Indian Economy-News & Updates

[boxer_B]

Reliance bid to make India's largest global acquisition - India Business - Biz - The Times of India

NEW DELHI: The country’s largest company, Reliance Industries (RIL) has offered to buy a controlling stake in the world’s third largest chemical company LyondellBasell, RIL announced on Saturday.

LyondellBasell filed for bankruptcy in the US in January. RIL did not disclose how much it had bid but a senior merchant banker said it would have to pay at least $ 12 billion. This is the gap between LyondellBasell’s assets and liabilities.

But RIL might have to pay more, making this the biggest acquisition ever by an Indian company. Till now, the biggest overseas acquisition was Tata Steel’s 2006 purchase of Corus for $ 12.2 billion. In 2008, LyondellBasell’s market capitalisation was $ 58 billion, while its earning before interest, depreciation and amortisation (EBIDTA) was $ 1 billion.

A banker said that RIL would have to make a fresh infusion of capital in LyondellBasell in order to pay its debtors. It’s learnt that RIL has already offered to acquire fresh shares in the company to infuse capital.

The acquisition will take RIL higher up the Fortune 500 list, where it is currently ranked 264th. In a statement RIL said that the company is reviewing a number of global opportunities for growth of its core business. ‘‘This review is ongoing and there can be no assurance of the outcome with respect to any of the opportunities under review, including with respect to LyondellBasell,”the statement said.

The acquisition would make RIL one of the world’s largest petrochemical companies and it will also be able to penetrate developed markets.

LyondellBasell is headquartered in the Netherlands but based in the US. It was created when Basell Polyolefins merged with Lyondell Chemical Company in December 2007. It is one of the worlds largest polymers, petrochemicals and fuels companies. It filed for bankruptcy in the US under Chapter 11 because of the global financial crisis. A LyondellBasell confirmed it had “received a preliminary non-binding offer from Reliance Industries Limited.”

 

[boxer_B]

Indian Investments Abroad

A large number of Indian companies have been reaching out for overseas destinations, either through mergers and acquisitions or direct investments in order to access high-growth markets, technology and knowledge, attain economies of size and scale of operations, to tap global natural resource banks and leverage international brand names for their own brand building.

According to the data released by the Reserve Bank of India (RBI), the total outward investment from India, excluding that were made by individuals and banks, rose 29.6 per cent to US$ 17.4 billion in 2007-08, largely due to acquisitions.

Hindalco-Novelis, Tata Steel-Corus, Suzlon-Repower and Wipro-Infocrossing are some of the major acquisitions by Indian corporates abroad.

During 2008-09, Singapore, the Netherlands, Cyprus, the UK, the US and Mauritius together accounted for 81 per cent of the amount of proposals for outward foreign direct investment (FDI) (US$ 5 million and above). This has changed slightly in the first quarter of 2009-10 with Mauritius, Singapore, the US and the UAE together accounting for 72 per cent of the amount of proposals for outward FDI during April-June 2009.

India retains its position as the second highest foreign employer in the UK, after the US, according to the 2009 UK inward FDI official data. This year, Indian inward investors created 4,149 new jobs, with 108 new projects, up 44 per cent from last year.

Indian companies have created 300,000 jobs in the US, while contributing US$ 105 billion to the US economy during 2004 to 2007, said Mr Anand Sharma, Minister of Commerce and Industry, during the annual summit of the United States India Business Council in Washington on June 17, 2009.

FDI Outflows

During 2008-09, the actual outward FDI in joint ventures (JVs) and wholly owned subsidiaries (WOSs) stood at US$ 15.9 billion. Of the total amount of investments, 82 per cent was in the form of equity and 18 per cent was in loans.

Further, 3,709 proposals amounting to US$ 22.1 billion were cleared for investments abroad in JVs and WOSs, during 2008-09.

During the quarter April-June 2009, 918 proposals amounting to US$ 2,717 million were cleared for investments abroad in JVs and WOSs.

Mergers and Acquisitions

A significant part of Indian overseas investment has gone into acquisitions abroad.

In a report, Grant Thornton, a global consultancy firm, stated that the volume of mergers and acquisition and group restructuring deals in the country witnessed a sharp nine times jump at US$ 2.27 billion during March 2009 against the volume of deals a month prior to it in February 2009.

Eight of the total deals were cross-border deals valued at US$ 296.67 million, with five outbound deals implying that the acquirer company was an Indian firm while the acquired was an international firm. The total value of the outbound deals was US$ 52.22 million.

Among the notable acquisitions are:

* Suzlon Energy Ltd has completed the acquisition of Portugal-based Martifer Group's stake in its German subsidiary, REpower Systems, by giving the final payment of US$ 122 million. It now holds 90.72 per cent of shares and voting rights in REpower Systems.
* McNally Bharat Engineering Company Ltd has acquired the worldwide coal and minerals processing business and equipment manufacturing facility of KHD Humboldt Wedag, a German engineering company.
* HCL Technologies, has entered into a strategic partnership with South Africa’s UCS Group. As part of the all-cash deal, HCL will acquire UCS’s enterprise solutions SAP practice focused on the retail sector for US$ 7.7 million.
* Essar Group's business process outsourcing and technology arm, Aegis Ltd, has acquired CCN Group PTY Ltd, a South Africa-based BPO firm, for around US$ 30 million.
* Bharat Petroleum Corporation, through its exploratory arm, Bharat PetroResources (BPRL), has got a foothold in Indonesia for oil and gas exploration. The company has bought out 12.5 per cent from Anadarko Indonesia, a wholly-owned subsidiary of Anadarko Petroleum Corporation of the US.
* Software services firm MindTree will be making a foray into China, having bagged a significant outsourcing contract from China’s biggest telecommunications equipment maker Huawei Technologies.
* Bharat Petroleum Corporation, through its exploratory arm, Bharat PetroResources (BPRL), has got a foothold in Indonesia for oil and gas exploration. The company has bought out 12.5 per cent from Anadarko Indonesia, a wholly-owned subsidiary of Anadarko Petroleum Corporation of the US.
* Apollo Hospitals Group, Asia's largest healthcare services provider, has inaugurated Apollo Bramwell Hospitals, a state-of-the-art multi-specialty hospital in Moka, Maritius, as a joint venture with British American Investment Co (Mtius) Ltd.
* Private power producer, Tata Power, will build a 525 MW plant for Corus at the world's second-largest steelmaker's IJmuiden facility in the Netherlands.
* Wipro Consumer Care and Lighting (WCCL), which forayed into the international personal care market by acquiring Singapore-headquartered Unza Holdings, is training its focus on east and west African countries to increase Unza's base this fiscal.
* Elgi Equipments, a leading manufacturer of compressors in India, has launched a 100 per cent subsidiary at Sao Paolo, Brazil, to directly market its products.

Looking Ahead

With more mergers and acquisitions, Indian companies would be getting direct access to new and more extensive markets, and new products and technologies, which would enable them to increase their existing customer base and market hold. This would otherwise take years to develop through the organic route.

In a bid to increase business and strengthen their global presence, more overseas investments by leading Indian firms are on the anvil.

 

[NSG_BlackCats]

Bajaj targets 1 million Pulsar sales by FY'11​

Mumbai: Bajaj Auto is betting big on its Pulsar bike and plans to ramp-up production to 90,000 units per month in the next six months with a sales target of one million units per annum by the end of next financial year. "We are witnessing a resurgence of sales in Pulsar. From a low of 25,000 units sales per month last year, sales have now shot up to 45,000 units per month," Bajaj Auto's CEO for two-wheelers, S Sridhar, told PTI.

The company has set an ambitious but "achievable" target of one million units for FY 11 and will ramp-up production at its Chakan unit to 90,000 units per month over the next six months, Sridhar said. The company, which had a sales of 28,000 per month (3,36,000 for the year) in FY 09, is aiming to sell six lakh Pulsars this fiscal (FY 10) at a monthly average of 50,000 units per month, he said.

The target is to up this to 85,000 units per month in FY 11 with the annual sales target pegged at one million units, he said. Of this, Pulsar 180 cc and 220 cc, both launched early this year to beat competition from Yamaha and Suzuki, would constitute 40 per cent sales with the balance from the Pulsar 150 cc, he said. Presently, its 180 cc and 220 cc sales constitute 30 per cent of the total Pulsar portfolio.

The Pulsar, which is in the performance category, presently enjoys a 50 per cent marketshare, Sridhar claimed. Asked how the turnaround in sales was achieved (Pulsar sales have increased 80 per cent in the last six months), Sridhar attributed it to the launch of its 180 cc and 220 cc versions which have gained a strong foothold in the marketplace. "We also undertook a massive marketing and advertising blitz -- our spend in FY 10 will be nearly Rs 60 crore, more than double that of the Rs 25 crore in FY 09," he said.

Apart from boosting its brand imagery, the company also focused on its existing customer base to boost sales of the Pulsar. "We provided free service to 60,000 Pulsars in camps where we also showcased our new editions (180 cc and 220 cc). We covered 60 towns and sold 3,000 new bikes through these camps," he said. The company exports 10,000 Pulsars (180 cc and 220 cc versions) to countries such as Indonesia, Sri Lanka, Bangladesh and South America, he said.

Link

 

[Lankan Ranger]

SriLankan Airlines scores a century in India

SriLankan Airlines has become the first foreign airline to operate 100 flights per week to India.

This was announced by the airline’s Chief Executive Officer Peter Hill here earlier this week.

“Since both India and Sri Lanka are cricket-loving nations, I would say that we are 100 not out. We are going to go forward and expand our network even more. In the next couple of years we want to be 150 not out. We recognised very early the important role that India plays in this part of the world and we have been steadily increasing the number of flights and the cities that we serve,” said Mr. Hill.

“Ever since the skies were liberalised in 2002, we have been covering 11 destinations in India. We cover not just big metros but also serve the lesser known but important tourist destinations like Goa,” he added.

Sharing the airline’s future plans with the media, Mr. Hill said: “Firstly, we want the management contract to be signed as a new agreement needs to be put together. In the next five years we want our fleet to increase. At present, we have 14 aircraft and we want it to double. We want to have 30 aircraft by 2013.”

The growing fleet would give the airline opportunities in China and Africa and increase the number of flights coming to India, he claimed.

Highlighting the country’s significance to Sri Lanka, Head of Worldwide Passenger Sales Manoj Gunawardena said: “One-third of our business starts and ends in India. We serve five metros except Kolkata. We are marketing India as a tourism destination for which we have an extensive marketing campaign.”

Talking about the airline’s strategy for India, Mr. Gunawardena pointed out: “We are investing in India as a destination. We have the option of exploring 15 other tier-2 cities. Kolkata is also in our planning horizon.”

Another airline official announced that for the next 100 days beginning this past Tuesday every 100th person availing of the Sri Lankan holiday package would get it free of cost till March next year.

Ahead of the upcoming fog season SriLankan Airlines will advance their flights to avoid any delays due to fogs.

“From December 15 to January 30, we will advance the Delhi-Colombo flight operating on Mondays, Fridays and Sundays from 22-30 to 19-35 so that we do not have our passengers stranded at the airport,” said Manager North India Sharuka Wickrama-Adittiya.

On the issue of extension of the 10-year contract (up to 2009) of Emirates Airline that manages the Sri Lankan national carrier, the CEO said he believed that the agreement needed “adjusting”.

“The negotiations between the Sri Lankan Government and Emirates for further extension of the contract are going on. Emirates has a 43 ½ per cent of investment in the airline. We need to renegotiate the agreement in a way that is satisfactory to both the sides. We will be meeting in January to discuss the same,” Mr. Hill added.

From:The Hindu : New Delhi News : SriLankan Airlines scores a century

 

[Lankan Ranger]

 

[Lankan Ranger]

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[third eye]

I have flown Sri Lankan a No of times, have found it to be a good airline with curteous staff.

Never realised India had enough traffic for 100 flights/ week for a foreign airline.

 

[paritosh]

yeah...the in-flight facilities were better than air-india...

 

[StingRoy]

The problem with Air India is that they need to really change their staff on the international flights... My experience on the AI flights were really bad... I am a amazed at more than 100 flights by the Sri Lankan airlines... I guess most connect to southern India.
Nice article in reference to the ongoing test series...

 

[idea123]

Congrats to SriLankan Airlines.
They have come a log way after teh dedly attack by LTTE at Colombo airport.
Srilankan Airlines is controlled by Emirates and possibly the traffic to gulf is handled by SreLankan airlines and Emirates withdrawing their planes for other sector.
BTW, it makes sense to SL Airlines to fly via India to gulf and return.
I hope Air India put up it's act together and learn some good professionalism from leading airlines company including SL Airlines.

 

[Spitfighter]

What is our projected GDP in 2015 and 2020? I couldn't find any reliable stats, Thanks.

 

[inferno]

India logs 7.9 per cent growth in second quarter

Signs of an upturn in the Indian economy were reinforced on Monday with the official data on the country's gross domestic product (GDP) suggesting a 7.9 per cent growth in the second quarter of this fiscal.

The economy had registered a 6.1 per cent growth in the first quarter, taking the cumulative expansion for the first half of the current fiscal to an impressive 7 per cent, as per data released by the Central Statistical Organisation (CSO) in New Delhi.

The bulk of the recovery was led by a 9.2 per cent growth in manufacturing, while mining and construction activities also expanded by 9.5 per cent and 6.5 per cent, respectively. But agriculture continued to me a major drag with a mere 0.9 percent growth.

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India logs 7.9 per cent growth in second quarter- Hindustan Times

 

[PeacefulIndian]

Indian economy surges 7.9 pct in Sept qtr - Yahoo! India News

The economy grew an annual 7.9 percent in the September quarter, much faster than expected on government stimulus spending and a surge in manufacturing, adding pressure on the Reserve Bank to lift interest rates as inflation rises.

The annual growth for India's fiscal second quarter was far above a median forecast of 6.3 percent in a Reuters poll as agricultural output performed better than expected, sending the yield on the benchmark 10-year bond up by 2 basis points as investors bet on higher interest rates.

The growth was the strongest for Asia's third-largest economy in 18 months.

For a graphic on GDP growth and inflation, click http://r.reuters.com/syt93g

"This data could be a green light for the Reserve Bank of India to hike rates, and there are greater chances of this by end of the calendar year. The exit from the fiscal stimulus by the government may also be earlier post the GDP data," said Robert Prior-Wandesforde, senior Asia economist at HSBC in Singapore.

In the June quarter, India's economy grew 6.1 percent from a year earlier, and Prior-Wandesforde said that by his calculation the September's period's growth was the sharpest on a quarter-by-quarter basis since quarterly data began in 1996.

Manufacturing output expanded 9.2 percent in the September quarter as consumers stepped up purchases of cars and other goods.

Farm output was up 0.9 percent, beating expectations for a decline, although economists warned that the impact of the poor monsoon was likely to be seen in the current quarter.

"The December quarter will show agriculture declining, because that's when the harvest shortfall will get captured," said Rajeev Malik, economist at Macquarie in Singapore, who stuck with his view that the central bank would deploy liquidity management steps rather than rate hikes in December and January.

"I don't think they (RBI) are going to be swung by what agriculture has done on a technical basis," he said.

Last week, India's finance minister expressed worry about rising food prices -- the result of a bad summer monsoon and floods that have crimped farm output.

On Monday, however, a top government advisor said there were no serious inflation concerns for now and said he expected no change in government stimulus policy for the current fiscal year.

"It is difficult to project what will happen in the rest of the year. But this performance does suggest that there may well have to be an upward revision in the GDP growth of 6.5 percent which has been projected so far," Montek Singh Ahluwalia, deputy chairman of India's Planning Commission.

India's roaring September quarter performance still lagged the 8.9 percent growth recorded by China during the same quarter.

Consumers' share of spending in the Indian economy totalled 53.5 percent in July-September, roughly in line with 53.4 percent a year earlier, while the government's share rose to 10.6 percent from 8.7 percent on the back of stimulus spending, Monday's data showed.

The economy accelerated from its 5.8 percent rate in the December and March quarters to 6.1 percent in June on pick-ups in the mining, manufacturing, and electricity and services sectors from the previous quarter.

In the 2008/09 fiscal year, India's economy grew 6.7 percent, its weakest in six years and well below rates of 9 percent or more in the previous three years.

The Reserve Bank of India has warned the poor monsoon was more likely to drive inflation than to curb growth. The index of food prices jumped 15.6 percent in the year to mid-November, although supply-side inflation is largely beyond the purview of monetary policy.

The central bank cut its key lending rate by 425 basis points between October 2008 and April, while the government slashed duty rates and stepped up spending to pump-prime the economy and prevent massive job losses.

The Reserve Bank forecast growth during 2009/10 would come in at 6 percent with an upward bias. The finance minister said last week growth could be 6-7 percent in 2009/10 and rebound to 8 percent next year.

The Reserve Bank of India late last month began its exit from its extremely loose monetary policy by removing some of the liquidity support measures implemented to help India weather the global downturn.

Economists in a Reuters poll at the time were divided over when the RBI would begin to raise interest rates, but were unanimous that rates would increase by the end of April. The central bank will hold monetary policy review meetings in January and April, but can adjust rates at any time.

(Writing by Tony Munroe; Editing by John Mair)

Manoj Kumar and Rajesh Kumar Singh

 

[EjazR]

The Hindu : News / National : India proposes to invest $6.5 billion in Iran gas fields

India on Monday proposed to invest $6.5 billion to develop gas fields in Iran and sought more liquefied natural gas (LNG) from that country.

At the same time, India asked Iran to honour the 2005 LNG import deal and ensure secured supplies of gas through the Iran-Pakistan-India pipeline.

In the first high-level contact in two years, India told the visiting Iranian Deputy Oil Minister and National Iranian Oil Co (NIOC) Managing Director, Seifollah Jashnsaz, that it was keen to buy 5 million tonnes of LNG a year besides the ones signed in 2005, sources said.

India also asked Iran to give the ONGC Videsh-led group rights to develop the gas field it discovered in the offshore Farsi block. It sought 20-25 per cent stake for the overseas investment arm of Oil and Natural Gas Corp (ONGC) in the Phase-12 of the gigantic South Pars gas field in the Gulf.

Sources said Jashnsaz was told to honour the 2005 LNG agreement which NIOC had previously blocked, saying the gas price in the signed deal was too low.

On the $7.4 billion Iran-Pakistan-India gas pipeline, India said it was willing to be part of the project provided Iran guarantees safety of the pipeline in Pakistan.

India said it would take delivery of the gas on the Pakistan-India border rather than the proposed sale point at the Iran-Pakistan border, sources said, adding this way Iran would be responsible for passage of gas in Pakistan and will have to bear losses if the pipeline is disrupted.

 

[EjazR]

Indian govt considers Islamic banking option

JEDDAH: Indian Finance Minister Pranab Mukherjee has assured a delegation of Indian Centre for Islamic Finance (ICIF) that he would soon discuss the feasibility of introducing an interest-free Islamic banking system in the country with RBI governor.

“Our talks with Mukherjee were very positive. He has taken note of the major points in our memorandum and promised to have detailed talks on the topic later. I am now very optimistic about Islamic banking in India after the talks,” said H. Abdur Raqeeb, general-secretary of ICIF who led the delegation.

Raqeeb said the finance minister had informed him that he would meet the RBI governor next week and that he would discuss the matter with him. “The minister also told me that he would be visiting Saudi Arabia shortly and would be available in the second week of November and then a meeting could be arranged for ICIF to interact with the secretaries and officials of the ministry’s banking department,” he added.

Raqeeb said the minister was impressed when informed that Islamic banking would benefit not only Muslims but also non-Muslims in the country. “About 40 percent of the clients of Islamic banks in Malaysia and 20 percent in Britain are non-Muslim,” he said. The Vatican has recommended Islamic finance because of its emphasis on ethical and socially responsible investments.

The delegation also briefed Mukherjee on the Kerala government’s decision to launch an Islamic investment company with a capital of Rs.10 billion following a feasibility study conducted by Ernst & Young. The company could be developed into a global Islamic bank at a later stage with RBI’s consent.

The Finance Minister went through the three-page ICIF memorandum and keenly read the recommendations of Raghuram Rajan Committee on Financial Sector Reforms. The Committee had advised the government to take measures to permit the delivery of interest-free finance on a larger scale, including through the banking system.

The delegation convinced the minister that the introduction of Islamic banking and finance would help India attract huge funds in investments from oil-rich Gulf countries. It will also encourage many Muslims, who avoid dealing with interest because of religious instructions, to invest their money.

“In India billions of rupees earned in interest are kept in suspended accounts, as believers do not claim it,” Raqeeb said quoting an RBI journal report. “The assets controlled by Muslims are estimated at $1.5 trillion and growing at 15 percent a year,” the journal said. In Kerala alone it is reported that this money could reach more than Rs 400 billion.

The delegation urged the Reserve Bank to allow Islamic banking/products through subsidiaries of banks and amend the BR Act/RBI Act by way of insertion of a separate chapter exclusively dealing with all aspects of Islamic banking business/products.

It also called for the setting up of Bharatiya Interest-Free Banking Company and a National Interest-Free Banking Corporation.

Meanwhile, the Indian Friends Circle in Riyadh said they were intending to present a similar memorandum to Mukherjee during his visit to Riyadh to consider Islamic banking as an alternate financial channel. "As an experiment a Shariah-compliant fund can be started at State Bank of India's Jeddah branch," the circle said in a letter to the minister.

"As Saudi Arabia has a large NRI base, of which many are followers of Islam and would like to invest their hard-earned money in financial schemes that are based on Islamic faith," said Ahmed Ali, its president. "This wealth can be used to enhance the economy of India," he said, adding that a copy of the letter has been presented to the Indian Embassy in Riyadh.