Inflation rate stays in negative for the second week
The Hindu Business Line, June 26, 2009, Page 7
Wholesale Price Index for all commodities at 234.2.
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The inflation declined marginally by 1.14 per cent during the week ended June 13.
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Our Bureau, New Delhi
Wholesale price inflation continued in the negative for a second straight week. The annual WPI-based inflation declined by 1.14 per cent during the week ended June 13, easing marginally from the minus 1.61 per cent recorded in the previous week, according to a data released by the Ministry of Commerce and Industry here on Thursday.
Year-on-year inflation was recorded at 11.80 per cent during the corresponding week of the previous year.
The whole sale price index was 234.2 points for the week ended June 13 from 236.9 in the same week a year ago.
On a disaggregated basis, the Primary Articles group recorded a marginal decline in inflation during the latest reported week to 5.7 per cent from 5.8 per cent in the previous week.
Food items
In food articles, inflation fell to 8.65 per cent from 8.71 per cent in the week ended June 6, 2009 due to fall in inflation in cereals.
In non-food articles, inflation deepened to (-) 1.3 per cent from (-) 0.9 per cent in the earlier week. In the ‘minerals’ subgroup, inflation remained unchanged at 4.2 per cent for the third consecutive week.
In the fuel and power index, inflation eased fractionally from (-) 12.8 per cent in the week of June 6 to (-) 12.6 per cent in the current week.
Manufactured products
In manufactured products, inflation during the week ended June 13 accelerated by almost 80 basis points to 0.8 per cent, from 0 per cent in the previous week.
The increase is on account of textiles (cotton textiles), rubber and plastic products (tubes), chemicals and chemical products (drugs and medicines), and transport equipment and parts
Inflation in the food index, which has a cumulative weight of 25.43 per cent in the index, came down to 9.2 per cent from 9.4 per cent in the week ended June 6, 2009.
Inflation ruled higher in the sub-groups of pulses, eggs, meat and fish, condiments and spices in primary food articles, while the sub-group of sugar, khandsari and gur in manufactured food products continues to record rising double digit levels. However, inflation in edible oils has been negative since the beginning of 2009-10.
Falling wholesale prices are only a statistical feature and do not mean India is suffering from deflation, the RBI Governor, Mr D. Subbarao, said June 20.
For the week ended April 18, the final WPI for ‘All Commodities’ stood at 232.6 points as compared to the provisional estimate of 230.2 points and the annual rate of inflation based on final index, calculated on point to point basis, stood at 1.62 per cent as compared to the earlier estimate of 0.57 per cent.
Friday, June 26, 2009
Inflation rate stays in negative for the second week
We are seeing a huge demand for home loans
Business Standard, June 26, 2009, Section II, Page 2
Q&A: R R Nair, Director and chief executive, LIC Housing Finance
Sudeep Jain / Mumbai
After weathering the December quarter, when the liquidity crunch was at its peak, LIC Housing Finance recorded a healthy 37 per cent growth in net profit for 2008-09. RR Nair, director and chief executive, tells Sudeep Jain that the company has revised its growth target for the year.
How is business in this quarter?
This quarter has been very good for us and we are seeing a huge demand for home loans. In the first two months of this financial year, we disbursed around Rs 2,000 crore fresh loans, which translates into 50 per cent year-on-year growth. Loan approvals have increased at a much higher pace. And this growth has been driven by retail, not project finance. After the election results, a number of projects that were struggling due to lack of funds have come back on track. Builders appear to have become more confident and the market looks good.
Are there any particular markets where you are seeing good growth?
Yes, NCR (national capital region), Mumbai and Bangalore. These markets were the most affected by the demand slump that we saw towards the end of last year. In my view, home prices have more or less bottomed out and in a few months, we may even see them go upwards.
What is your growth target for the current year?
Earlier, we had set a target of 25 per cent growth in incremental advances. But considering the way the demand has picked up in the past few months, we may see 30-40 per cent growth.
What is you liabilities mix at the moment?
NCDs (non-convertible debentures) account for 48 per cent of our liabilities while bank term loans account for 30 per cent. The rest is a mix between commercial paper, National Housing Bank refinance and foreign borrowing.
How are you doing on cost of funds?
The December quarter was very tough for everyone and our cost of funds had gone up to 12 per cent. Now, it has come down to around 9 per cent. The cost of incremental advances is even lower, somewhere around 8 per cent.
With the LIBOR (London Interbank Offered Rate) at record lows, are you looking at raising funds through the external commercial borrowing route?
The LIBOR is quite low and the spreads are high, but add-on costs, such as the cost of hedging against currency fluctuations, are still quite high. Right now, domestic availability of funds is good. It doesn’t make sense to look overseas for funds unless there is a price advantage.
What is the situation on the non-performing assets (NPAs) front?
We have been consistently reducing our NPAs for the last four years. In 2005, gross NPAs were 4.6 per cent. At the end of the previous financial year, they were 1.07 per cent. This year, they will be below 1 per cent.
How is your new financial services company, LIC Housing Finance Financial Services, doing?
LICHFL started operations in April and has five offices. We will have 30 offices by the end of the second quarter. Over the next three-four years, we plan to set up 300-400 offices. The company will employ about 30,000 people. The company will help us improve our distribution reach — hopefully, it will double our distribution capacity and our business over the next three-four years.
Unitech net slides 28% at Rs 1,197 cr
The Financial Express, Corporates & Markets, June 26, 2009, Page 1
fe Bureau, New Delhi
The country’s second largest real estate developer, Unitech Ltd, on Thursday reported a 28% dip in its net profit at Rs 1,197.71 crore for the financial year 2008-09. The company's total income fell by 22.5% at Rs 3,315.84 crore. Net profit during the previous fiscal stood at Rs 1,661.86 crore while total income was Rs 4,280.11 crore. Unitech did not separately give its earnings for the fourth quarter (January-March) period.
Struck with the liquidity crunch and slip in demand for its high-end and luxury projects, the developer has joined the league of real estate developers embarking upon the low-cost housing projects to generate more cash flows.
Its rival, the country's largest real estate developer, DLF, too posted a decline in its earnings in April with its net profit for the year fell by 41% at Rs 4,629 crore, from Rs 7,812 crore in 2007-08. Revenues also plummeted by 28% at Rs 10,541 crore as against Rs 14,684 crore during the previous year.
Sanjay Chandra, managing director of Unitech said, "During the quarter, while continuing to take measures to address the liquidity issues, the company successfully reoriented its product mix towards affordable housing. The company's new projects in the affordable housing segment received overwhelming response from customers".
However, the announcement that its immediate debt position was not under stress as it has managed to reschedule its repayments and good response to its low-cost, affordable housing projects saw the company's shares on the BSE closing up 5.19% at Rs 82.05.
Of its total reserves of over Rs 4,800 crore in the balance sheet, the company held Rs 644 crore as cash reserves. Also the company held debt to the tune of Rs 9,000 crore at the end of the financial year. The company also declared a dividend of 5% for the fiscal ended March 31, 2009.
The company had raised $550 million in the last two months through share and asset sales, and its debt position was comfortable after rescheduling most of its loan, Chandra had earlier stated.
The company, which is planning to become the largest residential real estate developer in the country, said: "Enthused by the overwhelming response for our new projects, we have set a target to launch 30 million sqft of space in the current fiscal. Of this, we expect to get bookings for about 20 million sqft."
The company said it was confident of generating sufficient cash flows from the sale of real estate products as well as non-core asset sales to meet its debt obligations and for the construction and other expenses for the current fiscal.
The earning per share for the year was Rs 7.37 on an equity base of Rs 324.68 crore. Total paid-up capital was represented by 162.34 crore equity shares of the face value of Rs 2 each.
Earlier this week, Unitech had informed the stock exchanges that the promoters had revoked over 5 crore shares pledged with lenders, bringing down the total pledged stake to 24.42%.
The promoters held a 64.52% stake in the company in March. The founders had pledged about 80.83 crore shares or 49.79% to lenders. Following the revocation, the total pledged stake of the promoters has come down to 24.42%, according to the company.
Unitech net jumps 105% to Rs 280 cr
Unitech net jumps 105% to Rs 280 cr
The Economic Times, June 26, 2009, Page 15
Our Bureau NEW DELHI
REAL estate company Unitech has posted a 105% jump in net profit at Rs 280 crore and a 48% rise in net sales at Rs 752 crore for the fourth quarter ended March ‘09 supplemented by other income of Rs 300 crore. This other income was generated from the company’s joint ventures in real estate and telecom sectors.
It includes interest accrued on the capital deployed in the real estate JV and the telecom venture Unitech Wireless, besides the services provided by Unitech to its telecom joint venture, Unitech head of corporate planning R Nagraju said.
The services to Unitech Wireless comprised providing manpower as Telenor had still not hired people. Unitech had also lent around Rs 900 crore as debt to Unitech Wireless, 64% owned by Norway’s Telenor. Following the infusion of equity by Telenor, Unitech Wireless has repaid Rs 400 crore to Unitech.
Unitech, which for months had been struggling to repay debt, now says it’s comfortably placed to honour its commitments to service debt, following fund raising through a qualified institutional placement(QIP) and increased sale of mid and low income homes.
Unitech has used Rs 700 crore of the total Rs 1,680 crore raised through the QIP to repay debt. Rest of the funds are being deployed in projects, Mr Nagraju said. He said Rs 1,000 crore would be due for repayment in the next nine months. The company claimed to have sold around 3,000 mid-income houses in the past four months and stated that if the demand continue like this, it will generate surplus cash this fiscal.
Small town, big return
ET Realty, June 26, 2009, Page 1
Demand for houses in small towns have witnessed a spur in economic activities
Vivek Shukla
For three years, Sunil Negi, a banker, has been trying to fulfill his long cherished dream of purchasing a house of his own, either in Delhi or in Bhopal, the city of where his in-laws reside. But his budget of Rs 25 lakh was not enough to fulfill his dream. But he looked beyond these two cities to make his dream come true. Negi finally zeroed in on a property in Rudrapur, a small town in Uttarakhand. In the process, he has become one of the many buyers who are purchasing houses in smaller cities.
Rudrapur is among a host of towns like Almora, Bhiwadi, Neemrana, Ghaziabad, Haldwani, Meerut and Karnal that have started attracting buyers. Small cities closer to the big cities are responsible for revival in the realty market, albeit slowly. According to Sanjeev Shrivastava, director, Assotech group, their projects in Gwalior, Rudrapur and Bhubaneswar are getting huge response. Developers who are building projects in smaller cities are getting positive response.
"In places like Meerut, Rudrapur and Haldwani, a two bedroom apartment costs Rs 15 lakh to Rs 18 Lakh. It is within reach for working people," said Sanjay Shrivastava, a Delhi based journalist, who has recently booked a flat in Meerut. "The main reason for realty development at these places is that metro cities and many big cities have reached the saturation point," said Devinder Gupta, CMD, global realty consultancy Century 21 India
Experts say that in smaller places, land is still available at reasonable rates. Industries are coming up. There is overall development. Hence, one should not think twice to book flats in small towns. Those fetch good returns.
Sunil Jindal, CEO of SVP builders says, "It is high time that those who only search for their houses in metro cities should think of smaller towns. Even in Ghaziabad, one can buy good house at less than Rs 25 lakh. The very same flat you would not get less than Rs 50 lakh in Delhi." Interestingly, rather than the big players, the smaller ones are benefiting from the realty boom in smaller cities and towns, which have shown no sign of being affected by the slowdown that has otherwise gripped the realty sector.
Ansal FY09 net dips 81% to Rs 32.54 cr
Ansal FY09 net dips 81% to Rs 32.54 cr
The Economic Times, June 26, 2009, Page 15
MUMBAI: Ansal Properties & Infrastructure on Thursday reported a decline of 81.24% in its consolidated net profit at Rs 32.54 crore for the year ended March 2009, over the previous year. The company had a net profit of Rs 173.52 crore for the year ended March 31, 2008, Ansal Properties & Infrastructure said in a filing to the Bombay Stock Exchange. Total sales of the company declined to Rs 740.97 crore for the year ended March 2009, from Rs 996.68 crore in the same period last year. The board of directors has proposed a dividend of 50 paise a piece for the year ended March 2009.—PTI
Thursday, June 25, 2009
Met confirms below normal rainfall fears
Met confirms below normal rainfall fears
The Economic Times, June 25, 2009, Page 1
Our Bureau NEW DELHI
FINALLY, the met department has changed its mind on the rains: this year’s south-west monsoon would be below normal for the country as a whole—for the first time in four years—and not normal as forecast earlier.
The silver lining is that there is little chance of a drought, with rains in July-August expected to make up for the initial deficit in the north-west, the main grain-growing regions of Punjab and Haryana. 
Still, the latest official prognosis of the rains, a lifeline to many a sector, spells grief for the economy trying to recover from the fallout of the slowdown. Analysts and industry captains voiced the same concern: poor rains could lower farm output, raise prices and dent rural demand and have a spiralling effect on corporate profitability and market sentiment.
An anxious industry is not pushing the panic button yet, preferring to watch the rains progress. “If the delay in monsoon is for some days, it may not be an issue of concern. However, if the agricultural season misses the monsoon by a considerable time frame, we may have a problem at hand. In both the cases, the government should be prepared to take corrective action in order to ensure that food prices are kept in check,” said Ficci president Harsh Pati Singhania.
The Centre too is keeping a close eye on the progress of the rains. It will meet state agriculture ministers on Thursday in the Capital.
Some states are taking proactive steps to make use of available water via irrigation. The Punjab government has, in this sweltering heat, banned the use of air conditioners in all government offices, boards and corporations with immediate effect till June 30, 2009. This is to ensure 8 hours of uninterrupted power supply in the farm sector for planting paddy.
“Quantitatively, monsoon season rainfall for the country as a whole is likely to be 93% of the long period average (LPA) with a model error of +/- 4%,” the India Meteorological Department’s (IMD) long-range forecast update for the 2009 south-west monsoon said on Wednesday.
Minister of state for science and technology Prithviraj Chavan confirmed the development. “South-west monsoon from June to September is likely to be below normal.”
Both the north-eastern and the peninsular regions of the country are likely to get below normal rains while the north-west would have deficient rains. Central India, which is yet to receive rains, is expected to have a normal monsoon.
The IMD, meanwhile, sought to underplay the role of El Nino in the poor monsoon progress thus far, going to the extent of vehemently denying that any “droughtlike” situation prevailed currently.
SBI cuts BPLR by 50 bps to 11.75%
SBI cuts BPLR by 50 bps to 11.75%
The Financial Express, June 25, 2009, page 1
BS Reporter / Mumbai
State Bank of India, the country’s largest lender, today announced a 50 basis point reduction in its benchmark prime lending rate (BPLR) to 11.75 per cent.
The rate cut would be effective from Monday, the bank said in a statement this evening. With the latest reduction, SBI has lowered its BPLR by 200 basis points since last November when the Reserve Bank of India signaled a soft interest rate regime. In contrast, players such as Punjab National Bank have lowered their BPLR by 300 basis points.
SBI’s move comes within a fortnight Finance Minister Pranab Mukherjee asked public sector banks to lower interest rates. Other players such as Union Bank of India and United Bank of India have also announced rate cuts. United Bank also announced today that it would reduce the BPLR by 25 basis points to 12 per cent with effect from July 1.
By staggering the rate cut decision to the end of the first quarter of the current financial year, banks would be able to show a healthy net interest margin for April-June, an executive with a private bank said.
While SBI had lowered deposit rates on four occasions during the first quarter of the current financial year, it had not reduced the BPLR fearing an adverse impact on the net interest margin (NIM). The BPLR was last lowered in January and since then SBI had been lowering lending rates on certain products such as home and auto loans and loans to small and medium enterprises.
The public sector players is seeing rigidity in its cost of funds as it had mopped up retail deposits by offering rates of 10.5 per a year for 1,000 days. While it is unable to reset interest rates on these deposits up to October 2011, its earnings from advances would drop immediately after the rate cut. As a result, SBI’s NIM fell by 14 basis points to 2.93 per cent at the end of March 2009, as against 3.07 per cent a year ago. During the fourth quarter, NIM fell by 22 basis points as the bank had raised around Rs 1,000 crore a day through retail deposits in the third quarter and the early part of the fourth quarter.
But bank executives said that the impact of the BPLR reduction on NIM would be 5-6 basis points. “The effect on NIM is limited as the bank has aggressively reduced its deposit rates,” said a senior SBI executive.
Land, food bills to be placed in Budget session
The Financial Express, June 25, 2009, Page 1
Economy Bureau, New Delhi
With only a few days to go for the Budget session of the Lok Sabha to begin, parliamentary affairs minister Pawan Kumar Bansal is scheduled to meet top officials of government departments and ministries on Thursday to draw up a list of bills to be introduced in the session.
The government’s top priority in the session, however, will be to re-introduce the amendment bills to the Land Acquisition Act of 1894 and the Rehabilitation & Resettlement Bill, Bansal said on Wednesday, speaking at the Idea Exchange programme of the Indian Express group.
Bansal also indicated that the Congress party’s election promise of a National Food Security Act will find a place in the session, although a decision is yet to be taken on introducing key financial sector bills. “Our flagship programmes will be given top priority. Road connectivity and telephone connectivity in the rural areas across the country will be on the agenda and the food security bill will also be considered,” he said.
When asked about financial sector reforms, including the insurance laws amendment bill, Bansal said, “The decision is entirely vested with the finance ministry, but we wish to bring reform in the insurance sector and reduce foreign direct investment caps. The hike in voting rights in banks, which was not passed by the 14 th Lok Sabha, will also be considered,” the minister said.
The UPA has promised to carry forward its agenda of financial sector reforms in insurance, pensions and banking this term. While the Insurance Laws (Amendment) Bill to raise the FDI cap in the sector to 49% was introduced in the Rajya Sabha — making it non-lapsable —the other seven bills will have to be introduced afresh in the Lok Sabha.
Although the bills on land acquisition & resettlement were passed by the 14 th Lok Sabha, they were ‘obstructed’ in the Rajya Sabha and have lapsed. The Resettlement & Rehabilitation and Land Acquisition Amendment Bills, aimed at preventing large-scale displacement of people during land acquisitions for projects like special economic zones, allow states to acquire 30% of land for private developers only after the developers had acquired 70% directly from farmers.
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