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10th

June 2008 Issue 6


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Economic Trigg

Exports excel in April; up 31.5 per cent

India began fiscal 2008-09 with an impressive 31.5 per cent growth in exports, but surgeprices pushed the import expansion to 36.6 per cent in April. Exports grew to 14.4

dollars in April 2008-09, against 10.95 billion dollars a year ago. Imports, fueled by a big

purchase of crude oil from abroad, went up to 24.27 billion dollars against 17.76

dollars. Trade deficit widened to 9.87 billion dollars in the opening month of the current

against 6.81 billion dollars in the same period last year. Oil imports amounted to 8.02

dollars, showing a rise of 46.2 per cent over the corresponding month last year.

The export performance in April was seen as commendable in the backdrop of the imp

strong rupee on exporters' margins in 2007-08 when the overall growth was limited to

per cent. While rupee started losing ground since May, the positive impact on imports

be seen in the next few months.

RBI sees some moderation in food prices

Food prices in India have shown some signs of moderation in 2008, Reserve Bank of

Governor Yaga Venugopal Reddy said. While increase in food prices was led by wheat d

2006, rice and edible oil also joined the price rise during 2007. However, food prices

exhibited some moderation during 2008. The wholesale price index of food articles d

2008/09 as on May 17 has increased by around 2.5 percent as compared with 3.1 perc

the previous year during the corresponding period," he said.

India's annual inflation rate measured by the wholesale price index rose to a 3-1/2 yea

of 8.1 percent in the week to May 17. Analysts expect it to rise above 9 percent in early

after an increase in state-set retail fuel prices this week. Rising global food prices

prompted Indian policy makers to take a slew of steps to try to contain local prices, incl

banning exports of some commodities and cutting import duties on some food items.

"Overall, some abatement of global prices, indication of better domestic supplieaddition of buffer stocks, including the series of measures already taken by the govern

on the supply side, are expected to yield results in the months to come," Reddy said.

Last month, the OECD and the UN's FAO food agency said food prices would remain high

the next decade even if they fall from current records, meaning millions more risk fu

hardship or hunger. Indian food grains production grew at 1.2 percent during 1990-

slower than an annual rate of increase in population of 1.9 percent in the same p

government data showed.
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India: 4th

most attractive Investment destination:

India has been rated as the fourth most attractive investment destination in the w

according to a global survey. The survey conducted by Ernst and Young found the South

country being preferred after China, Central Europe and Western Europe in term

prospects of alternative business locations and the criteria that drives the perceptiorespondents.

While China received 47 per cent votes, Central Europe and Western Europe got 42 pe

and 33 per cent votes respectively, says the survey of 834 respondents across the world

30 per cent votes, India emerges ahead of the US and Russia, which receives 21 per cent

each. About 21 per cent investors voted in favour of India as one of the top three inno

countries, ahead of UK, France, Finland and Sweden. The US with 50 per cent votes and

with 34 per cent votes stand out in investors minds as the most innovative countries. A

22 per cent investors ranked India second as a preferred global location for relo

projects, following China that received 36 per cent votes. According to the survey, invepay more attention to political and legal stability and telecom infrastructure than l

costs.

Corporate can borrow up to $50 m overseas: Relaxing ECB no

boosting Inflows

With pressures of excessive foreign exchange inflows receding, the Centre has re

external commercial borrowing (ECB) norms for companies, besides hiking foinstitutional investors (FII) exposure limits in Government securities and corporate b

Companies can now undertake borrowings of up to $50 million for incurring

expenditure for permissible end uses under the Reserve Bank of Indias Approval Rou

the case of borrowers in the infrastructure sector, the limit has been fixed even high

$100 million.

Currently, borrowers could avail themselves of ECB of only up to $20 million for

expenditure for permissible end-uses requiring prior approval from the RBI. In other w

not only has the ECB limit been hiked from $20 million to $50 million, but a separate h

limit of $100 million has been created for companies in the infrastructure sSimultaneously, the Centre has relaxed the all-in-cost ceilings for ECBs which appl

borrowings both under the Approval as well as Automatic routes.

For borrowings with average maturity of 3-5 years, the all-in-cost ceiling over six-month

has been raised from 150 basis points to 200 basis points. In the case ECBs above 5

tenor, the same has been increased from 250 to 350 basis points. The Centre also enh

the FII investment limits in Government Securities from $3.2 billion to $5 billion an

corporate bonds, from $1.5 billion to $3 billion.

Impact of curbs


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The Government had in August 2007 imposed curbs on use of ECB monies for under

rupee expenditures in view of the surge in capital inflows, leading to strengthening o

rupee and excess domestic money supply. More than $20 millions corporate borrowin

made to retain the proceeds abroad or use them solely for imports and other fo

currency expenditures.

During 2007-08, the RBIs foreign currency assets rose by $107.31 billion, whereas they

gone up by only $4.89 billion in the current fiscal as on May 16. Also, unlike last yea

rupee has in recent weeks depreciated against the dollar, which means there is less ca

discouraging capital inflows, officials said.

All other aspects of ECB policy such as $500 million limit per company per year unde

Automatic Route, eligible borrower, recognized lender, end-use of foreign cur

expenditure for import of capital goods and overseas investments, average maturity p

and reporting arrangements remained unchanged.


5/24

Indian Econom

Speaking Indicator

Crude above 120$/bbl: The biggest threat to Economy:

Expecting crude to correct to the level of 110 within 15-30 days

When crude was at below 90 level, economy grew at 9% around.

I expect crude at 110+ to erode growth by 1%, at 120+ to erode growth by 2.5%

assuming level to sustain for entire year.

Growth rate expected : 8% (crude below 110);6-6.5%(crude 120 level)

Crude prospect:

US & EU demand falling

China overheating

Demand to fall overallPossibly crude will be at 110-115 level in a month(60% chances)

Other triggers:

ECB relaxation upto $ 50 million +

RBI & Govt. will do their best to increase foreign inflow in the country to:

Tame inflation

Reduce crude shock

Increase growth rate without risking inflation

Rupee Movement:

Volatility is the rule of the game

Convertibility panel sees Rupee to be at 48 levels

RBI is uncomfortable above 45

Rupee to be in range 40-45

Target H2: 40-41

Target Q2: 41-42

Foreign inflow likely to resume in near to mid term

India Story changing

Foreign Institutions not very impressed


6/24

Fundamentals need a push upward

Inflation:

To be 6.5% around in a month

Q2 average inflation :6%

Food inflation already contained in my views

Only risk to inflation is high crude prices

Industrial commodities prices are also cooling down in past 15 days or at least

stabilizing.

Growth:

If inflation reduces to 6% level, and economic scenario doesnt improve, RBI ma

think loosening of monetary policies.

US Fed preparing itself to fight with inflation as it believes that it has won the wagainst growth concerns and recessions.

Interest rate hike in US likely.

That will strengthen $ against major currencies.

Crude is about to take a hit downward as $ appreciates.


7/24

World Economic Outlo

Testimony of the top Policymaker

Following is the excerpt of speech of

We are here giving the text in original, fo

readers. The remarks are the US Policym

perspective of the recent messed up scena

global economic crisis. The write up is interesting in the way that it tries to unfol

reasons and explanations of what went wrong in the process that could have been avoi

According to Mr Barnanke, several longer-term developments served as prologue fo

recent turmoil:

The first of these was the U.S. housing boom, which began in the mid-1990s and pick

steam around 2000. Between 1996 and 2005, house prices nationwide increased abo

percent. During the years from 2000 to 2005 alone, house prices increased by rougpercent--far outstripping the increases in incomes and general prices--and single-family

construction increased by about 40 percent. Starting in 2006, the boom turned to bust.

the past two years, building activity has fallen by more than half and now is well below w

it was in 2000.

A second critical development was an even broader credit boom, in which lender

investors aggressively sought out new opportunities to take credit risk even as marke

premiums contracted. Aspects of the credit boom included rapid growth in the volum

private equity deals and leveraged lending and the increased use of complex and often o

investment vehicles, including structured credit products.

A third longer-term factor contributing to recent financial and economic developments

unprecedented growth in developing and emerging market economies. From the

perspective, this growth has been a double-edged sword. On the one hand, low-cost im

from emerging markets for many years increased U.S. living standards and made the Fed

of managing inflation easier. Moreover, currently, the demand for U.S. exports arising

strong global growth has been an important offset to the factors restraining domestic de

including housing and tight credit. On the other hand, the rapid growth in the em

Fed Chairman Ben S. Bernanke

At the International Monetary Conference,

Barcelona, Spain (via satellite) on June 3, 20


8/24

markets and the associated sharp rise in their demand for raw materials have been--tog

with a variety of constraints on supply--a major cause of the escalation in the relative pri

oil and other commodities, which has placed intense economic pressure on many

households and businesses.

In the financial sphere, the three longer-term developments are linked by the fact t

substantial increase in the net supply of saving in emerging market economies contrib

to both the U.S. housing boom and the broader credit boom. The sources of this increnet saving included rapid growth in high-saving East Asian countries and, outside of C

reduced investment rates in that region; large buildups in foreign exchange reserves

number of emerging markets; and the enormous increases in the revenues receiv

exporters of oil and other commodities. The pressure of these net savings flows led to

long-term real interest rates around the world, stimulated asset prices (including

prices), and pushed current accounts toward deficit in the industrial countries--notab

United States--that received these flows.

The current economic and financial situation reflects, in significant part, the unwind

two of these longer-term developments--the housing boom and the credit boom--an

continuation of the pressure of global demand on commodity prices.

The housing boom came to an end because rising prices made housing increa

unaffordable. The end of rapid house price increases in turn undermined a basic prem

many adjustable-rate subprime loans--that home price appreciation alone would a

generate enough equity to permit the borrower to refinance and thereby avoid ever h

to pay the fully-indexed interest rate. When that premise was shown to be false and de

on subprime mortgages rose sharply, investors quickly backpedaled from mortgage-re

securities. The reduced availability of mortgage credit caused housing to weaken further

The losses from subprime mortgages have been significant in themselves, but their g

impact was to trigger the end of the broader credit boom. Notably, as subprime losses f

the credit rating agencies to downgrade what had been highly rated mortgage-b

securities, investors also came to doubt the reliability of ratings that had been award

other highly complex securities. As a result, investors became much more cautiou

reversed their aggressive risk-taking of the credit boom period. The resulting pullback aff

a much broader range of securities, including leveraged and syndicated loans, asset-b

commercial paper, commercial mortgage-backed securities, and a variety of structured

products. Large financial institutions, especially in the United States and Europe,

particularly affected by these events, having reported a total of roughly $300 billion in

downs and credit losses. These institutions have also been forced to bring onto their ba

sheets the assets of sponsored investment vehicles that can no longer be financed

standalone basis.


9/24

The Outlook

With this broader perspective as background, I turn now to a brief discussion of the cu

situation and outlook. Broadly speaking, the functioning of financial markets has improv

late, but conditions remain strained and some key funding and securitization markets

shown only tentative signs of recovery. Some borrowers, such as highly-rated corporaretain good access to credit, but credit conditions generally remain restrictive in areas re

to residential or commercial real estate.

Residential construction continues to contract, and the overhang of unsold new h

remains large, although it has declined some in absolute terms. Consumer spending ha

far held up a bit better than expected, but households continue to face significant headw

including falling house prices, a softer job market, tighter credit, and higher energy prices

consumer sentiment has declined sharply since the fall. Businesses are also facing challe

including rapidly escalating costs of raw materials and weaker domestic demand. How

the strength of foreign demand for U.S. goods and services has offset, to some exten

slowing of domestic sales.

Inflation has remained high, largely reflecting continued sharp increases in the pric

globally traded commodities. Thus far, the pass-through of high raw materials co

domestic labor costs and the prices of most other products have been limited, in part be

of softening domestic demand. However, the continuation of this pattern is not guara

and will bear close attention. Futures markets continue to predict--albeit with a great

of uncertainty--that commodity prices will level out, a forecast consistent with

expectation of some overall slowing in the global economy and thus in the demand fomaterials. A rough stabilization of commodity prices, even at high levels, would resu

relatively rapid moderation of inflation, consistent with the projections of Federal Re

governors and Reserve Bank presidents for 2009 and 2010.


10/24

Corporate Rad

Adhunik group plans Jharkhand plant

Neepaz Infrastructure and Developers (NIL) of the Adhunik Group has applied to

Jharkhand government for an MoU for setting up a 16 million tonne pellet plant to me

raw material requirement of steel producers in and around the state. The compan

proposed also to develop a 2500 acre industrial park at Padampur in West Singhbhum d

which has major iron-ore mines.

Mineral-rich Jharkhand was deemed by the company as an ideal location as the pr

estimated to cost Rs 5,850 crore, required significant quantities of iron-ore fines and w

serve the growing raw material requirement of steel mills in the state. Adhunik Group

develop the land and provide it to players interested in setting up units there.

Power would be provided at a concessional rate for an arrangement of 25 years th

group company which is setting up a 1000 mw thermal power plant in the state.

The other facilities of the proposed project are a benefication plant and a township

industrial park if developed would attract huge investment in the state and generate

and indirect employment for around 20,000 people.

Gujarat NRE to raise coal output in Australian mines

Gujarat NRE Coke Ltd, which is increasing coal production at its mines in Australia, is pla

to acquire half-a-dozen bulk carriers to bring coal to India.

"We are in the process of acquiring on lease charter six bulk carriers with the option of b

them out. These carriers are now under construction in shipyards and will be progres

put into use from 2010 onwards," said the vice-chairman and managing director, Arun K

Jagatramka.

The company is planning to increase its production substantially from the two Aust

mines it owns in the next couple of years and is evaluating plans to ramp up proce

capacities in India to deal with the increase in production, he said.


11/24

Gujarat NRE Coke is aiming to garner a substantial share in the 25 million tons coke m

globally, which is expected to triple to 75 million tons by 2011-12. It is the largest non-ca

manufacturer of low-ash metallurgical coke in the country.

"Originally, we planned to mine about 7 million tons coking coal. However, considerin

ongoing prices of coal, we have upped the target. We are currently revising our plan

would mine about 10-12 million tons of coal as part of our desire to emerge among the t

players in the sector globally."

Gujarat NRE produced about 9 lakh tons of coking coal during 2006-07, compared with

tons the year before. The soaring coking coal prices were perceived as specu

phenomena initially but it is increasing firmly.

Asked about the plans for the company's coking units in India, Jagatramka said, "W

evaluating our plans for Indian units. We might expand the existing capacity or set up

facility. We don't see coal prices coming down in the near future."

Gujarat NRE is the first and only Indian company to own and operate coal mines in Aus

Through its listed subsidiaries in Australia, the company operates two mines in the New

Wales region, with combined resources of more than 560 million tons of premium q

hard coking coal and their ownership accords the company the much sought after

against erratic supplies.

Mine ownership also provides a hedge against global price fluctuations. The company al

strategic investments in resource prospecting companies in Australia.


12/24

Gujarat NREs plan draws ire of Greens

Company's plans to excavate under Sydneys water catchment area have raised hackles

Australia's Greens party and other environment groups.

Plans presented to the Australian Securities Exchange earlier this month show that G

NRE wants to mine within 500 meters of the Cataract Dam near Wollongon

Greens MP Lee Rhiannon said mining so close to the dam could cause the wall to crac

could lead to gas leak.

Gujarat NRE acquired Elouera Colliery from BHP in December and merged it with neighb

Avondale Colliery to create a single giant mine.

The company's documents say it intends to extract 350,000 tonne of coking coal this

rising to 1.3 million tonne in 2010, with longer-term targets of 2.5 to 3 million tonne a

by mining areas close to the dam.

Sujana close to acquiring sponge iron unit

Hyderabad-based Sujana Metal Products is close to acquiring a sponge iron unit and one

plant over the next couple of months.

The acquisition will be done in the next two months," Sujana Group of Companies' G

Director, V S R Murthy, said. Both the target companies are based in Hyderabad.

Rohit Ferro to buy 60% in PSP's mining firms

Rohit Ferro Tech Ltd (RFTL) signed a Memorandum of Understanding (MoU) with PSP gro

Indonesia to acquire 60 per cent stake in the two coal mining companies of the PSP grou

The first company has mining concession for thermal coal with coverage area of

hectares and the mine has estimate reserves of 20 million tonnes of coal. The s

subsidiary has rights for coking coal in area spread over 3,851 hectares and coal reserve

estimated at 15 millions. The concession areas of both the companies are located Central Kailmanthan area of the Indonesian archipelago.

Besides meeting RFTL's current coking coal requirements and requirement for comp

proposed 110 captive power plants, company will utilize the output of mines for comm

sales.


13/24

Orissa govt clears Rs 2200 cr Apeejay project

The High Level Clearance Authority (HLCA) of the Orissa government headed by Chief Mi

Naveen Patnaik today cleared the Rs 2200 crore ship building yard and ship repairing p

of the Apeejay Shipping Ltd. It also decided to commit Rs 2700 crore expenditure to the government towards infrastructure development for the Petroleum, Chemicals and P

Chemicals Investment Region (PCPIR) at Paradip.

The ninth HLCA meeting chaired by Patnaik cleared 10 projects in the steel, power and p

chemical sector which were earlier approved by the State Level Single Window Clea

Authority (SLSWCA) headed by the chief secretary.

Talking to the media persons after the HLCA meeting, chief secretary Ajit Kumar Tripathy

the ship building yard and repairing project will be implemented through a joint ve

company named as Oceanic Shipyard Ltd (OSL) formed by APJ Shipping and Bharati Shipy

The project will be implemented in three phases with an estimated investment Rs 2200

in the first phase. Official sources said, the state government is likely to benefit about Rs

crore over next 25-30 years in the form of taxes and duties. Besides, it will generate

and indirect employment opportunities for about 51,300 persons when fully commission

The company has indicated to the Orissa government that it will complete all phases o

project within 72 months. It has sought 1050 acres of land and the state governmen

already accorded the administrative approval for the acquisition of the required land fo

employment intensive project, sources added.

Similarly, the Welspun Power and Steel Ltd's proposal for setting up a 5 million tonn

annum iron ore beneficiation plant and 3 million tonne per annum pelletisation pla

Dhamra was given in principle clearance.

While the company had received approval for setting up of a 3 million tonne per a

(MTPA) steel plant at Tangi at an investment of Rs 6103.8 crore earlier, it proposed to se

iron ore beneficiation and 3 MTPA palletisation plant at Dhamra. This entails an addi

investment of Rs 1830 crore.

The committee also cleared the capacity expansion plan of the Essar Steel from 4 m

tonne to 6 million tonne per annum along with a 8 million tonne per annum irobeneficiation plant. The company intended to change its steel making technology from

sponge iron route to blast furnace route.

The project, in its revised form, entails an investment of about 10,724 crore. Whil

company requires about 2200 acres of land, it has acquired about 103 acres.


14/24

Besides, the proposal of the SMC Power Generation Ltd to expand capacity from 0.5mt

1mtpa, increasing the capacity of MSP Metaliks from 0.25 mtpa to 1 mtpa, enhancem

steel making capacity of Bhusan Steels from 3.10 million tonne to 9 million tonne per a

were approved by HLCA.

The proposal of Bhusan Energy Ltd for 2000 Mw thermal power plant at one go, 100thermal power plant by Monnet Ispat and Energy at one go instead of two phases and

Mw thermal power plant at one go also received the nod of HLCA.

About the PCPIR at paradip, Ashok Kumar Meena, managing director, Industrial Prom

and Investment Corporation of Orissa Ltd (Ipicol) said, HLCA has given in principle appro

the state's Rs 2700 crore expenditure commitment for infrastructural development for P

An estimated Rs 15,275 crore is proposed to be invested in the project.

The Central support for PCPIR is projected at about Rs 5008 crore while the remaini

7517 crore will be mobilized through public-private-partnership (PPP), he pointed out.

Coal Ventures to access coking coal from Australia

The Coal Ventures International (CVI), a joint venture of SAIL, RINL, Coal India, NMDC

NTPC, is likely to access soon coking coal mines in New South Wales (NSW), Australia.

Minister of State for Steel Jitin Prasada was assured of coking coal linkages from NSW d

his meeting today with NSW Minister for Primary Industries, Energy, Mineral Resource

State Development Ian Macdonald. Prasada is currently leading a five-member delegat

Australia.

"Prasada emphasized allocation of mineral resources for Coal Ventures Internationa

Macdonald assured full cooperation in meeting the requirement of this compan

statement by the Steel Ministry said today.

The delegation visited some coal mines near Sydney and Wollongong/Port Kembla

Terminal (PKCT) from where a large chunk of NSW coking coal destined for India is shipp

EIL to form JV with Italian firm

Engineering and consultancy firm Engineers India will enter into a joint venture with I

firm Tecnimont SPA and also pick up 30 per cent stake in the new company.

The Cabinet on Thursday approved the formation of the joint venture company

authorized EIL to pick up 30 per cent stake in the proposed venture, Information

Broadcasting Minister P R Dasmunsi told reporters after the meeting of the Union Cabin


15/24

Set up in 1965, EIL provides engineering and technical services to petroleum and

industries.

For the quarter ended March 2008, EIL posted a net profit of Rs 56.68 crore, compared

42.52 crore during the same quarter in 2007. Total income for the quarter increased

287.77 crore from Rs 209.26 crore in the year-ago period. For the year ended March 31,the company posted net profit of Rs 194.60 crore, against Rs 142.99 crore a year ago.

Tacnimont SPA is an international EPC contractor with a strong presence in oil and

petrochemical and chemical sector.

The Board also recommended a final dividend of 70 per cent on the paid up share ca

Shares of EIL were trading at Rs 576 down by 2.12 per cent on the Bombay Stock Exchan

Nalco to invest INR 40,000 crore in expansion projects

Kalinga Times reported that Orissa based National Aluminum Company Limited has draw

ambitious growth plans involving massive investment of around INR 40,000 crore in n

years. The proposed investments would be made in alumina smelter and power proje

Indonesia, South Africa and Iran and Brownfield and Greenfield growth projects within

Nalco, which now enjoys more managerial powers and commercial autonomy to chart it

course in the world market, has decided to start its third phase expansion afte

completion of the second phase expansion work. The second phase expansion is

implementation at an investment of INR 4092 crore and the same is scheduled

completed by 2008 end.

Now, plans are afoot for 3rd phase expansion, which is likely to entail expenditure to the

of INR 6000 crore. Under this expansion, the bauxite mining capacity shall be enhanc

around 90,000 tonnes, alumina refining to 30,000 tonnes, aluminum smelting to 63

tonnes and power generation to 1700 MW per annum. The proposed third phase expan

likely to entail an expenditure to the tune of INR 6000 crore.

Besides, Nalco also has plans to set up at least two new projects in India. A mines and re

complex is being planned in Andhra Pradesh in which the bauxite mines capacity will b

million tonnes, while the refinery will have a capacity of 1.4 million tonnes. The draft Mo

the project is under negotiation with the Andhra Pradesh government and the projecinvolve an investment of INR 7000 crore.

About overseas project, Nalco has already signed a MoU with Indonesia to set up a 50

tonne smelter and a 1250 MW captive power plant. It plans to invest around INR 14,000

in this Greenfield project. Besides, it is exploring the possibilities of setting up a smelte

power plant in South Africa at an investment of around INR 16,000 crore.


16/24

In Iran, a 310,000 tonne smelter has also been planned, in two phases, as a JV with A

The MoU for the project was signed in March 2008. The project cost will be approxim

INR 8000 crore.

Adhunik Metaliks 2007-08 net profit up by 3.85% YoY

Adhunik Metaliks has posted net profit of INR 21.90 crore for the January to March

quarter up by 2.9% YoY as compared to INR 21.58 crore during January to March

quarter. Net sales for the quarter surged by 66% YoY to INR 311.92 crore as compared t

188.03

For year ended March 31st 2008, net profit rose by 3.85% YoY to INR 80.45 crore as agINR 77.47 crore for the year ended March 31st 2007.

UTV new media acquires 76% stake in IT Nation

UTV New Media, the digital media arm of UTV Software communications Ltd, on Mo

announced its foray into the digital media space with the acquisition of a controlling sta

76 per cent in 'IT Nation', a leading online informediary, for Rs 15 crore.

"UTV New Media envisages an investment of around Rs 120 crore over the next two

into ... the internet space with a portfolio of 10 portals... UTV will acquire 20,000 music including Jodhaa Akbar and upcoming Akshay Kumar starrer 'Singh is king'," T N Prabhu

of UTV New Media said in a statement in Mumbai.

The investment will also include online technology space with IT Nation and in the o

business space with UTVi.com, the business website for the recently launched UTVi bu

channel, he said.

The intention is to create digital assets such as images, music, ring tones and videos fo

catalogues. Also in place are relationships and arrangements with 65 mobile operators a

the world to distribute the mobile content, he added.
http://www.financialexpress.com/news/UTV-new-media-acquires-76-stake-in-IT-Nation/314749/http://www.financialexpress.com/news/UTV-new-media-acquires-76-stake-in-IT-Nation/314749/http://www.financialexpress.com/news/UTV-new-media-acquires-76-stake-in-IT-Nation/314749/


17/24

Visa Steel to invest Rs 10,000 cr

Mineral to metals company, Visa Steel, will be putting up a 2.5 million tonne integrated

project in Chhattisgarh at a cost of around Rs 10,000 crore.

Vishambhar Saran, chairman, Visa Steel said, the technical feasibility report was und

and would be completed by the end of July. Saran was speaking at a press conferen

announce the company's results.

In the first phase, Visa Steel would set up a one million tonne rolling mill, which would c

500-600 crore. The full project would be completed over a period of 5-6

Vishal Agarwal, managing director, Visa Steel said, the balance would have to be acquire

the full requirement would emerge once the feasibility report was completed.

The Chhattisgarh plant would produce long products for the domestic market while the

project would be partly for domestic and export markets.

Agarwal said, "Our strategy remains to establish a globally competitive and world

integrated facility of special and stainless steel making in Orissa, with captive p

generation and backward linkage of raw materials mines."

Visa Steel is planning to integrate backwards into mining of iron ore, chrome ore and

Iron ore is currently being sourced from Orissa Mining Corporation (OMC)

commencement of its own mining operations.

So far, Visa has invested around Rs 1,000 crore in pig iron, coke and ferro chrome pro

Saran said, orders worth Rs 800 crore had been place for further expansion in Orissa.

The 3 lakh tonne sponge iron plant with and the power plants were nearing completion.

A part of the Patrapada coal block at Talcher with 54 million tonne deposit has been al

to the company. Visa Steel is also developing a chrome ore deposit through its subs

company, Ghotaringa Minerals Ltd.

The requirement of coking coal is being imported from Australia.

Visa Steel has posted net profit of Rs 20.99 crore for the fourth quarter ended March

from Rs 65 lakhs in the corresponding period last year. The company's revenue fo

quarter under review rose by 78 per cent to Rs 259.68 crore as against Rs 145.98 crore d

the quarter ended March 2007.


18/24

It has recorded Rs 682.81 crore revenue for the financial year ended March 2008 as agai

537.93 crore in the previous year. Visa Steel's net profit for the financial year ended M

2008 increased by 110 per cent to Rs 43.15 crore from Rs 20.52 crore an year ago.

Vishal Agarwal, managing director, Visa Steel, said, " The growth in revenues and pro

FY07-08 have been driven by better realization in products like pig iron, coke

ferro chrome combined with higher volume growth in the coke and ferro ch

operations."

Srei Infra sub to set up 25,000 IT kiosks

SREI Sahaj e-Village Ltd, a subsidiary of Kolkata-based SREI Infrastructure Finance Ltd

would set up 25,000 IT kiosks to be known as common service centers (CSC) across six s

with a total investment of around Rs 1000 crore over the next two years. The six state

West Bengal, Bihar Orissa, Assam, Uttar Pradesh and Tamil Nadu.Under this project,

centers would provide a bouquet of services starting from e-governance, e-commerce

learning and thereby linking rural areas with the entire world.

"We will set up 25,000 IT kiosks in six states in east and south India, for setting up ru

infrastructure, within a span of two years," said Hemant Kanoria, chairman and man

director of SIFL, said here. "About 25000 village level entrepreneurs (VLE) would run

centers and they in turn would create direct employment of another 75,000 persons in

areas. They would offer services which the government would provide in the rural area

birth certificates, land records among others. Srei Sahaj would add the e-commerce alearning products to make it remunerative for the VLEs," he added.

The cost of setting up one kiosk is estimated to be Rs 2.5 lakh of which a VLE would ha

provide Rs 1.25 lakh and the rest would borne by Srei Sahaj. The revenue for each o

centres is projected at a minimum of Rs 10,000 with in six months from starting the o

services.

"We have made arrangements with the banks for financing the VLEs," said Sabahat S

CEO, Srei Sahaj E-Village Ltd.

For on line services the revenue would be shared equally between Srei and VLE.

"Already 1500 centers are operational in West Bengal and by the end of 2009 the num

slated to go up to 4397 covering 14 districts of the state," Azim added.

This programme is under the national e-Governance Plan (NeGP), which entails setting

100,000 centers across the country.


19/24

Neyveli Lignite posts higher Q4 net

Neyveli Lignite Corporation's net profit for the fourth quarter of last year was nearly 15

as much as in the corresponding quarter of the previous year, but that was more due

quirk of accounting rather than performance.

In fourth quarter last year, the company had to make some adjustments for over-prov

made in the previous years --basically, the company had assumed certain tariffs for its p

but later, the Central Electricity Regulatory Commission allowed it a lesser tariff. For th

year 2006-07, NLC had to reduce its profits by about Rs 500 crore on account o

'adjustments' it had to make. Nevertheless, the company's performance for 2007-0

marked by record mining of lignite and power generation. It produced 17.45 billion unit

year compared with 14.77 billion units in the previous year.

NLC's installed capacity will increase from 2,490 MW, between its two stations in Neyve

the end of this year, the installed capacity will go up by 500 MW. The addition will

equally from expansion at Neyveli and a new plant in Rajasthan.

New projects

NLC's Chairman and Managing Director, S. Jayaraman, said that the Rs 2,030-crore proje

expansion of Thermal Power Station II at Neyveli is underway. The project is to put u

units of 250 MW each. The first of them will be commissioned this financial year and the

a few months later. Lignite for these plants will come from Mine-II, whose capacity i

being expanded to 15 million tons from 10.5 million tons at a cost of Rs 2,161 crore.

The Rs 1,114-crore thermal power project in Rajasthan will go on stream this year

project is for putting up two units of 125 MW each, lignite for which will come fro

Barsingar mine in the State. The mine is also being developed by NLC at a cost of Rs 254

Feasibility report for the 1,500 MW Jayamkondan project is expected to be ready next m

Mr Jayaraman said. On the 2,000 MW Hirma project in Orissa, Jayaraman said that the m

and power generation operations would be done through separate companies.


20/24

Industry Wat

India becomes 3rd largest importer of Chinese tyres

As Indian tyre manufacturers reel under the

high prices of raw materials like natural

rubber, crude oil and carbon black, they face a

tough challenge from China even as its exports

to India climbs multi fold. According to data

provided by Automotive Tyre Manufacturers

Association, from 39th rank in 2002-03, India

climbed to the 3rd position in 2007. During

April 2007 to February 2008 period, Indian

imports from China surged almost two fold to

1.2 million units from 660,000 units. The

Indian tyre market comprising tyres of cars,

UV, OTR, trucks and buses, is worth INR

20,000 crore currently.

Mr Rajiv Bhudhraja director general of ATMA

said that "The average price of a pair of

Chinese truck tyre is about INR 7,500, which is

significantly lower than Indian prices which

retail at about INR 13,000 to INR 15,000.

than 100,000 Chinese tyres are imp

every month, totaling to about INR 900

yearly. More alarming is the fact that p

have changed their perspective products from China, which was once th

to be sub standard." He added that "Chi

been able to sell radial tyres at such

rates to India because of the very low c

manufacturing in that country and also d

under voicing the imports and selling

without paying VAT here. In addition,

has huge capacities of radial tyres."

The domestic tyre market consists of le

players like MRF followed by A

Bridgestone, CEAT, JK Tyres, Mic

Goodyear, among others.

Power demand in India to reach 335 GW by 2017 - Report

According to the McKinsey & Companys

Electric Power & Natural Gas Practice study,

with soaring crude oil prices, the time has

come for the Indian power sector to explore

substitutes. If India continues to grow at an

average rate of 8% for the next 10 years,

power demands may rise from the present

120 GW to 315-335 GW by 2017, 100 GW

higher than current estimates.

The study said that India is gradually

progressing towards a service led economy

from an agrarian economy. Supply and

production have increased but demand hasdoubled. It added that the demand can only

be met through a 5 to 10 fold rise in power

production. This means investments in the

power sector will increase over USD 600

billion in the next 10 years.

Consumer demand across rural and urban

sectors is growing at 14% over the next 10

years, whereas Indias GDP growth is just 8%

a year. The second reason is

governments plan to provide electric

everyone by 2012. This means 23 m

below poverty line households shou

added in the power grid. The third rea

the 24X7 supply of electricity to consu

and the industrial demand to swit

expensive diesel based power. Whe

demand rises to 335 GW, Indias p

sector will have to generate 415 to 44

for plant availability adjustments an

spinning reserves. Adding 300 GW by

will mean increasing the annual capac

30 GW against the current growth ca

of 9 GW.

The McKinsey & Companys r

however, said that India will be able t

only 160-180 GW by 2017 even in ca

best development trajectory. If

estimates are to be broken, India nee

increase its capacity at a fast pace.


21/24

Industry Watc

Mining industry to touch $30 bn by 2012

Country's mining industry is projected to touch over $30 billion (about Rs 1,27,662 c

accounting for about 2.5 per cent of the GDP in the next four years, a latest report said.

"Considering India's mineral resources, we believe there is strong potential for fudevelopment and scaling up of the country's mining industry. We believe that the m

industry could grow to $30 billion plus by FY'12 and reach 2.5 per cent of GDP, if

develops a conducive regulatory framework and attracts significant investmen

exploration, mine development and infrastructure," a report by financial services

Edelweiss stated.

The report on metals and mining pointed out that India has immense natural resources

is ranked among top 10 globally for deposits in iron ore at 25.2 billion tonnes (BT),

257.4 BT and bauxite 3.3 BT, which constitute 3 per cent, 10 per cent, and 4 per

respectively of the world's resources. The country also holds leading position globamica (No 1), barytes (No 2), chromite (No 4), kaolin (No 4), and manganese (No 7)

report said.

"These are significant numbers and imply that India has the potential to develop a sc

up, world class mining industry. Some progress has been made and in iron ore, for insta

India ranks third amongst various exporting countries," it said.

Coal Industry in India:

The Indian coal industry is the fourth largest in terms of coal reserves and third largeterms of coal production in the world. But despite its huge resource base, till date, Indi

not been able to minimize its coal deficit.

Coal has been recognized as the most important source of energy for electricity gener

and industries such as steel, cement, fertilizers and chemicals are major sectors of

consumption. So in order to satisfy the coal demand, the Indian coal industry needs m

investment and private players to raise its production level. The coal washeries have to

bigger role in the industry to produce less moisture and ash based coal to sustain in s

environment regulations.

Some of the salient points are:

Coal requirement for the power utility will grow at a CAGR of around 10% during 2007-08 to 20

Private coal washeries have rapidly increased the production of washed non coking coal in

during 2002-03 to 2006-07.

High coking coal demand by the Indian steel industry and low reserve base has boosted the imp

coking coals.

Coal demand from the Indian cement industry looks bright and it is expected that coal require

by the industry will rise steadily from 2007-08 to 2011-12.

Coking coal requirement in steel production is expected to touch over 85.34 million tonnes in

12.


22/24

Banking Sector: Is it in the doldrums of Economic Politics or Political Economy ?

(Based on Moodys Report)

High Interest Rate and relatively stable growth momentum.Relatively stable core revenues and sound profitability ratios, which act as a modepositive rating driver.

The net profits of all commercial banks increased by around 27 per cent last fisc

the core recurring income and profits are rising continuously.

The commercial banks in the country are leveraging the growth opportunity

currently exists in the country and are enhancing their earning capacity.

The enhanced capacity has worked as a catalyst in strengthening the financial musbanks while as compared to international rates, domestic interest rates are as high

per cent.

The banking sector witnessed a sustained flow of core revenues mainly due to incr

lending activities, both at corporate and small and medium enterprise level.The fierce competition in the banking sector has put pressures on the net inmargin of banks, leading to a decline from 2.81 per cent to 2.69 per cent in FY'08.

Banks to maintain high profitability in FY'09

Riding on the back of a high interest rate regime, Indian banks are likely to con

with their growth momentum in terms of profitability during the current fiscal,

agency Moody's said in a report."For the moment the rating agency maintains positive stance with rated brelatively stable core revenues and sound profitability ratios, which act as a mode

positive rating driver," Moody's said in a report titledBanking System Outlook.

The net profits of all commercial banks increased by around 27 per cent last fisc

the core recurring income and profits are rising continuously.

The commercial banks in the country are leveraging the growth opportunitycurrently exists in the country and are enhancing their earning capacity", it said.

The enhanced capacity, the report said, has worked as a catalyst in strengtheninfinancial muscle of banks.

As compared to international rates, domestic interest rates are as high as 13 per ce

The banking sector witnessed a sustained flow of core revenues mainly due to incrlending activities, both at corporate and small and medium enterprise level.

However, the rating agency said the margins of banks were likely to remain

pressure due to increasing competition in the domestic banking system.

The fierce competition in the banking sector has put pressures on the net inmargin of banks, leading to a decline from 2.81 per cent to 2.69 per cent in FY'08.

It also said lesser interference and competition for good-quality credits could

some pressure on banks revenue flow.


23/24

Global Food cr

A desperate call for a second green revolution

It is not happening the first time, for if we

ask our grand parents, they would tell us

that world has been on the brink of

starvation several other times as well. In

1960S, on one such turning point of human

history, humanity witnessed famine in

several parts of world.However; we saved

ourselves from those difficult times

A massive programme of investment in

agricultural research and infrastructure

avidly supported by the US out of a cold-war-

fuelled fear that hungry countries could fallinto the arms of the Soviet Union led to an

explosion in farm productivity. Nations that

never dreamt of being able to feed

themselves were transformed into net

exporters of food. Those efforts, led by

Norman Borlaug, an American agronomist

who was later awarded the Nobel peace

prize, resulted in the development of higher-

yielding seeds and an exceptional expansion

in the use of irrigation, fertilizers and

pesticides in developing countries. By 1968

the jump in farm productivity was so clear

India, for example, harvested a record wheat

crop, as did the Philippines for rice that

William Gaud, administrator of the US

Agency for International Development, said

the world was witnessing the makings of a

new revolution.

It is not a violent red revolution like that of

the Soviets, nor is it a white revolution like

that of the Shah of Iran, Gaud said in a

speech 40 years ago. I call it the green

revolution, he added, coining a term that

has long survived him. Yet, like its

counterparts elsewhere on the spectrum,

the green revolution eventually lost

momentum. Today, the world stands on the

brink again as agricultural commodity

surge, triggering food riots in countries

Haiti to Bangladesh.

Variations in the food prices across Asia

implications on the regions imme

macro- economic outlook, a latest rep

Standard and Poors says.

Vietnam is by far the most adv

affected, with consumer prices of food

by year-on-year rates for over 20 per

every month this year. China and Indo

have also had persistent double

increases in food prices, Standard

poors Asia-Pacific Chief Economist

Gokran said.

Besides, other ASEAN (Association of

East Asian Nations) countries have

relatively modest increases. In short,

food prices may be a global problem, a

in Asia they are clearly a greater problesome than for others. According t

article, short Production Cycles Key to

Food Supply Safety, price index num

can distort the realities that consumers

Virtually all countries in the region

elaborate control mechanisms cov

production and distribution of food, w

among other things, tend to suppres

reporting of inflationary tendenciesconsumers actually have to deal with.

S&P further said that there are se

macro-economic implications arising

food-price hikes. Central banks are no

position to ease up on liquidity,

governments facing food shortages w

restrict exports, thus creating price pre

for those countries dependent on impo


24/24

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