www.learnwithflip.

com

BFS60
14 June, 2013
Weekly
th

BFS Roundup @ FLIP

The week that was.

SEBI turns focus to PSUs on minimum

holding norms

Currency:
Appreciation/Depreciation

After taking action against private sector

companies, failing to meet minimum public
shareholding norms, SEBI has begun the process of
sending reminders to about a dozen listed PSUs
that are yet to attain a minimum public
shareholding of 10 per cent by August 8, 2013.

Newspapers were full of news, analysis and

comments last week on the sliding rupee
against USD.

The government would need to sell shares worth an

estimated INR
` 3,600 crore at the current valuations
to meet the minimum public holding norms in these
companies.
FLIPs View: This will definitely help the
divestment agenda, but the amount received by the
government from this may not be much, given the
depressed nature of the equity markets.

----------------------------------------------Cobrapost expose: RBI penalises Axis, HDFC,

ICICI banks for rule violations
RBI has imposed a fine of INR 5 crore on Axis Bank,
INR 4.5 crore on HDFC Bank and INR 1 crore on
ICICI Bank for violation of KYC norms and antimoney laundering guidelines after inquiring into
charges levelled by an online portal Cobrapost.
FLIPs View: The banks have definitely got away
lightly, and I am afraid that the bank's intention to
tighten their norms or train their staff to prevent
this happening again, will only be a token gesture
with no real intention. FLIP has seen this first hand
where a training and certification for the branch
staff of these banks did not get much of a response.
---------------------------------------------------------

'Citigroup facing $7-bn currency hit on

dollar'
Citigroup may lose $5 billion to $7 billion in
regulatory capital this year if the dollar gains
against the yen, euro and currencies in emerging
markets, which provide about half the firm's profit.
Firm's reliance on revenue from abroad is causing a
concern that a global economic slowdown will hurt
s
the bank more
than its US rivals.
FLIPs View: This is significant, and banks with a
strong global balance sheet will all be impacted.
---------------------------------------------------------

Few interesting questions that might have

confronted you are:

What makes a currency

appreciate/depreciate against
another currency?

Why a particular movement is

good/bad for different sectors?

What is the role of the central

bank in such a situation?

Well try to answer them one by one

below:

Click here to read the article

Rupee weakens to almost 59 a dollar,
recovers
Rupee fell to almost 59 a dollar on Tuesday,
recovered to end at 58.40, after the intervention by
RBI (claimed by market participants).
Rupee has fallen by 8.5% since the start of the
financial year.
FLIPs View: Domestic and global factors are at
work here. Huge CAD in India, FIIs pulling out only
of debt markets so far, as the arbitrage loses
sheen, as US interest rates are on the rise. If FIIs
start pulling out of equity markets, there could be
mayhem, and RBI reserve power is not sufficient to
stem this slide. They are going to need the reserves
to fund the CAD. All in all, not looking too bright
for the rupee.
---------------------------------------------------------

BFS Roundup @ FLIP

Did you know?
Thanks to a large number of Indians working abroad, India has become
the largest recipient of remittances in the world, according to World
Bank.
Lets look at top 5 recipients of remittances in 2012:
Name of Country

Inward Remittance received

(in USD bn)

India
China
Philippines
Mexico
Nigeria and Egypt

69
60
24
23
21

The remittances to emerging countries have quadrupled since 2000, and we seem
to be leading the pack!
Term of the Week

Offer for Sale

MMTC offer-for-sale tomorrow June 12, 2013

Nine companies offer to sell shares via OFS, six succeed June 3, 2013
Recently, a lot of companies were seen offloading their shares, as SEBI has made it mandatory
for all listed private sector companies to have a minimum public shareholding of 25% by
June 3, 2013.
Following this, more than 60 companies including names like Jet Airways, Adani Enterprises, Tata
Communications, Omaxe, Essar Ports etc. filed for dilution of stake through offer for sale in the
month of May.
What is an offer for sale?
As the name implies, offer for sale in an offer made by the promoters/promoter entities to dilute
their stake in the company. It can be for compliance or simply to liquidate some of their holdings.
The size of the offer shall be a minimum of INR 25 crores. However, size of offer can be less than
INR 25 crores so as to achieve minimum public shareholding in a single tranche.

www.learnwithflip.com

BFS Roundup @ FLIP

Who can participate?
Except the promoters of the company, all market participants like individuals, mutual funds, FIIs,
insurance companies, corporates, QIBs, HUFs etc. can participate in the OFS process. The
promoters of the company can only participate as the sellers in the process.
How does it work?
The seller deposits shares to be offered with the exchange, before the day of OFS. The exchange
than starts the online bidding process and investors can submit their bids directly or through their
dealers.
Once the bidding gets over, the allotment price is fixed just like in any other public issue, and the
allocation is done. The successful bidders will be allotted shares directly into their demat account
the very next day.
How is it different from a FPO?

Unlike IPOs/FPOs, no physical application forms are issued to apply for shares in the OFS
process. OFS process is completely electronic.

While IPOs/FPOs remain open for 3-4 days, OFS gets over in a single trading day as the
markets close for trading at 3:30 p.m.

Under IPOs/FPOs, there is a price band in which the investors need to bid for the shares or
simply give their consent to buy the shares at the cut-off price. With OFS, there is only a
floor price. This is the minimum price for bidding.

Because of its efficiency both in terms of cost and time, OFS is garnering a lot of interest as an
effective tool to raise money.
SEBI has given the deadline of August 8, 2013 to public sector companies to comply with
minimum public shareholding requirements (10% for PSUs).
MMTC has already announced its offer for sale. It will be interesting to see how many of them
dilute stake via OFS.

www.learnwithflip.com