Nokia shareholders expected to approve Microsoft deal

Nokia shareholders are expected to approve the sale of its mobile phone business to Microsoft on Tuesday, with the deal's financial benefits likely to outweigh resistance from a minority of investors upset over the sale of a Finnish national icon.

Nokia agreed in September to sell its devices and services business and license its patents to Microsoft for 5.44 billion euros after failing to recover from a late start in smartphones.

The sale, which is expected to close in the first quarter of next year after regulatory approvals, is set to boost Nokia's net cash position to nearly 8 billion euros from around 2 billion in the third quarter and allow it to return cash to shareholders, possibly through a special dividend.

Without the loss-making handset business, the remaining company will earn over 90 percent of sales from telecom equipment unit Nokia Services and Networks (NSN) and will also include a navigation software business and a trove of patents.

Since the Microsoft deal was announced, Nokia shares have doubled, closing at 6.00 euros on Monday.

Last year, they fell as far as 1.33 euros, a level not seen since 1994, on worries the mobile phone business would burn through cash before it could ever catch up with rivals such as Samsung Electronics (005930.KS) and Apple Inc (AAPL.O).

Billionaire and activist investor Daniel Loeb said in October that he had taken a position in Nokia and that he expects a "meaningful portion of the excess" cash from the Microsoft deal to be returned to investors.

While approval from shareholders is considered a done deal, Tuesday's meeting, which starts at 2:00 p.m. (1200 GMT) in Helsinki's Ice Hall arena, will also be a chance for some shareholders to vent their dissatisfaction.

The sale of the mobile phones business, Finland's biggest brand and at one point worth 4 percent of national GDP, came as a shock to many Finns. The company's success helped to transform Finland from a backwater economy in the shadow of the Soviet Union into a high-tech powerhouse.

At Nokia's last regular shareholders' meeting, many shareholders took to the microphone to question CEO Stephen Elop's strategy, particularly his 2011 decision to adopt Microsoft's Windows Phone software over Nokia's own Symbian or Google's (GOOG.O) widely popular Android operating system.

Elop stepped down when he announced the agreement with Microsoft, his former employer, and is due to return to the Redmond, Washington company when the deal closes.

Finnish tabloids have called him a "Trojan horse", although most analysts have been sympathetic, saying there were few good options for the company by the time he was hired in late 2010.

One Finnish businessman and former Nokia manager had set up a group called Nokita, translated as "bet higher" in Finnish, in an attempt to outbid Microsoft. He said on Monday that he failed to find enough investors.

"Of course there was a bit of a patriotic idea behind my plan, but there was also the calculation," said Juhani Parda, who believed Nokia's devices business could be worth around 23 billion euros in three years by adopting Android in addition to Windows Phone. "I think 5.44 billion is definitely good for Microsoft. I'm not sure it's the best deal for shareholders."

RBI mulling merits of FII limits in govt bonds

 
New Delhi: The Reserve Bank of India is examining the pros and cons of relaxing limits for foreign institutional investors (FII) in government bonds, a senior finance ministry official said on Wednesday.

The comment by Arvind Mayaram, the economic affairs secretary at the finance ministry, came in response to a question from reporters about whether India was considering lifting FII limits in order to qualify for inclusion into benchmark global bond indices.

India will also consider allowing local companies to issue rupee-denominated bonds abroad, marking a new step in the internationalisation of the rupee. International Finance Corp, the private sector arm of the World Bank, last month launched a $1 billion rupee-linked bond.

RBI Governor Raghuram Rajan had earlier said that Indian official are speaking to the index compilers about potential inclusion of domestic debt.

RBI pegs CAD at $56 bn, says no reason for rupee decline

Mumbai: Seeking to reassure investors, RBI Governor Raghuram Rajan Wednesday said there is no fundamental reason for rupee to fall again, and pegged the current account deficit for 2013-14 at USD 56 billion, much lower than the quantum estimated earlier.

He also said the Reserve Bank will not rush to close the special window opened for dollar purchase by oil companies.

The Governor also expressed the optimism that the second half of the current financial year will see better growth numbers on the back of good monsoon and the associated pick-up in consumption and healthy exports.

Referring to the recent decline in the value of rupee, the RBI chief said: "There is no fundamental reason for volatility in the exchange rate."

"At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that," he said in the hurriedly called press meet.

Pegging a much lower CAD for the fiscal, Rajan said: "Our estimate now is that CAD this year will be USD 56 billion, less than 3 percent of GDP and USD 32 billion less than last year. Of course, some of that compression comes of our strong measures to curb gold import."

The current account deficit (CAD), which is the difference between outflow and inflow of foreign exchange, touched an all-time high of USD 88.2 billion or 4.8 percent of the GDP in 2012-13.

Earlier, the government had projected the CAD in the current fiscal at USD 70 billion, which was revised downwards to USD 60 billion by Finance Minister P Chidambaram on back of declining gold imports and recovery in exports.

"It's important that RBI clarifies interpretation of economic events and the likely direction of economic policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my quote today," Rajan said.

His remarks seemed to have calmed currency markets as the rupee gained 41 paise against dollar to close at 63.30, after declining in the previous five days in a row.

"We have no intention of rushing this process (of closing the special window for OMCs)," Rajan said.

The Reserve Bank in August had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.

The rupee, it may be mentioned, fell to a record low of 68.85 to the dollar on August 28.

Rajan said since October 14 most of dollar demand from oil marketing companies has been met from the market only.

The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for import of an average 7.5 million tonne crude oil.

Expressing comfort at declining core inflation,narrowing CAD and better growth prospects in the second half on good monsoon, Rajan sought to reassure investors who fear India will be hit again as and when the US ends easy money policy.

Ruling out any major threat from the external front to rupee as well as the economy, Rajan said even if there is no more fresh FII inflows this year, there will not a problem to finance CAD as he country will have USD 32 billion less of CAD to finance this year.

"Last year FII inflows, both debt and equity, accounted for USD 26 billion. Let me assume that we get no inflow this year, and in fact outflows equal the inflows we got last year. In other words, there is a USD 52-billion turnaround in FII flows," the Governor said.

"Remember though that we have USD 32 billion dollars less of CAD to finance this year, and till yesterday, we raised USD 18 billion through new swap channels. So, if other financing remains the same as last year, which it seems on track, even if foreign investors pull out significantly more money this year than they have so far, we still can break even on capital flows," Rajan said.

Noting that OMCs have entered a swap arrangement whereby they will have to repay dollars to the RBI on various dates from February 2014 till April 2014, Rajan said: "One worry expressed by market participants is whether OMCs will add to further downward pressure on the rupee when it comes time for them to repay dollars to the RBI."

"This to my mind is a non-issue because we have three ways of managing the repayment. One is, of course, for the OMCs to buy dollars in the market. If exchange markets are calmer, this additional demand should be absorbed," he added.

Rajan said, "But if they are not calmer, we could roll over some portion of the swaps so they mature at a calmer time. But perhaps the easiest option would be for us to settle the swap with the OMCs by making net payments in rupees, and avoid the need for them to go back to the market for dollars. When the time comes, we will choose the most appropriate combination".

He also announced a bond purchase worth Rs 8,000 crore next Monday to inject liquidity in markets.

He further said the major outflows in the recent past following the tapering talks were debt outflows.

"Though that money has not come back, indeed our FII debt exposure, both corporate and sovereign, has come down from USD 37 billion on May 21 to USD 19 billion today. I presume what is left is more patient money, but given its diminished size, I do not see it is possible exit as a huge risk," the governor said.

Rajan's address came after stronger-than-expected US jobs data last week had sparked concerns about an early end to the Federal Reserve's stimulus, hitting the rupee and sending domestic bonds and shares tumbling. This led to FIIs pulling out more than USD 13 billion from bonds and over USD 2 billion from equities between end May and early September.

Though he termed food inflation "worryingly high", which rose to 10.09 percent in October, Rajan said he was comforted by a downward trend in the core consumer price index, which declined from 8.5 percent to 8.1 percent in the month.

"I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 percent from 8.5 percent in September. The momentum for core inflation is also on the decline," Rajan said.

Philanthropy list: Azim Premji the most generous Indian with donation of Rs 8,000 cr

 
New Delhi/Mumbai: When it comes to generous donations, Indians are no less than anyone. India’s Azim Hashim Premji has topped 2013 Hurun India Philanthrophy list prepared by China based Hurun Report Inc.

Azim Premji emerged as the most generous Indian with a donation of Rs 8,000 crore in the past year.

HCL group Chairman Shiv Nadar is the second highest contributor in the list with a donation of Rs 3,000 crore.

The Shiv Nadar Foundation, which completed 20 years in philanthropy this year, works towards educational initiatives and expansion programmes, directly benefiting 15,000 students across India.

G M Rao, through GMR Varalakshmi Foundation, donated Rs 740 crore for the education of underprivileged children, becoming the third biggest philanthropist in India's corporate world.

Nandan and Rohini Nilekani stand fourth in the list with a contribution of Rs 530 crore.

Ronnie Screwvala, whose initiatives are housed under the Swadesh Foundation (UTV group), contributed Rs 470 crore for achieving rural empowerment through the best practices and modern technology values.

'Biotech Queen' Kiran Mazumdar Shaw made a donation worth Rs 330 crore, while Ratan Tata donated Rs 310 crore to various charitable organisations for the underprivileged through the JRD Tata Trust and Sir Ratan Tata Trust.

London-based mining major Vedanta Resources Chairman Anil Agarwal donated Rs 290 crore to support the cause of healthcare.

PNC Menon of Sobha Developers and DLF Chairman Kushal Pal Singh contributed Rs 270 crore and Rs 200 crore, respectively for programmes like adoption of villages and skill training of the youth.

Hurun India Philanthropy List is a ranking of 31 Indians who donated more than Rs 10 crore (equivalent to USD 1.6 million) in cash or cash equivalent during April 1, 2012 till March 31, 2013.

Hurun Report included donations made by companies in which an individual had a significant share, by applying the percentage the individual has of the company on the donations.

Education was the most important area for the Indian philanthropists with a total contribution of Rs 12,200 crore.

It was followed by social development (Rs 1,210 crore), healthcare (Rs 1,065 crore), rural development (Rs 565 crore), environmental cause (Rs 170 crore) and agriculture (Rs 40 crore).

"This list demonstrates the responsibility taken by entrepreneurs," Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report said.

The average age of the philanthropists in the list is 62 years while the average age of the top 10 donors is 64 years.

Region-wise, the report said, south Indians showed the way for making contributions with a cumulative donation of Rs 10,000 crore while north Indians pitched in with contributions of Rs 4,865 crore.

The Companies Bill, 2013 mandates companies, with a net worth of more than Rs 500 crore or revenue of more than Rs 1,000 crore or net profit of more than Rs 5 crore, to earmark at least two percent of their average net profits of the preceding three years for CSR activities.

"This amendment to the Companies Bill should provide more transparent reporting of corporate donations," said Anas Rahman Junaid, Publisher-at-Large of Hurun Report India.

SBI posts worst quarterly profit in 2 years; net plunges 35%

 
Mumbai: State Bank of India on Wednesday reported its worst quarterly profit in over two years with a sharp 35 percent drop in earnings at Rs 2,375 crore in the three months to September, hit hard by higher provisions for staff expenses, bad loans and investment depreciation.

Standalone total income was Rs 37,199.92 crore as against Rs 32,953.47 crore in the same period a year ago.

"Provisions for loan losses, provision for the staff wage hikes, provision for pensions and of course the investment depreciation were the reasons for dip in the net profit in the quarter," the newly-appointed SBI chairman and managing director Arundhati Bhattacharya said.

This is the worst quarterly performance of the nation's biggest lender since the massive 90 percent plunge which brought the bank's net profit to just Rs 20.88 crore for the March 2011 quarter. Pratip Chaudhuri had taken over as chairman in April, 2011.

"Also, the fact that we have really not been able to book that kind of income on sale of investments as we had been able to do in the first quarter, due to the fact that interest rates have actually hardened. All of this accounted for lower bottomline," Bhattacharya said.

This is Bhattacharya's maiden earnings report after she took over charge on October 7 as the first woman head of SBI which controls nearly a quarter of country's banking assets.

SBI's total provision rose 6.53 percent to Rs 3,937 crore as against Rs 3,696 crore in the same period last year.

Despite the poor set of numbers, the market lapped up the SBI counter, which is down around 50 percent from its lifetime high. Today, the SBI counter closed 1.34 percent higher at Rs 1697.85 on the BSE, whose benchmark Sensex shed 0.45 percent.

Saday Sinha, banking analyst at Kotak Securities said the bank's net interest margin (NIM) at 3.2 percent was ahead of his expectations on the back of a 19 percent loan growth.

However, the profit after tax (PAT) came a shade below expectations due to higher-than-expected operational expenditure and Non-Performing Assets (NPA) provisions, he added.

During the quarter, major slippages came from the power sector (Rs 1,700 crore), iron and steel (Rs 600 crore) and infrastructure (Rs 700 crore), said SBI chief financial officer and deputy MD RK Saraf.

Although the bank's slippages of 3.1 percent is lower than the previous quarter, asset quality pain persists for the stock with net addition to impaired assets remaining at elevated levels, Kotak's Sinha said.

Staff expenses jumped 36 percent to Rs 5,819 crore from Rs 4,280 crore in the same period last year, while salary expenses jumped 26.74 percent to Rs 4,536 crore.

Provisions for pension rose 108.62 percent to Rs 1,054 crore in the quarter as against Rs 505 crore a year ago.

"The staff expenses have gone up quite sharply on account of the fact we have to make 15 percent provisions for the wage negotiation. We are also having to make additional provision on account of the fact that the LIC has changed the mortality table," Bhattacharya said.

According to LIC's new mortality table, the life expectancy has increased to 81 years.

At the end of the reporting quarter, the bank's gross non-performing assets (NPAs) rose to 5.64 percent of gross advances, compared with 5.15 percent year a year ago. Net NPAs also rose to 2.91 percent from 2.44 percent. However, on a sequential basis, NPAs declined by 39.23 percent.

Net interest income in second quarter increased 11.64 percent to Rs 12,251 crore from Rs 10,974 crore a year earlier.

Domestic net interest margin (NIM) increased sequentially to 3.51 percent in the quarter from 3.44 percent last year.

Deposits grew 14.01 percent to Rs 12,92,456 crore in quarter as against Rs 11,33,644 crore, while gross advances jumped 19.18 percent to Rs 11,39,326 crore.

"Right now, our deposit growth on year-on-year basis is at 15 percent and we expect to be able to grow at the same manner on the deposit side. On the credit side, we have to see how it happens, but currently we will maintain between 16 to 18 percent," Bhattacharya said.

The domestic credit deposit ratio increased from 76.64 percent in September 12 to 80.54 percent this quarter, a jump of 390 basis points.

SBI had seen an investment depreciation of Rs 8 crore as against loss of Rs 260 crore in the year-ago quarter with the depreciation on domestic banking side being Rs 237 crore as against a loss of Rs 257 crore.

The bank had booked a loss of Rs 229 crore in investment depreciation on foreign banking side as against a loss of Rs 3 crore.

"We were able to amortise the dip that has come on the treasury side. While on the domestic side there was a write in where as on foreign offices side there has been a write back. The net figure which has come is only Rs 8 crore," Bhattacharya said.

"This means for the next two quarters we will have amortised an amount of market-to-market, that will have to be taken, which will be in the range of Rs 700 crore."

During the quarter SBI shifted Rs 56,000 crore of SLR securities to held-to-maturity category.

Bank's provisions for income tax declined by 51.45 percent to Rs 908 crore as against Rs 1,870 crore.

Provisions for loan loss jumped 43.99 percent to Rs 2,646 crore as against Rs 1,837 crore.

Interest on loans rose 12.60 percent to Rs 25,379 crore as against Rs 22,538 crore. Interest on resources jumped 20.64 percent Rs 8,243 crore as against Rs 6,833 crore.

Total interest income rose 14.58 percent to Rs 33,922 crore as against Rs 29,607 crore.

Interest on deposits increased 13.96 percent to Rs 19,277 crore from Rs 16,916 crore, while interest on borrowing jumped 106.30 percent to Rs 1,468 crore as against Rs 711 crore due to increase in MSF rates and tight liquidity condition.

The bank's total restructured accounts stood at Rs 52,437 crore and has debt restructuring pipeline of Rs 6,000 crore which could be implemented in rest of the two quarters or may be next year, Bhattacharya said.

Talking about the outlook, Bhattacharya said the bank will continue to face tough situation as "we are not seeing those indicator that say things are beginning to look brighter".

However, she said the bank is seeing robust demand on the retail loan side. "But if you look at the stresses in the account, the stresses continue and we are not seeing stresses to have lessened to very great extent, specially in the mid cap and the large SME segments."