Wednesday, July 22, 2009
Montek rules out more stimulus packages
Montek rules out more stimulus packages
The Financial Express, July 22, 2009, Page 2
Press Trust of India, New Delhi
Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday ruled out any more stimulus package for industry as the Budget has given a substantial boost to the slowing economy.
“The Budget includes a very stringent boost, plan expenditure and investment ... We don’t need any more stimulus packages,” Ahluwalia told reporters here.
“We should concentrate on implementing what is there,” he said. The government has cut excise duty by 6% and service tax by 2% in three stimulus packages.
Besides, the fourth stimulus package was given in the Budget for 2009-10. About monsoon, he said, “Monsoon has improved; there was deficient rainfall but deficiency was more earlier —it has reduced now, (and) the monsoon has not ended yet, I think we should wait and see the entire month of July.”
He said if there is continuous improvement in July, the situation will not be that bad. About the impact of the delayed monsoon on GDP, he said, “Now it is too early to say about the condition of the monsoon; this is true that so far there is a problem but the impact of this could be ascertained only when we come to know the total deficiency in rainfall; if it is 5-10% deficit then there would not be much impact.” When asked about the rising prices of food articles and other commodities, he said even if wholesale price inflation is negative, prices of some commodities have surged.
HDFC cuts new loan rates by 25-50 bps
HDFC cuts new loan rates by 25-50 bps
The Economic Times, July 22, 2009, Page 1
Loans Up To Rs 15 Lakh To Be Available At 8.75%
Our Bureau MUMBAI
THE country’s largest home finance company, HDFC, has cut lending rates for new customers by 25-50 basis points. The financial institution has restructured its loan baskets to create a new product where loans up to Rs 15 lakh are available at 8.75% as against 9.25% earlier.
As per the revised structure, loans between Rs 15 lakh and Rs 30 lakh are now available at 9% (against 9.25% earlier) and loans above Rs 30 lakh are priced at Rs 9.5% (9.75%). Following the reduction, the EMI on a Rs 1-lakh loan with a 20-year tenure will shrink to Rs 884.
HDFC’s prime lending rate (PLR) remains unchanged at 13.75%, which means existing borrowers will not see any change in EMIs or cost of fund. A 50-basis point cut in interest rate lowers EMI by around Rs 34 for a Rs 1-lakh loan.
In the present round of cuts, HDFC has reduced rates for new borrowers under its floating rate scheme by widening the spread between the PLR and loan rate.
The rate cut, surprisingly sans wide publicity, comes at a time when most bank chiefs have predicted higher rates due to a bloated government borrowing programme.
HDFC officials were not available for comment. In the past, whenever HDFC cut rates for new customers, company officials justified it by saying the institution was merely passing on a reduction in incremental cost of funds. According to them, the PLR is reduced (and rates for new as well as old borrowers) only when there is a sustained fall in interest rates in the system.
Since December 2008, HDFC’s prime lending rate has fallen by 125 basis points. But the lending rate has fallen more steeply for new borrowers.
Earlier this month, India’s largest bank SBI also revised its home loan scheme for new customers. New borrowers would get loans at 8% for the first year and 9% for the second and third years. From the fourth year, the interest rate would be linked to the bank’s prime lending rate.
There are rumours of HDFC planning a new loan product, which may be announced after the company’s board meeting and AGM on Wednesday. The AGM will also approve Deepak Parekh’s appointment as chairman until end-December ’09. With Mr Parekh deciding to quit as executive chairman, this is likely to be the last AGM with him as the chief executive.
Criminal cases against Maytas Properties promoters
Criminal cases against Maytas Properties promoters
Business Standard, July 22, 2009, Page 2
BS Reporter / Hyderabad
The Hyderabad police has registered cheating and criminal breach of trust cases against the promoters of Maytas Properties, an unlisted company owned by the family of Satyam Computer Services Ltd founder B Ramalinga Raju, who is in jail after confessing to manipulating Satyam’s accounts.
Speaking to Business Standard, Deputy Commissioner of Police (Detective) R S Praveen Kumar said the police registered the cases yesterday following a complaint from a member who bought property at Hill County, Bachupally, a residential project promoted by Maytas Properties on the outskirts of the city.
The complainant told the police that he paid about Rs 77 lakh to buy the property and the company promised to deliver it in March 2008 but did not do so, citing the crash in the real estate market.
The police have registered cases under Section 406 (criminal breach of trust) and Section 420 (cheating). “We will investigate the case based on the complaint,” Kumar said, adding that that the cases were filed against B Rama Raju, Maytas Properties, vice-chairman and younger son of Ramalinga Raju.
People who bought flats at Hill County have been on the warpath for some weeks now since pressure from their monthly loan instalments was building up. They have held demonstrations at the construction site, at Rama Raju’s residence and also staged a hunger strike in protest against the delay.
Hill County is a Rs 1,100-crore project out of which the company has collected Rs 654 crore by selling residential property. It currently has Rs 100 crore as receivables and Rs 200 crore as vendor liabilities. The project envisaged construction of 840 apartments and 326 independent villas. The flats were priced between Rs 50 lakh and Rs 1.5 crore, while the price of villas ranged from Rs 1.5 crore to Rs 2.5 crore.
Last week, the company’s government-appointed director Ved Jain announced that it was looking at parting with a stake in the residential project.
India Inc back on GDR expressway
India Inc back on GDR expressway
Business Standard, July 22, 2009, Page 1
BS Reporter / Mumbai
Tata Steel, Suzlon mop up $700 million; Tata Power to raise $250 million.
India Inc is back in the overseas equity markets with a bang. If Sterlite Industries raised $1.5 billion from the US market last week, Tata Steel and Suzlon Energy today raised $700 million through issue of Global Depository Receipts (GDR) in a move to fund expansions and partly repay liabilities.
Tata Power also joined the queue today and launched its $250-million GDR issue, with an option to retain a higher amount. The fund is expected to be used for setting up greenfield projects, having a capacity of 5,660 Mw at a cost of Rs 25,000 crore. The company had tied up for Rs 18,000 crore debt and was looking at external borrowings.
Tata Steel, the world’s sixth largest steelmaker, raised $500 million (approximately Rs 2,415 crore) through the GDR issue, the largest by an Indian company in the London market, exceeding SBI’s $370-million issue in 1996. Further, wind energy major Suzlon has raised $201.91 million (about Rs 976 crore) by issuing GDRs, as well as Foreign Currency Convertible Bonds (FCCBs).
“We are seeing interest for Indian paper from investors in Asia, India and Europe, though they are being selective,” said Vedika Bhandarkar, managing director and head (investment banking), JP Morgan India.
Citigroup Global Markets, Goldman Sachs International, JP Morgan Securities and UBS arranged the share sale for Tata Steel. Tata Steel shares shot up 5.28 per cent to Rs 411.75 on Tuesday, while the Sensex fell 0.85 per cent. Its GDRs yesterday rose 0.7 per cent to $8.13 on the Luxembourg exchange, extending its gain this year to 81 per cent.
Suzlon shareholders, however, reacted negatively to the securities issue, with the shares falling 3.45 per cent to Rs 90.95 on the Bombay Stock Exchange.
Tata Steel sold 65.4 million shares at $7.644 each as part of the GDR issue. That’s a 6 per cent discount to yesterday’s closing price in Luxembourg. The shares will be listed in London, the company said in a statement.
Suzlon has issued 14.6 million GDRs priced at $7.40 each and each GDR would represent four equity shares of the company.
The Tata GDR will lead to an equity dilution of 7.4 per cent and the total equity capital post issue will be Rs 887.40 crore. The promoters’ stake in the steelmaker will be reduced to 31.16 per cent from 39.87 per cent. After the equity dilution of 3.75 per cent, the promoters’ stake in Suzlon will reduce to 57.58 per cent from 59.82 per cent.
Suzlon has raised $108.04 million through the issue of GDRs and remaining $93.87 million through bonds, the company said in a statement to BSE. The GDRs will be listed on the Luxembourg Stock Exchange.
The fund raised will be used for the expansion of Tata Steel’s largest plant in Jamshedpur and development of overseas mines, said Koushik Chatterjee, Tata Steel group’s chief financial officer. Moreover, company sources said a part of the fund would be used for the acquisitions of iron ore and coking coal mines abroad.
In May, Tata Steel UK, a subsidiary of the Indian steel maker, had received lenders’ approval to reset the covenants in its £3.7 billion Corus acquisition-related debt, after it agreed to infuse £425 million into the European business. As part of the package, around £200 million will be used to prepay debt and de- leverage the European balance sheet, Tata Steel earlier said in a statement.
Suzlon will use the proceedings from the GDR for capital expenditure, working capital and repayment of loans, said an official. However, the fresh FCCB issue is mainly to restructure its earlier $500 million zero-coupon FCCBs. The existing bondholders of the $500 million issue could swap for new convertible bonds. Those who disagree with swap could receive certain fees, said the official.
Tracey Pierce, head of equity primary markets at the London Stock Exchange Group, said “today’s announcement by Tata Steel is a vote of confidence in the continued strength of the London Stock Exchange’s offering to international companies.”
Tata Steel, which became global player after buying Corus for $12 billion in 2007, plans to raise its production in India to 10 million tonne as domestic demand for the metal rises. Corus, which cut 40 per cent production in December, is looking for raw material security to reduce input costs and raise profit margins.
Business Standard, July 22, 2009, Page 1
BS Reporter / Mumbai
Tata Steel, Suzlon mop up $700 million; Tata Power to raise $250 million.
India Inc is back in the overseas equity markets with a bang. If Sterlite Industries raised $1.5 billion from the US market last week, Tata Steel and Suzlon Energy today raised $700 million through issue of Global Depository Receipts (GDR) in a move to fund expansions and partly repay liabilities.
Tata Power also joined the queue today and launched its $250-million GDR issue, with an option to retain a higher amount. The fund is expected to be used for setting up greenfield projects, having a capacity of 5,660 Mw at a cost of Rs 25,000 crore. The company had tied up for Rs 18,000 crore debt and was looking at external borrowings.
Tata Steel, the world’s sixth largest steelmaker, raised $500 million (approximately Rs 2,415 crore) through the GDR issue, the largest by an Indian company in the London market, exceeding SBI’s $370-million issue in 1996. Further, wind energy major Suzlon has raised $201.91 million (about Rs 976 crore) by issuing GDRs, as well as Foreign Currency Convertible Bonds (FCCBs).
“We are seeing interest for Indian paper from investors in Asia, India and Europe, though they are being selective,” said Vedika Bhandarkar, managing director and head (investment banking), JP Morgan India.
Citigroup Global Markets, Goldman Sachs International, JP Morgan Securities and UBS arranged the share sale for Tata Steel. Tata Steel shares shot up 5.28 per cent to Rs 411.75 on Tuesday, while the Sensex fell 0.85 per cent. Its GDRs yesterday rose 0.7 per cent to $8.13 on the Luxembourg exchange, extending its gain this year to 81 per cent.
Suzlon shareholders, however, reacted negatively to the securities issue, with the shares falling 3.45 per cent to Rs 90.95 on the Bombay Stock Exchange.
Tata Steel sold 65.4 million shares at $7.644 each as part of the GDR issue. That’s a 6 per cent discount to yesterday’s closing price in Luxembourg. The shares will be listed in London, the company said in a statement.
Suzlon has issued 14.6 million GDRs priced at $7.40 each and each GDR would represent four equity shares of the company.
The Tata GDR will lead to an equity dilution of 7.4 per cent and the total equity capital post issue will be Rs 887.40 crore. The promoters’ stake in the steelmaker will be reduced to 31.16 per cent from 39.87 per cent. After the equity dilution of 3.75 per cent, the promoters’ stake in Suzlon will reduce to 57.58 per cent from 59.82 per cent.
Suzlon has raised $108.04 million through the issue of GDRs and remaining $93.87 million through bonds, the company said in a statement to BSE. The GDRs will be listed on the Luxembourg Stock Exchange.
The fund raised will be used for the expansion of Tata Steel’s largest plant in Jamshedpur and development of overseas mines, said Koushik Chatterjee, Tata Steel group’s chief financial officer. Moreover, company sources said a part of the fund would be used for the acquisitions of iron ore and coking coal mines abroad.
In May, Tata Steel UK, a subsidiary of the Indian steel maker, had received lenders’ approval to reset the covenants in its £3.7 billion Corus acquisition-related debt, after it agreed to infuse £425 million into the European business. As part of the package, around £200 million will be used to prepay debt and de- leverage the European balance sheet, Tata Steel earlier said in a statement.
Suzlon will use the proceedings from the GDR for capital expenditure, working capital and repayment of loans, said an official. However, the fresh FCCB issue is mainly to restructure its earlier $500 million zero-coupon FCCBs. The existing bondholders of the $500 million issue could swap for new convertible bonds. Those who disagree with swap could receive certain fees, said the official.
Tracey Pierce, head of equity primary markets at the London Stock Exchange Group, said “today’s announcement by Tata Steel is a vote of confidence in the continued strength of the London Stock Exchange’s offering to international companies.”
Tata Steel, which became global player after buying Corus for $12 billion in 2007, plans to raise its production in India to 10 million tonne as domestic demand for the metal rises. Corus, which cut 40 per cent production in December, is looking for raw material security to reduce input costs and raise profit margins.
LIC Housing June quarter profit up 18%
LIC Housing June quarter profit up 18%
The Hindu Business Line, July 22, 2009, Page 6
Our Bureau, Mumbai
LIC Housing Finance reported an 18 per cent growth in net profit at Rs 124 crore in the first quarter of this fiscal, against Rs 105 crore in the corresponding quarter last year.
If it were not for a marginal drop in net interest margin in this quarter and a three-digit growth in net profit in the first quarter of 2008-09, the profits would have been higher, said Mr R.R Nair, Director and Chief Executive, LIC Housing Finance.
The company’s NIM was at 2.45 per cent (2.66 per cent).
“The NIM will improve as our incremental cost of funds is coming down. We hope to maintain a NIM of 2.7-2.8 per cent in this fiscal,” said Mr Nair.
The aim is to build the portfolio rather than to target good margins, he said.
Incremental cost of funds came down to 7.13 per cent (8.93 per cent).
The company's disbursals grew at 60 per cent in the June ended quarter.
The Hindu Business Line, July 22, 2009, Page 6
Our Bureau, Mumbai
LIC Housing Finance reported an 18 per cent growth in net profit at Rs 124 crore in the first quarter of this fiscal, against Rs 105 crore in the corresponding quarter last year.
If it were not for a marginal drop in net interest margin in this quarter and a three-digit growth in net profit in the first quarter of 2008-09, the profits would have been higher, said Mr R.R Nair, Director and Chief Executive, LIC Housing Finance.
The company’s NIM was at 2.45 per cent (2.66 per cent).
“The NIM will improve as our incremental cost of funds is coming down. We hope to maintain a NIM of 2.7-2.8 per cent in this fiscal,” said Mr Nair.
The aim is to build the portfolio rather than to target good margins, he said.
Incremental cost of funds came down to 7.13 per cent (8.93 per cent).
The company's disbursals grew at 60 per cent in the June ended quarter.
Mumbai most preferred for property investing: survey
Mumbai most preferred for property investing: survey
Business Standard, July 22, 2009
Press Trust of India / Chennai July 21, 2009, 19:13 IST
The country's financial capital Mumbai ranked as the most preferred destination for investing in properties, while Chennai has displaced Bangalore in the South, a survey conducted by an online portal said here today.
The survey, "Trend in residential space across top cities in the current scenario" conducted by Indiaproperty.com, a unit of Consim Info (formerly BharatMatrimony group), ranked Mumbai as the most preferred destination to invest in property while in South, Chennai was the first place for property investments, overtaking Bangalore.
Cities like Patna, Nashik, Tiruchirapalli and Madurai have also become favourite destinations for property investments, the survey said.
It said 60 per cent of respondents felt interest rates for home loan would come down further in the coming months, while 40 per cent evinced interests on properties with an area between 500 sq ft and 1,000 sq ft.
Over 3,000 people from the metros and other cities, including Pune, Thane, Coimbatore, Ahmedabad and Vadodara participated in the survey.
"Market sentiments are reviving and people are willing to invest. Based on our survey, more than 60 per cent of customers are looking at buying residential properties in the next six months. They also are expecting a lowering of interest rates on home loans," Consim Info Founder and CEO Murugavel Janakiraman said.
Business Standard, July 22, 2009
Press Trust of India / Chennai July 21, 2009, 19:13 IST
The country's financial capital Mumbai ranked as the most preferred destination for investing in properties, while Chennai has displaced Bangalore in the South, a survey conducted by an online portal said here today.
The survey, "Trend in residential space across top cities in the current scenario" conducted by Indiaproperty.com, a unit of Consim Info (formerly BharatMatrimony group), ranked Mumbai as the most preferred destination to invest in property while in South, Chennai was the first place for property investments, overtaking Bangalore.
Cities like Patna, Nashik, Tiruchirapalli and Madurai have also become favourite destinations for property investments, the survey said.
It said 60 per cent of respondents felt interest rates for home loan would come down further in the coming months, while 40 per cent evinced interests on properties with an area between 500 sq ft and 1,000 sq ft.
Over 3,000 people from the metros and other cities, including Pune, Thane, Coimbatore, Ahmedabad and Vadodara participated in the survey.
"Market sentiments are reviving and people are willing to invest. Based on our survey, more than 60 per cent of customers are looking at buying residential properties in the next six months. They also are expecting a lowering of interest rates on home loans," Consim Info Founder and CEO Murugavel Janakiraman said.
Multiplex boom in Chennai
Multiplex boom in Chennai
The Economic Times, July 22, 2009
21 Jul 2009, 1909 hrs IST, Nandini Sivakumar, ET Bureau
CHENNAI: At 120 screens and 60,000 seats, Chennai’s voracious appetite for movies has seemingly not been satiated. A number of upcoming mutiplexes is set to change the average Chennai movie-goer’s cinematic experience. As many as six multiplexes are set to be operational in the next year and a half, with 40 screens and 8,000 seats in all.
After Inox, it is now the turn of other national players like PVR Cinemas and Fame India to turn their attention to Kollywood capital Chennai. PVR Cinemas, which will make its debut in the Chennai market with seven screens at Ampa Skywalk on Nelson Manickam Road this October, will be the first in a string of multiplexes. PVR operates more than 100 screens across the country.
Mumbai-based Fame Cinemas too has signed up with Spectrum Mall that’s coming up in Perumbur. "We are planning a five-screen multiplex with a total seating capacity of 1,400 seats. Fame Cinemas will run the multiplex," said Mr Senthilkumar of Ganga Foundations, which is executing the project.
While PVR Cinemas operates multiplexes in both Bangalore and Hyderabad, Fame operates one multiplex and one single-screen cinema hall in Bangalore.
They are also said to be in talks with the two-decade-old National Theatres, which is currently being reconstructed to house five screens. Chennai-based Gemini Studios is also said to be in the fray for the same.
Chennai currently has under ten multiplexes, Sathyam Cinemas, Inox Chennai, Mayajaal and Abirami Mega Mall being some prominent ones. So, how will the city, whose average theatre occupancy stands at a dismal 45%, react once all these mutiplxes are up and running?
People who did not travel long distances to catch movies at the handful of existing multiplexes will now have the opportunity to do so in their neighbourhood, thus, increasing occupancy rates, feels Chennai Theatre Owners Association president and Abirami Mega Mall managing director Ramanathan.
Citing the example of Maharashtra that has hundreds of multi-screen theatres, he said that the emergence of the multiplex culture will also lead to filmmakers making smaller films targeted at this urban crowd, the way it is in Bollywood. "The kind of movies being made will also change. There will be lesser unnecessarily lavish ones. It is a healthy trend," he opined.
But there are some who are not so optimistic. "I don’t know if Chennai has the potential for so many new screens. I think players will end up eating into each other’s business," Inox, Chennai, general manager Vivek Vettah told ET. Inox has a four-screen multiplex at City Centre Mall that opened to the public in January 2007.
Home-grown multiplex Sathyam Cinemas too is on the expansion mode, with its eight-screen multiplex in Express Avenue expected to be ready early next year. "We are also talking to a couple of other upcoming malls," Sathyam Cinemas COO Tan Ngaronga told ET, refusing to mention the names they are considering.
Meanwhile, PVR and Sathyam have got necessary no-objection-certification and license from the authorities to run multiplexes. National Theatres’ papers are currently being processed for conversion to a five-screen unit from the existing single-screen. The other malls are in various stages of construction and are expected to apply for license soon.
To add to the multiplex experience, a number of single-screen theatres too converting to muti-screen units — Royal Theatre in Villivakkam (four screens), Murali Krishna in Mint (four-five screens) and National Theatre in Virugambakkam (five screens).
Royal Theatre has just completed conversion into a four-screen complex and is set to launch shortly, while work is underway at National Theatre, the no-objection-certificate for which is being processed by the Public Works Department.
South, west cement companies may crumble on steep price corrections
South, west cement companies may crumble on steep price corrections
Business Standard, July 22, 2009
Chandan Kishore Kant / Mumbai July 22, 2009, 0:47 IST
Cement makers in north, central and east India are likely to be the least affected due to the expected cement price correction in the coming quarters. Demand in these regions is anticipated to remain robust, thereby ruling out the possibility of steep price cuts.
The south- and west-based companies will bear the brunt as these two regions have already shown less than the average national demand growth.
Analysts tracking the cement industry told Business Standard that southern and western regions would be the first to crumble as capacity utilisation had dipped considerably and players had started offering discounts on the building material. They added that the southern market would see the steepest cuts, which were expected to begin from the current quarter onwards.
However, experts are maintaining their positive outlook for companies based in other regions. India Infoline, in its recent note, said north and central regions would have stable prices. “We continue to be positive on north-based companies and negative on south-based companies,” the note added.
Companies, including Shree Cement, JK Lakshmi, JK Cement, Binani Cement, Lafarge and Grasim, which have larger exposure to north, east and central markets, will be relatively comfortable for a longer period. However, companies like India Cement, Madras Cement and Dalmia Cement may have to bear the brunt.Giants such as ACC, Ambuja and UltraTech, which have pan-India presence, are expected to see partial impact.
The northern and eastern markets have witnessed an average rise of Rs 7-10 a bag (1 bag = 50 kg) in the last one month, whereas in the central part, in cities like Lucknow, prices have shot up by as much as Rs 40 a bag in the past one month on the back of huge spending by the state government on infrastructure projects.
However, the southern region is lagging behind as discounts ranging between Rs 3 and Rs 10 are prevailing in the market as increase in infrastructure spending is not sufficient at a time when newer capacities are in stabilisation mode in the region.
In the April-May period (y-o-y), according to the latest statistics from the Cement Manufacturers’ Association, the central region outperformed the country’s average consumption growth of 11 per cent by registering a rise of 22 per cent in consumption.
Business Standard, July 22, 2009
Chandan Kishore Kant / Mumbai July 22, 2009, 0:47 IST
Cement makers in north, central and east India are likely to be the least affected due to the expected cement price correction in the coming quarters. Demand in these regions is anticipated to remain robust, thereby ruling out the possibility of steep price cuts.
The south- and west-based companies will bear the brunt as these two regions have already shown less than the average national demand growth.
Analysts tracking the cement industry told Business Standard that southern and western regions would be the first to crumble as capacity utilisation had dipped considerably and players had started offering discounts on the building material. They added that the southern market would see the steepest cuts, which were expected to begin from the current quarter onwards.
However, experts are maintaining their positive outlook for companies based in other regions. India Infoline, in its recent note, said north and central regions would have stable prices. “We continue to be positive on north-based companies and negative on south-based companies,” the note added.
Companies, including Shree Cement, JK Lakshmi, JK Cement, Binani Cement, Lafarge and Grasim, which have larger exposure to north, east and central markets, will be relatively comfortable for a longer period. However, companies like India Cement, Madras Cement and Dalmia Cement may have to bear the brunt.Giants such as ACC, Ambuja and UltraTech, which have pan-India presence, are expected to see partial impact.
The northern and eastern markets have witnessed an average rise of Rs 7-10 a bag (1 bag = 50 kg) in the last one month, whereas in the central part, in cities like Lucknow, prices have shot up by as much as Rs 40 a bag in the past one month on the back of huge spending by the state government on infrastructure projects.
However, the southern region is lagging behind as discounts ranging between Rs 3 and Rs 10 are prevailing in the market as increase in infrastructure spending is not sufficient at a time when newer capacities are in stabilisation mode in the region.
In the April-May period (y-o-y), according to the latest statistics from the Cement Manufacturers’ Association, the central region outperformed the country’s average consumption growth of 11 per cent by registering a rise of 22 per cent in consumption.
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