UCO BANK on VENTILATOR(Must read till End)

Best SELL: TP 24MarchExp, 18 MayExp,

Downgrading to negative of UCO Bank by rating agencies is not a surprise if one looks at operational rot which is turning UCO Bank into Bad Bank.

As per Motilal Oswal Securities " Most PSBs are still trading at expensive valuations"

Our take: Even at Cmp, UCO Bank is the MOST EXPENSIVE PSB stock as its share price can fall another 50% upto Q4 results.

Investors have forgotten that it was CMD of UCO Bank who was prosecuted for various irregularities during Harshad Mehta scam/time Govt at that point of time was likely to write off UCO Bank (and

merge) but due to intervention of the then FM and assurances given by Union/Staff, Govt gave fresh lifeline and an opportunity to UCO Bank for revival but since then, condition of bank has grown from bad to worse RBI had earlier in 2008 put UCO Bank on MONTHLY MONITORING SYSTEM. It may happen again in 2016 as situation is alarming and UCO has CROSSED ALL PARAMETERS which qualify for Prompt Corrective Action by regulator RBI.

Name of Top 50 NPAs/defaulters in Banking Sector have appeared. Large no of these names are in portfolio of UCO Bank. This is the MAIN CONCERN

1) Q3 Loss at 1498Cr

2) NPA 14931Cr 10.98% (amongst highest in PSB). However, it may be noted that NPAs in overseas branches is lower. Otherwise, on standalone basis, DOMESTIC NPA 12.01% 

3)Return on Asset is (-) 2.56%: WORST in banking industry

4) Yield on Advances is 9.48% which is BELOW BASE RATE

5) Staff Cost up by 18.53%

6) Operating Profit nosedives by 48%

7) Interest income falls by 14.28%

8) Profit from Investments crumbles by 62.61%

9) Advances fall by 7.21%

10) Fresh Slippage at 7148 crores  is 5.5% of Advances although industry norm is 1%

11) Recovery of NPA in 9 months is mere 721crores (less than 5% NPA).With such slow recovery, NPAs are bound to shoot up further in coming quarters

12) NIM  only 1.93%

13) Cost to Income ratio 49.82% (almost twice of Private sector banks)

14) Net profit per employee is NEGATIVE

15) Foreign branches are incurring losses. Singapore branche has

incurred Loss of 38.70 crores

16) SECURITY COVERAGE IN MAJORITY OF LARGE NPAs VERY VERY WEAK/LOW and

Chances of Recovery are REMOTE

17) As per information, in many NPAs, value of securities like stocks, book debts have been OVERSTATED which have gone unnoticed by auditors. It will increase provisioning in future

18) UCO Bank is also allegedly involved in Export scam of Money laundering 

19) Some frauds in fixed deposits/advances have come on surface which are under investigation by CBI. It is bound to lead to further liabilities on UCO Bank.

20) CASA will fall substantially as current a/c deposit of over 20,000 crores at zero cost in respect of Iran will move out. Outgo of zero cost deposit will lead to higher losses. Bank may have to even provide for forex loss due to weak rupee.

We feel that NPA of UCO in Q4 may shoot as high as 14% which should be record in banking industry and Losses for FY17 may go up further.

UCO Bank in fact is turning out to be Bad Bank of banking industry and is tilting towards collapse

UCO Bank is a Class Room example of what can go wrong with a bank

SELL  SELL SELL

List of large defaulters of UCO being sent separately

http://www.moneylife.in/article/uco-bank-another-template-of-rot-within-psbs/45621.html

EXPOSE ON UCO BANK

UCO Bank turns out to be among the worst banks in every downturn and needs repeated capitalisation. But nobody is ever asked to pay a price

Public sector lender UCO Bank, like many of its peers, is suffering from a bad loans problem. The operational rot in the Bank can be gauged from the loan exposure to certain companies. Loan exposure of some of the big accounts of UCO Bank is as under: 

A large number of companies in of the list allegedly have bogus turnover, which have been used to borrow money. Now, such companies have either almost shut down their operations or running measly operations with annual loss in hundreds of crores. Recovering even 10% of the exposure could be extremely difficult for the lenders. 

A group like Lanco, which is run by L Rajagopal, a Congress MP in the previous regime, who was suspended for using pepper spray inside the Lok Sabha, may not go bankrupt. But when and how much they will pay back to UCO Bank is the real question. The chances of recovery of these risky exposures is practically nil. Consider the brief profile of these companies and the flagship companies of these corporate groups. 

The Lanco group is in financial trouble due to overexposure to capital-intensive sectors and excessive debt. The flagship company of the group Lanco Infrastructure has a debt of more than Rs37,000 crore and a negative net worth. With such huge debt and losses, its ability to service the full debt is a big question. If at all there is hope in future (after few years), UCO Bank will have to forego entire interest amount and even substantial portion of principal through One Time Settlement (OTS) or Corporate Debt restructuring (CDR)).

Amtek Auto, the flagship company of Amtek group, has reported a loss of Rs448 crore for the last nine months. It has a huge debt of more than Rs12,000 crore. Sterling Biotech has reported a huge loss of Rs377 crore for trailing 12 months. It has a total debt of more than Rs3,000 crore. At present, it is a penny stock. This makes UCO Bank’s exposure to all but worthless as its revival is ruled out. One of Essar Group's companies Essar Oil has a total debt of more than Rs25,000 crore and an extremely high debt to equity ratio of 4.68 on 31 March 2015. The group has a total debt of around Rs45,000 crore. Essar Steel is again in financial trouble and looking for relief from banks. 

ElectroSteel, which is a penny stock, has a total debt of Rs9,500 crore with a debt to equity ratio of 9.7 on 31 March 2015. With huge project cost, UCO Bank will find it nearly impossible to recover its Rs359 crores and sooner or later may write it off as bad debts. This is especially so because the company is now under the control of the banks. Even in this scenario, it will have to make a big sacrifice under OTS after a few years.

Visa Steel, the flagship company of Visa Steel Group, had a debt of around Rs3,118 crore with a negative net worth based on consolidated numbers for FY14-15. It reported a loss of more than Rs400 crore in the last nine months, while UCO Bank's exposure to the company is Rs130 crore. 

Zoom developers has already gone bust and the group is under investigation by Enforcement Directorate (ED) and Central Bureau of Investigation (CBI). There is absolutely no hope of recovering the Rs309 crore lent to it by UCO Bank. As per results for quarter ended 31 December 2015, UCO Bank reported a huge loss of Rs1,498 crore. The bank's Gross non-performing assets (NPAs) stand at 10.98% (Rs14,932 crore), which is amongst the highest. Its domestic NPAs stand at a huge 12.01%. Its yield on advances is below the base rate at merely 9.48%. UCO Bank’s net NPAs stood at 6.51% as compared to 4.25% a year ago. Its return on assets (annualised) stands at -2.56%. Its cost to income ratio is at nearly 50%, which is extremely high. Its fresh slippage is at Rs7,148 crore, which is 5.5% of advances, although industry norm is 1%. Net interest margins (NIMs) of UCO Bank stand at an abysmal 1.93%.

Even then, the worst may not be over for the bank yet. With such huge defaults, NPAs of UCO Bank may continue to rise even in FY16-17 and financial position of state-run lender can take big hit. Exposure to large NPAs is more than Rs11,000 crore. This figure seems all the more frightening as security against same is less than 15%, or in certain cases less than 10%. This makes loan recovery impossible. Some frauds in fixed deposits or advances have come on surface, which are under investigation by CBI. This may lead to further liabilities for the Bank.

UCO Bank has had difficult times in the past. RBI had earlier in 2008 put UCO Bank on a monthly monitoring system. Currently, the Bank has a market capitalisation of around Rs3,440 crore. The stock has been on a declining trend in the past year like other PSBs. After touching a high of Rs77 in March 2015, it has crashed by nearly 60% to around Rs32 currently. But despite the fact that the bank is a stretcher case and will need to be capitalised by taxpayers’ money, no heads will roll, while Reserve Bank keeps making pious statements of intent. 

http://www.moneylife.in/article/uco-bank-another-template-of-rot-within-psbs/45621.html

COMMENT FROM Mr G R Chari

A very good expose of the stench emitting from the rot in the banking system. The virus of non-performing loans (NPL) has now spread from the public sector banks (PSB) to some marquee names in the private banking space also. Though Dr. Rajan took hold of the reins of RBI in September 2013, it is only in recent times that he has become active in going after the banks with a stick in his hand. When the PM & FM called a meeting of the bank heads on January 1, 2015, no grave sign or concern of the NPA problem came to light then. It is, therefore, quite obvious that the banking heads were busy layering of the bad loans and trying to shove it down to posterity. The bad loan issue has created such a scare that it has now reached the portals of the Supreme Court of India which has directed the RBI to give a list of loan defaulters above Rs.500 crores in an sealed cover. The data from RBI showed that bad debts which stood at Rs 15,551 crore for the financial year ending March 2012, climbed to Rs 52,542 crore by end-March 2015. Of course, no reasonable explanation is offered for this surge in NPA's except to say that they are part of the normal provisioning activity of the banks. Possibly taking a cue from all this, the PNB was forthright in coming out with a list of 904 wilful defaulters owing ~ Rs.11,000 crores to the bank. In spite of the surmounting problems the bank's face, what is most regrettable is that there is no sincere effort to come to the grips of the problem except the beaten down path of transferring the NPL's to ARCIL or creating a Bad Bank or whatever. This  process or step is definitely bad as it absolves the responsibility and accountability of the Top Management of the bank. The worse thing is that,most of the NPL are under-secured with inadequate collaterals and this creates a serious doubt as to how much of NPL's will be recoverable. So, there is a real challenge before the govt/RBI to meet this crisis head-on.Tough problems call for tough solutions and, if the RBI and the government is sincere (which most govts. are not, due to political-business nexus), they really have only two or three choices before them:

1) Create or form a Recovery Cell or Directorate in each bank and give them a specific mandate to recover the bad loans within a specified time frame (of say, one year). The RC will be headed by a person in the rank of Executive Director with independent charge and he shall report to the bank's Board or a specific Committee of the Board on a regular basis. If the need arises, the ED will have the power to take the help or assistance of the CBI or similar investigating authority of the state to help in the recovery of bank loans.

 2) Repeal the Bank Nationalization Act of 1970 and, if that takes time due to Parliament logjam, amend the Act to bring down the stake of the govt. to 49% paving the way for privatization of 29 PSB's. Even the very intent of the govt. to privatize the PSB's will get a thumbs up from the market and will arrest the erosion that is taking place in the bank's market capitalization. With this measure, the govt. will still have a significant say in the management, running and overseeing of the bank's operations. The experiment of the govt. in appointing a professional banker to head Bank of Baroda has given a positive response to this approach. However, the State Bank of India can continue to be a state owned bank under the SBI Act and continue as a banker to the govt. 

3) As the above move will be resisted by the bank's union, it may be necessary to declar  and bring the PSB's under the National Security Act or such similar law in force. Simultaneously, each bank should aggressively pursue voluntary retirement scheme. In the absence of strict measures to contain the NPA problem, mere infusion of fresh capital into the banking system will merely amount to throwing good/scarce public money in the drain. The banking sector is a proxy for the economy and the strengthening of the banking sector will automatically strengthen the economy.

G R CHARI

IMPORTANT:

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Den of Wealth continues its streak of accuracy:

CASTROL LTD: We had forecast that co should declare PAT of 610 crores
as against PAT of 474 crores in CY14. Now, Castrol has declared PAT of
615 crores. Despite markets falling sharply for 2 consecutive days,
Castrol was up. Dear investors, thanks for believing in us and we
shall continue our endeavour that you all create knowledge based
wealth and not just one-liner tips and daily flip-flops.

ACTUAL LOSS Q3 Rs 4792 Cr (not 1408Cr)

BOI: Downgraded by S&P,ICRA & CRISIL


TP:Rs79FebEXP,Rs 65MarchExp,Rs53 MayExp

As per report of Motilal Oswal Securities " MOST PSBs are STILL
TRADING at EXPENSIVE VALUATIONS".

Our take: In PSB space, BOI is amongst the most EXPENSIVE stock:

1. BOI has declared LOSS of Rs 1408 crores for Q3. However, this Loss
is arrived at after onetime WRITEBACK of Rs 3384 crores. Thus ACTUAL
LOSS is whopping Rs 4792 crores for Q3 alone. Perhaps HIGHEST
quarterly loss in PSB space

2. BOI has been downgraded by various rating agencies as BOI is set to
report worse nos for Q4 and there is no near term visibility in
improvement of operational performance and BOI should report LOSS FOR
FY17 as well.

Q3: ALL NEGATIVES:

a) Actual Loss Rs 4793 cr.
b)NPA 9.18%
c)Gross NPA   36519Cr
d)Net NPA       19979Cr
e)Restructures Assets 31576Cr
f) Return on Assets:(-)0.93%. If RoA falls below 0.25%, RBI can start clampdown
g)Operating Profit for 9m 4571 cr as against 6061cr, steep fall
h)FRESH SLIPPAGE Rs 22592Cr
i)COST to INCOME Ratio 56%- perhaps highest in banking industry
j) 17270 Cr may slip into NPA in coming quarters (out of restructured assets)
k)NPAs worth 1956 cr already written off in 9months

There is sharp deterioration in asset quality due to higher stress
than anticipated and higher exposure to stressed sectors like Steel,
Power.

Q4 NPA can be 11% and NPAs will not come down even in FY17 as recovery
of NPAs is as low as 5%.

PROBLEM OS NPA TO GET WORSE IN Q4 due to following method of providing for NPAs:

1)  Additional slippage to increase NPAs
2) Fresh Slippage (NPA) where banks have made provisions applicable
for substandard assets i.e. @ 15 to 25%. These shall be further
downgraded as doubtful/Loss Assets as per RBI guidelines which will
necessitate provisions for doubtful/Loss assets i.e. @ 40% to 100% of
NPA amount
3)NPAs which are secured are to be provided at a lesser rate. However
at the year end i.e. 31.03.2016, banks are required to value the
securities to ascertain the fair value of securities and provisioning
requirements. The value of securities is likely to come down due to
fall in real estate prices
4) Banks are required to make additional provisioning for (a)
Restructured assets due to diminution in fair value of assets (b)
Unhedged exposure

Outlook for BOI is dim and grim as even Operating Profit nosediving,
ever increasing salary bills and rampant inefficiency

SELL at Cmp should fetch handsome gains to investors. SELL

Creation of Bad Bank/Selling NPAs to ARC: BAD IDEA

Instead of Plugging the leaking hole, putting more water in the leaking Vessel:

Ever since (last 2-3 weeks) PSBs have reported massive Losses with unthinkable deterioration in their asset qualities, there have been repeated statements from our Finannce Minister as well as from different sections of media that Govt is planning to create Bad Bank where NPAs of PSBs will be transferred. And also reports that some banks are planning to sell their NPAs to ARCs.

Such reports have created an impression that such measures will relieve PSBs of their sickness and put them on path of recovery and there are talks of bottomfishing of PSBs for multibagger returns in 2 years. Such reports are emerging as investors have not understood REAL concept of BAD BANK and also of how NPAs are sold to ARCs

1.  Selling of NPA to ARCs: Whenever any bank sells any NPAs to any ARC, same are at subtantial discount to their book value. No ARC ever buys NPAs at their face value. ARCs do their due diligence in terms of good NPAs and Bad NPAs.  ARCs consider those accounts as good NPAs where such bad loans are covered by ADEQUATE security ( e.g. land) and here ARCs feel that they will be succeed in recovering decent amount of good NPA through sale of assets like land (because by that time,share price of such listed entities crumbles by upto 90% and share sale may not fetch even 5% of NPA, a la Kingfisher). Good NPAs normally are acquired by ARCs at 20-30% discount to book value. However, bad NPAs are the real problem. Bad NPAs are those accounts where security may be hardly 5-15% of loan exposure (e.g. promoter pledged only shares, value of which crumbled) and in case of NPAs , majority of NPAs are bad NPAs (that is why, recovery ratio of NPAs amongst all PSBs is around5% of NPAs). ARCs acquire Bad NPAs at50-70% discount to their book value.

Now, suppose a PSB want to sell 3000 crore worth NPAs to an ARC. Looking at combination of bad NPA (ratio of which is much higher and that is why bank want to sell)and Good NPA (Ratio of which is much lower), ARC normally acquires 3000 crore worth NPAs for around 1500 crores. That works out to nearly 50% discount.  It means that PSU Bank will have to immediately MAKE PROVISION OF 1500 CRORES in its books (loss of 1500 cr on selling NPAs). However, story does not end here. Even if ARC acquiring 3000 crore worth NPAs for 1500 crore, entire 1500 is not paid UPFRONT to PSU Bank. ARCs PAY ONLY 15% UPFRONT. It means PSU Bank immediately will get fund infusion of 225 crores ( 15% of 1500 crores) and ARC issues SECURITY RECEIPT for balance amount (which is paid as and when there is recovery of NPAs).

Thus,prima facie, investors get impression that selling of NPA is damn good and main revival tool for PSU Banks. Selling NPAs is shirking of the responsibility (to recover NPAs themselves) and shift the burden to another shoulder (by taking big hit). Doesnt it work as incentive for PSU bankers to remain reckless in future credit disbursal/appriasal?

2. BAD BANK: Firstly we are fairly confident that Mr Rajan will not agree for creation of Bad Bank (as per our interaction with some seniors in RBI). Second, even passing bill for creation of BAD Bank in Parliament will be extremely difficult proposition. Moreover, these appear to be political statement as idea of Bad bank was floated/mooted during Congress rule as well. Still as hypothetical case, if we assume that Bad Bank is created, then what?

Let us look back at REAL LIFE EXAMPLE OF IDBI: As on March 2014, IDBI had accuulated NPA of roughly 9000 crores. In order to relieve IDBI of NPA burden(to show to the world that Balance Sheet is clean), govt of India created SASF (just like a bad bank). Please note that SASF was created in 2004 i.e. 12 years back. And now please understand scheme of things put in place by GOI.  GOI provided a loan of Rs 9000 crores to SASF and SASF in turn invested entire amount in ZERO interest Govt Special Securities floated by GOI and REDEEMABLE AFTER 20 YEARS. Thus this transaction did not involve ACTUAL CASH OUTGO FROM GOI. And SASF (akin to bad bank) acquired 636 NPA assets with a net loan outstanding of Rs 9004 crores.

Transferring NPAs to SASF was akin to UNDERWRITING OF NPAs of IDBI. Even though arrangement did not involve any cash outgo but it has CREATED A LIABILITY FOR THE SAME WHEN THESE SECURITIES ARE DUE FOR REDEMPTION IN 2024. Thus GOI effectively took over burden of NPAs of IDBI. And even after 12 years, as per our reports, so far SASF has recovered less than 4000 crores of NPAs( out of 9004 crores). Balance

5000 cr worth NPAs not yet recovered. What could not be recovered in 12 years, it may take another 12-24 years to recover or may be no recovery.

Even though GOI cleaned up balance sheet of IDBI in 2004, fresh NPAs continued to evolve, grow and mount. What we want to convey is that transferring of NPAs to ARC or SASF does not deter bankers from fresh NPAs. Selling of NPAs and transferring to Bad Bank is just TEMPORARY MEASURE to calm down everyone.

Bad bank will be exactly on lines of SASF created for IDBI in 2004 and hence, entirely unviable.

And we are fairly confident that bad bank may not materialize even upto 2017.

Finally : Infusion of funds by GOI:  It is like putting more water in a leaking vessel, rather than to seal/plug the leaking holes of the vessel. In last 2 years, GOI had infused more than 59000 crores in diffferent PSUs. Despite that, financial condition of PSU Banks has become worse with deteriorating asset quality. Govt putting more money (although looking at GOI's stressed liquidity, infusion will not be significant) will again be a small and temporary measure. Rather, GOI should focus as to how delinquent bankers are taken to task, how research/ credit quality assessment of borrower/ due diligence is done more effectively so that in future loans are not disbursed to unworthy

In view of our above practical approach, we feel strongly feel that WORSE for PSU banks is still to come. Losses and NPAs of large no of PSU Banks for Q4 WILL be more worse. And we are pessimistic even about entire FY17 due to weak outlook for credit intensive sectors (and big exposure of PSBs to these sectors) which will keep PSB's Credit cost at elevated levels. Moreover, COST TO REVENUE of PSBs is much higher than private sector banks and PSBs are at definite disadvantage vis-a-vis private sector banks.

INVESTMENT ADVICE: Although PSBs share prices touched new low in last 2 weeks, but likely to make new low in next 2 months. Hence, one should stay away from buying shares of PSBs (not to catch a falling knife).

As per our analysis,  BOI, UCO Bank, Central Bank and IOB are worst placed

Breaking News: CASTROL India Ltd:Best Ever Performance

India's no 1 brand in lubricants CASTROL is all set to report HIGHEST EVER yearly PAT and still stock is vailable @ 21% lower than its 52 week high

Performance so far:

                       9M/Sept15      CY14
                         Rs/Cr             Rs/Cr

PAT                   474.40           474.50

Castrol follows Calender Year for its accounting and not Financial Year

Its PAT for 9 month ended September 2015 @ 474 crores is equivalent to PAT of ENTIRE CY14.

We estimate that Castrol should report PAT of 610 crores for Year ended Decemeber 2015. It means Castrol's PAT will JUMP 28% YoY basis. Considering that overall, this earning season has been lacklustre with several big disappointments (even MNCs), Castrol's show of 28% PAT JUMP can be considered spectacular. Moreover our estimated PAT of 610 crores will be HIGHEST EVER in co's history as previous highest profit of Castrol was 508 crores 2 years back. Castrol has been amongst the most investor friendly companies with good track record of dividend and bonus shares.
It offers a good opportunity to buy CASTROL as currently stock is trading at 21% LOWER to its 52 week high price of Rs 518.

Best buy in derivative segment.

BTST TP Rs 428.40
TP Rs 440 Feb expiry
TP Rs 455 March Expiry

Breaking News: FII limit hiked in Axis Bank. Buy. TP 419.60 Feb expiry

Breaking News: FII limit hiked in Axis Bank. Buy. TP 419.60 Feb expiry

ALARMING DEFAULTERS:UCO BANK:SELL

We are giving hereunder Loan exposure of FEW big a/cs of UCO Bank:

Name                      Rs/Cr

AMTEK Group          494

LANCO Group          818

Sterling Bio/Grp        286

ESSAR Group         1416

Electrosteel Steel      359

VISA Steel Group     130

ZOOM developer       309

Even the most optimistic person will agree that chances for   recovery of loans(approx 3800 crores) from majority of above DIIs (Dacoits of India Inc) are  almost nil:

1. AMTEK group: Group companies had been resorting to bogus billing to show fake/inflated financials to trap bankers for taking big loans. Now, flagship co Amtek Auto has reported LOSS of 448 crores for 9 months (other listed companies also showing HUGE losses). With such MASSIVE LOSSES, how loans of UCO Bank will be repaid?

2. LANCO Group: Although this group is not thief/rogue like some of other clients of UCO Bank and is in genuine biz activities, but entire group is in financial trouble due to indulgence in capital intensive sectors and excessive debt. Lanco Infra reported LOSS of 717 crores for FY15. With such huge losses, group will definitely not in a

position to repay  full amounts (principal amount+interest). If at all there is hope in future (after few years), UCO bank will have to forego entire interest amount and even substantial portion of principal sum (OTS or CDR).

3. STERLING BIO/Group: Sterling Biotech alone has reported whopping LOSS of 473 crores for 9 months. Group companies may barely survive but it is almost 100% likely that revival is ruled out and it means that sooner or later, UCO Bank will have to write off such loans as bad debts

4. ESSAR Group: Here comes King of Bad Loans. This group has shamelessly mastered the art of exploiting Indian Law (wherein default is not criminal liability, just breach of contract) and even more shamelessly looting PSU Banks with regular frequency. Essar Steel in 2003 (or so) had gone for massive CDR under which banks and minority shareholders lost heavily. Despite proven BAD track record, it is shocking and defies explanation that how banks again showered loans of nearly 45000 crores? This group has always been in controversy whether back-dating of subsciption to E Oil IPO, whether colluding with journalists/politicians (to avoid expose in media). Promoters in their personal capacity are rolling in BILLIONS OF DOLLARS (not Re) with unlisted power companies, huge real estate portfolio and what not. Any banks who enters this group cannot leave unscathed. There are already reports that E Steel again in financial trouble and looking for relief from banks. Naturally, UCO will to have to make sacrifice on its

exposure amounts

5. ELECTROSTEEL STEELS: This case like still born baby (dead). Even before co could start commercial production, co looking for relief from banks. With huge project cost, UCO bank will find it nearly impossible to recover its 359 crores and sooner or later write off as bad debts. Or best scenario, to make big big sacrifice under OTS after

few years

6. VISA  STEEL group: Another thief from Kolkatta who camouflage as industrialist and then brazenly loot public money. Can UCO bank ever recover its 130 crores when Visa Steel has reported LOSS of 412 crores in just 9 months

7. ZOOM Developers: We dont have to say any words about this group as same has already gone bust and various govt agencies are investigating into this big fraud. Definitely, 100% write off 309 crores

Above list of potential defaulters is not FULL List. We may be again revealing some more names of what would ultimately be bad loans for UCO Bank. We estimate that loans worth 10,000 crores (or even higher) are completely stressed, sooner or later will be NPAs and may be, next year to be written off as bad debts.

With such huge defaults, NPAs of UCO Bank may continue to rise even in FY17 and financial position of UCO Bank can take big hit. That is why, we say that UCO Bank may turn out to be AIR INDIA of Indian Banking

Industry.

SELL

  UPDATE ON BANK OF INDIA and UCO BANK

With reference our SHORT SELL call on above 2 stocks, BOI had made low
of Rs 78.35 and even UCO bank had fallen to Rs 30.05. Subsequently,
both stocks have staged smart rise. However, we wish to inform you as
under:

1. Markets have bounced sharply in 2 days. Hence, even bad stocks tend
to rise in tandem with broader indices.

2. In rising market, panic short covering by faint hearted. Indian
markets have risen in tandem with global markets (no improvement in
fundamentals)

3. Media Hype: Govt machinery and various channels have gone in
overdrive to repeatedly emphasize that huge banking reforms in
pipeline and there will be infusion of funds in PSU Banks by Govt.
Firstly, we wonder what reforms Govt is planning to increase
efficiency of PSU Bank staff, how much autonomy Govt will grant to
CMDs for taking independent decisions and not succumb to political
pressures. Can Govt reduce/break stronghold of trade unions over PSU
Banks? Nothing will improve unless politician-businessman nexut is
broken which is primary reason for The Great Bank Robbery. Intended
reforms are more of political statements to pacify the markets.

Coming to infusion of Funds: Govt pumped nearly 60,000 crores in
various PSBs in last 2 years at much higher price. What has been the
result? Govt has been subsiding inefficient banks with tax payers'
money.

Govt has put enormous amount of money in AIR INDIA But unable to stem
the rot. Market share of Air India has plummetted from 67% to 27% with
continuously mounting losses. Hence, infusion of few thousand crores
in so many PSBs will be like putting balm on a deep bleeding wound.
And, moreover, can Govt afford resonably large infusion funds,
considering that Govt is alread strapped for funds.  Hence, investors
are advised not to take media statement at face value and do realistic
analysis of extent of crisis and intended small action.

FINALLY COMING TO FUNDAMENTALS: We will not be surprised if few PSBs
(like UCO Bank) become AIR INDIA/MTNL (perrenially ill) of Indian
Banking Industry. Such fears are based upon solid facts. We repeat
that so far, only Dust off the kitchen platform is coming off.
Cockroaches hidden under the platform are yet to come out. In Q4, BOI,
UCO Bank etc  are bound to report MUCH HIGHER LOSSES, MUCH HIGHER
NPAs, MORE SLIPPAGES. Their operating profits are plunging (even if we
forget NPAs) as COST TO REVENUE in some of PSBs is as high as 56% as
against industry norm of 25-30%.Due to bad loans, credit growth is
slowing down, rather there is degrowth in many cases. It may sound
unbelievable but YIELD ON ADVANCES at 9.48% in UCO Bank IS BELOW EVEN
THE BASE RATE. NPAs are rising but recovery of NPAs is just 5% of
total NPAs.

Hence, we feel that fundamentals of banks like BOI and UCO Bank at
least (where we have done extensive research, where we have reliable
sources) WILL NOT improve in 2016 at least. Rather Q4 may bring new
shocks

Hence, we can only advise (those who have SHORTED on our
recommendation) not to panic,muster courage, hold your position and
even roll over your positions to March because firstly, post budget
sharp correction is expected in broader indices which will help to
pull down prices of both stocks and even otherwise, stock prices are
bound to get tired. You have seen how Maruti had jumped after our
SHORT SELL advice but in 1 week, Maruti fell more than we had
estimated.
Fall in UCO and BOI will be much steeper than recent rise.

We maintain our SELL on both stocks

NPAs of PSBs

Yesterday, there was interview of former Chairman of SBI Mr Choudhari on CNBC. Anchor asked him what was main cause of such high NPAs in banks: Whether slow down in respective industries or inefficiency and outright corrupt promoters.

Mr Choudhari replied that 90% of NPAs due to slowdown in respective industries and only 10% blame on promoters

No wonder that NPAs have risen so much due to such vested attitude of bankers.

If he had accepted that 90%(or little lower) NPAs were due to inefficient and outright corrupt promoters, bankers  would have been blamed as to why bank sanctions loans to such promoters without proper due diligence

Now my question to Mr Choudhari is:

Slowdown only for clients of PSBs?  Slowdown has not hit clients of private sector banks? Why such low NPAs in private sector banks? If slowdown was main factor, then NPAs in private sector banks also would have been much higher

Clear case of shielding bankers from the blame and no guts to point fingers at DIIs (Dacoits of Indian Inc)

Naming and Shaming: Marquee Robber Barons of UCO Bank Ltd

It has been long standing demand that all PSBs should make public names (and amount looted) of BIG defaulters. However, perhaps due to lack of political will, such has not happened so far.

We are hereunder revealing names of FEW so-called industrialists who have literally looted large sums of UCO Bank (some of these companies have as many as 24-25 bankers, indicating that it was highly organised crime at biggest scale).

More alarming fact is that if forensic audit is done of these companies by competent agencies, it will be found that EACH of these companies engaged in bogus/fake billings to show fake turnover and fake profits.

1. SHREE GANESH JEWELLERY: In 2013-14 when co was showing too good to be true financials, we had written that we suspect of bogus billing. Now, current financials vouch for our claim. Shree Ganesh Jewellery

reported HUGE LOSS of 760 crores for FY15. Now, company has almost shut its bogus operations. As for 9 month ended Dec 15, on revenue few lac rupees,co has already reported LOSS of 90 crores. Mind it, these losses on almost nil revenue.

2.  REI  AGRO:  As early as in 2012 we had suspected this co of bogus financials. May sound unbelievable but it is true that this co has reported LOSS of Rs FIVE THOUSAND FOUR HUNDRED NIGHTY FOUR Crores for FY15.  Co has already reported LOSS of Rs SEVEN HUNDRED SEVENTY ONE Crores for 6 months. Results for Dec quarter could not be declared as many directors resigned and present strength of 2 directors is less than minimum statutory requirement of 3 directors for a listed co.

3. ARSHIYA LTD: We had suspected thief motive of its promoters as early as when stock was listed and continued upper circuit for months. It clear that stock was listed for market manipulations ONLY and not for genuine reasons. Initially co reported huge margins which were again too good to be true. Analysts were getting convinced about its so called "logistics story" and buy calls emanating from various quarters.

Arshiya has made LOSS of Rs 244 crores for FY15.  Loss for 9months in current year is Rs 161 crores.

It is no brainer that UCO Bank can NEVER RECOVER its dues from above 3 companies. And sooner or later, entire exposure will have to be written off as bad debts.

On Monday we shall try to reveal more names of BIG BIG ROBBER BARONS (who camouflage as industrialists) who have looted royally UCO Bank,brining the bank on the brink.

With such defaulters on its roll, UCO Bank likely to remain in BIG BIG TROUBLE for coming year(s)

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REAL PICTURE OF NPAs:UCO BANK:TP Rs 15-17 May Expiry(Multibagger)

GrossNPA         14931Cr

GNPA               10.98%

Net NPA            8409Cr

NetNPA              6.51%

Above ratios are amongst the HIGHEST in Indian Banking Industry. However, it is only half picture:

FRESH Slippage 7148Cr (Bank has not revealed same in Q3 results. This info from our source and 100% ACCURATE)

Fresh Slippage are more than 5.5% of Advances whereas Industry benchmark is 1%. It means Fresh slippage of UCO Bank are higher BY 450%

Fresh Slippage should also get converted into NPAs in next 1 or 2 quarters.

Likely scenario of NPAs in Q4:

a) As per RBI guidelines, bank has made 50% provision of NPAs in Q3. It means that provision of NPAs in Q4 will also be 2360 crores (same as in Q3).

b) Out of Fresh slippage of 7148 crores, even if one-fourth (very conservative) become NPAs, it means bank will have to provide additional Rs 1800 crore worth NPAs.

Thus, provisioning for NPAs in Q4 alone could be more than Rs 4000-4100 crores. If it happens, Gross NPA BOUND TO JUMP TO 15% in Q4.

SITUATION BECOMES MORE GRIM when you consider the following:

a) NPAs written off in 9m: 1401 Cr

b) Recovery from NPA a/c in 9m: 721Cr

RECOVERY OF 721 cr in 9 months is LESS THAN 5% of Gross NPAs. It means NPAs will rise disproportionately due to very very low ratio of NPA recovery

Based upon such analysis, we are afraid that LOSS in Q4 of UCO Bank may be more than 2500 crores and G NPA 15% or so

Sooner or later, Stock price is bound to crack. SELL MORE.

Another Bombshell SHORT SELL:

UCO Bank Ltd:

UCO has reported 1497 cr LOSS for Q3. However, this is just trailer of a full- length movie. UCO has negatives on all parameters and rot/ mess/ malaise is much deeper. We feel that stock can slide to Rs 25-26 Feb expiry and TP Rs 16-18 May expiry(provided markets do not go up sharply). Full detailed report tomorrow. Investors may remember that our record in SHORTSELL ideas is unmatched (Maruti, JDL, BHEL, Pnb, SCI, Cipla etc).

UCO Bank Ltd: Breaking News: Huge Blow:

In Q3, Current Account Deposits have GONE down by 4700 crores (-19%). UCO Bank was sole banker designated for Rupee trade with IRAN and Hence was enjoying Current Account Deposits of Rs 20000 crores with ZERO COST ( as no interest to be paid on same) and same was contributing approx Rs 2000 crores to OPERATING PROFIT of UCO. With USA lifting sanctions on Iran, these Rupee based VOSTRO deposits are no longer required. Withdrawal of funds from this Vostro already started in Q3, leading to reduction of 4700 cr in current account deposit. Once entire amounts of Vostro are withdrawn ( which should happen/ complete in next 1-2 quarters, not only CASA will plunge but UCO WILL report operating LOSS. It means TOTAL LOSS for Q4 should be 2300-2500 crores.

BIG BIG BLOW for UCO which already under big stress from all sides For next update/Breaking News/Revelation   pl stay tuned at

www.telegram.me/denofwealth