New Delhi, September 7
For the quarter ended June 2011, the percentage of promoter holding pledged has declined from 9.5% in March 2011 to 9.1%, whereas the percentage of total equity pledged has decreased from 5.1% in March 2011 to 5.0% in June 2011, according to a report by ICICI Direct.

Even as the percentage has gone down, it is significant to note that the decline has come in a falling market. This means that concerns remain on the health of the India Inc.

The term “pledging of shares” is looked upon with suspicion by investors.

On an average, 8-9% of promoter holding has been pledged during June 2009-June 2011. The report states that from June 2009 to December 2010, the Sensex remained in positive territory, due to which pledging would not have caused alarm bells to ring as the value of shares would not have seen much of erosion in value.

However, the markets have been weak recently and the Sensex has corrected by more than 10% in the last two quarters, resulting in an erosion of market capitalisation of stocks, and hence the value of shares pledged for securing loans, the report says.

The risks associated with pledging of shares are quite significant particularly from the promoter’s perspective.

Companies that have taken loans against shares have to provide further margin in cash or pledge more securities to maintain the margin requirement, if the market falls.

The companies that default may face the situation of selling pledged shares by lenders resulting in a decline in stock prices and reduction in promoter holding.

Promoters use various methods to meet business and personal needs. Loan against shares is one such method.

These loans typically have a tenure of 1-3 years and carry a margin requirement of two or three times. 

New Delhi, September 7
The government today increased the Minimum Export Price (MEP) of onion by $175 per tonne to $475 a tonne — a move aimed at discouraging outbound shipments and controlling surging domestic retail prices of the kitchen staple.

Onion prices have gone up by Rs 10 per kg in last one-and-a-half months and it is being sold at Rs 25 per kg in the national capital.

In the wholesale price index, prices of onions jumped by over 57 per cent on an annual basis for the week ended August 20. It had contributed to food inflation that crossed double digits (10.05 per cent) mark after five months.

“The MEP of all varieties of onions, including Bangalore Rose Onions and Krishnapuram Onions will be $475 per tonne,” the Directorate General of Foreign Trade, which comes under Commerce Ministry, said in a notification.

Earlier, the MEP was $300 per tonne for the general category onion and $400 per tonne for premium varieties — Bangalore Rose onions and Krishnapuram onions.— PTI

New Delhi, September 7
The government today ruled out extending the popular export incentive scheme, Duty Entitlement Pass Book (DEPB), beyond September 30, even as it is working on an alternative mechanism.

“The government has taken a view not to extend the DEPB Scheme beyond September 30, 2011,” Minister of State for Commerce and Industry Jyotiraditya Scindia said.

Exporters from different sectors have been lobbying hard with the government for extension of the Scheme which entails an annual expenditure of Rs 8,500 crore from the exchequer.— PTI

San Francisco, September 7
Yahoo Inc Chairman Roy Bostock fired CEO Carol Bartz over the phone on Tuesday, ending a tenure marked by stagnation and a rift with Chinese partner Alibaba.

CFO Tim Morse will step in as interim CEO, and the company will search for a permanent leader to spearhead a battle in online advertising and content with rivals Google Inc and Facebook.

Shares in Yahoo jumped 6 per cent in after-hours trading to $13.7 after closing at $12.90 on the Nasdaq.

They are scarcely higher than where they were when Bartz first took the reins in January 2009 with hopes of reviving stalled growth and competing with up-and-coming rivals.

On Tuesday, her efforts were abruptly halted after Bostock called with the bad news. “I am very sad to tell you that I’ve just been fired over the phone by Yahoo's Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward,” the outspoken CEO said in a two-sentence email to employees obtained by Reuters.

The turn of events surprised few Wall Street observers who had tracked a rising torrent of criticism and watched revenue growth falter and sputter out.

Some analysts said Bartz’s departure signaled the company had run out of options after failing to dominate the advertising and content markets and handing over its search operations to Microsoft Corp.

Yahoo is still one of the most popular destinations on the Internet but faces increasing competition from social networking service Facebook and from Google, which has a market value of $170 billion, 10 times more than Yahoo.—Reuters

Mumbai, September 7
Reserve Bank Deputy Governor Subir Gokarn today said the central bank had no plan to ban teaser loans but warned that any such product will attract 2 per cent additional provisioning.

“There is no attempt or intent on the part of RBI to stop these products or prevent them any way. We are only saying that there is some additional risks involved in such products and hence more provisioning have to be made for any such products," Gokarn told reporters on the sidelines of a Ficci seminar here.

“Whether they fall into such (teaser) category is something my colleagues in the regulatory department to decide, but the policy response to any such structure is that once it is deemed to satisfy any of those criteria of (teaser loans), it would attract higher provisioning requirement of 2 per cent which we imposed recently.

"So if you have a product that falls into such a structure, then you will have to make the additional provisioning. It is very clear," he said when asked whether the regulator is planning to bracket the recently launched home loan schemes by ICICI Bank and HDFC as teaser loans.

Recently ICICI Bank and mortgage lender HDFC had offered a fixed rate home loan products to attract more borrowers, as credit growth slowed in the face of rising interest rates. — PTI

Chandigarh, September 7
Burdened by rising Non-Performing Assets (NPAs) in its agriculture loan portfolio in North India, the State Bank of India (SBI) will organise camps to ensure that farmers start paying back their dues. This will also make farmers eligible for a fresh crop loan.

After the Agriculture Debt Waiver and Debt Relief Scheme (ADWDRS), 2008, farmers in this region seem to have stopped paying back their loan instalments on time. The NPA in the agriculture loan segment for SBI is over 15 per cent.

Officials said that earlier, the NPA in the agriculture sector was just 3 per cent in North India, comprising Punjab, Haryana, Himachal Pradesh and Jammu and Kashmir.

“With the NPA in the sector rising in the past three years, we have decided to organise 500 compromise camps in villages of the two states, in the next two months,” said S K Sehgal, chief general manager of the bank

As part of these camps, the bank will provide loanee farmers an opportunity to renew existing crop loans and get fresh loans. Farmers with bad loans would be coerced to pay the interest amount, so that the account turns regular, and he becomes eligible for a fresh crop loan, he added.

“Farmers who avail this opportunity will not be charged a penal rate of interest, and with an interest subvention, a fresh loan will be given to him at 4 per cent,” he added.

He said that the bank had also come out with a special gold loan scheme for farmers, wherein loan would be extended to them on mortgaging of gold, at 7 per cent

“There will be 3 per cent interest subvention on this gold loan to farmers if they continue to pay their interest amount regularly. An overdraft limit will also be given to farmers on this gold loan,” he added. 

New Delhi, September 7
The Empowered Group of Ministers (EGoM) on Food is scheduled to meet tomorrow to discuss allowing exports of wheat and non-basmati rice, Commerce and Industry Minister Anand Sharma said today.

"The EGoM on Food will meet tomorrow and we will discuss wheat and rice exports," he told reporters after meeting Agriculture Minister Sharad Pawar. Sharma, along with Textiles Secretary Rita Menon, met Pawar and is believed to have discussed various issues related to cotton crop.

The Food Ministry has suggested permitting exports of two million tonnes of wheat and two million tonnes of non-basmati rice, which includes one million tonnes of par-boiled rice. Wheat exports have been banned since early 2007.

The Centre had lifted an over three-year ban on non- basmati rice exports in July with a quantitative restrictions of one million tonnes. However, the shipments have been put on hold following an order by the Delhi High Court.— PTI

New Delhi, September 7
The slowdown in the automobile sector is forcing automobile makers to realign sales strategy. A cut in production is on the cards or has already been announced.

High fuel prices and rising interest rates led to a fall in auto sales for the second month running in August, especially in the passenger cars and the commercial vehicles segment.

Tata Motors has decided to cut production in both the passenger and commercial vehicle segments to align its output with market demand.

Tata Motors MD - India Operations P M said: "Yes, we have adjusted production of both passenger vehicles and commercial vehicles in order to align with the market demand." He was speaking on the sidelines of a summit organised by the Society of Indian Automobile Manufacturers (SIAM) said. The production cuts would vary for different models.

Earlier, the country's largest car manufacturer Maruti Suzuki India Ltd (MSIL) had also cut its production for two months .

According to SIAM estimates, Tata Motors' passenger vehicle production declined 21.63 per cent year-on-year to 28,344 units in July.

SIAM said, passenger vehicle sales, which include cars, vans and sport utility vehicles, fell 5.7 per cent in August, the second drop in two and a half years. The auto market saw an 8.9 per cent decline in July.

There was further bad news for the automobile industry as SIAM said that demand for cars in India is expected to slow more than predicted during this fiscal due to rising interest rates and vehicle costs and fuel prices.

"While we hope that the industry achieves overall growth forecast...we may have to revise growth projection for passenger vehicles and commercial vehicles further," said Pawan Goenka, president, SIAM.

SIAM said it might further lower its growth projection for vehicle sales in the country from the earlier estimate of 11-13 per cent announced two months back. In July, SIAM had lowered its vehicle sales growth forecast for FY12 to 11-13 per cent from the earlier estimate of 12-15 per cent made in April.

"As money and fuel became expensive, the market sentiment was gravely affected and the passenger vehicle segment de-grew 8.9 per cent in July and again by 5.7 per cent in August," Goenka said, adding that the industry is hoping that the forthcoming festive season will see a recovery in the passenger car sales.

Goenka said the government should come out with a national plan and strategy for utilisation of the fuel in the transport sector, rather than discourage its usage. Similarly, a renewed focus needs to be put on strengthening of infrastructure for gaseous fuels such as CNG and LPG, Goenka added.

BRIEFLY

Phillips launches ‘Green’ mobile
Philips has launched Xenium Series of Phones in India, which use ecologically sensitive technology. The phone is priced between Rs 1,700 and Rs 8,000. — A Tribune photo