Dhanlaxmi to buy 15% in broking co for 13 cr

Our Bureau MUMBAI

DHANLAXMI Bank will invest . 13 crore to buy a 15% stake in online broking
company Destimoney Securities even as its quarterly profits tumbled on investments in
people and technology.
The bank’s board on Thursday approved the investment, which will lead to purchase of
fresh shares in the firm that is partly owned by PE firm New Silk Route founded by
former Mckinsey head Rajat Gupta.
The investment would help the brokerage improve its financial muscle and taking its
enterprise value to . 80 crore. The deal is subject to regulatory clearances.
“We are ready to pump in more funds in Destimoney, if needed,” Dhanlaxmi
Bank chief financial officer Bipin Kabra told ET. “But online broking firms do not need
much capital.”
Average transactions in the company are around . 180 crore through its 27,000 clients.
It is a member of NSE and BSE and has a network of 14 branches and more than 100
franchisees spreading across 50 cities.
“This is a strategic investment and is part of our plans to augment growth, broaden our
product portfolio and provide investmentsavvy customers cost-effective financial
solutions,” said the CFO of Dhanlaxmi Bank, which reported a 75% fall in net profit at .
1.6 crore for the second quarter ending September 30, 2010.
The bank management attributed the fall to its investment in people, products,
processes, technology and infrastructure.

Destimoney eyes second strategic partner

Our Bureau MUMBAI

DESTIMONEY, a financial services company owned by private equity player New Silk
Route, is looking for a second strategic partner. This is even as the firm is looking at
acquisitions or partnerships in the stock broking and the retail asset space.
Currently, New Silk Route holds a 80% stake in the company with the remaining stake
being held by individual investors and the management team. Destimoney was earlier
known as Dawnay Day. In 2008, New Silk Route acquired the company after Dawnay
Day’s parent firm in the UK went into receivership. The current investors bought out
Dawnay Day and the previous management team.
According to Vivek Vig, MD and Group CEO, Desitmoney, “We might look at a
second shareholder who is a strategic player. We are looking at acquisitions or
partnerships in the broking, distribution and in the asset space. We are looking at
contribution of brand, knowledge and funds from the partner.” Investors have currently
pumped in Rs 250 crore into the company.
In the past few months, the company has rolled out over 100 branches to over 133
branches in 70 locations. The move incidentally comes at a time when non-banking
finance companies had been hit by the financial crisis and had pruned their branches and
their asset growth. It’s only in the past couple of months that NBFCs have again started
lending. In December, Destimoney picked up a 26% stake in PNB Home Finance for
which it paid around Rs 80 crore. It is increasing the stake to 49% for which it will have
to pay an additional Rs 137 crore. Though it has the rights to increase its stake, its
unlikely to do that now.
In its earlier avatar, it used to do only brokerage and wealth management business. The
brokerage business has now been scaled up. On Thursday, the firm entered into a
strategic alliance with Dhanlaxmi Bank to offer an online brokerage platform for the
bank customers. The bank plans to use the online platform to attract more savings bank
customers who will keep a larger float in the bank. Destimoney also has a distribution
business through which it distributes mutual funds, insurance, home loans, credit cards,
structured products and fixed deposits. It has kicked off a soft launch of gold loans in six
centres across the country and is also looking to offer secured loans to individuals. It also
plans to get into the asset reconstruction space for retail loans.
“We are concentrating on the tier-II and tier-II cities and are targeting the middle class.
Unlike others, we sell products only when both the husband and wife come to the branch
for a joint presentation,” added Mr Vig.

DIGEST

UCO new branch UCO Bank has recently opened two new branches one at Margherita
in Tinsukia and the other at Lepetkata in Dibrugarh, Assam. Pradyut Bordoloi, state
industry, commerce, power and public enterprises minister formally inaugurated the
Margherita branch. The Lepetkata branch was formally opened by Gyanendra Dev
Tripathy, IAS, deputy commissioner, Dibrugarh district, Assam. SK Nandi, zonal
manager, Jorhat and other senior executives of the zone were present at the inaugural
ceremony. A large number of customers participated in both the events.
DVC bond
DVC floated seven years’ redeemable, nonconvertible, non-cumulative, taxable bonds of
Rs 10 lakh each for cash at par aggregating to Rs 500 crore with Green Shoe Option up to
Rs 140 crore on private placement basis through Book-Building-Method. The first issue
opened on February 19 and closed on February 23. The issue has almost been doubly
over-subscribed receiving applications for Rs 912.8 crore.The fund was mobilised
through a pool of nine arrangers at a cut off rate of 8.95 per cent per annum what for
similar issues have been offered to AAA rated companies. The issue will be listed with
the NSE. DVC issue was rated AA by CARE and FITCH. The fund will be utilised
towards its growth for mega capacity addition. The success is a repeat of DVC bond issue
in 2003 when high investors’ confidence was reposed in DVC at a very aggressive cut off
rate under Book Building Method.
SMIT fest
The annual cultural fest of IIT Guwahati - Alcheringa, which was organised recently, has
bagged the first position in the Just A Minute (JAM) session and Rapshody. It
also secured the second position in Model United Nations (MUN) session. As many as 27
students of Sikkim Manipal Institute of Technology (SMIT) and two faculty members as
teacher coordinator participated in the fest. JAM is an extempore competition in which
each participant was given one minute to speak on the topic given on the spot. MUN was
a UN mock Parliament in which the participants represented different countries and they
had to speak on a political topic relevant to that country. The students performed well in
other events as well like quiz, theatrix (dramatics and street play competition), T-shirt
designing, In sync (dance competition) and last crusader (painting competition) and won
a total of eight prizes. Students from at least 25 institutes participated in the fest and the
SMITians did shine among them and we are indeed proud of them.
Allahabad Bank rates
Allahabad Bank has revised the interest rates on Foreign Currency Non-Resident (FCNR)
deposits.
The revised rates for US Dollar are 1.84 per cent (earlier 1.85 per cent) for one year to
less than two years, 2.08 per cent (earlier 2.16 per cent) for two years to less than three
years, 2.69 per cent (earlier 2.78 per cent) for three years to less than four years), 3.20 per
cent (earlier 3.29 per cent) for four years to less than five years and 3.62 per cent (earlier
3.71 per cent) for five years only.
In case of GB Pound deposits, the revised rates are 2.30 per cent (earlier 2.26 per cent),
2.57 per cent (earlier 2.75 per cent), 3.11 per cent (earlier 3.36 per cent), 3.58 per cent
(earlier 3.81 per cent) and 3.94 per cent (earlier 4.14 per cent) for respective maturities.
For EURO deposits, the bank has fixed interest rates at 2.20 per cent (earlier 2.20 per
cent), 2.45 per cent (2.68 per cent) and 2.85 per cent (3.08 per cent), 3.18 per cent (earlier
3.37 per cent) and 3.47 per cent (earlier 3.63 per cent) for corresponding maturities.
With regard to Canadian Dollar the bank has fixed interest rates at 2.25 per cent
(earlier 2.26 per cent), 2.37 per cent (earlier 2.36 per cent), 2.94 per cent (earlier 2.90 per
cent), 3.36 per cent (earlier 3.31 per cent) and 3.69 per cent (earlier 3.62 per cent) for
respective maturities.
For Australian Dollars the interest rates fixed by the bank are 6.05 per cent (earlier
6.21 per cent), 5.99 per cent (earlier 6.02 per cent), 6.22 per cent (earlier 6.28 per cent),
6.50 per cent (earlier 6.57 per cent) and 6.65 per cent (earlier 6.70 per cent) for the
respective maturities.
Rates for NRE term deposits are 2.59 per cent (earlier 2.60 per cent) for one year to
less than two years, 2.83 per cent (earlier 2.91 per cent) for two years to less than three
years and 3.44 per cent (earlier 3.53 per cent) for three years.
The rate for NRE savings bank deposit remains unchanged at 3.50 per cent since
18.11.05
IOC new chairman
Brij Mohan Bansal, director (planning & business development) has taken charge as
chairman of Indian Oil Corporation Ltd. He takes over the reins from Sarthak Behuria
who completed his tenure on February 28, 2010. Bansal is a B Tech in chemical
engineering, supplemented by DIIT in process plant engineering from the Indian Institute
of Technology, Delhi. He has over 35 years of work experience in oil & gas sector,
comprising business development, research & development, operating IndianOil’s
refineries and technical services.
Price rise no help: OMCs
The recent price hike of Rs 2.71 a litre on petrol and Rs 2.55 a litre on diesel has not been
of much help for the oil marketing companies (OMCs), as being a tax component, the
amount goes to the government. Indian Oil Corporation, Bharat Petroleum Corporation
and Hindustan Petroleum Corporation continue to incur underrecovery of Rs 4.97 a litre
and Rs 3.27 a litre on petrol and diesel, respectively. The price was increased after
finance minister Pranab Mukherjee announced a hike in customs and excise duties on the
two products. The companies incur under-recoveries on auto and cooking fuels as they
sell these products at a government controlled price.
PNB sells stake
Punjab National Bank has divested 26 per cent of its stake in its wholly owned housing
subsidiary, PNB Housing Finance Ltd, in favour of Destimoney Enterprises Pvt Ltd. The
bank has sold 78 lakh equity shares at the rate of Rs 101.50 per equity share aggregating
to Rs 79.17 crore to Destimoney. PNB believes that the tie up with Destimoney will yield
a more focused strategy which will result in a sharp growth in business.

CIL felicitates Manna Dey

Coal India Limited (CIL), in its role as a corporate citizen promoting art and culture,
felicitated the legendary singer Dada Saheb Phalke Award recipient Padma Bhushan
Manna Dey recently, for his meritorious contribution to Indian music. Union coal
minister Sriprakash Jaiswal presented a silver plaque to the versatile genius Manna Dey,
the only male singer to have received Dada Saheb Phalke Award. “It is befitting that the
felicitation is held in the city of Kolkata, famous for art and culture” said Jaiswal.

State industry, commerce, power and public enterprises minister Pradyut Bardoloi
inaugurating the Margherita branch of UCO Bank
Bhaskar Sen, the new chairman and managing director of United Bank of India is
received by the executive director TM Bhasin, on his first day of joining in the Bank on
March 1, 2010.

Ashok Kumar Dutt has joined Dena Bank as the new executive director on March 1.
Earlier, he was working with Allahabad bank as field general manager.

Axis scrip drops, but deal good in long term

M Allirajan TNN

Though Axis Bank’s acquisition of Enam’s investment banking (Ibanking) and

equity broking business is seen as a “winwin” deal for both the entities, investors didn’t
react positively to it. The Axis stock slid 2.7% on the BSE on Thursday to close at Rs
1,427. Despite the deal being a positive for the bank in the long term, some analysts
believe that the valuations are on the higher side.
However, with Axis Bank’s current market capitalization standing at about Rs 62,000
crore, the deal is not “big enough” to make much of an impact on the stock, analysts
tracking the bank said. Some analysts, however, remain positive on the stock and have
recommended “accumulate” on declines.
The Rs 2067-crore shareswap deal will result in an issue of 13.8 million fresh equity
shares, leading to a minimal 3.3% dilution on an expanded equity base, analysts said. The
dilution is unlikely to have any impact on the capital adequacy ratio of the bank, they
said.
While stocks of some listed players in the space are trading at 15-16 times their
estimated earnings for the 2010-11 fiscal, Axis Bank is paying 23-25 times the PBT
(profit before tax) reported by Enam in the first seven months of the current fiscal, an
analyst tracking the bank said.
If the net current assets (consisting largely of cash and equivalents) in Enam’s books
are adjusted, the valuation is only slightly higher than peers, analysts at Prabhudas
Lilladher said. Moreover, in such deals an acquisition premium of at least 10-20% is
usually paid and so valuations are in line if they are taken on an adjusted basis, they said.
However, the deal would give Axis the much needed leg-up in the I-banking
and broking business. “Axis is not a significant player in I-banking and broking. With
this deal, it would be taking a big leap on the equities side,” said Rajiv Mehta, assistant
vicepresident, research, India private clients, IIFL.
“Enam provides the right platform (for Axis Bank) and a lot of synergies can be
exploited from the deal,” he said. The continuity of Enam’s top management team and
the five year noncompete clause for founders and promoters would work in favour of
Axis, which would be able to expand the I-banking business significantly, market
observers said.