PSU banks make defaulters' names public to recover dues

It is routine for equity analysts to comment that PSU banks have higher NPLs (Nonperforming Loans) because these bankers are too weak to recover dues from big borrowers, but this attitude is going to change quickly.

Also read : Allahabad Bank labels Orchid A/c as NPA, eyes recovery soon

UCO bank has published an advertisement with a picture of an industrialist titling him a defaulter. Also Allahabad Bank rattled out the names of its big defaulters on CNBC-TV18. The changing face of PSU bankers could send shivers up India Inc's spine, reports CNBC-TV18's Gopika Gopakumar.

There is an advertisement published by UCO bank against its customer Reid and Taylor for defaulting on a Rs 110-crore loan. The most noticeable thing about it is the picture of the promoter Nitin Kasliwal. The notice, which was carried in a leading english daily, cautioned other banks against dealing with the company.

The notice said, In spite of repeated reminders, request and persuasions, the said borrower has not liquidated liabilities of the bank. In terms of the guidelines of the Reserve bank of India, the account has been classified as Non Performing Asset. While the UCO Bank reserves its right to initiate legal action against them for recovery of its dues, this information is published in the interest of the banks/financial institutions and the public at large to exercise due caution while dealing with the above named director, guarantor and company in any manner whatsoever particularly the assets which are hypothecated and mortgaged to the bank.

Clearly this is a first of its kind, but a chat with bankers indicated more may follow. Another bank has hit on another means to pressure defaulters. The chairman of Allahabad bank rattled out details about clients who have defaulted on National television.

Shubhalakshmi Panse, CMD, Allahabad Bank said, "The big accounts with us is Kemrock Industries Rs 471 crore, Sterling Industries Rs 240 crore, Surya Vinayak Rs 314 crore, Orchid chemicals Rs 230 crore, Websol Industries Rs 70 crore and the list goes on".

Until recently bankers shied away from mentioning names under the excuse client confidentiality, but not any more. In a rare act of aggression last week, bankers even invoked personal guarantees of Kingfisher 's Vijay Mallya. Again, it was first time ever against a non-performing business promoter.

Until now, banks were only going after the small promoters. The newfound aggression is probably triggered by a recent statement of the finance minister that banks must act against rich promoters of poor companies. Whatever the trigger, it is clear that corporate bigwigs better watch out. If you default, be prepared for some tough times including public name calling.

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Unilever's $ 5.4 bn open offer for HUL to begin on June 21

Hindustan Unilever today said the USD 5.4 billion-open offer by its parent firm Unilever Plc to buy 22.52 percent stake in the company would begin on June 21.

Once complete, the open offer would be one of the biggest deals and fifth largest India Inbound M&A transaction on record till date.

Anglo-Dutch consumer goods giant Unilever Plc is looking to hike stake in its Indian arm Hindustan Unilever Ltd (HUL) to 75 per cent through the open offer. Currently, it has a stake of 52.48 per cent.

Unilever will pay Rs 600 a share, valuing the open offer at USD 5.4 billion.

The open offer would begin on June 21 and close on July 4, HULBSE 1.23 percent said in a regulatory filing.

Last week, HUL's board had constituted a committee of independent directors to provide recommendation to the shareholders about the open offer.

The committee would consist of all the five independent directors of the company--Aditya Narayan, S Ramadorai, R A Mashelkar, O P Bhatt and Sanjiv Misra.

HUL's portfolio includes leading brands such as LuxBSE 1.23 percent, Lifebuoy, Surf Excel, Rin, Wheel, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall's and Pureit.

The company, which employs over16,000 employees, posted net sales of Rs 26,317.15 crore for the 2012-13 fiscal.

Shares of HUL today closed at Rs 586.70 on the BSE, up 1.23 per cent from its previous close.

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India Inc confident as mood in EU, globe worsens: Survey

The Young President's Organisation (YPO), one of the world's most powerful network connecting over 20,000 chief executives from leading companies, has released a survey on business confidence. The organisation says that business confidence across world is at a stand still and in Europe, it has worsened.

Also Read: PM confident Parliament will transact financial, other biz

Speaking to CNBC-TV18, Pashupati Advani, board member, South Asia, YPO says that corporate India's level of confidence is on the rise and the minimum public float requirement will boost domestic investment-mood and attract higher FII inflows.

Below is the edited transcript of the interview on CNBC-TV18

Q: The news doesn't look very good as far as business confidence is concerned. Europe down by about 4 points according to the YPO barometer…

A: Asia, on the other hand, has made up for more than the loss of confidence in Europe and flat world confidence at 60.4. We have been conducting this survey since 2009 and this is the 16th edition. Business confidence in Africa has turned out to be very exciting. Asian countries are also moving up and the big mover, though it is still below average, is Japan because the confidence is started to rise in Japan very rapidly because of the policies and leadership.

Q: What about India in specific?

A: Business confidence in India has remained reasonably flat and is slightly lower this time. But what is interesting about Indian business confidence is that CEOs are expecting to make fresh investment over the next 12 months — bear in mind this survey was conducted during the first two weeks of April. So, CEOs are looking to increase investment and sales for the FY14 fiscal without any significant change in hiring employees. Though the survey reveals tightening of the belt, there is an amount of confidence egging corporate India to make fresh investment.

Q: How do you expect global equities to perform?

A: Funds from all sources are flowing into the markets with Japan being recent driver of fund flow. Our survey shows that as people are willing to take risk they are going to make fresh investment in new capacities and India is one of the few countries that is going to attract those investments. The Indian economy actually benefits as commodities go down.

Q: Do you believe that FII flows will continue to be strong?

A: I am a firm believer in that thesis. It is the mega deals from multi-nationals are what will drive the India economy and domestic investment.

Q: As deadline for the minimum public float and the public shareholding requirement nears, there will be a host of companies issuing offers in the market. What will be the impact of this on the Indian market?

A: That will attract fresh investment as investors line up to participate in the growth of companies with a strong and proven track record.

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The luxury car battle: Audi's plans to stay on top

The pecking order in the Indian luxury car market has changed. Audi has edged past German peer BMW to become the number-one player in the market.

It sold 2,216 vehicles in the January-March quarter, against BMW's 1,410 vehicles.

Also read : New Range Rover to drive JLR margins in FY14: Credit Suisse

CNBC-TV18's Sunanda Jayaseelan caught up with Michael Perschke, the head of Audi India, to find out just how Audi plans to hold on to that top spot.

Michael Perschke can heave a sigh of relief, at least for the moment. However, he's also the first to admit that becoming the number-one player in the Indian luxury car market is one thing and keeping the throne quite another.

Its new financing scheme has helped volumes rise by 10-15 percent. Perschke's key priority now is to come up with newer methods to attract a new ilk of clientele, thus creating a wider customer base.

Michael Perschke, MD, Audi India says, "The salaried class for example, we were not able to reach a huge section of them earlier, but now that we offer EMI's up to 84 months suddenly we have discovered a whole new target group".

Perschke also acknowledges that the financing scheme is not a new ploy. Competitor Merecedes Benz implemented it, and saw sales rising 5 percent. That leaves ways to cut costs and to make Audi much more accessible. Especially since the government has made things tougher by hiking the excise duty on imported cars.

So audi, which already has one of the highest levels of localisation in its segment, wants more. It targets 90 percent of total revenues from locally-manufactured products going ahead.

Perschke informed that as of now nearly 80 percent of company's total sale comes from locally built products

Audi currently manufacturers the A4, A6, Q5 and the Q7 in india. It is now banking on new launches to fuel sales growth. perscheke did not comment on a timeline for the new A7, but he did let slip that up to four new products would hit indian roads before this fiscal year is up.

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Call in ED; custodial interrogation is must: Cobrapost

In its latest expose, Red Spider 2, Cobrapost has revealed that the money laundering racket was at a much larger scale and involved top state-owned banks and insurance companies. Cobrapost added that 23 major banks and insurance companies were part of the racket.

Also read: Cobrapost 2: FinMin calls for action, banks to investigate  

In a sting operation in March, Cobrapost revealed how private banks like HDFC Bank , ICICI Bank and Axis Bank aided customers to launder unaccounted funds.

Aniruddha Bahal, editor, Cobrapost , in an interview to CNBC-TV18, calls for the deployment of the enforcement directorate (ED) to investigate the allegations of money-laundering. He adds that custodial interrogation of those suspected to be involved as part of a criminal investigation alone would bring the truth to light.

Below is the edited transcript of the interview on CNBC-TV18

Q: The Reserve Bank of India governor said show cause notices would be issued to the errant banks. The banks retort that internal audits by external auditors like KPMG have shown categorically that there is no evidence of money laundering except for some cases of KYC- norm violations. Are you suggesting that three banks in question are lying?

A: Of course, they are lying and they are lying through their teeth. They are misleading the public. It is widespread across several branches with bank officials confirming that it money was laundered in the past with specific mention of each instance. The government, instead of  directing the enforcement directorate (ED) which specialises in investigating such cases, is issuing orders to some dubious Indian bank association.

Q: Is the Reserve Bank of India (RBI) unequipped to deal with this?

A: I categorically state that the RBI is not equipped to deal with criminal investigation concerned with money-laundering. The central bank might have some personnel who are good at auditing, but this investigation calls for professional forensic analysis, custodial interrogation of these people and access deleted mails from hard disks. I don't think the RBI is equipped for this.

Q: Is the RBI at the centre of a conspiracy?

A: Yes. I wish to remind the authorities they should build accountability in the system by putting certain practices in place and punish those responsible for the violation of KYC norms. The RBI is hedging its bets by pleading to the lesser crime of KYC violation instead of admitting to money laundering.

Q: Has the RBI at any point followed through with the action against these particular banks that you have mentioned?

A: I requested the RBI in the press conference to make their audit report public. Apart from hearsay and speculation, little is known about what the RBI discovered in its audit of 34 banks.

Q: Why did you not release all the information of  money-laundering against these three private sector banks to light on March 14?

A: It takes time to transcribe tapes and we lack adequate resources.

Q: Was the sting related to the opening up of the banking sector with private companies making a beeline for banking licences?

A: We were egged on by several agitations over black money across India. With the limelight on money stored away in Swiss Banks, there was little people knew about illicit funds being stashed away and laundered within the country. So this is a sort of warning to the government that the antecedents of those applying for these banking licences need to be vetted.

Q: Should the entire process of issuing new bank licences be put on hold till there is conclusive proof that none of these banks or insurance companies were involved in money-laundering ?

A: There has to be transparency in the way the licences are issued. Previous conduct and record could be an important criteria for the grant of these licences.

Q: Why do you believe that this is a crisis of leadership and not a case of procedural violations?

A: The crisis of leadership is apparent. Violations at one or two branches escaping the attention of the top management is understandable. But when it occurs across 20-25 branches, the management cannot plead ignorance. There are officers who have sent mails seeking approval from senior management when cash is involved and the senior management sends a reply. So, I want to know who has custody of those mails and this which can happen only in a custodial interrogation of those involved.

Q: Is there a third part of Operation Red Spider?

A: Yes, there is. It will be released soon

Q: When will you make it public?

A: It will be released on May 9 which is three days, from now.

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2G: Chacko to move resolution seeking extension of JPC

PC Chacko, chairman of the Joint Parliamentary Committee (JPC) on the 2G scam is likely to move a resolution in the Lok Sabha seeking extension of JPC beyond the Budget Session. Sources say that the BJP has agreed to the extension of the JPC beyond May 10.

After Lok Sahba Speaker Meira Kumar expressed her inability to remove him as JPC Chairman as demanded by 15 opposition members of the committee, PC Chacko had started contacting members to hold a meeting.

Also read: 2G scam: Opposition seeks removal of JPC chief PC Chacko

With the term of the committee coming to an end on May 10 along with the end of the Budget session, Chacko is most likely to seek an extension to reach a conclusion as amid divergent views, the panel would not be able to adopt the draft report before Parliament is adjourned sine die, the sources said.

The fresh extension could be till the beginning of the Monsoon session of Parliament which is likely to begin around July 23.

Fifteen members from Opposition parties including from former UPA allies DMK and Trinamool Congress, had earlier written separate letters to the Speaker contending that they have "no confidence" in the JPC Chairman and had appealed to her to immediately remove him. They had also rejected the draft report "in toto".

With numbers not on his side, Chacko is unlikely to rush with the adoption of the report. While SP has not sought Chacko's removal, it has made it clear that till Raja is not called as a witness, it would not support the report. SP has one member in the panel. BSP, with two members, is likely to side with UPA.

(With inputs from PTI)

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Buffett devotees stick by him even as growth slows

By Jonathan Stempel and Jennifer Ablan

OMAHA, Nebraska (Reuters) - Short-seller Douglas Kass, Warren Buffett's handpicked bear, raised a concern on the minds of many shareholders at the "Woodstock for capitalists" this weekend: Has Berkshire Hathaway Inc become so big that it will find it hard to grow?

Many retail investors who converged on Omaha, Nebraska, for Berkshire's annual meeting on Saturday acknowledged that its fastest growth days are likely behind it. But they said Berkshire is still a good long-term bet as faith remains in Buffett and his management team's more than 4-decade-long record of stellar returns, and the company's tentacles into many sectors of the U.S. economy.

"Yes, it is a concern, but I have to get my expectations in line," said Julie Fehrnstrom, a mother of three from Orinda, California, attending her fifth meeting. "They are not driven by short-term decision making and they have really smart management. You really don't always find that."

Sherrie Palmer, a social worker from Portage la Prairie, Manitoba, was attending her first Berkshire meeting, one of 35,000 or so investors.

"The steepness of the growth is leveling off, but it's not a concern," Palmer said. "We like the manner in which decisions are made and I don't worry about this being an organization jumping to a fad that won't pan out."

Patience has served Berkshire shareholders well. Investing in companies with dependable businesses and sound management has helped Berkshire as an investment trounce major competitors since Buffett took it over in 1965. Berkshire is now one of the largest U.S. companies by market value, with more than 288,000 employees in dozens of businesses, covering everything from ice cream to underwear and insurance to railroads.

But its massive size - currently around $268 billion in market value - has made it hard for Berkshire to grow as fast as it once did. While Berkshire performs well in down markets, it can lag in rising markets.

Buffett reminded shareholders that 2009-2013 may prove to be the first five-year period ever when the company's growth in book value per share will lag the Standard & Poor's 500 <.SPX> index including dividends.

"People who buy stocks now and hold stocks for 20 years will make money," Buffett told Reuters Insider in an interview on Saturday evening. "Those who hold for 20 days, I don't know what will happen."

M&A, SUCCESSION

It has also become harder for the company to find deals that are large enough to move the needle. In February, Berkshire, along with Brazilian investment firm 3G Capital, struck a deal to buy ketchup maker H.J. Heinz Co , and Buffett said he was looking for more big acquisitions.

But in an interview on Friday, Berkshire Vice Chairman Charlie Munger said high prices have made attractive deals scare. "With interest rates at zero, the prices being paid for businesses are very high," Berkshire's second-in-command said.

Still, size has advantages. Berkshire's quarterly profit rose nearly 51 percent on solid performance in insurance and many of its other units. The results showed that its more than 80 businesses are benefiting from a strengthening economy, as illustrated by increased traffic on its Burlington Northern railroad unit, new customers for its McLane food distribution business and stepped-up demand for its Forest River recreational vehicles, to name just a few.

"In the 1990s, Warren was criticized for not being 'state of the art,'" said Arthur Cohen, a financial adviser from Highland Park, Illinois, who was attending his 15th meeting. "I'm not critical of his performance since."

Investors have also worried about what will happen to Berkshire after Buffett, 82, and Munger, 89, leave. In his most extensive comments to date about the future of Berkshire after he is gone, Buffett said he still expects the conglomerate to be a partner of choice for distressed companies.

Buffett said he and his board are "solidly in agreement" on who should be the next chief executive - but offered no names - and said his son, Howard, would become chairman to ensure that Berkshire had the right CEO in place.

"The key is preserving a culture and having a successor, a CEO that will have more brains, more energy, more passion for it than even I have," Buffett said in response to a shareholder question at the meeting.

BIG BASH

As Berkshire has grown, so has the yearly extravaganza, now Omaha's second-biggest annual tourism event behind the College World Series baseball tournament. The event attracted many well-known investors, including Mario Gabelli, Leon Cooperman and Chris Davis, as well as mom-and-pop investors.

Missy Krasso, a driver for Happy Cab in Omaha, makes as much as $3,000 in fares during the Berkshire weekend. Wall Street tips well, she said.

Before the meeting began, Buffett roamed an exhibit hall at the arena featuring Berkshire-owned companies. Cherry Coke in hand, he dipped coconut bon-bons in a fondant coating at See's Candies, admired a model Burlington Northern railroad and tossed newspapers. Berkshire owns the Omaha World-Herald and others.

A new addition to the series of events around the meeting this year was an "Invest in Yourself" five-kilometer run through downtown Omaha, with Buffett starting it off, if not necessarily setting the pace.

The real mad sprint began at 6:30 a.m. on Saturday, when dozens of shareholders rushed for the best seats directly in front of Buffett and Munger on the arena floor, large enough to be suitable for a rock-star concert.

Sherman Silber, a fertility doctor who has attended the meetings for 15 years, said he misses the "old format" where he could just go to the podium and ask a question. "Now you have to do all this lottery stuff," he said.

But Rosie Smith, a finance executive for a Baltimore book printer, said she keeps coming back for more.

"We came out here, and it was the wildest thing we've ever seen," she said, referring to the first of her 10 visits to the meeting. "Every year, it keeps snowballing."

(Reporting by Jennifer Ablan and Jonathan Stempel in Omaha; Additional reporting by Rhonda Schaffler; Editing by Ben Berkowitz, Paritosh Bansal, Tiffany Wu and Maureen Bavdek)

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Malaysia ruling coalition wins simple majority in parliament

KUALA LUMPUR (Reuters) - Malaysia's ruling National Front coalition won a simple majority of 112 seats in the 222-seat national parliament in Sunday's election, the country's Election Commission said, signalling it would extend its 56-year rule in the Southeast Asian nation.

The opposition alliance had 58 seats with more than two-thirds of the seat results confirmed, according to the official results.

Opposition leader Anwar Ibrahim had earlier claimed victory in the election, warning the Election Commission and the ruling party of Prime Minister Najib Razak not to "hijack" the results.

(Reporting by Stuart Grudgings. Editing by Jason Szep)

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India's rating upgrade unlikely anytime soon: SP

Amid high public-debt levels and concerns about deficit and subsidies, the India growth story still remains positive, global rating agency Standard and Poor's (S&P) said today. However, the rating agency ruled out rating upgrade of India anytime soon.

India's growth track record is good in current circumstances as the RBI attempts to counteract loose fiscal policy . The market has factored in one ore two rate cuts this year, the agency added.

However, S&P warn that reform announcements recently made by the government did not suffice to ensure growth. The agency also pointed out that a large number of infrastructure projects were stuck and those in the pipeline were "historically bad".

Investments must be unlocked for growth and the government must find short to mid-term solutions of problems in the infrastructure, power and coal sectors.

Offering a global perspective, S&P said that Asia-Pacific growth would not be impacted by problems in the US and eurozone and in fact, forecasts Asia Pacific economies to perform better from hereon. "Nobody expects the eurozone to recover by next year and will muddle through while the US economy will pick up going ahead," the agency said.

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Taking away capital mgmt from RBI not advisable: Subbarao

Moneycontrol Bureau

Reserve Bank of India Governor Duvvuri Subbarao, who is known to have mind of his own, and has many times been at odds with the Finance Minister today voiced his discontent about the Financial Sector Legislative Reform Commission(FSLRC's) recommendations regarding capital inflows.

In an interview with CNBC-TV18's Latha Venkatesh, he stressed that taking away capital management from Reserve Bank of India is not advisable and that the central bank had made this suggestion to FSRLC when it was consulted.

"So we submitted but they have decided, the way they have decided. Now I believe the government will call for consultation and we will certainly not only put across our point but argue our point," he said.

FSLRC which was set up to rewrite and update all the archaic Indian financial sector laws has recommended that the government and not the RBI should make rules with respect to capital inflows. This recommendation is irrespective of whether the inflows are FDI, FII, forex loans or NRI deposits.

This recommendation has been strongly criticized by many economic and baking sector scholars including KJ Udeshi and YH Malegam. Subbarao said that FSLRC's argument on this is that external sector management with capital inflows has bearing on monetary policy, on financial stability and on bank regulation and hence RBI should not be handling capital inflows. 

Also read: Barring FDI, RBI must control all capital flows: YH Malegam

On Friday, RBI cut the repo rate by 25 basis points and pointed that further room for monetary easing was very little. Upside risk to inflation and high current account deficit (CAD) were sighted as two key reasons by RBI for its hawkish stance.

Today, Subbarao said that CAD could come close to 5 percent in 2012-13 and stressed that any improvement below 5 percent would be a good improvement on CAD. He said although India was able to finance 6.7 percent CAD up till January due to higher liquidity in global system, we can not depend on mere foreign capital flows. "We must have low and steady CAD financed by stable flows," he added.

Diesel price hike was seen as one of the key step in controlling the twin deficit-CAD and fiscal deficit, however oil retailers have declared on three prices hike since the fuel was deregulated. Subbarao also learned that diesel price hike was deferred on the back of fall in global crude oil prices, which gave oil retailers leeway to postpone the price hike. He however said that it would have been better if scheduled rise in April was taken by oil retailers.

On the recent cobrapost expose which involved leading private sector banks like ICICI Bank, Axis Bank, and HDFC Babk, Subbarao said that RBI was determined to take strict action against erring banks and will soon introduce systematic improvement in know your customer norms.

On the new banking licenses Subbarao said that RBI would constitute committee that will vet all applications only after June. He said that RBI would issue enough licenses to instill competition but would also make sure that they don't outnumber the existing players.

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