Vedanta gets shareholder nod for India buyout offers

REUTERS - Mining conglomerate Vedanta Resources Plc won the backing of its shareholders to offer up to $3.48 billion to buy the Indian government's minority stakes in two of its subsidiaries.

London-listed Vedanta said it received 92.10 percent of votes in favour of the company or its units buying the government's 29.5 percent stake in Hindustan Zinc .

Vedanta also received 92.01 percent of votes in favour of acquiring the government's 49 percent holding in Bharat Aluminium Co (BALCO).

The company said investors holding about 73 percent of its shares voted at the general meeting on Wednesday.

In January last year, the company offered India $2.94 billion for its stake in Hindustan Zinc, and $338 million for the shares in BALCO as part of a broader effort to slim down its byzantine structure.

Vedanta said the government had not formally responded to that offer, or to two subsequent letters. That forced Vedanta to renew permission from shareholders to make fresh offers.

As of August last year, it had a mandate to offer, in rupees, the equivalent of $3.38 billion for the Hindustan Zinc shares and $550 million for BALCO, but that mandate has expired.

Now, because the rupee has weakened, it is seeking a lower threshold - permission to offer up to $487 million for BALCO and no more than $3.48 billion for both shares combined. That could still mean higher formal offers for both or either, as the stakes do not have to be sold simultaneously.

But India's mining ministry wants parliamentary approval before the Hindustan Zinc sale goes ahead, and the BALCO sale may need special approval from the markets regulator.

India had been hoping to raise about $9 billion from the sale of state-owned assets this year.

(Reporting by Karen Rebelo in Bangalore; Editing by Sriraj Kalluvila)

View the original article here

Adopt sustainable biz models: Unilever global chief to India Inc

Mumbai, Oct 30 (IANS) Rapid globalisation and the resulting inter-dependence of financial markets, technology and economic systems have made the world more complex to manage and now is the time for India Inc to embrace sustainable business models, a top official said here Wednesday.

"Never before have we seen such rapid explosions in the global population, shifts in economic power or resulting pressures on natural resources with enormous swings in currencies, raw material costs and climate becoming the norm," said Unilever Global CEO Paul Polman.

He said the digital revolution will continue to change lives and business at an increasingly fast pace and many struggle with this 'new normal' with the average tenure of a CEO now less than four years and those of politicians even shorter.

Polman was addressing the day-long Indian Society of Advertisers Global CEO Conference on Navigating VUCA (volatile, uncertain, complex and ambiguous).

He urged India Inc to embrace sustainable business models, be intuitive, explore new markets and pare unnecessary costs.

"All of us need to be net contributors to society, offer more than we take from the society. We cannot afford any more global warming, let people go hungry or allow people to work for abysmally low fees. Capitalism needs to evolve," Polman emphasised, advising how business leaders could navigate through tough economic situations.

Other top corporate heads like Tata Sons' R. Gopalakrishnan, Cadbury India's Manu Anand and Tata Motors' Ravi Kant, Hero Motocorp's Pawan Munjal, Vodafone India's Marten Pieters, Facebook India head Kirthiga Reddy, Raymond Lifestyle Business' Sanjay Behl, MCCS India's Ashok Venkatramani, ISA Chairman and HUL executive director Hemant Bakshi, Exchange4media Group's Anurag Batra and Indian Society of Advertisers' (ISA) treasurer Paulomi Dhawan were among other prominent speakers at the conference.

The ISA is the peak national body for advertisers since more than six decades and represents organisations involved in Indian advertising, marketing and media industries.

ISA members constitute more than two-thirds of India's national non-government ad spends and aims to protect consumers by ensuring that advertising and marketing communications are conducted responsibly besides safeguarding rights of its members to communicate freely with their customers.

View the original article here

Cummins misses, cuts outlook on mining, India weakness

By James B. Kelleher

CHICAGO (Reuters) - Cummins Inc , the U.S. maker of engines and other vehicle components, reported lower-than-expected quarterly profit on Tuesday and cut its full-year outlook, citing weak sales to most of the industries its serves, including mining.

The news sent Cummins shares tumbling as much as 9.2 percent.

The Columbus, Indiana-based company said sales of all its products had also contracted sharply in India in the most recent quarter as a result of declining business confidence and manufacturing activity there.

Like many emerging markets, India has seen an exodus of foreign investment in recent months as expectations have grown that the U.S. Federal Reserve will begin to taper its massive stimulus program.

"Of all of our markets, India is currently the most challenging," Cummins CEO Tom Linebarger told analysts during a conference call to discuss this results.

"Customers cut orders to lower working capital and preserve cash as business confidence declined in the face of weak industrial activity and rising inflation." Truck production alone tumbled 33 percent in the third quarter in India, Linebarger said, and September's production numbers were the lowest in a decade.

Cummins now expects full-year revenue to fall 3 percent versus its previous forecast of revenue being flat in 2013.

The company also cut its forecast for profit before interest and taxes to a range of 12.5 to 13 percent of total sales, down from 13 to 14 percent of sales.

Cummins, which supplies the engines that run hauler trucks, loaders and excavators used in mines all over the world, said lower capital equipment spending by resource companies also caused earnings to fall short of expectations and prompted the cut in its forecast.

Cummins was the latest U.S. company to blame the mining sector's weakness for its financial woes, joining heavy-equipment maker Caterpillar Inc and steelmaker Timken Co .

Miners, facing investor backlash over unpopular takeovers and budget overruns and suffering from falling metal prices, have slashed spending on new equipment and have even begun to cannibalize components from old mining equipment in order to avoid spending money on new spare parts.

Cummins posted third-quarter net income of $355 million, or $1.90 a share, up from $352 million, or $1.86 a share, last year.

Analysts, on average, expected a profit of $2.11, according to Thomson Reuters I/B/E/S.

Sales in the quarter fell 1 percent to $2.5 billion.

Cummins shares were down 7.1 percent at $125.27 on the New York Stock Exchange on Tuesday afternoon, off an earlier low at $122.54.

(Reporting by James B. Kelleher in Chicago and Sagarika Jaisinghani in Bangalore; editing by Kirti Pandey, Jeffrey Benkoe and Matthew Lewis)

View the original article here

India likely to implement debt swap in February - sources

By Neha Dasgupta

MUMBAI (Reuters) - India is likely to implement its planned 500 billion rupee debt swap plan only after the government's yearly borrowing programme concludes in February, two officials aware of the country's plans said.

India was expected to hold off on its first debt swap because the current period of volatility in bond markets could make it less successful, the officials said.

The government announced the planned debt swap under the budget unveiled this year. It would involve buying short-end bonds and selling an equivalent amount of longer maturity debt in a fiscally neutral action intended to ease near-term redemption pressures on government finances.

However, longer-end bonds were currently less attractive because of market expectations the central bank would continue raising interest rates after its 25 basis point hike last month, said an official.

"The market is showing uncertainty as of now, so it would be better to have it (debt swap) after the borrowing is over," said one of the officials involved with the process who was not authorised to publicly discuss the deliberations.

The officials said only if longer-end bonds rally would the the country reconsider its currently timing plans. India's government makes the final decisions but the central bank manages the country's debt programme.

India may also consider making debt switches a more permanent feature to better manage redemptions and liquidity, the officials added.

"It has to be looked at from the market development perspective also, not just as a one-off," said one of the officials.

Under the budget for the fiscal year ending in March, the government plans to borrow a total of 5.79 trillion rupees by February 7, leaving around seven weeks to conduct the debt swap.

The government has already announced it will buy back shorter-end bonds due to mature between 2015/16 and 2017/18 fiscal years but has not announced which longer-end bonds it will target to sell.

India's benchmark 10-year bond yield has risen around half a percentage point this year.

(Editing by Subhadip Sircar and Nick Macfie)

View the original article here

Oerlikon subsidiary opens India office to spur growth

Bangalore, Oct 25 (IANS) World's leading vacuum solutions provider Oerlikon Leybold Friday opened an India office here to power its sales in the South Asian region for higher market share.

"We continue to invest in emerging markets like India to serve industrial needs better in South Asia and the India office will be the sales and service hub for the region," Oerlikon chief executive Martin Fuellenbach told reporters here on the occasion.

Though the Cologne-based Swiss firm has been present in India since 2005 through agents and later by setting up a subsidiary, it augmented its services for vacuum gauge calibration to provide complete set-up of complex systems.

"As our key customers like the space department are located here (Bangalore), our presence will enable us to better serve their needs as we offer complete solutions," said Oerlikon India general manager M. Sreenivasulu.

Coming under the space department, the state-run Indian Space Research Organisation (ISRO) makes and launches rockets and satellites to meet the country's various communications and remote sensing applications.

The Oerlikon India subsidiary has an in-house vacuum gauge calibration facility and a helium leak testing service, with skills and capacity to service all its products except turbo pumps.

"Going forward, the India region will be key to our growth plans because of skilled manpower at a competitive cost," Fuellenbach said.

The company has flown in its application experts from Germany to train local engineers to service its customers in the countries across the region.

As a leading industrial group specialising in machine and plant engineering, Oerlikon provides cutting-edge technologies for chemical fiber machining, drive, vacuum, coating and advanced nano-technology in 34 countries the world over.

The company's advanced vacuum solutions are used in manufacturing and analytical process besides research activities.

View the original article here

Unilever hit by sliding emerging market currencies; India onion prices weigh

By Martinne Geller

LONDON (Reuters) - Unilever Plc reported slower sales growth after demand for its consumer goods was hit by the devaluation of a handful of emerging market currencies and other factors such as rising onion prices in India.

"This is a soft quarter without a shadow of a doubt," Chief Financial Officer Jean Marc Huet told Reuters in an interview On Thursday.

The Anglo-Dutch maker of Ben & Jerry's ice cream, Lipton tea and Dove soap posted a 3.2 percent sales increase in the third quarter, down from 5 percent in the second.

It had already warned in September that a slowdown in markets such as Indonesia, Brazil and India had accelerated and it expected quarterly underlying sales growth of only 3 percent to 3.5 percent.

Unilever generates more than half its annual sales from developing and emerging markets, where sales rose 5.9 percent in the quarter - down from 10.3 percent in the previous three months but still stronger than the slight decline seen in developed markets.

Turnover fell 6.5 percent to 12.5 billion euros, hurt by an 8.5 percent hit from foreign exchange rates.

"The reality is that the global economy is not in as good shape as some would like to make out," Chief Executive Paul Polman said on a conference call. "I believe we have to calibrate our expectations a little more as we navigate these choppy waters."

Polman added that in three decades operating in emerging markets, he had never seen such large declines in so many currencies at the same time.

"Whilst we normally can deal with one or another and compensate for that globally, this really came as a shock to the global economy in total," he said.

Uncertainty over when the U.S. Federal Reserve will scale back its bond-buying stimulus led to sharp falls in currencies such as the Indian rupee and the Brazilian real between May and September.

The drops were compounded, Polman said, by other factors including a government abolition of fuel subsidies in Indonesia and a more than trebling in the price of onions in India - a staple cooking ingredient - that further weighed on consumers' buying power.

CROSSING CATEGORIES

Unilever's performance looks relatively weak compared with peers such as Nestle , the world's biggest foods group, which said last week competitive pricing helped it lift sales growth in spite of tough conditions in emerging markets and Europe.

Reckitt Benckiser earlier this week reported higher-than-expected sales and raised its outlook.

Huet said Unilever's business crosses so many categories, including basics like shampoo and food used by people at all levels of the economy, while Reckitt's goods - like dishwasher detergent and headache tablets - appealed to higher-income consumers more immune to economic volatility.

Unilever's currency hedges typically give it a window of three to six months, during which time it can work to raise prices in local markets hurt by devaluations. Selective increases are expected to help in the coming quarters, it said.

For the full year, currency should hurt sales by about 6 percent and profit by about 7 percent, Huet said.

In North America, third-quarter sales volume fell due to a decision to stop selling some low-margin ice cream products and continued weakness of the company's margarine business.

Also, Unilever's market share in the high-margin personal care business was hurt by promotions by rival Procter & Gamble , whose Pantene and Herbal Essences shampoos compete with Unilever's Tresemme.

The company said it expects sales growth to improve in the fourth quarter, helped by new products such as Vaseline body sprays in Europe and Tony & Guy hair products in the United States. Still, Polman said developed markets like the United States were not recovering as fast as expected.

Following the divestiture of some less-profitable brands including Skippy peanut butter and Wishbone salad dressings, Polman said there were some small businesses left to sell but he declined to name them.

"It's better to announce the sale than to preannounce the intention," Polman said.

Unilever shares were up 0.7 percent in London at 1045 GMT.

(Reporting by Martinne Geller in London; Editing by David Goodman and Jane Merriman)

View the original article here

India looks to China, Iran for onions to cool political heat

By Rajendra Jadhav

MUMBAI (Reuters) - India has become so desperate for fresh stocks of the onions it uses in spicy curries that it is turning to regional rival China and sanctions-hit Iran for supplies, and there is even talk of airlifts to ease soaring prices.

But despite a swirl of high-level meetings on Thursday, the government is unlikely to land imports in substantial quantities before state elections begin on November 11, with state-run firms struggling to clinch deals and private players risk-averse.

Indians eat their way through 15 million tonnes of onions a year, using them as the base for traditional dishes such as biryani and bhaji. This has made high prices a hot potato that has in the past contributed to the fall of state governments.

Retail prices of onions have quadrupled in three months - now costing over 100 rupees a kilo, which is what a third of the population live on per day - as a supply squeeze caused by wet weather has hampered harvests.

Farm and food ministers met with Delhi Chief Minister Sheila Dikshit in New Delhi on Thursday to discuss ways to curb galloping prices in the Indian capital.

Onion prices were a major factor in pushing inflation to a seven-month high in September of 6.46 percent, and the government, led by the Congress party, is facing heated calls in the media to bring prices down by whatever means.

India has never before imported onions by air but Farm Minister Sharad Pawar proposed just that on Wednesday because sea transport takes longer and so cannot replenish supplies as fast, thereby bringing down prices.

Elections in the capital and in the states of Rajasthan, Madhya Pradesh, Chhattisgarh and Mizoram kick off in November.

"The state-run agencies are floating import tenders, but supplies are likely to come only after 3-4 weeks," said Changdev Holkar, a director at the National Agricultural Cooperative Marketing Federation.

"And quantity would be also miniscule compared to demand."

Private traders won't rescue the world's No. 2 producer and consumer because they know prices could quickly fall - farmers have planted far and wide to reap the benefit of high prices.

"Onions are highly perishable. Once you import, you have to sell at whatever price is prevailing in the market. You can't wait for prices to rise," said Ajit Shah, president of the onion exporters' association.

And even stopping exports won't help matters, because they have already shrunk to just a trickle.

"Our prices are too high. Buyers are switching to Pakistan and China," said a Mumbai-based exporter. Indian onions cost $900 per tonne whereas $570 will buy you a tonne from China.

Pawar stuck to basic supply-demand economics on Thursday to bring relief. "Supplies from the new season crop would start in two to three weeks and that would depress prices," he said.

He might be disappointed, though. Heavy rains are expected in the next few days in big onion-growing states of Maharashtra, Andhra Pradesh and Karnataka - and that could be disastrous, Holkar said, disrupting harvesting and damaging the crop.

"Right now, imports or restrictions on exports cannot change the demand-supply equation. Dry weather for two to three weeks can increase supplies and bring down prices," said Shah. (Reporting by Rajendra Jadhav; Editing by Jo Winterbottom and Mark Heinrich)

View the original article here

EXCLUSIVE - India gears up for first asset-backed property bonds

By Archana Narayanan and Aditi Shah

MUMBAI (Reuters) - Indian property firms, including DLF Ltd, are gearing up to sell the country's first bonds backed by rental income from their office buildings and shopping malls.

The bonds would open a new source of capital for a commercial property sector weighed down by $22 billion of bank debt and sluggish rentals, and come on the heels of new rules allowing developers to raise money through real estate investment trusts (REITs).

Property and infrastructure lender IDFC is at the most advanced stage, with plans to sell at least 3 billion rupees in a debt security backed by lease rentals from an IT park in Noida, outside Delhi, and a special economic zone in Pune, said people involved in the discussions.

IDFC declined to comment.

DLF, India's biggest listed developer, is in talks to raise up to 10 billion rupees in a bond backed by lease rentals from two malls by the end of this year, the people said. The developer has in the past talked about raising funds through such a vehicle. Developer K. Raheja Corp is also pursuing an asset-backed deal, but is proceeding slowly, Neel Raheja, group president, told Reuters.

Credit Suisse and JP Morgan are among banks tapping property companies and investors to gauge their interest in the structure, the people said. Both banks declined to comment.

"Bankers have pitched deals for IDFC and DLF to us. We are assessing the risk of the product and waiting for the rating," said a senior fund manager who declined to be named because the talks were not public. He said IDFC was likely to issue the first such bond, within a month.

MORE LRD THAN CMBS

While the bond structure is loosely referred to in India as a commercial mortgage-backed security (CMBS), it differs from a CMBS in the United States or Europe, under which lenders securitise mortgages on commercial property.

Rather, DLF and IDFC's proposed bonds would be similar to so-called lease-rental discounting (LRD), sold in a bond. Rental income is used to pay the interest to the bond investor, while the principal is repaid at maturity, the people said. In an LRD, the principal is amortised over the life of the debt.

Both DLF and IDFC are considering bonds with 5-year maturities and an option to extend the borrowing to 7 years. The debt would be issued by a special purpose vehicle that owns the underlying property and would carry a credit rating independent of the developer.

DLF's executive director of finance, Saurabh Chawla, confirmed the developer is looking at such a debt structure for its offices and shopping malls, but gave few details.

"We are exploring the possibility," he said. "There are many such programs that we have which we hope to complete over the next 6-9 months."

DLF earns more than 20 billion rupees in rent every year, Chawla said. The company has also been selling non-core assets to reduce its debt.

YOUNG DEBT MARKETS

Indian property developers, typically family-run, usually rely on bank loans and selling equity to fund their operations.

India's corporate bond market has traditionally lacked the depth and liquidity to serve as a major funding source for all but the highest-rated companies. More exotic bond products, meanwhile, have failed to take off because of low investor appetite and regulatory restrictions that prevent many investors such as pension funds from buying riskier assets.

The search for new ways to raise funds comes after Indian developers gorged on cheap bank loans during a property boom in 2006-07, which was ended by the global financial crisis as well as high domestic inflation and interest rates. Demand for commercial property in India has also weakened in some cities as corporate tenants rein in costs by consolidating operations, according to a report this month by CBRE.

IDFC is considering an asset-backed security that yields 10.75 percent to 11 percent, said those close to the discussions, below the roughly 12-13 percent interest on a loan for a similar duration.

Property-backed bonds carry risk, as issuers can default if lease payments are disrupted. Defaults on mortgage-backed assets were a key contributor to the 2008 global financial crisis.

The Indian market for property-backed bonds is likely to develop slowly. "The tap may finally open, but not in strong force," said Sandeep Singh, director of structured finance at Fitch Ratings in Mumbai.

Raheja said his company is considering doing a deal in the next 3-6 months. "Before we do it we want to make sure it goes right and therefore we are not rushing into it," he said.

($1 = 61.6000 rupees)

(Additional reporting by Manju Dalal in SINGAPORE; Editing by Rafael Nam, Tony Munroe and Ian Geoghegan)

View the original article here

EXCLUSIVE - India gears up for first asset-backed property bonds

By Archana Narayanan and Aditi Shah

MUMBAI (Reuters) - Indian property firms, including DLF Ltd, are gearing up to sell the country's first bonds backed by rental income from their office buildings and shopping malls.

The bonds would open a new source of capital for a commercial property sector weighed down by $22 billion of bank debt and sluggish rentals, and come on the heels of new rules allowing developers to raise money through real estate investment trusts (REITs).

Property and infrastructure lender IDFC is at the most advanced stage, with plans to sell at least 3 billion rupees in a debt security backed by lease rentals from an IT park in Noida, outside Delhi, and a special economic zone in Pune, said people involved in the discussions.

IDFC declined to comment.

DLF, India's biggest listed developer, is in talks to raise up to 10 billion rupees in a bond backed by lease rentals from two malls by the end of this year, the people said. The developer has in the past talked about raising funds through such a vehicle. Developer K. Raheja Corp is also pursuing an asset-backed deal, but is proceeding slowly, Neel Raheja, group president, told Reuters.

Credit Suisse and JP Morgan are among banks tapping property companies and investors to gauge their interest in the structure, the people said. Both banks declined to comment.

"Bankers have pitched deals for IDFC and DLF to us. We are assessing the risk of the product and waiting for the rating," said a senior fund manager who declined to be named because the talks were not public. He said IDFC was likely to issue the first such bond, within a month.

MORE LRD THAN CMBS

While the bond structure is loosely referred to in India as a commercial mortgage-backed security (CMBS), it differs from a CMBS in the United States or Europe, under which lenders securitise mortgages on commercial property.

Rather, DLF and IDFC's proposed bonds would be similar to so-called lease-rental discounting (LRD), sold in a bond. Rental income is used to pay the interest to the bond investor, while the principal is repaid at maturity, the people said. In an LRD, the principal is amortised over the life of the debt.

Both DLF and IDFC are considering bonds with 5-year maturities and an option to extend the borrowing to 7 years. The debt would be issued by a special purpose vehicle that owns the underlying property and would carry a credit rating independent of the developer.

DLF's executive director of finance, Saurabh Chawla, confirmed the developer is looking at such a debt structure for its offices and shopping malls, but gave few details.

"We are exploring the possibility," he said. "There are many such programs that we have which we hope to complete over the next 6-9 months."

DLF earns more than 20 billion rupees in rent every year, Chawla said. The company has also been selling non-core assets to reduce its debt.

YOUNG DEBT MARKETS

Indian property developers, typically family-run, usually rely on bank loans and selling equity to fund their operations.

India's corporate bond market has traditionally lacked the depth and liquidity to serve as a major funding source for all but the highest-rated companies. More exotic bond products, meanwhile, have failed to take off because of low investor appetite and regulatory restrictions that prevent many investors such as pension funds from buying riskier assets.

The search for new ways to raise funds comes after Indian developers gorged on cheap bank loans during a property boom in 2006-07, which was ended by the global financial crisis as well as high domestic inflation and interest rates. Demand for commercial property in India has also weakened in some cities as corporate tenants rein in costs by consolidating operations, according to a report this month by CBRE.

IDFC is considering an asset-backed security that yields 10.75 percent to 11 percent, said those close to the discussions, below the roughly 12-13 percent interest on a loan for a similar duration.

Property-backed bonds carry risk, as issuers can default if lease payments are disrupted. Defaults on mortgage-backed assets were a key contributor to the 2008 global financial crisis.

The Indian market for property-backed bonds is likely to develop slowly. "The tap may finally open, but not in strong force," said Sandeep Singh, director of structured finance at Fitch Ratings in Mumbai.

Raheja said his company is considering doing a deal in the next 3-6 months. "Before we do it we want to make sure it goes right and therefore we are not rushing into it," he said.

($1 = 61.6000 rupees)

(Additional reporting by Manju Dalal in SINGAPORE; Editing by Rafael Nam, Tony Munroe and Ian Geoghegan)

View the original article here

India will fully finance Current Account Deficit: Chidambaram

Bangalore, Oct.5 (ANI):Finance Minister P.Chidambaram said Saturday that the country would finance its Current Account Deficit fully in fiscal 2013-14 without drawing down on its reserves.

Chidambaram said he is confident of economic growth and India would be able to contain the Current Account Deficit.

"The confidence comes from my knowledge of the numbers. The confidence comes from the fact that gold imports have sharply compressed in the months of July, August and September. For example in April, May, June we imported 335 tonnes of gold. In July, August and September, I think the number has come down to about 65 or 70 tonnes. My confidence comes from the fact that exports have picked up briskly and smartly," he said.

The Current Account Deficit grew less than expected in the June quarter and is tipped to ease in coming months as a pick-up in exports and lower gold imports improve the trade balance, offering relief to the battered rupee.

On Tuesday, Economic Affairs Secretary Arvind Mayaram said the country would contain the fiscal deficit at 4.8 percent of GDP and added that the government would not have to go beyond the finance ministry's planned market borrowing for the year, and would be able to meet its budgeted revenue target.

The Current Account Deficit (CAD) for the three months through June was USD 21.8 billion, or 4.9 percent of gross domestic product, driven by sluggish exports and high gold imports in April and May before the government hiked tariffs on the metal to a record 10 percent.

Meanwhile, slowing economic growth has dampened tax revenues, making it tougher for the government to hit its fiscal deficit target of 4.8 percent of GDP for the financial year that ends in March.

Economists are now split over whether new Reserve Bank of India (RBI) chief Raghuram Rajan will hike rates again at the central bank's next policy review on October 29.

Many did not anticipate Rajan's focus on curbing inflationary pressures despite growth languishing at a decade-low.

Furthermore, Chidambaram also spoke in detail about the Forward Markets Commission (FMC) issuing show cause notice to FTIL (Financial Technologies (India) Limited).

"FTIL (Financial Technologies (India) Limited) which is a promoter is also under the watch both by the Ministry of Company Affairs and by the two regulators. While NECL (National Spot Exchange Limited) as I have said it is a company. It is not a regulated entity. They are in court. I wish the depositors or the lenders or investors the best. They should exercise and establish their rights under court of law. And those who have committed any errors, I don't know, they will be answerable to those who have put their money in NECL," added Chidambaram.

FMC has alleged that even though borrowers had defaulted on earlier loans, they were allowed to raise money on the NSEL platform.

The FMC on Thursday barred the National Spot Exchange (NSEL) and group firms from auctions of commodities held by the stock exchange after a complaint that firms related to the former Managing Director took part in the bidding process. (ANI)

View the original article here

Low growth, high inflation likely to persist in India

By Rajesh Kumar Singh

NEW DELHI (Reuters) - Economic data on Monday will likely offer further evidence of high inflation and weak growth, complicating the RBI's mission of cooling prices without worsening the slowdown and adding to the government's difficulties as it heads into an election season.

Asia's third-largest economy has been caught in a situation which some analysts define as akin to stagflation for the past three quarters -- with economic growth stuck below 5 percent and prices rising at a fast clip.

Inflation numbers due later on Monday will likely show the same trend.

According to a Reuters poll, wholesale prices probably rose 6 percent in September, slightly below a six-month high of 6.1 percent in August. Consumer inflation, also due on Monday, is expected to have quickened to 9.60 percent last month from 9.52 percent in August, the poll showed.

The government will release the data on wholesale prices around 12:00 p.m. Consumer price data is due at 5:30 p.m.

The inflation data comes on the heels of Friday's disappointing industrial output numbers. Output grew a much-slower-than expected 0.6 percent in August, compared with an upwardly revised 2.75 percent expansion in July, hurt by weak investment and consumer demand.

The government is hopeful the economy will start to recover by the end of the year on higher farm output and exports. But the latest industrial production data has dampened that hope.

Output grew just 0.1 percent between April and August, the first five months of the fiscal year 2013/14.

That will be a worry for Prime Minister Manmohan Singh's Congress party as it campaigns for five state elections starting in November, a warm up for national elections due by next May. The opposition Bharatiya Janata Party has gained momentum in recent months thanks in part to the weak economic performance of Singh, a veteran economist and reformer.

"India is likely to face low growth and high inflation for some time," said Daniel Martin, Asia Economist at Capital Economics in Singapore, who expects the Reserve Bank of India (RBI) to increase its repo rate by another 25 basis points later this month.

"A higher repo rate will hold up the economic recovery. It is a difficult situation for the central bank."

Economic growth has averaged 4.6 percent between the fourth quarter of 2012 and the second quarter of 2013. Headline inflation, measured by wholesale prices, averaged around 7 percent in the same period -- way above the central bank's perceived comfort level of 5 percent.

INFLATIONARY WORRIES

Worries over high inflation led new RBI chief Raghuram Rajan to surprise markets in his policy review last month with an interest rate hike. Economists are now split over whether Rajan will hike rates again at the next review on October 29.

If inflation data does come in line with expectations, the odds for another hike at the October review will only increase.

Even though India is stumbling through its worst economic crisis since 1991, Rajan has clearly signaled he would focus on price stability, which he sees as a necessary condition for lifting economic growth from a decade low.

Inflation is expected to come down in coming months as a slowing economy is likely to keep demand-driven price pressures in check and as this summer's strong monsoon rains may eventually cool food prices.

Yet, price risks persist. Adjustments in domestic prices of subsidised fuel and other imported items following a sharp depreciation of the rupee are still incomplete.

Although the rupee gained 5 percent last month, it is still down around 10 percent this year against the dollar, meaning higher import costs for items such as oil, fertilizer, pulses and edible oil in rupee terms.

The rupee hit record lows in late August, pressured by the country's gaping current account deficit and a general exodus of global investors from emerging market assets.

RECOVERY IN SIGHT?

In its bid to revive the economy ahead of polls, Singh's government has decided to inject capital into banks so they can offer cheaper loans for purchases of items such as bikes, fridges, washing machines and televisions.

The move is aimed at boosting production in the consumer durables sector, which has failed to register growth since last November.

A pick-up in merchandise exports, aided by a recovery in global economy along with the rupee depreciation, has bolstered the government's hopes for an economic rebound in the quarter to end-December.

Singh is also counting on the prospect of strong farm output for an economic boost. The sector is expected to post annual growth of about 5 percent this fiscal year, which should lift rural incomes and increase demand for goods and services.

"Strong exports and a rebounding farm sector will only help at the margins," said Martin of Capital Economics. "India's recovery largely depends on a revival in investments."

(Reporting by Rajesh Kumar Singh; Editing by Sanjeev Miglani & Kim Coghill)

View the original article here