Mumbai, December 16
In its mid-quarter policy review announced today, the RBI today announced a one per cent reduction in the statutory liquidity ratio (SLR) of commercial banks from 25 per cent to 24 per cent. The new SLR rates come into effect from December 18, according to the RBI.

The apex bank also announced that repo rates and reverse repo rates would be held at 6.25 per cent and 5.25 per cent, respectively. The cash reserve ratio (CRR) of scheduled commercial banks will also remain unchanged at 6 per cent.

Today's announcement comes amidst signs that inflation was showing signs of slowing even as liquidty concerns in the economy was on the rise. The RBI also announced a second auction for purchase of government securities next month, under its open market operation (OMO) to improve banks' liquidity.

So far, the RBI has increased repo and reverse repo rates six times this year in a bid to rein in inflation.

According to the RBI, today's measures will inject Rs 48,000 crore afresh into the banking system.

RBI said it would purchase Rs 12,000 crore each every week for the next four weeks starting from the week ending December 24. "The above two measures are expected to inject liquidity on an enduring basis of the order of Rs 48,000 crore", RBI said. The move is expected to bring down the liquidity deficit to comfortable levels, the apex bank said.

However, the RBI cautioned that today's measures to improve liquidity was only a temporary phase as inflation continues to remain a major concern. The risks of higher inflation continue to remain because of booming domestic demand and higher global commodity prices which was causing a build-up of demand side pressures, according to the central bank.

"... despite the slow recovery and slack capacity in advanced economies, international commodity prices such as oil, food, industrial inputs and metals have risen noticeably in recent weeks.

New Delhi, December 16
Twenty six years of joint venture between the Munjal family-owned Hero Group and Japanese automaker Honda Motors, which formed the country’s largest two-wheeler manufacturer came an end today with the latter formally deciding to sell its 26 per cent stake in the company.

Reports emerging from the auto sector said Honda Motors’ board had given a go ahead for the sale and the board of the joint venture company will meet to finalise the terms of the disengagement.

Top officials of Honda would be in India to attend the board meeting.

Reports said the Japanese auto major will exit the JV through a series of off-market transactions by giving the Munjal family-that currently holds 26 per cent stake in the company an additional 26 per cent.

The main reason for the exit by the Japanese automaker is that having already got an independent fully-owned two-wheeler subsidiary, Honda Motorcycle and Scooter India (HMSI), in the country, it wants to concentrate in improving its market share.

However, as per the agreement reached between Munjals and Honda, the Japanese automaker will provide the Hero Group with technology for new models for at least another two years.

According to reports, Honda will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30 and 50 per cent to the current value of Honda’s stake as per the price of the stock after the market closed on Wednesday.

On the other hand, Munjal family would compensate Honda through high royalty payouts, which could double to nearly six per cent of net sales.

Reports suggested that as per the arrangement, it will be a two-leg deal. In the first part, the Munjal family, led by Brijmohan Lal Munjal group, will form an overseas-incorporated special purpose vehicle (SPV) to buy out Honda’s entire stake, which will be backed by bridge loans.

This SPV would eventually be thrown open for private equity participation and those in the fray include Warburg Pincus, Kohlberg Kravis & Roberts (KKR), TPG, Bain Capital and Carlyle.

Post transaction, the Munjals will emerge as the largest shareholder in Hero Honda with a combined direct and indirect holding of 34-36 per cent and the PE funds will own an indirect stake of 16-18 per cent.

PEs will take between 50-60 per cent stake in the new entity to give them the 16-18 per cent stake in the main company, which would soon sport a new name.

New Delhi, December 16
India Inc today said it is "happy and delighted" at Reserve Bank keeping the key policy rates unchanged and announcing measures to pump in Rs 48,000 crore into the system.

"We are extremely delighted that RBI has put a halt on interest rate hike and along side, reduced SLR (Statutory Liquidity Ratio) by one percentage point, which is an extremely favourable change," Ficci President Rajan Bharati Mittal said.

He said the measures would help ease the liquidity problem and meet the financing needs of the industry. Terming the RBI's credit policy as "realistic and balanced," Assocham said the central bank has correctly highlighted the prevailing liquidity deficit in the system and tried to resolve the situation.

"(Assocham) fully endorses RBI's view on the play of current inflationary pressures in the country as well as the existing external and domestic economic conditions," chamber's President Dilip Modi said. CII said it is "happy" that repo and reverse repo rates were not hiked and RBI injected liquidity into the banking system. "This will help short-term rates to cool down and help maintain stability in our macroeconomic environment," CII Director General Chandrajit Banerjee said. — PTI

Sydney, December 16
Lanco Infratech, an Indian infrastructure group, has bought the coal mines of Australia's Griffin Coal for almost $850 million in one of India's largest investments in the country, a media report said.

Administrator KordaMentha said the Indian infrastructure group agreed to buy the Western Australian Collie coal mines of Ric Stowe's failed company, which produced over four million tonnes of steaming coal annually, The Australian reported. However, the sale does not include Griffin's nearby Bluewaters power stations, which will be sold in a separate process next year.

The group plans to expand the capacity of the mines and export the coal to India for use in its power stations. — IANS

Washington, December 16
The US is suing oil giant BP Plc and eight other companies linked to the Gulf of Mexico oil spill for violating American environmental laws, Attorney General Eric Holder has said.

The civil suit was filed in the US District Court in New Orleans against BP, rig operator Transocean, Anadarko Petroleum Corp, Transocean's insurer Lloyd's and five others for their role in the spill.

The lawsuit asks for civil penalties under the Clean Water Act and to declare eight of the defendants liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill, Holder said on Wednesday."We intend to prove that these defendants are responsible for government removal costs, economic losses and environmental damages without limitation," Holder said.

"Both our civil and criminal investigations continue, and our work to ensure that the American taxpayers are not forced to bear the costs of restoring the Gulf area and its economy is moving forward."

The Deepwater Horizon rig exploded on April 20, killing 11 oil rig workers and causing a well rupture that resulted in nearly 5 million barrels of oil spewing into the Gulf of Mexico, leading to the worst environmental disaster in the US history. Oil continued to flow out of the well until July and it was finally plugged in September.

According to the suit, the defendants failed to keep the oil well under control in the period leading up to the explosion; failed to use the safest drilling technology to monitor the well's conditions; failed to maintain continuous surveillance; and failed to use equipment necessary to ensure the safety of both personnel and natural resources.

BP said in November that the cost of the oil spill had risen to $11.6 billion. Total costs are expected to reach about $40 billion, including $20 billion set aside for compensation payments in an agreement signed with the US government. — DPA

Helsinki/New Delhi, December 16
Finnish cell phone maker Nokia has slapped fresh lawsuits against Apple, alleging violation of patents related to iPhone and iPad, among other products, in three countries. Nokia today said it has filed lawsuits in the UK, Germany and the Netherlands.

"These (the latest lawsuits) actions add 13 further Nokia patents to the 24 already asserted against Apple in the US International Trade Commission and the Delaware and Wisconsin Federal courts," Nokia's Vice-President (Intellectual Property) Paul Melin said in a statement. — PTI

New Delhi, December 16
State-owned Oil and Natural Gas Corp (ONGC) today approved a special dividend, free share and a stock split before the government's planned sale of stake in the company in March, Chairman RS Sharma said.

In the pre-divestment bonanza, the government will rake in Rs 5,074 crore from the Rs 32 per share (320 per cent) special interim dividend approved by the board of ONGC, he told reporters here.

The board also approved issue of one free share for each held (1:1 bonus issue) and splitting each equity shares of Rs 10 face value into two shares of Rs 5 (2:1 stock split).

"The total dividend payout will be Rs 6,844 crore, of which Rs 5,074 crore will go to the government (which holds 74.11 per cent stake in the company," he said. Besides, ONGC will also pay Rs 1,163 crore in dividend tax to the government on the special interim dividend.

While the record date for payment of special dividend has been fixed as December 21, the company will seek shareholder approval for the stock split and bonus issue through a postal ballot.

Post stock split and bonus issue, one share of Rs 10 will become four shares of Rs 5 each. Total issued shares of the company will increase from 2,139 million to 8,556 million.

"Based on the current indications, the follow-on public offer (of 5 per cent of government's shares) should be opening around the first week of March," Sharma said.

Following the offer, the government's stake in ONGC would come down to 69.14 per cent from 74.14 per cent at present. — PTI