported."
Out of those imported parts, about 80% are purchased in yen, he added.

During the October-December period last year, MSI spent Rs6,959.03 crore in consumption of raw materials and components. It also paid Rs460 crore as royalty in the quarter to its parent company Suzuki, which is about 5.5% of MSI's total sales.

When asked about the impact of Japan's natural disaster on MSI's production, Mr Seth said it will be unaffected for some time till next month as the company has enough inventory of components.

"Besides the stock at the plants, we will be getting some supplies, which will reach to us from Japan that started sailing just before the earthquake," he added.

Last week, the company had said it was assessing the possible impact of the natural calamity on its components import from Japan. Earlier, MSI had cancelled the celebrations for rolling out its 10 millionth car in view of the catastrophe.

On Tuesday, MSI ended 3.58% up at Rs1,171.85 on the Bombay Stock Exchange, while the benchmark Sensex gained 0.84% to 17,988.30.

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Govt tables Banking Laws (Amendment) Bill 2011 in Lok Sabha

The Bill proposes to raise the ceiling on voting rights of shareholders of nationalised banks from 1% to 10% and proposes to remove the voting right restriction of 10% for private sector banks in the total voting rights of all the shareholders of the banking company

New Delhi: The government today tabled a Bill in the Lok Sabha to raise the voting rights of shareholders of nationalised banks to 10% from the existing 1%, a move that will make investment in state-owned banks more attractive, reports PTI.

The Banking Laws (Amendment) Bill 2011 proposes to raise the ceiling on voting rights of shareholders of nationalised banks from 1% to 10%, the statement of Object and Reason of the Bill said.

In addition, the Bill proposes to remove the voting right restriction of 10% for private sector banks in the total voting rights of all the shareholders of the banking company. In the case of private sector banks, the voting rights would be commensurate with investors' shareholding.

There are 20 nationalised banks in the country and 22 private sector banks in the country.

The Bill was tabled in the Lower House by finance minister Pranab Mukherjee, seeking to amend the Banking Regulation Act, 1949, the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, and to make consequential amendments in certain other enactments.

These amendments would enhance the regulatory powers of the Reserve Bank of India (RBI) and increase the access of the nationalised banks to the capital market to raise funds required for expansion of the banking business, it said.

Besides, it enables nationalised banks to increase or decrease their authorised capital with approval from the central government and RBI without being limited by the ceiling of a maximum of Rs3,000 crore, it said.

It also proposes to give powers to the nationalised banks to issue two additional instruments-bonus shares and rights issues-for accessing the capital market to raise capital required for expansion of banking business.

At the same time, it proposes to confer powers upon the RBI to impose such conditions as it deems necessary while granting such approval for acquisition of 5% or more share capital of a banking company if it considers necessary.

The amendment also proposes to confer power on the central bank to call for information and returns from associate enterprises of banking companies and also to inspect the same.

The Bill noted that taking advantage of the liberalised environment, banking companies are engaging in multifarious activities through the medium of associate enterprises.

It has, therefore, become necessary for the Reserve Bank of India as the regulator of the banking companies to be aware of the financial impact of the business of such enterprises on the financial position of the banking companies, it added.

The amendment moved by the government also exempts mergers and acquisitions in the banking sector from the scrutiny of the Competition Commission of India.

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Shilpi Cable Technologies IPO opens on 22nd March

Shilpi Cable Technologies new issue closes on 25th March

Incorporated in 2006, Shilpi Cable Technologies has launched its IPO on 22nd March.

Shilpi Cable is engaged in the business of manufacturing radio frequency (RF) cables, widely used in telecom, automobile and power sectors. The company's factory is located in Chopanki, Bhiwadi, Dist Alwar, Rajasthan.

The new issue closes on 25th March. CARE has assigned an IPO Grade 1 to Shilpi Cable IPO. This means as per CARE, company has 'Poor Fundamentals'.

CARE assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.

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