B U S I N E S S

Citigroup to exit HDFC, sell its stake for up to $2.1 bn
Mumbai, February 23
Citigroup Inc plans to raise up to $2.1 billion by selling its entire stake in Housing Development Finance Corp (HDFC) on Friday as part of the U.S. bank's efforts to shore up its capital base, three sources with direct knowledge said. The transaction is the largest share sale this year in India and comes close on the heels of investors such as Carlyle paring their stakes in Indian companies after a sharp surge in the domestic markets in 2012.

Indian carriers rack up mounting losses in past year
New Delhi, February 23
Rising ATF prices and cut-throat fare competition have taken their toll in the Indian aviation industry, which, despite a robust passenger growth of around 18% in the past one year, have witnessed their prospects nosedive. Five of six major carriers are losing money and if auditors can be believed then Indian carriers currently have accumulated losses of over Rs 30,000 crore.

Indo-Pak expo expected to spur bilateral trade
Ludhiana, February 23
The four-day Indo-Pakistani Expo 2012, aimed at promoting bilateral trade ties between the two neighbours, got off on Thursday. It is the seventh in a series of trade shows organized by the PHD Chamber of Commerce & Industry and is being held here for the first time.

Job seekers cross a road as they line up outside a Foxconn recruitment centre in Shenzhen, Guangdong province, on Wednesday. Apple Inc's top manufacturer in China, Foxconn Technology, is having no problems luring fresh workers to churn out ever more gadgets, despite the firm's reputation as a tough employer that has put it under a thorough probe into its labour practices. — Reuters The head office of Emirates NBD in Dubai. More than two years after the Dubai debt crisis erupted, the restructuring of corporate debts remains in legal limbo as it is unclear how banks can get back their money from government-linked enterprises in the Gulf state. — Reuters

UAE’s Etisalat sues Indian telecom JV partners for fraud
New Delhi, February 23
UAE telecom operator Etisalat has sued its Indian joint venture partners for fraud, the former monopoly said on Thursday, following a top court's recent order to cancel its affiliates licenses amid a corruption probe.

Eurozone economy set to shrink in 2012
Brussels, February 23
The eurozone's economy is heading into its second recession in just three years, while the wider EU will stagnate, the EU's executive said on Thursday, warning that the area has yet to break its vicious cycle of debt.

Shanghai court says Apple can sell iPads
Shanghai, February 23
A Shanghai court has rejected a request by a Chinese technology firm that the sale of Apple Inc's iPads be halted across the affluent Chinese city, a source with direct knowledge of the ruling told Reuters on Thursday. The company, Proview Technology (Shenzhen), had been seeking the injunction against Apple as part of its battle with the US tech giant over the iPad trademark in China.

GTX launches SICT mobile handsets in tieup with iVK
Chandigarh, February 23
Chinese cellular handset major Gouxingtong (GTX) has tied up with iVK Mobiles to launch its range of Symbian handsets under the SICT brandname. With a focus on the rural and the semi-urban markets, the JV has brought in a wide range of low cost and feature rich mobile handsets.

Citigroup to exit HDFC, sell its stake for up to $2.1 bn
Transaction largest share sale this year in India

Mumbai, February 23
Citigroup Inc plans to raise up to $2.1 billion by selling its entire stake in Housing Development Finance Corp (HDFC) on Friday as part of the U.S. bank's efforts to shore up its capital base, three sources with direct knowledge said.

The transaction is the largest share sale this year in India and comes close on the heels of investors such as Carlyle paring their stakes in Indian companies after a sharp surge in the domestic markets in 2012.

Analysts said more stake sales via block deals in the stock market are likely to take place in the near future, as buyout firms and strategic investors look to cash in on investments made before the 2008 global financial crisis.

"The stock market rally since the beginning of this year has opened a window of opportunity for investors to book strong profit on their holdings," Jagannadham Thunuguntla, head of research at SMC Global Securities. "Many such exits will happen in the next couple of months."

Citigroup, the largest shareholder in HDFC, has launched the process to sell about 145 million shares, or a 9.9% stake, in HDFC for between Rs 630 and Rs 703.55 per share, the sources said. The lower end of sale price range represents a discount of 10% to the HFDC stock’s Thursday close of Rs 701.30 on the BSE.

HDFC chief executive Keki Mistry told Reuters the company had been informed about the launch of the deal by Citi, but declined to give details. A spokesman for Citigroup in India declined to comment.

Citi is the sole bookrunner for the deal, the sources said.

The deal will take it to the top of India's equity capital market league table, according to Thomson Reuters data. The bank, which ranked no. 2 in the ECM table in 2011, was not among the top three in the table before this transaction in 2012.

BLOCK DEALS: The exit from HDFC is part of Citigroup's efforts to boost its capital base to meet new global banking rules, the sources said. The European debt crisis has interrupted CEO Vikram Pandit's plans to rebuild the bank that reported an 11% drop in its latest quarterly profit. Citi, which had to be bailed out by the US government during the financial crisis, has repaid the bailout investments. — Reuters

Indian carriers rack up mounting losses in past year
Vibha Sharma/TNS

New Delhi, February 23
Rising ATF prices and cut-throat fare competition have taken their toll in the Indian aviation industry, which, despite a robust passenger growth of around 18% in the past one year, have witnessed their prospects nosedive. Five of six major carriers are losing money and if auditors can be believed then Indian carriers currently have accumulated losses of over Rs 30,000 crore.

While this is a grim scenario for all players, Kingfisher Airlines, which too fell to high fuel costs and fierce price war among budget airlines, also has its very faulty business model to blame for its financial woes.

Even though airline-promoter Vijay Mallya blames government policy for his company’s downfall, industry insiders hold his frequent change of plans and unplanned acquisitions, all driven by the ambition to become the number one company, responsible for the carrier’s sorrows.“The fact that Mallya is, the one who largely holds control means he is responsible for all the changes affected by the airline, whether it was beginning as an all-economy, single-class configuration aircraft with food and entertainment and shifting focus to luxury or discontinuing Kingfisher Red brand and completely converting fleet to a dual class, full-service configuration,” industry analysts feel.

In fact, most of the airlines are suffering from wounds that are self-inflicted. Despite registering strongest annual growth in the Asia Pacific region with demand up by 16.4%, Indian carriers reported losses due to excess capacity as one of the reasons.

According to the Geneva-based International Air Transport Association, India had the strongest annual growth with demand up by 16.4%. But capacity rose 18.6% and the load factor was 74.7%. “Deterioration in load factors generated by this excess capacity is one of the factors behind the losses being reported by Indian airlines in contrast to the current situation in China,” IATA said.

In contrast, the Chinese domestic demand rose 10.9% for the year on a 7.8% lift in capacity, strengthening load factors to 82.2%, thereby helping the profitability of the country’s airlines.

Capacity and economy conditions are among the issues that will continue presenting turbulence for carriers worldwide. “Cautious improving business confidence is good news. But 2012 is still going to be a tough year,” is what Tony Tyler, IATA director general & CEO recently advised.

The Indian aviation industry has only two things to look forward to — the hope of 49% FDI being permitted in aviation and direct import of ATF fuel. Meeting a key demand of the cash-strapped airlines, the government on Wednesday formally allowed private airlines to import jet fuel directly.

Indo-Pak expo expected to spur bilateral trade
Tribune News Service

Ludhiana, February 23
The four-day Indo-Pakistani Expo 2012, aimed at promoting bilateral trade ties between the two neighbours, got off on Thursday. It is the seventh in a series of trade shows organized by the PHD Chamber of Commerce & Industry and is being held here for the first time.

"India and Pakistan are the two largest economies in the South Asian region and provide tremendous potential for bilateral trade. The bilateral trade between the two countries will increase, if we

concentrate on the small & medium enterprises. If SMEs in both countries work collaboratively, it’ll definitely boost bilateral ties”, said Punjab principal industries secretary S.S. Channy, .

“There’s no better way of collaboration than organizing such kind of expos to bring the business communities of the two countries together on a common platform," noted R.S. Sachdeva, co-chairman of the PHD Chamber, Punjab. “There is enormous potential for tieups in energy, specifically hydroelectric energy, healthcare, infrastructure, tourism, university education and entertainment. We’re expecting 50,000 visitors during the four days of the expo. The Indian and Pakistani pavilions will include home interiors, textiles, electronics, handicrafts, marble, garments & clothing accessories and food, to name a few,"

The fair is expected to lead to more people-to-people contacts between the two countries and provide an opportunity for businessmen from India to showcase and market their products as well as interact with their Pakistani counterparts.

UAE’s Etisalat sues Indian telecom JV partners for fraud

New Delhi, February 23
UAE telecom operator Etisalat has sued its Indian joint venture partners for fraud, the former monopoly said on Thursday, following a top court's recent order to cancel its affiliates licenses amid a corruption probe.

Etisalat has launched legal proceedings against Vinod Goenka and Shahid Balwa, top executives at its India partner DB Group, and Majestic Infracon Private Limited, a DB Group company, for fraud and misrepresentation. Etisalat DB officials were not immediately available for comment.

On Wednesday, Etisalat said it would shut down the operations of Etisalat DB (EDB), in which it owns a 45 percent stake, after the unit's 15 licences were among the 122 the Supreme Court ordered to be scrapped. Etisalat paid $900 million in 2008 for its stake in Swan Telecom, later renamed Etisalat DB, with Majestic owning 45.7%.

"Etisalat's case is that it was induced into its investment in the company without any disclosure of the matters that are now alleged to have occurred in connection with the obtaining of 2G licences by EDB," Etisalat said.

"Those events occurred a year before Etisalat's investment. Etisalat is facing very significant financial losses on its investment in EDB despite its having no involvement in the 2G license application or award process and being entirely innocent of any allegations relating to it”, the UAE firm added." — Reuters

Eurozone economy set to shrink in 2012

Brussels, February 23
The eurozone's economy is heading into its second recession in just three years, while the wider EU will stagnate, the EU's executive said on Thursday, warning that the area has yet to break its vicious cycle of debt.

Economic output in the 17 nations sharing the euro will contract 0.3% this year, the European Commission said a report, reversing an earlier forecast of 0.5% growth in 2012. The wider, 27-nation European Union, which generates a fifth of global output, will not manage any growth this year, the EC forecast. "The EU is set to experience stagnating GDP this year, and the euro area will undergo a mild recession," it said in its interim forecast report.

"Negative feedback loops between weak sovereign debtors, fragile financial markets, and a slowing real economy do not yet appear to have been broken," the EC said.

The eurozone was last in recession in 2009, dubbed the Great Recession worldwide, when the economy contracted 4.3% during the deepest global slump since the 1930s.

A poisonous mix of high public debt, evaporating investor and business confidence and rising unemployment killed off the two-year recovery from the global financial crisis, economists say. Despite signs of stabilisation this year, economists polled by Reuters only expect growth to return in 2013.

Inflation for the eurozone this year should come to 2.1%, the Commission forecast. The growth forecast is a shade more optimistic than the IMF’s view. — Reuters

Shanghai court says Apple can sell iPads

Shanghai, February 23
A Shanghai court has rejected a request by a Chinese technology firm that the sale of Apple Inc's iPads be halted across the affluent Chinese city, a source with direct knowledge of the ruling told Reuters on Thursday. The company, Proview Technology (Shenzhen), had been seeking the injunction against Apple as part of its battle with the US tech giant over the iPad trademark in China.

The court ruled in Apple's favour after a hearing yesterday, the source said. Electronics firm Proview Technology (Shenzhen) says it owns the Chinese rights to the "iPad" trademark and had sought to block sales of Apple's iconic tablet computer in China as well as imports and exports of the device. — Reuters

GTX launches SICT mobile handsets in tieup with iVK
Ruchika M. Khanna/TNS

Chandigarh, February 23
Chinese cellular handset major Gouxingtong (GTX) has tied up with iVK Mobiles to launch its range of Symbian handsets under the SICT brandname. With a focus on the rural and the semi-urban markets, the JV has brought in a wide range of low cost and feature rich mobile handsets. SICT now proposes to launch its range of Android phones and tablets by next month.

SICT CEO Anil K. Kaushik told The Tribune the firm had already begun retail operations in 8 states. “By end-March we’ll be launching our handsets in J&K, Orissa, West Bengal and Karnataka. We’re looking at Rs 34 crore sales by end-March,” he said. He added SICT planned to launch a separate mobile accessories division under the JV.