New Delhi, April 24
Jet Airways today announced a strategic alliance with Etihad Airways, saying it would sell 24 per cent stake to the Abu Dhabi-based carrier for about Rs 2,058 crore, marking the first investment by a foreign carrier in an Indian airline since the change in FDI policy.

Bringing curtains down on almost six months of tough negotiations, top officials, including Jet promoter Naresh Goyal and Etihad president and CEO James Hogan, announced the strategic equity alliance in Abu Dhabi under which the Indian private carrier would sell 27.26 million shares in a preferential offer to Etihad at Rs 754.74 a piece.

"The value of this equity investment is $379 million (about Rs 2,058 crore) and will result in Etihad Airways holding 24 per cent of the enlarged share capital of Jet Airways," a joint statement by the two airlines said.

The deal is subject to shareholders' nod and conditions precedent, including regulatory approvals.

The two airlines claimed that their alliance would lead to Indian passengers from 23 cities to gain direct access to an expanded global network. Jet would also enhance its services from its primary hubs of Delhi and Mumbai and introduce new flights from Hyderabad and Bangalore.

The new India-Abu Dhabi routes and Jet Airways would "establish a Gulf gateway for flights to the US, Europe, Africa and the Middle East," the statement said, adding their combined global network would cover over 140 destinations.

It said the strategic alliance would bring additional traffic, frequencies and revenues to metro airports, as well as other airports of the Airports Authority of India and bring "significant benefits to the Indian economy."

"Substantial ownership and effective control will remain with Indian nationals, with Goyal as non-executive chairman holding 51 per cent of the company," the statement said.

Goyal, who was earlier bitterly opposed to opening up of FDI participation for foreign airlines, was the first to move immediately after the government allowed international carriers to pick up a maximum of 49 per cent stake in domestic airlines last September.

Giving details of the deal, the statement said, "This strategic investment with a $600 million commitment from Etihad Airways will help further strengthening of Jet Airways' financial position." Etihad would also inject $220 million to create and strengthen a wide-ranging partnership between the two carriers, including a strong codeshare arrangement.

Etihad would also invest $150 million "by way of a majority equity investment in Jet Airways' frequent flyer programme 'Jet Privilege', subject to regulatory and corporate approvals and final commercial agreements. These are expected to be completed within the next six months, it said.

"I have no doubt that this partnership with Etihad Airways is a win-win situation for all our stakeholders, especially our guests, who will now have access to a much expanded global network," Goyal said. — PTI

Mumbai, April 24
The RBI, which gave a clean chit to private banks accused of money laundering following a sting operation by Cobrapost website, has quietly asked several players to re-verify their customers.

In the past few weeks, banks sent out messages to many of its old customers seeking fresh customer verification details like address and identity proofs. "It is part of a periodic verification of our Know Your Customer (KYC) norms," an official at an HDFC Bank branch in suburban Mumbai said.

Officially, banks are saying that re-verification is being done to update their records. "People move residences and the new KYC norms must reflect their address change," an official at a private bank said.

The sting operation conducted with hidden cameras allegedly showed officials at many branches of HDFC, ICICI and Axis Bank offering to help an undercover reporter hide crores of rupees in unaccounted money.

Earlier this week, KC Chakrabarty, Deputy Governor, RBI, had said there was no case of money laundering at these banks.

He, however, added the central bank was looking at further tightening the KYC norms to prevent misuse.

Sources say, a few public sector banks with international operations that have been accused in the media of facilitating illegal transfer of money across countries are also under the RBI scanner. Customers of these institutions may also be asked to submit their details again.

New Delhi, April 24
Prime Minister's Economic Advisory panel chairman C Rangarajan today said India has a potential to grow at 8 per cent without fuelling inflation.

"If you are going to have an investment rate in the range of 32-35 per cent, I would still say 8 per cent growth rate is potential rate of growth in economy and it is possible to grow at that rate even without provoking high level of inflation," he said at India Summit organised by UK-based magazine The Economist.

As per latest estimates for 2012-13, investment rate is close to 35 per cent, he said.

He said, "I do not subscribe that view that high growth warrants high inflation..," he said. Noting that inflation is showing some signs of moderation, he said "of course it is not anywhere near the comfort zone that we would like to have."

Wholesale Price Index (WPI) for the month ended March moderated to 3-year low of 5.96 per cent against RBI’s projection of 6.8 per cent. The headline WPI inflation is expected to be around 6 per cent in the current fiscal, with primary food inflation around 8 per cent, fuel at about 11 per cent and manufactured goods at around 4 per cent.

On Current Account Deficit (CAD), he said, "it is still high and we need to act." The government has taken a number of steps in the last few months to narrow CAD, including curbing gold import and increasing exports.

The moderation in gold imports is expected to help bring down the CAD to 4.7 per cent, from 5.1 per cent of GDP in 2012-13.

However, in value terms the CAD is expected to be higher at $100 billion as compared to $94 billion last fiscal.

"I certainly believe low growth phase has bottomed out," he said. Rangarajan said economy can pick up in the current fiscal from 5 per cent to 6.4 per cent. — PTI 

New Delhi, April 24
Seeking to prevent misuse of funds belonging to foreign investors, the RBI has proposed that transfer of such funds to the Indian entity should be allowed only through escrow mechanism under which the money would remain with the bank pending investment.

The proposal comes against the backdrop of cases of misuse of such funds which are meant to purchase shares.

The issue was recently discussed at a high-level meeting presided over by Department of Economic Affairs secretary Arvind Mayaram.

"There have been cases of receipt of remittances for issuance of share capital and return of the investor's money before the expiry of the 180 days without issuance of shares. This bypasses the FDI/ECB guidelines," sources said.

The RBI argued that the misuse can be checked if usage of money is allowed only after issuance of shares.

As per the RBI's proposal, Indian investee company would be required to open an escrow account with bank rather than directly remitting to the account of investee company and funds shall be released by bank from this account in accordance with the terms of escrow arrangement. — PTI 

Washington, April 24
Factory activity expanded at its slowest pace in six months in April, the latest sign that economic growth continued to lose momentum early in the second quarter, though the recovery has not been derailed.

Even as the economic picture has dimmed in recent weeks as the effects of government austerity started to filter through, strength in the housing market has provided an anchor.

New home sales in March were at their second-highest level in three years and overall house prices rose in February, other data showed on Tuesday.

"The numbers are not suggesting that the economy is surging, but none of them are really showing that the economy is falling off the cliff," said Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York.

Financial data firm Markit said its "flash," or preliminary, factory purchasing managers' index fell to 52 this month from 54.6 in March as output, employment and new orders pulled back.

It was the lowest index level since October, though a reading above 50 does indicate growth.

While the Markit PMI has a shorter history and has been trending higher than an established, competing index from the Institute for Supply Management, its direction is in line with other surveys showing a cooling in manufacturing activity in April.

The Richmond Federal Reserve Bank said on Tuesday its gauge of factory activity in the central Atlantic region dropped into negative territory this month, pulled down by weak shipments and new orders.

London, April 24
Gold rose on Wednesday as solid physical demand encouraged speculative buying after the previous session's drop, while support also came from weak German economic data, which fanned speculation the European Central Bank could cut interest rates.

Investor confidence is still reeling after bullion's spectacular fall and outflows from exchange-traded funds show no signs of abating, although demand for gold bars and coins surged after prices plunged to their weakest in over two years on April 16.

Spot gold rose 0.7 per cent to $1,421.81 an ounce by 0952 GMT, after falling for the first time in six sessions on Tuesday. Gold sank a combined $225 on April 12 and 15 in a sell-off that surprised ardent gold investors and bulls.

US gold futures for June delivery were up 0.9 per cent to $1,422.30.

European shares advanced, building on the previous session's hefty gains, after weak German Ifo survey fuelled hopes of a European Central Bank rate cut and continued liquidity injection.

The European Central Bank meets next week and there is growing speculation that a slew of weak economic data and subdued inflation will drive it to cut rates.

The dollar gave up initial gains against the euro, with traders citing talk of central bank buying euros against the US currency.

Frankfurt, April 24
The European Central Bank (ECB) is closer to lowering interest rates any time since it last cut them in July 2012 and is likely to shave a quarter-point off at its policy meeting next week.

Sources involved in the deliberations say momentum is building for action to help a euro zone economy which has slipped back into recession, a move that some policymakers wanted to take earlier this year.

Inflation sliding well below target gives the bank scope to act and a senior ECB official said even Bundesbank chief Jens Weidmann, the most hawkish member of the 23-man Governing Council, had an open mind.

After the bank's last monetary policy meeting on April 4, ECB president Mario Draghi signalled a cut could come soon when he said the bank stood "ready to act" to boost the recession-hit euro zone economy.

"Now we are free," a senior ECB official said. "For the next meeting in Bratislava, I would look at rates, certainly."

The ECB's Governing Council meets in Bratislava next Thursday - one of two annual policy meetings outside Frankfurt. The 23-men body rarely moves rates when it meets off-base, but the bleak economic picture strengthens the case for action. Any decision on whether to act in May will depend on the economic data.

The ECB expects a gradual recovery in the euro zone in the second half of this year, "subject to downside risks".

Policymakers believe a rate cut would have limited impact on the economy but would at least show they are supporting it.

San Francisco, April 24
Apple has reported that its quarterly profit dipped for the first time in nearly a decade despite a rise in revenue from the same period a year earlier. Apple posted a profit of $9.5 billion on revenue of $43.6 billion in the first three months of this year, compared to a profit of $11.6 billion on $39.2 billion in the same quarter in 2012.

"We are pleased to report record March quarter revenue thanks to continued strong performance of iPhone and iPad," said Apple chief executive Tim Cook yesterday.

Apple also announced that its Board of directors has endorsed a plan to more than double to $100 billion the amount of its stock it will buy back in the coming three years. The Board also approved a move to raise a coming stock dividend by 15 per cent to $3.05 per common share as the company worked to restore shareholder confidence.

"We are very fortunate to be in a position to more than double the size of the capital return program we announced last year," Cook said. — AFP