Tuesday, April 28, 2009
Slowdown may continue till 2010, says RBI
Slowdown may continue till 2010, says RBI
The Times of India, April 28, 2009, Page 20
New Delhi: Warning that the worst may not be over yet, Reserve Bank Governor D Subbarao has said the global economic recession may not only continue through 2009 but could prolong to the next year as well.
“Even with current levels of policy intensity, the trough of the global recession is not seen until the end of 2009 and could get pushed out further if the policy responses fail to gain traction,” Subbarao said at the International Monetary Fund-World Bank spring meetings.
Leading the Indian delegation to the International Monetary and Financial Committee meet in Washington, he said India is expected to grow at 6.5% to 6.7% in 2008-09, and the real GDP growth for 2009-10 would be about 6%. A statement by RBI further quoted Subbarao as saying, “The most frequently asked question today is whether the worst is behind us. While there are incipient signs of business confidence and consumer spending trying to gain toehold, rising unemployment, high inventories and financial stress weigh heavily on overall demand conditions,” Subbarao said. PTI
The Times of India, April 28, 2009, Page 20
New Delhi: Warning that the worst may not be over yet, Reserve Bank Governor D Subbarao has said the global economic recession may not only continue through 2009 but could prolong to the next year as well.
“Even with current levels of policy intensity, the trough of the global recession is not seen until the end of 2009 and could get pushed out further if the policy responses fail to gain traction,” Subbarao said at the International Monetary Fund-World Bank spring meetings.
Leading the Indian delegation to the International Monetary and Financial Committee meet in Washington, he said India is expected to grow at 6.5% to 6.7% in 2008-09, and the real GDP growth for 2009-10 would be about 6%. A statement by RBI further quoted Subbarao as saying, “The most frequently asked question today is whether the worst is behind us. While there are incipient signs of business confidence and consumer spending trying to gain toehold, rising unemployment, high inventories and financial stress weigh heavily on overall demand conditions,” Subbarao said. PTI
‘India, China to lead Asian recovery’
‘India, China to lead Asian recovery’
The Times of India, April 28, 2009, Page 20
New Delhi: Driven by India and China, the emerging Asian economies no longer witness slump, which will lead the global recovery, UK financial services major Barclays said on Monday. “The slump in activity in emerging Asia is over. We believe the region returned to positive growth of the aggregate level in the first quarter of 2009 — driven by China and India — and the recovery is broading to the more open industrial economies in 2009,” Barclays Capital, an investment banking arm of Barclays, said.
Barclays capital included 10 Asian economies — India, China, Taiwan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Thailand and Hong Kong.Barclays expected the recovery in Asia to arrive slightly earlier than the rest of the world, reflecting stronger balance sheets. PTI
The Times of India, April 28, 2009, Page 20
New Delhi: Driven by India and China, the emerging Asian economies no longer witness slump, which will lead the global recovery, UK financial services major Barclays said on Monday. “The slump in activity in emerging Asia is over. We believe the region returned to positive growth of the aggregate level in the first quarter of 2009 — driven by China and India — and the recovery is broading to the more open industrial economies in 2009,” Barclays Capital, an investment banking arm of Barclays, said.
Barclays capital included 10 Asian economies — India, China, Taiwan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Thailand and Hong Kong.Barclays expected the recovery in Asia to arrive slightly earlier than the rest of the world, reflecting stronger balance sheets. PTI
India likely to grow at 6%, says Montek
India likely to grow at 6%, says Montek
The Times of India, April 28, 2009, Page 20
Washington: India is expected to record a gross domestic product (GDP) growth rate of 6% in this financial year (2009-10), which will improve further in the next fiscal with likely recovery in the global economy, Planning Commission deputy chairman Montek Singh Ahluwalia said on Friday.
“Next year they (IMF) expect the global economy to improve. I am hoping that our economy will also be able to improve,” he said on the sidelines of the G-20 ministerial meeting.
Although RBI too projected a growth rate of 6% during the current financial year, many global agencies like IMF and World Bank expect the Indian economy to expand by only 5.25% and 4%, respectively.
Noting that the global economy is passing through a very severe phase, Ahluwalia said, “We are weathering it better than most countries.” The India economy during 2008-09, according to advance estimates for national income released by the Central Statistical Organisation (CSO) in February, was estimated to grow by 7.1%, down from 9% in the previous fiscal. PTI
The Times of India, April 28, 2009, Page 20
Washington: India is expected to record a gross domestic product (GDP) growth rate of 6% in this financial year (2009-10), which will improve further in the next fiscal with likely recovery in the global economy, Planning Commission deputy chairman Montek Singh Ahluwalia said on Friday.
“Next year they (IMF) expect the global economy to improve. I am hoping that our economy will also be able to improve,” he said on the sidelines of the G-20 ministerial meeting.
Although RBI too projected a growth rate of 6% during the current financial year, many global agencies like IMF and World Bank expect the Indian economy to expand by only 5.25% and 4%, respectively.
Noting that the global economy is passing through a very severe phase, Ahluwalia said, “We are weathering it better than most countries.” The India economy during 2008-09, according to advance estimates for national income released by the Central Statistical Organisation (CSO) in February, was estimated to grow by 7.1%, down from 9% in the previous fiscal. PTI
Banks continue to park surplus funds with RBI despite rate cut
Banks continue to park surplus funds with RBI despite rate cut
The Hindu Business Line, April 28, 2009, Page 1
Borrowing at a lower rate under CBLO mechanism, making a tidy spread.
K. Ram Kumar, Mumbai
Parking surplus funds with the Reserve Bank of India continues to be an attractive option for banks despite the 25 basis points cut effected in the reverse repo rate last week.
Banks, particularly Government owned, are borrowing against their surplus holding of government securities at a lower rate under Clearing Corporation’s Collateralised Borrowing and Lending Obligation (CBLO) mechanism and deploying the funds at a higher rate with RBI.
By doing so, banks are making a tidy spread of 50-100 basis points a day.
Consider this: If a bank
had borrowed on Monday against its surplus government securities holding at the weighted average interest rate of 2.72 per cent under CBLO and parked the funds at RBI’s Reverse Repo (R/R) window at 3.25 per cent, it stands to make a gain of 53 basis points (100 basis points equals 1 per cent) in just a day.
CBLO is a discounted money market instrument which enables banks and other market participants to borrow and lend funds via electronic book entry. It imposes an obligation on the borrower/lender to return the money borrowed/receive the money lent, at a specified future date. The underlying charge on securities is held in custody (with CCIL) for the amount borrowed/lent.
According to banking sources, the central bank had cut the reverse repo rate on April 21 with the express intention of pushing banks to lend to the productive sectors of the economy. However, due to slack credit offtake, banks with surplus Statutory Liquidity Ratio (SLR) portfolio are making the most of the arbitrage opportunity thrown up by the interest rate differential between CBLO and RBI’s R/R window.
Notwithstanding the reverse repo rate cut, during the last four working days after the RBI’s rate cut, banks, on an average, have parked around Rs 1 lakh crore daily with the RBI.
As of March-end 2009, scheduled commercial banks’ investment in Statutory Liquidity Ratio (SLR) securities — the slice of net demand and time liabilities (NDTL) that banks necessarily have to park in government securities — increased to 28.1 per cent from 27.8 per cent a year ago.
Banks, according to RBI, as of March-end 2009, were holding excess government securities worth Rs 1,13,817 crore or 2.7 per cent over the prescribed SLR of 24 per cent of NDTL.
Considering that at the beginning of April CBLO has seen rates as low as 0.50 per cent, banks would have made a killing, earning a clean return of 3 per cent in just a day.
“Feeble credit offtake coupled with the fear of bad loans going up in the current scenario of economic slowdown is prompting banks to park their surplus funds with the RBI. Not many bankable loan proposals are coming our way. So, it’s a Hobson’s choice for us,” said a senior public sector bank official.
As per RBI’s statistics, scheduled commercial banks have collectively lent Rs 1,429 crore in the fortnight ended April 10, 2009. This, according to bankers, is an indication of a slowdown.
Pointing out that banks continue to flood the central bank’s reverse repo window with surplus liquidity despite the cut in the interest rate, market players feel that the regulator may move to curtail the tendency of banks to park surplus funds by imposing a cap.
The Hindu Business Line, April 28, 2009, Page 1
Borrowing at a lower rate under CBLO mechanism, making a tidy spread.
K. Ram Kumar, Mumbai
Parking surplus funds with the Reserve Bank of India continues to be an attractive option for banks despite the 25 basis points cut effected in the reverse repo rate last week.
Banks, particularly Government owned, are borrowing against their surplus holding of government securities at a lower rate under Clearing Corporation’s Collateralised Borrowing and Lending Obligation (CBLO) mechanism and deploying the funds at a higher rate with RBI.
By doing so, banks are making a tidy spread of 50-100 basis points a day.
Consider this: If a bank
had borrowed on Monday against its surplus government securities holding at the weighted average interest rate of 2.72 per cent under CBLO and parked the funds at RBI’s Reverse Repo (R/R) window at 3.25 per cent, it stands to make a gain of 53 basis points (100 basis points equals 1 per cent) in just a day.CBLO is a discounted money market instrument which enables banks and other market participants to borrow and lend funds via electronic book entry. It imposes an obligation on the borrower/lender to return the money borrowed/receive the money lent, at a specified future date. The underlying charge on securities is held in custody (with CCIL) for the amount borrowed/lent.
According to banking sources, the central bank had cut the reverse repo rate on April 21 with the express intention of pushing banks to lend to the productive sectors of the economy. However, due to slack credit offtake, banks with surplus Statutory Liquidity Ratio (SLR) portfolio are making the most of the arbitrage opportunity thrown up by the interest rate differential between CBLO and RBI’s R/R window.
Notwithstanding the reverse repo rate cut, during the last four working days after the RBI’s rate cut, banks, on an average, have parked around Rs 1 lakh crore daily with the RBI.
As of March-end 2009, scheduled commercial banks’ investment in Statutory Liquidity Ratio (SLR) securities — the slice of net demand and time liabilities (NDTL) that banks necessarily have to park in government securities — increased to 28.1 per cent from 27.8 per cent a year ago.
Banks, according to RBI, as of March-end 2009, were holding excess government securities worth Rs 1,13,817 crore or 2.7 per cent over the prescribed SLR of 24 per cent of NDTL.
Considering that at the beginning of April CBLO has seen rates as low as 0.50 per cent, banks would have made a killing, earning a clean return of 3 per cent in just a day.
“Feeble credit offtake coupled with the fear of bad loans going up in the current scenario of economic slowdown is prompting banks to park their surplus funds with the RBI. Not many bankable loan proposals are coming our way. So, it’s a Hobson’s choice for us,” said a senior public sector bank official.
As per RBI’s statistics, scheduled commercial banks have collectively lent Rs 1,429 crore in the fortnight ended April 10, 2009. This, according to bankers, is an indication of a slowdown.
Pointing out that banks continue to flood the central bank’s reverse repo window with surplus liquidity despite the cut in the interest rate, market players feel that the regulator may move to curtail the tendency of banks to park surplus funds by imposing a cap.
JP Associates to raise Rs 4k cr
JP Associates to raise Rs 4k cr
Financial Express – Corporates & Markets, April 28, 2009, Page XVI
Agencies, Corporate Bureau, Mumbai
Construction firm Jaipraksh Associates Ltd on Monday said its board had approved raising Rs 4,000 crore through private placement/public issue of non-convertible debentures in one or more tranches.
The company, in a statement to the BSE, said, “The funds are to be used for capital expenditure and working capital needs.”
JP Associates shares on Monday were up 3.58% or Rs 4.50 to close at Rs 130.30 on the Bombay Stock Exchange. Meanwhile, the company also announced that it has reported a growth of 83.12 % in its net profit to Rs 385.32 crore for the fourth quarter ended March 31, 2009 against Rs 210.41 crore in the corresponding quarter last year.
The company’s total income from operations jumped 59.94 % during the quarter at Rs 2,151.67 crore. Total income from operations for the corresponding quarter last fiscal was Rs 1,345.28 crore. For the fiscal 2008-2009, the company’s net profit increased 44.54 % at Rs 881.22 crore as compared with Rs 609.67 crore recorded in 2007-2008.
Total income from operations for the last fiscal went up 44.54 % at Rs 6,015.26 crore, compared with Rs 4,161.38 crore in the previous financial year. JP Associates’ FY09 earning per share, EPS stood at Rs 7.44.
The company has also announced that the board of directors of the company at its meeting held on April 27, 2009, inter alia, declared the second interim dividend of Re 0.30 (15%) per equity share of Rs 2/- for the year 2008-2009. Manoj Gaur, executive chairman of Jaiprakash Associates, said the company is guiding Rs 11,000 crore revenues for financial year 2010. This will be distributed among the three divisions; viz;, cement, which would contribute almost Rs 5,500 crore; engineering and construction (E&C), comprising hydropower and expressway construction division, will contribute almost Rs 4,800 crore while real estate will give about Rs 1,000 crore.
Gaur added that the company expects to maintain profitability of about 29-31% on a gross operating margin (GOP) basis.
The company expects FY 2010 revenues to jump more than two-third, driven by growth in all of its three business segments of construction, cement and real estate, Its executive chairman said.
“We are on way for 70 % -plus growth in FY10,” Gaur told reporters. JP Associates in December last year said it will merge Jaypee Hotels, Jaiprakash Enterprises, JP Cement, and Gujarat Anjan with self.
Jaiprakash Associates said its board approved amalgamation of Jaypee Cement, Gujarat Anjan Cement, Jaypee Hotels and Jaiprakash Enterprises with the flagship company. As per the amalgamation plan, Jaiprakash Associates would issue one share of Rs 2 each to the shareholders of Jaypee Cement for every 10 shares of Rs 10 each held in the company. Also, Gujarat Anjan Cement shareholders would be offered one share of Rs 2 each in Jaiprakash Associates for every 11 shares of Rs 10 held in the subsidiary.
Financial Express – Corporates & Markets, April 28, 2009, Page XVI
Agencies, Corporate Bureau, Mumbai
Construction firm Jaipraksh Associates Ltd on Monday said its board had approved raising Rs 4,000 crore through private placement/public issue of non-convertible debentures in one or more tranches.
The company, in a statement to the BSE, said, “The funds are to be used for capital expenditure and working capital needs.”
JP Associates shares on Monday were up 3.58% or Rs 4.50 to close at Rs 130.30 on the Bombay Stock Exchange. Meanwhile, the company also announced that it has reported a growth of 83.12 % in its net profit to Rs 385.32 crore for the fourth quarter ended March 31, 2009 against Rs 210.41 crore in the corresponding quarter last year.
The company’s total income from operations jumped 59.94 % during the quarter at Rs 2,151.67 crore. Total income from operations for the corresponding quarter last fiscal was Rs 1,345.28 crore. For the fiscal 2008-2009, the company’s net profit increased 44.54 % at Rs 881.22 crore as compared with Rs 609.67 crore recorded in 2007-2008.
Total income from operations for the last fiscal went up 44.54 % at Rs 6,015.26 crore, compared with Rs 4,161.38 crore in the previous financial year. JP Associates’ FY09 earning per share, EPS stood at Rs 7.44.
The company has also announced that the board of directors of the company at its meeting held on April 27, 2009, inter alia, declared the second interim dividend of Re 0.30 (15%) per equity share of Rs 2/- for the year 2008-2009. Manoj Gaur, executive chairman of Jaiprakash Associates, said the company is guiding Rs 11,000 crore revenues for financial year 2010. This will be distributed among the three divisions; viz;, cement, which would contribute almost Rs 5,500 crore; engineering and construction (E&C), comprising hydropower and expressway construction division, will contribute almost Rs 4,800 crore while real estate will give about Rs 1,000 crore.
Gaur added that the company expects to maintain profitability of about 29-31% on a gross operating margin (GOP) basis.
The company expects FY 2010 revenues to jump more than two-third, driven by growth in all of its three business segments of construction, cement and real estate, Its executive chairman said.
“We are on way for 70 % -plus growth in FY10,” Gaur told reporters. JP Associates in December last year said it will merge Jaypee Hotels, Jaiprakash Enterprises, JP Cement, and Gujarat Anjan with self.
Jaiprakash Associates said its board approved amalgamation of Jaypee Cement, Gujarat Anjan Cement, Jaypee Hotels and Jaiprakash Enterprises with the flagship company. As per the amalgamation plan, Jaiprakash Associates would issue one share of Rs 2 each to the shareholders of Jaypee Cement for every 10 shares of Rs 10 each held in the company. Also, Gujarat Anjan Cement shareholders would be offered one share of Rs 2 each in Jaiprakash Associates for every 11 shares of Rs 10 held in the subsidiary.
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