Tata shuts Nano plant at Singur

The ruling Left Front in West Bengal on Tuesday asked the Tatas to
reconsider their resolve to suspend work at the small car factory at
Singur saying that it was an unfortunate decision at a time when
efforts were on to find a way out of the impasse.

While state Industries Minister Nirupam Sen said it was an unfortunate
day for West Bengal, Mamata Banerjee said that the party has no
comment to make, as it was 'completely their (Tatas') internal and
technical matter'.

"We have not stopped work at the Tata project. The decision to suspend
work at the plant was Tatas' own. We have not obstructed anyone. We
cannot do anything if workers do not turn up for work," she told
reporters in Kolkata, adding that her party wanted normal work to
continue at the Nano plant.

She also said that some people were claiming that the indefinite
dharna had been undertaken after the party (Trinamool Congress) took
money. "I challenge them to prove it. If they fail to prove it they
have to apologise publicly."

Citing that there was no change in the volatile situation in Singur,
Tata Motors on Tuesday said it was looking for alternate options to
manufacture its small car Nano from the company's other plants and
work at Singur has been suspended.

"In view of the current situation, the company is evaluating alternate
options for manufacturing the Nano car at other company facilities,"
the company said it a statement.

A detailed plan to relocate the plant and machinery to an alternate
site is under preparation, it added. "Tata Motors has been constrained
to suspend the construction and commissioning work at the Nano plant
in Singur in view of continued confrontation and agitation at the
site," it said.

The decision has been taken in order to ensure the safety of its
employees and contract labour who have continued to be violently
obstructed from reporting to work, it added.

The project's auto ancillary partners were also constrained to suspend
work in line with Tata Motors' decision, it said.

Today's decision came at a meeting of the Tata Motors management
committee , a day after Ratan Tata arrived from Singapore and took
stock of the situation arising out of Mamata Banerjee's siege, sources
said.

Tata Motors chairman Ratan Tata had last month threatened to exit West
Bengal if there was no let up in violence at Singur, where the company
is building a factory to make the world's cheapest car 'Nano.'

"We are deeply concerned at the violence and disruption and at the
safety of our employees, equipment and investments at the project site
at Singur," Tata told reporters on the sidelines of the Tata Tea
annual general meeting on August 22.

"If need be we will move and relocate the Nano project elsewhere. We
have made a major investment in West Bengal. To move will be at a
great cost to Tata Motors and to shareholders, but relocation will
also cost the West Bengal government. However, I will not bring my
employees here if they will be beaten up," the Tata Group chairman
said.

After Tata Motors decided to suspend work at the Singur plant, Ratan
Tata told a national televison channel that he does not want to be 'an
unwelcome guest'.

Trinamool Congress on its part claimed that the Tatas will never
leave, and added that 'they are just posturing'.

Mamata's Banerjee's party further said that their agitation was
against the state government and not Tata.

While international consultants working in the plant have returned
home, Tata Motors sources said that Singur employees will be absorbed
elsewhere.

"To minimise the impact it may have on the recently recruited and
trained people from West Bengal, the company is exploring the
possibility of absorbing them at its other plant locations," a company
statement said.

Tatas' threat comes at a time when a number of states including
Maharashtra, Punjab, Andhra Pradesh, Gujarat and Uttarakhand are
wooing them to set up the facility.

Tata Motors had evacuated its entire workforce from the Singur
facility on Thursday in the face of numerous instances of intimidation
from protesters at the site.

A section of scientists, engineers and professionals on Tuesday
expressed concern at the happenings at the Tata Motors Nano plant at
Singur, and said that it had come at a time when West Bengal was fast
becoming a favourable spot for setting up new industries and was
attracting considerable investments.

"We feel people of West Bengal will express themselves in favour of
industrialisation," they said.

"This new spate of industrialisation and associated infrastructural
growth is the dream for each and every citizen and are all poised to
welcome this positive change," a representative of the group said.

Earlier in the day, Trinamool Congress leader Partha Chatterjee met
West Bengal Governor Gopal Krishna Gandhi, who has stepped in to end
the Singur deadlock, for the third time in the past three days.

Chatterjee, the leader of the Opposition in the assembly, accompanied
by former Rajya Sabha MP Dinesh Trivedi discussed the ongoing crisis
with the Governor for about an hour.

Chatterjee, however, declined to disclose any details about the
meeting.

With the Singur impasse continuing, the Governor had suggested a
neutral mediator to end the impasse, and the Left Front government
were not against this suggestion.

In a letter to Trinamool Congress chief Mamata Banerjee last week,
Gandhi had said that a person with no political or industrial
affiliation be invited to act as an unbiased intermediator in the
matter.

Gandhi also requested her to suggest a name or names and said he would
request the West Bengal government to respond positively.

The TC chief had on Monday urged the Governor to take the initiative
for talks in which her party would participate as it wanted an
'immediate solution'.

She, however, underlined that the talks should be on the issue of
return of 400 acres to the 'unwilling' farmers at Singur.

Banerjee also said that work should resume at the Tata Motors Re
100,000 car plant, where there was no work for the fifth consecutive
day.

"We want that work should take place at the Tata plant, at the same
time, talks can also go on."

India Aug 23 WPI inflation 12.34% vs 12.40% week ago

India Aug 23 WPI inflation 12.34% vs 12.40% week ago
Thursday, Sep 4

    India's headline inflation slipped to 12.34% for the week
ended Aug 23 from 12.40% in the previous week, the commerce and
industry ministry said today.

    This is the second consecutive week that the headline inflation
rate has declined.

    The fall in inflation rate, based on wholesale price index, is
mainly on account of a high base effect.

    In the week ended Aug 23, index for all commodities rose
marginally to 240.3 from 240.2 a week earlier. In the corresponding
week last year, the index had risen 0.1% on week to 213.9.
    The inflation rate was 3.94% in the year ago period.

Sharekhan Post-Market Report dated September 04, 2008

 

 

Sharekhan's daily newsletter September 04, 2008 Index Performance Index Sensex Nifty Open 14,895.85 4,512.95 High 14,994.15 4,514.60 Low 14,766.01 4,419.45 Today's Cls 14,899.10 4,447.75 Prev Cls 15,049.86 4,504.00 Change -150.76 -56.25 % Change -1.00 -1.25   Market Indicators Top Movers (Group A) Company Price  (Rs) % chg Gainers KSK Energy 215.70 9.02 Akruti City 962.15 7.60 Aban Offshore 2,214.95 5.33 UCO Bank 42.40 4.56 Piramal Healthcare 345.00 3.71 Losers GMDC 206.20 -14.51 Indiabulls Real Estate 289.35 -10.24 GSPL 59.85 -7.07 GE Shipping 363.90 -5.27 Indiabulls Securities 62.30 -4.67 Market Statistics - BSE NSE Advances 1,332 765 Declines 1,259 791 Unchanged 94 43 Volume(Nos) 25.19cr 47.67cr  Market Commentary  Unable to pass the baton Taking cue from weak international markets, the Sensex loses over 1% due to heavy selling in heavyweights, realty and FMCG stocks. The market failed to capitalise on the 551-point gain on Tuesday, as weak Asian indices and overnight fall on the US bourses weighed on sentiment.     Barring information technology (IT), health care (HC) and automobile sectors, all other sectors witnessed selling. The benchmark BSE-30 Sensex opened 154 points lower at 14,896 and never recovered from the early slump. While the market moved in a range below 15,000 for the better part of the trading session, the index witnessed a steep fall towards the closing hours and nearly breached the 14,800 mark to touch the day's low of 14,766. The Sensex pared losses on selective gains and ended the session with losses of 151 points at 14,899, while the Nifty declined 56 points to close at 4,448.  The breadth of the market was strong. Of the 2,685 stocks traded on the BSE 1,332 stocks advanced, 1,259 stocks declined and 94 stocks ended unchanged. Among the sectoral indices, the BSE Reality dropped sharply and lost 3.20%, while the BSE FMCG, the BSE Oil & Gas, the BSE Metal and the BSE Power were down over 1% each. The BSE IT was the major gainer and gained 0.46% followed by the BSE HC and the BSE Auto. Over 1.88 crore shares of Austral Coke changed hands on the BSE followed by Reliance Natural Resources (1.24 crore shares), Resurgere Mines and Minerals India (0.91 crore shares), IFCI (0.71 crore shares) and Dish TV (0.67 crore shares). European Indices at 16:46 IST on 04-09-2008 Index Level Change (pts) Change (%) FTSE 100 Index 5528.10 28.40 0.52 CAC 40 Index 4417.18 -29.95 -0.67 DAX Index 6402.91 -64.58 -1.00 Asian Indices at close on 04-09-2008 Index Level Change (pts) Change (%) Nikkei 225 12557.66 -131.93 -1.04 Hang Seng Index 20389.48 -195.58 -0.95 Kospi Index 1426.43 -0.46 -0.03 Straits Times Index 2626.05 -80.48 -2.97 Jakarta Composite Index 2075.23 -40.76 -1.93

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Crude Oil, Gold Lead Decline in Commodities in LondonTrading

 

 

Sept. 2 Crude oil and gold led a decline in commodities in London as
Hurricane Gustav spared the U.S. Gulf states the destruction caused by
Katrina and Rita in 2005.

The S&P GSCI index of 24 commodity futures has dropped as much as 7
percent in two days, to the lowest since April 2. Oil is trading at a
five-month low, 27 percent below the record $147.27 a barrel reached
July 11.

``Oil is the driver of today's declines in commodities, reflecting the
lack of appetite from investors,'' Frederic Lasserre, head of
commodities research at Societe Generale, said today by phone from
Paris.

Lower commodity prices may help ease inflation, which in the euro zone
dropped to 3.8 percent last month, from 4 percent. The World Bank
expects global growth to slow to 2.7 percent this year, from 3.7
percent in 2007.

Crude oil for October delivery fell as low as $105.46 a barrel on the
New York Mercantile Exchange, 8.7 percent less than on Aug. 29.
Today's trading is combined with yesterday's for settlement purposes
because of the Labor Day holiday in the U.S.

Workers from more than 70 percent of the platforms and rigs in the
Gulf were evacuated as Gustav approached. All of the area's 1.3
million barrels a day of oil and 7.06 billion cubic feet of gas, 95
percent of the total, was shut. Royal Dutch Shell Plc, Total SA and
ConocoPhillips said they were inspecting offshore U.S. Gulf platforms
today.

``The absence of serious structural damage from Gustav when the market
was braced for the worst has caused prices to turn decisively
downwards,'' said Christopher Bellew, a senior broker at Bache
Commodities Ltd. in London.

Gold Declines

Gold for immediate delivery fell as much as $16.28, or 2 percent, to
$801.42 an ounce, the biggest decline since Aug. 19. Gold dropped as
lower oil prices diminished the appeal of the metal as a hedge against
inflation.

Commodities also declined as the dollar strengthened against
currencies including the euro. Most commodities are priced in dollars
and some investors buy them as a hedge against further weakness in the
U.S. currency.

``In the short term, gold's direction will be determined by the moves
in crude oil and -- barring currently unapparent damage to Gulf of
Mexico production facilities or local refining operations -- the
downside appears vulnerable,'' John Reade, the head of metals strategy
at UBS AG in London, wrote in a report.

On the London Metal Exchange, copper for delivery in three month fell
as much as 2.4 percent to $7,128 a metric ton, the lowest intraday
price since Aug. 12. Stockpiles of the metal tracked by the bourse
rose 3.5 percent to 179,800 tons, the highest since Jan. 21,
indicating slower demand growth.

Supply Speculation

Zinc dropped for a second day on speculation supplies from mines will
expand faster than demand into next year. The metal dropped $35, or 2
percent, to $1,745 a ton.

Yunnan Chihong Zinc & Germanium Co., China's fifth-biggest zinc
producer, said it wasn't affected by the Aug. 30 earthquake in Sichuan
province and Nyrstar NV, the world's largest zinc producer, said its
U.S. smelter in Tennessee is unaffected by Hurricane Gustav.

``The main problem with zinc is a perception of oversupply,'' said Dan
Smith, a metals analyst at Standard Chartered Plc in London.

Corn for December delivery fell as much as 30 cents, or 5.1 percent,
to $5.55 a bushel, the lowest since Aug. 18, in after- hours
electronic trading on the Chicago Board of Trade. Soybeans also
slumped.

``The sharp drop in crude prices is the driving factor behind the
weakness in grains markets today,'' Toby Hassall, an analyst at
Commodity Warrants Australia in Sydney, said by e- mail. ``The impact
of Gustav was far less traumatic to the Gulf coastline than many had
expected. The fear premium that had been built into crude prices was
hastily wiped away.''

Robusta coffee for November delivery, the most actively traded
contract, fell as much as $26, or 1.2 percent, to $2,221 a ton on the
Liffe exchange in London.

Power exchange to provide Internet trading

 

NSE & NCDEX promoted power exchange—Power Exchange India (PEX)— in a bid to compete with its rival MCX-Financial Technologies promoted Indian Energy Exchange (IEX), is offering slew of provisions to attract members. The exchange, which proposes to launch its operations from the first week of October from Mumbai, will offer Internet-based power trading, minimum power trading of 1 mw hour (mwh) and above all power seller will not be entitled for payment of margin. Indian Energy Exchange handles minimum trading of 10 mwh.

PXI CEO Rupa Devi Singh told FE, "We intend to start our operations from October 3 or 6 from Mumbai. We await clearance from the Central Electricity Regulatory Commission (CERC) for the rules and regulations. I do not want to draw a comparison between PXI and IEX. However, the notable difference is that PXI is Internet-based while IEX is on dedicated lease lines. We have taken a conscious decision that sellers of power will not have to pay margin. Following our decision, IEX has reciprocated."

Singh, who addressed power companies, banks and financial institutions at the roadshow, said PXI will initially involve in the day ahead auction which allows simultaneous buy and sell bids and seller will have flexibility to bid for time blocks with 'Block Bid' option. There will be complete anonymity of the bids between the traders and PXI will do financial settlement and clearing. Moreover, Singh said PXI has created IT back up in house while Nasdaq OMAX has developed software for IEX.

According to Singh, PXI proposes to have around 50 members who will be offered fair pricing. For trading member the annual fee will be Rs 1 lakh and one time fee of Rs 5 lakh and deposit of Rs 10 lakh. In case of trading and self clearing, the annual fee will be Rs 2.5 lakh, Rs 10 lakh of one time fee and Rs 25 lakh of deposit.

Members of trading and clearing category will have to pay annual fee of Rs 2.5 lakh, one time fee of Rs 10 lakh and deposit of Rs 40 lakh.

 

http://www.financialexpress.com/news/Power-exchange-to-provide-Internet-trading/356168/

 

 

Brand Power: RIL king of brands at $6.8 bn

 

NEW DELHI: India's trillion-dollar plus stock markets boast of 20
companies with a brand value of over $1 billion, up from 16 last
year.

There are now a dozen (BSE-listed) companies with a brand value over
$2 billion (vis-à-vis nine last year) and half-a-dozen with over $3
billion (up from four last year).

Raise the cut-off to $6 billion, and it's a club-of-one, India's
biggest private-sector company, Reliance Industries, with an end-2007
brand value of $6.81 billion (Rs 26,801 crore) vis-à-vis $5.8-billion
in end-2006.

Using the relief-from-royalty method of brand valuation, which assumes
that a company does not own its brand and needs to licence it from a
third party, a global leading brand valuation firm, London-
headquartered

Brand Finance India's Top 50 Most Valuable (Company) Brands, 2008,
presented exclusively by ET, studied only BSE-listed consumer-facing
corporate brands (and not holding companies, such as Hindustan
Unilever, which own a portfolio of branded businesses) to arrive at
the BF Top 50 list.

Prima facie, the BF Top 50 study doesn't show any dramatic shift in
last year's line-up. The top brands are evenly spread out across
sectors pretty much like last year, reiterating the fact that brands
can create significant value even outside the traditional consumer
goods sector.

As many as nine out of top 10 brands of last year have maintained
their place in the roster, albeit with a minor reshuffle in positions.
Hindustan Petroleum Corporation (HPCL) is the only one to have got
nudged out by a newcomer, Bharti Airtel, from the Top 10 list.

And even though the total brand value of Top 50 at $68.25 billion
looks impressive compared with last year's figure of $50.8 billion,
it's largely the effect of rupee appreciation (at an average exchange
rate of Rs 45.5 and Rs 39.3 to a dollar in calendar 2006 and 2007,
respectively, for the purpose of this study) that reflects an over 34%
jump in the dollar-denominated brand valuation. In rupee terms, the
Top 50's brand value has gone up by only 15%, Rs 2.67 lakh crore from
Rs 2.32 lakh crore.

However, a closer scrutiny of the Top 50 list highlights some twists
in the tale. For one, it marks the debut for 11 new brands on the Top
50 list, United Breweries, Tata Tea, Dabur, Idea, Tata Communications,
Pantaloon, DLF, Jaiprakash Associates, GMR, Reliance Infrastructure
and Gail.

Says Brand Finance India MD M Unni Krishnan: "These brands have
swiftly grown in size through a combination of organic and inorganic
growth and their ability to transform their business to offer a whole
range value proposition to customers. These brands have shown
leadership in shaping their industries ahead of time and consequently
strengthening their ability to retain and acquire new customers."

The cut-off for Top 50, which was a low Rs 172 crore (No. 50, Essar
Oil's brand value) last year, has moved up to Rs 645 crore this year
(Gail at No. 50 this year). Equally, as many as one in five brands on
the Top 50 list last year dropped out of the list this year, IDBI
Bank, Canara Bank, Essar Steel, Cipla, Nicholas Piramal, Reliance
Energy, Sun Pharmaceutical, Gujarat Ambuja, Reliance Capital, ACC and
LIC Housing. "Whilst the IDBI brand remains valuable, we have not been
able to complete the brand valuation analysis due to paucity of
marketing, customer and people data/information in the public space,"
explains Mr Krishnan.

Two, the emergence of infrastructure as a fresh force and the decline
of banking & finance and manufacturing in the brand war for supremacy
in valuation. Though RIL retains its top position this year too, the
petrochem-to-retail giant has seen its brand value (in rupee terms)
remain virtually static, it barely inched up 1.4% over the year.

Gainers in the top 10 include Bharti Airtel (brand value: Rs 9,798-
crore), which rose three rungs to settle at rank 8 and ICICI Bank (Rs
11,533-crore) that moved two slots up to reach the No. 7 spot. More
than scaling the chart, the two have seen a jaw-dropping change in
their values.

Bharti Airtel gained as high as 26% in (rupee) value while ICICI Bank
followed with a increase of 24% in brand value. Interestingly, it's
been a lacklustre year for the oil navratnas in the public sector.
They continue to be under pressure due to rising crude prices and
steep under-realisation due to government price controls.

All three oil PSUs, IOC, BPCL and HPCL, not just slipped down in the
chart, they saw a significant erosion in their brand value in 2007.
IOC slid to the third position (from No. 2 last year) with a brand
value of Rs 17,987 crore (a drop of 5.3%), BPCL dropped to No. 9 slot
from No. 7 last year and saw its brand value erode by a whopping 17%
and HPCL down by 15%. SBI at No. 4, is the only one amongst the PSUs
to hold its own while showing a remarkable rise, close to 16%, in its
brand value.

Sectoral analysis shows that banking & finance rule the list with nine
brands although their number has dwindled over the last year. Oil &
gas and IT have sent in six brands each, followed by automobile (four
brands) in the list. Amidst the construction boom and some big-ticket
IPOs in that space, infrastructure brands made a grand entry in the
study for the first time.

These include highly-visible brands of 2007, DLF, Jaiprakash
Associates, GMR and Reliance Infrastructure, at rank 43, 46, 48 and
49, respectively. The entries from a new sector had an obvious impact
on brand from other sectors. While FMCG and telecom added new brands
to the list of Top 50, banking & finance, manufacturing (steel,
cement, durables) and pharma saw brand representation from within the
sector go down.

Barring a handful of brands, there's been relatively minor shifts in
ranks. The steepest fall has come for the likes of Tata Power (No. 47
versus No. 38 last year), Bank of Baroda (No. 39 and No. 30) and
Videocon (No. 35 and No. 27). Others that moved down sharply in the
list include Taj (Indian Hotels) that fell from No. 26 to No. 33 and
JSW Steel dropped from No. 37 to No. 42.

The study in its second year still manages to say a lot about the
rapidly transforming business landscape in India. It's no longer about
consumer goods alone. The dominance of banking, IT, oil & gas, et al,
may pale as we go along and we could see a rise of brand from new
sectors that get a boost in the emerging new economic paradigm.


Source : Economic Times

Dividends dip as cos boost reserves for future plans

 

Despite high profits over the last few years, corporate India is
gradually reducing its dividend payout ratio. While companies' profits
are increasing every year, the owners are not sharing the largesse
with the shareholders. They are either investing the surplus in future
growth or strengthening their reserves.

An ETIG analysis of 1,000 companies over the last five years reveals
that the aggregate dividend payout ratio has dropped from 30.1% to
23.9% between FY04-FY08.

During this period, while net profit has almost trebled from Rs 70,000
crore to Rs 203,200 crore, dividend paid to shareholders has just
about doubled from 21,000 crore to Rs 48,600 crore. This translates
into a CAGR of 33% in net profit while dividend payout grew by 23%.

Dividend payout ratio reflects the proportion of net profit which is
disbursed to the shareholders. It is an important indicator of
companies' strategy and planning. A high ratio implies low opportunity
for expansion and hence payback to the shareholders, while low payout
ratio means the company is looking to reinvest the gains for future
growth.

This is evident from high payout ratio for FMCG, IT and pharma
sectors, and low payout ratio for infrastructure related sectors. Due
to the turbo-charged activity in infrastructure, companies involved in
the sector have been busy expanding operations rather than returning
cash to the shareholders.

Among the top 10 firms in terms of payout ratio (and minimum dividend
of Rs 200 crore), seven are from manufacturing sector. Prominent among
these are Hindustan Unilever, Nestle, Glaxosmithkline and Ranbaxy.

Incidentally, HUL has a payout ratio of more than 100%. This means
that total dividend paid was more than its net profit for the year.
This is possible as a company can pay shareholders by running down its
reserves. ONGC, which was the top dividend payer across firms in
absolute terms having doled out more than Rs 6,800 crore last year,
had a payout ratio of 44%.

Among major sectors, the payout ratio for manufacturing & related
activities which was above 30%, for three years till FY06, saw the
payout ratio come down to 26.6% in FY07 and 24.5% last year. This also
corresponds to capacity expansion initiatives undertaken by the
firms.

For the financial services sector including banking, dividend payout
ratio has come down but only marginally. Among the major companies,
while HDFC and PNB have reduced payout ratios, the country's largest
lender SBI has increased its payout ratio. IT sector has been quite
generous last year with payout ratio going up from 26.7% in FY07 to
31.1% FY08.

Companies in the sector increased their dividend by as much as 41% on
aggregate basis, despite a moderate growth of 21% in profits. IT is
the only sector to see significant fluctuation in its payout ratio
over last few years, probably indicating that the sector is still
evolving. The payout ratio for the sector has moved up and down
ranging between 45% and 23%, over the last five years.

For services other than financial services and IT, which includes
hotel, tourism, transport and communication, the payout ratio remained
at 15.6%. This group is also among the lowest in terms of payout
ratio.

'I-T men can't change their tax assessment'

 

MUMBAI: Tax payers need not pay more if the income-tax officer changes
his opinion on their income and asks for more taxes, according to a
recent order passed by the Income Tax Appellate Tribunal (ITAT),
Mumbai.

The ITAT's order was on an appeal filed by Mumbai-based Sudarshan
Securities and serves as a reminder to assessing officers that tax
cannot be levied at the whims and fancies of tax officers. Sudarshan
Securities was taxed 30 per cent of the book profit under Minimum
Alternate Tax (MAT). The assessing officer, while passing the order
for 1997-98, concluded that the capital gain should be taxed at a
concessional rate of 21.5 per cent and the balance at 43 per cent.

Later, the assessing officer changed his opinion and held that the
entire book profit should be taxed at 43 per cent. The Commissioner
(A) also took the same view, citing an amendment in 1989 to the Income
Tax Act , which gave it the power to reopen such cases.

Then, Sudarshan Securities, represented by Jignesh R Shah, moved the
ITAT. The tribunal ruled against such changes in opinion, which put
additional tax burden on the taxpayer. Mr Shah argued that section 147
of the Income-tax Act is not a weapon in the hands of the assessing
officers to use it whenever they feel like changing his opinion and
views.

The ITAT accepted Mr Shah's argument and quashed the order of the
assessment officer. The Income-tax laws give wide powers to assessing
officers for reopening a case if they feel that some income has
escaped the tax net. But the department cannot reopen an assessment
already made, if the officer has merely changed his opinion after
reappraising the very same facts which were available when the
original assessment was made, too.

In 1989, amendments were introduced to section 147 of the Income-tax
Act, widening the power of the assessing officer to reopen cases, if
there is enough ground to suggest that income had escaped the tax net.
Even there, reopening a case on the basis of a change of opinion on
existing facts are not permitted.

RIL scraps KG basin stake transfer to arms

 

 

MUMBAI: Reliance Industries (RIL) has scrapped its plan to transfer 80% of its participatory interest in the famous D-6 block of the Krishna Godavari basin gas field, perhaps the company's most valued asset, to four of its subsidiaries.

The company had sent a letter to the petroleum ministry on Thursday withdrawing its earlier application which sought permission to transfer the stake to the subsidiaries. Under the production sharing contract, any contractor (here RIL) is supposed to get the government's nod for transferring stake in any asset.

In the letter, RIL says that it has organised funds required for the exploration and production of the block, officially known as KG-DWN-98/3, and therefore wants to abandon its plan to transfer its participatory interest to the subsidiaries.

In its application to the ministry for the proposed transfer three months ago, it had said the move was aimed at increasing flexibility in organising finances for the development of the project. RIL's investment in the KG basin blocks is expected to be around $8 billion. Interestingly, RIL, had got the go-ahead from the Directorate General of Hydrocarbon on this on August 21. The proposal had then been forwarded to the petroleum ministry.

When contacted, a RIL spokesperson confirmed the development. "RIL has raised the requisite financial resources and is no longer pursuing the application for assignment of participating Interest (PI) to the subsidiaries. Implementation of the project has not been hindered," the spokesperson said.

"However, in view of non-receipt of such approval/confirmation, we have successfully firmed up alternate means of financing and have met the cash requirements of the project.... We are entitled to assign the PI as envisaged in the...PSC but having raised the requisite finance as aforesaid, there is no need at this time for us to pursue the means of financing that would envisage assignment of PI and for the record hereby formally withdraw the..application and request that no further action need be taken thereon," RIL said in its letter addressed to the joint secretary (exploration) in the ministry of petroleum. ET has a copy of the latter.

Industry experts said RIL's move could have been partly driven by the criticism of its big shareholders. A few major shareholders, especially the foreign institutional shareholders, had questioned the logic of the proposed move in the past few days after the development came to the fore on Tuesday. ET was the first to write about the proposed move in its edition dated August 26.

RIL clarified the next day that these four companies, Reliance KG Exploration and Development, Reliance KG D6 E&P, Reliance KG Basin and Reliance E&P KG, are wholly-owned arms. But there were reports saying at least one of these companies could be part-owned by two top-level RIL executives.

The timing of RIL's withdrawal from the proposed move assumes significance. RIL has withdrawn the transfer of the participatory interest on Thursday, four days before the hearing of the legal case between the company and Anil Ambani's Reliance Natural Resources (RNRL) in the Bombay High Court.

Industry observers said had the move not be abandoned, it would have presented a target from RNRL's lawyers, led by Ram Jethmalani on Monday.

In the course of his arguments in the High Court last week, Mr Jethmalani had asked for the transfer of RIL's participating interest in the KG basin to RNRL so that the latter can sell the gas till its proposed 7,800 mega watts (MW) power plant at Dadri comes up.

On this, the government counsel TS Doabia had said in the High Court that RIL cannot transfer or assign its participating interest in favour of any other company without government approval, under the provisions of the production sharing contract.

RIL holds 90% equity in the KG basin while the remaining 10% is held by Niko Resources. RIL shares on BSE gained 3% or Rs 63 to closed at Rs 2137 on Friday over the previous day close. The stock has lost 5% in the last one week but gained 2% in the last one month

 

http://economictimes.indiatimes.com/RIL_scraps_KG_basin_stake_transfer_to_arms/rssarticleshow/3426594.cms

 

 

Crude prices drop; India's import bill cut, saysAssocham

 

NEW DELHI, AUGUST 31: With the recent softening of global crude oil prices to $110-120 per barrel from the peak price of around $147 a barrel in July this year, India's burgeoning import bill is likely to lessen by $ 17 billion.

According to a study conducted by The Associated Chambers of Trade and Commerce in India, titled `Crude Economics', the oil import bill for the 2007-08 would have touched $ 125 billion if crude oil prices had remained at $ 145 per barrel. However, with the reversal in price movement, country's import bill this year would be restricted to $108 billion, if the average price for next three quarters remains $ 120 per barrel.

In 2007-08, the import bill for crude oil was much lower at $ 67.98 billion.

The study revealed that crude prices have dipped by almost 25 per cent since July this year when they touched an all-time high of $147.27 per barrel on account of correction in demand, easing supply conditions and stronger US dollar.

Considering the government estimates of 5 to 6 per cent rise in crude oil import volumes to around 129 million tonne this year, there would be a corresponding increase of 58 per cent in the crude oil import bill from fiscal 2007-08.

The softening of crude oil prices may come as a huge respite to the current account deficit, which is grew at an alarming rate.

Trade deficit for the first quarter of the fiscal (April-June 2008) widened 42 per cent on account of a 50.2 per cent rise in the oil imports. The oil import bill for Q1 '08 stood at a $25.5 billion as compared to $17 billion for the same period last fiscal.

"The economic forces at play in shrinking demand and improving supply facilities may cool down crude oil prices further which would lead to a narrower than estimated current account deficit. It's a good positive sign for the economy", said Assocham president Sajjan Jindal.

$17 bn The likley cut in India's import bill

129 mn tonneEstimated volume of oil import this fiscal

25pcThe drop in crude prices since july

 

http://www.indianexpress.com:80/story/355647.html

 

China, India slowdown threatens global auto market

 

 

TOKYO: A sudden slowdown in car sales in China and India is threatening to shrink the global auto market this year, promising tougher times for an industry leaning on the two most populous countries to pick up the slack in the West.

Early this year, industry executives had been optimistic that demand in the world's second- and 11th-largest car markets would charge ahead, despite fallout spreading from the US credit crisis. But inflation, led by soaring fuel costs, and other economic problems have caught up with car consumption much faster than expected.

In July, car sales in China rose 6.8 percent from the year before, the slowest pace in two years, while sales in India fell for the first time in about three years. And while booming fuel and commodities prices have powered a faster-than-expected sales surge in resources-rich Russia, Brazil and the Middle East, that hasn't been enough to make up for struggling demand almost everywhere else.

"China is almost three times the size of the Russian car market so for every 1 percent reduction in Chinese sales you need a Russian rise of 3 percent to offset that," said Adam Jonas, auto analyst at Morgan Stanley. "For now, Brazil and Russia are helping to soften the blow but we have still revised down our global growth forecasts throughout the year."

Morgan Stanley now expects global car sales to decline 0.3 percent this year to 58.1 million vehicles after forecasting an expansion of 3.5 percent at the beginning of the year. China will still account for much of the sales increase as its economy heads for a sixth straight year of double-digit growth, but with so much resting on that market, competition is set to intensify just as fast.

In a sign of the times, Mazda Motor Corp last week halved its sales forecast at a Chinese venture selling compact cars, admitting it had set its goal too high. Standard & Poor's says rising competition among carmakers in BRIC countries -- Brazil, Russia, India and China -- is already beginning to dampen profitability. Within a few short years, China has turned into one of the most competitive auto markets from one of the most lucrative, suggesting even Russia, where foreign car sales grew 40 percent in July, could soon go down a similar road.

SEEKING BALANCE

The unpredictable pace of growth underscores the importance of having a well-balanced regional portfolio -- something that all big players are working on. "We need to keep in mind that the BRIC markets aren't always going to be strong," Mitsuo Kinoshita, executive vice president at Toyota Motor Corp, told reporters last week.

Based on first-half sales, the world's top three automakers, Toyota, General Motors and Volkswagen, relied on the mature North American, Japanese and European markets, excluding Russia, for up to two-thirds of their total sales. For quick growth, heavy exposure to the fastest-growing BRIC markets, especially China, is still key -- a mix that favours GM, Volkswagen and Hyundai Motor.

Its North American and general financial woes aside, GM is a formidable force in BRIC markets, ranking first in Russia and China and third in Brazil. Volkswagen is a close second in both Brazil and China while it has plans to beef up sales rapidly in Russia. Toyota has yet to make headway in India and Brazil, while it is now No.3 in China, climbing from nowhere five years ago.

South Korea's Hyundai is the world's fifth-biggest automaker thanks to its big presence in China, India and Russia. But analysts say the real race lies ahead. The bulk of vehicles sold in Brazil and India are of the low-end variety -- cars like Renault/Dacia's hit Logan model -- that most top automakers still don't have. "It's critical to have an entry-level car to compete in emerging markets," said Morgan Stanley's Jonas.

"All big brands will come out with their 'Logan-fighters' over the next two years or so." Home-grown competitors are also stepping up, with India's Tata Motors due to launch the Nano, the world's cheapest car, next month. Toyota, for its part, has said it would start production of a new, entry-level car in India in 2010 and Brazil in 2011.

That will put it behind GM, which said last week it would launch a new small car in India next year, aimed primarily at emerging markets. Yet having the right product is only part of the equation. A solid distribution and sales network is just as vital, meaning first-mover advantage -- like Fiat's in Brazil and Maruti Suzuki's in India -- is hard to crack.

"That takes the most time, and it's part of the reason that Japanese automakers are sputtering in Latin America," said UBS auto analyst Tatsuo Yoshida.

ASIA HOLDS SHORT-TERM KEY

The same goes for Asia. The Japanese have dominated the Southeast Asian market for decades and that looks unlikely to be challenged any time soon. "They've got better transport cost logistics and generally, a better segmentation profile for the high-fuel-cost environment," said Tim Armstrong, a director at Global Insight.

While Armstrong noted there was no single formula to win in developing markets, he said the Japanese likely had a short-term advantage since much of the current growth was happening in Asia. "All the world growth is essentially coming from Asia and Russia, where the Japanese are well-placed. As a group, they're probably very strong."

 

http://economictimes.indiatimes.com/articleshow/msid-3431545,flstry-1.cms

 

Sharekhan Post-Market Report dated September 01, 2008

 

Sharekhan's daily newsletter September 01, 2008 Index Performance Index Sensex Nifty Open 14,412.99 4,356.10 High 14,547.41 4,365.00 Low 14,281.10 4,281.35 Today's Cls 14,498.51 4,348.65 Prev Cls 14,564.53 4,360.00 Change -66.02 -11.35 % Change -0.45% -0.26%   Market Indicators Top Movers (Group A) Company Price  (Rs) % chg Gainers KSK Energy 187.20 6.79 Sintex Industries 328.70 6.34 Educomp Solutions 3,989.65 5.73 BEML 772.45 5.45 Areva 1,602.30 4.99 Losers Rei Agro 1,333.30 -4.74 Aditya Birla Nuvo 1,257.95 -3.97 Ranbaxy 499.80 -3.61 Indiabulls Financial 241.40 -3.44 Phoenix Mills 182.25 -3.37 Market Statistics - BSE NSE Advances 1,329 561 Declines 1,255 640 Unchanged 96 36 Volume(Nos) 21.84cr 34.40cr  Market Commentary  Strong comeback at tail end Though trading nearly more than 150 points lower for the predominant part of the day, the Sensex stages a robust pull back towards the tail end to post a loss of only 66 points. Taking lead from weak global markets, the 30-stock Sensex of the BSE started the day with a pessimistic note—142 points lower at the opening bell.     The index remained subdued during the major part of the day and trade more than 150 points lower, as investors booked profits for the Friday's surge. Metal, consumer durables and technology stocks took the major beating. The index faltered by afternoon and slipped to the day's low of 14,281—283 points below the previous close. While the market fluctuated sharply thereafter, firm bullish sentiment and strong buying in heavyweights and PSU stocks in late trades helped the Sensex erase most of its losses. The Sensex finally ended the session 0.45% or 66 points lower at 14,499. The Nifty slipped by 11 points at 4,349. Movers & Shakers Maharashtra Industrial surged on report that the company has decided to split the shares from the face value of Rs10 to Re1. Gammon Infrastructure rallied sharply on receiving the letter of allotment for the development of the Youngthang Khab Hydro Electric Project on built-own-operate-transfer basis from the Government of Himachal Pradesh. The market breadth was positive, as 50% stocks (1,329 stocks) advanced and 47% stocks (1,255 stocks) declined. Around 3% stocks (96 stocks) ended unchanged.  Eight of the 13 sectoral indices ended in the red. The BSE Metal dropped 1.08% at 12,214 followed by the BSE CD (down 1.05% at 3,800.62) and the BSE Teck (down 0.89% at 3,046). However, the BSE PSU gained 0.31% at 6,768, the BSE Oil & Gas, the BSE FMCG, the BSE Bankex and the BSE Reality closed with marginal gains. Heavyweights led the fall in the Sensex. Ranbaxy Laboratories slipped by 3.61% at Rs499.80, Tata Steel slumped by 2.67% at Rs584.30, Maruti Suzuki India shed 2.56% at Rs650.40 and Bharti Airtel lost 2.50% at Rs816.25. While Reliance Communications, Infosys, Hindustan Unilever, Tata Power and NTPC were down by over 1% each.  Among the gainers ITC jumped 1.62% at Rs191.65, HDFC Bank gained 1.48% at Rs1,296.10, BHEL soared 0.90% at Rs1721.90, SBI rose by 0.88% at Rs1416 and Satyam Computer Services was up 0.85% at Rs423.40, while ONGC and ACC ended with modest gains. On turnover front, over 3.31 crore Resurgere Mines & Minerals India shares changed hands on the BSE followed by Reliance Natural Resources (1.17 crore shares), Nutek India (65.53 lakh shares), Chambal Fertilisers & Chemicals (53.22 lakh shares) and Noida Toll Bridge Company (44.57 lakh shares). European Indices at 16:10 IST on 01-09-2008 Index Level Change (pts) Change (%) FTSE 100 Index 5600.70 -35.90 -0.64 CAC 40 Index 4467.57 -15.03 -0.34 DAX Index 6395.33 -26.97 -0.42 Asian Indices at close on 01-09-2008 Index Level Change (pts) Change (%) Nikkei 225 12834.18 -238.69 -1.83 Hang Seng Index 20906.31 -355.58 -1.67 Kospi Index 1414.43 -59.81 -4.06 Straits Times Index 2713.79 -26.16 -0.95 Jakarta Composite Index 2164.62 -1.32 -0.06

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