New Delhi: Inflation accelerated to the fastest pace since 1995, vindicating the Reserve Bank of India’s (RBI) decision to raise borrowing costs for the third time in two months.
Wholesale prices rose 11.98% in the week to 19 July, after gaining 11.89% in the previous week, the commerce ministry said on Thursday. Economists had expected a 12.03% increase.
RBI governor Y.V. Reddy this week raised the central bank’s repurchase rate by a half a percentage point to 9%, sacrificing growth to tame runaway inflation. RBI may increase the benchmark rate again in the next three months, according to economists in a ‘Bloomberg’ survey.
“The message is clear that inflation will dominate over growth,” said Sonal Varma, a Mumbai-based economist at Lehman Brothers Inc. “We expect growth to slow to 7.3% this fiscal year due to rising headwinds from sharp rate increases, rising commodity prices and slackening foreign demand.”
Reddy, due to retire in September, this week also raised the cash reserve ratio (CRR) to 9% from 8.75% and said the bank had “headroom” to further tighten monetary policy.
Higher energy and commodity prices are fuelling inflation across Asia, prompting central banks to raise borrowing costs.
“Inflation, on a week-on-week basis, has continued to remain stable,” the finance ministry said in a statement on Thursday.
Inflation in the week accelerated because of an increase in the prices of pulses, fruits, spices and sugar. The manufactured price inflation rose 10.82% in the week ended 19 July, compared with a 10.72% gain in the previous week, Thursday’s report showed.
RBI raised its year-end inflation forecast to 7% from 5.5% and lowered its growth estimate for the year ending March 2009 to 8% from an earlier prediction of 8-8.5%. Economists expect inflation to remain at elevated levels in the coming months.
The government may revise Thursday’s preliminary wholesale price estimate in two months after receiving additional data. The commerce ministry on Thursday raised its inflation estimate for the week ended 24 May to 8.9% from 8.24%. (Bloomberg)
GM talks with Mahindra, others on Hummer
New York:General Motors Corp. (GM) is in talks with Indian auto maker Mahindra and Mahindra Ltd (M&M) and auto makers in Russia and China about selling its Hummer brand, sources familiar with the matter said.
One source close to the discussions said M&M was not very interested at this time as it has plans to launch a small sport utility vehicle (SUV) in the US market next year.
M&M would like to launch that SUV under its own brand and has signed up about 250 dealers to distribute it, the source said. But talks with GM—still in initial stages—were on, he added.
GM declined to comment. Mahindra was not immediately reachable for comment. The sources did not name the Russian and Chinese companies talking with GM. (Reuters)
SBI expects threefold rise in international biz
Toronto:India’s largest lender, State Bank of India (SBI), has decided to expand its global operations and expects a more than threefold increase in its international business in the next five years, its chairman O.P. Bhatt said.
“The bank expects more than threefold increase growth in its international business from 7% last year to 25% in next five years,” Bhatt said here on Wednesday while launching SBI’s first debit card in Canada. (PTI)
HDFC raises lending rate by 75 basis points
Mumbai:Housing Development Finance Corp. (HDFC) said on Thursday it was raising its retail prime lending rates by 75 basis points, the latest in a series of rate hikes by lenders after the central bank tightened policy.
The increase will take effect from 1 August and its floating home loan rates will carry a minimum rate of 11.75%, a 75 basis point increase, it said in a statement. (Reuters)
ICICI raises loan rates by 75 basis points
Mumbai:ICICI Bank Ltd, the nation’s second largest by assets, raised the rate it charges its best customers by 75 basis points after the central bank increased borrowing costs and asked lenders to set aside more funds.
The prime lending rate for its best corporate clients was increased to 17.25% from 16.5%, the bank said. The floating reference rate for consumer loans was lifted to 14.25%. (Bloomberg)
Unusual rise in Deutsche fund price on BSE
Mumbai: Debt funds of Deutsche Asset Management (India) Pvt. Ltd, an arm of German bank Deutsche Bank AG, traded on the Bombay Stock Exchange, or BSE, have been seeing unusual price movements in the past few days.
On Thursday, Deutche mutual fund sent out a series of announcements on its funds to BSE, warning investors about these abnormal price rises.
“Over the past few days, we have observed that the traded prices of units have seen unusual variance as compared to the NAV (net asset value). We believe that there is no reason for the listed price to quote such significant variance,” said one such announcement.
One such fund, DWS Fixed Term Series 50 – Plan A- Growth option or DWS FTS 43 IG, saw a 20% rise on Thursday, surprising the analyst community as well as the company.
The scheme, listed last Friday, has a face value of Rs10. While its NAV per unit stood at Rs9.7, the price on BSE has gone up 44% to Rs14.4 in five trading days. Similar variation was witnessed in the prices of other fixed-term funds of Deutsche mutual fund, traded on BSE.
The head of debt products at a large domestic mutual fund house, who did not wish to be named, said the price rise is confusing as this is not an area where stock operators would play. “Such small schemes are for a set of low-risk investors and their fundamental value does not inspire high volatility in prices,” he said. (Nesil Staney / Mint)
Tata?calls?off?investment plan in Bangladesh
New Delhi: The Tata group called off a proposed $3 billion (Rs12,750 crore) investment plan in neighbouring Bangladesh after it failed to get commitments from the government for the supply of natural gas to the projects.
“It is clear that the government will not be in a position, in the foreseeable future, to grant the projects the natural gas commitment they would require,” the Mumbai-based group said in a release on Thursday. “Consequently, there is no prospect of taking these projects further.” (Bloomberg)
Chintamani Rao now chairman of Barc
Mumbai: Chintamani Rao, chief executive officer of Times Global Broadcasting, Bennett, Coleman and Co. Ltd’s broadcast arm, is now chairman of industry body Broadcast Audience Research Council (Barc).
Barc was set up in September 2007 in India by broadcasters, advertisers and advertising agencies to establish an alternative television audience measurement system. Barc’s former chairman Pradeep Guha exited from his post recently as a consequence of his departure from Zee Entertainment Enterprises Ltd, where he was chief executive.
Rao, when contacted, confirmed the development and said that the Indian Broadcasting foundation (IBF) had nominated his name for chairman.
The other members from IBF represented in Barc board of directors include president of Star India Paritosh Joshi, president, network sales, Multiscreen Media Pvt. Ltd Rohit Gupta and CEO of Zee Entertainment Enterprises Ltd Punit Goenka. Goenka’s inclusion into Barc has also been a recent development. (Anushree Chandran / Mint)
Sintex buys German auto component maker
Mumbai: Plastic products maker Sintex Industries Ltd said on Thursday its unit has acquired 90% stake in German auto component maker Geiger technik GmbH, at an enterprise value of €35.6 million (Rs236 crore).
“This acquisition offers Sintex market entry in Germany, which is the capital of the European automotive market,” managing director Amit Patel said in a statement. (Reuters)
Torrent denies takeover talks with Takeda
New Delhi: Torrent Pharmaceuticals Ltd, the maker of anti-infective and cardiac drugs, denied that its founders plan to sell their stake to Japan’s Takeda Pharmaceuticals Co., or any other company. “The company denies that it, or its promoters, intend to sell any stake to Takeda Pharmaceuticals Co.,” Ahmedabad-based Torrent said in a release to the Bombay Stock Exchange on Thursday. “There is no move on the part of the company or its promoters to sell stake, in part or in whole, to any player, national or global.”
‘The Times of India’ had on Thursday reported that Takeda is interested in acquiring the stake of Torrent’s founders.
Takeda and Torrent are discussing the price of the acquisition, the newspaper said, citing an unidentified person familiar with the negotiations. Torrent is asking for Rs400 a share from Takeda, the report said. Osaka-based Takeda Pharmaceutical is Asia’s largest drug maker. Torrent Pharma rose 4.03% to close at Rs181.80 in Mumbai trading on Thursday. (Bloomberg)
Moody’s downgrades Indian Oil rating
Singapore: Moody’s Investors Service, a subsidiary of Moody’s Corp., on Thursday downgraded the issuer rating of Indian Oil Corp. Ltd, or IOC, to Baa3 from Baa2. The rating outlook is stable.
The rating action reflects material decreases in IOC’s profitability as a result of continued regulatory restrictions in India, which have restricted the company’s ability to fully pass through the cost of oil in its marketing business. As the price of oil has increased, the impact of this has grown substantially, despite some mitigating measures undertaken by the Indian government. (Staff writer)
Vishal Retail to raise up to Rs200 cr via equity
New Delhi: Discount retailer Vishal Retail Ltd is looking to raise up to Rs200 crore through share sale to fund expansion when the market conditions improve, a senior company official said on Thursday. The retailer, which plans expand retail space to 10 million sq. ft by 2011 from 2.39 million sq. ft now, will fund expansion till then via the franchisee route and debt. “The value retailers stand to benefit in the current inflationary environment,” said Manmohan Agarwal, chief executive (corporate affairs) a day after posting its April-June results. (Reuters)
Exercise by just popping a pill, scientists say
Bangalore: Scientists have identified two cell signalling pathways that increased endurance in mice and turned them into long-distance runners when activated by a drug, according to a report in 31 July issue of ‘Cell’. These pathways also confer many other benefits of exercise.
This may have obvious allure to increasing endurance in sports, but researchers say drugs mimicking the effects of exercise have therapeutic potential in treating some muscle disorders, cases of disabilities and other metabolic diseases where exercise is proven to be beneficial, or even where hospitalized patients are unable to exercise. A team of scientists from Howard Hughes Medical Institute in Maryland and Salk Institute for Biological Studies in San Diego had earlier worked with genetically engineered mice and showed that permanently activating a genetic switch turned mice into marathon runners.
The altered mice not only had super-endurance but were resistant to weight gain and had better response to insulin, thus lowering levels of glucose in the body. Now, the researchers found a drug—currently under investigation and not commercially available—that activates the genetic switch.
The findings are equally tempting to couch potatoes and Olympic contenders but to avoid the misuse in games, researchers have already developed a test that detects the “drug” and its compounds in blood and urine. They are working with the World Anti-Doping Association and racing against time to have it in place before the Beijing Olympics starts on 4 August. (Seema Singh / Mint)
Santosh Nautiyal set to head port tariff body
Bangalore: Santosh Nautiyal, a former bureaucrat, is set to be named the new chairman of the port tariff regulatory body that sets prices for services provided at the government-owned major ports in the country. The Tariff Authority for Major Ports, or TAMP, currently does not have a full-time chairman. “We have recommended Nautiyal’s name to head TAMP to the appointments committee of cabinet (ACC), ” said a shipping ministry official who did not want to be named ahead of a formal approval from the ACC, which is headed by Prime Minister Manmohan Singh.
Brahm Dutt, secretary, department of road transport and highways, was asked by the government to act as the interim head of TAMP after the earlier chairman, A.L. Bongirwar, completed his five-year term on 17 October 2007.
The chairman of TAMP is appointed for a period of five years with an age limit of 65 years. Nautiyal, a retired Indian Administrative Service official belonging to the Orissa cadre, headed the National Highways Authority of India between January 2003 and July 2006.
He is currently chairman of the National Shipping Board, the apex body that advises the shipping ministry.
Several contenders had applied for the post. These include former shipping secretary A.K. Mohapatra, former chairperson of Mumbai Port Rani Jadhav and the former chief secretary of Maharashtra D.K. Shankaran. India’s major ports are located at Mumbai, Navi Mumbai (JNPT), Kandla, Kochi, New Mangalore, Mormugao, Chennai, Tuticorin, Visakhapatnam, Kolkata, Haldia and Paradip.
These ports together handled 519 million tonne of cargo in the 12 months to March 2008, accounting for about 75% of the cargo handled at all the ports in the country. (P. Manoj / Mint)
Datacom promoter willing to dilute stake
New Delhi: New Delhi-based businessman Mahendra Nahata, a 36% owner in mobile phone services aspirant Datacom Solutions Ltd who is in a dispute with partner Videocon Industries Ltd, said he was willing to dilute his stake in the phone firm, which holds a government licence to roll out services across India, at a company valuation of $2.5-3.0 billion. This valuation makes the stake controlled by his family-run Jumbo Techno Services at between $900 million and $1.08 billion.
Nahata has charged Videocon promoters, industrialist Venugopal N. Dhoot’s family, with taking decisions not in the benefit of shareholders and transgressing clauses in an agreement between the two sides. On Thursday, the ‘Business Standard’ reported that Dhoot had offered to buy out Nahata’s stake in the phone firm.
Nahata told ‘Mint’ that there were several proposals being considered to sort out differences between the two sides but ”nothing had been finalized”. On selling his stake, he said, ”There is a lot of excitement around the telecom industry in India and many foreign companies want to enter the market. We will be willing to look at diluting our stake at a valuation of some $2.5-3.0 billion for an all-India licence. We will be considering these proposals based on its merits, but there is nothing firm as yet.”
Dhoot could not be reached for comment Thursday. A day earlier he said there were no differences with Nahata. (Staff Writer)
Indira Jaising elected to UN committee
United Nations: Supreme Court lawyer and women rights activist, Indira Jaising, has been elected to the United Nation’s committee on elimination of discrimination against women.
Jaising, 68, secured the highest number of votes—149 out of 181—in a keen contest. This was the first time India had fielded a candidate for this 23-member committee and the state parties chose 11 candidates from 18 nominees in the field.
Jaising, who became the first woman to be designated as a senior advocate by the Bombay high court in 1986, has been elected for a four-year term beginning 1 January 2009. (PTI )
IAEA set to advance US-India atom pact despite qualms
United Nations nuclear watchdog governors are expected on Friday to approve an inspections plan for India, needed for its nuclear trade deal with the US, despite qualms about rewarding a non-proliferation outsider.
The deal would open to India the world market in nuclear fuel and technology for civilian uses after an embargo of three decades prompted by New Delhi’s nuclear tests and refusal to join the global Nuclear Non-Proliferation Treaty (NPT).
The draft before the International Atomic Energy Agency’s (IAEA) 35-nation governing board would place India’s declared civilian nuclear energy plants—14 of 22 existing, or planned reactors—under regular IAEA surveillance.
If the plan is adopted, India must then win an unprecedented waiver from the 45-nation Nuclear Suppliers Group (NSG) allowing trade in sensitive nuclear materials with a non-NPT state, and ratification by the US Congress for the deal to take force.
The first NSG meeting on India is expected on 21-22 August.
Washington and New Delhi are lobbying sceptical members of the slow-moving NSG hard to help clinch the deal, with time fast running out before US politics pause for November elections. Western powers tout the deal as nudging giant India towards the non-proliferation mainstream and fighting global warming by increasing use of low-polluting nuclear energy in burgeoning developing economies, reducing high oil and gas costs as well.
Sceptics, including smaller European and developing nations, Canada, New Zealand and disarmament groups fear it will fray loyalty to an NPT already challenged by a push for nuclear power, led by Iran, in the volatile West Asia. (Mark Heinrich / Reuters)