New Delhi, February 19
Concerned over spiralling prices of sugar, the Prime Minister's Economic Advisory Committee today asked the government to "urgen-tly" import 3-5 million tonnes of the sweetener to bridge the demand-supply gap.

"It is imperative that urgent steps are taken to import white sugar to the extent of shortfall in availability which may be assessed at somewhere in the region of 3 to 5 million tonnes," said Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan in his report on the economy.

The current sugar year (October-September) began with a record low stock of less than 2 million tonnes, the report said, adding that the output was likely to dip further to 14 million tonnes from 14.7 million tonnes in the previous season.

"The expected output of sugar, including processed raw sugar... is unlikely to be much more than 14 million tonnes," the report said.

The PMEAC's estimate of sugar output is lower than the government's projection of 15.5 million tonnes for 2009-10 as against the domestic demand of about of 22 million tonnes.

Driven by production shortfall, the prices of sugar, khandsari and gur shot up by over 51 per cent in December 2009. — PTI

Foreign fund flows into stock and bond market during the second half of the current fiscal are expected to slow down to $ 9.2 billion, half the amount received in the first six months. "Assuming some positive net FII and ADR/GDR inflows, overall portfolio flows in the second half of 2009-10 are placed at $ 9.2 billion," said the report.

Portfolio flows had risen sharply in the first half of 2009-10 to $ 18 billion, primarily on account of strong FII inflows of $ 15.3 billion. The review further stated that the unsettled conditions in financial markets, which emerged since the third week of January, have made it difficult to assess to what extent portfolio flows would accrue on a net basis in the last quarter of the year.

Portfolio flows include investment made by foreign institutional investors, investments in American depository receipts or global depository receipts and offshore funds.

The review expects the total portfolio flows for the entire fiscal 2009-10 to be $ 27.2 billion. In the past financial year 2008-09, portfolio flows had been negative $14 billion, while there had been flows of $ 29.6 billion in 2007-08. — PTI

Mumbai, February 19
The follow-on offer of REC got a listless response with the issue getting subscribed only 0.29 times on the first day of the offer, indicating that ghosts NTPC is likely to haunt the government's this year's second major share sale as well.

The issue through which the government is divesting 17.39 per cent stake received bids for 4.97 crore shares against 17.17 crore shares on offer, as per data available on the National Stock Exchange.

While the Qualified Institutional Buyers bid for 0.52 times the shares on offer, non-institutional investors subscribed only 0.19 times of the portion reserved for them.

The issue received bids for 3.35 crore shares at the price of Rs 204 a piece, while investors bid for 52.70 lakh shares at the floor price of Rs 203. Besides, one crore bid came in at Rs 205 and for 9.28 lakh shares at Rs 210.

However, the retail demand was a marginal 0.55 per cent, which analysts said was mainly because of the thin difference between the base price and the prevailing market price of Rs 213.70.

Retail investors had given an icy response to another PSU NTPC's FPO earlier this month. Analysts had said that the NTPC floor price of Rs 202 a share was not attractive as the share was trading only marginally higher that time.

Commenting on half-hearted response to REC, SMC Capitals Equity Head Jagannadham Thunuguntla said "There was no discount for retail investors. The spread between the market price and the issue price was less. Also a weak broader market brought down investor demand in the FPO." — PTI

Hyderabad, February 19
The Andhra Pradesh High Court today rejected the bail plea of Satyam Computers founder B Ramalinga Raju, the prime accused in the multi-crore financial fraud in the IT firm.

The bail plea of senior vice-president-cum-global head of internal audit cell in Mahindra Satyam, V S Prabhakar Gupta, was also rejected by Justice P Swarup Reddy.

Gupta, who held the same position in the Satyam Computers Services, was arrested on November 21 on charges of falsifying accounts and conspiring with other accused in the case.

In his bail application, Ramalinga Raju said the entire investigations in the Satyam case had been completed and that chargesheets were also filed.

As the chargesheet contains thousands of documents, he is not able to go through it and unable to meet his counsels to prepare for his defence due to his ill-health, Raju informed the court through his counsel.

Gupta also made a similar request to the court.

However, the CBI informed the High Court that granting of bail to the duo would hamper its investigation as it was awaiting additional reports from the courts in the UK, the US and some European countries on diversion of funds by the accused. — PTI

Chandigarh, February 19
Bogged down by rising prices of raw material, slow demand in overseas market, currency volatility and inability of the government to release funds granted under Textile Upgradation Funds Scheme (TUFS), textile sector in the region is hoping for some reprieve from Finance Minister, Pranab Mukherjee, as he gets ready to present his Budget proposals for 2010-11.

The main fear for the textile sector now is the government proposal to withdraw the stimulus package granted to textile sector in year 2008-09, when this industry was passing through a recessionary phase. Most textile units in the region feel that this sector is just beginning to recover, and withdrawal of all benefits granted to them under the stimulus packages would hamper its chances of recovery. Rather, the sector is looking for a special package to bail it out of the present crisis.

SP Oswal, chairman of Vardhaman Group of Companies, said the government should not withdraw the benefits granted to textile sector like duty drawbacks and interest subvention. “Though the textile sector is now recovering from recession, the growth is still very slow as the main markets for export are US and Europe, which are still recovering from recession. Rather, an industry wise approach should be adopted for withdrawal of stimulus, so that stimulus benefits are withdrawn from those sectors only which have experienced exponential growth. The government should rather try and remove all direct and indirect levies on industry, thus making the Indian textile sector more competitive in the global market,” he said.

Agreeing with Oswal, Ajit Lakra, president of Ludhiana Knitters Association, said the textile sector had not fully recovered from the recession so the stimulus package should continue. “We also hope that enough funds are released under the TUFS scheme, which has become obsolete as money has not been released to anyone for the past six months.

Also, the government should now ensure that the benefits under TUFS reach the small and medium enterprises, rather than the big textile companies,” he added.

Industry in Panipat, which accounts for 40 per cent of the handloom exports from India, too, looks forward to more fiscal incentives to the sector so as to recover the losses suffered in the past two years, especially by the textile exporters.

Ramesh Verma, president of Handloom Exports Manufacturers Association, Panipat, while reiterating the demand of easy finance options for the sector, said the government should have a long term policy for this sector.

“The biggest problem being faced by us is the currency volatility that is hampering our profit margins. Just like China, the government can fix a flat rate for rupee convertibility to dollars. The government should also ban export of cotton so that the prices in the domestic market get stabilised.

Mumbai, February 19
In what would bring cheers to savings account holders, the Reserve Bank today asked banks to start calculating interest rates on savings accounts on a daily basis from April 1.

The move will enable saving bank account holders to earn better interest rates since banks currently calculate interest on these accounts on the lowest available balance, from 11th and the last date of a month.

"We advise that payment of interest on savings accounts may be made by banks on a daily product basis with effect from April 1," the RBI said in a notification, which also asked banks to ensure a smooth transition and work out the modalities in this regard.

However, earlier the banks had urged the Reserve Bank of India to postpone the move.

"We requested it to either reduce the savings rate or postpone the implementation. It will affect our margins and profit," Indian Banks Association chairman MV Nair had said.

Currently, interest rates on saving accounts are de-regulated, barring up to Rs 2 lakh.

The RBI only administers the interest rates on saving bank deposits up to Rs 2 lakh, and for the deposits above this amount, banks are free to give any interest rates. — PTI

New Delhi, February 19
For the sixth year in a row, EPFO subscribers are likely to get 8.5 per cent interest on their provident fund (PF) deposits for 2010-11.

"Maintaining the 8.5 per cent interest rate for 2010-11 will leave a surplus of Rs 15.26 crore whereas the EPFO will face a deficit of Rs 426.53 crore if it gives a return of 8.75 per cent to subscribers," an EPFO source said. The Employees' Provident Fund Organisation (EPFO) with a subscriber base of over 4.7 crore has been maintaining the return of 8.5 per cent on deposits since 2005-06.

As per practice, the EPFO's advisory body Finance and Investment Committee (FIC) at its meeting on February 26 will firm up its view on interest rate to be paid to the depositors the next fiscal. Once the FIC firms up its view, its recommendations will be placed before the EPFO's apex body, Central Board of Trustees (CBT), for final decision.

The FIC recommendations are usually accepted by the CBT. The source said, "The EPFO has estimated income of Rs 15,036 crore in 2010-11 and maintaining 8.5 per cent interest rate in the next fiscal means interest payout of Rs 15,020.80 crore and a surplus of Rs 15.26 crore." He further added, "Maintaining 9 per cent return will not be feasible in any case as that would result in a deficit of over Rs 868 crore."

Unionists, however, think that the rate of return should not be less than 9.5 per cent the next fiscal in view of the spiralling prices of essential food items, which touched the decade's high of about 20 per cent in December last year.

"It is the government's responsibility to ensure reasonable returns to the depositors. In view of skyrocketing inflation, particularly in food products, it is required to provide an interest rate of 9.5 per cent in the next fiscal," All-India Trade Union Congress secretary D L Sachdev said. Echoing similar views, secretary, Hind Mazoor Sabha, AD Nagpal, also said, "Under these circumstances where there is a tremendous price rise, the value of money is diminishing at a faster pace. — PTI

New Delhi, Februry 19
HDFC Bank today increased the fixed deposit rates by up to 150 basis points across maturities, a move that follows the Cash Reserve Ratio hike of 0.75 per cent by the RBI last month.

HDFC Bank is the second lender to hike the deposits rates post-credit policy review on January 29. Fixed deposits with maturity between 3 and 10 years will now yield more with 7.5 per cent interest against the earlier rate of 6 per cent. The interest rate for term deposits between 2 and 3 years has been raised by 100 basis points to 7 per cent from the prevailing 6 per cent interest rate. At the same time, the fixed deposits rate with the tenure of 366 days to 2 years has been increased by 50 basis points to 6.5 per cent except for 1 years 16 days maturity in which case the depositors will get the 6.75 per cent interest rate, according to the bank's website.

HDFC Bank, which bagged the “Best Local Bank in India” for the second consecutive year from Euromoney last week, will provide 0.5 per cent extra over the card rate to its senior citizens customers. To suck out about Rs 36,000 crore from the system, the RBI last month raised by 75 basis points the CRR.

Last week, IDBI Bank hiked the deposit rates by 0.25 per cent across various maturities. — PTI

BRIEFLY

United Bank to hit market on Feb 23
KOLKATA: United Bank of India will hit the capital market with its initial public offer on February 23 to raise capital. Executive Director of UBI TM Bhasin said the maiden issue was targetted towards augmenting capital base of the bank. He said post the stake dilution, government holding in the bank would stand at 84.2 per cent. The bank would dilute 15.8 per cent stake through the IPO. Bhasin said the price band had been fixed between Rs 60 and Rs 66 and the price would be determined through 100 per cent book building process. — PTI

Godrej Properties for JV
BANGALORE: Godrej Properties is looking at joint ventures with landowners as the firm does not have any landbanks, a top official of the Group said. The focus of Godrej Properties is “affordable housing” with a price range from as low as Rs 5 lakh to Rs 20 lakh and “we see a lot of potential in this,” Chairman of the Godrej Group Adi Godrej told reporters here on Friday. — PTI

23 await nod for MF
New Delhi: As many as 23 firms are awaiting approval from SEBI to enter mutual fund space, which is already overcrowded with 37 players managing assets over Rs 7 lakh crore. The companies have filed for regulatory approvals, which are being processed by SEBI, sources said. Some of the Indian companies whose applications are with SEBI include India Bulls Ltd, Future Finance, SREI Infrastructure Finance and ASK Investment Holdings. — PTI