Mumbai, May 3
Credit rating agencies (CRAs), which rate debt profile of corporates, will need to disclose the fees received for such rating actions as also the default rate on their previous ratings, market regulator SEBI said today.

The role of the rating agencies came under question during the global financial meltdown as many of the companies and their issues collapsed despite enjoying high ratings.

The disclosure guidelines, issued by SEBI against the backdrop of the recent global financial meltdown, require CRAs to frame policies and a code of conduct to deal with the issues related to conflict of interest between their analysts and entities being rated.

SEBI said the CRAs will have to ensure full compliance with the guidelines by June 30 and make mandatory disclosures twice annually.

As per the SEBI guidelines, the CRAs will have to maintain records of the important factors underlying the credit rating and a summary of discussions with all the stakeholders involved as well as decisions of the rating committee, including voting details and notes of dissent.

"These records should be maintained till five years after maturity of instruments and be made available to auditors and regulatory bodies when sought by them," SEBI said in a circular, adding that the CRAs will also have to publish information about the historical default rates.

The four major credit rating agencies that operate in the country are Crisil, Fitch, Icra and Care. These agencies, based on the creditworthiness of companies, assign them ratings (like AAA, AA, BBB and so on) which are used by investors, banks and other institutions.

The new SEBI guidelines require the credit rating agencies to disclose their shareholding patterns as well.

SEBI said, "A CRA shall disclose its shareholding pattern as prescribed by the stock exchanges for a listed company under clause 35 of the listing agreement." It said CRAs will also have to annually provide the list of defaults separately for each rating category (AAA, AA, A, BBB, BB, B, C). "A rating agency shall recognise default at the first instance of delay in servicing of interest or principal on the rated debt instrument," it added.

According to the guidelines, every six months, the agencies will have to provide information like all credit ratings movements, new credit ratings assigned and change of each credit rating from investment grade to non-investment grade and vice versa.

As for dealing with issues of conflict of interest, the regulator said CRAs will have to ensure that their analysts do not participate in any kind of marketing and business development activities, "including negotiations of fees with the issuer whose securities are being rated".

The agencies will also have to ensure that their employees who are involved in the credit rating process and their dependents do not own the shares of the issuer. Besides, SEBI said, "A CRA shall disclose, in case of accepted ratings, its conflict of interest...Including the details of relationship - commercial or otherwise - between the issuer and the CRA or its subsidiaries." — PTI 

New York/Chicago, May 3
UAL Corp, parent of United Airlines, said it would buy Continental Airlines Inc for about $3.17 billion in stock, forming the world's largest carrier and further shrinking the US airline industry.

Continental shareholders will receive 1.05 shares of United common stock for each Continental common share they own. Based on United's stock price of $21.60 on Friday afternoon, and Continental's 139.6 million outstanding shares as of April 21, United would pay $3.17 billion for Continental, or $22.68 a share. That represents a 1.5 per cent premium over Friday's closing price.

The name of the combined airline will be United Airlines. The name of the holding company will be United Continental Holdings Inc.

Continental chief executive Jeff Smisek will run the Chicago-based combined airline with over $29 billion in annual revenue, while UAL CEO Glenn Tilton will be non-executive chairman.

The deal marks the first major US airline merger since Delta Air Lines Inc's 2008 purchase of Northwest, and caps months of speculation that more industry consolidation was ahead. — Reuters

New Delhi, May 3
Tata Nano will have competition in the coming years with French auto major Renault and Bajaj Auto putting the price to their ultra low cost (ULC) at $2,500, (around Rs 1.10 lakh).

Renault and Bajaj are jointly developing the ULC with Nissan to take on Tata Nano, which is currently available in a price range of Rs 1.23 lakh-1.72 lakh (ex-showroom Delhi ) for three variants. It is expected to now hit the market by 2012.

The revelation of the pricing of the Renault-Bajaj car came at the Annual General Meeting of the company.

Renault president and CEO Carlos Ghosn informed the AGM, “In India, Renault and Nissan are developing an ultra low cost vehicle with the Bajaj group, benefiting from its expertise in the light vehicles and the knowledge of the Indian market. We are aiming for a price of $2,500.”

The confirmation also came from Bajaj Auto director Rajiv Bajaj who replied in the affirmative when asked if this was the agreed price.

The conformation from the two puts to bed the tricky issue which has been the main reason for the delay in bringing out the car, the project for which was announced in 2008 months after Tata launched Nano.

Originally, the car was scheduled to hit the market this year.

New Delhi, May 3
Leading pharmaceutical firms such as Cipla, Ranbaxy, Pfizer, Dr Reddy's are among the firms pulled up by the drug price regulator National Pharmaceuticals Pricing Authority (NPPA) for overcharging.

According to information available on the NPPA website, as on March 31, 2010, the total estimated overcharged amount, including interest, by various pharmaceutical firms since the inception of the NPPA in 1997 stood at a whopping Rs 2,150.38 crore. But so far, the authority could recover a paltry Rs 191.45 crore from this and is fighting litigations in various courts to recover the rest of the sum.

According to the authority, the country's top two firms Cipla and Ranbaxy, accounted for over 50 per cent of the total overcharged amount — Rs 2,150.38 crore. While Cipla's overcharged amount stood at Rs 1,382 crore, that of Ranbaxy's it was at Rs 136.2 crore during the period. Though the NPPA has been in litigation with Cipla over the issue it could not recover any amount from the Mumbai-based drug maker, while the regulator has recovered around Rs 30 crore from the Delhi-based Ranbaxy.

The NPPA was established on August 29, 1997 as an independent body of experts with the task of fixing and revising drug prices, both bulk drugs and formulations, to ensure the availability. Under the Drugs Prices Control Order of 1995, the NPPA is empowered to fix and regulate the prices of medicines produced by using 74 out of about 500 commonly used bulk drugs, kept under statutory price control. — PTI 

New Delhi, May 3
The bid price for pan-India 3G licence today crossed the Rs 10,000 crore-mark on the 20th day of auction, assuring the exchequer of Rs 41,766 crore in revenue.

Nine operators in the fray for 3-4 slots drove up the pan-India bid price to Rs 10,348 crore.

Mumbai circle continued to attract much interest, with bids reaching Rs 1,706.07 crore - over five times the base price of Rs 320 crore. Delhi's received a bid of Rs 1,653.87 crore.

Both Mumbai and Delhi circles have three slots available for auction.

The government had originally estimated to collect Rs 35,000 crore from sale of spectrum (air waves) for third generation mobile services and Broadband Wireless Access (BWA).

With BWA spectrum yet to be auctioned, the total collections could rise further. Telecom Minister A Raja had stated earlier that the government may garner around Rs 50,000-Rs 55,000 crore by selling 3G air waves and BWA spectrum.

Mobile operators, including Bharti, Vodafone, Reliance and Tata, are among those in the fray for spectrum for 3G services, which allows subscribers to download hi-speed data and stream videos on mobile telephones. The radio waves are being auctioned across 22 circles.

The successful bidders would be allotted air waves in September after the spectrum is vacated by the defence forces. A total of 116 rounds were completed today. — PTI 

Mumbai, May 3
US-based stock exchange NYSE today announced selling its five per cent stake in India's top bourse NSE to Singapore government's investment arm Temasek. The deal marks exit of New York Stock Exchange from National Stock Exchange and Temasek's entry as shareholder.

The transaction has received the necessary regulatory approvals, NSE and Temasek said in a joint statement, but did not elaborate on the financial details.

NYSE had acquired 5 per cent of NSE in 2007 for $115 million, valuing the bourse at about $2.3 billion.

However, in June last year, private equity firm Norwest Venture Partners bought a little over two per cent stake from IL&FS Securities Services in a secondary transaction for Rs 250 crore, thus valuing NSE at about $2.5 billion.

NSE's current shareholders include Indian and global banks, insurance companies as also investment companies from India and abroad.

Shares of close to 1,500 companies are traded on the NSE with a combined market capitalisation of over Rs 60,00,000 crore. The average daily turnover at the exchange is close to $20 billion (about Rs 88,000 crore).

Commenting on the deal, NSE managing director Ravi Narain said: "Temasek is a well-respected investor and we welcome them as a shareholder." Temasek Senior MD Manish Kejriwal said that the company sees its investment in NSE as a "good proxy" to India's economic growth and development of its capital markets. — PTI 

Berlin, May 3
The finance ministers of 16 nations that use the euros Sunday night sealed a 110-billion euros bailout package for heavily indebted Greece over three years after the country's government agreed to a new round of tough austerity measures.

The largest financial rescue of a nation from bankruptcy will involve credit of 80 billion euros from the 15 other euro zone nations and 30 billion euros from the International Monetary Fund (IMF).

It is intended to prevent Greece from defaulting on its staggering debts of more than 300 billion euros as it could have a domino effect on other debt-ridden nations in the eurozone.

Under the financial support programme, which was endorsed by 16 eurozone finance ministers at an emergency meeting in Brussels, a maximum of 30 billion euros from the EU and the IMF will be given in the current year.

The first loan tranche will be made available to Greece before May 19 for repaying its debts, chairman of the euro zone group and Luxembourg Prime Minister Jean-Claude Junker said after the meeting.

"We are optimistic that our help will be enough to meet all Greek payment obligations till 2012," he told a news conference.

The bailout deal will be formally endorsed by the heads of states and governments of the euro zone at a European Union summit on May 7, where they will also discuss measures to avert a similar crisis in future, Junker said.

He said credit from euro zone partners and the IMF will be paid to Greece only if the debt-ridden country sticks to the austerity measures announced on Sunday.

The European Union and the IMF will monitor Greece's progress with its economic recovery programme every three months.

The bailout package came after weeks of wrangling, post the Greek government reached a deal with negotiators from the European Commission, the European Central Bank and the IMF in Athens on a new round of severe spending cuts.

The Greek government will undertake public sector salary and pension cuts for three years, tax increases, scrapping bonuses and other measures, which it hopes could save up to 30 billion euros over three years. — PTI

Mumbai, May 3
JSW Steel today said its consolidated net profit stood at Rs 611 crore for the fourth quarter ended March 31, 2010. The company had a loss of Rs 39.9 crore in the same quarter a year ago, JSW Steel said in a filing to the Bombay Stock Exchange.

Total income rose to Rs 5,577 crore for the quarter ended March 31, from Rs 3,719 crore in the same period previous fiscal, the filing added.