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Since
the repeal of the Controller of
Capital Issues (CCI) Act in 1992,
the primary equity market in In the last fifteen years, the primary mobilisations have jumped rather sharply improving the depth of the market as well as reflecting the diverse nature of companies appearing to tap the market. One of the avowed objectives of capital issue polices has been to encourage equity cult among retail investors, but neither the reform measures appear foolproof nor the corporate behavior appears above board. Every attempt is made by the companies to cut corners and defeat the broader objectives of public policies. The recent shift towards private placement of equity by an overwhelming number of companies rather than relying on public offerings, is a classic case of such loopholes in policies allowing private placement and the companies merrily taking advantage of them. The brief structure of the primary market has been enumerated in the chart 1. Chart 2: Different Kinds of Issues in the Primary Market
The trends of mobilisations in the recent years have been reflective of the economic activity with particular emphasis on the industrial growth. During the period of lower industrial growth, that is, between 1997-98 and 2002-2003, the mobilisations have been rather subdued, but with the revival of the economic activity, there has been a sharp jump in the primary mobilisations. In the current financial year, the mobilisations through public offerings route- the initial public offering (IPOs) and follow-on public offers (FPO)- have dipped rather sharply while among the private placement route, that is, qualified institutional placements (QIP) have slipped but mobilisations through preferential allotment have remained firm. If the issuers continue to place significance on the private placement route then it would have adverse implications for the retail investors as they are the ones who would miss the opportunity to be part of the growth stories as well as the spread of the equity-cult across investors would suffer. While it is necessary that the needs of issuers be addressed, the goal of spreading equity culture should not be jeopardized. Brief
Background Under the era of CCI, the public issues were regulated and consequently even the issue price was to be fixed by the issuer within the formula provided thereof. With the repeal of CCI Act, the role of market forces in the determination of pricing of issues and allocation of resources for competing uses assumed significance. The issuers of securities were allowed to raise capital from the market without requiring any consent from any authority for either making the issue or pricing it. However, this unfettered freedom had led to a phenomenon of vanishing companies, that is, companies after raising funds from the market disappeared usurping investors’ money without leaving a trail; this led to the introduction of stringent norms of access to the market. With significant emphasis being placed on disclosure-based regulations, there has been remarkable improvement in disclosure standards that have enhanced transparency. Among the significant changes in the infrastructure and process flow, the introduction of the book-building mechanism which, on one had, facilitated better process of mobilization of resources, price discovery and on the other, gave rise to a series of irregularities in 2006 which again led to establishment of stricter norms of the know-your-client (KYC) norms and other related requirements.
Upsurge
in Equity Mobilisations
As referred to earlier, that the primary market mobilisations have reflected the underlying economic activity which went from a phase of lower growth during the mid-nineties to a buoyant growth in the second half of the present decade. As shown in Chart 2, initially the mobilisations from primary equity market have dipped from the peaks of Rs 27,633 crore raised in 1994-95 to a low of Rs 4,030 crore in 2002-03. With the bullish sentiments in the secondary market, the primary market mobilisations have steeply jumped to Rs 33,508 crore and further to Rs 87,029 crore in 2007-08 (Table 1). But, it has been short-lived for during April-September 2008, the amounts raised have fallen equally sharply to Rs 2,032 crore as compared with Rs 32,646 crore in the corresponding period of 2007-08.
Diversification
of Issuers As shown in Table 2, the industry-wise classification of capital raised through public and rights issue shows that it has become more diversified with a wider set of industries tapping the market. While telecommunications, power, cement and constructions have begun to raise larger amounts, the dominance of banks and financial institutions witnessed during the earlier phase until 2002-03 has declined somewhat in the recent years, that is, between 2003-04 and 2007-08. They accounted for nearly 85 % of the total amount raised in 2002-03 to a low of 7% in 2006-07. Increasing
Dominance of Private Placement of
equity
Resembling the primary
corporate debt market, the primary
equity market has recently witnessed
substantial mobilisations through
the private placement route as
compared with public offerings. The
private placement of equity is
through two modes: the QIP, which
was introduced in May 2006, and
preferential allotment. Qualified
Institution Placement
Around
May 2006, notwithstanding the robust
growth of the primary market, an
element of concern was expressed
that there were relatively less
number of follow-on public offers (FPOs)
by listed issuers as against the
backdrop of an increasing number of
overseas offerings by Indian
companies through global depository
receipts (GDRs)/foreign currency
convertible bonds (FCCB) issues.
During the period from 2001-02 to
2004-05, the number of FPOs
increased from Nil to 6, while the
number of GDR/FCCB offerings
increased nearly 14 times (3 to 42).
It was noticed that the listed
companies preferred GDR/FCCB route
on account of its timeliness and
cost effectiveness. While, on the
one hand, this was resulting in a
gradual ‘export’ of the domestic
market, on the other hand, it was
impacting the depth of the domestic
markets. Hence, with a view to
making the domestic market more
competitive and as a step towards
reducing the ‘export’ of the
capital market, the SEBI introduced
the system of qualified
institution’s placement (QIP)
wherein a listed issuer issues
equity shares or securities
convertible into equity shares to
qualified institutional buyers (QIB)
in terms of provisions of Chapter
XIIIA of SEBI (DIP) guidelines. As
shown in Table 3, the mobilisations
through QIP jumped to Rs 25,525
crore in 2007-08 given the buoyancy
in the secondary equity market, but
following the fall in stock indices
since the beginning of the current
financial year, the amounts raised
have slipped to a meager amount of
Rs 75 crore. Preferential
Allotment The
preferential issue of equity shares/
fully convertible debentures (FCDs)/
partly convertible debentures (PCDs)
or any other financial instruments
which would be converted into or
exchanged with equity shares at a
later date, by listed companies
whose equity share capital is listed
on any stock exchange, to any select
group of persons under Section
81(1A) of the Companies Act 1956 on
private placement basis shall be
governed by these guidelines. Preferential
allotment is a way of infusing fresh
equity in the business by issuing
shares or warrants to the specified
entities at specific prices to a
promoter or promoter group or a
person acting in concert (PAC) or
institutional players. The basic
reasoning is that if the promoter is
pumping in money into the business,
they must be confident of its
prospects. And when other
institutions pick up preferential
shares, this also adds to the
confidence factor. In
the early 90s, the regulations on
preferential allotment were very
stringent. As per the first Sebi
takeover code in 1994, after the
preferential allotment, the allottee
had to go through a mandatory open
offer to the public. This rule made
the preferential route a bit averse
for them. Due to this, preferential
route was out of favour. Later, Sebi
set up a committee under the
chairmanship of Justice Bhagwati,
which recommended exempting the need
to make an open offer. The rationale
was that infusion of capital into
the company was in general interest
of all shareholders. And then in
1997 the takeover code came into
being and allotment via the
preferential route was exempted from
making open public offers.
Shareholders could also send in
their approvals through a postal
ballot. When these restrictions were
cleared, promoters seemed to make
hay. They then used the preferential
allotment route to make unusual
profits at the expense of the
shareholders. And this was due to
the fact that there was no basis for
pricing a preferential allotment.
Due to this, various promoters,
especially of foreign companies
listed on Indian bourses, were seen
allotting equity shares to
themselves at comparatively lower
prices than the prevailing market
price. And subsequently, selling the
shares in the secondary market to
make a quick killing at the expense
of the existing shareholder. During
the height of the IT boom, many new
software companies made preferential
allotment to mutual funds at a price
higher than that prevailing in the
market. But then, such cases are few
and far between. But,
now things have changed, the current
guidelines state that the price of
the issue must be the average of the
weekly high and low of the closing
prices of the related shares quoted
on the stock exchange during the six
months or last two weeks preceding
the relevant date, whichever is
higher. The company is also required
to disclose the details of the
number of shares allotted, and
details about the allottee. It also
has to disclose the rationale of
raising the funds. Private
Placement exceeding Public Offers
Conclusion In the past fifteen years, there appears to be a change in the pattern of mobilisations from the equity market with different industries tapping the market and earlier dominance of banks and financial institutions appear to be declining. Despite the issues with the CCI, there was a clear policy to spread equity-cult in the capital market, the policy then prevalent was encouraging allotment to the applicants of the lowest lot with the highest weightage and scaling down to the applicants of the highest quantity with almost the lowest weightage. However, in the recent times with the shifts in the technology application, process flow, structural changes and relatively liberal regulatory environment, the issuers appear to be moving in favour of private placement which would not be in the interest of the retail investors and also would not lead to deepening and widening of the market. _______ * This note is prepared by Piyusha D Hukeri. Highlights of Current Economic Scene Agriculture Food Corporation of India (FCI) is expected to have record foodgrain procurement of 51 million tonnes this year comprising 28.5 million tonnes of rice and 22.68 million tonnes of wheat, respectively. Up to 1 December 2008, stock of total foodgrains (wheat and rice) in the central pool is reported to be around 35.2 million tonnes, including 15.6 million tonnes of rice and 19.6 million tonnes of wheat, respectively. This is around 96% more than the last year's corresponding stock of 18.4 million tonnes, and more than double the buffer stock norms of 16.2 million tonnes. State government of Madhya Pradesh has announced paddy bonus of Rs 25 per quintal over and above the minimum support price (MSP) fixed by the central government. Similarly it is estimated that this year procurement of coarse grains would be at Rs 840 per quintal. As per official sources, area cultivated under wheat is expected to augment by 3%-4% in 2009 due to good monsoon and remunerative prices. It is predicted that if the pace of sowings continued till the last week of December, then the total area under wheat would be around 29.3 million hectares, displaying a rise from last year’s acreage of 28.19 million hectares. The central government has targeted to cover 28.5 million hectares under wheat during this rabi season. Up to 12 December 2008, acreage under wheat is reported to be around 21.36 million hectares, up from last year’s 20.47 million hectares. It is expected that bumper wheat output in 2009 and huge output in 2007 and 2008, would compel government to lift the curbs on export of foodgrains and also relax stockholding limits.
As
per the latest report by Food and
Agriculture Organisation (FAO), Estimates by Solvent Extractors’ Association (SEA) reiterates that vegetable oil imports into the country is likely to rise by 3.17% during this oil year (November - October) on stagnant domestic production and increasing local demand. Total oilseed output in the kharif season is estimated to be at 16.5 million tonnes and rabi oilseed production is forecasted to be at 10 million tonnes. The acreage so far, during the ongoing rabi oilseed crop has risen to 8.375 million hectares from 7.7 million hectares a year ago. According to latest import data released by the Solvent Extractors’ Association (SEA) reveals that total imports of vegetable oil has increased by 30% to 5.55 lakh tonnes in the month of November 2008, as compared to 4.28 lakh tonnes during the same period a year ago. It includes 5.19 lakh tonnes of edible oils and 36,310 tonnes of non-edible oils. Imports of palm products including CPO and RBD palmolein has been reported to be around 3.63 lakh tonnes and 1.37 lakh tonnes during the same period, as compared with 3.14 lakh tonnes and 30,014 tonnes in November 2007.Import of refined edible oils increased to 1.37 lakh tonnes and that of crude oil to 3.81 lakh tonnes. Import of non-edible oils, declined by 55% to 36,310 tonnes as compared with 80,592 tonnes in the previous period. The total import of soybean oil was at 7.59 lakh tonnes as compared with 40.44 lakh tonnes of CPO. National
Agriculture Cooperative Marketing
Federation (Nafed) has procured 30
lakh quintals of cotton valued at Rs
900 crore till 17 December, 2008 at
the minimum support price (MSP).
Procurement of cotton is going on at
a faster pace from the sates like
Gujarat, Punjab, Karnataka, Andhra
Pradesh and International
Cotton Advisory Committee (ICAC)
retreated that global cotton trade
is likely to fall by 12% to 7.3
million tonnes in 2008-09, following
uncertainty in the global financial
crisis and tightening credit
availability for spinning mills.
Imports of cotton in the world would
decline mainly due to 24% drop in
imports by Prices
of poultry have dropped by 25%-30%
since last one month due to outbreak
of bird flu in northeastern states
of Inflation The annual rate of inflation, calculated on point to point basis, stood at 6.84% for the week ended 06/12/2008 (over 08/12/2007) as compared to 8.00% for the previous week ended 29/11/2008 and 3.84% during the corresponding week ended 08/12/2007 of the previous year. The rate of inflation, based on average monthly WPI, which was 10.97% for the month of October 2008, has eased by 2.31 percentage points to 8.66% in November, 2008. The index for the major group, Primary Articles, declined by 0.4% to 249.0 from 249.9 for the previous week. The index for Food Articles group declined by 0.5% to 243.4 from 244.7 for the previous week due to lower prices of moong (4%), urad (3%), fruits & vegetables and tea (2% each) and barley (1%). Due to higher prices of fodder (2%) and groundnut seed, gingelly seed and raw cotton (1% each), the index for Non-Food Articles group rose by 0.1% to 234.6 from 234.4 for the previous week However, the prices of niger seed (18%), raw rubber (4%) and raw wool (1%) declined. The annual rate of inflation, calculated on point-to-point basis, for Primary Articles stood at 11.81% for the week ended 06/12/2008 as compared to 11.66% in the previous week. It was 4.55% as on 08/12/2007 i.e. a year ago. For Food Articles, the annual rate of inflation stood at 10.19% for the week ended 06/12/2008 as compared to 10.52% in the previous week. It was 2.51% as on 08/12/2007 i.e. a year ago. The index for the major group, Fuel, Power, Light & Lubricants, declined by 3.7% to 332.1 from 345.0 for the previous week due to lower prices of naphtha (23%), furnace oil (15%), bitumen (11%), petrol (10%), aviation turbine fuel (7%), high speed diesel oil (6%), light diesel oil (5%) and lubricants (4%). The index for Manufactures Products declined by 0.3% to 202.4 from 203.1 for the previous week. The index for Food Products group rose by 0.2% to 199.5 from 199.2 for the previous week due to higher prices of gur and bran (all kinds) (4% each), atta (2%) and cotton seed oil, groundnut oil and ghee (1% each). However, the prices of rice bran oil (4%), coconut oil (3%), imported edible oil (2%) and sooji (rawa) (1%) declined. Due to lower prices of texturised yarn (5%), the index for Textiles group declined by 0.1% to 141.5 from 141.7 for the previous week. The index for Chemicals & Chemical Products group declined by 0.6% to 222.5 from 223.8 for the previous week due to lower prices of benzene (41%), purified terephthalic acid (pta) (24%), bopp film (11%) and liquid chlorine (1%). However, the prices of p.v.c. resins (3%) moved up. The index for Basic Metals Alloys & Metal Products group declined by 1.1% to 280.4 from 283.6 for the previous week due to lower prices of basic pig iron and foundary pig iron (7% each), joist & rolls and oromild steel & tensile plates (6% each), wire (all kinds) (5%), zinc (4%), skelps, cr coils and zinc ingots (3% each), cr sheets and angles, channels & sections (2% each) and steel sheets, plates & strips and other iron steel (1% each). However, the prices of ms bars & rounds (3%) moved up. Due to lower prices of car chassis (assembled) (3%) the index for Transport Equipment & Parts group declined by 0.5% to 176.5 from 177.3 for the previous week. For the week ended 11/10/2008, the final wholesale price index for All Commodities (Base:1993-94=100) stood at 239.3 as compared to 238.8 and annual rate of inflation based on final index, calculated on point to point basis, stood at 11.30% as compared to 11.07 % reported earlier vide press note dated 24/10/2008. Financial
Markets Capital Markets Primary
Market As
per media sources, the Securities
& Exchange Board of India (SEBI)
has decided to continue with the
mandatory grading of initial public
offers (IPOs), amid doubts on the
relevance of the present system as
the gradings do not reflect in the
performance of these issues in the
markets. In the absence of
sufficient experience to vouch for
the current system of mandatory
grading or to counter it, the SEBI
Board decided to maintain the status
quo earlier this month. The decision
has been taken as members of the
Primary Market Advisory Committee (PMAC)
felt that it is too early to come to
a conclusion on the effectiveness of
the present policy of mandatory IPO
grading. SEBI had made grading
mandatory for all IPOs where draft
offer documents were to be filed
with the regulator on or after May
1, 2007, and made issuers
responsible for the cost of grading.
Since then, about 100 IPOs have been
graded by credit rating agencies. It
has been decided that the decision
would be reviewed, based on the
experience gained. Secondary
Market During the week key benchmark indices- the BSE Sensex and S&P CNX Nifty regained psychological 10,000 and 3,000 level respectively, on buying support from foreign institutional investors. Despite a see-saw movement through the week, markets ended in the green, in anticipation of the second stimulus package and a further reduction in interest rates. A Fed rate cut for interbank lending from 1% to between 0-0.25 % and expectations of auto bailout were positive for the global markets. Fall in inflation to a 9-month low and slump in crude oil prices further bolstered the sentiment. Inflation dipped sharply to 6.84 % (8 % in the previous week) during the week. Despite the OPEC supply cut, oil tanked to $36 levels, indicating a slump in demand. The BSE Sensex ended 410 points (4.2 %) higher to close at 10,100 during the week. The BSE Mid-Cap gained 214 points or 7% to 3,264 and the BSE Small-Cap index advanced 213 points or 6% to 3,744 in the week. Both these indices outperformed the Sensex. The S&P CNX Nifty gained 156 points or 5.3% to 3,078 during the week. According to SEBI, the liquidity crunch faced by the corporate sector has been behind the huge redemption pressure and erosion of assets under management (AUM). The AUM of the mutual fund industry contracted 20.7% from Rs.5.4 lakh crore as on 31 August 2008 to Rs 4.3 lakh crore as on 31 October 2008. During this period, liquid and debt schemes, which contribute more than 65% to the total AUM, witnessed a fall in AUM from Rs 3.61 lakh crore to Rs 2.90 lakh crore. These schemes invest in money market and debt instruments issued largely by corporate, banks and non-banking finance companies (NBFCs). The stress in liquidity led to the market for certificates of deposit (CDs) and commercial papers (CP) drying up. Based on the data for top five mutual funds, SEBI had observed that of the total assets in debt (excluding open-ended debt schemes) and liquid schemes, 45% are in CDs, 23% in debentures, 17.4% in pass through certificates (PTCs) and 9% in CPs. Approximately, 90% of the debt portfolio of mutual funds is represented by highest rated paper. Derivatives
It
has been yet another winning stretch
for Nifty futures, which gained over
5.5 % to end the week at 3082.4
points. This time around Nifty
futures also ruled at a wider
premium during most part of the
week. It, however, settled at about
five-point premium to the spot.
Rollover of open interest (OI)
positions also picked up moderately.
The Nifty futures saw a rollover of
about 31 %, slightly higher than
that of the previous month. The
market-wide rollover has been also a
shade better at 32-35 %. Despite
breaching the 2950-mark, Nifty
future struggled to move past the
3100-mark last week. It is now
hovering at about 38.5 against its
previous week’s level of 49.23
points. The cumulative foreign
institutional investors (FII)
positions as a percentage of the
total gross market position on the
derivative segment as on 19 December
stood at 30.58 %. FIIs were
predominantly net buyers during most
part of the week. They now hold
index futures worth about Rs 9,850
crore (Rs 8,842 crore) and stock
future worth about Rs 12,314 crore (Rs
10,649 crore).Their index options
holding stood higher at about Rs
15,310 crore (Rs 13,581 crore). Government
Securities Market Primary
Market On
17 December 2008, Reserve Bank of
India (RBI) auctioned 91-day and 364
day Treasury Bills (T-Bills) for the
notified amounts of Rs 5,000 crore
and Rs 1,000 crore, respectively.
The cut off yield for 91 day and 364
day T-Bills has been set at 5.45%
and 5.36%, respectively. Secondary
Market Bonds rallied during the week spurred by surging deposits into public sector banks and sliding global oil prices. The bond rally continues unabated, as the benchmark 10-year government bonds completed the biggest weekly gain in a decade to end the session at a yield of 5.56%. Dealers are hoping that slowing inflation will allow the Reserve Bank of India (RBI) to reduce borrowing costs. The yield on the 8.24% benchmark bond has dropped 66 bps this week to end Friday at 5.56%. The yield has now fallen almost 400 bps from its high in July ’08. Bonds have been rallying after the Fed cut its benchmark rate to a record low this week on speculation that RBI, too, would further slash its policy rate after three reductions this quarter. The
average trade volume during the week
averaged Rs 15,000 crore or about Rs
3,500 crore more than the average
NSE equity turnover per day during
the week. The outlook for debt
remained positive. Bond
Market In
a bid to strengthen know your
customer (KYC) norms, the RBI
released draft guidelines on the
revised procedures for the reporting
the transfer of shares or
convertible debentures, by way of
sale, from resident to non-resident
and vice versa under the foreign
direct investment (FDI) scheme, on
19 December 2008. The procedure has
been revised to capture the details
of investment in a more
comprehensive manner. Accordingly,
the proforma for reporting of inflow
or outflow details on account of
remittances received or made in
connection with the transfer of
shares or convertible debentures, by
way of sale, submitted by the bank
to the RBI has also been modified.
The banks receiving the remittance
are required to submit a KYC report
on the non-resident investor. During
the week under review, five FIs/Banks
and three corporates tapped the bond
market through issuance of bonds to
mobilise an amounts of Rs 3,725
crore.
Snapping its four-day winning streak, the rupee on Friday fell by 31 paise against the dollar to close at 47.26/27 amid expectations of cuts in interest rates as inflation has declined to a nine-month low. The domestic currency resumed weak at 47.20/22 a dollar and later fluctuated between 47.36 and 46.86 on alternate bouts of dollar buying and selling during the day. One, three, six and twelve month forward premia, as a result, ended the week at 5.73% (5.30%), 4.59% (4.61 %), 3.19% (3.26%) and 2.28 % (2.30%). Three-day forward premia weakened, as the overnight arbitrage options weakened, with the narrowing domestic call money and Fed fund spreads. Overnight premia was 3.9 % last weekend, down from the previous week’s level of 5.20%. Currency
Derivatives The
SEBI is exploring the possibilities
of allowing more market players
including foreign institutional
investors (FIIs) and non-resident
Indians (NRIs) to participate in the
currency futures market. This move
may help in bringing more depth into
the currency futures market. At the
sidelines of the 'Conference on
Securities Market 2008’ organised
by National Institute of Securities
Markets (NISM), CB Bhave, chairman,
SEBI, told reporters that the
regulator is exploring the
possibilities of allowing more
market players including NRIs to
participate in the currency futures.
The regulator is looking how futures
are functioning and the investment
pattern in the futures market.
Currently, there are more than 1,400
FIIs registered with SEBI. The
financial institutions, banks and
retail investors are allowed to
participate in the trading. Commodities
Futures Derivatives On
15 December 2008, after the Forward
Markets Commission (FMC) chairman BC
Khatua said that the regulator may
lift the ban on futures trading in
four banned commodities in few
weeks, the government gave another
indication that it was seriously
considering reviewing the ban on
futures trading in wheat, rice, tur
(pigeon pea) and urad (black gram).
Union agriculture and consumer
affairs minister Sharad Pawar said
in Parliament that futures markets
only provided a platform for price
discovery and were not responsible
for any rise or fall in the price of
any commodity. He also added that
the ban on futures trading had not
harmed the country’s agriculture
growth. The government had banned
futures trading in four agri
commodities in 2007 after the then
Left allies blamed malpractices in
the futures market as being
responsible for the hike in the open
market prices of these commodities. Sugar
futures slipped on 19 December on
profit-taking and expectations bulk
buyers, such as makers of cold
drinks, may trim buying during the
winter. The benchmark January
contract on the National Commodity
and Derivatives Exchange had risen
about 5 % since 4 December 2008. According
to sources silver prices gained
nearly 11% over the last two weeks
on fresh demand from jewellery and
gift manufacturers ably supported by
higher prices in international
markets. Silver spot prices in
Ahmedabad market have jumped up to
Rs 17,802 per kg from Rs 17,050 per
kg in early December. Similarly, MCX
March 2009 futures also rose by
nearly 11% to trade at Rs 18,080 per
kg on Thursday, from Rs 16,488 in
the last third week of November. According
to World Gold Council (WGC),
domestic demand for investment in
gold is growing by as much as 15% in
the last two months. “With other
investment avenues like stocks,
mutual funds (MFs) and banks
falling, some by even 70% in a year,
investment in gold has climbed the
demand graph by 14-15% in October
and November,” said WGC
vice-president Shivaram. Crude
oil futures prices on the national
commodity bourses fell sharply
during the week which has been the
biggest weekly fall of nearly 15% in
the recent months as concerns about
falling global oil demand amid
economic slowdown and rising
inventories offset big production
cut announced by OPEC. Crude oil
January 2009 contracts fell sharply
by 14.45% to finish at Rs 2,026 per
barrel on Friday over the previous
week. The January futures contract,
which expired on 19 December 2008,
tumbled more than 7% to as low as
$33.44a barrel. Falling crude prices
could pressurise the bullion pack.
Gold future prices continued its
rally in the previous week as sharp
fall in dollar against major
currencies supported the yellow
metal. Gold February 2009 contracts
finished firm at Rs 12,711 per 10
gram over the previous week. Prices
touched a high of $882.40 per ounce
on 17 December 2008 before falling
on account of profit booking by
traders at higher levels. Weak macro
economic data from the Banking On
a review of ECB policy and to
promote development of mining,
exploration and refinery sectors in
the country, the definition of
infrastructure for the purpose of
availing ECB has been expanded to
include mining, exploration and
refining. Accordingly, the
infrastructure sector henceforth is
defined as (i) power, (ii)
telecommunication, (iii) railways,
(iv) road including bridges, (v) sea
port and airport, (vi) industrial
parks, (vii) urban infrastructure
(water supply, sanitation and sewage
projects) and (viii) mining,
exploration and refining. Export-Import
Bank of India (Exim Bank) has
concluded an Agreement dated June
24, 2008 with the Myanma Foreign
Trade Bank, Myanmar, making
available to the latter, a Line of
Credit (LOC) of US$ 64 million for
financing eligible goods and
services, including consultancy
services from India relating to
financing of three transmission
lines, viz., Thahtay Chaung -
Oakshitpin 230 KV; Thahtay Chaung -
Thandwe-Maei -Ann 230 KV and
Thandwe-Athoke 230 KV to be executed
by Power Grid Corporation of India
in Myanmar. Exim
Bank has concluded an Agreement
dated June 24, 2008 with the Myanma
Foreign Trade Bank, Myanmar, making
available to the latter, a Line of
Credit (LOC) of US$ 20 million for
financing eligible goods and
services, including consultancy
services from India relating to
setting up of an Aluminum Conductor
Steel Reinforced (ACSR) wire
manufacturing factory, with total
annual output capacity of ACSR
10,000 tonnes and galvanized iron
wire 4000 tones in the Myanmar. Based
on a review, ECB policy has been
modified as under: i) ECB up to US$
500 million per borrower per
financial year has been permitted
for rupee expenditure and/or foreign
currency expenditure for permissible
end-uses under the Corporate Mukesh
Ambani-led Reliance Industries has
raised Rs 996 crore in two tranches
through the issue of debentures.
Edelweiss Capital arranged finances
for the company.
The first tranche secured
redeemable non-convertible
debentures; valued at Rs 498 crore
had a maturity of 10 years and
carried an annual coupon rate of
10.75 per cent. The second had a
maturity of three years and carried
a coupon rate of 10.10 per cent. Passenger
carmaker Ford The
world’s largest carmaker, ACC,
the country’s largest cement
manufacturer has become the first
cement company to shut down one of
its plants in Himachal Pradesh for
15 days effective from December 23,
2008. The decision has come within a
month of ACC concrete (ACC’s
wholly owned subsidiary) laying off
25 per cent of its employees. The
plant’s capacity at Gangal–II is
4,800 tonnes a day and on an annual
basis is 2.4 million tonnes.
Intel,
Boeing, Lockheed Martin are among
several large corporates supporting
joint research initiative between UK-based
Royal Institution of Chartered
Surveyors (RICS), a leading
organization of its kind in the
world for professionals in property,
land, construction and related
environmental issues has announced
its entry into The
Information Technology HCL
Technologies, the country’s fifth
largest IT software and services
provider has completed its Rs 3,100
crore cash offer for the Wipro
Infotech, the business division of
Wipro, has opened a new application
support center in 3i
Infotech, a global information
technology company has announced the
launch of I-SERV, a brand for its
retail services. Under the new
brand, a comprehensive range of
value added services will be
provided to consumers, specifically
to those in the remote rural areas,
thereby, empowering them to carry
out various day-to-day activities
and improving quality of life. 3i
will deploy technical infrastructure
and manpower support to deliver
these services related to banking,
insurance, mobile, education,
ticketing and other utilities. The
company will be offering these
services through 12,500 stores in
Haryana, Uttar Pradesh, Madhya
Pradesh, Maharasthra, Goa, Andhra
Pradesh, Tamil Nadu and UK-based
services firm Secro Group has
acquired a 60% stake in Telecom The
Cellular Operator’s Association of
India (COAI), the GSM operators’
body, has opposed the telecom
regulator’s recommendation for
levying an additional 2 per cent
charge on 3G spectrum saying it is a
“retrograde step”.
The COAI clarified that this
would only add to the financial
burden of the service providers. Expressing
concern over declining trend in is
quarterly revenues, the government
has asked the state-run BSNL to take
steps to check the fall in revenues.
The
government has capped the number of
private players which can bid for 3G
services in Mumbai and
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Despite
the chequered phase of the primary
equity market, the mobilisations
from the market have grown
substantially during this phase. The
market has contributed to financial
deepening by encouraging diverse
industries to tap the market and led
to significant mobilisation of
funds.