बाजार में यह रणनीति पालन करें - NIFTY - BANK NIFTY 28 MAY 2018

Government looking at stake sales in 11 more public sector companies

New Delhi: The government is considering a proposal to disinvest another 11 public sector companies, including Delhi’s landmark Ashok Hotel, MTNL’s tower business and equipment-maker Bharat Heavy Electricals (BHEL) through a mix of long-term lease, asset and strategic sale. With NITI Aayog sharing the latest selloff list with the finance ministry, close to 50 companies have now been recommended for disinvestment via the strategic sale and leasing route, although the government’s track record has remained poor. 

Finance ministry officials said the proposals were being studied and a final decision will be taken by the Cabinet committee on economic affairs, but defended the movement on strategic sale so far, arguing that the government was on course to complete some of the transactions, including Air India, where 76 per cent equity is being offered for sale compared to the recommendation of 100 per cent. 

Sources said NITI Aayog has recommended leasing out Ashok Hotel — spread over 25 acres in the capital’s diplomatic enclave — for 60 years to get the worn-down property back into shape. While the Atal Bihari Vajpayee government had sought to sell Ashok Hotel, the plan was resisted by the tourism ministry, apart from other problems. 

Even during the Narendra Modi regime, the sale of ITDC hotels has not taken off as the government has opted to play safe. Last year, then tourism minister Mahesh Sharma had said the property was not on the disinvestment list, along with Samrat Hotel, as they were only a few metres away from the PM’s residence on what is now called Lok Kalyan Marg. 

Among the other PSUs under the fifth disinvestment plan, NITI Aayog has listed BHEL as one of the candidates, citing erosion in its market value over the last few years compared to private sector players such as Larsen & Toubro (L&T), that has aggressively grown and diversified. 

Based on Friday’s close, BHEL’s market cap was estimated at Rs 27,535 crore, compared to nearly Rs 1.2 lakh crore for L&T. In May 2010, L&T’s market cap was around Rs 95,000 crore, while BHEL was at Rs 1.2 lakh crore. 

But unlike several other PSUs, the think-tank has suggested that the government should reduce its stake in BHEL from 63 per cent to 49 per cent by offloading shares in the market, before diluting it further. A similar proposal made earlier had been trashed by the finance ministry. 

Sources said the panel, headed by economist Rajiv Kumar, has also recommended that the government should begin selling assets in MTNL, once a top state-run company, which is now the third-biggest loss-maker behind BSNL and Air India. The proposal is to hive off the telecom PSU’s towers into a separate company and sell off the entity. An outright stake sale has not been proposed, given the large real estate holdings. Surprisingly, NITI Aayog has not given any road map for BSNL, which reported loss of around Rs 4,800 crore in 2016-17. 

Other companies — from National Textiles Corporation to Hindustan Copper and Telecommunications Consultants (India) — may be put up for strategic sale with NITI Aayog recommending that government could exit most of these PSUs. While some of the companies, such as NTC, reported impressive profit in 2016-17, it was on the back of exceptional items or one-time gains. 

Rs 140-billion PNB-Nirav Modi fraud case: How money changed hands

The Enforcement Directorate, on Thursday, filed its first charge sheet in the Rs 140-billion Nirav Modi scam. The charge sheet was filed against Modi and 23 others associated with him, including his siblings, and a number of his firms, namely Firestar Group of Companies, M/s Solar Exports, Stellar Diamonds and Diamonds R Us. ED said to date, the diversion of the proceeds of crime, to the extent of $629.21 million, had been traced to several group companies, relatives and other dummy companies under the control of Nirav Modi and his associates. Below are some details on the money allegedly laundered, provided by ED:

Bad loans drive IDBI to ₹5,662.76 cr. quarterly loss

Lender charts revival plan; puts ₹21,000 cr. NPAs on block

State-run lender IDBI Bank reported loss for the sixth straight quarter even as the bank’s management assured that most of the bad loans have been recognised and could turn to black after the second quarter of the current financial year.

The lender reported a net loss at ₹5,662.76 crore in the quarter ending March 2018 due to higher provisioning for non-performing assets (NPAs) as compared to a net loss of ₹3,199.77 crore in the same period of the previous year. This is the second highest quarterly loss after Punjab National Bank, which posted ₹13,417 crore loss in the same quarter.

The loss was on the back of ₹12,800 crore slippages during the quarter that led to ₹10,733 crore of provisions for bad loans, as compared with ₹6,054 crore in the year earlier period.

Legacy issues

“Most of the legacy issues regarding asset quality has been recognised,” said M.K. Jain, MD and CEO of IDBI Bank, in the post earnings media interaction. “Whatever is remaining should get cleaned up by the second quarter of the current financial year,” he said, adding that the bank had decided to halt lending to the corporate sector from where the maximum stress was coming.

The bank has drawn up a plan to boost its capital by sale of non-core assets and also shed riskier assets. The lender’s capital adequacy ratio fell to 10.41%, as compared with 11.93% in the third quarter, after it decided to pre-pay investors of additional tier-I capital bonds (AT-1), a move that will save the bank ₹550 crore of interest income every year. To clean up the balance sheet further, the bank board has approved sale of bad loans of more than ₹21,000 crore.

The board has also decided to divest stake in the mutual fund arm, in which the bank has 67% stake and IDBI Capital, another subsidiary of the bank, 33%. Mr. Jain said IDBI Capital would divest about 26-30% stake to a strategic partner.

Sun Pharma warns U.S. pricing pressure to hit 2019 profit

(Reuters) - India’s largest drugmaker Sun Pharmaceutical Industries Ltd said on Friday it expects its 2019 revenue to come in short of analysts’ expectations due to pricing pressure in its main market, the United States.

A man walks past the logo of Sun Pharmaceutical Industries Ltd. outside its research and development centre in Mumbai, May 25, 2018. REUTERS/Francis Mascarenhas/Files

Makers of generic drugs have seen poor sales as uncertainty grows in the global market for copycat drugs due to rising competition and pricing scrutiny in the world’s largest healthcare market.

The warning compounds problems at Sun, which has been struggling to get clearance for its factories that are under U.S. supply bans due to quality control failures.

It now plans to reduce its research spend on some generic drug projects that have become “unviable”, Dilip Shanghvi, the company’s founder and managing director, said on a conference call with analysts.

The move follows larger rival Teva Pharmaceutical Industries’s statement earlier this month that it planned to reduce its U.S. generics business.

“As a large investor, I am also unhappy,” said Shanghvi who, along with affiliated parties, owns a major stake in the company he founded in 1983.

“We re trying to get the (Halol) plant re-certified at the earliest. It’s taking much longer,” he said.

The world’s fifth-largest generic medicines maker is pinning its hopes on the launch this year of three specialty drugs: Yonsa for a type of prostate cancer, another, named OTX101, to treat dry eye, and Ilumya for psoriasis.

“We want to find a new engine of growth and that is why we are investing in this,” Shanghvi said, adding: “We will have to incur significant expenses for these important launches.”

Thirty-six analysts polled by Reuters expect Sun’s fiscal 2019 revenue to come in at 300.36 billion Indian rupees ($4.43 billion) - about 13 percent higher than the 264.89 billion rupees for 2018.

While fourth-quarter profit was better than expected, helped by an uptick in India and emerging markets, revenue in the United States, which accounts for almost 35 percent of the total, fell 3 percent, Sun said.

Rivals Dr. Reddy’s Laboratories Ltd and Lupin Ltd reported weak March-quarter earnings this week, blaming pricing pressures.

($1 = 67.7800 Indian rupees)

Forex reserves fell $11 bn in a month: RBI

Central bank steps up dollar sales

The country’s foreign exchange reserves fell $2.6 billion for the week ended May 18 to $415 billion, latest data released by Reserve Bank of India showed.

In the last one month, foreign exchange reserves fell by about $11 billion as the central bank stepped up intervention in the currency market as rupee came under pressure following rise in crude oil prices. Rising oil prices pose threat to macroeconomic stability as the country imports 80% of its crude requirements.

Foreign exchange reserves touched a record high of $426 billion for the week ended April 13, 2018.

According to the latest data, fall in foreign reserves is primarily due to decline in foreign currency assets.

Rupee strengthens

Rupee, which is the worst performing Asian currency this year, strengthened against the dollar as crude oil prices fell on the prospect of supply increase. On Friday, the rupee posted its biggest single-session gain, as it appreciated by 56 paise or 0.9% to close at 67.78 against the dollar amid a rise in domestic stocks. This is the best single-day rise for the rupee since March 14, 2017. The rupee on Friday touched a high of 67.70 in the intra-day trade.

India Cements net rises 3% to ₹35.3 cr.

‘Sales increase by 8% to 30.9 lakh tonnes, recovery in demand from States working on infra projects’

The India Cements Ltd. (ICL) reported a standalone net profit of ₹35.3 crore for the quarter ended March 2018 from ₹34.3 crore in the same quarter the previous year.

The cement firm, however, reported a lower total income of ₹1,401.73 crore for the quarter under review, from ₹1,524.29 crore in the same quarter the previous year. For 2017-18, the EBIDTA stood at ₹722 crore against ₹869 crore in 2016-17, the company said in a release. The net profit for the year was ₹100.6 crore as against ₹173.4 crore in the previous year. The total income for year was ₹5,360.1 crore (₹5,794 crore).

A combination of increased fuel cost and drop in price realisation per tonne cement sold were primarily responsible for decline in profit last year.

The board of directors, in their meeting held on Friday, approved a dividend of 8% for the year 2017-18.

Addressing a press conference here, N. Srinivasan, vice-chairman and managing director, said, “We have done well last year given the circumstances.”

The second-half of the year that went by saw better demand. During the fourth quarter, sales volume increased by 8% to 30.9 lakh tonnes. Capacity utilisation improved to 79% in the fourth quarter from 73% in the same quarter the previous year. This was mainly due to recovery in demand from States such as Andhra Pradesh, Telangana, Karnataka and Maharashtra which were implementing infrastructure projects, he said.

In Tamil Nadu, the main market, demand did not pick up due to restrictions on sand mining. Also, there were no infra projects. The overall sales volume marginally improved to 11.17 million tonnes last year from 11.04 million tonnes in the previous year, he said. The capacity utilisation of the plants stood at 71% last year.

‘Improved sales’

Stating that he was optimistic on improved sales and better capacity utilisation, Mr. Srinivasan said, “We are watching the situation.” He indicated that the company would review the situation in the second quarter before contemplating any expansion. One had to see if the higher level of capacity utilisation was sustainable.

For the last seven years, the cement industry had been struggling to achieve growth. After a gap of five years, the industry had clocked a growth of 6.3% against a 1.2% contraction in the preceding year, he said.