The Tribune, Chandigarh, India

Sensex touches 28-month low; down 112 points

Mumbai, December 19
The BSE Sensex fell to 28-month low today at 15,379.34, down 112 points on heavy selling for the fourth day in a row on persisting concerns over slowing growth and weakening rupee amid declining global markets.

After losing 511 points in the past three sessions, the BSE 30-scrip index opened lower and dropped sharply to 15,190.

It recovered some ground but still ended the day 0.72 per cent down from Friday's close. Sensex has sunk 26 per cent so far this year.

The 50-scrip NSE index Nifty fell 38.50 points or 0.83 per cent to end at 4,613.10. FIIs continued to sell shares. They sold equities worth Rs 220.25 crore on Friday, as per provisional data from the stock exchanges.

Analysts said investors are wary of slowdown in economic growth, falling rupee and tight liquidity.
The selloff continued unabated and bears had another field day. RBI’s caution on Friday about slow economic growth has led to the jittery sentiments on the bourses," said Shanu Goel Senior Research Analyst at Bonanza Portfolio.

"Banking stocks led the fall as the sentiments worsened on RBI’s decision to keep the CRR unchanged. Negative openings in European markets added to the woes," she added. Global cues remained weak on investor worries over the euro-zone debt crisis. Asian markets were down also due to some anxiety in the region after the death of North Korean leader Kim Jong-il.

Key indices in China, Hong Kong, Japan, Taiwan, Singapore and South Korean fell by up to 3.43 per cent.

Parag Doctor, Associate VP at Motilal Oswal Securities said, meanwhile, "There was last hour buying in the market due to bounce back in European markets. European debt crisis, government delay in policy implementation and concern of lower growth is troubling the market, which is why sentiments have turned cautious." After weak openings, European stocks was trading slightly higher, with key indice in France, Germany and the UK up between 0.49 per cent and 0.22 per cent. Of the 30 Sensex scrips, 21 ended with losses, while eight finished higher. Wipro closed unchanged. Among the sectoral indices, the BSE-Capital Goods fell 3.48 pc, Bankex - 3.08 pct, Realty - 2.89 pc, Power - 1.60 pc and PSU - 1.59 pc. The total market breadth on the BSE remained negative as 2,066 stocks ended with losses, while 726 finished with gains.

The total turnover declined to Rs 1,844.17 crore, from last Friday's level of Rs 2,187.93 crore. — PTI

Re weaker by 16 paise

Snapping its two-session gaining string, the rupee on Monday settled down by 16 paise at 52.86/87 against the dollar due to fresh demand for the US currency from importers amid weak local stocks markets. At the Forex market, the rupee opened weak at 52.85/86 a dollar from last close of 52.70/71. It dropped further to a low of 53.25 per dollar before closing at 52.86/87 per dollar. Dealers said fresh dollar demand from importers as well as falling equity markets weighed on the rupee.

FCCBs face redemption pressure as rupee continues to fall
Sanjeev Sharma/TNS

New Delhi, December19
With stock prices plummeting and rupee under pressure, foreign currency convertible bond (FCCB) issues of several companies will face redemption pressure resulting in heavy cash outflows, lower profitability and equity dilution, according to analysts.

A research report by Edelweiss says that of the BSE 500 companies, 28 companies have FCCBs maturing by financial year 2013. Of this, 25 will face FCCB redemption, translating into Rs 33,000 crore cash outflow. Steep rupee depreciation has resulted in huge mark to market (MTM) losses, which coupled with redemption premium (generally kept off P&L) will lead to higher effective cost of borrowing through FCCBs. While refinancing through domestic debt will trim profit before tax (PBT), companies resorting to restructuring of FCCBs will face higher dilution.

Of the issues coming up for maturity, possibility of conversion in case of 25 companies seems remote even after considering 20% CAGR to the current market price, redemption of which would lead to cash outflow of Rs 33,000 crore. The report adds that with the rupee depreciating steeply by around 17 per cent during FY12, FCCB liabilities have catapulted further by Rs 33.3 billion. Concerns loom large for companies where FCCBs are due for redemption in the near future and hence the probability of MTM losses now being realised is high.

Assuming refinancing cost at 12 per cent per annum, on an aggregate, reported PBT of shortlisted companies will be lower by 11.2 per cent. FCCB refinancing is likely to result in lower PBT/higher equity dilution. The report says that most of these shortlisted companies will either have to opt for refinancing or a downward revision in conversion price.

Steep rupee depreciation will result in cumulative MTM loss of Rs 63.2 billion since issuance which was till now being considered as notional.

However, with most FCCBs maturing till FY13, many of these MTM losses will lead to significantly higher cash outflow.

COSTLY AFFAIR

*U 28 companies have FCCBs maturing by financial year 2013

* Of this, 25 will face FCCB redemption, translating into Rs 33,000 crore cash outflow

* Steep rupee depreciation has resulted in huge mark to market (MTM) losses, which will lead to higher effective cost of borrowing through FCCBs

Mistry quits Forbes & Co

New Delhi, December 19
Shapoorji Pallonji Group firm Forbes & Company today said Cyrus P Mistry, who is set to succeed Ratan Tata as the Tata group Chairman next year, has resigned from its board.

"Cyrus P Mistry has resigned as a Director on the Board of Directors of the company with effect from December 9, 2011," Forbes & Company said in a filing to the BSE.

Last month, the holding company of the over $80 billion conglomerate Tata group had announced that Mistry, the 43-year-old Managing Director of Shapoorji Pallonji Group, would succeed Ratan Tata after his retirement in December 2012.

"I take this responsibility very seriously and in keeping with the values and ethics of the Tata Group, I will undertake to legally disassociate myself from the management of my family business to avoid any issue of conflict of interest," he had said. — PTI

Kingfisher grounds 15 planes

Mumbai, December 19
Lenders to cash-strapped Kingfisher Airlines, which has been grounding planes and cutting routes to stay aloft, are awaiting a report on the airline's viability before they approve a $133 million loan, banking sources said on Monday. SBI Capital Markets Ltd, a unit of SBI, has been hired by the banking consortium to draft a report on the carrier's financial outlook.

That report has yet to be submitted, two sources with direct knowledge of the matter said. Asked if the banks were open to lending more to the airline, he said: "Everything is on the table". Kingfisher shares rose more than 2 per cent on the comments before closing up 0.23 per cent at Rs 21.75. The airline's shares have fallen about 67 per cent since the start of the year, cutting its market value to about $200 million.

Kingfisher, controlled by flamboyant liquor tycoon Vijay Mallya, has been seeking additional short-term working capital loans of about Rs 700 crore to fund operations. The airline has also been looking to raise equity.

To join oneworld alliance

The airline announced on Monday it would become part of the global oneworld alliance from February, which it said would help it improve its competitive offering and financial position.

A Kingfisher executive, who declined to be identified, told Reuters the airline had grounded 15 planes, but declined to say why or how long the planes had been grounded. — Reuters

Indian market retains trillion-dollar tag, for now

New Delhi, December 19
India today managed to hold onto the elite league of 14 countries with a trillion-dollar stock market, although by a small margin, with a market size just hovering over this mark at $1.0116 trillion.

As the market barometer Sensex plunged to a 28-month low, the total size of the market today dipped to Rs 5,348,352.02 crore, measured in terms of total value of all the listed companies in the country. At the currency rate of Rs 52.87 against the US dollar at the end of day, the Indian market was worth $1,011.6 billion in the American currency.

At the day's lowest level of rupee at Rs 53.25, the market size was $1004.4 billion - retaining the trillion-dollar tag by a whisker.

In percentage terms, the market is just about 1 per cent away from losing its trillion-dollar size and an equivalent fall in either the stock market or the rupee value could take the market below this mark.

The rupee has been a declining trend for many months now and had hit its record low level below Rs 54-level last week, but the fall has been somewhat arrested since then on the back of an intervention by the Reserve Bank.

The market size has been hovering above the trillion- dollar mark for last few days and an eminent miss was averted on Thursday last week, when the RBI managed to reverse the downfall of rupee after a record fall to Rs 54.30 level.

On Friday, the market size stood at Rs 54,11,301 crore or $1.026 trillion, based on that day's currency rate of Rs 52.30, as the market tanked sharply.

The experts say that India could slip out of the coveted league of trillion-dollar stock markets anytime in the event of any noticeable fall in the rupee value or the stock market.

Besides India, there are an estimated 13 countries in the trillion-dollar stock market club and these include, the US, the UK, Canada, Brazil, Australia, Hong Kong, South Korea, China, Japan, Spain, Germany, Switzerland and France.

The Indian market had first achieved a trillion-dollar size about four and half years ago on May 28, 2007, but moved out of this coveted league about a year later on July 1, 2008.

India again joined this elite club of markets with trillion-dollar valuation about a year later on June 3, 2009. — PTI

Vodafone to stop services on inactive mobile numbers

New Delhi, December 19
Faced with shortage of numbers, telecom major Vodafone India today said it would discontinue services on mobile numbers of pre-paid customers that have not been in use for a continuous period of 60 days.

"Vodafone India will discontinue mobile services for pre-paid customers on numbers that have no usage i.e., no voice calls (incoming or outgoing), SMS and data for any continuous period of 60 days," Vodafone said.

Vodafone's steps follow the guidelines by the Department of Telecom (DoT) for allocation of a new number series that is based on subscribers on visitor location register (VLR). The Vodafone statement added that the stringent norms has created an acute shortage of numbers for any telecom company. — PTI

Rajasthan, Punjab prefer PPP model for infra projects
Ruchika M. Khanna
Tribune News Service

Chandigarh, December 19
Realising that the only road to development was through the public-private partnership (PPP) mode, all northern states, led by Rajasthan and Punjab, are adopting this in a major way. Though the northern region still accounts for a smaller share of the total PPP projects, when compared to the southern and western region, it is believed that the successful implementation of projects being undertaken in the PPP, will make this route of investment in infrastructure more popular.

There are a total 748 PPP projects under implementation across the country, and northern region accounts for only 18.8 per cent of them. As of date, there are 141 projects under different stages of the implementation in the states of Jammu and Kashmir, Himachal Pradesh, Punjab, Haryana, Delhi, Uttar Pradesh, Uttarakhand and Rajasthan. The value of these projects is Rs 80,544 crore.

The maximum number of these projects are in Rajasthan (61), followed by Punjab (34) and Uttar Pradesh (18). Though Haryana has lesser number of projects in the PPP mode (14), in value terms, the investment routed through PPP is Rs 14,564 crore, much more than the investment through this route in Punjab. Delhi has taken the PPP route to get investments worth Rs 11,656 crore in 12 projects.

This has been revealed in a report on “Public Private Partnership in Northern Region: An Analysis”, released by the CII. The report is based on data from PPPindia and from the Planning Commission. The sectoral analysis of the PPP projects in North indicates that road sector has bagged the maximum number of PPP projects in the region (94), followed by urban development (28), energy sector (7), tourism and education (4 each), healthcare (3) and just one airport project.

The report also lauds the efforts made by states like Punjab, Rajsathan, Uttar Pradesh and Haryana for having in place the legal and institutional framework for PPPs.

MetLife launches new child plan

New Delhi, December 19
MetLife India Insurance Company Limited (MetLife) today announced the launch of its new unit-linked child plan, Met Smart Child. This plan offers complete solution for child’s higher education, even in the absence of parents. The life insured is the parent or grandparent and the beneficiary is the child/grandchild. This is the second Child Savings Plan added in MetLife’s portfolio, after Met Bhavishya.

The unique feature of Met Smart Child is that the fund is locked in for the benefit of the child till the child turns 18. This will ensure that the fund never gets misused and is solely used for the child’s benefit.

In case of the unfortunate demise of the parent, the sum assured under the product is paid immediately to the beneficiary and all the future premiums which would have been otherwise paid by the parent are paid by MetLife into the fund. — TNS