Disney raises stake to 50 pc in UTV Software

Walt Disney Company (South East Asia) has raised its stake in UTV software to more than 50 % and has become the majority shareholder of UTV Software Communications. Walt Disney recently acquired about 20 % of UTV shares from the open market and increased its holding in the company to more than 50 %. Earlier, its shareholding was 37 %. This made Walt Disney the first Hollywood studio to have majority shares in an Indian entertainment company. The shareholding of UTV and Walt Disney in UTV Software Communications has increased to 83.25 %. In February, Walt Disney had invested $190 million in UTV Software and increased its stake from 14.85 % to 37.29 %. According to UTV sources, though Walt Disney is now a majority partner of UTV Software Communications, its equation in the company will remain unchanged. As per an agreement reached with UTV founder, Ronnie Screwvala, Walt Disney will not claim more than 3 seats it already has on the UTV Software 12-member board. Also, it will not use its voting rights till 2012, but may amend if needed. An industry source revealed that Disney might have taken advantage of the market slowdown to buy UTV software's 23 % additional shares in the open market at a cheaper rate and if this continues Walt Disney may look to delist UTV Software in some time nearby, giving an open offer to UTV's minority shareholders. Surely I foresee the great future of UTV Software ahead. 
Currently UTV trading at Rs. 227, maybe by or after 2012 Disney may offer delisting.

INVESTORS GAIN LITTLE IN BUYBACKS

If stock prices movements are an indicator, then investors are not happy with buybacks or share repurchase programmes initiated by companies. While the consensus view is that buybacks are positive as they are usually an indication that the company's management thinks the shares are undervalued, shares of none of the 11 companies whose share buybacks are open have gone up after the initiative was started, data shows- Stocks of Reliance Infrastructure, SRF, Rain Commodities and DLF have fallen by as much 35-60% from the day the buyback was open and most companies have seen their stock value erode by an average 40% in the same period. All the buybacks are to be done through open market purchase. Though on the day of announcement, stocks might have usually reacted positively, stock prices of the same companies have mostly fallen by as much as 10-50% in the period between the buyback intention was first announced and when it actually started. "What's in it for the ordinary investors, if the company is buying back at the prevailing price? Only the promoters appear to benefit from this peculiar situation as they are indirectly increasing their stake (since bought back shares will be extinguished) and that too without using their own funds. Companies such as Amrutanjan, Godrej Consumer, EID Parry and Ipca Labs announced buyback plans in the last two days alone. While its true that shares of most companies are available at steep discounts (40%-80%) vis-a-vis their January peaks, since most of the purchases are done through open market, nonpromoter entities hardly stand to benefit from the scheme of things. "Certainly, its a good time from a valuation perspective. But whether investors are appreciating (buybacks) or not, is a judgement on individual companies which is again dependent on many factors . The maximum buyback price in cases such as Reliance Infrastructure (Rs 1600), DLF (Rs 1100), SRF (Rs 160) or HEG (Rs 350), practically becomes a non-benifical

INDIA IN RECESSION ?........NAAAAA

US went into recession followed by Britain and European nations even the Asian countries were not speared by this global recession. Hong Kong also slipped into recession in the 3rd quarter as on 15th NOV 2008, as global economic slowdown took its toll on the financial hub, Hong Kong’s gross domestic product fell 0.5% from the previous quarter on a seasonal adjustment basis, following a fall of 1.4% in second quarter.

European nations which became Euro Zone from the year 1999 and introduced Euro € as its currency, also faced the recessions. The 15 European countries faced this situation first time in ten years since being in euro zone. They recorded -0.2% growth rate in the second quarter of the year. If the growth rate in Europe goes to negative, constantly for two quarter it is officially pronounced recession in Europe.

Generally recession is identified as- continues fall in GDP for two consecutive quarters of the country is termed as recession in that country.

But whereas in India, there is no question of recession but will definantely slowing down for a bit. With inflation down to 8.40 per cent, the Reserve Bank is expected to cut policy rates, repo and reverse repo, along with a fiscal stimulus package by the Government, to spur economic growth. The Indian economy grew by 7.6 % in the first half of the fiscal from 9.3% a year ago, and analysts predict further slowdown in the remaining period of this fiscal. Data released by the Central Statistical Organisation on 28 th of Nov 2008 showed that all the eight economic sectors that contribute to the gross domes-tic product (GDP) recorded a lower growth year-on-year. The slow-down in the services sector — which accounts for nearly 60% of the output — was milder than expected, The economy expanded by 7.9% during the first quarter, taking the first-half GDP growth to 7.8 %. Economists had been expecting second quarter GDP to grow 6.9%,

Growth in manufacturing during the second quarter almost halved year-on-year to 5%, and was down 60 basis points compared with the preceding quarter. Growth in agriculture slipped to a two-year low of 2.7%, raising concerns about its potential impact on food inflation, which continues to rise despite falling headline inflation.

Tata Tele sets off losses of Rs5,141 crore,....Biggest write-off by an Indian firm; two-step capital restructuring to help company achieve profitabili

Tata Teleservices Ltd, or TTSL, the country’s sixth largest phone services firm, has started restructuring its capital by writing off Rs5,141 crore in losses and unabsorbed depreciation, according to excerpts from proceedings of shareholders meeting, in what is the largest such set-off by any Indian firm.

The restructuring, which was approved at an extraordinary general meeting of shareholders on 8 September and is pending approval from the Delhi high court, will potentially help the company achieve profitability faster.

This is the second occasion in the telecom sector’s recent history that such a large write-off is being executed; the first being in 2005 when Reliance Industries Ltd’s then subsidiary Reliance Infocomm Ltd, now called Reliance Communications Ltd, or RCom, wrote off Rs4,500 crore as part of a split between the Ambani brothers. RCom is now run by younger brother Anil Ambani’s Reliance-ADA Group.

According to the TTMLs profit-and-loss statement for fiscal 2008, the Tata phone firm had losses of Rs9,177.17 crore, including carried forward loss of Rs7,363.41 crore. Most of the losses were on account of increased capital expenditure for capacity building as the company expanded its subscriber base to nearly 30 million, as of end-August data from industry lobby Association of Unified Telecom Service Providers of India.

As its network expands and it gains customers in India, the world’s fastest growing phone services market by customers, TTSL has reduced annual losses to Rs1,813.76 crore for the period ended 31 March 2008, against Rs2,062.52 crore in the previous year. Revenue also increased to Rs5,377.90 crore for fiscal 2008, a rise of 15.70% over Rs4,647.80 crore in the year to 31 March 2007.

The restruc-turing plan includes reducing Rs1,967.71 crore from its share premium reserves on the balance sheet by writing off Rs983.85 crore of book losses (through wiping out share premium) and Rs983.85 crore of unabsorbed depreciation.

In a simultaneous move, TTSL plans to halve its equity share capital from Rs6,347.15 crore to Rs3,173.57 crore, by reducing Rs1,586.78 crore from its book losses and Rs1,586.78 crore against unabsorbed depreciation.

The capital restructuring will enable the Tata Sons Ltd subsidiary to hasten dividend plans and perhaps make it more attractive for a foreign strategic telecom partner to pick up stake. TTSL is an unlisted entity.

Writing off losses enhances TTSL’s dividend paying capacity, one expert said, but its benefit will have to weighed against the minimum or alternative tax benefits the company enjoys as a result of the losses. “One has also to see whether the dividend capacity is really useful at a time when further investments are called for,” said Vivek Gupta, partner at BMR Associates, an audit firm.

This move “right-sizes the balance sheet”, said Girish Vanvari, executive director at KPMG, a management consultancy and accounting firm. Share capital, reserves and surplus add up to a large net worth and bloat the balance sheet. Also, he added, “companies cannot declare dividends till they wipe out accumulated losses”.

WHAT IS ISLAMIC BANKING?

a) Islamic banking does not involve transaction of payment or taking of interest, thus cannot maintain the SLR in government bonds which are Interest bearing.

b) Loans are given on Profit/loss sharing basis.

c) Mortgages are based on cost plus profit mark up as opposed to interest based loans.

d) Banks buys an asset and sells it at higher price to client on deferred payment basis.

e) If the bank goes bust, according to Shariah, the depositor is advised to share the loss, though in countries like U.K the bank is legally bound to pay back deposits.