While there has been insufficient rain in UP, Jharkhand and parts of Bihar, heavy rains have lashed Punjab and Haryana. However, agriculture minister Sharad Pawar is optimistic about foodgrain output
Agriculture minister Sharad Pawar today expressed confidence that India's foodgrain production would be better than last year despite scanty rain in Uttar Pradesh and flooding in parts of Punjab and Haryana, reports PTI.
"It is true that in parts of Uttar Pradesh, Jharkhand and in some parts of Bihar, there has been insufficient rain. It is also true that because of heavy rain in Punjab and Haryana, there are some damages. However, we will have more production than last year," Mr Pawar said in New Delhi.
India had produced 234.47 million tonnes of foodgrains in 2008-09 and last week, the agriculture minister, enthused by better prospect of rain, had said that the country would have "bumper produce" this year.
"The latest sowing report shows that compared to last year, the area coverage is more for rice, oilseeds, pulses, cotton, sugarcane and jute," Mr Pawar said, adding the prospect of monsoon is "quite encouraging" as of today.
The monsoon, however, has started playing truant since the past one week, raising some concerns about lower production.
"Definitely, there is a gap, but there will be continuity (of rainfall) after the gap. I am not worried as this happens sometimes. A year before also there was some gap but we could produce substantially without any problem," he said.
The Met department has predicted that rainfall would be 98% in July and 102% in August, he said.
Mr Pawar said that though there are "some damages" because of rain in Punjab and Haryana, the farmers and the government of the two states exuded confidence that the production, particularly rice, would not be affected.
"There could be some damages, but they are hopeful of meeting the gap," he said. Punjab and Haryana contribute maximum foodgrains to the Central pool.
The minister, however, expressed concerns about storage capacity, and said that the government is seriously pursuing state and private participation in the construction of godowns.
Currently, the government's storage capacity is 41 million tonnes against the stock of 60 million tonnes.
"If the assessment (sowing) is correct and the next year production is higher, then storage will be a serious problem.
That's why, we are aggressively going with the help of the state governments to construct warehouses in different parts of the country," Mr Pawar said.
Mr Pawar said that his ministry will assess the space crunch in a week's time and if required, might seek more concession from the finance ministry for parties interested in constructing warehouses.
Shares of IDBI Bank, Indian Bank, UCO Bank, Dena Bank and Vijaya Bank are moving higher in a gallop. Is it just the capital infusion by the government or something else?
A lot of smaller banks seem to be in a tearing hurry to make new highs or recapture old ones. Among these are IDBI Bank, Indian Bank, UCO Bank, Dena Bank and Vijaya Bank. What gives? One of the key reasons could be the government’s recent equity infusion of up to Rs6,200 crore in five State-run banks — Bank of Maharashtra, Central Bank of India, IDBI Bank, UCO Bank and Union Bank of India — and another reason is most of these banks are planning FPOs. Let’s explore further...
IDBI has risen from a low of Rs106 late May to Rs124. By the looks of its chart, it seems all set to aim for the Rs140 mark, provided it holds above Rs130. IDBI is not very widely tracked by brokerages (Sharekhan, IDFC, and Macquarie are among the few who track it). Net interest income (NII) estimates for the first quarter (Q1) range from Rs750 crore to Rs760 crore and net profit estimates from Rs180 crore to Rs250 crore. Macquarie says in its earnings preview, “Asset quality continues to worsen. Margins should be relatively healthy but headwinds ahead on higher cost of funds as liquidity tightens.”
So why is the stock so bullish? In IDBI’s case, the recent infusion will take the government’s stake to over 65% giving it a temporary respite and enough headroom for a follow-on public offer (FPO) that should shore up its finances and fulfil its capital requirements with ease (results on 22nd July). This is also expected to give a push to its lending abilities.
In Indian Bank's case, asset quality is expected to improve even more in Q1 (it had improved quite a bit in Q4 already). NII expectations range from Rs920 crore to Rs970 crore and net profit expectations range from Rs380 crore to Rs470 crore. Indian Bank, too, plans to raise about Rs1,000 crore through Tier II bonds and its target is to achieve a 22% growth in business to Rs1.8 lakh crore by March 2011. The focus of the bank, according to its managing director TM Bhasin, in recent interviews, is on lending to SMEs, corporates, and infrastructure along with building a stronger CASA. To achieve its loan growth target, Indian Bank will have to get to a CASA level of at least 34%. Mr Bhasin recently said that loan growth for Q1 was at 30%, which is higher than what the market expects. In an interview with The Hindu Business Line newspaper, he revealed that savings bank account balances had grown by 4.5% in Q1 vs 2% growth in Q1FY10. So results expectations (24th July) from this company are on the higher side. Indian Bank is almost near its January 2008 high of Rs257.
UCO Bank is getting about Rs375 core from the government under the recapitalisation scheme and will probably follow this up with an FPO since its total need is around Rs1,300 crore. The bank’s guidance for Q1 is 19% credit and deposit growth, mainly driven by large and mid-corporate sector, and net interest margin of 2.6%. Another positive (as viewed by the market) is that Arun Kaul (currently at Central Bank of India) will soon head UCO Bank. UCO Bank had touched a high of about Rs90 in January 2008 and its current market price is Rs84.
Incidentally, a lot of top-level changes are expected soon — S Raman will move to Canara Bank from Union Bank of India. M Narendra will move from Bank of India to Indian Overseas Bank. Ramnath Pradeep will shift from Central Bank of India to Corporation Bank. R Ramachandran will leave Syndicate Bank and assume charge as CMD of Andhra Bank, HSU Kamath will move from Canara Bank to Vijaya Bank, and Nagesh Pydah will move from Punjab National Bank to Oriental Bank of Commerce.
Dena Bank (results on 26th July) has risen from a low of Rs70 in January to almost Rs100. Dena Bank, too, is to be a beneficiary of government capital infusion. It is expected to receive Rs600 crore in this quarter and hopes to get another Rs700 crore over the next two quarters. Its CMD DL Rawal has decided to crack the whip on non-performing assets (NPAs) this year and has set a target of Rs75 crore-Rs100 crore cash recovery from written-off accounts in FY11. Motilal Oswal expects Dena Bank’s NII to grow 21% to Rs300 crore in Q1 and expects a 27% loan growth. Again, this bank is also not very widely tracked by institutional brokers. The stock is already at its January 2008 high of Rs98.
Vijaya Bank, too, has been the recent beneficiary of Rs1,200 crore recapitalisation from the Union government. Its chairman Albert Tauro said in an interview late June that protecting margins and asset quality has been a focus and hinted at a margin improvement and better NPAs this quarter. He set a net NPA target of less than 1% by end FY11 and net interest margin (NIM) target of 2.85% (results on 22nd July). The stock is not quite near its January 2008 highs of Rs100, but punters are watching for a breakout above Rs69.
Just a few days ago, Fitch Ratings upgraded the support ratings of five nationalised banks — Corporation Bank, Indian Bank, Andhra Bank, Vijaya Bank and Dena Bank to ‘3' from ‘4'. The upgrades “reflect the Centre's continued strong propensity and commitment towards maintaining healthy financial profiles for government-owned banks, and the government’s improved ability to do this based on better prospects for its fiscal position,” said the Fitch report. The government plans to ensure a minimum 8% Tier-I ratio for government-owned banks by end of FY11 and plans to infuse Rs16,500 crore to this end.
In a public notice released today, MCX-SX said "There have been attempts by some elements at spreading misinformation to create doubts among our shareholders and to undermine our reputation and business for their benefit"
Anguished by the lack of clearance from market watchdog Securities and Exchange Board of India (SEBI) to become fully functional despite meeting the norms, Jignesh Shah-led group firm MCX Stock Exchange today went public with its grievance and hit out at competitors, reports PTI.
Without naming the National Stock Exchange (NSE), MCX-SX also said that its rival was killing competition by offering free trading in currency derivatives, and thus making it difficult for it to get business and investors.
In a public notice, released today in the form of advertisements in dailies, MCX-SX said "There have been attempts by some elements at spreading misinformation to create doubts among our shareholders and to undermine our reputation and business for their benefit."
A MCX-SX spokesperson did not respond to queries if the company was alluding to rival exchanges like Bombay Stock Exchange (BSE) and NSE.
In an apparent attack at SEBI, it also said the go-ahead for doing full-fledged business was elusive despite MCX-SX having taken all the necessary steps to make it compliant to the relevant regulations about trading in equities, equity derivatives, interest rate derivatives, mutual fund and debt market among other instruments.
MCX-SX said that one of the key conditions put on it related to bringing down promoters' stake and it did so with a "capital reduction-cum-arrangement" scheme and SEBI was informed about the same, way back in December 2009.
While the scheme was already approved by the board and shareholders, it also got the nod of Bombay High Court in March 2010 and the same was also notified to the SEBI on 7 April, 2010, MCX-SX said.
But, the exchange has got "no response from SEBI in this regard" as of July 2010, it noted.
MCX-SX said that it was operational since October 2008, but was offering only currency derivatives product, and it was first given recognition by SEBI for one year only with a condition that it would meet the shareholding-related regulations by 15 September, 2009.
In another apparent allegation against SEBI, MCX-SX said in the same public notice that the regulator in August 2009 had approved trading in interest rate futures, to be traded on currency derivatives segment, but "it did so for exchanges other than MCX-SX."
"At the same time, SEBI renewed the recognition of the exchange for one year up to September 2010 on the condition that no new class of contracts in securities will be introduced without complying with the MIMPS (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges Regulation) regulations."
"Thereafter, it became impossible to get any new investors in the exchange with no revenues due to no fees or charges being levied by the competing exchange in the currency segment and more so because of no possibility of any new product without complying with MIMPS regulations," the public notice said.
"New Investors wanted MCX-SX to have regulatory permission for all segments, before investing, whereas SEBI wanted divestment before giving approval for other segments," it added.
MCX-SX said that this "log-jam" forced it to go for a scheme that required reduction in its share capital to bring down the stake of some entities, including promoter group firms Financial Technologies India Ltd (FTIL) and Multi Commodity Exchange (MCX), to 5% each.
Under the scheme, warrants were issued to the shareholders whose equity capital was cancelled by way of reduction.
MCX-SX said that its shareholders currently comprise of banks and public financial institutions with nearly 89% stake collectively and the "conditions stipulated by SEBI while granting renewal to the exchange up to September 2010 stands complied" after the high court approval in March 2010.
"Since then, MCX-SX is awaiting necessary SEBI approval for providing trading facilities in equities, futures and options on equities, interest rate derivatives, mutual fund trading platform, debt market, etc."
The company also listed out the members of its board of directors and the advisory board, which includes many former top bureaucrats and regulators.