Indian rupee down 37 paise at 62.94 vs US dollar
Economy to grow better in second half of FY14: C Rangarajan
Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has expressed confidence that India will see "distinctly better" economic growth in the second half of the current financial year.
The economy grew by 4.4 per cent in the first (April-June) quarter of current financial year. In 2012-13, the GDP growth fell to a decade low of 5 per cent.
"The impact of the good monsoon will be only seen in the second half. Apart from increasing agricultural production, this will also increase the rural demand," Rangarajan said at a CII seminar on Financial Inclusion for Reviving Growth.
Besides, there has been improvement in the manufacturing sector and in the second half of the current fiscal the growth of this sector could be about 3 per cent, he added.
"Therefore, for the year (2013-14) as a whole, it will be about 1.5 per cent which will be consistent with an aggregate growth rate of the economy of a little over 5 per cent," Rangarajan added.
He also maintained PMEAC's growth projection of about 5.3 per cent which can be achieved with the present trend in the manufacturing.
PMEAC had initially projected growth target of 6.4 per cent for 2013-14 which was lowered to 5.3 per cent in September.
In reply to a question as to whether India is ready to cope with the financial stress that might arise due to the US fiscal tapering, Rangarajan said: "I think we must get ready for it because we don't know when it will happen. The good news is that the current account deficit is coming down. In fact the CAD should be much lower than what one had expected. If the CAD come down below 3 per cent of the GDP, the capital flows should be adequate to control the CAD."
Finance Minister P Chidambaram had in October said India will be able to contain CAD below $60 billion in 2013-14 as against an earlier estimate of $70 billion.
RBI mulling merits of FII limits in govt bonds
New Delhi: The Reserve Bank of India is examining the pros and cons of relaxing limits for foreign institutional investors (FII) in government bonds, a senior finance ministry official said on Wednesday.
The comment by Arvind Mayaram, the economic affairs secretary at the finance ministry, came in response to a question from reporters about whether India was considering lifting FII limits in order to qualify for inclusion into benchmark global bond indices.
India will also consider allowing local companies to issue rupee-denominated bonds abroad, marking a new step in the internationalisation of the rupee. International Finance Corp, the private sector arm of the World Bank, last month launched a $1 billion rupee-linked bond.
RBI Governor Raghuram Rajan had earlier said that Indian official are speaking to the index compilers about potential inclusion of domestic debt.
India's exports to grow by 7.2% in 2014: Morgan Stanley
Singapore: India's exports are expected to grow by 7.2 percent in 2014 fiscal on the back of improvement in growth of developed markets, says a report by Morgan Stanley Research.
"We expect export growth of 7.2 percent in fiscal year 2014 versus minus one percent in fiscal 2013," it said in a report on Asia Pacific Economics.
Morgan Stanley Research expects a gradual sequential recovery in India's exports on the back of improvement in developed markets growth from the third quarter of this year, narrowing the trade gap.
The investment bank's research report expected gold imports to decline due to quantitative controls put in place by the government as well as increase in real rates as inflation expectations moderate.
"We estimate that quantitative control along with increase in real rates will help to reduce gold import demand in this fiscal to around USD 42 billion in fiscal 2014."
Non-oil and non-gold imports would remain very weak as tight monetary and fiscal policy would keep domestic demand weak. However, acceleration in exports can lead to some increase due to import content in exports, it pointed out.
It also noted Reserve Bank of India’s efforts on portfolio equity and debt flows. The recent steps taken by RBI to augment capital flows by providing a swap window facility to allow banks to swap non-resident deposits and overseas borrowing at a lower cost have mitigated the funding pressure to some extent in the near term.
Indeed, we expect these measures to help increase capital flows by about USD 15 billion in fiscal 2014 and thus we estimate only a marginal balance of payment deficit in our base case," said Morgan Stanley Research.
However, the key variable that would influence overall capital flows would be portfolio flows into debt and equity, it said.
But a prolonged growth slowdown could potentially lead to a continued balance of payments stress, implying that RBI would face the impossible trinity of managing the exchange rate and controlling the interest rates when capital flows would be volatile, the report said.
The report also highlighted that India would be impacted by the rise in the US rates and the US dollar.
"India will be significantly exposed to the trend of a rising US dollar and real rates through the current account imbalance, moderate dependence on foreign debt funding and upward pressure in its real rates," it said.
It said the economic growth would remain weaker for longer period. The three key risks arising from longer- duration slowdown would be the sharp rise in non-performing assets in banking system, challenges in managing fiscal deficit and the external funding risks would remain high.
Khan Market is India's costliest retail market
New Delhi: National capital's tony Khan Market is the most expensive retail market in the country even though its ranking worldwide has dropped two places to 28.
Monthly rentals at Khan Market stood at Rs 1,250 per sq ft as of June, 2013, up by just 2 per cent from the year-ago period, according to global property consultant Cushman and Wakefield's (C&W) report 'Main Streets Across the World 2013.
When it comes to rental appreciation, Panjagutta in Hyderabad with 29 per cent growth is placed 8th in the list of global rental movement ranking of 2013.
South Extension in New Delhi is at 17th position with an annual rental growth of 20 per cent. Kutuzovsky Prospekt in Moscow recorded the highest rental growth of 42 per cent.
"In the global ranking of most expensive retail locations, Khan Market in New Delhi emerged as the 28th most expensive in the world, retaining its position as most expensive retail location in India," C&W said.
"India (Khan Market) however, dropped in the global ranking from 26th to 28th position due to the weakening of the Indian rupee against US dollar and largely stable rentals with limited increment in rental values in established retailing sectors," it added.
Hong Kong's Causeway Bay has emerged as the world's most expensive retail location, followed by New York's 5th Avenue, as per the report that ranks the most expensive locations in the top 334 shopping destinations across 64 countries.
Avenue des Champs Elysees in Paris is ranked third, while New Bond Street in London, Ginza in Tokyo are at 4th and 5th places respectively.
Khan Market witnessed high demand from retailers but due to limited availability and transactions, rental values have only seen a marginal increase, it said.
Commenting on the report, C&W Executive Managing Director South Asia Sanjay Dutt said: "While retail rentals globally registered a slower growth of 3.2 per cent as compared to previous year on account of slowdown in economic uncertainties in the leading markets, the Asian markets saw a better average of rental increase at 4.5 per cent in the same period."
The economic risk remains for 2014, but conditions are expected to steadily improve across most markets, he said.
"The retailers' push towards the best and most sought after locations will continue. However, limited supply and higher rental costs will create obstacles for some brands, leading a number of retailers to look at alternative locations in close proximity to the main thoroughfares," he added.
On Indian retail locations, Mumbai's Linking Road (Rs 750/sq ft/month) emerged as the second most expensive retail location in the country despite a correction of 11.8 per cent in rental over last year. Connaught Place and South Extension are third and fourth positions with a rental of Rs 725 per sq ft in a month.
Bangalore's Brigade road and Mumbai's Linking Road stood at 6th and 11th positions respectively in the list of world's top 15 markets to saw the sharpest retail rental decline.
RBI pegs CAD at $56 bn, says no reason for rupee decline
Mumbai: Seeking to reassure investors, RBI Governor Raghuram Rajan Wednesday said there is no fundamental reason for rupee to fall again, and pegged the current account deficit for 2013-14 at USD 56 billion, much lower than the quantum estimated earlier.
He also said the Reserve Bank will not rush to close the special window opened for dollar purchase by oil companies.
The Governor also expressed the optimism that the second half of the current financial year will see better growth numbers on the back of good monsoon and the associated pick-up in consumption and healthy exports.
Referring to the recent decline in the value of rupee, the RBI chief said: "There is no fundamental reason for volatility in the exchange rate."
"At some time, it makes sense to take a deep breath and examine the fundamentals. I hope you all will do that," he said in the hurriedly called press meet.
Pegging a much lower CAD for the fiscal, Rajan said: "Our estimate now is that CAD this year will be USD 56 billion, less than 3 percent of GDP and USD 32 billion less than last year. Of course, some of that compression comes of our strong measures to curb gold import."
The current account deficit (CAD), which is the difference between outflow and inflow of foreign exchange, touched an all-time high of USD 88.2 billion or 4.8 percent of the GDP in 2012-13.
Earlier, the government had projected the CAD in the current fiscal at USD 70 billion, which was revised downwards to USD 60 billion by Finance Minister P Chidambaram on back of declining gold imports and recovery in exports.
"It's important that RBI clarifies interpretation of economic events and the likely direction of economic policies at times of uncertainty so that the market worries about the right things and does not get into a tizzy about the wrong ones. That is my quote today," Rajan said.
His remarks seemed to have calmed currency markets as the rupee gained 41 paise against dollar to close at 63.30, after declining in the previous five days in a row.
"We have no intention of rushing this process (of closing the special window for OMCs)," Rajan said.
The Reserve Bank in August had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.
The rupee, it may be mentioned, fell to a record low of 68.85 to the dollar on August 28.
Rajan said since October 14 most of dollar demand from oil marketing companies has been met from the market only.
The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for import of an average 7.5 million tonne crude oil.
Expressing comfort at declining core inflation,narrowing CAD and better growth prospects in the second half on good monsoon, Rajan sought to reassure investors who fear India will be hit again as and when the US ends easy money policy.
Ruling out any major threat from the external front to rupee as well as the economy, Rajan said even if there is no more fresh FII inflows this year, there will not a problem to finance CAD as he country will have USD 32 billion less of CAD to finance this year.
"Last year FII inflows, both debt and equity, accounted for USD 26 billion. Let me assume that we get no inflow this year, and in fact outflows equal the inflows we got last year. In other words, there is a USD 52-billion turnaround in FII flows," the Governor said.
"Remember though that we have USD 32 billion dollars less of CAD to finance this year, and till yesterday, we raised USD 18 billion through new swap channels. So, if other financing remains the same as last year, which it seems on track, even if foreign investors pull out significantly more money this year than they have so far, we still can break even on capital flows," Rajan said.
Noting that OMCs have entered a swap arrangement whereby they will have to repay dollars to the RBI on various dates from February 2014 till April 2014, Rajan said: "One worry expressed by market participants is whether OMCs will add to further downward pressure on the rupee when it comes time for them to repay dollars to the RBI."
"This to my mind is a non-issue because we have three ways of managing the repayment. One is, of course, for the OMCs to buy dollars in the market. If exchange markets are calmer, this additional demand should be absorbed," he added.
Rajan said, "But if they are not calmer, we could roll over some portion of the swaps so they mature at a calmer time. But perhaps the easiest option would be for us to settle the swap with the OMCs by making net payments in rupees, and avoid the need for them to go back to the market for dollars. When the time comes, we will choose the most appropriate combination".
He also announced a bond purchase worth Rs 8,000 crore next Monday to inject liquidity in markets.
He further said the major outflows in the recent past following the tapering talks were debt outflows.
"Though that money has not come back, indeed our FII debt exposure, both corporate and sovereign, has come down from USD 37 billion on May 21 to USD 19 billion today. I presume what is left is more patient money, but given its diminished size, I do not see it is possible exit as a huge risk," the governor said.
Rajan's address came after stronger-than-expected US jobs data last week had sparked concerns about an early end to the Federal Reserve's stimulus, hitting the rupee and sending domestic bonds and shares tumbling. This led to FIIs pulling out more than USD 13 billion from bonds and over USD 2 billion from equities between end May and early September.
Though he termed food inflation "worryingly high", which rose to 10.09 percent in October, Rajan said he was comforted by a downward trend in the core consumer price index, which declined from 8.5 percent to 8.1 percent in the month.
"I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 percent from 8.5 percent in September. The momentum for core inflation is also on the decline," Rajan said.
Philanthropy list: Azim Premji the most generous Indian with donation of Rs 8,000 cr
New Delhi/Mumbai: When it comes to generous donations, Indians are no less than anyone. India’s Azim Hashim Premji has topped 2013 Hurun India Philanthrophy list prepared by China based Hurun Report Inc.
Azim Premji emerged as the most generous Indian with a donation of Rs 8,000 crore in the past year.
HCL group Chairman Shiv Nadar is the second highest contributor in the list with a donation of Rs 3,000 crore.
The Shiv Nadar Foundation, which completed 20 years in philanthropy this year, works towards educational initiatives and expansion programmes, directly benefiting 15,000 students across India.
G M Rao, through GMR Varalakshmi Foundation, donated Rs 740 crore for the education of underprivileged children, becoming the third biggest philanthropist in India's corporate world.
Nandan and Rohini Nilekani stand fourth in the list with a contribution of Rs 530 crore.
Ronnie Screwvala, whose initiatives are housed under the Swadesh Foundation (UTV group), contributed Rs 470 crore for achieving rural empowerment through the best practices and modern technology values.
'Biotech Queen' Kiran Mazumdar Shaw made a donation worth Rs 330 crore, while Ratan Tata donated Rs 310 crore to various charitable organisations for the underprivileged through the JRD Tata Trust and Sir Ratan Tata Trust.
London-based mining major Vedanta Resources Chairman Anil Agarwal donated Rs 290 crore to support the cause of healthcare.
PNC Menon of Sobha Developers and DLF Chairman Kushal Pal Singh contributed Rs 270 crore and Rs 200 crore, respectively for programmes like adoption of villages and skill training of the youth.
Hurun India Philanthropy List is a ranking of 31 Indians who donated more than Rs 10 crore (equivalent to USD 1.6 million) in cash or cash equivalent during April 1, 2012 till March 31, 2013.
Hurun Report included donations made by companies in which an individual had a significant share, by applying the percentage the individual has of the company on the donations.
Education was the most important area for the Indian philanthropists with a total contribution of Rs 12,200 crore.
It was followed by social development (Rs 1,210 crore), healthcare (Rs 1,065 crore), rural development (Rs 565 crore), environmental cause (Rs 170 crore) and agriculture (Rs 40 crore).
"This list demonstrates the responsibility taken by entrepreneurs," Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report said.
The average age of the philanthropists in the list is 62 years while the average age of the top 10 donors is 64 years.
Region-wise, the report said, south Indians showed the way for making contributions with a cumulative donation of Rs 10,000 crore while north Indians pitched in with contributions of Rs 4,865 crore.
The Companies Bill, 2013 mandates companies, with a net worth of more than Rs 500 crore or revenue of more than Rs 1,000 crore or net profit of more than Rs 5 crore, to earmark at least two percent of their average net profits of the preceding three years for CSR activities.
"This amendment to the Companies Bill should provide more transparent reporting of corporate donations," said Anas Rahman Junaid, Publisher-at-Large of Hurun Report India.
SBI posts worst quarterly profit in 2 years; net plunges 35%
Mumbai: State Bank of India on Wednesday reported its worst quarterly profit in over two years with a sharp 35 percent drop in earnings at Rs 2,375 crore in the three months to September, hit hard by higher provisions for staff expenses, bad loans and investment depreciation.
Standalone total income was Rs 37,199.92 crore as against Rs 32,953.47 crore in the same period a year ago.
"Provisions for loan losses, provision for the staff wage hikes, provision for pensions and of course the investment depreciation were the reasons for dip in the net profit in the quarter," the newly-appointed SBI chairman and managing director Arundhati Bhattacharya said.
This is the worst quarterly performance of the nation's biggest lender since the massive 90 percent plunge which brought the bank's net profit to just Rs 20.88 crore for the March 2011 quarter. Pratip Chaudhuri had taken over as chairman in April, 2011.
"Also, the fact that we have really not been able to book that kind of income on sale of investments as we had been able to do in the first quarter, due to the fact that interest rates have actually hardened. All of this accounted for lower bottomline," Bhattacharya said.
This is Bhattacharya's maiden earnings report after she took over charge on October 7 as the first woman head of SBI which controls nearly a quarter of country's banking assets.
SBI's total provision rose 6.53 percent to Rs 3,937 crore as against Rs 3,696 crore in the same period last year.
Despite the poor set of numbers, the market lapped up the SBI counter, which is down around 50 percent from its lifetime high. Today, the SBI counter closed 1.34 percent higher at Rs 1697.85 on the BSE, whose benchmark Sensex shed 0.45 percent.
Saday Sinha, banking analyst at Kotak Securities said the bank's net interest margin (NIM) at 3.2 percent was ahead of his expectations on the back of a 19 percent loan growth.
However, the profit after tax (PAT) came a shade below expectations due to higher-than-expected operational expenditure and Non-Performing Assets (NPA) provisions, he added.
During the quarter, major slippages came from the power sector (Rs 1,700 crore), iron and steel (Rs 600 crore) and infrastructure (Rs 700 crore), said SBI chief financial officer and deputy MD RK Saraf.
Although the bank's slippages of 3.1 percent is lower than the previous quarter, asset quality pain persists for the stock with net addition to impaired assets remaining at elevated levels, Kotak's Sinha said.
Staff expenses jumped 36 percent to Rs 5,819 crore from Rs 4,280 crore in the same period last year, while salary expenses jumped 26.74 percent to Rs 4,536 crore.
Provisions for pension rose 108.62 percent to Rs 1,054 crore in the quarter as against Rs 505 crore a year ago.
"The staff expenses have gone up quite sharply on account of the fact we have to make 15 percent provisions for the wage negotiation. We are also having to make additional provision on account of the fact that the LIC has changed the mortality table," Bhattacharya said.
According to LIC's new mortality table, the life expectancy has increased to 81 years.
At the end of the reporting quarter, the bank's gross non-performing assets (NPAs) rose to 5.64 percent of gross advances, compared with 5.15 percent year a year ago. Net NPAs also rose to 2.91 percent from 2.44 percent. However, on a sequential basis, NPAs declined by 39.23 percent.
Net interest income in second quarter increased 11.64 percent to Rs 12,251 crore from Rs 10,974 crore a year earlier.
Domestic net interest margin (NIM) increased sequentially to 3.51 percent in the quarter from 3.44 percent last year.
Deposits grew 14.01 percent to Rs 12,92,456 crore in quarter as against Rs 11,33,644 crore, while gross advances jumped 19.18 percent to Rs 11,39,326 crore.
"Right now, our deposit growth on year-on-year basis is at 15 percent and we expect to be able to grow at the same manner on the deposit side. On the credit side, we have to see how it happens, but currently we will maintain between 16 to 18 percent," Bhattacharya said.
The domestic credit deposit ratio increased from 76.64 percent in September 12 to 80.54 percent this quarter, a jump of 390 basis points.
SBI had seen an investment depreciation of Rs 8 crore as against loss of Rs 260 crore in the year-ago quarter with the depreciation on domestic banking side being Rs 237 crore as against a loss of Rs 257 crore.
The bank had booked a loss of Rs 229 crore in investment depreciation on foreign banking side as against a loss of Rs 3 crore.
"We were able to amortise the dip that has come on the treasury side. While on the domestic side there was a write in where as on foreign offices side there has been a write back. The net figure which has come is only Rs 8 crore," Bhattacharya said.
"This means for the next two quarters we will have amortised an amount of market-to-market, that will have to be taken, which will be in the range of Rs 700 crore."
During the quarter SBI shifted Rs 56,000 crore of SLR securities to held-to-maturity category.
Bank's provisions for income tax declined by 51.45 percent to Rs 908 crore as against Rs 1,870 crore.
Provisions for loan loss jumped 43.99 percent to Rs 2,646 crore as against Rs 1,837 crore.
Interest on loans rose 12.60 percent to Rs 25,379 crore as against Rs 22,538 crore. Interest on resources jumped 20.64 percent Rs 8,243 crore as against Rs 6,833 crore.
Total interest income rose 14.58 percent to Rs 33,922 crore as against Rs 29,607 crore.
Interest on deposits increased 13.96 percent to Rs 19,277 crore from Rs 16,916 crore, while interest on borrowing jumped 106.30 percent to Rs 1,468 crore as against Rs 711 crore due to increase in MSF rates and tight liquidity condition.
The bank's total restructured accounts stood at Rs 52,437 crore and has debt restructuring pipeline of Rs 6,000 crore which could be implemented in rest of the two quarters or may be next year, Bhattacharya said.
Talking about the outlook, Bhattacharya said the bank will continue to face tough situation as "we are not seeing those indicator that say things are beginning to look brighter".
However, she said the bank is seeing robust demand on the retail loan side. "But if you look at the stresses in the account, the stresses continue and we are not seeing stresses to have lessened to very great extent, specially in the mid cap and the large SME segments."
Rupee continues slide for 5th day, falls 47 paise against dollar
The Indian rupee continued to slide against the US dollar for the fifth day in a row, closing down at a fresh two-month low, amid bearish local equities and demand for the US currency from importers.
A firm dollar overseas also weighed on the rupee as the dollar index, consisting of six major global rivals, was up by 0.28 per cent.
At the Interbank Foreign Exchange Market, the domestic currency resumed lower at 63.35 and moved in a range of 63.30 to 63.84 against the dollar before settling at 63.71, a fall of 47 paise or 0.74 per cent.
The rupee has plunged 209 paise, or 3.39 per cent, in five straight sessions. It is at the lowest level since closing at 63.84 on September 10.
"Rupee was seen depreciating against the US dollar due to persistent dollar strength, rising dollar demand from the domestic oil companies and debt market outflows. Also, the stock markets which ended the session on a negative note contributed to the weakness in the local currency," said Abhishek Goenka, CEO of India Forex Advisors.
The 30-share BSE Sensex tumbled 209.05 points, or 1.02 per cent, to a one-month low, completing six days of losses. Overseas investors pumped in Rs 333.50 crore in stocks on Monday.
Economy to get back on 8 pc growth trajectory in 2 years: Plan Panel
Planning Commission Deputy Chairman Montek Singh Ahluwalia exuded confidence about India's potential, saying the economy will get back on the targeted growth trajectory of 8 per cent after two years.
"I think we can hit what we thought was our trajectory two years later because of the slowdown that we have," Ahluwalia said on Tuesday, on the sidelines of the 34th SKOCH Summit in New Delhi.
The economy expanded at a decade-low rate of 5 per cent in the first year of the 12th Plan (2012-17) period, during which the government has targeted an annual average growth rate of 8 per cent.
In the April-June quarter of the current financial year, economic growth slowed to 4.4 per cent, compared with 4.8 per cent during January-March. Growth was 5.4 per cent in the April-June period of the previous financial year.
"I believe that the long- or medium-term growth potential of the economy remains 8 per cent, provided you do all things outlined in the 12th Plan. Obviously, the first two years are not going to be at that level," Ahluwalia said.
According to Ahluwalia, the average economic growth rate in the 12th Plan period will be lower than 8 per cent and the Commission will make its estimate next year during the mid-term review of the five year policy.
Ahluwalia said he expects growth to improve in the second half of the current financial year.
"The second half of the year should be better. The first half was lower. So for the year as a whole to be better than 5 per cent, the second half has be really good. We don't know the numbers," he said.
Asked whether the slowdown is over, Ahluwalia replied: "I believe that the economy has bottomed out. The financial experts say that there will be turnaround. It is clearly not a strong rebound. But there is evidence that (there will be turnaround)."
India's exports in October grew 13.47 per cent to $27.2 billion, the fastest pace in two years, government data showed yesterday.
"The news on the exports front is very encouraging," Ahluwalia said.
He said the current account deficit will probably be lower than the target set by the Finance Minister. The deficit refers to the difference between outflows and inflows of foreign currency.
"He (the Finance Minister) himself said that instead of $70 billion, it would be $60 billion... The important news is that it would be much lower than $88 billion last year. That means we need less money. That should increase the assessment of micro-economic stability," he added.
Rupee falls further on strong dollar demand
Continuing its slide for the sixth straight day, the rupee on Wednesday lost 17 paise to trade at a fresh two-month low of 63.88 in early trade on strong dollar demand from importers amid weak local equities.
At the Interbank Foreign Exchange (Forex) market, the local currency opened lower at 63.88 a dollar from its previous close of 63.71.
Forex dealers said besides sustained demand for the US currency from importers and a lower opening in the domestic equity market also put pressure on the rupee but dollar's weakness against euro in the global markets capped the fall.
The rupee had depreciated by 47 paise to close at 63.71 against the dollar in the previous session. Meanwhile, the BSE benchmark Sensex fell by 53.97 points, or 0.27 per cent, to 20,227.94 in early trade on Wednesday.
Vodafone bets big on India 3G, to invest Rs 7,100 cr
Vodafone has drawn up ambitious plans to invest 700 million pound ( about Rs 7,100 crore) in India during the next 2- 3 years mainly on rolling out 3G networks.
This amount will be in addition to Rs 4,000- Rs 6,000 crore annual investments the company has been making in recent years, Vodafone India CEO Marten Pieters said on Tuesday.
The investment will be part of the cash- rich British company's Project Spring under which the Vodafone Group will invest 7 billion pound by March 2016, to establish stronger network and service differentiation in major global markets.
"The Indian investment is about 10 per cent of pound 7 billion in the next 2- 3 years. It depends also on what is available. The investment will be above the normal level of investment we would have done so it's like a catch up investment," Pieters said.
Riding on a strong growth in data usage and voice calls, Vodafone India said it has posted 13.5 per cent jump in revenue at Rs 20,476.3 crore for the first half ( April- September period) of 2012- 13.
The company had logged Rs 17,581.3 crore in revenue during the same period in the last fiscal.
Pieters said, India has become the third largest contributor to the UK- based Vodafone Group's services revenues.
" We are also focused on growing the use of mobile Internet. Our data continues to contribute strongly to business, accounts for 9 per cent of service revenue in Q2, 2013- 14 fiscal," said Pieters.
He said most of the subscribers in India would use Internet via mobile phones but the company doesn't have 3G spectrum in all the circles.
"We will try to get spectrum in all the circles next year. We count on pending approval for spectrum trading and the fresh 2100 Mhz auction in 2014," he pointed out.
On revenue growth, he said it is driven by hardening of rates, exponential growth in data and good subscriber base. "These, however, were partially offset by the effect of seasonality and regulatory changes," he added.
"The service revenue has grown 13.5 per cent to Rs 18,481 crore during the 6- month period from Rs 16,282.6 crore in the corresponding period last fiscal, but our data revenue has grown much faster at 76.5 per cent. The data growth has been driven by high smartphones usage, he added.
Vodafone India's operating profit or EBITDA ( earnings before interest, taxes, depreciation and amortization) improved by 30.6 per cent to Rs 6,519.1 crore in H1, 2013- 14, compared to Rs 4,993 crore in the same period of last fiscal.
Pieters said the environment in the country is more positive these days as the regulatory clarity is emerging. However, at the same time he pointed out that that all is still not fine on the regulatory front.
Meanwhile, Vodafone Group chief Vittorio Colao at a meeting in London on Tuesday said the company will only consider an IPO in India once the $ 2- billion tax dispute is resolved.
"We don't have to do it… because we don't need the money. We need to resolve the tax issue first," said Colao.
Colao added that there was " no real change" to discussions on the tax dispute. " We have had talks and continue to have talks. It's complicated and honestly, we have to see where it goes."
Vodafone posted a 13.5% jump in revenue at Rs 20,476.3 cr for the first half of 2012- 13.
Apple's new retina display iPad Mini hits stores without fanfare
Apple Inc has begun selling its new iPad Mini, the one with its famed retina display feature, without the usual fanfare.
The company usually announces the availability date in advance, allowing loyal customers to line up at stores overnight to be among the first to buy one. This time, Apple quietly issued a news release on its immediate availability.
Supplies also are limited. People had to order them online to pick them up at Apple's retail stores. This suggests the company may be having problems producing enough iPad Minis.
Apple CEO Tim Cook acknowledged during a conference call two weeks ago that "it's unclear whether we will have enough for the quarter or not."
The new Mini is the first version of the smaller iPad to feature the high-resolution display that Apple calls Retina. It also includes a power-efficient A7 chip, along with faster wireless and expanded LTE cellular connectivity.
The new iPad Mini is available in silver or gray. Wi-Fi-only models will start at $399 for a 16-gigabyte gigabyte model while cellular-capable models will start at $529 for the 16-gigabyte model. It's available in the US and several other markets.
'Mfg growth to remain subdued in Q3 on high interest rates'
New Delhi: The country's manufacturing sector is expected to witness subdued growth in the October-December quarter on concerns over high interest rates, a survey by industry body Ficci today said.
"Low or subdued growth is supported primarily by some improvement on export front. However, we are seeing rising concerns over the cost of credit by the manufacturers as compared to previous surveys," Ficci President Naina Lal Kidwai said.
Upturn in industrial sector is particularly evident in sectors like leather, textiles, cement, chemicals and textiles machinery. At the same time, sectors like automotive, capital goods and electronics are expected to witness sluggish growth in Q3, the survey found.
Besides, outlook on hiring looks bleak in manufacturing, with over 75 percent of the respondents unlikely to hire additional workforce in next three months.
Moreover, the survey found that five out of thirteen sectors were likely to witness low growth (less than 5 percent). Only two sectors, leather and paper, are expected to have a strong growth of over 10 percent in Q3 2013-14 while remaining sectors are likely to witness moderate growth.
"Notably, the proportion of respondents availing credit above 12 percent per annum rose significantly in the current survey to 58 percent as compared to 42 percent in previous survey", Kidwai said.
Interest rate paid by the manufacturers, as reported in the survey, ranges from 8 to 16 percent with average interest rate at around 12 percent per annum.
The investment scenario in manufacturing sector will also remains subdued in Q3 with 72 percent respondents not having any plans for capacity additions for the next six months as compared to 74 percent respondents in the previous survey.
However, the demand conditions appear to be slightly better with 44 percent respondents reporting higher order books for Q3 2013-14 as compared to 32 percent respondents in the previous quarter.
The survey covers thirteen major sectors namely textiles, capital goods, textiles machinery, metals, chemicals, cement, electronics, automotive, leather & footwear, machine tools, food processing, paper and tyre.
FM asks service tax defaulters to come clean
New Delhi: In a stern warning to 10 lakh service tax defaulters, Finance Minister P Chidambaram today asked them to come clean so as to avoid punishment.
"We have reached the tipping point where we have to pause, take stock, talk to you, offer a fair and generous transition method and persuade as many of you to come over to paying taxes before the tax is enforced in a strict manner.
"VCES is just that. The one who has not paid service tax to draw a curtain on the past and move on to a new chapter in his business. That is what VCES is," he said.
He was meeting representatives of various trade and industry associations and chambers of commerce and industry to encourage them to take advantage of the service tax amnesty scheme -- Voluntary Compliance Encouragement Scheme (VCES).
Chidambaram said that of the total 17 lakh registered service tax payers, only seven lakh of them were paying the levy.
"This scheme is aimed at 10 lakh people who either are non filer or stop filer. Many of the 10 lakh have not filed at all, or not paid service tax at all. Many have paid from certain period and then stopped paying. I don't know who is cleverer, the guy who never pays or who stops paying," he said.
The Finance Minister, who earlier had a similar interaction in Chennai, said he does not believe in harsh penalties, but "sometimes it is necessary to send a stern message".
Both the non-filer and stop-filer are treading on dangerous ground, he cautioned.
"We have enough information today about business companies, firms, partnerships. We have the PAN numbers. We have digitised most of our operations," he said.
Rupee will settle down: Chidambaram
New Delhi: With the rupee declining to a two-month low of 63 to a dollar, Finance Minister P Chidambaram Monday assured the domestic currency will stabilise.
"Rupee will settle down," he told reporters here.
In early trade today, the rupee fell to 63.33 to a dollar, its weakest since September 18.
The Indian currency started weakening since last week after the dollar purchase by oil companies was partly shifted to the market.
"Rupee weakness is due to OMC forex demand being moved to market. 30-40 percent of OMC demand has moved to market," Economic Affairs Secretary Arvind Mayaram had said last week.
The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.
In August, the Reserve Bank had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.
The rupee has recovered over 8 percent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee had followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.
Economic data and global trends to dictate the market
As expected, the market was in a corrective phase last week, which saw
the Sensex drop nearly three per cent (573 points) to end below the
21,000 mark at 20,666.15. A weak rupee and rising crude oil prices also
contributed to the fall. The slowdown in foreign inflows saw players
booking profits. Prior to last week's fall, the Sensex had touched an
all-time high of 21,321 on Diwali day.
In terms of fundamentals the Indian equity market does not have the strength to inch higher. It's on a support system, propped up by global liquidity. As long as money continues to flow into the market, the Sensex will hold up. Many are hoping for positive triggers on the domestic front as well which could help the Sensex maintain its upward momentum, but these are unlikely ahead of the general election slated in May 2014.
A silver lining for Indian markets is that rating agencies will not be changing India's rating till next year. This means India will continue to enjoy investment grade rating. The other positive is the continuing weakness in the Eurozone. The latest developments are the downgrading of France by Standard & Poor's which lowered its rating from AA+ to AA, and the rate cut by the European Central Bank (ECB) last week from 0.5 per cent to 0.25 per cent on concerns of deflationary risk. As a result more money may flow from European economies to safe haven like India.
As against this, fears of an early tapering off of quantitative easing by the US Federal Reserve have again surfaced, and may affect market sentiment. Though 'tapering' is bound to start sooner or later, it will not be the end of quantitative easing, it will just slow down the pace of fund infusion into the US economy. Since 2008, when the global downturn struck, the US Federal Reserve has pumped $3.85 trillion into the economy.
Ultimately, as noted earlier, in the near-term, liquidity and only liquidity will dictate the future course of market movement. If money flow continues, fundamentals will take a backseat and the Sensex will inch higher. But if India hopes to rank among the most favoured markets by global investors, the economy will need to improve to the level where gross domestic product growth is in the seven to eight per cent range. At present, that remains a distant dream.
Once growth momentum returns so will liquidity and fresh investment. On the contrary, if the current low growth environment continues, there will be growing stress, some of which is already evident from the September ended quarterly results of many companies.
In the coming week, apart from global trends, domestic economic indicators such as the October trade deficit numbers - which will be announced on Monday - the September industrial output data - expected on Tuesday - and October inflation data - due on Friday - will dictate Sensex movement. Currently it seems the movement is likely to be range bound with a downward bias.
In terms of fundamentals the Indian equity market does not have the strength to inch higher. It's on a support system, propped up by global liquidity. As long as money continues to flow into the market, the Sensex will hold up. Many are hoping for positive triggers on the domestic front as well which could help the Sensex maintain its upward momentum, but these are unlikely ahead of the general election slated in May 2014.
A silver lining for Indian markets is that rating agencies will not be changing India's rating till next year. This means India will continue to enjoy investment grade rating. The other positive is the continuing weakness in the Eurozone. The latest developments are the downgrading of France by Standard & Poor's which lowered its rating from AA+ to AA, and the rate cut by the European Central Bank (ECB) last week from 0.5 per cent to 0.25 per cent on concerns of deflationary risk. As a result more money may flow from European economies to safe haven like India.
As against this, fears of an early tapering off of quantitative easing by the US Federal Reserve have again surfaced, and may affect market sentiment. Though 'tapering' is bound to start sooner or later, it will not be the end of quantitative easing, it will just slow down the pace of fund infusion into the US economy. Since 2008, when the global downturn struck, the US Federal Reserve has pumped $3.85 trillion into the economy.
Ultimately, as noted earlier, in the near-term, liquidity and only liquidity will dictate the future course of market movement. If money flow continues, fundamentals will take a backseat and the Sensex will inch higher. But if India hopes to rank among the most favoured markets by global investors, the economy will need to improve to the level where gross domestic product growth is in the seven to eight per cent range. At present, that remains a distant dream.
Once growth momentum returns so will liquidity and fresh investment. On the contrary, if the current low growth environment continues, there will be growing stress, some of which is already evident from the September ended quarterly results of many companies.
In the coming week, apart from global trends, domestic economic indicators such as the October trade deficit numbers - which will be announced on Monday - the September industrial output data - expected on Tuesday - and October inflation data - due on Friday - will dictate Sensex movement. Currently it seems the movement is likely to be range bound with a downward bias.
SAIL Q2 net profit zooms to Rs 1,180 cr
A Rs 1,056-crore exceptional gain and cheaper coal fuelled Steel Authority of India's (SAIL) net profit in the July-September quarter to more than double at Rs 1,180 crore, although realisation fell by 6.5 per cent on subdued prices.
SAIL, which clocked Rs 543 crore net profit during the same quarter of 2012-13 fiscal, largely met its 15-16 million tonne (MT) coking coal requirements through imports, mostly from the US and Australia.
During the second quarter, the PSU got "exceptional" amount of Rs 1,056 crore from global mining major Vale towards damages due to non-supply of full quantity of contracted hard coking coal, leading to a big boost in the bottom-line.
However, this did not truly reflect on the profitability of the company as it had to make a provision, which stands at Rs 1,150 crore now, for an impending wage hike of its close to 85,000 non-executives.
"One of the reasons of increase in our profit was lesser prices of coal. The price of the imported coal which was $220 per tonne during the second quarter fiscal has come down to $135 per tonne. So, there was a savings of Rs 885 crore to the company on this account," SAIL Chairman CS Verma said.
On the flip side again was the dip in realisation to the tune of Rs 720 crore during the second quarter ended September 30, compared to the year-ago period.
"Sales realisation during the second quarter of the last financial year was Rs 37,210 per tonne. During this quarter, this came down to Rs 34,230 per tonne, thus there is a dip of 6.5 per cent in realisation," Verma said.
Despite the decline in realisation, which has a bearing on the prices, SAIL sold 3.015 MT steel during the quarter, against 2.616 MT a year ago, clocking a 15 per cent growth.
Turnover was also up by 7 per cent to Rs 12,802 crore.
SAIL's total expenditure, at Rs 11,067.42 crore, amounted to nearly 96 per cent of the total income during the July-September period. In the second quarter of 2012-13 fiscal, the expenditure (at Rs 10,113.63 crore) was 93.51 per cent of total income (Rs 10,815.56 crore).
Its finance costs were up over 16 per cent to Rs 216.48 crore, while other income declined by over 33 per cent to Rs 152.71 crore in the last quarter. The company's tax outgo also declined by over 13 per cent to Rs 212 crore in Q2 FY14.
Verma said steel demand will pick up in the coming days, but prices will hover around the same level.
Reliance Infrastructure Q2 net jumps 12 pc to Rs 427 crore
Reliance Infrastructure has reported a 12 per cent increase in its consolidated net profit at Rs 427 crore for the quarter ended September 30, 2013.
The company had posted a net profit of Rs 382 crore in the corresponding quarter of previous year (2012-13), Reliance Infrastructure said in a statement.
Total income of the company dropped to Rs 5,273 crore from Rs 5,798 crore in the corresponding period of the last financial year (2012-13).
On a standalone basis, the net profit of the company for the quarter ended September 30, 2013 declined over 16 per cent at Rs 345.82 crore, said its BSE filing. The company had posted a net profit of Rs 414.13 crore in the same period, last fiscal (2012-13).
Total income from operations decreased to Rs 2,831.80 crore from Rs 3,500.22 crore in the corresponding period of the last financial year (2012-13).
Reliance Infra is engaged in several areas in the infrastructure sector i.e. roads, metro rail, cement and airports.
During the quarter, the company said it earned revenues to the tune of Rs 159 crore from its road projects
"Reliance Metro Rail Line in Mumbai is scheduled to be commissioned within the current financial year," the company said in a statement.
Trial runs being conducted regularly on the entire Versova-Andheri-Ghatkopar corridor, the statement added.
The company's first 5 million tonnes per annum cement plant in Madhya Pradesh will start commercial production by this month end, it said.
Shares of the company closed at Rs 440.95 apiece, down 2.14 per cent on BSE.
World Bank says expanded access to banking services comes with risks
In Brazil, bank customers can access their accounts aboard a floating bank on the Amazon River. In Mexico, rural residents find banking services inside popular stores like Walmart or 7-Eleven, or at their local pharmacy.
Mobile technology and regulatory reforms have made it easier and cheaper for private and public companies around the world to offer banking services to the poor, youth, women and rural residents, and others who lacked access.
But in a new report released on Monday, the World Bank warns that while some services, like low-fee accounts, clearly benefit the poor and small firms, others - such as microcredit, microinsurance, and debt relief - can do more harm than good.
"We're very careful to make sure we're not saying that everyone should be borrowing," said Asli Demirguc-Kunt, the World Bank's director of research and co-author of the report.
Instead, the World Bank encourages governments to reduce regulatory barriers, legal hurdles or other factors that make financial services too expensive for some, such as boosting competition and protecting the rights of creditors.
Access to finance helps the world's poorest save so they can invest in education and improve standards of living, and enables small companies to borrow so they can grow. It also makes it easier for governments to target subsidies and financial assistance to the bank accounts of the neediest.
More than 50 governments have pledged to improve financial inclusion, or the number of people and companies that use financial services. World Bank President Jim Yong Kim last month also announced a target of universal financial access by 2020. Now, about 2.5 billion people, or half the world's adult population, lack access to financial services.
Microcredit, or tiny loans to the poor, came into vogue in the late 1990s as a way of providing banking services to the world's poorest in order to combat poverty and boost entrepreneurship.
But several studies in recent years have shown that microcredit, which often comes with very high interest rates, has little or no impact on the financial fates of people in nations such as Mexico, the Philippines, Morocco and India.
The World Bank said India in particular offers a cautionary tale about the overextension of credit, after reports of dozens of suicides by poor borrowers in 2010 in the southern state of Andhra Pradesh.
India lacked appropriate protection for consumers and legal provisions for personal bankruptcy, the bank said. In general, governments should avoid directed credit and lending through state-owned banks, as these interventions can become tied to politics, according to the World Bank.
Fingerprinting, Iris scans
But innovative financial instruments and new technology have made it easier to expand access, even in countries without strong institutions.
One experiment in rural Malawi collected the fingerprints of some farmers that wanted loans to grow paprika. The experiment showed that farmers who were at highest risk for default were more likely to pay back a loan if they were fingerprinted, since they worried they might not get another loan in the future.
The identification could also make lenders more likely to extend credit since they would have better information about borrowers.
"Recent research suggests that biometric identification (such as fingerprinting, iris scans, and so on) can substantially reduce information problems and moral hazard in credit markets," the World Bank said.
Other tools that can encourage people to save in formal bank accounts are commitment savings accounts, where people give up access to their money for a set period of time, or regular reminders of savings goals.
But the World Bank said it was important to have more educated consumers in addition to enabling government policies. For that, standard financial literacy classes generally fail at preparing people for major financial decisions.
"A person can learn the meaning of street signs, but this does not make him capable of driving in traffic," the bank said.
Instead, what seems to work better is providing information just as a person is starting a new job or purchasing a financial product.
"You need the right regulations in place, but also to educate consumers so that they watch out for themselves," Demirguc-Kunt said.
Gold prices fall below Rs 31,000 on selling, weak global cues
Gold prices dipped below Rs 31,000-mark after nearly one month, falling by Rs 350 to Rs 30,900 per ten grams in New Delhi on Monday.
Traders said heavy selling by stockists on the back of sluggish demand amid a weak global trend mainly pulled down the yellow metal's prices.
However, silver found some buying support from industrial units and ended higher by Rs 110 to Rs 49,010 per kg.
Gold in Singapore, which normally sets price trend on the domestic front, dropped by 0.4 per cent to $1,283.28 an ounce after data showed that US employers added more jobs than expected which reduced demand for the metal as an alternate investment.
On the domestic front, gold of 99.9 and 99.5 per cent purity plunged by Rs 350 each to Rs 30,900 and Rs 30,700 per ten grams, respectively. It had lost Rs 150 in the previous session. Sovereign also shed Rs 100 to Rs 25,000 per piece of eight gram.
On the other hand, silver ready recovered by Rs 110 to Rs 49,010 per kg and weekly-based delivery by Rs 160 to Rs 48,310 per kg. The white metal had lost Rs 200 in last trade.
Silver coins also spurted by Rs 1,000 to Rs 87,000 for buying and Rs 88,000 for selling of 100 pieces.
Govt will get over negativity, says Chidambaram
Finance Minister P Chidambaram has conceded that a potent mix of factors like slowdown of economic growth, dysfunction of the executive and corruption allegations has brought in a "high degree of negativity" but expressed confidence that the government would get over it.
"In the second five years of UPA, yes, there is, I can sense, I can see that the voter is at the moment negative. I can see that. I am blind if I don't see that. The reason is slowdown in economic growth , dysfunction of the executive, the cases of allegations of corruption, investigations that are going on, inflation and a slowdown in job creation. I think it is a potent and powerful mix, a potent mix of factors which has brought in a high degree of negativity. It is possible we may get over it."
"It is possible we don't get over it. It is a verdict we have to leave to the people. We have to accept whatever the verdict people will give," Chidambaram said at the "Thinkfest" event in Bambolim near Panaji.
Even in this slowdown in the last nine years, the country has clocked an average of 7.5 per cent growth.
"It is sad that at the end of the 10-year term, the growth has seen slowdown for a couple of years after having been high in the middle years and low in the last two years. I am doing my best. I will continue to do my best to see that there is an upturn before we go to polls," he said.
Chidambaram was replying to a question whether at the end of the second UPA term in the context of global pressures, CAG reports and high optimism in which the coalition was voted to power in 2009, there was today a lack of credibility for the government and that the prime minister was singularly lacking in leadership.
He shot back saying that he cannot remain in government and comment on the prime minister.
"That is not correct, that is not appropriate. I won't do it. He is the prime minister. I am a minister in his Cabinet. I have to accept his leadership and respect him. I am sorry, I cannot answer this question."
Indian rupee drops 83 paise against US dollar, breaches 63-mark
he Indian rupee dropped by 83 paise to 63.30 against the US dollar after a gap of nearly eight weeks on persistent dollar demand from importers and banks on the back of higher dollar overseas.
The domestic currency resumed lower at 63.00 per dollar as against the last weekend's level of of 62.47 per dollar at the Interbank Foreign Exchange (Forex) Market and dropped further to 63.32 per dollar before quoting at 63.30 per dollar at 10.40 am. It moved in a range of 62.94 per dollar and 63.32 per dollar during the morning deals.
Sustained dollar demand from importers and banks in view of firm dollar overseas mainly affected the rupee value against the dollar, a forex dealer said.
In New York, the American currency jumped last Friday after the US created twice as many jobs in October as Wall Street had expected, sparking yet another round of discussion about when the Federal Reserve could slow its bond buys.
Meanwhile, the BSE Sensex dropped further by 129 points, or 0.62 per cent, to 20,537.37 at 10.50 am.
Rupee will settle down, assures Chidambaram
Finance Minister P Chidambaram took to reassuring investors and traders after the rupee declined to a two-month low of 63 to a dollar, saying the currency will stabilise.
In early trade on Monday, the rupee fell to 63.33 a dollar, its weakest since September 18.
"Rupee will settle down," the finance minister told reporters in the national capital.
The Indian currency started weakening again last week after the dollar purchase by oil companies was partly shifted to the market.
The PSU oil companies are the biggest buyers of dollars, requiring $8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.
"Rupee weakness is due to OMC forex demand being moved to market... 30-40 per cent of OMC demand has moved to market," Economic Affairs Secretary Arvind Mayaram had said last week.
The rupee has recovered over 8 per cent since August 28, when it fell to a record low of 68.85 to the dollar.
The Reserve Bank of India had in August opened a special window to help the three state-owned oil marketing companies - Indian Oil, Hindustan Petroleum and Bharat Petroleum - to meet daily foreign exchange requirements and buy dollars directly from the central bank.
The gain in the rupee's value had also followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.
Bank licences: Sebi scans listed applicants, firms
 |
|
As the Reserve Bank of India
(RBI) gears up to issue new bank licences, capital markets regulator
Sebi has also a job at hand that is of scrutinising all applicants
coming under its jurisdiction directly or through group entities. Sebi's scrutiny follows detailed queries shot off by RBI to various regulators in India and abroad as part of its due-diligence of entities seeking to enter banking arena. According to a senior official, Sebi is looking into the capital market track-record of all the group entities of 26 banking aspirants, some of whom are either listed entities or have presence in Sebi-regulated businesses like mutual funds, brokerage and investment banks. The area of prime focus for the Securities and Exchange Board of India (Sebi) is action taken by or underway for violations to various market regulations, he added. The scrutiny is expected to be over this month itself. RBI is granting new bank licences for the first time in about a decade and preliminary screening process is underway for 26 entities that have submitted their applications. As part of this process, RBI has also asked the applicants to provide further details about their promoters, equity structure, financial inclusion programme, proposed banking model, among others, sources said. In addition to Sebi, RBI is also seeking details from other regulators such as insurance watchdog IRDA and pension regulator PFRDA, about the businesses of the applicant entities under their respective jurisdictions. With regard to some applicants, RBI has sought to know details about source of funds and compliance to the structural norms proposed for new banking players. Besides, RBI is seeking additional details from the concerned foreign regulators about those applicants whose group entities have operations, significant business dealings with foreign companies or overseas listings. Sources said this due diligence process involves information exchange with domestic and foreign regulatory authorities for all group entities of the applicants. |
Telecom tariffs may go up every year: Vodafone MD
India's second largest telecom operator Vodafone expects phone call and other mobile services rates to go up every year, indicating that low tariff regime may not be sustainable any longer for the industry.
"We have lower tariffs for 18 years against inflation of 8-9 per cent per year. Now, can you do that forever? No you can't," Vodafone India Managing Director and Chief Executive Officer Marten Pieters said in an interview.
"So the point has come where lowest has been seen, we will have to increase our tariffs every year depending on cost levels," he said.
He said that like everyone else, the telecom industry too has to increase the prices.
Last month, the company increased 2G mobile Internet rates along with two other players, Bharti Airtel and Idea Cellular, in the range of 25-30 per cent.
Peiters said that going forward 2G data rates and 3G data rates will be at same level indicating a further hike in 2G mobile Internet rates.
"We started 6-7 times high tariff rate when we opened up 3G network. It is now back to 1.5 to 1.6 times of 2G data rates. It over time will come together. But it can't come over time just by lowering 3G tariff, it needs to also see increase of 2G tariffs. Once it is equal, it doesn't matter to customer anymore," Pieters said.
The company's competitors such as Reliance Communications and Aircel have, meanwhile, reduced 3G mobile Internet rates to bring them on par with 2G mobile Internet rates.
Pieters said that industry will have to work to create efficiency in the network to handle increasing load.
"My assumption is that our price increase will always be lower than inflation but you can't of-course forever keep lowering your prices, its impossible," he added.
In a bid to remain profitable, leading telecom operators have increased rates of special tariff vouchers and reduced free minutes usage.
Bharti Airtel too has said recently that the current tariffs in the country "are at absolutely unsustainable levels".
Pieters said however that despite the tariff hikes India still has the lowest tariffs in the world.
"India has still the lowest tariffs in the world. I think there is only one country which is coming closer, which is China. The only difference being that in China, there are only three operators, they are very profitable and they invested last year USD 55 billion in telecom infrastructure. We did USD 5 billion, so what's better for the country," he added.
Finance Ministry keen on selling 10 pc govt stake in Indian Oil in Nov
The Finance Ministry wants to sell 10 per cent of the government's stake in Indian Oil Corp (IOC) by end of the month in a bid to achieve its Rs 40,000 crore disinvestment target.
So far, the government has raised about Rs 1,325 crore from stake sales in six companies.
"We want to push the IOC stake sale first, within November itself. This will pave the way for disinvestment of other oil sector PSUs like Engineers India," a senior Finance Ministry official said on Sunday.
IOC shares closed at Rs 213.20 on the Bombay Stock Exchange on Friday. They have fallen 43 per cent from the 52-week peak of Rs 375 on January 18.
At the current price, the sale of 19.16 crore IOC shares, equivalent to 10 per cent of the government's holding in the company, would fetch more than Rs 4,000 crore, which is 10 per cent of this financial year's disinvestment target.
Last month, the Department of Disinvestment put off overseas roadshows for the IOC stake sale following opposition from the company and the Petroleum Ministry, which cited poor market conditions. The roadshows were planned in London, US, Singapore, Hong Kong and Dubai.
Citibank, HSBC and UBS Securities are among the five merchant bankers selected to manage the oil retailer's share sale.
IOC Chairman RS Butola had written to the Oil Ministry in September, saying, "Current share price of IOC, already undervalued, may not fetch the fair value in the prevailing uncertain environment and investors in all probability are likely to factor in huge discount in their assessment of share price."
A share sale under present conditions could fetch a low price and would further dent IOC's efforts to raise loans for crude oil imports.
The government held a 78.92 per cent stake in the country's largest oil refiner as of September 30.
IOC posted an 82.5 per cent drop in net profit to Rs 1,683.92 crore for the July-September quarter after losses from foreign exchange and sales of diesel, cooking gas and kerosene below cost.
The government plans to sell 10 per cent in Engineers India. At the current market price of Rs 175.10, the sale of 3.36 crore EIL shares would fetch about Rs 600 crore.
Tata, SIA incorporate airline venture
The new company is a joint venture between Tatas and Singapore Airlines , with Tata Sons Ltd holding he majority 51 per cent stake and the Singaporean aviation major having the remaining 49 per cent equity.
As per information available with the Corporate Affairs Ministry, the new company was incorporated on November 5 with a total paid up capital of Rs 5 lakh and has been registered in New Delhi.
The incorporation documents have been signed by three directors -- Prasad Menon, Kersi Rustom Bhagat and Mukund Govind Rajan.
The incorporation follows approval from the Foreign Investment Promotion Board (FIPB) late last month for the proposed investment of USD 49 million by SIA in the joint venture, where Tatas are making initial investment of USD 51 million as per their shareholding structure.
Earlier, the JV received Corporate Affairs Ministry's approval to use the name 'Tata SIA Airlines Limited'.
The process of incorporating a new company for this joint venture started with registration of the name, followed by submission of various other documents, including the Article of Association, and details of the company's board of directors, share capital, business areas etc.
Tata SIA Airlines is among the first major companies to be incorporated under the new Companies Act, 2013.
The two partners are making an initial investment of USD 100 million to launch the airline, which may take off next year after getting all the clearances required.
This is the third attempt by Tatas and SIA to enter the Indian civil aviation sector.
Tatas have a long history of association with civil aviation in India.
JRD Tata had started Tata Airlines in 1932, which was later in 1946 renamed as Air India and was subsequently nationalised in 1953.
In February this year, Tatas also announced a partnership with Malaysia's AirAsia for a low-cost carrier in India, wherein Arun Bhatia's Telestra Tradeplace is third partner.
Tatas and Singapore Airlines have assured the government that control of their proposed venture would always remain in Indian hands, while seeking approval to offer full-service passenger services on both domestic and international routes.
The initial board of the new carrier will have three members, which would be later expanded to six members with six nominees of Tata group.
The JV would also provide air transport carriers for both passengers and freights as well as supporting services to air transport, like operation or airport flying facilities, radio beacons, flying control centres and radar stations.
GlaxoSmithKline Pharmaceuticals Q3 net declines 33.73 per cent
GlaxoSmithKline Pharmaceuticals (GSK) has reported a 33.73 per cent decline in standalone net profit at Rs 100.95 crore for the third quarter ended September 30.
The company had posted a standalone net profit of Rs 152.34 crore in the same period previous financial year.
The company follows January to December financial year.
The drug firm's total income declined by 7.02 per cent to Rs 666.02 crore in the July-September quarter, compared to Rs 716.37 crore during the same period last year.
GlaxoSmithKline Pharmaceuticals shares were trading at Rs 2,448 per scrip at the Bombay Stock Exchange in the afternoon trade, down 1.33 per cent from their previous close.
Godrej Consumer Products Q2 net up 22.39 pc at Rs 194.97 cr PTI
Godrej Consumer Products has reported a 22.39 per cent increase in consolidated net profit at Rs 194.97 crore in the second quarter ended September 30.
The company had reported net profit of Rs 159.3 crore in the same quarter last year.
Godrej Consumer's net sales in the quarter under review was at Rs 1,957.38 crore, an increase of 22.51 per cent against Rs 1,597.64 crore in the corresponding period last year, the company said in a filing to the Bombay Stock Exchange.
"Our robust operating performance is a result of continued focus on strengthening our position in our core categories. We continue to be aggressive in launching new innovations that have been well accepted by our consumers," Godrej Group Chairman Adi Godrej said.
Elaborating further, he said: "The overall market outlook remains turbulent and uncertain. We remain watchful, agile and prudent. We will continue investing judiciously for the longer term to improve our position, create competitive advantage and emerge stronger than ever before."
Overall expenses of the company in the quarter were at Rs 1,686.35 crore, up 22.70 per cent against Rs 1,374.32 crore in the same quarter last year.
Shares of Godrej Consumer were trading at Rs 858 apiece in the afternoon trade, up 0.51 per cent from their previous close on BSE.
Trade deficit narrows as exports rise 13.47% in October
India's exports rose 13.47 per cent to $27.27 billion in October while imports fell 14.5 per cent, helping narrow the trade deficit.
Imports stood at $37.8 billion, leaving a trade deficit of $10.56 billion as against $20.2 billion in October 2012, official data showed.
"This is a consistent growth in exports...The US is doing extremely well and Europe is also doing well," Commerce Secretary S R Rao told reporters here.
Gold and silver imports in October fell to $1.3 billion from $6.8 billion in the same period last year.
In April-October, exports grew by 6.32 per cent to $179.38 billion, while imports during the period contracted by 3.8 per cent to $270.06 billion.
Rao expressed confidence that the country would achieve the $325 billion target for the current fiscal.
Standard Chartered Bank sees marginal breach in FY14 fiscal deficit target
Standard Chartered Bank on Thursday warned of a 0.2 per cent slippage in fiscal deficit at 5 per cent of India's GDP due to slower revenue growth.
"Our base case is a fiscal deficit of 5 per cent of GDP this fiscal. This is based on the assumption that slippage of 0.65 per cent of GDP revenue proceeds and higher spending of 0.2 per cent of GDP on subsidy/bank recapitalisation, which though will be partially offset by a 0.7 per cent of GDP cut in spending," StanChart economists Samiran Chakraborty, Anubhuti Sahay and Nagraj Kulkarni said in a report.
Finance Minister P Chidambaram has been saying that the 4.8 per cent fiscal deficit target is a red line and that will not be breached.
The StanChart economists said the 0.20 per cent slippage will be due to slower tax revenue collection and uncertainty about realising non-tax revenue. Though the fiscal deficit target can be met by cutting spending, the upcoming elections are a deterrent.
"Based on the trends observed so far on tax collections, we expect tax collection to fall short by 0.65 per cent of GDP this fiscal," the report added.
On expenditure trimming, the UK lender said "we believe government can reduce spending by 0.7 per cent of GDP, which could reduce FY14 expenditure growth to 17.7 per cent and imply growth of 10 per cent in H2. But such reductions will have an adverse impact on the already weak growth."
The report noted the government has crossed 76 per cent of its borrowing target in H1 itself, the widest ever recorded in over a decade.
"The government's ability to adhere to its 4.8 per cent deficit target will depend on one-off revenue items (divestment and spectrum auction proceeds) and its willingness to curtail spending.
"It may still be able to achieve the target, but we believe lack of political will to curb expenditure ahead of the elections will keep these concerns a risk to the Indian economy," the report said.
On the impact of the 76 per cent drawal in H1 alone and its implications for H2, the report said sharp widening of fiscal deficit was driven primarily by slower tax mop-up and negligible proceeds from budgeted lumpy revenue items.
Fiscal deficit may correct sharply for a few months in H2 in contrast to the average deficit of Rs 68,000 crore per month in H1 on the realisation of lumpy revenue, especially if it coincides with quarter-ends, the report said.
Lumpy revenue needs to be in line with budgeted amount to avoid fiscal slippage, as expenditure cuts can at best only offset lower-than-expected tax collection, it said.
Weak GDP growth takes a toll on taxes, the report said and noted that net tax collection slowed to single digits in H1, much lower than the 19.2 per cent budgeted growth.
On Wednesday, the Government said direct tax collection rose 11.58 per cent in the April-October period to Rs 3.37 lakh crore, up from Rs 3.02 lakh crore during the same period last fiscal. The government has fixed direct tax collection target of over Rs 6.68 lakh crore for this fiscal, envisaging a growth of 19.2 per cent over Rs 5.65 lakh crore in FY13.
The gross collection of corporate taxes rose 8.23 per cent to Rs 2,09,622 crore during April-October, while personal income tax shot up 17.89 per cent to Rs 1,25,078 crore.
Net direct tax collections rose 13.33 per cent to Rs 2,84,339 crore during April-October, as against Rs 2,50,900 crore in the year-ago period.
StanChart said large slippage was evident, especially in excise collection, and corporate tax and services tax collection with personal income tax being the only exception.
The slowdown in services tax collection was driven by a lack of clarity on the services tax base - in March 2013, the Government widened the base, except for a small negative list of service items - and confusion over a services tax amnesty scheme. On the other hand, slower GDP growth has weighed on corporate and excise tax collection, it said.
Nominal GDP growth in FY14 is unlikely to meet the government's expectation of 13.4 per cent, but the report has pegged it at 10.7 per cent.
Though the government may be able to get the budgeted spectrum auction proceeds in January, the market is not sure about the disinvestment target of 0.56 per cent of GDP.
H1 saw expenditure growth of 16.6 per cent, which is lower than the estimated 18.2 per cent. As a proportion of annual spends, however, the government spent 48.6 per cent of budgeted amount in H1, higher than the past five years.
On revenue side, the report said even though the government is likely to meet its target of budgeted proceeds from service tax, corporate and excise taxes
On non-tax revenue front, the report said the government has not been able to collect disinvestment and telecom-related revenue more than 0.01 per cent of GDP in H1, against a budgeted Rs 96,000 crore, or 0.96 per cent of GDP.
Of the Rs 40,000-crore divestment proceeds, the Government has so far been able to collect only around Rs 1,400 crore.
Though the Government has committed to cap the subsidy burden at 2 per cent of GDP, the foreign lender sees marginal slippage in petroleum subsidy (0.1-0.15 per cent of GDP) despite the recent correction in the rupee and crude oil prices, as it has refrained from sharply increasing diesel price.
However, the new food subsidy law is unlikely to result in any additional pressure on expenditure as its implementation before Q4 looks remote. Also, a large share of administrative and infrastructure costs are likely to be deferred to next fiscal, the report said.
"We, therefore, expect slippage of 0.15 per cent of GDP on the subsidy front."
Given the poor fiscal health, the Government has mandated a 10 per cent reduction in non-planned spends, excluding those on items like interest payments, salaries and subsidies.
"We believe, however, that such a mandated cut in non- planned expenditure will not be large enough to meet its fiscal target," the report concluded.
Power Grid FPO gets CCEA nod, merchant bankers appointed
The government has cleared a proposal for follow-on public offering (FPO) of state-run Power Grid Corporation to raise about Rs 7,500 crore.
"The 17 per cent follow-on public offer of Power Grid has been cleared. This includes 13 per cent fresh equity and 4 per cent stake sale by the government," Power Minister Jyotiraditya Scindia said after the Cabinet Committee on Economic Affairs (CCEA) meeting.
The FPO will comprise 13 per cent fresh equity by the public sector company and 4 per cent stake sale by the central government.
The government will sell 18.51 crore shares in the public sector company. The company will issue fresh 60.18 crore shares through the offer. Out of this fresh shares, about 2.4 per cent would be reserved for the employees.
At current market valuations, the FPO is likely to fetch close to Rs 7,500 crore. The company may garner close to Rs 5,700 crore while the government will get an estimated Rs 1,700 crore.
Post-FPO, the government stake in the company will come down to 57.89 per cent from current shareholding of 69.42 per cent.
According to sources, Citigroup, ICICI Securities, UBS, SBI Caps and Kotak Mahindra have been appointed as the merchant bankers for the FPO.
This would be the second follow-on offering from Power Grid, which sold a 10 per cent stake along with a similar stake divested by the government in November 2010 at an issue price of Rs 90 a share.
The company hit the capital market with its initial public offering in October 2007.
Shares of the company closed at Rs 95.10 apiece, down 1.19 per cent on the Bombay Stock Exchange.
Sensex drops over 100 points; Tech Mahindra up 4% post Q2 results
NEW DELHI: The S&P BSE Sensex
slipped over 100 points in morning trade on Friday, weighed down by
losses in realty, consumer durables, banks and power stocks. Tracking
the muted momentum, the 50-share Nifty index was trading close to its crucial psychological support level of 6150 levels.
Tech Mahindra rallied as much as 3.78 per cent in morning trade after the IT major surprised analysts on Thursday by reporting better than anticipated revenue growth in dollar terms. Revenue came at $758 million increased by 4.7% sequentially, higher than the expectation of 2.7-3% increase.
At 09:20 a.m.; the 50-share index was at 6163, down 23 points or 0.38 per cent. It touched a high of 6,173.75 and a low of 6,139.85 in early trade today.
The S&P BSE Sensex was trading at 20,762, down 61 points or 0.3 per cent. It touched a high of 20,792.30 and a low of 20,645.64 in trade today.
The S&P BSE Midcap Index was down 1.07 per cent and BSE S&P Smallcap Index edged lower by 1.1 per cent.
Among the sectoral indices, the BSE Consumer Durable Index was down 1.03 per cent, followed by the S&P BSE Auto Index which dropped 0.68 per cent and the S&P BSE Capital Goods Index was trading 0.62 per cent.
The BSE IT index was trading 0.3 per cent higher, followed by the BSE Metal index which was up 0.29 per cent, BSE HealthCare index was trading flat with positive bias.
Tata SteelBSE 1.32 % (1.3 per cent), Wipro (0.9 per cent), Cipla (0.66 per cent), Infosys (0.47 per cent) and Sesa Goa (0.15 per cent) were among the major Sensex gainers.
Sun Pharma (1.78 per cent), ONGC (1.73 per cent), BHELBSE 0.86 % (1.34 per cent), GAIL (1.3 per cent) and Maruti SuzukiBSE -1.02 % (1.32 per cent) were among the index losers.
Asian shares slumped to a three-week low after U.S. stocks suffered their biggest fall in more than two months, weighed down by GDP data and surprise interest rate cut by the European Central Bank.
Japan's Nikkei 225 index was trading 0.9 per cent lower at 14,097.50 and Hong Kong's Hang Seng index was trading 0.4 per cent lower at 22,788.12.
South Korea's Kospi index was trading 0.3 per cent lower at 1,997. China's Shanghai index was trading 0.3 per cent lower at 2,122.
Tech Mahindra rallied as much as 3.78 per cent in morning trade after the IT major surprised analysts on Thursday by reporting better than anticipated revenue growth in dollar terms. Revenue came at $758 million increased by 4.7% sequentially, higher than the expectation of 2.7-3% increase.
At 09:20 a.m.; the 50-share index was at 6163, down 23 points or 0.38 per cent. It touched a high of 6,173.75 and a low of 6,139.85 in early trade today.
The S&P BSE Sensex was trading at 20,762, down 61 points or 0.3 per cent. It touched a high of 20,792.30 and a low of 20,645.64 in trade today.
The S&P BSE Midcap Index was down 1.07 per cent and BSE S&P Smallcap Index edged lower by 1.1 per cent.
Among the sectoral indices, the BSE Consumer Durable Index was down 1.03 per cent, followed by the S&P BSE Auto Index which dropped 0.68 per cent and the S&P BSE Capital Goods Index was trading 0.62 per cent.
The BSE IT index was trading 0.3 per cent higher, followed by the BSE Metal index which was up 0.29 per cent, BSE HealthCare index was trading flat with positive bias.
Tata SteelBSE 1.32 % (1.3 per cent), Wipro (0.9 per cent), Cipla (0.66 per cent), Infosys (0.47 per cent) and Sesa Goa (0.15 per cent) were among the major Sensex gainers.
Sun Pharma (1.78 per cent), ONGC (1.73 per cent), BHELBSE 0.86 % (1.34 per cent), GAIL (1.3 per cent) and Maruti SuzukiBSE -1.02 % (1.32 per cent) were among the index losers.
Asian shares slumped to a three-week low after U.S. stocks suffered their biggest fall in more than two months, weighed down by GDP data and surprise interest rate cut by the European Central Bank.
Japan's Nikkei 225 index was trading 0.9 per cent lower at 14,097.50 and Hong Kong's Hang Seng index was trading 0.4 per cent lower at 22,788.12.
South Korea's Kospi index was trading 0.3 per cent lower at 1,997. China's Shanghai index was trading 0.3 per cent lower at 2,122.
Govt criticises Goldman Sachs for forecasting Narendra Modi’s victory in 2014 elections
Zee Media Bureau
New Delhi: American multinational investment banking firm Goldman Sachs’ recent note on optimism over political change in India has irked Commerce and Industry Minister Anand Sharma.
The Commerce Minister in an interview to a business daily said that the investment banking firm should concentrate upon “doing what they claim to specialise in”.
Goldman is parading its ignorance about the basic facts of Indian economy; and it also exposes its eagerness to mess around with India's domestic politics,” said Sharma.
Goldman Sachs had noted expectations that the opposition Bharatiya Janata Party, led by prime minister candidate Narendra Modi, could prevail in parliamentary elections due by May 2014.
The firm had also upgraded its view on India to "marketweight", with a target for the Nifty of 6,900 points.
Goldman noted that external capital account pressures have moderated for now, and cites signs of a cyclical pick-up and structural improvements in the economy.
Rupee to stabilise in a day or two: FinMin
New Delhi: The Finance Ministry Thursday said the rupee will stabilise within a couple of days as inflows of NRI deposits and export proceeds are likely to be strong.
"Strong FCNR (B) inflows, export realisation will strengthen rupee... Rupee will stabilise in 1 or 2 days," Economic Affairs Secretary Arvind Mayaram said.
The rupee weakened to 62.58 against the US dollar in the early trade today.
Mayaram said the weakness in rupee was due to shifting part of dollar purchases by oil companies to open market.
In August, the Reserve Bank had opened a special window to help the three state-owned oil marketing companies -- IOC, HPCL and BPCL -- to meet daily foreign exchange requirements and buy dollars directly from RBI.
"Rupee weakness is due to OMC forex demand being moved to market. 30-40 percent of OMC demand has moved to market," Mayaram said.
The PSU oil companies are the biggest buyers of dollars, requiring USD 8-8.5 billion every month for the import of an average 7.5 million tonne of crude oil.
The rupee has recovered over 10 percent since August 28, when it fell to a record low of 68.85 to the dollar. The gain in rupee followed optimism that the US Federal Reserve would delay the tapering of its bond buying programme.
To attract dollars, RBI in September had opened a special concessional window for swapping foreign currency non-resident (banks) (FCNR-B) deposits and overseas foreign currency borrowings for banks. So far USD 15.2 billion has come from this window.
The window will remain open till the end of this month, and many analysts have pegged the inflows from these instruments to be in the range of USD 20-25 billion.
The plight of the rupee started after the US Fed in its May 24 meeting hinted at shutting the easy money tap- repurchase of USD 85 billion worth of T-bills every month.
This had led to a spike in US interest rates, enticing FIIs to plumb for better returns back home by exiting emerging markets.
FIIs had sold domestic debt worth more than USD 52 billion so far in 2013
US economy clocks 2.8% growth in third quarter
New York: The US economy grew at an annual rate of 2.8 percent in the third quarter, the government said Thursday in a report that revealed weakness in key consumer spending.
The world`s largest economy accelerated from a 2.5 percent pace in the second quarter, surprising analysts who had expected the Commerce Department`s first read on third-quarter gross domestic product would show expansion at a weaker 1.9 percent pace.
It was the strongest pace of growth in a year. But analysts forecast a weaker fourth quarter this year, after a Washington budget battle forced a 16-day government shutdown in October that shaved an estimated USD 24 billion from the economy.
Scott Hoyt of Moody`s Analytics noted that growth in the third quarter came amid widespread expectations that Congress would find a compromise in time to avoid the government shutdown.
The Commerce Department said the July-September pick-up was mainly due to a sharper decline in imports from the second quarter and accelerating rises in private inventory investment and state and local government spending.
Federal government spending, hit by "sequester" budget cuts that began in March, fell 1.7 percent following a fall of 1.6 percent in the second quarter.
Inflation heated up, led by price jumps in energy goods and services, but remained well below the two percent target of the Federal Reserve for price stability.
The price index rose 1.8 percent in the third quarter, following a 0.2 percent rise in the second. Excluding food and energy prices, the price index increased 1.5 percent, compared with a 0.8 percent rise in the prior quarter.
Growth in consumer spending, which accounts for roughly two-thirds of US activity, slowed to 1.5 percent from an increase of 1.8 percent in the second quarter
Disposable personal income rose 2.5 percent in the third quarter, down from a 3.5 percent increase in the prior quarter under pressure from rising consumer prices.
"The US economy had somewhat more pep in the previous quarter than expected amid solid gains in construction," Sal Guatieri of BMO Capital Markets said in a research note.
However, he added, weakness in consumer spending and business investment, alongside the large gains in inventories and the government shutdown, "will weigh on growth in the current quarter."
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