The contractual completion period is 16 months from the date of the contract.
McNally Bharat Engineering Company has received two orders from Visa Power.
The first order is for supply of one 1,600 TPH reversible stacker-cum-reclaimer and two 1,600 TPH bucket wheel type reclaimer including associated utility civil and electrical for 2 x 600 MW VISA Raigarh super thermal power project, Raigarh, Chhattisgarh at a price of Rs60 crore excluding all taxes and duties on FOR basis. The contractual completion period is 16 months from the effective date of the contract.
The second order is for erection testing and commissioning services for one 1600 TPH reversible stacker-cum-reclaimer and two 1600 TPH bucket wheel type reclaimer including associated civil works for 2 x 600 MW Visa Raigarh super thermal power project, Raigarh, Chhattisgarh at a price of Rs10 crore, excluding all taxes and duties. The contractual completion period is 16 months from the effective date of the contract.
In the early afternoon, McNally Bharat was trading at around Rs99 per share on the Bombay Stock Exchange, 0.3% up from the previous close.
The Iran-Iraq war, which lasted from September 1980 to August 1988, provided great business opportunities in Kuwait. There was no dearth of items and they had the leeway to even supply 5% to 7% more than the indented quantity. This is the ninth part of the series describing the unknown triumphs and travails of doing international business in Asia in the seventies and eighties
The Dubai business community and people in general, do not take sides on political issues, and I suppose this is due to their exclusive concentration on business. In fact, even before this border skirmish became a full-fledged war the merchants on both sides were ‘sensing’ the trouble ahead and truck loads of goods were already moving towards the Kuwaiti border. As for Iran, the good old dhows operated at great speed and merchants of Iranian origin were mopping up the goods at regular intervals, as and when they had the opportunity. Physical delivery and price were the criterion for sales.
In fact, there was a time, not much earlier, when Iranian importers were allowed to get the goods into the country, as long as foreign exchange for payment was not asked for overseas remittance. How the system exactly operated, I do not know, but as long as the merchant paid us the cash for each purchase, we could not care less, and we did our best to deliver the goods, even at small margins, and banked on the post-dated cheques that we had issued for supplies, which, anyway, was the practice.
The supplies to Iran, on this basis, much prior to the war scene, was going on for quite some time, and I was too busy with my trips to even know about them. More and more, my time was spent on handling Kajeco products. In fact one evening, I had the urgent request to stop all my work and jump into a van that was going to Al Ain, bordering the Sultanate of Oman. In fact, one has to cross, overland, the Omanese strip of land before reaching Al Ain, which formed part of UAE. I readily agreed, and almost all the staff license holders drove various new vehicles to the jetty, for onward delivery to an Iranian client, for transhipment to Iran.
We had an excellent contact in Kuwait, whose associate company was also the agent for Kajeco products, but who was one of those active merchants supplying various goods to Iraq. We had intimation from a French contractor, if I recall, Dumex by name, who had some trouble with our supplies, and they wanted the manufacturer's representatives to visit them at the site in Kirkuk, some 700 km or so from Basra.
From time to time, we had been receiving various indents for great many of the items, of which we had hardly any knowledge; but all that we did was to locate the item, slapped a 10% profit, and quoted the price for delivery on their truck. The order would be confirmed, practically immediately, and our procurement and collection would follow. There was no dearth of items and we had the leeway to even supply 5% to 7% more than the indented quantity.
This sort of profitable business was fun, as long as it lasted.
As I sat pondering over the complaint from Dumex, I got the confirmation that Vijay would be joining me on the trip in a day, and asked me to arrange the Kuwaiti visa. Our Kuwait contact, ably handled by Stephen, a Lebanese friend, had already submitted the relevant documents for “land entry permits” for us to travel into Iraq.
In those days, hotel accommodation was almost impossible. So, when we landed in Kuwait, Stephen not only collected us, but took us to his home, where we stayed for a couple of days, before embarking on an arduous journey, overland to Iraq. Kuwait was not as liberal as the UAE in issuing liquor permits, but did not strictly enforce this practice—if anyone had carried a bottle or two, as long as he was not a national or Muslim. Stephen, being a Christian had his own little stock, and enjoyed Scotch, as much as he did the Lebanese Aarak.
We had to be physically present for getting the permits, but once this formality was over, we relaxed at home, thanks to Mrs Stephen’s hospitality, a Lebanese trait, while Stephen was getting organized for our overland trip, which would last a good 12 days,
The Iran-Iraq war had intensified, and Iranian Air Force had a clear advantage as they bombarded Basra. We were to commence our travel in the afternoon, arrive at Safat border and then proceed to Basra, stay overnight, for which, luckily Stephen had arranged for hotel accommodation, where they normally stayed before their onward journey which they usually started much before day break, every time they went.
We had a wonderful Lebanese dinner and Vijay the vegetarian had no problem, and we slept comfortably, knowing that, in the next ten days or more, we would have to do away with such luxury.
(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 protected].)
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In the last 12 months nine new equity fund offers (NFOs) have been launched. This is the lowest for any 12-month period since March 2003
In the last three months when the Sensex rallied from around 15,000 points to 18,000 points, equity funds witnessed a net outflow of Rs2,717 crore and there was just two NFOs (New Fund Offers) which included one ELSS (Equity Linked Savings Scheme). This is the lowest NFOs in any 12 month period since 2003.
Moneylife has constantly been reporting that the investor population has been declining and much of this is due to poor and half thought-of regulatory changes. SEBI’s new chairman, UK Sinha, has perpetuated this. We have analysed two similar periods. From January 2006 to December 2007 and from January 2009 to December 2010 the Sensex rallied from around 9,500 points to around 20,000 points in both periods. In the first period there were 87 equity NFOs launched bringing in a total of Rs66,025 crore which was around 32% of the total sales which totalled Rs2.08 lakh crore. Existing schemes gathered the remaining 62% with around Rs1.42 lakh crore. However in contrast, in the period from January 2009 to December 2010, there were just 40 NFOs launched, picking up just Rs9,070 crore which was a minor 8% of the total inflows which amounted to Rs1.18 lakh crore. The sales made a serious impact to the net equity fund flows where in the period Jan’06-Dec’07 witnessed a net inflow of Rs63,786 crore and the period Jan’09-Dec’10 saw a net outflow of Rs14,475 crore. Had the sales been what were in the earlier period we would have seen some inflows into equity mutual funds.
Fund companies have to shell out commissions to distributors and the various expenses incurred when they launch an NFO from their own pockets. All they can charge an investor is a fee of Rs100 if the investment is above Rs10,000 or if it is a new investor, Rs150 would be charged. This amount is insufficient to cover the cost of advertising, etc, to promote their product. With the lack of investor interest and huge costs, most fund companies would have chosen to avoid new fund offers to avoid losses. Only those fund companies with a large fund corpus would be able to survive. Fund companies would find it unviable to promote existing products as well for the same reason. Just last month we saw a nascent fund company Indiabulls launch Indiabulls Blue Chip fund—an equity fund, which managed to rake in just Rs13 crore, whereas an older company Franklin Templeton through its NFO—FT India Feeder-Franklin US Opportunities Fund—an overseas fund of funds, managed to bring in as much as Rs104 crore.
What could be a major reason for this decline? In August 2009, then SEBI chief, CB Bhave, introduced the ban on entry load. The entry load for mutual funds was banned in order to make it fairer. The move was intended to reduce the cost for investors. But, was the cost for starting investing the only reason for the lack of retail participation? Unfortunately, SEBI board failed to look at other factors. Among some of the other factors that deter retail investors from putting money in the markets are the unexplained volatility in the market, manipulation of IPOs, poor performance of 40% of funds, several counts of mis-selling, lethargic complaint redressal and lack of financial awareness.
It is this foolish regulation that killed all incentives to sell mutual funds. With the banning of entry load, the distributors’ margins have been completely squeezed and they have been exiting the business of selling mutual fund in droves. We have recently seen Fidelity exiting the business. Bank-sponsored fund companies have their own relationship mangers; it is the other fund companies which would find it difficult to survive. Bank relationship managers are well-known for their unscrupulous and pushy ways and tend to operate purely on commissions and rarely on customer interests. In February last year UK Sinha took over as SEBI chief, he made a futile effort to incentivise distributors. (Read: http://www.moneylife.in/article/will-inives-to-mutual-fund-distributors-have-much-of-an-effect-on-fund-inflows/17541.html). In fact sales have fallen 25% in the last 12 months compared to that of the previous year.
Distributors and advisors are responsible for pushing and increasing penetration of financial products. Their income depends on this and they would choose more profitable products over others. The only option for distributors to earn some income has been to make investors churn their portfolios. This earns them a 1% exit load and while it has been an incentive for brokers to make investors churn more frequently, it is a loss for investors. Along with this, the low incentive to sell mutual funds has led many distributors to sell ULIPs, which is terrible for investors. Insurance currently pays the highest commissions. Therefore most distributors have moved on to selling ULIPs. Moneylife has received so many complaints where savers have been mis-sold ULIPs. Investors who need hand-holding and cannot decide without the help of market intermediaries, ended up buying harmful products that was pushed at them or preferred to keep the money in the bank.
Unless the regulators create a proper structure to sell financial products distributors, agents would continue to sell products earning them the highest commission and it is the investors who would be at a loss.