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Toyota eyes 10 % market share in 6-7 years!

2010-03-13T12:43:00.001-08:00

KOCHI: Amidst the mounting recall troubles its parent is facing globally, Toyota has set an ambitious target of cornering 10 per cent share of the share market in the next six-seven years, up from the present 3 per cent, Toyota Kirloskar Motor MD Hiroshi Nakagawa said here today.

Nakagawa said new compact car, the Etios, is a good quality product and will be affordably priced. "With the introduction of the Etios, we hope to attain a sizeable market share here in the shortest possible time," he added.

During the frist two months of this year, Toyota more than doubled it sales to 11,982 units against 5,736 in the year-ago period.

The company had sold 55,497 units last year, and with 5,861 units, Kerala contributed 11 per cent of total sales.

It aims to expand its sales and service network to about 150 dealers nationally by this year end, out of which two will be in Kerala where it already has six dealers.

Toyota is showcasing its array of vehicles at a two-day exhibition called the Toyota 'Q' World here. Innova, Corolla Altis and Fortuner are market leaders in their segments in Kerala, with 45, 35 and 68 per cent market share respectively.

After Chandigarh, Lucknow, Mumbai, Ahmedabad, Pune and Kochi, the four-month-long Toyota 'Q' World will travel to Bangalore, Chennai, Hyderabad and Kolkata.

Toyota Kirloskar Motor is a joint venture between Toyota Corp and Kirloskar Group. It has already invested nearly Rs 1,500 crore at its Bidadi plant, near Bangalore, and employs around 3,000. The plant started production in December 1999 and has a capacity for 80,000 units annually.

Are You a Tactical or Strategical Stock Investor?

2010-01-23T10:06:00.001-08:00

Two ways to approach the stock market are tactically or strategically. Which you choose should depend on the circumstances.

Most investors will do better taking a strategical approach, which is the classic long-term view of investing.

The strategical approach looks to position the investor in the right stocks for years to come.

Many fortunes have been made in the stock market using this approach – think Warren Buffett.

However, it is important to also think tactically about the stock market because short-term swings can ruin your best long-term plans.

Tactical investing considers whether you are better served by an offensive or defense approach.

An offensive approach calculates whether this is a short-term correction or a long-term downtrend.

In either case, the investor considers the benefits and risks of short selling and acts appropriately.

A defensive approach to a downturn suggests adjusting your asset allocation to a more conservative position – more fixed income if that's appropriate, for example.

Neither approach suggests a panicked reaction that will undoubtedly result in poor decisions and worse outcomes.

The thoughtful investor is like a chess player thinking several moves ahead – if this happens, what will I do to take advantage of the opportunities and minimize the risks.

If you are going to invest in individual stocks, you must take an active role in monitoring the market and your investments and have a contingency plan in place.

3 Tips to Successful Small Cap Stock Investing - Profit 500% in 30 Days With Less Initial Investment

2010-01-17T03:44:00.001-08:00

It might be said in the financial world that small cap investing is a risky proposition. That might have been the case if inexperienced investors or traders did little research in finding the right stocks to buy. Moreover, as the world is emerging from a recession, a lot of those small cap companies have gone by the wayside. Being that their company's product or service is too competitive out in the marketplace, there is this "checks and balances" process happening to help eliminate some of those smaller outfits. Therefore, enabling complete investors to swoop in and take advantage by buying these so-called recession proof stocks. Here are some tips to utilize to find the right small cap stocks and cash in on instant profitability.

1. Research a niche market/company-As I had coined in the previous paragraph, a "complete investor" is not your traditional investor. As fun as it is to just take someone's word for it and buy up stock, small cap investing requires thorough research. What I like telling first time small cap investors, find two or three companies with varying products and services and find out as much as you can. Immediately, you should start to do your research on the internet, there is a lot of company information you can gather and there are actually "upper management" contact information. Call up these companies, find out what they're production looks like, find out if the managers own shares of their stock and find out if they plan on purchasing more in the future. Additionally, ask for their profitability reports (10K and 10Q), this information will give you a "temperature" as to their profitability direction. With all the right measures and research, investors can easily find out if they are a worthy buy in the future months to come.

2. Stay away from Pink Sheet Stocks-Pink sheet stocks are generally referred to what I like to call "underground shares". Companies only selling pink sheets have yet to be endorsed by the stock exchange or Nasdaq indexes. Even in a recession, these are many times more riskier to carry because the firm hasn't completely developed into a full scale corporation. And another downside is that if you ever need to sell your pink sheet stocks, they will be tough to get rid of due to the fact that the public are not aware of that particular company. And as a result, keep pink sheets on the back burner and don't consider them until you complete further research.

3. Diversify your portfolio, invest in a wide range of companies, not just one-This should be an easy tip to understand. Plan on investing on three or four different niche markets and spread the money around. This way if one company's stock drops, the others will pick up the slack. This is just common investing 101, any good portfolio will be broken down into 50% small cap stocks and the other 50% various blue chips, bonds and other stable commodities. Overall, a well rounded small cap portfolio will comprise of an average of 15 different companies. Something to think about when you're deciding to put together your investments.

RIL Bonus shares listed, trading to start on Monday

2009-12-06T20:22:00.001-08:00

MUMBAI: India's most valued company Reliance Industries on Sunday said that the bonus shares alloted by the company have been listed on stock exchanges and trading in which would commence from tomorrow.

"The bonus shares have been listed with National Stock Exchange of India and Bombay Stock Exchange and have been admitted for dealing with effect from December 07, 2009," RIL said in a statement here.

Shareholders of the Mukesh Ambani-led company had approved the issue of bonus shares on November 17 in the ratio of 1:1 of the face value of Rs 10 and RIL had allotted them to the eligible members as per their shareholdings on the record date on November 27, 2009.

The RIL board had in October approved 1:1 issuance of bonus shares after a 12-year gap. The last time RIL announced a bonus issue was in October, 1997.

Idea ends sponsorship deal with IPL team 2 yrs before schedule

2009-12-06T20:13:00.001-08:00

NEW DELHI: Mumbai Indians, the Indian Premier League team owned by Mukesh Ambani, has lost its largest sponsorship deal with Idea Cellular walking out of the $2-3 million per year contract two years before schedule.

"We were not very happy with the Mumbai Indians association; it did not give us the branding impact we had hoped for," said an Idea Cellular official, defending its decision to terminate the Rs 10-15 crore/year deal signed just before the second edition of Indian Premier League earlier this year.

The spokesperson of the telecom operator, however, refused to confirm or comment on the termination of the deal. An email query sent to Mumbai Indians, led by Sachin Tendulkar, remained unanswered.

Cricket remains of prime import to Idea's marketing plans though, particularly with India becoming the world's top test team for the first time on Sunday.

It is now looking at a larger branding play with GMR-owned Delhi Daredevils, said the official talking on condition of anonymity. In October, Idea had picked up a one-year sponsorship of Delhi Daredevils for the Champions League Twenty20 tournament and IPL season three. The sponsorship involves Delhi Daredevils players displaying Idea logos on their jersey. Virender Sehwag, the talk of the town after his magnificent 293 in the third and final test against Sri Lanka that confirmed India's rise to the top, captains the Delhi team.

Idea Cellular's deal to become Mumbai Indians' principal sponsor in the telecom services category was the biggest deal signed by any IPL franchisee for season two. Most of the other deals were in the Rs 2-5-crore-per-year bracket. At the time of the signing of the deal just before the second season of IPL earlier this year, both sides had agreed on a three-year association.

Soon after IPL was forced to relocate to South Africa, Idea and Mumbai Indians had drummed up an elaborate four-phase campaign, which aimed to connect the team's players Sachin Tendulkar, Harbhajan Singh and Zaheer Khan with cricket fans. The campaign involved fans getting to call or SMS the cricketers, give them playing suggestions and wishing them good luck. Each player's Idea number was flashed across mass media platforms. While Tendulkar, Harbhajan and Zaheer Khan had led the communication, similar 10 digit numbers were assigned to others in the Mumbai Indians team like Sri Lanka's Sanath Jayasuriya and West Indian Dwayne Bravo.

Other activation by Idea involved providing cricket updates, gaming, match videos and photographs. The campaign activity was not restricted to Idea subscribers and all operators, including landlines, had the option of 'calling' Mumbai Indians players. Idea's tagline had been 'duniya hila denge Indians'. Mumbai Indians' other sponsors for IPL season two included chewing company Wrigley, beverage and snacks maker PepsiCo, MasterCard, Adidas and Pernod Richard.

With India sitting pretty on top of the cricketing world and the IPL joining the list of most popular sporting brands in the world, most marketers are looking at leveraging the Twenty20 league as a significant activation opportunity next year when it returns to the country after a year's gap.

Market may correct 15% post election: Merrill Lynch

2009-04-14T07:11:00.001-07:00

MUMBAI: Over the next 6-8 weeks, Merrill Lynch expects concerns of a hung Parliament post-election and expected slowing incorporate earningswill likely worry the market. "We believe this could lead to a 15% correction in the markets," the investment bank says in a report.

On the elections, the brokerage believes (a) there will likely be a hung Parliament i.e. none of the three combinations - Congress-led UPA, BJP-led NDA and the Third Front - will be able to come to power (b) post-election results new alliances are likely -regional parties like BSP and AIADMK will be important (c) the probability of a Third Front government coming to power is still low but increasing in its view.

"Our best case scenario would be a Congress government but with the Left being a key ally in it," it adds.

According to ML, most of the present alliances are fluid and many parties would be willing to reconsider their alliances post-elections. "We think 2 regional parties - Mayawati's BSP and Jayalalita's AIADMK would play a crucial role in deciding the Government. The role of the Left parties, though weakened, should also be important," ML says.

Despite the break-down of seat sharing with Mulayam Singh's SP in Uttar Pradesh and Laloo Yadav's RJD in Bihar, ML thinks both will continue to be part of the Congress-led UPA. The investment bank thinks the UPA still has a slight edge since they can get Left support again. The BJP-led NDA, on the other hand, could need the support of BSP, Jayalalita's AIADMK, Naidu's TDP as well as its old ally BJD. Commenting on the Third Front, Merrill Lynch says, "We think it would be extremely implausible that a Third Front government is formed without the support of Congress or BJP, because Congress plus BJP should gain nearly 50% of the total seats. However, if the Congress/BJP can't form a stable Government, they may support a Third Front Government. While we think this is a lower probability event, the possibility has been increasing past few weeks."

The brokerage also expects that Third Front government will be negative for the Indian stock markets.

"We think a positive scenario for the market is a BJP or Congress led government without the Left parties but has a low probability event in our view. Historically, markets have been edgy ahead of elections. We think concerns of a hung Parliament could lead to a 15% correction in markets this time," the report adds.

"We would be defensive (Buy Hero Honda, Bharti) in the run-up to elections. We think infrastructure would be a priority for all Governments - Jaiprakash could be a gainer in the post-election scenario. We believe a Congress or BJP government without the Left could lead to reforms in (a) privatization and oil reforms (b) banking reforms (c) FDI in retail, aviation, insurance etc," ML said.

G20 leaders pledge $1.1 trillion aid to stem fin meltdown

2009-04-02T09:53:00.001-07:00

Leaders of the world's largest economies have reached an agreement to tackle the global financial crisis with measures worth USD 1 trillion.

G20 leaders have pledged USD 1 trillion dollars in emergency aid and have also called for stricter limits on hedge funds, executive pay, credit-rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund (IMF).The G20 has also called for an end to bank havens and said that banking secrecy of past must end.

IMF: The biggest beneficiary

The IMF has been one of the biggest beneficiaries of the G20 summit. UK Prime Minister Gordon Brown said that the G20 has agreed additional USD 500 billion for IMF and a further USD 250 billion in IMF Special Drawing Rights.
Global leaders confident of bold action
Earlier, UK Trade and Business Minister Peter Mandelson expressed confidence that the G20 leaders would come together to take decisive steps to revive the global economy.
Peter Mandelson, Business Minister, UK said, "I think you will see a watershed. I think you will see the beginnings of a new way of working in the international economy and its financial system of the sort that we saw all those generations ago after the Second World War. But Rome is not or rebuilt in this case in a day. It is going to take months and months. The key thing though is to put those vital decisions that direction of travel in place today and to do so ambitiously and that's what we will see."
India's role at G20

UK Foreign Office Minister Lord Malloch Brown commented on India's key role at the G20 saying that India was central to the plan of getting global trade going again.
Lord Malloch Brow believes that it is quite significant for India because after all India is a country with a growing export economy, and exports have been under huge pressure as a result of this, and there is going to be for example a big package of trade finance to try and get exports going again.
Brow further stated that this is a controversial issue in India and there is going to be a huge push to get the global trade ground going again, and India is seen as a key actor in that. A lot of those countries, which were thought to have not enabled trade deal to be reached last year that they kind of engaged, and that won't be met this year, he added.
"The whole issue is of restoring growth to the global economy by the size of the stimulus already adopted by the additional resources today for the International Monetary Fund (IMF) and other institutions. This is obviously going to impact on people everywhere including in India", Brow said.

New student immigration system set to launch in the UK on 31st March 2009

2009-03-28T16:29:00.001-07:00

The UK Government today announced the go-live date for the student tier of its new points-based system for migration.

From 31st March, students looking to study in the UK can apply for their visa through the new points-based system which will streamline the Student visa application process.

Under the new transparent system, students will need to prove that they have been accepted onto a course run by a UK Border Agency (UKBA) licensed education institution, prove that they have the means to support themselves and supply their biometric details at their local visa application centre.

If granted a visa, the new regulations allow international students to undertake part-time work of up to 20 hours per week during term time, full time work during the holidays as well as any course related work placements.

A UKBA spokesperson commented: "Thousands of international students choose to study in the UK every year. These changes to the visa application system will allow students to check whether they are eligible for a visa before they even apply, making the whole system more straightforward. We would urge anyone considering studying in the UK to visit the UKBA website now to familiarise themselves with the new regulations and ensure their application can be processed as quickly as possible."

For the first time, all independent fee-paying schools, colleges and universities that want to accept international students to study with them now need a licence to do so. This will help the UK Government crack down on bogus colleges, something which will be welcome news to many international students, who can now be sure the language school, college or university they intend to study at is an approved educational institution. So far over a thousand UK institutions have signed up to sponsor international students.

About the UK Student Visa
Applying for a General Student visa or a Child Student visa under Tier4 is a simple process and should be done in the country of which you are a national or a legal resident. You can apply for a visa by post, in person or online. For your application to be successful you will need:

    * A current passport or travel document;
    * A visa letter from the institution you are planning to study at;
    * Proof of maintenance funds;
    * Evidence of any qualifications the sponsoring institution took account of when deciding to accept you for the course you plan to study;
    * Any other supporting documents relevant to your application.

You will also need to make an appointment at your nearest visa application centre to provide your biometric details (10 digit fingerscans and a digital photograph) as part of the application process.

The UK Border Agency will refuse your application and you may be banned from coming to the UK for 10 years if you use a false document, lie or withhold relevant information.

Students looking to study in the UK for six months or less, and who do not wish to take any employment while they are in the UK, or to extend their stay while they are in the country, can enter the UK on a student visitor visa.

Obama tells banks 'work together'

2009-03-28T14:24:00.000-07:00

President Barack Obama has met with top US bankers to discuss his latest plans to stabilise the US financial system and boost the US economy.

Mr Obama called the bosses of the biggest US banks to the White House and told them: "We are in this together."

The president said that his message to the bankers was "show some restraint."

The boss of Goldman Sachs said after the meeting "the problems will be solved" and "we are at the end of beginning, the hard works starts now."

He said the money spent on stimulating the economy would be money well spent.

Mr Obama said that he had asked the bankers to "show some restraint. Show that you get that this is a crisis and everybody has to make sacrifices.

They agreed and they recognized it," he said. "Now, the proof of the pudding is in the eating."

The meeting was a bridge-building exercise by the Obama administration after coming under fire last week for allowing huge bonuses to be paid to AIG executives.

Far-reaching plans

There are three measures needed to turn the economy around, said Lloyd Blankfein, chief executive of Goldman Sachs: "Stimulating the economy, arresting the fall in asset prices and fixing the financial system."

All three were now in place, he added.

"The capital markets are recovering and the stimulus [package] is just starting to get into people's pockets," said Jamie Dimon, chief executive of JP Morgan Chase.

Richard Davis, chief executive of Bancorp, was equally upbeat following the meeting. He said he could see the "beginning of a turn [in the economy], we can start to see a bottom."

He also said the 13 bankers present at the meeting understood the public's anger at bonuses paid to executives of banks that have received government aid.

However, he said that the money Bancorp took from the government "was a good investment, it was not a bail-out."

The government is getting a good rate of interest and it will get its money back, he said.

Despite the optimism of the leading bankers, John Mack, chief executive of Morgan Stanley, sounded a more cautionary note about the time needed for the government measures to take effect.

"Nothing is going to be instantaneous, it's going to take time," he said.

Toxic assets

The US government announced a plan earlier this week to work together with banks and private investors to help turn the economy around.
The "Public-Private Investment Programme" is designed to buy up to $1 trillion (£686bn) worth of toxic assets to help repair banks' balance sheets.

Specifically, it will purchase the troubled mortgages and securities that have been at the root of the credit crunch.

And on Thursday US Treasury Secretary Timothy Geithner outlined on Thursday far-reaching plans to strengthen government authority over the US financial system.

Mr Geithner told a US House Committee that a simpler, more effective regulatory system was needed.

The measures are designed to prevent the kind of systemic risk-taking among banks that contributed to the current financial crisis.

The Obama administration has made it clear that it sees the banks as essential to an economic recovery.

The chairman of the Federal Reserve, Ben Bernanke, recently told Congress that while the recession may end in 2009, that would happen "only if" financial stability was restored.

Not asking G20 countries to spend more: US

2009-03-28T14:19:00.001-07:00

WASHINGTON: The United States is not expecting G20 countries to come to next week's summit in London with a commitment to spend more right now to
G20 protest
Fiscal stimulus major in G20 countries
stimulate the economy, top White House officials said on Saturday.

But the officials said President Barack Obama would stress the need for "significant stimulus" to jumpstart the ailing world economy during the meeting of leaders from the world's major economies.

Obama and his aides have played down evidence of a transatlantic rift over whether the G20 meeting should emphasize spending or regulatory reform to help the economy. The president has said both are necessary.

Michael Froman, U.S. deputy national security adviser for international economic affairs, told reporters in a conference call that Obama was not going to the summit to tell other nations to spend more.

"Despite the back and forth in the press on this issue, nobody has asked and nobody is asking any country to come to London to commit to do more right now," he said.

"I think what we do have a consensus around -- and I think that consensus is broadly shared ... is that the G20 agrees as a whole that we'll do whatever is necessary to restore global growth."

White House spokesman Robert Gibbs, also playing down any tensions, said a lot of spending already had taken place.

"If you look at what has been done by the nations that comprise the G20, which is 85 percent of the people in the world, roughly, you've already had economic recovery and stimulus that equals about 1.8 percent of GDP in those 20 nations," he said.

"There's already been significant action taken across the globe and we think that's positive for getting the global economy moving again."

Froman said stimulus or spending measures would be one leg of a four-part program that G20 leaders would focus on to restore growth."

"First is putting in place significant stimulus to get growth going again," he said. "Secondly, fixing each of our financial systems to get lending flowing; third, avoiding protectionism; and fourth, taking steps to minimize the spread of the crisis to emerging markets and developing countries."

German Chancellor Angela Merkel said earlier this month Germany had spent more than its fair share to boost its economy and warned against a rush to enact new stimulus measures.

The world stuck with the dollar, more is the pity

2009-03-28T13:39:00.001-07:00

The dollar is, and will remain, the US's currency and its own and everyone else's problem. The idea of creating a global currency, as espoused Dollar-might
by China earlier this week, is interesting, has a certain amount of merit and is simply not going to happen any time soon.

US desire for free access to the cookie jar that being the world's reserve currency represents will be too strong, especially given its need to finance huge amounts of debt reasonably cheaply. As well practicalities are fearsome, even if consensus was more or less there.

Chinese central bank head Zhou Xiaochuan on Monday called for the creation of a new "super-sovereign" global reserve currency, advocating building on an International Monetary Fund instrument called Special Drawing Rights.

Zhou echoed a call by Russia last week, when it indicated it would raise the issue at the upcoming Group of 20 meeting in London on April 2, saying the idea had support from emerging market economies including Brazil, India, South Korea and South Africa.

There is no doubt that the current system breeds instability, but it enjoys the great advantage of entrenchment and sticking with it allows the US, and others, to avoid making hard choices and paying true market prices for their economic decisions.

No surprise then that President Obama knocked the idea down in blunt terms. "I don't believe that there's a need for a global currency," Obama said, terming the dollar "extraordinarily strong right now." Exactly. Too strong by some margin, especially when one considers the coming effects of both quantitative easing and a massive long-term need to fund the costs of the debt binge that exploded and the ever increasing bailout to clean up the aftermath.

In fact you could say the dollar's "extraordinary" strength can only be fully explained when you take into account the fact that foreign central banks keep piling up huge reserves of the thing and that it is the international medium of exchange for commodities and energy, well really for global trade and financial intermediation.
Treasury Secretary Timothy Geithner said on Wednesday the US dollar is still the world's reserve currency and will remain so for a long time,
Dollar-might
but expressed openness to greater use of IMF SDRs. The dollar's central role has two main implications, both rather ugly but also very seductive for those involved.

For the US it's a bit of a free ride as far as debt financing goes. People buy and hold treasuries more and the US gets cheaper financing that would otherwise be the case. Of course that's a bit like an alcoholic bartender getting a discount at work; a real benefit, but not a true one.

It also means that even if the US has the will to take away the proverbial punchbowl or drive the dollar down, it doesn't always have control, as what it does at the short end of the interest rate curve can be confounded by foreign purchases that keep the long end and financing costs down and the dollar up.

The US reserve status also opens up the opportunity for mercantilist countries, like, say China, to keep its own currency cheap, building up huge dollar stocks and force-feeding the American milch cow with cheap credit with which to buy imported goods.

That may not work any more anyway, as all of the cow's stomachs are full and the milk's gone thin. There is a temptation also to build up reserves as protection against bad times and bitter IMF medicine.

Gold declines on fresh selling, weak global cues

2009-03-28T13:36:00.001-07:00

NEW DELHI: Snapping last two days rising streak, gold prices fell by Rs 50 to Rs 15,300 per 10 gram in the national capital on Saturday on

emergence of selling by stockists sparked by weakening trend in overseas market.

Silver, which surged by Rs 300 on Friday, declined by Rs 110 to Rs 22,090 per kg on Saturday.

Selling pressure gathered momentum following reports of the precious metal felling sharply in US market as investors shifted their funds toward rising equity markets.

Marketmen said fresh selling by stockists in line with weakening global trend mainly led to fall in gold and silver prices.

Meanwhile, gold in overseas markets traded around 918 US dollar an ounce from 932 dollar an ounce.

Standard gold and ornaments after remaining firm in last two trading sessions, fell by Rs 50 each to Rs 15,300 and Rs 15,150 per 10 gram, respectively but sovereign remained steady at Rs 12,400 per piece of eight gram.

In a similar fashion, silver met with selling from stockists and reduced offtake by industrial units and lost moderate ground. Silver ready declined by Rs 110 to Rs 22,090 per kg and weekly-based delivery by Rs 210 to Rs 22,190 per kg.

Silver coins also lost Rs 100 to Rs 28,300 for buying and Rs 28,400 for selling of 100 pieces.

Brown pushes $100bn global fund

2009-03-26T15:33:00.001-07:00

UK Prime Minister Gordon Brown has called for a $100bn (£69bn) global fund to underwrite world trade as his pre-G20 summit tour continues in Brazil.

Mr Brown is on a three-continent trip ahead of next week's London summit.

He was speaking after holding talks with Brazil's President Luiz Inacio Lula da Silva.

Brazil's exports fell 25% in the past three months and the PM, who will also meet ex-football hero Socrates, urged the World Bank to provide trade credit.

Trade finance

In a joint statement, the two leaders called for measures to boost global economic demand and for action to protect emerging market economies from financial volatility.

Mr Brown argued that the credit crunch has led to a collapse in world trade, affecting economies of all sizes, and that support was needed to help rebuild it.

In particular, he said levels of trade credit - which exporters and importer use to settle accounts - must be increased.

"I am going to ask the G20 summit next week to support a global expansion of trade finance of at least $100bn to help revive trade in all parts of the world," he said, while giving no specific details.

The prime minister also urged countries not to resort to protectionism and backed a new system to publicly highlight countries who bring in trade barriers.

The Brazil leg of Mr Brown's trip will also include talks with business leaders. The final part of the tour will be in Chile.

Russian dialogue

It also emerged that Mr Brown had spoken to Russian president Dmitriy Medvedev about the forthcoming G20 meeting.

The Kremlin said the two leaders had had a "constructive dialogue" about the summit and proposed reforms to institutions like the International Monetary Fund.

"Gordon Brown noted the harmony of the British and Russian positions on the majority of aspects of the preparation for the G20 summit," it said in a statement.

But the Brazilian president warned the London summit must agree some concrete measures or the crisis would "deepen".

"If the G20 becomes a meeting just to set another meeting, we will be discredited," he said.

On his first visit to Brazil, Mr Brown is arguing it deserves a more prominent place at the global economic top table.

Like other developing countries, Brazil's trade has been severely affected in recent months as the credit which underwrites it has disappeared and the PM says the G20 should restore that credit.

'Decisive steps'

Mr Brown has urged leaders to "take action" at the G20 to reform the banking system, protect jobs and help the world's poorest countries, saying "doing nothing is no longer an option".

Business secretary Lord Mandelson - who is travelling with the prime minister - said the G20 summit cannot be expected to "transform" the global economic situation overnight.

But in a speech in Sao Paulo, he said he expected world leaders to take "decisive steps" in London to boost confidence, focusing on credit, bank regulation and stimulating economic demand.

And Foreign Office minister Lord Malloch-Brown, closely involved in preparations for the summit, said the G20 must signal to the public it is taking clear action in key areas.

"We can't again engage in meaningless, empty commitments which don't survive the flight home," he told Associated Press.

He added: "Incumbency is hell nowadays, just about every government is struggling with terrible opinion polls and very angry people."

Amid talk of rifts between nations over the best way to handle the crisis, the UK has insisted there is "far more agreement" among world leaders than is being portrayed.

Progress has been made, Mr Brown says, on getting tax havens to agree to share tax information while there had already been "the biggest fiscal stimulus in history" and big interest rate cuts.

He has said every country has its own timetable for announcing its fiscal and monetary policies and that this must remain a matter for individual governments.

He has played down comments made by Governor of the Bank of England Mervyn King, that the government should be cautious about a further fiscal stimulus, given the high levels of UK debt.

US President Barack Obama has said he wants a "robust" and "sustained" fiscal stimulus and has said all countries must share the burden of rescuing the global economy.

US plans to rein in Wall Street

2009-03-26T15:31:00.001-07:00

US Treasury Secretary Timothy Geithner has outlined far-reaching plans to strengthen government authority over the US financial system.

The measures are designed to prevent the kind of systemic risk-taking among banks that has contributed to the current financial crisis.

Mr Geithner told a US House Committee that a simpler, more effective regulatory system was needed.

He said the government had not had "adequate tools" to handle the crisis.

'New rules'

The treasury secretary said the existing financial system had "failed in basic, fundamental ways".

"These failures have caused a great loss of confidence in the basic fabric of our financial system," he said.

He also talked of "unwise" risk-taking and a failure of "market discipline".

"Regulated institutions held too little capital relative to the risks to which they were exposed," he said.

Mr Geithner said that "new rules of the game" were needed to achieve comprehensive reform, rules that "must be simpler and more effectively enforced".

He said the financial system "needs to be subject to strong oversight by the government".

He also called for more openness and more transparency among financial institutions, and more integration among regulators.

New framework

"We need better, smarter, tougher regulation," Mr Geithner said.

He outlined five elements of a plan to achieve this:

    * Establishing a single entity responsible for stability among major institutions
    * Enforcing more conservative capital requirements for financial institutions
    * Forcing investment companies of a certain size to register with the Securities and Exchange Commission (SEC), the US financial regulator
    * Establishing a framework for derivative markets
    * Strengthening requirements for money market funds.

As a result of these initiatives, hedge funds - investment funds that have been criticised for increasing stock market volatility and forcing some share prices down - would be subject to regulation.

The new system would also be designed to ensure that complacency resulting from the so-called 'too big to fail' syndrome, where companies assume the government will bail them out if necessary, would be eradicated, Mr Geithner said.

Strict capital requirements would be enforced, he added, so that risk taking would be curtailed.

'Moment of opportunity'

The treasury secretary said that time was of the essence in implementing these five elements.

"We have a moment of opportunity, we need to act," he said.

He also stressed the importance of the international effort to reform the global financial system.

"We will work with the Europeans, we cannot move alone," he said.

However, Mr Geithner did say there was a limit to how long the US could wait for global co-operation. He said the US had to look after its own interests.

"We cannot wait for consensus with the rest of the world [if that jeopardises US recovery]," he said.

'Catastrophic damage'

Questioned as to whether there was an alternative to using taxpayer money to bail out financial institutions, Mr Geithner reinforced the government's argument that it had no choice.

"There are circumstances where it's cheaper for the taxpayer over time for the government to take action. Letting certain financial institutions fail can cause acute, catastrophic damage [to every US citizen]," he said.

Former SEC head Harvey Pitt said that Mr Geithner's plan was a start, but that the Obama administration does not sufficiently understand the problems it faces.

"We are doomed to repeat past failures," he told BBC News.

"Before you can regulate you have to have a fundamental base of knowledge and I think that knowledge is lacking in our government."

Satyam shortlisting key staff to be retained after takeover

2009-03-26T15:26:00.001-07:00

HYDERABAD: Satyam Computer Services has kickstarted the process of shortlisting 100 key employees, who will be retained in the beleagured firmafter a new owner takes management
control . A new owner is expected to be in place by April 30 this year.

The retention of key employees for a year is one of the pre-requisites that a shortlisted bidder has to agree to, if he is finally selected as the owner. A senior company official is understood to be assisting a special advisor to the board and a career consulting agency to identify key employees. The government-appointed board of Satyam will have to approve the list.

A company spokesperson said: "We are not aware of any shortlisting being done by the mentioned individuals or by anyone else for that matter. It is absolutely speculative." But a person familiar with the development had said that retention of key employees was needed for business continuity and to help the firm retain clients. Many clients have snapped ties or put Satyam on notice after the firm's founder B Ramalinga Raju admitted to perpetrating a Rs 7,000-crore financial fraud. "Key employees stood by the company during the crisis. While a new owner will bring his own team, the services of existing employees may be needed to help the new team in the initial phase," the person said.

Besides, some of the key employees are also being questioned by investigating agencies probing the scam. The government-appointed Satyam board has made it clear that the new owner of the firm will have to co-operate with investigating agencies as well as the regulators.

Satyam, once ranked as the country's fourth-largest software exporter, claimed to have had around 53,000 employees on its rolls till the end of September last year. Nearly 80% of the associates were onshore and the balance onsite employees-either in client locations or Satyam's own offices overseas .

Its main line of businesses include providing services to segments such as telecom, infratructure, media, entertainment and semiconductor (TIMES), manufacturing, banking financial services and insurance (BFSI), retail and pharma. The employee numbers are now being validated, as concerns were raised on the actual headcount. Satyam has seen employee attrition after the scam. Kiran Karnik, chairman of the government appointed Satyam Board, was recently on record to say that employee attrition in the company was not alarming despite the prevailing situation.

Infosys offers employees option to work with NGO for 1 year

2009-03-26T15:23:00.001-07:00

NEW YORK: Left without as much work for all its emoployees, Infosys is offering some of them an option to work with a non-profit organisationfor a year and get paid half their salary by the IT major, its co-founder Nandan Nilekani has said.

"We've also launched a program where an employee can go work with a non-profit organisation for a year and we'll pay him half the salary for the duration," Nilekani told US publication Forbes in an interview published online.

Asked if Infosys was still hiring in the gloomy economic scenario, Nilekani who is also Infosys' Co-Chairman said, "Very selectively."

"In our industry, campus recruitment happens very early. Students who will be graduating and joining us this summer, we offered them jobs last March. So we have 18,000 offers out and we will be honouring those.

"We won't have as much work for all our employees right now, so we're encouraging them to contribute to projects on open source and do more innovative work," he said.

Responding to a query on whether there are new opportunities for Infosys in the current crisis, Nilekani said that the firm is doing more business-driven projects, such as "redesigning the supply chain of a company".

"We're also entering new sectors like pharmaceuticals, natural resources and media, and new geographies like emerging markets," he noted.
Pointing out that 88 per cent of Infosys' revenues come from the US and Europe, Nilekani said that the economic crisis has impacted everyone.

"You can see it reflected in our guidance for this year. We expect an 11 to 12 per cent increase in revenues, and while it's still in double digits, it's a lot lesser than what we've had in the past few years," he added.

Agilent to cut 2,700 jobs, warns of revenue drop

2009-03-26T15:22:00.001-07:00

Agilent Technologies Inc (A.N) is reducing its workforce by 2,700 people, or 14 percent, in response to a steep reduction in revenue expected
for 2009 due to the weak economy and "no prospects for a meaningful recovery in the foreseeable future."

The company said a restructuring of its electronic measurement business would have a cash cost of $160 million but would reduce annual costs by $300 million.

It also expects another $10 million in cost-cutting in its semiconductor and board test segment from the job cuts.

Agilent said it expects fiscal 2009 revenue in its electronic measurement business to fall roughly 30 percent from 2008 to the lowest in its 10-year history.

It also warned that revenue in its semiconductor and board test segment would be down more than 50 percent from last year and 65 percent from its peak.

Growing demand among NRIs to become overseas citizens of India

2009-03-26T15:21:00.001-07:00

Regular NRI visitors to India are increasingly switching from a five-year visa to either a PIO (Person of Indian Origin) Card that allows themvisa-free entry for 15 years or an OCI (Overseas Citizen of India) status that allows them a life time entry and stay in India. This is the Indian version of the much sought after American 'Green Card'.

Considering the current depression in the West, OCI status has become more attractive to overseas Indians, many of who are seriously thinking of resettling in India.

According to Indian officials, applications for OCI have increased remarkably in the last two years and especially after the announcement this January that NRI professionals such as doctors and dentists with OCI status will be allowed to practise in India. At the same time, Indian embassies are also encouraging NRIs to apply for OCI if they are eligible as it means that they do not require visas or even renewal of their PIO Card after 15 years.

So the issuance of OCI 'mini-passports' is taking more time than the original four to six weeks.

About 400,000 OCI cards have been issued; of these about 150,000 have been received and issued in India and the remaining from Indian embassies abroad. Many overseas Indians have discovered that applying for OCI is sometimes difficult and more time-consuming abroad than in India. So they apply when they are on a visit to India by giving their address in India.

In January 2005, Prime Minister Manmohan Singh announced that the OCI scheme had been extended to all overseas Indians who migrated from India after Jan 26, 1950, as long as their home country allows dual citizenship in some form or the other.

Citizens of Pakistan and Bangladesh are not eligible for OCI.

Compared to PIO Visa, OCI has numerous advantages like multi-purpose, multiple entry, life-long visa for visiting India; no need to register with Foreigners Regional Registration Offices for any length of stay in India; and parity with NRIs for all facilities in economic, financial and educational fields except purchase of agricultural/plantation properties. However, registered OCIs cannot get government jobs or stand for election for any public office right from civic to national positions and appointments.

Still, the OCI is pretty close to becoming a full-fledged Indian citizen. Every registered OCI is issued with a registration certificate which looks like an Indian passport but in a different colour; and an OCI visa sticker is pasted in the person's foreign passport.

The OCI application form, procedure and FAQs can be downloaded from the website of the Indian home ministry. The application should be accompanied with a demand draft of $275 or equivalent in the local currency as application fees.

If the application is rejected, $ 250 or equivalent in the local currency will be returned to the applicant after deducting $25 as processing fees.
Before accepting an OCI application, the Indian chancery officials scrutinize it to ensure that the applicant is entitled to this status. Sincethere is room for some interpretation of rules and discretion, some applicants are rejected. This also implies the possibility of corruption.

The big problem for most applicants is their eligibility. The applicant has to provide documentary proof that his/her parents/grandparents migrated from India after Jan 26, 1950, or were eligible to be granted Indian citizenship on that date or were resident of Goa, Pondicherry (now Puducherry), Sikkim which merged with India after Aug 15, 1947. These family documents are not easy to come by or be traced.

Some overseas Indians have two passports. Fore example, Hari (named changed) migrated from India to Britain in the 1960s and later settled in Australia in 1980s. Since both the countries allow dual citizenship, he has both British and Australian passports.

Now under which passport does he apply for OCI? He wonders which passport would carry more weight for his OCI application.

In some cases, they have to go back to their villages and get evidence that their grandparents were resident there and provide proof of his/her relationship with this person. For example, Kanji (name changed), whose great grandparents migrated to East Africa in the 19th century.

The travel documents for his great grandfather are not acceptable for OCI application. So he has to get an affidavit signed by the officer of his native village in Kutch and it should be attested by a magistrate for his application. Tracing his ancestors in his village and getting the paperwork done are not an easy task by any means.

Yet, more and more overseas Indians want that OCI mini-passport.

RBS may face tough bargaining

2009-03-25T17:50:00.001-07:00

MUMBAI: Royal Bank of Scotland will have to negotiate with hard-bargaining buyers and haggle with the regulator before it can strike a deal to
sell its India assets.

RBS, whose India presence is largely a result of its ABN Amro buyout in 2007, has put its retail and SME assets in India on the block, along with assets in eight other countries. Although the Indian business is an attractive buy, potential bidders have a bargaining chip because of ABN Amro's recent losses recorded in India, following retail loan write-offs.

RBS could raise $1 billion from the sale of the Asia assets, with India brining in $500-700 million. The Indian retail and SME loan portfolio, which is on sale, is around Rs 8,000 crore. The Indian operations is said to have made a loss of E33 million (around Rs 225 crore) following a three-fold rise in provisions. These are largely in retail loans and estimated to be around E115 million (Rs 786.2 crore).

The Asian retail and SME business has made a loss of £113 million (Rs 826 crore) while the impairment loss was at £171 million (Rs 1,250 crore). Senior bankers point that net credit losses, combined with the 90-day past due in credit cards, is at above 15% and the situation in personal loans was also worsening.

A bank spokesperson said under the 90-day past due norm, credit cards impaired assets were at 7% while for personal loans it was at 4%. "Our delinquency rates and losses are in line with the industry. Credit cards and consumer finance credit metrics have continually been reviewed over the period, resulting in further tightening of consumer-lending policies. This has led to lower levels of card and loan acquisition," said the official.

Bidders include ANZ, Standard Chartered Bank, HSBC and JP Morgan, among others. Though ANZ is a lead contender, it may not be a cakewalk. The Australian bank had made an exit from India after selling off its operations to StanChart in 2000. If it now wins the bid, it will have to get a new banking licence and also at least part of the branches. However, this may upset other foreign banks who get only a couple of branches a year.

Interestingly private sector banks have been kept out of the initial bidding process. Banks have to submit a bid by April 1. RBS group chairman Phillip Hampton had recently said: "The simplest way is everything goes to a single buyer paying the maximum price."

RBS is said to be keen to retain eight out of the 31 branches which it has in the country. "We have to wait and watch whether RBI would allow such a sale to take place. The pricing would be dependant on how much branches the acquiring bank would finally get from RBI," said an official from one of the banks who are in the fray.

In Asia, the bank is selling its retail and SME business in eight countries in India, Hong Kong, Singapore, Taiwan, Indonesia, Malaysia, Pakistan
and China. The bank is also looking for a total sell-off in the Philippines, Vietnam and Pakistan.

Nano may drive in profits soon for Tata Motors

2009-03-25T17:43:00.001-07:00

NEW DELHI: The pot of gold is right round the corner for Nano. With commodity prices and excise duty dipping, and tax benefits stacked up in its

favour, the road to profitability looks a lot closer than when it did when Tata Motors conceived the project in 2002-2003.

Nano has hit the market at the right time — commodity prices have fallen 30-40% since August last year, when they had peaked. The excise duty on smaller cars too has come down to 8% from 12% over two years.

Tata Motors was banking on profitability two years from now, but MD Ravi Kant says the car will ring in profits from the word go. The 10-year excise holiday in Uttarakhand will also help Tata Motors considerably, a top Tata executive said. The first 50,000 cars will roll out of its Pantnagar plant. Declining steel and metal prices too could lead to lower input costs on future supply contracts for Nano.

Tata Motors is expected to raise huge amounts from Nano bookings — the company expects 5 lakh orders, which will generate a corpus of Rs 5,000 crore.

Further, the booking will fetch the company an interest-free deposit of Rs 95,000 (the amount for the base model) and Rs 1.4 lakh (booking for the top-end variant). Besides, it will also gain a Modvat benefit, which means the company will not have to pay tax on auto components as the supplier would already have done so.

"Tata Motors will need to sell many Nanos to break even. However, by leveraging the Nano platform, it can make high-end cars for overseas markets. With several variants, it could be a highly profitable product for the company," said auto
analyst with Booz & Company, Vikas Sehgal.

Young Indians say no thanks to American dream

2009-03-25T17:40:00.001-07:00

BANGALORE: For decades, the United States beckoned as the land of opportunity for bright, young Indians, lured by the prospect of prestigious
India Rocks
university degrees followed by jobs on Wall Street or in Silicon Valley.

Indians have since 2001 been the largest foreign student population on American campuses, comprising around 15 percent of all international students at colleges and universities in the United States, according to the U.S. Embassy in New Delhi.

But now, the economic crisis that has sent the U.S. economy into its worst recession in decades, has tarnished the sheen of the 'American Dream' for many Indians who are opting for university studies and career opportunities at home.

America's loss may be India's gain, analysts say, pointing to a 'reverse brain drain' that may see India reaping benefits for years to come as some of its smartest and most talented people put their energies into India' economy, Asia's third-largest.

"The brain drain has already begun to reverse. Now there are many magnets pulling the best talent. Before, the U.S. was where everyone wanted to go," said Vivek Wadhwa, a U.S.-based Indian academic who has written a paper on the issue. India's economy has boomed at around 9 percent growth in each of the last three years, lifting millions out of poverty and creating a generation of affluent and ambitious young Indians.
Many have pursued prestigious post-graduate degrees in the U.S. and Europe and then stayed after finding high-paying jobs.

But as the global financial crisis has kicked-in, Indians are seeing greater opportunities at home, where there are more job openings, the cost of living is lower and modern amenities such as shopping malls and condominiums offer them a comfortable life.

About 100,000 skilled Indian 'returnees' will come home from the United States in the next five years, Wadhwa estimated.

"When I joined Duke four years ago, nearly every student talked about wanting to stay and work in the U.S.," said Wadhwa, an adjunct professor at Duke University and a senior research associate at Harvard Law School.

"Now the vast majority plan to go back home. A few want to work here to pay off their loans, but they don't think they will be able to get jobs."

With U.S. unemployment at a 26 year high, prospects at home appear better for Indian graduates as firms such as Warner Bros and IBM announce they will move jobs to India and other outsourcing hubs after laying off workers in North America.

FINANCIAL AID

Rahul Dutta, 23, is a case in point. He has changed his plans to study in the United States and is now enrolled at a local university.

"My initial plan was to do my master's degree there and look for a job too, but now I realise that there are no jobs and no funding, so I took admission in a college in Delhi," said Dutta.

In Bangalore, south India's high-tech metropolis, Kripa Chettiar reached the same conclusion.

"I was looking at doing a master's in financial engineering at Columbia University," Chettiar said. "But now I am not even writing the GRE because now there's no point, as there is no financial aid available at all."

The GRE, or Graduate Record Examination, is the standard admission test for graduate university studies in the United States and several other English-speaking countries.

Garvit Bafna in Pune, a city near India's financial capital Mumbai, took the exam, but he says he will only move to America if he gets into a top-ranked university.

Even students who have passed the GRE exam are abandoning plans to study abroad due to lack of funds, said Rajiv Ganjoo, head of international education at Career Launcher, an educational service provider in India.

"It is a waiting game now," Ganjoo said. "Students are looking at the recession, at how the colleges react to it and how the government reacts to it, before taking any steps."

For students already in the United States, getting fellowships and other funding is becoming difficult, especially for foreigners as the pool of scholarship dollars has dried up due to shrinking university endowments from stock market losses.

"The funding scenario is grim as compared to past years," said Cherry Harika, a 24-year-old from India's Punjab province who is studying for a masters degree at Boston University.

"My university has frozen new hiring. There are hardly any new job openings for foreigners, especially when U.S. citizens are losing their jobs."

Employer visa sponsorships are growing scarcer and President Barack Obama's administration is under pressure to restrict the number of temporary work permits issued to foreigners.

About 55,000 students in India took the GRE last year, down more than 20 percent from the year before, said Jaideep Chowdhary, who heads the GRE programme at a private training institute in India.

Most students who study in the United States need to shell out around $50,000 for a two-year stay, he said.

Much of that money would come from loans which are not easy to get these days due to the credit crunch, especially for students with no reasonable assurance of a job.

By contrast, studying at the Indian Institutes of Technology in Madras, part of a highly reputed nationwide network of engineering and technology campuses, costs about $1,200 a year.

India too has taken a hit from the financial crisis which has slowed the scorching pace of growth of its IT outsourcing sector. One small advantage of the crisis for India may be the human capital benefits as the brightest stay home, said Wadhwa, who wrote a report titled "America's loss is the world's gain".

"This is an economic tragedy that significantly increases the chances the next Intel or Cisco Systems will launch outside the U.S.," Wadhwa wrote.

Infosys bags $100 mn outsourcing contract

2009-03-25T17:36:00.003-07:00

NEW DELHI/ HYDERABAD: Infosys Technologies, India's second-largest software firm by sales, has won an $80- 100 million multi-year outsourcing
contract from Australian phone firm Telstra.

The Australian firm had undertaken a vendor consolidation exercise to reduce its IT service providers from four -- EDS, IBM, Infosys and Satyam -- to two.

The consolidation was aimed at bringing down the cost of managing its IT systems. The Australian telecom major plans to bring down the number of IT systems from about 1,350 now to almost 300 by 2010.

According to an outsourcing expert who helps customers on their outsourcing strategy, vendor consolidation at Telstra is not over yet. "Infosys and EDS are clear winners, but we will need to wait for few more weeks to get the entire picture," he said on conditions of anonymity.

Infosys refused to comment on the Telstra deal as it's in the silent period before the announcement of its quarterly earnings. An IBM India spokeswoman also did not offer any comments as the company does not talk about specific customers.

The contract from the telecom firm is the second win in Australia for the Indian IT major in the last few months. Rio Tinto had earlier selected Infosys over Accenture for a $50 million application development deal announced in October last year.

"Telstra will work with fewer IT vendors to achieve savings of at least $100 -$200 million to begin with, and much more over the coming years," another expert familiar with Telstra's outsourcing decisions said. He also requested anonymity.

The Australian firm had earlier terminated its contract with Satyam but is still in the process of completing the consolidation process, an executive with one of Telstra's suppliers said. An email sent to Telstra remained unanswered.

"Infy's track record with BT and the company's front-end capabilities coming from the acquisition of Expert Information Services a few years ago are helping it remain a favourite even at a time when Telstra is attempting to consolidate," the expert noted.

Reducing the number of IT vendors is part of Telstra's overall transformation strategy. On the procurement side, Telstra has already reduced the number of suppliers by almost 20%, translating into saving of $226 million this year.

"The IT transformation is redefining how we interact with customers. It is an important part of our commitment to provide better services to our customers and deliver them more efficiently – saving everyone time by simplifying the processes," Telstra chief executive Solomon D Trujillo said in his November note to shareholders.

As part of its five-year roadmap, Telstra is seeking an integrated delivery model covering the entire IT architecture, applications and infra-structure delivery and migration.

"Telstra's objective is to differentiate itself in the market through tightly integrated services and marketing structured around the customer. Transformation is a means to that end," Ovum analysts Clare McCarthy and David Kennedy said in a re-cent research note.

Infosys offers employees option to work with NGO for 1 year

2009-03-25T17:36:00.001-07:00

NEW YORK: Left without as much work for all its emoployees, Infosys is offering some of them an option to work with a non-profit organisationfor a year and get paid half their salary by the IT major, its co-founder Nandan Nilekani has said.

"We've also launched a program where an employee can go work with a non-profit organisation for a year and we'll pay him half the salary for the duration," Nilekani told US publication Forbes in an interview published online.

Asked if Infosys was still hiring in the gloomy economic scenario, Nilekani who is also Infosys' Co-Chairman said, "Very selectively."

"In our industry, campus recruitment happens very early. Students who will be graduating and joining us this summer, we offered them jobs last March. So we have 18,000 offers out and we will be honouring those.

"We won't have as much work for all our employees right now, so we're encouraging them to contribute to projects on open source and do more innovative work," he said.

Responding to a query on whether there are new opportunities for Infosys in the current crisis, Nilekani said that the firm is doing more business-driven projects, such as "redesigning the supply chain of a company".

"We're also entering new sectors like pharmaceuticals, natural resources and media, and new geographies like emerging markets," he noted. Pointing out that 88 per cent of Infosys' revenues come from the US and Europe, Nilekani said that the economic crisis has impacted everyone.

"You can see it reflected in our guidance for this year. We expect an 11 to 12 per cent increase in revenues, and while it's still in double digits, it's a lot lesser than what we've had in the past few years," he added.

IFC to invest e135 m in Volkswagen's Chakan project

2009-03-25T17:33:00.001-07:00

PUNE: The International Finance Corporation (IFC), the World Bank's private equity arm, will invest e135 million in Volkswagen India's
greenfield manufacturing site at Chakan. IFC will invest e60 million in the equity, or quasi equity, of the project and provide a syndicated loan of up to e 75 million. VW India spokesperson Kurt Rippholz said the investment had been committed.

"IFC's investment is in the normal process of financing an investment like this. We are now waiting for the approvals, which could take three-four months to come in," he said.

The site at Chakan, about 40 km from here, will be inaugurated on March 31 by group chairman Martin Winterkorn, who will be leading an 11-member delegation comprising the top management of some of VW's brands and businesses. Among those who will be present at the inauguration of the plant are Skoda Auto chairman Rheinhard Jung and Rupert Stadler, chairman of VW's premium car brand Audi.

Also present will be Harald Schomburg, director of sales and marketing, VW Commercial Vehicles, which has a fledgling presence in the country. The Chakan plant will begin commercial operations with the SkodaAuto Fabia and produce the VW Polo next year. Both cars share a common platform, hence the vendors base will remain the same.

Mallya's Whyte & Mackay appoints John Beard as CEO

2009-03-25T17:32:00.001-07:00

LONDON: John Beard, a senior figure in the UK drinks industry, had been appointed as chief executive of the Scottish whiskey major Whyte &
Mackay, which was bought by Indian liquor baron Vijay Mallya in 2007.

Beard will lead the distiller's expansion plans in both domestic and international markets.

Beard, a former chief executive of Bacardi Brown Forman, replaces Ashwin Malik, who has led the Glasgow-based company since its takeover.

After his appointment, Beard said: "I have been really impressed with Whyte & Mackay's performance and its commitment to building not only strong brands, but strong international brands.

"I have met Mallya personally, and there is no doubt in my mind that he is committed to this company, committed to building great premium brands, and committed to making Whyte & Mackay a major international spirits company."

Malik, who returns to take up a position in India, said: "I have enjoyed my time here in Scotland and have met many wonderful people, but the time is right to return to India with my family."

W&M last September reported a 25.6 million pounds profit for the 18 months after Mallya's taking over of the company.

World's biggest banks to meet in London: Report

2009-03-07T15:54:00.001-08:00

NEW YORK: Chief executives of leading banks from Japan, Europe and the United States will meet in London to discuss regulation of the financial sector,AFP news agency reported, citing the Nikkei economic daily.

According to the report, which did not name sources, the British government will host the meeting on March 24, after the Group of 20 (G-20) finance ministers meeting in London this coming weekend.

The report said invitations had been sent to leading institutions including JPMorgan and HSBC. It said Mitsubishi UFJ Financial Group president Nobuo Kuroyanagi would attend.

Leaders of the G-20 nations are due to meet in London on April 2.

Home repossessions hit 12-year high

2009-02-20T18:13:00.001-08:00

The human cost of the recession has been made clearer after figures showed a 54% jump in the number of people who lost their homes last year.

Around 40,000 properties were repossessed by lenders during 2008, up from 25,900 in 2007 and the highest figure for 12 years, said the Council of Mortgage Lenders (CML).

Repossession levels are expected to soar further this year as the credit crunch and deteriorating economy continue to bite, with the group predicting 75,000 people will lose their homes in 2009.

But there was a slight drop in the number of properties taken over by lenders in the final quarter of 2008, with 10,400 people losing their homes during the period, compared with 11,100 in the previous quarter.

However, the figure was still well up on the final quarter of 2007, when 6,900 homes were repossessed.

The CML said the total number of repossessions for 2008 had come in 11% below its forecast of 45,000. It said for this to happen despite the worsening economy and rising unemployment, demonstrated that mortgage lenders were making "strenuous efforts" to ensure repossession was a last resort.

But the group said there had been a sharp increase in the number of cases where borrowers were handing back keys to their lenders or abandoning their properties. It urged people not to do this, warning they would still be liable for any outstanding debt once their home was sold.

Prime Minister Gordon Brown insisted the Government was pulling out all the stops to ensure repossessions do not become as prominent in the current recession as in previous slumps. "We're going to do everything we can to stop repossessions," he said on a visit to his Fife constituency.

"We're determined that this will not become as high a feature as it has been in previous downturns in the country. The measures we're putting in place are coming in and I believe that we will be able to see an impact on the rate of repossession."

One in 10 homes repossessed during 2008 were buy-to-let properties, in line with the proportion of mortgages that are buy-to-let loans. Landlords have been hit particularly hard by the credit crunch, with many lenders pulling out of the buy-to-let market altogether, while others are demanding bigger deposits and charging higher rates.

Eicher Motors offers buyback of 14L shares at Rs 691/sh

2009-02-04T05:24:00.001-08:00

Siddharth Lal, CEO, Eicher Motors, said the company has offered buyback of upto 14 lakh equity shares at Rs 691 per share. The offer will be made between March 12 and 26 and the offer size aggregates to Rs 97.5 crore. Meanwhile, the acceptance ratio will be around 10%.

He said the company has committed nearly Rs 100 crore for a buyback and the buyback price is in conjunction with Volvo's acquisition price for 8%.

Lal said said Eicher has accumulated cash more than necessary for regular operations. So, the company was mulling other avenues for utilising the remaining cash on its balance sheet. The company is debt free, he added.

Lal said Volvo will not participate in proposed buyback, while promoters and Mitsubishi Motors will participate in buyback. EGIL Group is consented not to participate in buyback.

US job losses surge in November

2008-12-06T09:54:00.001-08:00

US employers axed 533,000 jobs in November, the biggest monthly cut since 1974, the US Labor Department said.

In a dramatic indication of the worsening economic situation, the US jobless rate rose to a 15-year high of 6.7% from 6.5% in October.

Since these latest numbers were compiled, further jobs losses have been announced, including big cuts at AT&T.

Recent figures have fuelled fears that the world's biggest economy is set for a deep, long downturn.

The news pushed Wall Street share prices down 2.5% at one stage, but the market then rebounded and eventually closed up 3%.

US oil prices fell to a four-year low, before recovering slightly to close down $1.93 at $41.74 a barrel.

'Decline accelerating'

Four days after the government officially stated that the US economy was in a recession, President George W Bush himself publicly acknowledged the fact.

Speaking at the White House, Mr Bush said: "Our economy is in a recession. This is in large part because of severe problems in our housing, credit and financial markets."

Reacting to the unemployment data, US President-elect Barack Obama said: "There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better."

Commentators said the jobs figures showed clearly how steeply the US economy was declining.

"This was much worse than was expected and represents wholesale capitulation. The threat of a widespread depression is now real and present," said Peter Morici, a professor at the University of Maryland School of Business.

"This clearly demonstrates that the decline is accelerating," said Tig Gilliam, chief executive of North American operations for Adecco, one of the world's biggest staffing firms.

"It looked mid-year like maybe things would get a little bit better, and now the numbers are just dropping dramatically," he said.

Recession year

The National Bureau of Economic Research said this week that the US entered a recession in December 2007.

Separately, a measure of US service sector activity, the Institute for Supply Management's index, dropped to a record low in November.

The US service sector makes up about 80% of US economic activity.

November was the 11th month in a row that the economy lost jobs.

"In the past six months the US has lost 1.55 million jobs, almost as many as were lost in the whole 2001 recession," said Ian Shepherdson at High Frequency Economics.

"You can't get much uglier than this. The economy has just collapsed, and has gone into a free fall," said Richard Yamarone at Argus Research in New York.

Bleak outlook

The economy contracted at an annual rate of 0.5% from July to September due to the biggest fall in US consumer spending in 28 years.

Many economists believe the gross domestic product will fall even more sharply in the current quarter.

On Wednesday, the Federal Reserve Board painted a bleak picture of the US economy in its influential Beige Book, a report used to help determine US interest rates.

It said economic activity has weakened across the US in the past two months, with retail sales, and vehicle sales in particular, "down significantly".

US companies such as AT&T, DuPont, JPMorgan Chase and mining company Freeport-McMoRan Copper & Gold have announced job cuts this month.

Analysts fear the trend will worsen further.

'Progress' in US auto bail-out

2008-12-06T09:51:00.001-08:00

Progress has been made on a multi-million dollar bail-out deal for the three big US carmakers, officials say.

Congress and the White House are holding weekend talks on the plan after two days of Congressional hearings.

White House Press Secretary Dana Perino said talks with members of both parties had been "constructive".

House Speaker Nancy Pelosi wants a vote on the plan next week, and is said to have accepted White House conditions on the source of the bail-out funding.

Bosses from the three big car companies - General Motors, Ford and Chrysler - have appeared before two Congressional committees pleading for $34bn (£23bn) to prevent collapse.

They warn the collapse of any one of them would have disastrous effects on the whole US economy.

The talks follow an announcement on Friday that more than half a million jobs were lost across the US in November, pushing the unemployment rate to a 15-year high in a dramatic indication of the country's worsening economic situation.

Hope of progress

There has been considerable opposition to a carmaker bail-out plan. Critics say the manufacturers need to first show they can be more efficient.
A key stumbling block in the rescue talks had been over a White House stipulation that the aid be drawn from a $25bn fund set aside for the production of environmentally friendlier cars, which President George W Bush wants Congress to modify.

Ms Perino said on Saturday the use of this fund for the bail-out was central to any agreement, along with requirements that taxpayers are protected and that carmakers take tough business decisions.

"Taxpayers should not be asked to finance assistance for automakers without a strong likelihood that they will be paid back," she said.

Congressional Democrats had previously insisted the money should come from a bank rescue fund - known as the Troubled Asset Relief Programme (TARP) - rather than the fund for the production of environmentally friendlier cars.

But according to Congressional sources, Ms Pelosi, a Democrat, was prepared to yield on that condition, and she has suggested that the $25bn fund could be used under certain conditions.

"We will not permit any funds to be borrowed from the advanced technology programme unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative," she said.

"Regardless of the source, all funding needs will be tightly targeted with vigorous supervision and guaranteed taxpayer protection."

The automaker-bail-out plan is a stop-gap measure intended to help the three firms survive until the administration of President-elect Barack Obama takes over in January and can craft a longer-term solution, correspondents say.

Responding to Friday's announcement that 533,000 US jobs were lost in November, Mr Obama called for urgent measures to stimulate the US economy and get people back to work.

"There are no quick or easy fixes to this crisis... and it's likely to get worse before it gets better," he said.

RBI allows companies to buy back FCCBs via rupee resources

2008-12-06T09:49:00.001-08:00

NEW DELHI: RBI today allowed firms to buy back foreign currency convertible bonds (FCCBs) prematurely through rupee resources as RBI's earlier
move to permit FCCB buy back through forex
found few takers due to a dollar crunch.

"In addition (to the RBI's earlier move) the Reserve Bank will consider applications for buy back of FCCBs out of rupee resources," RBI Governor D Subbarao said.

Last month, the RBI had allowed companies to prematurely buyback FCCBs financed by the company's foreign currency resources held in India or abroad. However, for buying back these bonds through rupee resources, certain conditions have to be met.

One of the conditions is that there has to be a minimum discount of 25 per cent on the book value. Besides, the amount of buy back is limited to USD 50 million of the redemption value per company and the resources for buy back are drawn out of internal accruals of the company.

Even though liquidity shortage is no longer a major issue, analysts said companies would not be rushing for this facility as many of them are using money for other business purposes. Economic Affairs Secretary Ashok Chawala also said there is hardly any redemption pressure on FCCBs.

A Finance Ministry release said here companies should open escrow account with the branch or subsidiary of an Indian bank overseas or an international bank to ensure that the funds are used only for buy back.

Return to $1 gas? Energy prices evaporate

2008-12-06T09:44:00.001-08:00

COLUMBUS: Oil prices hit four-year lows on Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so
dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

The worst jobs data in 34 years on Friday just added more fuel to the deepening global recession as US employers slashed a far worse-than-expected 533,000 jobs in November and the unemployment rate rose to a 15-year high of 6.7 per cent.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA. Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 per cent.

Just this week, in which the National Bureau of Economic Research determined that the US is in recession, oil has fallen 25 per cent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

Gasoline futures for January delivery tumbled to 90 cents.

For gas prices to get close to a $1, oil prices probably would need to fall another $10 a barrel — something that would have been impossible to fathom during the first part of this year as oil prices soared near $150 per barrel.

"Just seeing that '1' up there is just hard to imagine," said Kevin Keating, 65, an attorney as he filled up his Volvo S60 at a station in Phoenix that advertised prices at $1.67. "Wasn't that long ago that we worried about the '4' being up there."

Prices in New York City are well above the national averages, but still well off their highs of nearly $5 this summer.

"When gas prices are OK, we make a little profit," said Mamady Kourouma, 36, a cab driver from Guinea who paid $2.41 a gallon at a station in Chelsea.

With wages stagnant, home prices plummeting and foreclosure rated soaring, dollar-a-gallon gas may help mom fill up in the family minivan and cab drivers in New York City, but prices that low also would truly speak to how rotten the economy has become.

"The economy at that point worldwide would be in a serious, serious deterioration," said Geoff Sundstrom, spokesman for AAA.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said Thursday on his blog that retail prices could fetch $1.25 a gallon soon in parts of the Midwest, including Ohio, Indiana, Illinois and Missouri.

Already, some parts of the country are seeing prices around that level. The Web site gasbuddy.com, where motorists can post local gas prices, motorists can fill up for $1.29 in Neelyville, Mo., a village of about 500 people near the Arkansas state line.

The jobs number suggests that demand for gasoline, which has been running well below year-ago levels even with the cheaper prices in the last several weeks, will fall even more in early 2009 as work-related driving plummets, said Kloza.

"I believe that January 2009 will represent the most 'challenging' and ugly economic month of my lifetime, and my first memory is of Sputnik," Kloza said.

There is plenty of reason to suspect Kloza is right.

Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people has increased by 2.7 million and the jobless rate is up 1.7 per centage points. The meltdown in financial markets has crushed lending, the Detroit 3 are on the brink of bankruptcy without a big government bailout.

Friday's report was much deeper than the 320,000 job cuts economists were forecasting. If there is a plus side it is that the unemployment rate did not climb to the 6.8 per cent level economists were expecting.

Kloza does not believe prices will make it to a $1. Gas prices neared a dollar last time on Dec. 18, 2001, three months after the terrorist attacks and the country in its last recession, when prices hit $1.08 a gallon.

Though the weak gasoline prices point how bad the economy is, they also could help it turnaround.

Kloza figures the US gasoline bill at $1.75 per gallon average will be about $20.5 billion this month, down about $16 billion a year ago. Five years ago, the bill was $17.2 billion.

"That could be one important spur to some kind of economic recovery," Sundstrom said.

In other Nymex trading, gasoline futures tumbled 6.83 cents to settle at 90 cents. Heating oil slid 8.26 cents to $1.4265 a gallon while natural gas for January delivery shed 24.7 cents to sell at $5.77 per 1,000 cubic feet.

In London, January Brent crude slipped by $2.42 cents to $39.86 on the ICE Futures exchange.

Oil could fall to $25 a barrel: Merrill Lynch

2008-12-06T08:49:00.001-08:00

LONDON: Oil prices are likely to keep falling until well into next year and could reach $25 a barrel before recovering, US bank Merrill Lynch has said. In a research report published on Thursday, it said oil prices should begin to rally in the second half of 2009.

Merrill Lynch recently cut its forecast for the average price of US crude oil futures and North Sea Brent crude oil to $50 a barrel from a previous estimate for both crudes of $90.

"With demand vanishing across all key oil consuming regions, benchmark crude oil prices continue to plummet," it said. "In the short-run, market participants will focus on both OPEC and perhaps even non-OPEC producer responses to balance the market."

"A temporary drop below $25 is possible if the global recession extends to China and significant non-OPEC production cuts are required," it said.

"In our view, oil prices could find a trough at the end of Q1 2009 or early Q2 2009 with the seasonal slowdown in demand. Then, as economic activity starts to strengthen, we see oil prices posting a modest recovery in the second half of 2009."

Oil prices hit a peak above $147 a barrel in July but have fallen more than $100 since then as the severity of the global economic downturn has become clear.

Merrill Lynch said a combination of high oil prices and high leverage had proven dangerous for the global economy.
"On October 1, we lowered our average crude oil price forecast in 2009 to $90 per barrel based on a global GDP growth forecast of 3 percent. Since then, our economists have revised their 2009 global GDP growth forecast down to 1.3 percent, a scenario consistent with a global recession.

"As a result, we are now lowering our average WTI and Brent crude oil price forecast to $50 per barrel for 2009."

It said the major downside risk to its price forecast would be a revision of economic growth assumptions for China, which are currently at 8.6 percent for next year.

"In the short-run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations," it said. "We now expect an outright contraction in global oil demand in 2009."

China economy to slow to 19-year low in 2009: World Bank

2008-11-24T22:03:00.001-08:00

BEIJING: The World Bank said on Tuesday China's economy will grow by just 7.5 per cent in 2009, the lowest level in 19 years, due partly to the
global economic slowdown.

The forecast, made in the World Bank's quarterly update on China, is down from a previous estimate of 9.2 per cent, and would be the fourth lowest growth rate in the country since the launch of reforms three decades ago.

The last time China's economy saw a similar slowdown was in 1990 -- amid international isolation following the Tiananmen massacre the year before -- when it grew by just 3.8 per cent.

"The prospects of the world economy are much weaker than six months ago," Louis Kuijs, a World Bank senior economist, told a briefing in Beijing.

"But in addition to that, the deceleration domestically has been more pronounced."

Weakness in the housing sector is a major factor weakening the domestic side of the Chinese economy, he said.

This year, China's economy is likely to grow by 9.4 per cent, the World Bank said in its report. In its previous quarterly update, it had predicted 9.8 per cent growth for 2008.

2 MBA students, with losses in stocks, held for kidnapping teen

2008-11-24T22:00:00.001-08:00

NEW DELHI: In a shocking fallout of the financial meltdown, two part-time MBA students who had apparently lost heavily on investments in stocks and real estate decided to make good their losses by joining in a plot to kidnap a 15-year-old south Delhi boy. The operation went awry when the mastermind, a cousin of the victim, panicked and dumped him at Okhla from where a passerby brought him home. ( Watch )

Arjun Jhamb Verma, a Class IX student of Gyan Bharati School in Saket, was kidnapped on his way to school on the morning of November 20. By Sunday night, the south Delhi police had arrested the two MBA students along with four others, including the kingpin who is an electronics and real estate dealer. The others include an inter-state extortionist and his accomplice as well as a hair-stylist

Both MBA students were pursuing their course through correspondence. Police said Piyush Jain (24) had enrolled in IMT Ghaziabad and also dabbled in shares. His close friend Rohit Chopra (24), who is doing an MBA from Ignou, is a property dealer in Gurgaon. He had apparently lost a lot of money due to the slump in prices of flats. Rohit had also invested in the stockmarket at Piyush's insistence.

Rohit's father is a general manager at a leading hotel in the capital while Piyush's father is an established graphic designer with his own setup in Karol Bagh.

DRIVEN BY GREED

Piyush Jain (24) is an MBA student in IMT Ghaziabad. His friend Rohit Chopra (24), enrolled in Ignou's MBA course, is a property dealer in Gurgaon.

The duo together lost around Rs 80 lakh in market meltdown. That was the ransom demand to Arjun's mother

Kidnapping allegedly conducted by 21-year-old Bharat Jhamb, Arjun's first cousin. He was reportedly unhappy with his share of ancestral property that got divided 3 years ago between his father and Arjun's father

Sensex up on Citigroup package; metals gain

2008-11-24T21:58:00.001-08:00

MUMBAI: Equities were firm after a gap-up opening as global markets rose after the US government announced bail-out package to rescue banking major Citigroup. All the sectoral indices were in the green led by metals, banks and power stocks. Market may witness some volatility on account of November F&O expiry this Thursday.

"Though stock futures have added 2 per cent OI, the Put Call ratio has seen a mild deterioration. The overall rollover is back to normal levels but the Nifty is falling short. With this background, we do not expect the Nifty to improve to go beyond its tether at 2850. At 2900 call writing for the next month has taken place. Write 3000 call if the 2800 level in the Nifty is reached. Bongaigaon Refinery looks better placed," said Anagram Stock Broking note.

At 10:30 am, Bombay Stock Exchange's Sensex was at 9084.65, up 181.53 points or 2.04 per cent. The 30-share index touched a high of 9182.80 and low of 9073.21 in early trade.

National Stock Exchange's Nifty was at 2759.55, up 51.30 points or 1.89 per cent. The broader index hit a high of 2790.70 and a low of 2707.15 in trade so far.

"Trend deciding level for the day is 8882 / 2694 (Sensex/Nifty). If market trades above this level during the first half-an-hour of trade then we may witness a further rally up to 9063 - 9222 / 2754 - 2801. However, if market trades below 8882 / 2694 for the first half-an-hour of trade then it may correct up to 8723 / 2648," said Angel Broking.

Buying activity was also seen in second rung stocks. BSE Midcap Index was up 1.52 per cent and BSE Smallcap Index moved 1.22 per cent higher.

Shares of metal companies were higher after surge in commodities prices in global markets following fall in US dollar against the euro and jump in crude oil prices.

Power and capital goods companies were witnessing some buying after the government decided to fund power and infrastructure sector to keep the growth engine running.

Banks were up globally on the euphoria of bail-out of Citigroup. The US government unveiled a massive rescue package of upto $20 billion for the struggling bank.

BSE Metal Index was up 3.12 per cent, BSE Bankex was up 2.83 per cent and BSE Power Index moved 2.33 per cent higher.

HDFC Bank (4.84%), Reliance Infrastructure (4.58%), ICICI Bank (4.48%), Sterlite Industries (4.33%) and Jaiprakash Associates (4.01%) were the major Sensex gainers.

Ranbaxy Laboratories (-2.50%), Mahindra & Mahindra (-1.17%), Hindustan Unilever (-0.36%) and Maruti Suzuki (-0.18%) were the only losers.

Market breadth was positive on the BSE with 1095 advances and 511 declines.

RBS braces for first annual loss

2008-11-19T18:46:00.001-08:00

Royal Bank of Scotland has signalled it expects to make its first annual loss in 2008 as it unveiled more write-downs on assets hit by the credit crunch.

The beleaguered lender said bad debt charges and write-downs totalled £206m in the third quarter, on top of £5.9bn in the first half of the year.

RBS boss Stephen Hester told BBC News making a profit would prove difficult.

RBS also detailed plans to raise £19.7bn as part of the government's bank bail-out plan.

The bank's third-quarter write-down would have been higher, but accounting changes relating to the way securities are classified provided a boost of £1.2bn.

The firm said its operating profit in the first nine months of 2008, before credit market write-downs, was 8% lower than a year earlier.

"The scale of the market disruption and the economic downturn that is happening as a consequence means that credit losses are rising very sharply," Mr Hester said.

"I suspect that people may conclude that profits will be difficult to achieve this year," he added.

The firm reported in August a loss for the first half of the financial year of £691m.

'Momentous'

Mr Hester said RBS troubles stemmed from the bank's decision to lend far too much in good times.

Through its investments it became far too exposed to disastrous sub-prime loans to US homeowners with poor credit histories. It also bought the giant Dutch bank, ABN Amro, at the height of the boom.

BBC business editor Robert Peston said it was momentous that RBS, which can trace its history back almost 300 years, was heading for its first full-year loss.

He said RBS had survived one set of multi-billion pound losses on the sub-prime phase of the credit crunch.

It would now be tested by rising impairment charges on more conventional lending as a recession made life tough for individual and companies with big debts, he added.

Dividends to resume

RBS said it wanted to raise up to £15bn from investors by selling shares at 65.5p each. If the shares are not taken up, the government will acquire them.

The government will also directly buy preference shares in the bank - worth a total of £5bn.

Under the terms of the government agreement, dividend payouts are restricted, directors' pay limited and banks are required to pay 12% a year interest on the preference shares.

RBS said it would buy back the preference shares "as soon as it is prudent to do so", which would allow it to restart dividend payments.

Mr Hester said he would be "disappointed" if he couldn't pay dividends again in 2010.

Lloyds TSB and HBOS are also taking part in the government bank rescue plan, whereas Barclays has raised cash from the Middle East.

Spain 'to slide into recession'

2008-11-19T18:38:00.001-08:00

Spain is likely to slip into recession in the fourth quarter and stay there into 2009, Bank of Spain head Miguel Angel Fernandez Ordonez has said.

His comments followed figures showing that the Spanish economy had contracted by 0.2% in the third quarter, the first shrinkage since 1993.

"The scenario for the next quarters is very similar to that of the third quarter," Mr Ordonez said.

The eurozone officially entered recession last week.

CSFB analyst Giovanni Zanni said: "We have a slightly worse forecast for Spain than for the rest of the euro area."

'Faster decline'

Spain's economy has relied heavily on construction and consumer spending, but the global financial crisis and rising unemployment have hit economic expansion hard.

The central bank boss has forecast an intensified slump in spending on new construction projects. Consumer spending will also slow further, he added.

Analysts said that the third-quarter figures reported by the National Statistics Institute were worse than expected.

"The consumer slowdown is faster than expected and also the contraction in investment is worse than expected, and points to a faster rate of decline in the fourth quarter," said Jose Luis Martinez at Citigroup.

Reforms

The Organisation for Economic Co-operation and Development (OECD) said that the downturn in the Spanish economy was at "an early stage".

"Nonetheless, it has already resulted in a marked increase in unemployment, hitting workers in low skill occupations, including immigrants, particularly hard," the OECD said in a report.

It said that Spain should take steps to improve worker training and to increase competition in certain sectors of the economy.

The International Monetary Fund has predicted that Spain's economy will grow by just 1.4% in 2008, slower than expected, and shrink by 0.7% in 2009.

Spain's Labour Ministry reported at the beginning of November that the country's unemployment rate had reached a 12-year high of 11.3%.

Citi shares hit 15-year low as analyst cuts view

2008-11-19T18:30:00.001-08:00

NEW YORK: Citigroup Inc. shares hit a 15-year low Wednesday as an analyst predicted the bank will have to cut the value of some of its assets by
an additional $3 billion.

Citi shares tumbled Wednesday, falling $1.96, or 23 percent, to $6.40. Earlier in the day, shares hit a 15-year low of $6.25. Citi, which has been battered by the ongoing credit crisis, has seen its shares lose 53 percent of their value in November.

Shares fell as Fox-Pitt Kelton analyst David Trone predicted further losses for the bank, while Citi separately announced it would be acquiring the remaining assets from its structured investment vehicles and liquidate a hedge fund that's value plummeted 53 percent in October.

Also this week, Citi said it will cut an additional 53,000 jobs on top of 22,000 cuts it previously announced as it aims to return to profitability.

Fox-Pitt Kelton's Trone does not expect profitability to return during the fourth quarter, though. Trone now estimates Citi will lose 79 cents per share. He previously forecast a loss of 8 cents per share.

The cut in the fourth-quarter estimate is based on expectations for $3 billion in write-downs as Citi will have to mark down the value of some of its investments in bonds backed by mortgages as well as leveraged loan assets, Trone wrote in a research note. Citi has already taken more than $40 billion in write-downs since the middle of 2007.

Trone also increased his forecast for charge-offs _ loans written off as not being repaid _ and loan-loss reserves based on estimates provided by the company earlier in the week.

His revised estimate is the latest in a string of cuts by analysts in recent weeks.

Analysts widely expect Citi to post a loss during the fourth quarter, and have been increasingly pessimistic in their views. On average, according to Thomson Reuters, analysts forecast Citi will lose 15 cents per share in the fourth quarter. Just a month ago, the average estimate was for earnings of 1 cent per share.

Citi is coming off four consecutive quarterly losses, including a $2.8 billion loss during the third quarter. The bank has been trying to clean
up its balance sheet and shed expenses during the current market turmoil.

Among those changes, the New York-based bank said Wednesday it will acquire the remaining $17.4 billion in assets held by SIVs it already supports .

Citi said it is transferring assets from its SIVs to a portfolio of assets held for sale. The transfer allows the funds to fully repay maturing debt obligations.

Citi is acquiring the SIV assets at their current fair value, net of cash. The assets' value fell to $17.4 billion from $21.5 billion as of Sept. 30. The $4.1 billion drop mostly reflects $3 billion tied to asset sales and maturities, with the remaining $1.1 billion due to declines in market value.

An SIV is a fund that borrows money by issuing short-term securities at a low interest rate and then lends that money by purchasing long-term securities at higher interest. That process can make a profit for its investors from the difference.

However, SIVs began to struggle as demand dried up for short-term bonds during the ongoing credit crisis. As a result, the value of SIV holdings fell sharply, forcing banks such as Citi that operated the off-balance sheet funds to provide them with financial support.

The value of that support in Citi's case, currently pegged at $6.5 billion, will be returned to Citi once the asset transfer is complete.

Citi, one of the biggest SIV holders, brought the SIVs onto its books last December.

As Citi completes the SIV transaction, it is also liquidating a hedge fund operated by its alternative investment unit, a Citi spokesman said. The Corporate Special Opportunities fund, based in London, invested mostly in European leveraged loans and corporate debt.

``As with many other credit-based investment products, investment returns have been hurt by one of the most volatile periods for fixed income in history,'' Citi said in a statement.

The market for those assets has shrunk drastically in recent months amid the global market turbulence, leading to the sharp decline in value and the subsequent liquidation of the fund.

Dow plunges nearly 430, falls below 8,000 mark

2008-11-19T18:28:00.001-08:00

NEW YORK: Wall Street hit levels not seen since 2003, with the Dow Jones industrial average falling below the 8,000 mark, as the fate of Detroit's Big Three automakers and the economy disheartened investors.

Stocks finished at their lows of the session after the automakers pleaded for relief during a second day of hearings in Washington. The heads of General Motors Ford and Chrysler are asking for a massive infusion of cash to prevent millions of layoffs and stave off bankruptcy.

Investors were discouraged by the Fed's sharply lowered projection for economic activity this year and next. Economic worries caused across-the-board selling, with financial stocks particularly hard hit.

The Dow finished down nearly 430 points at the 7,990 level.

Over 100 US blue chips now selling for under $10 a share

2008-11-19T18:15:00.000-08:00

NEW YORK: One hundred and
one.

No, that's not Dalmatians but the number of stocks in the U.S. benchmark S&P 500 index now trading for less than $10 a share.

In fact, $10 would get you 10 shares of online broker E*Trade, now the cheapest stock in the index at 98 cents a share. At the other end of this low-ball spectrum you can get a small slice of the garbage business with a share of Allied Waste at $9.90.

In between lies a raft of household names, many formerly held up as blue chips, including Citigroup($6.40), Alcoa ) ($8.16), Xerox ($5.58), Motorola ($3.44), Starbucks ($7.97) and Yahoo ($9.14), not to mention beleaguered automakers Ford Motor $1.26) and General Motors ($2.79).

In all, the group makes up the greatest number of sub-$10 stocks in the index in at least 28 years, said Howard Silverblatt, senior index analyst at Standard & Poor's.

In fact, Silverblatt said it could be the most in the post-World-War II era, though he cautioned that his data reaches only as far back as 1980.

"This is definitely unusual," he said. "I think you'd have to go back as far as the 1940s, when $10 was worth more to see a similar number," he said.

According to S&P data, 101 is almost double the 59 companies with share prices below $10 in October 2001 when the dotcom meltdown was in full swing and almost triple the 35 sub-$10 stocks in October 1987.

Ten dollars is more than just a psychological barrier. Some institutional investors cannot invest in shares below $10 and some bond contracts require companies above that level.

Some other gloomy facts: only five S&P 500 companies had share prices of more than $100 on Wednesday.

So far this year, the S&P 500 has plunged 45 percent. It is now worth just over $7 trillion, the index's lowest collective market value in 11 years.

Twenty-five stocks, or five percent of the index, don't make the $1 billion mark in market cap, and just 11 exceed the $100 billion level.

In fact, a third of the entire index is not even qualified to be in the index -- 186 stocks have market caps under $4 billion, the minimum value for consideration for S&P 500 membership.

Nikkei drops 4% to 3-week low on crisis fears

2008-11-19T18:14:00.001-08:00

TOKYO: Japan's Nikkei average fell 4.3 per cent on Thursday to a three-week low, battered by a stronger yen and fears of global recession that
hit exporters such as camera maker Canon Inc.

Worries that the deteriorating global economy is biting into Japan's economy intensified after data showed on Thursday the nation's trade balance swung into a deficit of 63.9 billion yen ($668.5 million)in October.

Among high-tech exporters, Tokyo Electron Ltd, Japan's top semiconductor maker, fell 9.1 per cent to 2,505 yen after data showing a 68 per cent slide in orders for Japanese equipment used to make semiconductors, reflecting a glut of oversupply in the sector.

"One focal point is whether public pension funds buy stocks, giving support to the market, as they have been doing," said Norihiro Fujito, general manager of the investment research and information division at Mitsubishi UFJ Securities.

Tokyo's benchmark Nikkei fell 352.39 points to 7,920.83, sliding below the 8,000 mark for the first time since late October. The broader TOPIX index slid 3.9 per cent to 795.59.

They were following the lead of U.S. stocks, which fell to a 5-½ year low on Wednesday as investors girded for a lengthy economic downturn and automotive executives predicted a far-reaching calamity without a government lifeline.

Investors were especially concerned about the world's biggest economy U.S. consumer prices plunged at the sharpest rate on record in October. "This will have a huge negative impact on the U.S. economy and, as a result, on the global economy," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

The yen held gains made on Wednesday, underpinned by investor
risk aversion, hitting the shares of key exporters such as Cannon, which also makes office products. Its shares fell 2.9 per cent to 2,725 yen.

Wall St end up over 6% on bargain hunting

2008-11-13T19:31:00.001-08:00

NEW YORK: US stocks
rallied on Thursday, ending up over 6 per cent after the S&P 500 and the Nasdaq touched new multiyear lows earlier in the
session as bargain hunters rushed back into the market to scoop up beaten-down shares
.

The desire to buy stocks at cheap prices offset worries about a sharper economic and consumer downturn. The Dow Jones industrial average jumped 552.59 points, or 6.67 per cent, to end unofficially at 8,835.25, based on the latest data.

The Standard & Poor's 500 Index shot up 58.97 points, or 6.92 per cent, to finish unofficially at 911.27.

The Nasdaq Composite Index surged 97.49 points, or 6.50 per cent, to close unofficially at 1,596.70.

Honda sells 98 Hybrids a day after price cut

2008-11-13T19:29:00.001-08:00

NEW DELHI: Honda Siel Cars India sold 98 Civic Hybrid cars on a single day on Thursday, much more than what it managed in the entire five months since the premium hybrid's launch in India, thanks to a whopping Rs 8 lakh, or 40%, price cut.

Honda is aiming to sell another 100 cars in the next few days. Company officials maintained that the reduced price is a limited-period offer—a marketing tack frequently used in the Indian auto industry.

With Thursday's orders, Honda has sold out the first batch of Civic Hybrids it had imported from Japan. The second batch is already on its way. "A big consignment of these cars will be reaching India in the next few days. We will also take more orders as per the demand from our dealers," the HSCI spokesperson said.

Civic Hybrid, at its new price of Rs 13.36 lakh, is now almost cheek by jowl with the petrol-fired Civic, which costs Rs 12.86 lakh (ex-showroom Delhi) for the top variant. The price parity has led to increase in demand for the hugely fuel-efficient hybrid in metros like Mumbai and Delhi, and fuel-sensitive areas like Punjab and Hyderabad.

"Customers are extremely attracted by the high-fuel efficiency of the hybrid," said a Delhi-based Honda dealer, who clocked a dozen bookings for the car on Thursday. With electric motor support, Civic Hybrid delivers an average of 20 km per litre of petrol. Also, the hybrid system comes with a lifetime warranty.

Is Vikram Pandit led Citi looking at new leadership?

2008-11-13T19:26:00.001-08:00

NEW YORK: As Citigroup Inc.'s shares sank to 13-year lows below $9 a share, the bank denied a report Thursday that it is looking for a new chairman.

``Any report that the board is searching for a new chairman is false,'' said Citigroup spokeswoman Christina Pretto.

The Wall Street Journal reported Thursday, citing people familiar with the matter that some Citigroup board members are increasingly dissatisfied with the company's performance and are considering replacing Chairman Sir Win Bischoff. The board named Bischoff chairman in December after ousting former CEO and Chairman Charles Prince.

Citigroup's board issued a statement Thursday that it ``reiterated its full support for the company's chairman'' and ``looks forward to his continued leadership.'' The board called Thursday's Wall Street Journal report ``completely erroneous.''

Citigroup, which has suffered four straight quarters of losses due to bad bets on mortgages and other deteriorating loans, has seen its stock plunge to the lowest levels since May 1995. Shares fell 19 cents, or 2 per cent, to $9.45 Thursday, and traded as low as $8.27 earlier in the day.

Investors have gotten increasingly nervous that Citigroup lacks strong enough leadership to pull the company out of a mess of souring consumer loans and highly leveraged investments.

CEO Vikram Pandit, while well-respected as an investment banker, never led a public company before taking Citigroup's reins in December. And the bank's board has little financial-services expertise, with the exception of Robert Rubin _ a Treasury secretary under President Bill Clinton _ who has said since joining Citi in 1999 that he does not want to run the bank.

A leading candidate for the chairman position, the Journal said, is Citigroup board member Richard Parsons _ Time Warner Inc.'s chairman, who is part of President-elect Barack Obama's transition economic advisory board. Parsons was chief executive and chairman of Dime Bancorp, a thrift bank, in the early 1990s.

But some analysts doubt this experience in banking
would be enough to lead Citi _ the most troubled of the four largest U.S. banks _ back to financial health.

``You need somebody who's done workout, somebody's who's dealt with a troubled institution. Ultimately, you might have to break it up anyway,'' said Christopher Whalen, managing director of Institutional Risk Analytics. ``If you get the right person, it could be enormously helpful. But I just think it's kind of late.''

Bart Narter, a bank analyst at consulting and research firm Celent, said replacing the chairman would be an ``important symbolic move,'' but that ``putting a new captain on the oil tanker doesn't mean it's going to turn any faster.''

The Journal also reported that Citigroup is in talks to buy the Maryland regional bank Chevy Chase Bank. Citigroup's Pretto declined to comment on the matter. A message left with a Chevy Chase Bank official was not immediately returned.

Last month, Citigroup lost out on a deal to buy the much larger bank Wachovia Corp. Wells Fargo & Co. nabbed the Charlotte, North Carolina-based bank instead.

After releasing its third-quarter results last month, Chief Financial Officer Gary Crittenden said in an interview with The Associated Press that when it comes to acquisitions, ``we would continue to look, and see, obviously, what happens. But it would need to meet some pretty strict criteria.''

Analysts have been less sure, however, that Citi should be making acquisitions.

``Citi shouldn't be buying anything right now. They should be battening down the hatches,'' Whalen said.

Chevy Chase Bank has $11 billion in deposits, according to data from the Federal Deposit Insurance Corp., and nearly 300 offices in the metropolitan area surrounding Washington, D.C.

Celent's Narter said that arguably, now is a great time to be buying banks. But for Citigroup, he said, ``given all the other issues they have, I don't know if I'd be focusing on an acquisition right now.''

Less than a month to enter the Green Card Lottery - Apply Now!

2008-11-13T19:19:00.001-08:00

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Equities end at day's low

2008-11-11T03:04:00.001-08:00

MUMBAI: Markets ended sharply lower following Tuesday due to lack of fresh buyingand profit booking by traders at higher levels.

Bombay Stock
Exchange's Sensex closed at 9,839.69, down 696.47 points or 6.61 per cent. The index touched an intra-day low of 9,799.45 and a high of 10,405.39.

National Stock Exchange's Nifty ended at 2,923.95, down 7.12 per cent or 224.30 points. The 50-share index hit a low of 2,919.45 and a high of 3,147.20 in the day.

Among frontline stocks, Jaiprakash Associates (-12.21%), Sterlite Industries (-11.03%), Tata Steel (-10.98%), Hindalco Industries (-10.18%), DLF (-10.15%) and BHEL (-9.65%) were the worst hit.

ITC, up 0.06 per cent, was the lone gainer in the 30-share index.

Market breadth on BSE showed 1763 declines against 765 advances.

World has 100 days to fix crisis: EU leaders

2008-11-07T21:08:00.001-08:00

BRUSSELS, BELGIUM: European Union leaders backed a 100-day deadline by which the world's leading economies should decide urgent global finance
reforms, French President Nicolas Sarkozy said on Friday.

Sarkozy, who chaired a special meeting of EU nations, said the financial crisis and economic downturn required a quick deal on an overhaul at a Nov 15 summit in Washington bringing together leaders of the world's 20 largest industrialized nations and emerging economies.

"We are in an economic crisis. We have to take this into account," Sarkozy said. "We have to react and we have no time to lose." "I'm not going to take part in a summit where there is just talk for talk's sake," Sarkozy told reporters after talks between the heads of the EU's 27 nations.

The EU is calling for a second global summit next spring to flesh out changes to the way the world economy is governed. They want to see far more supervision of big financial companies and are urging governments to jointly monitor them.

They want to prevent a repeat of the Wall Street excesses that caused havoc in markets worldwide, and are bringing emerging economies China, India and Brazil on board for talks on shaping a new world economic order.

British Prime Minister Gordon Brown said the Washington talks should be a "decisive moment for the world economy." A text agreed by EU leaders says they want an early warning system that would watch for financial bubbles and prevent ``world imbalances'', such as the swelling US trade deficit.

They also suggest making the International Monetary Fund the world's financial watchdog, suggesting it be given more power to curb financial crises and give more money to aid countries in trouble.

The Europeans also want to close loopholes that allow some financial institutions to evade regulation, and ensure supervision for all major financial players, including ratings agencies or funds carrying high amounts of debt.

The leaders in a declaration called for greater transparency in markets that would no longer omit "vast swathes of financial activity from auditable, certifiable accounts." It also said "excessive risk-taking must be overhauled," a reference to the sale of high-risk debt securities and executive pay that may reward risk-taking.

EU leaders will call on the Nov 15 summit to agree immediately on five principles: submit ratings agencies to more surveillance; align accounting standards; close loopholes; set banking codes of conduct to reduce excessive risk-taking; and ask the International Monetary Fund to suggest ways of calming the turmoil.

To date, European governments alone have committed some 2 trillion euros ($2.6 trillion) in cash injections, bank deposit guarantees, interbank loan coverage and partial or full nationalization to prop up consumer and business confidence.

The damage done worldwide is fueling a search for a "new Bretton Woods", a reference to the post-World War II conference that shaped the international financial system.

In Washington, there is little desire in the waning days of the Bush administration for a major overhaul of financial regulations. But the United States and European nations are no longer the only players. China and Brazil and India are jumping at the chance to join a major international effort.

G-20 finance officials nations will meet this weekend in Sao Paulo, Brazil, to prepare next week's summit. This may pave the way for emerging economies to play a larger role in global finance talks. France is suggesting bring them on board as members of the exclusive world club of G-8 industrialized nations which regularly meets to discuss the global economy.

Asia to avoid full-fledged financial crisis: ADB

2008-11-07T21:06:00.001-08:00

NEW YORK: Asia is expected to avoid a "full-fledged" financial crisis this time as governments and the corporate sector learned their lesson from
the previous crisis that hit the region 10 years ago, the head of the Asian Development Bank said on Friday.

"Combined with the large buildup in foreign exchange reserves, capital outflows can now be handled more effectively than in the past. And reforms have improved financial systems," Haruhiko Kuroda said in a speech to the Asia Society in New York.

"A range of indicators also point to a healthier corporate sector in Asia. The result is that a full-fledged financial crisis in the region is unlikely," he added.

Nevertheless, the region is already feeling the economic impact of the global crisis, Kuroda said, forecasting that the aggregate economic growth for developing Asia will decline by 1.5 percentage points this year from the record 9.0 per cent of 2007.

"The giant economy of China and India, which account for a large portion of the growth estimate, have already seen growth slow significantly," he said.

On a positive note, Kuroda said, inflation is also declining in Asia as commodity prices fall and demand weakens.

World economies to decline in 2009: IMF

2008-11-07T21:04:00.001-08:00

WASHINGTON: Barely 10 days ahead of the Summit of the Group-20 here called by President George Bush, IMF has revised its global economic outlook and forecast that advanced economies would slip into recession next year, while the growth rate of Asian nations would come down.

In its World Outlook Report published today, the International Monetary Fund (IMF) has predicted that the global growth would slow down by 0.2 per cent in 2008 and 0.9 per cent in 2009, thus leaving the revised growth figures at 3.7 per cent for this year and 2.2 per cent for the next.

The outlook is not too different for India as well, since IMF sees the country's economic growth going down to 6.3 per cent, 0.6 per cent less than what it had projected last month, as the financial meltdown envelops the globe.

With special mention to the US economy, the report says that it would contract by as much as 0.7 per cent in 2009, while the Eurozone has been forecast to shrink by half-a-point next year.

For the advanced economies in general, IMF sees a negative growth of 0.3 per cent and 5.1 per cent for the emerging and low-income countries, a full one per cent decrease over its previous projection.

"...the sharp decrease in demand in advanced countries observed in the last few months has lead us to predict a sharper contraction for the end of 2008 and the first half of 2009. Because of the sharp worsening of credit conditions to emerging countries...and lower exports is why we have substantially revised our forecasts for that part of the world," said Economic Counsellor and Director of Research Department of IMF Oliver Blanchard.

Painting a scary picture of world trade, IMF forecast suggests that the global growth in volume of trade in goods and services would slide from 7.2 per cent to 4.6 per cent in 2008 and dip to 2.1 per cent next year.

The world economic growth is likely to slowdown from 5 per cent in 2002 to 3.37 per cent in 2008, while India's economic growth for this year is expected to dip by just 0.1 per cent to 7.8 per cent than what was forecast last month.

As per the IMF projections, India is likely to record an economic growth of 6.6 per cent during October-December against 8.9 per cent in the corresponding period in 2007. "The downward revisions to 2009 real GDP growth projections are somewhat larger in emerging economies, averaging one per cent," the IMF said.

Blanchard said that this was clearly a period of "very high uncertainty" with two downside risks, "Despite the measures taken to address the financial system, we cannot be sure that there are no hidden land mines left in the field. A worsening of the financial crisis would clearly lead to further contraction of activity.

"Another risk, which a number of commentators have mentioned, is sustained deflation. It is an issue to worry about, but we do not give it high probability at this stage." In line with the market development, IMF has revised petroleum price projection from 100 dollar a barrel to 68 dollar a barrel for 2009.

According to IMF projections, the UK will be the worst hit on account of the global crisis and may witness contraction of its economy by 1.3 per cent in 2009. In addition, the advanced countries which will witness negative growth in 2009 include the US, Germany, France, Italy, Spain and Japan.

RBI cuts repo rate by 100 bps to 8 pc

2008-10-30T02:41:00.002-07:00

MUMBAI: The Reserve Bank of India has decided to reduce the repo rate under the Liquidity Adjustment Facility by 100 basis points to 8.0 per cent
with immediate effect.

The global financial situation continues to be uncertain and unsettled. Even as countries directly affected by the turmoil have taken aggressive action to manage the crisis, confidence and calm is yet to be fully restored in the financial markets. Due to financial integration, this uncertainty is transmitting also to countries outside the epicenter of the crisis. India too is experiencing the indirect impact of the global liquidity constraint as reflected by some signs of strain in our credit markets in recent weeks, the Indian central bank said in a statement.

The cut is aimed at maintaining financial stability, it added.

Govt plans $21.7 bn extra spending in 08/09

2008-10-30T02:41:00.001-07:00

NEW DELHI: Government sought parliamentary approval on Monday for an extra 1.06 trillion rupees ($21.7 billion) of expenditure in the year to March 2009, including funds for a farm debt waiver scheme, food and fertiliser subsidies.

It said gross additional spending would be 2.37 trillion rupees, of which more than 1.3 trillion rupees would be funded through savings by various ministries.

In its supplementary demand, the government said it was seeking 388.63 billion rupees for fertiliser subsidies and 255 billion rupees for the farm debt waiver scheme.

Top-10 firms lose Rs 1.5 trillion; RIL worst hit

2008-10-26T00:17:00.000-07:00

MUMBAI: The bloodbath on the bourses has wiped off a whopping Rs 1.50 trillion from market valuations of country's of 10 most valued firms in the past week, with Reliance Industries suffering the worst blow.

The meltdown at the bourse washed away a big chunk from the market valuation of corporate behemoth Reliance Industries even as others like IT major Infosys Technologies and diversified conglomerate ITC Ltd managed to swim against the tide.

The combined market cap of the elite club saw an erosion of Rs 1,50,730 crore in the past week, dropping to Rs 8,94,000 crore from the previous week's Rs 10,44,000 crore.

With the market going for a free-fall last week, the country's most valued firm Reliance Industries lost Rs 45,600 crore in its market value dipping below the crucial Rs 2,00,000-crore mark.

RIL, which announced its second quarter results last week, registered its profit up by 7.4 per cent at Rs 4,122 crore, while its revenue rose by 39.4 per cent to Rs 44,938 crore.

Shares of RIL plummeted for three days in row last week to settle at Rs 1,015.50 on BSE on Friday, wiping off as much as Rs 29,038 crore or about 16 per cent of its market value in a single day.
However, Infosys defied negative market trend and managed to add Rs 2,645 crore to its market cap of Rs 71,491 crore at the end of Friday's trading last week. ITC gained Rs 245 crore to stand at Rs 60,019 crore.

Notwithstanding the fall in valuation, however, Mukesh Ambani-led firm stood at the numero-uno position with Rs 1,59,818 crore of market cap on Friday, against Rs 2,05,419 crore in the week-ago period.

The Bombay Stock Exchange benchmark Sensex on Friday plunged 1,070 points to end at 8,701, the second biggest fall in this fiscal. The barometer Sensex, which was quoting at 9,975.35 points on October 17, lost over 1,200 points last week.

Besides, the elite club of top 10 firms, comprising four private sector entities and six public sector units, witnessed a shuffle in the rankings, with PSU firm NTPC regaining the third slot from telecom major Bharti Airtel.
Also Infosys rose to the sixth position, displacing MMTC which slipped to the seventh slot. While ITC moved ahead of NMDC to the eighth rank.

State-run ONGC witnessed a drop of Rs 24,886 crore falling to Rs 1,41,069 crore at the end of trade last week. Also Bharti Airtel lost over Rs 27,000 crore to stand at Rs 1,01,446 crore, while SBI lost Rs 16,354 crore.

According to the list, RIL is followed by ONGC (Rs 1,41,069 crore), NTPC (Rs 1,07,892 crore), Bharti Airtel (Rs 1,01,446 crore), SBI (Rs 73,414 crore), Infosys (Rs 71,491 crore), MMTC (Rs 65,213 crore), ITC (Rs 60,020 crore), NMDC (Rs 59,708 crore) and BHEL (Rs 53,443 crore).

Market mayhem: How poorer have the Ambanis become?

2008-10-24T23:34:00.001-07:00

MUMBAI: The next time Forbes announces its list of billionaires (assuming it dares to do so even amid a massive wealth destruction globally), chances are that many Indian tycoons will find to their dismay that their rankings have slipped a few notches.

Even if they managed to retain their slots, or even climb up a few rungs, it would still be cold comfort, as few billion of their wealth would evaporated amid the ongoing turmoil in the stock market.

As the late British financier Sir James Goldsmith remarked when congratulated for cashing out before the stock market crash of 1987, "It is like winning a game of bridge on the decks of the Titanic."

The Sensex recorded the second-biggest single-day fall in absolute terms on Friday when it crashed by 1,071 points, or 11%, to close at 8,701. With this, the index has crashed more than 12,000 points, or nearly 60%, since its peak of 20,873 achieved on January 8, 2008.

Market cap of all the companies traded on the Bombay Stock Exchange
(BSE) has evaporated by a staggering Rs 46 lakh crore, or $940 billion during the period. So, how poorer have top industrialists like the Ambanis, Tatas and Birlas become after the meltdown in the share prices of their companies?

An ET analysis of promoter wealth loss between January 8 and October 24, 2008, shows that the two Ambani brothers bore the brunt of the stock market mayhem, witnessing the highest wealth erosion among promoters of the top business houses in the country.

Though still dominating the market cap ranking, RIL chairman Mukesh Ambani saw his personal wealth crash from $ 57.6 billion as on January 8 to $14.4 billion as on Friday, a fall of 75% since January 8.

A major part of the wealth erosion happened in the flagship company, RIL, whose market cap has declined by Rs 2.8 lakh crore, or $ 57 billion. The market cap of two other group companies Reliance Petroleum and Reliance Industrial Infrastructure fell by $ 15.3 billion and $0.7 billion during the period.

Mukesh's younger Brother Anil Ambani of the ADAG group saw his wealth tumble from $48.4 billion to $8.4 billion, a loss of 83%. His five companies, Reliance Communication, Reliance Capital, RNRL, Reliance Infrastructure and Adlabs Films, recorded an aggregate market cap loss of $53.7 billion.

Realty major DLF is the third-biggest loser where the promoter wealth has eroded from $44 billion to as low as $6 billion. DLF is followed by Tatas who saw their wealth in 27 listed companies plunge from $38.2 billion to $12.8 billion, a loss of 67%.

TCS, Tata Motors, Tata Power, Tata Communications and Tata Teleservices are among the key companies in the Tata group to have taken a big hit on market cap during January 8 to October 24 2008.

Billion-dollar companies' club shrinks to sub-100 in size

2008-10-24T23:33:00.001-07:00

MUMBAI: Dalal Street's Friday fury today shrunk the billion-dollar companies' club to sub-100 in size as the benchmark Sensex crashed by over 1,0
00 points and the rupee hit its record low of 50-per-dollar.

At the end of today's trading, when the Sensex fell to its lowest level in about three years, there were just about 90 companies with a market capitalisation of at least one billion dollar.

There were as many as 226 companies with a market value of one billion dollar and above as on January 10, when the Sensex scaled its record high of 21,206.77 points before the bear-rampage began on the bourses.

A sharp plunge in the stock market since January 10 has also seen the total value of billion-dollar club shrinking to nearly one-fourth from about USD 1,600 billion to just about USD 400 billion currently.

Besides, the fall in market valuation, a sharp depreciation in rupee value against the US dollar, has also added to the shrinking of this elite club.

The rupee has depreciated by over 25 per cent during this period -- from close to 39.25-level on January 10 to touch 50-level against the US dollar for the first time ever.

The Sensex today fell to 8,701.07 points, registering a fall of about 12,500 points or nearly 60 per cent.

The cumulative market value of the billion-dollar club currently stands at about Rs 21 trillion (nearly USD 400 billion), from more than Rs 62 trillion on January 10.

In Indian currency also, there are just four companies left in India with a trillion-rupee market cap including Reliance Industries, ONGC, NTPC and Bharti Airtel -- down from over a dozen before the downslide began early this year.

There were a total 13 companies with a market capitalisation of Rs 1,00,000 crore or above on January 10. Those having moved out of this club include realty major DLF, MMTC, NMDC, Reliance Comm, ICICI Bank, SBI, Larsen and Toubro, BHEL and SAIL.

Besides, RIL had a market cap of over Rs four trillion on January 10, which has now plunged to Rs 1,47,628 crore, while that of ONGC has also dropped by over Rs one trillion to Rs 1,41,069 crore. Besides, market cap of companies like Bharti and DLF were close to Rs two trillion on January 10, but now that of Sunil Mittal-led telecom giant is just over Rs one trillion and that of K P Singh-led realty major is at Rs 34,761 crore.

NTPC has also seen its market value nearly halving from more than Rs two trillion, while companies like MMTC, NMDC, RCOM and ICICI Bank have also lost about Rs one trillion or more from their market capitalisation.

Companies like SBI, L&T, BHEL and SAIL have also lost more than Rs 50,000 crore each from their market cap.

The cumulative market value of all the listed companies has dropped to near Rs 27.7 trillion from more than Rs 72 trillion at the peak of the last bull run in January.

Chrysler to cut 25 per cent of salaried work force

2008-10-24T23:32:00.001-07:00

DETROIT: Chrysler LLC said Friday it will cut 25 percent of its salaried work force starting next month, and the company warned that it will make more restructuring announcements in the near future.

CEO Robert Nardelli said in a statement that the moves are being made as the company "works to find new ways to operate."

Chrysler, which has about 18,500 white-collar workers, also will cut a quarter of its contract employees, those who work for other companies under contract with the automaker.

About 5,000 workers are likely to lose their jobs, although the company would not say how many contract workers it has.

The company also said employees have been told to cut discretionary and overhead expenses and reduce capital expenditures not related to major products.

"These are truly unimaginable times for our industry," Nardelli said in the statement. "We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate," he said.

Chrysler's sales are down 25 percent through the first nine months of the year, the worst decline of any major automaker.

On Thursday, the company announced it will cut 1,825 jobs by eliminating one shift at a Toledo Jeep plant and accelerating the closure of its sport utility vehicle factory in Newark, Del., because of the slowing global economy and a shift toward smaller vehicles.

Chrysler's owner, Cerberus Capital Management LP, is in talks to sell the company or merge with another. Discussions are under way with General Motors Corp. and the combined Nissan Motor Co. and Renault SA.

Depositors pull out Rs 17K cr from ICICI since March

2008-10-24T23:31:00.001-07:00

MUMBAI: ICICI Bank is shifting focus away from wooing bulk deposits as part of a strategy to reduce its cost of resources.

Over the last six months, the bank saw an exodus in deposits following a cut in the lending costs. In the first quarter ended June 30, ICICI Bank saw deposit outflow of Rs 10,000 crore.

From March till October 10, deposits fell by nearly Rs 17,000 crore. At the end of March 2008, ICICI Bank had deposits aggregating Rs 2,44,431 crore, compared with Rs 2,34,461 crore at the end of the first quarter in the same financial year. The bank's deposit base stood at Rs 2,27,384 crore as on October 10.

The largest private lender in the country has been reportedly looking at cutting down its dependence on bulk deposits since March last year, given the rise in interest rates.

The proportion of retail deposits, which was 43% in March'07, rose to 46.5% in March'08 and is currently close to 50%.
The bank did not make any special efforts to renew its bulk deposits. Over the past few months, the bank has cut down its lending activity in retail banking and is focussing on current and savings accounts. When contacted, ICICI Bank officials declined to comment.

On a sequential basis, the bank reported a marginal decline in advances in the first quarter. The advances at the end of June were Rs 2,24,146 crore, compared to Rs 2,25,616 crore at the end of March. But other big banks have registered a rise in deposits and advances portfolio in the first six months.

HDFC Bank saw a deposit growth of nearly Rs 30,981 crore from March 31 to October 10 this year.

Who murdered the financial system?

2008-10-23T21:07:00.001-07:00

Leftists claim that the global financial crisis was caused by reckless deregulation and greed. Rightists blame half-baked financial regulations and perverse incentives. Actually, the financial sector is deeply regulated, with major roles for both the state and markets. It was not one or the other that failed but the combination.

The best metaphor for the mess comes from Jack and Suzy Welch, who recall Agatha Christie's Murder on the Orient Express. In this novel, 12 people are suspects in a murder. And 12 turn out to be guilty. What starts as a whodunit concludes as an everybody-dun-it. In the same spirit, allow me to present the 12 murderers of the US financial system.

The Federal Reserve Board

Alan Greenspan, Fed Governor in 1987-2006, was once hailed as a genius for keeping the US booming, but is now called a serial bubble-maker. He presided over bubbles in housing, credit, and stock markets. He said it was difficult to identify asset bubbles in advance, so anti-bubble policies might be anti-growth. It was better to let bubbles build, and sweep up after they burst. Bernanke, like Greenspan, ignored the US housing bubble till it burst.

US politicians

Envisioning a home for every American, regardless of income, they provided excess implicit and explicit housing subsidies. One law forced banks to lend to subprime poor borrowers. Legislators created Fannie Mae and Freddie Mac, government-sponsored entities that bought or underwrote 80% of all US mortgages, and enjoyed exemption from normal regulations. Politicians ignored Greenspan's warning that such a dominant role for two under-regulated giants posed a huge financial risk.

Fannie Mae and Freddie Mac

They resisted regulation, and spent over $2 million lobbying legislators against any tightening of rules. As mortgagers of last resort they should have been especially prudent. But they bought stacks of toxic mortgage paper — collateralised debt obligations (CDOs) — seeking short-term profits that ultimately led to bankruptcy.

Financial innovators

Their ideas provided cheap, easy credit, and helped stoke the global economic boom of 2003-08. Securitisation of mortgages provided an avalanche of capital for banks and mortgage companies to lend afresh. Unfortunately the new instruments were so complex that not even bankers realised their full risks.

CDOs smuggled BBB mortgages into AAA securities, leaving investors with huge quantities of down-rated paper when the housing bubble burst. Financial innovators created credit default swaps (CDSs), which insured bonds against default. CDS issues swelled to a mind-boggling $60 trillion. When markets fell and defaults widened, those holding CDSs faced disaster.

Regulators

All major countries had regulators for banking, insurance and financial/ stock markets. These were asleep at the wheel. No insurance regulator sought to check the runaway growth of the CDS market, or impose normal regulatory checks like capital adequacy. No financial regulator saw or checked the inherent risks in complex derivatives. Leftists today demand more regulations, but these will not thwart the next crisis if regulators stay asleep.

Instead of keeping mortgages on their own books, lenders packaged these into securities and sold them. So, they no longer had incentives to thoroughly check the creditworthiness of borrowers. Lending norms were constantly eased. Ultimately, banks were giving loans to people with no verification of income, jobs or assets. Some banks offered teaser loans — low starting interest rates, which reset at much higher levels in later years — to lure unsuspecting borrowers.

Investment banks

Once, these institutions provided financial services such as underwriting, wealth management, and assistance with IPOs and mergers and acquisition. But more recently they began using borrowed money — with leverage of up to 30 times — to trade on their own account. Deservedly, all five top investment banks have disappeared. Lehman Brothers is bust, Bear Stearns and Merrill Lynch have been acquired by banks, and Morgan Stanley and Goldman Sachs have been converted into regular banks.

Rating agencies

Moody's and Standard and Poor's were not tough or alert enough to spot the rise in risk as leverage skyrocketed. They allowed BBB mortgages to be laundered into AAA mortgages through CDOs.

The Basel rules for banks

These international negotiated norms provided harmonised regulatory checks on financial excesses across countries. The first set of norms, Basel-I, was widely criticised as too rigid and blunt. So countries agreed on Basel-II, which allowed banks to use credit ratings and models based on historical record to lower the risk-ratings of many securities. This dilution of norms led to excesses everywhere. Iceland's banks went bust holding loans/securities totalling 10 times its GDP. The dilution of risk-rating in Basel-II helped inflate the financial bubble.

US Consumers

Their savings used to be 6% of disposable income some time ago, but more recently has been zero or even negative. They have gone on a huge borrowing spree to spend far more than they earn. This excess is reflected in huge, unsustainable US trade deficits.

Asian and OPEC countries

They undervalued their currencies to stimulate exports and create large trade surpluses with the US. They accumulated trillions in forex reserves, and put these mostly into dollar securities. This depressed US interest rates, and further fuelled borrowing there.

Everybody

Consumers, corporations, banks, politicians, the media — indeed everybody — was happy when housing prices boomed, stock markets boomed, and credit became cheap and easily available. Bubbles in all these areas grew in full public view. They were highlighted by analysts, but nobody wanted to stop the lovely party. Everybody liked easy money and rising asset prices. This trumped prudence across countries.

So, forget the Left-versus-Right or regulations-versus-markets debate on the financial crisis. States, institutions, markets and everybody else was guilty.

These actors will for some years don sackcloth and ashes, adopt stiffer regulations, and listen to lectures on the virtues of prudence and restraint. But after seven-to-ten years of the next business upswing, I predict that we will once again have a new generation of bubbles, evading whatever new checks have been put in place. When everybody loves bubbles, they are both irresistible and inevitable.

US stocks fall as credit worry undermines trust

2008-10-09T13:41:00.001-07:00

NEW YORK: Stocks fluctuated Thursday as Wall Street weighed the prospects for the economy after IBM Corp. affirmed its profit forecast and investors hoped the government might take ownership stakes in banks to help stabilize the financial industry.

But declines in some blue chip names like General Motors Corp. weighed on the markets and hurt the Dow Jones industrial average. Broader market gauges were mixed.

Investors looked to recover from near-panic selling that cascaded through global markets in the past week. Stocks around the world moved mostly higher one day after the Federal Reserve and other leading central banks cut interest rates to help unclog the credit markets and stimulate the global economy.

There's some hope by investors that Wall Street is getting closer to finding a bottom after the worst six-day rout for the Standard & Poor's 500 index since 1987. On Wednesday, the Dow gave up 189 points to close at 9,258.10 — and was down about 35 percent from its high of 14,164.53 reached exactly one year ago.

"I think the base driver today is that we're oversold," said Arthur Hogan, chief market analyst at Jefferies & Co. "You can't do that too long before things turn around, and I think the bottom of this market gets put in this week."

While a rate cut can take up to a year to work its way through the economy, the move was aimed as a boost to investor sentiment. Perhaps adding to that, there were some signs Thursday that corporate earnings might come in better than expected. IBM, one of the 30 stocks that make up the Dow industrials, posted third-quarter results that beat forecasts and affirmed its full-year earnings forecast.

Investors also appeared cheered by a plan being considered by the Bush administration to invest in hobbled U.S. banks as a way to stabilize the financial sector. An administration official, who asked not to be identified because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and obtain ownership shares in return.

Britain rolled out a similar plan, though no U.K. bank has received any investments. In Iceland, the government now has control of all three of the country's major banks as it struggles to contain the troubles there.

Wall Street also gained some confidence after the government reported applications for unemployment benefits dropped last week from a seven-year high. The Labor Department's report matched projections, though claims still remain at elevated levels.

In midmorning trading, the Dow Jones industrial average fell 69.85, or 0.75 percent, to 9,188.25. GM was the biggest decliner in the Dow, falling $1.24, or 18 percent, to $5.67.

Broader stock indicators were mixed. The Standard & Poor's 500 index slipped 4.19, or 0.43 percent, to 980.75, and the Nasdaq composite index rose 9.83, or 0.56 percent, to 1,750.16.

Demand for short-term Treasurys waned, with the yield on the three-month Treasury bill, which moves opposite its price, rising to 0.77 percent fr
om 0.63 percent late Wednesday. Longer-term debt prices also fell, with the yield on the 10-year note rising to 3.76 percent from 3.65 percent late Wednesday.

Investors will also be watching to see what effect short selling will have on the market now that a three-week ban imposed by regulators has expired. Some analysts believe the unprecedented ban on short selling — an effort to bolster investor confidence amid the worst financial crisis since the stock market crash of 1929 — did more harm than good at a time of historic market volatility.

Meanwhile, oil prices looked for direction as traders weighed fears that a world recession will crimp demand against speculation that OPEC may cut output to keep prices from falling too far. Light, sweet crude rose 14 cents to $89.09 per barrel on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 386.7 million shares.

The Russell 2000 index of smaller companies fell 6.77, or 1.24 percent, to 539.80.

In Asia, Japan's Nikkei 225 closed down 0.50 percent while the Hang Seng added 3.31 percent. In afternoon trading, European bourses advanced, with Britain's FTSE-100 up 1.65 percent, Germany's DAX up 0.86 percent, and France's CAC-40 up 0.34 percent.

Dow falls below 9,000 on credit fears

2008-10-09T13:24:00.001-07:00

NEW YORK: Stocks fell for a seventh straight session on Thursday, with the Dow sliding below 9,000 for the first time in more than five years, as investors worried recent moves by authorities worldwide to thaw frozen credit markets might not be enough to avert a global recession.

The Nasdaq fell below 1,700 for the first time since August 2003.

The Dow Jones industrial average was down 241.57 points, or 2.61 per cent, at 9,016.53. The Standard & Poor's 500 Index was down 17.18 points, or 1.74 per cent, at 967.76. The Nasdaq Composite Index was down 34.26 points, or 1.97 per cent, at 1,706.07.

House votes down bail-out package

2008-09-29T12:13:00.001-07:00

The lower house of the US Congress has voted down a $700bn (£380bn) plan aimed at bailing out Wall Street.

The rescue plan, a result of tense talks between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.

Members of President George W Bush's Republican party were strongly opposed to it. About two-thirds of them refused to back it.

Shares on Wall Street plunged within seconds of the announcement.

Mr Bush had earlier appealed to lawmakers to pass the bill, saying it would restore economic confidence.

A White House spokesman said that the US leader was "very disappointed" by the result.

He would meet members of his team in the coming days to "determine next steps", spokesman Tony Fratto said.

The BBC's Adam Brookes in Washington said Democratic leaders in the House were likely to try and convince a number of their members who voted against the bill to change their minds in coming days.

Impassioned debate

The vote came as banks failed in the US, Europe and the UK.

The fourth largest US bank, Wachovia, is being bought by Citigroup after becoming the latest to hit problems.

In Europe, Benelux giant Fortis was bailed out by three governments, while in the UK the Bradford & Bingley bank was nationalised.

The US Federal Reserve, the European Central Bank and eight other central banks announced further moves to combat the crisis, by making a further $330bn available to provide liquidity to global money markets.

Speaking ahead of the vote, Mr Bush had argued that the bail-out plan was a "bold" one which he was confident would restore strength and confidence to the US economy.

But after a several hours of impassioned debate, the bill's opponents - the majority of whom were from the Republican Party - got their way.

Monday meltdown shaves 506 pts off Sensex

2008-09-29T10:19:00.001-07:00

Despite US lawmakers reaching a consensus on the proposed $700 billion bailout deal, investor skepticism grew over the deal and triggered a global selloff on Monday. The Sensex fell to a new year-low of 12,402 before recovering to close at 12,595.
The Nifty closed at 3,850, down 3.4 per cent, or 135 points.
Investors were anxious that the global credit crisis will take a very long time to clear up and will likely drag on global economic growth.
Major Asian markets closed lower, with benchmark indices in Korea, Japan and Hong Kong down between 1.3 per cent to 4.3 per cent. The major European markets too opened sharply lower.
"The Indian markets are very fickle and volatile based on US happenings and the volumes are very low," said K N Vaidyanathan, CEO of Alchemy Capital Management.
Frontline stocks like Hindalco, Tata Steel, DLF, RCom, Ranbaxy, TCS, Satyam, JP Associates, and ICICI Bank touched their year lows on Monday. HUL however touched its year high of Rs 265 in intraday trade on defensive buying in a weak market.

India's largest private bank ICICI dropped over 12 per cent to close at Rs 493 after touching the year low at Rs 483 in intraday trade. It was the biggest loser among the Sensex stocks.
"This is a cyclical correction for India within a long-term secular bull market. The 11,000 levels are likely the final target for the downside of the Sensex. But India is falling at a more manageable rate than China, which is down 65 per cent," says Robin Griffiths, technical analyst at Cazenove Capital Management.
Tata Consultancy Services slumped to its year low at Rs 612 intraday trade on BSE following reports that it is eyeing Siemens' IT solutions and services unit. HCL Technologies fell more than 8 per cent to Rs 195 on BSE after JP Morgan cut rating to the stock to neutral from overweight after the company launched an 8.33 per cent higher all-cash offer than rival firm Infosys, for UK-based Axon.
The BSE banking index was the biggest loser among the sectoral indices. It lost 395 points to close at 6175 levels. Among the banking stocks, Indusind Bank Ltd, Oriental Bank of Commerce and Karnataka Bank lost between 7 per cent to 9.6 per cent.
The IT index on the BSE also took a hit to close 5.5 per cent down.

The BSE realty index also fell 189 points to end at 3407 levels. Apart from DLF the other realty stocks that were hammered included Housing Development & Infra, down 13.7 per cent, Sobha Developers, which shed more 9.6 per cent.
Market experts expect volatility in the next one year but at the same time see attractive valuations in the current market. This opportunity should be used to increase allocation to risk assets like equity slowly over the next one year, says S Naren, CIO for Equities, ICICI Prudential AMC.
Some experts even see a rally after this present spell of volatility is over. "What we might see is just a few days or a couple of weeks of really negative sentiment in the market. But then I think you will get the formation of a base. I would expect a really significant rally lasti
ng several months in case of Indian and Chinese markets, adds Griffiths of Cazenove Capital Management.

Worries mount despite rescue package hope

2008-09-29T10:14:00.001-07:00

Financial markets declined early Monday after congressional leaders said they are poised to pass a $700 billion rescue plan for banks, brokerages, credit unions, thrifts and insurance companies.

Failure to reach an agreement would have led to severe market disruptions, analysts said. But even if investors did dodge a bullet and credit markets start to stabilize, the realities of a weak economy are likely to weigh on markets, they said.

"When you start thinking of the broader issues, a lot of this is very troubling," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "We have in front of us a recession in the general economy, the consumer is dramatically retrenching their habits by cutting spending, and our financial system has sputtered. This isn't necessarily a confidence builder because now everybody knows how precarious the financial system really is."

In electronic trading early Monday, U.S. stock index futures were down, suggesting Wall Street would decline when trading opened. Dow Jones industrial average futures were down 0.9 percent at 11,044, while Standard & Poor's 500 index futures were down 1.2 percent at 1,200.

Asian markets fell as investors remaind unconvinced the bailout would quickly resolve the bad debt mess. Tokyo's Nikkei 225 index declined 1.4 percent while Hong Kong's Hang Seng index slid 2.1 percent.

The dollar recovered moderately against currencies such as the pound, euro and yen. The yield on three-month Treasuries was little changed at 0.84 percent.

The plan would allow the government to buy toxic mortgage-backed assets from embattled financial institutions, giving them fresh cash to bolster lending. It would permit the Treasury to immediately spend $250 billion to buy banks' risky assets, provide another $100 billion at the discretion of the president, and a final $350 billion unless Congress has a change of heart and the president decides not to veto the decision.

Even if the bailout is passed — the House votes on Monday, and the Senate later this week — the economy remains balanced on the edge of a recession. Unemployment has been rising; it's now at a five-year high of 6.1 percent and is expected to rise as high as 7.5 percent by late 2009.

With worries running high about recessions around the world, global stock market volatility should remain elevated. And while anxiety about the financial institutions could keep boosting demand for Treasury bills, pushing short-term rates down for U.S. government debt, a glut of new issues with longer maturities that must be sold to finance the rescue plan could weaken the dollar over time.

In early trading Sunday night, the euro fell to $1.4545, the pound fell to $1.8336, while the dollar rose to 106.28 yen.

There are also plenty of banks still in trouble, and it may take time before the plan helps them.

Banks and brokerages wrote down about $400 billion worth of toxic mortgage investments since last year. Analysts believe write-downs could reach $1 trillion as rising home foreclosures further erode the values of mortgage-backed securities.

In the second quarter, the Federal Deposit Insurance Corp. estimated there were 117 banks and thrifts in trouble, the highest level since 2003. This past week Washington Mutual Inc. became the largest bank to fail in U.S. history, and investors are concerned there might be more failures to come.

In Europe, the beleaguered Dutch-Belgian banking and insurance giant Fortis NV is being partially nationalized due to the market dislocation. Troubled British mortgage lender Bradford & Bingley will also be nationalized and sold off in parts, British media reported Sunday.

The threat of more banks failing in the U.S. and abroad forced the government to act swiftly.

"Without this rescue plan, the costs to the American economy could be disastrous," President Bush said in a statement late Sunday after the legislation was finalized.

Stocks have been volatile and the credit markets have been tight for over a year. The turbulence escalated to unprecedented levels a few weeks ago.

T-bill yields fell to zero for the first time since 1940 as investors pulled their money out of money-market funds and turned to the safest assets out there even if they offered no returns. The difference between those T-bill yields and bank-to-bank lending rates — a key measure of banks' willingness to lend — rose to the highest levels since 1982. And the Dow Jones industrial average swung violently, dropping to its lowest point since November 2005.

The proposed $700 billion bailout is aimed at reviving a market for mortgage-backed securities that has all but disappeared as credit has tightened.

"This gives us a much stronger background to work in compared to the past three weeks," said Ned Riley, chief investment officer of Boston-based Riley Asset Management. He added, however, that "we're still not out of the woods relative to all the other problems facing the economy, and there will be doomsayers who predict this package won't work."

The plan gave no details about how the government will buy banks' troubled assets, leaving it up to the U.S. Treasury Department to come up with the fine points. The government could price the assets very conservatively, which will mean further losses for institutions with souring debt on their books. Pricing the assets too high might leave taxpayers on the hook.

While those details have yet to be worked out, the market's biggest worry is that the rescue package may trigger inflation, said Quincy Krosby, chief investment strategist for The Hartford. She said "the government might have to print money to pay for the bailout" by issuing large amounts of Treasury debt.

"If the market believes this is going to be inflationary, you'll see mortgage rates go up and money go into commodities," Krosby said.

That would deliver another blow to already struggling consumers. Banks have tightened up their lending practices, making it more difficult to get everything from home loans to credit cards. And surging energy prices and an uncertain job market have caused Americans to pare spending.

After the events of the past few weeks, analysts believe Americans are even angrier and more distrustful of the U.S. financial system. Many have watched their stock portfolios and nest eggs plummet in the past few weeks, and are going to be more unwilling to take risks.

"Who is going to want to borrow to buy a new home in this environment?" Battipaglia said.

Unions backing Alitalia rescue

2008-09-29T09:11:00.001-07:00

A 1bn-euro (£800m; $1.45bn) bail-out of Italian airline Alitalia has won the support of the last two unions who had been opposing the deal.

The support for the rescue package could help clear the way for a relaunch of Italy's flag carrier.

The airline had appeared doomed to liquidation until the rescue emerged.

Last week, the Italian civil aviation authority, ENAC, agreed not to revoke Alitalia's licence to fly after a revised rescue plan was approved.

The SDL and AVIA unions, which represent cabin crew and ground staff had opposed the plan.

However, they have now followed the example of the airline's pilots and changed their minds.

International investment hope

The Italian consortium putting forward the rescue package, CAI, had withdrawn its offer earlier this month after it failed to gain the backing of all Alitalia's unions.

However, the deal was revived last week.

The consortium, led by chairman of the Piaggio scooter firm, Roberto Colaninno, has pledged to inject 1bn euros into the airline, strip away unprofitable parts of the business and then merge it with Italy's second-largest carrier, Air One.

They also hope that an international airline, such as Air France-KLM or Lufthansa will take a minority stake in the firm.

Prime Minister Silvio Berlusconi, who was re-elected in May, had vowed to rescue the airline.

Alitalia is estimated to be losing more than 2m euros every day.

Zimbabwean bank issues new notes

2008-09-29T09:10:00.001-07:00

The Zimbabwean central bank has issued higher denomination banknotes in order to battle the cash shortage caused by the world's highest inflation rate.

New 10,000 and 20,000-dollar notes have been released to help Zimbabweans deal with crippling hyperinflation which is said to be at 11.2 million per cent.

The central bank has issued a slew of new notes since August when it sliced 10 noughts off the local currency.

Cash supply is so tight only Z$20,000 (US$20) can be withdrawn daily.

This has led to large queues outside banks with people hoping to be among the first to be served before the cash runs out.

It has been hoped that a power-sharing deal between President Mugabe and opposition leader Morgan Tsvangirai might have a positive effect on the moribund economy but thus far it has failed to have any considerable effect.

The two sides are yet to agree on which party should control key ministries, such as finance, home affairs and information.

Zimbabwe once had one of Africa's most prosperous economies but its fortunes have declined during the past decade.

Now unemployment in the Southern African country is rampant and it is estimated that at least 80% of the population lives below the poverty line.

Euro bank Fortis admits mistakes

2008-09-29T09:09:00.001-07:00

The new boss of the European bank Fortis which had to be rescued this weekend has said the bank had got its timing wrong.

Chief executive Filip Dierckx said some of the bank's decisions had been made "at the wrong moment".

The European banking and insurance giant was partly nationalised by the Netherlands, Belgium and Luxembourg.

Ministers from the three countries agreed to put 11.2bn euros ($16.1bn; £8.9bn) into Fortis to save the bank.

Analyts say the bank's biggest mistake was joining in - along with Britain's Royal Bank of Scotland and Spain's Santander - in the 70bn euro purchase of the Dutch bank ABN Amro last year.

Shares fall

Ever since, Fortis has been weighed down by the 24bn euros it paid for its share of ABN.

Before this bail-out Fortis said it needed to raise about 5bn euros as it absorbed ABN's Dutch retail banking arm.

It had said it could meet the shortfall by selling other assets, but has so far found it hard to find any buyers.

Fortis' new chief executive Filip Dierckx, who took over on Friday, has tacitly acknowledged the bank's mistakes.

"If you look at some of the decisions that were taken in the past, then you can say that probably they were done at the wrong moment," he said.

Too big

Fortis is one of the largest European financial institutions to be bailed out by governments as result of the current turmoil in the credit markets.

It was seen as too big a European bank to be allowed to go under. Its assets are greater than the size of Belgium's annual domestic economic output.

Belgian Prime Minister Yves Leterme said the bail-out showed Fortis would not be allowed to fail, after its share price plunged in recent days.

Mr Leterme said: "We have taken up our responsibility, we did not abandon the savers."

Insolvency fears saw the company's shares fall to their lowest level in more than a decade before the deal was announced.

Wall Street bail-out goes to vote

2008-09-29T09:07:00.001-07:00

The lower house of the US Congress is debating ahead of a vote on a $700bn (£380bn) plan to bail out Wall Street.

President Bush has urged the House of Representatives to pass the bill - designed to end the credit crunch - and send a strong signal to the markets.

It comes as the fourth largest US bank, Wachovia, said it was being bought by rival Citigroup after becoming the latest to experience problems.

In Europe, Benelux giant Fortis was bailed out by three governments.

And in the UK, the Bradford & Bingley bank was nationalised.

The US Federal Reserve, the European Central Bank and eight other central banks tried to combat the credit crunch by making a further $330bn available to provide liquidity to global money markets.

Restore stability

Speaking at the White House, Mr Bush said the bail-out plan was a "bold" one which he was confident would restore strength and confidence to the US economy.

However, he warned that it would not answer all economic woes and that some difficulties would remain. President Bush said: "I'm confident that this rescue plan, along with other measures taken by the Treasury Department and the Federal Reserve, will begin to restore strength and stability to America's financial system and overall economy."

But the agreement has done little to calm global stock markets, which fell again on Monday.

The House of Representatives is expected to vote on the bail-out package some time after its three hour debate ends at around 1700 GMT.

Leaders of the US Senate plan to put the bail-out to a vote on Wednesday.

If approved by the Senate and House, the revised plan will lead to the biggest intervention in the markets since the Great Depression in the 1930s.

Political timetable

Time is of the essence, not only to end the log-jam in financial markets, but also because of the election timetable in the United States.

The US Congress was supposed to go into recess last Friday, and with presidential and congressional elections in early November, politicians are keen to hit the campaign trail with a resolution to the crisis under their belt. The two candidates for the presidency, Democrat Barack Obama and Republican John McCain, have given their cautious support for the proposed legislation.

The original bail-out package proposed by the US administration was deeply unpopular with many Americans.

During a weekend of negotiations, numerous clauses were added to the proposed Emergency Economic Stabilization Act of 2008, designed to reassure taxpayers.

Nancy Pelosi, the Democratic Speaker of the House of Representatives, said the agreement was "not a bailout of Wall Street", but designed to ensure pensions, savings and jobs would be safe.

Democratic Senate leader Harry Reid said the deal was a big improvement on the initial proposal.

"They wanted a blank cheque and we couldn't give them one... Now we have to get the votes."

No 'golden parachutes'

The deal addresses several of the key concerns raised by both Democrats and Republicans:

    * The government will release the money in tranches - $250bn straight away, and $100bn at the request of the White House; Congress can veto the release of the remaining $350bn
    * Banks that accept bail-out money will have to hand over shares in return, which allows tax payers to benefit from the banks' recovery
    * Top bankers, meanwhile, will see their pay limited, and "golden parachutes" - huge payments when they leave the firm - will be banned
    * The banking industry will have to help finance the bail-out if the money can not be recovered from the struggling banks themselves
    * Four agencies will monitor the deal, including an independent Inspector General and a bipartisan oversight board
    * Banks will be obliged to join an insurance programme to protect them against the losses of mortgage-backed securities

The Bush administration submitted its initial proposal after several financial institutions got into trouble, unable to free up the money to keep their daily business going.

The liquidity problems, while originating there, have not been limited to the US.

Asian markets down as US bailout stalls.

2008-09-26T01:11:00.002-07:00

HONG KONG: Stocks were mostly down across Asia on Friday as political wrangling held up a 700-billion-dollar bailout package for the US financial system despite earlier hopes that a deal was near.

Talks over the rescue package were gridlocked Thursday as lawmakers were at loggerheads over the way forward, with Democrats accusing the Republicans of dragging their feet.

Tokyo's Nikkei was down 0.19 percent at noon, Hong Kong was off 2.25 percent, Seoul was 1.29 percent down and Taipei lost 1.74 percent. Singapore eased 0.44 percent.

Some stocks had risen earlier, taking a cue from Wall Street, which closed 1.82 percent up on prospects that an agreement could be reached.

US Democrats said Republican White House contender John McCain had sabotaged the rescue package, which they said had largely been agreed upon.

"John McCain did nothing to help, he only hurt the process," Senate Majority Leader Harry Reid told a joint news conference with Senate banking committee chairman Christopher Dodd.

Under the proposal the government would buy 700 billion dollars of toxic mortgage-related assets at the heart of the global credit crisis. The move would be the biggest government bailout since the 1930s Great Depression.

Shortly before the talks, senior lawmakers announced the outlines of a deal but some Republicans dragged their feet, while Democrats called for limits on pay deals for executives whose companies are rescued.

The talks were set to reconvene Friday.

Earlier, as President George W. Bush met McCain and his Democratic rival Barack Obama, he said: "We are in a serious economic crisis in the country, if we don't pass a piece of legislation."

In Tokyo dealers were also bearish as the government announced inflation had remained at a decade high 2.4 percent, with analysts warning it may not come down soon.

"Rising grocery prices are particularly negative for consumer demand, and this trend of high prices is likely to last for some time, which could weigh on the economy," said Norio Miyagawa, an economist at Shinko Research Institute.

The hold-up sent oil prices down, with New York's main contract, light sweet crude for November delivery, easing 1.30 dollars to 106.72 dollars a barrel.

The contract climbed 2.29 dollars to 108.02 at the close of floor trading on Thursday at the New York Mercantile Exchange as a deal looked imminent.

"It seems like people who are watching the oil market are worried there could be some blockade" over the deal, said Dave Ernsberger, Asia director of global energy information provider Platts. The package is necessary if oil prices are to regain their upward momentum, he added.

Global markets have been sent into a tailspin since the collapse last week of Wall Street investment giant Lehman Brothers and the US government's rescue of insurance giant AIG.

The crisis took another scalp Thursday as the US government closed struggling Washington Mutual, one of the country's largest savings and loans banks, allowing JPMorgan Chase to buy its operations for 1.9 billion dollars.

It has also led to global banking giant HSBC cutting 1,100 staff worldwide.

Meanwhile it emerged Friday Nomura Holdings will pay just a token two dollars for the Europe and Middle East operations of bankrupt Wall Street giant Lehman Brothers.

The top Japanese broker will acquire only Lehman's employees in the regions, and not its stocks, bonds or other assets, the Nikkei business daily reported.

Rupee dips by 21 paise to 46.42/43 a dollar in early trade

2008-09-26T01:11:00.001-07:00

MUMBAI: Rupee fell by 21 paise to 46.42/43 against the greenback in morning trade on Friday due to month-end dollar demand and sustained capital outflows amid weakening dollar overseas.

In fairly active trade at the Interbank Foreign Exchange (forex) market, the local currency resumed steady at 46.19/21 a dollar from its overnight close of 46.21/22 a dollar but later dropped to 46.42/43 a dollar at 1030 hrs.

Forex dealers said the rupee remained under pressure as oil refiners stepped up dollar purchases for their month-end import payments even as global crude oil prices traded below USD 107 a barrel in Asian markets this morning.

They said a sharp slide in equity markets across Asia also weighed on the rupee sentiment.

Indian benchmark Sensex was down by 171 points or 1.26 per cent at 1025 hrs today.

Meanwhile, the US dollar fell against major currencies in Asian markets this morning after a USD 700 billion plan to save the financial system reportedly failed to make any headway.

Tata Motors to sell stake in 6 arms

2008-09-26T01:09:00.001-07:00

MUMBAI: Tata Motors is learnt to have initiated talks with private equity (PE) funds to sell up to 25% stake each in its six profit-making unlisted subsidiaries. The biggest of the lot is the wholly-owned arm Tata Daewoo Commercial Vehicle Company. Others include HV Excels, HV Transmissions, Tata Motors Finance, Tata Technologies and Telco Construction Equipment (Telcon).

A banker close to the development said the move is part of the company's plan to raise Rs 3,000 crore through divestment of stakes in its subsidiaries and selling shares in listed firms. Tata Motors is also raising Rs 4,200 crore through a simultaneous, but unlinked rights issue to finance the $2.3-billion acquisition of Jaguar Land Rover (JLR) in June.

"The company feels that it need not hold large holdings in these subsidiaries. Thus, the company will bring them down by 20-25 % in each of them. However, it would like to hold a majority stake in these firms, which are mainly supplying components to it or financing its products," the banker added. Another banker said Tata Motors would conclude the stake sale by June 2009.

The company had raised $3-billion bridge loans in June this year. Of this, $2.3 billion has been utilised for the JLR buyout and the rest was spent to meet JLR's working capital expenditure. Tata Motors will pay back the bridge loans in June 2009.

It is learnt that JLR would return $700 million to Tata Motors and mark the loans on its balance sheet.
When contacted, a Tata Motors spokesperson told ET: "Tata Motors has already announced, on August 20, 2008, its intention to review the current investment portfolio and pursue a programme of monetising certain investments over the coming quarters.

We will be announcing these divestment decisions as and when they are taken up by the company. It would not be possible for us to comment on specific companies or initiatives at this stage." Tata Motors has started selling shares in Tata Steel as part of its fund-raising programme. On Thursday, it sold one crore shares worth Rs 485 crore to Tata Sons.

If your idea clicks at Google, get paid up to $10 mn

2008-09-26T01:08:00.001-07:00

NEW DELHI: Google is turning 10 and has thought of a novel idea to celebrate a decade of its existence. It is working towards changing the world. If you have an idea that could change the world, or at least help a lot of people, the internet giant Google wants you to share it with them. And hold your breath, if the idea rocks and clicks, you get as much as $10 million to make it a reality.

Google has named the project "10 to the 100th" and the initiative will seek input from the public and a panel of judges in choosing up to five winning ideas, to be announced in February.

"These ideas can be big or small, technology-driven or brilliantly simple -- but they need to have impact," Google said in a news release. "We know there are countless brilliant ideas that need funding and support to come to fruition."

Those are ideas such as the Hippo Water Roller, which Google cited as the kind of concept the company would be interested in rewarding. Developed in Africa, where it is most used, the Hippo Water Roller is a barrel-shaped container, attached to a handle, that holds 24 gallons of water and can be rolled with little effort like a wheelbarrow, making it easier for villagers on foot to transport critically needed fresh water to their homes.

People are encouraged to submit their ideas, in any of 25 languages, at www.project10tothe100.com through October 20. Entrants must briefly describe their idea and answer six questions, including, "If your idea were to become a reality, who would benefit the most and how?"
Google employees, with the help of an advisory board, will narrow the submissions to 100 semifinalists by January 27. Between January 27 and February 2, the public will vote online for their favorite ideas. A panel of as-yet-unnamed judges will then review the top 20 ideas and announce up to five winners in mid-February.

Funding, from a pool of $10 million, will be awarded in May. If the judges decide to reward five winning ideas, each will receive $2 million. If only two ideas are chosen, each will receive $5 million, and so on.
A Google spokeswoman was reluctant to set parameters for the submissions, although the project's Web site suggests that successful ideas should address such issues as providing food and shelter, building communities, improving health, granting more access to education, sustaining the global ecosystem and promoting clean energy.

"We don't want to limit it at all. We want a wide range of ideas," said Bethany Poole, product marketing manager at Google, who announced the project Wednesday on CNN along with Andy Berndt, managing director of Google's Creative Lab. "We think great ideas come from anywhere."

To cite Google's own example, Google News began after the September 11 terrorist attacks, when an engineer became frustrated that he couldn't aggregate news sources from around the world in one place.

By opening the project to anyone -- not just laboratories or universities -- Google is embracing "crowdsourcing," the Internet-age notion that the collective wisdom of mass audiences can be leveraged to find solutions to design tasks.

Project "10 to the 100th" is not unlike the Google-sponsored Lunar X PRIZE, a $30 million international competition to safely land a robot on the surface of the moon, travel 500 meters over the lunar surface, and send images and data back to Earth. The first team to land on the moon and complete the mission objectives will be awarded $20 million. At least 16 teams are competing.

Buffett makes $783 mn on Goldman investment

2008-09-26T01:07:00.002-07:00

LONDON: Warren Buffett's decision to salvage troubled Goldman Sachs by pumping in $5 billion yielded immediate dividends to the legendary Wall Street investor who raked a notional profit of $783 million (over Rs 3,621 crore) within hours of the deal's announcement.

According to The Times, within hours of revealing his investment desire in Goldman Sachs on Wednesday, Buffett had made a theoretical profit of 783 million dollars.

"The Wall Street investment bank astounded its rivals by raising 10 billion dollar in fresh capital -- five billion dollars from Berkshire Hathaway, Buffett's main listed company, and five billion dollars through a public share offering.

"Shares in Goldman rose six per cent to 133 dollars, giving Berkshire an instant theoretical profit on a side deal, under which it has warrants to buy up to five billion dollars of new Goldman shares at 115 dollars a share at any time in the next five years," the newspaper said in a report published in its online edition today.
The publication quoting analysts noted that Buffett's decision to take the plunge in financial stocks "might come to be seen as the turning point in the financial crisis."

In a separate public offering, Goldman raised $5 billion through issue of new shares at 123 dollars a share.

Shares of Goldman Sachs took a beating last week after Lehman Brothers filed for bankruptcy. Later, the investment banking major and Morgan Stanley became a bank holding firm under the direct purview of the US Federal Reserve.

The report said that Berkshire wrested attractive terms from Goldman and added, "the perpetual preference shares will pay out an interest rate of 10 per cent. Goldman can call these in at any time, but has to pay a 10 per cent penalty to Berkshire."

KPC sells early Oct naphtha at -$6.00/tonne-sources

2008-09-26T01:07:00.001-07:00

SEOUL: Kuwait Petroluem Corp (KPC) sold 50,000 to 75,000 tonnes of naphtha for early October lifting at a discount of $6.00 a tonne to Middle East quotes, two trading sources close to the deal said on Friday.

Reliance will receive the full-range naphtha which will load from Mina al-Ahmadi on Oct 6-7. The discount was a hefty fall from around $2.00-$3.00 premium it had fetched for up to 125,000 tonnes of second-half October loading naphtha earlier in the month, they said.

Reflecting the current bearish naphtha market that has pushed down naphtha's premium against Brent crude to lowest levels this year in the past couple of days, South Korea's Lotte Daesan secured 50,000 tonnes of first-half November arrival naphtha at a discount of $25.00 a tonne to Japan spot quotes.

HSBC to cut 1,100 jobs worldwide due to financial crisis

2008-09-26T01:06:00.001-07:00

HONG KONG: Global banking giant HSBC is to cut 1,100 jobs worldwide because of the volatile global financial environment, a spokesman said Friday.

The cuts will be made in the bank's global banking and markets divisions, with around half of those losing their jobs in HSBC's British operations, Hong Kong-based spokesman Gareth Hewett said.

"The steps we have taken today are in the light of the current global business and economic environment and our cautious outlook for 2009," he said in a statement.

"Markets continue to be challenging and difficult but our strategy leaves us well positioned for the next wave of global growth, when it comes." Around 100 jobs will go in Hong Kong. The jobs would be cut in both front and back office operations, Hewett said.

US woes will hit China growth, but not much -paper

2008-09-26T01:05:00.001-07:00

BEIJING: China's economy will be affected by the US financial crisis, but Beijing still has a lot of room to manoeuvre to limit the damage, a government think-tank said in a report published on Friday.

The US credit crunch has fanned concern that weakening external consumption will bite into China's exports, a key driver of Beijing's double-digit expansion of the past five years.

"Although the US subprime crisis will have a negative impact on China's economic growth, the extent will be limited and will not jeopardise the economic fundamentals," the State Information Centre, a key government think-tank, was cited by the China Securities Journal as saying.

"We don't need to get into a panic over the possible fallout because our economic growth is strongly propelled by domestic forces," it added.

It suggested that the government increase the threshold of individual income tax, remove the 5 per cent withholding tax on interest income and direct more subsidies to people on low incomes to further stimulate household consumption. Zhang Liqun, a senior researcher at Development Research Centre (DRC), a cabinet think tank, agreed.

He wrote in the same newspaper that Beijing is capable of maintaining fast growth as it has abundant capital and a large pool of labour. Demand for better consumer goods is also growing in tandem with wages.

To prevent the economy from slowing too abruptly, Beijing cut the benchmark lending interest rate last week for the first time since February 2002.

It also lowered required reserves for small lenders, the first cut since 1999. But the vice-head of the DRC, Lu Zhongyuan, said China needs to keep a tight monetary policy to tame inflation. Writing in the China Economic Times, he said pipeline price pressures were still building even though consumer inflation had dropped quickly in the past several months.

Suggesting that the central bank offer more credit support to small firms and exporters, Lu said China should carry out further reform of energy prices and keep the yuan steady to dampen hot money inflows and outflows.

US set to lose financial S-power status

2008-09-26T01:04:00.001-07:00

BERLIN: Germany blamed the US on Thursday for spawning the global financial crisis with a blind drive for higher profits and said it would now have to accept greater market regulation and a loss of its financial superpower status.

In some of the toughest language since the crisis threw Wall Street banks into financial disarray earlier this month, German finance minister Peer Steinbrueck told parliament the turmoil would leave "deep marks" on both sides of the Atlantic, but called it primarily an American problem. "The world will never be as it was before the crisis," Steinbrueck, a deputy leader of the centre-left Social Democrats (SPD), told the Bundestag lower house.

"The United States will lose its superpower status in the world financial system. The world financial system will become more multi-polar," he said. Chancellor Angela Merkel, whose conservatives rule in coalition with the SPD, and Steinbrueck both pushed the Group of Eight (G8) to agree measures to boost financial market transparency during Germany's presidency of the G8 last year. But their drive collapsed amid opposition from Washington and London. Merkel criticized their stance at the weekend, saying the days of laissez-faire capitalism were over.

Both Merkel's conservatives and SPD leaders are keen to claim credit for Germany's push for more transparency and show leadership on the crisis ahead of a federal election in 2009. The German views were echoed by leaders of governments from around the world meeting this week at the United Nations in New York. Many sharply criticized the George W Bush administration's financial record and warned that US financial mistakes now threatened the global economy. The crisis has put the Bush White House, which has long advocated a hands-off approach to markets, on the defensive, forcing it to rethink its financial policy.

At the same time it has emboldened voices in Europe, Latin America and elsewhere, of those who are uncomfortable with American-style capitalism and who want tighter regulation of markets.

French President Nicolas Sarkozy, whose country holds the rotating EU presidency, has called for a global summit to overhaul a "crazy" financial system. The collapse of US investment bank Lehman Brothers and financial woes at other financial institutions like insurer AIG have prompted the US government to propose a $700 billion rescue package for the country's financial sector.

The US Congress appears close to approving the rescue, whose fate has kept international markets on tenterhooks. Steinbrueck , in one of the harshest attacks on US policies from a G8 ally, denounced what he called an Anglo-Saxon drive for double-digit profits and massive bonuses for bankers and company executives.

Resentment grows over Wall Street bailout plan

2008-09-23T20:25:00.000-07:00

ATLANTA: Resentment is growing on both sides of the US political divide over a plan to use $700 billion of taxpayer money to bail out Wall Street firms with bad mortgage debt.

The disquiet comes from many voters on the left who see hypocrisy in the rush to help some of the world's richest firms when the government says there is insufficient money to spend on other priorities.

It also comes from some on the right, from people who say the bailout violates the principle that government should aim to limit its role in the economic life of the country and citizens, and that corporations should take responsibility for their actions.

Anger over the deal is expressed most sharply by people caught up in the home mortgage crisis and their advocates.

"Hypocritical? Absolutely," said Gabriel Onofrio, who negotiates on behalf of people in North Carolina who face foreclosure.

"When you have the free market and the privatization of profit but the socialization of the losses, that doesn't make any sense," said Onofrio, whose organization, the Neighborhood Assistance Corporation of America, argues that lenders should restructure home mortgages to make them more affordable.

Markets cheered last week when President George W. Bush asked Congress to approve a plan to enable the government to acquire up to $700 billion in home and commercial mortgages to stabilize firms by taking bad assets off their books.

The plan aimed to halt the worst financial crisis since the Great Depression, which has seen global credit markets seize up over concerns about the plummeting value of U.S. housing and securities based on home mortgages.
Architects of the bailout urged Congress on Tuesday to act swiftly or face dire consequences, and it was unclear whether any concerns expressed by voters would hamper its progress.

But lawmakers are sensitive to constituents, particularly in an election year. Republican Sen. Orrin Hatch from the conservative state of Utah said reaction to the plan from his constituents was "all negative."

That comment was echoed by numerous callers to conservative talk shows and a new website VoteNoBailout.org (http://www.votenobailout.org) also aimed to rally support against the legislation, which it said effectively enabled bankers to take the country hostage.

Money better spent

The bailout should include provisions for people facing foreclosure in the form of long-term, low interest loans, said civil rights leader Jesse Jackson, an authority on the impact of the home mortgage crisis.

"You can't just provide benefits or bonuses for those who engineered the crisis and have a socialized bailout for them and leave the 7 million victims to their own devices," Jackson said in an interview.

Congress had mistakenly bought into a belief in "unleashed capitalism without checks and balances" and was compromised in its ability to oversee Wall Street because lawmakers took financial contributions from corporate donors, Jackson said.

The scale of the bailout also staggered many people who said that, while they understood the potential cost of an economic slump, the money could be better spent.

"We are talking about 700 billion dollars that could do wonders for all kinds of things that this country and the world needs, like universal health care or health care for lower income kids, or to stop global warming," said Lanya Shapiro, executive director of Traction, a civic engagement and leadership development organization based in North Carolina.

"Meanwhile people who for decades talk about the ills of regulation now want us to come to the rescue of these large Wall Street corporations," Shapiro said.

One aspect of the bailout likely to incite most resentment is the possibility that Wall Street firms could profit from the plan, said Cal Jillson, a political scientist at Southern Methodist University in Dallas.

"In times of great uncertainty like we're in now, the working class and middle class do begrudge elites sweeping big pots (of money) off the table," he said.

Clients move assets worth $6b from Citi, UBS to Deutsche

2008-09-23T20:22:00.001-07:00

NEW DELHI: The crisis of confidence triggered by the subprime mortgage meltdown has adversely hit Citi and UBS' wealth management businesses across the Asia-Pacific region, resulting in a movement of client assets of $6 billion to rival Deutsche Bank.

Sources at Deutsche Bank have told ET that UBS and Citi clients have moved assets worth $6 billion to Deutsche Bank's private wealth management (PWM) division in Asia Pacific in the past eight months. This could imply that the loss to these banks is likely to be much higher as their clients would have moved their money to other banks as well.

This asset movement might have been triggered by an erosion of high net worth investors' confidence in Citi and UBS, which have written down over $47 billion and $42 billion, respectively, in subprime losses.

Officials at UBS' APAC headquarters in Hong Kong refused to comment when contacted by ET. Citi Private Bank, Hong Kong, did not respond to a detailed mail and repeated phone calls. Deutsche Bank confirmed that the inflow of assets but declined to divulge from where they came.

Both UBS and Citi have disclosed asset outflows in wealth management to the tune of $15 billion and $11 billion, globally. However, these findings reveal that the impact on the Asian business, considered a growth driver by both banks, has been quite significant. Both these banks don't disclose AUM's on a region-specific basis.

These events have taken place in the backdrop of high profile management exits from UBS and Citi to rival institutions in the past 18 months. Early last year, Ravi Raju, who was the head of Asia Pacific investments for Citi Private Bank, moved to Deutsche Bank PWM as regional head for Asia Pacific along with a team of 18 bankers.

Soon after, Anurag Mahesh, head of structured products for Asia Pacific at Citi Private Bank, moved to Deutsche PWM as head of global investments and sales for Asia Pacific. Sources suggest that this team has moved a large proportion of Citi's assets and clients with them.

In July, Kaven Leung, chief executive of Citi global wealth management in APAC, which includes Citi Private Bank and Citi Smith Barney, also resigned. UBS, which draws 40% of its revenues from wealth management, has also lost senior bankers including Marcel Kreis, who was head of UBS global wealth management in south-east Asia and Pacific including Australia and onshore Japan. He moved to Credit Suisse as head of wealth management for Asia Pacific last year along with his team.

With Asian economies like India and China emerging as the fastest growing HNI markets in the world, Citi and UBS cannot afford to lose clients in this region. It remains to be seen how these developments impact UBS' plans to set up its onshore wealth management business in India, a decision they have been deferring for the past two years. In the meantime, the fate of Morgan Stanley, which recently announced the launch of private wealth management services in India, and Merrill Lynch, hang in balance.

Realty crash shuts investors' exit options

2008-09-23T20:20:00.001-07:00

NEW DELHI: It has become well nigh impossible for those who invested in real estate last year to exit the scene as the downturn has deepened and the prices being quoted do not even cover the purchase costs and interest expenses.

Moreover, the negative global news flow has set off a panic reaction, inducing investors to close deals at losses.

The 35-year-old Rahul Verma, who works with a Noida-based IT company, exemplifies the experiences of late entrants into the property market. He bought a Rs 50-lakh flat in Greater Noida early last year by arranging for a bank loan to finance 85% of the cost.

His EMIs have continuously gone up since the purchase, thanks to a series of rate hikes by the RBI. The flat purchase was a pure investment decision. Rahul had jumped onto the bandwagon after hearing stories of skyrocketing returns made on property investments.
However, the prices haven't climbed as expected and the interest outgo has made the property expensive. Rahul is now left with the only option of selling at a loss. And given the global economic gloom, he is willing to take a hit.

"Several investors are stuck simply because there hasn't been enough price appreciation in the past one year," says Raheja Developers Chairman Navin Raheja.

Several young investors invested in property at the peak of the property cycle last year. Many purchased two apartments simultaneously, assuming that they would finance one by selling off the other at a premium. They are now caught in a difficult situation as they bought at a higher market rate and are compelled to service two EMIs.

Some investors have started defaulting, according to a senior Parsvnath executive. "There is a significant rise in the number of people who are approaching us to cancel their bookings and return the money," he says.

Property consultants feel that investors will have to bear huge losses if the markets do not improve during the festive season. Home buyers in the country are staying away due to the high interest rate regime and expectations of a correction following the realty crash worldwide.

World leaders seek talks on financial crisis, multilateral reforms

2008-09-23T20:18:00.001-07:00

UNITED NATIONS: World leaders on Tuesday demanded urgent steps to contain the global financial crisis and a sweeping reform of multilateral institutions, including the Security Council, during the UN General Assembly's annual debate.

A ministerial meeting of six major powers trying to scale down Iran's nuclear ambitions, scheduled for Thursday on the sidelines of the UN General Assembly, was meanwhile called off after Russia said it would not take part.

But on the first day of the 192-member Assembly's debate, the world's financial meltdown took center stage, with UN chief Ban Ki-moon stressing the need to "restore order to the international financial markets."

In a farewell speech to the assembly, US President George W. Bush assured worried world leaders that his administration and the US Congress would approve an emergency 700-billion-dollar Wall Street bailout "in the urgent time frame required."

French President Nicolas Sarkozy said those leaders most directly concerned by the issue had a duty "to meet before the end of the year to examine together the lessons of the most serious financial crisis the world has experienced since that of the 1930s."

The French leader, who holds the rotating presidency of the European Union, later told a press conference that he had in mind a "G8 format," referring to the eight leading economic powers, that could be opened to "emerging countries."

Bush also urged the world body to fully implement sanctions against North Korea and Iran over their nuclear programs, warning: "We must not relent until our people are safe from this threat to civilization."

In Moscow, the Russian foreign ministry said in a statement: "We do not see any fire that requires us to toss everything aside and meet to discuss Iran's nuclear program in the middle of a packed week at the United Nations General Assembly."

And Iranian President Mahmoud Ahmadinejad vowed that Tehran would "resist" Western bullies trying to prevent the country from acquiring civilian nuclear technology. He lashed out equally at Israel and its chief ally the United States, saying "the Zionist regime is on a definite slope to collapse and there is no way for it to get out of the cesspool created by itself and its supporters."

Visiting Israeli President Shimon Peres slammed Ahmadinejad's speech, accusing the Iranian leader of "putting on the mantle of a preacher and using to deepen hatred." "Iran is today the center of terror," he added.

In their remarks, Sarkozy and his Brazilian President Luiz Inacio Lula da Silva pressed for a sweeping reform of multilateral institutions, including the powerful Security Council.

The French leader said enlarging the 15-member UN Security Council as well as the G8 club of leading industrialized nations - Britain, Canada, France, Germany, Italy, Japan, the United States and Russia - was not "just a matter of fairness, (but) also the necessary condition for being able to act effectively."

Lula for his part said that "only legitimate and effective instruments can assure collective security," adding: "Today's structure has been frozen for six decades and does not relate to the challenges of today's world."

He welcomed the General Assembly's decision last week to begin inter-governmental talks on expanding the powerful Security Council - which comprises 10 rotating, non-permanent members and five, veto-wielding permanent ones (China, United States, France, Britain and Russia) - no later than next February 28.

The thorny issue of how to enlarge a body that has remained largely unchanged since the establishment of the United Nations in 1945 has for years divided the UN membership. Just four months before he leaves office at the end of his eight-year run at the White House, Bush also leveled some of his toughest-yet criticism at Moscow over its war with Georgia.

"The United Nations charter sets forth the equal rights of nations large and small. Russia's invasion of Georgia was a violation of those words," he said, vowing to keep supporting the former Soviet republic's territorial integrity.
Georgian President Mikheil Saakashvili challenged the United Nations not to allow its principles to be "crushed" by Russia.

He called for an independent international probe into the five-day war between his country and Russia in August over South Ossetia and asked the world body to ensure that the French-brokered truce deal is observed and for the peaceful resolution of Georgia's separatist conflicts.

French Foreign Minister Bernard Kouchner for his part said here that a planned international meeting on the breakaway Georgian enclaves of South Ossetia and Abhazia, scheduled for October 15 in Geneva, was being downgraded from the ministerial to the expert level because of disagreement with Moscow.

Reliance shifts focus, eyes producing assets

2008-09-23T20:17:00.001-07:00

MUMBAI: Reliance Industries aims to acquire discovered oil and gas assets abroad, shifting its focus from exploration as its looks to balance its business portfolio, a top company official said.

It will look for fields in the Middle East, Latin America and the Far East that produce heavy crude oil, which fattens the firm's refining margins. "We want to acquire assets that synergise with the rest of our business.

Heavy oil is good for our refineries to earn better margins," PMS Prasad, president and chief executive of the firm's oil and gas business, said in a recent interview. Reliance hopes to start production from its gas fields in eastern India next year and is building a 580,000 barrels per day refinery alongside its existing 660,000 bpd export-focused plant in Jamnagar, which will become the world's biggest refining complex.

"Our focus was to look at more and more value creation through exploration assets. Once these projects come on stream, we (will) now look at producing assets and acquiring discovered fields. Earlier, that was not the case," he added.

The firm has said in the past that to secure crude oil supply for its refineries it wanted to produce about 300,000 bpd abroad and 100,000 bpd in India. Last week, it started production from its domestic oilfield, which will eventually pump 40,000 bpd, but its overseas assets - 12 oil and gas assets in seven countries - do not include a producing oilfield. "The shift in our strategy is to bring a better balance in our portfolio.

We need to look beyond building greenfield projects," Prasad said. Reliance, controlled by billionaire Mukesh Ambani, has grown into one of the world's leading refiners and petrochemical firms by following an organic path, while Indian peers such as the Tata Group have expanded aggressively overseas.

Reliance is expected to start pumping 15 million metric standard cubic metres a day (mmscmd) of gas early next year from its D-6 block in the eastern offshore Krishna-Godavari basin. Reliance owns a 90 per cent stake in the block, while 10 percent is with Canada's Niko Resources.

Production from the block will be increased to nearly 90 mmscmd in 2010. Of this about 80 mmscmd will be from the D1 and D3 fields, while 9-10 mmscmd will emerge from the MA oil field. The D1 and D3 fields have an expected lifespan of 10-12 years and peak production will last for seven to eight years, Prasad said.

With an additional eight discoveries, for which an appraisal plan has been submitted, gas production should rise by 25 mmscmd by 2013/14, Prasad said. That would leave total output at around 115 mmscmd within five years. Prasad did not elaborate whether Chevron would increase its stake in Reliance Petroleum Ltd, which is building the second Jamnagar refinery, as laid down in the initial deal. "Chevron has a 5 per cent stake and before June 2009 it has a possibility to raise it to 29 per cent, as per the agreement," he said.

Govt selling up to $1.2 bn stake in Axis Bank

2008-09-23T20:16:00.001-07:00

HONG KONG: An Indian government agency is selling a stake worth roughly $1.2 billion in private sector lender Axis Bank, sources familiar with the situation said on Wednesday.

The Administrator of the Specified Undertaking of the Unit Trust of India, known as SUUTI, has tapped Citigroup , JP Morgan and ICICI Securities to sell a 21 per cent stake in the lender.

An investor roadshow began on Tuesday in Dubai and was scheduled to continue on Wednesday in Dubai and Abu Dhabi, one of the sources said.

JWT & Crayon may spice up Congress poll campaign

2008-09-23T20:14:00.001-07:00

NEW DELHI: The Congress, which is in the process of identifying advertising firms to execute its 2009 Lok Sabha campaign, on Tuesday heard presentations from JWT and Crayon, the two agencies it had shortlisted for final selection.

The firms made multimedia presentations on their ideas for the Congress' election campaign to party chief Sonia Gandhi. A final decision on the selection is expected "very soon," a Congress sources said.

The agencies will help the Congress design its Lok Sabha campaign, including its strategy, slogans and putting together of the manifesto.

The two shortlisted companies have their own strengths. JWT is India's biggest advertising agency handling a number blue chip client brands such as Horlicks, Boost, Pepsi and Nike.

Crayon is a Delhi-based firm which has worked on several political accounts, including the BJP's 2004 polls campaign, Akali Dal's 2006 assembly campaign and the SP's 2007 campaign. It has also created the Delhi government's recent 'Badlti Tasveer Dilli Ki, Aap Ke Liye' ads that can be seen in the Capital now.
The last two elections have seen emotive and sustained media campaigns shape the fortunes of political parties. The Congress, which is has faced a number of reversals in state elections, seems to have realised how deeply damaging issues like inflation can be. Many senior leaders feel an early advertising onslaught could help the party appear proactive.

Industry sources estimated the Congress account to be worth Rs 150 crore, for a couple of months, which is technically more than the Rs 200-250 crore that large FMCG firms like Coca-Cola and Pepsi spend yearly on their campaigns.

The Congress and BJP could be spending in excess of Rs 300 crore in just a couple of months leading up to the elections. Congress sources said a final decision on whether one agency or both would be handed the account would be decided by the high command.

JWT and Crayon were hand-picked from a pool of five agencies that included Percept, Redifussion and Madison, who made presentations before a high-powered Congress panel looking into the party's publicity needs sometime back.

I am not too afraid of failure: Richard Branson

2008-09-04T04:32:00.001-07:00

Richard Branson saunters into the room, looking famished and a tad tired. He helps himself to some sandwiches, before somebody reminds him that they are cold. Dressed in a plain white shirt and creamish trousers, he doesn't look like your usual multi-billionaire. But then there's nothing usual about Richard Branson—not any day. The day Business Today met him, Branson jumped off a 35-storey hotel building to launch Virgin's mobile operations in India. Later in the evening, he would go on to twirl an unsuspecting Bollywood starlet like a WWE prizefighter. Branson was in India to announce the launch of the company's mobile operations in India. Virgin has launched its Virgin Mobile brand in India targeted at Indian youth, in a franchisee agreement with Tata Teleservices. Virgin will launch its service in 50 cities, expanding to more than 1,000 cities by the end of the year. Virgin Mobile estimates that there are about 215 million urban youth mobile subscribers and an expected additional 50 million urban youth subscribers over the next three years. It expects revenue in this segment to be excess of Rs 35,000 crore by 2010. In a freewheeling chat with BT's T.V. Mahalingam, 57-year-old Branson, Chairman, Virgin Group, spoke about capitalism, leaping off buildings, Bollywood, James Bond and, of course, the group's plans for India. Excerpts:

What makes a 57-year-old jump off buildings? What makes you tick?

I am a great believer that capitalism has proven to be the only thing that works. Communism has been tried and failed. Socialism has been tried and failed. The problem with capitalism is that wealth comes only to a few people. If you are one of those fortunate people who has that wealth, it's important to care to redistribute that wealth by investing in new areas, employ new people. It should be on a global basis. Over 50 per cent of my time is used to creating new business; the rest 50 per cent of my time is spent on using the money to tackle social issues that the world is facing. And if I have 250 people (in a country like India) creating a good quality new business, the least I can do is make sure the story appears on the front page of the newspaper instead of the back page. To be perfectly honest, I don't feel any different from the way I used to feel when I was 20 years old. I don't behave much differently than I did when I was 20 years old. And I enjoy myself and like people around me enjoying themselves. I like to make people smile. I think if you take yourself too seriously, life gets boring. If I come to India with my sherry and my English suit, I don't think it would have captured the imagination of people. So, I like to throw myself into anything I do and sometimes I like to throw myself off anything I do.
In the past, you have said that India has been unwelcoming to foreign investors. Has that changed at all?
I think India is still quite protectionist. I think it was justified in being protectionist, you know, 50 years ago. In the last 20-30 years, that's held India back. I lobbied for 15 years to fly Virgin Atlantic to and from London. It took about six different aviation ministers before we got permission. In the past, people had to fly to Middle East to get to London. I think that our success in opening up the skies has done its bit in helping India to flourish because it also opened up the domestic aviation scene. But we cannot set up a domestic airline; we cannot set up financial services, we couldn't set up a Mobile Virtual Network Operator (MVNO) in India in the mobile space… retail is still restricted. There are quite a lot of areas where India is still restricted. India is strong enough to say 'let's have an open society'… the consumer would benefit from that.
Why launch a telecom service for the youth alone?

You can never be an old brand and appeal to a younger group, (but) if you are a youth brand, you can always appeal to an older market later. We found that in other countries, where we aimed our offerings at the youth market, we had 45-, 65-year-old people buying our products. I think the youth market is still large with 400 million people in the age group that we are targeting. Expanding would be relatively easy as we move into GSM and post-paid, where we will get an older age group as well.

What are the sectors in India where you see an opportunity to, like you say, "shake up the market, challenge the norm"?
(Laughs) I promised not to talk about anything new today, (but) we have people looking at expanding our radio network into other cities. City hotels is a possibility. But it's early days. Right now, we are going to concentrate to get the Virgin brand going with mobile, try to get the rights to run a domestic airline one day and if the financial industry opens up, that's a scenario we would like to look at some day.

Low-cost products and price differentiation seem to be a major play in India in most sectors… be it aviation, retail or even telecom. How does Virgin plan to tailor its offerings in this market?
Pure low cost normally does not survive. If you look at Air Deccan, it did not survive. It was eaten up by Kingfisher. I think just low-cost companies in any sector do not survive long term. The companies that survive are the ones that offer the best quality in that sector. Virgin America or Virgin Blue in Australia are the two best companies flying their respective countries domestically—best entertainment systems, best cabin crews, best seating, lighting—but because they are so popular and so full, we can offer competitive rates as well. I think that's the way to go about it.

Virgin Comics has a lot of Indian content with comics like Devi, Ramayan 3392 AD. Is there a market for that kind of content globally? How's the response been?
It's been good. I think the breakthrough will come when features are made from some of those comics and I am sure that will happen in the not-so-distant future. We have comics made by directors of feature films, hopefully films will emerge from them.

Sony has made a venture into Indian film production. Do you see a venture into Indian entertainment in the future?

It's certainly a possibility but we have no certain plans at the moment.
I believe the next Bond flick, Quantum of Solace, has begun filming. Any plans to do a cameo in that like the last movie, Casino Royale?
(Smiles) They are using a lot of Virgin in the movie. They are using the upper class lounge at Heathrow but I haven't got a call yet to do a cameo… but I have moved to Bollywood. Tonight, I will do my first spot in a Bollywood movie… and I have a line in the movie. It's "My name is Branson…Richard Branson" (laughs).

You've been a businessman, adventurer, fledgling actor, what's next?

I suppose it has to be an astronaut, isn't it? Obviously that with Virgin Galactic in 18 months time.

Do you see a demand for Virgin Galactic from countries like India? Or is it just from the developing countries?
Yes, I am sure everybody would like to go to space some day. I met an Indian who signed up yesterday, the demand will be enormous. The price will eventually come down… some day, thousands of Indians will hopefully travel to space.

Recently, Virgin flew Boeing 747 from London to Amsterdam with one of its four engines using a bio-fuel that was a mixture of oils from coconut and the babassu nut. You have been criticised and lampooned by several people, including environmentalists. How do you handle criticism?
If you are going to have technological breakthroughs, you are going to have to try things. What Boeing, Virgin and GE Engines wanted to prove was that biofuel could fly at 35,000 feet without freezing. In the past, it would freeze at 15,000 feet. Having proved that, all I would like to say to people who have criticised the idea is that 'if you have a better idea, we would love to hear about it'. We think that the best way to deal with global warming is to develop a biofuel that's clean.

Moser Baer to raise Rs 411 cr from global investors

2008-09-04T04:28:00.001-07:00

Technology firm Moser Baer India on Thursday said its wholly-owned photovoltaic subsidiary has entered into definitive agreements with a consortium of global investors to raise Rs411 crore to fund its expansion plans.

The investors include Nomura, CDC Group, Credit Suisse, Morgan Stanley, IDFC Pe and IDFC.

The transaction values Moser Baer photovoltaic business at Rs6,350 crore.

Moser Baer plans to use the capital for expanding its capacity of crystalline silicon and thin film solar verticle.

The company currently has an annual capacity of 120 MW, including 40 MW of amorphous silicon film modules.

The fund would also be used for the expansion of crystalline silicon cell manufacturing to 180 MW and amorphous silicon thin film to 120 MW.

Samsung goes for brand recall

2008-09-04T04:26:00.001-07:00

The advert which is going to break this weekend is Aamir Khan's second major TV commercial for Samsung Mobile since he signed up as a brand ambassador for them. However, unlike the advert for the Samsung Beat 450, this advert is a brand campaign and it features Samsung's latest 'Soul' mobile device in the campaign and the advert revolves around the 'Next is What?' tagline that Samsung has been using.

Looking at the advert, it quite obviously features some pretty high-tech computer graphics (CG), much like Samsung's international campaigns. In fact, this is the most CG-heavy advert since Aditya Birla Group's campaign a few years ago, an ad that is still played on TV.

Samsung is a clear number two in the Indian mobile marketplace with 7.4 per cent of the market but lately it has done well more because of the failures of SonyEricsson and Motorola rather than the market-leader Nokia making any missteps. However, with an interesting new line-up at the higher-end of the market, Samsung Mobile expects to be snipping at Nokia's heels which are still quite a way away.

With ex-Nokia Distribution head Sunil Dutt heading up Samsung Mobile's operations, and aided by the emergence of organised retail in mobile, Samsung is hoping that adverts like this would help in brand recall.

Eurozone economy shrinks by 0.2%

2008-09-03T10:06:00.001-07:00

The eurozone economy has contracted in the three months to June due to lower private spending and falling exports, adding to fears of a lasting slowdown.

The 15-nation area saw its economy shrink by 0.2% in the quarter compared with the previous three months, statistical office Eurostat said.

High fuel and food prices have dented consumer spending across Europe - one of the key drivers of the economy.

The euro fell to its lowest in eight months at $1.4386 after the data.

'Weakness'

There are increasing fears across Europe that the region could be entering a recession and the latest figures showed that exports for the quarter slid 0.4%, while investments declined 1.2%.

Germany's deputy economy minister said the country had probably already fallen into its first recession in more than five years, and warned that the outlook was poor.

Germany - the largest economy in Europe - contracted by 0.5% percent during the second quarter.

During the same period, France and Italy shrank 0.3%, while the Netherlands saw zero growth.

Amelia Torres, a spokesperson for European Economic and Monetary Affairs Commissioner Joaquin Almunia said the data needed to be viewed in context.

"In the first quarter, growth was quite high and this was because we had a mild winter and a lot of construction continued."

"We paid in the second quarter for that," she said.

Unicredit economist Aurelio Maccario said the data showed the beginning of "a phase of prolonged weakness bound to last a few quarters".

Looking ahead, Eurostat revised downwards its forecast for the eurozone's annual growth from 1.5% to 1.4%.

The European Central Bank has the double challenge of fighting slowing economic growth while inflation quickens.

Many analysts expect it to keep interest rates on hold at its meeting on Thursday.

Pound dips further against dollar

2008-09-03T09:50:00.001-07:00

The pound has continued to fall against the US dollar, hitting its lowest level since April 2006 on fears that the UK is heading into a recession this year.

Sterling fell to a low of $1.7771, and was recently trading at $1.7668. The weak pound weighed on shares, and the FTSE 100 stock index lost more than 2%.

Sterling has fallen sharply over the past month, down from July highs that saw one pound buying two dollars.

Wednesday's slide comes as the Bank of England starts a rate-setting meeting.

The Bank is due to give its verdict on interest rates at midday on Thursday, with most analysts expecting it to keep borrowing costs unchanged at 5%.

Measured against a basket of currencies used by the UK's main trading partners the pound is at a 12-year low.

Earlier on Wednesday, the pound had staged a small rally after better than expected figures on the service sector.

However, analysts had warned that any rebound may be short-lived because of the negative sentiment surrounding the currency.

Any rise in the pound would give "an excuse to sell sterling again at slightly better levels", said Lee Hardman, currency analyst at BTM-UFJ bank.

Difficult outlook

The US currency has been gaining ground in recent weeks and on Tuesday the euro fell to a eight-month low versus the dollar, dipping to below $1.44. Falling oil prices, which hit a five-month low on Wednesday, have been a factor behind the dollar's rally.

Investors had bought commodities to protect against the dollar's weakness earlier this year but are now unwinding those positions - to the US currency's benefit.

Analysts also said the dollar was strengthening because the US economic outlook appeared better than the deteriorating picture in the UK and the eurozone economies.

"We're seeing a continuation of the trend where sentiment on the rest of the world is deteriorating while sentiment in the US is improving, albeit from a very low base, and the dollar is outperforming as a result," said Adam Cole of Royal Bank of Canada.

Gloomy comments over the weekend from UK Chancellor Alistair Darling, who warned that Britain was facing its toughest economic challenge for 60 years, triggered sterling's plunge on Monday, which were exacerbated when the OECD predicted that the UK would be the only major industrial country to plunge into recession this year.

Tatas, Bengal govt responsible for Singur impasse: Cong

2008-09-03T09:44:00.000-07:00

NEW DELHI : The Congress on Wednesday accused the Tatas and West Bengal government of being responsible for the imbroglio over Singur issue and said negotiations were the only way to arrive at a solution.

"It is ultimately between the Tatas and the West Bengal government..There was responsibnility on the part of the Tatas also to build a bridge with the local community.." said Congress spokesman Manish Tewari.

He charged the state government too "failed" to instill confidence among the farmers whose land was acquired for the Tata Motors' small car plant.

Google to Release Web Browser Tuesday; Should Microsoft Worry, or Mozilla?

2008-09-02T08:52:00.001-07:00

In its latest bid to remain ascendant on the Internet, Google is about to release its own Web browser, long a key online battleground. It just announced its plans for the browser, dubbed Chrome, briefly on its official blog, so its ultimate intentions are not yet clear. But the Web browser more than ever has become the one indispensable product—even if it's free—for anyone using the Internet. So it's clear that Google is looking to firm up its ever-growing online presence—especially vs. Microsoft, maker of the dominant browser Internet Explorer. (Chrome was first reported by the blog Google Blogoscoped, which in an odd publicity tactic on Google's part received a comic book in the mail outlining the product.)

This is a very interesting if long-rumored move, since it pits Google all the more directly against Microsoft in a battle for preeminence on the Web. Some folks such as Kara Swisher think it turns what she calls a Cold War between the two behemoths red-hot.

However, I think the war got pretty hot many months if not years ago, as Google released its own, Web-based office-productivity software and Microsoft tried to buy Yahoo, among many other moves aimed at thwarting Google's seemingly unstoppable march. So while there will be much sturm und drang about Google making yet another bid for a crucial piece of people's online lives, I actually think this represents more of the same of Google's standard operating procedure: Throw stuff out there, see what sticks, and then run with what ends up catching on.Indeed, the missive just posted on Google's main blog pretty much confirms that Google is throwing this out early (along with the comic book, which went out early by accident) to the open-source community, which will be able to use the code to create yet more new and different browsers, to see what they can do with it. According to Sundar Pichai, Google's VP of product management, and Linus Upson, the engineering director:

So why are we launching Google Chrome? Because we believe we can add value for users and, at the same time, help drive innovation on the web.

All of us at Google spend much of our time working inside a browser. We search, chat, email and collaborate in a browser. And in our spare time, we shop, bank, read news and keep in touch with friends — all using a browser. Because we spend so much time online, we began seriously thinking about what kind of browser could exist if we started from scratch and built on the best elements out there. We realized that the web had evolved from mainly simple text pages to rich, interactive applications and that we needed to completely rethink the browser. What we really needed was not just a browser, but also a modern platform for web pages and applications, and that's what we set out to build.

On the surface, we designed a browser window that is streamlined and simple. To most people, it isn't the browser that matters. It's only a tool to run the important stuff — the pages, sites and applications that make up the web. Like the classic Google homepage, Google Chrome is clean and fast. It gets out of your way and gets you where you want to go.

Under the hood, we were able to build the foundation of a browser that runs today's complex web applications much better. By keeping each tab in an isolated "sandbox", we were able to prevent one tab from crashing another and provide improved protection from rogue sites. We improved speed and responsiveness across the board. We also built a more powerful JavaScript engine, V8, to power the next generation of web applications that aren't even possible in today's browsers.

This is just the beginning — Google Chrome is far from done. We're releasing this beta for Windows to start the broader discussion and hear from you as quickly as possible. We're hard at work building versions for Mac and Linux too, and will continue to make it even faster and more robust.

We owe a great debt to many open source projects, and we're committed to continuing on their path. We've used components from Apple's WebKit and Mozilla's Firefox, among others — and in that spirit, we are making all of our code open source as well. We hope to collaborate with the entire community to help drive the web forward.

The web gets better with more options and innovation. Google Chrome is another option, and we hope it contributes to making the web even better.

So check in again tomorrow to try Google Chrome for yourself. We'll post an update here as soon as it's ready.

All that said, Google clearly must feel pressure from Microsoft, particularly with the recent release of its Internet Explorer 8, which includes features intended to blunt Google's inexorable growth in search market share. The new IE allows people to block information collection that helps Google place more relevant ads, has links to Microsoft services, and offers a better, Microsoft-oriented search toolbar.

Ultimately, if Google's browser does indeed work better on all the stuff people do online besides browse, that's going to be a good thing for all of us—if only because it will goad Microsoft, Firefox creator Mozilla, and others to innovate faster.

And judging from Google's stated intention here to create a "modern platform for Web pages and applications," its ambitions seem to come close to the "Google operating system" that many people have speculated Google ultimately wants to build. That's what entrepreneur John Furrier thinks is at work here. It's not just Google vs. Microsoft here. It's the entire Web way against desktop computing, maybe for the final showdown.

At the very least, I wouldn't be surprised if Chrome finds its way onto mobile devices. If it's as simple, stripped-down, and fast as that post implies—and as a nice summary of the features from ReadWriteWeb illustrates—it's readymade for mobile devices, the next great online battleground.

Already, Google CEO Eric Schmidt has noted that the iPhone produces way more searches than any other mobile device simply because it uses a real browser. That just shows much demand there would be for a browser that works even faster on the mobile devices that are increasingly the way most people will get their daily information.

However, in the short term, the bigger impact could be on Firefox, more than on Microsoft's IE—despite the fact that Google recently committed to supporting Firefox for years to come. Many of the people inclined to use something other than the often-default IE on their PCs probably have switched already, though Firefox is continuing to gain share. So I wonder if the switchers are more inclined to abandon Firefox than the IE they already abandoned. Mainstream users who haven't bothered to switch from IE, and many who never will, probably won't go for either Firefox or Chrome in whatever versions eventually come out.

Of course, Google doesn't succeed on every product by any means, even if the press and early adopters always assume they do when they're released. Google Apps are not yet a runaway hit, at least not with large companies. The Google shopping site Froogle, Google Checkout, the social network Orkut, and others have not set the world on fire either. We'll see which one Chrome turns out to be. (Don't be surprised to see a spate of blog posts after Chrome is available for download saying how much it sucks.)

But that may not matter in the end. If Google can offer up an example of a better browser, if it can disrupt the current way of doing things so that incumbents must scramble, it will give itself a better chance to thwart Microsoft's classic grind-'em-down-slowly strategy. And the way of the Web will be one step closer to the prevailing mode of computing.

Vanisha Mittal, Isha Ambani follow dads to rich list

2008-09-02T04:13:00.001-07:00

Riding high on their fathers' richie-rich status, Vanisha Mittal, Isha Ambani and Pia Singh -- daughters of Lakshmi Mittal, Mukesh Ambani and K P Singh respectively -- have grabbed the top three rankings on a Forbes list of billionaire heiresses.

While many daughters and grand-daughters of the world's wealthiest would never actually inherit a billion-dollar fortune, Indian-origin steel tycoon Lakshmi Mittal's daughter Vanisha Mittal Bhatia has emerged as the potentially richest among those standing to inherit a fortune, according to US business magazine Forbes.

Vanisha is followed by Isha Ambani, the richest resident Indian Mukesh Ambani's only daughter, at the second rank, and another Indian billionaire K P Singh's daughter Pia Singh at the third position in the Forbes list of the world's likely- to-be richest heiresses.

Mittal was ranked as the fourth richest person in the world in March when Forbes published its annual rich list, followed by Mukesh Ambani at the fifth rank. "Perhaps best known for the $60 million wedding her father threw for her in 2004, she (Vanish) now serves as a director on the board of dad's $103 billion steel company, ArcelorMittal," Forbes said.

"Her corporate involvement and small family -- she has only one brother -- puts her in good stead to inherit a sizable chunk of her father's fortune," the magazine noted.

About 16-year-old Isha, it said that Mukesh Ambani's only daughter is "just a teenager but already has her own stake in the family's Reliance Industries, worth about $80 million."

About Indian realty baron K P Singh's daughter Pia Singh, ranked third in the heiresses list, the magazine said she already holds a stake worth $400 million in the country's biggest real estate firm.

India's economy grows at 7.9 per cent in first quarter

2008-08-29T01:54:00.001-07:00

Indian economic growth moderated to 7.9 per cent in the first quarter of current fiscal, against 9.2 per a year ago as rising borrowing costs impacted manufacturing and some other sectors.

However, moderation in the GDP growth was expected as RBI hardened interest rates to control double-digit inflation.

If the first quarter GDP growth continues in the remaining months of this fiscal, the economy would expand at the rate more or less projected by Finance Minister P Chidambaram.

As he projected the economy to grow by close to 8 per cent, compared to 9 per cent in the previous fiscal.

Manufacturing growth almost halved to 5.6 per cent, against 10.9 per cent as rising interest rates impacted their expansion. Even though agriculture grew by lower rate of three per cent, it is quite considerable on the high base of 4.4 per cent.

The other sectors which witnessed considerable decline in growth rate are electricity, gas and water supply, which expanded at the rate of 2.6 per cent against 7.9 per cent.

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Dubai to hold region's biggest cyber games exhibition

2008-08-29T01:41:00.001-07:00

DUBAI: The biggest electronic gaming exhibition in the Middle East and North Africa will be held here next month bringing together world leaders of the industry, WAM news agency reported Friday. The Dubai World Game Expo (DWGE), to be jointly organised by Indiex Conference and the Dubai International Character and Licensing Fair, will run Oct 28-30 at the Dubai International Exhibition and Convention Centre.

The show is devoted to introducing a wide variety of computer games, including entertaining video games software, online gaming, mobile games, game related hardware, and next-generation platforms, together with opportunities to actually feel them.

The DWGE is expected to bring in key players in the global gaming industry, including software and hardware developers, mobile games developers, network and telecommunication specialists, merchandising and licensing agencies, educational institutions and entertainment professionals. An experts' conference, sponsored by Nokia, will be held during the expo to discuss the state of the industry and recent developments.

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Tata Steel shares surge 5% on strong Q1 results

2008-08-29T01:40:00.001-07:00

MUMBAI: Shares of Tata Steel surged nearly 5 per cent on Friday after it posted a 60.5 per cent rise in April-June consolidated net profit late on Thursday.

At 12:30 pm, the company's shares were up 4.72 per cent at Rs 598.80 with volume traded at 9,39,182 against two-week average of 13,97,055 shares.

The steel maker is in talks to raise at least $1 billion from a stake sale to private equity firms or a private placement of shares, according to media reports.

"The company's performance was the best ever (when we include Corus)," Tata group chairman Ratan Tata told shareholders at the company's annual general meeting.

Total income rose more than 39 per cent to Rs 43,560.96 crore for the quarter. The figures were calculated on a proforma basis as the profits of Corus were not included in the company's consolidated quarterly earnings last year.

The company, part of the Tata Group conglomerate, rose to become the sixth biggest steelmaker after buying Anglo-Dutch company Corus for $13.7 billion last year. The merged Tata Steel-Corus company plans to produce 25.6 million tonne annually.

Since May, Tata Steel has kept steel prices in India unchanged following a government directive in an effort to contain inflation. However, it faces the challenge of meeting rising raw material costs, which could weigh on future profits, according to analysts.

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Re may breach 44-mark soon

2008-08-21T01:45:00.001-07:00

MUMBAI: The rupee is now within a striking distance of the 44-mark versus the greenback. On Wednesday, the local currency fell to 43.87 levels during the day, but timely intervention from RBI prevented the rupee from losing further ground against the dollar. The rupee has weakened over 150 paise over past 10 days.

Amid huge volatility, there was heavy dollar-demand from importers and oil companies, which took the rupee to a 17-month low. The rupee finally ended the day at 43.70/72 against the dollar, after state-owned banks sold dollars at RBI's behest to halt the rupee's fall. The rupee had closed at 43.59/60 levels on Monday. Both forex and bond markets were closed on Tuesday for a national holiday.

Foreign banks were also seen buying dollars in the spot market, in an attempt to arbitrage the price differential in the overseas non-deliverable forwards (NDF) market. Foreign banks often buy dollars in the spot market, and simultaneously sell them on the NDF market when the rates there are weaker. A dip in the stock market also raised fears of further dollar repatriation by foreign investors. However, market sentiment changed, when state-owned banks started selling dollars on behalf of the central bank. Though the intervention was not too heavy, it sent a clear message, said market sources. Forward premia on near-term contracts also rose, with exporters looking to hedge their dollar receivables. Premia on the one-month contract ended the day at 4.65% (3.66%) while the six-month contract ended the day at 3.02% (2.87%) and the annual contract ended the day at 2.60% (2.55%).

Meanwhile, bond yields also rose, as tight cash conditions, coupled with a heavy volume of auctions scheduled for the week, took a toll on market sentiment. Yield on the 10-year benchmark bond ended the day at 9.14%, rising from Monday's close of 9.08%. According to market participants, the tightly-packed auction schedule for the week worsened already-tight cash conditions, as traders sold bonds to generate cash for the upcoming auctions. According to a trader at a bond house, cash conditions are already under pressure. The Centre's decision to offer fertiliser subsidies will further add to the already rising fiscal deficit.

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Reliance Retail to bring UK's Hamleys toys to India

2008-08-21T01:21:00.001-07:00

NEW DELHI: Reliance Retail has entered into an exclusive pan India franchise arrangement with the UK-based Hamleys, the world's most famous toy retailer, to bring the latter's toys to India. ( Watch )

This arrangement is aimed at combining the distribution dominance and scale of Reliance Retail in FMCG, food, electronics, consumer durables, apparel, footwear, lifestyle and home improvement categories, and Hamleys' world-class toy retailing experience, said a company release here.

Hamleys brings to this partnership its skills and capabilities of creating a store experience, training its staff to deliver this experience, designing stores and developing private label products to complement the brands. Reliance has the reputation of building the network and running its store operations nationwide efficiently.

The company is set to open two flagship stores in Mumbai and New Delhi in 2009. This will be followed by a regional expansion, across India, over the next few years.

Reliance Retail Ltd, a division of Reliance Industries Ltd, will be the partner in one of the biggest international expansions by the old iconic toy retailer, approaching its 250th anniversary in 2010. Reliance Retail will replicate the magical and experiential elements of Hamleys famous flagship store on London's Regent Street and will promise the ultimate treat for the entire family. This will be seen with the combination of strengths that both partners bring to the country.

The stores will sell a wide range of toys from the much loved brands to more traditional and nostalgic toys, as well as quirky and unusual treasures. These will include Hamleys own brand range, renowned for exceptional quality and play value. Toy demonstrators and magicians will bring the store to life as well as well as a host of events and activities.

The Indian toys and games market is estimated at approximately Rs 2,500 crore and has been handicapped by lack of significant national brands and the availability of quality retail stores. Being a young nation, there is an opportunity to grow this market by providing a wide range of national and international brands and products under one roof and creating a store experience which is memorable and unique.

Bijou Kurien, president & CEO, Reliance Lifestyle Holdings Pvt Ltd, said, "Our partnership with Hamleys heralds the beginning of a new era in the evolution of the toy market in India. We hope to bring world class toy stores which will capture the imagination and attention of children in India. We are tremendously excited about this venture and our decision to partner with Hamleys."

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Reliance Retail ties up with UK's Wincanton for back-end biz

2008-08-21T01:19:00.001-07:00

NEW DELHI: After having signed up at least half-a-dozen partnerships for specialty formats, Reliance Retail is now entering into a joint venture with leading European supply chain specialist Wincanton for its food and grocery and hypermarket businesses.

The synergy would enable Reliance to efficiently run its critical back-end operations, which essentially include warehousing of goods and transporting them to stores on time.

The latest move by India's largest corporate house, which jumped on the retail bandwagon two years ago by promising to do everything on its own, seems to suggest that it now needs a partner for almost every retail initiative.

Industry observers believe that the company has expanded very fast and has managed to set up over 600 stores across various retail formats in less than two years, but its supply chain is in a mess. "How to get the right merchandise to the stores on time has been its biggest problem. You'd often not find the goods you want in Reliance's food and grocery outlets," said a source. Wincanton, the UK-based $4-billion supply chain solution provider, has been roped in precisely to tackle this problem. It is expected to completely take over the supply chain, find the right warehouses for goods and transport them in time and in the right quantity to Reliance Retail stores.

Supply chain solution providers, Wincanton, for example, have IT systems in place to update them with regular data on inventory level in stores.

So, even without a store manager calling up, the warehouse manager would know the stores' requirements. Wincanton serves several companies across industries, from FMCG to retail, automotive and oil. Its client list includes retail giants Tesco and Woolworths, auto companies Ford and DaimlerChrysler, and consumer goods firms P&G, Nestle, SAB Miller and GSK.

For Reliance, an alliance such as this means a major shift in its strategy. The season of alliances has begun at Reliance with specialty stores and is now fast extending to almost everything. Two years ago, when India's largest private telecom operator, the Bharti Group, announced a tie-up with the world's largest retailer, Wal-Mart, many thought it had got a headstart over other Indian corporate biggies foraying into retail.

But unlike Bharti, Reliance had decided to go solo. It made the ambitious announcement, not unusual from the house of the Ambanis, that Reliance Industries had earmarked Rs 25,000 crore for its retail business. Reliance had evaluated the options of partnering with a foreign retailer as well as buying out an existing Indian retailer, but had not found it very exciting.

True to its form, Reliance built scale fairly rapidly, spreading from one city to another. The growth was achieved through a team of professionals poached from existing Indian retailers, but the pace of execution dwarfed rivals' achievements.

Reliance, however, realised it needed to do a lot more on the back-end to continue the pace of expansion and return early profits, which its shareholders usually expect.

"It didn't take Reliance long to realise that retail was a different ballgame altogether. It's not just about some long-term government policy or certain business competency, which it's known to manage well. The variables in retail business are far too many. There could be a number of factors such as general economic downturn, terror scare, shorter wedding season, cricket season like an IPL or a political protest, which can affect store sales. You need to be able to manage that," said a source close to Reliance.

The company has entered into alliances with foreign companies for several specialty stores, including opticals (Pearle Europe), toys (Hamleys) and apparel (M&S).

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