The Tribune, Chandigarh, India

	Kingfisher liable for prosecution; ‘onus on Mallya to save airline’ TNS & Agencies New Delhi, March 20 Kingfisher Airline’s promoter Vijay Mallya may have earned some reprieve for his cash-strapped carrier, but it could be shortlived. Civil Aviation Minister Ajit Singh today warned the cash-strapped carrier that the company was liable for prosecution over unpaid taxes and the onus to save the carrier was on Mallya. Kingfisher Airlines, which has debt of $1.3 billion, is scrambling to raise funds as banks have refused to lend more for day-to-day operations. A big cutback in flights has reduced its revenue, leaving the carrier with little cash to pay its employees, airports and tax authorities. “Banks will decide if they want to risk loans to Kingfisher,” he added, even as Mallya and Kingfisher CEO Sanjay Aggarwal met Directorate General of Civil Aviation (DGCA) officials to submit their plans for the airline. “Vijay Mallya has to convince the DGCA he’s in a position to operate an airline,” Singh asserted. After the meeting, Mallya said Kingfisher had submitted all data to DGCA. The airline will be using just 15 to 16 aircraft as against the 28 planes submitted in February. It has also decided to stop overseas flights operations. Mallaya said a Kingfisher team had gone to Geneva to talk to IATA, adding he was encouraged by Finance Minister Pranab Mukherjee’s speech in Parliament on FDI. Kingfisher has never made a profit in a struggling Indian airline industry that is saddled with high fuel costs, stiff competition and low fares. Five of India's six airlines are in the red and all domestic carriers together are likely to lose $2.5 billion in the fiscal year ending March, according to the Centre for Asia-Pacific Aviation (CAPA), an industry consultancy. Global industry body IATA has suspended Kingfisher from its settlement system, restricting bookings through overseas agents, hitting ticket sales. On Monday, the last of Kingfisher's independent directors resigned. The troubled carried needs at least $500 million immediately to keep flying and $800 m to return to full operations, according to CAPA. SBI didn’t provide any lifeline: FinMin The government said Tuesday that State Bank of India had not extended any lifeline to the cash-strapped Kingfisher Airlines this fiscal. "SBI, leader of consortium of lender banks, has informed that no such lifeline has been extended to KFA by them during the current financial year," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.
	Tech Mahindra, Satyam merger decision today Sanjeev Sharma/TNS New Delhi, March 20 The stage is set for a merger between Mahindra Satyam and Tech Mahindra on Wednesday and the market will be keenly watching the nuances of the merger structure and swap ratio. After having gone through a troubled period, Satyam, which was India’s third largest IT firm, was acquired by the Mahindra group and now has been on the way to recovery. The merger could create an entity that could figure among the top five Indian IT companies. Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities. said it needed to be seen what course of action would be adopted by the firms in their merger planning. It may be any of the following methods — Tech Mahindra buying Mahindra Satyam or the reverse, or a merger between the two. He said keeping several factors such as brand image into account, the most likely method is for Tech Mahindra to buy Mahindra Satyam. Another aspect that will be closely watched by the market will be the nuances regarding the merger swap ratio. Irrespective of the swap ratio, the impact on the promoter group Mahindra will be limited, as they hold virtually similar percentage of stake in both the entities, about 42.65% stake in Mahindra Satyam and 47.65% stake in Tech Mahindra. However, any swap ratio in favour of Tech Mahindra may prove to be slightly better for the Mahindra group. It needs to be seen what kind of base will be used by the companies to arrive at the final swap ratio. However, on the basis of the current market prices where the shares of Mahindra Satyam and Tech Mahindra are trading, the likely swap ratio is appearing to be close to 9:1. That is, one share of Tech Mahindra will be issued for every 9 shares of Mahindra Satyam. Any swap ratio close to 9:1 will make the merger transaction market-price neutral, meaning thereby, there may not be any arbitrage opportunity left for the shareholders of both the companies. However, the swap ratio close to 9:1 appears to be value decretive for the shareholders of Mahindra Satyam and value accretive for Tech Mahindra shareholders. If the final swap ratio is close to 9:1, then the combined entity will be having a market cap to the tune of about Rs 17,000 crore. The combined entity will become 5th largest IT firm in terms of market cap. British Telecom, other promoter of Tech Mahindra, will be closely watching this space as it holds an about 23.20% stake in Tech Mahindra. If the swap ratio is 9:1, then BT will hold about 11.44% stake in the combined entity. Thunuguntla said Mahindra Satyam may be able to come out of the crisis of unprecedented magnitude and this underlines that crisis management has proved to be quite robust in the Indian corporate world.
	StanChart cuts GDP forecast to 7.1% Mumbai, March 20 On the backdrop of higher crude prices and fragile coalition at the Centre, Standard Chartered Bank revised downward GDP growth forecast lowered to 7.1% in the next financial year from 7.4% estimated earlier. Similarly, inflation forecast has been revised to 7.2% for FY13 from 6.5% projected earlier, the report added. "We revise down our growth forecast to 7.1% for FY13 on relatively restrictive monetary policy and higher inflation," the research report said. The government has pegged FY13 growth at 7.6%, and a fiscal deficit of 5.1%. On inflation, the report said lack of supply-side reforms along with higher crude oil prices will drive average inflation rate for the next financial year to 7.2%. "We now expect WPI inflation to average 7.2% in FY13," it said. The report also said the recent hike in the excise duty by two percent to 12% would also add to the inflationary pressure. "The recent hike in the excise duty by 2% to 12% should also add to inflationary pressure, especially in manufactured product prices. This along with a 20% rise in railway freight rates announced just before the FY13 budget, should push prices higher," the report said, adding this will constrain the Reserve Bank for substantial reduction in policy rates. "Against this backdrop, we now think RBI will be able to cut rates by only 75 bps (0.75%) in FY13, compared with our earlier forecast of 150 bps (1.5%). The repo rate is currently at 8.50%, and we expect it to be at 7.75% by the end of FY13," the report said. Referring to current account deficit, the report said current account deficit is likely to be at 3.3% of GDP against 3.1% projected earlier. The research report also revised down its balance of payment (BoP) forecast to USD 5.5 billion from $10.5 billion estimated earlier. — PTI
	‘Oil prices can rise further’ Singapore, March 20 Franklin Templeton funds that focus on developing economies are heavily invested in energy stocks as the firm believes oil prices have room to increase further, the head of its emerging markets group Mark Mobius said Tuesday. "If you look at inflation and the oil price over the long term, you'll find that the oil prices have not kept up with inflation, so there's some catch-up to do," Mobius told a news conference. So long as oil does not spike rapidly from current levels of around $120 a barrel, the impact on the global economy will be manageable as slower growth among oil importing countries will be offset by gains in Russia and other oil producers, he added. Franklin Templeton, whose emerging markets group manages about $50 billion in equity, counts several oil companies among its top holdings. Its flagship $17 billion Templeton Asian Growth Fund, which was 36 percent invested in energy as of end-January, has PetroChina Co and Thailand's PTT PCL as its first and third-largest holding. The global emerging markets fund owns Lukoil Holdings and Gazprom, and Mobius told reporters Templeton funds also have stakes in Singapore rig builder Keppel Corp. Fund managers and analysts from Franklin Templeton's emerging markets group are currently in Singapore to discuss the firm's investment plans in coming months. AFRICA, CHINA: Mobius said the firm also sees opportunities in Africa and other so-called frontier markets that are not only rich in natural resources but also have fast-growing middle classes. "These countries are at a very early stage of development," said Mobius. For instance, although Africa represents 17% of the world's population, it only accounts for 6% of global GDP. Nine out of the world's 10 fastest growing countries over the last decade were frontier markets, six of them in Africa, he added. Mobius' Templeton Frontier Markets Fund, which has just under $1.2 billion, is heavily invested in banks and telecoms, with energy ranking third by industry sector. Nigeria represents the fund's largest holding by country. Frontier markets refer to countries such as Kazakhstan and Vietnam and the newly emerging economies in Africa and the Middle East, which currently receive very little investments through the stock markets. As for China, he said he was confident about its continued prospects despite signs of slowing economic growth and worries among some investors that the world's second-largest economy is headed for a hard landing. — Reuters
	Huge gold imports weighing on Re: FM Tribune News Service New Delhi, March 20 India produces just two tonnes of the precious yellow metal and imports as much as 900 tonnes — a transaction that causes strain on the balance of payment and affects the country’s exchange rate. India is the world's largest consumer of the yellow metal, accounting for some 20% of global demand. However, the quality of gold bearing ore is “extremely poor”, making it uncompetitive to mine such ores and produce the precious metal indigenously. India has around 30 gold mines and each tonne of Indian gold bearing ore yields only 22 grams of gold, Finance Minister Pranab Mukherjee told the Rajya Sabha on Tuesday, adding unless each tonne ore produces 45 to 50 gm of gold the exercise becomes uncompetitive. Justifying the hike in customs duty on the precious metal in the budget last week, he said the huge gold imports were straining the country’s balance of payments. All taken together, the total indigenous production of gold is two tonnes, while the import at one point of time touched the 900-tonne mark. According to Mukherjee, gold imports of such magnitude were straining the balance of payments and affecting the rupee exchange rate by impacting supply-demand balance of foreign exchange. “However, such imports do not have a direct bearing on foreign exchange reserves, as the Reserve Bank intervenes in the foreign exchange market through purchase and sale operations to curb excessive volatility and restore market orderliness”, he added.
	India to urge airlines to boycott EU carbon scheme New Delhi, March 20 India will urge its airlines to boycott the European Union's carbon charge scheme, raising the prospect of a global trade war over a law requiring flights in and out of Europe to pay for their greenhouse gas emissions. A senior government official told Reuters that India would soon ask local airlines not to buy carbon credits from or share emissions data with the bloc, which says other countries are not doing enough to tackle this source of greenhouse gases. India does not yet plan to ask airlines to cancel Airbus purchases. — Reuters
	Bullion traders extend strike for another two days Tribune News Service Mumbai, March 20 Bullion dealers and jewellers across India today extended their strike by two days to protest the doubling of import duties on gold and silver. "We have extended the strike by two more days and will resume business on Thursday," a spokesperson for the Bombay Bullion Association said. The FY13 budget also brought small jewellers, the backbone of the trade, into the tax net bringing them on par with the bigger stores backed by corporate houses. According to the trade, the additional import duties will increase the cost of gold by more than Rs 1,000 per ten grams. According to the jewellers over half a million jewellers across the country will be affected by the new rules.