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Thursday, July 30, 2009

INDIA INC GETS OFF TO A FLYING START IN Q1

THREE CHEERS: 850 COS NET UP 13% 

With 4 out of 5 firms in black & quite a few posting astounding nos., the earnings picture looks promising for rest of the year 

INDIA Inc has begun the new financial year on a pleasant note, with four out of five companies making profits in the first quarter. Analysts see better earnings for the rest of the year on falling cost of operations. 
An ETIG study of 850 listed companies saw their net profits rising 13% over the year-ago period after three dismal quarters, helped by falling raw material costs, lower cost of borrowing and modest growth in wage bills. The study did not include banks and public sector oil companies as their fortunes are directly linked to government policies. 
Among the 22 Nifty companies that have declared quarterly results Nifty is the benchmark stock market index that comprises 50 firms the earnings story is even more gripping. These firms together reported a 25% increase in standalone net profit for the quarter over the year-ago period after witnessing modest earnings growth ranging between 3% and 8% in the previous four quarters. 
Some companies that announced spectacular results include cement maker ACC, which posted 85% higher net profit, Mahindra & Mahindra (151%), Grasim (61%), Dr Reddys (120%) and Hero Honda (83%). 
This could set the tone for better earnings in the coming months, with companies and analysts seeing lower cost of operations going forward. We can expect continued increase in profits as companies are unlikely to see input costs going up in the near term, said DR Dogra, deputy managing director of credit rating agency CARE. 
The bottomline performance was boosted by lower raw material costs, which declined 3% for the first time in the past four quarters.

 

SBI Q1 net soars 42% on strong treasury income

Slump Leads To Rise In Banks NPAs 

Oil Cos Profits Up On Inventory Gains 


New Delhi: Riding on strong treasury income, the State Bank of India (SBI)the countrys biggest banksaw a 42% jump in net profit to Rs 2,330 crore for the quarter ended June 30, from Rs 1,641 crore in the corresponding quarter last year. 
But, the current global economic slowdown also ballooned its non-performing assets (NPAs), which rose to Rs 8,404 crore by June 30 compared to Rs 6,298 crore a year ago. In percentage terms, net NPAs of the bank rose to 1.5% in Q1 from 1.4% in a years time, while gross NPAs rose to 2.8% from 2.4% in the same period last year. In Q1, the bank made a total provision of Rs 1,234 crore to cover its NPAs. 
Total income, during the quarter, rose 30% to Rs 21,042 crore from Rs 16,203 crore in the same period last year. Interest income grew 26.6% to Rs 17,473 crore from Rs 13,799 crore in the same quarter. 
State Banks income from treasury operations in the quarter grew to Rs 6,385 crore as compared to Rs 4,329 crore in same period last year. Wholesale and retail banking divisions contributed Rs 6,279 crore (Rs 4,414 crore) and Rs 8,377 crore (Rs 7,460 crore) respectively , the bank said. 
Gross advances by Juneend stood at Rs 5,49,793-crore , up 22.8%, as compared to Rs 4,47,747 crore in the year-ago period, the bank said. Due to this, the banks market share in advances rose to 16.5% as against a 15.7% last year. Its home and auto loan portfolios grew 24% and 29% respectively on a year-on-year basis. 
Total deposits by end-June went up 36% from Rs 5,61,857-crore last year to Rs 7,63,563 crore. Current and savings account deposits, on a year-onyear basis, grew by 22.7% and the proportion of CASA to total deposits presently stands at 38.4%, the bank said. 

SAIL Q1 profit declines 28% 


New Delhi: Hit by lower sales and higher input costs, SAILthe countrys largest steelmakeron Thursday posted a 28% decline in its net profit at Rs 1,326 crore for the first quarter of the current fiscal. Lower sales realisation and higher input cost led to the fall in our profit in the first quarter, SAIL chairman S K Roongta said here. AGENCIES 

DLF Q1 net slips 79% 


Realty giant DLF on Thursday reported a 79% plunge in its consolidated net profit at Rs 396 crore for the quarter ended June 30, due to a sharp decline in demand for its housing and commercial properties. AGENCIES

Tuesday, July 28, 2009

Now, file your I-T returns in just 5 minutes

THREE days left, and you havent filed your returns Try the ET Tax Wizard, its so easy to use and just takes 5 minutes to fill in the form.
Just sample some of the comments that ET Tax Wizard has been receiving from among the thousands who have been flocking to the site, www.tax.economictimes.com, of late. Omar Sharif, domain consultant with Tata Consultancy Services in Mumbai, wrote to us that the interface was very user-friendly . Indeed, it made my life simpler. Geetanjali P, an analyst with a big multinational computer maker in Bangalore, said: It greatly simplified the tax-filing process for professionals like me. And it is not just the young, working professionals like Sharif and Geetanjali who are waxing eloquent on this tool from ET online. 
Seventy-nine-year old Mumbaikar Sunder Thadani says he has been trying his hand at e-filling for the past three years, but found most other sites very difficult to use . He discovered ET Tax Wizard this year and now says: I was surprised to find that compiling returns on the screen was so simple, and quick. I completed (filing) my returns within 15 minutes. It was so efficient and fast that even an old man like me could complete it. 
ET Tax Wizard is a part of the ET Portfolio Wizard, the wealth management software that allows investors and savers to keep track of their investments like shares, mutual funds, fixed deposits, NSC, Kisan Vikas Patra, PPF, RBI and corporate bonds et al. ET Portfolio Wizard automatically calculates capital gains on shares and mutual funds once investment details are entered, thereby making the tax calculation all the more easier.

Deora meets law minister, Pranab on Anils outburst

THE Congress battery of official spokespersons declined to comment on the record. However, two senior Congress leaders, one a two-term chief minister of a large North Indian state and the other a member of the Union Cabinet said that the party may have to take a stand because the allegations of favouritism against a senior cabinet minister could hurt the image of the party and the government. Both declined to discuss specifics or to spell out what that stand could be.
Some political observers feel that another empowered group of ministers (EGOM) may have to be set up to resolve the dispute. Mr Deora is believed to be opposed to this. On Tuesday evening, Mr Deora met law minister Veerappa Moily and finance minister Pranab Mukherjee to discuss the days developments . The outcome of the meeting isnt clear though a source said the ministers had decided to support the petroleum ministrys move to file a special leave petition (SLP) in the Supreme Court seeking scrapping of those parts of the family settlement pertaining to the supply of gas. 
In the speech, Mr Ambani referred several times to his father claiming that RIL was deviating from the founders philosophy. In refusing to execute a bonafide commercial agreement RIL has no regard for... morality in its headlong pursuit of corporate greed, he claimed. 
In the AGM speech, while extensively updating shareholders of Reliance Natural Resources (RNRL) on recent developments of its four-year-old gas dispute with RIL, Mr Ambani said the petroleum ministrys stand was aimed at helping RIL renege on its contractual commitments with RNRL as well as stateowned NTPC. 
Mr Ambani lashed out at the petroleum minister Mr Deora in no uncertain terms. I am sure all private companies in India wish that if they made commercial decisions they wished to get out of, they too had a saviour to bail them out as is the case for RIL. 
He said that he had written a letter on this subject to Prime Minister Manmohan Singh. He was confident that Dr Singh would support the cause of truth and justice , and ensure neutrality of the government in a pure commercial dispute between two corporate entities . Despite the directness of his speech, Mr Ambani was careful to confine his attacks to Mr Deora. 
The legal dispute between RIL and RNRL is now being fought at the Supreme Court, following a Bombay High Court order in June which ordered RIL to sell gas from its Krishna Godavari basin to RNRL for $2.34 per mmBtu for 17 years. This was lower than the government set price of $4.20 per mmBtu. The petroleum ministry had also joined the case in the apex court by filing a special leave petition (SLP) seeking annulment of the gas supply contract between RIL and RNRL. The Supreme Court will hear the case next on September 1. The SLP and crossappeals filed by both sides will come up for admission before the Supreme Court. 
The facts are deliberately being twisted by the oil ministry to say the corporate agreement between RIL and RNRL is a private division of sovereign assets, Anil Ambani said, rejecting the contention that the gas price was set as part of a private agreement between the brothers in 2005. 
He also criticised the petroleum ministrys stand that RIL had violated the product sharing contract (PSC) with the government by promising gas to RNRL without informing the government. Frankly, if the petroleum ministry is genuinely aggrieved... why dont they exercise their powers and terminate the PSC and take back the ownership of the gas fields from RIL when the provisions exist for them to do so he asked. 
He said the ministrys claim that it was not aware of the agreement between the Ambani brothers was untrue. He said the ministry had been in possession of all relevant details of the gas deal since April 2006 when RIL provided details of the gas pact to the ministry. 
He also attacked the petroleum ministry for its claims that the sale price of the KG basin gas was fixed at $4.20 per mmBtu. Drawing a parallel to stamp duty on property, which acts as a reference rate and has no bearing on the actual transaction price, he said $4.20 per mmBtu was fixed for the calculation of the governments share of profit from the gas sale. 
Also, he emphasised that the government would not lose money if RIL sells gas at a lower price of $2.34 per mmBtu, as directed by the Bombay High Court in June. Under the PSC, 99% of all revenues and profits would go to RIL and the remaining 1% to the government in the initial years. Of the initial revenue of Rs 50,000 crore from the gas sale, RIL will get Rs 49,500 crore, he said. Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL, he said sarcastically. 
According to him, NTPC is also affected by RILs machinations. NTPC has been fighting a separate legal tussle to obtain gas from RILs KG D-6 . 
Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the government ) was exorbitant and against public interest.
The ministrys role runs counter to the view of others in the government that it shouldnt play any role in price-setting , Mr Ambani said. 
The petroleum ministry has unilaterally gone ahead and taken a stand, which runs contrary to that of the cabinet sub-group , apparently without even consulting it, even though that group represented the broader collective wisdom of several other ministers, including the ministers of finance, law, power and fertilisers, he said on Tuesday. 
Anil Ambani said Reliance Industries is seeking an exit from its obligations. It is unfortunate that Reliance Industries has tried every trick in the book and apparently several outside the book to back out of its solemn, legal and contractual obligations, he said.

 

FIs buy low-float PSUs on disinvestment hope

INSTITUTIONAL investors seem to be finding long term value in stateowned Indian companies. Portfolio investors have hiked their stakes in public sector undertakings (PSUs) during the first quarter of FY10, signalling interest in a stock segment that is otherwise perceived to be slowmoving and red tape-bound compared with their private sector peers. 
Institutional investors are increasing their stake in low-float PSU banks, infrastructure companies, capital goods manufacturers and gas transportation companies on expectations of a rerating and increased shareholder value in the event of government deciding to divest stake. 
Institutional investors are showing interest in select state-owned companies. PSU banks, for instance, are a big draw among institutional investors because of their improved net interest income (NII) margins, said Gopal Agarwal, equities head, Mirae Asset Investment. 
Stable government and the willingness to divest stake in closely-held PSUs are the prime reasons for the general build-up of interest on PSU stocks, Mr Agarwal added. 
Shareholding pattern (April-June quarter) of PSU companies reveal that FIIs have been big buyers in PSU banks. FII holdings in Central Bank, Vijaya Bank, Union Bank, IDBI Bank, Indian Overseas Bank, SBI and term lenders IFCI and IDFC have gone up significantly during the quarter. Shipping Corporation, Power Finance Corporation and HPCL are amongst government companies where FII have marginally reduced (between 0.2 and 1.4%) their exposure . On the other hand, mutual funds are loading their portfolios with companies Power Trading Corporation , BPCL and HPCL, along with select (few) banking stocks like Canara Bank, IFCI and Allahabad Bank. Contrary to FIIs, mutual funds have sold holdings in Bank Of Baroda , Indian Overseas Bank, Union Bank, IDFC and PNB. 
Banks and insurance firms have followed a strategy similar to that of FIIs and have consolidated their positions in banking companies, while reducing exposure to engineering and utility companies. 
shailesh.menon@timesgroup .com

 

ANIL PUTS DEORA IN GAS CHAMBER


Ambani Junior took the battle with his brother into the corridors of the government. Dhirubhai's second son threw down the gauntlet, savaging his father's friend and launching a scathing attack on the petromin. The outburst marks a game-changing event in Indian corporate history

  ANILAmbani on Tuesday launched a bare-knuckled verbal assault targeting Murli Deora, India's petroleum minister and an old friend of Dhirubhai Ambani and Reliance Industries, run by his elder brother Mukesh. Mr Ambani did this in the course of one of the most aggressive speeches ever delivered at a company's annual general meeting. In the course of a riveting oneand-a-half hours, Mr Ambani, who was speaking at the AGM of Reliance Natural Resources (RNRL), castigated what he described as RIL's "dishonourable conduct in... refusing to honour the gas supply contract" and the "exorbitant profits RIL is seeking to make at the cost of the power and fertiliser sectors." But more than that, the centrepiece of his speech was devoted to what he claimed was the "apparently biased and partisan role of the petroleum ministry". Mr Ambani was also scathing in his remarks about a government decision setting a price of $4.20 per unit of natural gas, claiming that the price should not be more than $1.5. It is very rare for Indian industrialists to so openly criticise asenior government functionary or even a corporate rival, let alone with the belligerence displayed by Mr Ambani, the chairman of the eponymous Anil Dhirubhai Ambani Group (ADAG) and among the world's 50 richest men. 

    "I am bringing out facts which no one has brought out so far," Mr Ambani told ETlater on Tuesday evening. Mr Ambani's speech had four major components: RIL's conduct, Mr Deora's alleged bias, details of the production-sharing contract, which he claims favours RIL, and the inappropriateness of thegovernment-set price of $4.20. 
    Mr Ambani was blunt in his many references to Mr Deora. "It is evident that the apparently biased stance commenced in 2006, coinciding with changes in the ministry. I am not casting aspersions on the integrity of individu
als here — I am sure that they have good reasons for their stance," was one of the most direct accusations. 
    This is of course not the first time that politicians and businessmen have duelled. Anil's father, the late Dhirubhai Ambani, the founder of Reliance, battled former prime minister VP Singh along with rival industrialists such as Nusli Wadia through much of the 1980s. But the protagonists of these battles rarely spoke in public. 

    Mr Deora refused to join issue: "I have no comments to make... as the matter is sub judice. All I can say (to Anil) is 'best of luck'." RIL too had no comments. "The matter is before the Supreme Court and sub judice," a Reliance Industries spokesperson said. Harish Salve, a legal eagle who represents RIL, India's largest private sector company by market capitalisation and sales, told ET NOW, this newspaper's business channel, that the Supreme Court would not be swayed by the AGM speech. "Our judges are made of sterner 
stuff," he said. 
    At the AGM, the mood was febrile, as some shareholders raised slogans criticising Mr Deora. For the most part though they listened with rapt attention, perhaps aware of the history-making nature of the speech. Most RNRL
shareholders also own stocks in RIL from which the company was demerged as part of the Ambani family settlement, which was executed over 2005 and 2006. 
    The ultimate impact of Mr Ambani's amazing speech remains unclear. Initial reactions from senior leaders of the Congress indicated a certain element of shock and awe, perhaps because of its sheer unexpectedness. 
SHOOTING FROM THE MOUTH G A S S U P P LY F R O M R I L 
Despite the binding commercial agreement that exists between RIL and RNRL for the supply of gas, it is unfortunate that RIL has tried every trick in the book and apparently several outside the book—to back out of its solemn, legal and contractual obligations. 
We are claiming gas only from RIL's lawful share or its rightful entitlement of production of gas under the PSC. P E T R O M I N ' S R O L E Apparently, the petroleum ministry has used its discretion and not even thought it fit to take the approval of the Cabinet. 
It has been brought to my attention that one of the senior advocates of the petroleum ministry, who I have no doubt is a most accomplished person with the highest degree of legal expertise, is the same person who sent a formal complaint to Sebi in October 2007 against the Reliance Power IPO and me personally—it's a different matter that Sebi and the hon'ble Supreme Court allowed the IPO to proceed, over-ruling all complaints. 
... the apparently biased stance commenced in 2006, coinciding with changes in the ministry. I am not trying to cast aspersions on the integrity or motives of individuals... I am sure all pvt cos in India wish if they made commercial decisions they wished to get out of, they too had a saviour to help bail them out as is the case for RIL. G A S P R I C E 
A GAS PRICE OF $4.2 IS EXORBITANT AND CAN IN NO WAY BE JUSTIFIED 

There is no question of RIL suffering a loss—it will still make good profits at $2.34. The problem is it wants to make super normal profits— talk of greed vs. need. 

ANIL AMBANI LASHES OUT 
I am deeply dismayed by this apparently partisan and biased approach of the petroleum ministry in favour of RIL, which is hurting not just RNRL, but also the government-owned NTPC 

Of the initial revenue of Rs 50,000 crore, RIL gets almost all, i.e., Rs 49,500 cr vs. govt's Rs 500 cr. Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL. 
THE MOST IMPORTANT WORD FOR SHRI DHIRUBHAI AMBANI WAS 
TRUST& THAT WORD HAS, UNFORTUNATELY, GONE MISSING
Deora meets law minister, Pranab on Anil's outburst 
    THE Congress' battery of official spokespersons declined to comment on the record. However, two senior Congress leaders, one a two-term chief minister of a large North Indian state and the other a member of the Union Cabinet said that the party may have to take a stand because the allegations of favouritism against a senior cabinet minister could hurt the image of the party and the government. Both declined to discuss specifics or to spell out what that stand could be. 
    Some political observers feel that another empowered group of ministers (EGOM) may have to be set up to resolve the dispute. Mr Deora is believed to be opposed to this. On Tuesday evening, Mr Deora met law minister Veerappa Moily and finance minister Pranab Mukherjee to discuss the day's developments. The outcome of the meeting isn't clear though a source said the ministers had decided to support the petroleum ministry's move to file a special leave petition (SLP) in the Supreme Court seeking scrapping of those parts of the family settlement pertaining to the supply of gas. 
    In the speech, Mr Ambani referred several times to his father claiming that RIL was deviating from the founder's philosophy. In refusing to execute a bonafide commercial agreement RIL has "no regard for... morality in its headlong pursuit of corporate greed," he claimed. 
    In the AGM speech, while extensively updating shareholders of Reliance Natural Resources (RNRL) on recent developments of its four-year-old gas dispute with RIL, Mr Ambani said the petroleum ministry's stand was aimed at helping RIL renege on its contractual commitments with RNRL as well as stateowned NTPC. 
    Mr Ambani lashed out at the petroleum minister Mr Deora in no uncertain terms. "I am sure all private companies in India wish that if they made commercial decisions they wished to get out of, they too had a saviour to bail them out — as is the case for RIL." 
    He said that he had written a letter on this subject to Prime Minister Manmohan Singh. He was confident that Dr Singh would 
support the cause of "truth and justice, and ensure neutrality of the government in a pure commercial dispute between two corporate entities." Despite the directness of his speech, Mr Ambani was careful to confine his attacks to Mr Deora. 
    The legal dispute between RIL and RNRL is now being fought at the Supreme Court, following a Bombay High Court order in June which ordered RIL to sell gas from its Krishna Godavari basin to RNRL for $2.34 per mmBtu for 17 years. This was lower than the government set price of $4.20 per mmBtu. The petroleum ministry had also joined the case in the apex court by filing a special leave petition (SLP) seeking annulment of the gas supply contract between RIL and RNRL. The Supreme Court will hear the case next on September 1. The SLP and crossappeals filed by both sides will come up for admission before the Supreme Court. 
    "The facts are deliberately being twisted by the oil ministry to say the corporate agreement between 
RIL and RNRL is a private division of sovereign assets," Anil Ambani said, rejecting the contention that the gas price was set as part of a private agreement between the brothers in 2005. 
    He also criticised the petroleum ministry's stand that RIL had violated the product sharing contract (PSC) with the government by promising gas to RNRL without informing the government. "Frankly, if the petroleum ministry is genuinely aggrieved... why don't they exercise their powers and terminate the PSC and take back the ownership of the gas fields from RIL when the provisions exist for them to do so?" he asked. 
    He said the ministry's claim that it was not aware of the agreement between the Ambani brothers was untrue. He said the ministry had been in possession of all relevant details of the gas deal since April 2006 when RIL provided details of the gas pact to the ministry. 
    He also attacked the petroleum ministry for its claims that the sale price of the KG basin gas was fixed 
at $4.20 per mmBtu. Drawing a parallel to stamp duty on property, which acts as a reference rate and has no bearing on the actual transaction price, he said $4.20 per mmBtu was fixed for the calculation of the government's share of profit from the gas sale. 
    Also, he emphasised that the government would not lose money if RIL sells gas at a lower price of $2.34 per mmBtu, as directed by the Bombay High Court in June. Under the PSC, 99% of all revenues and profits would go to RIL and the remaining 1% to the government in the initial years. Of the initial revenue of Rs 50,000 crore from the gas sale, RIL will get Rs 49,500 crore, he said." Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL," he said sarcastically. 
    According to him, NTPC is also affected by RIL's machinations. NTPC has been fighting a separate legal tussle to obtain gas from RIL's KG D-6. 
    Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the government) was "exorbitant" and against public interest. 
    The ministry's role runs counter to the view of others in the government that it shouldn't play any role in price-setting, Mr Ambani said. 
    "The petroleum ministry has unilaterally gone ahead and taken a stand, which runs contrary to that of the cabinet sub-group, apparently without even consulting it, even though that group represented the broader collective wisdom of several other ministers, including the ministers of finance, law, power and fertilisers," he said on Tuesday. 
    Anil Ambani said Reliance Industries is seeking an exit from its obligations. "It is unfortunate that Reliance Industries has tried every trick in the book and apparently several outside the book to back out of its solemn, legal and contractual obligations," he said.







Anil Ambani Attacks RIL And Oil Ministry At RNRL AGM

'Deora serving Mukesh's greed'

Mumbai: Anil Ambani on Tuesday launched a scathing, no-holds-barred attack on the petroleum ministry, saying its stance in the gas supply dispute between his company Reliance Natural Resources Ltd (RNRL) and elder brother Mukesh's Reliance Industries Ltd (RIL) was serving the "plain and simple corporate greed'' of one "monopolistic gas producer''. While Anil did not name any individuals, the reference to petroleum minister Murli Deora was clear when he said: "It is evident that the apparently biased stance commenced in 2006, coinciding with changes in the ministry.'' Deora replaced Mani Shankar Aiyar as petroleum minister in 2006. 

    The unprecedented attack by a business tycoon on a minister came in the form of a long speech delivered at the annual general meeting of RNRL. AGMs are normally occasions for corporate honchos to boast about the company's achievements and profits, but Anil dispensed with the accounts, the directors' report and so on tersely. "With your permission, I would like to take them as read,'' he said, before tearing into RIL and the petroleum ministry. 
    The younger Ambani was careful to draw a distinction 
between the petroleum ministry and the rest of the government. Indeed, he repeatedly suggested in his speech that the ministry had acted unilaterally, not consulting the rest of the cabinet or even the empowered group of ministers.



Monday, July 20, 2009

Bulls pitch their tents on D-St

From extreme optimism to moderate pessimism and back to extreme optimism... All in a month's work for Sensex. With 446 more scored, guess, bulls have made Dalal St their home

Our Bureau MUMBAI



    INDIAN equities appear set to cross the highs made in June this year, as key data — globally and locally — seem to suggest that the global economy is on the path to recovery. Benchmark indices rose 3% on Monday, riding the bullish wave in world markets, sparked by rising commodity prices and better-thanexpected corporate earnings.
    Back home, brokers and investors are confused as the market has swung from extreme optimism to moderate pessimism to extreme optimism, once again in less than a month. Market operators are said to have suffered heavy losses on their trading calls, even though they would have gained by way of an appreciation of their portfolio value.
    BSE's 30-share Sensex ended the day at 15191.01, up 446.09 points, over their previous close. NSE's 50-share Nifty gained 127.30 points to close at 4502.25. This is for the fourth time in five trading sessions
that indices have gained around 3% in a day.
    TCS led the rally in IT shares with a 15% rise, after the company surprised the market with better-than-expected third quarter earnings
announced on Friday evening. Realty and banking were the other big performers of the day.
    Market watchers say the positive momentum itself could lift the Sensex and the Nifty above its
recent highs, although valuations are once again crawling towards the overbought zone.
    Traded turnover on both exchanges combined was around Rs 95,000 crore. Dealers said most of the short positions have been covered up. But this could work against the bulls if sentiment weakened, they cautioned.
    In the US, the index of leading indicators rose in June for a third consecutive month, reinforcing signs that the recession may be nearing an end. The Conference Board's gauge of the economic outlook for the next three to six months increased 0.7%, more than forecast, after a revised 1.3% gain in May.
    Investors were also enthused by talk that CIT Group, the 101-year-old commercial finance company on the brink of bankruptcy, is close to getting a $3-billion lifeline from its bondholders. In the UK, the pound firmed up to a one-month high against the dollar and a survey showed that demand in the UK housing market was beginning to pick up.




LAND OF OPPORTUNITY: I CAN SEE THE STRENGTH, THE FUTURE & THE EXCITEMENT

THE WORST IS BEHIND US


India today has a lot to offer to those who dare to dream. If I were asked whether I would start in India of today, the answer would be yes, steel czar L N Mittal tells ET's Soma Banerjee in an interview at ArcelorMittal's London office. Edited excerpts:



    THE FIRST AND THE MOST IMPORTANT QUESTION: economists have started talking about 'green shoots' appearing in some economies. So, would you say the worst is behind us?
If I talk to bankers, investors, or even business people, almost everyone believes that the worst is behind us. The confidence is coming back, and the crisis we have gone through in the last eight-nine months is at least slowing down and is on the decline... (This) in itself is a big comfort. But we have to continue to monitor and wait because there are still a few segments like consumer credit and the real estate market...(which) are still to completely flush out their toxic assets.
When do you think the developed economies could start showing signs of revival? Any time frame?
The emerging economies will definitely recover earlier; we are beginning to see that. For example, China has announced an 8% GDP growth. My people have visited China and they say they can see the effects of the stimulus package kicking in. In India there are two factors: first, it is a developing economy where you can see things are much more positive. (Second)...the Congress winning the election has given so much confidence that you see a lot of exuberance.
With the UPA coming to power with a larger mandate, what are the boosters needed to restore investor confidence?
There is already a lot of confidence in the emerging markets, especially India. India is a great country for foreign investors. I can see that a lot of foreign investors are very interested in investing in India. They see the market, the population; they see the people. There is an interest. What we need is speedy execution. People should not get stuck in approvals and bureaucracy. It is a great reform if we can implement all the initiatives.
Are you saying it's more to do with governance? To see that the policies framed by the government can play out?
The government can speedily approve the projects. It should start educating states that these investments are good for them. For example, Jharkhand & Orissa, where we are keen to invest in the steel industry. We read everyday that there is a protest or violence. We need to avoid this, and educate the people that it is not a land-grabbing scheme. It's is a scheme for the future, for the next generation. And this kind of education is really important.
There has been some resistance to these two projects at the local level. What are you doing to mitigate this?
We have a limited role to play. What we are doing is part of our CSR (corporate social responsibility) programme. We are starting some education and health programmes. We have started consultations with local authorities and are educating them about the benefits of such projects. It is helping a little. But I think it requires much more intensity.
There was a sharp fall in commodity prices after the economic recession struck. Now we see an upturn again. What is happening in commodities? Is it just cyclical or something else?
You have to go back five years. I think that at that time, everybody thought there will only be growth. There was so much of excitement over the demand in commodities and there was assured supply as well. Prices went up. All emerging markets had started showing a lot of growth potential. But this did not last. It was not a sustainable growth pattern. And this wasn't a sector crisis...it was global and every sector was impacted. Now we are starting from a new base; slowly the demand will improve in the emerging economies and prices will start to stabilise. They would not go back to the levels of 2007-08. (Those price levels) were irrational.
This would be a learning point...that you won't expect a boom of that sort, or, as some people would say, 'irrational exuberance'?
There are two points: one, that there is a lot of overcapacity which has been built and is being built. And the demand is not going to come
back to the pre-crisis levels immediately. I think we are looking at another four-five years. So during this time, I do not believe we will see such a high growth in prices.
You have gone in for production cuts at ArcelorMittal. How does it look going forward?
Today, we are operating at 50-55% capacity, which is not a real demand situation. This is based on apparent steel demand. Today, there is a destocking taking place in the system. Inventory levels are coming down to a much more reasonable level. During the pre-crisis levels, the inventories were supposed to last for four months. Now they last for six to seven. So there is plenty of inventory which is getting reduced. So, once this destocking is complete, there will be a realignment between apparent and real demand, which will allow us to increase our capacity utilisation to, maybe, 70% or 75%.
The Lehman Brothers crisis came as a huge wake-up call for most people. Were you in any state of preparedness for a huge crisis like that? How did you face the consequences?
The world was not ready, why ask me? No one in the world expected the Lehman crisis to bring such a big global crisis. Everyone, even the regulators and the governments, were expecting that this is a temporary crisis which will be overcome very soon. Everyone was expecting this crisis to be of short-term nature. Clearly, that was not the case. It blew up into a much larger shape. We were having our management conference (in Delhi) in September when we realised that things were not looking good. We got some alert from our own management that we had to do something. We were mentally prepared to look into the crisis from a longer perspective.
You definitely had an advantage as you were at least mentally prepared for something major like this?
You may say that. That is one reason why we announced the production cuts. We went on reducing our inventory levels. And we succeeded. Today the result is that we have become a much more flexible and agile company.
In a crisis, big companies resort to cutting down wasteful expenditure, (possibly) on R&D, and things they haven't been able to do earlier. What strategies did you evolve?
We initiated 3Cs in our company — cash, cost and customers. On the cash front, we have tried to generate more liquidity. In the last eight weeks, for example, ArcelorMittal has raised $11.5 billion. At one point, we had $23.5 billion of liquidity. So we succeeded in having enough liquidity. On the cost side, we cut our fixed cost, and worked on shortening our supply chain. On the customer side, we relooked at their demands. How could we supply them on a shorter notice; whether there is a change in demand pattern; and how we could improve our services to our customers, whether we could supply much more on just-in-time kind of model. We have not reduced our budget for R&D. In fact, we maintain our budget. And we have also added some new projects to our R&D.
How do you see the future of the automobile industry, which is a big customer for any big steel company like yours? And, second, you just talked about raising debt. How does it work out for a company as big as yours? You think bankers are still risk averse at this point?
I'll answer your second question first. Clearly, the bankers are more risk averse. The banking industry has suffered a lot of losses. They want to have better capital adequacy ratio. They want better liquidity. They have become much more selective. They want to look at all the projects and financing from a different angle. The easy money era is gone. Now it is selective money era, where the projects will be evaluated with different angles and criteria. And that is a good thing. On the auto sector, if you look at the US today, the demand is down to 9-10 million units. But these are not sustainable levels. Every year, the US scarps about 12 million units. You are scrapping 12 million units and you are buy
ing only 9 million units. So there is a gap. I think once the consumer confidence comes back — the American economy is based on the car industry, and consumers must have cars — slowly the demand will come back. But about restructuring the auto industry, whether it is General Motors, Chrysler, Honda, Nissan, Renault... any car, any model, ArcelorMittal Steel is in every fifth car in the world. We are a large supplier, so whether GM or Chrysler or Toyota. I mean if GM & Chrysler do not want to produce and if Toyota wants to take over the market share, we will supply more to Toyota. For us, our supply to the auto industry is critical.
There is a question put to every big company like yours which has done such deals like ArcelorMittal. Do you feel doing the ArcelorMittal deal at the time of the boom was wrongly timed?
I think it is a very natural question to ask. We have become such a large company, and questions like 'should we have done or should we have not done' do come to mind. But I am very pleased...The ArcelorMittal merger was the right thing to do and the best thing that could have happened to the industry. Today, if ArcelorMittal would not have combined, both the companies would have had much more difficult times than what we are having today. Our strategy, which we outlined during the merger, has got reinforced. One of our strategies was that we should continue to grow in the developing countries and the emerging markets. Today, we have 14% of our business in the emerging markets. We want it to grow to 25%. This too has been reinforced during this crisis. Clearly, the winners are emerging economies. For example, our India project. We feel now that was the right decision. Unfortunately, we got delayed in our approvals. But we have to do it and we will continue to work on this project.
You had started dabbling in another commodity—oil—a few
years ago and started a venture with ONGC in India. You have certain blocks in Nigeria and are now putting up a refinery in India. So, are you still bullish on the oil sector, is your interest as much as it was when you started?
No. See, from the beginning our interest in the oil sector had been very limited. I wanted to help in India's energy security. The Indian government wanted my support... So I said fine, I will do whatever I could in my limited way because this is not my core business. My core business is ArcelorMittal. When HPCL programme came to me, it was not moving. So, when the Indian government said would I be interested, I said I will support for the sake of energy security. So, my interest in the oil business is limited to the extent.

The refinery project is again stuck in procedural issues such as the state government not giving tax breaks. Does it frustrate you, because it's something you were doing only to help India.
These irritants are there in all the countries. So we should not isolate India as an example when there is a delay in approvals. In the case of Bathinda refinery, we are in good dialogue with the Punjab government. I was in India a couple of weeks ago. I met the chief minister (and state officials). They seemed to be very cooperative. They seemed to understand that they need to do something. So I am sure we will have very successful negotiations in the next couple of weeks. Work is going on. We have tens of thousands of people working on the refinery. The project is on schedule and is likely to be completed in May 2011. So nothing is stopping as far as the project is concerned. But we definitely need a level playing field in terms of assistance from the state government, similar to what the Gujarat government has been providing.
You've made headlines each time you bought a new house. This time you have bought a stake in one of the football clubs in the UK. What are your interests? Are you a sports enthusiast?
Yes! I love football. And I watch cricket also...not just football.
Are you going to be dabbling in IPL as well? Own a team at some point?
There is (already) so much of excitement in IPL that they don't need any more interest from outside India.
We consider you as an Indian, not (someone) outside India...
I think we cannot be participating in all kinds of sports... As far as our programmes are concerned, we have a Mittal Champion Trust that is grooming athletes. We are working in different areas like health, girls' education and building and promoting institutes. But whatever we are doing isn't enough. I think, as a family, we need to do more.
On a personal note, you've been one of India's biggest brand ambassadors. Yet, you left India a long time back. What does India mean to you today? What is the India that you want to talk about?
First of all, I'm very proud to be an Indian. When I left India, opportunities were not there. And if someone asked me, whether I would start if I was in India of today, the answer would be yes. Because I can see the strength of our country. I can see the future and I can see the excitement. So, that is all very important to be conveyed to the world that we are a country with very strong people, very strong ambition about the future and we are going to achieve it.

Mr Mittal, you've been a great friend of The Economic Times and have been associated with several of our initiatives; you have been the chairman of the jury for the prestigious business awards that ET does. We've now launched our business channel. What do you think the channel could bring? What could be our advantage?

I think the print paper will still have value, because not only do you want to look at television, but you also have to lead in print. The format will have to be different. Now a days, I find that all international papers are changing their format to suit customer needs. So whether it is a TV channel or a print media, all have to continue to evolve with customers' tastes.

ANY BIG LEADER YOU ADMIRE, OR A ROLE MODEL?
I don't want to name any one person. There has always been a learning process...and a continuous change of role models. When I started young I had a
different role model but as the business grows, comparisons with different role models begin because the requirements are different. I don't want to disappoint those who were not my role models. I will leave it there.


WOULD YOU LIKE TO TELL US ABOUT ONE OF THEM WHO CAME IN WHEN YOU WERE AT A SIGNIFICANT POINT IN YOUR LIFE?
I think, for me, the first role model was my father. I learnt a
lot of my initial business from my father... He has been my mentor and I still go and talk to him.


YOU STILL DO? WHAT IS HIS TAKE TODAY?
He always gives me his perspective on things. There is a great learning from his experience. If there is one role model I can name it is my father.





TATA STEEL, SUZLON HIT THE GDR TRAIL

AIM TO MOP UP RS 4,440 CRORE

TATA Steel and Suzlon Energy aim to raise up to $925 million (about Rs 4,440 crore at current exchange rates) by selling shares to international investors, three days after India's largest copper producer Sterlite Industries collected $1.5 billion (about Rs 7,200 crore) from a sale of shares in the US.
    The sale of these issues began on Monday and is expected to be over by Tuesday. Tata Steel, the world's sixth-largest steel maker, will issue global depository receipts (GDR) worth $400 million with an option to collect $350 million more, depending on investor response. Suzlon, the world's fifthlargest wind turbine maker, is offering GDRs worth $100 million, but has kept an option to collect $75 million more.
    A number of Indian companies sold shares in the market this year to repay expensive debt and fund expansion plans, encouraged by an improvement in economic indicators and a strong rally on local bourses. Tata Steel and Suzlon have been planning to sell shares to foreign investors for some time, but the success of the Sterlite issue that was sold out in six hours prompted them to hit
the market now, said a banker. Many other firms could follow their lead, he said, requesting anonymity.
    Sterlite Industries, part of the Londonlisted Vedanta Resources, on Wednesday raised $1.5 billion through an issue of American depository shares (ADS), the first such issue by an Indian company in two years. Sterlite said it would use the ADS issue proceeds to finance its power genera
tion plans and other planned capital expenditure. Of the $1.5 billion raised, about $500 million (about Rs 2,400 crore) would come from parent Vedanta, while $1 billion (about Rs 4,800 crore) was from institutional investors. Tata Steel will use the proceeds to part finance its growth plan, said a person familiar with the matter. Tata Steel to invest Rs 10k cr to raise capacity
"THEcompany doesn't have any liquidity requirement, nor any repayment obligation," he said, requesting anonymity.
    Tata Steel is in the process of investing Rs 10,000 crore in the country in the next two years to raise capacity by 3 million tonnes. The company has an annual production capacity of 30 million tonnes in India and overseas.
    Tata Steel's GDR is priced at the rupee equivalent of Rs 370. At this price, a collection of $750 million will mean a 3.5% equity dilution by the Tata group, which currently holds around 34% stake in the company.
    Tata Steel's GDR rose 2% to $8.07 on the Luxembourg Exchange on Monday, extending the gain this year to 80%. Tata Steel shares fell marginally to close at Rs 391.10 on the BSE on Monday. Tata Steel officials declined comment on the develop
ment. The Tulsi Tanti-controlled Suzlon Energy will utilise the proceeds of the issue to retire debt.
    The company also plans to divest its entire 61% stake in its Belgian subsidiary Hansen Transmissions to retire debt of around Rs 12,000 crore, said a person aware of the development, who asked not to be named. The GDR is priced at the rupee equivalent of Rs 89.55, he said. Suzlon has been in talks with potential buyers including Spanish wind turbine maker Gamesa and Vestas of Denmark to sell Hansen.
    Suzlon is expected to earn over $1 billion from the sale. Suzlon shares fell marginally to close at Rs 94.10 on the BSE on Monday. Citi, UBS, JP Morgan and Goldman are arrangers to the Tata Steel issue while Citi, Deutsche Bank and Credit Suisse advised Suzlon.


FIIs may get more play in govt paper

G-Sec Investment Cap May Be Raised As Govt Tries To Ensure Its Borrowings Don't Dry Up Liquidity

 THE finance ministry and Reserve Bank of India (RBI) are readying measures to improve liquidity in the system and mute talk of the Centre's massive borrowing programme inflating government bond yields.
    As the first step, the investment cap in government securities (G-Secs) by foreign portfolio investors, or FIIs, is likely to be raised, an official privy to the move said. The current limit for FII investment
in government securities is $6.5 billion while for corporate debt, it is $15 billion. FIIs are close to exhausting their investment limits in G-Secs while there is plenty of room for such inflows in corporate debt.
    "Once global debt flows resume, global investors may find government paper attractive. The overall investment ceiling in G-Secs will be relaxed after the current limit is breached," said the official, who asked not to be named.
    Indeed, foreign portfolio investors have been flocking to G-Secs in recent
months, especially after the new government took over, buying short-term government paper (91-day and 364-day treasury bills), besides one-year and three-year G-Secs. For these investors, these investments are attractive given the higher yields and short maturity.
    The Centre and RBI will also be making other efforts to send out signals to the market that the borrowing programme will not lead to undue hardening of bond yields.
RBI may use CRR to ease liquidity
FOR one, the RBI already has Rs 88,000 crore of Market Stabilisation Bonds for fiscal 2009-10 to tap into. The central bank could use this corpus to lend to the government, thus reducing pressure on fresh borrowings from the market.
    And when appropriate, RBI could also use other monetary tools such as the cash reserve ratio (CRR) to further ease liquidity in the system. The government's gross borrowing programme of Rs 4,50,000 crore for 2009-10 had raised fears that the private sector will be left with little resources once the economy shows signs of picking up.
    Such fears were assuaged by the finance ministry, which has said half of the total borrowings could be done through RBI's Open Market Operations (OMO) window. It now turns out that OMOs need not be conducted on such a large scale, as RBI already has Rs 88,000 crore of MSS bond funds. Also, by easing FII limits in government debt at a later stage, more liquidity can be infused to help soften bond yields. Softer government bond yields have an overall impact in maintaining a moderate interest rate climate.
    Also, government officials said that the the budget document shows a capital outflow of Rs 30,000 crore on account of the government's subscription to new Special Drawing Rights (SDRs) of the International Monetary Fund. This will merely be an accounting entry where the forex reserves will be drawn down and IMF SDRs' balance increased. Therefore, this will have no impact on liquidity, though technically this appears as a borrowing item.


‘Emerging nations to lead turnaround’

THE LNM INTERVIEW

India & China will lead the global recovery, but we must cut red tape to keep investor interest alive, says the steel baron

THE global economic slump may be showing signs of picking up ,led by the growth in emerging economies such as India, but there is need to take a cautious approach as some segments like real estate and consumer credit "are still to completely flush out their toxic assets", LN Mittal, chairman and CEO of Arcelor-Mittal, said in an exclusive interview to ET.
    In an hour-long interview at Arcelor Mittal's London office, steel baron Mittal said: "...the slowdown in the decline is in itself a big comfort. But we have to continue to monitor and wait."
    The green shoots of revival have begun to appear in some parts of the world, but it will take
at least three to four years for demand to come back to the "pre-recession levels."
    Commodity prices, which reached irrationally exuberant levels, have begun to show early signs of stability, and may move towards a more "rational plateau" in the near future.
    The global recession has not only forced companies to adopt new strategies on cost and customer service, but it has also changed the rules in the credit market.
    "The easy money era is gone. Now it is the selective money era, where projects will be evaluated from different angles and criteria. And that is a good thing. I think that is the right thing to do; there will be more prudent policies."
Foreign investors eager to invest in India
SPEAKING on the roles of emerging economies, he said that while the government stimulus packages have already begun playing out with China projecting a 8% GDP growth, the election of the new UPA government with a strong mandate has brought in a new air of "confidence and excitement." Foreign investors are looking forward to India as a market but there is a need to expedite clearances and remove bureaucratic hurdles.
    The two steel projects being planned by the company in Jharkhand and Orissa are a case in point. "The government can speedily approve the projects. The government should start educating different states that these investments are good for them...We are keen to invest in the steel industry. We may read everyday that there is a protest or violence. We need to avoid this. We need to educate the people that it is not a land-grabbing scheme. It is a scheme for the future."
    Asked about the Bhatinda refinery which he is developing in partnership with Hindustan Petroleum, Mr Mittal said the project will be completed by May 2011 as per schedule. He added that the company was hoping for tax breaks, of the kind offered by Gujarat.






Thursday, July 16, 2009

Big IT to gain as global cos tap best-of-breed vendors

 TOP Indian tech firms including TCS, Infosys and Wipro are currently pursuing several outsourcing contracts worth $150-200 million each, even as customers such as British Petroleum (BP), insurance major AXA and British bank Lloyds seek to reduce the number of IT suppliers they work with in order to rationalise costs.
    At a time when companies are attempting to cope with lower demand for their products and services, outsourcing customers plan to work with fewer vendors at lower rates. Last month, Australia's biggest phone firm Telstra selected Infosys and EDS for a $450-million application development and maintenance contract and shifted work from IBM and Mahindra Satyam to these vendors.

    BP, which spends in excess of $300 million every year on outsourcing, currently works with over two dozen IT suppliers and plans to rationalise its supplier base to about five. When contacted by ET on Tuesday, a BP spokesman confirmed that his company is currently in the process of reducing the number of suppliers.
    "Yes, we have been reviewing our strategic IT providers and are getting close to the end of that process, but I
can't confirm the number of current or possible future providers," said BP spokesman Robert Wine.
    Experts such as Siddharth A Pai, partner and MD of sourcing advisory firm TPI, said, that many customers are attempting to centralise their buying power for better rates.
    "During boom time, many of these outsourcing decisions were taken by operational managers. Now, companies want to rationalise those decisions
by moving towards best-of-breed vendors," he said. In another instance, one of the biggest European insurance firms AXA plans to bring down its number of IT suppliers from seven to three. While TCS supports AXA's UK operations, Wipro provides IT services to the insurance firm's French business. "AXA is a large outsourcer, with hundreds of millions of pounds worth of work being outsourced," said an outsourcing expert.

India Inc’s all set for a swinging Q1

INDIA Inc may be heading for a profitable year, with early corporate results for the first quarter of the new fiscal showing significant improvement in margins despite slower revenue growth. The first set of 59 non-banking companies to come out with their numbers for the quarter ended June 30 have reported a 21% year-on-year growth in net profit, the highest in four quarters, while their aggregate net sales grew 11%, an ET study shows.
    Banks were excluded from the study as their income is dependent on the interest rate regime and does not necessarily reflect demand growth in the economy.
    Slower sales growth indicates that the corporate sector is yet to see a significant pick-up in demand but there has been a major improvement in profit generation as cost pressures have eased. The companies saw expenses like wage bill, raw material costs, interest costs and fuel and power expenses rise much more moderately than before.
Wage bill growth moderate at 9%
THE wage bill, for example, grew just 9% in the first quarter compared with 34% in the year-ago period. However, it may be too early to take a call on overall corporate results for the quarter as the sample size is small and includes mostly small and medium-sized companies.
    "Some companies' performance has exceeded analysts' expectations but we need to wait for more companies to declare results," said Ambareesh Baliga, vice-president of Karvy Stock Broking. "Although the stock market rebound over the last few days is partially due to better corporate results, it is moving up largely due to international markets besides the improving monsoon scenario and positive policy announcements after a disappointing budget," he added.
    The sample included Infosys Technologies, Larsen & Toubro, Power Finance Corp, Rei Agro, Jubilant Organosys, Sintex, Prism Cement, Blue Dart Express, Rallis India and Praj Industries, among others. These companies' aggregate net sales have been consistently slowing after
peaking at 39% in the first quarter of 2008-09.
    Although the economy had started slowing in 2007-08, net sales of companies continued to grow in the early part of last fiscal largely due to higher prices of products and services as firms passed on the increased costs of operations to consumers. The recent decline in producer inflation as captured by the wholesale price index, which has turned negative over the last few weeks, may have also influenced slower sales growth.
    Clearly, the slowdown in demand is yet to bottom out. But profitability may have seen the worst in the quarter ended March, when net profits (excluding extraordinary and other income) for the firms in the study grew just 4%.
    Net profit growth has accelerated sharply to 21% in the June quarter, with PFC, Prism Cement, Dhampur Sugar, Shiv Vani Oil & Gas, Rallis India, Geojit BNP Paribas and Bajaj Auto Finance recording more than 25% jump.
    Although L&T reported a tripling of its net profit, this was largely due to a
one-time gain out of shares sale in Ultratech Cement, which was factored out in the study.
    Interestingly, if the top five firms in the sample, which account for four-fifths of aggregate revenues of the set — namely, Infosys, L&T, PFC, Rei Agro and Jubilant Organosys — are excluded, the story of improving financial gets even stronger. The remaining 54 companies have seen a turnaround in both revenue and profit growth during the first quarter.
    Aggregate net sales of this group rose 7% in the March quarter after shrinking 12% in the previous quarter. These firms, which saw profits drop more than 50% during the second half of 2008-09, saw their adjusted net profits shooting up 46% in the last quarter.
    These companies have also posted a strong 34% growth in operating profit for the first quarter of the financial year, the highest over the last five quarters. Their raw material bill dropped 6%, while an 11% rise in salary costs was the slowest in five quarters. Their cost of interest increased 12% compared with a 49% jump in the first quarter of 2008-09.


Wednesday, July 15, 2009

GOVT TARGETS Rs 15k cr FROM DISINVESTMENT

SELLOFF PLAN TO BE READY BY MID-AUG

Borrowing Schedule To Be Finalised Today

THE government will come up with a road map for the sale of its stake in public sector companies by mid-August, finance secretary Ashok Chawla said.
    He also said the finance ministry and the Reserve Bank of India would finalise the government's borrowing programme for the financial year on Thursday. The government will have to raise more than Rs 4 lakh crore this year to finance the highest fiscal deficit on record.
    "We will have a clear road map
in the next three or four weeks ... The government will retain 51%, but the road map for disinvestment in terms of actual companies ... is being worked out," he said at a Budget discussion organised by industry body CII.
    While Mr Chawla declined to give the ex
act amount that will be raised through disinvestment in the current fiscal, another government official said the road map could target raising Rs 15,000 crore in current fiscal, depending on market conditions. The Economic Survey had recommended an annual disinvestment target of Rs 25,000 crore.
    The public sector firms that figure in the road map include NHPC, Oil India and Tyre Corporation. Disinvestment in NHPC and OIL India alone is expected to fetch around Rs 3,500 crore. The finance ministry had, on Tuesday, held discussions with officials of some ministries to finalise the road map.

    "The ministries have been consulted. They are going to look at what is feasible, what percentage is to go when. There is a certain process which takes time," he said.
Govt to borrow Rs 15k cr each week till September
MR CHAWLA said the government plans to borrow Rs 15,000 crore every week till September as part of its effort to front load most of the current fiscal's total borrowing of Rs 4 lakh crore, or 40% of the total expenditure of over Rs 10 lakh crore. This is to leave room for private sector borrowers in the second half of the fiscal year, he said.
    "As the economy revives, we hope it will in next three months or so, there will be demands for more borrowing by other players and therefore, we are trying to borrow more directly at this stage," he said.
    The RBI will support the government through open market operations to meet its funding requirements and the effort is to ensure that private companies are able to find enough funds at the right cost. After the interim Budget, the government and RBI had come out with an
indicative calendar for market borrowings for the first half and had pegged the requirements at Rs 2.41 lakh crore. Out of this, close to Rs 1.65 crore has already been borrowed.
    Mr Chawla said there is enough liquidity in the system and market had good appetite which was evident from bond yields. The benchmark 10-year bond yield, which touched an all-time low of 4.86% in early January, rose to 7.37% by mid-March, its highest since November 2008, on concerns that the government will borrow heavily to fund economic growth. At present, the 10-year bond is hovering at 6.81%.
    He also ruled out any plan to roll back tax cuts till there is firm economic recovery.
    Mr Chawla said the government would pursue financial sector reforms that have been in the offing. To ensure better targeting of subsidies, the government was carrying out a systemic reappraisal to make them merit-based, he said.


Ticket to Hollywood: Anil to invest $825 million in JV with Spielberg


Mumbai: Making his Hollywood debut, Anil Ambani has announced to invest around $825 million (around Rs 4,000 crore) as a first tranche towards producing six films a year for global audiences. In one of the largest deals in global cinema in recent times, Ambani has teamed up with Hollywood icon Steven Spielberg for their LA-based DreamWorks Studios. In a conference call from New York, Ambani and Spielberg said movies produced by Dreamworks would be be distributed by Walt Disney globally, while the exclusive rights for India, "including DTH, DVD and theatre rights'', would rest with Reliance Big Entertainment. On being coaxed for a breakup, Anil Ambani said $325 million would come from his personal contribution, "$150 million would be chipped in by Disney and the rest would be with banks and institutions.'' "Clearly, the outlay of $825 million is what we are aiming at in the next three years: $325 million will be in the form of equity,'' Ambani said.
    Reacting to suggestions that an investment outlay of over $1.5 billion for Dreamworks was on the cards, Ambani said, "There is no scaling up or scaling down of investment. We will begin with $825 million and this is the largest
in recent times.''
    Spielberg said he looked forward to visiting India to meet filmmakers. "This venture with Reliance opens a new door to our future,'' he said. "Their visionary step has given us a new set of dreams to work toward. I am very excited that we are back in business and are independent of any motion picture studio. Now, we feel we have the independence in our partnership with Reliance,'' Spielberg said, alluding to Dreamworks earlier separation when it was sold to Viacom's Paramount for $1.6 billion. To this, Ambani said: "We are delighted to partner with such uniquely talented individuals as Spielberg and Stacy Snider. Ever since we looked at their business plan, I never doubted that we would succeed in providing them with financial muscle required to realise their dream.''
Coming To Cinema Near You
39 Clues
An epic family adventure about two ordinary kids, whose discovery that they are part of the world's most powerful family, sets them off on a globe-trotting treasure hunt.
    Produced by Spielberg & Deborah Forte
Cowboys and Aliens
Science fiction collides with the Old West in this action movie about an outlaw, who gets caught up in an epic conflict when aliens invade the land now known as "Area 51."
    Co-financed along with Universal Studios
Dinner For Schmucks
A comedy about a young man, who gets more than he bargained for, when he makes
a bet that he can find the world's biggest loser to be a guest at a dinner party.
    Directed by Jay Roach
Motorcade
A heart-pounding action movie about a disgraced Secret Service agent, who happens to be in the wrong place at the right time, when the President is kidnapped.
    Directed by Len Wiseman
Hereafter
A supernatural drama about three strangers from around the world who each face a near-death experience.
    Written by Oscar-nominated screenwriter Peter Morgan
Deal to boost filmmakers' sentiments
Mumbai: ADAG chief Anil Ambani announced on Wednesday that his associate Amitabh Jhunjhunwala and Spielberg's partner for decades Stacey Snider, who has been associated with projects like Eric Brockovich, The Mummy and American Pie, would also serve on the Dreamworks board.
    The ADA groups entertainment business owns 428 cinema screens across India, the US, Malaysia and Mauritius.
    Last year, the firm had entered into pacts to develop Hollywood projects with stars like Brad Pitt, Tom Hanks, Julia Roberts, Nicolas Cage, Jim Carrey and George Clooney. The first DreamWorks motion picture to be released under the Touchstone Pictures banner is scheduled to hit theatres by 2010, and the production house said they have been actively acquiring properties and developing projects for an early release. In recessionary times, the ADAG investment will boost sentiments of filmakers.
    Film-maker Rohan Sippy said, "The last one year has been challenging for everyone, including Hollywood, no one has been able to escape the meltdown. Though I don't know much about the deal but it is fantastic some more good films will get made besides Speilberg is an icon of sorts.''
    Some of the films set to hit the floor under the Dreamworks banner include 39 Clues, based on the bestselling book series from Scholastic; Cowboys and Aliens, a science fiction film; Dinner For Schmucks, based on the French film, The
    TNN

Dinner Game.



 

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