Breaking News & Stocks

-Power to pick 100% in Indonesia coal mine
17 Mar, 2008, 0410 hrs IST......................

NEW DELHI: Reliance Power, the flagship power company of the Anil Dhirubhai Ambani group, has struck a deal to buy out a coal mine in Indonesia located in South Sumatra. The valuation of the coal mine, based on its reserves, is estimated to be around Rs 20,000 crore. The company is expected to announce its acquisition in a day or two.

The coal mine, which has resources of 2 billion tonnes, is spread over 100,000 acres, equivalent to Greater Mumbai area. The greenfield coal mine, a discovered asset, will be the prime source of fuel for Reliance’s power project in Krishnapatnam in Andhra Pradesh. It is estimated that the Krishnapatnam ultra mega power project would require about 14 to 15 million tonnes of coal every year.

Reliance Power is understood to have acquired the coal mine for about Rs 1,000 crore. It has acquired 100% interest in this coal mine. When contacted, Reliance officials declined to comment on the development

Experts say that this coal mine could be compared to one of the largest coal mines in India — the Gevera coalmine — in Chhattisgarh which has reserves of 1.2 billion tonnes and is producing around 35 million tonnes annually. Given that the acquired mine has resources of 2 billion tonnes, it is expected that the production from this mine should be more than the largest mine in India.

Although, the coal from this mine would be brought in for the Krishnapatnam project, it would also fuel other coal based power projects of the company. The acquisition is significant as it India is competing with energy hungry countries like China to acquire stakes in oil and coal blocks and secure energy security.

Tata Power, another leading power company which won the first imported coal based power project at Mundra have also bought a 30% stake in a coal company Bumi in Indonesia to meet its coal requirements. Other power and steel companies are also looking at Indonesian coal reserves with interest.

In fact, the coal special purpose vehicle (SPV) formed by five leading public sector undertakings (PSUs) including NTPC is also likely to make its first coal acquisition in Indonesia.

Indonesia presents an attractive market for Indian companies due to its proximity to country's shores. Besides, Indonesian better in quality than Indian coal having loess of ash content and higher calorific value

BHEL, RPL may plug into largest PPP project
17 Mar, 2008, 0055 hrs IST............................

NEW DELHI: In what could transform into the biggest public-private joint venture in the power sector, public sector Bharat Heavy Electricals (BHEL) and Reliance Power (RPL) are exploring possibility of a tie-up for equipment manufacturing.

Reliance Power recently announced its intention to venture into power equipment manufacturing. The company, which is part of the Reliance-Anil Dhirubhai Ambani Group (R-ADAG), is in talks with the public sector engineering major to leverage its expertise in manufacturing. BHEL and Reliance Power would have equal equity partnership in the proposed special purpose vehicle (SPV).

"Initial talks have taken place between top officials of both the companies and a high level meeting between officials of Reliance Power and BHEL is also likely this week to finalise the road map for the proposed venture. The venture is likely to be implemented by an SPV where both the companies would have 50:50 equity partnership," an industry source close to the development said.

When contacted, a power ministry official said there is no problem with the possible tie-up as the Cabinet has made way for such associations by clearing the ONGC-Mittal tieup. An official at Reliance Power said the company has no comments to offer.

"We are open to all types of associations which would be in the interest of the country, but the development is at an initial stage," the source said.

BHEL is tying up with several companies for increasing its manufacturing capacity. The government has set a target of adding over 78,000 mw of generation capacity during 11th Plan. BHEL would be able to meet just over 50% of this target even with its proposed expansion. The company is, therefore, looking at all options to expand its manufacturing base.

Reliance Power on the other hand has plans to set up 13 projects with total capacity of 28,200 mw. Of this, 10,300 mw is gas-based, 3,300 mw is hydel and the rest is coal-based. While the company is looking all over the globe for equipment suppliers, it has favoured its own manufacturing facilities to reduce cost of generation and timely completion of projects.

It is expected that the proposed JV with BHEL would not be restricted for captive use of Reliance Power and venture would look for commercial business from other power stations too

Investor loss in 2008 crosses $500 bn mark
13 Mar, 2008, 2045 hrs IST.........................

MUMBAI: Over $500-billion have been wiped off from the wealth of investors in Indian stocks since the beginning of 2008 as an unending turbulence today sent the market to its lowest level in about six-and-a-half months.

The total loss of about Rs 20,50,000 crore (506 billion dollars) include over 300 billion dollars of promoters of the listed companies here, while public shareholders have lost close to 200 billion dollars.

According to the latest data available with stock exchanges, the total market capitalisation of all the listed companies in India stood at about Rs 51,22,000 crore (about 1,270 billion dollars) after the benchmark Sensex recorded its seventh-biggest loss of 770 points in a broad-based plunge.

The total loss since the beginning of this year accounts for more than one-quarter of the investors wealth.

During this period, more than 2,500 companies have seen their market values erode, while less than 100 have managed to register some gains

Besides, the country's ten most valued companies, including Reliance Industries and ONGC, alone have lost about Rs five trillion (over 125 billion dollars) so far in 2008.

The total market value of these ten companies stood at Rs 14,94,500 crore at the end of today's trading, as against Rs 20,21,700 crore as of December 31, 2007.

Among these companies, Reliance Industries alone has lost close to Rs 93,000 crore, while the country's most valued real estate firm DLF has seen its market value plunge by close to Rs 80,000 crore. Besides, public sector giants ONGC, NTPC, MMTC and Anil Ambani group's Reliance Communications have lost more than Rs 50,000 crore each.

Companies such as Bharti Airtel, NMDC and ICICI Bank also lost close to Rs 40,000 each, while the country's biggest lender SBI has seen about Rs 18,000 crore being wiped off from its market capitalisation in this period.


The 30-share benchmark Sensex today fell 770.63 to close at 15357.35 points - which is not only the lowest level in 2008 but also the lowest closing since August 31, 2007.

The market capitalisation of all the listed firms sank by close to 80 billion dollars (about Rs 3,25,000 crore) on Thursday.

Only one of the 30 Sensex companies today managed to close with a modest gain, while the overall market breadth was highly negative. There was just one gainer for about 15 stocks closing in the red today as just about 12 per cent of total actively traded stocks could manage to end in the green.

The Sensex has dropped by about 4,925 points so far in 2008, which accounts for more than 75 per cent of its gain registered in entire 2007.

The Sensex had risen 6,500 points in 2007 to end at 20,286.99 points.

In terms of the market capitalisation also, the loss incurred since the beginning of 2008 accounts for about 60 per cent of the total gain in 2007. The market capitalisation of all the listed companies had increased by Rs 35,45,626 crore in 2007 to end the year at Rs 71,69,985 crore.

Global mkt bull run ageing; steam still left in India: ICICI
16 Mar, 2008, 1300 hrs IST.......................................

NEW DELHI: The global equity bull run is reaching its last lap and a high level of volatility is expected during 2008, but emerging markets such as India and China may again outperform the developed world this year, India's biggest private sector lender ICICI Bank believes.

"The global equity bull run is showing signs of ageing as growth becomes scarcer. The period of spectacular returns and low volatility is behind us and 1H2008 could see high volatility in equity markets," according to a "Global Investment Outlook 2008" report by ICICI Bank's private clients division.

While earnings growth would shrink in G7 economies - the US, UK, France, Germany, Canada, Italy and Japan, this along with inflation simmering in the background would keep equity markets on the edge, said Anup Bagchi, Head of Global Private Clients at ICICI Group.

"The global equity markets have been on a strong bull run for the past five years with some intermittent correction. The above-trend economic growth, impressive corporate earnings coupled with low interest rates and benign inflationary trends provided a sound backdrop for such an impressive bull run in the global equity markets," the report said.

However, fears about a recession in the US, tight credit conditions and huge write-downs and losses being disclosed by some of the Wall Street giants have resulted into a worldwide sell-off and most of the markets have dropped by 10-15 per cent since the beginning of this year and the falls have been steepest for some of them since the 9-11 terror attack.

Noting that the developed world would see a slowdown in earnings and economic growth rates being played out in the coming quarters, the report said that the "financial contagion would mean that emerging markets will not remain unscathed."

"Yet, the ongoing correction means that the worry about the pricey valuations among the EM world would eventually be replaced with the attraction of better growth opportunities in these countries as compared to developed world."

"In other words, the intermittent corrections in the EM space could offer fresh buying opportunities," ICICI Bank's Private Clients Group said, but added that investors would need to be selective in the emerging markets space as well.

"Countries that are less dependent on the US economy, or are facing lower inflationary pressures or having favourable current account position are likely to outperform in the coming times."


India and China are favourably placed in this regard, especially after the meaningful correction in the recent past, Bagchi said in the report.

After a stellar 47 per cent return over last year, the emerging trends augur well for India's Sensex, it noted.

"With 50 per cent of population between 25-35 years, the channeling of savings into the equity markets is only going to increase (currently it is just six per cent of the total savings and at 8-year high). For example, there has been a 25 per cent rise in total equity asset holdings of the Mutual Funds in FY07," he added.

The report emphasized, however, that the emerging markets might not emerge completely unscathed from the US weakness, even as they are "much less vulnerable than history might suggest." The micro and macro picture in these EMs is much more robust which would allow the fiscal and monetary authorities to act proactively to the evolving environment.

"The EM story is that of improving fundamentals, rising incomes, widening prosperity and expanding domestic demand rather than just exports," the report said. "Decoupling, in our view, is not a one-off event but a process of self-realisation of the EMs that began in the last decade and will mature over time," Bagchi said.

Fed rate meet to cue market
15 Mar, 2008, 1201 hrs IST...............

MUMBAI: The market will continue to follow global cues in the coming days, but there is hope of some relief as the US Federal Reserve is widely expected to lower interest rates by 50-75 basis points on Tuesday.

“If the Fed cuts rates by 75 bps, there will certainly be a positive reaction in US market and we will follow suit. Having said that, I wouldn’t advise investors to sell nor go short, the uptrend expected would be nothing but a mere bounce-back,” said Ajay Parmar, head of research at Emkay Share & Stock Broking.

IDBI Capital’s Shahina Mukadam said a 50-bps cut is more realistic given that the Fed infused $200 billion in the market last week. “If international markets don’t see much redemption, there’s no reason for our market to lose ground,” she added
On Friday, Bombay Stock Exchange's Sensex settled at 15,760.52, up 403.17 points or 2.63 per cent from the previous close. National Stock Exchange's Nifty ended 2.64 per cent or 122.8 points higher at 4,745.80.

On a weekly basis, both indices lost over a per cent weighed down by losses across the globe. Add to that, India’s index of industrial production showed growth slackened disturbingly in January. IIP rose 5.3 per cent against 7.7 per cent the previous month and capital goods, the spine of the India’s growth story, grew a mere 2.1 per cent against 16.3 per cent the previous year.

“These numbers just put a niggling thought in the mind. Corporate numbers are alright. So there is no clear signal of a downtrend as yet,” Mukadam said.

On a different note, the UPA-Left committee on the Indo-US nuclear deal will meet Monday to make its stand clear on the controversial deal, where the government is likely to present the draft of the India-specific Safeguards Agreement reached with International Atomic Energy Agency.

The stock market will remain closed on Thursday on account of Id-E-Milad and Friday for Good Frid

GLOBAL MARKETS - Bear Stearns crisis batters stocks, dollar

Mar 17 2008 2:46PM

LONDON (Reuters) - Global stocks sank and the dollar tumbled on Monday as a fire sale of Bear Stearns and a Federal Reserve emergency cut of a key lending rate sparked fears that worldwide credit crisis will claim more casualties.

European shares opened nearly 3 percent lower following a sell-off in Japan where the leading index shed more than 3.5 percent.

The dollar hit new lows against the euro and a basket six of major currencies. Oil hit a new high of nearly $112 a barrel on the weaker dollar.

Investors dived into safe haven assets, lifting gold to more than $1,030 an ounce at one point and sending yields on short-dated euro zone debt below 3 percent for the first time in more than two years.

"The markets are in a complete state of panic and in such situations there is no such thing as valuation or value in any asset," said Michael Klawitter, FX strategis at Dresdner Kleinwort in Frankfurt.

In an unexpected move late on Sunday, the Fed lowered the discount rate it charges on direct loans to banks to 3.25 percent from 3.50 percent and implemented steps to provide cash to a wider range of financial firms, using tools last used in the Great Depression.

Minutes earlier, JPMorgan Chase & Co <JPM.N> had said it would buy Bear Stearns <BSC.N> for a rock-bottom price of $2 a share, valuing the U.S. investment bank at the centre of a widening global credit crisis at about $236 million.

JPMorgan and the Federal Reserve Bank of New York temporarily bailed out Bear Stearns on Friday after a deterioration in the latter's liquidity, one the worst cases yet in a broad-based drying up that has been going on since mid-2007.

Investors are now nearly fully pricing in a 1 percentage point cut in the main federal funds rate at or before the Fed's policy meeting on Tuesday.

"Desperate times need desperate measures. The Federal Reserve is doing what it takes to restore stability," said Craig James, chief equities economist at Commesec in Sydney.

STOCKS, DOLLAR DOWN SHARPLY

Equity markets took a hefty hit across the world as uncertainty grabbed hold of investors.

European shares tumbled in early trade. The FTSEurofirst 300 was down 2.9 percent.

Earlier, Japanese stocks fell to about a 2-1/2 year closing low, dragged down by exporters worried about a rising yen.

The benchmark Nikkei average fell 3.7 percent or 454.09 points to end at 11,787.51, its lowest finish since Aug. 8, 2005.

The broader TOPIX index shed 3.7 percent or 43.58 points to 1,149.65, the lowest close since June 2005.

The dollar plunged across the board.

It slid as much as 3 percent in early Monday trading to as low as 95.77 yen according to Reuters data , the lowest since 1995, and set fresh all-time lows at 0.9637 Swiss francs .

It later recovered slightly to 97.21 yen and 0.9825 Swiss franc.

The euro soared as high as a new record $1.5904 before dropping back to $1.5788.

The weak dollar drove oil prices higher. Crude for April delivery was up $1.10 at $111.31 a barrel, off a record $111.80 hit earlier.

SEEKING SAFETY

Investors dived into safer assets. Spot gold hit $1,030 an ounce, before falling back to around $1,023 an ounce.

"Gold will be the main beneficiary (of the falling dollar) as a hedge against global risk," said Australia & New Zealand Bank senior commodities analyst Mark Pervan.

When the U.S. currency falls, the price of gold, like that of oil, tends to rise as investors with dollars buy it to lock in value and non-dollar investors find it cheaper.

Investors also bought bonds. Short-dated euro zone government bond yields were at their lowest in over two years and implied rates down.

The two-year cash yield fell 8 basis points to 2.984 percent , its lowest since early 2006 while the 10-year Bund yield was down 3 basis points at 3.696.

(Additional reporting by Rafael Nam and Toni Vorobyova)

JPMorgan to buy Bear Stearns

New York, March 17: JPMorgan Chase & Co bought stricken rival Bear Stearns for a rock-bottom price while the US Federal Reserve set an emergency interest rate cut and opened direct lending to Wall Street.

The shock news, the biggest sign yet of how devastating the credit crisis is for Wall Street, slammed the US dollar to a new record low against the euro and pummeled Asia stock markets early Monday.

"The fear is how many more skeletons in the closet are still there in the global credit markets?" said David Cohen, economist at Action Economics in Singapore. "This is another effort by the Fed to calm things down, but the cloud on the horizon is just how much more of these credit issues are still out there."

The move will be seen as an attempt to prevent other major investment banks and brokers from suffering the same fate as Bear, the fifth-largest US investment bank, as the pressures on the U.S. financial system from the credit market turmoil reach unprecedented levels.

Bear`s major shareholders, including British billionaire Joseph Lewis and Bear Stearns` Chairman Jimmy Cayne, will have their holdings virtually wiped out by the deal, which will see JPMorgan pay only about USD 2 a share for Bear in JPMorgan stock.

The USD 236 million value of the deal, which is based on share count at the time of its annual report in January, compares with estimates of more than USD 1 billion that have been placed on Bear`s world headquarters building on Manhattan`s Madison Avenue.

Before it faced speculation about liquidity problems, which were quickly followed by a run on the bank last week, Bear`s stock had been trading at around USD70, and its 52-week high last April was at more than USD159, valuing the company at about USD24 billion at that time.

The pressures on companies like Bear prompted US Treasury Secretary Henry Paulson on Sunday to say the U.S. government is prepared to do "what it takes" to maintain the stability of the financial system.

Broader risk

Bear Stearns` cash reserves were drained by fleeing customers on Thursday, and on Friday the bank secured emergency funding from the Fed, extended through JPMorgan Chase.

Bear Stearns trades interest-rate swaps, credit default swaps, and other derivatives with dozens of banks globally. If Bear Stearns went bankrupt, all of its trading partners could face big losses and fear could spread, which is why the Fed has been so instrumental in helping to arrange the rescue.

"It wouldn`t just be Bear`s problem, it would be everyone`s problem," said Marino Marin, an investment banker at Gruppo, Levey & Co who has restructured banks in the past but is not involved in this deal. "It would be apocalyptic," Marin added.

JPMorgan Chase, the third largest U.S. bank and one of the few global banks relatively unscathed by the credit crunch, has sought to limit its liabilities in the deal by having the Fed fund up to USD30 billion of Bear`s less liquid assets.

Details of the risk that the Fed will take on in that part of the deal, and what the potential burden could be for US taxpayers, were not immediately clear.

The Fed said on Sunday it cut the discount rate to 3.25 percent from 3.5 percent, effective immediately. It also unveiled a new lending facility at the discount rate for primary dealers - big Wall Street firms with which it deals directly in financial markets.

Bear Stearns, one of 20 primary dealers, had been unable to borrow directly from the window, because it had previously been open only to deposit-accepting banks.

JPMorgan said in its statement that the boards of the two companies had unanimously approved the deal, through which Bear shareholders will receive 0.05473 shares of JPMorgan Chase for every Bear Stearns share.

JPMorgan will guarantee the trading obligations of Bear and its subsidiaries and provide management oversight of the operations.

The transaction is expected to close by the end of the second quarter as it already has fast-track approvals from the Fed and other federal regulators.

For JPMorgan, the deal may turn out to be a rare opportunity, some analysts said.

"JPM is getting the number three prime broker, a solid merchant banking portfolio, a good high net worth business and a mortgage servicing business for well below its market value. But BSC has no choice but to sell," said Bernstein Research analyst Brad Hintz.

Bear Stearns has complicated mortgage bond and credit derivative assets on its balance sheet, and valuing them could be difficult. Bear may also face legal liability from soured subprime mortgage bonds and other instruments it sold, analysts said.

Crisis of confidence

Investors lost confidence in Bear in recent weeks, because it is the smallest of the major investment banks and, at the same time, renowned as an aggressive trader in credit and mortgage markets.

Bear generates a much bigger percentage of its revenue from the U.S. fixed income markets than its competitors, giving it few other businesses to lean on amid the global credit crisis.

In a classic run on the bank, many traders last week stopped doing business with Bear because they feared the firm might go bust, draining cash and making a collapse all the more likely. Hedge funds and other clients withdrew assets.

Following previous crises, famous firms such as Kidder Peabody, Salomon Brothers and First Boston were forced to seek buyers with robust balance sheets.

Bear last week accelerated plans to announced its first quarter results to Monday, at which time Bear is expected to disclose it cash position, capital levels and exposures to hard-hit assets.

Analysts on average expect Bear`s first quarter earnings to plunge by more than half to USD 1.19 a share from USD 3.82 a share a year ago, and revenue to shrink toUSD.4 billion from USD 2.5 billion, Reuters Estimates said on Sunday.

Foxmandal Little favours entry of foreign legal firms

London, March 17: Foxmandal Little, Indias oldest and largest law company that has also opened an office in London recently, wants the government to allow foreign firms into the legal services sector.

Som Mandal, partner of the firm overseeing its London operations, said that in an upcoming economy like India, there can be plenty of work for everyone.

"Foxmandal Little has carefully considered this issue. We believe on balance that the public interest would benefit from the entry of foreign lawyers subject to appropriate safeguards," he said.

The company supported the view of the Ministry of Law and Justice to allow the entry of foreign law firms to the Indian legal services sector to practise foreign law, he said.

"We understand that foreign law firms are not interested in litigation and in that respect, the objections raised by the Bar Council of India and all other bar, lawyers and law firms fail to stand ground," he said.

"A sufficient safeguard to this effect would be, to formulate rules that allow foreign law firms to only practice the law of their jurisdiction. The availability of foreign lawyers would greatly minimise costs to the Indian business enterprises, since as of date, to avail the services of a foreign lawyer, an enterprise would have to approach lawyers located in that jurisdiction, which obviously entails more expenses," he stressed.

Mandal said Indian lawyers were competent and could deliver quality work. They "will not be scared to face the competition" once the government decides to open its door, he added.

Glenmark launches dermatology products in US market

Mumbai, March 17: Drug maker Glenmark Pharmaceuticals on Monday said its US-based subsidiary has started marketing and distribution of clobetasol propionate dermatology products in the US market.

Glenmark Pharmaceuticals Inc, the US subsidiary of Glenmark Pharmaceuticals has commenced marketing and distribution of clobetasol propionate dermatology products, the company said in a filing to the Bombay Stock Exchange.

This dermatology portfolio marks Glenmark's entry into the US semisolid product market. Glenmark plans to launch an additional 11 dermatological products in the next 12 months.

Based on these recent launches, GPI now has a portfolio of 28 generic products for the US market.

The company has acquired the US marketing rights for a line of clobetasol propionate products which include - cream, e cream, ointment gel and topical solution through an US-based pharmaceutical development company.

Clobetasol propionate is used to treat diseases such as eczema and psoriasis, where it is used on the scalp and body. It is also dispensed to counter auto-immune presentations, such as hair loss and skin nodules.

The total sales for the clobetasol propionate products in the 12 month period ending December 2007 were in excess of 28 million dollars, as per the IMS health report.

Oil prices hit fresh high at 111.42 dollars

Singapore, March 17: Oil prices soared to a new intra day trading high above 111 dollars in Asian Trade on Monday as the dollar slumped to fresh lows against the euro, dealers said.

New York's main contract, light sweet crude for April delivery, briefly traded at a new all-time high of 111.42 dollars, breaking the previous peak of 111 dollars set last Thursday.

The contract closed Friday at the end of US trading hours at 110.21 dollars.

The surge came as the euro hit a new lifetime high above 1.58 dollars in Asian trading Monday while the US unit fell to as low as 96.57 yen, a level not seen since September 1995.

"We can continue to expect strong prices for oil and commodities like gold in the near term," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

The record-breaking spree has been fuelled by investors rushing into commodities including oil, which they see as a safe haven amid rising concerns over the US economy and a credit squeeze.