Yearly Newsletter - 2010

January 2010

Domestic News

Govt to miss April deadline on GST rollout

The UPA government’s proposed comprehensive indirect tax reform, goods and services tax (GST), will miss its scheduled rollout from April 1, 2010, a temporary setback to creation of a unified national market for goods and services in the country. "Because of the difficulties in passing the required constitutional amendment bill in the budget session , it will not be practical to introduce GST on April 1, 2010. New dates for GST implementation will be decided in April," Chairman of the Empowered Committee of State Finance Ministers and West Bengal finance minister Asim Dasgupta said. Dasgupta’s admission was a clear indication that the implementation of the new regime may be postponed by a year to April 1, 2011, as a number of states may not be willing for even a mid-year roll-out.



Govt won’t be able to introduce GST in April ‘10: Sanjay Bhatia

Oil PSUs may get cash compensation: Govt

Public sector oil companies - IOC, BPCL and HPCL - may get compensated in cash for selling oil products below the cost instead of oil bonds, Petroleum Secretary R. S. Pandey said. "Most likely it subsidy is going to be cash," Pandey told reporters in New Delhi after a meeting with Finance Minister Pranab Mukherjee. He said that no decision had been taken on the quantum of compensation to be given by the Finance Minister. "Discussions were held and we hope to hear from them soon," Pandey said. The Petroleum Ministry had sought Rs200bn of oil bonds for public sector oil firms as compensation for FY10, as crude oil prices have started inching higher, S. Sundareshan, the No. 2 official in the Petroleum Ministry, had said last month.

The Ministry of Finance and the Ministry of Petroleum & Natural Gas have a difference of opinion on the amount of compensation. The Petroleum Ministry had asked for a compensation of Rs 200bn for the three quarters. Estimates are that losses for the OMCs will zoom up to Rs 450bn by the end of this fiscal year if crude oil prices remain at the current region of US$80 per barrel. The leading state-run oil marketing companies are set to post losses in the third quarter as well if the compensation is not announced soon. The Finance Ministry is not interested in giving oil bonds due to the pressures on fiscal deficit. At the same time, a price hike looks unlikely as of now, as it would add to inflation.

Power Grid Corp Board clears FPO plan

Power Grid Corporation of India Ltd. announced that its Board of Directors, at its meeting held on January 25, granted an in-principle approval to the Follow on Public Offering (FPO). The issue will be equivalent to 10% of the paid up equity share capital for augmenting resources of the Company to fund its investment programme. This will be subject to approvals by Government of India and other statutory approvals. The Government of India currently holds 86.36% stake in the Company, while the remaining 13.64% is held by public. The Cabinet had earlier asked all listed profitable PSUs to have public shareholding of at least 10% in each of them. There are 17 listed PSUs which have public holding less than 10%.

NTPC FPO opens on 3 Feb, 2010

NMDC files Draft Red Herring Prospectus with SEBI

Cabinet approves 10% divestment in Engineers India

Separately, the Cabinet Committee on Economic Affairs decided to disinvest 10% paid up equity capital of Engineers India Ltd., out of the Government’s shareholding, in the domestic market through a follow-on public offering (FPO). After this disinvestment, the Government's shareholding in the company would come down to 80.40%. It has also been decided that before the FPO the company will take the following steps:

(a) Issue of two bonus shares for every one share;
(b) Split one share of the face value of Rs10 into two shares of Rs.5 each
(c) Declare a special dividend of 1000% of the paid up equity capital.

India's air passenger traffic grows 8% in 2009

During the year 2009, passengers carried by domestic airlines stood at 445.13 lakhs as against 412.71 lakhs in the year 2008, thereby registering a growth of 7.86%, data released by the Civil Aviation Ministry showed. This includes passengers carried by Pawan Hans Helicopters Ltd. Analysis of Capacity (ASKM) and Demand (RPKM) data for the year 2009 vis-à-vis 2008 indicates that the airlines increased the capacity with effect from July onwards. The data also suggests that demand has started increasing with effect from June 2009 indicating better utilization of the capacity. The total domestic passengers carried by the country's Scheduled Airlines in December 2009 were 44.87 lakhs as against 38.98 lakhs carried in November 2009, translating into a growth of 15.11%. December 2009 witnessed overall seat factor of more than 80% mainly due to peak season traffic. The overall cancellation rate of scheduled domestic airlines for December 2009 has been 1.8%. The overall On-Time Performance (OTP) of scheduled domestic airlines for December 2009 was 71.5%.

RIL bolsters war chest for LB via another treasury sale

Reliance Industries Ltd. (RIL) raised Rs34.65bn selling its own shares from the vault, taking total funds raised in four months to US$2bn, as it strengthens flanks in the battle for bankrupt petrochemicals company LyondellBasell. RIL sold 33 million shares at Rs 1,050 each, 5% lower than its price on January 8. RIL confirmed the transaction, but did not reveal details. Five funds bought the shares, which were arranged by UBS, according to reports. The company has been selling down treasury stocks, created when RIL merged its unit Reliance Petroleum with itself eight years ago, to pay for Lyondell. The Mukesh Ambani-run firm has expressed its interest in buying a controlling stake in the bankrupt company. But, it is facing resistance from the target company's Board, which in its plan to emerge from bankruptcy, has valued itself at about US$15bn. The latest sale is the third fund-raising by the country’s biggest company. It raised Rs26.75bn last week and Rs31.88bn in September through sale of treasury stocks. RIL reportedly raised the bid for Lyondell by 13% last month, to US$13.5bn from US$12bn.

Lyondell gets more time to plan reorganization: report

Bharti Airtel acquires 70% stake in Warid Telecom

Bharti Airtel Ltd. announced that it has agreed to acquire 70% stake in Warid Telecom, Bangladesh, currently a wholly owned subsidiary of the Dhabi Group. Warid Telecom offers mobile services across all the 64 districts of Bangladesh and has a total customer base of over 2.9mn. Under the agreement, Bharti Airtel will make a fresh investment of US$300mn to rapidly expand the operations of Warid Telecom and will have management and board control of the company. This is the largest investment in Bangladesh by an Indian company. Dhabi Group will continue as a strategic partner retaining 30% shareholding and have their nominees on the Board. The acquisition by Bharti Airtel would be partly by purchase of existing shares held in Warid Telecom International Ltd. by Dhabi Group for a nominal consideration and balance by way of issue of fresh shares at par.

Tata Steel forms JV with Nippon Steel

Tata Steel Ltd. said that it has formed a joint venture with Japan’s Nippon Steel for production and sales of automotive cold-rolled flat products at Jamshedpur. Tata Steel will have 51% stake in the JV, which will invest about Rs18bn to set up a plant in the Indian company’s Jamshedpur complex. The JV will set up a continuous annealing (the process of heating a metal and letting it cool slowly to harden it) and processing line, with a capacity of 600,000 tons. Nippon Steel will transfer its technology for producing high-grade cold rolled sheet for automotive application. The companies will target the conclusion of the JV deal by June 2010 and start operations before March 2013.

Relinace Infra signs concession pact for Mumbai Metro II

Reliance Infrastructure Ltd. (RInfra) led consortium signed the Concession Agreement with Government of Maharashtra for the second line of Mumbai Metro Rail Project on BOT basis, for a concession period of 35 years with an extension clause of another 10 years. Reliance Infra, part of the Reliance- Anil Dhirubhai Ambani Group (ADAG) would be executing this project in a consortium comprising Reliance Communication and SNC Lavalin Inc, Canada. The total estimated cost of the project is Rs 110bn out of which Rs 22.98bn will be provided by the Government as Grant. With this investment, Reliance Infra would be committing more than Rs 135bn for the Mumbai metro rail sector.

Maruti launches concept MPV at auto expo

Maruti Suzuki plans to create a new segment with the launch of its new 7 seater family car, MD & CEO, Shinzo Nakanishi was quoted as saying. The company showcased its new MPV Multi Purpose Vehicle at the auto show in Delhi. Nakanishi said that Maruti Suzuki hopes to maintain sales growth in calendar 2010 despite rising raw material costs, inflation and the rise of the yen against the rupee. "This is not an easy job this year with so many new cars being launched," he said, when asked if Maruti will be able to maintain its 50% market share. "We have to make preparations for this," he added. Separately, the company’s finance head Ajay Seth was quoted as saying that Maruti Suzuki will decide later on a proposal to expand capacity. The company has cash reserves of Rs50bn and will utilize that for the expansion, he said. Maruti has no plans to take loans, Seth said. Maruti Suzuki expects sales this fiscal year (FY10) to reach a record 1 million units, Nakanishi said in New Delhi.

Maruti Suzuki unveils Eeco at Rs2.6 Lakh

Tata Motors displays the widest range of products at the Auto Expo 2010

Toyota launches the Prius in India

GM India launches Chevrolet Beat

Click here for more on the Auto Expo

Jubilant FoodWorks IPO subscribed 30.86 times

The Initial Public Offering (IPO) of Jubilant FoodWorks Ltd. received a strong response as it got subscribed 30.86 times as per latest information available with the stock exchanges. The total QIB portion was subscribed 59.38 times while the HNI was subscribed 51.81 times. The retail portion also received an overwhelming response as the segment was subscribed 3.71 times. Kotak Mahindra Capital Co. Ltd. was the sole book running lead manager to the IPO. Jubilant FoodWorks had entered the capital markets with its IPO of 22,670,447 equity shares with a price band of Rs135 to Rs145 a share. The offer comprised a fresh issue of 4,000,000 shares and an offer for sale of 18,670,447 shares by the India Private Equity Fund (Mauritius) and Indocean Pizza Holding Ltd.

New listings...DB Corp., Godrej Properties shine

DB Corp., the publisher of Dainik Bhaskar newspaper, commenced its stock market journey on a strong note. The stock started trading at Rs250 per share on the BSE as against its issue price of Rs212 per share. The stock closed the week at Rs253. The company's IPO was a big hit with the issue getting subscribed by nearly 40 times last month.

Godrej Properties Ltd. listed at Rs510, a premium of 16% over the issue price of Rs490 per share on the BSE. Godrej Properties, part of the Godrej group had entered the capital markets with its IPO of 9,429,750 shares at a price band of Rs490 to Rs530, totaling up to Rs5bn. The IPO of Godrej Properties received an overwhelming response as it got subscribed four times. It ended the week at Rs521.

Shares of JSW Energy, a part of the JSW Group, failed to sparkle on its debut and edged higher by 0.75% to end at Rs100.75. The company had fixed the price at Rs100 per share of Rs10 each for it’s IPO of equity shares aggregating up to Rs27bn. A discount of Rs5 to the issue price was offered to retail investors. The stock closed the week at Rs113.

T Rowe Price buys 26% in UTI AMC, UTI Trustee

US-Based investment management firm T Rowe Price Group has bought a 26% stake in UTI Asset Management Company (AMC) and UTI Trustee Company for Rs6.5bn, giving it a stake in the India's fourth-largest fund house and a chance to profit from the fast-growing Indian mutual fund industry. The deal values the country's oldest mutual fund house at Rs25bn or about 3.6% of its assets under management. The NYSE-listed firm has acquired 6.5% each from the existing four owners of UTI AMC - State Bank of India (SBI), Life Insurance Corporation of India (LIC), Bank of Baroda (BoB) and Punjab National Bank (PNB). After the stake sale, the existing owners referred to as sponsors will now retain a stake of 18.5% each in UTI AMC.

GTL Infra to buy Aircel Towers for Rs84bn

GTL Infrastructure announced that its Board of Directors considered and approved the purchase of tower assets from Aircel Ltd. and its group companies (Aircel / Seller) through a Special Purpose Vehicle (SPV). The company would purchase 17,500 telecom towers from Aircel. There are 21,000 active tenants on these towers. The transaction value is Rs84bn. Aircel has committed additional 20,000 sites to GTL Infrastructure over next three years. Towers will be acquired through slump sale of assets. Out of the equity funding of Rs34bn, GTL Infra will be contributing up to Rs17.5bn. The SPV has entered in to a Business Transfer Agreement / other documents with the Aircel / Sellers for acquiring the Tower Portfolio. The transaction will be consummated subject to the statutory, regulatory and lenders approvals.

Strides Arcolab and Pfizer to collaborate on generics

Pfizer and Strides Arcolab announced a new collaboration, whereby the US drug giant will commercialize off-patent sterile injectable and oral products in the United States through its Established Products Business Unit. These finished dosage form products will be licensed and supplied by Strides and Onco Laboratories Ltd. and Onco Therapies Ltd., two joint ventures between Strides and Aspen, in which each has a 50% ownership interest. The financial terms of the supply agreement were not disclosed. The first of the products commercialized under this collaboration is expected to be launched in 2010.

Pantaloon separates value retail biz

Pantaloon Retail (India) Ltd. said that it will transfer its value retail business - Big Bazaar and Food Bazaar - into a group company, Future Value Retail. The company's committee of directors at a meeting held on December 31 approved transfer of value retail business of the company to Future Value Retail - a wholly owned subsidiary, Pantaloon Retail India said in a filing to the exchanges. Pantaloon's value retail business would be transferred with all its assets, rights, liabilities or obligations of all nature and kind, along with its employees related to value retail business on an on-going concern basis, it added. Future Group is now looking to list this company independently. Future Group director & CEO-retail Rakesh Biyani said this was one of the options the company would seriously consider for funding its growth.

ABG Shipyard gets 15% stake in Great Offshore

ABG Shipyard, which exited the fight for Great Offshore by selling its entire stake and pricing its bid lower than rival Bharati Shipyard, has ended up with a 15% stake in the company. ABG's open offer was priced at Rs 520 per share against Bharati’s Rs 590. ABG wanted to buy 32%, while Bharati’s offer was meant for a 20% stake. Both offers closed on December 22. Bharati’s open offer attracted shares amounting to 27% of the company’s equity capital against its target of 20%. Bharati will thus have to reject 7%, while ABG will accept all shares tendered in its offer.

ABG will have to pay Rs 2.8bn for buying the 5.65 million Great Offshore shares. A senior ABG Shipyard official confirmed the development but declined to talk about what the company plans to do with its unexpected equity stake.

ABG sold its 8% stake in Great Offshore a day before its open offer, sending a message that it was not interested in having management control of the company. Bharati Shipyard, which now holds 43% stake in Great Offshore, is considering another open offer to acquire management control of the company.

International News

Jobs, healthcare reforms remain top priority for Obama

The unfinished agenda of reversing the slide in the job market and pending healthcare reforms were the highlights of US President Barack Obama's maiden State of the Union Address. He vowed to press ahead with his plan to overhaul the nation’s healthcare system and called on Congress to pass a package of tax cuts and spending to stimulate the world's largest economy and create millions of new jobs. "Jobs must be our No. 1 focus in 2010, and that is why I am calling for a new jobs bill tonight," Obama told lawmakers from the podium in the chamber of the House of Representatives.

Obama appealed to US lawmakers to take another look at his administration's healthcare reform proposal, while acknowledging that the plan is in a bit of a limbo at the moment. He also touched upon the ballooning budget deficit, saying that the government must tackle it. The deficit will hit US$1.35 trillion in 2010, the Congressional Budget Office has predicted.

Obama’s speech before a joint session of Congress was devoted mostly to economic concerns, particularly the loss of more than 7 million jobs since the start of the recession in December 2007. Many of the steps he outlined have also been proposed previously. Support for Obama has weakened since he took office and a new Wall Street Journal/NBC poll has found that Americans think that he has focused too much attention on the now-stalled health-care overhaul and not enough on the economy.

Read Barack Obama's State of the Union speech

Bernanke weathers storm...gets 2nd term as Fed chief

After several days of uncertainty and conjecture over the fate of Ben S. Bernanke, the US Senate gave a green light for his appointment as the chairman of the Federal Reserve for a second term. Bernanke survived hard-core opposition by some Senate Republicans and Democrats to his handling of the financial crisis and the questionable conduct of the American central bank in the years leading up to the financial crisis. The 70-to-30 vote was the weakest endorsement ever extended to a chairman in the Fed’s 96-year history. The confirmation was a victory for US President Barack Obama, who had called Bernanke an architect of the recovery. Bernanke cleared the procedural vote easily, ultimately winning 77 votes. The final vote was a bit closer.

UK moves out of recession...but only just

The UK economy started growing again in the fourth quarter of 2009. However, the country’s GDP was a mere 0.1% bigger than in the previous three months. Britain’s mounting debt burden, which is forecast to rise to 78% of GDP by 2014, continued to worry investors. Meanwhile, a leading analyst said that Britain's battered banking system could no longer be ranked among the world's most stable. A damning report from credit rating agency Standard & Poor's said: "We no longer classify the UK among the most stable and low risk banking systems globally." PIMCO, one of the world’s biggest bond investors, said that the UK government debt market was lying "on a bed of nitroglycerine" because of the parlous state of the public finances.

Greek bonds yields touch 10-year high

Greek bond yields hit a 10-year high when the government denied reports that it had asked China to help it in funding public debt. Financial markets have been jittery over Greece’s deficit - although the government completed a successful sale of five-year bonds this week that brought in €8bn (US$11bn). Greek bonds slumped for a third day on January 28 and the cost to insure the country’s debt rose to a record after Prime Minister George Papandreou said that the government doesn’t need to borrow from European nations to curb its budget deficit. The yield premium investors demand to hold the securities instead of benchmark German bunds increased to the most since October 1998. The German and French governments denied a report in a newspaper that European Union member states are examining ways to provide financial assistance to Greece. "We need no bilateral loan," Papandreou told reporters in Davos, Switzerland. "We never asked for it."

Debt trouble...Greece seeks China's help

Sovereign defaults top 2010 risk hit list: WEF report

The risk that deteriorating government finances could push economies into full-fledged debt crises tops a list of threats facing the world in 2010, the World Economic Forum (WEF) said in a report. The WEF think tank, in its annual Global Risks report ahead of its meeting in Davos, said unsustainable debt levels ranked among the top three risks for the year ahead, alongside underinvestment in infrastructure and chronic diseases driving up health costs and reducing economic growth. Already fragile economies, particularly in the developed world, are at risk of overextending unsustainable levels of debt, potentially leading to full-blown crises with inevitable social and political consequences, not least higher unemployment, it said in the report. "Governments, in trying to stimulate their economies, in fighting the recession, are building unprecedented levels of debt and therefore there is a rising risk of sovereign defaults," said John Drzik, Chief Executive of management consultancy Oliver Wyman, which was one of the contributors to the WEF report

Fed continues to see slow recovery for US

Recovery in the US, the world's largest economy, will be a gradual one despite tell-tale signs of improvement in the key data points, according to the minutes from the Federal Reserve's last policy meeting in December. Incoming data started to take a more positive tone in the weeks prior to the Fed's policy meeting on Dec. 15-16. After the meeting, the Fed held policy steady and made only cosmetic changes to its policy statement. Fed officials welcomed the better news but said it did not change their outlook. And, although the November employment report was better than expected, Fed officials observed that more good news is needed on this front to provide convincing evidence of a sound recovery in the labor market. Fed policymakers were split about the forecast for inflation in the longer-term, but on the whole inflation is not a major concern for the US central bankers at the moment. The Fed staff expects core inflation to slow down over the next two years.

Obama unleashes new regulations on Wall Street

Wall Street suffered its worst one-day decline in nearly three months on January 21 after the Barack Obama administration announced a slew of proposals aimed at tightening the regulatory noose around the nation's biggest financial firms. The proposals aim to deter commercial banks from becoming so large that they put the broader US economy at risk and distort normal competitive forces. The proposed new norms include limiting the size and scope of Wall Street's trading operations.

Obama, who blames excessive risk taking by Wall Street firms for helping to cause the financial crisis, also intends to stop them from owning or investing in hedge funds. They also prohibit commercial banks from owning, investing or advising private equity funds. "If these folks want a fight, it's a fight I'm ready to have," Obama told reporters at the White House, flanked by his top economic advisers and lawmakers. "We should no longer allow banks to stray too far from their central mission of serving their customers," he said.

The proposed rules also would bar US financial institutions from proprietary trading operations for their own profit. The White House blames the practice for helping to nearly bring down the US financial system in 2008. They would also set a new limit on banks' size in relation to the overall financial sector that would take into account deposits as well as liabilities and other non-deposit funding sources. Only commercial banks that don't do proprietary trading on their own accounts would have access to the Federal Reserve's discount window, a government-lending facility through which banks borrow reserves at a discount.

This would separate commercial and investment banks. Key banks that would be covered by the proposed restriction include Citigroup, Bank of America, JP Morgan Chase, Wells Fargo. Traditional investment banks such as Goldman Sachs and Morgan Stanley could need to give up their status as commercial banks to continue proprietary trading of mortgage securities. Goldman Sachs would need to divest its private-equity and hedge fund businesses as well as limit its proprietary trading, based on the proposal.

The plan is in tune with the proposal of former Federal Reserve chairman and current economic advisor Paul Volcker, who has called for greater restrictions on financial institutions in the wake of the financial crisis. Before his announcement, Obama met Volcker. The White House did not discuss the proposal with the banking industry prior to making it public.

Obama slaps 'bailout' tax on financial firms

US President Barack Obama proposed a plan to tax financial companies that took bailout funds from Washington to keep them from collapsing like Lehman Brothers. The legislation is necessary to make sure Wall Street banks return the money they accepted in full. As per the Obama proposal, Wall Street banks are liable to pay up to US$117bn to reimburse taxpayers for the financial bailout, as he slammed bankers for their massive profits and obscene bonuses. "My commitment is to recover every single dime the American people are owed," Obama said at the White House yesterday, flanked by members of his economic team. "We want our money back and we are going to get it," he said. "My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people," Obama told reporters.

The fee calls for a levy of 0.15 of a percentage point on the balance sheets of companies with assets exceeding US$50bn. It is also aimed at helping to reduce the ballooning US budget deficit. The assessment on excess liabilities at big firms is designed to raise about US$90bn over 10 years. It would remain in place for at least 10 years, or until all losses from the Troubled Asset Relief Program (TARP) were repaid. Ten firms will pay 60% of the tax. The fee would need to be approved by Congress. Full details of the fee proposal will not be laid out until Obama delivers his budget for fiscal 2011 in early February.

The special assessment would apply to about 50 companies - including banks, bank holding companies, thrifts, insurance companies, and broker-dealers. The fee would not apply to hedge funds or mutual funds. AIG will be subject to the fee, but mortgage lenders Fannie Mae and Freddie Mac, which are under government conservatorship, will be excluded. The fee would also not apply to General Motors Co. and Chrysler, the still-ailing US automakers that got bailout money.

Euro-zone unemployment hits 11-year high of 10%

Unemployment in the 16-nation euro zone reached 10% in November, the highest level in eleven years. According to data from Eurostat, unemployment rose to 10% to from 9.9% in October. Economists had forecast November unemployment of 9.9%. Over 15.7 million people were unemployed, and in the broader 27-nation European Union, there were 22.9 million people unemployed. Unemployment was a staggering 19.4% in Spain, which has been reeling from the burst of a house price bubble. Irish unemployment was 12.9%, French unemployment was 10%, Italian unemployment was 8.3% while German unemployment was 7.6%. Other economic data have pointed to a mixed economic picture. Manufacturing and services-sector purchasing-managers' surveys have been showing robust expansion. But retail sales dropped 1.2% in November, as spending is frequently held back in periods of high unemployment.

Dubai inaugurates Burj tower

Dubai officially opened the US$1.5bn Burj Khalifa tower, which at 828 metres is the world’s tallest building. It will also contain the planet’s highest mosque and swimming pool. In mid-December Dubai received a US$10bn bailout from Abu Dhabi, a wealthier neighbouring emirate, to aid Dubai World, a state-backed conglomerate which faces a debt crisis caused by its commercial-property arm.

Burj Khalifa...can it tower over Dubai's debt woes

Toyota's image takes beating on massive recalls

Toyota's image as the world's No.1 automaker suffered as it ordered a recall of over a million more vehicles to replace floor mats that could get caught in gas pedals and cause sudden acceleration. Toyota's recall now included the 2008 though 2010 Highlander, along with the 2009 and 2010 model year Corolla, Venza, Matrix and Pontiac Vibe. Toyota already halted sales of the Highlander, Corolla and Matrix as part of the separate recall to fix sticking accelerator pedals. General Motors' Pontiac car is included in the recall because the Vibe and Toyota's Matrix are similar vehicles that were produced under a partnership between the two companies. Toyota recalled 4.3 million vehicles due to the floor-mat problem in October 2009, after first issuing a safety advisory warning the previous month, following a fatal accident involving a Lexus.

Apple unveils much-awaited tablet PC - iPad

Apple Inc. unveiled the much-anticipated tablet PC called iPad. CEO Steve Jobs took the wraps off the new Apple gadget at the Yerba Buena Center for the Arts in San Francisco. Apple will sell some iPad models with data plans from AT&T, with no contract required. The iPad's price starts at US$499, but this rate is likely to drop. Apple sold the first iPhone for US$599 but slashed the price to US$399 after a few months. The iPad has a 9.7-inch touch screen. It is a half-inch thick, weighs 1.5 pounds and comes with 16, 32 or 64 gigabytes (GB) of flash memory storage. The device comes with Wi-Fi and Bluetooth wireless technology, but there was no mention of a data connection. Jobs said the battery on an iPad lasts 10 hours, and that the device can sit for a month on standby without needing a charge.

GM gets new CEO in Ed Whitacre

General Motors (GM) appointed Ed Whitacre as chief executive. Whitacre, who is also GM’s chairman, had been given the job on an interim basis after Fritz Henderson’s abrupt resignation in December, just months after the carmaker emerged from bankruptcy protection. GM also said that it would repay the debt portion of its government aid by June, sooner than it had forecast. Separately, GM found a new buyer for Saab, two months after a deal with Sweden’s Koenigsegg fell apart. In a complex deal, Spyker, a Dutch maker of sports cars, will now acquire the marquee and save thousands of jobs at Saab’s Swedish factories.

Kraft to buy Cadbury for US$19.5bn

Kraft Foods Inc. said that it has agreed to buy UK chocolate maker Cadbury in a deal worth around 11.9 billion pounds (US$19.5bn). Kraft said that it will pay 500 pence and 0.1874 of its own shares for every Cadbury share, or the equivalent of roughly 840 pence a share in total. In addition, Cadbury holders will receive a dividend of 10 pence a share. The bid was recommended by Cadbury board. "We believe the offer represents good value for Cadbury shareholders," Cadbury chairman Roger Carr said in a statement. A purchase by Kraft would create a company with about US$50bn in annual sales. The offer values Cadbury at 13 times 2009 underlying earnings before interest, taxes, depreciation and amortization. Carr had repeatedly called Kraft's previous offer derisory and told shareholders that the bid - worth around 769 pence a share at Friday's closing price - was an attempt to steal the company.

Kraft’s Cadbury deal is ‘bad’ : Buffett

Oracle gets EU nod for Sun Micro acquisition

The European Commission approved Oracle Corp.'s acquisition of Sun Microsystems after the US database software titan addressed competition concerns about its acquisition of the open-source database MySQL, which Sun bought in 2008. Oracle said on Dec. 14 that it will boost investment in MySQL and is committed to keeping MySQL’s open-source licensing platform. "I am now satisfied that competition and innovation will be preserved on all the markets concerned," European Competition Commissioner Neelie Kroes said in a statement today in Brussels. "Oracle’s acquisition of Sun has the potential to revitalize important assets and create new and innovative products." With this, Oracle overcomes one of the last regulatory hurdles to the planned US$7.4bn transaction, though China and Russia still need to give their assent as well. US regulators approved the deal months ago. Oracle said that it expects to close the transaction shortly and has scheduled a conference call for next week on its strategy for Sun.

Web censorship...Google threatens to pull out of China

In a significant move, Google Inc. said that it may pull out of China, citing a series of cyber-attacks on its infrastructure and users. The web search giant said that it was no longer willing to accept censorship of its search results from the Chinese authorities. The announcement comes amid growing tensions between China and the United States over Internet freedom. During a visit to China in November last year, US President Barack Obama told an online town hall that he was a big supporter of non-censorship. Shares of Google fell following the news that it might withdraw from China, while shares of Baidu jumped.

February 2010

Domestic News

Petrol, diesel prices hiked

Petrol prices will be hiked by Rs 2.71 per liter and that of diesel by Rs 2.55 a liter, according to media reports. The increase will be effective from tonight. PSU oil refining stocks advanced following the announcement while yields on the benchmark 10-year government bonds edged up. In the Union Budget, the Finance Minister proposed to restore the basic duty of 5% on crude petroleum; 7.5% on diesel and petrol, and 10% on other refined products. He also proposed to enhance the Central Excise Duty on petrol and diesel by Re.1 per litre each. "The raise in fuel prices is to offset the impact due to hike in customs and excise duties," said Mr. Prayesh Jain, Analyst, India Infoline Research.

Aam aadmi remains at the core of UPA policies: President

13th Finance Commission: cut fiscal deficit to 3% by end-FY14

The Government must cut its fiscal deficit to 3% of the GDP by the end of fiscal year 2013-14 and eliminate its revenue deficit in 2014-15, according to the key recommendations of the 13th Finance Commission. The fiscal deficit is estimated at 5.7% in the year ending on March 2011, and will fall further to 4.8% in the year 2011-12, a 13th Finance Commission said. The report of the 13th Finance Commission, said that the fiscal deficit should drop to 4.2% in 2012-13 and to 3% in 2013-14. Finance Minister Pranab Mukherjee said that the Government has accepted all major suggestions of the 13th Finance Commission. The Centre must cap its total debt at 68% of the GDP by the end of financial year 2014-15, the report of the 13th Finance Commission stated.

Report of the 13th Finance Commission (2010-2015)

January inflation surges to 8.56%

India's inflation rose to 8.56% in January 2010 as against 7.31% in December 2009. The Government announced that it had revised November inflation rate to 5.55% from 4.78% forecast earlier. The official Wholesale Price Index (WPI) for 'All Commodities' for January 2010 rose by 0.8% to 248.5 from 246.5 in the previous month. Inflation stood at 4.95% during the corresponding month of the previous year. Build up inflation in the financial year so far was 8.90% compared to a build up of 1.51% in the corresponding period of the previous year, the Commerce Ministry said.

The Reserve Bank of India's (RBI) governor Duvvuri Subbarao said that the central bank could not focus on inflation alone and added that the large government borrowing influences monetary policy. At its policy review on January 29, the RBI raised banks' cash reserve requirements (CRR) by 75 basis points to 5.75% but left benchmark lending and borrowing rates unchanged at 4.75% and 3.25%, respectively.

Food inflation edges up...Hovers near 18%

There is no respite for the common man from spiraling food prices, even as fuel prices have softened a bit. Food inflation rose for the fourth straight week in early February, climbing to the highest level in six weeks, data released by the Commerce & Industry Ministry showed. Point-to-point inflation for the Food Articles group rose at a 17.97% pace in the week ended February 6 as against the annual rise of 17.94% in the previous week, the Government data revealed. Inflation in the Fuel & Power group dropped to 9.89% in the early part of February compared to 10.44% in the previous week, the Commerce Ministry said. Inflation in this group was at (-) 3.03% during the same week last year.

Govt unveils nutrient based subsidy for fertilizer sector

The Cabinet approved implementation of the Nutrient Based Subsidy (NBS) Policy on decontrolled Phosphatic and Potassic fertilizer with effect from April 1, 2010. It has been decided to fix the subsidy on the nutrients ‘N’ - Nitrogen, ‘P’ - Phosphorus, ‘K’ - Potash and ‘S’ – Sulphur contents for the year 2010-11. In addition to the fixed subsidy on above mentioned nutrients, there will be an additional per tonne subsidy for subsidized fertilizer carrying other secondary nutrients and micro nutrients in formulations approved under FCO 1985. The subsidy will continue to be disbursed through the Industry during the first phase. The industry will receive subsidy based on certification of sale by the State Governments / Statutory Auditors of the Company as in the past.

The NBS regime is expected to promote balanced fertilization and consequently increase agriculture productivity in the country through higher usage of secondary and micro nutrients. It is also expected that new innovative fertilizer products would be developed subsequently under the NBS regime to meet the different requirements of Indian agriculture. The NBS regime is expected to depict the actual demand of fertilizers in the country and promote realistic pricing of fertilizer products in the international market. Unshackling of fertilizer industry is also expected to attract fresh investments in this sector.

Since the subsidy on the subsidised nutrients and consequently subsidized fertilizers will remain fixed, the retail prices of subsidized fertilizers at farmgate level will be decided by the Companies. The Fertilizer Industry has assured that under NBS regime, the price line around the current level would be maintained during Kharif-2010. The Government in consultation with the fertilizer industry will make interventions in such a manner that the farmgate prices of non-urea fertilizers are, as far as possible, near the current prices so that the farmers are not adversely affected.

Urea which has the maximum tonnage consumed nitrogenous fertilizers in the country will continue to be under the current MRP regime. However, it has been decided to increase the maximum retail price of urea from Rs.4830 per MT to Rs5310 per MT with effect from April 1, 2010.

UP withdraws ban on entry of imported sugar

The UP government revoked the ban imposed on raw sugar imports into the state, thus making available an additional one million ton of sugar for the open market. The move put further pressure of sugar prices. In a letter dated Feb. 19 to S.K. Das, director in the traffic/transportation department of the Railway Board, Uttar Pradesh cane commissioner said that apprehensions of a bad law and order situation emanating from the import of raw sugar had subsided. Therefore, the Railways should now arrange for sufficient railway rakes to transport the raw sugar imported last year by UP sugar mills to the state forthwith. Raw sugar imported by UP sugar mills had been lying at the western ports since end 2009 after the UP government imposed a ban fearing a widespread disturbance by sugarcane farmers, besides damage to the Railway property.

Govt puts off commercial launch of BT Brinjal

Bowing to relentless protests by farmers the Government rejected the country's first genetically modified food - Bt Brinjal. Aubergine had been genetically modified by the Maharashtra Hybrid Seed Company Ltd., known as Mahyco, in which Monsanto has a 26% stake. The Government put the commercial introduction of Bt Brinjal on hold following pressure from 13 state governments, groups opposed to genetically-modified food and members of the scientific community. The Union Environment Minister Jairam Ramesh announced the decision to impose an open-ended moratorium on the release of Bt Brinjal till the time independent scientific studies establish, to the satisfaction of both the public and professionals, the safety of the product for humans. Significantly, the moratorium is only on approving commercial trials for Mahyco's Bt Brinjal variety using the Cry1Ac gene. Apart from Mahyco's Bt Brinjal, trials of another variety by the Indian Institute of Horticulture Research, Bangalore, using Cry2A Bt gene are at an advanced stage. The Indian Institute of Vegetable Research at Varanasi has also developed a variety of Bt Brinjal using a different gene.

Govt to auction 3 slots of 3G spectrum

The Government will auction three slots each of 3G wireless spectrum in most of its telecoms zones, including in the lucrative Delhi and Mumbai regions, from April 9, the Telecom Ministry said. The Centre had earlier planned to auction four slots in Mumbai and two in Delhi. Of the 22 telecoms zones, 17 will see auctions for three slots each, while four slots each would be up for bids in the rest, the Telecom Ministry said in a document. The Government, through the Department of Telecommunications (DoT), proposes to allot the rights to use certain specified radio spectrum frequencies in the 2.1GHz band (3G Spectrum) and in the 2.3GHz band (BWA Spectrum) by means of auction in various telecom service areas in India. Separate process will be carried out for allotting 3G Spectrum blocks and BWA Spectrum blocks.

Wireless subscriber base reaches 545.05mn in Jan'10

Govt remains in a fix over 3G auction

With only a month and a half to go before the current fiscal year ends, the fate of the already delayed 3G auction is still hanging in balance. The Government is still not certain whether it can hold the 3G auction before the end of March. At the same time it is not perturbed in case it fails to meet the deadline. The Finance Ministry reportedly cleared the decks for 3G auction by the end of March, by assuring the Law Ministry that it would give spectrum to all the successful bidders by September 1 instead of selectively releasing the airwaves. But, the Government is not sure if it can conduct a 3G wireless auction before the end of the current fiscal year, Finance Secretary Ashok Chawla said.

"The issues relating to 3G auction have been resolved, but I can't say whether the actual auction will happen before March 31," Chawla said. At the same time, Cabinet Secretary K M. Chandrasekhar said that it does not matter if the 3G auction happens in this fiscal year (FY10) or the next (FY11). He added that Centre would like to garner maximise possible revenue from the 3G auction and would set a date accordingly. "I think all the issues have been resolved," Chandrasekhar told reporters in New Delhi. "I don't think it really particularly matters if this year or next year."

The 3G auctions for all-India licences were initially scheduled to begin on February 13 but were postponed to a time-frame between mid-February and March 5. It is not clear whether the DoT will follow this schedule or announce a new set of dates within the financial year. 3G auction has been deferred time and again on differences between the Telecom Ministry and the Defence Ministry over vacation of spectrum by the armed forces. Lack of revenues from 3G auction will hurt the fiscal position with budget deficit at a 16-year high. The Government has projected a fiscal deficit of 6.8% of the GDP for the current fiscal year.

Teaser home loans...Banks refuse to toe RBI line

Banks have reportedly rejected the Reserve Bank of India's (RBI) repeated suggestion to give the benefit of cheaper home loans to existing customers as well saying that the move will hit their bottom lines. It is not feasible for banks to change their deposit rates to compensate for the loss of interest income arising from lowering the home loan rates for current borrowers, an official of the Indian Banks Association (IBA) was quoted as saying. The IBA will discuss the central bank's latest letter at its managing committee meet on Feb 26, according to reports. In January, the RBI had voiced concerns over the so-called 'teaser' home loan rates. Later, the central bank said that the cheaper home loan rates should be extended to existing borrowers as well. The RBI is believed to have sent two letters over the past two months to the IBA, seeking an explanation on this issue.

RBI releases guidelines on the Base Rate

Infra financing...RBI unveils new NBFC category

The Reserve Bank of India (RBI) issued a notification introducing a new category of Non-Banking Finance Companies (NBFCs) as Infrastructure Finance Companies (IFCs). The existing categories of NBFCs are Asset Finance Companies (AFCs), Loan Companies (LCs) and Investment Companies (ICs). In addition, with a view to encouraging larger flow of funds to the crucial infrastructure sector, the exposure of a bank to IFCs has been enhanced to 20% of its capital funds. NBFCs should also deploy a minimum of 75% of total assets in infrastructure loans to be recognised as IFCs, the RBI said in a statement. NBFCs with net owned funds of Rs 3bn or above with a minimum credit rating ‘A’ or equivalent of CRISIL, Fitch, CARE, ICRA or equivalent rating by any other accrediting rating agencies could enter infrastructure financing, the central bank said. Unlike banks, which have to maintain a 9% capital adequacy ratio, IFCs need to maintain a CAR of 15%, of which at least 10% should comprise tier one capital. As per the RBI notification, IFCs will not be subject to the borrower limits which restrict NBFCs from lending to any single borrower by 10% of its owned fund, and any single group of borrowers by 15% of its owned fund. IFCs are also exempt from the restriction limiting single party exposure to 5% of net owned fund and group exposure to 10% of net owned fund.

Bharti Airtel redials Africa with Zain bid

Bharti Airtel launched a bid to expand into Africa’s telecoms market by entering talks to buy most of Zain's business in the region. Zain is based in Kuwait. The proposed deal, valued at US$10.7bn, comes almost five months after Bharti’s second attempted acquisition of MTN in South Africa was rebuffed. Shares of Bharti tumbled amid concerns about the high value of the deal and its possible impact on Bharti's balance sheet and earnings. Bharti said that the total enterprise valuation would be adjusted against US$1.7bn of Zain’s debt. The Kuwait-based company has US$5bn debt on its books. The Bharti statement also added, "It has been agreed that a sum of US$700mn out of the total payable amount would be paid after one year from closing of the deal, whose deadline has been fixed for March 25." The two companies also agreed to a break-fee of US$150mn, payable by either side on terms and conditions customary to a deal of this nature and size. Bharti and Zain are in exclusive talks until March 25 for the Kuwaiti firm's operations in 15 African countries. Zain also said that upon successful conclusion of the deal, this transaction would reflect an equity value of about US$9bn for Zain Africa.

Bharti Airtel rating under scrutiny on Zain bid: S&P

NSE inducts 11 new securities in F&O

The National Stock Exchange (NSE) has decided to include 11 additional securities in its futures & options (F&O) segment with effect from February 19, 2010. The announcement was made by NSE vide a circular issued after market hours on Tuesday, February 16, 2010. The new additions include Adani Enterprises, Apollo Tyres, Areva T&D India, BGR Energy Systems, Fortis Healthcare, Godrej Industries, Jain Irrigation Systems, McLeod Russel, Mundra Port & SEZ, OnMobile Global and Videocon Industries. This is the first time in nearly two years that NSE has included stocks in the derivatives segment. After the market crash of 2008, the NSE removed shares of several companies from the derivative segment as they had turned illiquid. At the peak of the stock market boom, there were nearly 225 scrips in the F&O segment of NSE. The inclusion of new stocks would take the number of stocks traded on NSE’s F&O segment from 179 to 190. This would significantly increase volume and improve market depth.

Govt revisits oil price deregulation

The Kirit Parikh panel submitted its much-awaited report on fuel pricing to the Petroleum Ministry. The experts group, headed by the former Planning Commission member Kirit Parikh, recommended freeing of petrol and diesel prices, while raising kerosene and domestic LPG rates by Rs 6 per litre and Rs 100 per cylinder respectively. The committee recommended that prices of kerosene and domestic LPG should be raised in line with the per capita income. At current levels of global prices, the proposal if implemented would result in hike of the petrol and diesel prices by around Rs 3.9/litre and Rs 3.2/litre, respectively. The move will lead to nil under-recoveries on auto fuels as the entire burden would shift to the consumers. However, chances of deregulation of diesel prices are fairly slim on account of its impact on inflation. Currently, under-recoveries on these products are Rs 287/cylinder and Rs 16.5/litre. The recommendation, if implemented, would result in reduction in the subsidy burden by around Rs70.2bn on kerosene and Rs78.8bn on the domestic LPG, resulting in reduction in under-recoveries by around Rs149bn. Petroleum Ministry has given an assurance that the matter will be processed in a week's time. The Cabinet will then take up the report. It will be put up before the Cabinet in a week's time and it will be considered by the Government at the highest level in about 15 days.

Govt OKs ONGC, GAIL Investments in Myanmar

The Government allowed Oil and Natural Gas Corporation (ONGC) and GAIL India to take 8.35% and 4.17% stake respectively, in a pipeline that China is building in Myanmar to transport gas from offshore blocks A-1 and A-3. ONGC Videsh Ltd. (the overseas investment arm of ONGC), and GAIL have been permitted to infuse US$167.84mn (Rs7.76bn) and US$83.88mn (Rs3.88bn), respectively to fund the building of the pipeline. Overall, the Cabinet Committee on Economic Affairs (CCEA) permitted OVL to invest an additional US$832.54mn (Rs38.49bn) in the blocks and in the pipeline project. The approval took the total investment by OVL in the project to over US$1bn (Rs46.23bn). The Government also authorised ONGC to provide financing/guarantee support for the additional investment by OVL in the project.

GAIL will invest up to US$502mn (Rs23.2bn) in the projects. China National Petroleum Corporation (CNPC) is building the US$2bn (Rs92.46bn) pipeline to ship gas from the two Myanmar blocks (A-1 and A-3) to Southwest China's Yunnan province. The blocks A-1 and A-3 are under development phase from November 2009. As on October 31, 2009, OVL and GAIL (India) had made an investment of US$115.77mn (Rs5.35bn) and US$56.79mn (Rs2.62bn), respectively for exploration in the two blocks.

Govt clears Rs8bn equity infusion in Air India

The Government has approved the proposal for release of equity support of Rs8bn in two equal monthly installments to National Aviation Company of India Ltd. (NACIL). This equity infusion had earlier been approved by the GoM headed by the Finance Minister. The release of funds will be calibrated to the achievement of milestones laid down by the Group of Ministers (GoM). NACIL is currently facing severe financial losses which are compounded by its costly legacy assets, weakening revenue stream and high cost structure, resulting in rising liabilities. The GoM had accepted the company’s savings and cost reduction plan of Rs.1911 crores for the financial year 2009-10. NACIL has initiated action as part of the Turnaround Plan along with cost reduction/revenue enhancement programme. NACIL’s present paid up equity capital of Rs 1.45bn is not sufficient for an aviation company of its size. The equity induction will not only ease the cash flow situation of the company but would also preclude borrowing from the markets at a high cost. The turnaround/restructuring plan of NACIL will be monitored and reviewed by Ministry of Civil Aviation, COS and GOM periodically.

January air passenger traffic up 23% yoy

There is more good news on the recovery front as far as the Indian economy is concerned. The domestic airline industry, which was struggling badly a few months back, appears to be in fine fettle. Passengers carried by the domestic Indian airlines in January 2010 stood at 41.41 lakh as against 33.76 lakh in the corresponding period of the year 2009, thereby registering a growth of 22.7%. However, the January 2010 figures are lower in comparison with that of December 2009 when domestic airlines carried 44.87 lakh passengers. The double-digit growth in January this year came on the heels of a 33% growth recorded in December 2009 over the year-ago period. What's more, it reverses the negative trend considering that January 2009 saw traffic falling by 14% year on year. This was also the fourth consecutive month that the domestic airlines carried more passengers compared with the same period of the previous year.

Jan car sales up 32% yoy

India’s domestic car sales rose by 32% to 145,905 units in January 2010 from 110,300 units sold in the same month a year ago, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. Utility Vehicle (UV) sales were up 54.7% at 26,120 units in January 2010 while the total passenger vehicle sales rose by 36.6% to 187,605 units. Local sales of trucks and buses (CVs) jumped 130.8% to 53,447 units from 23,154 units in January 2009, according to the SIAM data.

Two wheeler sales grew by 43.4% to 834,383 units in January this year from to 581,729 units in the year-ago period. Motorcycle sales in January 2010 were up 43.7% at 650,633 units versus 452,809 units sold in the corresponding month last year. Total three-wheeler sales rose by 46.5% to 38,722 units during January 2010 compared with 26,435 units sold in the same month a year earlier.

Total sales of automobiles stood at 11,14,157 units in January 2010 as against 768,698 units sold in January 2009, representing an increase of 44.9%. Total exports were up 45.7% at 150,780 units in January 2010 with shipments of passenger cars growing by 77% to 38,118 units.

REC FPO subscribed over 3 times

Rural Electrification Corp.’s (REC) FPO was subscribed by 3.1 times. The QIB section was subscribed by 5.6 times, while the Non-Institutional segment was subscribed 1.2 times and the Retail section was subscribed just 0.2 times. Foreign Institutional Investors (FII) demanded 1 time the company’s FPO book. Most of the FII and MF bids were at Rs206 per share. 44% of the demand came in at Rs205/share and 30% of demand came in at Rs206/share. Reports further stated that Life Insurance Corp (LIC) and SBI may not get any allotment of shares as its bids were at Rs205/share. Global funds like HSBC’s Halbis Capital, New Vernon and Morgan Stanley bid at higher prices than the local institutions.

SBI to raise up to US$4.3bn via rights issue

SBI plans to raise up to US$4.3bn through a rights equity issue in 2010-11. The bank needs about half the amount to sustain growth over the next 5 years, the chairman was quoted as saying. O.P. Bhatt said, the bank would need to raise US$8.6bn to feed demand for loans over 5 years in the fast-growing economy. "If we can raise half of it anytime during the next 12-18 months, it will be great," he added. The Rs100bn to Rs200bn rights offering will need the support of the Government, which owns about 60% of the bank.

Maruti to recall A-star due to fuel tank issue

Maruti Suzuki said that it has recalled more than one lakh units of the A-Star hatchback due to a fuel tank problem. The company also said that it expects the total cost to be around Rs300mn. The Gurgaon-based automaker will bear around 40% of this. The company expects to sort out the problem in all affected models by mid-April. It has cleared around 40% of the vehicles affected in the domestic market. The problem, which was highlighted by an internal company study in November 2009, is because of an anomaly in the fuel tank, which may cause fuel leakage when filled to the brim. Maruti Suzuki had started contacting customers since December last year and said that it is changing the fuel pump gasket and the O-ring at zero cost for the models affected. The recall affects all A-Star models produced between the launch in November 2008 and August 22, 2009, including those exported.

Recall of A-Star a proactive step: Maruti

Volkswagen launches the new Polo at Rs.4.34 lakhs

Tata Motors hires Carl-Peter Forster as group CEO

Tata Motors appointed Carl-Peter Forster as the Group Chief Executive Officer of the company. He will have the overall responsibility of Tata Motors Operations globally, including Jaguar Land Rover (JLR). Forster, 55 years, has 24 years of international experience in the automobile industry. Most recently he was the head of General Motors, Europe, where he looked after Opel/Vauxhall, Saab and the European activities of Chevrolet. Before joining General Motors in 2001, Forster has had 13 years of experience in BMW where he held various positions including that of Managing Director of BMW South Africa and was also on the Managing Board of BMW responsible for manufacturing. The company also announced its group sales, global sales stood at 85,714 nos. in January 2010, a growth of 93% over January 2009. Cumulative sales for the fiscal (April 2009 – January 2010) are 681,480, higher by 13% compared to the corresponding period in 2009-10.

US woes mount for Ranbaxy

The US Food & Drug Administrator (FDA) reportedly asked Ranbaxy to immediately assess the manufacturing practices at its plants that make drugs for the American market, saying that the Indian company has failed to adequately address the concerns raised by it earlier. "FDA expects Ranbaxy to immediately undertake a comprehensive assessment of its global manufacturing operations to ensure that all sites manufacturing drug for the US market conform to US requirements," the USFDA said while issuing a warning letter to one of the company’s plants in the US recently. The warning will not have any immediate financial impact on Ranbaxy, majority-owned by Japanese pharma major Daiichi Sankyo, as it is not accompanied by a ban on the drugs made at the plant. The US market accounted for about a quarter of Ranbaxy’s US$1.6bn revenues for the year ended 2008.

Gurgaon-based Ranbaxy said it had nothing to add beyond the statement it had issued on December 24 at the time of receiving the warning letter from the USFDA. The USFDA's warning letter was posted on the regulator’s website. Ohm Laboratories, Ranbaxy’s US subsidiary, received the warning letter on Dec. 21, from the USFDA for its liquid manufacturing facility located in Gloversville for violations of US manufacturing standards during inspections between July and August, 2009. Since then, Ohm has hired the services of PRTM, a global consulting firm, to provide expertise and advice on issues raised by the USFDA.

Bharti Retail launches easyday Market in NCR

Bharti Retail, a wholly owned subsidiary of Bharti Enterprises, launched its first compact-hypermarket store 'easyday Market' in the National Capital Region. Located at Mahgun Metro Mall, Vaishali, Ghaziabad, the new store offers customers a great shopping experience, high in-stock levels and a wide range of quality products at the best prices under one roof. The easyday Market in Ghaziabad is a 50,000 sq. ft. store offering over 12,500 quality products.

Reliance Infra consortium bags Rs50bn Mumbai sea-link deal

The Maharashtra government decided that a consortium led by Reliance Infrastructure - a part of the Anil Dhirubhai Ambani, or ADA Group - will build a planned sea link between Worli and Haji Ali. The first part of the project, which connects the Mumbai suburb of Bandra to Worli, was built by HCC. The Maharashtra government's cabinet sub-committee on infrastructure cleared the project that had been stuck for about a year. The committee also decided to initiate the process to invite bids for Haji Ali-Nariman Point section of the sea link. The bids for the 4.7-km leg of the Worli-Haji Ali sea link were opened on Feb. 4 last year, wherein a Reliance Infrastructure-led consortium emerged the lowest bidder, requiring a viability gap funding (VGF) of Rs13.92bn. The other bidders, comprising HCC, John Laing and Samsung, sought Rs24.66bn as VGF.

Dubai World unit exits SpiceJet

Reliance Mutual, Birla Mutual and DSP BlackRock and a FII bought almost the entire 13.05% stake in SpiceJet Ltd. of Istithmar PJSC, a Dubai-based investment house. The three Indian MFs together bought stake amounting to 9.61% in SpiceJet. Birla Mutual bought 4.14%, DSP BlackRock 3.6% and Reliance MF 1.87%. The unidentified FII got the balance stake. With this, the total foreign holding in SpiceJet has reduced to a little over 26% from 35% earlier. The deal was struck at Rs52.01 per share and is valued at Rs1.69bn. Istithmar was holding a 13.39% stake in the company. Istithmar sold about 31.5 million shares out of the 32.3 million. However, the company still holds about US$12mn worth of Foreign Currency Convertible Bonds (FCCBs).

Fame India remains in spotlight amid bidding war

Shares of Fame India extended the recent winning streak amid a tug of war between Inox Leisure and Reliance MediaWorks for the control of the Mumbai-based multiplex operator. On February 22, Reliance MediaWorks launched a counter bid for buying a 62.08% in Fame at Rs 83.40 per share. The Reliance MediaWorks offer for will open on April 1 and close on April 20. Reliance MediaWorks is an Anil Ambani-controlled company and holding company for BIG Cinemas. Reliance MediaWorks' open offer price represents a 63.5% premium over the open offer price of Gujarat Fluro Chemicals-promoted Inox Leisure to Fame shareholders. Earlier, Inox Leisure had signed an agreement to acquire 43.28% promoter's stake in Fame for Rs660mn and bought a further 7.21% stake from open market at Rs127mn. Presently, three Anil Ambani group firms Reliance MediaWorks, Reliance Capital Partners and Reliance Capital together hold about 12.14% stake in Fame India. ADAG objected to the Inox-Fame deal. It said that the Inox offer for Fame India was inferior to its own bid of Rs 80.

Shree Renuka Sugars acquires Grupo Equipav

Telenor acquires further stake in Unitech Wireless

Uninor, the joint venture between Unitech and Telenor, announced that it has received the fourth and final round of the planned fresh equity investment from the Telenor Group. With this, the Telenor Group has invested a total of Rs61.35bn of new equity into the company, taking its ownership to 67.25%, as per the shareholders' agreement. The Cabinet Committee on Economic Affairs (CCEA) had approved Uninor's application to increase its foreign shareholding up to 74% in 2009. Uninor aims at achieving EBITDA break-even within 3 years and Operating Cash Flow break-even within 5 years of launch of operations and a market share of 8% by 2018.

Delightful debut for Jubilant Foodworks

Jubilant Foodworks, which runs the fast pizza chain under the Dominos brand, ended its maiden trading day with delicious gains, ending at Rs229 on the BSE as against its issue price of Rs145. The shares of Jubilant Foodworks got listed at Rs161.60, a premium of 11%. While the stock moved in a narrow range for most part of the trading day, there was substantial buying towards the end of the session which saw the share price climb to the day’s high of Rs 241.95, before closing at Rs 229. The price band of IPO, through which the company raised up to Rs3.29bn, was fixed between Rs135 to Rs145 per share. The issue closed on January 20. The company had entered the capital market with an issue size of 2.26crore shares of Rs10 each. The company had already roped in several anchor investors that includes Reliance MF, SBI MF, Blackrock, Canara Robeco MF and Fidelity for a total investment of Rs443mn under its pre-IPO placement.

Hathway Cable loses connectivity on debut

Hathway Cable & Datacom Ltd., one of the largest Cable TV services companies, started trading at Rs250 per share as against its issue price of Rs240. However, the stock soon fell below its issue price. The company entered the capital market with 227,55,000 equity shares of Rs10 each for cash at a price band of Rs240 to Rs265 through a 100% book building process. The IPO just managed to get subscribed by 1.36 times on the final day of the IPO. Most of the bids came at the lower end of the price band. The QIBs portion received subscription of 1.43 times its allocated portion, the Non Institutional Investors segment got subscribed 4.28 times and the Retail Individual Investors portion received subscription of 0.2754 times.

Dismal debut for DB Realty

Aqua Logistics sees muted debut

Vascon Engineers slips on listing

Vascon Engineers Ltd., an engineering, procurement and construction (EPC) services and real estate development company, closed the maiden trading day on the bourses at Rs146.45, down 11.24% to its issue price of Rs165. It touched an intraday low of Rs145.10 and high of Rs171.95 on the NSE. Traded volume stood at 94,70,462 shares and the turnover was Rs1.44bn. On the BSE, the stock touched a day's high of Rs173.45 and low of Rs144, before closing at Rs147.20, down 10.8%. The public issue of 10,800,000 equity shares was opened for subscription between January 27 and January 29 at a price band of Rs165-185 and was subscribed 1.22 times. The company raised Rs1.78bn from the IPO, which will be used for construction of EPC contracts and real estate development projects; repayment of debt and general corporate purposes.

In the pink of health...Syncom shines on debut

Thangamayil Jewellery ends below issue price

Infinite Computer makes decent debut

Shares of Infinite Computer Solutions Ltd. listed at Rs170 on the National Stock Exchange (NSE), a premium of Rs5 against its issue price of Rs165 a share. The stock touched a high of Rs206 and finally ended at Rs192 - up 16% from its issue price. Around 16.37 million shares were traded on the BSE on its debut day. The stock closed the week at Rs207. Infinite had entered the capital markets with an IPO of Rs 189.8 crore. The issue was subscribed over 43 times and the price band was set at Rs 155-Rs 165 per share. Infinite Computer is a global service provider of infrastructure management, intellectual property leveraged solutions and IT services. The company will use the proceeds for capital expenditure, acquisitions and repayment of debt.

Troubles mount for Vishal Retail

Ram Chandra Agarwal, founder and managing director of Vishal Retail Ltd., said that he is prepared to step down as the head of the company if that helps the beleaguered retailer. "I am agreeing to anything that is in the benefit of the company, including stepping down," he said. Vishal Retail has been posting losses over the last three quarters amid an economic slowdown that has hit retailers hard. Agarwal also said that he was also prepared to dilute an unspecified stake from his share of 63% in Vishal Retail to pave the way for any investor. Reports said that private equity firm TPG has evinced interest in acquiring a majority stake in Vishal Retail, which has gone in for corporate debt restructuring (CDR). Investment banking sources said TPG has made a Rs2.5bn offer for the stake held by Vishal Promoter and Chairman Ram Chandra Agarwal before the CDR cell. Agarwal and other promoters hold 60.23% stake in the company. The TPG proposal values the beleaguered apparel retailer at Rs4.17bn. The Mumbai-based CDR cell is holding talks with lenders as part of Vishal Retail’s debt recast.

International News

Fed not in a hurry to raise rates: Bernanke

Federal Reserve chairman Ben S. Bernanke reassured common Americans, corporates and world markets that he will keep interest rates at record low for the foreseeable future, as the economic recovery in the US is still fragile. In his first day on Capitol Hill this week, Bernanke told the House Financial Services Committee that while the economic recovery is moving along, the job market remains weak. Against this backdrop, the Fed is unlikely to lift the fed funds rate, the key overnight bank lending rate, anytime soon. However, he did imply that the Fed will at some point need to raise the fed funds rate. Bernanke was scheduled to appear before the Senate on Thursday.

Bernanke's prepared testimony had hardly any surprises, and he gave no new clues regarding the future of monetary policy. As a result, Fed watchers maintained their own forecasts for monetary policy. Many see the first rate hikes coming in the fall of 2010; others see no move until next year. Financial markets, which have been rattled of late amid mounting worries about an impending reversal in loose money policy, heaved a sigh of relief. Markets seemed happy that Bernanke wasn't hawkish.

Obama unveils US$3.8 trillion US budget

US President Barack Obama projected that the budget deficit of the world's largest economy would peak at a new record this year before easing, as he pushed for fiscal responsibility while fighting double-digit unemployment. "In the long term, we cannot have sustainable and durable economic growth without getting our fiscal house in order," Obama said in a statement with the budget’s formal release. His budget for the fiscal year to September 30 next year, a blueprint subject to change by Congress, forecast a deficit of US$1.56 trillion this year, equal to 10.6% of gross domestic product (GDP). The rise was partly due to spending associated with a package of emergency stimulus measures Obama signed last year as the US grappled with recession. The increase in the 2010 deficit compared with a US$1.41 trillion shortfall in 2009 that amounted to 9.9% of GDP. But this funding gap was forecast to dip to US$1.27 trillion next year - 8.3% of GDP and a third of total government spending forecast at US$3.8 trillion.

Fed to look into Goldman-Greece dealing: Bernanke

Federal Reserve Chairman Ben Bernanke announced that the US central bank was looking into Goldman Sachs' dealings with the Greek government. Reports stated that the European Union has demanded that the Greek government provide details of how it used currency swaps and other instruments. Bernanke said that the Fed was looking into trading of credit default swaps (CDS) that allow financial firms and investors to bet that Greece will default on its debt, report added. "We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece," Bernanke said in a testimony before the Senate Banking Committee in Washington. Bernanke was responding to a question from Senator Christopher Dodd, a Connecticut Democrat, who asked if there should be limits on the use of credit default swaps to prevent runs against governments. Greek bonds slid amid concern that the country’s credit ratings may be cut.

Further downgrade in Greece's rating possible: S&P

Standard & Poor's Ratings Services said that there is no immediate threat to Greece's BBB+ long-term and A-2 short-term sovereign credit ratings, but warned that a ratings cut is possible in the near term. "In our view, a further downgrade of one to two notches is possible within a month," said Marko Mrsnik, an S&P credit analyst. S&P had lowered Greece's long-term rating to its current level on Dec. 16. Confidence in Greece has deteriorated after it was revealed late last year that the country's 2009 deficit was close to 13% of its gross domestic product, significantly more than the euro-zone's 3% limit.

IMF to sell 191 tons of gold...prices edge lower

The International Monetary Fund (IMF) said that it plans to sell 191.3 tonnes of gold to raise new resources, pushing spot prices and gold-miner shares lower. The value of the planned sales would be worth about US$6.2bn at current prices, according to some estimates. The sales would follow the unloading of 212 tons of IMF gold to three central banks, part of a program approved by the executive board in September. Those transactions under the previous tranche of the IMF gold-sale program consisted of a 200-ton sale to the Reserve Bank of India (RBI) in October, followed by November sales of two tons to the Bank of Mauritius and 10 tons to the Central Bank of Sri Lanka. The latest planned sales would complete the IMF's program to reduce its holdings of the precious metal by about one-eighth. The IMF announced last year that it would sell 403.3 tonnes of gold, about one-eighth of its total stock, to diversify its sources of income and increase low-cost lending to poor. The world lender said that the open-market sales will be conducted in a phased manner over time to avoid disruptions of the gold market.

WGC anticipates orderly execution of IMF gold sales

UK consumer inflation breaches official target

Its time for the Bank of England (BOE) governor Mervyn King to write a letter to the Chancellor of the Exchequer, Alistair Darling, explaining the jump in consumer price inflation (CPI) beyond the tolerable level, and set out a plan to return to the goal. Consumer prices in the United Kingdom rose at an annual pace of 3.5% from a year earlier, the most since November 2008, the Office for National Statistics said in London. The gain, fueled mainly by the increase in sales tax, was below the 3.7% consensus forecast. On a monthly basis, inflation in Britain fell by 0.2% in January, the smallest drop for the month since records began in 1997. The BOE had warned that January inflation was likely to rise due in part to the expiration of a temporary cut in the value-added tax at the end of December. The BOE chief is required to write an open letter to the Treasury when inflation misses the 2% target by more than a full percentage point. Today’s letter from King is the sixth since the bank was granted independence in setting interest rates in 1997.

IEA hikes global oil demand forecast

The International Energy Agency (IEA) revised its forecast for global oil demand for the year 2010 by 170,000 barrels per day, citing the stronger than anticipated rebound in the global economy. However, a higher price assumption and persistently weak OECD oil demand. Global oil demand is estimated at 86.5 million barrels a day in 2010, or 1.8% higher than 2009 levels, the IEA said in its monthly report. This growth in demand will come entirely from emerging, non-OECD economies. Meanwhile, the US government and OPEC came out with contrasting estimates for global oil demand this year, with the Energy Information Administration (EIA) boosting its growth forecast while OPEC trimmed its downbeat prediction.

Toyota chief apologizes for massive global recalls

Toyota President and CEO Akio Toyoda apologized again at a hastily arranged news conference, where he said that Toyota would establish a high-level committee to study the problems. "I came out here because I would not want our customers to spend the weekend wondering whether their cars are safe," he said. The apology came as pressure mounted for Toyota to address complaints about the brakes on its Prius hybrid, and as Congress prepares next week for the first of two hearings on whether the automaker has been forthcoming about safety problems.

Toyota has recalled more than 9 million vehicles worldwide to prevent the risk of unintended acceleration in its vehicles, which the automaker has blamed on sticky gas pedals and floor mats that can entrap the gas pedal. Toyoda spoke amid Japanese news reports that Toyota would recall its Prius, the target of a US government investigation into reports that it sometimes loses braking power. Toyoda made no announcement on a Prius recall but said he would head the new task force to review internal checks, analyze consumer complaints and get input from outside experts to address the company's quality control.

Still, Toyota raised its earnings outlook for the year ending in March despite the cost of the recall, which it estimated at US$2bn. There was a sharp drop in Toyota’s sales in the US in January. But its woes proved a blessing for other carmakers, particularly for Ford, which saw sales rise by 24% in January compared with a year earlier.

Honda to recall nearly 379,000 vehicles in US

Even as Toyota is battling fast erosion in its global brand equity, its fellow Japanese car maker Honda Motor Co. Ltd. said that it would expand a recall by nearly 379,000 vehicles in the US to replace an airbag deflator that could rupture and send shards toward the driver during an accident. The problem has been linked to one fatality and 11 injuries. "The driver's airbag inflator could produce excessive internal pressure, which may cause the airbag inflator casing to rupture, resulting in metal fragments passing through the airbag cushion material and possibly causing injury or fatality to vehicle occupants," Honda said. In total, about 826,000 vehicles are affected by the US recalls. The latest expansion of the recall applies to 2001 and 2002 model-year Accord, Civic, Odyssey, CR-V, and 2002 Acura TL vehicles. Honda said that an additional announcement was coming shortly from Japan that would detail the steps it is taking in other markets and in conjunction with Japanese regulators.

Schlumberger to buy Smith International

Schlumberger Ltd., the world's biggest oilfield services company, has agreed to purchase Smith International Inc. for around US$11bn in stock to diversify its product offerings. Smith, based in Houston, makes drilling tools, bits and other products for the oil and gas industries. Under terms of the transaction, Smith stockholders will receive 0.6966 of a Schlumberger share for each share held. Based on Schlumberger's closing stock price on Feb. 19 of US$63.90, that values Smith shares at US$44.51 each. Based on Smith's 247.4mn shares outstanding, the all-stock purchase is worth US$11.01bn. Smith shareholders will own about 13% of the combined company once the deal is completed, likely in the second half of 2010.

March 2010

Domestic News

Base rate to kick in from July 1: RBI

The Reserve Bank of India (RBI) said that the new base lending rate for banks will take effect from July 1. In mid-February, the RBI had said that it would introduce the base rate from April. According to draft guidelines on the central bank's website, the actual lending rate charged to borrowers would be the base rate plus borrower-specific charges including product-specific operating cost, credit-risk premium and tenure premium.

Separately today, State Bank of India (SBI) chairman said that the benchmark prime lending rate (PLR) and base rate will both continue until the complete implementation of the new base rate. "Base rate is meant for new borrowers and we will have to take care of old borrowers also," O.P. Bhatt, chairman of the country's biggest public sector bank said. He said lending rates were unlikely to jump up till May and the bank would review home loan rates by March 31.

India's January exports up 11.5% YoY

India's merchandise exports rose by 11.5% YoY in January 2010 to touch US$14.34bn, data released by the Government showed. Imports for the month under review were up by a strong 35.5% at US$24.7bn, the Commerce & Industry said in a statement. The trade deficit for January 2010 stood at US$10.36bn versus US$5.34bn in January 2009, the Commerce Ministry added. Exports for January 2010 were up by 4.9% in Rupee terms, while imports grew by 27.6% in local currency terms. Oil imports during January 2010 were up 56% at US$7.05bn while Non-oil imports rose by 28.8% to US$17.65bn.

Food inflation falls for 3rd successive week

Food inflation in India dipped marginally in the middle of March, falling to a five-month low, the government said. This was the third consecutive drop in food inflation in as many weeks. Inflation also fell in the Primary Articles group and Fuel group, it said. Inflation for the Food Articles group dropped to 16.22% in the week ended March 16, as compared to 16.3% in the previous week, the Commerce & Industry Ministry said. Inflation in the Non-Food Articles category too slipped to 13.06% from 13.99% in the week ended March 6. Primary Articles inflation stood at 13.88% in the week under review versus 14.16% in the preceding week. Inflation in this crucial group was at 4.91% in the corresponding week a year earlier, the government data showed. The WPI for this group rose by 0.1% to 282.3 from 282.1 in the previous week. Annual point-to-point inflation in the Fuel & Power group remained unchanged at 12.68% in the week ended March 13. It was at (-)6.06% in the week ended March 14, 2009. The WPI for this major group remained unchanged at its previous week's level of 361.7.

Govt moving slowly on full convertibility: FM

The Government would like to move slowly to full convertibility of the Indian rupee, Finance Minister Pranab Mukherjee told parliament. "The full convertibility of rupee is our ultimate destination and we are taking gradual steps towards this. However, it is felt that it is not time to jump to that destination at one go now," Mukherjee said in a prepared answer to parliament. "Considering the risks involved in opening the Indian economy fully by allowing complete convertibility of the rupee, the Government and the RBI have adopted a calibrated approach," the Finance Minister said. The Government intends to go for full capital account convertibility in a three-stage plan, extending to the fiscal year 2010-11. It would allow greater movement of capital in and out of the local currency. The rupee has been convertible on current account since 1994. "Fiscal consolidation, lower inflation and a stronger financial system were seen as crucial signposts for India," Mukherjee said.

Govt softens stance on sale of non-levy sugar

The Government has partially relaxed norms for mills to sell non-levy sugar quota for March in the open market. It has given them seven more days to sell the allocated quantity, the Ministry of Consumer Affairs, Food and Public Distribution said in an order dated March 10. The validity period for each week in March is extended by seven days so that mills can sell quota for week ending March 31 by April 7, the Ministry said. The Government had earlier asked sugar mills to sell a part of their monthly non-levy quota every week, failing which the unsold quantity will be converted into levy sugar and sold at subsidised rate through the public distribution system (PDS).

Separately, the Indian Sugar Mills Association (ISMA) said that India is expected to produce 16.8 million tonnes of sugar in the current season that ends in September 2010, raising its output forecast by 5%. Yields in the top sugar producing states, Maharashtra and Uttar Pradesh, have improved, president Vivek Saraogi said. Several sugar mills have started winding up operations as they have crushed all available cane and many others are likely to shut down by end-March, he added.

Improved supply and higher output figures for 2010-11 have pressured retail prices of sugar over the last month to Rs35-40 per kg range, down from a high of around Rs50 a kg at the end of December and early this year. Sugar was selling at Rs31.75 per kg. This was slightly higher over March 8 when it was selling at Rs30 per kg. This is because the Maharashtra State Cooperative Sugar Factories Federation issued an appeal to sugar mills, asking them not to sell sugar below Rs32 per kg at ex-mill rates.

NSE to launch Nifty Futures on Chicago Mercantile Exchange

The National Stock Exchange of India (NSE), and CME Group, the world’s leading and most diverse derivatives marketplace, announced cross-listing arrangements, including license agreements covering benchmark indexes for US and Indian equities. The parties also entered into a MoU with respect to other areas of potential co-operation, including related to development and distribution of financial products and services. Under the cross-listing arrangements, the S&P CNX Nifty Index will be made available to Chicago Mercantile Exchange (CME), for the creation and listing of US dollar denominated futures contracts for trading on CME, and the rights to the S&P 500 and Dow Jones Industrial Average (DJIA) will also be made available to NSE for the creation and (subject to regulatory approval) listing of Rupee-denominated futures contracts for trading on NSE. The license to the Nifty 50 from NSE’s affiliate India Index Services & Products Ltd. (IISL), which is exclusive to CME Group within the Americas and Europe, is in addition to the existing licensing arrangement between Singapore Exchange Ltd. (SGX) and IISL.

NSE and SGX sign MOU to develop India-linked products

SGX to offer Nifty options

S Ramadorai to be non-executive chairman of BSE

SUUTI sells 9.42% of its existing stake in NSDL to NSE

Forbes Richest list...Mukesh Ambani, LN Mittal in Top 5

India's Mukesh Ambani and Lakshmi Mittal figure among the world's top five billionaires, while four other Indians are in the top 50 in 2010 Forbes list of the World's Billionaires. There are as many 49 Indians in the Forbes list of the planet's 1,011 richest people. With a fortune of US$29bn, Mukesh Ambani has been ranked at No. 4 while steel magnate Lakshmi Mittal, who is valued at US$28.7bn, is placed at No.5. Mukesh Ambani's younger sibling Anil Ambani has been ranked 36 with a fortune of US$13.7bn. Wipro chairman Azim Premji is ranked 28 in the world with a fortune of US$17bn. Shashi Ruia and Ravi Ruia of the Essar group have taken the 40th spot with a combined wealth of US$13bn. Last among the Indians in top 50 is Savitri Jindal, ranked 44th, with a fortune of US$12.2bn. Among other Indians on the Forbes billionaires list are Kushal Pal Singh of DLF (74), Kumar Mangalam Birla of AV Birla group (86), Sunil Mittal of Bharti group (87), Anil Agarwal of Vedanta group (113), Adi Godrej & family (148), Shiv Nadar of HCL group (201), N.R. Narayana Murthy & family (616), Rahul Bajaj of Bajaj Auto (880) and Vijay Mallya of UB group (937).

India Feb local car sales up 33.2% YoY

Car sales in India rose by 33.2% in February, with sales rising to 153,845 units compared with 115,505 units sold in the same month a year ago, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses gained 87% to 58,024 units in the month under review, SIAM data revealed. Three-wheeler sales were up 31.9% at 39,558 units. Two wheelers sales grew by 32.8% to 837,653 units while motorcycle sales were up 30.7% at 642,419 units. Scooter sales rose by 44.7% to 145,857 units. Total domestic sales of automobiles grew by 35.0% to 1,129,783 units in February. Total exports jumped 49.9% to 165,241 with car exports rising 39.2% to 36,267 units.

IOC, OIL confirm making cash offer for Gulfsands

Indian Oil Corp Ltd. (IOC) and Oil India Ltd. (OIL) confirmed that they had approached Gulfsands Petroleum Plc for a possible all cash offer worth 381 million (US$570mn) to acquire the UK-based company. Gulfsands is an oil producer with interests in Syria, Iraq and the Gulf of Mexico. "In response to recent speculation concerning a possible offer for Gulfsands, Indian Oil and Oil India confirm that they have jointly made an approach regarding a possible all cash offer for Gulfsands," the two companies told the LSE. In a separate notification to the LSE, Gulfsands said that the company had received a preliminary approach on March 18 for a possible offer at 315 pence per share for its entire issued and to-be-issued share capital. The board of Gulfsands has, however, rejected the preliminary offer. Earlier, news reports quoted the two companies as saying that are not planning to raise their bid for Gulfsands.

Cairn India hikes Rajasthan oil reserve estimate

Cairn India shares rose after it revised upwards its estimates for reserves at its Indian operation and said the unit's Rajasthan fields could produce more oil. Cairn India raised its estimates of oil and gas in place in Rajasthan to 4 billion barrels of oil equivalent (boe) from 3.7 billion boe and said there could be another 2.5 billion boe yet to be discovered. The Indian subsidiary of Edinburgh-based Cairn Energy Plc said the fields had the potential to pump 240,000 boe per day. Previously the company said it hoped to exceed its target of 175,000 boe per day but did not specify by how much. Cairn added it was making progress with the pipeline to bring its crude to market. Currently oil is being transported by road tanker.

LyondellBasell rejects RIL's revised offer

LyondellBasell, the bankrupt fuels, plastics and chemicals producer, is to pursue a restructuring plan with creditors after rejecting a $14.5bn (£9.6bn) bid from India's Reliance Industries (RIL). Lyondell said in a filing to a bankruptcy court in New York that the RIL offer did not offer enough value to warrant abandoning its existing plan to emerge from bankruptcy. Lyondell filed for bankruptcy last year, hit by debt, rising oil prices and falling demand. Lyondell said that private equity firms Apollo Management, Ares Management and Access Industries had agreed to back a rights offering in which Lyondell would sell 263.9m class B shares, subject to bankruptcy court approval. The takeover of Rotterdam-based Lyondell by RIL would have created one of the world's biggest independent oil refining and petrochemicals groups. LyondellBasell said it will raise US$3.2bn through debt and issue of securities on private placement basis, which will be used by the company to come out of bankruptcy.

RIL out of race for Value Creation

Reliance Industries Ltd. (RIL) is out of the race for Value Creation after the Canadian firm sold a majority stake in an oil sands property to BP Plc. Earlier this year, RIL had made a US$2bn takeover bid for majority stake in Value Creation to rival BP's US$1.2bn bid. Value Creation’s subsidiary Technoeconomics is the owner of a technology that helps produce oil from sand and upgrade bitumen - a major feed stock for petroleum - at a relatively lower cost. Value Creation's largest block of leases, Terre de Grace, covers about 290 square miles in the Athabasca region of Alberta.

Separately, RIL plans to buy three shale gas assets in the US, according to reports. The company may acquire a 40% to 50% stake in the US based company and the deal size is likely to be between US$1bn and US$2bn, added reports. RIL is nearing a deal for the US shale gas assets in a joint venture with Atlas Energy, which controls part of a huge gas field in the northeast of the US, according to reports.

Vindi Banga to leave Unilever

Manvinder Singh Banga, President - global foods, home & personal care at Unilever Plc, decided to quit by the end of May. It is unclear where Vindi is headed. Banga is also member of Unilever's executive board. He will be replaced by Michael B Polk, who is currently president (Americas) at Unilever. Polk, in turn, will be replaced by Dave Lewis, who is currently vice-president of Unilever, the UK and Ireland. He will join the Unilever Executive. Banga began his innings with Unilever in India. He became Chairman & MD of Hindustan Lever Ltd., as it was called, in 2000. He then moved to Singapore in 2004 as president, home & personal care, Asia. He joined the Unilever Executive in 2005 as president (foods), creating the foods category. In 2008, he was given additional charge of the home & personal care categories.

P. Jayendra Nayak to lead Morgan Stanley in India

Govt to cut stake in SBI...tables bill in LS

The Government introduced a bill to amend the State Bank of India Act in parliament and is seeking approval to allow SBI to sell preference shares and reduce its holding in the bank to 51%. The bill’s statement of objects and reasons said that the legislation was aimed at allowing "reduction of shareholding of the Central Government from 55% to 51% consisting of the equity shares of the issued capital." The SBI Act, 1955 was amended in 1993 to enable the bank to access capital market. While SBI can access capital market by issuing equity shares or bonds, or by both equity shares and bonds, there is no express provision under the SBI Act to enable the bank to issue preference shares and also bonus shares, it added. The bill also aims to provide for flexibility in the management of the bank. The Bill will provide for increasing the authorised capital of SBI to Rs50bn and enable the Central Government to increase or reduce the authorised capital in consultation with the Reserve Bank of India (RBI). The passage of the bill will give SBI the headroom to raise more equity capital. At the current price, this would mean a mobilisation of Rs200bn. SBI will need to raise nearly Rs400bn over the next five years to maintain growth momentum, according to chairman OP Bhatt.

ICICI Bank gets QFB privileges in Singapore

The Monetary Authority of Singapore allowed ICICI Bank to offer retail banking services. The authority has granted ICICI Bank a qualified full banking (QFB) status. ICICI Bank now has the permission to open 25 outlets (branches or ATMs) in Singapore. "We are delighted to receive this approval since it will further strengthen our footprint in the corporate, commercial, wealth management and Direct banking services in Singapore," said Chanda Kochhar, Managing Director and CEO, ICICI Bank. " We expect to see significant increase in our client base in the region having strong India connections". ICICI Bank is the second Indian entity to get this authorisation in Singapore. The country’s largest lender, State Bank of India (SBI), was given a similar license two years ago. The license is a part of a bilateral agreement between India and Singapore to open up their financial sector. On its part, the RBI had allowed DBS, Singapore’s largest bank, to open another eight branches in the country. Another Singapore bank, UOB was also given the nod for a branch operation here. SBI has used the authorisation to open seven branches and 17 ATMs in the city state and has started retail banking operations.

Tata Motors offers early conversion to bondholders

Tata Motors initiated steps to reduce debt by around Rs19.75bn in foreign currencies by offering to convert bonds into shares before maturity. The move extends the carmaker’s debt-reduction exercise initiated a year ago to drive down loans taken to acquire UK’s Jaguar and Land Rover. Tata Motors said it has invited holders of foreign currency convertible bonds (FCCBs) to convert their debt into stock, a year before maturity. The company has 11.8 billion yen-dominated notes (about Rs5.95bn according to current rates) and US$300mn (about Rs13.8bn) dollar-dominated notes due for conversion respectively in March and April 2011. Tata Motors had a consolidated debt of Rs231bn at the end of December. In 2009, Tata Motors raised US$750mn through the sale of GDRs and convertible bonds. The yen-denominated notes are zero-coupon bonds while the dollar bonds are 1% bonds due in April 2011. The bondholders will get an enhanced conversion ratios, which runs from March 23-29, Tata Motors said.

Maruti to spend Rs17bn on Manesar expansion

Maruti Suzuki India Ltd. said that it will invest about Rs17bn for the proposed capacity expansion at its Manesar plant by 2.5 lakh units annually. This initiative will help the company scale up the Manesar plant's capacity from 300,000 units per annum to 550,000 units per annum over the next two years. Maruti Suzuki's present production facilities are located at Gurgaon with a capacity of 7 lakh (0.7 million) units and Manesar with capacity of 3 lakh (0.3 million) units. Maruti Suzuki also said that it will invest around Rs12.5bn to double its K-series engine manufacturing capacity in the next 2-3 years. The country's largest car maker currently makes 250,000 K-series engines at its Gurgaon plant annually.

Bajaj Auto sees FY11 sales at 4mn units

In its Board meeting held on March 24, Bajaj Auto Ltd. set itself a sales target of 4mn vehicles for FY11, representing a growth of almost 40%. This would include exports over 1mn vehicles. For FY11, motorcycle sales are targeted at over 3.6mn vehicles, while commercial vehicles sales are targeted at about 400,000 vehicles. The Board also approved the expansion of total capacity to 5 million vehicles / year in anticipation of continued growth in the domestic and international markets in FY 2012. Staying with its brand centered strategy that is focused on the Boxer, Discover, Pulsar, and RE brands, Bajaj Auto is hopeful of achieving this sales growth while maintaining its industry leading EBITDA margins. Bajaj Auto said that it expects to close FY 2010 with sales of almost 2.9mn vehicles, the highest ever in its history. This includes exports of 900,000 vehicles, which is also the highest ever.

Bajaj Auto surpasses Bharat Stage III norms

Bajaj Pulsar 135LS becomes the 2nd largest performance bike

Essar group set for London listing: reports

Ruia brothers-led owned conglomerate Essar Group is planning an US$8bn listing of their oil and power businesses in London, according to reports. The reports state that Essar is looking at a London listing of a holding company which will have their refinery, power, exploration and production businesses. The listing would make it the first Indian company to enter London's main market since Vedanta Resources seven years ago, reports added. Vedanta had raised US$876mn through its listing on the LSE in 2003. The proposed listing by Essar comes days after its acquisition of US-based Trinity Coal for US$600mn. The UK-based Sunday Telegraph reported that the Essar group had appointed JP Morgan Cazenove as its advisor two months ago.

Fortis buys 24% in Singapore's Parkway Holdings

Fortis Healthcare Ltd. announced that its wholly owned subsidiary has entered into a definitive agreement to acquire 23.9% strategic stake in Singapore's Parkway Holdings Ltd. from TPG Capital (formerly Texas Pacific Group) for Rs31.19bn (US$686mn). The deal values Parkway shares at S$3.56 each, higher than its Thursday's closing price of S$3.12. Fortis is India’s second-largest healthcare provider after Apollo Hospitals and Parkway is Asia’s biggest hospital operator by sales. The acquisition would form Asia’s largest hospital chain with over 10,000 beds across 64 hospitals in six countries. The deal will also see Fortis Chairman Malvinder Mohan Singh appointed chairman of the Parkway board. Fortis will replace TPG as Parkway’s single largest shareholder and intends to seek four seats on Parkway’s 11-member board. Parkway runs 16 facilities and has 3,400 beds across six countries including Malaysia, Singapore, UAE, China and Bangladesh. A listed entity on the Singapore Stock Exchange, it has a market capitalisation of US$2.4bn.

Piramal Healthcare acquires "i-pill" from Cipla

Piramal Healthcare Ltd. announced signing of a definitive agreement for the purchase of all Intellectual Property Rights (IPRs) in India related to "i-pill" brand of Cipla for an aggregate consideration of Rs950mn. "i-pill" features in the top-300 pharmaceutical products and had sales of Rs309.2mn as per ORG IMS for the last 12 months. The acquisition of "i-pill" strengthens Piramal’s over the counter (OTC) portfolio which has strong consumer brands such as Lacto Calamine skin care range, Supractiv Complete, Saridon and Polycrol antacid. "i-pill" is an emergency contraceptive pill (ECP) used to prevent unplanned pregnancy and is available over the counter at local chemists. It is not an abortion pill.

Videocon joins mobile bandwagon with launch in TN

Videocon Telecommunications Ltd. launched mobile telephone services under the GSM platform. The service, which was launched in Tamil Nadu with sub-one paise effective tariff, will be rolled out in other states, covering 100 cities over the next 100 days. Addressing a press conference, Chairman of Videocon group, Venugopal Dhoot, said that Videocon would invest Rs140bn in its mobile telecom business in the next three years, and expects to secure 100 million subscribers over the period. Dhoot said that a consortium of banks led by State Bank of India (SBI) has committed to lending Rs70bn to Videocon, for the telecom business. The rest of the funds will come from internal accruals. In Tamil Nadu, where Videocon joined nine other operators, the company intends to invest Rs15bn, generating employment to some 20,000 people.

Daimler AG sells 5.34% stake in Tata Motors

Daimler AG sold 5.34% stake or 25.59mn equity shares in Tata Motors through a block deal on March 9, the deal was done at an average price of Rs751.67 per share on the BSE. Through this share sale, Daimler AG managed to raise Rs19.12bn. Citigroup was the sole banker to the Tata Motors block deal. Tata Motors’ largest promoter, Tata Sons, bought four million shares of the former from Daimler for Rs3bn, thus raising its stake in the commercial and passenger vehicle giant by nearly 1%. Citigroup Global Markets (Mauritius) Pvt. Ltd. bought a little over 4.65 million shares for Rs3.5bn.

Welspun Gujarat arm to acquire MSK Projects

Welspun Gujarat Stahl Rohren said that its unit will make an open offer to acquire a 75% stake in MSK Projects Ltd. Welspun Gujarat will invest a total of Rs4bn of which Rs2bn will be infused directly into MSK. Welspun Infratech will acquire the stake through a combination of share purchases from MSK promoters, associates, investors, preferential allotment and open offer, Welspun Gujarat said. Welspun Gujarat plans to buy Rs2bn worth of MSK shares through preferential allotment. It is looking to invest in MSK at Rs130.50 a share, Welspun Gujarat Director Akhil Jindal was quoted as saying. The entire investment will be funded by Welspun Gujarat's existing cash flows. Welspun Gujarat expects to complete the MSK deal in 90 days.

QTIL-WTTIL to buy tower business from TTML

Tata Teleservices Maharashtra Ltd. (TTML) announced that it would sell its 100% stake in its tower arm 21st Century Infra Tele Ltd. (TFCITL) to QUIPPO-WTTIL. As part of this deal, TFCITL’s entire portfolio of 2535 towers in Mumbai, Maharashtra and Goa will be acquired by QUIPPO-WTTIL at an enterprise value of Rs13.18bn. The transaction will provide strategic advantage to QUIPPO-WTTIL as it will complement the tower portfolio of the company in Mumbai, Maharashtra and Goa, where QUIPPO-WTTIL does not have a significant presence currently. The TFCITL portfolio, with a high tenancy ratio of 2.15, will further strengthen QUIPPO-WTTIL's current tenancy ratio. This transaction will take the overall portfolio of QUIPPO-WTTIL to over 38,000 towers nationally. This transaction will also bring immense benefit to QUIPPO-WTTIL with the 3G and WiMax auctions to be conducted shortly.

SKNL plans IPO for Reid & Taylor unit

S. Kumars Nationwide Ltd. is planning an initial public offering (IPO) of its unit Reid & Taylor India in the next 6-8 months. SKNL also plans to convert Belmonte into a separate subsidiary and is looking to bring in private equity investment into Belmonte. It is looking at a qualified institutional placement (QIP) this year. Belmonte is a mens wear brand in value segment that has both fabric and ready-to-wear garments under one label. SKNL operates in product categories like fabrics, apparels, home textiles and fibers.

ARSS Infra makes strong debut

ARSS Infrastructure Ltd. had a bumper debut on the Indian exchanges on March 3 as the stock shot up over 66% to end at Rs750 on NSE against issue price of Rs450 per share. Total traded quantity on the NSE was 15.7mn shares. The stock continued to be firm through the week and ended at Rs791. ARSS Infra is engaged construction of roads, highways, bridges, irrigation projects and engineering, and also undertakes engineering, procurement and construction activities for railways. The company’s IPO received tremendous response from investors and was subscribed over 47 times.

Texmo Pipes, Man Infra shine on debut

Shares of Texmo Pipes surged over 50% on the listing day against the issue price of Rs90. It closed the week at Rs143. The initial public offer (IPO) of Texmo Pipes & Products closed on 19 February, with an oversubscription of 7.48 times.

Texmo manufactures PVC and HDPE pipes. The company will use the proceeds for the expansion of its product range. Texmo’s debut performance was the third best this year after ARSS Infrastructure Ltd and Jubilant Food Works Ltd.

Shares of Man Infraconstruction listed at almost 38% premium to the issue price of Rs252. It ended the week at Rs334. The company’s initial public offer was subscribed 62.33 times. Man Infra provides construction services for building ports and roads, besides undertaking residential, industrial and commercial projects.

IL&FS Transportation Networks' initial public offering (IPO) was subscribed 1.86 times, while that of Pradip Overseas was subscribed 2.27 times, as per data available on the NSE website.

IL&FS Transportation IPO subscribed 33.42 times

The initial public offering (IPO) of IL&FS Transportation Networks Ltd. (TNL) was subscribed 33.42 times, according to NSE web site. The issue, which closed on March 15, received bids for 792.67mn shares against the 23.71mn shares on offer. The IPO included 42.8 lakh shares offer for sale by Trinoka Trinity Capital. The QIB portion was subscribed 52.6 times, while the Non-institutional segment (HNI) was subscribed 39.39 times and Retail 4.56 times. The price band for IL&FS Transportation issue was fixed at Rs 242-258.

Pradip Overseas IPO subscribed 14 times

United Bank of India makes steady debut

United Bank of India started trading on the bourses with healthy gains on March 18. The stock got listed at Rs75 per share as against its issue price of Rs66, translating into a premium of 7.5%. The stock listed at Rs77, but surrendered most of its gains to close at Rs68.10, up 4.2% over its issue price of Rs66. Only 19% of the total traded quantity resulted in actual delivery on the BSE. The state-run bank had fixed the issue price of its IPO at Rs66 per share - the upper end of its price band - raising Rs3.25bn through the issue. The IPO was subscribed over 33 times.

Dalmia Cement to demerge cement, power & other biz

The Board of Directors of Dalmia Cement (Bharat) Ltd. (DCBL) unanimously approved a Scheme of Arrangement to transfer its Cement, Power and other businesses into Dalmia Bharat Enterprises Ltd. (DBEL). DCBL will demerge the Cement Undertaking, Refractory Undertaking, Thermal Power Undertaking and certain other business into DBEL which at presently is a wholly owned subsidiary. Further, the Cement & Thermal Power Undertaking will be demerged into two wholly owned subsidiaries viz., Avnija Properties Ltd. and DCB Power Ventures Ltd., respectively. The demerger is expected to be completed by Q3 FY11 and is subject to the requisite approvals of the Shareholders, Creditors, Lenders, Stock Exchanges, High Courts and other Regulatory Authorities.

Renault Nissan inaugurate Chennai plant

The new car factory set up by Nissan of Japan with its French partner, Renault, at Oragadam near Chennai was inaugurated in the presence of state Chief Minister M Karunanidhi. Carlos Ghosn, chief executive, Renault-Nissan Alliance, said that the new plant would manufacture 200,000 cars, half for the export market, by 2012, and 400,000 by 2014. The Oragadam plant would involve a total investment of Rs.45bn. The alliance has so far invested Rs23bn into the venture. The plant would commence production in May with one shift and be gradually scaled up. The 1,200 employees would be increased to 1,500 by May 2010 and to 3,000 by 2012, he added.

Facebook to establish operations in India

Facebook announced that it is investing in India by opening an office in Hyderabad, where it will build a world-class team to support its growing number of users, advertisers and developers in India and around the world. The announcement comes at a significant time in Facebook’s international growth. The company has seen exponential growth in recent months. More than 8 million people in India now actively use the site to connect with their friends, family, and people they know in India and across the globe. The company has more than 400 million active users worldwide. Facebook’s new operations center in Hyderabad will supplement operations supported out of Palo Alto, California, Dublin, Ireland and a recently announced location in Austin, Texas.

International News

Eurozone throws its weight behind Greece...finally

In a bid to restore confidence in their common currency, all 16 eurozone leaders have reportedly agreed to provide joint financial assistance to the debt-laden Greece in tandem with the International Monetary Fund (IMF). The euro rose from a 10-month low against the dollar after European Central Bank (ECB) president Jean-Claude Trichet toned down his opposition to the IMF's involvement in a Greek rescue plan. "Europe has taken a big step in the face of a big challenge," Greek Prime Minister George Papandreou told reporters after talks in Brussels, declaring himself satisfied. European Council President Herman Van Rompuy called the deal significant not just for Greece, but for the stability of the eurozone.

Backers of the plan included French President Nicolas Sarkozy, according to reports. Sarkozy previously had opposed a role for the Washington-based IMF. The deal was brokered during a summit in Brussels. The French President said that the eurozone would put up two-thirds of the money, and the IMF the rest. Terms imposed by German Chancellor Angela Merkel mean that the concerted EU-IMF mechanism could be activated only under strict conditions and would require the unanimous approval of the eurozone. Greek Finance Minister George Papaconstantinou said that the deal removed the risk of default by his country. He also said that no aid was being given to Greece as of now.

EU leaders were under pressure to come up with a detailed plan to aid Greece, amid mounting worries that the debt troubles in countries like Greece, Portugal and Spain could spread elsewhere in the euro zone. Eroding confidence in the euro was also among the factors that influenced the outcome of the Brussels summit. The euro fell to a 10-month low against the dollar in afternoon trading on March 25 after the Trichet reportedly said that getting help from the IMF to solve the region's debt problems would be very, very bad. Separately, Zhu Min, the deputy governor of the People's Bank of China, said that the Greek debt crisis was only the tip of the iceberg and complained that Europe had offered no decisive action on the matter.

Earlier, the ECB took some pressure off Greece by extending emergency lending rules, saying that its bonds won’t be cut off from ECB refinancing operations next year in case Moody’s lowers its rating to a level comparable with other companies. That decision marked a reversal for the ECB, which said in January that it wouldn’t soften its collateral policy for the sake of a single country. The bank was scheduled to reintroduce pre-crisis rules at the end of 2010.

Fitch cuts Portugal's sovereign credit rating

Greek PM wants G20 to keep a check on speculators

Greek Prime Minister George Papandreou urged the Group of 20 (G20) nations to crack down on market speculators. He blamed speculators for Greece's woes, and warned that a fresh financial crisis could be triggered if their activities were not reined in. "We need clear rules on shorts, naked shorts and credit default swaps. I hope there will be a positive response from this side of the Atlantic to bring this initiative to the G20," Papandreou said. In another speech, Papandreou called for tougher rules for credit default swaps (CDS) and said that the G20 nations should take the lead in keeping speculators at bay. After meeting with US Secretary of State Hillary Clinton, Papandreou said that debt-strapped Greece cannot sustain borrowing at rates far higher than those charged to other nations.

US Congress clears composite health-care bill

US congress sealed the fate of the landmark health-care bill, with the Senate approving a spate of changes suggested by the Republicans. The measure was signed into a law by President Barack Obama on March 23. The Senate passed the bill 56-43 after two days of debate while the House approved the bill on Thursday evening in a 220-207 vote. The House had to take a second vote on the follow-on measure, after initially clearing it on March 21, because the Senate parliamentarian struck down some provisions.

House Democrats approved a smaller "patch" bill that adds more subsidies for seniors and low-income Americans, among other things. The changes approved by the Senate include an expansion of subsidies to make insurance more affordable and more state aid for the Medicaid program for the poor. Speaking in Iowa City, Iowa, Obama told voters that he had kept a promise made during the 2008 presidential campaign. The US President visited Iowa as part of a public relations blitz to sell the new plan.

Republicans said the bill will increase budget deficit and hurt the private insurance market. Democrats believe the law will grow more popular over time, allowing them to take on the Republicans in upcoming elections. "And my attitude is, go for it," Obama said of the Republicans’ repeal campaign. The partisan rift created by the health-care debate promises to be a central issue in the November elections. It also threatens to thwart cooperation between the two parties on Obama’s other legislative priorities, such as immigration, energy and climate change.

Lehman files bankruptcy plan; to form new firm

Lehman Brothers Holdings Inc. filed a plan with the US bankruptcy court in Manhattan to wind down its remaining assets and operations - and end the largest US bankruptcy case in history. Under the proposed Chapter 11 plan, a newly created business called Lamco would manage the remainder of Lehman's commercial real estate, mortgages, principal investments, private equity, corporate debt and derivatives assets. Lehman Brothers said that the new Lamco Company would provide management services to the parent, administer its assets and offer long-term employment opportunities for the hundreds of employees who are currently working to liquidate the former investment bank's estate.

Currency moves...US steps up pressure on China

American lawmakers wrote a letter to President Barack Obama, appealing him to take action against china for keeping its currency depressed. Business groups in the US say China's currency controls keep the yuan undervalued, giving its exporters an unfair price advantage and swelling its multibillion-dollar trade surplus. But, China rejected pressures from 130 US lawmakers for Beijing to ease currency controls and accused Washington of trade protectionism that it said might hurt the global recovery. A foreign ministry spokesman insisted that Beijing is not intentionally pursuing a trade surplus. "If a country pressures another to appreciate while at the same time depreciating its currency and using protectionism to restrict imports, it is harmful not only to US-China trade but to trade as a whole," the spokesman, Qin Gang, said. On March 14, China's Prime Minister Wen Jiabao said that the yuan was not undervalued and dismissed finger-pointing by other governments as unhelpful. He promised exchange rate reforms but said the currency would remain at a stable and balanced level. Still, a report pointed to some evidence that China is preparing to allow its currency to appreciate. Various Chinese government bureaus are reportedly conducting their own "stress tests" on the effect a stronger currency would have on the nation's industry.

Japanese steel firms agree to 55% rise in coal prices

Nippon Steel Corp. and other major Japanese steel makers have agreed a 55% price increase for supplies of coking coal with BHP Billiton, according to media reports. The price hike, which applies to deliveries in the April to June quarter, will boost the cost of coking coal to US$200 per ton, according to reports. The benchmark price of coking coal for the financial year 2009-10 was US$129. The agreement will expire at the end of the three-month period, requiring a new pricing contract for deliveries from July. A spokesman for JFE Holdings Inc., the world's sixth-biggest steelmaker, said that the agreement does not mean the firm has accepted a quarterly pricing system.

Media reports last week said that Chinese mills may agree to a 40% rise in iron-ore prices from major miners. According to some reports, BHP Billiton has reached an interim price deal with some Chinese steel mills for a 40% price increase over 2009-10 iron-ore benchmark prices. The deals were short-term contracts and not a final agreement on the 2010-11 benchmark price, reports said, and negotiations on annual benchmark pricing terms continue between mining companies and steel producers in South Korea and Japan.

China aims for 8% GDP growth in 2010: Wen Jiabao

China is targeting about 8% growth in gross domestic product (GDP), an inflation rate of about 3% and a basically stable currency, China's Prime Minister Wen Jiabao. Wen also said that China would maintain an appropriately easy monetary stance and an active fiscal policy. "We must not interpret the economic turnaround as a fundamental improvement in the economic situation," Wen said in his State of the Union speech to nearly 3,000 delegates in the cavernous Great Hall of the People. "There is insufficient internal impetus driving economic growth," he added.

A top official at the People's Bank of China said on March 4 that the central bank plans to stick to its moderately loose monetary policy stance while remaining vigilant against overly-fast inflation. Wen affirmed a target of 7.5 trillion yuan of lending, down from the record last year, after property prices climbed the most in 21 months in January. He indicated no roll-back in the fiscal stimulus that spurred a rebound, targeting a budget deficit of 1.05 trillion yuan (US$153bn), or 2.8% of GDP, similar to last year’s ratio.

Dubai govt to support Dubai World with US$9.5bn in new funding

The Dubai government will support Dubai World’s debt restructuring with as much as US$9.5bn in new funds. "The government of Dubai, acting through the Dubai Financial Support Fund, will support these proposals with significant financial resources, including a commitment to fund up to US$9.5bn in new funding over the business plan period," the government said in a statement. "This will be funded by US$5.7bn remaining from the loan previously made available from the government of Abu Dhabi and from internal Dubai government resources," Sheikh Ahmad Bin Saeed Al Maktoum said. Dubai World and Nakheel PJSC will discuss these proposals in detail with their creditors, the Al Maktoum said. "The restructuring process is expected to take several months to implement," Al Maktoum said. "The tribunal process remains available to protect the companies, their creditors and other stakeholders." Dubai World said in November that it would seek to delay repaying all loans until May, sparking a plunge in developing nation stocks and doubling the cost to protect against a default by Dubai. The International Monetary Fund (IMF) estimates Dubai has outstanding loans of US$109.3bn, some of it used to fund a property boom that ended in 2008.

IATA halves 2010 loss forecast for airlines

The International Air Transport Association (IATA) halved its loss forecast for 2010 to US$2.8bn compared to the US$5.6bn loss forecast in December 2009. The improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010, the global aviation body said. Relatively flat capacity translated into some yield improvement and stronger revenues, it added. IATA also lowered its 2009 loss estimate to US$9.4bn from the previously projection of a US$11bn loss. Improvements are driven by economic recovery in the emerging markets of Asia-Pacific and Latin America whose carriers posted international passenger demand gains of 6.5% and 11%, respectively in January, IATA said. North America and Europe are lagging with international passenger demand gains of 2.1% and 3.1% respectively for the same month, it added. "We are seeing a definite two-speed industry. Asia and Latin America are driving the recovery. The weakest international markets are North Atlantic and intra-Europe which have continuously contracted since mid-2008," said Giovanni Bisignani, IATA’s Director General and CEO.

Airlines to return to black in 2011: IATA

Global airlines should post a profit in 2011, after an expected loss of about $2.8bn in 2010, the head of airline industry body IATA said. A shortfall in global air carriers' revenues from their peak in 2008 should be made up within two years, IATA Director-General Giovanni Bisignani told a news conference at the FIDAE air industry fair. "With a loss of $2.8bn this year, I think we can say with a reasonable degree of certainty that we will be back in the black in 2011," Bisignani said. He said the body would issue its forecast of 2011 industry results in June. A gap of nearly $80bn in annual revenues lost since a 2008 peak would be made up within two years, he said. IATA forecasts industry revenues of $522bn for 2010, which is still $42bn shy of 2008 levels.

Forbes Richest list...Carlos Slim dethrones Gates

For only the second time since 1995, Microsoft founder chairman Bill Gates has lost the crown of "The World's Richest Person". Yet again it is Mexican tycoon Carlos Slim, who has snatched the coveted position from Gates, Forbes magazine said. Slim's net worth stood at US$53.5bn in 2010, compared to Gates's US$53bn fortune, while investor Warren Buffett came in at No. 3 with a personal wealth of US$47bn. The trio regained US$41.5bn of the US$68bn they had lost in the previous year, Forbes said. Overall wealth of the world's billionaires grew by 50% over 2009, Forbes said. The number of billionaires around the world has nearly recovered in 2010 after dropping by a third in 2009 due to the global financial crisis. There are now 1,011 billionaires, compared with 793 last year and 1,125 in 2008.

GM hit by recalls

General Motors (GM) said that it has recalled 1.3mn Chevrolet and Pontiac models in North America for power steering failures that are linked to 14 crashes and one injury in the United States. The Detroit-based automotive giant recalled the cars sold in North America over the past five years. The recall affects 2005-10 Chevrolet Cobalt and 2007-10 Pontiac G5 models sold in the US, 2005-06 Pontiac Pursuit vehicles sold in Canada, and 2005-06 Pontiac G4 models sold in Mexico. The power-steering assist in those models can sometimes fail, GM said, adding that the cars are safe to drive. At speeds of less than 15 miles per hour, however, steering can be difficult, it added. A remedy is still being developed and customers will be alerted when the fix is finalized, GM said. The news follows a series of large-scale recalls by Japanese competitor Toyota, Honda and Hyundai.

BP to pay Devon US$7bn for Brazil, GOM, Azeri fields

BP Plc announced its first foray into Brazil by paying US$7bn for a group of assets held by Devon Energy. The deal will also see the British oil major picking up other Devon assets in Azerbaijian and the Gulf of Mexico. Devon Energy will get half the Kirby oil-sands interests that BP holds in Alberta, Canada, for US$500mn. The two companies would form a joint venture to develop Kirby. BP to pay US$7bn to Devon in return for interests in 10 exploration blocks in Brazil; 240 leases in the US Gulf of Mexico deep water; and a 5.63% stake in an Azerbaijan development, of which BP will now hold 39.77%.

Shell, PetroChina make US$3bn Arrow Energy offer

MetLife to buy AIG unit

Google stops censoring Chinese search services

Google said that it is redirecting users of its China search engine to its Hong Kong search engine as a means of providing uncensored content. However, the web search titan added that it was going to continue its R&D work in China and maintain its lucrative ad sales business. Google is now redirecting traffic away from google.cn to Hong Kong-based google.com.hk, which offers Chinese-language service with uncensored results. Hong Kong is not subject to censorship laws. The Google move, which came after weeks of negotiations with local authorities over the contentious matter, could potentially escalate a two-month old dispute with the Chinese government over censorship. The latest salvo from Google could prompt the Chinese government to block the service altogether. The US company had said in January that it was no longer willing to censor its Chinese engine and that it would pull out of the country unless a solution could be reached.

Teva buying Ratiopharm for about US$5bn

Teva Pharmaceutical Industries Ltd. said that it will buy Ratiopharm GmbH for ~US$5bn, or 3.625 billion euros. Ratiopharm ranks as Germany's second largest generic drug producer and the sixth largest globally. Petah Tikva, Israel-based Teva beat Pfizer Inc. and Actavis Group hf, which also competed in the auction. On an adjusted basis, the combined company would have had 2009 revenues of US$16.2bn. Teva expects to complete the transaction by year-end 2010. Upon completion of the acquisition, Teva expects cost savings of at least US$400mn within three years. "The acquisition will position Teva as the leading generic pharmaceutical company in Europe," Teva said in a statement.

Phillips-Van Heusen Corp to acquire Tommy Hilfiger

Prudential Plc announced plans to buy the Asian life-insurance business of American International Group (AIG) for US$35.5bn. AIG, the troubled US insurance giant, will use the money to help it repay some of the remainder of the US$182bn bail-out money it received from the US government. Prudential will boost its already considerable presence in Asia. It is raising US$20bn in a rights issue to help fund the deal. Its share price fell 20% in the days following the deal’s announcement.

Apple lodged a lawsuit against HTC, claiming that the Taiwanese company had infringed 20 patents for the iPhone’s user interface, underlying architecture and hardware in its smart-phones that are powered by Google’s Android operating system. Steve Jobs, Apple’s CEO, said that competition is healthy, but competitors should create their own original technology, not steal Apple's.

Germany’s Merck diversified its drugs business by securing a friendly US$7.2bn agreement to buy Millipore, which is based in Massachusetts and makes equipment for (and provides services to) the bioscience industry.

The bid from Japan’s Astellas Pharma for OSI turned hostile. It offered US$3.5bn for Long Island-based OSI, which specialises in cancer treatments, and went to court to prevent it from trying to block an acquisition with a poison pill.

CF Industries revived its interest in Terra Industries by offering US$4.7bn for its rival, which recently agreed to a friendly takeover from Norway’s Yara International. With demand growing for fertiliser in emerging markets, merger deals in the industry have sprouted vigorously.

April 2010

Domestic News

IMF ups outlook on India's GDP growth

The Indian economy is estimated to grow by 8.75% in 2010 and 8.5% in 2011, according to the World Economic Outlook report (2010) by the International Monetary Fund (IMF). In 2009, India's economic growth had slowed to 5.7% due to the global economic downturn. In its half-yearly World Economic Outlook, IMF said that consumption in India will strengthen as the labour market improves. Investments will receive a boost from strong corporate profits, rising business confidence and favourable financing conditions, it added. IMF said the strength in domestic demand in India and China will have positive impact for other Asian economies. Asia’s economy is projected to grow 6.9% and 7% in 2010 and 2011, respectively, the IMF said. "For economies such as India, which are relatively more closed and which have relied on stimulus to support growth, the main challenge will be to ensure durable fiscal consolidation, including by implementing fiscal and other structural reforms," the IMF said.

Prime Minister sees FY11 GDP growth at 8.25%

New emission norms...Petrol, diesel to cost more from midnight

Petrol and diesel prices in 13 major cities, including New Delhi and Mumbai, will rise marginally from midnight with the availability of cleaner fuel. So, petrol will cost 50 paise more in Delhi and diesel 26 paise more. The revised petrol price in New Delhi will be Rs47.93 a liter and that of diesel will be Rs38.10 a liter. Prices will vary in other cities depending on taxes. Besides Delhi and Mumbai other 11 cities that will switch to Euro IV stage fuel are: Kolkata, Chennai, Hyderabad, Bangalore, Lucknow, Kanpur, Agra, Surat, Ahmedabad, Pune and Sholapur. The rest of the country will switch from Euro-II fuel to Euro-III in phases, beginning with Goa. Sale of Euro-III grade fuel will be done in a phased manner over the next 5-6 months. Euro-III petrol will cost 26 paise more and the same grade diesel will be costlier by 21 paise. The rates will differ from city to city depending on local taxes.

All 9 firms qualify for 3G auction: DoT

All the nine telecom companies, which had submitted applications for participation in the auction of radio frequency spectrum for third generation (3G) telephony, have qualified for the bidding process that will take place next week. According to the Department of Telecommunications (DoT), all the nine companies - Aircel, Bharti Airtel, Etisalat DB Telecom, Idea Cellular, Reliance Telecom, S Tel, Tata Teleservices, Videocon Telecommunications and Vodafone Essar - will participate in the auction for 3G. Information published on the DoT web site also show that 11 companies - Bharti Airtel, Idea Cellular, Aircel, Augere Mauritius, Infotel Broadband Services, Qualcomm, Reliance WiMax, Spice Internet Service Provider, Tata Communications Internet Services, Tikona Digital Networks and Vodafone Essar - have qualified to bid for broadband wireless access (BWA) services.

Click here for the two lists

Govt delays mobile number portability to end-June

Govt expects to earn Rs450bn from 3G, BWA auctions

The Government expects to pocket Rs450bn from the auction of airwaves for 3G mobile services and high-speed broadband services, Telecom Minister A. Raja was quoted as saying by a business daily. In the Union Budget, announced in end-February, the Government estimated that it will earn Rs350bn from the combined auction. The auction for 3G spectrum began involving multi-stage bidding over the Web. Though winning bidders have to deposit money in 10 days of the auction, they will get 3G radio waves only in September. The base price for pan-India 3G airwaves was pegged at Rs35bn, while for BWA airwaves, it was Rs17.5bn. The Government will auction three slots of 3G airwaves in 17 telecom services areas and four in the other five zones. Only two slots will be up for grabs for broadband airwaves. MTNL and BSNL have already been awarded spectrum for both 3G and WiMax services but they will have to match the highest bid for each of the services.

Govt's H1 gross borrowing pegged at Rs2.87 Trillion

The Government will raise Rs2.87 trillion by selling bonds in the first half of FY11, top officials in the Finance Ministry and the RBI said. This works out to 63% of the record gross Rs4.57 trillion budgeted for the full fiscal year. The net borrowing for FY11 is seen at Rs3.45 trillion. The gross market borrowing figure was less than market expectations, sending yields on the 10-year benchmark government bonds lower. On an average, Rs110-150bn of issuance would come to the market every week, Shyamala Gopinath, a deputy governor of the RBI told reporters in New Delhi after officials of the central bank and the finance ministry met to finalise the first-half borrowing schedule. The front-loading is aimed at allowing space for private borrowing in the second half of the financial year when the Indian economy gathers more steam. Gopinath also said that the RBI would try to smoothly conduct the government's borrowing programme.

IMD predicts normal monsoon...at 98% of LPA

There is good news for farmers, consumers and policymakers, as the southwest monsoon is likely to be normal this year after last year's dismal rains, according to the initial projections of the India Meteorological Department (IMD). The India weather bureau today predicted that the southwest monsoon rainfall will be normal at 98% of the long period average (LPA). "The long range forecast for the 2010 southwest monsoon season (June-September) is that the rainfall for the country as whole is likely to be normal," the IMD said in a statement today. This is the weather office's first official forecast for this year's monsoon. "Rainfall for the country as a whole is likely to be normal," B. P. Yadav, spokesman for the IMD, told reporters in New Delhi today, adding that the forecast model had an error margin of 5%. He said that the El Nino conditions, which disrupts normal weather patterns, was weakening. The LPA rainfall for June-September is 89 cm, the IMD said. Southwest monsoon rainfall was only 78% of LPA last year, though the IMD had initially forecast it at 96%.

India's Q3 BoP surplus at US$1.77bn

India’s Balance of Payments (BoP) surplus in the third quarter stood at US$1.77bn versus a deficit of US$17.88bn in the corresponding period of the previous fiscal year, the Reserve Bank of India (RBI) said. The BoP surplus for the April-December 2009 period came in at US$11.3bn versus US$20.38bn in the year-ago period, the RBI said.

Despite a low trade deficit during Q3 FY10, the current account deficit was higher at US$12.03bn as against US$11.67bn a year ago, mainly due to lower invisibles surplus, the central bank said in a statement. The current account deficit during April-December 2009 was higher at US$30.3bn compared to US$27.5bn during the same period of the previous fiscal year.

The capital account for Q3 FY10 showed a surplus of US$14.773bn versus a deficit of US$6.1bn, the RBI data revealed. Surplus in capital account increased sharply to US$43.2bn during April-December 2009 (US$5.8bn during April-December 2008) mainly on account of large inflows under FDI, Portfolio investment, NRI deposits and commercial loans.

As the surplus in capital account exceeded the current account deficit, there was a net accretion to foreign exchange reserves of US$11.3bn during April-December 2009 as against a drawdown of US$20.4bn in the year-ago period.

Apr-Feb fiscal deficit hits 92% of FY10 forecast

India's April-February fiscal deficit stood at Rs3.81 trillion as against Rs3.07 trillion at the same time a year ago, data released by the government's auditor showed. This translates into 92% of the revised budget estimate of Rs4.14 trillion projected by the Government. Revenue deficit for the first 11 months of FY10 was Rs3.16 trillion versus Rs2.45 trillion in the year-ago period. This translates into 96% of the revised budget estimate of Rs3.29 trillion for the full fiscal year. Tax collections in the period under review stood at Rs4.91 trillion compared to Rs4.98 trillion in the April-February period of FY09. Net tax revenue for the first 11 months of the current fiscal year rose by 0.6% to Rs3.59 trillion. Total spending during April-February 2009-10 was Rs8.58 trillion versus Rs7.48 trillion in the same period last year. Total receipts for the period stood at Rs4.77 trillion versus Rs4.41 trillion in the year-ago period.

India’s external debt up 12% at US$251.4bn

Cabinet okays recapitalisation plan for PSU Banks

The Union Cabinet approved a proposal to inject Rs150bn to recapitalise public sector banks in the current fiscal year. The infusion of Tier-I capital by the Centre would boost lending by state-run banks in FY11 by Rs1.85 trillion, the Government said in a statement. The CCEA approved recapitalisation in Vijaya Bank, Dena Bank, UCO Bank, Syndicate Bank, Bank of Baroda, Central Bank of India and Bank of Maharashtra. The Cabinet approved provision of capital to the public sector banks (PSBs) during FY11 and FY12 so as to enable them to maintain a minimum 8% Tier I capital. "The exact amount, mode of capitalisation and other terms and conditions would be decided in consultation with the banks at the time of infusion," the Government said. For FY12, additional capital requirements, if any, will be worked out in consultation with the PSBs based on their third quarter results for FY11. The additional availability of credit is likely to benefit employment oriented sectors, especially agriculture, micro & small enterprises, export, entrepreneurs etc. in promotion of their economic activities which would in turn contribute substantially to the growth of the economy, the Government said. The Government has negotiated with the World Bank for two Banking Sector Support Loans (BSSL) totaling US$3.2bn. Formalities in respect of the first tranche of US$2bn loan have already been completed.

Feb FDI inflows up 15%: Govt

Foreign Direct Investments (FDI) into India grew by 15.4% to US$1.72bn in February 2010, a government official was quoted as saying. FDI in February 2009 was US$1.49bn. The major sectors receiving FDI in February included services, computer software, computer hardware, telecommunications, housing and real estate. FDI during April-February 2009-10, the first 11 months of the current financial year, stood at US$24.68bn as against US$25.39bn in the same period last year, the official said. Commerce & Industry Minister Anand Sharma was quoted as saying that FDI in FY10 is likely to be the same as last year, or a little more. India attracted FDI of US$27.31bn in FY09, up 11% from US$24.58bn in the previous fiscal year. The Government aims to attract US$50bn in FDI per year by FY12 and US$75bn a year by FY14, Commerce Minister Sharma was quoted as saying.

Rupee hits 19-month peak

Indian Rupee strengthened to a 19-month high against the US Dollar after the BSE Sensex and the NSE Nifty touched their highest levels in more than two years. Strong overseas portfolio inflows in the nation's stocks and bonds also helped boost the sentiment. The rupee was supported by strong Asian currencies that rose on growing media speculation that China will soon revise its currency policy and will let the yuan move a bit more freely. The partially convertible Rupee ended at 44.29 on April 9 after touching 44.23, its strongest since Sept. 8, 2008. It had closed at 44.92 on March 31. The debt and currency markets were shut last Thursday for the annual book closing of banks and the following day for Good Friday. The Rupee has appreciated nearly 4% this year, Asia’s best performance after Malaysia’s ringgit.

Austrian Baldauf is Air India's first COO

Gustav Baldauf, Austrian Airlines' executive vice-president, flight operations, was appointed chief operating officer (COO) of Air India. Baldauf's appointment was decided at a meeting of the board of directors of the National Aviation Company India Ltd. (NACIL) - the parent company of Air India. NACIL also formed four committees - one each for human resources, audit, strategy and finance. These panels will give their reports on the turnaround plan for the airline in a month. Besides Baldauf, those in the running were Brock Friesen, COO of Air Malta, and George Reeleder, MD of Rapidair of Air Canada. Air India is expected to incur losses of around Rs54bn this fiscal and the trend is likely to continue for a few more years. The national carrier's losses will mount to over Rs131.74bn in three straight years. Air India has received the Government's sanction for an equity infusion of Rs8bn. It has a provision of an additional Rs12bn in the next fiscal year. It has also raised over Rs7bn from bonds for aircraft acquisition.

March car sales up 20% yoy

India's domestic passenger car sales stood at 155,600 units in March 2010 as against 129,585 units in the same month a year earlier, representing an increase of 20%, data released by industry body SIAM showed. Local sales of trucks and buses increased to 67,362 units from 41,797 units in the same month last year, translating into a gain of 61%. Two-wheeler sales in March jumped to 920,133 units as opposed to 654,010 units sold in March 2009, the SIAM data revealed. Motorcycle sales for the month under review stood at 708,349 units versus 521,993 units in the year-ago period. Total automobile exports in March came in at 159,953 units as against 113,866 units sold in March 2009.

SEBI announces slew of investor friendly measures

The Securities and Exchange Board of India (SEBI) said that companies should list their shares within 12 days of completing the IPO instead of 22 days at present. Separately, SEBI also extended the ASBA facility to institutional investors. Currently, it is only available for retail investors and high net worth individuals. The new norms would be applicable for all public issues from May 1. The capital market watchdog also tightened disclosure norms for listed companies. listed companies will have to detail balance sheet as a note to half-yearly results within 45 days from half-year end. Currently, shareholders have access to the balance sheet on an annual basis. Companies also have to submit audited or unaudited quarterly financial results on a standalone or consolidated basis within 45 days of every quarter.

Jan-Mar domestic air passenger traffic up 20% yoy

The total domestic passengers carried by the Scheduled Airlines of India in the first quarter of 2010 (January to March) was 11.8mn. The total domestic passengers carried by the Scheduled Airlines of India in the first quarter of 2009 was 9.8mn. Passengers carried by domestic airlines, including NSOP operators, from January-March 2010 were 12.03mn as against 9.98mn in the corresponding period of year 2009, thereby registering a growth of + 20.54%. Domestic airlines flew close to 4mn passengers during March 2010, up 23% over the corresponding month last year. As per the Directorate General of Civil Aviation (DGCA) data, most of the airlines filled over 70% of their seats during this period. The flight occupancy, however, dipped marginally compared with February this year.

Bharti Airtel inks deal to acquire Zain Africa

Bharti Airtel Limited, Asia’s leading telecommunications service provider, announced that it has entered into a legally binding definitive agreement with Zain Group to acquire Zain Africa BV based on an enterprise valuation of US$10.7 bn. Under the agreement, Bharti will acquire Zain’s African mobile services operations in 15 countries with a total customer base of over 42 mn. Zain is the market leader in ten of these countries and ranks second in four countries. With this acquisition, Bharti Airtel will be the world’s fifth largest wireless company with operations across 18 countries. Bharti group’s global telecom footprint will expand to 21 countries along with the operations in Seychelles, Jersey, and Guernsey. The company’s network will now cover over 1.8 billion people - the second largest population coverage among Telcos globally.

Zain Africa BV has mobile operations in the following 15 countries - Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone, Tanzania, Uganda, and Zambia. The total population of these 15 countries stands at over 450 mn with telecom penetration of approximately 32%. With this acquisition Bharti’s total customer base will increase to around 179 million in 18 countries. Bharti launched mobile services in India in 1995, Sri Lanka in 2009 and acquired Warid in Bangladesh in January 2010.

L&T, Rolls-Royce tie-up for light water reactors

Larsen & Toubro Ltd. (L&T) and Rolls-Royce, the global power systems company, signed a Memorandum of Understanding (MoU) for cooperation to effectively address the projected need for light water reactors (LWR) in India and internationally. LWR technology is in use in over 60% of civil nuclear power plants operating worldwide. The two companies have agreed to collaborate on areas, including nuclear instrumentation and controls, engineered products and systems, reactor components, engineering services, in-service reactor support and waste management. The agreement between Rolls-Royce and L&T follows the recent bilateral Civil Nuclear Cooperation Declaration by the Indian and UK Governments, which enables UK and Indian industries to engage in civil nuclear commerce.

HDFC re-launches teaser loan scheme

Housing finance major HDFC re-introduced a new dual rate home loan scheme, which is available only till the end of April. Under the scheme, the fixed rate will be 8.25% up to March 2011. In the following year (2011-12), the rate will be fixed at 9%. Starting from the third year (2012-13) the scheme will attract the prevailing floating rate for the remainder of the loan's tenure. The floating rates will be applicable under two slabs; for loans up to Rs3mn the rate will be 9% while for loans above Rs3mn the rate will be 9.25%. HDFC also said today that its existing floating rate product would continue without any change where rates are 8.75% for loans up to Rs3mn, 9% for loans between Rs3mn and Rs5mn and 9.25% for loans of more than Rs5mn.

HDFC’s earlier scheme offered home loans at 8.25% fixed for the first two years and thereafter, at the then-prevailing floating rate. The leading home loan provider’s revised scheme was apparently a reaction to State Bank of India (SBI) extending its special scheme till the end of this month. Renu Sud Karnad, managing director, HDFC, said even though there is a marginal increase in interest rate compared with the earlier offer, HDFC's effective rate over a 15-20 year term is very attractive. HDFC said this is a flexible product with dual rates. The fixed rates are applicable for all new loans irrespective of the loan amount. SBI is charging 8% fixed for the first year and 8.5% fixed for the subsequent two years under its special scheme for loans up to Rs5mn.

Tata Motors converts US$345mn bonds to shares

As announced earlier, Tata Motors had offered bondholders of their 0% JPY 11,760mn and 1% US$300mn Convertible Bonds an option to convert their bonds into Ordinary Shares during a 5-day period from March 23 to March 29. In this period, bondholders could opt to receive a higher number of shares per bond. Bondholders, who did not participate, would continue with all the terms of their bonds prior to this one-off offer. The offer has met with great success with bondholders representing 93% of the JPY bonds and 76% of US$ series bonds respectively, opting to convert their bonds into Ordinary Shares. The company was able to extinguish debt worth US$345mn of these bonds at current exchange rates. As a result of the above offer, the company allotted 26.64 million equity shares to the bondholders, who exercised the option to convert these bonds into Ordinary Shares during the offer period.

Tata Motors sells 20% stake in Telcon to Hitachi

Tata Motors DVR hogs limelight amid heavy discount

Tata Motors' DVR shares surged amid optimism that liquidity on the counter will improve amid reports that Tata Sons will pare its stake through a book-building route. Tata Sons had reduced its stake to 54% from 73% in 2009 and is further planning to cut it in an attempt for better pricing for the DVR, which is currently quoting at a significant discount to Tata Motors. Tata Sons plans to sell the DVRs in the open market through an auction and has also reportedly appointed Tata Capital for the transaction. On April 13, in bulk deal on the exchanges, Tata Sons sold ~1.6mn shares. HDFC MF bought ~1.05mn shares at an average rice of Rs485 per DVR. Tata Motors’s DVRs (with a one-tenth voting right compared to ordinary shares) have been trading at a ~40% discount to the ordinary shares. The ‘A’ class shares have a 5% higher dividend than ordinary shares.

Getting logistics right...RIL invests in Deccan 360

Reliance Industries Ltd. announced investment in Deccan 360, India’s new delivery and distribution network, an initiative which will provide a remarkable boost in transforming the logistics spectrum in India. Deccan 360's founder chairman Capt. G.R. Gopinath said that RIL's stake was between 26% and 50%, while reports suggested that the Mukesh Ambani-owned company paid US$20mn to US$30mn for the stake. This investment will help Deccan 360 increase the air and surface network coverage across the country. The investment was made by a wholly owned subsidiary of RIL. The purchase would boost the supply chain and logistics operations for Reliance's retail business, according to reports. Reliance Retail, a unit of Reliance Industries, operates 900 multi-format stores in 80 cities across India. Deccan 360 is owned by G. R. Gopinath, who founded India's first budget airline Air Deccan and later sold it to Vijay Mallya-controlled UB Group's Kingfisher Airlines in 2007.

Maruti Suzuki sells a million units in FY10

Maruti Suzuki India Ltd. sold a total of 10,18,365 vehicles in FY10. This is the first time in Indian automobile history that a car company has sold over a million units in a financial year. This included 8,70,790 units sold in the domestic market, the highest ever by the company in a fiscal. The export sales of 147,575 units in the year were the highest ever annual exports by the company. The total sales numbers in 2009-10 mark a growth of 29% over the previous financial year. Maruti Suzuki’s total sales in 2008-09 were 792,167 units. During March 2010, Maruti Suzuki sold a total of 95,123 units, up 11% over March 2009 when the company had sold 85,669 units. The March 2010 numbers include domestic sales of 79,530 units and the highest ever monthly exports of 15,593 units. The previous highest monthly exports were in August 2009 at 14,847 units.

Hero Honda Board declares Special Dividend

M&M and Renault announce restructuring of JV

Mahindra and Renault announced the restructuring plans for their 51:49 JV, Mahindra Renault Pvt Ltd, through which the Logan car is manufactured. Under a Framework Agreement, the two parties have in principle agreed that M&M will take over the operations of the JV. Renault will continue to support M&M and the product through a License Agreement and supply of key components, including the engine and transmission. The aim of the restructuring is to ensure continuity and build on the positive customer equity that exists for the Logan in India, the two companies said in a statement.

Mahindra & Mahindra (M&M) will buy Renault’s equity stake in MRPL resulting in Mahindra Renault Pvt Ltd becoming a 100% Mahindra group owned company. M&M will be responsible for the management of the Logan in the Indian market. The Renault name and logo will continue to be used on the Logan till the end of this calendar year. Over the course of a transition period of about 18 months, M&M will rename the car to a Mahindra owned brand name and the car shall then only display the Mahindra logo.

M&M may make modifications in line with customer expectations and execute additional localization to reduce costs. Other vehicles built on the Logan platform by Renault globally, such as the Sandero, are not included in this new agreement. M&M and Renault will continue to work together on an ongoing basis to explore areas of synergy for mutual benefit on several fronts.

Mahindra slashes prices of Logan

Mahindra Renault Pvt. Ltd. unveiled a major price rationalisation for Logan to boost sagging sales of the entry-level sedan. The announcement came a week after Mahindra & Mahindra bought out French carmaker Renault in the joint venture that makes the Logan at Nashik. Prices of the BS III Logan have been reduced by Rs27,000 to Rs80,000 while for the BS VI version the price reduction is Rs24,000 to Rs65,000. The prices are ex-showroom Delhi. The revised prices of the Logan will come into effect from April 26. There will be no change in the price of Logan as far as exports are concerned, he added. After the price cut, the BS III petrol Logan will be available at Rs4.86 lakhs and the BS III diesel variant will be sold at Rs5.65 lakh (ex-showroom Delhi). The BS IV compliant petrol Logan will now be available at Rs4.89 lakh and the BS IV diesel variant will be sold at Rs5.80 lakh (ex-showroom Delhi).

Bajaj Auto hikes stake in KTM to ~36%

Bajaj Auto Ltd. said it has hiked its stake in KTM Power Sports AG to 35.7%, from 31.9%, after the Austrian company raised money by selling new shares. KTM, which is introducing an electricity-powered motorcycle, strengthened its equity base by €43mn through the share sale. Bajaj Auto increased its share-holding in KTM from 31.92% to 35.67%. Cross Industries (controlled by Messrs Stefan Pierer and Rudy Knunz) retained its shareholding at over 50%. The joint development projects between Bajaj Auto and KTM are proceeding well and the first products will the markets end of this year in Europe and by middle of 2011 in India. Bajaj Auto will distribute KTM products in India and in markets like Sri Lanka, Bangladesh, Indonesia, Africa and such Bajaj lead markets.

Reliance Infra promoters hike stake to 43%

Shares of Reliance Infrastructure Ltd. advanced after the company's founders raised their stake to 43% from 38% by investing more than Rs18.21bn. On converting the balance warrants, the promoter group's holding will increase to 48%. The promoters bought the additional stake at Rs929 per share, the company said in a statement. Increase of stake by promoters will help bolster investor confidence.

Reliance Infrastructure allotted 1.96 crore equity shares to AAA Project Ventures Private Ltd., a Reliance Anil Dhirubhai Ambani promoter group company against convertible warrants issued to them. The Board had in July 2009 allotted 4.29 crore convertible warrants to AAA Project Ventures entitling them to one equity share of Rs10 per warrant at an issue price of Rs929 per share. The issue price was calculated as per applicable SEBI guidelines.

The effective purchase cost to the promoter group is Rs1,112 per share after taking into consideration the upfront payment of Rs7.83bn already received on warrants issued earlier, which were cancelled.

This equity capital infusion will substantially enhance Reliance Infra's net worth to Rs160bn, and further augment its borrowing capabilities to Rs320bn at even a debt:equity ratio of 2:1.

Godrej Consumer Products buys Indonesia's Megasari

Godrej Consumer Products Ltd. said that it will acquire Indonesian firm PT Megasari Mamsur, as well as its distribution arm, PT Intrasari Raya. The deal is valued at around Rs10-12bn. The Rs6bn Megasari manufactures household insecticides, wet tissues and air fresheners under the brand names Hit, Mitu and Stella, respectively. The deal will be financed through a mix of internal accruals and debt. The senior management at Megasari will be retained, though a Godrej group resource - Naveen Gupta - will move to Indonesia as business head. He will report to Mahendran. This is the fifth acquisition for GCPL.

Unitech Board clears demerger plan

Unitech shares advanced after the company's board of directors approved demerger of its non-core operations into a separate entity called Unitech Infra. Unitech will transfer non-core operations, including telecommunications, hotels, special economic zones, logistics, transmission towers and others, to Unitech Infra. For every one share of Unitech, the shareholders will get one share of Unitech Infra, which will be listed on the stock exchanges by the end of the year. The Board also approved the amalgamation of two wholly owned subsidiaries, Aditya Properties and Unitech Holdings, with Unitech. The Board also approved hiving off the shares and investments held in Unitech's telecom business to a wholly-owned subsidiary of Unitech Infra. Post-demerger, Unitech will hold 35% stake in Unitech Infra, while the promoters would have 32% shareholding. The balance will be with the public. Reports stated that the demerged entity, Unitech Infra, is estimated to have an initial net worth of about Rs50bn and a debt of Rs3.5bn.

United Spirits, UB sales top 100mn cases

United Spirits Ltd. (USL) and United Breweries Ltd. (UB), the flagship companies of The UB Group, announced that they crossed the milestone of clocking a sales volume of 100mn cases each for the fiscal year ended March 31, 2010. This achievement made United Spirits the world’s second-largest spirits company by volumes, dislodging Paris-headquartered Pernod Ricard. "It wasn’t long ago that we were merely a 3 million case company. We have created a new history in the world of beverage alcohol by selling 740 million cases in about a quarter of a century. The Indian spirits industry today is pegged at 236 million cases and USL has a 59% market share in India in the segments it operates in. We are certain that our additional sales in the next financial year will take us to the No. 1 position globally," Dr. Vijay Mallya, Chairman, The UB Group said.

Jet Airways to hike fares by 10-15%

Jet Airways will hike fares of by 10-15% in the April-June quarter over the January-March quarter. Raj Siva Kumar, vice president, revenue management, said that the rise in crude prices and better volumes were likely to push the fares up. The airline has posted a healthy load factor of over 80% on the international rotes and around 70% on domestic routes in January-March period and is close to breakeven on the US routes. Jet plans to induct 11 aircrafts this fiscal including 737s and five ATRs. Further, the airline is also seeking clarification from the Government on issuing a qualified institutional placement (QIP), according to reports.

Blackstone to invest Rs2.25bn in Jagran Media Network

The Blackstone Group will be investing Rs2250mn (approximately US$50mn) in Jagran Media Network Pvt. Ltd., which will hold majority share of Jagran Prakashan Ltd. JPL is India's leading media and communications group, with the group's flagship brand, Dainik Jagran, being the most widely read newspaper in the world with a total readership of 54.6mn. Jagran Media Network will file for necessary approvals for the investment with the Foreign Investment Promotion Board (FIPB).

Essar Energy lowers price of London IPO

Essar Energy reportedly lowered the price of its London initial public offering (IPO) to 420 pence a share, owing to recent stock market volatility. The price was previously in a range of 450 pence to 550 pence, but new terms have been given to investors, lowering that price. The IPO will now be valued around US$2bn. JPMorgan Cazenove and Deutsche Bank AG are joint bookrunners for the sale. This is likely to be one of the biggest IPOs in London in the last 2-3 years. This would be the biggest Indian IPO in London after Vedanta Resources raised 700 million pounds (US$1.05bn) in an IPO in 2003. Essar Energy is a holding company for the group’s energy businesses. The money raised from the London IPO will be used to fund power projects, exploration and development of oil and gas blocks, expand Essar’s refinery, and to meet working capital requirements, the group said. Essar Energy owns all of unlisted Essar Power Ltd. and 89% of listed Essar Oil Ltd. At current valuations, Essar Energy is expected to join FTSE 100 shortly after listing.

Sun Pharma sinks on adverse US rulings

Shares of Sun Pharma took a big knock after a US district court ruled that the Indian drugmaker will have to withdraw its generic Eloxatin product from the American market on June 30th. Sun Pharma said it will re-enter the US market by 2012. Eloxatin is an anticancer drug with US$1.4bn annual sales in US at innovator prices, IIFL said in a note. Sun Pharma had launched it in March 2010, after a favorable judgment from a court of law regarding the enforceability of its settlement with Sanofi, the innovator. Later, other generic players settled with Sanofi and agreed to withdraw the product from the market on June 30. Sun Pharma can appeal the decision by the district court in a court of appeal, IIFL said. However, even if the appeal court gives a temporary reprieve to Sun Pharma, the sales would practically be at risk of damages, should it lose the appeal, it added.

Separately, Sun Pharma said that a jury returned a verdict in the patent litigation over generic Protonix. The jury determined that Nycomed's US Patent No. 4,758,579 is not invalid. Pantoprazole Sodium DR Tablets are the AB-rated generic equivalent of Wyeth's Protonix DR Tablets. Protonix is an anti-gastric ulcer drug that had US$2.3bn annual sales at innovator prices.

Glenmark Generics settles litigation with GSK

Glenmark Generics Inc., USA (GGI), the United States subsidiary of Glenmark Generics Limited (GGL), announced the settlement of litigation pending between Glenmark and GlaxoSmithKline LLC (GSK) over patent actions concerning atovaquone and proguanil hydrochloride 250mg/100mg tablets, the generic version of GSK’s Malarone tablets. Under the terms of the Settlement Agreements which are still subject to review by the Federal Trade Commission and the Department of Justice, Glenmark will be able to market and distribute its atovaquone / proguanil 250mg/100mg tablets under a royalty-bearing license from GSK in the third quarter of calendar year 2011, or earlier under certain circumstances. Glenmark believes that it is entitled to 180 days of exclusivity with respect to its atovaquone / proguanil 250 mg/100mg tablets as the first generic to file an ANDA for the product. GSK currently markets its product as Malarone in the US, indicated for the prevention and treatment of malaria. Total US sales as reported by IMS Health for the 12 month period ending December 2009 were approximately US$56mn.

Triveni Engineering signs JV agreement with GE

GE Oil & Gas, through one if its affiliates (GE Pacific Mauritius Ltd.) and Triveni Engineering & Industries Ltd. signed a joint venture (JV) agreement to design, manufacture, supply, sell and service advanced technology steam turbines in India in the above 30MW to 100MW range for power generation applications in the Indian and worldwide markets. Triveni will hold one extra share with both parties having equal representation on the Board. GE Triveni Ltd., which will be incorporated in India and headquartered in Bangalore, will manufacture advanced technology steam turbines for both domestic customers and export to global markets. The JV, which will benefit from a full and exclusive technology transfer and on-going R&D support from GE, will use Triveni's Bangalore facility for turbine manufacturing. The transaction is expected to close in the next few months, subject to legal and regulatory approvals.

Standard Chartered files DRHP for India listing

Standard Chartered Plc announced that it is considering an issue and listing in India of Indian Depository Receipts (IDRs) representing underlying new ordinary shares in the Company. The Company has today filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in connection with that proposal. The listing of IDRs is subject to market conditions and further regulatory approvals. The listing of IDRs is expected to be the first by an overseas company. India is one of Standard Chartered's key Asian markets - generating over US$1bn in profit - and the listing provides Indian residents with an opportunity to invest in the Company and participate in its growth.

Credit Suisse gets in-principle nod for Mumbai bank branch

SKS Micro files draft prospectus for IPO: report

Avantha Power plans to raise up to Rs12.5bn via IPO

Avantha Power & Infrastructure Ltd. has sought the approval of capital market regulator SEBI to raise up to Rs12.5bn in an initial public offer (IPO). The reports state that Avantha Power (formerly BILT Power Ltd.), part of the Gautam Thapar group, may raise up to Rs3bn selling 65mn shares to investors before the IPO. Enam Securities, Axis Bank, Citigroup Global Markets India and Kotak Mahindra Capital Co. will manage the Avantha Power IPO. With 191 mw of operational thermal power capacity, APIL has 2,400 mw of generating capacity under various stages of implementation and 1,320 mw of generating capacity under planning spread across India.

Decent debut for IL&FS Transportation

IL&FS Transportation, a developer, operator and facilitator of surface transportation infrastructure projects has registered a decent debut on Dalal Street. The stock started trading at Rs278 per share as against its issue price of Rs258. The stock ended the week at Rs273. The price band for IL&FS Transportation issue was fixed at Rs242-258 and the IPO of was subscribed 33.42 times. The issue received bids for 792.67mn shares against the 23.71mn shares on offer. The IPO included 42.8 lakh shares offer for sale by Trinoka Trinity Capital. The QIB portion was subscribed 52.6 times, while the Non-institutional segment (HNI) was subscribed 39.39 times and Retail 4.56 times.

Robust listing for DQ Entertainment

Powerful debut for Persistent Systems

Shares of Persistent Systems, software developer enjoyed a significant first day of trades. The closed at Rs404 on April 6 as against it issue price of Rs310 translating into a premium of 30%. The stock hit an intraday high of Rs447 and an intra-day low of Rs361 and the total traded quantity on the counter was ~10.5mn shares on the NSE. The company's 5.4mn share IPO was subscribed more than 93%. The retail portion was subscribed 22 times, institutional portion went for ~144 times, while the non-institutional segment was subscribed ~106 times.

Disastrous debut for Goenka Diamond

Looks like the Indian investors are not too keen about the jewellery companies. Goenka Diamonds and Jewels Ltd. got the same welcome to the market as Shree Ganesh Jewellery did last week. Goenka Diamonds, engaged in the business of cutting and polishing of diamonds and manufacturing and retailing of diamond jewellery, had an atrocious listing. The stock commenced trading at Rs124 on the NSE as against the issue price of Rs135 per share. It closed at Rs123.10 on the NSE after touching a low of Rs92.20 and a high of Rs141. Total traded quantity on the counter was over 36.8mn shares on the NSE. The IPO, which opened for subscription during March 23-26, was barely subscribed. The HNI portion was subscribed three times, QIB portion over 1 times and retail portion 0.66 times. The price band for the issue was fixed at Rs135-145 per share. The issue constituted 30.93% of the fully diluted post issue paid up capital of the company. Promoters' holding reduced to 69.07% from 100%. The book running lead manager to the issue was SBI Capital Markets and Karvy Computershare was the registrar.

QIBs drive Jaypee Infratech IPO subscription

The initial public offer (IPO) of Jaypee Infratech received bids for 190.38mn shares compared to 221.76mn shares on offer. QIBs led the bidding even as he HNIs and Retail investors remained cautious. The IPO was subscribed 86% by 16:00 IST on Friday, as per NSE web site. The company has set a price band of Rs102-117 per share for its IPO. Retail investors will be allotted shares at a discount of up to 5% to the issue price that will be determined as per the 100% book-building route. The issue closed on May 4. The IPO is a combination of fresh issue of equity shares aggregating up to Rs16.5bn and an offer for sale 60mn shares by Jaiprakash Associates.

International News

IMF ups global growth forecast

In its World Economic Outlook, the IMF raised forecasts for global economic growth to 4.2% this year. But it kept next year's projection unchanged. Emerging market economies like China and India are leading the upturn in global economic growth, the IMF said, with 2010 growth expected to be nearly three times as fast as that in advanced economies. The IMF forecast that growth in emerging and developing economies would rise to 6.3% this year and 6.5% next year. In advanced economies it would reach only 2.3% in 2010 and 2.4% in 2011. China will grow the fastest - by 10% this year and 9.9% in 2011. Elsewhere, Brazil, India and Indonesia are also staging strong rebounds. The IMF suggested it may not be too early to start unwinding the stimulus if output gaps are closing and inflation pressures are beginning to emerge.

IMF chief economist Olivier Blanchard warned that new, and no less formidable, challenges have already appeared. He said that fiscal consolidation must become a priority for heavily-indebted advanced economies. The industrialised nations as a whole may need to weaken their currencies to boost exports, Blanchard said. On the other hand, emerging economies need to allow their currencies to rise, curbing exports, he said.

Global financial turmoil...Greenspan defends his policies

The Financial Crisis Inquiry Commission of the United States began a three-day hearing, focusing on the causes behind the sub-prime mortgage meltdown that almost led to a second Great Depression and wiped out several top Wall Street institutions. Former Federal Reserve chairman Alan Greenspan said that while steps can be taken to limit the impact of another shock, regulators can't fully prevent another crisis from happening. Greenspan defended his record and blamed the proliferation of securitised subprime mortgages for triggering the financial crisis. He said that although he was concerned about booming home prices as early as 2002, he did not expect the boom to continue for so long.

Eurozone unveils details of Greece rescue

European governments unveiled a plan to prevent Greece from going bankrupt. Eurozone members offered debt-plagued Greece a rescue package worth as much as €45bn (US$61bn) at below-market interest rates in a bid to stem its fiscal contagion and restore confidence in the euro common currency. The move calmed global investors and helped shore up confidence in the sagging euro. Eurozone finance ministers said they would offer as much as €30bn in three-year loans in 2010 at around 5%. That is less than the current three-year Greek bond yield of 6.98%. Another €15bn would come from the International Monetary Fund (IMF). Germany also abandoned an earlier demand that Greece pay market rates. Europe’s biggest economy would contribute almost a third of the loans, the largest single share. Greek, EU and IMF officials will meet today to start working on details. "The package sends a clear message that nobody can play with our common currency and our common fate," Greek Prime Minister George Papandreou told reporters in Larnaca, Cyprus. The European loans would be tied to Euribor and priced above rates charged by the IMF. The EU will offer a mix of fixed-rate and floating rate loans. The IMF would charge less than the EU. Both types of funding would be offered at the same time. Transfers to Greece would be made by the ECB.

Greek decides to take EU-IMF financial aid

Greek reportedly decided to tap into the emergency rescue package put together jointly by the European Union (EU) and the International Monetary Fund (IMF) to help pull the economy out of its current fiscal mess. Greek Prime Minister George Papandreou announced on national television the activation of up to €45bn (US$60bn), in loans expected from the EU and IMF, international reports stated. "It is a matter of national need to ask officially" for the activation of the EU-led aid mechanism, Papandreou said in a televised address from the Greek island of Kastelorizo. The European Commission, the European Central Bank and the IMF have been holding talks in Athens to finalize the terms of the aid package. Worries that Greece might default on its debt had hurt global stocks for the past few months, countering improved earnings and signs of stability in the global economy. Investors had feared that a Greek default could trigger a bigger financial crisis in some of the other troubled eurozone nations. Those fears subsided somewhat when the EU and the IMF agreed to make billions in loans available to Greece at below market rates. But, the euro came under renewed pressure this week as Greek bonds tumbled amid worries about the government's ability to meet its financing needs despite the EU-IMF aid.

China moving close to revaluing yuan

Asian currencies gained amid growing conjecture that China was close to revising its currency policy, including letting the yuan float a little more freely against the US Dollar. The timing of the move and the details of new regime remain unknown. Billionaire investor George Soros said that China and the US have probably come to an agreement on the yuan amid speculation that the currency’s 21-month-old peg to the dollar may be scrapped. Treasury Secretary Timothy Geithner made a surprising trip to Beijing and had a meeting with China's Vice Premier Wang Qishan amid wide speculation that the yuan may be revalued shortly. He was scheduled to return to Washington directly after visiting India.

Obama urges Wall Street to help reform financial industry

United States President Barack Obama strengthened the case for the overhaul of financial regulations for Wall Street, urging the industry leaders to join his administration, instead of fighting the White House in this effort. Speaking at Cooper Union in New York, near Wall Street, Obama addressed an audience of students, union leaders and some of the financial industry's most prominent executives, including Goldman Sachs CEO Lloyd Blankfein. "I want you to join us, instead of fighting us in this effort....These are reforms that would put an end to taxpayer bailouts," the US president said. Obama said the financial crisis was born of a failure of responsibility from Wall Street all the way to Washington. The cost of future financial institution collapses should be paid by the industry, not taxpayers, he said. Republican efforts to demonize the bill as providing for bailouts are not true. Obama said.

Full text of Obama speech on Wall Street reform

US launches Federal probe against Goldman Sachs

US Federal prosecutors are reportedly looking into whether Goldman Sachs has committed securities fraud. The Securities and Exchange Committee (SEC) referred its investigation of Goldman to the Justice Department for possible criminal prosecution, according to several media reports. "Given the recent focus on the firm, we are not surprised by the report of an inquiry," said Samuel Robinson, a spokesperson for Goldman. "We would fully cooperate with any requests for information." The SEC, the Justice Department and the US Attorney's office all declined to comment. Earlier, the SEC charged Goldman with securities fraud for failing to tell investors that hedge fund Paulson & Co. helped select securities for a portfolio it was also betting against. Goldman has denied the allegations.

UK FSA launches probe against Goldman Sachs

...Goldman execs grilled in Senate

Seven current and former Goldman Sachs executives, including CEO Lloyd Blankfein, faced an extensive and intense cross-examination from the US lawmakers about the firm's role in the financial crisis. The Senate hearing that lasted more than 10 hours. Goldman Sachs has been accused by Levin's committee of betting aggressively against the US housing market, making as much as US$3.7bn in the process. Documents released by the panel also showed that Goldman Sachs may have been engaging in other questionable practices. Goldman Sachs has maintained that it too got hit when the US housing market collapsed, losing some US$1.2bn in 2007 and 2008. It has also rejected charges that it bet against US homeowners or against its own clients.

Galleon insider trading...US looking at Rajat Gupta's role

Name of Rajat Gupta, the India-born former head of consulting firm McKinsey & Co., has been embroiled in the US government probe into alleged insider trading at hedge fund Galleon Group, reports The Wall Street Journal (WSJ). US prosecutors are examining whether Goldman Sachs director Gupta shared inside information about the Wall Street firm with Raj Rajaratnam, founder of Galleon, at the height of the financial crisis, the US financial newspaper said. "Mr. Gupta is unaware of any examination of any such issue and has done nothing wrong," a spokeswoman for Gupta said in a statement responding to the report. A McKinsey spokeswoman declined to comment, but said in a statement that McKinsey has no knowledge of this alleged matter, which is unrelated to our firm. Gupta is believed to be a close associate of Rajaratnam's, according to the WSJ report.

US oil slick spreads...threatens environmental damage

A massive and fast spreading oil spill in the Gulf of Mexico reached the coast of Louisiana, which declared a state of emergency to help prevent major environmental damage. The US Navy has been sent to help avert an economic and environmental disaster. The states of Mississippi, Alabama and Florida are also threatened, as oil continues to escape from the wreckage of the rig. Oil is expected to wash ashore in Mississippi on Saturday before reaching Alabama on Sunday and Florida on Monday. The oil is gushing from a sub-sea well about 80 kilometres off the coast of Louisiana and 1,500 metres below the water's surface. The leak occurred after a drilling rig exploded on April 20 and then sank. An estimated 794,936 litres (5,000 barrels) of sweet crude oil were leaking daily. BP officials said it could take as long as 90 days to stop the leak. Louisiana Gov. Bobby Jindal declared a state of emergency, mobilizing the Louisiana National Guard. The White House said it will prohibit new offshore oil drilling until authorities learn what caused the explosion of the Deepwater Horizon rig.

Global air traffic improves further

The International Air Transport Association (IATA) announced that March 2010 international scheduled air traffic showed continued strengthening of demand. Compared to March 2009, passenger demand was up 10.3%, while cargo demand grew 28.1%. Both are improvements from the 9.0% and 26.3% growth for passenger and freight demand recorded in February. These are strong gains, but the data is being compared to March 2009, which was the low point for international air travel during the recession, the IATA said. "March results show that the pace of the upturn is strong. But the trauma of the recession is not over. The industry has lost two years of growth, and passenger and freight markets are still 1% below early 2008 highs. Nonetheless, the pace of improvement, based on an improving global economic situation, is much faster than anybody would have expected even six months ago," said Giovanni Bisignani, IATA’s Director General and CEO. With a 78.0% load factor recorded in March, passenger load factors remain at record highs. While demand expanded by 10.3% in March, capacity increases stood at 2.0%, boosting the load factor and creating much tighter supply and demand conditions. Global capacity remains 3-4% below pre-crisis levels.

IATA applauds Europe’s post-Volcano measures

Air travel resumes slowly over Europe

Air travel over Europe gradually started returning to normal but the volcanic ash emanating from Iceland may linger on for a while. Also, a new ash cloud spreading south from the erupting volcano in Iceland threatened to undermine the efforts to ease several days of severe air traffic restrictions. Singapore Airlines, Qantas Airways, Cathay Pacific Airways, Korean Air Lines and other Asian carriers resumed flights to European cities, including London, Frankfurt and Paris. UK regulators re-opened most of the nation’s airspace late on April 20, following similar moves by officials across Europe. But, the airport warned that not all flights will be operating in the early stage of the opening. It took weeks for carriers to clear the backlogs of stranded passengers following the April 14 eruption of Iceland’s Eyjafjallajokull volcano. Ash drifting over Europe forced the cancellation of about 90,000 flights. The Eyjafjallajokull eruption began on March 20. After a lull, it resumed early on April 14 directly under the glacier that covers most of the mountain. The previous eruption of the 1,666-meter peak in December 1821 continued until January 1823.

Iron ore...Japanese steel firms to pay 90% more to Vale

In a move that ends a four decade-old practice of setting annual prices, major Japanese steel makers Nippon Steel Corp. and Sumitomo Metal Industries Ltd. have reached a tentative accord with Brazilian miner Vale SA on a roughly 90% hike in iron ore prices for the April-June period. Sumitomo Metal, Japan’s third-biggest steelmaker, agreed to pay Vale US$100 to US$110 per metric ton for the three months beginning the April 1. Nippon Steel and South Korean steel maker Posco, which jointly purchase iron ore, have also reached a provisional agreement with Vale at the same price. Separately, BHP Billiton, the world’s largest mining company, today said that it will sell the majority of its production to Asian steel mills on shorter-term contracts without giving pricing. Moving to quarterly pricing will help producers benefit from surging spot prices for iron ore, which are trading at more than double the annual-contract price. Cash prices have more than doubled in the past year. Asian steel mills have long resisted the move away from annual contract pricing. So, it is a significant win for BHP. Shares of the Melbourne-based mining titan rose in Sydney trading.

China sends 4 Rio Tinto employees behind bars

GM reports post-bankruptcy loss of US$4.3bn

In its first official accounts since leaving bankruptcy protection, General Motors (GM) reported a net loss of US$4.3bn for the period between July 10th and December 31st. The company said that it remains on course to repay by June the government loans it received as part of its bail-out last year. The new financial numbers by GM show that the company is moving closer to breaking even, giving greater credibility to claims that the Detroit automaker could see an operating profit this year. But most of GM's losses during the period were caused by one-time expenses, such as US$2.6bn for the UAW's retiree health care trust. Absent those costs, GM posted an operating loss of US$600mn during the last three months of 2009, GM CFO Chris Liddell said. It also generated US$1bn more than it spent operating after emerging from bankruptcy. "It's getting close to breakeven," Liddell said. That is encouraging to some experts, and suggests GM is making progress toward becoming a publicly traded company again.

GM repays govt loans 5 yrs ahead of schedule

General Motors (GM) announced it had repaid in full the US$8.4bn in loans it received from the US, Canadian and Ontario governments, five years ahead of schedule. The US government still holds a majority stake in GM, but could start selling the shares later this year. Ed Whitacre, who took the reins at the Detroit carmaker after its emergence from bankruptcy last July, said that the loan repayment, five years ahead of schedule, "is a sign that our plan is working. We are moving at GM, and improving at a rapid pace." He told several thousand cheering GM workers at an assembly plant in Kansas City that the company was investing US$257mn in the facility and a plant in Detroit to build the next version of the Chevrolet Malibu mid-sized sedan. The Detroit plant will also produce the Chevrolet Volt plug-in hybrid car, which will start rolling off the assembly line in October.

Renault, Nissan and Daimler announce strategic tie-up

Renault, Nissan and Daimler announced a strategic tie up. The Renault-Nissan Alliance will take a 3.1% stake in Daimler, and the German luxury carmaker will acquire a 3.1% stake each in Renault and Nissan. The three car makers will cooperate on the next-generation of Daimler's Smart platform and Renault's Twingo, including electric versions, besides expanding the Smart and Twingo families. The value from this alliance for Renault and Nissan, which have already been cooperating for over a decade, amounts to about 2 billion euros (US$2.7bn) in cost cuts and addition business over several years, said Carlos Ghosn, chief executive of both Renault and Nissan. Renault holds a 44.3% stake in Nissan while the Japanese firm owns 15% of the French automaker. Renault is not interested in a merger with Daimler, but a deepening of the cooperation is possible going forward, Ghosn said.

Toyota suspends US sales of Lexus GX 460

In yet another blow to its reputation, Toyota said it will temporarily suspend sales of its 2010 Lexus GX460 after Consumer Reports magazine issued a safety warning on the SUV. Consumer Reports said that the SUV carried an unusually high risk of a 'rollover accident' during certain types of turns. The Japanese automaker said it took the situation with the Lexus GX460 very seriously and will conduct its own tests on the SUV to identify the problem pointed out by Consumer Reports. The magazine gave the GX460 a rare 'Don't Buy: Safety Risk' label until the problem is fixed. This designation is rarely given by the magazine. The last time it was used was in 2001, on the Mitsubishi Montero. Toyota has sold about 5,000 GX460s in the three months since it went on sale. Toyota said it was testing all its sport utility vehicles to reassure buyers of their safety after Consumer Reports warning on Lexus GX 460 SUV. The testing covers the entire lineup of Toyota and Lexus SUVs. Toyota is also suspending production of the Lexus GX 460, which is built in Tahara, Japan, for 12 days starting April 16.

HP to acquire Palm for US$1.2bn

Hewlett-Packard said that it will acquire Palm in a deal valuing the struggling cellphone maker at US$1.2bn. Palm’s common shareholders will receive US$5.70 a share in cash, a 23% premium over the closing price, H-P said in a statement. Elevation Partners LP, Palm’s biggest investor, gets US$485mn for its preferred shares and warrants. Shares of Palm, 30% owned by Elevation Partners, jumped above HP's cash offer. Some investors could be betting on a higher bid, while others could be covering short positions on the heavily shorted stock. Both the boards have approved the deal, which includes debt. Based on Palm's latest filing, the deal values Palm's 167.892 million shares outstanding at US$957mn.

Palm has been struggling to boost sales in the lucrative smartphone market as consumers have shunned its latest launches even as rivals such as Apple and RIM have stepped up their presence. Speculation had been building up over the past few weeks over a possible takeover offer for Palm. Slow sales of Palm's latest smartphone models have depressed the stock, raising questions on the company's future prospects. Palm's chairman and chief executive, Jon Rubinstein, is expected to remain with the company. The transaction is expected to close during H-P's third fiscal quarter ending July 31.

United Airlines, US Airways talk merger: reports

Shares of both US Airways Group and UAL Corp., the parent of United Airlines, climbed on reports the carriers were in early merger talks after a nearly two-year break. Negotiations could still break down, and it could still be several weeks before any transaction is announced, media reports cited people close the matter as saying. US Airways and United both refused to comment on the reports, though both airlines have in the past promoted mergers as a way to reduce industry capacity, which many experts complain is still too high.

British Airways inks merger deal with Iberia

British Airways said that it has signed a merger agreement with Iberia. The terms of the merger agreement are consistent with the binding memorandum of understanding (MoU) signed between the airlines in November 2009. The merger is expected to be completed in late 2010 and has been structured so that the merged entity will be able to take advantage of further consolidation in the global aviation industry, British Airways said in a statement. The merged company, to be known as International Airlines Group, will be listed in London and Spain. The new group will generate annual synergies of approximately €400mn by the fifth year.

Zhejiang to buy Volvo car unit for US$1.8bn

Zhejiang Geely Holding Group, agreed to buy Ford Motor's Volvo car unit for US$1.8bn. The takeover underscores China's arrival as a major force in the global auto industry and ends nearly two years of talks with Geely over Volvo. Such a deal would have been nearly unimaginable a few years ago for the Chinese carmaker, which on 2009 forecasts has a turnover of only 16% of Volvo's, and has just over half the workforce. The deal highlights in particular the big opportunities that have emerged from the financial crisis for smaller players. Geely had secured all the necessary financing to complete the deal, though it remained open to a possible loan from the European Investment Bank.

Twitter to embrace ads to make money

Twitter unveiled a plan to use advertising to boost revenues. Biz Stone, one of the three co-founders of the micro-blogging service, provided details of the long-awaited revenue-generating plan for the San Francisco-based startup in a post on the Twitter blog. Stone said the advertising service, called "Promoted Tweets," will allow businesses and organizations to highlight their 140-character-or-less messages known as "tweets" to a wider group of users. He said a number of companies, including Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks, and Virgin America, had signed up to take part in the first phase of the advertising program. Stone said tweets sponsored by advertisers will be featured at the top of Twitter.com's search results pages with only one "promoted tweet" being displayed per page. "Promoted Tweets will be clearly labeled as 'promoted' when an advertiser is paying, but in every other respect they will first exist as regular tweets and will be organically sent to the timelines of those who follow a brand," he said.

May 2010

Domestic News

3G Auction...Govt's provisional revenue cross Rs600bn

There is no end in sight to the frenzied bidding for third-generation (3G) mobile airwaves even as the Government's bounty from the auction keeps swelling each day. At Thursday's (May 13) close, the Centre is expected to garner more than Rs600bn from 3G auction alone as against projection of Rs350bn from the combined 3G-BWA auction. Meanwhile, bids for one set of pan-India 3G mobile licences reached Rs150bn (US$3.33bn), more than double the base price of Rs35bn, on the 29th day of the auction. As per the details given by the Department of Telecommunications (DoT), five more Clock Rounds were completed on Thursday. With this, the total number of Clock Rounds completed to date has come to 162. The 3G auction started on April 9. BWA bidding will start two days after the 3G auction concludes.

Mumbai and Delhi continued to be among the most sought-after circles with highest bids of Rs28.24bn and Rs27.45bn, respectively. The reserve price for both the Mega Metro circles is Rs3.2bn. Karnataka was at the third place with a bid of Rs15.64bn. As per the DoT web site, Tamil Nadu had the fourth highest bid of Rs14.5bn, followed by Maharashtra at Rs12.45bn and Andhra Pradesh at Rs12.18bn. Gujarat saw seventh highest bid at Rs10.55bn.

Telcos raise funds for buying 3G spectrum

Telecom companies, who have emerged winners in the just concluded 3G auction mobilised Rs360bn in loans of the total Rs677.19bn they will have to pay-up by the month end. Telcos have also lined up an additional Rs290bn from their cash reserves and a further Rs110bn in internal accruals to pay for the 3G airwaves. A third of the Rs360bn loans that have been raised by telcos are through the issue of commercial papers. Bharti Airtel has raised Rs85bn from a consortium of financial institutions. Vodafone Essar will pay for 3G airwaves from its Rs100bn loan from SBI. Reliance Communications has so far raised Rs40bn from selling commercial papers at 6% interest. Aircel Cellular has raised Rs40bn by issuing commercial papers at 6% interest for a one-year period. Tata Teleservices has raised close to Rs50bn to pay for 3G airwaves.

RBI announces liquidity easing measures

India's food inflation eases further

India's food prices inched lower in the middle of May while prices of non-food articles as well as that of fuel items also declined, data released by the Government showed. Inflation in the Food Articles group fell to 16.23% in the week ended May 15 as against 16.49% in the previous week, the Commerce & Industry Ministry said today. It stood at 8.79% in the corresponding period last year. The WPI for the Food group dropped 0.1% to 293.6. Inflation in the Primary Articles group softened to 15.90% in the week under review compared with the previous week's annual reading of 16.19%. Inflation in the group stood at 6.97% during the week ended May 16, 2009. The WPI for this group declined by 0.1% to 298.9.

AI staff strike crushed...unions call another stir

Just three days after the horrible air tragedy at the Mangalore airport, a section of ground employees of Air India walked out of their assigned duty stations on Tuesday morning/afternoon. Around 15,000 crew members and maintenance engineers of the national airline went on a nationwide strike, protesting a gag order issued on the members for talking to the media after the air crash at Mangalore and delay in payment of salaries. Hundreds of flights were cancelled, leaving thousands of passengers stranded and furious. But, the strike lasted only two days, as the Air India management and the Government cracked down on the errant unions. Also, the Delhi High Court stayed the strike by Air India employees till July 13. The court was hearing a petition filed by Air India's management the National Aviation Company of India Ltd. (NACIL), which demanded that the strike be declared illegal, void and ineffective. The Air India management terminated the services of 17 union leaders, suspended 15 engineers and penalised others. Air India also de-recognised the two unions of the airline who had called the strike. However, more trouble looks likely for Air India as the two unions have called for another strike on June 12.

March exports up 54% yoy

India’s merchandise exports grew at the fastest pace in six years in March as the global economic recovery picked up pace. Overseas shipments rose 54% to US$19.9bn, Union Commerce Minister Anand Sharma said in New Delhi today, after a 34.8% gain in February. Exports are rebounding after an average 16.5% drop in 2009 and expanded at the fastest pace since March 2004.

For the whole of fiscal year (2009-10) India's merchandise exports dropped to US$176.5bn from around US$185bn in the previous fiscal year, Trade Secretary Rahul Khullar said. Imports fell by 8.2% in the financial year ended March to US$278.7bn. As a result, the trade deficit declined to US$102bn, from US$118bn in the year ended March 2009.

"The fall has been mainly due to the global meltdown, but still we have been able to perform well," Sharma told reporters in New Delhi. Merchandise export target for the current fiscal year (2010-11) has been set at US$200bn, the Commerce Minister said, adding that India wants to double exports by 2014 from the current levels.

April exports jump 36% on low base

India's merchandise exports in April rose by 36.2% to US$16.9bn while imports during the month grew at an annual pace of 43% to US$27.3bn, Commerce & Industry Secretary Rahul Khullar said. As a result, the trade deficit for the month stood at US$10.4bn as against US$6.7bn in the same month last year. But, the big jump in April's exports was partly due to a low base effect when a worldwide slowdown had adversely affected overseas goods shipments from India. Exports in April 2009 had shrunk by nearly 30% to US$12.4bn. "Don’t get carried away by these numbers... because base was low and that’s why you have an increase in percentage terms. You are still running below the export level in April 2008-09," the Commerce Secretary told reporters. India’s exports contracted for 13 straight months starting October 2008, before turning positive in November 2009.

Govt to add 20,359 MW power in FY11

The Government aims to add 20,359 MW of new power generation capacity in the financial year 2010-11, deputy chairman of Planning Commission, Dr. Montek Singh Ahluwalia said in New Delhi. India has an installed power capacity of about 160,000 MW. India added only 9,585 MW of power capacity in the year ended March 2010, down a third from its target of 14,507 MW for the year. Private sector would fund 40% of the 2007-12 infrastructure funding, Ahluwalia told a news conference in New Delhi. The Government aims to spend US$500bn in the five-years to March 2012 to bolster its tardy infrastructure as it seeks to accelerate economic growth. The Government officials have said it will fail to achieve a target of adding 78,700 MW of power generation capacity in the five years to 2012. It will be able to add only 61,000 MW by 2012.

Govt to build 2500 Km highways in FY11

Monsoon on schedule despite Laila: IMD

Southwest monsoon, crucial for India's agriculture sector and the overall economic prosperity, remains on track to hit Kerala on the southern coast in the next 3-4 days despite the tropical cyclone Laila. Earlier, there were fears that monsoon may get delayed owing to Laila. "Conditions are becoming favourable for onset of southwest monsoon over Kerala during next three days," the Indian Meteorological Department (IMD) said. Separately, an IMD official was quoted as saying that Kerala will not receive monsoon showers before June 2 as against the original prediction of May 30. Monsoon current has not advanced for the past six days after reaching the Andaman & Nicobar islands three days earlier than normal, D. Sivananda Pai, director of the National Climate Center at Pune, said. "Monsoon winds were weak, and may need up to two days to strengthen," Pai said. The Andaman and Nicobar Islands received the first monsoon showers on May 17, two days ahead of schedule, before moving to many parts of the Bay of Bengal in the following week. The progress has been slow since then due to cyclone Laila.

OMCs to get Rs140bn cash

The public sector oil marketing companies (OMCs) will get Rs140bn (US$3.1bn) of cash from the Finance Ministry this month to partially compensate them for selling fuels at subsidised rates, Petroleum Minister Murli Deora said. Though the OMCs will get the funds at a later stage, they can use the authorisation while preparing their financial results for the 2009-10 financial year, Deora said. In the first installment, the Finance Ministry paid Rs120bn to OMCs for their revenue losses in 2009-10 on kerosene and LPG. "Another installment of Rs140bn doesn’t fully cover their revenue losses for the year gone by. The combined revenue loss of the OMCs in FY10 was Rs460bn. While ONGC, Oil India (OIL) and Gail India have chipped in with about Rs150bn, the Government is expected to meet balance losses of about Rs310bn through cash. So far, the Finance Ministry has agreed to pay Rs260bn in two installments. Combined losses of the three companies for FY11 is estimated around Rs900bn. Currently, the OMCs are losing about Rs5.52 a litre on petrol, about Rs5.21 a litre on diesel, Rs18.80 a litre on kerosene and Rs254.37 per cylinder on cooking gas.

Oil PSUs sign JV pact for Venezuela project

Union Minister of Petroleum and Natural Gas, Murli Deora, along with S. Sundareshan, Secretary Petroleum; Chairman Indian Oil Corp; Chairman & Managing Director, Oil India; Managing Director, ONGC Videsh Ltd. and other senior officials from the Ministry of Petroleum and Natural Gas participated in the signing ceremony presided by the President of the Bolivarian Republic of Venezuela, Hugo Chavez Frias for signing a joint venture agreement with the Corporación Venezolana del Petróleo S.A. (CVP) for the development and production from Carabobo-1 Project, in Orinoco Region of Venezuela. The signing took place in Caracas, the capital city of Venezuela, late Thursday night (India time). The new joint venture is PetroCarabobo S.A. Along with OVL, IOC and OIL, the other two partners of the consortium i.e. Spanish Major Repsol and Malaysian Petronas also signed the joint venture agreement.

Assured life cover mandatory in all ULIPs: IRDA

The Insurance Regulatory & Development Authority (IRDA) reiterated its long-standing demand that life insurance companies should offer assured life cover with Unit Linked insurance Products (ULIPs). In an order issued late on Monday night IRDA said that all ULIPs, including pension/annuity products must have a minimum assured sum payable on death. However, IRDA clarified that provision of death benefit will not be mandatory in case of unit linked products providing health insurance cover. The revised IRDA norms will come into effect from July 1. ULIPs cannot be used to obtain loans, IRDA said, adding that minimum policy term would be five years in the case of individual products, while the group products would continue to be renewed annually.

Partial withdrawal from the policies would be allowed only after the fifth policy anniversary for all unit linked products, except pension or annuity products, IRDA said. In the case of unit linked pension or annuity products, no partial withdrawal will be permitted and the insurer will be allowed to convert the accumulated fund value into an annuity only at maturity, the insurance regulator said. The insured will have the option to commute up to a maximum of one-third of the accumulated value as lump sum at the time of maturity. In the case of surrender, only up to a maximum of one-third of the surrender value could be availed in lump sum and the remaining amount must be used to purchase an annuity, IRDA said.

Every top-up premium will have a lock in period of three years from the date of payment of that top-up premium, IRDA said. Top-up premium will not be allowed during the last three years of the contract, it added.

Jan-April air passenger traffic up 22% yoy

Passengers carried by domestic airlines from January-April 2010 were 162.82 lakhs as against 133.41 lakhs in the corresponding period of year 2009, thereby registering a growth of 22.05%. The total domestic passengers carried by the Scheduled Airlines of India in April 2010 was 41.88 lakhs as against 39.03 lakhs in the previous month. April 2010 observed higher seat factor primarily due to beginning of tourist season. The overall cancellation rate of scheduled domestic airlines in April 2010 has been 2.5%. There had been cancellations due to bandh in Kolkata on 27th April, which have been indicated under miscellaneous category. The number of passenger related complaints of scheduled domestic airlines for April 2010 has been 3.5 per 10,000 passengers carried.

Jet Airways domestic passenger traffic rose 39%

April domestic car sales up 38.5% yoy

Govt doubles natural gas prices

The Government more than doubled the price of natural gas produced by public sector firms, ONGC and Oil India. The base price of gas supplied by these firms will rise to US$4.2 per million British Thermal Units (mmbtu). The price of subsidized gas sold by state-owned firms have been brought at par with that of the gas sold by Reliance Industries (RIL) from its field in the Krishna-Godavari (KG) basin. "ONGC and OIL have been making substantial under-recoveries and losses and, therefore, it was necessary to revise prices. The prices were last revised in 2005," Union Information & Broadcasting Minister Ambika Soni said. While the decision taken by the Cabinet will bring relief to state-owned upstream firms, but it will push up fuel costs for the sensitive power and fertilizer sectors. It will also mean an increase of 20% in the price of compressed natural gas (CNG), which is heavily used by certain types of vehicles in cities like New Delhi and Mumbai. Separately, the Cabinet Committee on Infrastructure allowed NTPC to go ahead with its deal with Russia’s Techno prom Exports (TPE) for its controversial 1,980MW Barh project in Bihar.

Govt to hasten disinvestment of PSUs

The Cabinet Committee on Economic Affairs (CCEA) approved the appointment of Merchant Bankers and other intermediaries to disinvestment transactions involving offer for sale or fresh issue by the company in conjunction with offer for sale be advanced to an earlier stage in the process of disinvestment. The approved process will help planning and timing of the Public Offerings in a manner that they are spread out evenly and avoid bunching as far as possible so as to ensure better response from investors, including retail. The appointment of Merchant Bankers and other intermediaries will now be taken up simultaneously with the process of seeking CCEA approval as soon as the Minister-in-Charge has approved the case. It is expected that the time saved will be optimally utilized in preparing for the actual transaction and in facilitating the disinvestment process.

ICICI Bank-BoR merger swap ratio fixed at 25:118

ICICI Bank entered into an agreement with the Tayal family to merge Bank of Rajasthan (BoR) with it. A decision to this effect was taken on May 18 by both the banks. According to ICICI Bank, the share swap ratio has been fixed at 25 shares for 118 shares of BoR. This is based on an internal analysis of the strategic value of the proposed amalgamation, average market capitalization per branch of old private sector banks and relevant precedent transactions, ICICI Bank said. At the proposed share swap ratio, the indicative price for BoR works out to about Rs188.42 per share, which reflects a premium of 89% to the latter's closing stock price on May 18. The deal values BoR at about 2.9 times its book value, compared with the industry average of 1.84. BoR's board has approved the deal, which will be subject to regulatory clearances. It's board will meet again on May 23 to discuss the ICICI Bank offer. ICICI Bank has started a due diligence exercise on BoR.

ICICI Bank and BoR approve merger

Parkway Holdings...Khazanah challenges Fortis bid

Integrated Healthcare Holdings, a unit of Malaysian sovereign wealth fund Khazanah launched a S$1.18bn (US$835mn) partial takeover offer to gain control of Singapore's largest private healthcare provider, Parkway Holdings. According to reports, Integrated Healthcare unit offered to buy 313mn shares of Parkway at S$3.78 per share, a premium of 25% over the last traded price of S$3.02. If the offer is successful, Integrated Healthcare will be able to raise its stake in Parkway to 51.5%. Currently, Integrated Healthcare has a stake of nearly 24% in Parkway. The offer is subject to the approval of more than 50% of shareholders and valid acceptances for no less than 313mn shares. Fortis Healthcare had earlier bought a 23.9% stake in Parkway from US buyout firm TPG for US$685mn. Fortis said then that it had no immediate plans to raise its stake in Parkway and planned to work with the Singapore firm in expanding across the region. Fortis Chairman Malvinder Mohan Singh was to be nominated as chairman of Parkway.

REC, Adani, Piramal Healthcare in MSCI index

Shares of Rural Electrification Corp. Ltd. (REC) jumped after MSCI included the state-run power finance company, Piramal Healthcare and Adani Enterprises in the MSCI India Index. REC is also one of the three largest additions to the MSCI Emerging Market Index. Idea Cellular was removed from the MSCI India index. MSCI also added 51 Indian stocks in the Global Small-Cap indices while removing 12 stocks from the index. These changes resulted from the May 2010 Semi-Annual Index Review and will come into effect from May 26.

Cairn India to increase production from Mangala field

Cairn Energy Plc expects its Indian unit to ramp up production of crude oil from its Mangala Processing Terminal (MPT) in Rajasthan to 125,000 barrels of oil per day (bopd) in the second half of the year. First-quarter average gross production from the Mangala field stood at 17,532 bopd and current production is about 60,000 bopd, the Edinburgh-based oil and gas exploration and production (E&P) company said. The Mangala terminal when complete will have initial capacity to handle 205,000 bopd, Cairn Energy said. In Rajasthan, Processing Trains One and Two at the Mangala Processing Terminal, or MPT, are operational and Train Three is due for completion by the end of Q2 2010, Cairn Energy said in an update. The pipeline from the MPT in Rajasthan to Salaya in Gujarat is now complete and hydrocarbons have been introduced into the pipeline in Q2 2010 to facilitate the ramp up of production to 125,000 bopd in H2 2010, it added.

Mumbai power tussle...Tata Power moves Bombay HC

Tata Power approached the Bombay high court against the Maharashtra government's memorandum, which had asked the company to continue supply of 360 MW of power to Reliance Infrastructure at a regulated rate of Rs3.70-4.40 per unit. The company also requested the court to quash the report of a five-member panel chaired by the state chief secretary on this issue. Tata Power also made Reliance Infrastructure, the city’s civic body-run BEST and Tata Power Trading Co. as respondents. The state government today said the State Load Dispatch Centre (SLDC) should maintain status quo regarding 360 MW unless and until Maharashtra Electricity Regulatory Commission (MERC) gives any direction in the matter. The move is crucial especially when MERC has convened a hearing on June 28 on the matter.

Abbott to acquire Piramal's healthcare solutions business

Abbott announced a definitive agreement with Piramal Healthcare Ltd. to acquire full ownership of Piramal's Healthcare Solutions business (Domestic Formulations), for an up-front payment of US$2.12bn, plus US$400mn annually for the next four years, giving Abbott the No. 1 position in the Indian pharmaceutical market. The total consideration works out to US$3.7bn. Abbott plans to fund the deal with internal accruals and said that the transaction would not change its earnings outlook for 2010. Piramal's pharma solutions business makes and sells cheaper versions of patented drugs and the unit accounts for more than half of its revenue. Piramal's other interests include contract manufacturing (CRAMS) and pathology laboratories. Abbott said the combined sales force would be the largest in the industry in India, and forecast that sales in India of more than US$2.5bn by 2020. Piramal Healthcare will remain in the industry and invest in remaining businesses, Chairman Ajay Piramal said.

Reva to electrify M&M's green drive

Mahindra & Mahindra Ltd. strengthened its position in the Electric Vehicles domain with the acquisition of a majority stake in REVA Electric Car Co. Ltd. Bangalore. REVA will be renamed Mahindra REVA Electric Vehicle Co Ltd. Under the new agreement which was signed by both the companies, M&M will own 55.2% equity in Mahindra REVA by a combination of equity purchase from the promoters and a fresh equity infusion of over Rs450mn (about US$10mn) into the company. The buyout makes the Mahindra group a strong global player in the electric vehicle space.

Reliance Power buys 433MW assets from Reliance Infra

The committees of Directors, as authorized by the respective boards of Reliance Infrastructure and Reliance Power, on May 27, approved the transfer of 433 MW power generation assets of Reliance Infrastructure comprising of 220 MW at Samalkot (A.P.), 165 MW at Kochi (Kerala) and 48 MW at Zuarinagar (Goa) to Reliance Power. These assets are held by subsidiaries of Reliance Infrastructure. The entire share capital of these subsidiaries has been agreed to be transferred by Reliance Infrastructure to Reliance Power to bring entire power generation portfolio under one roof. The transfer of these assets will take place after obtaining the requisite approvals. With this acquisition and commissioning of its 600 MW Rosa Power Project in UP, Reliance Power will have over 1000 MW operating capacity under its portfolio.

Essar Energy shares fall on London debut

Essar Energy started trading on the London Stock Exchange (LSE) on May 4 but the UK's largest stock market listing in more than two years suffered the worst debut of any big issue in almost eight years. Essar Energy, which plans to join the FTSE 100 shortly after its listing, tumbled 7.2% in conditional trading after raising £1.2bn last week. Shares ended at 389.5 pence as against the IPO price of 420 pence. Conditional trading allows institutional investors to buy and sell a stock without delivery. It normally continues for three days till the listing of the stock. Essar Energy will be listed on LSE on May 7. The power and oil-and-gas exploration company had originally set the price range for its IPO at between 450 pence and 550 pence a share but lowered the price amid stock market volatility. The last big IPO on LSE was that of HMV, which sank 7.5% in May 2002. Essar Energy's listing came on a rough day for global equity markets, with London's FTSE 100 index closing down 2.5% amid mounting debt problems in the Southern European nations. JPMorgan Cazenove, Essar Energy's sponsor and adviser on the IPO, had to buy shares to help stabilise the company's share price.

Bajaj Finserv shares jump on RBI circular

Shares of Bajaj Finserv Ltd. surged after the Reserve Bank of India revised guidelines that may raise the value of its stake in the two insurance joint ventures with Allianz. Bajaj Finserv rose on speculation that it will get a higher price should Allianz exercise its option to increase its stake in the insurance JVs. The RBI asked overseas investors to value privately held companies using the discounted cash flow method, valuing future cash receipts and expenditures, instead of using net asset value norm. The RBI issued a circular on May 4, revising the pricing guidelines for transfer of shares by Indian residents to non-residents. With respect to transfer of unlisted shares, it said that the pricing cannot be less than the fair value to be determined by an appropriate third party as per the discounted free cash flow (DCF) method.

Jagran Prakashan to buy print biz of Mid-Day Multimedia

Jagran Prakashan Ltd. announced that its Board of Directors at its meeting held on May 5, has approved the Scheme of Arrangement whereby it would acquire the print business of Mid-Day Multimedia Ltd. The Scheme of Arrangement is subject to necessary approvals and consents. Mid-Day Multimedia's print business, run by its 100% subsidiary Mid-Day Infomedia Ltd. (MIL), comprises publication brands viz. Mid-Day (published from Mumbai, Pune, Bangalore and Delhi), Sunday Mid-Day, Gujarati Mid-day and The Inquilab, the largest read Urdu newspaper in the country and all publication related internet properties. The valuation of the two businesses has been done by Ernst & Young and the swap ratio as per their report works out to be 7 : 2 (i.e. for each 7 fully paid up equity shares of Rs10 each of Mid-Day Multimedia, its shareholders will be entitled to 2 fully paid up equity share of Rs2 each of Jagran Prakashan). The radio business of Mid-Day Multimedia, operated through its subsidiary Radio Mid-Day, will continue to stay with the present shareholders of Mid-Day Multimedia Ltd. Singhi Advisors were the advisors to the transaction.

DB Corp to absorb demerged radio biz of subsidiary

Vedanta Resources buys zinc biz of Anglo American

Vedanta Resources plc and Anglo American plc signed a definitive Share Purchase Agreement under which Vedanta, through one of its controlled Group companies, will acquire Anglo American Zinc for a total consideration of US$1,338mn on an attributable, debt and cash free basis, with economic ownership transferred from January 1. It is currently Vedanta’s intention, subject to approvals, that the acquisition be undertaken by Hindustan Zinc Ltd. The transaction will be funded from existing cash resources. As at March 31, Vedanta had cash, cash equivalents and liquid investments of US$7.2bn. Anglo American Zinc is one of the top five global zinc producers. Its assets include the 100% owned Skorpion mine in Namibia, 100% owned Lisheen mine in Ireland and the 74% owned Black Mountain Mining, which includes the Black Mountain mine and Gamsberg project in South Africa. Of the total consideration, US$698mn relates to the Skorpion mine, US$308mn relates to the Lisheen mine and US$332mn relates to Anglo American’s 74% interest in Black Mountain Mining.

Godrej Consumer to buy out Sara Lee in JV

Godrej Consumer Products Ltd. shares rallied after the company agreed to acquire Sara Lee Corporation's 51% stake in joint venture Godrej Sara Lee for 185 million euros. Godrej Consumer Products currently holds 49% stake in the joint venture firm Godrej Sara Lee. The acquisition of Sara Lee Corp's 51% stake in the joint venture will make it a 100% arm of Godrej Consumer Products. Godrej Sara Lee is a household insecticides player in India. Godrej Sara Lee's net profit rose 31% to Rs1.37bn on a 20% rise in revenue to Rs9.65bn in the year ended March 2010 over the previous year. Sara Lee decided to exit the household insecticides business. Godrej Sara Lee sells household insecticides such as Hit and mosquito repellant GoodKnight. US-based Sara Lee has been selling units to focus on coffee and foods businesses. Sara Lee last year agreed to sell its toiletries business to Unilever and its air-fresheners business to Procter & Gamble for a combined 1.59bn euros and said both transactions will close this year.

Welspun to buy majority stake in Saudi pipe making firm

Welspun Gujarat Stahl Rohren, the flagship company of Welspun Group, changed its name to Welspun Corp, citing the reason that the words Gujarat and Stahl Rohren (meaning steel pipe in German) are no longer relevant for the company in today's context. Welspun Corp. also announced that it will purchase a majority equity stake in Aziz European Pipe Factory LLC, a Saudi Arabian pipe and pipe coating facility for an undisclosed sum. Aziz European Pipe manufactures pipes primarily for the oil & gas industry. Welspun Corp said it believes the acquisition will help it in providing a complete solution to the oil and gas majors and water companies in the GCC (Gulf Corporation Council) region. The acquisition will be done though its subsidiaries, and is subject to the regulatory approvals. Aziz European Pipe Factory is a JV company between the Saudi firm Aziz and the Forest Group, and is claimed to be one of the largest manufacturer of spiral submerged arc welded steel pipes in the Middle East. It has a production capacity of 2.7 lakh MTPA (million tonne per annum) of pipes.

Strides Arcolab inks 2 licensing-cum-supply pacts with Pfizer

Strengthening the collaboration announced earlier this year, Strides Arcolab announced the signing of two licensing and supply agreements with Pfizer Inc. to address new markets and product segments. Under the first agreement, Strides will license and supply up to 38 generic oncology products to Pfizer for markets in the European Union, Canada, Australia, New Zealand, Japan, and Korea. The second agreement covers niche sterile injectables for the US market. The finished dosage form products will be commercialized by Pfizer through its Established Products Business Unit. The financial terms of both agreements were not disclosed.

Aban Offshore shares slide as rig sinks offshore Venezuela

Shares of Aban Offshore nose dived after the company lost one of its biggest money-spinning rigs, earning Rs15mn a day, offshore Venezuela. Aban Pearl, a semi-submersible ship owned by one of the subsidiaries of Aban offshore, sank in the early hours of May 13, the company said. The company said it was assessing the causes of the incident. Investigations started in Venezuela into the sinking of a natural-gas platform leased by a unit to state-owned Petroleos de Venezuela SA. PDVSA said that a failure in Aban Pearl’s floatation system caused the rig to sink after a massive inflow of water. Aban Offshore, based in Chennai, is assisting in finding the causes of the incident, the company said. Technicians avoided a leak by sealing the gas well with a security valve before the platform sank, PDVSA said in a statement. The rig’s 95 workers were safely evacuated, Venezuelan President Hugo Chavez said earlier yesterday in a message posted on his Twitter account.

Muted debut for SJVNL; Jaypee Infra falls below issue price

State-run hydro power generation company SJVNL lost about 4% on its debut and closed at Rs25 on the BSE after kicking off its maiden trading journey at Rs28. The stock hit a high of Rs28 on May 20 and a low of Rs24.10 on May 21. The company had priced its IPO at the top end of the Rs23-26 price band following strong response to the issue. A discount of Rs1.30 per share was given to retail investors and employees. The SJVNL IPO was subscribed 6.64 times, kick starting the government's divestment programme for FY11 on a positive note. The QIB portion was bid 9.02 times, while the HNI segment was bid 3.38 times and retail investors segment was subscribed 3.11 times. The central government offered 41.50 crore of SJVNL, formerly Satluj Jal Vidyut Nigam Ltd., for sale through the IPO. With the successful completion of the IPO, the Centre's stake has declined to 64.47% from 74.5%. The Himachal Pradesh (HP) state government holds 25.5% stake in SJVN. the company reported a net profit of Rs7.75bn on net sales of Rs14.23bn for nine months ended December 2009.

Shares of Jaypee Infratech Ltd. fell on listing amid a weak market and closed well below the issue price of Rs102 per share on the BSE. The stock opened at Rs93, touched a high of Rs98.50 and a low of Rs90 before shutting shop at Rs91. Set up as a special purpose vehicle for the Yamuna Expressway, Jaypee Infratech had raised Rs22.5bn from the initial public offering (IPO) between April 29 and May 4. The 165 km, six-lane Yamuna Expressway will connect Noida and Agra, in Uttar Pradesh. The company currently has debt of Rs40.44bn. Jaypee Infra had priced its IPO in the band of Rs102-117 per share following lukewarm response, with retail investors getting a discount 5% on allotment. The issue was subscribed 1.24 times, with 27.39 crore shares bid against 22.17 crore shares on offer. The IPO comprised fresh issue of equity shares and an offer for sale of 6 crore shares by parent Jaiprakash Associates.

Mandhana Industries makes a lackluster debut

Disappointing debut for Tarapur Transformers

Technofab Engineering gets SEBI nod for IPO

Standard Chartered IDR subscribed over 2 times

The Indian Depository Receipts (IDR) issue of Standard Chartered Plc received a muted response and was eventually subscribed more than two times on Friday, which was the last day of the bookbuilding. The issue opened for general subscription on May 25. Retail investors and eligible employees subscribing to IDRs under the retail and the employee portion respectively, and whose bid amount does not exceed Rs100,000, will benefit from a further 5% discount to the final issue price. Ten IDRs will represent one underlying share of the Company, and the new shares issued in aggregate would constitute 1.16% of the post-issue paid-up capital of the Company. Based on Thursday's London closing price of 1,682 pence, and the currency conversion, that valued each IDR at about Rs114 as of Friday morning, towards the high end of the offering's price range. The bank offered about 240 million IDRs at Rs100 to Rs115 each. It sold 15% of the offering to so-called anchor investors including ICICI Prudential Asset Management Co. and Reliance Capital Ltd. for Rs104 a share, according to a regulatory filing this week.

Standard Chartered gets Rs3.74bn from anchor investors

What are Indian Depository Receipts (IDRs) all about?

Hindustan Motors skids on net worth erosion

Hindustan Motors shares slumped after the company reported that losses had wiped out more than half of its net worth. Hindustan Motors announced that it was planning to approach the board for Industrial and Financial Reconstruction (BIFR) as previous four fiscals saw the company's net worth getting eroded by more than 50%. The company expects sales to double this fiscal year helped by the introduction of a new mini truck and aims to sell between 25,000 and 30,000 vehicles in the year ending March 2011, Rattan Singh, chief general manager in charge of sales and marketing, was quoted as saying.

Nitesh Estates falls below IPO price

Nitesh Estates had a subdued debut with the stock opening at the issue price of Rs54 per share on the NSE before slipping below the IPO price. The stock ended the week at Rs45. The IPO was subscribed only 1.16 times. The company got bids for 7.44 crore shares as against 6.41 crore shares on offer. Category-wise data showed that the QIB portion was subscribed 2.54 times. The non-institutional investors segment was subscribed just 0.22 times and the retail individual investors category was subscribed a mere 0.16 times. Nitesh Estates raised more than Rs580mn through issue of 1.08 crore shares to five anchor investors. The shares were allotted at Rs54 per share.

Power packed debut for Talwalkars

Hindustan Media Ventures plans to raise Rs3bn via IPO

SJVN prices IPO at top end

Jaypee Infratech IPO price fixed at Rs102/share

ABB shares surge on parent's open offer

Shares of ABB India surged after its Swedish parent made a voluntary open offer to increase its shareholding in the Indian arm to 75%. ABB offered US$965mn (€785mn) to increase its stake in its Indian subsidiary from the current 52%. The stock closed the week at Rs827 after being as high as Rs880 on May 21. ABB Asea Brown Boveri Ltd. and ABB Ltd. proposed to acquire up to 48,510,997 fully paid up equity shares of the Target Company, constituting 22.89% of the Voting Share Capital at a price of Rs900 per equity share. The offer will open on July 8 and will close on July 27. ABB's Indian operation is among the group's biggest subsidiaries, with more than 6,000 employees, sales of Rs63bn and pre tax profits of Rs5.3bn last year.

Lodha Developers bags Wadala deal for Rs40.50bn

Lodha Developers paid an asking price of Rs40.5bn to the Maharashtra government for the right to construct a multi-storied apartment and a truck terminus in the central Mumbai suburb of Wadala. The price paid by Lodha is twice the asking price fixed by the Mumbai Metropolitan Region Development Authority (MMRDA) had set a minimum price of Rs19.8bn for the plot. MMRDA had asked real estate developers to bid for the right to lease a 25,000-sq mt plot for 65 years and Lodha's winning bid comes with the right to construct up to 4,95,000 sq mt. There were reports that a total of 14 bidders were in the fray, including big names such as Sheth Infrastructure, Shriram Urban Infra, DB Realty, Reliance Infra, Bhakti Realty, Indiabulls, Real Estate Parinee Developers, Godrej, Ackruti, Sunteck Realty, Gaurhati Estate, Raheja Universal, Acne Housing and Lodha. The previous record for an Rs18bn deal to build a commercial complex in Navi Mumbai was set in April 2008.

Amtek Auto to buy 40.21% in Amtek India

Amtek Auto said that it has entered into a share purchase agreement with the existing promoters of Amtek India to acquire 50.72mn shares at a price not exceeding Rs68, representing 40.21% of the total paid up equity share capital of the target company. Out of the above, Amtek Auto has acquired 33.11mn shares of Amtek India at an average price of Rs64.83 per share, constituting 26.25% of the paid-up equity capital of the target company through a block deal on the Bombay Stock Exchange (BSE). Amtek Auto will now make an open offer to the shareholders of Amtek India to acquire up to 25.23mn shares, representing an aggregate 20% of the fully paid-up equity capital of the target company. Amtek India has appointed D&A Financial Services as the manager to the open offer.

Infosys denies reports of buying interest in Logica

Areva T&D announces open offer for Indian arm

A consortium comprising Alstom Holdings, Schneider Electric Industries SAS, Schneider Electric India, Areva T&D Holding SA and Areva T&D SAS announced an open offer to acquire up to 47,821,327 shares, constituting 20% of the issued share capital of Areva T&D India. The Offer is being made at a price of Rs 295.34 for each Share to be paid in cash in accordance with the SEBI (SAST) Regulations. The offer will open on July 22, and will close on August 10. DSP Merill Lynch is the Manager to the Offer. Areva T&D Holding SA and other group companies, including Areva T&D SAS and Long & Crawford Ltd. together already hold 72.18% in Areva T&D. The offer comes after Areva SA agreed to sell its entire equity in Areva T&D Holding SA, its global electric transmission and distribution business, to a consortium of Alstom Holdings and Schneider group of companies for 2.29 billion euros in January.

International News

OECD raises global growth forecast

The pace of global economic growth is picking up faster than expected, but the recovery process could be hit by the ongoing euro-zone debt crisis and overheating in countries like China, the Organization for Economic Cooperation and Development (OECD) said. In its twice-yearly economic outlook, the Paris-based organisation for industrialised nations raised its forecast for global growth to 4.6% in 2010 and 4.5% in 2011. Last November, it predicted growth of 3.4% this year and 3.7% in 2011, after a 0.9% contraction in 2009. "Strong growth in emerging-market economies is contributing significantly," the OECD said. "The spillover from growth in non-OECD Asia could be stronger than expected, especially in the United States and Japan. From this point of view, the overall environment is relatively auspicious." the Paris-based organisation said.

David Cameron is new British Prime Minister

David Cameron, the leader of the Conservative Party, said that he will lead a coalition government in the UK with the Liberal Democrats. Nick Clegg, leader of the Lib Dems, will serve as his deputy. This marks an end to the 13 years of Labour Party rule after Gordon Brown offered his resignation to the queen. Earlier, Brown announced his resignation as prime minister of Britain and leader of the Labour Party as he could not muster a majority in Parliament after the recent, inconclusive general election. Brown then traveled with his wife and children to Buckingham Palace to formally resign and to recommend that Cameron, the Conservative leader, be invited to form a government. Britain’s general election on May 6th had produced an inconclusive result, leaving the Conservatives as the largest party in Parliament but short of an overall majority. After five days of wrangling the Conservatives joined forces with the Liberal Democrats, who came third at the polls, behind Labour.

US Senate approves Wall Street reform bill

The US Senate passed a sweeping overhaul of the influential but somewhat notorious American financial sector, paving the way for President Barack Obama to sign it into law and forcing Wall Street to change the way it operates. The bill was passed by a 59-39 vote. The bill only needed 51 votes to pass. Four Republicans voted for it and two Democrats voted against it. Earlier in the evening, the bill cleared a tougher hurdle, a 60 vote threshold, to end debate. The legislation is not only intended to prevent a repeat of the 2008 financial crisis that led to another Great Depression, but is also likely to reshape the role of numerous federal agencies, and vastly empower the Federal Reserve in a crisis-like situation. Democratic Congressional leaders and the Obama administration must now work to reconcile the Senate bill with a version approved by the House in December, a process that is expected to take several weeks. The legislation bans deposit-taking banks from proprietary trading, introduces a consumer financial protection bureau to police the sale of credit products and empowers the government to seize a failing systemically important firm. The legislation requires "too-big-to-fail" banks to install new capital restrictions and divest their derivatives units, sets up a government board to assign credit raters for banks' structured products, and instructs the government to conduct a one-time audit of the Fed's emergency response programs.

Lehman blames JPMorgan for collapse

Lehman Brothers' estate sued JPMorgan Chase, accusing the second-largest US bank of illegally siphoning off billions of dollars in the days leading up to its record bankruptcy that triggered the worst financial crisis in decades. The suit has been filed in the US Bankruptcy Court in the Southern District of New York. It contends that Lehman, which was teetering on the brink of a collapse, invited JPMorgan to assist it in securing emergency financing. JPMorgan used insider knowledge of Lehman's distress to extract US$8.6bn of collateral in the four business days ahead of the Wall Street firm's bankruptcy filing on Sept. 15, 2008. This included US$5bn on the final business day. The demands triggered a liquidity squeeze that contributed to Lehman's collapse. The estate is now hoping to recoup billions in collateral JPMorgan demanded, and billions in other damages. "The purpose of these last-minute maneuvers was to leapfrog JPMorgan over other creditors," the plaintiffs said. Lehman and its official committee of unsecured creditors are seeking US$5bn of damages, a return of the collateral and other remedies. But, JPMorgan spokesman Joe Evangelisti called the lawsuit "meritless," and said the bank will vigorously defend itself.

Dubai World to pay 30% debt in 5 years

Dubai World said that it has agreed "in principle" to headline economic terms with a committee representing about 60% of its lenders on the restructuring of financial liabilities worth US$23.5bn. After the restructuring, Dubai World's debt will be about US$14.4bn and comprise two tranches. The first tranche will be US$4.4bn and the second tranche - US$10bn, with five and eight-year maturities, respectively. "The proposal puts the company on a sound financial footing and reflects the continued support of the Government of Dubai and its lenders," said Aidan Birkett, chief restructuring officer of Dubai World. The remaining 40% of creditors still have to accept the deal. Also, Nakheel continues separate negotiations with banks to reach an agreement, reports said. The first tranche of US$4.4bn will be paid in five years with a 1% cash pay interest but no shortfall government guarantee. Tranche B, US$10bn, will be paid over eight years with 1% interest plus varying payment in kind interest

Moody's warns of a downgrade on Portugal

Moody's Investor Service said that it had placed Portugal's investment-grade bonds on review for possible downgrade citing the recent deterioration of the country's public finances and long-term growth challenges for its decision. In the event of a downgrade, Portugal's Aa2 ratings would fall by one or, at most, two notches, the debt ratings agency said. Moody's said that it expects to complete the review within three months. Moody's senior analyst Anthony Thomas said the decision to place Portugal on review reflected the potentially lasting deterioration in the government's debt metrics, which in the context of a small and slow-growing economy may no longer be consistent with a Aa2 rating. Moody's also said it believes that increased risk discrimination in the financial markets may raise Portugal's financing costs for some time to come. But the debt ratings agency said it expected Portugal's debt service costs to remain very affordable in the near to medium term. Although the country's debt metrics may turn out to be more consistent with a low Aa or high A rating, government debt is neither unsustainable nor unbearable.

UK announces £6.25bn in spending cuts

The UK government's spending cuts in the current financial year will total £6.25bn (US$9.05bn), Chancellor of the Exchequer George Osborne said. Around £500mn of the savings will be used to fund new programs, he said. This near £6bn is meager compared with the £40bn to £50bn that is coming from 2011 onwards. The plan is only the first stage in what will be a series of much greater and deeper cuts needed to bring down Britain’s deficit of £156bn, which was revised downwards by £7.5bn last week. Britain will be a leading voice for fiscal responsibility within Europe as it embarks on a sustained programme of cutting public spending, Osborne said. It was important to cut the deficit urgently so that debt repayments did not spiral out of control, he added. Osborne told a press conference that Britain was already spending as much on debt servicing as it did on defence, transport or policing. If urgent action was not taken this sum could rise to the same level as the education budget, he said. But trade union leaders are already up in arms against the plan. The move (spending cuts) was dangerous and risked a double-dip recession, warned Brendan Barber, general secretary of the Trades Union Congress.

Italy joins Europe's austerity drive

Global air traffic falls 2.4% in April: IATA

The International Air Transport Association (IATA) announced international scheduled air traffic results for April 2010. Passenger demand slumped by 2.4% as a result of massive flight cancellations centered in Europe during the six days in April following the eruptions of an Icelandic volcano. The fall in traffic interrupted the industry’s recovery from the global financial crisis. International scheduled cargo traffic, less impacted by the cancellations, saw the pace of its recovery slow to 25.2% growth in April (down from the 28.1% improvement recorded in March). "The ash crisis knocked back the global recovery - impacting carriers in all regions. Last month, we were within 1% of pre-crisis traffic levels in 2008. In April, that was pushed back to 7%," said Giovanni Bisignani, IATA’s Director General and CEO. "European carriers bore the worst of the volcano’s impact. Their 11.7% drop in passenger traffic could not have come at a worse time. Europe’s slow recovery from the global financial crisis and its currency crisis are already a huge burden on the profitability of its airlines. The uncoordinated and excessive cancellations and unfairly onerous passenger care requirements rubbed salt into the European industry’s wounds," said Bisignani.

Toyota faces fresh US probe into recalls

Toyota's already battered image could take fresh beating in the wake of reports that the Japanese auto major faces a US National Highway Traffic Safety Administration (NHTSA) probe into a disparity in timing between 2004 and 2005 recalls of vehicles in Japan and the US related to the same defect. The NHTSA is reportedly launching an investigation into whether Toyota Motor Co. delayed telling it in 2005 that a known defect in its 4Runner and T100 trucks in Japan was also a problem in the US. Toyota later recalled the trucks in the US for a steering relay rod that was prone to cracking. The probe could reportedly result in Toyota being fined over US$16mn.

Toyota to recall 11,500 Lexus LS vehicles globally

Well, the recall blues continue for Toyota Motor Corp. as it plans to recall as many as 11,500 Lexus LS vehicles worldwide, including 4,500 units in Japan, to fix a problem with the computerized steering system. The models in question were sold in the United States, Europe and China as well as Japan. The models covered by the recall are the LS460 and LS460L, and hybrids LS600h and LS600hL. The Japanese auto giant, which has recalled more than 8.5mn vehicles worldwide so far this year, has received 12 complaints about the problem within Japan, Toyota spokesman Paul Nolasco was quoted as saying. The problem involves a computerized system that oversees the steering controls. The steering system is a standard fitting on the LS luxury model sold in Japan, but is optional in some cars sold overseas, according to reports. On May 18, Toyota paid a US$16.4mn fine to settle allegations by US regulators that it was too slow to recall vehicles with defective accelerator pedals.

Apple sells 1 million iPads in first month

Apple said that it has sold more than one million iPads in a month, with sales of the touch-screen tablet device outpacing the first month sales for the iPhone by roughly two to one. Shares of Apple rose following the news. The stock is up more than 25% since the first of the year. The news also gave a boost to the shares of companies such as SanDisk and Micron Technology which make Flash memory chips used in devices such as the iPad. Apple released the WiFi version of the iPad on April 3, while the 3G version went on sale last Friday. iPad sales have already outstripped initial Wall Street estimates and the company is struggling to meet the high demand. Apple plans to launch the device in international markets later this month. Jobs said that demand continues to outpace supply and that the company is working hard to try to produce iPads at a faster rate. Apple also said that iPad users have downloaded more than 12 million apps from the company's App Store, as well as more than 1.5 million e-books.

Patent row...HTC fights back against Apple

HTC Corp. filed a complaint with the International Trade Commission (ITC) to stop import and sale of Apple's iPhone, iPad and iPod in the United States, the Taiwanese mobile phone company said. "We are taking this action against Apple to protect our intellectual property, our industry partners, and most importantly our customers that use HTC phones," said Jason Mackenzie, vice president of HTC's North American unit. HTC accused Apple of infringing five of its patents related to cellphone directory hardware and software and power-management technology in portable devices. HTC also claimed that it introduced the Windows Mobile PocketPC Phone Edition in 2002 and the Android smartphone in 2008. HTC's action was widely expected after Apple filed a patent infringement suit against the company in March. Apple has accused HTC of infringing 20 patents. In addition, Apple has filed a complaint with the ITC and also sued HTC in the US District Court in Delaware.

Continental Airlines to merge with United Airlines

Continental Airlines and United Airlines parent company UAL Corp. have agreed to merge their operations in an all-stock transaction. Under the deal, Continental shareholders will receive 1.05 shares of the United common stock for each Continental share they own. United shareholders will own roughly 55% of the equity of the combined company and Continental shareholders the remaining 45%. The companies have estimated annual cost savings of US$1bn to US$1.2bn by 2013. Jeff Smisek, Continental's CEO, will head the combined company. Glen Tilton, CEO of UAL, will serve as a non-executive chairman. The brand name for the combined airline will be United Airlines and the marketing brand will be a combination of both.

SAP to buy Sybase for US$5.8bn

SAP AG has agreed to buy Sybase Inc. for US$5.8bn, as the German enterprise software giant seeks to take on rival Oracle. SAP will make a tender offer for Sybase at US$65 a share, a 44% premium over the shares' thee-month average price. Sybase shares have historically never traded above US$55 a share on a split-adjusted basis, a mark they reached in 1994. The deal will be made using SAP's cash on hand, and a €2.75bn (US$3.47bn) loan facility. Sybase will operate as a standalone unit, and its management team will remain in place. In after-hours trading, Sybase shares rose 15% to US$64.65, while US-traded shares of SAP fell nearly 1% to US$44.50. Shares of Sybase had surged earlier on May 12, following news report of the impending merger announcement.

June 2010

Domestic News

Inflation above 10%; sparks fears of rate hike

The annual rate of inflation, based on monthly WPI, stood at 10.16% for the month of May 2010 as compared to 9.59% for the previous month and 1.38% during the corresponding month of the previous year. Build up inflation in the financial year so far was 1.85% compared to a build up of 2.67% in the corresponding period of the previous year. The official Wholesale Price Index for 'All Commodities' for May 2010 rose by 1.7% to 258.1 from 253.7 for the previous month. The provisional number for March was scaled up to a 17-month high of 11.04% from 9.9%.

The Reserve Bank of India (RBI) will take appropriate action as and when needed to rein in spiraling inflation, Finance Minister Pranab Mukherjee said. Separately, RBI Deputy Governor K.C. Chakrabarty said that the central banker could hike policy rates before its scheduled July quarterly review. The 10-year benchmark bond yields climbed following the hawkish comments by Chakrabarty and by C. Rangarajan, the chairman of the Prime Minister Economic Advisory Panel.

Contrasting with their views, chief economic adviser to the finance ministry Kaushik Basu said that inflation will moderate after the Government decides to de-control fuel prices.

Inflation crosses 10%...FM puts ball in RBI's court

Food and fuel inflation moderates

Revised DTC draft unveiled for public scrutiny

The Finance Ministry unveiled the second draft of the proposed Direct Taxes Code (DTC). The first draft tax code was released in August 2009 and received 1,600 comments. The first draft had proposed a uniform corporate tax rate of 25%. The revised discussion paper addresses 11 issues which includes the issue of wealth tax and general anti-avoidance rule (GAAR). The final draft is set to take into account issues such as minimum alternate tax (MAT), special economic zones (SEZ), transfer pricing, GAAR, IT exemption on savings and taxation of charitable organisations. Under the Direct Tax Code, the current distinction between short-term investment asset and long-term investment asset on the basis of the length of holding of the asset will be eliminated.

The seemingly diluted DTC says that FIIs can offset prior capital losses against capital gains but will have to pay advance tax as is applicable to domestic institutions. All gains made will be treated as capital gains and not as business income. All capital gains, whether short-term or long-term will get included in total income and taxed at normal rates. Currently, short-term gains are taxed at 15% and long-term at NIL. However for long-term, a standard deduction at specified rates will be allowed, reducing the effective rate of taxation. STT will remain, though rates could go down.

A big relief for India Inc. is that MAT will now be levied on book profits and not on gross assets as proposed earlier. Housing Finance Companies and real estate companies will benefit as the presumptive rent at 6% on house property has been removed. For self-occupied property, a deduction of Rs150,000 on interest paid is being re-instated. The DTC proposes to abolish the Securities Transaction Tax (STT). Therefore, all capital gains (loss) arising from the transfer of equity shares in a company or units of an equity oriented fund will form part of the computation process.

The Direct Tax Code Draft Bill is set to be presented in the monsoon session of Parliament. The earlier proposal to tax the Government provident fund and Public Provident Fund withdrawals, is set to be dropped.

IMD revises monsoon forecast to 102% of LPA

The India Meteorological Department (IMD) said that rainfall over the country as a whole for the 2010 southwest monsoon season (June to September) is likely to be normal. Quantitatively, monsoon season rainfall for the country as a whole is likely to be 102% of long period average (LPA) with a model error of ±4%.

The first stage forecast for the southwest monsoon rainfall over the country was issued on April 23. At that time, the weather office had said that monsoon season rainfall is likely to be 98% of the long period average (LPA) with a model error of ± 5%. The LPA of monsoon season rainfall over the country as a whole for the period 1941-1990 is 89cm.

Rainfall over the country as a whole in July is likely to be 98% of LPA and that in August is likely to be 101% of LPA both with a model error of ± 9%. Over the four broad geographical regions of the country, rainfall for the 2010 Southwest Monsoon Season is likely to be 102% of LPA over North-West India, 103% of LPA over North-East India, 99% of LPA over Central India and 102% of LPA over South Peninsula, all with a model error of ± 8 %.

June monsoon rains 16% below normal: IMD

India's southwest monsoon was 16% below normal in the whole of June but showed an improvement of 60% over the same period last year, according to the Indian Meteorological Department (IMD). The nation received 137.5 millimeters of rain in June, compared with the 50-year average of 163.5 millimeters, the IMD said on its website. The weather bureau said that adverse local weather conditions weakened the monsoon currents that reached the Kerala coast on schedule but have not advanced beyond eastern and central India since June 18. But the IMD expects revival and said that total rainfall in the June-September season would still be normal as forecast earlier.

India's Q4 external debt at US$261.4bn

India's Q4 BoP surplus at US$2.1bn

RBI to buy back govt securities worth Rs100bn

The Reserve Bank of India (RBI) offered to buy back government bonds for up to Rs200bn to increase liquidity in the banking system. Payments towards advance taxes, licence fees for 3G telecom spectrum and broadband wireless access have taken cash out of the banking system. As a first step, the RBI will offer to repurchase bonds for up to Rs100bn, the central bank said. The repurchase will be funded from the current account surplus of the Government. There was short-term mismatch in funds, it added. The RBI will offer to repurchase 12.25% government bonds maturing in 2010, 11.30% 2010 bonds and 6.57% 2011 bonds on June 18. The RBI will retain the right to vary the amount it may accept, or even reject all offers, it said. On May 27, the central bank permitted banks to borrow an additional amount up to half a percentage point of their SLR (statutory liquidity ratio) holdings. The measures were to be in effect from May 28 to July 2. Banks have been raising an average Rs450bn from the RBI every day. The money market will see a shortfall of at least Rs1 trillion, according to reports and nobody knows how long the crunch will continue.

3G, broadband auctions fuel growth in bank loans

Govt approves 10% stake sale in Coal India

The Cabinet Committee on Economic Affairs gave its approval to divest 10% equity of the Coal India Ltd. out of its holding of 100% through book building process in the domestic market. One percent of the equity will be offered to the employees of CIL and its eight subsidiaries. The CCEA has also decided to allow 5% price concession to the retail investors in order to encourage greater public ownership of the public sector companies. The CCEA also approved a 5% concession to the employees of the company and its subsidiaries to encourage their becoming stakeholders in the company. After this disinvestment, Government of India’s shareholding in the company would come down to 90%. At present, the paid up equity capital of the company is Rs.63.16bn and the Government of India holds 100% of the equity in the company.

Government plans to divest 10% stake in Neyveli Lignite

Cabinet clears Hindustan Copper disinvestment

The Cabinet Committee on Economic Affairs approved the proposal for disinvestment of 10% paid up equity capital of Hindustan Copper Ltd. out of Government of India’s shareholding along with issue of fresh equity of equal size by the company in the domestic market. There will be an issue of fresh equity by Hindustan Copper to the extent of 10% of the pre-issue paid up capital of the company equivalent to 9,25,21,800 shares of Rs5 each in the domestic market as per SEBI rules and regulation. The Government will also disinvest 10% of pre issue paid up capital, equivalent to 9,25,21,800 shares of face value of Rs.5 each. Reservation of shares for employees of HCL will be on a discount of 5%, which will also be available to retail investors as per the guidelines of SEBI. The paid up equity capital of the company is Rs.4.62bn. The Government of India is holding 99.59% paid up equity capital at present.

Engineers India files DRHP with SEBI for FPO

Govt approves infusion of Rs62.11bn in 5 Public Sector Banks

May exports rise 35% yoy

India’s exports in May rose 35% from a year earlier to US$16.1bn, Rahul Khullar, Commerce Secretary said today. Imports rose 30.8% to US$27.4bn in May. The trade deficit for the month under review works out to US$11.3bn. India has exported US$33bn worth of goods in April and May, up ~36% over the first two months of FY10. Imports during the April-May 2010-11 went up by 29.1% to US$54.7bn over the year-ago period, according to the Commerce Secretary. Trade deficit for April-May was US$21.7bn. The Government is targeting around 15% export growth in the current fiscal year, following an annual drop of 4.7% in FY10 due to the global economic slowdown. April exports had risen 36% to US$16.9bn while imports had grown 43% to US$27.3bn, translating into a trade deficit of US$10.4bn. Exports in May grew for the seventh month in a row since November 2009, after a 13-month trough due to recession in several markets. However, Khullar said that it was too early for celebrations. "Don’t get carried away by these numbers because the base in the comparable period last year was low," he told reporters in New Delhi. The growth in May took place on a rock bottom performance a year ago.

Domestic car sales up 30% in May: SIAM

India's domestic car sales rose 30% year on year in May, according to Society of Indian Automobile Manufacturers (SIAM). The rise is attributed to rising incomes and a rapidly expanding economy that has offset the impact of price increases. Domestic firms have sold 148,481 cars in the month of May, compared with 113,810 units a year ago, the SIAM data showed. Sales of trucks and buses, a barometer of economic activity, rose 58% to 48,580 units in May, the report added. The overall production data for April-May 2010 shows production growth of 33.52% over same period last year with industry producing 2,715,189 vehicles. In April-May 2010, overall automobile exports registered a growth rate of 67.57%.

January-May air passenger traffic up 22% yoy

Passengers carried by India's domestic airlines from January to May 2010, stood at 211.38 lakhs as against 173.34 lakhs in the corresponding period of the year 2009, thereby registering a growth of 21.95%. The total domestic passengers carried by the Scheduled Airlines of India in May 2010 were 47.85 lakhs as compared to the 41.88 lakhs passengers carried in April 2010. The month of May 2010 observed higher seat factor primarily due to the tourist season. The overall cancellation rate of scheduled domestic airlines for the month of May 2010 has been 1.9%. During May 2010, a total of 1549 passenger related complaints had been received by the scheduled domestic airlines. The number of complaints per 10,000 passengers carried for May 2010 has been 3.3.

Cabinet puts off stake sale in Coal India, Hindustan Copper

The Union Cabinet deferred a decision on government stake sales in Coal India and Hindustan Copper, Mines Minister B.K. Handique said in New Delhi. The Government is planning to sell about 10% stake in Coal India, through an initial public offering (IPO) to raise roughly Rs125bn and looking to launch the issue in August. The Centre is also planning a sale of 20% stake in Hindustan Copper to raise Rs40-50bn. The Government’s stake in the Kolkata-based company would drop to about 81% after the offer from 99.59%. "The Centre is likely to take a decision on about 20% stake sale in Hindustan Copper (HCL) next week," said Handique.

RNRL, Reliance Power to consider merger on July 4

The boards of directors of Reliance Natural Resources Ltd. (RNRL) and Reliance Power Ltd. will meet on July 4, to consider a merger of the two anil dhirubhai ambani group (ADAG) companies. Earlier, media reports had suggested that RNRL and Reliance Power could merge, sending the shares of the two companies higher. The announcement is significant as it comes close on the heels of the two Ambani siblings rescinding a long-standing non-compete agreement, allowing them to expand into each other's sectors.

Also, last week Reliance Industries Ltd. (RIL) and RNRL signed a new gas supply master agreement (GSMA) pursuant to the judgment of the Supreme Court, dated May 7. RNRL said that it would now take appropriate steps requesting the Government of India for expeditious allocation of natural gas to facilitate implementation of the same. The price, quantity and the tenure of the natural gas to be supplied by RIL to RNRL from its KG basin block will be decided by the Government. However, some reports suggest that the new GSMA between the two companies entails supply of 28 mmscmd natural gas for 17 years at US$4.20 per mmbtu. RIL said that the GSMA is compliant with the Gas Utilization Policy and EGoM decisions.

HDFC Bank appoints CM Vasudev as Chairman

The Board of Directors of HDFC Bank Ltd. approved the appointment of CM Vasudev as its Non-Executive Chairman from July 6. Vasudev succeeds Jagdish Capoor who retires on July 5 on the completion of his term. The appointment of Vasudev is subject to regulatory and shareholder approvals. Vasudev has been an Independent Director of the Bank since October 2006. A retired IAS officer, Vasudev has had an illustrious career in the civil services and has held several key positions in India and overseas. These include Finance Secretary, Government of India and Executive Director, the World Bank. He has also been the Government nominee on the Boards of many companies in the financial sector including State Bank of India, IDBI, ICICI, IDFC and NABARD. A former Deputy Governor of the Reserve Bank of India, Capoor had been the Non-Executive Chairman of HDFC Bank since July 6, 2001.

Kalanithi Maran forays into aviation with SpiceJet takeover

Sun TV Network owner Kalanithi Maran bought a 37.7% stake in low-cost carrier from its promoter Bhupendra Kansagra and US investor WL Ross. The acquisition was done by Kalanithi Maran, elder brother of union textiles minister, Dayanidhi Maran, in his individual capacity through his company KAL Airways. The deal makes Maran the single largest shareholder in SpiceJet. Maran will make an open offer for 20% more in SpiceJet at Rs 57.76 a share. The open offer was been made by Kal Airways, promoted by Maran and his wife Kareri, based on the two-week average daily high and low price of SpiceJet equity shares on the Bombay Stock Exchange (BSE), where it is listed, the managers to the issue said. The new promoters propose to change the name of SpiceJet after acquisition and shift its registered office away from Gurgaon. They have, however, undertaken not to sell any substantial asset of the airline. SpiceJet has recently been given permission to fly overseas to Bangladesh, the Maldives and Nepal. It swung to a net profit of Rs274mn in January-March 2010 against a loss of Rs78mn a year ago.

Spicejet CEO Sanjay Aggarwal resigns

Sanjay Aggarwal, CEO of SpiceJet has resigned barely three weeks after the acquisition of the company by Sun TV founder Kalanithi Maran. SpiceJet has appointed Kishore Gupta, a director since 2000, as acting CEO. Aggarwal was appointed CEO of SpiceJet in October 2008, after Siddhanth Sharma resigned in July of that year. Maran bought a 37.7% stake in the budget airline from its promoter Bhupendra Kansagra and US investor Wilbur Ross for Rs7.46bn. Maran will have to make an open offer, for a minimum stake of 20%, to the minority shareholders of SpiceJet. That is likely to happen in August, subject to SEBI approvals. Aggarwal was brought into SpiceJet in 2008 by Ross when the US billionaire invested US$80mn in the ailing company. He replaced the then CEO Siddhant Sharma.

L&T stock falls on NTPC disqualification

Larsen & Toubro (L&T) shares slid amid reports that NTPC had disqualified L&T Power from its mega deal to supply supercritical boilers and turbines. The disqualification is technical in nature as L&T participated through its subsidiary L&T Power, which has no expertise in manufacturing supercritical equipment. The issue relates to the creation of 11 thermal power stations based on supercritical technology at five locations. NTPC had decided to give orders to the best two bidders for boilers and the best three for turbines. In February, when the bids were opened, there were only two bidders - BHEL and L&T for boilers segment. After L&T's disqualification it has essentially become single bid from BHEL and NTPC is likely to call fresh bids for the 11 supercritical boilers. There was no clarification on the issue from L&T or NTPC. For turbines, L&T Power, BHEL, JSW-Toshiba, Bharat Forge and Ansaldo had participated. All four bidders except L&T Power qualified for turbines.

NTPC to acquire Australian coal mine

NTPC plans to buy controlling interest in a 720mn tons coal field in Australia in a deal valued at US$1-1.5bn. The deal will help the company to increase about 3,500mw of power capacity. The coal mines, located near Perth in western Australia, will allow NTPC to import up to 10mn tons of coal annually for its plants. The debt-ridden promoters (of the Australian project) may sell the 416 mw power project along with its captive coal mine separately from the virgin coal field. NTPC is likely to participate only for the greenfield coal project that will give it access to 7-10mn tons of good-quality thermal coal. The annual production from the field could go over 12mn tons per annum. The company (NTPC) will place its bid once the mode of selloff is decided by its current owners later this month. In case the entire project is sold as one unit, NTPC would acquire the power project as well. In this case, up to 3 million tonnes of coal from the greenfield project will used for the power plant. The existing captive mine of the power plant is depleting and will exhaust in 2-3 years.

Rel Infra, GTL infra agree on mega deal

The Boards of Reliance Communications Ltd. (RCOM), and its subsidiary, Reliance Infratel Ltd. and GTL Infrastructure Ltd. (GTL INFRA) approved a Rs500bn (US$11bn) deal to create the world’s largest independent telecom infrastructure company, neither owned nor controlled by any telecom operator. This transformational deal will be implemented through a demerger of RINFRATEL’s tower assets into GTL INFRA. India’s largest optic fibre network of over 200,000 kms and related assets presently, owned by RINFRATEL will remain under RCOM’s ownership.

The proposal will lead to substantial unlocking of value, through cash infusion to RCOM, leading to substantial reduction of its consolidated gross debt and improved leverage ratios, contributing to enhanced financial flexibility; and the receipt of FREE listed shares of the merged entity, by over 2 mn shareholders of RCOM and the minority shareholders of RINFRATEL, enabling their continued participation in future prospects of the high growth telecom infrastructure sector.

RCOM acquires Digicable

The Board of Directors of Reliance Communications Ltd. (RCOM) approved a proposal to acquire Digicable, India’s largest Cable TV service provider, in an all-stock deal of the new entity, subject to definitive documentation, necessary approvals etc. The new entity named "Reliance DigiCom" is an integration of RCOM’s DTH, IPTV and Retail Broadband Operations, with Digicable. This will be India’s / Asia’s largest, and the World’s 5th largest company, to offer the full-suite of Triple Play services – Digital TV, Ultra High-Speed Broadband and Voice. The new company, Reliance DigiCom, will fuel our ‘4-screen strategy’ to own mobile, cinema, TV and computer screens, that are rapidly becoming an integral part of our customers’ daily lives, leading to world-class convergence of information, communication and entertainment solutions and services."

Tata Motors kicks off Nano production from Sanand

Tata Motors’ brand new plant for the Tata Nano at Sanand, in Ahmedabad district of Gujarat, was inaugurated by the Honourable Chief Minister of Gujarat, Narendra Modi, in the presence of the Chairman of Tata Sons and Tata Motors, Ratan N. Tata, Ministers of the Gujarat Government, top officials, vendor and supplier partners, dealers and associates of the company. The plant’s inauguration marks the culmination of the company’s goal of making the Tata Nano freely available to hundreds of thousands of families, desirous of the car. The capacity of the plant, to begin with, will be 250,000 cars per year to be achieved in phases, and with some balancing is expandable up to 350,000 cars per year. Further capacity expansion has also been provided for in this location. Read More…

Reliance Power to acquire 2 coal companies in Indonesia

Reliance Power Ltd. announced that the company's wholly owned subsidiary, Reliance Coal Resources Ltd., has entered into Share Purchase Agreements to acquire the entire share capital of two coal companies in Indonesia. These two Indonesian companies own three coal mines in, Indonesia. The coal from these mines will be used in the Krishnapatnam Ultra Mega Power Project and other power projects of the group. Reliance Coal Resources will make an upfront payment of Rs5bn (US$106mn) for acquiring the mines. The balance payment will be paid in a staggered fashion depending on the mines meeting certain production targets. If all production-linked targets are met, the total value of the deal will be US$1.6bn.

Reliance Infrastructure to develop Worli to Haji Ali Sea Link

Tata Power to raise US$300mn via stake sale in 2 SPVs

Tata Power Company (TPC) will raise US$300mn (Rs13.9bn) from private equity fund Olympus Capital, by selling 14-15% stake in its two special purpose vehicles (SPVs) that own 30% in KPC and Arutmin, which own the Bumi Resources coal mines in Indonesia. The stake sale is to clear current debt of US$675mn (Rs31.33bn), which Tata Power raised to buy stake in the mines in June 2007 for US$1.23bn (Rs56.9bn), and to fund additional acquisitions. It has to repay a short-term loan of US$70mn (Rs3.25bn) in July, part of the debt taken for the Indonesian acquisition. TPC has signed an agreement to raise US$300mn in Bhira Investments Ltd. and Bhivpuri Investments Ltd. Coal SPVs through shares, with differential rights to be issued to Olympus Capital Holdings Asia.

Mindtree bags contract for UID project

Mindtree shares rose after the company received an application development and maintenance services contract from "Aadhaar", previously known as unique identification (UID) project. The multi-year contract involves designing, developing, testing, maintaining and providing help desk services from the Unique Identification Authority of India (UIDAI) Bangalore technology centre, the company said in a filing with BSE. Financial details were not disclosed. "Aadhaar" will authenticate every Indian in terms of his or her identity based on bio-metric verification. With a massive information base of 1.2 billion people and the ongoing collection, validation, issue and constant verification of identity, project "Aadhaar" will require one of the most complex IT architectures ever created and a software implementation that would become a benchmark for years to come.

ITC forays into skin care segment

ITC announced its first foray into the fairness creams segment with the launch of Vivel Active Fair. With this launch, ITC expands its personal care products portfolio with yet another differentiated product in line with ITC’s philosophy of offering world-class products to the Indian consumer. Sandeep Kaul, Chief Executive, Personal Care Products Business, ITC, said, "Skin cream is a rapidly growing product category in India. We at ITC have been involved with intensive R&D efforts over the last 3 years to create a unique value proposition and a superior fairness cream for the Indian consumers. Vivel Active Fair is a result of continuous engagement with consumers, understanding their needs and designing an offer and delivering benefits which truly make a difference".

ITC announces 1:1 centenary bonus

ITC will complete a 100 years in August. Acknowledging the unstinted support of shareholders, the Board of Directors proposed a centenary issue of Bonus shares in the ratio of 1:1, subject to shareholders’ approval at the Annual General Meeting scheduled for 23rd July. ITC has evolved into a multi-business conglomerate and is today the leading FMCG marketer in India, the second largest hotel chain, the clear market leader in the Indian Paperboard & Packaging industry and the country’s foremost Agri-business player. Additionally, its wholly owned subsidiary is one of India’s fastest growing IT companies in the mid-tier segment. Over the last 15 years, ITC has created multiple drivers of growth by developing a portfolio of world-class businesses. During this period, the company’s post-tax profits recorded an impressive compound growth of 21.7% per annum respectively. Total Shareholder Returns, measured in terms of increase in market capitalisation and dividends, grew at a compound rate of 24.3% during this period, placing the company amongst the foremost in the country in terms of efficiency of servicing financial capital. ITC today is one of India’s most admired and valuable corporations with a market capitalisation in excess of Rs100,000 crores.

Bajaj Finserv spurts amid Buffett investment buzz

Shares of Bajaj Finserv appreciated by about 10% on the BSE on June 9 amid media reports that legendary investor Warren Buffett-led Berkshire Hathaway is in talks with the company for a possible investment. However, Bajaj Finserv clarified that the company was neither in touch with Berkshire Hathaway nor was it aware of any plans of theirs to invest into the company. Buffett, who has till now made only a few investments outside the US, plans to visit India next March and is likely to explore possible investment opportunities in the country.

HUL Board approves share buyback

Hindustan Unilever Ltd. announced that the Board has considered and approved, the buyback of the company’s equity shares at a price not exceeding Rs280 per share. The company will spend up to an aggregate amount of Rs6.3bn, being within 25% of the total paid-up capital and free reserves. The buyback is subject to the approval of the shareholders, and such other approvals/consents, as may be necessary. The company proposes to buy back shares from the BSE and NSE through open market purchases from time to time. The maximum price is at a premium of 20% over the average closing price of the company’s share in last three months. "The buyback is proposed to effectively utilize the surplus cash and make the balance sheet leaner and more efficient to improve returns," HUL said in a statement. As per the provisions of the Securities and Exchange Board of India (Buyback of Securities) Regulation 1998, the promoters (Unilever) and the directors of the company shall not participate in the proposed buyback process.

Fortis Healthcare tops Khazanah offer for Parkway

Fortis Healthcare Ltd. offered S$3.80 per share for acquiring whole of the Parkway Holdings Ltd. The general offer by RHC Healthcare Pte. Ltd., a company jointly owned by RHC Holding Pvt. Ltd. and Fortis, is higher than the S$3.78 a share offered by Malaysian state investor Khazanah to control the Singapore firm. The bid valued Parkway at S$4.32bn (US$3.1bn). Fortis will have to pay S$3.23bn for shares of Parkway that it does not already own. The offer is conditional on Fortis getting at least 50% of the Singapore firm. Fortis owns just over 25% in Parkway and is the controlling shareholder. Khazanah, which has just under 24%, made its surprise partial offer to raise its Parkway stake to 51.5% by buying shares at S$3.78 apiece. Shareholders had until July 8 to accept Khazanah's offer. Parkway runs 16 hospitals across Asia including Singapore, Malaysia, India and China. Fortis cannot make a partial offer for Parkway under Singapore law because it bought shares recently. Singapore's security regulator had given Fortis till July 30 to state whether or not it intends to make a counterbid for Parkway. On June 30, Glass Lewis, a US-based advisory firm, recommended that Parkway shareholders vote against Khazanah's offer, warning that minority shareholders may find themselves in an untenable position if the Malaysian investor gains majority control.

Fortis Healthcare defers preferential allotment to GIC

Fortis Healthcare Ltd. said that the Company and GIC Special Investments Pte Ltd. have mutually agreed to defer the current preferential investment. GIC would like to consider participating in the larger fund raising by the Company as per the resolution passed in the Board Meeting dated June 9, Fortis Healthcare said. The Extra-ordinary General Meeting (EGM) of the Company held on June 9 had approved the preferential allotment of Equity Shares to GIC Special Investments Pte Ltd., through its affiliated investment vehicle.

Shree Renuka Sugars completes Equipav AA deal

Bajaj Hindusthan to absorb subsidiary

Bajaj Hindusthan said its board has approved the company’s merger with its unit Bajaj Hindusthan Sugar. Shareholders in the unit will get one share of the parent firm for every five held. Post-merger, Bajaj Hindusthan will have a sugarcane crushing capacity of 136,000 tons per day, distillery capacity of 800 kilolitres a day and surplus bagasse-based co-generation capacity of 150mw, it said. "The merger will strengthen Bajaj Hindusthan’s position in India’s sugar sector, resulting in rationalisation of operations, better profitability, enhanced production and a stronger competitive position," Kushagra Bajaj, joint managing director, said. The appointed date for the merger is April 1, 2010. Bajaj Hindusthan’s stake in the unit will be held in a trust as treasury stock.

Reliance Capital buys 18% in Bloomberg UTV

Reliance Capital has bought around 18% stake in Bloomberg UTV, according to reports. Financial details of the deal were not disclosed. Bloomberg UTV is a joint venture between news and financial data publisher Bloomberg LP and the founders of UTV, a media and entertainment group controlled by Ronnie Screwvala. The JV was formed in October 2009. On getting necessary approvals, Reliance Capital will be the second-largest shareholder, while Bloomberg will own 15% of the company and the balance 67% will be owned by promoters of UTV, the reports added. "The investment will form part of Reliance Capital's exposure to the fast growing and high potential media sector," the ADAG firm said in a statement.

Dull Indian debut for Standard Chartered

Standard Chartered Plc made a subdued debut on Indian bourses as tax rules and regulations on investing in depositary receipts led to a weak investor response to the first local listing of a foreign company. Standard Chartered sold 240 million IDRs at Rs104 each IDR and raised around Rs24.9bn. Standard Chartered's Indian Depository Receipts (IDRs) closed at Rs103.05 on the Bombay Stock Exchange (BSE), down 0.9% from their issue price of Rs104, with almost 20 million receipts changing hands. They earlier opened at Rs105 and traded between Rs100.60 and Rs108. Ten IDRs represent one Standard Chartered share. The offer received bids for only 11% of the issue size until the end of the third day. Though, the issue was finally subscribed about 2.2 times, most of the bids had come in the last few hours of the subscription period.

Eicher-Volvo to spend Rs2.9bn to hike capacity

VE Commercial Vehicles, the joint venture between Eicher Motors and Volvo, said that it will invest Rs2.9bn to raise capacity at its Pithampur plant in Madhya Pradesh. The investment will raise capacity by 85,000 engines a year and will make India Volvo's global manufacturing hub for medium-duty base engine. The current capacity at Pithampur is 40,000 engines. The announcement sent Eicher Motors shares up by as much as 20% on Friday. Shares later closed up 15.6% at Rs921.75. "This will catapult VE Commercial Vehicles into one of the largest commercial vehicle engine manufacturers in India and will give us the capability well beyond any of our competitors," chief executive Siddhartha Lal said. The new capacity will come onstream in the second half of 2012, initially to serve Volvo group's and Eicher's local requirements and later for exports, Lal said. "Indian market is extremely important and in a few years will become one of the most important countries in terms of turnover and profitability for us," Par Ostberg, President, Trucks Asia, Volvo Group and Chairman VE Commercial, said.

Technofab Engineering IPO subscribed over 12 times

The initial public offering (IPO) of Technofab Engineering Ltd. was subscribed more than 12 times as at 5:00 pm (IST) on Friday, according to the data published on the NSE Web site. The company received bids for 36.49mn shares as against 2.99mn shares on offer. Technofab Engineering has set a price band of Rs230-240.a share. The issue opened on June 29. The issue will constitute 28.50% of the post issue paid-up equity capital of the company. The net issue will constitute 28.03% of the post issue paid-up equity capital of the company.

Blackstone to buy 12.5% in Monnet Power

The Blackstone Group has announced that it will be investing Rs2750mn (about US$60mn) for 12.5% equity stake in Monnet Power Co. Ltd. (MPCL), an independent power producer. MPCL is developing a 1,050 MW coal fired power plant in Orissa backed by pit-head captive coal mines, and has a pipeline of a further 2000 MW under development. MPCL is a 100% subsidiary of Monnet Ispat & Energy Ltd., which is India’s second largest manufacturer of integrated coal-based sponge iron.

Sumitomo Mitsui to buy 4.5% stake in Kotak Mahindra Bank

Kotak Mahindra Bank Ltd. entered into an agreement with Sumitomo Mitsui Banking Corporation, Japan (SMBC), for a preferential issue to SMBC of 16.4 mn shares of Kotak, which amounts to approximately 4.5% stake on a post-issue basis for Rs13.66bn. The proposed investment is at a price of Rs833 per share. The regulatory floor price as per SEBI Guidelines is about Rs771 and the closing price on June 29 on NSE was Rs744.55. The preferential issue is subject to shareholder and other necessary regulatory approvals.

ING exits from Kotak Mahindra Bank

Dutch financial major ING sold its entire investment in Kotak Mahindra Bank by selling a 3.07% stake through a bulk deal on the NSE for Rs8.01bn (US$172.5mn). As per VCCircle estimates, ING took a haircut of 17% on its two-and-half-year-old investment (excluding dividend earnings on the shares).

ING operates the ING Vysya Bank in the country. ING Bank NV Singapore Branch had originally bought around 2.5% stake in Kotak Mahindra Bank in October 2007 through a qualified institutional placement (QIP). The deal was struck at around Rs950 per share and ING had sunk in around Rs8.12bn.

Rabobank sells 11% in Yes Bank

Rabobank reduced its stake in Yes Bank by selling 11% to a group of domestic and foreign institutional investors for an estimated Rs9.9-10bn (US$210mn). That paved the way for an imminent entry of the Dutch lender into retail banking business in India. The Netherlands-based Rabobank still holds 4.9% in Yes Bank.

The shares were sold in a series of bulk deals at an average price of Rs 263 per share, amounting to over Rs10bn. According to reports, the buyers included Life Insurance Corporation of India (LIC), SBI Life, Templeton and Carmignac - a French fund. Rabobank was one of the initial investors in Yes Bank, founded in 2004, in which Rana Kapoor and Ashok Kapoor were the Indian partners.

International News

G20 agrees on cutting deficits, debt levels

Group of 20 (G20) leaders reached a deal on cutting high budget deficits and debt levels, but each member have been allowed to adopt its own methods to reach the goals. G20 agreed to stabilize debt levels by 2016 while pledging to cut deficits in half by 2013. "Our challenges are as diverse as our nations," US President Barack Obama said. "But together we represent some 85% of the global economy, and we have forged a coordinated response to the worst global economic crisis of our time." President Obama said that G20 countries agreed to balance the need for continued growth in the short term and fiscal sustainability in the medium term.

The goals are based on a proposal put forward by Canadian Prime Minister Stephen Harper for advanced economies. But after some G20 countries, including the US, Japan and India, raised objections, the deficit and debt reduction goals were described more as expectations rather than deadlines. Negotiators spent at least 45 hours drafting the summit's final communique, said Dominique Strauss-Kahn, head of the International Monetary Fund (IMF). A specific mention of the yuan, China's currency was dropped at the last minute.

How each G20 members should proceed with controversial provisions such as taxing banks to recoup bailout costs and implementing tougher bank capital rules was left open. The next G20 summit in November in Seoul. The world's top leaders are supposed to thrash out policies on issues including bank capital rules, financial regulation, and voting rights at the IMF. The G20 must also show progress on a promise to rebalance the global economy.

House clears financial reform bill

The House of Representatives approved a landmark bill which will usher in the biggest overhaul of the American financial regulations since the Great Depression. Negotiations had been completed on ironing out the differences between the House and Senate versions of the final legislation, but they were reopened after Republicans objected to some last-minute amendments. A proposal to impose a tax on banks and hedge funds was subsequently removed. The House cleared the bill by a 237 to 192 vote, sending the bill to the Senate, which is not expected to act until later this month. The passage of the bill in the House marked a major win for US President Barack Obama and his fellow Democrats, who have made revamping of the Wall Street rules a top priority in the wake of the 2007-2009 financial crisis. The death of Democratic Senator Robert Byrd and jittery Republican allies complicated efforts to round up the votes needed in the Senate. A week-long break following the July 4 holiday means the Senate won't act until the week of July 12, at the earliest. The bill would impose tighter regulations on financial firms and reduce their profits. It would boost consumer protections, force banks to reduce risky trading and investing activities and set up a new government process for liquidating troubled financial firms.

Broken promise…Japanese PM to resign

Hatoyama said he was resigning after just eight months in office, largely because of his broken campaign promise to move a US Marine base off the southern island of Okinawa. Barely eight months in office, Japanese Prime Minister Yukio Hatoyama became the fourth prime minister to resign in the last four years. Hatoyama announced his intention to resign citing his broken campaign promise to move a US Marine base off the southern island of Okinawa. Hatoyama, a Ph.D in engineering from Stanford University, had last week said he would continue despite support for his cabinet falling to 17%.

Julia Gillard takes over as new Australian PM

Resources stocks and the Aussie (as the Australian dollar is widely called) rallied initially after Julia Gillard became the nation's first woman leader, following the resignation of Kevin Rudd. But, the Australian dollar retreated and shares of BHP Billiton and Rio Tinto declined later amid uncertainty about the stance of the new Prime Minister on the controversial mining tax. Rudd's proposed tax on miners' profits had not gone down well with the mining industry and also led to a slump in Rudd's ratings ahead of the Labor Party's new election. The so-called Resources Super Profits Tax was announced last month by the Rudd government. The RSPT would impose a 40% tax on miners' profits, beginning on July 1, 2012. The mining industry claims that the planned tax would hurt their business, cost jobs and dampen investments. But, Gillard called for a truce between the government and the mining industry on the thorny issue. BHP said that it is encouraged by Gillard’s appointment and has asked publicity agencies to suspend all of its advertisements against the proposed tax, according to a statement. Rio, the world’s third-largest mining company, said that it is "cautiously encouraged" by Gillard’s comments on the tax. Xstrata welcomed Gillard’s willingness to engage in talks.

Australia, miners agree on new resources tax

The Australian and New Zealand dollars gained while resources stocks rose after the announcement of a compromise tax deal between miners and the government. Australian Prime Minister Julia Gillard agreed on a new resources tax with the mining industry, sending shares of BHP and rival Rio Tinto higher. The 'Mineral Resources Rent Tax' - earlier called 'Resources Super Profits Tax' - will be 30%, applying to iron ore and coal, while the rent tax for oil and gas resources will be 40%, the government said in a statement. Gillard’s predecessor Kevin Rudd had proposed a 40% tax on all resources.

Yuan logs biggest weekly gain since Dec. 2008

The yuan had its biggest weekly gain since December 2008 after China set the currency’s daily reference rate at a record high, just ahead of the G20 summit over the weekend after ending a two-year peg to the US currency. The yuan rose 0.5%, to 6.79 per dollar in Hong Kong. The central bank fixed the reference rate at 6.7896 per dollar. The yuan is allowed to trade 0.5% on either side of the daily fixing. The yuan on Friday touched a post-revaluation high against the US dollar, marking a record modern low for the American currency against the Chinese unit.

The yuan (also known as the renminbi) notched up its biggest gain in five years against the dollar on June 21 and also closed at its highest levels since July 2005 as the People's Bank of China (PBOC) chose to stay on the sidelines and allowed the market to find its feet. In the process, the yuan posted its biggest single-daily gain against the dollar since its revaluation in July 2005. The yuan's previous post-revaluation closing high was 6.8113 set in July 2008, when China re-introduced the yuan-dollar peg to mitigate the impact of the global financial crisis on its economy. Its previous post-revaluation intraday high of 6.8099 was set in September 2008.

Over the weekend, China's central bank announced plans to ease the yuan's de-facto peg to the US dollar in a bid to avert any criticism at the upcoming G20 summit in Toronto. However, the Chinese central bank ruled out a one-time revaluation and said any strengthening of its currency would be gradual. Chinese President Hu Jintao is scheduled to attend the G20 summit, set for June 26-27, along with US President Barack Obama and leaders of the world's other major economies.

BOJ offers 3 trillion yen in new lending

The Bank of Japan (BOJ) said that it would offer as much as 3 trillion yen (US$33bn) in new lending to financial institutions in a bid to expand credit available to companies. The BOJ made the announcement in a statement in Tokyo. The Japanese central bank also left its key policy rate unchanged at 0.1% as had been widely expected by economists. The new lending facility will be temporary, with funds possibly available by about the end of August, the BOJ said today. Each counter-party will be allowed to borrow up to 150 billion yen on a one-year basis and will be able to roll over the loans up to three times, it said. The BOJ also said that the Japanese economy shows further signs of a moderate recovery, induced by improvement in overseas economic conditions.

Swiss parliament okays UBS-US tax deal

Switzerland's parliament approved a bill that will allow authorities there to share on time data on nearly 4,500 UBS clients with the US authorities, according to media reports. The agreement came after the Lower House of Parliament dropped a demand that the pact be subject to a referendum, which would have delayed the transfer beyond an August deadline set by US authorities. Failure to hand over the UBS client accounts in time would have broken the terms of the tax treaty and could have led to retaliation from the US government. The agreement to hand over the details of the UBS clients to the US government was first signed in August 2009, but a subsequent court ruling meant that it needed to be approved by the parliament.

Moody's cuts Greece's govt bonds to junk

Moody’s has cut Greece's government bond ratings to junk. The Dow abandoned triple-digit gains to close lower. The euro, which regained some lost ground against the dollar, retreated from its daily highs. European markets rallied on though as the Greek downgrade by Moody’s was announced after markets closed there. Reaction to Moody's downgrade was mild as opposed to about six weeks ago when its rival Standard & Poor's had cut its rating on Greece's debt to junk. But, the fact is that Greece continues to struggle despite European leaders having made billions in loans available to the nation. Moody's said it was cutting Greece's government bond ratings by four notches to Ba1 from A3, with a stable outlook for the next 12-18 months. It was the second of the three major agencies to accord Greek bonds junk status.

UK plans US$59bn spending cuts, new taxes

The UK took action to get its own budget deficit under control even as world markets were hit by concerns about the exposure of French banks to Greece and other troubled euro-zone nations. The UK FTSE 100 index fell 1% to 5,246.98 but moved off early lows after UK Chancellor George Osborne announced spending cuts and tax increases that will total £40bn (US$59bn) a year by 2015. The budget, which came just six weeks after the Conservative and Liberal Democrat coalition took power, will eliminate the country's structural deficit by the end of the current parliament, Osborne said. He said that total borrowing would fall from £149bn this year to £37bn in fiscal 2015 and that borrowing as a percentage of gross domestic product (GDP) would drop to 1.1% over that period. Harriet Harman, acting leader of the opposition Labour Party called it a reckless budget and said that the plan would harm the British economy.

The newly created Office for Budget responsibility to cut its growth forecast for the coming year to 2.3% from 2.6%, though it also lifted its growth expectations from 2013 onward. Gilt sales in fiscal 2011 will be £20.2bn lower than previously expected at £165bn, UK Debt Management Office said. That is a bigger reduction than many economists were expecting.

Oil spill...BP approves US$20bn fund; halts dividend

Shares of BP remained in the spotlight as it agreed to establish a US$20bn escrow fund to payout claims from the oil spill disaster in the Gulf of Mexico and cancel its quarterly dividend. US President Barack Obama met with BP executives in the White House, including CEO Tony Hayward and the company's chairman, Carl Henric Svanberg. The British oil company announced that it was canceling its quarterly dividend for the rest of the year, and promised that it would revisit the issue next year. In an address to the nation, Obama said that he will make BP pay for the costs of cleaning up the oil disaster. He also pushed the Congress to move on clean energy legislation. BP Chairman and CEO apologized to the American people for the spill and said that the meeting with Obama was constructive. Svanberg said that the escrow fund agreement will provide greater comfort to the citizens of the Gulf Coast and greater clarity to BP and its shareholders. The British company also said that it will implement a significant reduction in its 2010 capital spending budget of US$20bn and increase planned divestments to approximately US$10bn over the next 12 months.

Obama slams BP for oil spill

Fitch downgrades BP credit rating

BP turns down Cameroon’s help on oil spill: report

Cameron was reportedly turned down for help by BP Pic, to help combat the huge oil spill in the Gulf of Mexico. The film director was quoted as saying that the U.S government should take services of some really smart people to monitor undersea gusher. He further added that he has been watching for weeks the oil spill with growing horror and heartache and he thought that those morons did not know what they actually doing.

US court blocks offshore drilling ban

The US federal judge denied a motion filed by the Obama administration to allow the ban to stay in place during the appeal process. The judge also denied a motion by plaintiffs to enforce his own injunction. This means that the US government can file an emergency motion with the appeals court asking it to keep in place the drilling moratorium until the legal fight over the injunction is resolved. The Obama administration plans to declare a new moratorium on deepwater drilling, Interior Secretary Ken Salazar said on June 22. Salazar's announcement came hours after US District Judge Martin Feldman overturned the administration's first six-month moratorium on exploration in deep waters. "We see clear evidence every day, as oil spills from BP's well, of the need for a pause on deepwater drilling," Salazar was quoted as saying. The new moratorium would contain more specific justification for the drilling ban, Salazar said.

Apple introduces iPhone 4

Apple presented the new iPhone 4 featuring FaceTime, which makes the dream of video calling a reality, and Apple’s stunning new Retina display, the highest resolution display ever built into a phone, resulting in super crisp text, image, and video. In addition, iPhone 4 features a 5-megapixel camera with LED flash, HD video recording, Apple’s A4 processor, a 3-axis gyro, and up to 40% longer talk time - in a beautiful all-new design of glass and stainless steel that is the thinnest smartphone in the world. iPhone 4 comes with iOS 4, the newest version of the world’s most advanced mobile operating system, which includes over 100 new features and 1500 new APIs for developers.

Emirates orders 32 Airbus A380 super-jumbos

In one of the largest ever orders for commercial aircraft, Emirates announced that it would buy an extra 32 Airbus A380 super-jumbos, at a total list price of US$11.5bn. Emirates is one of Airbus's biggest customers. Its new total of 90 A380s on order accounts for almost 40% of the 234 orders Airbus has signed for its two-deck plane. Emirates deliberately announced the deal in Germany's capital to fight a trade battle with flag carrier Deutsche Lufthansa AG. Emirates, which had already ordered 58 of the world's largest passenger plane, wants Berlin to grant it greater access to the huge German aviation market. Lufthansa argues that its home market of 80 million people shouldn't be thrown open to a carrier from one of the United Arab Emirates.

BSkyB rejects News Corp. offer

British Sky Broadcasting rebuffed a buyout offer from Rupert Murdoch's News Corp. that values the company at 12 billion pounds (US$17.7bn), but said that it was willing to back a sweeter bid. News Corp. is already BSkyB's biggest shareholder with a 39% stake. Murdoch's son, James, is BSkyB's chairman. Independent directors said News Corp.'s informal offer of 700 pence per share was too low. They say they would have backed an offer above 800 pence, which would value the company at about 13.7 billion pounds. Satellite-based BSkyB has 9.8 million customers and reported a profit of 286 million pounds in the three months ending March 31. "We believe that this is the right time for BSkyB to become a wholly-owned part of News Corporation with its greater scale and broader geographic reach," said Chase Carey, News Corp.'s chief operating officer. BSkyB was created by the 1990 merger of News Corp.'s Sky Television and government-franchise British Satellite Broadcasting. Currently News Corp.'s share of BSkyB's earnings is recorded on the company's books as earnings from equity affiliates.

BASF buys Cognis for US$3.1bn

BASF SE has reached an agreement with Cognis Holding Luxembourg S.a r.l. controlled by Permira Funds, GS Capital Partners and SV Life Sciences to acquire the specialty chemicals company Cognis for an equity purchase price of €700 million. Including net financial debt and pension obligations, the enterprise value of the transaction is €3.1 billion. The acquisition is subject to clearance by the competent merger control authorities. Closing of the transaction is expected for November 2010 at the latest. "With the acquisition of Cognis, we are strengthening our portfolio with cyclically robust and profitable businesses and further expanding our position as the world’s leading chemical company," said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE.

Tate & Lyle to sell EU sugar operations

American Sugar Refining (ASR) will pay £221 million for Tate & Lyle's golden syrup factory in London and the right to use its 132-year-old brand name worldwide. The operations also include cane sugar refineries in London and Lisbon and the Tate & Lyle Process Technology consulting business. Tate & Lyle chief executive Javed Ahmed said that sugar refining had a long and proud history in the business, but his company was now focusing efforts in products such as sweeteners, starch and ethanol. "We believe the interests of this business and its employees are now best served by being part of a company for whom sugar refining is core. I sincerely thank our employees for their hard work and commitment over the years, and wish them every success in the future," Ahmed said.

July 2010

Domestic News

Food inflation slides...falls below 10%

India's food inflation declined in the week ended July 17, falling to single digit levels for the first time in many months while inflation in the fuel group remained elevated. Inflation in the Primary Articles group also fell, the Government said. According to the data released by the Commerce & Industry Ministry, inflation in the Food Articles group stood at 9.67% in the week ended July 17 versus 12.47% in the previous week. Inflation in the Primary Articles group was at 14.5% as against 16.48% in the week ended July 10 while inflation in the Fuel & Power group rose to 14.29% from 14.27% in the preceding week.

Moody's upgrades India's local currency rating to Ba1

Govt clears three-year drilling moratorium

The Cabinet Committee on Economic Affairs (CCEA) approved the grant of drilling moratorium of three years to all deepwater block Production Sharing Contracts (PSCs) signed under various rounds of exploration till NELP-V where drilling commitments are pending as on January 1, 2009. There is no financial expenditure involved on behalf of the Government. The drilling moratorium dispensation would apply to 30 PSCs involving three contractors, the Government said. The main objective of the drilling moratorium dispensation is to enable the contractors to meet the drilling commitments under various PSCs, which have been adversely affected on account of a global shortage in availability of deepwater rigs since 2007 due to the then prevailing high crude oil prices. Six blocks of ONGC, 13 blocks of RIL and one block of ENI will benefit from the three-year drilling holiday.

ISRO launches PSLV-C15, puts 5 satellites into orbit

The Indian Space Research Organisation (ISRO) launched the Polar Satellite Launch Vehicle (PSLV-C15) from Sriharikota spaceport, putting five satellites into the orbit. The four-stage 44.4 metre tall PSLV-C15 lifted off at the end of a 51-hour countdown from the Satish Dhawan space centre at 9.22 AM (IST), according to reports. The five satellites are: indigenous 694kg Cartosat-2B, 116kg Alsat 2A of Algeria, 6.5kg Aissat built by the University of Toronto, one kg Tissat-1 of the University of Applied Sciences, Switzerland and Studsat weighing less than one kg designed and developed by 45 students from seven engineering colleges of Bangalore and Hyderabad. This was the first mission by ISRO after the disappointing failure of India's ambitious home-made cryogenic engine powered GSLV-D3 in April.

April-June indirect tax receipts up 43% yoy

Indirect tax collections - comprising revenue from customs, excise and service tax - rose by 43% to Rs569.3bn in the first quarter of the current fiscal year, up from Rs396.94bn in the year-ago period, a finance ministry official was quoted as saying. Out of the total indirect tax collections, realisation from customs were up 60% to Rs281.35bn while excise receipts grew by 55% to Rs195.36bn. Service tax collection, however, declined by 3% to Rs92.58bn during the reporting quarter. The Government has budgeted an overall tax mop-up of Rs7.46 lakh crore during this fiscal year. While Rs3.16 lakh crore are expected to be realised from indirect taxes, Rs 4.3 lakh are expected to be collected from direct taxes, which mainly consist of corporate tax and personal income tax.

Direct tax collections up 15.49% in Q1: Govt

Right time to decontrol sugar: Sharad Pawar

This is the right time to decontrol India's sugar sector as production in India is all set to rebound, Agriculture Minister Sharad Pawar said. Pawar, who has recently taken over as the chief of the International Cricket Council (ICC), also said that the Government is actively considering imposing tax on sugar imports. The Government may end stock limits for bulk consumers of sugar, he said in New Delhi. "Sugar sector is heavily regulated. This is the time the millers and the Government should sit together to decide on easing restrictions on sugar sector," he told an industry conference in the capital. The Government sets the benchmark price for sugarcane and the monthly sales quota for mills, who are required to sell 20% of their production at below-market prices to the Centre for resale to the poor through fair price shops. Pawar did not provide a timeframe as to when the Government would end the controls. He also said that he expects a strong rebound in India's agriculture output, which will reduce food price inflation. Last year, India had suffered the country's worst drought in 37 years, hitting farm output. The flood situation in Punjab and Haryana, the main grain producing states is not serious, the Agriculture Minister said.

SEBI revises exposure margin on equity derivatives

Based on the feedback received from market participants, capital market regulator SEBI has decided that exposure margin shall be higher of 5% or 1.5 times the standard deviation (of daily logarithmic returns of the stock price). This circular shall come into force from July 15. This is in modification of SEBI Circular dated October 15, 2008 which specified that the exposure margin shall be higher of 10% or 1.5 times the standard deviation (of daily logarithmic returns of the stock price) of the notional value of the gross open position in single stock futures and gross short open position in stock options in a particular underlying. This measure is aimed at reducing the effect of higher costs of F&O contracts on retail traders and to lure them back. Only a reduction in the exposure margins could bring in more retail traders as the SPAM margins cannot be touched. Most retail investors have reduced their exposure to F&O stocks as the market has been volatile and range bound alternatively for quite some time now.

SEBI approves physical settlement of derivatives

Capital market regulator SEBI has decided to provide flexibility to Stock Exchanges to offer either cash settlement for both stock options and stock futures; or physical settlement for both stock options and stock futures; or cash settlement for stock options and physical settlement for stock futures; or physical settlement for stock options and cash settlement for stock futures. A Stock Exchange may introduce physical settlement in a phased manner.

Nifty may trade in London

India’s National Stock Exchange (NSE) and The London Stock Exchange Group (LSEG) signed a Letter of Intent to evaluate joint strategic business opportunities, and to co-operate together more closely in the future. As part of the agreement, both exchanges declared their intent to explore the feasibility of an agreement whereby FTSE Group may licence the FTSE 100 Index to the NSE, and whereby the NSE may licence the S&P CNX Nifty (Nifty 50) to LSEG for the purpose of issuing and trading options and other index contracts. Additionally, the two signatories will explore the possibility of holding joint training and education courses besides holding seminars with a particular focus on Small and Medium sized Enterprises (SMEs). The LoI was signed in Mumbai by Xavier Rolet, Chief Executive of LSEG and Chitra Ramkrishna, Joint Managing Director of the NSE, in the presence of the George Osborne MP, the Chancellor of the Exchequer of the United Kingdom, who is leading a high profile British business delegation to Mumbai.

June car sales up 31% yoy

Domestic sales of passenger cars in India grew by 30.8% in June, as consumers made a beeline for a spate of new models amid loose monetary policy and buoyant growth prospects, the Society of Indian Automobile Manufacturers (SIAM) said. Car makers in India sold a total of 141,184 vehicles in the month under review compared with 107,948 cars sold in the same month a year ago, data from the industry body showed. Sales of trucks and buses rose by 44% to 52,211 units in June, SIAM said. India's car sales are likely to rise 12-13% in 2010-11 to 1.7 million units, SIAM president Pawan Goenka told reporters in New Delhi. About 1.71 million units are likely to be sold this fiscal year, compared with 1.53 million a year earlier, the SIAM said today.

April-June Passenger Vehicles sales up 32% yoy

January-June passenger air traffic up 22% yoy

Passengers carried by the Indian domestic airlines from January to June 2010 were 257.10 lakhs as against 210.99 lakhs in the corresponding period last year, thereby registering a growth of 21.86%. The total domestic passengers carried by the Scheduled Airlines of India during April to June 2010 were 134.77 lakhs as against 118.53 lakhs in the first quarter of the year. The total domestic passengers carried by the Scheduled Airlines of India in June were 45.04 lakhs versus 47.85 lakhs in May. Airlines had carried 41.88 lakhs passengers in April. June observed comparatively lower seat factor primarily due to end of vacations and onset of monsoon, the Civil Aviation Ministry said in a statement.

Govt not mulling ban on BlackBerry: UK Bansal

The Indian Government is not considering a ban on Research In Motion's (RIM) Blackberry e-mail service, a top government official in-charge of internal security in the Union Home Ministry said in New Delhi. Canada-based RIM, the maker of BlackBerry smartphone handsets, has assured the Indian Government that it will address the nation’s security concerns, Utthan Kumar Bansal told reporters on the sidelines of a function. Bansal added that his department had raised national security concerns with RIM over the data services, but expected a solution to be found soon. "They (RIM) have assured us that they will be addressing it," Bansal said. His remarks follow a report carried by a business daily that the DoT has been asked to warn RIM that its BlackBerry services will be stopped if its e-mail and other data services do not comply with formats that can be monitored. Earlier this week, UAE government said that the BlackBerry smartphone services poses a security threat. RIM uses a high level of encryption on data transfers, which allows people to misuse the BlackBerry service, prompting some governments to raise the alarm over its implications on national security.

BlackBerry open to misuse: UAE

Bombay HC grants interim stay on realty service tax

In a major reprieve to home buyers and developers, the Bombay High Court granted an interim stay on writ petition challenging collection of service tax levied on buildings under construction until further hearing. The writ petition was moved by the Maharashtra Chamber of Housing Industry (MCHI), an umbrella organization of more than 500 developers. A division bench of the Bombay High Court, comprising Justice V C Daga and Justice S J Kathawala granted interim stay until further hearing. Next hearing in the matter along with other companion petitioners is posted for August 3.

Tata Motors hikes Nano prices by 3-4%

Tata Motors Ltd. announced that it has increased the price of the Nano by 3-4% for those customers who had continued to retain their bookings with the company. "Despite a steep increase in input prices, their Tata Nano's are being priced only 3-4% higher, depending on the model, than the price announced at launch," Tata Motors said in a statement. With its 250,000 unit per year Sanand plant becoming operational ahead of schedule, the company will speedily ramp up production of the Nano, Tata Motors said. Accordingly, the company has begun intimating retainee-customers that their cars are coming up for delivery. This is the final step, before the company opens up sales of the Nano, Tata Motors said.

Tata Steel to raise Rs16bn from promoters

Tata Steel plans to raise about Rs16bn in a preferential allotment of shares and warrants to the promoter, Tata Sons. The preferential allotment will take place at Rs 594 a share, a 17% premium to the current market price of Rs509. In a notice to the Bombay Stock Exchange (BSE), the company said that a special resolution had been passed to issue 150,00,000 shares and 120,00,000 warrants to Tata Sons. Warrants can be converted within 18 months of the allotment. Tata Sons has a 29.13% stake in Tata Steel. This would rise to 31.22% after the allotment of shares and conversion of warrants. Tata Steel plans to raise annual production capacity up to 50mn tons from the present 30mn tons in a bid to become a major global steel player. "In the coming years, Tata Steel expects to emerge as a global steel producer with a total annual output of between 40-50mn tons, with major manufacturing plants in India, several countries in Asia, the UK and Continental Europe...," Tata Steel Chairman Ratan Tata said in the company's annual report.

Tata Steel arm sells 27.03% stake in Southern Steel Berhad

SBI gets nod to acquire State Bank of Indore

The Union Cabinet approved the acquisition of State Bank of Indore by State Bank of India (SBI) and also accorded `in-principle’ approval to introduce a Bill in the Parliament for making consequential amendments in the State Bank of India (Subsidiary Banks) Act, 1959, to remove references of State Bank of Indore. Acquisition of State Bank of Indore by SBI would allow economies of scale in terms of footprint, manpower and other resources. Acquisition of State Bank of Indore will also help SBI in spreading its credit risk. Besides, keeping in view the growing economy, State Bank of Indore would require larger equity capital to support a growing balance sheet. In the event of its acquisition, the increased capital requirement can be taken care of by SBI.

Reliance Power achieves financial closure for Krishnapatnam UMPP

Reliance Power Ltd., part of the Anil Dhirubhai Ambani Group (ADAG), achieved financial closure for its Krishnapatnam ultra-mega power project (UMPP) in Andhra Pradesh. Reliance Power said that the estimated cost of the project is Rs175bn. IDBI Bank was the lead arranger of the Rs131.25bn debt with Power Finance Corp acting as joint lead arranger. A consortium of over 15 banks and financial institutions are participating in the financing arrangements. The 4,000 MW coal-fired project is being financed in 75:25 debt-equity ratio, Reliance Power said.

L&T wins bid for Hyderabad Metro project

Hyderabad Metro Rail Ltd. (HMRL) board will meet on Saturday to recommend awarding the Rs121.32bn Metro Rail project to Larsen & Toubro (L&T). The company emerged the lowest bidder, outbidding consortiums led by Reliance and Lanco Infratech. L&T will meet the financial closure in another six months and is expected to complete the project four years after that. The company had offered the lowest viability-gap funding of Rs14.58bn - roughly 12% of the project cost - against the Reliance-led consortium’s viability-gap funding of Rs29.91bn, which is 25% of the project cost. The state and central government will be providing up to 40% of the viability-gap funding (Rs48.5bn), while L&T will raise 30% of the project cost through equity and the rest through debt.

Low-cost car...Bajaj Auto, Renault-Nissan sign MoU

Bajaj Auto and Renault-Nissan formalised an agreement to roll out their much-awaited but much-delayed ultra low-cost car. The signing of the MoU follows discussions between both partners to define the product, manufacturing plan and distribution agreements," the Renault-Nissan Alliance said. The design, engineering, manufacturing and supply-base expertise to create this all-new product will be executed by Bajaj Auto, with the support of the Renault-Nissan Alliance. The marketing and distribution will be led by the Renault-Nissan Alliance, with the support of Bajaj." The companies have agreed to a structure worked out in November last year. "There has been no change to this structure originally agreed between both the partners," Renault-Nissan Alliance said. The Bajaj-Renault-Nissan ULC has already been delayed, and the companies have said that the car could be out by 2012, one year behind the original target.

Bajaj Auto says partnership with Renault-Nissan is intact

JSW Steel and JFE ink strategic agreement

JFE Steel Corp, following extensive deliberations with JSW Steel since signing a strategic collaboration agreement on November 19, 2009, announced that as the first concrete step of a new strategic alliance, they have signed agreements for JFE Steel to take an equity position in JSW Steel and to provide the Indian steelmaker with technical assistance. JFE Steel, through its partnership with JSW Steel, now expects to participate on a full scale in the emerging market of India. JFE Steel will acquire a stake in JSW Steel by subscribing to a preferential allotment at a cost of Rs48bn. The company plans to acquire 14.99% voting rights, so it will make additional investments if the forthcoming acquisition does not reach this figure due to reasons including but not limited to possible fluctuations in JSW Steel’s share price.

HCC announces Rs20bn Lavasa IPO, bonus

Hindustan Construction Company Ltd. (HCC) said that the Board of Directors of Lavasa Corporation Ltd. has approved the proposal to undertake, subject to market conditions, obtaining necessary shareholder and regulatory approvals, an initial public offering (IPO) of its Equity Shares for an amount up to Rs20bn. Lavasa Corp.'s Q1 net sales were at Rs1.81bn and net profit at Rs490mn during the quarter ended June 30. Separately, HCC's Board of Directors also approved the issue of Bonus Shares in the ratio of one equity share of Re. 1 each for every existing one equity share of Re1 each held by the Shareholders.

US court rules in favour of Sun Pharma

Sun Pharmaceutical Industries Ltd. announced that the United States District Court for the Southern District of New York has dismissed in its entirety the complaint filed by Taro Pharmaceutical Industries Ltd. (Taro), seeking to block the Tender Offer by Sun’s subsidiary, Alkaloida Chemical Company Exclusive Group Ltd. (Alkaloida), to purchase all outstanding Ordinary Shares of Taro. The Court rejected Taro’s claims based on allegations that Sun and Alkaloida had failed to make adequate disclosures concerning the Offer. The Court also rejected Taro’s request for discovery, remarking that Taro had not explained any purpose that discovery would serve. The Court also dismissed Taro’s other claims, including breach of contract and misappropriation of trade secrets, for lack of subject matter jurisdiction. The Court gave Taro two weeks to file an amended complaint to attempt to fix the defects in its complaint. However, even if Taro revives its state law claims, they will not entitle Taro to obtain the injunction it was seeking to enjoin consummation of Alkaloida’s Offer.

Fortis to sell Parkway stake to Khazanah

Fortis Healthcare Ltd. decided to exit Parkway Holdings Ltd. after Khazanah Nasional Berhad came out with a general offer for the whole of the Singapore-based hospital operator. The Malaysian sovereign wealth fund announced a general offer to buy all outstanding shares of Parkway at S$3.95 per share in response to the S$3.80 offered by Fortis. The Indian company had offered S$3.80 a share this month for Parkway, Asia’s biggest hospital operator, after Khazanah made a S$3.78-a-share bid on May 27 to more than double its stake to 51.5%. Khazanah’s partial offer was due to expire on July 26. The price of S$3.95 would be the highest for its shares since October 2007. Fortis controlled Parkway with four of its 12 directors, including chairman Malvinder Singh. Khazanah had just under 24% and two seats on the Parkway board.

SRL to acquire Piramal Diagnostic

Super Religare Laboratories Ltd. (SRL) signed a definitive agreement to acquire Piramal Diagnostic Services Pvt Ltd (PDSL), a subsidiary of Piramal Healthcare Ltd. PDSL provides pathology and radiology diagnostic services through a network of 107 laboratories with FY10 revenues of over Rs2bn. As a result, SRL will have the largest network of pathology and radiology centres and will become the undisputed leader in the diagnostic services industry in the country. This deal is valued at Rs6bn. Piramal will receive Rs3bn on closing and the balance amount over a period of three years. Piramal will continue to be involved in the business, including by way of representation on the Board of Directors and the Executive Committee of SRL. Complementing the strengths of both SRL and PDSL, the combined entity will have nearly 170 laboratories and 1500 collection centers and will serve more than 12 million customers annually.

Tulip Telecom to buy 13% in Qualcomm's India arm

Tulip Telecom Ltd. (Tulip), one of India’s largest Enterprise Data Service providers, today announced a strategic partnership with Qualcomm Inc. for a Broadband Wireless Access (BWA) venture. Subject to Government approvals, Qualcomm will have a 74% stake in the venture, while Global Holding Corporation (GHC) and Tulip will hold 13% each, in compliance with applicable Indian Foreign Direct Investment regulations. Tulip’s investment in this venture for the 13% stake will be approximately Rs. 1,400 million.

In the recently concluded BWA auction, Qualcomm had won a slot of 20 MHz TDD spectrum in key telecom circles of Delhi, Mumbai, Haryana and Kerala. Qualcomm’s objective is to facilitate the deployment of LTE which is best suited to address the demand for high bandwidth mobile broadband services in the 2.3 GHz band, and seamlessly interworks with current and upcoming 3G HSPA and EV-DO networks.

ABB successfully increases stake in Indian arm to 75%

Network18 realigns businesses into 2 entities

The Board of Network18 group approved a re-organization plan to create a simplified two listed entity structure for the group. The New TV18 entity consolidates all TV businesses of the group and owns CNBC-TV18, CNN-IBN, IBN7, CNBC-Awaaz and the group’s 50% stake in Colors, MTV, Nick, VH1 and IBN Lokmat. The New Network18 will hold a controlling interest in New TV18 and will be the operating company for the group’s digital, publishing, sports and event management businesses. New Network18 will also hold all group investments in HomeShop18, Newswire18, DEN, Yatra.com and Capital18. The new structure will offer shareholders the choice of investing in either the entire Network18 Group or only in the broadcast TV business. It will also create opportunities for harnessing greater operational synergies. The proposed restructuring will be effective from April 1, 2010. The Yellow Pages and Magazine publishing businesses of Infomedia18 will be merged into Network18 while the printing press operations will continue to remain in the company.

Viacom18 makes voluntary offer for Indian Film Co

Aban Offshore gets insurance money on lost rig

Shares of Aban Offshore Ltd. jumped after the company said that the reinsurers have agreed to settle the claim with regard to the sinking of the semi-submersible rig Aban Pearl. The reinsurers have agreed to settle the claim at the assessed insurable value of US$235mn, Aban Offshore said in a statement. Approximately 97% of the insurance claim amount has been received and the balance amount is likely to be received shortly, it added. The company had lost its gas exploration rig, Aban Pearl, to the Carribean sea on May 13. Aban Offshore's shares fell the most in almost 18 years on May 14. The company's natural gas platform was leased by a unit of Brazil's state-owned Petroleos de Venezuela SA. The Aban Pearl rig was built in 1977 and last changed hands in 2007 for around US$211mn. The semi-submersible rig was drilling some of the 16 gas wells in the Mariscal Sucre natural gas project.

Engineers India FPO subscribed over 13 times

The Engineers India Ltd. FPO was subscribed 13.35 times, according to NSE data at 7:00 PM on Friday. The company received bids for 449.68mn shares as against 33.69mn shares on offer. The QIB segment was subscribed by more than 23 times and for them the issue closed on Thursday itself. Friday was the last day for Retail and Non-institutional Investors. The price band for the Engineers India FPO was fixed at Rs270-290 per share. The stock ended at Rs323. Engineers India FPO includes a 10% stake sale by the Government. Retail investors will get a 5% discount on the issue price, which will be discovered through the 100% book building process. The Government holds 90.4% stake in EIL, which provides design and engineering services for petroleum, power and fertiliser companies. Post FPO, the Centre's stake in EIL will fall to 80.4%. ICICI Securities, HSBC Securities, IDFC Capital and SBI Capital are the book-running lead manager for the FPO.

SKS Microfinance IPO subscribed by more than 10 times

Hindustan Media Ventures IPO subscribed 5.23 times

Hindustan Media Ventures Ltd. (HMVL) IPO received strong response on the last day of subscription. The issue was subscribed 5.43 times as per the NSE web site. The company, a de-merged Hindi business arm of HT Media, received bids for more than 75mn shares as against the issue size of 13.82mn shares. The QIB portion was subscribed by nearly 9 times while the HNI section was subscribed 3.3 times and Retail 1 time. HMVL entered the capital market on July 5, with a public issue of equity shares of Rs10 each aggregating up to Rs2.7bn. The Price Band was fixed between Rs162 and Rs175 per share. A subsidiary of newspaper publisher Hindustan Media has allocated 2.8 million shares to anchor investors, which includes Reliance Capital, Canara Rebeco Mutual Fund and Birla Sun Life, at Rs 166 a share to raise Rs 461mn. HT Media holds 98.85% stake in HMVL. The objects of the issue are to raise funds for setting up new publishing units; upgrading existing plant and machinery; prepayment of loans, and for general corporate purposes. The book running lead managers to the issue are Edelweiss Capital and Kotak Mahindra Capital.

Technofab Engineering shares jump on debut

Shares of Technofab Engineering Ltd. (TEL) jumped in their debut on bourses after its initial public offering (IPO) received a good response from all category of investors. The stock ended the day at Rs295.65 on the BSE compared to the issue price of Rs240 a share. It had earlier been as high as Rs307 after opening at Rs265. On the NSE, it shut shop at Rs296 after touching a high of Rs307.80.

TEL specialises in engineering, procurement and construction (EPC) services. It had fixed a price band of Rs230-240 for its IPO, which raised close to Rs720mn. The issue was subscribed 12.78 times. A major participation was seen from the Non-institutional Investors, or HNIs. Their reserved portion got subscribed by a whopping 48.85 times. The QIB and Retail portions saw subscription to the tune of 4.28 times and 10.03 times, respectively. Employee's reserved portion was fully subscribed.

Aster Silicates slumps after strong debut

Shares of Aster Silicates Ltd. doubled on debut before tumbling by 20% on the last trading day of the week. The stock closed the week at Rs196.30. It had been as high as Rs258 during the week and as low as Rs123. The issue price was fixed at the higher end of the price band of Rs112-118 a share. The IPO of sodium silicate maker was open between June 24 and June 28. The issue was subscribed 4.47 times. Sodium silicate includes food grade sodium silicate, special drilling grade silicate and detergent grade silicate. Aster produces sodium silicate both in glass and liquid form. Food grade sodium silicate is used in the manufacturing of Silica precipitate and Gel, which finds its applications in toothpaste, salt, cosmetics, glucose powder, tyre, rubber and pesticides etc. Sodium silicate, (special drilling grade silicate) is also used in off-shore drilling and for reactivation of old oil and gas fields. Aster intends to use issue proceeds for expansion of manufacturing facilities and additional working capital requirements.

Prakash Steelage IPO opens on 5 August

Emami Infra shares crash amid wild gyrations

Nissan India launches ‘Micra’

Nissan Motor India Pvt Ltd (NMIPL) announced its product offensive in India with the commercial launch of its first ‘Made-in-India’ compact hatchback – the new Nissan ‘Micra’. The Nationwide sales for the all-new Nissan Micra, which is been built on Nissan’s versatile ‘V’ platform would commence from July 15. Nissan Micra will be available in three standard variants of XE (Entry), XL (Mid) and XV (Top).Available in two interior colour schemes: black and griege (only XV), the Nissan Micra will be introduced in a range of six colours - Sunlight Orange, Brick Red, Pacific Blue, Storm White, Blade Silver and Onyx Black. The Nissan Micra is priced competitively in its segment providing a complete package of features, performance, drivability and comfort. The ex-showroom Delhi prices for Nissan Micra are Rs3,98,000 for XE (entry), Rs4,69,500 for XL (mid) and Rs528,800 for XV (top) variants respectively. Additionally, in a competitive move, Nissan has adopted a uniform pricing policy across the country.

Noel Tata steps down as Trent MD

N. N. Tata, on stepping down as the Managing Director of Trent, has been appointed as the Managing Director of Tata International Ltd. Tata will continue his association with Trent as its non executive Vice Chairman. N. N. Tata has overseen the profitable growth of Trent from a single store company in 1998 to over 90 stores across its retail formats - Westside, Star Bazaar, Landmark, Fashion Yatra, Sisley and Zara. During this period, Trent has entered into a strategic franchise and sourcing agreement with the well-known international retailer Tesco of UK for the Star Bazaar business. Under N. N. Tata’s leadership, the consolidated turnover of Trent has increased from Rs80mn in FY99 to Rs11.37bn in FY10.

International Price

IMF lifts global growth projection to 4.6%

The International Monetary Fund (IMF) raised its forecast for global economic growth this year, reflecting a stronger-than-expected first half, while warning that over the next 18 months the momentum is widely expected to fall below the pace of the first half of 2010. Releasing its latest update to the World Economic Outlook in Hong Kong, the IMF predicted that the world economy will expand by 4.6% in 2010, the biggest gain since 2007, compared with an April projection of 4.2%. But, expansion will decline to 4.3% next year, unchanged from the April forecast, the Washington-based fund said.

Canada and the US are leading advanced economies out of the worst recession since World War II, trailed by euro-area countries that need additional measures to boost confidence in their banks, the fund said. Faster expansions in Brazil, China and India are helping to protect the global recovery as a sovereign-debt crisis weighs on Europe, it added.

China overtakes Japan as world's No. 2 economy

China has overtaken Japan to become the world's second-largest economy after the United States, the country's chief currency regulator said. The economy expanded 11.1% in the first half of 2010, compared with a year earlier, and is likely to log growth of more than 9% for the whole year, according to Yi Gang, head of the State Administration of Foreign Exchange. "China, in fact, is now already the world's second-largest economy," he was quoted as saying. Yi said China's growth rate, which has averaged more than 9.5% a year over the past 30 years, was bound to slow over time. If China could chalk up growth this decade of 7-8% annually, that would still be a strong performance. The issue was whether fast growth can be sustained, he said. If China expands by 5-6% a year in the 2020s, it will have maintained rapid growth for 50 years.

EU bank regulator to stress-test 91 banks

Europe's banking supervisor said that 91 banks will take part in the financial sector stress tests that will check their resilience to further market and credit risks. The Committee of European Banking Supervisors also laid out the key features included in the tests. "The exercise is being conducted on a bank-by-bank basis using commonly agreed macro-economic scenarios," the CEBS said. The scenarios would show a different impact on the various European Union member states, said CEBS. It also envisages adverse conditions in financial markets and a shock on interest rates to capture an increase in risk premium in bond markets, said London-based CEBS. The adverse scenario assumes a 3% decline in GDP from European Commission forecasts for 2010 and 2011, and tests for resilience to sovereign risk at a level beyond the market conditions experienced in early May 2010. The EU expects its economy to expand 1% this year and 1.75% in 2011. The scope of the tests was also extended to include shocks from sovereign debt defaults.

Euro rises above US$1.29 on strong data

The euro crossed US$1.29 after a private survey showed improvement in business activities in Germany and France in July. The preliminary estimate of Germany's composite PMI rose to 59.3 from 56.7 in June, according to Markit Economics. The French PMI rose to 59.9 in July from June's 59.6.

Meanwhile, a key measure of private-sector activity in the manufacturing as well as service industries of the 16-nation euro zone showed an unexpected rise in July. The Markit euro-zone composite purchasing managers index (PMI) rose to 56.7, its highest level in three months, from a reading of 56.0 in June. Economists had forecast a fall to 55.2.

A reading of more than 50 signals expansion, while a figure of less than 50 signals a contraction. The euro-zone manufacturing PMI rose to 56.5 in July from 55.6 in June, while the services PMI rose to 56.0 from 55.5 in June.

Moody's downgrades Portugal's bond rating

Moody's Investor Service downgraded Portugal's bond ratings two notches to A1 from Aa2, but said that the ratings outlook is stable. The Portugal government's financial strength will continue to weaken over the medium term, as evidenced by ongoing deterioration in the country's debt metrics, said Anthony Thomas, senior analyst in Moody's Sovereign Risk Group. Economic growth prospects are likely to remain relatively weak unless recent structural reforms bear fruit over the medium to longer term, he added. Portugal's government is likely to remain relatively highly indebted for the foreseeable future, Thomas said. Moody's noted that a more severe deterioration in the country's debt metrics in the event of higher interest rates or weaker economic growth cannot be completely ruled out. Moody's had placed Portugal's bond ratings on review for possible downgrade on May 5.

S&P affirms Britain's AAA sovereign rating

Moody's says it may downgrade Hungary's rating

Moody’s Investors Service said that it has placed Hungary’s credit rating on review for a possible downgrade after the government was unable to reach agreement with the IMF and EU on fiscal targets. Moody’s placed Hungary’s Baa1 local and foreign currency government bond ratings on review for possible downgrade. Separately, S&P said that it revised its outlook on Hungary to negative from stable, while affirming its BBB-/A-3 rating, which is already lower than Moody's.

"Moody’s decision to initiate this review was prompted by the increased uncertainty regarding Hungary’s fiscal outlook and economic prospects," the credit rating agency said. "This uncertainty is the result of the recent breakdown of Hungary’s talks with the IMF and EU."

Basel Committee relaxes new bank rules

The Basel Committee on Banking Supervision softened some provisions in Basel III, a set of rules being drawn up to govern banks’ capital requirements and liquidity standards. The modifications water down earlier definitions of capital and include a long phase-in period to comply with new requirements about leverage and liquidity ratios. The final package of reforms is expected to be presented to the G20 leaders’ meeting in Seoul in November. The Basel Committee, operating from the headquarters of the Bank for International Settlements (BIS) in Basel, Switzerland, agreed on a complex set of compromises to adjust a number of measures. The goal is to put in place stricter global banking regulations known as Basel III to ensure capital adequacy and liquidity in the world's banking system. A list with all the exact changes is available on the BIS website.

BP manages to stop oil flow in the Gulf

The UK oil major stopped the leak from the blown well in the Gulf of Mexico for the first time since April. In a brief remark, US President Barack Obama said that the BP developments marked a positive sign. On April 20, one of BP's rigs exploded and set off the worst oil disaster in US history. The Deepwater Horizon rig explosion killed 11 workers. BP received US government's approval to pressure-test the latest containment system on its blown Gulf of Mexico oil well. Seismic tests also will be conducted to detect any possible ruptures on the sea floor.

BP to sell oil assets to Apache for US$7bn

Apache Corp. agreed to buy BP's oil and natural-gas fields across North America and Egypt for US$7bn. Apache will scoop up BP properties in Alberta and British Columbia as well as the Permian Basin of West Texas and New Mexico, and Egypt's Western Desert. But, the Prudhoe Bay, Alaska, operations were not part of the deal. Apache will add estimated proved reserves of 385 million barrels of oil equivalent to its portfolio. BP aims to raise US$10bn this year for its cleanup effort in the Gulf of Mexico. The beleaguered British oil major had said it will raise cash to set up a US$20bn fund for the worst spill in US history.

BP CEO Hayward resigns...Co logs US$17bn loss

BP announced that its unpopular CEO Tony Hayward would step down on October 1. Robert Dudley, its American executive director, will replace him. BP reported a loss of US$17 billion in the second quarter, after a pre-tax charge of $32 billion to cover the costs of cleaning up the oil spill, compensating its victims and paying fines. The embattled company intends to sell up to $30 billion of assets to settle its bills. In his first interview after agreeing to step down from the top spot this week, Hayward was quoted as saying that he did everything possible once the Deepwater Horizon rig exploded and sank in the Gulf of Mexico to stop the spewing oil and clean up the shoreline. Hayward made clear he wanted to stay, but decided it would hurt BP as its works to permanently cap the well, and repair the Gulf coastline and the company's public image.

EDF sells UK power business to Li Ka-shing's CKI

EDF sold its UK electricity networks business to Cheung Kong Infrastructure of Hong Kong for US$9bn, 45% more than the price originally suggested for the deal. CKI, controlled by Hong Kong billionaire Li Ka-shing, outbid a consortium of Australia's Macquarie, the Abu Dhabi Investment Authority, and Canada Pension Plan. CKI holds a 39% stake in Hongkong Electric, and the two companies will be teaming up to run EDF Networks, as they have done for other energy assets in the UK, including Northern Gas Networks. CKI was advised by RBS, EDF by Deutsche Bank, Barclays Capital and BNP. CKI has acquired low-voltage electricity distribution networks in the east and south of England, and long-term contracts with businesses such as the London Underground, Heathrow and Gatwick airports, and the Channel tunnel. Vincent de Rivaz, EDF’s CEO in the UK, had previously opposed the sale plan, which was proposed under the previous EDF group CEO Pierre Gadonneix.

GrainCorp to buy AWB for US$769mn

Charles River and WuXi mutually terminate acquisition agreement

Panasonic to buy Sanyo Electric, other unit for US$9.4 bn

Airbus beats Boeing at Farnborough air show

Sales at the biennial Farnborough trade fair in the UK could not quite match the record levels of 2008, when almost 70 billion euros changed hands, but they were still a massive improvement on 2009's post-financial crisis air show at Le Bourget, near Paris, when sales totaled a meager 5.4 billion euros. Airbus did a roaring trade at the Farnborough International Airshow. The Franco-German company Airbus was positively bullish after selling 130 planes and securing pledges for the future purchase of a further 122. Boeing flew in its new 787 Dreamliner for its debut appearance outside the US. The 787 is Boeing's answer to the Airbus A380 superjumbo. Boeing reported 103 new orders worth roughly 8 billion euros at the trade fair.

Boeing Dreamliner makes first UK landing

Google gets its licence back in China

Looks like Google and China have buried their differences over the controversial issue of censoring Internet search results. Google said on Friday that the Chinese government has renewed it's licence after the company submitted a revised application to meet regulations in the world’s biggest Internet market by users. "We are very pleased that the government has renewed our ICP license and we look forward to continuing to provide web search and local products to our users in China," Google said in a statement.

Goldman Sachs to settle SEC suit for US$550mn

Goldman Sachs said that it has agreed to pay US$550mn to settle a civil fraud suit launched by the SEC, accusing it of defrauding investors in a sale of securities tied to sub-prime mortgages. The SEC called the penalty the largest ever by a Wall Street firm and Goldman acknowledged using incomplete information in its marketing materials and said that it would reform its business practices.

Muted debut for AgBank in Shanghai

Shares of Agricultural Bank of China Ltd. (AgBank) opened 2.2% higher at 2.74 yuan (40.5 US cents) in their trading debut on the Shanghai Stock Exchange. But, the AgBank shares eased to 2.69 versus the initial public offering (IPO) price of 2.68 yuan. On the other hand, AgBank shares rose in its debut on the Hong Kong stock exchange. AgBank's H-shares opened at 3.25 Hong Kong dollars (42 US cents) and quickly rose to HK$3.29, for a 2.8% gain over its HK$3.20 IPO price. They closed the day at HK$3.27. That gave AgBank a market capitalization of US$128.6bn. One of China's leading banks has so far raised US$19.2bn from its IPO, according to reports. If an over-allotment option is exercised, it could raise around US$22bn, making it the world's largest IPO. Agricultural Bank’s Xiang said today he’s "very satisfied" with the share price in Hong Kong.

KKR shares fall on New York debut

Playboy founder proposes to take company private

August 2010

Domestic News

Inflation falls below 10%...hits six-month low

India's wholesale price based inflation fell to a six-month low in July, slipping below the double-digit mark, the Government. This might give some flexibility to the Reserve Bank of India (RBI) in formulating monetary policy, especially if inflation moderates further next month. Inflation, as measured by the wholesale price index (WPI), stood at 9.97% last month as against expectations of a 10.4% rise. It was also down from June's number of 10.55%. The annual rate of inflation stood at (-)0.54% during the corresponding month of the previous year.

Mumbai Port resumes limited operations

Partial operations resumed at Jawaharlal Nehru Port Trust (JNPT) and Mumbai Port Trust, where movement of ships was suspended following a collision between two cargo vessels. About 60 of the 300 cargo-boxes spilled by Mediterranean Shipping Co.’s MSC Chitra have been removed, S.N. Maharana, operations head at Jawaharlal Nehru Port Trust, was quoted as saying. The Government aims to have all of the containers cleared by Saturday, paving the way for the resumption of normal operations at Jawaharlal Nehru and the neighboring Mumbai Port, which together handle about 40% of India’s exports. A three-day shutdown of the ports following the Chitra collision stranded about US$4bn of overseas shipments, according to the Federation of Indian Export Organisations. Traffic in the Mumbai channel had come to a halt when two merchant vessels MSC Chitra and MV Khailijia III had collided off the Mumbai coast on August 7. The Chitra had 1,219 containers on board, of which 31 held hazardous chemicals and pesticides, when it collided with another ship on Aug. 7, according to the Government.

Jairam Ramesh's statement on Mumbai oil spill

June exports up 30.4% yoy

Growth in India's exports slowed marginally in June but expansion in imports moderated even more sharply, raising some concerns over the pace of India's trade amid lingering doubts about the global economic recovery. India's merchandise exports grew by 30.4% to US$17.75bn while imports rose by 23% to US$28.3bn, data released by the Government showed. This translates into a trade gap of US$10.55bn as against US$9.41bn in the same month last year. Trade deficit in May stood at US$11.29bn. Exports had grown by 35.1% in May while imports had risen by 38.5%. Oil imports in June were up 26.6% at US$8.35bn while non-oil imports rose by 21.5% to US$19.95bn.

Govt extends export sops as global recovery slows

Commerce Minister Anand Sharma decided to extend sops for the labour intensive export sectors, citing a fragile recovery in the global economy, but sounded confident of achieving the annual export target. India’s plan to offer incentives to exporters will cost the Government Rs10.5bn, Sharma said while presenting the annual supplement to the Trade Policy at a press conference in New Delhi. The Commerce Minister said that the Government intends to extend the DEPB scheme for exporters for six months (or till June 30, 2011) and the zero duty EPCG scheme by a year or till March 31, 2011. He also announced the extension of SHI (Status Holders Incentive) scheme for one more year till March 31, 2011.

LS clears Govt's additional spending demand

The Lok Sabha passed supplementary demands for grants for FY11. The house adopted the demands through voice vote after discussion. Finance Minister Pranab Mukherjee sought parliamentary approval for spending an additional Rs545.89bn in FY11 to meet the requirements arising from compensating oil marketing companies for under-recoveries, increasing the country’s quota in the IMF, and buying out the RBI's stake in NABARD.

The first supplementary demands for grants tabled in Parliament, also seeks extra outlay for the Commonwealth Games, anti-Naxal operations and special assistance to the trouble-torn Jammu & Kashmir. It claims that the additional outlay will not hit fiscal deficit projections, as the Government kitty had swelled by over Rs 1 lakh crore from the sale of telecom spectrum, three-times more than the budget estimate of Rs350bn.

After the partial rollback of stimulus measures, the Government has projected that fiscal deficit will decline to 5.5% of GDP in FY11 from over 6.5% last fiscal. The Government requires additional outlay of Rs140b for compensating the oil marketing companies towards their under-recoveries on account of subsidised sale. The additional expenditure on this count will be through cash outgo, it said. The budget had a provision of Rs31.79bn for this.

Govt exempts PSUs from 25% public float rule

The Finance Ministry exempted public sector companies from the recent rule that requires listed companies to achieve at least 25% public holding within three years. Public sector firms will now have to maintain a minimum public float of only 10%, the finance ministry said in a notification. The modified rules also gave a breather to the private sector companies. They will have to comply with the minimum 25% public float within three years but they will now have flexibility in how the limit is reached, without the annual 5% increase mandated in the current rules.

Listed state-owned companies that have less than 10% public stake will have to reach that threshold over a period of three years, but those listing through a public offer will comply with the 10% norms at the time of listing in one go. The Finance Ministry had amended the rules to the Securities Contracts (Regulation) Act on June 4, asking companies to lower their promoter holdings in order to increase opportunities for common investors and also increase free float to discourage manipulation. But many public sector firms as well as the department of disinvestment had sought a review of the norms citing valuation concerns.

Parliament panel for trebling nuke accident compensation

A Parliamentary Committee looking into the Nuclear Liability Bill has trebled the accident compensation burden of the nuclear plant operator besides extending the liability cover to private suppliers as well. It suggested that the bill should fix the liability cap on the state-run operator at Rs15bn (~US$320mn) as against Rs5bn (US$110mn) proposed in the original draft law. There was no compensation burden on private suppliers and contractors in the original draft. The panel recommended inclusion of a clause in the proposed legislation to make suppliers accountable for any mishap involving an atomic plant. The other amendments proposed in the Civil Liability for Nuclear Damage Bill, 2010 include extension of the period of claim in the event of nuclear accident from 10 years to 20 years, creation of a Nuclear Liability Fund and restricting its application to atomic plants operated by only state-run companies.

RBI pulls up deputy governor for media remarks

The RBI snatched key portfolios from deputy governor K.C. Chakrabarty after the former PNB chairman reportedly told a few media persons that the central bank should be more aggressive in tackling inflation. Chakrabarty's ill-timed comments led to the 10-year bond sliding by close to 35 paisa last Thursday. The comments came a couple of days after the RBI raised the repo rate by 25 bps and the reverse repo rate by 50 bps. According to reports, Chakrabarty had said the monetary policy action was inadequate. Chakrabarty has been divested of the most important portfolios he handled such as Human Resources Development, department of administrative and personnel management, besides urban banks department and rural planning and credit department. These will now be managed by another deputy governor, Subir Gokarn, whose primary responsibility so far was monetary policy and economic analysis and research.

RBI announces shake up in portfolios

TRAI wants full cable digitisation by Dec. 2013

Shares of Hathway Cable, Den Networks and WWIL jumped after telecom cum broadcasting regulator TRAI said that all cable operators in the country should switch to digital cable television systems by December 2013. Shares of DTH operators Dish TV and Sun TV also gained amid optimism that the TRAI ruling may prompt many consumers to opt for DTH services.

TRAI said that all-India digitisation of cable television should be implemented in four phases. Cable operators in the four metro cities Delhi, Mumbai, Kolkata and Chennai should switch to digital cable systems as early as March, 2011. In the second phase, all cities with population of over one million should turn digital by December 2011. This should be followed by digitisation of cable television systems in all the urban areas by December 2012.

TRAI said that all cable operators in the country should switch from analogue to digital systems by December 2013. The regulator said that digital cable television systems will enable television viewers to receive high quality television signals of their choice and have the option to subscribe to channels on A-La-Carte basis. In addition, it will ensure access to many more channels in comparison with analogue cable.

Govt to set up commission to check illegal mining: reports

The Government has cleared a proposal for setting up a commission to check illegal mining and it has been asked to submit its report within 18 months. The decision follows several meetings between the Prime Minister’s Office (PMO) and senior Mines Ministry officials to check the menace of illegal mining. The issue has come into the spotlight recently after Karunakar Reddy and Janardhan Reddy, Ministers in the Karnataka Government, were found to be involved in illegal mining. The commission will focus on illegal mining in Karnataka and other mineral producing states like Orissa, Jharkhand, Chhattisgarh and Goa. The Central Government is also preparing a new Mines Act, which has a separate section that seeks to put an end to illegal mining.

Tribals to get 26% share from mining profits: Govt

India’s gold demand soars 94% in H1 2010

The total gold jewellery demand in India remained robust in H1 2010. The volume of growth increased 67% to 272.5 tonnes as compared to 163 tonnes in H1 2009. In Indian Rupee value terms, demand increased to Rs457bn an increase of 94%. The volume of gold in investments was very strong and grew by 264% to 92.5 tonnes in H1 2010 as compared to 25.4 tonnes in the corresponding period. In terms of value, investments accounted for Rs148bn in H1 2010 compared to Rs37bn in H1 2009 an increase of 300%.

Coal India files DRHP with SEBI for IPO

Coal India Ltd. filed draft papers for a proposed Rs 130bn Initial Public Offer (IPO) with the Securities and Exchange Board of India (SEBI). Union Cabinet had approved Coal India’s IPO last month, to divest 10% of the Government’s stake in the Navratna PSU. The issue is likely to be launched on October 18 and to close on October 21, said reports. Coal India produced 431.5 million tons of coal in the last fiscal. The country's coal output stood at 531.5 million tons in FY10.

CIL to explore 22.4bn tonnes Coal Resources

SCI board gives green light to FPO

The Board of Directors of The Shipping Corporation of India Ltd, subject to approval from the Government of India, the Board has approved the proposal to start a process of appointment of Merchant Bankers and other key intermediaries w.r.t proposed follow-on-offer by SCI and offer for sale by the Government of India.

SCI seeks bids from FPO advisors by Aug 24

Tata Sons forms panel to look for new chief

The salt-to-software Tata group has kicked off the process of finding a suitable successor to its septuagenarian Chairman Ratan Tata. The US$70bn conglomerate said that a five-member panel would select its next Chairman. The group said it expects to complete the final selection in adequate time to effect a smooth transition. Two of the five members represent two trusts that are the major shareholders of Tata Sons while two are directors of Tata Sons, according to reports. The panel also includes one external member. Reports suggest that Tata is open to hiring an expatriate candidate for the top job given that about two-thirds of the group's revenues today come from the overseas business. Ratan Tata is slated to step down in December 2012. He has spearheaded the Tata group since 1991. Ratan Tata will play only an advisory role and will not be part of the selection panel.

R Gopalakrishnan not seeking re-election on retirement: Tata Motors

Boeing India head sees 2030 market at US$135bn

The Indian aviation sector will require 1,150 commercial jets worth about US$135bn over the next 20 years, Boeing India head Dinesh Keskar said. In July 2009, the US aircraft maker had forecast demand for 1,000 planes valued at about US$100bn over two decades. Boeing's European rival Airbus had said in March that India would need 1,030 new planes worth US$138bn over 20 years. This market represents more than 4% of Boeing commercial airplanes' worldwide forecast, he said in New Delhi.

The Indian aviation sector will show strength and resilience over the long term, Keskar said. "The potential for future growth of air travel, both domestically and internationally, is among the greatest in the world," he said. Air travel in India is expected to revive by 2011, Keskar said.

IT stocks slip as US hikes visa fees

Shares of leading Indian IT companies slid after the US Senate passed a Border Security Bill that will raise the visa fees of Indian software companies operating in the US by more than US$200mn. IT stocks were also down because of mounting concerns over the health of the US economy. Indian IT companies get a major chunk of their revenue from the US economy. In addition, derogatory remarks by a US senator on Indian IT companies like Infosys has revived the specter of protectionism as unemployment still remains pretty high in America. The Border Security Bill, which was passed by the US senate last Thursday, will have a significant impact on the Indian IT vendors as it aims to raise about US$600mn by increasing fee for H-1B and L-1 visas. As per the bill, companies with less than 50% of local force have to pay an additional US$2,000 on H1B and L1 visas. Currently, H1B visas costs range between US$3,000-5,000, depending on the attorney and premium processing fees taken. NASSCOM says the Bill unfairly reduced competitiveness of Indian firms.

Anand Sharma takes up H1B-L1 visa issue with USTR

Jobs not fleeing to China, India : Obama

Ramalinga Raju gets bail from Andhra Pradesh HC

Ramalinga Raju has been granted bail by the Andhra Pradesh high court on health grounds. Ramalinga Raju, the founder of Satyam Computer’s was arrested on January 7 2009 and is currently undergoing treatment in a city hospital, was granted bail on the condition that he stays in Hyderabad and on provision of two sureties of Rs 20 lakh each. Justice Raja Elango granted the bail to the former chairman of Satyam Computer, CBI said he could influence witnesses numbering 250 if let out. Along with Ramalinga Raju, the other 10 accused in the Rs140bn Satyam accounting fraud case have been granted bail by various courts.

Mahindra Satyam wins SC order for Upaid Settlement case

BlackBerry solution must past litmus test: Govt

The Government hardened its stance on the BlackBerry issue on Friday, saying that any solution by Research In Motion (RIM) must pass through field trials as it is concerned about the security of the nation. The Government insisted that it would block some BlackBerry services next week if Canadian smartphone maker RIM fails to address its security concerns. At the same time, Minister of State for Communications Sachin Pilot said the Government was hopeful of resolving the matter soon. "Talks are scheduled for the next few days and I am hopeful we will come up with some solution," added Pilot. RIM officials began talks on access to encrypted data with the Home Ministry and Telecom Ministry on Thursday. The Government has set Aug. 31 as deadline for the country's telecom operators to give access to decoded data sent via BlackBerry devices to law enforcement and security agencies. A shutdown would affect about 1 million BlackBerry users in India out of a total 41 million BlackBerry users worldwide, allowing them to use the devices only for calls and Internet browsing.

RIM gets till Aug. 31 to resolve BlackBerry issue

The Government gave Research In Motion (RIM) until August 31 to comply with a request to provide access to encrypted corporate email and messaging services or those services will be shut. If a technical solution is not provided by then, the Government will review the position and take steps to block these two services from the network. The ultimatum came hours after Union Home Secretary GK Pillai concluded a high-level meeting with senior intelligence officials and public sector telecom operators on exploring ways to gain access to encrypted BlackBerry communication content. But, reports quoting a senior security official said that the maker of BlackBerry smartphones had assured the Indian government of giving access to its messenger service and is working to address the Government's security worries.

RIM to share some BlackBerry codes with Saudi: report

RIM gets another breather from Saudi Arabia

Barking up the BlackBerry Tree

Vedanta may buy 51% stake in Cairn India: report

Vedanta Resources Plc is in talks with Cairn Energy Plc, to buy a stake in Cairn India, both companies confirmed without being specific. Cairn Energy has a 62.4% stake in its Indian unit. The deal is reportedly valued at US$8-8.5bn and may be announced on August 16. "If the deal goes through, Cairn India will be valued at US$16-17bn as compared to US$13.9bn of current market capitalization and enterprise value of US$14.5bn," says a note by IIFL. Before the deal goes through, Cairn Energy would have to take approvals from the Government of India and Petronas, which owns 15% stake in Cairn India.

S&P places Vedanta on CreditWatch Negative

Standard & Poor's Ratings Services said that it had placed its 'BB' long-term corporate credit rating on London-based metals and mining company Vedanta Resources PLC and the rating on all of the company's issues on CreditWatch with negative implications. The CreditWatch action follows Vedanta's announcement that it will acquire a controlling stake in India-based oil and gas company Cairn India Ltd. (not rated). The CreditWatch placement reflects our view that the proposed acquisition could significantly increase Vedanta's debt and weaken its financial risk profile to levels below our expectation for the current rating.

Govt shows red light to Vedanta's Niyamgiri project

Shares of Sterlite Industries and Vedanta Resources slid after the Union Ministry of Environment & Forest (MoEF) rejected environment clearance by the metals company to mine bauxite in Niyamgiri hills of Orissa. The MoEF rejected Vedanta Aluminium's application for a Stage II forest license for its mining project. The MoEF also said that it was studying violation of forest laws in Niyamgiri by Vedanta Aluminium and was examining a possible penal action against the company. The MoEF also decided to issue a Show Cause Notice to Vedanta Aluminium for its alumina refinery. Environment Minister Jairam Ramesh told reporters in New Delhi today that there has been a very serious violation of Environment Protection Act, Forest Conservation Act and the Forest Rights Act. "There have been no emotions and no politics and no prejudice involved in this report. I have taken this decision in a proper legal approach," he said.

Vedanta rating unaffected by permit rejection: S&P

POSCO plant report by September-end: Jairam Ramesh

Oil PSUs won't make counter bid for Cairn India: reports

Shares of Cairn India slipped after news reports suggested that public sector oil companies will not make a counter bid for the Indian arm of UK-based Cairn Energy Plc. Speculation has been rife that state-run oil companies, led by ONGC and Oil India could announce a counter offer for Cairn India. Vedanta Resources Plc last week announced plans to acquire up to 60% stake in Cairn India for up to US$9.6bn. Separately, reports suggested that Oil India has hired seven banks, including Citigroup and Morgan Stanley, to help complete one overseas acquisition in the current fiscal year. Banks, including Deutsche Bank, BNP Paribas, Nomura Bank International and Merrill Lynch, were appointed about a month ago, Finance Director, TK Ananth Kumar was quoted as saying.

Cairn India discovers oil and gas in onshore KG block

Reliance enters into JV with Carrizo Oil & Gas

Reliance Industries Ltd. announced that its subsidiary, Reliance Marcellus II, LLC, has signed definitive transaction agreements to enter into a Marcellus Shale joint venture with US based Carrizo Oil & Gas, Inc. Under the proposed transaction, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in a 50:50 joint venture between Carrizo and ACP II Marcellus LLC, an affiliate of Avista Capital Partners. Pursuant to the transaction, Reliance will acquire 100% of Avista’s interest and 20% of Carrizo’s interests in the joint venture. Upon completion of the transaction, Reliance and Carrizo will own 60% and 40% interests, respectively, in a newly formed joint venture between the companies. Reliance will pay a total consideration of US$392mn, comprising of US$340mn of cash and US$52mn of drilling carry obligations. The drilling carry obligations will provide for 75% of Carrizo’s share of development costs over an anticipated two year development program.

Reliance Power to spend US$5bn in Indonesia: reports

RBI clears BOR merger with ICICI Bank

The Reserve Bank of India (RBI) approved the Scheme of Amalgamation of Bank of Rajasthan Ltd with ICICI Bank with effect from the close of business on August 12. All branches of Bank of Rajasthan will function as branches of ICICI Bank with effect from August 13. The Scheme was sanctioned in exercise of the powers contained in Sub-section (4) of Section 44A of the Banking Regulation Act, 1949. The Scheme will come into force with effect from close of business on August 12, 2010.

Atul Sobti quits as Ranbaxy CEO

Ranbaxy Laboratories Ltd. announced that Atul Sobti will step down from the positions of CEO and Managing Director of the Company, effective August 19. Arun Sawhney, currently Ranbaxy's President, Global Pharmaceutical Business, has been appointed as Managing Director, effective August 20. Sobti's three-year term was to end in May 2012. The departure of Sobti came just over a year after taking over the reigns of Ranbaxy. Sobti cited "substantial and basic" differences with the management of parent Daiichi Sankyo. "There are opinions to run a company. When you believe you don’t have a consensus, you move out. The differences were substantial and basic, but there was no immediate trigger," Sobti told reporters in New Delhi. Sobti was appointed as the CEO and MD last May to replace erstwhile promoter Malvinder Mohan Singh. Singh had agreed to lead Ranbaxy as MD for a five-year term after selling off his family’s stake in 2008 for over Rs100bn, but he also left the firm due to differences with the Japanese management. Daiichi had bought a 63.92% stake in Ranbaxy in 2008 for an estimated Rs220bn.

Adani to buy Linc Energy's Galilee coal asset

Australia's Linc Energy said that it would sell its Galilee coal tenement to Adani Enterprises in a cash plus royalty deal worth approximately A$2.7bn. Linc, whose primary business is underground coal gasification, will receive A$500mn in cash and A$2 per tons in royalty for the first 20 years of coal production from the mine, Linc CEO Peter Bond was quoted as saying. Adani has already obtained approval from both the Australia's Foreign Investment Review Board (FIRB) for the Galilee acquisition, and indicative approval for the transfer of the coal tenement from the Queensland State Government. The deal would help Adani as it works towards increasing its power-generation capacity. Adani Power, 70% owned by Adani Enterprises, has four thermal power plants under various stages of development and planning with a combined planned capacity of 9,900 megawatts. India is estimated to face a coal shortage of 52 million tons in the year ending March 31, 2011, and power utilities have been asked to import 35 million tons of the fuel to bridge the deficit.

Adani secures coal purchase rights in Indonesia

Adani Enterprises Ltd., through its step-down Indonesian subsidiary, PT Adani Global, has entered into a binding Tripartite Agreement for setting up a dedicated "Rail and Port Project" with the Regional Government of Sumatra Selatan, Indonesia and PT Iiukit Asarn, a Government of Indonesia Coal Mining Company. PT Bukit Asam is one of the leading producers of Coal in Indonesia, and owns second largest coal reserves in Indonesia. This Project provides "Coal Purchase Rights" to Adani and the infrastructure created will be used for transportation of a minimum volume of 35 million metric tonnes per annum (MMTPA) of coal on a "take or pay" basis from PT Bukit Asam concessions in South Sumatra. The Concession is initially valid for a maximum period of 30 years, which can be extended by mutual agreement.

S&P raises Tata Motors rating to B+

Standard & Poor's Ratings Services said that it raised its long-term corporate credit rating on India-based Tata Motors Ltd. to 'B+' from 'B'. The outlook is positive. At the same time, it raised the issue rating on the company's senior unsecured notes to 'B+' from 'B'. "We raised the rating on Tata Motors to reflect the sustained improvement in the operating performance of Jaguar and Land Rover (JLR) and the company's India operations over the past year. The improvement in Tata Motors' operating performance, along with the company's debt reduction measures, has improved its cash flow protection measures and liquidity position. Tata Motors' consolidated adjusted EBITDA margins were about 10% in the quarter ended June 30, 2010, and 8% for the past nine months.

Maruti launches new Alto at Rs3.19 lakh

Maruti Suzuki launched Alto with ex showroom Mumbai price of non metalic Alto K 10 Lxi- Rs3.19 Lakh and Alto K 10 Vxi - Rs3.32 Lakh. This version, called 'Alto-K10' comes with improved suspension, new cable-type transmission, superior brake system and more Knee-room for rear seat passengers. The existing Alto clocks average sales of around 20,000 units a month, Maruti said. With the launch of the new version, the company expects Alto's overall sales to increase. While the existing Alto will continue to be on sale, the new Alto-K10 is targeted at customers who desire more features and performance at an economical cost. The existing Alto holds the record of selling the highest number of units in a month. It sold a staggering 25,340 units in May this year.

Maruti raises prices marginally

Ssangyong picks M&M as preferred bidder

Mahindra & Mahindra Ltd. (M&M), India’s leading manufacturer of utility vehicles, emerged as the preferred bidder for the acquisition of a majority stake in South Korean SUV maker, Ssangyong Motor Company (SYMC). The preferred bidder status would require it to enter into a Memorandum of Understanding with SYMC, followed by a detailed due diligence process. SYMC is a Korean manufacturer of auto and aggregates, with 7 models under 5 brands. The 7 models include 2 large sized sedans, 4 SUVs and 1 MPV. It also has a manufacturing plant for gasoline and diesel engines as well as axles. SYMC is a significant player in the SUV segment in Korea, having recorded 1.3 million SUV sales from 1990 to 2009.

Religare promoters to hike stake to over 65%

Shares of Religare Enterprises Ltd. surged on Aug. 24 after the Company announced that its promoters - Malvinder Mohan Singh and Shivinder Mohan Singh - will hike their stake in the Company from 57.1% to 65.79%. The Singh brothers will purchase Religare shares from existing shareholders and through preferential allotment. The proposed increase in shareholding will be achieved by acquiring 8.03% stake via an investment company through a combination of preferential allotment and proposed open market purchase of 5.58% equity shares totaling Rs3.57bn. The preferential allotment comprises equity shares (4%) amounting to Rs2.5bn and, warrants convertible into equity shares (4%) amounting to Rs2.5bn. Consequent to the preferential allotment and open market purchases, the promoters will announce an open offer for buying another 20% stake in Religare Enterprises.

Religare promoters announce open offer

Daiichi Sankyo gets SC nod for Zenotech Lab open offer

Japan's Daiichi Sankyo is planning to go ahead with a proposed open offer to buy 20% additional shares in India's Zenotech Laboratories Ltd. after the bid was approved by the Supreme Court. Daiichi Sankyo said that it would launch the open offer at Rs113.62 per share, and would shell out up to Rs782mn. The open offer for Zenotech will start on August 4 and will close on 23. Daiichi Sankyo had put its open offer for Zenotech on hold a year ago after minority shareholders approached a lower court asking for a better price. Ranbaxy Laboratories Ltd., which was bought by Daiichi Sankyo, has a stake in Zenotech. The open offer for Zenotech is to meet local takeover regulations, which require the acquirer to pick up an additional 20% stake in a target company after buying a controlling stake.

ABG Shipyard exits Great Offshore

ABG Shipyard reportedly exited Great Offshore after selling its 4.5% stake in the offshore oil & gas service provider in one big block deal. The Mumbai-based company sold 1,725,000 shares of Great Offshore on the BSE, at Rs365 apiece, valuing the deal at about Rs630mn. Great Offshore ended nearly 6% down on Friday at Rs371 after being as low as Rs365. ABG Shipyard was marginally up at Rs236 after being as high as Rs243. ABG Shipyard has been selling Great Offshore shares after it lost the bid for the latter to rival Bharati Shipyard. ABG Shipyard, along with its wholly-owned subsidiary Eleventh Land Developers sold a little over 2% between May 12 and July 16, and reduced its stake to 5.3% in early August. ABG Shipyard could be making a loss while exiting its holdings in Great Offshore in which it had picked up a little over 15% at Rs520 per share.

Reliance Broadcast forms 50:50 JV with CBS

Reliance Broadcast Network Limited (RBNL), part of the Reliance Anil Dhirubhai Ambani Group, and CBS Studios International, a division of CBS Corporation, announced their equally owned joint venture that brings together two of the world's pre-eminent media and entertainment companies. Marking the announcement of the joint venture in Mumbai, India, were Tarun Katial, CEO, Reliance Broadcast Network Limited and Armando Nunez, President, CBS Studios International. The Joint Venture Company (the "JVCo") will be a limited liability company incorporated in India. CBS and RBNL (through its subsidiary) will act as shareholders and each have a 50% equity interest in the JVCo. The joint venture will, at its start, see the creation of three new television channels allowing for programming rights in India, one of the world's fastest-growing television markets, and across the Indian subcontinent. Leveraging both brand strengths, the JVCo is called BIG CBS Networks Pvt. Ltd.

Engineers India sets FPO price at Rs290

The Government set the issue price of Engineers India's follow-on public offer (FPO) at Rs 290 per share - the upper end of the price band. A discount of 5% will be given to retail bidders and to employees. The public issue, which was oversubscribed 13 times, will fetch Rs9.5bn for the Government. The offer was open between July 27 and July 30. The state-run engineering consultancy had fixed the price range of its 3.36 crore shares of Rs 5 each at Rs 270-290 a piece. The allotment will be done by August 6 and these shares will be listed by August 16. The Rs9.77bn FPO had received an overwhelming demand from all market participants, including retail investors, making it one of the best divestment offers by the Government so far this fiscal. In the portion reserved for institutional buyers, the FPO was subscribed 23.43 times. The Government, which holds a little over 90% cent in EIL, sold 10% stake through the FPO.

Decent debut from SKS Microfinance

The stock debuted at Rs 1,036, a 5.18% premium over the initial public offering (IPO) price. So far, the stock hit a high of Rs 1,151 and low of Rs 1,036. ON BSE, 8.25 lakh shares were traded on the counter. The company had priced its initial public offering (IPO) at Rs 985 per share, at the top end of the Rs 850-985 per share price band. A discount of Rs 50 per share was offered to retail investors. The IPO of SKS Microfinance was subscribed 13.69 time and had garnered bids for 18.85 crore shares. The qualified institutional bidders (QIBs) made a beeline for the IPO with the portion reserved for them getting subscribed 20.38 times. Bids were put in for 14.37 crore shares as against 70.52 lakh shares reversed for QIBs. Within the QIB category, foreign institutional investors (FIIs) put in bids for 10.67 crore shares. Domestic institutional investors (DIIs), other than mutual funds put in bids for 3.08 crore shares. Mutual funds put in bids for 61.30 lakh shares. The category reserved for non-institutional investors (NIIs) was oversubscribed 18.26 times, while that for retail individual investors (RIIs) was oversubscribed 2.81 times. SKS Microfinance intends to utilize the net proceeds of the IPO to augment its capital base to meet its future capital requirements arising out of growth in the business.

SKS Microfinance raises US$358mn from IPO

Gujarat Pipavav Port IPO subscribed almost 20 times

Gujarat Pipavav Port's initial public offering (IPO) has been subscribed 19.94 times. The company got bids for 2.2bn shares as against 110.42mn shares on offer. The QIB portion was subscribed 13.2 times while the HNI portion got subscribed 85.7 times and the Retail portion got subscribed 9.15 times. The company had fixed a price band of Rs42-48 a share for its IPO, which opened on Aug. 23 and closed on Aug 25 for QIBs and on Aug. 26 for others. Kotak Mahindra Capital Company and IDFC Capital are the book running lead managers while IDBI Capital Market Services is the co-Book Running Lead Manager.

Punjab & Sind Bank files DRHP with SEBI

Prakash Steelage shares surge 20% on huge volumes

Emaar MGF plans to cut IPO offering by half: report

Independent News sells 5.7% in Jagran Prakashan

Shares of Jagran Prakashan Ltd. fell after Independent News & Media Plc. sold its entire stake in the Indian newspaper publisher. According to reports, Independent News & Media Investments Ltd. sold about 5.7% stake in Jagran Prakashan for over Rs2bn. The 100% subsidiary of UK-based media company sold shares in Jagran at Rs118 apiece. ICICI Securities was the sole advisor to Independent News & Media on this transaction, according to reports. Independent News & Media had acquired a 26% stake in Jagran in 2005 at Rs467 per share from Jagran's promoters. But it has been selling its stake in Jagran since July 2009 as a part of its strategy to exit non-core assets. In March 2010, Independent News & Media sold 7.5% equity in Jagran for Rs2.55bn to pay off its debt.

Midfield Industries shares surge 31% on debut

OMDC shares hit upper circuit on BSE debut

Asian Hotels (West) shares surge after listing at Rs242

MakeMyTrip shares sizzle in US debut

In what has been billed as the best debut in the US for an IPO since November 2007, shares of India's MakeMyTrip shot up by a whopping 89% on Thursday in New York. Shares of MakeMyTrip gained US$12.45 to close at US$26.45 on the Nasdaq. It was trading even higher in after-hours trading at US$26.60. The stock rose as high as US$26.81 on the Nasdaq after opening at US$22. A private research firm said it was the best debut for an IPO since November 2007. The IPO was the first in the US market by an Indian company since 2006. It raised US$70mn through the offering of 5 million shares at US$14 each. MakeMyTrip recorded a net profit of US$1.3mn for the three months ended in June, Chief Executive Deep Kalra was quoted as saying. However, it is yet to turn a full-year net profit in its decade-long history.

Asian Hotels (East) shares double on listing

HEG, RSWM rise on Bhilwara Energy IPO plans

Strong debut for Bajaj Corp

Shares of Bajaj Corp Ltd climbed nearly 24% on the NSE after the company's initial public offering (IPO) received good response from the market. The stock listed at Rs760 over the issue price of Rs660. Te stock closed at Rs754, up Rs94 or 14% compared to the issue price. The stock earlier hit a high of Rs816. Traded volume on the counter stood at over 5863899 shares. The company set an issue price of Rs660 after raising Rs2.97bn from the IPO. The issue closed on August 4 for QIBs and on August 5 for Retail and Non-institutional bidders. The QIB portion was subscribed by more than 20 times, while the HNI segment was subscribed by a whopping 53.5 times. The retail portion was subscribed 6.6 times. Bajaj Corp. will use IPO money for promoting future products and acquisitions besides other strategic initiatives.

International News

S&P downgrades Ireland's ratings

Standard & Poor's Ratings Services downgraded Ireland's long-term sovereign credit rating to AA- from AA and kept its outlook on negative. This rating review follows the cost of bailing out the country's ailing banks. Ireland bailed out some of its largest banks in the wake of the 2008 financial crisis. Anglo Irish Bank was nationalized. S&P noted that the downgrade applies to other ratings that depend on Ireland's sovereign credit rating, including senior unsecured debt ratings on government-guaranteed securities of Irish banks.

International passenger traffic up 9.2% in July: IATA

The International Air Transport Association (IATA) announced international scheduled traffic statistics for July which showed continued strengthening of demand for both passenger and cargo traffic. Compared to July 2009, international passenger demand was up 9.2% while international scheduled freight traffic showed a 22.7% improvement. These year-on-year comparisons for July were less than the June growth data showing 11.6% and 26.6% increases for passenger and cargo traffic, respectively. The apparent slowdown was entirely due to the fact that by July 2009 traffic was already starting to recover. After adjusting for seasonality, the improvement in demand was faster month-to-month in July than it was in June. Read More...

IATA outlines agenda to strengthen Australian aviation

Potash urges shareholders to reject BHP offer

Potash Corporation of Saskatchewan Inc. asked its shareholders to reject BHP Billiton's nearly US$39bn unsolicited bid and said it is in talks with other companies for alternatives. The board of Potash Corp. unanimously rejected BHP's US$130-a-share approach on Aug. 12, calling it grossly inadequate. The global mining giant later announced a hostile bid for Potash Corp, deciding to take its offer directly to shareholders. Potash Corp. said that it has been in touch with a number of third parties who have expressed an interest in considering alternative transactions. Potash Corp. also said that it expected superior offers or other alternatives to emerge. Over the weekend, reports said that sovereign wealth funds, Chinese banks and other financial firms could fund a global consortium to make a counter offer for Potash Corp. Reports also suggested that Potash Corp. was contacted by China’s Sinochem Group and Brazil’s Vale SA.

Potash in talks with third parties: report

Toyota recalls another 1.3mn cars in US, Canada

Toyota Motor Corp. added another 1.3mn cars to its growing recall list in North America, asking owners to bring in their Corolla and Matrix sedans to fix a problem with the engines. The recall covers 2005 to 2008 models, which could develop a crack that may cause harsh shifting or stop the engine from starting altogether. According to Toyota three unconfirmed accidents have been reported, including a minor injury. The recall covers 1.13 million vehicles in the United States and 200,300 in Canada, Toyota said. Toyota Canada said it had no reports of accidents or injuries. The recall of the Corolla and Matrix cars adds to the 11 million vehicles Toyota has recalled in the past year. Separately, General Motors (GM) said that some 200,000 Pontiac Vibes, a sister car to the Toyota Matrix, would be recalled in the United States and Canada because of the same issue.

Boeing announces further delay in deliveries of Dreamliner

Boeing said that it will postpone the date for the first deliveries of its 787 Dreamliner until the middle of the first quarter of 2011 because of delays in flight testing scheduled for this autumn arising from engine availability problems. Boeing said in a statement that it will work closely with supplier Rolls-Royce to expedite the engine deliveries while other flight testing across the fleet continues. Last month Boeing had cited supplier workmanship issues related to the horizontal stabilizer and instrumentation delays as reasons for pushing the first deliveries of the aircraft to the early weeks of 2011.

HP CEO resigns on sexual harassment charges

Mark Hurd, the high-profile chief executive officer (CEO) of US-based PC major Hewlett-Packard resigned on August 6 amid allegations of sexual harassment and violations of company's Code of Conduct. The charges of sexual harassment against Hurd and the company were leveled by a former marketing contractor, who is believed to have received numerous inappropriate payments from HP. The company's shares plunged in late trading after the announcement but recovered to trade little changed. HP said it had initiated the investigation on June 29 after the contractor made a claim of sexual harassment. The woman, who HP refused to identify, worked as marketing contractor for two years, the company said. Hurd repeatedly filed inaccurate expense account reports in a bid to keep the relationship with the contractor under wraps, HP said. Read more...

H-P, Dell intensify bidding war for 3Par

The bidding war for 3Par Inc. intensified further, with both Hewlett-Packard and Dell raising their takeover offers - with the latest bid valuing the small data storage company at US$2bn. Investors in 3Par cheered the news, driving the stock up more than 20% to US$31.26 - more than 4% above the highest bid price, signaling a hope for more offers.

H-P boosted its offer to US$30 per share just before the opening bell. That came just hours after Dell had raised its offer to US$27 to match H-P's previous offer. In a statement, 3Par said it has accepted Dell's raised bid, though that statement was issued before H-P moved up its own offer.

3Par had signed a deal last week to be acquired by Dell for US$18 per share. H-P announced an unsolicited bid of US$24 a share on Aug. 23. Early on Aug. 26, Dell raised its bid to US$24.30 per share, narrowly trumping H-P's offer. By the end of the day, H-P had boosted its own bid to US$27.

Corus sells Teesside plant to Sahaviriya Steel

Corus UK Ltd. and Sahaviriya Steel Industries Public Co. Ltd., Thailand's largest steel producer, signed a Memorandum of Understanding (MoU). As per the MoU, Sahaviriya Steel (SSI) would acquire from Corus the Teesside Cast Products (TCP) business in a transaction valued at approximately US$500mn (GBP 320mn). The deal, if successful concluded, is expected to create a significant number of jobs at the plant in addition to TCP's existing workforce of over 700 and will provide a considerable boost to the local economy. The assets covered by the MoU include the Redcar and South Bank coke ovens, TCP’s power generation facilities and sinter plant, the Redcar Blast Furnace and the Lackenby Steelmaking facilities. A sale agreement would also result in Corus and SSI operating Redcar Wharf (TCP’s bulk terminal) as a joint venture, giving Corus the flexibility to use Teesside to serve its other steelmaking operations, while also meeting SSI’s requirements on Teesside.

Wheat climbs to 23-month high as Russia bans exports

Wheat futures extended the recent rally, with prices of December contract reaching the highest level in nearly two years after Russia banned its exports because of the nation’s worst drought in at least half a century. On Thursday, wheat for December rose as much as 6.5% to US$8.68 a bushel on the Chicago Board of Trade, taking gains for that contract to 25% this week. But, wheat futures fell on Friday, erasing an earlier gain to a 23-month high.

Wheat has been the best-performing commodity this year on the UBS Bloomberg CMCI Index, ahead of Coffee and Nickel. There were some concerns that other nations may follow Russia’s export ban, and wheat futures may reach US$10 a bushel, a price not seen since the global food crisis in 2008. Russian Prime Minister Vladimir Putin has urged Kazakhstan and Belarus to also suspend shipments of wheat.

Wheat last traded at US$10 in March 2008. Wheat reached a record US$13.495 in February 2008, sparking off food riots from Haiti to Egypt. Wheat prices have doubled in less than two months as a heat wave in Russia, dry weather in Kazakhstan, Ukraine and the EU, and flooding in Canada has hurt crops. Russia’s drought is also threatening sowing plans for winter grain.

GDF Suez to merge global arm with International Power

French power utility GDF Suez said that it will merge its international energy arm with International Power. The latter will be combined with the international operations of GDF Suez outside Europe, as well as certain assets in the UK and Turkey. The combined business will be listed on the London Stock Exchange, with current International Power shareholders controlling 30% of the company and GDF Suez holding the remaining 70%. International Power shareholders will also be entitled to a cash payment of 92 pence a share after completion through a special dividend. The GDF Suez business will be transferred to International Power with 4.4 billion euros (US$5.8bn) of debt.

GM gets new CEO as Whitacre resigns

Edward Whitacre is stepping down as chief executive (CEO) of General Motors (GM). He will be succeeded by Daniel Akerson, a GM board member. Whitacre shaped up foundering GM, which reported its second straight profitable quarter on Thursday and prepared to move ahead with plans to float an IPO. Whitacre actually took over the top spot at GM in January, making the turnaround even more remarkable. Whitacre, who served as CEO at AT&T and steered it through a series of key mergers, remains GM chairman until the end of the year. He had been expected to quit after guiding GM through an IPO to reduce the US government's 61% ownership stake. Just a week ago, Whitacre, 68, said that he had not given any thought to resigning. "Everybody knows at my age I'm not a real longtimer," he told reporters. Akerson, who recently has been serving as a managing director at private equity firm Carlyle Group, also served as chairman of troubled XO Communications.

Honda to recall more than 428,000 vehicles in US and Canada: report

September

Domestic News

Govt asks RIM, Google, Skype to set up local servers

The Government has told Research In Motion (RIM), Google and Skype to set up servers locally to enable security agencies to monitor data traffic on their networks, Home Secretary G.K. Pillai said. The announcement comes a day after the RIM managed to obtain a two-month extension from the Government for providing access to its encrypted data service. Earlier, RIM had been given a deadline of August 31 to comply with the Government diktat to give security agencies access to its premium corporate e-mail and messenger service or face a ban. RIM has proposed setting up a server in India through which BlackBerry messages can be routed, giving security forces access, the Home Ministry said in a statement. RIM's proposals for lawful access to its messages would be operationalised immediately and their feasibility assessed, the ministry said. BlackBerry has also been facing a October 11 ban by the United Arab Emirates and has been negotiating with Saudi Arabia on security issues.

DoT releases 3G spectrum to successful bidders

The Department of Telecommunications (DoT) has allotted 3G spectrum for commercial use on 1st September as per the timelines indicated in the Notice Inviting Applications (NIA) and in the Letter of Intent issued after the bid amounts were deposited. The 3G spectrum has been allotted to AirTel, Aircel, Vodafone, S Tel, Reliance, Idea Cellular and Tata Cellular Services who won the bids through the electronic auction conducted by the DoT spread over a period of 34 days in respect of 3G and 16 days in respect of BWA. The BWA spectrum has already been assigned to the successful bidders’ which are Aircel, Augere, Tikona, Qualcomm, Infotel and Bharti.

Indian banks won't be hit by Basel III norms: Subbarao

Indian banks will not be affected by the higher capital requirements under the Basel 3 norms, the Reserve Bank of India (RBI) governor Duvvuri Subbarao said. He also said that leverage in the Indian banking system was moderate. In a speech at the FICCI-IBA Conference on ‘Global Banking', Subbarao said that the Indian banking system is better-placed to adhere to the Basel III norms which will soon come into effect internationally. Separately, State Bank of India (SBI) Chairman O.P. Bhatt said today that loan quality in the Indian banking sector has deteriorated in the last two years.

RBI looking into deregulation of savings rate

The Reserve Bank of India (RBI) will set up a committee to look into the issue of deregulating interest rates on the savings bank accounts. "A working group will soon be set up to examine the possibility of deregulating of interest rates," RBI Deputy Governor Usha Thorat said while addressing a banking conference organised by FICCI and IBA. "We have to examine whether the de-regulation can help bring more people into the formal banking system," Thorat said. She also said that there is a need for a higher number of tie-ups between banks and the non-bank finance companies (NBFCs) to have better delivery systems and to ensure better last mile connectivity. The central bank is in the process of tweaking regulations on securitisation to ensure the growth of the securitised market in an orderly manner, Thorat said. She called on the banks to ensure that there is no excessive borrowing, besides asking the lenders to do more forward looking provisions to cover their non-performing assets (NPAs) in future.

EPFO announces 9.5% interest rate for FY11

The 190th meeting of the Central Board of Trustees of the Employees' Provident Fund (EPF) was convened in New Delhi on Sept. 15. After detailed deliberations, the Board recommended 9.5% as the rate of interest for the fiscal year 2010-11, from the surplus located in the interest suspense account. This was deferred by the Board in the last meeting. The Union Minister of Labour & Employment, Mallikarjun Kharge chaired the 190th Meeting of the Central Board of Trustees. Talking to reporters after the Board meeting, Kharge said the CBT want the PF money of the about 50mn workers to be safe and secure and invested in a manner to provide good return on their accounts. The rate of interest on EPF has been pegged at 8.5% for the last five years from 2005-06 to 2009-10. Although the decision to provide 9.5% interest rate would result in a deficit of about Rs16bn, the same would be made good by a surplus of Rs17.31bn in the interest account of the EPFO.

Govt hikes FII cap in debt

The foreign investment ceiling in government and corporate bonds was increased by US$5bn each. The Union Finance Ministry increased the cap on foreign investment in government and corporate bonds by US$5bn each to US$10bn and US$20bn, respectively. The Government's move will help increase foreign capital inflows and offset India’s current-account deficit, which widened to US$13bn in the first quarter from US$12.2bn in the preceding three months.

India's exports grow 22.5% in August

India’s merchandise exports registered a growth of 22.5% in August 2010, at US$16.64bn, Union Commerce Secretary Rahul Khullar said in New Delhi. During a media briefing, Khullar said that India’s imports in August 2010 were US$29.7bn, up by 32.6% over the same month last year. He stated that during April-August 2010-11, exports stood at US$85.27bn, showing a growth of 28.6%. Imports during the first five months of FY11 stood at US$141.89bn, reflecting a growth of 33.2%. As a result, the trade deficit for the April-August 2010 came in at US$56.62bn. Khullar also informed that the Government is on track to achieving a target of US$200bnin exports in the current financial year. According to the Commerce Secretary, sectors like cotton yarn, iron ore, gems & jewellery, plastics, leather engineering etc were doing well.

Govt pegs H2 FY11 borrowing at Rs1.63 lakh Cr

The Government said that it will borrow Rs1.63 lakh crores in the October-March period. The borrowing will be done in an orderly manner and there will not be any frontloading of the bond auctions, according to reports. FY11 borrowing will continue till the second week of February 2011. Average Government borrowing in the October-March period will be Rs100-110bn per week. The Government has so far borrowed Rs2.73 trillion of the budgeted Rs4.57-trillion gross borrowing for the fiscal year 2010-11. It had planned to sell debt worth Rs2.87 trillion in the April-September 2010 period.

India Inc. up in arms against Ohio's outsourcing ban

Indian IT industry reacted strongly to Ohio state's decision to ban IT outsourcing and termed the move as discriminative. "Ohio's ban on outsourcing can only be viewed as counter-productive to the US government thrust on reducing public deficit and possibly lead to an increased tax burden on its citizens," said NASSCOM. Expressing concerns over the issue, NASSCOM said they would take up the issue to US by the end of September and would ask help from Union Commerce & Industry Minister Anand Sharma. Supporting NASSCOM's stand, IT giant Infosys also expressed its concern over the Ohio's bill to ban offshoring of IT services. Meanwhile, the Government protested the US state of Ohio’s decision to ban IT outsourcing of government work to countries such as India, saying that governor Ted Strickland’s decision violates the commitment made by G20 countries to fight protectionism. Commerce Secretary Rahul Khullar lodged a compliant against the decision with deputy US trade representative Michael Punke.

Indian airlines' loss to narrow in 2010: IATA

The combined loss of Indian airlines will shrink in 2010 but their huge debt burden is a matter of concern, International Air Transport Association (IATA) Giovanni Bisignani said. The international trade body for the aviation industry expects Indian airline companies to narrow their combined loss to US$400mn in 2010 from a combined loss of US$1.7bn in 2009, Bisignani said in New Delhi.

Rishad Premji appointed Wipro's chief strategy officer

Rishad Premji was appointed Chief Strategy Officer of Wipro. The 33-year-old elder son of Azim Premji, will report to the joint CEOs, Suresh Vaswani and Girish Paranjpe. The changes will be effective January 2011. However, Rishad will move into the strategy function from September 1. Rishad had a stint with a global consultancy firm in Europe before joining Wipro around three years ago. He is armed with an MBA degree from Harvard Business School. Wipro’s current chief strategy officer and M&A head of the IT business, Lakshminarayana K.R. (Lan), is taking over as the chief endowment officer of a trust set up to fund the philanthropic activities of Azim Premji.

Vodafone loses tax battle in Bombay HC

The Bombay High Court ruled in favour of the Income Tax Department in the long-standing dispute with Vodafone Group Plc. Bombay High Court's judges D.Y. Chandrachud and J.P. Devadhar said that the I-T Department has jurisdiction over Vodafone’s acquisition of Hutchison’s Indian mobile phone operations. The I-T Department had claimed a tax liability of Rs122.97bn in the Hutch-Vodafone deal that was worth US$11.2bn. Vodafone has eight weeks to appeal the Bombay High Court verdict in the Supreme Court. The I-T Department cannot pass any order in the next eight weeks. Vodafone maintains that it is not liable for tax on the US$11.2bn transaction while the I-T department says that since an Indian asset changed hands, Vodafone should have paid capital gains taxes on the deal.

Coal India gets nod for US$3bn IPO

Coal India Ltd. received a green signal from the Securities and Exchange Board of India (SEBI) for its up to US$3bn initial public offering (IPO). This is expected to be the biggest IPO ever by an Indian firm. The company's public offer of about 631mn shares, or 10% of the company, will open on October 18 and close October 21, its chairman said last month. Coal India is likely to file the red herring prospectus (RHP) for its IPO on September 25, through which the Government expects to raise about Rs150bn. Citigroup Global Markets India, Deutsche Equities India, DSP Merrill Lynch, Enam Securities, Kotak Mahindra Capital and Morgan Stanley are the book running lead managers to the issue.

SEBI rejects MCX-SX proposal

Shares of Financial Technologies India tumbled after the Securities and Exchange Board of India (SEBI) rejected the application of Multi-Commodity Exchange-Stock Exchange (MCX-SX) to operate an equity trading exchange. SEBI rejected a proposal by MCX-SX for stock and debt trading platforms, citing non-compliance with shareholding rules, witholding of material information, concentration of 'economic interest', and 'illegal' buyback transactions with investors. The regulator pointed out that for all practical purposes the management and control of MCX-SX was with two promoters, MCX and Financial Technologies, and that their holdings were beyond the permissible limit of 5% allowed to any entity in any stock exchange in India.

NTPC to build power project in Bangladesh

NTPC Ltd. signed a memorandum of understanding (MoU) with Bangladesh Power Development Board (BPDB) for cooperation in the power sector between the two countries and to set up a 1,320 megawatt coal-fired power plant in Khulna. Under the MoU between the two national companies, the large coal fired power plant will be set up under equal partnership.

NTPC eyeing stakes in two Indonesia coal mines

ONGC seeks details from Cairn India

ONGC examined the relevant agreements signed by Cairn Energy Plc and/or affiliates with Government of India and inter-se with ONGC as one of the participating company's in the various oil blocks/fields and other related documents. Based on this documentary examination, it is noted that ONGC has pre-emptive rights in relation to Cairn's participating interest under the various agreements with the Government of India and ONGC. ONGC has requested Cairn Energy PLC vide letter dated 30th August 2010, to provide us with full details along with the copies of the agreements and other arrangements entered into between Cairn Energy and/or affiliates and the proposed buyer (And/or affiliates). Cairn Energy had informed ONGC on 16th August of the proposed disposal of its substantial shareholding in Cairn India.

RIL buys 14.8% in EIH

Reliance Industries Ltd. (RIL) announced that it had acquired, through its wholly owned subsidiary Reliance Industries Investment and Holding Pvt. Ltd., from Oberoi Hotels Pvt. Ltd. and certain other promoters of EIH Ltd., shares representing 14.12% of EIH Ltd. at a total cost of Rs 10.21bn approximately. RIL’s investment in EIH has been made as the Oberoi family had developed the "Oberoi Hotels" brand into a premier international brand in the luxury hospitality sector and as a result EIH has excellent future prospects. RIL has full faith in and would support the management of EIH and there is no change of management, operation or control of EIH. The deal price works out to Rs184 a share. Reliance Industries bought an additional 0.68% in EIH, raising its holding to 14.8% in hotel chain. EIH said in a filing to the BSE the shares were bought from the market on Monday, 30 August 2010 and Tuesday, 31 August 2010.

RIL not keen on making open offer for EIH: report

EIH announces Rs13bn Rights Issue

EIH Ltd. announced that its Board of Directors, at its meeting held on Sept. 23, has accorded consent to a Rights Issue of Equity Shares not exceeding Rs13bn. The company's Board also constituted a Committee to finalise the Rights Issue ratio, issue price and all other procedural modalities. The Oberoi family as well as Reliance Industries Ltd., which recently bought over 14.8% in EIH, could buy the unsubscribed portion of the proposed Rights Issue to strengthen their hold over the company. The Rights Issue will help the promoters and RIL to help avoid a hostile takeover bid. ITC currently owns a 14.8% stake in EIH. It is not clear if ITC will subscribe to the Rights Issue.

Honda, Hero group deny stake sale in Hero Honda

Shares of Hero Honda came under pressure this week amid growing speculation that Honda Motor Co. plans to sell its stake in the Indian JV. But, Yuki Watanabe, spokesperson for the Japanese auto giant denied the news. Separately, the Munjal family owned Hero Group said that its joint venture partner is planning to exit India’s largest two-wheeler maker Hero Honda by selling its 26% stake. "We have already conveyed earlier that the Hero Group and Honda Motor Co, Japan, have for years enjoyed a very cordial and fruitful relation, resulting in millions of satisfied Hero Honda customers across the country and there has been no change in the relationship in any manner," Hero Group said in a statement. "The news report is incorrect and speculative," it added. Media and markets have been abuzz with speculation that the Hero group and private equity firm KKR are in talks to buy out Japan's Honda Motor's stake in Hero Honda. According to reports, the Munjal family would buy out 20% of Honda's stake, while KKR would buy the remaining 6%. Honda and the Hero Group hold 26% each in Hero Honda.

Tata Steel to raise up to US$5.5bn debt

Tata Steel is in talks with banks to raise between US$4.5bn to US$5.5bn loan to refinance debt at its European unit Corus, according to reports. The company had reportedly said last month that it was looking to refinance existing debt based on the extension of the period and flexibility of terms. Tata Steel's European operations account for two-thirds of its global capacity of about 30mn tonnes, while the Indian operations contribute a quarter. Separately, Tata Steel Managing Director Hemant Nerurkar said that the company was not selling its South African unit.

Tata Steel to buy stake in ore project of New Millennium

Tata Steel made a positive investment decision by exercising its option to acquire an 80% interest in the direct shipping ore (DSO) project of New Millennium Capital Corp., Canada. As part of the joint venture (JV) agreement, Tata Steel will reimburse NML 80 per cent of NML’s cost to date on the DSO project; arrange funding up to CDN$300 million of capital costs for the project to earn its 80 per cent share of the JV and commit to take 100 per cent of the DSO project’s iron ore products of specified quality, at world market prices, for the life of the mining operation. It is expected that the JV will produce four million dry tonnes per year of iron ore products commencing in 2012.

GTL Infra-Reliance Infratel deal called off

GTL Infrastructure Ltd. scrapped the deal to merge Reliance Communications Ltd.'s (RCOM) tower assets held in Reliance Infratel Ltd. with itself. GTL Infra's Board of Directors had earlier given an in-principle approval for the merger of Reliance Infratel Ltd's tower assets into the Company. But, after a careful review, the Committee of Directors in their meeting held on September 6, has conveyed that the Non-Binding Term Sheet signed by both parties dated June 27, expired on August 31. Subsequently, despite efforts, both parties have neither extended the Term Sheet nor entered into any definitive transaction agreements as envisaged therein. Consequently, the process of merger as originally contemplated would not take place. RCOM said in a statement that it is in talks with other strategic and financial investors to sell a stake in Reliance Infratel Ltd. to significantly reduce the Company's debt. It declined to comment on why the deal with GTL had been called off.

RPower-RNRL merger gets shareholders' nod

Kale Consultants stock up on stake sale news

Sun Pharma acquires controlling stake in Taro

Sun Pharmaceutical Industries Ltd. announced that it has completed the acquisition of a controlling stake in Taro Pharmaceutical Industries Ltd. pursuant to the Option Agreement entered into in 2007 with Taro’s controlling shareholders led by Taro’s Chairman, Dr. Barrie Levitt. As a result of the closing, Sun’s subsidiaries have increased their economic interest in Taro to 48.7% and their voting rights to 65.8%. In connection with the closing of the Option Agreement, the parties to the transactions, as well as Taro’s directors, have settled all outstanding litigation among themselves. Taro has an established franchise in dermatology and topical products in the US, in addition to generic product offerings in cardiovascular, neuro-psychiatric and anti-inflammatory therapeutic categories. Taro has strategic sales and marketing operations in Israel and Canada.

Sun Pharma unit receives warning letter from USFDA

Sun Pharmaceutical Industries, a wholly owned subsidiary of Sun Pharmaceutical Industries Ltd. received a warning letter from the United States Food and Drug Administration (USFDA). This letter was issued by the USFDA as a follow up to the last inspection of the SPI Inc. manufacturing facility in Cranbury, New Jersey, US, initiated in February during which the USFDA had identified violations of current Good Manufacturing Practice (cGMP) regulations. In a statement, the company mentioned SPI has undertaken immediate corrective actions. SPI intends to respond promptly and timely to the USFDA within fifteen working days. SPI is committed to working cooperatively and expeditiously with the USFDA to resolve the matters indicated in its letter. Until the SPI responses to the observations have been clarified and explanations provided to the satisfaction of the USFDA, the latter may, in the near term, withhold approval of pending new drug applications listing the facility as the manufacturer. Sun Pharma maintains its 2010-11 consolidated sales growth guidance.

Kingfisher Airlines board approves fund raising plan

Shares of Kingfisher Airlines rose after the Board approved an increase in the authorised Equity Share Capital from Rs.9bn to Rs16.5bn and an increase in the authorised Preference Share Capital from Rs1bn to Rs.26bn. The Company will immediately seek to raise up to US$250mn by way of GDR and a further Rs.5bn through a domestic offering subject to necessary regulatory approvals. This funding is expected to be completed within the next 3-4 months. At the meeting of the Board of Directors of United Breweries (Holdings) Limited, the Holding Company of Kingfisher Airlines, it was resolved that a sum of approximately Rs6.5bn provided as loans to Kingfisher Airlines be converted into Preference Share Capital. The financials of Kingfisher Airlines are expected to be significantly strengthened by these initiatives.

TCS UK acquires Unisys insurance business

Diligenta, a leading Business Process Outsourcing (BPO) provider in the UK and a subsidiary of Tata Consultancy Services (TCS) announced major business wins with Phoenix Group and Old Mutual International following the transfer of Unisys Insurance Services' (UISL) UK life and pension services business to Diligenta. Diligenta’s new contract with Phoenix Group has been extended by an additional six years until 2018 and both contracts will generate £250mn in revenue for the company over that period, reinforcing Diligenta’s position as one of the largest BPO providers in the UK. Diligenta will begin delivering the services currently provided to UISL’s clients effective September 1.

Maruti Suzuki confirms plan for 3rd plant at Manesar

Maruti Suzuki India Ltd. will spend 35 billion yen (Rs19.25bn) to set up a third plant at Manesar in Haryana, Suzuki Motor Corp. Chairman, Osamu Suzuki told the shareholders of the Indian unit. He was addressing the shareholders of Maruti Suzuki at the annual general meeting (AGM). The new plant at Manesar will have an annual production capacity of 2.5 lakh units, Suzuki said. "With this plant, the total output from Maruti Suzuki India will be at 1.75 million units," Suzuki said. Currently, the company has a total annual output of 1.2 million units per year. Maruti Suzuki, which is 54.2% owned by Suzuki, is building a second plant at Manesar at an investment of Rs17bn. That plans will also have an annual capacity of 2.5 lakh units and will be ready by January 2012, Suzuki said. The existing plant at Manesar has a production capacity of three lakh units a year.

Reliance Broadcast to make preferential allotment to Rakesh Jhunjhunwala

Reliance Broadcast Network Ltd. is likely to make preferential allotment of equity shares to Rakesh Jhunjhunwala, Goldman Sachs, Citigroup and Damani Estates, according to reports. Reliance Broadcast said that it aims to raise over Rs4bn by way of preferential issue of shares to promoters and non-promoters. The promoter group will subscribe to about 2.9 crore shares, totaling approximately Rs2.5bn, and the remaining investors will subscribe to 1.9 crore shares aggregating over Rs1.5bn. The preferential offer, which is subject to necessary approvals, will be made at a price of Rs85 per share, reflecting a premium of 25% to the last 26 weeks' average price.

Aurobindo Pharma inks pact with AstraZeneca

Aurobindo Pharma entered into licensing and supply agreements with AstraZeneca, one of the world's leading biopharmaceutical business, to supply several solid dosage and sterile products for Emerging Markets. The agreements will support AstraZeneca's investment in Branded Generics sold in Emerging markets. These products fall under a broad range of important therapeutic segments such as Anti-Infective, Cardiovascular System (CVS) and Central Nervous System (CNS). Financial terms are not disclosed.

Aurobindo Pharma gets MCC South Africa nod for 23 registrations

Fortis Healthcare stock up on Singapore listing reports

SpiceJet to spread wings...unveils global operations

SpiceJet announce the commencement of its international operations with its first flights to Kathmandu and Colombo ready to take off in four weeks. The carrier will flag-off its first international flight from Delhi to Kathmandu, Nepal on October 7. This will be followed shortly by the first flight from Chennai to Colombo, Sri Lanka on October 9.

Career Point IPO subscribed 47.39 times

The initial public offering (IPO) of Career Point Infosystems Ltd. was subscribed 47.39 times on the back of strong response from the QIB and HNI categories. Even the Retail category got a good response. The IPO received bids for 152,061,300 shares against the 3,208,907 shares on offer. The QIB portion was subscribed 47.45 times, while the Non-Institutional (HNI) section was subscribed 101.93 times and Retail by 31.74 times. The IPO began on Sept 16 and closed on Sept 21. The IPO price band was fixed at Rs 295 to Rs 310. The book running lead managers to the issue are Centrum Capital, JM Financial Consultants. Link Intime India is the registrar to the IPO.

Microsec Financial Services IPO subscribed 12.20 times

Eros IPO subscribed 26.51 times

Gujarat Pipavav Port makes a strong debut

Shares of Gujarat Pipavav Port Ltd rose as much as 26% on their debut on the NSE after its IPO received fairly good response from all category of investors. The stock opened at Rs56.10 on NSE as against the issue price of Rs46 a share. It ended at Rs54 after touching a high of Rs58 and a low of Rs52. Total traded quantity on the counter stood at 109.55mn shares. The issue, which opened for subscription between August 23-26, was subscribed 19.94 times. The QIB portion got subscribed 13.2 times while the HNI and Retail portions were subscribed 85.70 times and 9.15 times, respectively.

International News

Basel Committee unveils new global banking rules

The Basel Committee on Banking Supervision decided to significantly increase the amount of capital banks must set aside against potential losses, but allowed lenders more time to adapt to the new rules. The Basel panel, representing regulators from 27 nations, more than doubled its capital requirements for banks, giving lenders as long as eight years to comply in full, as part of efforts to prevent another financial crisis. Global banking regulators in Basel, Switzerland increased the key capital ratio for the world’s banks to 7%. The global bankers raised core Tier 1 from 2% to 4.5% starting in phase from January 2013 to complete by January 2015. In addition, banks will have to set aside another 2.5% for future periods of stress. The minimum core capital cushion is the funds banks accumulate by selling stock and retaining profits. Tier 1 capital, whose definition has been narrowed by the Basel committee, includes common equity and perpetual preferred stock. If ratified by the Group of 20 nations later this year, the rules will require banks to bolster the amount of low-risk assets they hold in reserve as a cushion against market shocks.

Obama unveils new steps to boost growth

US President Barack Obama announced a slew of new economic policies aimed at shoring up growth in the world's largest economy and also to kick-start the Democratic campaign for the mid-year Congressional elections later this year. The speech was billed as a major policy address. The president formally announced three proposals the White House had hinted were coming: $50 billion in infrastructure spending; expanding and making permanent the lapsed research tax credit for business; and a measure allowing businesses to write 100% of their investment costs off their taxes through 2011. Republicans termed the economic proposals old wine in new bottle, and instead urged Obama to extend all of President George W. Bush's tax cuts, not just those for the middle class.

Global slowdown is steeper than anticipated: OECD

The global economic slowdown appears to be much slower than anticipated, and policymakers should continue to extend their stimulus measures to help support growth, the OECD said. "Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated," said Pier Carlo Padoan, chief economist at the Paris-based agency. "It is not yet clear whether the loss of momentum in the recovery is temporary ... or whether it signals greater underlying weaknesses in private spending at a time when public support is being removed," he said.

Europe unveils new rules to curb short-selling

Naked short-sellers will be required to submit proof they can access the underlying security to settle their trade. Standardised derivative contacts will be cleared centrally. The European Commission proposed tougher new rules aimed at checking derivatives trading and restrict short-selling as the European regulator tries to curb practices that are blamed for exacerbating the global market meltdown of 2008. The proposed new rules covering over-the-counter derivatives will require standardised contacts to be reported to trade repositories and cleared centrally - a move EU officials hope will reduce risk and lend more stability to the financial markets in turbulent times. Naked short-sellers would be required to submit proof they can access the underlying shares to settle their trade designed to profit from falling prices. Similar disclosure requirements will be introduced for short positions in European sovereign bonds.

US drags China to WTO over steel, credit cards

The US filed two complaints against China at the World Trade Organization (WTO), claiming discrimination against American steel makers and credit-card companies. China has 10 days to respond to the US request for consultations on the two cases, with those talks taking place over a 60-day period. At the end of consultations, the US can request a dispute settlement panel at the WTO. The move comes as trade tensions between the two countries are once again on the rise, with Congress holding hearings this week on legislation to penalise China for keeping its currency undervalued. One case concerns curbs on payment-processing companies such as MasterCard and Visa that are at a disadvantage because China favors a monopoly provider, China UnionPay Data Co., the US trade office said. The second complaint is over dumping duties that China imposed on more than US$200mn of US-made steel products.

BP completes well kill operations in Gulf of Mexico

BP confirmed that well kill operations on the MC252 well in the Gulf of Mexico are now complete, with both the casing and annulus of the well sealed by cement. The MC252 well has been shut-in since July 15 and cementing operations in August, following the static kill, provided an effective cement plug in the well’s casing. The relief well drilled by the DDIII drilling rig intercepted the annulus of the MC252 well on September 15, followed by pumping of cement into the annulus on September 17. BP, the federal government scientific team and the National Incident Commander have now concluded that these operations have also successfully sealed the annulus of the MC252 well.

BP blames on rig owner, contractors for US spill

BP shares rose in London after the oil giant spread the blame for the Gulf of Mexico oil spill and its credit rating was upgraded by Fitch Ratings. In its internal report, BP said a series of complex events, rather than a single mistake, led to the tragedy and that multiple parties, including Halliburton and Transocean, were involved. BP managers had direct involvement in just one of the eight judgment errors and equipment failures that led to the April 20 explosion aboard the Deepwater Horizon drilling rig, according to the UK company’s internal investigation. The explosion killed 11 workers and spewed crude oil into the Gulf of Mexico for almost three months. The blame for the other mistakes rests primarily with rig owner Transocean, contractor Halliburton Co. and Weatherford International, which provided valves for the well, according to the 234-page report released after a probe by more than 50 BP engineers, geologists and hired investigators.

HP revises bid for 3PAR; Dell opts out of race

HP will purchase 3PAR, a leading global provider of utility storage, through a cash tender offer of US$33 per share in cash, or an enterprise value of US$2.35bn. The transaction has been approved by the boards of both the companies. Dell announced that it will not increase its most recent proposal to acquire 3PAR, and that it has ended its discussions regarding a potential acquisition. Dell is entitled to receive a US$72mn break-up fee from 3PAR upon the termination of its merger agreement. Dell’s final offer to acquire 3PAR was not accepted by 3PAR’s board of directors.

Apple unveils new iPods, Apple TV

Apple introduced a new line up of its popular music players - iPods at its annual music-themed special event. CEO Steve Jobs also unveiled a social networking feature in the iTunes music store besides a revamped Apple TV device and updates to the operating system for the iPhone, iPod Touch and iPads. The new iPod Touch will start at US$229. It is thinner and adds many of the new iPhone 4's features, including a front and rear facing camera, "Retina Display," and FaceTime, which allows users to make video calls over Wi-Fi. The iPod Touch is also the best selling portable game player, outselling Nintendo and Sony's portable game players combined, Jobs said.

Nokia shares fall on N8 delay reports

Shares of Nokia came under pressure amid media reports that it was deferring shipments of its much-awaited N8 smart phones by a few weeks due to last minute tweaks. But, the Finland-based mobile handset maker denied any such move. Nokia may push back shipment of N8 because of software glitches, a couple of online industry websites reported. Nokia denied the reports, and spokesman Doug Dawson said that the N8 will be shipped by month-end, as planned. "We had targeted our online pre-order customers to receive their N8s by the end of September," Nokia said on its blog. "As it can take time from the beginning of shipment to arriving at their doorstep, in full transparency, we have advised our pre-order customers that they should expect their new Nokia N8 in October," it said.

Genzyme rejects Sanofi-Aventis bid

Genzyme Corp. rejected the US$69-a-share bid from Sanofi-Aventis SA, calling it "an unrealistic starting price." Sanofi-Aventis, the French pharmaceutical giant, went public with its pursuit and said that all efforts to begin talks with Genzyme have been rejected. "The Genzyme board of directors unanimously affirmed its previous rejection of Sanofi's proposal," Genzyme said in a statement. A letter to Sanofi management, signed by Genzyme chief executive Henri Termeer, recalled that the board had turned down an earlier offer on August 11. Sanofi-Aventis chief executive Chris Viehbacher said that Genzyme's response was "relatively unsurprising." Meanwhile, Matrix Asset Advisors sent a letter to the biotech company's board urging it to aggressively pursue selling the company in the wake of a rejected US$18.5bn bid from Sanofi-Aventis.

3G Capital to acquire Burger King for US$4bn

Burger King agreed to be bought by Brazil-based investment firm 3G capital in a deal valued at US$4bn, including the assumption of debt. The deal is the largest leveraged buyout of a fast-food chain ever, according to the market researcher CapitalIQ, and the second for Burger King in the last eight years. Burger King’s potential new owner, 3G Capital, is backed by wealthy Brazilians, including a billionaire and a former tennis champion. The investment firm plans to expand Burger King’s presence internationally, especially in Latin America and Asia.

Nokia taps Microsoft executive

Nokia hired Stephen Elop, a former Microsoft executive, to replace Olli-Pekka Kallasvuo, who will be stepping down as chief executive. The Finnish company also launched three new smart-phone models in an attempt to rebuild eroding market share. Nokia has failed to produce a serious competitor to the iPhone so far, but remains the world’s biggest mobile-phone manufacturer.

Boeing got illegal subsidies from govt: WTO

The World Trade Organisation ruled that Boeing had received illegal subsidies from the American government. The details of the decision remained confidential. The WTO had earlier ruled that Airbus, Boeing’s European rival, had also been getting illegal low-interest government loans. America and the EU filed their WTO cases against each other in 2004. Boeing CEO Jim McNerney said that he was "heartened" by a WTO ruling. McNerney argued that the judgment showed that any subsidies paid to Boeing by US government agencies were much smaller than the European Union's claim that 23 billion dollars changed hands.

International air traffic expands in July: IATA

International Air Transport Association (IATA) said that the number of people flying internationally in July expanded from a year ago, with month-over-month premium traffic growth hitting an annual expansion rate of more than 10%. International passengers traveling in first and business class seats rose by 13.8% in July from a year ago, while numbers on economy seats rose 8.8%, according to the IATA.

IATA lifts 2010 profit forecast for world airlines

Global airlines will register a much higher combined profit in the year 2010 than initially anticipated on the back of the global economic recovery and tight capacity management, according to the International Air Travel Association (IATA). IATA sees the industry posting a combined net profit of US$8.9bn, more than three times the previous forecast of US$2.5bn made in June, and compared to an estimate of nearly US$10bn losses in 2009. "This year is as good as it gets," Giovanni Bisignani, IATA’s director general, told reporters in Singapore today. "The real question in this forecast is how long we see the recovery lasting." Earnings for the global airline industry will probably fall to US$5.3bn next year because of concerns about the sustainability of growth and razor thin profit margins, IATA said in a statement.

October 2010

Domestic News

Rupee soars past 44 on heavy FII inflows

The rupee surged to its highest level in more than two years against the dollar, notwithstanding a weak stock market and suspected RBI intervention, as foreign inflows are expected to shoot up in light of the Coal India IPO. The partially convertible Indian currency touched a day's high of 43.9750, its highest since September 2008. It opened at 44.2550 and touched a day's low of 44.2675. It had closed at 44.4350 on October 8. Demand by local oil companies limited the gains in the rupee, according to reports. Traders and dealers are also closely watching the Reserve Bank of India (RBI), which had bought dollars to stem the rupee's strength.

Mobile number portability from Nov 1

After missing three deadlines, mobile number portability (MNP) will be rolled out in November, Telecom Minister A Raja said. MNP allows subscribers to retain existing numbers and change the service operator for a nominal transaction fee of roughly Rs 19. "November 1 onwards, MNP would be operational partially... First, we wanted to inaugurate in Haryana," Raja said. He also said that in the first phase, MNP will be launched in 11 circles and the implementation will begin from the second or third week of November. An official announcement about this will be made on November 1. Implementation in the eleven circles would be completed by December 20, he said.

Current account deficit widens

Current account deficit in the April to June quarter widened to US$13.7bn from US$4.5bn in the year earlier, the RBI said. The deficit widened compared to the nearly US$13bn reported in the January to March quarter, which too was a record. The trade deficit for the first quarter of FY11 was higher at US$34.2bn compared with US$25.6bn in the year-earlier period. The merchandise deficit was also higher than the US$31.5bn reported in the January-March quarter. Strong overseas capital inflows helped keep the overall Balance of Payments (BoP) to remain in a surplus at US$3.74bn, compared with US$2.1bn in the January to March quarter and a surplus of about US$100mn in the year-ago period.

Fiscal deficit down 17% YoY

India’s fiscal deficit fell by around 17% year-on-year to Rs1,51,425 crore during the first five months of FY11, mainly on account of the money received from the combined auctions of 3G and Wireless Broadband spectrum in April this year. The Union Budget had estimated (BE) fiscal deficit at Rs3,81,408 crore for the current financial year. The April-August figure is 39.7% of the total BE. The Government had garnered a whopping Rs1.06 lakh crore by auctioning both 3G and Broadband Wireless Access (BWA) services against the Budget target of Rs350bn. The Centre aims to reduce the fiscal deficit to 5.5% of GDP as compared to 6.5% last year.

SC cancels bail for Raju, five others

The Supreme Court cancelled bail granted to B. Ramalinga Raju and five others, all accused of involvement in the Satyam Computer Services Ltd. accounting fraud, after the Central Bureau of Investigation (CBI) told the court they were interfering with the investigation. The bench, comprising justices Dalveer Bhandari and Deepak Verma, gave Raju and the others until November 8 to surrender to the authorities. It also ordered that the trial in the lower court at Hyderabad be completed by July 31, 2011. Raju was granted bail by the Andhra Pradesh High Court in August after being taken into custody in January 2009, soon after he confessed to the Rs 70bn (now estimated at Rs 140bn) accounting swindle through which he inflated Satyam's profits and boosted its stock price.

Wal-Mart positive about Govt opening retail to FDI

Wal-Mart expects India to open up foreign direct investment (FDI) in multi-brand retail given the positive tone coming from government officials. According to reports, the Indian Government has begun to speak more positively about relaxing the FDI rules in the sensitive retail sector. Wal-Mart Stores Inc. CEO Mike Duke was in India and said that "regarding the timing, it is not really my position to set this. It is for the Indian government but the feeling I get is a very positive feeling in the discussions we have had with government officials)."

Gold prices in India cross Rs 20,000 mark

Gold prices in India, the world's largest consumer of the yellow metal, climbed atop Rs. 20,000 per 10 grams for the first time ever, hitting demand ahead of the peak festival season next month. In fact, local jewellers are now expecting a rise in scrap gold supplies. In the international market, gold rose to a record for a second day, as the US dollar extended losses, increasing investor demand for the precious metal as an alternative investment and store of value. Silver too extended a rally to a 30-year high. Expectations of another round of Quantitative Easing by the US Federal Reserve had fueled a rise in gold prices on Oct. 13, which marked the 16th record high in five weeks. The dollar continued to slip against a basket of six major currencies on speculation that the Fed policymakers will ease monetary policy further to shore up growth of the sagging US economy. Goldman Sachs said that gold will benefit from the so-called Quantitative Easing and forecast US$1,650 an ounce in 12 months. Gold has gained 25% this year, on course for a 10th consecutive annual gain, the longest streak since at least 1920.

FMC lifts ban on sugar futures

Forward Markets Commission (FMC) lifted the ban on Sugar futures citing reduced prices of the sweetener from its peak levels of January and better crop outlook. The commodity markets regulator said that sugar prices have dropped 40% since January and the output is expected to be robust in the year 2010-11. Agency reports quoted the FMC Chairman B.C. Khatua as saying that the decision on launch of new sugar futures contracts will be taken in the next few days after consulting the sugar industry and commodity exchanges. The futures trading ban had been imposed in May 2009 after sugar prices soared.

Sugar stocks gain as Govt lowers levy quota

Govt cuts levy sugar obligation to 10%

Govt offers 34 oil, gas blocks under NELP IX

The Government offered 34 oil and gas blocks for exploration under its ninth round of New Exploration licensing Policy (NELP). These blocks cover an area of 88,807 square km. The last date for bidding for blocks offered under NELP IX is March 18, 2011. Union Petroleum Minister Murli Deora said that he expects investments of US$14bn in NELP IX. In its previous eight rounds of auctions, the Centre has awarded 235 oil & gas blocks. The blocks offered include eight deep sea, seven shallow water and 19 onland, Deora said. The onland blocks include eight small blocks for which there is technical qualifying criteria for the companies to bid. The first roadshow for NELP IX will be held in Mumbai on October 18. The roadshow will then move to Moscow, Houston, Calgary, Perth and Singapore. NELP XIII, which closed in October 2009, attracted investment commitment of US$1.34bn for 36 blocks that received offers. Under NELP-VIII, 70 areas or blocks for exploration were offered, the biggest licensing round in India. Of the 36 areas bid for, the Government had awarded 33 blocks to successful bidders.

Sudhir Vasudeva to succeed ONGC's R.S. Sharma

The Public Enterprises Selection Board (PSEB) has named Sudhir Vasudeva, ONGC's director for offshore operations, to succeed RS Sharma as the chairman of ONGC. According to reports, RS Sharma, Chairman ONGC will retire in January 2011. PESB, the committee that screens talent for top positions in state-run companies, named Vasudeva, 56, as its first choice after interviewing eight candidates, according to reports. The Board has named Pawan Hans Ltd. Chairman & Managing Director RK Tyagi as its second choice for the post of Chairman & Managing Director of ONGC. The panel’s recommendation will be sent to the appointments committee of the cabinet (ACC), which will take a final call, one of them said. Vasudeva has been actively involved for about 19 years in development and management of the Mumbai High.

Indirect tax collections up 44% in April-Sept 2010

Customs, Central Excise and Service Tax revenue collections rose to Rs. 1.51 trillion during April-September 2010-11. There is an increase of 44.4% in revenue collections at all-India level during April-September 2010-11 compared to the same period of last year i.e. April-September 2009-10. Total revenue collections from Indirect Taxes during April-September 2010-11 are 48.1% of the Budget Estimates of 2010-11.

NSE to shift stock options to European style

All Stock Options contracts expiring on January 27, 2011 and onwards shall have European exercise style only, according to the National Stock Exchange (NSE). There shall be no interim exercise available for all Stock Options contracts expiring on January 27, and onwards and all the in-the-money Stock Options contracts shall get automatically exercised on the expiry day. All existing month Stock Options contracts expiring on November 25, and December 30, shall continue to have American exercise style. Capital market regulator the Securities and Exchange Board of India (SEBI) has decided to allow domestic exchange to induct some European flavor in their work culture.

Anti-outsourcing bill gets defeated in US Senate

A bill moved in the Senate by the Democrats to bring jobs back to America by granting payroll tax breaks to participating companies was defeated by 53 to 45 votes The measure - A bill to amend the Internal Revenue Code of 1986 to create American jobs and to prevent the offshoring of such jobs overseas - was put to vote on Tuesday and defeated in a vote predictably along party lines. The Business Roundtable, a pressure group comprising the US's top CEOs, who account for US$6 trillion in revenues and employ 12 million people, wrote a letter to the senate arguing for the move to be dropped. The development comes a week after a NASSCOM delegation, comprising representatives of top IT companies such as Infosys, Wipro and TCS visited the US and lobbied with the key Congressmen and corporations. "We welcome the move. The anti-offshoring bill was more of an electoral rhetoric. We had met the Congressmen, key Government officials and American industry last week and expressed our concerns against the protectionist measures," NASSCOM Vice-President Ameet Nivsarkar said.

SKS Microfinance fires CEO...stock slides

Shares of SKS Microfinance fell after the Company's Board of Directors terminated the appointment of Suresh Gurumani as Managing Director and Chief Executive Officer. The board also withdrew all powers and authorities granted to him or otherwise enjoyed by him in the Company as Managing Director and CEO of the Company, with immediate effect. The Board also appointed M. R. Rao, Deputy CEO as the Managing Director & CEO for a period of three years w.e.f. October 04, 2010, subject to the completion of necessary statutory and other procedure. Reports also said that SEBI has asked SKS Microfinance to spell out the reasons behind its decision to sack Gurumani. According to a business daily, SKS Microfinance was also told to disclose whether it was earlier aware of any events or circumstances that could have resulted in Gurumani's exit.

SKS Microfinance hits 52-week low

Shares of SKS Microfinance tanked and hit a 52-week low of Rs 894.70 on the BSE on Oct. 25 before recovering by the close of the week. The stock ended the week at Rs 1,021. The counter has been under pressure ever since the sacking of its CEO Suresh Gurumani. The company got further jolted by heightened regulatory scrutiny into the operations of microfinance institutions in the country due to high interest rates and coercive loan recovery methods. SKS got listed on August 16 and had a strong debut after raising over Rs16bn through the IPO, the second by an MFI in the world. The scrip was hit badly on Oct. 25 on reports that the company could not recover loans for a week in Andhra Pradesh due to the effect of an Ordinance promulgated in the state to curb strong arm tactics of MFIs. The nation's largest microfinance firm, SKS said that it suffered a "notional loss" of about Rs 600mn.

SEBI yet to clear Sesa Goa open offer for Cairn India

Market regulator SEBI has reportedly withheld the approval of the open offer by Sesa Goa to buy 20% stake in Cairn India. The Petroleum Ministry and ONGC had raised questions on the terms of the deal between Cairn Energy Plc and Vedanta Resources Plc. The open offer from Sesa Goa was to open on October 11. Separately, Cairn Energy Plc secured the approval of shareholders for sale of majority stake in its Indian arm to Vedanta Resources.

Car sales rise 30% in September

Passenger car sales in India grew by over 30% in September, as easy finance availability coupled with the introduction of a slew of new models and a booming economy continued to lure consumers. Total automobile vehicle sales grew by 21.63% to 13,29,086 units in September as against 10,92,687 units in the same month last year, the Society of Indian Automobile Manufacturers (SIAM) said. Total sales in August were 12,63,293 units. Companies sold 169,082 cars in September versus 129,684 units in the same month last year, SIAM said. In August, domestic car sales were at 160,794 units.

IOC to hit markets with Rs 190bn FPO: report

Indian Oil Corporation (IOC) is likely to raise about Rs 190bn from capital market. Half the proceeds would go to the government, which will offload 10% of IOC shares to help it meet its disinvestment target of Rs 400bn this fiscal. In addition, the company will issue new shares amounting to another 10% of its equity capital to help the country’s largest state refiner build new units. IOC will start shortlisting merchant bankers next week for its public issue. The IOC public offer may hit the market by January, adding to the rush of equity and debt issues aggregating to an estimated Rs 800bn in the next six months.

Bharti Airtel to unveil 3G by December end

Bharti Airtel said that it will launch its 3G services before the end of 2010, to usher in broadband data revolution in the country. Airtel, the largest mobile services provider in India, will offer customers the widest 3G network in India. Airtel successfully bid for 3G spectrum in 13 telecom circles across India and is rolling out state-of-the-art networks in these geographies. These 13 telecom circles also constitute 68% of Airtel’s revenue market share. This includes key metros such as Delhi, Mumbai, Bengaluru, Chennai and Hyderabad, which account for 21% of all data traffic in the country and are expected to have the strongest uptake of 3G services. Airtel is also in advanced discussions with other quality operators to offer 3G services to its customers across the country. This will not only ensure seamless roaming, but also offer 3Gbroadband to its entire customer base in India.

Reliance Power signs US$8.3bn deal with Shanghai Electric

Reliance Power announced that it has given a US$8.3bn contract to Shanghai Electric Group Co Ltd. (SEC) for supply of 36 coal-fired thermal power generation units, spare parts and related services over a 10-year period. This takes the total deal size between Reliance Power and the Chinese power equipment maker over the past couple of years to US$10bn. SEC will supply boiler, turbine and generator packages for 30,000 MW capacity of coal-based power at six plants including the 3,960-MW ultra mega power project at Krishnapatnam, the 5,940-MW project in Chitrangi, and the 3,960-MW project in Tilaiya. The project is being financed by Bank of China, China Development Bank, the Export-Import Bank of China and Industrial and Commercial Bank of China. The agreement with the Chinese banks allows Reliance Power to get financing for importing Chinese equipment for up to US$12bn.

Power Grid plans to raise Rs86bn via FPO

PowerGrid Corporation of India Ltd. will launch its proposed follow-on public offering (FPO) in the second week of November, Chairman and MD S.K. Chaturvedi said. The public sector power transmission major aims to raise about Rs86bn through the FPO. "We plan to invest that money in our projects in the remaining period of the Eleventh Five-Year Plan and as the initial investment in the Twelfth Five-Year Plan project," Chaturvedi told reporters in New Delhi. PowerGrid has appointed ICICI Securities, SBI Capital Markets, Goldman Sachs and JP Morgan as its merchant bankers for the FPO. The Government would disinvest 10% of its stake in PowerGrid and the Company would sell another 10% fresh equity through the FPO.

SCI disinvestment gets Union Cabinet's nod

The Cabinet Committee on Economic Affairs approved issue of fresh equity of 10% by Shipping Corporation of India (SCI) and the sale of 10% Government shareholding. Retail investors will get a discount of 5% on the issue price. 0.5% of the issue size would be reserved for the employees of the company. They will also get a 5% discount on the issue price. The divestment of SCI is expected to generate approximately Rs13bn. The Government ownership in SCI is currently 80.12% and after the above offer of sale and further issue of shares, the Government holding will be 63.75%.

Withdraw POSCO project clearances: panel

Most of a committee set up to review a $12 billion project proposed by South Korean steel giant POSCO recommended that the Government withdraw its preliminary environmental clearances for the project. Three of the four members of the Meena Gupta Committee opposed the POSCO steel plant. The panel was established by the Ministry of Environment and Forests. The committee report cited serious environmental issues," Environmental Minister Jairam Ramesh said. The decision comes hot on the heels of the Union Environmental Ministry's decision a few weeks ago to pull environmental clearances from Vedanta Resources for a bauxite-mining project in Orissa. POSCO India said that it had not violated any law to obtain clearances for its 12-million tonne steel plant in Orissa.

Sterlite told to shut copper smelter; gets SC reprieve

Vedanta Resources received another setback when the Madras high court ordered a subsidiary of the group to close the world's ninth biggest copper smelter on environmental grounds. Sterlite Industries, in which the London-listed Vedanta has a 54% stake was told to close its Tuticorin smelter in Tamil Nadu. The smelter produced 334,000 tons of copper cathode in the12 months to March, accounting for nearly half of all India's copper output. The court ordered Sterlite to shut the plant to protect nature from unabated air and water pollution. The Union Environment Ministry had last month blocked Vedanta from building a bauxite mine in a tribal region of Orissa. However, the Supreme Court announced a stay on the Madras High Court order, granting a relief to Sterlite. The stay order was applicable till Oct. 18. Sterlite had appealed the Supreme Court on September 29 for the Stay on the Madras High Court judgement dated September 28 for the company's copper smelter at Tuticorin. The matter will come up for further hearing on Oct. 18.

Sterlite plant closure...SC extends stay on HC order

The Supreme Court said that its interim order passed on October 1, staying the Madras High Court order against Sterlite Industries, would continue till the second week of December. The apex court extended the stay on the Madras High Court order, which had directed Vedanta Resources' subsidiary Sterlite Industries to close its copper smelter at Tuticorin citing environmental concerns. The court asked the Centre, the Tamil Nadu Government and the pollution control authorities to state why action was taken against Sterlite. A bench comprising Justices R.V. Raveendran and H.L. Gokhale directed the parties to file their reply within two weeks. The Supreme Court also directed Sterlite Industries to produce reports of the National Environmental Research Institute (NERI) by the next date of hearing.

Cairn India open offer price final: Vedanta

The open offer price announced for Cairn India's minority shareholders is the final price, Vedanta Resources Plc said but added that it cannot move forward with the offer until it gets regulatory approval. "We have given a very lucrative offer and that offer we stand by," Vedanta Chairman Anil Agarwal said in Mumbai. "There is no question of increasing the open offer price," he added. Sesa Goa, which is owned by Vedanta, will wait for the SEBI approval to launch the open offer for Cairn India, he told reporters. The open offer from Sesa Goa was to open on October 11. But, SEBI has reportedly withheld the approval of the open offer by Sesa Goa to buy 20% stake in Cairn India.

SBI retail bond issue oversubscribed 17 times

State Bank of India's (SBI) retail bond issue was subscribed 17.3 times. SBI received applications worth around Rs85bn on Day One itself, although it had planned to collect just Rs10bn. Given the overwhelming response, SBI could come out with another such issue in the next three months, reports said. The bank is planning to close the issue before October 25. SBI floated a public issue of lower Tier II bonds worth Rs10bn, including Rs5 bn greenshoe. The QIB portion was subscribed more than 46 times , while the Non-Institutional (HNI) section was subscribed 18 times and Retail by twice the amount of bonds allotted to them.

Tata Motors raises Rs33.51bn via QIP offering

Tata Motors Ltd. said that its Board of Directors has approved the issue and allotment of 83,20,300 Ordinary Shares of Rs10 at a price of Rs1,074 per Ordinary Share and 3,21,65,000 'A' Ordinary Shares at a price of Rs764 per share, aggregating to Rs33.51bn. A duly authorized Committee of the Board of Directors of the Company has decided to close the bid for the Qualified Institutional Placement (QIP). Tata Motors raised the size of its QIP to US$750mn owing to higher demand from large institutional investors.

Tata opens up Nano sales in four states

Tata Steel to refinance Corus loans

Tata Steel executed agreements for the refinancing of its European operations. Tata Steel UK Holdings, a 100% indirect subsidiary of Tata Steel signed a Senior Facility agreement with a syndicate of 13 banks for a £3.53bn loan (Rs250bn) and revolving credit facility which is intended to replace in full the current term loan and revolving credit facilities entered into at the time of the acquisition of Corus group. Tata Steel had bought Anglo-Dutch steel maker Corus in 2007 for about US$12.9bn. The new financing structure is in two parts - a five-year loan of around £1.86bn equivalent and a seven-year loan of US$1.58bn equivalent. The revolving credit facilities for working capital purposes have been increased to US$1.08bn and will have a tenor of five years.

S&P raises outlook on Tata Steel

Standard & Poor's revised its outlook for Tata Steel and its UK-based subsidiary from negative to stable, as the liquidity conditions at its unit have eased. "We revised the outlook as we believe the potential pressure on Tata Steel UK (TSUK)'s liquidity has eased following the refinancing of a £3.67 billion bank loan," the credit rating agency said in a statement. The outlook assesses the potential direction in which a rating will move. While stable outlook means that rating is unlikely to change, negative denotes that it may be lowered.

Bajaj Auto to re-enter Sensex; ACC to exit

Bajaj Auto Ltd. will make a re-entry into the BSE Sensex. It will replace ACC Ltd. from Dec. 6. Bajaj Auto was excluded from the BSE 30-share benchmark on March 14, 2008. The BSE also included GlaxoSmithKline Pharmaceuticals Ltd., Zee Entertainment Enterprises Ltd., Rural Electrification Corp. and Yes Bank Ltd. in the BSE-100 Index. They will each replace Aban Offshore Ltd., Century Textiles & Industries Ltd., India Cements Ltd. and Punj Lloyd Ltd. in the BSE 100 index.

Anil Ambani gets FMC nod to buy 26% stake in ICEX

Commodity markets regulator Forward Markets Commission (FMC) said that Anil Ambani Group has been given a go ahead to acquire 26% stake in the country's third largest commodity bourse by volumes Indian Commodity Exchange (ICEX). The Ambani Group will buy the stake from the co-promoter of the exchange Indiabulls Group. ADAG already has its presence in the spot commodity market under its arm Reliance Capital. ICEX offers futures trading in 18 commodities, including bullion metals and agricultural items. According to FMC data, the exchange has registered a turnover of Rs130bn in the first fortnight of September. Presently, Indiabulls is the major holder with 40% stake in ICEX while MMTC has 26% besides other smaller holders.

Satyam stock tumbles on big losses

Shares of Satyam Computer Services Ltd. tumbled after the Hyderabad-based IT company posted a net loss of Rs1.24bn in FY10. Shares of Tech Mahindra also slipped while Mahindra Satyam's ADRs slumped on the New York Stock Exchange. Mahindra Satyam announced audited financial results for the financial year ended March 2009 and March 2010. The Company posted a consolidated net loss of Rs1.24bn for FY10 on consolidated net sales of Rs54.81bn. EBITDA margin in FY10 was at 8.3%. Consolidated net loss in FY09 stood at Rs81.77bn on a consolidated net sales of Rs88.13bn. FY09 headcount stood at 45,000 while the same in FY10 was at 27,000. In FY09, Rs62.43bn was provided against prior period items. The Company's net worth stood at Rs46.3bn in FY10. The net worth presently stands at Rs18bn. Mahindra Satyam had Rs21.17bn cash in hand in FY10. Mahindra Satyam added 44 new clients in FY10. Mahindra Satyam has 350 active clients.

Fortis Healthcare to buy Quality HealthCare biz

Fortis Healthcare has agreed to buy the healthcare assets of Hong Kong-based Quality HealthCare Asia Ltd. for HK$1.52bn. According to reports, the Quality HealthCare acquisition is being made by the Singhs' Fortis Global Healthcare Holdings Pte Ltd unit, which it said is the family's vehicle to build a pan-Asian healthcare business. In addition to the HK$1.52bn in cash, Fortis Global Healthcare will provide HK$20mn in base working capital.

Maran hikes stake in SpiceJet to 53%

Kalanithi Maran raised his controlling stake in domestic carrier SpiceJet Ltd. to about 53% and plans to fill the top management posts lying vacant soon. Maran and KAL Airways on Oct. 12 acquired a 7.42% stake in SpiceJet through an off-market transfer. They bought 28.5 million equity shares at Rs. 47.25 a share, a discount of around 38.5% to the market price. The move came less than a week after Maran and KAL acquired a 5% stake to raise their holding to 45.26% in SpiceJet. On October 9, reports said they had purchased 19.3 million equity shares for Rs. 47.25 a share. The company also announced that its foreign currency convertible bonds (FCCBs) have been converted into 19.3 million equity shares. Maran and KAL's stake, not taking into consideration the FCCB conversion, is now at 52.69%. Sun TV Network chief Maran paid Rs7.46bn in June for a 37.7% stake in SpiceJet. He now has to buy an additional 20% stake in line with the current SEBI takeover rules. The open offer was due to start on August 6 and close on August 25. It will now start on Oct. 18 and will close on November 6, according to lead manager Enam Securities.

L&T divests entire stake in Kalindee

India's leading engineering and construction firm Larsen and Toubro Ltd (L&T) has divested its entire stake in listed firm Kalindee Rail Nirman (Engineers) Ltd, that executes railway track, signaling and telecommunication projects on turnkey basis. After holding the stake for last two years, L&T sold its remaining 8.60% stake in Kalindee Rail on Oct. 27 through open market transactions. In a separate development, Kalindee Rail has approved the allotment of ten lakh convertible warrants to promoters and promoters group.

Adani to invest Rs 100bn in Orissa coal mine

Adani Enterprises Ltd. (AEL), the flagship firm of Ahmedabad-based Adani Group, has been selected as mine developer and operator (MDO) for development and operation of the Chendipada coal block in Orissa by UCM Coal Company Ltd. It plans to invest Rs 100-110bn in a 2,000 MW pit-head power project and for the development and operation of the block. This also includes the setting up of a coal washery. The block has a mining capacity of 40 million tonnes per annum (MTPA).

Nirma to delist shares from NSE and BSE

In a board meeting held on October 9, Nirma Ltd. received a proposal from Karsanbhai K. Patel, Shantaben K. Patel and Kulgam Holdings Pvt. Ltd., being the Promoters of the Company, to acquire the equity shares held by public shareholders in the Company pursuant to and in accordance with the Securities and Exchange Board of India (SEBI) regulations. The promoters are seeking delisting of the equity shares of the Company from all the stock exchanges where such shares are presently listed i.e. Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE). The promoters believe that a price of Rs. 235 per share is an attractive price for the public shareholders of the Company.

Tata Motors unveils MPV Aria

Tata Motors launched the Tata Aria, the first Indian four-wheel drive crossover, a luxurious creation with the finesse of a sedan and the muscle of an SUV all blended in one car. The Tata Aria redefines several benchmarks with its design and technologies, offering class leading features that take comfort and safety to a new height. The selectable 4x4 is equipped with a Torque-on-Demand System which significantly enhances all-terrain capabilities. It is the first in its segment with an In-dash GPS-based Navigation System. It is also among those rare cars in India to offer advanced safety features like the Electronic Stability Programme (ESP), which ensures the car’s stability, and six airbags to ensure safety in exigencies.

Biocon signs agreement with Pfizer

Biocon Ltd. entered into Global Commercialization agreement with Pfizer. The US pharma giant will have exclusive rights to commercialize these products globally, with certain exceptions, including co-exclusive rights for all of the products with Biocon in Germany, India and Malaysia. Pfizer will also have co-exclusive rights with existing Biocon licensees with respect to some of the products, primarily in a number of developing markets. Biocon will remain responsible for the clinical development, manufacture and supply of these Biosimilar Insulin products, as well as for regulatory activities to secure approval for these products in various geographies.

Strides gets WHO nod for Oseltamivir generic

Strides Arcolab announced that the World Health Organization (WHO) has prequalified it's generic version of Oseltamivir- capsules 75 mg for the treatment of H1N1 infection. Strides thus becomes only the second company globally to receive WHO pre-qualification for generic Oseltamivir. Oseltamivir is manufactured at Strides' UFDA-approved and WHO-qualified oral dosage forms manufacturing and R&D facility in Bangalore. The product is available in the Indian market under the brand name `Starflu.'

Indosolar slips below issue price on debut

The shares of Indosolar Power Ltd. opened flat on NSE compared to the issue price but soon fell below that level, as investors shunned the stock after a disappointing IPO even as the overall market opened higher. The stock closed its maiden trading day at Rs23.40 after touching a day's high of Rs29.50 and a day's low of Rs22.60. It had opened at Rs29.90 as against the issue price of Rs29. Traded volume on the counter stood at 136.6mn shares on the NSE. The stock closed the week at Rs24.55. The company had entered the capital market with its IPO priced in the range of Rs. 29 to Rs.32 a piece. The offer opened on September 13 and closed on September 15. Indosolar IPO got oversubscribed 1.55 times. The issue got total bids for over 190.3mn shares as against 123.1mn shares on offer. The QIB category got demand for 1.4 times and the HNI category was subscribed 1.3 times. The retail portion got subscribed 1.8 times. The Book Running Lead Manager (BRLM) was Enam Securities.

Tecpro Systems IPO subscribed 14.46 times

VA Tech Wabag IPO subscribed 36.22 times

Oberoi Realty lists at premium

Shares of Oberoi Realty climbed 10% at NSE on debut after opening at Rs 271. The stock closed the week at Rs 293. The stock touched a high of Rs 304.90 and a low of Rs 271. It had fixed an IPO price at Rs 260 a share. The IPO of Oberoi Realty Ltd. was subscribed 12.13 times on the final day of the issue, according to NSE web site. The IPO received bids for 393.53mn shares as against the 32.44mn shares on offer. The QIB portion was subscribed over 22 times, while the Non-Institutional Investors (HNI) section was subscribed 3.6 times and Retail by 0.94 time. The IPO began on Oct. 6 and closed on Oct 8. The IPO price band was fixed at Rs 253 to Rs 260. The proceeds of the issue will be going for ongoing projects, investing into subsidiaries, repayment of loans, acquisition of land and for general corporate purposes.

Stunning debut for VA Tech WABAG

Shares of VA Tech WABAG Ltd. rose as much as 30% on the first day of listing on Oct. 13 on the NSE after opening at Rs 1,500. The stock closed at Rs 1,704, up Rs 394 compared to the issue price of Rs 1,310. The scrip went on to touch an intra day high of Rs 1,806 and an intra day low of Rs 1,500. Total traded quantity on the counter stood at over 1.56mn shares on the NSE. The stock closed the week at Rs 1,675. The IPO of VA Tech Wabag had been subscribed 36.22 times, according to NSE's web site. The issue had opened on September 2010 and closed on September 24. The company received bids for 11.33mn shares as against 3.12mn shares. The company had fixed the price band between Rs 1230 and Rs 1310 per share. Non institutional investors (HNI) category was subscribed 100.98 times followed by retail individual investors (8.55 times) and qualified institutional buyers (36.13 times).

Gallantt Ispat makes scintillating debut

Disappointing debut for Cantabil Retail

Strong debut for TecPro Systems

Spectacular debut for Bedmutha Industries

Sea TV jumps 26% on debut

Ashoka Buildcon stock down 2% on debut

BS Transcomm surges 46% on debut

Shares of BS Transcomm Ltd. closed with ~46% gains on debut at the NSE on Oct. 27, notwithstanding the tepid response to the company's IPO. It opened at Rs 257 as against the issue price of Rs 248. The stock closed at Rs 362, up Rs 114 compared to the issue price. The stock hit a day's high of Rs 398 and a day's low of Rs 239. The stock hit a 20% upper circuit on Friday and closed the week at Rs 383.

BS Transcomm has raised Rs. 1.9bn through an initial public offering (IPO) of 76,79,410 equity shares. BS Transcomm IPO was subscribed 1.1 times and received bids for 84.13 lakh shares compared with 79.79 lakh shares on offer. The qualified institutional buyers (QIB) category was subscribed 0.52 times, non-institutional investors category (HNI) was subscribed 3.16 times and retail individual investors category was subscribed 1.04 times.

Nokia launches N8 smartphone in India

Nokia launched its latest and much anticipated smartphone, the Nokia N8, with Ovi services in India. Leading Bollywood actress Priyanka Chopra, who had been living virtually on N8 for the last 48 hours, reappeared at the unveiling event with the device. The first of a series of devices powered by Symbian^3, the latest edition of the world’s most used smartphone software, the Nokia N8 intuitively connects people to the places and services that matter most. It allows people to create compelling content, connect to their favorite social networks and enjoy on-demand Web TV programs and content. The latest version of Ovi Store, available first on the Nokia N8, gives easy access to more apps.

RIM introduces the BlackBerry Torch smartphone in India

Venky's to buy Blackburn Rovers soccer club

Venky's India Ltd. will acquire UK's Premier League soccer club Blackburn Rovers. The owners of Venky’s India will reportedly pay 46 million pounds (US$73mn) to purchase the Blackburn Rovers Football Club, the 1995 Premier League champion. Venky's India is the first Indian company to acquire a Premier League club chairperson Anuradha Desai was quoted as saying. Blackburn Rovers’ Chairman John Williams further added that a series of meetings, including discussions with the Premier League, have followed an extensive due diligence process. Both parties are hopeful that the transaction will be completed in November.

Koutons Retail creditors file winding-up petitions

Debt-laden clothes seller Koutons Retail India Ltd is facing at least four lawsuits, of which two are winding-up petitions filed in the Delhi high court by its suppliers to recover dues. Last week, Berry Cotts Pvt. Ltd, a New Delhi-based vendor of fabrics, filed a winding-up petition against the troubled retailer. Another winding-up petition was earlier filed by RC Velvet, a supplier of corduroy fabric based in Gurgaon near New Delhi. Fortunex Ltd, headquartered in Hong Kong with facilities in Dhaka, Bangladesh, has also moved court to recover dues. A person familiar with the Berry Cotts lawsuit said the firm was trying to recover more than '10 crore for supplies to the retailer.

International News

Fed ready for QE2 to prop up US economy

Minutes of the Federal Reserve’s Sept. 21 meeting showed that the American central bank was prepared to buy more government debt to support a fragile economic recovery. Fed policy makers last month were prepared to ease monetary policy "before long" and focused on purchases of Treasury securities and boosting inflation expectations as ways to add stimulus, the minutes showed. Fed policymakers continue to believe that the pace of the US economic recovery is slowing, and wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus. The Fed also said for the first time that it was considering targeting a path for the level of nominal gross domestic product (GDP) as a way to increase price expectations. The minutes did not specify how big the program could be, when it could start or how long it could last. But investors took the notes as further evidence that the Fed will announce plans to buy more assets when it meets next month. Fed Vice Chairwoman Janet Yellen warned that low interest rates could give companies incentive to take on too much risk.

Developed world growth tepid; EMs shining: IMF

The International Monetary Fund (IMF) said that economic recovery in the advanced nations is losing steam even as the emerging economies continue to race ahead. IMF chief economist said that some emerging nations need more market-oriented currency policies, while wealthy nations need to cut budget deficits. IMF officials said that the world economy will expand 4.8% this year and slow down slightly next year. Emerging economies will expand more than 7% this year, while developed nations can expect to grow just 2.7%. Industrialised nations are projected to grow by 2.2% in 2011, the IMF said. Although the global recovery is uneven and fragile, IMF chief economist Olivier Blanchard said that the world is not likely to slip back into a recession. Still, he urged policy-makers around the globe to take tough actions.

Economics Nobel goes to 3 for research on labour market

Peter Diamond and Dale Mortensen, two Americans, and Christopher Pissarides, a British-Cypriot, jointly won this year’s Nobel prize for economics for their work on why supply and demand often fail to balance in the jobs market. The Nobel jury said that the work of Diamond, Mortensen and Pissarides helped resolve puzzles such as why people remained unemployed despite a large number of job openings. It lauded the three economists for their analysis of markets with search frictions," which helps explain how unemployment, job vacancies and wages are affected by regulation and economic policy.

China's Liu Xiaobo wins Nobel Peace Prize for 2010

Jailed Chinese writer and political activist Liu Xiaobo has been conferred the coveted Nobel Peace Prize for the year 2010, the Norwegian Nobel Committee said. The Chinese dissident won the Nobel Peace Prize for his long and non-violent struggle for fundamental human rights in China. The Norwegian Nobel Committee said it has long believed there is a close connection between human rights and peace. Liu is known as the principal author of "Chapter 08," which called for democratic reforms and caused a stir in underground circles after being circulated in December 2008. The prize upset the Chinese government, which had warned the Norwegian Nobel Committee about giving the honor to Liu.

China hikes key lending, deposit rates

The People's Bank of China (PBOC) raised the key lending and deposit rates by 25 basis points each. The PBOC said in a statement today that it will raise the one-year yuan lending rate to 5.56% from 5.31%, and the one-year yuan deposit rate to 2.5% from 2.25%. This was the first revision in benchmark interest rates by China since December 2007. The rate changes will come into effect from Oct. 20. Between September 2008 and December 2008, the Chinese central bank had slashed benchmark rates several times as part of the government's efforts to mitigate the fallout from the global financial meltdown.

New bank rules will be phased in: Basel panel

The Basel Committee on Banking Supervision said that the new liquidity rules for global banks will be phased in via an "observation period" instead of fixed, mandatory deadlines. The new bank rules will also include clauses that allow regulators to address any unintended consequences. The planned liquidity coverage ratio will require banks to have enough highly liquid assets to cover cash outflows for a 30 day period. The planned net stable funding ratio, which covers liquidity over longer periods, will also be phased, the committee said. "The Committee agreed on key details of the liquidity coverage ratio," the Committee said following a meeting in South Korea. "It confirmed that both the LCR and the net stable funding ratio will be subject to an observation period and will include a review clause to address any unintended consequences," the Committee said.

G20 to shun currency devaluation

The finance and central bank chiefs from the Group of 20 (G-20) pledged to move towards more market determined exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies. They also vowed to continue to resist all forms of protectionist measures and seek to make significant progress to further reduce barriers to trade. The global economic recovery continues to advance, albeit in a fragile and uneven way, the G-20 said in a Communiqué after the meeting of their Finance Ministers and Central Bank Governors, at Gyeongju, South Korea on October 23. Growth has been strong in many emerging market economies, but the pace of activity remains modest in many advanced economies, the G-20 said. "Downside risks remain and are different from country to country and region to region. Yet, given the high interdependence among our countries in the global economic and financial system, uncoordinated responses will lead to worse outcomes for everyone. Our cooperation is essential," it said.

US House clears bill aimed at China's currency

The House of Representatives approved a bill to treat the yuan’s exchange rate as a subsidy. The yuan bill would let companies petition for duties on imports from China to compensate for the effect of an undervalued yuan. The legislation was backed by both Democrats and Republicans. China said that the bill could harm ties between the two countries. The Chinese authorities lashed out at US Congressional moves they said amounted to protectionism, raising the temperature ahead of several important international summits. US accuses China of keeping its currency artificially low to give its exporters a competitive edge. US Treasury Secretary Timothy F. Geithner said that he was confident tensions over the yuan won’t lead to escalating trade sanctions or feed into a broader global currency conflict with China. The Bill passed by the House of Representatives is far from becoming law.

EU agrees to stricter budget rules

European Union (EU) leaders agreed to Germany's long-standing proposal for tighten budget rules governing the euro-zone in an effort to prevent a repeat of the Greece-led sovereign debt crisis. German Chancellor Angela Merkel won EU backing for the creation of a permanent debt-crisis mechanism by 2013 to prevent a repeat of the Greece-like debt shock. "We won’t allow only the taxpayers to bear all the costs of a future crisis," Merkel said in Brussels after a summit of EU leaders. There is a justified desire to see that it is not just taxpayers who are on the hook, but also private investors. The stricter rules, crafted by the finance ministers of the 27-nation block, include a permanent debt-crisis mechanism as well as new sanctions for countries that let deficits spiral out of control. Adoption of new rules comes as bond yields in deficit-laden countries like Ireland and Portugal have started rising again, suggesting ongoing concerns about their financial stability.

Moody's downgrades Spain's rating to 'Aa1'

Moody's Investor Service downgraded Spain's rating to "Aa1" from "Aaa", citing weak economic prospects, a considerable deterioration in government finances and worsening debt affordability. The outlook on Spain's ratings is stable, Moody's said. Three months ago, Moody’s had put Spain's rating on review for a possible downgrade and that period was to end this week. Fitch Ratings and Standard & Poor’s have already downgraded Spain’s credit rating.

Ireland's rating under review: Moody's

Ireland's credit rating may be lowered as the spiraling cost of bailing out the nation's troubled banks is taking a heavy toll on its financial sector, Moody's Investor Service said. Ireland’s "Aa2" credit rating is on review for possible downgrade, Moody's said. The global credit ratings agency also cited a murky outlook for the recovery of domestic demand in light of weak economic data and a further increase in borrowing costs. If Moody’s rating is cut, it would most likely be by one notch, which would leave the nation with an A rating. Moody's said that it intends to complete the review within three months. That will bring Ireland’s rating into line with Standard & Poor’s and Fitch Ratings.

China stocks fly on Moody's comment

Shares in China surged on Oct. 8 after Moody's Investor Service said that it was putting the nation's ratings under review for a possible upgrade. The yuan climbed to the highest level against the dollar since 1993. Mainland Chinese financial markets resumed trading after a week-long holidays. "The resilient performance of the Chinese economy following the onset of the global financial crisis, and expectations of continued strong growth over the medium term are the main reason for the review," Moody’s said. The review of the A1 ranking, Moody’s fifth-highest, will be completed within three months.

China hikes fuel prices...Refining shares rise

China hiked the retail prices of gasoline and diesel by 3% as the government steps up efforts to cool down the overheated economy and meet energy-saving targets. The ceiling for gasoline prices will rise by 230 yuan (US$34.50) a metric ton and for diesel it will rise by 220 yuan a ton, the National Development and Reform Commission (NDEC), the top economic planner, said in a statement. This brings the end-user costs to 7,420 yuan per ton and 6,680 yuan per ton, respectively. Shares of China Petroleum & Chemical Corp., the country’s biggest refiner known as Sinopec, and PetroChina Co. gained.

Brazil hikes taxes on foreign inflows

Brazil raised taxes on foreign inflows of capital for the second time this month. An influx of dollars has helped the real to appreciate by nearly 40% since the start of 2009. With currency tensions rising, Tim Geithner, America’s treasury secretary, told an audience in California that no country could "devalue its way to prosperity".

Obama regime lifts deepwater drilling

Separately, the Obama administration lifted its moratorium on deepwater drilling in the Gulf of Mexico earlier than expected. A government report suggested that the six-month hiatus had caused the temporary loss of between 8,000 and 12,000 jobs. Meanwhile it was reported that the European Union will unveil tougher rules on offshore drilling in its waters, including increasing the liability of companies in the event of a disaster. Europe has around 900 offshore wells.

BP raises US$3.5bn via bonds

BP raised US$3.5bn in five- and ten-year bond auctions, which attracted strong investor demand. The British oil company will have to pay roughly US$20bn as compensation for the oil spill at its offshore drill in the Gulf of Mexico. BP pledged several US Gulf of Mexico assets as collateral for the US$20bn Deepwater Horizon Oil Spill Trust, set up to pay claims from the disaster. The UK company's pledged collateral consists of an overriding royalty interest in oil and gas production at BP's Thunder Horse, Atlantis, Mad Dog, Great White and Mars, Ursa and Na Kika oil and gas assets in the Gulf of Mexico. The move was aimed at assuaging concerns on BP's ability to pay off all the legitimate claims it faces on the US oil spill.

UBS, Credit Suisse asked to hold more capital

Swiss banking giants UBS and Credit Suisse need to maintain a much higher level of capital on their balance sheets against risk-weighted assets in order to sail through another financial meltdown, a government-appointed panel said. The Swiss banking committee is recommending the country's two major banks to hold 19% of risk-weighed assets on their balance sheets compared with 10.5%level the Basel Committee on Banking Supervision announced last month. Of that, 10% will have to be held in the form of common equity compared with 7% required under Basel III rules, and the rest in contingent capital. The panel was examining the role of the so-called "too big to fail" banks in the wake of the 2008 global financial crisis.

Wal-Mart to acquire Massmart

Wal-Mart Stores Inc. announced that it has made a preliminary, non-binding proposal which could, if successful, lead to Wal-Mart making a cash offer to acquire Massmart Holdings Limited for ZAR148 per share. This is an indicative, non-binding offer, and is subject to a number of conditions, including due diligence, and a period of reciprocal exclusivity granted by Massmart and Wal-Mart. In accordance with the South African legal requirements, Massmart filed a Cautionary Announcement indicating the terms of the Contemplated Offer. Massmart, headquartered in Johannesburg, is one of the largest distributors of consumer goods on the African continent and is the leading African retailer of general merchandise, home improvement equipment and supplies.

Unilever to acquire Alberto Culver for US$3.7bn

Unilever agreed to acquire US-based Alberto Culver Co. for US$3.7bn in cash. Unilever will acquire all of the outstanding shares of Alberto Culver for US$37.50 per share in cash, valuing the company at about US$3.7bn. The US$37.50 per share price represents a 33% premium to Alberto Culver's 12-month volume weighted average share price. This will make Unilever bigger than Procter and Gamble (P&G) as the world’s No.1 hair conditioner company. The acquisition is to bring St Ives, TRESemme and VO5 under Unilever and intensify the competition in the hair care industry between L’Oreal and P&G. Albert Culver has been in the industry for 50 years and has six manufacturing facilities with over 2,700 people in nine countries.

Pfizer to acquire King Pharma

Pfizer and King Pharmaceuticals entered into a definitive merger agreement whereby Pfizer will acquire King for US$3.6bn in cash, or US$14.25 per share. The share price is about 40% higher than King’s Oct. 11, closing price and 46% above its one-month average closing price as of the same date. Both companies’ boards approved the transaction. The transaction will give Pfizer ownership of King’s prescription pharmaceutical business, which is focused on delivering new formulations of pain treatments that are designed to discourage abuse. Pfizer also will gain King’s Meridian auto injector business for emergency drug delivery, which develops and manufactures the EpiPen and is a long-term supplier to the US Department of Defense, and King’s animal-health business.

GSK to pay US$750mn to settle tainted drug complaints

GlaxoSmithKline Plc agreed to pay US$750mn, besides pleading guilty to manufacturing and distributing adulterated drugs from a now defunct plant in Puerto Rico, the US Justice Department said. In July, the British drug giant had said that it has reached an agreement, in principle, relating to quality problems at its SB Pharmo Puerto Rico Inc's plant and would pay about US$750mn to resolve the allegations. The company settled criminal and civil complaints accusing it of knowingly selling, for years, old contaminated baby ointment Bactroban and an ineffective antidepressant Paxil CR. The drugs, along with the anti-nausea medicine Kytril and diabetes drug Avandamet - were made at the plant between 2001 and 2005. In total, GlaxoSmithKline sold 20 drugs with questionable safety produced at the contaminated Puerto Rico factory.

Renault sells stake in Volvo to reduce debt

Renault SA raised about €3.01bn (US$4.19bn) after selling a large part of its 21.7% stake in Volvo AB, cutting it to 6.8%, to help reduce debt. Renault said that the proceeds from the private share placement to institutional investors would help bring net debt to below €3bn from €4.6bn, in line with previously announced targets. The sale covers all of Renault's B shares, leaving A-class shares worth 6.8% of Volvo's capital and 17.5% of voting rights.

Rio Tinto and BHP call off JV plan

BHP Billiton and Rio Tinto scrapped their proposed US$116bn iron ore joint venture after opposition from competition regulators. "Both parties have recently been advised that the proposal would not be approved in its current form by the European Commission, Australian Competition and Consumer Commission, Japan Fair Trade Commission, Korea Fair Trade Commission or the German Federal Cartel Office," BHP and Rio said in a joint statement. "Some regulators have indicated they would require substantial remedies that would be unacceptable to both parties, including divestments, whereas others have indicated they would be likely to prohibit the transaction outright." Rio and BHP had announced the deal on June 5, 2009. The deal has been strongly opposed in iron-ore dependent China and by global steelmakers amid fears that the mining titans could get more pricing power.

Singapore Exchange to buy ASX

Singapore Exchange (SGX), Singapore’s main stock exchange, launched a takeover bid for ASX Ltd., its Australian counterpart. The CEOs of both bourses touted the benefits of the A$8.4 billion (US$8.3 billion) proposal, which would create Asia’s fourth-biggest exchange by market cap of listed firms. But the deal must overcome regulatory impediments in Australia, including a 15% cap on foreign ownership of ASX. SGX's proposed takeover of the ASX requires the support of the minority Labour government, and at least four other legislators in the lower house of Parliament. Three key Australian lawmakers said they opposed the sale of ASX. The proposed takeover will also be assessed by the Australian Foreign Investment Review Board.

Liverpool sold to Boston Red Sox owners

Liverpool’s board agreed to sell England’s most successful soccer club to Boston Red Sox owner John W. Henry’s New England Sports Ventures LLC. The Liverpool board accepted the bid after reviewing two offers. But the takeover by the New England Sports Ventures requires resolution of a legal dispute with the Reds' American owners Tom Hicks and George Gillett. Hicks and Gillett said earlier that the offers dramatically undervalue the club and they will resist any attempt to sell without their agreement. They also said that they have invested US$270mn in cash since buying the club. The sale is also subject to Premier League approval.

Nokia starts shipping N8 smart phones

Nokia's latest entertainment smartphone, the highly anticipated Nokia N8 with Ovi services, has started shipping. Customers who have placed a pre-order for the Nokia N8 in Nokia Online Shops and Nokia retail stores will be the first to receive their Nokia N8. Market availability will vary by country and by operator, with broad availability in the coming weeks. The first of a series of smartphones based on the new Symbian, the Nokia N8 is fast and easy to use and supports true multitasking, allowing users to run multiple apps simultaneously and switch between them easily. Dubbed the world's best camera phone, the Nokia N8 lets you take the highest quality photos and shoot HD-quality videos in supreme clarity with the 12MP camera with Carl Zeiss optics. You can edit photos and videos on-screen and choose from multiple ways to share them; transfer large files to an external hard-drive with USB-on-the-go, or upload photos to social networks like Facebook, Twitter or RenRen straight from the home screen. All this is delivered in a robust aluminum body in a range of vibrant colors with a real-glass 3.5" AMOLED display.

Microsoft unleashes Windows Phone 7

Microsoft launched Windows Phone 7, its new operating system for mobile phones, in its bid to make a mark in the mobile handset market which is dominated by competitors, such as Apple, Research in Motion and phones that run on Google's Android OS platform. Windows Phone 7 will see the first devices launch on October 21 from major manufacturers including HTC, Samsung and LG.

Microsoft's chief software architect to quit

The Microsoft Corp said that its chief software architect Ray Ozzie will step down following a tenure in which the Windows-maker lost ground to Google and Apple. Chief Executive Steve Ballmer has reportedly said that Ozzie would not be replaced, raising questions about the leadership and direction of the world's largest software company. Ozzie, who spearheaded Microsoft's move towards providing software and computing power over the Internet - known as "cloud computing" - had achieved what he set out to do. Ozzie took on the role of chief security architect in 2006, after Bill Gates stepped down as Microsoft CEO to focus on his philanthropic work. Previously, he served as chief technical officer starting in 2005, after Microsoft purchased Groove Networks, which Ozzie founder in 1997.

Apple unveils an all new MacBook Air

Apple unveiled an all new MacBook Air, the first of a next generation of notebooks which will replace mechanical hard disks and optical drives with Internet services and solid state flash storage. Available in 11-inch and 13-inch models and weighing as little as 2.3 pounds, the new MacBook Air is Apple’s lightest and most portable notebook ever. MacBook Air uses the same solid state storage technology as iPad to deliver instant-on responsiveness, up to seven hours of battery life and up to 30 days of standby time.

November 2010

Domestic News

CAG pegs 2G spectrum loss at Rs 1.8 lakh crores

The Comptroller and Auditor General Vinod Rai submitted its report on the 2G spectrum matter, saying that non-auction of 2G spectrum in 2008 may have cost the exchequer up to Rs 1.40 lakh crores besides. An additional loss of over Rs 360bn was caused after the award of additional spectrum to the existing telecom players, says the CAG report. But, the Union Telecommunications Ministry moved the Supreme Court, disputing the CAG claim that Telecom Minister A. Raja caused massive losses to the Centre by awarding 2G licences at throw-away prices to new and existing operators in 2008.

The Telecom Minister followed the policy laid down by NDA government's Telecom Minister Pramod Mahajan, the Telecom Ministry said in an affidavit filed in the apex court. The Supreme Court will hear a Public Interest Litigation (PIL) on this issue on November 15. The affidavit stated that the Government auditor CAG did not have the authority to question the policy decision taken by Raja. The CAG report accuses Raja of ignoring the advice given by the Law and Finance ministries and that of the Prime Minister as well. But the affidavit gave account of communication between Raja and Prime Minister Dr. Manmohan Singh as well as other ministries.

Meanwhile, Telecom Minister A Raja ruled out resignation over the controversial issue, saying that he will prove that everything has been done according to the law. Also, DMK chief, M Karunanidhi strongly stood behind A Raja and virtually ruled out his resignation, saying that the telecom minister only went by the procedures followed by his predecessors. He also said there was no need for him to talk to the Congress over the issue.

SC asks Vodafone to deposit Rs 25bn in 3 weeks

airtel unveils new youthful and dynamic global identity

Govt to launch MNP by January 20

The Mobile Number Portability (MNP) service will be launched in the entire country on January 20, Union Minister of Telecommunications and IT Kapil Sibal said after launching the service at Rohtak, Haryana. The MNP service was launched by Sibal by making the inaugural call to Bhupindrer Singh Hooda, the Chief Minister of Haryana from a ported mobile number. The Union Minister said that now the mobile subscribers of Haryana will be able to exercise their choice of telecom service provider. He said the choice based services initiate healthy competition among the telecom service providers which ultimately benefits ‘Aam Aadmi’. Mobile subscriber base has reached around 700 million from mere 33 million in March 2004. The telecom networks in all the remaining 21 Licensed Service Areas have started migration for working in the MNP environment. For orderly technical migration of complex interconnected networks, each of the remaining service areas will be migrated one by one on alternate days. This will enable simultaneous validation of technical parameters and removal of any problems arising from migration activity to ensure successful and smooth migration of a service area. Migration activities will not take place during December.

2G spectrum case...SC defers verdict on PM's role

All-party meet fails to break parliament logjam over 2G scam

Prithviraj Chavan named new Maharashtra CM

The mystery behind who would replace ousted Maharashtra chief minister Ashok Chavan was resolved this week. The Minister of State in the Prime Minister's Office (PMO) Prithviraj Chavan was appointed the new Maharashtra Chief Minister. Chavan's name was formally announced morning after he met Congress President Sonia Gandhi at her 10 Janpath residence in New Delhi. Senior Congress leaders Pranab Mukhejee and A.K. Antony were also present at the occasion, according to media reports. Ashok Chavan was officially sacked by Sonia Gandhi after his name cropped up in the Adarsh Housing society scam. The Congress ally in Maharashtra, the Nationalist Congress Party (NCP), used the opportunity to replace the deputy chief minister. The party substituted Chhagan Bhujbal with Ajit Pawar, nephew of party chief Sharad Pawar.

Nitish Kumar returns for 2nd term after convincing win

The Nitish Kumar-led JD(U)-BJP combine scored a resounding victory in Bihar, with a comfortable two-thirds majority in the just concluded assembly elections. The JD-U leader was on Friday sworn in as chief minister for a second consecutive term at the historic Gandhi Maidan in Patna. The oath of office was administered by Governor Devanand Konwar. Nitish Kumar, who is Bihar's 32nd chief minister, steered the National Democratic Alliance (NDA) to an incredible victory - winning 206 of 243 seats. On the other hand, the RJD-LJP alliance and the Congress were routed badly. The Bihar elections were held in six phases with the Chief Election Commissioner S.Y. Quraishi described it as the "most peaceful election ever." In the last elections in 2005, the JD(U)-BJP alliance got 143 seats with JD(U) securing 88 and BJP 55. RJD and LJP together had 64 seats in the outgoing House. Congress had nine. Nitish Kumar said Bihar has chosen to end its association with caste politics to make a new beginning - a "nayi kahani." He said he had no magic wand, but he would try and live up to the aspirations of the people of Bihar. JD (U) chief Sharad Yadav said the results are outcome of the socio-economic development programme implemented by the Nitish Kumar-led coalition government in the state. Yadav also made it clear that the alliance with BJP would continue.

Why Nitish Kumar magic worked in Bihar

Rosaiah goes, Kiran Reddy to be Andhra CM

Yeddyurappa retains CM's job in Karnataka

OECD sees more sustainable growth for India

India will return to a more sustainable pace of growth as a sharp rebound in agricultural output slows, the Organisation for Economic Cooperation and Development (OECD) said. India has avoided an inflationary spiral due to slowing gains in food prices the Paris-based agency said in its twice-yearly outlook report. Still, the RBI needs to tighten monetary policy further because fuel prices remain high, credit demand is strong and capacity is scarce, it added. Strong business investment and personal consumption will support the Indian economy, which is projected to expand 8% next year and 8.5% in 2012, according to the OECD. Economies in the Asia-Pacific region will continue to recover in the next two years thanks to solid domestic demand and exports, but many countries need higher interest rates to counter inflation, the OECD said.

India is not stealing US jobs: PM

India is not in the business of stealing jobs from the United States, Prime Minister Dr. Manmohan Singh said in New Delhi at a joint news conference with the visiting US president Barack Obama. Dr. Singh's remarks came in the wake of the recent rhetoric against the outsourcing of Information Technology (IT) work by US companies to countries such as India. It may be recalled that the state of Ohio even banned IT offshoring to India. Separately, the Prime Minister said that India and the US decided to accelerate the deepening of bilateral relations and to work as equal partners in a strategic relationship that will positively and decisively influence world peace, stability and progress. Dr. Singh welcomed the decision by the US to lift controls on export of high technology items and technologies to India, and support India’s membership in multilateral export control regimes such as the Nuclear Suppliers Group (NSG). "This is a manifestation of the growing trust and confidence in each other. We have agreed on steps to expand our cooperation in the space, civil nuclear, defence and other high end sectors," the Prime Minister said. Read More...

Global trade imbalances unsustainable: Obama

India and US to accelerate deepening of ties

Praful Patel warns airlines on rising fares

Union Civil Aviation Minister Praful Patel threatened action against airlines that charge exorbitant fares, after several airlines raised ticket prices on the back of growing passenger traffic. "We will take action against airlines that violate the price band. In fact, DGCA has sent notices to all the airlines. This kind of predatory pricing cannot be justified and it cannot be allowed to continue," Patel said on the sidelines of an aviation seminar. One-way economy class airfares on routes such as Delhi-Mumbai are being sold for as much as Rs16,000, while a one-way business class airfare on the same route can cost Rs35,000-matching the levels of return fares to some European destinations. The hike follows an 18-20% growth in passenger traffic this calendar year. "We shall certainly try our best to bring discipline in the aviation sector. Airlines in the last few weeks have been charging very exorbitant prices," the minister added.

Airlines hike fares as demand up 16% in Oct

DGCA to monitor routewise tariff of all airlines

Govt seeks parliament nod for additional spending

The Finance Ministry has sought parliament’s approval to spend an extra Rs 449.50bn on a gross basis in the current fiscal year, according to the ministry's supplementary demand for grants. Of this amount, Rs 198.10bn will be the net cash outflow, it said. The Government has sought an additional spending of Rs 2.78bn as cash compensation to public sector companies oil marketing firms for selling products below cost and another Rs 50bn towards the fertilizer subsidy. The Finance Ministry also sought an approval for spending Rs 120bn for the repayment of cash management bills. The Government has a budget target of spending Rs 11.09 trillion in the current fiscal year. Finance Minister Pranab Mukherjee told parliament that the additional spending will not increase FY11 fiscal deficit, which the Centre aims to limit to 5.5% of gross domestic product (GDP). Mukherjee, while setting the FY11 fiscal deficit target in February, had said that the budget gap would be partially funded through market borrowings of Rs 4.57bn.

Govt forms high level panel on infrastructure financing

Fertilizer Ministry turns down proposal to free urea prices

The Department of Fertilizers (DoF) has rejected the Finance Ministry's recommendation for decontrolling urea prices, and has decided to go ahead with its initial plan to implement the next stage of the new pricing scheme (NPS) - the so-called "modified NPS-III". Officials in the DoF said a detailed note was being prepared on the implementation of the modified NPS-III and consultations with the industry had begun. The note will be finalized and sent for ministerial assent in the next few weeks, after which it will be put up before an inter-ministerial group (IMG), the officials said. Once the IMG approves it, the note will be taken to the cabinet for its consent. The DoF has, however, agreed to incorporate two of the Finance Ministry's recommendations in its draft policy document. First, it has agreed to go ahead with the Finance Ministry's recommendation to decanalise urea i.e. remove all restrictions on who can import the fertilizer. The DoF has also agreed to allow urea manufacturers limited manoeuvrability in determining the maximum retail price (MRP) at which they wish to sell the fertilizer. Manufacturers would, however, be required to give the government a written assurance that they will not raise the price by more than 10% over and above the government-mandated MRP.

Sparkling debut for Coal India

Shares of Coal India Ltd. surged on its much-anticipated debut on the bourses on Oct. 4, with the stock comfortably crossing the Rs 300 mark in opening trades. The Coal India listing was expected around Rs 280-290. On the NSE, Coal India ended at Rs 342, up ~Rs 97 or nearly 40% over the issue price of Rs 245 a share. It opened at Rs 291 and went on to touch a day's high of Rs 344.90. Traded volume on the counter stood at 479.7mn shares on the NSE. On the BSE, the stock opened at Rs 287 and went on to touch a day's high of Rs 315 before closing at Rs 342.35 amid trading volume of 192.87mn shares.

The issue by the public sector coal miner, the world's largest, has already made history by raising Rs 152bn (US$3.4bn), the highest amount in an IPO in India. Since the issue was subscribed 15 times, the total book size totaled a whopping Rs 2.35 lakh crores (over US$50bn). The Coal India IPO surpassed the Rs 116bn raised by Anil Ambani's Reliance Power Ltd. in January 2008 as India’s biggest IPO.

Coal India IPO's institutional order book was heavily oversubscribed, with orders worth about US$27bn from foreign investors alone. Individual investors applied for more than two times the shares on offer to them. They were offered a 5% discount. The HNI portion got subscribed by 25.40 times. In all, the Coal India issue received bids for a staggering ~9.63bn shares as opposed to the 631.63mn shares on offer.

All the money raised from the Coal India IPO will go to the Government, which sold a 10% stake in the coal producer. The Government sold 631.63mn shares in Coal India at Rs 245 a share, the top of the price band of Rs 225-245.

Coal India in BSE-500 index from Nov 25: BSE

Coal India eyes Peabody, Massey Energy assets

Coal India is in talks with Peabody Energy Assets to acquire a stake in the Australian company, according to a report. The report stated that the deal includes a stake in a mine as well as a long-term off-take arrangement. The deal is likely to be for less than US$200 mn, added the report. Coal India Chairman Partha Bhattacharyya also said that the company was doing due diligence for a stake in a Massey Energy mine but has no plan to acquire the company itself. There were reports that the company was looking for acquisition of Massey. Massey had hired boutique advisory firm Perella Weinberg to help it conduct a strategic review of alternatives to enhance shareholder value.

Separately, Coal India announced financial results for the half year ended 30th September, 2010. The profit after tax (PAT) stood at Rs 40.20bn as compared to Rs 31.15bn in the same period a year earlier. Total revenue stood at Rs 259.43bn as compared to Rs 223.40bn in the same period last year. Net sales of the company was at Rs 225.25bn, a rise of 16.9% for the first half of the current fiscal as against Rs 192.69bn recorded in the same period the previous fiscal year.

April-October direct tax collection up 18% yoy

Net direct tax collections in the first seven months of the current fiscal crossed the mark of rupees two trillion and stood at Rs 2,04,351 crore as on 31st October 2010 (April-October, 2010). This is up from Rs 1,73,447 crore collected during the same period in last fiscal (April-October, 2009) and thereby registering a growth of 17.82 percent. Growth in Corporate Income Tax was 22.05 percent. The collections from Corporate Tax stood at Rs 1,34,251 crore as on 31st October, 2010 as against Rs 1,09,996 crore in the same period during the last fiscal. Growth in collections from Personal Income Tax (including STT, and residual FBT / BCTT) was 10.33%. The collections from Personal Income Tax stood at Rs 69,722 crore as on 31st October, 2010 as against Rs 63,195 crore collected during the same period in last fiscal.

India's exports climb 21% in October

Indirect tax receipts up 42.4% during April–October

Revenue collections from indirect taxes i.e. Customs Duty, Central Excise and Service Tax have increased by 42.4% at the all-India level in the first seven months of the current financial year 2010-11 over the same period last year. Total revenue collections from the indirect taxes during April – October 2010-11 stood at Rs 1,80,261 crore which is 42.4% higher than the corresponding period in the previous fiscal year. This is also 57.5% of the Budget Estimates (BE) for 2010-11. Maximum revenue collections to the tune of Rs 75,349 crore came from Customs alone during April – October 2010-11 which is 65.9% higher than the collections made in the year-ago period. Revenue receipts from Central Excise was to the tune of Rs 71,078 crore during April – October 2010-11 which is 36.2% higher than the collections made in the corresponding period of the previous year. Revenue collections from Service Tax stood at Rs 33,833 crore at the all-India level during April – October 2010-11 which is 16.9% higher than the collections made in the same period last year.

MSCI adds 5 new stocks in MSCI India index

MSCI Inc., a leading provider of investment decision support tools worldwide, announced today the results of the November 2010 Semi-Annual Index Review for the MSCI Equity Indices - including the MSCI Global Standard and MSCI Global Small Cap Indices. All changes will be implemented as of the close of November 30, 2010. The Geneva-based MSCI added five Indian stocks in the MSCI Global Standard Indices, while removing one from the list. Canara Bank, IndusInd Bank, LIC Housing Finance, Lupin and UltraTech Cement are the new additions. Reliance Natural Resources Ltd. (RNRL) has been excluded from the MSCI India index. The MSCI also announced changes in constituents for the MSCI Global Small Cap Indices. As far as India is concerned, there has been 52 additions and 22 deletions.

India's exports rise 23.2% in Sept. 2010

Air India FY11 loss narrows

Air India reported a net loss of Rs 55.5bn for the fiscal year 2009-10 as the national carrier was not able to capitalise on higher load factors due to an increase in depreciation and interest charges. The net loss for FY10, however, was down by about 23% from a loss of Rs 71.89bn reported in FY09, Air India said in a statement. Depreciation rose to Rs 13.9bn in FY10 from Rs 12.26bn a year ago. Interest and financing charges increased by 46%, according to Air India. Air India has current debt of about Rs 190bn and is trying to cut costs by fleet and route rationalisation. The Government infused Rs 8bn into Air India in the last fiscal year and has allocated Rs 12bn in its FY11 budget to help the airline reduce its losses and debt, which have been mounting. Air India's passenger revenues increased by Rs 10.34bn in the first half of FY11 from a year ago and yields rose 13% in the same period. Air India Chairman Arvind Jadhav expects to pare its losses by around 75% in FY11.

SKS Microfinance cuts interest rate further

SKS Microfinance said it has agreed to a set of proactive measures recommended by the Microfinance Institution Network (MFIN), of which the Company is a member in good standing, to address the concerns raised by the AP State Government. In AP, the Company has already reduced interest rates to effectively 24.55% and shall take steps to further reduce it to effectively 24%. The Company is also planning to reduce interest rates in other States to effectively 24% in due course. The Ordinance and its implementation will have material impact on the Company's operations in AP. The Company started holding centre meetings from November 8, onwards to communicate the changes, carry out necessary modifications and collect data like ration card numbers and SHG borrowing details as required by the Ordinance. Read More...

SKS Microfinance stock recovers on management clarification

CRISIL puts 12 MFI on negative watch

SKS Microfinance tumbles on falling collections

Shares of troubled microfinance giant SKS Microfinance took a fresh pounding on Nov. 18 after saying that the collections are lower than normal on account of transition from weekly to monthly collection cycle and the related change in MIS, Passbook and member communication. One month has passed since the date of the Andhra Pradesh Ordinance. SKS microfinance commenced collection in those centres where it did not collect in the last 30 days. SKS Microfinance warned that if this is not redressed satisfactorily, the resultant reduction in collections in AP is likely to have a material impact on the company's revenues and asset quality of the AP portfolio. SKS Microfinance holds sanctioned credit limit of Rs 25bn from various banks and also confirms that seven banks have disbursed a sum of Rs 2.92bn post the AP Ordinance. SKS Microfinance disbursed Rs 10.48bn in October. SKS Microfinance said it was not able to conduct village centre meeting in 54% of the centres in AP for the week ended October 29. For the week ended November 12, the company was able to hold 97% of the centre meetings in AP. However, as the Andhra Pradesh Micro Finance Institution Ordinance, stipulated that the periodicity of the loan repayment should not be less than a month, no collection or disbursement was done in the said meetings.

SKS Microfinance stock recovers on management clarification

SKS Microfinance tumbles on cash crunch news

Share Microfin delays IPO: report

IOC beats Reliance to become nation's No.1 refiner

Indian Oil Corp (IOC) surpassed Reliance Industries Ltd. to regain its position as nation's biggest refiner after it completed expansion of its Panipat unit. "We have this week completed expansion of our Panipat refinery (in Haryana) to 15 million tonnes (from 12 million tonnes)," IOC director (Refineries) B.N. Bankapur was quoted as saying. Before the expansion, IOC's eight refineries had a total crude oil refining capacity of 51.2 million tons a year. Together with its subsidiary Chennai Petroleum Corp Ltd. (CPCL), it had a combined refining capacity of 61.7 million tons. After Panipat expansion, IOC group's refining capacity has increased to 64.7 million tons, ahead of 62 million tons of refining capacity that Reliance has at Jamnagar in Gujarat. IOC was the largest oil refiner in the country before Reliance started its 29 million tons a year only-for-exports unit adjacent to its 33 million tons a year plant at Jamnagar.

Vedanta gets US$6bn for Cairn India acquisition

Vedanta Resources Plc announced that it has entered into financing agreements for US$6bn with a consortium of leading banks to fund the Vedanta Group's proposed acquisition of 51-60% of Cairn India Ltd. for an aggregate consideration of approximately US$8.5bn to US$9.6bn. Vedanta proposes to acquire 31%-40% and Vedanta's subsidiary Sesa Goa Ltd. will acquire a 20% stake in Cairn India. Anil Agarwal, Chairman of Vedanta Resources plc, said, "The financing announced provides the group with funding flexibility. We are delighted to announce US$6 billion of commitments from leading international banks, a testament to the strength of the Vedanta story.

PowerGrid FPO subscribed 14.47 times

The Power Grid Corporation Ltd. FPO got subscribed 14.47 times as at 5:00 p.m. of Friday, according to the NSE web site. The issue got total bids for over 12.18 billion shares as against 841,768,246 shares on offer. The issue closed on Thursday for the qualified institutional bidders (QIB) category, which a whopping subscription of 18.52 times the allotted size. For the HNI and Retail categories the FPO will close on Friday. The company entered the capital market with its FPO priced in the range of Rs 85 to Rs 90 a piece. The offer opened on Nov 9. Post issue, the Government of India would continue to hold 69.4% of Power Grid. The company plans to raise 10% fresh equity, while the Government is likely to offload 10% of its 86.36% stake in Power Grid.

Power Grid Corp sets FPO price at Rs 90/share

October auto sales up 38% yoy

Domestic car sales in India grew at an impressive 38% rate in October to touch a new monthly record, as easy financing, new launches and a robust economic environment lured customers to the showrooms during the peak festival season. Auto makers in India sold a total of 182,992 cars in the local market last month compared with 132,615 units sold in the same month last year, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. October passenger car sales were the best-ever monthly sales compared to the previous best of 169,082 units in September. This was the fifth consecutive month of record car sales. "October demand was good due to the festive season. Basic fundamentals of the industry remain strong. Interest rates continue to be favourable despite a marginal increase and there is a strong availability of financing," SIAM Director-General, Vishnu Mathur said. New model launches also helped increasing the excitement in the market and creating demand, he added.

Lavasa Corp. asked to stop work near Pune

The Union Environment Ministry was slapped a show cause notice on Lavasa Corp. and has also asked the company to stop construction work at the Lavasa site near Pune. Lavasa Corp., which is 65% owned by Hindustan Construction Company (HCC), has 15 days to reply to the show cause notice. A Lavasa Corp. spokesperson that the company was still to receive the notice from the Union Environment Ministry. As and when such a notice is received it will respond after studying the same. It may be recalled the Lavasa Corp. recently received an approval from the market regulator SEBI for its proposed IPO. The Union Environment Ministry has asked Lavasa Corp. to respond to queries on the large project, which if not satisfactory may mean stalling of the entire project. According to the show cause notice, over 5% of the total project cost has already been incurred without environmental clearance. The notice also says that changes were made in project during the first phase without getting permission. Construction has been made on hills above 1000 metres for which environmental clearance is required. Lavasa is modern India's first planned city on the outskirts of Pune.

HCC stock down on show-cause notice

JSW Energy buys coal miner CIC Energy

JSW Energy acquired the Bahamas-based coal miner and power company CIC Energy Corp. for Canadian US$422mn (Rs 18.86bn), securing supplies for its power projects in India. "The acquisition will be effected by a step down subsidiary of JSW Energy Ltd, subject to obtaining regulatory approvals and completion of confirmatory due diligence," the company said in a statement. The deal is likely to be completed by March, it added. Toronto-listed CIC has around 2.6 billion tonnes of coal reserves in the Mmamabula region of Botswana, JSW said. "The reserves have good quality thermal coal and with low sulphur that is adequate to meet all the project requirements of JSW Energy," chairman and managing director Sajjan Jindal said.

Tata Motors denies recall of Nano cars

In response to some media reports on Tata Motors recalling the Nano cars, the auto major clarified that it is not recalling the one-lakh-rupee car. Earlier, media reports had quoted Tata Motors Managing Director P.M. Telang as saying that the Nanos would be recalled to installing a fire safety equipment. "Yes, customers have been informed. Some have been already recalled," he was quoted as saying. But, Tata Motors said that the Nano is a safe car with a robust design, state-of-the-art components and built with an uncompromising attention to quality in all aspects. This has been re-established through a second analysis, conducted during the months of September and October, Tata Motors said. Customers can be rest assured that there are no generic defects in the Tata Nano, it said. "Besides, our customer satisfaction studies with current Nano owners indicate that about 85% are satisfied or very satisfied with the car, because of it being ‘small yet spacious’, its performance, maneuverability, durability, low operating cost and safety," Tata Motors said. Read More...

M&M signs deal to buy Ssangyong Motors

Ssangyong Motor Co. Ltd. (SYMC) and Mahindra & Mahindra Ltd. (M&M) announced the signing of a definitive agreement in Seoul. The agreement was signed by Yooil Lee and Youngtae Park, Joint Receivers of SYMC and Dr. Pawan Goenka, President, Automotive & Farm Equipment Sectors, M&M, in the presence of key staff and advisors to both groups. It is intended that SYMC will continue to function as an independent entity with primarily a Korean management. The acquisition will offer financial stability to SYMC and the two companies will work to further strengthen Ssangyong’s product portfolio across the globe. The inherent strengths of Ssangyong combined with Mahindra’s expertise will help in building a global SUV major. The labour union of SYMC, M&M and SYMC have also signed a Tripartite Agreement which contains provisions for employment protection, long-term investment and commitment for no labor dispute.

M&M to buy up to 5.5% in Tech Mahindra from BT

Mahindra & Mahindra Ltd. (M&M) announced that pursuant to a proposal received from British Telecommunications Plc (BT), it has agreed to acquire up to 5.5% of the equity shares of Tech Mahindra Ltd. from the British telecom giant over time through an inter-se transfer amongst qualifying promoters at a market related price in accordance with applicable SEBI and stock exchange rules. The Company plans to grant BT a waiver of M&M's pre-emption rights under the Shareholders' Agreement between M&M, Tech Mahindra and BT for the balance of BT's shareholding in Tech Mahindra, which M&M has not agreed to acquire, subject to certain conditions. M&M and BT have also agreed that, as and when such balance shareholding of BT in Tech Mahindra falls below 10% of the issued share capital, the Shareholders' Agreement between M&M, Tech Mahindra and BT will automatically terminate. M&M has also agreed to consider any further proposals that may be received from BT from time to time.

BT may consider further stake sale in Tech Mahindra

Maran buys another 7.68% in SpiceJet

KAL Airways Pvt. Ltd., an associate company of Kalanithi Maran, picked up a 7.68% stake in Gurgaon-based low-cost carrier SpiceJet Ltd. through an off-market transaction. The South-based media baron is set to assume chairmanship of India's second largest budget carrier next week. Following this transaction, Maran's and his associate company's combined stake in SpiceJet rose to 66.2%. It was not clear at what price Maran bought the stake. SpiceJet has been converting foreign currency convertible bonds (FCCBs) into equity in phases. Maran will induct at least five more directors on to the airline's Board at the November 15 meeting and at least two of the existing directors will tender their resignations, according to reports. Read More...

Kingfisher Airlines unveils debt recast

Kingfisher Airlines announced that its Board of Directors at its meeting held on November 25, approved a Debt Recast Package (DRP) with lending banks, following a one-time relaxation in restructuring guidelines sanctioned by the Reserve Bank of India (RBI). The company will convert debt of up to Rs 13.55bn from lenders into share capital besides converting debt of up to Rs 6.48bn from promoters into share capital. It will also reschedule repayment of the balance debt to lenders over nine years with a moratorium of two years at reduced rate of interest. While Board sanction has been received from several lenders, the same is shortly expected from the others. The DRP is subject to execution of necessary documentation. The airline has a debt of over Rs 60bn on its books and the debt restructuring will help it cut interest costs. The airline plans to raise funds of about US$1bn, including a US$250mn GDR issue, that would be considered as soon as the debt restructuring exercise is finalised.

Dabur India acquires Namaste Labs

Dabur India Ltd. announced that its wholly owned subsidiary Dermoviva Skin Essentials, USA has entered into Unit Purchase Agreement to acquire 100% membership units in leading personal care Namaste Group Companies viz - Namaste Laboratories LLC, USA and its three subsidiaries for total consideration of US$100mn. The transaction is subject to customary conditions, including regulatory reviews and approvals and is expected to close by the end of the 2010 calendar year. The current management team, led by Namaste founder and CEO Gary Gardner, will continue to run the operations of the Namaste business. The sales team, including broker representatives, will remain in place, and existing relationships with retailers, wholesalers, distributors and suppliers will not change. Namaste will continue to operate in its current facility in Blue Island, IL, with business as usual and without interruption.

Axis Bank to buy Enam's broking, investment banking biz

Axis Bank Ltd. said that it will acquire the equity broking and investment banking businesses of Enam Securities Pvt Ltd in an all stock deal worth Rs 20.67bn, in a bid to complete its portfolio of financial services offerings. Enam's Asset Management (AMC), Portfolio Management (PMS) and insurance broking businesses are not part of the deal, Shikha Sharma, CEO of Axis Bank said at a news conference in Mumbai. As part of the deal, Enam shareholders will receive 5.7 shares of Axis Bank for every one share held. Enam will own 3.3% of Axis Bank after the completion of the transaction. Post the deal, Enam will be a 100% subsidiary of Axis Bank, and will be headed by Enam director Manish Chokani. Vallabh Bhansali of Enam is likely to be inducted on the Axis Bank Board. The deal is subject to the approval of the RBI, SEBI, Stock Exchanges, High Courts and other statutory authorities, Bhansali said. On non-compete agreement, Bhansali said that Enam will not compete on any ground that has been transferred for a period of five years. He added that the shares will be subject to statutory lock-in as well. He also said that the total income of Enam Securities for the April1 to October 20, 2010, period stood at Rs. 1.82bn and the profit before tax (PBT) stood at Rs. 770mn.

Lavasa gets SEBI green light for IPO

Hindustan Construction Company Ltd. (HCC) shares rose after the company received an observation letter from market regulator SEBI for its unit Lavasa Corp's proposed up to Rs 20bn IPO. HCC group CFO Praveen Sood was quoted as saying that the observation letter is an approval from SEBI, adding that the market regulator has given the company permission to file the Red Herring Prospectus (RHP) for the IPO. The company has to open the issue within 12 months from the receipt of the observation letter, he said. SEBI made certain observations, which has to be rectified at the time of the filing RHP, Sood told the media, without elaborating. Lavasa Corp., which is 65% owned by HCC, had filed the DRHP in September. Lavasa, which is developing several hill townships near Pune, would use the IPO proceeds to develop infrastructure at the site, repay some debt and to buy additional land in Lavasa.

Gravita India sparkles on debut

Shares of Gravita India Ltd. surged in a subdued market on Nov. 16 after the IPO of the lead manufacturer received tremendous response from all category of investors. After opening at Rs 201 on the NSE the stock went on to touch a day's high of Rs 247.70 as against the issue price of Rs 125 a share. The stock closed its maiden trading day at Rs 208, up Rs 104.90 over the issue price. It closed the week at Rs 225. The initial public offering (IPO) of Gravita India Ltd. was subscribed 42.88 times. The QIB portion was subscribed 6.04 times, while the Non-Institutional (HNI) section was subscribed 182.52 times and Retail by 37.34 times. The IPO had opened on November 1 and closed on November 3. The issue price was fixed at Rs 125 per share, the upper end of the price band of Rs 120-125 a share. The company raised Rs 450mn through the issue of 36 lakh shares. Gravita intends to utilise the proceeds of the issue for setting up an additional manufacturing facilities at Jaipur and new facility at Wada, Maharashtra.

Retail investors can now bid Rs 2 lakh in public issues

Claris Lifesciences extends IPO to Dec 2

Harley Davidson opens India assembly plant

Harley-Davidson Inc. is moving forward with the launch of operations in India to assemble motorcycles for the Indian market from component kits supplied by its US plants. The company expects the CKD (complete knock-down) assembly facility to be operational in the first half of 2011. "CKD assembly operations in India are a natural next step for Harley-Davidson as we build our brand presence around the world," said Harley-Davidson Motor Company President and Chief Operating Officer Matthew S. Levatich. "This investment will allow us to improve our market responsiveness and production flexibility while reducing the tariff burden, which we expect will drive growth over time by making our bikes more accessible to India's consumers.

International News

North Korea attacks South Korean island

In a dangerous escalation of tensions on the Korean peninsula, North Korea fired artillery at South Korea's Yeonpyeong island in the Yellow Sea off the countries' west coast on Nov. 23, setting houses on fire and leading to power failure. Residents of the Yeonpyeong island were evacuated to the bunkers. According to island residents speaking on South Korea's YTN television network, the artillery - more than 50 rounds - was fired from positions south of the North Korean city of Haeju. The attack started at 2:34 p.m. local time, according to local residents. North Korea's artillery assault on a South Korean island killed one soldier and seriously injured civilians and troops.

The attack was the second by North Korea this year against South Korea in the maritime border area of the Yellow Sea. South Korea’s Joint Chiefs of Staff said they returned fire even as Seoul put its military on high alert saying that it will "respond strongly" to further provocation from North Korea. South Korea also scrambled F-16 fighter jets and lifted the state of military readiness to its highest level short of war. The government convened an emergency meeting in the war bunker of the presidential office.

South Korea's defence ministry said that North Korea's firing of artillery shells was a clear violation of an armistice between the two countries, and said Pyongyang had planned the shelling intentionally. The North Korean attack came days after it revealed the existence of a previously secret uranium nuclear programme. South Korea had said on Nov. 22 that it will discuss possibility of redeploying US nuclear weapons after North Korea unveils a previously secret uranium enrichment nuclear facility.

Ireland formally asks for bailout from EU, IMF

After resisting it for several days, Ireland over the weekend finally decided to press for a bailout from the European Union (EU) and the IMF to stabilise its financial sector amid mounting debt. The Irish government said on Nov. 21 that it will start formal negotiations with the EU and the IMF over a financial rescue package. Irish Prime Minister Brian Cowen said in Dublin that he expects talks on the details of financial assistance for Ireland to be completed in the next few weeks. Irish Finance Minister Brian Lenihan said that the loan will be less than €100bn (US$137bn). He declined to give further details.

Still, the euro remained under pressure on speculation that an election in Ireland will hinder the nation’s aid talks with the EU and the IMF. Cowen said that he would dissolve his government and hold a new election once a new national budget is enacted. He is scheduled to present a proposed budget on Dec. 7. Also, the Irish rescue package failed to damp speculation that Portugal and Spain would follow Ireland in tapping the EU-IMF fund to address the mounting debt troubles.

Patrick Honohan, governor of the Central Bank of Ireland, reportedly said that selling the banks to foreign buyers may be a desirable course of action. Honohan, who has previously said that the Irish banks need bigger capital buffers, said this would be an expensive process. Late on Nov. 23, the Irish government reportedly planned to take a majority stake in lender Bank of Ireland, sending the bank's shares up sharply higher in extended trading.

...S&P cuts Ireland's rating

Standard & Poor's Ratings Services late cut its long-term sovereign credit rating on Ireland to A from AA-, and its short-term rating to A-1 from A-1+. The new ratings reflect the agency's view that the Irish government appears likely to borrow "over and above" the agency's previous projections to fund further bank capital injections into Ireland's banking system. S&P said it also may further downgrade the ratings if negotiations over the terms of an IMF-EU financial aid program, or if talks over Ireland's 2011 budget, "fail to staunch wholesale funding outflows." Separately, Moody’s Investors Service warned on Nov. 22 that a bailout of Ireland may pose a "credit negative" for the country. Moody’s said that a "multi-notch" downgrade in Ireland’s Aa2 credit rating was "most likely" because the aid would increase the country’s debt burden.

...Portugal, Spain deny pressure to take bailout

European Union, Portuguese and Spanish officials continued to be at pains to damp speculation that Lisbon or Madrid could soon be forced to seek a financial rescue to finance their swelling budget deficits and high cost debt. Euro-zone credit markets remained in turmoil, putting the euro under renewed pressure. Spanish and Portuguese equities sold off. The cost of insuring Portuguese and Spanish government debt against default continued to rise on Friday despite denials by the Portuguese as well as Spanish governments that they were under no pressure to accept a bailout.

A spokesman for the Portuguese government said a report in the Financial Times Deutschland newspaper that Lisbon was under pressure from the ECB and other euro-zone members to take a bailout in order to ease strain on Spain - was "totally false." A EU spokesman also denied any knowledge of pressure on Portugal to take a bailout. Spanish Prime Minister Jose Luis Rodriguez Zapatero absolutely ruled out a rescue for Spain, saying that the nation’s deficit-reduction measures were well under way and that the economy, while still weak, has touched bottom.

Separately, Hungary's currency and stocks fell sharply on Friday on escalating worries over the government's planned changes to the private pension fund system.

Greek budget deficit revised to 15.4% of GDP

Republicans to gain control of House

The New York Times is projecting that Republicans will win the 218 seats necessary for control of the US House of Representatives after four years of Democratic control. The New York paper also sees Democrats retaining enough Senate seats for control of the chamber. The Republicans are projected to grab at least 50 seats in the House, according to CNN, easily exceeding the 39 needed to capture control of the chamber from the Democrats for the first time since 2006. Other media networks such as MSNBC and Fox also projected a Republican win in the lower chamber. The Republican Party's re-capturing of the House of Representatives deals a major blow to President Barack Obama, who has been facing some flak over the anemic economy, government spending, swelling budget deficit and spiraling debt. Before the election, polls showed a majority of Americans were dissatisfied with the economy, with unemployment near 10% and the deficit at a near-record US$1.3 trillion at the end of fiscal 2010. Americans worried about the economy and jobs voted in all 50 states on Tuesday for all 435 House seats and in 37 Senate races, as well as for 37 governorships. Exit polls showed that the economy was the No. 1 issue and that half of voters wanted the Democrats’ historic health-care law to be repealed.

Bernanke denounces China's currency policy

US Federal Reserve Chairman Ben S. Bernanke joined the war of words against China’s currency policy while defending his latest round of monetary stimulus. In a speech prepared for a conference at the European Central Bank (ECB) on Nov. 19, Bernanke said that China’s decision to undervalue the yuan has adversely affected the global economic recovery. Countries that undervalue their currencies may eventually inhibit growth around the world and risk financial instability at home, Bernanke said. The result could be slow growth ahead for everyone, he said.

EC slaps fine on 11 airlines

The European Commission fined 11 airlines a total of €799mn (US$1.1bn) for operating a cartel in air-cargo tariffs between 1999 and 2006. Air France-KLM received the biggest penalty, of €340mn. British Airways was fined €104mn, though this is less than the amount it had set aside in anticipation of the charge.

OECD cuts growth forecasts for industrialised world

The global economic recovery is losing momentum as the US economy has nearly stalled while growth in emerging countries is also moderating, the Organisation for Economic Co-operation and Development (OECD) said. In its twice-yearly report, the Paris-based agency said that several factors suggested that its outlook might be downgraded further, citing among others global currency tensions and a possible debt crisis in Europe. The OECD, in its latest economic outlook, said it now expects GDP across its member nations to expand by 2.3% in 2011 and 2.8% in 2012. Earlier this year, the OECD forecast 2011 growth of 2.8%.

Canada rejects BHP's bid for Potash

The Canadian government rejected BHP Billiton’s US$38.6bn bid for Potash Corp. of Saskatchewan. The decision may mark the end of Anglo-Australian miner's unsolicited takeover proposal, which began nearly three months ago, although the company has 30 days to appeal the decision. Canadian Industry Minister Tony Clement said that BHP's proposal did not present a net benefit to Canada. BHP said that it was disappointed, but continues to believe that the offer is of net benefit to Saskatchewan, New Brunswick and Canada. BHP said it will continue to cooperate with the minister and the Investment Review Division of Industry Canada and will review its options. Potash said in a statement that the government’s ruling "does nothing to change our view that the ... offer is wholly inadequate," adding that the bid "fails to reflect both the value of Potash Corp’s premier position in a strategically vital industry and the company’s future growth prospects." BHP shares climbed in Sydney while that of Potash slid in after-hours trading.

Qantas grounds Airbus A-380

Qantas Airways suspended flights of its Airbus A380 fleet after an engine failure triggered an emergency landing in Singapore. The Australian carrier said that the suspension will remain in effect until the outcome of an investigation into an incident where engine failure forced one of its A380 planes to make an emergency landing in Singapore is known. Qantas has taken delivery of six A380 aircraft from Airbus, out of a total of 20 on order. The aircraft operate flights between Sydney, Melbourne, Los Angeles, Singapore and London. The 20-aircraft order is the second-largest order of A380 planes from any airline in the world. "Qantas is willing to put safety before any commercial considerations," CEO Alan Joyce, said. He said Qantas is working closely with Airbus and engine maker Rolls Royce to understand what happened on Oct. 4.

Qantas finds oil leaks in 3 A380 engines

The chief executive of Qantas Airways said that Airbus A380 fleet will stay on the ground for another 72 hours while it continues to investigate the cause of last week's emergency landing in Singapore. The investigations after the incident found oil leaks in three engines on three separate aircraft. Australia's Qantas grounded its fleet of six Airbus A380s after an engine failure triggered an emergency landing in Singapore. Qantas has taken delivery of six A380 aircraft from Airbus, out of a total of 20 on order. The aircraft operate flights between Sydney, Melbourne, Los Angeles, Singapore and London. The 20-aircraft order is the second-largest order of A380 planes from any airline in the world.

Meanwhile, Rolls-Royce said that the cause of the incident was specific to its Trent 900 engine, which it built for the superjumbo, and was the first of its kind to occur on a large civil Rolls-Royce engine since 1994. Singapore Airlines took the precaution of replacing the same engine on three of its A380s. Separately, Airbus rival Boeing suspended test flights of its new 787 Dreamliner after a fire broke out in the electronics compartment of one of the jets.

GM to raise US$13bn in IPO

General Motors Co. announced plans to offer investors US$13bn in common and preferred shares. GM will offer 365mn common shares at a price between US$26 to US$29 each. Another 60mn in series B mandatory convertible junior preferred stock will be included in the deal, which is expected to take place later this month. The underwriters will also have the option to buy up to an additional 54.75mn common shares from shareholders and 9mn shares of preferred stock from the company to cover over-allotments. The sale will include a stake of up to US$2bn for four or five sovereign-wealth funds and will bring the U.S. Treasury’s stake down to 43% from its current 61% stake. Morgan Stanley, JP Morgan, BofA Merrill Lynch, Citigroup, Goldman Sachs, Barclays Capital, Credit Suisse, Deutsche Bank and RBC Capital Markets will serve as the joint book-running managers for the deal.

GM announces Q3 profit of US$2bn

General Motors Co. (GM) posted the largest quarterly net profit since it emerged from bankruptcy in July 2009, driven by a turnaround in its critical North American operations, as it gets ready to go public again. The quarterly profit of US$2.16bn works out to earnings per share of US$1.20 on sales of US$34.1bn. The results were mostly in line with a forecast that GM issued just last week, which had called for a profit of between US$1.9bn and US$2.1bn and sales of about US$34bn. "The latest results mark the third straight quarter of profitability and positive cash flow for GM and continue our significant progress," according to Chris Liddell, vice chairman and chief financial officer.

GM makes solid start in 2nd innings on Wall Street

Shares of General Motors Co. (GM) rose in their return to the American markets on November 18 after completing a highly successful IPO that raised more than US$20bn. The IPO was the second-largest in the US history and came 18 months after the Detroit-based auto maker’s shares were delisted following a bankruptcy. GM shares opened at US$35 apiece, up US$2 compared to the offer price of US$33 a share. The stock closed at US$34.19 in the open market, a 3.6% gain over the offer price, but below the listing price. The stock climbed as much as 9.1% in the first hour of trading. Trading was very active, with volume topping 452 million shares at the close. That was equivalent to about 10% of the total volume trading on the New York Stock Exchange. With 478 million shares in the deal, the GM IPO raised US$15.8bn, surpassed only by the 2008 IPO for Visa Inc. Its owners, including the Treasury, sold US$15.8bn of common shares at US$33 each in the second-largest US IPO on record.

Ford to reduce stake in Mazda: report

Chevron joins shale gas bandwagon...to buy Atlas Energy

Chevron became the latest oil giant to bet big on US natural gas exploration, disclosing plans to acquire Atlas Energy for US$4.3bn. Chevron will pay US$3.2bn in cash for Atlas and assume US$1.1bn in debt. The price represents a 37% premium to Atlas’s closing price on Nov. 8. The deal gives Chevron access to the giant Marcellus shale-gas formation that lies beneath Pennsylvania and other states. The deal is a departure for Chevron, which until now has sat back while competitors made multi-billion-dollar deals for access to US natural-gas fields. Atlas is a leading producer of gas from the Marcellus Shale, a huge gas field that stretches from West Virginia to upstate New York.

Caterpillar to acquire Bucyrus

Caterpillar will acquire Bucyrus International in a transaction valued at about US$8.6bn (including net debt). The acquisition is based on Caterpillar’s key strategic imperative to expand its leadership in the mining equipment industry, and positions itself to capitalize on the robust long-term outlook for commodities driven by the trend of rapid growth in emerging markets. Bucyrus shareholders will receive $92 per share, $7.6 billion in aggregate consisting of all cash. The transaction represents an implied premium of 32 percent to Bucyrus’ share price as of November 12. Caterpillar will fund the acquisition through a combination of cash from the balance sheet, debt and up to $2 billion in equity. The transaction is expected to close in mid-2011.

Facebook unveils new messaging service

Facebook unveiled a new messaging service for its 500 million members that can seamlessly integrate email, Facebook messages, SMS, IM, and Facebook Chat. The product will include a full conversation history from all the mediums, and a social inbox which filters messages according to a user's preference. "We want people to be able to communicate in whatever way they choose," says Facebook spokeswoman Meredith Chin. Facebook users will have an @facebook.com email address with their public vanity URL as the prefix. Read More

SAP ordered to pay US$1.3bn to Oracle

A jury in California awarded Oracle US$1.3bn in damages in its lawsuit against SAP over stolen software, deeming the German company liable for copyright infringement. Oracle had alleged a now-defunct SAP subsidiary stole and resold Oracles patent-protected software. SAP acknowledged the patent infringement, but disagreed with the extent of the damages to its US rival. Oracle claimed the unit, TomorrowNow, took thousands of customers with the stolen technology. The US$1.3bn verdict is the largest software infringement damages ever awarded. SAP assessed the damage to Oracle at around US$40mn. Oracle argued the cost was much higher once lost licence fees were taken into account. The costs related to the US federal jury decision won't have any impact on SAP's outlook, which doesn't take account of this type of charge, a spokesman for the German software company said. SAP is considering an appeal.

December 2010

Domestic News

CBI raids Niira Radia's premises

Intensifying its campaign against the alleged perpetrators and beneficiaries in the mega 2G spectrum scam, the CBI raided 34 offices and residences of corporate lobbyist Niira Radia, former TRAI chairman Pradip Baijal, siblings of ex-telecom minister A Raja and an NGO backed by DMK MP Kanimozhi. A CBI official claimed that some "incriminating documents" were recovered during the raids at 27 places in Tamil Nadu and seven places in Delhi and Noida. The premises of alleged Hawala dealers Mahesh Jain and Alok Jain alias Bobby, who are brothers, were also raided.

The premises of Kamaraj, associate editor of Tamil magazine 'Nakkeran' in Chennai, Raja's brother and sister near Tiruchirappalli and Tamil Maiyam, an NGO in which Kanimozhi, daughter of Tamil Nadu chief minister M Karunanidhi, is on the board of directors were among those searched. Kamaraj is considered close to Raja. The investigating agency also swooped down on the premises of Raja's auditor Subramanyam and also auditor of Kanimozhi's mother Rajathi.

At Tiruchirappalli, CBI officials raided the residence of a private TV channel reporter GL Narasimhan, considered a close associate of Raja. The raids came a week after the searches in the homes of Raja in Delhi and in his native place Perambalur and a number of others. The CBI also roped in enforcement directorate officials to probe whether there was a possible violation of Prevention of Money Laundering Act (PMLA), according to reports.

"Searches conducted so far at around 34 places in Tamil Nadu, Delhi and NOIDA (UP) have led to the recovery of incriminating documents," CBI spokesperson Bineeta Thakur said. Raja was forced to resign as minister on November 14 in the wake of the CAG's report that the rates at which 2G spectrum was allotted resulted in a possible loss to the exchequer to the tune of Rs 1.76 lakh crores. Raja's premises were searched last week. Raids were also conducted at the residences of former Telecom Secretary Siddarth Behura, Chandolia, Member Telecom Commission K Sridhar and Deputy Director General in the Department of Telecom A K Srivastava.

Ethical behavior should be cornerstone of India Inc: PM

Govt unveils Terms of Reference of DoT panel

SC seeks Govt reply to Ratan Tata plea by Dec. 13

The Supreme Court issued a notice to the Government asking it to clarify by Dec. 13 its stand on a petition filed by Tata Group Chairman Ratan Tata, according to a two-judge panel headed by G.S. Singhvi. Ratan Tata had filed a petition seeking to stop the leaks of his phone conversations with Niira Radia, the founder of a public relations company that counts the Tata group companies among its clients. Ratan Tata had sought a direction to the Government to probe the leakage of tapes and stop their unauthorised publication. In his petition to the apex court of the country, the veteran industrialist had sought action against those involved in the leakage of tapes, alleging that such an act amounted to infringement of his fundamental Right to Privacy. Ratan Tata asked the Supreme Court for directions to the Union Home Secretary, the Central Bureau of Investigation (CBI) and the Income-Tax Department. In the wake of the 2G spectrum scam, some media companies have published the taped conversation of Radia with top politicians, journalists and industrialists. Transcripts of some of these tapes have also found their way to various web sites.

Also Read:

2G scam...SC slams A Raja for ignoring PM's advice

India's wireless subscriber base tops 687mn in Sept

Winter session of parliament draws a blank

The winter session of parliament will go down as one of the worst in India's democratic history with both sides - the Government and the Opposition - refusing to cede any ground on the issue of 2G spectrum controversy. The Question Hour in Parliament was disrupted for the 22nd day on Dec. 13, with Lok Sabha Speaker Meira Kumar adjourning the lower house till noon. Opposition members, mainly from the BJP and SP, persisted with their demand for a JPC probe into the so-called 2G spectrum scam. The scene was no different in the Rajya Sabha where vice-president Hamid Ansari had to adjourn the Upper House till noon after the BJP and the AIADMK members continued their demand for a JPC probe into irregularities in the 2G spectrum allocation. It was also the ninth Anniversary of the terrorist attack on the Indian parliament. The members observed silence in both Houses as a mark of respect to those killed in the attack. Separately, Congress President Sonia Gandhi lambasted the BJP and asked partymen to expose the saffron party's double standards and doublespeak' on the issue of corruption.

Mid-Term Review: India's economy could grow 9% in FY11

That the Indian economy could grow at 9% this fiscal year was amply clear after the announcement of the second-quarter GDP data last week, but the same view on Tuesday received an official backing of sorts, with the Government saying that GDP in FY11 could cross 9%. "It is estimated that growth in 2010-11 will be 8.75% with 0.35% variation on either side. The range indicates the possibility of crossing the 9% mark this year itself," according to the Mid-Term Economic Review tabled by Finance Minister Pranab Mukherjee in Parliament. The new range is wider than the earlier estimate owing to higher risk factors, including a possible deterioration in the economic situation in the eurozone, the Government said in its Mid-Term Review. It expects the fiscal deficit to remain within its budgeted range of 5.5% of GDP in FY11. "Sustaining such high levels of growth for a number of years, however, will require significant deepening of reforms initiative," said the Mid-Term Economic Review.

Also Read:

India needs $400 bn investment in power during 12th plan

IOC, BPCL, HPCL hike petrol prices

Bharat Petroleum Corporation Ltd. (BPCL), Indian Oil Corp. (IOC) and Hindustan Petroleum Corp. Ltd. (HPCL) hiked petrol prices by Rs 2.95 per litre. The hike in petrol prices was the fifth time in six months. The last hike of petrol prices was implemented on November 2. IOC, BPCL and HPCL have revised rates four times since June 26 when petrol price was deregulated. After the latest increase, petrol prices have gone up by Rs 4-5 a litre since deregulation in June.

Murli Deora, the Union Petroleum Minister reportedly asked public sector oil marketing companies to hike petrol price by only Re 1 per litre instead of Rs 2.50 warranted to offset their losses. According to reports, price for diesel was left to the Empowered Group of Ministers (EGoM), which meets on December 22.

In June, the EGoM on petroleum product pricing, lifted its control on petrol and raised diesel price by Rs 2 a litre. It also promised to free diesel prices at a later date. Since then, crude oil prices in the international market have climbed to US$90 a barrel, the highest since July 2008. As a result, the state-run oil marketing companies are losing Rs 4.71 per litre on diesel for selling the fuel at the government-capped prices.

The Government came under pressure from coalition allies to cut excise duty on petrol to partially roll back petrol prices. But, Finance Minister Pranab Mukherjee said that the hike was necessary because of soaring international oil prices.

India, China ink deals worth US$16bn

Chinese Premier Wen Jiabao arrived with 300 industry leaders in tow for its India visit and signed up deals totaling US$16bn. "It is necessary to ease restrictions concerning approval procedures, capital flow and entry and exit of people, thus creating more favourable conditions for mutual investment," Wen told corporate captains at a meeting jointly organised by CII, FICCI and ASSOCHAM. Shortly after his 10-minute address, Indian and Chinese companies signed 49 deals worth Rs 700bn.

Following the deals, India and China signed an inter-governmental pact to facilitate investments. India and China signed six agreements, including one in the field of green technology. The agreements were signed after talks between Prime Minister Dr. Manmohan Singh and the visiting Chinese Premier. The two sides also signed a MoU each on exchange of hydrological data of common rivers, media exchanges and cultural exchanges.

Premier Wen Jiabao outlines four pronged strategy to deepen co-operation

India-China FTA talks may stumble over trade deficit

India-Indonesia bilateral trade touches US$10bn

Govt announces recapitalisation of Public Sector Banks

The Union Cabinet approved a proposal to provide an additional amount of Rs 60bn, in addition to the Rs 150bn already provided in the Budget, to ensure Tier I CRAR (Capital to Risk Weighted Assets) of all Public Sector Banks (PSBs) at 7% and also to raise the Government of India's shareholding in all PSBs to 58%. The exact amount, mode of capitalization and other terms and conditions would be decided in consultation with the banks at the time of infusion. The proposed capital infusion would enhance the lending capacity of the PSBs to meet the credit requirement of the economy in order to maintain and accelerate the economic growth momentum. "This additional availability of capital is likely to benefit employment oriented sectors, especially agriculture, micro & small enterprises, export, entrepreneurs etc. in promotion of their economic activities which would, in turn, contribute substantially to the growth of the economy," the Government said in a statement. Read More

Lok Sabha clears additional Govt spending for FY11

India and France ink nuclear pact

India and France signed an agreement to build two nuclear power plants in India, as the two nations sought to enhance their bilateral trade and economic ties. The agreement was signed between the Department of Atomic Energy (DAE) and France's atomic energy commission (CEA) for cooperation in the field of nuclear science and technology. Areva SA, one of France's main nuclear power companies, will build two European pressurized reactors of 1,650 megawatts (MW) each at Jaitapur in Maharashtra. The agreement, valued at about US$9bn, was signed in the presence of French President Nicolas Sarkozy and Indian Prime Minister Dr. Manmohan Singh in New Delhi. The French President had come on a four-day visit to India. Sarkozy, who arrived on Dec. 4, is accompanied by his defense, foreign and finance ministers and nearly 60 business leaders.

Sugar stocks cheer Govt's export announcement

Shares of sugar companies advanced after media reports suggested that the Government has allowed the millers to export 5 lakh tons of the sweetener under the advance license scheme. A Rs 90/quintal hike in levy sugar price to industry was also announced by the Union Agriculture Minister Sharad Pawar. A financial newspaper also reported that the Centre would allow higher liquidity to the industry, besides higher borrowing limits to mills to facilitate early clearing of cane payment arrears to farmers. Shares of Bajaj Hindusthan, Shree Renuka Sugars, Balrampur Chini, EID Parry, Triveni Engineering, Sakthi Sugars and Dhampur Sugar Mills gained on the announcement.

October exports climb 21% YoY

India's merchandise exports continued the good performance of the past couple of months despite sluggish economic growth in a few key overseas markets, data released by the Government showed. Overseas shipments of goods grew by 21.3% to US$18bn in October while imports for the month under review rose by 6.8% to US$27.7bn, the Commerce & Industry Ministry said. As a result, the trade gap in October came down to US$9.7bn from US$11.1bn in the same month last year. The trade deficit was at US$9.1bn in September this year. In the Indian Rupee terms, the October exports were up 15.3% at Rs 797.63bn while imports increased by mere 1.5% to Rs 1229.7bn. Oil imports during October were up a measly 0.3% at US$8.41bn while non-oil imports during the same month were up nearly 10% at US$19.28bn.

Direct tax collections rise 18% during Apr-Nov

Exports jump 27% in November

India's merchandise exports grew by 26.8% in November while imports rose by a more modest 11.2% last month, Union Commerce & Industry Secretary Rahul Khullar said. Overseas shipments stood at US$18.9bn in November while imports were at US$27.8bn, Khullar told reporters in New Delhi. The trade gap for the month under review stood at US$8.9bn compared with US$9.7bn in October. But, these are provisional trade data for November and the same is subject to revision, Khullar said. In the April to November 2010-11 period, exports were up 26.7% at US$140.3bn while imports were up 22% at US$222bn, according to the Union Commerce Secretary. As a result, the trade deficit for the first eight months of the current fiscal year stood at US$81.7bn. Khullar exuded confidence that India's merchandise exports will touch US$215bn in FY11 as opposed to the annual target of US$200bn set by the Government. "Exports are doing pretty well. And, at this rate, four months from now it (total exports) could be in the range of US$210-215bn," the Commerce Secretary said. Khullar said that India is likely to end up the financial year with a trade of gap of around US$120bn, which he said is manageable.

Azim Premji to transfer 213mn shares to trust

Wipro chairman Azim Premji said he will give about Rs 88.46bn (about US$2bn) to improve school education in India. Premji, India's third richest man with a net worth of US$18bn, will transfer 213 million equity shares of Wipro, held by a few entities controlled by him, to the Azim Premji Trust from Dec. 7. It will fund educational activities of the Azim Premji Foundation (APF) which works mainly with schools in rural India. He had previously transferred over Rs 7bn crore to the APF.

The 213mn equity shares amount to about 8.7% of Wipro's total outstanding shares held by entities controlled by Premji. Premji will transfer Rs 88.46bn worth of shares to the trust Azim Premji Foundation Pvt. Ltd. involved in nonprofit initiatives. The transfer will be effected by the end of December. Further, Wipro said the Company has been informed that the trust has been created to fund various social, not for profit initiatives, which are expected to scale significantly over the next few years. The trust is controlled by Premji, and he will continue to retain the voting rights of the transferred shares.

Nilesh Shah quits ICICI Prudential AMC

Nilesh Shah, Deputy Managing Director, ICICI Prudentail Asset Management Company (AMC) has decided to step down from ICICI Prudentail AMC. According to reports, Nilesh Shah has not said when he would exit but he could extend his tenure at ICICI Prudential AMC till mid-February to ensure a smooth transition. "Nilesh Shah has indicated his desire to leave ICICI AMC to pursue other opportunities. He will continue at the AMC for an appropriate transition period. The AMC has a strong investment team which will continue to focus on maximising value for investors," an ICICI Bank spokesperson has been quoted as saying. ICICI Prudential AMC is a joint venture between ICICI Bank and UK's Prudential group. Nilesh Shah has been with ICICI Prudential AMC since 2004.

UK Sinha named new SEBI Chairman

U.K. Sinha has been named the new SEBI Chairman, according to reports. He will replace outgoing SEBI chief C.B. Bhave. U.K. Sinha is currently the Chairman and Managing Director of UTI Asset Management Company Pvt. Ltd. U.K. Sinha is also the Chairman of the Association of Mutual Funds of India, the apex industry body for mutual funds. Before moving to UTI, U.K. Sinha was Joint Secretary in the Department of Economic Affairs (from June 2002 to October 2005). U.K. Sinha's name was shortlisted after the final interviews on Dec. 13 and was to be recommended for the approval of the Appointments Committee of Cabinet. The Government panel was headed by Cabinet Secretary, K.M. Chandrasekhar. The other members of the panel were Ashok Chawla, Finance Secretary; R. Gopalan, Secretary, Department of Financial Services; and Alka Sirohi, Secretary to the Department of Personnel and Training.

Coal India to buy 10% stake in Peabody mine: report

Coal India, the world's largest coal miner, is looking at buying over 10% stake in an asset of Australia's Peabody and has ample funds for overseas acquisitions, Chairman Partha Bhattacharyya said. "Peabody is going ahead, discussions are becoming quite fruitful. Hopefully, it will be concluded in this fiscal," he told reporters. Last month, Bhattacharyya said that the company was in advanced talks with Peabody to acquire a stake in one of its Australian mines and was also looking at a long-term offtake agreement. The state-run firm recently raised US$3.4bn in India's largest IPO.

Govt approves stock split, bonus for ONGC

Shares of ONGC rose after the Cabinet Committee on Economic Affair (CCEA) approved a stock split and bonus for ONGC ahead of the proposed follow-on public offering (FPO). The CCEA approved a proposal to split each share of ONGC into two. There were reports that the Union Cabinet had approved a 1:1 bonus issue for ONGC, but there has not been any official confirmation of the same from the Government or the Company. The Government will raise about Rs 110bn by divesting a 5% stake in ONGC by March. Post offer, the Government's shareholding in ONGC would come down to 69.14% from current 74.14%. ONGC said that its Board will meet on December 16 to consider payment of interim dividend for FY11. ONGC also said that Dec 21 has been fixed as the Record Date for the purpose of payment of Interim Dividend.

DGCA asks airlines to simplify fare listings

The Director General of Civil Aviation's (DGCA) told airlines that the listings of fares on their websites were not user-friendly and asked them to simplify and publish the prices again by Dec. 9. In a communication to the airlines, the regulator said that the publishing of the fares needs to be simplified for various categories with seamless uniformity for all carriers and that the listings should include last-day fares clearly spelt out. This is because the airlines have used their own nomenclatures for the online listings, running up to a dozen different categories. On Dec. 6, all domestic airlines complied with the DGCA's directive to publish monthly airfares on their websites. The online listings gave the lowest to the most-expensive ticket prices the airlines would charge, including last-minute fares. In November, these last-minute fares went for as high as Rs 25,000 a ticket, prompting the government to intervene. According to the published fare sheets, airlines continue to charge steep prices on last-minute fares, or tickets booked closer to the departure dates.

Govt asks ICVL to study Riversdale bid

International Coal Ventures Ltd. (ICVL), a consortium of five public sector companies may bid for Australia's Riversdale Mining Ltd., according to a financial newspaper. ICVL includes SAIL, Coal India, NTPC, NMDC and Rashtriya Ispat Nigam Ltd. The Union Steel Ministry has asked ICVL to study a bid for Australia’s Riversdale Mining, Arup Roy Chowdhury, Chairman at NTPC Ltd, was quoted as saying. Global metal and mining giants such as ArcelorMittal, Xstrata, Peabody and Anglo American are also expected to take a look at Riversdale. Tata Steel, India's leading private sector steel maker, is one of the major shareholders in Riversdale, owning about 24% in the company. Other major shareholders include Brazilian steelmaker CSN and US investment firm Passport Capital. Rio Tinto announced a US$3.5bn bid for Africa-focused Riversdale Mining earlier this month, setting the stage for a potentially protracted takeover battle, but told Riversdale that it was not in a position to make a bid.

Coal India in talks with Sinar Mas Group: report

Environment Ministry sticks to Show Cause Notice on Lavasa

The Union Ministry of Environment and Forest (MoEF) decided against permitting construction work to continue at the Lavasa Hill City project on the outskirts of Pune. The ministry said that its November 25 order to "stop project activities" at Lavasa hill-city in Maharashtra will continue till the final analysis is undertaken by the ministry. However, in Tuesday’s order issued by Dr. Nalini Bhat, an adviser in the ministry’s Impact Assessment Division, who had heard the representatives of Lavasa and National Alliance for Peoples Movement (NAPM) last week, the ministry offered to hear Lavasa’s views again on December 22, underlining that "an order could be expected on or before December 31". The Bombay High court asked the Environment Ministry to consider allowing Lavasa unit to resume construction activity partially. On December 7, the Bombay High Court had stayed the status quo notice issued by the Environment Ministry to Lavasa Corp.

Also Read:

Bombay HC judge recuses himself from hearing Lavasa plea

MOEF notice issued in Haste: Lavasa Corp

In replies to MoEF show cause notice, HCC's arm Lavasa Corporation has stated that their are malafide intentions against the project and critical facts related to the project have been suppressed. Lavasa Corp. said that the show-cause notice was issued in haste. It is Ex Parte without following any principles of natural justice. No hearing was given though these allegations had been made to the Minister seven months back. The effort through the show-cause notice appears to be stall the IPO of Lavasa.

MoEF interim order is made without objective verification: Lavasa Corp

SC extends stay on Sterlite plant closure

SKS falls as AP assembly passes MFI bill

The Andhra Pradesh state assembly approved a legislation to regulate the microfinance sector. The state assembly passed the Bill to regulate the working of microfinance institutions (MFIs) in the state. Shares of SKS Microfinance fell on reports of the Andhra Pradesh assembly passing a law to regulate Microfinance interest rates. Also, Citigroup downgraded its rating on SKS to "sell" from a "hold". Citigroup said the current regulatory imbroglio has unraveled more sharply than expected and will likely leave a trail of impact on earnings, growth and asset quality even if resolved quickly. "If it prolongs, the impact could be higher, with possibilities of further downsides to the stock," Citigroup said in its report. Citigroup has cut earnings 41-52% over FY11-13E to factor in reduced lending rates, higher funding costs, lower growth and increasing credit cost requirements medium term.

SKS Microfinance clarifies its stand on Andhra Pradesh MFI Bill

Car sales grow 21% in November

Domestic sales of passenger cars in India grew by 20.8% in November, spurred by rising incomes, easy availability of finance and new model launches, the Society of Indian Automobile Manufacturers (SIAM) said. Manufacturers sold 161,497 passenger cars in the month under review as against 133,703 cars sold in the same month a year earlier, the industry body said. Sales of Commercial Vehicles, or trucks and buses, rose by 18.3% to 48,314 units in November from 40,855 units in November 2009, SIAM said. Total two-wheeler sales stood at 930,370 units compared to 790,613 units sold in the corresponding month last year. Within the two-wheeler space, sales of motorcycles grew by 15.6% to 710,182 units, while scooter sales rose 30.7% to 165,614 units. Three-wheeler sales were up by 3.6% at 40,420 units.

Total sales of vehicles across categories rose by 17.81% to 12,21,981 units in November 2010 from 10,37,232 units sold in the same month last year. Total automobile exports were down 4% in November at 175,508 units, according to SIAM. However, there are some concerns that sales of passenger cars is likely to moderate owing to a high base effect, shortage of auto parts and hardening interest rates. "December we expect sales will be further down, December traditionally has been a lower volume month," said Sugato Sen, senior director at SIAM was quoted as saying.

ICICI Bank, HDFC to discontinue teaser home loans

ICICI Bank said that it has discontinued the so-called teaser home loan schemes with immediate effect. HDFC also announced that it will not extend its special home loan schemes. With teaser home loans customers get credit at concessional rates for the first few years and rates start heading north from the fourth year. Under teaser rate, HDFC offered home loans at a fixed rate of 8.5% up to March 31, 2011, 9.5% for a period between April 1, 2011 and March 31, 2012 and the applicable floating rate for the balance term. Similarly, ICICI Bank had offered a rate of 8.5% in the first year, 9.25% in the second year and 1.5% over and above the base rate in the third year. It may be recalled that in its policy review meeting last month, the RBI had voiced concern over the high risk of default on loans offered at teaser rates. In fact, the central bank had increased the standard asset provisioning for dual rate loan schemes five times to 2% - a move seen as a clampdown on teaser loan products.

Tata Motors announces host of benefits on Tata Nano

Tata Motors announced a host of benefits on the Tata Nano, as it deepens its customer reach-out initiatives to expand open sales of the car across the country. The Tata Nano will now come with a 4-year / 60,000-km (whichever is earlier) manufacturer’s warranty, at no extra cost. Besides being applicable on new deliveries, the warranty is also being extended to all existing owners of the car. In addition, all new buyers have the option to avail of a comprehensive maintenance contract at only Rs 99 per month. This contract will help customers take care of running maintenance of the car. These benefits will further enhance the satisfaction of Tata Nano users. Beginning July 2009 when despatches to those who had booked the car started, the company has delivered over 71,000 Tata Nanos.

Avail loan on Tata Nano in just 48 hours

Tata Motors Finance (TMF) has launched a special Tata Nano finance scheme, under which a customer can get a loan with select documents in just 48 hours. TMF will provide finance up to 90% for the Tata Nano, at easy rates. TMF, which provides customer finance for all Tata Motors vehicles, is present in all the 540 odd passenger vehicles outlets of the company. As already announced, the Tata Nano will now come with a 4-year / 60,000-km (whichever is earlier) manufacturer’s warranty, at no extra cost. Besides being applicable on new deliveries, the warranty is also being extended to all existing owners of the car. In addition, all new buyers have the option to avail of a comprehensive maintenance contract at only Rs.99 per month. This contract will help customers take care of running maintenance of the car.

RIL's gas output from D1-D3 fields falls 15%

Reliance Industries', Dhirubhai-1 and 3 fields, known as D1 and D3, in the Krishna Godavari basin, have reportedly seen a 15% drop in production to about 45-46 million cubic meters per day due to reservoir complexities. The D1 and D3 have seen output fall from 53-54 MMSCMD achieved in mid-2010 to 45-46 MMSCMD, added reports. According to reports "the reservoir is a complex reservoir and has not behaved as previously modeled". Besides D1 and D3, D-26 or MA oilfield in the same block is producing about 8 MMSCMD as associated gas. Together, the output from KG-D6 currently stands at around 54 MMSCMD. Also, RIL has been forced to restrict production from the MA field to under 20,000 barrels per day due to high water and gas output. The field was yielding more water than oil and even 8 MMSCMD of gas in comparison to 20,000 bpd of oil was considered quite high, according to reports.

RCOM to start 3G service in 13 circles in next quarter

Reliance Communications announced the launch of Reliance 3G Services starting with Delhi, Mumbai, Kolkata and Chandigarh. With the 3G rollout, Reliance Communications becomes the First operator to offer 3G services to customers in the Top 3 Metros of Delhi, Mumbai and Kolkata. Demonstrating its all round execution and innovation capabilities, Reliance Communications has rolled out 3G services in a record time of around 100 days of receiving 3G Spectrum in the major Metros of India. Reliance Communications will be launching Reliance 3G services across all 13 telecom circles, where it holds 3G licenses, by end of Fiscal 2010-11, The company is targeting a national footprint of Reliance 3G services through associations with other like minded, quality 3G licensees in the balance 9 telecom circles during the course of next year.

RCOM to get US$1.93bn from China Development Bank

During the visit of the Chinese Prime Minister to India, Reliance Communications Ltd. (RCOM) signed a Memorandum Understanding (MoU) with China Development Bank Corporation for syndicated financing of US$1.93bn. The proposed facility has 10 year maturity, and will be funded by a Syndicate including CDB and other Chinese Banks / Financial Institutions. RCOM will benefit extension of maturity, and substantial savings in interest costs. The facility is subject necessary approvals, etc. The MoU covers: (a) the first and largest Syndicated Loan of US$1.33bn for refinancing Spectrum Fees; and (b) financing of up to US$600mn towards 85% of equipment and services be procured from Huawei Technologies Co. Ltd. and ZTE Corporation. This facility is over and above the existing US$750mn facility, already substantially utilized by RCOM for procurement of equipment and services from Huawei and ZTE.

Reliance Power's UMPP concludes project financing by Chinese Banks

Huawei to invest US$2bn in 5 years, set up India plant

GMR Infra to divest 50% stake in InterGen

GMR Infrastructure entered into agreement to divest 50% stake in InterGen to Chinese electricity company Huaneng Power for US$1.23bn. The transaction is expected to close in the first half of 2011. InterGen is a global power generation company, with power plants located in UK, the Netherlands, Mexico, the Philippines and Australia, with a total gross operational capacity of 8,146 MW. GMR Infra had acquired 50% stake in October 2008, for an equity value of US$1.14bn. GMR Infra also paid about US$130mn to service the debt and received a dividend of US$32mn. The proceeds from the sale, therefore, just about result in a break-even on the investment. Given the high debt position of the firm, this is certainly a positive development and its share price reacted accordingly, rising 5.3% to Rs46 per share in Monday's trading session.

Lanco Infratech to buy Griffin Coal and Carpenter Mine

Lanco Infratech Ltd., through its step down Australian subsidiary, Lanco Resources Australia Pty Ltd., concluded a binding agreement with Griffin Energy Group Pty Ltd (Administrators Appointed) and Carpenter Mine Management Holdings Pty Ltd (Administrators Appointed) to purchase 100% shares of Griffin Coal Mining Company Pty Ltd and Carpenter Mine Management Pty Ltd (Griffin Coal). Griffin coal, based out of Collie in Western Australia, owns the largest operational thermal coal mines in Western Australia. The mine currently produces over 4 mtpa of coal and can be ramped up to over 15 mpta in the near term, post development of evacuation infrastructure. The mining tenements contain over 1.1 billion tonnes of JORC compliant thermal coal resources.

Future group resumes JV talks with Carrefour

The Future Group is likely to join hands with French retail major Carrefour for a joint venture in cash and carry wholesale trade. According to reports, a deal on this effect is likely to be signed within the next 2-3 months. It was not clear who will hold how much stake in the proposed joint venture. Future Group CEO Kishore Biyani was in Paris this week to hold talks with Carrefour. India does not allow foreign investment in multi-brand retail, but the government in July revived the debate by seeking feedback from various stakeholders about allowing FDI in multi-brand retail. This is not the first time that Carrefour and Future Group have held talks for a JV in India. They have been in talks for a more than a year now.

Reckitt Benckiser to buy Paras Pharma for US$728 mn

Reckitt Benckiser Group plc said it will acquire Ahmedabad-based fast moving consumer goods (FMCG) company Paras Pharmaceuticals for Rs 32.6bn. Private equity investor Actis will sell its 63% holding in Paras to Reckitt. Others, including Paras founder Girish Patel and his family who hold about 30% stake and Sequoia Capital, will also sell their shares to it, the company said. Paras has a strong presence in personal care and healthcare segments. It sells over-the-counter healthcare products such as pain relief ointment Moov, heel care lotion Krack, cold remedy D’Cold, prickly heat treatment Dermicool and fungal creams Itch Guard and Ring Guard. Its personal care brands include Recova, Livon, Set Wet, Zatak and Borosoft. Reckitt is paying almost seven times Paras’ annual turnover and 20 times its profits to gain full control. Paras’ turnover is estimated to be around Rs 4.5-5bn, and its earnings before interest, tax, depreciation and amortisation (EBIDTA) margins at 32%. Reckitt Benckiser India has a turnover of Rs 20bn, of which Dettol, its liquid antiseptic and toilet soaps brand, contributed Rs 10bn.

Dewan Housing acquires Deutsche Postbank Home Finance

Dewan Housing Finance Corporation Ltd. announced the acquisition of Deutsche Postbank Home Finance Ltd. for a total consideration of Rs 10.79bn. Post the transaction, DHFL will hold 67.5% equity stake in the company. The transaction is subject to necessary approvals. Average loan per customer for DHFL stood at Rs 5 lakh, as compared to Rs 23.5 lakh (March 2009) average loan size given out by Deutsche Postbank. The loan portfolio of the combined entity would witness a 48% jump from the current portfolio of Rs 11,145 crores. This is the second acquisition done by DHFL after it acquired ING Vysya's home financing business in 2002.

CEAT to acquire brand CEAT from Pirelli

Apax Partners, Carlyle in race for buying Patni

Private equity firms Apax Partners LLP and Carlyle Group are locked in the battle to acquire majority stake in India's Patni Computer Systems Ltd., according to reports. The PE consortium of Carlyle Group and Advent International has reportedly roped in former Wipro vice-chairman Vivek Paul as a partner to lead their US$1bn bid for Patni. Paul would be investing through Akansa Capital - an investment company he launched after his departure from TPG Capital last year. He may join Patni’s board if they win the bid. Paul had quit his position as vice chairman of Bangalore-based Wipro Ltd., India’s third- largest computer-services provider, in 2005 to join TPG. The other bidder is iGate Corporation, which is backed by private equity firm Apax Partners. Apax and iGate are jointly bidding for the 45.9% stake held by Patni Chairman Narendra Patni, and his family, according to reports. A decision is expected as early as this month, the report said. Bidders want the Patni family to sign a no-compete agreement and a so-called representation and warranties contract that would help the buyers in case of any future liabilities, according to reports. Japan’s NTT Data Corp., Fujitsu Ltd. and Hitachi Ltd. had earlier considered deals involving Patni, according to media reports. General Atlantic holds a 17.5% stake in Patni through a mix of Indian shares and ADRs.

SEBI clears Fame open offers

After an eight-month wait, Inox Leisure Ltd and Reliance MediaWorks Ltd have received the approval from the capital market regulator SEBI for launching their proposed open offers for acquiring control of multiplex-operator Fame India Ltd. Inox owns around 50.2% of Fame as on 30 September. It got into an agreement with the existing promoter of Fame, Shravan Shroff, to purchase a 43.28% stake from him and acquired the rest from the market. Inox and Reliance MediaWorks were locked in a takeover battle for controlling Fame, with Reliance MediaWorks crying foul and writing to SEBI, alleging collusion in the manner in which Inox procured the stake in Fame from its existing promoters. Reliance MediaWorks protested on the ground that the price offered by it for Shroff's stake was much higher than that of Inox. Inox announced its open offer to the public on 6 February at an offer price of Rs 51 per share, while Reliance MediaWorks' offer was announced at Rs 83 per share. Under the existing takeover regulations prescribed by SEBI, any entity owning more than 15% in a company has to make a mandatory open offer for at least 20% more. A committee constituted by SEBI has recommended certain changes to the takeover code. However, they are yet to be implemented.

Amar Lulla resigns as Joint MD of Cipla

Cipla Ltd. said that Amar Lulla as Joint Managing Director of the Company will expire on December 13. Amar Lulla informed the Company that he is not in a position to continue his services in the above capacity on expiry of his current term. In deference of his wishes, the company's Board accepted his request. Consequently, Amar Lulla will cease to be the Joint Managing Director of the Company effective from the aforesaid date.

MOIL dazzles on debut...But ends near day's low

Shares of MOIL Ltd. gained as much as 57% on the BSE as the public sector mining company made its debut on the bourses after a highly successful IPO. But, the weak market sentiment dragged the stock down to the day's low by the close of trade, cutting its day's gain to 24%. The stock closed at Rs 466 as against the issue price of Rs 375 per share. The stock earlier touched an intra-day high of Rs 591 after opening at Rs 551. The stock closed at Rs 461.95 on Thursday. The MOIL IPO was subscribed by 56.43 times, according to the NSE website. The issue got total bids for over 1896,149,230 shares as against 33,600,000 shares on offer, as per the data available with the National Stock Exchange. The QIB portion was subscribed 49.16 times, while the Non Institutional (HNI) portion was subscribed 143.30 times and retail portion was subscribed 32.86 times. MOIL Ltd. had fixed its initial public offering (IPO) price band between Rs 340 to Rs 375. The issue opened on 26th November and was closed on 1st December.

SCI FPO subscribed 4.25 times

Punjab and Sind Bank IPO subscribed 47.20 times

The initial public offering (IPO) of Punjab & Sind Bank was subscribed 47.20 times. The issue got total bids of 1.88bn shares as against 40mn shares on offer, as per the data available with the National Stock Exchange's web site at 16:00 hrs (IST) on Thursday. At the end of Wednesday, the QIB portion was subscribed 49.80 times, while the Non-Institutional (HNI) section was subscribed 22.91 times and Retail by 8.38 times. The employee portion was subscribed more than 1 times. The IPO began on Dec 13 and was to close on Dec 16. The issue for QIB bidders closed on Dec 15. The IPO price band was fixed at Rs 113 to Rs 120.

Claris Lifesciences IPO subscribed 1.50 times

The initial public offering (IPO) of Claris Lifesciences Ltd. was subscribed 1.50 times. The IPO received bids for 16,168,900 shares against the issue size of 10,789,474 shares on offer. The high networth individual (HNIs) category was subscribed 2 times. The retail portion was subscribed 1.6 times while the qualified institutional bidders (QIB) category got subscribed 1.3 times. The IPO had been extended till December 2 as the public issue received a very lukewarm response from the investors amid a steep fall in the market following the bribes-for-loans scam. Furthermore, Claris also revised its IPO price band lower to Rs 223-248 from Rs 278-293. The issue period started on Nov 24 and closed on Dec 2. The Book Running Lead Manager are Enam Securities, Edelweiss Capital, JM Financial Consultants and ICICI Securities.

One97 Communications postpones IPO further

Toyota Etios priced between Rs 5-7 lakhs

The Toyota Etios sedan was launched in Bangalore by Akio Toyoda, President of Toyota Motor Corp. at a price of between Rs 4.96 lakhs and Rs 6.87 lakhs (Ex-showroom Delhi). The standard version of the Etios called "J" will be available at Rs 4.96 lakhs (Ex-Delhi), followed by "G" at Rs 5.46 lakhs, "G+" at Rs 5.96 lakhs, "V" at Rs 6.41 lakhs and "VX" at Rs 6.86 lakhs. Bookings for the Etios sedan started this week while the delivery of the car will start in January. The hatchback version of the Etios called Liva will be launched in April 2011, according to Toyota Kirloskar Motors officials. Toyota Kirloskar Motors aims to sell about 70,000 units of Etios and Liva in CY 2011. The joint venture between Kirloskar group and Toyota Motor Corp. plans to sell a total of 73,000 vehicles in India in 2010 and 145,000 vehicles in 2011. The company is investing Rs 32bn to set up its second manufacturing facility in Bangalore to roll out the Etios and the Liva cars, Toyoda said. About 4,000 engineers have spent five years for developing the cars, he added. Toyota Kirloskar Motor aims to capture 10% of the Indian passenger car market by 2015, mainly on the back of Etios and Liva models.

International News

Obama agrees to extend Bush-era tax cuts

US President Barack Obama reached a deal with Republican lawmakers that would extend Bush-era tax cuts for two years and unemployment benefits for 13 months. It would also lower the payroll tax by 2% for a year. The deal also includes letting businesses write off 100% of their capital purchases in 2011; protects taxpayers from the alternative minimum tax; and keeps the US$1,000 child tax credit and a credit for college tuition. The Treasury-bond market saw its biggest one-day sell-off this year. The yield on ten-year American government bonds jumped from 2.95% to 3.11%.

Obama defended the tax deal with the Republicans to extend Bush-era tax cuts saying the compromise was necessary to help middle-income Americans cope with a sluggish economy and to boost job creation. Some Democrats openly criticised the details of the agreement and threatened to scuttle the deal. Democrats are furious that the deal extends Bush-era tax breaks for the highest income levels as well and revives the estate tax at 35%, the level favored by most Republicans.

Senate clears tax cut deal...Bill goes to House next

The US Senate approved the US$858bn package designed to extend the somewhat controversial Bush-era tax cuts despite a series of reservations from the two principal parties. The measure, which passed 81-19, now goes to the House of Representatives. The House will take it up on Thursday, according to Majority Leader Steny Hoyer, D-Maryland. If the House doesn’t pass the bill, then income-tax rates would climb on January 1. The measure is aimed at keeping the Bush-era tax cuts in place for two more years. The bill would also cut employee payroll taxes by 2% and extend emergency unemployment benefits through the end of 2011, and set the estate tax rate at 35% with a US$5mn exemption. The bill also contains an extension of benefits for renewed ethanol subsidies, credits for green-energy development and the purchase of energy-efficient appliances. US President Barack Obama praised the vote and urged the House of Representatives to quickly approve the bill, which the White House negotiated with Senate GOP leaders. Treasury Secretary Timothy Geithner urged House Democrats and Republicans to pass the deal. The agreement will accelerate the pace of the recovery and help the private sector to create new jobs for American workers," Geithner said. The Democrats could send back to the Senate a bill with adjustments to the estate-tax provision, which Senate Republicans have vowed to resist. Meanwhile, Wall Street firm Morgan Stanley says that the bill, if passed, would add 1% to the GDP growth, or roughly US$400bn, to the US economy in 2011.

WikiLeaks revelations leave US govt in a tizzy

WikiLeaks, the US whistleblower web site, stunned the world by releasing the latest round of confidential material it has obtained illicitly. This time it published the first of some 250,000 cables between American embassies and the State Department. The leak of sensitive diplomatic communications was criticised by the US secretary of state Hillary Clinton, as "an attack on the international community". The US Justice Department is investigating whether criminal charges can be brought against Julian Assange, the public face of WikiLeaks. Clinton made a number of phone calls in recent days to express regret for the release of classified State Department cables.

Meanwhile, WikiLeaks publication of thousands of classified diplomatic documents made life more difficult for diplomats. The secret dispatches revealed Washington's evaluation of many other highly sensitive international issues. These included a shift in relations between China and North Korea, high-level concerns over Pakistan's growing instability, and details of clandestine US efforts to combat al-Qaida in Yemen. Among scores of disclosures that caused uproar included disclosures that Arab leaders are privately urging an air strike on Iran and that US officials have been instructed to spy on the UN leadership.

An American provider of Internet domain names withdrew its service to the WikiLeaks Web site on Dec. 3 after a barrage of attacks by hackers that threatened to destabilize its entire system. But within hours, WikiLeaks said it had registered its domain name in Switzerland. Attempts to access the original wikileaks.org Web site produced only a page saying: "The address is not valid." But the new domain name, wikileaks.ch provided access to the site.

WikiLeaks founder arrested in London

WikiLeaks founder Julian Assange was arrested in London after he surrendered to the UK police on charges of alleged sex offences. Assange turned himself in to the British police on a warrant issued by Sweden in connection with accusations of rape and sexual molestation. Assange, a 39-year-old Australian, was arrested by officers from Scotland Yard when he went to a central London police station by prior agreement with the authorities, the police said. Assange denies the charges of sexual misconduct said to have been committed while he was in Sweden in August. Assange was refused bail by a judge in London on Dec. 7. He is due to appear in a London court again on Dec. 14, when his case will be argued by Geoffrey Robertson, a high-profile British-Australian human rights lawyer. Assange has for his own safety been moved to a segregation unit of the London prison where he is being held pending extradition to Sweden, one of his lawyers said. Assange, a former computer hacker who has coordinated WikiLeaks' release of tens of thousands of US diplomatic cables, is not allowed to have a laptop computer in the prison, but his lawyers have requested one.

Ireland finally gets €85bn EU bailout

European leaders approved an €85bn, or US$112.53bn, aid package for the debt-plagued Ireland besides unveiling a permanent system to resolve the region's fiscal problems. The agreement was announced on Sunday at an European Union (EU) finance ministers’ meeting in Brussels. The financial package for Ireland includes €10bn for immediate recapitalization measures, €25bn on a contingency basis for banking system supports and €50bn covering budget-financing needs. "This program is absolutely essential for the country," Irish Prime Minister Brian Cowen said at a press conference in Dublin. "We have carefully considered all available policy options. It’s the best available deal for Ireland." Cowen added that the bailout doesn’t involve any change in Ireland’s ultra-low corporate tax rate of 12.5% and that repayments will be at a 5.8% interest rate. The funding will be available to Ireland at a cheaper interest rate than what is available on the international markets where its borrowing costs have soared to about 9%, he said.

Fitch downgrades Ireland to 'BBB+; Outlook Stable

Ireland's credit rating was cut to the same level as Libya and South Africa, and three steps above "junk" status which would force investors to dump Irish bonds. The downgrade came amid concerns about the increased cost of saving the banks. Rating agency Fitch downgraded Ireland for the second time in two months, citing the higher cost of propping up the banks, weaker economic prospects due to the deepening banking crisis and the loss of access to affordable funding in the financial markets. The rating was cut by Fitch to BBB+ from A+, marking the first time Ireland has suffered a three-notch downgrade since losing its top AAA-rating in January 2009. Ireland has suffered 10 credit downgrades by the three main rating agencies over the past two years. Fitch has been responsible for four downgrades. This was the first time Ireland has slipped below an A rating. Rival ratings agencies, Moody’s and Standard Poor’s, still have Ireland on A-level ratings but both have said that the State’s sovereign rating could be downgraded. Ireland still has a better credit standing than Greece, the only other country in the euro zone to receive an external bailout.

S&P raises China's long-term credit rating

Standard & Poor's Ratings Services said that it was raising its assessment of China's long term foreign and sovereign credit rating to "AA-" from "A+". The move reflects a more upbeat assessment of the nation's macroeconomic and financial stability, according to the global credit rating agency. After observing Beijing's track record for the last two years, that Chinese authorities could respond to future threats to financial stability with timely measures, S&P said. S&P also said it was maintaining its stable outlook on China's long term credit rating. China has strong capacity to absorb potential balance sheet losses, given its substantial foreign reserves and strong fiscal position, S&P said.

China extends selective RRR hike for 3 months: report

Moody's puts Spain on review for possible downgrade

Moody's Investor Service said that it has put Spain's "Aa1" local and foreign currency ratings on review for a possible downgrade, citing it's vulnerability to funding stress given its high refinancing needs in 2011. Another trigger is a potential further rise in the public debt ratio should the cost of bank recapitalisation prove to be higher than expected so far. Moody's also cited increased concerns over the ability of the Spanish government to achieve required sustainable and structural improvement in government finances, given its limited ability to control regional government finances. Moody's has also placed the "Aa1" rating of Spain's Fondo de Reestructuración Ordenada Bancaria (FROB) on review for a possible downgrade, as its debt is fully and unconditionally guaranteed by the government of Spain.

ECB extends liquidity support measures

The European Central Bank (ECB) said that it will continue its stimulus measures by extending the liquidity support to the banking system but refrained from boosting the bond purchase program. ECB President Jean-Claude Trichet said that the central bank would keep offering banks access to emergency loans through the first quarter, helping to assuage some of the concerns over the sovereign debt troubles. The comments, and word that the ECB was in the market buying peripheral euro-zone debt, helped lift the euro against the dollar. There was a bit of relief in the markets that the ECB was not going to withdraw liquidity.

US economy on recovery path

Monthly data from payroll processing firm ADP Employer Services showed that private job additions in the US last month was the highest in three years. ADP said that employment increased by 93,000, the most since November 2007. The jobs growth reported by ADP topped the median forecast of 70,000. The ADP report on private payrolls bolstered optimism before the government’s November employment data, which is forecast to show on Dec. 3 that 145,000 jobs were added last month. The Labor Department report is also forecast to show that the unemployment rate held at 9.6%, according to economists' estimates.

Separately, the Institute for Supply Management said that its key factory gauge was little changed at 56.6 after rising to a five-month high of 56.9 in October. A reading higher than 50 signals growth. The ISM index of manufacturing activity edged down slightly from 56.9 in the previous month. A separate government report showed that that construction spending in the US rose 0.7% in October, beating analysts' expectations of a 0.5% decrease.

The Federal Reserve's Beige Book, a snapshot of economic conditions across the central bank's 12 districts, showed that growth continued to improve in most US regions from early October to mid-November. Manufacturing expanded and retailers anticipated a stronger holiday shopping season.

After the start of trading, the National Association of Realtors said its pending home sales index surged 10.4% in October after slipping 1.8% in September. The index, which measures sales contracts for existing homes, was expected to be unchanged.

Global airlines to earn US$15bn in profits: IATA

The International Air Transport Association (IATA) revised its industry outlook for 2010 to a net profit of US$15.1 bn (up from the $8.9 billion forecast in September). Similarly the Association revised upwards its projections for 2011 to a net industry profit of $9.1 billion (up from the US$5.3 bn forecast in September). Net margins remain weak at 2.7% for 2010 and falling to 1.5% in 2011. "Our profit projections increased for both 2010 and 2011 based on an exceptionally strong third quarter performance. But despite higher profit projections, we still see the recovery pausing next year after a strong post-recession rebound. And the two-speed nature of the recovery is unchanged with European airlines continuing to underperform other regions," said Giovanni Bisignani, IATA’s Director General and CEO.

Google unveils laptops with Chrome OS

Google exhibited the first laptops that will run on its Chrome OS operating system, using software to store applications and data on the web rather than a hard drive, resulting in much shorter boot-up times. The first Chrome OS computers will be sold by Acer and Samsung in 2011 and compete in the low-priced netbook market. Separately, Google opened an online e-book store in America. Google eBooks is a potential challenger to the dominance of Amazon and Apple in the digital-book market. Consumers can buy recent bestsellers and download free classic titles and read them on a number of devices, including the iPad, though not the Kindle. The service will be available in Europe and Asia next year.

US govt exits Citigroup...Nets US$12bn profit

The US Treasury Department sold the remaining 2.4 billion common shares it held in Citigroup. The US Treasury announced that it had sold 2.4bn Citigroup shares at US$4.35 each, finally unwinding an ownership interest that in April amounted to a 27% stake in the bank. The Obama government spent US$45bn directly to prop up the bank during the financial crisis, but it claims that Citi’s bail-out has reaped a profit of US$12bn, after the latest share sale, for taxpayers. The US Treasury made the "right amount of profit" from the sale of its remaining stake in Citigroup this week, CEO Vikram Pandit said. "The US government made in our view the right amount of profit, the US$12bn profit that they made, and of course the assistance was something that we are very thankful for," Pandit said. Meanwhile, the Treasury and the Federal Reserve accelerated their efforts to exit their investments in American International Group (AIG).

PepsiCo acquires Wimm Bill Dann dairy for US$3.8bn

PepsiCo agreed to buy 66% of Wimm-Bill-Dann, a Russian company which produces dairy goods and fruit juice, for US$3.8bn. PepsiCo plans to make an offer for the rest of the shares in Wimm-Bill-Dann. The price of US$33 per US share is 32% more than the average in the past 30 days, they said. The deal is PepsiCo’s largest yet to bolster its Russian beverage business, following the 2008 purchase of a majority stake in OAO Lebedyansky, the country’s biggest juice maker. The move makes Russia PepsiCo’s biggest international market. The purchase would be one of the biggest foreign investments yet seen in Russia outside the energy industry. In 1974 Pepsi-Cola became the first American product to be made and sold in the then Soviet Union.

Rio Tinto unveils US$3.5bn initial bid for Riversdale

Shares of Riversdale Mining Ltd. surged in Sydney on Dec. 6 after the company said that Rio Tinto Group has made a takeover proposal. Riversdale Mining, which is developing coal mines in Africa, said that Rio Tinto made an initial A$3.5bn (US$3.47bn) takeover proposal. The Company has had discussions with Rio Tinto concerning a possible transaction at the corporate level for indicative consideration of A$15.00 per Riversdale share. The offer was priced at 6.4% premium to its close on Dec. 3. These discussions were undertaken in confidence and Rio Tinto said that it was not in a position to submit a proposal for the potential acquisition of the Company.

Twitter valued at US$3.7bn post latest fund raising

Popular micro-blogging web site Twitter has been valued at US$3.7bn after it raised US$200mn in new financing, which was led by one of the highest-profile Internet investors in Silicon Valley. According to one estimate, Twitter's annual revenue was currently under US$100mn. The company was last valued at US$1bn in a funding round last year. Facebook, the world's No. 1 Internet social networking company, is valued at more than US$45bn in recent stock purchase transactions on the secondary market. The San Francisco-based Twitter had raised US$160mn in four earlier funding rounds, from investors that included Spark Capital, Institutional Venture Partners and T. Rowe Price. Twitter’s newest round was led by venture capital firm Kleiner Perkins Caufield & Byers, and early investor in Internet giants such as Google, Amazon.com and others. As part of the new funding round, Twitter has added two new board members - Flipboard CEO Mike McCue, and former Google executive David Rosenblatt.