Company exec comment on RBI policy

The Reserve Bank of India (RBI) on Friday left its short-term interest rates unchanged on Friday but raised banks' cash reserve requirements by a higher-than-expected 75 basis points, to be implemented in two phases, and warned of rising inflation. It also lifted its forecast for GDP growth in the current year to 7.5 percent, from an earlier target of 6 percent, and said that the current rate of growth is likely to be sustained in the financial year that ends in March 2011. Following are comments from company executives on the monetary policy and its impact on their business. V. KUMARASWAMY, CHIEF FINANCIAL OFFICER, JK PAPER "As of today the banks are flush with funds and in the last few months there has not been too much of credit offtake. It is not likely (that rates will go up)." H.S. BHARANA, CHAIRMAN, ERA INFRA ENGINEERING "I don't think there will be any impact. There is a lot of liquidity in the market. It is not going to affect lending rates.

Company exec comment on RBI policy

The Reserve Bank of India (RBI) on Friday left its short-term interest rates unchanged on Friday but raised banks' cash reserve requirements by a higher-than-expected 75 basis points, to be implemented in two phases, and warned of rising inflation. It also lifted its forecast for GDP growth in the current year to 7.5 percent, from an earlier target of 6 percent, and said that the current rate of growth is likely to be sustained in the financial year that ends in March 2011. Following are comments from company executives on the monetary policy and its impact on their business. V. KUMARASWAMY, CHIEF FINANCIAL OFFICER, JK PAPER "As of today the banks are flush with funds and in the last few months there has not been too much of credit offtake. It is not likely (that rates will go up)." H.S. BHARANA, CHAIRMAN, ERA INFRA ENGINEERING "I don't think there will be any impact. There is a lot of liquidity in the market. It is not going to affect lending rates."

State Bank sees no upward pressure on rates

The chairman of State Bank of India, India's leading bank, said on Friday he did not see any upward pressure on lending rates in the next six months, after the central bank had raised banks' reserve requirements. "We do not see any upward pressure in lending rates in the next six months. Our deposit rates may not go up, but it cannot come down also," O.P. Bhatt told reporters

Rajasthan govt exempts sugar from tax

The Rajasthan government has announced VAT exemption on imported sugar in the state till June 30, in a bid to control the spiralling sweetener prices. "The decision to exempt four per cent VAT was taken by Chief Minister Ashok Gehlot yesterday, following which sugar price will decrease by Rs 1.6 to 1.8," an official said. Sugar prices are ruling between Rs 41-43 a kg in the state. "The government has exempted the tax in view of rising prices. After June, further decision will be taken accordingly after a review of situation," the official added. The prices of the sweetener has doubled since January 2009 and currently hovering around Rs 45 a kg in the country on expected fall in sugar production this year. India, the world's largest consumer of sugar, is estimated to produce nearly 16 million tonnes of sugar against the annual demand of 23 million tonnes. The gap of 7 lakh tonnes is being met through imports

Finmin adviser:inflation won't go out of contro

India's rising inflation will not go out of control, the finance ministry's chief economic adviser Kaushik Basu said on Friday. India's central bank left short-term interest rates unchanged on Friday, as expected, but surprised markets with a higher-than-forecast 75-basis point rise in banks' cash reserve requirements and warned of mounting inflation.

India is land of billion opportunities: Experts

Making a strong pitch for economic optimism, speakers at a high-profile event at the elite London School of Economics here said India, "a land of a billion opportunities", had a potential to achieve double digit growth rate. Hosted by LSE's India Observatory, the event included release of Rajya Sabha MP and economist N K Singh's book 'Not by Reason Alone: The Politics of Change' by Shobhana Bhartia, chairman of HT Media, and an engaging panel discussion and interaction with students. The panel included Mukesh Ambani, chairman of Reliance Industries, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, Lord Meghnad Desai, LSE-based economist and academic, Lord Chris Patten, chancellor of the University of Oxford, and Lord Nicholas Stern, I G Patel professor of Economics & Government at LSE. In the book, Singh, who has played a key role in India's economic reforms, draws on his diverse experiences to comment on the past and present of the politics of change. He said good politics led to good economics and mentioned the unprecedented 11.03 per cent rate of growth recorded by Bihar in the latest official estimates. "I see India as a land of a billion opportunities, not a land of a billion problems. Lot of good things are happening. We should be optimistic," Ambani said. Compared to other recession-hit countries, India had 'less baggage' and a 'strong balance sheet', and was in a 'great position' to start off, he said. According to Ambani, nine per cent should be India's default growth rate when it had the potential of at least 11 per cent. "We need more responsible government, a change of governance, and build more institutions. India is in a fortunate position compared to the rest of the world. We have less baggage, a young population. India's strength is all about soft power," he said. Noting that India recorded 7 per cent rate of growth in the last two years of economic downturn, Ahluwalia said India has done 'exceptionally well' to manage the global recession. "Surely, we are doing something well," he said, adding that reforms were all about restructuring the government. Lord Patten paid tributes to India's resilience as a nation-state despite diversity, and said though he was a fan off China's economic success, India had been more successful in developing global brands. "India does not lock up people; it does not have famines and there has not been a single Indian member of the Al Qaeda – that says something about India's stability," Lord Patten said. India, Lord Patten said, needed to invest in higher education and research, and noted that Hong Kong alone had two of the best universities in the world.

RBI set to raise banks' reserve requirements

24 of 25 economists expect 50 bps increase in the cash reserve ratio (CRR) , or the proportion of deposits banks must keep with the Reserve Bank. That would take the level to 5.5 percent. Eight of 25 expect a 25 bps increase in reverse repo and repo rates to 5.0 percent and 3.5 percent respectively. Others expect no change in rates at the policy review. The reverse repo rate is the borrowing rate of the Reserve Bank and is the operational rate now. The repo is the lending rate. FACTORS TO WATCH Inflation has surged, primarily driven by a sharp rise in food prices after a weak monsoon. Signs of economic recovery are also evident in strong GDP and industrial output data. The RBI says the rise in inflation driven by food prices is a supply-side issue monetary policy cannot address. Still, it is worried about inflation pressures spilling over to the broader economy, and will watch for signs of demand-side price pressures in indicators such as asset prices, credit growth, and manufacturing prices. The widely watched wholesale price index rose in December by 7.3 percent over a year earlier, its fastest pace since November 2008 and jumping from 4.8 percent in November. Food prices rose 16.81 percent in the 12 months to Jan. 9, easing from a rise of nearly 20 percent in early December.

SAIL Q3 net doubles, beats forecast

Three months ended Dec. 31. (Versus the same period a year earlier, in billion rupees unless stated) Net profit 16.76 vs 8.43 Net sales 96.97 vs 87.24 NOTE: State-run Steel Authority of India Ltd is India's largest domestic producer of the metal. A Reuters poll of 12 brokerages had estimated quarterly profit at 14.07 billion rupees on net sales of 97.80 billion.

Century Textiles net up 110%

BK Birla group firm Century Textiles has posted a 110 increase in its net profit for the December quarter of financial year 2010 at Rs 59.6 crore as compared to Rs 28.3 crore it posted in the corresponding quarter last year. The company's total income rose 22 per cent at Rs 1,098 crore for the December quarter of FY 2010 as compared to Rs 894.5 crore for the quarter ending December 31, 2008.

NTPC FPO opens on 5 Feb, 2010

NTPC Limited will enter the capital markets on February 3, 2010 with its further public offer of 412,278,220 equity shares of Rs10 each through the alternate book building process under part D of schedule XI of the SEBI (Issue of Capital and Disclosure Requirements)Regulation 2009, as amended. The FPO will close on February 5, 2010.

HCC Q3 net dips 36% to Rs 15 cr

Construction major Hindustan Construction Company (HCC) reported a 36 per cent drop in net profit for the quarter ended December 31, 2001 at Rs 14.75 crore as against Rs 23.20 crore in the previous corresponding quarter. The company said in a filing to National Stock Exchange that the numbers are not comparable because of Rs 9 crore write back of excess tax provision in the third quarter of the last financial year. Total Income increased from Rs 814.83 crore for the quarter ended December 31, 2008 to Rs 891.20 crore for the quarter ended December 31, 2009. The turnover of the company went up by 7.9 per cent during the quarter. Shares of HCC were trading at Rs 139.50 down 4.12 per cent from its previous close at the Bombay Stock Exchange at 12:48 pm.

SpiceJet zooms on Q3 turnaround, record profit

SpiceJet, India's best low cost airline, reported a record net profit of Rs 109 crore for the third quarter ended December 2009 against Rs 18 crore loss in the corresponding quarter a year ago. A drop in aircraft fuel prices and 36% rise in operational income help the company to post robust net profit. The company's net sales increased to Rs 642 crore against Rs 472 crore, while aircraft fuel charges declined by 8.5 per cent to Rs 208 crore from Rs 227 crore in the same period. The appreciation of rupee by 3.3% also benefited the company because of a portion of company's cost like lease rental, maintenance cost, part of the employee cost etc are dollar denominated. The company benefited the most from recovery in domestic air passenger traffic with the economy reviving. The stock is trading 10 per cent higher to Rs 58.65 on the BSE. Trading volumes have rised by almost eight-fold to 20.4 million shares as compared to average 2.60 million shares in last two weeks.

LIC buys 2% in Essar Oil for Rs 309 cr

State-run life insurer LIC has acquired nearly two per cent stake in Essar Oil for Rs 309.4 crore through open market transactions today. Life Insurance Corporation (LIC) has bought 2.21 crore representing 1.83 per cent stake in Essar Oil shares at the rate of Rs 140 a piece through a block deal on the National Stock Exchange, sources said. Shares of Essar Oil plunged over six per cent to a low of Rs 138.60 in the afternoon trade on NSE. Over 2.64 crore shares changed hands on the NS

Reliance Ind Q3 net profit rises 14.4% YoY

Reliance Industries Q3 net profit rose 14.4% to Rs40.08bn as against Rs35.01bn in the sane period last year. While, Net sales rose 80% to Rs568.6bn as against Rs315.6bn in the same period last year. Shares of Reliance Industries have advanced by 0.6% to Rs1059. The scrip opened at Rs1041 it touched an intra-day high of Rs1067 and a low of Rs1029 and has recorded volumes of over 3.5mn shares on NSE.

Investment plans announced for India unchanged: LN Mittal

Global steel major, Arcelor Mittal, has not yet zeroed-in on any particular location for its next investment in India, Arcelor Mittal's chief, LN Mittal said today. "We have not decided yet about the location. It could be Orissa, Maharashtra, Jharkhand or Karnataka," Mittal told reporters on the sidelines of a function organised by the Rotary Club here today. Investment plans already announced remain unchanged, he said, adding "we are not exiting from these projects." Though keen to invest in India, Mittal, however, was "not satisfied" with the pace of progress of his projects. Arcelor Mittal, which accounts for 10 per cent of global steel capacity has signed an MoU with the Jharkhand and Orissa State Governments in 2005 for setting up 12-million tonnes per annum capacity steel plants in the two states. "The progress in the proposed projects is not satisfactory either for me or for the company," the steel tycoon said. The projects are yet to take-off due to a host of regulatory issues including land acquisition.

Econ adviser: 9 pct growth rate seen for FY11

India should be back at a 9 percent growth rate by the next fiscal year, Kaushik Basu, chief economic adviser to the finance ministry, told reporters on Friday. India's economy grew 6.7 percent in 2008/09, slowing from rates of 9 percent or more in the previous three years as the global credit crisis hit business activity.

Bhushan Steel-Essel set to acquire plot for Rs 1,530 Cr

Land in Navi Mumbai to be used for building Bollywood theme park. In the largest ever property deal in over 18 months, Bhushan Steel and Subhash Chandra-promoted Essel Group are set to acquire a 250-acre plot in Kharghar (Navi Mumbai) for Rs 1,530 crore. The Bhushan Steel-led consortium beat nearly 100 other bidders to acquire the land from City and Industrial Development Corporation of Maharashtra (Cidco). Indiabulls came in second with a bid of Rs 1,059 crore, while a consortium of GVK group and HCC came third with a bid of Rs 808 crore, according to sources involved with the transaction. Future City Properties, the company floated by Bhushan Steel and the Essel group, has proposed the development of a Bollywood theme park. Indiabulls and GVK-HCC had proposed knowledge and leisure-based theme parks, respectively. When contacted, a Cidco official confirmed that the Bhushan Steel-led consortium had emerged as the highest bidder. “We have opened the bids today. The highest bid has to be cleared by legal authorities,” the official said. In the term sheet, 70 per cent weight had been assigned to the financial bid and the rest to technical parameters. The project entails an allocation of 60 per cent (around 150 acres) for the development of a theme park on the Kharghar Hill Plateau, while the rest can be used for real estate development. The project has a floor space index (FSI) of one. The transaction, if cleared by the authorities, will become the largest in Mumbai. Boom times again High-value property transactions in the country have seen an uptick over the last few weeks after a prolonged slowdown in the property sector since mid-2008. Last week, the Wadhwa group announced the acquisition of an 18.18-acre plot in Mumbai’s central suburb of Ghatkopar in a Rs 571-crore deal. “It looks like a boom symptom to me. Since the markets have picked up, such deals are happening now,” said Akshaya Kumar, CEO of real estate consultant Park Lane Property Advisors. A deal similar in size to the latest one was struck in August 2009, when the Indiabulls group won a bid for the development of the Mantralaya complex in south Mumbai for Rs 1,376 crore. Three years before that, in 2006, Mukesh Ambani’s Reliance Industries bought 18 acres in the Bandra-Kurla Complex for Rs 1,104 crore, for the construction of an exhibition centre. Some mega deals that failed There have been mega deals that became big failures too. BPTP, a Delhi-based developer, which bought a 95-acre plot in Noida for Rs 5,006 crore in early 2008, had to surrender a major portion of the land to the local authorities after the global financial crisis severely affected the real estate sector. In Mumbai, land deals involving Sunteck Realty and Jet Airways and the Mumbai Metropolitan Region Development Authority in 2008 were mired in controversy due to payment issues.

LIC buys 2% in Essar Oil for Rs 309 cr

State-run life insurer LIC has acquired nearly two per cent stake in Essar Oil for Rs 309.4 crore through open market transactions today. Life Insurance Corporation (LIC) has bought 2.21 crore representing 1.83 per cent stake in Essar Oil shares at the rate of Rs 140 a piece through a block deal on the National Stock Exchange, sources said.

RIL Industries's Lyondell prospects fade

Reliance Industries (RIL) suffered a setback in its attempt to take over Luxembourg-based LyondellBasell Industries on Tuesday after a US court dismissed a creditors’ petition seeking a bigger role for potential investors such as RIL in rescuing the bankrupt company. US bankruptcy judge Robert Gerber dismissed the motion filed by unsecured creditors seeking the installation of a court examiner to ensure that Lyondell gives due consideration to the RIL offer. He also dismissed another petition by the committee urging him to give it the right to come up with a restructuring plan after working with potential investors like Reliance Industries. Gerber, instead, gave Lyondell management time till April 15 to win approvals for its current plan of restructuring, something that has no role for RIL. “... With so much going on, I’m not of a mind to open up exclusivity to anybody other than the debtors,” the Judge said. The move has put a stop to efforts to put together an alternate takeover plan involving RIL by Lyondell creditors. If RIL wants to take over Lyondell, it will require the unlikely scenario of the Lyondell management amending its plan of reorganisation and giving a role to the Indian company. RIL has raised more than $2 billion since September, ostensibly to support its takeover bid for the bankrupt petrochem and refining major. RIL is reported to have expressed its willingness to value the company at $13.5 billion, $1 billion less than the value ascribed to it by the company’s own restructuring plan. The move to extend the exclusivity period has effectively put RIL at the mercy of the Lyondellbasell management, which has been accused of conflict of interest when comparing RIL’s offer with that of its current owner, Len Blavatnik.

Food price index up 16.81 pct y/y on Jan 9 - govt

Food price index rose 16.81 percent in the 12 months to Jan. 9, while the fuel index was up 6.34 percent, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28 percent in the previous week. India's annual wholesale inflation rose to 7.31 percent in December 2009, compared with 4.78 percent rise in November and 6.15 percent a year ago.

Rs 4,000 cr layout for conversion of PSU fertiliser firms

CCEA approves conversion of three National Fertiliser Ltd plants to gas-based units at over Rs 4,000 cr investment