Friday, May 30, 2008

Mark davidson explores Nepali market

After winning the hearts of wine-lovers in Japan, US, Sweden, UK, Denmark and China, Australian wine conglomerate Mark Davidson is tapping the prospects of Mark Davidson and Miracle Mile brands of wine in Nepal."
According to our survey, there is a very good potential here for wine," managing director and chief winemaker Mark Davidson said. Davidson is here in Kathmandu to meet his local partner and retailers.
Some star hotels have already started using Mark Davidson as their house wine. "We have Mark Davidson as our house wine," Jayesh Rimal, F&B executive of Radisson, said, adding that the hotel has so far not received any complaints regarding wine."
Mark Davidson and Miracle Mile, the flagship brands, at present control 25 to 30 per cent of the total market share in the nine months since it was launched in the domestic market," shared Arjun Bhandari, the local partner of the Mark Davidson.
"It was launched in August last year in the Nepali market," Davidson said, adding that Nepalis will love the quality wine."Nepalis are developing the wine-drinking culture slowly," added, the Psychology degree-holder turned winemaker of 30 years, Davidson.
Lately the domestic market is flooded with a variety of wines from all over the world — especially from Australia — and the Nepalis have learnt to drink wine as it is considered good for heart, lungs, kidneys and brain, according to the research.Australia is the fourth largest wine exporter.

Thursday, May 29, 2008

Mandi can benefit farmers

Setting up of mandi (food grain collection and buying-selling points) at major centres in Tarai like Bara and Chitwan can help farmers get the better price for their crops.
On one hand, customers are paying high price for food grains in the market but the farmers, on the other hand, are compelled to sell their agri-produce at a low price offered by the middlemen.
"The middlemen take a large chunk from our profits as they fix the price," complains Chandrika Raut, a farmer of Mangadhawa, Motiswar VDC in Bara. Transportation problem has forced the farmers to sell agri-produce at home at a very low price as they all could not go to the market directly.
"We could get benefit, if we could take the grains to the market or factory directly," Ram Lakhan, another farmer, says, adding that the price of maize is higher in the market this year in comparison to last year but the farmers are getting lower price than last year.
"The solution could be setting up of well-equipped and well-managed mandis — where the farmers can take their agri-produce and store it until they sell at their own price — at various districts," suggests Jagdish Prasad Agrawal, managing director of Pro Bio-Tech Industries Pvt Ltd. "If it can be done, the middlemen will slowly disappear. "Private sector is ready to set up such collection centres that will benefit farmers and businessmen, both," he adds.
Nepal can get comparative advantage in the agriculture produces despite government's apathy towards the farmers and agriculture sector. "Without proper irrigation and technical know-how, our national production average is around two per cent," Dr Dinesh Gautam, technical manager of the Pro Bio-Tech Industries, says, adding that if the farmers are well-monitored by the technical officers, the production can be easily doubled.
"With proper irrigation facility, avaibility of fertilizer on time and technical know-how, the yield could be doubled," says Balram Pudasaini, a farmer at Banjara VDC in Bara. "But we have not seen the face of a JTA in last fifteen years. How can a farmer increase the output," he says lamenting the government policy.

Tuesday, May 27, 2008

NRB directives to check IPO 'fake subscription'

Better late than never. To check the 'fake oversubscription' of financial institutions' initial public offerings (IPOs), Nepal Rastra Bank (NRB), the regulatory authority of the financial institutions, has issued a directive for them.
The central bank has suspected that the financial institutions are playing foul under its nose taking the advantage of loopholes in the NRB's regulations.
"The financial institutions alongwith the chief operating officer (CEO) personally, will be fined if they fail to maintain the prescribed capital adequacy ratio," Krishna Bahadur Manandhar, acting governor of the central bank, said adding that the CEO will be fined Rs 1,00,000 and the financial institution has to pay interest.
"If the financial institution exceeds the resource mobilisation cap, it will also be charged interest on daily basis as a fine," he said.
"Those financial institutions that fail to maintain enough capital adequacy ratio — even a single month in a fiscal year — cannot distribute cash dividend and bonus shares at the end of the fiscal year," Manandhar said, adding that it will be applied form October 17.
Recently, public are losing the appetite for IPOs due to various scams in the capital market. Securities Board of Nepal (Sebon), the capital market's regulator, had a month earlier, uncovered a huge IPO scam that involved around eight billion rupees. The Employment Promotion and Development Bank (EPDB) had received more than 5,00,000 applications amounting to over eight billion rupees, an oversubscribed by 66 per cent.
However, the eight billion rupees claimed to be collected was not the real money and the collection of cash did not exceed half-a-billion.
Until now, the oversubscribed amount used to be only in the papers not in real cash term, but the central bank is planning to tighten the issue managers as well.

OTC market starts
KATHMANDU: Securities Board of Nepal (Sebon) has approved the Over the Counter (OTC) Market Regulation presented by Nepal Stock Exchange (Nepse), the sole secondary market. The shares of companies that are delisted and those companies that could not meet criterion to be listed at the Nepse can now trade, according to the new regulation that will come into effect from next week. "38 companies, including Nepal Bank Ltd, have been delisted from the Nepse," a press release states, adding that the total amount of delisted shares worth Rs 963.2 million. The OTC market will attract two per cent commission upto Rs 25,000 transaction, from Rs 25,000 to Rs 50,000, it will attract 1.5 per cent commission and Rs 50,000 over transaction will attract one per cent commission. — HNS

Monday, May 19, 2008

Nepali CSOs win $40,000

Three civil society organisations (CSOs) from Nepal has won grants worth $40,000 each from the World Bank's South Asia Development Marketplace (DM) to implement projects aimed at reducing stigma and discrimination associated with HIV and AIDS.Overall, twenty-six proposals from across South Asia won grants from a $1 million award pool, the multinational donor said.Titled 'Tackling HIV and AIDS Stigma and Discrimination: From Insights to Action', the competition was designed to identify some of the most innovative ideas on reducing stigma and discrimination associated with HIV and AIDS. It drew nearly 1,000 applications from Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka. "Through a vigorous assessment process, the applicants were narrowed down to 75 finalists, who showcased their ideas in Mumbai last week," according to the bank.Organising beauty pageants by and for transgendered people, linking people living with HIV and AIDS (PLHAs) with income generation activities and social assimilation and improving the government hospital environment towards PLHAs were the winning ideas from Nepal."We will hold a beauty pageant for transgenders soon. The winners will act as ambassadors busting the stigma against HIV and AIDS," said Sunil Babu Pant from the Federation of Sexual and Gender Minorities Nepal.Using the funds, they will now have upto 18 months to carry out their projects and bring concrete benefits on how to change the attitudes and practices that undermine effective HIV and AIDS programmes."Recognition of these kinds of grass roots organisations is very important," said Shabana Azmi, actress and social activist presenting the awards. "We have to make sure they are empowered, strengthened and financed so they can carry out their work. This initiative is a small but very important step in the fight against stigma and discrimination."India was the most represented country among winners, with 12 of 26 winning proposals. Afghanistan, Bangladesh, Nepal and Pakistan followed with three winning projects each. Two winning proposals came from Sri Lanka."These innovative, homegrown solutions to fight stigma and discrimination have a huge potential to make a difference in their communities," said Praful Patel, World Bank vice-president for South Asia who served as a juror during the competition. "I heard from all the participants that stigma is a huge constraint to fight the disease. Now is the time to move from knowledge to concrete actions. We hope these ideas will be implemented, scaled up, and incorporated into the national AIDS programmes."The South Asia Regional Development Marketplace is sponsored by the government of Norway, the Swedish International Development Cooperation Agency (Sida), UNAIDS, UNICEF and the World Bank Group, including the International Financing Corporation (IFC).It is a competitive grant programme that uses a transparent process to identify and support grassroots initiatives with innovative approaches to solving challenging development issues. The programme has awarded nearly $34 million to roughly 800 small-scale projects over the last seven years.The World Bank has granted Rs 2.4 billion in aid, the highest-ever, this year.

Supporting hydropower
KATHMANDU: The World Bank on Monday pledged to extend support to Nepal for the development of South Asian Regional hydropower project. During his meeting with Prime Minister Girija Prasad Koirala at his official residence at Baluwatar, Praful Patel, the bank's vice-president for South Asia said the bank is eager to assist Nepal in hydropower projects. Patel is visiting as vice-president for the last time as he is retiring after two months. — HNS

Saturday, May 17, 2008

Nepse starts picking up, NT shares alloted

As the fiscal year is going to end, the secondary market is flooding with rights shares pushing the Nepse up. This week, Nepse posted a growth of 41.34 points to 812.67 points on the last day of the trading from last week’s closing of 771.33 points.
Financial institutions, the dominant players at the secondary market, have to increase their paid up capital according to the capital plan they have already submitted to the central bank. Rights shares — worth billions — of more than 90 per cent of the financial institutions are in pipeline fuelling the capital market, apart from the fiscal year-end syndrome that gives the boost to Nepse.
The secondary market ended in the green zone on four of the five-day trading, loosing only on the last day. The sensitive index — an index of the A-class companies — also posted 9.90 points growth to 213.38 points from last week’s closing of 203.48 points.
On Sunday, Nepse surged by 2.21 points to 773.54 points from last week’s closing of 771.33 points. Similarly, on Monday it posted a growth of 11.81 points to 785.35 points. On Tuesday, it recorded a growth of 20.91 points to 806.26 points. On Wednesday, Nepse flared to 825.61 points, a rise of 19.35 points from Tuesday’s closing. However, it plunged by 12.94 points to close the weekly trading at 812.67 points.
In terms of monetary value, Ace Development Bank (with Rs 120.21 million), Bank of Kathmandu (with Rs 56.97 million), Nepal Bangladesh Bank (with Rs 36.53 million), Standard Chartered Bank, Nepal (with Rs 29.32 million), and ICFC Finance Company (with Rs 27.13 million) are this week’s top performers.Ace Development Bank also topped the chart in terms of numbers of share units traded with 1,96,000-unit of its shares being traded this week. ICFC Finance Company topped the chart in terms of number transaction with 826 transactions.
The better performance of commercial banks, development banks, hydropower, insurance and finance companies groups have pushed the Nepse up. However, hotel group ended in the negative territory. It lost 6.44 points to 394.03 points from last week’s closing of 400.47 points.
The finance company group closed at 1040.21, a rise of 101.94 points from last week’s closing of 938.27 points. Similarly, commercial bank group posted 35.23 points growth to 812.72 points from last week’s closing of 777.49 points, while, development bank group flared by 76.16 points to 1113.75 points from last week’s closing of 1037.59 points.
Insurance and hydropower gr-oups have also posted 3.77 po-ints (to 753.37 points from last week’s closing of 749.60 points) and 112.39 points (to 1158.44 points from last week’s closing of 1046.05 points) growth.

Citizen Investment Trust allots NT shares
Citizen Investment Trust (CIT) has alloted the much-awaited Nepal Telecom (NT) shares on Friday. “CIT has published the names of bidders — who got NT’s shares — on its website on Friday. Except for few applicants, who lacked necessary documents and signature, all — those who have applied — got the NT shares,” Anil Dhakal, officer at the CIT, said, adding that around 271 applicants’ 40,000-unit shares are in withheld. Finance Ministry had on Wednesday given a go ahead to the CIT — the issue and sales manager of the NT shares — to allot NT shares. “We will write to the Sebon, the regulatory authority, on what to do about withheld applicants,” he said. CIT is planning to distribute share certificates within two months and immediately the shares will be listed. “Most probably, the shares will be listed within the current fiscal year,” he added.

Wednesday, May 14, 2008

Except for few, all to get Nepal Telecom shares

Except for few applicants those whose forms lack necessary documents and signature — like not signed forms, not submitted citizenship certificate and child’s birth certificate in case of under age — all will get Nepal Telecom’s (NT) shares.
“Applications for more than 40,000-unit shares are in withheld due to ‘technical’ reasons,” said a senior official at the Finance Ministry as the ministry today gave a go ahead to the Citizen’s Investment Trust (CIT) — the issue and sales manager of the NT shares — to allot NT shares.
“We got green signal from the Finance Ministry today,” Anil Dhakal, officer at the CIT, said, adding that CIT is planning to make it public on Friday.“Last Friday, the CIT had sent the final data to the Finance Ministry for approval.”
The CIT had received 27,617 applications for 53,48,452-unit of shares, 1.51 million-unit less out of the floated 75 million-unit for the public.
“Out of the total units applied, allotment of more than 40,000-unit will be withheld for the time being due to the applicants ‘technical’ faults,” Finance Ministry official said, adding that the ministry will decide on them afterwards.The investors have quoted a maximum of Rs 2,550 to the lowest of Rs 600 for a unit share that is quoted Rs 600 minimum — after adding Rs 500 premium to the face value of Rs 100 for each unit.
The highest number of the investors, which is at 16,157 have bidded in between Rs 601 to Rs 700, the most logical price for the NT share, according to its book value, profitability and return.The government has collected Rs 3.62 billion, though it had planned to raise Rs 4.5 billion in the first phase from selling 75 million-unit of shares now and Rs 4.5 billion in the second phase from selling 75 million-unit, later.
The government has almost succeeded in its target — as the collection falls short of less thana billion only — despite ‘negative’ campaign and slackness in the capital market during the call for the NT shares bid.As a part of divestment and privatisation plan, the government has started selling NT’s 10 per cent shares to public through an auction. It had already sold five per cent to the Telecom’s employees at the subsidised rate of Rs 90 per unit.

Thursday, May 8, 2008

Nepse halts share trading of five financial institutions

Nepal Stock Exchange (Nepse), issuing a press release, has halted share trading of five financial institutions; Mahalaxami Finance Ltd, Birgunj Finance Ltd, Siddhartha Finance Ltd, Butwal Finance Ltd and Himchuli Development Bank until further notice.
"The four finance companies and a development bank jointly announced to merge and become a commercial bank with a paid up capital of Rs 2 billion," states the press release issued here by the Nepse, adding that there is a huge difference in the size of their paid capital at present but they are not clear on what to do on the liability and the ratio between share and capital reserve.
The news of their merger and upgradation to the A-class commercial bank has fuelled the share price of these financial companies forcing the Nepse to act immediately.
"They also have not got any approval from the Nepal Rastra Bank (NRB), the regulatory authority," states the press release. As per the regulation, they must get the regulatory authority's prior approval.Mahalaxmi Finance Ltd, Birgunj Finance Ltd, Siddhartha Finance Ltd, Butawal Finance Ltd and Himchuli Development Bank have signed an accord a couple of week's ago to merge and upgrade to 'A' level commercial bank.
However, Mahalaxmi Finance, National Finance and Narayani Finance have also earlier declared a merger for upgradation to a development bank. But neither did they merge nor did they upgrade."
This rumour of upgradation to commercial bank, like the earlier one, could be a ploy to hike share prices 'unnaturally' for their personal benefit," said one senior official at the Nepse, without wanting to be named.All of them are planning to increase their paid up capital to Rs 400 million each to make Rs 2 billion in total required for the upgradation for the commercial banks.
They have also proposed it to be called 'United Bank of Nepal' after the merger. However, the companies that have currently Rs 50 million to 100 million paid up capital have to increase to Rs 400 million each to make a total of Rs 2 billion required for a commercial bank. Some of them have to raise paid up capital to almost four to eight times.

Wednesday, May 7, 2008

Inflation on rise

The inflation is balloning due to rise in the prices of food articles like rice and rice products, and oil and ghee. According to the current macroeconomic situation based on first eight months' data, it stood at 7.2 per cent in mid-March compared to 6.2 per cent in the corresponding period last year.
The report by the central bank paints a bleak picture as the budget is also at deficit of Rs 6.99 billion due to higher growth of government expenditure. In the same period last year, the budget was at the surplus of Rs 1.18 billion. Of the sources of deficit financing, government mobilised domestic borrowing of Rs 9.20 billion (excluding overdraft), states Nepal Rastra Bank's (NRB) report.
In the review period, the net domestic borrowing remained at a negative of Rs 433.14 million as the government repaid domestic borrowing worth Rs 5.29 billion.
In the first eight months, government expenditure, on a cash basis, increased by 32.5 per cent to Rs 80.34 billion compared to an increase of 15 per cent in the same period last year, states the report. However, revenue mobilisation has increased by 26.2 per cent to Rs 60.61 billion compared to an increase of 16.4 per cent in the corresponding period last year.
According to the central bank, liquid funds of commercial banks also increased by 6.8 per cent to Rs 69.61 billion in the review period.
"Commercial banks have Rs 129.95 billion liquid assets as of mid-March 2008, including Rs 60.34 billion holding of government securities," states the report.
A net liquidity of Rs 54.99 billion was injected through foreign exchange intervention in the review period compared to Rs 44.43 billion last year. A higher inflow of remittances in the review period increased the purchase of the US dollar in the foreign exchange market.
For managing liquidity of banking system, a total of Rs 9.27 billion has been absorbed in open market operation including Rs 5.57 billion through reverse repo auctions and Rs 3.7 billion through outright sale auctions in the review period. "A short-term liquidity shortfall was observed by some commercial banks in the review period on account of over subscription in initial public offering of shares by ADB/N and the issuance of electricity bond by Nepal Electricity Authority," it states.
Total exports went down by 2.6 per cent compared to a decline of 6.6 per cent in the corresponding period last year, according to the report. "Of the total exports, export to India plummeted by 6.9 per cent in 2007-08 compared to a decline by 6.4 per cent in the same period of 2006-07."
The drop in the exports to India was largely due to the fall in the exports of vegetable ghee, textiles, chemicals, wire and thread.
The overall BoP has, however, posted a surplus of Rs 13.29 billion in the review period. The BOP had registered a surplus of Rs 12.28 billion in the corresponding period last year.

Sunday, May 4, 2008

IPOs flood capitall market

Do save – buying shares is the best way to invest your hard earned money. And, there are some 10 financial companies – one commercial bank, four development banks and five finance companies – on the pipeline to float pubic shares worth about half-a-billion rupees.
Of them, the Securities Board of Nepal (Sebon) has already given green signal to eight – three development banks and five finance companies – to float initial public offering (IPO).
"We are studying the applications of Global Bank and Pashupati Development Bank," said Binaya Dev Acharya, deputy director at the Corporate Finance Division of Sebon.
Global Bank has assigned NIDC Capital markets Ltd as its issue manager.
Apart from these ten financial institutions, two more commercial banks are also preparing to float Rs 300 million worth shares to public, each. Prime Commercial Bank has already assigned Citizen Investment Trust as its sales and issue manager and the Bank of Asia has picked Nepal Merchant Banking and Finance Company as issue manager.
According to the new regulation of Nepal Rastra Bank, the financial companies must issue 30 per cent minimum shares to the public. Lately, the central bank has also fixed the paid up capital for the finance companies (at Rs 200 million), development banks ( Rs 640 million) and commercial banks (Rs 2 billion).
The central bank's regulation requires already established financial companies to increase their paid up capital by the end of fiscal year 2012-13.
However, the financial institutions are floating the shares according to the current structure of their paid up capital. The financial institutions play a dominent role in our capital market as it has more than 80 per cent weightage in the total listed companies.
Apart from the IPOs, the rights share worth more than five billions is in pipeline making it to a total of more than seven billion worth shares in the capital market.

New IPOs
*Global Bank floating 30,00,000 units worth 300 million rupees
*Subekchhkya Development Bank is floating 1,20,000-unit shares worth Rs 1,20,00,000,
*Triveni Development Bank is floating 1,50,000-unit shares worth Rs 1,50,000,00
*Pashupati Development Bank is floating 8,00,000-unit of shares worth Rs 8,00,000,00
*Clean Energy Development Bank is floating 9,60,000-unit shares worth Rs 9,60,000,00.
*Kaski Finance Company is floating 2,00,000-unit of shares worth Rs 2,00,000,00,
*Shikhar Finance Company is floating 2,00,000-unit of shares worth Rs 2,00,000,00,
*Sagarmatha Merchant Banking and Finance is floating 2,00,000-unit shares worth Rs 2,00,000,00,
*Reliable Investment Finance Company is floating 2,47,500-unit shares worth Rs 2,47,500,00
*Lord Buddha Finance Company is floating 2,25,000-unit shares worth Rs 2,25,000,00