The Supreme Court on Monday issued notice to RBI, HDFC Bank and others on a plea seeking clarity on the RBI’s powers to enforce a merger scheme of banks, which was approved by it earlier. The issue relates to the merger of HDFC Bank and the Centurion Bank of Punjab (CBoP), which got the RBI nod on May 20, 2008.

A bench, headed by Justice MY Eqbal, issued notice to the banking regulator, HDFC Bank and others after the HDFC Bank Officers’ Association sought the apex court’s intervention in deciding two issues  — whether the banking regulator has no power to enforce a scheme which was sanctioned by it and if the RBI’s statutory power as a banking regulator to give directions for the proper functioning and management of a bank does not extend to giving directions to enforce a scheme sanctioned by it earlier.

Challenging the Kerala High Court’s order that held that the RBI is helpless in directing a bank to enforce a scheme, which RBI itself sanctioned and approved, the association alleged that discriminatory treatment meted to its members by the HDFC Bank is in violation of the scheme sanctioned by RBI. It also sought a direction to RBI to probe the issue.

As per the scheme of amalgamation entered into between HDFC Bank and Centurion Bank of Punjab, the employees of CBoP became the employees of the HDFC Bank without any break or interruption in service, on terms and conditions which were no less favourable to the employees of CBoP than those on which they were employed with CBoP, the petition said.

After the approval by RBI, the scheme was binding on the banks and any deviation from the same made the amalgamation null and void, it said. However, HDFC later violated this scheme by making the service conditions of the employees much worse than what they were entitled to under the scheme, the association stated.

“RBI has full power and duty to enforce its own scheme under Section 44A read with Section 35A of the Banking Regulation Act, 1949. Section 35A gives wide power to RBI to give directions to any bank to secure the proper management of any banking company. Therefore, the HC erred in holding that RBI is helpless in the face of violation of a scheme which it itself sanctioned and approved as a condition precedent to an amalgamation,” the petition filed through counsel Prashant Bhushan stated.

Godrej Consumer Products (GCPL) shares rose over 4 per cent on Monday after the RBI said foreign investors can buy up to 40 per cent of the paid-up capital in GCPL under the portfolio investment scheme. (Express Photo)

Godrej Consumer Products (GCPL) shares rose over 4 per cent on Monday after the Reserve Bank of India said foreign investors can buy up to 40 per cent of the paid-up capital in GCPL under the portfolio investment scheme (PIS).

At 1.38 pm, the scrip was trading 2.94 per cent higher at Rs 1343.90. It opened at Rs 1324.80 and had touched a high and low of Rs 1360 and Rs 1324.65, in trade so far.

Foreign Institutional Investors (FIIs)/Registered Foreign Portfolio Investors (RFPIs) can now invest up to 40 per cent, revised from earlier 35 per cent, of the paid-up capital of Godrej Consumer Products Limited under PIS, the Reserve Bank had said on Friday.

GCPL passed resolutions at board of directors’ level and a special resolution by shareholders, agreeing to enhance the limit for the purchase of its equity shares and convertible debentures by FIIs/RFPIs.

The purchases could be made through primary market and stock exchanges, RBI said.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS.

(With inputs from PTI)

At 11.21 am, the scrip was trading 6.40 per cent higher at Rs 25.75. (PTI)

Punj Lloyd shares gained as much as 8.68 per cent in the morning trade on Monday after the company announced that it has secured a contract for the EPCC Package 2 at Haldia Refinery, West Bengal from Indian Oil Corporation for a value of Rs 1,094 crore.

At 11.21 am, the scrip was trading 6.40 per cent higher at Rs 25.75. It opened at Rs 24.40 and had touched a high and low of Rs 26.30 and Rs 23.85, respectively, in trade so far.

In a BSE filing, the company said, “The scope of the work involves, Residual Process Design, Detailed Engineering including HAZOP study, engineering, procurement, construction and commissioning of the Sulphur Block comprising the Sulphur Refinery Unit, Amine Regeneration Unit, the Sour Water Stripper including the Utilities and Offsite facilities.”

This project falls under IOC’s prestigious ‘Aishwariya’ Project. IOC’s Haldia project aims to upgrade Black Oil, mainly High High Sulphur Fuel Oil to higher value products like diesel and LPG which will lead to subsequent improvement in Gross Refinery Margins. It will also produce improved quality diesel, conforming to BS-IV specifications as a measure towards environmental protection.

“With this new win, the Group’s order backlog stands at Rs 20,978 crore. The order backlog is the value of unexecuted order on June 30, 2015 plus new order received after that date,” the company said in the BSE realease.

For the quarter ended June 30, 2015, the company posted net loss of Rs 597.87 crore against loss of Rs 363.92 crore in the corresponding quarter a year ago.

Brokerage house Ambit Capital has revised the BSE Sensex target to 28,000 from 32,000. (Photo: PTI)

The Sensex dropped over 900 points for the week ended August 28 owing to extremely negative global cues. After the downfall on the domestic equity bourses last week, brokers have downgraded their targets for the key benchmark indices.

Brokerage house Ambit Capital has revised the BSE Sensex target to 28,000 from 32,000.

Macquarie and Barclays too have downgraded the December target for Nifty to 8,700 and 9,642 from 9,600 and 10,219 earlier.

Bank of America Merrill Lynch in a research report said, “Our equity strategists expect corporate earnings to begin to turn up in September from June’s anemic 1%. They still see downgrades that will pull the BSE Sensex consensus earnings down to 12 per cent from around 18 per cent now.”

According to brokers, delay in earnings recovery and real estate issues make India risky. India has seen FIIs sales for 3 out of last 4 months so far, exchange data shows.

However, most agree India remains in a sweet spot among emerging markets due to crude oil slump and ongoing reforms. Citi stays positive on India story and maintains target of 32,200 on the BSE index.

Vineeta Mahnot, equity research analyst, Hem Securities, said, “Turbulence in the global markets triggered by the Chinese meltdown and devaluation of the currency by the country thereby, sharp sell-off by the investors across the globe, continued weakness in the commodity prices and rupee depreciation created worrisome for the investors. Trend in global markets and global macro economic data and movement of commodity prices globally will dictate the trend on the bourses. Market seems to continue its southward journey in the week ahead too; However, auto sales number, Indian GDP growth numbers will be important data to watch out for. Buying at the lower level may register some gains for the indices.”

(With inputs from Reuters)

Maruti Suzuki share price may jump over 10 per cent in the next few quarters, says brokerage house Sharekhan. (Reuters)

Sharekhan has upgraded the target price of Maruti Suzuki shares and also said that it expects the share price of the company can jump over 10 per cent in the next few quarters. On August 28, Friday, the share price of the auto maker was at Rs 4,204.95.

The management of Maruti Suzuki has set out a target of two million annual sales by 2020 and is focusing on new products and segments to achieve the same. The recently launched premium crossover S-Cross, an upcoming compact sports utility vehicle (SUV) and a premium hatchback are aimed at expanding segments. The next generation, premium Nexa outlets are aimed at providing a differentiated buying experience for discerning customers and gain a foothold in segments wherein it has little presence.

The management has also laid out a roadmap for expansion of its sales and service network to achieve its two-million-unit target. It added 309 sales outlets in FY2015 which is the highest addition in the last ten years. Importantly, the expansion was targeted at increasing geographical spread and the company managed to add 300 cities to its coverage.

According to the brokerage house, the domestic automobile industry turned a corner in FY2015 and posted a growth of 3.9 per cent vis-à-vis a sharp 6.6 per cent decline in the preceding year. The election of a stable government at the centre aided in boosting consumer confidence especially in urban India. However, the growth was not broad-based as only six of the eighteen passenger vehicle (PV) manufacturers posted a growth and sales had to be supported by high discounts and promotions.

Maruti Suzuki India (MSIL), pulled further ahead of the rest of the pack and reported a growth of 11.1 per cent as compared with a 1.3 per cent fall for the rest of the industry. The strong performance was on the back of a strong product line-up, new model launches, shift in preference towards petrol models and excellent distribution network especially in rural India.

Sharekhan in a research note said, “In FY2015, MSIL has demonstrated the strength of its business model with the quantum of the outperformance as compared with its peers. The management plans of launching new models and entering new segments especially the compact SUV segment are expected to further aid in a market share expansion. Additionally, the strong network expansion would lay the foundation to achieve its 2020 target.”

The brokerage house continues to remain positive on the stock and revised its target price to Rs 4,700 (from Rs 4,650) earlier. Sharekhan said, “In our estimates we have not yet factored in a demand boost due to the payout from the seventh pay commission pending clarity on the timeline for the same.”