02 September 2008

Biz Headlines

Options outdo futures for first time in 8 yrs

Finance Secretary D Subbarao appointed RBI Governor

Ranbaxy Fine buys US co for $340m

Sensex bounces back

RIL shelves stake transfer plan

Sensex closes down 66 points despite

Daughters of Mittal, Ambani and KP Singh follow them into Forbes list

Tata Steel, Jet Airways most powerful brands


Maruti Suzuki August sales falls by 9.19 pc
A biofuel-propelled car that can run at 84mph over snow, ice
Hyundai domestic sales up 34 pc in Aug
Hyundai sales soar 57.5% in August

Hero Honda Aug sales up 27 pc

Bajaj Auto motorcycle sales rise 5 per cent in August
TVS Motors logs 11 per cent volume growth in August


Reliance abandons stake transfer of gas-rich D-6 block
Aban Offshore arm's JV bags $271 mn order from Maersk Oil
Delay in starting of gas production in RIL's D6 field
IOC to import up to 0.9 mn T diesel this FY


ONGC says to start pumping coal seam gas
Reliance to pump D-6 gas from October-govt
Govt unlikely to penalise RIL for delaying gas production
RIL-RNRL KG gas dispute hearing to resume on Tuesday

Arbitration panel asks Tata to pay $19 million in damages to Reliance Communication

Oil drops $4 as Gustav hits US Gulf Coast

Resurgere Mines share double its issue price

D Subbarao is new RBI chief

Suzlon advances REpower stake buy

Sensex recovers on late buying, ends down 66pts

Source:ET,BS.

Brand Power: RIL king of brands at $6.8 bn

Brand Power: RIL king of brands at $6.8 bn

DELHI: India’s trillion-dollar plus stock markets boast of 20 companies with a brand value of over $1 billion, up from 16 last year. There are now a dozen (BSE-listed) companies with a brand value over $2 billion (vis-à-vis nine last year) and half-a-dozen with over $3 billion (up from four last year). Raise the cut-off to $6 billion, and it’s a club-of-one, India’s biggest private-sector company, Reliance Industries, with an end-2007 brand value of $6.81 billion (Rs 26,801 crore) vis-à-vis $5.8-billion in end-2006. Using the relief-from-royalty method of brand valuation, which assumes that a company does not own its brand and needs to licence it from a third party, a global leading brand valuation firm, London-headquartered Brand Finance India’s Top 50 Most Valuable (Company) Brands, 2008, presented exclusively by ET, studied only BSE-listed consumer-facing corporate brands (and not holding companies, such as Hindustan Unilever, which own a portfolio of branded businesses) to arrive at the BF Top 50 list.


Brand Power: RIL king of brands at $6.8 bn2 Sep, 2008, 0210 hrs IST,Shailesh Dobhal & Bhanu Pande, ET Bureau
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NEW DELHI: India’s trillion-dollar plus stock markets boast of 20 companies with a brand value of over $1 billion, up from 16 last year. There are now a dozen (BSE-listed) companies with a brand value over $2 billion (vis-à-vis nine last year) and half-a-dozen with over $3 billion (up from four last year). Raise the cut-off to $6 billion, and it’s a club-of-one, India’s biggest private-sector company, Reliance Industries, with an end-2007 brand value of $6.81 billion (Rs 26,801 crore) vis-à-vis $5.8-billion in end-2006. Using the relief-from-royalty method of brand valuation, which assumes that a company does not own its brand and needs to licence it from a third party, a global leading brand valuation firm, London-headquartered Brand Finance India’s Top 50 Most Valuable (Company) Brands, 2008, presented exclusively by ET, studied only BSE-listed consumer-facing corporate brands (and not holding companies, such as Hindustan Unilever, which own a portfolio of branded businesses) to arrive at the BF Top 50 list.
Also Read
India Inc's brand sheet: RIL most valuable brand
Brands: Value beyond the balance sheet
Brand value league table construct
Tata Steel, Jet Airways most powerful brandsPrima facie, the BF Top 50 study doesn’t show any dramatic shift in last year’s line-up. The top brands are evenly spread out across sectors pretty much like last year, reiterating the fact that brands can create significant value even outside the traditional consumer goods sector. As many as nine out of top 10 brands of last year have maintained their place in the roster, albeit with a minor reshuffle in positions. Hindustan Petroleum Corporation (HPCL) is the only one to have got nudged out by a newcomer, Bharti Airtel, from the Top 10 list.

And even though the total brand value of Top 50 at $68.25 billion looks impressive compared with last year’s figure of $50.8 billion, it’s largely the effect of rupee appreciation (at an average exchange rate of Rs 45.5 and Rs 39.3 to a dollar in calendar 2006 and 2007, respectively, for the purpose of this study) that reflects an over 34% jump in the dollar-denominated brand valuation. In rupee terms, the Top 50’s brand value has gone up by only 15%, Rs 2.67 lakh crore from Rs 2.32 lakh crore. However, a closer scrutiny of the Top 50 list highlights some twists in the tale. For one, it marks the debut for 11 new brands on the Top 50 list, United Breweries, Tata Tea, Dabur, Idea, Tata Communications, Pantaloon, DLF, Jaiprakash Associates, GMR, Reliance Infrastructure and Gail. Says Brand Finance India MD M Unni Krishnan: “These brands have swiftly grown in size through a combination of organic and inorganic growth and their ability to transform their business to offer a whole range value proposition to customers.

These brands have shown leadership in shaping their industries ahead of time and consequently strengthening their ability to retain and acquire new customers.” The cut-off for Top 50, which was a low Rs 172 crore (No. 50, Essar Oil’s brand value) last year, has moved up to Rs 645 crore this year (Gail at No. 50 this year). Equally, as many as one in five brands on the Top 50 list last year dropped out of the list this year, IDBI Bank, Canara Bank, Essar Steel, Cipla, Nicholas Piramal, Reliance Energy, Sun Pharmaceutical, Gujarat Ambuja, Reliance Capital, ACC and LIC Housing. “Whilst the IDBI brand remains valuable, we have not been able to complete the brand valuation analysis due to paucity of marketing, customer and people data/information in the public space,” explains Mr Krishnan.

Two, the emergence of infrastructure as a fresh force and the decline of banking & finance and manufacturing in the brand war for supremacy in valuation. Though RIL retains its top position this year too, the petrochem-to-retail giant has seen its brand value (in rupee terms) remain virtually static, it barely inched up 1.4% over the year.

Gainers in the top 10 include Bharti Airtel (brand value: Rs 9,798-crore), which rose three rungs to settle at rank 8 and ICICI Bank (Rs 11,533-crore) that moved two slots up to reach the No. 7 spot. More than scaling the chart, the two have seen a jaw-dropping change in their values. Bharti Airtel gained as high as 26% in (rupee) value while ICICI Bank followed with a increase of 24% in brand value. Interestingly, it’s been a lacklustre year for the oil navratnas in the public sector. They continue to be under pressure due to rising crude prices and steep under-realisation due to government price controls.

All three oil PSUs, IOC, BPCL and HPCL, not just slipped down in the chart, they saw a significant erosion in their brand value in 2007. IOC slid to the third position (from No. 2 last year) with a brand value of Rs 17,987 crore (a drop of 5.3%), BPCL dropped to No. 9 slot from No. 7 last year and saw its brand value erode by a whopping 17% and HPCL down by 15%. SBI at No. 4, is the only one amongst the PSUs to hold its own while showing a remarkable rise, close to 16%, in its brand value. Sectoral analysis shows that banking & finance rule the list with nine brands although their number has dwindled over the last year. Oil & gas and IT have sent in six brands each, followed by automobile (four brands) in the list. Amidst the construction boom and some big-ticket IPOs in that space, infrastructure brands made a grand entry in the study for the first time. These include highly-visible brands of 2007, DLF, Jaiprakash Associates, GMR and Reliance Infrastructure, at rank 43, 46, 48 and 49, respectively.

The entries from a new sector had an obvious impact on brand from other sectors. While FMCG and telecom added new brands to the list of Top 50, banking & finance, manufacturing (steel, cement, durables) and pharma saw brand representation from within the sector go down. Barring a handful of brands, there’s been relatively minor shifts in ranks. The steepest fall has come for the likes of Tata Power (No. 47 versus No. 38 last year), Bank of Baroda (No. 39 and No. 30) and Videocon (No. 35 and No. 27). Others that moved down sharply in the list include Taj (Indian Hotels) that fell from No. 26 to No. 33 and JSW Steel dropped from No. 37 to No. 42. The study in its second year still manages to say a lot about the rapidly transforming business landscape in India. It’s no longer about consumer goods alone. The dominance of banking, IT, oil & gas, et al, may pale as we go along and we could see a rise of brand from new sectors that get a boost in the emerging new economic paradigm.


RIL most valuable brand
Brand value league table construct
Tata Steel, Jet most powerful brands
Indian flection brands
-------------------------------------

01 September 2008

Buy RIL stock when it falls, Investors Guide from ET

Buy RIL's stock when it falls

Beta: 0.37
Institutional Holding: 25.98%
Dividend Yield: 0.6%
P/E: 15.6
M-Cap: Rs 3,10,444 cr
CMP: Rs 2,136

Reliance Industries (RIL) ranks among the country’s largest companies in the private sector on various parameters. It is on the verge of commissioning two of its biggest projects in September ’08.

At full utilisation levels, these projects are expected to add nearly Rs 80,000 crore to RIL’s consolidated revenues, further strengthening its numero uno position in India Inc. Its current market valuation appears to have taken into account the immediate gains from these two projects.

However, going forward, the stock may witness stagnation as its future outlook is getting cloudy due to the build-up of several negative factors. Nevertheless, there remains a possibility that given its strong cash flows, presence across industries and forward and backward linkages, RIL can spring positive surprises. Long-term investors can accumulate the stock at dips.

RIL has invested nearly $8.8 billion in its Krishna-Godavari (KG) basin gas fields since their discovery in ’02. Production from these fields is expected to start by the end of September at the rate of 25 million cubic metres a day (mcmd), which will be gradually scaled up to 80 mcmd.

The second mega-project, which will commence operations this month, is Reliance Petroleum’s 29 million tonne per annum (mtpa) high-complexity petroleum refinery in Jamnagar special economic zone (SEZ).

Latest media reports and comments from government quarters suggest that RIL will be able to stick to its initial schedule of completion by September ’08 and commence commercial production by December ’08. This Jamnagar plant will make RIL not just India’s largest petroleum refiner, but also the world’s largest single location refiner.

However, RIL is facing some imminent woes. The natural gas project is embroiled in two major lawsuits with Reliance Natural Resources (RNRL) and NTPC, both of which are claiming a huge chunk of gas supply at low prices.

This has disabled the company from selling gas to any third party. Any adverse outcome of these court cases can have a major impact on RIL’s future profitability, as well as its return on capital.

Similarly, the RPL refinery project, which was conceived when globally refinery margins were on the rise, is getting commissioned just when the rally has waned. The benchmark Singapore refining margins have fallen sharply to around $4 per barrel as of end August ’08 from $12 at the start of July ’08.

In view of several other refineries coming up in West Asia and China, the refining industry is expected to remain in a downward trend for the next 3-4 years. Over the past couple of years, RIL has aggressively entered the organised retail sector, opening around 735 stores across 13 states. This is another industry which is witnessing the entry of too many players, putting a big question mark on its profitability.

Initially, RIL’s valuation had got a boost from the potential growth prospects of its two mega projects. However, as the problems became more apparent, valuations plummeted. The scrip’s price-to-earnings (P/E) multiple, which had crossed 31 in January ’08, has halved to around 15.5 now, as the stock price fell from Rs 3,200 to Rs 2,150.

Still, the company commands one of the highest valuations among global peers such as Exxon Mobil, Royal Dutch Shell or PetroChina. And since current valuations have already factored in higher profitability of the new businesses, there is every reason that the valuations can weaken further.

Despite all these negatives, there are a few positive factors, which will help add some shine to the company’s performance. Being fully integrated in the petroleum value chain, the lower profitability of its refining business can be compensated to a certain extent by future improvement in profits of its petrochemicals business.

Secondly, the recent weakening of the rupee bodes well for RIL, which is increasingly focusing on exports, while its domestic revenues are also linked to the rupee-dollar exchange rate.

RIL operates in a capital-intensive commodity business, which is subject to business cycles. Against this background, it is creditable for the company to have maintained a return on capital above 18% over the past five years. But this has necessitated the company to plough back most of its profits into the business and pay just around 10% as dividends.

This will continue in future too and RIL’s dividend payouts, as well as dividend yields will remain very low. In the long term, several other projects that RIL is pursuing should help boost its growth momentum. The company is developing special economic zones in Haryana, Gujarat and Maharashtra.

It is also investing in exploration blocks in India, as well as abroad, and has bagged coal-bed methane (CBM) blocks. The potential hydrocarbon reserves from these blocks will also add value to the company. Hence, long-term investors can buy into the scrip when it falls, but they should not expect much upside in the near term from the commissioning of RIL’s two mega projects.

--------------------------------------
Derivatives Diary: The action is hotting up 1 Sep, 2008, 0033 hrs IST, Shakti Shankar Patra
Both the Dow and the Nifty found support at the lower ends of their respective ranges and bounced back sharply late in the week.

'Committee to Save the Dollar' ain't needed 1 Sep, 2008, 0030 hrs IST
The dollar isn’t doing better because the US outlook is brightening. Rather, economies, such as Japan’s and those in the euro area, that were forecast to hold their ground are losing pace.

Investors can accumulate Opto stock on dips 1 Sep, 2008, 0027 hrs IST, Kiran Kabtta
Opto Circuits offers the right mix of high growth and dividends. Though the company seems fairly valued, investors can accumulate the stock on dips.

HDIL's financial viability looks positive 1 Sep, 2008, 0023 hrs IST, Supriya Verma
Given its proven ability to complete slum rehabilitation projects, HDIL’s financial viability seems positive. The company is also set to withstand the slump in realty sector.

Stocks to buy: L&T, Areva, HCL, Ansal Properties 1 Sep, 2008, 0020 hrs IST
Here is a list of stocks you can buy this week.

Buy RIL's stock when it falls 1 Sep, 2008, 0018 hrs IST, Ramkrishna Kashelkar
Long-term investors can buy Reliance Industries’ stock when it falls, but they should not expect much upside in the near term from the commissioning of the company’s two mega projects.

Goa Carbon's stock attractively priced 1 Sep, 2008, 0017 hrs IST, Amit Jain
Goa Carbon’s stock is attractively priced and offers significant upside potential for investors in the medium term.

Adhunik Metaliks provides good investment opportunity 1
Sep, 2008, 0015 hrs IST, Santanu Mishra
Backward integration plans, higher margins and investments in allied segments will drive Adhunik Metaliks’ growth. Investors with a horizon of 3-4 years can consider the stock.

How the deals stack up for India Inc in UK 1 Sep, 2008, 0011 hrs IST
While OVL agreed to buy Imperial Energy, Infosys gobbled up Axon. ETIG ploughed through the numbers to see how the deals stack up for Corporate India.

Week Ahead: Short term trend is bullish

Source:Economic Times, Business Standard.

31 August 2008

Business Headlines, Stock Reports

Headines

RIL scraps KG basin stake transfer
Canara bank to open 100 new branches
ONGC to get five new onshore blocks in WB
Iran has 85 bn barrels heavy oil reserve: Report
Private oil cos suggest win-win formula to revive retail biz

RIL gearing up for for KG gas production
FIIs net buy Rs 1,586cr in F&O on Friday
iPhone price may fall 15%
R-ADAG takes on L&T on monorail project


Index Outlook
‘Stability’ was the theme in the Indian stock markets in August; accompanied by the attendant boredom. Though the Indian benchmark was thwarted in its attempt at surpassing the 15500 mark this month, it has managed to hold on to ...

Larsen & Toubro: BuyInvestors with a 2-3-year perspective can consider adding the stock of Larsen & Toubro to their portfolio. The company’s proven execution skills, quality clientele, well-entrenched presence in a wide range of businesses and ability ...

ONGC may rope in Rosneft as local partner in Imperial EnergyKolkata, Aug. 30 ONGC may rope in Rosneft Oil Company of Russia as its local partner in Imperial Energy Corporation Plc in case of a successful acquisition of the UK-based company having substantial oil equity in Russia’s Siberia region, ...

Infosys: BuyWith bulging cash coffers and inorganic growth aspirations, Infosys Technologies has for long been scouting for suitable acquisitions. It seems to have finally found an ideal candidate in the Axon Group. ...

Indiabulls Real Estate: BuyThe current macro scenario does not augur too well for the real-estate sector with issues such as funding challenges, tapering demand and slowing launches clouding prospects. The sharp de-rating of stocks in the sector in the past one year ...

TECHNICAL ANALYSIS:
Sideways movement seen for Nifty future (August 31, 2008)
Reliance Infra (August 31, 2008)
Unitech (August 31, 2008)
Infosys (August 31, 2008)
Tata Steel (August 31, 2008)
SBI (August 31, 2008)
Reliance (August 31, 2008)
Index Outlook (August 31, 2008)
Query Corner: What the charts say (August 31, 2008)

STOCKS: PNB: HoldShareholders of Punjab National Bank (PNB) can stay invested in the stock. Though the stock trades at an attractive valuation, it may under-perform in the near term, given the uncertain interest rate scenario. The current macro environment ...

STOCK MARKETS: Bull's EyeE-mail your response by Tuesday to:
STOCK MARKETS: Baskets of XE-mail your guess before Tuesday to:


Source:ET,BL

29 August 2008

Sensex up by 516 pts on Dip in Inflation,Inline GDP numbers

Closing Bell: Lower inflation, in-line GDP boosts market sentiment

Sensex surges 516 points as inflation eases

Bulls get their act together, lift Sensex up by 516 pts

After lying low for the entire week, Indian stock market benchmarks surged on Friday to close over 3 per cent higher backed by host of positive cues from domestic and global markets. Market opened with a gap-up reacting to drop in inflation to 12.40 per cent against expectation of 12.83 per cent, on moderation in prices of vegetables, meat, cement and a few non-administered petroleum products.

Directionless till Thursday, investors took this opportunity to build positions in recently beaten down banking and realty stocks as fears of Reserve Bank of India raising interest rates eased. Market also got a lift from a rally in Asia and the US earlier on the back of a surprise 3.3 per cent first quarter GDP growth in US. Retreating oil prices as traders discounted threat of hurricane Gustav to US installations boosted sentiments further. However, oil climbed back up to $117 in Friday’s trade as threat from Gustav continued to loom.

Back home, data showed the Indian economy grew at 7.9 per cent in the April-June quarter against previous quarter's 8.8 per cent. The numbers were also disappointing compared with previous year’s 9.2 per cent growth. This is the first time in last thirteen quarters that GDP growth has fallen below 8 per cent, but India is still expected to clock an annual growth of 8 per cent. “Moderation will continue for at least for two more quarters (factoring the further tightening by RBI).

However, we do not expect GDP to fall below 8 per cent in 2008-09. The consumption demand (both from consumer and government) is still strong which should support the manufacturing sector. Investment and savings are also satisfactory and is reflected in growth of construction sector in this quarter (11.4% against 7.7% a year ago),” said Krupresh Thakkar, research analyst, India Capital Markets. “Growth in agriculture holds the key, as a good season would increase demand for other products from industrial and service sectors boosting the economy. The slight slowdown in service sector is an area of concern but we would like to watch the figures for one more quarter,” he added.

Bombay’s Stock Exchange’s Sensex closed at 14,564.53, up 516.19 points or 3.67 per cent. The 30-share index touched a high of 14,586.16 and low of 14,279.02. National Stock Exchange’s Nifty ended at 4,360, up 3.46 per cent or 146 points. It touched a high of 4,368.80 and low of 4,230.60.

Hitendra Nayee, institutional-head, dealing, India Capital Markets, said, “domestic funds and foreign institutions both turned buyers. After months, we saw inflation climbing down and GDP numbers were also in line with expectations. The good thing is volumes were high, that shows interest returning back into the market. Now, the NSG meet will be keenly watched. We are expecting short-term uptrend in the market.” However, second rung stocks were behind in the race as compared with heavyweights.

BSE Midcap Index closed 2.38 per cent higher at 5,742.29 and BSE Smallcap Index gained 1.61 per cent to close at 6,891.64. State Bank of India (7.19%), Reliance Infrastructure (5.97%), ICICI Bank (5.93%) Tata Motors (5.44%) and DLF (5.35%) were the major Sensex gainers. There were no losers in the index. Shares of Tata Steel surged nearly 5 per cent after the company posted 60.5 per cent rise in April-June consolidated net profit late on Thursday. The company's shares ended up 4.99 per cent at Rs 600.35 with volume traded at 22,11,323 against two-week average of 14,78,472 shares.

The steel maker is in talks to raise at least $1 billion from a stake sale to private equity firms or a private placement of shares, according to media reports. Gammon Infrastructure Projects ended up 1.17 per cent at Rs 94.95 on BSE after it got an order for a bridge project worth Rs 8 billion. Jai Corp ended up 5 per cent at Rs 324.30 on market talk that Mukesh Ambani's Reliance Industries may grant it a gas distribution contract. On BSE , advances were 1,851 and declines 790. According to NSE website, total turnover was Rs 10,626.94 crore (provisional), up from Rs 8,769 crore Wednesday—a prior to settlement day.

Source:ET,BL,Sify

India economy growth slows to 7.9 percent in Q1

India's economy grows at 7.9% in Q1

Indian economic growth moderated to 7.9 per cent in the first quarter of current fiscal, against 9.2 per a year ago as rising borrowing costs impacted manufacturing and some other sectors.However, moderation in the GDP growth was expected as RBI hardened interest rates to control double-digit inflation.

If the first quarter GDP growth continues in the remaining months of this fiscal, the economy would expand at the rate more or less projected by Finance Minister P Chidambaram.
He projected the economy to grow by close to 8 per cent, compared to 9 per cent in the previous fiscal.

Manufacturing growth almost halved to 5.6 per cent, against 10.9 per cent as rising interest rates impacted their expansion. Even though agriculture grew by lower rate of three per cent, it is quite considerable on the high base of 4.4 per cent.

The other sectors which witnessed considerable decline in growth rate are electricity, gas and water supply, which expanded at the rate of 2.6 per cent against 7.9 per cent.In the services sector, trade, hotels, transport and communication grew by 11.2 per cent, against 13.1 per cent.
Finance, insurance, real estate and business services expanded by 9.3 per cent, against 12.6 per cent.

However, community, social and personal services grew by higher rate of 8.4 per cent, against 5.2 per cent.Construction activities also expanded at higher rate of 11.4 per cent, as compared to 7.7 per cent, while mining and quaring grew by 4.8 per cent, against 1.7 per cent.
In absolute terms, India's GDP stood at Rs 7,82,357 crore (Rs 7,823.57 billion) in the first quarter of this fiscal, against 7,24,949 crore (Rs 7249.49 billion) in the corresponding period of 2007-08.

In services, trade, hotels, transport and communication grew by 11.2 per cent against 13.1 per cent, while financing, insurance, real estate and business services rose at the rate of 9.3 per cent against 12.6 per cent.However, community, social and personal services grew at higher rate of 8.4 per cent against 5.2 per cent.

Commenting on the growth figures, PM's EAC member Saumitra Chaudhuri said, "It is on expected lines. When EAC came out with the GDP projection, monsoon conditions were not clear. If monsoon turns out to be good, which seems to be the case, there could be some upside."
What is heartening is that investment in the economy continues to be buoyant.
"The investment-GDP ratio has risen to 37.9 per cent, which means GDP growth is likely to be maintained," a finance ministry official said.

However, some analysts believe that economy is likely to expand at lower growth rate in the next quarter. "I expect that the figures would be flat below 7.9 per cent in the next quarter," CRISIL principal economist D K Joshi said.

Moderation in economic growth, particularly in manufacturing, was expected as RBI had tightened monetary policy to curb double digit inflation.For the first quarter, wholesale prices-based inflation stood at 9.4 per cent. Mineral inflation was at a huge 46 per cent, while food articles inflation stood at 5.8 per cent, fish at 1.5 per cent, manufactured products at nine per cent and electricity at 1.4 per cent.

The consumer price index for industrial workers, which is a better indicator of the impact of price rise on the common man, rose by 7.7 per cent in the first quarter.
-----------------------------------------------
India's economy grows at 7.9% in Q1
Growth at 3 year low but rates to stay tight
Economic growth slows to 7.9%
GDP moderates to 7.9% in Q1



Source: ET,Rediff,BS, BL

Top Business Headlines

Top Headlines

Top 10 open ended funds
3G auction to be over by Sept 30: DoT
Wall Street hit by weak data
BHEL gets contract worth $264 mln
Tata Steel consolidated Q1 profit up 60.5 pc

Tata Steel Global eyes $1 bln PE deal
Market discounts GDP slowdown; indices up over 2%
RIL gets nod to transfer KG assets to four arms
India kicks off FX futures trade, front-months lead

Cabinet approves changes to Companies Bill 2008
FinMin confident of close to 8% economic growth this fiscal
Revised draft for NSG ready
July crude oil import up 9% as production dips
Private insurers slash term cover premia by 10-40%
Sensex rallies 516pts; financial, realty stocks lead

Source:ET, BS, BL etc

28 August 2008

Inflation falls marginally to 12.40 percent

Inflation down to 12.40% Vs 12.63%
Inflation falls marginally to 12.40%
28 Aug, 2008, 1800 hrs IST, ECONOMICTIMES.COM
Inflation slipped marginally to 12.40% for the week ended August 16 from 12.63%.

Giving a little respite to the hapless consumers, inflation slipped marginally to 12.40 per cent for the week ended August 16 from 12.63 per cent a week before. Earlier Lehman Brothers expected inflation to increase to 12.82 per cent y-o-y from 12.63 per cent in the previous week, due to higher prices of food articles, rubber, sugar, paper products, oilseeds, textiles & rubber and plastic products.

"We expect the final WPI inflation to peak in Oct/Nov at around 13.5-14.0 per cent, but to stay in double-digit territory until February 2009. Based on our forecast of slower GDP growth of 7.3 per cent in FY09, our energy team's forecast of the price of oil falling sharply to $90/bbl in Q1 2009, plus favorable base effects, our forecast is that WPI inflation will start turning down decisively in January 2009," it said in a report.

It is the 27th consecutive week the inflation rate has been above 5.5 per cent, the RBI's original target for inflation at the end of the fiscal year in March 2009. At a policy review in late July, the RBI raised its key lending rate by 50 basis points to 9 per cent and also increased banks' reserve requirements, and said it was now aiming to bring inflation down to 7 per cent by the end of March. The government has said the inflation rate would hit 13 per cent and thereafter start moderating from December, before settling at 8.0-9.0 per cent by the end of the fiscal year in March.

A slide in prices of oil, India's biggest import, to around $117 a barrel from a record high above $147 in mid-July, is expected to ease the pressure on inflation. However, analysts said pressure from primary articles and strong demand despite the several rounds of policy tightening would most likely propel inflation higher for some months.


Other Top stories:
Sensex ends down 248pts; Reliance weighs / Sensex ends 248 pts down as
Cash based selling widens September premium, rollovers low
Bears rule on inflation jitters, crude prices
Market ends sharply lower; RIL down over 3%
US stocks open higher on GDP data

Forbes' Top 25 powerful women in pics
Mayawati enters Forbes' power women list; Sonia slips in rank
Forbes' Top 25 powerful women in pics
Aditya Birla Nuvo to buy 56% in Apollo Sindhoori


Source: ET,BS etc

Tata Steel Q1 cons PAT at Rs 3901 cr

Tata Steel Q1 cons PAT at Rs 3901 cr
Tata Steel Ltd has announced the following...
Tata Steel Group Earnings Beat Estimate on Prices (Update2)
Tata Steel Profit, Including Corus, Climbs

By Debarati Roy and Paresh Jatakia
Aug. 28 (Bloomberg) -- Tata Steel Ltd., India's largest producer, reported a better-than-expected 60 percent gain in first-quarter profit, including unit Corus Group Plc, on increased prices and output of high-grade products.

Net income rose to 39 billion rupees ($891 million) in the quarter ended June 30 from 24.3 billion rupees a year earlier, the Mumbai-based company said in a statement today. Five analysts in a Bloomberg survey estimated a median profit of 19.7 billion rupees. Sales climbed 39 percent to 435.6 billion rupees.

Steelmakers including ArcelorMittal and Posco raised prices this year after a threefold increase in coking coal rates and a near-doubling of iron-ore costs. Tata, which has held prices in India because of a government directive, faces the challenge of battling record raw-material costs, Chairman Ratan Tata said at a shareholders meeting in Mumbai today.

``Cost pressures will start kicking in in the coming quarters and that'll have a moderating impact on profits,'' said Sanjay Jain, an analyst at Motilal Oswal Securities Ltd. in Mumbai. The brokerage has a ``buy'' rating on the stock.

Global prices of hot-rolled coils, a benchmark product, are poised for their first monthly drop in a year, according to Steel Business Briefing. That may leave Indian producers little choice but to lower rates after keeping them unchanged since May.
``If international market prices come down, they will have to cut,'' Steel Secretary Pramod Rastogi told reporters Aug. 22.
A government order kept domestic prices as much as 15,000 rupees ($342) a metric ton below global levels, according to S.K. Roongta, chairman of Steel Authority of India Ltd., the nation's second-biggest producer.
Discount Narrows
A fall in global prices and cheaper imports from Southeast Asian countries has reduced this discount to $100 a ton, Mumbai- based India Infoline Ltd. said in a note dated Aug. 26.
``Domestic prices can come under pressure if international prices soften by $100-150 a ton,'' Bijal Shah and Sumit Pathak, analysts at the brokerage, said. ``Demand is weakening in Europe, U.S. and China and there are concerns on the global outlook.''
Tata Steel shares fell 1.6 percent to 571.95 rupees at the close of trading in Mumbai, before the earnings were announced. The stock has lost 39 percent of its value this year, compared with a 31 percent decline in the benchmark Sensitive Index.
The shares trade at about 8 times forecast profit, according to data on the Bloomberg. Falling prices may keep valuations for Indian steelmakers depressed, said Shah and Pathak.
Tata Steel is the worst-performer on the benchmark Sensitive stock index in the past three months, according to Bloomberg data.
`Buy' Ratings
Still, as many as 22 of 28 analysts tracking Tata Steel have a ``buy'' recommendation on its shares, with an average one-year price target of 932 rupees, according to Bloomberg data.
The company last month reported a 22 percent jump in first- quarter profit to 14.22 billion rupees from its Indian mills.
Tata Steel and Corus sell more than two-thirds of their production in Europe. While Tata imports a third of the coal needed for its Indian plants and mines its own iron ore, Corus buys both the raw materials.
The company is looking at forming iron-ore and coal ventures in Mozambique and scouting for limestone ventures in Oman, to secure raw material supplies, Tata told shareholders today.
Pension Assets
Meantime, the value of the pension funds of Corus, worth 14 billion euro ($21 billion) -- more than twice Tata Steel's market value -- eroded by 648 million euro in the period. The reduction has been accounted in the balance sheet, instead of profit and loss account, Tata Steel said in the statement.
Pretax profit would have been lower by 53.52 billion rupees had the previous practice of reflecting the value of pension fund assets in earnings been followed, Tata said.
``Given the size of the pension assets, it is a good idea to route it through the balance sheet to avoid huge fluctuations in earnings from quarter to quarter,'' said Giriraj Daga, an analyst at Khandwala Securities Ltd. in Mumbai. ``The losses are mark-to- market and can change. It's not a negative.''
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Tata Steel has declared its consolidated results for the quarter ended June 2008 (Q1). The company's net profit was at Rs 3914.6 crore (including Corus) versus Rs 2409.12 crore.
Its net sales were at Rs 43,508 crore (including Corus) versus Rs 31,162 crore.

Highlights
Margins at 16.1% vs 15.4% (YoY)
Margins at 16.1% vs 12.3% QoQ
Forex loss of Rs 303 cr vs loss of Rs 537 cr
Increase in stock in trade at Rs 1607 cr vs Rs 336 cr
Actuarial gains/ losses not shown in P&L in accordance with IFRS principles and permitted in AS21
Had it been accounted then Q1 profits would have been lower by Rs 5352 crore resulting in loss of Rs 1438 crore
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Source:MC, Bloomberg