Tuesday, 6 August 2013

Raghuram Rajan to be next RBI governor

Chief Economic Advisor Raghuram Rajan will be the next Reserve Bank of India (RBI) Governor after incumbent D Subbarao retires in September.

Mr Rajan, a former International Monetary Fund (IMF) Chief Economist has been appointed for a three-year period.

"It's the right choice that a thorough professional has been appointed...," Arvind Virmani, former Chief Economic Advisor.

Planning Commission member Saumitra Chaudhuri and Economic Affairs Secretary Arvind Mayaram's names had also been floating around in the media as contenders for the RBI chief's position.

The government had been on the lookout for the next RBI Governor, ever since incumbent D Subbarao expressed his desire to "move on". Dr Subbarao, due to retire in September, was initially appointed for three years in 2008.

The government would ideally have wanted Dr Subbarao to continue considering the state of the Indian economy. Growth has slumped to a decade low and the rupee is trading at record lows.

With elections less than a year away, the government might have been comfortable with Dr Subbarao, who's been there and seen all.

Mr Rajan now faces a tall order as he has to balance growth with supporting a tumbling rupee that hit an all-time low of 61.80 on Tuesday.

JSW Steel's FX debt at Rs 12000cr; hints at 3% price hike

JSW Steel , which operates a 10 million tonne steel plant at Karnataka is planning to hike steel product prices by 3-3.5 percent in current month following rupee depreciation, hike in international steel and iron ore prices, Seshagiri Rao, joint MD & Group CFO, JSW Steel told CNBC-TV18.

Market was disappointed with the increase in the company’s debt level at the end of June quarter. It reported net debt of Rs 29,200 crore. Rao explained that expenses and rupee depreciation had pushed up overall debt.  JSW Steel’s foreign currency debt currently stands at Rs 12,000 crore and rapidly depreciating rupee, which today hit lifetime low of 61.59 against dollar is going to create further trouble for the company.

The company continues to face iron ore scarcity at its Vijayanagar plant in Karnataka. “Only 12 mines are operating, there is no adequate supply of iron ore to meet the industry requirement. We are trying to bridge that gap by procuring part of the quantity from outside Karnataka, still not able to improve capacity utilization to 100 percent,” Rao said. It plans to procure 2.5-3 million tonne ore from outside Karnataka.

JSW Steel hopes to improve profitability in the last quarter of current financial as it will commission a pellet and coke oven battery plant at Dolvi unit in November and December respectively.

Tata Power slumps to 4-year low, down 18% on Q1 net loss

Tata Power Company shares crashed 18.5 percent intraday Tuesday to touch more than four-year low of Rs 68.25 after it reported loss during April-June quarter .

The private power producer posted consolidated net loss of Rs 114.7 crore in first quarter (April-June) as against profit of Rs 145.9 crore in a year ago period, dented by higher interest payment and forex loss, but its standalone performance was quite good.

Consolidated net revenue increased higher-than-expected 29 percent on yearly basis to Rs 9,292 crore during June quarter while earnings before interest, tax, depreciation & amortisation (EBITDA) margin jumped 290 bps year-on-year to 21.7 percent as against analysts' forecast of 21.2 percent.

Analysts on an average had expected the power company to report net profit at Rs 224 crore on revenues of Rs 9,004 crore for the quarter.

Meanwhile, foreign exchange loss rose by 6.5 times to Rs 292.8 crore during April-June quarter from Rs 45.2 crore in corresponding quarter of last fiscal.

Finance costs (interest payment) ballooned 64.3 percent year-on-year to Rs 902 crore in first quarter. Finance cost includes Rs 45 crore being provision for interest on amounts which have not been deposited with the statutory authorities on account of disputes which are pending.

On standalone basis, net profit increased to Rs 357 crore from Rs 312.30 crore and revenues rose to Rs 2,484.89 crore from Rs 2,190.02 crore Y-o-Y.

At 15:15 hours IST, the stock was quoting at Rs 72, down 13.98 percent amid hefty volumes on the BSE.

Sensex falls around 500 points as rupee hits record low

The Sensex and the Nifty fell around 2.5 percent on Tuesday as shares in lenders such as Yes 
Bank (YESB.NS) slumped on fears the RBI would announce new cash-draining measures to defend the rupee after it hit a record low.


Yes Bank was down 6.3 percent, while both HDFC Bank (HDBK.NS) and ICICI Bank (ICBK.NS) fell 3.7 percent.

The Nifty was down 2.17 percent, while the Sensex fell 2.04 percen

Supreme Infrastructure soars on bagging orders worth Rs 1,111.90 crore

Supreme Infrastructure India is currently trading at Rs. 164.95, up by 7.35 points or 4.66% from its previous closing of Rs. 157.60 on the BSE.

The scrip opened at Rs. 155.55 and has touched a high and low of Rs. 169.80 and Rs. 155.50 respectively. So far 2859 shares were traded on the counter.

The BSE group 'B' stock of face value Rs. 10 has touched a 52 week high of Rs. 324.00 on 10-Oct-2012 and a 52 week low of Rs. 155.00 on 02-Aug-2013.

Last one week high and low of the scrip stood at Rs. 172.00 and Rs. 155.00 respectively. The current market cap of the company is Rs. 272.90 crore.

The promoters holding in the company stood at 57.81% while Institutions and Non-Institutions held 19.23% and 22.96% respectively. Supreme Infrastructure India has bagged orders worth Rs 1,111.90 crore across India. The company has secured an order worth Rs 245.40 crore in West India, of which order worth Rs 150 crore is for carrying out sewage treatment plant (STP) and laying of sewage lines at Bhayender, Mumbai and order worth Rs 145.40 crore is for supply, testing, construction, erection of sub transmission lines on Turnkey basis at Thane, Maharashtra.

In North India, the company has won order worth Rs 509.50 crore, of which order worth Rs 208.30 crore is for construction of Gurgaon Green Project at Gurgaon, Haryana. Moreover the company has received the order worth Rs 194.20 crore for construction of houses for Army welfare Gurgaon. A road project worth Rs 17 crore has also been received in the region.

Further, the company has received contract worth Rs 50 crore for construction of Buri One Residential Complex at Zirakpur, Chandigarh. While, contract worth Rs 40 crore is for setting up a 4MW solar power plant on PPP basis at Punjab.

In East India, the company has received contract worth Rs 307 crore. Of which, The company has received contract worth Rs 212 crore for four laning of Barasat-Krishnagar in West Bengal, while it has also received EPC contract worth Rs 95 crore for construction of commercial complex in Kolkata, West Bengal.

MCX slumps 10 percent after NSEL suspends e-trading

MCX is 26 percent owned by Financial Technologies Ltd (FITE.NS), which also owns 100 percent of NSEL. Financial Technologies shares were down more than 21 percent on Tuesday.

Although MCX and NSEL are operationally independent, though Financial Technologies is the controlling stakeholder for both, shares in MCX have slumped 42 percent since NSEL suspended trading in forwards last week.

"Multi Commodity Exchange of India Limited (MCX) and National Spot Exchange Limited (NSEL) are totally different entities with no financial commitments or exposure to each other whatsoever," MCX said in a statement to the stock exchanges on Tuesday.

Reliance MediaWorks enters into contract with TVC Film maker

Reliance MediaWorks has entered into a contract with renowned TV Commercial (TVC) and feature filmmaker Vadim Perelman as Creative Director. Vadim Perelman has a diverse portfolio created over a career spanning nearly two decades. He has earned awards and accolades for his work with brands such as GM, Microsoft, Kellogg’s, MasterCard, GMC, and Chevrolet to name a few.

Commenting on the arrangement, Naresh Malik, President Media and Creative Services Reliance MediaWorks Ltd says: “Perelman is expected to bring his unique aesthetic and personal style to projects undertaken by Reliance MediaWorks. His vast experience will be an invaluable asset to any project he is associated with".

"I'm excited to be associated with the team at Reliance MediaWorks as its Creative Director. Great advertising generates from the community and I want to learn and embrace the personality, tastes, style and culture of India. I'm passionate about all art forms and I desire to truly make this endeavor a success," said Perelman.

This is an exclusive arrangement between Reliance MediaWorks and Vadim Perelman for India, wherein Vadim Perelman will not provide his services to any other production house for the Indian Territory.

FTIL tanks 25% on likely ban on e-series contracts at NSEL

Shares of Financial Technologies India, the promoter of the National Spot Exchange Ltd, today tanked by nearly 25 per cent following reports that the Government is likely to ban trading in e-series contracts on the NSEL.

After making a weak opening, shares of FTIL further plunged 24.98 per cent to Rs 148.50 on the BSE.

In the last trading session, FTIL shares had rebounded by 31 per cent.

FTIL-promoted MCX shares were down by 10 per cent at Rs 331.85 — its lower circuit limit.

The move could hit NSEL’s business further.

NSEL offers e-series contracts in gold, silver, copper, zinc, lead, nickel and platinum.

On July 31, the NSEL suspended trade in all contracts except the ‘e-series’ following the Government’s direction not to launch new contracts because of the violation of some rules.

NSEL is grappling with the problem of payment settlement of about Rs 5,600 crore after the suspension.

Under e-series contracts, retail investors can buy and sell commodities in demat form. This is a unique market segment which functions similar to the cash segment in equities, but offers commodities in the demat form in smaller denominations.

NSEL had yesterday said it had formed an independent panel to advise and monitor the process for settling Rs 5,600 crore in dues and wanted strict action against brokers not cooperating with the payment plan.

Ashoka Buildcon shines on emerging lowest bidder for turnkey contracts worth Rs 494.50 crore

Ashoka Buildcon is currently trading at Rs. 47.15, up by 0.15 points or 0.32% from its previous closing of Rs. 47.00 on the BSE.

The scrip opened at Rs. 46.55 and has touched a high and low of Rs. 49.35 and Rs. 46.50 respectively. So far 3498 shares were traded on the counter.

The BSE group 'B' stock of face value Rs. 5 has touched a 52 week high of Rs. 93.04 on 13-Aug-2012 and a 52 week low of Rs. 46.00 on 05-Aug-2013.

Last one week high and low of the scrip stood at Rs. 55.50 and Rs. 46.00 respectively. The current market cap of the company is Rs. 0.00 crore.

The promoters holding in the company stood at 67.52% while Institutions and Non-Institutions held 18.46% and 14.02% respectively.

Ashoka Buildcon has emerged as the lowest bidder at the price bid opening meeting dated August 05, 2013 for the turnkey contracts for electrification work for Mahavitaran Infrastructure plan Phase-II aggregating to Rs 494.50 crore from MSEDCL.

Ashoka Buildcon builds and operates roads and bridges in India on a build, operate and transfer (BOT) basis. It currently operates one of the highest numbers of toll-based BOT projects in India.

Siemens wins repeat order for Gurgaon metro south extension project

Siemens Ltd has informed BSE regarding a Press Release dated August 06, 2013, titled "Siemens wins repeat order for Gurgaon Metro South Extension project" A consortium comprising Siemens, Siemens AG and Siemens China has won an order for a turnkey project worth approximately 70 million euros from IL&FS Rail. The share of the order value for Siemens is Rs 184.1 crore. The project involves extension of the Gurgaon Metro line with a new southern line, which is around seven kilometers long.

NSEL to pay 7,000 retail investors first

Nearly 7,000 retail investors are in for some relief with the Forward Markets Commission (FMC), the commodity futures regulator that is trying to resolve the payment crisis at the National Spot Exchange (NSEL), deciding to first clear the dues of those who had put in Rs 10 lakh or less.

Under the plan, these investors will get their full amount that is due in one go. This, according to FMC sources, will take care of over half the investors who add up to 13,000 and are affected by a payment crisis after NSEL suspended trading last week.

"We have asked the exchange to directly settle the dues and give priority to small investors," said an FMC source, who did not wish to
be identified. Investors who are entitled to get amounts higher than Rs 10 lakh will have to wait till the small investors are paid off, sources said. This group of investors, who are mainly high networth investors (HNIs), will probably be paid in a staggered manner as and when NSEL receives payments or realizes funds by liquidating commodities in warehouses, sources said. 

As per FMC's plans, all the money it receives will first go into an escrow account and from there payments will be done. 

Earlier in the day, the crisis-hit NSEL formed a committee of four eminent people with varied backgrounds to act as an independent body that would look into the whole settlement process post its troubles that started last month. The management of the exchange will report to this 'oversight committee'. The exchange is also working on putting in place two more committees - one constituting the planters and processors and one constituting the member-brokers - to better coordinate with the exchange for a smooth rollout of the whole plan. 

On July 31, NSEL had said that it was suspending all trades on one-day contracts on the bourse from the next day and would also merge several days' settlement into one. Since the announcement led to a payment-default like situation, the government and the Forward Markets Commission (FMC), the regulator for all commodity derivatives trades in India, stepped in to resolve the crisis in which around Rs 5,500 crore worth of funds and commodities are involved. The setting up of the three committees is part of the coordinated effort by the parties involved in the situation. 

The committee comprises Sharad Upasani, a retired IAS officer and a former chairman of the Company Law Board, Justice R J Kochar, a former judge of the Bombay High Court, G N Bajpai, former chairman of Sebi and D Sivanandan, a retired IPS officer who was once the director general of police in Maharashtra. "The exchange has constituted the committee for the purpose of monitoring the payout of dues as would be decided in consultation with FMC. The management of the exchange will report to this committee for implementation of the process," a release from NSEL said. 

The two other committees are being formed for better coordination between the stakeholders in the spot trading business.

Rupee falls past 61.21/dollar to record low

RBI's cash tightening steps fail to prop up currency

The rupee fell to a record low on Tuesday, showing the month-old cash tightening steps from the RBI have so far failed to prop up the currency.
The rupee was last at 61.32/33, having breached its previous all-time low of 61.21 seen on July 8.

The rupee had recovered from all-time closing low to end 22 paise higher at 60.88 against the dollar in yesterday's trade.

The benchmark 10-year bond yield was trading up 4 basis points at 8.24%.

Godrej Properties surges on inking agreement to develop 13.76 acre property at Gurgaon

Godrej Properties is currently trading at Rs 475.00, up by 1.50 points or 0.32% from its previous closing of Rs 473.50 on the BSE.

The scrip opened at Rs 475.00 and has touched a high and low of Rs 475.00 and Rs. 475.00 respectively.

The BSE group 'B' stock of face value Rs 10 has touched a 52 week high of Rs 689.00 on 07-Dec-2012 and a 52 week low of Rs 467.15 on 05-Aug-2013.

Last one week high and low of the scrip stood at Rs 510.70 and Rs 467.15 respectively. The current market cap of the company is Rs 3696.93 crore.

The promoters holding in the company stood at 74.98% while Institutions and Non-Institutions held 16.77% and 8.25% respectively.

Godrej Properties (GPL), the real estate development arm of the Godrej Group, has entered into a Development Agreement with Oasis Buildhome to develop a 13.76 acre property situated on Northern Periphery Road (NPR) in Sector 88A/89A, Gurgaon. The project will be developed as a premium residential group housing project and is expected to offer 1.2 million square feet of saleable area.

This well located parcel of land has strategic access from the existing Pataudi Road and the NPR. Upcoming road infrastructure will further enhance the connectivity of the project to Delhi and other parts of Gurgaon.

The company is currently developing two residential projects in Gurgaon, Godrej Frontier and Godrej Summit, and has recently added a new project in Okhla, New Delhi where it plans to do a premium residential development. As with most Godrej Properties projects, this project is being done as a joint venture.

Tata Motors gains on tying-up with UCO Bank for commercial vehicle financing

Tata Motors is currently trading at Rs. 286.35, up by 1.75 points or 0.61% from its previous closing of Rs. 284.60 on the BSE.

The scrip opened at Rs. 283.50 and has touched a high and low of Rs. 288.75 and Rs. 283.50 respectively. So far 34,000 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 337.05 on 10-Jan-2013 and a 52 week low of Rs. 224.15 on 13-Aug-2012.

Last one week high and low of the scrip stood at Rs. 304.20 and Rs. 278.00 respectively. The current market cap of the company is Rs. 78,361.00 crore.

The promoters holding in the company stood at 34.35% while Institutions and Non-Institutions held 37.98% and 8.43% respectively.

Tata Motors has entered into an understanding with UCO Bank (formerly United Commercial Bank), for financing its range of commercial vehicles, to provide an added facility of finance to its customers. Though this tie-up, UCO Bank will offer loans of upto 85% on a Tata Motors commercial vehicles on-road pricing. At very competitive rates starting at 11.50% p.a and tenure of upto 7 years, this facility will be available through all Tata Motors and UCO Bank outlets.

Tata Motors is India's largest automobile company, is the leader in commercial vehicles in each segment, and among the top in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is also the world's fourth largest truck and bus manufacturer.

Sensex to open on a weak note

The monsoon session began with an adjournment and the government has itself to blame. Prime Minister Manmohan Singh earlier appealed to the Opposition to cooperate and discuss issues.  But on the first day of Parliament, the members of the BJP literally watched the fun as the ruling coalition’s own MPs from Andhra Pradesh disrupted the House on the Telangana issue.

The services sector showed contraction for the first time since October 2011, according to the HSBC Purchasing Managers’ Index. The index dived to 47.9 points from 51.7 points in June, the steepest fall since April 2009. Meanwhile, rising automation and low attrition in IT sector may act as a dampener for job seekers with industry body Nasscom expecting hiring to decline by up to 17% to 1,50,000 in the current fiscal.

While indices are more or less afloat, a study shows that over 45% stocks on the NSE are below their 2008 lows. For the day, the indices are expected to open on a weak note today. Some turnaround could always happen towards close. Tata Power, Unitech, Crompton Greaves will be in focus as they announce their results.

Global cues are not encouraging. US indices retreated from their record levels. The Dow fell 0.3%, while S&P 500 lost 0.15% and the Nasdaq Composite added 0.09 percent. Brent crude was down 25 cents to $108.70 a barrel and U.S. crude settled down 38 cents to $106.56.

Asian markets are weak on fears that the US Federal Reserve would start scaling back its stimulus as soon as next month.

Japan's Nikkei 225 index was trading 1.5% lower and Hong Kong's Hang Seng lost 1.58%. South Korea's Kospi index has shed almost a percent while China's Shanghai index is down over half a percent.

The National Spot Exchange Limited (NSEL) has constituted an independent  committee of eminent persons for the purpose of advising and monitoring the progress of financial closeout  plan.
Reports state that seven more pharmaceutical companies including Novartis India Limited moved the Delhi High Court to challenge government's new drug pricing order that asked them to slash prices of 348 medicines.

Educomp staff not paid salaries

Educomp Solutions has reportedly not paid salaries to over 6,000 employees for a number of months.

One employee at a computer faculty in Assam said the lag in salary payment is as much as three-four months. The employee requested anonymity.

Educomp has been working with Government schools to provide computer education. The schools are expected to pay for the hardware, content and services provided by Educomp’s resource coordinators or Smartclass coordinators.

In some instances, delayed payments to Educomp on the part of the schools using Smartclass can lead to delays in payment to their resource coordinators (provided by Educomp to schools to ensure effective usage of Smartclass).

“We hope to resolve this situation very soon as we are currently in the midst of a comprehensive drive to boost collections from such schools and where necessary, we will discontinue services to non-paying schools, ” Divya Lal, Chief Operating Officer (COO), Educomp Smartclass, told Business Line.

“In today’s tough economic environment it is a challenge to service such schools in the face of non-payments,” she added.

However, the resource coordinators are on the payroll of Educomp and have defined salaries. A former employee from Karnataka said that since there is a contract with Educomp, salaries should not depend on whether or not the schools pay the company.

The employee said that he left the company a few months back because it had delayed payment of his salary for almost five months. Even three months after leaving his job, he had not received the full and final settlement, he claimed.

The company’s cost concerns have also led to unemployment for many. Last year, it had sacked more than 750 people.

An employee, who worked with the administration department in Educomp, said: “I was given one month’s notice in December 2012 as they were shutting down one admin office (out of the two) in Gurgaon.

“The company said it already had five to six people in the other admin office and did not want the extra cost. I had to quit in January 2013.”

July Services PMI contracts, 1st fall in 20 months

In July, the services sector, the largest in the Indian economy, contracted for the first time since October 2011, according to the HSBC Purchasing Managers’ Index (PMI). The index dived to 47.9 points from 51.7 points in June, the steepest fall since April 2009, when the economy had faced the ripple effects of the global financial crisis. After April 2009, the sector had recorded contraction only in September and October of 2011.

The fall in the services PMI in July was despite the government taking a slew of decisions to further open the sector to foreign direct investment.

According to data released last week, manufacturing PMI stood at a disappointing 50.1 points in July, against 50.3 points in June. A reading of more than 50 indicates growth, while one below it shows contraction. As a result, the composite PMI (for the manufacturing and services sectors) plummeted to 48.4 points from 50.9 points in June, the first such decline in about four years.

In 2012-13, economic growth had fallen to a decadal-low of five per cent. For this financial year, the Reserve Bank of India (RBI) has already cut its growth projection from 5.7 per cent to 5.5 per cent. The PMI reading for July showed the wait for a recovery in growth would take longer than anticipated.

According to Markit Economics, the financial firm that compiled the data for the PMI, the transport, storage and renting segments were the “main drivers of the overall decline” in July. “Activity in the services sector contracted in July, led by a drop in new business, which also led to a decline in optimism among the surveyed companies,” said Lief Eskesen, HSBC chief economist for India and the Association of Southeast Asian Nations.

However, many feel the services PMI isn’t a good indicator of growth in the sector. “In the Indian context, services PMI takes into account only large companies. Therefore, I will not worry too much about it, as the Indian market is dominated by the smaller entities on the services side, which are simply not covered by this data,” said Pronab Sen, chairman of the National Statistical Commission.

In September 2011 and October 2011, the services sector had seen contraction, according to PMI. However, the sector (excluding construction) grew 8.5 per cent in the second quarter of 2011-12 (which includes September 2011) and 8.2 per cent in the third quarter (which includes October 2011), according to official data on gross domestic production.

On RBI’s rate cut policy, Eskesen said, “While RBI has to cater to the currency at the moment, it will eventually need to cater more to growth, as economic activity continues to soften.”

“My personal view is RBI should go for a rate cut, but keep the money supply tightened, as it has done because one cannot ignore the widening current account deficit,” Sen said.

According to the monthly PMI survey report, in July, new orders to private sector firms fell for the first time since April 2009, owing to the increasingly fragile economic conditions. “Manufacturing and services companies both signalled lower volumes of incoming new work, with the rate of contraction faster in services,” said Markit Economics. “While the rate of charge inflation in the manufacturing sector accelerated to the quickest since February, prices charged by service providers rose at the slowest pace in the current 33-month inflationary sequence,” it added.

Markit Economics panel members involved in the research said to attract new business, discounts would be offered.