Current Economic Statistics and Review For the
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Theme
of the week: Isn’t the Current Growth Cycle Led by Bank Credit?* A silent but distinct change has occurred in the behaviour of scheduled commercial banks during the past five years since 2002-03 or thereabout. Earlier, for about a decade after the financial sector reforms began in the early 1990s, the banks were extremely shy of expanding their credit base economy-wide generally, and in particular, for agriculture, small-scale industries, small borrowers and other informal sectors. The experiences of the 1970s and 1980s had shown how, amongst other things, bank credit had played a major role in accelerating the growth process as well as in stimulating improved employment growth, particularly in rural as well as urban non-farm sectors. A decisive shift in credit distribution in favour of a vast range of informal sectors as well as for underdeveloped regions and states then had helped widen the demand base of the economy and thus contribute to a more dispersed growth sectorally and regionally. Contrariwise, during the whole of the 1990s, the scheduled commercial banks, faced as they were with the twin burdens of serious infirmities in operations following the unprecedented banking growth of the past and of radical reform measures, sought to curtail their credit delivery arrangements. An attempt made to compare bank credit to GDP ratios for three major sectors, namely, agriculture, industry and services, shows that the erosion in the ratio has taken place in all sectors, though the decline was the steepest in agriculture. A priori this was due to the inter-play of demand-supply forces; more significantly, on the supply side, banks showed conscious reluctance to expand their credit-base – a situation which continued up to 2002-03 (Graph A) and in which banks preferred to park their surplus liquidity in government securities rather than advance commercial loans. Apart from an acute risk aversion, which banks exhibited as a fall out of the vast NPAs, which they carried in their books and the implementation of various prudential norms which affected their exposure to the agricultural sector, it was also a situation of weak demand from the industrial sector in the context of industrial recession that the economy faced. Interestingly, now the silent change that has been occurring in the banks’ attitude to credit delivery appears to follow from two sources, namely, the socio-political pressures to expand credit delivery for different sectors of the economy and the banks’ own strength acquired after over a decade of cleaning up of their operations and strengthening of their capital base and other prudential norms, including sharp reductions in NPAs.
As
a result, improvements have been taking place all around the regional and
sectoral distributions of bank credit.
In the first place, as shown in Table 1, the overall bank credit to
GDP ratio has registered over 50 per cent rise since 2001-02.
Following the governmental dictates of special targets set for the
doubling of agricultural credit in three years, the improvement in bank
credit to agricultural GDP ratio has been the sharpest.
This is also reflected in rates of increases in direct finance for
agriculture in recent years
Interestingly, all other indicators, which had faced a setback in the 1990s, have been showing signs of improvement after 2001-02. Our separate studies show that even credit-deposit ratios at the rural as well as undeveloped state and district levels have been looking up during the past four to five years since 2002-03 (Tables 3 and 4).
At another level, there are distinct indications to hypothesize that the expansions in bank credit started in 2002-03 (Graph A) began to stimulate general real economic activity in the following year 2003-04 and thereafter. As shown in Table 5, the acceleration in growth, including that in agriculture, began in 2003-04. The latest three years show average annual GDP growth of 8.1 per cent as against 4.7 per cent during the previous three years; all sectors of the economy have exhibited this buoyancy in growth.
That is not all; the above phenomena are reflected in many other macro-economic indicators. Per capita private final consumption expenditure (PFCE) grew at an annual rate of 5.3 per cent during 2003-05 as against at an annual rate of 1.5 per cent during the preceding three years. Domestic saving and capital formation rates have experienced sudden jumps in 2002-03 and remained high thereafter. For three years 2001-02 to 2003-04, the current account on balance of payments (BoP) remained in surplus suggesting that the country was exporting capital abroad due to inadequate domestic investment but thereafter the situation stands transformed in favour of a significant current account deficit to finance increased investment. Also, this impetus to the growth process had not originated either in expanded public expenditure programme or autonomous increase in private investment. Nor has there been any noticeable improvement in foreign direct investment (Table 6)
While
the government’s development expenditure (centre and states together)
had remained stuck until
2004-05 at about 14.5 per cent of GDP (Table 6), it has been only during
the past 2 to 3 years that private investment has picked up in response to
the availability of institutional finance for infrastructure
and other areas; FDI flows have also begun to look up now (Table
7).
With the publication of the NSSO’s 61st round (2004-05) results, we now have a fairly clear picture of the employment trends during different growth cycles. An increase of 5.8 per cent in total employment has been witnessed between 1999-2000 to 2004-05 in contrast to a fall of 5.5 per cent between 1993-94 and 1999-2000 (Table 8).While farm employment has experienced a steady fall during the past three decades and a half, non-farm employment in rural as well as urban areas grew rapidly during the 1970s and 1980s and fell or stagnated during the whole of the 1990s, but between 1999-2000 and 2004-05, there has occurred a spurt in non-farm employment (table 9). What is interesting is that while rural manufacturing employment has again picked in recent years, the growth has been the fastest in services sector areas.
The hypothesis that we are seeking to advance here is that the current upswing in the growth cycle is primarily bank finance-led. This stands to reason in many ways, the most crucial one being the dominance of self-employment amongst the populace and inadequacy of own savings amongst business enterprises. While the banks have sharply improved their credit base, it is not as though they have achieved healthy distributional goals. There is evidence to the effect that they are continuing to prefer richer farmers and other big-size clientele in rural areas (Table 10) and easy sectors like housing, retail
credit,
real estate, capital market and commodity dealers, in urban areas.
Even so, bank credit and the associated money supply are fungible
and they have an ability to expand the demand base of the economy
generally. The resulting growth may continue to be unequal, as surely it
is. Overall, these tend to
support the hypothesis that bank credit has a substantial role to play in
the growth process and that it deserves to be used as a potent instrument
of achieving distributional goals. * This note is prepared by S L Shetty with the support of data compiled by R.Krishnaswamy, V.P. Prasanth and Bipin Deokar.
Highlights of Current Economic Scene AGRICULTURE
Rabi sowings are picking up across the country. As per the ministry of agriculture, wheat sowings have recorded a 69 per cent rise to 26.3 lakh hectares till November 10, 2006 from 15.6 lakh hectares in the corresponding period last year. As per the experts it has resulted from higher market price of the commodity. Pulses acreages have also increased by 19 per cent to 56.8 lakh hectares during the same period as compared to 47.6 lakh hectare in the year ago. On the other hand, Sown acreages of oilseeds have dropped by 26per cent to 47.2 lakh hectare by the end of second week of November 2006 as against 63.6 lakh hectare a-year ago period owing to diversion of sowing area of major oilseed crop such as mustard in favour of pulses like gram. As per the commerce ministry, the country might put a ban on exports of corn as demanded by poultry farmers and other users, and resort to import of corn for the first time in five years amid a domestic shortage caused by a fall in production. The maize prices in the country have risen by half from a year earlier, pushing up costs for poultry farmers and starch producers. As per the Solvent Extractors’ Association of India (SEAI), the import of edible oils has gone down by 12 per cent to 44.2 lakh tonnes in the 2005-06 oil year (November-October) from 50.4 lakh tonnes a year ago due to higher domestic output and large carryover inventory of rapeseed-mustard held by the National Agricultural Cooperative Marketing Federation (Nafed), the import of non-edible vegetable oils have risen sharply by 73 per cent to 7.1 lakh tonnes from 4.1 lakh tonnes in the previous year on account of higher shipments. As
per the estimates of traders and industry experts, global black pepper
production for the 2007 season (beginning December 2006) is likely to fall
short of the average crop size. The reports have reiterated that the total
global production between would range between 2,15,000 and 2,20,000 tonnes
for the season 2007, reflecting a decline of 40,000 tonnes from the usual
average crop size. While domestic pepper production has been pegged at
around 50,000 tonnes, other major pepper producers like International Sugar Organisation (ISO) has estimated a higher global sugar surplus of 5.8 million tonnes for the year 2006-07. While sugar output is estimated at 158.3 million tonnes, consumption demand is likely to be 152.5 million tonnes. Brazil is expected to increase its output by 700,000 tonnes on year to 32.9 million tonnes, India’s production has been pegged at 24.5 million tonnes, and Thailand is expected to see a 1.42 million tonnes increase in its output to 6.5 million tonnes. Higher global surplus may not augur well for the country’s sugar exports, as and when the ban on exports is lifted, especially, in the wake of higher cane prices and a possible supply glut led by a bumper sugar crop in the country. Cashew kernel exports from the country have declined by 8.14 per cent in value terms at Rs 1,222.9 crore during the first half of the fiscal year 2006-07. In volume terms the country exported 58,210 metric tonnes. However, the exporters have realised 6.7 per cent less per kg of cashew kernel exported during the same period to Rs 210per kg as against Rs 225 per kg earned in the same period last year. A National Plant Variety Registry has been set up by the Protection of Plant Varieties and Farmers’ Rights Authority (PPV&FR) under the Union ministry of agriculture to register crop varieties. It would facilitate farmers and plant breeders to protect their IPR over breeds that they have developed indigenously. Around 12 crop species (rice, wheat, maize, bajra, sorghum, pigeon pea, chickpea, lentil, mung, black gram, peas and rajma), breeds of which have been developed by Indians have been identified for registration. The breeder would gain exclusive commercial rights for a new variety of a crop for 15 years. IndustryOverall According to the Manufacturing ASCON Survey conducted by the CII, a total of 34 manufacturing sectors out of 125 sectors have recorded production growth of more than 20 per cent during April-September 2006-07 as compared with the same period of the previous fiscal year, including power transformers, industrial furnace, textile machinery and tractors. Another 47 sectors have recorded a growth of 10-20 per cent and 31 sectors have registered growth rate of 0-10 per cent, according to the survey. Other sectors that led the growth include PVC, switchgears, power cables, circuit breakers, castings, fluid power and nitrogen boilers. Sectors reporting negative growth have been 14, lower than 20 sectors during the same period last year. Out of the 63 sectors that reported their sales performance, 19 sectors have registered growth of more than 20 per cent, 23 sectors have registered growth of 10-20 per cent, while 18 sectors have reported 0-10 per cent growth and only 3 sectors have recorded low or negative sales growth. The export performance of the manufacturing sector too has improved significantly; as many as 17 sectors have shown more than 20 per cent growth in exports, 7 sectors have recorded 10-20 per cent growth while 10 sectors have recorded 0-10 per cent growth. Pharmaceuticals The
domestic pharma market is poised to accelerate at 13.6 per cent between
2006 and 10 and is expected to become a $ 9.48 billion industry by 2010.
The Indian pharma market has consistently seen growth of 9.5 per cent CAGR
between 2000 and 2005 and touched the market size of $ 5.13 billion by
March 2005, according to a study paper by the Assocham and Cygnus. Towards
March 2006, the growth rate has jumped to 11 per cent to reach a market
size of $ 5.7 billion. The FDI in pharma industry is estimated at $ 172
million during 2005-06, recording a CAGR of 62.6 per cent during the
period beginning 2002-06. According to estimates, contract research and
manufacturing (CRAMS) market in Textiles The ministry of textiles has carried out a survey on the status, annual capacity, actual production, exports and proposed investment for technology upgrade of textile engineering industry. Of the Rs 1,40,000 crore investment required by the industry for its modernisation and expansion up to 2010, about Rs 70,000 crore is needed for installation of plant and machinery, the survey revealed. The production of textile machinery, parts and accessories has seen an increase from Rs 1,668 crore in 2004-05 to Rs 2151 crore in 2005-06, registering an increase of 28 per cent. Despite the buoyancy in manufacturing sector, the imports of both new and second-hand machinery have risen from Rs 2,575 crore to Rs 3,765 crore but exports have not gone up comparatively; they stood at Rs 690 crore in 2005-06 against Rs 587 crore in the previous year. To meet the growing demand, intensive consultations have been started with Chinese and Japanese manufacturers for setting up joint ventures in the country; the effort is a part of the government’s strategy as domestic manufacturers have not been able to meet local demand and textile sector has to rely on imports which have soared to nearly 4,000 crore per annum. Currently, the waiting time for delivery of machines is reported to be between 16 and 18 months; there is an urgent need to shorten the time required. InfrastructureOverall The finance ministry is trying different means of financing the estimated $ 320 billion required for the infrastructure sector in the next five years, which by general opinion should come from the domestic sector. The ministry has plans to tap retail investors, hoping that this segment will be able to provide the momentum for growth and expansion in the infrastructure sector. The ministry has already accepted the R H Patil committee report on corporate bonds and securitisation; one of the recommendations of the committee was that retail investors should be encouraged to participate in the sector through stock exchanges and should also be encouraged to participate in the corporate bond market through mutual funds. Power Power generation capacity addition during the Tenth Plan period (2002-07) is slated to fall far short of the original target of 41,000 MW as originally fixed by the ministry and subsequently scaled down during the mid-term review of the Tenth Plan to 36,956 MW. The Power Secretary, Mr R.V. Shahi, said the country is likely to see a capacity addition of 30,642 MW by the end of current Plan period (March 2007), about 75 per cent of the original target. A total of 17,700 MW of additional capacity has been commissioned so far and projects with capacity of another 12,898 MW are expected to come up during the remaining five months till March 2007. Non-Conventional
Energy With the main objective of encouraging bio-fuels, especially bio-diesel, and assuring sustainable agricultural growth, rural development, energy security and equal opportunity for the masses with overall environmental protection, a Bio-diesel Association of India (BDAI) has been formed with a three-pronged objective - ensure energy security, support agriculture and sustain environment. This is sought to be achieved through a revolution in the form of bio-fuels i.e. bio-ethanol and bio-diesel. A comprehensive bio-fuels policy that judiciously balances the interests of primary producers, processors and consumers can help boost out bio-energy output, meet rising energy demand, help raise rural incomes and sustain the ecology, through green fuels, BDAI has asserted. Several corporates including those already in the energy sector as well as aspiring new entrepreneurs and service providers are already members of the association. Indian
Oil Corporation Ltd has constituted an internal group on bio-fuels to
oversee at commercialisation of various projects on bio-diesel. The group
is currently in talks with five states, Chhattisgarh, Andhra Pradesh,
Rajasthan, Uttaranchal, and Tamil Nadu, to implement the project on a
large scale. Subsequently, the project is likely to be extended to Orissa
and Steel Indian
steel industry needs to upgrade its production capabilities and product
offerings for the Indian automobile sector; the country's automobile
industry is currently growing at around 15 per cent per annum, ahead of Coal Oil
India Ltd is planning to launch a second pilot project for coal
liquefaction, a process that converts coal into petrol, diesel and other
liquid fuels. Oil The
central government is considering a policy and legal framework to promote
private sector participation in the emerging option of underground coal
gasification (UCG) and has set 2010-11 as a deadline for commercial
utilisation of UCG. The framework includes extension of fiscal benefits in
the line of coal bed methane (CBM) policy. Apart from fiscal benefits, UCG
may be notified as an end use under the present captive mining policy to
facilitate allocation of coal blocks to potential entrepreneurs. The coal
ministry has already approved a proposal from Neyveli Lignite Corporation
for funding a pilot UCG project at its lignite reserves in Rajasthan.
Also, ONGC has agreements in place with both NLC and Coal India Ltd for
pilot UCG studies. Aviation Full service carriers Indian Airlines, Jet Airways, Kingfisher Airlines and Air Sahara have decided to hike their fares by 3-5 per cent in the third week of November 2006 and the low-cost carriers (LCCs) are expected to follow suit in 2-3 weeks. Not only are the airlines planning to increase fares, but they also plan to reduce the number of tickets being sold at lower fares under various promotional schemes. The move to raise fares now is seen as an effort to rationalise prices. The decision has been taken at a meeting of the newly formed airlines' body, Federation of Indian Airlines (FIA). Indian plans to raise fares by Rs 200 on all sectors during the peak winter season between December and January. To gain market share, airlines have been cutting fares in quick succession, resulting in huge losses to the industry; the aviation sector is estimated to post losses to the tune of Rs 2,200 crore in 2006-07. The largest low-cost carrier Air Deccan has recorded a loss of Rs 340 crore for 15 months ending June 2006, Kingfisher Airlines and Spice Jet have reported net loss of Rs 240 crore and Rs 41.4 crore, respectively in the first year of operation. Jet, the largest private sector carrier has also recorded a loss of Rs 55 crore in the second quarter of 2006-07. Domestic seat capacity has increased by almost 40 per cent in 2005-06, much faster than the 28 per cent rise in passenger traffic. InflationThe annual point-to-point inflation rate based on wholesale price index (WPI) rose by 5.30 percent for the week ended November 04,2006 as compared to 5.09 per cent in the last week or at a lower rate of 4.04 per cent during the corresponding week last year.
During
the week under review, the WPI rose to 208.8 from 208.4 in the previous
weeks’ level (Base: 1993-94=100). The index of ‘primary articles’
group, (weight 22.02 per cent), increased by 0.4 percent to 214.2 from its
previous week’s level of 213.3, mainly due to increases in prices of
‘food article like beef and buffalo meat, poultry chicken, eggs and fish
marine, bajra, milk, urad , wheat and gram The index of ‘fuel, power,
light and lubricants’ group (weight 14.23 per cent) remained unchanged
at the last week level of 329.5. The index of ‘manufactured products’
group also increased by 0.2
per cent to 180.0 from 179.7 during the week under review. Food Products
like bran, skimmed milk powder and oil cake,rice bran oil,sunflower oil,
mustard oil and groundnut oil, textiles, chemicals and chemical products
Basic metals and alloys and Machinery and machine tools prices rose. The
latest final index of WPI for the week ended September 09,2006 has been
revised upwards; as a result both, the absolute index and the implied
inflation rate stood at 207.8 and 5.22 per cent as against their
provisional levels of 206.6 and 4.61 per cent, respectively. Financial MarketsCapital
Markets Primary
Market Blue
Bird (India) Ltd, a manufacturer of paper based notebooks and stationary
products, is entering the capital market with a public issue of 87.75 lakh
equity shares of Rs 10 each for cash at a premium to be decided through a
100 per cent book building process. The issue opens for subscription on
November 16 and closes on November 22. The price band for the issue has
been fixed at Rs 90 to Rs 105. Out of the net offer to the public, 50 per
cent is reserved for allotment to qualified institutional buyers, of which
5 per cent is reserved for mutual funds; 15 per cent is reserved for
non-institutional buyers and the balance will be allotted to the retail
investors on a proportionate basis. The issue constitutes 25.07 per cent
of the fully diluted post issue capital of the company. The issue funds
will finance the construction of the company's second notebook
manufacturing and printing unit in The
Bangalore-based Sobha Developers Ltd (SDL) is coming out with a public
issue of 88,93,332 equity shares of Rs 10 each through book building
process in the price band of Rs 550-Rs 640 per share. The issue comprises
a reservation of up to 8,89,300 equity shares for SDL's permanent
employees and a net issue to the public of 80,04,032 equity shares. It
constitutes 12.20 per cent of the post-issue paid-up capital of the
company. The issue opens for subscription on November 23 and closes on
November 29. Secondary
Market The
BSE sensex maintained its winning streak, as buying continued at higher
levels. Strong FII-inflows and revision in earnings estimates by
brokerages have fuelled the latest bull-run on the bourses. For the week
ended Friday (17 November), the Sensex gained 147 points (1.10%), to
settle at 13,429.48 The S&P CNX Nifty advanced 18 points (0.47%) for
the week ended Friday (17 November), to settle at 3,852.80. On 13
November, the Sensex jumped 116.09 points to 13,399 as select blue-chips
were in demand. It gained 26.50 points to 13,425.50 on 14 November, as
buying continued. On 15 November 2006, the Sensex has gained 43.87 points,
settling at 13,469.37 on demand for banks and cement makers. On 16
November 2006, the Sensex finished 36.52 points higher, at 13,505.89, on
buying interest for banking and cement stocks. Sensex lost 76.41 points on
17 November to settle at 13,429.48 on profit booking. It had struck an all
time high of 13,678.04 in opening trade on that day. For
every one rupee that the Indian public gained when the Sensex crossed 13K
at the end of October, the `foreign' shareholders gained Rs 3. The gain
for the Indian public over the first 10 months of this year was Rs 42,000
crore, while the share of foreign holding rose in value by more than Rs
1,26,000 crore. More importantly, when the index crossed the 13,000-mark
market cap of companies in which foreign holding is 50 per cent or more
accounted for almost a third of the number of companies and nearly a
quarter of the total Sensex value of Rs 16.5 lakh crore. The
trustee of a mutual fund cannot function on the board of an asset
management company (AMC) of another mutual fund. SEBI proposes to amend
the SEBI (Mutual Fund) Regulations in this regard. According to SEBI,
trustees are privy to information pertaining to the conduct of business by
the asset management company. The role of independent trustees is crucial
to avoid conflicts of interest in a mutual fund. Derivatives
The Nifty touched 3900 levels before easing down to close at 3852 in the spot market. The November Nifty futures continued to trade at a premium, closing at 3857 on Friday. The December futures were held at 3856.95, which is a marginal discount to the November series. A premium on the future is indicative of bullishness, and expectations would still be inclined that way. Government
Securities Market Primary
Market Under
the weekly T-Bill auctions, the RBI mopped up Rs.2925.52 crore and Rs.1318
crore through 91-day T-Bill and 182-day T-Bill. From this, the RBI raised
Rs.120.52 crore and Rs.615 crore under the Market Stabilisation Scheme
(MSS) through 91-day T-Bill and 182-day T-Bill respectively. The cut-off
yields for the 91-day and 182-day T-Bill were 6.6462% and 6.9298%
respectively. RBI
conducted the auctions of State Development Loan (SDL), 2016 for eleven
states for an aggregate amount of Rs.2431.23 crore. The cut-off yield of
SDL 2016 for Andhra Pradesh, Himachal Pradesh, Maharashtra, Punjab,
Rajasthan and West Bengal was 7.74%, for The
Government of RBI
issued modified guidelines on ‘When Issued’ transactions. The
highlights of the modified guidelines such as WI’ transactions can be
undertaken in the case of securities that are being reissued as well as
newly issued on a selective basis; Stipulation that any ‘WI’
transaction must have a Primary Dealer (PD) as counterparty has been
dispensed with ; Only PDs can take a short position in the ‘WI’
market. In other words, non-PD entities can sell the ‘WI’security to
any counterparty only if they have a preceding purchase contract for
equivalent or higher amount; Long position for re-issued security as well
as newly issued security for non-PDs should not exceed 5% of the notified
amount; Long or short position for PDs in case of re-issued security
should not exceed 10% of the notified amount, while in case of newly
issued security the short position of PDs should not exceed 6% and long
position should not exceed 10% of the notified amount. Secondary
Market Despite
fall in the international oil prices in recent times, Rakesh Mohan, deputy
governor, Reserve Bank of India (RBI), has maintained that the incomplete
pass-through of rising oil prices, particularly LPG and kerosene, has kept
inflation under check. The other factors, namely declining intensity of
oil usage, higher competition and stable inflation expectations, have also
controlled inflation. “The
inflation management has been facilitated by an improved monetary fiscal
interface, forces of competition unleashed by growing openness and
deregulation of the economy. The relatively modest inflation (5.4% as on
October 21) is attributable to a number of factors such as declining
intensity of oil usage, incomplete pass-through in some cases, higher
competition and finally stable inflation expectations in view of
pre-emptive monetary policy tightening, The
weighted average YTM of G.S 2016 7.59% bond was 7.5372% on Nov 17, 2006 as
compared to 7.5979% on Nov 10, 2006. The 1-10 year YTM spreads decreased
by 5 bps to 56bps. Bond
Market UTI
Bank has tapped the debt market through issuance of upper tier II bonds
with a tenure of 15 years and offering coupon of 9.35 per cent with a call
option at the end of 10 years and if it is not exercised then the coupon
is steeped up by 50 basis points. HDFC
has tapped the market to mobiles Rs 200 crore by offering 8.40 per cent
for 3 years. Foreign
Exchange Market The
rupee-dollar exchange rate has depreciated from Rs 44.45 on November 10 to
Rs 45.10 on November 17 before touching a low of Rs 45.34 on November 15.
The six-month forward premia closed at 2.01% (annualized) on Nov 17, 2006
vis-à-vis 1.77% on Nov 10, 2006. Commodities
Futures derivatives Commodity
futures market regulator Forward Markets Commission (FMC) is gearing up to
considerably bolster its regulatory oversight once the Forward Contracts
(Regulation) Amendment Bill 2006 is passed. The Bill, currently, is with
the Parliamentary Standing Committee and could be tabled in the
forthcoming winter session. Pending amendment, FMC has been internally
working on draft regulations to monitor and govern a host of market
participants and relationships amongst them, said Mr S. Sundareshan,
Chairman, FMC. FMC has identified 15 areas for regulations for this
purpose. These regulations, among others, intend to cover areas such as
commodity pool operations, depositories, awareness and investor
protection, portfolio management services or PMS managers, commodity
brokerages / members, capital adequacy, customer interest, maintaining
financial records and the like. To deter malpractices in futures trading
the regulator has decided to levy penalties that are far from paltry.
Indeed, penalties could become commercial in nature. For instance, unfair
trade practices or malpractices will attract penalties extending to the
whole of the profit made through the transaction resorting to such
practices or as high as Rs 25 lakh.
Corporate SectorZee
Telefilms has acquired a 50 per cent stake in Ten Sports at an enterprise
valuation of $ 114 million (or $ 57 million for the stake sold) from Larsen and Toubro has entered into a technological collaboration with Mitsubishi Heavy Industries for manufacturing the equipments for power mega projects. The companies will together invest Rs 450 crore in the venture, currently registered as L&T Boilers Limited. Under the agreement, the Japanese company will transfer technology to L&T for manufacturing boilers. Swiss cement company Holcim has raised its share in Gujarat Ambuja Cements Limited (GACL) by buying 50 million shares for Rs 685 crore. The company’s stake in GACL has now increased up to 18.4 per cent from about 14.8 per cent. IVRCL
Infrastructures and Projects Limited has received new orders worth Rs 343
crore in water, environment and power sector. The company has got Rs 113
crore order by Power Grid Corporation of Wipro Infotech, a division of Wipro Limited, has won Rs 304 crore contract for providing comprehensive IT outsourcing services to Dena Bank over a period of ten years. Texmaco, a KK Birla group company, has received an order to supply 900 flat wagons to Container Corporation of India Limited (Concor). The company would supply 20 rakes comprising 900 bogie container flat wagons (BLC) valued at Rs 145 crore. Export SectorThe government is likely to come out with a policy on FDI in credit information bureau (CIB). CIB is a repository of credit information with current and historical data on both existing and potential borrowers. CIB maintains both negative and positive database of credit information, which can be accessed by the lending institution. However, the bureau does not collect information on deposit accounts, current accounts and cheque accounts of a borrower. According to banking sources, the investment policy under discussion proposes to allow FDI up to 49 per cent of the total investment in a credit bureau. However, FIIs may not be allowed to invest in such ventures. Import
of cheap automotive spares from
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