Current Economic Statistics and Review For the
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Theme
of the week:
Banking Scenario – Top 100 Centres*
The
Reserve Bank of The Reserve Bank has recently released the above data for the month ending March 31, 2007. This note attempts to present a brief review of quarterly data for all scheduled commercial banks and for Top 100 centres during the period 2001 to 2007. Before discussing the status of the centres, an overview of the banking data is presented. Commercial
banks at a Glance Data on aggregate deposits and credit of all scheduled commercial banks classified according to various bank groups, are presented in Table 1, for selected years, viz, 2001, 2004, 2006 and 2007, whereas the data according to population groups are given in Table 2 for the same four time points.
It may be seen from Table 1 that deposits grew at higher rate (at 24.2 per cent) in March 2007 over March 2006 compared with the increases in 2006, 2004 and 2001. Bank credit grew by 30.6 per cent and 28.5 per cent in 2006 and 2007, respectively, much higher than the credit growth in 2001 and 2004. The recent two years, viz., 2005-06 and 2006-07, experienced all-round growth, in agriculture, industry and services sectors resulting a growth rate of 9 per cent and above in GDP. The high demand for goods and services lead to higher growth in output which impacted large growth in bank credit. All bank groups, experienced similar growth rates in their credit in 2005-06 and 2006-07 (over 30 per cent) except by Regional Rural Banks. On the deposits front, foreign banks outpaced other bank groups in their growth in 2004, 2006 and 2007. Nationalised banks, and SBI and its associates accounted for large chunk of deposits as well as credit in all the selected four time points.
Across the population groups, metropolitan areas accounted for about 56 per cent of aggregate deposits and 66 per cent of credit, which have increased from 42.8 per cent and 61.6 per cent, respectively in March 2001. Rural areas and semi urban areas bore the brunt of reduction in their shares in respect of both deposits and credit, while urban areas just maintained their share during the period under review. The C-D ratio, however, increased from 40.2 per cent to 60 per cent in rural areas during 2001 to 2007, next to metropolitan areas with the CD ratio around 89 per cent in 2007. Credit in rural areas grew by 21.5 per cent and 25.5 per cent in 2007 and 2006, respectively, as against 28.5 and 34.8 per cent growth in aggregate credit in the two years. The reclassification of branches according to 2001 census population figures could have affected, to some extent, the shares of rural areas in aggregate deposit and credit besides the declining trend noticed during 2001 to 2004. Statewise
distribution of deposits and credit Statewise
distribution of deposits and credit of all scheduled commercial banks for
periods ending March 2001 and March 2007 is given in Table 3. It is
observed that shares of northern and north-eastern regions remained more
or less the same while those of central region and eastern region declined
marginally in both deposits and credit.
Top
100 centres: Data on outstanding deposits and bank credit of top 100 centres are presented in Table 4 for each of the quarters from March 2001 to March 2007.[2] Centres are arranged in descending order of size of deposits outstanding with a branch on one hand and by size of credit on the other, irrespective of the state in which a centre is located. It may, however, be mentioned that the top 100 centres need not necessarily be same in all the quarters as the branches in a centre can have larger or lower amount of deposits/credit in the current quarter over the previous quarter (s) and accordingly, that centre gets included or not in top 100. The
top 100 centres accounted for about 59 per cent of aggregate deposits in
March 2001 while the top 100 centres accounted for 75.5 per cent of credit
when the centres are arranged by credit. In terms of number of offices,
they, whether classified by deposits or credit, accounted nearly for
one-fourth of all offices through out the period. But the share of top 100
centres steadily increased to nearly 69 per cent in aggregate deposits
while such share in total credit varied between 75-77 per cent and stood
at 77.4 per cent in March 2007. Thus 75 per cent of the offices accounted for only 23-24 per cent of aggregate credit during 2006 and 2007, though they had a little higher share (around 30 per cent) in aggregate deposits. It is also observed that the growth in deposits and credit of the top 100 centres is always higher than the growth in aggregate deposit and credit, as expected. Further, the growth in deposits in March quarter is generally higher than the growth in other quarters of the financial year. Bank branches might be canvassing for deposit mobilisation to achieve their targets, resulting in higher growth than in previous quarter of the fiscal. However, similar pattern is not observed for credit. On the contrary, in 2002-03, 2004-05, and 2006-07, the growth in credit of these centres was lower than their credit growth in other quarters. This is only to observe that banks have not making up for enhancing their credit growth towards the end of the financial year to achieve their targets. The growth rate in credit from December 2004 onwards for the top 100 centres was more than 30 per cent while the corresponding growth rates in deposits were lower compared those of credit.
Table
5 presents the list of top 10 centres and their share in aggregate
deposits and bank credit in March 2001 and March 2007. It is observed that
the top 10 centres remained the same in March 2001 and March 2007 in
respect of both deposits and credit. Of these, Mumbai and
A
frequency distribution of top 100 centres according to their state of
location as per the classification of deposits and also by credit is given
in Table 7 for the years 2001 and 2007. The distribution of the 100
centres across states according to deposits is almost the same in both
time points, viz., 2001 and 2007. While 20 centres each are from northern
and central regions, 23 and 24 centres are from western and southern
regions respectively in 2007, among the top 100 centres. When the
distribution is seen from credit classification, 33 centres are among the
top 100 from southern region in 2001 as also in 2007. However, exact
identification of the centres at both time points is not attempted. In
respect of western region and central region, only 17 and 15 centres
appear in top 100 in 2007 compared with 21 and 17 in 2001, respectively.
More number of centres (25) appeared from northern region in 2007 compared
to 20 in 2001. Large amount of credit was extended in 2007 over 2001 by a
few new centres in Haryana (3), Jammu & Kashmir (1), Himachal Pradesh
(1) and In summary, the frequency distributions of the top 100 centres across states between the two time points are very close whether classified by deposits or bank credit, excepting a few minor changes and above limitation.
Annex: Definitions of certain Terms 1. A centre is defined as the revenue unit classified and delimited by the respective state government, i.e., a revenue village/ city/ town/ municipality/ municipal corporation, etc., as the case may be in which the branch is located. 2. Population group classification of bank centres for March 2006 & 2007 are based on population data as per 2001 census while such classification for earlier periods is based on 1991 census. There is no change in the definition of population groups, which are defined as: (i) Rural – includes centres with population of less than 10,000 (ii) Semi-urban – includes centres with population of 10,000 and above but less than 1 lakh (iii) Urban – includes centres with population in the range of 1 lakh & above but less than 10 lakh (iv) Metropolitan – includes all centres with population of 10 lakh and above 3. Aggregate deposits exclude inter bank deposits and the bank credit represents gross bank credit excluding inter bank advances, but includes outstanding amount of bills rediscounted with RBI and financial institutions. (Source: RBI: Quarterly Statistics on Deposits and Credit of scheduled commercial banks, March 2007, and earlier issues). * This note has been prepared by Dr. K. S. Ramachandra Rao
Highlights of Current Economic Scene AGRICULTURE The central government has not been able to achieve the wheat procurement target of 150-lakh tonnes during the current rabi marketing season April-March 2007-08; partly due to low arrival of production in the market and heavy purchase made by the private sector. While Food Corporation of India (FCI) and other governmental agencies have procured 111.04 lakh tonnes out of 154 lakh tonnes of the foodgrains arrived at different wholesale markets in the country, whereas private sector has purchased 18.76 lakh tonnes as on July 30, 2007. Meanwhile, the foodgrains stocks with FCI has touched 211.84 lakh tonnes, out of which wheat stock has been 120.2 lakh tonnes as on August 01, 2007. In order to augment the buffer stocks, the central government has plans to import 50 lakh tonnes of wheat during the current financial year. The
estimation undertaken by Agricultural ministry’s indicates that
country’s kharif coverage has moved up in most crops especially in
cotton and soyabean. The report released by Ministry’s Crop Weather
Watch on August 10, 2007 has revealed that area sown under cotton is 86.24
lakh hectares (lh), which has exceeded the normal coverage of 83.73(lh)
under which 53.32(lh) is reported to be planted as Bt cotton. Similarly,
the soyabean-sown areas have touched 85 (lh), a quarter more than the
normal. As per the Green cardamom output is expected to reduce by 40 per cent, due to unfavorable climatic conditions. Prices are expected to rise because of upcoming festivals and low output. Prices are estimated to raise by Rs 50 i.e. it would reach to Rs 575-600 per kg for the extra bold quality and Rs 475-500 per kg for the virudnagar bold quality. One of the major cardamom-growing states, Kerala, is reported to be under inclement weather conditions that have affected the crop adversely and the arrival of good quality cardamom has fallen drastically. Central government has approved two major schemes, viz., Additional Central Assistance (ACA) and National Food Security (NFS), which will begin with this fiscal year (2007-08) and last over the period of five years. The total outlay assigned for both the programmes is more than Rs 29,800 crore, under which Rs 25,000 crore has been allocated for (ACA) and Rs 4,882.48 crore for (NFS). This programme is predicted to enhance public investment in agriculture and allied sectors, incentivise state and district agricultural plans and help state to meet the targeted agricultural growth rate of 4 per cent from the present 1.8 per cent. The current year commitment for the scheme would be Rs 1,5000 crore, while in next four years, it will be around Rs 5,875 crore pr annum. Under this mission, the total amount is subdivided as per the crops, i.e., Rs 17,222 crore is allocated for rice, Rs 1,920 is allocated for wheat and Rs 1,240 crore for pulses. It is estimated that with the introduction of this scheme, growth in the rice production would be concentrated in 133 districts of 12 states, while wheat output growth would be in 138 districts of 9 states and pulses in 168 districts of 14 states. Moreover, on the occasion of Independence Day, Prime Minister has ensured that the government would soon launch a special programme to invest more than Rs 25,000 crore in agriculture to enhance livelihood of farmers and increase food production.
As
per Central Sericulture Research and Training Institution, nearly 25,000
farming families in Banglore and Department of Commerce, in collaboration with agriculture ministry and APEDA, is going to launch ‘Mangonet’, i.e., a system that would provide complete solution regarding Indian mangoes export. It will be introduced to provide traceability of sources for the comfort of importers, in the wake of bio-safety concerns of farm produce for mangoes. Software would be developed by APEDA, under which they would provide the information to exporters about the monitorisation of the pesticide residue, achievement of product standardization and traceability of the products through different stages of its production, processing and marketing. Whereas, agriculture ministry would set up testing laboratories and the cost would be borne by the National Horticulture Mission. Singapore International Oils and Oilseeds Conference [SIOOC] held in 2007 have stated that edible oil imports would decline due to high prices; which is likely to reach 58 lakh tonne for oil season (November-October) 2006-07, that is about 6 lakh tonnes lower as per the estimation of 64 lakh tonnes. The estimation undertaken states that the country’s total edible oil demand may increase to 125 lakh tonnes for season 2006-07 from actual 122.80 lakh tonnes for 2005-06, while total supply is estimated to 67.75 lakh tonnes for 2006-07 from actual import 54 lakh tonnes in season 2005-06 mainly through domestic production. According
to the World Health Organisation (WHO), globally there have been more than
300 confirmed human cases of bird flu and nearly 200 deaths since 2003 due
to the H5N1 strain and avian influenza. The H5N1 virus spreads disease
mainly among birds, but expert’s worry that it may mutate into a form
easily transmitted to human beings. It is observed that As per the decision undertaken by committee of secretaries (CoS) after reviewing the wheat import situation, the government would facilitate import of wheat flour by reducing the effective duty from 36.4 per cent to zero; this will help processing industries. As the global prices of wheat are appreciating gradually, the government is facing with the problem of justifying imports at high prices. However, it is stated that the country is importing wheat not due to scarcity of the grain, but with a view to replenish the buffer stock. However, it is not clear that whether the government will import wheat flour on its own account or allow imports by the private sector. This has to be approved by the Cabinet Committee on Prices or the Cabinet Committee on Economic Affairs. International
Olive Council (IOC) will launch olive promotional campaigns in The
state-run Spices Board is planning to stabilise the market price of
cardamom, by forming a new company to brand and retail the product. To
save cardamom consumer from unscrupulous traders and vendors, the spices
board would initiate some radical steps to popularise the branded variety.
As domestic consumption has increased, it has helped to sustain the
cardamom price, when the export market has suffered a steep fall from
2,000 tonnes to 500-600 tonnes. World
Coir exports have suffered due to appreciation of Indian rupee against dollar. Exports have slipped by 5.72 per cent in value terms during April-July 2007, as compared that with corresponding period last year. During 2001-02 exports of coir and its products were around 71,334 tonnes, valued at Rs 320.58 crore, while in 2006-07 exports have touched 1,68754 tonnes valued Rs 605.17 crore. The
International Cotton Advisory Committee (ICAC) has projected that a firm
trend in the world cotton prices during the season 2007-08 would fall by
2.7 per cent mainly due to lower cultivation in As
per the estimation undertaken by the Spices Board, spices export from the
nation is likely to touch $1 billion by 2008-09 on the back of higher
exports of chilli, cumin, and mint products. Total spices exports worth Rs
3575.75 crore was exported as against that of Rs 813.21 crore in 2005-06,
reporting a growth of 36 per cent. The InfrastructureRailways In
order to attract tourists the railways are planning to introduce luxury
trains with facilities like fashion shows, premiering new films, launch of
music albums, spas and beauty parlour. Palace on Wheels, Heritage on
Wheels in Rajasthan sector, Fairy Queen on Delhi-Alwar sector, Deccan
Odyssey in Steel In a bid to bridge the gap between the steel demand and production in the domestic market and achieve 120 million tonne (MT) production by 2012, the steel ministry has asked the industry to spell out the proposed investment and the expansion plans so that it can take up the matter with concerned state governments and push the matter on case-by-case basis. The ministry has set a target to add 70 MT steel capacity over the next five years and the industry has proposed to invest around Rs 2,80,000 crore to make it happen. Tata Steel plans to add 25 MT steel making capacity over next five years, while JSW and SAIL plans to add 15 MT and 13 MT capacities respectively. Essar steel plans to add 10MT capacity and Arcelor Mittal aims at having steel making capacity of 6 MT by 2012. Coal Coal India (CIL) and Neyveli Lignite Corporation (NLC) have tied up with Oil and Natural Gas Corporation of India (ONGC) for two pilot projects for coal gasification and liquefaction. CIL - ONGC project is coming up in Jharkhand, while NLC-ONGC pilot project is coming up in Rajasthan. Both projects will require an initial investment of Rs 100 crore each. General Rate of growth of the index of six core- infrastructure industries has gone down from 7.7 per cent in June 2006 to 5.3 per cent in June 2007. Crude petroleum has registered a negative growth of 1.8 per cent in June 2007 as against a rise of 1.2 per cent in June 2006. Coal production also decelerated to 1.3 per cent from 11.8 per cent in the previous year. Cement and finished steel industries have grown at 5.6 per cent each also showing a sharp
decrease in their growth rates. Electricity generation is the only industry, whose production accelerated registering a growth rate of 6.8 per cent in June 2007 on top of 4.9 per cent in June 2006. InflationThe annual point-to-point inflation rate based on wholesale price index (WPI) rose by 4.05 percent for the week ended July 28,2007. During the comparable week of the earlier year, it was 5.08 per cent.
During the week under review, the WPI rose to 213.1 from 213.4 in the previous weeks’ level (Base: 1993-94=100). The index of ‘primary articles’ group, (weight 22.02 per cent), fell by 0.4 percent to 222.5 from its previous week’s level of 223.4, mainly due to decline in the prices of ‘food article like fruits and vegetables, poultry chicken, ragi and moong and fish marine.
The price index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) registered a marginal rise of 0.1 due to higher price of aviation fuel and furnace oil..
The index of ‘manufactured products’ group declined by 0.1 per cent to 185.6 from 185.7 during the week under review. The lower prices of food products like bran, imported edible oil and sunflower oil and methanol. Bop film and rubber chemicals and also pig iron contributed for the fall in manufactured products. The
latest final index of WPI for the week ended June 09 26, 2007 has
undergone no revision; as a result both, the absolute index and the
implied inflation rate stood at 211.8 and 4.28 per cent.
BankingThe
Export Import Bank of Financial MarketsCapital
Markets Primary Market BGR Energy Systems Ltd,
formerly GEA Energy System ( Motilal Oswal Financial
Services Ltd proposes to enter the capital market with an initial public
offering of 2.98 equity shares of face value Rs 5 each. The issue, which
is being made through a 100-per-cent book building process, opens on
August 20 and closes on August 23. The price band has been fixed at Rs
725-Rs 825. Of the total issue, 1.42 lakh shares have been reserved for
eligible employees and the net issue to the public is 28.4 lakh shares.
The total issue will constitute 10.5 per cent, while the net issue will
constitute 10 per cent of the post issue paid-up capital of the company.
The equity shares are proposed to be listed on BSE and NSE. The company
plans to raise between Rs 216.25 crore and Rs 246.07 crore to fund organic
and inorganic growth and support its growth plans through long term
working capital deployment, enhanced financing facility for broking
customers and technology advancement. Secondary
Market The market posted fourth straight weekly loss, tracking weak global markets. A whole host of factors right from yen carry trade unwinding, hedge fund redemption pressure, heavy FII selling and sub-prime concerns haunted local bourses throughout the week. The market declined in 3 out of 4 trading sessions. Markets across the globe were inflicted with intense volatility The benchmark index BSE Sensex declined 726.73 points to 14,141.52 in the week ended Friday, 17 August 2007. The S&P CNX Nifty was down 225.30 points to 4,108.05 in the week. On 14 August 2007, Omnitech InfoSolutions settled at Rs 164.55 on BSE, a premium of 56.71 per cent over the IPO price of Rs 105. It debuted at Rs 183.75 on BSE, and hit a low and high of Rs 155 and 183.75, respectively. IVR Prime Urban Developers settled at Rs 418.15 on BSE, a discount of 23.97 per cent over the IPO price of Rs 550, on 16 August 2007. The IVR scrip debuted at Rs 500. It touched a high of Rs 500 and a low of Rs 388. Zylog Systems settled at Rs 431.10 on BSE, a premium of 23.14 per cent over the IPO price of Rs 350, on Friday, 17 August 2007. The scrip debuted at Rs 525, also its high. It also touched a low of Rs 356.20. Despite
rising interest rates and appreciating rupee, capital investments by
Indian companies in the current fiscal could exceed last year’s level,
according to a study by the Reserve Bank of However, the RBI expects the shortfall of Rs 58,253 crore to be more than made good by new projects that will come up in the current year. For all the developments that have taken place in the mutual funds market, the average level of awareness is still pathetic or so suggests Computer Age Management Services (CAMS), the registrar that caters to a large number of India’s fund houses. A survey done by CAMS through IMRB (Indian Market Research Bureau) in a select location not long ago has revealed a startling fact: There is less than 50 per cent awareness of funds. Additionally, there is less than 50 per cent awareness on two key fronts – regulations and returns. A SEBI-appointed group studying the issues relating to difficulties faced by investors while dealing with transmissions of securities in physical and dematerialised mode has recommended a threshold limit up to which the listed companies would require only an Affidavit, Deed of Indemnity and No Objection Certificate from other legal heirs. Standard format of these documents have also been recommended. The threshold limit should be fixed at holding of 200 shares or Rs 1 lakh in value, whichever is higher. Also, the prescribed threshold limit shall be the basic minimum limit to be adhered to by all the listed companies. The companies having higher threshold shall continue to do so, and also can set liberal threshold. The
Securities and Exchange Board of India (Sebi) chairman M Damodaran has
said that subprime crisis was not the only reason for the market
volatility and also ruled out any separate regulation for hedge funds.
Damodaran said: “In fact, there exists no single category as hedge
funds”. He said that the Sebi would prefer them to enter the Indian
markets directly rather than through some offshore derivatives. He said
registration of hedge funds with the Sebi, as in the case of foreign
institutional investors, was enough. He pointed out that the Sebi was not
worried about the large number of players coming into The Central Board of Direct Taxes (CBDT) has clarified that lending and borrowing of shares for short selling in equities will not attract capital gains tax. With this clarification one of the important hurdles in the way of permitting short selling on the stock exchanges has been cleared. According to the sources, the short selling of securities will also not attract securities transaction tax (STT) as is prevalent in case of physical sale and purchase of equity shares. This is because securities offered under lending and borrowing of securities does not amount to transfer of shares and hence it is exempt from capital gains tax. Short selling is backed by a scheme of lending and borrowing of shares which will help in settlement of transactions through physical delivery. This is otherwise known as covered short sale. Derivatives There are appreciable discounts to spot visible in the index options market. The spot Nifty landed at 4108 after hitting a low of 4002. The August Nifty contract was at 4091 while the September contract was at 4073 and October was at 4052. Incidentally, there is almost 300,000 open interest in the October contract already. The FII exposure pattern in derivatives is interesting. They were massive net sellers last week in spot. Across the derivatives segment, they increased their exposures with the open interest growing due to an increase in 1) index future sales 2) index call option buys 3) stock futures sales. This makes it clear that they are bearish in perspective across the entire market, the call index option exposure is a hedging mechanism while the short index and stock futures positions are direct attempts to gain as the market falls. In the index options segment, there has been a massive expansion in the Nifty calls open interest segment across all time frames. A lot of August Nifty puts have been settled but there has been an overall open interest expansion with a large number of September and October puts being opened. The overall put-call ratio (in terms of open interest) is now an unsustainably high 2.2. This suggests that the market is oversold in the short term and almost guarantees at least one big bullish session in the next week. Most underlyings fell on vast volumes in spot markets and the action was mirrored by massive volume and high open interest in the stock futures segment. The fact that the FIIs are net short across this segment could be a key. Government Securities
Market Primary
Market RBI conducted the sale (re-issue) of "5.48 per cent Government Stock 2009" for Rs.4000 crores under the Market Stabilisation Scheme (MSS) on August 16, 2007. The cut-off yield of the security was set at 7.9864 per cent. RBI
conducted the auction of State Development Loans (SDLs), 2017 for eight
states for an aggregate amount of Rs.3484.434 crores through a yield based
auction using multiple price auction method. The cut-off yield of the
securities was 8.30 per cent for Tamil Nadu, 8.35 per cent for the states
of Manipur, Mizoram and Punjab, 8.36 per cent for Kerala, 8.39 per cent
for RBI has announced the sale (re-issue) of "7.27 per cent Government Stock 2013" and "7.99 per cent Government Stock 2017" for Rs.5000 crores and Rs.2000 crores on August 24, 2007. Secondary
Market Overnight rates jumped to a high of 55 per cent, their highest level in nearly five months, from 6 per cent at the last close as a few banks had to resort to sudden borrowing to cover their reserve requirements with the central bank on the reporting Friday. The 1-10 year YTM spreads decreased by 18 bps to 50 bps. The yield of the benchmark 10 year security - 7.49 per cent 2017 was 7.9918 per cent as against 7.9861 per cent during the previous week. Average outright settlement volumes decreased by 49 per cent as compared to the previous week. Average repo volumes increased by 5 per cent compared to the previous week. The highest daily settlement volumes for outright trades were Rs.64 billion on August 13, 2007 and Rs.230 billion for repo trades on August 14, 2007. The
US Federal Reserve Board on August 17, 2007 approved temporary changes to
its primary credit discount window facility in order to promote the
restoration of orderly conditions in financial markets. It has reduced the
primary credit rate to 5.75 per cent and has extended the provision of
term financing for as long as 30 days. Bond
Market The corporate bond
market witnessed issues of certificates of deposit (CDs), especially by
foreign banks, amounting to a total of Rs 300-400 crore. According to
dealers, foreign banks are raising rupee resources to stay liquid, fearing
an adverse impact of a liquidity crisis in overseas markets. Citibank,
Rabo Bank and Deutsche Bank are some of the major issuers of CDs. The
interest rates on 3-month to 6-month CDs came down by 5-10 basis points to
7.85 per cent and 8.10 per cent respectively compared with the levels seen
on Friday. Other banks that raised
money included State Bank of Foreign
Exchange Market The rupee depreciated
marginally against the dollar, but failed to revup the information
technology and export sector stocks. The six-month forward
premia closed at 1.30 per cent (annualized) on August 17, 2007 vis-à-vis
1.90 per cent on August 10, 2007. Commodities
Futures derivatives Forward Markets
Commission Chairman B C Khatua said that commodity futures trading in the
country is heading toward saturation levels due to bottlenecks in
infrastructure and operational constraints, lack of quality warehousing
facilities as well as uniform standards for benchmarking each commodity
are some of the constraints facing the commodity market. Setting a uniform
standard for a commodity as far as possible will help in increasing the
volume of trade as well as ensuring better participation, he added.
Turnover in commodity exchanges dropped 6-7 per cent in April-July
2007-08 compared with same period a year ago due to these problems, the
regulatory board head said. The Central government banning forward trading
in high volume commodities like wheat a few months ago has also
contributed to the fall in turnover, he said. Limits imposed on open
positions that could be held by individuals for near-month contract in
commodities like pepper and jeera has also affected the market, the
chairman said. Rejecting suggestions for a ban on futures trade, he said
the market will achieve further growth by bringing more commodities under
forward trading. Commodity futures trading in its present form is relatively new in The recently introduced
futures trading in raw jute on the Multi Commodity Exchange (MCX) has come
in for sharp criticism from the jute industry, with the latter urging the
Centre for an immediate ban on the futures.
The industry’s appeal is currently being looked into by the
textile ministry. The ministry is already in discussion with the ministry
of consumer affairs, food and public distribution department (FPD) and the
Forward Markets Commission (FMC).
According to the
industry, futures trade in raw jute is a clear /fatka and dabba trade
perpetrated by unscrupulous brokers and market operators, who care least
about the industry, and are mostly interested in maximising gains. Such an
action, the industry feels, can never be allowed to grow especially on
jute, which is an essential commodity and is governed by Jute and Jute
Textile Control Order (J&JTCO). The industry
representatives said that the recent raw jute speculation on MCX showed
compulsory deliveries despite -the contract. The market speculators and
operators escape the practice through delivery/purchase by paying 5 per
cent penalty as mentioned in the penal provisions, they alleged. The penal
margins being very low, the speculators are deriving benefits out of these
contracts, thereby marring prospects for the industry.
Moreover, the industry
argued, with the Centre making packaging of sugar and food grain
compulsory in jute bags, the jute prices remaining stable is all the more
necessary. The Centre has recently made the order under the Compulsory
Jute Packaging Act of 1987.
If prices of raw jute
doesn’t remain within limits, the cost of production of bags would shoot
up, adversely affecting the operations of the food ministry, FCI and other
state agencies, who will then be forced to pack the materials well above
the market regulated prices and distribute through PDS,? said an industry
representative. It has been pointed out
to the government that due to ?speculative trade? on the National Multi
Commodity Exchange (NMCE), Ahmedabad, in jute year 2005-06, the prices of
raw jute rose exorbitantly and hoarding became a common practice.
At that point jute was
not available in the market, forcing the industry to go in for ?block
closure? of mills resulting in unemployment of almost 2.5 lakh workers and
daily wage earners across the country.
The industry had then
filed an FIR with the state police to investigate the whole activities of
the NMCE and its brokers/sub-brokers and agents. Following this, the
Centre took a series of steps such as fixing fresh prices of raw jute,
registration of all dealers, traders or agencies holding raw jute and
launching of de-hoarding operations.
Corporate SectorIn
a largest venture capital fund ever raised for A study of debt-to-equity ratio of 500 major companies with sales more than Rs 100 crore between 2006-07 and 2005-06 revealed that the D/E ratio of these companies has gone up from 0.61 during 2005-06 to 0.65 during 2006-07.Out of these 500 companies 248 witnessed a fall in D/E ratio whereas 224 showed a rise in the two years under the study. Rest 28 firm’s ratios were same for both years. A significant rise in the D/E ratio is registered by Tisco(0.26 in 2005-06 to 0.69 in 2006-07) and Ranbaxy Lab(0.43 to 1.35).(Fe,19) Hindustan Zinc (HZL) has received London Metal Exchange (LME) registration which is known to be most demanding standard worldwide, for the lead ingots produced at its Chanderiya lead smelter, in Rajasthan. The product registration branded “Vedanta 99.99” denotes a 99.99 per cent purity of lead produced and signifies that these lead ingots are acceptable for delivery at the LME warehouse. (Fe, 19) LN
Mittal’s joint venture with ONGC Videsh has bagged a gas exploration
block in In a bid to acquire more properties and expand its business, Indian Hotels Company (IHCL) a part of Tata Group is planning to raise up to Rs 1900 crore through a rights issue of shares and convertible debentures. Indian hotels will raise Rs 844 crore with a rights issue of equity shares in the ratio of 1:5 at a price of Rs 70 per share and another Rs 900-1080 crore in a rights issue of unsecured debentures in the ratio of 1:10 at a price range of Rs 150-180, which can be converted into shares after two years. (Fe, 14) Shriram Transport Finance Company, the largest asset financing NBFC and part of the Shriram Group has picked up 40 per cent stake in Ashley Transport Services, a wholly owned subsidiary of Ashok Leyland and its group companies. (Fe, 20) JSW Steel is entering into the fields’ of software solutions and Bio-diesel and as a first step the group is exploring options to hive off its in-house software arm, Jsoft solutions into a separate vertical that would provide software solutions to other companies as well. JSoft Solutions currently manages the software requirement of JSW Steel and the rural BPOs that JSW Steel promotes as part of its CSR activities. The group has also undertaken the cultivation of jatropha in 120 acre of land around its steel plant in Vijayanagar and once the group manages to convince farmers to cultivate jatropha in 1000 acres, the company will look at entering the bio-diesel segment. (Fe; 14) The country’s largest steel manufacturer Steel Authority of India (SAIL) and South Korean giant Posco have signed a memorandum of understanding to cooperate on a wide range of business and commercial interest areas. Through this alliance SAIL will get access to Posco’s best-in- class furnace technology, while Posco would be able to use SAIL’s distribution network. Mahindra
and Mahindra which has tied up with Bramont in Tata Steel is facing stiff opposition from various quarters for its Rs 2500 crore Titanium project to be set up in the Tirunelveli District of Tamilnadu.The Company is ready for public debate on any issue and would meet people of the six villages, where the company seeks to acquire 10,000 acres of land through the state government. Apart from providing the market price for the land the company will be employing 1000 persons directly and another 3000 indirectly. If the project goes through, this would be the first titanium project in the world to have a desalination plant as well as a power plant. (15) Visa
steel is setting up a ferrochrome plant in Orissa through a joint venture
with Telecom
Nortel
Networks Corporation, a global provider of communications capabilities is
in talks with an Indian telecom operator for providing technologies to
conduct trial for 4G technologies in Bharti Airtel Lanka, a subsidiary of Bharti Airtel is going to launch 2G and 3G services in Srilanka by the end of the current financial year. The company is also planning to invest approximately $200 million in the next five years in the Srilankan market.The mobile services will be launched under the Airtel brand.
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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