Indian Economy - News & Updates - Archive

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Indian ADRs gain $14 bn in April; ICICI Bank accounts for one-fourth​

Monday May 4, 2009

Indian companies listed on American bourses saw their cumulative market capitalisation increasing by nearly $14 billion in April, with ICICI Bank (ICICIBANK.NS : 529.9 +50.7) alone accounting for nearly one-fourth of the total gains.

Led by ICICI Bank, which gained $ 3.45 billion in April, the total valuation of 16 Indian stocks trading on the New York Stock Exchange and the Nasdaq climbed by $13.52 billion last month.

Private sector lender HDFC Bank saw its valuation rise by $1.78 billion. At the end of trading on Friday last week, the market capitalisation of ICICI Bank stood at $11.45 billion, while HDFC Bank's was at $11.62 billion.

Besides, IT major Infosys (INFOSYS.BO : 1629.25 +121.95) and Wipro (WIPRO.NS : 365.55 +34.7) witnessed a combined addition of $5.29 billion to their market caps in April.

IT bellwether Infosys' valuation increased $2.12 billion in April to $17.59 billion while Wipro's market cap stood at $13.79 billion at the end of Friday's trade.

Among the Indian stocks, BPO company EXLService was the only one to witness a decline in valuation. EXL Service's market cap stood at $255 million on Friday last week, a loss of $4 million over previous month. US markets witnessed robust trading sessions last month, propeled by the financial sector. Ushering in hopes of a possible early recovery, financial services majors such as Citigroup and Bank of America reported better-than-expected quarterly results. Copper producer Sterlite Industries and auto maker Tata Motors (TATAMOTORS.BO : 257.2 +24.4) saw their valuations jump by $1 billion and $937 million, respectively over the previous month.

BPO companies Genpact and WNS Holdings, IT major Patni Computer Systems (PATNI.NS : 170.95 +9.6) and pharma major Dr Reddy's Laboratories' valuation increased in the range of $81-275 million. During the week ended last Friday, 16 stocks witnessed a gain of $3.55 billion in their total valuation.

Infosys' valuation increased by $1.42 billion during the week, while ICICI Bank gained $152 million over the previous week.

 

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Manufacturing expands for the first time in 5 months: PMI​

4 May 2009,

MUMBAI: Activity in Indian factories expanded for the first time in five months in April as a swelling orders pipeline pointed to a tentative recovery, a survey showed on Monday.

The ABN AMRO Bank purchasing managers' index (PMI) based on a survey of 500 companies, rose to 53.3 in April from March's 49.5, climbing above the threshold of 50 that separates expansion from contraction.

The latest reading is the highest in seven months and it has steadily risen after hitting a trough of 44.4 in December. A

The PMI survey, which is compiled by UK-based Markit Group, comes well ahead of official statistics.

Several research notes in the past few days have pointed to improvement in economic activity in the months ahead. But the central bank remained cautious about the outlook at its policy review last week.

Manufacturing makes up about 16 percent of India's gross domestic product. Government data shows India's factory output fell for the third time in five months in February as the global slowdown hit hard but analyst said they saw some signs of revival after a dismal March quarter.

The boost in manufacturing index came from a surge in new orders. The new orders index rose to 54.9 from 49.5 in March.

The Reserve Bank expects the economy to grow at around 6 percent in 2009/10, a seven-year low, after growing at an average rate of around 9 percent or more in three fiscal years to March 2008.

In order to stimulate demand in Asia's third-largest economy, the central bank has aggressively cut rates since October, most recently last week and has flooded the banking system with cash to stoke bank lending.

The key short-term lending rate has now been cut by 425 basis points in six moves to stand at 4.75 percent.

The government has cut factory gate duties and announced stimulus packages including $4 billion in extra spending to protect growth in the face of the global slowdown.

 

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Indian drugmakers facing takeover threat, says Govt panel​

Monday, May 4, 2009

New Delhi (PTI) Warning of significant takeover threats for most Indian drugmakers by their large foreign peers, an inter-ministerial task force has suggested the Government act proactively to strengthen the pharma industry.

"(The) Indian pharmaceutical industry being fragmented with small balance sheet sizes, takeover by global pharmaceutical companies would adversely affect the health interests of the nation," the task force has said in its recommendations to the Commerce Ministry.

"India is exposed to the threat of takeovers from global big pharmaceutical companies under the new IPR regime," it noted.

The task force was set up under the aegis of the Commerce Ministry for suggesting "Strategy for Increasing Exports of Pharmaceutical Products".

According to industry experts, there are more than 10,000 drug manufacturers in the country and most of them are small-sector units operating in the generic segment.

With a large number of drugs going off-patent in developed markets like the US and Europe, Indian companies are expected to garner a lion's share in the segment.

According to the report, drugs worth 40 billion dollars in the US and 25 billion dollars in Europe are expected to go off-patent soon and this opens a vast opportunity for the domestic industry.

 

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Rupee trading at its highest levels​

4 May 2009,

MUMBAI: The rupee rose to its highest levels in more than two weeks on Monday on back of gains in Asian currencies and strong upswing in the stock market. At 12 45 pm, the rupee traded at 49.67 against the dollar, stronger than Wednesday's close of 50.04.
It climbed 1 percent from the previous close in the early hour deals on Monday to touch an intraday high of 49.55. This is the strongest level that the rupee has touched since April 16, before easing back in mid-morning trade. It had even fallen 50.61, the unit thus moved within a wide range of 100 paisa in the course of the day.

Buoyed investor confidence pushed the yen and the dollar down against major global currencies as they were encouraged to buy of riskier emerging market assets on improved global outlook.

"The rupee is mainly tracking the dollar's weakness against global major's," says a dealer at ICICI Bank. "Stocks are also bullish. The rupee had fallen earlier due to profit booking as traders sold once it moved beyond the 50 level," he added.

Indian bonds fell to week lows on speculation that some investors sold securities ahead of a debt auction scheduled this week. Yields on notes due in 2019 climbed to the highest level in two weeks as the government prepares to offer Rs 12,000 crores of bonds this Friday. The yield on the 6.05 percent note due February 2019 rose seven basis points to 6.34 per cent at 12 45 pm.

 

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OVL to invest $1.45 bn in Iraq oil block​

4 May 2009,

NEW DELHI: ONGC Videsh Ltd, the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), is likely to invest $1.45 billion in an oil block in Iraq that was awarded to it by the erstwhile Saddam Hussein regime.

"The service exploration and production contract for Block-8 have been concluded and the agreement is likely to be signed in the next couple of months," an official said.

Block-8, located in the western desert in southern Iraq bordering Saudi Arabia, was awarded to OVL in November 2000 by the then Saddam Hussein government. However, the government formed after the US invasion of the oil-rich country, sought re-negotiation of the contract which has now been concluded.

The block already has a discovery and is estimated to hold 645 million barrels of inplace reserves, of which 54 million are recoverable, he said adding OVL has committed investing USD 86 million in two phases of exploration and USD 1.45 billion in development of the reserves thereafter.

The contract would be a service contract wherein OVL will be paid about 18 per cent rate of return on its investment.

The official said OVL was also considering bidding for the six producing oilfields Iraq has put on offer in its first licensing auction. "It is talking to two international oil firms for a joint bidding."

OVL wants 51 per cent and will give out 24 per cent to the partner. The remaining 25 per cent would be with Iraqi national oil company.

 

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RBI offers 600 bn rupees at special repo​

4 May 2009,

MUMBAI: The Reserve Bank of India said it would conduct a special repo auction for 600 billion rupees on Monday. The reversal of the auction will be on May 18, it said in a statement.

The special repo facility was introduced on Oct. 14, 2008 on a daily basis, offering 200 billion rupees to meet liquidity needs of mutual funds.

The central bank later increased the facility to 600 billion rupees to include liquidity needs of non-banking financial companies and housing finance companies. At its policy review on April 21, the central bank said the auction will be conducted on a weekly basis every Monday till March 2010.

 

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Now, internet facilities for train passengers​

May 04, 2009 09

Be it booking a ticket or keeping a tab on the stock market, select rail passengers will soon be able to work online while on the move as railway authorities are mulling a proposal to provide satellite-based internet facility on premier trains.

Besides checking the stock prices on real time basis, passengers of such trains can access bank accounts and also book air and rail tickets while travelling. A trial run was successfully carried out on the Mumbai-Ahmedabad Shatabdi Express and the report has been submitted to the railway ministry.

The report is being examined and the ministry is likely to appoint a committee to work out the modalities for introducing the internet on trains, a senior railway ministry official said.

Besides the Rajdhani and Shatabdi trains, saloon cars and accident relief trains are also to be equipped with the transmission technology for internet connectivity.

The proposal also envisages the provision of LCD screen on every seat of the first AC coach of the Shatabdi and the first and second AC coaches of the Rajdhani trains. The cost of this ambitious project has been estimated at about Rs 340 crore (Rs 3.4 billion) as it requires a VSAT terminal, Wi-fi set up and a dedicated VSAT hub among other equipment.

Termed as value addition to passenger amenities, railways are keen to establish a High Speed Internet Corridor along all routes to provide internet, IPTV and other entertainment and utility services in trains.

The plan envisages introduction of an onboard audio and video entertainment system for passengers during the journey. All these steps are being undertaken to provide better facilities to railway passengers, the official said.

 

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India Inc paying millions on lobbying in United States​

Monday, May 04, 2009

WASHINGTON: On issues ranging from immigrant visas to bilateral trade and individual business ventures, Indian companies, including top corporate entity Reliance Industries Limited (RIL) and industry body Nasscom, are paying lawmakers and government departments thousands of dollars for lobbying.

As per the disclosure reports filed by lobbyist firms with the Senate and the House of Representatives, just four Indian entities — RIL, Nasscom, Sun Pharma and Orchid Chemicals — have together paid close to $2,75,000 (about Rs. 1.4 crore) during the first three months of 2009. Out of this, RIL has paid $1,90,000 to Barbour Griffith & Rogers (BGR) Holding, a high-profile lobbyist group that has many Fortune 500 firms and foreign governments as its clients, for providing “strategic counsel on issues related to trade.”

Incidentally, the U.S. Congress and the House of Representatives are currently considering new legislation to penalise, including a ban from doing business in the U.S., companies that supply petroleum products to Iran. RIL is on the hit-list.

Besides, Nasscom (National Association of Software Companies) has paid $70,000 to the same lobbyist, in the first quarter of 2009 for lobbying on international technology and immigration issues.

Sharp reaction

Indian software industry has reacted sharply to the recent moves by the U.S. administration to put curbs on H1-B visas, a skilled foreign worker visa that have largely been given to Indian IT professionals in the past.

While the payment made by Sun Pharma in Q1 2009 is below $5,000, Orchid Chemicals has paid $10,000 for lobbying on issues related to the U.S. drug regulator FDA’s policies.

Sun Pharma’s lobbying issues have been related to citizens’ petitions and FDA reforms.

While there are no past disclosures about RIL’s lobbying attempts, Nasscom, Sun Pharma and Orchid are known to have been quite active on this front. Besides, there are also disclosures about lobbying by companies such as Larsen & Toubro and industry body CII in the past.

As per the disclosures, Nasscom made a total payment of $3,40,000 towards lobbying on issues such as technology and immigration during 2008, while the figures for the previous years are $2,80,000 each in 2007 and 2006, $1,00,000 in 2005, $1,80,000 in 2004 and $2,00,000 in the year 2003.

Orchid Chemicals has also been paying $10,000 every quarter since the second quarter of 2008, while Sun Pharma has paid about $75,000 since 2008.

 

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IPL biz worth $2 billion in two years​

For all the controversies, twists and turns that have dogged the T20 cricket tournament since its inception last year, as an enterprise, IPL is already worth more than $2 billion and counting, says UK based brand valuation consultancy Brand Finance. The IPL brand alone has a value of over $311.94 million, according to a Brand Finance report available exclusively with ET.

With cricket-crazy Indians lapping up the slam-bang version of the gentleman’s game, IPL has generated huge economic value for both its owner, the Board of Control for Cricket in India (BCCI), and the eight team franchisees.

And, it has set the stage for the franchisees to list their teams on the stock market. Following are the team valuations:

Team Valuation - Mumbai Indians

Franchise Fees - $111.9 million

Brand Value 2009 - $41.6 million

Brand Value percent of Franchise Fee** - 37%


Team Valuation - Royal Challengers

Franchise Fees - $111.6 million

Brand Value 2009 - $37.4 million

Brand Value percent of Franchise Fee** - 34%


Team Valuation - Deccan Chargers

Franchise Fees - $107 million

Brand Value 2009 - $34.8 million

Brand Value percent of Franchise Fee** - 33%


Team Valuation - Chennai Super Kings

Franchise Fees - $91.9 million

Brand Value 2009 - $39.4 million

Brand Value percent of Franchise Fee** - 43%


Team Valuation - Delhi Daredevils

Franchise Fees - $84 million

Brand Value 2009 - $39.2 million

Brand Value percent of Franchise Fee** - 47%


Team Valuation - Kings XI Punjab

Franchise Fees - $76 million

Brand Value 2009 - $36.3 million

Brand Value percent of Franchise Fee** - 48%


Team Valuation - Kolkata Knight Riders

Franchise Fees - $75.1 million

Brand Value 2009 - $42.1 million

Brand Value percent of Franchise Fee** - 56%


Team Valuation - Rajasthan Royals

Franchise Fees - $67 million

Brand Value 2009 - $39.5 million

Brand Value percent of Franchise Fee** - 59%



**The percent figures provide a view on how much value has already been created over just one year.

IPL biz worth $2 bn in two years - News in Pictures | Economic Times

 

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India to recover in second half of 2009-10: Goldman Sachs​

Monday, May 4, 2009

New Delhi (IANS): The Indian economy will recover from the slowdown in the second half of 2009-10, thanks to the strong domestic market and improving financial sector, investment bank Goldman Sachs said on Monday.

“We expect a recovery in activity in the second half of fiscal 2009-10, led by a pick-up in domestic demand amidst the loosening financial conditions,” Tushar Poddar, an economist with Goldman Sachs, said on Monday.

“The positive surprise coming from domestic activity data, excess liquidity in the system, a substantial easing of financial conditions, declines in some key interest rate spreads, and the removal of election uncertainty suggest that activity will pick up in the second half,” he added.

According to him, the positive cues were reflected in the stock markets.

“Markets seem to be driven by both domestic and global factors. The Sensex increased 21 per cent month over month, outperforming the S&P by 8 per cent,” Mr. Poddar said.

Foreign institutional investment (FII) rose to $1.8 billion in April after falling $1.2 billion in March and the rupee appreciated 2.3 per cent against the dollar, he said.

According to Mr. Poddar, the key risk is “the formation of an unstable coalition and the ratcheting up of long bond yields due to greater borrowing by the government to finance the post-election budget”.

The Hindu News Update Service

 

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Tata Motors rakes in Rs 2,500 cr ($500 million) from 203,000 Nano bookings in just 21 days!​

4 May 2009,

NEW DELHI: Tata Motors on Monday said it has received over 2.03 lakh bookings for its Rs 1 lakh car Nano, garnering nearly Rs 2,500 crore ($500 mn).

The bookings were double of allotted number of cars
for delivery. Fully paid bookings were nearly Rs 2,500 crore, the company said.

Out of the total bookings, 70 per cent were financed and the rest on application through cash payment. About 4,000 cash bookings were made online through Tata 'NANO' - The People's Car from Tata Motors, it said.

Out of the three variants of Nano, the base model Nano Standard accounted for 20 per cent, mid-range Nano Cx 30 per cent and the top end Nano Lx getting 50 percent of the booking.

The bookings for Nano started on April 9 and closed on April 29.

At the time of launch of Nano on March 23, Tata Motors had said the booking amount would be Rs 95,000, Rs 1.2 lakh and Rs 1.4 lakh for the base model, mid-level and top-end variants respectively.

The company said the first 1,00,000 allottees from among the applicants will be chosen through a computerised random selection procedure, and the announcement will be made within 60 days of closure of booking.

Deliveries will start in July 2009, and are expected to be completed in the last quarter of 2010, while all efforts would be made to ramp up production and deliver earlier, it added.

Customers, who could not be allotted the vehicles but wishes to retain the booking with the company, would be paid interest at the rate of 8.5 per cent for the first year and 8.75 per cent for the second year.

The five-seater Tata Nano, powered by a 623 cc petrol engine, had received good response. Tata Motors claimed 6.10 lakh booking forms were sold and 14 lakh people thronged into Tata Motors' showrooms, Croma and Westside stores across the country to catch a glimpse of the car, while Nano's website recorded three crore hits during the period of bookings.

The company would use its Pantnagar facility, which has an annual capacity of 50,000 units, to roll-out the Nano until its Sanand unit in Gujarat with an annual capacity of 2.5 lakh units goes on stream.

 

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Nations may take a leaf out of Indian regulatory models for fin reforms: Accenture Report​

5 May 2009,

CHICAGO: As nations across the world make reshaping the financial services industry a key priority in their efforts to put the global economy back on track, they are likely to take a leaf out of the regulatory models of countries like India, an Accenture report has said.

"The regulatory models of Canada, India and Spain may become more widely adopted. Canada's banks largely escaped exposure to toxic assets, due to the higher liquidity reserves required by their charters. India and Spain which also require high levels of liquidity reserves, have also emerged strong," the global consulting firm said in a report.

The Brazilian, Chinese and Indian banks are better capitalised than most banks in the developed nations of the US, the UK, Europe and Australia, it said.

Looking ahead, Accenture said trends like "rethinking regulation" are likely to emerge as countries resort to recapitalise some institutions, organise mergers of stronger and weaker companies and step up regulatory oversight.

Referring to an increased role being played by emerging nations in the world economy, the report said advanced economies, like the Group of 7, recognise that involvement of developing countries in discussing the restructuring of the regulatory framework is vital to a successful effort in tackling the global meltdown.

 

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India's publishing BPO industry to cross USD 1.2 billion by 2012​

Tue, May 5

Pune,May 5 (ANI): A recently released report by ValueNotes estimates that the Indian publishing BPO industry is expected to grow to a value of USD 1.2 billion by 2012.

This growth is expected to come from rise in the number of publishing companies that will outsource - which include traditional segments such as STM/Academic, Educational and Legal Publishing, as well as new segments such as magazines, corporate and B2B publishing.

India continues to remain the favored publishing BPO hub - with 35,550 people in direct employment, and revenues worth USD 660 million as of end-2008. While revenues are expected to cross USD 1.2 billion by 2012, the total employee strength is estimated to cross 55,000 by 2012.

Publishing outsourcing includes a wide range of services. The four broad heads include content, design, technology and 'other' services.

Content continues to drive the industry and contributes to 72 percent of the total industry revenues.

Over the last couple of years, services offshored have undergone a transition - from low value services such as tagging, editing existing designs, copy editing to high value services such as original designs, testing and assessment and e-learning tools.

There has been an influx of technology in the industry that has enhanced productivity, workflow management and most importantly reduced costs and turnaround time.

According to Arun Jethmalani, CEO, ValueNotes, "Most providers have access to similar technology, however the differentiator has really been the capabilities developed around workflow and innovation. Today's technology will become tomorrow's standard and constant innovation will differentiate the winners."

Aradhana Kolhatkar, lead analyst, Publishing Services, ValueNotes, said: "Indian players are shifting focus from the matured STM segment to the more lucrative segments in the publishing market. We believe that educational, magazines, corporate/B2B, trade and e-books will be attractive segments over the next 3-4 years. Indian service providers can extend their current capabilities to service these upcoming opportunities."

Based on exhaustive primary research and analysis of this sector, ValueNotes has identified and established that there are over 140 vendors in the publishing offshoring industry. Of these we have identified SPi, Aptara, Integra and Laserwords as frontrunners in the industry.

ValueNotes Database is a leading provider of business intelligence and research, with expertise across selected domains and types of customer needs. Working with clients across the globe, we have significant understanding of international markets.

 

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Sensex beats gold and silver with 46% returns​

5 May 2009,

AHMEDABAD: Improvement in the global macroeconomic fundamentals, with a rising risk appetite, has seen infusion of money into stock markets in the last two months. As uncertainty over the global economic outlook subsides, with rising optimism of a speedy recovery, equity has outperformed all other options of investment.

During the last two months, the Sensex has appreciated over 45%, while investment in gold and silver has given negative return of around 7%.

As worries over the global economic outlook subside, equity markets across the world have rallied during this time, appreciating between 21-45 %. And leading the pack is Sensex, which has beaten indices in US, Europe and Asia with 45% gain since March 6, 2009.

Investors and punters, who made a beeline for gold as the safest bet during uncertainties earlier, have started liquidating their positions in the yellow metal and are switching funds towards equities across global markets.

“Risk appetite of investors increases whenever uncertainty about global economic market subsides. Investors across the globe have started switching their funds from other asset class such gold to equities,’’ said Amitabh Chakrabarty, head-equity, Religare Securities.

Signs of continued improvement in the macro environment aided markets to surge past the 12,000-mark on Monday, its highest in the last seven months.

“The rally has its legs on improved fundamentals as reflected by the improved offtake in some of the industries like auto, cement and steel. Further, attractive valuations also acted as a catalyst for liquidity to chase the emerging markets, which remain less vulnerable and expected to continue to log in growth higher than the their peers in the developed world,’’ said Dinesh Thakkar, MD, Angel Broking.

 

[Screaming Skull]

Rakesh Mohan quits as RBI deputy governor to join Stanford University​

5 May 2009,

MUMBAI: In a surprise move, the deputy governor of the Reserve Bank of India and one of India’s senior-most economic policymakers, Rakesh Mohan, quit on Monday, a full year before his tenure comes to an end. Mr Mohan will take up a teaching assignment at Stanford University.

Although there was speculation about his departure ever since he lost out in the race for the top job at the RBI in September last year, it is the timing that has caught bankers and policymakers by surprise. Mr Mohan was once considered to be the frontrunner to succeed YV Reddy as the RBI governor, but the government eventually chose finance secretary D Subbarao.

Yet, Mr Mohan stayed on at a critical time when global financial markets were in turmoil and local credit markets were almost frozen. He helped Mr Subbarao fashion policy responses — something which the RBI governor acknowledged on Monday. Mr Subbarao said that over the past several months, as he traversed a steep learning curve, he had been increasingly depending on Mr Mohan for his advice and counsel.

When asked about the sudden decision, Mr Mohan told ET: “Decisions are not taken hastily. I have received an offer from Stanford University. I will be guiding doctorate students and be associated with Stanford’s Centre for International Development.”

As a deputy governor, he handled monetary policy, financial markets, economic research and statistics. For a good part of his stint with the RBI, he had to grapple with a strengthening rupee and strong pile-up of foreign exchange reserves, a dilemma faced by many other central bankers across Asia. On the interest rate management front, Mr Mohan had to deal with the cycle turning both ways.

But, Mint Street watchers say that the then governor YV Reddy had a larger role in key policy decisions. Indeed, it was Mr Reddy who welcomed Mr Mohan back to the RBI after a short-lived stint as secretary of the department of economic affairs in the finance ministry.

Mr Mohan was appointed deputy governor in September 2002 and moved to North Block in October 2004 as secretary, department of economic affairs during P Chidambaram’s tenure as finance minister, only to return to the RBI after eight months.

Government officials reckon that he was quite uncomfortable during both his assignments in the finance ministry: first as an adviser to the finance minister during Yashwant Sinha’s tenure as finance minister, and later, as secretary of economic affairs. On both the occasions, he quit office mid-way, which is seen as a blot on his copybook.

Some who worked with Mr Mohan in the government say that they were surprised to see the transformation — in someone who was seen as pushing for financial sector reforms during his finmin stint — after he moved to the RBI.

According to them, he changed tack to oppose reform moves, some of which originated during his time in the finance ministry. Indeed, there is a view among some senior officials that this may have gone against him when the government chose a successor to YV Reddy.