2805

India's state-run Oil and Natural Gas Corporation will take control of Hindustan Petroleum Corp (HPCL) as part of the government's plan to create an integrated public sector oil entity comparable with big global oil companies like Shell, BP and Exxon, a report in The Economic Times said.
"It is a very big decision. A Cabinet note will soon be moved. The government of India will transfer its majority shareholding (of 51.11% in HPCL) to ONGC, which will then become the holding company of HPCL," the report quoted an official without identifying.

The move will stop short of a complete merger, which may take longer, but the purpose will be served with this step, the report said citing the same people.
India has about a dozen state-run oil and gas companies - including Indian Oil Corp, Oil and Natural Gas Corp, Hindustan Petroleum Corp. But alone they do not have the financial power to rival global oil majors in bids for overseas oil assets.

The report comes close on the heels of Finance Minister Arun Jaitley's announcement during the budget speech earlier this month to "create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies."
Combining them "will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for shareholders," Jaitley had said.
The status of all other oil companies such as Oil India Ltd (OIL) and Indian Oil Corp. (IOC) would remain unchanged.
ONGC's exploration functions will be integrated with HPCL's refining and distribution capabilities. HPCL, which owns and operates two major refineries in Mumbai and Visakhapatnam, has India's largest lubricants unit and second largest pipeline network of 3,015 km apart from a vast marketing system.

News source: Business News

Posted On Tuesday, 28 February 2017 07:23

2804

The Central Statistics Office (CSO) is slated to come up with its second official estimate of gross domestic product (GDP) growth on Tuesday for the financial year 2016/17 after factoring in demonetisation impact in the December quarter. The first advance estimates of National Income, 2016/17 pegged the GDP at growth at 7.1 per cent but did not take into account the impact of demonetisation.
CSO is not alone. Many government and private agencies, experts and think-tanks have revised estimates for India's GDP growth downwards. The Reserve Bank of India (RBI) in its sixth-bimonthly policy pegged the GDP growth at 6.9 per cent for the 2016/17. This was followed by multilateral funding agency Asian Development Bank (ADB) which lowered it to 7 per cent for the current fiscal due to the impact of demonetisation. The National Council of Applied Economic Research (NCAER) expects the economy grow at 6.9 per cent against an earlier projection of 7.6 per cent.
The Economic Survey released almost a month ago pegged the growth for the current fiscal at 6.5-6.75 per cent. Moving in sync was the International Monetary Fund (IMF) which saw the economy growing at 6.6 per cent - significantly lower than its initial estimate of 7.6 per cent. Recently, Moody's Investors Service has cut its forecast for India's GDP growth in 2017 by 40 basis points to 7.1 per cent because of the impact of demonetisation. Since all the growth estimates have moved south, any good news from the CSO would come as a surprise.

News source: Business Today

Posted On Tuesday, 28 February 2017 07:21

2803

'Share buyback' has become the buzz word after the recent announcements of IT majors Cognizant and TCS to buy back shares. In fact, recent reports have suggested that Infosys may follow a similar strategy and announce a share buy back of $2.5 billion (Rs 17,000 crore) in April. Following the trend, now world's largest coal producer, Coal India confirmed that the board of its arm Northern Coalfield has given go ahead to a share buyback plan worth Rs 1,244 crore.
"Board of Directors of Northern Coalfields Limited (NCL), our wholly-owned subsidiary ... has considered and approved the buyback of 76,356 fully paid equity shares of face value of Rs 1,000 each from the members of NCL on a proportionate basis through tender offer," Coal India Ltd said in a BSE filing.

But what are share buybacks and why are the companies are opting for it? Let's find out.
What is the objective?
The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better P/E multiple. The other objective is to improve earnings per share (since the same dividend amount is now distributed among fewer shares). Share buyback is a more tax efficient way of distributing earnings of the company. While dividends under Rs 10 lakh are not taxable in the hands of shareholders, companies have to pay tax on dividends. A share buyback program is a more tax efficient way of distributing earnings from a company's perspective.
What are the benefits?
There are many benefits of a buyback. With the reduction in the number of shares in the market, the earnings per share (EPS) increase. And because the company spends cash to buys its stock, the cash assets on its balance sheets reduce. This increases the RoE (return on equity). Shareholders who sell their stocks in the repurchase programme earn the market value plus a premium (if offered). The residual value for the remaining shareholders also goes up. Of course, it helps to up the promoter's stake in the company, assuming non-participation by promoters.
What are the processes involved?
A company can buyback through a either a tender offer or through the open market. In a tender offer, the company makes an offer to buy a certain number of shares at a specific price, directly from shareholders. In the open market option, the company buys up to a certain number of shares (no compulsion to buy the whole announced quantity); a maximum price is fixed and the buyback can be done upto or below that particular price, not beyond.

News source: Business Today

Posted On Tuesday, 28 February 2017 07:16

2802

Bank operations will be imapcted today as the public sector banks are on a one-day strike. Nine bank unions have called for a day-long protest to

Posted On Tuesday, 28 February 2017 07:14

2801

The Reserve Bank today announced the launch of the latest 'Inflation Expectations Survey of Households' across 18 cities aimed at capturing subjective assessments on price movements.
The survey for March 2017 will cover around 5,500 households, based on their individual consumption baskets, across cities like Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi and Jaipur.
The RBI has been regularly conducting the survey on inflation which provides "useful policy information".
"The survey seeks qualitative responses from households on price changes (general prices as well as prices of specific product groups) in the three month ahead as well as in the one year ahead period and quantitative responses on current, three month ahead and one year ahead inflation rates," the RBI said.
The central bank also announced the launch of Consumer Confidence Survey (CCS) for March 2017.
This survey aims at capturing subjective assessments of around 5,400 respondents across six metropolitan cities -- Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi.
"The survey seeks qualitative responses on questions pertaining to economic conditions, income, spending, perceptions on prices, employment prospects," it said.
The RBI factors in result of the surveys while framing its monetary policy.
Mumbai-based Hansa Research Group has been engaged to conduct the field work of the two surveys on behalf of the RBI.

News source: Business Today

Posted On Tuesday, 28 February 2017 06:54
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