Mumbai: The Vedanta Group today ruled out increasing the open offer price to minority shareholders of Cairn India, saying its current offer was "lucrative," reports PTI.
"There is no question (of increasing the open offer price). The price is final and that is a very lucrative offer," Vedanta group chairman Anil Agarwal told reporters here.
Vedanta Resources is buying 40%-51% stake from Cairn Energy Plc and its subsidiary Sesa Goa has filed papers for an open offer for an additional 20% stake.
Sesa Goa is offering a price of Rs355 per share, Rs50 less than what Vedanta is paying Cairn Energy for the majority stake. Whereas, the group is offering Cairn India's parent Cairn Energy Rs405 a share, which includes a fee for not competing with it in India, Sri Lanka and Bhutan for the next three years.
"Non-compete fee (of Rs50 per share) is very important for us because we do not want Cairn Energy Plc to work in our areas," Mr Agarwal said.
Sesa Goa's open offer was to have opened today, but has been delayed due to lack of approval from the Securities and Exchange Board of India (SEBI).
On the proposed open offer, Mr Agarwal said SEBI has been asking "normal questions" on the $9.6 billion deal with Cairn Energy Plc and Vedanta is replying to them.
He said SEBI normally gives approval in 45-60 days and he expects the approval to come "in a few days."
Reliance General’s ‘gross premium underwritten’ is down by over 21%, partly as a result of increase in premium by almost 500% in Reliance HealthWise, which has put off customers. This is at a time when the general insurance sector is expanding and no other company is exhibiting negative growth
After being labelled as the cheapest policy for three years, Reliance General Insurance hiked premiums for its HealthWise mediclaim policy by as much as 500% citing rise in illnesses and inflationary trend in medical costs.
(Read more: http://www.moneylife.in/article/8/7498.html). However, it seems that the move has backfired and the company's revenues have fallen sharply by 20% (Please see table). This is when all other general insurers are witnessing a healthy rise of 12% to 1,067% in premiums.
According to a broking house, more than 70% of customers have switched to another insurer due to Reliance's premium hike. Moreover, they are assisting policyholders who have claims rejection from Reliance TPA Medi Assist under the pretext of pre-existing conditions.
The gross premium underwritten is an important parameter to judge business growth for an insurance company. The general insurance sector has shown healthy growth by 12% to 1,067% for different companies except for Reliance General that has unhealthy decline of over 20%.
please click see the table
"Post de-tariffing, there was a major price war and some insurers chose to have short sight whereas some maintained long sight. Reliance General targeted for short-term growth and tried to build a decent top-line within a span of two-three years but that turned out to be a loss-making proposition for Reliance - the aftermath of which is now very apparent in the market.
"Due to the losses made in the past three years, Reliance had to cover up the same and revise the premium that resulted in this hike. Market reaction to this hike has resulted in a major revamp in the portfolio of health policies in Reliance. And as a result, Reliance Health insurance is not being perceived (as being) competitive in the market," said another broking house.
There have been comments on our 23 June 2010 article about policyholders writing complaint letters to different authorities without success and more importantly without hearing back from the insurance regulator. It is a surprise considering that the Insurance Regulatory and Development Authority (IRDA) has been putting out a lot of advertisements in newspapers urging policyholders to contact it if their grievance is not solved by any insurer. On the other hand it is not surprising considering that IRDA was looking the other way on other consumer issues like abrupt removal of cashless facility by PSU insurers at corporate hospitals.
The official reply from Yegnapriya Bharath, joint director, consumer affairs department, IRDA, on 31st July was: "Reliance filed revised rates with IRDA in an effort to make the product sustainable and also make it on par with market rates, which had gone up due to increased claim outgo as a result of spiraling medical costs. The revision filed by Reliance was considered by IRDA only in March 2010 (after three years of the initial filing of the product) and the rates as already mailed to you were cleared."
When Moneylife asked IRDA chairman J Hari Narayan about 500% increase in Reliance general insurance during the Associated Chambers of Commerce and Industry of India (ASSOCHAM) global insurance summit on 1st September, he said, "We (IRDA) don't regulate pricing. There used to be (a) tariff regulatory system where pricing was regulated, but we now believe that pricing is best left to competitive forces in the market."
He added that policyholders can switch to another insurance company. When we emphasised that policyholders cannot easily switch due to restriction of pre-existing conditions not being covered for four years, Mr Narayan added that he would check if there had been any regulatory breach.
But will IRDA act on this issue? Healthcare is second largest in general insurance with over 20% share after motor insurance.
Global cues point out to a positive opening for the Indian market. The US markets settled higher on Friday on hopes that the Federal Reserve will provide further stimulus to boost the sagging economy, as the jobs market witnessed a cut of 95,000 jobs in September. Asian markets were on the US Fed’s possible move to initiate fresh stimulus to boost the economy. The SGX Nifty was up 42.50 points at 6,184.50 against its previous close of 6,142.
Markets in Asia were mostly in the positive zone this morning on hopes that the US Fed will take more steps to boost the economy of the world’s largest economy. Reports that Moody's Investors Service is reviewing China's government bond rating for a possible upgrade boosted investor sentiments in China and Hong Kong.
The Shanghai Composite was up 1.71%, Hang Seng was up 1.05%, KLSE Composite was up 0.29%, Straits Times was up 0.46% and Seoul Composite was up 0.34%. On the other hand, Nikkei 225 was down 0.99% and Taiwan Composite was down 0.02%. The SGX Nifty was up 42.50 points at 6,184.50 against its previous close of 6,142.
The local market ended its five-week winning streak, ending in the red for the week ended 8th October on all-round selling pressure and tepid cues from the global and domestic arena. Nervousness ahead of the domestic earnings season, which kicks off next week, also kept investors on the sidelines. However, inflows from foreign investors limited the losses. Finally, the key benchmarks ended almost 1% lower with the Sensex losing 194.78 points and the Nifty shedding 39.95 points for the week.
Domestic triggers this week include the industrial output figures to be released on Tuesday, monthly inflation and weekly food inflation data on Thursday and the start of the earnings season on Friday.
The US markets ended in the positive zone on hopes that the Federal Reserve will provide further stimulus to boost the sagging economy, as the jobs market witnessed a more-than-expected job cuts in September According to a monthly government report released early Friday, a total of 95,000 jobs were slashed last month, marking the fourth consecutive decline. Private employers added 64,000 workers last month, short of the 75,000 economists expected. Though, the unemployment rate held steady at 9.6%, it has now breached 9.5% for 14 straight months, the longest stretch since the 1930s.
The Dow gained 57.90 points (0.53%) to 11,006. The S&P 500 index gained 7.09 points (0.61%) to 1,165. The Nasdaq gained 18.24 points (0.77%) to 2,402.
The two-day meeting of the International Monetary Fund and the World Bank concluded without finding any resolution to the currency issue, which is expected to reverberate at Group of Twenty (G-20) meet next month in Seoul.
The currency issue was the most discussed topic at the meet after the governance reform. IMF managing director Dominique Strauss-Kahn said one of the reasons for currency dominating the meet is that global economic recovery is so uneven. He said some parts of the world are having high growth, while others have low growth and large capital is flowing to regions which have growth.
Indian finance minister Pranab Mukherjee voiced his opposition to any move towards a currency war, and called for “engaging” the concerned countries.
Meanwhile, amid Indian rupee's rising to two-year high last week, Reserve Bank of India (RBI) on Sunday said it may intervene in the foreign exchange market if foreign institutional investor (FII) inflows are volatile.
FII have pumped a record $21 billion (Rs96,000 crore) so far this year into Indian stock markets.