DLF plans to sell non-core assets to reduce debt

Source : :17 May 2010, 0057 hrs IST,PTI


NEW DELHI: Realty giant DLF plans to raise Rs 2,700 crore this fiscal year through sale of non-core assets to reduce its debt of over Rs 16,421 crore by about one-third.

The country’s largest realty firm plans to cut its debt by Rs 5,000 crore, of which it plans to raise Rs 2,700 crore from sale of non-core assets and the rest from internal accruals. DLF had decided to raise Rs 5,500 crore last fiscal via sale of non-core assets, but was able to raise only Rs 1,800 crore.

“We are not only confident of managing our liabilities during the fiscal. We will also reduce our debt very comfortably,” DLF executive director (finance) Saurabh Chawla said.

... The debt will come down by about Rs 5,000 crore from the current level,” DLF executive director (finance) Saurabh Chawla said. Half of the planned repayment will come from non-core asset sales, while the rest will be funded through revenues from operations, he added.

DLF has to repay Rs 2,500-2,700 crore in debt this fiscal and an additional Rs 1,800 crore as interest. “Divestment of non-core assets as a strategy is to focus more on the core business operations and not merely as a means to reduce debt.

However, all-cash flows from this process will be utilised to bring down debt,” the presentation made to analysts said. DLF repaid about Rs 5,600 crore of debt in the last fiscal against a mandatory debt repayment of Rs 3,549 crore.

Mr Chawala said the current debt equity ratio stands at 0.53:1, which will increase to about 0.75:1 in this quarter, but come down during the fiscal. DLF’s net profit declined by 61% to Rs 1,730 crore in 2009-10 against Rs 4,469 crore.

The total revenue during fiscal 2009-10 fell by 25% to Rs 7,855 crore from Rs 10,431 crore in fiscal 2008-09.
In the last fiscal, the company had sold 12.55 million sq ft area across different locations.

IDBI asks KF to pay back Rs 900 cr

Source : :17 May 2010, 0017 hrs IST,Sangita Mehta & M Padmakshan,ET Bureau

MUMBAI: IDBI Bank has recalled a Rs 750-crore loan advanced to Kingfisher Airlines, after the company failed to stick to its repayment schedule.

IDBI has sent a notice to the airline asking it to pay a total of Rs 900 crore, which includes a Rs 150-crore short-term loan on which the Vijay Mallya-owned company has missed some payments and a Rs 750-crore loan which will mature after some years.

The letter, which was sent last week, has asked India’s second-largest private airline to pay around Rs 900 crore by the middle of this week. If this did not happen, the bank said that it might invoke guarantees issued by holding company United Breweries Holding and by Vijay Mallya himself.

The contents of the letter were described to ET by people with access to it. Officials from IDBI declined to comment on the matter.

Mr Mallya denied that IDBI was calling back the loan. “The loan was given by a consortium led by SBI. So far, there is no problem. The information that IDBI is recalling the loan is incorrect,” he said.

Banks typically call back loans if it reaches the conclusion that the borrower may fail to pay on time. The recall notice is for Rs 750 crore, as Kingfisher has already defaulted on the Rs 150-crore shorter duration debt. In reality, such recall notices are used as negotiating tactics, a way of telling a defaulting company not to take its payment obligation lightly.

Sources familiar with the matter said that Kingfisher, which has overtaken state-owned Air India and is close behind leader Jet Airways in its share of the domestic market, had failed to pay interest both on the long-term loan (Rs 750 crore) and, interest and principal on the short-term debt (Rs 150 crore) according to the schedule, prompting the bank to send its missive.

Kingfisher Airlines has borrowed around Rs 3,000 crore from several banks, such as State Bank of India, Punjab National Bank, Bank of India, ICICI Bank and Axis Bank and has appointed SBI Capital Markets, an investment banking arm of SBI, to restructure these loans. Kingfisher has announced plans to raise $100-million equity by issuing global depository receipts which would improve its debt-equity ratio.

IDBI and other lenders are worried about their exposure to the airline company. The delay on the part of Kingfisher in arranging equity and the decision to restructure the loan within a year of availing is disappointing, said an official from a large commercial bank, who spoke on condition of anonymity.

Restructuring a loan means changing the original terms under which the money was lent out. Usually, the rate of interest or reduced or the loan is allowed to be paid over a longer-time period. In some cases, both concessions are forthcoming.

RBI guidelines on restructured loans stipulate that restructured loans to non-manufacturing company such as airlines have to be classified as bad assets. Classifying a loan as a bad asset means higher provisioning or requiring banks to set aside more capital, thereby impacting the bottomline.

Sources from SBI Caps say that they plan to seek an exemption from RBI on restructuring loans to the airline company. The lenders would ask RBI to allow them to change the terms of the loan without classifying it as a stressed or bad asset.

However, it is unclear if the central bank will oblige. In the recent past, RBI had declined to relax norms on provisioning even in the case of the Ratnagiri project (Dabhol), forcing lenders to make provisions.

Banks urged to make rescheduling recovery of loans from sick units a continuous process

---

The AP Incipient Sick SSI Federation has suggested to the State Govt to constitute a team to study the implementation of the policy in TN, for rehabilitation of sick SSI units.

---

Source: BS :Amit Mitra,Hyderabad, May 16,2010

The State Level Bankers Committee (SLBC) of Andhra Pradesh has suggested that banks should make the rescheduling of recovery of loans from sick industries a continuous process, instead of the present system of only once, in a bid to further boost recovery efforts of sick units in the State.

Public money
This, the committee felt, should be done based on current exigencies and unforeseen circumstances, as “otherwise the public money used by the industry will remain blocked without any tangible return.”
This issue was part of the agenda at the recent SLBC meet, that was discussed at length.

“The issue will once again be taken up the SLBC's steering committee meeting that is scheduled in the next couple of weeks. After that it will be conveyed to all the banks in the State,” a senior official of the committee told Business Line.

State policy

The AP Incipient Sick SSI Federation has suggested that the State Government, while preparing the state policy for industrial production, could constitute an experts team to study the implementation of the policy in Tamil Nadu, exclusively for rehabilitation of sick SSI units.

It also pointed out that rehabilitation of sick SSI units in Andhra Pradesh is “being neglected though rehabilitation fund of Rs 20 crore is kept with APSFC, which is not utilised so far.”

The SLBC also suggested that the stipulated power cut period in a month for the industrial sector may be treated by banks as interest holiday to the MSME sector, both for term loan and working capital. Industrial units in the State had been till recently facing 13-day power cuts in a month, which has, however, now been lifted.

Working capital

It further suggested that banks should provide ad hoc credit facility to MSMEs to meet the working capital limit needs in order to make up the shortfalls that arise out of power shortage and delayed payments from customers.

As per the latest SLBC data, the total outstanding credit to the MSME sector in the State is about Rs 28,143 crore, including Rs 15,525 crore for small enterprises and Rs 7,363 crore for micro units.

Credit guarantee

Last fiscal, the total guarantee approved under the Credit Guarantee Fund Trust for micro and small enterprises in the State increased to Rs 225.03 crore from Rs 80 crore in the previous fiscal, reflecting an increase of 181 per cent.

State Bank of Mysore bullish on lending to agri, small sectors

Mr Dilip Mavinkurve, Managing Director, State Bank of Mysore

Looking at Rs 600-crore inflow thru rights issue.

---

Advance indications are that monsoons are likely to be 90-95 per cent normal… If the monsoon is alright for the kharif crop beginning in June we should be able to increase our agri portfolio.

---

Source :C. Shivkumar,:BL :Bangalore, May 16,2010

Mr Dilip Mavinkurve, Managing Director of the State Bank of Mysore, is not the quintessential modern day banker, talking derivatives and exotics. He is instead a complete public sector banker belonging to the traditional school, committed to development. In an interview to Business Line, Mr Mavinkurve spoke on his plans to push the bank's development-focused agenda.

You have estimated a very ambitious business growth target of 26 per cent in an environment of low corporate credit off-take. How are you going to achieve the target?

Credit off-take is low. But everybody is talking in terms of an 8 per cent GDP growth. But 8 per cent growth cannot be achieved unless agriculture grows by 3 per cent. This time everybody is talking about normal monsoons. Advance indications are that monsoons are likely to be 90-95 per cent normal. Last year, we were quite impacted by drought and flood. Our growth in the farm sector was the lowest. I am talking about Karnataka where we have our largest presence.

Second, there is also the debt relief factor. The ability of the farmers to pay back and take fresh loans was not there. Everything is now coming to a conclusion. One, the debt relief has been extended up to end of June. We hope that with this extension we should be able to convince everybody to take the relief and avail themselves of fresh loans. If the monsoon is alright for the kharif crop beginning in June we should be able to increase our agri portfolio.

Then there is the SME sector. The RBI has made it mandatory for collateral-free advances up to Rs 10 lakh. With cover from the Credit Guarantee Fund Trust for Micro and Small Enterprises, we should be in a position to see some additional growth. Overall, the SME sector appears to be picking up quite well. Though we did restructuring last year, there seems to be some improvement, particularly in the auto and other sectors, where there are a large number of SSIs. In main corporate accounts, sanctioned limits would be drawn for the implementation.

In addition, we have sizeable coffee assets in Chikmagalur and Hassan regions. The industry is beset with problems. Fortunately, the finance Bill this year announced a coffee relief package. This will also help us. Affected growers have been given another lease of life.

Does it mean that it would allow you to writeback some provisions on substandard assets?

Not too large. The coffee growers were also subject to agriculture debt relief. They were supposed to pay up within a stipulated time. They were not able to do it in view of the ongoing problems in the coffee plantation sector. Now they will be enabled to do it. Heavy rainfall caused some crop damage. Agriculture, therefore, will give us good growth.

What about capital requirements for sustaining the credit growth especially in a situation where tier-I capital increase is constrained?

We have proposed a rights issue. We had filed a draft prospectus with SEBI. We are required to get some approvals from the SBI, RBI and probably now from the Government since we are a statutory body, and since we come under the State Bank of India subsidiary Banks Act. SBI has already given the consent. The Acts have also been amended. We are awaiting the RBI's approval. Once that is through, the draft would become final. The inflow from the rights issue that we are looking at is Rs 600 crore. That should stand us in good stead for the next couple of years. With the increase in tier-I capital, we should be able to increase tier-II. This year whatever profits we get will help in tier-I accumulations. We have a tier-I capital adequacy of 7.8 now. Total CRAR, is about 12 .99 per cent. Although we are above 9 per cent, we are looking at further strengthening our tier-one capital. World over, the standard is strengthening tier-one capital.

What about perpetual bonds and preference shares?

We are not considering it this year. Last year, we raised Rs 100 crore. But this capital is expensive. We normally do a five-year capital planning in consultation with the SBI. The perpetual bond we raised was part of that consultation. This Rs 600 crore willlast us this financial year and the next. After about two-and-a half-years we may need to go for further capital depending on the business growth. The total capital adequacy we are planning is 13 per cent.

You are also active in the CDs market. Will it not increase the volatility of liabilities?

Yes. But we are not taking an excessive amount of CDs. As a policy we have certain caps on CDs. We have CDs outstanding of Rs 6,000 crore, though we have an approval for Rs 9,000 crore. Even within the ALCO we have an internal cap. Besides, CDs are also clubbed with bulk deposits. Both of them are considered volatile by us. From April 2009, we have kept a ceiling on them. That is one of the reasons for our profitability.

What about impact of the European crisis on credit? Is there a likelihood of domestic credit once again substituting for cross border flows?

The dependence on the euro is much greater than what is thought of. In the earlier days, the billing was done in dollar even to Europe. After the continuous weakness of the dollar, people started billing in euro. The textile sector started billing in euro. With the euro weakening now the effect is likely to be larger. It has just started. There is lots of uncertainty. Nobody wants to hold on to any position. There is bound to be high volatility in the next few months with short-term funds moving from one asset class to another.

Indians see China as a land of economic opportunities: survey

 Source :Ananth Krishnan :BEIJING, May 16, 2010

But majority of Chinese look at India either as threat or as a far less developed nation

While Indians are beginning to increasingly view China as a land of economic opportunities, a majority of Chinese continue to look at India either as a threat or as a far less developed country, according to a survey conducted by a Beijing-based research group.

 

The survey, carried out between year 2000 and 2009 by Horizon Research, found that Chinese perceptions of India were beginning to slowly improve — 45 per cent now viewed India favourably. However, most Chinese still perceived India, along with the United States and Japan, as the countries that most posed a threat to China. The study also found that Chinese viewed Pakistan as a better partner than India.

Contrastingly, Indian perceptions of China were more positive. Only 23 per cent of 4,500 surveyed in India viewed China as an enemy.

“What we found was that Chinese people still have many misperceptions about India,” said Yuan Yue, chairman of Horizon Research. “Chinese people feel India is developing slowly, but the majority of Indian people feel China is an emerging country which will soon even replace the U.S.” 

Almost half of those surveyed in India, he said, believed China would replace the U.S. as the world's dominant power.

Mr. Yuan did not comment on what role China's media, which are State-controlled, may have had on shaping attitudes towards India.

Consequently, Mr. Yuan noted, more Indians were willing to travel to China for business and tourism, while fewer people in China viewed India as an opportunity. India ranked below the U.S., Russia, Europe and South Korea as countries Chinese viewed as destinations for business or education.

Among other Chinese perceptions of India, the survey found Chinese viewed India as the “weakest” of the four BRIC nations — Brazil, Russia, India and China. 

The survey's findings, revealed at the start of a two-day forum examining relations between the two countries, served as a sobering reminder to both officials and scholars present of the wide perception gap that persists between the neighbours, even as they celebrate 60 years of bilateral ties this year. 

“The survey shows we need to increase dialogue and exchanges,” Mr. Yuan said.

Indian Ambassador to China S. Jaishankar said the current period in bilateral relations, one of “blue skies” following the border-related tensions of last year, presented an opportunity to do so. “There is a Chinese saying that roofs are better repaired before it rains,” he said. “Clearly, that is done best when the sun is shining. Even as we acknowledge the progress in our ties, it is important that we focus on initiatives to further strengthen them.” Part of the initiative, he said, was “to put in place a broader engagement between our societies.”

Australia’s new migration list removes hairdressing, cookery

 

 Source:PTI:The hindu :Melbourne, May 17, 2010

In a major overhauling to its immigration policy, Australia has announced new preferred occupation skills list dropping occupations like hairdressing and cookery in favour of doctors, nurses and engineers to crackdown on people seeking permanent residency through low-value education courses.

 

Immigration minister Chris Evans has announced a new skilled occupation list for Australia, with 200 fewer classifications and said that it will ensure Australia brings in workers it needs rather than having a policy dominated by people doing particular courses.

The new move will put an end to people coming to Australia for short courses in some vocational subjects and then gaining permanent residency based on that training.

“What this will do is drive our independent skill migration programme so that we’re bringing in the people we need, not have people dominating our migration programme because of the course they study in Australia,” he said.

He said previous lists have not looked at the long-term needs on which to base these decisions.

“They’ve been dominated by various interests lobbying to be on the list,” he said adding, “This is an independent piece of work by Skills Australia. It’s focused on us developing a skills base and matching our education effort and this list will determine who can independently migrate to Australia.” 

Mr. Evans said it is a fundamental economic reform based on scientific analysis.

He said in the past the education system, rather than skills needs, drove migration outcomes.

“This is about making sure the people who come in on the migration programme have the skills we need, have the English levels we need and can get a job in that skilled area,” he said.

He said the list, developed by the independent body Skills Australia and containing 181 highly valued occupations, would ensure Australia’s skilled migration programme is demand—driven rather than supply—driven.

“We intend to fundamentally change the way we target skilled migrants to restore integrity to the skilled migration program,” Mr. Evans said.

The new SOL is a critical reform in the Government’s overhaul of the skilled migration programme and closes the door on those seeking to manipulate the migration system.

Only people with relevant qualifications in occupations listed on the SOL will be eligible for independent general skilled migration.

“Australia’s migration programme cannot be determined by the courses studied by international students,” Mr. Evans said.

“This SOL represents a new direction which aims to ensure we choose migrants who have the skills to meet our nation’s economic needs. 

“The Rudd Government continues to value the very important contribution made by the international education sector and education providers that deliver high—quality courses to both Australian and overseas students will continue to prosper.

“International students who have the skills our economy needs will still be able to apply for permanent migration or be nominated by employers but we will no longer accept the thousands of cooks and hairdressers who applied under the guidelines established by the Howard government.” 

Under the Howard government people who completed short courses in vocations such as cooking and hairdressing and had low English skills were almost assured of gaining permanent residence as a skilled migrant.

In 2007—08, of the 41 000 general skilled visas granted, more than 5000 went to cooks and hairdressers; three quarters of them had formerly studied in Australia.

These two occupations have been removed from the new SOL.

The Minister said he would recommend to the Governor—General in—Council amendments to the Migrations Regulations 1994 to give effect to this new framework.

The new SOL is proposed to come into effect from July 1 to replace the old list which contained more than 400 occupations. It will be updated annually.

Mr. Evans said Skills Australia received advice from industry skills councils, industry peak bodies and Professions Australia to ensure the SOL contained occupations Australia needs in the medium to long term.

“The Government has increased English language requirements for trade applicants and introduced a new job ready programme for onshore trade applicants. There is now increased priority for employer sponsored migrants and this will ensure industry is able to quickly access the skilled workers it needs,’ he said.

During the past 18 months, the Government has driven a reform agenda, aimed at shifting the supply—driven skilled migration system we inherited to a demand—driven one.

“First and foremost, young Australians should be trained and given the opportunity to fill existing job vacancies. The Government has a national plan to ensure young people are skilled in the occupations where there is the greatest need,” Senator Evans said.

Chairman of the Government’s National Resources Sector Employment Taskforce, Parliamentary Secretary for Western and Northern Australia Gary Gray, welcomed the new SOL and said it would address the needs of the resources sector.

“The taskforce has met with resource sector employers across the country and the clear message is that we need a targeted approach to migration,” Mr. Gray said.

The government recognises the proposed changes would affect some overseas students currently in Australia intending to apply for permanent residence.

The introduction of the new SOL does not change the concessions announced in February which provide generous transition arrangements for former and current international students seeking a visa under the General Skilled Migration (GSM) programme.

People who have already applied for a GSM visa would not be affected by the implementation of the new SOL.

The changes would in no way affect international students coming to Australia to gain a qualification and then return home.

Canadian Finance Minister to visit India this week

 

 

Source : The Hindu,PTI,Toronto, May 16,210

In order to expand and strengthen bilateral business ties between two countries, Canadian Finance Minister Jim Flaherty is visiting India this month.

During his three day visit beginning from May 17, Mr. Flaherty will meet his Indian counterpart Pranab Mukherjee, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and other political, business leaders and heads of industry in New Delhi and Mumbai.

The visit of Mr. Flaherty is aimed at further strengthening the growing trade and other ties between India and Canada, as well as highlighting Canada’s priorities for the June G20 Leaders’ Summit in Toronto, official sources said here yesterday.

In Mumbai, the Minister will speak at a luncheon hosted by the Confederation of Indian Industry (CII).

Flaherty is a lead thinker for the Government of Canada on economic issues on G7 and G20. He also advises the Government on a broad range of international issues including foreign development, trade and cross border policies.

SAIL to set up Rs. 60,000 crore steel project in Jharkhand

 

 Source:PTI:New Delhi, May 16, 2010

State-owned SAIL is mulling over setting up a steel project, at an estimated cost of Rs. 60,000 crore, in Jharkhand. 

The plant, which is expected to be built on the space belonging to a closed fertilizer mill in Sindri, Dhanbad district, would help the company raise its annual steel production to 60 million tonnes by 2020.

The steelmaker recently applied to the Ministry of Chemical and Fertilizers for setting up the 12 million- tonne per annum plant, government officials told PTI. 

“The integrated steel project would come up in two phases,” one of the officials said. 

As per the proposal, the PSU would also set up a 1.15 million-tonne coal or gas-based urea plant at the site. The loss-making fertilizer mill in Sindri had been lying shut since March 2002. 

The plan to utilise the land bank of closed fertilizer and cement mills for setting up steel mills is in line with a strategy outlined by Steel Secretary Atul Chaturvedi. 

Former Fertilizer Secretary Chaturvedi said that in order to avoid problems relating to land acquisition, public as well as private sector firms should seek land belonging to closed mills, especially ones located in the mineral-rich States of Jharkhand, Orissa and Chattisgarh. 

Meanwhile, the government set up a high-level committee of State industry ministers to prepare guidelines on the creation of industrial sites, comprising waste and fallow land. 

SAIL is currently in talks with South Korean steelmaker POSCO to jointly set up two steel plants, entailing an estimated investment of Rs. 15,000 crore in the country. 

It has also been approached by global firms like ArcelorMittal and Kobe Steel for possible business ventures.

Ratan Tata honoured with Global Indian award

  Chairman of the Tata Group, Ratan Tata. 

   Source: May 16,2010.The Hindu-Toronto,File Photo: Rajeev Bhatt 

India’s top industrialist and Chairman of the Tata Group, Ratan Tata has received the 2010 CIF Chanchlani Global Indian Award for his outstanding global leadership, vision and professional excellence.

The award which carries USD 225,000 (Rs One Crore) and citation was presented at the Annual Award Gala of Canada India Foundation, held in Vancouver Barj Dhahan, Gala Chair and Co—Chair of Canada India Foundation said.

Mr. Ratan Tata joined India’s largest business conglomerate in 1962 and in 1991 replaced his predecessor JRD Tata, as Chairman of Tata Sons.

Since then, the Group’s revenues have increased 12—fold.

Recent acquisitions under Tata’s guidance include Jaguar and Land Rover from Ford Motor Company and Corus Group, an Anglo—Dutch steel producer.

Mr. Tata was honoured with the Padma Vibhushan, India’s second—highest civilian award in 2008.

His dream of manufacturing a low—cost and environmentally friendly car that more people in India could afford to drive was realised when the Tata Nano, also known as ‘the People’s Car’, with an end—user cost of only USD 2,500, went into production last year and has since received world—wide acclaim.

Canada India Foundation created the CIF Chanchlani Global Indian Award to recognise individuals who have demonstrated global leadership, vision and professional excellence, which has made people of Indian origin around the globe proud of their heritage.

Capital Gains

Source:sify:may 17,2010
What does transfer mean?

Transfer means giving up your right on an asset. It includes sale, exchange, compulsory acquisition under any law, relinquishment etc

Does the capital gain tax differ according to my period of holding an asset?

Yes. If assets are held for more than 36 continuous calendar months prior to transfer they are called long-term assets and their transfer results in long-term capital gain that is taxed at the rate of 20%. The only exception to this general rule is in respect of securities for which the period of holding prior to transfer is 12 months to be considered as long-term capital asset and the rate of tax is nil, provided securities transaction tax has been paid. Any transfer of assets held for lesser than these periods would result in short-term capital gain. This is taxed at normal rates in respect of all assets except securities. For securities the rate of tax is 10% along with payment of securities transaction tax.



Can I get any benefit for erosion in the value of money over the years while calculating my gain on sale of asset?

Yes. To neutralize the erosion of value of money over the years the cost index for the year of sale is factored in while calculating the cost of investment so that the impact of inflation is neutralized and only the actual gain to the seller is brought to tax.

I have sold a property and made profit. If the sale amount is reinvested in purchase of a site, is my profit exempt from tax?

No. For getting exemption the nature of property sold is relevant. If you have sold a residential property, the gain received on sale should be reinvested in another residential property [which may include land and building] to qualify for exemption [section 54]. Even if you have sold a property other than a residential property, you will qualify for exemption only if the net consideration is reinvested in a residential property which may include land and building [section 54F].



If I sell my land will I be taxed?

Gain from sale of non-agriculture land is taxable as capital gain. Gain from sale of agriculture land is taxable only if it is located within 8 kilometers from the urban limits.

After US and Japan, Indian LPOs all set to enter Oz

Source : :PTI May 17 2010 , New Delhi

After US and Japanese markets, home-grown legal process outsourcing (LPO) firms are now gearing

up to tap the USD 21-billion Australian legal market.

Pegged at USD 21 billion in terms of industry revenue in 2009, the Australian legal market is projected to grow by about 1 per cent year on year.

While there are many law firms that are operational in the Australian market, it remains largely untapped by off-shore legal outsourcing companies. Market experts state that though there are around 35,000 players in this segment, the market is dominated only by six or seven top ones.

Indian LPOs, such as Pangea3, are set to benefit the most from legal outsourcing in Australia. The Mumbai-based company had recently tied up with Australian law firm Advent Lawyers to set up its base there.

Australia is a tremendous market. In fact, we are among the first legal process outsourcing companies to have entered the Australian market," Pangea3 co-CEO Sanjay Kamlani said.

Solutions offered by the firms range from day-to-day commercial contract drafting, corporate governance, M&A due diligence, risk management and compliance, IPR services and litigation support, and e-discovery.

Almost 40 per cent of the services offered are either administrative, personal or property-based, an official with an LPO firm said.

Indian firms are currently helping in-house counsels in Australia integrate legal technology solutions and off-shore legal talent solutions into their own processes, dramatically enhancing the value-addition to their organisations without burning holes in their pockets.

"Of the total cost incurred by a firm in Australia, about 33 per cent is spent on wages or rent -- something that can be greatly minimised by outsourcing to low-cost destinations," Kamlani said.

Stating that there is not much competition from other emerging markets such as Philippines, Kamlani stated that Indian professionals have, through years of experience, developed extensive process expertise that is highly respected by clients in the West as well as Apac.

Indian LPOs have already cornered a sizeable chunk of business in the multi-million US and Japanese markets

Planning Commission sets 20,359 MW capacity addition target

Source : :PTI May 17 2010 , New Delhi

The Planning Commission today set targets to augment the country's infrastructure this fiscal, including
adding 20,359 MW of power generation capacity and 2,500 km of highways, its Deputy Chairman Montek Singh Ahluwalia said here.

The goal for at least the power sector is ambitious given the failure to meet even last year's subdued target.

The plan panel had set 14,507 MW power generation capacity target in 2009-10, but actual addition was just 9,585 MW.

Similarly, the target for highway last fiscal was 3,165 km, while the actual completion was 2,008 km.

The investment target for roads has been pegged at Rs 35,680 crore in 2010-11, higher than Rs 29,934 crore in the last fiscal.

Again, the actual investments that came in into the sector last fiscal was Rs 11,608 crore.

Gold too hot for Indian buyers

 Source : :Reuters May 15 2010 , New Delhi

Gold imports by India, the world's biggest market for the precious metal, could drop
for a third straight year in 2010 as record high prices scare off traditional buyers.

Traders expect to spot the first sign of this trend at next week's Hindu festival of Askhay Tritiya, when demand usually jumps because it is considered an auspicious time to buy jewellery and coins.

"Forget buying for the festival, on the contrary people are selling," said Suresh Hundia, president of the Bombay Bullion Association in Mumbai.

"There is a queue of sellers."

Gold is up 12.6 percent so far this year to record levels on investors' fears that a $1-trillion rescue package to prevent a Greek debt crisis from spreading to other euro zone states would eventually fail, or stoke inflation.

On Friday the metal was heading for its fourth consecutive weekly rise, matching a run that ended in late November. Gold stood at $1,234.40 an ounce by 0636 GMT, up $2.57 from New York's Thursday notional close, but off Wednesday's record of $1,248.15.

Traders say many Indians are responding by buying smaller quantities to maintain the same expenditure, or recycling old jewellery. Those who can afford to spend more may wait for prices to stabilise before they buy.

"Demand has turned to zero in the last four days," Hundia added. "Last year for the festival about 12 tonnes was sold. If prices stay like this, there will be very little sold."

After Akshay Tritiya, demand may spurt only for the festivals of Ganesh Chaturthi in September and Dhanteras in November.

"If prices stay like this, near all-time highs, physical demand could take a hit and a lot of scrap could start coming in. Imports for the full year could fall by 25-30 percent," said Abhishek Raval, a precious metals manager at IndusInd Bank.

For a graphic on India's gold purchases since 1997, click here

For a graphic timeline of gold's rise to record highs, click here

GOLD BECOMING INVESTMENT, NOT JUST JEWELLERY

In India, where gold has long been considered auspicious, the bulk of demand is for jewellery.

But a small and growing number of investors is turning to gold to diversify portfolios and protect themselves against inflation, which has driven prices higher and crowded out jewellery buyers.

"People are allocating 20 to 30 percent to gold in their portfolios," said Haresh Acharya, director of Parker Bullion Pvt Ltd, a large wholesaler in Ahmedabad, noting that wealthy investors were buying the metal.

"The risks involved in the stock market and high inflation are making them allocate more to gold."

Gold as an investment is a relatively new asset class in India, where headline inflation soared to a 17-month high of 9.9 percent in March.

Last year India's demand for gold jewellery was 405.8 tonnes, while that for investment was at 74.2 tonnes, data from the World Gold Council shows.

Rajan Mehta, director of Benchmark Asset Management Co Pvt Ltd in Mumbai, which started India's first gold exchange-traded fund in 2007, said total gold under exchange traded funds could rise as much as 50 percent within a year from 10.063 tonnes now.

"If you look at gold, the returns in the last few years have been very high," he said. "There is more and more realisation that this is an asset class that will give good returns."

On the other hand, a Mumbai-based fund manager said gold was not a compelling buy, because apart from price fluctuations, it was subject to currency risk, as India is a big importer.

Investment in gold still pales in comparison to household demand, which accounts for nearly three quarters of sales in India, and most Indians do not consider it an asset class in its own right, but as a store of wealth.

"The majority of households that buy gold in India don't do that to sell at a higher value necessarily. It becomes a form of savings," said Rajeev Malik, economist at Macquarie Capital, Singapore. "The two are not as substitutable as elsewhere."

Indian jewelers saw brisk sales from January to April, when imports rose 74 percent to 126 tonnes from the same period a year ago as demand bounced back, after a dip last year when prices were high and the monsoon failed, hurting rural incomes.

Food shortages following last year's poor harvest touched off inflation, drawing investors to gold, even though it pays no dividends and can incur storage costs.

"Prices are at unbelievable levels," said Rajesh Mehta, chairman of Rajesh Exports Ltd, one of India's top jewellery makers and exporters.

Trade officials have their fingers crossed for good rains in the monsoon period from June to September, vital to boost incomes in the rural areas home to two-thirds of Indians.

Normal rains are forecast but predictions can often go awry.

"If the monsoon is bad, it will be a crisis. Sales will fall more than they did last year," said Haresh Kewalramani, director of the Bombay Bullion Association.

Sebi panel to discuss select MF products on May 31

Source : :PTI May 17 2010

A committee of market regulator SEBI will consider the issue of restricting mutual funds

from selling an equity product that involves betting on future prices.

The SEBI Mutual Fund Advisory Committee is concerned that this is not mutual funds' core activity and may take a decision on May 31.

Equity options is a derivative product where investors bet on future value of stocks or their indices and SEBI is against mutual funds getting into the hedging business, as it could suffer losses.

In a letter sent to all fund houses recently, SEBI had sought proposals from asset management companies (AMCs), regarding selling of equity options and an increased disclosure of their investment in this segment, sources in fund houses said.

Mutual funds have already submitted their view to SEBI and they may be reviewed at the SEBI's Mutual Fund Advisory Committee meeting scheduled on May 31.

"MF industry body Association of Mutual Funds of India (AMFI) has already submitted its views in consultation with industry players. The proposal would be discussed on May 31," a SEBI source said on condition of anonymity.

The market regulator on its part wants the fund houses to control the risk exposure and clearly demarcate their risky exposure, he added.

Industry players said, "SEBI has been looking at ways and means of regulating distribution of MF products and also MFs investment in derivatives."

The steps are part of SEBI's move to control the risk taken by MFs, analysts said.

Selling an option usually involve huge losses as the underwriter gets exposed to unlimited risks when market becomes volatile or collapses or hits the upper circuit.

"The objective of SEBI could be to ensure that MFs can hedge by buying options, but they should not underwrite the option as it is not the core business of MFs to take risk this way," an analyst at a brokerage house said.

In order to increase accountability on the part of fund houses, the market regulator had last week asked AMCs to disclose the details of investor complaints on websites, as well as in annual reports.

Now all AMCs will have to put up the data for the bygone fiscal by June 30, 2010, and for each new fiscal within two month of the close of the fiscal year.

In order to increase investor interest in MFs, the market regulator had last year abolished entry load and asked fund houses not to deduct marketing and distribution charges from the investment made by customers.

Exim Bank to join hand with banks to offer joint products

Source : : PTI May 16 2010 , Kolkata

The Exim Bank has decided to join hands with commercial banks to offer comprehensive products to companies in foreign trade.

"We have decided not to get into a rate war with banks in the areas we operate, but rather complement them in offering services and products," Exim Bank Chairman and Managing Director T C A Ragnganathan told PTI.

"There are some products which commercial banks are not interested in, like country risk and cluster financing," he said.

"We will try to offer single window service to an organisation where few products may be offered by commercial banks and we will offer complete solutions to trade without affecting our margins," Exim Bank Executive Director Prabhakar Dalal said.

He, however, said that this did not mean that existing products would not be offered if required.

Dalal said the focus would also be in offering financing for overseas investments by Indian corporate entities.

Ragnganathan said it would take time for the shift in strategy and in the next six to 12 months, some results would be seen.

Meanwhile, Exim Bank's total borrowings for 2010-11 would be Rs 24,000 crore, 20 per cent higher than the previous year.

The bank would raise the amount through a mix of rupee and foreign currency loans.

It was close to raising USD 100 million from the Asian Development Bank (ADB) to provide funds to eligble SMEs.

"We are in the final lap to raise USD 100 million for small and medium enterprises in states like Assam, Madhya Pradesh, Orissa, Uttar Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Uttarakhand," Ragnganathan said.

The bank intended to extend loans through development of clusters in different sectors.

The foreign trade development bank had also raised 150 million euro from the European Investment Bank to promote green energy and projects that reduce greenhouse gas emissions.

Another USD 200 million was raised through five-year bonds from the euro dollar market.

Sharp fall in Akshaya Tritiya gold sales as prices bite

Source : : Reuters May 17 2010 , Mumbai

India's gold traders and retailers said late Sunday they saw
large falls in Akshaya

India's gold traders and retailers said late Sunday they saw large falls in Akshaya

Tritiya festival sales, in an indication demand may remain subdued through the rest of the year if global prices continue to stay firm.

The festival, which is more popular in south India, is the second-largest gold buying day in the world's largest market for gold.

"Sales are down compared to last year as prices have jumped in the last 10 days," said Lokesh Kumar Agarwal, chairman of Brijwasi Bullion, a large trader in Lucknow in Uttar Pradesh, India's most populous state in the north.

"People who bought 10 grammes last year, bought only two grammes this time," said Agarwal.

Prices have hardened tracking the international markets, where weakening currencies and fears of a European bailout package have spurred investor buying.

On the Multi Commodity Exchange of India Ltd (MCX), front month gold hit a new record high on Monday at 18,416 rupees ($403.6) per 10 grammes, breaking the previous record of 18,339 rupees hit on last Friday.

Kingfisher cancels flights to London due to volcanic ash

Source : PTI May 17 2010 , Mumbai

With drifting volcanic ash from Iceland forcing closure of two European airports, Kingfisher Airlines
today cancelled all its flights to London while Air India rescheduled its Mumbai-London flight.

"Having assessed the current information received from Eurocontrol, and the trends indicating anticipated closure of the airspace over London Heaththrow airport due to fresh contamination of volcanic ash, Kingfisher airlines has cancelled its flights to and from London airport," its spokesperson told PTI here today.

Air India has rescheduled its Mumbai-London flight AI-131, which was to take off at 2.20 this morning.

"We will take a call on the issue at 1130 hours," its spokesperson said. However, Jet Airways said that all its flights to London were on schedule. The airspace over London's Heathrow Airport and Schiphol airport in Amsterdam, another of Europe's biggest air travel hubs, closed this morning as a dense cloud of volcanic ash drifted from Iceland.

The restrictions affecting Heathrow -- as well as Gatwick, Stansted and London City airports -- will be in place until at least 7 a m local time (1130 IST), the aviation authority said.

SMS alert for kitchen gas leaks

Source : PTI May 17 2010 , Bhubaneswar

Even when you are away from home, this gadget can send an SMS warning
you about a gas leak in your kitchen.

A group of young technologists and engineers here have developed a cooking gas alarm and SMS system to prevent fire mishaps due to gas leakage either from stove or rubber pipe.

The user gets a text message on his or her mobile phone about the impending danger in case of a gas leak with the help of the gadget manufactured by city-based company RoboticWares.

"We are trying to make the common man's life more simple and secure. We are targeting military, medical, consumer and industrial sectors as a potential market for robots," says CEO of RoboticWares Kushal Nahata.

He said kitchen fires can be prevented with the help of remote-controlled gadgets.

Also in the company's kitty of innovative products is a remote video surveillance system called 'Far Eye' which provides a complete software solution for office or home security, he said.

"Far eye monitors home or office round-the-clock, captures motion events using webcam and saves them into compressed video clips. It enables one to conduct remote video surveillance from anywhere in the world," Chief Technology Officer of RoboticWares Gaurav Srivastav said.

The company has also developed a University Automation System known as Unimator, which could be used by around 10,000 students enabling video lecturing, assignment system and storing complete information about a college on web.

Some leading educational institutions here, like the HDF School of Management and Kalinga Institute of Industrial Technology, have been using it, Srivastav said.

ICAI seeks jail in audit fraud cases

Source : BS:Joe C Mathew / New Delhi May 17, 2010, 0:11 IST

The Institute of Chartered Accountants of India (ICAI) has recommended strict penal action, including imprisonment, for auditors who are found associated with serious accounting frauds.

It also wants the Ministry of Corporate Affairs to frame a code of conduct for financial analysts and investment bankers for better scrutiny of firms that may indulge in such illegal affairs.

The recommendations are part of ICAI’s final report on Satyam scam and the role of Satyam's former statutory auditors from global auditing firm PriceWaterhouseCoopers. The report, finalised by ICAI’s highest decision-making council a few days ago, would be submitted to the ministry this week.

According to sources, ICAI has recommended strict action against auditors known to have collided with Satyam’s former promoter Ramalinga Raju in committing fraud. The committee has also recommended fresh scrutiny of the account books of all associate firms and subsidiary companies of the Raju family. ICAI officials confirmed that its apex council had finalised the report on May 13, but declined to provide details.

An ICAI sub-committee, which carried out extensive inquiry into the scam in January this year submitted its report to the institute’s council. The sub-committee report prima facie found fault with PriceWaterhouse auditors S Gopalakrishnan and S Talluri, and recommended disciplinary action, including a professional ban on the two individuals.

The central council of ICAI took time to firm up its views on the report as it wanted the accused auditors to be given a fair chance to present their case.

India Inc, banks to raise Rs 150,000 crore debt

Source:FC:Sneha Shah May 16 2010

To meet their growth plans, Indian companies and ban­ks are likely raise around Rs 150,000 crore of debt thr­ough issue of bonds in the ongoing financial year. According to industry experts, sectors like manufacturing, infrastructure and banks are likely to tap the debt market to raise money.

“Banks will be raising close to 70-80 per cent of the total debt that will be raised in the present financial year,” Anil Ladha, head-capital markets with ICICI Securities, said. According to him, banks will raise money through debt to make up for their tier I and tier II obligations.

According to a estimates put out by various investment bankers, banks will raise close to Rs 150,000 crore in 2010-11 through debt market. As equity becomes expensive and concerns loom large over valuations, companies will look at shifting to bonds and that will be evident in FY11, bankers say. Apart from banks, companies in the manufacturing sector, infrastructure sector and non-banking financial companies will look at debt issuances as an option to raise money.

Most of the bonds that are issued by Indian companies are not for more than 7-10 years period. “Absence of a long-term debt paper is a disadvantage and keeps out many companies from opting for bond issuances,” a banker said. According to her, infrastructure companies will look at debt market for financing the shorter term of the requirement.

“These debt issuances will be mainly through private placements of bonds,” an investment banker with a foreign bank said. According to him, retail bond issuances will be over and above this Rs 150,000 crore that the companies raise through debt issuances. “Retail bond issuances will amount to Rs 10,000-15,000 crore in FY11,” a banker who did not wished to be named said.

In 2009-10, around Rs 173,000 lakh crore was raised through debt by banks and companies. In 2009-10, companies like Shriram Transport, Tata Capital and L&T Finance raised money through retail bond issuances while almost all major banks like SBI, Bank of India, Union Bank of India, Canara Bank and others raised money (tier I capital) through floating such bonds.

Private infrastructure firms get nod for tax-free bonds

Source :FC : Sarita C Singh & KA Badarinath May 16 2010 , New Delhi

Private infrastructure companies can now easily access long-term and cost-effective funds with the governmentclearing the decks for them to raise money through tax-free bonds.

The route was cleared last week when finance minister Pranab Mukherjee approved the proposal to award tax-free status to bonds issued by private infrastructure companies and non-banking infrastructure finance companies, a finance ministry official said.

The decision will help companies to boost resources for public and private infrastructure projects, which were facing major financial constraints, the official said.

The official said all core sector companies and related non-banking financial companies (NBFCs) together would be able to raise only Rs 20,000 crore through tax-free paper.

They would have to follow stringent norms, the official said, and only AA plus rated pure infrastructure companies and related NBFCs would be eligible to issue tax-free bonds.

Infrastructure companies have welcomed the decision and some said it would reduce the cost of borrowing.

Srei Infrastructure chairman and managing director Hemant Kanoria said, “If that has happened, then it is a very good thing, because it was urgently required. It will help infrastructure finance companies to raise money in domestic market at lower cost and,

to that extent, we can also lend to private companies at a lower cost. Through tax-free bonds the cost of funds for infrastructure typically goes down by at least 200 basis points.”

Kuljit Singh, partner of audit and consultancy firm Ernst & Young in India, said it was a great move that would instantly lead to reduction in the cost of borrowing. However, one has to look into ratings, Singh said, as pension funds and even retail investors look for good ratings before investing.

L&T Power managing director and chief executive officer Ravi Uppal said it was a very good move and it would mobilise more earnings, which would come into the infrastructure segment.

“One of the things that is coming in way for infrastructure companies is investment, and if this kind of move is permitted, it will bring more earnings within the fold of the segment. Joint ventures, public-private partnerships and a whole lot of things will be triggered by this,” Uppal said.

GMR Energy chief executive officer Raaj Kumar said the move was positive but one had to read the fine print.

Jindal Power managing director R P Singh said it was great move for infrastructure sector as a whole.

On March 24, 2010, Mukherjee said that the government was considering opening up the window for issuing tax-free infrastructure bonds to private companies. So far, only state-owned Rural Electrification Corporation and National Highways Authority of India were allowed to issue such bonds.

Prime minister Manmohan Singh said last month that the investment needed for infrastructure sector was expected to grow to more than $1 trillion (Rs 45,00,000 crore) in the twelfth plan (2012-17) compared with $500 billion in the eleventh plan (2007-12).

To attract more funds for infrastructure development, the government allowed individuals to save more tax in budget 2010-11 by investing Rs 20,000 a year in long-term infrastructure bonds in addition to the Rs 1 lakh tax exemption under some sections.