IDBI raises $300 mn via overseas bond sale at 5.06% coupon

The state-run  IDBI Bank on Wednesday became the first lender to hit the overseas debt market this year, raising USD 300 million in a 5.5-year money, priced at 5.061 percent.

For the city-based lender, this is first issue since last March when it had raised USD 500 million.

The current RegS bond sale got an over-subscription of USD 2.2 billion from overseas investors, said Citigroup, which was one of the lead bankers to the issue along with RBS and PNB Paribas.

Regulation S bonds are senior unsecured debt instruments sold to foreign investors in which US-based American investors cannot participate.

Also Read: India allows more banks to import gold in easing of curbs

Despite repeated calls, the bank did not respond.

The bank had given an initial pricing guidance of US Treasury plus 370 bps, but the bank could price it cheaper due to the overwhelming response from investors, as a result the final pricing got tightened by 20 bps to T-plus 350 bps over five-year treasury, Citi said.

Commenting on the successful bond sale, Citi India's debt capital markets head Neville Fernandes said that "IDBI Bank moved swiftly to take advantage of the robust market conditions and abundant liquidity in the international debt markets, carefully navigating through the news headlines like economic weakness in China and the US Fed's rate decision later today."

The issue has been rated BB+ by S&P, Baa3 by Moody's and BBB- by Fitch.

"This shows strong international investor appetite for strong credit from the county," RBS India head of debt capital markets Manmohan Singh said.

The bonds will be listed on the Singapore Stock Exchange.

As much as 77 percent of investors were Asian region with the rest coming in from European region, while the investor type included 40 percent banks, 39 AMCs, 15 percent private banks and the rest insurers and others, Singh added.

Earlier this month, telecom major Bharti had raised USD 400 million or 350 million Swiss francs from the Swiss market in a six-year money.

This was Bharti's second bond sale this year after it had raised 250 million euros in January in the run-up to spectrum auctions. Last March, the company had raised USD 1.5 billion in overseas debt sale in two tranches.

After a massive bond sale last year worth USD 16 billion, up 60 percent from 2012, the domestic companies have been going slow to tap international bond market following rising interest rates there.

The overseas fund raising ebbed after the May 24 tapering talk by the US Fed, which spiked interest rates in Western markets. Since then there were only a few issues, including HDFC Bank 's USD 500 million in October and ICICI Bank 's USD 750 million in December.

IDBI Bank stock price

On February 28, 2014, IDBI Bank closed at Rs 56.10, up Rs 0.35, or 0.63 percent. The 52-week high of the share was Rs 95.50 and the 52-week low was Rs 52.30.

The company's trailing 12-month (TTM) EPS was at Rs 7.22 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 7.77. The latest book value of the company is Rs 134.09 per share. At current value, the price-to-book value of the company is 0.42.

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Piramal buys 3.5% stake in Sunteck Realty for Rs 65 cr

Sunteck Realty has around 28 million square feet of area under development with most either completed or under various stages of completion.

Ajay Piramal-led Akshar Fincom has picked up a 3.5 percent stake in  Sunteck Realty for around Rs 65 crore, according to industry sources.

Piramal has acquired over 20.65 lakh shares or 3.5 percent stake in the company for around Rs 65 crore, sources said.

"This is one of the biggest deal for Sunteck Realty," an industry expert said.

Also Read: Yash Birla Group sells Mumbai property for Rs 250 crore

It may be recalled that Piramal recently picked up 20 percent stake in Shriram Capital for Rs 1,900 crore.

Sunteck Realty has around 28 million square feet of area under development with most either completed or under various stages of completion.

The BSE-listed firm has projects across segments, including residential and commercial, with most of them in Mumbai, besides projects in Goa, Nagpur and Jaipur.

Currently the promoter shareholding in the company is 73.49 percent

Sunteck Realty stock price

On March 20, 2014, at 14:10 hrs Sunteck Realty was quoting at Rs 260.55, down Rs 17.8, or 6.39 percent. The 52-week high of the share was Rs 465.00 and the 52-week low was Rs 221.25.

The company's trailing 12-month (TTM) EPS was at Rs 1.98 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 131.59. The latest book value of the company is Rs 59.02 per share. At current value, the price-to-book value of the company is 4.41.

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Persistent launches products-focused business unit

Silicon Valley-based  Persistent Systems has launched a dedicated business unit called 'Accelerite' that will align its business strategy towards products and intellectual property based on the social, mobility, analytics and cloud (SMAC) platform.

"We believe that products and product development services need to be managed differently and customers need to view these as different business lines," the firm's CMD and CEO Anand Deshpande told CNBC-TV18 in an interview. "We are taking some of our IP revenues and putting them into the Accelerite brand and all our products will be branded as such."

Deshpande also spoke about the commentary that has come from top Indian IT companies such as  Infosys and  TCS recently who said growth in fourth quarter would be relatively muted.

"I would not read into it as a long term trend," he said. "Most people are projecting a lower Q4 but overall the trend is good. The market is shifting and people are buying new technologies and solutions so growth is expected in the future."

He added that most of the company's business (about 85 percent) comes from North America and so he was not concerned about a perceived slowdown in the Indian IT space, a factor alluded to by TCS at its recent analyst call.

Persistent has been focused on new technologies such as cloud computing, mobility and analytics and is seeing a lot of activity and new deals getting signed, Deshpande said. "These deals are small in size but are signed with large companies and last for a long time."

The company's nine-month dollar revenue growth stands at 14.6 percent while its targeted full year margin is 24-25 percent.

Below is the interview of Anand Deshpande, CMD & CEO, Persistent Systems with Ekta Batra & Sonia Shenoy on CNBC-TV18.

Ekta: You have also setup a business unit to focus on your product segment. Can you take us through that news?

A: We announced this today that we are creating a business unit called Accelerite and the idea there is that we believe that products and product development services that we do, need to be managed differently and also customers need to view them are two different business lines. Therefore, we are taking some of the our IP revenue where we are responsible for selling those products into this brand called Accelerite and all the products that we do will get branded as Accelerite products and that way we will have the ability to compete as a product company which Accelerite will look and feel like when we are competing with other product companies in the market.

Sonia: Before coming to specific performance of Persistent, I wanted to get your view on the commentary that we got from some of the bigwigs like Tata Consultancy Services (TCS) and Infosys where Q4 might be a slower quarter than earlier expected. Are you getting a sense that perhaps the growth for the entire sector could slowdown or is it just a one or two company specific worry?

A: It is hard to say exactly what has happened for the entire sector. However, most people are projecting potentially a slower Q4 but overall the trends are very good. The market is shifting so there is a lot of activity in the market, people are buying new technologies and solutions, so there is a lot of growth expected in the future but as the market moves from what we use to do to what we are likely to do – there is likely to be some changes in between, so that is the reason why people are projecting a slightly slower Q4 but overall I would not read too much into it in terms of long-term trend.

Ekta: One of the key things which were brought up by TCS in their analyst call or analyst meet was that India has been quite a volatile geography for them and that is one of the reasons why the guidance for Q4 might be lower than what they were anticipating. For Persistent Systems how much of your revenue is dependent on the India region and what is the region looking like. Is there any sort of volatility in the market that you are facing?

A: Almost 85 percent of our business comes from North America. We have a very small percentage of business from India. Therefore, we are not subject to the changes that we see in the Indian market. Most of the business is directly coming from North America for us.

Sonia: When you say that Q4 could see slower growth, what could your constant currency growth look like not just in the revenue front but also in terms of volumes because last quarter you did about 3.5 percent quarter on quarter, volume growth? How much could that slowdown to?

A: It is not like we are projecting a whole lot of slowdown in terms of Q4 but I do not want to say what the exact number might be but it is in the same range as last quarter or little lower than that but not by much and there should be volume growth. We are also expecting intellectual property (IP) growth this quarter. We do see that some of the businesses that we have done traditionally are changing and there is a shift in the kind of business that we do as we look forward. The outlook though is very positive in the sense that we are seeing good opportunities, good pipeline growth and many good interesting deals getting signed.

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Will sustain 30% operating margin levels: Prestige Est

Prestige Estates, which got a good response to its Prestige Lakeside Project, is planning several new launches in FY15.

We really have to time the launches so at the moment we are pretty bullish about how we can achieve that.

Irfan Razack

CMD

Prestige Estates

Irfan Razack, CMD, Prestige Estates , believes the company will have a sustained growth going forward.

"We achieved some spectacular numbers in this fiscal. We now need to look at ways to sustain those numbers and how can we take that to the next level," he told CNBC-TV18's Ekta Batra and Reema Tendulkar.

Also Read: Sustainable real estate in India: Roadblocks to growth

Despite a slowdown in the sector, Prestige Estates is likely to achieve its FY14 guidance across various operating parameters due to good growth in the Bangalore market. The company is one of the top picks of Barclays in the real estate sector. It also figures among CLSA's preferred picks.

The company, which got a good response to its Prestige Lakeside Project, is planning several new launches in FY15.

The company has also bagged two large development projects in Hyderabad, which may get approvals soon.

Razack said that going ahead the company will be able to sustain the 30 percent operating margin levels. 

Below is the interview of Irfan Razack, CMD, Prestige Estates with Ekta Batra & Reema Tendulkar on CNBC-TV18.

Ekta: Can you start by giving us an overall sense on where you see growth parameters for Prestige Estates considering that the company is now all set to beat its guidance across all parameters?

A: We will have a sustained growth. The main thing is we have achieved some very spectacular numbers in this fiscal. Now, we need to see a) that we sustain these numbers and b) how we can again take this to another high. So we are working out certain strategies. The best part is we have now got certain approvals for some very large developments and all this will come in the next fiscal.

We really have to time the launches so at the moment we are pretty bullish about how we can achieve that. Plus we picked up two very large developments in Hyderabad and those are also on the verge of approvals so even that will add up to the kitty.

So all in all, first two quarters next year will be pretty exciting and pretty aggressive and we will have to see how things pan out. Of course till the elections are over we have to be on the quieter side, immediately after that that is when we have to plan the launches so there is no distraction.

Prestige Estate stock price

On March 20, 2014, at 14:13 hrs Prestige Estates Projects was quoting at Rs 157.40, up Rs 4.65, or 3.04 percent. The 52-week high of the share was Rs 192.35 and the 52-week low was Rs 105.10.

The company's trailing 12-month (TTM) EPS was at Rs 9.54 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 16.5. The latest book value of the company is Rs 77.38 per share. At current value, the price-to-book value of the company is 2.03.

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Maruti board meet on Suzuki Gujarat plant: Key takeways

India's largest passenger-car company Maruti reviewed terms of proposed Suzuki Gujarat plant and decided to amend contours of the agreement.

Faced with severe criticism and concerns over the Gujarat deal, India's largest passenger-car company Maruti reviewed terms of proposed Suzuki Gujarat plant and decided to amend contours of the agreement.

Here are the key takeaways:

1. Bulk of capex for Suzuki's Gujarat subsidiary would be funded through depreciation/equity by Suzuki. The earlier plan had intended to cover it via post-tax profits of Maruti .
2. Hence, the subsidiary will not charge any mark-up for vehicles supplied to Maruti.
3.  In case of termination of the agreement, the Gujarat subsidiary would be transferred to MSIL at book value versus fair value previously.
4. The company is voluntarily seeking minority shareholders approval for this arrangement.

Post tweaking of the agreement with Suzuki, the Maruti stock witnessed a sharp upmove . Analysts and brokerages have given thumbs up to the company's decision with many upgrading the stock to buy.

Maruti Suzuki stock price

On March 18, 2014, at 14:14 hrs Maruti Suzuki India was quoting at Rs 1869.40, up Rs 132.30, or 7.62 percent. The 52-week high of the share was Rs 1899.90 and the 52-week low was Rs 1217.00.

The company's trailing 12-month (TTM) EPS was at Rs 106.68 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 17.52. The latest book value of the company is Rs 615.03 per share. At current value, the price-to-book value of the company is 3.04.

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Could this put a floor under China property prices?

China`s fresh urbanization plan could establish a floor for the country`s cooling property market, analysts told CNBC.

Authorities unveiled the National New-type Urbanisation Plan on Monday, which detailed plans to increase the amount of Chinese people living in cities to 60 percent from 54 percent by the end of 2020, through huge investment in transport networks, urban infrastructure and residential real estate, together with reforms to the country`s registration system.

According to Alaistair Chan, economist at Moody`s Analytics, continued strong demand for city property should put a floor under house prices.

"Now that the 70-City house price index has peaked showing that prices in the major cities are coming down, the government is under pressure to reduce restrictions. I don`t think they will do that, but the new urbanization plan could be a method of putting a floor under prices," he said.

The pace of growth in China property prices slowed in February, according to Reuters` calculations based on official data released Tuesday. New home prices rose 8.7 percent on year in February, compared with January`s 9.6 percent rise.

In 2013, prices rose in every month, with some large cities such as Shenzhen and Guangzhou posting more than 20 percent price rises from a year earlier, leading some analysts to conclude the frothy market is topping out.

Analysts at real estate services firm JLL said they doubt that the urbanization plan would have any short term impact on supply/demand dynamics or prices but said it would eventually lead to a moderation in prices in the long term.

"The price index will come down as the mix of units changes rather than the values coming down across the board," said Michael Klibaner, head of research for Greater China at JLL.

"There is a huge unmet need in China for properties aimed at people with median incomes and the urbanization plan directly addresses this. These properties will be be built on land further out from the city centers, and will have smaller unit sizes and less expensive facilities," he said.

Urbanization has been a core part of the Chinese government`s strategy over the past decade, and Monday`s announcement was part of their continued drive to help more rural dwellers migrate to cities, improving their standard of living and helping boost the overall economy.

As part of the plan, policy makers have scheduled the cancelling of the hukou registration system - which makes it difficult for a Chinese citizen to leave the place in which they were born - and eased restrictions in some mid-sized cities. However, strict policies will be maintained in cities with a population of over five million.

According to IHS Global Insight, the government`s plan to increase urbanization to 60 percent will involve 110 million rural residents crowding into the cities over the next seven years.

"[This] suggests strong demand growth in housing, transport and other markets related to urbanization," said Brian Jackson, China economist, at IHS.

"While the document does not mention how much investment is required for the next urbanization wave, it will be a considerable figure given the extensive construction plans addressed in the document," he added.

According to Citi Research, the proportion of Chinese people living in the country`s top three mega regions - now 18.2 percent of the population compared to advanced economies` 40 percent - is set to double in the coming decades.

China`s urbanization ratio at 54 percent is markedly lower than advanced economies, which average around 80 percent.

Capital Economics estimated that the property sector contributed 9.5 percent of China`s gross domestic product (GDP) in 2013.

-By CNBC`s Katie Holliday. Follow her on Twitter: @hollidaykatie.

Copyright 2011 cnbc.com

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Sebi to consider legal cost recovery from penalties

With many of its orders getting challenged in tribunal and courts, Sebi wants to recover legal expenses incurred in such litigations from penalties imposed by it on defaulters before crediting the same to the government's coffers.

Also Read: Sahara investors untraceable, search empties Sebi coffers

The capital markets regulator has incurred litigation expenditure in the range of Rs 4-5 crore in each of the past three financial years, while such expenses could be even higher in the current fiscal ending this month.

Besides, Sebi may also consider charging 'processing fees' for various service requests from companies, stock exchanges and market intermediaries, as many of such services are being provided for free despite significant costs incurred by the regulator in such matters, sources said.

Fees are proposed to be levied on all service requests, barring investor complaints, in accordance with the processing time, cost and procedures involved. Besides, fees can be hiked for services like informal guidance and consent settlement.

These proposals are likely to be considered by Sebi board later this week and are based on recommendations made by a Committee on Rationalisation of Financial Resources (CRFR), which has also suggested an upward revision in certain existing fees charged by the regulator from companies and market intermediaries, a senior official said.

The recommendations have been made to beef up Sebi's financial resources to help it meet expenses for its various regulatory and investor-centric activities. The committee has submitted its report to Sebi after detailed discussions and a "thorough study" of various parameters.

With regard to legal costs, the panel has recommended remittance of net proceeds of penalties collected by it to the Consolidated Fund of India, as against current practice of gross proceeds being credited to the government account.

Pursuant to notification of Sebi (Amendment) Act, 2002, all sums realised by way of penalties need to be credited to the Consolidated Fund of India. Prior to this amendment, all sums collected as penalties were retained by Sebi.

However, the CRFR observed that many orders passed by Sebi were getting appealed against in the Securities Appellate Tribunal (SAT) and some of them even go to the Supreme Court.

As a result, Sebi was incurring significant legal expenses in its attempt to uphold the validity of its orders and the panel felt that it would be appropriate if the net proceeds of penalties, after deducting the legal expenses incurred, only be credited to the Consolidated Fund of India.

With regard to the services proposed to be charged by Sebi, the panel has suggested Rs 50,000 fee for permission to set up Wholly Owned Subsidiary Abroad, and Rs 10,000 each for requests such as change of custodian, change in registered office or name and change in managing director.

For informal guidance, Sebi has been asked to charge Rs 2 lakh per question seeking information under 'informal guidance scheme', while the processing fee for consent settlement has been proposed to be hiked from Rs 5,000 to Rs 10,000 per application.

It has also been suggested that certain fees be restored to the level seen before a reduction was announced in 2009.

Among others, it has been proposed to revise fees for mutual funds , bourses, brokers as also for filing of offer documents, rights issues and takeovers.

The fee hikes are being proposed against the backdrop of lower volumes in primary as well as secondary markets, resulting in reduced fee collections.

As per Sebi estimates, the regulator's operational income (fees from intermediaries) is expected to be about Rs 165 crore in the current fiscal - ending March 31 - and at about Rs 196 crore in the next financial year 2014-15.

However, a fee revision as per CRFR recommendations can boost Sebi's operational income to Rs 378 crore in 2014-15.

Before the CRFR review, Sebi's total income for the year 2014-15 is estimated at Rs 372 crore, which would include Rs 196 crore as fees from intermediaries, Rs 158 crore as income from investment and about Rs 18 crore as miscellaneous income.

With adoption of CRFR recommendations, the total estimated income can rise to Rs 554 crore, on account of an increase in fee income.

After taking into account capital and extraordinary expenditure, Sebi expects to post overall deficit of Rs 146 crore in the current fiscal.

However, a revision in fees as per CRFR recommendations can help the regulator post an overall surplus of Rs 106 crore in the next fiscal, as against a deficit of about Rs 77 crore at the current rates.

According to Sebi, various investor-centric initiatives as well as the ever increasing regulatory mandate may warrant not only identification of new resources but also aligning some existing levies to the changed market structure.

In the past, the Securities and Exchange Board of India (Sebi) had hiked the fees for various market intermediaries in 2006, while a reduction was also announced in 2009.

The downward revision in 2009 was undertaken with a view that the fees levied by statutory authorities like Sebi should be adequate enough to meet revenue expenses fully and leave a little surplus for capital expenditure.

However, the committee felt that the enhanced scope and role of market regulatory in today's time, which requires much higher financial commitment in order to remain effective and efficient, was not visualised then.

Also, the anticipation of market volumes having a secular growth trend has not materialised and decline in primary and secondary market volumes has hurt Sebi's fee collection.

The review was undertaken by the internal CRFR committee as per recommendations of Sebi's audit committee.

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Sesa Sterlite's copper smelter to be shut for 22 days

"We were to close the plant last year for maintenance but could not because of the forced shutdown on environmental grounds," one of the sources said, referring to a closure of more than two months from March 30 on complaints of emissions.

India's No.1 refined copper producer  Sesa Sterlite will shut its smelter for 22 days starting April 26, two company sources said on Tuesday, in what would be the first maintenance closure in four years and cut supplies to top buyer China.

Sesa Sterlite, a unit of billionaire Anil Agarwal-controlled Vedanta Resources, produces 30,000 tonnes of refined copper per month and exports half of that to China.

"We were to close the plant last year for maintenance but could not because of the forced shutdown on environmental grounds," one of the sources said, referring to a closure of more than two months from March 30 on complaints of emissions.

The shutdown next month could help support global copper prices, which fell to three-and-a-half-year lows last week on fears that a domestic bond default in top consumer China could cause copper financing deals to unravel.

It will help rival producer Hindalco Industries raise sales. The shutdown was confirmed by a second source. Both sources declined to be named because they are not authorised to talk to media.

The closure might also lead to metal from China coming to India, with a group of large Chinese copper smelters planning to jointly boost shipments in the coming months to cope with low prices at home.

P Ramnath, head of Sesa Sterlite's copper business, declined to comment on the planned shutdown but said falling prices were not an issue for the company as its sales were hedged.

He added that the slowdown in China has not had any impact on exports so far.

"We're able to export the full quantity, that's not an issue," Ramnath told Reuters by phone from Tamil Nadu, where the plant is based.

"Nobody has approached us to cancel any contract or anything."

Sesa Sterlite's smelter closure last year had created a shortage for Indian cable makers such as Finolex Cables Ltd and Precision Wires India Ltd and raised imports. An environmental court later allowed the plant to be restarted.

Sesa Sterlite stock price

On March 14, 2014, Sesa Sterlite closed at Rs 171.65, down Rs 1.25, or 0.72 percent. The 52-week high of the share was Rs 213.05 and the 52-week low was Rs 119.45.

The company's trailing 12-month (TTM) EPS was at Rs 4.14 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 41.46. The latest book value of the company is Rs 44.64 per share. At current value, the price-to-book value of the company is 3.85.

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Idea and Lowe Lintas's code to viral success

Youtube: It's skippable True-View ad platform. It seems Idea and Lowe Lintas have figured out the code to viral success - the latest 'Ullu Banaaoing' set of films have been deemed the most watched ads for the month of February.

Youtube: It's skippable True-View ad platform. It seems Idea and Lowe Lintas have figured out the code to viral success - the latest 'Ullu Banaaoing' set of films have been deemed the most watched ads for the month of February.

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Big Bazaar launches India's largest mktg campaign

This week Big Bazaar announced the launch of what it is calling India's biggest marketing campaign. Starting 24th March, the retail chain will launch a new ad around a new category every week - for the next one year.

This week Big Bazaar announced the launch of what it is calling India's biggest marketing campaign. Starting 24th March, the retail chain will launch a new ad around a new category every week - for the next one year. The cost of the 52 films is estimated to be above a Rs 100 crore - that's around Rs 2 crore a week. And Big Bazaar says that the investment will help it's business to go up by 30-35 percent.

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