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RBI increases reverse repo rate
Revises GDP growth rate upwards; keeps Bank Rate, Cash Reserve Ratio unchanged

Mumbai, October 25
The RBI has raised its benchmark interest rate in a bid to curb inflationary trends in the economy. Unveiling the quarterly credit and monetary policy review today, RBI Governor Y.V. Reddy announced that the reverse repurchase rate, or repo rate, has been hiked by 25 basis points to 5.5 per cent.

RBI Governor Dr Y. V. Reddy (left) with Dr Rakesh Mohan, Deputy Governor, during a meeting with bank chiefs in Mumbai on Tuesday.
RBI Governor Dr Y. V. Reddy (left) with Dr Rakesh Mohan, Deputy Governor, during a meeting with bank chiefs in Mumbai on Tuesday. — PTI photo

Highlights

Industry hails mid-term review of credit policy
New Delhi, October 25
Union Finance Minister P.Chidambaram said today the RBI today increased the reverse repo and repo rates by 25 basis points, as a measured step towards moderate monetary tightening.



EARLIER STORIES

 
Ford Chairman and CEO William Clay Ford Jr poses with newly unveiled Ford Fiesta in New Delhi on Tuesday.
Ford Chairman and CEO William Clay Ford Jr poses with newly unveiled Ford Fiesta in New Delhi on Tuesday. The sedan is the fifth new product designed specifically for the Indian market since 1999, with added water wading protection for the monsoon season and improved airconditioning. Fiesta will be available in two variants — Duratec petrol 1.6 litre and 1.4 litre TDCi diesel. — Tribune photo by Mukesh Aggarwal

Huawei to set up plant in India
Shenzen (China), October 25
Chinese telecom equipment major Huawei Technologies is in the process of setting up a manufacturing plant in India with an investment of $60 million for which the company has sought approval from the government.

Ericsson to buy Marconi assets for $2.12 b
London, October 25
British Telecoms equipment-maker Marconi Corp Plc today agreed to sell most of its assets and its iconic name to Sweden’s Ericsson for around $ 2.12 billion, leaving the former conglomerate a shadow of its former self.

POSCO plans jv in India
Seoul, October 25
POSCO, the world’s fifth-largest steel maker, will set up a steel processing joint venture in India as it moves to expand its presence in fast-growing markets overseas.

ONGC eyes S. Korean oil storage facility
Seoul, October 25
The ONGC has entered into talks with the Korea National Oil Corp. (KNOC) over the possible use of Korea’s oil storage tanks, a senior official at Korea’s Energy Ministry said on today. South Korea, which imports all of its crude needs, has been actively seeking oil storage leasing deals to secure wider sources of supplies and reduce its heavy reliance on volatile West Asia where almost 80 per cent of its crude is sourced.

Timex to open 130 stores
New Delhi, October 25
With a focus on consolidating its retail presence, Timex Watches Ltd today said it would introduce international brands FCUK and Opex in the Indian market in first quarter next year and would open 130 showrooms by the end of 2007.

HCL Tech net jumps by 3.5 pc
New Delhi, October 25
Country's fifth largest IT outsourcing company HCL Technologies today reported 3.5 per cent year-on-year increase in net income in the first quarter ending September to Rs 167.5 crore on a consolidated basis.



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RBI increases reverse repo rate
Revises GDP growth rate upwards; keeps Bank Rate, Cash Reserve Ratio unchanged
Tribune News Service

Mumbai, October 25
The RBI has raised its benchmark interest rate in a bid to curb inflationary trends in the economy.

Unveiling the quarterly credit and monetary policy review today, RBI Governor Y.V. Reddy announced that the reverse repurchase rate, or repo rate, has been hiked by 25 basis points to 5.5 per cent. The apex bank said the move was aimed at lowering inflation.

The revised reverse repo rate will come into effect on October 26. The repo rate was earlier raised by 25 basis points to 5 per cent in April.

The RBI noted that the country’s annual rate of inflation based on the wholesale price index stood at 4.62 for the week ended October 8 as manufactured items and food products saw an unexpected surge in prices in recent months.

According to the RBI, the apex bank has kept unchanged the Bank Rate, at which the central bank lends to other commercial banks, and the Cash Reserve Ratio (CRR), the fortnightly cash balances maintained by commercial banks with the central bank. The bank rate and CRR currently quote at 6 per cent and 5 per cent, respectively. According to Mr Reddy, it would be difficult to contain inflation between 5 and 5.5 per cent forecast earlier because of rising international prices of oil.

According to the RBI policy, upside inflationary pressures from oil prices can be expected to continue. “So far, there has been only partial pass-through of international crude prices into domestic prices of petroleum products and second round effects have not yet become noticeably significant,” the apex bank said.

Despite the higher inflation projection, the central bank said the Indian economy was likely to expand by a healthy 7-7.5 per cent in the current fiscal year ending March 31, 2006, on a pick-up in the farm output.

Healthy forecast

Meanwhile, the RBI said that India’s economy was likely to expand by a healthy 7-7.5 per cent in the current fiscal year ending March 31, 2005, thanks to a pick-up in farm output.

In the April-June quarter, the first quarter of the fiscal year, the economy grew 8.1 per cent over a year earlier.

The growth projection has been revised upwards following a jump in agricultural production and a fresh momentum in other industrial sectors.

The RBI said in August that the Indian economy would post a growth of 7 per cent in the current fiscal year if the industry and services sectors continued to maintain a high growth momentum.

India’s economy grew by 6.9 per cent in the fiscal year ended March 31, 2005, on top of a higher increase of 8.5 per cent in the previous year on increased agricultural production.

Highlights

Following are the highlights of busy season credit policy of 2005-06 unveiled by the RBI today:

* GDP growth target revised upwards to 7-7.5 pc from 7 pc

* Inflation seen at 5-5.5 pc in FY06, but difficult to contain with oil shocks

* RBI to ensure price stability

* Reverse Repo rate hiked by 0.25 pc to 5.25 pc

* Bank Rate unchanged at 6 pc

* Cash Reserve Ratio unchanged at 5 pc

* IBA asked to review benchmark PLR

* Money supply (M3) growth to be higher than 14.5 pc

* Deposit growth seen higher than projection

* Non-food credit to be higher than 19.0 pc

* Total liquidity up at Rs 1,20,076 crore in October 2005

* Govt market borrowing consistent with Budget projection

* Forex reserves up at 143.4 billion dollars

* Monetary policy stance to maintain price stability

* Repo rate under LAF raised by 0.25 pc to 6.25 pc

* Exports up 20.5% in H1 vs 30.8% in previous H1

* Imports up 33.1% in H1 against 37.3 % in previous H1

* Rupee depreciated against dollar by October 21

* Rupee appreciated against euro, pound and yen

* Bank's capital market exposure pegged at 40 pc of networth

* Bank's direct capital market exposure at 20 pc of networth

* Banks with exposure to certain sectors, including real estate, NBFCs and capital mkts, to be supervised

* Electronic trading platform for repo operations in gilt

* SPVs for funding infrastructure to get FI status

* ECBs raised by the SPVs to come under approval route

* Bank guarantee for ECBs raised by textile companies

* Banks to fix own target for funding SME sector

* Bank accounts with minimum balance for vast population

* Provisioning requirement for advances up at 0.40 pc

*Direct SME advances also exempted from the requirement

* Framework to revive cooperative credit system

* Framework to revitalise RRBs

* National settlement system in 4 metros by 2005-end

* New NEER and REER indices. — PTI

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Industry hails mid-term review of credit policy
Tribune News Service

New Delhi, October 25
Union Finance Minister P.Chidambaram said today the RBI today increased the reverse repo and repo rates by 25 basis points, as a measured step towards moderate monetary tightening.

“With adequate liquidity available, there will not be any adverse impact on cost of credit for investment for productive activities,”Mr Chidambaram said in his initial reaction to the central bank’s mid-term review of the annual policy statement.

He said “it is encouraging to note that the RBI has upgraded the forecast for GDP growth in 2005-06 from 7 per cent to 7-7.5 per cent. Agriculture is likely to perform well, and the business confidence index is now at its highest level in the past 10 years.”

The Finance Minister said there were indications of an investment boom supported by buoyant growth in credit as well as in equity finance. It was critical to maintain this investment momentum to accelerate growth, he added.

The industry reacted positively to the RBI hiking the projection of the GDP growth rate for the current fiscal from 7 per cent to 7.5 per cent and maintaining status quo with regard to the bank rate.

Another measure in the mid-year review of the policy lauded by the industry related to the increase in exposure of banks to the capital markets from 10 per cent to 20 per cent.

‘’The review of prudential limits for the capital market exposure was long overdue. The announcement that the RBI is willing to consider higher than prescribed limits (of 20 per cent of a bank’s consolidated net worth as direct capital market exposure and 40 per cent of aggregated capital market exposure) for banks is a welcome move,’’ CII President Y.Deveshwar said.

Reacting to the increase in the reverse repo rate by 25 basis points, industry chamber FICCI said it was ‘’justifiable and practical in view of the global and domestic market realities’’.

PHDCCI President K.N. Memani, however, said the increase in the reverse repo rate to 5.25 per cent should not harden the interest rate structure. ‘’We should aim to reduce the prime lending rate which at present is hovering between 10 and 12 per cent of the international lending rates.’’

ASSOCHAM President Anil K Agarwal said the hike in the reverse repo rate was a welcome step and on a par with the demands of industry. Similarly, the decision not to change the cash reserve ratio too is welcome. ‘’However, it would have been appreciated if the RBI had increased the bank rate by 25 basis points,’’ he said.

‘’The continuation of the bank rate and the CRR at the existing levels is a step in the right direction. However, the object of reducing the CRR to the statutory minimum level of 3 per cent should be achieved at the earliest in a phased manner,’’ Mr Memani said.

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Huawei to set up plant in India

Shenzen (China), October 25
Chinese telecom equipment major Huawei Technologies is in the process of setting up a manufacturing plant in India with an investment of $60 million for which the company has sought approval from the government.

"We are planning local manufacturing in India and will invest $60 million for the same. We applied in March 2005 for approval for the facility from Foreign Investment Promotion Board and waiting for the decision," Huawei Tech spokesperson Fu Jun said.

He said the proposed manufacturing plant would meet the future bidding criteria in telecom PSUs where local manufacturing unit would be mandatory condition as well as enable the company to deliver quick customer service.

The proposed centre to come up in Bangalore will focus on NGN (Next Generation Network), fixed wireless terminals, some part of 3G equipment, designing process of Huawei's products.

Huawei is hopeful of starting the facility this year once the FIPB nod comes in, he added.

Huawei's decision on manufacturing plant in India follows the policy decision of Department of Telecom to make vendors mandatorily have a production unit in the country. — PTI

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Ericsson to buy Marconi assets for $2.12 b

London, October 25
British Telecoms equipment-maker Marconi Corp Plc today agreed to sell most of its assets and its iconic name to Sweden’s Ericsson for around $ 2.12 billion, leaving the former conglomerate a shadow of its former self. Marconi, set to be renamed Telent Plc after the deal, said wireless giant Ericsson would buy most of its telecom equipment and international services businesses, leaving it mainly with a small services business in Britain. Marconi said it planned to return 275 pence per share to shareholders in the first quarter of 2006, and its shareholders will also continue to own 100 per cent of Telent. — Reuters

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POSCO plans jv in India

Seoul, October 25
POSCO, the world’s fifth-largest steel maker, will set up a steel processing joint venture in India as it moves to expand its presence in fast-growing markets overseas.

POSCO said in a public notice to regulators today that it would own a 65 per cent stake in $ 14.50 million joint venture, with the remainder held by South Korea’s LG Corp.

The new firm, tentatively named POSCO India Processing Centre, would be located in the western part of India to process electrical steel coil and sell the products to the booming Indian market, a POSCO official said. He did not elaborate. — Reuters

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ONGC eyes S. Korean oil storage facility

Seoul, October 25
The ONGC has entered into talks with the Korea National Oil Corp. (KNOC) over the possible use of Korea’s oil storage tanks, a senior official at Korea’s Energy Ministry said on today. South Korea, which imports all of its crude needs, has been actively seeking oil storage leasing deals to secure wider sources of supplies and reduce its heavy reliance on volatile West Asia where almost 80 per cent of its crude is sourced.

India, which has surpassed South Korea as Asia’s third-largest oil consumer, is keen to engineer oil swaps with other big importers in order to cut down shipping costs on its growing imports from more distant sources.

The ONGC has a stake in Russia’s giant Sakhalin-1 oil and gas field, which started pumping oil a month ago and will reach its full 250,000 barrels per day (BPD) capacity by the end of 2006. — Reuters

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Timex to open 130 stores

New Delhi, October 25
With a focus on consolidating its retail presence, Timex Watches Ltd today said it would introduce international brands FCUK and Opex in the Indian market in first quarter next year and would open 130 showrooms by the end of 2007.

"Our main focus at the moment for India is to build our retailing business. We will adopt the franchisee route to set up the 130 stores in the next two years," Vice- President Asia Pacific of Timex Watches Kapil Kapoor said.

The outlets to be christened 'Time Factory' will have the entire range of Timex products and also the international brands FCUK and Opex, the French range for women, which Timex had acquired couple of years back.

"Test marketing has been done for FCUK, the launch in India will be done in the first quarter of next year," Kapoor said on the sidelines of the conference held to announce the company's becoming the official time-keeper for the forthcoming India Open 2005 golf event here. — PTI

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Corporate results
HCL Tech net jumps by 3.5 pc

New Delhi, October 25
Country's fifth largest IT outsourcing company HCL Technologies today reported 3.5 per cent year-on-year increase in net income in the first quarter ending September to Rs 167.5 crore on a consolidated basis.

The gross revenues of the company during the period were up 24 per cent to Rs 970 crore.

The company has declared an interim dividend of 200 per cent on every share of the face value of Rs 2.

HCL Technologies won a $100 million plus deal from a global telecom company. It also won two $50 million plus deal with a global bank and a global software product company.

Chambal Fertilisers

Chambal Fertilisers and Chemicals Ltd today posted a net profit of Rs 46.56 crore for the quarter ended September 30, 2005 where as the same was at Rs 40.56 crore in the year-ago period.

Total income for the second quarter is Rs 713.81 crore where it was Rs 688.77 crore in the same period last fiscal, the company informed the BSE.

Finolex Cables

Finolex Cables Ltd has posted a net profit of Rs 5.71 crore for the quarter ended September 30, 2005, as compared to Rs 5 crore for the quarter in the corresponding period in the previous year.

Informing the BSE, the company said its total income (net of excise) has decreased from Rs 160.60 crore in Q2-05 to Rs 149.30 crore for the quarter this fiscal.

IPCL net up

Reliance Group company Indian Petrochemicals Corporation Ltd (IPCL) today posted a 119.56 per cent jump in net profit at Rs 303 crore for the quarter ended September 30, 2005 as compared to Rs 138 crore in the year-ago period.

Total income has increased 12.25 per cent to Rs 2,079 crore for the second quarter from Rs 1,852 crore in the same period last fiscal, the company informed the BSE.

VSNL gains

Videsh Sanchar Nigam Ltd (VSNL) today posted a 3.29 per cent rise in net profit of Rs 91 crore for the second quarter this fiscal as compared to Rs 88.1 crore in the corresponding quarter in 2004-05.

Total income has increased 18.97 per cent to Rs 961.2 crore for the quarter ended September 30, 2005 from Rs 807.9 crore in the same period last fiscal, the company informed the BSE.

ABB profit up

Power and automation major ABB Ltd today posted a 47.21 per cent increase in net profit at Rs 52.94 crore for the third quarter this fiscal as compared to Rs 35.96 crore for the same quarter last fiscal.

Total income grew by 25.10 per cent to Rs 719.92 crore for the quarter ended September 30, 2005 from Rs 575.47 crore in the year-ago period, the Bangalore-based company informed the BSE.

Tata Motors net up

Tata Motors Ltd today posted a 9.26 per cent increase in net profit for the second quarter of this fiscal at Rs 337.87 crore against Rs 309.21 crore in the same quarter last year.

Total income of the company in the period grew 14.78 per cent to Rs 4,839.35 crore in comparison to Rs 4,215.94 crore in the year-ago period, the company said.

For the first half of the fiscal, Tata Motors recorded a net profit of Rs 610.54 crore where as the same was Rs 532.57 crore for the half year last fiscal.

Panacea Biotec

Panacea Biotec today reported a 106 per cent jump in net profit for the second quarter ended September 2005 at Rs 22.87 crore as compared to Rs 11.10 crore during the same quarter last year.

The net sales during the quarter have increased by 68 per cent to Rs 132 crore as against Rs 78.65 crore in the corresponding period last year, the company said. — Agencies

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BRIEFLY


Model and Bollywood actress Katrina Kaif poses at the launch of new range of Hewlett-Packard Pavilion PCs in New Delhi on Tuesday.
Model and Bollywood actress Katrina Kaif poses at the launch of new range of Hewlett-Packard Pavilion PCs in New Delhi on Tuesday. Priced between Rs 35,990 and Rs 99,990, the HP Pavilion PCs allows users to simultaneously watch a DVD while recording a live TV programme or play an interactive game while downloading a movie in the background, enabling at the same time the user to listen to music collection with theatre-quality surround sound. 
— Tribune photo: Rajeev Tyagi

Comba Telecom
New Delhi, October 25
Comba Telecom, a leading provider of wireless solution for 2G and 3G mobile markets, today announced the launch of its India operations, a press note said here today. Based in Delhi, the company’s office would serve as the regional base for SAARC countries in the subcontinent. — TNS

Jaipan Industries
Mumbai, October 25
Jaipan Industries Ltd has decided to split stock in the 1:10 ratio. The shareholders approved the splitting of one equity share of Rs 10 each into 10 equity shares of Rs 1 each, at the EGM held on October 17. — PTI

Japan Airlines
Tokyo, October 25
Japan Airlines Corp., Asia’s biggest carrier, said today it would join the “oneworld” global airline network, seeking to bolster its services and operations after a series of safety mishaps hurt its image. JAL aims to attract more travellers by taking advantage of a bigger route network. It has held alliances with individual airlines, including oneworld leaders American Airlines and British Airways, but remained out of global groups. —Reuters

N.K. Nayyar
New Delhi, October 25
Mr Naresh K. Nayyar will be the first CEO of ONGC-Mittal Energy Ltd, the joint venture firm floated by India’s largest oil producer ONGC and world’s largest steel maker Mittal Group for acquisition of oil and gas assets abroad. Mr Nayyar, who is currently Director (Business Development), Indian Oil Corp, will take charge of OMEL next month, industry sources said. Sources said Mr Nayyar resigned from his job at IOC this morning. — PTI

Allahabad Bank festival bonanza
Chandigarh, October 25
Allahabad bank has offered a 1 per cent special discount in interest rates on all retail products (other than housing loan) from October 1 to December 31, as part of its festival bonanza. For the southern states, the facility is available from October 1 to January 31, 2006. While the revised rate of interest is 10 per cent for all categories under the All- Bank Saral Loan Scheme, it is 7.50 per cent for the All-Bank Car Finance Scheme. —TNS

Shreyans group nets Rs 2.62-cr profit
Ludhiana, October 25
Shreyans Industries Limited has posted a net profit of Rs 2.62 crore for the first half of this fiscal as against a loss of Rs 90.42 lakh in the corresponding period last fiscal. The six months turnover of the company has risen by 15 per cent to Rs 89.40 crore as on September 30 as compared to the turnover of Rs 77.80 crore in corresponding period last fiscal. — PTI
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