Archive for ‘News’

April 4, 2012

CRISIL: 188 Companies defaulted in FY12

Crisil: 188 companies defaulted in FY12
TUESDAY, 03 APRIL 2012 16:35

Crisil Ratings has downgraded a total of 188 entities and one third of them have been placed under the default category.

According to CRISIL, this is the highest in a single year in absolute terms, and on a relative basis, translates into a 10-year high annual default rate of 3.4%.
“These pressures are also reflected in the increase in banks’ gross non-performing assets (NPAs; to 2.9 per cent of advances from 2.3 per cent), and in the quantum of debt restructured (to 3.3 per cent of advances from 2.5 per cent) between March 31 and December 31 of 2011,” the CRISIL release said.
“Weak liquidity caused by elongation of working capital cycles is the primary reason for the defaults. This trend is likely to persist with slowing demand,” Roopa Kudva, Managing Director and Chief Executive Officer, CRISIL, said in the release.
Sectors that will continue to be under stress are- textile, steel and construction engineering, power, commercial real estate and the new telecom players. But the ratings agency says, the operating profitability for the services sector and established telecom players will improve in the current financial year.
“The credit quality of India’s corporates will remain under pressure, given the slowdown in demand. However, high operating rates, softening in commodity prices and flexibility to defer capital expenditure will help players offset profitability pressures, and tackle slackening in demand,” said Ramraj Pai, President, CRISIL Ratings.

December 11, 2010

Medical tourism to become USD 100 bln industry by 2012: Report

The Medical Tourism sector is growing exponentially all over the world and is set to become a USD 100 billion sector by 2012, a new report has said.

The sector is growing at a rate of 20-30 per cent annually and is bound to continue its growth pattern in the years to come.

According to Frost and Sullivan, the business research and consulting firm, the medical tourism industry is currently a USD 78.5 billion industry [end-2010], catering to over three million patients who travel around the globe for medical care.

The Middle East is one of the latent source markets of patients and it is estimated that 20 per cent of healthcare seekers worldwide are from Gulf and Arab states.

Significantly, patients from UAE alone spend about USD 2 billion in healthcare travel on an annual basis.

As a result, many countries are targeting the region to woo guests and patients to their own medical tourism destinations.

Germany, in particular, and Europe, in general, have been primary medical tourism hubs for hundreds of years and continue to lead the industry followed by Thailand, India and Malaysia.

Boasting of an excellent healthcare system, high quality, safe and quick treatment, Germany is considered to be a top destination for patients from all over the world, and particularly from the Middle East, UK and the US.

Germany is also an attractive destination for patients from the region, in terms of distance, costs and tourism attractions.

A McKinsey and Company 2008 report also emphasizes that 40 per cent of medical travelers seek advanced technology, while 32 per cent seek better healthcare.

Another 15 per cent seek faster medical services while only 9 per cent of travelers seek lower costs as their primary consideration.

November 16, 2010

Banks borrow 103k cr, liquidity remains tight

Money markets continued to remain tight on Monday as call rates rose to 6.93% from 6.75% on Friday. Banks borrowed a net amount of Rs 1,03,525 crore from the Reserve Bank of India’s (RBI) repo windows, lower than Rs 1,18,570 crore borrowed last Friday.

Meanwhile, yields on the ten-year paper, dropped by three basis points to close at 8.06% on Monday, though they had risen briefly after inflation data for October came in at 8.6%. Wholesale inflation declined for the second consecutive month to 8.58% in October, as against 8.62% in September.

RBI deputy governor Subir Gokarn said on Saturday the liquidity deficit may result in greater volatility in short-term rates. Gokarn noted RBI may relax bond-holding rules, buy back government securities or take other similar steps to deal with a liquidity shortage in the banking system, but would not reduce the cash banks need to set aside as reserves. “It is very difficult to be raising rates on the one hand and reducing the cash reserve ratio on the other because two are contradictory,” he said.

November 11, 2010

G20 struggles to move beyond vows of cooperation

A deeply divided G20 struggled to move beyond broad promises of economic cooperation as world leaders gathered in Seoul for a two-day summit on Thursday.

Former U.S. Federal Reserve Chairman Alan Greenspan said the United States was pursuing a policy of weakening the dollar, adding fuel to an already heated Group of 20 debate over the U.S. Federal Reserve’s bond-buying spree to revive the economy.

The G20 club of rich and emerging economies had hoped to use the summit to soothe tensions over foreign exchange rates that have been created by sharply divergent economic growth rates. President Barack Obama urged his peers to put aside differences and follow through on previous agreements to even out imbalances between cash-rich exporting nations and debt-burdened importers.

Thursday’s agenda included dozens of bilateral meetings as well as ceremonies to mark the Veterans Day holiday. The summit officially kicks off with a working dinner Thursday night and a full day of meetings on Friday.

Behind the scenes, negotiators met for a third day to hash out the language in a closing statement to be issued at the summit’s conclusion on Friday. The final version may not venture far beyond agreements reached by G20 finance ministers last month, yet it still proved difficult to agree on the wording.

South Korean President Lee Myung-bak said a “little bit” of progress had been made since the October finance ministers meeting in Gyeongju, South Korea, but deep divisions remained over how best to reduce current account imbalances.

October 26, 2010

Food prices a structural inflation driver – RBI

The Reserve Bank of India (RBI) warned on Tuesday that surging food prices are structural and will put upward pressure on inflation and interest rates.

The RBI is widely expected to raise interest rates by another 25 basis points on Nov. 2 as it continues to battle headline inflation that rose to 8.62 percent on an annual basis in September.

“Persistent price increases in commodities for which there are less effective substitutes, with other things remaining equal, will raise the potential rate of inflation over a period of time,” RBI Deputy Governor Subir Gokarn said in a speech on Tuesday.

The yield on India’s most traded 7.99 percent, 2017 bond rose two basis points to 7.98 percent, up 2 basis points after Gokarn’s comments as traders said they added to the likelihood of a 25 basis point rate increase next week.

“This means that actual inflation or interest rates will be higher than they would be in the absence of such increases,” said Gokarn, whose brief at the central bank includes monetary policy.

Annual food price inflation eased to 15.53 percent in early October but remains stubbornly high, in part because of rising demand as incomes increase. The economy of the world’s second most populous country is on track to grow at 8.5 percent this fiscal year.

“When we take into consideration the impact of structural food price shocks such as the ones India is experiencing, the policy implications become complex,” Gokarn said.

Production of pulses was not keeping pace with demand, he said.

The price of some pulses, which are a main source of protein for Indians, has roughly doubled over the past three years.

“Rise in income has increased the share of proteins in peoples’ diet. Rising affluence has also led to an increase in demand for proteins and nutrition,” said Gokarn, adding one option would be to import pulses through contract farming.

The RBI has raised interest rates five times this year amid headline inflation that was in double-digits for six months through July.

The central bank’s perceived comfort zone for wholesale price index (WPI) inflation is 5 to 6 percent, and it has said it expects inflation to ease to 6 percent by the end of the fiscal year in March

October 23, 2010

Ten-Year Bond Yields Rise Toward Two-Year High as Cash Availability Drops

India’s 10-year bonds fell, pushing yields to a two-year high, on concern an auction of notes by the finance ministry today and sales by state governments next week will further reduce the availability of cash to buy debt.

Banks borrowed an average 485 billion rupees ($10.9 billion) from the central bank’s repurchase auction window each day this month, compared with 251 billion rupees a day in September. India sold 110 billion rupees of bonds due in 2017, 2022 and 2040 today. Investors will make the payment on Oct. 25. Funds in the banking system have dropped after Coal India Ltd.’s initial public offering that ended yesterday, the country’s biggest share sale to date.

The yield on the 7.8 percent note due May 2020 rose seven basis points, or 0.07 percentage point, this week to 8.14 percent as of the 5 p.m. close in Mumbai, according to the central bank’s trading system. The price dropped 47 paise per 100 rupee face amount to 97.77.

October 21, 2010

PE Players See an Exit Season

It is exit season for private equity investors in the realty space. With a smart recovery in the Indian realty sector and an impressive lineup of public offers, investors are getting to see the face of money. Significantly, investors at the project or SPV level are up for a busy exit season given the increasing demand for residential and commercial space.

Consider this: Red Fort is exiting more than five deals. In the residential space, Red Fort has sold over 5,000 apartments in Tier 1 cities such as Chennai, Bangalore, Delhi, NCR. Kotak Realty Funds Group  is planning complete exits from two of its IT Park investments – Peepal Tree Properties, a green field IT park building in Mumbai and Green Boulevard, a project in Noida IT Park, Delhi. Indiareit Fund Advisors is eyeing five partial exits this year from its large portfolio of residential projects. It plans to exit from Neptune Developers, and other projects such as Skyline (Bangalore), Samira (Mumbai) and SSPDL Northwood (Hyderabad) this year. It made a partial exit of Rs 49 crore from Aristo (Mumbai) in April, where it invested Rs 150 crore.  

Data shows, 2010 witnessed exits deals such as CVCI-Emaar MGF Land Ltd ($60 million), WDC Ventures-Vijay Associates Constructions Pvt. Ltd. ($40 million), Symphony Capital Partners-DLF Assets Ltd ($694 million), Siva Ventures Ltd-Aamby Valley Ltd ($323 million).

DE Shaw Composite Investments (Mauritius) Ltd. exited from DLF Assets Pvt. Ltd. for $470 million (Rs 2200 crore) by selling its entire stake to Rajiv Singh, Vice Chairman, DLF last year.

October 21, 2010

Action In “Infra Enablers”

Action in “Infrastructure Enablers”

With infrastructure slated for high growth and PE funds, which cannot make investments in core infrastructure owing to their “growth equity” nature, a lot of action is seen in the ancillary or “infrastructure enabler” space.

Recently, Clearwater Capital hiked its stake in Diamond Cables by purchasing 2.2% stake for around Rs 10 crore through the secondary market which took its total holding to 13.77%. Originally an electrical products maker, the company diversified into a manufacturer of power transmission equipment and turnkey services provider (EPC).

NYLIM Jacob Ballas India Fund III, LLC, a Mauritius-based private equity vehicle dedicated to India, infused Rs 152 crore into SEW Infrastructure Ltd, an engineering, procurement and construction (EPC) company in Hyderabad.

Axis Private Equity already has investments of Rs 126 crore in Delhi-based railway line manufacturer Harish Chandra India Ltd (HCIL) and Rs 60 crore in Vishwa Infrastructures and Services, which executes projects in the water supply and sanitation sector.