Loan
June 6, 2013
CDB lents $44 million to CSIQ Canadian Solar sought a $44 million loan from the China Development Bank to finance its project in China. It is […]
March 13, 2013
Axis Bank Ltd. Axis Bank Ltd. was formerly known as UTI Bank and was the first of the new private banks to have begun operations in […]
January 26, 2013
Muthoot Finance Muthoot Finance is the largest gold financing company in India in terms of loan portfolio. As the business very well suggests, the company provides […]
January 4, 2013
The Indian Finance Ministry has recently asked the Central Bank of India, the Reserve Bank to consider giving infrastructure status to the housing sector. The ministry has also asked […]
January 3, 2013
“If you suffer from small loans, you have a problem; but when you borrow alarmingly large sums, then it is the lender who will suffer a […]
November 27, 2012
Is student Loan really the cause of next financial crisis The question might seem a little absurd, but it’s worth taking a look. It is reported […]
October 2, 2012
USA’s loan grant schemes to green companies have proven to be a massive disaster as proved by the failure of a numerous companies that have been […]
February 29, 2012
China's solar panel companies can used their government banks backing as a major competitive advantage. Just like their telecom equipment companies ZTE and Huawei they can use the debt to win contracts over suppliers from India and elsewhere. Note there is a already a major controversy in the USA over the subsidies and support given to Chinese solar companies and has led to a so called solar trade war between the two . Even USA has used its EXIM Bank to provides millions of dollars in financing of solar farms which are supplied by US Solar Panel producers First Solar. Chinese companies Goldpoly are using the strong billion dollar lines to build solar projects in the Europe as well
July 4, 2011
Japan has decided to from 5 consortia of three to nine companies to bid for large solar projects in Asia and Africa.The Japanese government will support these consortia with subsidies and diplomacy to take on the Chinese solar companies.Note Chinese companies have soundly beaten the Japanese in solar company rankings despite the early mover advantage.Japanese zaibatsus are falling behind the Chinese in the global solar marketshare as low costs,cheap capital and huge subsidies have bankrupted European and American solar companies.Solar Energy in Japan has a long future dating back to 1994 when the government introduced capital subsidies to boost solar energy installations on rooftops.Till 2004,Japan was the largest solar market in the world after which it was overtaken by Germany.After 2004,the growth in the solar industry tapered off as the government reduced the subsidies for solar panels to almost zero.The huge domestic market gave rise to Japanese companies like Sharp,Mitsubishi,Kyocera,Panasonic-Sanyo become top solar panel producers in the world.However the low cost Chinese solar module producers have pushed back most of the Japanese companies
July 4, 2011
Green Banking in India has started increasing at a rapid pace as concerns over Global Warming increase.Most of India's Banks are pushing for Clean Technology in their separate ways.Though there is lack of regulation on funding of environment friendly projects,Banks are pushing ahead on their own anyway.India's Financial Sector has seen the writing on the wall as the largest bank SBI is using Wind Energy for captive consumption to reduce its carbon footprint.The Bank is also reducing the interest rates for Green Projects beside helping in carbon consulting of customers.SBI is also implementing thousands of Green Kiosks to reduce the need for paper.ICICI Bank is helping funding research in clean technology using TFD while Canara Bank has funded almost 50,000 units of Solar Lighting .
July 4, 2011
The Indian Financial Companies were subject to strict regulations till 1991 when interest rates were administered and asset allocation was governed through various formal mechanisms and strict controls limited the entry of financial companies. In 1991, the government of India initiated a reform programme for India, which encompassed the financial sector.There were numerous reforms that were intitiated which has led to the emergence of a robust financial sector which easily managed to sidestep the post Lehman global financial crisis in 2008.The post 1991 reforms allowed the deregulation of interest rates,entry of new private sector banks permitted long-term lending institutions like ICICI,IDBI,HDFC to carry out banking activities.The banking sector in India has become increasingly more competitive in recent years. Public sector banks have lost their market share to the more dynamic private sector banks .It is not possible to list out all the Finance Companies in India in one post as there are almost 13000 non-bank finance companies (NBFCs) besides Banks,Insurance Companies,Foreign Financial Institutions etc.This post lists out the Financial Companies in the Gold Finance,Travel,Housing,Infra sectors as well as the Top 10 Banks.
July 4, 2011
At the time of independence in 1947, India's capital market was relatively under-developed. Although there was significant demand for new capital, there was a dearth of providers. Merchant bankers and underwriting firms were almost non-existent. And commercial banks were not equipped to provide long-term industrial finance in any significant manner. By the early 1990s, it was recognized that there was need for greater flexibility to respond to the changing financial system. There was a need for these financial institutions to directly access the capital markets for their funds needs.So a number of infrastructure finance companies were set up.Some of them have become fully private like ICICI while others have been partly privatized. like REC and PFC.Besides a number of private companies have recently become big players in the infrastructure financing space like SREI,L&T Finance etc.Note with almost $1 trillion expected to be spent on infrastructure in India over the next 5 years,the scope for these companies is immense if they manage their assets-liabilities in a decent manner
July 4, 2011
The formal housing finance market of India comprises various segments viz. Housing Finance Companies, Scheduled Commercial Banks, Co-operative Sector etc. These institutions offer a variety of products relating to
direct finance, refinance, micro-finance etc, to the borrowers.The share of outstanding housing loan as a percentage of GDP has risen from 3.4 per cent in 2001 to 7.25 per cent in 2007 (estimated). The share of outstanding housing loan as a percentage of GDP has risen from 3.4 per cent in 2001 to 7.25 per cent in 2007 (estimated).
Housing Finance Companies in India
At present, the need for housing finance in India is largely being fulfilled by the more than 40 Housing
Finance Companies and 27 Public Sector Commercial Banks.The housing finance companies' market is dominated by large players such as HDFC, LIC Housing Finance Limited, Can Fin Homes, Dewan Housing Finance Limited, Sundram Home Finance and GRUH Finance Limited (now bought by HDFC)
June 28, 2011
REC is looking to invest more than $600 million to set up 300-400 MW capacity in India and is already talking to the Himachal Pradesh government to set up plants there.REC has said that it is looking for power plants with a PLF of more than 50% which automatically rules out wind and solar energy.Its interesting that REC is concentrating on small hydro and biomass power capacity unlike other PSUs which are mainly concentrating on solar energy.India needs massive amounts of investment in renewable energy in order to meet its 15% Renewable Energy Obligation by 2020 from 5% at present.Its instrumental for the large government companies to invest heavily into clean sources of energy.Power Finance Corporation Green Energy has been set up by PFC to become one of the biggest lenders in Green Energy and now REC has also decided to directly invest in Green.More such initiatives will have to be taken to increase the cleantech energy capacity.
June 1, 2011
India's policymaker keep making dumb policies to promote agriculture in the country which leads to huge losses for taxpayers and leads to no gains for poor farmers.One such policy is to give a interest rate subsidy of 3% to farmers who have repaid their loans.This means that if you are getting a loan from the banks at 7.5% normally,you will now get it at 4% if you are a farmer who has repaid his loans.Note the condition "repaid his loan" is meant to sound as it he has great thing like saving someone from a burning building.Last time I though all loans were meant to be repaid.But evidently different rules apply to farmers who were in the election year in 2009 were given a loan waiver.The government effectively allowed the farmers to convert their loans to a grant.It was an indirect gifting of billions of dollars to farmers to get votes and it worked splendidly for the ruling Congress party.A winning idea is seldom abandoned even it leads to perverse economic outcomes.
May 12, 2011
BJP,the chief opposition party in India is finding it hard to fight the ruling party's widespread corruption as its leader are too compromised in land scams of their own.The Karnataka ministers of the BJP are known to be amongst the most corrupt in the country with the CM himself indulging in land scams along with his sons.The Bellary trio of Reddy brothers have amassed billions of dollars through plundering iron ore illegally and having literally bought the government in Karnataka for the BJP with their ill-gotten wealth.Karnataka’s Chief Minister has justified corruption as tradition and despite huge pressure to resign managed to survive due to unique caste politics of India .The Supreme Court has called the corruption in India “mind boggling” while the Chief Vigilance Officer had earlier called 30% of India’s population utterly corrupt.Now the BJP's ministers in the Punjab government have been accused of land scams in the state.Two of the BJP ministers Manoranjan Kalia and Swarna Ram have been implicated in a Land deal on the outskirts of Chandigarh.Kalia holds the industries and local bodies portfolio, Ram is social welfare and justice minister.
May 10, 2011
Power Finance Corporation (PFC) will raise ~$1 billion through a follow-on-public offer (FPO) which is the first divestment by the Government for FY12.Note the government of India has set a target to raise $9 billion through divestment of public sector (PSU) companies stocks.PTC India Financial Services another company operating in the same segment offering finance to power generation companies came out with an IPO.Despite advantages of growth,a good business model in India’s booming Energy Sector,the valuation of the company had been kept too high leading to 20-30% losses from the IPO price.However PFC does not have a high valuation trading for around 9-10x P/E which is comparable to the competitors like REC.However the valuation is not very low also keeping in mind the rising interest rate environment which is making life tough for the Indian Banks and financial intermediaries.Power Finance Corporation has substantial advantages of growth,a good business model in India’s booming Electricity Sector where the List of Power Companies are growing exponentially.The valuation of the company also has been kept at a reasonable level at a discount of around 5% from the prevailing stock market price.The growth of the company has been impressive but a rising interest rate environment,competition from other power finance government providers like IFCI,IDFC,REC makes the issue neutral.It is always possible to buy the stock later or buy competitors in the same space like REC.The stock is a good buy for the long term given the fundamentals,good business sector,however current short term macro problems does not make it a great buy currently.
April 22, 2011
Indian Politicians after being forced to bend against the popular support received by Anna Hazare and other civil rights activists in the recent fast unto death […]
April 8, 2011
The Government of India has been trying to put hurdles in the 2G Telecom Scam case right from Day 1.Its blatant shielding of the rich and powerful involved in the massive billion dollar corruption involving ruling party alliance members and top corporate houses has been apparent.The proof of the government malintentions was India's top court taking over the supervision of the investigation agency CBI with itself.This was a major slap for the government as CBI falls under the authority of the Home Ministry.With the CBI having filed a chargesheet which names the former Telecom Minister Raja and some billionaire businessmen,the government is again trying its stalling tactics.The government and its repsentative lawyers did not agree to the name of U U Lalit as special public prosecutor.Additional Solicitor General (ASG) Indira Jaising raised objections despite K K Venugopal, who has been appearing on behalf of CBI and ED suggesting his name.
April 6, 2011
The Lok Janpal Bill has received a tremendous response from India's Civil Society which is totally fed up with the endemic corruption and a government which refuses to do anything as most of its ministers are caught in numerous scams themselves.One of its former ministers is already cooling his heels in Jail after India's Supreme Court was forced to take over the investigation as the government refused to take action.The Anti-Corruption Bill which has been formulated by eminent citizens and social activists has been rejected by the government (what a surprise) and the ruling party Congress has refused to talk.Here is a Guide and Summary of the Main Points of the Draft of the LokJanpal Bill.Instead the ruling party has brought in politics into the picture saying that Anna Hazare has become a puppet for the opposition.
April 5, 2011
India’s Civil Society has brought out the Jan Lokpal Bill that has been drafted has been drafted by eminent members of the civil society like Prashant […]
April 5, 2011
The Jan LokPal Bill is supposed to be the answer to India's massive endemic corruption which strikes daily in the form of a new scam or scandal.The government has proven to be woefully inadequate in taking on the corrupt politicians,bureaucrats and businessmen.This corrupt nexus has been repeatedly exposed and its structure exposed through the Nira Radia Tapes.The Indian administration has shamefully failed to take action only promising to do something without doing anything worthwhile.The Indian Judiciary has also castigated the government numerous times for its abject failure in the 2G Telecom Scam,Black Money Scandal etc.However the government instead of strengthening anti-corruption measures has only put obstacles in the way.Its no wonder when the committee meant to look after the Bill comprises of ministers tainted with a number of scams themselves.Anna Hazare has held a fast unto death to put pressure on the government to pass the draft bill but the Minister appear unconcerned.Here is a short summary and guide to the main points of the Jan LokPal Bill which IMHO deserves the support of the whole Indian civil society.
April 1, 2011
One of the major reasons for the Chinese success in the export markets in Asia and Africa have been the massive vendor financing done by state owned Chinese banks.Large orders have been won by Chinese companies like Dongfang Electric and Huawei as Chinese Banks financed the multi billion Indian orders by cheap loans.Note in large project finance cases cheap loans can make a huge difference in project returns and can be the clincher in choosing the equipment supplier.The US Exim Bank too seems to be pulling up its socks in helping American companies win large equipment orders through vendor financing.Note the US Exim Bank had got involved in a huge controversy when it agreed to finance a utlra mega power plant based on coal energy by Reliance Power in India.Despite protests by environmentalists,Exim Bank had gone ahead in financing as it would lead to jobs in America.Note USA is one of the biggest laggards in climate change and the government does not really care much out there.
March 29, 2011
It remains to be seen whether the top corporate executives of India's topmost conglomerates get prosecuted over these wrongdoings.Essar and ADAG are amongst the top 10 conglomerates in India with wide ranging operations with billions of dollars in revenues nationally as well as internationally.The Supreme Court has been instrumental in bringing this case so far as the government seems totally coopted by corruption.It has been frequently been castigated by the Supreme Court and has shamelessly defended corrupt bureaucrats and politicians.It remains to be seen how this 2G Telecom Case ends.If justice is done,then it may provide a new chapter to India's corruption ridden story till now.
March 19, 2011
Wikileaks has not only caused problems for the US by exposing its diplomatic cables but has caused consternation and embarassment in almost all countries.Leaders of a lot of countries have got exposed for their hypocrisy and doublespeak.In fact Wikileaks also contributed to the current unrest in the Middle East by revealing the extravagance and corruption of the ruling regimes in Libya and Egypt.The same script is now being played out in India as well where a leading newspaper the Hindu has partnered with Wikileaks in printing the sordid details related to India.
March 17, 2011
The Wikileaks Cable says that an Indian Official Nachiketa Kapur showed an Embassy Staffer Two Chests filled with millions of Ruppees in Cash meant for bribing legislators.This corruption scam is the latest in a series over the last 6 months or so.Already India's previous Telecom Minister is cooling his heels in Jail and crucial leaders of the ruling coalition have been questioned in the 2G Scam.Most of Indian corporate chieftains have also been implicated in the Telecom Scam with mudslinging in full flow.India's Foreign Policy is being made by such crass and corrupt leaders is a shocking revelation though nothing new.Earlier Jharkand state had seen its legislators convicted of accepting bags full of cash during the earlier Congress regime.So this means that bribing and making Indian Policies is not a new thing.India's Opposition Parties are making a huge hue and cry and demanding the PM's resignation.
March 16, 2011
PTC India Financial Services has substantial advantages of growth,a good business model in India's booming Energy Sector.However the valuation of the company has been kept too high for essentially what is a financial intermediary.The growth of the company has been compensated by the high valuation making it not such a good buy especially in the context of the current stock market and economic conditions.It might be better to look at cheaper alternatives in the Indian Infra Sector.
December 14, 2010
India has been plagued with a large number of scams and scandals in recent days.Not that it has made much difference to the functioning of politicians and bureaucrats.India's Agriculture Minister was blatantly defending favored business interests while India's PM seems more interested in Big Business Privacy rather than tackling corruption.The Stock Market after falling for a couple of days due to increasing number of stock market scandals,has returned to normal.However the Indian politicians keep shocking the country with even more and more brazen acts of corruption and nepotism.
December 8, 2010
Punjab and Sind Bank is a National PSU (Public Sector Undertaking) which is coming with a Rs 480 crore IPO by selling 4 crore shares at around Rs 113-120.The Company is offering 18% of its equity in the offering which would give it a market capitalization of roughly Rs 2500 crore ($550 million) at the upper end of the price band.Note there are a large number of mid cap and large cap PSU banks listed on the Indian markets.Note most of the PSU banks have seen a very good bull run in the last year and a half significantly outperforming the rest of the market.However the last 3-4 months have been tough with a LIC Housing Finance Scandal implicating top PSU Bank Officials for taking Bribes for Loans.The rise in deposit rates and tight liquidity has also hurt the sentiment for PSU Bank stocks.However,Banking remains one of the best ways to play the Indian growth story as financial inclusion remains very low.PSU Banks in general trade at low valuations compared to the private bank peers and mid cap PSU banks at lower multiples than larger ones like SBI,Bank of Baroda and PNB.
Summary
Punjab and Sind Bank seems a no brainer due to its significant discount on its fair valuation.At 5x P/E and around 1.2x P/B ,Punjab and Sind Bank is being sold at a substantial discount to the rest of PSU banks which are lower quality in terms of growth and margins.There are some mitigating factors like the low NIM ratio however the valuation more than covers for that up.The only problem in case of the Punjab and Sind Bank IPO is going to be oversubscription.Like MOIL IPO which saw 55-60 times oversubscription,same thing could happen here also.