USL board orders probe into loans to UB Group companies

"Certain pre-existing loans/deposits/advances due to the company and its wholly owned subsidiaries from United Breweries (Holdings) Ltd which were in existence as on March 31, 2013, has been taken into consider atom in the consolidated annual accounts of the company drawn up as of that date."

The Board of United Spirits Ltd , now controlled by Diageo, has ordered a probe into the loans given by United Spirits to UB Group companies as it posted a whopping net loss of Rs 4,488.77 crore for the financial year ended March 31, 2014.

The company had reported net loss of Rs 105.03 crore in the fiscal ended March 31, 2013. USL made provisions of Rs 1,012.75 crore in year ended March 31, 2014 on the account of 'doubtful loans' and exceptional item of Rs 3,235.73 crore on sales of Scottish subsidiary, Whyte and Mackay.

While ordering the probe for a "detailed and expeditious enquiry on doubtful loans", the company said: "The Board has directed the Managing Director to engage independent advisors and specialists as required for the enquiry. "Certain pre-existing loans/deposits/advances due to the company and its wholly owned subsidiaries from United Breweries (Holdings) Ltd which were in existence as on March 31, 2013, has been taken into consider atom in the consolidated annual accounts of the company drawn up as of that date."

Pursuant to a previous resolution passed by the Board on October 11, 2012, such dues (together with interest) aggregating to Rs 1337.40 crore were consolidated into, and recorded as, an unsecured loan by way of an agreement between the company and UBHL," the company said. For the quarter ended March 31, 2014, the company reported standalone net sales of Rs 1,916.95 as against Rs 1,866.18 crore in the corresponding period a year ago. For the quarter ended March 31, 2014, USL's standalone net loss stood at Rs 5380.10 crore as against net profit of Rs 56.02 crore.

The probe comes after UB group chairman Vijay Mallya was declared a wilful defaulter by state-owned United Bank of India. However, Mallya disagreed with the action of the lender and said he would pursue legal action. "We were not given a hearing, we have not appeared before them, we disagree with their action and we shall pursue legal action," Mallya told reporters after the annual general meeting of United Breweries.

World's largest spirits maker Diageo Plc announced on November 9, 2012 that it will acquire 53.4 percent stake in United Spirits for Rs 11,166.5 crore in a multi-structured deal.
 

United Spirits stock price

On August 22, 2014, United Spirits closed at Rs 2279.05, down Rs 111.2, or 4.65 percent. The 52-week high of the share was Rs 2940.55 and the 52-week low was Rs 2226.00.

The latest book value of the company is Rs 89.71 per share. At current value, the price-to-book value of the company was 25.40.

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Investor Camp: Will market's bull run continue?

Watch Investor Camp at Noida with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy where they discuss the road ahead for the market with market experts.

Watch Investor Camp at Noida with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy where they discuss the road ahead for the market with market experts.

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Forex reserves up by USD 60.5 million to USD 318.64 billion

Foreign currency assets (FCAs), a major constituent of overall reserves, increased by USD 75 million to USD 291.393 billion in the period.

The country's foreign exchange reserves surged by USD 60.5 million to USD 318.64 billion for the week ended August 29, as foreign currency assets rose, the Reserve Bank of India (RBI) said today. Last week, the reserves had fallen by USD 810.7 million to USD 318.579 billion, the RBI statement said.

Foreign currency assets (FCAs), a major constituent of overall reserves, increased by USD 75 million to USD 291.393 billion in the period, the statement said. FCAs, expressed in dollar terms, include the effect of appreciation or depreciation of the non-US currencies such as the euro, pound and yen held in reserves.

Gold reserves remained unchanged at USD 21.173 billion in the reporting week.
The special drawing rights were down USD 10.5 million to USD 4.386 billion, and India's reserve position with the IMF also dropped by USD 4 million to USD 1.687 billion during the week, RBI data showed.

Also Read: See near-term rupee stability; 62/$ by 2015-end, says HSBC

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Sesa Board nod for raising borrowing cap to Rs 80K cr

The Board has also approved creation of charge/mortgage over properties of the company for the purpose of the borrowing, Sesa Sterlite said.

Sesa Sterlite  Friday said its Board has approved an enabling resolution for raising its borrowing limit by over 33 percent to Rs 80,000 crore.

The Board, which met Friday, has also approved a proposal to issue convertible securities of up to Rs 6,000 crore besides giving nod for private placement of non-convertible debentures of up to Rs 4,000 crore, the metal and mining major said in a BSE filing.

"The Board in their meeting held today considered and recommended passing ... enabling resolutions for increase in the borrowing limits of the company from Rs 60,000 crore to Rs 80,000 crore," it said.

The Board has also approved creation of charge/mortgage over properties of the company for the purpose of the borrowing, Sesa Sterlite said.

The enabling resolutions, once approved by shareholders, would remain valid for one year from the date of getting their nod.

The company Board has also approved re-appointment of Dindayal Jalan as Whole-Time Director, designated as Chief Financial Officer, for two years till September 30, 2016.

Sesa Sterlite stock price

On August 22, 2014, Sesa Sterlite closed at Rs 281.05, up Rs 2.75, or 0.99 percent. The 52-week high of the share was Rs 318.40 and the 52-week low was Rs 168.30.

The company's trailing 12-month (TTM) EPS was at Rs 4.85 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 57.95. The latest book value of the company is Rs 113.60 per share. At current value, the price-to-book value of the company is 2.47.

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Wilful defaulter tag a powerful weapon for creditors: Rajan

"The wilful defaulter tag is a powerful weapon in the hands of creditors for resolving distressed assets. It shuts out access to credit within the Indian financial system for a borrower," Rajan said without naming Mallya.

Reserve Bank Governor Raghuram Rajan has said the wilful defaulter tag is a powerful weapon in the hands of banks for resolving bad loans. His comments come days after the state-run United Bank of India declared the industrialist Vijay Mallya as "wilful defaulter ".

"The wilful defaulter tag is a powerful weapon in the hands of creditors for resolving distressed assets. It shuts out access to credit within the Indian financial system for a borrower,"  Rajan said without naming Mallya. He was speaking at an event organised by American bank Citi at Boston. The comments come from a note circulated by the event organiser. Mallya, whose  Kingfisher Airlines owes money to several banks, had yesterday said he will challenge  UBI's decision to declare him a willful defaulter.

Mallya is the chairman of United Breweries, producer of India's best-selling beer brand Kingfisher. He is also the chairman of United Spirits, now controlled by Diageo Plc. Besides United Bank of India, Kingfisher owes about Rs 9,140 crore to about a dozen banks. Of them,  IDBI Bank is considering declaring Mallya a willful defaulter and is serving out its 15-day notice period on non-payment of dues. Kingfisher owes Rs 750 crore to IDBI Bank. 

Indian banks' gross NPAs touched 4.6 percent in June 2014, according to the rating agency Icra. Rajan said even though GNPAs and restructured assets are at 10 percent of the total assets, there are some signs of this stress easing in the last few quarters as project approvals have been fast-tracked and levels of stalled projects have started to decline.

"The sectors which have been impacted the most could see NPAs easing as growth returns," he was quoted as saying.

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BSE to shift 74 stocks to restricted category from Sept 9

The stocks to be transferred to the trade-for-trade or the 'T' group segment include that of Panasonic Appliances India Company, Saregama India, Shriram Asset Management Company and JBM Auto.

Premier stock exchange BSE will shift securities of 74 companies to the restricted trading segment from September 9, to ensure safety of the investors.

The stocks to be transferred to the trade-for-trade or the 'T' group segment include that of Panasonic Appliances India Company , Saregama India ,  Shriram Asset Management Company and JBM Auto .

Under the trade-for-trade segment no speculative trading is allowed and delivery of shares and payment of consideration amount are mandatory.

The move is "with a view to take preventive surveillance measure to ensure market safety and safeguard the interest of the investors," BSE said in a statement Friday.

"Trading Members are requested to take adequate precaution while trading in above scrips, as the settlement will be done on trade-to-trade basis and no netting off positions will be allowed," the exchange said.

According to BSE, "the transfer of scrips for trading and settlement on a trade-to-trade basis is purely on account of market surveillance measure and it should not be construed as an adverse action against the company".

"This is a temporary measure and will be reviewed periodically depending on the market conditions," it added.

Further, BSE said it would shift securities of 87 firms Emkay Global Financial Services out of the restricted segment with effect from September 9.

The bourse also said that securities of 252 companies, including  Ramco System and Bharatiya Global Infomedia , would continue in the trade-for-trade segment.

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Trai suggests no extra entry fee for full MNP service

Trai suggests no extra entry fee for full Telecom regulator Trai has suggested that full mobile number portability service should attract no additional entry fee and bank guarantee from MNP operators.MNP service

Telecom regulator Trai has suggested that full mobile number portability service should attract no additional entry fee and bank guarantee from MNP operators.

The Department of Telecom (DoT) had sought Trai's opinion on issues like additional entry fee, bank guarantees and clarification on number of players to be involved in the rollout full MNP service in the country.

With regards to entry fee, Trai said whatever it had suggested in its earlier recommendations should be taken for record, sources said.

Trai had submitted its recommendations on full mobile number portability on September 25, 2013.

The government in June this year granted in-principle approval to full MNP that allows customers to retain numbers even after switching operator or location.

The Telecom Commission will now consider the recent clarifications from Trai and will take a final decision on the matter.

There are two MNP operators in India: Syniverse and MNP Interconnection Telecom Solutions India, which is a joint venture between US-based Telcordia Technologies and Indian enterprise DTC.

The government is trying to achieve full MNP by March 2015.

At present, subscribers are allowed to change their service providers while retaining same number within a circle only.

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RBI to hold rates on Sept 30; may cut in Feb: BofA-ML

The Reserve Bank of India is likely to hold the key interest rate in its policy review meeting later this month and is expected to lower that from February, says a Bank of America Merrill Lynch report.

According to the global financial services major, the Consumer Price Index based inflation is peaking off and is expected to be around 7.5-8 percent in September.

"We expect the RBI to begin to cut rates starting February with stable oil prices and INR providing comfort that CPI inflation will come off to 6 percent by early 2016," BofA-ML said in a research note.

The Wholesale Price Index based inflation fell to 5-month low of 5.19 percent in July on account of decline in vegetable prices, while the CPI-based retail rose marginally to 7.96 percent in July, from 7.46 percent in June.

The BofA-ML report further noted that late rains should water a good winter rabi crop to douse agri-inflation.

Moreover rising investment is beginning to step up agriculture, especially horticulture production.

Secondly, 'imported' inflation is expected to abate with the US Fed's tapering holding global commodity prices in check and stabilisation of the rupee.

Indian diesel prices will get benchmarked to global prices by June and finally, weak aggregate demand will likely check pricing power.

On GDP, the report said that the growth rate is bottoming out. It is, however, expected to return to 7.5 percent not before 2018.

Soon after taking the reins of RBI in September last year, Rajan surprised the industry by hiking the short-term policy rate by 0.25 percent to keep inflation under check.

The repo rate or the short term lending rate was increased to 7.5 percent from 7.25 percent.

Subsequently, RBI raised repo rate by another 0.5 percent to keep inflation under check.

However, it has kept interest rate unchanged since April this year.

In the recent monetary policy review, RBI kept policy rate static at 8 percent citing upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices.

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UTI MF's focussed equity fund mops up more than Rs 770cr

UTI Mutual Fund today said its 'Focussed Equity Fund - Series I' closed with an overwhelming response and garnered more than Rs 770 crore.

UTI Mutual Fund today said its 'Focussed Equity Fund - Series I' closed with an overwhelming response and garnered more than Rs 770 crore.

"UTI's Focussed Equity Fund - Series I (1,100 days) received an overwhelming response from investors during the NFO period of August 13-27. The scheme has attracted more than 67,000 applications and garnered over Rs 770 crore," UTI MF said in a statement today.

UTI MF managing director Leo Puri said, "The excellent mobilisation is a reflection of the continued trust reposed by the investors in UTI's fund management capabilities".

UTI MF's Sales and Marketing President Suraj Kaeley said, "With this fund, we have set a new benchmark in close-ended equity funds. It also signals the revival of the interest of
retail investors in the equity market."

The Focused Equity Fund - Series I is a 1,100-day close-ended equity oriented scheme. The scheme would be invested in a compact portfolio of up to 30 securities.

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Expenditure panel to look to boost capital spending: FinMin

The newly-constituted Expenditure Management Commission (EMC) appointed by the National Democratic Alliance government will look to review major areas of central government spending and suggest ways to improve fiscal discipline and create more space for spending development projects, the Finance Ministry has said.

The newly-constituted Expenditure Management Commission (EMC) appointed by the National Democratic Alliance government will look to review major areas of central government spending and suggest ways to improve fiscal discipline and create more space for spending development projects, the Finance Ministry has said.

The announcement of the EMC was made by Finance Minister Arun Jaitley during the July budget.

The EMC whose chairman (currently former RBI governor Bimal Jalan) will enjoy union-minister status, will also have a mandate to review the rules pertaining to the Fiscal Responsibility & Budget Management (FRBM) Act.

Also read: Bimal Jalan to head govt's panel on expenditure management

One the poll promises of the Bhartiya Janata Party, whose NDA coalition swept to power on a historic mandate this May, was to review government spending, which had increasingly tilted towards greater subsidies and more revenue expenditures in the past several years.

The Finance Ministry said it expects the EMC to get full support from state governments.

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