NIDC proposes 133% bonus shares; Araniko pledges 15% dividend, Zenith 8.5% bonus shares

Kathmandu, December 9, 2013

NIDC Development Bank Limited has proposed a stunning 133 percent bonus shares to shareholders from the net profit it posted in the last fiscal year.

Likewise, Araniko Development Bank Limited has pledged 15 percent dividend -- 5 percent bonus share and 10 percent cash – to the shareholders.

Similarly, Zenith Finance Limited has proposed 8.5 percent bonus share.

However, the dividends proposed by these BFIs are subject to the approval of Nepal Rastra Bank and the upcoming Annual General Meetings of the BFIs concerned.

Meanwhile, Bishwa Bikas Bank Limited has informed that the actual date of book close  for its upcoming right share is December 24, correcting the initially mentioned date of December 16.

RBB, NIDC begin work to sell NIBL, Nabil cross-holdings

KATHMANDU, JUN 08 - 2013

Rastriya Banijya Bank and Nepal Industrial Development Corporation (NIDC) have started an initiative to sell their cross-holdings in Nepal Investment Bank and Nabil Bank respectively. The RBB has a total of 4.51 million units of promoter shares at the NIBL, while the NIDC has 1.24 million such shares at Nabil Bank.

Although private sector banks and financial institutions have already ended their cross-holding, these banks are yet to end theirs as per the central bank’s directive.

RBB CEO Krishna Prasad Sharma said the largest bank has formed a committee to determine the value of its promoter shares that remain in the Nepal Investment Bank Limited (NIBL).

“A team headed by a board director will determine the value soon and we plan to start selling our shares in the NIBL within this fiscal,” Sharma said.

On the other hand, a senior official of the NIDC said they are planning to issue a notice to sell their cross-holding at Nabil. “We have already sold 300,000 units of shares through auction in two phases,” said the NIDC official.

The central bank had directed banks and financial institutions to end cross-holdings as cross interest would prevent a competitive environment in the banking sector.

The NRB spokesperson said the central bank has asked them to end their cross-holdings as soon as possible. “They also cannot distribute dividend as per the central bank directive,” he said. However, the NIDC official said the NRB has exempted them from the dividend as it has continued selling the cross-holdings. “All the shares were not sold in the earlier attempts,” the official said.

In the case of RBB , it backtracked from selling its shares in the NIBL four years ago after the Securities Board of Nepal (SEBON) rejected the price it quoted. The RBB had quoted Rs 1,068 per share and SEBON had said that it was unjustifiable. At that time, the value of an ordinary share of the NIBL was around Rs 1,900.

Later, as the share prices plunged due to recession in the stock market, the RBB did not make an effort to sell its shares.

The value of NIBL’s public share was worth Rs 724 on Friday, which means that the RBB is likely to get far less than what it could have got four years ago. Usually, the value of promoter shares is kept less as compared to public shares.

Source: The Kathmandu Post

State-owned BFIs struggling to recover old loans

KATHMANDU, NOV 20 - 2012

Major state-owned banks and financial institutions ( BFIs ) are having a hard time recovering old loans even though they have been restructured.

The loan given to Pokhara-based Fulbari Hotel by a consortium led by Nepal Bank has remained unpaid for the last one year although it has been restructured and the consortium partners had been assured that it would be repaid under the revised repayment schedule.

A consortium led by Nepal Bank had extended credit worth Rs 1.28 billion to Fulbari to construct a five-star hotel in Pokhara, and the flow of loans had started from October 1994 with a repayment period of seven years. Other members of the consortium are Rastriya Banijya Bank (RBB), Employees Provident Fund (EPF) and NIDC Development Bank.

“Initially, the borrower Amatya Group had been making repayments as per the schedule,” said Kiran Kumar Shrestha, acting general manager of Nepal Bank. “However, it has not done so since the last one year.” He added that the consortium partners were discussing how to move ahead. The Fulbari loan is the largest loan for the consortium partners.

Meanwhile, another loan issued to Mount Everest Brewery promoted by the same group has also remained unpaid for the last six months. The consortium had extended a sum of over Rs 300 million to the company. Various companies including Mount Everest Brewery promoted by the group besides the individual promoters have been put in the Credit Information Bureau’s blacklist.

Similarly, another consortium loan that went to Mahalaxmi Sugar Mill is not being recovered smoothly. “After restructuring the loan two years ago, the loanee Birendra Kanaudiya has been making repayments, but they have been lower than what had been promised,” said Krishna Prasad Sharma, chief executive officer of Rastriya Banijya Bank, the lead bank in the consortium.

The group has provided over Rs 330 million to the sugar mill. Kanaudiya was removed from the blacklist after he agreed to repay the loan.

He had initially paid Rs 100 million to be removed from the blacklist.

Another big defaulter is Arun Chand of Basuling Sugar Mill. He had taken loans worth Rs 580 million from a consortium consisting of the Agricultural Development Bank Limited (ADBL), Nepal Bank, RBB, NIDC and the EPF.  There has not been any payment from Chand although the principal and the interest accumulated have crossed Rs 1.5 billion. Chand is a son of former prime minister Lokendra Bahadur Chand.

Troubled public enterprises (PEs) have also defaulted loans. “We are yet to get repayment of loans that went to Himal Cement Factory and Janakpur Cigarette Factory both of which are currently closed,” said Shrestha of Nepal Bank.

According to him, the cigarette factory which has been closed for the last one and a half years stopped making repayments nine months ago. Nepal Bank has lent around Rs 300 million to the state-owned factory. The loan issued to Himal Cement was extended by a consortium led by NIDC Development Bank.

Source: The Kathmandu Post

Listed PEs providing handsome returns

KATHMANDU, MAR 25-2012
Listed public enterprises (PEs) have not disappointed investors on the dividend front.

A majority of public enterprises have been incurring losses thus turning them into liabilities for the government but a few that are doing well have been distributing handsome dividends to investors.

Recently, Salt Trading Corporation (STC) announced 45 per cent dividend –– 35 per cent stock dividend and 10 per cent cash dividend –– for its stock holders.

There are nine active companies with a majority stake of the government that are listed at Nepal Stock Exchange. All the companies are earning profits, except for Nepal Film Development Corporation, thus giving out dividends to stock holders.

There are still 36 PEs under the government’s control among which only 22 companies are making profits, according to the Economic Survey 2011.

Nepal Telecom (NT) will distribute 45 per cent cash dividend to stake holders. Last year too it had distributed 35 per cent cash dividend. The company with its 150 million unit shares constitutes 25 per cent of the total market capitalisation of the stock exchange. The government holds 92 per cent stake in the telecommunication company.

Among the financial institutions, NIDC Capital Markets and Nepal Awas Bikas Bitta Company will provide dividends of 25 per cent and 15 per cent, respectively. But Agriculture Development Bank has yet to announce any dividend since its listing about two years back.

“These companies are able to give more dividends but being government owned entities there is less pressure on them to appease retail shareholders like other listed companies,” said general secretary of Nepal Investors’ Association Prakash Rajoria, referring to the monopoly enjoyed by government companies.

Most of these government owned companies enjoy a monopoly in their respective areas making it profit generating entities. NT, despite the existence of new telecom companies, enjoys a near-monopoly situation. Likewise, STC has a monopoly over salt distribution nationwide. Chilime Hydropower also being Nepal Electricity Authority’s subsidiary has a ready buyer at hand.

He pointed out that stocks of government companies are for risk aversive investors as they neither give high returns nor fall to an abysmal low. “The government’s backing is an assurance for investors that the chances of the company collapsing is low even during a bad phase unlike companies with private promoters,” he said citing the example of Nepal Bank that was de-listed due to its financial troubles but the hope of the bank again being listed is still intact as shown by its improved condition.

According to experts, during a bearish run, investors look for underlying benefits like cash dividends and bonus shares instead of short-term returns. Even though the short-term return from share investment is non-existent, a handsome dividend can make up for any losses.

Source: THT