Seattle, Washington/ Takamatsu, Japan, January 19
US and Japanese aviation safety officials finished an initial investigation of a badly damaged battery from a Boeing Co 787 Dreamliner jet on Friday as Boeing said it was halting deliveries until the battery concerns were resolved.

Boeing said it would continue building the carbon-composite 787, but deliveries were on hold until the US Federal Aviation Administration approved and implemented a plan to ensure the safety of potentially flammable lithium-ion batteries that prompted a widespread grounding of the new airplane this week.

In Washington, the top U.S. transportation official, Ray LaHood, said the 787 would not fly until regulators were "1,000 percent sure" it was safe. A week earlier, LaHood said he would not hesitate to travel on a Dreamliner.

Officials from the Federal Aviation Administration (FAA), US National Transportation Safety Board (NTSB) and Boeing joined Japanese authorities looking into what caused warning lights to go off this week on an All Nippon Airways Co domestic flight, prompting the aircraft to make an emergency landing at Takamatsu airport in western Japan.

The incident prompted regulators in the United States and around the world to ground the 50 Dreamliners in service. The jet has been flying safely for 15 months, carrying more than 1 million passengers, but it has run into problems in recent weeks, including problems with fuel leaks.

The biggest safety concerns centered on its lithium-ion batteries, which are lighter than conventional batteries, pack more energy and are faster to recharge, but are also potentially flammable.

When the FAA announced the grounding of all six US-operated 787s on Wednesday, the agency said airlines would have to show the batteries were safe and in compliance with its rules. It said both battery failures released flammable chemicals, heat damage and smoke — all of which could damage critical systems on the plane and spark a fire in the electrical compartment.

A Japanese safety official at Takamatsu airport told reporters that excessive electricity may have overheated the battery and caused liquid to spill out. Pictures released by investigators of the battery showed a burnt-out blue metal box with clear signs of liquid seepage.

GS Yuasa Corp, the Japanese firm that makes batteries for the Dreamliner, said it sent three engineers to Takamatsu to help the investigation. A person at the firm, who asked not to be named due to the sensitivity of the issue, said: "Our company's battery has been vilified for now, but it only functions as part of a whole system. So we're trying to find out exactly where there was a problem within the system."

An official with Thales, the French company that makes control systems for the battery, referred all questions to Boeing.

At a news conference, the Japan Transport Safety Board (JTSB) said the charred battery and the systems around it would be sent to Tokyo for more checks. It said there were similarities with an earlier battery fire on a Japan Airlines Co 787 parked at Boston's Logan International Airport.

"This information will go to Boeing and the FAA. They will assess it" before allowing the 787 to fly again in Japan, said Hideyo Kosugi, a JTSB inspector. He said the JTSB aimed to issue a report within a week but the US review might take longer.

LaHood, the US transportation secretary, said Friday he could not predict when the 787 would resume flight. "So those planes aren't flying now until we really have a chance to examine the batteries ... That seems to be where the problem is," said LaHood, who told a news conference on January 11 he would not hesitate to fly on the plane himself.

When pressed by reporters on Friday about whether he regretted his prior statements, LaHood said, "Last week it was safe." What has changed since then, he said, is the fact that another incident occurred involving the batteries.

Karen Walker, editor of Air Transport World, said La Hood and FAA administrator Michael Huerta chose to "stand side by side" with Boeing executives and underscore the jet's safety because of its huge importance to the US economy as the first all-new American airliner in two decades. — Reuters

New Delhi, January 19
The country's demand for diesel will stay buoyant despite its plan to hike the price of the fuel in small monthly steps, analysts and company officials said on Friday, and the country will keep up the pace of its exports of diesel.

From Thursday, government allowed state fuel retailers to raise prices by up to Re 0.50, or one US cent, a litre each month to gradually align them with market rates, and has also freed up the price of gasoil sold to bulk consumers.

The plan aims to prop up public finances without triggering a popular backlash ahead of 2014 elections as India struggles to rein in fuel subsidies and hold down its fiscal deficit.

The country's biggest fuel retailer, Indian Oil Corp, said it now loses revenue of about Rs 9 a litre on the sale of diesel, meaning the hikes will have to run for about a year-and-a-half in order to reflect market realities.

"This is a sensible approach and I don't think this will impact demand because they are going to increase the prices in a gradual way and people will get used to it," said analyst Praveen Kumar at consulting firm FACTS.

Despite paring its economic growth projections for the year, the government raised its forecast for diesel consumption ahead of the decision, as the government launches a push to develop the country's infrastructure.

The government expects diesel demand to rise 8.3% in the fiscal year ending in March, to 1.43 million barrels per day (bpd), up from a prior forecast of 5.9%.

India exported about 416,000 bpd of diesel in 2011/12, the bulk of that by Reliance Industries, operator of the world's biggest refining complex.

"Demand is driven by broader economic activity in the country," said Kumar, adding his firm was sticking to its forecast for 4.6% growth in diesel demand in 2013, to reach 1.48 million bpd.

Demand will not be affected by the decision to raise prices gradually and diesel demand will grow about 8% to 8.5% in the current fiscal year, said M. Nene, head of marketing at Indian Oil Corp.

"Industrial clients in India have no alternative to diesel, while the hike in the retail price is too small to impact demand," said Victor Shum, an oil analyst at IHS Purvin & Gertz, adding that his firm was keeping its forecast for growth of 5% in 2013 to 1.5 million bpd.

Regular price hikes will narrow the gap between diesel and gasoline, whose prices were freed up in 2010, and deter consumers from using it as an alternative to the fuel oil, sold at market rates and sometimes costlier than subsidized diesel.

In New Delhi, the capital, a litre of petrol costs Rs 67.26, about 41% more than the equivalent volume of diesel, which costs Rs 47.65 a litre.

While analysts hope to see diesel prices freed up as well, the Planning Commission pointed to political challenges ahead in executing the decision. "I’d say there is a very clear signal being given that we’re going to adjust prices, but there are no iron-clad guarantees in terms of timing," Montek Singh Ahluwalia, deputy chairman of the panel, told a private news channel. — Reuters

Mumbai, January 19
HDFC Bank has posted a net profit of Rs 1,859 crore for the quarter ended Dec 2012, up 30%, against a net profit of Rs 1,429.7 crore in the same quarter last fiscal.

According to Thomson Reuters I/B/E/S, analysts had expected a net profit of Rs 18.3 billion for the bank, which is also listed in New York and competes with bigger local rivals State Bank of India and ICICI Bank.

Net interest income for Q3 rose to Rs 3,880 crore, up 24.5%, as compared to Rs 3,116 crore in the same period a year ago. Net interest margins for the quarter stood at 4.1% vs 4.2%, quarter-on-quarter. Fee income rose 24.3% year-on-year, helping the bank’s other income rise 26.7%. As of December-end, the core cost-to-income ratio was 47.1%.

HDFC Bank's Q3 gross NPAs rose at 1% against 0.9% in previous quarter. Asset quality, valued by the market at about $29 billion, was stable with net nonperforming loans as a percentage of total assets at 0.2%.

Q3 provisions stood at Rs 307 crore against Rs 293 crore, quarter-on-quarter.

At the end of Q3, HDFC Bank’s capital adequacy ratio stood at 17 per cent.

HDFC Bank is not seeing much pressure on asset quality, although there may be an uptick in bad loans for some products, HDFC Bank executive director Paresh Sukthankar said on Friday. The bank is also seeing "renewed, intensified competition" from several banks on retail loan products, he added.

The bank's net interest margin, a key gauge of profitability, is among the highest in the sector. It aims to keep it in a range of 3.9-4.2 percent in the near term.

On Friday, the HDFC Bank stock closed at Rs 659 on the BSE, a fall of 1.2 per from its previous close. At 01:10 pm on Friday, the stock was at Rs 662.45, down 0.65 per cent, on the National Stock Exchange. It touched a high of Rs 674 and a low of Rs 661.65 in trade on Friday. — Reuters

Is it advisable to invest in gilt funds at this time?

— Sheetal

Yes, it would be advisable to invest in gilt funds with a two- to three-year perspective. Some money should be invested in income funds as well. The reason for this is that with inflation no longer a threat, the government is focusing on giving an impetus to growth in a bid to counter recessionary trends. One of the key ways of doing this is by cutting interest rates. And since bond prices bear an inverse relationship to interest rates, these rate cuts will result in a bond price rally. Consequently, gilt and income funds investing in corporate paper are expected to perform well.

Banks deduct tax at source on interest on deposits in various ways — quarterly, at the fiscal end or on maturity. Can a depositor choose to submit such income for taxes, either at end of each financial year (in case of multiyear deposits) or at maturity (if the interest is paid on a cumulative basis)?

— Rochelle

Banks deduct tax at source on deposit interest each year if the interest is above Rs 10,000. This is true even in the case of cumulative deposits where the interest is accrued and payable at the end of the term. According to tax laws, interest earned, whether received or accrued, has to be submitted for taxation every year as and when the investor earns it.

I retired as an executive in a PSU and am now aged 64 years. Aside from a monthly pension of Rs 926 I have no other source of income. I receive Rs 80, 000 a year from my son who has so far not claimed any tax deduction on this amount. Can the latter be considered a gift from my son who in turn can claim tax rebate/deduction from his gross total income, or is this amount subject to the Rs 100,000 savings limit?

— Senthil

The amount of Rs. 80,000 can be considered as the household expenses of your son or as a gift to you, as he pleases. In either case, there are no tax implications. Any funds gifted to you by your son does not entitle him to any tax deductions or rebate.

BRIEFLY

Mumbai
Rupee hits 10-week high: The rupee strengthened to its highest level in two-and-a-half months on Friday, gaining for a second straight week, as the government's decision to partially deregulate diesel and a broad risk-on sentiment globally boosted the currency. he partially convertible rupee closed at 53.71/72 per dollar. The unit had closed at 54.3850/3950 on Thursday. The rupee rose for a second straight week, gaining 1.9 per cent, its biggest weekly gain in four months.

SBI nod for capital infusion: State Bank of India, the country's top lender, said on Saturday that its board had approved a capital injection of Rs 30.04 billion by the government through preferential allotment of shares in the current fiscal year. The funds will be used to support local and international banking operations, and the bank is seeking separate approvals from the government and India's central bank to raise its issued capital, SBI said in a statement to the stock exchanges. The Reserve Bank of India said in September that the government needed to inject 900 billion rupees into state-run banks to meet the upcoming Basel III requirements.

New DElhi
Gold slides for third day: Gold prices continued to slide for the third-day by losing Rs 90 to Rs 30,910 per 10 grams in the national capital on Saturday largely on strong rupee against the dollar and subdued demand amid a weak global trend. However, silver held steady at Rs 59,400 per kg in restricted buying at prevailing higher levels. Traders said strengthening of the rupee, which climbed to a two-and-a-half month high of Rs 53.71 against the dollar on Friday, making importers of the precious metal cheaper, mainly put pressure on the gold prices. Besides, subdued demand at prevailing levels and a weakening global trend, too, had shadow on the precious metal prices, they said.