INVESTOR'S PARADISE

Tuan Huynh, Director & CIO, Deutsche
Bank,PAM


Globally, there are clear signs of risk averseness and analysts worldwide are divided on whether the worst is over and what would be the economic outlook going forward. However, Tuan Huynh, director, chief investment officer — India and China, Deutsche Bank, PAM (private asset amangment) is of the view that investors investing in countries like India have not much to worry. Mr Huynh is of the view that returns would continue to be handsome, but the investment horizon may become a little longer. Based at Singapore, Mr Tuan was in India recently to take stock of the situation.

Wealth creation has taken a pause after years of secular growth. What is the strategy going forward?

The year witnessed a tough investment environment. Some asset classes gave negative returns. Markets were going up 40% every year and suddenly the meltdown occurred.

Clients are now raising questions as they are concerned about developments. We do believe that there are no clear answers but there is need to take a systematic approach to investing.

What are you advising your clients?

Our investment focus is India specific but for the purpose of diversification, we invest across different asset classes like equity mutual funds, real estate, structured products and commodity. To further diversify our client's portfolio from country specific risk, we are advising them to invest in overseas assets.

For instancee, investing in Latin America to benefit from high commodity prices. Further, there is a need for change in allocation on a continuous basis.

Given the prevalent scenario, what is the risk appetite among your clients?

The portfolios are managed on the basis of risk profile of different investors like having a conservative approach, moderate or balanced approach. At this point of time, we are largely neutral on equities and bullish on assets class like soft commodities and precious metals.

As an investment theme, we continue to believe that soft commodities like corn, soya would still giving good returns due to demand – supply factors. Apart from that, we believe that precious metals like gold would also generate good returns for investors in times to come.

Why do you think markets have not yet bottomed out?

Some of the reasons for our concern are the fate of global financial players. The brief rebound of global markets from mid-march happened due to the Bear Stearns bailout which somewhat took away the systemic risk.

But in June, concerns on financials continued with downgrading by S&P of Merrill Lynch, Morgan Stanley and Lehman Brothers.

What is your macroeconomic outlook on India?

Despite the strong reading for the first quarter, we still feel that the economy will slow due to a combination of rising inputs costs, tight monetary conditions and capacity constraints.

The manufacturing sector has been slowing for several quarters now. We think that RBI's shift to tightening money supply is not just a reaction to higher energy prices but necessary to bring domestic demand in line with a constrained supply-side.

Would this affect your investment decisions in India?

The kind of growth that India has witnessed is one of the best. Going forward there are some risks to economic growth, which would certainly slow the pace of growth.

We have downgraded our GDP target on India. But even then, it will continue to post better growth as compared to other countries. Typically, at this point of time, we are looking at higher returns on a longer investment horizon
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CA. VIKAS KAPAHI
TREASURER
JAB WE MET CA
REDEFINING PROFESSIONALISM

SOUTH INDIAN BANK DECLARES 30 PERCENT DIVIDEND

THIRUVANANTHAPURAM : The Annual General Meeting of Thrissur-based South Indian Bank (SIB) has declared the highest ever dividend of 30 per cent while approving the Board's proposal to come out with a bonus issue and employees stock option scheme.

This was the higest ever rate of dividend declared by the bank in its 79 years of service, an SIB release said here on Monday. The capital bse of the bank had been strengthened by various measures like the rights issue, public issue, follow-on public issue and qualified institutional placement.

The bonus share would be issued to existing shareholders in the ratio of 1:4 on the record date. The employees' stock option scheme would be implemented to reward existing employees who had put in long years of service and also to offer incentive to new staff members.

In the current financial year, the bank would strive to increase the net profit to Rs 190 crore from Rs 150 crore the previous year, SIB's CMD Dr V A Joseph informed the AGM. A total business target of Rs 30500 crore had been set for the current year.

Also, the bank was working to add five lakh new customers in Savings Bank accounts which would mark a three per cent incrase in Current Account and Savings Bank Accounts (CASA) of the bank.

As NRIs form a sizeable clientele group, the bank planned to conduct a one-month long "Pravasi Utsav" to promote its bouquet of proudcts and services to NRIs.

The AGM also re-elected Dr John Joseph, Dr C J Jose and Jose Alapatt to the Director Board.

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CA. VIKAS     KAPAHI
     TREASURER
   JAB WE MET CA
REDEFINING PROFESSIONALISM

change your thinking

It will take just 37 seconds to read this and change your thinking. Two men, both seriously ill, occupied the same hospital room. One man was allowed to sit up in his bed for an hour each afternoon to help drain the fluid from his lungs.His bed was next to the room's only window. The other man had to spend all his time flat on his back. The men talked for hours on end. They spoke of their wives and families, their homes, their jobs, their involvement in the military service, where they had been on vacation. Every afternoon, when the man in the bed by the window could sit up, he would pass the time by describing to his roommate all the things he could see outside the window. The man in the other bed began to live for those one hour periods where his world would be broadened and enlivened by all the activity and colour of the world outside. The window overlooked a park with a lovely lake. Ducks and swans played on the water while children sailed their model boats. Young lovers walked arm in arm amidst flowers of every colour and a fine view of the city skyline could be seen in the distance. As the man by the window described all this in exquisite details, the man on the other side of the room would close his eyes and imagine this picturesque scene.One warm afternoon, the man by the window described a parade passing by. Although the other man could not hear the band — he could see it in his mind's eye as the gentleman by the window portrayed it with descriptive words. Days, weeks and months passed. One morning, the day nurse arrived to bring water for their baths only to find the lifeless body of the man by the window, who had died peacefully in his sleep.She was saddened and called the hospital attendants to take the body away. As soon as it seemed appropriate, the other man asked if he could be moved next to the window. The nurse was happy to make the switch, and after making sure he was comfortable, she left him alone. Slowly, painfully, he propped himself up on one elbow to take his first look at the real world outside.He strained to slowly turn to look out the window besides the bed. It faced a blank wall. The man asked the nurse what could have compelled his deceased roommate who had described such wonderful things outside this window. The nurse responded that the man was blind and could not even see the wall. She said, 'Perhaps he just wanted to encourage you.' Epilogue: There is tremendous happiness in making others happy, despite our own situations. Shared grief is half the sorrow, but happiness when shared, is doubled. If you want to feel rich, just count all the things you have that money can't buy. 'Today is a gift, that is why it is called The Present,' The origin of this letter is unknown, but it brings good luck to everyone who passes it on. Do not keep this letter.
BY: CA DIVYA SHARMA

SEBI REDUCES TIME DURATION FOR RIGHT ISSUE TO 43 DAYS

MUMBAI: The Securities and Exchange Board of India (SEBI) on Wednesday reduced the time duration for a rights issue from 109 days to 43 days.

“The reduction in timelines would reduce the market risk faced by investors and issuers and would ensure faster turnaround of money for investors,” said C. B. Bhave, Chairman, SEBI, while addressing a press conference here after its board meeting.

The board also approved the proposal for prescribing and standardising the format for abridged scheme-wise annual report and reduction in time period for dispatching the annual report to mutual fund unit holders from six months to four months.

The new time limit for dispatching will be made applicable for the annual reports of 2008-09 onwards..

To reduce the time duration for a rights issue, SEBI has decided to amend the SEBI (DIP) guidelines and the listing agreement.

Reduction in timeline approved include: the number of days for the notice period for a board meeting will be reduced from seven days to two working days; the notice period for record date will be reduced from 15/21/30 days to seven working days for all scrips; issue period will be reduced from a minimum of 30 days to a minimum of 15 days with a maximum of 30 days and the time period for completion of post-issue activity will be reduced from 42 days to 15 days.QIP pricing norms

The SEBI board has decided to revise the pricing norms for QIP (qualified institutional placement) and preferential allotment: Floor price may be based on the two weeks average for making a QIP or for making preferential allotment to QIBs (qualified institutional buyers); and relevant date for QIP will be the date on which the board of the company or the committee of directors duly authorised by the board of the company meets to take the decision to open QIP.

Quarterly results

Further the SEBI board decided to amend Clause 41 of the listing agreement.
Accordingly, a listed entity in addition to submitting quarterly and year-to-date standalone financial results within one month of end of the quarter, may also submit consolidated financial results to the stock exchanges within two months from the end of the quarter.
“A listed entity opting to submit consolidated financial results in addition to standalone results to the stock exchanges will be required to publish consolidated financial results only.”

A listed entity would also be required to place the limited review report on unaudited financial results before its board of directors or committee before submission to stock exchanges only if the variation (as defined in present Clause 41) between unaudited financials and financials amended pursuant to limited review for the same period exceeds 10 per cent.

SEBI also decided that “where the listed entity chooses to submit unaudited financial results for the last quarter (instead of submitting audited financial results for the entire financial year within three months of end of the financial year), the limited review report will be submitted for the last quarter also.”Ahmedabad office

The board approved the opening of Western Regional Office of SEBI at Ahmedabad. This office will look after the regulatory aspects of investor protection and market regulation and supervision regarding issuers, investors and intermediaries.

PTI reports:

Belying expectations, the SEBI took no decision on restrictions on issue of Participatory Notes by foreign institutional investors (FIIs) but it gave an in-principle nod to the National Stock
Exchange for starting currency futures.

VANDE MATARAM
HAPPY INDEPENDENCE DAY TO ALL ON 61st ANNIVERSARY OF INDEPENDENCE
PROUD TO BE AN INDIAN
JAI HIND

CONGRATULATIONS

MADE INDIA PROUD

SEBI set to fine 7 i-bankers for shoddy work

MUMBAI: Capital market regulator SEBI is set to impose penalties on some of India's top investment bankers for what it considers "shoddy work" done by them while handling public offerings over the past few years. The regulator's Market Intermediaries Regulation and Supervision Department (MIRSD) has uncovered serious shortcomings in the due diligence process for initial public and rights offerings, besides open offers, carried out by seven investment bankers — Kotak, Enam, DSP Merrill Lynch, SBI Caps, HSBC, Keynote and Aryaman Financial.

A due diligence process relates to the examination and independent verification of material and financial facts and statements provided by companies seeking to raise capital. It is the responsibility of merchant bankers to ensure compliance with the norms laid down by the regulator and the government in the run-up to a flotation. They also have to ensure that allotment of shares and refunds to investors are done, post-issue.

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The regulator's investigation has revealed major lapses in the due diligence process relating to initial public offerings, rights issues and also open offers, according to an official close to the development. SEBI has set in motion adjudication proceedings for imposing a monetary penalty against all these bankers, the official said.

He added that arbitration proceedings against Enam and Kotak pertain to YES Bank and IDFC IPOs dating back to 2006. A SEBI probe had revealed a scam involving manipulation of retail category in these IPOs. DSP Merrill Lynch was also rapped by SEBI for the YES Bank IPO as the regulator's inspection showed that the details of the promoters as mentioned in the IPO document were different from the one filed with the Reserve Bank of India.

HSBC and SBI Caps were charged with failure in disclosing key details in open offers managed by them. In some cases, the regulator has found 10-15 lapses in the offer documents, the official said. In several cases, bankers have not followed the prescribed procedures while conducting due diligence, said SEBI officials. SEBI chairman CB Bhave had told ET, in an interview shortly after taking over, that one of the issues SEBI was actively looking at was to make merchant bankers more responsible, post-issue.

In some cases, the merchant banker had not even verified the plant and machinery of the companies, the issues of which they had managed. Besides, litigation against the company directors was not mentioned in the public issue documents. Errors were also noticed in financial details provided in the documents.

SEBI's inspection also found serious deficiencies in some IPOs. For instance, in one IPO, the regulator found out that the post-issue capital of the company was higher than its authorised capital — a clear indication of poor due diligence carried out by the issue's merchant banker. The same mistake was found in Weal Infotech IPO's case and the regulator has pulled up the merchant banker to the issue, Aryaman Financial.

SEBI has taken a grim view of the fact that merchant bankers, who are entrusted with the task of vetting a public issue, have failed to discharge their responsibilities fully, which is detrimental to the interest of investors. Five of the merchant banks who were served notice by SEBI declined to comment on the issue when ET contacted them. Keynote Financial said it had not received any notice from the regulator. Officials of Aryaman Financial were not available for comment.

It is not only in IPOs that serious lapses on the part of merchant bankers were detected. Even in case of open offers, SEBI has indicted merchant bankers. The market watchdog has taken HSBC to task on the Garware Offshore open offer. In this instance, SEBI found out that the open offer document did not furnish important details of the target company. The offer was made by India Star Mauritius and the financial details of the acquiring company were not given in the offer document.

Even the company's paid-up capital was wrongly mentioned in the financial data, officials said. SEBI has prescribed a standard letter of offer containing various financial and other parameters of the company. In fact, HSBC was given a warning by the regulator in an earlier case.

SEBI has moved against SBI Caps for the investment bank's failure to provide a vital piece of information about a company in the open offer document. The open offer was made by a company listed on a regional stock exchange, but the document did not mention the fact that the company would soon list on BSE. Many investors tendered their shares in the offer since they did not possess the requisite information

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CA. VIKAS KAPAHI
TREASURER
JAB WE MET CA
REDEFINING PROFESSIONALISM