BSNL Plans to Share 24k Towers With RIL

7/31/2019 BSNL Plans to Share 24k Towers With RIL

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BSNL plans to share 24k towers with RIL

Publication: Financial ExpressProvider: The Indian Express Online Media Ltd

July 16, 2012

Loss-making state-owned telecom operator BSNL is trying hard to shore up itsrevenues by getting into agreements with private players for sharing its over 70,000-strong tower infrastructure. The firm is close to sealing a deal of this kind withReliance Industries (RIL) subsidiary Infotel Broadband, which would be its biggest inthe space so far.

According to people close to the development, BSNL is in advanced stages ofnegotiations with RIL for sharing around 24,000 of itstowers. RIL's Infotel Broadband is expected to launch its 4G services (broadbandwireless access or BWA) by the end of this year and needs towers for the same. Thedeal with BSNL would signal its first major step towards the impending launch.

Sources said BSNL is offering around 22% discount over the prevailing marketrentals for towers. The market rentals are in the range of R15,000-18,000 per monthwhereas it is offering its towers to RIL for around Rs12,000 per month. Comparedwith the rentals charged by the PSU from other operators using its towers, thediscount for RIL could be around 50%.

When contacted, an RIL spokesperson declined to comment on the development.

BSNL chairman and managing director RK Upadhaya said in a text message to FE,"BSNL is having tower sharing agreement with almost all the telecom serviceproviders. Currently am out of Delhi and in a meeting".

The deal works to the advantage of both the parties. For Infotel, which is the onlyBWA operator to have spectrum in all the 22 telecom circles in the country, the

discount would be quite attractive to begin the services. Further, with the failure ofnew mobile operators to roll out their services on a large scale, there is surpluscapacity in the market. In this scenario, the BSNL deal would further drive down thetower rentals.


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For BSNL, it offers an opportunity to get into a big-time tower sharing deal. Thecompany has been the slowest into getting into such pacts and has also been a latestarter. Further, its tenancy ratio is the worst in the market today.

The company started getting into tower sharing pacts only when in 2010 the

Sam Pitroda-led committee suggested it to do so. To this day it rents only around1,500 of its more than 70,000 towers, and that too only to a few new operators.

According to analysts, the only problem the company could risk getting into ischarges of lack of transparency in forging the deal because it is offering a hugediscount in rentals without floating any tenders.

BSNL has been posting losses for the last three years now and in terms of subscribers,at 97.7 million, it trails Bharti, Vodafone, Reliance Communications, Idea Cellularand Tata Teleservices. For 2011-12, its losses are expected to be

around Rs 7,000 crore. During 2010-11, the company's net loss stoodat Rs 5,997 crore on a revenue of Rs 28,876 crore.

Its financial position took a major hit after it coughed up Rs 18,500 crore as paymentfor 3G and BWA spectrum for which it had to dip into its cash reserves.

With both these services not taking off, it has even approached the department oftelecommunications (DoT) to surrender its BWA spectrum in 20 circles. Thoughthe DoT has accepted its request, it is not going to offer any immediate respite to thecompany financially because the government has decided that the refund of the money

paid would take place only when the surrendered spectrum is put for auction. This isnot expected before next year.

Bajaj Hind's coal linkage plan spiked by ministry

Publication: Financial Express

Provider: The Indian Express Online Media Ltd

July 16, 2012

Bajaj Hindusthan's R12,000-crore Lalitpur thermal power project in Uttar Pradeshseems to be in trouble, with the coal ministry making it clear that it is not in a position


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to commit coal supply to the project under the power ministry's 12th Plan capacityaddition programme.

The Shishir Bajaj-led Bajaj Group, a sugar-to-hair oil conglomerate, recently forayedinto commercial power generation through its subsidiary Bajaj Hindusthan. The

subsidiary is banking on timely completion of the Lalitpurpower project to have 5,000MW operational capacity in place by 2015. Its plan could go haywire, though, if thecompany fails to secure fuel linkage for the project on time.

However, pointing out that it has already committed to providing coal linkage to morethan 80,000 MW under-construction capacity, the coal ministry has said that it wouldnot be possible for it to grant coal linkage to any more 12th Plan projects.

"Since letters of assurance (LoAs) amounting to more than 80,000 MW for setting uppower projects already exist, there is prima facie no scope for grant of new LoAs for

12th Plan power projects. This is the positionMoC (ministry of coal) has been takingin all the cases requiring fresh coal linkages," the coal ministry has said in reply to areference from the Prime Minister's Office (PMO) over this issue.

Coal India subsidiaries have issued letters of assurance covering the capacity of108,000 MW. During the last three years of the 11th Plan, only 26,000 MW wascommissioned. The balance capacity has been included in the 12th Plan programme.

Since LoAs have been assured to these projects, CIL subsidiaries are required to issuecoal linkage to them as per the existing policy.

The previous Mayawati-led regime in the state had signed 10 memorandums ofunderstanding (MoUs) with private companies for the development of 10,970MW capacity. However, nine projects are still languishing for want of coal linkage,which private developers had committed to arrange on their own. The newgovernment in the state has extended the validity of the MoUs by 18 months for allthe nine projects, but it is far from certain whether these projects would finally see thelight of day.

Himawat Power's Bhognipur-I, Creative Thermolite's Murka, Torrent

Power's Sandila and Welspun's Mirzapur are some other private projects in UttarPradesh stuck due to non-availability of coal linkages.


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FIIs develop a selective taste for Indian equities


July 16, 2012

India may have outperformed its peers in the first half of 2012, but foreigninstitutional investors (FIIs), who set the trend here, have pared their holdings inseveral of the Sensex stocks over the past quarter. Of the 16Sensex firms that havedisclosed their shareholding pattern for the quarter ended June 2012, FIIs increasedtheir exposure in just five companies, indicating a somewhat bearish view on theIndian markets. FIIs sold shares worth $340 million in the three months to June 2012,after having bought equities worth $8.86 billion in the March 2012 quarter.

The Indian market outperformed in the first half of 2012, posting gains of 8% for theMSCI India index compared with 2% for the MSCI EM index, which rose 2%. That'sdespite the fact that the rupee underperformed its peer group. The markets had ralliedsharply in the early part of the year following a 'risk on' trend globally after the LTROor long-term refinancing operation was announced in Europe. However, FIIs lost theirappetite for Indian stocks after the government said it would introduce the GeneralAnti-avoidance Rules or GAAR. Following this announcement, local insurance firmsand mutual funds sold $ 2.8 billion and $ 1.2 billion worth of stocks, respectively.

Moreover, JPMorgan believes the weak progress of the monsoon could be a risk forthe markets. "While the impact on growth may not be substantial, food inflation andsentiment will be likely casualties," the brokerage observed.

While the softening prices of commodities is a plus for corporates, the sluggish globaleconomy has left the country's exports weak. Exports in June fell for the secondconsecutive month.

FIIs have bet on companies that deliver steady earnings growth, pushing up theirholdings in India's top mortgage lender HDFC as also its subsidiary and private lenderHDFC Bank. They also upped their takes in some energy stocks like Tata Power, CoalIndia and GAIL.

In value terms, FIIs sold the most in IT bellwether Infosys with total net salesof Rs 1,624 crore in the company, followed by engineering and construction majorLarsen and Toubro, private lender ICICI Bank and BajajAuto. In percentageterms, FIIs offloaded the most in Bajaj Auto followed by Dr Reddy's Laboratories andL&T, and Jindal Steel (1.21%).


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Of the 218 BSE 500 companies for which data are available, FIIs raised their stake in100 companies and reduced their stake in 105 firms. The group upped their stakein pharma, healthcare and FMCG firms and reduced their exposure in infrastructureand engineering firms. Banks saw heavy selling as well as buying.

FIIs invested significantly in firms such as Cairn India(Rs 674 crore), Godrej Consumer (Rs 376 crore), Titan Industries (Rs 235 crore),United Spirits (Rs 211 crore), Federal Bank (Rs 117 crore), IDFC(Rs 113crore)and TTK Prestige (Rs 102 crore). Lupin, BritanniaIndustries, Divi's Laboratories, Bata India, Asian Paints and Cadila Healthcare wereamong the defensives that got significant FII investment.

"It is not surprising that FIIs have invested in defensive stocks given the uncertaintyprevalent in the market," said UR Bhat, managing director of the Indian arm of DaltonStrategic Partnership, a global fund registered as an FII in India.

FIIs sold the most in stocks such as LIC Housing Finance (Rs 616 crore), Yes Bank(Rs 584 crore), GlaxoSmithKline Healthcare (Rs 256 crore), Zee Entertainment(Rs 232 crore), Suzlon Energy (Rs 160 crore) and ABG Shipyard (Rs 151 crore).

The pace of inflows from here on would depend on global as well as domestic macro-economic situation. "A lot depends on the government's policy action and thedevelopments in Europe. The global situation will determine the investors' riskappetite while the policy actions will determine how attractive India is seen as aninvestment destination," said Bhat.

Markets to watch inflation data

Publication: Mint NewsProvider: HT Media Ltd

July 16, 2012

New Delhi, July 16 -- After a dull week on global bourses, there was some reason tocheer on Friday. Chinese gross domestic product (GDP) data showed the world's No.2 economy grew at 7.6% in the second quarter, which was though pretty much in linewith the expectations but allayed fears of a slowdown. Equities across Europe and theUS rallied as commodity prices shot up supporting the spurt in equities. Friday also


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turned out to be a good day from earnings point of view.

In India, there was extreme caution ahead of the beginning of the big-ticket earningsseason as there were many concerns about Infosys Ltd's revenue guidance. Theearnings released by Infosys on Thursday added to the gloom as the company said it

sees revenue in dollar terms rising 5% to $7.34 billion in the fiscal year to March,down from its April estimate of 8-10% growth. The market had expected Infosys totrim its growth forecast to 6-8%. Though Tata Consultancy Services Ltd made up forsome of the loss of sentiment as its earnings exceeded forecast by posting a 38%annual jump in quarterly profit, but given the economic situation, expectations fromcorporate earnings is low.

India's date with monthly inflation will once again be a keenly watched event onMonday as this data has gained a lot of prominence after the release of industrialoutput data last week. The Index of Industrial Production data for May came in abovemarket expectations, which, in turn, lowered hopes of any Reserve Bank of India(RBI) action in the forthcoming meeting this month. Markets fear that a rise ininflation will make the case for RBI action difficult. Though the average expectationfor wholesale price inflation is 7.65%, anything significantly above will definitely bea dampener for the markets. The markets will also watch out for the presidentialelection scheduled on 19 July, as there is a general perception it will mean thebeginning of economic reform. Though there is no logical reason for such a sentiment,this perception is quite strong on political calculations. I think such positive hopes willat least give some stability to the markets.

Globally, the earnings and Ben Bernanke, chairman of the US Federal Reserve, willbe the keys to market sentiment. What will matter the most to the US and globalmarkets is Bernanke as he is due to deliver his semiannual monetary policy report tothe Senate and House committees on Tuesday and Wednesday. Analysts will focus onevery word he says for mention of any possibility of monetary easing or the much-hyped third quantitative easing and how he views the slowing economy. At home,technically the markets are still in a rough patch and unless the benchmark Nifty indexon the National Stock Exchange of India Ltd settles above 5,312 points, broadersentiment will remain cautious with a downward bias. On Monday, the markets are

likely to open with a positive gap mainly due to the rally on the US and Europeanbourses following better-than-expected Chinese GDP data. The first test for a risingNifty will come at 5,267 points. If it is able to hold above this level with highvolumes, it will be the first positive signal for the markets. If the Nifty fails to breachthis level and falls, it will be a bearish signal and the support at 5,212 points willbecome a key support. If the Nifty settles above 5,267 or breaches it with goodvolumes, it will be a positive signal and there will be a 80% chance of gains


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of upto 5,302 points, which is another resistance level. The resistance around thislevel will actually be a band between 5,302 and 5,312 points. If the Nifty closes abovethis band, the sentiment on bourses will turn positive with the next resistance at 5,356points followed by strong resistance at 5,391. On the downside, the first support isplaced at 5,212 points, which is a good support level. If this level goes, the next

support will come up at 5,191 points, which is technically an important support for themarkets. A close below this level will be bearish with a 83% chance of furtherdownslide. The Nifty is then likely to find support at 5,156 points. Among individualstocks, Bharat Heavy Electricals Ltd (Bhel), Orchid Chemicals and PharmaceuticalsLtd and Voltas Ltd look good on charts. Bhel at its last close of Rs 231.30 has targetof Rs 237 and a stop-loss of Rs 223, Orchid Chemicals at its last close of Rs 121.30has a target of Rs 226 and a stop-loss of Rs 215, while Voltas at its last closeof Rs 113.05 has target of Rs 117 and a stop-loss of Rs 107. From my previous week'srecommendations, ACC Ltd and Bank of India triggered their stop-losses,while Bhel failed to meet its target and continues to be a recommendation thisweek. Published by HT Syndication with permission from MINT.For any query withrespect to this article or any other content requirement, please contact [email protected]

Automobiles- Maruti Suzuki bets on rural market to drive

its sales

Publication: Economic TimesProvider: Bennett, Coleman & Co. Ltd

July 16, 2012

Chanchal Pal Chauhan NEW DELHI: Maruti Suzuki, India's largest carmaker, is onan overdrive in the rural hinterland where it sells one of every three cars sold. Itexpects the rural market to contribute about half of its sales by 2015-16.

To beat market blues during a slowdown in sales, Maruti has opened 23 new retailoutlets in towns and hamlets in the last three months.

Maruti's share of rural sales has witnessed a continuous jump and last month it got abig boost with 55% growth in sales, taking its overall share to an all-time high of 33%from just 3% in 2007-08. In a slowing Indian market where sales have hit bumps led
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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by higher fuel prices and expensive finance, rural market has become a keyfor Maruti Suzuki's success.

"Now, we have a reasonable base of rural sales and the 55% jump epitomises thestrength of the Indian hinterland markets and villages. We are developing new

markets and generating customers who have never used cars in these smaller towns(and expecting them) to generate long-term competitive advantage,"says Maruti managing executive office (marketing & sales) Mayank Pareek.

Maruti identifies human settlement of around 10,000 as rural markets and has soldmore than 23,000 cars in such markets in June this year. Maruti rural marketinginitiative started in 2007, when it identified many small clusters to sell cars and ropedin panchayat functionaries to generate potential customers.

Now, many of these small clusters - turmeric farmers in Tiruchengode in Tamil Nadu,apple growers in Himachal Pradesh - are generating constant sales. According tocompany data, many of these customer groups account for 35-50 vehicle sales amonth that double during the harvest season.

Rural markets have been playing strong role in sustaining growth of carmakers andeven giving a bigger chunk of sales for small-ticket buys like bikes and scooters.Hero MotoCorp's 46% sales are coming from rural market and the share has beenconsistently rising. Higher farm incomes and sustained economic growth have led toan increased consumption in such areas.

Maruti, which constantly profiles all kind of customers, says that rapid improvementin rural market, thanks to the exposure to television and other media, even its high-ticket cars are much in demand. For instance, premium cars like Swift, Dzire and SX4have got almost equal share of sales from the smaller towns like their urban markets.

"The aspiration levels in villages are rising in smaller towns. We had been tapping thispotential, which is increasing demand for our new models. Premium hatchbacks likeSwift are now a strong brand and sells in a good number every year," says Pareek.

Maruti research shows that only 40% of the rural buyers are farmers and the majoritysupports the rural economy - traders, school teachers, state government employeesand shop keepers. Also, in rural areas, the demand for petrol cars is much better.Keeping that in mind, it has started new retail networkat Anantnag, Durg, Hissar, Ranchi and Coimbatore in the past few weeks, where saleshave been pretty insulated from the urban-centric economic slowdown.


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Car sales in India have slowed in the past few months prompting automobile industrybody Society of Indian Automobile Association to lower its car sales growth forecastto 9-11% for the year ending next March, as higher costs and slower economicexpansion have impacted demand. However, rural markets are not prone to economyshocks, say experts. They remain stable.

"Rural markets have several inherent strengths and generate intrinsic demand. Thoughit largely depend on a good monsoon, the huge investments in roads and otherinfrastructure have helped sustain demand in recent years," says Abdul Majeed,partner, automotive practice, PricewaterhouseCoopers.

Pareek echoes this view. "A lot of investment has been made in the rural economy inthe last few years and roads and means have significantly improved. This meanspeople have more money to spend and are better connected. Better connectivity has amultiplier effect and generates demand and momentum in rural markets."

Maruti has the largest network which is more than all the other carmaker put together.Its current strength stands at 1,119 new car sales outlets in across 811 cities. Around40% of these are purely based in rural markets. In addition, it has 421 pre-owned carbusiness outlets. For Reprint Rights:timescontent.com

Rupee to stay afloat on foreign fund inflows

Publication: Business StandardProvider: Business Standard

July 16, 2012

BS REPORTER Mumbai The rupee is expected to retain the current level with thehelp of foreign fund inflows in the medium term, as narrowing trade deficit data augurwell for the currency. However, downward risk remains high in the event of freshrisk-off waves from developments on the global front.

On Friday, the rupee closed at 55.15 against the dollar, registering a third consecutiveweekly gain of 0.6 per cent. "There were good dollar supplies from exportersand FIIs above 55.70 to dilute the impact of strong dollar rally against majorcurrencies. Else, the rupee would have been down and out around 56.50 by now," saidMoses Harding, head of ALCO and economic & market research at IndusInd Bank.
http://timescontent.com/http://timescontent.com/http://timescontent.com/http://timescontent.com/


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He expects the rupee to trade in the range of 55.30-55.95 against the dollar for thenear term.

The rupee gained 1.4 per cent over the previous close even as the dollar index, asmeasured against six major currencies, stayed above 83.65 levels on Friday. There

have been net foreign fund inflows worth $1.6 billion in Indian equities and debtmarkets this month so far, according to data from the Securities and Exchange Boardof India.

In June, India's trade deficit shrunk to a 15-month low of $10.3 billion from $16.3billion in May, as imports contracted on a faster pace compared to the slowdown inexports. "In our view, while lower oil prices are partly responsible for the drop in theoil import bill, rupee depreciation is starting to narrow the non-oil import bill. Goldimports are also down as a result," said Sonal Varma, chief economist at Nomura.

"The trade deficit in the coming months, if sustained at the current level, couldprogressively lead to a gradual appreciation in the exchange rate," said Param Sarma,director and chief executive officer of NSP Treasury Risk Management Services.

Traders will also look at the wholesale price index (WPI) for June 2012 that will bereleased on Monday for cues on the possibility of rate cuts in the upcoming monetarypolicy review.

Bond yields may harden as the overall inflation is expected to be sticky.

Steel companies brace for a lacklustre Q1


July 16, 2012

The gloom in the Indian steel sector is set to be reflected in the financial results ofsteel makers for the first quarter of fiscal 2013. The sector's results are set to beimpacted by multiple factors, including limited pricing power due to an oversupplysituation, increasing imports and a weakening rupee, due to which which companiesare unable to take advantage of weak global prices of iron ore and coking coal.


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India's steel consumption grew 8.8% in the first quarter, but despite this growth, steelproduction was still nearly 5% higher than consumption. However, domestic priceshave remained flat as compared to last year.

"The positive thing is that companies are willing to cut production," said Rohit Vohra,

partner and director at Boston Consulting Group or BCG, a global managementconsultancy firm. "Companies are okay shutting down a blast furnace to bring supplyin line with demand."

The demand supply mismatch for steel has risen as a result of new capacities comingon stream, which has propelled India to being the fourth largest steel producer in theworld with an installed capacity of 89 mt a year, according to statistics from theWorld Steel Association.

However, demand for steel in India is only 71 mt as of 2011-12. Companies are

tackling the current scenario by running their plants at lower capacity. According toWorld Steel Association, India's average capacityutilisation in 2011-12 was 83%.

"We remain concerned on Indian steel industry demand-supply balance over nextcoming quarters which would adversely impact pricing capacity of steel companies,"said Saurabh Agarwal of Kotak Securities, a Mumbai-based brokerage, in the firm'squarterly results preview released last week.

Imports in the first quarter grew 41% due to last year's low base. But weak globalprices have meant that prices of imported steel are comparable to domestic prices.

"Hot rolled coil prices declined across major geographies in the first quarter of fiscal2013 and are now close to yearly lows," stated Mumbai-based brokeragefirm Motilal Oswal in its quarterly results preview released last week.

Consultants say weak rupee has helped to a certain extent in maintaining domesticprices at last year's levels.

"Given the current scenario, the only thing helping the domestic steel industry'spricing power is the weak rupee," said Vohra of BCG.

Oil & Gas- Mandatory blending of bio-petrol on cards, in a

move to cut fuel import bill


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July 16, 2012

Subodh Ghildiyal NEW DELHI: The government will soon move for mandatoryblending of petrol with ethanol (EBP), pegging the target at 5 per cent, in what couldbe a first step towards reducing the escalating fuel import bill.

The move for mandatory EBP would overrule the recommendation of PM's economicadvisory council (PMEAC) that blending be kept optional to deal with fickle supplyof the bio-fuel.

Such a decision would put India in the select band of countries with mandatory bio-petrol. India has struggled to get petrol blending off the ground, despite a Union

Cabinet decision in 2010.

Seeking to kick-start the frozen policy objective, the PMEAC had recommended thatuncertainty over availability of ethanol could be dealt by making EBP optionaltheoil marketing companies could be given the choice to have higher targets whenethanol supply is bountiful and lower in an adverse year.

However, the new and renewable energy ministry has moved a Cabinet noterecommending that EBP should be mandatory with 5 per cent target for oilcompanies. It said PMEAC's optional EBP should not be considered.

Fuel blending has been suggested as silver bullet to India's elusive search for a sort ofantidote to huge oil imports, which render economy hostage to price volatility ininternational markets. It is also seen as a long-term solution to reducing dependenceon fossil fuel while increasing the energy efficiency of the fuel.

The crux of the fresh start over EBPin the form of Cabinet proposalis theintractable issue of pricing of ethanol.

Now, the renewable ministry has left it to the Union Cabinet to pick between theformula proposed by the Saumitra Chaudhuri committeeand PMEAC's recommendation that price be left to market forces.

Chaudhuri panel's suggestions peg ethanol at Rs 27 per litre with a floor priceof Rs 23 and a ceiling price of Rs 31.


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The renewed push to EBP has already hit a rough patch, with chemicals and fertilizersministry flagging its concern that mandatory EBP would hit the chemicals industryhard.

In a dissent note, the Union chemicals ministry has argued that 5 per cent EBP would

require 105 crore litres of ethanol annually, even though oil companies could procureonly 36 crore litres last year. It has argued that mandatory EBP would hurt chemicalsindustry by diverting its share of ethanol to oil companies. Even the PMEAC said thatIndia cannot depend on ethanol's largest producers like Brazil and the US.

The Cabinet proposal, instead, has recommended that chemical industries ink long-term contracts with ethanol producers for upto 50 crore litre annually.

The pricing of ethanol has been a politically sensitive issue. While key UPA ministerswere seen to push for higher administered price for ethanol so that it improved theearnings of sugar industry, there have been suggestions that the sugar lobby shouldnot be allowed to exploit EBP.

PMEAC also recommended that ethanol price be determined by commercialprocesses, and not be aimed at helping out an individual sector (read sugar). ForReprint Rights:timescontent.com

Office space demand sluggish, but Mumbai an exception


July 16, 2012

An easing of rentals helped developers lease out more office space in Mumbai in thefirst half of CY12 compared to the year-ago period. However, for the rest of India,absorption of office space was sluggish as IT andITeS companies curtailed theirexpansion plans and multinationals turned cautious.

Mumbai saw a jump of 61% in absorptions to about 2.9 million sqft between Januaryand June 2012 against 1.8 million sqft during the same period last year, according toreal estate consultancy firm CB Richard Ellis India. Rentals in Mumbai were lower by10-15% in January-June 2012 against the year-ago period, say industry players.


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"Mumbai registered the second highest demand for office space in first half of 2012,largely led by the banking, financial services and insurance (BFSI) sector and by thesmall-to-medium-sized office enterprises," said realty consultants Cushman andWakefield India in a report. Also, good offtake is being seen from companies inlogistics, pharma, entertainment, automobile and telecom sectors.

"Developers and owners have taken a practical approach now and rentals have comedown," says Sumesh Mishra, senior vice-president (finance), Sunteck Realty. "Therewas no demand for the whole of the last year and, so, it's better that we lease it outrather than have the spaces lying vacant." The company has seen rentals in the rangeof R140 to R180 per sqft per month in its projects, Sunteck Centreand Sunteck Grandeur, in the western suburbs of Mumbai, which were commandingover R200 in the same period last year.

However, unlike the earlier 6-9-year lock-ins, Sunteck has now signed rental leases

for 2-3 years. "There is enough space to be occupied for the next six months to a yearand, then, another year for the markets to revive. So, by having shorter tenure leases,we can revise rentals once there is improvement in rents," says Mishra.

"New buildings with modern amenities, better infrastructure and glass facade havecome up in the last couple of quarters and clients who were looking for new spaceshave taken up the inventory in such buildings," saysMayur Shah, executive vicepresident, Hubtown.Some of the marquee deals in this period included Sahara Groupclosing a 3.5 lakh sqft space in Crescenzo in Bandra Kurla Complex at R275-300per sqft per month. Global cosmetics major L'Oreal leased 80,000 sqft inMarathon Futurex, central suburb of Lower Parel, for R125-150 per sqft per month.

However, caution on part of MNCs and IT and ITeS companies had a negative impacton offtake in other parts of the country. The leasing activity remained sluggish andoffice absorptions fell by 21% over last year, says the Cushman report. BetweenJanuary and June 2012, India recorded total absorption of around 13.4 million sqft ofoffice spaces, compared to 16.9 million sqft last year.

"The decline in absorption and the corresponding decline in pre-commitments, isindicative of the trend that the occupiers are looking at taking up space once business

requirements are clarified and frozen," says SanjayDutt, executive managing director(south asia), Cushman & Wakefield. "The demand from IT/ITeS sector is likely toremain subdued, resulting in low leasing activity," he added.

Absorption in NCR noted the highest decline of 53% during the period at 1.35million sqft. Bangalore saw an absorption of 3.01 million sqft, a decline of 45%. In


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Chennai, absorptions were at 1.72 million sqft, down 12% from last year. However,markets like Kolkata bucked the trend due to demand from IT/ITeS players.

However, some markets bucked the trend due to demand fromIT/ITEs players. Kolkata's office market noted marginal increase at 1.04 million sq.ft.

Hyderabad saw a 5% increase in absorption at around 1.7million sq.ft.Ahmedabad recorded a total absorption of 4.4 lakh sq.ft higher than lastyear.

Rupee to stay afloat on foreign fund inflows

Publication: Business StandardProvider: Business Standard

July 16, 2012

BS REPORTER Mumbai The rupee is expected to retain the current level with thehelp of foreign fund inflows in the medium term, as narrowing trade deficit data augurwell for the currency. However, downward risk remains high in the event of freshrisk-off waves from developments on the global front.

On Friday, the rupee closed at 55.15 against the dollar, registering a third consecutiveweekly gain of 0.6 per cent. "There were good dollar supplies from exportersand FIIs above 55.70 to dilute the impact of strong dollar rally against majorcurrencies. Else, the rupee would have been down and out around 56.50 by now," saidMoses Harding, head of ALCO and economic & market research at IndusInd Bank.He expects the rupee to trade in the range of 55.30-55.95 against the dollar for thenear term.

The rupee gained 1.4 per cent over the previous close even as the dollar index, asmeasured against six major currencies, stayed above 83.65 levels on Friday. There

have been net foreign fund inflows worth $1.6 billion in Indian equities and debtmarkets this month so far, according to data from the Securities and Exchange Boardof India.

In June, India's trade deficit shrunk to a 15-month low of $10.3 billion from $16.3billion in May, as imports contracted on a faster pace compared to the slowdown inexports. "In our view, while lower oil prices are partly responsible for the drop in the


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oil import bill, rupee depreciation is starting to narrow the non-oil import bill. Goldimports are also down as a result," said Sonal Varma, chief economist at Nomura.

"The trade deficit in the coming months, if sustained at the current level, couldprogressively lead to a gradual appreciation in the exchange rate," said Param Sarma,

director and chief executive officer of NSP Treasury Risk Management Services.

Traders will also look at the wholesale price index (WPI) for June 2012 that will bereleased on Monday for cues on the possibility of rate cuts in the upcoming monetarypolicy review.

Bond yields may harden as the overall inflation is expected to be sticky.

FIIs develop a selective taste for Indian equities


July 16, 2012

India may have outperformed its peers in the first half of 2012, but foreign

institutional investors (FIIs), who set the trend here, have pared their holdings inseveral of the Sensex stocks over the past quarter. Of the 16Sensex firms that havedisclosed their shareholding pattern for the quarter ended June 2012, FIIs increasedtheir exposure in just five companies, indicating a somewhat bearish view on theIndian markets. FIIs sold shares worth $340 million in the three months to June 2012,after having bought equities worth $8.86 billion in the March 2012 quarter.

The Indian market outperformed in the first half of 2012, posting gains of 8% for theMSCI India index compared with 2% for the MSCI EM index, which rose 2%. That'sdespite the fact that the rupee underperformed its peer group. The markets had rallied

sharply in the early part of the year following a 'risk on' trend globally after the LTROor long-term refinancing operation was announced in Europe. However, FIIs lost theirappetite for Indian stocks after the government said it would introduce the GeneralAnti-avoidance Rules or GAAR. Following this announcement, local insurance firmsand mutual funds sold $ 2.8 billion and $ 1.2 billion worth of stocks, respectively.


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Moreover, JPMorgan believes the weak progress of the monsoon could be a risk forthe markets. "While the impact on growth may not be substantial, food inflation andsentiment will be likely casualties," the brokerage observed.

While the softening prices of commodities is a plus for corporates, the sluggish global

economy has left the country's exports weak. Exports in June fell for the secondconsecutive month.

FIIs have bet on companies that deliver steady earnings growth, pushing up theirholdings in India's top mortgage lender HDFC as also its subsidiary and private lenderHDFC Bank. They also upped their takes in some energy stocks like Tata Power, CoalIndia and GAIL.

In value terms, FIIs sold the most in IT bellwether Infosys with total net salesof Rs 1,624 crore in the company, followed by engineering and construction major

Larsen and Toubro, private lender ICICI Bank and BajajAuto. In percentageterms, FIIs offloaded the most in Bajaj Auto followed by Dr Reddy's Laboratories andL&T, and Jindal Steel (1.21%).

Of the 218 BSE 500 companies for which data are available, FIIs raised their stake in100 companies and reduced their stake in 105 firms. The group upped their stakein pharma, healthcare and FMCG firms and reduced their exposure in infrastructureand engineering firms. Banks saw heavy selling as well as buying.

FIIs invested significantly in firms such as Cairn India

(Rs 674 crore), Godrej Consumer (Rs 376 crore), Titan Industries (Rs 235 crore),United Spirits (Rs 211 crore), Federal Bank (Rs 117 crore), IDFC(Rs 113crore)and TTK Prestige (Rs 102 crore). Lupin, BritanniaIndustries, Divi's Laboratories, Bata India, Asian Paints and Cadila Healthcare wereamong the defensives that got significant FII investment.

"It is not surprising that FIIs have invested in defensive stocks given the uncertaintyprevalent in the market," said UR Bhat, managing director of the Indian arm of DaltonStrategic Partnership, a global fund registered as an FII in India.

FIIs sold the most in stocks such as LIC Housing Finance (Rs 616 crore), Yes Bank(Rs 584 crore), GlaxoSmithKline Healthcare (Rs 256 crore), Zee Entertainment(Rs 232 crore), Suzlon Energy (Rs 160 crore) and ABG Shipyard (Rs 151 crore).

The pace of inflows from here on would depend on global as well as domestic macro-economic situation. "A lot depends on the government's policy action and thedevelopments in Europe. The global situation will determine the investors' risk


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appetite while the policy actions will determine how attractive India is seen as aninvestment destination," said Bhat.

PM says job guarantee scheme not in good shape


July 16, 2012

New Delhi, July 16 -- Prime Minister Manmohan Singh on Saturday expressed

unhappiness over the implementation of the government's flagship rural employmentguarantee scheme describing it as not in "not in good shape" and directed the PlanningCommission to address the "gaps."

Singh was speaking after releasing a report on the working of the marquee MahatmaGandhi National Rural Employment Guarantee Act (Mgnrega) in New Delhi. In hisspeech, Singh pointed to problems like delayed payments to workers and said theseshould be addressed at the earliest.

"The Mahatma Gandhi Nrega story in numbers is a story worth telling.... the scheme

scores high on inclusivness...no welfare scheme in recent memory has caught theimagination of the people as much as Nrega has," Singh said.

"(But) statistics do not tell the whole truth," he said while releasing'NREGA Sameeksha', a collection of research studies conducted onthe programme under which Rs 1,10,000 crore have been spent to pay wages to1,200 crore people since 2006. Singh said he was "surprised to hear from (ruraldevelopment minister) Jairam Ramesh that concurrent evaluation processes are not ingood shape." He referred to the "gaps" highlighted byRamesh and PlanningCommission member Mihir Shah that need to be fixed. Concurrent evaluation is theassessment of the impact of the programme as it is being implemented, withoutwaiting for any periodic audit. "I would request (Planning Commission deputychairman) Montek (Singh Ahluwalia) to apply his mind to making good thisdeficiency as well," he said. On the issue of delayed payments tothe Mgnrega workforce, he said, "sooner we tackle this problem ofdelayed payments, I think better results would be in the offing." Referring to thepositive outcomes of the programee, Singh said that nearly 5.50 crore families, or


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nearly one in four rural households, were provided over 250 crore person-days ofwork under the programme since the launch of the Mgnregs in 2006. Singh said thesafety net provided by the scheme had helped rural India cope with the frequentdistress and natural disasters. "The combined effect of expanded agriculturalproduction, demand for labour from the construction sector and the effect

of Mgnrega has led to tightening of the market for agriculturallabour and a steady risein real wages. Farmers sometimes complain about this, but rising demand for labour isthe only way to help the landless improve their standard of living." In his "foreward"to the report, the rural development minister referred to key problems plaguing theflagship programme including the misappropriation of funds. "Though theachievements of Mnrega have been impressive, there have been issues with regard toits implementation that need to be recognised and addressed meaningfully. ...Therehas been public concern over misappropriation of funds and resources, and leakagesin Mnrega," Ramesh said. "While implementation remains uneven and patchy acrossstates and districts, there is evidence to suggest that Mgnrega has contributed toincreased rural wages everywhere, reduced distress migration from traditionallymigration-intensive areas, usage of barren areas for cultivation and empowerment ofthe weaker sections and giving them a new sense of identity and bargainingpower," Ramesh said. The rural employment programme was notified on 7 September2005 and came into effect on 2 February 2006. It is considered the brainchild of theSonia Gandhi-led National Advisory Council (NAC) that sets the social agenda of thegovernment. The UPA government came to power in 2004 for the first time on a pro-poor ticket and the scheme was one of the main programmes targeting the sectionduring the alliance's first term in office. The popularity of the scheme was seen as one

of the causes for the re-election of the alliance for a second term in 2009. It seeks tocreate "durable assets" such as roads and irrigation facilities. Published by HTSyndication with permission from MINT. For any query with respect to this article orany other content requirement, please contact [email protected]

Asset reconstruction firms may benefit as bad debts pile upPublication: Mint NewsProvider: HT Media Ltd

July 16, 2012


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Mumbai, July 16 -- Slowing economic growth is crimping the ability of companies torepay their debt, in turn adding to the bad-loan burden of banks, but at least one entityis anticipating a business opportunity out of this gloomy scenario.

The expectant beneficiary is Asset Reconstruction Co. India Ltd (Arcil), India's oldest

and largest buyer of dud loans from banks.

Arcil expects to acquire Rs 1,000-1,300 crore of assets this year, up from Rs 20-24 crore in the last fiscal, managing director and chief executive officerP. Rudran said in an interview.

Bad debts in the banking industry have crossed Rs 1 trillion and are rising as slowingeconomic growth, which fell to 6.5% in the last fiscal from 8.4% in the previous year,and high interest rates cause borrowers to default on their debts. "We are observingthe capacity to sustain NPAs (non-performing assets) of banks," Rudran said.Business for asset reconstruction companies (ARCs) is expected to also come frombanks shifting to Basel III regulations, the new international accounting practicesenforced by the Bank for International Settlements (BIS), which would require banksto raise an estimated Rs 2.7 trillion by March 2017. Being the majority owner ofpublic sector banks that control more than 70% of the banking industry, thegovernment has to bear the responsibility to top up their capital. Banks can also raiseresources themselves by liquidating their bad debts and this is what Arcil is countingon. "The banks, for their own interest, will have to liquidate these assets as that wouldhelp them boost their capital," Rudran said. Another potential opportunity is on thehorizon. A government advisory group on ARCs suggested in December that they beallowed to buy bad debts from non-banking financial companies (NBFCs) as well.This will enlarge the pool of assets available for ARCs and will give them betternegotiating power as well. The Reserve Bank of India (RBI) is yet to approve theplan. "We are equipped to acquire Rs 2,000 crore worth of assets this year. However,it all depends on how much banks are willing to sell," Rudran said. Last year was abad year for the asset reconstruction industry as a whole, Arcil included, he said.India's banks have traditionally been reluctant to sell bad loans, which ARCs seek toacquire at a discount to their face value and then try to recover the money fromdefaulters. India has more than 50 ARCs, with Arcil controlling more than 70% of the

distressed assets market. Rudran said banks tend to use the market as a price-discovery mechanism-to get an idea of how much their bad debts are worth-when theyaren't really interested in selling their bad debts. "They (banks) could beoffering Rs 10,000-12,000 crore of assets, but sell not even Rs 2,000 crore. They arenot selling their assets, rather they are announcing the auctions (of bad debts) for aprice discovery," said Rudran. The entire business model is dependent on theportfolios of banks and housing finance companies, and price negotiation are hectic.


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Deals often fall through because of differences on valuations-the price at which banksare willing to sell their bad loans and the price that ARCs are willing to pay. Bankersin turn complain that ARCs offer prices as low as 20-30% of the face value of badloans and that is not acceptable to them. "When banks give loans, they do their ownvaluation of assets that are mortgaged. Banks feel the prices offered by asset-

reconstruction companies are too low and we can realize better value using our ownmechanism," said a senior banker with a public sector banks who did not want to benamed. "ARCs and banks have the same recovery mechanism, they (ARCs) have theadvantage of aggregation of assets and nothing more." One more issue between banksand ARCs is that the banks prefer to get cash; for larger assets,ARCs issue securityreceipts (SRs) that they redeem after recovering loans from defaulters."Against SRs we have to book mark-to-market (MTM) provisions and there is noguarantee that the money will be recovered and those SRs will be redeemed," saidanother senior executive with a public sector bank who, too, didn't want to be named."It's as good as keeping the asset with us and trying to recover on our own." MTM isvaluing an asset at its current market value rather than the historic value at which itwas acquired. ARCs, by aggregating assets from different banks, could offer a bunchof assets to a customer. For example, a bank may have a part of a factory mortgagedto it by a defaulter and the rest of the assets could be with another bank. ARCs canaggregate these assets and offer a full factory to a customer willing to buy it.According to the latest available Reserve Bank of India data, the book value of assetsacquired by ARCs at the end of June 2011 was Rs 74,088 crore. Banks' reluctance tooffer their assets to ARCs will have to change because bad debts are piling up in thebanking industry and sooner or later, they may have to dispose of these assets. "It

depends at what price the NPAs are sold. If you take a long-term view, three to fiveyears, on these assets, most of them get recovered so banks will not like to sell them ata steep discount," said Hatim Broachwala, analyst at Karvy Stock Broking Ltd."However, in public sector banks, there is a huge amount of bad debts. They mightlike to liquidate some of that to ARCs, but not private sector banks if the pricesoffered are too low." Published by HT Syndication with permission from MINT. Forany query with respect to this article or any other content requirement, please contactEditor [email protected]

Demographic dividend



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July 16, 2012

New Delhi, July 16 -- Last week the world observed World Population Day. With 1.2billion people, India has the second highest population in the world, following Chinaand that will change by 2030 when it will overtake China. According to International

Monetary Fund (IMF), India is in the middle of a major demographic transition wherethe working age ratio is set to rise from about 64% currently to 69% in 2040, whichmeans an addition of over 300 million working age adults. This would make India thelargest single positive contributor to the global workforce over the next three decadesand confer what is called a "demographic dividend".

What is it?

Demographic dividend is the benefit a country gets due to increase in the working agepopulation compared with dependants such as children and old people. This stage of a

country's growth begins with a demographic transition. It means a shift from a ruralagrarian society with high fertility and mortality rates to an urban industrial societywith low fertility and mortality rates.

What happens here is the labour force temporarily grows more rapidly than thedependant population, resulting in a growth in per capita income. This phase normallylasts for at least five decades. During this period, a country generates higher incomethat leads to higher savings and growth. What are its implications? An increase inworking age ratio can raise the rate of economic growth conferring a demographicdividend-the working age population on an average is more productive than thoseoutside this age group. One of the reasons for slowing economic growth in Europe isrise in the ageing population and decline in the working age population. A bulge in theworking age ratio contributes to higher savings rates and increasing domesticresources available for productive investment. IMF states the demographic dividendcould add about 2 percentage points per annum to India's per capita growth domesticproduct over the next two decades. When a country arrives at a more stable and slowpopulation growth rate, it makes easier for the economy to grow. For instance, if acountry's population growth rate is 4%, the economy needs to grow at the same rate tokeep up with the population. Now consider that a country's population grows at 2%

per year, the same economic growth of 4% suddenly becomes a real positiveeconomic growth. What's the role of policymakers? The dividend period can only beconsidered as a window of opportunity rather than a guarantee of improved standardsof living. Only when a country capitalizes on resources released and uses themeffectively will the economy benefit. If right policies are not in place, a demographicdividend can turn into a demographic disaster. This is because once this window ofopportunity closes, countries that did not find a way to take ample advantage of the


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dividend would find it hard to make the necessary leap. Published by HT Syndicationwith permission from MINT. For any query with respect to this article or any othercontent requirement, please contact Editor [email protected]

Oil & Gas- Mandatory blending of bio-petrol on cards, in a

move to cut fuel import bill


July 16, 2012

Subodh Ghildiyal NEW DELHI: The government will soon move for mandatoryblending of petrol with ethanol (EBP), pegging the target at 5 per cent, in what couldbe a first step towards reducing the escalating fuel import bill.

The move for mandatory EBP would overrule the recommendation of PM's economicadvisory council (PMEAC) that blending be kept optional to deal with fickle supplyof the bio-fuel.

Such a decision would put India in the select band of countries with mandatory bio-petrol. India has struggled to get petrol blending off the ground, despite a UnionCabinet decision in 2010.

Seeking to kick-start the frozen policy objective, the PMEAC had recommended thatuncertainty over availability of ethanol could be dealt by making EBP optionaltheoil marketing companies could be given the choice to have higher targets whenethanol supply is bountiful and lower in an adverse year.

However, the new and renewable energy ministry has moved a Cabinet note

recommending that EBP should be mandatory with 5 per cent target for oilcompanies. It said PMEAC's optional EBP should not be considered.

Fuel blending has been suggested as silver bullet to India's elusive search for a sort ofantidote to huge oil imports, which render economy hostage to price volatility ininternational markets. It is also seen as a long-term solution to reducing dependenceon fossil fuel while increasing the energy efficiency of the fuel.


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The crux of the fresh start over EBPin the form of Cabinet proposalis theintractable issue of pricing of ethanol.

Now, the renewable ministry has left it to the Union Cabinet to pick between the

formula proposed by the Saumitra Chaudhuri committeeand PMEAC's recommendation that price be left to market forces.

Chaudhuri panel's suggestions peg ethanol at Rs 27 per litre with a floor priceof Rs 23 and a ceiling price of Rs 31.

The renewed push to EBP has already hit a rough patch, with chemicals and fertilizersministry flagging its concern that mandatory EBP would hit the chemicals industryhard.

In a dissent note, the Union chemicals ministry has argued that 5 per cent EBP wouldrequire 105 crore litres of ethanol annually, even though oil companies could procureonly 36 crore litres last year. It has argued that mandatory EBP would hurt chemicalsindustry by diverting its share of ethanol to oil companies. Even the PMEAC said thatIndia cannot depend on ethanol's largest producers like Brazil and the US.

The Cabinet proposal, instead, has recommended that chemical industries ink long-term contracts with ethanol producers for upto 50 crore litre annually.

The pricing of ethanol has been a politically sensitive issue. While key UPA ministerswere seen to push for higher administered price for ethanol so that it improved theearnings of sugar industry, there have been suggestions that the sugar lobby shouldnot be allowed to exploit EBP.

PMEAC also recommended that ethanol price be determined by commercialprocesses, and not be aimed at helping out an individual sector (read sugar). ForReprint Rights:timescontent.com

Automobiles- Maruti Suzuki bets on rural market to drive

its sales


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July 16, 2012

Chanchal Pal Chauhan NEW DELHI: Maruti Suzuki, India's largest carmaker, is onan overdrive in the rural hinterland where it sells one of every three cars sold. Itexpects the rural market to contribute about half of its sales by 2015-16.

To beat market blues during a slowdown in sales, Maruti has opened 23 new retailoutlets in towns and hamlets in the last three months.

Maruti's share of rural sales has witnessed a continuous jump and last month it got abig boost with 55% growth in sales, taking its overall share to an all-time high of 33%from just 3% in 2007-08. In a slowing Indian market where sales have hit bumps led

by higher fuel prices and expensive finance, rural market has become a keyfor Maruti Suzuki's success.

"Now, we have a reasonable base of rural sales and the 55% jump epitomises thestrength of the Indian hinterland markets and villages. We are developing newmarkets and generating customers who have never used cars in these smaller towns(and expecting them) to generate long-term competitive advantage,"says Maruti managing executive office (marketing & sales) Mayank Pareek.

Maruti identifies human settlement of around 10,000 as rural markets and has soldmore than 23,000 cars in such markets in June this year. Maruti rural marketinginitiative started in 2007, when it identified many small clusters to sell cars and ropedin panchayat functionaries to generate potential customers.

Now, many of these small clusters - turmeric farmers in Tiruchengode in Tamil Nadu,apple growers in Himachal Pradesh - are generating constant sales. According tocompany data, many of these customer groups account for 35-50 vehicle sales amonth that double during the harvest season.

Rural markets have been playing strong role in sustaining growth of carmakers andeven giving a bigger chunk of sales for small-ticket buys like bikes and scooters.Hero MotoCorp's 46% sales are coming from rural market and the share has beenconsistently rising. Higher farm incomes and sustained economic growth have led toan increased consumption in such areas.

Maruti, which constantly profiles all kind of customers, says that rapid improvement


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in rural market, thanks to the exposure to television and other media, even its high-ticket cars are much in demand. For instance, premium cars like Swift, Dzire and SX4have got almost equal share of sales from the smaller towns like their urban markets.

"The aspiration levels in villages are rising in smaller towns. We had been tapping this

potential, which is increasing demand for our new models. Premium hatchbacks likeSwift are now a strong brand and sells in a good number every year," says Pareek.

Maruti research shows that only 40% of the rural buyers are farmers and the majoritysupports the rural economy - traders, school teachers, state government employeesand shop keepers. Also, in rural areas, the demand for petrol cars is much better.Keeping that in mind, it has started new retail networkat Anantnag, Durg, Hissar, Ranchi and Coimbatore in the past few weeks, where saleshave been pretty insulated from the urban-centric economic slowdown.

Car sales in India have slowed in the past few months prompting automobile industrybody Society of Indian Automobile Association to lower its car sales growth forecastto 9-11% for the year ending next March, as higher costs and slower economicexpansion have impacted demand. However, rural markets are not prone to economyshocks, say experts. They remain stable.

"Rural markets have several inherent strengths and generate intrinsic demand. Thoughit largely depend on a good monsoon, the huge investments in roads and otherinfrastructure have helped sustain demand in recent years," says Abdul Majeed,partner, automotive practice, PricewaterhouseCoopers.

Pareek echoes this view. "A lot of investment has been made in the rural economy inthe last few years and roads and means have significantly improved. This meanspeople have more money to spend and are better connected. Better connectivity has amultiplier effect and generates demand and momentum in rural markets."

Maruti has the largest network which is more than all the other carmaker put together.Its current strength stands at 1,119 new car sales outlets in across 811 cities. Around40% of these are purely based in rural markets. In addition, it has 421 pre-owned car

business outlets. For Reprint Rights:timescontent.com

Steel companies brace for a lacklustre Q1


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July 16, 2012

The gloom in the Indian steel sector is set to be reflected in the financial results ofsteel makers for the first quarter of fiscal 2013. The sector's results are set to beimpacted by multiple factors, including limited pricing power due to an oversupplysituation, increasing imports and a weakening rupee, due to which which companiesare unable to take advantage of weak global prices of iron ore and coking coal.

India's steel consumption grew 8.8% in the first quarter, but despite this growth, steelproduction was still nearly 5% higher than consumption. However, domestic priceshave remained flat as compared to last year.

"The positive thing is that companies are willing to cut production," said Rohit Vohra,partner and director at Boston Consulting Group or BCG, a global managementconsultancy firm. "Companies are okay shutting down a blast furnace to bring supplyin line with demand."

The demand supply mismatch for steel has risen as a result of new capacities comingon stream, which has propelled India to being the fourth largest steel producer in theworld with an installed capacity of 89 mt a year, according to statistics from theWorld Steel Association.

However, demand for steel in India is only 71 mt as of 2011-12. Companies aretackling the current scenario by running their plants at lower capacity. According toWorld Steel Association, India's average capacityutilisation in 2011-12 was 83%.

"We remain concerned on Indian steel industry demand-supply balance over nextcoming quarters which would adversely impact pricing capacity of steel companies,"said Saurabh Agarwal of Kotak Securities, a Mumbai-based brokerage, in the firm'squarterly results preview released last week.

Imports in the first quarter grew 41% due to last year's low base. But weak global

prices have meant that prices of imported steel are comparable to domestic prices.

"Hot rolled coil prices declined across major geographies in the first quarter of fiscal2013 and are now close to yearly lows," stated Mumbai-based brokeragefirm Motilal Oswal in its quarterly results preview released last week.


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Consultants say weak rupee has helped to a certain extent in maintaining domesticprices at last year's levels.

"Given the current scenario, the only thing helping the domestic steel industry'spricing power is the weak rupee," said Vohra of BCG.

PFC arm seeks JV partner for coal-based projects

Publication: New Indian ExpressProvider: HT Media Ltd

July 16, 2012

NEW DELHI, July 16 -- PFC Consulting Ltd, a wholly-owned subsidiary of PowerFinance Corporation, is looking to diversify its portfolio through the joint ventureroute.

To tap the opportunities offered by the huge investment potential in the domesticpower sector, PFC Consulting is eyeing a 50:50 JV with another company havingglobal presence and expertise in providing consulting services in thermal powergeneration segment, especially in project engineering and management.

"Though PFC has the ability to undertake such projects on its own in India, but we arelooking to expand our business beyond India. For that we are scouting for a partnerwho has international experience. We expect good response from both domestic andglobal firms," an official familiar with the development told Express.

The JV company will be set up as a consulting firm specialising in design engineeringand project management consultancy for thermal power plants based on super criticaland advanced technologies. Initially, the company's focus will be on coal-basedthermal generation sector projects in India. It may later take up projects in SAARC

countries also.

The JV firm will provide clients with services in the coal-based generation segmentbut not limited to conceptual studies, design engineering and project supervision.

In view of the estimated capacity addition target of over 100 GW in the power sectorin the 12th Plan, an investment potential of Rs 13,500 billion would be offered in the


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sector. Also, the use of super critical and ultra-super critical technologies in powergeneration can reduce the coal requirement of electricity production.

This investment potential will lead to setting up of many power projects in future,which would augment the demand for project-based consultancy services including

work related to design engineering or project engineering.

PFC Consulting is presently handling projects with a capacity in excess of 60,000MW which is in pre-developmental phase and bidding stage.

The last date for submitting the bids is August 31. Having clocked a compoundedannual growth rate of over 35% in the previous four financial years, PFC Consultinghas handled projects totalling Rs 200 crore as on date.Published by HT Syndicationwith permission from New Indian Express. For any query with respect to this articleor any other content requirement, please contact Editor

[email protected]

Weekly coal wrap-up: Poor Asian demand sees fall in prices

Publication: SBB - Steel Business BriefingProvider: Steel Business Briefing

July 16, 2012

High prices for Australian premium low-volatile coking coals could not find supportlast week as sluggish demand exerted downward pressure. Mid-vol hard coking coals(HCCs) came under heavy pressure with competitive offers from the US and Canada.

Platts premium low-vol was assessed at $219/tonne FOB Australia on Friday, down$2/t week-on-week, while second-tier coking coals saw a more drastic fall of $4/t to$172.50/t FOB in the same comparison. This is the lowest price point for Platts HCC

assessment since it was first published in March 2010.

Buying interest for Australian prime HCCs dipped in the two most common spot-buying countries, India and China, due to weakening demand. A drop in prices fordomestic coking coals was the key factor in lowering Chinese demand for imports.Spot Liulin No.4, a local premium HCC, was transactable at a CFR North Chinaequivalent of $208-218/t according to three sources.


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Relative lack of interest in imported spot materials was seen in India, despite thestrengthening of the rupee. Most end-users were in no hurry to purchase in view of theapproaching monsoon. No one is in a rush to buy coking coal during the monsoon

season, an Indian mill said.

Reflecting lower prices was a spot deal heard for Australian low-vol coking coal at$218/t FOB. A flurry of low-offers from North America pressured prices for thesecond tier coals. Good quality unblended Canadian mid-vol coals were heard offeredat $185-190/t CFR India. In addition, an Indian coke maker was said to have boughtunblended US low-vols at $195/t CFR.

Metallurgical coke surged $10/t Monday on deals transacted which supported higherprices. Japanese coke of 62% coke strength reaction was said transacted at $375/tCFR India. However, coke prices remained stable through the week despite severalmaterials from Korea, China and Russia on offer.

Markets to watch inflation data

Publication: Mint News

Provider: HT Media Ltd

July 16, 2012

New Delhi, July 16 -- After a dull week on global bourses, there was some reason tocheer on Friday. Chinese gross domestic product (GDP) data showed the world's No.2 economy grew at 7.6% in the second quarter, which was though pretty much in linewith the expectations but allayed fears of a slowdown. Equities across Europe and theUS rallied as commodity prices shot up supporting the spurt in equities. Friday alsoturned out to be a good day from earnings point of view.

In India, there was extreme caution ahead of the beginning of the big-ticket earningsseason as there were many concerns about Infosys Ltd's revenue guidance. Theearnings released by Infosys on Thursday added to the gloom as the company said itsees revenue in dollar terms rising 5% to $7.34 billion in the fiscal year to March,down from its April estimate of 8-10% growth. The market had expected Infosys totrim its growth forecast to 6-8%. Though Tata Consultancy Services Ltd made up for


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some of the loss of sentiment as its earnings exceeded forecast by posting a 38%annual jump in quarterly profit, but given the economic situation, expectations fromcorporate earnings is low.

India's date with monthly inflation will once again be a keenly watched event on

Monday as this data has gained a lot of prominence after the release of industrialoutput data last week. The Index of Industrial Production data for May came in abovemarket expectations, which, in turn, lowered hopes of any Reserve Bank of India(RBI) action in the forthcoming meeting this month. Markets fear that a rise ininflation will make the case for RBI action difficult. Though the average expectationfor wholesale price inflation is 7.65%, anything significantly above will definitely bea dampener for the markets. The markets will also watch out for the presidentialelection scheduled on 19 July, as there is a general perception it will mean thebeginning of economic reform. Though there is no logical reason for such a sentiment,this perception is quite strong on political calculations. I think such positive hopes willat least give some stability to the markets.

Globally, the earnings and Ben Bernanke, chairman of the US Federal Reserve, willbe the keys to market sentiment. What will matter the most to the US and globalmarkets is Bernanke as he is due to deliver his semiannual monetary policy report tothe Senate and House committees on Tuesday and Wednesday. Analysts will focus onevery word he says for mention of any possibility of monetary easing or the much-hyped third quantitative easing and how he views the slowing economy. At home,technically the markets are still in a rough patch and unless the benchmark Nifty indexon the National Stock Exchange of India Ltd settles above 5,312 points, broadersentiment will remain cautious with a downward bias. On Monday, the markets arelikely to open with a positive gap mainly due to the rally on the US and Europeanbourses following better-than-expected Chinese GDP data. The first test for a risingNifty will come at 5,267 points. If it is able to hold above this level with highvolumes, it will be the first positive signal for the markets. If the Nifty fails to breachthis level and falls, it will be a bearish signal and the support at 5,212 points willbecome a key support. If the Nifty settles above 5,267 or breaches it with goodvolumes, it will be a positive signal and there will be a 80% chance of gainsof upto 5,302 points, which is another resistance level. The resistance around this

level will actually be a band between 5,302 and 5,312 points. If the Nifty closes abovethis band, the sentiment on bourses will turn positive with the next resistance at 5,356points followed by strong resistance at 5,391. On the downside, the first support isplaced at 5,212 points, which is a good support level. If this level goes, the nextsupport will come up at 5,191 points, which is technically an important support for themarkets. A close below this level will be bearish with a 83% chance of furtherdownslide. The Nifty is then likely to find support at 5,156 points. Among individual


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stocks, Bharat Heavy Electricals Ltd (Bhel), Orchid Chemicals and PharmaceuticalsLtd and Voltas Ltd look good on charts. Bhel at its last close of Rs 231.30 has targetof Rs 237 and a stop-loss of Rs 223, Orchid Chemicals at its last close of Rs 121.30has a target of Rs 226 and a stop-loss of Rs 215, while Voltas at its last closeof Rs 113.05 has target of Rs 117 and a stop-loss of Rs 107. From my previous week's

recommendations, ACC Ltd and Bank of India triggered their stop-losses,while Bhel failed to meet its target and continues to be a recommendation thisweek. Published by HT Syndication with permission from MINT.For any query withrespect to this article or any other content requirement, please contact [email protected]

United Phosphorus acquires Agrichem Europe


July 16, 2012

Mumbai, July 16 -- United Phosphorus Ltd on Saturday said it has entered into anagreement with SD Agrichem Europe, a Dutch subsidiary of Punjab Chemicals andCrop Protection Ltd, to acquire 100% shares of the European company. The dealincludes all assets, intellectual property rights, product registrations, brands,distribution network and manufacturing facilities of Agrichem. The purchase valuewas not disclosed.

"Agrichem will give us new and enhanced market access in European countries, andit also . has an exciting registrations portfolio with products that will becomplimentary to United Phosphorus' existing portfolio in Europe," said Jai Shroff,global chief executive of Mumbai-based United Phosphorus.

Agrichem based out of Oosterhaut, Netherlands is engaged in the production,marketing and selling of crop protection products in the European agrochemicalsmarket. Its product range includes herbicides, insecticides and fungicides registered inseveral European countries like Netherlands, Belgium, UK, France, Germany, Ireland,Denmark, Italy, Slovakia, Czech Republic, Belarus and Switzerland. It also has aresearch and development facilities, crop protection registration department and itsown formulation facilities in Netherlands.


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United Phophorus is currently the largest Indian agrochemical company by sales andis engaged in research, manufacturing, marketing, sales and distribution ofagrochemicals and specialty chemicals across the globe. It posted a revenue ofabout Rs 9,000 crore ($ 1,627 million) for the year ended 31st March 2012. Publishedby HT Syndication with permission from MINT. For any query with respect to this

article or any other content requirement, please contact [email protected]

Does the mutual fund industry need a helping hand?


July 16, 2012

New Delhi, July 16 -- The Rs 6.92 trillion Indian mutual funds (MFs) industry willsee some more action this week. The capital markets regulator, the Securities andExchange Board of India's (Sebi) Mutual Fund Advisory Committee (comprising ofchief executive officers of fund houses, mutual fund trustees, investor associationsand few other industry experts) will meet at Sebi headquarters in Mumbai on 17 Julyto deliberate some of these proposals that were put forth by the Indian MF industry tothe finance ministry over the last fortnight. A few of these proposals have beenclassified as those that can be addressed immediately such as a hike in the totalexpense ratio (TER; by about 25 basis points), allowing fungibility in the way expenseratios can be accounted for and easing of Permanent Account Number (PAN) andknow-your-customer (KYC) guidelines, especially for foreign individuals.

We will wait to hear the committee's views on these issues, but in the meantime, MintMoney asked a few industry experts from various parts of the MF industry theirviews. We approached various stakeholders-large and small asset managers,distributors, investor associations. Almost all large fund houses (those that were a partof the ministry meetings last fortnight) refused to go on record because they said theydid not want to say anything more than what they discussed with the ministry. Here isa diverse set of views on the three questions that the MF world is busy with. Publishedby HT Syndication with permission from MINT. For any query with respect to thisarticle or any other content requirement, please contact [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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IGate may not meet growth guidance


July 16, 2012

New Delhi, July 16 -- iGate Corp. has recouped the revenue it lost in the Marchquarter due to a client rationalization process. It reported a 1.8% growth in revenue to$268 million, meeting Street expectations. This includes revenues of Patni ComputerSystems Ltd, which the company acquired last year.

In the March quarter, revenues had fallen by almost the same extent after the companydecided not to renew contracts with about 44 of its customers. iGate had expected itsother customers to ramp up and make up for this loss in revenue; but this hadn'tmaterialized.

The company's latest results suggest it has made some progress. But, the growth of1.8% is hardly anything to get excited about. The company's shares hardly movedafter the results were announced.

iGate's gross profit margin took a large hit of 277 basis points owing to higher wagecosts and visa expenses. One basis point is one-hundredth of a percentage point. Thecompany increased wages by 10% effective April, which hit margins by 240 basispoints, while visa application costs hit margins by 200 basis points. This more thanoffset the gains from the sharp depreciation in the rupee last quarter. As a result, grossprofit fell by 5.5% sequentially despite the rise in revenues. The drop in operatingprofit, however, was contained, thanks to a check on selling, general andadministrative expenses, as well as a drop in depreciation charges. The company'searnings per share missed Street estimates by 2 cents or about 3%. Going by thecompany's performance in the first two quarters of 2012, it seems unlikely that it willmeet its growth guidance. iGate has said it expects the Indian information technology(IT) industry to grow by 8-10% this year and its growth will be higher than industrygrowth rates. But, even if it grows revenues by 5% sequentially in the remaining twoquarters of the current year, it will end with revenues of $1.1 billion this year, whichmeans a growth of less than 5% compared with the iGate-Patni combined revenue in2011. Even though Tata Consultancy Services Ltd's (TCS's) results allayed some of


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the fears of IT investors, results so far suggest that the Nasscom growth target of 11-14% growth this financial year will be difficult to achieve. While some companiessuch as TCS may do better than others, the outlook for the sector as a whole isweakening. Published by HT Syndication with permission from MINT. For any querywith respect to this article or any other content requirement, please contact Editor

[email protected]

Scrap import market stable and quiet in East Asia

Publication: SBB - Steel Business BriefingProvider: Steel Business Briefing

July 16, 2012

The scrap import market in East Asia was quiet during the week ended 6 July. Fromlate last month suppliers had raised their offer prices into East Asia by $5-10/tonnebut buyers are generally unwilling to pay higher prices for their scrap, market sourcessaid.

Traders described the market as quiet and stable. Offer prices for bulk HMS 80:20 areat $400/t cfr China compared to the previous bulk bookings of 80:20 from US WestCoast that concluded at $390-392/t cfr China around two weeks ago.

In late June Dongkuk Steel Mill and Korea Iron & Steel Co booked one cargo each forSeptember arrival at $400/t cfr for HMS1, up $7/t from an earlier mid-June order of$393/t cfr Korea.

In Taiwan, US-origin containerized 80:20 scrap offer prices rose to $378-380/t cfr early in the week of 6 July, up from the previous week's transaction prices of$375/t cfr. A Taiwanese trader reported hearing small quantities to regular supplierssettled at $374-375/t cfr towards the end of the week. He estimated that the dealsinvolved 3~4,000 t per customer.

Sellers are trying to hike new offer prices but there are few takers, another

Taiwanese trader said. The weak domestic steel market is the main cause of thesluggish scrap import market, Platts SBB was told. Domestic rebar prices were paredtwice during the past week by a total of NTD 500/t ($16.7/t).


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In Vietnam, offers for 80:20-in-container from USA have risen $5/t to $395-405/t cfr depending on location. Prices have bottomedout, said a local scrap traderin Hanoi. Suppliers are in no rush to sell but prefer to hold to their stocks, he

observed. Market sentiment in Vietnam remained weak because of the sluggish

construction longs market.

Bajaj Hind's coal linkage plan spiked by ministry


July 16, 2012

Bajaj Hindusthan's R12,000-crore Lalitpur thermal power project in Uttar Pradeshseems to be in trouble, with the coal ministry making it clear that it is not in a positionto commit coal supply to the project under the power ministry's 12th Plan capacity

addition programme.

The Shishir Bajaj-led Bajaj Group, a sugar-to-hair oil conglomerate, recently forayedinto commercial power generation through its subsidiary Bajaj Hindusthan. Thesubsidiary is banking on timely completion of the Lalitpurpower project to have 5,000MW operational capacity in place by 2015. Its plan could go haywire, though, if thecompany fails to secure fuel linkage for the project on time.

However, pointing out that it has already committed to providing coal linkage to morethan 80,000 MW under-construction capacity, the coal ministry has said that it would

not be possible for it to grant coal linkage to any more 12th Plan projects.

"Since letters of assurance (LoAs) amounting to more than 80,000 MW for setting uppower projects already exist, there is prima facie no scope for grant of new LoAs for12th Plan power projects. This is the positionMoC (ministry of coal) has been takingin all the cases requiring fresh coal linkages," the coal ministry has said in reply to areference from the Prime Minister's Office (PMO) over this issue.


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Coal India subsidiaries have issued letters of assurance covering the capacity of108,000 MW. During the last three years of the 11th Plan, only 26,000 MW wascommissioned. The balance capacity has been included in the 12th Plan programme.

Since LoAs have been assured to these projects, CIL subsidiaries are required to issue

coal linkage to them as per the existing policy.

The previous Mayawati-led regime in the state had signed 10 memorandums ofunderstanding (MoUs) with private companies for the development of 10,970MW capacity. However, nine projects are still languishing for want of coal linkage,which private developers had committed to arrange on their own. The newgovernment in the state has extended the validity of the MoUs by 18 months for allthe nine projects, but it is far from certain whether these projects would finally see thelight of day.

Himawat Power's Bhognipur-I, Creative Thermolite's Murka, TorrentPower's Sandila and Welspun's Mirzapur are some other private projects in UttarPradesh stuck due to non-availability of coal linkages.

Correction below 5,200 likely; sell into rallies: Sukhani

Publication: Money Control CEO Call.Provider:moneycontrol.com

July 16, 2012

Name: Correction below 5,200 likely; sell into rallies: Sukhani

Position:

CompanyName: market,Nifty,Sensex,NSE,BSE,Sudarshan Sukhani,s2analytics.com,Titan,JSWSteel

Interviewer:
http://moneycontrol.com/http://moneycontrol.com/http://moneycontrol.com/http://s2analytics.com/http://s2analytics.com/http://s2analytics.com/http://s2analytics.com/http://moneycontrol.com/


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Sudarshan Sukhani ofs2analytics.comtells CNBC-TV18 that the market is in a correction phase whichcould take the Nifty below 5200.

"We are looking at downside pressure on prices on the index values, so the approach is to sell intorallies," he said.

His advice to traders today is to maintain their short positions despite the choppiness in the market. "30-50 points up and down is possible, but that doesn't change the mode of the market," he said.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee.

Q: How would you approach the index this morning?

A: I would continue to assume that the market is in some kind of a correction. We are looking at downsidepressure on prices on the index values, so the approach is to sell into rallies.

I have short positions and I am going to maintain them. After four-five days of choppiness and somedeclines, a rally could be expected in the sense that 30-50 points up and down is possible. But thatdoesn't change the mode of the market, which is that a correction below 5,200 is very likely.

Q: You have a sell on Titan Industries?

A: Titan has fallen to Rs 200 and then there was a rally and one thought that maybe this decline is over.But apparently for the last four-five days price action suggests that that was a relief rally; the decline inTitan is not done with and together with other fast moving consumer goods (FMCG) stocks Titan is nowsuggesting that a deeper correction is in the offing. The concept stocks are now going out of fashion, atleast for the next few weeks. Titan is one of them and a target of Rs 200 is expected it. The day traderswill expect something lower but even there a decent dec

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