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RBI bans some MNC banks from trading in gilts
Probes Circular Trading Deals; More Banks Likely To Be Pulled Up
Sugata Ghosh & Sangita Mehta
HE Reserve Bank of India (RBI) has pulled up some foreign banks in India amid investigation on circular trading in government bonds — transactions where securities change hands at offmarket prices to hide losses. The Board for Financial Supervision (BFS) of the banking regulator discussed the matter at its last meeting when a decision was taken to impose certain restrictions on their market operations. The central bank has decided on a sixmonth trading ban on three multinational banks, said a senior banker familiar with the development. The Reserve Bank of India spokesperson was not available for comments, but according to regulatory and custodian sources, Standard Chartered Bank which has a significant presence in India, Societe Generale and Calyon are among the banks that have come under the RBI lens. A StanChart official said that the bank “will not comment on market speculation”. Calyon officials could not be reached despite repeated attempts while a mail to a senior SocGen official remained unanswered. These banks, according to the RBI decision, cannot carry out proprietary trades in government bonds, but can participate in primary auctions, open market operations conducted by the RBI, buyback offers from the government and repo
The central bank has decided on a 6-month ban on three multinational banks
(or repurchase of securities) transactions with the central bank. “There are a few more banks, including a large European bank whose trading patterns have drawn the RBI’s attention. Investigation is on and there could be more regulatory action,” said a person familiar with the development.
The off-market trades relate to deals that banks cut in illiquid and semi-liquid bonds to dress up their books and even ramp up the market. For instance, a bank that is an illiquid paper it bought at `102 may be tempted to strike such deals with a few other banks when the last traded price of the security is well below that rate. Say, three
days ago, the paper was traded at `101 — a price at which the bank’s stop-loss limit gets triggered. As a result, the bank finds itself at a point where it has to dump the paper; and, since it’s a security for which there are no ready buyers the price it may fetch can go even below `101. To wriggle out of the situation the bank sells a part of that bond holding to a second bank at `101.50, which in turn sells to a third bank for `101.55, and then again to a fourth bank for `101.58. During the final leg, the fourth bank sells it to the first bank. Even though the first bank may have sold just `5 crore of the `25 crore of the illiquid security it is holding, traded volumes add up to ` 20 crore as the paper moves from one bank to another. Since adequate volumes get generated, the last traded price (`101.58) becomes the new price of the paper. “This may be high enough to avoid a fire sale by the bank. Besides, it also revalues the entire `25 crore bonds, though just `5 crore has been traded,” said a trader. There are occasions when banks also do this to attract other unsuspecting buyers, but this may not have happened in the present case, he said. According to another trader, such trades are common between mutual funds and banks when the former wants to prop up the month-end valuations to show a high net asset value (or, the price of a mutual fund unit) of some of the debt schemes. In some cases, off-market deals also happen between large banks and for-
eign institutional investors who borrow cheap dollar offshore to buy Indian government bonds that promise a much higher returns. A ban on trading will mean
that the banks in question will not be able to sell the securities they buy from the market or subscribe through auctions to maintain the minimum mandatory
holding in government bonds. As part of the statutory liquidity requirement, banks have to hold 25% of the deposits in government papers.
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YY INDL LIMITED
Delhi - 110066
(A Govt. of India Undertaking)
Regd . Office : 1, Bhikaiji
Cama Place, New
SI . No .
Financial year ended
30-Sep.09 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
a) Net Sales! Income From Operations
b) Other Operating Income
Expenditure a) Increase/decrease in stock in trade and work
in progre ss
b) Consumption of raw materials
c) Purchase of traded traded goods d) Employees cost
e) Depreciation f) Other expenditure I) Sub-Contract payment II) Construction material III) Other expenses g) Total Profit from Operations before Other Income, Interest & Exceptional items (1.2) 4 5. 6. 7.
11812.95 328.59 10153,41 17470.57 5252.90 45018.42 14342.88 3486.37 17829.25 0.20 17829.05 17829.05 6731.20
13130.41 315.16 7943.54 11884.73 4265.12 37538.96 9280.74 5940.79 15221.53 17.05 15204.48 15204.48 5398.00 135.49 (865.68) 10536.67 10536.67 5615.62 3.12 3.12
23671.35 610.06 22161.82 34921.21 10003.36 91367.80 28597.23 6383.49 34980.72 0.27 34980.45 34980.45 13192.88
23153.17 576.50 14728.62 20267.14 8122.23 66847.66 19115.96 10393.77 29509.73 17.05 29492.68 29492.68 10788.00 135.49 (1389.78) 19958.97 19958.97 5615.62 5.92 5.92
48690.06 1290.54 30024,75 55609.92 15954.66 151569.93 47809.77 18367.10 66176.87 129.08 66047.79 66047.79 24485.00 487.04 (2481.76) 43557.51
With target pressure gone, banks report less loan nos
LOAN growth in the banking system is faltering as borrowers shift to market funding and due to the tapering off of window-dressing that boosted numbers at the end of the quarter last month. Banks loaned `7,133 crore in the fortnight ended October 22, down from ` 46,000 crore lent in the preceding fortnight. Banks follow unconventional methods to show higher loan numbers during the quarter-end that’s a formal record to measure their performance against targets. “Credit growth has not been as robust as expected,” pointed out HDFC Bank MD and CEO Aditya Puri. Bank loans used to be one of the key gauges in the past to measure economic activity, but that is becoming less reliable as alternative sources of funding such as share of bonds and overseas loans for corporates increase. “The rise in bank credit to the commercial sector was also supplemented by the higher flow of funds from other sources,” RBI governor Duvvuri Subbarao
said. “Rough estimates showed that the total flow of financial resources from banks, nonbanks and external sources to the commercial sector during the first half of 2010-11 was higher at `4,85,000 crore, up from `3,29,000 crore during the same period of the previous year,” he added. If the slow pace of loan growth continues, the central bank’s estimates of 20% this year may have to be cut for the second straight year. Last year, RBI lowered the credit growth projection twice, first from 22% to 20% and then to 18%. The data released in central bank’s weekly statistical supplement shows that the year-to-date (between April 1 and October 22) credit growth was at 7.2% while that year-on year (YoY) was 21%. Most bankers believe that the third quarter will be crucial to achieve the target as a busy season will kick in when most corporates borrow for expansion while individuals borrow during the festival season. “Although 20% growth may not be achievable, we may be able to achieve 18-19% growth in credit,” said Bank of India chairman and managing director Alok Misra.
FILLING UP OF THE POST OF SECRETARY ON DEPUTATION BASIS Central Electricity Regulatory Commission had earlier invited applications for the post of Secretary in the Pay Band of Rs.37400 67000 + Grade Pay-Rs.1O,000/- per month to be filled bb deputation on foreign service y terms. The last date of receiving applications for the post has been extended to 24th November, 2010. Detailed terms & conditions are available in website www.cercind.gov.in. The applications as per prescribed format must reach the Assistant Secretary (P&A) , CERC by 6.00 P.M. of the extended last date. Candidates who have already submitted their applications in response to the earlier advertisement need not apply again .
Profit before Interest & Exceptional Items (3+4) Interest Profit after Interest but before Exceptional Items (5-6) Exceptional items 8. 9. Profit (+)!Loss(-) from Ordinary Activities before tax (7-8) 10.a Provision for Taxation 10.b Short! (Excess) Provision for caner years 10.c Provision for Deferred Tax Liability/(Asset) including earlier years adjustment 11. Net Profit (+)ILoss(.) from Ordinary Activities after tax (9.10) 12. Extraordinary Items (net of tax expense) 13. Net Net (+)! Loss (-) for the period (11- 12) Profit 14. Paid-up equity share capital (Face Value of 5!-) (Refer Note 3 below) 15. Reserves excluding Revaluation Reserves 16. Earning Per Share (EPS) (Refer Note 4 below) a) Bas & diluted EPS before Extraordinary iten in b) Bask & diluted EPS after Extiaordinary items in Public Shareholding —— Number of Shares —— Percentage of Share holding Promoters and Promoter group Shareidding a) Pledged/Encumbered
—— Number ——
(896.19) 11994.04 11994.04 16846.84 3.58 3.56
(1662.35) 23449.92 23449.92 16846.84 6.96 6.96
5615.62 105854.96 12.93 12.93
Percentage of Shares (as a % of the total shareholding of promoter and promoter group) —— Percentage of Shares (as a % of the total share capital of the company) b) Non- encrnibered Number of Shares —— Percentage of Shares (as a % of the total shareholding of promoter and promoter group)
of Shares (as a % of the total
Parekh slams builders’ 10% booking plans
share caoital of the comoanv)
90.401% ( in lakhs r Financial year ended
HALF YEAR ENDED
UUpacking a new chapter ofgrowth...growth... n
In 2009-10, we unveiled a new chapte r, of growth,aspirations and achievements. We com pleted our expansion programme, increasing capacities from 5, 500 MT to 10 ,000 MT. The expanded capacities are operational and will propel our growth to the next leve l, going forward. U NAU DITED FINANCIAL RESULTS (PROVISIONAL) FOR THE 4TH QUARTER ENDED ON 30/09/2010 (Rs. n Lacs)
Standalone 30-Sep.10 30-Sep-09 30-Sep-10 30-Sep-09 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
31-M -10 (Audited)
HDFC chairman Deepak Parekh has strongly criticised schemes in which builders offer to book apartments at 10% of the property value with balance to be paid on completion. “Within days of buying a plot, builders are putting out advertisements accepting booking at 10% upfront payment,” said Mr Parekh. He questioned how it was possible for developers to receive all approvals overnight and said the regulator should not allow lenders to fund projects unless all approvals have been received. Mr Parekh’s statements were in support of RBI’s move to ensure that banks lend only after potential home buyers bring in 20% of the property value. Although most banks insist that borrowers bring in at least 15% of the property value, some banks in their eagerness to get large accounts have funded borrowers after they brought in the initial 5% to 10% of the property value, with the understanding that they will bring their remaining portion of the finance at a later day. In the months leading to the financial crisis, some private banks had come out with schemes where they offered 100% financing of the property. Some of the banks had burnt their fingers as a result of such loans since borrowers had no equity in the property. Earlier, before the financial crisis, RBI, in order to discourage such lending, had said banks needed to provide higher capital for loans where the borrower’s equity was less than 25%. However, banks discovered a loophole after they found out that the excess capital has to be provided only as long as the outstanding loan is more than 75% of the property value. Now, with the strong revival in housing demand, banks were again getting enthusiastic in growing their mortgage portfolio. To curb this practice, the central bank said banks, henceforth, cannot lend more than 80% of the property value. Mr Parekh said in the rush for market share, lenders should not set aside prudential lending norms. RBI has also discouraged banks from lending for purchase of properties over `75 lakh by asking banks to set aside more capital for such loans. Bankers, however, say the Indian mortgage market is a far cry from the US. Unlike the US, there is a huge housing shortage in India. Also, income levels are rising at a much faster rate. They point out that in India, on an average, home loans are repaid in seven years and the loan to property value ratio is less than 75%.
a. Net Income from Sales b . Other Operating Income C. Increase/Decrease in stock
(d) TOTAL Expenditures a. Consumption of Raw Material b. StaffCost c. Manufacturing Expenses d. Other Expenses a. Depreciation f. TOTAL Profit from Operations before Other Income, Interestand Exceptional Items (1-2) Other Income Profit before Interest and Exceptional Items (3+4) Interest Profit after Interest but before Exceptional Items (5-6) Exceptional items-(Add)/Less Profit (+)ILoss (—) from Ordinary Activities before tax (7+8) Provisionfor Taxation Net Profit (+)/ Loss (—) from Ordinary Activities after tax (9-10) Extraordinary Item (net of tax expenses) Net Profit(+)I Loss(—) forthe period (11-12) Paid-up Equity Share Capital (Face Value: Rs. 10/- per Share) Reserve excluding revaluation reserves (as per Balance Sheet) of previous accounting year to be given in column (5 Basic and Diluted EPS for the period, for the year to date and for the previous year (Rs.)
3117 .60 ‘
1917.03 763.31 115.46 89.44 18.64 184.28 1171.13 745.90 6.08 751.98 0.58 751.40 0.00 751.40 0.00 751.40 0.00 751.40 1995.28
3211.74 2478.39 118.64 60.34 15.78 20.23 2693.38 518.36 0.00 518.36 0.72 517.64 0.00 517.64 0.00 517.64 0.00 517 .64 1995.28
0.00 (266.40) 11065.93 8181.15 351.74 257.10 64.74 351.08 9205.81 1860.12 15.15 1875.27 8.93 1866.34 0.00 1866.34 0.00 1866.34 0.00 1866.34 1995.28
6805.57 171.26 297.54 7274.37 5521.39 343.39 221.86 115.00 221.15 6422.79 851.58 20.12 871.70 5.79 865.91 5.96 859.95 1.35 858.60 0.00 858.60 1995.28 7659.85
Segment Revenue Consultancy & Engineering Projects 27244.85 25382.17 53993.50 48097.28 105533.14 Lumpsum Turnkey Projects 3211645 21437.53 65971.53 37866.34 93846.56 Total 59361.30 46819.70 119965.03 85963.62 199379.70 Segment Profit froni operations Consultancy & Engineering Projects 12637.78 8103.85 24539.78 17352.42 42423.98 Lumpsum Turnkey Projects 3285.91 2096.20 6720.90 3413.68 9200.77 Total (a) 15923.69 10200.05 31260.68 20766.10 51624.75 Prior period adjustments 0.00 79.43 0.00 80.45 79.96 Interest 0.20 17.05 0.27 17.05 129.08 1580.81 839.88 2663.45 1569.69 3735.02 Other un allocable expenditure ) Total , 1581.01 936.36 2663.72 1667.19 3944.06 Other Income (c) 3486.37 5940.79 6383.49 10393.77 18367.10 17829.05 15204.48 34980.45 29492.68 66047.79 Profit Before Tax (a.b+c) Capital Employed * 134920.50 157492.62 134920.50 157492.62 111470.58 Fixed assets used in the compan s business orliabilitiescontracted have not been identified to any of the reportable segments,as the fixed assets and support services are used interchangeably between segments. Accordingly, no disdosure relating to total segment assets and liabilities has been made. In Lumpsum Turnkey Projects of the company, margins do not accrue uniforml y y during the year. Hence , the financial performance of the segments can be discerned onlyonth e basis of thefi gures for t hefu llyear. (? in lakhs Particulars
AS ON 30-Sep.10 (Unaudite 30-Sep-CO (Unaudited)
3 4 5 6 7 8 9 10 11 12 13 14 15 16
SOURCES OF FUNDS
9.35 13373736 67.03
4.30 13395755 67.14
No. of shares Percentage of shareholding
13373736 13395755 67.03 67.03 67.14
Promoters and Promoter Group
Shareholding a. Pledged / /Encumbered Number of Shares
Percentage of Shares
(a) Capital (b) Reserves and Surplus LOAN FUNDS TOTAL APPLICATION OF FUNDS FIXED ASSETS (NET) INVESTMENTS DEFERRED TAX ASSET (NET) CURRENT ASSETS, LOANS AND ADVANCES (a) Inventories (b) Sundry Debtors (c) Cash and Bank balances (d) Other currentassets (e) Loans and Advances LESS: CURRENT LIABILITIES AND PROVISIONS (a) Liabilities (b) Provisions NET CURRENT ASSETS MISCELLANEOUS EXPENDITURE (NOT WRITFEN OFF OR ADJUSTED) PROFif AND LOSS ACCOUNT
16846.84 118073.66 0.00 134920.50 7610.96 10137.84 15814.30 93.28 45344.36 177927.81 18328.01 23569.70 140906.82 22998.94 101357.40 0.00 0.00 134920.50
5615.62 151877.00 0.00 157492.62 6724.35 3951.35 13059.96 83.34 31414.40 206390.41 22112,05 23864.74 132263.88 17874.22 133726.84 30.12 0.00 157492.62
IDBI Bank raises $125m via bonds
MUMBAI: Public sector lender IDBI Bank has raised $125 million
foreign currency syndicated loan from the Singapore market to meet the growing demand from domestic corporates for foreign currency funds. “As part of our $1.5-billion medium term note (MTN) programme for this fiscal, we have raised $125 million through a three-year bond issue. We mobilised this fund on November 1 in Singapore. With this, so far we have issued bonds worth $475 million so far this fiscal,” IDBI Bank chief financial officer P Sitaram said here on Thursday. He further said the issue had an overwhelming response as more than a dozen foreign bankers were keen to participate.
(as a % of total shareholding of Promoter and Promoter Group) Percentage of Shares (as a % of total share capital of the company) b. Non-Encumbered Number of Shares Percentage of Shares (as a % of total shareholding of Promoter and Promote r Gro up) Percentage of Shares (as a % of total share capital of the company)
NA. 6579083 100.00 32.97
NA. 6557064 100.00 32.86
NA. 6579083 100.00 32.97
N.A. 6557064 100.00 32.86
1. The Audft Committee reviewed the above results arid the same were taken on record by the Board of Directors at their meeting held on 01.11.2010. 2. Segment reporting prescribed with respect to products underAS - 17 is not applicable. 3. 3. Details of Investor complaints during the Quarter ended 30/09/2010 Opening: 0 Received: 2 Disposed: 2 Balance: 0
Plac e: Mumba i Date : 01.11.2010 For SHARP INDUSTRIES LIMITED -SdDIRECTOR
heldono4.1I .2010. 2 TheAuditorsofthe Companyhave carried out’Limited Review ’of theabovefinancial results. 3 Consequent to approval of Shareholders in their Extra ordinary General Meeting (EGM) held on 22nd April, 2010 for sub-division of each equityshare offace vaIueof 101- each into2equitysharesof 51-eachand issueof bonus shares inthe ratio of 2:1,the paid up equity share capital of the Company as on 30th September, 10 consist of 336936600 equity shares having face value of 5!- each as against56l56lOO equity shares h face value of ’1O!- each ason 30th September ,2009 and 3lstMarc h , 2010. aving 4 As per requirement of AS-20,the Basic and Diluted Earning per share has been adjusted for all periods presented on the basis of new number ofequity shares aftersplitand bonus i.e. 336936600equi1y shares of 51- each. 5 During the current quarter, “Further Public Offer’ of 33693660 equity shares of 51- each of the Company through an offer for sale by the President of India, acting through Ministry of Petroleum & Natural Gas, Government of India was made through the 100% book building process. Consequently. Sliareholding ofGovernmentof India reducedto 80.401% from 90.401% 6 Therewer eno investor s ’ complaints pending at the beginningofquarter. Dufng the current quarter companyhadreceived6l complaints and samewere resolved during the quarter.
By Order of the Board
I The above results have been reviewed by the Audit Committee and approved by tie Board of Directors at their meeting
For Eng ineers India Limited Place : New Delhi New Dated : 4th November , 2010 2010 Please visit our website at http ://www .engi neersind ia.com (Ram Singh) Director (Finance)
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