Indian Economy - News & Updates - Archive

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Seafood exports see 8% growth in 2008-09​

22 May 2009, 0348 hrs IST,

KOCHI: Indian seafood exports have grown by 9.7% in rupee terms to touch Rs 7,617.97 crore in the April-February period of 2008-09 compared to the
same period last year. In terms of quantity, the exports have increased by 7.9% to reach a level of 530,033 tonnes during the same period.

However, in terms of dollar, the exports fell by 1.4% to $1,705.45 million during the same period. The unit value realisation fell to $3.22 per kg during April-February period from $3.52 per kg in the previous corresponding period.

Among the products, shrimp continued to be the major export item accounting for 44% of the kitty. Among the major markets, EU — the largest market for Indian seafood with a share of 33% — recorded an increase of 4% in quantity, 3.7% in rupee value.

But it, however, declined by 6.4% in the dollar earnings.

Japan — the second largest market with a share of 14.9% — recorded a negative growth in quantity and dollar value but a marginal growth in rupee value. China — the third largest market with a share of 14% — recorded a growth of 20% in rupee value.

The US, which stood at second place last year, fell to fourth place with a share of 12%.

Seafood exports see 8% growth in 2008-09- Foreign Trade-Economy-News-The Economic Times

 

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Rupee down 16 paise against dollar in early trade​

26 May 2009, 0929 hrs IST, PTI

MUMBAI: The Indian rupee weakened 16 paise against the US dollar in early trade on Tuesday on capital outflow by foreign funds in anticipation that
the domestic markets may open down, in tandem with other Asian bourses.

At the Interbank Foreign Exchange (Forex) market, the local unit fell 16 paise to $47.44.

On Monday, the domestic currency had ended 18 paise lower at 47.28/30 against the greenback.

Forex dealers said the Bombay Stock Exchange benchmark Sensex is likely to open on a weak note in line with other Asian markets, which are down up to 0.5%, leading to capital outflow by foreign funds.

Month-end dollar demand also put pressure on the rupee, they added.

The 30-share barometer had closed with a moderate gain of 26 points at 13,913.22 points in a choppy trade yesterday.

Rupee down 16 paise against dollar in early trade - India Business - Business - The Times of India

 

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INVESTOR CONCERNS - Rupee falls on fears North Korea N­test may spur out flow from Asia

The rupee fell for the first time in seven days on con cerns overseas investors will pull money out of Asia after North Korea said it held a nuclear test on Monday.
The currency declined the most in almost two weeks as the MSCI Emerging Markets Index of stocks dropped, adding to speculation global funds see increased risk.

However, a report by Goldman Sachs on Monday said the rupee is likely to rise to 46 to the dollar within 12 months in the backdrop of a stable government at the Centre and relatively resilient domestic demand.

Noting that there are significant pressures for rupee appreciation, the report said the currency gained around 5% against the dollar since the victory for the Congress-led United Progressive Alliance in the general election.

But on Monday, a gauge that tracks the dollar against six major currencies rose for the first time in six days, indicating investors are opting for the relative safety of the greenback.

“The rupee is falling and it’s a reaction to the North Korean nuclear test,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. Banks are reversing dollar short positions to reduce risk. Stocks are expected to drop, and that could add to the rupee’s weakness.

The rupee weakened 0.4% to close at 47.29 to the dollar in Mumbai. The Indian currency had climbed 4.9% last week, the best performance since March 1996. A short position is a bet that an asset or currency will fall.

Offshore contracts indicate bets the rupee will trade at 47.46 to the dollar in a month, compared with expectations of 47.22 as on 22 May. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.

North Korea conducted a nuclear test on Monday, the nation’s official Korean Central News Agency said. The underground test was successful, according to the report.

The ICE’s Dollar Index, which tracks the greenback against the euro, the Japanese yen, the British pound, the Canadian dollar, the Swiss franc and Sweden’s krona, climbed 0.3%.

 

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India set to have 1bn mobile users by '14​

26 May 2009, 0404 hrs IST, Shalini Singh,

NEW DELHI: One of the most important reasons for Bharti to emerge as a frontrunner for equity stake in MTN is its leadership position in India
projected to be the world’s ranking telecom market in just a few years.

DoT, in a first ever forecast of mobile penetration across India for the next six years, has projected a billion mobile phones by 2014. This forecast is part of a spectrum committee report prepared by the DoT that is expected to be made public after the new telecom minister takes office.

It is well established that India has had one of the most remarkable growths in mobile phones since the sector was first opened to private investment in 1994. From two operators in each circle in 1995 the country now has 12 to 13 operators. Of these, about six to seven are fully functional, offering the Indian consumer unprecedented choice and low tariffs.

India has also been breaking all types of records on new subscriber additions in the last two years by adding up to 8 to 10 million phones a month, sometimes more. The latest report of the DoT put together by its committee shows that India will reach the half a billion mobile mark by 2010 and within four years reach 1 billion mobile subscribers.

In 2014, India’s population is expected to be 1.26 billion, with mobile penetration of 1.01 billion the mobile teledensity would be 80% above. It would mean 8 out of every 10 Indians will have access to a mobile device.

This probably reflects the world’s largest new growth opportunity over the next five years, surpassing China’s potential. China is already at nearly 700 million mobile phones as compared to India’s 400 million. The fact that India will add more than 600 million new subscribers must rate as the biggest subscriber adds for any country in the world.

Some of the imperatives to reach this figure would include re-defining spectrum allocation and pricing policies, early 3G auctions, and reviewing the M&A norms.

It is clear that no country in the world can sustain a fragmented telecom market of 12 to 13 players per circle. In the end, the market will have to consolidate to between three to four national players and two or three regional players with an average subscriber base of approximately 150 million each by 2014.

India set to have 1bn mobile users by '14 - India Business - Business - The Times of India

 

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India now a player in M&A premier league​

26 May 2009, 0401 hrs IST, Rupali Mukherjee

NEW DELHI: India will enter the global pecking order of the largest M&A's done so far this year with the proposed Bharti Airtel-MTN deal. It
will be the third largest deal so far in 2009 and if pharma is excluded, it will be the largest deal so far globally.

The proposed $29 billion acquisition is the third largest M&A deal after pharma biggie Pfizer acquired Wyeth in January for nearly $64 billion, and Merck’s acquisition of Schering-Plough for nearly $46 billion, also in the pharma space announced in March this year. So excluding the two top deals done in the pharma sector, this would be the largest deal done globally. Bharti’s proposed acquisition of 49% stake in MTN worth up to $29 billion may become the largest cross border acquisition by a domestic company after the $12.7 billion Tata-Corus deal.

It is also the largest acquisition in India’s telecom sector and in Africa by a domestic company. The deal will even surpass that of China’s ICBC which acquired South African bank Standard Bank group worth $5.6 billion in October 2007 — the biggest African cross border inbound deal on record so far.

Till date, the largest acquisition on record in Africa by a domestic company is Ranbaxy’s acquisition of Be-Tabs Pharma for $70 million announced in 2006.

In fact, quite a few domestic companies across sectors have shown an appetite for African companies. The second largest deal is Apollo Tyres buying South Africa’s Dunlop Tyres for $66 million.

Last year Godrej Consumer Products bought Kinky brand of hair business for $33.2 million, while in January this year that of Tata Communications and Neotel for an undisclosed amount.

India now a player in M&A premier league - India Business - Business - The Times of India

 

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India buys US debts worth $38 billion ​

25 May 2009, 0102 hrs IST, PTI

NEW YORK: As the recession-hit US economy is groping in the dark over uncertain financial position, India has increased its exposure to American
debt securities by over three-fold to $38.2 billion till March compared to the year-ago period.

The emerging nation's investment in the US debt stood at $11.8 billion in March 2008. According to the data from the US Treasury Department, India has bought American debt instruments worth $38.2 billion till March 2009. Interestingly, India's exposure to US debt has surged by about $20 billion since October 2008, when the ongoing financial turmoil turned for the worse.

The world's largest economy was rattled by the then-famed Lehman Brothers filing for bankruptcy in mid-September. Considered to be one of the safest investment bets, India had invested $18.3 billion in October 2008 in the American securities, which soared to $38.2 billion in March. Among the foreign countries, neighbouring China has the highest investment of $767.9 billion. Japan, the world's second largest economy has invested $686.7 billion in US debts till March 2009.

India buys US debts worth $38 billion - International Business - Business - The Times of India

 

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Watch out for more deals​

26 May 2009, 0357 hrs IST, Shalini Singh

Even as the fine print of Bharti's proposed share-swap deal with MTN is being finalised, it is bound to be watched by a lot of other Indian telecom
companies with great interest. Indeed, it could prove to a path-breaker, prompting many other Indian telecom companies to use the same strategy to drive their consolidation plans.

The global recession — and resultant crash crunch — has thus far caused large telcos to hold back on big investments in India. Even the speed at which Etisalat and Telenor will launch their services in India remains unclear due to large capital commitments in Swan and Etisalat.

The Bharti-MTN deal, however, shows a new path for Indian companies which will now be under pressure to compete with a behemoth like Bharti, which will have nearly 200 million subscribers in India and around the world. This would make Bharti not only the third largest in-country mobile operator, but also place it amongst the top four global operators. This could force other Indian operators to look for similar deals, since large sums of cash for investment will be difficult to come by in the next 12 to 18 months.

Many Indian telecom operators like Reliance, Idea, Aircel and even Tata could look for similar arrangements to gain global access to subscribers and markets, especially in Africa and the Middle East — two of the fastest growing markets in the world after India, with large unserved populations.

‘‘If the deal does go through and if share markets respond positively, then other companies are also likely to structure similar deals,’’ said Kunal Bajaj, MD of consulting firm BDA India.

‘‘Clearly, Bharti Airtel is better placed to drive the bargain than MTN as India’s telecom market has displayed that it is recession-proof and Bharti has higher cash flows today than most global companies. Conversely, MTN is more vulnerable than a year ago as South Africa has been more severely hit by the global recession than India,’’ said telecom analyst Mahesh Uppal.

However, while India’s telecom market could give other Indian companies a strong negotiating position too, such deals are complicated and require immense trust and coordination to work successfully.

In the Bharti-MTN case, for example, the decision on where the headquarters of the new joint company will be located becomes a key point. Would it continue to be New Delhi or will it move to Johannesburg?

Still, the Bharti-MTN deal has opened up a whole new range of opportunities for Indian telecom operators to go global without the need to spend large amounts of cash, and for global operators to access India by parting with shares rather than cash.

In any case, Bharti’s proposed deal with MTN should come as no surprise to those who were reading between the lines of Bharti’s announcements when it reached 100-million subscribers. Bharti had hinted at accessing another 100 million subscribers outside India.

Watch out for more deals - India Business - Business - The Times of India

 

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The rise and rise of Bharti ​

26 May 2009, 0400 hrs IST

If there is one sector that exemplifies the success of India’s reforms, it is probably telecom. And within telecom, if there is one company that is
a shining example of entrepreneurship in action, it is undoubtedly Bharti. Sunil Mittal certainly backed the right horse when he chose India’s fledgling, high-risk telecom sector. And under his stewardship, Bharti Airtel has galloped away to become India’s largest mobile company with a subscriber base of 100 million.

The figures tell an incredible story. In the last seven years, the company’s sales have risen 783 times to Rs 36,962 crore in 2008-09. In the same period, its net profit improved a whopping 65,492 times, from Rs 12 lakh to Rs 7,859 crore.

“A small company with an incredible passion for growth and innovation, that’s how I would describe Bharti Airtel’s modest beginning in 1995. The passion has only grown bigger over the years,” Sunil Mittal once said in the group’s in-house magazine. Mittal had set up the company in 1985 and it collaborated with Siemens AG of Germany to make electronic push button phones. At that time, Mahanagar Telephone Nigam Ltd used to provide traditional rotary dial phone sets. Since telephone subscribers were usually affluent, Bharti’s push button instrument was a big hit.

Mittal also started selling cordless phones. From there to mobile telephony was a logical leap. In 1992, when the Narasimha Rao government announced the new telecom policy, the group bid for a mobile telephone services licence through a new company, Bharti Cellular. In 1994, it was awarded the licence for Delhi circle. The next year, it began its mobile phone service under the brand name, Airtel.

Later, the company went into rapid expansion mode through a series of takeovers. In 1997, the holding company, Bharti Televenture, acquired a 74% stake in JT Mobile, which used to operate in Karnataka, Andhra Pradesh and Punjab. To expand operations in Chennai, the company acquired a 95.3% stake in Bharti Mobinet from Crompton Greaves and other partners. It also ventured into the submarine cable business through a joint venture with SingTeli2i, Bharti Aquanet, in which Bharti had a 51% stake.

This rapid growth needed regular infusions of funds. In 1999, Bharti secured Rs 1,300 crore from Warburg Pincus. That proved to be a smart investment — Warburg earned Rs 8,500 crore — a return of around 550% — when it exited Bharti in 2005. In 2000, Bharti got a major boost when global telecom major Singapore Telecommunication (SingTel) joined as a strategic partner. At present, SingTel’s effective stake in Bharti Airtel is 31%.

In 2002, Bharti Airtel raised Rs 8,300 crore from the stock market through an initial public offer. That provided the company a much-needed war chest at a time when the mobile telephony business had been shaken up by the entry of Reliance Industries.

In the years since, Bharti has gone from strength to strength. In 2002-03, Bharti Airtel had an EBIDTA (earning before interest, depreciation, tax and amortisation) loss of Rs 54 crore. In 2003-04, it it earned a profit of Rs 815 crore, which rose to Rs 1,819 crore in 2004-05, Rs 4,360 crore in 2005-06 and Rs 7,451 crore in 2006-07. Its EBIDTA margin improved from 17% in 2003-04 to 40% in 2006-07 and to 42% in 2007-08.

The rise and rise of Bharti - India Business - Business - The Times of India

 

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Mittal Mantra: The making of an Indian telecom MNC​

26 May 2009, 0145 hrs IST

On May 15, shortly after Bharti Airtel announced that its mobile and landline subscribers now cumulatively numbered over 100 million, TOI caught up
with Bharti boss Sunil Mittal. "Does it seem you've ascended Mt Everest," we asked. "After all, where do you go from here?"

Mittal was forthright. "Now, our challenge is to globalize," he said. "We are in some small island-countries (like Mauritius). We should be looking at entering big countries."

Did that mean that Bharti would look at major acquisitions, we asked. Mittal didn't beat around the bush. "Yes," he said.

"We are looking for acquisitions in emerging markets like South Africa and Middle East. We tried to acquire MTN but couldn't. It was a disappointment. But we will keep trying to do acquisitions to enter emerging economies."

Mittal was as good as his word. Within a few days of that interview, Bharti has announced that it is in advanced talks for a mega deal. And Mittal has a chance to make up for all the disappointment he felt last time, when negotiations with MTN broke down.

If the deal goes through this time, it will make Bharti the largest telecom entity in the world (by number of subscribers) outside China.

Add MTN's 100 million subscribers to Bharti's 100 million, and the combined figure of 200 million will see Bharti comfortably leapfrog US giants Verizon (122m) and AT&T (108m), among others.

Bharti will then emerge as the world's fourth largest telecom company, behind only China Mobile (472m), China Unicom (247m) and China Telecom (237m).

Mittal Mantra: The making of an Indian telecom MNC - India Business - Business - The Times of India

 

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Govt to present budget in first week of July: Pranab​

26 May 2009,

NEW DELHI: Finance Minister Pranab Mukherjee on Tuesday said that budget for 2009-10 that will spell out policies and priorities of the new UPA
government will be presented in the first week of July.

"I would not like to have a second batch of vote on account... the Budget will be presented in the first week of July," he told CNBC-TV18 in an interview.

The minister further said that the issues and concerns about the economy raised by him in the interim budget, especially with regard to the sectors which are hit badly by the global financial crisis, would be addressed in the budget.

The government is required to get the budget passed by July 31, the date when the vote on account approved by Parliament allowing government to withdraw money from the Consolidated Fund of India expires.

In case the budget is not approved before July 31, the government will have to seek another vote on account. MORE

The focus of the government policies and reforms, Mukherjee said, will be 'Aam Admi' as has been mentioned in the Congress manifesto.

"Aam Admi is to be at the focal point," he said, adding the manifesto proposed to increase the minimum wages under the NREGA scheme to Rs 100 per day.

Similarly, he added, the issue of providing food security would get top priority.

On the need of another stimulus package to boost the economy reeling under the impact of the global financial meltdown, Mukherjee said the government since December last had already announced three packages.

"Whatever is needed will be done," he said, pointing out the government could not take any policy decision since March in view of the general elections for the 15th Lok Sabha in which the Congress-led UPA was voted back to power with bigger mandate.

Noting that signs of economic recovery in Europe are not promising, the minister said, the problems of crisis-hit sectors like textiles, leather and gems and jewellery will be addressed in the budget.

When asked whether he would prefer growth to fiscal prudence, he said, "What is needed is stimulus to growth, we cannot indulge in fiscal profligacy."

 

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$23 billion Bharti-MTN largest global telecom deal this year​

26 May 2009,

NEW DELHI: The Sunil Mittal-controlled Bharti Airtel and South Africa-based MTN group's proposed $23-billion mega deal is the largest global
telecommunications transaction and the fourth biggest global M&A deal this year.

The Bharti-MTN deal with a potential value of $23 billion is nearly half of the total telecommunication merger and acquisition transactions announced till mid of this month.

As per global deal tracking firm Dealogic, global telecom volumes in 2009 stood at $49.2 billion through 410 deals.

"Not only for sheer size, this deal would be a first of its kind, because it is a stock and cash deal. It will bring to centre stage the use of stock as a mechanism to settle purchase consideration," global consultancy firm PricewaterhouseCoopers Executive Director Sanjeev Krishnan told media.

Besides, the Bharti-MTN deal would be the fourth-largest deal so far this year after the Wyeth-Pfizer transaction amounting to $61.8 billion, Schering-Plough and Merck deal worth $45.9 billion and the US government hiking its stake in Citi to 36 per cent for $25 billion.

Experts believe the Bharti-MTN deal certainly give a fillip to the M&A market in India, which has been somewhat dormant for a bit, but the lull in the merger and acquisition space is far from over.

"Since this was a deal the two parties had negotiated last year too, it is not a new transaction, so it may be premature to say that the lull in the M&A market has lifted - there are still financing and other challenges for most Indian businesses...," Krishnan said.

The Bharti-MTN deal would involve a complex structure in which both the entities would pay cash and stock for stakes in each other. As per the exploring agreement, MTN would acquire around 36 per cent economic interest in Bharti Airtel. While, Bharti Airtel would acquire 49 per cent stake in MTN.

"This deal is unique as for the first time company stock is being monetised in this manner to make an acquisition and it may just spur alternative mechanism for financing acquisitions in times to come," Krishnan added.

After the $23 billion Bharti-MTN deal, the Directv Group's $14.7 billion acquisition of Liberty Entertainment announced at the start of this month is the second largest telecommunications deal so far this year.

Some other major global telecommunications deal include US-based Frontier Communications' $8.6 billion acquisition of Verizon Communications, Canada Pension Plan Investment Board's $4.8 billion investment in Macquarie Communications Infrastructure for 81.67 per cent stake in the company.

This would be the biggest M&A deal involving an Indian entity. Prior to this, Tata Steel's takeover of European steel major Corus for $12.2 billion was the largest, followed by UK telecom giant Vodafone's controlling stake buy in mobile service provider Hutch Essar for about $10 billion

 

[Screaming Skull]

India set to have 1 billion mobile users by 2014​

26 May 2009,

NEW DELHI: One of the most important reasons for Bharti to emerge as a frontrunner for equity stake in MTN is its leadership position in India projected to be the world’s ranking telecom market in just a few years.

DoT, in a first ever forecast of mobile penetration across India for the next six years, has projected a billion mobile phones by 2014. This forecast is part of a spectrum committee report prepared by the DoT that is expected to be made public after the new telecom minister takes office.

It is well established that India has had one of the most remarkable growths in mobile phones since the sector was first opened to private investment in 1994. From two operators in each circle in 1995 the country now has 12 to 13 operators. Of these, about six to seven are fully functional, offering the Indian consumer unprecedented choice and low tariffs.

India has also been breaking all types of records on new subscriber additions in the last two years by adding up to 8 to 10 million phones a month, sometimes more. The latest report of the DoT put together by its committee shows that India will reach the half a billion mobile mark by 2010 and within four years reach 1 billion mobile subscribers.

In 2014, India’s population is expected to be 1.26 billion, with mobile penetration of 1.01 billion the mobile teledensity would be 80% above. It would mean 8 out of every 10 Indians will have access to a mobile device.

This probably reflects the world’s largest new growth opportunity over the next five years, surpassing China’s potential. China is already at nearly 700 million mobile phones as compared to India’s 400 million. The fact that India will add more than 600 million new subscribers must rate as the biggest subscriber adds for any country in the world.

Some of the imperatives to reach this figure would include redefining spectrum allocation and pricing policies, early 3G auctions, and reviewing the M&A norms.

It is clear that no country in the world can sustain a fragmented telecom market of 12 to 13 players per circle. In the end, the market will have to consolidate to between three to four national players and two or three regional players with an average subscriber base of approximately 150 million each by 2014.

 

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Steel PSUs to invest Rs 13k cr​

27 May 2009, 0100 hrs IST, PTI



NEW DELHI: SAIL, NMDC and RINL will infuse Rs 13,000 crore this fiscal as part of their programme to expand production capacities to 35 million tonnes in next two-three years. "SAIL, NMDC and RINL will spend Rs 13,000 crore in '09-10 on their expansion programmes with an aim to double their production capacities by 2011-12," steel secretary P K Rastogi said.

 

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'Sensex may touch 19,500'​

27 May 2009, 0054 hrs IST, PTI

NEW DELHI: Driven by the election outcome, the Sensex could catapult to 19,500 level this year, provided the government pushes through the reform agenda, analysts said. Experts believe that reforms expected to be carried out by the government may keep the sentiment upbeat and propel it to regain the levels, it had seen in 2007.

 

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Lamy banks on strong India to push Doha deal​

27 May 2009, 0121 hrs IST

KOLKATA: World Trade Organisation (WTO) director-general Pascal Lamy on Monday expressed confidence that the UPA government's return to power in
India would help raise the momentum for pushing through the Doha deal.

"The elections have given a clear vote of confidence to the Congress Party and its allies.... India is a key WTO member and has been actively engaged in the Doha Round since its launch in 2001. I am confident this will remain the Indian policy in the future," Lamy told TOI in an email interview on the WTO's expectations from the new dispensation in Delhi.

"Given the current state of the world economy and the importance of greater global cooperation, I believe the WTO needs a strong India, and likewise, India needs a strengthened WTO," he added.

Lamy said it was still premature to think of dates to convene a ministerial/mini-ministerial to conclude the Doha Round. "I remain of the view that it is a question of substance rather than timing. Obviously, the state of the world economy pleads for positive action on trade sooner rather than later. A Doha Round deal offers the lowest hanging global stimulus package. Every day which passes without a deal is a lost opportunity. But I also believe we need to get the substance right," he said.

"I think its is important that negotiators roll up their sleeves and start re-engaging in earnest to solve the remaining issues. Ministers will meet in various configurations in the coming months in Indonesia, on the margins of the OECD meeting, on the margins of the G8 in Italy or in Singapore at the end of July. All these provide useful opportunities for political engagement," he added.

Lamy said the WTO would come out with a fresh report next month to take stock of whether countries were taking steps to reduce protectionism. "G-20 leaders' meeting in London identified protectionism as one of the risks which could aggravate the crisis. The WTO is helping countries keep protectionist pressures at bay by monitoring measures taken by members," he said. "I believe countries should remain vigilant and avoid taking isolationist measures which could provoke a downward spiral and end up hurting all countries. As Mahatma Gandhi said, 'an eye for an makes the whole world blind'."

Lamy banks on strong India to push Doha deal - India Business - Business - The Times of India