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Happy New Year 2009

Satyam Computer's two more independent directors resign

Satyam Computer Services pared gains and was now up 9.96% at Rs 149 at 15:21 IST,on 29th Dec'08, after the company said two more independent directors have resigned.
A sharp slide in the stock was witnessed after the announcement which hit the market in mid-afternoon trade. Just before the announcement, the stock had jumped 17.78% to Rs 159.60 on hopes of a better corporate governance after the Indian outsourcer said it would consider more options to improve shareholder value and business practices, including strengthening corporate governance.
The stock had hit a 52-week high of Rs 544 on 30 May 2008 and a 52-week low of Rs 114.65 on 24 December 2008.
India's fourth largest software exporter by sales has an equity capital of Rs 134.77 crore. Face value per share is Rs 2.
The current price of Rs 149 discounts its Q2 September 2008 annualised EPS of Rs 35.48, by a PE multiple of 4.19.
Satyam said in a statement to the exchanges Krishna Palepu and Vinod Dham had resigned from the company's board effective Sunday, (28 December 2008). The outsourcer did not give any reason for the resignations. On Friday, 26 December 2008, Satyam had announced the resignation of independent director Mangalam Srinivasan.
Meanwhile, Satyam said before trading hours today, 29 December 2008, it has postponed a board meeting set for Monday, 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The board had been expected to consider a share buyback, after news last week that the outsourcer had been barred from doing business with the World Bank added to its woes.
Earlier in the day, a newspaper report quoted Dham as saying the 10 January 2009 board meeting would discuss a change in management, including a possible exit of Satyam's chairman and founder B Ramalinga Raju. It would also discuss appointing a chief executive or even a sale to another entity, the report said.
The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details.
The meeting would also address issues arising from a possible dilution of the founder's stake in the company. The company said it has received a communication from the promoters that all their shares in the company held by SRSR Holdings were pledged with institutional lenders since September 2006 and is is possible that some of the lenders may exercise or may have already exercised their option to liquidate such quantum of shares at their discretion to cover the margin shortfall. This would consequently dilute the promoters' holding in the company.
Raju and his family hold 8.61% stake in Satyam mainly through SRSR Holdings, a family owned investment company. SRSR has 8.27% stake in Satyam (as on 30 September 2008)
Satyam Computers during trading hours on 18 December 2008 had said its board will meet on 29 December 2008 to consider buyback of shares. The announcement was aimed at soothing investor nerves after the Satyam stock slumped 30.22% on 17 December 2008. Investors had chucked the stock following the company's announcement after market hours on 16 December 2008 of a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju.
Satyam scrapped a $1.6 billion acquisition of companies connected to its chairman after the plan angered investors. The company's total disregard for corporate governance and shareholders was shocking - Satyam had no plan to take the proposal to minority shareholders.
The World Bank said last week Satyam had been declared ineligible for direct contracts with it for eight years "for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors". Satyam has asked the authority to withdraw what it called "inappropriate" statements and to issue an apology, but the World Bank in Washington has said it stood by its statement. Media reports had earlier said that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it for eight years.
The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices.
Satyam Computer Services' net profit rose 3.70% to Rs 597.43 crore on 6.87% increase in net sales to Rs 2700.52 crore in Q2 September 2008 over Q1 June 2008.
Satyam Computer Services is a global business and information technology services company. It delivers consulting, systems integration and outsourcing solutions to clients.

Cholamandalam DBS Finance issuing preference shares to promoters.

Cholamandalam DBS Finance rose 1.83% to Rs 41.70 on 29th Dec'08, extending gains for the second trading session in a row on its plan to raise Rs 300 crore by issuing preference shares to promoters.
The stock had jumped 9.93% to Rs 40.95 on Friday, 26 December 2008, when the company made the announcement during market hours
The stock hit a high of Rs 42.80 and a low of Rs 41 so far during the day. The stock had touched a 52-week high of Rs 389.50 on 2 January 2008 and a 52-week low of Rs 27 on 25 November 2008.
The stock is up 11.94% from a recent low of Rs 37.25 on 24 December 2008.
The small-cap financial services provider has an equity capital of Rs 37.95 crore. Face value per share is Rs 10.
The company will issue one crore fully convertible preference shares at Rs 100 each at a premium of Rs 200 to promoters. The shares will be convertible into equity within 18 months. However, the conversion ratio was not disclosed.
Promoters held 74.96% stake in the company as at end September 2008
The company posted net loss of Rs 10.50 crore in Q2 September 2008 as compared to net loss of Rs 18.02 crore in Q2 September 2007. Operating income rose 31% rise to Rs 280.48 crore in Q2 September 2008 over Q2 September 2007.
Cholamandalam DBS Finance, a non-banking financial company, is a joint venture between Murugappa Group and DBS Bank of Singapore. It offers personal loans, vehicle finance, corporate finance, capital market finance and home equity loans.

Hindustan Zinc hardens on raising zinc prices

Hindustan Zinc jumped 4.22% to Rs 341.50 on 29th Dec'08, after the company hiked zinc prices by nearly 3%.
The price revision is effective from Thursday, 25 December 2008, a company circular said.
The stock hit a high of Rs 344.40 and a low of Rs 334.50 so far during the day. The stock had a 52-week high of Rs 842.95 on 2 January 2008 and a 52-week low of Rs 215 on 27 October 2008.
India's largest zinc producer by volumes has an equity capital of Rs 422.53 crore. Face value per share is Rs 10.
The current price of Rs 341.50 discounts its Q2 September 2008 annualised EPS of Rs 90.83, by a PE multiple of 3.75.
Hindustan Zinc on Friday, 26 December 2008, said it has hiked the prices of zinc, used in producing galvanised steel, by Rs 1,800 or 2.9% to Rs 63,400 a tonne. The company, however, kept the lead rates, used in batteries, rubber and paint industries, at previous week's level of Rs 70,500 per tonne.
Hindustan Zinc revises rates of its products mostly twice a weak following the price movement at the London Metal Exchange.
Hindustan Zinc's net profit declined 17.9% to Rs 959.51 crore on a 12.1% fall in sales to Rs 1743.84 crore in Q2 September 2008 over Q2 September 2007.
Hindustan Zinc specializes in the exploration, mining and smelting of zinc, lead and other non-ferrous metals. The company's products include zinc ore, lead zinc concentrate, zinc metal, lead metal, cadmium metal, silver metal and sulfuric acid.

Core Projects & Technologies jumps on US buy

Core Projects & Technologies rose 3.25% to Rs 46.10 on 29th Dec'08, after the company acquired a US-based company for $20 million.
The stock hit a high of Rs 47 and a low of Rs 45 so far during the day. The stock had a 52-week high of Rs 464.40 on 28 December 2007 and a 52-week low of Rs 34.10 on 27 October 2008.
The small-cap software-solutions provider has an equity capital of Rs 17.25 crore. Face value per share is Rs 2.
The current price of Rs 46.10 discounts its Q2 September 2008 annualised EPS of Rs 7.77, by a PE multiple of 5.93.
Core Projects & Technologies has acquired a unit of US-based education company, The Princeton Review. The acquired unit provides integrated education solutions.
The acquisition will add approximately $24 million to Core Projects' global revenues and is expected to yield an Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) of 24% in the full year of operations, Core Projects said in a statement to the stock exchanges. The acquisition will be funded through debt, the statement added.
Core Projects & Technologies' net profit rose 25.75% to Rs 16.75 crore on a 36.99% rise in sales to Rs 88.91 crore in Q2 September 2008 over Q1 June 2008.
Core Projects & Technologies provides information technology products and services. The company provides services including onsite and offsite consulting and knowledge management services, systems integration, global postioning system based vehicle tracking and detection systems, application support for their products, and offshore outsourcing.

Hindalco shines on expansion buzz

Hindalco Industries rose 0.93% to Rs 49 on 29th Dec'08, on BSE, on reports it would spend about Rs 25000 crore in next five years for expansion purpose.
The stock hit a high of Rs 49 and a low of Rs 48.55 so far during the day. The stock hit a 52-week high of Rs 200.65 on 7 January 2008 and a 52-week low of Rs 38.05 on 27 October 2008.
The company's current equity is Rs 175.32 crore. Face value per share is Rs 1.
The current price of Rs 49 discounts the company's Q2 September 2008 annualized EPS of Rs 23.47, by a PE multiple of 2.09.
As per reports, Hindalco may spend about Rs 25,000 crore over the next five years for expanding capacity by as much as three times in aluminium and copper.
Recently, Hindalco repaid the bridge loan taken to acquire Novelis. Hindalco raised $982 million in a five-year foreign currency loan at 315 basis points above the London interbank offered rate (Libor) and used it to clear the $3.03 billion bridge loan taken at 80 basis points over Libor for acquiring Canada's Novelis in 2007.
Hindalco Industries' net profit rose 12% to Rs 719.95 crore on 14.4% increase in net sales to Rs 5683.18 crore in Q2 September 2008 over Q2 September 2007.
Hindalco Industries is India's largest aluminium producer and is engaged in producing aluminium and semi- fabricated products.

India may see deflation in next financial year: Bankers

28 Dec 2008, 1527 hrs IST, PTI

MUMBAI: Indian economy may go into deflation by the second quarter of financial year 2009-10 as there are fears of inflation going below zero percent in the face of unprecedented fall in crude and commodity prices.

"If the current pace in inflation-decline continues, the figure (in WPI-based inflation) may slide below two per cent by end-fiscal," HDFC Bank's Deputy Head of Treasury, Ashish Parthasarathy, said, adding "it may fall further to below zero per cent by Q2 FY10."

Inflation almost halved to a nine-month low of 6.61 per cent from this year's peak of 12.91 per cent, giving more space to the RBI to signal further cuts in interest rates.

Deflation occurs in an economy when the negative inflation prevails for a long period. In the event of deflation, the Reserve Bank will have to enhance money supply and lower rates further "to support inflation", IDBI Gilts' Economist, Amol Agarwal said.

Citibank India's Chief Financial Officer, Abhijit Sen, echoed this view saying that the rapid decline in the headline inflation is likely to continue in the coming months.

"In my view, deflation is a remote possibility in this economy. However, if the inflation continue to fall to much lower levels, this would have an impact on the profitability of banks, as it would affect the credit demand," Sen said.
The sharp decline in inflation has given a headroom for the Reserve Bank to slash its reverse repo rate by 0.5-1 per cent, he said.
A lower inflation rate has offered the opportunity to the Reserve Bank to explore further monetary policy options including a cut in the short term reverse repo rate," Sen said.

Wholesale prices-based inflation declined by 0.23 percentage points for the seventh consecutive time during the week-ended December 13 as manufactured goods and food items became cheaper due to the cascading effect of fuel price cuts amongst other factors.

"(The) declining inflation rate provides more leeway to the RBI to further slash interest rates . I expect a 100 basis points cut in both the repo (short-term lending rate) and reverse repo (short-term borrowing) rates," said Crisil's Principal Economist D K Joshi.

India's Reserve Bank had hiked its key policy rates several times till October to hold-off skyrocketting inflation rate that rose to a multi-year high of around 13 per cent early this year.
However, with inflation now on the decline, the Central Bank has shifted its focus from fighting inflation to supporting economic growth with a series of rate cuts.

It cut the Cash Reserve Ratio (CRR), the percentage of cash banks are required to park with the apex bank to 5.5 per cent from nine per cent and the repo and reverse repo rates to 6.5 per cent and five per cent respectively.

via:E.T

Global economy likely to be weakest in 2009

28 Dec 2008, 2103 hrs IST, PTI

LONDON: The year 2009 is likely to be the weakest year for the global economy
since the second world war, largely because of the recessionary trend in advanced economies, media reports says.

"Forecasters say 2009 is shaping up to be the weakest year for the global economy for decades, and possibly since the second world war," the Sunday Times said.

The International Monetary Fund (IMF), which has revised down its world forecasts twice since the summer, will shortly unveil new predictions that will show the global economy formally in recession, the report added.

According to Consensus Economics, on the basis of assessing economic growth using market exchange rates, global growth next year would be only 0.4 per cent, the weakest since 1945, dominated by the synchronised downturn in advanced economies.

The IMF has already said that 2009 would be the first year since the second world war when advanced countries would experience simultaneous recession, and emerging economies would contribute to the global economic growth.

Meanwhile, another British daily the Telegraph said, "HSBC has warned that global gross domestic product would contract in 2009, describing this as 'an extraordinary development in the modern era'. It predicts that next year will be the worst in peacetime both for rich countries and the wider global economy since the Great Depression."

HSBC is gloomy about Britain, and is predicting a 2.5 per cent drop in GDP in 2009, compared to 0.9 per cent in the US and 1.4 per cent in the Eurozone. The bank also predicts a rebound in world economic activity in 2010, led among advanced economies by America, the Sunday Times said.

However, HSBC predicts that "Britain will have a very subdued recovery."

In a separate report, the Sunday Times said that "this week the Oxford Economics consultancy is likely to disclose that the country (Britain) has suffered a sudden and savage slide down the global rankings".

According to Oxford Economics Managing Director Adrian Cooper, "The UK GDP per capita in 2009 will be 24 per cent lower than in America and will be over 15 per cent lower than in Japan, Germany and France."

As per Oxford Economics projections, worse is yet to come, because of the recession and the sliding pound". Cooper added, "Britons will no longer be among the richest people on the beach."

IPI (Iran-Pak-Ind) gas pipeline fraught with dangers for India

28 Dec 2008, 1903 hrs IST, Swaminathan S Anklesaria Aiyar , TNN

The Iran -Pakistan-India (IPI) gas pipeline has been discussed for almost a decade, with its
proponents arguing that it will promote our energy security.

After 26/11, the project is dead. No Indian government can proceed with a deal that will give Pakistan a knife at India’s energy throat. Far from promoting our energy security, it would be a source of immense national insecurity.

Just suppose the pipeline was complete and functioning today. The pipeline contract would have required Pakistan to ensure the safety of supplies. But Baluch insurgents have been bowing up gas pipelines in Pakistan for ages, so Islamabad could easily connive in the blowing up of the India section of the pipeline, claiming it did not control non-state actors, and indeed is opposed to them.

Just as it did after 26/11, Pakistan could claim that it was itself a victim of sabotage, that India must not indulge in finger pointing, and that Islamabad would investigate the incident provided India provided enough evidence!

Wouldn’t a pipeline deal include insurance against disruption of gas supplies? Well, may be some brave global insurance company would come forward initially, but it would surely have charged premiums so hefty as to undercut the entire economic rationale of the pipeline, which was supposed to be cheaper than the alternative, which is supply through tankers carrying liqueified natural gas from Iran.

Besides, insurance contracts have “force majeure” clauses protecting the insurance company from liability in the event of war or civil conflict. So, the IPI pipeline would be an insecure project.

Why then have so many politicians and ideologues been canvassing the IPI pipeline with such vigour and passion? For two reasons. One, some naïve, optimistic politicians view India and Pakistan as natural partners separated by unwarranted mistrust, and they saw the pipeline as a way of building economic linkages, trust and friendship.

Second, the entire left saw the pipeline as a way of spitting in the face of the US, and asserting India’s independence in foreign policy.

The US opposed the pipeline on the ground that it would strengthen Iran’s economy and enable that country to escape some of the economic sanctions penalties that the US has sought to impose on it. When India went slow on the IPI pipeline after the Bush-Manmohan Singh agreement of 2005, the left was livid at what it saw it as a foreign policy surrender of a junior partner in an unequal relationship. So obsessed was the Left with the need to combat US imperialism that it failed to see the threat that the pipeline would strengthen Pakistan.

At the time, most analysts agreed that the risk of an Indo-Pak war was remote. In the absence of war, many analysts felt that Pakistan was unlikely to cut the pipeline, for commercial and foreign policy reasons.

This analysis ignored risks involved in conflict at levels lower. Both countries have become nuclear powers, so open warfare is virtually impossible. For that very reason, each country needs to focus on strategies and pressure points other than war, which can be used as bargaining counters or for covert retaliation.


So, the pipeline in its current form must be viewed as dead. Yet the fact remains that India will need massive gas imports in the future. Iran is not a reliable supplier—it reneged on an earlier low-cost LNG deal with India, so we must find alternative suppliers. Yet Iran is too big to be totally ignored.

So let’s consider a different sort of pipeline. This will be a shallow offshore pipeline taking gas from Iran to the maritime boundary between India and Pakistan off Kutch. At this point, the pipeline can divide into two, with one section going north to Pakistan and the other going west to Kutch.

Any sabotage of the main pipeline will hit Pakistan as badly as India, it will mean mutually assured destruction (MAD) of gas supply. The section going to each country from the maritime boundary will be in the territory of that country, under its own control.

In the Cold War, MAD was the basis of global security. By analogy, India and Pakistan need a MAD pipeline for security. Neither side will be able to hurt the other without hurting itself.

Economictimes Report

SBI website falls victim to hackers

28 Dec 2008, 0625 hrs IST, ET Bureau

MUMBAI: An attempted attack caused a shutdown of State Bank of India’s (SBI) website on Saturday. “There has been an attempt to disrupt the system,” a senior official confirmed. But he refused to divulge any further details. While the bank’s internet banking
site www.onlinesbi.com was operational, its sites www.statebankofindia.com and www.sbi.co.in were down on Saturday.
Late evening, officials said that the bank was targeting to get its website operational by 9.00pm. Later the bank put up a message stating that site was under maintenance and directed online applicants to clerical positions to the Institute of Banking Personnel Selection site.
SBI is the country’s largest bank with over three million online customers. The number of people with access to internet banking has increased dramatically after SBI installed its core banking solutions in over 11,100 branches across the country. In the past too, government website have been attacked by hackers who left behind anti-India slogans.
Last year Bank of India’s website had fallen victim to hackers who planted malaware on the site that installs itself on the users computer and transmits sensitive information to the hacker. Besides this there have been phishing attempts on customers of various banks where the hacker puts up a website identical to that of a bank to steal passwords.

On Saturday, the bank launched a railway ticket booking facility at internet kiosks at ATM centres located in railway stations. All online banking customers can get printed electronic reservation slips instantly through the kiosks. The kiosk can be used for other internet banking transactions as well.

via:E.T

Satyam defers Dec 29 Board meeting

K. V. Kurmanath, Business line

Hyderabad, Dec. 27 Satyam Computer Services has decided to postpone the crucial December 29 board meeting, even as the investor community is anxious about the developments.
“The meeting has been postponed to ensure physical participation by all members on the board. The idea is to have an extensive discussions on all the issues, including buyback,” a Satyam spokesperson said.
At least two board members, Mr Vinod K. Dham and Dr Krishna Palepu, live abroad. The decision to hold the December 29 meeting was taken a few days after the company withdrew the proposal to acquire the two Maytas companies. The agenda was to discuss the buyback of shares as part of the plan to win back investor confidence.
Though a fresh date for the meeting has not been indicated, it is learnt that it would be held well ahead of the board meeting in the third week of January scheduled to consider the third quarter results.
Earlier, Mr Vinod Dham had asked the company management to convene a special board meeting to address the developments of the last 10 days. “As an independent board member, I am working with the Satyam management and other board members to come up with steps that will maximise shareholders interest,” Mr Vinod Dham, Father of the Pentium and founder-Executive Managing Partner of NEA-Indo US Ventures, told Business Line.
The Satyam board okayed a proposal on December 16 to acquire Maytas Properties and Maytas Infra - the two companies controlled by Mr B. Ramalinga Raju, Chairman of Satyam, and his sons - for a consideration of $1.6 billion. Though it withdrew the decision in a few hours following protests by the investor community, the scrip lost over 40 per cent in the last 10 days.
“I have suggested that a special board meeting consider various options and address the concerns that have been brought up,” he said.
Mr Vinod Dham, who worked as Vice-President of Intel’s Microprocessor Products group, has been on Satyam’s board from January 2003.
Meanwhile, Fidelity Investment Trust, which holds 4.63 per cent through Fidelity Management and Research Company, declined to comment on reports that foreign institutional investors are trying to effect a change in the management. “We don’t comment on individual cases,” a Fidelity spokesperson told Business Line.
Ms Judi Frost Mackey, a spokesperson of Lazard (which holds 1.83 per cent through Lazard Asset Management), too declined comments on whether the Satyam Board’s decision to acquire the Maytas firms went well with Lazard and whether it had written to Satyam on the proposed deal. “We never comment on Lazard Asset Management’s holdings,” the spokesperson said.

Business Line report

Satyam board to meet on January 10

28 Dec 2008, 0030 hrs IST, ET Bureau

HYDERABAD: Satyam Computer Services is up for grabs. Founder and Chairman B Ramalinga Raju is set to exit a company that he has built over 21 years after his failure to repair its tarnished image.

The Satyam board will now meet on January 10 to discuss a possible dilution of the promoters stake. The promoter and his family hold an 8.5% stake in the company.

The board, which has come under pressure poor corporate governance, will also be recast and expanded.

The company has appointed DSP Merill Lynch to "conduct a review of the strategic options to enhance shareholder value", according to a statement issued here today.

"Satyam's Board of Directors recognizes the serious nature of certain questions raised by the events of the last two weeks," said B Ramalinga Raju, Chairman and Founder of Satyam.

"In order to ensure that these questions are properly addressed, and that the interests of stakeholders are fully and carefully considered, Satyam has decided to broaden the scope of its deliberations beyond a possible buy-back of its stock."

The board was earlier scheduled to meet on Monday.

But academician Mangalam Srinivasan resigned as an independent board member on December 25 as furious investors questioned the propriety of using the software company's cash reserves to buy real estate and infrastructure companies linked to Mr Raju. This has put pressure on other members to follow her example.

An independent board member T R Prasad had earlier said the board had only given an in principle nod to the buy-back of shares.

E.T. Report

Satyam puts off board meeting to January 10

BS Reporter / Mumbai/hyderabad December 28, 2008, 0:33 IST

Meeting agenda to go beyond buyback.

Satyam Computer Services today sprung another surprise by postponing its crucial board meeting which was scheduled to be held on Monday. The meeting will now be held on January 10.

In a late night statement, Satyam said the scope of the board deliberations will be broadened beyond just a possible share buyback. The additional possible actions include measures to strengthen the governance structure, including increasing the size and altering the composition of the board. The meeting will also conduct a review of the company’s strategic options to enhance shareholder value and address issues arising from a possible dilution of the promoter’s stake in the company.
The company has engaged DSP Merrill Lynch to assist in this review.
Satyam Founder and Chairman Ramalinga Raju said the board recognises the serious nature of certain questions raised by the events of the last two weeks. In order to ensure that these questions are properly addressed, and that the interests of stakeholders are carefully considered, Satyam has decided to broaden the scope of its deliberations beyond a possible buy-back of its stock, Raju said.
Satyam’s independent director V S Raju said the company is trying to get all board members together in one location and coordinating that needed a new date.
V S Raju said the new date will ensure the presence of two independent directors, Krishna G Palepu and Vinod K Dham, both of whom are currently in the US.
Palepu and Dham participated in the last board meeting that approved the acquisition of two promoter-related firms through video conference.
Speculation had been rife on the eve of the company’s now-postponed board meeting that there will be a major change in the management of India’s fourth largest Indian IT services provider.
Monday’s board meeting to consider a share buyback was announced on December 18 and analysts wondered why Dham and Palepu did not organise their travel plans earlier despite getting sufficient notice.

Academician Mangalam Srinivasan had resigned as an independent board member on Thursday as furious investors questioned the propriety of using the software company’s cash reserves to buy real estate and infrastructure companies linked to Raju.
It is also being felt that Satyam’s Founder and Chairman B Ramalinga Raju has to do a lot of explanation at the next meeting.
An indication to this effect was given by M Rammohan Rao, dean of Indian School of Business and an independent director of Satyam, who chaired the board meeting when it decided to acquire Maytas Infra and Maytas Properties, the two companies controlled by the family of Ramalinga Raju.
“I am not taking any actions at the moment. At the next board meeting, there will be discussions, clarifications will be sought, and then I will take it forward,” he said.

"Business Standard" Report

Satyam board seen headed for major overhaul

27 Dec 2008, 0023 hrs IST, ET Bureau

HYDERABAD: A shakeout looms in the top echelons of Satyam Computer Services
, as the board prepares for a meeting on Monday to consider a share buy back, amid growing calls for drastic measures to repair its damaged image.

One independent director, academician Mangalam Srinivasan, stepped down on Christmas day citing moral responsibility for allowing a controversial takeover bid of two firms run by Satyam’s founder B Ramalinga Raju. However, the plan was aborted within hours after a shareholder rebellion.

Speculation is rife that more heads could roll. A change in management
or a complete overhaul of the board may happen on Monday. But a Satyam spokeswoman declined to say if anything other than a share buyback is on the agenda. Ramalinaga Raju is the executive chairman and his brother Rama Raju is the managing director on the Satyam board.

According to a corporate lawyer, if Raju resigns, one of the options before the board could be to appoint one of the independent directors as a chairman or managing director. The other option could be to appoint other investor nominees as chairman or managing director. “But this possibility appears remote as financial investors may not be willing to take the onus of running the company,” said a corporate lawyer, who wished not to be identified.

Institutional investors led by Aberdeen Asset Management, Fidelity and ICICI Prudential hold a 61% stake in Satyam, several times the 8.5% stake held by the family of the company’s founder and chairman Ramalinga Raju. The resignation of Ms Srinivasan, who was on the Satyam board for over 17 years, has also added pressure on other directors to follow her example.

But VS Raju, former dean of IIT Madras and an independent board member ruled out resignation. “I am clear that I did not do anything wrong. We approved the acquisition of Maytas Infrastructure
and Maytas Properties after examining the full information available to us. The resolution to allow Satyam to acquire the two firms was not put to vote and was adopted unanimously by the board,” he said. Other independent members including M Ram Mohan, the dean of the Indian school of Business and T R Prasad, former Cabinet secretary were unavailable for comment.

The other directors on Satyam are Ram Mynampati, president and whole time director, Krishna G Palepu, a professor at the Harvard Business School, and Vinod Dham, described as the father of the Pentium chip.

Via:E.T

Ramalinga Raju may not chair Satyam board meet

27 Dec 2008, 0110 hrs IST, Kingshuk Nag, TNN

HYDERABAD: Stunned by the attacks from all sides, Satyam chief Ramalinga Raju may offer not to chair the company's crucial board meeting on December 29th and even step down from the chairmanship of the company temporarily, sources told TOI.

This development
comes with pressure mounting on the independent directors to take moral responsibility for the aborted Satyam-Maytas deal that has sent the company on a downward spiral. Dean of Indian School of Business (ISB), M Rammohan Rao, who chaired the crucial board meeting which approved the ill-fated deal to buy the two Maytas companies, is also believed to have been ‘‘informally advised'' by Andhra Pradesh government representatives to quit the Satyam board.

Meanwhile, Left MP Abani Roy has demanded Satyam Computer Services
board member (independent) Rammohan Rao resign from his positions in various government and regulatory committees. Citing media reports, Roy, a Rajya Sabha MP, has written a letter to Prime Minister Manmohan Singh saying: “His actions in the boardroom of Satyam further accentuated by his stoic silence on various issues reflect an irresponsible role of conduct on his behalf.”

The board meeting on December 29 has been convened primarily to consider the prospects of buying back the company's shares. However, it is also quite obvious that the board members will use this opportunity to recapitulate all that has happened in the past two weeks and decide on a plan of action, including any changes that may be required to get the company back on a respectable footing.

Sources claim that Rammohan Rao may reconsider his earlier decision of continuing on the board of Satyam. When asked by TOI about this, Rao said: ‘‘I am not taking any actions at the moment.'' But significantly he added: ‘‘At the next board meeting there will be discussions, clarifications will be sought, then I will take it forward.''

Indications are that one of the independent directors, former cabinetsecretary T R Prasad might aggressively question the company's management policies at the next board meeting. Prasad -- who, as Union heavy industry secretary in 1996, crossed swords with Suzuki over the Maruti issue and also functioned as Maruti Udyog Limited's chairman -- joined the Satyam board only in April 2007.

Sources say that Prasad would be pushed into taking a more active role in Satyam's affairs, what with the company coming under close scrutiny from Sebi and the department of company affairs. ‘‘Having held the top most civil services position in the country, Prasad is well placed to guide the company out of trouble at least domestically,'' a highly placed source said.

Satyam's oldest director Mangalam Srinivasan - who has been a director on Satyam's board since 1991 - resigned on Christmas Day, taking moral responsibility for being part of the aborted deal. Analysts said that it was significant that 70-year-old Srinivasan - an academic in the US - resigned. ‘‘She had been with Ramalinga Raju since Satyam Computers was merely four years old and the company has just got its first contract in the US. Her quitting has been a shocker for the Satyam supremo,'' an analyst said.

The other independent directors on Satyam's board include father of Pentium Vinod Dham and former director of IIT, Delhi, U S Raju. Sources say that Raju is not likely to quit the board, but there were no clear indications on what could be playing on Dham's mind. Vinod Dham joined the Satyam board in January 2003, along with Harvard Business School professor Krishna Palepu. But as per the definitions of the NYSE, Palepu does not qualify as an independent director of Satyam.

Via:E.T

WEEK AHEAD : Market may recover after steep slide

Hopes of further rate cuts by the central bank and a likely second government stimulus package to pump prime the economy may trigger a recovery on the bourses after a sharp slide last week. However, trading volumes are likely to remain low as most foreign fund managers are on a vacation for Christmas and the New Year. Domestic institutions may provide support to boost yearly net asset values.
The BSE 30-share Sensex lost 770.99 points or 7.63% to 9,328.92 in the week ended Friday, 26 December 2008.
Commerce Minister Kamal Nath on Wednesday, 24 December 2008, said the government is considering another stimulus package to lift slowing growth. The new stimulus package may include steps to ease liquidity and relief measures for export and housing sectors, the trade minister said. He also said the government is looking at possible duty cuts for more goods to stimulate demand in the economy.
The second stimulus package assumes importance as the industrial production fell 0.4% in October 2008, to move into negative zone after 15 years, while exports declined by 12.1% during the month.
The first stimulus package announced early this month mainly involved an across-the-board excise duty cut of 4% and an additional public expenditure of Rs 20,000 crore. In addition to the fiscal stimulus, the Reserve Bank of India through a slew of measures reduced the key ratios and policy rates, thereby releasing about Rs 3 lakh crore of liquidity into the system.
A sustained decline in inflation has raised expectations of a further cut in key policy rates by the Reserve Bank of India. Wholesale prices increased 6.61% in the year through 13 December 2008 lower than previous week's 6.84% rise, data released by the government on Friday, 26 December 2008 showed. The central bank's fiscal year-end target for inflation is at 7%.
Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.
The RBI had on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.
However, concerns over corporate earnings may cap gains. Weaker export numbers, lower excise collections and flagging industrial production data have raised concerns about a sharp moderation in growth. The government said on Friday, 26 December 2008, advance taxes paid by companies declined 22% to about Rs 42600 crore in the December 2008 quarter over the December 2007 quarter, reflecting economic slowdown.
Also there is now the lurking tension brewing on the geopolitical front with tensions escalating between India and Pakistan although Prime Minister Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani said there would be no Indo-Pak war.

Organic Coatings moves up on hike in stake by promoter

Organic Coatings galloped 9.94% to Rs 10.18 at 14:57 IST on BSE, after its promoter raised stake in the company through open market purchases.
The stock hit a high of Rs 10.29 and a low of Rs 9.03 so far during the day. The stock hit a 52-week high of Rs 24.55 on 1 January 2008 and a 52-week low of Rs 7.46 on 18 November 2008.
The company's current equity is Rs 5.97 crore. Face value per share is Rs 10.
The current price of Rs 10.18 discounts the company's Q2 September 2008 annualized EPS of Rs 1.74, by a PE multiple of 5.85.
Rajnikant K Shah, a promoter, has hiked his stake to 11.27% in the company after acquiring 2,200 shares through open market purchases on 19 December 2008. The total promoter holding in the company stood at 42.22% as on 30 September 2008.
Organic Coatings' net profit fell 13.3% to Rs 0.26 crore on 2.9% fall in net sales to Rs 9.45 crore in Q2 September 2008 over Q2 September 2007.
The company is engaged in manufacturing and marketing ink and ink products. It manufactures printing inks, acrylic polymer, resins and other ink products. The product includes printing inks and industrial coatings.

CEAT skids on shutting units

Tyre-maker CEAT declined 2.03% to Rs 38.55 at 13:59 IST on BSE, after the company said it has temporarily shut down two its plants in Maharashtra to avoid inventory pile-up.
The stock hit a high of Rs 40.10 and a low of Rs 38.30 so far during the day. The stock hit a 52-week high of Rs 198.80 on 4 February 2008 and a 52-week low of Rs 32.90 on 20 November 2008.
The company's current equity is Rs 34.24 crore. Face value per share is Rs 10.
The company has temporarily shut down its plant at Bhandup and Nashik in Maharashtra due to avoid inventory pile-up. It has shut its Bhandup plant from 26 December 2008 to 28 December 2008, and its Nashik plant from 25 December 2008 to 31 December 2008. The plants will continue routine maintenance operations during the shut period, the company said.
High interest rates and sluggish consumer spending have dented demand for automobiles forcing many auto component makers to shut down their units to avoid inventor build up
CEAT, previously Ceat Tyres, the flagship of the RPG group, manufactures steel-belted radials for passenger cars. The range of tyres manufactured is marketed under the Ceat, Samraat and Secura brand names.
CEAT reported a net loss of Rs 28.83 crore in Q2 September 2008 as against net profit of Rs 25.51 crore in Q2 September 2007. Net sales rose 14.9% to Rs 670.15 crore in Q2 September 2008 over Q2 September 2007.

Reliance Petroleum spurts commissioning Jamnagar refinery

Reliance Petroleum galloped 10.48% to Rs 88 at 9:56 IST on BSE, on commissioning its refinery at the Jamnagar special economic zone in Gujarat.
The stock hit a high of Rs 89.45 and a low of Rs 82 so far during the day. The stock hit a 52-week high of Rs 259.80 on 8 January 2008 and a 52-week low of Rs 68.55 on 21 November 2008.
The company's current equity is Rs 4500 crore. Face value per share is Rs 10.
Reliance Petroleum (RPL), a subsidiary of Reliance Industries (RIL) has commissioned its refinery at Jamnagar in the state of Gujarat with a crude oil processing capacity of 5.80 lakh barrels per day.
The secondary processing units of the refining complex is currently under synchronisation and commissioning. The entire refinery complex is expected to attain full capacity shortly, company said in a statement.

Believe it or not: Oil cheaper than packaged water

26 Dec 2008, 0720 hrs IST, Sanjay Dutta, TNN

Black Gold has lost its sheen, and how! Today, the cost of a litre of petrol or diesel for Indian oil majors is less than the price of the bottle of packaged water that you buy.

Back-of-the-envelope calculations show that a litre of petrol costs about Rs 11 and diesel about Rs 13, excluding transportation and sundry other charges etc. In contrast, you pay Rs 12-15 for a one-litre bottle of water.

Here's how the arithmetic goes: A barrel of crude oil contains about 190 litres. At $38 a barrel, the current price in the international market, each litre of crude works out to Rs 10, taking the exchange rate at Rs 50 to a dollar.

On an average, approximately 28-29 litres of petrol and 85 litres of diesel are refined from each barrel of crude.
Admittedly, this figure can vary according to the type of crude being processed and the technology deployed in a refinery. So how much would the price of a litre of motor fuel be after incurring the cost of refining, if there were no other charges?

The calculation is so mind-boggling that sometimes even executives of oil marketing companies get confused by the myriad central and state taxes
- levied at incremental rates - and complex charges such as "freight equalisation levy'' and dealer margins, etc. Such levies taken together constitute 45-55% of the sale price of petrol or diesel.

So if petrol costs a little over Rs 45 a litre in Delhi pumps, taxes and levies make up about Rs 22 and another Rs 12 constitutes the oil-marketing firm's profit. That leaves a basic cost of about Rs 11 per litre. Similarly, at Rs 32 a litre - the Delhi price of diesel - the actual cost can be taken as Rs 13 as the companies are making a profit of almost Rs 3 a litre.

These calculations are admittedly simplistic and do not take into account other products such as kerosene, jet fuel, cooking gas, naphtha, etc., that are produced along with petrol and diesel and have a bearing on the final cost of each product. However, there won't be big difference between these figures and the figures worked out by the industry.

With crude projected to slide further in the coming days as the global slowdown gets a firmer grip on industry and pushes demand further down, the obvious question is: When will our pump prices go down further?

ToI has repeatedly said this will happen just before the elections are announced, possibly around February. In the meantime, the government is looking to rejig the petro-tax regime to make way for lower prices without hurting oil marketing companies that have accumulated huge losses during the extended run of high crude prices.

via: E.T

Investors looking to sell Satyam>>Funds dial IT czars for Satyam deal

25 Dec 2008, 0252 hrs IST, Gaurie Mishra & Pankaj Mishra, ET Bureau

NEW DELHI/BANGALORE: Some large investors in Satyam Computer Services are understood to have approached rival firms and buyout funds to sell their stakes and even push for its takeover, putting more pressure on the management of India’s fourth-biggest software exporter that has been hauled over the coals after the two botched Maytas acquisitions.

Institutional investors led by Aberdeen Asset Management, Fidelity and ICICI Prudential hold a 61% stake in Satyam, several times the 8.3% stake held by the family of the company’s founder and chairman, Ramalinga Raju. This makes the company vulnerable to a hostile takeover, especially since several funds are upset at Satyam’s founders for trying to use the company’s cash pile to buy the two Maytas firms run by Mr Raju’s family members.

But given Satyam’s reputation problems and the challenging global environment, getting a buyer may not be easy, analysts say. However, at least two people familiar with the developments told ET that bankers acting on behalf of some funds had approached Satyam’s rivals such as Wipro, Infosys, large overseas IT companies and financial players in the past few days.

Infosys and Wipro declined to comment as they are in a “silent period” before quarterly results next month, but informed sources indicated that these companies did not show interest in pursuing a deal.

Private equity investors are rumoured as another set of potential buyers, although analysts say Satyam is more likely to attract interest from IT firms as a financial buyer would need to have a top management team in place before moving in to do a deal.

Texas Pacific Group, which counts former Wipro vice-chairman Vivek Paul among its top executives, has in the past explored a Satyam buyout, but persons close to the US fund now say it is not interested in pursuing a deal.

“While this might seem to be a difficult transaction on the face of it, things can be executed, especially with value of promoters’ holding being anywhere between $150-160 million,” said an official at one fund that is looking to sell its stake in Satyam, requesting anonymity.
Satyam’s shares have fallen 40% since it announced and later abandoned its plans to acquire the two Maytas companies - Maytas Infrastructure and Maytas Properties. The company has seen some Rs 6,100 crore lopped off its market value since the deals were unveiled a week ago.

Besides facing allegations of poor corporate governance, Satyam's reputation suffered a further blow after news emerged that the World Bank had blacklisted the company for eight years over charges of bribery. Satyam, which serves customers such as GE and General Motors, has been declared ineligible by the World Bank “for contracts for providing improper benefits to (World) Bank staff and for failing to maintain documentation to support fees charged for its subcontractors”.

A top executive at a leading Indian technology company told ET that while Satyam might appear to be a good acquisition target, especially at its prevailing stock price, “the recent questions about corporate governance and cancellation of the World Bank contract might discourage other rivals to make an acquisition because of the reputation risks”.

If institutional investors in Satyam do find a buyer for their stakes, it would almost certainly trigger an open offer for the company's shares. Under India's takeover rules, any investor that picks up 15% stake in a company needs to make an open offer to other shareholders to acquire an additional 20%.

Satyam is a highly liquid stock due to its high float. On Wednesday alone, over 87 million of Satyam shares changed hands on the NSE. Institutional investors hold 61.57% of the company and the public shareholding is 10.42%. The company also has an American Depository Receipt listed on the New York Stock Exchange. Shares in Satyam closed nearly 4% down at Rs 134.95 in Mumbai on Wednesday.

Aberdeen through four of its funds holds 5.45% of Satyam and for one of its funds - Aberdeen International India Opportunities Fund - Satyam is the third-biggest investment in its portfolio. Others such as Fidelity, ICICI Prudential and Lazard Asset Management hold 3.4%, 2.4% and around 2.15% each of the company’s shares.

Satyam hammered on ban by World Bank

Satyam Computer Service plunged 14.17% at Rs 120.50 on BSE after the World Bank barred the company from doing business with it for eight years.
The stock hit a 52-week low of Rs 122.25 in early trade. The stock hit a high of Rs 124.35 so far in the day. The stock had a 52-week high of Rs 544 on 30 May 2008.
India's fourth largest software exporter by sales has an equity capital of Rs 134.77 crore. Face value per share is Rs 2.
The current price of Rs 120.50 discounts its Q2 September 2008 annualised EPS of Rs 35.48, by a PE multiple of 3.39.
Satyam Computer Services' American depository receipt slumped 11.02% on Wednesday, 23 December 2008 after the World Bank confirmed an earlier report that it has barred Satyam Computer Services from doing business with it for eight years, starting September this year, due to data theft and paying bribes to its staff.
The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices.
The Satyam Computer Services stock had tanked 13.55% to Rs 140.40 on Wednesday, 22 December 2008 amid rumours that its founder and chairman B Ramalinga Raju was stepping down from the board
Satyam Computers during trading hours on 18 December 2008 said its board will meet on 29 December 2008 to consider buyback of shares. The announcement was aimed at soothing investor nerves after the Satyam stock slumped 30.22% on 17 December 2008. Investors had chucked the stock following the company's announcement after market hours on 16 December 2008 of a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju.
Satyam scrapped a $1.6 billion acquisition of companies connected to its chairman after the plan angered investors. The company's total disregard for corporate governance and shareholders was shocking - Satyam had no plan to take the proposal to minority shareholders.
Satyam had announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and Chairman B. Ramalinga Raju and other insiders hold 36% in Maytas Infra and 35% in Maytas Properties.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services.
Satyam Computer Services' net profit rose 3.70% to Rs 597.43 crore on 6.87% increase in net sales to Rs 2700.52 crore in Q2 September 2008 over Q1 June 2008.
Satyam Computer Services is a global business and information technology services company. It delivers consulting, systems integration and outsourcing solutions to clients.

Deep Industries moves up

Deep Industries jumped 6.98% to Rs 46 at 14:53 IST on BSE, after a consortium of the company was awarded a block under the New Exploration Licensing Policy.
The stock hit a high of Rs 47.80 and a low of Rs 41.65 so far during the day. The stock hit a 52-week high of Rs 271 on 8 January 2008 and a 52-week low of Rs 36.85 on 27 October 2008.
The company's current equity is Rs 20 crore. Face value per share is Rs 10.
The current price of Rs 46 discounts the company's Q2 September 2008 annualized EPS of Rs 6.02, by a PE multiple of 7.64.
Deep Industries in consortium with Deep Energy LLC, Kanvel Finance and Savla Enterprise has bagged a block under the New Exploration Licensing Policy (NEPL-VII). The area of block is 789 square kilometers. Deep Industries will hold 70% interest in the block and all others will hold 10% each.
Deep Industries' net profit rose 35% to Rs 3.01 crore on 76.4% increase in net sales to Rs 8.54 crore in Q2 September 2008 over Q2 September 2007.
The company provides equipments and services for drilling and work over, air and gas compression and allied business.

Some stocks slide on exclusion from NSE's derivatives list

Five shares slipped between 0.70% and 5% after the National Stock Exchange removed them from trading in its futures & options segment.
CMC (down 0.70% to Rs 306), IBN18 Broadcast (down 3.01% to Rs 87.10), IVR Prime Urban Developers (down 5% to Rs 39.90), Sobha Developers (down 4.52% to Rs 104.45), and Wire and Wireless (India) (down 4.43% to Rs 11.22), declined.
NSE dropped these five stocks from the derivatives segment as these stocks no longer met certain required criteria. Existing unexpired contracts for the months of December 2008, January 2009 and February 2009 would continue to be available for trading till their respective expiry and new strikes would also be introduced in these existing contract months.

US economy shrinks as IMF warns of Great Depression

23 Dec 2008, 2018 hrs IST, AGENCIES
LONDON: The US economy shrank by 0.5 percent in the third quarter, official data showed on Tuesday as Britain edged ever closer to a recession and the IMF's top
economist warned of a second Great Depression.

The abrupt contraction of gross domestic product (GDP) in the world's largest economy, confirming a first estimate, was seen by analysts as marking the start of a steep downturn for the United States after GPD growth of 2.8 percent in the second quarter.

Britain's economy also shrank by 0.6 percent in the three months to September compared to the previous quarter, against a previous estimate of 0.5-percent contraction, the Office for National Statistics said.
Britain and the United States will be in recession if their economies contract again in the fourth quarter, according to the traditional definition of a recession as two consecutive quarters of negative economic growth.

The IMF's top economist, Olivier Blanchard, warned governments around the world should boost domestic demand in order to avoid a Great Depression similar to the downturn that shook the world in the 1930s.

"Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad," Blanchard said in an interview with the French newspaper Le Monde.

"It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression," he added.

New data out in France offered some respite from the gloom, however, showing that household consumption of manufactured goods -- a key growth indicator -- rallied 0.3 percent last month after slumping in October.

"It is a first small Christmas present for the French economy," said Alexander Law, an economist at the Xerfi research centre in Paris.

But in Italy, retail sales figures went down 0.3 percent in October.

Denmark's economy contracted 0.4 percent in the third quarter and the Dutch economy showed zero growth, official data showed. Finland's unemployment rate rose to 6.0 percent in November from 5.8 percent a month earlier.

Elsewhere in Europe, the Polish central bank cut its key lending rate by 75 basis points to 5.00 percent, following a further cut in interest rates
in Hungary on Monday by half a percentage to 10.0 percent.

The European Central Bank issued some heartening pre-Christmas data showing that the eurozone's current account deficit narrowed to 6.4 billion euros (9.0 billion dollars) in October from 8.8 billion euros in September.

News of weakening growth sent the British pound sliding under 1.0550 euros, nearing a record low of 1.0463 reached last week, as dealers bet on more interest rate cuts from the Bank of England and forecast parity with the euro.

The dollar also drifted lower against the euro and the yen in muted trading conditions ahead of the Christmas holidays. In late morning trading, the euro firmed to 1.3959 dollars, from 1.3944 dollars in New York late on Monday.

European stocks rose in early afternoon trading after the announcement of US GDP
figures, with the FTSE 100 index in London up 0.80 percent, the Frankfurt Dax up 0.89 percent and the CAC 40 in Paris up 0.51 percent.

Asian stocks closed mostly down, with the Hong Kong stock market shedding 2.8 percent and Shanghai sinking 4.55 percent as a smaller-than-expected Chinese interest rate cut failed to boost market sentiment.

Oil prices also fell further to below 40 dollars a barrel in Asian trade, with New York's main futures contract, light sweet crude for delivery in February, shedding eight cents to 39.83 dollars a barrel.

The contract had fallen to 39.91 dollars in New York on Monday.

Energy analysts were also keeping a close eye on a meeting of key world gas exporters in Moscow amid fears of a "gas OPEC" similar to the Vienna-based oil cartel that could raise natural gas prices.

In a keynote speech, Russian Prime Minister Vladimir Putin told the conference that the "era of cheap gas" for consumers was coming to an end because of the expense of developing new fields.

Venezuelan Energy Minister Rafael Ramirez said: "We see in this forum an opportunity to build a solid organisation, which has in its foundation the same principles that gave birth to OPEC."

World Bank bans Satyam from providing software services

23 Dec 2008, 1535 hrs IST, ET Bureau

NEW DELHI: The World Bank has banned Satyam Computer Services from providing
software services to the financial institution for eight years due to alleged malpractices including bribery, as per a Fox News report.

The report quotes a World Bank official as saying "improper benefits to bank staff" and "lack of documentation on invoices" were the reasons behind the ban applicable till 2016.

World Bank information security chief Robert Van Pulley admitted to the ban during a recent meeting with the officials of Government Accountability Project (GAP),
a whistleblower protection organisation in the US, as per the report. The bank has handed over the case to the US Justice Department and the Treasury Department.

When contacted, a Satyam spokeswoman said, "Satyam does not comment on individual clients."

Satyam started providing IT services to the World Bank in 2003. Two years later, allegations of bribery surfaced. In 2007, an internal World Bank investigation found that former VP Mohamed Muhsin had secured contracts and purchase orders worth $100 million for the Indian firm in return for Satyam's stock options (ADRs) at preferential prices, as per earlier reports by Fox News. However, Satyam was allowed to work for the bank till 2008.

Satyam Computer tanks on buzz of resignation by Raju

Satyam Computer Service lost 13.55% at Rs 140.40 on BSE on rumors its founder and chairman Ramalinga Raju has resigned from the board.
The stock hit a high of Rs 163 and a low of Rs 138 so far during the day. The stock had a 52-week high of Rs 544 on 30 May 2008 and a 52-week low of Rs 153.80 on 17 December 2008.
India's fourth largest software exporter by sales has an equity capital of Rs 134.77 crore. Face value per share is Rs 2.
The current price of Rs 140.40 discounts its Q2 September 2008 annualised EPS of Rs 35.48, by a PE multiple of 3.95.
As per unconfirmed reports, Raju has put in his papers and he is awaiting the board's decision on the issue. Raju's resignation could raise issues of succession.
Meanwhile, media reports today, 23 December 2008, said a top World Bank official has admitted that Satyam was barred last February from all business at the bank for an eight-month period on account of an alleged data theft. FOX News had reported the scandal about ultrasensitive data heists by Satyam Computers, but complying with its secrecy policy the World Bank denied reports. Satyam had denied the allegations.
Satyam Computers during trading hours on 18 December 2008 said its board will meet on 29 December 2008 to consider buyback of shares. The announcement was aimed at soothing investor nerves after the Satyam stock slumped 30.22% on 17 December 2008. Investors had chucked the stock after the company on 16 December 2008, announced a $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure, companies run by Raju's sons B Rama Raju and Teja Raju.
Satyam scrapped a $1.6 billion acquisition of companies connected to its chairman after the plan angered investors and drove down the software firm's American depository receipt a record 55% on 16 December 2008. The company's total disregard for corporate governance and shareholders was shocking - Satyam had no plan to take the proposal to minority shareholders.
Satyam had announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and Chairman B. Ramalinga Raju and other insiders hold 36% in Maytas Infra and 35% in Maytas Properties.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services.
Satyam Computer Services' net profit rose 3.70% to Rs 597.43 crore on 6.87% increase in net sales to Rs 2700.52 crore in Q2 September 2008 over Q1 June 2008.
Satyam Computer Services is a global business and information technology services company. It delivers consulting, systems integration and outsourcing solutions to clients.

Pyramid Saimira Theatre facing Fake SEBI Letter

Pyramid Saimira Theatre was locked at lower circuit limit of 10% at Rs 61.15 on BSE on reports the market regulator has not issued any advisory to the company's chairman regarding an open offer.
The stock hit a high of Rs 68.25 and a low of Rs 61.15 so far during the day. The stock had a 52-week high of Rs 551 on 31 December 2007 and a 52-week low of Rs 35.30 on 2 December 2008.
The small-cap theatre chain operator has an equity capital of Rs 28.28 crore. Face value per share is Rs 10.
The current price of Rs 61.15 discounts its Q2 September 2008 annualised EPS of Rs 12.31, by a PE multiple of 4.96.
The Securities Exchange Board of India (Sebi) is reported to have denied issuing any letter to Pyramid Saimira Theatres (PSTL) regarding an open offer as per the takeover regulations. The market regulator is said to be looking into the letter in circulation and reports suggest that it will issue a detailed press release later today 23 December 2008.
However, the company had confirmed during market hours today, 23 December 2008 that the stock market regulator had asked its chairman, P S Saminathan, to make an open offer to buy 20% in the company at Rs 250 a share. According to the company, the Sebi had asked Saminathan, to file documents for the open offer within 14 days.
Yesterday, 22 December 2008, media reports had suggested the Sebi vide its order dated 19 December 2008 had asked P S Saminathan to acquire additional 20% at a minimum price of Rs 250 per share for violating share purchase rules.
The stock had ended 10% down at Rs 67.90 yesterday, 22 December 2008, reversing an intraday 10% rise after the company said it had not received any communication from the stock market regulator regarding an open offer. The company had also announced that Saminathan had informed the company that he did not receive any communication from Sebi regarding an open offer. The stock had plunged on huge volume of 32 lakh shares on BSE, much higher than average daily volumes in the counter.
Pyramid Saimira Theatre's net profit fell 42.4% to Rs 8.70 crore on a 74.9% rise in sales to Rs 252.26 crore in Q2 September 2008 over Q2 September 2007.
Pyramid Saimira Theatre is focused on distribution and exhibition of films. Its objective is to have presence in all categories of theatres including malls, multiplexes, cineplexes and standalones across the country in tier I, II and III locations.

Godawari Power & Ispat gets Carbon credits

Godawari Power & Ispat rose 1.75% to Rs 69.90 at 14:11 IST after its captive power project won 1,59,926 carbon credits per annum from Germany.
The stock hit a high of Rs 71.90 and a low of Rs 64 so far during the day. The stock had a 52-week high of Rs 376.50 on 1 January 2008 and a 52-week low of Rs 57 on 2 December 2008.
The small-cap steel rods and pipes maker has an equity capital of Rs 28.07 crore. Face value per share is Rs 10.
The current price of Rs 69.90 discounts its Q2 September 2008 annualised EPS of Rs 45.30, by a PE multiple of 1.54.
The company's 25-megawatt captive power project will be entitled for the credits from 1 December 2008 to 30 November 2018, the company said in a statement.
Industries in developed countries buy carbon credits to meet their environment obligations under the Kyoto Protocol. Each unit of carbon credit represents a one metric tonne reduction in greenhouse gas emission.
Godawari Power & Ispat's net profit rose 48.3% to Rs 31.79 crore on a 86.1% rise in sales to Rs 331.61 crore in Q2 September 2008 over Q2 September 2007.
Godawari Power & Ispat is engaged in manufacturing steel intermediate products like sponge iron and ferro alloys and finished long steel products like billets, wire rods and mild steel wires, which find application in the construction and infrastructure sectors. The group operates in three segments namely steel, electricity and others.

Hatsun Agro strengthens

Hatsun Agro Product rose 1.78% to Rs 40 at 12:46 IST on BSE, on reports it would double its previously planned ice cream production capacity at its new facility coming up in Salem, Tamil Nadu.
The stock hit a high of Rs 40 and a low of Rs 39.85 so far during the day. The stock hit a 52-week high of Rs 107.20 on 13 May 2008 and a 52-week low of Rs 34.55 on 2 December 2008.
The company's current equity is Rs 6.80 crore. Face value per share is Rs 2.
The current price of Rs 40 discounts the company's Q2 September 2008 annualized EPS of Rs 5.83, by a PE multiple of 6.86.
The new facility will commence production in March 2009, well in time to take advantage of the peak sales in the ensuing summer. The company's existing facility is located in Red Hills, north part of Chennai, Tamil Nadu.
Hatsun Agro Product's net profit rose 16.2% to Rs 4.95 crore on 25.4% increase in net sales to Rs 262.93 crore in Q2 September 2008 over Q2 September 2007.
The company is engaged in manufacturing and selling milk and milk products and ice creams. The company mainly operates in Tamil Nadu, Karnataka and West Bengal states.

Bajaj Hindusthan sweetens on truce between Bajaj family

Bajaj Hindusthan rose 4.56% to Rs 63 at 12:00 IST, on a truce between the promoter family.
The stock hit a high of Rs 64 and a low of Rs 60.50 so far during the day. The stock had a 52-week high of Rs 399.50 on 9 January 2008 and a 52-week low of Rs 38.25 on 21 November 2008.
The small-cap sugar and ethanol maker has an equity capital of Rs 14.14 crore. Face value per share is Rs 1.
Bajaj Hindusthan said in a statement that the Bajaj Auto chairman Rahul Bajaj will acquire a little more than 29.2% of the company's equity from group investment firms and other Bajaj family members at the market price as on 30 December 2008 and later transfer the stake, along with his 0.4% stake, to his brother Shishir Bajaj for zero consideration thus giving Shishir full control over the sugar firm. The company made the announcement after market hours yesterday, 22 December 2008.
After the transfer, Shishir Bajaj's stake will rise to 32.47% from 2.85% currently. Analysts expect this to be the first leg of the transaction. In the second, Shishir Bajaj is likely to exit from Bajaj Auto where is owns about 2%. This will pave the way for an end of the six-year old family dispute.
Bajaj Hindusthan reported a net loss of Rs 87.46 crore in Q4 September 2008 as against a net profit of Rs 90.54 crore in Q4 September 2007. Sales rose 7.1% to Rs 463.11 crore in Q4 September 2008 over Q4 September 2007.
Bajaj Hindusthan manufactures sugar and ethanol. The company has ten sugar plants, which are all located in the northern Indian state of Uttar Pradesh (UP).

Nifty ends below 3000; realty, banks plunge

23 Dec 2008, 1709 hrs IST, ECONOMICTIMES
Indian equities market ended lower for a second consecutive day as traders resorted to booking profits. Delay in much awaited financial stimulus, building tension between India and Pakistan and volatility in derivative contracts ahead of F&O series settlement also weighed on sentiment.

“Sentiments turned negative following weak global cues. Markets have witnessed a good pull-back rally and traders turned sellers after Nifty broke 3000 and today was another profit booking day. Derivative settlement also put indices under pressure,” said DD Sharma,
senior vice president, Anand Rathi Securities.

Bombay Stock Exchange’s Sensex ended at 9,686.75, down 241.60 points or 2.43 per cent. The 30-share index touched an intra-day low of 9643.56 and a high of 9838.38.
National Stock Exchange’s Nifty closed at 2968.65, down 2.32 per cent or 70.65 points. The broader index touched a high of 3040 and a low of 2957.05.

Midcaps and smallcaps fell in line with bluechips. BSE Midcap Index slipped 2.58 per cent and BSE Smallcap Index declined 2.56 per cent.

Traders hammered overleveraged realty, banks and capital goods stocks. Selling pressure was also seen in second rung stocks.
BSE Realty Index was down 4.84 per cent, BSE Bankex fell 3.76 per cent and BSE Capital Goods Index slipped 3.61 per cent.

“Outlook is positive despite two weak sessions and as long as Nifty maintains 2950, intermittent trend is up. Other factors like expected financial stimulus and growing tension between India and Pakistan is likely to influence sentiments,” Sharma added.

Biggest Sensex losers comprised Satyam Computer (-13.55%), Jaiprakash Associates (-10.18%), Tata Motors (-7.04%), Sterlite Industries (-6%) and Larsen & Toubro (-4.89%).

Reliance Communications, up 1.24 per cent, managed to end with modest gains.

Anil Ambani’s Reliance Communications (RCOM) has set aside $1 billion for its 3G (third generation) telecom services rollout. The approximately Rs 4,700 crore investment
in 3G, will be funded through RCOM’s internal cash reserves of Rs 12,000 crore.

Jaypee Group’s decision to merge with its hotel, cement, real estate and construction subsidiaries Jaypee Hotels, Jaypee Cement, Gujarat Anjan Cement and Jaiprakash Enterprises with the flagship public-listed company Jaiprakash Associates didn’t go well with the investors
.

The merger will bring the group’s all cement companies under one roof enhancing economies of scale and effectively deal with demand-supply mismatch in different regions, the Delhi-based company said. However, the scrip plunged sharply.

Investors continued to dump Satyam Computers shares on concerns of corporate governance after the IT major took an U-turn from acquiring Maytas Infra and Maytas Properties. Satyam Computer Services, plunged 13.55% on rumours its founder and chairman Ramalinga Raju has resigned from the board.

Market breadth on BSE was negative with 1752 declines against 725 advances.

BGR Energy signing a pact with an Italian firm

BGR Energy Systems soared 5.92% to Rs 164.50 at 12:48 IST on BSE, on signing a pact with an Italian firm for condensate polishing plants in India
The stock hit a high of Rs 168.45 and a low of Rs 157.45 so far during the day. The stock hit a 52-week high of Rs 988 on 4 January 2008 and a 52-week low of Rs 115 on 2 December 2008.
The company's current equity is Rs 72 crore. Face value per share is Rs 10.
The current price of Rs 164.50 discounts the company's Q2 September 2008 annualized EPS of Rs 13.16, by a PE multiple of 12.50.
BGR Energy Systems (BGR) has forged a technical collaboration and license agreement with Italy-based Termomeccania Ecologia (TME) for condensate polishing plants in India. The technical & collaboration agreement between BGR and TME is on exclusive basis for Indian market and non-exclusive for overseas market.
TME will transfer and impart technical know-how for condensate polishing plants to BGR Energy. It will also render additional technical and commercial assistance to BGR during initial phases of the collaboration The agreement is for five years with a scope to extend it further.
Last week, BGR Energy Systems had secured credit lines worth Rs 2105 crore to fund its working capital requirements for a power project at Tamil Nadu.
The company had in August 2008 bagged an order worth Rs 39.60 crore for supply of air fin coolers to Essar group's refinery expansion project at Jamnagar in Gujarat.
BGR Energy Systems' net profit rose 47.8% to Rs 23.69 crore on 36.5% increase in net sales to Rs 424.57 crore in Q2 September 2008 over Q2 September 2007.
BGR Energy Systems is a supplier of systems and equipment for the power, oil and gas, petrochemical and process industries.

Reliance Industries gets pressure from the US to stop selling gasoline to Iran.

Reliance Industries fell 0.96% to Rs 1338.10 at 13:23 IST on BSE on reports it may face pressure from the US to stop selling gasoline to Iran.
The stock hit a high of Rs 1352.70 and a low of Rs 1325 so far during the day. The stock had a 52-week high of Rs 3252.10 on 15 January 2008 and a 52-week low of Rs 930 on 27 October 2008.
India's largest private sector company by market capitalisation and oil refiner has an equity capital of Rs 1573.79 crore. Face value per share is Rs 10.
The current price of Rs 1338.10 discounts its Q2 September 2008 annualised EPS of Rs 113.40, by a PE multiple of 11.79.
As per reports, eight American lawmakers have asked the Export-Import Bank of United States (Ex-Im US) to immediately suspend all financial assistance to Reliance Industries (RIL) till it agrees to stop selling gasoline to Iran. The Ex-Im bank has provided two separate loan guarantees worth $900 million to RIL, of which a $400 million loan was for the development of the D-6 block in the Krishna Godavari (KG) basin. Another $500 million of loan guarantee was given to construct the 5,80,000 barrels per day refinery in Jamnagar being constructed by Reliance Petroleum (RPL), a company jointly promoted by RIL and Chevron Corp of the US.
In a letter written to Ex-Im Bank president James Lambright, the American lawmakers stated that RIL is a major supplier of gasoline to Iran which is detrimental to the national security interests of the US and the loan is in direct collision with its foreign policy on Iran.
Reliance Industries' net profit rose 7.4% to Rs 4122 crore on 39.8% growth in net sales to Rs 44787 crore in Q2 September 2008 over Q2 September 2007.
On 3 October 2008, RIL said it had allotted 12 crore equity shares of face value Rs 10 each to various promoter group firms upon exercise of rights attached to warrants held by them. These equity shares would be subject to a lock-in for a period of three years from the date of allotment of the warrants. The conversion price for the warrants is Rs 1,402 per share.
RIL manufactures petrochemicals, synthetic fibers, fiber intermediates, textiles, blended yarn and polyester staple fiber. The company also owns a petroleum refinery cum petrochemicals complex in Jamnagar, Gujarat that produces a wide range of products such as gasoline, superior kerosene oil and liquified petroleum gas.

Sensex ends below 10K; ICICI Bank, RIL fall

Monday, 22 Dec 2008,

Indian stock market indices ended a choppy session lower Monday, after selling pressure intensified in index heavy-weights like ICICI Bank and Reliance Industries. Second rung stocks also gave up gains and end flat with a negative bias.

Equities began the F&O settlement week on a flat note and turned volatile due to lack of direction. Subdued Asian markets weren’t of any help either. In the last hour of trade, indices tripped as traders resorted to profit booking in oil&gas and banking stocks. European markets too opened weak and US stock futures pointed to a weak opening.

“Profit booking was seen in Reliance Industries and ICICI Bank as both these scrips were each up 40 per cent in this current F&O series,” said Rakesh Gandhi, technical analyst at Latin Manharlal Securities.

Bombay Stock Exchange’s Sensex ended at 9,928.35, down 171.56 points or 1.7 per cent from Friday's close. The index fell to a low of 9894.01 from an intra-day high of 10,173.34.

National Stock Exchange’s Nifty closed at 3039.40, down 1.24 per cent or 38.20 points. The broader index hit a low of 3027.80 and a high of 3110.45 during the day.

Secondline stocks were comparatively less affected. BSE Midcap Index ended 0.13 per cent down and BSE Smallcap Index closed 0.24 per cent lower.

“Sensex faces stiff resistance at 10500-10800 levels and Nifty at 3200-3300. A stimulus package by the government or any other positive global newsflow may help benchmarks to cross this hurdle. Else, it (Nifty) will remain rangebound between 2700-3100 for next few weeks. On the lower side, 2800 would be a good buying opportunity,” Gandhi added.

Amongst the sectoral indices, BSE Oil& Gas Index was down 3.02 per cent, BSE Bankex fell 2.48 per cent and BSE Auto Index declined 1.36 per cent. But the BSE Consumer Durables Index posted 2.94 per cent rise. The BSE Realty Index, which notched up significant gains in morning trade, gave in to profit booking and ended up just 0.13 per cent.

Among frontline stocks, ICICI Bank (-5.49%), Reliance Industries (-4.78%), Mahindra & Mahindra (-4.55%), Maruti Suzuki (-3.29%) and HDFC Bank (-3.01%) were badly hit.

Tata Motors (4.91%), DLF (2.73%), Ranbaxy Laboratories (2.05%), ITC (0.87%) and Tata Power (0.52%) managed to end with gains.

Market breadth on BSE showed 1,296 advances against 1,258 declines.

In Europe, FTSE 100 was down 0.86 per cent, CAC 40 declined 0.90 per cent and DAX declined 1.28 per cent. US markets are expected to open a little lower. Dow Jones stock futures were down 0.2 per cent, S&P 500 futures slipped 0.3 per cent and Nasdaq 100 futures were down 0.1 per cent.

US lawmakers ask Ex-Im to suspend aid to RIL over Iran ties

20 Dec 2008, 1900 hrs IST, PTI

WASHINGTON: A group of US Congressmen have asked the country's Export-Import Bank to suspend $900 million worth assistance to Reliance Industries, until the Mukesh Ambani-led Indian conglomerate stops business with Iran.

In a statement issued here, Congressman Brad Sherman said that he along with a "bipartisan group of House colleagues" have sent... letter to the Ex-Im president calling on the bank to suspend assistance for RIL, until it agrees to stop selling gasoline to Iran.

The letter also calls on Ex-Im to do a better job in the future to ensure that the projects it supports are not in conflict with US national interests.

Ex-Im has approved two separate loan guarantees worth $900 million, including a $400 million package in August, 2008.

Reliance has been a major supplier of refined petroleum products to Iran. According to some reports, Reliance has at times provided as much as 30 per cent of oil-rich Iran's need for imported refined petroleum products.

Ex-Im's assistance was approved to help finance the expansion of Reliance's refining complex at Jamnagar, the very facility that provides Iran with gasoline.

Reliance's subsidiary RPL is set to fully commission its 580,000 barrels per day only-for-exports refinery at Jamnagar by March and along with its existing 660,000 barrels per day facility would become the world's largest single location refinery.

"I very much support the Export-Import Bank's mission of supporting US exports. However, we must ensure that when we provide assistance, the corporate recipients are not doing business with our enemies," said Congressman Brad Sherman.

Iran imports about 40 per cent of its gasoline. "We could greatly increase our leverage against Tehran in the dispute over its nuclear programme by encouraging those supplying them with gasoline to halt their trade with Iran," Sherman said.

Sherman's letter follows another sent by Senators Lieberman and Kyl in early November. The Lieberman-Kyl letter raised similar concerns about Ex-Im projects.

Ex-Im's response to that letter failed to address the critical shortcomings in the approval process for these loans.

Sherman and his House colleagues are calling on Ex-Im to conduct a more robust investigation of the companies it assists, and to do a better job coordinating with the State Department and other foreign policy agencies to ensure that the assistance provided is in accord with our vital national security concerns.

WEEK AHEAD >>Market may extend gains on rate cut hopes

Key benchmark indices may extend gains on on a likely second government stimulus to pump prime the ailing economy and on expectations of a further fall of key policy rates with the inflation rate dropping to a nine-month low. However, the market may be volatile as derivative contracts for December 2008 series expire on Wednesday, 24 December 2008. It will be a truncated trading week as the market remains closed on Thursday, 25 December 2008 on account of Christmas.
Buying by foreign funds this month has lifted sentiments. FIIs bought shares equities worth Rs 1626.90 crore this month, till 18 December 2008. However they were net sellers in calendar 2008, so far, as they offloaded shares worth Rs 52,690.90 crore.
In its second stimulus package to boost growth, the government is likely to provide sops to the automobile, housing and steel sectors, reports suggest. The committee of secretaries (CoS) on economic crisis is examining proposals like increasing the limit for low interest-rate housing loans from Rs 20 lakh to Rs 30 lakh, increasing the tax rebate on home loans, reducing car and two-wheeler loan rates by 2% (from the current 12-14%), increasing depreciation and ensuring faster disbursal of central value added tax (Cenvat) credit for the steel sector.
The new package could also include monetary measures such as cuts in the cash reserve ratio (CRR), and statutory liquidity ratio (SLR) by the Reserve Bank of India (RBI), after the inflation rate in the week ended 6 December 2008 dropped to a nine-month low of 6.84%, below the RBI's target of 7% for 2008-09. Lower rates may revive demand over a medium term.
Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.
The RBI on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.
The first stimulus package unveiled by the government on Sunday, 7 December 2008, involved Rs 20,000 crore in additional government expenditure, an across-the-board 4% excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters.
Volatility is expected to rise as derivative contracts for December 2008 series expire on Wednesday, 24 December 2008. As per reports, rollover of Nifty positions from December 2008 series to January 2009 series stood at 23.2% as of Thursday, 18 December 2008.
A preliminary data on advance tax payments for December 2008 quarter reflects strong signs of a slowdown in the economy. The top 100 tax-paying companies in each of India's four major tax collection centres have reportedly paid 5-28% lower advance tax in the third quarter because of the current economic slowdown. Companies are required to pay three-fourth of their annual tax liability in three installments, by 15 June, 15 September and 15 December, depending on their annual profit projections. Advance tax payout is seen as a leading indicator of the performance of the company as it is based on its estimate of profit for the full year.
Lower advance tax receipts might also put pressure on government finances at a time when it is trying to increase spending to revive demand.
Meanwhile, uncertainty about the fate of the struggling US automakers may keep global markets subdued. While US president George W Bush reportedly said the government is looking at all options for the troubled US auto giants and wanted to move in an expeditious way, Treasury Secretary Henry Paulson offered mixed signals on the chances of a bailout for troubled US automakers, saying failure is not an option but adding that any bankruptcy should be orderly.
The big 3 US automakers -GM, Ford and Chrysler have warned that without a financial aid, millions of jobs could be lost, which will add further problems to the faltering US economy. The automakers have been looking at $14 billion package from government to help weather the crisis.

Unitech leads gainers in 'A' group

19th Dec'08 Friday

EIH, Gammon India, Jet Airways, and BGR Energy Systems are among the other gainers.
India's second biggest realty firm by market capitalisation Unitech soared 16.14% to Rs 44.25, extending gains for the second day in a row, on reports it plan to invest Rs 2500 crore in affordable housing projects. It topped the gainers in BSE's A group shares. The stock is up 91.55% from a recent low of Rs 23.10 on 28 November 2008.
EIH, which operates Oberoi Hotels, spurted 13.29% to Rs 135.10, on reports its Mumbai hotel is flooded with requests for reservations at the restaurant when it reopens on 21 December 2008, almost a month after the terrorist attacks destroyed significant portions of the building. It was the second biggest gainer in A group.
Construction company Gammon India flared up 12.43% to Rs 72.35. It was the third biggest gainer in A group.
India's largest listed airliner by market capitalisation Jet Airways moved up 11.92% to Rs 186.80, on its move to lease five aircrafts. It was the fourth biggest gainer in A group. Another trigger for the rally in the counter was the recent cut in jet fuel prices announced by state-run oil firms. Jet fuel makes up almost half of an airline's operating costs.
Engineering firm BGR Energy Systems rose 11.77% to Rs 155.30 after the company secured credit lines worth Rs 2105 crore to fund its working capital requirements for a power project at Tamil Nadu. It was the fifth biggest gainer in A group.

Fiscal year 2010 to be more challenging: RBI

18 Dec 2008, 2148 hrs IST, PTI

MUMBAI: Next year will be a more challenging year than this has been but the Reserve Bank of India (RBI) will continue to do everything possible to lessen the domestic effects of the global financial crisis, its chief said.

In speech released on Thursday, RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.

While the central bank had a roadmap, it was not possible to deploy it all in one go.

"It would be our endeavour to adapt this roadmap to the evolving global developments and implement it flexibly and pragmatically," he said.

"Our approach, as indeed of every prudent central banker around the world, has been to 'cross the river by feeling the stones'."

Subbarao said India's economic fundamentals remained strong, but developments in the real economy, financial markets and global commodity prices pointed to a period of moderating growth and declining inflation.

"The year 2009-10 will be more challenging than the current one," he said.

"The RBI will continue to be on vigil and do everything possible within its mandate to mitigate the impact of the crisis on the Indian economy."

Since mid-October, the central bank has lowered its key lending rate by 250 basis points to 6.5 percent to shield the economy from the spillover of the global credit crisis.

It has also aggressively slashed banks' reserve requirements to shore up growth, which many expect to slow to 7 percent in the fiscal year which ends in March from 9 percent in 2007/08.

The government bond market is widely expecting interest rates to fall again soon, with the benchmark 10-year bond yield dropping 30 basis points on Thursday to 5.50 percent.

Subbarao noted inflation had been declining for the four weeks before he spoke, pointing to a faster-than-expected reduction in the pace of rising prices, while a recent cut in state-set fuel prices should further ease inflation pressures.

Data on Thursday showed India's wholesale price index, its most widely watched inflation measure, rose 6.84 percent in the 12 months to Dec. 6, sharply below the previous week's 8 percent and lower than a Reuters estimate of 7.49 percent.

Subbarao said there had been a noticeable decline in credit demand in November but it was not clear whether this was a one-off or a trend.

If this were indicative of slowing economic activity, it would be a challenge to banks to ensure credit flow to productive parts of the economy.

But he said banks also seemed to be inhibited from lending by high interest costs on deposits and by concerns about credit quality, but if credit demand was slackening, they should be able to lower their deposit rates.

While advanced economies had seen contagion spread from the financial to the real sector, in India the slowdown in the real sector was affecting the financial sector, which then had a second-order impact on the real sector.

Subbarao said there had been demands for some regulatory relaxation, for instance on non-performing loans by lengthening the cut-off point after which they are classified as bad loans.

But he cautioned against any relaxation, saying delaying recognition of bad loans just made the problem worse and if the global downturn was prolonged, banks should just get on and deal with problem loans fast.

Via:E.T

Be ready for painful adjustments: Chidambaram

18 Dec 2008, 2044 hrs IST, PTI

NEW DELHI: The government today said the country would have to be prepared for a "painful period" of adjustments because of the global crisis but expressed confidence
that economy would still grow by 7 per cent and bounce back next year.

Home Minister P Chidambaram, who was fielded to reply to the debate on the economic situation in the Lok Sabha, acknowledged that this year has been "difficult" but said the government was taking steps to ensure that productive engines of economy including agriculture, industry and services continue to function.

"We will ensure that economy continues to grow. We will ensure that the growth this year is seven per cent," he said. India recorded a growth of nine per cent in 2007-08 and this year, RBI had projected a growth rate of 7.5 to 8 per cent.

He said the government would prevail upon the banks to lend funds to the productive sectors of the economy.

"Prime Minister and I (was Finance Minister) met the bankers and prevailed upon them to lend. The lending has already started by the end of November...banks will lend to every productive sectors of the economy," he said.

Describing housing sector as a main driver of the economy, he said bankers are being prevailed upon to cut home loans of the existing customers.

The Minister further said that an apex committee under the Prime Minister was monitoring the situation and would take necessary steps to boost the economic growth.

Referring to the stimulus package announced by the government on December 7, he said, "we announced this package to keep economy growing for next three months. If there is capacity to absorb more capital we are ready to give more."

As regards growth, Chidambaram said, "recovery would start in the second half of the next fiscal. Next year, we are confident that economy will bounce back...I am confident the world output will also bounce back."

Ram Kripal Yadav (RJD) hoped that the Prime Minister would take steps to formulate schemes to help the common man when country was facing the affects of global meltdown.

He said both organised and unorganised sectors were facing the consequences of the economic crisis.

M Ramadass (PMK) said India was not facing major problems due to the global financial crisis as Manmohan Singh, when he was the Finance Minister, had accepted certain recommendations of experts on finance and adopted policies accordingly.

Yerrannaidu (TDP) said the government should create more liquidity through banks in the infrastructure sector.

S K Bwiswmuthiary (Ind) and Ganesh Singh also participated in the debate.

Shareholders may take legal action against Satyam

18 Dec 2008, 0415 hrs IST, Jessica Mehroin Irani & Ashish Rukhaiyar, ET Bureau

MUMBAI: Shareholders of Satyam Computers can take legal action against the company even after Satyam backtracks from its plans to acquire Maytas

Properties and Maytas Infrastructures, according to legal experts.

Anoop Narayanan, partner of Majmudar & Co, feels that the Satyam shareholders ‘paid a price’ for the board decision and this provides them sufficient ground for initiating legal action.

“The unfavourable impact of the called-off deal and the criminal act (criminal breach of trust) behind that may be sufficient grounds for legal action even after the deal
has been called off,” says Mr Narayanan. The Satyam stock lost more than 30% or Rs 68.45 on Wednesday, to close at Rs 158.05 on the BSE. Mr Narayanan feels a “criminal action can also be taken for breach of trust.”

Legal experts feel at least 100 shareholders, or shareholders with a combined 10% stake, can come together and file a case for breach of trust and mis-management as it is clear that the company board did not act in the best interest of the shareholders. This is in accordance with Sections 397 and 398 of the Companies Act 1956.

It is also alleged that the deal was deliberately valued in a fashion to avoid obtaining shareholders’ approval. Edelweiss Securities, in a report released on Wednesday, says that the Section 372A of the Companies Act, 1956 empowers a board to make any investment without passing a special resolution by the shareholders if the value is either 60% of the aggregate of the paid up capital and free reserves or 100% of its free reserve, whichever is more.

“Around 60% of the company’s paid-up capital and free reserves stand at $1 billion while its free reserve is $1.64 billion, which is extremely close to the transaction consideration of $1.6 billion,” notes the report.

According to another partner of a corporate legal firm, who did not wish to be named, said that it is amply clear that the deal was designed to use the company’s fund to help a section of the promoters for their personal gains. “I would not be surprised if the stock exchanges at the behest of Sebi ask for an explanation from the promoters. In the US, promoters cannot get away easily after such acts,” he says.

via:E.T