Indian financial system bankable, says RBI panel

The Indian banking system can easily weather a doubling of bad loans or a sudden spike in interest rates that can send bond yields soaring, a stress test of the system by a panel of top RBI and finance ministry officials reveals, highlighting the relative strength of banks in this country amid the turmoil in the global financial sector. The high-level committee on financial sector assessment headed by RBI deputy governor Rakesh Mohan also forecast economic growth of 8% in the medium term, as it concluded that India’s banking sector was an oasis of stability in a global financial sector strewn with effigies of once-mighty international banking names. The panel also suggested that the regulation of housing finance companies be transferred to RBI whose permission should be sought before any change in strategic shareholding. The panel, which explored varying so-called "stress test" scenarios, said most Indian banks had raised enough capital and could easily cope with a steep jump in bad loans. If bad loans rise by 150% — in its worst case scenario — the panel concluded that the overall capital adequacy position of Indian banks falls to 10.6% in September ’08 as against 11% in March ’08. "Even under the worst case scenario, capital remained comfortably above the regulatory minimum," said the panel in its report released on Monday. The other stress test involved an interest-rate shock and the committee noted that an overnight impact of a 244-basis point increase in bond yields resulted in an erosion of 19.5% of a bank's capital and reserves. "The capital-to-risk-weighted assets (CRAR) would reduce from 13% to 10.9% for a 244-basis point shock," it said, adding that only in case of 20 banks, which account for 36% of total assets, would the CRAR slip below the regulatory 9%.

PM brings broad agenda to G-20

Asking industrialised nations to avoid protectionism in the trade of goods and services, Prime Minister Manmohan Singh today said it was important and necessary for the G-20 Summit to take "credible decisions" to help reverse the current slowdown and instill a confidence in the global economy. In a statement before leaving for London to participate in the meeting of world leaders to discuss the economic meltdown, Singh also focussed on the need to ensure adequate flows of finances to the developing countries to overcome the reversal of international capital flows. Singh, who will have his maiden meeting with US President Barack Obama on Thursday, said the time has come for the international economic and financial architecture to reflect contemporary economic strengths. The Prime Minister, who is undertaking his first trip abroad after the coronary bypass surgery on January 24, said considerable amount of preparation has been done for the Summit. These preparations relate to provision of coordinated fiscal stimulus by major economies to offset the decline in private demand, agreement on a set of principles to plug loopholes and weaknesses in the supervisory and regulatory arrangements for the financial institutions, he said. He underlined the need to undertake effective measures designed to provide emerging and developing countries adequate resources to offset the effects of global slowdown on their economies. "It is important and necessary for the Summit to take credible decisions which will help to halt and reverse the current slowdown and to instill a sense of confidence in the global economy," he stressed. "It is an unfortunate reality that the effects of the slowdown have spread across the world, and developing countries, particularly those in Africa, are facing its worst consequences," the Prime Minister said. He asked the developed countries to steer clear of protectionism and work towards restructuring and reforming the international financial institutions. "There are some issues which require particular focus such as the need to ensure the adequate flow of finances to the developing countries to overcome the reversal of international capital flows, and not retard progress towards the attainment of the Millennium Development Goals, the need to avoid protectionism in trade of both goods and services, and restructuring of international financial institutions. India, Singh said, has benefitted from growing global interdependence as manifested in the high growth rate that the country has achieved over the last five years. "We would like to ensure that our economy continues to expand at a healthy rate to meet the principal challenges of eradicating poverty and ensuring balanced and inclusive socio-economic development for our people," he said. "Our economic, financial and banking institutions have shown great resilience and the fundamentals of our economy remain strong," he said. Singh is likely to press the developed countries to desist from trade barriers and ensure that flow of funds for development does not suffer. New Delhi hopes that the London Summit will come out with clear and strong guidelines on measures for recovery of global economy and reform of the international financial institutions.

Reliance Infra forays into IT implementation

Reliance Infrastructure Limited has been empanelled as the Information Technology (IT) Implementation Agency with Power Finance Corporation (PFC), for implementing information technologies in State Electricity Boards (SEB). With this, RInfra became the only Company with the unique recognition of being an IT Consultants (ITC) as well as an IT Implementation Agency (ITIA), marking the company’s foray into IT implementation. Earlier, RInfra had been empanelled as an IT Consultant (ITC). The Union Ministry of Power (MoP), through the PFC had envisioned the adoption of IT initiatives in various SEBs, for which it has allocated Rs.100bn. The SEBs would be initially getting funds out of this allocation as loans and subsequently, on successful completion of the defined objectives, i.e., establishing the baseline data for AT & C losses through the implementation of IT initiatives - the same would be converted into a grant. The SEBs desiring to have allocations out of this funds are expected to undertake IT initiatives as a part of Accelerated Power Development and Reform Programme (APDRP) and are required to appoint an IT Consultant and IT Implementation Agency, who are empanelled with the PFC. PFC, the nodal agency for releasing funds under APDRP, has identified Systems Integrator (lead for IT Implementation), GIS, Meter Data Acquisition Provider, and Network Service Provider as the four key roles for IT Implementation in SEBs Among all the 85 participating companies, RInfra is the only integrated power utility company that received empanelment as an IT Implementation Agency for all the four roles. The rest of the participants were representing IT sector, Telecom Sector or either of the streams in utility or power sector, i.e. distribution sector, equipment manufacturing, etc. RInfra, with its new status as an empanelled IT Consultant and IT Implementation Agency with PFC and can bid for both IT Consultancy and Implementation for various SEBs as an when they would invite the bids for the same. These bids are likely to be floated from May 2009. Lalit Jalan, CEO & Whole Time Director of Reliance Infrastructure said, “We have been excited on getting both the prestigious recognitions of being IT Consultants and IT Implementation Agency for PFC to make SEBs IT Enabled. This is nothing but the due acknowledgement of what we have already adopted and successfully implemented on our Mumbai & Delhi Distribution business”. He further added, “We are confident that our rich experience and expertise in the field would definitely be of great help to the SEBs and enhance their overall operational performance, efficiency and profitability”. Reliance Infrastructure, in its Mumbai Power Distribution business, has adopted several IT initiatives such as, implementation of SAP, GIS, Knowledge Management System, Equipment Monitoring System (EMS), Distribution Management System (DMS), ISU – CCS, Integrated SCADA, FPI, Automated Meter Reading (AMR), etc. The Company is aiming to become highly techno-savvy and totally IT enabled power utilities in India.

HPCL, ONGC to buy initial oil from Cairn's Rajasthan block

Hindustan Petroleum Corporation's (HPCL) Vizag refinery and Mangalore Refinery of Oil and Natural Gas Corporation (ONGC) have been named buyers of the initial crude oil Cairn India will produce from its prolific Rajasthan block. The first 15,000 barrels per day of Cairn output has been split equally between the two coastal refineries, a top government official said. Indian Oil Corporation (IOC) would also take the Rajasthan crude once volumes reach 50,000 bpd by the end of 2009. "A formal letter indicating the volumes allocated between the three has been sent to Cairn. They (Cairn) has to now enter into appropriate crude sale agreements," the official said. When contacted, Cairn India CEO Rahul Dhir refused comments on the issue saying: "We are in discussions with the Government to finalise the offtake arrangement... We have not fully concluded the offtake arrangements so far." Dhir said the focus for the company currently was to start oil production from Mangala, the biggest oilfield in the Rajasthan block, by the third quarter of 2009 calendar year. "We are targeting 30,000 bpd (1.5 million tonnes a year) of crude oil production from Mangala by July-September quarter. Output will rise to 50,000 bpd (2.5 million tonnes) by Q4," he said. Cairn, he said, was trying to pump small quantities of oil in the next month or so. Cairn will initially produce 4,000 to 5,000 barrels of oil per day from its fields in the Barmer district of Rajasthan. The oil would be transported in trucks to Kandla on Gujarat coast for onward shipment to Mangalore on the west coast and Vizag on the east coast, the official said. Though IOC had indicated it can take up to 1.5 million tonnes of Rajasthan crude between its Koyali refinery in Gujarat and Panipat unit, the company would not immediately take the initial volumes as it lacks receiving facility. Koyali, where the oil can be transported in trucks, does not have facility that can unload the waxy Rajasthan crude that turns solid at room temperature. Also, it does not have heated storages. A heated pipeline to transport the crude to Gujarat coast would start in the fourth quarter, when an additional 50,000 bpd will be produced, Dhir said. Peak output of 1,75,000 bpd (8.75 million tonnes a year) from the Mangala, Bhagyam and Aishwariya fields in Rajasthan block is to first go to state refiners, the official said. IOC has indicated that it can take 20,000 bpd (one million tonnes) at its Panipat refinery in Haryana and another 0.5 million tonnes at Koyali unit in Gujarat once a delayed coker is installed at the refinery. "We are on track to delivering first oil in Q3," Dhir said. Mangalore Refinery, which till recently was the official offtaker of Rajasthan crude, wants only 1.2 million tonnes, while Hindustan Petroleum says it can take 0.5 million tonnes at its Vizag unit. The remaining unsold output would go to private refiners, the official said. Reliance Industries (RIL) and Essar Oil have expressed interest in buying Cairn crude. RIL wants 30,000 to 60,000 bpd of Cairn crude each for its two refineries at Jamnagar in Gujarat, while Essar Oil has written for 30,000 bpd this year and 1,20,000 bpd by 2011 when it expands its Vadinar refinery in Jamnagar. Since the crude is waxy, refiners need to put up infrastructure to receive the oil. Laying of spur pipelines and special heated storages for Rajasthan crude would take about six months. The Mangala field is expected to produce 30,000 bpd by the second quarter of 2009-10. Production hit a plateau of 1,25,000 bpd during H1 of 2010. Besides 1,25,000 bpd of Mangala, the adjacent Bhagyam field would produce 40,000 bpd and Aishwariya another 20,000 bpd. The peak of 1,75,000 bpd would be reached in 2011. Cairn is investing $850 million in a processing facility and another $940 million in a heated oil pipeline from the fields to the port of Viramgam in Gujarat. Cairn India, the subsidiary of UK-based Cairn Energy, holds a 70 per cent stake and is the operator of the Rajasthan block. ONGC is its partner with a 30 per cent stake.

Jaiprakash Associates - Updates

Jaiprakash Associates Ltd has informed that in accordance with the press release from the RBI dated December 06, 2008 and relevant policy, as amended from time to time, Jaiprakash Associates Ltd ("the Company") has repurchased and extinguished the zero coupon convertible bonds aggregating to the face value of USD 4,000,000. Further purchases will be effected subject to various guidelines as applicable for such buy back.

RIL shuts down oil production at KG basin

Reliance Industries Ltd (RIL) has once again shut down crude oil production at its predominantly gas-rich KG-D6 block to hook up more wells that will raise the output to a peak of 40,000 barrels per day. Reliance shut down production at the MA field on the midnight of March 22 for 45 days to connect more oils that will raise the output, a source said. The MA field was producing about 18,000 barrels per day of oil from three wells when it was shut down. Two-three more wells would be hooked up in the planned shutdown period. "Output is expected to rise to 40,000 bpd before the end of the April-June quarter," the source said. The Reliance spokesperson did not return calls for comments. The MA field in KG-D6 off the Andhra coast, which began pumping out oil in September 2008, had produced 7,90,000 barrels of oil till December 9 last year, when output ceased due to equipment failure. It had resumed production earlier this month after the three-month shutdown. RIL, the source said, sold a second cargo from the MA field to Chennai Petroleum Corp Ltd (CPCL). A 4,50,000-barrel cargo was delivered to CPCL's refinery near Chennai last week. The billionaire Mukesh Ambani-run firm had sold the first cargo of over 4,30,000 barrels of oil to Hindustan Petroleum Corp Ltd's Vizag refinery in November.

Sesa Goa - Outcome of Board Meeting

Sesa Goa Ltd has informed that the Board of Directors of the Company at its meeting held on March 30, 2009, inter alia, has taken the following decisions: 1. Mr. P K Mukherjee has been reappointed as Managing Director of the Company with effect from April 01, 2009 for a period of three years. 2. Mr. D D Jalan and Mr. Akhilesh Joshi have resigned as Directors of the Company, with immediate effect. 3. The validity of Scheme of Amalgamation of Sesa Industries Ltd with Sesa Goa Ltd has been extended upto July 31, 2009.

Japan Feb industrial output falls 9.4% MoM

Japan's industrial output fell 9.4 percent in February, slightly more than expected, data showed on Monday, adding gloom to an economy mired in its worst recession since World War Two. Manufacturers surveyed by the government expect output to rise 2.9 percent in March, and rise 3.1 percent in April, the data showed.

Volatile activity seen around 2850-3250 range

With foreign players buying in spot and index futures along with huge call buying in 3100-3200 strikes and put writing at 3100-3000 strikes, Indian markets may gain further in the coming week. However, markets have now turned over-bought and higher levels may attract players to book profits in their long positions. “Levels of 3200-3250 may prove to be a big uncertain ‘block’ on an upside. Capped upside’ is likely in the next week. Institutional activity and Global news-flow is likely to swing the markets in the coming week. On the whole, ‘ranged and volatile activity’ is seen in the range 2850-3250 of Nifty,” said Reliance Money in a report. The sharp pull-back rally gained strength last week and was largely due to upbeat cues from the global markets which pushed players to cover their shorts ahead of the F&O expiry. The rally has been so sharp that the index crossed quite a few hurdles with ease. Indices have now closed above significant levels of 10,000 (Sensex) and 3100 (Nifty). Activity was on the whole wide-spread and was visible in mid-cap and small-cap segment too. Surprisingly the volumes too were elevating and were supportive for the broad based rally last week suggesting buoyant sentiments among the market players. “At present, the momentum is undoubtedly favoring the bulls. However, with the markets turning into the overbought zone, chances of profit-taking in the near term are relatively high. The deepness of the correction, if any, will be very significant as it will reveal the market direction. Any breach below the 2850-2800 level may call for heavy selling in near term,” said Amit Sharma, Prituous Wealth Advisory. Last week was an ‘expiry week’ in F&O. It started on very ‘firm’ note with Nifty witnessing a solid positive opening and then surging further ahead without much ‘profit-taking’. Markets mirrored ‘rally’ in global peers and advanced on four out of five trading sessions in the week. Expiry for March series was unexpected. Closing of the series witnessed markets surging sharply on account of ‘short-squeeze’. ‘Positive’ action from FIIs kept the sentiment buoyant in the last week. On weekly basis, Nifty (spot) closed 10.74% higher at 3108.65. Nifty March Futures closed the series at 3082.70 and Nifty April futures too, posted decent gains of 329 points and closed 11.77% higher at 3124.55. Nifty April futures moved into Premium of 16 points. Volumes in F&O were sharply lower on Friday, with total turnover falling to Rs.51171 crore as against Rs.76957 crore in previous trading session. Top gainers in the F&O were Aban Offshore, JSW Steel, Tata Motors, Orchid and Sesa Goa. Top losers were Tulip, HDFC, Infosys Technologies and Biocon. The technical note of Reliance Money said, “On daily chart Nifty (after closing above 2850 levels) is now trading very close to its acid-test range of 3200-3250 on daily charts. On a positive side volumes, market breadth and FII flow has remained very strong through the week. Also observed was average cross-over (20&50 day EMA) on last session of the week around 2830 levels. Thus, in case current rally is sustained with 2800-2850 as short term support we may see extension of rally towards 3250 first and then towards 3500 (200 day SMA & 50 week EMA) on higher side.”

DoT seeks Finance Ministry's views on stake sale

The Department of Telecom has sought the views of the Finance Ministry on the recommendations made by Telecom Regulatory Authority of India on barring promoters of new telecom companies from selling their equity stake for a period of three years. On March 12, the regulator said that promoters of telecom companies, which had recently obtained licences, should be asked to give the Government half of the profits earned from selling their equity if they diluted their stake within three years of taking the licence.

Nagarjuna Fertilizers - Updates

Nagarjuna Fertilizers & Chemicals Ltd has informed that the Board of Directors of the Company at its meeting held on April 27, 2007 approved the proposal to issue 2,25,00,000 equity shares of Rs 10/- each to the Core Promoters of the company on preferential basis pursuant to the guidelines prescribed by Securities and Exchange Board of India for preferential issues. The said proposal was approved by the shareholders at the 31st Annual General Meeting held on September 21, 2007. The Stock Exchange had through letter dated October 22, 2007 granted In-principle approval for the allotment of 2,25,00,000 equity shares of Rs 10/- each to the Core Promoters by way of preferential allotment. The Warrants Allotment Committee of Directors at its meeting held on October 26, 2007 allotted 2,25,00,000 equity shares of Rs.10/- each as per the details given below: 1. Name of the Core Promoter : Nagarjuna Management Services Pvt Ltd - Total No of warrants : 74,97,500 2. Name of the Core Promoter : Chinnar Securities Pvt Ltd - Total No of warrants : 68,73,750 3. Name of the Core Promoter : KRR Holdings Pvt Ltd - Total No of warrants : 68,73,750 4. Name of the Core Promoter : KS Raju & Associates Holdings Pvt Ltd - Total No of warrants : 12,55,000 The Core Promoters had paid 10% of the value of the warrants allotted to them. The Core Promoters are required to pay the balance 90% of the value of the warrants on or before April 26, 2009 being the period of 18 months from the Date of Allotment. The Core Promoters represented by Nagarjuna Holdings Private Ltd (NHPL) by their letter dated March 26, 2009 informed the Company of their inability to convert the said warrants into equity shares. The Warrants Allotment Committee of Directors of the Company had through Resolution dated March 26, 2009 approved the cancellation / annulment of the allotment of 2,25,00,000 warrants issued to the Core Promoters as also forfeiture of the 10% of the value of the warrants received by the Company.

RCom eyes 15-20 pc revenue from data, value-added biz

Anil Ambani-run Reliance Communications is targeting 15-20 per cent of its revenue from its data and value-added services verticals. According to company sources, RCom is giving a major push to its data business and expects it, along with the VAS business, to contribute 15-20 per cent of overall revenues. To achieve its revenue target, RCom is planning to target high-value customers of rival companies. The company is planning to launch a swap offer 'Change2Broadband' wherein data-card customers of competitors will be upgraded to Reliance's Netconnect Broadband Plus service, sources said. Under 'Change2Broadband', RCom will offer a Rs 3,600 annualised savings scheme to these churn customers. A potential high-value customer for RCom is one who is currently subscribing to tariff plans of over Rs 1,099. This could translate into a revenue contribution of over Rs 800 crore every quarter. RCom is also planning a similar swap offer to upgrade its own Reliance Netconnect customers to Netconnect Broadband Plus. RCom has tied up with Alcatel Lucent to establish its data network. RCom's high-speed data network will provide seamless coverage across 20,000 towns and 4.5 lakh villages. The company has invested over Rs 600 crore in its pan-Indian network for its data business.

Obama to unveil automakers plan on Monday

President Barack Obama will unveil on Monday a much-anticipated plan on the future of ailing US automakers, his spokesman said Friday. "A task force is meeting today. They are finishing up the decisions that have to be made and put in place. The president will make an announcement on Monday," spokesman Robert Gibbs said. Obama's auto task force has been working to solve the woes of the "Big Three" US automakers which have been pushed to the brink of bankruptcy in the economic recession amid a global downturn in car sales. Two of the firms, GM and Chrysler, have asked for another 21.6 bn dollars in US aid on top of the 17.4 bn in emergency loans approved in December as they struggle to survive. Ford, the other in the trio, has said it has enough cash to survive the downturn without government aid. The New York Times reported on its website late Friday that the Obama administration was likely to extend more short-term aid to General Motors and Chrysler on Monday, but impose a strict deadline for bondholders and union workers to make concessions that would help the ailing automakers become viable businesses and avert bankruptcy.

India's Infosys eyeing US buy opportunities-paper

Indian software services firm Infosys Technologies Ltd expects to find acquisition opportunities in the U.S. during the current downturn, reported on Saturday."Acquisitions will definitely be very accessible in this market from a price point of view. If it makes sense we'll do it," the paper quoted Infosys co-chairman Nandan Nilekani as saying. Companies operating in the healthcare and pharmaceuticals sectors would make interesting targets, Nilekani said. Last year, Infosys, India's No. 2 software services exporter, bid for British consultancy and SAP services provider Axon but lost to smaller Indian rival HCL Technologies The U.S. market currently accounts for about 63 percent of the Indian firm's revenues, the report said.

Inflation at 0.27%

The annual rate of inflation, calculated on point-to-point basis, stood at 0.27% for the week ended 14 March 2009 as compared to 0.44 % for the sequential previous week. It was 8.02% in the corresponding week of the previous year. The official Wholesale Price Index for all commodities for the week ended 14 March 2009 rose by 0.1% to 227.0 from 226.7 for the previous week. The major driver of the WPI is manufacturing index that rose by 0.2 % to 199.6 from 199.2 for the previous week. While food product, non-metallic mineral products, basic metals alloys and metal products group registered an increased for the week ended 14 March 2009 that of textiles group declined by 0.9 % to 139.3 from 140.5 for the previous week due to lower prices of cotton yarn-cones (4%). However, the prices of polyester staple fibre (1%) moved up. In addition to this The index for machinery and machine tools group declined by 0.2 % to 172.1 from 172.4 for the previous week due to lower prices of electric motors: phase one (5%), electric motors (3%) and electric motors: phase three (2%). Another major driver is primary article index that rose marginally to 245.6 from 245.5 for the previous week. The two major component of this is food articles and non-food articles. Among which the index for food articles group rose by 0.1% to 242.7) from 242.5 for the previous week due to higher prices of barley (2%) and bajra, maize, fruits & vegetables, masur, urad and rice (1% each). However, the prices of fish-marine and tea (3% each), moong (2%) and condiments & spices and gram (1% each) declined. The third major contributor to WPI that is index for fuel, power, light and lubricants remained unchanged at its previous week's level of 321.0. The week on week decline in the wholesale price index leads to disinflation situation in India and not the deflation in real terms. Disinflation is the phenomena where there is slowing of the rate at which prices increases. This occurs during a slowdown as sales drop. Disinflation is not to be confused with deflation, where prices actually drop. In case of India, drop in industrial production in January 2009 along with dismal performance by the consumer durable and capital goods throughout the year was due to slowing demand in domestic as well as in the external market. On the other hand, there is immense pressure on consumer price index. The index that give us the clear idea about the real price that consumer pay at market place.

Vakrangee Softwares' board approves to set up STP

The board of Vakrangee Softwares approved the incorporation of a 100% (wholly owned) subsidiary company at Philippines, Manila. Further, the board has approved to set up of STP (Software Technology Park). This was approved at the board meeting held on 25 March 2009.

ONGC to come out with IPO for its $2.5 bn plant

ONGC will come out with an initial public offer of its unit that is building a petrochemical plant at Dahej in 2011-12. "We would look for an IPO closer to the completion of the $2.5 billion project ... We do not need funds for next two years," ONGC Chairman RS Sharma told reporters. ONGC holds 26 per cent stake in ONGC Petro-additions Ltd (OPaL), while state run GAIL has 19 per cent and GSPC has five per cent. Sharma said the company has received commitment for more than Rs 8,000 crore for the debt component of the project from banks.