MLM / Chain Money
Saradha Group has nothing to do with chit fund business: Chit Funds Association

Saradha Group has about 160 registered activities including realty and resort but not even one activity was registered as Chit Fund in the state, All India Association of Chit Funds general secretary TS Sivaramakrishnan said

Objecting to the use of word ‘Chit Fund’ in multi-crore Saradha Group financial fraud, industry body CFAI today said none of the entities of the Kolkata-based Group was operating as a registered chit fund.

 

“The failure of some multi-level marketing (MLM) or a Ponzi scheme is explained as failure of a chit fund company. This is totally unfair," All India Association of Chit Funds general secretary TS Sivaramakrishnan said.  

 

Saradha Group has about 160 registered activities including realty and resort but not even one activity was registered as Chit Fund in the state, he said, while addressing a press conference.

 

“Our grievance is failure of some other activity, why is it branded as failure of Chit Fund?,” he added.  

 

The association also demanded that the government come out and clear the air over Chit Funds.

 

There are about 10,000 Chit Funds registered in India with annual subscription of Rs30,000 crore per annum. “We are governed by the Chit Fund Act 1982 and implementations by the respective states. This Act is notified in entire India,” he said.

 

“Principle regulator is the Reserve Bank of India, Act is made by the Central Government and rules are made by respective state governments,” Sivaramakrishnan added.

 

The regulator of chit funds is the Registrar of Chits appointed by respective state governments under Section 61 of Chit Funds Act.

 

Powers of adjudication vest in the Registrar and the state government concerned is the Appellate authority. In case of failure of a chit fund business, the responsibility for winding up such a business also vests with the respective state governments.

 

As per the law, a Chit Fund company is not allowed to accept deposit from the public and can only accept subscription amount from the members.    

 

However, Saradha Group accepted deposits from investors and worked as a Multi-Level Marketing company.

 

Meanwhile, the government has said several of its investigating wings like SEBI, RBI, I-T department and Enforcement Directorate have begun crackdowns on Ponzi schemes and have initiated action against Saradha Group under various laws including the Prevention of Money Laundering Act (PMLA).

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Shree Cements disappoints with marginal 7% increase in net sales

Despite slumping sales and a sluggish cement industry, its net profit was boosted due to lower depreciation
 

Shree Cements has posted a net profit of Rs274.09 crore for the quarter ended 31 March 2013 as compared to Rs114.28 crore for the quarter ended 31 March 2012. Total Income has increased from Rs1,453.56 crore for the quarter ended March 2012 to Rs1,514.41 crore for the quarter ended 31 March 2013.
 

We had recommended this stock at Rs4,470 and it is currently quoting at Rs4,410.85, up over 2% on the Bombay Stock Exchange (BSE).
 

Further analysis of the company showed that the company has had a disappointing quarter, growing its net sales only 7% year-on-year (y-o-y) when compared to its three-quarter y-o-y average of 27%. Its operating profit grew at a slightly higher rate of 13% but still well below its three-quarter y-o-y average of 40%. Yet despite these, the company has reported 139% y-o-y higher net profit, at Rs274 crore due to lower depreciation outlay and low cost of power. The company continues to maintain high return ratios, with return on networth and return on capital employed at 39% and 26% respectively. The company is valued at a market capitalisation of 8.47 times operating profit.
 

SBI Cap Securities, a financial institution, has pegged the stock as a “Hold” and values the company at Rs4,211 per share. One of the key things that helped the operating parameters of the company, according to SBI Cap Securities, is power. The report states:
“Higher contribution from the power segment helped SRCM make up for the weak cement contribution in 3QF13.” Furthermore, the report states: “Remarkably the cement related power & fuel cost dropped sharply to Rs408/tonne compared to Rs573/tonne in 3QF12 and Rs608/tonne in 2QF13. The power cost benefit was driven largely by fall in pet-coke prices that fell to an average of Rs6,375 in 3QF13 from Rs6,900/tonne in 3QF12(Rs6,502/tonne in 2QF13).”
 

The board of directors has declared interim dividend of Rs8 per equity share of Rs10 each for the financial year 2012-13. The date of payment of dividend will start from 7 May 2013.

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RBI may cut repo rate by 25bps on 3rd May, says Nomura

Nomura expects the tone of the central bank’s forward guidance to shift from hawkish to neutral. RBI is likely to signal that there is some scope for further rate cuts, but only contingent on signs of a sustainable moderation in CPI inflation and the current account deficit

The Reserve Bank of India (RBI) will announce its monetary policy for the fiscal 2013-14 on 3 May 2013. Here is what brokerage firm Nomura expects from the upcoming policy:

 

A 25 basis points repo rate cut: The brokerage expects RBI to cut its repo rate by 25 basis points (bps) to 7.25%, in line with consensus expectations. The RBI had stated in March that “headroom for further monetary easing remains quite limited.” However, lower WPI inflation (80bp below the RBI’s projection in March), continued weak growth and a narrower trade deficit should have collectively created space for further easing. Additionally, while a cut in the cash reserve ratio (CRR)—to allow for better policy transmission—is possible, Nomura does not consider this part of its base case scenario (Consensus and Nomura: 4%).

 

Economic projections: Nomura expects the RBI to project GDP growth at around 6% y-o-y in FY14 (year ending March 2014, up from 5% in FY13. Its forecast is for a lower 5.6%. The brokerage expects the RBI to project WPI inflation at between 5.5% and 6% y-o-y by March 2014 (6% in March 2013) on lower global commodity prices, a lagged impact of weaker demand and the forecast of a normal monsoon.

 

Developmental and regulatory policies: The brokerage expects the RBI to announce a phased reduction in the hold-to-maturity (HTM) limit for banks from the current 25% to 23% (same as the statutory liquidity ratio). It could also tighten asset-quality norms for non-banking finance companies and on gold loans.

 

Forward guidance: Nomura expects the tone of forward guidance to shift from hawkish to neutral. It expects the RBI to signal that there is some scope for further rate cuts, but only contingent on signs of a sustainable moderation in CPI inflation and the current account deficit.

 

According to Nomura, the global commodity price outlook is the key to the trajectory of WPI inflation. A steady fall in global commodity prices, if sustained, would help ease input cost pressures and thus aid a further fall in WPI inflation in the coming months, providing the RBI even more headroom to cut rates.

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