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The Financial Express,
April 22, 2014
The Reserve Bank of India (RBI) will open up the banking space to more entrants once it revisits the existing guidelines. The central bank has, in the past, observed that it wants more differentiated players in the system and that licences would be available ‘on tap’; in keeping with this philosophy, windows for accepting applications will be opened at intervals.
The RBI is also keen that intermediaries are able to access long-term funds for infrastructure building in the country. It might even consider allowing banks to access long-term bonds, but exempt these liabilities from regulatory obligations such as Cash
Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
The central bank’s longer-term objective is to have different kinds of intermediaries catering to diversified needs — in other words, a horses-for-courses policy. In this context, the central bank is taking a closer look at the recommendations of the Nachiket
Mor committee report and will crystallise its views shortly on how the suggestions can be taken forward.
The Usha Thorat committee report on non-banking finance companies (NBFC) will also be studied. Earlier this month, the RBI awarded in principle banking licences to
Bandhan, a microfinance institution and IDFC, an infrastructure lender.
The Mor committee had suggested the setting up of payments banks and wholesale banks; and the central bank will consider how best this could be done. Payments banks

News are expected to invest the float that they have in government securities, using the returns to cover costs. It is possible these banks will operate as joint ventures, with telecom companies as one of the partners.
The central bank is also keen on having smaller banks operating in the system — perhaps with a capital of around R50 crore rather than the R500 crore required for universal banks currently. It believes these banks could play a useful role.
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Press Trust of India,
April 22, 2014
As many as four firms, including private sector lender Lakshmi Vilas Bank and infrastructure major IL&FS Engineering and Construction Company have lined up rights issue worth more than Rs 800 crore.
Mirc Electronics, which sells the Onida brand of TVs and drug firm Neuland
Laboratories also plan to raise funds by issuing equity shares to existing shareholders.
These four firms, which had filed their draft documents with Securities and Exchange
Board of India (Sebi) this year, are awaiting market regulator's approval.
These companies are collectively planning to garner Rs up to 863 crore through rights issue.
In rights issue, shares are issued to the existing investors as per their holding at predetermined price and ratio.
Lakshmi Vilas Bank is planning to raise up to Rs 505 crore, while IL&FS Engineering and Construction Company plans to raise Rs 300 crore. Mirc Electronics have plans for
Rs 33 crore and Neuland Laboratories for Rs 25 crore.
Moreover, Sebi has approved the rights issue of Mukand, Wheels India, Easun Reyrolle and Denis Chem Lab since the beginning of the year. However, Polson Ltd withdrew their rights issue in January.
According to Prime Database, 2014 is likely to see little action on the rights front.
In 2013, companies had raked in Rs 4,101 crore through issuance of right shares to their existing shareholders as against Rs 7,295 crore raised in the preceding year, indicating a slump of 44 per cent.
By way of numbers, 2013 witnessed 12 companies using the rights route as compared to
17 firms in the preceding year.
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News
Business Standard,
April 22, 2014
Key benchmark indices extended early gains to hit fresh intraday high in morning trade.
The market sentiment was boosted by data released by the stock exchanges showing that foreign funds were net buyers of Indian stocks on Monday, 21 April 2014. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit fresh record high. The
S&P BSE Sensex was up 83.35 points or 0.37%, up 93.67 points from the day's low and off 4.85 points from the day's high. The market breadth, indicating the overall health of the market, was strong.
Index heavyweight Reliance Industries (RIL) extended early gains in volatile trade to hit
52-week high. Capital goods shares were in demand with shares of engineering and construction major L&T hitting 52-week high. Interest rate sensitive realty stocks edged higher.
Key benchmark indices edged higher in early trade after provisional data released by the stock exchanges showed that foreign funds were net buyers of Indian stocks on Monday,
21 April 2014. The barometer index, the S&P BSE Sensex and the 50-unit CNX Nifty, both, hit record high. Key benchmark indices extended early gains to hit fresh intraday high in morning trade.
The market may remain volatile till tomorrow, 23 April 2014 as traders roll over positions in the futures & options (F&O) segment from the near month April 2014 series to May 2014 series. The April 2014 F&O contracts expire tomorrow, 23 April 2014. The stock market remains closed on Thursday, 24 April 2014, on account of Parliamentary elections in Mumbai constituency.
The market sentiment was boosted by data showing that foreign funds remained net buyers of Indian stocks on Monday, 21 April 2014. Foreign institutional investors (FIIs) bought shares worth a net Rs 212.85 crore on Monday, 21 April 2014, as per provisional data from the stock exchanges.
At 10:15 IST, the S&P BSE Sensex was up 83.35 points or 0.37% to 22,848.18. The index gained 88.20 points at the day's high of 22,853.03 in morning trade, a record high for the barometer index. The index fell 10.32 points at the day's low of 22,754.51 in early trade.
The CNX Nifty was up 19.35 points or 0.28% to 6,837. The index hit a high of 6,838 in intraday trade, a record high for the index. The index hit a low of 6,813 in intraday trade.
The market breadth, indicating the overall health of the market, was strong. On BSE,
1,203 shares gained and 656 shares fell. A total of 73 shares were unchanged.
The BSE Mid-Cap index rose 40.36 points or 0.55% to 7,437.77 and the BSE Small-Cap index rose 61.28 points or 0.8% to 7,689.25. Both these indices outperformed the
Sensex.
The total turnover on BSE amounted to Rs 574 crore by 10:15 IST compared to Rs 152 crore by 09:25 IST.

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Among the 30-share Sensex pack, 17 stocks gained and rest of them declined.
Index heavyweight Reliance Industries (RIL) gained 2.77% to Rs 986. The stock was volatile. The stock hit a 52-week high of Rs 986.45 in intraday trade so far during the day. The stock hit a low of Rs 956.90 so far during the day. RIL on Friday, 18 April 2014, said its net profit rose 0.8% to Rs 5631 crore on 12.9% growth in turnover to Rs 97807 crore in Q4 March 2014 over Q4 March 2013. RIL's non-operational income dropped
9.22% to Rs 2036 crore in Q4 March 2014 over Q4 March 2013.
RIL's net profit rose 2.2% to Rs 5631 crore on 8.1% decline in turnover to Rs 97807 crore in Q4 March 2014 over Q3 December 2013. RIL's non-operational income dropped
11.67% to Rs 2036 crore in Q4 March 2014 over Q3 December 2013.
RIL's gross refining margin (GRM) dropped to $9.3 a barrel in Q4 March 2014, from
$10.1 a barrel in Q4 March 2013. The GRM, however, rose on sequential basis from $7.6 a barrel in Q3 December 2013.
Engineering and construction major Larsen & Toubro (L&T) rose 1.12% to Rs 1,336.85 after hitting a 52-week high of Rs 1,346.50 in intraday trade. L&T had on 26 March 2013 announced that their general insurance subsidiary L&T General Insurance (LTGI) was in talks with Future Generali Insurance (FGI) for the formation of a joint venture (JV) that would combine and continue the business of general insurance in India. L&TGI and FGI had entered into a non-binding agreement to jointly examine the terms of a potential transaction. The Parties have now decided mutually to call off the discussions around the proposed joint venture, L&T said after market hours on Monday, 21 April 2014. LTGI will continue its focus on expanding its business footprint in the areas of both general and health insurance, L&T said.
L&T General Insurance Company commenced business operations in 2010-11. The
Company operates out of 17 branches spread over India and earned gross written premium of Rs 253 crore during the financial year ending Mar 31st 2014 indicating a growth of 39% over the previous financial year as against an industry growth of 12% for the same period. The said premium includes around Rs 207 crore from property and casualty insurance and Rs. 46 crore from health insurance.
Other stocks from capital goods sector were also in demand. ABB India (up 1.07%),
Bharat Heavy Electricals (Bhel) (up 1.07%), BEML (up 2.03%), Bharat Electronics (up
2.08%), Siemens (up 0.26%) and Thermax (up 0.13%) gained. Crompton Greaves fell
0.81%.
Interest rate sensitive realty stocks edged higher. D B Realty (up %), DLF (up 0.85%),
Indiabulls Real Estate (up %), Oberoi Realty (up %), Housing Development and
Infrastructure (HDIL) (up 4.03%), Sobha Developers (up 1.32%) and Unitech (up 5.63%) gained.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June
2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014, as consumer-price inflation eased to a two-year low and as the rupee firmed up against the dollar.

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A major near term trigger for the stock market is the outcome of the upcoming Lok
Sabha elections. The 36 days long voting process began on 7 April 2014 and will conclude on 12 May 2014. The results will be declared on 16 May 2014 after which India will get a new government. The term of the current Lok Sabha expires on 1 June and the new
House has to be constituted by 31 May.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 60.69, compared with its close of 60.59/60 on
Monday, 21 April 2014.
Most Asian stocks rose on Tuesday, 22 April 2014 after Wall Street stocks extended gains into a fifth day, though investors continued to see tensions in Ukraine as a threat to risk appetite. Key benchmark indices in Taiwan, Singapore, Japan, and South Korea rose by
0.15% to 0.45%. Key benchmark indices in Indonesia, China and Hong Kong fell 0.05% to 0.53%.
Investors await HSBC's preliminary purchasing managers' index for the mainland manufacturing sector tomorrow, 23 April 2014.
Trading in US index futures indicated that the Dow could fall 5 points at the opening bell on Tuesday, 22 April 2014. US stocks closed modestly higher Monday, helping the S&P
500 to extend its winning streak to the longest in six months.
In economic news, the Chicago Fed National Activity Index decreased slightly in March.
However, the Conference Board's leading economic index rose in March and February, signaling that growth could accelerate in coming months.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 decided after the conclusion of a monetary policy review to trim its monthly bond purchases by $10 billion to $55 billion.
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Reuters,
April 22, 2014
India's KMC Constructions wants to build more roads in a country where thousands of kilometres are needed every year just to keep pace with double-digit growth in traffic.
But the company won't be bidding for many new contracts any time soon.
The situation faced by KMC, an unlisted Hyderabad-based company that notched a turnover of $170 million last year, is being played out across India's infrastructure industry.
Instead of competing for fresh projects, KMC is trying to finish a highway of more than
200 kilometres linking the outskirts of Delhi to the desert city of Jaipur, fight a state government in court over the right to raise toll prices on an existing road, and lower its debt.

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"All of us - the government, the contractors - we are all responsible for the problems. We think we can eat and eat and eat when we need to know our capacity. We are going to move slower because we want to be there for the long-term," Shashank Shekar, a KMC senior manager, told Reuters.
Delays in getting road, rail and power projects approved have eaten into the cashflow of companies burdened by debts that are still rising, slowing capital expenditure to a trickle.
While the economy is struggling through its longest period of sub-5 percent economic growth since the 1980s, the central bank is battling to pull down inflation.
Investors in the infrastructure sector appear little concerned. Betting that a new government under pro-business opposition candidate Narendra Modi will emerge from elections and restart investment, they have driven the CNX Infrastructure Index up by 18 percent since early February, beating an 11 percent rise in the broader market.
The poor state of balance sheets of companies in the sector, however, suggests a quick turnaround is unlikely as cash-strapped firms battle to pay debts rather than start spending, regardless of the chances of a Modi victory.
"Given the general state of company balance sheets...it's tough to see a lot of new investments coming in from the existing players anytime soon," said Sanjay Sethi, Head of Infrastructure Group at Kotak Investment Banking.
RUSH TO SELL
At the end of 2013, some 37 percent of Indian corporate debt was owed by companies whose earnings were not enough to cover interest payments, up from 34 percent in July-
September, according to Credit Suisse. More than a third of these companies are in infrastructure and construction, the bank said.
Sunil Singhania, Head of Equities at Reliance Capital Asset Management, said that while he was convinced of an economic recovery, investors needed to be "very selective" and differentiate between companies based on their balance sheets.
Among the heavily-indebted firms rank Jaiprakash Associates , Punj Lloyd and GMR
Infrastructure . All of their debts rose in the year to end-2013.
Engineer Larsen & Toubro, in better financial health than many, said on Thursday around 9 percent of its 1.7 trillion rupee order book was "slow-moving", meaning it may write the orders off because of delays to project approvals.
Under pressure from banks eager to rebuild their own capital, many firms are now rushing to offload assets.
Jaiprakash recently raised about $1.7 billion from sales, and plans to slash its $10.4 billion in debts, which have risen 10 percent since September, by two-fifths. GMR is to list its energy arm to raise funds.

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With Indian firms short of cash, foreign investors could play a key role boosting capital expenditure. Acquisitions by cash-rich funds from abroad will determine, in part, how quickly companies can cut their debts and start spending again.
Foreign investment in Indian infrastructure has remained subdued, despite the country's desire to attract more money into the sector and the limited restrictions on foreign ownership in core areas such as roads, power and new urban metro projects.
Other areas like the national railways, which Modi's party plans to modernise, continue to place restrictions on foreign investment.
Appetite for infrastructure assets is growing among sovereign wealth and pension funds, but they prefer buying projects already up and running which offer stable, inflationbeating returns. An Abu-Dhabi-led consortium bought two hydropower plants from
Jaiprakash in March.
Around a dozen road portfolios are currently up for sale, three banking sources said, but few assets look like changing hands until owners agree to take losses.
"International developers need to come into the country in a big way given the investment needs of the sector. Some of the existing assets may however need to be sold below book and promoters will have to take haircuts," Kotak's Sethi said. (Reporting by
Tommy Wilkes; additional reporting by Himank Sharma in Mumbai; Editing by Simon
Cameron-Moore)
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The Assets,
April 22, 2014
Singapore-based Aditya Birla Sun Life Asset Management Company, the wholly owned subsidiary of Birla Sun Life Asset Management Company, has launched the India
Infrastructure and Reforms Fund – a share class under the India Premium Fund, an open-ended equity fund targeted at global investors.
Open for subscription from April 10 2014 to April 25 2014, the fund will focus on a portfolio of 20-30 stocks of Indian infrastructure companies including, but not limited to companies operating in - engineering, construction, power and utilities, asset owners
(roads, ports, airports, others) logistics and transportation sectors. It will also consider other sectors that could potentially gain from the economic reforms undertaken in India in the future – for example, banking, retail and PSU.
A. Balasubramanian, CEO, Birla Sun Life Asset Management said, “The Indian economy is on the road to recovery and macro indicators being favourable, we see upcoming quarters presenting great promise in the Indian Infrastructure space. For global investors looking to capitalise on emerging opportunities, India is at the cusp of that change and now is the right opportunity to latch on. The launch of our India
Infrastructure and Reforms Fund therefore is most timely, as it allows global investors with a long term view to make the most of India’s growth story in this domain.”

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In terms of indicators, with inflation and interest rates cooling down, CAD and currency looking stable, green shoots in exports combined with the investment cycle bottoming out, the next few quarters present strong potential in the Indian infrastructure story.
The Indian markets can expect to see renewed attention, both globally and domestically as one of the best performing emerging markets on the back of economic revival after recent challenges, built on strong fundamentals and currency bounce back. Any favourable political outcome will help in reviving investment demand in the country. The investment cycle, reminiscent of the 2003-2007 phase, can be a key driver for economic growth over the next 2-3 year period, with demographics and consumption fueling demand.
The portfolio of India Infrastructure and Reforms Fund will be diversified across large, mid and small cap stocks. A combination of top-down and bottom-up approach will be followed in the stock selection process. The top down approach focuses on an analysis of macro-economic factors, economic changes and trends, key policy changes, infrastructure spending, etc. The bottom-up approach would seek to identify companies with high profitability and scalability supported by sustainable competitive advantages and superior return ratios.
Investment in the Fund is only suitable for “accredited investors” (as defined under the
Securities and Futures Act of Singapore) and the fund is not open to the retail public.
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Business Standard,
April 22, 2014
Hindustan Construction Company rose 3.05% to Rs 18.60 at 14:23 IST on BSE after the company said it has been awarded an Rs 300 crore contract by Delhi Metro Rail
Corporation.
The announcement was made at the fag end of trading hours on Wednesday, 16 April
2014.
Meanwhile, the S&P BSE Sensex was up 297.15 points or 1.33% at 22,574.38.
On BSE, so far 8.19 lakh shares were traded in the counter as against average daily volume of 6.17 lakh shares in the past one quarter.
The stock hit a high of Rs 18.90 and a low of Rs 18.40 so far during the day. The stock hit a 52-week high of Rs 19.80 on 11 April 2014. The stock hit a 52-week low of Rs 7.75 on 2
August 2013.
The stock had outperformed the market over the past one month till 16 April 2014, surging 21.71% compared with the Sensex's 2.14% rise. The scrip had also outperformed the market in past one quarter, jumping 27.56% as against Sensex's 4.76% rise.
The small-cap company has equity capital of Rs 60.66 crore. Face value per share is Re 1.

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Hindustan Construction Company (HCC) said it has been awarded an Rs 300 crore contract by Delhi Metro Rail Corporation (DMRC). This contract is for design and construction of 1.54 KM long twin tunnel on Dwarka-Najafgarh metro corridor of phase
Ill of Delhi Metro. This is the third contract for underground metro received by HCC since October 2012 under the phase Ill development of Delhi Metro aggregating Rs 1539 crore, HCC said. The construction work would be completed in 36 months, it added.
On winning contracts, Arun Karambeklar, President and Whole Time Director, HCC said, "HCC has been undertaking challenging assignments in underground metro development and repeat order from DMRC reflects our ability to execute complex assignments. Last month, HCC completed the 'up-line tunnel' of CC30 package well ahead of all peers working on phase III development".
HCC reported a net profit of Rs 5.39 crore in Q3 December 2013 compared with a net loss of Rs 38.51 crore in Q3 December 2012. Net sales fell 16% to Rs 852.11 crore in Q3
December 2013 over Q3 December 2012.
HCC is India's leading infrastructure company. HCC has executed a majority of India's landmark infrastructure projects, including the Bandra Worli Sea Link, Mumbai - India's first and longest open sea cable-stayed bridge; the Kolkata Metro, Farakka Barrage and
India's largest nuclear power plant at Kudankulam - Tamil Nadu, to name a few. Today,
HCC serves the infrastructure sectors of Transportation, Power and Water. HCC is also developing Lavasa City, a planned hill city and one of India's largest urban development and management initiatives. The HCC Group, with a group turnover of Rs 8,510 crore, comprises of HCC, HCC Infrastructure Co., HCC Real Estate, Lavasa Corporation and
Steiner AG in Switzerland.
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One India,
April 22, 2014
With the real estate sector in the Gulf Arab emirate Dubai showing no let-up in expanding, the construction sector is all set to witness a shortage of 500,000 workers by
2015, a media report said on Saturday.
According to a survey initiated by the Dubai international academic city (DIAC) and conducted by consultancy Deloitte, construction firms and developers face a shortfall of
500,000 workers across all career levels and divisions as massive public and private projects fuel an unprecedented real estate boom in the sheikhdom, reported Xinhua citing the Gulf News daily.
The study showed that building and construction project management skills are most lacking among senior levels, according to 43 percent of the companies surveyed.
Likewise, 54 percent of the companies believe that design engineering skills are lacking among mid-level professionals, followed by civil engineering skills, said the report.
Dubai's winning bid to host the World Expo in 2020 also boosted the construction sector, with average rents having risen by 23 percent during the first quarter of 2014, according to real estate consultancy Jones Lang LaSalle.

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The report quoted estimates by HSBC bank saying that about 45,000 new hotel rooms will be needed for the event. The total infrastructure works for Expo 2020 is estimated at
12.54 billion Dirham or about $3.40 billion, producing a large demand for talent and skilled workers to decent on the UAE for job opportunities.
The Dubai government launched last year several new projects, including a new city within the city named by Dubai ruler Sheikh Mohammed Bin Rashid and a free zone for the design industry which shall play a key central role during the expo event.
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The Citizen,
April 22, 2014
Recent announcements on government procurement of private power generation capacity will see huge investments in the South African power sector, but it’s too late to alleviate the country’s near-term power crunch.
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Energy Minister Ben Martins last week announced government will start with the procurement of 800MW of co-generation capacity before the end of the month and a further 2500MW coal-fired generation capacity in May.
The local construction industry may benefit hugely from the projects that are valued at about R52.7bn on the coal side only.
Doug Kuni, executive officer of the South African Independent Power Producers’
Association (Saippa) says coal generation units of 300MW make economic sense and he expects various bids of one or more such units per project.
These units are common in China and India and the technology is readily available offthe-shelf, he says. Two units would require an investment of about $600m that could come from local or international developers.
He says local content will be required and partnering with local construction groups has proved to be a model frequently and successfully used so far during the energy department’s procurement of renewable energy.
Brian Day, a member of the management committee of Saippa, agrees, saying that much of the establishment of such a power plant entails general construction works. As such, the local construction industry’s experience in the construction of Eskom’s Medupi and
Kusile power stations will stand it in good stead for participation in the IPP process for coal-fired generation.
However, the lead-time for these projects is quite long. It can take five years from start to finish, including all regulatory consents, reaching financial close, construction and commissioning.

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It will therefore not bring relief for the current restricted power system, explains Kuni.
The Indian Vedanta group has announced that it will be developing a 600MW power generation plant near Lephalale, as will Exxaro in partnership with French group GDF
Suez.
That may account for 1200MW of the allocated 2500MW, Kuni says. Many developers are also considering the development of smaller plants of around 150MW, he adds. If many bids are received, the department may even increase the allocation, as it did recently with renewables.
IES energy consultant Dave Long says up to 1 600MW of the allocation may be imported from Botswana.
Buying power from a variety of smaller independent producers spreads the risk to the grid from a geographical perspective and drives prices down, says Long. While large projects like Medupi may in theory have the benefit of scale, the execution risk of developing it has proven to overshadow that benefit.
Day says the 800MW of co-generation capacity may include existing plants as well as new plants, depending on the bid specifications. It is not currently clear whether the producers currently contracted to Eskom through short- and medium-term contracts will qualify. These include Sasol, Sappi, Mondi and some sugar producers.
CENNergy, a joint venture between Exxaro and Indian power giant Tata, will bid and
Anglo’s Namakwa Sands may also qualify, says Day.
These projects have a shorter lead time that the coal projects and some may be ready to deliver power to the grid six months after signing the deal, Long said. Some will follow after 12 months and others will take 18-24 months.
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