Tuesday, January 19, 2010
ASSOCHAM launches economic awareness campaign........................
ASSOCHAM launches economic awareness campaign
India Inc advocates equitable, efficient and transparent system
Chambers should be out of tax purview, Piramal
Withdrawal of stimulus package may hurt growth
The Economic Time
s, January 19, 2010, Page 11Expect PSU selloff every three weeks
Expect PSU selloff every three weeks
Hindustan Times, HT Business, January 19, 2010, Page 25
From the fiscal year beginning in April, expect one share issue from public sector companies every three weeks, as initial public offers (IPOs) of unlisted firms or follow-on public offers (FPOs) of listed ones.
The UPA government is set for a large wave of sell-offs, possibly celebrating the end of five years of coalition constraints that blocked disinvestments before elections last year.
As many as 30 IPOs or FPOs are expected over the next two years –interrupted only by logistical difficulties in managing the cash chasing the shares.
“The market outlook during 2010-11 looks bullish. We should be able to do one issue every three weeks,” Disinvestment Secretary Sunil Mitra told HT.
Subsequently, FPOs of even cash-rich companies such as ONGC, Indian Oil Corporation, Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and GAIL India could be seen during 2011-12
Last November, the government had decided that the public should hold at least 10 per cent shares in all listed, profitable government-owned companies.
There are 10 listed units where public shareholding is below 10 per cent. They include companies such as National Mineral Development Corporation, MMTC and Neyveli Lignite.
The government has also decided that all unlisted CPSUs that have made profit in the past three years and have a positive net worth (assets greater than liabilities) should get listed on stock exchanges.
About 60 companies qualify for disinvestment under these criteria.
“We would hope to float the issues of Coal India Limited, SAIL and BSNL in 2010-11,” Mitra said.
“We have been in consultations with the CIL and BSNL since August last year,” he said.
Since the UPA government came to office for the second term this May, two public sector companies — NHPC and Oil India — have already listed.
The government has already approved stake sales in power generation companies NTPC Ltd, Satluj Jal Vidyut Nigam (SJVN), Rural Electrification Corporation (REC), NMDC and Engineers India Limited (EIL).
The SAIL Board has cleared a 10 per cent stake sale and is awaiting Cabinet approval.
Timely steps saved the economy: FM
Timely steps saved the economy: FM
Hindustan Times, HT Business, January 19, 2010, Page 25
Finance Minister Pranab Mukherjee on Monday said that timely and pro-active monetary and fiscal measures have enabled the Indian economy to stage a quick recovery amid the scars of a global economic meltdown. "The finance minister stated that the adverse impact of the global financial crisis and the subsequent recessionary trend in the major economies of the world had cast a cloud of uncertainty over the domestic economy in the second half of 2008-09," a finance ministry statement said. "The policy measures undertaken by the government have worked and the macro-economic situation confirms signs of a turn-around for the economy," it said. Mukherjee was chairing a pre-budget meeting of the ministry's Parliamentary consultative committee. The Indian economy grew 7.9 per cent in the July-September period - its strongest in six quarters - on the back of higher consumer spending and private investment. Recent data has triggered hopes that the worst might be over for the Indian economy. Industrial output grew by 11.7 per cent in November, the highest in two years, raising prospects of a sustained revival in the broader economy in the coming months. Automobile sales grew by 68 per cent in December, while exports have turned positive in November after contracting for 13 successive months. However, there are concerns over rising inflation and a widening deficit in the government's budget. India's wholesale inflation rose by 7.3 per cent in December as policy makers launched a plan to contain prices by shoring up supplies of staple items such as sugar and foodgrains.
Hindustan Times, HT Business, January 19, 2010, Page 25
Finance Minister Pranab Mukherjee on Monday said that timely and pro-active monetary and fiscal measures have enabled the Indian economy to stage a quick recovery amid the scars of a global economic meltdown. "The finance minister stated that the adverse impact of the global financial crisis and the subsequent recessionary trend in the major economies of the world had cast a cloud of uncertainty over the domestic economy in the second half of 2008-09," a finance ministry statement said. "The policy measures undertaken by the government have worked and the macro-economic situation confirms signs of a turn-around for the economy," it said. Mukherjee was chairing a pre-budget meeting of the ministry's Parliamentary consultative committee. The Indian economy grew 7.9 per cent in the July-September period - its strongest in six quarters - on the back of higher consumer spending and private investment. Recent data has triggered hopes that the worst might be over for the Indian economy. Industrial output grew by 11.7 per cent in November, the highest in two years, raising prospects of a sustained revival in the broader economy in the coming months. Automobile sales grew by 68 per cent in December, while exports have turned positive in November after contracting for 13 successive months. However, there are concerns over rising inflation and a widening deficit in the government's budget. India's wholesale inflation rose by 7.3 per cent in December as policy makers launched a plan to contain prices by shoring up supplies of staple items such as sugar and foodgrains.
Oberoi Realty files papers for IPO
Oberoi Realty files papers for IPO
Hindustan Times, HT Business, January 19, 2010, Page 25
Mumbai: City-based realty firm Oberoi Realty on Monday filed its Draft Red Herring Prospectus with SEBI for an IPO of 39,562,000 equity shares with a face value of Rs. 10 at a price band to be decided later. The issue will constitute a dilution of 12 percent of the fully-paid equity share capital. Kotak Mahindra Capital, Enam Securities, J P Morgan India and Morgan Stanely India are the book running lead managers.
Hindustan Times, HT Business, January 19, 2010, Page 25
Mumbai: City-based realty firm Oberoi Realty on Monday filed its Draft Red Herring Prospectus with SEBI for an IPO of 39,562,000 equity shares with a face value of Rs. 10 at a price band to be decided later. The issue will constitute a dilution of 12 percent of the fully-paid equity share capital. Kotak Mahindra Capital, Enam Securities, J P Morgan India and Morgan Stanely India are the book running lead managers.
Interest rates unlikely to rise
Interest rates unlikely to rise
Times of India, January 19, 2010, Page 21
Prabhakar Sinha, TNN
NEW DELHI: Interest rates are unlikely to firm up even if RBI raises key rates to contain inflation, feel bankers.
In its forthcoming review of the credit policy on January 29, it is believed that RBI will increase the cash reserve ratio (CRR) — the proportion of deposits that banks are required keep with the central bank — by about half a percentage points to contain the soaring inflation.
However, bankers feel that RBI would leave the other two rates — repo and reverse repo — unchanged. Repo rate is the interest rate at which central bank, RBI, lends short term funds to bank. At present, repo rate is at 4.75%. Reverse repo rate is the rate at which banks park their surplus funds with the central bank, which is at 3.25%.
Union Bank of India chairman and managing director M V Nair though refused to speculate on the issue of measures that would be taken by RBI in its review of the credit policy, however, said that it would not lead to increase in the interest rates as there is enough liquidity in the system. Another CMD of a public sector bank said that over a period of time, adopting easy money policy, banks have already cut the deposit rates, which has brought down the cost of funds for them. In near future, the cost structure of funds is not likely to change, he argued. Therefore, he said that in the forthcoming credit policy, even if RBI takes certain measures to control the inflationary expectations, the interest rates are not likely to move up.
According to the latest data, banks are parking around Rs 70,000 crore surplus funds with the RBI at only 3.25% interest rate as against the cost of funds at around 6%. A senior banking official said that even if RBI raises the CRR by half a percentage points, it will suck only around Rs 21,000 crore from the system.
However, as annual inflation has crossed 7% mark, which is higher than central bank's projection of the inflation at 6.5%, bankers feel that the central bank would take measures to squeeze surplus liquidity, which has given rise to inflationary expectations. But this would not affect the availability of funds to lend in the market place, bankers argue.
Since April 2009, in the first nine months of the current financial year till January 1, 2010, while the deposits have grown by Rs 4,30,430 crore, the credit offtake by corporate houses and individuals is only Rs 2,45,258 crore. In fact the condition was even worse a fortnight back. Till then the credit offtake was only at around Rs 1,65,000 crore. In the last fortnight, the credit offtake has shown some signs of recovery when it grew by Rs 79,515 crore.
A senior government official said that a measure leading to rise in the interest rate will be counterproductive and will affect the economic recovery adversely.
Times of India, January 19, 2010, Page 21
Prabhakar Sinha, TNN
NEW DELHI: Interest rates are unlikely to firm up even if RBI raises key rates to contain inflation, feel bankers.
In its forthcoming review of the credit policy on January 29, it is believed that RBI will increase the cash reserve ratio (CRR) — the proportion of deposits that banks are required keep with the central bank — by about half a percentage points to contain the soaring inflation.
However, bankers feel that RBI would leave the other two rates — repo and reverse repo — unchanged. Repo rate is the interest rate at which central bank, RBI, lends short term funds to bank. At present, repo rate is at 4.75%. Reverse repo rate is the rate at which banks park their surplus funds with the central bank, which is at 3.25%.
Union Bank of India chairman and managing director M V Nair though refused to speculate on the issue of measures that would be taken by RBI in its review of the credit policy, however, said that it would not lead to increase in the interest rates as there is enough liquidity in the system. Another CMD of a public sector bank said that over a period of time, adopting easy money policy, banks have already cut the deposit rates, which has brought down the cost of funds for them. In near future, the cost structure of funds is not likely to change, he argued. Therefore, he said that in the forthcoming credit policy, even if RBI takes certain measures to control the inflationary expectations, the interest rates are not likely to move up.
According to the latest data, banks are parking around Rs 70,000 crore surplus funds with the RBI at only 3.25% interest rate as against the cost of funds at around 6%. A senior banking official said that even if RBI raises the CRR by half a percentage points, it will suck only around Rs 21,000 crore from the system.
However, as annual inflation has crossed 7% mark, which is higher than central bank's projection of the inflation at 6.5%, bankers feel that the central bank would take measures to squeeze surplus liquidity, which has given rise to inflationary expectations. But this would not affect the availability of funds to lend in the market place, bankers argue.
Since April 2009, in the first nine months of the current financial year till January 1, 2010, while the deposits have grown by Rs 4,30,430 crore, the credit offtake by corporate houses and individuals is only Rs 2,45,258 crore. In fact the condition was even worse a fortnight back. Till then the credit offtake was only at around Rs 1,65,000 crore. In the last fortnight, the credit offtake has shown some signs of recovery when it grew by Rs 79,515 crore.
A senior government official said that a measure leading to rise in the interest rate will be counterproductive and will affect the economic recovery adversely.
12% service tax likely to return
12% service tax likely to return
Business Standard, January 19, 2010, Page 1
Vrishti Beniwal & Jyoti Mukul / New Delhi
To exit stimulus, govt may raise excise duty too
The government may take the first step towards fiscal consolidation in Budget 2010-11 by partially rolling back tax cuts given to the industry last year. The service tax rate may be restored to 12 per cent, while excise duty could be increased marginally.
The finance ministry is considering a phased exit of the stimulus measures as the economy posted a robust 7.9 per cent growth in July-August quarter of 2009-10. To begin with, it wants to withdraw measures that are not likely to impact the industry significantly, such as the 2 per cent service tax cut. In the case of excise duty, the increase may not be equivalent to 6 per cent reduction that the industry got from the government as part of the stimulus measures.
The Budget changes would also be used as an opportunity to rationalise indirect taxes ahead of introduction of the goods and services tax (GST).
According to government sources, all options were being discussed and a final decision would be taken by Finance Minister Pranab Mukherjee in consultation with Prime Minister Manmohan Singh. Mukherjee took the political input across party lines during pre-Budget consultations with members of the Parliamentary Consultative Committee today.
A senior executive of one of the leading automobile companies said the industry, too, was preparing itself for a partial rollback of excise duty cut which had been given to generate demand. Automobile and consumer durables sectors were the major beneficiaries of the duty cut. But with a spur in demand, some sections in the government felt a rollback could be attempted. Indirect tax receipts have taken a major hit due to lowering of excise duty to 8 per cent (in two phases — 4 per cent and 2 per cent) and service tax to 10 per cent.
The government, meanwhile, is evaluating whether to increase excise duty for specific sectors which are showing recovery, or marginally raise the rate for all sectors to avoid disparity. It may also think of bringing more services in the tax net to improve its revenue mop-up.
An increase in service tax rate without an increase in excise could leave a gap of 4 per cent between the two taxes, which are to be subsumed once GST is introduced. This could come in the way of a smooth rollout of the new tax regime.
Rajeev Dimri, partner, BMR Advisors, said: “If they ( the government) increase service tax, they should also look at excise duty to avoid distortions.”
On the kind of impact the service tax cut could have on rising demand, Dimri said it was difficult to assess, “but the cut provides right signal to the industry by lowering costs for consumer”.
Satya Poddar, partner, Ernst & Young, said every little tax cut helped during slowdown, adding that the bigger stimulus was in excise duty cut.
Added Dimri: “The government has to decide when is the right time to exit the stimulus. Budget is the logical way to do it. It would not make sense to touch the rates two months later. So, they should do it now or six months later.”
Poddar said if the stimulus was rolled back entirely and excise duty was to be raised to 14 per cent, the government might find it difficult to again bring it down to 5 per cent later when GST is introduced. Five per cent is the central rate suggested by the Finance Commission taskforce on GST. “The government would not do anything that is not compatible with GST,” he added.
One of the major concerns against the move towards rolling back the cuts, especially on excise, is rising inflation which touched a year’s high of 7.31 per cent for December 2009. “The inflation could, however, be stoked further if the government’s fiscal deficit is not controlled,” said an expert.
More spending and lower revenues are expected to widen the fiscal deficit to 6.8 per cent of GDP this fiscal, compared with 6.2 per cent in 2008-09 when the FRBM Act required the government to bring it down to 2.5 per cent. Indirect tax receipts has fallen 21 per cent to Rs 1,46,000 crore for the first eight months of the year (April-November), which is 46 per cent of the Budget estimate of Rs 2,69,477 crore for 2009-10.
The fall in excise duty collections has been sharper at 17.4 per cent till November 2009 compared to service tax collections, which have fallen 6.6 per cent. With pressure mounting on launching crucial social sector schemes, the finance ministry would need to shore up revenues. The finance minister has repeatedly stressed the need to get back to the path of fiscal consolidation by aiming a fiscal deficit of 5.5 per cent in 2010-11 and 4 per cent in 2011-12.
Business Standard, January 19, 2010, Page 1
Vrishti Beniwal & Jyoti Mukul / New Delhi
To exit stimulus, govt may raise excise duty too
The government may take the first step towards fiscal consolidation in Budget 2010-11 by partially rolling back tax cuts given to the industry last year. The service tax rate may be restored to 12 per cent, while excise duty could be increased marginally.
The finance ministry is considering a phased exit of the stimulus measures as the economy posted a robust 7.9 per cent growth in July-August quarter of 2009-10. To begin with, it wants to withdraw measures that are not likely to impact the industry significantly, such as the 2 per cent service tax cut. In the case of excise duty, the increase may not be equivalent to 6 per cent reduction that the industry got from the government as part of the stimulus measures.
The Budget changes would also be used as an opportunity to rationalise indirect taxes ahead of introduction of the goods and services tax (GST).
According to government sources, all options were being discussed and a final decision would be taken by Finance Minister Pranab Mukherjee in consultation with Prime Minister Manmohan Singh. Mukherjee took the political input across party lines during pre-Budget consultations with members of the Parliamentary Consultative Committee today.
A senior executive of one of the leading automobile companies said the industry, too, was preparing itself for a partial rollback of excise duty cut which had been given to generate demand. Automobile and consumer durables sectors were the major beneficiaries of the duty cut. But with a spur in demand, some sections in the government felt a rollback could be attempted. Indirect tax receipts have taken a major hit due to lowering of excise duty to 8 per cent (in two phases — 4 per cent and 2 per cent) and service tax to 10 per cent.
The government, meanwhile, is evaluating whether to increase excise duty for specific sectors which are showing recovery, or marginally raise the rate for all sectors to avoid disparity. It may also think of bringing more services in the tax net to improve its revenue mop-up.
An increase in service tax rate without an increase in excise could leave a gap of 4 per cent between the two taxes, which are to be subsumed once GST is introduced. This could come in the way of a smooth rollout of the new tax regime.
Rajeev Dimri, partner, BMR Advisors, said: “If they ( the government) increase service tax, they should also look at excise duty to avoid distortions.”
On the kind of impact the service tax cut could have on rising demand, Dimri said it was difficult to assess, “but the cut provides right signal to the industry by lowering costs for consumer”.
Satya Poddar, partner, Ernst & Young, said every little tax cut helped during slowdown, adding that the bigger stimulus was in excise duty cut.
Added Dimri: “The government has to decide when is the right time to exit the stimulus. Budget is the logical way to do it. It would not make sense to touch the rates two months later. So, they should do it now or six months later.”
Poddar said if the stimulus was rolled back entirely and excise duty was to be raised to 14 per cent, the government might find it difficult to again bring it down to 5 per cent later when GST is introduced. Five per cent is the central rate suggested by the Finance Commission taskforce on GST. “The government would not do anything that is not compatible with GST,” he added.
One of the major concerns against the move towards rolling back the cuts, especially on excise, is rising inflation which touched a year’s high of 7.31 per cent for December 2009. “The inflation could, however, be stoked further if the government’s fiscal deficit is not controlled,” said an expert.
More spending and lower revenues are expected to widen the fiscal deficit to 6.8 per cent of GDP this fiscal, compared with 6.2 per cent in 2008-09 when the FRBM Act required the government to bring it down to 2.5 per cent. Indirect tax receipts has fallen 21 per cent to Rs 1,46,000 crore for the first eight months of the year (April-November), which is 46 per cent of the Budget estimate of Rs 2,69,477 crore for 2009-10.
The fall in excise duty collections has been sharper at 17.4 per cent till November 2009 compared to service tax collections, which have fallen 6.6 per cent. With pressure mounting on launching crucial social sector schemes, the finance ministry would need to shore up revenues. The finance minister has repeatedly stressed the need to get back to the path of fiscal consolidation by aiming a fiscal deficit of 5.5 per cent in 2010-11 and 4 per cent in 2011-12.
FM sees signs of turnaround
FM sees signs of turnaround
Business Standard, January 19, 2010, Page 6
The Finance Minister Pranab Mukherjee on Monday said the macro-economic indicators were confirming the signs of revival in the economy. “The policy measures undertaken by the government have worked and the macroeconomic situation confirms signs of a turnaround for the economy,” Mukherjee sai. PTI.
Business Standard, January 19, 2010, Page 6
The Finance Minister Pranab Mukherjee on Monday said the macro-economic indicators were confirming the signs of revival in the economy. “The policy measures undertaken by the government have worked and the macroeconomic situation confirms signs of a turnaround for the economy,” Mukherjee sai. PTI.
Kamal Nath woos Japanese investors
Kamal Nath woos Japanese investors
Business Standard, January 19, 2010, Page 6
Road Transport Minister Kamal Nath today invited Japanese investors to come forward to participate in the $20-billion worth highway projects to be awarded shortly.
Business Standard, January 19, 2010, Page 6
Road Transport Minister Kamal Nath today invited Japanese investors to come forward to participate in the $20-billion worth highway projects to be awarded shortly.
No need for fiscal tightening: Sharma
No need for fiscal tightening: Sharma
Business Standard, January 19, 2010, Page 6
Ahead of the third quarter monetary policy review by the Reserve Bank later this month, Commerce and Industry Minister Anand Sharma has opposed monetary tightening, saying fund flows to the industry have not caused food inflation. The Reserve Bank of India will announce the third quarter monetary policy on January 29. PTI.
Timing stimulus exit is a challenge: RBI
Timing stimulus exit is a challenge: RBI
Business Standard, January 19, 2010, Section II, Page 3
BS Reporter / Mumbai
The Reserve Bank of India (RBI) on Monday said that the timing and sequence of exit from an easy monetary policy were still a challenge.
Commenting that there has been marked improvement in the performance of the industrial sector, RBI Governor D Subbarao said, “The challenge for RBI is to support the recovery process without compromising on price stability.”
While gross domestic product growth for the second quarter increased to 7.9 per cent compared to the first quarter growth of 6.1 per cent, inflation based on the wholesale price index shot up to a 13-month high of 7.31 per cent in December compared to 4.78 per cent in November. This was above the central bank’s projection of 6.5 per cent and way above its comfort level of 5 per cent.
Subbarao also said the timing and sequencing of exit from the expansionary fiscal and monetary policy occupied central place in RBI’s policy matrix. The central bank is scheduled to release the third quarter review of monetary policy on January 29 amid expectation it would increase the cash reserve ratio, or the proportion of deposits that banks set aside, by 50 basis points to suck out liquidity from the system. Banks on Monday parked close to Rs 70,000 crore with RBI through the reverse repo window used to suck out liquidity.
The central bank had lowered key policy rates after the global financial crisis intensified in September 2008 to avoid any impact on the Indian market and spur economic activity. But with economic activity picking up in recent months, inflation rising and the rupee coming under pressure due to higher capital flows, RBI and the government are expected to withdraw the stimulus gradually.
Subbarao said the contagion of the global financial crisis was effectively contained by coordinated fiscal and monetary measures and described India’s growth in the quarter through September as “robust”.
RBI sees big challenge in timing the stimulus exit
RBI sees big challenge in timing the stimulus exit
The Financial Express, January 19, 2010, Page 12
Agencies, fe Bureaus, Mumbai
Reserve Bank of India (RBI) governor Duvvuri Subbarao on Monday said timing the withdrawal of stimulus is “a challenge” as he prepares to unveil the next monetary policy decision amid growing inflation pressures.
“The challenge for RBI is to support the recovery process without compromising on price stability,” Subbarao said at a conference in the southern Indian town of Benaulim, Goa.
India’s benchmark wholesale-price inflation rate climbed to a 13-month high last month, fueling speculation that Subbarao may tighten policy on January 29. China’s central bank last week unexpectedly raised the proportion of deposits that banks must set aside to check price gains and asset bubbles.
India’s inflation accelerated to 7.31% in December, the government said January 14. In the last policy review in October, Subbarao ordered lenders to set aside a higher proportion of deposits in government bonds.
The government injected fiscal and monetary stimulus worth more than 12% of gross domestic product between September 2008 and April 2009 as the global recession deepened. The intervention helped the economy grow 7.9% in the three months to September 30, the fastest pace in more than a year.
Subbarao said on Monday that the contagion of the global financial crisis was effectively contained by coordinated fiscal and monetary measures and described India’s growth in the quarter through September as “robust.”
India’s Industrial production climbed 11.7% in November, the most in two years. Exports surged to a 15-month high in December after rising 18.2% in November, the first increase in 14 months.
Also commenting on the challenges for DICGC on the way forward Subbarao said one key challenge is reducing the time taken to settle claims. Though the corporation has been able to settle all claims within the statutory time limit, its goal is to go beyond the statutory prescription, and ensure settlement of claims within a few days of liquidation of a bank as against a few months taken now.
“Towards this end, effort is required in two directions. First, DICGC must have a computerised depositors’ data base in respect of over 85,000 branches spread across the country. Second, the entire process of filing claims by the liquidator and their processing by the corporation should be computerised with appropriate connectivity,” he said.
Subbarao, in light of the recent experience which has challenged the concept of “too big to fail”, questioned the need to review the manner of defining ‘risk’ for the purpose of determining risk-based premium.
“How do we go about it?How do we factor-in the risk associated with all the non-banking business of a financial conglomerate on its banking business? How should risk based premium factor in this risk? “ he asked.
He also questioned the taxation of the entire income or the surplus of a deposit insurance system or any part of it.
“Is it possible to define an international benchmark or at least a standard methodology for determining a bench-mark for the reserve ratio (ratio of Deposit Insurance Fund to Insured Deposit), signifying the adequacy of Deposit Insurance Fund?
What countercyclical measures should a deposit insurance system take to build up its funds for the rainy day?” he said.
Poor response from realtors delays Solan IT Park bidding
Poor response from realtors delays Solan IT Park bidding
The Financial Express, January 19, 2010, Page 20
Preeti Parashar, Chandigarh
The bidding process of Himachal Pradesh’s first IT park proposed to come up near Waknaghat in Solan district has been put on hold due to poor response from developers.
Though the last date for inviting the bids had been extended from October 26, 2009 toJanuary 4 this year but not many companies came forward till the last date. A senior official of Himachal’s IT department told FE that tender committee’s meeting will be held on Tuesday to decide whether to further extend the date or defer the bidding for now.
“Since the bidding process had been deferred earlier this month till further orders things will be clear after the meeting. We hope the market to pick up soon and more developers are expected to evince interest in developing the project. The real estate developers have also asked for a few changes in the request for proposal (RFP), which will be taken into consideration in the meeting,” said the official.
He further added, “The companies want some relaxations in the development norms, milestones kept by us for the project and various land laws etc. It is expected that the RFP will be finalised after accommodating the changes during the meeting. Then it will be further forwarded to the cabinet for final approval.”
The IT park-cum-township project has been running slow ever since its inception. Earlier state’s IT department had floated the RFP in September 2009.
As per information available companies like like Mahindra World City, Jaypee Group, AGS Infrastructure, CMC Constructions evinced interest in developing the park. The successful real estate developer will be responsible for designing, developing and managing the proposed IT park cum township.
The IT park-cum-township will be developed on public-private-partnership (PPP) basis and spread over 64.7 acre in village Mauja Majhol in Solan district. The estimated investment going into the park will be around Rs 500 crore.
The developer will plan, market, develop buildings, provide and maintain amenities, and manage the project for 80 years. The infrastructural facilities will have to be developed by the company within four years from date of commencement of the project.
Strong real estate revenues propel Jaiprakash Associates profit in Q3
Strong real estate revenues propel Jaiprakash Associates profit in Q3
The Hindu Business Line, January 19, 2010, Page 2
Our Bureau, New Delhi
Buoyed by stronger real estate revenues and better price realisation for its cement business, Jaiprakash Associates Ltd (JAL) announced on Monday that it had more than doubled its net revenue for the third quarter ended December 31, 2009 – to Rs 2,964 crore from Rs 1,417 crore.
Net profit stood at Rs 103 crore down by 38 per cent as compared to Rs 168 crore in the same quarter last fiscal. However, this includes the expenses made under the “Jaypee Employee Stock Purchase Scheme, 2009”. The company had issued 1.25 crore equity shares to a trust for the employees and as per SEBI guidelines the difference between the market price and face value had to shown in the accounts. The Chief Financial Officer, Mr Rahul Kumar, said that this expense is a notional expense and has no impact on the company's operating margins.
If the expense for the Employee Stock Purchase Scheme is not taken into account, the net profit stood at Rs 314 crore, almost 87 per cent higher than Rs 168 crore in the same quarter last year.
Mr Kumar added that the company's strong performance has been boosted by its cement business and he expects cement prices to firm up in the coming months, “In the first nine months of this fiscal, price realisation is Rs 500/tonne higher than it was in the same period last fiscal. While construction continues to be our greatest revenue contributor, cement is catching up fast.”
The company is expanding its cement production capacity. The capacity has gone up from 9.5 million tonnes at the beginning of the year to 15 mt. Mr Kumar said by the end of the fiscal, another five mt would be added from greenfield projects. “The cement grinding joint venture with SAIL in Bhilai would be commissioned in the next three months. This would add two mt per annum capacity to our current capacity,” said Mr Kumar.
Giving his expectations for the next quarter, Mr Manoj Gaur, Chairman, Jaiprakash Associates, said, “We are on course to reach Rs 10,000-crore turnover for the year. Already we have sold 12.5 million sq ft of real estate area and we expect to sell another 5-6 million sq ft in the next quarter. As the economy is growing I believe we would be able to maintain the momentum in revenue and profitability.”
The company's share price on the Bombay Stock Exchange closed at Rs 163.25 on Monday, down 1.25 per cent from Rs 164.50 at the previous close.
No need for monetary tightening now
No need for monetary tightening now
The Hindu Business Line, January 19, 2010, Page 15
Arun S, Lagos
The Commerce and Industry Minister, Mr Anand Sharma, has called for easier availability of credit at low interest rates till the industry completely recovers from the aftermath of the financial crisis. The Minister's statement against any tightening of monetary measures comes days before the Reserve Bank of India (RBI) is slated to announce the third quarter review of its monetary and credit policy on January 29.
“I don't think there is any need for monetary tightening now,” Mr Sharma told reporters on the sidelines of the recently held Ficci event Namaskar Africa here.
Pointing out that the industry was yet to recover fully from the effects of the credit squeeze and freeze following the collapse of some big financial institutions in the West, the Minister said, “If you want the industry to expand and exports to be competitive then they must get credit on easy terms and low interest rates.”
“The dollar credit window we have created in the Foreign Trade Policy (FTP) for exporters should continue,” he added.
Announcing several incentives for exporters on January 12, Mr Sharma had said the Commerce Ministry has taken up with the Finance Ministry issues such as continuation of interest subsidies, cheaper dollar credit and more time for exporters to realise overdue export proceeds.
However, the Minister said he would not want to delve into the domain of the RBI. “Let them (RBI) regulate. I am only talking of the availability of credit on easy terms,” he said.
Asked whether the easy availability of cheap credit would further push up inflation, the Minister shot back saying, “There is no spill-over effect of credit on inflation. What should businesses do, should they shut down or stop expanding?”
He said the increase in food inflation had nothing to do with banks offering credit to business.
“I think there is a speculative build-up when it comes to food inflation in some of the commodities,” he said, adding that food inflation was resulting mainly from shortage of sugar, edible oil and pulses.
“There is enough grain available in the country. Both rice and wheat procurement is good. But I am worried about pulses and edible oils. The agriculture sector is also concerned. The Cabinet Committee on food security is taking a fortnightly stock of the situation. I am a member of that. We hope the food prices come down. We are also optimistic about the rabi crop,” he said. Food inflation was 17.28 per cent for the week ended January 2, down from 18.22 per cent in the previous week.
The Hindu Business Line, January 19, 2010, Page 15
Arun S, Lagos
The Commerce and Industry Minister, Mr Anand Sharma, has called for easier availability of credit at low interest rates till the industry completely recovers from the aftermath of the financial crisis. The Minister's statement against any tightening of monetary measures comes days before the Reserve Bank of India (RBI) is slated to announce the third quarter review of its monetary and credit policy on January 29.
“I don't think there is any need for monetary tightening now,” Mr Sharma told reporters on the sidelines of the recently held Ficci event Namaskar Africa here.
Pointing out that the industry was yet to recover fully from the effects of the credit squeeze and freeze following the collapse of some big financial institutions in the West, the Minister said, “If you want the industry to expand and exports to be competitive then they must get credit on easy terms and low interest rates.”
“The dollar credit window we have created in the Foreign Trade Policy (FTP) for exporters should continue,” he added.
Announcing several incentives for exporters on January 12, Mr Sharma had said the Commerce Ministry has taken up with the Finance Ministry issues such as continuation of interest subsidies, cheaper dollar credit and more time for exporters to realise overdue export proceeds.
However, the Minister said he would not want to delve into the domain of the RBI. “Let them (RBI) regulate. I am only talking of the availability of credit on easy terms,” he said.
Asked whether the easy availability of cheap credit would further push up inflation, the Minister shot back saying, “There is no spill-over effect of credit on inflation. What should businesses do, should they shut down or stop expanding?”
He said the increase in food inflation had nothing to do with banks offering credit to business.
“I think there is a speculative build-up when it comes to food inflation in some of the commodities,” he said, adding that food inflation was resulting mainly from shortage of sugar, edible oil and pulses.
“There is enough grain available in the country. Both rice and wheat procurement is good. But I am worried about pulses and edible oils. The agriculture sector is also concerned. The Cabinet Committee on food security is taking a fortnightly stock of the situation. I am a member of that. We hope the food prices come down. We are also optimistic about the rabi crop,” he said. Food inflation was 17.28 per cent for the week ended January 2, down from 18.22 per cent in the previous week.
Private SEZs told to reserve 10% space for small-scale units
Private SEZs told to reserve 10% space for small-scale units
The Hindu Business Line, January 19, 2010, Page 15
K.R. Srivats, New Delhi
Small-scale units may now get a better deal in allocation of space in private special economic zones .
The Centre has now said that minimum 10 per cent of the space in IT/ITES SEZ may be reserved for SSI IT/ITES units.
All other SEZs were asked to allocate 10 per cent space for SSI units.
Also, IT/ITES SEZs have been advised to set up incubators of minimum 200 seats. Currently, IT/ITES SEZs are mainly promoted by the private sector.
“The Centre's instruction covers central SEZs, IT/ITES SEZs and all other SEZs in the private sector,” Mr L.B. Singhal, Director-General, Export Promotion Council for SEZs, told Business Line.
The footfalls are back
The footfalls are back
The Financial Express, January 19, 2010, Page 10
Mona Mehta
The organised retail sector, which bounced back somewhat in the three months to September 2009, posting double-digit topline growth, should turn in an even better performance in the quarter ended December 2009. After all, economic growth was gathering momentum, there had enough liquidity in the banking system, stock markets were on a roll and companies had started hiring once again. As such, consumers had regained confidence and were willing to spend; the festive season, which set in earlier than usual last year, had seen spends go up.
Most retailers, therefore, should manage a high double-digit topline growth for the December 2009 quarter. The good news is that operating margins could improve further with companies having kept a check on costs. As a rule, retailers have been shutting down unviable stores across formats, bringing down the expenditure on rentals. Of course, they have also been adding some outlets in new locations.
Pantaloon has seen a double-digit growth in same-store-sales during the December 2009 quarter. The value segment saw a growth of 25%, 28% and 30% in October, November and December 2009, respectively. The lifestyle space didn’t do too badly, either. It grew by 6% in October 2009, 8% in November and touched double-digits in December. Kishore Biyani, CEO, Pantaloon Retail, believes there is a change in the sentiment and consumer spends are higher across categories such as apparel, fashion accessories, cosmetics and white goods. With the economy recovering, the retailer, who has around 10 million sq ft of space, should grow faster now than it did in the year up to June 2009 when revenues increased by 25.6% to Rs 6,342 crore (stand-alone).
With the value retailing growing faster and now fetching approximately 70% of revenues, gross margins could be under pressure. However, the company is making attempts to contain costs and so, operating margins could improve with better operating efficiencies and operating leverage. Given its wide range of formats and the aggression to build scale, Pantaloon is well-poised to cash in on the rising consumer spends in organised retail chains. Since October 2009, footfalls at Big Bazaar and Pantaloon have seen an estimated increase of 20-25% and a fair share of customers are buying products.
Shoppers Stop, too, is recovering from the downturn. Same store sales, which had fallen by about 7% in the June quarter, rebounded in the September quarter with a growth of 1.8% as result of which operating margins were up at close to 10%. The December quarter should be even better and the retailer will see a strong uptick in the operating margins with industry watchers forecasting a 300 basis points expansion, thanks to better operating leverage. Although the retailer hasn’t scaled up operations over the past year, it could do so now that the operating environment is more conducive. Since April 2009, Shoppers Stop has launched only two mid-sized stores, but it hopes to launch eight stores in 2010. In all, it hopes to add 4 lakh sq ft over the year, for which it plans to spend Rs 100 crore. Currently, the company has 30 large-format stores.
The Bangalore-headquartered Titan, which saw a fall in jewellery volumes of just under 10% in the September 2009 quarter, could continue to see weak volumes. The management recently noted that the festive season had seen fairly good sales, though high gold prices were a bit of a concern. It was unlikely, the management observed, that jewellery volumes would pick up significantly with gold prices at current levels. Titan’s watches business hasn’t been faring too well either, though there has been a bit of a rebound in recent months. Sales showed a marginal decline in the September 2009 quarter at Rs 295.52 crore, compared with Rs 303.45 crore posted during the corresponding period in 2008. Titan’s net profit for the first half of the year has remained virtually flat at Rs 161.09 crore, compared with the corresponding period of 2008-09. That’s not surprising since total sales were up by a mere 6.3%, at Rs 2,045 crore.
After shutting down 140 loss-making retail stores during the June 2009 quarter, Spencer’s Retail, a division of RPG Enterprise, is expected to grow revenues by about 9% in the December 2009 quarter, according to Sanjiv Goenka, the company’s vice chairman. Goenka says same store sales have been growing at 18% in the last three months. “We have been able to reduce our operating costs to the tune of Rs 100 crore, reduce inventories, streamline our supply chain management and focus on retail innovations,” observes Goenka. Spencer’s is planning to set up about a dozen large stores by March 2011.
Oberoi Realty files IPO papers
Oberoi Realty files IPO papers
The Hindu Business Line, January 19, 2010, Page 11
Our Bureau, Mumbai
Mumbai-based Oberoi Realty filed its draft red herring prospectus for an IPO of 39,562,000 equity shares with a face value of Rs 10 at a price band to be decided later. Sources said the company proposes to raise over Rs 1,500 crore. The issue, which will be through the 100 per cent book building process, will constitute a dilution of 12 per cent of the paid-up equity share capital.
The Hindu Business Line, January 19, 2010, Page 11
Our Bureau, Mumbai
Mumbai-based Oberoi Realty filed its draft red herring prospectus for an IPO of 39,562,000 equity shares with a face value of Rs 10 at a price band to be decided later. Sources said the company proposes to raise over Rs 1,500 crore. The issue, which will be through the 100 per cent book building process, will constitute a dilution of 12 per cent of the paid-up equity share capital.
Subscribe to:
Posts (Atom)
Posts
