UTI Bank to raise funds via GDR

MUMBAI: UTI Bank on Friday said it will tap the overseas market as part of its plans to raise over Rs 4,000 crore to meet increasing credit demand and new capital norms.

The company would issue 1.41 crore equity shares in the overseas market, besides offering 3.19 crore shares to its promoters on preferential basis.

In a notice to the Bombay Stock Exchange, UTI Bank said the board has decided to raise capital by way of Qualified Institutional Placement (QIP) of 2.82 crore shares and a GDR issue of 1.41 crore equity.

Going by today's market price of Rs 641.25, the bank could raise over Rs 2,711 crore from the market.

"The price for the preferential issue, GDR and QIP offering would be aligned and subsequently decided through the book building route," Bank President Finance Somnath Sengupta said.

Seven promoters including -- specified undertaking of the Unit Trust of India hold 27.33 per cent, while LIC and GIC together have 42.93 per cent stake in the bank.

"We have received the approval for the preferential issue from SUUTI and LIC. GIC and other promoters have time till July 26 to decide on subscribing to the issue," Sengupta said.

The shareholders in its EGM held today have approved raising of Tier-I capital by way of GDRs and issue to the promoters.

Shares of the bank surged to a 52-week high of Rs 658.70 during the day, but closed at Rs 641.25 up 0.02 per cent on the Bombay Stock Exchange.

For the quarter ended June 30, the bank posted a 45.15 per cent rise in net profit at Rs 174.98 crore as against Rs 120.55 crore in the Q1 of previous fiscal.

Source: Economic Times

Mexican Slim zips past Bill Gates in rich ranks: Report

Mexican tycoon Carlos Slim is the world’s richest man, worth an estimated $67.8 billion, after overtaking Microsoft Corp. founder Bill Gates

Mexico City: Mexican tycoon Carlos Slim is the world’s richest man, worth an estimated $67.8 billion, after overtaking Microsoft Corp. founder Bill Gates, according to a respected tracker of Mexican financial wealth on 2 July.

Mexican tycoon Carlos SlimA 27% surge in the share price of America Movil, Latin America’s largest cell phone operator controlled by Slim, from March to June made him close to $8.6 billion wealthier than Gates, said Eduardo Garcia in Sentido Comun, the online financial publication he founded.
Garcia estimated that Gates was worth $59.2 billion.
Forbes magazine reported in April that Slim had overtaken billionaire investor Warren Buffett for the No. 2 spot in the world’s richest stakes but was still behind Gates.
Mexico has a huge rich-poor divide, with a tiny elite holding most of the country’s wealth and around half the population living on less than $5 a day.
Forbes bumped up Slim because gains from his holding company Carso and fixed-line telecom Telmex added to the Mexican’s fortune while shares of Buffett’s Berkshire Hathaway Inc. fell in the same period.
Three months ago, Sentido Comun’s Garcia begged to differ with Forbes and calculated Slim’s wealth as more than Gates’ -- but only by a whisker. Now he says there is no doubt whose fortune is bigger at current share values.
“When I put Slim ahead three months ago Forbes bumped him up to second place (in world rankings) a few days later,” Garcia, also the publication’s editor-in-chief, told Reuters. “Let’s see if the same happens again.”
Spokespeople at Forbes magazine were not immediately available for comment.
Garcia, who uses Forbes’ calculations for US billionaires’ wealth, says the 5.7% increase in Microsoft share prices in the second quarter is no match for the sharp rise in valuations of Slim’s companies.
Shares of Telmex in the second quarter rose 11% and Slim’s bank, Inbursa, saw its stock advance 20%.
Garcia’s Sentido Comun, which translates as “common sense,” reckons Slim and his amily own a fortune equivalent to 8 percent of Mexico’s gross domestic product.
For Gates to be worth 8% of the US economy, his fortune would have to grow to more than $13 trillion, 17 times his current wealth, according to Sentido Comun.
Slim, known for his Midas touch in turning around struggling businesses and turning them into profit-making machines, told Reuters in an interview this year he was not in the habit of calculating his fortune on a regular basis.
Slim and his chief spokesman Arturo Elias Ayub were not immediately available for comment.

Source: Mint

6 PSU banks join Rs 1 lakh cr club

Higher credit offtake combined with robust deposit growth saw six public sector banks cross the landmark Rs 100,000 crore figure in business turnover, which includes net deposits as well as advances, in 2006-07.

The six banks that have joined the major league are Syndicate Bank, Indian Overseas Bank, UCO Bank, Oriental Bank of Commerce, IDBI Bank and Allahabad Bank.

State Bank of India (SBI) tops the chart of large-sized banks, with a total business turnover of Rs 772,858 crore, followed by Canara Bank (Rs 240,887 crore), Punjab National Bank (236,456 crore), Bank of Baroda (Rs 2,08,537 crore), Bank of India (Rs 204,817 crore), Union Bank of India (Rs 147,566 crore) and Central Bank of India (Rs 134,572 crore).

This took the total number of public sector banks that have surpassed the Rs 100,000 crore mark at the end of March 2007 to 13 against seven banks in 2005-06. With the Indian economy growing at a rapid pace, both deposits and advances have increased significantly during 2006-07.

The aggregate business turnover of public sector banks rose almost 26 per cent during the year compared with last year, while the total business volume rose by 7,05,713 crore to Rs 34,34,322 crore as on March 31, 2007.

The aggregate deposits of public sector banks rose 23 per cent to Rs 19,94,200 crore against Rs 16,22,481 crore, while bank credit recorded a robust growth of 30 per cent to Rs 14,40,123 crore compared with Rs 1106128 crore last year.

With rising inflation, interest rates rose across the board during the fiscal. Interest rates on deposits of major public sector banks over one-year maturity increased from 6-7 per cent in March 2006 to 7.5-9 per cent (as per the RBI Weekly Statistical Supplement) in March 2007.

While the increase in lending rates had a moderating impact on credit growth, the jump in deposit rates created favourable conditions for deposit growth.

Vijaya Bank, United Bank of India, Bank of Maharashtra and State Bank of Travancore crossed the Rs 50,000 crore mark to join the league of mid-sized banks.

Source: Business Standard /Swapnil Mayekar / Mumbai June 26, 2007

UTI Bank puts off $600m GDR

Move to give promoters more time to take a call on the issue.

UTI Bank, a mid-sized private sector bank, has deferred its $600 million global depository receipts (GDR) issue as well as the simultaneous preferential offer to its promoters.The bank said the decision to put off capital raising plans was taken in order to provide promoter shareholders - Specified Undertaking of Unit Trust of India (SUUTI), Life Insurance Corporation and General Insurance Corporation - more time to take a call on subscribing to the preferential offer.SUUTI is the largest shareholder in UTI Bank with 27.43 per cent stake. LIC owns 10.38 per cent of the bank’s equity and GIC 2.38 per cent.In a statement released after the bank’s extraordinary general meeting (EGM) here today, UTI Bank said the special resolutions on raising capital have been deferred “to provide promoter shareholders further time for consultation” on the preferential share offer.The shareholders would again meet on July 13 to consider the plans to raise capital. The shareholders, however, passed a resolution increasing the bank’s authorised capital to Rs 500 crore from Rs 300 crore.Banking sources said LIC, which bid in the recently concluded ICICI Bank’s follow-on equity offer for shares worth about Rs 4,000 crore, has asked for more time to arrange for funds as it was currently experiencing a “tight liquidity” situation.SUUTI, which has already obtained the government’s permission, also needs to arrange for funds to subscribe to its portion of the preferential offer.While SUUTI would need to pay about Rs 1,300 crore to subscribe to 20.3 million shares being offered on a preferential basis, LIC requires about Rs 450 crore for 7.6 million shares and GIC around Rs 50 crore for about 0.7 million shares.If the shareholders had passed the resolutions today, the promoter shareholders would have had to subscribe to the preferential offer within 15 days from the commencement of the EGM, in accordance with the Securities and Exchange Board of India (Sebi) guidelines. There is no provision for part payment in a preferential allotment.UTI Bank has already appointed Goldman Sachs and Citigroup as the merchant bankers for the GDR issue. The GDRs are proposed to be listed on the London Stock Exchange.P J Nayak, chairman and managing director of UTI Bank, had earlier said, “We thought making the preferential offer simultaneously with the GDR issue was the fairest way to raise adequate capital and also ensure good corporate governance practice, whereby the existing promoters are given an option to maintain their shareholdings.”

Source: Business Standard BS Reporter Mumbai June 26, 2007

Get online,not in line,to pay tax

2007-06-21 14:41:12
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Paying taxes has never been simpler with the authorities introducing the mechanism of online payment. The use of electronic means to deliver services is not only an efficient and speedy process, but it also facilitates a transparent process for disseminating information and delivering it to the taxpayers of the nation, says the Economic Times.

Online payment of taxes helps you save time, is convenient and is paperless. You could be in office or at home — the facility to pay taxes is just a click away. To use of this facility, all you need is an account with a bank that offers net banking and e-tax payment facility. SBI, HDFC Bank, IDBI Bank, UTI Bank and Union Bank of India are some banks that provide the e-tax payment facility.

The procedure for payment of taxes online is simple and the user-friendly instructions make it even more attractive. To start with, you need to log on to NSDL-TIN website (www.tin-nsdl.com) and click on the ‘e-Tax-online payment’ option. You will then be directed to a list of banks that provide the e-tax payment facility. Click on the option for your bank and choose the applicable tax challan.

If it is a tax deducted at source payment, challan no. 281 shall apply; else challan nos. 280, 282 or 283 shall be applicable. Challan no. 280 is used for payment of advance tax and self-assessment tax. Challan no. 282 is used for payment of miscellaneous taxes like gift tax, wealth tax, estate tax, expenditure tax etc. Challan no. 283 is used for payment of fringe benefits tax or banking cash transaction tax.

On opting for the challan type applicable, particulars such as the permanent account number (PAN) or tax deduction account number (TAN) as may be applicable, name and address of the taxpayer, relevant assessment year, type of payment and name of the bank will be displayed.

These particulars will need to be filled in carefully as an incorrect PAN/TAN (if it does match the records of the income-tax department) will not allow further processing of the payment. The mandatory fields are highlighted and to ensure smooth processing, these fields need to be populated. You will then reach the net-banking site provided by your bank where you hold your account and with the use of the allocated customer ID and password, the payment will be processed.

Once the process is complete and the bank processes the online transaction, you will be issued an acknowledgment indicating the challan identification number (CIN). After a week of making the payment, the status of the payment may be verified at the NSDL-TIN website under section ‘Challan Status Inquiry’.

You can also verify the payment of taxes through an online bank statement. Apart from being relieved of the hassles of visiting the bank for paying taxes and the additional paper work, an added advantage is that online payment does not require attaching the acknowledged counterfoil with your return.

Quoting the challan identification number is sufficient proof for the tax authorities. Imagine, not having to worry about the challan copies and the related paperwork. As for security concerns, the authorities assure the taxpayers that the transmission through the NSDL-TIN website is encrypted and is with the secure socket layer authentication.

SBI, LIC, others to dilute 50% in UTI MF via IPO

UTI AMC will be the country’s first domestic mutual fund to go for an IPO, through which sponsors will make a partial exit

Kolkata: UTI Asset Management Company will float an initial public offer by March-end next year to help its sponsors, SBI, LIC, PNB and BoB, offload up to 50%.
UTI Asset Management Company Ltd chairman and managing director U K Sinha told PTI that the board of the company had recently approved the proposal to offload up to 50% stake held by the four sponsors.
State Bank of India (SBI), Life Insurance Corporation of India (LIC), Punjab National Bank (PNB) and Bank of Baroda (BoB), individually hold 25% stake each in the asset management firm.
Sinha said UTI AMC would probably be the first domestic mutual fund in the country to go for an IPO, through which the four sponsors would make a partial exit.
He said the details on the valuation of the company were being worked out.
The valuation of the firm was last done in November 2005, when the four sponsors bought stake in it.

Source: PTI

Rupee world's favourite currency

NEW DELHI: Sabse bada rupaiya. The Reserve Bank of India is going to find it increasingly tough to prevent the rupee from appreciating, if the growing appetite for the rupee in different parts of the world is anything to go by. For instance, the US-based Inter-American Development Bank (IADB) raised rupee-denominated debt worth Rs 150 crore money in the Japanese market in May. The issue was of 10-year bonds offering an interest rate of 8.25%, with payments to be settled in dollars. It had raised a smaller amount for three years in February at 7.25%. The transaction is only a pointer to the growing strength of the rupee, which is fast gaining the confidence of investors across markets. The IADB floated a rupee-denominated dollar settlement issue after Japanese investors insisted on holding rupee assets, said an official. The dollar value at redemption would depend directly on the valuation of the rupee. This debt issue is significant because it was floated in a mature market, signalling that even investors in developed economies are now betting on the rupee. Says Vineet Gupta, head-local credit analysis, Calyon Bank, “Every investor wants India in his portfolio and the global demand for rupee-denominated assets will continue to strengthen. This comes on the back of high growth in the economy and the appreciating rupee.” The rupee has appreciated by a whopping 8.78% since January this year, from 44.2 per dollar on January 1 to 40.63 per dollar on Thursday. Rupee-denominated debt instruments floated outside India cannot be settled in rupees since the Indian currency is not fully convertible. The underlying valuation of the transaction is driven by the rupee even though the settlement is in dollars. This implies that at the time of settlement of the loan, the borrower will pay back the dollar equivalent of the rupee. Since the expectation is that the rupee would appreciate against the dollar, the lender expects to get back more dollars per rupee lent. For instance, if at the time of the debt issue, the rupee is trading at Rs 41 per dollar and the issue size is $100 million (Rs 410 crore) and at the time of repayment, the rupee is trading at Rs 40 per dollar, then the final valuation of the settlement will vary according to the rupee and the borrower will have to pay back $102.5 million (4100/40). Thus, an investor would opt for a rupee-denominated paper to gain from a higher dollar return at the time of repayment, owing to the appreciation of the rupee. This appreciation has led to increased demand in global markets for rupee-denominated assets. Industry sources said a couple of months ago, there was a similar issue of rupee-denominated bonds, with settlement in dollars in London to finance a takeover deal of a company. In fact, Dubai launched rupee-dollar futures contracts that will be traded on the Dubai Gold and Commodities Exchange (DGCX) on Thursday.

source: Times News Network

Media stocks attract FIIs

FIIs and global investors seemed to have taken an increased interest in media and entertainment sector, which has witnessed growing advertising revenues.
According to analysts, increasing interest rates and rising rupee have impacted sectors such as automobiles, manufacturing and IT, while also favouring interest insensitive sectors. Analysts feel that media companies' that have invested in television, radio and multiplexes are the only ones that don't seem to have been impacted.
Moreover, growing year on year advertising revenues in both print and electronic media have also accounted for these stocks being currently in favour despite volatility.
Analysts feel buyer interest in media stocks is likely to continue as the television industry is expected to grow by 22-23 per cent and print industry by 13-14 per cent in the next two years.
Another positive trigger is that most media companies' profits have more than doubled in the fourth quarter of the financial year 2007, said an analyst who did not wish to be named.

Emaar MGF likely to invest $ 12 bn in India

DUBAI: Emaar MGF, a joint venture between Dubai-based Emaar Properties and India's MGF Developments, is likely to invest about $ 12 billion in India in the next five years for setting up nine special economic zones and 50 hospitals.
Emaar MGF also plans to add 25,000 hotel rooms throughout the country in ten years, besides establishing schools and universities, residential townships and shopping malls.
"It is our vision to change the way modern India lives and toward this goal we have brought into the country the largest ever foreign direct investment (FDI) in the Indian real estate sector," Emaar MGF Executive Vice Chairman and Managing Director Shravan Gupta told Gulf News.
The company started the expansion programme by laying foundation stone for a township project at Mohali Hills, a satellite town of Chandigarh.
The project will have a capital of Rs 16,000 crore and will include residential plots, town houses, villas and shopping malls, in addition to facilities such as hospitals and IT parks.
Meanwhile, Emaar MGF has received approval for nine SEZs, proposed to be located in states including Haryana, Hyderabad, Tamil Nadu, Andhra Pradesh and Karnataka.
In the hospitality sector, the company plans to build 10 luxury hotels and 45-50 business hotels in 10 years. It's joint venture with Accor will result in 100 budget hotels. In all, it will add 25,000 hotel rooms across India in 10 years.

Source: PTI

Sebi to educate investors

Mumbai: Stock market regulator Sebi will launch a nation wide investors' campaign in the next two months to educate people about the securities market, said M Damodaran, chairman, Sebi. This would be with the help of the major stock exchanges and the state governments.
Addressing retail investors at India Investors Show, Damodaran said, "We will reach out not just to people in the Metros, and only to people in the tier-two towns, but wherever investable surpluses are available."
Sebi will work through the National Institute of Securities Market (NISM) for spearheading the investors' education campaign.
Damodaran said, "We have already tied-up with some large institutions in order that our investors' education programme reach much beyond the metros and tier-two towns", he said.
Stressing on the need of the retail investors' participation in the market, Damodaran said that the participation of the retail investors in the market is necessary for the healthy growth of the Indian stock market in the long-term horizon. It will help the market also to give a reasonable return.

Source: Domain-B

Shareholders should question CEOs' salary: Ahluwalia

New Delhi: Shareholders of family-owned companies should question the quantum of emoluments being drawn by the chief executive officers (CEOs) of their companies, said the deputy chairman of the Planning Commission speaking to Karan Thapar in the programme 'Devil's Advocate' telecast on news channel CNN-IBN.
Ahluwalia further added, "If you look at the ten best performing companies in India... Find out the salaries of top CEOs and then consider how many companies that are performing nowhere near as well are paying there CEOs three-four times that salary.
Ahluwalia said regulation of CEOs salary is a shareholder issue and should be decided by the remuneration committee of independent directors.
Defending the Prime Minister's recent remarks on CEO's salaries he said the PM did not mean that skilled and highly- skilled persons getting a good salary in a competitive market is "something to be objected to," Ahluwalia said. He further added that, "if you have a family controlled business and they owe themselves large salaries it is not necessarily the best thing to do."

Source: Domain-B

Google buys Internet news delivery firm FeedBurner

SAN FRANCISCO: Google announced on Friday that it has bought FeedBurner, a firm specialising in delivering podcasts, weblogs, news and advertising to Internet browsers. Chicago-based FeedBurner is a "web feed" firm that lets online publishers constantly send updated news, commentary and other content directly to readers with tools such as Really Simple Syndication (RSS). "We are thrilled with this acquisition," Google vice president of product management Susan Wojcicki said during a conference call with reporters. "We believe the two companies are very complementary and it will enable Google to bring hundreds of thousands of new sites into AdSense network."

Source: www.timesofindia.com

India largest borrower from WB

NEW DELHI: The World Bank's lending to India will touch $3.8 billion in the 12 months period ending June 30, making the country the single largest borrower from the multilateral financial institution. "World Bank's involvement with India has increased tremendously and the $3.8 billion to be extended till June 30 is the largest amount being extended so far," World Bank executive director Dhanendra Kumar said. Out of the total $3.8 billion, $2.32 billion would be 'zero interest' grants and credit provided by the Bank's International Development Association (IDA), Kumar said. The Bank's lending to India last year was $1.4 billion. He added that half of the $3.8 billion would be deployed for development projects in rural areas. The bank is also expected to approve 14 projects by the end of June and would provide additional assistance for two projects already undertaken, he said.

Source : PTI

Markets to correct in June: Anagram Stock Broking

V K Sharma, analyst, Anagram Stock Broking, said we are heading into a bearish market. “If we look purely at the yesterday’s charts, which doesn’t take into account the closer of S&P 500 at an all-time high and Asian markets today, then it’s a bearish market that we are heading into. The market would definitely do a reversal today and open sharply higher,” he added. Sharma feels that the closure of the day in which the settlement ends is only for history and the current month. “A good close today doesn’t mean that the market is headed for a new bullish heights and a fall doesn’t mean that the next month is bad,” he explained. He believes the markets are heading into a correction in June. “We would look at utilizing any opportunity that comes to lighten commitments rather than going long. We are merely exporting the current months problems into June and the areas in which the open interest has actually been built are the weak areas and where the rollover is high,” Sharma added.

Source: Moneycontrol.com

At 9.4%, GDP growth second fastest-ever

NEW DELHI: The dream run continues. The Indian economy continues to grow at a scorching pace, notching up its second fastest growth rate ever, with gross domestic product (GDP) rising 9.4% during 2006-07. The strong performance was pulled off on the strength of double-digit growth rates by manufacturing and most service sectors, which ensured that the economy grew by over 9% for the second year running despite a measly 2.7% rise in farm output. The fastest GDP rise since 1988-89 — when the economy grew 10.5% — also beats the government’s earlier estimate of 9.2% and puts India second only to China in terms of growth in major economies. With GDP at 1999-2000 prices estimated at Rs 28,48,157 crore, the Central Statistical Organisation, which put out the revised estimates on Thursday, projected that the per capita income went up 8.4% to Rs 22,483 during 2006-07. While the government was pleased with the overall numbers, the slow rise in farm output was a worry. Over half the population still depends on agriculture for a livelihood but the sector’s share in economic activity has declined from over 34% in 1990-91 to 18.5% at the end of 2006-07.
Source: TOI, June 1, 2007

India's GDP grew by 9.4% in 2006-07

Indian economy grew by 9.4 per cent in 2006-07 against 9 per cent in the previous year as robust growth in manufacturing and services sector more than made up for a slowdown in agriculture and construction sector.However, gross domestic product growth slowed down to 9.1 per cent in the fourth quarter (Jan-March) of 2006-07 against 10 per cent in the same quarter of the previous fiscal, pulled down by slow agriculture, construction, financial and social services growth.GDP growth during the fourth quarter was, however, higher sequentially as it was 8.7 per cent in the previous quarter of 2006-07.Manufacturing grew by 12.3 per cent in 2006-07 against 9.1 per cent in the previous year, while trade, hotels, transport and communication grew by 13 per cent against 10.4 per cent.Agriculture and allied sector's growth, however, slowed down to 2.7 per cent against six per cent and construction to 10.7 per cent against 14.2 per cent.

source:PTI

Poor show in power sector will trip economic growth, says PM

NEW DELHI: PM Manmohan Singh on Monday called for a "crash programme (course)" on raising India's generation capacity, saying the dismal pace of reforms in the power sector will trip overall economic growth and called upon states to check electricity theft that was bleeding the system. "There is general agreement on the need to rapidly reduce transmission and distribution losses...If we expect the economy to keep growing at 9-10% per annum, we need a commensurate growth in the power supply...I request all chief ministers to launch a campaign against theft in their states," Singh told a CMs' conference on power sector. For good measure, PM added, "In fact, time is running out, and unless we are able to arrest the growing shortages, the effect on our economy may well prove disastrous." "We have not been able to make a decisive breakthrough in ensuring high and sustainable rates of growth of this sector and improving its financial health...The current level of losses in transmission and distribution, ranging between 30-45% in many states, threatens the financial health of the sector. A large proportion of these losses are due to theft. Theft is the cancer of the power sector." Concerned over the slow pace of capacity addition, given that only half of the 41,000 mw target could be achieved in the 10th Plan, the PM announced setting up of a dedicated, professionally-managed National Power Project Management Board to keep track of 11th Plan projects. Singh also announced setting up of a task force to develop hydel projects and look into issues of rehabilitation and resettlement of affected persons. The PM said states and the Centre had every right to intervene decisively in case the sector regulators did not take measures strictly in consonance with public interest. "After all, the law is quite clear on this. Regulators should regulate — but not over-regulate. They should not become parking places for retired bureaucrats." The conference resolved to set up a standing group of power ministers, on the lines of a grouping of state finance ministers on VAT, to look at issues affecting the power sector. With over Rs 600,000 crore investment needed during the 11th Plan, Singh also announced setting up a sub-committee of the standing group to look at financing issues, particularly for upgrading transmission networks. While the standing group would be headed by power minister Sushilkumar Shinde, the sub-group would be chaired by FM P Chidambaram and include deputy chairman of plan panel Montek Singh Ahluwalia. "I expect this sub-committee to finish its work in three months," he said. Singh said the sector required a "crash programme" for capacity addition to eliminate shortages by 2012 and pegged the investment needs at over Rs 600,000 crore during the 11th Plan period. He said the sector's inability to attract private players on a big scale was a serious issue.

source:29 May, 2007 -TIMES NEWS NETWORK

BSE market cap crosses $1 trillion

MUMBAI: Thanks to the meteoric rise of the rupee in the last two months, the combined wealth of the Indian investors is a trillion dollar now. In Monday's intra-day trade as the rupee hit a new nine-year high against the US dollar, at 40.50, and a strong rally took BSE's market capitalisation to over the Rs 40.50 lakh crore mark, India joined an elite club of countries that boast of $1-trillion market capitalisation. With the country's GDP too at over $1 trillion now, India is among the 10 countries in the world which has a trillion-dollar GDP and market capitalisation at the same time. Both these milestones were achieved due to the appreciation of the rupee, which was hovering around 44.50 during the beginning of 2007. At that exchange rate, India's GDP as well as BSE's market cap would now be about $921 billion. In the last year, investor wealth in rupee terms has jumped 37% to Rs 40.40 lakh crore; in dollar terms, it has shot up 56% to $1 trillion. During the same period, Sensex has gained 36% to its current close at 14,398. While market players said this milestone for India is more psychological in nature, they believe that joining this elite club would also attract greater international attention. ‘‘India is already the fourth largest market in Asia (behind Tokyo, Hong Kong and Shanghai) and the country's GDP growth rate has been second fastest in the world. And now achieving this important milestone would definitely be important when it comes to FII investment,'' said Amitabh Chakraborty, president-equities, Religare Securities.

Source:29 May, 2007 -TIMES NEWS NETWORK

RBI allows foreign companies to open escrow accounts for Indian acquisitions

Mumbai: The Reserve Bank of India (RBI) has allowed foreign companies to open escrow or special accounts in authorised banks for buying shares in Indian companies - a move that gives them more flexibility in acquiring local companies.
Authorised banks may open escrow or special accounts on behalf of non-residents for the purpose of open offers, delisting offers and exit offers subject to SEBI regulations, RBI said in a notification.
These banks will not require prior approval of the Reserve Bank to open such accounts and these could be operated by persons appointed by the firms, the RBI said.
These non-interest bearing accounts could be opened in Indian currency jointly for the purpose. However, banks will not be allowed to provide any facilities against balance in these accounts, the notification added.
The RBI is expected to notify necessary amendments in the foreign exchange management regulations shortly in this regard. Meanwhile, as part of measures to boost oil and gas exploration in the country, the RBI eased norms for field consortium members to make payments to the operator.
RBI, in a notification, allowed banks to make payment towards cash calls to the operator for oil exploration in India either in foreign currency or in Indian rupee.
Cash call is the expenditure incurred by oilfield operators, which is reimbursed by the consortium as per the production sharing agreement.
The RBI has asked banks to ensure that the demand made by the operator for payment toward cash calls is as per the production sharing agreement. It, however, asked banks to obtain a no-objection certificate from the income tax department before making any such payments.

Financial services has larger share of GDP in India than in UK

Mumbai: Financial services accounted for 9.7 per cent of India's GDP in 2005-06, which was 1.2 per cent more than the share of financial services in the GDP of the UK, global consulting firm KPMG says in its latest study.
India has also outpaced the UK in hiring financial service professionals, with hiring in the sector crossing 5,000 people in 2006, despite a severe crunch of appropriate skills required, the report said.
Despite, increase in the recruitment figures, the report indicates that 58 per cent of the Indian organisations experience difficulties in recruiting the right people with the right skills. This is mainly because, most Indian companies hire people directly for sales operations as opposed to the backend work, where the chances of learning on the job skills are higher. This recruitment pattern, therefore, calls for the education institutions in India to improve their job related skills, it said.
"During 2006, recruitment activity in India was higher than in the UK, with many of the participating organisations recruiting over 5,000 employees, including both graduates and experienced hires," the KPMG report released in association with the UK-India education and research initiative (Ukieri) said.
India, with one of the world's largest labour pools, however, is experiencing high competition and low supply versus low availability of appropriate skills as a serious constraint on the organisations, the report revealed.
The report titled 'Global Skills for Graduates in Financial Services' has been launched to encourage quality training within graduate professionals.
Financial services organizations both in India and the UK that operate on a global basis are increasingly using competency frameworks during their recruitment practices, which are tailored locally to reflect the market they are recruiting in, the report said.
"The recruitment of the right talent into the financial services industry is a big issue in cities like London and Mumbai. Our report shows that graduates gain theoretical knowledge, but lack practical job related skills," KPMG UK chairman new and emerging markets Ian Gomes said.
There is a 'soft skills gap', which needs immediate attention. The findings of our report would be used to inform joint curriculum projects in the UK and India to help institutions address this issue, he added.

Turnover today:

The NSE Cash turnover was at Rs 10014.83 crore
The NSE F&O turnover was at Rs 40494.64 crore
The BSE Cash turnover was at Rs 5029.26 crore
The total turnover was at Rs 55538.73 crore

Markets this week

• Market recover from week’s low on across sector buying
• Sensex down 1.2% or nearly 170 points at 14355; recovers 550 points from week's low
• Nifty down 1% or nearly 35 points at 4146.20; recovers 180 points from week's low
• BSE Bank Index down 5% on unexpected CRR hike
• SBI down 6.5%, HDFC Bank down 5.5%, ICICI Bank down 4.5%
• BSE Cap Goods Index down 3%, Suzlon down 16%, BHEL down 4.5%
• Index Losers: Hindalco, VSNL down 12.5% each, Jet Airways down 7.3%
• Index Gainers: Wipro up 6%,Bharti up 5.5%, Satyam up 3.5%, ONGC up 2.5%
• CNX Midcap Index down 1% at 5245; realty stocks feel heat due to CRR hike
• Midcap Gainers: TV Today up 28%, Bajaj Hind up 12%, Praj Ind up 10%
• Midcap Losers: Akruti Nirman down 18.5%, Unitech down 16%
• BSE Small Cap Index down 2.5% at 7290

India on the move: Roach

Stephen S Roach, chief economist at the US-based Morgan Stanley, returning from his fourth trip to India in three years, said the South Asian country has achieved breakthroughs in savings and foreign direct investments that would script one of the world’s most exceptional economic development stories over the next three-five years.

“I am returning from India with great enthusiasm. India has made solid progress on two counts — savings and FDI — and infrastructure development seems set to follow. These are breakthroughs that can unshackle India’s greatest strengths — a high-quality stock of human capital and the magic of its entrepreneurial spirit.

India’s national saving at 32.4 per cent in the 12 months ending March 2006 is up significantly from the 25 per cent average of the 1990 to 2004 period.

At the same time, the aggregate investment ratio has moved up to 33.4 per cent as of March 2006, a major breakout from the 26 per cent average of the preceding 15 years. And foreign direct investment is on target to hit $13 billion in the 12 months ending March 2007, more than double India’s previous best of $5.5 billion hit in the previous year.

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How to tackle inflation

Ajay Shah / New Delhi February 07, 2007


One of the great strengths of India is that the political system just does not accept high inflation.

Is the government getting needlessly hysterical about inflation? Many people think it is okay to tolerate some inflation if, in return, it is possible to sustain higher growth rates. Nothing matters as much for peace, prosperity and poverty alleviation as high GDP growth, so I would always advocate any policy which delivers higher sustained GDP growth. However, the link between inflation and growth is complex. High inflation does not give high growth. The growth miracles of Asia, where above 7% growth was sustained over a 25-year period, were not associated with high inflation. In fact, countries with high inflation have tended to have low growth.

In the business cycle, an acceleration of inflation can support a temporary acceleration of growth. In India, expected inflation has gone up from roughly 3% in 2004 to roughly 7% today--a rise of 4 percentage points. Interest rates have risen by less than 4 percentage points. As a consequence, real interest rates have actually gone down. Borrowing has become cheaper; we have a credit boom; and this is giving heightened GDP growth.

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Govt to let Re rise to bring inflation down

NEW DELHI: The government is plumping for a stronger rupee as the most effective short-term measure to combat inflation, according to sources in the finance ministry. The ministry has already indicated to RBI governor YV Reddy that the government will be comfortable with a stronger rupee. The central bank has been allowing the rupee to appreciate of late. The Reserve Bank could also resort to a hike in the cash reserve ratio (CRR), as merely tinkering with interest rates at the short end does not reduce the excess liquidity that is feeding inflation, which is currently pushing 6%. The bulk of inflation reflects supply constraints: metal prices are high globally (nearly 30% increase over 12 months in dollar terms) as also food prices (up 13%, again in dollar terms). The government has taken several supply-side measures to reduce prices: slashed import duties on base metals, cement and wheat, curtailed export of sugar, and imported wheat at zero duty. It is trying to import pulses from Myanmar and Canada and planning to step up open market sales of wheat. However, the price rise has not been contained. Longer term supply-side measures will take time to kick in. Also, the current price rise is not just a supply-side impact. There’s another villain in this story: the huge amount of foreign capital flowing into the country, seeking to cash in on the India boom. Just over the last one week, $3 billion has come into the country, said the finance ministry official. When foreign capital flows in, money supply goes up as RBI purchases the inflow, giving rupees in return. RBI seeks to take back this extra money in the system by selling government securities. When the public picks up bonds, the cash flows into RBI, reducing the money supply. But such sterilisation is not complete and external capital inflows lead to a rise in the money supply.

source: TIMES NEWS NETWORK

India sees a GDP growth of 9.2% in 2006-07

NEW DELHI: Driven by robust performance in manufacturing and financial services, the country's Gross Domestic Product (GDP) growth is projected at 9.2 per cent during 2006-07, against 9 per cent in the previous year.The 9.2 per cent GDP growth for 2006-07 is projected on top of 9 per cent for 2005-06, taking the growth to over 9 per cent for the second year running, according to advanced estimates released by the CSO here.However, the advance estimates showed that growth in agriculture dipped again to 2.7 per cent in 2006-07 after rising to 6 per cent in the previous year.The manufacturing sector grew at 11.3 per cent against 9.1 per cent while construction took a breather to 9.4 per cent against 14.2 per cent last year.The financing, insurance, real estate and business services continued to perform well logging in 11.1 per cent growth against 10.9 per cent.There was a marginal improvement in mining and quarry to 4.5 per cent from 3.6 per cent last year. The GDP at factor cost (1999-2000) prices is likely to reach Rs 28,44,022 crores in 2006-07 as against quick estimates of Rs 26,04,532 crores for 2005-06.The estimated growth in GDP for the trade, hotels, transport and communication sector during 2006-07 is placed at 13 per cent.The trend is derived from the April-November 2006 growth which is 10.1 per cent in Railway revenue earning freight traffic, 8 per cent in cargo handling in major ports, 34.1 per cent in production of commercial vehicles, 28.1 per cent in passengers handled in civil aviation, 10.5 per cent in air cargo handled and 52 per cent in telephone connections.The lacklustre performance in agriculture has forced the government to lower the estimates of wheat and rice production to 72.5 million tonnes against the initial estimates of 74 MT.

source: PTI[ WEDNESDAY, FEBRUARY 07, 2007 12:45:30 PM]

Markets Today...

• All time high closing for Sensex, Nifty
• Sensex up 1.14% or 165 points at 14643.13
• Nifty up 0.68% or 28.35 points at 4224.25
• BSE IT Index up 2.2%; Infosys up 3.7%, Wipro up 1.26%
• BSE Auto Index up 1.5%; Bajaj Auto up 9%, Hero Honda up 2.7%
• Index Gainers; Cipla up 3%, VSNL up 2.9%, Grasim up 2.8%
• Index Losers; BPCL down 2.6%, Tata Motors down 1.9%, ONGC down 1.8%
• CNX Midcap Index closes above 5400
• Midcap banking & tech stocks in focus; IndusInd bank up 14%, NIIT Tech up 9.34%, iGate up 8.5%
• BSE Small-Cap Index up 0.46% or 35 points
• Lakshmi Vilas Bank up 20%, Autoline up 10%
• New Listing: Akruti Nirman closes at Rs 563.45 Vs listing price at Rs 692
• New Listing: Cambridge Solutions closes at Rs 100.9 Vs listing price at Rs 48.7
• Total market turnover at Rs 43490.99 cr Vs Rs 45857 cr on Tuesday