Highlights of  Current Economic Scene

Anticipating a dip in credit delivery by cooperative credit institutions, the Centre has asked public sector banks to lend about 10 per cent more than their target to ensure the overall target of Rs 2,80,000 crore farm credit for 2008-09 is achieved. In April-December 2008, 60.66 per cent of the target was achieved, which is lower than 66.79 per cent of the target achieved during the period in the previous fiscal.  Government data for April-December 2008 has displayed that scheduled commercial banks would comfortably achieve their target, while regional rural banks would also manage to achieve their target. However, cooperatives might not be able to achieve their target, as more farmers are defaulting on loan repayment in expectation of a fresh loan waiver and settlement scheme.

According to the Solvent Extractors Association of India, oilmeal exports have fallen in January 2009 to 5.63 lakh tonnes from 8.39 lakh tonnes during the same period a year ago, mainly due to poor demand and emergence of South America as a serious competitor in the global market. Exports have dropped on month-on-month basis as well with December exports standing at 7.08 lakh tonnes. For the fiscal year so far (April-January 2009), however, the shipments have increased by 21 per cent at 46.16 lakh tonnes as against 38.25 lakh tonnes during the same period a year ago, driven by rise in exports soyameal and rapeseed meal. While exports of soyameal, for the April-January 2009 period, have stood at 35.77 lakh tonnes against 26.80 lakh tonnes, that os rapeseed meal have increased to 7.30 lakh tonnes from 6.91 lakh tonnes. Exports of groundnut meal, rice bran extraction and castorseed meal have declined during the review period. Groundnut meal exports have fallen to 32,733 tonnes from 44,975 tonnes, that of rice bran extraction has slid to 1.05 lakh tonnes from 1.55 lakh tonnes and shipments of castorseed meal to 1.71 lakh tonnes from 2.53 lakh tonnes.

Coffee exports from India has declined by 15 per cent to 10,810 tonnes in January, owing to poor demand for instant coffee and value-added products, caused by economic recession. As per the estimates of Coffee Board, total provisional exports of coffee, including value-added products, have stood at 10,810 tonnes in January against 12,692 tonnes in the same month last year. While the provisional export of instant coffee have dropped to 1,866 tonnes as on January 30 from 2,760 tonnes a year ago, that of value-added products have slumped to just 1,015 tonnes from 2,751 tonnes during the same period. Moreover, re-exports (shipments of value-added products), too, have slumped,” he said. However, coffee export so far this fiscal year ending March 2009 has increased by 22 per cent in value terms to Rs 1,815.43 crore from Rs 1,483.11 crore in the corresponding period last fiscal year due to high prices in global markets even though shipment in volumes have suffered touching 1,59,798 tonnes from 1,64,870 tonnes a year ago. The average export price of coffee touched Rs 1,13,607 per tonne, up 26 per cent, from Rs 89,956 a year ago. Russia , Commonwealth countries and Germany are India ’s major coffee markets.

The country has seen a record output of tea, that is, 980.8 million kg during 2008, driven by a 26-million kg rise in south India tea production, as against 944.7 million kg in 2007. According to a Tea Board data, while production in north India has increased to 733.9 million kg in 2008 from 724.7 million kg in 2007, in the South it was up at 246.9 million kg (220 million kg). In December, production increased by 8.4 million kg to 58.6 million kg compared with 50.2 million kg during the same period a year ago. Of this, output in South was up at 23.1 million kg against 18.1 million kg and in north; it was up at 35.5 million kg against 32.1 million kg. Tea exports from the country too increased in 2008 to 196.02 million kg, getting an advantage of political and weather problems in Kenya . Exports have witnessed a rise in the standalone month of December to 20.51 million kg against 18.38 million kg during the same period a year ago. In fact, December tea shipments were the highest in two years.

According to traders and market analysts, production of jeera is likely to fall by 20-25 per cent this year as compared to last year due to unfavourable weather conditions though area covered under sowing has increased. Foggy and humid climate in Gujarat during the winter season has damaged the jeera crop to a large extent. According to the trade body, jeera production for the new season may not be more than 28-30 lakh bags (1 bag contains 50 kg) this year. At present, the carry forward stock of jeera is about 5-7 lakh bags in India as compared to 10 lakh bags last year.

The latest findings by the International Grain Council (IGC) have revealed that global grain output shot up 5.65 per cent in 2008 following larger than expected production in the northern hemisphere notably in China, despite serious weather problems affecting southern hemisphere crops. Total output of food grains, including wheat, rice and maize among others, was estimated at 1,788 million tonnes, 101 million tonnes higher than 1,889 million tonnes in 2007. World carry-out stocks of grains in 2008-09 are placed 31 million tonnes higher than at 338 million tonnes. Total consumption of foodgrains is estimated to decline by 14 million tonnes to 1,731 million tonnes, reflecting a sharp slowdown in ethanol manufacture in the US and, to a lesser extent, the impact of the global economic downturn on commercial demand for animal feed.

As per the estimates provided by cotton traders in Gujarat, domestic textile mills’ cotton consumption in 2008-09 may range between 18.5 and 20 million bales, reporting a marginal decline from around 22-24.1 million bales consumed during 2007-08. This decline can be mainly attributed to reduction in purchasing power following global economic slowdown. Kishor Shah, president, South Gujarat Cotton Dealers Association (SGCDA) opines that in addition to economic turmoil and higher cotton prices, power cut in Tamil Nadu, which consumes around 50 per cent of cotton in the country as the state houses hundreds of textile mills, is also responsible for lesser cotton consumption in the country.

In order to curb the increases prices of soya meal and maize, which are the most crucial ingredients of poultry feed, the poultry industry has demanded that soya meal and maize to be brought under the Essential Commodities Act. According to he National Egg Coordination Committee (NECC), the apex body of poultry farmers, hoarding and speculation, by the traders has led to abrupt rise in the prices of these commodities. Soya meal prices have shoot up to Rs 21,000 - 23,000 per tonne from price range of Rs 10,000 - 12,000 per tonne that was prevailing couple of months back.. Similarly, price of maize has also touched Rs 1,000 per quintal from Rs 600-650 a quintal per year ago. As per NECC, the break-even level for egg production has gone up from Rs 0.90 -1.00 to Rs 2.25 per egg, whereas that of broilers has increased to Rs 47-48 per kg from Rs 27-28. Many of the poultry farm owners are running short of working capital due to the losses incurred by them in the last two years. This has resulted in the closure of around 15 per cent of the industry - consisting mainly of small and marginal farmers.

Bangladesh , for the first time, has garnered larger market share than India in garment exports to the US , acquiring 5^th position, which was previously occupied by India . While Bangladesh 's share increased by 10 per cent, India 's share went down by 3 per cent in the US market in the same time period. As per the experts, recession-hit retailers in the US and Europe are increasing their purchases from Bangladesh as it is able to supply garments at a relatively less price due to low labour cost and better economies of scale. The estimates by Apparel Export Promotion Council (AEPC) has revealed that exports of ready-made garments from India are likely to fall short of the $11.62 billion target for the current fiscal, totalling up to $8.78 billion, a drop of 24 per cent. However, China has continued to retain its position as the largest supplier to both the US and Europe .

In order to move tobacco growers to alternative crop through a rehabilitation programme, the Tobacco Board has forwarded a proposal to the Department of Commerce outlining the broad contours of a pilot project that is spread over 202 villages in the key tobacco-growing states of Andhra Pradesh and Karnataka. The proposal is to phase out tobacco cultivation and to rehabilitate about 50 per cent of the tobacco growers to alternative crops over a span of 10 years. Currently, there are about 87,703 tobacco growers and about 99,143 barns registered with the board. The objective is to cut down the number of barns to 50,000 by 2020. The total number of clusters in Andhra Pradesh and Karnataka are 222 with each cluster having roughly 350-500 barns. The Board has suggested that this could be met either by outright budgetary support or by levy of cess on cigarettes, the modalities of which have not yet been sorted out. Altogether, 1,993 growers in the selected cluster are included in the pilot project. The pilot project is spread over three years from 2008-09 to 2010-11. The alternative crops in each of the soil regions have also been identified.

With a view to promoting seafood in the domestic market, the central government has announced subsidies (up to 20 to 25 per cent) for retail units to create necessary infrastructure to modernise their outlets complying with certain hygiene standards, and also for setting up clean wholesale markets. According to Mr P. Krishniah, Chief Executive, National Fisheries Development Board (NFDB), the subsidy scheme will cover major outlets with an investment of up to Rs 1 crore, medium size outlets with up to Rs 50 lakh investment and small units at up to Rs 10 lakh investment. For wholesale markets, the NFDB has plans to provide subsidy or grant for modernisation of wholesale fish markets. In addition, the State fisheries department is also planning to open at least 100 new seafood retail outlets across the State in a phased manner. This will also be funded by the NFDB, they added.

With a target to increase the country’s fish production to over 10 million tonnes by the end of the 11th Plan from the current 6.5 million tonnes, the central government has announced various schemes. The government has announced 100 per cent grant to states for reservoir development to increase fish production through regular stocking of seeds.  According to Mr P. Krishnaiah, Chief Executive, National Fisheries Development Board, Rs 40 crore has been released under the scheme. The government has also decided to allow cultivation of Vannamei shrimp (white shrimp), and sea bass, which are in great demand worldwide. In the case of Vannamei shrimp, currently two companies – Sarat Seafood and BMR Hatcheries – are permitted to do the trial run in a restricted environment in 250 acres in Nellore district in Andhra Pradesh.

There have been reports of delayed arrival of Alphonso mangoes this year due to late flowering. As per the Divisional Manager, Maharashtra State Agricultural Marketing Board, Ratnagiri district, the first week of April 2009 would see a production of about 15 to 20 per cent and by second half of April the production would touch 60 per cent. Mr Sudhir Moraeswar Joshi, Chairman of the Mango Growers Co-operative Society, Ratnagiri and Sindhudurg districts, that this year mango production from Ratnagiri and Sindhudurg is expected to be less by 50 per cent. The area under Ratnagiri mango cultivation is around 62,836 hectares with a production of 1,15,939 tonnes per annum. The area under Sindhudurg is around 26,125 hectares with an average production of three tonnes per hectare.

Infrastructure

The Index of Six core industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 247.4 in December 2008 and registered a growth of 2.3% compared to a growth of 3.2% in December 2007.  During April-December 2008-09, six core-infrastructure industries registered a growth of 3.5% as against 5.9% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a growth of (–) 0.3% in December 2008 compared to a growth rate of (-) 1.4% in December 2007. The Crude Oil production registered a growth of (-) 0.5% during April-December 2008-09 compared to 0.3% during the same period of 2007-08.

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of 3.0% in December 2008 compared to growth of 1.9% in December 2007. The Petroleum refinery production registered a growth of 3.7% during April-December 2008-09 compared to 7.5% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 9.4% in December 2008 compared to growth rate of 8.4% in December 2007. Coal production grew by 10.1% during April-December 2008-09 compared to an increase of 3.5% during the same period of 2007-08. 

Electricity generation (weight of 10.17% in the IIP) registered a growth of 0.7% in December 2008 compared to a growth rate of 3.9% in December 2007. Electricity generation grew by 2.6% during April-December 2008-09 compared to 6.6% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 11.6% in December 2008 compared to 4.4% in December 2007. Cement Production grew by 7.0% during April-December 2008-09 compared to an increase of 7.7% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 0.8% in December 2008 compared to 1.8% in December 2007. Finished (carbon) Steel production grew by 2.7% during April-December 2008-09 compared to an increase of 6.4% during the same period of 2007-08.

Inflation

Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 24th January 2009 declined by 0.2 percent over the week.

The annual rate of inflation, calculated on point-to-point basis, stood at 5.07 percent for the week ended January 24, 2009 as compared to 4.78 percent during the corresponding week of the previous year.  

The index for major group primary articles declined marginally due to decline in prices of bajra, arhar, coffee, copra, groundnut, and gingili seed.

The index for major group fuel, power, light and lubricants rose by 0.6 percent due to higher prices of naphtha, furnace oil and light diesel oil.

The index for major group manufactured products declined by 0.5 percent due to lower prices of rice bran oil, coffee powder, khandasari, etc.

The final wholesale price index for ‘All Commodities’ for the week ended November 29, 2008 stood at 233.3 as compared to 233.6 and annual rate of inflation based on final index, calculated on point to point basis, stood at 7.86 percent as compared to 8.00 percent.

Financial Market Developments

Capital Markets

Primary Market

Securities and Exchange Board of India (SEBI) will amend its takeover regulations to ease the path for a possible acquisition of Satyam Computer and also to provide for such extraordinary cases in the future. Possibly in view of falling stock prices, the SEBI Board tightened the norms for issue of preferential warrants, raising the upfront payment to 25% from 10%. On the initial public offer (IPO) front, SEBI eased rules, allowing companies to announce their price-band even up to two days before the opening date of the issue. The price bands are usually announced in the Red Herring Prospectus about two weeks before the opening date. The timelines for bonuses has also been reduced to 15 days between the board decision and completion of bonus issue, when the articles of the company don’t call for shareholder approval. Where shareholder approval is required, the time line is 60 days. Earlier it was six months for both. The SEBI also decided that companies will announce their dividends on a “per-share” basis and not on %age basis.

Mumbai-based Gemini Engi Fab has called off its IPO on 02 February 2009, a day before its scheduled opening. The Rs 44-crore issue was slated to open on 03 February and close on 09 February. Poor response from qualified institutional buyers (QIB) is the main reason cited by he merchant banker for the cancellation of the issue.

Response to EdServ’s public issue offer was dismal on the second day of bidding as the issue has been subscribed 0.002 times. According to NSE data, the issue has received 11,600 bids for 39.73-lakh shares IPO. The offer began on Thursday and will close on Monday. The price band is fixed between Rs 55 and Rs 60. EdServ is the first company to go ahead with its IPO in the last four months.

After a long lull, Edserv Softsystems Ltd is set to tap the primary market. IPO of Rs 39.7 lakh equity shares opens on 08 February. The company has fixed a price band of Rs 55-60 per share of face value Rs 10. The issue closes on February 9. The company plans to raise around Rs 20 crore from the float, to expand humanware education & deployment system business up to 200 centers. The issue has received poor grading from rating agency CARE.

As per global consultancy firm Grant Thornton, India Inc's capital mobilisation through IPO has hit rock bottom as the total amount raised via this route in 2008 aggregated to $ 4,509 million, the lowest in the last three years. Capital mobilisation through IPOs witnessed a fall both in terms of volume and value as only 44 transactions worth $ 4508.85 million were announced.

Secondary Market

The markets exhibited extremely lacklustre movement amid a thin range during the week. Despite reports of a pro-industry budget and the markets gaining in three out of five sessions, key indices ended the week in the red on institutional selling and weak global cues. While the BSE Sensex down by 123.4 points or 1.3% to 9,300.9 over the week, the NSE Nifty lost 31.7 points or 1.1% to 2,843.1. The Defty lost only 0.5% as the rupee strengthened. While reports of tax relief and fiscal stimulus in the forthcoming budget has been considered a positive by the markets, poor corporate results, a fall in direct tax collection and lower exports were the dampeners.

After facing a severe liquidity crunch in the later part of 2008, the mutual fund industry has shown signs of growth. The industry’s average assets under management (AAUM) in January has gone up from Rs 421,116 to Rs 460,948 crore, a rise of 9%. According to the SEBI data, mutual funds invested Rs 1,173 crore in debt instruments in January. As opposed to this, their investment in equity has been only Rs 117.50 crore.

Mutual fund investors in India may no longer have to pay entry or exit charges (loads) if the SEBI approves a proposed variable load structure for these instruments. Distributors, however, may be allowed to charge a load on some schemes – such as money market and some liquid funds — that mostly do not attract entry loads at present. As per sources, SEBI has been working on the details of a variable load structure following discussions with representatives of Association of Mutual Funds in India (Amfi) and fund houses, and that new guidelines were expected in a few weeks.

The NSE is all set to start the cross-margin facility across the cash and derivatives segments across all categories of market participants from 12 February. The cross-margining facility will allow the market participants to see their overall position as a basket of cash and derivatives positions as against the existing practice of treating the cash & derivatives positions separately. It also allows a market participant to reduce the total margin payment required. This method is mainly used by financial intermediaries to reduce their systematic risk.

Derivatives

Markets are stuck in the 2,500-3,100 range. A quiet week ended with the indices down marginally after several sessions of range-trading. Breadth signals were poor. Volumes have diminished alarmingly and the ratio of advances to declines remains negative.

It has been just another dull week for traders as Nifty future chose to remain in a narrow band. It ended the week at 2835.6 points, registering a drop of 1% over that of the previous week. The discount between Nifty future and spot also narrowed during the week due to short covering, particularly on Friday. But despite that, the average trading volumes remained dull, hovering at about Rs 31,000 crore.

The cumulative FII positions as a %age of the total gross market position on the derivative segment, as on February 5 was 35.52%. Foreign institutional investors indulged in alternate bouts of buying and selling in the F&O segment. They now hold index futures worth about Rs 10,355 crore (about Rs 9,553 crore) and stock future worth about Rs 11,601 crore (about Rs 11,092 crore). Their index options holding improved to about Rs 12,059 crore (about Rs 11,263 crore).

The volatility index, which measures the immediate expected volatility, has jumped to 50.65 after breaching the 50-point mark a couple of times intra-day during the week.

Government Securities Market

Primary Market

The Reserve bank of India (RBI) auctioned 91 Day T-Bills and 182 day T- Bills for the notified amounts of Rs 8,000 croe and 1,500 crore, respectively on 04 February 2009. The cut-off yield for the 91 day T-Bills has been set at 4.83% and for 182 day T- Bills has been set at 4.70%.           

Seven State governments auctioned 10-year paper maturing in 2019 for the notified amounts of Rs.4748.97 crore on 05 February 2009. The cut-off yield for the security has been set at 7.24% for Himachal Pradesh, Goa and Punjab, 7.26% for Tamil Nadu, 7.27% for Haryana and West Bengal and 7.29% for Rajasthan.

On 06 February 2009, RBI re-issued 7.46% 2017 and 6.30% 2023 for the notified amounts of Rs.5,000 crore and Rs.2,000 crore, respectively. The cut-off yields for the securities were 6.83% and 7.15%, respectively.

Secondary Market

Call money dropped below the reverse repo rate of 4%, in view of surplus liquidity in the banking system. Bond yields softened slightly during the week as inflation weakened, though government borrowings remained high. Bonds edged higher for the first time in nine days, with the new benchmark paper yield falling 13 basis points to end the session at 5.78%. Government borrowings, so far this year, were in excess of Rs 2.07 lakh crore or about 105% of the budgeted estimates of the current year. Liquidity remained comfortable.

During the week ended 06 February 2009, RBI absorbed an average amount of Rs.51,658 crore through the daily LAF reverse repo auctions. On the other hand, RBI injected an average amount of Rs.225 crore through the daily LAF repo auctions. Banks have borrowed an amount of Rs.500 crore during the week under the special term repo facility.

Average CBLO volumes during the week increased by around 17% as compared to the previous week. The weighted average rates moved higher during the week, with the weighted average overnight rates at 3.68% as against 3.63% during the previous week.

Banks have begun raising short-term funds through issuances of certificate of deposits (CDs) as the cost of funds has declined and the banking system remains wary of extending loans. The aggressiveness in raising funds through CD issuances has witnessed primarily among the state-run banks, who were trying to reduce their cost of funds before lowering the lending rates.

Bond Market

During the week under review, one bank, one NBFC, two corporates and two central undertakings have tapped the bond market to mobilise Rs 2,592 crore.

Foreign Exchange Market

Rupee advanced for a second week as stock gains increased optimism that overseas funds will return to buy emerging-market assets. The currency appreciated for a fourth day, its best run in more than a month, as offshore non-deliverable forward contracts showed traders reduced bets for how far the rupee will decline in a month. The rupee strengthened 0.4 % this week, the highest since 19 January 2009.

The rupee closed at Rs.48.73/USD on February 06, 2009 as compared with Rs.49.02/USD as on January 30, 2009. The Rupee moved between Rs.48.65 and Rs.49.01, with a standard deviation of 13 paise during the week. The six-month forward premia closed at 2.18% (annualized) on February 06, 2009 vis-à-vis 2.36% on January 30, 2009. Forward premia for one, three, six shrank to 3.28% (3.70%), 2.72% (3.23%) and 2.18% (2.38%). The 12-month forward premia, however, firmed slightly to 1.85% (1.76%) as some foreign banks took long forward cover against their FCNR deposits. Cash to spot forward premia remained at 1.77%.

After three weeks of fall, India ’s foreign exchange reserve rose by $990 million to $248.611 billion during the week ended January 30, 2009, mainly due to revaluation in the foreign currency assets and gold reserves.

Currency Derivatives

Robust trading volumes in currency derivatives has drawn nine public-sector banks led by Bank of India, Federal Bank, MMTC, TCS and Jaypee Capital to jointly float India’s fourth currency futures exchange — the United Stock Exchange of India Ltd (USEIL). With an authorised capital of Rs 150 crore and paid-up capital of Rs 120 crore, the new exchange has received in-principle approval from the SEBI. It will commence operations in two months; USEIL expects to ride on the strength of the promoter-banks in different geographies to offer its exchange-traded currency futures product to the latter’s customers. The average combined daily trading volume in currency futures on NSE, MCX-SX and BSE is estimated at around Rs 2,000 crore.

Commodities Futures derivatives

The Bombay High Court reserved its order on a dispute between the commodity market regulator Forward Markets Commission (FMC) and National Commodity and Derivatives Exchange Ltd (NCDEX) over slashing of transaction rates by the exchange. Faced with a sharp drop in turnover since July, NCDEX created two slabs for exchange rates, before 5 pm and after 5 pm in January. NCDEX announced uniform charges of Rs 3 for every lakh of the total value of all trades in all commodities from 10 am to 5 pm and five paise in the second session from 5 pm to 11 pm. In an attempt to attract trade in the metals, the rates in the second slab were reduced drastically. But the FMC took exception to this reduction, saying it might affect the business of two other commodity exchanges adversely. FMC last month also ordered NCDEX to keep the new structure in abeyance, following which the latter moved the Bombay High Court.

Copper futures edged up on 06 February boosted by stronger-than-expected US manufacturing data released overnight, but a stronger rupee may keep a lid on the gains later in the day. The benchmark February copper contract has been 0.99% higher at 157.45 rupees per kg, after falling more than 1% in the previous session.

Public Finance

The latest data on Union government accounts for current fiscal so far (upto Dec 2008) reveals that while revenue deficit at Rs. 173830 crores accelerated by 343.3% mainly due to surge in subsidies, especially that in fertilisers and to some extent by the stimulus package for pushing the economy by increasing the plan expenditure. The fiscal deficit increased by 181.3%.

Up to December 2008, the non-plan expenditure at Rs. 426419 crores was 26.5% more than that in the corresponding period last year. This amount of expenditure is 84% of the budgeted expenditure. One silver lining is the substantial increase in the corporation and income tax during December 2008 as a resulted the corporation tax and income tax has achieved 64% and 50% of their respective budget estimates; still it was much less than the tax mobilised in December 2007.

Insurance

Tata AIG Life Insurance company and South Indian Bank has entered into a partnership to provide premium renewal collection services to the policyholders through the 520 core banking solutions (CBS) branches of SIB.

HDFC Standard Life, has inaugurated 13 branches in the National Capital Region (NCR), in December 2008.

Having improved its product portfolio to take on competition from the private players, LIC the country’s largest life insurer, has expressed the confidence that it would regain its market share of over 60% and earn new premium of Rs 57,000 crore by March.

Banking

Tata Capital will be entering the housing finance segment and is seeking approvals from the regulator for the creation of a separate housing finance company. Apart from plans to launch a $250 million to $300 million PE fund in the next three to six months, the company is keenly looking at investment banking, wealth management services, travel and forex, treasury advisors and credit cards as potential businesses.

LIC Housing Finance has slashed lending rates for new borrowers by 100 basis points (bps) across various loan categories. Home loans up to Rs 30 lakh, irrespective of the tenure, would now be cheaper by 100 bps at 8.75%, while for loans above Rs 30 lakh, the rates are lower at 9.75% as against 10.75% earlier. The new rates are effective from February 1, 2009.

The RBI has cancelled the licence of Maharashtra-based Sadhana Co-operative Bank following insolvency of the bank. Following liquidation every depositor will receive repayment of his deposit up to a ceiling of Rs 1 lakh from the Deposit Insurance and Credit Guarantee Corporation. The licence of the bank was cancelled as all efforts to revive it in consultation with the state government had failed.

Punjab National Bank has launched a Global Credit Card in association with VISA and will be accepted in over 2.90 crore merchant establishments and 10 lakh ATMs worldwide which use VISA as a payment gateway. The credit card will also be accepted at a host of e-commerce sites.

Corporate

Even as the Centre has launched a damage control exercise over the Satyam Computer Services scandal, in a startling disclosure, India ’s stock exchanges have revealed that as many as 1,317 listed companies have not filed their corporate governance report for the quarter ended September 30, 2008. For the July-September 2008 quarter, 1,228 companies listed on the Bombay Stock Exchange and 89 companies on the National Stock Exchange (NSE) have not submitted their corporate governance reports to these exchanges. NSE has suspended trading in the stocks of the 89 companies while BSE is yet to decide its course of action. The list of companies that have not submitted corporate governance report to exchanges include Aditya Ploymers, Alpic Finance, Balmer Lawrie Freight Containers, BIL Industries, Cyberspace Infosys, Dalmia Industries, DSQ Software, DSQ Biotech, IDBI Bank, Indiabulls, Rathi Ispat, United Breweries and Vardhaman Industries, among hundreds of others.

Engineering and construction major Larsen & Tourbo (L&T) has posted a 216% rise in net profit at Rs 1,520 crore for the quarter ended December 31, 2008, as compared to Rs 482 crore recorded during the corresponding period of the previous year. According to a press release, net profit of Rs 1,520 crore included an extraordinary gain of Rs 916 crore (net of tax) from the sale of the company’s ready mix concrete business.

Replacement costs on faulty blades and forex losses in the third quarter have hit wind power major Suzlon Energy hard, with the company posting a net loss of Rs 59 crore compared to net profit of Rs 152 crore in the third quarter of 2007-08. The results are on a consolidated basis and include performance of three group companies, Suzlon Wind Group, Hansen Group and REpower Group. Together, Suzlon, the world’s fifth largest wind turbine manufacturer, incurred Rs 233 crore as blade retrofit charges in the quarter, and has made provisions for an additional Rs 171 crore for the same in 2008-09. The group also incurred mark-to-market losses on foreign exchange contracts to the tune of Rs 124 crore in the quarter.

State gas utility GAIL India Ltd has reported a 59% decline in its net profit to Rs 253 crore in the third quarter ending December 31, 2008, on more than doubling of LPG subsidy payouts. The company’s net profit in the October-December period was recorded as Rs 253 crore as against Rs 621 crore a year. The decline in profits was on account of Rs 905 crore payout as LPG subsidies.

Spicejet has posted a net loss of Rs 17.9 crore for the quarter ended December 31, 2008 as against a net profit of Rs 9.38 crore for the same quarter in the last financial year.

French nuclear giant Areva and Nuclear Power Corporation of India Ltd (NPCIL) has inked a memorandum of understanding (MoU) that would lead to the development of six nuclear reactors in India with a total investment of Rs 60,000 crore. Initially Areva will be supplying NPCIL with two European pressurized reactors of 1,650 MW each. These reactors would come up in Jaitapur in western Maharashtra . India has set up a target of generating 60,000 MW nuclear power by 2030. Presently, NPCIL has 17 nuclear power reactors of 4,120 MW in operation and 5 nuclear power reactors of 2,660 MW under construction. NPCIL aims to increase atomic power generation to 20,000 MW by 2020.

VisionExpress, the joint venture between Reliance Retail and Dutch optical retailer Pearle Eurpoe, plans to open 500 eyewear outlets across the country by 2015 at it aims to be a leading player in the estimated $900 million Indian optical eyewear market.

Home appliances manufacturer Samsung India is planning to invest $20 million (about Rs 96 crore) in its Chennai and Noida facilities to expand the operations with more focus on investment in machinery.

Ambuja Cement, the second largest cement manufacturer in India has posted a dip of 24.7% in its net profit to Rs 1,390 crore for the year ended December 31, 2008 against Rs 1,846 crore in 2007. The company’s net sales grew by 9.5% to Rs 6,262 crore against Rs 5,719 crore, as the cement production during the year grew 5% to 17.8 million tonne against 16.9 million tonne in 2007.

External Sector

Exports during December 2008 registered an annual increase of 1.1% to reach US $ 12690 million; as a result during the fiscal year so far the total exports at US$131990 million registered a growth of 17.1% over that of US $ 112737 million reported in the comparable period last year.

Imports during December were valued at US $ 20256 million, an increase of 8.8 per cent over that of US$ 18610 million in December 2007 and the cumulative import at US$ 225809 million was 31.5% more than that of US $ 171718 during April-December 2007-08.

Trade balance during December thus worked out to be $ 7567 as compared to 5785 in December 2007. The cumulative trade balance for April-December 2008 estimated at US $ 93819 million was 1.6 times to that of US $ 58981 million during April-December 2007.

While oil imports during the current fiscal year so far gone up from US $ 54421 million in April-December 2007 to US $ 78827 million , that of  non-oil imports accelerated by 25.3% to US $ 146982 million.

Information Technology

India’s IT industry exports will grow by 16-17% in 2008-09, around 5 percentage points lower than the 21% growth projected by Nasscom. For the fiscal year 2009-10, the rate of growth would be just 5.88%, with an export value of $160 billion on account of demand slowdown and recession in Europe and USA .

Mobile phone company Sony Ericsson has joined hands with gaming portal Zapak.com and Microsoft XBOX360 for “World Gaming Day”.

Telecom

TRAI has rapped operators for rapidly increasing call drop rates, asking them to reduce incidences of call drops on the network and improve the voice quality of services by February 28, 2009. Trai has asked them to report the measures adopted by the end of the month.

The Telecom Commission, the highest decision-making body in the Department of Telecommunications (DoT), has decided to refer the matter of allowing unrestricted internet telephony to the regulator TRAI.  DoT is seeking more clarifications from TRAI, which had recommended unrestricted domestic internet telephony. This would have allowed consumers to make calls at much cheaper rates. At present, a call from a computer is allowed to another computer within the country, but not to a phone.  But one can make international calls to a phone from a computer. However, the Telecom Commission has allowed sale of calling cards for making domestic and international calls from any phone - a step that could bring tariffs down by up to 70 %.

*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project.