New Delhi, June 19
Canada-based equity research firm Veritas has downgraded the country’s second-biggest mobile phone operator Reliance Communications (RCom) to "sell" and has put a target price of Rs 15, citing high debt, "whimsical" accounting policies and poor corporate governance standards as the key reasons.

After the news, RCom's share plunged by about 9 per cent in the morning. After hitting a record low of Rs 60 a piece on the BSE, the RCom shares recovered some ground and were trading 4.7 per cent down at Rs 62.10 at 1430 hours. As the stocks traded at around Rs 61-62, company officials said the report "lacked credibility", was "full of factual inaccuracies, baseless allegations masquerading as research" and that Veritas was destroying investor confidence through sensationalism.

The report released on June 8 also says that research firm does not foresee any significant improvement in the tower market over the next 12-18 months, given the stampede by all players in the telecommunication tower market in India to monetise assets.

Moreover, the firm estimates that at best the telecom major can monetise its Reliance Infratel tower asset at a diminished value of Rs 12,500 crore.

Veritas also said the company’s accounting policies were whimsical and do not provide a clear picture of the underlying operating and business trends.

It added that the risk management and governance practices of the company were sub-optimal.

The report says that the telecom company has exceedingly high financial leverage, accompanied with debt repayment obligations of approximately $2.2 billion over the next 24 months, at a time when EBITDA in core business operations is stagnating, which is a significant challenge for the management team.

It said RCom had been scaling back its capital expenditures (capex) and has put assets on the block.

“We are also skeptical of the company's ability to reduce its financial leverage meaningfully by undertaking an IPO of Flag Telecommunication, given that equity of Reliance Globalcom Bermuda - whose only assets is Flag as per Federal Communications Commission Filings - has been pledged by its holding company, Reliance Globalcom BV Netherlands, to secure debt of $500 million,” the report said.

For FY12, the company reported a profit before tax of Rs 882 crore, whereas in our normalised estimate we believe the company incurred loss before tax of Rs 1,529 crore, it said.

Losing ground

* Veritas has put a target price of RCom’s share at Rs 15

* Says high debt, ‘whimsical’ accounting policies and poor corporate governance standards to blame

* RCom has debt repayment obligation of $2.2 bn (approx) over the next 24 months

* While RCom reported a profit before tax of Rs 882 cr in FY’12, Veritas says it incurred loss before tax of Rs 1,529 cr

Mumbai, June 19
Under attack for not reducing interest rates, Reserve Bank Governor D Subbarao today said inflation at current levels is unacceptable and monetary tightening is required to ensure sustainable growth.

"We want to support growth in the medium term with low and stable inflation, which is possible only with tightening, but inflation at the current level is not acceptable," he said at a function organised by the Indian Merchants' Chamber here.

He went on to say that "We would like to believe that the policy rate hikes have helped in moderating inflation...we look at all indices, be it WPI, CPI, etc in policy making.

Those wanting to gauge our responses should look at them; don't criticise us for confusing..." Yesterday, the RBI had stunned markets and industry by leaving all the key rates and cash reserve requirements for banks unchanged despite widespread expectations of rate cut.

Irked by the policy decision, Commerce and Industry Minister Anand Sharma had said he would take up the matter with the Finance Minister and the RBI Governor. The wholesale price index based inflation rose to 7.55 per cent in May, while GDP growth last fiscal plunged to a nine-year low of 6.5 per cent.

Discounting fears that the country is heading to a 1991-like condition, when the government had to pawn the sovereign in offshore banks, the Governor said, "We are not at a 1991-like implosion situation in 2012 (and that) our growth story is still credible but not inevitable. We need to work hard." On the sharp fall in crude and other commodity prices, he said this has been undone by the sharper decline of the rupee. — PTI

New Delhi, June 19
Top telecom operators’ recent decision to cut 3G data usage rates has not only come as good news for the subscribers but it is expected to fuel more than expected growth for the operators themselves.

Bharti Airtel, Vodafone, Reliance Communications (RCom) and Idea Cellular have over the past recent weeks announced up to 70 per cent cut in 3G tariffs which the market experts feel would assist mobile operators to expand their 3G user base.

Mobile data usage has been rapidly on the rise in India as more and more subscribers are accessing the web and use their applications through their smartphones and the cut in 3G rates would attract more and more subscribers to use this service that makes video calling and video downloading much easier.

Vodafone had recently reported that its Indian data subscriber base hit 30 million last year, and anticipates this figure should expand dramatically going forward.

Reports suggest that it is the easy availability of cheap smartphones which is driving this trend. Vodafone has reported that a typical user of these devices on its network is consuming four times the amount of data than the typical feature phone owner.

Bharti Airtel has also seen data download increase by 10 per cent per month in the recent past.

Similarly, Idea Cellular expects the number of 3G users to triple by the end of this financial year.

India's telecom firms have been focusing on increasing the usage of 3G data services to boost their revenue amid stagnation in demand for voice services.

Analysts point out that the significant price reduction would further increase the adoption of 3G network services.

Recent surveys have revealed that smartphone owners (between the age group of 15 and 25) spend an average of over three hours a day on the devices, with 60 per cent of their time dedicated to entertainment, like gaming or browsing the web.

Incidentally, in a move that would significantly fuel further growth in this segment is the all out effort being made by the telecom operators to attract subscribers by offering them low-priced smartphones bundled with attractive 3G plans.

New Delhi, June 19
Gold zoomed to fresh record high of Rs 30,750 per 10 gm in the national capital today on brisk buying by stockists and jewellers for the current wedding season and a firming global trend.

Gold prices surged by Rs 325, surpassing its previous June 15 record of Rs 30,570. Silver also jumped up by Rs 800 to Rs 55,800 per kg on hectic demand by industrial units and coin makers.

Trading sentiment bolstered after gold climbed in global markets on widening euro zone debt crisis and speculation the Federal Reserve will act to spur growth, weakened dollar and boosted demand for the metal as an alternate investment. Gold in global markets, which normally sets price trend on the domestic front, gained 0.3 per cent to $1,633.60 an ounce in Singapore. Traders said frantic buying by stockists and jewellers for the ongoing wedding season amid positive global cues mainly pushed the gold to record high.

On the domestic front, gold of 99.9 and 99.5 per cent purity surged by Rs 325 each to set a new peak level of Rs 30,750 and Rs 30,550 per 10 gm, respectively. — PTI

New Delhi, June 19
Bharti Softbank (BSB), a 50-50 joint venture between Bharti Enterprises and Softbank Corp, and Yahoo Japan Corporation, the first ranked internet portal in Japan, today announced a partnership for developing a mobile internet portal for the Indian mobile market.

Although the companies did not share the investment details, but said that they have formed a joint venture company BSY Pte. Ltd for the purpose.

BSB was launched in October 2011 to focus on mobile internet in India. BSY Pte. Ltd is a step forward in this partnership and aims to combine Bharti’s deep understanding on the Indian market with Softbank group’s rich experience in the internet portal space, Bharti Airtel said.

Kavin Bharti Mittal, Head of Strategy and New Product Development, BSB said, “We are delighted to partner Yahoo Japan, who have a proven track record in this area. BSY, which is BSB’s second venture, will be an important piece in our strategy to drive the uptake of mobile internet and data services.”

Shin Murakami, Chief Mobile Officer of Yahoo Japan, said “We are excited about the partnership with BSB for the Indian market, where the coming years will see explosive growth of data usage on mobile. Through this partnership, we hope to contribute to enhance people’s lives through mobile internet.” 

New Delhi, June 19
Looking to improve its footprint in India, SanDisk Corporation, a global leader in flash memory storage solutions, today announced a suite of new retail products that includes four new USB flash drives and a high-performance memory card, which is the first global launch in the country by the company founded by an Indian.

Founded by Sanjay Mehrotra in 1988, SanDisk unveiled the new products which include the fastest, thinnest and highest-capacity USB flash drives, as well as the world’s fastest memory card for smartphones and tablets.

The new products are the SanDisk Extreme USB Flash Drive, the high capacity storage Cruzer Glide USB Flash Drive with a 128 GB storage capacity, Cruzer Pop USB Flash Drive and SanDisk Extreme Pro micro SDHC card, which is ideal for smartphone and tablet users who want to boost their device’s storage capacity.

Although the company officials refused to divulge the investments they are making to expand their footprint in India or the kind of market share they are expecting to garner with the new product launches, but said India, which is the fastest growing market in the world, remains one of the most important targets for improving their sales.

“India is an important market for SanDisk, and today serves as the global launch platform for our new USB flash drives and industry-leading memory card,” said Manisha Sood, Country Manager and Director, India and SAARC.

The Extreme USB flash drive can transfer, store and share large files up to 10 times faster with speeds of up to 190MB per second.

The 128GB Cruzer Glide USB flash drive is SanDisk’s highest-capacity USB drive ever and according to company officials is an ideal companion for anyone using ultra-thin notebooks, which are often limited to 128GB of storage.

The device allows consumers to double their available storage with a convenient portable solution.