Mobile social network Mig33 has raised $8.9 million in Series C funding led by Indonesian telecom entrepreneur Sugiono Wiyono Sugialam and Japanese social networking firm Gree Inc. Mig33 was also supported by existing investors Accel Partners, Redpoint Ventures and DCM.
In May 2007, Accel Partners and Redpoint first invested $10 million in Mig33. In January 2008, Mig33 closed a $13.5 million round led by DCM and joined by Accel and Redpoint. With this Series C round, Mig33's total funding so far rises to $34 million. The Singapore-headquartered service now has 40 million members and reaches 200 countries.
The funding will be used to expand its service in more emerging markets such as South Africa and India and will also use it to develop its monetisation channel.
The sustained decline in profitability of the bank, coupled with the additional impact of further provisioning on its books is of grave concern for shareholders
Kerala-based Dhanlaxmi Bank is treading on choppy terrain these days, if its financials are anything to go by. The lender's bottom-line has been taking a hit for the past five quarters now, and faces some more heat given that it has yet to meet the mandatory provisioning requirement against its loan book.
The recent September quarter results have failed to provide much cheer to investors. Despite a healthy growth in the top-line, the bank's profits have been impacted due to staffing and branch expansions. The bank registered a 52% growth in revenues as advances have picked up considerably in this quarter. However, its net profit tanked a massive 74% to Rs1.62 crore from Rs6.26 crore in the corresponding quarter last year. Operating profit growth was muted at 9%, although entering positive territory after a long time.
Its performance over the past five quarters indicates that the bank finds itself in a sticky situation. Although average growth in revenues is fairly sound at 36%, the company's operating performance has averaged -39% over the past five quarters. On an average, net profits have declined 62% over this period.
The bank's net interest margin (NIM) has remained at around 2.4% over the past five quarters, which is much lower compared to some of its peers in the banking industry. On the asset performance side, the bank has gross non-performing assets (NPAs) at around 1.25% of its loan book while net NPAs stand at around 0.7%. However, the bank's loan-loss provisioning coverage at the end of September stood at only 46%. This is a long way from the mandatory provisioning requirement of 70% fixed by the Reserve Bank of India (RBI). This means that the bank will have to endure more stress on its profitability as it makes more provisioning in the coming quarters to address this deficit.
Recently, the bank announced the acquisition of 15% stake in financial services provider Destimoney Securities. This acquisition cost the bank around Rs13 crore. Destimoney Securities is a 100% subsidiary of Destimoney Enterprises, a financial services provider and advisory company owned and controlled by private equity firm New Silk Route.
According to bank officials, the primary reason behind this investment was to offer its retail customers access to online broking services through the bank. Although it could help the bank generate more current account, savings account (CASA) deposits, the investment is a costly affair at a time when the bank is experiencing more than just a pinch on its financial statement.
Natural calamities that have occurred in Asia recently will create some pressure on prices till the end of December, according to the investment banker
Investment bank Goldman Sachs has said that it expects steel prices to remain under pressure till the end of this year due to adverse weather conditions in Asia, China's energy-conservation measures, rising inventories and lower capacity utilisation in the developed world, resulting in sluggish demand.
"Due to uncertain weather conditions, the Asian construction sector generally sees less activity in the period of July-September and so prices for the metal can go down. However, natural calamities have occurred late in the period, which will create some pressure on prices till the end of December," said Goldman Sachs in a report.
The Asian construction sector consumes about half of the region's steel production.
In south and south-east Asian countries, demand for steel from the construction sector has been largely affected due to natural calamities which occurred recently. There has been heavy flooding in many countries like China, India, Pakistan, Vietnam, Thailand and Indonesia, the report said.
Even countries like Korea, which have not been affected by natural disasters, are seeing a slowdown in construction activity, Goldman Sachs added.
According to the World Steel Association (WSA), crude steel production in China, the world's largest producer and consumer of the metal, fell 5.9% during September to 47.9 million metric tonnes (MMT) from the same month last year. The WSA said that Japan's crude steel output stood at 9.2MMT in September, up 11.7% compared to the same month last year, while South Korea's crude steel production increased 3.2% to 4.7MMT.
Energy-conservation measures in China have also forced steel producers to curb production. In addition, steel consumption in that country will be affected as the Chinese government has decided to limit multi-home ownership, said analysts. Construction accounts for half of the steel demand in China.
"Steel demand in China has come down due to a slowdown in the construction sector. The pace of growth has fallen but there is still some demand, so steel prices will not be affected adversely at least till December," said an analyst from Elara Securities (I) Pvt Ltd.
Asian steel consumption is running at an average utilisation rate of 86% against 69% for the US and 73% for Europe. Even capacity utilisation rate of Japanese steel majors like Nippon Steel Corp and JFE Steel Corp during July to September 2010 was 96% and 86% respectively, against 77% for US Steel and 71% for ArcelorMittal, the world's largest steelmaker. Higher utilisation rates in Asia are helping to offset some seasonal weaknesses, the report said.
"Steel demand in Europe and the US is recovering at a very slow pace which is putting pressure on prices. Lower capacity utilisation by European and US steel majors indicates muted demand in these countries. Europe particularly may remain weak due to the summer season and as the holiday season begins by December," an analyst from a Mumbai-based research firm said.
ArcelorMittal also painted a bleak picture for steel consumption during the October to December period, due to slowdown in demand in China, muted recovery in developed countries and rising raw material cost.
The steel major said it expected October-December EBITDA at $1.5 billion-$1.9 billion, against $2.26 billion in the July-September period, due to weak realisation.
"Our outlook for Q42010 remains cautious as the expected higher input prices continue to work through the business and demand remains muted, though with some regional differences," said LN Mittal, chairman and chief executive, ArcelorMittal, in a presentation to investors.
Goldman Sachs believes that lack of confidence among buyers may also put pressure on steel prices till December.
"Our channel checks with traders suggest that while demand in certain
segments/markets remains strong, there is a crisis of confidence leading to a buyers' strike," the investment bank said.
However, Goldman Sachs is optimistic about steel prices post December due to downward correction in inventories and rebound in construction activity, particularly in Asia.
"Furthermore, there is a belief that construction activity is only delayed, not cancelled. When the weather improves, one can expect demand to recover even stronger than usual due to all the pent-up demand for construction. If anything, Asian governments may have to spend on reconstruction activity after the bad weather," the report said.