Inflation falls to 6.39%After stubbornly remaining static for three consecutive weeks, India's inflation, based on the Wholesale Price Index (WPI), declined marginally in the week ended March 24. The point-to-point inflation was 6.39% compared with 6.46% in the preceding week. The latest inflation reading is above the average estimate of around 6.25% by economists. The annual inflation rate was 4.06% during the corresponding week of the previous year. The slight dip in inflation may not bring much relief to the Government and the Reserve Bank of India (RBI) till it falls below 6%. Finance Minister P. Chidambaram wants inflation at 4%. The RBI has set a target of 5-5.5% for the year 2006-07. It may be recalled that on March 30, the RBI announced a 25 basis point hike in the repo rate, a key short-term lending rate, besides raising the Cash Reserve Ratio (CRR) by 50 basis points to 6.5% in two stages. The surprising monetary tightening measures by the RBI took most economists by surprise as they had expected the central bank to wait at least till the annual policy meeting, scheduled for April 24, before taking any further steps
February exports up 8% yoy
India's merchandise exports grew by 7.87% in February to US$9.7bn from US$8.99bn in the same month last year, the Government said on Monday. Imports rose 25.11% to US$14.36bn from US$11.48bn in the year-ago period. As a result, the trade deficit in February was US$4.66bn as against US$2.49bn in the corresponding month a year earlier. The trade deficit stood at US$5.78bn in January, US$5.68bn in December 2006 and US$6.2bn in November 2006. During April-February 2006-07 (first 11 months of the fiscal year 2006-07), exports were up 19.26% at US$109.13bn while imports climbed by 27.78% to US$164.98bn. Year-to-date trade gap is up at US$55.86bn from US$37.62bn in the year-ago period.
February core sector growth slows
The production of six infrastructure industries grew by 7.2% in February from a year earlier, the Government said on Thursday. The index for the six key industries increased to 219.9 in February from 205.2 a year earlier. In January, the growth was 8.2% year on year. The six industries - Steel, Cement, Coal, Crude Oil, Refinery and Electricity - account for a quarter of the country's industrial production, which represents a 25% of Asia's fourth-largest economy. On a cumulative basis, the core sector growth in the first 11 months of the current fiscal year stood at 8.3% as against 6.1% in the same period a year earlier, data released today by the Commerce Ministry showed.
Govt ups wheat production forecast
The Government on Wednesday revised its forecast for wheat production this year citing improved cultivation by farmers. Wheat output may reach 73.7mn tons in the year ending June, exceeding 72.5mn tons forecast in February, Agriculture Secretary P.K. Mishra said in New Delhi. India, world's second-biggest wheat producer, produced 69.35mn tons of the grain last year. Wheat was planted in 28.45mn hectares (70.30mn acres), up 7% from a year ago, according to the Agriculture Ministry. India's foodgrain production may rise to 211.78mn tons from 208.6mn tons a year earlier, while output of oilseeds may fall to 23.26mn tons from 27.98mn tons, Mishra said.
Coal India eyes IPO in FY08
Coal India Ltd. (CIL) wants the Government to sell a 5% stake in the company through an Initial Public Offering (IPO) to strengthen its finances and management, its chairman said on April 4. "An IPO is needed as this would bring in a greater degree of financial discipline and...better corporate governance," said Chairman Partha Bhattacharyya. CIL is currently wholly-owned by the Government. "I will take it up with the Government in 2007-08," Bhattacharyya said. Coal India, which produces 85% of India's coal, plans to invest Rs24bn to raise output to 384.5mn toes this fiscal year. Last year, it produced 360.94mn tons. Bhattacharyya said the company expected to sign a 20-year fuel supply agreement with NTPC in a month. It currently supplies 110mn tons of coal every year to NTPC for power generation. CIL will also spend Rs10bn on a planned Rs35-bn joint venture to acquire coal mines abroad.
Five senior executives resign from Jet Airways
In a major blow to Jet Airways India Ltd. five executives of the full service carrier have put in their papers, citing poor management practices, centralised decision making process and lack of empowerment. V Raju, Jet's Vice President (South East Asia); Michal Tan, Head of Training; Nandini Verma, Vice President (Communications); Vijay Sethi, Senior General Manager and Ravindran, Head of Training were among those who have stepped down. The latest round of exits from Jet comes close on the heels of the start of arbitration proceedings on the aborted purchase of Air Sahara. The airline has also seen a steady decline in its market share, which is down from 34.9% at the end of the first quarter of 2006 to 30.4% during the third quarter of 2006.
BHEL, NTPC, BEML, BEL unveil provisional results
NTPC Ltd. announced its provisional financial results for the fiscal fourth quarter and year ended March 2007. The public sector power generation major has reported a net profit of Rs67.26bn for the year 2006-07 as against Rs58.2bn in the previous financial year. This translates into a growth rate of 15.5%. Revenues for the year ended March 2007 are up by 27% at Rs332bn versus Rs261.43bn in the year 2005-06.
Bharat Heavy Electricals Ltd. (BHEL) announced the tentative financial results (flash results) for the year 2006-07. The state-owned power equipment maker has posted provisional net profit of Rs23.85bn in the financial year ended March 31, 2007 as against Rs16.79bn in the previous fiscal year. This represents an increase of 42% year on year. Provisional turnover for the year 2006-07 is up 28.75% at Rs187.02bn.
Bharat Earth Movers Ltd. (BEML) announced provisional results for the fourth quarter and financial year ended March 2007. The public sector heavy equipment maker recorded a fourth quarter net profit of Rs1.55bn while sales for the January-March quarter are more than Rs10bn. For the year 2006-07, BEML has clocked a provisional net profit of Rs3.15bn on an all time high turnover of Rs26bn, which is up 18% over the previous fiscal year.
Bharat Electronics Ltd. (BEL) announced that it has recorded its highest ever turnover of Rs39.6bn (provisional) for the year 2006-07, which is an increase of 12% over last year's turnover of Rs35.36bn. The estimated Profit Before Tax (PBT) is Rs10.42bn as against last year's figure of Rs8.55bn, an increase of 22%.
Fortis sets IPO price band of Rs92-110Fortis Healthcare Ltd., one of the largest private healthcare companies in India and a Ranbaxy group company, is entering the capital market with an Initial Public Offer (IPO) of 45,996,439 equity shares of Rs10 each for cash at a premium to be decided through a 100% book building process. The company proposes to allot 242,476 equity shares to eligible employees in the firm allotment portion. The price band for the issue has been fixed between Rs92 and Rs110 per share. The issue opens for subscription on April 16 and closes on April 20. The price band set is lower than the highest price at which it made its pre-IPO placements. The New Delhi-based firm had raised 1.54 billion rupees through pre-IPO placements in the range of 135-159.50 rupees per share. Bulk of the proceeds from the issue are to be used to part-fund a hospital to be built in New Delhi and to pay a loan made for an acquisition, Shivinder Singh told reporters. "We believe in pursuing greenfield projects and acquisitions for growth," Singh, who is also the CEO said.
NHPC files DRHP for IPO
National Hydroelectric Power Corporation (NHPC) has filed a Draft Red Herring Prospectus (DRHP) with the capital market regulator SEBI for its Initial Public Offering (IPO). NHPC plans to raise up to Rs25bn (US$580mn) through the IPO, valuing the company at around US$4.25bn. The public sector hydropower major would issue 10% fresh equity, while the Government would divest 5% of its stake in the power PSU. Post IPO, the Government's stake in NHPC would come down to about 86.3%. NHPC has a paid-up capital of Rs106bn and an authorised share capital of Rs150bn. The company is planning to hit the capital market by June this year. The funds from the IPO would finance six planned projects which would have a combined capacity to produce 3,080 MW, on top of the existing capacity of 2,755 MW, according to the offer document. NHPC plans to sell 1.12bn new shares in the IPO, while the Government will sell about 558mn shares.
Mahindra-Renault launch Logan
Mahindra & Mahindra Ltd. (M&M) and Renault SA, France's second-largest automaker, on Tuesday announced that they had launched the Logan entry level sedan in the Indian market through their Joint Venture. M&M has a 51% stake in the JV called Mahindra Renault, while the French auto major has the remaining 49% holding. The Logan will be rolled out nationwide by November. Delivery will start four weeks after the booking. The Logan will be available in both petrol and diesel variants. Customers will have the option of six colours. The price of the 1.4 litre and 1.6 litre Petrol versions of the Logan will range from Rs428,000 (ex-Mumbai) while the 1.5 litre Diesel versions will be available in the range of Rs547,000 and Rs644,000 (ex-Mumbai). The ex-Delhi price of the Logan will be Rs435,000 to Rs576,000 for the two petrol variants and Rs554,000 and Rs651,000 for the two Diesel variants.
For the years ended 2006-07, Bajaj Auto's total vehicle sales rose 19% to 2,721,178 units. Motorcycle sales for FY07 climbed 24% to 2,376,518 from 1,912,224 units last year. The motorcycle market share improved from 30.8% in FY06 to 33.5% in FY07. Total two-wheeler sales were up 18% at 2,399,400 units while 3-wheeler sales jumped 28% to 321,778 units.
For FY07, Hero Honda clocked an impressive cumulative tally of 3,336,756 units compared to cumulative sales of 3,000,751 units in the previous fiscal year. TVS Motors clocked motorcycle sales of 924,813 units compared to 806,708 units in 2005-06, translating into a growth of 14.6%. Total two wheeler sales grew by 13.85% to 1,528,214 units from 1,342,204 in the previous financial year.
Maruti sold 635,629 vehicles in the domestic market in 2006-07, the highest ever annual sales in the company's history. This marked a growth of 21% over domestic sales in 2005-06. In all, the company sold 674,924 vehicles during the year, including exports of 39,295 vehicles. Exports grew by 13% over 2006-07.
For the fiscal year 2006-07, Tata Motors Ltd. reported record sales of 579,378 vehicles (including exports), up 28% over 454,345 in 2005-06. For the financial year 2006-07, Ashok Leyland's overall sales climbed by 34.8% to 83,101 vehicles from 61,655 units in the previous fiscal year. While domestic sales were up 35.75% at 77,076 exports grew by 23.5% to 6,025 units.
Tata Steel completes Corus acquisition
Tata Steel Ltd. on Monday announced that it had completed its £6.2bn (US$12bn) acquisition of Corus Group Plc at 608 pence per share in cash. The completion of the transaction is pursuant to the Scheme of Arrangement being declared effective by the High Court of Justice in England and Wales on April 2. The enlarged company will have a pro forma crude steel production of 27mn tons in 2007 and will be the world's fifth largest steel producer with 84,000 employees across four continents. The combination of Tata Steel and Corus with a high value added product range and strong positions in auto, construction and packaging, will create the world's second most global steel producer with a combined presence in 45 countries.
S&P keeps Tata Steel rating under scanner
Deals continue to pour in
Indian Hotels Company Ltd., along with financial investors, is set to acquire the San Francisco-based 110-room Hotel Campton Place for US$60mn, subject to approvals. The boutique Campton Place exudes European ambience and comprises two early 20th century buildings in the shopping and financial districts of San Francisco, California.
Hindustan Lever Ltd. (HLL) said on Wednesday that Unilever India Exports Ltd. (UIEL) will sell its home delivery retail business Sangam to Wadhawan Foods Retail (WFR) on a slump sale basis with effect from March 31. UIEL is a 100% subsidiary of HLL. Although Sangam has met many of its business milestones successfully, the company believes that it is not in its strategic interest to continue to be present in this format of organised retail, HLL said.
Hershey Co. will buy a 51% stake in Godrej Beverages & Foods Ltd. for US$54mn. Hershey has received the green signal from the Foreign Investment Promotion Board (FIPB) for the purchase. Hershey plans to buy 40% from IL&FS, 5% from Godrej Industries ( which holds a 48% stake in Godrej Beverages), and 6% from A Mahendran, Managing Director of Godrej Beverages.
Financial Technologies India Ltd. (FT) on Tuesday announced that Dubai Multi Commodities Centre (DMCC) had purchased an additional 1% stake in the Dubai Gold and Commodities Exchange (DGCX) for US$12.5mn. Following the latest purchase, DMCC now holds 51% in DGCX and FT holds the balance 49%.
Sherwin-Williams Co., the largest US paint retailer, agreed to buy Nitco Paints for an undisclosed consideration to enter the Indian market. The terms of the purchase were not disclosed. Nitco Paints is a privately owned manufacturer and distributor based in Mumbai with sales of about US$18mn, Cleveland-based company said.
Oil prices dip as Iran releases UK sailors
Oil prices fell on marginally on Thursday after Iran decided to release the 15 British navy personnel after holding them captive for nearly two weeks. Light, sweet crude for May delivery rose 14 cents to US $64.52 a barrel in mid afternoon Asian electronic trading on the New York Mercantile Exchange. This followed a drop of 26 cents the day before after the Iranian president announced he would release the UK sailors. On London's ICE Futures, Brent crude for May rose 22 cents to US $68.62 a barrel. The standoff had raised fears of a disruption in oil supplies and caused a nearly US $5 jump in prices. But crude is still trading higher than before the March 23 detention, fueled by concerns about tight US domestic supplies. A weekly report released Wednesday by the US Energy Information Administration showed that gasoline inventories declined for the eighth straight week and that demand is still strong.
China to hike reserve requirement again
The People's Bank of China announced that it will boost the reserve requirement ratio of banks to slow inflation and investment in the fastest-growing major economy. The move is the third increase in reserve requirement this year and follows a 27 basis point hike in short-term interest rates on March 18. The reserve ratio will increase by 0.5% to 10.5% starting April 16, the People's Bank of China said in a statement. "The central bank will continue to carry out prudent monetary policies, use multiple tools to strengthen liquidity controls to maintain liquidity at a moderate level and to prevent money supply and lending from growing too rapidly," the People's Bank of China said.
Japanese companies plan higher capex
Japanese companies plan to step up investment, underscoring their optimism about the outlook for growth at home and abroad. The Tankan, Japan's most closely watched business survey, showed that large companies plan to increase spending by 2.9% in the year that began on April 1, beating economists' estimates. However, sentiment among Japan's largest manufacturers slipped from a two-year high, the Bank of Japan said. The Tankan showed that manufacturer confidence declined to 23 points in March from a two-year high of 25 in December. The average estimate had pegged the reading at 24. Sentiment among large non-manufacturers stayed at a 16-year high of 22 points in March, below the 23 point forecast. Japanese companies tend to be conservative in their capital expenditure estimates in the March survey and upgrade them later. In March last year companies planned to boost spending 2.7%. That increased to an estimated 11.9%, the fastest in more than 15 years, the survey showed.
Yen hits 5-week low vs dollar
The yen touched its lowest level in five weeks against the dollar as traders across the world resumed the so-called "carry trade" amid optimism that interest rates in Japan will remain the lowest among the G8 nations. The dollar hit a five-week high versus the yen, at 119.08 yen, before retreating against the Japanese currency. The euro also hit a 5-week high at 159.05 yen. The recent gains in global stock markets are giving investors more confidence to step up trades with money borrowed with the Japanese currency. But gains in the dollar were capped ahead of key US employment data. Markets were nervous ahead of a keenly-watched US non-farm payrolls report on April 6 and the G7 finance ministers meeting next week, which may yield some comments on currencies. The dollar came under pressure after data showed that growth in the US service sector slowed to a four-year low in March, reinforcing the view that US interest rates could be cut later this year. The jobs data will provide more clues on whether the Federal Reserve will lower rates from the current 5.25% to support the economy.
US, South Korea reach deal on FTA
The United States and South Korea reached a free trade agreement (FTA) that would be America's biggest such accord in more than a decade and could boost bilateral trade by as much as US$20bn. The negotiations, reached just minutes before the final deadline was to expire, were difficult to conclude due to differences over such sensitive sectors as rice, beef, automobiles and pharmaceuticals. Details were not announced. The FTA will eliminate duties on products like South Korean autos and apparel, and cut investment barriers for US insurers and financial companies. South Korea will abolish its 40% tariff on US beef over 15 years and the pork tariff over 10 years. Rice wasn't included in the FTA. Seoul and Washington had been in talks over the last 10 months to try and meet the ambitious timetable for sealing the deal, which could see annual bilateral trade rise from US $70bn to US $90bn a year. For the US, the deal is the largest trade since the North America FTA accord was signed with Canada and Mexico more than a decade ago. On the other hand, South Korea would get much greater access to the markets of its second-largest trading partner.
DaimlerChrysler admits talks to sell Chrysler
DaimlerChrysler finally confirmed that it was looking at parting ways with Chrysler, which lost US $1.5bn last year. We are talking with some of the potential partners who have shown a clear interest," DaimlerChrysler CEO Dieter Zetsche told shareholders on April 4. "So far, I am satisfied with the process. Everything is going according to plan." Zetsche, however did not identify the suitors. Nor did he guarantee that the talks would end in a sale. "We need to keep all options open," he said. "We need to keep maximum scope for maneuver." But reports said that three bidders had submitted preliminary offers for Chrysler two private equity firms - the Blackstone Group and Cerberus Capital Management - and a Canadian auto parts supplier, Magna International. Chrysler has around US $20bn in health care obligations for retired workers. Some estimate it may fetch no more than US $5bn to US $7bn, or even a naught. Daimler shares have soared nearly 25% ever since talk of the company contemplating selling Chrysler broke in February. But, they dipped 1.4% on April 4 as investors were frustrated that Zetsche did not offer more details.