Saturday, September 30, 2006
Business News Aug 30th,2006
Economy on a roll, GDP up 8.9% in Q1
New Delhi, Sept. 29: The Indian economy registered this decade’s highest first quarter growth during the current financial year at 8.9 per cent on impressive showing by manufacturing and services sectors.
“This is the highest first quarter growth since 2000-01,” finance minister P. Chidambaram said shortly after the GDP data was released and assured that credit to manufacturing sector, which grew by 11.3 per cent, would neither be ‘delayed nor denied’. However, Mr Chidambaram wanted players other than industrial houses to chip in for boosting manufacturing growth further to make India a leader in at least 12 areas of activity.
The finance minister attr-ibuted the robust Q1 GDP growth to 31 per cent rise in bank credit, 36.2 per cent growth in commercial vehicles, 32.2 per cent increase in passenger traffic by aviation industry and 48.9 per cent jump in telephone connections. “Without government intervention”, the services grew by 10.6 per cent in Q1 of the current fiscal, the finance minister said.
Agriculture grew by a flat 3.4 per cent, chipping in 19.1 per cent to the overall GDP growth. Except for electricity and construction, which slowed down to 5.4 per cent and 9.5 per cent from 7.4 per cent and 12.4 per cent respectively, every sector recorded positive growth. He said growth in construction sector was lower than last year but did not indicate poor performance of the sector.
Local bodies cleared to raise funds from market
New Delhi, Sept. 29: Municipal bodies will now be able to raise funds from the market to meet their investment needs on a sustainable basis with the centre on Friday giving its approval for setting up a ‘Pooled Finance Development Fund’ for urban local bodies (ULBs).
“The Cabinet Committee on Economic Affairs has approved a proposal by the ministry of urban development for setting up a Pooled Finance Development Fund. This will enable ULBs, including small and medium sized municipalities, to raise funds from the market,” finance minister P. Chidambaram told reporters after a CCEA meeting.
Mr Chidambaram said although municipalities are at present allowed to issue municipal bonds to raise funds, the decision would help them to borrow from the market on a collective and sustainable basis. The bonds issued under the proposed fund, to be set up within a month, would enjoy a tax-free status, he said, adding that necessary cha-nges would be brought in the finance bill of the next financial year in 2007.
“This fund will address the financial gap faced by cities and municipal bodies. They will now be able to approach the market to finance their infrastructure projects,” he said. Under the new scheme, local bodies would be able to access market borrowings based on their credit worthiness through the State-level pooled finance mechanism such as a State pooled finance entity. The government has approved an allocation of Rs 400 crore in the 10th plan for the scheme.
The proposals under the new scheme would be sanctioned by a committee comprising representatives of ministry of urban development, Planning Commission, State Urban Development department and fina-nce ministry among others. Of the funds available with the central government for the fund, five per cent would be used for project development assistance.
The balance 95 per cent would be used for contribution to a credit rating enhancement fund for improving the credit rating of municipal bonds to investment grade. According to an official note released after the CCEA meeting, the centre would reimburse 75 per cent of the cost of project development for each municipality, while the State or the union territory government would refund 25 per cent.
The government has also fixed a ceiling for disbursal of amount to the cities according to population. For metro and big cities such as Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, the ceiling has been fixed at Rs 1 crore. For cities with population of above ten lakh, the ceiling is Rs 50 lakh, while for cities with population of less than 10 lakh the ceiling stands at Rs 25 lakh.
While the bonds issued under the fund would be tax-free, interest and dividend income earned from investments made from the credit rating enhancement fund corpus will not be exempted from income tax, the official note said.
Other CCEA decisions
Centre awards CBM blocks: The government awarded four Coal Bed Methane (CBM) blocks to the Anil Ambani group while rejecting its claim for another two after considering a detailed evaluation of the bids by an empowered committee of secretaries. Besides, three blocks were awarded to Australia’s Arrow Energy, two blocks to CoalGas and one block to British Petroleum. “The CCEA has accepted the recommendations of the ECS without any change,” finance minister P. Chidambaram said.
FDI hike in telecom won’t be deferred: The Union cabinet on Friday turned down a proposal by the communications ministry to keep in abeyance the increase in foreign direct investment (FDI) limit to 74 per cent from 49 per cent in the telecom sector and directed resolution of inter-ministerial differences within three months. “Department of telecom had suggested suspension of Press Note 5 and the matter was discussed. The decision to increase FDI to 74 per cent stands,” Mr Chidambaram said.
Acquisition of 6 LR-1 tankers by SCI cleared: The government gave the go ahead to Shipping Corporation of India (SCI) to acquire six long range-1 (LR-1) product tankers at a cost of Rs 1,705.68 crore. The acquisition would replace SCI’s ageing product tanker tonnage and meet the increased demand for exports and coastal transportation in the coming years.
Battery recall spreads like wild fire
Washington/Tokyo, Sept. 29: Consumers are being asked to return 526,000 laptop batteries made by Sony because they could catch fire, the latest in a record-setting recall involving nearly 7 million computers. IBM and Lenovo Group, the world’s third largest computer maker, were seeking the recall of rechargeable, lithium-ion batteries purchased with ThinkPad computers. A laptop caught fire at Los Angeles airport this month.
Elsewhere, Japanese electronics makers Toshiba and Fujitsu are recalling Sony batteries for their laptops while PC-maker Dell exp-anded its earlier recall of Sony battery packs. The batteries can short-circuit and have been blamed for causing some computers to catch fire.
The latest announcements bring the tally of recalled Sony batteries to about 7 million worldwide, and are a major embarrassment for the Japanese electronics and entertainment powerhouse. Toshiba said it is recalling 8,30,000 batteries made by Sony for its laptops. Hours later, Fujitsu Ltd. recalled an undisclosed number of Sony batteries that are used in 19 of its laptop models, according to Fujitsu spokesman Masao Sakamoto.
Whereas Dell said it is increasing the recall of Sony battery packs used in its systems to 4.2 million units from 4.1 million units. It urged customers to visit www.dellbatteryprogram.com and to recheck their batteries to see if they are affected.
The recalls comes as Sony Corp is in the midst of a major overhaul of its operations, closing plants, shutting divisions and trimming jobs. Sony said earlier on Friday it had asked manufacturers using its problem batteries to carry out a recall.
“Other laptop makers are expected to follow suit and offer new batteries to their customers,” said Takashi Uehara, a Sony spokesman. Sony has said the batteries could catch fire in rare cases when microscopic metal particles came into contact with other parts of the battery cell, leading to a short circuit.
Typically a battery pack will shut off when there is a short circuit but on occasion the battery would catch fire instead. The Toshiba recall involves Dynabook, Qosmio, Satellite Portege and Tecra models, but regional breakdowns and dates of manufacturing weren’t immediately available, said Toshiba spokesman Keisuke Omori.
In all, these are the largest electronic-related recall involving the Consumer Product Safety Commission. The agency said there have been only 47 reports of battery catching fire.
“While the risk may be real, it is very small,” said Julie Vallese, a commission spokeswoman.
In the latest recall, Lenovo cited a potential risk after a report of a smoking laptop at the LA airport. IBM and Lenovo chose to pursue a broader recall, the commission said.
For IBM and Lenovo, the batteries believed to be at risk were sold between February 2005 and this month, separately or along with ThinkPad computers.
About 1,68,500 of the 5,26,000 batteries were sold in the US. The recalled batteries were sold with, or sold separately to be used with, the following ThinkPad notebook computers: T Series (T43, T43p, T60); R Series (R51e, R52, R60, R60e); and X Series (X60, X60s). The batteries have the following part or model numbers, found on the battery label: ASM P/N 92P1072, 92P1088, 92P1142 or 92P1170; or FRU P/N 92P1073, 92P1089, 92P1141, 92P1169 or 93P5028. Consumers have been advised to stop using the batteries and contact Lenovo for a free replacement or log on to lenovo.com/batteryprogram.
DCB plans to raise Rs 180cr via IPO
Hyderabad, Sept. 29: Development Credit Bank Ltd will be expanding its branch network, besides shoring up its CAR, using some of the proceeds from its IPO, which opened on Friday, Mr Amin Manekia, a director of the bank, said here on Friday. “We plan to improve our CAR from the current 9.66 per cent, strengthen our capital base, and expand our branch network to 100, besides investing in technology,” Mr Manekia said.
Post-IPO, the stakeholding of the Aga Khan Fund for Economic Development in DCB will be reduced to about 31 per cent from the current 58.43 per cent, he said. The bank is offering 7,15,00,000 shares of Rs 10 each, and the issue is through the book-building route. The price band for the issue is Rs 22-Rs 26. Mr Manekia said the bank will raise Rs 157 crores at the lower end of the price band and Rs 186 crores at the upper end.
Northgate plans $26.5m private placement
Hyderabad, Sept. 29: Northgate Technologies Ltd, a Hyderabad-based software products firm, said on Friday that it will be raising $26.50 million by way of prefere-ntial allotment to five foreign institutional investors. Proceeds from the private placement will be used to expand Northgate’s operations, including the setting up of a server farm in Hong Kong, at an estimated cost of $6 million, the company’s chairman and managing director Venkat S. Meenavalli said.
Mr Meenavalli told reporters here that the board had approved the allotment of 24,47,062 equity shares of Rs 10 each at a price of Rs 497.28 to the five FIIs. The FIIs include UBS Securities Asia Ltd, through its Mauritius subsidiary Swiss Finance Corporation, which will be allotted 6,33,700 shares. Macquarie Bank Ltd of Australia would also be allotted 6,33,700 share, while Copthall Mauritius Investments Ltd will be allotted 5,79,450 shares, India Capital Fund 4,61,700 shares and India Institutional Fund 1,35,512 shares.
The Northgate board on Friday had also decided to increase the authorised share capital of the company from Rs 18 crores to Rs 23 crores, Mr Meenavalli said. Mr Meenavalli said Northgate, which has a substantial presence in the online advertising market, was also planning to enter the mobile Voice over Internet Protocol space.
Megasoft seen as frontrunner for merger with VisualSoft Tech
Hyderabad, Sept. 29: Six months after its plan to merge AppLabs Technologies collapsed, VisualSoft Technologies, a software services firm here, has short-listed three suitors, including Megasoft Ltd., to merge itself with, sources familiar with the deal said late on Friday. All three companies, including Megasoft, are based in Chennai.
The sources said Spark Capital, an investment banker
engaged by VisualSoft Technologies, will be making a presentation to the company’s board on Saturday. “Megasoft is one of the three suitors who have been short-listed by Spark. The board of VisualSoft will take a decision based on the three merger offers, and we expect it to decide soon. The merger will be through a stock swap. VisualSoft needs to merge itself with another company to remain in business. The company has been drifting for a while after the AppLabs deal fell through,” the sources said.
According to market sources, Megasoft is seen as the strongest suitor, in terms of finances. “Megasoft is a major player in the telecom products space, and it needs a software services firm like VisualSoft to complement is software services portfolio,” the source, who is intimate with both VisualSoft and Megasoft, told this newspaper.
Megasoft posted a net profit of Rs 8.07 crore on revenues of Rs. 37.72 crore in the first quarter of 2006-07. In comparison, VisualSoft posted a net profit of Rs 25.84 lakh on revenues of 18.71 crore in the first quarter of 2006-07. “Large investors in VisualSoft have been concerned with the drift in the company, and it took Spark Capital more than six months to find the suitors. We believe that a merger is the only way to help VisualSoft grow,” the sources said.
New Delhi, Sept. 29: The Indian economy registered this decade’s highest first quarter growth during the current financial year at 8.9 per cent on impressive showing by manufacturing and services sectors.
“This is the highest first quarter growth since 2000-01,” finance minister P. Chidambaram said shortly after the GDP data was released and assured that credit to manufacturing sector, which grew by 11.3 per cent, would neither be ‘delayed nor denied’. However, Mr Chidambaram wanted players other than industrial houses to chip in for boosting manufacturing growth further to make India a leader in at least 12 areas of activity.
The finance minister attr-ibuted the robust Q1 GDP growth to 31 per cent rise in bank credit, 36.2 per cent growth in commercial vehicles, 32.2 per cent increase in passenger traffic by aviation industry and 48.9 per cent jump in telephone connections. “Without government intervention”, the services grew by 10.6 per cent in Q1 of the current fiscal, the finance minister said.
Agriculture grew by a flat 3.4 per cent, chipping in 19.1 per cent to the overall GDP growth. Except for electricity and construction, which slowed down to 5.4 per cent and 9.5 per cent from 7.4 per cent and 12.4 per cent respectively, every sector recorded positive growth. He said growth in construction sector was lower than last year but did not indicate poor performance of the sector.
Local bodies cleared to raise funds from market
New Delhi, Sept. 29: Municipal bodies will now be able to raise funds from the market to meet their investment needs on a sustainable basis with the centre on Friday giving its approval for setting up a ‘Pooled Finance Development Fund’ for urban local bodies (ULBs).
“The Cabinet Committee on Economic Affairs has approved a proposal by the ministry of urban development for setting up a Pooled Finance Development Fund. This will enable ULBs, including small and medium sized municipalities, to raise funds from the market,” finance minister P. Chidambaram told reporters after a CCEA meeting.
Mr Chidambaram said although municipalities are at present allowed to issue municipal bonds to raise funds, the decision would help them to borrow from the market on a collective and sustainable basis. The bonds issued under the proposed fund, to be set up within a month, would enjoy a tax-free status, he said, adding that necessary cha-nges would be brought in the finance bill of the next financial year in 2007.
“This fund will address the financial gap faced by cities and municipal bodies. They will now be able to approach the market to finance their infrastructure projects,” he said. Under the new scheme, local bodies would be able to access market borrowings based on their credit worthiness through the State-level pooled finance mechanism such as a State pooled finance entity. The government has approved an allocation of Rs 400 crore in the 10th plan for the scheme.
The proposals under the new scheme would be sanctioned by a committee comprising representatives of ministry of urban development, Planning Commission, State Urban Development department and fina-nce ministry among others. Of the funds available with the central government for the fund, five per cent would be used for project development assistance.
The balance 95 per cent would be used for contribution to a credit rating enhancement fund for improving the credit rating of municipal bonds to investment grade. According to an official note released after the CCEA meeting, the centre would reimburse 75 per cent of the cost of project development for each municipality, while the State or the union territory government would refund 25 per cent.
The government has also fixed a ceiling for disbursal of amount to the cities according to population. For metro and big cities such as Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad, the ceiling has been fixed at Rs 1 crore. For cities with population of above ten lakh, the ceiling is Rs 50 lakh, while for cities with population of less than 10 lakh the ceiling stands at Rs 25 lakh.
While the bonds issued under the fund would be tax-free, interest and dividend income earned from investments made from the credit rating enhancement fund corpus will not be exempted from income tax, the official note said.
Other CCEA decisions
Centre awards CBM blocks: The government awarded four Coal Bed Methane (CBM) blocks to the Anil Ambani group while rejecting its claim for another two after considering a detailed evaluation of the bids by an empowered committee of secretaries. Besides, three blocks were awarded to Australia’s Arrow Energy, two blocks to CoalGas and one block to British Petroleum. “The CCEA has accepted the recommendations of the ECS without any change,” finance minister P. Chidambaram said.
FDI hike in telecom won’t be deferred: The Union cabinet on Friday turned down a proposal by the communications ministry to keep in abeyance the increase in foreign direct investment (FDI) limit to 74 per cent from 49 per cent in the telecom sector and directed resolution of inter-ministerial differences within three months. “Department of telecom had suggested suspension of Press Note 5 and the matter was discussed. The decision to increase FDI to 74 per cent stands,” Mr Chidambaram said.
Acquisition of 6 LR-1 tankers by SCI cleared: The government gave the go ahead to Shipping Corporation of India (SCI) to acquire six long range-1 (LR-1) product tankers at a cost of Rs 1,705.68 crore. The acquisition would replace SCI’s ageing product tanker tonnage and meet the increased demand for exports and coastal transportation in the coming years.
Battery recall spreads like wild fire
Washington/Tokyo, Sept. 29: Consumers are being asked to return 526,000 laptop batteries made by Sony because they could catch fire, the latest in a record-setting recall involving nearly 7 million computers. IBM and Lenovo Group, the world’s third largest computer maker, were seeking the recall of rechargeable, lithium-ion batteries purchased with ThinkPad computers. A laptop caught fire at Los Angeles airport this month.
Elsewhere, Japanese electronics makers Toshiba and Fujitsu are recalling Sony batteries for their laptops while PC-maker Dell exp-anded its earlier recall of Sony battery packs. The batteries can short-circuit and have been blamed for causing some computers to catch fire.
The latest announcements bring the tally of recalled Sony batteries to about 7 million worldwide, and are a major embarrassment for the Japanese electronics and entertainment powerhouse. Toshiba said it is recalling 8,30,000 batteries made by Sony for its laptops. Hours later, Fujitsu Ltd. recalled an undisclosed number of Sony batteries that are used in 19 of its laptop models, according to Fujitsu spokesman Masao Sakamoto.
Whereas Dell said it is increasing the recall of Sony battery packs used in its systems to 4.2 million units from 4.1 million units. It urged customers to visit www.dellbatteryprogram.com and to recheck their batteries to see if they are affected.
The recalls comes as Sony Corp is in the midst of a major overhaul of its operations, closing plants, shutting divisions and trimming jobs. Sony said earlier on Friday it had asked manufacturers using its problem batteries to carry out a recall.
“Other laptop makers are expected to follow suit and offer new batteries to their customers,” said Takashi Uehara, a Sony spokesman. Sony has said the batteries could catch fire in rare cases when microscopic metal particles came into contact with other parts of the battery cell, leading to a short circuit.
Typically a battery pack will shut off when there is a short circuit but on occasion the battery would catch fire instead. The Toshiba recall involves Dynabook, Qosmio, Satellite Portege and Tecra models, but regional breakdowns and dates of manufacturing weren’t immediately available, said Toshiba spokesman Keisuke Omori.
In all, these are the largest electronic-related recall involving the Consumer Product Safety Commission. The agency said there have been only 47 reports of battery catching fire.
“While the risk may be real, it is very small,” said Julie Vallese, a commission spokeswoman.
In the latest recall, Lenovo cited a potential risk after a report of a smoking laptop at the LA airport. IBM and Lenovo chose to pursue a broader recall, the commission said.
For IBM and Lenovo, the batteries believed to be at risk were sold between February 2005 and this month, separately or along with ThinkPad computers.
About 1,68,500 of the 5,26,000 batteries were sold in the US. The recalled batteries were sold with, or sold separately to be used with, the following ThinkPad notebook computers: T Series (T43, T43p, T60); R Series (R51e, R52, R60, R60e); and X Series (X60, X60s). The batteries have the following part or model numbers, found on the battery label: ASM P/N 92P1072, 92P1088, 92P1142 or 92P1170; or FRU P/N 92P1073, 92P1089, 92P1141, 92P1169 or 93P5028. Consumers have been advised to stop using the batteries and contact Lenovo for a free replacement or log on to lenovo.com/batteryprogram.
DCB plans to raise Rs 180cr via IPO
Hyderabad, Sept. 29: Development Credit Bank Ltd will be expanding its branch network, besides shoring up its CAR, using some of the proceeds from its IPO, which opened on Friday, Mr Amin Manekia, a director of the bank, said here on Friday. “We plan to improve our CAR from the current 9.66 per cent, strengthen our capital base, and expand our branch network to 100, besides investing in technology,” Mr Manekia said.
Post-IPO, the stakeholding of the Aga Khan Fund for Economic Development in DCB will be reduced to about 31 per cent from the current 58.43 per cent, he said. The bank is offering 7,15,00,000 shares of Rs 10 each, and the issue is through the book-building route. The price band for the issue is Rs 22-Rs 26. Mr Manekia said the bank will raise Rs 157 crores at the lower end of the price band and Rs 186 crores at the upper end.
Northgate plans $26.5m private placement
Hyderabad, Sept. 29: Northgate Technologies Ltd, a Hyderabad-based software products firm, said on Friday that it will be raising $26.50 million by way of prefere-ntial allotment to five foreign institutional investors. Proceeds from the private placement will be used to expand Northgate’s operations, including the setting up of a server farm in Hong Kong, at an estimated cost of $6 million, the company’s chairman and managing director Venkat S. Meenavalli said.
Mr Meenavalli told reporters here that the board had approved the allotment of 24,47,062 equity shares of Rs 10 each at a price of Rs 497.28 to the five FIIs. The FIIs include UBS Securities Asia Ltd, through its Mauritius subsidiary Swiss Finance Corporation, which will be allotted 6,33,700 shares. Macquarie Bank Ltd of Australia would also be allotted 6,33,700 share, while Copthall Mauritius Investments Ltd will be allotted 5,79,450 shares, India Capital Fund 4,61,700 shares and India Institutional Fund 1,35,512 shares.
The Northgate board on Friday had also decided to increase the authorised share capital of the company from Rs 18 crores to Rs 23 crores, Mr Meenavalli said. Mr Meenavalli said Northgate, which has a substantial presence in the online advertising market, was also planning to enter the mobile Voice over Internet Protocol space.
Megasoft seen as frontrunner for merger with VisualSoft Tech
Hyderabad, Sept. 29: Six months after its plan to merge AppLabs Technologies collapsed, VisualSoft Technologies, a software services firm here, has short-listed three suitors, including Megasoft Ltd., to merge itself with, sources familiar with the deal said late on Friday. All three companies, including Megasoft, are based in Chennai.
The sources said Spark Capital, an investment banker
engaged by VisualSoft Technologies, will be making a presentation to the company’s board on Saturday. “Megasoft is one of the three suitors who have been short-listed by Spark. The board of VisualSoft will take a decision based on the three merger offers, and we expect it to decide soon. The merger will be through a stock swap. VisualSoft needs to merge itself with another company to remain in business. The company has been drifting for a while after the AppLabs deal fell through,” the sources said.
According to market sources, Megasoft is seen as the strongest suitor, in terms of finances. “Megasoft is a major player in the telecom products space, and it needs a software services firm like VisualSoft to complement is software services portfolio,” the source, who is intimate with both VisualSoft and Megasoft, told this newspaper.
Megasoft posted a net profit of Rs 8.07 crore on revenues of Rs. 37.72 crore in the first quarter of 2006-07. In comparison, VisualSoft posted a net profit of Rs 25.84 lakh on revenues of 18.71 crore in the first quarter of 2006-07. “Large investors in VisualSoft have been concerned with the drift in the company, and it took Spark Capital more than six months to find the suitors. We believe that a merger is the only way to help VisualSoft grow,” the sources said.
