Category: Economy, Markets and Macro Views

Man Industries has bagged an order to manufacture and supply 257 miles of LSAW and HSAW line pipes coated externally and internally with anti-corrosive systems. With this new order, Man Industries order-book stands at Rs 2200 crore.

Man Industries board meets on 31 March 2007, to consider a scheme of demerger between the company and Man Aluminium.

Man Industries is involved in manufacturing and supply of steel line pipes for high and medium pressure applications such as oil, gas, petrochemicals and water transportation. The company is one of the leading manufacturers and exporters of saw pipes and aluminium extrudates.

Man Industries posted a net profit of Rs 16.47 crore in the December 2006 ended quarter against Rs 7.83 crore in the December 2005 quarter. Net sales for the December 2006 quarter rose to Rs 327.11 crore (Rs 206.49 crore).

TCS plunged 4.3% to Rs 1205, Wipro lost 4% to Rs 561.70, Satyam Computer shed 4% to Rs 453 and Infosys shed 3.1% to Rs 1990.

IT stocks fell for the second day in a row today. The fall on Monday (26 March) arose out of concerns from the rupee’s recent surge against the dollar. The BSE IT Index had lost 58.31 points on (26 March), to 5,009.42. IT scrips had recovered from their lower level after a sharp fall in late-February – early-March 2007. The BSE IT Index had surged to 5,095.28 by 22 March, from a low of 4,730.30 on 5 March.

A crisis in the US subprime mortgage sector, which issues mortgages to high-risk borrowers, has raised concerns whether the broader housing sector, and even the world’s largest economy, might be dragged down as well. The IT industry derives up to 60 – 70% of its revenue from the US market. The IT industry is eyeing an export turnover of $31 billion in the fiscal ending March 2007, at a time when the demand for offshore outsourcing remains strong.

Some in the investment community believe that IT bellwether Infosys’ guidance for FY 2008 (year ending 31 March 2008) can be conservative in view of risks of a global slowdown. Infosys unveils its full year guidance at the time of announcing fourth quarter and annual results in March.

Any rise in the rupee directly impacts the revenue and profits of IT firms proportionately. The Indian rupee traded just below its strongest level in more than seven years on Wednesday (28 March 2007), as banks continued to sell dollars to generate funds in order to tide over a cash crunch.

At 12:00 IST, the rupee was at 43.157/167 per dollar. A break of 43.115 will take it to its strongest level against the dollar since November 1999. The rupee had settled at a 20-month peak of 43.29/30 on Monday (26 March).

The stock hit a low of Rs 359 and a high of Rs 414.80. Exchanges have set Rs 407 as base price for the scrip with a 20% price band. A strong 11.1 lakh shares changed hands in the counter on BSE. Indiabulls Real Estate (IBREL) was formed following the demerger of the real estate business of Indiabulls Financial Services (IBFSL). The company was listed on the bourses today.

It may be recalled that as part of the demerger scheme of IBFSL, a share of IBREL was issued for every share held in IBFSL with 9 January 2007 as record date. Accordingly, trading in equity shares of IBFSL was done on ex-entitlement basis with effect from 2 January 2007. IBFSL stock had settled at Rs 659.65 on BSE on 29 December 2006, the last day when the stock was trading cum-entitlement basis (for allotment of IBREL shares). At the moment of writing this, IBFSL was hovering at Rs 364.

The total equity capital of IBREL is Rs 35.93 crore, consisting of 17.96 crore shares of Rs 2 each. Avoid all Real Estate stocks until further notice.

The finance ministry has ordered the recasting of the boards of all listed public-sector banks, cutting down the number of shareholder directors by 50% while raising the number of government appointed “independent” directors.

Extremely Bad Decision as the government’s grip on public-sector banks will increase.

In a related development, the government has also withdrawn its own directors as well as the Reserve Bank of India’s directors from the management committees of bank boards. This key board committee is responsible for clearing all big-ticket loans that cannot be cleared by the CEO of a bank. The loan-sanctioning power of the public-sector bank CEO is limited to Rs60 crore at small banks and Rs100 crore at big banks. This reminds me of the series of co-operative banks that went bankrupt in between late 90s and 2002 because of involvement of corrupt directors.

Bank CEOs, in private, say that while such nominees are technically independent professionals, in reality most of them are political appointments and normally belonging to the party in power. For instance, one so-called independent director who is set to join a large Mumbai-based bank is Rani Satish, the former minister of state for Kannada and Culture from the ruling Congress party.

“On what basis do I remove a shareholders’ nominee?” asks a visibly frustrated chairman of a very large public sector bank, who says the timing of the government decision is unfortunate because public-sector banks need more outside expertise at a time when they are trying to compete more aggressively with private banks that can attract a more diverse board.

The terrible decision by government to recast public sector bank boards does not technically abide by the capital market regulator’s norms on independent directors on the boards of listed entities. In accordance with Clause 49 of the listing norms, all listed corporations should have 50% independent directors on their boards.

Hopefully the rating agencies like Fitch and Moody’s will downgrade India to RISKY category.

India’s leading Private Bank, HDFC Bank is an arrogant bank and sucks badly in customer service.

Here is a Case Study on how HDFC Bank has violated the norms of Association of Mutual Funds of India in providing online mutual fund access to its consumers. I am one of the victim.

I bought units worth Rs 5,000 in Tata Index Fund Nifty Plan – Option A – Dividend Reinvestment. I had downloaded and read the offer document twice before investing. After my initial investment, the market fell and I wanted to BUY some more units, say worth Rs 2,000. I log on to my HDFC Bank and I was shocked that their interface doesn’t let me invest less than Rs 5,000. I bought this to the attention of customer service and they are writing back that it has been clearly mentioned in terms and conditions. I wrote back saying HDFC Bank cannot float its own norms and they have to follow AMFI and Terms mentioned in the offer document. Unfortunately, I can’t sue them because of WEAK legal system in India.

Here are the screen shots to prove my point.

This is how HDFC Bank takes customers for a ride. I would advise all our readers to stay away from HDFC Bank’s Online Mutual Fund interface for investing.

ITC has resolved to launch snack foods, to widen its portfolio of consumer goods and foods. ITC is India’s top cigarette maker that also has interests in hotels, paperboard, apparel, retail and information technology, already sells ready-to-eat foods, biscuits and confectionery.

ITC has estimated that branded snacks segment is growing at 30% annually. The category is dominated by unbranded regional firms. ITC’s Bingo brand will initially sell varieties of potato chips and finger snacks priced at Rs 5 and Rs 10.

I am a little bit confused as to what is the core business of ITC now ? You thoughts 🙂