Highlights of  Current Economic Scene

Agriculture

Punjab , the major contributor of wheat to the central pool, has scaled down its estimates of wheat output by 5 lakh metric tonnes to 150 lakh metric tonnes during this season due to untimely rains causing widespread damage to wheat crop in the state. It has been reported that rains have caused damage in the range of 50% to 75% to wheat crop cultivated on 5,400 hectares and 75% to 100% damage on 2,500 hectares, while rest of the total area faced less than 50% damage. Punjab had earlier estimated that wheat production would be around 155 lakh metric tonnes for this rabi marketing season as against last year’s output of 157.20 lakh metric tonnes. Besides, the total crop arrival during this rabi marketing season is also expected to be lower at 100 lakh metric tonnes as against last year’s arrival of 105 lakh metric tonnes.

The center has projected that rice procurement would cross 300 lakh tonnes by the end of the current season in September, as it has purchased over 50% of the paddy arriving in mandis. It is expected that if the current trend continues, there would be 20% increase in procurement of rice to 342 lakh tonnes over the period of last year. According to the latest report by Food Corporation of India (FCI), rice procurement so far this season (October-September), has increased by 20% to 264.7 lakh tonnes, which includes 83.9 lakh tonnes levy rice received from millers as against 219.8 lakh tonnes in the corresponding period last year. Maharashtra has contributed 1.7 lakh tonnes of rice to the central pool as compared to 1.2 lakh tonnes, while Tamil Nadu 10.2 lakh tonnes as against 6.8 lakh tonnes during the same period a year ago. Rice purchase in Orissa has increased to 18.2 lakh tonnes from 16.4 lakh tonnes and in West Bengal it has risen to 10.3 lakh tonnes from 4.3 lakh tonnes.

India ’s top two sugar producing states are likely to witness drop in sugar output to 8.66 million tonnes in the year ending September 2009 on lower cane availability and poor recovery. Maharashtra , the highest sugar producer in the country, has produced 4.55 million tonnes as on 31 March 2009 as compared to 7.24 million tonnes during the same period a year ago. Out of 143 sugar mills 139 have reported to close down their operations by March-end in the current crop year, while other 4 mills are still functioning. Whereas, mills in Uttar Pradesh, are estimated to have produced about 44% less sugar during the year ending September 2009 as compared to the previous year. The total sugar output in the states has just touched 41 lakh tonnes and crushing has now ended in the state.

Mills from northern states of India have struck raw sugar import deals worth 80,000- 10,000 tonnes from Brazil at US $300-US $330 per tonne, free on board. These shipments are expected to arrive during June- July 2009. Indian mills are importing sugar to optimise their unutilised refining capacity following a shortfall in the cane’s output in the marketing year ended on 30 September 2008. Domestic sugar output is expected to fall to 14.5 million tonnes in the year ending September 2009 down from 26.3 million tonnes a year ago.

As per the official of National Agricultural Co-operative Marketing Federation (Nafed), rabi onion harvest is expected to be around 8 million tonnes during this year, of which Maharashtra is expected to produce a record of 3.2-3.5 million tonnes. Prices of onion have started to cool off in the local markets because of new crop arrival from Nashik region in Maharashtra, which produces about 40% of the country's onion production, was delayed due to late sowings of the crop on account of deficient rainfall. Minimum export price (MEP) of onion has been slashed to US $125 per tonne since 13 March 2009 since after domestic availability of the commodity has increased.

According to Indore-based Soybean Processors Association of India (SOPA), exports of soymeal in 2008-09 have registered an increase of 6.47% to 4.2 million tonnes as compared with 3.9 million tonnes in the previous fiscal year. Soyameal exports dropped by 63% to 2, 22,876 tonnes in March as against 6, 05,852 tonnes during the same month of the previous year. Vietnam , Japan , Indonesia and Thailand have remained top export destinations for Indian soymeal during the entire fiscal year.

The Cotton Association of India (CAI) has revised India ’s cotton export estimates at 4 million bales for the cotton year 2008-09 as against earlier estimates of 5 million bales. As per its report, shipments of cotton has reached 4,14,612 bales during August-December 2008, as compared with 4.5-5 million bales during the same period a year ago. Higher prices of Indian cotton in the international market and the slowdown of economy have hit exports. Exports of the commodity have increased during January-March this year due to renewed demand from some of the Asian countries. Total exports from August 2008 to March 2009 stood at 10, 11,672 bales. It is expected that by the end of cotton year, consumption by domestic mills, non-mills and small units is likely to reach 23 million bales, as against earlier estimation of 22 million bales. The association has predicted that cotton production this year would be around 293 million bales, with opening stock at 4.3 lakh bales and import at 1 million bales. While by the end of the year, closing stock may hover around 7.6 million bales. CAI has so far procured 8.8 million bales of cotton and has planned to purchase 10 million bales by end of the cotton year.

Industry

The General Index (IIP) stands at 280.4, which is 0.5% lower as compared to the level in the month of January 2008. The cumulative growth for the period April-January 2008-09 stands at 3.0% over the corresponding period of the previous year.

The annual growth of thee Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of January 2009 at (-) 0.4%, (-) 0.8% and 1.8% as compared to January 2008. The cumulative growth during April-January, 2008-09 over the corresponding period of 2007-08 in the three sectors have been 2.7%, 3.0% and 2.6% respectively, which moved the overall growth in the General Index to 3.0%.

In terms of industries, as many as five (5) out of the seventeen (17) industry groups (as per 2-digit NIC-1987) have shown positive growth during the month of January 2009 as compared to the corresponding month of the previous year. The industry group ‘Machinery and Equipment other than Transport Equipment’ have shown the highest growth of 17.5%, followed by 10.3% in ‘Other Manufacturing Industries’ and 5.3% in ‘Beverages, Tobacco and Related Products’.  On the other hand, the industry group ‘Food Products’ have shown a negative growth of 16.1% followed by 15.2% in ‘Wood and Wood Products; Furniture and Fixtures‘ and 13.4% in ‘Transport Equipment and Parts’.

As per Use-based classification, the Sectoral growth rates in January 2009 over January 2008 are (-) 1.0% in Basic goods, 15.4% in Capital goods and (-) 9.2% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 2.5% and 0.7% respectively, with the overall growth in Consumer goods being 1.1%.

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 242.0(provisional) in February 2009 and registered a growth of 2.2% (provisional) compared to a growth of 7.0% in February 2008.  During April-February 2008-09, six core-infrastructure industries registered a growth of 3.0% (provisional) as against 5.8% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a negative growth of 6.2% in February 2009 compared to a growth rate of 2.3% in February 2008. The Crude Oil production registered a growth of (-)1.7 (provisional) during April-February 2008-09 compared to 0.5% during the same period of 2007-08.

Petroleum refinery production  (weight of 2.00% in the IIP) registered a growth of 0.5% (provisional) in February 2009 compared to growth of 5.8% in February 2008. The Petroleum refinery production registered a growth of 3.0% (provisional) during April-February 2008-09 compared to 7.2% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 6.0% (provisional) in February 2009 compared to growth rate of 11.6% in February 2008. Coal production grew by 8.7% (provisional) during April-February 2008-09 compared to an increase of 5.6% during the same period of 2007-08. 

Electricity generation (weight of 10.17% in the IIP) registered a growth of 0.3% (provisional) in February 2009 compared to a growth rate of 9.8% in February 2008. Electricity generation grew by 2.1% (provisional) during April-February 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 8.3% (provisional) in February 2009 compared to 12.8% in February 2008. Cement Production grew by 7.2% (provisional) during April-February 2008-09 compared to an increase of 7.9% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of 3.6%(provisional) in February 2009 compared to 2.3% (estimated) in February 2008. Finished (carbon) Steel production grew by 2.4% (provisional) during April-February 2008-09 compared to an increase of 5.6% during the same period of 2007-08.

Inflation

The official Wholesale Price Index for ‘All Commodities’ (Base: 1993-94 = 100) for the week ended 28 March 2009 remained unchanged at the previous week level.

The annual rate of inflation, calculated on point-to-point basis, stood at 0.3 percent (Provisional) for the week under reference as compared to 7.75 percent during the corresponding week of the previous year.  

The index of major group primary articles fell marginally to 245.0 from 245.7 for previous week mainly due to lower  price of tea ,linseed, copra, fodder, fire clay, iron ore and chromite.

The index for major group fuel, power, light and lubricants remained unchanged at previous week level.

The index for major group manufactured products rose by 0.2 percent over the week due to higher prices of edible oils, cotton yarn, benzene, etc..

Wholesale price index for ‘All Commodities’ (Base: 1993-94=100) revised up to 227.5 from 228.4 for the week ended 31 January 2009 and annual rate of inflation based on final index, calculated on point to point basis, stood at 3.98 percent as compared to 4.39 percent (Provisional).

Financial Market Developments

Capital Markets

Primary Market

Having received Cabinet clearance for the long-awaited capital restructuring, United Bank of India (UBI) has set its sights on a February 2010 deadline for its proposed maiden public offer. As per UBI chairman & managing director Satish C Gupta, the bank intends to file the red herring prospectus with Securities & Exchange Board of India (SEBI) after September 2009 once it comes up with its audited half yearly results.

Secondary Market

A US government plan to buyout toxic assets and a $1 trillion spending by G20 to revive the world economy has ensured key domestic indices closed with gains for the fifth week in a row. BSE Sensex surged 455 points or 4.4% to 10,804 in a curtailed week on account of Mahavir Jayanti and Good Friday. Midcap and Smallcap counters were outperformers with BSE Midcap and BSE Smallcap indices gaining 7.5% and 9.6% respectively. NSE Nifty hit intra-day’s highs of 3,400-plus before settling to close at 3,342 points rose 131 points or 4.1%. The Defty gained 4.75% as the rupee recovered to above the 50 level. However, industrial production growth fell 1.2% in February whereas inflation stood at 0.26% for the week ended March 28.

Matters relating to possible reforms in primary market issuances and mutual funds along with a few critical internal issues could come up for discussion at the SEBI’s board meeting on Monday. Sources close to the development said that the board could also discuss the initial public offer (IPO) scam involving National Securities and Depository Ltd (NSDL) in the matter of opening over 50,000 fictitious demat accounts for IPOs during 2003-05 and it would also consider the members' opinion on bringing over-the-counter (OTC) corporate bond transactions under clearing entities. In the first board meeting of this financial year, the regulator is also likely to discuss one of its committee's recommendations for introducing new derivatives in order to boost liquidity. Following a host of recommendations by the primary market advisory committee, the SEBI board is likely to discuss ways to crunch the currently prescribed timelines for various primary market issuances. The discussion would look at options to reduce the timelines for settlements and allotment of shares in public issues.

The government and financial sector regulators have decided to work out a policy for regulating financial intermediaries to reduce the scope of mis-selling of products and improve investor education. A panel, headed by Pension Fund Regulatory & Development Authority (PFRDA) Chairman D Swarup, has been set up as some of the regulators believed that investors were unable to make an informed decision due to the fragmented nature of various segments of the financial sector. While an earlier panel headed by the then Insurance Regulatory & Development Authority (IRDA) Chairman C S Roar had concluded that investor advice being rendered was more-or-less fine, some of the regulatory agencies were learnt to have raised concerns. Managers expect a large part to be invested back by April 10. The mutual fund industry has suffered an erosion of a whopping Rs 1 lakh crore during the month of March alone due to huge redemptions from banks and institutional investors in liquid and money market funds.The total investments of the fund industry in debt papers like certificate of deposits (CDs), commercial papers (CPs) and collaterised borrowing and lending obligations (CBLOs) stood at around Rs 1,84,000 crore at the end of February. Industry experts said that, by March-end, this corpus had depleted by over 50%.

As per a report by global research firm, Preqin Global private equity (PE) fund-raising hit a low of $45.9 billion in the first three months of calendar 2009 – the smallest amount since 2003 – on account of the turbulent economic scenario. In the fourth quarter of 2003, PE firms had raised $34 billion with 131 funds achieving final closure.    

The financial year 2008-09 saw only 55 firms declaring bonus shares, compared with 71 a year earlier and 86 in 2006-07. Of the 55, nine firms were from the financial sector, four each from information technology (IT) and real estate sector, and three each from mining and pesticides sector. Not a single company from the auto ancillaries and entertainment sectors declared bonus shares during 2008-09, as against over four firms issuing bonus shares a year earlier. Only three mid- and small-sized IT firms – Kaashyap Technologies, Compucom Software and Jetking Infotrain – issued bonus shares in FY09, down from 13 IT firms in 2008. The engineering sector saw just two companies – Larsen & Toubro and Gujarat Apollo Industries – declaring bonus shares, compared with five in 2008.

Derivatives                  

Yet another fabulous week for the Nifty ended with the bulls striking back at the bears with a vengeance. The Nifty future closed the week at about 3,355 points, gaining 4% over its previous week’s close. The Nifty April futures also ended in a premium of about 13 points over that of the spot. Open interest (OI) positions at 4.34 crore shares also suggests a higher participation. Market sentiment remained positive. Market volumes have lifted to over Rs 60,000 crore per session, which is excellent given average turnover of Rs 45,000 crore through 2008-09. Volumes rose perceptibly in both the cash and derivative segments. The advances-to-declines ratio was positive. Sentiment remains upbeat with major index futures trading at a premium to the underlyings. Volumes surged in the derivatives market as traders added their mite to the bull run. The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on April 9 stood at 35.24%. They were predominantly net buyers, particularly in index futures in the F&O segment. But they have been offloading index options and stock futures. They now hold index futures worth Rs 12,540.03 crore (Rs 10,608.96 crore and stock futures worth Rs 15,872.01 crore (Rs 14,575.64 crore). Their index options were quite high at Rs 26,308.55 crore (Rs 22,952.15 crore). The rest of the volume is from Indian traders sucked in by the 800-point rally. The major index futures are all trading at some premium to their respective underlyings. OI has increased in the three highly-traded indices.

The Nifty options market is displaying unusually high put-call ratios (PCR), especially in the April series. OI has increased in both calls and puts. But the April Nifty PCR in terms of OI is around 2 while the overall Nifty PCR in terms of OI is at 1.6.

The VIX has risen but it's still at reasonable levels. Historical volatility has risen in the past 20 sessions. The volatility index, however, gave out cautious signals. The index, which measures the immediate expected volatility of Nifty future, added value quite consistently. It touched an intra-day high of 50 but managed to close lower at 43.54, much above its previous week’s close of 37.4.

Albertian Institute of Management and Geojit Financial Services are jointly organising a national workshop on derivatives in association with the NSE and NCDEX on April 17 and 18. Experts from NSE and NCDEX will explain the growing importance of derivatives trading and its various aspects in the workshop which is targeted at investors, officials of financial sector firms, teachers, researchers, and students.

The SEBI’s proposal to introduce a host of exotic derivative products in domestic markets has got a positive response from market participants. A senior SEBI official said the report, which sought public comments till April 6, has received 37 responses, most of which look forward to the launch of exotic derivative instruments.

Government Securities Market

Primary Market

On 8 April 2009, RBI auctioned 91-day treasury bills (TBs) and 364-day TBs for the notified amount of Rs 8,000 crore and Rs 1,000 crore, respectively. The cut-off yield for the 91-day TB was set at 4.09% and for 364-day TB at 4.40%.

Two state governments auctioned 10-year paper maturing in 2019 for the notified amount of Rs 900 crore on 8 April 2009. The cut off yield was set at 7.77% for both the securities.

Through open market operation (OMO), RBI purchased 7.59% 2016, 7.49% 2017, 8.35% 2022, 7.95% 2032 and 8.33% 2036 with the cut-off yield of 6.90%, 6.91%,7.60%, 7.74% and 7.75%, respectively, for the aggregate amount of 6,000 crore on 8 April 2009.

On 9 April 2009 RBI re-issued 6.05% 2019 and 7.50% 2034 for the notified amount of Rs 8,000 crore and Rs 4,000 crore, respectively. The cut-off yield was set at 6.75% for the 10-year paper maturing in 2019 and 7.74% for the 25-year paper maturing in 2034.

Secondary Market

Call rates dipped to more than 3-week lows during the week, as most banks seemed to have had ample funds to meet their reserve needs. Rates ended in the range of 3.50%-3.60% on Thursday, below the previous close of 3.80%-4.00%.

Government bonds extended gains in a holiday-shortened week as demand for debt revived due to the large amount of excess cash in the system, which helped calm supply fears and ensure a smooth debt auction. Bond yields retreated during the week, overwhelmed by the continuing liquidity overhang in the banking system and sagging inflation. Inflation remained in the sub-one% zone for the third consecutive week at 0.26% on the back of weak commodity prices and weak international oil prices. Despite the weak oil prices, oil companies continued to access the special market operations window of the RBI, which opened in June 2008. As a result, oil companies’ demand for bank credit remained low. Since the beginning of the week, refineries resorted to about Rs 925 crore of SMOs, raising the equivalent of about $185 million through the RBI window. In addition, traders said part of the excess liquidity was contributed by weak credit offtake with the onset of the lean season. During this period, credit offtake is generally low.Help for bonds came from foreign institutional investors. FIIs returned with a net investment of $492 million last week. The yield on the 10-year benchmark bond dropped to 6.70%, off a low of 6.67% which was the lowest since March 24. The yield was also 25 bps below the previous week’s close of 6.96%. Bond yields could continue in the current range with ample liquidity supporting bonds, but upcoming debt supplies could keep sentiment cautious.

The undertone was positive as average trade volume per day rose to Rs 16,200 crore, up from the previous week’s level of Rs 12,500 crore. G-Sec trade volume though was slightly less than equity trade volume at Rs 16,600 crore at the National Stock Exchange.

An overweight government borrowing programme is taking a serious toll on the balance sheets of primary dealers (PDs), bond houses which buy and sell government securities. Every primary dealership firm has to enter into agreements, with the RBI providing commitments to underwrite for a small fee, a minimum portion of government bonds auctioned by the central bank. PDs had to pick up a record Rs 9,000 crore worth of unsold government bonds last quarter as a part of this underwriting commitment.

Bond Market

During the week under review, ICICI Home Finance Ltd tapped the bond market to mobilize Rs 100 crore by offering 9.75% for 10 years. The bond was rated AAA by Care.

The National Highways Authority of India (NHAI) is planning to raise Rs 3,000 crore this fiscal through tax-free bonds to fund various projects. The NHAI, which raised Rs 1,700 crore in 2008-09 through tax-free bonds, is also in talks with the Asian Development Bank (ADB) for procuring $ 400 million (about Rs 2,000 crore) to strengthen road network within the country.

Foreign Exchange Market

The rupee inched higher as improvement in risk sentiment in financial markets helped the currency to sustain gains. Rupee closed the week at 50.01 per dollar from the previous week close of 50.34 per dollar. The currency was largely guided by risk sentiment from domestic equity markets. Risk sentiment from global markets could be eyed for further direction on capital flows as several event risks in overseas markets build up.

The FII inflows and low oil demand also helped power up the rupee- dollar exchange rate to Rs 49.91 from the previous week’s Rs 50.30 per dollar. Forward premia for one, three, six and 12 months ended the week at 3.67%, (4.53%), 3.19% (3.64%), 2.69% (2.97%) and 2.14% (2.30%) respectively. Cash to spot forward premia also contracted to 3.35% (3.85%) as interest rate differentials between call money and Federal funds narrowed. The rupee appreciation came despite large outflows on account of corporate debt service/redemption payments. But exporters also repatriated funds, taking cues from the Non-Deliverable Forward (NDF) market, where the dollar softened to Rs 50.15 (Rs 51.41) or lower than the one month domestic forward rate. The narrow spread between the NDF and the domestic one month rate pointed to possible further short-term rupee buoyancy.

The country’s foreign exchange reserves rose by $2.834 billion for the week ended April 3, according to figures released by the Reserve Bank of India ’s weekly statistical supplement. For the week ended March 27, the reserves had fallen by $1.5 billion to $253.326 billion.

Commodities Futures derivatives

Commodity futures exchanges will have lesser flexibility to fix differential transaction charges as per the revised guidelines by the commodity futures regulator, the Forward Market Commission (FMC). In the revised guidelines, FMC has said that no exchange can fix the differential transaction charges based on the different time zone and different commodities. The regulator has revised the guidelines in wake of the National Commodities & Derivative Exchange’s (NCDEX) proposal to reduce transaction charges from Rs 3 a lakh to 5 paisa a lakh for transaction in the evening session. This proposal, however, was dismissed by the regulator. The new norms mean that the exchanges cannot have one charge for one set of commodities and different for another set of commodities. Similarly different charges for different time zone would also not be permitted.

Public Finance

According to the latest press note revenue receipts as on February 2009 works out to be 79 per cent of the actual to revised estimates at Rs. 437,397 crore with the receipts under net tax revenue reaching to Rs. 356,390 crore and non-tax revenue Rs.81, 007 crore.

With total expenditure reaching 83.1 per cent of the revised estimates, fiscal deficit till date works out to be Rs.307, 133 crore. Market borrowings at Rs.300255 crores financed about 98 per cent of the fiscal deficit.

Banking

Private sector banks, Axis Bank and Bank of Rajasthan, have announced reduction in lending rates. Axis Bank has reduced its prime lending rate (PLR) by 0.5% to 15.25%, while Bank of Rajasthan has slashed it by 0.25% to 9.75%. The private sector banks lowering of their benchmark rates came close on the heels of another private sector lender, HDFC, responding to the repeated monetary measures introduced by the RBI. The new rates of both the banks would be effective from April 1, 2009.

State Bank of India (SBI) is planning to raise Rs 41,000 crore through equities and debt in the next couple of years. 

Bank of Maharashtra has slashed its benchmark prime lending rate by 0.25% to 12.50%. The revised PLR will be effective from April 15, 2009.

Bank of Rajasthan has announced its tie-up with DBS Cholamandalam Asset Management company for the distribution of their product and services across the country.

ICICI Bank’s mortgage lending arm ICICI Home Finance is raising Rs 100 crore through the issue of subordinated bonds.

SBI has slashed its lending rates on loans to small and medium enterprises (SMEs) and has announced measures to further improve credit flow to the fund-starved sector. The bank has slashed interest rate for all new SME customers with loan requirement of up to Rs 5 lakh to 8% and for requirement above Rs 5 lakh but below Rs 25 lakh to 10%. The reduced rate will be available for the next two years and will be applicable for working capital as well as term loans, provided they are covered under CGTMSE guarantee.

SKS Microfinance Pvt Ltd, one of the fastest growing micro finance organizations in the country, is in the process of creating a business intelligence unit to ensure faster turnaround for the benefit of its customers. The MFI, which has so far disbursed Rs 6,000 crore and has an outstanding loan of Rs 2,500 crore, is also planning to offer home loan products to its customers.

Corporate

The shareholders and creditors of Reliance Industries Ltd (RIL) and Reliance Petroleum Ltd (RPL) have given approval to the amalgamation of the two companies. Post merger, RIL will become world’s largest refinery in terms of single location refining capacity and fifth largest polypropylene manufacturer. As per the swap ratio, one share of RIL will be allotted against 16 shares of RPL. Chevron Corporation has decided to sale its entire 5% stake in RPL for Rs 1,377 crore ($270 million).  

ACC, the largest cement producer has decided to increase its production capacity by organic expansion keeping aside acquisition of any firm i.e. by inorganic way.  It is looking ahead to increase production capacity to 30.58 million tonnes till 2010 from 22.63 million tonnes. 

Videocon Industries is planning to raise Rs 200 crore from issue of warrants on preferential basis to Bennett, Coleman & Company Ltd (BCCL). Videocon will be issuing over 1,17,65,000 crore warrants, which would be converted to equal number of equity shares. 

Reliance Industries (RIL), the country’s largest private sector conglomerate, is expected to report a 10-15% surge in profits for the fourth quarter of the financial year 2008-09 compared to the third quarter. The surge in profits will mainly be facilitated by its petrochemicals business and marginally improved refining margins. RIL had posted a net profit of Rs 3,501 crore for the third quarter of 2008-09. 

France ’s Group Danone SA will sell its entire stake of 25.48% in Britannia Industries Ltd. to the Wadia Group. Post-merger, Wadia Group’s stake will increase to 50.96% in Britannia Industries. As a result, Wadia Group has emerged as major stakeholder. This transfer of the stake between two promoters is not direct as Danone SA will hand over its shareholding to Leila Lands Ltd ( Mauritius ), which is a subsidiary of Bombay Burmah.  Wadia Group is the parent company of Bombay Burmah.

Sahara India Commercial Corporation has filed an application in the Bombay High Court alleging that Jet Airways had committed breach of contract in Sahara Airlines takeover deal, and is liable to pay Rs 2,000 crore instead of the renegotiated amount of Rs 1,450 crore agree upon by them.

ONGC, Reliance Industries and Indian Oil Corporation are coming together for the first time, to bid jointly for a vast oilfield in Venezuela , which will require an investment of $16-18 billion.

BHEL Corporate R&D division has proposed to increase its R&D investments to Rs 900 crore by 2011-12 from the present level of Rs 650 crore in the year 2008-09.

Foreign fund house Deutsche Securities, Mauritius has acquired 10.92% stake in Vijay Mallya-led United Breweries for Rs 273 crore through open market transactions.

External Sector

Exports during February 2009 were valued at US$ 11931 million which was 21.7% lower than that in Februry 208 as a result during the fiscal year so far the total exports at US$156597 million registered a growth of 7.3% over that of US $ 145878 million reported in the comparable period last year.

Imports during February were valued at US $ 16823 million, a decrease of 23.3 per cent over that of US$ 21934 million in February 2008 and the cumulative import at US$ 271687 million was 19.1% more than that of US $ 228081 during April- February 2007-08.

Trade balance during February thus worked out to be $ 4910 as compared to $6714 in 2008. The cumulative trade balance for April-February 2008-09 estimated at US $ 115090 million was 1.4 times to that of US $ 82203 million during April-February 2007-08.

While oil imports during the current fiscal year so far gone up from US $ 70704 million in April-February 2007-08 to US $ 89684 million, that of non-oil imports accelerated by 15.6% to US $ 182003 million.

Telecom

Aircel has launched its services in the saturated telecom market, Mumbai. The company is the seventh service provider and has to compete with six well established telecom companies – Airtel, MTNL, Vodafone Essar, Idea, Reliance, Tata Teleservices and Loop Mobile. Aircel has around 1,000 cell sites in Mumbai and will be increasing it to around 2,000 sites by the year-end. The company is the country’s fifth largest service provider with presence in 17 circles among 22 circles in the country.  

Tata Teleservices will find it difficult to complete its pan-India GSM roll-out this year as it is unlikely to receive approval for three service areas namely Assam , North East and Jammu & Kashmir, since it had applied for dual technology approval after the cut-off date of September 25, 2007. 

Nokia, the world’s largest handset manufacturer, has announced that it would be adding features such as music online and location based services on its new phones hoping to tap

*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.