Mumbai, December 3
India's sovereign rating could be cut if the government loosens fiscal policy in the runup to elections due by 2014 or sees a prolonged slowdown in economic growth, global ratings agency Fitch said on Monday.

Both Fitch and Standard & Poor's earlier this year cut their ratings outlooks for Asia's third-largest economy to negative, putting the country in danger of being the first of the BRICS grouping of fast-growing economies (Brazil, Russia, India, China and South Africa) to be downgraded to junk status.

Fitch said weak gross domestic product data on Friday confirmed the slowdown in the economy, and recent reform proposals by the government, while potentially supportive of growth, would need time to work and face political risks in their implementation.

"Policy slippage and/or mounting evidence of a structural decline in the trend growth rate, such as protracted relatively weak economic data, could cause the ratings to be downgraded," its report said.

The Indian economy extended its long slump in the July- September quarter of fiscal 2013, growing only 5.3 per cent, below the 5.5 per cent expansion seen in the three months to June, keeping it on track for its worst year in a decade.

The ratings agency expects economic recovery to be shallow with real GDP falling to 6% in the current fiscal year from 6.5% in the previous year before recovering to 7% in the year that ends March 2014.

The agency, however, pointed out that the upbeat HSBC Purchasing Managers’ Index (PMI) reading earlier in the day suggests that growth may have troughed. India's manufacturing sector beat the expectations of economists to grow at its fastest pace in five months in November, boosted by strong export orders and a surge in output, a business survey showed on Monday.

"However, tight fiscal and monetary policy settings decrease the authorities' scope to support growth amid stubbornly high inflation and a commitment to consolidating public finances," the report said.

Fitch said several of the proposals announced by the government require legislative approval and policy reversals cannot be ruled out.

The government opened doors for foreign direct investment into sectors like multi-brand retail in mid-September but the parliament remains in deadlock, with no decisions reached since the start of the winter session on November 22.

"The approach of general elections in 2014 means there is little time to fully enact reform. These risks are reflected in the Negative Outlook," Fitch added.

Fitch also pointed out that the government's five-year road map for reducing the fiscal deficit to 3% of GDP by 2016-17 is a stronger statement of intent than seen in some time, but added that India's track record of delivering on fiscal policy goals has not been encouraging.

"A loosening in fiscal policy ahead of the general elections could further weaken India's public finances and put pressure on the ratings," Fitch added. — Reuters

Morgan Stanley raises GDP outlook; Factory index up at 5-mth high in Nov

Morgan Stanley has raised India's FY13 GDP growth forecast to 5.4% from 5.1%, citing better-than-expected GDP growth for the September quarter and also the stabilization in non-agriculture growth indicators. The country's economy grew 5.3% from a year earlier in the July-Sept period, provisional GDP data showed on Friday. Meanwhile, India's manufacturing sector beat the expectations of economists to grow at its fastest pace in five months in November, boosted by strong export orders and a surge in output, a business survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI), which gauges the business activity of factories but not its utilities, rose to 53.7 in November from 52.9 in October. The economy extended its long slump keeping it on track for its worst year in a decade and underscoring the urgency of politically difficult reforms to spur a revival. — Agencies

Mumbai, December 3
Shares in Jet Airways, the second largest Indian airline, rose over 7 per cent on media reports of a 24 per cent stake sale to Etihad Airways, a flag carrier of the United Arab Emirates, for Rs 1,600 crore.

The deal is expected to be completed by the year-end, the airline will soon seek regulatory approval to tweak its ownership pattern to facilitate a stake sale to Etihad Airways. Jet Airways and Etihad have a code-sharing agreement.

The gains on Monday come on the back of a 57 per cent rise in the carrier's shares in November on speculation over a deal with Etihad Airways.

Rival SpiceJet Ltd shares were also up 6 per cent.

Jet Airways, owned by Naresh Goyal, and SpiceJet, a low-cost airline headquartered in Chennai, battling hot competition and high operating costs, are in talks to sell minority stakes to foreign investors, said a senior Indian government official with knowledge of the discussions.

Jet Airways, whose main hub is Mumbai, has an international hub at Brussels Airport. SpiceJet began service in May 2005 and by 2012, it was India's third largest airline in terms of market share. — Reuters

Mumbai Airport may ask Kingfisher to vacate terminal space over Dues

In fresh trouble for Kingfisher Airlines, Mumbai airport authorities are likely to issue an eviction notice after the grounded carrier failed to respond to an earlier notice asking it to clear the Rs 22 crore dues towards parking and navigational charges. The notice for clearing the dues, served 10 days ago, gave the airliner seven days to make the payment, but it has not yet responded, Mumbai International Airport Ltd, sources told PTI on Monday. They said the airport operator may now slap an eviction notice on the cash-strapped airline and lease out the space to other carriers. The Vijay Mallya-owned carrier has been grounded since October 1 and its flying licence suspended. — PTI

New Delhi, December 3
Looking to improve its market share, following the Hero and Honda separation, Chennai-based TVS Motors today said it was looking to finalize a partnership with German automobile and motorcycle giant BMW for collaboration in two-wheelers before the end of this fiscal.

The move will come as a major push for the group, which has been maintaining its share of the market despite the arrival of Suzuki and Honda, as independent players in the two-wheelers segment. It is more of an effort to gain technology in its bid to ramp up its portfolio in the high-end performance motorcycles segment.

Talking to reporters here on Monday following the launch of the company’s latest model, the executive segment 125cc bike Phoenix 125, TVS Motor Co president (marketing) H.S. Goindi said, “Talks are on (with BMW) and we expect something to materialize before the end of the ongoing fiscal”.

Phoenix 125, has been launched at a price tag of Rs 49,990 for drum brake version and Rs 52,000 (ex-showroom Delhi) for the disc brake variant

Goindi, however, declined to comment on the nature and details of the partnership for which the company is in talks with the German automobile firm.

BMW has been selling its high-end performance bikes since 2010 in India.

TVS earlier had a partnership with Japan’s Suzuki Motor Corp, but had parted ways to remain on a solo journey.

New Delhi/Mumbai/Beijing/ Singapore, December 3
Faced with soaring demand, stagnant output at home and a need to diversify from Iranian crude imports lost to Western sanctions, Indian oil companies are hungry for deals like ONGC's Kashagan buy that promise supplies sooner rather than later.

State-run ONGC Videsh has agreed to pay about $5 billion for 8.4%of the Kashagan field in Kazakhstan, the world's largest oilfield discovery in four decades - which could boost its output by about 16% within a year.

The deal adds to a stable of assets that span some of the trickiest territories in the world — Sudan, Iran, Iraq, Syria and Libya among them — accumulated as parent Oil and Natural Gas Corp struggled with domestic output.

But it's a drop in the ocean for the world's fourth-biggest crude importer — it buys in 3.5 million barrels per day (bpd) - where the energy gap triggers constant power cuts. Asia's third-largest economy plans to hit 8% growth in 2014/15 and by 2030 that could lift it to be third-largest in the world and also the no. 3 energy consumer, according to BP.

Oil supplies have become more urgent as Western sanctions over nuclear projects squeeze Iran, once India's second-biggest supplier. India's imports from Tehran slipped by nearly a fifth to 257,000 bpd in April-September.

"Our priority is to look for discovered, developed and producing assets which give us production growth immediately," T.K. Anantha Kumar, head of finance for Oil India, the country's other state-run explorer, told Reuters.

While not all the oil bought overseas turns up in domestic refineries, it can give companies a stake in the global crude trade, enhancing their flexibility for supplies and potentially helping profits. — Reuters

New Delhi, December 3
The Supreme Court on Monday, rapped the Sahara group for not refunding Rs 27,000 crore to investors, who had put their money into its two firms. A bench headed by Chief Justice Altamas Kabir asked Sahara India Real Estate Corp and Sahara Housing Investment Corp to state on Tuesday whether they would be able to refund the entire amount to their investors within a week.

Justice Kabir, who is known for his cool demeanour, had some harsh words for the companies for not implementing the apex court’s order and said the firms’ plea does not merit any hearing.

“Your intention is very shaky. Your every step is shaky, we can’t interpret our order according to your need,” the bench said.

Senior advocate Gopal Subramaniam, appearing for one of the companies, tried to justify its failure to refund the entire amount, but the bench strongly rebutted him saying, “You are justifying your conduct, which is not justifiable”. The bench, however, granted a day’s time to the two firms to inform it if they would be able to refund the money or not.

SEBI also opposed Sahara’s petition and submitted it had already filed a contempt petition against them and said that a strong action should be taken against them. — PTI