RBI rejects banks' proposal for borrower-specific base rates

Source :BS Reporter / Mumbai May 7, 2010, 0:40 IST

The Reserve Bank of India (RBI) has rejected a proposal by some banks for having borrower-specific base rates. It has also not allowed them to charge a negative premium while calculating the effective interest rate.

Some banks had sought a few relaxations after RBI came out with final base rate guidelines in April. They asked the regulator if they could be allowed to fix different base rates for different customers and if they could charge a negative premium on the base rate.


Charging a negative premium would have meant lending below the base rate. For instance, if a bank uses the marginal cost of one-year deposits as the benchmark for fixing the base rate, a negative premium will be charged for all loans with tenures of less than 12 months.

RBI, however, stuck to its basic principle, that is, it would not allow any lending below the base rate. Some banks, which are indicating that the base rate will be 8-9 per cent, will not be able to give short-term loans to the corporate sector. This is because interest rates for short-term loans are linked to the overnight rate, which is well below 8 per cent. The regulator also ruled out different base rates for different customers.

In its annual policy for 2009-10, RBI announced a review of the present system of benchmark prime lending rate (BPLR) in order to make loan pricing transparent. It formed a committee headed by Executive Director Deepak Mohanty to review the system.

The proposal was mooted in the backdrop of sticky transmission of monetary policy. In addition, the present BPLR system is marked by high sub-PLR loans, which account for as much as 70 per cent of the total lending in case of some banks.

The committee, which deliberated the issue for about a year, decided to replace BPLR with the base rate and said the new system would become effective from July 1. While RBI gave complete freedom to banks on the methodology to calculate the base rate, it barred them from lending below this rate.

On the parameters that would be used to calculate the base rate, like the tenure of the cost of funds, the central bank gave banks freedom, but said a parameter once chosen would not be allowed to be changed. However, it gave a leeway to banks by allowing them to change the parameters and the methodology for the first six months. This was done to give banks time to refine the system of calculating the rate.

Citigroup probing rumor of erroneous trade

Source :7 May 2010, 0846 hrs IST,REUTERS


NEW YORK: Citigroup is investigating a rumor that one of its traders entered a trade that helped precipitate a drop of almost 1,000 points in the Dow Jones Industrial Average, a spokesman for the bank said on Thursday.

Citigroup, the third-largest US bank, currently has no evidence that an erroneous trade has been made, the spokesman said. Earlier, sources told Reuters that the plunge in the Dow Jones Industrial average -- its biggest intraday point drop ever -- may have been caused by an erroneous trade entered by a person at a big Wall Street bank.

Market sources said the erroneous trade may have involved shares of the so-called E-Mini, a stock market index futures contract that trades on the Chicago Mercantile Exchange's Globex trading platform. The composition of the E-Mini is similar to the stocks in the S&P 500.

A CME spokesman said it found no problems with its systems. Other market sources said the erroneous trading involved the IWD exchange-traded fund or the S&P 500 Mini. A person close to BlackRock, which manages the IWD, said there was no unusual trading in the iShares product.

Amid the sell-off, Procter & Gamble shares plummeted nearly 37 percent to $39.37 at 2:47 p.m. EDT (1847 GMT), prompting the company to investigate whether any erroneous trades had occurred. The shares are listed on the New York Stock Exchange, but the significantly lower share price was recorded on a different electronic trading venue.

"We don't know what caused it," said Procter & Gamble spokeswoman Jennifer Chelune. "We know that that was an electronic trade ... and we're looking into it with Nasdaq and the other major electronic exchanges."

A different P&G spokesman had said earlier the company contacted the Securities and Exchange Commission, but Chelune said that he spoke in error. One NYSE employee leaving the Big Board's headquarters in lower Manhattan said the P&G share plunge lay at the center of whatever happened.

"I'll give you a tip," the employee said, speaking on condition of anonymity. "P&G. Check out the low sale of the day. Something screwed up with the system. It traded down $30 at one point." Nasdaq said it was working with other major markets to review the market activity that occurred between 2:00 p.m. and 3:00 p.m., when the market plunge happened.

The exchange later said it was investigating potentially erroneous transactions involving multiple securities executed between 2:40 and 3:00 p.m. Nasdaq also said participants should review their trading activity for potentially erroneous trades.

Citi, BofA among shortlisted for Coal India IPO

Source:Reuters:Friday, May 7, 2010 12:44 IST


Mumbai: Citigroup, Bank of America Merrill Lynch and Deutsche Bank are among the six banks that have been shortlisted for bookrunning a $2.7 billion state-run Coal India's IPO, four sources with direct knowledge of the situation said.


Others in the list are Morgan Stanley, Kotak Mahindra Capital and Enam Securities, the sources, who are not authorised to speak to the media, told Reuters.

All that you want to know about gas row-

 Source:TOI:May 7, 2010, 12.21am IST

What is the Krishna-Godavari (KG) basin?

As the name implies, this refers to the area broadly enclosed by the deltaic basins of the two major rivers in Andhra Pradesh Krishna and Godavari. It includes part of the Bay of Bengal into which these rivers drain. The area has been identified as one of India's biggest oil and gas fields, several times the size of Bombay High. Onland, the KG basin has an area of about 28,000 sq km, while the offshore area is estimated at 21,000 sq km till a depth of 200m and another 18,000 sq km between 200m and 3000m.

How is Reliance Industries involved in the KG basin?

Under the government's New Exploration and Licensing Policy (NELP), various blocks in identified oil and gas fields were offered to private operators on lease for exploration and production. RIL won the bids for 12 such blocks in the KG basin in 2000. Under NELP, private operators sign a production sharing contract (PSC) with government, which sets out terms and conditions under which they operate their lease, including the share of revenues that would accrue to the government. The PSC for block D6, which is at the heart of the current dispute, was signed between RIL, the government and Niko, which is partnering RIL, in April 2000.

How is the Anil Ambani group involved?

When the Reliance group was still a unified entity with both brothers sharing management responsibilities, RIL had announced in 2003 that group company Reliance Energy Ltd (REL) would be setting up a gas-based power plant at Dadri in western Uttar Pradesh, for which gas would be supplied from RIL's KG basin production. In 2005, however, the group broke up with each brother acquiring control of different business areas. While the oil and gas business went to elder brother Mukesh, Anil had control of the power business. As part of the division of the group, RIL was demerged and Reliance Natural Resources LTD (RNRL) was formed to act as a conduit for the gas from the KG basin to REL. All RIL shareholders were made RNRL shareholders, except that Mukesh's holding in the parent company was substituted by Anil in the new firm. Thus, RNRL was part of the Anil Dhirubhai Ambani group (ADAG).

What is the MoU often referred to?

In 2005, RNRL and RIL signed a memorandum of understanding (MoU) on the terms under which gas would be supplied for the Dadri project. This MoU specified that the price at which the gas would be supplied would be the same as the price at which RIL would supply gas to an NTPC project. NTPC had invited global bids for supply of gas in 2003 and RIL finally won the bid and was issued a letter of intent by NTPC in June 2004. The price quoted by RIL in its bid was $2.34 per mmbtu (million metric British thermal units).

So what's the dispute about?

RIL argues that the $2.34 per unit price is not applicable to its deal with RNRL for various reasons. First, gas prices had since the 2005 MOU risen sharply. Second, it has not concluded a deal with NTPC on that price, since it had some issues pertaining to damages it would have to pay in case of failure to supply the agreed quantity of gas . Hence, it says, there is no NTPC price to be followed as per the MOU with RNRL. Third, it says under the PSC signed with the government, the government has the final say on the price at which it can sell gas to third parties and in fact can even dictate to whom the gas should be sold.
RNRL contests each of these claims. It argues that international gas prices have historically been much higher than Indian prices and so that can't be a benchmark. Further, the bid price for the NTPC project must be followed under the MOU irrespective of whether or not RIL and NTPC have finalized their deal. Finally, it maintains that the government only has the right under the PSC to fix the price at which gas will be valued for the purpose of determining the government's share of revenues from the project. RIL, it insists, is free to sell its share of the gas at whatever price it decides.

Where did the price of $4.2 per unit come from?

In May 2007, RIL invited bids from various gas users like power and fertilizer companies and on that basis arrived at a price of $4.2 per, which was then approved by the petroleum ministry as a market-determined price. RNRL alleges that this was an eyewash and an orchestrated auction between small time users and that the ministry has been partisan towards RIL in the whole issue.

How did the government get involved?

When, after sustained pressure from RNRL, RIL sought approval of the government for the price of $2.34 per unit, the government refused. It said the price was not market-determined and in any case gas was a national asset and its allocation could not be decided by some private agreement between two brothers. ADAG points out that the ministry's stance in the matter which suits RIL's current position has been a feature since Murli Deora became the petroleum minister in 2006.

How are courts involved?

Following RIL's refusal to supply gas at the terms specified in the MOU with RNRL, the Anil group company went to the Bombay HC seeking an order to RIL to follow the terms of the MOU. The Bombay HC finally in June this year passed an order that RIL must renegotiate a deal with RNRL that would make suitable arrangements for supply of gas. It also added that the basis for such an arrangement must be the scheme of demerger agreed between the brothers in 2005. RNRL has now gone to the Supreme Court seeking a direction from the apex court that the HC order on renegotiation should be set aside and RIL should be asked to supply gas under the terms of MoU.

IRB Infra order book crosses Rs 10000cr mark

 

Source:CNBC-TV18:Fri, May 07, 2010 at 12:22 

Construction firm IRB Infrastructure has received a road project worth Rs 1,200 crore from National Highways Authority of India (NHAI).  

The company expects to commence work on the project by the end of the year. It is a toll-based project and IRB would be paying a premium of Rs 140.4 crore in the first year to NHAI. 

 
Speaking to CNBC-TV18, VD Mhaiskar, Chairman and Managing Director of IRB Infra, says existing order book has crossed the Rs 10,000 crore mark post this order. “We expect good flow of orders from NHAI going forward.”

India to grow 8.3% in 2010: UN report

 Source:TNN, May 7, 2010, 12.14am IST

NEW DELHI: India is likely to post economic growth of 8.3% in 2010, a United Nations report released on Thursday has said.

The report - `Economic and Social Survey of Asia and the Pacific 2010' - an annual publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said the outlook for 2010 had improved significantly, with the Asia-Pacific region's developing economies forecast to grow by 7%, led by China at 9.5% and followed by India at 8.3%.

The report, however, urged the Asia-Pacific region to increase social spending to consolidate the region's stronger than anticipated economic rebound and to spur a fairer, more balanced and sustained economic recovery over the long term.

"Governments must embrace this opportunity to secure the gains of economic rebound by investing in social programmes that directly benefit people hardest hit by the crisis, act to reduce poverty and create a more sustainable economy," said Noeleen Heyzer, UN under-secretary general and executive secretary of ESCAP.

According to the report, even at the height of this crisis, Asia and the Pacific was still the fastest-growing region in the world, supported in large part by fiscal stimulus packages adopted by the region's biggest economies.

The survey, however, warned that rising inflationary pressures, especially of food products, and asset price bubbles, in a number of countries would make 2010 a complex year for policy makers who will have to balance sustaining the momentum of growth with financial stability.

"While monetary tightening may be necessary to restrain inflationary pressures, policy makers must be cautious about withdrawing fiscal stimulus packages lest the fledgling recovery process is disrupted," the report said. The survey provides governments of the Asia-Pacific region -- representing 62% of the world's population -- a roadmap towards a more inclusive and sustainable development path.

"We know from experience following the 1997 Asian financial crisis that it may be years before the poorest people are able to recover from the past two year's global crisis; governments need to maintain programmes to help people recover their assets and livelihoods," Heyzer said.

The survey promotes a number of regional policy recommendations for inclusive and sustainable growth, such as strengthening social protection and enhancing financial inclusion. Increased social spending directly supports income security for households by providing food security, education and access to health care, reducing the need by poorer families to maintain precautionary savings to protect against adversity. These families are then able to contribute more to local economies and invest more in their own development.

"The region has close to one billion people living in poverty at this very moment. The more people we lift out of poverty today, the larger consumer class and developed markets we create for the future," Heyzer said.

Shriram Transport to raise Rs 500cr via retail NCDs

 

Source : Moneycontrol.comFri, May 07, 2010 at 09:15

Commercial vehicle lender Shriram Transport is planning to raise Rs 500 crore, including Rs 250 crore of greenshoe option, through retail non-convertible debentures (NCDs). The company would raise subordinate debt and three-year secured NCDs at 9.75% and five-year NCD at 10.25%.
It would raise double bond around 11% with a minimum tenure of five years.
The retail NCD issue is expected to open on May 17.

Key dates in Ambani brothers' dispute

 Source : Reuters: Fri, May 07, 2010 at 11:11 


The Supreme Court has issued its ruling in the gas-pricing dispute between the billionaire Ambani brothers. The fiercest corporate battle till date had rattled investors and raised concerns over the influence of powerful businesses on government policy.

Following is a timeline of key dates in the Ambani rift.

July 2002: Dhirubhai Ambani, a school teacher's son and founder of the Reliance business empire, dies. Mukesh Ambani becomes chairman and managing director of Reliance Industries Ltd, and Anil Ambani is made vice-chairman.



November 2004: Feud between the brothers becomes public.

June 2005: Family reaches a settlement to split the Reliance group in a deal brokered by their homemaker mother, Kokilaben.

2006: Formal split takes place, with Mukesh taking control of flagship Reliance Industries, with interests in petrochemicals, oil and gas exploration, refining and textiles. He has since launched a retail venture. The Anil Dhirubhai Ambani Group gets telecom, power, entertainment and financial services. The Group includes Reliance Communications Ltd, Reliance Infrastructure Ltd, Reliance Capital Ltd, Reliance Natural Resources Ltd (RNRL) and Reliance Power Ltd.

July 2008: Reliance Communications calls off merger talks with South Africa's MTN after Mukesh makes a claim on the shares of Anil's telecom firm.

June 15, 2009: Mumbai High Court directs Reliance Industries and Reliance Natural to enter a gas supply agreement within a month.

July 1, 2009: Reliance Industries says will appeal to the Supreme Court against High Court ruling.

July 19, 2009: Indian government steps into the legal dispute, filing petition in the Supreme Court saying the gas is its property.

July 20, 2009: The Supreme Court does not exclude the government from the proceedings. Court says will hear case on September. 1.

August. 28, 2009: The Supreme Court website lists case hearing on October 20.

October 11, 2009: Following a visit to holy shrines in the Himalayas, Anil Ambani offers an olive branch to his elder brother and makes an impassioned call to end the impasse. Reliance Industries welcomes the move, but says the dispute under litigation is not merely a family matter and hoped "any overtures for rapprochement are in no way related to the ongoing hearing of the case".

October 20, 2009: A three-member bench, including Chief Justice KG Balakrishnan, of the Supreme Court begins hearing arguments in the case.

November 4, 2009: The hearing is disrupted when a judge withdraws, citing potential conflict of interest as his daughter worked at a firm that was a consultant to Reliance Industries.

November 5, 2009: A new three-member bench that also includes the Chief Justice begins hearing arguments from scratch.

November 5-December 18, 2009: Reliance Industries argues a private deal between the Ambani brothers cannot take precedence over government policy, which determines who can receive gas and at what price. Reliance Natural, which claims otherwise, says the government will not suffer a loss even if Reliance Industries sells it the gas at the disputed price. The government stresses it does not favour either side in the dispute.

December 18, 2009: Court finishes hearing the case and reserves judgement.

Supreme Court rules in favour of RIL by 2:1

  





 










Source : Moneycontrol.com: Fri, May 07, 2010 at  Fri, May 07, 2010 at 11:40


The verdict on one of the fiercest corporate battle between the Ambani brothers, Mukesh Ambani’s Reliance Industries (RIL) and Anil Ambani’s Reliance Natural Resources (RNRL) over the supply of gas from the Krishna-Godavari basin is out.

After listening to both sides, in what was a split verdict approach, the Supreme Court ruled in favour of RIL by 2:1.

As the verdict process began earlier today, Supreme Court judge Sathasivam declared that the brothers' MoU was not binding and that RIL and RNRL must renegotiate in six weeks.

The judge said that the government owned all the gas assets till it reached the users. It added that Production Sharing Contract (PSC) will overwrite all the prior agreements and the MoU between the Ambani brothers is not binding. The PSC dictates a price of USD 4.2 per mmBtu.

He also said that it was not feasible to restrain the government’s power on gas and it is a natural asset which belongs to the people.


Justice B.Sudarshan Reddy then delivered the dissent to Justice Sathasivam's verdict. At the end of both verdicts, the Supreme Court ruled in favour of RIL by 2:1.

In nutshell, the Supreme Court has fixed the gas sharing price at USD 4.2 per mmBtu. It has not directed the parties to renegotiate the quantum and tenure of the gas contract

The shares of Reliance group companies traded mixed post the verdict.

Mukesh Ambani pack:
At 11:08 am, the Reliance share was quoting at Rs 1,030.30, up Rs 19.40, or 1.92%. A recovery from the day's low of Rs 991.10. The Reliance Industrial Infrastructure stock was up Rs 8.90, or 1.12%, at Rs 807.

Anil Ambani pack:
The share of Reliance Natural Resources was trading a bit soft at Rs 61.70, down Rs 6.65, or 9.73%.

Reliance Capital, Reliance Infrastructure, and Reliance Communications too echoed a similar sentiment, trading down over 3% each. The Reliance Capital share was trading down Rs 28.8, or 4.06%, at Rs 681. While the R-Comm share was down Rs 5.6, or 3.57%, at Rs 151.45. The Reliance Infrastructure share was quoting at Rs 1,007.90, down Rs 45.65, or 4.33%.

Govt has right to decide price: SC on RIL-RNRL gas row

 

Source: Dhananjay Mahapatra, TNN, May 7, 2010, 11.05am IST

NEW DELHI: The Supreme Court on Friday ruled that the government was the legal owner of the gas in the RIL-RNRL gas dispute and said it had the right to decide the price and utilization of fuel, which is a natural asset. The government contract overrides any private deal, the court ruled.

RIL does not have absolute marketing right over gas; the price was subject to the government’s approval, the court said.

In an order tilting in favour of elder brother Mukesh Ambani in the KG basin gas row, the apex court ordered RIL to initiate in six weeks, re-negotiation with RNRL in terms of Gas Sale Master Agreement so that right of RNRL is safeguarded. It also told them to ensure the deal abides by the government’s policies.

The court also said that natural gas resources cannot be subject to any family agreement and the family MoU signed by Mukesh and Anil Ambani and their mother Kokilaben was not legally and technically binding. Family agreement can only be a guiding factor about parties’ intention, it said.

Delivering the majority verdict of the bench headed by Chief Justice K G Balakrishnan on the four-year gas dispute between RIL and RNRL, Justice P Sathasivam said the Production Sharing Contract over-rides all other agreements.

Millions of stakeholders were awaiting the verdict closely. Not surprising, when you consider that the verdict has direct fallout on scrips of companies with a combined market capitalization of about Rs 3.78 lakh crore.

The high-voltage legal battle has stretched for several days over Anil Ambani's claim for a share of Mukesh Ambani-controlled KG basin gas.

The brothers, through their lawyers, traded arguments and claims. Mukesh said he could not honour the family agreement requiring RIL to give 28 mmscd of KG basin gas to Anil's Reliance Natural Resources Ltd for 17 years at $2.34 per unit because the gas actually belonged to the government, while Anil Ambani asked for enforcement of the family accord.

The outcome will have repercussions not just for the siblings but also for firms -- belonging to private sector as well as those in public sector like NTPC -- that have tied up with RIL for 60 mmscnd of KG basin gas. An adverse outcome for RIL can singe the government because of allegations of collusion between Mukesh and the ministry of petroleum and natural gas (MoPNG).

The government claimed to be neutral. But many felt that its stance asserting its proprietorial rights over the KG basin gas while maintaining that it could not allow the precious public good to be apportioned between two brothers on the basis of a family agreement, showed a tilt towards the elder of the Ambani siblings.

The judgment comes after four-and-a-half months. It was reserved on December 18, 2009, which like judgment day, was also a Friday.

Apart from arguing that supply of gas from KG basin was subject to the production sharing contract (PSC) and Centre's Gas Utilisation Policy (GUP), RIL had said that if it sold gas to RNRL at $2.34 for 17 years, its return on investment of $12 billion would be just $2 billion, which was much lower than the interest that this sum would attract on investment or credit.

The Centre had questioned the basis of any gas supply agreement between two private parties on the lines of a family agreement and asked how RIL could allocate gas to RNRL when the government had not yet given any allocations to its own entity in NTPC.

NTPC was apprehensive of the outcome of the legal battle between the corporate honchos. It wanted to safeguard its interest and had pleaded with the court that the outcome should not alter RIL's commitment to supply it gas at $2.34 to its power plants at Kawas and Gandhar. RNRL had argued that it was only seeking to enforce a document which was framed on the foundation of RIL's commitment to NTPC.

Indians can now carry $3,000 in cash when they travel abroad

Source:5 May 2010, 1320 hrs IST,ET Bureau


MUMBAI: Foreign travellers can carry 50% more foreign exchange in cash than they could earlier. In a move towards further liberalisation of its foreign exchange policy, the Reserve Bank of India said it has increased the cash limit for foreign travel from $2,000 to $3,000 with immediate effect.

Authorised dealers and full-fledged money changers can now sell up to $3,000 to travellers proceeding to countries other than Iraq, Libya, Islamic Republic of Iran, Russian Federation and other Republics of Commonwealth of Independent States, without prior permission from RBI. In respect of these countries, Indians can carry up to $5,000 in cash. This ceiling was last reviewed in November 2001.

RBI has been consistently liberalising foreign currency regulations since 2000. The $3,000 ceiling applies only to the amount of cash that an individual can carry. Most credit card holders can spend up to their card limits during overseas travel. This spending is over and above the limit on carrying cash.

Foreign borrowing on the rise

The central bank has also released data on the extent of foreign borrowing by Indian corporates. This data shows that more and more Indian corporates are going for foreign loans. The total overseas borrowing is up 15% in FY10 to $21.4 billion, according to RBI data.

Indian corporates sought clearance for foreign currency borrowings of $4.3 billion in March, taking total sanctions for the year to $21.4 billion. While this 15% is more than the previous year’s $18.6 billion, it’s well below $31 billion sanctioned in FY08.

According to Edelweiss Securities economist Sidharth Sanyal, “This is a reflection of a revival of risk appetite among international borrowers. Moreover, the global liquidity conditions during the year (FY10) had improved because of which interest rates too ruled easy in most part of the year.”

A sizeable part of the money was for new projects and financing capex plans. Most of the loans were less than $100 million. During the year, there were only two big ticket sanctions for refinancing old loans. These were Tata Steel’s $1 billion loan and another $300 million by Reliance Industries. There were also a few large borrowings for investments in local businesses.

The data includes foreign currency convertible bonds (FCCBs) issued by local firms. Last year, the regulator had allowed companies to raise funds in the overseas markets to buy back outstanding FCCBs, data shows that such borrowings were less than $1 billion — a fraction of ECBs sanctioned during the year. FCCBs, which lost its sheen with the market downturn, is slowly picking up.

Venezuela, India mull $100b wealth fund

Source: KA Badarinath, Siddhartha P Saikia May 06 2010 , New Delhi

Venezuela has offered to partner with India to set up a $100 billion
sovereign we­alth fund to jointly acquire energy assets globally.

While India is not averse to the idea, New Delhi has asked Caracas to come up with a formal proposal to explore possibility of bidding for oil and gas assets.

The wealth fund will also be leveraged to mine gold, diamonds and iron ore in Venezuela and other Latin American countries.

“India has asked for a draft of the proposal. It will be discussed with concerned ministries and companies dealing in energy sector,” said an external affairs ministry official, requesting anonymity.

The fund would be set up with an initial corpus of $10 billion and scaled up over five years. To sweeten the deal and re-launch economic as well as trade relations with India, Venezuela has offered to supply an additional 100,000 barrels crude oil on daily basis at pre-determined rates irrespective of crude markets fluctuations globally. India sources about 150,000 barrels crude from Venezuela per day. Venezuela has garnered $4 billion worth revenues in oil trade during 2009. “We are ready for extra supplies to other refineries that are duly equipped to receive Vene­zuelan crude with special characteristics," Vene­zu­ela's vice minister for foreign affairs Temir Porras Ponceleon said on Wednesday.

The fund was first proposed by Venezuelan president Hugo Chavez to prime minister Manmohan Singh in 2006. This proposal was pursued by Ponceleon in his summit-level talks with foreign secretary Nirupama Rao on Wednesday. The proposal also figured at Ponceleon’s meeting with oil minister Murli Deora. India is the only Bric nation that does not have a sovereign wealth fund. China, Singapore, Saudi Arabia, Norway, Kuwait and Russia are among top countries that have large wealth funds to make investments abroad. Chinese firms spent $32 billion last year to buy energy and metals assets abroad. China Investment Corporation, set up in 2007 with a corpus of $200 billion, is one of the largest sovereign wealth funds in the world.

India’s energy consumption may more than double by 2030 to 833 million tonnes of oil equivalent, based on present trends, driven by population growth and an industrial build-up, as per International Energy Agency (IEA) projections. When contacted, R S Sharma, CMD, ONGC, refused comment. “Such a fund would be very helpful to compete with the Chinese companies,” Sharma had earlier told Financial Chronicle. The government is already weighing the option to set up a sovereign wealth fund to help Indian oil and gas companies to compete for overseas energy assets.

Oil ministry has asked finance ministry to consider setting up a fund using a part of India’s $254 billion forex reserves. “So far, we have not received any communication from the government on creating a sovereign fund with Venezuela,” said T K Ananth Kumar, director (finance), Oil India.

“The government is planning to create a sovereign fund for sometime now. It is at a preliminary stage. India shares good relations with Venezuela. But, several factors have to be analysed before joining hands for a fund of such big size,” Kumar said.

“We will have to analyse several factors such as investment opportunities, kind of assets where we will focus and how both the countries would contribute before creation of such a fund,” said S V Narasimhan, director (finance), IOC.

Meanwhile, Deora and chief executives of top oil companies will leave for Venezuela next week to seal the largest energy deal of $2.2 billion. OVL, IOC and OIL have jointly picked up a significant stake in oil assets at Carabobo –1 block in Venezuela’s Orinoco belt.

Tata Tea rechristened as Tata Global Beverages

Source:FC:Ritwik Mukherjee May 06 2010 , Kolkata

In less than a year of br­inging in operational integration, five beverage businesses under Tata Tea, Pepsi in deal for beverage joint venture

Tata Tea have formally come under one corporate name — Tata Gl­obal Beverages. The bo­ard of directors of Tata Tea on Thursday approved the rec­hristening exercise.

Among the beverage bra­nds of the $1.07 billion Tata Tea are Tata Tea, Tetley and Eight O’Clock Coffee. The operational integr­ation of its five beverage bu­sinesses was announced last year.

Tata Global Beverages will now unite all the beverage interests marking another step in the company’s transformation into a global leader in ‘good for you’ beverages. However, the current brand names will remain for its products, the communiqué clarified.

Managing director of Tata Tea R Krishna Kumar said, “The announcement clearly demonstrates the group’s pride in its Tata parentage and heritage, as well as its intention to build a new and strong global Tata brand.”

An official communiqué from the company said: “Tata Tea, Tetley, Eight O’Clock Coffee and other company names will change to one corporate name — Tata Global Beverages Limited, subject to the approval of the shareholders and the approval of the central government. The approval of the shareholders is proposed to be sought by way of postal ballot in accordance with the provisions of Section 192A of the Companies Act, 1956.”

According to tea industry officials, this signals an important milestone in the evolution of the beverage business, where 70 per cent of the current consolidated revenues come from outside of India. The company is present today in around 60 countries. Tetley and Eight O’clock Coffeee are among international acquisitions in recent years in line with its global strategy. It also markets the Hima­layan mineral water brand.

“The new name reflects the company’s ambition to become global and its successful transition from being a tea and coffee commodity business to one focused on delighting consumers across the world with great-tasting branded beverages. Importantly, it sets out the strategic intent of the company for the coming years,” Kumar said.

For China, world on a platter

Source:FC:Urs Schöttli May 06 2010

A few days ago the world exposition in Shanghai opened its doors to thepublic. After the 2008 Summer Olympics in Beijing this is the second major world event, with which China makes global headlines. In the run-up to the two events we noted that while in Beijing the attention focused on the Olympics, in Shanghai the main interest was for Expo 2010. Observers who had been at the opening ceremony in Beijing’s bird’s nest noted that the fireworks that launched the Shanghai Expo were far grander. Proud Shanghai officials mention with glee that the Olympics had been a short event, while the Shanghai Expo will last a full six months.

Obviously, this is a new round in the eternal rivalry between the two great cities. World expositions come and go and most of them get quickly forgotten. However, a few of these events have gained a particularly emblematic significance.

We think of the Great Exhibition in London’s Crystal Palace in 1851 or of the World’s Fair in Paris in 1889, which gave the French capital a new monument of global fame, the Eiffel Tower. The London exhibition was also the celebration of the great British Empire.

At that time it not only spanned the world, it also proudly claimed to have reached the apex of the white man’s civilisationary mission in the world. The Paris exhibition, like many paintings of the Impressionists, was the celebration of a new age, the age of technology and industrial power.

A few years ago we met officials who were in charge of planning the Shanghai Expo 2010. They stressed that the main goal of the giant event was “to bring the world to the Chinese people”. Of course the Expo, together with the Summer Olympics, was also to be a kind of “coming of age party”, a demonstration to the world at large that China had returned to the top table. These two events are indeed a symbolic celebration of the historic economic, technological and social modernisation that has propelled China into the 21st century.

In many ways, the Shanghai Expo is a tribute to the greatest Chinese reformer in modern times, Deng Xiaoping. He stands for the gigantic efforts with which China has overcome the dreadful legacy of chairman Mao who had left the country destroyed and impoverished.

But let us go back to the claim of the Chinese officials that the Shanghai Expo mainly serves the purpose to bring the world to the Chinese people. It is this ambitious mission which puts the Shanghai Expo amongst the most important exhibitions. The officials expect some 70 million people to visit the six-month event. The overwhelming majority of the visitors will be from China.

In comparison, the number of foreign guests will be insignificant. It is to be expected that visitors from the distant provinces and remote towns will come to Shanghai in organised groups. The Communist Party will invite deserving members. Local dignitaries from all the four corners of the country will come to Shanghai and spend a good time at the Expo. Universities will send their eager teachers and students and, of course, the Chinese media will report at great length on the smallest detail of this gigantic show.

It will be interesting to see which pavilions will rank amongst the most popular. Of course, as is normal with a country that has emerged from two centuries of humiliation by foreigners, the focus will be first and foremost on the Chinese pavilions. The Shanghai Expo does not only present the world to China, it also wants to demonstrate the rapid rise of China to the top of the world economy.

Without any doubt the pavilion of the United States will attract most attention. The Japanese, too, can expect to be amongst the very top when it comes to the number of visitors. It is a telling fact that in both cases the bilateral relations are not free from friction.

However, the Chinese are pragmatic enough to distinguish between emotions and utility. They know that their country’s future needs the top technology, which only the United States and Japan can provide. The main political message, which the Chinese government wants to spread at the Shanghai Expo has to deal with the quality of life, particularly in an urban setting.

A strong emphasis is put on the respect for nature and the environment. However, it is expected that for the huge majority the main interest will be in getting an impression of as many foreign pavilions as possible.

It will be for them the first fleeting contact with people from distant parts of the world and will raise their curiosity for the world beyond China’s borders. This then, will be the historic legacy of the Shanghai Expo.