 "India in nos: QIP losses, executive pessimism and Air-India")
Two-third QIPs trading below their offer price
Qualified Institutional Placements (QIPs) are a quick way of capital raise for companies. When the going is good, companies tend to get institutional investors on board through this route. With share prices stagnating, it appears that companies may not find it easy to raise money. A CRISIL study reveals that 66% of QIPs completed in 2010 are trading below their offer price. The total return on investments, as measured by the difference in the offer price and the market price as on 03 June 2011, by all the QIPs was -19%. This is against a 2% gain in the NSE Nifty and just 1% fall in S&P CNX 500 index. In 2010, 50 companies garnered Rs 22,500 crore through this route. In the first quarter of 2011, only one company has adopted the QIP route for capital raise. Crisil expects investor appetite to remain low going forward and companies may have to look for alternate route of fund raising.
More than half the world is bummed about pay
Over the past three months, executives around the world have grown more pessimistic about their nations’ economies: compared with three months ago, a smaller share say their economies improved over the past six months, and slightly more expect worsening conditions over the rest of 2011, according to the recent global survey published in the Mckinsey Quarterly. Notably, 57% of all respondents say it’s at least somewhat likely that the eurozone will splinter within the next two years. However, executives appear to be positive about prospects for their own businesses. On the whole, expectations for hiring, profit, and customer demand remain positive and stable compared with three and six months ago.
Air-India & taxpayers
Air-India is all set to hurt taxpayers more. The state-owned airline posted a record loss of Rs 6,994 crore for the year ended March 2011, according to a report in the mint newspaper citing a paper that makes an internal assessment. The airline was granted Rs 1,200 crore equity in January 2011 by the government. Interest costs rose as the ‘letter of comfort’ giving sovereign guarantee from the finance ministry did not arrive. The airline projected a net loss of Rs 4,164 crore over revenue of Rs 15,666 crore. The company missed both targets. The revenue reported was Rs 13,964 crore, according to the report.