There's no easy replacement for dollar: Subbarao
"It is not easy to replace the US dollar as the global reserve currency because of the sheer size of the American economy and its dominant share in global trade", the Governor said at the launch of a book entitled 'Global Crisis, Recession and Uneven Recovery' by former RBI governor Yaga Venugopal Reddy here this evening.
In the wake of global financial meltdown and the dramatic rise of other currencies against the US dollar questions were raised about the sustainability of the US currency as the global reserve currency, with some experts even calling for replacement of the greenback.
Admitting that the emerging economies in particular and all those economies which have the American greenback as their reserve currency, are suffering from currency volatilities, he said, such a singular dependence on a single currency is creating many a vulnerability to these economies in particular and the global economy and its still fragile recovery in general.
The American unit has been steeply falling for quite some time now against all the major global currencies, the euro, pound and yen. The rupee has been steadily appreciating against the US unit for many a month, even though the euro and yen have gained much more than the rupee.
Since this September alone, the rupee has gained more than 5 per cent against the dollar as the RBI has been keeping off the forex markets for the 18th month in a row. While this has helped importers, exporters, especially those from software side, have been hit badly because over two-thirds of their revenues come from the dollar-driven markets.
The tax-free bonds of Indian Railway Finance Corporation (IRFC) received bids of over Rs 300 crore on the very first day after it opened for subscription on Monday, according to distributors of the bonds. IRFC plans to raise Rs 1,000 crore through the offering and could also consider an unspecified green shoe option through private placement. The bond issue will be open for subscription till December 3.
The decent response to the issue comes amid tight liquidity conditions in the system, with banks borrowing over Rs 1 lakh crore through the Liquidity Adjustment Facility (LAF) auctions.
“The pre-tax annualised yield works out to 9.68% for a seven-year tenor and 10.30% in 10-year tenor for banks and corporates at the tax rate of 33.66%. For individuals, the pre-tax annualised yield (tax rate of 30.90%) will work out to be 9.30% in the seven-year tenure and 9.89% in the 10-year tenure,” Arvind Konar, head of fixed income, Almondz Global Securities , said. It offers a premium over the AAA-rated corporate bonds of same maturity, he said.
“The premium spread is a huge 150-155 basis points in the 10-year maturity and around 65 basis points for the five-year maturity on a pre-tax basis compared with AAA-rated PSU bonds,” he said.
Secured, non-convertible, redeemable, tax-free bonds in the nature of promissory notes will have a tenure of five years, seven years and 10 years with a coupon rate of 6.05%, 6.32% and 6.72%, respectively, on a semi-annual basis. Bonds will not have any put or call option and the allotment will be done on a day-priority basis.
Barclays, HSBC, Deutsche Bank, Almondz, Standard Chartered, and SBI Capital Markets are among the 15 arrangers to the issue. The minimum subscription for the tax-free bonds is Rs 1 lakh.
IRFC is raising money from the market to part-finance the plan outlay of Indian Railways. Every financial year, IRFC raises funds by borrowing in the market for meeting its financing needs. Banks, FIs, insurance companies, MFs and resident individuals can apply for these bonds, while Hindu undivided firms, partnership firms, overseas corporate bodies and FIIs cannot invest.
Name - Rakesh prasad
PGDM -1
Tata Group Chairman Ratan Tata on Monday said he did not enter the airline business as he was not comfortable with the idea of bribing a minister, as had been suggested by an industrialist.
He regretted that despite being a pioneer in the airline industry, the group faced enormous problems in setting up a domestic airlines in collaboration with Singapore Airlines.
"We approached three Prime Ministers also. But an individual thwarted our efforts to form the airlines," Tata said, recalling how he spurned the suggestion by a fellow industrialist.
He, however, did not name the individual. Amid Tatas' efforts to set up a joint venture with Singapore Airlines, a fellow industrialist had said: "You are stupid people. The Minister was asking for Rs 15 crore. Why didn't you pay the money?"
Narrating the incident, Tata said, "I did not want to go to the bed knowing well that I set up an airlines by paying Rs 15 crore."
Ratan Tata's predecessor, JRD Tata, had set up the first commercial airlines of India 'Tata Airlines' in the 1930s and that was later in the 1950s taken over by the Government and turned into Air India.
Responding to questions about how he succeeded without without compromising ethics and values after delivering a lecture on 'India in 21st Century: Opportunities and Challenges' here, Tata, 72, said he did not have a methodology in this regard, but went on to narrate the entire history of how Tatas failed to re-enter the aviation business.
After taking over the reins of the group, Ratan Tata had tried at least on three occassion to pursue the aviation business and accordingly moved the government of the day in 1995, 2000 and 2001.
The last time (2001), it was the BJP government when Tatas and Singapore Airlines withdrew as sole bidders their joint bid for Air India, citing political opposition to the sale.
Earlier in 1995 and subsequently in 2000, the consortium had made concerted efforts to take stake in Air India, but the controversies that engulfed disinvestment through a strategic sale in a public sector undertaking and the unions' agitation prevented materialisation of the bids.
Tata, who took over the group in 1991 and has since overseen the global expansion of the group, said he doesn't want to change his retirement due in 2012.
"I don't want to change my deadline I set for my retirement. There are lots of sacrifices, one has to make in terms of personal life. I wanted my life back. I want to enjoy the things that I wanted to do," the top industrialist said here.
He said there are two kinds of people, one who goes back home on his own feet, and another who goes in a box. "I have told my shareholders that I do not want to go back in a box," he said.
Name -Rakesh prasad
PGDM - 1
Narayana Murthy's VC fund Catamaran may invest $10 mn in Manipal
The discussions pertaining to a possible investment are still in early stages and hence the details remain sketchy even though sources familiar with the situation said Catamaran could invest up to $10 million. While PremjInvest has a committed corpus of nearly $1 billion, Catamaran is a smaller $129 million fund, tracking venture investments. The possibility of having NRN and Premji as investors could well be a coup for Manipal, which is looking at the capital market.
Before Murthy founded Infosys, he had a meeting with Premji for heading Wipro’s then nascent IT business. The meeting, obviously, went nowhere, with Premji later dubbing the encounter as just a drink at Welllington Club, and finding Murthy too highpowered for us and Murthy very happily admitting, “He rejected me. But I am very grateful to him for that.”
Global success and billions later, the two might come together at Manipal Universal Education . However, Catamaran’s investment head Arjun Narayan said the fund will not comment on speculation as a matter of policy, while Manipal Education MD Ranjan Pai said, “There is nothing as of now”. Manipal Universal Learning is part of the Rs 2000-crore Manipal Education and Medical Group (MEMG), which is a strategic player in education and healthcare services.
“There is an intent on the part of Catamaran and Manipal to strike a deal, but it depends on how the IPO story develops,” a second source said.
Pai declined to comment any further stating that his company’s board will have to meet and discuss on IPO and then go in for formal discussions with bankers. However, informed sources said Manipal Education could be looking at $1-1.25 billion valuation for its public offering, which could be launched in the second-half of FY12. Informal discussions have been underway with the bankers, they said.
Manipal’s education revenues could touch $250 million by FY12. Its revenue is equally split between India and overseas operations, which include a large acquired campus in the Caribbean island of Antigua. The other international campuses are spread across Dubai, Malaysia and Nepal.
In January this year, NRN’s Catamaran made its maiden investment in a pre-IPO deal with SKS Microfinance, where it invested Rs 28 crore for a 1.3% stake. Catamaran picked up this stake at a steep discount to the issue price as the microfinance company looked at roping in marquee investors ahead of the IPO.
Meanwhile, Catamaran along with US venture fund Accel Partners is closing a $1.2 million investment in Ace Creative Learning – a company that provides educational support services to schools and colleges. “We are currently looking for scalable and capital efficient businesses across fields such as FMCG, healthcare, e-commerce, agri-business and defence,” Narayan of Catamaran told TOI.
Last year, Murthy sold shares worth Rs 174.3 crore, or $37 million, and his wife Sudha Murty off-loaded shares worth Rs 430 crore, or $92 million, to set up Catamaran, named after a sailboat. Later, NRN brought in an MIT grad Narayan, who is in his late 20s, to spearhead the fund.
JITENDRA KUMAR SINGH
PGDM
SEMESTER-1
CAG report proves charge against Raja,SC told
THE final report of the Comptroller and Auditor General (CAG) has proved the allegations that Mr A Raja,who quit on Sunday night as telecom minister,granted 2G spectrum licences arbitrarily to favour certain companies were true,senior counsel Prashant Bhushan told the Supreme Court on Monday.
Mr Bhushan told a bench comprising Justice G S Singhvi and Justice A K Ganguly that Mr Raja advanced the cut-off date retrospectively and illegally to award 2G spectrum only to 122 out of 575 applicants.He said most of those who were awarded licences and 2G spectrum were ineligible.
Appearing for the petitioner Centre for Public Interest Litigation (CPIL),Mr Bhushan said that the licences were allegedly granted on first-come-first-served (FCFS) basis instead of transparent public auction.
The court was told that even the FCFS method was not properly applied as priority was fixed from the date of compliance with the letter of intent (LOI) conditions rather than the date of receipt of applications.
Referring to the central governments affidavit filed last Thursday,the senior counsel told the court all the arguments that have been advanced in the affidavit were advanced by the department of telecommunications (DoT) before the CAG and the same were rejected by the audit authority.
He said that the director general audit (post and telegraph) too found fault over the manner in which 2G spectrum licences were issued.The senior counsel said that the CAG has annexed the director general audits report in its final report.
Bhushan told the court that 2G spectrum licences in 2008 were granted at the rates of 2001,when the telecom market was in a nascent stage.He told the court that by 2008 the telecom market had become buoyant,there was a huge demand and the prices had increased 10 fold.
The affidavit filed by the CPIL said that the DoT in its affidavit has not addressed the issue of Rajas conversations with corporate lobbyists Nira Radia and the role played by her in the award of licences and spectrum.
The details of the conversations were given by the directorate of income tax (Investigations) to the Central Bureau of Investigation more than a year back,the affidavit said.
The entire 2G spectrum scam is a multi-stage,well thought out,deliberate act where a criminal conspiracy was hatched between private companies /persons and officials of DoT in order to circumvent an open,transparent auction process to favour a chosen few, the petitioner said.
IN THE DOCK: A Raja
PRABHAKAR MANI
PGDM 1 SEM
At least three MFIs based out of Kolkata are on the verge of slashing lending rates by nearly 500 basis points to 19.1% per annum, on reducing balance from a little less than 24% now. This move will allow them to be at par with Bandhan Financial Services, the leader in the eastern pack. At present, Bandhan offers the cheapest loan among MFIs in the country.
The Reserve Bank of India also seems to be quite pleased with the MFIs in West Bengal. “MFIs here offer loans at comparatively cheaper rates,” a senior RBI official in Kolkata said. Kolkata-based Sahara Utsarga Welfare Society and its associate Destiny Finco have already decided to reduce interest rates to 19.1% from December 1. These two entities collectively have an exposure of around Rs 90 crore.
Village Financial Services, the state’s second-largest MFI by assets, is contemplating reducing rates too. Its managing director & CEO Kuldip Maity told ET that the company would take a final view at its next board meeting on November 19. “We are most likely to lower the rate as our average cost reduced following expansion of business,” he said. Village Financial Services’ outstanding loan portfolio runs to Rs 150 crore.
The rate cuts are happening at the time of tight liquidity and when other borrowers, including retail ones, are seeing their borrowing cost go up. The central bank in its recent monetary policy had increased key interest rates by 25 basis points.
Sahara Uttarayan, another local MFI with Rs 51-crore exposure, plans to withdraw its 1.5% loan processing charge in three phases from January next year. It will, however, keep its interest rate unchanged at around 24% a year on reducing balance.
Incidentally, none of these entities has so far raised capital from private equity players. “MFIs which did not raise capital from private equity players are better placed to reduce lending rates as there is no pressure on them to increase profit margin,” Bandhan CMD Chandra Shekhar Ghosh said.
Sudipta Banerjee, managing director of both Sahara Utsarga and Destiny Finco, said: “Our operation is guided by principles of an NGO or a socially-motivated entity. As we are nearing a Rs 100-crore portfolio, we have decided to pass on the benefit of scale to our customers by lowering rates.”
Earlier, the RBI had told banks to ensure that MFIs they lend to do not charge usurious rates from their borrowers. Around the same time, the Andhra Pradesh government sought to increase its regulation of MFIs by asking entities operating in the state to obtain a registration from the state government.
MFIs in Bengal are reducing rates so that the all-inclusive cost to their borrowers reduce to 24% a year.
Besides charging interest, MFIs also levy a one-time 1% fee on account of processing charge or other charges and 10% security deposit. RBI has recently said the all-inclusive cost to borrowers should be within 24%, although it has not issued any operative guideline to this extent.
SKS Microfinance has slashed interest rates in quick succession over a month to reduce the effective lending rate to 24% from 31.08% (inclusive of insurance and registration charges), following an ordinance passed by the Andhra government to lower interest rates.
Name -Rakesh prasad
PGDM 1
At least three MFIs based out of Kolkata are on the verge of slashing lending rates by nearly 500 basis points to 19.1% per annum, on reducing balance from a little less than 24% now. This move will allow them to be at par with Bandhan Financial Services, the leader in the eastern pack. At present, Bandhan offers the cheapest loan among MFIs in the country.
The Reserve Bank of India also seems to be quite pleased with the MFIs in West Bengal. “MFIs here offer loans at comparatively cheaper rates,” a senior RBI official in Kolkata said. Kolkata-based Sahara Utsarga Welfare Society and its associate Destiny Finco have already decided to reduce interest rates to 19.1% from December 1. These two entities collectively have an exposure of around Rs 90 crore.
Village Financial Services, the state’s second-largest MFI by assets, is contemplating reducing rates too. Its managing director & CEO Kuldip Maity told ET that the company would take a final view at its next board meeting on November 19. “We are most likely to lower the rate as our average cost reduced following expansion of business,” he said. Village Financial Services’ outstanding loan portfolio runs to Rs 150 crore.
The rate cuts are happening at the time of tight liquidity and when other borrowers, including retail ones, are seeing their borrowing cost go up. The central bank in its recent monetary policy had increased key interest rates by 25 basis points.
Sahara Uttarayan, another local MFI with Rs 51-crore exposure, plans to withdraw its 1.5% loan processing charge in three phases from January next year. It will, however, keep its interest rate unchanged at around 24% a year on reducing balance.
Incidentally, none of these entities has so far raised capital from private equity players. “MFIs which did not raise capital from private equity players are better placed to reduce lending rates as there is no pressure on them to increase profit margin,” Bandhan CMD Chandra Shekhar Ghosh said.
Sudipta Banerjee, managing director of both Sahara Utsarga and Destiny Finco, said: “Our operation is guided by principles of an NGO or a socially-motivated entity. As we are nearing a Rs 100-crore portfolio, we have decided to pass on the benefit of scale to our customers by lowering rates.”
Earlier, the RBI had told banks to ensure that MFIs they lend to do not charge usurious rates from their borrowers. Around the same time, the Andhra Pradesh government sought to increase its regulation of MFIs by asking entities operating in the state to obtain a registration from the state government.
MFIs in Bengal are reducing rates so that the all-inclusive cost to their borrowers reduce to 24% a year.
Besides charging interest, MFIs also levy a one-time 1% fee on account of processing charge or other charges and 10% security deposit. RBI has recently said the all-inclusive cost to borrowers should be within 24%, although it has not issued any operative guideline to this extent.
SKS Microfinance has slashed interest rates in quick succession over a month to reduce the effective lending rate to 24% from 31.08% (inclusive of insurance and registration charges), following an ordinance passed by the Andhra government to lower interest rates.
Name- Rakesh prasad
PGDM -1
HPCL to invest Rs13,000 cr to augment Vizag refinery capacity
"We have asked for a detailed feasibility report (DFR) for raising capacity at the Vizag refinery," HPCL Chairman and managing director Subir Roychowdhary said here.
The decision to expand the Vizag refinery follows steel tycoon Lakshmi Mittal group and French oil firm Total SA walking out of a proposed USD 4 billion project to build a 15 million tonnes per annum refinery and a 2.5 million tonnes per annum petrochemicals plant near HPCL's 8.3 million tonnes per annum refinery at Visakhapatnam.
"That project is on freeze (since 2007 when Mittal walked out). We are now looking at raising our Vizag refinery capacity," he said.
The other partners in the five-way consortium were state-run explorer Oil India Ltd and state gas utility GAIL India Ltd.
HPCL does not intend to bring a partner onboard for the refinery expansion.
It may add a new 180,000 barrels per day (9 million tonnes per annum) crude distillation unit (CDU) and scrap the old 36,000 bpd (1.8 million tonnes per annum) unit at the Vizag refinery.
"We already have acquired land for the project," he said. "The project will take 3 years to complete."
HPCL currently operates three CDUs at the 8.3 million tonnes a year (166,000 bpd) Vizag refinery. It also runs a 6.5 million tonnes a year refinery in Mumbai.
Roychowdhary said HPCL and Mittal Energy, owned by billionaire Lakshmi Mittal, will mechanically complete the 9 million tonnes a year refinery at Bhatinda, in Punjab, by March, 2011, and the unit will be fully operational by September.
HPCL is also looking at investing Rs30,000 crore to set up an 18 million tonnes a year refinery.
The new refinery, to be set up in Maharashtra, was conceptualised to make up for space constraints at HPCL's existing Mumbai Refinery.
"We have been told that 1,800 acres of land is available with MIDC (Maharashtra Industrial Development Corp). We have asked for 1,000 acres more land," he said.
State-owned Engineers India has been engaged to carry out a feasibility study on the proposed refinery. The options under consideration are a single 18 million tonnes per annum unit or two units of 9 million tonnes per annum capacity each.
The DFR will be ready by December, Roychowdhary said. The land earmarked for the refinery is located between Ratnagiri and Raigad and the unit, called Maharashtra Refinery, would be completed within 48 months from the date of receipt of all approvals. MORE PTI ANZ ARV ARV 11151333 NNNN
It’s very close to action time on cap flows: Nomura MD
Robert Subbaraman , MD and chief economist, Asia at Nomura Securities , feels India needs to act fast to curb capital flows.
Excerpts from an interview with ET bureau on the sidelines of the World Economic Forum in New Delhi.
There seems to be some sort of setback to global economy?
Actually, the US data has improved, partly due to quantitative easing. Dollar has weakened and equity markets have rallied. But in Europe sovereign debt concerns have escalated. In China and other parts of Asia, inflation and asset price concerns have increased. Overall, it is still tricky.
Since quantitative easing II, policy challenge outside the US have increased. Challenge for Europe is to increase growth rate. For Asia and Latin America, capital flows are big concerns. And for the big commodity importing countries, which are mostly Asian, how to deal with the rising prices is the big challenge.
Where are you in the debate on capital flows in India?
It is getting very close to time to act. There is a case for tighter fiscal policy, case for slowing down capital flows. India’s situation is different from other countries in that it has a current account deficit. India does need capital, but it needs a different type of capital, like stable foreign direct inflows.
We also need to appreciate that India’s fiscal situation is worse than any other country in the region. It is also facing rising commodity prices, and the rupee is appreciating because of capital flows. Both these can cause current account situation to deteriorate. My concern is that at some stage investors may begin to focus on risk more than growth and capital could start to flow out.
What is your assessment of the G-20 meet?
The outcome could have been a lot worse. The divide in terms of currencies, in terms of dealing with capital inflows, in terms of discussing how you should rebalance the world economy were very huge. There was an agreement that the IMF should play a bigger role as watchdog, and I think we will start to see more of that.
The G20 was able to agree to further reform of the financial sector, talk about the proposed financial warning system. When it comes to exchange rates and imbalances, I think it has moved away from being narrowly focused on exchange rate to being a little bit more broadly focused on current account balance. That is a welcome step although not much was decided in terms of exact numbers.
There are many ways to balance the current account, exchange rate is just one of them. You can do lot, like China has done, to boost domestic demand. And that can be done through investments or reducing precautionary savings to help spend more on imports. The coordination is still not as good as it should have been.
What are the risks if the attempts at coordination are not successful?
If there is no cooperation then you can get protectionism through trade restrictions or action on capital flows. What I have to say is that at the end of 2008 and early 2009 when every one was worried about the depression global coordination was lot easier because every one knew you had to loosen policy. Today global coordination is more difficult because some countries are easing policy while others are tightening.
Some countries are worried about deflation while some others are worried about inflation. So I think it is more tricky, but arguably now is the time when you need the cooperation the most. Some countries are faced with a lot of pressure on their currencies to appreciate. And if there is no cooperation you can get protectionism, either through trade or even through foreign capital flows.
Commodity prices are rising rapidly. Food and energy prices are starting to go up. If there is no cooperation, it will be in the interest of individual countries to impose interventionist policies. But that is bad for the global economy.
Kochi's IPL loss could be Ahmedabad's gain
MUMBAI: Ahmedabad's dream of flaunting an Indian Premier League team might come true very soon. Fifteen days into the suspension notice given to the Kochi franchise, it is becoming clearer by the hour that its internal conflicts are unresolvable. "It's as good as over. There is no solution to this," a source close to the developments confirmed to TOI on Wednesday.
Shockingly, it has been learned that the two warring parties, one led by the Gujarat lobby and the other by Rendezvous Sports World Limited, have not bothered to meet even once since the governing council meeting on October 28.
The IPL council, it may recalled, had asked the franchise to resolve its problems within 30 days or face termination. With 15 days still to go, even the BCCI is resigned to the possibility that Kochi will not have a team after all.
A senior official said: "We will hold an auction as we want eight teams this year too." At the moment there are only seven teams in the fray, including Sahara's Pune Warriors, and excluding Kings XI and Rajasthan Royals who are fighting for survival in courts.
This is where the final twist kicks in. Right from the beginning, Ahmedabad has been eager for a team but it got pipped, both in 2008 and this year (when Gautam Adani failed to make a winning bid).
Interestingly, a formidable Gujarati lobby got together in 2010 to bid for a team in Ahmedabad. But it had to settle for Kochi, thanks to the presence and influence of 'mentor Shashi Tharoor'.
Apart from the then Union minister of state, who backed the Gaikwad family, and Kochi-based developer Vivek Venugopal, 1% paid equity holder, all other promoters only wanted Ahmedabad.
In fact, the Gaikwad family that owns 25% free equity in RSW, suggested that even at the time of bidding in March, the Gujarat lobby only wanted to write 'Ahmedabad' in the space left to fill the desired city for a franchise. "We had to constantly tell them that it had to be 'Kochi'," they say.
"Why else would a motley group of influential Gujarati businessmen invest over $300 million in Kochi, which didn't even have infrastructure," explained another source.
VARUN KUMAR TIWARI
PGDM-1st Sem
BY ANKIT KUMAR
RBI may go slow on monetary policy tightening
NEW DELHI: Industrial growth has almost halved to 4.4 per cent in September against 8.2 per cent a year ago, pulled down by slow-down across segments.
However, the industrial growth in the first half of this fiscal, as measured by the Index of Industrial Production (IIP), stood at 10.2 per cent against 6.3 per cent a year ago. The higher growth in the first half of this fiscal is because of robust prod uction figures during initial months.
With the growth coming down heavily in the month of September along with declining inflation numbers, the RBI is likely to pause tightening of its monetary policy, indications of which were given by it in its latest review on November 2.
Manufacturing sector, which comprises almost 80 per cent of IIP, grew at a slower rate of 4.5 per cent in September against 8.3 per cent a year ago and electricity generation expanded by just 1.7 per cent against 7.5 per cent. Mining output rose 5.2 per cent (7.4 per cent).
Besides, the industrial growth figure for August was revised upwards to 6.91 per cent from 5.6 per cent estimated earlier. This has been partly due to the fact that industrial data has been updated to adjust the new series of wholesale price index, which takes 2004-05 as the base year against 1993-94 used earlier.
The compliant by RBI that industrial data is too volatile is substantiated by the behaviour of capital goods sector. In contrast to a whopping growth witnessed of late, capital goods production declined by 4.2 per cent in September. — PTI
Prev: Rupee declines against dollar
Next: G20 may reach consensus on competitive devaluation
Nifty falls below 6100; IDFC, Bharti, DLF down
Index of industrial production for the month of September fell to 4.4 per cent lower than the previous month's revised annual growth of 6.92 percent. The street was expecting growth of 6.4 per cent. The September IIP data is the lowest in 15 months.
At 12:51 pm; Nifty Stock Exchange’s Nifty was at 6095.85, down 98.40 points or 1.59 per cent. The 50-share index touched intraday low of 6091.75 and high of 6202.50.
Bombay Stock Exchange’s Sensex was at 20279.36, down 309.73 points or 1.50 per cent. The index touched a high of 20593.91 and low of 20278.84 in trade so far.
“Nifty is expected to find support at 6150 (21 DEMA), which if breached with force is likely to target deeper retracement levels at 6090 under a bearish momentum indicator signal,” said Edelweiss report.
BSE Midcap Index was down 1.25 per cent and BSE Smallcap Index edged 1.26 per cent lower.
Amongst the sectoral indices BSE Realty Index fell 3.05 per cent, BSE Metal Index was 2.15 per cent lower and BSE Bankex slipped 1.91 per cent.
Nifty losers included IDFC (-4.76%), Bharti Airtel (-3.98%), DLF (-3.74%), Hindalco (-3.10%) and Tata Steel (-2.75%)
Gainers comprised Bajaj Auto (1.28%), Sun Pharma (0.93%), HDFC (0.67%), Siemens (0.49%), and HCL Tech (0.43%).
Market breadth turned negative on the NSE with 1968 declines against 1180 advances.
Chinese markets were under pressure on expectations that the government tighten credit to contain inflation which hit a 25-month high in October. Shanghai Composite tanked 5.30 per cent.
Bilateral engagements dominate runup to G20
AS THE leaders of the G20 assembled in Seoul for their fifth summit that begins with a formal dinner Thursday night,they spent their time meeting one another,cementing old ties,forging new ones,consolidating relationships.The big bilateral meeting of the day is,of course,the one between US president Barack Obama and his Chinese counterpart Hu Jintao.While its outcome is not known at the time of writing this,the Indian delegation is clear that there is as yet no commonly shared diagnosis of the worlds economic ills and how to establish balance between surplus and deficit countries.This,of course,does not bode well for any dramatic solutions being thrown up by the Seoul summit. Not being a direct combatant in the ongoing wrestling match over currency valuations,Indias prime minister,Manmohan Singh,utilized the time to meet up with prime minister of Ethiopia Meles Zenawi,president of Mexico,Felipe Calderon and British premier David Cameron. Indias relations with Ethiopia go back thousands of years,with evidence of trade from the sixth century onwards.However,the present warmth in relations between India and Ethiopia has to do less with the glory of the past and more with the present race for Africas riches and goodwill by resource hungry countries such as China and India. India held an India-Africa summit in February 2009 and the next one is slated for 2011 in Africa.Setting its place and time figured in the meeting between Indias and Ethiopias leaders.Ethiopia is supportive of India on global issues,said foreign affairs ministry spokesperson Vishnu Prakash while briefing the media on the PMs bilaterals. India is doing quite a few things by way of capacity building in Africa.A pan-Africa e-network started rolling out last year from Addis Abbaba,capital of Ethiopia.India has a scheme called ITEC,India Technical and Economic Cooperation,which offers scholarship,training and various other forms of capacity building.Ethiopia has a commercial memorandum of understanding with the Indian Institutes of Technology at Delhi and Kanpur. With the Mexican leader,Dr Manmohan Singh discussed ways to raise bilateral trade to $5 billion from the current $3 billion.Another focus was the next Conference of Parties on Climate change kicking off late November in Cancun,Mexicos resort town on the Caribbean.Dr Singh stressed the importance of identifying doable things.Dr Singh had a good meeting with British prime minister David Cameron,picking up the threads from his high profile visit to India in July. A common characteristic of all the three leaders whom Dr Singh met t on Thursday is that they had all supported Indias election as a non-permanent member of the UN Security Council.   PM Manmohan Singh with South Korean President Lee Myung-bak in Seoul on Thursday |
PRABHAKA MANI
PGDM 1 SEM
The yields on the 12-year paper, carrying a coupon of 8.13%, rose by one basis point to 8.05%, though the overnight call rate eased somewhat to 7%, about 11 basis points below Wednesday’s close.
Speaking at a seminar in the city, State Bank of India chairman OP Bhatt conceded that there was a “certain amount of discomfort” about the current levels of liquidity in the banking system.
Chanda Kochhar, MD & CEO, ICICI Bank, observed that the days of excess liquidity were over. “While there is no excess liquidity or too much of a surplus, it isn’t really an impediment to growth. Money does need to be infused into the system and as the government starts spending, liquidity will start coming back,’’ noted Kochhar.
However S Sridhar, CMD, Central Bank of India said liquidity would continue to be tight for some time. “Any improvement in liquidity depends on when the government spending resumes and foreign inflows.Liquidity may ease by the end of 2010,’’ Sridhar explained. Interestingly, the overnight call rate remains around 75 basis points above the repo rate of 6.25%. M Narendra, CMD, Indian Overseas Bank said PSUs were in expansion mode as a result of which liquidity would flow back into the system. “Call rates have come down and the money market should not remain tight for too long,’’ he added.
On Thursday, three-month CDs were commanding yields of 7.97%, almost flat as compared with the levels seen on Wednesday. However, companies were paying more to borrow through Commercial Paper (CPs); yields on the three-month CPs moved up a notch to 8.45% from 8.36% on Wednesday. MD Mallya, CMD, Bank of Baroda expected liquidity should be reasonably good soon because of the steps taken by the RBI. “In the next 15 days, we should be able to see much better liquidity situation,’’ Mallya said. On Tuesday, RBI re-introduced the special second liquidity adjustment facility (SLAF) for five weeks till December 16, 2010.
JITENDRA KUMAR SINGH
PGDM.
SEMESTER-1
Industrial growth slows down to 4.4 pc in Sept
However, Industrial growth in the first half of this fiscal, as measured by the Index of Industrial Production (IIP), stood at 10.2 per cent against 6.3 per cent a year ago.
The higher growth in the first half of this fiscal is because of robust production figures for initial months.
With the growth coming down heavily in the month of September along with declining inflation numbers, RBI is likely to pause tightening of its monetary policy, indications of which were given by it in its latest review on November 2.
While manufacturing, comprising almost 80 per cent of IIP, grew at slower rate of 4.5 per cent in September against 8.
Ranbaxy Q3 net up 16.5% at Rs 312.8 cr
The company had posted a net profit of Rs 116.6 crore in the July- September quarter last year, Ranbaxy said in a filing to the Bombay Stock Exchange (BSE).
Consolidated sales of the company also grew by 13 per cent to Rs 1,887.2 crore in the September quarter, from Rs 1,720.5 crore in the same period last year, the filing added.
Commenting on the numbers, Ranbaxy Managing Director Arun Sawhney said: "Our key markets continued to perform well attributable in large measure to balanced sales across geographies. This has also been aided by the favorable Forex movement."
Bolstered by the handsome quarter numbers, shares of Ranbaxy Laboratories soared by 3.45 per cent to hit an year high of Rs 624.90 on the BSE.
name-vikash singh
pgdm 1st sem
2010-2012
But the money that will accrue to the company by selling the by-products will come over the next few years since it is not possible to lift the granites and copper tailings at one go, sources said.
According to sources, while HCL is likely to get at least Rs 915 crore in 10 years from waste granite, another Rs 2,000 crore would come from copper tailings.
This has assumed significance as HCL is gearing up to mobilize an estimated Rs 4,000 crore to Rs 5,000 crore from an follow-on offering (FPO) next month, in which the government is divesting a 10% stake (9.25 crore shares) while the company is offering an equal number of shares to raise funds for its own use. As of now, the FPO is scheduled to open on December 6.
Incidentally, while the granite it is selling has anti-water absorption and anti-abrasion qualities and could be used as ballast on railway tracks, the copper tailings contain substantial amount of micro-nutrients and a lot of other minerals, the tender documents on HCL's website noted. The other minerals include nickel, cobalt and tin. Sources also said the ore concentration of HCL is more than 1%, which is better than the global average of 0.82%.
"Earlier, the global average was more. But gradually, it is coming down as best mines have already been explored," said a source. The company is also in the process of reviving some of the mines, which are currently non-operational.
On Wednesday, the HCL stock on the BSE ended at Rs 447, but market players believe the offer will be at a substantial discount to the current market price. And this discount could be as much as 35% to the market price. Even if the shares are offered at Rs 300, the FPO will raise about Rs 5,400 crore from investors. At present, the government holds almost 99.5% in the company, with just about 0.5% with the public.
Vedanta profit surges 79% to $337 mn
London: Metal and mining major Vedanta Resources Plc reported a 79 per cent jump in net profit to USD 337 million in the first half of this fiscal, mainly on account of rising demand.
Its net profit was USD 188.2 million in April-September 2009, Vedanta said in a statement.
Vedanta has delivered strong financial results and record production in the first half of the year. We remain focused on delivering our strong organic growth programme and are well placed to benefit from the India's tremendous growth prospects," Vedanta Resources plc Chairman Anil Agarwal said.
The company's strong earnings were bolstered by record production of Zinc-Lead, aluminium, iron ore, silver, commercial power, and copper Zambia.
The company said it expects the growth momentum will continue and remains confident of achieving a good performance for the full year with a significant increase in output across all major segments of the Vedanta Group.
MANALI
PGDM 1ST
No bell till end- july to Ramlinga Raju
The Supreme Court order on October 26 had directed the accused to surrender before the special court on or before November 10. The Supreme Court had cancelled their bail pleas after the Central Bureau of Investigation (CBI) challenged the Andhra Pradesh High Court order granting them bail. Raju was granted bail on August 18 and the other five on July 20.
The five are his brother and former managing director of Satyam Rama Raju, former chief financial officer Srinivas Vadlamani, former vice-president (finance) G Ramakrishna, former senior manager (finance) D Venkatapathy Raju and former assistant (finance) Ch Srisailam.
They will not be able to apply for bail till July 31, 2011 — the deadline set by the Supreme Court for the special court to complete the trial. They will be at liberty to approach the high court for bail in case the trial is not complete by then.
It may be recalled that PW auditors, S Gopalakrishnan and Srinivas Talluri, and former Satyam employee Prabhakar Gupta had secured bail earlier, while Raju's other brother, Suryanarayana Raju, got anticipatory bail.
On November 9, the Supreme Court did not allow the petitions of Raju and the five accused seeking four weeks to surrender.
Raju cited ill-health for bail before the apex court. He told the court he was discharged from the Nizam's Institute of Medical Sciences here on October 2 and therefore needed time to recover. Others said they were the breadearners and needed time to make arrangements for their dependents.
Varun Kumar Tiwari
PGDM-1st sem
Govt to decide on SBI's Rs 20K cr rights issue within fortnight
BY ANKIT KUMAR
The government today said it will take a call within a fortnight on whether SBI should be allowed to go for the rights issue, which is expected to be in the range of Rs 18,000-21,000 crore, less than the original estimate.
"We are number crunching that (SBI proposal of Rs 20,000 crore rights issue) at this point of time. I think some decision would be taken perhaps in next 15 days," financial services secretary R Gopalan said on the sidelines of an event by consultant Skoch hereHe said the presumptions under which the additional requirement has been asked for are being looked into by the government.
"So, amount in any case is dependent on what we arrive at along with SBI. As to how valid those presumptions are, so that exercise is on at this point of time," Gopalan said.
"So once that is there, the next question is what form will we be doing in. That is also being discussed with SBI," he added.
The government holds about 59 per cent stake in SBI. If it clears the proposal, the government will have to subscribe the issue to the extent of its holding, so as to maintain its stakeholding at the existing level.
Depending on the decision taken, Gopalan said there could be implications on the budget.
"There can be implications on budget or it can be neutral on budget, so we will take a view," he said.
If the Government decides to subscribe to the rights issue in cash, it will have to go for additional expenditure. However, if it decides to subscribe the issue through bonds, the effect may be felt later.
According To RBI, banks would not be penalised for any shortfall in statutory liquidity ratio between November 9 and December 16. Banks are required to invest 25 per cent of their net demand and time liabilities in government bonds and other approved securities under SLR. This is an "ad hoc, temporary measure",the central bank said.
Inter-bank call money rates, which were at 7.40-7.50 per cent — higher than the repo rate of 6.25 percent — cooled to close at 6.7 percent after RBI’s measures. Net borrowing by banks, which was Rs 1.10 lakh crore from RBI’s first repo tender on Tuesday, came down to Rs 6,825 crore in the second LAF.
"Liquidity is tight at the moment," said Deepak Parekh, chairman of HDFC. "It will start easing as money comes into the system. The tightness is only for some time," he added.
Still, bankers say the current conditions reflect a mismatch in liquidity more than a cash crunch. "If one looks at investment by banks in government bonds in excess of minimum SLR requirements, it will not show there is a liquidity squeeze in the system," said a senior official at a large, state-run bank in Mumbai.
JITENDRA KUMAR SINGH
PGDM
SEMESTER-1
By Standard Chartered, Bank of America Merrill Lynch and Barclays, are staring at mark-to-market losses of more than $225 million on debt related to funding of Bharti Airtel’s acquisition of Africa assets of Kuwait’s Zain. The spread on debt, similar to that of Bharti, has widened to about 250 basis points over the London Interbank Offered Rate (Libor), a benchmark on global lending, said a banker in the deal who did not want to be identified. Bharti contracted funding at 195 basis points above Libor. A basis point is 0.01 percentage point.
Name - Rakesh prasad
PGDM -1
CUTTING USELESS LITIGATION Taxman wont rush to court over petty sums
The new rules are in sync with a national litigation policy that seeks to make the government an efficient and responsible litigant.
The purpose of the policy is to ensure that valuable time of the courts is not spent in resolving pending cases and to bring down the average pendency time in the courts, a tax department official explained.
The Central Board Of Excise and Customs (CBEC),the apex indirect taxes body,has directed its officials that an appeal will not be filed in the appellate tribunal if the amount involved,including fine and penalty,is 1 lakh and less.Similarly,appeals will not be filed in high courts if the disputed amount is 2 lakh and less.
CBEC is responsible for the collection of indirect taxes central excise,Customs duty and service tax.An amount of over 47,000 crore,more than the governments disinvestment target for the current fiscal,is locked up in indirect taxes arrears.
In the case of direct taxes,more than 75,000 crorean amount close to a fifth of the governments annual collectionsis blocked in courts.The direct taxes body already has a rule in place to check litigation.
Experts say the move is a step in the right direction,but add that the department needs to go a step further and shun litigation altogether.
India OK with $70 bn capital inflows, eyeing QE2
NEW DELHI: India can manage capital inflows of up to $70 billion and there is no need yet to impose curbs, but it must be alert to the latest round of US quantitative easing, a top economic adviser said on Thursday.
Several Asian policymakers are worried the US Federal Reserve's move to buy $600 billion in government securities will lead to a surge in hot money inflows into emerging markets, creating asset bubbles and complicating monetary policy setting.
"The need to act on capital flows has not come yet, but we will need to watch capital flows," said C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council .
India's response to the move has been muted in comparison with other nations like China, South Korea and Brazil, offering some comfort for the United States as it tries to soothe tensions and hammer out an accord at the G20 summit underway in Seoul.
Asia's third-largest econony needs foreign inflows to brige its widenining current account deficit, expected to be around 3 percent of GDP in the 2010/11 fiscal year to end-March 2011. Policymakers are confident India can easily finance the gap.
Since January, foreign investors have poured in $28.5 billion into the equity markets, pushing the benchmark stock index up nearly a fifth and the rupee up 5.3 percent.
Rangarajan's comments are in line with that of Montek Singh Ahluwalia, another key aide to Prime Minister Manmohan Singh. The central bank has also said it will intervene in the forex markets only if inflows turn lumpy
deepak kumar jha
pgdm 1st
2010-2012
PSU copper miner Hindustan Copper (HCL), which is set to launch a follow-on offer, is eyeing around Rs 3,000 crore by selling by-products from its mines at Malanjkhand in Madhya Pradesh and Khetri in Rajasthan. The company has floated tenders for selling about 200 million tonnes of high-quality granites (also called waste rock) at its MP mines and 95 million tonnes of copper tailing from its mines in MP and Rajasthan.
But the money that will accrue to the company by selling the by-products will come over the next few years since it is not possible to lift the granites and copper tailings at one go, sources said.
According to sources, while HCL is likely to get at least Rs 915 crore in 10 years from waste granite, another Rs 2,000 crore would come from copper tailings.
This has assumed significance as HCL is gearing up to mobilize an estimated Rs 4,000 crore to Rs 5,000 crore from an follow-on offering (FPO) next month, in which the government is divesting a 10% stake (9.25 crore shares) while the company is offering an equal number of shares to raise funds for its own use. As of now, the FPO is scheduled to open on December 6.
Incidentally, while the granite it is selling has anti-water absorption and anti-abrasion qualities and could be used as ballast on railway tracks, the copper tailings contain substantial amount of micro-nutrients and a lot of other minerals, the tender documents on HCL's website noted. The other minerals include nickel, cobalt and tin. Sources also said the ore concentration of HCL is more than 1%, which is better than the global average of 0.82%.
"Earlier, the global average was more. But gradually, it is coming down as best mines have already been explored," said a source. The company is also in the process of reviving some of the mines, which are currently non-operational.
On Wednesday, the HCL stock on the BSE ended at Rs 447, but market players believe the offer will be at a substantial discount to the current market price. And this discount could be as much as 35% to the market price. Even if the shares are offered at Rs 300, the FPO will raise about Rs 5,400 crore from investors. At present, the government holds almost 99.5% in the company, with just about 0.5% with the public.
Name - Rakesh prasad
PGDM -1
India food inflation at 12.30 pct y/y as on Oct 30
NEW DELHI: India's food price index rose 12.30 percent, while the fuel price index climbed 10.67 percent in the year to Oct. 30, government data on Thursday showed.
In the prior week, annual food and fuel inflation stood at 12.85 percent and 10.67 percent, respectively.
The primary articles price index was up 14.87 percent in the latest week compared with an annual rise of 15.43 a week earlier.
The wholesale price index, the most widely watched gauge of prices in India, rose 8.62 percent in September compared with an annual rise of 8.5 percent in August.
name- deepak kumar jha
pgdm 1st sem
(1010-2012)
India not stealing jobs: PM
Prime Minister Manmohan Singh welcomes American initiative and commitment to support India
Have Not Raised Outsourcing During This Trip,Says Obama
Our Political Bureau NEW DELHI
IN a direct assault on projectionist tendencies,Prime Minister Manmohan Singh said that India was not in the business of stealing American jobs.Mr Singh,who sought a new economic impulse in an interlinked world,said that close interactions between nations make economies more robust.
India is not in the business of stealing jobs from the US.Outsourcing (work to India) has helped improve the productive capacity and productivity of America, Mr Singh said at a joint press conference with visiting US president Barack Obama at Hyderabad House.
His statements came after president Obama flaunted the business deals struck in India that would add 50,000 additional jobs back home.
Replying to a question on outsourcing,the US president,who met Mr Singh and held delegation-level talks,said that both countries were operating on stereotypes that have outlived their usefulness and clarified that he hasn't raised the outsourcing bogey during this trip.
To a specific question on the purpose of his visit,Mr Obama said part of the reason why he advertised creation of 50,000 jobs from deals signed in Mumbai during his visit was to tell people in America why he spent so much time in India.His visit came in the backdrop of electoral setback in the US Congress for Obama's Democratic Party,amid criticism of his economic policies and the president summed up the situation,saying that people were frustrated with high unemployment level and difficult economic conditions.During his visit,over 20 deals worth $10 billion were signed between the corporations of the two nations.President Obama said the relationship between the two nations as a defining partnership of the 21st century and acknowledged Indias emergence as a prominent and key player on the global stage.On his part,Mr Singh welcomed American initiative and commitment to support India,saying this was essential for sustaining 9-10 % growth over the next three decades.He pointed out that India needed $1 trillion of investment in infrastructure over the next five years.
The two leaders committed to enhance bilateral co-operation in technology transfer,enhancement of trade and investment flow to create jobs in the respective nations and raise the living standards.
US president Barack Obama and Prime Minister Manmohan Singh at a joint press conference in New Delhi on Monday.
PRABHAKAR MANI
PGDM 1 SEM