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RBI hikes repo rate, CRR unchanged
No rebidding for airport revamp
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Cabinet relaxes FDI norms, allows single brand retail
Task force to look into
PFC to raise Rs 1,500 crore through IPO
BSNL bags award
Corporate News
Corporate Results
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RBI hikes repo rate, CRR unchanged
Mumbai, January 24 Announcing the apex bank’s third quarter review of the Annual Monetary Policy for fiscal 2005-06, RBI Governor Y V Reddy in a statement here that without a policy response, it would be difficult to contain inflation within the projected range of 5 to 5.5 per cent. “In view of the current macro-economic and overall monetary conditions, it has been decided to increase the fixed reverse repo rate under the liquidity adjustment facility (LAF) of the Reserve Bank by 25 basis points from 5.25 per cent to 5.50 per cent, with immediate effect,” the statement said. Repo, a financial instrument used for raising capital from commercial banks to suck out excess liquidity, has gone up to 5.50 per cent and reverse repo rate to 6.50 per cent. The reverse repo rate was hiked to maintain the 1 per cent difference between the two instruments. The apex bank also upped economic growth projections to 7.5-8 per cent and hiked by 0.25 per cent, interest rate at which it buys and sells bonds to commercial banks to keep inflation under leash. In its third quarter review of monetary policy, the central bank spared changes to interest rates by leaving the benchmark bank rate untouched at 6 per cent. The RBI said the repo rate would continue to be linked to the reverse repo rate. The spread between the reverse repo rate and the repo rate has been retained at 100 basis points, as at present. Accordingly, the fixed repo rate under LAF would be 6.50 per cent, it added. The RBI in its mid-term review of October 25, 2005, had also increased the repo and reverse repo rate by 25 bps. “International crude prices continue to remain a potent threat to overall price stability,” the RBI said. “While the Reserve Bank continues to pursue its medium-term objective of reducing the CRR to the statutory minimum level of 3 per cent, on a review of the current liquidity situation, it is felt desirable to keep the present level of CRR at 5 per cent unchanged.” The RBI asked commercial banks to improve credit quality by undertaking a segment-wise analysis and take steps to expand in those areas where credit demand was growing rapidly. “While strong credit growth is a reflection of greater credit penetration and investment activity, there are concerns about credit quality in the expansion phase,” it said. The Annual Policy Statement for fiscal 2006-07 would be announced on April 18. Reflecting the buoyancy in the economy on the back of good monsoon and farm production and a good showing by industry and services, the central bank raised the GDP growth projection to 7.5-8 per cent. The revised projection is 0.5 per cent higher than the 7-7.5 per cent forecast in the busy season credit policy. In its annual policy in early 2005-06, RBI had predicted 7 per cent growth for this fiscal. Meanwhile the RBI’s Deputy Governor Rakesh Mohan said that on Tuesday that the rate increase may be reversed if the macro-economic situation changes. “It depends upon unfolding circumstances. It is always possible if the
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Interest on home loans may go up
New Delhi, January 24 The hike by the central bank comes at a time when the country is experiencing a boom in construction activity especially in the housing sector. Amidst concerns that this could have negative impact on this booming sector, which triggers economic activities in other sectors, Finance Minister P Chidambaram said if external situations improved, the hike in repo rates by the RBI could be reversed. “The 25 basis points hike in repo rates, I believe is a pre-emptive action by RBI which wants to be ahead of curve (in keeping inflation under check)... As soon as external situation clears and stabilises, I believe it could be reversed,” Mr Chidambaram told reporters reacting to the central bank’s third quarter review of monetary policy. The central bank also reiterated its commitment to ensure conducive interest rate environment and the provision of appropriate liquidity to meet genuine credit needs of the economy for maintaining the growth momentum. What the government and the RBI were keen on was to keep the inflation below 5 per cent and given the strong credit and consumer demand, “we do not want to stoke inflationary expectations.” Mr Chidambaram also expected the interest rates to be stable in the medium and long term. “We have to keep a watch on the US situation on January 31 and March. This is pre-emptive action. I understand they could be reversed if the situation is right,” he said. The Finance Minister also said he did not see any change in the government-borrowing programme as of now given the resource position.
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No rebidding for airport revamp
New Delhi, January 24 The eGoM decided to go ahead with the modernisation process and take a look at the bids and then award them to the two successful bidders. Immediately after the meeting, headed by Defence Minister Pranab Mukherjee, Civil Aviation Minister Praful Patel said January 31 was set as the deadline for awarding of the contracts, while rejecting the suggestion if there could be
rebidding in view of the valuation controversies. He, however, did not spell out any decision saying that minutes have to be finalised and signed by the eGoM Chairman Pranab Mukherjee. The eGoM was held to consider a revised report from the expert committee, headed by Delhi Metro chief E Sreedhararn, on the basis of clarification sought by the group earlier this month. Mr Patel parried a flurry of questions on how many bidders would be shortlisted for the two airports. He
said, "We have considered all the views that were expressed in the matter, including those of the Committee of Secretaries, the panel led by E Sreedharan and various others". "All issues have been resolved. There will be no rebidding," the minister asserted adding that there was still a week to go for the deadline so there was still a lot of time left. The shortlisted bidders would have to form two joint venture companies with the Airports Authority of India (AAI) for the development of Delhi and Mumbai airports. Besides Mr Mukherjee and Mr Patel, other members of the eGoM are Finance Minister P Chidambaram, Commerce Minister Kamal Nath and Law Minister H R Bhardwaj. The Left parties have been opposing the "privatisation" process, with the latest development in this regard being a letter shot off by the RSP leader Abani Roy
complaining of lack of transparency in the process. The Left has asked the government to put the process on hold and hand over the task to the AAI. Incidentally, there has also been opposition from some of the civil aviation experts as regards the entire process, who have pointed out that the entire process had been vitiated. There has been a demand for either the process be re-started from the Request for Proposal stage or from the very beginning. The eGoM is understood to have discussed possibilities of broadbasing the criteria for the bid process in the light of the
recommendations of the Sreedharan-led Group of Eminent Technical Experts (GETE), so as to allow more than one bidder for each of the two metro airports. If the proposal for broadbasing the criterion is adopted, the bids of GMR-Fraport, Reliance ASA (Mexico), D S Construction-Munich Airport and GVK-South African airport are likely to be considered as per the rankings.
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Cabinet relaxes FDI norms, allows single brand retail
New Delhi, January 24 The Cabinet said it has simplified the procedures to attract investments and to avoid multiple layers of approvals that were presently required in some activities. On opening up the FDI in retail sector, which is vehemently opposed by the Left parties, the Cabinet was of the view that this is aimed at attracting investment, technology and best global practices as also catering to the demand of such branded goods in India. This would imply that foreign companies would be allowed to sell goods sold internationally under a single brand, viz., Reebok, Nokia, Adidas. Retailing of goods of multiple brands, even if such products are produced by the same manufacturer, would not be allowed. “The whole FDI policy has been reviewed in an integrated manner, to remove anomalies and inconsistencies. This is not so much an exercise to revise caps, as to simplify and rationalise the procedures. The guiding principle is that for some items requiring industrial licence which are in any case well regulated, there is no need for a second tier Foreign Investment Promotion Board (FIPB) approval, and so these can be put on to the automatic route”. With a view to facilitating the easier inflow of FDI into India, it has been decided that instead of having to seek FIPB approval, FDI up to 100 per cent would now be allowed under the automatic route for: the development of new airports; (so far FDI up to only 74 per cent )was allowed under automatic route); laying of natural gas/LNG pipelines; market study and formulation and investment/financing in the petroleum sector; cash and carry wholesale trading and export trading; (so far, FDI in wholesale cash and carry trading and FDI beyond 51 per cent in export trading required prior government approval). The Cabinet has also given its approval to remove the divestment condition, which had been imposed earlier, with respect to business-to-business e-commerce. Hitherto, while FDI upto 100 per cent was allowed, the investor was required to divest 26 per cent of the foreign equity within 5 years of making the investment. This was seen to be restricting the level of FDI in these sectors. It has also been decided that there will be no need for approval of FIPB for transfer of shares in an existing Indian company from Indian investors to foreign investors in the financial services and where the provisions of the Securities and Exchange Board of India (SEBI) Takeover Code are applicable in cases where approval of RBI/SEBI/Insurance Regulatory Development Authority of India (IRDA) is also required. |
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Task force to look into exporters’ woes
New Delhi, January 24 “The Prime Minister has accepted our suggestion that a task force be created for more coordination between the two ministries. The task force will meet every six months,” FIEO president O.P. Garg said after a meeting of exporters with Prime Minister Manmohan Singh. The hour-long meeting, which discussed various problems such as high transaction costs confronting the exporters, was attended by Commerce Minister Kamal Nath and Finance Minister P. Chidambaram. In a presentation to the PM, the exporters also sought withdrawal of the controversial Fringe Benefit Tax to increase global competitiveness, exemption from service tax and early resolution of the Duty Entitlement Pass Book scheme. The exporters also suggested declaring gateway ports as “sleepless ports”, similar to the Shanghai port in China, for expediting clearance of cargo round the clock. The Federation of Indian Export Organisations have sought creation of a separate fund for greater market access and a single nodal agency for exports. The apex exporters’ body has also mooted an employment export growth oriented scheme for meeting the twin objective of speeding up exports and generating additional jobs. — PTI
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PFC to raise Rs 1,500 crore through IPO
New Delhi, January 24 There would be a fresh issue of equity shares of 10.30 crore, offer for sale of equity shares of 5.15 crore shares and the combined issue of equity shares is 15.45 shares, PFC CMD V.K. Garg said. Dr Garg said that HSBC, Kotak Mahindra, ICICI
Securities, DSP Merill Lynch, SBI CAPS would be the merchant bankers. With this move, the divestment is back on the agenda with the government deciding to sell 5 per cent stake in PFC in tandem with its IPO The divestment is modelled around the NTPC offer. PFC has a paid-up capital of Rs 1,030 crore. This translates to 10.3 crore new shares of Rs 10 face value each.
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BSNL bags award
New Delhi, January 24
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IFC to aid PSL expansion with $20 m
New Delhi, January 24 The financing will support the expansion of PSL’s production capacity to meet a rapid increase in domestic and international demand for large-diameter steel piping for use in oil, gas, and water applications. In eastern India, the PSL expansion will help satisfy demand for piping due to recent gas finds in the Krishna Godarvi Basin. The project will also help the company to improve its cost competitiveness, productivity, product quality, and environmental performance. “IFC’s investment in PSL is helping a local player enhance its regional presence. This is in line with IFC’s mission to promote sustainable private sector investment in emerging markets,” said Mr Iyad Malas, IFC’s Director for South Asia. Indo Asian inks pact
Indo Asian Fusegear Ltd today announced a $8.5 million joint venture with the National Company for Glass Industries (Zoujaj) and Saudi Arabia-based Saudi offset Ltd Partnership for manufacturing electrical products. The newly-formed Limited Liability joint venture would be known as ‘Saudi National Lamps and Electricals Company Ltd’ and would be engaged in the manufacture of energy-saving compact fluorescent lamps (CFLs) and HID lamps, the company said in a press note.
Order for HCC
Hindustan Construction Company Ltd has bagged a contract worth Rs 395 crore from National Hydroelectric Power Corporation Ltd for dam construction works in West Bengal. The order would be carried out for Teesta Low Dam HE Project, Stage-IV and the package would include construction of diversion arrangement, concrete gravity dam along with spillway, roller compacted concrete dam, surface power house, and other associated civil works, the company informed the Bombay Stock Exchange today.
Toshiba eyes India
Japanese technology major Toshiba Corporation is looking to tap the growing Indian consumer market by introducing home appliances and mobile handset market in the country with its exclusive range of products later this year. “After economic liberation, India has emerged as one of the few markets in the world, which offers growth and earning potential in all areas of businesses,’’ Toshiba India Pvt Ltd (TIPL) Managing Director Itaru Ishibashi told reporters here.
LG GSM cellphones
LG Electronics India Pvt Ltd (LGEIL), leading consumer electronics and mobile handset manufacturer, today said it aims to grow by 300 per cent in the GSM business in the country this year. “We have set a target of selling 15 lakh handsets this year as compared to four lakh in 2005,” LGEIL National Product Group Head, GSM Mobile Phones, H.S. Bhatia said here. LGEIL, which clocked a turnover of Rs 7,500 crore in 2005, aims to achieve a Rs 9,000-crore turnover in 2006. The company plans to launch 17 new GSM models this year in order to
consolidate is position further in the Indian market. The company today launched four GSM mobile phones priced in the range of Rs 6,990 to Rs 19,500. With the launch of the four new handsets, LG Electronics at present has 15 GSM models in the Indian market.
Simbhaoli Sugar
In a bid to expand capacity at its various sugar plants, Simbhaoli Sugar Mills Ltd has decided to invest Rs 351.8 crore. The Board at its meeting held recently, decided to increase capacity at the company's Greenfield sugar plant in west Uttar Pradesh to 5,000 tonnes crushed per day, currently having a capacity of 4,000 tcd, it informed the BSE.
— TNS, PTI
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Bharti Tele recommends name change
Mumbai, January 24 Total income for the group has increased 40.22 per cent to Rs 3,045.15 crore for the third quarter in current fiscal from Rs 2,171.57 crore in same period in 2004-05, the company informed the Bombay Stock Exchange. On individual basis, the company has reported a net profit of Rs 538.68 crore for the quarter ended December 31, 2005, as compared to Rs 26.17 crore for the same quarter in last fiscal. Total revenue has increased to Rs 2,936.03 crore for the third quarter from Rs 28.16 crore in the year-ago period. The company has also informed that the Board of Directors have approved the change of the name of the company from “Bharti Tele-Ventures Ltd” to “Bharti Airtel Ltd” subject to the approval of the shareholders of the company and other regulatory authorities. ABB profit up
Power and automation major ABB Ltd today posted a 33.59 per cent rise in net profit at Rs 94.61 crore for the quarter ended December 31, 2005 as compared to Rs 70.82 crore for the same quarter in previous fiscal. Total income grew to Rs 1,001.62 crore for the fourth quarter this fiscal from Rs 762.18 crore during the corresponding quarter last fiscal, up 31.41 per cent, the company informed the Bombay Stock Exchange. The net profit for the year ended December 31, 2005 was Rs 218.67 crore as against Rs 154.31 crore for the previous year. Also, the Board has recommended a dividend of Rs 8 per equity share of Rs 10 each for the year ended December 31, 2005.
India Cements in black
India Cements Ltd has reported a net profit of Rs 7.22 crore for the quarter ended December 31, 2005 as compared to a net loss of Rs 33.31 crore for the quarter ended December 31, 2004. Total income was Rs 350.28 crore for the third quarter this fiscal as against Rs 265.15 crore during the corresponding quarter last fiscal, up 32.10 per cent, the company informed the Bombay Stock Exchange.
IDBI net at Rs 119 cr
The Industrial Development Bank of India Ltd (IDBI) today posted a net profit of Rs 119.30 crore for the quarter ended December 31, 2005, whereas the same was at Rs 62.13 crore for the quarter ended December 31, 2004. The company’s total income was at Rs 1,548.16 crore for the third quarter of FY ’05-06 where as the same was at Rs 1,259.08 crore in the third quarter of FY 04-05, IDBI informed the Bombay Stock Exchange. The results for the quarter ended December 31, 2005, are not comparable with the same quarter in the previous year as they include the operations of erstwhile IDBI Bank Ltd, which was merged with IDBI in April, it added.
ICICI Pru grows 76 pc
ICICI Prudential Life Insurance, a private life insurance company, has registered a 76 per cent growth in the third quarter October–December 2005, taking its new business weighted premium to Rs 588 crore. Of this, retail premium comprised Rs 534 crore, and group premium Rs 54 crore. The company has written 213,947 policies for a total sum assured of Rs 5290 crore, which has shown a growth of 94 per cent as compared to the corresponding period of the previous year. “The company continues to expand its network in the country and added 27 new branches in the third quarter, taking the total number of branches to 162. The new offices are in locations ranging from Jammu, Udipi, Behrampur and Panipat. The company has 32.2 per cent retail private market share for the period ended November 2005, ” said Ms Shikha Sharma, CEO & Managing Director, ICICI Prudential Life Insurance. — PTI, TNS
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