Headlines (22 September 2008)

GENERAL

1)Russian Defence Minister Anatoly Serdyukov will visit New Delhi next week to kickstart the preparations for the Indo-Russian summit in early-December, when Dmitry Medvedev is scheduled to embark upon his maiden India voyage as President. During his three day visit from September 28, Serdyukov will co-chair the 8th session of the Indo-Russian Inter-Governmental Commission on Military-Technical cooperation, with his Indian counterpart A K Antony to review the bilateral defence projects, including the vexed issue of cost escalation and delay in retrofitting of Admiral Gorshkov Aircraft carrier.

Indian Express
 
CORPORATE / INDUSTRY

2)RELIANCE Industries on Sunday formally announced the commencement of production from the famous D6 upstream assets. The first-of-its kind production from a deepwater field in India commenced on Sep- tember 17 and comes 40 years after the Bombay High was discovered by ONGC. To begin with, RIL will produce 5,000 barrels of crude a day which will reach a peak of 5.5 lakh barrel of oil equivalent per day (boepd). At this level, it could save $20 billion forex outflow for the country.

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3)PepsiCo on Sunday announced a $500 million investment in India in a clear endorsement of the attraction of emerging markets like India amidst a global financial meltdown. The $39-billion food & beverage giant’s plans cover the next three years. The fresh investments un- derscores that the company is betting big on the continuation of the Indian growth story that is pushing up the number of middle class every year.

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MONEY & BANKING

4)AFTER a gap of almost five years, banks have started charging some of the top-rated corporates loans at the benchmark prime lending rates (PLR). Till now, top-notch corporates could borrow at below prime – a negotiated rate which is well below PLR. But not any longer,thanks to the tight liquidity conditions in the money market. Since the time Reserve Bank of India(RBI) allowed banks to lend below PLR, the best- rated borrowers have availed loans at sub-PLR rates. For the first time last week, a large state-owned bank disbursed loans to a top-rated auto- mobile company and an airlines company at PLR which is 14%, a banker close to the development said.

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5)GETTING loan for your dream home is going to be tougher as banks may tighten lending norms, apart from increasing interest rates. Bankers expect stricter lending norms soon for all types of loans including housing, auto and personal loans. Banks may follow more stringent norms for deciding the creditworthi-ness of individuals and corporates so that they do not run into a Lehman-like crisis.

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6)In a move to soften the blow of Lehman Brothers’ bankruptcy in the Indian stock and asset markets, four banks are set to take over its structured products businesses in India. Banks likely to make the final cut include India’s largest bank, State Bank of India, French bank BNP Paribas, UK-based Standard Chartered Bank and Barclays. The final contours of the deal are likely to be decided next week.

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7)The board of directors of Dhanalakshmi Bank has approved a five per cent dividend to all its shareholders for last year. The AGM of the bank, slated for September 27, is expected to approve the dividend proposal. The bank’s net profit grew by 76 per cent to Rs 28.46 crore(Rs 16.14 crore) during 2007-08.

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INSURANCE

8)INSURANCE regulator Irda has decided to undertake a fresh review of the cost structure of Unit Linked Insurance Plans(Ulips) to make the product affordable and attractive for retail investors in a choppy market. One option is to pare the commission charges to make Ulips attractive for investors. The case could be bolstered by the fact that the ceilings on commission were fixed for traditional policies oriented towards protection, while Ulips has a high element of savings. A part of the premium in Ulips is invested in equities or government bonds, depending on the choice made by the policy- holder. The returns are reflected in the increase in the value of the unit, mirrored by the net asset value(NAV) declared by the firm.

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9)Tata Group’s life insurance arm, in which American International Group – which last week got a new lease of life – has 26% stake, plans to ramp up its branch network by adding another 100 branches in the next 12 months.

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MARKETS

10)”BULLS are back in the race, but supported by US Fed-sponsored crutches. The question is how far and how fast can they run in this state,” remarked a trader when asked about his views on Friday’s rally. This perhaps sums up the mood on Dalal Street, even as it appears that the market could sustain the upward momentum for the next few sessions. Brokers say the mood on the street is one of healthy scepticism, and that covering up of short positions alone can take the market higher. Given that the macro environment still appears precariously poised, it is doubtful that investors would be keen to buy at higher levels.

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COMMODITIES

11)Despite recent spikes, jeera, chilli and turmeric futures on NCDEX are expected to remain bearish in the short term. Jeera(cummin seed) for October delivery on NCDEX on Friday hit the upper circuit at Rs 11,097 a quintal on short covering. Though jeera contracts on NCDEX may witness minor gains, enough inventory is available to meet the festival demand and may pressuire the prices, said an analyst.

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REAL ESTATE

12)Indian property prices, which had taken off like jet planes, appear to be losing altitude after bad debts owing their origin to real estate brought down the US financial market to its knees. Marketmen see prices cooling and projects being held up for want of cheap funds, but don’t expect the market to crash. Raising funds from American and Western European investors, who accounted for a bulk of overseas money coming to India, will be difficult. “Developers will have to look at new avenues like middle-east and Korea,” said global realty consultant Jones Lang LaSalle Meghraj country head Anuj Puri. The first to be hit would be commercial property prices, although a correction in re- sidential segment too is expected. Rates had almost doubled in the three years leading to 2007, when interest rates started hardening. “Negative sentiments from events like these (collapse of Lehman Bro- thers, Merrill Lynch and others) will have a bearing on the banking and financial services’ real estate requirement in India,” Puri said.

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13)AS the realty sector rushes into affordable housing to survive the slowdown, developers are innovating to cut costs and delivery time to retain the interest factor. Morgan Stanley-backed Mantri Developers, a leading luxury-homes maker, is working on ‘factory homes’ as its foray into budget or affordable housing. Mantri is in discussions with a potential German realty partner to show up with 6000 “modular, pre-fabricated homes”. The Bangalore-based firm that kicked off real estate development building small units for the Maharashtra Police a decade earlier, is projecting a 70% reduction in site work to churn out between 15-20 homes a day. Launching later next year, the firm’s latest venture will build homes for the middle classes formed to handle these projects, said MD Sushil Mantri.

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BUSINESS PROCESS OUTSOURCING

14)IN THE early days of the business process outsourcing (BPO) industry, two kinds of people were extremely busy: The call centre agents who barely got breathing space between calls and the HR managers, trying hard to retain people. While the business continues to expand at a brisk pace, keeping the agents busy, it’s the HR managers who can relax now. That’s because attrition rate, which averaged 60% a year and in several cases had gone over 100% just a few years back, has drastically dropped to an average of 30% in some cases it’s much lower, below 22%! Earlier the companies had to hire several hundred new agents every few months to keep the business going and now with the sector having matured, many people see it a long term career with day-time work options. The mundane BPO job has not only become more attractive but also more stable.

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15)GENPACT, the country’s largest BPO firm in terms of revenue and headcount, is in the race to acquire Lehman Brothers’ Mumbai-based captive back office unit for an undisclosed sum. Genpact has been scouting for captives and niche companies in India for acquisitions.

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INFORMATION TECHNOLOGY

16)If it was “God’s Own Country” to woo tourists, it is now “God’s Own e-State” to attract investment to Kerala’s IT sector. “After tourism, IT is the next big opportunity for the State,” said Mr N Radhakrishnan Nair, CEO, Technopark.

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17)IT firm Patni Computer Systems aims to double its revenue from the Asia-Pacific region in the next three years with increased focus on the business initiatives in the region, a top company official said. Patni is also eyeing buyouts in the region, especially a few deals, the official added.

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INTERNATIONAL
 
18)JAPAN’S Nomura Holdings is interested in buying the European operations of US investment bank Lehman Brothers, according to reports on Sunday, while Barclays will bid for parts of the business, a person familiar with the matter said.

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