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The M&M scrip hit a 52-week high on Tuesday on speculations that the utility vehicle maker will soon be issuing bonus shares
Mahindra & Mahindra Ltd (M&M) shares zoomed Tuesday on speculation that the company will be issuing bonus shares soon. Against its capital of Rs272.62 crore, M&M has free reserves of about Rs4,673.75 crore.
During the day, the share made a new 52-week high of Rs1,176 and was trading at Rs1,151, up 2% from Monday’s (4th January) close. On 4 January 2009 the stock had shot up 5% after the company reported 122% rise in its domestic sales to 22,754 units in December 2009 as against 10,253 units in December 2008, an increase of 2.22 times.
During December, M&M, the country’s largest utility vehicle maker, sold a total of 24,001 vehicles (domestic plus exports), as against 11,172 vehicles sold in December 2008.
The company financials have been restated to incorporate the figures of M&M’s one-time subsidiary Punjab Tractors Ltd which merged with the company. Hence in the September 2009 quarter, the company posted revenues of Rs4,557.77 crore and an operating profit of Rs608.97 crore against revenues of Rs3,137.96 crore and operating profit of Rs185.32 crore in the September 2008 quarter. Based on the expected EPS of Rs69.47 and the current price, the stock is quoting at a P/E of 16.26.
TIAA-CREF, the world's largest private pension system, has sold its holdings in ONGC, PetroChina, CNPC Hong Kong and Sinopec over their investments in war-torn Sudan
US-based Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), the world's largest private pension system, has exited Oil and Natural Gas Corp (ONGC) and other Chinese energy firms over their investments in war-torn Sudan. ONGC, the State-run oil refiner, however, said that its operations did not support suppressive activities anywhere in the world.
TIAA-CREF has sold its holdings in ONGC, PetroChina, CNPC Hong Kong and Sinopec, the New York-based fund said in a statement.
The US fund house had a tiny shareholding in ONGC and stakes sold across the four companies constituted a small slice of its $402 billion assets under management, reports PTI.
"Our decision to sell shares in these companies culminated a three-year effort to encourage them to end their ties to Sudan or attempt to end suffering there," TIAA-CREF's chief executive Roger W Ferguson Jr said.
ONGC, which through its overseas arm ONGC Videsh Ltd (OVL) has 25% stake in Greater Nile Oil Project, said its business directly or indirectly does not support any 'suppressive' activities or human rights violations anywhere in the world.
"We at ONGC are very conscious that our operations do not cause any concern or (in) any way convey our support to any oppressive activity anywhere in the world," ONGC chairman and managing director RS Sharma told PTI.
Sudan is in the midst of a civil war that broke out in 2003 when Christian groups accused Khartoum of oppressing them in favour of Muslim Arabs.
ONGC said that it was concerned about TIAA-CREF'S move but the firm's business in Sudan would continue.
With the objective of securing energy security for the country, the State-owned firm entered oil-rich Sudan about seven years ago, buying 25% stake in the Greater Nile Project, from which Canada's Talisman Energy exited under pressure from human rights groups.
ONGC Videsh's entire investment was paid off in less than three years from the investment.
Mr Sharma said ONGC's operations in Sudan were far away from the conflict regions in the south. "We are conscious that we are in no way conveying any support to any suppressive activity anywhere in the world including our own country," he said.
The decision by TIAA-CREF would not impact OVL's decision to invest in Sudan, he said, adding that the State-run firm valued support from all investor groups and "feels concerned and pained" at withdrawal by any investor group.
"But we do not think there is any reason for us to withdraw or reduce our operations (in Sudan). We are not the oppressors or (in) any way supporting such acts," Mr Sharma said.
Last year in March, TIAA-CREF had announced plans to "intensify pressure on five companies (PetroChina, CNPC Hong Kong, ONGC, Sinopec, and Petronas of Malaysia) that maintain business relations with the government of Sudan to cease those relations or attempt to ease suffering and end genocide in Darfur."
Industry experts feel that the implementation of MNP will not take place before the 3G auction. This will help certain mobile operators to upgrade and prevent high-value subscribers from migrating
For all those waiting eagerly to change their mobile service provider (MSP), here is some bad news. Mobile number portability (MNP), which was supposed to come into force from 1st January in the Metro and category A service areas, has been delayed till the new fiscal year.
According to a circular issued by the department of telecom (DoT), the government has decided to extend the timeline for MNP implementation for the whole of the country in one go by 31 March 2010.
However, there are certain doubts being raised due to the delay. The government was scheduled to issue the notice inviting applications (NIA)—a legally binding document containing the details on the slot—on 8 December 2008, as per the original third-generation (3G) spectrum auction. Due to non-clarity on the spectrum availability, the NIA document is now expected to be issued by 7th January.
What has the auction of 3G got to do with MNP? There are two points—first, only those MSPs with strong balance sheets can dare to go in for the auction process; second, it will allow these MSPs to upgrade and thus retain existing high-value subscribers from migrating to other MSPs.
"We believe that Bharti Airtel would benefit if 3G auctions were to be held before the end of FY2010 in the scenario where regulators are talking about the possibility of delay in the rollout of MNP,” said brokerage Sharekhan Ltd, in a report.
The research report said, "Our view stems from (1) the risk of over-payment for the 3G license would be low given the weak balance sheet position of other telecom players and availability of four slots in a circle, and (2) Bharti would be in a better position to protect its post-paid and high-usage pre-paid subscribers if 3G network rolls out before the rollout of MNP. Further, this could help Bharti to protect its revenue and subscriber market share due to lower churn of high value customers by moving to the 3G network."
The government wants to complete the process before the end of this fiscal year as it feels there is a possibility of lower auction proceeds owing to weak balance sheet of MSPs, the ongoing tariff war and low interest of new entrants in the process. The government may find it difficult to garner its estimated Rs35,000 crore from the 3G auction.
The 3G auction is expected to be crucial for the Indian government, as it would help it manage its current year fiscal deficit. Moreover, every six months of delay in the auction process translates into a loss of revenue to the tune of $1 billion for the country's economy.
Earlier, the Telecom Regulatory Authority of India (TRAI) had fixed 31 December 2009 as the target date for implementing MNP in Metro and A category circles and 20 March 2010 for B and C category circles.
However, after meeting with MSPs, DoT said that it found that while some of the access (basic/mobile) and international long distance (ILD) service providers have technically upgraded and augmented their networks and some have established physical links with MNP operators, others are still in the process. Since these are all time-consuming processes, the concerned MSPs are being given a timeframe by DoT for various activities, it said in a circular.
MNP allows subscribers to retain their existing mobile telephone number when they move from one access provider to another, irrespective of the mobile technology, or from one cellular mobile technology to another of the same access provider, in a licensed service area. This means a CDMA subscriber can opt for a GSM service provider and vice-versa.
With the implementation of MNP, many believe that there would be a higher churn among subscribers. The global experience in MNP is somewhat mixed with reported churn levels between 0.1%-31.9%. Surveys conducted by market research organisations have predicted that the porting rate will be between 10%-20% for pre-paid subscriptions, and up to 50% for post-paid subscriptions.
Even sector regulator TRAI, while calculating the per port transaction charge, has estimated 10% porting rate for the first 15 months and thereafter 7%, 6% and 5%, respectively for successive years.
"We believe MNP would have a higher impact in Metro and A circles, especially the post-paid subscriber base as pre-paid churn is already high. Tata Teleservices and Vodafone have relatively higher exposure to Metro and A circles. However, Tata Teleservices is likely to benefit from MNP given its recent entry into the GSM segment which has the majority of high average revenues per user (ARPU) early customers. We believe Vodafone will feel the maximum impact of MNP among pan-India operators. Operators like MTNL and Loop which are only present in metros would be impacted the most," said Motilal Oswal Securities Ltd, in a research report.
According to the TRAI notification, subscribers changing their service providers will have to pay Rs19 as porting charge to the recipient operator. However, TRAI has said that operators are free to charge any amount lesser than or equal to this charge. This would prove to be another headache for mobile operators, already reeling under pressure due to the tariff war. Many operators may provide this service free of cost in order to increase subscriber base.
Speaking about the low portability charges and their impact, Motilal Oswal Securities said that there would be three outcomes. First, the recipient operator would incur minimal cost if it foregoes the 'per port transaction charge' (Rs19), thus allowing subscribers to change their operator while retaining the number without any financial burden. Second, subscriber retention cost will increase and tariff wars are likely to intensify, and third, the process of industry consolidation would likely get accelerated further.
Syniverse and MNP Interconnection are the two operators selected to implement MNP services in India.
While MNP implementation and new launches could lead to some further market disruption and cause an increase in competitive activity, successful 3G auctions and final policy on 2G spectrum allocations would increase visibility on these key regulatory issues. One can only wait and watch.