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SBI hikes BPLR by 1%, spares auto loans

Mumbai, Aug 11: With mounting pressure on its margins, primarily due to the Reserve Bank's latest policy actions, India's largest lender, State Bank of India, on Monday hiked its benchmark prime lending rate by one per cent to 13.75 per cent with effect from tomorrow.

SBI also hiked its deposit rates by 0.25-0.75 per cent on various maturities effect from Saturday, a senior SBI official said here.

"Even after this hike, SBI's BPLR (13.75 per cent) is amongst the lowest in the industry. We expect that this would attract more customers to the bank. The bank is still confident of maintaining a 20-22 per cent growth in advances and around 25 per cent growth in deposits for the remaining part of the fiscal," the official said.

The hike in BPLR will not affect existing and new housing loans upto Rs 30-lakh, besides, existing auto loans and all types of education loans, the official said.

However, new auto loan borrowers will have to pay more following the hike, he said.

SBI announced its hike after many banks, including its nearest competitor, ICICI Bank, increased their BPLRs to prevent a drastic fall in their margins after the apex bank hiked the cash reserve ratio and short-term repo rate by 0.25 per cent and 0.5 per cent respectively to check inflation.

Amongst the major banks which have already hiked their lending rates are Union Bank of India, Bank of India, Central Bank of India, Jammu & Kashmir Bank, IDBI Bank, Axis Bank, IndusInd Bank, Bank of Rajasthan, Yes Bank, Bank of Baroda, Canara Bank, Corporation Bank and Allahabad Bank.

For new auto loans, the hike will be contained to 0.5 per cent, the bank said.

"This exemption would benefit a large body of our customers and encourage them to keep their accounts in proper order. The bank believes that its action would contribute to revival of these sectors which have witnessed some strain recently and would also enhance demand for credit," the bank said.

Following the hike in deposit rates, deposits having a tenor 181 days to less than one year, would now attract a rate of 8.5 per cent, against 8 per cent earlier.

Similarly, for 1-2 year, the rates have been revised to 10 per cent, against 9.5 per cent earlier. Also, 3-5 year and 5-10 year deposits, would now carry a rate of 9.75 per cent and 9.25 per cent respectively, against 9 per cent earlier, the bank said.

The bank has also hiked the deposit rates for senior citizens by 0.5-0.75 per cent. With this, deposits having 1-2 years, 3-5 years and 5-10 years will carry a rate of 10.5 per cent, 10.25 per cent and 9.75 per cent respectively, the bank said.

Another state-owned lender, Central Bank of India has also raised BPLR by 1 per cent to 14 per cent with immediate effect.

The hike would make the BPLR-related loans of the bank dearer to its customers. Vehicle loans having a three-year tenor would now carry an interest rate of 12 per cent as against 10.5 per cent earlier, the bank's website said.

Dabur Pharma gets proposal from Fresenius for jointly dev biz

Mumbai Aug 11: Cancer drug manufacturer Dabur Pharma Ltd on Monday said it has approved the letter of intent for an alliance with Fresenius Kabi AG for jointly developing business.

The Board acknowledged the receipt of proposal from Fresenius for jointly developing business, increasing operational efficiencies and providing access to markets for products manufactured by the Indian firm and its subsidiaries, Dabur Pharma said in a filling to Bombay Stock Exchange.

The Board in its meeting has approved the letter of intent to be executed by the company on the basis of which a definitive agreement would signed between both parties, it added.

The company said it has taken the decision to appoint Satish Kulkarni as CEO in recently concluded board of directors meeting and is subject to the approval of central government and shareholders of the company, it said.

The firm has also appointed Rakesh Bhargava, Satish Kulkarni, Gerrit Steen Michael Schoenhofen, John Ducker, DG Shah and Nitin Poddar as additional directors to its Board.

It has also appointed Rakesh Bhargava as the non-executive chairman of the Board and Anand C Burman as an additional director of the company.

According to the filing, Fresenius Kabi (Singapore) Pte Ltd (Fresenius) has acquired 90.89 percent stake in the firm.

Fresenius had acquired 73.27 percent in Dabur Pharma from its promoters and certain other shareholders in April. Further, Fresenius made an open offer for an additional 20 per cent stake in the firm.

"Consequent to the open offer and the acquisition, Fresenius has acquired 90.89 percent of the equity capital of Dabur Pharma," the filing said.

Dalal Street regains Rs 50-tn market-cap

Mumbai, Aug 11: The stock market on Monday regained its Rs 50,00,000 crore market capitalisation mark as investors' wealth appreciated by close to Rs 1 trillion on wide-based buying interest on the bourses.

The 30 blue-chip companies, which are part of Sensex, accounted for nearly half of the today's gain in the overall market capitalisation as the benchmark index settled with a gain of over 336 points.

The total investor wealth, as measured by the cumulative market cap of all the listed companies in the country, rose to about Rs 50.5 trillion, up from nearly Rs 49.5 trillion at the end of last week's trading.

However, the total market value of all listed companies is still about Rs 22 trillion away from its all-time high of about Rs 72 trillion scaled early this year.

The market had embarked upon a downward journey after the Sensex scaled its all-time high of 21,206.77 points on January 10. The index had fallen over 8,000 points from its peak to touch its 52-week low of 12,514.02 points on July 16.

The total market value had also plunged to nearly Rs 42 trillion on July 16 -- wiping off close to Rs 30 trillion from the record high level.

However, the relatively bullish trends seen in the recent past have helped the market recover more than one-fourth of the total loss in the recent bearish phase.

The total market value of the 30 Sensex companies today rose to Rs 22.46 trillion from about Rs 21.98 trillion as on Friday last week. The market value of Sensex companies had fallen to nearly Rs 18 trillion on July 16.

CLB to start hearing Zandu Pharma case next week

New Delhi, Aug 13: The Mumbai bench of the Company Law Board will start its hearing next week in the case filed by Zandu Pharmaceuticals opposing take over bid by rival Emami Ltd following the directions of the High Court.

According to the sources, the Company Law Board would hear the matter next week at its Western region Bench in Mumbai.

Earlier, on August 7, a single member bench of the Mumbai High Court of Justice S A Bobde had set aside the order of the CLB passed on July 28 and directed it to look into the matter again and pass an order within 15 days.

Justice Bobde had also directed to postpone the scheduled AGM of Zandu Pharmaceuticals to be held on August 9.

On July 28, after a brief hearing, the CLB had directed Zandu and Emami to approach Sebi as both were listed firms. It added the market regulator was the right authority to look into any acquisition disputes.

Later, Zandu had challenged this order before the High Court.

Zandu had filed an application before the CLB challenging acquisition of its shares by Emami on the grounds that it was in violation of the Sebi Act, 1992, Sebi Takeover Regulations, 1997, Sebi Insider Trading Regulations, 1992 and the Companies Act, 1956.

The company had requested CLB for rectification of register of members of Emami in relation to acquisition of shares and to suspend its acquired voting rights.

Emami acquired 27.5 percent stake in it held by the Vaidyas, who were partners with the Parikhs in the pharmaceutical firm.

The Parikhs had contended the stake sale claiming the first right of refusal.

As per law, Emami is required to make an open offer for a minimum of 20 per cent share in Zandu.

Jindal steel plant to be commissioned in 2010

Bhubaneswar, Aug 13: Jindal Steel and Power Ltd is optimistic about commissioning the first phase of the proposed six mtpa steel mill in Orissa's Angul district by October 2010.

JSPL executive vice-chairman and managing director Naveen Jindal, who met Chief Minister Naveen Patnaik here, told reporters that the work for the first phase of the project was progressing well.

The company had already spent Rs 4,000 crore so far for it and has placed an order for equipment for the purpose.

Of its total project cost of Rs 13,135 crore, JSPL had also spent a lot on land, construction, equipment and other activities, he said.

Jindal said JSPL has a small iron ore mine at Tensa in Keonjhar district and is hopeful of getting raw material linkage to its Angul project. "We have been allotted coal block for the requirement of our captive power plant and the steel plant," he added.

He said the company apprised the Chief Minister about the progress and made a presentation before him, while seeking the state government's help in availing new raw material linkage early.

The JSPL which signed an MoU with the state government for setting up a beneficiation plant at Deojhar in Keonjhar district and the Angul steel plant on November 11, 2005, had progressed well besides tackling local problems, he said.

The company had already set up an industrial training institute (ITI) at Angul to help the local youths, particularly of those families affected by the project. Denying any local opposition to his project, Jindal claimed that the company had been able to win the confidence of the people. ''The local people feel that the project will benefit them and therefore there is no opposition to our project.''

JSPL, he said, had taken care of the project affected people by takig up several activities like renovation of temples, mobile health centres, opening ITIs and other community development activities.

''The local people are with the company,'' he claimed adding that while JSPL had spent Rs 2 crore last year towards CSR, the amount was raised to Rs 5 crore in 2008-09.

The company, he said, were recently identified as the best company for successfully implementing its CSR activities.

To a question on whether JSPL would also spend 5 percent of its profit for local area development as done by the state owned public sectors, Jindal expressed ignorance about the scheme.

TCS, Infy, Wipro next IT service megavendors?

New Delhi, Aug 13, 2008: Tata Consultancy Services (TCS), Infosys Technologies and Wipro Technologies, collectively referred as ‘India-3’, will emerge as the next generation of IT service megavendors, according to Gartner Inc.

These vendors are increasingly being considered for strategic service deals, and will augment or, in some cases, replace today’s acknowledged megavendors by revenue - IBM Global Services, Accenture and EDS - in this space by 2011.

These emerging megavendors are much smaller than the current megavendors but will increasingly compete for the same mega deals that had been the exclusive domain of the incumbent megavendors.

The ‘India-3’ have leveraged their strong success with meeting client needs to achieve record growth levels during a long period of time (30 quarters continuously) and have outperformed the incumbent megavendors by almost a 3:1 margin in growth rates.

A comparison of the key data and statistics between the ‘India-3’ vs the current megavendors shows the differences in growth rates between these companies and reveals the rise in the market capitalisation of the emerging megavendors. The market capitalisation of the Indian providers is significantly higher than that of EDS, and almost on par with Accenture, which are much larger companies in terms of revenue are.

“The emerging megavendors have made dramatic progress in the past few years and more than doubled their revenue in a four-year period, with the 2007 revenue being 2.6 times the 2004 revenue,” said Partha Iyengar, vice president, distinguished analyst and regional research director, Gartner.

“This level of growth differential has continued even as these vendors have become multibillion dollar enterprises. To put this in context, there are just 100 service enterprises globally with more than USD 1 billion in revenue.”

The emerging megavendors have leveraged four critical competencies to achieve their status as emerging megavendors. The competencies are: Process excellence; world-class HR practices; providing high quality services at a low cost; the achievement of significant and disproportionate ‘mind share’ compared to their actual size.

To achieve process excellence, the ‘India-3’ providers have invested heavily to frameworks and have aggressively marketed these capabilities as evidence of being able to deliver in a consistent, predictable manner.

Supporting the levels of growth witnessed by the ‘India-3’ has required a high level of HR excellence and capabilities. This has helped them to create a world-class human resource management (HRM) infrastructure.

For the past few years, these companies have been adding more than 30,000 people to their workforce every year. The recruitment, training, induction and overall onboarding challenges of this kind of scale could only be supported by the creation of a world-class HRM infrastructure, which has been a significant competitive differentiator for Indian companies.

By combining process excellence to deliver higher quality with the less expensive (and larger) workforce available in India, the India-3 providers were able to create the combination of low-cost, high-quality services, which has proved to be the most alluring factor for clients. These qualities have resulted in a higher level of mindshare among clients and prospects globally that is significantly disproportionate to their revenue and overall size, as compared with the incumbent megavendors.

However, the challenges remain for the emerging megavendors to truly achieve this status. There exists a clear divide when it comes to the "revenue per employee" data, as there is a clear a divide between today's megavendors and the aspiring Indian megavendors. For example it was USD 51,320 for TCS in 2007 while for the same year Accenture’s revenue per employee was USD 130,200.

The Indian providers will have to address the issue of moving away from resource intensive revenue growth to a model that provides higher leverage and increases revenue without a linear relationship to head count, which is the situation that exists today. They will have to achieve similar (to the current megavendors) levels of revenue per employee benchmarks to truly achieve megavendor status. Furthermore, they will increasingly have to deal with the business constituency that is often deeply involved in these higher-end projects and develop strong relationships with the business stakeholders.

“There are strong indicators that ‘India-3’ (TCS, Infosys and Wipro) will be the next megavendors in IT services. However, to achieve this, the current standing of the India-3 will need to expand quickly to keep pace with the changing client environment for IT delivery in the future,” said Mr Iyengar. “Revamping and continually reinventing their delivery capabilities, even as they address the challenges of managing their growth opportunities, will determine how and when these emerging megavendors will actually achieve megavendor status.”

‘India-3’ is an acronym devised by Gartner for Tata Consultancy Services, Infosys Technologies and Wipro for the purpose of this research.

Google phone coming in October

San Francisco, Aug 16: T-Mobile is to launch the first phone based on Google's Android design Sep 17, in hopes that the new device will compete with Apple's iPhone, Wired magazine reported.

The smartphone will be manufactured by Taiwan-based High Tech Computer, and will have a large touch screen that slides out to reveal a five-row QWERTY keyboard. The device, which will be called the G1, will sell for USD 150 to T-Mobile customers in the first week of launch before it is offered to other customers at a higher price.

Google developed the Android design to help it expand its successful advertising business into the increasingly lucrative mobile market. It released the parameters to an alliance of mobile phone carriers, developers and manufacturers earlier in the year.

Deutsche Telecom's T-Mobile announced in February that it would introduce Android-based phones in the fourth quarter of 2008.

Gold may slip below Rs 10,500/10 grams by September-end

Mumbai, Aug 17: In line with the steep fall in its price in global markets, gold price in India is expected to fall below the Rs 11,000 mark per 10 grams by September, a top industry official said.

"Gold prices have witnessed a steep fall in line with the global markets and are likely to drop further and may touch the Rs 10,400 to Rs 10,600 per 10 grams-mark by September-end," Bombay Bullion Association (BBA) President, Suresh Hundia told here today.

Domestic gold prices in July saw an inverted U shaped trend, rising in the beginning of the month trading initially at Rs 12,900 per 10 grams and then rallying up to a peak of Rs 13,567 per 10 grams by mid month. Gold then began its downward journey and at the end of the month finished at Rs 12,557 per 10 grams, much below the level it had initially begun.

The gold price dropped from Rs 12,705 on July 26 to the present Rs 11,300 per 10 grams in the local bullion market.

In the international market, the yellow metal dipped below USD 800 an ounce for the first time since December 2007.

As US economists see improved prospects for its economy, the dollar becomes more attractive as an investment. And as the dollar becomes more attractive, particularly in times of crisis, gold has lost its lustre, as have other precious metals.

In the domestic market, gold demand has already started picking up and people have advanced their purchases before the Diwali and wedding season, following a sharp decline in prices, bullion traders said.

Market participants expect the metal to test further lows in line with the steep fall in its prices.

"The metal is losing its social value and more dependent on the foreign exchange," All India Sarafa Bazar President, Sheel Chand Jain, said, adding, every rise in dollar would reduce the appeal of the metal.

He said that easing crude oil prices have also eroded the demand for gold as a hedge against inflation.

Gold in overseas markets hit an intra-day low of USD 773.90 an ounce, its weakest since November 20 last year, down from USD 811.25 late in New York on Thursday as the dollar firmed up to a six-month high against the Euro. Crude oil prices fell to USD 111.34 a barrel on demand fears.

Bullion traders said prices would see more lows in the next few days following a fall in demand among stockists and jewellery fabricators.

Overall, there has been a shortfall in demand for physical gold in India, which usually demands about 800 MT of the yellow metal annually.

According to the BBA, India’s gold imports have fallen by almost 50 percent in the first quarter. BBA statistics say that gold imports in the first quarter of this year is 101 MT as against 193 MT during the same period last year.

Oil falls under $112 on bearish global demand

London, Aug 16: Oil dropped below USD 112 a barrel on Friday, down more than USD 2.50, to its lowest level since early May, pressured by faltering global demand, rising supply and a stronger dollar.

Crude has fallen sharply since reaching an all-time high of USD 147.27 a barrel on July 11 partly on concern about weakening demand. It fell as low as USD 111.85, the lowest since May 2, on Friday.

US crude for September delivery was last trading down USD 2.77 at USD 112.24 a barrel by 1420 GMT. The contract will expire on Aug 20. London Brent's new nearby contract, October, lost USD 2.52 to USD 111.16 a barrel.

"It looks like we might be trying to find a short term price floor. We've tested USD 114 and USD 113, we might well hover here for a little while before we make another move," Simon Wardell, oil analyst at Global Insight said.

"We might get to USD 110, how quickly we get there would depend on the demand outlook ... if next week's U.S. inventory data shows an increase in stocks, we could go lower," he added.

Supply has been rising as demand ebbs. Output from the Organization of the Petroleum Exporting Countries rose 145,000 barrels per day in July to 32.8 million bpd, the International Energy Agency said this week.

Oil also fell as the dollar strengthened following further proof that the US economic slowdown is spreading. The economy of 15-nation euro zone contracted 0.2 percent in the second quarter, data showed on Thursday.

The euro hit a six-month low against the dollar on Friday. Weakness in the US currency earlier this year had boosted the appeal of oil and commodities to investors as a hedge against inflation.

Fighting between Russia and Georgia, a key supply route from the Caspian to Europe, has lent support to oil. But analysts said diplomatic efforts to secure a peace accord reduced the risk of supply disruption.

US President George W Bush accused Russia on Friday of "bullying" Georgia and key European ally Germany criticised Moscow for going too far with its invasion of its small Caucasus neighbour.

Indian stocks only positive performer among BRIC in Aug`

New Delhi, Aug 17: With crude oil prices softening, global investors are again gradually turning their attention towards emerging economies, including India, the only market among the three other BRIC nations, to give positive returns so far this month.

According to an analysis of MSCI Barra indices, a measure of returns from various stock markets across the world for foreign investors, Indian stocks are the only ones to give positive returns among the four BRIC countries till August 15.

Indian stocks have provided a positive return of nearly two percent so far in August, while Chinese, Russian and Brazilian markets have given losses of 10.67 percent, 7.32 percent and 13.74 percent, respectively, according to an analysis of performances of MSCI Indices for various nations.

Besides, MSCI Barra's emerging market index, which includes all the developing world markets, has also given negative returns to foreign investors to the tune of 6.72 percent so far this month.

Interestingly, investors across the world have put in funds into Asia, ex-Japan Equity Funds, which reflected investor's preference for targeted exposure. New money was absorbed by India, China and Korea-dedicated equity funds in the second week of August, as per to data complied by international fund tracking firm EPFR Global.

India equity funds have now posted inflows in three of the past four weeks, which follows their seven week and one billion dollar outflows in June and July, the report revealed.

"With some commodity prices hitting six-month lows and the price of oil dropping briefly below 113 dollar a barrel, investors pulled more money out of EPFR Global tracked Latin America and Europe, Middle East and Africa (EMEA) equity funds and extended Asia ex-Japan Equity Funds' winning streak to four straight weeks," the EPFR report stated.

However, lack of optimism about the global economy saw the diversified Global Emerging Markets (GEM) Equity Funds post outflows for the ninth time in 10 weeks.

In the past three months as well, Indian stocks have provided the lowest negative returns to investors as compared to its peers in the BRIC nations. Indian stocks have provided negative returns to the tune of 12. 86 percent in the three-months period.

While, Chinese, Russian and Brazilian stocks have given negative returns as high as 20.15 percent, 27.97 percent and 28.94 percent, respectively, in the three months period, as per MSCI data.