B U S I N E S S

Re posts biggest 6-wk gain on GAAR delay; RBI intervenes
Mumbai, May 7
The Indian rupee posted its biggest percentage gain against the US dollar in six weeks on Monday after India postponed controversial rules on foreign taxation by a year, helping soothe worries about flows.

A shopkeeper counts rupee notes at a roadside food stall in Mumbai. The Indian currency fell to near a six-month low against the US dollar on Monday before recovering slightly, thanks to suspected central bank intervention, currency dealers said. The unit fell to an intraday low of Rs 53.74 to the greenback —a level last seen in December, 2011 — but then edged back up to 53.30 after the intervention. — AFP

In this June 2007 file photo, activists hold a protest rally against Google and Orkut websites in New Delhi. India has opened an anti-trust investigation into Google's online advertising practices, suspecting them of being anti-competitive. — AFP

Tax sops for foreign banks
New Delhi, May 7
The government said on Monday it would exempt foreign banks from paying tax for setting up local units as it looks to ring-fence such units against external economic shocks.

Rohtak emerging as new industrial hub
Chandigarh, May 7
Amid crisscrossing highways and freshly carpeted roads, industry has found a new address in Haryana — the Industrial Model Township (IMT) in Rohtak. A sleepy town, whose only claim to fame was Gulab’s traditional winter sweets till a few years ago, began by establishing itself as an education hub first — attracting institutes of repute including an IIM — that changed its face forever.

IT industry faces slowdown
New Delhi, May 7
As was being suspected, a report brought out by Kotak Institutional Equities has confirmed that the Indian IT industry is going through a slowdown and will be greatly affected by rising competition and cost inflation pressures. The report adds growth slowdown is for real and the two of the largest verticals accounting for 41% of revenues of the industry have slowed down.

HDFC Q4 net up; Rs 11 dividend
Mumbai, May 7
Housing finance lender HDFC Ltd on Monday reported a 16% jump in net profit at Rs 1,326.14 crore for the fourth quarter ended March, 2012.

Gold imports set to rise on excise removal
Mumbai, May 7
Gold imports by India, the world's biggest buyer of bullion, could rise on pent-up demand from jewellers after the government decided to scrap an excise duty on jewellery it imposed in March, the head of a trade body said Monday. Jewellers in India, which imported more than 950 tonnes last year — a new record — went on strike to protest against the duty and ended their action only after government reassurances that it would consider scrapping the tax.

iGATE drops Patni from brandname
Bangalore, May 7
iGATE Corporation on Monday announced its new brandname as 'iGATE'. The name 'Patni,' representing Patni Computer Systems Ltd, a majority owned subsidiary, has been removed from its brand identity.

Infosys woes prompt calls for change at top
Bangalore, May 7
The conservatism that served Infosys Ltd so well for three decades is now stunting its growth, prompting calls from investors for new blood at the top of India's showpiece outsourcer.

Employees walk in front of a building dubbed the "washing machine", a well-known landmark built by Infosys at the Electronics City IT district in Bangalore. The first signs all was not well at Infosys came a year ago with a disappointing sales forecast and the unexpected resignation of an executive many had expected to be its next CEO. Infosys has come to define an industry that symbolises modern entrepreneurial India. — Reuters

Punjab industry faces boiler licence renewal woes
Ludhiana, May 7
Industrial plants in Punjab using boilers need to renew their boiler licences every year and, with only one designated person — the state director of boilers, whose office is located in Jalandhar — authorized to do so in the entire state, they are facing a major problem.

Re posts biggest 6-wk gain on GAAR delay; RBI intervenes

Mumbai, May 7
The Indian rupee posted its biggest percentage gain against the US dollar in six weeks on Monday after India postponed controversial rules on foreign taxation by a year, helping soothe worries about flows.

The rupee extended gains in the afternoon session after Finance Minister Pranab Mukherjee told lawmakers that India will delay the General Anti-Avoidance Rule (GAAR) until fiscal 2013/14.

The local currency had already been propped up in morning trade by expectations of a more active central bank, with dealers saying the Reserve Bank of India had likely sold dollars soon after trade opened.

On Friday, the central bank had announced measures to bolster currency inflows, signaling its intention to prop up a rupee that had taken a hit in recent weeks due to the uncertainty over GAAR and the concerns over India's fiscal and economic outlooks.

The BSE Sensex, which was down as much as 1.9% in early trade, reversed losses to gain 0.5%.

"With GAAR implementation deferred by a year, inflows are likely to resume in the coming days, pushing USD/INR lower," Standard Chartered Bank said in a note.

The rupee rose 1.08 percent against the dollar, its biggest daily gain since March 27, to settle at 52.9050/9150 after falling to as low as 53.76 in intraday trade. It had closed at 53.47/48 on Friday,

Standard Chartered analysts expect immediate psychological support for the pair at 52.50, with a break of that leading to a test of 51.98, the 38.2 percent Fibonacci retracement of the up-move from 48.85 to 53.92.

Analyst don't expect significant falls in USD/INR over the longer-term, however. Worries about India, especially about its widening current account deficit, are unlikely to spur inflows, despite the removal of GAAR as a near-term risk, traders said.

The global risk environment is also worsening, as seen on Monday when the euro fell to a three month low following Greek and French election, while the disappointing US jobs data is also adding to the caution.

The RBI's actions on Friday to relax the interest rate ceiling on certain foreign currency banks deposits of banks are unlikely to help the rupee, analysts added, while the central bank also has limited firepower for more forex interventions.

The one-month offshore nondeliverable forward contracts were at 53.23. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 53.19 on a total volume of $5.25 billion. — Reuters

Tax sops for foreign banks

New Delhi, May 7
The government said on Monday it would exempt foreign banks from paying tax for setting up local units as it looks to ring-fence such units against external economic shocks.

Finance Minister Pranab Mukherjee made the announcement while initiating a debate on his tax proposals for the 2012/13 fiscal year that began on April 1.

"The Reserve Bank of India (RBI) is formulating a scheme for subsidiarisation of Indian branches of foreign banks to ring fence Indian capital and Indian operations from economic shocks external to the Indian economic scenario," he told lawmakers in Parliament. "To support this effort, I propose to provide tax neutrality for such subsidiarisation."

The RBI favours operating foreign banks to expand by opening wholly owned local units rather than opening branches, to shield them from liquidity shocks and capital constraints in their home markets.

However, foreign banks operating in India have cited high stamp duty and capital gains tax as a hindrance to floating local subsidiaries.

Existing laws require overseas lenders to pay up to 30 percent of the market value of their assets as capital gains and stamp duty while converting branches to a new entity.

The lenders as well as the RBI had requested the government to provide an incentive or a level playing-field to make the subsidiary model viable. — Reuters

Rohtak emerging as new industrial hub
Geetanjali Gayatri/TNS

Chandigarh, May 7
Amid crisscrossing highways and freshly carpeted roads, industry has found a new address in Haryana — the Industrial Model Township (IMT) in Rohtak. A sleepy town, whose only claim to fame was Gulab’s traditional winter sweets till a few years ago, began by establishing itself as an education hub first — attracting institutes of repute including an IIM — that changed its face forever.

Gradually Rohtak moved from being a purely agrarian economy to an education hub before graduating to acquire an industrial character. The recent Rs 4,700 crore investment by Maruti Suzuki and Asian Paints aliong with some other big projects has put its stamp on Rohtak’s emergence as a vibrant destination for big names in the auto, chemicals and mechanical components industry.

While this has happened despite the flourishing industrial hubs of Manesar and Bawal, it hasn’t happened without reason. Improved road connectivity with Delhi, labour availability, continual government support and industry-friendly initiatives besides the pending-completion Kundli-Manesar-Palwal expressway have been catalytic in turning around the fortunes of the district which is expecting a lot more industry to venture in and explore what is on offer.

Nippon Carbide, which supplies functional films used by the auto and electronics industries to Honda, Nissan, Suzuki among others, plans to start construction on its Rs 66 crore project by next month. “Besides Rohtak being well connected, land pricing is very sensible and manpower and water are unlikely to be a cause of concern in the near term. Also, the future looks very promising once the Kundli-Manesar-Palwal expressway opens,” said senior advisor Deepak Vasudev.

Shyam Rughwani, a consultant at Aisin Automative that makes auto parts, explains the company went in for an investment of Rs 383 crore in Rohtak, primarily because very large plots were not available in Manesar which has some labour issues as well. “For the Japanese, Noida doesn’t seem a very attractive destination. Then, Maruti is a market leader. Besides the KMP expressway, the government has been able to instill confidence in industry through various initiatives as well as transparent dealing,” he said..

The Sabarkantha Cooperative, a milk processing unit of Amul Dairy, will come up over 14 acres with an investment of Rs 92 crore. “We were initially interested in Bawal but the department offered the option of Rohtak, which we accepted. Haryana seemed a good bet especially because the departments seemed to work in tandem with each other and the close coordination was evident in the way the land allotment process was handled,” said Brahmabhatt, associated with the firm.

Suzuki alone has invested about Rs 3500 crores with a Rs 1800 crore motorcycle plant and Rs 1700 crore R and D facility to come up in IMT Rohtak. A spokesman of the company said that Suzuki is bowled over by Haryana given the conducive industrial climate in the state and the constant government support to the projects and the industry.

Haryana Industries Minister Randeep Singh Surjewala said: “An industrial hub with large scale infrastructural development and enhanced connectivity, Rohtak has its locational advantage which comes with tremendous growth opportunities. The government, too, is committed to providing a seamless entry to industry while ensuring an environment which helps it thrive anywhere in the state”.

IT industry faces slowdown
Tribune News Service

New Delhi, May 7
As was being suspected, a report brought out by Kotak Institutional Equities has confirmed that the Indian IT industry is going through a slowdown and will be greatly affected by rising competition and cost inflation pressures. The report adds growth slowdown is for real and the two of the largest verticals accounting for 41% of revenues of the industry have slowed down.

The BFSI (banking, financial services & insurance) vertical, which picked up the slack of telecom slowdown over the past three years, has started slowing down. As a result the burden will be too much for rest of the verticals combined if financial services were to slow down materially and telecom vertical remains weak.

The report said Nasscom’s FY2013 growth target of 11-14% was little aggressive than what the industry may actually achieve. It was of the view that in the present scenario strength of execution coupled with adequate margin of safety will be critical in stock selection in an increasingly competitive market with fewer growth opportunities and cost inflation pressure.

The report said the investment banking segment also runs the risk of going the telecom way. Financial services segment and investment banking in particular are challenged by balance sheet de-leveraging, slowdown and changes in regulation.

Changes in regulation require IT investments which the prevailing business conditions cannot justify.

As a result banks are forced to cut spending in existing areas (pricing pressure) to invest in regulatory changes. Conditions in the financial services space appear suspiciously similar to the telecom service provider vertical three years ago; market share gains need not be a virtue as Tech Mahindra’s performance has demonstrated.

The report pointed out there would be slower-than-expected expansion in Europe . Global vendors are in far better position to defend share (and appear to be doing that) in the European market given they have established strong offshore capabilities. This is in sharp contrast to the approach of global vendors who were in a denial mode, under threat from offshore players providing easy access to the US. The task has become more challenging for offshore pure plays.

The report noted growth for players is getting concentrated in core areas of competence. For example, Wipro’s growth has been largely restricted to energy, utilities and infrastructure management services, while the latter has been the bedrock of HCL Technologies.

HDFC Q4 net up; Rs 11 dividend

Mumbai, May 7
Housing finance lender HDFC Ltd on Monday reported a 16% jump in net profit at Rs 1,326.14 crore for the fourth quarter ended March, 2012.

The company had net profit of Rs 1,141.95 crore in the January-March quarter of the previous fiscal, HDFC said in a filing to the Bombay Stock Exchange.

The total income rose to Rs 4,884.7 crore in the quarter ended March 31, from Rs 3,774.1 core in the corresponding period a year ago, registering a 29% jump.

The board proposed a dividend of Rs 11 per share on the face value of Rs 2 each for the financial year 2011-12.

For the entire fiscal ended March 31, 2012, the company reported a 17% rise in net profit at Rs 4,122.6 crore, compared to Rs 3,534.9 crore in 2010-11.

During the year, total income improved to Rs 17,332.9 crore from Rs 12,878.9 core in 2010-11.

HDFC’s net interest margin stood at 4.4 per cent at the end of March 2012.

Loan approvals during the year were Rs 90,154 crore as compared to Rs 75,185 crore in the previous year, representing a growth of 20%.

At the same time, loan disbursements during the year grew by 18% to Rs 71,113 crore as against Rs 60,314 crore in the previous year. As at March 31, 2012, the company’s loan book stood at Rs 1,40,875 crore as against Rs 1,17,127 crore in the previous year, a rise of 20%. — PTI

Gold imports set to rise on excise removal

iGATE drops Patni from brandname

Bangalore, May 7
iGATE Corporation on Monday announced its new brandname as 'iGATE'. The name 'Patni,' representing Patni Computer Systems Ltd, a majority owned subsidiary, has been removed from its brand identity.

Unveiling the brand, Phaneesh Murthy, CEO, iGATE said, "I have always articulated that Patni, being a family name, is difficult to protect in several of our markets. This brand change is in line with our vision of 'one company' that will follow the successful delisting offer process of Patni with the Indian stock exchanges."

"With a revenue run rate of over $1 billion and over 27,000 employees, the new iGATE symbolizes a young and vibrant brand representing the merits of a fully integrated entity, equipped with an innovative mindset of a game-changer”, he said. — PTI

Infosys woes prompt calls for change at top

Bangalore, May 7
The conservatism that served Infosys Ltd so well for three decades is now stunting its growth, prompting calls from investors for new blood at the top of India's showpiece outsourcer. Critics say Infosys also must shed its aversion to acquisitions, change its premium pricing strategy and make better headway in higher-end businesses like consulting to compete with global rivals IBM and Accenture.

"It's one thing to get to the top and it's another to stay there. Infosys is clearly struggling to stay there," said Eric Mookherjee, a Paris-based fund manager for Shanti India, which holds Infosys shares.

The first signs all is not well at Infosys came a year ago with a disappointing sales forecast. — Reuters

Punjab industry faces boiler licence renewal woes
Manav Mander/TNS

Ludhiana, May 7
Industrial plants in Punjab using boilers need to renew their boiler licences every year and, with only one designated person — the state director of boilers, whose office is located in Jalandhar — authorized to do so in the entire state, they are facing a major problem.

Bobby Jindal, general secretary of the Punjab Dyers Association, said though Ludhiana had the largest number of boilers in Punjab there was no designated authority empowered to issue and renew licenses.

"With only one person for the entire state, work keeps on pending and we’ve to make rounds of the office to get the licences renewed. The Punjab Pollution Control Board issues a licence for a period of three to five years, but for boilers we’ve to get it renewed every year”, he observed.