Fed Offers Banks Loans Amid Crisis

The Federal Reserve took highly unusual steps Friday to open up the supply of cash to the nation's banks and signaled a willingness to cut interest rates if necessary, at a time when some of the safest financial markets are seizing up and threatening the broader economic outlook.

Specifically, the central bank lowered the discount rate, charged on direct Fed loans to banks, to 5.75% from 6.25%, and took steps to encourage banks to borrow from what is known as its discount window, such as lengthening the term of such loans to as long as 30 days from the current one day. Fed officials also joined a conference call with leading financial executives, aiming to ensure the Fed's moves have maximum impact by making clear that officials are actively inviting more borrowing from the Fed.

The central bank has now used most of the tools at its disposal for restoring normalcy to the markets. If these steps fail, its only major weapon left is a cut in the federal-funds rate target -- perhaps even on or before its next meeting on Sept. 18. The futures market indicated traders expect the Fed to cut rates at least a quarter point at its September and October meetings, and down a full point from the current 5.25% to 4.25% by the end of the year.

Read more in the Wall Street Journal

Subprime not lone cause for swings: Damodaran

M Damodaran, chairman, Securities and Exchange Board of India (Sebi) today ruled out the US subprime crisis as the single cause for the swing in markets, and also ruled out any separate regulation for hedge funds.

Damodaran said the regulator would prefer hedge funds coming to the Indian markets directly than through offshore derivatives. He said registration of hedge funds with Sebi, as in the case of foreign institutional investors, would be enough.

He pointed out that Sebi was not worried about the large number of players coming to India because their entry pre-supposes the constant returns being offered by the Indian markets besides a sound market regulatory mechanism.

He said Sebi would soon issue guidelines for setting up a self-regulatory organisation (SRO) for investment advisors including brokers and the print and the electronic media.

"A single organisation covering all sets of investment advisors is going to be effective," he said while ruling out multiplicity of self-regulatory organisations.

The purpose of self-regulation is to see that the advises on investments are given professionally and in a transparent way, Damodaran added.

DLF pays Rs 1,675cr for DCM Silk Mills land

In the country’s most expensive land deal, DLF has paid a whopping Rs 1,675 crore for acquiring 38 acres of land in west Delhi from DCM Shriram Consolidated (DSCL) and the Lohia Group. The deal surpassed arch rival Unitech's Rs 1,582 crore purchase of 300 acres in Noida last year.

DLF shelled out Rs 44 crore per acre for the land parcel, located around 5 km away from New Delhi's central business district of Connaught Place. The property - better known as Swatantra Bharat Mills and DCM Silk Mills - was owned by SBM Land Redevelopment Project. DSCL and the Lohia's held an equal 50% right each to the land.

While DSCL said that it has received its share of Rs 837.50 crore on signing the agreement with DLF today, the Lohias did not offer any official comment. A family source said S P Lohia of Indonesia-based P T Indo Rama was the owner of the land.

DLF, the country's largest real estate developer, is looking to realise around Rs 12,000 crore from its future development at this site. A senior executive from DLF chose to describe the sale as "not a land deal, but a project deal on perpetual lease basis". The company said it funded the deal through internal accruals.

Read more in Business Standard

Sensex ends down 643pts; Tata Steel drops 10%

The Sensex opened with a huge negative gap of 416 points at 14,585 on the back of a sell-off in the global markets triggered by the subprime crisis in the US.

The Sensex, after languishing over 500pts lower for most of the trading session, slipped again towards the close to a low of 14,345. The index finally ended with a hefty loss of 643 points at 14,358 - the second biggest loss in absolute terms in history.

HEFTY LOSSES...
Date	Close	Prv Cls	Chg	% Chg
18-May-06	11391.43	12217.81	-826.38	-6.76
16-Aug-07	14358.21	15000.91	-642.70	-4.28
02-Apr-06	12455.37	13072.10	-616.73	-4.72
01-Aug-07	14935.77	15550.99	-615.22	-3.96
17-May-04	4505.16	5069.87	-564.71	-11.14
27-Jul-07	15776.31	15234.57	-541.74	-3.43
28-Feb-07	12938.09	13478.83	-540.74	-4.01
05-Mar-07	12415.04	12886.13	-471.09	-3.66
15-May-06	11822.20	12285.11	-462.91	-3.77
08-Jun-06	9295.81	9756.76	-460.95	-4.72

The BSE Metal index slumped 6.5% to 10,300. The Bankex and Realty index plunged 5.5% each to 7421 and 6980, respectively. The Oil & Gas index hsed 4.5% at 7505. The Auto and FMCG indices dropped over 3% each to 4662 and 1855, respectively.

Read more in Business Standard

Reliance Capital Trustee picks up shares in ETC Networks

MUMBAI: Anil Ambani group firm Reliance Capital Trustee Company Ltd has picked up 1.2 per cent stake in Zee group-promoted ETC Networks for Rs 1.60 crore in open market transactions on the bourses. Reliance Capital Trustee Company bought one lakh equity shares of ETC Networks at a price of Rs 93.50 per share in a bulk deal at the Bombay Stock Exchange. It had bought 71.44 lakh shares on the National Stock Exchange at Rs 94.19 per share aggregating to Rs 67.28 crore on Thursday. Reliance Mutual Fund today also purchased one lakh shares in ETC Networks at a price of Rs 98 per share on the NSE. As on June 30, Zee Telefilms holds 55 per cent stake in ETC Networks. The scrip of ETC Networks closed at Rs 102.45, up 9.57 per cent at the Bombay Stock Exchange after touching a 52-week high of Rs 102.85.

NTPC replaces Dabur India on Nifty, CNX 100 indices

MUMBAI: State-run power major NTPC Ltd will replace Dabur India in two indices of National Stock Exchange - S&P CNX Nifty Index and CNX 100 index - from September 24.

The index maintenance sub-committee has decided to exclude Dabur from the two indices and inducted NTPC in its place during its periodic review. The changes would become effective from September 24, NSE said in a press release.

Besides, the committee excluded fifteen companies such as Aditya Birla Nuvo, United Spirits, Indiabulls Financial Services, Jindal Steel & Power and Bank of India from the CNX Midcap Index. In their place, 15 other companies such as Essar Steel, Lanco Infratech, Biocon, HT Media, Tata Tea and Yes Bank have been included, the release said.

Further, 10 companies were excluded from the S&P CNX 500 index and in their place 10 other were included namely - Idea Cellular, Sobha Developers, Television Eighteen India and Power Finance Corporation, the release added.

Read more in The Economic Times

Indian IT trioka fit for Buffett's portfolio: S&P

NEW DELHI: The world's greatest investor Warren Buffett may have shied away from putting his money in Indian companies so far, but those fulfilling his investment criteria include at least three companies based here -- namely Infosys, Wipro and Satyam Computer.

Standard and Poor's, one of the world's biggest investment services providers that compiles a list of stocks meeting the legendary investor's appetite twice a year, has named the three of the biggest names in Indian IT space in the latest model portfolio.

The American Depositary Receipts of the three Indian IT giants have been named alongside global giants Microsoft, Oracle, Ericsson, Cisco Systems, Diageo, China Mobile and SAP.

Besides, the list also includes 3M Company, Altria, British American Tobacco, Mcgraw-Hill Company and Qualcomm.

Read more in The Economic Times

India Inc eyes industrialised countries

NEW DELHI: North America and Asia have emerged as the most sought-after destinations for India Inc's acquisition bids, with takeover deals in the region touching $12 billion in the first four months of fiscal 2008, an Assocham Eco Pulse study said.

India Inc's acquisition deals in North America are valued at $7 billion while that in Asia totalled $4.2 billion, the chamber said.

Indian businesses signed deals worth $5.1 billion with US-based companies during April-July 2007, with the Tatas, Essar, Reliance and Infosys leading the brigade.

Tata Group remained at the forefront with total deal values worth $2.13 billion in steel, hospitality and automotives sector, followed by Essar's acquisition of Minnesota Steel for $1.65 billion. Reliance Communication expanded footprint in the US communications market by acquiring Yipes for $300 million.

Read more in The Economic Times

BNP stops withdrawals from 3 funds

BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't "fairly" value their holdings after concern over US subprime mortgage losses roiled credit markets, according to a report by Bloomberg.

The funds had about 2 billion euros ($2.76 billion) of assets on July 27 including 700 million euros in subprime loans rated AA or higher.

The Paris-based bank said today that it will stop calculating the net asset value for the funds - Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia.

"The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP Paribas said in the statement.

The bank joins Bear Stearns and Union Investment Management GmbH in stopping fund redemptions.

Most borrowers haven’t hedged external borrowings

Many Indian companies that have gone in for foreign currency loans believe the rupee will appreciate further against the dollar and have not hedged against the opposite, according to the treasury head of a domestic financial institution. That is especially true of companies that raised less than $10 million (Rs40.6 crore) in overseas loans, adds the treasury head, who did not wish to be identified.

This is despite steps taken by the finance ministry to slow down foreign currency inflows and curb the appreciation of the rupee. The finance ministry on Tuesday issued new, more stringent norms on external commercial borrowings (ECBs).

Read more at Livemint.com

Stir against organized retail set to go national

Wal-Mart Stores Inc., the world’s largest listed retailer, has just announced its India plans. Unorganized retailers across India will mark that and the entry of other large retailers on Thursday by burning effigies of the CEOs of Wal-Mart and others, closing some wholesale markets and shops and holding demonstrations in the first wave of nationwide protest against them.

The protests, asking large firms to “Quit Retail,” in India’s 60th year of Independence, in a twist on the famous “Quit India” slogan that Indians used to end British rule, also coincides with the anniversary of that movement. It will bring together an eclectic group of small retailers, hawkers, farmers, wholesalers and trade union activists.

Read more at Livemint.com

Govt to ask SC to revisit ruling on back-offices tax

The issue of taxing Indian back offices of foreign companies refuses to go away with the government planning to ask the Supreme Court to revisit its July decision that ruled that US investment bank Morgan Stanley would not have to pay tax in India on global income earned on account of the firm’s captive back-office unit in the country.

The ruling will have a bearing on the around 110 captive back offices that exist in India that serve parent companies, including Standard Chartered Bank, Fidelity Investments and ABN Amro.

“We are filing a review petition (in the Supreme Court). We had presented quite a bit of evidence which is not there in the judgement,” said an official of the income-tax department, who did not wish to be identified.

Read more at Livemint.com

RIL plans power foray for retail biz

The Mukesh Ambani-owned Reliance Industries Ltd (RIL) plans to set up captive power generation capacity of around 4,000MW at an investment of Rs12,000 crore to supply power to the 6,000 outlets that its subsidiary Reliance Retail plans to open.

The Anil Dhirubhai Ambani Group, managed by Mukesh Ambani’s brother Anil Ambani, claims that this violates an existing non-compete agreement between the two business groups.

“The first of these captive units will be set up in Maharashtra,” said an RIL executive, who did not wish to be named.

The captive power units will have a unit size of around 400MW each and will generate power at a tariff of Rs2.60 per unit. RIL is in talks with Siemens Corp., Alstom, Mitsubishi Heavy Industries (MHI) and General Electric for setting up the power generation units.

Read more at Livemint.com

Wipro buys US firm for $600 mn

he deal is the largest overseas buy in the IT space

Wipro Ltd, the country’s third largest software exporter, today achieved the distinction of making the largest overseas acquisition in the information technology (IT) space when it announced the acquisition of US-based, Nasdaq-listed outsourcing firm Infocrossing for approximately $600 million (around Rs 2,430 crore) in an all-cash deal.

The acquisition will be conducted through a tender for all the outstanding shares of Infocrossing, followed by a merger of Infocrossing with a Wipro subsidiary. Institutional members have a majority holding (close to 10 per cent) in the company. M&A BYTES Major acquisitions by IT companies Date Target Name Acquirer Name Total Value 08/06/2007 Infocrossing Inc Wipro Ltd 600.00 07/06/2007 Unza Holdings Pte Ltd * Wipro Ltd 249.71 1/18/07 Syndesis Ltd Subex Azure Ltd 165.40 2/26/07 Lason Inc Hov Services Ltd 148.00 8/14/06 Mantas Inc I-Flex Solutions Ltd 113.00 2/19/07 Esys Technologies Pte Ltd Tele Data Informatics Ltd 105.00 10/31/06 Tks-Teknosoft Sa Tata Consultancy Services Ltd 80.37 * Unza is a consumer care company (in $ million) Source: Bloomberg

Wipro is making an open offer at $18.70 per share, which — if fully subscribed — will cost close to $600 million. Wipro currently has cash reserves of $750 million and expects to close this acquisition by December 2007. Read more in Business Standard

RIL's Maha Mumbai SEZ may get extension

The board of approvals (BoA) for special economic zones (SEZ) is likely to extend tomorrow the validity of in-principle clearance to Reliance Industries' Maha Mumbai SEZ under the new rules that limit its size to 5,000 hectares.

"The extension of validity has been under the new rules that limit the size of a SEZ to 5,000 hectares," a government official said. Reliance had earlier proposed Maha Mumbai SEZ over an area of 10,000 hectares and received in-principle approval for project in August last year.

The amendment to rules notified in March had reduced the validity of in-principle approval to one year from three years previously, but BoA was given the powers to extend the validity by two more years.

Besides the Maha Mumbai project, the BoA, headed by Commerce Secretary G K Pillai, will take up eight fresh proposals. These include five zones for in-principle nod and three for formal approvals. Of these, two relate to Infosys Technologies which wants to set up IT and ITES zones near Hyderabad. The biggest zone coming up for in-principle approval is by Ispat Industries, which wants to set up a 1,012 hectare multi-product SEZ in Maharashtra's Raigad district.

Read more in Business Standard

India is now 5th largest global steel producer

India has moved up two places in global ranking and is now the fifth largest producer of crude steel in the world with the revised figures for production in 2006 ahead of South Korea and Germany.

An expert committee set up by the union ministry of steel, which went into the issue of under-reporting of capacity and production data, has revised the production figures for crude steel in calendar year 2006 to 49.45 million tonne as against the earlier reported 44 million tonne, which put India in the seventh position among global steel producers.

The revised figures for crude steel production in 2006-07 is pegged at 50.71 million tonne and that of finished steel at 51.90 million tonne.

According to figures released by the International and Iron and Steel Institute (IISI) for 2006 released in January, South Korea ranked fifth with a crude steel capacity of 48.4 million tonne and Germany sixth with 47.2 million tonne. With the revised figures, India has pipped both South Korea and Germany.

Lower estimates of induction furnace and re-rolling sectors accounted for most of the under-reporting of crude steel data, which in turn affected semi-finished and re-rolling (long product) figures.

Consumption figures have also been revised. The revised data series for the last five years for consumption after adjustment due to double counting for finished steel (alloy and non-alloy) shows that during 2006-07, domestic steel consumption stood at 46.14 million tonne as compared to 41.43 million tonnes in 2005-06.

Finance ministry limits ECB inflows to $20mn

The finance ministry today released revised guidelines for external commercial borrowings (ECBs) limiting inflows from such borrowings into the country at $20 million, and for use only for foreign currency expenditure for permissible end-uses of ECB.

According to a release on the website of the finance minsitry, "borrowers raising ECBs more than $20 million shall park the proceeds overseas for use as foreign currency expenditure for permissible end-uses. The above modifications would be applicable to ECB exceeding $20 million per financial year both under the automatic route and under the approval route."

The release added that borrowers proposing to avail ECB up to $20 million for rupee expenditure for permissible end-uses would require prior approval of the Reserve Bank under the approval route. However, such funds shall be continued to be parked overseas until actual requirement in India.

"All other aspects of ECB policy such as $500 million limit per company per year under the automatic route, eligible borrower, recognised lender, average maturity period, all-in-cost ceiling, pre-payment, refinancing of existing ECB and reporting arrangements remain unchanged," the release added.

The release further said that the new conditions would not apply to borrowers who have already entered into loan agreements and obtained loan registration numbers from the Reserve Bank.

Zensar Tech bags 7 mn dlr insurance biz

MUMBAI: Zensar Technologies Ltd, an IT and BPO services provider, today said it has received a seven million dollar (over Rs 28.27 crore) insurance deal from a South African insurance company.

With this deal, Zensar's insurance business reaches the 10 million dollar mark, having won a three million dollar contract from a US mid-west-based provider of insurance products, and a million dollar initial contract for BPO service from a Latin American insurance client.

"We are delighted to take our business in the 'Insurance Vertical' to its 10 million dollar mark, with the acquisition of a new insurance account in South Africa," Zensar Technologies Deputy Chairman and Managing Director Ganesh Natarajan said in a communique to the Bombay Stock Exchange.

Read more in The Economic Times

ICICI Bank reduces deposit rates by 0.25-0.50%

MUMBAI: ICICI Bank on Tuesday reduced interest rates on deposits of value less than Rs 15 lakh by 25-50 basis points for select maturities upto two years, a day after the country's largest lender SBI reduced its deposit rates.

The revised interest rate for tenors 181-365 days will be 6.25 per cent per annum as against 6.50 per cent at present, ICICI Bank said in a release.

Similarly, the revised interest rate for tenors 366 days-upto 2 years excluding special deposit schemes will be 6.25 per cent as compared to 6.75 per cent, it said.

The new rates would be effective from August 9, it said adding the interest rates on special deposit schemes remained unchanged.

The revision comes barely a week after Reserve Bank hiked the amount of depositors' money commercial banks need to park with the central bank by half a percentage point.

Read more in The Economic Times

Quatrro gets foothold in US mortgage sector

NEW DELHI: In what could be another game-changer for the Indian business process outsourcing (BPO) industry, Raman Roy-founded Quatrro BPO Solutions, on Tuesday, announced the acquisition of mortgage loan processing operations and platform of USA-based Preferred Financial Group, Inc.

Post the acquisition, Quatrro would become the first BPO offering from an Indian company that pursues the onsite-offsite model - the business model that has found favour with the software services industry in recent times. "We will be acquiring the technology platform, the people and the origination business of the US partner and that would also enable us to provide end-to-end fulfillment services to mortgage lenders across the US," says Quatrro Promotor Raman Roy.

The acquisition will be closed through Quatrro Mortgage Solutions - a subsidiary of Quatrro BPO Solutions and will allow the Indian major to provide quality service at a price-point projected to be 30 per cent to 50 per cent lower than current processing costs in the United States.

“This coming together of two successful organizations with talented people and great business acumen is in line with our creating value by innovation strategy, which involves attracting and supporting entrepreneurial management teams by building high-end third party businesses in underserved and uncontested market spaces,” adds Roy.

Read more in The Economic Times