RIL eyes over Rs 1.5 lakh cr investment in next five years.

NEW DELHI: Setting its sight on a number of new businesses and expansion of existing ones, billionaire Mukesh Ambani-led Reliance Industries group may invest more than Rs 1,50,000 crore over the next five years.

The group is sitting on a huge cash pile of over Rs 42,000 crore that has nearly doubled in one year, and further money influx is expected in the next few months, while it might raise further funds from the market, mostly through overseas bonds and partly through project equity, sources said.

There might be major investments, totalling nearly Rs 1,00,000 crore, in the group's core businesses of petrochemicals and energy exploration and production over the next five years, they added.

Besides, business initiatives in telecom, power and financial services sectors would also witness investments worth at least Rs 50,000 crore in the next few years.

The group is working on various business expansion strategies for different segments and a consolidated view of these initiatives could be announced by the group chief Mukesh Ambani at RIL's Annual General Meeting on June 3.

In last year's AGM on June 18, 2010, Ambani had said that he was aiming to double the group's enterprise value in less than a decade, from an estimated USD 80 billion (Rs 3,70,000 crore) at that time.

RIL's cash balance stood at a record high level of Rs 42,393 crore at the end of last fiscal ended March 31, 2011, as against Rs 21,874 crore a year ago.

Besides, its debt-to-equity ratio is very low at 0.17 (meaning Rs 17 debt for every Rs 100 equity capital), which could allow it to raise significant debts whenever needed.

RIL raised USD 1.5 billion dollars through overseas bonds last year at very competitive rates.

RIL's revenue rose by 29 per cent in the fiscal to Rs 258,651 crore, while its net profit increased by 25 per cent to Rs 20,286 crore.

Sources said the group would look at both organic and inorganic growth opportunities in various businesses.

In a financial presentation after its full-year results last week, the company said it was "uniquely positioned to pursue organic and inorganic growth opportunities to meet its growth aspirations."

It also said that it had a "investment programme of over USD 10 billion to cater to domestic market" in petrochemicals business.

Earlier at an investor conference in February, RIL had projected investment totalling USD 25-30 billion (Rs 1,10,000-1,35,000 crore) for the next five years in its various businesses, including energy and telecom sectors.

Source: EconomicTimes

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HDFC Bank appoints Rakesh Singh as i-banking head

Private sector lender HDFC Bank today said it has appointed Rakesh Singh as Head of its investment banking division.

Singh, who was earlier the Managing Director and Co-Head of Financing Advisory at Rothschild, will be responsible for building loan syndication, project financing, corporate finance and advisory and debt and equity capital markets business, an official statement issued here said.

He will report to Harish Engineer, Executive Director, it added. Singh, who has done his masters in business administration, has served in Morgan Stanley, Merrill Lynch, Standard Chartered Bank and ANZ Investment Bank during his 17-year-long career.

Source: Business Standard

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Inclusion banking will soon be profitable: Union Bank

Union Bank of India, the fifth largest public sector lender with over Rs 3.55 lakh crore in assets, has said its financial inclusion project, called the 'new bankable class', will turn profitable sooner than expected.

"Going by our experience with the financial inclusion project, which we call 'banking for the new bankable class', this will turn in profits sooner than later, especially when the cash transfer facilities under Adhaar scheme starts flowing in," Union Bank chairman and managing director MV Nair told PTI in an interaction here.

Nair, who recently got a three-month extension after completing his tenure, said, "For us, this is not a loss making business. Some of the segments such as remittance facilities for the migrant labourers as also those for the milk and fruit vendors, under the inclusion project are already profitable.

The MNREGA (National Rural Employment Guarantee Scheme) payments may remain in loss for some more time but then the government is subsidising it."

He said the bank got into this business three-four years ago, well before the government and the Reserve Bank began pushing it and made it mandatory from the last financial year.

"At Union Bank, we always believed in the opportunity at the bottom-of-the-pyramid and our innovative approaches have worked well so far and we hope this will continue to be so. This has given us the confidence to move into financial inclusion space well in advance.

"When we looked at this large unbanked class, we realised

that they were a future business opportunity and not a burden on our finances. Hence we started it off and looked at it as an investment for the future. And we are happy that we started it earlier than others," the chairman of the Mumbai-based lender explained the rationale behind this move.

The bank has already opened six million inclusion accounts and its project is well on course, he continued.

"The RBI has allotted us 3,159 villages. As of March 2011, we have already covered 2,511 villages. We intend to cover 10 million customers by March 2013 under the inclusion plan," Nair said.

For the new bankable class, the UNI is offering a combination of banking products such as no-frills savings account, microcredit, micro insurance, remittance facilities and overdraft, the chairman said.

However, industry analysts are not so hopeful about the profitability of the inclusion drive. For instance, Ernst & Young India partner and financial services head Ashvin Parekh is of the view that looking at the way the government and RBI are pushing this, it will impact the profitability of small banks.

According to Parekh, "the ideal model would be the government setting up some banks, specifically for the inclusion project, and once the target is met, privatise them.

"Or else, it could ask only large banks, which can absorb the losses for a longer period to drive the project and give them some tax incentives," Parekh said.

Source: Business Standard

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Axis Bank Q4 net up 33.5 per cent

Mumbai: Driven by a sharp rise in interest income, private sector lender Axis Bank today announced 33.5 per cent rise in net profit at over Rs 1,020 crore in the quarter to March and sounded bullish about growth this fiscal.

During the quarter, the bank saw its fee income from large and mid-corporate growing 68 per cent, treasury by 79 per cent and retail by 45 per cent.

The total interest income rose to Rs 4,366.6 crore in the quarter against Rs 2,988.4 crore in Q4 2009-10.

Though there has been a marginal deceleration in the net interest margin (NIM) in Q4, which came down to 3.44 per cent against 3.81 per cent and to 3.65 per cent from 3.75 per cent for the full year, a 48.3 per cent jump in total income to Rs 5,817 crore in Q4, coupled with a decline in stressed assets, could take care of the decline.

Axis bank had a net profit of Rs 764.8 crore in Q4 of FY10.

"We are hopeful of improving upon the robust numbers in FY11 in the current fiscal. I expect advances growth to be around 25 per cent, which would be above industry average. A similar growth is expected on deposit front too," executive director and chief financial officer Somnath Sengupta said in a conference.

On the Enam deal, Sengupta said, they had an in-principle approval from RBI, under which, the bank was asked not to allow any Enam shareholders who may buy into Axis shares a position on the board of the bank.

On whether Enam chairman Vallabh Bansali would be on the board, he said no call has been taken on this. He also ruled out any renegotiation of the price it paid for the deal, which was questioned by RBI, saying the regulator has not told them anything about it.

Source: Financial Express

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RBI issues new FY12 WMA limits for govt

Mumbai: RBI issued fresh limits for the federal government to borrow from the bank under Weighs and Means Advances (WMA) for the financial year 2011-12 starting April.

The Reserve Bank of India (RBI) said the maximum the government can borrow under WMA is 300 billion rupees for April 1 to April 20 and 450 billion rupees for the period of April 21 to June 30.

Earlier, the government's WMA limit was 300 billion rupees for the first half ending September 30.

It added, the government can further borrow 300 billion rupees between July 1 to September 30 and another 100 billion rupees for October 1 to March 31, 2012.

The government usually borrows from the central bank under WMA when it does not have enough funds with itself and needs to spend in the economy.

The RBI increased the WMA limit so that the government does not have to issue dated securities to fund its overdraft. This is a positive development for the bonds market as it will lead to increased liquidity without fresh borrowing, said a head of treasury at a foreign bank.

The government has been borrowing from the RBI under WMA since the first two weeks of April. During the week ending April 15, the central government borrowed 506.07 billion rupees, exceeding its first-half borrowing limit.

The RBI also said that the government can raise funds via fresh market borrowing in case it utilises 75 percent of the WMA limit.

The government has already announced 200 billion rupees of fresh market loans through cash management bills this month.

This is the maximum that the government can raise as per the budget announcement through cash management bills. So, there will not be any further such bill issued, said another dealer at a foreign bank.

The government has to repay the loans borrowed under WMA at the repo rate, which is 6.75 percent.

In case, if the government overshoots the limit, it has to repay the additional amount at 2 percent above the repo rate.

Source: Financial Express

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