RBI hikes CRR by 50bps, repo by 25bps

The Reserve Bank of India (RBI) today abandoned its monetary policy stance of equal emphasis on price stability and growth, and decided to remain solely focussed on inflation containment. As part of its further monetary tightening, the central bank raised the cash reserve ratio (CRR) for third time since December 2006 by 50 basis points to 6.50% with effect from April 28 and also raised the repo rate by 25 basis points to 7.75%, the rate at which it lends to banks against securities. “The stance of monetary policy has progressively shifted from an equal emphasis on price stability along with growth, to one of reinforcing price stability with immediate monetary measures, and to take recourse to all possible measures promptly in response to evolving circumstances,” RBI said. RBI MOVES AGAINST INFLATION Date Action March 30, 2007 CRR hiked by 50 bps to 6.5%; Repo rate hiked by 25 bps to 7.75% Feb 14, 2007 CRR hiked by 50 bps to 6% Jan 31, 2007 Repo rate hiked by 25 bps to 7.5% Jan 31, 2007 General provisioning on standard commercial real estate loans, personal loans & capital market loans doubled to 2% Dec 11, 2006 CRR hiked by 50 bps to 5.5% Oct 31, 2006 Repo rate raised by 25 bps to 7.25% July 25, 2006 Reverse repo and repo rates hikes 25 bps each to 6% and 7% respectively June 8, 2006 RBI raises reverse repo and repo rates by 25 bps to 5.75% and 6.75%, respectively The central bank’s monetary tightening measures came even as the banking system was reeling under severe liquidity strain, with call rates having in recent days shot up to ridiculously high rates of 70-80% and year-on-year inflation at around 6.5% for the third week in succession up to March 17, 2007. Since the February 13 measures, when CRR was raised by 50 basis points, RBI said data has shown that industrial production increased by 11% during April 2006-January 2007 as against 8% a year earlier and the year-on-year money supply (M3) growth up to March 16, 2007 was 22% as against 16.9% a year ago. At a disaggregated level, prices of primary articles, fuel group and manufactured products registered a year-on-year increase of 12%, 1% and 6.6% as on March 17, 2007 as against 3.7%, 8.9% and 1.7% a year ago. The year-on-year growth in non-food bank credit of scheduled commercial banks (SCBs) was 29.5% as on March 16, 2007 as against 32.7% a year ago. The third increase in CRR in five months will drain Rs 43,000 crore from the banking system. The RBI has also reduced the interest it will pay on CRR balances to 0.50% from 1%. The RBI release issued this evening:

In the recent period, monetary policy has been engaged in managing the transition to a higher growth path while ensuring that pressures on actual inflation and inflation expectations are contained. At this juncture, it is important to reinforce the measures already taken for maintaining price stability and anchoring inflation expectations in order to sustain the growth momentum. The role of monetary policy is to maintain stability and so contribute to growth on an enduring basis.

As indicated in the Third Quarter Review of the Annual Statement on Monetary Policy for the year 2006-07, "the outlook for inflation assumes criticality in terms of policy monitoring and action" (paragraph 76). Furthermore, "a judicious balancing of weights assigned to monetary policy objectives would accord priority to stability in order to support growth on a sustained basis" (paragraph 82). Accordingly, it is necessary to reinforce the emphasis on price stability and well-anchored inflation expectations, as set out in the stance of the Third Quarter Review, with a demonstrated commitment in terms of credible policy monitoring and actions. The conduct of monetary policy should continue to demonstrate that inflation beyond the tolerance threshold of the Reserve Bank is unacceptable and that the resolve to ensure price stability is always backed by timely and appropriate policy responses.

In recognition of the cumulative and lagged effects of monetary policy, the Reserve Bank began a graduated withdrawal of accommodation in mid-2004. Since September, 2004 repo/reverse repo rates have been increased by 150 basis points each, the CRR has been raised by 100 basis points, risk weights have been raised in the case of housing loans (from 50 per cent to 75 per cent), commercial real estate (from 100 per cent to 150 per cent) and consumer credit (from 100 per cent to 125 per cent) and general provisioning requirement for standard advances in specific sectors has been raised to 1.0 per cent of standard advances. On February 13, 2007 a further two-stage increase of 25 basis points each in the CRR was announced, effective from the fortnights beginning February 17 and March 3, 2007. Liquidity management was modified on March 2, 2007 to put in place an augmented programme of issuance under the market stabilisation scheme (MSS) with a mix of treasury bills and dated securities in a more flexible manner. In view of the enhanced MSS programme and the need to conduct LAF as a facility for equilibrating very short-term mismatches, daily reverse repo absorptions were limited to a maximum of Rs.3,000 crore, effective March 5, 2007. The stance of monetary policy has progressively shifted from an equal emphasis on price stability along with growth to one of reinforcing price stability with immediate monetary measures and to take recourse to all possible measures promptly in response to evolving circumstances

Since the monetary measures that were announced on February 13, 2007 there have been some notable developments, namely,

(a) The general index of industrial production increased by 11.0 per cent during April 2006 to January 2007 as against 8.0 per cent a year ago, as per the release of the Central Statistical Organisation (CSO) of March 12, 2007.

(b) Year-on-year inflation based on the wholesale price index (WPI), has ruled around 6.5 per cent for the third week in succession up to March 17, 2007 as per the data released today. At a disaggregated level, prices of primary articles, fuel group and manufactured products registered a year-on-year increase of 12.0 per cent, 1.0 per cent and 6.6 per cent as on March 17, 2007 as against 3.7 per cent, 8.9 per cent and 1.7 per cent a year ago.

(c) inflation based on the consumer price index for industrial workers (CPI-IW), urban non-manual employees (CPI-UNME), agricultural labourers (CPI-AL) and rural labourers (CPI-RL) showed year-on-year increase to 7.6 per cent, 7.8 per cent, 9.8 per cent and 9.5 per cent in February 2007, respectively, from 5.0 per cent, 4.8 per cent and 5.0 per cent and 4.7 per cent, a year ago.

(d) The year-on-year growth in non-food bank credit of scheduled commercial banks (SCBs) was 29.5 per cent as on March 16, 2007 as against 32.7 per cent a year ago.

(e) The year-on-year growth in aggregate deposits of SCBs was 24.8 per cent as on March 16, 2007, over and above 18.0 per cent a year ago.

(f) The year-on-year money supply (M3) growth up to March 16, 2007 was 22.0 per cent as against 16.9 per cent a year ago.

(g) Continuation of accelerated external inflows has resulted in accretion of US $ 18.6 billion to the foreign exchange reserves, taking their level from US $ 179.1 billion at the end of January, 2007 to US $ 197.7 billion on March 23, 2007.

(h) Additional liquidity amounting to Rs.23,894 crore was absorbed under the market stabilisation scheme (MSS) during February 1 - March 30, 2007.

(i) Globally, the process of withdrawal of accommodation in monetary policy is being vigorously pursued. Since mid-February, 2007 among the leading central banks, the European Central Bank and the Bank of Japan have raised key policy rates by 25 basis points each, while the People’s Bank of China raised one year lending rates by 27 basis points and the reserve requirements by 50 basis points. There has been no change in the policy rates of the US Federal Reserve, the Bank of England, the Bank of Canada, the Reserve Bank of Australia and the Reserve Bank of New Zealand all of which had undertaken prior policy action.

In the light of the current macroeconomic, monetary and anticipated liquidity conditions, and with a view to containing inflation expectations, it is critical to take demonstrable and determined action on an urgent basis. Accordingly, the following monetary measures are being taken consistent with the stance of the monetary policy:

i) It has been decided to increase the fixed repo rate under the LAF by 25 basis points from 7.50 per cent to 7.75 per cent with immediate effect.

ii) The other arrangements regarding the operations of LAF announced on March 2, 2007 will continue until further notice.

iii) The policy of withdrawal of semi-durable and durable elements of liquidity through treasury bills and dated securities under MSS will continue. Accordingly, the Reserve Bank would, subject to variations in liquidity conditions, announce auctions of MSS covering issuances of treasury bills and dated securities on a weekly basis. The auction for Treasury bills under MSS would continue to take place by notifying the amounts under MSS every week along with the regular auction calendar as has been the existing practice. The Reserve Bank would retain the flexibility of reviewing the schedule of auctions under the MSS from time to time, in response to evolving circumstances.

iv) The cash reserve ratio (CRR) of scheduled commercial banks (SCBs), regional rural banks (RRBs), scheduled co-operative banks and scheduled primary (urban) co-operative banks is being increased by one-half of one percentage point of their net demand and time liabilities (NDTL) in two stages, effective from the fortnights indicated below:

Effective Date (i.e., the fortnight beginning from) CRR on net demand and time liabilities (per cent)

April 14, 2007 6.25%

April 28, 2007 6.50%

As a result of the above increase in the CRR, an amount of Rs.15,500 crore of resources of banks would be absorbed.

v) The interest rate applicable on eligible CRR balances (i.e., the amount of reserves between the statutory minimum CRR and the CRR prescribed by the RBI) shall be reduced to 0.5 per cent per annum from the present 1.0 per cent per annum with effect from the fortnight beginning April 14, 2007.

Active monitoring of macroeconomic, overall monetary and liquidity conditions will continue and all monetary policy actions would be considered in response to the evolving situation.

India 4th largest market for Oracle in APAC

India is the fourth largest market for Oracle in the APAC (excluding Japan) region, according to its third-quarter results for the region, while China is the first followed by South Korea and Australia.

Oracle equates the market size in tandem with the nation's economy. So while Oracle has been in China for just about 17 years and in India for 19 years, China has been growing at approximately 9% per year. However, within two years, India has jumped to fourth position from fifth, while 5-6 years back it was in the 10th position.

Though the company denied giving any exact numbers, it registered 89% growth from its new license revenues in Asia Pacific & Japan whereas the database and middleware new license revenues went up 26% in Q3FY07.

In the past few years, Oracle has made 30 acquisitions in view with its focus on vertical markets. "Acquisitions in APAC region in the financial services, retail, telecom and utilities is not off-limits for Oracle," said Brian Mitchell, senior vice president, Asia Pacific while announcing Oracle’s third quarter results for APAC (Q3FY07).

On the Indian operations side, the company has 19,000 employees, a majority of which are in its development centre. This quarter also saw Oracle completing its first phase of expansion into 17 cities of India, which brought the total number to 23. Apart from the focus on education, healthcare, construction and real estate verticals the company increased its focus on small and medium enterprises (SME).

With 4,500 customers already in the SME segment, it increased its momentum by launching Oracle Accelerate Programme. To tap into the growing SME segment Oracle recently rolled out its CRM (customer relationship management) on-demand platform. According to Krishan Dhawan, managing director, Oracle India, though the software-as-a-services concept is yet to catch up with the Indian organisation CRM is one application that is easy to deploy and manage.

While speaking on its Q3FY07 performance Dhawan pointed out that the company has continued its momentum in acquiring customers and entered some new industry areas including cement, paints, construction, real estate, retail, education and healthcare. Some of the wins of the company are-- Godfrey Philips, LG Electronics, Gujarat Electricity Board, ICICI Prudential life Insurance Company, Shree Cement, and Tube Investments of India among the others.

Apart from this, Oracle is also planning to tap into the growing utilities segment and the media sector. "The Indian media sector has not been technology intensive and hence is a virgin territory for Oracle. Similarly with the SPL acquisition we are now in a better position to offer solution to the utilities segment," remarked Dhawan. Other than Malyalam Manorama and Amar Bazaar Patrika Oracle recently had a win in the media segment with Amar Ujala Publications.

With the Indian retail segment hotting up, Dhawan felt that the coming years will see an increase uptake of IT in this segment. Oracle plans to focus on the retail segment through its recently acquired company Retek. It has already set up a centre of excellence (COE) at Bangalore. The centre with 300 people will help retailers who want to increase their profitability through IT deployment.

Carriers` equity capital bar raised

The move is set to discourage new entrants.

In a move to keep small players at bay and discourage new entrants to an overcrowded market, the civil aviation ministry has raised the minimum equity capital requirement for carriers to start or continue operations.

A notification from the ministry has raised the minimum equity capital requirement for a five-fleet carrier that wants to fly Airbuses and Boeings (or aircraft above 40,000 kg weight) from Rs 30 crore to Rs 50 crore. There is also an equity requirement of Rs 20 crore for addition of every five aircraft to the fleet.

For carriers operating smaller aircraft like the Dornier (less than 40,000 kg), the government has doubled the minimum equity capital requirement from Rs 10 crore to Rs 20 crore (for a fleet of five aircraft). For addition of every five aircraft, these airlines will have to infuse equity capital of Rs 10 crore. Existing carriers have been given a year to abide by the new rules.

Carriers could earlier expand their fleet without any limit once they put in Rs 30 crore (Rs 10 crore for smaller aircaft) as equity capital.

At the same time, the ministry has put an overall limit of Rs 100 crore as total equity capital. Beyond this, the expansion of fleet by carriers will not be linked to a commensurate increase in its equity capital.

The move will affect over half a dozen carriers which have applied for fresh licences to operate scheduled airlines -- like Easy Air, Air One, Yamuna Airways, amongst others. Most of these carriers have proposals in which their equity capital is much lower than the stipulated Rs 50 crore.

Says Ajay Singh, director of Spicejet: “We have an equity capital of Rs 200 crore and feel that this move will bring in some sanity to this sector, which has many fly-by-night operators seeking entry.”

Adds Koutav M Dhar, president (commercial & special projects) of MDLR Airlines, a regional airline that will start operations from next week, “We are a serious player and we welcome the new requirements that will throw out non-serious players.”

Welcoming the new conditions, GoAir Managing Director Jeh Wadia says, “This will ensure the financial strength of the existing airlines in the market. It may affect new entrants.”

At the same time, The new regulations, however, also give some leeway it will allow a scheduled airline operator to start airline operations with one aircraft against three required currently. However, the requirement for augmenting the fleet size to five aircraft within one year of issuing the scheduled operator permit would continue.

The government has also withdrawn the concession available to scheduled airline operators to have only 10 per cent of the paid-up capital when the initial Non Objection Certificate (NOC) is issued - another step to get small operators keep away from the business.

Rupee sees biggest fall in 11 years

The rupee had its biggest single-day fall in 11 years against the dollar on Thursday, amid buying of dollars by importers following the greenback’s sharp falls over the last few days and also on suspected intervention by the Reserve Bank of India (RBI).

The rupee fell 1.7 per cent to Rs 43.76 a dollar at close. The decline was the biggest since March 1996.

Dealers said it made sense for importers, particularly oil companies, to buy dollars after the recent sharp fall versus the rupee. The rupee has gained about 7.5 per cent since July 2006. The Indian currency touched an 8-year high of 43.05 yesterday.

The rupee had strengthened against the dollar because of the liquidity squeeze. Banks were selling dollars to replenish rupee liquidity excessively drained after tax outflows around March 15.

A dealer said the RBI was buying dollars at around Rs 43.50 and this, combined with importer demand, led to the rupee dropping the sharpest in 11 years.

The buying of dollars by the RBI and to some extent government spending infused rupee liquidity into the banking system, causing the call rates to close at 10 per cent on Thursday. The call rate closed at 10 per cent on Thursday.

The average weighted call rate yesterday was over 25 per cent.

Flag Tele listing on LSE soon

ADAG is expecting to recover ten times the value paid for buying the company in 2002.

Flag Telecom, a 100 per cent subsidiary of Reliance Communication (RComm), has mandated Goldman Sachs and Deutsche Bank as lead managers for the maiden initial public offering (IPO) on the London Stock Exchange.

Top sources say the bankers have valued the company at $2 billion. The IPO will be completed in the next three months. The company will divest 10-15 per cent of its equity through the IPO.

Through the IPO, the Anil Dhirubhai Ambani Group (ADAG), will be able to recover virtually ten times the value it paid for the company in 2002. It had paid $211 million to buy Flag.

Flag, which runs an international fibre bandwidth all across the globe, has announced an investment of Rs 7,000 crore to set up a new generation network which will provide high speed transmission. The cash from the IPO will be used to partly finance the ambitious project which is expected to be up and running by 2009. The new network will link to the Mediterranean to Greece, Cyprus, Turkey, Malta, Libya and Lebanon, Trans-Pacific to the US and Japan, Far East and Africa.

The 65,000 km cable network connects 40 countries across four continents and has over 200 international telcos and Internet service providers (ISPs) as its clients.

Flag has also recently completed Falcon, a $400 million fibre project which links West Asia to the rest of the world.

Flag Telecom is the second company of the Anil Dhirubhai Ambani Group after Reliance Energy which is being listed on the London Stock Exchange. Over 25 Indian companies are already listed on LSE which include ACC, Amtek Auto, Crompton Greaves, GAIL just to name a few.

A Reliance Communications spokesperson, however, declined to comment on the issue.

49% FDI cap for credit bureaus likely

The government is likely to cap foreign direct investment (FDI) in credit information bureaus at 49 per cent, as it prepares guidelines for entry of foreign companies in this sector.The sector has become attractive due to the booming retail financial services market.

The government has been considering either 49 per cent or 74 per cent cap, but is more inclined to go ahead with a lower cap to begin with, banking sources said.Credit information bureaus collect borrower data from banks and financial institutions, both positive and negative, for use by financial institutions subscribing to it.

Experian, which claims to be the only global credit information solutions company, is seeking to launch its subsidiary in India, with several banks including ICICI Bank having subscribed to its analytics and other services.

India already has credit bureau called Credit Information Bureau India Ltd (CIBIL), in which 62.5 per cent is owned by Indian lenders including State Bank of India, ICICI Bank, Housing Development Finance Corporation (HDFC) with 10 per cent stake each. The foreign shareholders in CIBIL include Citicorp Finance, Dun & Bradstreet and GE Strategic Investments.

CIBIL is a pure credit information bureau, whereas Experian is a provider of a range of services based on the core credit data. Experian earns only 10 per cent of its revenues globally from credit information with the balance coming from its various value-added services.

Retail credit has been growing at over 40 per cent since 2004-05 increasing its share in total advances to 25.5 per cent at the end of March 2006 from 22 per cent in March 2004. The phenomenal growth in the last three years has thrown up opportunities for companies that provide credit information and related services.

“We are waiting for the FDI rules to be framed so that we can apply for the launch of our joint venture,” said Richard Fiddis, Managing Director-Emerging Markets Development at Experian.

Experian has been waiting for the last two years to enter India as their customer in various markets wanting them to set up shop in India. “We will want more number of partners with lower shareholdings in the Indian joint venture. We will have about six to 10 banks and may be a telecom company as our partners,” Fiddis said.

Apart from borrower date from banks, Experian plans to use public sources like electoral rolls and court data for building its core database.

Corp bonds to trade on bourses from July 1

The much-awaited trading in corporate bonds will start on the National and the Bombay Stock Exchanges from July 1. This is expected to energise the moribund debt market.

The Securities and Exchange Board of India (Sebi) will ask the two stock exchanges to start trading in corporate bonds shortly, sources close to the developments said.

To begin with, trading would be through order matching as recommended by the R H Patil Committee. The committee had suggested various measures to activate the corporate bond market. The anonymous order matching would come into place only at a later stage, when the exchanges were ready, the sources added.

Banks and institutions will be allowed to trade through either the stock exchanges or via the OTC (over-the -counter). If they wanted to go through the stock exchanges, they could conduct the trading through the stock broking members, the sources added.

In order-matching system, the best buy order is matched with the best sell order. Experts said an efficient corporate debt market required a proper order-matching and guaranteed settlement systems.

Earlier this month, the capital market regulator extended the corporate bond reporting platform to the National Stock Exchange (NSE). From January 2, Sebi had asked the players to report the deals in the corporate bond market on the BSE’s reporting platform.

All transactions in corporate bonds of the value of Rs 1 lakh or above are required to be reported to the corporate bond platform. As the platform is purely for reporting purposes, the stock exchanges had no role or liability for settlement of these trades. The intermediaries and contracting parties were asked to settle the trades bilaterally.

The move to allow both the NSE and the BSE to start a trading platform is, however, at variance with the Patil Committee’s recommendation of a unified exchange for the corporate bond market.

The exchanges have also been asked by Sebi to provide details such as the issuer name, maturity date, current coupon, last price and amount traded, yield and weighted average yield.

The number of trades in the corporate bonds that took place today were 12 and the average traded value was Rs 100 crore. Presently, no trading takes place in the bonds’ segment of the BSE.

The Sebi move comes after Prime Minister Manmohan Singh’s call, during the inauguration of the Sebi headquarters last year, to activate the debt market.

The Prime Minister had said that the debt markets in India have failed to rise to the expectations. There was a need to make efforts to understand why the debt market has not taken off and to take appropriate policy measures to make it deeper, broader and more liquid, he had said.

A deeper and active debt market would help generate the necessary long-term funds required for the infrastructure sector.

Allianz takes new route for banking foray

The Allianz group, the German financial services major, is leaving no stone unturned to secure a banking license from the Reserve Bank of India (RBI) through its subsidiary, Dresdner Bank.

The move follows the RBI’s rejection of the group’s proposal to let Dresdner Bank predominantly use the Allianz brand in India.

The RBI had declined to issue a banking licence to Dresdner Bank, which was seeking to operate under a joint brand called Allianz Group Dresdner Bank.

The group’s intention was to focus on the name Allianz and not Dresdner, and capitalise on the Allianz brand awareness in India because of its insurance ventures – Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance Company.

The RBI had objected to such cobranding and asked Allianz to focus on the name Dresdner Bank. Allianz had earlier proposed to have Allianz group in bigger and bolder fonts and the latter part, Dresdner Bank, in smaller fonts. Allianz has now drafted an alternative proposal.

Sam Ghosh, country manager of Allianz and CEO of Bajaj Allianz Life Insurance, said, “RBI has asked us to come back with several (alternative) options. We are changing the wordings around and redesigning the logo and using different fonts. We will be suggesting to be allowed to use “part of Allianz group” in brackets along with the name Dresdner Bank. We will be forwarding various logos and RBI will then decide on which one to approve.”

Allianz is upbeat on starting retail banking business in India after signing its third joint venture with Bajaj group earlier this month, a distribution company to sell financial products such as mutual funds, credit cards and home loans.

Dresdner Bank, which the group acquired in 2001, was operating through the branch banking route in the country earlier. Dresdner Bank surrendered its branch licence after withdrawing from the Indian market and now has only a representative office. In its new avatar, it is planning to enter retail banking.

This is not the first time a foreign group is planning to enter the Indian banking space through its banking subsidiary. Prior to Allianz, GE Money, earlier known as GE Countrywide, did the same.

Indians on top at Leeds MBA programme

Leeds University Business School, one of the top B-schools in the world, enjoys a unique record - possibly unmatched by any other educational institutions abroad.

Its MBA programme for practising managers from across the world has the highest number of Indian students in one class.

“That's a huge achievement for Indian students considering that the admission is extraordinarily tough as the university draws response from students from as many as 40 countries,” says professor Andew Lock, Dean of the University.

There are 12 Indians in a class of 43, for which entrants must have three years work experience and have the "equivalent of a First Class First degree," he says. MBA STUDENTS AT LEEDS India 12 UK 11 China 1 East Asia 6 Africa 8 West Asia 3 Others 2

Lock was speaking to a visiting group of Indian mediapersons at the Leeds campus. The rewards are also fast in coming. The average annual salary for MBA passouts is $100,000 and over half of the students join the financial sector.

Leeds was also among the first universities abroad to set up a business center to conduct quality research on Indian business. Called the James E Lynch India & South Asia Business Centre, it recently launched `Watching India', a series of market research briefings on the country.

Focusing on the economy as a whole and key industries such as manufacturing, pharma, telecom, retail, IT, BPO/KPO, the series is aimed at helping UK firms keep informed with a fast changing environment in one of the world's fastest growing economies.

Apart from its ongoing collaborations with the IIMs and the Indian Institute of Foreign Trade, Leeds has forged alliances with NIFT Amity and the BITS in areas like biotechnology and engineering.

34 Indian firms in Forbes' list

Oil and Natural Gas Corporation leads the pack of 34 Indian companies, a chunk of them from the banking sector, which have found place on the elite Forbes' list of 2000 corporate giants across the world.

In the ranking based on sales, profits, assets and stock market value, there are five oil and gas companies, four software giants, three each dealing in materials and capital goods, two utilities, and one each food, consumer durable, and telecommunications majors.

At the top of the Indian list is ONGC that finds 239 spot in the overall rankings and is followed by Reliance Industries (258), State Bank of India (326) and Indian Oil (399).

Tata Consultancy finds 1047 spot in the overall list but tops Indian companies ranking of software and service outfits. Following it in the category are Infosys Technologies (1130), Wipro (1233) and Satyam Computer Services (1874).

Bharti Airtel is the only Indian telecommunications company to find spot among 2000 giants with a rank of 1149.

State Bank of India Group finds top spot among the Indian banks and is ranked at 326 in the overall list. It is followed by ICICI bank (536), HDFC-Housing Development (1197), Punjab National Bank (1308), Canara Bank (1360), HDFC Bank (1376), Bank of Baroda (1585), Bank of India (1691), Indl Dev Bank of India (1767), Union Bank of India (1772). UCO Bank (1931), Syndicate Bank (1943), Indian Overseas Bank (1946) and

Oriental Bank of Commerce (1974).

In the materials category, Steel Authority of India, Tata Steel and Hindustan Zinc find slots in the coveted list. ITC is the only Indian company to make the list in food, drink and tobacco category. NPTC, TATA Motors, Gail India, Bharat Heavy Electricals, Bharat Petroleum, Larsen and Toubro, Hindustan Petroleum and Bajaj Auto are among other Indian companies that find spot among 2000 top companies.

The first seven top spots go the American companies. Two firms from Netherland and one from Switzerland are among the first ten companies.

The top spot goes to Citigroup and following it are Bank of America, HSBC Holdings, General Electric, JP Morgan Chase, American Intl Group, ExxonMobil (all American), Royal Dutch Shell (Netherlands), UBS (Switzerland) and ING Group (Netherlands).

Forbes says this year's comprehensive list of global super stars values the world's largest public companies, including the hottest companies and best performers across 27 industries.

The 2007 rankings indicate that globalization is the essential element for business to prosper, the magazine says.

China brings 16 new companies to the Global 2000 and the United States has 34 fewer in the list. Among the giants, 116 are oil and gas which pulled down more revenue than any other industry but banks lead in profits.

A highlight of the analysis is that total revenues of the companies headquartered in Switzerland exceed that nation's gross domestic product.

The US companies included on this year's list have a combined market capitalization of 13.9 trillion dollars.

Argentina is represented on the Global 2000 for the first time ever.

Inflation continues at 6.46%

India's wholesale price index rose 6.46 per cent in the 12 months to March 17, matching the previous week's increase, data showed on Friday.

The figure was slightly below a forecast of 6.50 per cent in a Reuters poll of analysts.

The annual inflation rate was 3.69 per cent during the corresponding week of the previous year.

The wholesale price index is more closely watched than the consumer price index, which is published monthly, because it covers a higher number of products and is published weekly.

France warns India against 'tricks'

France warned India the proposal to replace additional customs duty on wines and spirits with countervailing excise duty at the state level will weaken New Delhi's position in the dispute with European Union at the World Trade Organisation.

"Any trick to replace the national duties with state levies that would not result in overall duty reduction would complicate matters (at WTO)," French Trade Minister Christine Lagarde said.

The EU has dragged India before the dispute settlement panel of the WTO, alleging that high import duty on wines and spirits violates multilateral agreements.

The Indian proposal to bring a legislation to cut additional customs duty and allow states to levy equivalent of excise has not pleased the members of EU. The country imposes a duty ranging from 250-550 per cent on wines and spirits.

Lagarde also took up this issue with Commerce Minister Kamal Nath.

She also wanted India to increase FDI limit in single brand retail from 51 per cent, contending that the move would encourage premium French brands to set up shop in India.

While leading French brands like Chanel and Louis Vuitton have set up retail operations in India, their overall presence still remains small.

Dolce & Gabbana to open shops in India

Italian designer Dolce & Gabbana, known for its big cat prints and gold glitz, plans to open two shops in New Delhi--its first directly-operated outlets in India.

The deal with real estate developer DLF Group is for two shops in the Emporio mall with opening planned at the end of this year, Dolce & Gabbana said in a statement.

There will be a Dolce & Gabbana shop and one for its more informal line, D&G Dolce & Gabbana.

"We see this project as the first step of a long-term investment plan," Cristiana Ruella, the group's managing director, said in the statement.

"There is no doubt that India is a promising market with great potential," she added.

Dolce & Gabbana has a total of 90 directly-operated stores worldwide.

Italian catwalk competitor Versace opened a shop in Mumbai last year and got a publicity boost in the country earlier this month when British actress Elizabeth Hurley wore a dress by the designer for her wedding in India to businessman Arun Nayar.

Italian designers Gucci and Giorgio Armani are also moving into the country, where non-Italian brands Hugo Boss, Burberry, Cartier, Chanel, Louis Vuitton and Tommy Hilfiger already have outlets.

India opened up single-brand retail ventures in February 2006 by allowing 51 per cent foreign direct investment in them.

Dolce & Gabbana said in the statement it expected operating profit (earnings before interest and tax) to be 229.1 million euros in the year ending March 31, 2007 on revenues up 30 percent to 1.05 billion euros.

The designers' latest advertising campaign triggered criticism in Europe from Spain's government and human rights group Amnesty International by featuring a picture of a man holding down a woman by her wrists while other men looked casually on.

Reliance plans two new gas pipelines: Govt

Reliance Industries Ltd, plans to build two gas pipelines in southern India, the government said on Friday, that could help the energy explorer supply gas from its deep-sea fields to retail consumers.

The petrochemicals to oil refiner aims to produce 80 million cubic metres of gas a day (mmscmd) by mid-2008 from its two fields in the prolific Krishna Godavari basin, off the southern state of Andhra Pradesh.

The Oil Ministry said in an advertisement on Friday that Reliance Gas Transportation Infrastructure Ltd., a group firm, had submitted a proposal to lay a 670 km pipeline from Chennai to Tuticorin in Tamil Nadu.

It also wants to build another 660 km pipeline from Chennai to Mangalore in the neighbouring state of Karnataka, via Bangalore, the ministry said.

The advertisements in local newspapers did not disclose the cost of the two projects, and a Reliance spokesman could not give details immediately.

Reliance is already constructing a 1,400 km (870 mile) pipeline to transport natural gas from the deep-sea fields off India's east coast to the western regions of the country.

Earlier this month, P.M.S. Prasad, head of Reliance's oil and gas business, said the company planned to build city gas distribution networks in Tamil Nadu and Karnataka and also in Maharashtra and Gujarat in the west and West Bengal in the east.

The Oil Ministry said the two new projects were to be developed on a common carrier basis, making it mandatory for Reliance to offer 33 percent of each pipeline's total capacity to other firms.

"The interested party would have to enter into a take or pay contract or any other mutually agreeable contract with the owner for usage of the proposed pipeline," the ministry said.

India produces 95 mmscmd of gas and the government expects this to rise to more than 190 mmscmd by 2009 after a series of gas finds off the east coast, including by Reliance, come on stream.

Govt cuts minimum export price for onion

India on Friday cut by $40 a tonne the minimum price at which onion can be exported from the country, aligning it with the fall in local prices and giving a thrust to exports.

The National Agricultural Cooperative Marketing Federation of India (NAFED), a government agency, had in February raised the minimum export price (MEP) by about 30 percent across regions, to discourage exports amid surging local prices.

"Now, arrivals have improved and prices have fallen across the country. So, we decided to reduce the minimum export price," a senior NAFED official said from New Delhi.

The new export prices, to come into effect on Sunday, differ from region to region. For instance, the MEP to the Middle East, a major buyer, would be $305, compared with $345 until March and $265 in early January.

Onion prices had shot up in India in early 2007 on lower arrivals and booming export demand from neighbouring countries. However, the government's export control and improving arrivals had brought down the prices again.

Wholesale prices in India's largest onion trading hub, Lasalgaon in Maharashtra state, have eased to Rs 500 a quintal, from 1,500 rupees in February. Retail prices have fallen from a peak of Rs 25 a kg to about Rs 9 in Mumbai.

"There is no shortfall of onion and it was necessary to cut the MEP," said, C B Holkar, Vice-Chairman of NAFED.

India, the world's second largest producer of onion, is expected to have exported an all-time record of 1.1 million tonnes in the year to March 2007, cashing in on output shortfall in neighboring countries, especially Pakistan.

However, the output is expected to fall to 5.5 millon tonnes in the current fiscal year, from 6.2 million last year, as heavy rains washed out part of the crop in western and southern India.

Aditya Birla Group to invest $260 mn on fibre

Aditya Birla Group, controlled by billionaire Kumar Mangalam Birla, is investing $260 million to expand a textile fibre capacity and meet rising global demand for casual fabrics, a group official said on Friday.

The expansion includes diversified Grasim Industries Ltd, which will spend about Rs 3 billion ($69 billion), and unlisted group companies in Thailand, Indonesia and China.

The group aims to raise the capacity of viscose staple fibre, a raw material for fabrics, to 727,000 tonnes a year by the December quarter from 566,000 tonnes now, group director for pulp business Shailendra Jain said.

There has been a change in consumer preference for cellulosic fabric in the last few years after demand remained stagnant in the 1990s, he said.

"There is a strong indication that consumers want more casual look," Jain said. "It's changing because of the lifestyle products."

Most of Grasim's investment will be funded from internal accruals, he said.

The fibre unit was a drag on Grasim's earnings for many years in the 1990s and many analysts had urged the cement-to-textiles firm to spin off the unit to improve financial ratios.

The fortunes of the unit improved in the last few years and has contributed positively to earnings.

Jain said the expanded capacity would start production after the July-September quarter, and immediately add to earnings of Grasim.

India tea exports rise annual 23.3% in January

Tea exports from India, the world's largest producer, rose 23.3 per cent in January from a year earlier to 13.77 million kg, the state-run Tea Board said on Friday.

Officials said rising overseas demand should keep sales high over the next few months, even as leading competitor Kenya overcomes a drought that hit their output and exports last year.

"We are tapping a lot in the emerging markets in Asia and Africa which should help us sustain this growth," Tea Association of India (TAI) spokeswoman Mridula Bhattacharya said.

Indian tea production in January fell 12.3 percent from a year earlier to 21 million kg, Tea Board officials said.

"Unfavourable weather conditions, especially with a drought-like situation prevailing in northern India, brought about this fall in production," Kalyan Basu, the secretary general of the TAI, said.

"There is no doubt with some rains production will catch up."

Exports reached 203.8 million kg in 2006, topping 200 million kg for the first time since 2002 mainly due to Kenya's drought and India's tapping of emerging markets, officials said.

In 2006, India exported 8.52 million kg of tea to Kenya, up from 1.54 million kg a year earlier.

"That will however change this year as Kenya seems to have overcome its problems," Basu said.

The bulk of India's exports in 2006 went to Iraq, Russia and the United Arab Emirates, officials said.

Tea production rose by 3 per cent to 955.9 million kg in 2006 from 2005 as good weather lifted production in the north, officials said.

"The outlook for both production and exports for the year remains good, despite increasing competition," Basu added.

GAIL to invest $4.1 bn in pipelines

Gas transporter GAIL (India) Ltd plans to invest Rs 180 billion ($4.1 billion) over the next five years in new pipeline projects across India, Chairman U D Choubey said on Friday.

The investment would boost revenues to Rs 58 billion by 2011/12 from 20 billion in the current year, he said.

The state-run company will build new pipelines totalling 5,000 km (3,100 miles) to enhance GAIL's gas transportation capacity to 280 million standard cubic metres per day (mmscmd) from the current 145 mmscmd, he said.

"With increase in usage of natural gas, we need to build an infrastructure to meet the demand," he said at a news conference.

India produces 95 mmscmd of gas and the government expects this to rise to more than 190 mmscmd by 2009.

Choubey said the company would go to the market to fund the expansion. "Details are being worked out," he said. It was not immediately clear whether it would be equity, debt or a combination of both.

GAIL, India's largest gas distribution firm, currently has a 6,000 km pipeline network that transports up to 80 mmscmd of gas to power plants and industries.

Shares in GAIL were up 2.2 per cent at Rs 269.70 in a firm Mumbai market.

Vodafone confident of closing Indian deal

British mobile giant Vodafone Group Plc is confident it can close its recent deal to buy a controlling stake in India's Hutchison Essar in the coming weeks, Chief Executive Arun Sarin said on Friday.

Sarin told an investors presentation that the approval for Vodafone's $11.1 billion acquisition from India's Foreign Investment promotion Board (FIPB) remained a few weeks away.

ABN Amro India folio reaps profits

ABN Amro, currently in merger talks with British banking major Barclays, has doubled its micro finance clientele globally with its India portfolio in the segment growing to 26.2 million Euro in 2006.

The growth in the bank's Indian micro finance portfolio came through partnerships with 26 intermediaries across six states and the business achieved break-even within one year of start-up and continues to operate profitably, ABN Amro said in a statement.

The bank said in its sustainability report that the number of its micro finance clients has almost doubled to 351,500 last year from 186,300 clients in 2005.

"In India, we apply a different model as we provide specialised financial intermediaries with credit who then lend the money to economically disadvantaged borrowers. This approach combines the bank's financial strength with the vast rural network of the intermediaries, " it said.

Micro finance are small loans that enable many people (entrepreneurs) to work their way out of poverty. However, a significant challenge remains extending the reach and distribution capacity of micro finance activities.

In addition to India, the bank also provides micro finance in USA and Brazil.

"In Brazil, we have expanded our loan portfolio from 0.2 million Euro in 2005 to some 5.8 million Euro in 2006. This means it has evolved from a pilot to a sizable operation in nine cities across Brazil," it said.

In the USA, ABN Amro also works with intermediaries to support start-up and micro businesses. Because of the nature of the US economy, developing a small business to move someone out of poverty requires larger provisions.