MTNL services disrupted in Delhi, Mumbai due to strike
Thousands of gazetted executives of state owned Mahangar Telephone Nigam (MTNL) struck work for the second day rejecting the management’s offer of a pay revision with 5% fitment benefit.
The Class I and Class II officials are demanding for a 30% fitment in the new pay scales with housing rent allowance (HRA) approved by the government recently.
However with more than 4,000 executives demanding the 30% fitment, the management agreed to implement only 5% fitment with HRA capping stating that the company will not be able to sustain the financial implication of the demand in the future.
The strike has disrupted services in many parts of Delhi and Mumbai. It is expected to continue tomorrow as a settlement has not been reached.
V K Tomar, MTNL Employees Union General Secretary, warned that the strike will go on till an agreement is reached.
Meanwhile the management has lodged an FIR as the non-cooperation has resulted in cutting of cables and pairs which has disrupted the services in various parts of these cities.
Unitech – Warrants for promoters + Long Term Funds
Unitech Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 18, 2009, inter alia, has approved the following proposals subject to the requisite approvals:
1. Raising of additional long-terms funds through issuance of further securities in the Company.
2. Issuance of Warrants in the Company to the Promoter(s) on preferential basis in terms of Chapter XIII of the SEBI (Disclosures & Investor Protection) Guidelines, 2000.
The Board has also decided to convene the Extra-ordinary General Meeting of members of the Company to obtain their necessary approvals to the above proposals.
Essar Shipping likely to be delisted
Essar Shipping Ports and Logistics (ESPL) may be delisted in coming days as the promoters are believed to be looking at acquiring the stake of minority shareholders and further delist the company.
Though there is no official comment available from the company, a person familiar with the development said that the promoters may raise around Rs 500-700 crore to buy out minority shareholders and the current valuations are very attractive for buyout.
ESPL is currently in the process of expanding the capacity of its its Vadinar Oil Terminal at a cost of Rs 900 crore, the project is scheduled to be completed by June next year.
NSE + BSE Trading Halted – Rules & Regulations on Halt + Resume
After the domestic equity markets opened in circuit limits, markets have been halted for trade till 11:55 am, following the rule of circuit breakers of different variations as under:
The index-based market-wide circuit breaker system applies at three stages of the index movement, either way viz. at 10%, 15% and 20%. These circuit breakers when triggered bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the BSE Sensex or the NSE S&P CNX Nifty, whichever is breached earlier.
In case of a 10% movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1:00 p.m.
In case of a 15% movement of either index, there shall be a two-hour halt if the movement takes place before 1 p.m. If the 15% trigger is reached on or after 1:00 p.m., but before 2:00 p.m., there shall be a one-hour halt.
In case of a 20% movement of the index, trading shall be halted for the remainder of the day.
In the current case, the NSE Nifty surged 14.48%, which has led to a halt in trading for two hours.
Govt withdraws ban on trading in wheat futures
The government has withdrawn the ban on trading in wheat futures following which the Forward Market Commission (FMC) has written to all national-level commodity exchanges to launch new contracts after getting a nod from the commodity market regulator.
Former finance minister P Chidambaram, in his budget speech for 2008-09, had announced the delisting of all wheat and rice contracts.
Following the FMC communique, commodity bourses – MCX and NCDEX – are involved in designing new contracts. Industry analysts opine the move will benefit farmers and the agri sector.
India Equity Strategy – Post Elections
The incumbent Congress-led UPA alliance has achieved a near majority; an almost best-case scenario, and should translate into: a) Stable Government for next five years; b) More reform-oriented agenda, with greater policy making flexibility; and c) More economic/results-oriented governance.
A strong Government mandate should result in: a) Upward bias in growth expectations (maintain 5.5% FY10 expectations for now) – investment rather than consumption driven; b) Stronger currency – return of enhanced capital flows; c) Stable rate scenario, with a 50bps downward bias.
This should be a big bang for the market – we expect it to hold gains at the 13000-13500 index levels for now. The big question – is it a game changer? Can India get back to the high growth – high valuation of recent years? This event probably does open up meaningful possibilities, but there’s a lot to do, and there could be a lot in the way. We see capital/liquidity-driven and beta-plays as the bigger immediate beneficiaries – infrastructure, banks and stressed balance-sheets.
RBI survey pegs economy growth below 6%
In a survey of 17 forecasters conducted by the Reserve Bank of India (RBI), the economic growth of the country is likely to expand at a rate of 5.7%-6%, slower than expected earlier in the current financial year. The survey has also predicted more rate cuts as there is an enough room for banks to slash rates without hurting their profitability.
RBI has conducted the survey every quarter since September 2007 and the survey does reflect the forecasters’ views and not of the RBI. Forecasters have projected their 2009/10-growth forecast to 5.7% to 6.5% percent from 6%.
Kotak Bank gets FMC nod to invest in Ahmedabad Commodity Exchange
Kotak Mahindra Bank has received a clearance from the Forward Market Commission (FMC) for its proposal to invest the regional commodity bourse – Ahmedabad Commodity Exchange (ACE). However, the bank refused to divulge details about picking up stake in the regional bourse.
ACE, which is being upgraded to a national level bourse, is expected to give some concessions to the Kotak Group, as according to existing norms an individual corporate house can hold a maximum of 40% stake in a national level commodity exchange.
Hindustan Unilever Volume is down by 4% for March quarter
Overall FMCG performance in general:
As per AC Neilson report, FMCG sector overall has performed very well for the March quarter in terms of pricing and volume both.
Rural and urban both continue to drive the growth.
There was good volume growth in laundry business and personal wash has seen a double digit growth.
FMCG sector has seen some down trading in some of the categories.
Closure and consolidation of the organized retail had its impact on the FMCG sector.
In March quarter, the company has taken appropriate pricing action to protect consumer and face up the competition.
For 12 months periods ending March, FMCG business grew by 18%, HPC business by 18.5% and Food business by 7%. Net sales were up by 15.5%. Advertisement and promotion cost increased by 11%. OPM increased by 40 bps to 14.5%.
The personal product portfolio especially oral care and food business has been affected due to pressure on modern trade business.
The company is concentrating on strengthening its rural distribution business. 50% of the sales come from rural region.
In urban distribution model, the company has gone for zero inventory models with distributors, which has been successful in Mumbai and some of other cities and will launch in some of the other big cities.
Low commodity price and cut in excise duty has helped to go for cut in product prices.
The company has gone for an average price correction of 10% to 12%. Average price correction in soap and detergent from Dec’08 to March’09 is around 5%. Price correction has taken place in mass category, which is price sensitive, where the company has put on grammage on premium products. In right sizing, it has increased Wheel size from 275 gms to 325 gms.
Lifebouy in 90gm and 20gm seen price reduction of Re. 1. In SKU of Lifebouy of Rs 6, there was cut of Re. 1 to Rs 5. The company has re-launched and change the communication strategy of Lifebouy.
Breeze has been made more competitive and is now comparable in pricing term with regional and local players. The company has now also focused more on the communication of the Breeze brands to consumers.
In Lux, the company has gone for increase in grammage, from 100 gms to 125 gms and from 60 gms to 75 gms. The company is running multi pack schemes in Lux and Hamam in Delhi, Punjab and Haryana.
The company has become more aggressive on brands like Rexona and Liril.
The company has re-launched Lux, Vaseline and Ice Cream variants.
To make up poor performance of Pepsodent, the company has reduced price of SKUs of Rs 13 to Rs 10 and Rs 6 to Rs 5. This has received a good response from consumers.
For the quarter, A&P investment has grown by 3% with media spends up by 27%, offset by lower promotions.
As per AC Neilson report, the company is losing market share. Skin cleansing category has seen a loss in market share between Jan-Mar’09 period. The loss is more in mass segment where price is key point.
The capital employed has increased due to inflation. Capital employed in soap and detergent has increased in March quarter due to large receivables and lower oil creditors.
During low cost period, laundry business is more affected as inis mass segments large numbers of palyers are there. Along with it, tea businesses where loose tea and commodity players are there, got affected.
Future outlook
The management said “Trade off between the competitive growth and profitability growth, the company will go for competitive growth”.
The management has now 30 days and 50 days planning panel, which will take decision on the changing scenario and based on it will take appropriate action on the products. As such, it expects the June quarter and future quarters will see the transaction effects, which the company has under taken.
The launches & re-launches and right sizing will take place in coming months.
Mass category will be taken care. Access to distribution in rural and urban will be taken care. All this effect will be seen in H2FY10.
The company has large capital expenditure for FY09. But after 2010, capital expenditure will be around Rs 300 to Rs 400 crore.
A&P cost will not come down but might increase marginally in FY10.
National gets warning on Bhai Ghanya Sehat Sewa Scheme
The Punjab and Haryana High Court issued warning against National Insurance Company (NICL) for attempting to back out from its contractual obligation of providing medical reimbursement to more than 8,00,000 beneficiaries of the Bhai Ghanya Sehat Sewa Scheme under the sponsorship of Bhai Ghanya Trust.
The trust was set up by the Punjab government for implementing the healthcare scheme for the poor in the state.
The court has also ordered NICL to ensure that the medical reimbursement services are not disrupted. The matter has been adjourned to May 27, 2008 as the counsel for NICL sought time.
The trust had appointed NICL after it emerged as the lowest bidder in a process for selecting an insurance company for providing health insurance cover and paid Rs 24 crore as premium to the insurer.
NICL had quoted an insurance premium of Rs 1,291 per main member. Meanwhile, the insurer already faced medi-claim reimbursement up to Rs 20 crore. Fearing heavy losses, NICL issued a termination notice on April 8, 2009, to the trust.
The group medi-claim policy is valid till September 2009.
Besides, NICL also issued a demand notice asking the trust to pay premium over and the amount earlier agreed at the time of execution of the service level agreement.
The trust pleaded that it had paid the premium as per the contractual obligation and the rate quoted by NICL during the bidding process.
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