Kingfisher Airlines in talks with an investor: Vijay Mallya

Bangalore: Criris-hit Kingfisher Airlines is in talks with a foreign investor for potential stake sale, its Chairman Vijay Mallya said Tuesday.

He, however, refused to divulge the investor's name.

"I expect this to take some form or shape in about 90 days. That is in my own estimate. It could be longer or it could be even earlier," Mallya told reporters after the annual shareholders meeting of the company.

Kingfisher Airlines has remained grounded for almost a year now under the burden of huge debts totalling over Rs 7,000 crore and accumulated losses of more than Rs 16,000 crore.

Asked about the investor's profile, Mallya said he is unable to reveal anything at this moment as it is something that would breach the confidentiality of agreement. "The investor is very sensitive to identity being revealed. Let us really give it a good try to get KFA started," he added.

To a query, Mallya said the United Breweries Holdings Limited (UBHL) Board has considered the request of KFA Board for continued funding in the light of the prospective investor and agreed to provide some funding for KFA.

"UBHL itself cannot use its own funds and its assets that it currently has because of the restraining order from the Karnataka High Court. We have in fact applied to the court's permission to use part of this fund, and now it is in the hands of the honourable court," he said.

On the response of the Directorate General of Civil Aviation (DGCA) to the airlines' submission of revival plan in a bid to restart limited operations, Mallya said the company had not heard from the aviation regulator, but gathered informally that they would like to see recapitalisation plan.

Asked whether the UBHL has agreed to pay employees' salaries, Mallya said: "Yes, that is the principle request before the honourable court."

Queried if there is any contingency plan in case the court does not take it up, he said: "I have no contingency plan to violate or deviate from the orders of honourable court."

To a question, Mallya said issues with its creditors are bilateral in nature and would talk to them from time to time.

"Some of them have preferred bilateral negotiations in good faithful spirit and some have gone to court. We have to deal with all these issues as they come along," he added.

On Malaysian low-cost carrier Air Asia impacting the aviation sector in India after its foray into the country, Mallya said KFA was never a low-cost carrier and always challenged the very use of the word. "If at all, it will have an impact on the full service space, but good luck to all those who are starting," he said.

Asked how he saw the aviation sector panning out in next year or so, Mallya said: "If you take all three components - current crude oil prices, the value of rupee versus the dollar etc - as they exist, obviously it is very challenging. And I don't know whether there can be full recovery."

CCEA approves methodology for coal blocks auction

New Delhi: The Cabinet Tuesday approved the methodology for auctioning coal blocks, providing for upfront and production-linked payments and benchmarking of coal sale prices.

Coal blocks will be put for auction after the environment ministry reviews them and bidders have to agree to a minimum work programme, according to an official statement.

"CCEA has approved the methodology for auction by competitive bidding of the coal blocks. The methodology provides for auctioning the fully explored coal blocks and also provides for fast tracking the auction by exploration of regionally explored blocks," the statement said.

The policy will ensure greater transparency and will pave the way for the government to auction explored blocks.

"The process of bidding of coal blocks will be started very soon. The government has fulfilled its commitment to bring transparency in the allocation of coal blocks," Coal Minister Sriprakash Jaiswal said.

A source said six explored blocks will be auctioned first, with estimated reserves of over 2,000 million tonnes.

The policy provides for production-linked payment on a rupee per tonne basis, plus a basic upfront payment of 10 percent of the intrinsic value of the coal block.

The intrinsic value will be calculated on the basis of net present value (NPV) of the block arrived at through the discounted cash flow (DCF) method, the statement said.

"To benchmark the selling price of coal, the international FoB (freight-on-board) price from the public indices like Argus/Platts will be used by adjusting it by 15 percent to provide for inland transport cost which would give the mine mouth price," it said.

To avoid short-term volatility, the average sale price will be calculated by taking prices of the past five years.

For the regulated power sector, a 90 percent discount will be provided on the intrinsic value. This will help to rationalise power tariffs, the government said.

To ensure firm commitment, there will be an agreement between the ministry and the bidder to perform minimum work programmes at all stages.

There would be development stage obligations in terms of milestones to be achieved such as getting mining leases and obtaining environment/forest clearances, while the bidder will have to give performance guarantees.

The policy also provides for relinquishment of a block without penalty if the bidder has carried out the minimum work programme stipulated in the agreement.

According to the statement, the Ministry of Environment and Forests will review details of coal blocks and communicate its findings before the areas are put to auction. Final clearances will be subject to statutory approvals.

The government said exploration activities in identified blocks are at an advanced stage and are likely to be completed soon. They will be auctioned under the Competitive Bidding of the Coal Mines Rules, 2012, according to the statement.

The Comptroller and Auditor General said in a report that allocation of coal blocks between 2004 and 2009 without auction resulted in "undue benefits" worth Rs 1.8 lakh crore to private entities.

This led to a furore in Parliament, with opposition parties seeking a probe into the matter. The CBI is investigating the issue.

The government allocated 14 coal mines to central and state public sector units, including four to NTPC, in July.

It had planned to auction 54 coal blocks with total estimated reserves of about 18 billion tonnes.

Rupee up 142 paise against dollar in late morning deals

The rupee had settled just a paise lower at 63.38 against the dollar in Wednesday’s trade. File photo: V.V. Krishnan

The rupee rose by 142 paise to 61.96 in late morning trade on Thursday on fresh selling of the U.S. currency by banks and exporters triggered by sharp fall in dollar in overseas amid smart rise in the equity market.

In New York market, the U.S. dollar fell sharply against major rivals yesterday, especially against emerging-market currencies, after the Federal Reserve made no change to its monthly asset-purchase programme.

The rupee resumed higher at 61.70 per dollar as against the last closing level of 63.38 at the Interbank Foreign Exchange (Forex) Market and firmed up further to 61.64 before quoting at 61.96 per dollar (1050 hours).

It showed a sharp gain of 142 paise or 2.24 per cent from its last close.

It moved in a range of 61.64 and 62.08 per dollar during the morning deals.

Meanwhile, the benchmark BSE-30 share Sensex rose by 489 points or 2.45 per cent to 20,451.56 at 1050 hours.

Keywords: inter-bank foreign exchange, rupee-dollar trade, forex market, opening trade

SBI increases base rate to 9.80 pc, makes loans costlier

A a day ahead of the RBI's policy review, State Bank of India (SBI) on Thursday increased its base rate, or the minimum rate of lending, to 9.80 per cent, making loans costlier.

"State Bank of India has revised the base rate by 0.10 per cent from 9.70 per cent per annum to 9.80 per cent," it said in a statement. Retail term deposit rates have been revised upward, it said.

SBI is the first major state-run bank to hike lending rates after short-term rates rose as a result of the Reserve Bank of India's liquidity tightening moves announced in July.

The decision comes on the eve of the mid-quarter review of the monetary policy.

According to watchers, new RBI Governor Raghuram Rajan has been given some room to take an accommodative stance after the US Federal Reserve delayed the tapering of liquidity infusion.

SBI also increased the spreads on auto and home loans by as much as 0.20 per cent, which will affect new borrowers.

Home and auto loan borrowers typically pay a margin, or a spread, above the base rate, which is arrived at as per the risk and quantum of borrowing.

The bank has hiked rates for loans under the benchmark prime lending rate, an older system of computing interest rates, to 14.55 per cent from 14.45 per cent. The lending rate hikes are effective from today, it added.

A senior bank official said the decision to increase rates was taken by the asset liability committee, which met late last evening.

"There has been an increase in our cost of funds and the pressure will only increase further as we enter the festive season, which increases the requirement for liquidity," the official said.

New housing loans under Rs 30 lakh will come at 10.10 per cent as against 9.95 per cent earlier, while interest rates on auto loans will go up to 10.75 per cent, the official said.

ECONOMY

19 Sep, 2013 11:50 IST

RBI To Likely Hold Rates Steady: Poll

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25%, and 47 of 48 respondents see the CRR unchanged at 4.00%

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Picture by Reuters

The Reserve Bank of India's new Governor Raghuram Rajan is expected to leave key policy rates unchanged in his first monetary policy review on Friday, and continue emergency cash tightening measures initiated in-mid July to stabilise the rupee, and check racing inflation.

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4.00 per cent.

Of 37 economists polled, 30 expect no change in the Marginal Standing Facility (MSF) rate or the rate at which banks access funds for emergency needs. The MSF rate was raised by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee.

Of 32 economists polled, 17 said they expect the RBI to retain the cash tightening steps, while another 28 out of 38 said they do not expect more measures to strengthen the rupee.

The majority of economists polled expect RBI's focus to remain on rupee stability with price stability coming a close second. Eighteen of 35 economists polled expect Rajan to retain his predecessor's stance, while 12 expect a more growth-oriented approach.

The rupee slumped to a record low of 68.85 to the dollar on August 28 but has since clawed back some ground and last traded at 63.22 on Wednesday.

India's headline inflation rate based on the wholesale price index soared to a six-month high of 6.1 per cent in August.

(Reuters)

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Ratan Tata joins Carnegie Board of Trustees

India's leading industrialist Ratan Tata has been nominated as a member of the board of trustees of the Carnegie Endowment for International Peace, an American think tank, a media release has said.

"We are extremely proud to welcome Ratan to our board of trustees," Harvey V Fineberg, chairman of the board said in a statement on Wednesday.

"Ratan has an unparalleled knowledge of the global economy, as well as the business sector in one of the world's most important emerging economies," Fineberg said after the announcement.

"He has enormous experience managing large organisations, and I know he will be a tremendous asset for Carnegie," he added.

Welcoming him, Carnegie President Jessica T Mathews said: "We are honoured to welcome Ratan to Carnegie's board."

Finberg expressed hope that having Tata on their Board of Trustees would be an asset for Carnegie in developing it as "the truly global think tank" and would also be helpful in establishing Carnrgie's new South Asia Centre in New Delhi.

Ratan Tata was the chairman of Tata Sons, the holding company of the Tata Group, from 1991 until his retirement at the end of 2012. He was also chairman of the major Tata companies, including Tata Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Global Beverages, Tata Chemicals, Indian Hotels, and Tata Teleservices. During his tenure, the group's revenues grew to over $100 billion annually.

Tata is chairman of two of the largest private-sector-promoted philanthropic trusts in India. He is also a member of the Indian Prime Minister's Council on Trade and Industry.

Carnegie Endowment for International Peace, the oldest think tank in the United States was established in 1910. It is globally renowned with research centres in Moscow, Beijing, Beirut, and Brussels as well as a program in Almaty, Kazakhstan in addition to its headquarters in Washington, DC.

Rupee jumps to 1-month high, up 158p to 61.80 vs USD as US Fed defers taper

Rupee jumps to 1-month high as US Fed defers taper

The rupee jumped to one-month high as it gained 158 paise to 61.80 against the dollar at the Interbank Foreign Exchange market on Thursday on hopes of increased capital inflows after the US Federal Reserve's decided to keep its stimulus programme intact.

Traders said besides expectations of increased capital inflows, the dollar's weakness against other currencies overseas, after the US Federal Reserve surprised markets by leaving its massive bond-buying programme unchanged, helped the rupee gain.

The rupee had settled just a paise lower at 63.38 against the dollar in yesterday's trade.

Meanwhile, stock markets were up by nearly 3 per cent in the opening trade.

The BSE benchmark index soared by 574.13 points, or 2.88 per cent, to 20,536.29, while National Stock Exchange's Nifty rose by 183.65 points, or 3.11 per cent to 6,083.10 in opening trade.

Sensex surges over 500 points, Rupee at over 1-month high on US Fed move

Sensex surges over 500 pts, Re at over 1-month high

The BSE benchmark index Sensex soared over 500 points to touch the 20,000 level in morning trade on Thursday following sustained buying by funds and retail investors, triggered by strengthening rupee and a firming trend overseas after the US Federal Reserve decided to keep its stimulus programme intact.

At 10.01 am, Sensex was up 545.58 points at 20507.74. Similarly, Nifty was up 176.50 points at 6075.95 during the same time.

The 30-share index, which had gained nearly 230 points in the past three sessions, rose further by 574.13 points, or 2.88 per cent, to 20,536.29 points with banking, realty, capital goods and auto sector stocks leading the rally.

The broad-based NSE Nifty also moved up 183.65 points, or 3.11 per cent, to 6,083.10.

Brokers said market sentiment turned extremely bullish on a flurry of buying by funds driven by strengthening rupee and a firming global trend after the US Federal Reserve surprised markets by sticking to its massive bond-buying programme.

The BSE banking index gained the most by surging 6.89 per cent to 12,711.50 as stocks like SBI was up 5.32 per cent, followed by ICICI Bank (8.18 per cent), Axis Bank (7.13 per cent), Yes Bank (16.27 per cent) and HDFC Bank (5.12 per cent).

In other Asian markets, Hong Kong's Hang Seng rose by 1.67 per cent, while Japan's Nikkei by 1.32 per cent in early trade on Thursday.

The US Dow Jones Industrial Average gained 0.95 per cent to hit record high in Wednesday's trade.

Business Today's Mahesh Nayak in his analysis of US Fed move and its impact on Indian financial markets wrote: For India, the news of zero taper is positive and this may also have a positive reaction with the financial market rising on Thursday.

However, overall it doesn't make much difference to India. In the last four years and nine months since QE started in the US on 25 November 2008 till date, the Fed has pumped slightly over $3 trillion to boost its battered economy. In the same period, close to $105 billion foreign institutional investors (FIIs) inflows came into the Indian equity and debt market. Even if one assumes that the entire FII inflows into India came from US, it this will not be over 3.5 per cent of the overall infusion of money by the Fed.

Meanwhile, zero tapering by the Fed will be soothing some nerves at Reserve Bank of India (RBI). On Friday, new RBI governor Raghuram Rajan will come out with his maiden policy and any tapering would have put pressure to further tighten interest rates to protect the rupee. However with the tapering being postponed, RBI can take its chance to cut rates for boosting growth. It will be interesting to see if Rajan bites the bullet.

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ECONOMY

19 Sep, 2013 11:50 IST

RBI To Likely Hold Rates Steady: Poll

Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25%, and 47 of 48 respondents see the CRR unchanged at 4.00%

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