Anil talks business with fund managers

Anil Ambani held his annual meeting with domestic fund managers in a plush hotel in Mumbai. In the meeting, he is believed to have discussed about the existing business conditions and some broader growth targets of his various businesses. According to fund managers, Mr Ambani is bullish on the economy’s prospects and painted a sanguine outlook on his businesses, especially telecom. They said no ‘tough questions’ were asked by any of the participants in the meeting. Some of the star chief investment officers were conspicuous by their absence. Contributed by Nishanth Vasudevan .

SBI group to step up infrastructure lending

Banking behemoth State Bank of India together with associate banks has targeted infrastructure lending of over Rs 1 lakh crore this financial year.Speaking to reporters here today, the SBI Chairman, Mr O.P. Bhatt, said, “We are stepping up infrastructure lending this year along with our associate banks.” Last fiscal, SBI and associate banks advanced Rs 80,000 crore for infrastructure projects such as power plants and petroleum refineries.The big ticket credits have made SBI and group one of the largest project financiers in the country, Mr Bhatt said.“We will continue to focus in this direction.”.The bank is evaluating about five proposals for funding through its venture capital division, he said. SBI’s nfrastructure fund has a corpus of over $1 billion.Mr Bhatt was in Bangalore to chair the annual general meeting of its associate bank State Bank of Mysore. He said SBI was awaiting government decision on merging its associate banks, including SBM, on the lines of the erstwhile State Bank of Saurashtra. Mr Bhatt said, “It (the merger) is desirable, but a decision has to be taken by the Government.”Referring to SBI providing guarantee to corporates, Mr Bhatt said, “Haven’t we become a global sized bank to provide such support?” He made it clear that SBI was prepared to offer more such guarantees.However, SBI in the past has provided guarantees or standby support only on a back-to-back basis. This implied that guarantees would be fully secured.Asked about further reduction in interest rates, Mr Bhatt said the bank was already lending at below the benchmark prime lending rate. “The BPLR is only a rate meant for fulfilling legal requirements. About 70 per cent of our lending is already below this rate.” He also said lending was not skewed in favour of large corporates.“We have conveyed to our micro, small and medium-scale enterprise customers that the current 8 per cent fixed rate will remain for at least 2 years.” He added that lending rates could not be isolated from cost of funds.He said credit offtake was beginning to improve. “The worst is behind us.” Besides, during the first quarter of any financial year, credit offtake remains low. Yet, he said, SBI and group banks have witnessed some buoyancy in the home loan offtake. He also dismissed fears of inflation in view of the high liquidity in the banking system. “If the liquidity is used for building productive assets, there is no cause for fear.”

Will expand capacity by 5K mw in 5yrs: Neyveli Lignite

Neyveli Lignite is engaged in power generation with backward integration of lignite mining. It will add an estimated capacity of 1,750 mw by FY13. Of this, an estimated 750 mw would be lignite-based integrated capacity with captive mines by FY11. Prasanna Kumar, CMD and Director-Finance, Neyveli Lignite, said the organisation has a bright future given the fact that they have expansion plans in the offing and many of the plans have been approved by the government. ?Within five years, we will expand the capacity by another 5,000 mw which is from 2,500 mw to 7,500 mw. The mining capacity will also be improved and profits will also be generated,? he added.

Govt may free petrol and diesel prices in six weeks: Deora

The Government will consider deregulating petrol and diesel prices in six weeks, Petroleum Minister Murli Deora said on Friday. "The issue of deregulation is being discussed and it will be put up to the cabinet for a decision," he said after taking charge of the Petroleum Ministry for the second time today. Asked about the time frame during which the decision is likely, he said: "In about six weeks." Jitin Prasada also took over as Minister of State for Petroleum today.

Suzlon increases stake in REpower to 83%

Wind Power company, Suzlon Energy today informed the Bombay Stock Exchange (BSE) that it along with the Martifer Group have agreed on the third and final payment of Euro 175 million to buy stake in REpower. According to a filing to the BSE, the final 16.79 per cent stake held in REpower Systems AG by Martifer is being sold to Suzlon as per the earlier decided payment plans. About Euro 87.6 million has been paid already by Suzlon, while the balance of Euro 87.6 million will be paid by the company on June 5. Suzlon's share holding has increased to 83.43 per cent post the earlier payment and will be subsequently hiked to 90.72 per cent post June 5, stated the company.

Govt to talk to banks to cut rates, increase fin: FM

Concerned over high credit cost and availability of funds, Finance Minister Pranab Mukherjee today said he will ask banks for a "benign plan of action" while committing to stimulate economic growth by stepping up public expenditure and speeding up reforms. "Industry and business have been hurt by the cost of finance and its easy availability... The cost and the speed with which finance can be accessed remains a matter of concern. "One of the first steps I propose to take is to meet bankers and get them committed to a more benign plan of action," Mukherjee said at his first press conference since taking charge as Finance Minister earlier this week. Listing out the concerns and constraints being faced by the economy, he said there was no alternative to pushing up growth in tandem with employment for which the government is willing to increase its borrowings. "Let me say unambiguously that we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing. This would need to be further continued in 2009-10. "However, we are equally committed to the process of fiscal consolidation over a period of say 2 to 3 years," he said exuding confidence that early return to recent growth performance would help attain fiscal prudence.

Tata Group hopes to close $1 bn fund by Dec

Tata Group hopes to close a $1 billion infrastructure fund by the end of the year and plans to invest it through its realty and infrastrucure unit, a senior official said on Wednesday. "This will meet a large part of our equity and debt requirements... elections were a decisive factor and investors are very excited," Tata Realty and Infrastructure chief financial officer Kishore Saletore told reporters. The fund opened for subscription in mid 2008. Tata Realty plans to invest 200 billion rupees ($4.2 billion) over three years, he added. Tata is among India's most diversified business groups, with interests in areas such as food, steel, auto, chemicals and software.

Schrader Duncan Board recommends Dividend

Schrader Duncan Ltd has informed that the Board of Directors of the Company at its meeting held on May 27, 2009, inter alia, has transacted the following: 1. Recommended payment of dividend of Rs 1.00 per equity share of Rs 10/- each for the year ended March 31, 2009. 2. Appointed Mr. Jcan Michel Bolmont as Additional Director. 3. Taken note of the resignation of Mr. Al Stecklein as Director.

Japan govt raises economy view for first time in 3 yrs

The revision followed an upbeat view last week from the Bank of Japan, which also raised its assessment of the economy, saying a rebound in global demand could mean last quarter's record 4.0 percent contraction was the worst of the recession. But the government echoed a cautious tone on the outlook sounded by the central bank's governor while cutting its assessment of jobs conditions in a monthly report. It said the employment situation was severe and worsening rapidly. "While the economy is in a difficult situation, the tempo of worsening has become moderate," the government said in the report, upgrading its overall assessment for the first time since February 2006. Previously, the government had said the economy was worsening rapidly and in a severe state. "As for short-term prospects, with a worsening employment situation, the economy is likely to remain severe for the time being," the report said.

Budget will bear pressure of stimulus: RBI governor

Delivering the keynote address at The Financial Management Summit ’09 hosted by The Economic Times, Reserve Bank of India Governor Dr Duvvuri Subbarao said the crisis emerging from the global recession was the worst ever in his time. Under such a scenario, stimulus packages announced by the global governments assume huge importance, he said. However, irrespective of this, the debate over the adequacy and effectiveness of fiscal measures by different governments continues, he said. Every government and regulator is trying to protect his nation from the impact of recession. In the last eight months, macro economy has been challenged and global GDP is expected to contract for the fist time since the World War II, he said. However, impact in India is less than the other countries, the RBI governor said. Subbarao made a note of the role of G 20 countries in the recovery and said that at the last meeting the group had discussed how to revive growth and regain confidence at the global level. He noted three crucial aspects before the RBI-- monetary policy, fiscal policy, and financial stability. Expecting a probable recovery in the latter part of the current year, he said that if global recovery doesn’t take place, we will conclude the policy measures should have been stronger and that the RBI would act accordingly. On the fiscal policy measures, he underscored the need for fiscal consolidation process. But he also cautioned that the next budget of the new government will bear pressure of stimulus packages. He thinks a sound banking system along with a well developed financial market will help bring financial stability.

Reliance, Essar not to buy Cairn crude

Reliance Industries and Essar Oil may not buy crude oil that Cairn India will start pumping from Rajasthan in the next few weeks as they say the oil was priced higher than its intrinsic value. RIL and EOL had wanted a minimum 30,000 barrels per day (1.5 million tons a year) each of Rajasthan crude but have been put off by the pricing agreement Cairn has reached with state-run Indian Oil Corp, the principal buyer, sources said. Cairn is to sell to IOC 1.9 million tonnes oil in 2009-10 and next year at a discount to Nigerian Bonny Light crude. The discount at current oil prices works out to about 11 per cent while RIL and Essar expect a minimum concession of 15 per cent considering the fact that Rajasthan crude does not have LPG and turns solid at normal temperature, they said. Cairn wants to price the crude taking taking three year average of Bonny Light which comes to USD 75 a barrel while current rates were about USD 20 lower. The discount as per the pricing formula at USD 75 work out to about 16 per cent. The Government has found in IOC, Hindustan Petroleum and Mangalore Refinery buyers of only 2.6 million tonnes of the 8.75 million tonnes peak output planned by Cairn India by 2011 and it may necessarily have to be sold to private refiners. A Cairn spokesperson declined to comment. Sources said Cairn was yet to arrive at an agreement on pricing with HPCL and MRPL.

Rel Cap to divest 26% in insurance arm

Anil Ambani Group firm Reliance Capital has initiated the process of divesting up to 26 per cent stake in its life insurance subsidiary and is mulling options like bringing in a strategic foreign investor and an initial public offer. "We are planning to divest 26 per cent stake in our insurance arm. We may either go in for an IPO or for a strategic investor or we might also go in for a combination of both the options," Reliance Capital CEO Sam Ghosh said. Without divulging any details as to how much capital the company is planning to raise through this option, Ghosh said "the funds raised through this divestment would be partly infused into the insurance arm and partly into Reliance Capital." Regarding the Insurance Regulatory and Development Authority initiating a process of formulating guidelines for IPOs he said, the sooner the guidelines come the better. The company, which has been going solo so far, has decided on this divestment at this point of time because it will give a better shareholder value, besides sentiments in the market is also looking bright. "We have not yet zeroed in on any foreign investor. We have just started the process and it is expected to be completed in three to four months," Ghosh added. He said even if the government increases foreign investment up to 49 per cent, the company plans to divest only 26 per cent stake to any overseas player.

Economy may recover later this year: RBI

Reserve Bank of India today said the Indian economy is likely to recover from the impact of the financial meltdown later this year as stability gets restored in world markets. “As the monetary and fiscal steps takes way through, and the calm restored in the global markets, we can see an economic turnaround later this year," Reserve Bank Governor D Subbarao said at a financial management summit here. India's less dependence on merchandise exports and its smooth functioning financial system, comfortable forex reserves and modest inflation will help for a swift recovery from the slow down, Subbarao said. Cautioning the policy makers about "challenges" in the domestic economy to manage the recovery, Subbarao said, the "unwinding" of measures taken during crisis time will be less painful for India than in other countries. "While risks from global markets persist, there are challenges in the domestic market (as to) how we manage the recovery in the next six-to-nine-months," Subbarao said. The central bank was confident of achieving a six per cent real GDP growth in 2009-10 as it had projected earlier. Subbarao said that if global factors favour an early recovery in the domestic market and the already-taken stimulus measures yield results, then it could lessen the need for further stimulus measures.

Growth outlook dim; Q4 GDP seen at 4.5%: Moody's

Economic woes are not over but the general election results have buoyed market sentiment this week. The victory of the incumbent Congress Party-led coalition has ensured continuity in policy direction and also created hopes for further economic reforms. The cash-strapped government may not be able to increase spending if the economic environment deteriorates, making policy reform the new focus in improving India's economic prospects. A new five-year term for Prime Minister Manmohan Singh, who has strong credentials in economic reforms, is an encouraging step. Investor confidence has strengthened after the election outcome was announced as some had seen political uncertainty as a setback to India's economic development. The Sensex and rupee both surged following the announcement of election results, as the longer-term outlook of India has brightened. Reforms will likely commence in long-anticipated areas such as banking, insurance and agriculture. Nevertheless, the upbeat sentiment in India may fade when the March quarter GDP numbers are released next week. Although India has not been crippled by the global turmoil in the same way as its more externally oriented Asian neighbours, it has still been hurt in various aspects. The robust export performance seen in the December quarter likely turned negative in the opening months of 2009. Meanwhile, facing falling profits, firms have become increasingly cautious, curbing investment and halting hiring plans. Private consumption and gross fixed capital formation - two important engines of India's growth - likely slowed sharply in the March quarter. Moody's Economy.com expects year-on-year GDP growth to have decelerated from an already-disappointing 5.3% for the December quarter to 4.5% for the March quarter, taking the fiscal 2008-2009 expansion to about 6.3%.

Govt imposes countervailing duty on Chinese chemical

Going all-out to protect the domestic industries from the Chinese onslaught, India has initiated a probe to consider imposition of countervailing duty on imports of key chemical sodium nitrite from the neighbouring country. The Directorate General of Anti-dumping and Allied Duties (DGAD) in the Commerce Ministry has initiated an investigation into a complaint by domestic firms alleging dumping of sodium nitrite originating in or exported from China, DGAD said in a notification. Countervailing duties are imposed when a foreign country subsidises its exports, hurting domestic producers in the importing country. The period of investigation is April 1, 2007 to March 31, 2008, DGAD said adding that during the course of the investigation DGAD would determine whether the product is being subsidised and causing injury to the Indian domestic industry. "The exporters in China, importers and users in India are being informed separately to enable them to file all information relevant," it said. The imports of sodium nitrite, widely used in the pharmaceuticals and textile sector, increased to $5.19 million in April-December 2008-09 from $3.10 million during 2007-08. India has already imposed anti-dumping duty on several products imported from China which includes yarn, fabrics, some stainless steel products and chemicals. China has emerged as the largest source of India's imports in the last two years. India's imports from China almost doubled to $24.16 billion in April-December 2008-09 from $12.64 billion in the comparable period of 2006-07, according to the Reserve Bank of India.

Reliance Power to invest Rs 12,000 cr in Arunachal

Anil Ambani-led Reliance Power will invest over Rs 12,000 crore for executing 2,520-MW hydro power projects in Arunachal Pradesh, to be commissioned in the next Five Year Plan (2012-17). "Reliance Power has signed an agreement with the Arunachal Pradesh government for developing 2,520 MW of hydro power projects in the state," a Reliance Power spokesperson said. The company has signed agreement with the state government for developing four hydro power projects -- 1,200 MW Kalai-II, 420 MW Amulin, 500 MW Emini and 400 MW Mihundon. These projects were awarded to the company through competitive bidding conducted by the state government. The current hydro project portfolio of Reliance Power is 4,620 MW, one of the largest in private sector in India. Besides, the other projects of the company in the state are 700-MW Tato-II and 1,000-MW Siyom, a company statement said. Construction activities have commenced at Tato-II and Siyom and preliminary work like preparation of Detailed Project Report is going on for all the other projects, it said. All these projects are Run-of-river (ROR) projects and would take 6-7 years to get commissioned. They are expected to be commissioned in the next plan period (2012-17) and Tato-II will be the first project to go on-stream.

FII investment crosses $3 bn-mark

Foreign Institutional Investors (FIIs) inflow into the Indian stock markets has crossed the three-billion-dollar mark (over Rs 15,725 crore) so far this year, with as much as two billion dollar coming in just five trading sessions. As per the latest data available with the Securities and Exchange Board of India (SEBI), FIIs made net purchases worth 3.2 billion dollars or over Rs 15,725 crore so far in 2009, with the stock market seeing major investments in the past three weeks. On Tuesday alone, FIIs put in as much as Rs 5,044.8 crore (1.06 billion dollars) in the domestic share markets, the SEBI data shows. "Since several past weeks, overseas fund houses are making investments in the many emerging markets and India is the part of that investment," brokerage firm Sharekhan's Research Head Gaurav Dua said from Mumbai. Since last week, FII inflows increased significantly with net investments of Rs 4,085 crore on May 14, followed by 1,000 crore on May 18, Rs 53 crore on May 19 and again a huge Rs 5,044 crore on May 20. However, during the period, the markets also witnessed sale of shares worth Rs 345 crore by the overseas investors, the SEBI data shows. Since the beginning of new fiscal year, FIIs have started putting money in domestic stocks, including blue-chips.

Govt gives NTPC ultimatum to sign gas pact with RIL

The government has given NTPC an ultimatum to decide on buying natural gas from Reliance Industries (RIL) by the weekend, failing which it (government) will cancel its allocation and give the fuel to other power producers. The Oil Ministry has conveyed to NTPC Chairman R S Sharma that the state-run firm has to decide this week on taking 2.67 million cubic metres of gas a day that was allocated to it from RIL's Bay of Bengal KG-D6 fields, a senior official said. "There is a long waiting list. Many plants need the fuel and NTPC cannot be sitting on the allocation," he said. Before the stern message to Sharma, the ministry had on May 12 written to the Power Ministry saying NTPC was not signing the gas purchase contract even though the state-run firm was the one that had vehemently fought to get the allocation. NTPC, he said, was delaying signing the Gas Sales and Purchase Agreement because it has sought legal opinion if such an act would compromise its court gas against RIL. Of the 17.99 mmcmd gas allocated to the power sector, a gas supply pact of only 2.67 mmcmd allocated to NTPC remained to be signed. NTPC's opposition had also delayed the GSPA for a separate 2.7 mmcmd allocated to the Dabhol power plant and the same is now slated to be signed this week. In case NTPC does not want to take the gas, it should state so officially so that the gas can be re-allocated to other fuel-deficit power plants, the official said. Initially RIL opposed selling the gas to NTPC due to an ongoing court case but the state-run firm vehemently challenged it saying its legal battle with the Mukesh Ambani-run company was for future projects and its current plants were entitled to get gas from the country's largest gas field. RIL did not want to sell gas to NTPC as the state-run firm had cited the court case to not only refuse participation in the process of discovering the price of KG-D6 gas but also blocked moves to sell the fuel to the Dabhol plant. RIL had in 2007 offered gas from its KG-D6 fields to RGPPL but NTPC, which is half owner of the country's largest gas-fired unit, blocked the move even though this gas is 25 per cent cheaper than imported-LNG being used at the plant. The Government has now decided that KG-D6 gas, priced at a cap of USD 4.20 per million British thermal units, will go to meet half the fuel deficits at existing power plants. RIL had in June 2004 won an NTPC tender to supply gas to its planned Kawas and Gandhar expansion projects in Gujarat but the two firms did not sign the GSPA due to disputes over issues such as liability in the case of default. NTPC filed a case against RIL at the Bombay High Court in December 2005, claiming that there is a concluded contract in existence for the supply of gas by the Mukesh Ambani-led firm to its power plants. According to RIL, the matter remained at the stage of negotiations.