Jet Air up 6% as Etihad deal gets closer

Shares of Jet Airways climbed over 6 percent to Rs 569 after Etihad bought over three of its slots at Heathrow Airport for USD 70 million, thereby consolidating it plans to invest in Jet Air.

Though deal talks are on since September last year, there has been no conclusion on it as yet and both parties are in final stage of negotiations. 

Etihad and Jet, both  have said that discussions on the deal are still on.

Read This: Buy Jet Airways for long term: PN Vijay

According to CNBC-TV18 sources, Jet Air is learnt to have revised certain clauses pertaining to the Etihad deal. The airline has agreed to give four seats to Etihad on its Board.

 Jet Air may also be open to price negotiations as well. The Jet-Etihad deal valuation is likely to be revised, said exclusive sources.

Earlier, the deal was stuck when Etihad said that instead of two it would want four members of Jet's board. It had also said that in future

The deal was likely to be announced last week, but Hamed bin Zayed al-Nahayan, chairman of Etihad Airways, told media that there were certain issues to be dealt with, before signing agreement with Jet Air.

Since September last year, reports of  likely Jet-Etihad started doing rounds and it was only in December that Jet confirmed about it, saying that it is still in negotiation phase. "As and when the deal will happen, we will make an announcement," it had said.

Etihad is keen to pick up 24 percent stakes in Jet Air at around USD 330 million. Both parties still need to discuss issues related to Board composition and revenue sharing model.

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Maruti gets removed from MSCI today; shares slip

Country's largest car maker Maruti Suzuki India moved down 1 percent on Thursday as index provider MSCI will remove the stock from its MSCI India index.

The changes will take place after the close of today's trade.

At 10:27 hours IST, shares went down 0.88 percent to Rs 1,396.90 on Bombay Stock Exchange.

The stock fell more than 13 percent in last one month whereas gained over 11 percent in one year.

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Gujarat Fluorochemicals to stop trading in FO, stock tanks

Gujarat Fluorochemicals dropped nearly 4 percent on Thursday as the stock will stop trading in derivatives segment after February expiry.

At 10:39 hours IST, shares declined 2.6 percent to Rs 278.70 on Bombay Stock Exchange.

The stock slipped over 4 percent in last one month while plunged more than 42 percent in one year.

The trading in shares of Suzlon Energy , one of the world's largest wind turbine suppliers, will also be stopped in F&O segment after today's trade. But the stock gained over 1.4 percent after getting beaten down quite badly in last few sessions.

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Why do entrepreneurs need to look at rural India now?

Nikita Peer

He is known for his bold and unconventional ideas in marketing strategy. That's why, when Harish Bijoor speaks, everyone listens. In more conventional terms, Bijoor is a brand expert and CEO of the Bangalore-based Bijoor Consults Inc, an author, a lecturer and even a quiz master.

The marketing guru offers some compelling insights into the potential of the rural market in India and urges entrepreneurs to tap its humungous potential. In his signature, unapologetic style, Bijoor says, "We not only have a stomach and a bladder but 46 other body parts and each one of them craves a marketing solution."

Enter body part No 1, as Bijoor builds his case. "India has the world's second-largest population. Yet our penetration of brands and services is pathetic except for tea, which has the highest penetration. No other product or service comes even 20-per cent close to tea in terms of penetration, which means there is an opportunity for everybody to go out and do things," says Bijoor, famously known for marketing ideas such as printing ads on eggs and hanging banners upside-down to grab eyeballs.

Also a walking encyclopaedia, he shares a little-known tidbit to strengthen his case. Enter body part No 2 - hair! "Even though we are the second-largest country in the world, there are more opportunities here than in China, in many cases. For instance, the hair oil segment in China is smaller than that in India. While China has 800 million women, India has 600 million women. The average length of the hair of Chinese women is 1.6 feet whereas the average length of hair of Indian women is 3 inches. Thus there is more opportunity in India in the hair products segment."

Urban markets drying up

Bijoor is baffled at the tendency of companies to confine themselves to urban boundaries. He says it's time companies started devising a rural strategy as well as an urban one. "Companies look at urban markets because they end up plucking the low-hanging fruit of opportunity. But urban markets are drying up. Therefore, it is important to go rural. In rural markets, the opportunities are not sitting there; they need to be created."

He throws entrepreneurs a challenge - go rural first, then urban. "If you enter a mall in a big city with a perfume you have manufactured, you will find 20 other brands competing with each other and you will be the 21st. But in the rural market, you will be different and unique. Not only is an opportunity being created, there's a bright future out there for entrepreneurs," shares Bijoor.

And there's no excuse not to. Bijoor says distribution problems are passe. "The biggest leveller for all businesses is the Internet. The moment there is connectivity, the remotest corner of the country can order what they want. They don't have to travel 200 km to the city to look at a variety of brands."

Why you need to move beyond urban boundaries?

India's villages are simply not what they used to be, including the quality of life, which has changed dramatically. Pradeep Lokhande, Founder, Rural Relations, a Pune-based organisation that has been working for two decades to make Indian villages computer-literate, points out, "Education, communication patterns, policies like minimum support price, Rajiv Gandhi Aawas Yojna and Gram Sadak Yojna have completely altered life for rural Indians. India has the largest elementary education system in the world. Also, Doordarshan reaches 92 per cent of the population and satellite TV reaches 45-55 per cent. Every month, there are 5 lakh new installations of DTH TV. Thus, rural folk are exposed to the bold and beautiful. This, among other things, has led to higher aspirations among rural Indians."

According to Bijoor, the mind of the rural Indian is already cluttered. "Brands which move electronically get seeded very deeply and Doordarshan is a killer brand in rural India, even today." He cuts to the chase. "Rakhi Sawant is a big hit not only among Indian men but among women as well. This is because a lot of rural women live a vicarious life, and Rakhi is a star who connects with them. She talks with rusticity as they do." Unflattering as that may be for Sawant, point taken!

Duplication Is A Powerful Opportunity

Today, duplication is a huge opportunity, especially in rural India, says Lokhande, who has a knack of pointing out opportunities in the obvious. "Of the 6 lakh villages in India, 87 per cent are very small. Thus, anything in a blue bottle is Parachute oil and anything in red-and-white is either Colgate or Lifebuoy." That's why local brands stand out. Ghadi detergent is a classic example," he adds.

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Sugar decontrol yet to be approved by Cabinet: Thomas

The center's move to decontrol sugar which was likely to be implemented before the Budget has got delayed as it still needs to be approved by the Cabinet, KV Thomas, Union Food Minister told CNBC TV18.

The government has however already started working on two key recommendations by the C Rangarajan committee-regulated release mechanism and levy sugar obligation.  

Thomas said that the government will most likely introduce the Food Security Bill in the last week of ongoing Budget session.

Below is the verbatim transcript of the interview

Q: You spoke at an event a few weeks back and said that decision on partial sugar decontrol could happen in the next 15 days. Were you hinting that it may happen in the Budget itself?

A: See this is under discussion for a long time and now it is under circulation so that it has to be approved by the cabinet. What we have worked out are the recommendations of the Rangarajan committee of which one is the levy sugar. The Rangarajan Committee's recommendation is that we should get out of the levy sugar system but at the same time the valuable tip sugar to the states under the PDS system should be protected. Second is the release mechanism, we have got a mechanism by which every month sugar is being released but from that it has gone to once in three months, now once in six months and now it is almost once in a year. So, second suggestion is also more or less in the process of implementation. All other recommendations, we have to discuss with the state government and we are discussing. The last one was the jute bag and that is also in discussion with the ministry of textiles.

Q: There is a concern with regards to that levy quota though in the sense if it is done away with, the government may have to bear an excess burden between Rs 5,000 to Rs 6,000 crore on its balance sheet, something the finance ministry may not be in favour of?

A: No. There is nothing on the government to bear. We will find out some kind of mechanisms by which government will not have an additional subsidy. Because already it is subsidised when we are giving it to the states at the rate of Rs 13.50 per kg, and fair and remunerative price (FRP) of Rs 19.50 per kg. The liability on the government is about Rs 23 per kg. We subsidise them from Rs 23, they collect Rs 13.5 then the remaining we subsidise to the states, which is to the tune of about Rs 2,000 crore now. Suppose the FRP further goes up then again the subsidy component to the states will increase, but in the proposed system we will find out a mechanism like either increase in excise duty or export import duty mechanism.
 

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FM focus is on pro-capital market measures: S Narayan

A day before the Budget, Finance Minister P Chidambaram will table the Economic Survey 2013-14 in Parliament on Wednesday. S Narayan, former finance secretary says he sees the fiscal deficit projection for FY14 at 4.8 percent. He also expects the finance minister to focus on pro-capital market measures in the Budget tomorrow, also that a surcharge is likely on high income tax brackets.

He says that we need incentives for the manufacturing sector in the Budget, and that he does not expect a hike in excise & service tax rates. He expects government borrowing in FY14 at Rs 5.8-5.9 lakh crore, and that the Food Security Bill is a potential negative if implemented in this Budget.

Below is an excerpt from the interview. 

Q: A word on which way you think the finance minister (FM) will lean between the urgency to do something right now for growth versus the fiscal prudent situation.

A: I think the FM will be bringing out a very mature Budget because he knows that down the road, with the elections looming he may have to give some concessions may be a little later. However, I think he will focus on ensuring that the fiscal deficit gets down to the kind of number that he has been talking about, which is 4.8 percent in the next year. He would make sure that there are some incentives.

I think there would be lot in it for the capital markets, as he wants to make sure that there is a lot of activity in the market. He wants to make sure that more Foreign Institutional Investor (FII) investments come into the market, and there are opportunities for more initial public offerings (IPOs). So I see a lot of activity which is pro-capital market coming in.  However, he will focus on fiscal prudence and perhaps a little bit of taxation on the higher side. Maybe not changing the tax rates but looking at some kind of a surcharge on the wealthy, something like that, some concessions for the poor. I think this is the kind of package that he would probably unveil tomorrow.

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Paramount Airways hits lenders wall for operations' restart

CNBC-TV18 learns that Paramount Airways has hit a wall as far as re-starting operations are concerned as lenders want their dues repaid first and have approached the regulator, Director General of Civil Aviation (DGCA) for the same.

According to government sources Paramount has applied to restart operations  two weeks back but no call has been taken on it. DGCA had suspended Paramount's license in April 2010.

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Bharti, Idea shoot up after ignoring spectrum auction

Shares of Bharti Airtel and Idea Cellular rallied quite smartly in early trade on Tuesday as major GSM players decided to stay away from spectrum auction.

In a setback to the government ahead of the Budget, there are no takers for the 900 MHZ GSM spectrum in the upcoming auctions in March as Vodafone, Bharti Airtel and Idea have decided not to participate.

According to CNBC-TV18 reports, this comes after, the Delhi High Court refused to grant a stay on the 900 MHZ auctions based on the pleas of Vodafone and Bharti Airtel on Monday.

The research firm Citi recommended a buy rating on Bharti with a target price of Rs 397. "Not applying for the upcoming spectrum auctions should help lower the hit from license renewals," Citi reasoned.
 
At 09:27 hours IST, shares of Bharti jumped 4.5 percent to Rs 320.75 on Bombay Stock Exchange.

Meanwhile, Aditya Birla Group company Idea Cellular rose by 3.38 percent to Rs 117.65.

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Kingfisher down 5% after govt cancels int'l flying rights

Moneycontrol Bureau

Shares of Kingfisher Airlines (KFA) tumbled around 5 percent to Rs 10.74 after the civil aviation ministry withdrew its international flying rights along with cancellation of slots at domestic airports.

KFA offered over 3,500 seats each day on international network and now these will be given away to other airlines that operate on same routes. Simultaneously, the airline's domestic will also be given away to other carriers.

The airline has been grappling with operational and financial issues since over a year. Its lenders have warned the airline to clear debt of over Rs 6,000 or face their wrath. Its employees too have frequently gone on strikes for not getting salaries on time. Last year, Hindustan Petroleum encashed the airline's  bank guarantees as it was unable to pay over Rs 300 crore toward oil dues.

The airline which stopped flying late last year is yet to renew its flying licence which expired two months ago. The airline had earlier said, rising fuel cost and capital costs, coupled with competition-induced price wars led to huge accumulated losses and mounting debts.

Did you read: 4 banks to deal with Kingfisher recovery, to find law firm

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LT Fin, MM Fin rally on new banking licence norms

Shares of non-banking finance companies rallied quite smartly in early trade on Monday after the Reserve Bank of India (RBI) on Friday issued its final guidelines for grant of new banking licences and invited applications from aspirants.

CNBC-TV18 reported quoting sources that the Reserve Bank may issue 4 to 5 licences.

L&T Finance Holdings , a subsidiary of engineering & construction major Larsen & Toubro , was locked at 5 percent upper circuit at Rs 85.70. There were pending buy orders of 326,411 shares, with no sellers available.

JP Morgan is neutral on L&T Finance with a target price of Rs 80. "While the stock is fully valued at the current share price, near term catalysts like a new banking license and possible rate cuts provide strong support," JP Morgan said.

At 09:41 hours IST, Mahindra & Mahindra Financial Services jumped nearly 6 percent to Rs 210.55 while SREI Infrastructure Finance advanced more than 6 percent Rs 38.30 on Bombay Stock Exchange.

Bajaj Finserv gained 4 percent to Rs 856.35 while IFCI rose 2.7 percent to Rs 34.25. State-owned Power Finance Corporation went up nearly 2 percent to Rs 207.95.

The central bank kept July 1 as the deadline to apply for new banking licences.

RBI said the applicants should have a past record of sound credentials, integrity and financial strength with a successful track record of 10 years.

The banking regulator fixed a minimum equity capital level of Rs 500 crore for the banking license aspirants, while capping the foreign holding in the first five years to 49 percent and mandating 25 percent of branches in rural area with population upto 9,999, among others

In line with existing domestic norms, the new bank should also achieve priority sector lending target of 40%. Interestingly, most of the existing banks are failing to meet the target.

RBI said non-operating finance holding company must be fully promoter-owned. "Non-operating holding company will hold 40 percent in new bank for 5 years and will cut stake in new bank to 15 percent in 12 years," the RBI added. Private companies and NBFCs can set up bank via non-operating holding company.

After a span of around 10 years RBI is set to issue fresh banking license. In 2003-04, it had last issued license to Yes Bank and Kotak Mahindra Bank.

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Ranbaxy up on restart of Atorvastatin production in the US

Moneycontrol Bureau

Ranbaxy shares rose over 4 percent in morning trade after the drug maker said it has resumed production of the drug substance for its Atorvastatin cholesterol lowering drug in United States.

It had recalled some batches of Atorvastatin, which is a generic version of Pfizer's Lipitor, in November 2012, stating that could contain small glass particles about less than 1mm in size. The company owned by Japan's Daiichi Sankyo had said that it was a voluntary recall in the US market related to 10mg, 20mg and 40mg dosage strengths, packaged in 90s and 500 count bottles with respect to certain lot numbers and didn't affect the tablets in 80mg strength.

"We are working with the US Food and Drugs Administration and have identified and implemented multiple corrective and preventive actions. As a part of the first step in initiating the manufacturing process to resume supplies to the US market, we have commenced the production of the drug substance for our Atorvastatin product," Ranbaxy said in a notice to stock exchanges on Monday.

HSBC upgraded Ranbaxy to "overweight" from "underweight" saying its re-entry in the generic Lipitor market and the approval to resume manufacturing at Ohm's Labs in the US are key positive catalysts.

The recent correction in the stock was also a reason for the upgrade.

At 10:10 hrs, Ranbaxy shares were up 3.8 percent at Rs 429.40 on NSE. Since the company announced the drug recall on Nov 23, the stock has tumbled over 19 percent.

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'India may be among top three aviation markets by 2020'

India is likely to become one of the top three aviation markets in the world by 2020 provided the strong passenger growth clocked in recent times continues, a Ficci-PwC report said.

"Indian civil aviation sector has continued to experience high passenger growth, and if the trend continues it could rank among the top three aviation markets in the world by 2020," it said in the report titled 'Indian Aviation:Spreading its Wings'.

Domestic traffic in India saw a Compounded Annual Growth Rate (CAGR) of 17 per cent between 2009 and 2011. "A strong market growth rate coupled with infrastructure expansion will help the sector back on its feet as the economy recovers," it said.

The report also said this would be a good time for global players to enter India and explore the potential of a large underserved market. "However, volatility in fuel prices combined with the highest tax on aviation turbine fuel and other national policy related issues continue to challenge the sector's growth," he said.

The recent increase of FDI up to 49 per cent in civil aviation might also not result in substantial increase in investment since it has been imposed on the aggregate of FDI and FII. The report also recommends a hike of 26 per cent cap on FDI in defence as it has failed to attract foreign investment.

India has received only USD four million in the 10 years since FDI was allowed in the defence sector, while the entire economy has received over USD 180 billion during the period.

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No rush to grow; hope Budget cheers on rates, mood: Toyota

Hiroshi Nakagawa, MD and CEO, Toyota India says the Asian auto giant will grow in India step-by-step and hopes the Budget will reduce interest rates, taxes and cheer consumer sentiment.

Toyota India has seen a number of firsts. The most recent is the design and development of the Etios and Liva for India by Indian designers and the rolling out a car-model for under Rs 5 lakh.

Below is an edited transcript of the show on CNBC-TV18

Q: The Etios and Liva are cars designed very much for India. How happy are you with the sales that they have recorded?

A: These models are one of our first that have been designed for India. These models are part of Toyota global range focusing especially on emerging markets. For the first time, we have begun to focus on the Indian consumer and the Indian market. Every aspect of India has been studied for the development of the Etios. Simultaneously we would expand this Etios model to other emerging markets. In terms of Indian market sales, I am very happy as the customers have acknowledged the challenges that we overcame.

Q: When you launched it a year and half ago I think your company said you were looking at 100,000 cars in 2012. Was that target achieved?

A: Yes. Two years ago we launched the Etios. Firstly, we launched a sedan model following a hatchback model and then followed it up with a diesel variant. In total, we achieved the original target of 100,000 cars.

Q: Could you have brought a small car into India a little earlier? You were a pioneer in the Indian market and introduced lots of segments. With the Qualis and the Innova you have really cracked open a new segment. Did you ignore the small car market for too long because that is a fast growing market?

A: Yes. The pioneers in the Indian auto industry are Maruti Suzuki , Tata Motors and Mahindra and Mahindra . We are challengers. We are still small compared to these giants. The Toyota philosophy is to grow step by step.

Q: You saw a gap in the Indian market and you introduced Qualis and Innova and then you decided to move into the small car market. Is that correct?

A: Yes. We have a kind of responsibility towards not only to customers, but also to employees, suppliers and dealers. Once we commit, we have to slowly rise and grow step by step.

Q: What do you feel about the industry today? The year 2012 was difficult. The data for the automobile industry in January revealed a highly negative picture. Toyota saw a 23 percent drop in January. When will things get better?

A: According to my understanding, India is a very promising market offering stable growth in the mid-and long-term. It is difficult to judge from last year or beginning of this year. Though the market is shaky, there is growth. However, interest rates are still high, there are difficulties related to exchange rates and a slowdown in customers' perception to buy cars.

Q: Do you expect anything from this Budget? What would you want and what do you expect?

A: I have observed that a lot of people visit our outlets but they do not, waiting for the right moment.

Q: How can the government help you turn that interest into a purchase?

A: The government can help by contributing to the increase in the consumer's buying power. So I look forward to some interest rate adjustment in the Union Budget.

Q: When will you say it is a good Budget?

A: The Budget will be good if it boost the customers' buying sentiment, supports with taxation and announces measures that will enhance the auto industry.

Q: Has the downturn in the last two years affected any of your investment plans? You have two factories at the moment. There were reports that you are planning a third factory. Are you planning a third factory, do you have any investment plans in the next year or two years and are these factories running to full capacity?

A: Yes, we built an additional plant after the first reached full capacity. Now the second plant has almost reached full capacity as per plan. Together both plants rollout 310,000 units.

Q: So that is about 100,000 in the first plant and about 200,000 in the second plant?

A: Yes. We have no plan to increase investment or initiate capacity expansion.

Q: Are you planning a third plant? When will the third plant be set up, if you say that your two plants are near full capacity?

A: There are rumours, but we have no plan for a third plant.

Q: Are you going to launch any improvements in the Etios and Liva? A few customers opine that though they are good models, they do not look as luxurious inside. So, are you planning a revamp of these two models?

A: Toyota's culture calls for continuous improvement or Kaizen. So, every moment and chance we get, we try to improve our models.

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ZipDial connects clients with customers through missed call

Marketers are in the business of wooing customer loyalty, but very often what may seem like a winning marketing idea fails, because of the sheer complexity of the reward loyalty program.

Set up in 2010, ZipDial essentially addresses this problem. ZipDial was started by three graduates from Indian Institutes of Management (IIM), Indian Institutes of Technology (IIT) and Stanford University in 2010 Valerie Wagoner, Sanjay Swamy and Amiya Pathak. They have developed a powerful and innovative suite of marketing solutions based on the simplicity of dialling a toll free number.

ZipDial helps brands connect with customers through a missed call. The client has given a toll free number that consumers can dial into, but instead of having to wait endlessly to connect with a call center executive or punching multiple options the call rings once and disconnects and then the consumer receives an SMS with more information on the marketing campaign.

ZipDial's clients leverage these number for sending promotional messages or information. Services include mobile number verification for e-commerce ventures, mobile banking polls and customer feedback surveys.

"We came up with the idea for ZipDial in a late night brainstorm as entrepreneurs do. By the time we came up with about 300 different applications we said, okay, now it is time to put a business around this.At the time I contacted a couple of smaller businesses who I thought might be interested in using such a service and literally in the first conversation they were trying to hand me cash over the table for their first month subscription because they were so excited about the service," says Valerie Wagoner.

Between 2010 and now ZipDial has been steadily adding clients. Today its mobile engagement and analytics platforms is used by companies like Procter & Gamble (P&G), Hindustan Unilever (HUL), Cadbury, Disney, MakeMyTrip, Ola Cabs, Snapdeal, Puma, Amnesty International and a lot more. Businesses pay annual or biannual subscription plus usage fee based on success. Valarie claims that compared to Facebook, ZipDial drives between 2-5 times more engagements across all customers and in a time period that is at least twice as fast.

"Cafe Coffee Day is an example of a retail customer that we work with. They have done campaigns where they are promoting a coupon opportunity and users ZipDial to earn coupons and those are then redeemed when the person walks into the Cafe Coffee Day outlet. We have also looped in a feedback survey where consumers can rate their experience at Cafe Coffee Day by Zip Dialling for happy or unhappy," Wagoner says.

In April 2011 the venture raised Rs 3.6 crore in funding laid by Mumbai Angels. This maiden brand also saw participation from Blume Ventures and the partners at AngelPrime. In December 2012 Silicon Valley based incubator cum seed fund 500 startups invested another Rs 2.5 crore. The funds were used to scale up and get the wheels turning on international expansion plan. Times Internet is the latest investor in the venture.

"The ZipDial has created engagement for 100 percent of consumers. So compared to something like QR codes which is limited to smart phone users or even SMS which fewer than half of Indian mobile phone owners like to send or know how to send. Zip Dialling is a 100 percent accessible interaction. So we see fantastic results like makemytrip.com increasing their feedback responses from less than 0.5 percent to more than 10 percent," Wagoner says

With revenues of Rs 5.5 crore in just first year of operations Wagoner and team at ZipDial seemed to be dancing all the way to the bank. Wagoner is now looking to leverage ZipDial's relationship with its global brands to expand across countries in Asia and Africa. Not only is ZipDial creating value for large brands but it is also helping Small and Medium Enterprises (SME) use mobile engagement and analytics for a starting package of Rs 1,000 a month. Wagoner claims this important segment will continue to scale up in India.

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SAIL to invest Rs 72,000 crore: CS Verma

State-run steel maker SAIL would invest Rs 72,000 crore to increase its overall capacity from 13.82 million tonnes to 23.46 million tonnes and enhance its iron ore production, company Chairman C S Verma said here today.

"A sum of Rs 72,000 crore is being invested to increase the overall capacity from 13.82 million tonnes to 23.46 million tonnes and we have already placed orders worth Rs 58,000 crore till January last," he said.

Out of Rs 72,000 crore, Rs 10,284 crore would be used for development of SAIL mines under Raw Material Division (RMD) to increase the production of iron ore. The RMD, which runs seven captive iron-more mines at Kiriburu, Meghahatuburu, Gua and Chiria in Jharkhand, and Bolani, Barsua and Kalta in Odisha, is working on the modernisation and capacity expansion of mines in the Eastern part of the country, Verma said. SAIL will invest Rs 10,284 crore for development of mines under RMD as well as Bhillai to cater to its increased iron-ore requirements, he said.

Of the total investment, he said, SAIL will pump in Rs 940 crore to increase the capacity of Kiriburu mines from 4.25 million tonnes per annum to 5.50 million tonnes per annum. Another Rs 900 crore will be invested on adjoining Meghahatuburu mines in West Singhbhum district of Jharkhand to increase capacity from 3 million tonnes per annum (MTPA) to 6.50 million tonnes per annum. Rs 1091 crore will be invested for enhancing the capacity of the Bolani Mines from 4 MTPA to 10 MTPA.

He said jobs for most of the packages of these projects have already been awarded and are likely to be completed by 2013-14. Besides, the mining in Gua Mines in West Singhbhum district, which remained closed since 2011, is likely to resume soon, Verma said. Gua Mine will be developed up to 10 MTPA capacity along with installation of beneficiation and pelletisation facilities with an investment of Rs 3,000 crore, Verma said after visiting Kiriburu and Meghahatuburu mine for the first time.

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Banking-licence norms same for all applicants: Takru

Speaking exclusively to CNBC-TV18's Aakansha Sethi, financial-services secretary Rajiv Takru said the government and the Reserve Bank of India are on the same page as far as the new banking-licence norms are concerned. He also reiterated that the new guidelines would ensure that banking-licences would be issued to deserving applicants and boost the banking-sector.

Commenting on the minimum capital requirement of Rs 500 crore, he said, "I think it is a good starting point from the earlier limit of Rs 300 crore. We will have to see how it pan out."

By allowed public sector undertakings (PSUs) to seek banking licences, Takru emphasises the creation of a level-playing field between PSUs and private sector companies. "Nobody has an edge. The same guidelines will be applicable to all parties seeking a banking-licence."

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Licence norms transparent about what RBI wants: AB Grp

Ajay Srinivasan, CEO, Financial Services, Aditya Birla Group feels that Reserve Bank of India is very transparent in terms of what their expectation were. It was after the RBI, issued the final guidelines for licensing of new private sector banks.

He supported RBI and said that from the beginning made it thsi clear that it was around financial inclusion .

Below is the verbatim transcript of his interview to CNBC-TV18

Q: On the plain reading of the guidelines put out by the Reserve Bank, are you in the race or out?

A: I think the guideline is actually a broad range of people to apply. It is not applying too many filters at the initial stage other than some broad criteria. So yes, at this point in time it looks like someone like us would be eligible to apply.

Q: In terms of the eligibility criteria and the obligations that the Reserve Bank will impose if you were to get a bank license do you believe that the obligations are too many or are they fair and it gives you a level playing field?

A: I think that's the way the guidelines are. They are very transparent in terms of what their expectations are. They have said from the beginning that this is really around financial inclusion.

I think, like it was mentioned just now, the RBI does believe that one wants widely held banks. They believe depositor interest is more important than just the shareholder interest. So, it is consistent with their thinking. It is consistent with what they have been talking about in the guidelines. If one wants to apply, the n they have to apply under those conditions.

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Arch rivals Infosys, TCS to work together on govt contract

It's the clash of the titans. Last year, India's top two IT companies , TCS and Infosys came face to face for a government IT contract. MCA 21, which was finally bagged by Infosys, but in a dramatic turn of events this year, all's not well with the project. It is prompting Infosys to go on the defensive side, reports CNBC-TV18's Kritika Saxena.

Undercurrents of rivalry between Infosys and TCS have never been a big secret, but the face-off has now reached another level. It was a sixand a half year IT contract to develop and maintain MCA 21. A portal launched by the ministry of corporate affairs in 2006, which is the main platform for cos to submit documents and filings to the Registrar of Companies.

TCS was handling this contract since 2006, but the contract was given to Infosys after TCS's contract expired in December 2012. Around January, TCS completed the official handover to Infosys, but the site ran into severe technical glitches post the handover. This created a panic situation at MCA prompting the ministry to bring in TCS as an external consultant for the contract. This essentially means that TCS will have to work with Infosys in sorting out the issue.

The ministry has jumped in to ensure corporate using the portal face minimum inconvenience. Sachin Pilot, Corporate Affairs Minister said, "Issues were caused due to transition. The website is now almost back to normal. If cos loses time, no extra money will be charged."

However, Infosys has been quick to retort with a statement, rubbishing allegations of negligence at its end.

Till date Infosys has made no significant changes to the system, which continues to run in the old environment. That is managed by the incumbent vendor, Tata Communications. Infosys gave a statement that any reports that imply that the instability in the MCA 21 applications is on account of their negligence are misguided.

V Balakrishan, Head, Infosys BPO, Bangalore said,  "This is a complex project, whenever there is a transition happens one will see some challenges. I think it's a great project and we are working with the ministry closely to address all the challenges".

Even though Infosys's statement has raised eye brows, TCS however remains tight lipped. As per policy, it did not officially comment on the contract.

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Jet Airways falls 5% on concerns over Etihad deal

Moneycontrol Bureau

Shares of Jet Airways fell over 5 percent to Rs 538.85 after news reports stated that its stake sale deal with Etihad Airways could be in jeopardy.

CNBC-TV18 has reported quoting sources that Etihad has requested for an option to increase its stake to 49%, if Jet promoters plan to exit in future. Naresh Goyal, chairman Jet, is not keen to include this clause in the share purchase agreement. Also, Eithad is keen to have four members on Jet's Board, which is again not gone well with Jet Air.

This has heightened Etihad's concerns regarding the deal.

Sources indicate that promoters and senior management of Jet Air are currently in Abu Dhabi to conduct and conclude negotiations. Sources also inform that the Indian government may also intervene to finalise the deal.

Promoters through Tail Winds hold 79.99 percent stake in the company as of December 31, 2012.

Also Read
Jet Air seat sale at Rs 2250: Will it trigger fare war?
Jet engineers on 'go-slow' mode, force flight cancellations

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Gujarat Gas up over 3% on good numbers in Q3

Natural gas distributor Gujarat Gas Company gained more than 3 percent in early trade on Friday after good set of numbers in the fourth quarter.

Consolidated net profit jumped nearly 3 times year-on-year to Rs 70 crore in the quarter ending December 2012 while net sales increased 18 percent YoY to Rs 756.5 crore during the quarter.

The total volume of gas sold during the quarter was 270 mmscm compared to 314 mmscm in the corresponding quarter of previous year. Meanwhile, total volume of gas sold stood at 1,157 mmscm in the year 2012, down compared to 1,246 mmscm in previous year.
 
In October, the company's majority shareholder, BG Asia Pacific Holdings Pte Limited signed a share purchase agreement with GSPC Distribution Networks for sale of its entire shareholding in the company.

In the year 2012, Gujarat Gas received the authorisation from the Petroleum and Natural Gas Regulatory Board for the city gas distribution areas of Surat, Bharuch and Ankleshwar.

Sugata Sircar, MD of the company said, "Company's distribution network has been extended by laying 59 km of additional steel pipelines in 2012. 8 new CNG stations were commissioned, about 34,600 residences have been connected and more than 23,400 vehicles converted to CNG during the year."

Consolidated net sales increased to Rs 3,066.9 crore in 2012 from Rs 2,381.9 crore in previous year while profit after tax went up to Rs 288.5 crore from Rs 2,748 crore during the same period.
 
At 10:31 hours IST, share moved up 1.91 percent to Rs 295.65 on Bombay Stock Exchange.

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ABB down for 2nd day on Merrill Lynch report after Q4 nos

Shares of ABB - the leader in power and automation technologies - hit a new 52-week low of Rs 558.10 (down more than 4 percent) on Friday as  research firm Bank of America Merrill Lynch put up an underperform rating on the stock.

Merrill Lynch also cut its target price to Rs 500 for the stock. "ABB is the most expensive capital goods stock in India, supported mainly by limited float and hope of a minority buyout," the firm reasoned.

The stock fell for the second consecutive session today. On Thursday, it was down 4.5 percent after its profit dropped 73.8 percent year-on-year to Rs 16.8 crore in the quarter ending December 2012.

Even net sales went down by 5.4 percent to Rs 2,052.8 crore from Rs 2,169.6 crore during the same period. Other income fell quite sharply to Rs 2.8 crore from Rs 27 crore YoY.

"Our products businesses delivered improved profitability. However, project businesses faced several challenges due to anticipated cost overrun mainly caused by project delays on account of external factors," ABB explained.

The company also disheartened by its operating performance. Earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 14.4 percent YoY to Rs 66.6 crore in the quarter ending December 2012. EBITDA margin dropped 40 basis points year-on-year to 3.2 percent in the fourth quarter.

At 10:43 hours IST, shares slipped 2.6 percent to Rs 568.15 on Bombay Stock Exchange.

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Rail Budget: Railways to launch 100 trains

Railways are planning to introduce about 100 trains, including AC double deckers, new passenger services and extension of services to cater to the demands of various states in the Rail Budget 2013-14.

As far as rolling stock programme is concerned, the announcement will be made for manufacturing of 4200 new coaches including 600 LHB coaches in the Rail Budget. While provision for manufacturing of 670 new locomotives including 20 LNG locos will be made, the budget will also account for manufacturing of about 16,000 new wagons.

"The focus of the Rail Budget this year is on providing more amenities to passengers. Attempts have been made to cater to the demands of all regions including Northeast as there were representations for new trains from various states," sources in Railway Ministry said.

While services of some express trains have been extended, frequency of certain popular trains have also been increased keeping the demand of people's representatives in mind. "About 100 new trains will be announced in the budget," the sources said. Last year, Railways had announced launching of 175 trains including passenger services.

Maintaining cleanliness and hygiene in trains and stations, providing quality linen, upgradation of fire-fighting arrangements and new facilities for differently abled persons are some of the measures likely to be announced by Railway Minister Pawan Kumar Bansal in his maiden budget speech on February 26. The proposal to provide braille stickers inside coaches for assisting visually impaired passengers are among the measures likely to be announced by Bansal.

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Videocon soars 18% as ONGC eyeing Mozambique gas field

Shares of Videocon Industries rallied as much as 18 percent in early trade on Thursday as state-owned oil & gas producer ONGC is in talks to buy the company's stake in Mozambique gas field.

ONGC plans to ship the fuel in its liquid form (LNG) to a proposed LNG terminal at Mangalore. ONGC Videsh, the overseas arm of the state explorer, and Oil India (OIL) are together negotiating for the stake for which Videocon is reportedly seeking at least USD 3 billion, according to sources privy to the development said. 

OVL-OIL combine, however, find Videocon's asking price too high and are in the processing of doing a due diligence. Sources said ONGC is taking OIL along for acquisition of Videocon's 10 percent stake in Offshore Area 1 in Rovuma basin field and feels OIL alone will not be able to buy the stake. 

Bharat Petroleum Corp  (BPCL) also holds 10 per cent stake in the block, which may hold as much as 70 Trillion cubic feet of gas reserves. 

Global energy giants like Royal Dutch Shell, BP Plc, ExxonMobil, Spain's Repsol and China's Sinopec also have found Videocon's asking price too high. 

The gas found in Offshore Area 1 is to be turned into liquefied natural gas (LNG) and shipped to markets like India. The plant in the Cabo Delgado province in northern Mozambique, is scheduled to start operating in 2018 with a capacity of 20 million tonnes of LNG per year. 

The capacity will be split evenly between operators of Offshore Area-1 and Italian giant Eni, which is developing gas found in the neighbouring Offshore Area 4. 

ONGC is looking at importing LNG from Mozambique at the proposed import facility at Mangalore in Karnataka.

"We will be signing a MoU with BPCL for looking into the feasibility of setting up the LNG terminal at Mangalore," ONGC Chairman and Managing Director Sudhir Vasudeva told reporters. 

At 09:36 hours IST, shares rose 7.57 percent to Rs 206.80 amid high volumes on Bombay Stock Exchange. It also hit a high of Rs 226.95 in early trade.

(With inputs from PTI)

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Expect Budget to give wings to renewable energy: Suzlon

If India has to achieve its target of increasing new and renewable energy to 15 percent by 2020 under the Prime Minister's Climate Change Action Plan, then the Finance Minister must provide good thrust to wind energy sector in the Budget, Tulsi Tanti, Chairman, Suzlon Energy  told CNBC TV18.

"We are expecting positive news in the Budget which will support the renewables and also some good package for the wind industries," Tanti said adding that currently the sector is not really moving in a right direction and hence administrative support is extremely important.

Tanti pointed that Indian market almost collapsed in the current financial year due to several domestic and global factors. The Union Budget needs to provide support to industries and markets in general to bring forth much needed revival.

The renewable energy sector has become extremely competitive. Tanti, however believes that positive policy framework in countries like US and China will support the industry going forward in 2014-15.

Debt woes

Suzlon has been suffering due to high indebtness since sometime now. The company was referred to corporate debt restructuring (CDR) after it defaulted on payment of foreign currency convertible bonds (FCCBs) worth USD 221 million. The company's loans has been restructured to the tune of Rs 9500 crore, giving it two year holiday from interest payments.

Tanti said that good mechanisms and banking system in India is giving support to Suzlon's corporate debt restructuring and it will also help the company to take care of its FCCB bond holders.

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UK's Balfour Beatty keen on developing business in India

UK-based leading infrastructure Group Balfour Beatty today said it is keen on developing its business in India and is looking at participating in the feasibility study of the proposed Mumbai-Bangalore industrial corridor.

"We are keen to develop our business in India and sort of things we do in infrastructure. We will certainly give some inputs into the feasibility study of the proposed Mumbai- Bangalore industrial corridor," Balfour Beatty Chief Executive Ian P Tyler told PTI here.

Prime Minister Manmohan Singh, while addressing a joint press conference with his British counterpart David Cameron, today said officials have been asked to explore UK's participation in a possible industrial corridor in the Mumbai-Bangalore sector. Cameron is heading a biggest-ever business delegation to India.

"The UK and India are keen to support that initiative. So, the UK industry can apply directly in terms of how we can assist in building infrastructure development," Tyler said. Tyler also said the company is developing its business in India and is "looking to play a more significant role with Tata projects to start looking at areas we might operate." On its proposed investments in projects here, he said, "We will invest what we need to invest to see business develops right."

He added that the Indian market is huge and there are lot opportunities. The Group's subsidiary Balfour Beatty India has already inked a pact with Tata Group's infrastructure arm Tata Projects (TPL) to collaborate on emerging opportunities in India and sub-Saharan Africa with initial focus on power generation, transmission, railways, mining, and water and waste water segments.

TPL is one of the reputed construction firms and is executing engineering, procurement and construction of some of the largest coal-based power plants, blast furnaces, among others, in the country.

Balfour Beatty, a world-class infrastructure group with capabilities in professional services, construction services, works in the UK, continental Europe, the US, South-East Asia, Australia and the Middle East.

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Sonata Software up 10% after big block deal worth Rs 16 cr

Sonata Software gained as much as 10 percent on Wednesday after more than 6 percent equity (63,58,371 shares) changed hands at Rs 24.85 a share on the Bombay Stock Exchange. The block deal was worth Rs 15.8 crore.

Promoters hold 37.8 percent stake in the company as on December 31, 2012. Meanwhile, other than promoters like Orange Mauritius Investments hold 4.24 percent stake and Teen Lok Advisory Services Pvt Ltd 1.9 percent.

Excelsior Construction Company Pvt Ltd and Srikar P Reddy have more than 1 percent holding in the company.

At 09:25 hours IST, shares rose 7.65 percent to Rs 26.75 on BSE.
 
In the previous trading session (Tuesday), the stock went up 2.47 percent to close at Rs 24.85. Market capitalisation of the company currently stands at Rs 281.30 crore.

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Jaiprakash Power Ventures drops 7% on QIP issue launch

Jaiprakash Power Ventures , a subsidiary of Jaiprakash Associates, fell nearly 7 percent in early trade on Wednesday after the company decided  launched its qualified institutional placement (QIP) issue of Rs 3,500 crore on Tuesday.

The company has set floor price for the QIP issue at Rs 31.93 per share, which was at a discount of 2.8 percent to the price of Rs 32.85 as on February 19.

At 10:16 hours IST, shares declined 6.7 percent to Rs 30.65 on Bombay Stock Exchange.

Trading volumes rose by 21.41 percent to 4,74,544 equity shares as against five-day average of 3,90,873 shares.

Market capitalisation of the company currently stands at Rs 8,044.88 crore.

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Will formulate transparent penalty system soon: CCI

Cracking the whip on DLF and the BCCI, probing cartelisation among oil marketing companies and clearing high-profile M&A deals - the past few months have been eventful at the Competition Commission Of India (CCI). CCI chairman Ashok Chawla discusses, on CNBC-TV18, some of the key decisions taken by the watchdog and adds that the commission has decided to establish a system to ensure a transparent set of guidelines and penalties.

Below is the edited transcript of the interview on CNBC-TV18

Q: The United Spirits Limited (USL)-Diageo deal, which has received the final observation from the Securities and Exchange Board of India (SEBI) awaits the nod from the Competition Commission of India (CCI). Can you give an update on the status of the USL-Diageo deal?

A: Today was the last date for the receipt of replies from USL and Diageo to queries raised by the CCI. I don't think after that it should take us very long to arrive at a decision.

Q: Where do you stand on the issue of cartelisation as far as oil marketing companies are concerned? The sector continues to be regulated by the government which has allowed a degree of freedom in pricing. But where really does the question of caretlisation arise if the OMCs don't even have the freedom to price?

A: We asked this question to the government sometime ago. The ministry of petroleum replied that it has no role to play regarding the pricing of petrol and it is decided by the oil companies. So, we are to issue an order calling for a probe to investigate if oil companies are forming a cartel to maintain similar prices for similar amounts of petrol.

Regarding diesel, the government has admitted that it has not fully deregulated the pricing. And this requires decision at the levels of the government and our advocacy efforts are on. However, the policy is not fully open and transparent.

Q: When will you issue that order?

A: The commission has already decided and is in the process of finalising an order which should be issued in a few days.

Q: The CCI has established the abuse of position and grave conflict of interest at the Board Of Control For Cricket In India (BCCI). Why did the CCI impose a penalty of only 6 percent and not the permissible limit of 10 percent?

A: I think the order and penalty of 6 percent indicates the significance of BCCI's contribution towards the development of cricket.

Q: There have been allegations that there was a lack of transparency in the process of how the BCCI's penalty was arrived at. What is your opinion?

A: We have taken a conscious decision to build on some more cases before establishing an architecture that will ensure transparency in the broad principles or guidelines for imposition of penalty.

Q: In response to the buyer guidelines issued after the DLF order, the DLF buyers-association has filed yet another complaint with the CCI which you have declined to address. What do these guidelines really mean and do they amount to anything at all?

A: Technically and legally, that was in relation to a specific case of DLF found to be abusing its dominance and the penalty was imposed accordingly. Later the agreement was modified and a separate order was issued in January.

Now that order is under litigation. I have mentioned separately and in the public domain, that while this is an agreement which will have to go through the process of judicial appraisal and final approval, it is fair and balanced and an agreement which builders, developers and consumers would do well to follow.

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Hotel Leela surges 15% on sale of IT park building

Hotel Leela Venture rallied as much as 15 percent in early trade on Tuesday as the company sold its IT park building in Chennai.

The board of directors of Hotel Leela approved sale of company's IT park building in Chennai to Reliance Industries (RIL).

On Monday, Hotel Leela executed an agreement for sale with RIL to sell the above said property for a consideration of Rs 170.17 crore, according to its release sent to exchanges.

Earlier in an interview with CNBC-TV18 (after third quarter results), Vivek Nair, vice chairman & MD, Hotel Leela had said the company had plans to reduce debt by Rs 2,750 crore in near future.

At 09:32 hours IST, shares rose 9.37 percent to Rs 26.85 on Bombay Stock Exchange. Even its trading volumes jumped 10 times to 2,51,803 equity shares as against five day average of 24,958 shares.

Earlier, on February 7 the board of directors of Hotel Leela approved corporate debt restructuring scheme.

The company posted a net loss of Rs 97 crore in the third quarter of FY13 as against loss of Rs 99.6 crore in a year ago period. Meanwhile, net sales rose 15 percent year-on-year to Rs 182.8 crore during the same quarter.

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Nomura cuts GSK Consumer to 'reduce' on high valuations

Moneycontrol Bureau

Nomura Financial Advisory and Securities India has downgraded GlaxoSmithKline Consumer Healthcare to "reduce" from "buy" citing high valuations, although it still feels the malted drinks maker will continue to deliver 20 percent earnings growth.

GSK Consumer shares were up 0.5 percent at Rs 3,798 on NSE in morning trade on Tuesday.

"We believe GSK Consumer will still deliver 20 percent profit growth in the next couple of years. However, at 30.7 times calendar 2013 EPS (earnings per share) forecast, it trades at a significant premium to its three-year average of 25 times," Nomura analysts Manish Jain and Anup Sudhendranath said.

London-headquartered parent GlaxoSmithKline Plc last month completed an open offer to pick up additional stake in GSK Consumer. Post the open offer made at Rs 3,900 a share, the global pharma major hiked its stake in the company to 72.46 percent from 43.16 percent.

Based on calendar 2014 EPS expectations, the maker of Horlicks and Boost trades at 25.4 times valuations, compared with the sector average of 23.9 times FY15 EPS forecast, the analysts noted.

"We believe the valuation has run ahead of the earnings growth potential due to the possibility of a delisting at some point in the future," Jain and Sudhendranath said.

The analysts prefer Jubilant Foodworks at current valuations, and expect the operator of Domino's and Dunkin Donuts fast food chains in India to clock a significantly higher 37 percent growth in earnings over the next couple of years.

The Nomura analysts also have a "relative preference" for Nestle India, citing a diverse portfolio mix and hence a lower risk profile.

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Sharp fall in Q2 profits takes Geodesic to 52-week low

Geodesic touched a new 52-week low of Rs 13.25 and was locked at 5 percent lower circuit on Monday after it reported sharp fall in its second quarter profits.

On a consolidated basis, net profit of the company fell by 73 percent quarter-on-quarter to Rs 9.8 crore in second quarter of financial year 2012-13 while net sales rose by 31 percent QoQ to Rs 222.3 crore during the quarter.

According to a press release, the company has written off a sum of Rs 25 crore towards bad and doubtful debts in the October-December quarter.

However, increase in sales was attributed to reduction in inventory and expansion across various industry segments.

"We are in talks with the bondholders and is currently working on consolidating its subsidiaries and accounts to ensure faster redemption of the foreign currency convertible bonds," the company said.

At 09:43 hours IST, there were pending sell orders of 55,430 shares, with no buyers available.
 
The stock has been fallen 29.5 percent in eight consecutive sessions since February 7, 2013.

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45 paise/L diesel hike to cut BPCL, ONGC losses

The government had said last month it would allow fuel retailers to raise the price of subsidised diesel by 40-50 paise a litre every month and asked bulk buyers to pay market rates.

Now, major oil marketing companies have hiked fuel prices, which should be encouraging for the market.

Also read: IOC raises petrol price by Rs 1.50/l, diesel by 45 paise/ l

RK Singh, chairman, Bharat Petroleum Corporation Ltd ( BPCL ) in an interview to CNBC-TV18 said fuel price hike was not an independent decision but a Cabinet decision. "We have been communicated in clear terms that diesel prices can be raised by 40-50 paise per month, until further orders, to reduce the under-recoveries in a phased manner," he added.

He applauded this decision, which would not only help under-recoveries but also save put consumers from hardships.

RS Sharma, former CMD, Oil & Natural Gas Corporation ( ONGC ) also applauded this decision. He said, "I see a very distinct change in the functioning of petroleum ministry and I find decisions getting taken, which is a very positive sign."

Below is the verbatim transcript of their interview on CNBC-TV18

Q: You have managed that fuel price hike. Was the decision taken independently this time or did you finally have to get a green signal from the government?

Singh: We have been communicated in clear terms that diesel prices can be raised by 40-50 paise per month, until further orders, to reduce the under-recoveries in a phased manner. This was, in my opinion, a great decision by the government of India not to burden the consumer and at the same time reduce the under-recoveries in a phased manner, so that the government burden, oil companies' burden is lessened to that extent. At the same time consumers are not put to hardships. This was the decision conveyed to us. It was a cabinet decision and we are going ahead with that.

Q: You have got two price hikes in diesel under your belt, you think you will be able to move in March as well or because of some state elections is there an instruction that in March you maybe asked to hold back?

Singh: I am not aware of any such instruction from the government. But let us wait and see. Let us not assume what will happen one month from now.

Q: So two hikes now-- 45 paise each on diesel, where does that still keep your under-recoveries at?

Singh: Diesel prices have also gone up as is the case with crude. Crude, which used to hover around USD 112-113 per barrel, has now moved to USD 118-119 per barrel. The exchange rate has worsened further and diesel prices itself have gone up. Therefore, the under-recovery in diesel which used to be Rs 9 per litre and some paise has jumped to close to Rs 11 per ltire. So, with this reduction by 45 paise, the under-recovery has come down to the level of close to Rs 10 per litre.

Q: There is some concern around the petrol prices though, there has been a huge surge in international prices since January, does the Rs 1.50 hike adequately cover you or are you still making some losses there?

Singh: This was the under-recovery till February 15. So when we hiked the price on February 15 midnight, the under-recovery amount was Rs 1.50 that is what we raised. But you are right, petrol prices now have gone up further and the current under-recovery is about Rs 3. But we will have to see how it behaves in the next 15 days time.

Therefore, next month we will have to take a view as to what is the average under-recovery and then accordingly we will decide whether to raise the price or reduce the price because it can work either way. The prices may go down also. We cannot raise the prices of petrol based on 1-2 days quote. We will have to wait for minimum 15 days.

Q: You have been hearing what the oil marketing companies (OMCs) version is and you have gone through this whole process over a multiyear period, having seen two diesel price hikes are you now getting more hopeful that this will happen for the remaining months of the year as well or do you think state elections will come in the way?

Sharma: One thing is very clear that I see a very distinct change in the functioning of the petroleum ministry and I find decisions getting taken and I feel that is a very positive sign. I have been all along lobbying for this kind of the mechanism that the prices keep getting aligned on a dynamic basis on regular basis rather than in an ad-hoc manner after six months or after one year, and then there is a strong reaction.

The way this mechanism has been put in place, I am extremely happy. The whole mechanism balances the burden of all stakeholders. Let us see in course of time, moving forward if the same adjustments are allowed to be done, I feel that is going to be very positive for the economy, for these companies, for the industry.

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DLF rises 2% on CLSA outperform report

Real estate major DLF rose more than 2 percent in early trade on Monday after brokerage houses upgraded the stock despite weak performance in third quarter.

CLSA has upgraded the stock to outperform rating with a raised target price of Rs 280. "The upgrade comes on the back of prospects of further debt reduction through equity raising and an improvement in cash-flows," CLSA reasoned.

Other research house HSBC retained overweight rating on the stock with unchanged target price of Rs 318, citing big ticket launches are the next catalyst.

"While Q3 will act as a near term overhang (management did not issue any profit warning), we remain positive on its business restructuring (new launches + debt reduction)," HSBC said.

JP Morgan stays overweight on DLF

Real estate developer reported third quarter net profit at Rs 285 crore, which include Rs 840 crore from the sale of Jawala Real Estate (which owning the NTC Mumbai land). After adjusting for this, the company posted a loss of Rs 550 crore.

At 10:26 hours IST, shares went up 2.09 percent to Rs 254 on Bombay Stock Exchange.

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RBI not to allow MFIs to charge interest of more than 26%

The Reserve Bank of India (RBI) today said micro-finance institutions (MFIs) cannot charge interest rate of more than 26 percent. "Charging more than 26 percent is exploitation. If you are not exploiting a person, then it is a reasonable rate. So, the RBI has fixed the rate at 26 percent," Deputy Governor of RBI K C Chakrabarty said here.

"MFIs are basically relevant because the banking system in the country is inefficient. The MFIs will be relevant for the next 10 to 20 years," he said at a seminar on MFIs organised by Indian Chamber of Commerce here.

Chakrabarty advised MFIs not to scale up their operations without understanding their limitations. He said MFIs should extend loans for income generating activities and not for consumption purposes. They should also focus on the credit-worthiness of borrowers, he said.

The RBI official also ruled out raising of margin cap (the difference between income earned by MFIs and cost of borrowings) from 10 percent to 12 percent. He said inefficient MFIs should not be in the system as they had the potential to bring in a financial crisis.

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Sistema Shyam says SC order will not impact its operations

Sistema Shyam Teleservices (SSTL), which operates under the brand name MTS, today said the Supreme Court order for telecom firms which were unsuccessful and did not participate in the 2G spectrum auction process to cease operations, does not impact it.

The apex court yesterday said the "entire" licenses quashed by it for 2G spectrum be auctioned without "further delay" and those telecom companies which were unsuccessful and did not participate in the auction process held in November 2012 will cease to operate "forthwith".

In a statement, an SSTL spokesperson said: "The Honourable Supreme Court's order on February 15, 2013 does not impact the company and any of its operations as it relates to telecom operators who had not participated in the spectrum auctions on November 12 and 14, 2012. The auctions done on the said dates was for the GSM spectrum (1800 Mhz)."

It added that "SSTL on the other hand being a pure play CDMA operator provides its telecom services using the 800 Mhz spectrum".

The CDMA spectrum auction was not conducted in November, 2012 as there were no bidders for it citing huge base price fixed for it.

SSTL did not participate in the auction as the company was awaiting decision of the apex court on its curative petition, which was pending for hearing at the time of auction. In the curative petition filed in May last year, the company had sought exemption from SC judgement of February 2, 2012 but it was rejected by the court on February 14, 2013.

The company has shown interest in participating in the spectrum auction scheduled for March. SSTL spokesperson said: "It may also be noted that the company had filed an application dated January 10, 2013 in the Supreme Court, saying that the company wants to continue its operations and intends to participate in upcoming auctions in March 2013. The Honourable Supreme Court is going to give a separate order on the same. The said order is awaited."

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KFA crisis: Is there a need to tighten rescheduling norms?

The final call on Kingfisher Airlines would be an important development for the economy and the banking sector. Banks have an exposure of Rs 7,800 crore to KFA. From the bankers' perspective, with an exposure of Rs 6000 crore in as early as 2010, which subsequently jumped to Rs 7800 crore, it was not an easy call to make as an account of this magnitude would be classified as non-performing assets (NPAs).

In an interview to CNBC-TV18 two banking stalwarts, AK Purwar, former chairman of State Bank of India (SBI) and RK Bakshi, retired executive director, Bank of Baroda share their view on the steps taken by banks and the Indian banking norms.

Below is the verbatim transcript of the discussion on CNBC-TV18

Q: Should bankers have taken this decision in 2010? Is it necessary that bankers should be more strict when a rescheduling is given because it does look like even the Reserve Bank of India (RBI) thinks that banks are happy rescheduling it?

Purwar: What was the total exposure of the banking system on Kingfisher? It was Rs 6000 crore plus. If one account of this magnitude goes into non-performing assets (NPAs) and going down the drain, banking system would take all possible steps to see to that this account gets restructured and may be revived. Unless they see that there is no chance of its revival, they would continue to feed it, continue to give oxygen to it, continue to see it revive.

Q: Can bankers, and that too 17 banks take an exposure of Rs 6000 crore and not go deeply into an industry which has not performed very well globally? Many bankers have told me that the group itself had some problems of repayment or some problems regarding the way it managed its finances, are Indian bankers less diligent?

Purwar: I would be the last person to agree to this statement. I believe that Indian bankers including public sector and private sector banks are as diligent as any other world class banks could be. We are very strict on diligence side.

Also Read: Uday Kotak: Growth vs inflation; we have to risk one

Q: Most foreigners who look at this case tell me that in any other country he would have died long ago. Is this true?

Purwar: I have worked abroad. I have seen what has happened throughout the world. In many countries such big exposes are not allowed to languish. Kingfisher is the third big airline of the country, after going out in the market and the impact it had on the customers, consumers is different and therefore every economy, every society, every country and those bankers who have told you, they have told you wrong. Every country tries to make sure that such companies survive unless they find there is just no way they can survive.

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Sanofi's case is different from Vodafone: Counsel

The Andhra Pradesh High Court (AP HC) today said that French drug giant Sanofi Aventis need not pay capital gain tax as demanded by Income Tax (I-T) department for acquisition of Shantha Biotech in 2009.

Porus Kaka, lead counsel of Sanofi told CNBC-TV18 that unlike the Vodafone case, their involves tax treaties and most of the company's investment comes from tax treaties. "When you have a tax treaty in focus and a country where you have signed an agreement with different considerations, it should apply and that's what the High Court has agreed with," adds Kaka.

Further, Kaka believes that finance minister is making efforts to try and rectify the wrongs that were brought in the last Budget with regards to the indirect transfer and the retrospective amendment.

"The court's judgment comes at an opportune time for him to take this process forward and ensure that these retrospectives are not applied across the board and certainly not applied in our treaty partners cases. It is very useful in the process what the FM has initiated and I hope it is carried to its logical conclusion and not undone again," adds Kaka.

Below is the verbatim transcript of Porus kaka's interview on CNBC-TV18

Q: Is the big takeaway, as far as this verdict is concerned, is that the Andhra Pradesh High Court has upheld the supremacy of the double tax avoidance agreement?

A: I think so. Unlike Vodafone, this is a case which involves tax treaty and we have 81 tax treaties and most of our investment does come through tax treaties. When you have a tax treaty in focus and a country where you have signed an agreement with different considerations, it should apply and that's what the High Court has agreed with.

Also Read: Govt keen to settle with Vodafone, seeks mediator: Salve

Q: The court also said that it doesn't matter if we have the retrospective amendment which is law today, if you have a double taxation agreement (DTA) is the retrospective amendment not applicable?

A: That has always been our law in India. It is good to see the court applied it even in an context of a retrospective amendment that when there is a provision of a treaty which is signed that will have supremacy despite what your domestic law provides and that is a part of our statute also. So that is a good decision and will help us in this entire indirect transfer retrospective battle that is continuing year after year.

Q: It will put additional pressure on the Finance Minister (FM) to try and rectify the wrongs that were brought in the last Budget with regards to the indirect transfer and the retrospective amendment. Do you believe that we are perhaps closer to see those wrongs being corrected?

A: Yes, the FM is making his efforts. The court's judgment comes at an opportune time for him to take this process forward and ensure that these retrospectives are not applied across the board and certainly not applied in our treaty partners cases. So, it is very useful in the process what the FM has initiated and I hope it is carried to its logical conclusion and not undone again.

Q: The finance ministry will decide its next course of action and whether the IT department will move the Supreme Court or not in this matter. The decision will be taken in the next few days. But going back again to the Vodafone issue because again the IT department sources are stressing on the fact that don't confuse this transaction with the Vodafone transaction it is different. Is it as different as chalk and cheese?

A: I do believe there is a significant difference and ultimately this was a case where there was a whole interpretation of a tax treaty, no question of any third country being involved and therefore there are factual differences. There are some similarities on corporate structure but otherwise, factually, there are significant differences. Legally interpretation issues are vastly different.

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See no issues with diesel price hikes every month: BPCL

After Indian Oil Corp (IOC), the country's largest fuel retailer by sales hikes petrol price by Rs 1.50 paisa per litre and diesel prices by 45 paise per litre. Other oil companies are likely to announce another round of diesel price hike in a day or two. Speaking to CNBC-TV18 about the fuel hike, RK Singh, chairman and MD of Bharat Petroleum Corporation ( BPCL ) says "Clear decision from government to hike diesel on monthly basis, do not see difficulty in minor diesel hikes every month," adds Singh.

Also Read: IOC raises petrol price by Rs 1.50/l, diesel by 45 paise/l

Further, Singh mentions that there is very definite and clear decision about the periodicity of the hike as also the quantum of hike. This was not the case with petrol. Government has indicated that oil companies can raise the price between 40-50 paise per month. "I do not see ambiguity or need for any consultation but being a government company, informing the ministry becomes necessary. So, I don't rule that out but do not find any difficulty in implementing the hike in a day or two," Singh adds.

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'Vodafone-govt need to agree on terms, adopt give take'

Dutt Menon Dunmorrsett, partner at Anuradha Dutt and Vodafone counsel says that conciliation is formal manner of resolving issues and is not adversarial.

Anuradha Dutt adds that Vodafone has not started to think of the end-result and that it is too premature to discuss the steps that Vodafone will take

A resolution will involve some give-and-take, and both the parties have to agree to terms, Dutt told CNBC-TV18.

Below is the edited transcript of the interview on CNBC-TV18

Q: Vodafone sent a letter of conciliation to the finance ministry. Has the informal process of negotiation that you were involved in failed? What does the conciliatory process mean?

A: Nothing has failed. It was similar to the discussion between two people to arrive at an amicable resolution. Therefore conciliation is a method and is not an adversarial proceeding. In fact it is an informal manner of amicable resolution. So, Vodafone decided to try conciliation to arrive at an amicable resolution.

Q: Is the waiver of interest and penalty an acceptable solution for Vodafone? What is Vodafone's expectation from the conciliatory process?

A: I don't think Vodafone has really started to think about what would be the end-result of this amicable resolution. It is initiating the process on the premise of willing to consider a resolution and if the government agrees to this, there will be some give-and-take which is legally permissible. Whatever solution is arrived at Vodafone must find it legally enforceable. It is a little premature to discuss what Vodafone is willing to accept and what the government is willing to do at this moment.

Q: Can interest and penalty waiver, if that is part of the settlement, be effected via a circular or is an amendment in the IT Act necessary?

A: To my mind, a circular can be brought to offer relief to a situation which the Shome Committee has termed hard and unfair. What I have gathered in my interaction is that the tax office probably thinks that an amendment is necessary and a circular may not be the best procedure.

Q: Is May the earliest that an amendment is likely to be moved?

A: It needs to be seen if both parties agree to the terms and conditions. If it is not possible to reach an agreement, then the government will do what it as and Vodafone will do what it has to. If the government decides on prospective amendment or waiving the interest penalty, it will have to wait till May with the Budget around the corner. So, it may be in May.

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Budget 2013-14: Recapitalisation of banks must be ensured

By Dr Brinda Jagirdar,

Economist, State Bank of India (SBI)

The Budget 2013-14 is framed against the backdrop weak industrial growth, sticky inflation, concerns on fiscal deficit and widening current account deficit.  Since industry has grown only by 0.7 percent during FY13 so far (April-December), it will be quite a challenge to even touch the 2 percent growth projected by Central Statistical Office (CSO) for the financial year.

The slowdown in overall GDP growth is also impacting the business growth and asset quality of banks. So in my view, the first issue the Budget must address is reviving investment in the economy on a sustained basis. In particular, to enable the economy to achieve 8-10% GDP growth, the recent decline in domestic savings rate, especially in financial assets, needs to be reversed.

At a time when interest rates in the economy are softening, it will be a challenge to mobilise financial savings. The current trend of lukewarm growth in bank deposits is a matter of concern more so because bank deposits are getting pushed out and funds are flowing into the shadow banking system of Liquid Mutual Funds, Tax Free bonds by PSUs and so on. 

Perhaps, companies offering tax-free bonds should not be allowed to unfairly crowd out the retail market and there is no necessity of giving tax advantage to these large infrastructure companies as these entities have the financial strength and standing to raise funds directly from the market.

Instead, banks, provident funds and pension funds could be allowed this benefit of garnering tax free long term funds for investing in infrastructure, which would help promote a vibrant corporate debt market and incentivise infrastructure development. Therefore, the tax advantages flowing to non-banks, which affect deposit mobilisation by banks, may be re-examined in the present context.  

As we have to leverage our demographic dividend urgently, the Budget must focus education and incentivising capacity creation in this sector. Skill development must go hand in hand with education and manufacturing and all this must be done with a sense of purpose and urgency. 

Banks are already extending education loans and to improve recovery and further incentivise them, the UID may be made mandatory for borrowers availing education loan. Further, presently deduction under Section 80-C for payment of tuition fees up to Rs 1 lakh is allowed.

This may be raised by another Rs 1 lakh to cover repayment of principal amount, where the benefit has not already been taken under section 80C as tuition fee.

The third area I will emphasise is agriculture. Government is already providing interest subvention for crop loans, but this interest subvention may be extended to all term loans in agriculture.

Term loans help to add overall investment and therefore interest subvention will give a fillip to capital formation in the economy. India's banking sector has remained resilient in the face of the global economic crisis and has received praise from abroad as it has managed to weather the economic and financial storms raging globally.

A sound regulatory framework as well as strong systems and processes in banks have helped India's banks. Going forward, the Budget must ensure that adequate provision is made for recapitalisation of banks so that they are able to support India's growth in the years to come.

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DLF falls after Oct-Dec results fail to impress

Shares in DLF fell as much as 3.6 percent a day after India's largest listed real estate developer reported a net profit of Rs 2.85 billion, that missed market expectations.

DLF's Oct-Dec earnings include Rs 8.4 billion from the sale of Jawala Real Estate, the entity owning the NTC Mumbai land. Adjusting for this, DLF reported a loss of Rs 5.5 billion.

"Lower pre-sales and cost escalations led to a sharp fall in EBITDA margin from 36.6 percent to 6.6 percent quarter-on-quarter," Jefferies said in a note.

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Dr Reddys Labs drops 2.5% on Merrill Lynch downgrade report

Dr Reddy's Laboratories fell for the second consecutive session on Friday as the research firm Bank of America Merrill Lynch downgraded the stock to neutral with a target price of Rs 1,975 after dismal performance in the third quarter.

"A sharp deceleration to 13 percent in the US market sales is likely in FY14," Bank of America Merrill Lynch reasoned.

The company missed street expectations on Thursday as its consolidated net profit declined a higher-than-expected 29 percent year-on-year to Rs 363 crore in the third quarter. Analysts on average had expected the pharma major to report a net profit of Rs 428 crore on revenue of Rs 2,913 crore.

Operating profit margin plunged quite significantly to 15.8 percent from 27.2 percent and analysts expectation of 21 percent.

At 10:18 hours IST, shares slipped 2.4 percent to Rs 1,833 on Bombay Stock Exchange.

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Biocon shrs rise on insulin products deal with Mylan

Moneycontrol Bureau

Biocon shares rose 2 percent in morning trade on Thursday after the biotechnology company said it has enhanced its partnership with pharma major Mylan through a strategic collaboration for insulin products.

"It has entered into a definitive agreement with Mylan for an exclusive strategic collaboration for the global development and commercialization of generic versions of of its three insulin analog products," the Bangalore-based company said.

In March 2012, US drugmaker Pfizer had scrapped a deal to sell insulin products made by Biocon.

Also Read: Biocon, Mylan in deal for 3 bio-generic insulin drugs  

Mylan, under the terms of the pact, will have the rights to develop and market Biocon's Glargine (a generic version of Sanofi's Lantus), Lispro (generic version of Eli Lilly's Humalog) and Aspart (a copy of Novo Nordisk's NovoLog).

Mylan and Biocon will share development, capital and certain other costs to bring the products to market, it said.

Canonsburg, Pennsylvania headquartered Mylan will have exclusive commercialization rights in the US, Canada, Australia, New Zealand, European Union and the European Free Trade Association Countries through a profit share arrangement with Biocon.

It will have co-exclusive commercialization rights with Biocon in certain other markets around the world, Biocon said.

Post the break-up with Pfizer, this tie-up again provides a reasonably strong marketing partner for its insulin analogs across key regulated markets, according to a report by IDFC Securities.

At 10:00 hrs, Biocon shares were up 1.1 percent at Rs 287.50 on NSE.

Nachiket Kelkar
nachiket.kelkar@network18online.com  

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Biocon, Mylan in deal for 3 bio-generic insulin drugs

Biocon, a global biopharmaceutical enterprise, has entered into a strategic collaboration with Mylan to develop generic insulin products. 

As per the agreement, both companies will share development and other costs to bring these products to the market. The financial agreement mirrors earlier deal with Mylan.

Kiran Mazumdar, CMD, Biocon, in an interview to CNBC-TV18, says that from this deal the company will receive licencing fees from Mylan.

Also Read: Biocon shrs rise on insulin products deal with Mylan

Below is the edited transcript of his interview to CNBC-TV18.

Q: Could you brief us with some details of the agreement that your company signed with Mylan, in terms of milestone structure and profit sharing agreement reached between the two companies?

A: For Biocon, it is a significant deal and we are delighted to have Mylan as our partner for these programmes. The licensing arrangement is for three bio-generic insulin analogs, namely Glargine, Lispro and Aspart.

I cannot share details of our financials of this program, they are mirror to what we have done with Mylan in our previous biosimilar biologics portfolio. This is a code development deal where Mylan and Biocon will share development cost for bringing these products to the market. Mylan will also contribute towards capex on the ongoing project that we have in Malaysia and our company will receive licensing fees for these programmes.

Q: Without mentioning any numbers, could you tell us if there could be any milestone payments on this deal and what stage of development are these products that you are talking about in the geographies that you could potentially be launching?

A: It is not structured along milestone payment deal, but Glargine has completed Phase I Pharmacokinetics and Pharmacodynamics (PK/PD) studies and it is all set to enter Phase III. Lispro and Aspart are also set to enter the clinic very soon. These programmes are on track to tap the market opportunity of about USD 11.5 billion that is present for these programmes currently.

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Maruti Suzuki drops over 3% ahead of exclusion from MSCI

Country's largest car maker Maruti Suzuki fell more than 3 percent in early trade on Thursday. The stock will be excluded from the MSCI India index, index provider said in a statement on Wednesday after completing its February index review.

The changes will take place of the close of trade on February 28, MSCI added.
 
At 10:27 hours IST, shares lost 2.94 percent to Rs 1,490.20 on Bombay Stock Exchange.

In the previous trading session too, the stock fell 1.48 percent to close at Rs 1,535.40. Shares tanked 9 percent in six consecutive sessions while declined 3 percent in last one month.

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Focus on recoveries, may look to LIC for capital: IOB's CMD

Saikat Das
moneycontrol.com

Rising pile of non-performing assets coupled with low base of equity capital has cramped growth for state-owned Indian Overseas Bank . Not surprisingly, investors have been could-shouldering the stock for a while now. Over the last year, IOB shares shrank nearly 23% as against a rise of about 18% in the Bankex, the broader index for banking stocks.

The bank however is optimistic of attaining recoveries (including upgradation) of Rs 2,000 crore by March-end as compared with Rs 1,100 crore recorded as on December 31, 2012.

"Our target is to take recoveries to 2000 crore by March end. We are purposefully moderating the credit growth. We are primarily intending to diversify the credit growth and keen on working capital loans mostly. We are not looking for large corporate lending now," M Narendra, chairman & managing director, IOB told moneycontrol.com in an interview.

Currently, the lender's tier - I capital stood at 7.33%, perhaps the second lowest in the industry after the Central Bank of India (at around 7%). It has just got an infusion of Rs 1,000 crore from the government, its major stake holder.

According to Narendra, after this capital injection its total capital adequacy ratio will be more than 12% versus 11.60% currently. In case of any further shortfall in capital, Life Insurance Corporate may pump in equity capital.

Here is an edited excerpt of the interview:

Q.  Following RBI's policy rate cut, you only enhanced the loan limit from Rs 30 lakh to Rs 75 lakh. When will you reduce the base rate?

A. The timing of reduction of base will have to be examined. We will have a full discussion on that. Currently, we have given substantial other benefits to the productive segments. Even repo or CRR cut is meant to ensure that there will be enough support to productive sectors of the economy.

We will take a little more leverage in cutting our base rate when our cost of deposit gets reduced and bulk deposit rates are matured and later to be taken at a lower rate. By April 01, we will definitely look at that (cutting base rate). But until now, we will look at giving more benefits across the sectors.

Our bank is now offering home loans upto Rs 75 lakh at 10.50%.  We are giving vehicle loans at 11%, loan against jewelry at 12% and SME credit at a maximum of 12%. The whole idea is that customers particularly from the priority sector are benefited.

Q. Your deposit growth has been muted (11% y-o-y) compared to your loan growth (19%). Do you have enough resources to sustain the credit growth?

A. Recently, we have raised USD 500 million from the overseas market. That will facilitate my lending in the international market.

As far as domestic market is concerned, we have enough sources of refinance. Then, we have excess statutory liquidity ratio (SLR) to the tune of 5-6% (total at 28-29%). Using that, we can borrow from RBI. We would like to utilize our current resources of deposits, CASA and all others to the fullest extent. We don't have any short term liquidity mismatch.

We have moved our overall global credit deposit (CD) ratio to 84% from 81% earlier. That gives a leverage of good profitable deployment of funds. We are not unduly worried much.

Q. What net interest margin (NIM) are you aiming at?

A. We are purposefully reducing the share of bulk deposits. It is at 21% as against 34% in the previous quarter. We are planning to reduce it to 15%. This will help improve my net interest margin. We are very comfortable on liquidity front.

If I do not reduce my base rate, my NIM will move back to 2.65%. If I bring down my base rate by 25 bps, it will be around 2.58%.

Q. How would be the composition of your credit book going forward?

A. Today, we are not so aggressive on credit growth. We are purposefully moderating the credit growth. Our credit growth is a little better in the international market while the domestic credit is better than the industry average.

In October-December quarter, large corporate loans grew only 7.5% y-o-y. However, retail credit expanded 30% during the same time. We are primarily intending to diversify the credit growth and look for more working capital loans.

We are not looking for large corporate long term lending now. Under the present circumstances, the share of large corporates lending would be around 35%. However, it may change if there is any improvement in the economy.

Q. Do you see any uptick in infrastructure sector?

A. In the last one year, the road sector has seen a better growth. Compared to the power sector, the requirement in road sector is working capital mostly. It is not on term loan. A few projects have been currently given in the infrastructure road sector.

Q. On non-performing asset (NPA) front do you expect any ugly surprise?

A. There may be some cases for CDR referral. But, quite a lot of sectors are still in difficulty. They are not getting right time payments or infrastructure. There contracts are not getting materialized. This is mostly on mid corporate segment.  Sector-wise problems have to be tackled individually.

We have enough internal limits for each sector that we lend. In fact, Infrastructure cap is around 12%. All other sectors are less than 3%. We are not surpassing any internal limit.

Q. What is the progress on recovery of bad loans?

A. So far in 2012-13, we have recovered (including upgradation) around 1100 crore. Our target is to reach Rs 2000 crore by March end. We are fully focused into it. During third quarter, we had Rs 119 crore cash recovery while 166 crore came from upgradation of loan accounts. Additionally, we recovered around 325 crore from the written off accounts.

Q. You got capital infusion of Rs 1000 crore. How are you placed to meet basel III capital requirement norms?

A. Your tier I requirement comes down under Basel III norms. Tier I in basel II is 8% while tier I in basel III is not more than 6.5%, even for RBI. To that extent, we are comfortable.

If there is any short fall, I will look to LIC for equity infusion. After this Rs 1000 crore infusion, capital adequacy ratio will be more than 12%. However, we have to see the cumulative plough back of profit. The government has also promised that they will give further capital as and when they are surplus.

Q. What is your expectation from Budget 2013?

A. There are quite a lot of suggestions. Our finance minister is serious in bring back the required reforms.

Firstly, we expect the government to allow banks going for long term bonds with a little tax break so that the future provision for infrastructure loans become better from our funding angle. Secondly, there should be lock-in period for deposits proposed for the tenure of 3-5 years in line with mutual fund industry. Thirdly, there are also proposals for tax benefits to banks for writing off loans. We look forward to all those.

Q. RBI issued draft guidelines on new restructuring norms. Your comments…

A. This is a very good sign so long as the economy and banks' profitability permits. That's why RBI has proposed for staggered provisions. Today, when such big restructuring cases are there, we should also have parallel provisions. In the event of any default, a bank will have lesser difficulty to manage.

At IOB, if you really upgrade the accounts, Rs 7000-8000 crore will be upgraded. Those have completed three years. Hence, the future liability increase on account of incremental provision will be reduced.

As and when normalcy comes to the economy, this special dispensation may have to be taken back.

saikat.das@network18online.com

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Tata Motors up as Jaguar Land Rover sales accelerate in Jan

Moneycontrol Bureau

Tata Motors shares surged over 3 percent in morning trade on Wednesday morning powered by strong growth at its British Jaguar Land Rover unit.

The maker of luxury passenger vehicles and 4x4 SUVs saw sales accelerate 32 percent year-on-year to 34,877 units in Jan.

Land Rover sales rose 31 percent to 29,118 units, while Jaguar sales were up 40 percent to 5,759 units, reflecting the launch of the new Range Rover and 2013 model year Jaguar XF and XJ models.

"Jan sales were up across every major market with sales up 74 percent in China, 46 percent in Asia Pacific, 33 percent in the UK, 24 percent in North America and 10 percent in Europe," JLR said.

At 9:45 hrs, Tata Motors shares were at Rs 307.85 on NSE, up 3.1 percent.

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Kingfisher Air down 5% as lenders talk recovery

Moneycontrol Bureau

Shares of Kingfisher Airlines plunged 5% to Rs 10.58 after its lenders said they will start the process of recovering over Rs 7,000 crore outstanding loans from the defunct carrier.

A consortium of 17 banks led by State Bank of India are lenders to the carrier and in early 2011 had restructured its loans to bring down interest burden. Since then, the carrier has not been able to repay loans consistently amid crisis ranging from employee strikes and day-to-day operational issues.

Since October 2012, KFA has halted operations due to financial crisis. The airline has frequently said that it is in talks with several investors but is yet to divulge any further details on offloading stakes to any foreign carrier.

The Directorate General of Civil Aviation (DGCA) has also warned to cancel the airline's flying licence if it does not come up with a revial plan.

KFA posted a Rs 755 crore loss in the December as its planes sat idle.

Did you read: Kingfisher woes could hit funding for other airlines: DVB

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