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MFs throw caution to wind
IBM close to acquiring Sun
Borrowers line up for loan restructuring
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Many leading manufacturers like Britannia have not just reduced the weight of the bread loaves, but also increased the prices marginally.
New Pension Scheme
Motorola’s Jha is top-paid CEO in US
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MFs throw caution to wind
Mumbai, April 3 Flagging off the issue, Sinha, however, made it clear that it was not a crisis situation warranting panic, but it is time the regulators looked at the issue. "I have brought it to the notice of the concerned authorities that it has systemic risks," Sinha told PTI when asked if he had taken up the matter with the government and regulators. Of the 75-80 per cent of mutual fund assets, which are short-term, Sinha said, a substantial investment came from banks. Banking money with mutual funds in end-October was Rs 13,000 crore and it jumped up to Rs 90,000 crore by February, he said. Though banks have long-term money, they are not lending but mutual funds, which have banks' short-term money parked with them, are lending long-term to corporates. "This is not a healthy trend," he said, adding this could lead to an asset-liability or maturity mismatch, that too, when banks can withdraw money parked with mutual funds within 24 hours. In the interest of the long-term health of the mutual funds industry, Sinha said that this practice should be discontinued. He feared this was happening in the mutual funds industry because of "competitive pressures" as a result of which mutual fund players "were throwing caution to the wind." The solution to the problem lay in self-control by trustees and mutual fund players themselves. One of the main reasons for this, he said, was the tax benefit being provided to corporates investing in debt funds. "This tax advantage (to corporates) is a distortion and does not serve any public policy," he said. Sinha said he was not against tax benefits to retail investors but extending it to corporates was proving detrimental to the mutual funds industry. Suggesting there should be greater transparency and disclosure norms, Sinha said mutual funds should be made to declare on a daily or weekly basis, the banking money parked with them. Most mutual funds were now suffering losses because they were running on short-term assets. There are three types of mutual funds - public sector, those with foreign parentage and domestic private institutions, Sinha said. Public sector mutual fund players have the potential to fare well but those with foreign parentage, who were very strong earlier, could now be in trouble because of the prevailing global economic slowdown, he said. — PTI
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IBM close to acquiring Sun
New York, April 3 According to the Wall Street Journal, International Business Machines and Sun Microsystems are in the final stages of negotiations to combine the two computer firms. Quoting people familiar with the matter, WSJ said the companies are now discussing a deal in which IBM would pay $9.55 a share for Sun, about $1-a-share lower than Sun previously expected. "The revised price — valuing the entire company at about $7 billion — would lower the amount IBM would have to pay by roughly $750 million," the daily said. The report said Sun is demanding assurances in return that IBM would push to complete a deal even if it faces vigorous regulatory objections. Another daily, the New York Times said the two companies have been negotiating for weeks, ironing out terms of an agreement that would turn IBM into a dominant supplier of high -profit Unix servers and related technology. Citing people familiar with the negotiations, the NYT said a final agreement could be announced today, although it is more likely to be made public next week. They added that IBM's board had already approved the deal.
— PTI |
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Borrowers line up for loan restructuring
New Delhi, April 3 Under the scheme, the RBI has said that if a bank restructures a loan, which is a standard loan as on September 1, 2008, it can continue to classify it as a standard asset, even after it is restructured. This means, that if the client is regular in making payments to the bank as on September 1, 2008, but may be on the verge of default in subsequent months, this account could be restructured. Banks can thus prevent it from slipping into a bad loan category. The banks restructure even those loans where payments have been regular, but it is apprehended that the borrower may default in the immediate future. Restructuring of loans means extending a tenure of the loan, or moratorium on payment of monthly instalments, or lowering interest rates, or converting some loan into equity. According to economists, this is likely to happen in the given situation where industrial production is fast slipping and at retail level, there are job losses. This means that there will be large defaults on the part of borrowers, and this may lead to banks being saddled with huge non-performing assets (NPAs). The corporate India, too, is making a beeline for corporate debt restructuring. Some prominent ones include retail chain Suvidha, pharmaceutical major Wockhardt, and real estate major Unitech, amongst others. Sources in the banking circles say that in a recently held meeting with the RBI, restructuring of loans has been discussed and banks have been asked to increase the tenure for these loans. Sources also admit that same has been the case with other retail loans. Bankers, however, admit that they can take some action against a defaulter to recover money and conserve capital, which, they would otherwise let go due to this rough patch in the economy. |
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Pay more for a thinner slice of bread
Chandigarh, April 3 A market survey carried out by The Tribune revealed that a number of bread manufacturers have reduced the weight of the bread, but maintained the original price points. Kitty Bread has reduced the weight of its various variants by 20-50 grams, but maintained the prices, so that consumers don’t feel the pinch. Many bread manufacturers have tried to camouflage this discreet reduction in quantity (weight), citing a recent regulation by the Ministry of Consumer Affairs, wherein the variation in weight is allowed because of bread losing moisture, has been reduced from eight per cent to three per cent. Ramesh Maggo, president of All India Bread Manufacturers Association, says the weight of loaf had not actually been reduced, but bread manufacturers were printing less weight on the packing, so as to escape the stringent norms regarding weight reduction allowed because of evaporation of moisture from bread. In private, manufacturers agree that rising input costs, especially of wheat, have forced them to reduce the weight and/or increase the price. They say that over the past couple of years, the wheat prices have been going up steadily. Even this year, wheat MSP has been hiked by Rs 80 per quintal, even as wheat prices in international market are coming down. “The input costs, especially wheat flour prices have gone up by 50 per cent in the past four years. Though we have tried to absorb the rising costs till date, but for the economic viability of the business, several bread manufacturers have reduced the weight, while maintaining the same price points,” says Anup Bector, joint managing director of Mrs Bector’s Foods. |
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Investment norms by mid-April
New Delhi, April 3 "Investment guidelines will be finalised by the middle of the month (April)... May 1 is the date it (pension scheme for all citizens) will be launched," Pension Fund Regulatory and Development Authority (PFRDA) chairman D Swarup told PTI. The Authority is set to launch the pension scheme for all citizens from May 1 after getting nod from the Election Commission. The Deepak Parekh Committee, constituted by the PFRDA, has recommended investment norms for the new pension system (NPS). The committee had suggested options to subscribers to invest in shares of the 50 stocks of the index Nifty of the National Stock Exchange, government bonds, liquid assets of mutual funds, state government bonds, rated bonds of public financial institutions and public sector companies, among other things. The PFRDA invited public comments on the recommendations, as well as certain modifications proposed by it to these suggestions. In August 2008, the government advised the PFRDA to extend the NPS, currently subscribed to by government employees, to all citizens. Central government employees who joined service on or after January 1, 2004, are covered under the NPS. Unlike the old pension scheme, in the NPS both employees and the employer (in this case, government) contributed an equal amount to the pension fund. Twenty-one states have also joined the scheme. However, the NPS for all citizens will not have any mandatory obligation for employers to give matching contributions to the pension fund. When asked about the corpus expected from citizens, Swarup said unlike in respect of the central and state governments, this scheme is voluntary and it would be difficult to predict the growth of the corpus. He, however, pointed out that a survey conducted by an independent organisation, Invest India Micro Pension Services (IIMPS), said in the next 5 to 7 years, 8 crore people will join the scheme. — PTI
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Motorola’s Jha is top-paid CEO in US
New York, April 3 With a total payout of over $104 million in 2008, Jha is the only CEO to get a compensation package exceeding $100 million, with Occidental's Ray Irani at a distant second with $49.9 million. Irani is followed by Walt Disney's Robert Iger ($49.7 million) at the third slot. In the overall ranking, compiled by the Wall Street Journal, Citigroup CEO Vikram Pandit comes at the fourth position with a payout of $38.2 million. Besides, Pandit is the highest paid CEO for bailed out banks in the US, WSJ said. The WSJ CEO Compensation Study was conducted by management consulting firm Hay Group and based on an analysis of CEO pay of the first 200 US companies with fiscal year 2008 revenue of at least $5 billion that filed their proxy statements between October 2008 and March 2009. WSJ said the study would be updated as companies file new proxies.
— PTI |
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Tata Tele has least-congested network
New Delhi: Mobile service provider Tata Teleservices Ltd (TTSL) on Thursday said it has been rated as the operator with least-congested network amongst all pan-India service providers in the quarterly analysis by telecom regulator
TRAI. In the report for October-December 2008 quarter on congestion, TTSL recorded the least congested network with only two PoIs (Points of Interconnection) having congestion as against 14 of
Airtel, 11 of Reliance and 12 of Vodafone, TTSL said in a
statement. — PTI |
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Axis Bank, BoR cut lending rates
Mumbai: Private sector lender Axis Bank has reduced its benchmark prime lending rate (BPLR) by 0.5 per cent to 15.25 per cent with immediate effect. The reduction in BPLR will be applicable for all BPLR-linked floating loans for both existing and new customers, the bank said in a release. Bank of Rajasthan also reduced its retail prime lending rate by 0.25 per cent to 9.75 per cent with immediate effect.
— PTI |
Aviva unit to slash 1,690 jobs in UK Forex reserves fall by $1.5 b BSNL’s new talk plans Gold prices may decline Leyland sales down 52.2 pc Sun extends open offer
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