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Kotak Mahindra Bank in focus after setting MCLR

Kotak Mahindra Bank announced lending rates based on marginal cost of funds to be effective from Friday, 1 April 2016. Kotak Mahindra Banks Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 8.9%, for one month will be 9% and for three months will be 9.25%. The MCLR on 6-month loans will be 9.4% and for one-year loans the rate would be 9.6%, the bank said. The MCLR on two-year loans will be 9.65% and for three-year loans the rate would be 9.65%, the bank said. The announcement was made after market hours on Friday, 1 April 2016.

Tata Steel announced on Saturday, 2 April 2016 that the sharp fall in international steel prices and the challenging conditions facing the global steel industry triggered a review of Tata Steels credit rating by Fitch. The companys long-term foreign currency issuer default rating (IDR) has been downgraded by 1 notch.

ITC on Saturday, 2 April 2016 said that the company has been compelled to shut its cigarette factories with effect from 1 April 2016 until clarity emerges in the current uncertain state of the rules on health warning.In 2009, the Central Government introduced pictorial health warning on cigarette packages. The implementation of any change in the health warnings on the cigarette packages is an elaborate process for the manufacturers, entailing months of preparation involving substantial cost and effort, ITC said. Since the matter of new health warning was under the Parliamentary Committees consideration, and the Government had itself held out that it would await the Committees report, the industry was led to believe that the Government would re-notify new health warnings after considering the Committees recommendations, the company said. Further, the question of the legality of the new warnings has been and continues to be pending before the Court, it added. In this situation, the company, as any prudent person would, did not commit to wasting substantial resources in creating the large number of cylinders and other tools necessary for a change-over of the warnings. As a result, the company is at present not in readiness to print the health warnings as now once again notified, ITC said.

Godrej Consumer Products (GCPL) on Saturday, 2 April 2016 announced that it has entered into an agreement to acquire Strength of Nature LLC (SON), a leading company of hair care products for women of African descent. This acquisition is a further step to accelerate GCPLs global 3 by 3 strategy and scale up its presence in Africa by being at the forefront of serving the hair care needs of women of African descent. GCPLs 3 by 3 strategy aims at scaling up the the companys international presence in emerging markets in Asia, Africa and Latin America through 3 core categories viz. hair care, home care and personal care. The acquisition is expected to be EPS accretive for GCPL from year one itself.

HCL Technologies announced on Saturday, 2 April 2016, an agreement to acquire (through demerger) all of the business of Geometric, except for the 58% stake that Geometric owns in the joint venture-3DPLM Software Solutions, with Dassault Systemes. In consideration of this acquisition, HCL will issue 10 equity shares of Rs 2 each to Geometric shareholders for every 43 equity shares of Geometric of Rs 2 each held by them. In total, HCL will issue 1.56 crore equity shares of Rs 2 each. The transaction is expected to be accretive on cash earnings per share, HCL said. Geometric is one of Indias leading PLM consulting, mechanical engineering and manufacturing engineering services providers. The acquisition strengthens HCLs presence significantly in the PLM consulting as well as mechanical and manufacturing engineering space. It also significantly strengthens HCLs automotive and industrial practices.

The acquisition would take place through a scheme of arrangement which would be subject to the approval of the High Courts at Mumbai and Delhi in addition to the approval of the regulatory authorities.

Coal India and its subsidiaries on provisional basis achieved 101% of targeted production at 59.19 million tonnes in March 2016. Coal India and its subsidiaries on provisional basis achieved 94% of targeted offtake at 49.12 million tonnes in March 2016. The announcement was made after market hours on Friday, 1 April 2016.

Hero MotoCorps sales rose 14% to 6.06 lakh units in March 2016 over March 2015. The announcement was made after market hours on Friday, 1 April 2016.

Tata Motors total commercial and passenger vehicles sales (including exports) rose 1% to 53,057 units in March 2016 over March 2015. The companys domestic sales of Tata commercial and passenger vehicles fell 1% to 46,701 units in March 2016 over March 2015. The announcement was made after market hours on Friday, 1 April 2016.

TVS Motor Company announced 10.19% rise in total sales to 2.32 lakh units in March 2016 over March 2015. Exports fell 26.88% to 31,121 in March 2016 over March 2015. Total two wheeler sales increased by 13.3% to 2.26 lakh units in March 2016 over March 2015. Scooters sales of the company grew by 24.7% to 68,171 units in March 2016 over March 2015. Three wheeler of the company fell 46.03% to 5,874 units in March 2016 over March 2015. The announcement was made after market hours on Friday, 1 April 2016.

Infibeam Incorporation makes its debut on the bourses today, 4 April 2016. The company has fixed issue price of Rs 432 per share. The Rs 450-crore initial public offer (IPO) of Infibeam Incorporation received tepid response from institutional investors. The IPO received good response from the non-institutional investors (NII) category. The NII category was subscribed 2.23 times and the retail investors category was subscribed 1.31 times. The Qualified Institutional Buyers (QIBs) category was subscribed 86% or 0.86 times. Overall, the IPO was subscribed 1.11 times. Infibeam Incorporation is an e-commerce company focused on developing an integrated and synergistic e-commerce business model.

Lloyds Metals and Energy said that a meeting of the board of directors of the company will be held on 14 April 2016, to consider stock-split proposal. The announcement was made after market hours on Friday, 1 April 2016.

Simplex Castings said that the company has received an order from Mazagon Dock Shipbuilders Limited and Garden Reach Shipbuilders Engineers Limited worth about Rs 22.00 crore and about Rs 8 crore from Jindal Rail Infrastructure. Mazagon Dock Shipbuilders, a government of India undertaking is the leading defence shipyard in the country and Garden Reach Shipbuilders Engineers is the premier Warship building company in India, under the administrative control of Ministry of Defence. Jindal Rail Infrastructure (JRIL) is a 100% subsidiary of Jindal ITF, set up for manufacture of Railway Rolling Stock. The announcement was made after market hours on Friday, 1 April 2016.

Adani Power said that a meeting of the board of directors of the company will be held on 6 April 2016, to consider and approve for offer and issue of warrants convertible into equity shares / equity shares on preferential basis to promoter and / or promoter group of the company. The announcement was made after market hours on Friday, 1 April 2016.

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Asia Pacific Market: Stocks down after Japan manufacturing data

Asia Pacific share market ended down on first trading session of month, Friday, 1 April 2016, as weaker than expected surveys on Japanese manufacturing sparked heavy fund selling and overshadowed upbeat news from Chinas vast factory sector. A renewed slip in oil prices also added to the cautious mood. The markets participants also quietened down ahead of the release of a stack of US economic data later on Friday.

Among Asian bourses

Nikkei falls to 1-month low

Japan share market ended first trading session of the fiscal 2016-17 to a 1-month low, as appetite for risk assets sapped after the Bank of Japans quarterly corporate survey showed business sentiment among large manufacturers sank to its lowest level in nearly three years. The Nikkei average stumbled 594.51 points, or 3.55%, to finish at 16164.16, its lowest close since March 1. Japans benchmark index ended the week 4.9% lower. The Topix index closed down 42.24 points, or 3.4%, at 1301.40, with each of its 33 subindexes in negative territory. The index ended the week 4.7% lower.

The Tokyo market commenced trading with back footing, with sentiment hurt by the Bank of Japans worse-than-expected tankan quarterly business sentiment survey for March, released just before the opening bell. The survey showed the headline diffusion index for large manufacturers business conditions came to plus 6, down from plus 12 in the previous tankan and marks its first fall in two quarters. The Nikkei average accelerated its downswing and briefly lost more than 600 points in the afternoon due to heightened risk-averse sentiment stemming from the dismal BOJ survey. Investors also found it difficult to buy stocks ahead of the release of US government jobs data for March later on Friday.

Panasonic plummeted 12.13%, a day after revealing that group operating profit for the year to March 2017 is expected to fall 35 billion yen from the previous years estimate to 375 billion yen. Other export-oriented issues were battered due to growing worries about their fiscal 2017 earnings caused by the disparity between the assumed exchange rate in the tankan survey and recent market levels. Among them were automakers Toyota, Honda and Nissan, as well as technologies Sony, Canon and Toshiba.

On the other hand, mobile carriers Softbank Group and KDDI were upbeat, along with gyudon beef-on-rice restaurant operator Matsuya Foods.

Australia Market ends lower

Australian share market ended steep lower, as bank shares face renewed heavy selling on concerns over the lenders exposure to bad debts. The markets participants also quietened down ahead of the release of a stack of US economic data later on Friday. At close of trade, the benchmark SP/ASX 200 dropped 83.40 points, or 1.64%, to 4999.40. The broader All Ordinaries lost 78 points, or 1.51%, to 5073.80.

Shares banks and financials suffered heavy losses as concerns continue to mount over the lenders exposure to bad debts, amid weak resources sector and rising mortgage delinquencies. National Australia Bank was down 2.1% to A$25.68, Commonwealth Bank 2.6% to A$72.99, Westpac 2.3% to A$29.56 and ANZ 2.8% to $22.81.

Shares of materials and resources companies bumped up after Chinas manufacturing activity unexpectedly expanded in March for the first time in nine months. Chinas purchasing managers index rose to 50.2 in March from 49.0 in February, showing manufacturing activity was expanding. BHP Billiton added 0.7% to A$16.97. Rio Tinto gained 1.1% to A$43.14, while Fortescue Metals rose 0.4% to A$2.56.

The Australian Industry Groups performance of manufacturing index was remain above the 50 level separating expansion from contraction, lifting 4.6 points in March to 58.1. Thats the highest level since April 2004 and the ninth consecutive month of growth.

China Market closes firmer

Mainland China stock market ended firmer on first trading session of the month, Friday, 1 April 2016,, as activity in Chinas factory gauge showed improving conditions for the first time in eight months during, suggesting the governments fiscal and monetary stimulus is kicking in. but market gains were limited due to the impact from Standard Poors downgrade of Chinas credit outlook. The benchmark Shanghai Composite Index rose 3.27 points, or 0.11%, to 3003.92. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 1.81 points, or 0.06%, to 3218.09.

China released the official Purchasing Managers Index (PMI) on Friday morning, which showed activity in Chinas manufacturing activity unexpectedly expanded in March for the first time in nine months, offering some signs that the economy is improving. The manufacturing purchasing managers index rose to 50.2 in March. The measure matches its highest level since November 2014. The non-manufacturing PMI rose to 53.8 from 52.7 in February. A separate, private PMI reading from Caixin Media and Markit Economics rose to 49.7 in March to the highest level since February 2015.

Late on Thursday, rating agency SP downgraded its outlook for Chinas sovereign credit rating to negative from stable, saying the governments reform agenda is on track but likely to proceed more slowly than expected.

Shares of energy and material companies registered the steepest gains among 10 industry groups. Sinopec Shanghai Petrochemical Co. jumped 8.8%. Wuhan Iron Steel Co. paced an advance for metal companies, increasing 3.8%. Aluminum Corp. of China added 2.3%.

Industrial Commercial Bank of China and PetroChina Co, long considered targets of government buying during down days because of their large index weightings, both erased earlier losses.

Liquor companies led declines among consumer-staples shares, with Kweichow Moutai Co. sliding 1%. East Money Information Co. fell 2.9%.

Hong Kong Stocks down 1.34%

The Hong Kong stock market closed lower, as investors risk sentiments hurt after rating agency Standard Poors downgraded its outlook for China and Hong Kong. SP on Thursday cut its outlook for Chinas sovereign credit rating to negative from stable, and also downgraded the outlook for Hong Kong. Shares fell across the board, with the energy sector among the biggest decliners. The benchmark index opened up 9 points at 20,786, which marked the intra-day high. Even though Chinas official and Markit PMIs staged rebound on March, the benchmark saw its losses widen in late trade to 321 points at 20,455. The benchmark Hang Seng Index dropped 277.78 points, or 1.34%, to 20498.92 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, shed 160.39 points, or 1.78%, to 8842.86 points. Turnover reduced to HK$65.3 billion from HK$71 billion on Thursday.

Macau gaming counters were lower as gross gaming revenue for March registered decline of 16%, overshooting market expectations. Melco (00200) plunged 5% to HK$10.26 as its earnings slid 93% to HK$100 million. Sands China (01928) dived 5% to HK$30.1. It was the worst performing blue chip. Galaxy Ent (00027) sagged 3.8% to HK$28.

SP today revised the outlook to negative from stable on0 Chinese government-related entities following sovereign rating action. China Shenhua (01088) dipped 4% to HK$11.7. CNOOC (00883) fell 3% to HK$8.87. China Mobile (00941) slipped 1% to HK$85.65.

HK retail sales growth has fallen for 12 consecutive months, with February sales plunging 20.6%, way above market expectations of 7.8% decline. Belle (01880) dipped 2% to HK$4.39. Bonjour (00653) dropped 2.6% to HK$0.37. Chow Tai Fook (01929) ebbed 1% to HK$4.82.

Indian indices snap 2-day winning streak

Losses for IT, telecom stocks and index heavyweight Reliance Industries (RIL) outweighed gains for stocks of public sector banks and index heavyweights ITC and HDFC, with the two key benchmark indices registered small losses. The barometer index, the SP BSE Sensex, fell 72.22 points or 0.28% to settle at 25,269.64. The Nifty fell 25.35 points or 0.33% to settle at 7,713.05.

Shares of companies engaged in exploration production of natural gas extended losses registered during the previous trading session after the Petroleum Planning Analysis Cell (PPAC) attached to the Ministry of Petroleum Natural Gas announced a reduction in locally produced natural gas price for the six-month period April-September 2016. Cairn India (down 0.71%) and ONGC (down 2.79%), edged lower. Oil India was up 0.93%. The price has been cut by almost 20% to $3.06 per million British thermal units (mmBtu) on gross calorific value (GCV) basis for the period 1 April 2016 to 30 September 2016 from $3.82 per mmBtu for the period from 1 October 2015 to 31 March 2016. PPAC made the announcement after trading hours yesterday, 31 March 2016. Shares of ONGC, Oil India and Cairn India edged lower yesterday, 31 March 2016, after media reports suggested that the gas price will be cut by about 20% after the half-yearly price review.

Separately, PPAC set the ceiling price at $6.61 per mmBtu on GCV basis for the gas produced from deepwater, ultra deepwater and high pressure-high temperature areas for the six-month period 1 April 2016 to 30 September 2016. It may be recalled that the government last month finalized proposal to grant marketing, including pricing freedom for the gas produced from deepwater, ultra deepwater and high pressure-high temperature areas in its bid to boost gas exploration and production in the country. The higher pricing for gas produced from deepwater, ultra deepwater and high pressure-high temperature areas is expected to result in estimated additional gas production of around 35 mmscmd. The countrys present gas production is around 90 mmscmd. Index heavyweight Reliance Industries slipped 1.11% to Rs 1,033.65.

Punjab National Bank (PNB) rose 3.66% to Rs 87.80. The bank announced lending rates based on marginal cost of funds to be effective from today, 1 April 2016. PNBs Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 9.15%, for one month will be 9.2% and for three months will be 9.3%. The MCLR on 6-month loans will be 9.35% and for one-year loans the rate would be 9.4%, the bank said. MCLR for three-year loans would be at 9.55% and loans with five-year maturity would carry an MCLR of 9.7%, the bank said. The announcement was made after market hours yesterday, 31 March 2016.

Bank of India rose 3.61% to Rs 100.55. The bank said that it allotted 46.39 lakh equity shares to General Insurance Corporation of India on preferential basis on 30 March 2016 at Rs 86.22 per share. The announcement was made after market hours yesterday, 31 March 2016.

Elsewhere in the Asia Pacific region: New Zealands NZX50 fell 0.7% to 6708.02. Taiwans Taiex index sank 1% to 8657.55. South Koreas KOPSI dropped 1.1% to 1973.57. Malaysias KLCI eased 0.4% to 1710.55. Singapores Straits Times index fell 0.8% to 2818.49. Indonesias Jakarta Composite index eased 0.05% to 4843.19.

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No upturn soon in ECBs despite new rules

Earlier this week, the Reserve Bank of India (RBI) revised the rules for external commercial borrowing, to make it easier for units in the infrastructure sector to raise funds abroad. However, it will be a while before a rise in such borrowing as companies estimate the effects of currency volatility and the pricing formula for rupee loans.

Bankers and analysts say the policy change is conductive in the long run for companies to use the ECB route. They will, however, remain cautious in the near term, due to swings in currency values and study the implications of the new regime for pricing loans. the marginal cost of funds-based lending rate.

Use of the ECB route had moderated in the past three years, for a variety of factors. Indian companies raised $32 billion through ECBs in 2012-13. The growth was flat in 2013-14 and fell to $28.4 bn in 2014-15. The amount raised was $21.5 bn in the first 10 months of FY16.

Aditi Nayar, senior economist at ratings agency ICRA, said use of ECB was subdued as economic activity itself was in low gear. This had reduced the working capital requirement. Also, the fall in commodity prices had an effect on demand (for money).

The economy has seen a gradual turnaround but is yet to translate into a pick-up in investment.

Joiel Akilan, executive director chief representative India at BBVA, the Europe-based financial services group, said global uncertainties, less of new large projects, deteriorating credit risk and a depreciating rupee had contributed to less demand for such loans.



Govt seeks views on Performance in Credit Rating Scheme

Government today sought comments from stakeholders on the recommendations of the Committee set up by MSME Ministry for revision in the guidelines of Performance in Credit Rating Scheme.

Performance and Credit Rating Scheme (PCRS) is being implemented by Ministry of MSME through National Small Industries Corporation (NSIC).

Under this scheme, grant up to 75 per cent of the fee payable to a rating agency by Micro and Small Enterprises up to a defined ceiling is provided by Ministry of MSME to the rating agencies.

The panel in its draft recommendations has proposed a revised fee structure under which the fee to be paid to the rating agencies shall be based on the turnover of the Small-Scale Units which has been categorized into three slabs.

For turnover of up to Rs 50 lakh, the fee to be reimbursed by Ministry will be 75 per cent of the fee charged by the rating agency subject to a ceiling of Rs 10,000. Under the second slab of above Rs 50 lakh to Rs 2 crore, the fee to be reimbursed will be subject to a ceiling of Rs 35,000, whereas for the third slab above Rs 2 crore, the fee will be reimbursed subject to a ceiling of Rs 40,000.

Various stake holders including banks, micro and small enterprises, industry associations and rating agencies are requested to examine the draft recommendations of the Committee for amendment in guidelines of the PCR Scheme and provide their comments to Ministry of MSME by April 5, micro, small and medium enterprises (MSME) Ministry stated.

Besides, the panel has proposed that the rating scale under the Scheme be revised to align it to the scale normally used by bankers. This will help banks and financial institutions to assess the credit worthiness of the MSEs applying to banks for fresh loans or for enhancement of their existing limits.

The scale besides indicating the credit worthiness would also indicate to the user the financial strength and operating performance through performance through a well defined matrix.

Besides, Credit Rating Agencies (CRAs) should provide data for the first year and there after should endevour to track the units rated by them at least for three years including the financial year for which the rating is being conducted.

A portal should be developed wherein information with regard to all rated units should be uploaded by the respective rating agencies.

While rating agencies would have access to this portal for uploading the information with respect to the units rated by them, Ministry of MSME and NSIC would have access to view the information on the portal.

The guidelines under the scheme issued in the year 2004. Therefore, the Ministry of MSME has decided to review the guidelines of the PCR Scheme to make it more useful for lenders and Micro Small Enterprises and increase its effectiveness.



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