13�WWW.ECONOMICTIMES.COM

Markets & Finance

While private sector companies are known to take that extra risk, diver-sify into newer areas even at the risk of inviting investors’ wrath, state-owned companies are happy in their comfort zone, anchored in their tradi-tional businesses despite holding the biggest chunk of idle cash in the cor-porate world.

It’s in this context that state owned Bharat Petroleum’s gradual but suc-cessful move into the exploration & production (E&P) space needs to be looked at. After all, E&P business is vastly different from refining and marketing, although they form the same value chain.

In the next five years, the company will start earning much higher profits from its E&P business than the gov-ernment-sponsored profits it can earn from its traditional business.

In 2010 huge natural gas deposits were discovered in a Mozambique offshore block. BPCL’s 10% stake in it is already worth over $2.2 billion, or half of the company’s value today.

BPCL also holds be-tween 10% and 20% stake in 10 blocks in Brazil , which have seen some exciting oil discoveries over the years. Although not

certified yet, they are likely to be sig-nificant going by the technical details available.

By 2018, both these mega projects begin production, BPCL is likely to have a bigger source of profits than its conventional businesses.

Experts are already valuing the E&P portfolio steeply. In fact, most broker-age houses prefer BPCL as an invest-ment candidate for its E&P success.

“BPCL remains our top pick,” men-tioned a Barclays report in May 2013 attributing the preference to its un-dervalued E&P portfolio.

The oil reserves in Brazil will be known in the first half of 2014, ac-cording to a Motilal Oswal report. “Assuming the recoverable reserves at 500 mmboe, it is likely to add around `50 to BPCL’s share value,” it mentioned.

As more details trickle in, this chang-ing face of BPCL will turn it into a win-ner for investors.

Ramkrishna Kashelkar

CHARTof the day

BPCL

Is it a Refining Stock or an Exploration Play?

Operations Listed Investment

Unlisted Investment Upstream

2.0

1.6

1.2

0.8

0.4

0

Source: Barclays Research estimates

FY14 P/B multiples (x)

IOC BPCL HPCL

1.1

0.3

0.7

1.5

0.7

0.3

0.1

0.4

0.8

0.2

0.2

0.4

BISWAJIT BARUAHMUMBAI

HDFC Bank continues tobe the most expensivebank stock in the world

though its price-to-book value(P/BV) has fallen from the peaklevels achieved in the stock mar-ket boom of January 2008.

The Mumbai-based bank isvalued at a P/BV of 4.27 at thecurrent market price, downfrom 7.75 of January 2008 andfrom 5.31 in January this year.But this level is not only higherthan all its peers in India, but al-so higher than the P/BV of thebiggest banks in the world,Bloomberg data shows. For in-stance, Citigroup’s P/BV is 0.78,JP Morgan is 1.03, while Bank ofAmerica has a P/BV of 0.71.

India’s second-largest pri-vate sector lender also main-tains its premium over ICICIBank, the largest private bank,despite announcing its slowestquarterly profit growth in adecade on Tuesday.

The difference between the P/BV of HDFC Bank and ICICIBank changed to the former’sadvantage at the end of tradingon Thursday, the first day of fulltrading after Tuesday’s results.At 4.27, HDFC’s P/BV was high-er than Tuesday’s 4.25, but low-er than Monday’s 4.35. ICICIBank’s P/BV was 1.62, downfrom Tuesday 1.64 comparedwith 1.67 the previous day.

HDFC Bank’s second quarterprofit growth slowed to 27%compared with 30% in the previ-ous quarters as the economicslowdown, high interest ratesforced customers to cut back onborrowings and spending.

The difference between price-to-book value is the premiumthat investors pay when theybuy shares of HDFC Bank. Thevalues of both banks have fluc-tuated in a narrow band in thepast one month though the gapbetween them has been in-creasing in the past three years.In 2010, the average P/BV ofHDFC Bank was about 4.09compared with ICICI’s 2.07.

Fund managers and analystsbelieve that HDFC’s focus on as-set quality, its expansive retailfranchise and focus on profit-ability will help it weather thecurrent slowdown despite theSeptember quarter’s slippage ingrowth. Some brokerages haveretained their price targets de-

spite Tuesday’s numbers.“HDFC Bank is best placed

among defensives to weather thestorm. Hence, we maintain our‘buy’ rating on the stock with a

price target of.̀ 725and haverelative prefer-ence for HDFCBank againstother defen-sives,” saidAdarsh Paras-rampuria, ana-lyst at Prabhu-das Lilladher.

HDFC Bank’sperformance is

also better than that of theSensex, whose price-to-earningsmultiple and P/BV have fallenfrom their 2008 highs but still re-main below that of the bank.The Sensex is trading at a price-to-earnings multiple of 18.1times and a P/BV of 2.64 times.HDFC Bank’s PE is 22.4 times.

Experts say as the fall at the

shorter end of yield curve afterthe 125-bps cut in the MSF, ormarginal standing facility, rateby the Reserve Bank of Indiawill lower the marginal cost offunds and increase the prospec-ts of a recovery in the whole-sale lending business. MSF isthe penal overnight rate atwhich banks borrow from RBI.

“We continue to believe thebank is well positioned to playthe India consumption storywith best in class underwritingabilities and superior manage-ment capabilities, its currentvaluation premium is largelyreflective of these strengths,”said Jignesh Shial, analysts atIDBI Capital Research.

HDFC Bank shares ended0.36% up at .̀ 653.75 on Thursday,while ICICI slipped 0.95% to.̀ 966.15. “We believe HDFC Bankremains uniquely positionedamong Indian banks – its strongasset quality and profitabilitymake it a safer stock,” said Man-ish Chowdhary, analyst at IDFCSecurities who maintains an‘outperformer’ rating.

Fund houses are bullish onloan advances, which they ex-pect to pick up with the festivalseason coupled with good mon-soon, as the bank has been ag-gressive in adding branches insemi-urban and rural areas,which are likely to pushgrowth in the coming quarters.

biswajit.baruah@timesgroup.com

HDFC Bank Maintains ItsPrimacy Despite Sept BlipLender’s price-to-book value has come down, but it is still far ahead of global giants

The

difference

between

P/BVs of

HDFC Bank

and ICICI

changed to

former’s

advantage on

Thursday

OUR BUREAUMUMBAI

Hours before he was arrested, AnjaniSinha, former MD & CEO, NSEL, in astatement to the Mumbai police, said theboard, comprising Jignesh Shah and Jo-seph Massey, was aware of the goings onat the exchange. Massey, former MD ofMCX-SX, Shah and other board memberswill be questioned in light of this freshstatement. In an earlier affidavit, Sinhasaid the NSEL board was not aware of thefraud being perpetrated on the bourse.

In the first high-profile arrest made inconnection with the .̀ 5,600-crore NSELfraud, Sinha was arrested by EconomicOffences Wing (EOW), Mumbai police, onThursday evening. In another importantdevelopment, EOW received the consentof the Mumbai city and suburban collec-tors to invoke the Maharashtra Protec-tion of Investors Deposit (MPID) Act,1999, against the accused.

Commodity markets regulator FMCwill direct the MCX board to removeShreekant Javalgekar, MD and CEO,MCX, and Dipak Shah, head of surveil-lance, who are directors on the board.

Sinha’s arrest came a day after he was

grilled by ED, which is investigating thecase under the Prevention of Money Laun-dering Act. He was grilled for seven hoursby EOW before being arrested at 6 pm onThursday evening. Sinha will be presentedbefore a metropolitan magistrate within 24hours of the arrest.

“Sinha has been arrested at 6 pm,” saidBalsing Rajput, DCP, EOW. “Sinha has beenarrested as he was associated in one capaci-ty or the other with NSEL. He was on theboard of NSEL as its MD & CEO. All thingsrelated to the company are reported to theboard by the MD. He had all the powers andit was with his knowledge and intentionthat what has transpired on the exchangehas been carried out. The decision of the

management starts from Sinha. We havealso received permission to invoke MPIDagainst the accused .”

Sinha was issued summons by EOW ear-lier this month but failed to appear beforethe agency for almost a fortnight ongrounds that he was laid low by viral fe-ver. This, EOW sources pointed out, couldbe placed on record against him.

Significantly, EOW sources confirmedthat Chandrakant Kamdar, a director onthe board of FT, the promoter of NSEL, wasbeing interrogated by EOW. “Being a pro-moter of NSEL, we are trying to ascertainwhether FT knew of the happenings on thespot exchange,” they said.

On MPID, EOW sources said it wouldhave to prepare a list of all moveable andimmoveable properties belonging to theaccused and trace whether funds from theNSEL fraud were used to acquire them. Ifa link is indeed established, properties,cash, investments in debentures, stocks,etc, could be frozen, the sources added.

Asked earlier whether the provisions ofthe MPID Act could be applied to an ex-change, which is not in the business of tak-ing deposits, Rajput said, “If an agent, bro-ker or anybody takes money (frominvestors) on the pretext of delivering a ser-vice – in cash or kind, including a commodi-ty – and fails or refuses to do so, it is sup-posed that he has duped an investor and isliable to face action under the MPID Act.”

EOW filed an FIR on September 30against directors and key managementpersonnel of NSEL, its promoter FT, 25borrowers/ trading members of NSEL,some of the brokers of NSEL and others.

NSEL Ex-MD Anjani Sinha Arrested

Sinha: The LAW CATCHES UP

Now claims that board,

including Jignesh Shah &

Joseph Massey, were aware

of exchange’s working

BAIJU KALESHMUMBAI

Saurabh Agrawal has pounded thepath leading up to Aditya Birla group’sMumbai headquarters plenty. The in-vestment banker has helped the Birlascut many significant deals – restruc-turing cement business, purchase ofUltraTech, acquisition of Spice Tele-com by Idea Cellular and later an in-vestment from Axiata in Idea.

It was on one such trip that Agrawal,44, a graduate from IIM, Kolkata, poseda simple, humble question to KumarMangalam Birla: “Can I be helpful?”

Agrawal, MD and regional head ofcorporate finance, South Asia, Stan-dard Chartered Bank, was referring tothe stalled discussions by Birla’s ce-ment company UltraTech to purchaseJP Associates’ cement plant in Gujarat.

The two sides had engaged in manyspurts of negotiations for almost twoyears, but couldn’t agree on a deal.Several rival investment banks hadalready unsuccessfully tried ‘cookingup a deal.’ “It wasn’t completely mari-nated...some ingredients were mis-sing,” recalls Agrawal who has morethan a passing interest in cooking.

“In any negotiations, deals get stuckon a rigid stance,” says Agrawal. Be-sides his proximity to Birla, Agrawalhad also developed a warm relation-ship with Manoj Gaur, executive chair-man and CEO, JP Associates. He hadadvised JP on its fund-raising plans.

Armed with consent from both Birlaand Gaur, Agrawal set out to break thedeadlock. He did it in 13 weeks. OnSeptember 11, Birla announced a.̀ 3,800-crore deal to buy out JP Asso-ciates’ cement plant in Gujarat.

Agrawal had excellent persuasiveskills in college, his classmates say.“Saurabh was comfortable withnumbers, had a sharp sense of com-merce and excellent persuasiveskills,” recalls Venkat Viswanathan,Saurabh’s classmate at IIM, and nowchief executive of Latent View Ana-lytics, a data analyser for many mul-tinational companies.

It’s not just the Birlas, Agrawal enjoysa good rapport with the Tatas too. “Henever sells anything to you; he onlybrings value propositions with the bestinsights to the table,” says NatarajanChandrasekaran, chief executive andmanaging director, Tata ConsultancyServices, India’s largest software ser-vices exporter. “He is extremely de-pendable, trusted and brings in highquality advice.” Agrawal advised TCSon its public offer in 2004 and also on astring of acquisitions. “He helped mewith how and what to present to in-vestors during our road shows for theTCS IPO,” recalls Chandrasekaran.

Investment banking sources say

Agrawal was also part of the team thatblew the whistle on Satyam founderRamalinga Raju. In 2009, Raju had ap-pointed DSP Merrill Lynch to findbuyers for Satyam. Sources say thatAgrawal, who was working with DSPMerrill Lynch, found some gaps in theaccounts, and alerted Sebi along withhis mentor Hemendra Kothari, thenDSP Merrill Lynch’s chairman. Rajulater made his famous confession.

Early in his career, Agrawal ap-peared for an interview for a summerinternship position at Citibank in Kol-kata. How can a chemical engineer –Agrawal was from IIT, Rourkee – dealwith finance, he was asked. “Ultimate-ly, it is all about making money wheth-er it is chemical engineering or run-ning a business,” he had replied. Hegot the internship and also persuadedCitibank to let him work in Mumbai.

Managing businesses is not new toSaurabh’s family. His father owned aprinting and publishing business inMathura which published epics –Mahabharata and Ramayana – in tra-ditional oil press. “I still have some ofthe original copies,” he says.

His younger brother Parag Agrawalco-founded Onmobile, a value-addedservice provider for mobile companies.

Soon after passing out from IIT, Rour-kee, Saurabh joined Engineers India, apublic sector unit, as a trainee engi-neer. A year later, he got into IIM, Kol-kata. His next stop was investmentbanking. He started that journey withDSP Merrill Lynch before finding hisway to StanChart 16 years later.

“He was able to pull together all thecorporate business, be in finance,mergers and acquisitions, equity cap-ital market under one roof in India,”says Mark Dowie, his boss and thegroup head, corporate finance, whole-sale banking at StanChart. “We hadgrowth in market share and addedmore clients under his leadership.”

After two decades at work, Agrawaltook a four month break before hejoined Standard Chartered Bank in2011. “He has missed all the anniver-saries and festivals after our marriageas he had crazy travel schedules,” saysShelly Agrawal, his wife. She is a for-mer banker and now a part-time teach-er. “But now, he teaches geography andhistory to his two school kids.”

“I went for a 10-day vipasana medita-tion in Mumbai and have turned muchmore calm,” says Agrawal. “I am tak-ing life a bit more easy now.” Withdeals like JP cement, he can afford to.

baiju.kalesh@timesgroup.com

Cooking Up a DealComes Easy to ThisInvestment Banker He was able to push

through the stalled deal

between Birlas and Gaurs

and has a good rapport

with the Tatas too

PROFILE SAURABH AGRAWALMD & REGIONAL HEAD, CORPORATE FINANCE, SOUTH ASIA, STANCHART

PIC

: NITIN

SO

NAWA

NE

e-PROC IJR EMENT TENDER FOR COSICII ITTARANJANNo. COS/CRJ IPLTB/e-Tender /13/0162 Dated: 15.10.2013

The following e-Tender s can be accessed under the the link www.irepa.gov.in Offers forsuch e-Teiider can be submitted oniy electronically by accessing the link wwwireps.gov.in-�CLW-�COS/CRJ-4ogin. Vendors may also contact the following officials to obtainclarification regar ding particular tender if any. Dy. CMM III Q/CLW /Chittaranj an.0341-2525594 or Dy. CMM IP/CLW/Chit tara nj an, 0341-2535921 or SMMJCON IHQ ,034 1-2535 63 1 for 1REPS related information , if any, may p lease contact:Dy. CMM/SYSTEM /CLW/Ch ittar anjan, 0341-2535568. Tender infomiation is also availablein CLW s website: w’ww.clw.lndlanrail ways.govin : SI. No.; Tender No.; BriefDescr iption of Item; Qty.; Cost of Tender Documents (�) #; Earnest Money Deposit(fl; Tender Closing Date & Time (1ST).

[1]; 91140857; Complete Stator Assembly for 3-Phase Tra ction Motor Type 6FRA-6068.Dig. No. OTWD.096.002 ALT-3 [Or Latest Alteration]. Speon. No. 4TMS.096.069 ALT-5 (Or Latest Alteration]; 295 Nos.; 2,290.00; 10 ,00 000.00; 20.11.2013, 11:00 firs.

[21; 91140389; Set of Stator Chamber and Associated Components each set consistingof 15 [Fifteen] Items. (1) Stator Chsmber/DE (CNC Machined) to Drg. No. 1TWD.096.0 17ALT-6 & to Specn. No. 4TMS.096. 059/Latest Version & RDSO STR No. 21. (II) InnerLab� nth/DE (CNC Machined) (Rotor) to Dig. No. 4TWD.096.043 ALT-5 & to Specn.No. 4TMS.096.068 REV- t [Latest Version] & RDSO STR No. 21. (ifi) Outer BearingCap/DE (CNC Machined) to Drg . No. 1TWD.096. 006 ALT-3 & to Specn. No.4TMS.09 6.068 REV-i [Latest Version] & RDSO STR No. 21. (IV) Inner Labyrintb/DE(CNC Machined) to Dig. No. 4TWD.096.028 ALT-4 & to Specit No. 4TMS.096.068REV-i [Latest Version] & RDSO STR No. 21 . (V) Outer Labyrinth/DE (CNC Machined)to Dig. No. 4TWD.096.029 ALT-5 & to Speen. No. 4TMS. 096.068 REV- 1 (Lat estVersion] & RDSO STR No. 21. (VI) End Frame/DE Assembly (CNC Machined) toDig. No. ITWD.096.005 AALLT-T-i i REF-4 with Air Out let Net to Dig. No. 2TWD.096.078ALT-l & to Specn. No. 4TMS.096.068 REV-i [Latest Version] & RDSO STR No. 21.(VII) Stator Chamber/NDE (CNC Machined) to Drg. No. 1TWD. 096.0l6 ALT-6 & toSpecn. No. 4TMS. 096.059/Latest Version & RDSO STR No. 21. (VIII ) InnerLabyrinth/NDE (CNC Machined) to Drg. No. 4TWD.096.042 ALT-5 & to Speen. No.4TMS.096.068 REV-i [Latest Version] & RDSO SIR No. 21. (IX) Inner Labyrinth/NDE(CNC Machined) to Dig. No. 4TWD.096.03 1 ALT-4 & to Specu. No. 4TMS.096.068REV-l [Latest Version] & RDSO SIR No. 2211. (X) Bear ing Cap/NDE (CNC Machined)to Dig. No. 3TWD.096.032 ALT-5 & to Speen. No. 4TMS.096.068 RE V-i [LatestVersion] & RDSO SIR No. 21. (XI) Clamp PlatefNDE (CNC Machined) to Dig. No.2TWD.096.033 ALT-6 & to Specsi No. 4TMS.096.068 REV-I [Latest Version] & RDSOSIR No. 21 . (XII) End Fsam�NDE Assembly (CNC Machined) to Dig. No. OTWD .096.003ALT-9 REF-5 & to Speen. No. 4TMS.096.068 REV- l [Latest Version] & RDSO SIRNo. 21. (XIII ) Speed Probe Housing (CNC Machined) to Drg. No. 1TWD.095.077ALT-4 & to Specn. No. 4TMS.096.061 REV-i [Latest Version] & IWSO SIR No. 21.(XIV) Machined Terminal Box Assembly to Drg. No. 3TWD.096.059 ALT.3 & toSpecn. No. 4TMS.096. 055 ALT-4 [Latest Version]. (XV) Terminal Box Cover Assemblyto Dig. No. 4TWD.096.027 ALT-2 & to IS:10192’82.; 808 Set; 2,290.00; i0,00,000.0G,25.11.2013, 11:00 fir s.

[3]; 91140949; End Ring Plate for Scheme-I Rotor. Dig. No. SKEL -4739 ALT- l,Specn. No. 4TMS.096.068 REV-I , ALT-4; 355 Nos.; 1,145.00; 77,000.00;20.11.2013, 11:00 lIre.

[4]; 81140126; Polyamide Sheet [NOMEX 1�’pe-4 l0]. Size: 0.25 MM Thick x 914 MMWide in Roll Length of 30 Mtrs. Specn. No. A0255 , ALT-2 ; 530 Mtr s.; 172.00;

8,500.00; 25.11.2013, 11:00 firs.

[# Coat of Tender Documents (?) are inclusive of VAT @14.5%I Tenderer to submitTender Documents Cost through h DD. in favour of FA&CAO /CLW/C hlttar anjan payableat Cliltiaranjan. Tenderers are also advised to give D.D. Number, Date and amount ofTender Cost in th e Oflbr . The Date of Demand Draft should be Date of Tender Openingor any prior date. Any Demand Draft prepared after the Date of Tender Opening willnot be considered as valid Cost of Tender Documents. The cost of Tender Documentsshould be received in Purchase Office preferably on the Date of Tender Opening but notlater than 10 (Ten) days from Tender Opening (excluding the day of Opening). OffersReceived without cost of Tender Documents will be summarily rejected. No post Tendercorrespondence wilt be made with the Fism for obtaining Tender Document Cost.NOTE: Drawing and specification is available and the same may be collected fromDy. CMM/IIQ or Dy. CMMI P or SM1WCON /HQ. ADDRESS: Office of the Controllerof Stores, Chittaranjan Locomotive Works, P.O. & P.S.: Chittaranjan, Distt.: Burdwan,State: West Benga PIN: 713331, IndIa. FAX No. 91-341-2525643.

HL.261 Controller of Stores

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NOTICE INVITING TENDERTBG BhELInvlte tendsrsfor prororuneni of SurgeAtTestor, BusPost Insuteto r , Ill uminadon n CossuItan Work , FtuProtecitn System, UPS, CurrentTransforrnee, MS Red, Tranaformeras per�JrTNos . 15281, 15288, 15267, 15279 ,15280,15291, 1529 15292 ,15294.

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