SEBI shakes up key advisory panels

The panel restructuring drive is also being seen as part of a process that began with change in the top leadership position earlier this year

New Delhi: The Securities and Exchange Board of India (SEBI) has embarked on a restructuring drive for the various advisory panels that help it frame new regulations in different capital market segments, such as IPOs, mutual funds and secondary market trading, reports PTI.

The capital market regulator reconstituted its Primary Market Advisory Committee (PMAC) last week and is currently in the process of restructuring some of the other existing panels and might also look at setting up some new committees.

A senior official said that a few other panels have also been restructured in the recent past, partly due to certain vacancies that arose in the old panels and partly for bringing in a more diversified representation from various segments.

The official said that the panel restructuring drive is also being seen as part of a process that began with change in the top leadership position earlier this year.

UK Sinha took over as the new SEBI chairman in February this year, while there have also been many changes in senior positions like executive directors and SEBI whole-time members, as also that of the nominated members since then.

As many as six panels have been either constituted or restructured since Mr Sinha took over as SEBI chairman from his predecessor CB Bhave.

These include advisory panels on primary markets, mutual funds, secondary markets, corporate bonds and securitization, consent orders and compounding of offences and the SEBI Committee on Disclosures and Accounting Standards (SCODA).

The new Primary Market Advisory Committee would be chaired by TV Mohandas Pai, formerly with IT giant Infosys and currently chairman director at Manipal Universal Learning.

Besides the panel would have members from stock exchanges, investor associations, corporates and other financial institutions among others.

The panel would advise SEBI on issues related to regulation and development of primary market, on legal steps required to introduce simplification and transparency in systems and procedures and on regulation of intermediaries for ensuring investor protection.

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Cement sector may witness negative growth in October

“Given last year’s higher base and the upcoming festival season (Diwali), the cement industry is expected to report negative year-on-year growth in dispatches for the month of October 2011,” Elara Securities said in a report

New Delhi: The cement sector is likely to witness negative growth in sales in October due to a slowdown in infrastructure construction activities amid the festive season, besides the higher base in the corresponding month last year, reports PTI quoting a brokerage firm.

“Given last year’s higher base and the upcoming festival season (Diwali), the cement industry is expected to report negative year-on-year growth in dispatches for the month of October 2011,” Elara Securities said in a report.

In September, the country’s cement firms reported a marginal 1.4% decline in dispatches over the same month last year. In August, cement dispatches were down by 6.6% in comparison to July.

Industry sources said the unavailability of sand has impacted cement offtake in the western region, while the monsoon and the fluid political situation hit sales in Andhra Pradesh.

“As cement demand is still subdued, cement players have cut down supply in the low price non-trade segment. Thus, cement prices during the month increased in most parts of the northern, eastern, western and central regions by Rs5-Rs30 per 50kg bag,” it said.

Cement prices in the southern region (except Andhra Pradesh) remained flat, as cement demand was weak due to festivals like Onam and Dussehra. Prices in Andhra Pradesh have inched up by Rs10 per bag due to the Telangana agitation.

“Cement dealers expect prices to inch up further by Rs5-Rs10 per bag in most regions” Elara Securities said.

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Banks’ Q2 earnings to rise by 10%: Analysts

Public sector lenders are likely to have experienced lower growth than their private sector counterparts due to the need for higher provisioning against loan defaults, analysts from Kotak Institutional Equities and Sharekhan said

Mumbai: Public and private sector banks experienced an average growth rate of 10% in earnings in the second quarter this fiscal due to a slowdown in credit demand, reports PTI quoting analysts.

However, public sector lenders are likely to have experienced lower growth than their private sector counterparts due to the need for higher provisioning against loan defaults, analysts from Kotak Institutional Equities and Sharekhan said.

As public sector banks complete the transition to system-based non-performing assets recognition, the additional provisioning will hurt their profits, they said.

“State-owned banks will report higher delinquencies as they will likely complete their stringent NPL (non-performing loans) recognition platform in the reporting quarter (especially for small-ticket loans), whereas we find limited concern for private banks on this count,” Kotak Institutional Equities said in a report.

The report said it expects earnings to grow 10% for the overall system, with PSU banks demonstrating 3% growth and smaller private banks a higher growth rate of up to 27%.

Analysts at brokerage Sharekhan peg the earnings growth of the overall banking system at 10.6%, pulled down by rising interest rates, slowing credit expansion and growing concerns over asset quality.

“In Q2, the slower credit growth, increase in NPA provisions and the mark-to-market provisions on investment book are expected to adversely affect the growth in earnings,” it said.

In spite of repeated rate hikes by the Reserve Bank of India (RBI), the lenders—who will start reporting their results for the September quarter from this week—will not show any decline in their net interest margins, the analysts from Kotak Institutional Equities said.

The Sharekhan report notes that the slowdown in credit offtake will hurt the net interest income of banks, as it will grow by only 2.9% on a sequential basis.

The chairman of country’s largest lender, State Bank of India (SBI), Pratip Chaudhuri had last week said credit grew by a muted 4.5% for the system in the second quarter, while for SBI, it stood at 5%.

The RBI, which has hiked key rates a record 12 times in the last 20 months to tame inflation, has set a credit growth target of 18%.

With respect to net interest margins (NIMs), the analysts feel banks will not be hurt.

“We should see limited pressure on margins, as banks have taken aggressive steps to pass on the rate hikes to customers in the past few quarters, while hikes in retail deposit rates have been taken only in select buckets and wholesale rates have been stable,” notes the Kotak report.

Non-interest or fee-based income will be lower, while volatility in the markets will hurt profits, as realisation from investments is low and provisioning has increased, analysts feel.

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