Friday, April 24, 2009
Dearer food prices push inflation to 0.26%
Dearer food prices push inflation to 0.26%
The Financial Express, April 24, 2009, Page 2
Press Trust of India, New Delhi
Inflation rose to 0.26% but remained around a three-decade low, even as essential food articles like vegetables and cereals turned costlier, something that is likely to become an issue in the Lok Sabha elections, which are under way. Wholesale price-based inflation rose by 0.08 percentage points during the week ended April 11 from 0.18% in the previous week.
“Some commodities are pressurising inflation. These are primary articles, especially food items like cereals and pulses,” said Crisil principal economist DK Joshi. Even as pulses varieties were cheaper by 0.3% over the previous week, they were expensive by 9.81% year-on-year.
Joshi said now there is enough stock of rice and wheat. But food prices are high as the minimum support prices are up and the production of coarse cereals and pulses has been low. Even on a weekly basis, prices of raw food as a whole rose by 0.5% due to tea turning expensive by 5%, bajara by 3%, vegetables by 2.6%, and mutton and maize by 1% each.
Political parties, including both the ruling Congress and the main opposition BJP, have promised a concessional supply of wheat and rice to the poor through the price distribution system.
On a yearly basis, food prices rose by 7.07%. Specifically, processed tea was costlier by 42.75%; sugar, khandsari and gur by 18.21%; common salt by 13.03%; cereals by 9.81%; and fruit and vegetables by 8.52%.
On Tuesday, the Reserve Bank cut two short-term key rates by 25 basis points each, but economists said there is no link between monetary policy and food prices. Joshi expects the RBI to cut key policy rates further by 25 basis points in the next policy in July.
The Financial Express, April 24, 2009, Page 2
Press Trust of India, New Delhi
Inflation rose to 0.26% but remained around a three-decade low, even as essential food articles like vegetables and cereals turned costlier, something that is likely to become an issue in the Lok Sabha elections, which are under way. Wholesale price-based inflation rose by 0.08 percentage points during the week ended April 11 from 0.18% in the previous week.
“Some commodities are pressurising inflation. These are primary articles, especially food items like cereals and pulses,” said Crisil principal economist DK Joshi. Even as pulses varieties were cheaper by 0.3% over the previous week, they were expensive by 9.81% year-on-year.
Joshi said now there is enough stock of rice and wheat. But food prices are high as the minimum support prices are up and the production of coarse cereals and pulses has been low. Even on a weekly basis, prices of raw food as a whole rose by 0.5% due to tea turning expensive by 5%, bajara by 3%, vegetables by 2.6%, and mutton and maize by 1% each.
Political parties, including both the ruling Congress and the main opposition BJP, have promised a concessional supply of wheat and rice to the poor through the price distribution system.
On a yearly basis, food prices rose by 7.07%. Specifically, processed tea was costlier by 42.75%; sugar, khandsari and gur by 18.21%; common salt by 13.03%; cereals by 9.81%; and fruit and vegetables by 8.52%.
On Tuesday, the Reserve Bank cut two short-term key rates by 25 basis points each, but economists said there is no link between monetary policy and food prices. Joshi expects the RBI to cut key policy rates further by 25 basis points in the next policy in July.
Moody’s forecasts 5% growth this fiscal
Moody’s forecasts 5% growth this fiscal
The Financial Express, April 24, 2009, Page 2
The Financial Express, April 24, 2009, Page 2
Lending rates head into single digits
Lending rates head into single digits
The Financial Express, April 24, 2009, Page 1
Sunny Verma, New Delhi
In a likely pointer to lower lending rates, a clutch of Indian companies has borrowed medium-term funds at single digit interest rates. A large private bank has lent one-year funds to a big private company at a very attractive rate of close to 8%, while a public sector company borrowed 30-day money at 5.25% from the same bank, according to a senior executive at the bank, who said he was not authorised to speak to the media.
Other bankers and infrastructure companies expressed surprise at the 8% rate, but said early signs of cheaper credit are visible now.
A medium-sized infrastructure company, GMR, said rates have to fall into single digits. According to Subbarao Amarthaluru, group CFO of GMR, “Lending rates are now down to less than 11% from 13%, but we want them to drop below 10% for projects to become viable.”
Lending rates for top-notch companies are now close to single digits, though benchmark prime lending rates are still holding up. “Downside risks have clearly come down. Some stability is coming back into the system”, said G Ramachandran, head-global research group, ICICI Bank.
The spread that AAA-rated corporate borrowers have to pay over government bond yields has fallen to the pre-crisis level of 150 basis points from 400 basis points in December 2008. The spread on two-year AAA corporate bond is about 135 basis points. Yields on benchmark 10-year government bond are at about 6.2%. This means, a top-notch corporate actually borrowed at less than 8%.
Amarthaluru said the situation has improved a lot after September. “Getting funds is not as difficult now as it was in the last six months, especially after February.”
To prod the banks to pare lending and deposit rates, RBI had on Tuesday cut repo and reverse repo rate by 25 basis points each.
A senior bank official said discounts on loans below PLR have risen sharply in the past few weeks, with banks trying to lend their surplus funds.
Awash with funds, banks deposited over Rs 1,00,000 crore a day with the Reserve Bank in the last three weeks. “There is no dearth of funds now. Our credit growth is around 27-28%,” said Punjab National Bank chief general manager LP Agarwal.
PNB is charging around 10-11% for a one-year loan to top-rated companies, he said. He, however, said lending rates cannot fall sharply unless deposits rates tumble. RBI deputy governor Rakesh Mohan said in London on Thursday that banks were still saddled with high-cost deposits and so their lending rates would soften only gradually.
Noting that nearly 70% bank lending was at rates below benchmark PLR, RBI on Tuesday decided to set up a working group to review the BPLR system to make credit pricing more transparent.
GMR’s Amarthaluru said he expects interest rates to drop a bit more since the rates of bulk deposits have crashed. Between October 2008 and April 18, 2009, public sector banks have reduced term deposit rates by 125-250 basis points, while the reduction in bulk deposits have been much steeper. The weighted average lending rate fell from 12.3% in 2007-08 to around 10.9% in 2008-09, RBI said in its annual review of the monetary policy on Tuesday.
The Financial Express, April 24, 2009, Page 1
Sunny Verma, New Delhi
In a likely pointer to lower lending rates, a clutch of Indian companies has borrowed medium-term funds at single digit interest rates. A large private bank has lent one-year funds to a big private company at a very attractive rate of close to 8%, while a public sector company borrowed 30-day money at 5.25% from the same bank, according to a senior executive at the bank, who said he was not authorised to speak to the media.
Other bankers and infrastructure companies expressed surprise at the 8% rate, but said early signs of cheaper credit are visible now.
A medium-sized infrastructure company, GMR, said rates have to fall into single digits. According to Subbarao Amarthaluru, group CFO of GMR, “Lending rates are now down to less than 11% from 13%, but we want them to drop below 10% for projects to become viable.”
Lending rates for top-notch companies are now close to single digits, though benchmark prime lending rates are still holding up. “Downside risks have clearly come down. Some stability is coming back into the system”, said G Ramachandran, head-global research group, ICICI Bank.
The spread that AAA-rated corporate borrowers have to pay over government bond yields has fallen to the pre-crisis level of 150 basis points from 400 basis points in December 2008. The spread on two-year AAA corporate bond is about 135 basis points. Yields on benchmark 10-year government bond are at about 6.2%. This means, a top-notch corporate actually borrowed at less than 8%.
Amarthaluru said the situation has improved a lot after September. “Getting funds is not as difficult now as it was in the last six months, especially after February.”
To prod the banks to pare lending and deposit rates, RBI had on Tuesday cut repo and reverse repo rate by 25 basis points each.
A senior bank official said discounts on loans below PLR have risen sharply in the past few weeks, with banks trying to lend their surplus funds.
Awash with funds, banks deposited over Rs 1,00,000 crore a day with the Reserve Bank in the last three weeks. “There is no dearth of funds now. Our credit growth is around 27-28%,” said Punjab National Bank chief general manager LP Agarwal.
PNB is charging around 10-11% for a one-year loan to top-rated companies, he said. He, however, said lending rates cannot fall sharply unless deposits rates tumble. RBI deputy governor Rakesh Mohan said in London on Thursday that banks were still saddled with high-cost deposits and so their lending rates would soften only gradually.
Noting that nearly 70% bank lending was at rates below benchmark PLR, RBI on Tuesday decided to set up a working group to review the BPLR system to make credit pricing more transparent.
GMR’s Amarthaluru said he expects interest rates to drop a bit more since the rates of bulk deposits have crashed. Between October 2008 and April 18, 2009, public sector banks have reduced term deposit rates by 125-250 basis points, while the reduction in bulk deposits have been much steeper. The weighted average lending rate fell from 12.3% in 2007-08 to around 10.9% in 2008-09, RBI said in its annual review of the monetary policy on Tuesday.
Three-day slide ends, Sensex surges 317 pts
Three-day slide ends, Sensex surges 317 pts
The Financial Express, April 24, 2009, Corporates & Markets.
fe Bureau, Mumbai
The markets finally snapped the three-day negative streak and closed the day with some smart gains on the back of strong cues from the Asian and European markets coupled with better-than-expected quarter results of HDFC Bank and strong buying in the benchmark indices.
The 30-share Sensex of the Bombay Stock Exchange (BSE) added 317.45 points or 2.93% and closed the day at 11,134.99 points. The broader S&P CNX Nifty of the National Stock Exchange (NSE) ended the day at 3,423.70 points, gaining 93.40 points or 2.8%.
The wholesale price index rose 0.26% for the week ended April 11. The domestic market opened marginally up and turned choppy, tracking mixed cues from US markets. The volatility remained throughout the trading session due to political uncertainty along with earning concerns. However, during the final hours of trading benchmark indices gained some ground on good buying witnessed in benchmark heavyweight and finally closed the day with huge gains.
Amitabh Chakraborty, president, equities, at Religare Securities, said, “The major reason for the markets to end in green was only due to the better-than-expected quarter results of Reliance Industries and HDFC Bank. Till now, results have been better then predicted, I think that markets are likely to go upward in the coming days also.”
Barring consumer durables, all sectors in the BSE ended the day on positive terrain, with IT and metal being the top performers of the day. The breadth of the markets remained strong as out of 2,600 stocks traded on BSE, 1,441 advanced, 1,056 declined while 103 remained unchanged. Among Sensex stocks, 27 ended in green while remaning three stocks closed below the dotted line.
“On Thursday, foreign institutional investors (FII) were net buyers which also had some positive impact on the markets. However since, stocks have rallied in the past few weeks and it will not be surprising if some profit booking can be witnessed in the markets at this level,” added Chakraborty.
The Financial Express, April 24, 2009, Corporates & Markets.
fe Bureau, Mumbai
The markets finally snapped the three-day negative streak and closed the day with some smart gains on the back of strong cues from the Asian and European markets coupled with better-than-expected quarter results of HDFC Bank and strong buying in the benchmark indices.
The 30-share Sensex of the Bombay Stock Exchange (BSE) added 317.45 points or 2.93% and closed the day at 11,134.99 points. The broader S&P CNX Nifty of the National Stock Exchange (NSE) ended the day at 3,423.70 points, gaining 93.40 points or 2.8%.
The wholesale price index rose 0.26% for the week ended April 11. The domestic market opened marginally up and turned choppy, tracking mixed cues from US markets. The volatility remained throughout the trading session due to political uncertainty along with earning concerns. However, during the final hours of trading benchmark indices gained some ground on good buying witnessed in benchmark heavyweight and finally closed the day with huge gains.
Amitabh Chakraborty, president, equities, at Religare Securities, said, “The major reason for the markets to end in green was only due to the better-than-expected quarter results of Reliance Industries and HDFC Bank. Till now, results have been better then predicted, I think that markets are likely to go upward in the coming days also.”
Barring consumer durables, all sectors in the BSE ended the day on positive terrain, with IT and metal being the top performers of the day. The breadth of the markets remained strong as out of 2,600 stocks traded on BSE, 1,441 advanced, 1,056 declined while 103 remained unchanged. Among Sensex stocks, 27 ended in green while remaning three stocks closed below the dotted line.
“On Thursday, foreign institutional investors (FII) were net buyers which also had some positive impact on the markets. However since, stocks have rallied in the past few weeks and it will not be surprising if some profit booking can be witnessed in the markets at this level,” added Chakraborty.
IMF says policy rates in India still high
IMF says policy rates in India still high
The Economic Times, April 24, 2009, Economy, Finance & Markets.
WASHINGTON: The International Monetary Fund on Wednesday said that policy rates of the Reserve Bank are high, even as the central bank had cut the short-term lending and borrowing rates by 25 basis points each yesterday.
"Policy rates remain high in real terms in India and further rate cuts would help bolster credit growth," IMF said in its latest World Economic Outlook.
There is room for additional monetary easing in a number of economies, it said.
The RBI had yesterday slashed short term lending (repo) and borrowing (reverse repo) rates by 25 basis points each to 4.75 per cent and 3.25 per cent respectively.
The Economic Times, April 24, 2009, Economy, Finance & Markets.
WASHINGTON: The International Monetary Fund on Wednesday said that policy rates of the Reserve Bank are high, even as the central bank had cut the short-term lending and borrowing rates by 25 basis points each yesterday.
"Policy rates remain high in real terms in India and further rate cuts would help bolster credit growth," IMF said in its latest World Economic Outlook.
There is room for additional monetary easing in a number of economies, it said.
The RBI had yesterday slashed short term lending (repo) and borrowing (reverse repo) rates by 25 basis points each to 4.75 per cent and 3.25 per cent respectively.
Goldman Sachs CEO sees hopeful signs of US recovery
Goldman Sachs CEO sees hopeful signs of US recovery
The Hindu Business Line, April 24, 2009, Page 17
Our Bureau, Hyderabad
There are some `hopeful signs' of the recovery of the US economy, according to Mr Lloyd Blankfein, Chairman and Chief Executive Officer, Goldman Sachs Group.
"The decay in asset prices has slowed down and there are hopeful signs in the capital markets,'' he said while interacting with the students at Indian School of Business (ISB) here on Wednesday.
When asked about the likely duration of recession, he replied: "I don't know''.
He, however, observed that the feeling of completely falling off the cliff had gone and some dire concerns were removed.
On the performance of Goldman Sachs' group, Mr Blankfein said the business environment was not `ordinary' and he would remain optimistic.
"The investment banking activity is much lower while our transaction activity is above average.
"There are risks and backpeddlers. In general, I think we have gone through the crisis,'' he said.
Addressing students and some participants of `10, 000 Women' programme, launched by Goldman Sachs to train women in entrepreneurship by partnering with ISB last year, he said there was a link between growth and empowering women in business.
"Investing in women would increase the standard of life and ensure sustainable growth," said Mr Blankfein, who flew in his corporate jet, especially to participate in the two-hour programme, which is part of Goldman Sachs global initiative, focussed on the developing countries.
Stating that only 36 per cent of labour force in India was women (compared with 60 per cent average in Brazil, Russia, India and China - BRIC nations), he said higher women workforce would increase the gross domestic product by one per cent.
India was a vibrant economy with strong trends in demography, he said.
"We continue to invest in strong investment banking, securities and asset management presence here.
"Opportunity and growth in India remain as attractive as ever, '' he added.
The Hindu Business Line, April 24, 2009, Page 17
Our Bureau, Hyderabad
There are some `hopeful signs' of the recovery of the US economy, according to Mr Lloyd Blankfein, Chairman and Chief Executive Officer, Goldman Sachs Group.
"The decay in asset prices has slowed down and there are hopeful signs in the capital markets,'' he said while interacting with the students at Indian School of Business (ISB) here on Wednesday.
When asked about the likely duration of recession, he replied: "I don't know''.
He, however, observed that the feeling of completely falling off the cliff had gone and some dire concerns were removed.
On the performance of Goldman Sachs' group, Mr Blankfein said the business environment was not `ordinary' and he would remain optimistic.
"The investment banking activity is much lower while our transaction activity is above average.
"There are risks and backpeddlers. In general, I think we have gone through the crisis,'' he said.
Addressing students and some participants of `10, 000 Women' programme, launched by Goldman Sachs to train women in entrepreneurship by partnering with ISB last year, he said there was a link between growth and empowering women in business.
"Investing in women would increase the standard of life and ensure sustainable growth," said Mr Blankfein, who flew in his corporate jet, especially to participate in the two-hour programme, which is part of Goldman Sachs global initiative, focussed on the developing countries.
Stating that only 36 per cent of labour force in India was women (compared with 60 per cent average in Brazil, Russia, India and China - BRIC nations), he said higher women workforce would increase the gross domestic product by one per cent.
India was a vibrant economy with strong trends in demography, he said.
"We continue to invest in strong investment banking, securities and asset management presence here.
"Opportunity and growth in India remain as attractive as ever, '' he added.
Unitech postpones Rs 500 cr mutual fund debt repayment
Unitech postpones Rs 500 cr mutual fund debt repayment
The Economic Times, April 24, 2009, Page 19
Notwithstanding its successful Rs 1,620-crore Qualified Institutional Placement (QIP) issue, troubled real estate company Unitech has postponed the repayment of a large part of the Rs 500-crore debt it had to pay back to mutual funds by April 19. According to a person familiar with the development, Unitech has repaid a fifth of this amount and rolled over 80% by another 12 months.
When contacted, the company refused to comment. However, a top executive, on condition of anonymity, told ET NOW: “We have restructured most of the debt and paid off some in such a way that all mutual funds have been paid proportionately, but none of their debt has been completely paid off.”
The company has restructured the debt for one year at an interest rate of 13%, much lower than the earlier 18%, said the person with knowledge of the situation. Unitech owed over Rs 500 crore to mutual funds of Reliance, HSBC, Sundaram BNP Paribas, SBI, UTI, Kotak and ING Vysa.
The debt restructuring has taken place at the same time as the company closed its QIP last week. On Wednesday, it formally informed the stock exchanges that it had placed over 420 million shares to 44 QIBs (Qualified Institutions Buyers) at Rs 38.50 a share. A JP Morgan report last week said the issue will result in a 26% dilution of the pre-issue share capital. Company executives told ET NOW that Unitech plans to use the proceeds from the QIP for reducing its debt and launching new projects.
Last week’s successful closure of Unitech’s QIP issue had raised expectations that the real estate company will be able to repay the Rs 500-crore debt on time. But, the company has decided to follow a strategy of postponing the bulk of the repayment by another 12 months.
The Economic Times, April 24, 2009, Page 19
Notwithstanding its successful Rs 1,620-crore Qualified Institutional Placement (QIP) issue, troubled real estate company Unitech has postponed the repayment of a large part of the Rs 500-crore debt it had to pay back to mutual funds by April 19. According to a person familiar with the development, Unitech has repaid a fifth of this amount and rolled over 80% by another 12 months.
When contacted, the company refused to comment. However, a top executive, on condition of anonymity, told ET NOW: “We have restructured most of the debt and paid off some in such a way that all mutual funds have been paid proportionately, but none of their debt has been completely paid off.”
The company has restructured the debt for one year at an interest rate of 13%, much lower than the earlier 18%, said the person with knowledge of the situation. Unitech owed over Rs 500 crore to mutual funds of Reliance, HSBC, Sundaram BNP Paribas, SBI, UTI, Kotak and ING Vysa.
The debt restructuring has taken place at the same time as the company closed its QIP last week. On Wednesday, it formally informed the stock exchanges that it had placed over 420 million shares to 44 QIBs (Qualified Institutions Buyers) at Rs 38.50 a share. A JP Morgan report last week said the issue will result in a 26% dilution of the pre-issue share capital. Company executives told ET NOW that Unitech plans to use the proceeds from the QIP for reducing its debt and launching new projects.
Last week’s successful closure of Unitech’s QIP issue had raised expectations that the real estate company will be able to repay the Rs 500-crore debt on time. But, the company has decided to follow a strategy of postponing the bulk of the repayment by another 12 months.
Discounts help DLF sell W Delhi project
Discounts help DLF sell W Delhi project
Business Standard, April 24, 2009, Page 5
Business Standard, April 24, 2009, Page 5
BS Reporters / Mumbai
DLF Ltd, the country’s largest property developer, has sold an entire housing project in West Delhi by offering flats for as much as 32 per cent less than the market rate.
The New Delhi-based developer, which launched a residential project at Shivaji Marg (better known as Najafgarh Road) on April 7, managed to sell all the 1,400 apartments on offer.
The project is being developed on a 38-acre lot for which DLF paid Rs 1,675 crore in a 2007 auction, making it the biggest land deal of that time. Each apartment will be between 1,200-1,525 sq ft.
The developer had priced the West Delhi project at Rs 6,000-7,000 a sq ft (basic selling price) and offered an initial discount of Rs 1,000 a sq ft, besides an additional one of Rs 500 a sq ft on timely payments. It also offered an 8.5 per cent discount if a customer paid the entire amount within a month of the initial booking, bringing down the effective price to Rs 4,075 per sq ft.
However, in addition to the basic price, customers have to pay preferential location charges varying between Rs 500 and 1,250 per sq ft, depending on what they chose and parking charges varying between Rs 300,000 and Rs 675,000.
Brokers who spoke to Business Standard said those still wishing to buy would be added to the waiting list. A DLF spokesperson confirmed the sale of all apartments but declined to say anything further.
Though brokers in Delhi say the price is good compared with current prices in the area, they say developers are cutting prices to clear their stock quickly, to create liquidity. According to data from property consultant Cushman & Wakefield, the current market price in the nearest comparable residential area is Rs 6,000 a sq ft.
“Apartments are not getting sold easily today. If they have to sell immediately, they have to sell at cheaper rates,” said Anil Singhal, a property broker based in New Delhi.
DLF has been forced to drop prices of some projects after facing opposition from customers. In the past month, it has reduced prices in some of its Chennai, Bangalore and Gurgaon projects by 10-20 per cent.
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