Friday, November 30, 2007

On wheels: Tibet and Everest Base Camp

Nepal has become an attraction for guided bike tours that have earned a reputation for exciting, off-the-beaten track itineraries and adventures lately. In the last couple of years, number of group biking adventurers has increased as one of the major vacation choices for the seasoned travellers.
Last month, a group of six motorcyclists — including a lady rider from Australia with a Nepali Road captain — completed a road trip of over 2000-km from Kathmandu to Lhasa and returned via Everest Base-camp in 16 days.
From dirt to high altitudes, rough roads and to newly black topped road from Gyantse via Gandrock, on new Royal Enfield Bullet 500cc motorcycles, the bikers led by Stewie McLean — who has been organising such adventure riding trip since 2004 — experienced an euphoria that cannot be described in words.
Though McLean has been bringing adventure groups to Nepal every April and taking them on a ride on rough mountainous roads in Nepal from Kathmandu to Pokhara to Chitwan, and back to Kathmandu, its the first time he attempted a ride to Lhasa with his groups of motorcyclists including Chris Abbot (a businessman), Wayne Skues (a farmer), Helen Travers, Stephen Brand (a doctor) and Binod Chettri a road captain.
Himalayan Riders — the local co-ordinator of the trip — has been organising such bike trips to different places in Nepal to make holidays of the tourists most memorable ever. It is organising such bike trips to Ladakh and Bhutan and planning to start a trip to Mangolia soon.
"Its more free to travel on bike," McLean, said, adding that the trend is picking up as the number of bikers is increasing every year. However, its very interesting to know that all these motorcyclists are 40-plus people. "Older folks like such trips," he added. According to him the younger people don't have enough money for such trips.In a long bike tour, the riders develop a certain comaraderi among themselves. "The group must be clear when to stop and how to communicate essentials like 'stop', 'slow down', or 'I have a problem'," he said, adding that one should make sure to have protective gear and use it properly."
Riding in a group requires a bit more skill than riding solo. A new rider may not have experience and the group will have to face the problem together," he added. Apart from that its challenging not only because of rough roads but also due to unwanted stray animals on the road," McLean said. "Its difficult to keep the speed and the riders have to blow horn all the time.
"But how did it all start? "When I invited my friends to Nepal for trekking, some of them didn't like to walk," he said, adding that then an idea occured. "Can I arrange a riding trip, I asked them and they immediately said 'ye'.
"Unlike most of the Nepalis, for whom bikes are means of transportation, McLane and his rider friends take it as sport. "Its a group sport," McLane added.

Thursday, November 29, 2007

Mutual Fund regulation in offing

After almost 15 years of securities trading, Nepal will get its first regulation to better manage and regulate Mutual Funds any time soon. Securities Board of Nepal (SEBON) has forwarded draft regulation of Mutual Funds — that is expected to lure small investors to the capital markets — to Nepal Rastra Bank (NRB) and Bankers Association (NBA) and is waiting for their comments.
"We sent the draft to the central bank long ago but they are sitting on it," Dr Chiranjivi Nepal, chairman of the SEBON, the regulatory authority of capital market said, adding that Mutual Fund — with a face value of Rs 10 per unit — is the most suitable investment for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
"Once we get it back, SEBON will approve it and sent it immediately to the Finance Ministry," he added. "After getting the clearance from the ministry, the regulation will come into effect." After the regulation, Mutual Funds are expected to fuel capital market as many commercial banks have shown keen interest in it. "It will create institutional investors also — something that the capital market lacks at present," Nepal added.
In an absence of the regulation also, NIDC Capital Markets Ltd and Citizen Investment Trust (CIT) had issued NCM Mutual Fund and CIT unit trust. But, the first one had a bitter experience in the absence of transparency and regulation.
"The proposed regulation has all the tools that a transparent and professional fund must have," Paristha N Poudyal, director at the Market Regulation Department, SEBON, said, adding that besides the sponsors that issue Mutual Funds, the draft envisions an Assest Management Company (AMC) that will manage the fund, a Trustee that works like a watchdog, a Custodian and a Depository; all of whom has to get separate licence from the SEBON.
"Commercial Banks and financial Institutions can sponsor the Mutual Fund and sponsors will appoint AMC," he added. According to the draft, Mutual Funds can also invest 50 per cent of their funds in foreign country.
A Mutual Fund is a trust that pools the savings of many who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them.
"They can be traded at the Nepal Stock Exchange (Nepse) as well," Poudyal said, adding that these funds are convertible and has liquidity also. Unlike other institutions, it can be stopped or liquidated or transferred to a new scheme, if 75 per cent of the unit-holders complain about mismanagement of the fund or any foul play is suspected," Poudyal said.

Thursday, November 22, 2007

Inflation goes up by 7 percent

The vegetables became more expensive this year in comparison to last year. “The prices of vegetables and fruits rose by 26 per cent, pulses by 17.8 per cent, spices by 13.2 per cent, oil and ghee by 11.9 per cent and grains and cereal products by 9.8 per cent,” a report from Nepal Rastra Bank (NRB) stated.
The price rose in Tarai, the Hills and Kathmandu valley by 7.5 per cent, 6.8 per cent and 6.3 per cent respectively.
However, the salary and wage rate index have also gone up by 12.5 per cent in mid-September 2007 compared to a rise of 7.6 per cent a year ago. Due to the rise in prices, year-on-year inflation has risen to seven per cent in mid-September 2007 from 6.6 per cent in mid September 2006.
However, remittance has decreased as it posted a rise of only 17.3 per cent against an increase of 30.6 per cent, in comparison to the corresponding period of the last fiscal year, according to NRB. Similarly, in the first two months of 2007-08, total government spending has increased by 13.5 per cent to Rs 11.14 billion. The government expenditure had increased by 22.5 per cent in the corresponding period of the previous fiscal year. The decline in the growth was due to a decrease in the growth of recurrent expenditure.
However, revenue mobilisation has decelerated in the review period. Revenue mobilisation has pos-ted 15.4 per cent to Rs 12.42 billion in comparison to 22.3 per cent in the corresponding period last year.
In the review period, the budget remained at a surplus of Rs 2.56 billion. However, the report stated that exports have declined by 5.9 per cent in contrast to a rise of two per cent in the corresponding period of the previous year.
“Export to India has decreased by 8.7 per cent and exports to other countries remained at a similar level in contrast to a rise of 1.2 per cent in the comparable period of the previous year. The decline in the exports to India was mainly attributed to the decrease in the exports of vegetable ghee, thread, textiles, toothpaste and wire. Similarly, exports to other countries took a downward trend owing to the lower exports of woolen carpet, pashmina, and tanned skin.Total imports increased by 10 per cent in comparison to 9.7 per cent hike in the corresponding period of the previous year. While imports from India went up by 3.5 per cent in the review period compared to a growth of 14.5 per cent in the corresponding period of 2006-07.
A rise in the import of vehicles and spare parts, cold rolled sheet in coil, MS billet, thread and hot rolled sheet in coil from India and substantial increase in the import of gold followed by telecommunication equipment and parts, transport equipment and parts, electrical goods and silver among others, from other countries led to the rise in total imports.
The overall balance of payments (BoP) recorded a deficit of Rs 2.68 billion. However, it had registered a surplus of Rs 758 million during the corresponding period of last fiscal year.
Indian currency equivalent to Rs 11.71 billion has been purchased through a sale of $180 million in the review period. “The purchase of IC went up due to widening trade deficits with India,” the report stated

Friday, November 16, 2007

NBL on scorching growth path

Nepal Bank Ltd (NBL) has left its worst days behind and is now moving ahead aggressively, said Dr Binod Atreya, co-coordinator of the management team of the first bank in the country.
Three months ago, when the foreign management team walked out, the central bank sent a team headed by Dr Atreya. The unaudited report for the first qu-arter shows that Nepali ma-nagement team is capable in handling NBL and its financial health is improving.
Established in 1937, November 20, NBL has — in its seventy years of operations — seen many ups and downs and learnt lessons from the past mistakes. After being declared a sick institution due to chr-onic bad loans and continuous political interference, government tho-ught of reforming it and services of The Bank of Scotland (Ireland) Ltd, ICC Consulting was hired. However, the foreign management remained always controversial.
“The situation is different now and unions are cooperative,” Atreya said adding that cordial relation between the management and unions is very important in the progress of the bank. “Downsizing staff, computerising 44 branches, preparing operational and HR manual were some of the positive outcomes of reforms,” Dr Atreya said. Reform has also helped modernise the ailing bank and made it more professional and reduced Non-performing Assets from 59 per cent.
In the recent days, the pioneer financial institution has to compete with new private banks that are competitive, aggressive and technologically advanced. “We are also upgrading our services,” he said adding that NBL offers all the products that the private banks offer and that also in competitive rates. It offers many kinds of loans and has ABBS. “NBL is planning to add ATMs and e-banking soon,” he added.
However, the operating cost of the bank is — 62 per cent in interest income — the highest among all the commercial banks. “We are again bringing VRS to reduce it,” he said adding that injecting fresh blood is also necessary for the soundh health of the oldest bank.
At present, the bank is serving with its 97 branches that were once more than 200. “It is reinstating its five branches — that were displaced due to lack of security — soon,” Atreya added.
The bank, which has Rs 38.71 billion deposit, is trying to win back its customers. “NBL is a business partner,” Atreya claimed thanking depositors, borrowers, employees and stockholders of the bank for their continued support throughout its seventy years of service. He also promised to provide competitive and customer-oriented banking services through competent and professional staff in efficient way.

Wednesday, November 14, 2007

Fifth governor Dr Pant passes away

Dr Yadav Prasad Pant, former finance minister, renowned economist and fifth governor of Nepal Rastra Bank (NRB) passed away in Bangkok on November 14, Wednesday at the age of 82. He was undergoing treatment at Bumrungrad Hospital in Thailand.
Dr Pant is the first Nepali to be awarded the Doctorate in Economics in 1952 and the Doctorate in Literature in Economics in 1976. He has held several positions in different national and international organisations including senior economist at the UN ESCAP (Bangkok), finance and planning secretary, senior member of the National Planning Commission, governor of the Nepal Rastra Bank Bank, Royal Nepalese ambassador to Japan, chairman of the Economic Commission and the minister for Industry, Commerce and Supplies, Finance and Water resources.
He also served as the chairman of several government-owned corporations, including Nepal Industrial Development Corporation (NIDC), National Trading Ltd, Royal Nepal Airlines Corporation and Nepal Oil Corporation.
He was the visiting professor in a number of institutes like UN Institute Bangkok, Institute of International Studies, Tokyo and Korean Development Institute, Seoul.
He served as the vice-president World Federation of United Nation Association in 1991-1999. Dr Pant was district governor of Lions Clubs International, District 325 – B. He was also Excom member of the world Federation of the United Nation Association, Geneva, Founder president of both the Nepal-Japan Friendship and Cultural Association, and Nepal – Scandinavian Chamber of Commerce and Industry.
Avid reader Dr Pant was the author of more than two dozen books including 'Problems in Fiscal and Monetary Policy', 'Trade and Co-operation in South Asia' and 'Some aspect of Economical Planning' and has contributed many articles to various national and international journals.
Dr Pant was the president of Society for International Development, vice-president of Nepal Red Cross Society and also served as Charter president, Lions club of Nawalparasi and served as Zone chairman and vice-district governor of Lions club International District 325 – B, in 1999-2000 and governor in 2000-2001.
He was decorated with the highest decorations by the government Nepal and Her Majesty Queen Elizabeth, Emperor of Japan and president of Republic of Korea.
He is survived by his wife Rama Devi Pant and three sons Dr Girish Pant, Dr Bhuwanesh Pant and Radhesh Pant (managing director of Bank of Kathmandu and president of Nepal Bankers' Association) and a daughter Meera Arjyal.

Businessmen conferred CIP awards, Excellence awards

The government conferred Commercial Important Person (CIP) award and Excellence Award on 33 top exporters, importers, and leading industrial and trade association chiefs — honouring their contribution to the national coffer for two fiscal years 2004-05 and 2005-06.
They received the award for their contribution in promoting exports, creating more employment opportunities.
Kiran Sakha, president of Garment Association of Nepal (GAN) speaking on behalf of the winners asked the government to provide security. "Political instability, labour dispute and regular bandh have hit the industries hard," he complained.
Similarly, welcoming the participants, Dinesh Chandra Gupta, executive director of Trade and Export Promotion Centre (TEPC) said that the award will boost businessmen's confidence and competitive edge.
The CIP award — started in 2004-05 — would allow winners claim various facilities like special passes that would entitle them to gain easy access to government offices and receive special treatment. They could also enjoy the CIP lounge at Tribhuvan International Airport (TIA). The CIP award will be valid for two years.

The winners

Organisations
Chandi Raj Dhakal, president of FNCCI
Surendra Bir Malakar, president of NCC
Binod Chaudhary, president of CNI
Kiran Prakash Sakha, president of GAN
Kabindra Nath Thakur, president, CEIA (Nepal)
President of Central Carpet Industry Association
Exporters
Subrat Dhital of Cotton Comfort Pvt Ltd
Poonum Danawat of J D Apparels
Harsha Garg of Rara Apparels
T G Shrestha of Samling Carpet Industries
Deepak Kumar Bhattarai of Paramount Carpet Industries
Shiva Ratan Sharada of Pioneer Carpet Industry
Manish Kumar Agrawal of Shree Krishna Oil Refinery and Vegetable Ghee Industry
Diwakar Golchha of Arihant Multifibres Ltd
Uddyan Ganguly of Dabur Nepal Pvt Ltd
Rohit Uthithan of Arati Stripes Pvt Ltd

Importers
The Gap Inc, USA
Wall Mart Store Inc, USA
Ludwing Wissanbach GmbH, Germany
Teppich Kibek-GmbH, Germany
The Cashmere Co, UK

Exporters
Mrs Meena Karki of New Himalayan Akash Exports
Krishna Bahadur Kunwar of Shree Krishna Pashmina Arts
Raju Shrestha of Asiatic Traders and Exports
Parmeshworlal Agrawal of Narayani Leather Manufacturing Industries
Swayambhu Ratna Tuladhar of Yak and Yeti Enterprises
Hemlal Kapri of HLK Pvt Ltd

Eric Anthony Wiele of Plum Traders Inc, Atlantic Avenue
Leather M Trading Co Ltd, Shenzhen Longgang Centre
Mac Mccoy (DZI Tibet Collection), Washington DC
Protolano Products Inc, 840, Walker street, Prescott Ontario
Nature Et Decouvertes 1 Avenue de L'europe, Air Park

Sunday, November 11, 2007

World bank commits $370 million

The World Bank on the last day of the meeting of Regional Management Team for South Asia — dedicated for Nepal — On Thursday committed $250 million and an addition of $120 million grant, the largest ever grant programme to Nepal for this year.
The grant will be without any conditionality as requested by Nepal to show the bank's commitment that it stands with the people of Nepal on the mission of peace building and state restructuring.
Speaking on the Nepal Day today Ad Melkert, UN under-secretary general and associate administrator, UNDP said that Nepal faces a challenge to bridge gap between the rich and poor. "As time is running out, we need to do something concrete," he said adding that the hard days will be overcome by national reconciliation and engagement of international community.
"Equality in policy and equal opportunity in practice can only ensure the MDGs and international community is ready to help Nepal in development, peace process and stability," he added.
Dr Ram Sharan Mahat, finance minister expressed commitment on scaling up the quality of physical infrastructures in the rural areas so that people can create and take advantage of economic development. "Community approach to development works best during conflict period," he said.
Ian Martin, special representative of the UNGS moderated the second session on 'Securing the Peace', where Dr Minendra Rijal, a seasoned democrat, highlighted the importance of reform in agriculture and land for the development of Nepal.
"Nepal being an agriculture country should focus on agriculture," Dr Baburam Bhattarai, one of the chief ideologues and second-in-command of Maoists said adding that industrialisation and more employment creation is key to Nepal's progress.
"We should build the basis for future growth in income and employment for the reduction of poverty," Prakash Chandra Lohani, former finance minister, said adding that investments in infrastructure, power generation, irrigation and telecommunication are a must for development.
Dr Dilli Raj Khanal, Member of Parliament from CPN (UML), stressed on security for investment and infrastructure development.
Earlier, welcoming the participants, Praful Patel, vice-president of World Bank for South Asia asked Nepal to come forward with what it wants.
Susan Goldmark, country director of the World Bank — a long-time development partner — for Nepal, on the occasion, expressed solidarity with the Nepali people. And Mac Maharaj, member of African National Congress, South Africa shared the South African experience of peace process.

Saturday, November 10, 2007

A banking disaster averted but was a lesson learned

On November 10, 2006, Nepal witnessed the first-ever run on deposits. Following the media reports of the shaky financial situation of Nepal Bangladesh (NB) Bank, anxious depositors rushed to its branches to withdraw their money. Long lines formed. I had seen photographs of such events in history books. With advances in central bank oversight and deposit insurance systems (explicit or implicit), such an arcane thing is not supposed to happen in modern banking. But, here it was, live, right in front of my eyes! Fortunately, by the next business day, Nepal Rastra Bank (NRB), the central bank of Nepal, had intervened and the panic did not spread.
All organizations, including governments and central banks, make mistakes and face crises. Those things just happen from time to time. Even the most competent organizations cannot avoid all mistakes. They certainly cannot prevent or even anticipate all external shocks. Good leaders and managers know that. The key is to respond to them effectively. So, the run on deposit did happen in Nepal. Did NRB respond effectively? It did take over management of the NB Bank rapidly and assured the depositors that their money was safe. The run on deposits stopped. A major banking disaster was prevented. NRB deserves a big pat on its back. Or does it?
I say it deserves half a pat at this point. Why only half? Because the response has not been complete. When a crisis strikes an organization, it must do two things. First, it must deal with the immediate problem. Second, it must learn from the experience so that perhaps the crisis can be prevented next time, and even if it cannot be prevented, its impact can be minimized. NRB has done the first part well, but it has not done the second.
From those who are knowledgeable about the banking sector, I have heard many troubling things about the NB Bank episode. They may not be all accurate, but they do not seem groundless, either.
For instance, I have heard that an NRB official who had responsibilities to regulate or supervise the NB Bank had a close relative working at one of the NB Group banks (the NB Group owns NB Bank, NCC Bank, and two finance companies). There were speculations that this has led to some leniency in the way the NB Bank was treated.
The NRB Act of 2002 prohibits NRB officials from taking a job with a financial institution under NRB supervision within one year of retirement. Yet, I have heard one senior retiree was immediately hired by the NB Bank as an advisor. Perhaps an adviser is exempted from the rules, but I would think a paid job would be at least against the spirit of the rules. It naturally raises suspicions that the NB Bank may have received some regulatory forbearance in return for a promise of a job later.
The most troubling is the report that some Board members may have close kinship or social ties with some of the promoters of the NB Bank (as well as others) or major bank defaulters. If this is true, it seems highly problematic, for their decisions as the Board members may be influenced by their personal interests. In fact, I have heard that some Board members had often questioned tough actions against the NB Group or big defaulters. Because of the custom of seeking consensus at the NRB Board, they de facto have a veto power.
None of these things may be true. Even if they are true, it is possible that the NRB officials and the BRB Board members concerned are so honest and capable of separating their personal interests and their public responsibilities that it did not make any difference in the conduct of their official duties. Maybe. But, central banks around the world set up stringent rules to avoid putting their officials in such a position of conflict of interest in the first place. It removes any temptation to be swayed by personal interests. It also eliminates any public suspicion that their decisions may be tainted. It is just a sensible thing to do.
I know that the banking specialists at IMF and the World Bank had been aware of the serious problems at the NB Group, including the NB Bank, for a few years. They recommended strong actions to prevent just the kind of crisis that finally happened recently. Many officials inside NRB agreed and they proposed appropriate measures to force the NB Bank to comply with sound banking practices. Yet, for some reason, such actions were not taken. This is why I cannot dismiss lightly the many stories of conflicts of interest. I am not suggesting that any particular individuals were at fault, though some may have been. More important is the overall pattern. It seems quite conceivable that the web of personal interests blunted the ability of NRB to respond to the growing signs of financial and managerial problems at the NB Bank with the sharpness and alacrity the situation demanded. Maybe the reasons for slow reaction were different. But, if many technical experts at NRB knew about the problem at the NB Bank and yet as a system NRB failed to take appropriate actions, does that not suggest there were some serious flaws in the process? In all likelihood, the NB Bank crisis was preventable. That is why I think NRB should now focus on learning from this experience, so that another crisis will not happen so easily.Of course the review of the NB Bank crisis must be done by an independent team of experts from outside. No doubt NRB itself has competent professionals who can conduct such a review; however, let us remember that avoiding conflict of interest is a critical first step in making a process like this truly professional. And, NRB should not wait. I hear there may be other banks in similar problems. Mistakes do happen at any organization. Allowing the same mistake to happen twice without any reform, however, is not a hallmark of a good organization.
I should note that one part of the oversight system did work well: the media. Some journalists understood the seriousness of the problems brewing at the NB Bank. Their report forced much needed regulatory action by NRB. What the IMF and the World Bank together could not do, they did it with their informative reporting. This is why free and responsible media is so critical to the functioning of market systems. Hats off to those journalists!

(Ken Ohashi is the World Bank Country Director for Nepal. This article is picked from Nepalbiznews.com.)

Friday, November 9, 2007

Capital market comes of age

"Capital market has entered into a new era," said Dr Chiranjibi Nepal, chairman of Securities Board of Nepal (SEBON), the regulatory authority of the capital market in Nepal addressing a press meet here in the valley Wednesday.
"Capital market needs transparency and effective regulation to develop it as a vibrant economic driver," he said adding that technological advancement and modernisation can only help it develop.
SEBON has on Sunday brought the long-awaited three regulations — Securities Board Regulation-2064, Stock Exchange Licensing Regulation-2064 and Securities Businessperson Regulation-2064, according to the Securities Act 2063, (clause 116).
The Stock Exchange Licensing Regulation-2064 has provisions that Nepse can now invite applications for new brokers. In Nepal Stock Exchange's (Nepse) recommendation SEBON will give licence to the new brokers. However, the existing brokers also have to take new license to improve their competence and quality at par with the new brokers, according to the new regulation.
The small investors will benefit from this as there will be more brokers and they can cater to the needs of all the investors. To make the brokers more deciplined, professional and check fake investors, the regulation has also provisions that they must keep records of proper identification of their clients.
The regulation — has already come into effect from Monday — has also reduced brokers' commission to maximum one per cent to 0.7 per cent. Earlier brokers used to charge 1.5 per cent to one per cent.
Though, it is too soon to expect any one to come forward for new stock exchange, the new regulation has paved the way for new stock exchange also. It has however, laid emphasis on sound infrastructure and investors' reputation.
"The new regulation will help professionalise the market, market -makers and brokers," said Nepal adding that SEBON can now act like a real regulator as the Securities Board Regulation has given it right to investigate and punish the wrong-doers.
It will also get 0.015 per cent of every transaction; from both buying and selling. The Nepse will collect the amount and give to SEBON every month, states the regulation.
Parista N Poudyal, director of the Marketing Regulation Department at SEBON did the presentation on the regulations while chief of SEBON Nepal replied the questions raised by the media at the press meet. Nepal also informed that SEBON is bringing IPO Registration regulation and planning more investors awareness programme throughout the country.

Brokers' commission reduced

Stock brokers' commission has been reduced to one per cent to 0.7 per cent, according to the new regulation that is going to be implemented from Monday. Earlier brokers used to charge 1.5 per cent to one per cent commission depending on the amount of the transaction.
"The new regulations are more market-friendly and liberal for the investors," said Dr Chiranjibi Nepal, chairman of SEBON, the regulatory body, adding that SEBON has recommended the regulation eight months ago. "It is the best in whole South Asia," Nepal added.
"The small investors will benefit from the new regulation," Rewat Bahadur Karki, general manager and CEO of the Nepal Stock Exchange (Nepse) said adding that it will be implemented from Monday.
Similarly, SEBON will also get 0.015 per cent amount of every transaction; from both buying and selling.

Saturday, November 3, 2007

IFC to reopen office in nepal

Susan G Goldmark, country director of World Bank for Nepal has on Thursday at the half yearly general meeting of Hotel Association of Nepal (HAN) said that the bank's private sector arm - International Finance Corporation (IFC) - has plans to reopen its office in Nepal soon.

Nepse to see rain of IPOs

With Nepal Stock Exchange (Nepse) index scaling a new high every day and looking towards the 900-point mark, multimillion offerings are set to rain on Nepse.
Some of the mega issues are: Rs 300 million worth initial public offering (IPO) of Global Bank, Rs 300 million worth IPO of Citizens’ Bank, Rs 500 million worth debenture of Salt Trading Corporation (STC) and Rs 250 million worth debenture of Himalayan Bank Ltd and Rs 128 million worth IPO of Nepal Development and Employment Bank Ltd, totalling to over one billion rupees. They are likely to be announced by February 2008.
Nepal Telecom (NT) is also planning to issue IPO amounting to Rs 1.5 billion — in two phases of Rs 750 million each. The first phase would be for its employees and the second, for the public. The NT’s IPO would be the biggest ever offering in the Nepse’s history.
However, NT should have issued its IPO long ago. Bureaucratic hassles delayed the floatation.
Similarly, Chilime Hydropower has also been long planning to raise Rs 240 million through an equity offering by the end of last year but it has not yet floated its IPOs for public till date. Chilime has floated the IPO for its employee and its shares are traded at the Nepse floor for Rs 1380 (on Thursday) per unit share.
Though Chilime is one of the successful hydro power companies that has been constructed with the indeginuous technology, its delay in issuing IPO for public is surprising. Chilime model is no doubt an example how Nepalis themselves can construct hydro power plant by raising money from the domestic market.
Apart from IPOs, some development banks and finance companies are issuing rights shares to increase their paid up capital according to the new directives of Nepal Rastra Bank (NRB), the regulatory body.According to the data of Securities Board of Nepal (SEBON), two development banks — Paschimanchal Bikas Bank Ltd and Bhrikuti Bikash bank Ltd, seven finance companies and Sagarmatha Insurance Company Ltd, an insurance company are in the pipeline to issue rights shares issue.
However, Invest Finance Company is planning to issue IPOs worth Rs 16 million and Arun Valley Hydro is also planning IPO with Rs 300 premium, according to the SEBON.
“With all these issues market is expected to cool down,” according to a broker. “The high demand and short-supply condition will be balanced with the new IPOs,” he added.

Friday, November 2, 2007

Nepse allows transactions

Nepal Stock Exchange (Nepse) has allowed share transaction of eight companies after they paid their renewal fee. However, only Nepal Bangladesh Bank's shares have been traded at the floor today.
"Some of the companies — whose shares are not being traded at the floor for a long time and have not paid renewal fee from last year — could be delisted," Rewat Bahadur Karki, general manager and chief executive officer (CEO) of the Nepse said adding that after a little wait for them to come to Nepse for renewal, the process of delisting will start.
On Monday, Nepse publishing a notice had freezed share transactions of 24 companies including a commercial bank, Nepal Bangladesh Bank (NBB) and a development bank, Deprox Development Bank after they failed to pay their renewal fees for this fiscal year.
"The listed companies must pay their renewal fee within the first three months of the fiscal year," Karki said. The failure in paying the renewal fee will result in the trading halt at the Nepse floor.
However, Nepse has recorded a whopping growth of 13.97 points today to post 878.86 points. Similarly, banking sub-index has also registered a growth of 16.38 points to post 951.46 points.
"The pertaining issue is what will happen to the small shareholders of those companies when they are delisted," said Mahesh Pandit, an investor adding that there is always a danger of making fool of the small investors by promoters as can amass wealth and declare the company a bankrupt.
"Promoters must be brought to the book to protect the small investors from being cheated," he said adding that Necon Air's shares used to be traded at Rs 700 but now the investors are on the road. "How can investors get their money back and promoters brought to the book?" he asked.
The government must prepare a mechanism for the protection of investors in case the companies like Nepal Med Ltd and Bansbari Leatherage run over night amassing public's money.


Who paid

Nepal Bangladesh Bank,
Kathmandu Finance,
Union Finance,
Lalitpur Finance,
Deprox Development Bank,
Nepal Insurance,
NB Insurance,
Prudential Insurance


Delisted companies (in February, 2007)

Nepal Battery Co Ltd
Juddha Match Factory
Nepal Plywood & Bobin Co Ltd
Himal Cement Co Ltd
Sayapatri Color Lab
Nepal Med Ltd
Ace Laboratories (Nepal)
Bansbari Leatherage
Necon Air Ltd
Nepal United Co
Plastic Trading Co
Nepal Byapar Bikas Co
 
 
Earlier, Nepal Stock Exchange (Nepse) has publishing a notice on Sunday freezed share transactions of 24 companies including a commercial bank – Nepal Bangladesh Bank (NBB) — after they failed to pay their renewal fees for this fiscal year.

According to the rule, the listed companies must pay their renewal fee within the first three months of the fiscal year. However, their failure to pay the renewal fee may hit the fate of around 8,15,320 investors, who have invested in shares of these 24 companies hard.

Hotel Yak and Yeti is the only hotel, among the listed under the hotels group that has not paid its renewal fee, whereas there are more financial institutions including a commercial bank and a development bank.

"Though they are not declared bankrupt like Necon Air and Nepal Med Ltd, it has still created panic to the small investors," said one investor without wanted to be quoted.

Meanwhile, the Nepse didnot seem to be affected by this decision as it today posted a growth of 5.40 points to 864.89 points and banking sub-index has also posted 7.02 points growth to 935.08 points.

According to the Nepse, these companies have to pay from Rs 15,000 to Rs 50,000 as a renewal fee. But they did not pay the fee despite repeated calls by the Nepse.

However, they will be allowed to resume their shares' transactions if they pay the renewal fee, according to the Nepse.

The companies that failed to pay renewal fee

Nepal Bangladesh Bank

Kathmandu Finance,

Union Finance,

Lalitpur Finance,

Pokhara Finance,

Nepal Bangladesh Finance,

Sirjana Finance,

NIDC,

Deprox Development Bank,

Shreeram Sugar Mills,

Morang Sugar Mills,

Biratnagar Jute Mills,

Butwal Spinning Mills,

Harisiddhi Bricks Tiles Factory,

Birat Shoe Ltd,

Himgiri Textiles,

Fleur Himalayan,

Hotel Yak and Yeti,

National Productivity and Economic Development Centre,

Nepal Trade Development Co (Koshi),

Nepal Trading Ltd,

Nepal Insurance,

NB Insurance,

Prudential Insurance