Total redemptions of all schemes stood at Rs1.19 lakh crore in June while equity funds witnessed Rs1,446 crore of net redemptions, despite the launch of six NFOs
The inflow of Rs1,256 crore for equity funds in May 2010 was a fleeting affair. Equity funds have continued to witness outflows in June 2010 and this time the outflow is one of the highest, which would lead to intense debate on the current regulations that govern fund-selling and put pressure on the market to introspect.
According to data released by the Association of Mutual Funds in India (AMFI), equity mutual funds have recorded Rs1,446 crore of redemptions in June 2010.
Meanwhile, the BSE Sensex was up 7% in June. The total outflow of all schemes stood at Rs1.19 lakh crore. Income funds have also suffered Rs1.34 lakh crore in outflows.
In June, six equity funds were launched. These were Baroda Pioneer Infrastructure Fund, Birla SunLife India Reforms Fund, DSP BlackRock Focus 25 Fund, ICICI Prudential Nifty Junior Index Fund, IDBI Nifty Index Fund and Taurus Nifty Index Fund. Put together, they raised Rs1,068 crore. Gross sales of existing schemes were Rs3,873 crore. However, redemptions from existing schemes were as high as Rs6,387 crore, leaving a net outflow of Rs1,446 crore.
Industry experts are citing low sales and continuous profit-booking as the reason for redemption in equity funds. Sales of equity schemes stood at Rs1,068 crore in June 2010.
All the loss-making broadcasting businesses would now come under one roof and so would all the loss-making print and digital businesses
The Network18 Group announced a business-restructuring plan on Wednesday which involves the consolidation of its various activities under two entities - one, broadcasting and two, digital initiatives and publishing.
The group's main businesses have been haemorrhaging cash for over two years now, following ill-timed expansion and diversification on a massive scale between 2006-08. But will the restructuring help the bottom-line? Not quite. The stock market's reaction says it all. Network18 crashed by 14% today and TV18 collapsed by 12%.
In a filing to the Bombay Stock Exchange (BSE), Network18 said that all its TV businesses - including CNBC-TV18, CNN-IBN, IBN7, CNBC-Awaaz and the group's 50% stake in Colors, MTV, Nick, VH1 and IBN Lokmat - have been consolidated into IBN18 which will be the new TV18. Separately, the group's website (moneycontrol.com, in.com etc.), publishing (Infomedia, which mainly runs the magazines and yellow pages), sports and event management businesses will come under the new Network18.
The New Network18 will also hold all group investments in HomeShop18, Newswire18, DEN, Yatra and Capital18. Interestingly, the Yellow Pages and magazine-publishing businesses of Infomedia18 will be merged with Network18, while printing press operations will continue to remain with the company. This means that the loss-making and difficult-to-run printing business may be up for sale.
Under the rearrangement, shareholders with 100 TV18 shares will receive 68 shares of IBN18 (eventually TV18) and 13 shares of Network18, the company said. Besides this, those who have 100 shares of Infomedia18 will retain their existing shares and receive 14 additional ones of Network18 (taking the transfer of Yellow Pages and the publishing business into consideration).
According to Network18 Group CEO Haresh Chawla, "The New TV18 will be a compelling bouquet of the most vied-for channels in the Indian television space for all stakeholders - be it viewers or advertisers... New Network18 remains well-poised to exploit the gamut of opportunities offered by the television space."
Investors have heard similar stories before. By now, the astute among them may have also seen that when in doubt, the first thing promoters do (especially in media) is to restructure their businesses. It buys them time and allows them to again raise money by spinning a new story of growth. The truth is the group has been living on borrowed time and money. Some parts of its business came into the black thanks to massive slash-and-burn operations (see http://www.moneylife.in/article/8/6010.html) after years of high overheads and high salaries especially undermined by poor quality of output and low productivity. The group started getting rid of excess staff in early 2009 and the process is still continuing. In the March quarter, several businesses showed higher operating profits thanks to "other income" and lower costs but not higher revenues. How would shifting businesses from one legal entity to another solve this fundamental problem with its business model?
The problem starts with the fact that 40% of TV18's business is broadcasting that helps pull in revenues for other businesses. And there, revenues show not traction. Revenues were actually down in the March quarter even over the terrible quarter that was March 2009, despite the fact that this year's March quarter revenues should have been buoyed by the big event of the Union Budget. The silver lining is that one part of ibn18's business-entertainment channel Colors-is making money. But other broadcasting businesses of ibn18 (CNN IBN, IBN Lokmat and IBN7) are in deep losses again and have no real growth traction. Competition is intense because others can also play the same game as Network18 can. Their operational costs are high too, mainly because salaries are exorbitant, relative to quality and quantity of output. Most importantly, these news operations have no real edge; they are indistinguishable from the others. The 50% profit from Colors will be eaten up by losses from the news channels.
The second leg of the business - the sunrise business of digital content - is not going anywhere either. Web18 revenues were up by just 8.5% in the March quarter and profits fell. The fourth leg of the group - printing and publishing of Infomedia - is a combination of legacy business (printing, which belonged to Tata Press) and a bunch of money-losing new titles ambitiously launched against strong headwinds in advertising. Whether these businesses are under TV18 or Network18 is really cosmetic.
In short, the restructuring exercise of the group currently amounts to aimless shuffling of pieces on a chessboard.
The rally would be laboured and likely to be aborted abruptly
The market, which was down 1% on Wednesday, recovered all losses today on positive global sentiments. The Sensex shut at 17,651, up 180 points (1%) and the Nifty ended at 5,296, up 55 points (1%). The indices started the day with a sharp gain, taking cues from Asian markets. Trading was range-bound till early afternoon. The market came off its high in the late afternoon session, ending the day with a modest gain.
Asian stocks were up on Thursday as US retail sales grew at their fastest pace in four years. Key benchmarks in Hong Kong, Indonesia, Taiwan, Singapore, Japan and South Korea were up by 0.5% to 2.7%. However, China's Shanghai Composite bucked the trend and was down 0.2%. The Chinese central bank said that it will keep a loose monetary policy; however, it will use different policy tools as required.
Wall Street was up on Wednesday on a forecast from financial company State Street Corp, igniting optimism about the coming earnings season and helped the S&P 500 break above a major resistance level. The Dow rose 275 points (up 2.82%) to 10,018. The S&P 500 gained 32.2 points (3.1%) to 1,060.3. The Nasdaq advanced 65.6 points (3.1%) to 2,159.
Back home, annual food inflation eased to 12.63% for the week ended 26th June from 12.92% in the previous week, but fuel inflation shot up to 18.02% after the hike in rates of petroleum products.
Fuel inflation for the week under review rose sharply to 18.02% (from 12.90% in the previous week) after the impact of the fuel price hike. Prices of petrol and diesel were raised by up to Rs3.50 a litre, while that of liquefied petroleum gas (LPG) and kerosene were hiked by Rs35 per cylinder and Rs3 a litre respectively.
Industrial output is forecast to grow at 16% in May this year from a year earlier, lower than the annual growth of 17.6% in April.
India's car sales may go up by 12%-13% in 2010-11 to 1.7 million units as estimated by the Society of Indian Automobile Manufacturers (SIAM). In June this year, 1,41,184 cars were sold compared with 107,948 units a year ago, lower than the record 1,48,481 units sold in May. Sales of trucks and buses rose 44% to 52,211 units in June, while motorcycle sales rose by 30% to 715,985 units.
The Securities and Exchange Board of India (SEBI) on Wednesday relaxed the exposure margin requirement for stock derivatives, based on the feedback received from market participants.
Foreign institutional investors were net sellers of Rs49 crore in the equities market on Wednesday. Domestic institutional investors were net buyers of stocks worth Rs134 crore.
L&T Infrastructure Finance Company, a subsidiary of Larsen & Toubro Ltd (up 1.8%), has received the status of 'Infrastructure Finance Company' from the Reserve Bank of India (RBI) within the overall classification of a Non-Banking Finance Company.
KEC International (up 0.6%) has won orders in the transmission and cables space to the tune of Rs610 crore. In the transmission segment, the company has won total orders of Rs487 crore for turnkey transmission lines in Georgia, South Africa, Zambia, the Philippines and UAE. In cables, the company has won orders for supply of low tension, high tension and extra high voltage power cables worth Rs123 crore from various customers.
The board of Samyak International (up 4.8%) has approved increase in its authorised share capital from Rs3.50 crore to Rs7 crore; issue of 30,00,000 equity shares of Rs10 each to strategic investors at a price of Rs40 per share (Rs10 face value plus Rs30 premium) on a preferential basis.
Reliance Power (down 0.3%) has announced the financial closure of its 4,000 MW Krishnapatnam ultra mega power project (UMPP) being developed by Coastal Andhra Power Ltd, its wholly-owned subsidiary. The company executed financing agreements for the imported coal-fired UMPP located at Krishnapatnam, Andhra Pradesh.