3G auction :Except Etisalat, Videocon all are winners

Source :Shalini Singh, TNN, May 20, 2010, 01.21am IST

NEW DELHI: The close of the 3G auctions had most of the 9 bidders emerging winners with the exception of Etisalat and Videocon, which were unable to bag a single circle. Vodafone, Bharti and Reliance all bagged the lucrative Delhi and Mumbai circles for a whopping Rs 3,316.93 crore and Rs 3,247.07 crore respectively.

Bharti, which had pan-India 3G ambitions had to settle for just 13 circles along with Reliance Communications and Aircel. Airtel is the biggest spender, forking out Rs 12,290 crore, followed by Vodafone at Rs 11,617 crore, Reliance Rs 8,583 crore, Aircel Rs 6,498 crore, Tata Rs 5,864 crore, Idea Rs 5,768.59 crore and S Tel at Rs 337 crore.

Idea won 11 circles, followed by Vodafone and Tatas with 9 circles each. S Tel bagged three circles. According to Kunal Bajaj, MD of Analysys Mason India, a global telecom consulting firm, "all the operators have displayed extremely different bidding strategies."

According to him, "in terms of quality of circles and money spent, Idea has displayed the most intelligent bidding propensity by leaving out Delhi and Mumbai and opting for 3 category A, 5 category B and 6 category C circles. Idea has 11 circles but has the lowest financial outflow out of the five other big telcos. Similarly, while Aircel has the same number of circles as Bharti Airtel, it is paying almost half the price that Airtel is."

Bajaj points out that Reliance and Tatas followed opposite strategies. Reliance has opted for the high-value Delhi, Mumbai circles but no category A circles, 5 category B circles and 6 category C circles. In contrast, the Tatas have given up Delhi, Mumbai and taken 3 category A and 6 category B circles.

StanC launches IDR issue to raise Rs 2700cr

Source :TNN, May 20, 2010, 01.24am IST

NEW DELHI: UK-based Standard Chartered (SC) has launched its first ever Indian Depository Receipts (IDR) issue to enhance its market visibility and brand profile in India. 

The foreign bank, which has a market capitalization of $50 billion at the London Stock Exchange plans to raise anything between Rs 2,400 and 2,700 crore through the issue, which is slated to open on May 25 and will close on May 28. The money raised will be repatriated to its parent company in UK.

The price band will be fixed and declared on May 24, during which the closing price of SC as on London Stock Exchange will be taken into consideration. On Wednesday, its share price on LSE appreciated by 1.5% to $2.49.

"The issue price will be at a discount of 5% for the retail investors, over institutional investors," group executive director Jaspal Singh Bindra said. The bank is offering 24 crore IDRs. Every 10 IDR will be representing one share of Standard Chartered. Foreign companies raise funds by issuing IDRs having underlying equity shares.

The StanC IDR will be listed both on the Bombay Stock Exchange and the National Stock Exchange, and investors will have the option to convert them into shares after one year.

Bindra said that India is the focus region for the bank, which plans to increase its headcount in India by 2,500 people during the current year to 20,000.

3G Spectram Impact : Fiscal deficit may slide below 5%

Source :Prabhakar Sinha, TNN, May 20, 2010, 03.00am IST

NEW DELHI: It's a huge boost for exchequer. With 3G and Broadband Wireless Access (BWA) spectrum auction revenue likely to touch Rs 80,000 crore and crude price falling to $68 per barrel, the fiscal deficit of the government is expected to come down below 5% in 2010-11, from the projected figure of 5.5%. In the Budget, the government had provided for Rs 36,000 crore from the auction of spectrum.

In the 3G spectrum auction, which closed on Wednesday, the government will receive Rs 67,719 crore. According to market sources, the government is likely to garner an additional Rs 12,000 crore from BWA auction. So, total revenue from the spectrum action will be Rs 44,000 crore more than the amountestimated in the Budget.

At the same time, the fall in oil price will contain off-Budget expenditure substantially. According to one estimate by Citigroup, if the oil price continues to hover around $85 per barrel, the under-recoveries by the oil marketing companies (OMCs) will touch Rs 100,000 crore in 2010-11. As OMCs cannot fund such a huge gap, the government is likely to chip in to meet the deficit, resulting in further increase in the fiscal deficit.

OMCs are facing under-recoveries as high global crude prices push the production cost up. But, the government does not allow OMCs to increase retail prices. Because of this, all the petroleum products are sold at below production cost in the country.

As the crude price has fallen by around 20% from May 3 (at $87 per barrel) to around $68 per barrel on Wednesday — the production cost of final products like petrol, diesel, Kerosene and cooking gas will also come down. However, Prayesh Jain of IIFL said the benefit will be realised only if the price remains at the current level.

It is believed that if crude price remains at the current level for the rest of the year, the under-recoveries would fall to around Rs 30,000 crore. And if crude price falls further, under-recoveries could be wiped out completely.

The main reason behind the fall in crude price is the expected slowdown in the developed economies due to crisis in Eurozone nations, which started from Greece. In fact, a senior global banker said, there is a silver lining for India in the European financial crisis. The best possible solution to contain the crisis is to cut government's expenditure, which will lead to slowdown in the economy, the banker added. And, any slowdown in the economy of Eurozone will bring down the demand for oil and reduce prices.

The positive aspect of this slowdown is that the commodity prices in the international markets will fall.

However, on the other hand, the slowdown in the developed world will also affect the economic growth of India. But, the banker pointed out that if India could continue with the spending in the infrastructure, using cheaper commodities, it can reduce the effect of the crisis on its economy.

3G spectrum: Govt hits jackpot; gets Rs 67,719 crore

Source :20 May 2010, 0621 hrs IST,ET Bureau

Four years of delay, 34 days and 183 rounds of frenetic bidding later, the auction of 3G mobile spectrum wound down on Wednesday, delivering an unexpected bonanza of Rs 67,719 crore ($15 billion) for the government’s dry coffers and paving the way for services such as video calling and high-speed internet using phones to be launched across India.

For auction-weary mobile firms already battling a savage price war, the end of the process marks the start of life under a pile of debt that could strain balance-sheets for years, possible consolidation activity or network sharing pacts between operators as losers look to plug service gaps to prevent customers from jumping ship.

The auction failed to throw up a pan-India licence holder. The country’s top two mobile firms Bharti Airtel and Reliance Communications each won 13 of the 22 telecom zones on offer, while other major operators Vodafone Essar, Idea Cellular and Tata won total of 9, 11 and 9 circles respectively.

Bharti, Reliance and Vodafone won the coveted 20-year licences for New Delhi and Mumbai, which account for a lion’s share of the country’s customers and revenues and attracted top bids of Rs 3,317 crore and Rs 3,247 crore respectively, effectively Rs 166 crore and Rs 162 crore per year of the licence period.

The auctions were for a maximum of three operator slots in all but one circle. State-run BSNL and MTNL will be the fourth operator of 3G services. Ministers were thrilled with the outcome, which comes at a time the government is under fire from industry over flip-flops in policy.

“The figures were far beyond our expectations and I am happy for that,” said telecom minister A Raja, who has spent much of the last two years facing accusations that he gave away precious 2G mobile spectrum to a clutch of new operators for a song. Raja promised to release spectrum to all winners by September and said customers could have 3G services by the year-end or early next year.

Will 3G be a money-spinner?

Finance minister Pranab Mukherjee, who had budgeted a total of Rs 35,000 crore from both 3G and WiMAX spectrum auctions, was more ebullient. “It is good... It will give me that much more elbow room,” a visibly elated Mr Mukherjee told reporters. The government has budgeted fiscal deficit at 5.5% of GDP for this fiscal year, and economists are hopeful the spectrum auction proceeds could flatter that number.

But the reaction from mobile operators has been mixed. Industry leader Bharti Airtel, which failed to achieve its objective of a pan-India 3G footprint in the auction, said “the auction format and severe spectrum shortage along with ensuing policy uncertainty drove the prices beyond reasonable levels”.

Doubts exist whether 3G services will prove to be a big money-spinner and ease the pressure on the sector, and some experts cite the experience of developed western markets where 3G services are only now starting to gain traction despite being around for at least five years.

But Vodafone Essar CEO Marten Pieters said he expected strong interest for 3G especially “among the higher value customers, which is a growing segment owing to rising affluence and increasing urban population”.

Gartner analyst Naresh Singh also said the price may be viable in the ultimate analysis. “Obviously, the pricing looks very high, but if you look at 500 million subscribers, 3G has the potential as it can be used for both voice and data,” he said.

India may become regular importer of sugar

Source : Reuters:Thu, May 20, 2010 at 09:57



India may become a regular importer of sugar in the years ahead, but an Indian sugar industry official said Wednesday they have to do a better job of eliminating wild swings in production because they are the world's biggest consumer of the sweetener.

"The role of India in sugar is somewhat similar to the role of China in soybeans," Ben Pearcy, managing director of sugar and bioenergy in trade house Bunge Ltd, told participants at the annual International Sugar Organization/Datagro sugar conference.

A few years ago, China was not a major importer of soybeans but a series of developments changed that and Beijing is now a major importer of the grain.


earcy wondered if the same could happen to India when it comes to sugar.

He said there could be a catalyst or a "tipping point" that could impact Indian sugar

 production such as the availability of reliable water supplies in the Asian country.


India is the world's No 1 consumer of and the No 2 producer of sugar.



Two weak annual monsoons hit the cane crop of the country, forcing New Delhi to allow large sugar imports and sparking a rally that saw raw sugar prices to hit a 29-year top at 30.40 cents a lb on February 1.



The weather problems were blamed on an El Nino weather anomaly, which wreaks havoc on weather patterns in the Asia-Pacific region. That El Nino has peaked and is now fading and a La Nina is poised to take its place.

An improvement in sugar yields in India and a recovery in production helped drive down prices to a year low of 13 cents on May 7 in the ICE Futures US.



Indian sugar production is expected to recover in 2010/11 to around 23.5 million to 24 million tonnes, from 18.5 million tonnes last season.



MN Rao, deputy director general of the Indian Sugar Mills Association, told Reuters that India has to find some kind of solution to the "very wide fluctuation" in production.



"I don't think India will be a regular importer (of sugar). We can't afford to be an importer being the largest consumer. The swings (in production) need to be addressed," he said.

3G auctions end, Govt to get around Rs 70,000 cr

 

 Source :Moneycontrol:May 19, 2010 16:58 PM

The 3G auction had commenced on 9 April, 2010 and there were nine bidders in the fray for the slots of 3G spectrum on the block. 

The government auctioned three slots in 17 telecom service areas and four slots in the remaining five states of Punjab, Bihar, Orissa, Jammu and Kashmir and Himachal Pradesh.

Nine leading mobile operators, including Bharti Airtel, Vodafone, Reliance Communication, Tata Teleservice, are figthing to grab spectrum. The government is selling three blocks of spectrum in most of the states with four slots in five states of Punjab, Bihar, Orissa, Jammu and Kashmir and Himachal Pradesh.

The bid price for Mumbai and Delhi is close to other over Rs 2,700 crore as against the reserve prices of Rs 320 crore for each circle.

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 Source :ML:May 19, 2010 06:19 PM 

Dr KP Krishnan may soon join the prime minister's Economic Advisory Council (EAC) as secretary. Besides advising on policy matters referred to the Council from time to time, the EAC also prepares a monthly report on economic developments both in India and abroad

Dr KP Krishnan, joint secretary of capital markets in the finance ministry, may soon join the prime minister's Economic Advisory Council (EAC) as secretary. According to sources, Dr Krishnan is likely to be replaced by Dr Thomas Mathew, the deputy director general of the Institute for Defence Studies and Analyses (IDSA).

Dr Krishnan, who belongs to the 1983 Indian Administrative Service (IAS) batch, had earlier worked as managing director, Karnataka Urban Infrastructure Development and Finance Corporation, and secretary for Urban Development and secretary for Finance Department, government of Karnataka. He has also worked as advisor to the executive director of the World Bank in Washington, DC.

Dr Mathew is also an officer from the 1983 IAS batch. Earlier, he had held several positions in the ministries of information & broadcasting, petroleum & natural gas, industries and defence— amongst others. He has been working at the IDSA since 2007.

The EAC to the prime minister was constituted on 29 December 2004. Dr C Rangarajan is the current chairman of the PM's EAC.

Apart from providing advice on policy matters referred to the Council by the PM from time to time, the EAC also prepares a monthly report on economic developments both in India and abroad for the PM. It monitors economic trends on a regular basis and brings to the PM’s attention important developments and suggests suitable policy responses.

I-T dept to launch new taxpayer schemes this year

 

 Source :ML:May 19, 2010 06:19 PM 

The I-T department is planning to set up an independent TDS directorate; faster processing of tax returns and technological upgrade of tax refunds are also on the anvil

With the present Income Tax (I-T) Act proposed to be replaced by the Direct Taxes Code (DTC) next year, the I-T department is planning to introduce a host of services related to processing of tax returns and refunds in the current fiscal, reports PTI.

The department will also observe 150 years of the introduction of the first ever I-T Act in 1860, as it will celebrate the 'Income Tax day' on July 24 this year.

The event is likely to be inaugurated by finance minister Pranab Mukherjee, who will also lay out a roadmap of the department for the future.

"This is the last year of the 1961 Income Tax Act. This year, a number of taxpayer programmes of the department can be initiated and completed," CBDT member (revenue) Durgesh Shankar said.

The department, this fiscal, is planning to set up an independent Tax Deducted at Source (TDS) directorate while fast processing of tax returns and technological upgrade of tax refunds are the other core issues, he said.
The revenue accrued from TDS has been constantly growing over the years and with the increase in the number of service organisations across the country, the share from under this category of taxes is bound to grow, Shankar said.

According to estimates, the TDS revenue contributes almost 40% to the direct taxes kitty.
Programmes like the Refund Banker scheme, presently on in 15 cities of the country, will also be extended to other locations this fiscal.

The DTC, aimed at simplifying the tax structure, is proposed to be introduced in April next year and will ultimately replace the Income Tax Act, 1961, bringing all other direct taxes, including wealth tax, under its purview.

Mukherjee had said that if a reasonable level of discussion happens on the code, a bill could be placed in the winter session of Parliament.

According to finance ministry records, the first I-T Act was introduced in India in 1860 by James Wilson who became the first finance member of the country. This became necessary since suppression of the 1857 struggle entailed heavy expenditure and made a large addition to public debt.

The Act received the assent of the governor general on 24 July 1860. It came into effect immediately and was modelled on the English Statute.