S&P cuts Tata rating over Jaguar Land Rover worries

A leading global ratings agency on Tuesday downgraded the credit rating of India's top vehicle company Tata Motors, citing worries over its struggling British luxury car unit Jaguar Land Rover.

Standard & Poor's Ratings Services said it had lowered its long-term corporate credit rating on Tata Motors Ltd to 'B' from 'B+', pushing the company's ratings deeper into "junk debt" territory.

It also gave its long-term corporate credit rating a "negative outlook," meaning a possible further downgrade for Tata Motors, which recently launched the Nano, the world's cheapest car that retails for just over 2,000 dollars.

"We lowered the rating on Tata Motors to reflect the challenging operating performance at Jaguar and Land Rover for the year ended March 31, 2009, and our expectations of a similar operating performance in fiscal 2010," said Standard & Poor's credit analyst Suzanne Smith.

"This, along with a high debt level, has placed significant pressure" on Tata Motors' finances," Smith said in a statement.

The downgrade came as Britain's Observer newspaper reported that Tata was close to agreeing a financial aid package with the British government for Jaguar Land Rover (JLR) after a year of difficult negotiations.

Tata Motors announced a surprise 58 percent jump in first-quarter net profit to 5.13 billion rupees (105 million dollars) last week, helped by a change in its accounting policy.

But the company still has to announce consolidated financial results for the first quarter of the financial year that would include its loss-making JLR subsidiary.

The negative credit rating outlook "reflects our view on the uncertainty over when JLR's operating performance will improve, given the weak global auto market conditions," Smith said.

"It also factors in Tata Motors' highly leveraged financial risk profile, given extremely high debt levels," she said.

Tata bought motoring icons Jaguar and Land Rover from Ford Motor Co last year for 2.3 billion dollars. Their sales have been hit by the global downturn, which has hurt the market for luxury vehicles.

The company's vice-chairman Ravi Kant said in June that Jaguar Land Rover global sales for the 10 months ending March fell by 32 percent to 167,000 vehicles from 246,000 the previous year.

Refined copper output of China, India triples: ICSG

The annual production of refined copper in Asian giants China and India more than tripled during 1999-2008, according to International Copper Study Group (ICSG).

In its latest statistical year book, the Portugal-based intergovernmental organization covered world copper supply and demand data for the decade ending 2008.

In the decade, the world copper mine production rose by 21% from 12.8 million tonnes to 15.5 million tonnes. On a regional basis, Africa, Latin America and Asia experienced the highest rise of 89%, 35% and 29% respectively.

According to the year book, the annual world refined copper production increased by 25% in the decade, with an average growth rate of 2.6%. China’s production increased by 2.6 million tonnes to 3.8 million tonnes and India by 470,000 tonnes to 675,000 tonne. While countries like Chile, Australia, Japan and South Korea also witnessed significant increase, the US experienced a declined of 41% in refined copper production.

During the period, world refined copper usage increased by 26% from 14.3 Mt to 18 Mt. Growth was largely driven by China, given that the global usage growth rate excluding China was only 0.1% during the period.

China’s usage during the decade increased by around 3.7 million tonnes or 245% while that of Asia, excluding China, increased by 680,000 tonnes or 18%. Against this, usage decreased in the US by 1.2 million tonnes or 28% and in the EU-15 countries by 440,000 tonne or 11%.

The ICSG statistical year book was released at the end of July. Earlier, in the month the study group released its monthly bulletin with preliminary data for April 2009.

According to the bulletin, the world refined copper market indicated a deficit of around 120,000 t for April 2009. The deficit was caused by high net Chinese imports and the consequent rise in their monthly apparent usage (which does not include unreported stocks).

For the first four months of 2009, the world copper usage declined by 2.9% compared with the same period in 2008. The pace of decline was supported by a nearly 38% rise in Chinese apparent usage against a decline of 18.5% in the remaining countries.

In developed markets, the usage remained sluggish as it experienced a decline of 23%, 42% and 23% in US, Japan and EU-15 countries.

While China apparent usage surged, the actual usage as indicated by the production of semi manufactures increased only by 2% in the four months. The net imports of refined copper in the duration increased by 119% more than offsetting a 42% decline in the scrap imports compared with the first four months of 2008.

Sugar prices shoot to 25-year high in global market

Gear up for real pricey sugar, Rs 30/kg may soon turn history with newer, higher, highs. With global white sugar prices hitting a 25-year phenomenal high at $500/tonne and raw sugar prices following suit, the country's sugar mills may not find it uneconomical to import despite the government's easing imports with an extended deadline to end March 2010. Unless the government, already strapped for sugar stocks to release in the open market and check prices, goes slow on this and other administrative moves to control consumer price.

Crucially, the sugar industry is of the view that at the current prices in the international market, the import of raw/white sugar even at nil rate of duty becomes increasingly unviable.

Ironic, since the government only recently extended the August 1 deadline for duty-free raw sugar imports. In addition, it has also allowed duty-free imports of up to one million tonne white (or ready to eat) sugar till November 30.

Significantly, the development of sugar prices shooting up to marked highs is being attributed in the global market primarily to signals that India will be importing a substantial quantity of both raws and whites. On Monday, the Liffe October white sugar surged in London to $505.9 a tonne, the highest level since the launch of the contract in July 1983.

Andy in New York, ICE October raw sugar rose to a three-year high above 19.3 cents a pound, fast approaching a 2006 peak of 19.73 a pound. Currently, raw sugar prices is trading at a three and half year high. But the key ICE March 2010 contract, which will be the benchmark later this year, moved to 20.44 cents. At that level, raw sugar would be at a 28-year high.

World raw sugar prices rose steeply from only 11.4 cents/pound in January 2009 to 18 cents per pound in July. Worse, traders have begun projecting raw sugar prices at an unheard of 30 cents/pound. Last week, Kushagra Bajaj, Joint MD of one of the country s biggest sugar mills, Bajaj Hindusthan, projected a high raw sugar price of 25 cents/pound, indicating that higher import prices for raw sugar could make it tougher for the industry to realise its production/processing price unless the government allowed domestic retail prices to climb up further.

Currently, retail prices rule anywhere between Rs 27-Rs 30/kg. According to industry monitors, the landed cost of imported raw sugar at the prevailing price works out to around $470 a tonne and the ex-factory cost of processed sugar from the imported raws is unlikely to be lower than Rs 26,000/tonne in the coastal States and Rs 28,000/tonne for UP, even without including financing costs. At the projected retail price of around Rs 35/kg, the ex-factory price of sugar would work out to Rs 28,000-30,000/ tonne, the only way in which the sugar industry feels it can realise its processing costs on imported raws at high prices.


As an offshoot of such high import and processing price for mills, problems could compound further on many fronts for the already sugarcane strapped industry, which has faced an increase of about 60% in raw sugar prices during the year and a similar trend in white sugar prices as well, with demand outstripping consumption significantly in the world market.

In the last two years, 2006-07 to 2008-09, the sugar price realisation was uneconomical, leading to large arrears by mills in sugar cane price to farmers. A loan of Rs 4000 crore was disbursed with a two year moratorium and repayment over four years. The industry is already carrying a huge liability and repaymetn starts from 2009-10. In the meantime, the cost of production of sugar has increased steeply in 2008-09 due to higher cane price payment, under utilisation of capacity and low recovery. The government should urgently adopt a balanced policy to empower the sector by allowing a reasonable retail price for sugar so that the industry can realise its production price and cane price arrears to farmers are cleared on time and they have a good incentive to increase sugarcane production, an official of an UP-based sugar mill emphasized. The sugarcane area in UP is projected to shrink by almost 6%-8% to under 2.02 million hectares in the 2009-10 season.

Some 2.5 m tonnes of sugar have already been imported this year but the soaring international prices are expected to put a big spanner in the works for the plans of the industry to import substantial quantities to meet high doemstic demand. On the flip side, the government has already made unprecedented sugar releases into the open market this year, ensuring that there is nil carryover stocks into the 2009-10 season, thus increasing pressure for big imports. But it could still be a Hobson s choice for the government on allowing sugar retail prices to shoot up further. This, despite the political sensitivity over keeping prices down, especially in the festival period starting in early September right through to the end of the year. Sugar has a 3.6% weightage int he WPI and has contributed noticeably to higher inflation rates, but the government is working on rationalising the weightage downward.

In a bid to keep domestic sugar prices down, the governmetn also extended sugar stockholding and turnover limits upto the end of the year and banned futures trade, apart form easing imports, both under OGL and the AL scheme.

Universal ID: Going beyond smart cards & databases

The June 2009 announcement of the appointment of Nandan Nilekani, cofounder of Infosys, as the head of UIDAI (Universal ID Authority of India) has created a lot of excitement.

What is missed out in the initial reactions is the larger issue involved. The government must be congratulated in correctly terming the office as “Universal ID Authority of India”. The terms “universal ID” “identification” and “authority” are very pertinent.

In recent years, many government departments have independently started issuing IDs to citizens of India, primarily to suit their interaction with the citizens. The home ministry through passport to track their travel in and out of the country. The income-tax department through PAN (permanent account number) to track income and expenses for the purpose of taxation. The Election Commission through their voter identity card. There are also ration cards, BPL card for poor families, driving licence and gas connection certificate

Common among all these experiments is the “limited purpose” of the intended use; no sharing of information among the agencies of the government. The UIDAI goes beyond “identity cards” to the very “identity” itself. It is important to evolve“architecture” of an identification system than the identity itself.

First, being “universal” in nature it is best to have a system that can accommodate citizens, permanent residents and visitors, though the system might focus on citizens first.

Second, it must be prospective in the sense that on the day when the system comes into force there is an enabling mechanism to put the system into action; in that sense it may be better to design a system that might start functioning 20 or 25 years from now, but with the guarantee that the eco-system to support such a system will be in place, rather than rushing through with one system or another.

Third, it must have system to take care of normal accidents — users losing an identity proof, users changing their status — location, job, marital status, getting children, acquiring property, occupying special position such as member of the parliament, prime minister of the country, and even special cases — facing disability, liquidation, criminal proceedings, change of name or sex.

Fourth, there must be a system of incorporating changes and re-issuance of identity proof that is easy, affordable and hassle-free , and yet making it rather difficult for end users with malicious purposes to do “identity theft” . Fifth, the identity system must have natural start and end points; for example, an identity system may start at the time of birth and accordingly it must be captured along with the birth of the child anywhere in the country; alternately, the identity proof issuance may happen at a specific age or at a specific stage — for example at the age of 18 — on acquiring the right to vote.

Sixth, there must be a system that “links up” the identity, say of two individuals at the time of marriage, children’s identity getting linked to parents with a provision that such linkages may have to be re-established during special circumstances (divorce, adoption in case of children).

Finally, the system must form the foundation for many identity proofs — passport, PAN, driving licence, voter identity card — and be able to keep the linkages intact and secure (ability to link all identity proofs, for example, all passports issued, all linked passports (spouse, children, parents), drivers licences issued at different places , voter identities issued.

Ultimately, the identity system must address all possible end uses of identity proof, for example, access to social benefits — pension, social security, subsidies, if any, and, insurance; right to vote, right to drive, right to drink, right to acquire property, right to job, help government to track — taxes, travel out of country, movements in case of bail, and, help citizens in getting services — bank account, BPL card, senior citizens benefits, healthcare, education.

SBI, Tata Motors, Sahara figure in top 100 tax defaulters list

Country's largest state-owned bank SBI, automobile giant Tata Motors and oil major Indian Oil Corporation, besides Sahara India and its Globe's biggest M&A dealmakers promoter Subroto Roy figure in the list of top 100 tax defaulters in the country.

Disclosing the list of defaulters in the Rajya Sabha today, the Minister of State for Finance S S Palanimanickam said in a written reply that top 100 tax defaulters owe to the exchequer whopping Rs 1.41 lakh crore -- more than three times the amount the government spends on NREGA scheme annually to provide employment to BPL families.

The Centre is taking various steps to recover the outstanding dues, the minister said, adding that the government has requested the adjudicating authorities like ITAT and Settlement Commission "to dispose of high demand cases expeditiously."

As per the list, disgraced stud farm owner Hassan Ali Khan tops the list of tax defaulters with an outstanding arrear of more than Rs 50,000 crore.

The list of tax defaulters also includes stock broker late Harshad Mehta and his associates and other brokers like A D Narrotam and Hiten Dalal.

While the SBI owes Rs 333.6 crore in taxes, Tata Motors and Indian Oil Corporation have to pay Rs 206.5 crore and Rs 210.3 crore to the treasury.

As regards Sahara, many of its group companies figure in the list of defaulters, while its promoter Roy owes Rs 230 crore to the exchequer.

AIG taps former MetLife chief as CEO

Troubled insurer American International Group Inc has chosen former MetLife chief Robert Benmosche as its new CEO, The Wall Street Journal reported, citing people familiar with the matter.

The AIG board approved the choice Monday morning, the newspaper said on its website.

An AIG spokesman was not immediately available to comment. Benmosche would succeed Edward Liddy as AIG chief executive. Liddy joined the company as chairman and CEO last September, within hours of the company getting billions of dollars in support from the U.S. government after nearly collapsing under losses on repackaged mortgages it had guaranteed.

In May, Liddy said he planned to step down once replacements were found to fill the CEO and chairman roles.

AIG shares were down 13 cents, or 1 percent, to $13.01 in late-morning trade on the New York Stock Exchange.

Suzlon shares fall 4 pc on poor earnings

Shares of wind turbine maker Suzlon Energy today fell by over four per cent on the Bombay Stock Exchange after the company reported a loss of Rs 452 crore for the first quarter of 2009-10.

The scrip closed at Rs 95.65 on BSE, down by 4.11 per cent over the previous close. It had plunged by 9.02 per cent to an intra-day low of Rs 90.75.

On the National Stock Exchange, the stock closed lower by 4.16 per cent at Rs 95.65.

The company has reported a net loss of Rs 452.67 crore for the first quarter ended June 30 due to lower sales volumes.

On the volume front, over 6.21 crore shares exchanged hands on NSE and 2.1 crore shares were traded on BSE.

The BSE 30-share Sensex closed at 15,924.23 points, up 253.92 points over the previous close.

NHPC IPO to hit market on August 7

Central government enterprise, National Hydroelectric Power Corporation (NHPC) will raise Rs 6,000 crore from the Initial Public Offer (IPO), which will hit the market on August 7.

"Rs 4,000 crore will be used to finance the under construction projects of the company while Rs 2,000 will be given to the government of India," NHPC Director (project) JK Sharma told reporters here.

For its IPO, NHPC has fixed the price band between Rs 30-36 per equity share.

On the ongoing projects, Sharma said that 11 projects of 4,622 MW capacity are currently under construction at various stages.

"The company is awaiting government's nod for five more projects with a capacity of 4,565 MW and certain joint venture projects having capacity of 2,166 MW," he said.

"Our current installed capacity is 5,175 MW and by 2013 end, our total installed capacity will be 10,000 MW," Sharma said, adding, most of the under construction projects are going to be commissioned on schedule.

Nifty likely to head to 4880 this week:Finquest

Finquest Securities expects Nifty to head towards 4880 levels this week.

“For the week, Nifty appears to be positive and seems likely to head towards 4880 levels. As Nifty attempts to breach the prior high at 4693, we could witness bouts of profit booking. For the day, Nifty appears to be positive and is likely to edge higher towards 4720 levels,” said the technical report.

Merits of Mutual Funds and ULIPs

“Its success lies in the fact that it is an insurance plan and not an investment or a welfare plan,” said James Franklin Roosevelt

Sorry Mr Roosevelt, but insurers here would beg to differ. Thanks to an array of ‘insurance cum investment products’ , the idea of a complete insurance product for investors seems to have diluted.

Yes, you have guessed it right. We are talking about Unit Linked Insurance Plans (ULIPs), which are currently the most popular of all insurance schemes available in the market. But why, as someone would rightly point out, is an ULIP being discussed in an Investor’s Guide edition purely dedicated to the Mutual Funds (MFs)?

ULIPs and MFs, have locked horns against each other for quite some time now. The recent debate roots from scrapping of the entry load from the MF schemes, closely followed by Insurance Regulatory & Development Authority (IRDA) capping the ULIP charges.

But why, after all, are MFs and ULIPs, up against each other?

The answer, though simple is highly complex to deal with. And the answer lies in the manner in which the ULIPs are sold. Investors here are perceived to believe that they are buying an insurance plan with a built-in add-on feature of mutual fund investments. Thus prima facie this product seems an attractive ‘buy one get one free’ offer. But this perception goes for a toss when the investor realises that the element of insurance is just miniscule. And this revelation pops only after the scheme is bought.

Most ULIPs available in the market today offer an insurance cover in the range of 5 -10 times the amount of annual premium. Thus, for an investor paying a premium of Rs 20,000 per annum, the embedded value of insurance is simply a lakh to two lakh rupees. In a stark contrast, a traditional pure term insurance plan can fetch an insurance cover of about Rs 50 lakh with the same amount of premium.

Moreover, unlike a traditional endowment or money-back policy, ULIP does not pay back the amount of sum assured if the holder survives through the policy term. The amount receivable on maturity is purely the fund value whose growth is directly linked to the markets. There is thus a very thin line of distinction between an MF and a ULIP as far as the structure and investment strategies are concerned.

Another concern surrounding the ULIP is the fact that if at the time of maturity of the policy, the markets are sailing in troubled waters, investors have no option but to accept the returns as determined by the market then. Unlike an MF, they do not have an option to hold on to their investment until the markets recover.

Thus, though MFs and ULIPs are said to be similar, the similarity is restricted to the product structure and investment strategies. The point where this similarity ends, the dissimilarities begin.

The starting point of this dissimilarity is the extent of charges levied by both these products. An ULIP is normally loaded with a number of charges ranging from premium allocation charge to fund management fees to policy administration charge, mortality charge, top-up premium charge, switchover charges and so on. Of these, the premium allocation charge, which usually varies from about 10% to 100%, is the prime source of income for insurance distributors and is highly criticized for robbing the investor of his invest-able surplus.

On the other hand, the prime source of revenue in case of an MF is the fund management charge, which is currently capped at 2.5% per annum. There is also a small percentage of penal charge, ranging from 0.5% - 1% called as exit loads, levied in case of premature withdrawals. Premature withdrawals here generally refer to withdrawals within one year from the date of investment. The net amount invested is thus much higher in case of an MF vis-à-vis a ULIP. However, having said that, it would be wrong to conclude that ULIP is a bad product and that a MF scores over an ULIP at all times.

ULIPs are known to be tax-friendly since both the investments and the returns are fully exempt from tax. Moreover, ULIPs offer flexibility to switch between the equity and the debt investments, which are currently absent in case of an MF. This switchover, though, attracts some cost. But then ULIP is beaten by an MF when it comes to liquidity, as an early exit from an ULIP is nothing less than suicidal.

To prove this thesis, ETIG analysed two investment options – one in a ULIP and the other in an MF to analyse the returns from these two competing products over a period of time. And the results are interesting indeed. Under both the options we have assumed the age of the investor to be 30 years and annual amount of investment is Rs 20,000 for 20 years. Under the first investment option, we have assumed a ULIP scheme with a 100% exposure to equity markets.

Assuming the risk cover to be five times the first premium installment, the sum assured is Rs 1 lakh. As far as charges are concerned, we have assumed a Premium allocation charge (PAC) of 20% for the first two years and 10% for the third year. Thereafter, PAC is uniform at 2% p.a. throughout the policy term. Policy administration charge is fixed at Rs 60 per month throughout the policy term while mortality charge is based on the age of the policyholder and the amount of risk cover. The same thus increases with the age of the policy holder during the policy term.

Another charge factored in is the fund management fee, which is 1.5% p.a. and gets deducted from the fund value on a regular basis. Thus, in the first three years of the policy, almost 25% of annual premium is deducted towards these different charges.

Under the second investment option, the premium paid towards a pure term insurance plan of Rs 1 lakh is mere Rs 417 per annum while investment in equity mutual fund will attract an annual fund management charge of about 2.5% of the fund value. (While we have assumed a pure term cover of Rs 1 lakh, investors would do well to note that a pure term plan with such small cover is currently not available in the market. We have assumed the same to make investments under both the options comparable).

Emami group plans edible oils venture

The Rs 2000-crore Emami group has chalked out ambitious initiatives for its edible oils venture. The company proposes to take up plantation of bio fuel crops (jatropha) and other edible & non edible oil seeds in Ethiopia. Closer home, it is also looking to set up greenfield edible and non edible oil refineries in Gujarat and south India.

While the Ethiopian venture in the state of Oromia will entail an investment of roughly Rs 400 crore, the Gujarat and south Indian projects will involve an investment of Rs 225 crore each, Mr Aditya V Agarwal, director, Emami group of companies, told mediapersons at a meeting held in Kolkata on Monday.

The projects will be taken up by group company Emami Biotech. Mott McDonald is advising the group on the projects.

Elaborating on the group’s Ethiopian project, Mr Agarwal said: "We intend to cultivate oilseeds on 1 lakh acres. We have already been allotted some 30,000 acres by Oromia Investment Commission on a 45 year renewable lease." Incidentally, Oromia Investment Commission is the nodal agency in the state of Oromia to allot and distribute land for industrial and agricultural purposes.

Apart from jatropha, the company will also grow sunflower, castor, pulses and herbs like menthol in the East African country. The Ethiopian venture also envisages setting up an extraction plant and will churn out 1 lakh tonne of crude bio fuel/edible oil per annum. The bio fuel will be exported to India and used to produce bio-diesel at the company’s plant at Haldia, the edible oil produced in Ethiopia will be used for captive consumption.

The project will be part funded by a mix of equity and debt. The company is in talks with Exim Bank, Bank of Baroda and State Bank of India to secure long term loan for the project. Of the total investment of Rs 400 crore spread over a five-to-six years, the company plans to invest some Rs 120 crore in the first phase.

"We have chosen Ethiopia for investment because of availability of labour, contiguous land, congenial business environment and stable law & order situation. Besides catering to our domestic needs, the Ethiopian project has a huge potential for the global export market," said Mr Manish Goenka, director, Emami group of companies.

Emami Biotech has already entered into an agreement with the Gujarat government for the proposed investment. "Our third edible oil refinery unit may come up either in Karnataka or in Tamil Nadu. We have not yet zeroed in on the site for the two projects," Mr Agarwal added. Currently, the company operates an integrated edible oil refinery and bio diesel plant at Haldia, West Bengal, which produces 1,500 tonnes of edible oil per day and 300 tonnes of bio-diesel.

IT majors chase Rs 2,500-cr railways' outsourcing deal

Tech firms TCS and Wipro, apart from several others, are in pursuit of up to Rs 2,500-crore outsourcing contract at Indian Railways, as the world’s biggest civilian employer plans to procure a human resource management system (HRMS) and other modules for integrating and automating functions of payroll, accounting and pension.

With around 1.6 million employees, Indian Railways aims to have a centralised system for managing its staff better. The organisation plans to spend around $1.5 billion over the next two to three years on technology.

“We will be coming out with a request for proposal very soon. The idea is to have built-operate-transfer (BOT) model with the vendors,” said a senior railways official. He requested anonymity because he is not authorised to talk about the project.

In order to avoid high capital investments in acquiring these solutions, railways is exploring cost-effective models such as software-as-a-service, wherein entire infrastructure and application software will be owned by vendors. “We also plan to bring performance and efficiency-linked parameters for paying these vendors,” the official added. At least two senior officials at Indian tech firms chasing this contract confirmed their interest on conditions of anonymity because they are not authorised to speak to media about their companies’ business pursuits.

“It will be a PPP and the pricing will be based on the number of transactions, while the IT company will fund and manage the entire IT set-up,” one of the executives said.

Indian Railways, which is the second largest rail network in the world, also plans to outsource another contract called ‘implementation of software-aided train scheduling’, valued at around Rs 450 crore. TCS, Infosys, Wipro and Mahindra Satyam are already bidding for this contract. The project will help railways do real-time train scheduling and management with the help of a software solution.

“Wipro is already doing two pilots for Indian Railways. One is a pilot for RFID and will be rolled out in next 12-18 months. The company is doing another control charting pilot for Railways where it charts the movement of trains,” another person familiar with outsourcing contract being awarded by Railways said. Both TCS and Wipro declined to offer specific comments about these contracts.

Railways is planning to outsource three more contracts over the next few months, with each estimated to be in the range of Rs 450 crore to Rs 500 crore. Apart from the asset management contract, the railways plans to invite bids for a contract to develop and deploy a solution for automating and integrating the functions of finance and payroll and the other one for material management solution.

Unlike Tatas, LN Mittal doesn't regret global acquisitions

Unlike business icon Ratan Tata, steel tycoon L N Mittal has no regrets about his global acquisition spree that earned him the 'biggest steel maker' title and, with it, tons of problems.

"We are the merger of the two best companies... the merged entity is a winner," Mittal told in a telephonic interview from Luxembourg when asked if he wished that his group was still Mittal Steel and not ArcelorMittal - the entity born out of Mittal's USD 32 billion deal for European steel giant Arcelor in 2006.

On whether he had any regrets like that expressed by Tata on his group's global acquisitions - Corus steel and JLR, the takeovers that made the group struggle hard to find finance due to slowdown blues, Mittal said: "I don't want to comment on this question."

However, on the amalgamation of his very own Mittal Steel with Arcelor, he said: "I think this is the merger of the two best companies. We have successfully completed and results are clearly seen. In difficult times, our strategies have not changed, our growth plans have not changed and this merged company is clearly a winner."

Incidentally, Tata had said in a recent interview to London-based Sunday Times that the acquisition of Corus Steel and Jaguar Land Rover happened at an inopportune time.

Adani Power IPO subscribed 14 times

The initial public offer of Adani Power, which closed on Friday, got subscribed over 14 times with most of the bids coming in from institutional investors.

The issue which has roped in institutional investors like Credit Suisse and T Rowe Price International Inc, received bids for over 350.26 crore shares against 24.87 crore shares on offer, achieving a demand for 14.08 times the shares on offer.

Marketmen said attractive price band of the IPO enthused investors besides the overall recovery in the secondary market that is getting reflected in the primary market.

Leading institutional investors participated in the issue as anchor investors and subscribed to over 5.28 crore shares at Rs 95 a piece. Anchor investors are the qualified institutional investors for whom bidding process is carried out a day before the issue opens.

The price band of IPO has been fixed between Rs 90-100 and the electricity generating unit of Adani Enterprises will raise Rs 3,160 crore at the upper end of the band.

The IPO began on July 28. Enam Securities, JM Financial Consultants, ICICI Securities and SBI Capital Markets are iacting as lead managers for the issue.

JSW likely to come up with an IPO

Sajjan Jindal-owned JSW Energy may go for an Initial Power Offer to raise funds for its ambitious plans to step up power generation capacity to 12,000 MW from the present 800 MW. "We may look at the IPO if the market stabilises," JSW Group Chief Financial Officer MVS Seshagiri Rao said.

However, a company source said that the JSW had already been started "working on the initial public offering" and the draft red herring prospectus submission to the market regulator, Securities and Exchange Board of India, might be a matter of couple of months'' time. The company had earlier planned for an IPO, but scrapped the plan as markets nosedived owing to the global financial meltdown.

"Whatever we raise, it will be for the future growth of the company. All the existing projects that the company is working on currently are tied up with funds," Rao said, but declined to divulge the percentage of stake JSW Energy would dilute if it goes ahead with the IPO plan.

Adani Power was the first from the energy sector to hit the market after the unprecedented financial meltdown that crippled economies across the globe. The Rs 3,000 crore issue was over-subscribed over 21 times.

SEBI gets new members on secondary market panel

Capital market regulator Securities and Exchange Board of India (SEBI) has reconstituted its Secondary Markets Advisory Committee (SMAC) by replacing four of its existing members, ET has learnt from a committee member. A formal announcement about the change in composition of the committee will be made shortly.

The 17-member SMAC is of significance to the regulator, as it advises SEBI in devising a policy framework pertaining to the secondary market. According to officials, a similar exercise is expected for other committees, including the Primary Market Advisory Committee (PMAC).

JR Varma, a professor at IIM-Ahmedabad, will now head SMAC, succeeding PG Apte, former director, IIM-Bangalore. Besides Mr Varma, other members of newly-constituted SMAC are UK Sinha, CMD, UTI Asset Management, Susan Thomas of IGIDR, and EMC Palaniappan, president, Association of National Exchanges members of India (ANMI). Mr Apte, Surjit Bhalla, MD of Oxus Investments and Chinubhai Shah, chairman and president of Gujarat Investors and Shareholders Association will not be part of the reconstituted panel. Also, the strength of SEBI officials in the committee has been reduced to four from five.

Among committee members, Ravi Narain, MD of NSEIL and Hinesh Doshi, vice-president of Investors’ Grievances Forum (IGF) will be representing the committee for the third consecutive term. Newly-appointed Madhu Kannan, MD and CEO of the BSE will be representing the bourse.

Indian ADRs gain $8.28 bn in July

he total valuation of Indian stocks trading on American bourses rose by over $8 billion last month, with IT firm Infosys alone contributing nearly half of the gains.

For the month ended July 31, Indian entities listed on the New York Stock Exchange and Nasdaq added $8.28 billion to their total market capitalisation. Infosys alone gained $3.58 billion, with its market cap at $24.66 billion.

Software firm Mahindra Satyam's valuation rose by $1.30 billion, while that of private sector lender ICICI Bank added $1.03 billion to its market cap.

Among the 16 companies trading as American Depository Receipts (ADRs), only three companies, including private sector lender HDFC Bank, have witnessed a total decline of $835 million in their market capitalisation.

HDFC Bank's valuation declined the maximum during the month and stood at $13.86 billion after it witnessed a value erosion of $760 million.

The market capitalisation of telecom firm MTNL and pharma company Dr Reddy's Laboratories fell by $41 million and $34 million, respectively.

The month of July saw a host of Indian companies reporting better-than-expected quarterly figures, which analysts believe pulled up the shares on the street.

Besides, Tata Motors' valuation shot up by $914 million to $4.75 billion after it posted better-than-expected quarterly results last week.

The net profit of the auto maker rose 57 per cent to Rs 514 crore in the first quarter of the current fiscal.

The valuation of IT major Wipro ascended by $644 million and copper producer Sterlite Industries gained $574 million.

Outsourcing firm Genpact saw its valuation increase by $487 million and IT firm Patni Computer's market capitalisation jumped by $275 million in the month.

BPO firm WNS Holdings and telecom major Tata Communications Ltd (TCL) too saw an upward movement in their market capitalisation. WNS Holdings' valuation went up by $160 million and TCL added USD 102 million.

Besides, internet majors, Sify Technologies and Reddif.com, BPO firm EXLService increased in the range of $7 million to $28 million.

The US markets were mixed on Friday with the Dow Jones Industrial Average gaining 17.15 points to 9,171.61 and S&P 500 rising 0.07 per cent to 987.48, while tech heavy Nasdaq was down 0.29 per cent to 1,978.50.

NTPC may lose up to Rs 30K cr if gas not supplied at $2.34: Anil

Amid a bitter battle with elder brother Mukesh Ambani over gas, Anil Ambani today cautioned the government that NTPC would lose up to Rs 30,000 crore if the fuel is not supplied by RIL at the committed rate of $2.34 per mmbtu.

Offering to clarify that his group company RNRL's position was in no way against the interests of NTPC, Anil sought an early meeting with Power Minister Sushil Kumar Shinde and said, "We would be delighted if NTPC, a navratna, gets its rightful share of 12 mmscmd of gas for 17 years at a price of $2.34, which was discovered through open transparent international competitive bidding in 2004."

Anil wrote a letter to Shinde on July 31 and sought a meeting to discuss the matter.

Want a loan? Check your Credit Score

Have you been paying your telephone bills on time? Do you consistently forget the due date for your insurance premiums? You better watch it! If you ever intend to apply for a loan in future all these aspects are going to count!

These are a few of the spruce up elements planned to be implemented in your current credit reports. What's more from next year (2010) there will be a system in place through which you can have access to your credit reports!

Such spruce ups have been made possible through a recent move of the RBI (Reserve Bank of India), which has granted an approval for the registration of CIBIL and a few other credit agencies namely, Equifax, Experian and Highmark under CIC Act (Credit Information Companies (Regulation) Act.

Why a credit report?

The concept of credit reports came into existence to ramp up the credit system and ensure banks have an evaluation system in place to decide if a prospective borrower is credit worthy enough to lend huge sums of money to, in the form of a home loan, car loan, personal loan, etc.

Once the RBI approval comes into effect formally, more credit information on individuals can be accessed, which includes telephone bill payments, insurance premiums etc. This should provide a well rounded study of how an individual manages finances, how they repay their debts, how timely they are with their bill payments, etc.

Access to credit reports - Advantages

There are several advantages to the enhancements set to happen with the existing credit information system. Here are a few of them.

Prevents Identity theft

If an individual's credit card or bank account is being misused, keeping track of one's credit report will help the individual take corrective action before it comes too late or before debts start mounting to unreasonable levels. It can help prevent identity theft and instances of fraudulent transactions to a large extent.

Creates discipline and improves money management skills

Often people opt for loans due to its ready availability without giving thought to their current lifestyle, other commitments and debt liabilities. Also, they fail to account for an emergency fund and a savings plan. All these could fall into perspective once a summary of a person's credit repayment is available in a single log with a score spanning 300-900 points providing a measure of an individual's creditworthiness.

More comprehensive credit reports

RBI's approval is the first step towards more comprehensive credit reports, where more periodic transactions involving money inflow and outflow can be tracked to analyze if an individual adopts a careful and methodical approach to his finances and eventually serve as a financial goal map for an individual who wishes to improve his credit score.

The proof of the pudding is in the eating

The very fact that individuals will soon have access to their credit reports can come as a sigh of relief to loan applicants.

If they have a very good repayment track record and an excellent credit score their chances for bargaining for a better interest rate on the basis of their credit report is a viable option. It would also help banks significantly decrease the percentage of defaults by opting to choose a better customer for a more competitive interest rate.

After all it makes better business sense for banks to have a higher percentage of customers who repay on time, every time, at lower interest rates compared to a higher percentage of defaulters with high interest rates.

More credit agency options

Now that they are more credit agencies to choose from, better systems that weed out errors and streamline the existing information systems will be given high priority.

Establishing a reputation for being the most accurate credit agency will provide the impetus for credit agencies to overcome the several bottlenecks that will emerge in setting up the infrastructure and the actual process.

Knowledge is Power

Access to credit reports is wonderful news for individuals who wish to apply for a loan but are unable to get one due to a faulty credit report or missing information.

Currently, rejected applicants who have been informed by their banks that CIBIL reports were the reason, would need to request for the control number of their credit report from their bank and approach CIBIL for a clarification. This can be a complicated process, especially if the bank does not provide a valid reason for the reject.

With direct access to their credit reports, individuals can directly contact CIBIL for a clarification or correction, even before they approach a bank for a loan. Verification and correction of credit scores can be far easier with such transparency.

The Flip Side

Such intensive credit tracking systems can also stir up a new set of problems to deal with. More often than not technology would play a key role in setting up systems that can source huge volumes of information of a large number of individuals.

Credit information is also very sensitive and personal to an individual, which in the wrong hands could prove dangerous. So credit information sourcing could be a new addition to the number of tracking systems that are slowly but surely evolving in all spheres of our lives.

In light of such developments could breach of privacy be one of they key issues we would need to battle in the future?

South Indian Bank takes major strides in the north

Call it a case of an institution outgrowing the dreams of its founders, and even its brand name.

Thrissur-based South Indian Bank – whose founders dreamed that the institution would grow beyond the borders of Kerala and have a presence all over south India and named it accordingly – is witnessing a rapid expansion of branches in the north and in a few years will have a significant percentage of its branches in the north, west and east of the country.

The bank opened its 300th branch in Kerala here today, taking the national branch count to 546, but more significant is the bank’s swift expansion of network in the north. Last year it opened a branch in Jammu, and over the past month new branches have been opened at Faridabad, Najafgarh and Indirapuram. Also on the bank’s radar are centers like Shillong, Meerut, Bhilai and Jamshedpur, among other locations.

“We are planning eight more branches in and around Delhi and with a string of new branches across the country in the recent past, we are now present in 25 states”, SIB managing director V A Joseph told ET.

Not content with its current network of branches that will reach 575 at the end of this fiscal when 29 more are added by March 2010, SIB has chalked out a 4-year plan that will see the branch network reach 750 by 2013. Of the 250 branches that will be opened between 2010 and 2013, as many as 150 will be in the north of the country, throwing another puzzle about the very brand name of the bank.

“We are adding branches at a quick pace, but fact remains that a vast section of the people in the country is still to have any reasonable access to a bank branch”, says Mr Joseph.

According to the bank’s projections, by 2013 the target is to reach business volumes of Rs 75,000 crore, a branch network that is 750 strong, the same number of ATMs, and an employee strength of 7,500.

Mr Joseph said the bank would continue recruiting in the range of roughly 600 staffers per year leading up to 2013, to reach the employee level of 7,500 by that year.

SIB had a net profit of Rs 60.11 crore for the first quarter of the current fiscal, up 56% from the Rs 38.62 crore net profit in the corresponding period last year.

UCO may float Rs 850-cr follow-on issue, non-life JV

UCO Bank may float an Rs 800-850 crore follow-on issue during the third quarter of the current fiscal. The bank has also decided to float a non-life joint venture (JV) company by September.

“The proposed issue will have a Rs 136 crore face value and if we consider a premium of Rs 50 per share, we may easily be able to raise Rs 800-850 crore during this quarter,” said SK Goel, chairman and managing director, UCO Bank. He was talking to reporters at a press conference to announce the company’s first-quarter results.

Currently, the government holding in UCO Bank is 64%. After the follow-on issue, the government’s holding will come down to 51%. Talking about different possibilities of raising capital, Mr Goel said: “About Rs 750 crore is slated to come from the Centre as part of the recapitalisation fund. Additionally, we have headroom for another Rs 800 crore for tier-II capital.”

On the plans to float a non-life JV, Mr Goel said: “Now that the economy is rebounding, we’ve decided to take the general insurance business plans. A JV is likely to be floated with a foreign insurer by September 2009.” Talking on the first-quarter financials, Mr Goel said: “Operating and net profit for the quarter ended June 2009 are up by 36% and 34% to Rs 310.3 crore and 178.9 crore, respectively. The bank’s total business, including overseas business, grew 26% to Rs 1,68,808 crore during the period under review.”

Total deposits and advances rose 28.37% and 22.71% to Rs 1,00,428 crore and Rs 68,380 crore, respectively.

Investments, on the other hand, rose 37.44% to Rs 32,688 crore. Interest earned for the period rose 26% to Rs 2,331.46 crore. Total income for the bank rose 29% to Rs 2,583.68 crore during the period under review against Rs 1,999.16 crore in the previous corresponding period.

Income from treasury operations for the period was Rs 658.16 crore against Rs 530.64 crore in the previous period. Corporate and wholesale banking during the first quarter was Rs 948.27 crore against Rs 763.05 crore in the previous period. Income from retail banking touched Rs 966.93 crore against Rs 763.05 in the previous corresponding period.

StanChart set to buy RBS' SME business in India, China, Malaysia

Standard Chartered is set to seal a deal to buy Royal Bank of Scotland’s retail and small and medium enterprises (SME) operations in India, China and Malaysia, two people familiar with the development said.

The deal, which could cost the UK-based bank around $250 million, is likely to be announced in a fortnight, said a dealmaker close to the negotiations. The businesses on offer are a perfect strategic fit for StanChart, which earns more than 70% of its income and over 80% of its operating profit from Asian operations.

RBS had put its retail and SME business in nine Asian countries on the block earlier this year. The Indian operations of RBS, which continue to run under the ABN Amro brand name pending regulatory approval, will account for a bulk of the consideration.

The talks, which are taking place in London, may conclude by early next week. Current discussions relate to the extent of the losses that RBS will fund in the next 12 to 18 months, said a senior bank executive.

There are also some HR issues in China and Malaysia that need to be addressed. The retail and SME portfolio under the ABN brand in India is around Rs 11,500 crore, of which the retail portfolio is around Rs 6,800 crore. Losses and provisions in these business for the last calendar year stood at around $160 million (around Rs 770 crore).

Despite losses, StanChart is keen on ABN Amro because of its one-million customers. It is also interested in Van Gogh, the premium banking service offered by ABN Amro to high net worth individuals. Both the banks have kept RBI informed about the due diligence and sale process.

The StanChart spokesperson said, “We always look at opportunities in our footprint markets but, as you would expect, we don’t comment on any specific opportunities we may be looking at.”

“The sale process of the retail and commercial assets in Asia has advanced well; however, due to regulatory constraints and the confidentiality of the process, we will not comment on any individual bidders or elements of the transaction process until its completion,” said the RBS spokesperson.

An earlier proposal by RBS to sell 26 of its 31 branches in India had to be shelved because RBI refused to transfer branch licences. StanChart is likely to receive some of the branches in order to service retail customers. Out of these 26 branches, around 10 are in cities where StanChart does not have operations.

In some of the other locations, the bank may need more branches, as ABN’s existing branches are far from StanChart’s. StanChart currently has the largest number of branches in the country at 90, and may get another 18 from the deal. Given the fact that it is the UK government, with its 70% ownership of RBS, which is selling the bank’s Asian units, RBI may take a lenient approach this time around. The transfer of branch licences, however, may not figure in the sales agreement.

The business RBS will continue to do in India include wholesale debt and debt capital market business, M&A, equities research and trading, markets and treasury, corporate banking, cash and trade business and private banking business. In China, RBS has around 13 branches while StanChart has around 55. StanChart may get only around five or six of these branches if the regulators approve the takeover.

The portfolio in China is a mix of more wealth and commercial banking. In Malaysia, the gain would be minimal for StanChart, where RBS has four branches. StanChart is one of the few banks to have been relatively insulated from the global financial crisis, as most of its income comes from emerging markets in Asia and Africa.

Indian Bank revises interest rate on NRE deposits

Public sector Indian Bank has announced revision of interest rates on FCNR (B) and NRE deposits with effect from tomorrow.

For FCNR (B) deposits, in US Dollar the revised interest rate has been fixed at 2.50 per cent for deposits of one year and above but less than two years (2.61 % existing).

The revised interest rate has been fixed at 2.56 per cent for deposits of two years and above but less than 3 years (2.53 per cent existing). It has been fixed at 3.17 per cent for deposits of three years and above but less than 4 years (3.12 percent existing).

The revised interest rate has been fixed at 3.64 percent for deposits of four years and above but less than 5 years (3.57 percent existing) and at 4.00 percent for deposits of 5 years only (3.93 percent existing), a bank release said.

For NRE term deposits, the revised interest rate has been fixed at 3.25 per cent for one year and above but less than two years (3.36 % existing); at 3.31 percent for two years and above but less than 3 years (3.28 % existing) and at 3.92 percent for deposits of 3 years and above and upto 5 years (existing 3.87 per cent), the release added.

17% jump in jobs in National Capital Region

Shrugging off recession worries, the national capital region (NCR) has recorded a 17.1 percent surge in jobs creation in the first

four months of this fiscal against the last four months of the previous fiscal, according to a study by a business body.

The study, Job Opportunities in the National Capital, conducted by the Associated Chamber of Commerce and Industry of India (Assocham) concludes that during April-July 2009, as many as 49,750 openings were created in the NCR of Delhi, Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad against 42,501 openings in the last four months of 2008-09.

Releasing the study, Assocham secretary general D.S. Rawat said that 46.4 percent of the new jobs were in the Delhi region.

As per the chamber's findings, job creation in the satellite towns of NCR - Gurgaon, Noida, Ghaziabad and Faridabad - registered a staggering growth rate of 49.5 percent in the first four months of 2009-10 over the last four months of the previous fiscal, whereas the Delhi region witnessed a decline of 6.4 percent during the same period.

However, the number of newly created jobs in the NCR as a whole increased from 42,501 during December-March 2008-09 to 49,750 during April-July 2009, a growth rate of over 17.1 percent.

Among the satellite towns, Gurgaon created the maximum new job opportunities with a 23.1 percent share in the total, followed by Noida/Greater Noida (20 percent), Ghaziabad (5.6 percent) and Faridabad (4.9 percent).

A sector-wise analysis shows the IT/ITES sector created the maximum number of jobs with a share of 27.5 percent of the total, followed by the academics sector (nearly 17 percent) and the banking, financial service and insurance (BFSI) sector (14.5 percent).

Will you let PC algorithms decide what stock you buy?

On vacation in Turkey, I am picked up at the airport by a minibus. It’s past midnight, pitch-black, the driver is speeding around corners. Only one headlight is working. And I have my doubts about the brakes. In my head I’m planning the letter of complaint to the tour company. And then the driver’s cell phone rings, he picks it up and answers it, he has only one hand on the steering wheel. Now I’m mentally compiling the list of songs to be played at my funeral.

That’s rather how I feel when people talk about the latest fashion among investment banks and hedge funds: high-frequency algorithmic trading. On top of an already dangerously influential and morally suspect financial minefield is now being added the unthinking power of the machine.

The idea is straightforward: Computers take information – primarily "real-time" share prices – and try to predict the next twitch in the stock market. Using an algorithmic formula, the computers can buy and sell stocks within fractions of seconds, with the bank or fund making a tiny profit on the blip of price change of each share.

There’s nothing new in using all publicly available information to help you trade; what’s novel is the quantity of data available, the lightning speed at which it is analyzed and the short time that positions are held.

You will hear people talking about "latency," which means the delay between a trading signal being given and the trade being made. Low latency – high speed – is what banks and funds are looking for. Yes, we really are talking about shaving off the milliseconds that it takes light to travel along an optical cable.

So, is trading faster than any human can react truly worrisome? The answers that come back from high-frequency proponents, also rather too quickly, are "No, we are adding liquidity to the market" or "It’s perfectly safe and it speeds up price discovery." In other words, the traders say, the practice makes it easier for stocks to be bought and sold quickly across exchanges, and it more efficiently sets the value of shares.

Those responses disturb me. Whenever the reply to a complex question is a stock and unconsidered one, it makes me worry all the more. Leaving aside the question of whether or not liquidity is necessarily a great idea (perhaps not being able to get out of a trade might make people think twice before entering it), or whether there is such a thing as a price that must be discovered (just watch the price of unpopular goods fall in your local supermarket – that’s plenty fast enough for me), l want to address the question of whether high-frequency algorithm trading will distort the underlying markets and perhaps the economy.

It has been said that the October 1987 stock market crash was caused in part by something called dynamic portfolio insurance, another approach based on algorithms. Dynamic portfolio insurance is a way of protecting your portfolio of shares so that if the market falls you can limit your losses to an amount you stipulate in advance. As the market falls, you sell some shares. By the time the market falls by a certain amount, you will have closed all your positions so that you can lose no more money.


It’s a nice idea, and to do it properly requires some knowledge of option theory as developed by the economists Fischer Black of Goldman Sachs, Myron S. Scholes of Stanford and Robert C. Merton of Harvard. You type into some formula the current stock price, and this tells you how many shares to hold. The market falls and you type the new price into the formula, which tells you how many to sell.

By 1987, however, the problem was the sheer number of people following the strategy and the market share that they collectively controlled. If a fall in the market leads to people selling according to some formula, and if there are enough of these people following the same algorithm, then it will lead to a further fall in the market, and a further wave of selling, and so on – until the Standard & Poor’s 500 index loses over 20 percent of its value in single day: Oct. 19, Black Monday. Dynamic portfolio insurance caused the very thing it was designed to protect against.

This is the sort of feedback that occurs between a popular strategy and the underlying market, with a long-lasting effect on the broader economy. A rise in price begets a rise. (Think bubbles.) And a fall begets a fall. (Think crashes.) Volatility rises and the market is destabilized. All that’s needed is for a large number of people to be following the same type of strategy. And if we’ve learned only one lesson from the recent financial crisis it is that people do like to copy each other when they see a profitable idea.

Such feedback is not necessarily dangerous. Take for example what happens with convertible bonds – bonds that can be converted into stocks at the option of the holder. Here a hedge fund buys the bond and then hedges some market risk by selling the stock itself short. As the price of the stock rises, the relevant formula tells the fund to sell. When the stock falls the formula tells it to buy – the exact opposite of what happens with portfolio insurance. To the outside world – if not necessarily to the hedge fund with the convertible bonds – this mix is usually seen as a good thing.

Thus the problem with the sudden popularity of high-frequency trading is that it may increasingly destabilize the market. Hedge funds won’t necessarily care whether the increased volatility causes stocks to rise or fall, as long as they can get in and out quickly with a profit. But the rest of the economy will care.

Buying stocks used to be about long-term value, doing your research and finding the company that you thought had good prospects. Maybe it had a product that you liked the look of, or perhaps a solid management team. Increasingly such real value is becoming irrelevant. The contest is now between the machines – and they’re playing games with real businesses and real people.

Pharma, mfg, telecom sectors see highest salary hikes for FY10

Pharmaceuticals, manufacturing and telecom sectors are witnessing the highest increase of up to 11 per cent in salaries for FY 2009-10, while IT and financial services got the least hikes.

With the economic downturn impacting the earnings of companies, they were restructuring their salary structures and focusing more on performance and also cutting down on the increments for the current fiscal, experts said.

As per a mid-year survey on 'Performance & Reward Trends' by Hewitt Associates, pharma sector saw the highest salary hike of 11.1 per cent for FY 2009-10, followed by manufacturing (10.8 per cent), telecom (9.5 per cent) and FMCG (9.3 per cent).

However, retail sector has been impacted by the downturn and the salary hikes for the current fiscal might not be as expected by the industry, Thiruvengadam said.

"Firms have been found to implement metrics to determine return on investment on human resources. Investment in proprietary knowledge and technological upgrade is continuing, albeit slower than during boom times.

"Smart firms have turned inward, consolidating operations, rationalising requirements and optimising resources to ride the slowdown," Deloitte Senior Director (Management Consultancy Services) P Thiruvengadam said.

"In the wake of the economic downturn and the current situation that the Indian economy is witnessing the IT, ITeS sectors will be impacted," Thiruvengadam added.

The Hewitt survey revealed companies across industries were strongly differentiating rewards on basis of performance but majority of them were not considering any layoffs or severe salary cuts in the current fiscal.

The sectors to witness least increase in pay packages for the current fiscal are IT (2.8 per cent), ITeS (4.4 per cent) and Financial Services
space (5.2 per cent), the survey stated.

"In IT & ITeS sector, overall salary increases have been kept under control and most companies have reported a stable or marginally reduced pay cost structure in relation to total costs. It reflects the response of a growth economy managing a short to medium term slowdown, while keeping an eye on long term growth," Thiruvengadam added.

Interestingly, layoffs have been generally more prevalent in sectors which hired numbers in the last few years like in the IT, ITeS, and retail sector recently, he added.

The Deloitte survey 'Engaging employees in recessionary times' found that there was an overall decrease in attrition rates. Around 23 per cent of firms surveyed reported attrition figures of less than five per cent and 44 per cent of companies reported figures between five and 10 per cent.

"During these unprecedented times when firms across the world considered options such as mass layoffs and salary cuts, India Inc also considered same measures but with maturity," Hewitt's Performance and Rewards Consulting practice leader in India Sandeep Chaudhary said.

Pharmaceuticals, manufacturing and telecom sectors are witnessing the highest increase of up to 11 per cent in salaries for FY 2009-10, while IT and financial services got the least hikes.

With the economic downturn impacting the earnings of companies, they were restructuring their salary structures and focusing more on performance and also cutting down on the increments for the current fiscal, experts said.

As per a mid-year survey on 'Performance & Reward Trends' by Hewitt Associates, pharma sector saw the highest salary hike of 11.1 per cent for FY 2009-10, followed by manufacturing (10.8 per cent), telecom (9.5 per cent) and FMCG (9.3 per cent).

However, retail sector has been impacted by the downturn and the salary hikes for the current fiscal might not be as expected by the industry, Thiruvengadam said.

"Firms have been found to implement metrics to determine return on investment on human resources. Investment in proprietary knowledge and technological upgrade is continuing, albeit slower than during boom times.

"Smart firms have turned inward, consolidating operations, rationalising requirements and optimising resources to ride the slowdown," Deloitte Senior Director (Management Consultancy Services) P Thiruvengadam said.

"In the wake of the economic downturn and the current situation that the Indian economy is witnessing the IT, ITeS sectors will be impacted," Thiruvengadam added.

The Hewitt survey revealed companies across industries were strongly differentiating rewards on basis of performance but majority of them were not considering any layoffs or severe salary cuts in the current fiscal.

The sectors to witness least increase in pay packages for the current fiscal are IT (2.8 per cent), ITeS (4.4 per cent) and Financial Services
space (5.2 per cent), the survey stated.

"In IT & ITeS sector, overall salary increases have been kept under control and most companies have reported a stable or marginally reduced pay cost structure in relation to total costs. It reflects the response of a growth economy managing a short to medium term slowdown, while keeping an eye on long term growth," Thiruvengadam added.

Interestingly, layoffs have been generally more prevalent in sectors which hired numbers in the last few years like in the IT, ITeS, and retail sector recently, he added.

The Deloitte survey 'Engaging employees in recessionary times' found that there was an overall decrease in attrition rates. Around 23 per cent of firms surveyed reported attrition figures of less than five per cent and 44 per cent of companies reported figures between five and 10 per cent.

"During these unprecedented times when firms across the world considered options such as mass layoffs and salary cuts, India Inc also considered same measures but with maturity," Hewitt's Performance and Rewards Consulting practice leader in India Sandeep Chaudhary said.

Ispat Industries incurs loss of Rs 214.9 cr in Q1

Iron and steel producer Ispat Industries Ltd, promoted by Vinod Mittal, on Saturday announced a net loss of Rs 214.92 crore in the first quarter ended June 30, 2009.

It had earned a net profit of Rs 28.73 crore in the same period last fiscal, Ispat Industries said in a filing with the Bombay Stock Exchange.

Total income of the Kolkata-based company decreased to Rs 1,399.68 crore for the quarter under review from Rs 2,875.78 in the same period previous fiscal.

The company manufactures direct reduced iron, hot rolled coils, pig iron/hot metal, cold rolled/galvanized coils/sheets and colour coated sheets.

ICICI Bank net zooms 21% in Q1 to Rs 878 cr

Extreme cost-cutting and treasury profits enabled the country’s largest private lender, ICICI Bank, beat analyst estimates and post a 21% rise in net profit in the first quarter of FY10 (Apr-Mar), the bank said on Saturday. Net profit stood at Rs 878 cr for the quarter-ended June ‘09 against Rs 728 cr in the year-earlier quarter. The average net profit forecast by various banking analysts was around Rs 820cr.

Besides profits from trading in government securities and equity, the bank was helped by a write-back of provisions made on credit derivatives as sentiment improved on Indian paper.

Profits rose even as the bank continued to shrink its balance sheet, avoiding high-cost deposits and unsecured advances. One reason for the higher profit was the Rs 367-cr savings in operating expenses during the quarter with overall operating expenses dropping 19.22% to Rs 1546 from Rs 1913 cr in the corresponding quarter of the previous fiscal.

“Instead of balance sheet size, we will focus on bringing down unsecured personal loans. We will however grow home, car and commercial vehicle loans on the retail side and working capital and infrastructure loans on the corporate side,” said Chanda Kochhar, MD & CEO, ICICI Bank. The bank’s advances declined by 9.2% while deposits came down by 10.3%.

With the reduction in outstanding loans, net interest income, which is the difference between income from loan and interest paid on deposit, dropped 5% to Rs 1985.28 cr. However, this decline was more than made up by the 35.86% rise in other income to Rs 2089.88 cr. Of this, treasury income was Rs 714 crore compared with a loss of Rs 594 crore in the year-ago quarter.

Despite slowdown in M&A and capital market activity, the bank reported a flat fee income of Rs 1,319 crore. Ms Kochhar said the bank would cut costs further and look at increasing productivity from new branches.

Provisioning rose by 67% to Rs 1323.65 cr but this was due to a one-time restructuring exercise, she added. In a conference call with analysts, NS Kannan, CFO, said that except life insurance none of the bank’s subsidiaries would require capital infusion during the current fiscal. ICICI’s life insurance subsidiary, ICICI Prudential, is expected to break even towards the end of the next fiscal.

“Even though net interest income was slightly lower and provision coverage declined to 51%, we see these as minor negatives. Our main expectations were regarding execution of the bank’s present strategy, which continues to be commendable,” said Vaibhav Agrawal, vice-president, research (banking) Angel Broking.


Fall in deposits

More branches, lower operating expenses and ratio of low- cost deposits improving to 30.4% are quite favorable. We believe by 2010, the bank will be very well positioned to benefit from the improving economic environment,” said Vaibhav Agrawal, vice-president , research (banking) Angel Broking. On Friday, the ICICI Bank scrip closed down 1% at Rs 766.85 on BSE.

The net interest margin was maintained at 2.4%. The decrease in net interest income was mainly due to a decrease in advances by 11.6%. Advances dropped to Rs 1,98,101 cr from Rs 2,24,145.9 cr in the corresponding quarter and Rs 2,18,310.8 cr in the first quarter. Advances on retail loans fell to 47% against 55% in Q1 FY09 as the bank looks at running down its unsecured loans.

Ms Kochhar said that corporate and international advances rose both in absolute and percentage terms to 40% from 35% a year ago.

Deposits fell to Rs 2,10,236 crore from Rs 2,34,460 cr in the year-ago quarter and Rs 2,18,348 crore in the preceding quarter. Ms Kochhar said that savings accounts grew by Rs 3,500 cr from the previous quarter while current accounts dropped by Rs 2000 cr.

She added that the bank had taken high costs deposits in the third quarter of the previous fiscal which it will allow to run down when they mature in the third quarter of the current fiscal. Current account and savings accounts ratio improved to 30.4% from 27.6% last year and 28.7% in the preceding quarter. Capital adequacy ratio stood at 17.38% against 13.42% last year.

SBI projects a net profit of Rs 11,000 crore this fiscal

The country's largest lender, State Bank of India, has told the government that it would earn a minimum profit of Rs 11,000 crore in the current fiscal, 21 per cent more that what it achieved in the previous fiscal.

In its statement of intent submitted to the government recently, SBI indicated that the bank would post a minimum net profit of Rs 11,000 crore in the current fiscal, sources said.

The bank has given the estimate of its likely earnings, sources said, adding that depending on the pace of economic recovery the bottom line could improve significantly.

SBI's net profit increased 36 per cent to Rs 9,121 crore during 2008-09 against Rs 6,729.1 crore in the previous fiscal despite the global financial meltdown hitting the Indian economy. The economic growth during 2008-09 slipped to 6.7 per cent from over nine per cent in the previous three years.

However, the expected profit numbers for the current fiscal could not be officially confirmed from SBI.

According to a filing with stock exchanges, the bank will announce its earnings for the its first quarter (April-June) of the current fiscal on July 30, 2009.

After announcing 2008-09 numbers in May, SBI Chairman O P Bhatt had said advances and deposits were likely to grow by 25 per cent each during the current fiscal.

A Budget for India

Few documents affect more people than India’s government budget. Some of them are investors, dismayed by Finance Minister Pranab Mukherjee: his budget speech sank the Sensex index by 6 per cent. But while the budget does little to inspire, their alarm is overdone.
Observers huff about a budget deficit at 6.8 per cent of gross domestic product, more than double the 2.7 per cent of the 2007-08 fiscal year. But this is not a shock, nor much to get worked up about. The government was already in the red by 6.1 per cent of GDP in 2008-09 because of a fiscal stimulus it is now continuing. This is the right policy while global demand remains frail – and it is hardly excessive
In the longer term, of course, the government must keep the deficit under control and eventually stabilise and reduce its debt. Fiscal discipline is not India’s forte. The fiscal rules put in place in 2003 coincided with an improvement in public finances, but mostly because the boom obligingly boosted tax revenues. The government must now strengthen its commitment to reduce indebtedness and identify a plan for doing so. It need not be all that painful: as long as its growth rate stays high, India can grow its way out of debt faster than most.
Mr Mukherjee is therefore right that expanding the economy is the top priority. Growth clocked in at 6.7 per cent last year – respectable, but less than in previous years and not as impressive once population growth is taken into account.
To restore and maintain fast growth, India must press on with the reforms that have advanced its economy since the 1990s. But the Congress party is disappointing those who hoped it would capitalise on the recent landslide to divest from state-owned dinosaurs and make India more hospitable to foreign investment. Mr Mukherjee made disturbingly complimentary nods to statist policies of the past.
The budget does take a stab at important obstacles to India’s economic well-being. Increasing rural incomes and credit is a sensible way to support domestic demand and alleviate the poverty that mires much of India’s people. Improving the subcontinent’s infrastructure can boost growth. But until governance improves drastically, these policies risk the waste and abuse that mark much of Indian administration.
To be fair, beyond a proposal to rationalise taxes – which should be adopted – the budget is no tool for solving the governance problem. That does not, however, relieve the government of the duty to solve it.

Godrej to merge consumer goods biz

The Godrej Group is on a drive to consolidate its consumer goods business to cut costs and push efficiencies across its three consumer product companies. The move will bring about synergies within the group’s flagship FMCG company, Godrej Consumer Products (GCPL) and two of its joint ventures — Godrej Sara Lee (GSL) and Godrej Hershey’s (GHL).

The group is looking to consolidate on three different levels. First, on the distribution front — all the three businesses will sell as one entity, starting this month to modern trade. “We will be selling as a single entity to modern trade, which will be Godrej from now on. This will ensure the advantage of scale and give us better margins,” GCPL managing director Dalip Sehgal said.

The group is also going to consolidate its supply chain, which will result in a common warehouse for all its consumer product companies. This will mean lesser operational costs for the group. Besides, distribution and supply chain, the company will also bring together its businesses focussed on the rural market. “If we synergise all our businesses, we will be able to get bigger volumes in the rural market,” added Mr Sehgal.

Currently, 38% of its sales come from the rural market, but the company expects that to go up to 50% in the next three years. “We are increasing our distribution reach in villages by increasing the number of stockists and sub-stockists,” said Mr Sehgal.

To rev up the FMCG business, the group had set up an FMCG cell to focus on growth and leverage from synergies across the three consumer goods companies. In another move to consolidate operations, GCPL merged two group entities — Godrej Consumer Biz and Godrej Hygiene Care — with itself. Following this, GCPL holds 49% stake in GSL.

Union Budget 2009-10: Mobiles, TV cos to benefit from Customs tweaks

Cheaper TVs, life saving drugs and coral baubles... that’s what the Customs duty tweak in the budget brought home. The government’s decision to lower Customs duty on LCD panels, some life saving drugs and corals will benefit domestic television manufacturers, the pharmaceutical sector and the gems & jewellery industry.

But the bigger benefit came from what the finance minister chose not to do. The government’s decision to stick to the current level of 10% peak Customs duty on non-agriculture products —though entirely expected—comes as a big relief for industry which is having a tough time fighting cheap imports and surviving the slowdown in global demand.

The increase in Customs duty on gold and silver—unpopular with both makers and consumers of gold jewellery—was long overdue as duties last went up in 2005. Gold prices have, since then, more than doubled from Rs 5,000 per 10 gm to Rs 11,000 per 10 gm. The fact that the government expects to gain Rs 800 crore from the move adds further legitimacy to it, as Customs duty collection this fiscal is expected to be substantially lower that the budgetary estimates for the year before.

India has been steadily cutting peak Customs duty with the objective of bringing it down to Asean levels (4% to 5%) by 2010. Duties, which were as high as 150% in 1991, came down to 10% in 2007-08. However, given the current demand sentiment, the government has deferred further lowering of duties.

Sectors which got a reprieve due to the government’s decision to continue with the 10% peak duty include domestic appliances like vacuum cleaners, microwaves, food grinders & shavers, audio & video tapes, CD & MP3 players, ceramic products, metals like iron & steel and metallic products, among others. All these products attract a Customs duty of 10% and will have to take a cut once the peak duty goes down further.

While reduction of import duty on LCD panels from 10% to 5% will bring down prices by up to Rs 3,000 per LCD TV set, the re-imposition of 5% duty on set-top boxes might increase prices, although the long-term objective of the government is to encourage domestic value addition.

The cut in Customs duty from 10% to 5% on influenza vaccine and nine specified life-saving drugs and the bulk drugs used to manufacture them, will serve the dual purpose of making the imported versions cheaper and domestic industry more competitive by reducing input costs.

The government has also decided to continue giving full 4% CVD (counervailing duty) exemption on accessories, parts and components imported for the manufacture of mobile phones for another year. This should help keep mobile phone prices in check.

To incentivise ‘green’ technology, the government has reduced basic Customs duty on permanent magnets—a critical component for wind-operated electricity generators—from 7.5% to 5%.

Reliance Digital to invest Rs 110-cr to set up 31 stores

Reliance Digital, the consumer durables arm of Mukesh Ambani-led Reliance Retail, plans to invest about Rs 110-crore in the current fiscal to roll-out 31 stores across India.

The company, which resells Apple products through its iStore chain, will open 10 outlets by March 2010 along with 21 Reliance Digital outlets, Reliance Retail's President and Chief Executive (Consumer Durable, IT & Telecom), Ajay Baijal, told PTI here today.

Presently, Reliance Digital has a 14-strong network and 10 iStores pan-India in destinations such as Mumbai, Hyderabad, Bangalore, Chennai, Ahmedabad, Vadodara, Ludhiana and Jaipur.

"This year, we plan to take the total number of stores (Reliance Digital and iStore) to 55. Each Reliance Digital store requires an investment
of about Rs 4-5 crore, while an iStore takes up to Rs 40-lakh," Baijal said.

The company is currently scouting properties for its expansion plans, Baijal said.

While iStores are spread over 1,000-1,500 sq ft, a Reliance Digital store is much bigger, covering 10,000-40,000 sq ft.

The company today launched its tenth iStore in the metropolis and will roll out one more in Chennai next week.

Banks ask RBI to ease provisioning norm that clumps together loans

Amid rising delinquencies, leading banks have asked the Reserve Bank of India (RBI) to relax provisioning norms for home loans and other assets.

A lesser-known accounting norm requires banks to provide for the entire exposure to a borrower if one of the loans given to her turns bad. For instance, if a customer defaults on credit card dues, the bank will have to classify not just the card outstandings, but also the home and auto loans taken by the same borrower as non-performing assets (NPAs). This is despite the fact that the borrower may have been regular in paying EMIs for home and auto loans
.

Banks have now asked the RBI to delink the bad loan and good loan for the purpose of asset classification and provisioning. A higher provisioning boils down to lower income for banks.

This was suggested by CEOs of large banks during a recent meeting with RBI governor D Subbarao. The move comes at a point when banks are battling a slowdown in credit growth. With loan demand from corporates failing to take off, some large banks are giving a new push to retail loans.

RBI norms stipulate that if a borrower defaults on any loan facility, all other facilities taken by this borrower should be treated as bad loans. Once a loan is classified as a bad account, the bank has to set aside 10% of the outstanding loan as a provision. This not only hurts the bank’s bottomline, but also enlarges the ratio of bad loans — a stigma on a lender.

Banks have told RBI that if a borrower fails to service a particular loan facility, all other facilities should not be classified as substandard provided the borrower makes regular payments on them. “This happens very often, when a customer has taken both a credit card loan and a home loan from the same bank. At times, due to a dispute on credit card payments, a customer may not pay card dues for some months, but may continue to service home loan dues,” a senior banker said, on condition of anonymity.

In fact, some banks also suggested that a similar relaxation be granted for loans to corporates.

In the case of corporate loans, if a borrower fails to pay the interest component on working capital, the term loan or any other facility taken by the corporate is classified as an NPA. At present, an exception is made only in the case of financial institutions, whereby provisioning is linked to the facility taken by the borrower.

Some banks also suggested that even if a home loan borrower does not make EMI payments for 90 days, they should be allowed to treat the account as a standard asset if instalments have been paid for earlier periods. At present, the RBI follows a 90-day norm, wherein an instalment not paid within 90 days from the due date has to be classified as an NPA on the 91st day.

For instance, a loan instalment due on April 1, and the remaining unpaid till July 1, has to be categorised as a bad loan. “A bank with a large retail home loan portfolio suggested to the RBI that so long as a borrower pays instalments due in, say, February and March in the April-June quarter, RBI should allow banks to classify the loan as a standard asset,” said a senior banker who was present at the meeting.

RBI may hike rates in early 2010: Goldman Sachs

Goldman Sachs expects the central bank to hike rates in early 2010 as economic activity picks up in the second half of 2009/10 financial year and inflation gathers pace, it said in a note on Friday.

India's industrial output grew for a second successive month in May as strong domestic demand offset faltering exports, which analysts said added weight to a view the central bank would not cut rates further.

The Markit Purchasing Managers' Index (PMI) showed earlier this month that manufacturing activity expanded for a third straight month in June.

Goldman Sachs said the positive fiscal stimulus in the budget and expectations of an upturn in the investment cycle in second half of 2009/10 may keep domestic demand robust, despite the prospects of a poor monsoon and a weak external environment.

It also maintained its gross domestic product forecast of 5.8 per cent for 2009/10, which is still lower than the government's forecast of 7 per cent. Goldman Sachs also said it expects inflation to rise to 6.5 per cent by March 2010.

The Indian rupee may appreciate against the dollar as a stable government ands domestic demand will attract foreign portfolio flows and a narrowing trade deficit turns the balance of payments positive.

The rupee may gain to 47.3 per dollar in three months, 46 per dollar in six months and 44.7 per dollar in a year, it added.

At 3:57 p.m., the Indian rupee was trading at 48.91/94 per dollar from its previous close of 48.72/73.

Gammon India March qarter net profit at Rs 72.63 cr

Construction company Gammon India on Friday said its net profit for the quarter ended March 31, 2009 stood at Rs 72.63, while it had a net profit of Rs 21.29 crore in the same quarter ended March 2008.

The financial statements include the amalgamation of the company with the erstwhile Associated Transrail Structures Ltd (ATSL). Hence, the figures for the current year and the last quarter ended March 31, 2009 are not comparable with those of the previous year, Gammon India said in a filing to the Bombay Stock Exchange (BSE).

Net sales rose to Rs 1,905.84 crore for the quarter ended March 2009, against Rs 821.61 crore in same period last year.

For the year ended March 31, 2009, the company has posted a net profit of Rs 140.47 crore, however it had a net profit of Rs 86.15 crore in the same period previous year.

Further, the board of directors has approved to allot 1.60 crore convertible warrants to three promoters of the company on preferential basis.

The company has alloted 30 lakh convertible warrants to Pacific Energy, 65 lakh convertible warrants to First Asian Capital Resources and 65 lakh convertible warrants to Devyani Estate & Properties, the BSE filing added.

The warrants are convertible for cash at a price of Rs 90.20 per share, the filing said.

Infosys net profit up, guidance down; faces pricing pressure

Technologies expects prices in the fiscal year to March 2010 to drop by 5% as its overseas clients battle slowing econ-omy,key officials said during its first-quarter results announce-ment on Friday. “Pricing environment continues to be challeng-ing. There are ongoing negotiations with clients,” the technology outsourcing major’s chief operating officer SD Shibulal said.

Infosys, India’s second biggest software exporter by revenues, beat street forecasts by posting a 17% jump in year-on-year net profit for the quarter to June, 2009 but economic challenges, pricing pressures and lower technology spend by major clients pushed the tech bellwether to lower its quarterly and annual revenue guidance.

While the broader market remained flat, Infosys’ scrip opened lower and then zipped up by nearly 4.8% -- trading at Rs 1,749 (previous close Rs 1,676 crore) nearly at close of Friday’s ses-sion.

Net profit for quarter ending June was Rs 1,527 crore, 17% higher than Rs 1,302 crore in the same period a year ago. How-ever, it was down 5.3% against March quarter levels of Rs 1,613 crore.

The expectations were, however, tempered by a revised earnings guidance for fiscal 2010, which the firm said would range be-tween Rs 21,416 crore and Rs 21,747 crore, reflecting a year-on-year decline of 1.3% to a growth of 3%.

It reported a 2.9% sequential fall in net income to Rs 5,472 crore for the quarter ended June 2009. While net sales for the March 31, 2009 quarter was Rs 5,635 crore, sales year-on-year was higher by 12.7% on Rs 4,854 crore posted in June 2008. Says In-fosys CEO Kris Gopalakrishnan: “We believe that in the short term, the global economic environment will continue to be chal-lenging.”

The firm, while adding 27 new clients this quarter, had 569 ac-tive customers this quarter, down from 579 in the previous quar-ter. To boot, revenue contribution from one of its marque cleints, slipped to 4.5% from 5.7% in the current quarter. Shibu-lal says Infosys had 19 $50-million plus clients for the June quar-ter. He pointed out that employee utilisation rate had come down to 70.9% against 74.5% in the March end quarter.

Operating profit margin improved by 50 basis points quarter-on-quarter to 34.1% in June 2009 against 33.6% in March 31, 2009. The IT major though expects FY10 operating margins to be around 31.5% and CFO V Balkrishnan sees operating margins coming down by 150 bps instead of the earlier 300 bps.

One of the reasons could be that the company’s employee strength declined by 945 during the last quarter to 1,03,905 with an attrition rate of 11.1% in the first quarter against 13.6% in the corresponding period of previous fiscal.

Agrees an analyst with Kotak Securities: “The improvement in margins came in due to the reduction in number of employees quarter-on-quarter. The sequential drop in number of employees came in after several quarters and was a surprise. The company has probably aligned costs to the expected revenue outlook.


Experts like James Friedman of Susquehanna International Group (SIG) said that while Infosys is gaining new business, fur-ther compensation increases and visa costs, though selective, could create incremental operating margin pressure. “Finally, the potential lower utilisation impact resulting from additional trainees hired could aggravate operating margin pressure,” he said earlier this week.

Earnings Per Share (EPS) increased to Rs 26.66 during the Q1, up 17.2% from Rs 22.75 in the same quarter of the previous year.

Revenue guidance for the September ending quarter was in the range of Rs 5318 crore-Rs 5413 crore, a year-on-year decline of between 1.9% to 0.1%. Explains Balakrishnan: “The global cur-rency market continues to be volatile and during the quarter, the rupee appreciated against the dollar. We continue to focus on margins while making the right investments to accelerate growth.”

In dollar terms, revenue guidance for the full year was between $4.45 billion and $4.52 billion, a decline ranging between -2.6% and -3.3%.

Meanwhile, financial brokerage firm Stifel Nicolaus downgraded Infosys stock to ‘sell’ from ‘hold’. “Lower guidance could be driven by slower ramp up of new work, higher tax rate, higher-than-expected pricing pressure (revenue), pressure from pricing, currency, and continued hiring, and increasing conservatism on Infy's part in giving guidance/outlook,” it pointed out

Budget Analysis 2009 - 2010

INCOME TAX Individual Positive Standard Deduction Existing Proposed Individual Up to Rs.1,50,000 Up to Rs.1,60,000 Individual (Woman) Up to Rs.1,80,000 Up to Rs.1,90,000 Senior Citizens Up to Rs.2,25,000 Up to Rs.2,40,000 To remove Surcharge of 10% on Personal Income Tax. Section 80DD of IT to be hiked to Rs.1 lakh. New Pension System Trust not to attract Income Tax, STT & DDT. Corporate Neutral No change in Corporate Tax TAX - OTHERS Positive CTT to be abolished FBT withdrawn CENVAT reduced GST to be introduced from April 1, 2010 MAT Negative MAT rate to be increased to 15% v/s 10% of book profit. Carry forward tax credit on MAT to 10 years v/s 7 years. AGRICULTURE Positive Target for agriculture credit flow set at Rs.3,25,000 crore for the year 2009-10 v/s Rs.2,87,000 crore in 2008-09. Interest subvention scheme for short term crop loans up to Rs.3 lakh per farmer at the interest rate of 7% per annum to be continued. Additional subvention of 1% to be paid from this year, as incentive to those farmers who repay short term crop loans on schedule. Time given to the farmers having more than two hectares of land to pay 75% of their over-dues under Debt Waiver and Debt Relief Scheme extended from June 30, 2009 to December 31, 2009. Allocation under Accelerated Irrigation Benefit Programme (AIBP) increased by 75% over budget estimate (B.E.) of 2008-09. Allocation under Rashtriya Krishi Vikas Yojana (RKVY) stepped up by 30% in B.E. 2009-10 over B.E. 2008-09. Subsidy regime for fertilizers to change to nutrient- based rather than price-based. Direct transfer of subsidy to farmers being worked out. EDUCATION Positive The overall Plan budget for higher education is to be increased by Rs.2,000 crore over interim B.E. 2009-10. Full interest subsidy for students taking courses in approved institutions. Provision for the scheme ‘Mission in Education through ICT’ substantially increased to Rs.900 crore and the provision for setting up and up-gradation of Polytechnics under the Skill Development Mission enhanced to Rs.495 crore. Rs.827 crore allocated for opening one Central University in each uncovered State. Rs.2,113 crore allocated for IITs and NITs which includes a provision of Rs.450 crore for new IITs and NITs. Rs.50 crore allocated for Punjab University, Chandigarh. Plan allocation for Chandigarh to be suitably enhanced during the year to provide better infrastructure to the people of Chandigarh. INDUSTRIES Automobile and Ancillaries Positive Specific component of excise duty applicable to large cars/utility vehicles of engine capacity 2,000 cc and above to be reduced from Rs.20,000 per vehicle to Rs.15,000 per vehicle. Excise duty on petrol driven trucks/lorries to be reduced from 20% to 8%. Excise duty on chassis of such trucks/lorries to be reduced from ‘20% + Rs.10000’ to ‘8% + Rs.10000’. Banking & Financial Companies Negative Scheduled commercial banks allowed to set up off-site ATMs without prior approval subject to reporting. A sub-committee of State Level Bankers Committee (SLBC) to identify and formulate an action plan for providing banking facilities in under-banked/unbanked areas in the next three years. Rs.100 crore set aside as one-time grant in-aid to ensure provision of at least one centre/Point of Sales (POS) for banking services in each of the unbanked blocks. Exemption from service tax (leviable under Banking and other financial services or under Foreign exchange broking service) being provided to inter-bank purchase and sale of foreign currency between scheduled banks. Loans at a subsidized interest rate of 6% for farmers who pay their dues in time, which is 1% less than what others would get. Time given to the farmers having more than two hectares of land to pay 75% of their over-dues under Debt Waiver and Debt Relief Scheme extended from June 30, 2009 to December 31, 2009. Full interest subsidy for students taking courses in approved institutions. No change in FDI limit in insurance Consumer Durable Positive List of specified raw materials/inputs imported by manufacturer-exporters of sports goods which are exempt from customs duty, subject to specified conditions, to be expanded by including five additional items. Fertilizer Positive Direct transfer of subsidy to farmers being worked out that will unshackle fertilizer companies. Subsidy regime for fertilizers to change to nutrient- based rather than price-based. Excise duty on naphtha to be reduced to 14%. FMCG Negative Investment-linked tax benefits for gas pipelines, cold chains Concessional customs duty of 5% on specified machinery for tea, plantations to be reintroduced for one year, up-to 06.07.2010. Gems & Jewellery Neutral Excise duty on branded articles of jewellery to be reduced from 2% to Nil. Tax holiday for exporters extended until 2011. Custom duty on Gold & Silver increased. Healthcare Positive Allocation under National Rural Health Mission (NRHM) increased by Rs.2,057 crore over Interim B.E. 2009-10 of Rs.12,070 crore. All BPL families to be covered under Rashtriya Swasthya Bima Yojana (RSBY). Allocation under RSBY increased by 40% over previous allocation to Rs.350 crore in B.E. 2009-10. Customs duty on 10 specified life saving drugs/vaccine and their bulk drugs to be reduced from 10% to 5% with Nil CVD (by way of excise duty exemption). Customs duty on specified heart devices, namely artificial heart and PDA/ASD occlusion device, to be reduced from 7.5% to 5% with Nil CVD (by way of excise duty exemption). Adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95% to badly hit sectors extended upto March 2010. Interest subvention of 2% on pre-shipment credit for seven employment oriented export sectors extended beyond the current deadline of September 30, 2009 to March 31, 2010. Tax holiday for exporters extended until 2011. Infrastructure & Engineering Positive 1 lakh dwelling units for paramilitary forces personnel to be constructed IIFCL (India Infrastructure Finance Company Ltd.) to evolve a Takeout Financing Scheme in consultation with banks to facilitate incremental lending to infrastructure sector. IIFCL to refinance 60% of commercial bank loans for PPP projects in critical sectors over the next 15 to 18 months. IIFCL and Banks are now in a position to support projects involving total investment of Rs.1,00,000 crore. Allocation to National Highways Authority of India (NHAI) for the National Highway Development Programme (NHDP) increased by 23% over B.E. 2008-09. Allocation for Railways increased from Rs.10,800 crore in Interim B.E. 2009-10 to Rs.15,800 crore in B.E. 2009-10. Allocation for Bharat Nirman increased by 45% in 2009-10 over B.E. 2008-09. Allocations under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased by 59% over B.E. 2008-09 to Rs.12,000 crore in B.E. 2009-10. Under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY), allocation increased by 27% to Rs.7,000 crore. Allocation under Indira Awaas Yojana (IAY) increased by 63% to Rs.8,800 crore in B.E. 2009-10. Allocation of Rs.2,000 crore made for Rural Housing Fund (RHF) in National Housing Bank (NHB) to boost the resource base of NHB for refinance operations in rural housing sector. Full exemption from excise duty to be provided on goods of Chapter 68 of Central Excise Tariff manufactured at the site of construction for use in construction work at such site. IT/ITES Positive Custom Duty on LCD panels cut from 10% to 5% Tax holiday for exporters extended until 2011. Sunset clause for Software Technology Parks of India extended by 1 year FBT abolished Media & Entertainment Negative Customs duty of 5% to be imposed on Set Top Box for television broadcasting. Customs duty on LCD Panels for manufacture of LCD televisions to be reduced from 10% to 5%. Oil & Gas Positive Investment-linked tax benefits for gas pipelines, cold chains SEC 80IB benefit extended to natural gas. Blueprint to be developed for long distance gas pipelines leading to a National Gas Grid to facilitate transportation of gas across the length and breadth of the country. Outlay for Assam Gas Cracker Project stepped up suitably in B.E. 2009-10. Government to set up an expert group to advice on a viable and sustainable system of pricing petroleum products. Duty paid High Speed Diesel blended with up-to 20% bio-diesel to be fully exempted from excise duties. Power Positive Cuts customs duty on wind power equipment by 2.5%. Allocation under Accelerated Power Development and Reform Programme (APDRP) increased by 160% to Rs.2,080 crore in B.E. 2009-10 over B.E. 2008-09. Customs duty on permanent magnets for PM synchronous generator above 500 KW used in wind operated electricity generators to be reduced from 7.5% to 5%. Excise duty on naphtha to be reduced to 14%. PSU Neutral While retaining at least 51% Government equity in Public Sector Undertakings, people’s participation in disinvestment programmes to be encouraged. Public Sector Enterprises such as banks and insurance companies to remain in public sector and will be given full support including capital infusion to grow and remain competitive. Real Estate Negative Interest subsidy for homes for loans up-to Rs 1 lakh Telecommunication Neutral Full exemption from 4% special CVD on parts for manufacture of mobile phones and accessories to be reintroduced for one year. Textile Positive Tax holiday for exporters extended until 2011. Adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95% to badly hit sectors extended up-to March 2010. Interest subvention of 2% on pre-shipment credit for seven employment oriented export sectors extended beyond the current deadline of September 30, 2009 to March 31, 2010. Customs duty on cotton waste to be reduced from 15% to 10%. Customs duty on wool waste to be reduced from 15% to 10%. Excise duty on manmade fibre and yarn to be increased from 4% to 8%. The scheme of optional excise duty of 4% for pure cotton to be restored. Excise duty for man-made and natural fibres other than pure cotton, beyond the fibre and yarn stage, to be increased from 4% to 8% under the existing optional scheme. MARKET REACTION Indices Open At 1:00 PM Change (%) Nifty 4,429.60 4,245.25 (4.16) Sensex 14,962.12 14,324.55 (4.26) BSE Midcap Index 5,211.32 5,057.77 (2.95) BSE Small Cap Index 5,857.54 5,710.23 (2.51) BSE Bank Ex Index 8,540.83 7,972.96 (6.65) BSE Power Index 2,953.98 2,815.74 (4.68) BSE PSU Index 8,288.56 7,903.25 (4.65) BSE Reality Index 3,460.62 3,300.78 (4.62) BSE Metal Index 11,243.54 10,762.61 (4.28) BSE Capital Goods Sector Index 13,142.48 12,585.89 (4.24) BSE Oil & Gas Index 9,664.71 9,308.71 (3.68) BSE Auto Index 4,627.36 4,479.99 (3.18) BSE TECk Index 2,656.95 2,578.42 (2.96) BSE IT Sector Index 3,346.92 3,266.68 (2.40) BSE Health Care Sector Index 3,641.36 3,589.95 (1.41) BSE FMCG Sector Index 2,296.37 2,303.94 0.33 BSE Consumer Durables Sector index 2,992.63 3,016.41 0.79

Markets reacted negatively , plunged more than 4% at around 1 PM (IST)

Domestic markets were trading under huge selling pressure (at around 1 PM) as investors were disappointed after Union Budget 2009-2010 did not contain any major reforms such as a roadmap to increase FDI in infrastructure & insurance, decontrol fuel prices and any clear roadmap on divestment. A surge in fiscal deficit target to 6.8% added to the market's woes. Sensex slipped below the 14,400 mark and Nifty fell below 4,250 mark. The significant selling pressure witnessed among Banking, Power, PSU, Realty and Metal stocks. The broader market indices were also under pressure as both BSE Midcap and BSE Smallcap indices traded with a loss of more than 2% each. However, markets opened higher today ahead of the Union Budget. Sensex crossed the 15,000 mark and Nifty jumped above 4,450 mark in the early trade. All the sectoral indices were trading in green. With the budget focusing on the common man rather than the economy as a whole, Sensex touched lowest level of 14,147.80 and Nifty fall to as low as 4, 195.40 level (at around 1 PM). Shares of companies that run insurance business fell after the Union Budget 2009-2010 did not include any measures to hike foreign direct investment limit in the insurance sector. Reliance Capital ,ICICI Bank, HDFC, Bajaj Finserv, SBI, Aditya Birla Nuvo and Max India fell by between 3-7%. PSU stocks fell as government bypassed announcement of divestment in public sector companies. Central bank of India, Hindustan Copper, MTNL, State Trading Corporation, Bharat Heavy Electricals, Power Finance Corporation fell by between 2-5%. Some of the Positives from the budget are: GST will be implemented from April 1, 2010 FBT abolished CTT removed While, disappointments are: Divestment in Insurance and Banks Fuel policy FDI in Infrastructure

Budget silent on edible oils tax, trade upset

The budget left import duty on edible oils unchanged on Monday, disappointing local industry that had been rooting for at least a small increase.

"There is no news for the edible oil sector. We are little bit disappointed as nothing has been announced to promote domestic oilseeds production," said B.V.Mehta, executive director of the Solvent Extractors' Association of India.

The market expected the government to impose a nominal tax on crude palm oil imports and marginally raise the levy on refined oils.

India allows tax free imports of crude variants, while levies a 7.5 percent tax on refined imports.

With soaring stocks of imported edible oils at Indian ports, the government was under pressure to slap duties on new cargoes.

An analyst said the decision to leave the tax regime unchanged indicated the government was still assessing the monsoon's progress.

India, the world biggest edible oil consumer after China, mainly buys palm oil from Indonesia and Malaysia, and small quantity of soyoil from Brazil and Argentina.

"Imports of edible oil will continue to be higher in coming days as the global prices are at comfortable level," said Veeresh Hiremath, senior analyst with Karvy Comtrade.

He said local prices of oils and oilseeds would decline.

Govt expects 497.50 bln rupees from state-run firms

The budget expects to generate 497.50 bln rupees from dividends and profits of state-run firms in 2009/10 and estimates food subsidy at 524.90 bln rupees during the fiscal year ending March 2010.

The budget also said the government would issue 103.06 bln rupees in bonds to oil firms.

Mahindra Satyam open offer gets poor response

Indian software services firm Tech Mahindra Ltd (TECHM.NS : 707.3 -44.8) said on Monday its open offer to the shareholders of Mahindra Satyam (SATYAM.BO : 73.9 -3.65) received less than 0.1 percent of the outstanding shares.

A total of 420,915 shares were tendered in the open offer, it said in a statement. Tech Mahindra intends to subscribe for 198.66 million additional shares at 58 rupees each, it said.

The company, which is 31 percent owned by BT Group, won an auction in April for a controlling stake in fraud-tainted Satyam Computer Services, now rebranded as Mahindra Satyam.

After the open offer is completed, Tech Mahindra will own 31.04 percent of Mahindra Satyam, formerly Satyam Computer Services Ltd.

Budget 2009-10: Experts' analysis and opinions

TAKAHARI OGAWA, ANALYST, STANDARD AND POOR'S RATING AGENCY

Ogawa said the size of the country's fiscal deficit was within the expected boundary, after India announced its fiscal deficit would widen as it outlined increased spending. However the lack of details about fiscal consolidation and privatisation was disappointing, Ogawa told Reuters in an interview.

SEBASTIEN BARBE, HEAD OF EM RESEARCH AND STRATEGY, CALYON, HONG KONG

"The government was elected on a pro-growth and pro-poor programme so I don't think they are going to make a big move in terms of reducing the fiscal deficit in the short term.

Beyond the short term outlook for the fiscal deficit what could be of interest is whether or not the government suggests some sort of precise and detailed roadmap to come back to a more controlled fiscal deficit. If they commit themselves to reduce the fiscal deficit in the next, say, 3 years to something closer to 3.5-4 percent of GDP, the market is likely not to be too harsh on the government. A large fiscal deficit is already priced in.

If they just announce a large fiscal deficit without a committment to a control in fiscal performance, there is a risk of a sovereign downgrade. But if they take strong commitments, I am not sure there will be a downgrade."

S. SRINIVASA RAGHAVAN, TREASURY HEAD, IDBI GILTS, MUMBAI:

"The budget is not up to the expectations and disappointing, too. They are saying that the fiscal deficit is manageable, but we have to wait and see how they are going to do that.

"The federal borrowing for the fiscal year at more than 4.5 trillion rupees, coupled with the state governments' share is going to be a huge burden for the market. Bond prices have come down already and we can expect some more falls."

JIGAR SHAH, SENIOR VICE-PRESIDENT AT KIM ENG SECURITIES IN MUMBAI

"The budget is good if we view it against the prevailing economic scenario, in India as well as globally. The budget is directed towards increasing demand, by leaving key tax rates unchanged. It was silent as to policy actions like (how to) increase foreign investment and stake sales in government units. That aspect isdisappointing."

KIRAN MAZUMDAR-SHAW, CHAIRMAN AND MANAGING DIRECTOR, BIOCON LTD

"It's not a bold budget. It's not such a great budget which will give a fillip to the industry. I was expecting many bolder reforms would be announced. There should have been much larger outlay for infrastructure and power. I am also disappointed that the budget had nothing substantial for the healthcare sector."

DEEPAK JASANI, HEAD OF RETAIL RESEARCH, HDFC SECURITIES, MUMBAI:

"There is a mismatch between market expectations and what was delivered. There were hopes the government would be bolder, but it has only gone for spending route and expecting things to take care of themselves.

"On most counts, there are a lot of general statements of intent, without any specific targets or timelines.

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI:

"The budget is more on the populist side and seems to address immediate rather than longer-term problems. Both the expenditure overrun and relief on the direct tax front, especially on personal income taxes, are ahead of our expectations."

RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI:

"The real concern emerging from the budget is that it has not given confidence as to how the government will go about the fiscal consolidation process, after hiking the fiscal deficit target.

"While the thrust on agriculture, infrastructure, etcetera augurs well from a long-term growth perspective, the fiscal profligacy is quite obvious in the near term and hence the markets have also reacted negatively."

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK (YESBANK.NS : 136 -6.8), MUMBAI:

"The budget is clearly focused on maintaining the growth drivers, that is, the rural economy and infrastructure, which is a strong positive for retail segments. Overall concerns do remain on higher expenditure as that would translate into higher fiscal deficit."

HARISH GALIPELLI, HEAD OF RESEARCH, KARVY COMTRADE, HYDERABAD:

"By pushing banks to lend aggressively to farmers, we can expect an increase in the productivity of agricultural produce. With incentives for exporters, export-oriented commodities like cotton and spices may rule firm."

KRISHNA BIR CHAUDHARY, PRESIDENT OF BHARATIYA KRISHK SAMAJ, NEW DELHI:

"The announced higher allocation for the irrigation sector is too little as 60 percent of the country's farm land is still rain fed. We expected more."

MARKET REACTION:

* The BSE Sensex (^BSESN : 14103.03 -810.02) tumbled as much as 5 percent as budget unfolds on concerns over how government will fund ballooning deficit.

* The partially convertible rupee falls nearly 1 percent to 48.33/35, versus 47.88 before the budget speech began and compared with Friday's close of 47.89/91. It traded later at 48.30/32.

* Yield on benchmark 10-year bond spikes 16 basis point to 6.99 percent. Most traded 2014 bond rises to 6.48 percent on the government's higher borrowing plan from 6.40 percent.

BACKGROUND:

- India could see growth of around 7 percent this year and more in coming years if it makes sweeping reforms including removal of subsidies and speeds infrastructure development, a government report said last Thursday.

- Bonds have jumped this year to factor in a massive increase in government borrowing. The market had priced in expectations that the deficit will swell to between 6.25 percent and 6.5 percent of GDP.

-Last week India unexpectedly raised gasoline and diesel prices by as much as 10 percent, passing onto consumers some of the recent rise in global oil prices and easing some of the pressures on the budget from subsidies.

- India fiscal deficit widened to 6.2 percent in 2008-09 as the government unleashed stimulus spending to insulate the economy against the global downturn.

- If the government fails to present a plan to bring the deficit back under control in subsequent years, the country's credit rating could come under pressure.

- India's shoddy infrastructure is considered by many foreign investors as the Achilles' heel of the economy that prevents the sort of double-digit growth seen in China

- The current fiscal year of 2009/10 runs until the end of next March.

Budget 2009-10: Key Points

OTHER KEY POINTS:

* Infrastructure spending

- allocations for highways, urban renewal to rise sharply

* Energy sector

- to develop long distance natural gas pipelines for a national grid; to set up panel to review domestic fuel prices

* Agriculture spending

- to provide additional 10 billion rupees over interim budget for more irrigation; to offer direct subsidies to farmers

* Government asset sales

- aims to raise 11.2 bln rupees from stake sales, 350 billion rupees from 3G telecom spectrum auction

* Growth

- 2008/09 GDP growth seen at 6.7 pct; government aims to return economy to high growth path of 9 pct/yr at the earliest

Budget hikes spending, deficit 6.8 pct/GDP

he new government said it will hike spending to spur growth, pushing the 2009/10 fiscal deficit to a much higher than expected 6.8 percent of GDP, slamming local stocks and pushing bond yields higher.

Financial markets had been expecting the fiscal deficit in the 2009/10 budget unveiled on Monday to rise to as high as 6.5 percent of GDP, from a previous government target of 5.5 percent.

The government's gross market borrowing is expected to rise to 4.51 trillion rupees, versus 3.95 trillion rupees in a Reuters poll.

Finance Minister Pranab Mukherjee pledged the government would return to fiscal responsibility targets "at the earliest". He also vowed to return the country to a higher growth rate of 9 percent a year as soon as possible, from an estimated 6.7 percent in 2008/09.

Total spending in the 2009/10 budget will rise to 10.2 trillion rupees, up 36 percent from 2008/09.

India's BBB-minus sovereign rating, placed on negative outlook in February, does not face any significant rating pressure, Standard & Poor's analyst Takahari Ogawa said after the budget was released.

Budget 2009-10: Taxes

Service tax levied on law firm

Custom duty on gold re-imposed

Customs duty to be reduced on drugs for heart treatment

No new tax on edible oil imports

4 per cent excise duty on cotton products restored

Customs duty on bio-diesel reduced

Life saving devices on heart contidion exempted from custom duty

Small business exempt from advance tax

To maintain overall customs and excise duty structure

Tax holiday to natural gas extended

Tax slab raised

MAT hiked to 15 per cent of book profit

Commodity transaction tax abolished

New pension scheme

Tax holiday for exporters extended untill 2012

Personal income tax exemption hiked by Rs 10,000

Abolish fringe benefit tax

Tax holiday extended for textile units

Goods and services tax from April 1, 2010

Share of direct taxes has increased to 56 per cent in 2008-09

Federal Tax/GDP ratio is 11.5 per cent

No surcharge of 10 per cent on personal income tax

Increase in exemption slab for senior citizen

No change in corporate taxes

Hike in IT exemption for women to Rs 1,90,000

Govt committed to tax reforms

Increase automation in direct tax collection

New tax code in 45 days

Centralised processing center at Bengalooru to streamline taxation

Income tax forms should be user friendly

Tax system should be such that it shold encourage voluntary compliance

Saral form 2 will be introduced

Budget 2009-10: Highlights

Budget speech completed. Finance Bill-II 2009 introduced.
Customs duty on bio-diesel reduced.
Silver to cost more.
Tax to be levied on Law Firms.
Textile units to receive tax holiday.
LCD TVs to cost less. Custom duty on LCD TVs cut from 10% to 5%.
Set-Top Boxes to cost more. Customs duty of 5% on set-top boxes.
To extend tax holiday for commercial production of mineral oil and natural gas.
Enhance budgetary support by Rs 40,000 cr.
Fringe Benefit Tax abolished.
Commodity Transaction Tax abolished.
Personal income tax exemption hiked by Rs 10,000.
No surcharge of 10% on personal income tax.
Centralised processing center at Bengalooru to streamline taxation.
No change in corporate tax.
Increase in exemption slab for senior citizens by Rs 15,000.
Fiscal deficit at 6.8% of GDP.
Proposes Rs 500 cr for rehabilation of displaced persons of northern and eastern areas of Sri Lanka.
Aila Relief proposed at Rs 1,000 crore.
Increased allocation for higher education. New IITs to be set up. Rs 2,113 cr for IITs and NITs.
Rs 25 cr each for AMU campuses in Murshidabad and Mallapuram.
Defence outlay goes up. One lakh dwelling units for paramilitary forces personnel to be constructed.
Allowances to para-military forces at par with defence forces.
One rank, one pension for ex-servicemen.
Allocation for Commonwealth Games to be raised to Rs 3472 crore
Online job exchange to be started with private partnership.
Unique ID plan to roll out in 12-18 months.
Top people from private sector to be given responsibility of vital national projects.
Interest subsidy for home loans up to Rs 1 lakh.
All BPL families to be bought under one smart card program.
50% of all rural women to be brought into self-help group programmes.
Rural mega clusters in Bengal and Rajasthan.
To add handloom clusters in West Bengal and Tamil Nadu.
75% hike in irrigation projects.
Rural Housing: Allocation to Indira Awaas Yojna hiked by 63% to Rs 8,883 cr. Rs 7000 crores for rural electrification scheme.
Rs 31,100 crore allocation for NREGA. NREGA gave employment opportunities to more than 4.479 cr households.
Rs 100 cr one-time grant to expand banks in non-banking areas.
Banks, insurance to stay with Govt. Banking network to be expanded.
Expert panel to look into petroleum product pricing. Domestic oil prices must be in sync with global prices.
'Aam Admi' is the focus of all our programmes and schemes: Pranab
Tax system should be such that it shold encourage voluntary compliance.
Income Tax forms to be made user-friendly. Saral-II forms to simplify taxation process.
Export Credit Guarantee scheme extended till March 2010.
Stimulus package to print media extended till December 31.
Farmers loan interest to come down to 6%. Interest subvention scheme for farm loans to be manitained.
Additional budget allocation for farmers.
IIFCL will refinance 60% of commercial bank loans in PPP. IIFCL to look at infrastructure needs.
Mumbai flood management allocation hiked to Rs 500 cr.
87% rise in urban renewal mission. Housing allocation hiked.
Fiscal stimulus at 3.5% of GDP
Allocation for NHAI up 23%
Trade in goods and services doubled in 2008
Job creation hit due to economic slowdown: Pranab
Govt took 3 stimulus packages so far. Two worst quarters of the global economic crisis is now behind us: Pranab
One budget can not solve all problems: Pranab
Foreign capital inflow is important
Increased focus on growth and encourage nation's development
Sustain growth rate of 9% for a longer period. Farm sector growth at 4%
Union Finance Minsiter begins his speech. This is Pranab Mukherjee's 4th budget.
Cabinet approves Union Budget.