Reliance losing in brand games and policy

Reliance’s gas pricing quandary continues with warehouse owner IGL retailing gas at up to $15 and Reliance following its earlier efforts at increasing its $4.2 supply rates to PSE Oil companies with a suit against the government asking it to pay more for the gas purportedly using the IGL model for itself even as a distribution supplier and not a retail distco like IGL or Petronet LNG

Reliance has failed on maost strategic fronts except in greenfield consumer and sports ventures like the Mumbai Indians team franchise , co branded cards etc where it has yet to begin or dowes not pull significant revenue compared to the Oil brand. Reliance has been almost synonymour with petrochemicals and oil enterprise int he country away from issues of subsidy and government benefaction for a decade or so, with Petro margins and oil and gas discoveries keeping markets happy,. Its last 2 years in the dust have been tough for Indian markets as a whole and there still might be a significant correlation thouhg not an over arching one between its and Brand India’s fortunes.

Reliance I would like to believe has frittered away the market’s dull times in continuing to expect largesse and

Mumbai Indians
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“sympathetic understanding” from public sources and markets. Its consumer brands are in no position to claim leadership and thus have no significant launches to their name. Its LTE venture is  working out a smashing deal at 10X the 3G industry’s competition and while ADA group has not done nay better either, it has at least delivered on time in long gestation projects which others would not even take up including the Power sector where delays and “non performance” are more understandable. Mukesh’s Reliance has not aggressively moved in infrastructure because it knew that investors would not empathise with the “long run” financing requirements of the sector but still, its alternative plans are almost in a state of a “null” ennui without response or favor it so much loves in its dinner plate.

There are no loyal investors left onthe Reliance bandwagon and they have to move fast before the M&M’s and the JP ‘s take over fromt hem with 1/10th the capitalisation and a much larger understanding of the current market and who it can be argued worked with almost the same handicaps and invested in unforgiving propositions

Also ADA’s failures in the financial services area could be a thing of the past soon when even they can look at aggressive growth again, leaving big brother with no work or profits on hand

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The Indian takeover code and Banking M&A

Thoguh the creeping acquisition route in the new takeover code allows holding up to 25% in the acquitree and then making a mandatory open offer, Banks’ experiences with RBI in such acquisitions have been testy and short on discussion. Current and likely future regulations with RBI limit the voting stock in a bank to 5% despite alllowing 74% FDI in any bank.

Also its view point on possible acquisition candidates for JP morgan and Goldman Sachs among others is not a known dfactor and they may want to put in some extra pprovisions even if they ever do allow voting stock of more than 5% . For example it may attempt to ask acquired banks in these cases to ramp up to Tier 5 and 6 town objectives for new banks and also fulfil social objectives akak priority sector lending which has kept foreign banks to lucrative OBS products in India 

2010 also saw foreign banks shrinking their balance sheets and staff in India bvy 15% and 5% respectively

HSBC plans for India

Though India is not one of the Top 5 markets for HSBC per its latest Strategy notes, it is still a crown in the Jewel as the bank plans to grow 18 markets in its latest 5 year strategy coinciding with Stuart’s coronation on the island. (Check advantages.us for HSBC strategy series’ with Gulliver, Stuart and Iain Mackay) 

Group General Manager Naina Kidwai  did make a splash on Bloomberg UTV around Diwali last year and our tweetseminar of the same is also on advantages.us (The Banking and Strategy initiative)

Press reports in march and as late as last month indicated HSBC India plans to grow its franchsie to a profit pocket of $1 billion from India.  

Deutsche Bank India reports growing income

The indian unit reported last week on June 13, 2010. Fy 2011 Income rose to $700 mln ( Dollar forty rule ) up by 20%, adding $83 mlnin Capital to India operations apart from the winding down of the Credit Card unit. The bank has been able to acquire premium realestate in India ops incl Cyber City Gurgaon. The banking company has been active in Debt Capital Markets deals jsut as Naina Kidwai’s HSBC starts showing up in ECM syndicates. The latest Reliance bid however has HSBC in the deal signage

DB’s book size in India would still come to INR 350 bln or $8.75 bln and Non performing loans stand at 1.24%.

The ubiquitous note on Foreign Banks in India

The press release , yet a idiosyncracy as many units report directly into risk and central ops at Singapore, London and Amsterdam for Foreign Banks and subsidiarisation is mooted not advertised or condoned by global banks. JP Morgan is also looking for M&A candidates which would probably be 10 times the siz e of a DB or a Citi operation in the country once regulations provide for the same. Similarily

.. the results cover the performance of the Indian branches of Deutsche Bank and do not include results of other Deutsche Bank Group entities in India covering businesses relating to equity broking, asset management, primary dealership, corporate finance, outsourcing or the NBFC. (Y!)

Global Bank India 2010 reports

Deutsche Bank
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In the global banks results season analysis and reports , a mainstay of our success we had found special place for SCB’s reports whence India had a major share in the Half year and full year balance sheets. Stnchart 2010 reported a $1.3 bln profit from India, growing India profits by 15%

HSBC similarily reported a $750 mln year for March 2011 for India growing profits by 88%. This compares to $366 mln for Citi with 42 branches. 2012 figures include retail business from ABN/RBS branches

Deutsche Bank comes in a late fourth, excluding sale of its card unit. Its profits amount to $152.25 mln for its retail banking and Corporate transaction banking units. Citi’s shares in trade and corporate lending amount to 6% and 14?% respectively Stand alone financials for India might become fully available as bank subsidiarisation gets in and reference financials are also made available with RBI

Credit Deposit Ratio for Citi as a norm may come to just around 60% in contradiction to their stated subdued lending in India compared to a Credit deposit ratio of 75% again we are researching aavailable data slices for more detail

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