The Tribune, Chandigarh, India

	Redeeming bonds likely to be tricky for India Inc FCCBs worth Rs 31,500 crore nearing maturity; Current stock prices of a number of issuing companies below conversion prices Sanjeev Sharma Tribune News Service New Delhi, May 23 India Inc may have to face problems in redemption of Foreign Currency Convertible Bonds (FCCBs) as nearly 70% of bond amount of these may not get converted into equity shares. This is because the current stock prices of issuing companies are significantly below their conversion prices. Bonds worth around Rs 31,500 crore issued by Indian companies are nearing maturity by March 2013. Of these, bonds worth Rs 22,000 crore are under a cloud. Companies have the option to either redeem FCCBs or reset their conversion price downwards to make conversion attractive. An analysis by CRISIL Research indicates that bonds worth Rs 20,000 crore could be either redeemed or see a downward revision in their conversion price, based on the analysis of the capital structure, promoter holding, parent company support, profitability and cash flows. Refinancing FCCBs with fresh debt will increase the interest burden of companies as most of the FCCBs carry very low or zero coupon rate. Companies that revise their conversion price downwards could witness a sharp dilution in their equity, which will lead to further decline in their share prices. “Due to the weak financial risk profile, most companies will find it difficult to refinance. Given the low promoter holding, any sharp downward reset in conversion price will dilute the promoter holding further,” according to Prasad Koparkar, head, industry & customised research, CRISIL Research. A large number of FCCBs were issued during 2006 to 2008 period when the stock markets were buoyant and the conversion prices were set at a steep premium to the then prevailing prices. Although the stock markets have largely recovered, after the decline seen post the global financial crisis in 2008, share prices of many of these companies with outstanding FCCBs have continued to remain depressed. “The Nifty is now only about 10 per cent below its highs in January 2008. But many of these companies, accounting for more than half of the outstanding FCCBs, are trading at a discount of more than 50 per cent to their January 2008 prices.” says Koparkar. UNPROFITABLE Many companies, accounting for more than half of the outstanding FCCBs, are trading at a discount of more than 50 per cent to their January 2008 prices Companies have the option to either redeem FCCBs or reset their conversion price downwards.
	BHEL okays 5 pc selloff; net up 40% New Delhi, May 23 State-run BHEL's board today approved the proposal to divest 5 per cent stake in the power equipment major, a move that could fetch over $1 billion (about Rs 4,500 crore) for the government. Bharat Heavy Electricals Ltd, which also announced its audited results, posted a 40 per cent jump in consolidated net profit at Rs 6,053.36 crore in 2010-11, which was lower than market expectations. Shares of the company tumbled nearly seven per cent to Rs 1,935.60 on the Bombay Stock Exchange, as investors seemed rattled by lower-than-expected results as well as the divestment proposal. The proposed offloading of government's five per cent stake in BHEL is part of Centre's ambitious programme to mop up Rs 40,000 crore through public sector disinvestments in the current fiscal. Based on current market price, the stake sale would garner around Rs 4,500 crore. "The board of directors of the company has recommended the disinvestment of 5 per cent of the paid-up equity of BHEL out of the government of India's shareholding," BHEL said in a regulatory filing. Ten per cent of the equity to be offloaded under disinvestment programme would be reserved for employees. Currently, government owns 67.72 per cent stake in BHEL. Further, BHEL has approved the split shares having a face value of Rs 10 into five shares of Rs 2 each. The board has recommended 179 per cent dividend, amounting to Rs 17.90 per share for 2010-11, which would be in addition to interim dividend of Rs 13.25 per share. — PTI
	Renault drives in Fluence at Rs 3 lakh Tribune News Service New Delhi, May 23 Renault today said it expects to source components worth 100 million euro (over Rs 600 crore) by 2012 from India, as it looks to gradually scale up the quantum of parts purchased from here for global business. “In 2010, Renault had sourced components worth 35 million euro from India. This year it will be between 75-80 million euro. By 2012, it is expected to reach 100 million euro,” Renault India Deputy Managing Director Sudhir Rao told reporters here. He was speaking at the launch of the company’s new sedan Fluence. The car is available in both petrol and diesel options and is priced between Rs 12.99 lakh and Rs 14.40 lakh (ex-showroom Delhi). The company expects to sell 100,000 vehicles in the country by the end of 2013, a top executive said. “The Renault Fluence was designed for the Asian market. We are confident that it will not only shake up the segment, but also give the Indian customer their first taste of what Renault is capable of bringing to the Indian market,” Nassif added. It is the first Renault branded car to be assembled at its Chennai facility. Renault, along with its global alliance partner, Nissan has committed an investment of Rs 4,500 crore by 2015 at Chennai facility, which will have a total production capacity of 4 lakh cars a year.
	Savings likely to bear brunt of inflation: Survey Companies with pricing power will benefit while staple companies are likely to face down-trading Tribune News Service New Delhi, May 23 Indian households are likely to cut back on consumption of grocery items to manage rising inflation. However, they are unlikely to reduce consumption of lifestyle category and household amenities, a Morgan Stanley survey has reported. The survey concludes that Indian households are likely to cut savings to manage rising inflation and is based on 2008 representatives of the low, medium and medium - high income groups. Ridham Desai, head of India research, Morgan Stanley, said, “The findings indicate that there will be a slowdown in the consumption for food items and other staples over the next twelve months.” In the report, Morgan Stanley notes that households expect inflation for their consumption basket to rise further. The research also suggests that they are willing to cut their savings to retain their expenditure growth at previous year’s levels. The report also notes that companies with pricing power will benefit while staple-companies are likely to face down-trading. It highlights that rural India is steadily gaining importance as a focus area for consumer companies and the consumption habits for urban and rural India appear alike. The survey finds that households are likely to respond with a down-trading in food items.
	Mahindra Satyam scrip falls 4% on Rs 327-crore loss Suresh Dharur Tribune News Service Hyderabad, May 23 The rebranded IT major Mahindra Satyam has reported a fourth-quarter net loss of Rs 327 crore but maintained that it was firmly on course to complete recovery and growth after being hit by the country's biggest corporate fraud two years ago. The loss for the quarter ended March 31, 2011 was on account of the settlement of a class action lawsuit with investors in the United States. The Hyderabad-headquartered company said it had paid Rs 571 crore as settlement towards class action litigation and also made provision to cover any probable loss due to any further litigation. The resolution of the lawsuit has paved the way for Satyam’s merger with Tech Mahindra which bought a 51 per cent stake in the scam-hit software firm in April 2009 for Rs 2,889 crore following a government-intervened rescue plan. “This year has been a very satisfying one, given the impressive progress we made on various fronts such as minimising the legal overhang, fortifying governance mechanisms, and restoring customer and employee confidence,” the company Chairman Vineet Nayyar told a press conference. Revenues for the fourth quarter registered a growth of 7.5 per cent compared to the previous quarter to Rs 1,375.3 crore while the operating margins doubled to 13 per cent from 6.4 per cent during the same period. To hire 17,000 The company plans to hire 17,000 people during this fiscal, chief executive CP Gurnani said. It added 12 new clients in the fourth quarter. “We are acutely aware of the challenges that lie ahead in this transformation journey. Accelerating profitable growth and building capability to deal with the scale are our key focus areas,” Gurnani said. Shares of Mahindra Satyam ended the day lower by 4.17 per cent at Rs 73.55 on the BSE today. In intra-day, the scrip plunged by 5.79 per cent to touch a low of Rs 72.30.
	6% bad loans in SBI’s agri portfolio Ruchika M Khanna Tribune News Service Chandigarh, May 23 Nearly 6 per cent of total agriculture advances of State Bank of India have turned into bad loans. The bank has the highest NPA (Non-Performing Assets) in its agriculture loan portfolio. The bank’s total exposure in the agriculture priority sector advances is Rs 94,862 crore. Managing Director A Krishna Kumar said a large section of the people who were beneficiaries of debt relief (where 25 per cent of agriculture loans had been waived in 2008, and the remaining had to be paid back over three years) in the Agriculture Debt Waiver and Debt Relief Scheme (ADWDRS), have defaulted in paying back their loans. Kumar, who was in the city to inaugurate the 1000th ATM of the Chandigarh circle, said that high NPA in agriculture advances had resulted because a large number of those who were eligible under the debt relief scheme did not pay back their loans at all. “The total liability of the bank under the debt waiver was Rs 5,307 crore, and under debt relief was Rs 1,124 crore,” he said. He said the bak’s focus would be on profitability. “Total business of the bank (deposits and advances) is around RS 17,00,000 crore. We are looking at a profit of 20 per cent this fiscal. The focus will be on retail lending and corporate lending, besides cutting down on costs so as to increase profitability.” He added the Net Interest Margin (NIM) of the bank is 3.4 per cent, and in spite of high interest rates, the bank’s NIM will not exceed 3.5 per cent.
	Rajiv Kumar is Ficci Secy-General New Delhi, May 23 Rajiv Kumar, a well-known economist, has been appointed as the Ficci Secretary-General, a post vacated by Amit Mitra who has joined the Mamata Banerjee government in West Bengal as Finance Minister. Kumar, 59, has been the Director-General of the 84-year old country's leading chamber since October, 2010, and prior to that he was Director and Chief Executive of an economic think-tank, the Indian Council for Research on International Economic Relations (ICRIER). Announcing his appointment here, Ficci President Harsh Mariwala said, "It is difficult to fit in Amit's (Mitra) shoes but Rajiv, I see, will lead Ficci to greater heights". Senior Vice-President of the chamber R V Kanoria said that Ficci, leveraging its brand equity among corporates, is in the expansion mode. It plans to expand its presence in Ahmedabad, Jaipur, Chennai and Hyderabad in the next two years. — PTI
	Sharma to take up DEPB issue with FM Addis Ababa, May 23 Making out a case for extension of the popular incentive scheme — Duty Entitlement Pass Book (DEPB) - for Indian exporters, Commerce Minister Anand Sharma today said he would take up the issue with Finance Minister Pranab Mukherjee on his return to New Delhi. "I am one who is not subscribing to this view that our exports have reached a stage where we can do away with some of the incentives...I am going to discuss DEPB and interest rates with the Finance Minister," Sharma said. Sharma is here in connection with India-Africa Forum Meeting. With the country's exports registering an impressive growth of 37.55 per cent in 2010-11, the Finance Ministry is not in favour of any more extensions to the tax rebate scheme, DEPB. — PTI