Posts Tagged ‘Fiscal’

Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares

Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares


Issue of bonus shares by Corporate India to its shareholders in the first 10 months of the fiscal has shot up 40% over the total during the fiscal ended March ‘09, after declining for two straight years.


This interesting jump in bonus issues indicates positive sentiment of the corporate sector to serve a larger equity base.


Companies like Britannia, TCS, Reliance Industries, Adani Enterprises, Jindal Steel, Divi’s Lab, JP Associates etc  have  issued bonus shares in the April ‘09-January ‘10 period.

There are as many as 61 companies which have done so.


Jagannadham Thunuguntla, equity head with Delhi-based merchant bank SMC Capitals, said:  “The increase in companies doling out bonus equity to its shareholders reflects that the domestic economy is on the path of recovery.”


Corporate India has got the confidence to expand equity capital base and issue bonus shares owing to the fact that they have performed very well this fiscal.


Bonus issue is an offer of free additional shares to existing shareholders.

This is one of the ways of rewarding shareholders, who largely benefit from capital gains.


A company may decide to distribute further shares as an alternative to increasing the dividend payout.

It is also known as a “scrip issue” or “capitalization issue”.


The number of companies issuing bonus shares declined more than a quarter after hitting a peak in 2006-07 to 72 firms in 2007-08 and shrunk further to just 44 companies for the year ended March ‘09.


This came after three consecutive years of rise in number of bonus issues, when more listed firms announced a bonus bonanza in line with the bull run of the stock market.


Bonus shares are issued by companies through capitalization of their free reserves.

When a company announces bonus issue, it is an indication of its management’s confidence to serve a larger equity base.



Weekly Update of The Market (08th-12th February)

Hello Friends, here, we bring you the weekly overview of the Indian as well as of the Global economy and  latest global business and industry updates.


Weekly Update of The Market (08th-12th February)


After starting the year on a good note & Indices making fresh highs within few weeks many Asian markets have corrected between 7 to 10%.


The global sell off over sovereign debt problems in Europe and an unexpected rise in jobless claims in US put investors on the defensive mode.


The anxiety about sovereign debt in Greece, Portugal and Spain sparked a sell-off in the Euro & has led strength to US dollar.


Foreign investors sell off is an outcome of dollar-carry-trade unwinding as when they borrowed the dollar was cheap & now it is recovering.


Investors viewed the markets in year 2010 with confidence in view of recovery gaining momentum is now shaken over the debt problems, nascent economic recovery & confidence of the governments that stand behind the euro.


Efforts of China to curb lending preventing overheating in economy also pose a risk to derail the global recovery.


Back at home, the effect of turmoil in the international market also made government to think its strategy on ambitious disinvestment programme.




Lukewarm response to the NTPC, the much awaited issue managed to get subscription of just 1.2 times on its closing day.


The maximum bid of 20.87 crore shares was put by Indian institution under the first time adopted French Auction route.


This has challenged the finance Ministry hopes on the proceeds from disinvestments to make up the sliding revenue & rising expenditure.


While it looks that PSU disinvestment may not yield desired results on market weakness, the 3G auction i.e. expected to garner Rs. 35,000 crore could be postponed to next fiscal year.




The fate of some of the IPO’s like NMDC, Satluj Jal Vidyut Nigam Ltd and Rural Electrification Corporation that are on the disinvestment agenda before March 31, looks tough to sail through, if the stock markets do not rise and big investors do not come back.


On the contrary, Banks like Bank of Baroda & Indian Bank that were expected to raise money overseas have put now their plans on hold.




The good news from the external sector continued as the data showed a 9.3% annual increase in exports in December to $14.6 billion, a second consecutive month rise.


While imports increased by 27.2% from a year earlier to $24.75 billion.


Food inflation remained at high levels & rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week on the back of rising pulses & potato prices.


Markets are likely to take a closer view of the advance estimates on economic growth for the current fiscal ending March 2010 scheduled to be released on Monday.




In the days to come an activity in the sectors like railways, fertiliser, textiles, pharma, education, power and infrastructure may be seen on expected positive policy announcements and budgetary sops.


It was clearly mentioned last week that world markets are going in downtrend and one should be careful in such a scenario and that one should be moving in cash.


Now the markets have taken a very sharp fall last week due to rise in Dollar Index and fall in all asset classes.




The coming week might see some counter rally from lower levels.

Nifty faces resistance between 4900-5000 levels and Sensex between 16400-17000 levels.




If we talk about commodity markets then one can see that strengthening dollar and lack of firm global cues had pressurized commodities prices to move southward.


Investors are selling riskier assets and putting their money in dollar as a safe haven buying.


Debt concerns facing Greece, Portugal and Spain coupled with dollar index which is trading above the mark of 80 is most likely to compel commodities to trade lower.


French and euro zone GDP, USD advance retail sales, USD U. of Michigan Confidence will give further direction to commodities.


Investors should keep an eye on gold – silver ratio.

It was 58:1 few months back, now reached to 67:1 on MCX, heading towards the level of 70:1.

It is demonstrating more selling in silver.




Stay Tuned for More on weekly updates.


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E-Filing of Service Tax to be Made Mandatory in Coming Months

E-Filing of Service Tax Set to be Made Mandatory in Coming Months

E-Filing of Service Tax Set to be Made Mandatory in Coming Months

The government will make electronic filing of service tax mandatory within a couple of months, said a senior official of the Central Board of Excise and Customs (CBEC).

“Electronic filing of service tax will be made compulsory in the next two months,” CBEC member Mr Y G Parande told reporters on the sidelines of a PHD chamber seminar.

Parande also expressed hope that despite impact of stimulus package on realisation of revenue, the government would meet service tax collection target during the financial year.

During the year, the government proposed to garner Rs 65,000 crore as service tax.

The service tax collection during the first seven months has dropped by 5.4 per cent to Rs 28,926 crore compared with corresponding period last year.

The collections of indirect tax, including customs, excise and service tax, fell by 21.6 per cent to Rs 1,26,903 crore during the period of April-October.


Attributing decline in revenue collections to incentives given by the government to help the economy combat the impact of global slowdown, Mr Parande said, “certainly, the stimulus packages have had the effect (on indirect tax collections), particularly because rates were brought down.”

Earlier, stimulus packages and economic slowdown have hit the exchequer hard as indirect tax collections shrunk by 21.6 per cent to Rs 1.27 lakh crore in the first seven months of this fiscal, against Rs 1.62 lakh crore a year ago.

All the three components of indirect tax — excise, customs and service tax — have registered decline in collections.


As stimulus is taking a heavy toll on the exchequer, talks have also already begun about when to withdraw it.

Prime Minister Manmohan Singh had said it will be phased out from next fiscal, while Finance Minister Pranab Mukherjee had said it will continue till the global economy recovers.


Are Retail Investors Staging a Comeback in Country’s Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

Are Retail Investors Staging a Comeback in Country's Primary Market ?

In what could be viewed as a sign of revival of retail interest in the country’s primary market, the initial public offering of Indiabulls Power has received over 31,000 applications from retail investors on the first day of its issue.


Although the retail portion of the offering remained under subscribed, the interest was more than what was seen in three major IPOs of the fiscal — NHPC, Oil India and Adani Power.

According to an analysis, NHPC‘s over Rs 6,000 crore issue received 30,474 retail applications on the first day.

Adani Power‘s Rs 3,610 crore issue got only 15,000 such applications.

The Rs 4,982 crore issue of OIL received 7,700 applications.


“Retail investors are gradually staging a comeback and it is a pleasant surprise for the primary market,” SMC Capital Equity Head Jagannadham Thunuguntla said.

The Rs 1,700-crore initial public offer of Indiabulls Power, which hit the market yesterday, got subscribed nearly six times, as flooded the counter with maximum number of bids.

However, bids from retail investors on the first day of subscription accounted for only 37 per cent of the shares reserved for them.


44,000 Crores to be Raised by Indian Firms :)

Indian-corporates-raise-44k crores

Indian corporates raised Rs 21,691 crore through the qualified institutional placement (QIP) route during the first half of this fiscal and the funds raised through this route are expected to double in the second half.


Mr Jagannadham Thunuguntla, the equity head of SMC Capital, said: “As of now, about 48 companies have received requisite resolutions from either shareholders or their boards to raise the funds through QIP route. The total amount proposed to be raised by these companies is about Rs 44,000 crore.”


He further said: “As there is no requirement for the approval of the Securities and Exchange Board of India (Sebi) for the QIP issuance. These companies are ready to offer their QIP whenever they are confident about the market conditions.”


“Some of the prominent names of the corporates that would be raising funds through this route include Tech Mahindra, Essar Oil, Hindalco, RCom, Omaxe, Pantaloon Retail, Jet Airways, Ansal, JSW Steel and L&T,” he said.


It seems that the Indian promoters have regained their confidence and enthusiasm for fund raising, he added.


It is turning out that corporates are raising funds through QIP route as a last alternative and not as a preference.

Most of the IPOs launched in the last seven to eight months had put up a flop show.


The bank funds that are another source of funding are not available for most of the corporates.

Depending upon the sector and profile, banks are asking for premium over interest rates and for smaller companies, banks are not offering loans.

So the corporates that are looking for the expansions would opt for the QIP route to raise the funds, Mr Thunuguntla added.


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Indian Export to Register 10% Growth during 2010-11 :)


With all sectors including textile showing recovery, the total export from India is likely to register 10% increase during 2010-11.


However, the growth during this fiscal (2009-10) would be either flat or marginally negative, although export observed a marginal decrease during the last financial year due to global recession.


While, it is said that almost all the sectors in India were showing a stimulation or plus-growth, including automobile, plantation and engineering.


On the other hand, it is said that the economic situation is not really that bad and there is a sign of revival during the last two to three months whereas the year 2010-11 is said to be good for all the sectors, particularly textile, which was feeling the ”cyclic pinch” and that would be back to business in the year.


Though textile would continue to remain weak in 2009, there could be recovery in the year 2010 and once the demand from the USA and EU improves, it is expected to achieve a reasonable growth 🙂


However, though there was a steep export growth in textiles and clothing in the first half of 2008-09, there had been slowdown in demand from major markets, USA and EU, due to the global economic crisis.


India’s FDI Inflows Surge in July :)


The government has revealed that despite a global financial crisis, the flow of foreign direct investment (FDI) to India during the month of July 2009 has been registered at $3.52 billion, impressive 56.5% higher than the $2.25 billion registered last year.


However, the inflows in July have been against $2.58 billion during the month of June 2009 and $2.10 billion received during the month of May 2009.


Moreover, it is said that this raise is an optimistic one if the present fiscal situation of India and world is taken into consideration.


In addition, it is said that a non-profit company will be encouraging FDI into India and this will act in association with the central and state governments as well as the Federation of Indian Chambers of Commerce and Industry.


On the other hand, the distinctive feature is the partnership between a private sector organization, the Government of India and state governments is unlike anywhere else in the world.


However, in order to attract more foreign investments, Indian government on Thursday announced formation of a not-for-profit company ‘Invest India’.


Private Sector Life Insurers Sailing in Choppy Waters :(

Private insurers sailing in choppy waters

Even after 8 years in operations, most of the companies seem to be sailing in choppy waters while the latest profit/loss numbers reveals that almost all of the 22 companies are still making losses.


Net losses of the private sector life insurers have risen to a whopping Rs 4850 crore during the last fiscal from 2001-2002, showing a uncanny rise of over 2000%.


However, Reliance Life has suffered the highest loss of Rs 1085 crore and its pool of the policy holders fund is a meager Rs 50 crore.

Moreover, ICICI Prudential Life is sitting on a net loss of Rs 780 crore while the cushion for policy holders is Rs 200 crore.

As for Birla Sunlife, the loss amounts to Rs 700 crore with a 130 crore surplus for the policy holders fund while HDFC Standard Life has netted losses of Rs 500 crore with a policy holders fund of 160 crore.


Additionally, IRDA is looking at the numbers very closely now and is also doing a check on the risk profile of individual companies and trying to build in a system of early warning given the fact that life insurance is a long gestation business.


Meanwhile, it is the speedy expansion in business that has cost the companies dear and the coming days will see a change in strategy.


At the same it is said that such multi million losses may hit valuations of private life insurers especially if the companies are keen to list on the stock exchanges.



UNION BUDGET 2009-2010


To lead economy to high GDP growth rate of 9 per cent per annum at the earliest

• To deepen and broaden the agenda for inclusive development to improve delivery mechanisms of the government.


• Growth rate of Gross Domestic Product dipped from an average of over 9 per cent in the previous three fiscal

years to 6.7 per cent during 2008-09.

• Whole sale price index rose to nearly 13 per cent in August, 2008 and had an equally sharp fall to zero per

cent in March, 2009.

• The structure of India’s economy changed over the last ten years with contribution of the services sector to

GDP at well over 50 per cent and share of merchandise trade doubling to 38.9 per cent of GDP in 2008-09.

• Recognising economic recovery and growth as co-operative effort of the Central and State Governments,meeting with Finance Ministers of States held as part of preparation of the Budget. This is intended to become an annual feature.

Highlights of Union Budget 2009-10

* Govt plans to bring back economy to high growth of 9%

* GDP growth dipped to 6.7% in FY’09

* FM to make pre-budget talks with state FMs annual affair

* Fiscal deficit up from 2.7% to 6.8% of GDP

* Return to fiscal prudence at the earliest

* ‘Aam admi’ is focus of all programmes and schemes

* IT exemption limit raised; Rs 15,000 for Sr.citizens

* Limit raised by Rs 10,000 for tax payers, including women

* 10% surcharge on personal income tax scrapped

* Fringe Benefit Tax abolished

* No change in corporate tax

* Defence gets Rs 1,41,703 cr, up 34%

* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr

* IIFCL to evolve mechanism for increased funding of infra

* IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 cr

* Allocations for highways being stepped up by 23 per cent

* Funds for housing, amenities for urban poor up Rs 3,973 cr

* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr

* Assistance for storm-water drainage project up by Rs 300 cr

* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr

* Interest rates incentive to farmers to repay loans on time

* Additional Rs 1,000 crore for accelerated irrigation scheme

* Export Credit Guarantee scheme extended till March 2010

* 2% interest subvention (IS) scheme extended till March 2010

* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.

* Commodity Transaction Tax abolished

* New pension system trust exempted from STT; DDT

* Minimum Alternate Tax hiked to 15% from 10%

* Tax holiday on petro sector extended to natural gas.

* 100% tax deduction on political donation * Stimulus for print media for another six months

* Fertiliser subsidy to be nutrient-based, not price

* Expert Grp to form viable pricing for imported petro goods

* Banks and insurance firms to remain in public sector

* Rs 100 cr one-time grant to expand banks in unbanked areas

* Govt committed to provide Rs 100 a day as wages under NREGA

* Allocation of Rs 39,100 cr to be made for NREGA

* NREGA coverage increased to 4.74 crore households in FY’09

* Work National Food Security scheme has begun

* Allocation for Bharat Nirman being raised by 45 per cent

* Rs 2,000 cr rural housing fund under National Housing bank

* Mission for female literacy with focus on minorities, SC/ST

* 50% of all rural women to be brought into SHG programmes

* Full interest subsidy for students in select institutions

* Five lakh students to benefit

* Modernisation of national exployment exchanges

* Action for social security to unorganised sector workers

* New pension benefits for 12 lakh jawans and JCOs from July

* One lakh dwelling units for paramilitary forces personnel

* Unique Identification Card to citizens in 12-18 months

* Provision of Rs 120 crore for UIC project

* Rs 2,113 crore allocated for IITs and new IITs

* Rs 3472 cr for Commonwealth Games from Rs 2112 cr

* Customs, excise and service tax base rates unchanged

* For Indira Awas Yojana, allocation increased 63%

* IT returns to be made simpler

* 8 missions being launched under Plan on climate change

* Allocation for market development assistance scheme up 148%

* Allocation for Rural Health Mission raised by Rs 257 cr above interim budget

* Rs 500 cr for rehabilitation of Sri Lankan Tamils

* Rs 1,000 cr for infrastructure in cyclone-hit area in WB

* Total expenditure crosses Rs 10 lakh cr for first time

* Share of direct taxes in revenue increased to 56% in FY’09

However, the failure of Finance Minister Pranab Mukherjee’s Budget in slashing securities transaction tax, the status quo when it came to short-term capital gains tax, no substantial increase in exemption level for calculating personal income tax and no complete tax exemption on interest income earned by senior citizens was a huge letdown.

I would rate this Budget at 5 on a scale of 1 to 10.

A Letter by a Common Man to India’s PM :)

A Letter by a Common Man to India's PM :)

Dear Mr. Prime Minister


Soon after you swear in as the PM of India and your initial steps, post your appointment, had exactly fitted the requirements of the situation.

But there was a sad development too : Induction of few ministers in your team whose integrity was widely suspect and who, as per their own affidavits of election nominations, were going under investigations for criminal offenses.

You must be aware being a former top civil servant, that if superior of any government employee has expressed even the slightest doubt about his honesty and integrity in his performance appraisal record, then same Govt employee is barred from promotion and sensitive posts or even retired compulsorily from service before his time.

Ministers who wield power and authority over thousands of crores of rupees worth of public assets and whose decisions can make a whole lot of difference between progress and disaster, need to be, like Caesar’s wife, above suspicion. It is surprising how you overlooked this fact while constituting ministries in both your terms of office.

No Compromises !!

‘We, the People,’ the acknowledged sovereign masters in democracy, can only hope that your own vigilance and the idealism and acute sense of right and wrong of the young blood you have inducted into the ministry will help to contain and terminate any acts of malfeasance and misuse of power.

Occasionally, though, to our disappointment, you also take recourse to the age-old excuse of politics being the art of the possible. This has been serving as a cover for corrupt politicians to hide their many sins.

Ideals and principles are not incompatible with clean politics and good governance. In India itself, there have been leaders, alas, though few, who have proved that accountable and fair governance is possible.

Actually, there was, and is, no need for you to make the kind of compromises that are the bane of the country’s politics. You have received a thumping mandate as a prime minister this time and you could have acted as a tough PM in this regard.

Accursed black hole

The respect and trust for you among Indian masses have in fact contributed to the impressive victory for Congress party. The parties in the Opposition are in disarray, and are unlikely to pose any problem in the foreseeable future. You, therefore, are in an unchallengeable position to give a determined drive to the formulation and execution of policies that you judge as the best for the country.

You have got the task of to take the country forward in all directions that matter: Political, economic, social, scientific, technological, fiscal, monetary, budgetary. No doubt you would have received plenty of suggestions and ideas as India has never suffered from any dearth of bright ideas on what needs to be done.

But real issue is not about bright ideas but rather India’s policy maker’s shaky grip on the methods of getting them done within the proposed time frames and cost estimates.

The result is that all the promises held out to the people at large vanish into the accursed black hole of failure of implementation.:(

In nut shell, lack of attention to know-how makes a over indulgence of know-what purposeless.

All who go through India’s ills and cures enumerated in the President’s Address, for instance, will find themselves in full agreement with each one of them.

For the laudable intentions contained in the Address to turn a reality, and reach their benefits to the aam aadmi, it is must for you to inculcate in your ministers a work culture that encourage and adherence to prudence, propriety and probity within their spheres of action.:)

The observations that follow are to help you to that end.

Independent and Transparent committees to evaluate tenders

There is a persistent and growing belief among all sections of aam aadmis by whom your government and party swear that huge sum is demanded and given as bribes for allocation of contracts for purchases and sanction of projects. Any new project or purchase announced, an aam aadmi presumption runs like that purpose of project is just to facilitate high personages in authority to make money, not to serve project’s real interest.

Better make all financial transactions absolutely transparent and pass evaluation of tenders above, say, Rs 100 crores, to an independent committee of former officials of the Comptroller and Auditor General of India (CAG) nominated jointly by the CAG and the Chief Vigilance Commissioner, and go by its findings, besides giving them wide publicity in the Web sites of the respective ministries.

Relentless Monitoring

Effective leadership consists in relentless monitoring and follow-up of orders without remaining content with merely issuing them. It will be great if you can regularly devote little time to review pending matters with ministers.

If you can make your ministers as well as the chief ministers to adopt this practice, it will surely result in an immediate flow in the tempo of action leading to swift service delivery and timely completion of projects. It will also put babudom on notice that there will be zero tolerance for arrogant response towards the aam aadmi.

Accustom Minister to think of Nation not constituencies

Until about 40 or so years ago, Central ministers used to visit every part of India to gauge a personal idea of the prevailing situations and mingle with the aam aadmis to know of their grievances and gain profit from their suggestions.

Nowadays, whether it is the central or state minister, either because he lacks self-confidence or because he is uncomfortable with English or local language, he rarely, if ever, ventures into the rest of the country. His obsession is mostly with channeling funds and jobs to his constituency or his native state.

Accustoming ministers to think of the nation as a whole will help rid the narrow politics of regionalism.

Reviving orientation camps for ministers

Rajiv Gandhi conceived the brilliant idea of a retreat in which ministers, elected representatives, bureaucrats, officers of the police and defence forces and eminent achievers of the civil society would spend a couple of days engaged in informal and friendly exchanges of views, ideas and experiences.

This helped in their cultivating a better understanding of their field of action and built up a better connection in forging a collective front on issues and problems facing the country.

I would earnestly urge you to revive this practice for developing a synergistic approach which may lead to effective and expeditious implementation of projects and schemes.

Reviving Inter-State and Zonal Councils

Mechanisms like zonal councils and the inter-state council, envisaged by India’s far-sighted Constitution makers for mutual reinforcement of the Centre and the states and contingency planning, have remained unused and ad hoc responses to situations have become the rule.

It is high time they were made into potent instruments for building a common front, regardless of parties in power, against present and future challenges.

I shall continue to be in touch with you as and when necessary.

Yours sincerely:

A Common Man 🙂