Monday, April 20, 2009
PM Panel pegs growth at over 7% this fiscal
PM Panel pegs growth at over 7% this fiscal
The Financial Express, April 18, 2009, Page 2
Press Trust of India, New Delhi
Prime Minister’s Economic Advisory Council (PMEAC) on Friday said it expects the country’s economy to grow at over 7% in the current fiscal as it has already started showing signs of recovery.
“7% plus is what my 2009-10 overall forecast is...I think it has already started recovering in my own assessment,” PMEAC chairman Suresh Tendulkar said on the sidelines of a conference on broadband here. He further said he expects rebound in the economy after September as the worst was over. “I have been maintaining that the worst is already over, (I expect) good recovery after September,” Tendulkar added.
Asked if the contracting industrial production worried him, he said the revised industrial production numbers were higher than the provisional ones, so it did not bother him much.
Despite three stimulus packages announced by the government, the Indian economy grew by 5.3 % in the third quarter of the last fiscal, its lowest rate in over five years, against a whopping 8.9% a year ago.
In the first nine months of last fiscal, the economy grew by 6.9%. For whole of 2008-09, the advance estimates of Central Statistical Organisation (CSO) pegged the economic growth at 7.1%, which seems a tough task in the wake of dismal industrial growth numbers.
On account of slackening demand hitting Indian trade more than anticipated, PMEAC lowered the country’s growth estimate to 6.5-7% from the earlier estimate of 7.1% for 2008-09. The government came out with three stimulus packages in December, January and in the interim Budget, providing sops to various sectors.
09 to be awful year: IMF chief
09 to be awful year: IMF chief
The Financial Express, April 18, 2009, Corporates & Markets, Section II, Page 2
Lalit K Jha, Washington, Apr 17 (PTI)
Observing that the current economic crisis has hit every nook and corner of the world, the head of the International Monetary Fund on Thursday said 2009 is going to be an awful year for economies across the globe.
"2009 will almost certainly be an awful year... We expect global growth to enter deeply into a negative territory," IMF Managing Director Dominique Strauss-Kahn told reporters in his address to the National Press Club here.
The crisis, which originated in advanced economies and spread like wildfire across the world, Strauss-Kahn said, is now a truly global crisis and nobody is escaping.
"Emerging markets are being hit hard, facing the double punch of a sharp drop in export demand and a sudden stop in capital inflows, and this threatens to undo the impressive gains in growth and convergence achieved over the past decade or so," he said.
"Of possibly even greater concern, the crisis has also arrived on the shores of low-income countries, and threatens to cast millions back into poverty - the human consequences here could be absolutely devastating," the IMF boss observed. PTI
The Financial Express, April 18, 2009, Corporates & Markets, Section II, Page 2
Lalit K Jha, Washington, Apr 17 (PTI)
Observing that the current economic crisis has hit every nook and corner of the world, the head of the International Monetary Fund on Thursday said 2009 is going to be an awful year for economies across the globe.
"2009 will almost certainly be an awful year... We expect global growth to enter deeply into a negative territory," IMF Managing Director Dominique Strauss-Kahn told reporters in his address to the National Press Club here.
The crisis, which originated in advanced economies and spread like wildfire across the world, Strauss-Kahn said, is now a truly global crisis and nobody is escaping.
"Emerging markets are being hit hard, facing the double punch of a sharp drop in export demand and a sudden stop in capital inflows, and this threatens to undo the impressive gains in growth and convergence achieved over the past decade or so," he said.
"Of possibly even greater concern, the crisis has also arrived on the shores of low-income countries, and threatens to cast millions back into poverty - the human consequences here could be absolutely devastating," the IMF boss observed. PTI
RBI likely to impose curbs on amount banks park with it
RBI likely to impose curbs on amount banks park with it
The Financial Express, April 18, 2009, Corporates & Markets, Section II, Page 1
Bank chiefs expect the Reserve Bank of India to put a cap on the extent the banks can park funds in the reverse repo window, as a quantitative measure to direct liquidity to industry on Tuesday. Governor of RBI, D Subbarao, will announce his annual monetary and credit policy for 2009-10 on April 21.
JM Garg, chairman & managing director , Corporation Bank, said he did not expect any cut in cash reserve ratio--the amount the RBI impounds from the commercial banks.
There is enough liquidity in the system, and still credit offtake is at 17% as per RBI data. “People , who were earlier bullish on their business expansion plans, have put their plans on hold,” he said.
According to him there could be some cap on the extent of funds the banks park with RBI. The idea may be to discourage banks to park their fund with the RBI. “In fact, if it happens then it will give a further signal for banks to cut their interest rates,’’ he suggested.
Rana Kapoor, managing director of Yes Bank explained that given the market conditions at present, the real interest need to see a significant reduction in the country.
“I hope, RBI would engineer a CRR change on April 21. Although there is ample liquidity at present, if CRR cut is announced by the regulator, it will invariably stimulate the Indian banking system as funds parked with RBI under CRR requirement do not fetch interest income to the banks,’’ he said.
A significant reduction in the CRR to a low of 3% is needed as the country badly needs significant capital of a longer term nature to be ploughed back into growth, he observed.
Abheek Barua, chief Economist, HDFC Bank said , “We expect the RBI to cut its repo and reverse repo rate as a signaling tool to re-iterate its pro-growth stance. This might not necessarily translate into an immediate easing of deposit and loan rates but the current macro conditions require further reiteration of the RBI’s commitment to growth.
With the reverse repo rate at an all time low of 3.5%, the repo rate at 5% and the CRR at 5%, the room for big-ticket rate cuts is fast shrinking. The emphasis the world over has veered towards managing monetary conditions by controlling the “quantity” of money rather than making direct changes in its price, he explained.
The outlook for growth is deteriorating rapidly while inflationary pressures have receded to give way to concerns over deflation. The monetary transmission mechanism within the Indian economy has so far been somewhat sluggish. Aggressive monetary easing undertaken in the recent past has not translated to a proportional decline either in deposit or lending rates.
The Financial Express, April 18, 2009, Corporates & Markets, Section II, Page 1
Bank chiefs expect the Reserve Bank of India to put a cap on the extent the banks can park funds in the reverse repo window, as a quantitative measure to direct liquidity to industry on Tuesday. Governor of RBI, D Subbarao, will announce his annual monetary and credit policy for 2009-10 on April 21.
JM Garg, chairman & managing director , Corporation Bank, said he did not expect any cut in cash reserve ratio--the amount the RBI impounds from the commercial banks.
There is enough liquidity in the system, and still credit offtake is at 17% as per RBI data. “People , who were earlier bullish on their business expansion plans, have put their plans on hold,” he said.
According to him there could be some cap on the extent of funds the banks park with RBI. The idea may be to discourage banks to park their fund with the RBI. “In fact, if it happens then it will give a further signal for banks to cut their interest rates,’’ he suggested.
Rana Kapoor, managing director of Yes Bank explained that given the market conditions at present, the real interest need to see a significant reduction in the country.
“I hope, RBI would engineer a CRR change on April 21. Although there is ample liquidity at present, if CRR cut is announced by the regulator, it will invariably stimulate the Indian banking system as funds parked with RBI under CRR requirement do not fetch interest income to the banks,’’ he said.
A significant reduction in the CRR to a low of 3% is needed as the country badly needs significant capital of a longer term nature to be ploughed back into growth, he observed.
Abheek Barua, chief Economist, HDFC Bank said , “We expect the RBI to cut its repo and reverse repo rate as a signaling tool to re-iterate its pro-growth stance. This might not necessarily translate into an immediate easing of deposit and loan rates but the current macro conditions require further reiteration of the RBI’s commitment to growth.
With the reverse repo rate at an all time low of 3.5%, the repo rate at 5% and the CRR at 5%, the room for big-ticket rate cuts is fast shrinking. The emphasis the world over has veered towards managing monetary conditions by controlling the “quantity” of money rather than making direct changes in its price, he explained.
The outlook for growth is deteriorating rapidly while inflationary pressures have receded to give way to concerns over deflation. The monetary transmission mechanism within the Indian economy has so far been somewhat sluggish. Aggressive monetary easing undertaken in the recent past has not translated to a proportional decline either in deposit or lending rates.
RBI to withdraw NPA relaxation from July
RBI to withdraw NPA relaxation from July
The Financial Express, April 18, 2009, Page 2
fe Bureau, Mumbai
The Reserve Bank of India (RBI) has informed banks that some of the modifications allowed to facilitate restructuring of non-performing assets(NPA) in view of the ongoing downturn in the Indian economy will be withdrawn from July 1 2009.
“The circulars dated December 8, 2008, January 2, 2009 and February 4, 2009 for restructuring of accounts will cease to operate from July 1, 2009. Thereafter, restructuring of all accounts will be governed only by the provisions of circulars dated August 27, 2008, November 3, 2008 and April 9, 2009.,’’ said RBI on Friday.
RBI has clarified that the cases where the accounts were standard as on September 1, 2008 but slipped to NPA category before 31st March 2009, these can be reported as standard as on March 31, 2009 only if the restructuring package is implemented before 31st March 2009
“All those accounts in case of which the packages are in process or have been approved but are yet to be implemented fully will have to be reported as NPA as on March 31, 2009 if they have turned NPA in the normal course,’’ RBI said.
However, in any regulatory reporting made by the bank after the date of implementation of the package within the prescribed period, these accounts can be reported as standard assets with retrospective effect from the date when the reference was made to the credit debt restructuring (CDR) cell in respect of cases covered under the CDR Mechanism or when the restructuring application was received by the bank in non-CDR cases.
In this regard, it may be clarified that reporting with retrospective effect does not mean reopening the balance sheet which is already finalised; what it means is that in all subsequent reporting, the account will be reported as standard and any provisions made because of its interim slippage to NPA can be reversed.RBI has also asked banks to provide extra information about the application received up to March 31, 2009 for restructuring, in respect of accounts which were standard as on September 1, 2008.
The banks will also furnish proposals approved and implemented as on March 31, 2009 and thus became eligible for special regulatory treatment and classified as standard assets as on the date of the balance sheet along with proposals under process/implementation which turned NPA as on March 31, 2009 but are expected to be classified as standard assets on full implementation of the package.
Meanwhile in another circular RBI has said for determining the amount of unsecured advances for reflecting in the published balance sheet, the rights, licenses, authorisations, etc., charged to the banks as collateral in respect of projects (including infrastructure projects) financed by them, should not be reckoned as tangible security. Hence such advances shall be reckoned as unsecured.
Banks should also disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. has been taken as also the estimated value of such intangible collateral. The disclosure may be made under a separate head in “Notes to Accounts”. This would differentiate such loans from other entirely unsecured loans, RBI said.
The Financial Express, April 18, 2009, Page 2
fe Bureau, Mumbai
The Reserve Bank of India (RBI) has informed banks that some of the modifications allowed to facilitate restructuring of non-performing assets(NPA) in view of the ongoing downturn in the Indian economy will be withdrawn from July 1 2009.
“The circulars dated December 8, 2008, January 2, 2009 and February 4, 2009 for restructuring of accounts will cease to operate from July 1, 2009. Thereafter, restructuring of all accounts will be governed only by the provisions of circulars dated August 27, 2008, November 3, 2008 and April 9, 2009.,’’ said RBI on Friday.
RBI has clarified that the cases where the accounts were standard as on September 1, 2008 but slipped to NPA category before 31st March 2009, these can be reported as standard as on March 31, 2009 only if the restructuring package is implemented before 31st March 2009
“All those accounts in case of which the packages are in process or have been approved but are yet to be implemented fully will have to be reported as NPA as on March 31, 2009 if they have turned NPA in the normal course,’’ RBI said.
However, in any regulatory reporting made by the bank after the date of implementation of the package within the prescribed period, these accounts can be reported as standard assets with retrospective effect from the date when the reference was made to the credit debt restructuring (CDR) cell in respect of cases covered under the CDR Mechanism or when the restructuring application was received by the bank in non-CDR cases.
In this regard, it may be clarified that reporting with retrospective effect does not mean reopening the balance sheet which is already finalised; what it means is that in all subsequent reporting, the account will be reported as standard and any provisions made because of its interim slippage to NPA can be reversed.RBI has also asked banks to provide extra information about the application received up to March 31, 2009 for restructuring, in respect of accounts which were standard as on September 1, 2008.
The banks will also furnish proposals approved and implemented as on March 31, 2009 and thus became eligible for special regulatory treatment and classified as standard assets as on the date of the balance sheet along with proposals under process/implementation which turned NPA as on March 31, 2009 but are expected to be classified as standard assets on full implementation of the package.
Meanwhile in another circular RBI has said for determining the amount of unsecured advances for reflecting in the published balance sheet, the rights, licenses, authorisations, etc., charged to the banks as collateral in respect of projects (including infrastructure projects) financed by them, should not be reckoned as tangible security. Hence such advances shall be reckoned as unsecured.
Banks should also disclose the total amount of advances for which intangible securities such as charge over the rights, licenses, authority, etc. has been taken as also the estimated value of such intangible collateral. The disclosure may be made under a separate head in “Notes to Accounts”. This would differentiate such loans from other entirely unsecured loans, RBI said.
Realty stocks gain ground
Realty stocks gain ground
The Hindu Business Line, April 18, 2009, Page 10
Home buyers waiting for further price correction, say analysts.
S. Shanker, Mumbai
Brushing aside the decline seen on Thursday, realty stocks on the BSE gathered a little steam on Friday.
The shares of most real estate majors were up and many have logged between 28 per cent and 100 per cent gains month-on-month, though they were far from their 52-week highs.
Unitech on Friday gained 21.34 per cent at Rs 52.60 over its previous close of Rs 43.35. There were reports that the cash-strapped company had raised nearly $325 million by selling fresh shares to institutional investors via qualified institutional placement on Thursday. The stock has risen about 102 per cent since March.
Mahindra Lifespaces rose 10.74 per cent to Rs 195.95, over the earlier close of Rs 176.95. The stock has gained about 86 per cent since March.
Gainers
Bangalore-based Puravankara Projects closed 9.73 per cent higher at Rs 58.35. Over the month the scrip has gained 52 per cent.
Parsvnath Developers rose 8.94 per cent at Rs 51.20 on Thursday’s close. The stock has risen nearly 50 per cent compared to its month-ago close.
Phoenix Mills was up 3.47 per cent at Rs 98.35. This is nearly 76 per cent higher than its closing price this day last month. Housing Development and Infrastructure Ltd rose 3.42 per cent at Rs 128.65 over previous close of Rs 124.40. HDIL has gained 82 per cent since March. Omaxe closed at Rs 57.40, up 3.05 per cent over earlier close and 37 per cent higher over the month. Sobha Developers closed at Rs 100, up 2.35 per cent. The stock has gained 28 per cent since March.
The stock of DLF was down 1.75 per cent at Rs 230.55. However, over the month it has gained 44 per cent.
Indiabulls Real Estate closed at Rs 128.80, down 5.05 per cent over Thursday’s close. The stock clocked a 46 per cent gain from its month ago close. Orbit Corporation, down 4.20 per cent, closed at Rs 69.65. The stock gained 52 per cent since March. Akruti City lost 5 per cent to record its 52-week low of Rs 443. The stock is down 72 per cent since March.
Emkay Global research said a recent interaction with brokers and developers on recent launches in the residential segment and the responses from the buyers indicate a consensus that in the last two months volumes have improved due to new project launches at competitive prices. However, they said this could be called a trend reversal (in terms of volumes and not pricing) only if such encouraging volumes continue for the next few quarters.
Emkay said majors such as DLF, Unitech and HDIL have launched residential projects at competitive prices in the last two months. With loan restructuring for most of the companies over, the research report from Emkay said investors will focus on the interest servicing capabilities of the companies.
Motilal Oswal Securities, which tracked the recent realty expo in Mumbai, said home buyers are awaiting further price correction.
Holding Back
The analysts said that over the past four to five months, many developers across Mumbai have reduced their prices by 10-30 per cent and are also open to negotiations. However, responses from home buyers indicate that they continue to hold purchase decisions, awaiting a further price correction.
Most developers are expected to increasingly focus on affordable housing. However, this could lead to severe competition and continued pressure on property prices, which would lead to lower margins for developers.
The Hindu Business Line, April 18, 2009, Page 10
Home buyers waiting for further price correction, say analysts.
S. Shanker, Mumbai
Brushing aside the decline seen on Thursday, realty stocks on the BSE gathered a little steam on Friday.
The shares of most real estate majors were up and many have logged between 28 per cent and 100 per cent gains month-on-month, though they were far from their 52-week highs.
Unitech on Friday gained 21.34 per cent at Rs 52.60 over its previous close of Rs 43.35. There were reports that the cash-strapped company had raised nearly $325 million by selling fresh shares to institutional investors via qualified institutional placement on Thursday. The stock has risen about 102 per cent since March.
Mahindra Lifespaces rose 10.74 per cent to Rs 195.95, over the earlier close of Rs 176.95. The stock has gained about 86 per cent since March.
Gainers
Bangalore-based Puravankara Projects closed 9.73 per cent higher at Rs 58.35. Over the month the scrip has gained 52 per cent.
Parsvnath Developers rose 8.94 per cent at Rs 51.20 on Thursday’s close. The stock has risen nearly 50 per cent compared to its month-ago close.
Phoenix Mills was up 3.47 per cent at Rs 98.35. This is nearly 76 per cent higher than its closing price this day last month. Housing Development and Infrastructure Ltd rose 3.42 per cent at Rs 128.65 over previous close of Rs 124.40. HDIL has gained 82 per cent since March. Omaxe closed at Rs 57.40, up 3.05 per cent over earlier close and 37 per cent higher over the month. Sobha Developers closed at Rs 100, up 2.35 per cent. The stock has gained 28 per cent since March.
The stock of DLF was down 1.75 per cent at Rs 230.55. However, over the month it has gained 44 per cent.
Indiabulls Real Estate closed at Rs 128.80, down 5.05 per cent over Thursday’s close. The stock clocked a 46 per cent gain from its month ago close. Orbit Corporation, down 4.20 per cent, closed at Rs 69.65. The stock gained 52 per cent since March. Akruti City lost 5 per cent to record its 52-week low of Rs 443. The stock is down 72 per cent since March.
Emkay Global research said a recent interaction with brokers and developers on recent launches in the residential segment and the responses from the buyers indicate a consensus that in the last two months volumes have improved due to new project launches at competitive prices. However, they said this could be called a trend reversal (in terms of volumes and not pricing) only if such encouraging volumes continue for the next few quarters.
Emkay said majors such as DLF, Unitech and HDIL have launched residential projects at competitive prices in the last two months. With loan restructuring for most of the companies over, the research report from Emkay said investors will focus on the interest servicing capabilities of the companies.
Motilal Oswal Securities, which tracked the recent realty expo in Mumbai, said home buyers are awaiting further price correction.
Holding Back
The analysts said that over the past four to five months, many developers across Mumbai have reduced their prices by 10-30 per cent and are also open to negotiations. However, responses from home buyers indicate that they continue to hold purchase decisions, awaiting a further price correction.
Most developers are expected to increasingly focus on affordable housing. However, this could lead to severe competition and continued pressure on property prices, which would lead to lower margins for developers.
CLSA buys 1.72 cr Unitech shares
CLSA buys 1.72 cr Unitech shares
The Hindu Business Line, April 18, 2009, Page 10
Our Bureau, Mumbai
Foreign institutional investor CLSA Mauritius Ltd picked up 1.72 crore shares of Delhi-based real estate developer Unitech Ltd at an average price of Rs 51.33 a share, the bulk deal report on NSE showed.
The Unitech shares bought by CLSA were worth Rs 88.29 crore.
The markets were quite volatile on Friday and the Sensex gave up a major part of its early gains of 390 points in a sell off witnessed during the last hour trading.
The Sensex finally closed with a gain of just 75 points at 11,023.
FIIs were net buyers of equities worth Rs 670 crore on Friday according to the provisional data put up by the stock exchanges.
Domestic institutions bought shares worth Rs 182 crore.
The Hindu Business Line, April 18, 2009, Page 10
Our Bureau, Mumbai
Foreign institutional investor CLSA Mauritius Ltd picked up 1.72 crore shares of Delhi-based real estate developer Unitech Ltd at an average price of Rs 51.33 a share, the bulk deal report on NSE showed.
The Unitech shares bought by CLSA were worth Rs 88.29 crore.
The markets were quite volatile on Friday and the Sensex gave up a major part of its early gains of 390 points in a sell off witnessed during the last hour trading.
The Sensex finally closed with a gain of just 75 points at 11,023.
FIIs were net buyers of equities worth Rs 670 crore on Friday according to the provisional data put up by the stock exchanges.
Domestic institutions bought shares worth Rs 182 crore.
No more land purchase: Unitech
No more land purchase: Unitech
Business Standard, April 18, 2009, Page 5
Business Standard, April 18, 2009, Page 5
Unitech’s Karnataka JV in limbo
Unitech’s Karnataka JV in limbo
Business Standard, April 20, 2009, Page 5
Business Standard, April 20, 2009, Page 5
DLF SEZs won’t be cancelled till realtor refunds duty sops
DLF SEZs won’t be cancelled till realtor refunds duty sops
The Economic Times, April 20, 2009, Page Economy, Finance & Markets
Amiti Sen, NEW DELHI
Real estate developer DLF will not be allowed to get its four special economic zones (SEZs) denotified or cancelled till the government carries out inspection of the zones to ensure that all duty exemptions enjoyed by the developer during implementation of the project are refunded. It must also be ensured that there are no units in these zones which could get affected by the denotification, a government official said.
“We have already asked our field organisations to start the inspection process. The Customs department will also carry out its own investigations,” a commerce department official told ET.
DLF recently asked the commerce department to denotify four of its IT/ITES SEZs in Bhubaneswar, Gandhinagar, Kolkata and Sonepat. The company, in an official statement, said the decision to get the zones denotified was due to a slowdown in demand for office space and an overall slump in the IT sector.
According to the commerce department, a developer can get a SEZ denotified as long as it is not operational and there are no units there, provided he refunds all the duty exemptions enjoyed because of the SEZ status.
A SEZ developer is exempted from paying local duties like excise and sales tax on materials purchased from the domestic tariff area (area outside the zones) for building and other activities within the zone, besides state government levies such as stamp duty and value-added tax. The developer is also exempted from paying Customs duty in case he imports inputs. “All these exempted duties have to be refunded to the government in case a SEZ is denotified,” the official said. Once the government officials deputed for the task certify that there are no units in the zones and calculate the duties to be refunded, the denotification can take place.
Interestingly, while the commerce department is of the view that there won’t be a problem in getting the DLF SEZs denotified, the same is not true for the three notified SEZs in Goa which the state government wants to be denotified. The denotification of SEZs has not happened yet as the developers are not in favour of the move and there are several units which have set up operations in these zones.
The Economic Times, April 20, 2009, Page Economy, Finance & Markets
Amiti Sen, NEW DELHI
Real estate developer DLF will not be allowed to get its four special economic zones (SEZs) denotified or cancelled till the government carries out inspection of the zones to ensure that all duty exemptions enjoyed by the developer during implementation of the project are refunded. It must also be ensured that there are no units in these zones which could get affected by the denotification, a government official said.
“We have already asked our field organisations to start the inspection process. The Customs department will also carry out its own investigations,” a commerce department official told ET.
DLF recently asked the commerce department to denotify four of its IT/ITES SEZs in Bhubaneswar, Gandhinagar, Kolkata and Sonepat. The company, in an official statement, said the decision to get the zones denotified was due to a slowdown in demand for office space and an overall slump in the IT sector.
According to the commerce department, a developer can get a SEZ denotified as long as it is not operational and there are no units there, provided he refunds all the duty exemptions enjoyed because of the SEZ status.
A SEZ developer is exempted from paying local duties like excise and sales tax on materials purchased from the domestic tariff area (area outside the zones) for building and other activities within the zone, besides state government levies such as stamp duty and value-added tax. The developer is also exempted from paying Customs duty in case he imports inputs. “All these exempted duties have to be refunded to the government in case a SEZ is denotified,” the official said. Once the government officials deputed for the task certify that there are no units in the zones and calculate the duties to be refunded, the denotification can take place.
Interestingly, while the commerce department is of the view that there won’t be a problem in getting the DLF SEZs denotified, the same is not true for the three notified SEZs in Goa which the state government wants to be denotified. The denotification of SEZs has not happened yet as the developers are not in favour of the move and there are several units which have set up operations in these zones.
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