Posts Tagged ‘Merchant Banking’

Consumer Confidence In India?? Excellent & On Upswing ;)

Indian COnsumers Most Confident

Despite below average monsoon, INDIA has emerged as the second most optimistic nation across the world in terms of consumer confidence level.

Majority of people have expressed their positive opinion about job prospects, personal finances and their willingness to spend in the next 12 months. 🙂

A survey conducted by global consultancy firm Nielsen throws light in this regard.

🙂

According to the survey, consumer confidence in India is on upswing, registering a 13-point rise to 112 index points in the second quarter, second only to Indonesia (113 points).

🙂

“The recent elections in India have had a positive effect on Indians’ sentiments towards its economy.

With the UPA government back in power for the second-term, consumers are more confident that political and policy continuity will help recover the Indian economy,’’

🙂

The consumer confidence in India witnessed an uptrend on three parameters—

Job Prospects,

Personal Finances and

Willingness to Spend.

🙂

In terms of job prospects, Over half of Indian consumers are optimistic that job prospects will either be excellent (13%) or good (55%) in the next 12 months.

India ranked second after Indonesia in this regard. 🙂

🙂

When it comes to spending habit, about 4% Indians think this is an excellent time to buy the things they want and need, and 39% think it is a good time to buy things.

🙂

Regarding personal finances, Indians are the most optimistic globally as about 9% of Indians think their personal finances would be excellent in the next 12 months and 65% consider they would be good.

🙂 😀

“A stable economy has refurbished Indian outlook on the job market and their personal finances. Indians are relaxing their hold on money and are spending more than they were willing to spend in the last eight months,’’ an expert from Neilsen quoted.

🙂

However, more or less consumer sentiments are positive all across the world, with the Global Consumer Confidence Index, rising to 82 points from 77 points in March.

😀 🙂

Despite below average monsoon, India has emerged as the second most optimistic nation across the world in terms consumer confidence level, with a majority of people having bullish opinion about job prospects, personal finances and their willingness to spend in the next 12 months, a survey conducted by global consultancy firm Nielsen, said on Tuesday.

According to the survey, consumer confidence in India is on upswing, registering a 13-point rise to 112 index points in the secondquarter, second only to Indonesia (113 points). “The recent elections in India have had a positive effect on Indians’ sentiments towards its economy. With the UPA government back in power for the second-term, consumers are more confident that political and policy continuity will help recover the Indian economy,’’ The Nielsen Company associate director (consumer research) Vatsala Pant said. The consumer confidence in India witnessed an uptrend on three parameters—job prospects, personal finances and willingness to spend. In terms of job prospects, India ranked second after Indonesia. Over half of Indian consumers are optimistic that job prospects will either be excellent (13%) or good (55%) in the next 12 months.

Regarding personal finances, Indians are the most optimistic globally as about 9% of Indians think their personal finances would be excellent in the next 12 months and 65% consider they would be good.

“A stable economy has refurbished Indian outlook on the job market and their personal finances. Indians are relaxing their hold on money and are spending more than they were willing to spend in the last eight months,’’ Pant said. When it comes to spending habit, about 4% Indians think this is an excellent time to buy the things they want and need, and 39% think it is a good time to buy things.

Globally consumer sentiments are positive, with the Global Consumer Confidence Index, rising to 82 points from 77 points in March.

Differential voting rights shares trading remains dull

Mumbai, July 1 The negligible trading seen so far in Tata Motors’ shares with differential voting rights (DVRs) can be blamed on the lack of awareness about the instrument in the Indian markets, said analysts.

These shares were issued in November last year. June was the first month to see trading in Tata Motors’ DVR shares on all days. Until June, these shares were not traded for more than 10 sessions in a month, with as little as one share traded in the day.

DVR investors acquire shares of a company at lower prices with the prospects of higher dividends in return for surrendering their voting rights.

DVR is still a new concept for the investor community here, said analysts. “Our markets here lack the maturity to understand DVRs at this point in time. It will take some time for investors here to appreciate an instrument like the DVR. In developed markets DVRs are common instruments,” said Mr Jagannadham Thunuguntla, Head Equity at SMC Capitals.

Tata Motors was the first company to issue shares with DVRs in India.

The Companies Act permits a company to issue DVR shares when, among other conditions, the company has distributable profits and has not defaulted in filing annual accounts and returns for at least three financial years. The issue of such shares cannot exceed 25 per cent of the total issued share capital of the company.

Tata Motors had issued 6.4 crore shares with DVRs in November 2008 as part of its Rs 4,145-crore rights issue to repay the loan taken for its acquisition of Jaguar-Land Rover. The ordinary rights issue was priced at Rs 340 a share, Rs 35 higher than the DVR shares. However for a 1 per cent dividend on ordinary shares, Tata Motors agreed to give 6 per cent dividend on DVR shares.

Pantaloon too issued shares with DVRs (along with their bonus issue) in February. These bonus issue shares were offered in the ratio of one bonus share with differential voting rights for every 10 equity shares held by shareholders on the record date.

Trading in this stock, though not substantial, has been better than that in the Tata Motors’ DVRs.

Pantaloon has seen 23.05 lakh shares with DVRs traded on the BSE in 2009, while Tata Motors has seen a dismal 5,427 shares with DVRs traded.

Another reason for the poor trading in Tata Motors’ shares with DVRs is that the promoter group holds the majority of the shares.

At the time of the issue, JM Financial was the underwriter. With the underwriter renegotiating its underwriting commitment, the promoters of Tata Motors ended up with more than 84 per cent of the shares. The next chunk of DVR shares went to IFCI – the sub-underwriter – said reports.

“With so much held by the promoters, not many people are able to trade in these shares. It is a very illiquid stock,” said Mr Thunuguntla.

Tata Motors’ shares with DVRs were issued at Rs 305. On Wednesday, the stock traded at Rs 280.10, down 2.40 per cent, on the BSE. Similar shares of Pantaloon were issued at Rs 150 and on Wednesday were trading at Rs 207, up 0.80 per cent.

Source:http://www.thehindubusinessline.com/2009/07/02/stories/2009070251771200.htm

PSU Divestment: Now is the best time news

As opportunities dry up in the recession-hit ‘advanced’ economies, foreign funds are increasingly looking at India. The government should seize the moment to accelerate disinvestment in PSUs, argues Jagannadham Thunuguntla

Jagannadham ThunuguntlaWhat a turnaround! The United States, long considered the ‘cradle of capitalism’, is now busy trying to nationalise its iconic brands such as AIG, Freddie Mac, Fannie Mae, General Motors and Chrysler, under various guises but using taxpayer money.

On the other hand India, long known for its close ties with the erstwhile USSR, and officially a ‘socialist’ republic under the Constitution, is now busy finalising the nuances of its disinvestment policy, giving the ownership of ‘public sector’ undertakings back to the public, at least in part. The economic world has thus been almost turned upside down.

A further indicator of this is the well-documented shifting of economic power from the West of Atlantic Ocean (the United States) to the East of Indian Ocean and particularly the Arabian Sea (the Asia). Global investors, including foreign institutional investors, are flocking to these parts, including India. This should help the country’s divestment policy.

Slow but steady disinvestment
India’s disinvestment process may be too slow for many people’s liking, but it has been fairly steady over recent years. The earlier UPA government which was in power from 2004 to 2009 could not pursue its disinvestment policy with full vigour due to opposition from its Left allies. Even then, during five year period the UPA government managed to complete 13 IPOs of public sector undertakings, garnering an amount of Rs27,385.21 crore.

The message from the election results 2009 is loud and clear: the Indians have changed their mindset from status quo to progress. Evolution is a continuous process in any country’s life and we have displayed it thoroughly this time. The ever-maturing Indians have taken note of the UPA’s efforts and given them a thumping win in this year’s elections. As the new government is free from ‘left’ load, now it can think of ‘right’ things.

This naturally gives a free hand to the new government to launch clear and relatively aggressive disinvestment policy taking into account the burden of fiscal deficit in India.

Opportunity to slash deficit
If the government plans to sell its stake in the listed PSUs while maintaining a controlling stake of at least 51 per cent as per the President’s inaugural speech in the 15th Lok Sabha in parliament, the total amount that can be raised is about $94.77 billion (Rs4,61,245 crore) based on the current market prices of listed PSUs. This works out to about 9.48 per cent of current GDP.

The current fiscal deficit of India is at $62.26 billion (Rs303020 crore), which is about 6.23 per cent of GDP. This means the deficit is much lower than the amount that the government has the potential to garner by selling up to 49 per cent stakes in listed PSUs alone. Besides listed PSUs, as per the disinvestment policy, the government is planning IPOs of several unlisted PSUs such as NHPC, OIL, Coal India, BSNL, RITES, IRCON International, etc.

This signifies that a clear and aggressive disinvestment policy would give the government a lot of cushion and headroom in its fiscal policy making. With an aggressive disinvestment policy, the fiscal deficit may be brought well under control, giving the government latitude to spend on the critical social sector.
On the other hand if the government goes slow on disinvestment, then it will be forced to fund projects vital for growth by raising taxes, which – particularly indirect taxes – are already at swingeing levels.

When the country as a whole owns assets such as BSNL, Coal India Limited and the Railways, and global money is eager to pay hefty valuations for these assets, how far is it reasonable not to accept that money, instead burdening the country with additional taxes?

Disinvestment means transparency
Besides that, disinvestment also helps to bring the financial condition and functioning of unlisted PSU companies into the public domain, where people can have an informed debate on the way several PSUs are operated. After all, the PSUs are pubic wealth and hence Indians have the right to know about the operations and financial health of these companies.

The listing of these companies would bring greater transparency and better corporate governance standards into these companies as they will be subjected to all the disclosure standards of the Securities and Exchange Board of India and the stock exchanges. Further, it could encourage more competitiveness in the operations of the PSUs.

Also, the listing of these companies provides the best opportunity for Indians to participate in the growth of Indian economy. Currently, even if investors believe in the Indian growth story, they have to essentially base investment plans on the private sector.

Hedge funds can finance growth
There is a lot of money with hedge funds, which are unregulated by nature. Also, they are free to invest in any asset class in any country, as long as they see a profit at the end. Now, due to the severe destruction to the assets in the developed economies, all that money is eagerly searching for good opportunities in the East. And India is very much on their radar.

So this is the perfect opportunity for India to create sufficient investment options to attract such money. When they are keen to invest, it would be wise to accept their money through disinvestment in PSUs.

To put it in terms that should appeal to the ever-hungry Indian government, the money that would be invested by these hedge funds in the PSUs will go directly into government’s coffers. Ideally, this could be deployed for infrastructure projects that are crucial to continuing and accelerating economic growth.

Finally, it should be noted that the Indian electorate has given a clear verdict favouring the pro-disinvestment UPA government. This essentially means the Indian voters have favoured disinvestment. Then, why should we argue with the collective wisdom of the Indian public?

Source: http://www.domain-b.com/economy/general/20090625_psu_divestment.html