New Delhi, May 17
In a disappointment for the government, rating agency Standard & Poor’s maintained its negative outlook on India’s sovereign rating and warned of one-in-three likelihood of a downgrade in the next 12 months.

S&P retained India's sovereign rating at BBB- with a negative outlook. This rating is the lowest investment grade and a downgrade would mean pushing the country's sovereign rating to junk status. A downgrade by international rating agencies can be very negative for any economy and tends to lead to a flight of capital out of the country and makes fund raising difficult as well as expensive. S&P had cut India’ s outlook to negative last year and warned of a possible downgrade which was one of the reasons for the subsequent urgency in economic reforms.

Warning of a potential downgrade, S&P said in a statement, “We may lower the rating if we conclude that slower government reforms than we currently expect would not lead economic growth to recover to levels experienced earlier this decade”. Such a conclusion could come from anemic investment growth, reversals on diesel or other subsidy measures, or inability to increase electricity supply to meet increasing demand.

It may be pointed out that lack of investments remains a worry for growth to revive as promoters are wary of committing capital and undertake large projects for a variety of reasons.

The finance ministry which had pitched for an upgrade with S&P officials last month was “disappointed”. Chief economic advisor Raghuram Rajan said in a statement, "It is disappointing that S&P has not seen it fit to improve its outlook for India, especially given that it acknowledges the important steps taken by the Indian government in recent months”.

Pointing to the factors that could lead to a downgrade, S&P's credit analyst Takahira Ogawa said: “High fiscal deficits and a heavy government debt burden remain the most significant constraints on our sovereign ratings on India. Nevertheless, the government has regained control of public finances and embarked on fresh structural reforms since September 2012". In a teleconference, Ogawa said there had been an improvement in the economy after the execution of recent economic reforms but added the results on the ground were uncertain.

Mumbai, May 17
Gold prices continued to fall with the yellow metal slipping below the psychological level of Rs 26,000 on Friday. At the Multi-Commodities Exchange (MCX) gold prices for June delivery fell to Rs 25,895 per ten grams, nearly 1% down in today's trade. According to traders, demand for gold continues to soften with analysts predicting a further fall below Rs 25,000 levels.

"Gold prices are likely to fall further as investors globally are moving towards riskier assets like stocks," said Chetan Jalan, an analyst.

Though India is seen as a major customer for gold, demand has softened following restrictions by the RBI. Restrictions on banks importing gold on consignment basis has hurt imports as jewellers catering for local markets will have to pay in advance for their raw material.

According to bullion traders, supply of gold has completely dried up in Mumbai and raw gold is being sold at a premium of Rs 1,000 per ten grams.

Mumbai/New Delhi, May 17
India's largest cigarette maker and FMCG major ITC reported 19.4 per cent rise in its consolidated net profit for the quarter ended March 31, at Rs 1,928 crore on Friday, meeting market expectations.

The diversified conglomerate, which makes four out of every five cigarettes sold in India, posted a net profit of Rs 1,614 crore in the corresponding period last year, ITC said in a statement.

Analysts on average had expected earnings of Rs 19.08 billion, according to Thomson Reuters I/B/E/S.

ITC has interests in FMCG, hotels, paperboards and packaging, tobacco products and IT.

Sales during the fourth quarter jumped 19.2% to Rs 8,180 crore from Rs 6,861 crore in the year-ago period, ITC added. Consolidated net income during the fourth quarter went up by 19.11% to Rs 8,511.38 crore from Rs 7,145.44 crore in the year-ago period.

At its meeting, the company’s board of directors recommended a final dividend of Rs 5.25 per share on the face value of Rs 1 each.

"ITC results were in line with expectations as revenues were driven by a 31 per cent increase in Agri sales and 26 per cent growth in FMCG sales," IDFC said in a note.

NIIT TECH DECLARES 85% DIVIDEND: IT solutions provider NIIT Technologies Ltd posted a 22% jump in net profit at Rs 56.6 crore for the quarter ended March 31, 2013, backed by all-round growth. The Noida-based firm had posted a net profit of Rs 46.2 crore in the year-ago period, NIIT Technologies CEO Arvind Thakur said. The company secured fresh orders worth US $110 million in Q4, he added.

Consolidated revenues rose 21% to Rs 537.2 crore in the Jan-March quarter of last fiscal compared to Rs 443.5 crore in Q4 of FY2011-12. The board has recommended a dividend of 85% or Rs 8.50 per equity share of Rs.10 each for the fiscal year 2013. — Agencies

New Delhi, May 17
The government may soon come out with a notification to implement the unified licence regime in the telecom sector and has sought advice on the matter from the law ministry.

Sources in the department of telecom said there would be no policy change while implementing the unified licence regime and the government is expected to allow crossholdings by telcos.

Reports said the file seeking the final advice from the law ministry was expected to be sent over the next week and the terms and conditions would be notified thereafter.

Implementation of the unified licence regime would also help the government end a series of confrontations with telecom operators, which have moved the courts to address issues like the 3G roaming pact and one-time spectrum fee.

Once the licence regime is notified, it would converge all three bands of spectrum covering 2G, 3G and 4G in its ambit. This, according to officials, will help companies to offer services using different scales of spectrum.

Officials said the committee's recommendations on the licence regime allow for sharing of spectrum of different bandwidth between companies besides allowing pooling of spectrum.

The new service operator may not be required to own complete infrastructure for delivering the services as required currently.

The committee has also recommended a new unified licence for telecom and broadcasting services that would enable end users to get a host of services such as mobile, landline, DTH and cable TV from a single company without the entity necessarily owning the full infrastructure.

The end-user would be able to deal with only one operator for all his needs such as fixed and mobile phones and broadband access through a fixed line, wireless broadband access, cable television, satellite television and IPTV (Internet Protocol television).

Washington, D.C., May 17
The percentage of global investment that goes to developing countries should triple in the next two decades as emerging economies catch up to richer nations and become more integrated into financial markets, the World Bank predicted in a report on Thursday.

These nations and their comparatively younger and bigger populations are also set to become the largest sources of capital, with China and India turning into the world's two biggest investors by 2030, the global development lender said.

The shifting landscape of saving and investment has profound implications for everything from which currencies will dominate global markets to the rise of new financial centers, patterns of capital flows and investment priorities.

But policymakers are still woefully unprepared for the changes, fixating instead on what will happen in the next three to six months, Kaushik Basu, the World Bank's chief economist, said.

"The big question that should concern us all is what will happen to the major drivers of growth and development: namely savings and investment," Basu told reporters ahead of the report's release.

"In some sense, some of the global economic turmoil that we are seeing today are some of the early indicators of the kind of turbulent period that the world is going into," he said.

Standard & Poor's earlier this week predicted that Chinese nonfinancial companies will overtake U.S. companies in their borrowing needs over the next two years.

By 2030, for every dollar invested in the world, 60 cents will flow into developing countries, a dramatic change from 20 cents to the dollar in 2000. China will make up 30 percent of all investment activity, while the United States will have 11% and India, 7%.

The numbers assume the world will grow on average 2.6% to 3% a year in the next two decades, while emerging economies will grow 4.8% to 5.6% a year.

As more capital flows from one developing country to another, known as South-South flows, China's yuan currency and its monetary policy will have a greater impact on the rest of the world, reducing the influence of U.S. and euro area policies.

A richer world in 2030 will also have a greater demand for services over manufacturing, meaning countries will face pressure to reduce protectionist barriers to trade in services, the World Bank said.

But shifts in global saving may not be equally distributed in each country, warned lead report author Maurizio Bussolo — a key concern for the poverty-fighting World Bank. In most developing countries, the top segment of the population saves three to four times more than the poorest. — Reuters

Mumbai, May 17
A tribunal on Friday ordered some of India's biggest cement manufacturers to pay Rs 6 billion in fees while it hears their appeal against a penalty the competition watchdog imposed last year.

The amount, to be paid within four weeks, represents 10 percent of the Rs 60 billion record high fine the Competition Commission of India (CCI) ordered the companies, and India's Cement Manufacturing Association, to pay for alleged price fixing.

The companies include Aditya Birla Group-member UltraTech Cement, Holcim-controlled Ambuja Cements, ACC, Jaiprakash Associates and the Indian unit of France's Lafarge SA.

The Competition Appellate Tribunal (COMPAT) said that it would dismiss the companies' appeal if they failed to pay the Rs 6 billion on time. Last year, COMPAT granted the companies a stay on paying the penalty while it hears their case.

A CCI spokesman said the anti-trust regulator does not comment on ongoing legal proceedings.

Last year, the regulator said the companies had colluded to underuse their plant and create an artificial shortage of cement. Executives from the fined companies denied price fixing. — Reuters