State Bank of India Chairman Om Prakash Bhatt is known for playing by the book. Even last Friday he wanted to do the same by putting a temporary freeze on lending for purchase of farm equipment. The idea was to check a further pile up of bad debt on the Rs 7,000-crore portfolio that has 17 per cent sticky assets.
SBI's move may not have moved the farmers, who had stopped paying their monthly installments ever since Finance Minister P Chidambaram announced a Rs 60,000-debt waiver plan, but it did create a furore in political circles. Finally, Chidambaram, by his own admission, had to intervene and get SBI to roll back the move.
For the 57-year-old SBI chief, who has earned an unprecedented five-year term, it proved to be a rare instance of being "misunderstood". Bhatt, who, by his own assessment has made the "elephant dance", has been proactive not just in shaping what he calls a "new SBI" but also in sensing government mood and acting accordingly.
For instance, he was among the first to put in place a new payment mechanism for public offers. While the initiative, which was recently approved by the Sebi board, is aimed at fine-tuning the bidding process, it also makes business sense for India's largest bank.
Last year, he managed to convince the Centre to part with Rs 10,000 crore for a rights issue, the biggest that India has seen, at a time when the markets were not doing too well. Bhatt's perseverance with the finance ministry also opened the doors for the other state-run banks to raise capital. Similarly, he managed to convince the government on the long-pending issue of merger of associate banks with SBI.
What probably helped him was his experience in dealing with the government. A 1972-batch executive, Bhatt joined the bank because his parents insisted.
He wanted to be an IAS officer, but in those days, SBI was a better paymaster. Having spent his initial years in various branches, Bhatt made it to the corporate office as executive assistant to PG Kakodkar, where he learnt to manage the dynamics and various pulls and pressures.
His colleagues, many of whom are his biggest critics, acknowledge that the stint helped him.
His rise has been meteoric. He was in Washington, then joined as General Manager in Lucknow, before moving to Guwahati as Chief General Manager. He then took over as the Managing Director of State Bank of Travancore.
Having pipped others to the post of the Managing Director of SBI, the man from Uttaranchal, became the SBI chairman in 2006.
After taking over the reins at SBI, Bhatt focused on regaining the market share — both for deposits and advances — which the bank had lost to its more agile private sector rivals. He set an ambitious target to increase its market share by 25 basis points (0.25 percentage points) every quarter.
He is also credited for putting in place the nationwide change management programme, ‘Parivartan', to bring back a sense of pride among employees.
He injected fresh blood into the system by recruiting technology-savvy young professionals to manage counters and cross-sell products. Bhatt is more than happy with the response and says that others companies are seeking his assistance to develop similar programmes.
Under his leadership, the bank started looking at new businesses ranging from general insurance, pensions to private equity. So far, his strategy has paid off but his success in the future will also depend on SBI's ability to raise capital and price products.
"What you are seeing is a new SBI," Bhatt told Business Standard in an interview last month. What he, perhaps, did not realise was that some things — like the government's political compulsions — never change.
BSE News
Monday, June 9, 2008
US,British firms bid for Mumbai Airport Contract
US-based Worldwide Flight Services, Swissport International of Spain and UK's Menzies Bobba Ground Handling Services are among seven bidders vying for the Mumbai International Airport's Rs 700 crore yearly ground handling contract.
While Swissport, an European infrastructure and service corporation providing value-added airport services at 187 airports across 43 countries, is going with India's Punj Lloyd group, Menzies is partnering Cambata Aviation for the bid. Cambata has been providing airport services at the Mumbai airport since 1967.
Turkey's Celebi Ground Handling is reportedly teaming up with Spencer Travels as overseas bidders. Spencers has a presence as an agency representing Cathay Pacific for passenger and cargo in southern and eastern parts of India and is also an agency for KLM Royal Dutch Airlines.
The GVK-led consortium mandated to modernise and upgrade the Mumbai International Airport Limited (MIAL) may name a winning bidder for the handling contract as early as August or at least four months ahead of the new regulations that make it mandatory for airport operators to either get into ground handling directly or to invite specialised agencies to bid for both passenger and ramp handling at the airport, besides the National Aviation Company Ltd.
The new policy comes into effect from January 1 next year. An MIAL spokesperson refused to divulge details as to when the bids would be finalised. "We will not be able to give those details though we will have to get the contracting within a few months," he said.
MIAL had invited bids in January for the contract. "We have received applications from specialised agencies and will soon shortlist names," said GV Sanjay Reddy, managing director, MIAL. The ground handling contract at Mumbai airport is for 10 years.
Confirming its bid for the ground handling services at the Mumbai airport, Atul Punj, chairman, Punj Llyod group, said: "We have bid for the ground handling contract for the Mumbai airport with international group Swissport. We are the investors and the local partners in the tie-up."
Punj, however, did not divulge much details and said the company was in the process of appointing a CEO for the new ground handling agency. Punj Llyod has recently become active in the Indian aviation space.
What makes the bid for Mumbai airport lucrative is the sheer number of the air traffic movements at the airport - 700-735 per day - making it the busiest airport with an estimated annual business size of Rs 650-700 crore pegged conservatively.
Currently, there are 40-odd local agencies involved in ground handling besides the airlines. Usually, 15 per cent of the contract value is the revenue share between the operator and the contracting parties.
The award of ground handling contracts to agencies has led to controversies involving airport operators and airlines, who want to do the job themselves. However, the civil aviation ministry's intervention has ensured that airlines do self-handling till next year, by when a policy will come into being.
While Swissport, an European infrastructure and service corporation providing value-added airport services at 187 airports across 43 countries, is going with India's Punj Lloyd group, Menzies is partnering Cambata Aviation for the bid. Cambata has been providing airport services at the Mumbai airport since 1967.
Turkey's Celebi Ground Handling is reportedly teaming up with Spencer Travels as overseas bidders. Spencers has a presence as an agency representing Cathay Pacific for passenger and cargo in southern and eastern parts of India and is also an agency for KLM Royal Dutch Airlines.
The GVK-led consortium mandated to modernise and upgrade the Mumbai International Airport Limited (MIAL) may name a winning bidder for the handling contract as early as August or at least four months ahead of the new regulations that make it mandatory for airport operators to either get into ground handling directly or to invite specialised agencies to bid for both passenger and ramp handling at the airport, besides the National Aviation Company Ltd.
The new policy comes into effect from January 1 next year. An MIAL spokesperson refused to divulge details as to when the bids would be finalised. "We will not be able to give those details though we will have to get the contracting within a few months," he said.
MIAL had invited bids in January for the contract. "We have received applications from specialised agencies and will soon shortlist names," said GV Sanjay Reddy, managing director, MIAL. The ground handling contract at Mumbai airport is for 10 years.
Confirming its bid for the ground handling services at the Mumbai airport, Atul Punj, chairman, Punj Llyod group, said: "We have bid for the ground handling contract for the Mumbai airport with international group Swissport. We are the investors and the local partners in the tie-up."
Punj, however, did not divulge much details and said the company was in the process of appointing a CEO for the new ground handling agency. Punj Llyod has recently become active in the Indian aviation space.
What makes the bid for Mumbai airport lucrative is the sheer number of the air traffic movements at the airport - 700-735 per day - making it the busiest airport with an estimated annual business size of Rs 650-700 crore pegged conservatively.
Currently, there are 40-odd local agencies involved in ground handling besides the airlines. Usually, 15 per cent of the contract value is the revenue share between the operator and the contracting parties.
The award of ground handling contracts to agencies has led to controversies involving airport operators and airlines, who want to do the job themselves. However, the civil aviation ministry's intervention has ensured that airlines do self-handling till next year, by when a policy will come into being.
FIIs in buying mode
| FIIs in buying mode |
| Foreign institutional investors (FIIs) bought shares worth net Rs 307 crore on Friday, 6 June 2008, compared to their selling of Rs 1419 crore on Thursday, 5 June 2008. FII inflow of Rs 307 crore on 6 June 2008 was a result of gross purchases Rs 2887.30 crore and gross sales Rs 2580.30 crore. Sensex declined 197.54 points or 1.25% to settle at 15,572.18 on that day. FII outflow in June 2008 totaled Rs 2,984.20 crore (till 6 June 2008). FII outflow in calendar year 2008 totaled Rs 18,353.60 crore (till 6 June 2008). There are a total of 1,385 FIIs registered with the Securities & Exchange Board of India (Sebi).
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| Source: Capital Market |
Market extends fall as oil price soars
| Market extends fall as oil price soars |
| The key benchmark indices slumped today due to a sharp surge in global crude oil price and setback in US stocks on Friday, 6 June 2008. BSE Sensex fell below 15,000 mark for the first time since 19 March 2008, in intra-day trade. The S&P CNX Nifty hit a fresh 2008 low. Except the BSE HealthCare index, all the other sectoral indices on BSE were in red. The market breadth was extremely weak. IT, realty, banking and oil & gas stocks were worst hit in today's market fall. Oil prices surged by their biggest one-day gain ever on Friday, 6 June 2008, rocketing over $10 to a new record high above $139 a barrel, taking this year's gains to 44%. Oil prices edged lower to $137.7 today, 9 June 2008. The 30-share BSE Sensex lost 444.14 points or 2.85% at 15,128.04 as per provisional data. At the day’s low of 14846.18 hit during mid-morning trade, the Sensex lost 726 points as per the provisional figures. The broader based S&P CNX Nifty was down 107.9 points or 2.33% at 4,519.90 as per the provisional figures. It hit a low of 4411.60 today in mid-morning trade, falling below 2008 low of 4448.50 hit on 22 January 2008. BSE clocked a turnover of Rs 5039 crore today compared to a turnover of Rs 5245.26 crore on Friday 6 June 2008. The market breadth was extremely weak on BSE with 475 shares advancing as compared to 2167 that declined. 49 remained unchanged. From the 30-share Sensex pack, 27 fell. The BSE Mid Cap index declined 2.55% to 6,188.35 and BSE Small-Cap index fell 3.43% to 7,432.33. BSE Healthcare index was the lone gainer from sectoral indices on BSE. It rose 0.63% to 4,322.88. Lupin (up 10.09% to Rs 715), Ranbaxy Laboratories (up 4.18% to Rs 528), Sun Pharmaceuticals Industries (up 2.56% to Rs 1,455.05) and Piramal HealthCare (up 2.12% to Rs 372.75) edged higher. Cipla (down 0.19% to Rs 207) and Dr. Reddy’s Laboratories (down 0.18% to Rs 692) edged lower. BSE Realty index was down 7.05% to 5,772.65. It was the top loser from the sectoral indices on BSE. Unitech (down 9.3% to Rs 184.80), Indiabulls Real Estate (down 6.06% to Rs 398.40) and DLF (down 7.39% to Rs 481.55) edged lower from the realty pack. IT stocks declined. Wipro (down 4.85% to Rs 480.50), Infosys (down 4.46% to Rs 1,904.05), Tata Consultancy Services (down 4.56% to Rs 915.65) and Satyam Computer Services (down 3.42% to Rs 491.45) edged lower. Banking stocks declined. HDFC Bank (down 4.34% to Rs 1,183.70), State Bank of India (down 3.17% to Rs 1292.80) and ICICI Bank (down 2.69%t o Rs 75.10) edged lower. Oil & Gas stocks fell after global crude oil prices hit the roof. PSU oil marketing companies which had found little solace after government had hiked domestic retail fuel prices were battered today. HPCL (down 9.21% to Rs 193.30), BPCL (down 7.09% to Rs 278.40), and Indian Oil Corporation (down 3.9% to Rs 363.25) edged lower. Reliance Industries (down 3.41% to Rs 2163.10) and ONGC (down 7.02% to Rs 872.60) also edged lower. India’s second largest telecom services provider by sales Reliance Communication rose 1.34% to Rs 554.10. The stock recovered from session's low of Rs 507.90. Reliance Communication (RCom) and the South African telco MTN will reportedly decide the share swap ratio at which Anil Ambani will transfer his stake in RCom to get stake in MTN. Both the companies have reportedly agreed for the deal, which will result in RCom promoter viz. the Anil Dhirubhai Group (ADAG) emerging as the single-largest shareholder in MTN and the foreign company becoming the holding firm of RCom. Jaiprakash Associates (down 8.65% to Rs 183.65), HDFC (down 5.99% to Rs 2206.65), Reliance Infrastructure (down 5.65% to Rs 1,038.85), Tata Motors (down 4.25% to Rs 517.10), Ambuja Cements (down 4.1% to Rs 81.95), Bharat Heavy Electricals (down 3.29% to Rs 1,374.65), edged lower from the Sensex pack. Rohit Ferro Tech declined 3.32% to Rs 154.90. SKP Overseas (SKP), a wholly owned subsidiary of the company in Singapore, has signed agreement with the PT. Pacific Samudra Perkasa (PSP) of Indonesia towards the 60% economic interest in both of the two mining companies PT Palopo Indah Raya (PIR) and PT Bara Prima Mandiri (BPM) as per the terms of the memorandum of understanding entered into earlier between the company & PSP. US stocks plunged on Friday, 6 June 2008, marking the Dow's worst day in 15 months, after the US government said the May 2008 unemployment rate jumped the most in 22 years and oil prices shot to another record, renewing fears that the US economy faces 1970s-style stagflation. The Dow Jones industrial average tanked 394.64 points, or 3.13% to end at 12,209.81, its biggest drop since February 2007. The S&P 500 slid 43.37 points, or 3.09%, to finish the day at 1,360.68. The Nasdaq Composite Index lost 75.38 points, or 2.96 percent, to close at 2,474.56. European markets were trading mixed today. Key benchmark indices in France and Germany were down by between 0.08% to 0.09%. The UK”S FTSE 100 however rose by 0.18%. In Asia, key benchmark indices in Japan, South Korea, Singapore and Taiwan were down by between 1.27% to 2.13% today. Markets in China, Hong Kong and the Philippines were closed for public holidays. Surging global crude oil prices, a hike in domestic fuel prices and rising inflation have spooked the domestic bourses in the past few days. Foreign institutional investors (FIIs) pressed heavy sales in the backdrop of a weakening rupee against the dollar, accentuating fall in share prices. From a recent high of 17,434.94 on 16 May 2008, the barometer index, BSE Sensex tanked 1,862.76 points or 10.68% in a short span to 15,572.18 on 6 June 2008. Brokerage earnings downgrades of Indian firms/stock prices amid rising input and interest costs for India Inc, high inflation and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. If inflation remains high, the Reserve Bank of India (RBI) would be forced to hike repo rate – a move that could choke overall growth of the economy. The Indian industry and consumer have already been reeling under high interest rates over the past few months. A further hike in rates would raise interest costs of corporate India and hit bottomline. After 10 days of debate, the Union government on Wednesday, 4 June 2008 agreed to raise retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners. A sharp fall in the rupee against the dollar in the past few days has heightened concerns about inflation. This is because the fall in rupee will raise cost of imports which in turn will result in further rise in inflation. According to rating agency CRISIL, headline inflation is expected to increase by 95 basis points on account of direct and indirect effects of the fuel price hike. The indirect impact which will be felt over the course of the next few months, it states in a note. A well distributed monsoon will bolster food production, helping douse inflation. Agricultural output in India depends on good rains. The Indian Meteorological Department (IMD)’s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this months which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990. A section of the market is of the view that the central bank may only use the reserve requirement route to tame inflation, fearing any hike in rates would further hurt growth already seen moderating to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To rein in inflation, in its monetary policy review for 2008-09 on 29 April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis points to 8.25% to suck out excess liquidity in the banking system. RBI often says pass-through of high global oil prices is incomplete in India, complicating policy making. Another near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.
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| Source: Capital Market |
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