Indian Economy - News & Updates - Archive

[Neo]

Thursday, 12 April 2007

Jet Airways strikes Sahara deal

Jet Airways is the largest private airline in India
India's largest private airline, Jet Airways, says it has agreed to buy out its smaller rival Air Sahara for 14.5 billion rupees ($340m).
Jet Airways has already paid Sahara $116m. It will make a further payment of $83m before 20 April and the rest will be paid in annual instalments.

The deal gives the airline a combined domestic market share of about 32%.

Jet's attempt to buy Air Sahara last year collapsed but the company says the new deal has been reached amicably.

Both airlines also fly to international destinations.

'Amicable'

"This deal is definitely going to be good for the shareholders," Jet Airways founder and chairman Naresh Goyal said at a press conference in Mumbai (Bombay), India's financial capital.

Jet Airways was founded by former travel agent Naresh Goyal

A lawyer for Jet Airways, Harish Salve, told journalists: "The important thing is that there was a dispute and it has been settled amicably by both sides."

Mr Salve said the agreement was confidential and that he could not reveal much except that Jet had bought all Air Sahara shares.

In 2006, Jet Airways announced it would pay $500m to buy Air Sahara. But the deal fell apart after Jet Airways failed to get the necessary regulatory approval.

The airline at the time said it would not go through with the acquisition in the interests of its shareholders.

Air Sahara argued the agreement should be honoured and demanded compensation from Jet Airways.

An arbitration panel was set up to hear the case, and it recommended the two parties come to some sort of an agreement among themselves.

Jet Airways, founded by London-based former travel agent Naresh Goyal, controls about 24.5% of the Indian domestic aviation market.

Air Sahara, owned by reclusive businessman Subroto Roy, controls about 7%.

http://news.bbc.co.uk/2/hi/south_asia/6547941.stm

 

[Neo]

Thursday, 12 April 2007

US sees no trade 'breakthrough'

Can different sides bridge the gap and reach an agreement?
The US has warned that it expects no "breakthrough" as four-day trade talks with global leaders begin in New Delhi.
US Trade Representative Susan Schwab said it would be a "stock-taking meeting", as India, the US, the European Union and Brazil congregated.

It is the first meeting since talks collapsed in July, after disagreement over farm subsidies and tariffs.

Brazil said differences were "narrowing" while the US underlined a "sense of urgency" at the event.

The need to reach a settlement on trade has been heightened ahead of a looming US deadline.

By June the power for the US President to give fast-track approval for trade deals will expire.

After that date getting any settlement through Congress is likely to prove more difficult.

Multilateral system

The World Trade Organization's Doha round of talks - named after the Qatari capital where talks started in 2001 - collapsed last year as developed and developing countries came to loggerheads with both sides saying the other was not doing enough.

"No one is making formal offers in this context but what [we] are doing is exploring conditional offers," said Ms Schwab.

The host country meanwhile offered a slightly more upbeat note, but like the US declined to offer any details.

"I am confident that all countries want to move forward, strengthening the multilateral trading system," said Indian Commerce Minister Kamal Nath.

Developed nations have been accused of maintaining overly high subsidies, to the detriment of poorer nations, while developed countries say developing countries have not sufficiently lifted barriers on imports.

The meeting on Thursday marked the first formal day of talks after informal and bilateral negotiations started a day earlier.

Before the talks, EU Trade Commissioner Peter Mandelson said: "If we fail, Doha's prospects for the year will be lost".

The original aim of the talks had been to increase world trade and in the process help beat poverty.

http://news.bbc.co.uk/2/hi/business/6547947.stm

 

[Neo]

Indian forex reserves top $200 billion

MUMBAI: India’s foreign exchange reserves topped $200 billion for the first time in early April, data showed on Friday, which analysts said reflected capital flows into the economy and central bank intervention to cap the rupee.

Foreign exchange reserves rose to $200.320 billion on April 6 from $199.179 billion a week earlier, the Reserve Bank of India (RBI) said. In Asia, India has the fifth-largest holdings of foreign exchange reserves behind China, Japan, Taiwan and South Korea.

Reserves have risen by $33.2 billion since Oct 27 last year, which analysts saw it as evidence of suspected intervention by the central bank to curb the currency’s appreciation. The central bank bought $19.7 billion in the foreign exchange market in the four months to the end of February, data showed earlier this week.

Before November, the central bank’s previous intervention was in May, when it bought $504 million. Intervention figures for March have not been released. The rupee has risen more than 10.5 per cent from a three-year trough of 47.04 per dollar last July and on Friday it ended at an eight-year high of 42.51/52 per dollar.

The intervention has created a headache for the central bank as it tries to curtail money supply and credit growth to curb inflationary pressures. When the central bank sells rupees to buy dollars, it adds to the supply of rupees in the banking system. Annual growth in money supply has remained stubbornly above 20 per cent, higher than the central bank would like.

The central bank has stepped up policy efforts to rein in money supply and credit growth by raising interest rates and increasing the proportion of cash that banks should hold with it.

http://www.thenews.com.pk/daily_detail.asp?id=51068

 

[Neo]

India exports 400,000T of sugar in Oct-Mar

MUMBAI: India exported 400,000 tonnes of sugar in the six months to the end of March and was likely to export 1 million tonnes in the crop year that ends in September, the head of the Indian Sugar Mills Association said on Friday.

India, the world’s second-biggest sugar producer, banned exports last July to curb prices. When it lifted the ban in January, world prices had fallen.

“The ban was lifted very late and we lost an opportunity to export when prices were higher,” Shantilal Jain, director-general of the association, told reporters at a commodities forum. He said India’s sugar output was expected to be 26 million tonnes in the year to September 2007, up from 19.3 million tonnes in the previous crop year, and he expected output to increase by another million tonnes in year to September 2008. Higher output this year would result in an opening stock of 10 million tonnes on October 1, 2007 against 4 million tonnes a year earlier, he said. Jain said a proposed transport subsidy for sugar mills was extremely necessary, saying exports were unlikely to reach 1 million tonnes this year without it.

The government incentives have not yet been approved. They have been referred to the election commission for approval because of elections in Uttar Pradesh, a major sugar producing northern state. “We look forward to the subsidy eagerly and it will boost exports next year,” he said.

http://www.thenews.com.pk/daily_detail.asp?id=51069

 

[Neo]

Saturday, April 14, 2007

Japanese cos in India rise 50% in a year: report

NEW DELHI: The number of Japanese companies operating in India has increased by nearly 50 percent in a year, drawn by an improved investment climate, according to a report on Friday.

“The number (of Japanese companies) that stood at 320 last January (2006) crossed 470 in February this year,” Japanese Ambassador to India Y Enoki was quoted as saying by the Press Trust of India.

Japanese companies were flocking to Indian shores because of an increasingly attractive investment climate in the country where economic growth is running at around nine percent, the ambassador said. India has been liberalising its economy, drawing a growing number of foreign investors from around the world.

http://www.dailytimes.com.pk/default.asp?page=2007\04\14\story_14-4-2007_pg5_29

 

[Contrarian]

Essar Power to invest Rs 15,000 crore


MUMBAI: Essar Power, belonging to the oil-to-telecom Ruia group, has lined up investments worth Rs 15,000 crore for setting up three coal-based power plants that will generate 3,600 megawatt (MW) in the states of Jharkhand, Gujarat and Madhya Pradesh. The three power plants of 1,200 MW each are likely to cost Rs 5,000 crore per plant.

The company, which currently generates 1,250 MW, is planning to set up a 1,200 MW power generation station close to a coal mine in Jharkhand.

Recently, the company was allotted a captive coal mine at Chakla, Jharkhand with potential reserves of 120 million tonnes. It will take an year to complete the financial closure, Arun K Srivastava, MD Essar Power told TOI.

A 1,200 MW plant would annually consume 6 million tonnes coal as fuel. According to Srivastava, the cost of power in Jharkhand would come to around Rs 2.10 per unit. As per the regulations, a portion of the power will be supplied to the state while the rest will be sold to outside buyers.

The Jharkhand power plant is likely to start generation by 2011. Essar Power has also signed a power purchase agreement with the Gujarat Urja Vikas Nigam (GUVNL) to supply 1,000 MW power at Rs 2.40 per unit for 25 years. To generate this power, the company is setting up a 1,200 MW plant.

After fulfiling its obligation to GUVNL, the company will sell the excess power to other buyers. The Gujarat plant is likely to achieve financial closure in nine months.

The third project is next to the coal mine at Mahan in Madhya Pradesh. This too will be a 1,200 MW project costing nearly Rs 5,000 crore. The coal for the project will come from the joint venture formed between Essar Power and Hindalco for the coal mine having 180 million tonnes of reserves.
http://timesofindia.indiatimes.com/...invest_Rs_15000_crore/articleshow/1907510.cms

 

[Contrarian]

Developing nations to put up united stand at WTO

NEW DELHI: The key WTO players may have put up a show of bonhomie on Thursday evening but there is little that they have done to improve trust.

With US still in a mood to garner as many goodies as it can without offering any concessions in return, the developing countries have little faith in the world's largest trading partner taking forward the process and that too with the interest of the poor countries in mind.

While the four key players US, EU, Brazil and India are expected to try to discuss the possibility of tariff and subsidy cuts on May 17 and 18 in Paris, India and China are unwilling to take any chances.

Over the next two days, the two Asian powers are going to issue a joint statement reminding the US and EU about the Doha Round mandate to uplift the interests of the poor.

Commerce minister Kamal Nath is scheduled to fly to Beijing over the weekend to hold parleys with his Chinese counterpart and ensure that the developing country bloc remained united. Consultations with the other developing country members are expected over the next few weeks.

Given the united posture adopted by the developing countries in thwarting the rich countries attempts to have their way, US Trade Representative Susan Schwab did recognise the role that India and Brazil are playing.

"India is in a profoundly important position in these negotiations one of a handful of nations that can make or break the Doha round.

Moreover, the nature of India's engagement will determine that of many other developing countries in G20 and G33," she said. Before Nath goes to Brazil, he is holding bilateral consultations with US, Japan and Australia to narroe down differences.

But there is a renewed urgency to conclude talks by December, something that Brazilian external relations minister Celso Amorim made clear.

Before the ministers meet in Paris in mid-May, officials from the four countries will start a conditional offer process to try and reach some sort of consensus. But they remained sceptical of how much the US would move.
http://timesofindia.indiatimes.com/...p_united_stand_at_WTO/articleshow/1907508.cms

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I think the Doha round for WTO is akin to the Uruguay round of GATT...The last step.

 

[Contrarian]

AT&T starts business in India

Staff Reporter

NEW DELHI: AT&T Global Network Services India, a joint venture between AT&T Inc. and Mahindra Telecommunications Investment Private Ltd., has announced the launch of its commercial business in India.

"India is a high-priority market for just about every global MNC, and the increasingly competitive telecom landscape will be a major factor in helping to attract further MNC investment and expansion into India. AT&T is strongly positioned in India to directly meet their telecommunication needs,'' AT&T Asia Pacific Vice-President V. S. Gopi Gopinath said in a statement. AT&T will be investing $750 million in 2007 to support its global customers.

Investment plans

This would help AT&T provide its global customers with consistent services worldwide and help drive their business growth, he added. In his message, Communications and IT Minister Dayanidhi Maran said AT&T's offerings would definitely increase the competitiveness of IT enterprises and IT users who need world class, state-of-the art global connectivity. "For its part, the Central Government, through its policies, will ensure that India continues to be an investor friendly destination for global telecommunications companies," the Minister added.

http://www.hindu.com/2007/04/15/stories/2007041502091300.htm

 

[Contrarian]

Work on $50 b industrial corridor to begin in January

NEW DELHI: Work on the Delhi-Mumbai industrial corridor, to be patterned on the lines of the Tokyo-Osaka industrial belt, will begin in January next year after the finalisation of the detailed project report, Commerce and Industry Minister, Kamal Nath, said after interacting with Japanese Trade Minister, Akira Amari, at a Confederation of Indian Industry (CII) function here on Saturday.

To be established with Japanese help, the Delhi-Mumbai Industrial Corridor (DMIC) project would need about $50 billion (about Rs. 2,15,000 crore) and come up along the proposed Delhi-Mumbai dedicated rail freight corridor, added Mr. Kamal Nath. Japan agreed to partner the project during Prime Minister Manmohan Singh's visit to Tokyo in December last year.

The industrial corridor would have a mega power plant, three ports and six airports apart from connectivity with the existing ports, Secretary in the Department of Industrial Policy and Promotion, Ajay Dua, said while making a presentation on the project. The DMIC project would be funded through private-public partnership (PPP) and foreign investment. Apart from giving a grant, Japan would invest in the project.

The 1,483 km corridor will span six States — Delhi, Haryana, Uttar Pradesh, Rajasthan, Gujarat and Maharashtra — which would be made stakeholders. The project will be implemented by DMIC Development Corporation, which will float Special Purpose Vehicles to implement the projects.

Mr. Kamal Nath hailed Japan's role as the largest contributor of ODA (Overseas Development Assistance) to India and stressed that the DMIC project would significantly enhance bilateral trade and economic ties.

The Japanese Trade Minister said DMIC would accelerate Japanese investment in India, develop India's infrastructure sector, including industrial parks, roads, ports and rail connectivity along the routes and facilitate exports from the regions covered by the corridor. He said a high-level business delegation would visit India in July to look for opportunities.

http://www.hindu.com/2007/04/15/stor...1502101300.htm

 

[Contrarian]

Lufthansa Technik to cash in on India's air traffic potential

Vinay Kumar

"Looking forward to strengthening relationships with Indian carriers and will expand support programmes"

# For Maintenance, Repair, Overhaul of jet engines, to provide crucial components to airlines
# To invest $20 million at the upcoming Rajiv Gandhi International Airport at Shamshabad, near Hyderabad

NEW DELHI: Hoping to cash in on India's emergence as one of the largest growth markets for air traffic, Lufthansa Technik, part of the Lufthansa Aviation group, plans to position itself as an experienced provider for support services of jet engines and crucial components to airlines in India.

Lufthansa Technik has decided to invest $20 million in the first Maintenance, Repair and Overhaul (MRO) facility for aircraft at the upcoming Rajiv Gandhi International Airport at Shamshabad on the outskirts of Hyderabad.

It signed an agreement with the GMR Hyderabad International Airport Limited (GMR HIAL) last week to set up the new facility that is likely to be ready by 2008-end.

"Today, about 150 to 250 million people in India are seen as potential buyers of flight tickets. In this connection, India is only at the very start of a sustainable development. As the world's leading MRO provider, we are looking forward to strengthening existing relationships with the Indian carriers and will expand our support programmes, including a regional component pool,'' said August Wilhelm Henningsen, Chairman of the Executive Board at Lufthansa Technik, while on a visit to Hyderabad to finalise the agreement with GMR HIAL.

"We see this venture with GMR as the foundation for a long-lasting partnership, and the basis for a state-of-the-art technical cooperation for the benefit of our existing and future airline partners in India,'' Mr. Henningsen said.

The MRO facility would be a crucial step to establish a full-service world-class airport to match Hyderabad's status as the economic powerhouse of the region as well as its geographic location that made it a strategic hub for domestic and international air traffic, said T. Srinagesh, Chief Operating Officer of GMR HIAL.

The facility will provide base maintenance services for A-320 and Boeing 737 family aircraft.

Lufthansa Technik secured many contracts last year for providing total component support and MRO services with Air Deccan, the low-cost airline, Kingfisher Airlines and Jet Airways.

Recognising the need for an experienced MRO partner for further growth of airlines in India where more than 400 new aircraft are on order at present, Lufthansa Technik has set up its Indian subsidiary — One Stop Airline MRO to supply technical components for the Airbus A-320 fleet of up to 60 aircraft at the Bangalore hub. State-owned carriers — Air India and Indian Airlines — also depend upon Lufthansa Technik for various component repairs as well as structural parts such as nacelles and thrust reversers.
http://www.hindu.com/2007/04/16/stories/2007041601761300.htm

 

[Contrarian]

TCS net profit up 44 per cent

MUMBAI: Tata Consultancy Services on Monday said fourth quarter net profit soared nearly 44 percent from a year earlier as firms abroad outsourced more office and software work to India.

Tata Consultancy Services, or TCS, said net profit for the three months to March rose to 11.95 billion rupees (272 million dollars) from 8.32 billion rupees in the year-earlier period, according to a notice on the Mumbai Stock Exchange website.

Income in the fourth quarter rose 40 per cent to 52.67 billion rupees.

For the full year, TCS net profit gained 42 per cent to 42.13 billion rupees on income of 189.1 billion rupees, up 41 per cent from the year earlier.

Tata Consultancy shares rose 17.45 rupees or 1.38 per cent to 1,280.1 on Monday while the benchmark Mumbai stock exchange Sensex index ended up 311.50 points or 2.33 percent to 13,695.58.

TCS said it added 218 new clients in the past year, including 43 in the last quarter.

"Our emerging hi-growth services are giving us a superior revenue quality and diversified customer base across markets," said S Ramadorai, chief executive and managing director of TCS.

"We are confident of continuing sustained, profitable growth," he added.

TCS won 12 deals of over 50 million dollars in the year, officials said.

The company disclosed that it plans to set up a new development centre in Morocco, while boosting finance operations in Brazil, Mexico and China.

TCS is part of India's diversified Tata group and employs more than 83,500 people from 60 different nationalities. The Mumbai-based firm earns nearly half of its revenues from banking and financial services in an industry that relies on India's cheap but skilled English-speaking workforce.

The rest of its revenues come from manufacturers and telecommunications customers.

TCS listed on Indian exchanges in August 2004 after raising 1.2 billion dollars.
http://timesofindia.indiatimes.com/TCS_net_profit_up_44_per_cent/articleshow/1915758.cms

 

[Contrarian]

Jet to acquire 20 aircraft sfor international flights


MUMBAI: Jet Airways, which recently took over beleaguered Air Sahara, on Monday announced its expansion plans acquiring 20 wide-bodied aircraft for USD 2.1 billion.

Jet Chairman Naresh Goyal said the aircraft delivery will begin this month. It will comprise 10 state-of-the-art Boeing 777-300 (Extended Range) and 10 A330-200 Airbus aircraft.

Starting with the wide-bodied aircraft, Jet Airways has redesigned everything offering new products in the first, premier and economy classes.

It also holds options of further adding aircrafts of each type and have recently signed to purchase 10 Boeing 787 Dreamliner with delivery commencing in 2011, which will cost the company USD 1.6 billion, Goyal said.

In all, Jet Airways will invest USD 3.7 billion in new aircraft for its aggressive growth strategy, he added.

All facilities offered will be premium and hence a premium will have to be paid by the passengers but the prices will be competitive, a senior Jet Airways official said.

Giving details of the configuration of its Boeing 777-300 ER aircraft, Goyal said Jet Airways has created the first airline suite in the sky offering its customers the ultimate privacy and luxury.

Each of the eight first class suite providing over 26 square feet of usable space features dual sliding doors that gives complete privacy for the passengers, he said.

These suites will have the world's longest first class bed of 83 inches, massive 23 inch flat screen monitors and carefully designed storage areas, including a personal hanging wardrobe and under ottoman stowage.

The suite is also designed to allow dining for two, multiple lighting option, a variable lumbar support and an eight-point massage system.

While Boeing 777-300 ER will be configured in three classes -- first class, premier and economy, the A330 will be configured in two classes of 30 premier and 190 economy seats.

Jet Airways will launch daily services to New York via Brussels in early August the Boeing 777. It also plans daily services to San Fransisco via Shanghai with B777 fleet in the winter of 2007.

The A330 will be deployed on daily Delhi-London services and flights from India to Singapore, Kuala Lumpur, Johannesburg and Toronto via Brussels.

 

[Contrarian]

Rupee touches another high against US dollar

MUMBAI: The rupee remained strong against the US currency and hit another high of 42.32/33 per dollar in late morning deals despite intervention by the Reserve Bank of India's (RBI) to check rupee appreciation.

In active trade at Interbank Foreign Exchange (forex) market, the local currency resumed steady at 42.51/52 a dollar but later surged strongly during late morning trading to Rs 42.32/33 a dollar, the level not seen since November 1998.

The Cash Reserve Ratio (CRR) hike started kicking in from April 14, the first leg of the latest CRR hike drained another Rs 7,750 crore from the banking system compelling banks to press heavy dollar liquidation, a forex dealer said.

Liquidity in the banking system is likely to tighten in the current week following a government bond auctions last week and the current week's auction by the central bank under the market stabilisation scheme (MSS).

Dealers, however, felt that the Reserve Bank of India's (RBI) intervention in order to check rupee appreciation could step up in the week as the inflation pressure has come down considerably.

 

[Contrarian]

BSNL may go ahead with GSM expansion plan

NEW DELHI: BSNL will now be able to place orders for its over Rs 20,000 crore mobile telephony expansion plan as Motorola, which had challenged its disqualification in the tendering process in the Delhi High Court, has withdrawn the case.

On October 9, Motorola filed a petition in Delhi High Court challenging its disqualification in the 45 million lines tender. Due to the court case, BSNL was unable to place any order during the pendency of the petition.

Motorola in a statement said "in view of the tremendous growth taking place in the telecom sector in the country and BSNL's petition of capacity constraints to have its share in this expansion, Motorola has decided to withdraw the case filed in the Delhi High Court".

The US-based company, however, clarified that withdrawal of petition didn't reflect any change in their original position saying "withdrawal of case by Motorola in no way reflects any change in the company's original position that its bid was in compliance with the tender condition".

The Delhi High Court on Monday dismissed Motorola's application as withdrawn. The award, to add 45 million lines in its GSM network, which had gone to Ericsson and Nokia will now be implemented with the withdrawal of this petition.

Ericsson, which was the lowest bidder, would get 60 per cent of the 45 million lines, while the second lowest bidder, Nokia, would get the remaining share of the north east and west zone.

Motorola had earlier challenged the award of the contract to Ericsson saying it was the lowest bidder and BSNL had wrongfully disqualified it on the technical evaluation ground.

 

[Contrarian]

Essar acquires Canadian Algoma Steel

NEW DELHI: Ruias owned Essar Steel on Monday announced that they have agreed to acquire Canadian Algoma Steel for an aggregate value of 1.8 billion Canadian dollars to be paid in cash.

Commenting on the deal Shashi Ruia, chairman Essar Global Ltd, an arm for Essar Groups' international operations, said "we believe Algoma is an excellent addition to our existing steel business and also offers growth potential. This acquisition fits in with our global steel vision of having world class low cost assets with a global footprint."

Benjamin Duster, Chairman of Algoma's Board of Directors said, "The Board of Directors unanimously supports the Essar proposal as it reflects a significant premium to the historical share price of Algoma."

Algoma Steel is an integrated steel producer based in Sault Ste. Marie, Ontario with steel shipments of 2.4 million tonnes in 2006.

It has a revenue of 1.9 billion Canadian dollars which are primarily derived from the manufacture and sale of rolled steel products, including hot and cold rolled steel and plate.

The offer price of 56 Canadian dollar per share represents a premium of 48 per cent to Algoma's stock price for the 20-day period ending on February 14, 2007 when Algoma confirmed that it was in discussions regarding a potential transaction, a joint statement by the two companies said.

The arrangement must be approved by Algoma's shareholders by the affirmative vote of at least 66 per cent (2/3rd) of the votes cast, in person or by proxy, at a shareholders meeting, and is subject to customary closing conditions including necessary regulatory approvals.

The support agreement provides for payments to Essar in the event that the acquisition is not completed under certain circumstances.