Asia economies to rebound in 2010 : ADB

Asian economies will likely bounce back from the global economic slump in 2010 but fears remain over the sustainability of growth if there is no wider recovery, the Asian Development Bank said Thursday. The bank's chief economist Lee Jong-Wha said the outlook for East Asia this year remained "pessimistic" but foresaw a V-shaped recovery led by China if countries continue to focus on stimulating domestic demand. "We are optimistic for developing Asia for a V-shape recovery.... But the big question is whether it will be sustainable growth -- in that part we are rather pessimistic without a full global recovery," Lee told media ahead of the launch of ADB's biannual Asia Economic Monitor in Bangkok. "It will be very difficult to return to the pre-crisis trend of growth," he added. Despite an increasing proportion of export demand coming from within Asia, notably China, countries in the region continue to rely on markets in the US, European Union and Japan for 60 percent of final goods exports, Lee said. Those markets are less likely to recover from the global financial crisis so quickly, he said. The ADB report recommended a continued focus on loose monetary and fiscal policies to stimulate domestic demand, with support for small enterprises and stimulus packages that must be fast and efficient. "The issue is how effectively they (Asian governments) can mobilise these additional fiscal resources," Lee said. The report showed that the pace of capital outflows from Asia had slowed in the first quarter of 2009, and Lee urged large Asian investors to focus more of their capital spending within the region. While China's recovery has "gained traction" and the more closed smaller economies such as Indonesia are on course to stronger growth levels, Lee said concern remained for more export-dependent small regional economies such as Hong Kong, Singapore, Malaysia and Thailand. The Manila-based bank said earlier this month it would update on September 22 its flagship Asian Development Outlook forecasts, which predicted earlier this year that developing Asia will see its economic growth fall to 3.4 percent this year compared to 6.3 percent in 2008.

June infrastructure output up 6.5 pc y/y: Govt

Country's Infrastructure sector output grew 6.5 per cent in June from a year earlier, higher than an unrevised 2.8 per cent in May, government data showed on Thursday, signalling signs of a pick up. Output had risen 5.1 per cent in the same month last year. During April-June, the output rose 4.8 per cent, compared with 3.5 per cent in the same period last year. The infrastructure sector accounts for 26.7 per cent of country's industrial output.

Mahindra Satyam tops value, volume chart on both exchanges

Mahindra Satyam has topped the combined value chart with a turnover of Rs 1,012.4 crore. It is followed by ICICI Bank (727.57 crore), Reliance (Rs 685.86 crore), Bharti Airtel (Rs 612.42 crore) and Sterlite (Rs 530.53 crore). The combined volume chart is being led by Mahindra Satyam as well with trades of over 126 million shares on both the exchanges. It is followed by IFCI (61.77 million), Ispat Industries (39.76 million), Unitech (37.33 million), and Suzlon (30.86 million).

Apollo Tyres lto invest Rs 10 bn for IT park in Kerala

Apollo Tyres is planning to invest about Rs 10 billion for setting up an IT park and a hotel complex in Kerala. There were plans to set up a five star hotel and IT park at the 30 acres land at nearby Kalamassery where it has a tyre unit. The company had decided to shift the unit to the Rubber Park at nearby Irapuram. But due to strong objection from the trade unions, it had been held up. The company said the unions have more or less agreed for shifting the factory. Apollo Tyres is planning to double the capacity of the unit from 100 tons per day to 200 tons per day after it was shifted to the rubber park.

IRDA Puts Cap on Charges on ULIP

22nd Jul, 2009 Circular No: 20/IRDA/Actl/ULIP/09-10 Sub: Unit linked products - Cap on charges The Insurance Industry has introduced ULIPs which have found favour with insurance customers in India. These products prescribe certain charges which are deducted either from contributions or from the fund. In 2005, the IRDA had in its Circular No.032/IRDA/Actuary/DEC-2005 dated 21/12/2005 defined various charges which could be levied for the management of the ULIPs. The IRDA has observed that the insurance industry is generally following these definitions. However, there are several heads of charges and in order to enable the customers to comprehend ULIPs, the IRDA had also mandated a signed customer-centric benefit illustration to be included as part of the policy document. This was to ensure that the customers would have a clear understanding of the product before making an investment decision. In order to further enhance clarity and to ensure that the charges are reasonable, relevant to the services being provided and clearly understandable by the customers, the IRDA through this Circular mandates an overall cap on all charges put together. Care has been taken to enable the insurers freedom to distribute charges across the policy term in order to impart flexibility and facilitate product innovation. It is important to keep in mind that insurance is a long term business and policy measures should encourage such long term savings through various instruments available in the insurance sector. On an analysis, it is established that the majority of the products have a tenor of 10 years and above and a smaller proportion is with a tenor of less than 10 years. Hence to encourage long term business and enable policyholders to earn additional returns thereby and taking into account the product features and the current cost structure, it is mandated that the cap on charges will be based on the difference between gross and net yields of any product. The net yield is the gross yield adjusted for all charges. For insurance contracts which are of a tenor of less than or equal to 10 years duration, the difference between gross and net yields shall not exceed 300 basis points, of which fund management charges shall not exceed 150 basis points. For other contracts, i.e., those whose contract period is above 10 years , the difference between gross and net yields shall not exceed 225 basis points, of which the fund management charges shall not exceed 125 basis points.It is relevant to note that in many markets across the world the Regulators have prescribed gross and net yield to the customer for ULIPs. Further, the following must be observed. Extra premium due to underwriting emanating from extraordinary health conditions, cost of all rider benefits, service tax on charges (as applicable) and any explicit cost of investment guarantee shall be excluded in the calculation of net yield In these calculations, all charges should be as per the ‘file and use’ document as approved by the IRDA. Please refer IRDA circular letter IRDA/ACTL/ULIP/2008-09 of January 25, 2008 on ‘benefit illustration’. There should be a specific mention of the gross yield and net yield to the customer at the point of sale. This benefit illustration must be approved by the IRDA. At the time of sale, for benefit illustration purpose, the insurer may assume a growth rate of 10% per annum of the investment as a model, as suggested by the Life Council. This will help the customer to understand the product and charges easily so that the prospect could consider the gross yield and net yield while making an informed decision. At the time of maturity, the insurer must issue the policyholder a certificate showing year-wise contributions, charges deducted, fund value and final payment made to the policyholder taking into account partial withdrawals, if any. In addition, this certificate must also show the actual gross yield and net yield taking into account the actual charges deducted. This certificate must confirm adherence of above prescription. The charges for the ULIPs as filed under the File & Use guidelines as approved by the IRDA, shall not be modified or changed without obtaining the prior approval of the IRDA. The circular comes into effect from October 1, 2009 so that all products which are approved by the IRDA on or after October 1, 2009 will be governed by the provisions of this circular. All existing products that do not meet the requirements of this circular should be withdrawn or modified by 31 December 2009. Sd./- (R. Kannan) Member (Actuary)

FM can manage govt borrowing without impacting rates: SBI

While Finance Minister Pranab Mukherjee presented the Union Budget, the market gasped when it was announced that the country’s fiscal deficit stood at 6.8% and that the government may need to borrow about Rs 4 lakh crore, resulting in the expectations that bond yields may harden ahead and interest rates may shoot up. However, in an exclusive interview, R Sridharan, Managing Director of State Bank of India, said the government may be able to manage its borrowing programme without crowding out private investments or making interest rates go up drastically. “I expect deposits to grow at 20-22% during the current fiscal 2009-2010. That should result in something like Rs 850-860 crore growth of deposits for the entire banking sector this year. If you assume that 25% of that will be invested in government securities, statutory liquidity ratio (SLR) securities, the amount available would be to the extent of something like Rs 2,20,000-2,30,000 crore for investment in central government securities,” he said. “In the initial stages, the yields might see a small spike but in the medium term, I feel that this borrowing programme can be managed by both the government and the RBI without dramatic downturn in the credit availability or also massive spike in interest rates,” Sridharan said.

Telecom sector revenues cross Rs.40,000 cr

Continuing its robust growth, the Indian telecom industry saw its gross revenues growing 2.6 percent to more than Rs.40,000 crore in the quarter ending March 31, said the sectoral watchdog here on Monday. According to the Telecom Regulatory Authority of India (TRAI), the gross revenue of the telecom sector for the period under review stood at Rs.40,444.66 crore, as against Rs.39,408 crore in the previous quarter. The state-owned operators -- Bharat Sanchar Nigam and Mahanagar Telephone Nigam -- together earned Rs.10,599 crore, while private players raked in Rs.29,846 crore. TRAI said India's total subscriber base reached 429.72 million by March-end, as against 384.79 million for the quarter ending December, registering a growth of 11.68 percent. Tele-density, too, increased 36.98 percent from 33.23 percent in the previous quarter. The subscriber base of wireless and wireline increased to 391.76 million and 37.96 million respectively. However, rural wireline decreased from 10.68 million to 10.58 million, a decrease of 0.93 percent. According to the watchdog, the ARPUs (average revenue per user) continued to fall, decreasing 6.82 percent from Rs.220 in December-end to Rs.205 in March. The number of Internet wireline subscribers increased 5.3 percent to 13.54 million in the fourth quarter as against 12.85 million in the same period a year before.

India not concerned over G-8 declaration on N-issue: Pranab

India today said it is not concerned about G-8 developed nations vowing to curb transfer of some sensitive nuclear technology to non-NPT members, saying for New Delhi clean waiver given by Nuclear Suppliers' Group is only relevant aspect for cooperation in the field. "So far as civil nuclear cooperation is concerned, the appropriate agency is IAEA and the 45-member NSG. We have got clean waiver from NSG. We are not deeply concerned (over G-8 declaration)," Finance Minister Pranab Mukherjee told the Rajya Sabha. Mukherjee, who was External Affairs Minister when India got waiver from the NSG and signed India specific safeguards agreement with IAEA last year, was responding to opposition members' concern on the G-8 declaration at Italy. At its summit in L'Aquila last week, the G-8 issued a declaration in which it underlined that they will curb transfer of enrichment and reprocessing technology and items to nations which are not signatories to nuclear non-proliferation treaty, a decision which may impact India. Mukherjee added India is not a member of G-8 grouping and it is only part of an outreach countries group of five countries. The issue was raised by senior BJP member Najma Heptulla who wanted a statement from the government on the development. Supported by her party colleagues and Left members, she asked the government whether the G-8 declaration would mean the extra conditionalities on the waiver given by the NSG. She wanted to know whether India was consulted before the declaration and if so whether the government had agreed. Brinda Karat (CPI-M) asked why the House has been kept in the dark over such an important issue.

IOC, RIL among 7 Indian cos in Fortune 500 global list

Seven Indian companies, including oil major Indian Oil Corporation and Mukesh Ambani-led Reliance Industries, have made the cut in the list of world's 500 largest companies compiled by Fortune. The league of 500 elite companies for 2009 is topped by oil giant Royal Dutch Shell, followed by another oil major Exxon Mobil and US retailer Wal-Mart Stores in that order. Besides IOC and RIL, the other Indian companies in the list are steel maker Tata Steel, oil entities, Bharat Petroleum, Hindustan Petroleum and Oil & Natural Gas, and public sector bank SBI. The same seven Indian entities were part of the list in the previous year as well. IOC has the highest rank of 105 among the featured Indian companies, followed by Tata Steel at the 258th spot, RIL (264), BPCL (289), HPCL (311), SBI (363) and ONGC (402). According to the magazine, IOC had revenues to the tune of USD 62.9 billion, Tata Steel (USD 32 billion), RIL (USD 31.7 billion), BPCL (USD 29.9 billion), HPCL (USD 28.2 billion), SBI (USD 24.5 billion) and ONGC (22.7 billion). The list also features Citigroup, Pepsico and Motorola, three companies led by India-origin people. Vikram Pandit-led Citigroup is at the 39th place with revenues of USD 112.3 billion while Pepsico bagged the 175th spot with revenues worth USD 43.2 billion. Motorola is placed at the 282nd position. Royal Dutch Shell had revenues to the tune of USD 458.3 billion while Exxon Mobil and Wal-Mart raked in revenues worth USD 442.8 billion and USD 405.6 billion, respectively. Wal-Mart had topped the 2008 list while Royal Dutch Shell was at the third place. Other firms in the top ten are BP (fourth spot), Chevron (5th), Total (6th), Conoco Phillips (7th), ING Group (8th), Sinopec (9th) and Toyota Motor (10th). Meanwhile, neighbouring China is represented by 37 companies in the Fortune 500 list.

US didn't ask India to sign CTBT: Govt

Government today informed the Rajya Sabha that the United States has not requested India to sign the Comprehensive Test Ban Treaty (CTBT) in recent bilateral discussions. In a written reply, Minister of External Affairs S M Krishna said CTBT does not affect the October 10, 2008 agreement which enables civil nuclear cooperation between India and Pakistan. "India has declared a voluntary, unilateral moratorium on nuclear explosive testing," he added. Giving a list of the countries which have signed the CTBT, the minister said India, Pakistan and DPR Korea have not signed it despite 181 states having signed the treaty.

Punj Lloyd JV bags US$300mn order

A Punj Lloyd joint venture has reportedly bagged an order worth US$300mn from Saudi Aramco. There are no more details available as yet. The stock was trading at Rs185.45 on the Bombay Stock Exchange (BSE) at 1:51 pm. It is down 12% in the last one month. Separately, global media reports said that Saudi Aramco and France's Total have signed 13 agreements with contractors to build a US$9.6bn joint venture refinery in the Gulf kingdom. The two awarded the contracts for the 400,000 barrels per day (bpd) refinery last month.

BJP demands rollback of hike in petrol, diesel prices

Accusing the UPA government of "plundering" the common man, the opposition BJP today demanded a rollback of hike in prices of petrol and diesel. "We condemn the government for hastily raising prices of petrol and diesel even as international prices for the crude oil have come down. We demand its immediate rollback," party spokesperson Prakash Javdekar told reporters outside Parliament. "They (UPA) sought votes during election in the name of aam admi. They have betrayed the people and are indulging in loot and plunder," he added. The BJP leader also accused the Centre of doing "nothing" over a "drought like situation" prevailing in the country and demanded the government implement a contingency plan if rains do not happen. "Farmers are suffering because of no rains. The government has done nothing and is simply tormenting the farmers. If rains do not take place, government should implement a contingency plan," Javdekar said.

DoCoMo eyes further investments in Asian carriers

Japan's NTT DoCoMo Inc said it is in talks with some Asian mobile carriers for possible capital investment as it aims to seek growth overseas to counter maturing cellphone market at home. DoCoMo's recent overseas investments include a 26 percent stake in Tata Teleservices, India's sixth-largest mobile operator, a 30 percent stake in Bangladesh telecom operator Axiata and a 16.5 percent stake in Malaysian operator U-Mobile . "Our main target is Asia, and there are some other (promising) countries there. We are in contact (with carriers in those countries," NTT DoCoMo Chief Executive Ryuji Yamada told Reuters in an interview on Thursday. He did not elaborate. Yamada also said he has not given up offering Apple Inc's iPhone to its subscribers. In Japan, Softbank Corp is the only carrier that offers the popular handsets at the moment.

Govt revokes coal supplies to 25 pvt power cos

India has cancelled allocation of coal supplies to 25 private power companies for not setting up plants that can annually generate 1,292 megawatts, the coal minister said on Friday. The country had assured coal supplies to several private firms for setting up their power plants. These firms are required to enter into fuel supply agreement with Coal India Ltd, a state-run monopoly coal producer. "However, it was noted that despite considerable lapse of time a large number of them did not set up the power plant despite having been accorded coal linkages by the ministry," Sriprakash Jaiswal told reporters. The companies, whose licenses have been cancelled, were expected to consume 5.844 million tonnes of coal every year. Jaiswal said the government may cancel the coal linkages of another 19 companies if they fail to provide details on their project status to Coal India in 15 days. The government, however, has asked 7 other firms to sign a fuel supply agreement with Coal India, Jaiswal added.

Govt revokes coal supplies to 25 pvt power cos

India has cancelled allocation of coal supplies to 25 private power companies for not setting up plants that can annually generate 1,292 megawatts, the coal minister said on Friday. The country had assured coal supplies to several private firms for setting up their power plants. These firms are required to enter into fuel supply agreement with Coal India Ltd, a state-run monopoly coal producer. "However, it was noted that despite considerable lapse of time a large number of them did not set up the power plant despite having been accorded coal linkages by the ministry," Sriprakash Jaiswal told reporters. The companies, whose licenses have been cancelled, were expected to consume 5.844 million tonnes of coal every year. Jaiswal said the government may cancel the coal linkages of another 19 companies if they fail to provide details on their project status to Coal India in 15 days. The government, however, has asked 7 other firms to sign a fuel supply agreement with Coal India, Jaiswal added.

Libor fall bails out Hindalco, JSW

The fall in the London Interbank Offered Rate (Libor) — the world’s most widely used reference rate for short-term lending — has come to the rescue of two prominent Indian companies which have recently breached their overseas loan agreements. Hindalco Industries and JSW Steel were each faced with a 100-basis point (one basis point is one-hundredth of a percentage point) rise in interest costs after they breached their loan covenants. However, with the six-month Libor currently quoting at 1.1% against 3.2% during the same time last year, the overall interest outgo for the two companies will come down. Till the financial crisis squeezed the global credit markets, Indian companies often raised cheap debt from overseas markets to fund their acquisitions and local capital expenditure. Hindalco Industries CFO Sunirmal Talukdar told that the company has already reached an agreement with its banks to change the covenant, while JSW Steel is still in negotiations with its lenders on relaxing the terms linked to its two foreign currency loans of $325 million. JSW expects to complete the talks this month, said joint managing director Seshagiri Rao. Mr Rao said the spread over Libor, on the foreign currency loans taken by JSW, could rise 100 basis points. But this will not immediately hike the final interest outgo. For the tenure of the loan post-September 2011, the company is in talks with lenders for bringing down the interest rates. According to a research report by Macquarie, “The JSW management is focused on reducing leverage to 1.5x from 1.8x in the next two years, but it will still be able to complete its steel expansion to 11 million tonnes by March 2011.” Covenants, in banking parlance, are typically terms and conditions associated with a loan that lenders insist on, to protect their exposure. A breach of covenants — usually triggered by external circumstances, including bad market conditions or internal problems faced by a company — attracts either a payment of a fee by the company to the banks, or a higher coupon rate on the loan contracted with the banks. In some extreme cases, banks can even ask the corporate to pre-pay the loan. In some cases, covenants spell out the acceptable limits for key financial ratios like the debt-to-Ebidta (earnings before interest, depreciation, taxation).

Budget bounty for infra, social sectors

Though under tremendous pressure to manage resources, the UPA is expected to enhance social sector and infrastructure spending in its budget for 2009-10 , in line with its strategy to beat the impact of global economic downturn. Sources pointed out that UPA-II budget is all set to provide an additional Rs 40,000 crore gross budgetary support from the interim budget (Rs 2,85,000 crore) and a significant increase of Rs 81,617 crore from the last fiscal (Rs 2,43,386 crore) for development programmes. According to top government sources, the sectors likely to get major focus would be social sector and infrastructure which will get major chunks of the additional allocations. Finance minister Pranab Mukherjee, reiterating the government’s commitment to give a boost to economic activity in rural areas , is expected to enhance further funding to the rural sector with an additional Rs 10,000 crore going to meet the growing demand of the flagship National Rural Employment Guarantee Scheme (NREGA) which turned out to be major vote-catcher for UPA. Sources indicate that expansion of the programme as well as raising the wages under NREGA have been kept in abeyance since the scheme is already taking around 12% of the national spending. Another pet scheme during UPA’s last tenure—the National Rural Health Mission (NRHM)—is likely to get an additional Rs 1,000 crore so as to provide better health services to the rural India. This will be in addition to the Rs 12,070 crore already allocated in the interim budget. With renewed focus on winning rural masses , the Rajiv Gandhi Grameen Vidyutikaran Yojana is likely to get an additional Rs 1,500 crore which has already been allotted Rs 6,000 crore in the interim budget. The scheme will focus on house-to-house electrification which would boost rural economy, sources said. The Pradhan Mantri Swasthya Suraksha Yojana is likely to be allocated Rs 1,100 crore. Under the scheme, the government envisages setting up of six new AIIMS-like institutions and upgradation of 13 existing government medical colleges. A provision of Rs 647.92 crore had been made for the scheme in the interim budget. Another flagship programme, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which has seen initial successes and is considered important for modernising urban areas, will get an additional Rs 1,200 crore against Rs 11,842 crore allocated in the interim budget. A chunk of this money would go for providing housing for the urban poor, sources said. The flagship programmes like the Sarva Shiksha Abhiyan, the Mid-Day Meal Scheme and the rural sanitation programme, may not get a substantial hike in allocations beyond what was given in the interim budget. SSA had got an impressive allocation of Rs 13,100 crore while Rs 8,000 crore was given for the Mid-day Meal Scheme. The rural sanitation programme had got Rs 1,200 crore in the interim budget. With the President highlighting the need to focus on women’s literacy and education, the government is likely to earmark Rs 7,000 crore to set up model schools in backward blocks and improve quality of education under SSA.