SEBI extends validity period of IPOs, rights to one year

SEBI extends validity period of IPOs, rights to one year

Curbs early exit from close-ended schemes.

Paul Noronha

Mr C. B. Bhave (right), Chairman, with Mr M.S. Sahoo, Whole-Time Member, SEBI, at a press conference held in Mumbai on Thursday. —

Our Bureau

Mumbai, Dec. 4 Indian companies will now have one year's time to launch their IPOs or rights issues after their draft prospectus has been cleared by SEBI.

The stock markets regulator at its board meeting on Thursday decided to extend the validity of its approval for IPOs and rights issues from three months currently, to one year, subject to updating of documents by the issuer.

In the past, many companies had to again file their draft red herring prospectus if they failed to launch the IPO or rights issue within three months getting SEBI's approval.

Mutual Funds

To ease redemption pressure on mutual funds, the board has curbed early exit from close-ended schemes.

SEBI has also made it mandatory for all new close-ended schemes to be listed on the stock exchanges. Schemes, which have been approved earlier but yet not launched, will also have to list on the exchanges, said SEBI. Investors can now make an early exit from such schemes only through the secondary market and not through the fund house.

For such close-ended schemes, the underlying assets will not have a maturity beyond the date on which the scheme expires, SEBI said.

To speed up and streamline the rights issue process, the board also approved the introduction of an alternative mode of application i.e., ASBA mode (application supported by blocked amount). Here the application money is blocked in the applicant's bank account till the time of allotment of the shares. The ASBA mode has already started functioning in the case of application for IPOs through select SEBI-approved banks.

The board also approved electronic trading of "rights entitlement" in stock exchanges.

The right entitlement will now be made available in demat form for all shareholders holding the underlying shares in demat form.

Until now, a shareholder intending to renounce his/her rights entitlement had to do it by applying physically through a designated application form.

Transparency measures

The board also decided to adopt a "code" for members of the board to avoid any conflict of interest that may arise; this will be put up in the public domain before December 12.

In order to bring transparency in the working of the board, the agenda papers submitted to the board on all policy issues, and the minutes of the meeting relating to such items will be made available in the public domain, said SEBI's news release.

Accordingly, the agenda papers for Thursday's board meeting will be made available on the SEBI Web site by December 15, said Sebi.

RSEs

SEBI board it is learnt also cleared the much-talked about exit option for RSEs at its board meeting, although no formal announcement was made in the press conference held later in the day.

According to sources, SEBI has created an exit option for RSEs, subject to payment of statutory liabilities.

Also, the investor protection fund, with the RSEs will now be entrusted to SEBI.

In addition, the subsidiaries of the RSEs will be allowed to function as independent brokers, said sources.

Mr T.V. Mohan Das Pai, Director - Human Resources, Infosys, the new nominee on the SEBI Board also attended the meeting. Mr Pai has replaced the earlier nominee Mr Venu Srinivasan, CMD, TVS Motors.

Source: HBL

Insurance regulator working on norms for mergers & acquisitions

 

Our Bureau

New Delhi, Dec. 3 The Insurance Regulatory and Development Authority (IRDA) is pitching for consolidation in the Indian insurance industry.

The IRDA Chairman, Mr J. Hari Narayan, said today that the regulatory authority was working on guidelines for mergers and acquisitions (M&As) in the insurance sector.

"There is a need to evolve M&A guidelines. Given what is happening across markets, it may be an opportune time for insurance industry to consider M&As. But in India we do not have within the insurance regulatory roadmap (framework) appropriate guidelines in this regard. I think we need to evolve some of them and we are working on them", he told a FICCI conference on insurance here.

A consolidation in the industry is expected to help improve competitiveness of the players besides providing increased benefits to customers.

Since the opening up of the insurance sector, the number of participants in the industry has gone up from six insurers (including Life Insurance Corporation of India, four public sector general insurers and General Insurance Corporation, as the national re-insurer) in 2000 to 42 insurers operating in the life, non-life and re-insurance segments as of today.

During 2008-09, registration had been granted to three companies in the life segment. At the conference, Mr Hari Narayan noted that insurance companies would be getting into an asset-liability mismatch of "varying degrees of intensity as we go along". He highlighted that the lack of availability of long-term securities in the market might impact certain kinds of liabilities that would arise in the future.

"This is one issue that we would be taking up with the Finance Finistry at an appropriate time", Mr Hari Narayan said.

The IRDA Chairman asked the insurance companies to use the opportunity of this downturn to get their house in order (improve treasury management performance etc) and build foundation for future growth, which he said would help double penetration of insurance in the country.

He also raised the issue of variation in management expenses ratio among the life insurance companies that have been in operations for at least five years.

On the issue of changes in solvency regime, Mr Hari Narayan felt that it was perhaps "premature" or may even be "imprudent" at this point of time to expect wide-ranging or significant changes in the solvency regime in the Indian insurance sector.

Mr Hari Narayan also said that IRDA was looking at rationalising the insurance intermediary sector.

 

Source: HBL

Public sector banks on fast track now

AUTO LOANS.

 Priyanka Vyas

New Delhi, Dec. 3 It's a reversal of roles. Public sector banks now have more customers knocking on their doors for auto loans than private banks, which were leading the race earlier.

The reason: public sector banks have started sanctioning auto loans at the same speed that private banks used to -- two to three days – and are offering lower interest rates as well.

The public sector banks' change of heart seems to have come about from the huge opportunity they see as private banks go increasingly stringent in financing vehicles due to the global meltdown.

Take for instance Mr Wilfred Minz, a supervisor at Life Insurance Corporation who was out scouting to finance his Alto. He preferred to approach the State Bank of Patiala that offered him an interest rate of 12.25 per cent, while private banks rates start from 13 per cent and go as high as 18-19 per cent. Besides, it was sanctioned on a fast track. "My experience has been that despite the extensive documentation they need (public sector banks), I did not have to run around and my loan got sanctioned in just two days," recounts Mr Minz.

Similarly, Mr Ramesh Khanna, a marketing manager, who bought a Ford Ikon last month from State Bank of India was taken aback with the public sector bank's promptness of service.

"It was hassle-free. I could not believe that a SBI official would come even at 9 p.m. to verify my documents," he said.

Said a dealer for Maruti Suzuki: "Earlier public sector banks were taking a week or longer to grant auto loans and private banks were doing it in two-three days. Now it is the other way around. In the earlier days private sector banks were not so stringent in lending. Even without Form 16, if the customers had two years in a stable job, the loan got sanctioned. Public sector banks have more checks. Despite this, they are now at par, or even quicker in lending."

Carmakers too seem to be increasingly betting on public sector banks with private banks cutting down on vehicle financing. "Public sector banks are lending in such difficult times. Though this can help sustain business, for growth to happen there has to be more lending," said Mr Mayank Pareek, Executive Officer, Marketing and Sales, Maruti Suzuki India Ltd.

According to a banking source, since the slowdown, ICICI Bank's share in financing Maruti cars has dropped to about 1,100 cars a month from the 11,000 cars that it did in its hey day. In contrast, SBI's share has grown to 14,000 units a month from around 8,000 earlier.

Hyundai too now has State Bank of India as the second largest financier for its cars.

"The share of public sector banks in financing Hyundai cars has been growing despite their stringent lending norms. But there is scope for more aggression," said Mr Arvind Saxena, Senior Vice-President, Sales and Marketing, Hyundai India.

Source: HBL

LIC stake in 3 public sector banks tops 5%

Buys up heavily when stock prices nosedived in Oct-Nov.

Ravi Ranjan Prasad

Mumbai, Dec.1 Life Insurance Corporation of India has bought heavily into banking stocks when markets plunged sharply in October and November, data submitted to stock exchanges indicate.

LIC's stake has crossed five per cent in three public sector banks — State Bank of India, Bank of India and Allahabad Bank according to the insider trading data on the BSE.

Higher stake

During October-November, LIC acquired 1.67 crore shares representing 2.64 per cent stake of SBI from the secondary market.

The insurance giant increased its stake from 4.40 per cent as of September 30 to 7.04 per cent as on November 18, 2008.

The shares of SBI, the largest public sector bank, had dipped to 52-week low of Rs 991 on October 27 in intra-day trading and closed at Rs 1056.

According to analysts, LIC had bought shares taking advantage of the attractive valuation.

During this time, domestic institutions were buying to support the falling Sensex, they said.

LIC held 3.62 per cent stake in SBI as on December 31, 2007 and it went up by less than one per cent till September 30, 2008 to 4.40 per cent.

SBI shares down

SBI shares closed at Rs 1055.95 on Monday, down by 2.84 per cent,

LIC also purchased 9.6 lakh shares of Bank of India on November 11, 2008 raising its stake to 5.14 per cent.

In Allahabad Bank, it has bought over 1.09 crore shares, or 1.45 per cent stake, taking its stake to 8.84 per cent as on November 12, as compared to 6.39 per cent as on September 30, 2008.

Buying in Dabur

LIC has also raised its stake in FMCG major Dabur India to 5 per cent from 4.24 per cent.

The Corporation bought 18.54 lakh shares of Dabur India on November 17 taking its total shareholding in the company to 5 per cent.

Source: HBL

Exports dip 12 pc, imports up 10 pc in Oct

Reeling under the impact of global slowdown, India's exports declined by 12.1 per cent in October this fiscal causing concerns of job losses in export-oriented manufacturing units.

Exports dropped to $12.82 billion in October from $14.58 billion a year ago.

However, imports grew by 10.6 per cent to $23.36 billion in October compared to $21.12 billion in the same month last year.

Concerns have been raised over large scale job losses in several export-oriented industries like textile, handicraft and gems and jewellery.

 

 

Source: ET

Five must-have insurance policies

Insurance market
============

Insurance is possibly the best financial tool to protect yourself as
well as your valuables from unforeseen circumstances. In fact, you owe
it to your family to get the best cover you can afford .

However, while it pays to be smart about insuring your family and your
valuables, it is even wiser to make out which policies are truly
worthwhile, and which ones are redundant. You need to know that while
each cover has its own benefits, not all of them are needed in normal
circumstances.

Also, there are lots of insurance policies that use scare tactics to
lure you in, and have premiums that are overpriced. And paying too
much for protection can be a financial strain in itself. Therefore,
you need to be selective in choice. Says Swaraj Krishnan, CEO of Bajaj
Allianz General Insurance, "Insurance is the best known form of
financial protection to guard against major uncertainties or vagaries
of nature.

As a thumb rule, a person needs to have at least a basic cover to
protect himself in the form of personal accident insurance — which is
the cheapest cover for self protection or health insurance to cover
hospitalization expenses with a minimum sum insured of Rs 1 lakh.
Assets like vehicle or home, which may be prized possessions, are also
depreciating and as such need adequate protection from risks like
accidents or natural perils." Thus, the insurance that's worth it
typically covers your life, your health, your earning power or the
assets you've accumulated during your lifetime. Primarily the five
main types of insurance everyone should take into account are:

Personal accident cover
==================

It basically covers the risk of accidental death and permanent total
disablement, and is a good choice to supplement a life insurance
policy. The best part of it is that it is the cheapest cover for self
protection and can be taken even by those whose income is low or
cannot qualify for life insurance due to medical issues.

Personal accident cover is also recommended in the early stages of
life when one has just started his/her career and there is no need of
insurance cover as the likelihood of death from natural causes is way
too low to require a financially unencumbered person to take on life
insurance.

The more compelling insurance need at that stage is for a personal
accident cover which covers the risk of accidental death. "Persons
below the age of 40 have a bigger risk from death and disability due
to an accident compared to any other risk. Disability for a young
person can be a bigger tragedy than death. Personal accident insurance
provides an extremely low cost option of covering this risk," says
Rahul Aggarwal, CEO of Optima Insurance Brokers.


Term insurance
============

Once a person crosses 35 years of age, the risk of diseases and
ailments starts increasing. The person also becomes more prone to
lifestyle diseases. Now it is not uncommon to hear of persons who have
died of a heart attack at the age of 30 or 35.

Hence it becomes important to cover the risk of death due to reasons
other than accident. Term insurance is a nofrills , low-cost option to
secure financial security for the family, and therefore should
preferably be there in everyone's insurance portfolio. "Every human
being has a quantifiable economic value for his dependents.

Any amount of loan that a person has taken gets added to this value.
Protection of this economic value is very important, especially in
India which does not have a strong social security net. A term
insurance is the cheapest way to cover oneself for one's Human Life
Value (HLV)," says Rajesh Relan , managing director of MetLife India
Insurance.


Critical illness cover
===============

By opting for this cover, you can insure yourself against the risk of
serious illness in much the same way as you insure your car and your
house. Under this cover, a guaranteed cash sum is paid if the
unexpected happens and someone is diagnosed with a critical illness
such as cancer, stroke and kidney failure .

The benefit amount is payable once the disease is diagnosed meeting
specific criteria and the insured survives 30 days after the
diagnosis. This is, in fact, a very important cover for persons who
have crossed 45 years of age. "Although a health insurance policy
covers hospitalization expenses, critical illness involves a lot of
expenditure even when the person is not hospitalised.

Expensive medicines and diagnostic tests, regular doctor visits,
special diets etc. add up to a lot of money. A critical illness policy
provides financial stability by providing upfront money to the insured
for all the treatment," says Aggarwal.


Home insurance
============

Your home is not just your most valuable asset, it's your safe haven
from the world outside. However, while your home cocoons you and your
family, it's your responsibility to see that nothing untoward happens
to the building and its contents. Therefore, insuring your home is as
essential as ensuring that it has strong foundations.

A home insurance policy, also known as householders' insurance, is the
best bet to safeguard your house because "it not only covers the
structure of your home but also all its valuable contents from
different kinds of perils such as earthquake, terrorism, flood,
burglary and house-breaking ," says Ajay Bimbhet, MD, Royal Sundaram
Alliance Insurance Company Ltd.

Besides, "all of us have observed that the weather has become very
unpredictable and vicious in the last one decade. The unpredictability
of weather, its extremes and increasing crimes in urban areas are
reason enough to take this policy," says Aggarwal.


Pension plan
==========

Retirement need arises when individual reaches such a stage in life
when one does not anticipate future inflows and he/she has to provide
for a regular inflow out of the money that a person has accumulated.

So all your accumulated wealth has to ensure that you go through the
golden years of life without any worry. A good retirement plan allows
you to accumulate for your golden years in a systematic manner. "You
could consider single pay/short pay pensions or immediate annuities
for such a need.

A flexible unit-linked endowment structured with regular partial
withdrawals could be suitable for such a need," says Relan. Thus, if
you are unable to afford all types of insurance , just stick to the
basics and you will be fine!

Sharekhan Post-Market Report dated December 01, 2008

 

Sharekhan's daily newsletter   December 01, 2008   Index Performance Index Sensex Nifty Open 9,162.94 2,755.15 High 9,326.68 2,832.85 Low 8,803.34 2,669.50 Today's Cls 8,839.87 2,682.90 Prev Cls 9,092.72 2,755.10 Change -252.85 -72.20 % Change -2.78 -2.62   Market Indicators Top Movers (Group A) Company Price  (Rs) % chg Gainers Mphasis 164.00 8.79 CESC 210.95 6.84 Piramal Healthcare 220.65 4.82 Dr Reddy's 447.55 4.53 Aditya Birla Nuvo 501.00 4.05 Losers GTL Infra 39.15 -11.72 Sterling Biotech 177.50 -10.51 DLF 178.50 -9.96 Maruti Suzuki 485.50 -9.40 Century Textiles 120.65 -9.18 Market Statistics - BSE NSE Advances 970 524 Declines 1,160 649 Unchanged 65 43 Volume(Nos) 21.73cr 49.52cr  Market Commentary  252 points lower Witnessing an intra-day swing of 524 points, the Sensex closes 252 points lower. The market saw high volatility during the day, as stocks gyrated between either sides of the zones throughout the session with the Sensex witnessing the     intra-day swing of 524 points. The market opened higher, buoyed by overnight gains in the US markets, but pared early gains as investors' sentiment turned cautious as the Sensex neared its intra-day high of 9,327 points. Thereafter, sustained selling in frontline, realty and auto stocks saw the Sensex enter into the negative territory. After displaying some range-bound moves, the market plunged deep into the red on heavy selling towards the close to touch the day's low of 8,803. The Sensex finally closed the session at 8,840, down 253 points. The Nifty closed at 2,683, down 72 points.  The breadth of the market was negative. Of the 2,195 stocks traded on the BSE, 1,160 stocks declined, whereas 970 stocks advanced. Sixty five stocks ended unchanged. Among the sectoral indices, BSE Realty shed 5.34%, BSE Auto declined 4.64% and BSE CD was down 4.47%.  Selective buying helped the index overcome its losses. Grasim Industries gained 1.75% at Rs904.80, Tata Steel advanced 1.69% at Rs153.50 and Tata Consultancy Services added 1.06% at Rs563.95. Sterlite Industries, Reliance Communications and JP Associates notched up steady gains. Selling was evident in select heavyweights. DLF dropped 9.96% at Rs178.50, Maruti Suzuki India declined 9.40% at Rs485.50, ICICI Bank tumbled 7.21% at Rs326.05, Reliance Infrastructure shed 7.21% at Rs467, BHEL dipped 6.71% at Rs1,2669.95, Ranbaxy Laboratories was down 4.96% at Rs198.45 and ITC shed 4.61% at Rs165.50. Over 2.51 crore shares of Unitech changed hands on the BSE followed by Suzlon Energy (0.94 crore shares), GVK Power & Infrastructure (92.52 lakh shares), Reliance Natural Resources Ltd (63.91 lakh shares) and ITC (46.21 lakh shares). European Indices at 16:00 IST on 01-12-2008 Index Level Change (pts) Change (%) FTSE 100 Index 4207.76 -80.25 -1.87 CAC 40 Index 3203.92 -58.76 -1.80 DAX Index 4540.92 -128.52 -2.75 Asian Indices at close on 01-12-2008 Index Level Change (pts) Change (%) Nikkei 225 8397.22 -115.05 -1.35 Hang Seng Index 14108.84 220.60 1.59 Kospi Index 1058.62 -17.45 -1.62 Straits Times Index 1690.23 -42.34 -2.44 Jakarta Composite Index 1223.12 -18.41 -1.48

 

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