Liquidity management on top of RBI`s agenda

Liquidity management is expected to top the agenda in the first quarter review of the monetary policy by the Reserve Bank of India (RBI) tomorrow.

The immediate task at hand for the RBI would be to convey whether it is still in the tight monetary policy mode, irrespective of an extended pause in interest rate increases.

Flush liquidity, apart from softening short-term money market rates, poses inflationary risks and also threatens to push credit growth back towards the peak of around 30 per cent witnessed in the previous three years.

The liquidity has been largely on account of the RBI’s purchases of dollars from the market to check the rupee’s sharp rise. Though foreign fund inflows into equities have remained strong, overseas borrowings and foreign direct investment have equally contributed to a glut in inflows.

Read more at Business Standard

Credit Policy Impact: Re moves up to 40.38/$

The rupee rallied sharply today on buying by global investors as the Reserve Bank of India lifted the daily borrowing limit for money market operations. A surging stock market also attracted inflows, dealers said.

The rupee ended at 40.38 per dollar rising from Monday's close of 40.54 per dollar, and moved within the striking distance of last week's peak of 40.20 per dollar.

Reliance Power bags Sasan

Matches Lanco-Globeleq price.

The three months of uncertainty over the 4,000 Mw Sasan ultra mega power project is finally over. Anil Dhirubhai Ambani Group (ADAG) company Reliance Power Limited (RPL) has bagged the project after matching the tariff of Rs 1.196 per unit quoted by the original winning bidder, a consortium of Singapore-based Globeleq and Hyderabad-based Lanco Infratech, which was disqualified.

After an hour-long meeting, the empowered group of ministers (EGoM) today awarded the Rs 20,000 crore project in Madhya Pradesh — the country’s largest thermal power project — to Reliance Power.

“Sasan Power Limited had received revised offers from three bidders that included Jai Prakash Associates, NTPC Limited and Reliance Power Limited and the revised bid of Reliance Power quoting a levellised tariff of Rs 1.196 per unit was the lowest,” said Power Minister Sushilkumar Shinde, who also heads the EGoM.

The EGoM has asked Sasan Power to award RPL the letter of intent (LoI) for the project, the minister said. Sasan Power Ltd is the shell company floated by the Power Finance Corporation to pilot the Sasan project. Read more at Business Standard

Everonn Systems to list Wednesday

MUMBAI: Everonn Systems India Ltd, issue price of which was fixed at Rs 140 per share, will list on the boursesWednesday.

The company had entered the capital market to raise Rs 50 crore. The 100% book build IPO was subscribed 131.47 times. The shares were offered in the price band Rs 125-140 per share.

Qualified institutional buyers portion was subscribed 92.94 times, non-institutional investors portion was subscribed 277 times and retail portion 123 times.

Everonn Systems is a fully integrated knowledge management, education and training company that offer services like creating globally relevant educational training content, designing and executing learning initiatives.

The company will use the proceeds of the issue for capital expenditure in its two strategic business units--institutional education & IT infrastructure services, and virtual & technical enabled learning solutions.

Everonn will also utilise the proceeds for mergers & acquisitions, investing in the proposed subsidiary to retail educational aids, tools and other products.

Govt rules out auction of 2G spectrum

NEW DELHI: The government on Tuesday denied any move to auction spectrum for second generation mobile services - a shift from the current subscriber-linked allocation policy.

"There is no question of that (2G auction)... I am not having any such intention," Telecom Minister A Raja today told reporters here.

The Department of Telecom had earlier said a CDMA operator had written a letter to the government seeking auction of additional spectrum against the current subscriber- led allocation.

As per the present policy, a GSM operator receives up to 6.25 MHz, while a CDMA operator gets up to 5 MHz, on meeting the specified subscriber base criteria. An additional allocation is made on the basis of the operator's subscriber base.

As per the unified access licence, the government had not committed more than 6.2 Mhz to GSM players and, therefore, any subsequent allocation may be auctioned, the CDMA player is believed to have said.

However, the GSM operators have opposed the demand

BSNL to issue new GSM tender: Raja

NEW DELHI: Bharat Sanchar Nigam Ltd will float a new tender for installing 40-50 million GSM lines, to be completed within 8-9 months, to expand its telecom services, the telecoms minister said on Tuesday.

"I am told that they are ready to go for a larger tender ... 40-50 million lines," A Raja told reporters. Earlier, BSNL had said it did not have plans to issue a fresh tender as it was still finalising an existing order.

BSNL has ordered 14 million 2G GSM lines from Ericsson and Nokia, the first phase of a 23 million line order that will be done in two steps, but was waiting for the companies to respond.

The firm cut the size of its original tender to 23 million lines from 45.5 million lines after Raja asked it to negotiate a lower price.

Reliance KG gas pricing in with Doc

NEW DELHI: RIL’s gas pricing formula, which has been the focus of the ongoing gas debate, is being independently examined by the PM’s Economic Advisory Council (EAC) chairman C Rangarajan.

It is understood the PMO had asked EAC to look into the formula even as the committee of secretaries (CoS) deliberates on the larger issue of pricing and allocation of natural gas.

Senior officials involved in examining RIL’s pricing say the end-price of $4.33 per million British thermal units (mmbtu) is reasonable in terms of prevailing rates of natural gas in the domestic and global markets. But they have some reservations over the formula, devised by RIL to derive the value of the gas. They say almost 97% of the component in RIL’s formula is the fixed component.

Read more at Economic Times

Tata Steel hums a new tune on Corus

MUMBAI: Tata Steel said on Monday that it will increase the size of its contribution to the purchase of Corus by about $800 million to $7.4 billion in order to cover some extra costs and take on the working capital of the Anglo-Dutch steel maker.

Mumbai-based Tata Steel, which became the world’s fifth-biggest steel company following the Corus purchase, said it will increase the size of its proposed convertible preference share issue to about Rs 6,000 crore from the earlier Rs 4,350 crore. It will raise the remaining amount through a GDR or an ADS.

Tata Steel announced the acquisition of Corus in April for a net acquisition value of about $12.9 billion. This was to be funded by Tata Steel UK’s debt of about $6.14 billion, and equity contributions from Tata Steel India and Tata Steel, Asia, a 100% subsidiary of the Indian company.

But the acquisition amount of $12.9 billion referred to the value of what was being paid for and did not include the continuing debt (working capital) of Corus. After the acquisition, the enterprise value, including all the debt and the costs, is estimated at about $13.7 billion.

Read more at Economic Times

Tata Motors net up 22 pc, despite sales drop

NEW DELHI: Country's largest automobile manufacturer Tata Motors Ltd said on Tuesday its net profit in the April-June period rose 22 per cent from a year ago, despite a drop in sales of cars and trucks.

Tata's net profit grew to Rs 4.7 billion in the fiscal first quarter from Rs 3.8 billion in the same period last year, the company said in a statement.

Revenue from sales was estimated at Rs 60.1 billion, up 5.3 per cent from a year ago.

Profit grew faster than sales, because of a foreign exchange gain of about Rs 2 billion. The company gained from the weakening of the US dollar against currencies in markets that buy Tata products.

Tata sells cars, buses, trucks and utility vehicles in Africa, the Middle East, and in Asia and Australia.

Unit sales totaled 128,095 vehicles in the April-June quarter, up just 1 per cent from a year.

Read more at Economic Times

RIL may become India's first $100 bn mkt cap firm

MUMBAI: Reliance Industries, India's most valued firm, may become the first in the country to achieve a market capitalisation of $100 billion, international brokerage and equity research major Morgan Stanley said on Tuesday.

Morgan Stanley's India-based analysts said in a research note sent to the firm's institutional clients that they were raising the consolidated earnings forecasts for RIL in the current and next fiscals.

They also revised upward their one-year price target for RIL shares, while projecting a 35 per cent surge from the current levels in its "base case" scenario.

Morgan Stanley further said in "bull case" scenario, the shares could rise by about 37 per cent, which when translated into market capitalisation would amount to over $100 billion.

Read more at Economic Times

RBI hikes CRR rates by 50 basis pts to 7 pc

NEW DELHI: The Reserve Bank Governor Dr Yaga Venugopal Reddy has hiked cash reserve ratio by 50 basis points to 7 per cent while the CRR repo and reverse repo rates as well as the bank rates remain unchanged.

Inflation target for 07-08 remain at 5 per cent according to the first quarter credit policy review unveiled on Tuesday. GDP forecast for FY-08 has been set at 8.5 per cent. The new CRR rate will come into effect from August 04.

The RBI has also removed 3000 crore reverse cap from August 06 The other highlights of the policy are as follows:

• Hedge funds pose significant risks to the markets says credit policy.

• Financial stability to add to market stance says RBI.

• Inflation targeted at 4 to 4.5 % in the medium term. Holding inflation within 5.0 per cent in 2007-08 assumes priority in the policy hierarchy, while reinforcing the medium-term objective to condition policy and perceptions to reduce inflation to 4.0-4.5 per cent on a sustained basis.

• CRR to be used for managing liquidity.

• Domestic outlook was favourable.

• Monetary stance spelt out in February 2007 continues.

• Credit policy guided by domestic policy.