Fw: Cygnus Daily Business Update 29 Mar,10
G.V.Sandeep
Global Economy
Govt slaps duty on import of Chinese chemical, machine
India has imposed anti-dumping duty of up to $213.34 per tonne on the import of a chemical from China, used in manufacturing glass, bricks and tiles, to protect the domestic industry. After concluding that imports from China which are at very low prices and have caused material injury to the domestic industry, the Directorate General of Anti-Dumping and Allied Duties (DGAD)-- the nodal agency under the commerce ministry-- has recommended anti-dumping duty on imports of Barium Carbonate. Acting on complaints from the domestic industry DGAD had initiated probe into the dumping of the chemical from China, which increased to 25,513 tonne in 2008-09 from 13,539 tonne in the previous fiscal. The anti-dumping duty imposed would be effective up to and inclusive of September 22, 2010. The government has also imposed an anti-dumping duty for a period of five years on a certain type of plastic processing machine imported from China. Anti-dumping measures are taken to ensure fair trade and provide a level playing field to the domestic industry. It is not a measure to restrict imports or cause unjustified increase in cost of products.
Indian Economy
FDI appears to be bypassing the telecom sector
Foreign Direct Investment (FDI) appears to be bypassing the telecom sector , despite India being one of the most attractive and fastest growing telecom markets. An analysis of the ownership details revealed by nine bidders for the 3G auctions opening on April 9, reveals that the average FDI holding is just below 40% (39.7%). This changes the common perception that FDI levels in the telecom sector are very high. It also reveals that despite the fact that FDI limits were raised from 49% to 74% five years ago, foreign investors have not utilized the higher investment ceiling. In addition, foreign telcos have given the 3G auctions a miss. This has wiped out the possibility of a large chunk of fresh FDI inflow and also reduces the auction’s potential to generate original revenue target of Rs 40,000 crore. While foreign investments coming in after the 3G bidding is over is a possibility, the lack of foreign investors’ interest in 3G bidding or even investing up to the full 74% FDI limit in 2G operations should be of concern to the government. In fact, Telenor, one of the major new foreign investors is staying away from 3G auctions altogether.
Government to borrow record $64 bn in H1 of FY-11
Reserve Bank of India will sell 2.87 trillion rupees ($64 billion) of bonds in the first half of 2010/11, 63 percent of its full-year target, less than market expectations, sending yields down. On an average, Rs 110-150 billion of issuance would come to the market every week, after officials of the central bank and the finance ministry met to finalise the first-half borrowing schedule. The yield on the benchmark 10-year government bond fell 1 basis point to 7.83 percent on the news. The central bank would try to smoothly conduct the government's borrowing programme. The RBI will provide later in the day details on the size and the maturity of the bonds to be auctioned. Traders are looking for a higher portion of three to five year maturities, which could push up short-term rates and flatten the yield curve. India's gross borrowing in 2010/11 is set to rise an annual 1.3 percent to 4.57 trillion rupees to fund a fiscal deficit that is projected at 5.5 percent of the gross domestic product.
Expanded IIP basket from April data
The government will come out with a more representative data on industrial production by adding nearly 150 new items and deleting the obsolete ones from the bask of goods and services that make up the IIP data, from the April estimate onwards. The April data will come out in June, for which the new series of index of industrial production (IIP) would be released. Currently, around 350 items are in the IIP basket to calculate the monthly industrial production figure. The new series would be more representative and would constitute around 500 items. The new series is expected to do away with obsolete items and add those products which have entered the markets in recent years. The factory production grew 16.7 per cent in January on robust manufacturing activity, however, it was slower than the record 17.6 per cent expansion reported in December. Economic and monetary stimulus provided by the government to spur the economy, following the onset of the global financial crisis since the third quarter of 2008, catapulted industrial growth into double-digits for the fifth month in a row in January from sluggish growth in earlier months.
New companies bill to facilitate, guide gen next joining family biz
The new companies bill 2009 will take a special approach to second and third generation family members joining the family run companies after their studies. With more number of gen next joining the services of such companies, they need to facilitate them by providing guidelines. They need to train them in following good corporate governance. The large corporates will be able to adopt the international standards, there is need to apply to calibrated regulation in the case of smaller companies ( SMEs) in view of the compliance cost. The farmers’ condition would not improve with free power supply and farm subsidies. Gujarat has achieved a CAGR growth of 8% in the last 5 years in the agri sector by ensuring 18 hours of power supply. If corporate farming is encouraged it will lead to better quality, marketing and delivery. The manufacturing sector could thrive only if it is assured of adequate power supply at low cost. It should be freed from the regulatory environment. Besides, labour reforms should be introduced.
Industry News
Automobile
Tata, Fiat, Hyundai & GM set to up prices from April 1
With the Government set to implement the Euro IV emission norms from April 1, several car-makers would be increasing the prices of their vehicles next month. Major automobile-makers including Tata Motors, Fiat, Hyundai, Mahindra and General Motors, plan to up their prices after the implementation of the new emission norms, which will require them to upgrade their products. Several car-makers had jacked-up their prices after the Budget and if they do so again in April, it would mean that prices would be going up for the second time in less than two-months. From April onwards, India will adopt stricter emission norms under which 13 major cities will upgrade to BS IV from BS III and the rest of the country would move up from BS II to BS III as per the recommendations of the Mashelkar Committee to control pollution.
Hero Honda to set up Rs 2,000 cr manufacturing plant in Karna
Karnataka government is alloting 500 acres near the northern district headquarters town of Dharwad to Hero Honda to set up a Rs 2,000 crore two wheeler manufacturing plant with annual capacity of one lakh units, Large and Medium Industries. The discussions would also be held with the TVS group in the next few days on the possibility of the latter putting up an engine manufacturing unit in the State.
Banking
Industry groups unlikely to get banking licences
The government has told the Reserve Bank of India (RBI) that the norms for approval of new banking licences could be based mainly on the existing policy framework for ownership of private banks, smothering the hopes of large local business houses keen on promoting and running banks. The Indian central bank’s ownership norms place a premium on diversified ownership in local private banks. They specify that the shareholding by an individual or group of related entities has to be capped at 10%, making it difficult for large industrial houses to own majority stakes in banks. The norms do provide for a higher shareholding by promoters when new licences are issued for private banks, but on the condition that the holding would be reduced to 10% over a time-frame which is supposed to be three years. Business houses will be disappointed if these norms stay in place, but the central bank’s thinking is that diversified ownership is critical because banks are special. Unlike manufacturing firms, they accept and deploy a large quantum of funds in a fiduciary capacity. Besides, big banks are of so-called systemic importance, because if they go bust other banks are also hit, something which was demonstrated in spectacular fashion during the global downturn when the collapse of investment bank Lehman Brothers almost brought financial markets to a halt.
Construction
Gayatri Projects bags contract worth Rs 602 cr from NHAI
Construction firm Gayatri Projects has bagged a road project worth Rs 602 crore from the National Highways Authority of India (NHAI). The company has bagged the contract for six laning of 45 km stretch on Indore-Dewas national highway on build, operate, transfer (BOT) basis. The company has agreed to pay a premium of Rs 24.10 crore to the NHAI annually and has a right to collect toll on the existing four lane highway through its SPV.
Engineering
ITC's Bhadrachalam facility gets FSC certification
The pulp & paper and paperboard manufacturing facility of ITC at Bhadrachalam has been awarded the FSC Chain of Custody certificate. It is the most widely respected certification for responsible fibre sourcing around the world. This certification provides a unique competitive edge to ITC’s finepapers and paperboards in an increasingly environment-conscious world. The Forest Stewardship Council (FSC) is an independent, non-governmental, not-for-profit organization established to promote the responsible management of the world’s forests. FSC is a certification system that provides internationally recognized standard-setting, trademark assurance and accreditation services to companies, organizations, and communities interested in responsible forestry. ITC is already a global leader in the area of sustainability. Along with being India’s first company to be invited to be a member of the WWF's Global Forest and Trade Network (WWF GFTN), ITC also has a sustainable social and farm forestry programme that has now greened over 100,000 hectares of land.
Health Care
Columbia Asia Group to set-up 14 hospitals in India by 2012
With an eye on the increasingly health-conscious and rapidly-growing middle-income group, Asia's leading hospital chain, Columbia Asia Group, plans to ramp-up its operations in India by opening eight more multi-speciality community hospitals with a total capacity of 800 beds by mid-2012. Presently, the group operates six hospitals, including a referral hospital, in the country. These are located in Bangalore (2 hospitals), Mysore, Kolkata, Patiala and New Delhi with a total of 640 beds. The hospitals will be set up in Dehradun, Lucknow, Jalandhar, Meerut, Pune and Ahmedabad, adding that the funds for all the hospitals have been tied-up through private equity. The Kuala Lumpur-based hospital chain, which employs 2,200 people currently, also plans to double its headcount to around 4,600 by 2012. The company has 16 facilities across India, Malaysia, Vietnam and Indonesia. It offers full-service hospitals built in neighborhoods, rather than in central city areas and its target market is the rapidly-growing middle-income group.
ITES
Nokia designs bear touch of psychologists, anthropologists
Those simple and at times swanky cellphones and services from the Nokia stable are not just designs of technological expertise but also bear the touch of psychologists and anthropologists. The world's largest mobile phone maker utilises expertise from myriad fields including psychology and anthropology, to churn out their mobile devices, services and software. The Finnish cellphone maker stressed that it makes use of customer feedback, information on consumer usage patterns and other consumer data to create designs. Nokia is a major mobile phone player in the Indian market and had the highest handset sales in the country after China, in 2009. Moreover, Nokia's market share gains in the Asia-Pacific region last year, were mainly driven by its presence in India and Indonesia. Nokia began India operations in 1995 and now has a manufacturing plant in Chennai and a design studio in Bangalore, among others.
Life insurance
SBI Life gets nod for commercial products
SBI Life Insurance, the joint venture between SBI and Australian insurer IAG, has received approval from the insurance regulator to sell some of its commercial line products. The company has already sold some policies to companies in Mumbai. The joint venture will eventually use most of SBI’s distribution network including the group’s 13,000-plus branches. SBI is also expected to lead businesses to the joint venture, which was earlier being booked by New India Assurance. Prior to formation of the joint venture, SBI was the corporate agent for New India and generated premium worth several hundred crore. According to a statement issued by the bank, the venture is expected to emerge as a leader in the industry within a few years.
Telecom
Zain, Bharti Airtel to ink Africa deal
Kuwait's Zain telecom and India's top mobile firm Bharti Airtel are expected to sign a $10.7 bn deal for the sale of Zain's African assets. Kuwait's Zain telecom and India's top mobile firm Bharti Airtel are expected to sign a $10. Zain entered the African telecom market in 2005 by acquiring the operations of the Dutch Celtel firm for around $3.5 billion. The value of the deal includes $1.7 billion of debt that the Indian telecom giant will assume. Bharti is due to pay $8.3 billion on signature of the deal, while the remaining $700 million will be paid a year later. Bharti Airtel, the largest Indian mobile phone operator, had raised the $8.3 billion, mainly from international banks. If the deal goes through, Bharti, which already has 125 million Indian subscribers, would get 42 million clients in 15 African countries from Burkina Faso to Zambia, while Zain clients will shrink to 30 million from 72 million.
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