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Citigroup`s loss for 2008 equals that of all Indian banks

Mumbai, March 23: It`s probably the price of being the largest that in the ongoing slump across global bourses, the market value lost by the world`s biggest bank Citigroup, run by India-born Vikram Pandit, so far in 2008 is equal to the loss suffered by all the Indian banks together.

But, despite this huge loss of close to 43 billion dollars, the US banking behemoth is still valued more than all the Indian banks taken together.

The market capitalisation of Citigroup has dropped by 26.63 percent since the beginning of the current calendar year, making it the worst performer among the top 30 blue-chips in the US that constitute the benchmark Dow Jones Industrial Average (DJIA) index in the American equity market.

The percentage loss in Citigroup`s market cap is lower than that of Bombay Stock Exchange`s banking sector index Bankex as well as a number of Indian banks in the same period. However, owing to the larger market value of the US banking giant, the absolute loss is equivalent to the collective loss sufferred by all the 18 banks present on the BSE Bankex index.

Citigroup, which has been among the worst affected from the US subprime crisis, has seen its market value getting eroded by close to 43 billion dollars since the beginning of the current year. A similar loss has been recorded by the 18 Indian banks during the same period.

While Citigroup`s market value has dropped from about 161 billion dollars at the end of 2007 to 118 billion dollars at present, that of the 18 Bankex companies has dropped from about Rs 5,35,960 crore (136 billion dollars) to close to Rs 3,64,522 crore.

Long-term solution to rising prices not in sight: Experts

New Delhi, March 23: Soaring prices of vegetables and fruits are increasing the heat for the common man in the midst of the summers largely due to constrained supply, and the experts feel that a "long-term solution is still elusive".

More than half the fruits and vegetables in the wholesale markets in Delhi have recorded rise of up to 100 percent and the effect could be more when it comes to retail prices.

Spiralling prices

According to data compiled by Delhi Agricultural and Marketing Board for 48 fruits and vegetables, coriander prices have more than doubled to Rs 800 per quintal during the month ended March 20, while sweet pumpkin was being sold at Rs 850 a quintal compared to Rs 325 a month ago.

However, there was some respite for the common man with prices of potato dropping to Rs 250 from Rs 413 a quintal, while Tomato was being sold at Rs 560, down from Rs 720, at the Azadpur market.

Prices getting out of control

Marketmen said the retail prices of vegetables are usually more than double the rate being charged in the wholesale market, but added that arrival of vegetables is sure to improve in the next few weeks and ease the pressure.

The rates of milk and dairy products, pulses, cereals, foodgrain and edible oil have shown an upward trend, prompting the government policy makers to take some immediate decisions like cutting down import duty on edible oil and rice to increase the domestic availability.

"The recent measures announced by the government to augment food supply would bring an immediate relief. But the pressure would still remain," Mumbai-based rating agency Crisil Principal Economist D K Joshi said.

Rate of Inflation at new high

The rate of inflation has reached a whopping 5.92 percent, mainly due to rise in the prices of food articles.

With the inflation racing to nearly a year`s high at about six percent, the supply side management would hold the key to check prices, Joshi said, adding that the consumers may have to pay more for food items because prices would continue to rise, with global food stocks coming to a 20-year low.

Commenting on the global situation, Agriculture Minister Sharad Pawar recently said that India imported wheat at about USD100-110 a tonne last year but the international prices have now nearly quadrupled.

Multi Commodity Exchange Chief Economist V Shanmugam said, "The government measures taken recently are in the right direction. The fiscal tools like duty cuts might bring some short-term relief." Supply and demand equation Looking ahead, he said, "If these measures do not work, then the government should aim at matching supply and demand equation."

Also, due to stagnated domestic farm production, the country`s dependency on food import is expected to increase, Joshi said. "Imports may ultimately get costlier because of increasing global food prices", he said.

Joshi said the inflation would hover around 6 percent in the coming weeks as the pressure on domestic food prices is likely to continue, triggered by rising crude prices which eventually may increase the cost of agricultural inputs for farmers.

LN Mittal may take over Global Steel`s mill in Bulgaria

New Delhi, March 23: Steel tycoon Lakshmi Niwas Mittal has intensifed efforts to take control of Global Steel Holdings Ltd's ailing Kremikovtzi steel mill in Bulgaria.

The mill, run by Pramod Mittal -- the younger brother of L N Mittal, has seen labour unrest and faces the possibility of being re-nationalised by the Bulgarian government.

In a letter to the Bulgarian Cabinet, the senior Mittal has pledged to do the needful to restructure the mill and invest enough money to absorb its outstanding liabilities, believed to be around one billion dollars.

"We have appointed Merril Lynch to rope in a strategic partner who can join Global Steel to help revive Kremokovtski, which has no raw material and is facing a lot of problems," a Global Steel official said.

L N Mittal is facing challenge from Ukranian millionaire Konstantial Zhevago, who owns London-listed iron ore producer Ferrexpo, Turkish company Erdemir, and Ukrainian tycoon Rinat Akhmetov, Kryvorizhstal.

"The businessman (Mittal) promised to improve the results of the holding, which are to be in compliance with all environmental legislation at local, regional and international level," Bulgaria's The Sofia Echo stated quoting the country's Economy and Energy Minister Petar Dimitrov as saying.

Besides, assuring to restructure the 325 million euro bond and the state loan, Mittal committed to settle late payments for tax, social security contributions and other debts owed by Kremikovtzi, wherein Global Steel Holdings (GSH) has a majority stake.

Dimitrov said, the state would not sell its 25 per cent stake and involvement of the state in the takeover negotiations only referred to the environmental programme and viability of the proposed modernisation plans, the daily said.

India may change global biz by 2018`

New Delhi, March 23: India, along with emerging market peers China, Brazil and Russia, is expected to transform the global business landscape and will have a greater influence on the markets across the world by 2018, a study says.

The study by UK-based Chartered Management Institute looking ahead to 2018, predicted what the world of work and management would look like and examined how organisations can prepare for it.

"In the probable future, Brazil, Russia, India and China (BRIC) nations will have a greater influence on business markets and transform the business landscape," the study said in its description of the most probable picture of the world of work and management in 2018.

The study also revealed that the business markets would be noticeably influenced by new players from India, Brazil, Russia, China, Eastern Europe and other developing countries as well as global businesses.

As new business models are introduced to respond to these changes, there would arise the need for greater emphasis on new skills such as understanding diversity and foreign cultures.

The study titled `Management Futures – The World in 2018` forecast that in the next 10 years the business models and structures would changes in nature and there would be a polarisation from global corporates to virtual community-based enterprises.

To succeed, organisations would need technology that is able to capture and analyse implicit and tacit knowledge and allow the sharing of knowledge with customers and partners, it said.

Central banks in mortgage crisis talks: Report

London, March 22: Central banks on both sides of the Atlantic are in talks about the feasibility of mass purchases of mortgage-backed securities in a bid to solve the global credit crisis, the Financial Times (FT) said on Saturday.

The newspaper, without citing sources, said the talks were at an early stage and part of a broader exchange on how to battle the turmoil in financial markets, which has continued despite the injection by central banks of billions of dollars of liquidity and cuts in interest rates.

The Bank of England (BoE) appears to be most enthusiastic to explore the idea, which would involve the use of public money to shore up the market in a key financial instrument, the FT said.

The Federal Reserve is open to the idea in principle, but only as a last resort, while the European Central Bank (ECB) is less keen, it said.

"We're not providing any comment," a BoE spokesman said. Britain's Finance Ministry also declined to comment. The ECB and Federal Reserve could not immediately be reached.

Central banks have so far been prepared to lend against mortgage-backed securities rather than buying them outright.

The securities have plunged in value amid a credit squeeze, which was sparked by low quality mortgages in the United States, leading to a vicious circle of forced sales, falling prices and weakening balance sheets for banks.

Banks have written down over USD 125 billion of assets since November, hammering their shares. The DJ Stoxx European banks index (.SX7P) has fallen almost 40 percent since June.

Governments and central banks have made repeated attempts to restore order. Britain has nationalized struggling mortgage bank Northern Rock (NRKx.L), Germany is overseeing the rescue of lender IKB (IKBG.DE) and the United States is presiding over a rescue of Bear Stearns (BSC.N).

But markets remain jittery, with Credit Suisse (CSGN.VX) warning on Thursday it could report its first quarterly loss in five years and credit ratings agency S&P saying on Friday it was cutting its view on US banks Goldman Sachs (GS.N) and Lehman Brothers (LEH.N) to "negative" from "stable

Investors` loss in US blue-chips double of Indian counterparts

Mumbai, March 23: The ongoing slump has taken a bigger toll on Indian stocks as compared to the US, but the investors` loss in the domestic blue-chips is only half of the wealth lost in American counterparts since the start of 2008.

The investors have lost close to 200 billion dollars in the 30 Indian blue-chip stocks, which constitute the benchmark Sensex, so far in the current calendar year. But the loss is much bigger at about 400 billion dollars in the 30 blue-chips of the US, which forms the barometer Dow Jones Industrial Average (DJIA) index there.

However, in percentage terms, the collective loss in the Sensex companies is higher at about 26 per cent, as against 8.7 per cent in the DJIA stocks.

Besides, as many as six companies in the DJIA pack -- Wal-Mart Stores, IBM, Du Pont, Home Depot, Caterpillar and JPMorgan Chase -- are trading with gains year-to-date, while only two Sensex companies -- Hindustan Unilever and Ranbaxy Laboratories -- have managed to improve on their market values from the 2007-end levels.

The collective market values of 30 DJIA companies have dropped from about 4.5 trillion dollars at the end of 2007 to about 4.1 trillion dollars currently. In the same period, the total market capitalisation of the 30 Sensex firms has dropped to about Rs 28,88,000 crore (about 735 billion dollars) to 21,40,000 crore (about 537 billion dollars).

Among the DJIA stocks, the biggest loss of about 26.63 per cent has been registered by Citigroup, while Merck, AIG and General Motors have lost more than 20 percent each.

Among the current Sensex constituents, the biggest loss of about 52 per cent has been recorded by Jaiprakash Associates, the newest member of this elite club.

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With level playing field you can`t compete with NTPC: CMD

New Delhi, March 23: Taking a dig at private sector competitors to whom it lost the bids for Ultra Mega Power Projects, state-owned NTPC has said it is an ethical company and can overcome any competitor on a level playing field.

"We cannot go and just start an IPO and start say with a Rs 10 equity share at a premium of Rs 450-460. If a sort of level playing field is given to us, we will definitely compete," NTPC Chairman and Managing Director T Sankaralingam said when asked about the PSU losing all the UMPP contracts.

He, however, clarified that he was not speaking about any specific company. "I know a private company other than Reliance Power which has done this (IPO)...110 times more than its issue price.

Reliance Power, which recently came with an IPO at an issue price of Rs 450 a share to mop up Rs 11,600 crore, has two UMPPs -- Sasan and Krishnapatnam -- under its belt and is eagerly awaiting bidding for five others in the pipeline. Third UMPP -- Mundra -- is with Tatas.

Sankaralingam said that "if equity norms are not distorted, then we can compete with the best," and added that in a private company one has the option of straight away forgoing the fixed cost -- the cost of equity, which turns out to be a big chunk of 35 paise per unit.

Referring to the practice of mopping up resources through IPOs or public offers for the new projects by the private companies, he said "this premium need not be serviced (immediately).

"The second aspect is how do you look at the entire pricing. Whether you want to price just for the sake of getting a power plant and put your entire operations into problem or whatever you do is logical."

"Within the norms of the regulator, do not defeat the very purpose of UMPP," Sankaralingam quipped.

Asked if he had approached the government and on level playing field what issues other than equity needed to be addressed, he said "as far as NTPC is concerned, ours is an ethical company. We will follow norms and if issues are addressed, I can tell you, you can not compete NTPC".

On whether losing out the contracts for the 4,000 MW UMPP was rankling, he said "to be more precise, we have said (to the government) if I am allowed to distort that, I can quote that number."

The winning bid for Sasan UMPP was as low as Rs 1.19 kWh, NTPC placed a Rs 2.12 per unit bid.

NTPC CMD wondered about the composition of price bids saying that "some of the things have a question mark, particularly the coal pricing. Please remember that coal cost includes Rs 187 taxes. If somebody says that I can do that in Rs 50, God save them."

He, however, said: "I will not call it irresponsible because somebody has done that (put 1.19 kWh bid)."

Sankaralingam, however, clarified that he was not criticising anybody and said that "it is their business style. It is up to them to quote. I am only telling the constraints which a government company has".

He wondered "if you quote three paise fixed charge and Rs 1.16 as variable cost, will the country accept it. Will the consumer accept it. Will the political system accept it. I cannot do it."

NTPC has a total installed capacity of 29,144 MW. The company is diversifying into power equipment manufacturing in joint venture with Bharat Heavy Electricals Ltd. The JV is expected to be incorporated by first week of April.

NTPC is also soon expected to sign an agreement with NHPC, PFC and TCS to set up India`s third power exchange. The move comes after the company parted ways with NCDEX and NSE failing to resolve certain key issues.