Now that the Sensex has closed above 17,600, expect continuation of the rally subject to dips
The Sensex ended the day 120 points higher (0.6%) at 17,694 and the Nifty ended 34 points up (0.6%) at 5,304 points. The market started the day with a high on the surprise issue of bonus shares by Wipro. In the morning session, it touched the intraday high.
Later, the bourse slid from the high, until it rebounded in afternoon trade. Asian stocks declined as speculation heightened that Greece could default on its sovereign debt obligations after Moody's cut its ratings on the country's sovereign debt.
Key benchmark indices in Hong Kong, China, Indonesia and South Korea fell by 0.14% to 0.98%. Key indices in Singapore and Taiwan rose by 0.04% to 0.33%. US stocks staged a late-day comeback on Thursday after steady quarterly profit earnings reports from consumer bellwethers like Starbucks outweighed worries over Greece's finances. The Dow rose 9.3 points (0.08%) to 11,134. The S&P 500 rose 2.7 points (0.23%) to 1,208. The Nasdaq gained 14.46 points (0.58%) to 2,519.
The Greek prime minister asked for the activation of the EU-IMF aid package aimed at pulling the eurozone member out of a debt crisis. The People’s Bank of China has said that Chinese GDP grew at a seasonally accelerated rate of 12.2% in the March quarter from 11.3% in the fourth quarter of 2009. It also said that there has been a healthy revival in exports, domestic production and consumption.
Closer home, the Reserve Bank of India (RBI) has suggested increasing the time period for banks for holding a loan before converting it to a security asset, to nine months. However, bankers are of the opinion that the holding period for corporate loans and retail loans should be three and six months, respectively. The government has approved infusion of Rs150 billion in State-run banks during the fiscal year ending March 2011, to help meet growing credit requirements of the economy. In the annual Budget, the government has proposed an infusion of Rs165 billion for State-run banks. This will help banks to increase their credit growth by about Rs1.85 trillion. Foreign institutional investors were net buyers on Thursday of Rs518 crore. Domestic institutional investors bought stocks worth Rs181 crore. The rupee was strong on higher equities and the weak dollar.
ABG Shipyard (up 1.1%) has received an order from Associated Bulk Carriers of Singapore for construction of three 20,000 deadweight tonnage cement carriers. Hind Rectifiers (up 1.8%) has commenced commercial production at its two plants at Dehra Dun for manufacture of rectifiers, invertors, convertors and transformers. Reliance Industries (up 1.1%) has announced the closing of its recently-announced Marcellus Shale joint venture transaction with US-based Atlas Energy. The IPO from Talwalkars Better Fitness (down 0.4%) has been fully subscribed on the second day of issue. Out of the total of 70.41 million bids obtained, 3.75 million bids were obtained at cut-off price. The price band of the issue which closes on 23rd April has been fixed at Rs123-Rs128 a share. SKF India (up 7.6%) has posted a growth of 59% and 174% in sales and operating profit in the March quarter over the year-ago period.
Private Treaties, the controversial investment arm of Bennett, Coleman & Co Ltd, is now housed under a separate company. However, it seems to have too many dubious investments in its books
Set up in 2005, Times Private Treaties, a part of Bennett, Coleman & Co Ltd, publishers of the Times of India, is now a separate corporate entity called Brand Equity Treaties Ltd. However, its investments not only continue to be controversial but are turning out to be quite unsound as well.
The business model of private treaties is unique. Under a legal arrangement, Brand Equity picks up a stake in the company in return for discounted ads and favourable editorial coverage. Most of these companies subsequently go public. A sample of recent headlines, to name a few, have been: ‘HCC plans Rs50,000 crore investment in Lavasa in a decade’; ‘The Lavasa Women's Drive 2010’; ‘Lavasa city to mimic nature’; ‘Pantaloons Femina Miss India 10 finalists: Lavasa trip’. These appeared in the Times Group’s newspapers. Lavasa of Hindustan Construction Company and Pantaloon Retail (India) Ltd are both private treaty clients.
According to the data available on the Times Treaties website (see here), the company has as many as 119 companies in its portfolio of clients.
Last year, there were media reports that the private treaties business had incurred mark to market losses exceeding Rs1,500 crore, following the market crash of 2008. Then came a nasty controversy about one of its treaty clients Pyramid Saimira Ltd. The market regulator Securities and Exchange Board of India (SEBI) alleged that Pyramid Saimira was banned from trading for seven years in connection with illegally ramping up the share price of Pyramid with the help of few media professionals. The trio attempted to plant a fake order in several newspapers led by a media cabal that included Rajesh Unnikrishnan (assistant editor of The Economic Times and close buddy of Nirmal Kotecha, a co-promoter of Pyramid Saimira) and Rakesh Sharma, a former journalist with Business Standard, who had turned into a PR professional.
Apart from controversy, there are questions also of how smart the investments have been. Shree Ganesh Jewellery, a treaty client, has plunged 45% as on 23 April 2010 from its offer price of Rs260 on 9 April 2010. CARE had assigned an 'IPO Grade 3' to the Shree Ganesh IPO indicating ‘average fundamentals’. Bennett, Coleman & Co had made an investment in this company to the tune of Rs5 crore in June 2007 at Rs150 per share. Moneylife had yesterday reported on how Nitesh Estates Ltd (which opened today) made a pre-IPO placement to Brand Equity Treaties Ltd at Rs143 per share on 19 February 2010 for 10 lakh shares aggregating to Rs15 crore. The stock is being offered at a Rs54-Rs56 price band. Jaiprakash Infratech Ltd which also appears in the ‘portfolio list’ list of Times Private Treaties is set to hit the market on 29 April 2010. Interestingly, there are speculations that Brand Equity Treaties itself would go public.
A complaint forwarded to the RBI by a retired government officer regarding SBI’s extensive delays in pension payments gets the central bank to take notice and undertake review of the lender’s systems
Moneylife had revealed yesterday (see here) that the Reserve Bank of India (RBI) has reprimanded pension-paying banks for delaying payments to pensioners and directed them to make good the dues immediately, along with penal interest.
It turns out that the reason RBI woke up is that a complaint was forwarded by a former highly-placed government officer to the deputy governor of the central bank, outlining the shoddy service given by the country’s largest lender, State Bank of India (SBI), in the form of extensive delays in pension payments.
This former officer had apparently been kept waiting unsuccessfully for ten months to receive his revised pension under the Sixth Pay Commission. This complaint forced the RBI to take a deeper look at the systems put in place by SBI for pension payments. A joint team drawn from both RBI and SBI investigated the matter and found various discrepancies in the way things were being administered.
The Investigation Report finds that apart from the complainant, there were at least 1,800 non-state resident pensioners who were denied the revised pension payment for months together. Taking a serious view of the matter, the RBI has put in a strongly worded letter to the chairman of the bank questioning the lack of customer sensibility despite being a premier bank in the public domain. It has pointed to the absence of an effective system of customer service at the branch level where pensioners normally interface with the front office.
This also forced the RBI to inspect the system at other Agency Banks making pension payments. The findings were more or less the same across all Agency Banks.
In view of the above, the RBI has advised these banks, including SBI, to undertake review of the system of attending to customer service and have a pension accounts guide at all branches to assist the pensioners in all their dealings with the bank. Additionally, the RBI has demanded that suitable arrangements be made, to place on the bank website details about the pension calculations, and made available to the pensioners at periodic intervals with sufficient advertisements to that effect.
As with the other banks, RBI has demanded that SBI make the payment of the revised pension and arrears within 15 days from the date of receipt of its communication to that effect. Additionally, it has also advised the bank to make a penal interest payment of 2% for any delay beyond the due date, which is to be credited to the pensioner’s account automatically without any claim from the pensioner on the same day when the bank affords the credit for revised pension or arrears.