Posts Tagged ‘public sector units’

IMCX-India’s Fourth National Commodity Bourse, To Be Launched Soon:)

IMCX-to-be-launched

International Multi Commodity Exchange (IMCX)

Commodity trading in India has a long history & was started much before it started in many other countries.

Today, apart from numerous regional exchanges, India has three national commodity exchanges namely, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and National Multi-Commodity Exchange (NMCE).

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THE RISING WAVES

These commodity exchanges have been performing extremely well in these years.

The turnover of commodity exchanges in India surged by 31% in the April-August period, led by a surge in trading of farm goods.

Total value of trading at the Commodity Exchanges during the fortnight from 16th August 2009 to 31st August 2009 was Rs. 3,04,651.88 crore.

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NEED OF THE HOUR

In India, futures’ trading in commodities is zooming.

India’s commodity exchanges have witnessed major action this year and are getting into investing and managing new commodity bourses.

Another commodity exchange may help using the opportunities better ; thereby improving trading volumes of specific contracts & be more efficient is the price discovery, which in turn will attract a wider constituency of participants from the entire commodity value chain i.e. government, producers, marketers, importers, exporters etc.

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THE FIRST STEP

A new commodity exchange, International Multi Commodity Exchange is going to launch very soon under the market regulator Forward Markets Commission (FMC).

IMCX is promoted by Indiabulls Financial Services Ltd (IBFSL) and India’s biggest state-run trading firm, MMTC Ltd, and part-owned by more institutions.

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The exchange is planning to start operations next month as the country’s fourth national commodity bourse & is ready to grab its share of a futures market that is growing 30% a year.

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BUILDING TECH – PLATFORM

The US-based exchange services provider Millennium Information Technology (MIT) has been awarded the contract for implementing the technology platform for the aforesaid exchange.

The US-headquartered MIT provides application solutions to financial and telecom industries.

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THE PILLARS OF FOUNDATION

IMCX will be the first commodity bourse in India to comply with the criteria of revised ownership criteria that makes the participation compulsory of public sector units or cooperatives.

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Currently, Indiabulls Financial Services Ltd. (IBFSL) holds 40% of the exchange, state-run MMTC Ltd. holds 26%.

Forward Markets Commission rejected the United Stock Exchange of India’s (USE’s) 10% stake buy in the bourse, on the grounds that the stock exchange is yet to be fully recognized.

So far, Indiabulls has diluted 24 per cent to HDFC Bank, Yes Bank and Indian Potash Ltd & IDFC + Krishak Bharati Cooperative Limited (KRIBHCO) have purchased a stake of 5% each in Indian Commodity Exchange, which was to be sold to the USE earlier.

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BUSINESS OPERATIONS

The exchange will start operations by launching 10-12 contracts in bullion, metals, energy and agricultural commodities with some uniqueness in contracts to attract more volume.

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·The exchange will launch gold mini and gold 1 kilogram contracts in the bullion segment. The gold contracts will have multiple delivery centers in five-six cities.

· In base metals, it is planning to offer copper, zinc and lead or nickel futures, and in the energy segment it will launch crude oil and natural gas contracts. Delivery-based contracts will be launched in the base metal segment, where contracts are mostly non-deliverable at other exchanges.

·The exchange has also tied up with several logistic providers for warehouse facilities, & in the next phase of expansion, the exchange may create its own warehouses

·Guar seed, rapeseed, refined soyoil, soybean and turmeric will be among the agricultural contracts.

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Did IPO Grading Fail to Catch the Fancy of Investors??

ipo grade system

The grading system of initial public offers (IPO) is in need of an upgrade, say market participants.

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Two years after it was first introduced by market regulator SEBI, the system has failed to catch the fancy of investors as share price trends of newly listed companies have shown little or no correlation to the grading given by rating agencies.

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“IPOs with grading 4 have shown returns that are much lower than IPOs with grades 1 and 2.
So, this is raising the question whether it is time to look at amendments to the existing structure or maybe SEBI can think of completely scrapping the system,” said Jagannadham T, equity head of SMC Capitals.

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However, one can’t deny the importance of the IPO grading system not only is it beneficial for retail investors who don’t have the time or skills to go through an entire prospectus but it also acts as a deterrent for fly by night promoters who wish to access the primary market solely for their gains.

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Not only financials of a company is looked at but also people at the business head level are contacted to see what the company is up to.

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As per few experts, IPO grading doesn’t have anything to do with the price post listing. A lot of things apart from fundamentals drive the stock.

The reservation of comment on pricing is a sore point, but even more, is the grading of a SEBI barred company like Austral Coke at Grade 2 by CARE above Orbit Corporation at 1 by the same rating agency.

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And this makes one wonder if a thorough due diligence is done by all rating agencies that’s ground enough for a review.

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NHPC IPO subscribed over 16 times :)

NHPC IPO

The issue received bids for over 2,762.99 crore shares against 167.73 crore shares on offer, as per the data available on the National Stock Exchange.

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The initial public offer of hydro power producer NHPC got subscribed over 16 times with most of the bids coming in from institutional investors.

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The offer, which is expected to mobilize up to Rs6,000 crore making it the second largest IPO in the country till date after Reliance Power’s, will close on Wednesday.

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Marketmen said the portion reserved for qualified institutional investors and high networth individuals got subscribed nearly 20 times each, while the retail investors portion was subscribed over three times the shares on offer.

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“The subscription by institutional investors is likely to go up further and the retail participation would also increase towards the end of bid timing,” SMC Capitals equity head Jagannadham Thunuguntla said.

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Analysts said being a public sector firm, NHPC is getting attention from various categories of investors.

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This is the first stake sale by a state-run company in the last one and a half years, after REC raised over Rs 1,600 crore in February.

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The  of the issue has been fixed between Rs 30 -36.

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Promoter stake reduction could raise Rs.159,000 crore :O

Promoter stake reduction could raise Rs.159,000 crore :O

Listed companies could raise over Rs.159,000 crore if Finance Minister Pranab Mukherjee’s proposal to reduce promoter stake in all listed companies to 75 percent becomes a policy , a report released Wednesday said.

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Of this, state-owned firms alone will contribute as much as Rs.138,000 crore, the report by broking firm SMC Capitals said.

Among the listed companies, there are about 180 firms where promoters hold more than 75 percent of the equity.

Of these, 28 are public sector units (PSUs),while the remaining 152 are private companies,said the SMC report.


“To comply with the proposal of reducing the promoters’ stake to 75 percent, the total value of stake that needs be offloaded is a whopping Rs.159,263 crore,” said SMC Capitals equity head Jagannadham Thunuguntla.

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“Of this amount, stake sale in PSU companies will aggregate to about Rs.138,075 crore, and that of non-PSUs will be Rs.21,188 crore,” he added.

Mukherjee had said in his budget proposal July 6 that the government would look at increasing public stake in all listed companies to 25 percent, which currently is about 15 percent.

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The chairman of the markets watchdog, Securities and Exchange Board of India (SEBI), has however proposed to the government that the increase in public holding be done in a phased manner and companies given time to dilute promoter holding to 75 percent.

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“Keeping this account, it will be more practical and sensible to implement this regulation in a phased manner by the finance ministry, facilitating smoother implementation,” said the report. 🙂



Lack of PSU divestment roadmap stalls IPO market

Jagannadham Thunuguntla, equity head of SMC Capitals.

In the absence of a roadmap for divestment of public sector units (PSUs), many private companies that were getting ready to raise funds through initial public offerings (IPOs) may now decide to wait. The market fall on Monday (the budget day) and Wednesday has made matters only worse.

However, investment bankers see light at the end of the tunnel in the finance minister Pranab Mukherjee’s announcement on the need for mandating a minimum 25 per cent public holding in all listed companies.

“Excitement is a bit down as there is no roadmap for PSU divestment. This initiative would have created an ecosystem for several public issues of private sector companies hitting the market,” said Jagannadham Thunuguntla, equity head of SMC Capitals.

“The divestment programme is unlikely to be as effective as was expected to be before the budget,” Thunuguntla added.

However, there is an air of expectation that companies would revive their plans to float initial public offerings (IPO) once the market revives.

The falling market, post-budget, has also put a question mark on the companies that were planning to raise funds through qualified institutional placements (QIPs), is a corporate fund raising instrument that enables completion of the process within a month against four months taken for a typical IPO.

According to a report published by Enam Securities While eleven companies have raised Rs 12,000 crore through QIPs before the budget, about 20 companies are planning to raise Rs 36,500 crore through this route, post- budget.

This list is liberally sprinkled with real estate companies, which have been facing a severe funds crunch since the outbreak of the global financial crisis in September 2008.