TRAI wants 69 telco licences cancelled

The Telecom Regulatory Authority of India (TRAI) has recommended cancelling 69 telecom licences, the government said on Friday, confirming earlier media reports in a case running parallel to an investigation into one of the biggest corruption scandals to hit India this year.

The regulator has recommended cancelling 38 licenses of companies including the Indian joint ventures of Telenor, Sistema and Etisalat's for failing to meet network rollout requirements, the government said.

TRAI wants 69 telco licences cancelled

The TRAI also recommended cancelling 31 other licences "after legal examination," Minister of State for Telecoms Sachin Pilot said in a written reply to a question from an MP.

The TRAI's recommendations are not binding, but the telecoms ministry has said it would send notices to companies that have been named by the regulator, asking them to defend their licences.

The ministry is also sending notices to companies involved in a telecom scam in which firms were allegedly given telecom licenses and spectrum at rock bottom prices, possibly costing the state USD 39 billion in revenue. Many of those companies are accused of being ineligible for the licenses.

The case, which revolves around the sale of telecom licenses at low prices, has led to the resignation of the telecoms minister, and, according to an official audit, has possibly lost the state USD 39 billion in revenue.

It has also frozen the country's parliament for nearly a month as opposition parties have demanded a full parliamentary investigation.

The government has decided to set up a one-man committee of former Supreme Court judge Shivaraj Patil to examine the allocation of licences and spectrum from 2001 to 2009, Telecom Minister Kapil Sibal said on Thursday.

A government auditor said in its recent report that licences were given too cheaply and 85 licence holders were ineligible to get them as they had suppressed facts and submitted false documents.

Sibal said on Thursday his ministry would send notices to all the companies by the end of this week, asking them to explain why their licences should not be cancelled.

He had earlier said there were 119 licencees who have not met rollout requirements.

Telecoms licencees in India are required to cover 90% of the service area in metro cities and 10% of the main town in other parts within the first year.

The cancellation recommendations include 10 licences held by Sistema Shyam Teleservices, eight of Telenor's India joint venture called Uninor, 14 of Loop Telecom, four of Aircel and two of Etisalat DB Telecom.

The 31 licences which the regulator wants cancelled after a legal examination include 13 held by Etisalat DB, 10 of Videocon Telecommunications, six of Loop Telecom and one each of Aircel and Sistema Shyam.

Last month, a source with direct knowledge had told Reuters that the regulator had recommended cancelling 38 licences for not complying with rollout requirements, and to legally examine 31 other licences which had "just met" them.

New IIP from Jan; to reflect better picture

The government is likely to come out with a more representative data on industrial production from January next year that would include about 100 new items, while excluding the obsolete ones.

"The December data is expected to come out on January 12, 2011, for which the new series of index of industrial production (IIP) would be released," an official told.

The new series would be more representative and will have more items in the rejigged basket.

Besides, it will take 2004-05 as the base year that will reflect industrial scenario better than the base of 1993-94 used currently.

"The industry ministry is waiting for Planning Commission's opinion. They have some issues that will be sorted out soon. The new series will then be approved by Committee of Secretaries," the official added.

Currently, IIP basket has about 350 items for calculating the monthly factory output figures. The new series would be more representative and would constitute over 500 products, the official said.

It is also expected to do away with obsolete items and add those products which have entered the markets in recent years. The official, however, did not divulge the details of new products and the old ones which will be deleted.

Industrial growth slowed down to 5.6 percent in August from 10.6 percent in the same month of the previous fiscal.

IIP data has been often criticised for not catching up with the times and providing archaic figures, compared to the ones provided by other agencies like Centre for Monitoring Indian Economy (CMIE).

According to industry body Ficci there is a strong momentum in industrial growth and it is expected to expand by 9 percent in the current financial year.

The government has recently rolled out a new wholesale price-based index for measuring inflation.

TCS and other results rocks....

* Novartis India Q2 net up 22% to Rs. 40.5 cr
Drug firm Novartis India on Thursday said its net profit rose by 21.98 per cent to Rs. 40.5 crore for the second quarter ended September 30, 2010, over the same period previous fiscal.

* Ambuja Cements net down at Rs. 152 cr
Cement major Ambuja Cements on Thursday said that it has clocked a net sales of Rs. 1,564 crore in the third quarter of the current fiscal, down 2.9 per cent from Rs. 1,611 crore in the year-ago period. Net sales declined on account of lower realisations, the company said.

* McDonald's Q3 net income jumps 10%
McDonald's frappes, smoothies and dollar menu drew in more customers in the third quarter, pushing the world's largest burger chain's net income up 10 per cent.

* TCS tops expectations, profit up at Rs. 2,169 cr
Indian IT major beat the Street’s expectations after it announced a 13.8 per cent quarter-on-quarter rise in its second quarter.


# Output outage pulls down ACC net by 79.2%
# GlaxoSmithKline Q3 net down 3.5%
# Sensex regains 20K in 388-point rebound
# Allahabad Bank Q2 net up 20% on NII growth
# TCS rises over 1% on hopes of strong Q2 numbers
# Ashok Leyland gains 2% on good Q2 numbers
# Kotak Bank consolidated Q2 net up 21%

FDI inflows down by about 60% in Aug

Reflecting fragile recovery in world's major economies, foreign direct investment into India dipped for the third consecutive month, by about 60 percent to USD 1.33 billion in August.
The FDI inflows in August 2009 were USD 3.26 billion.

Contrary to smart recovery in the domestic economy and a rebound in exports, overseas investment show a slackening trend in the current fiscal, an official said.

For the April-August period of 2010-11, FDI inflows declined by 35 percent to USD 8.92 billion compared to USD 13.8 billion in the same period last year, the official said.

According to experts, weak global economic recovery is one of the reasons for declining FDI in India.

"The main reason for the decline in FDI is slump in the major western economies like the US and Europe...," international trade expert with India's prestigious Indian Institute of Foreign Trade (IIFT) Rakesh Mohan Joshi said.

Crisil chief economist DK Joshi said: "This is not a good news for Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in our FDI."

Foreign investment in July 2010 was at USD 1.78 billion, a dip of 49 percent and in June international inflows were at USD 1.38, a dip of 46 per cent over the year ago period.

The sectors which attracted foreign investment, included services, telecommunication, construction activities and computer software and hardware, the official said.

The country received maximum investment from countries like Mauritius, the US, the UK, Singapore, the Netherlands and Japan.

The government has recently floated discussion papers for public comments to liberalise FDI in multi-brand retail and defence sector.

The foreign investment remained low-key despite a recent UNCTAD survey showing that India would remain the second most important FDI destination for transnational corporations during 2010-2012, next only to China.

In its latest 'World Investment Prospects Survey 2010-2012', the United Nations Conference on Trade and Development (UNCTAD) said transnational corporations remain buoyant about investment prospects in China, India and Brazil.

FDI for 2009-10 at USD 25.88 billion was lower by 5 percent from USD 27.33 billion in the previous fiscal.

India's external debt rises to $273.1 billion

India's external debt rose 4.1 percent or USD 10.8 billion to USD 273.1 billion in the first quarter of current fiscal due to a sharp increase in short-term trade credits, commercial borrowings and multilateral government borrowings.

The short-term debt increased by USD 5.4 billion to USD 57.8 billion, accounting for 21.2 percent of the total debt, while the long-term debt rose to USD 215.2 billion at the quarter ended June 30, the Reserve Bank of India (RBI) said in its monthly bulletin.

Almost all the components of external debt registered increase during the first three months of fiscal 2010-11. Commercial borrowings and loans under external assistance (multilateral and bilateral debt) increased by USD 2.5 billion and USD 2.3 billion respectively.

The share of commercial borrowings continue to be the highest at 27.3 percent in the total external debt followed by short-term debt (21.2 percent), NRI deposits (17.6 percent) and multilateral debt (16.4 percent).

The valuation effect reflecting the appreciation of the US dollar against other major international currencies and the Indian rupee resulted in a decline of USD 1.3 billion in India's external debt during the reporting quarter.

"Excluding the valuation effects due to appreciation of US dollar against other major international currencies and the Indian rupee, the increase in external debt worked out to USD 12.1 billion over the quarter," the RBI said.

IIP growth dips to 5.6% in Aug

Industrial output in August grew at the slowest pace in 15 months at 5.6 percent, nearly half of last year, disappointing the government that was betting on domestic consumption to drive the economy.

Manufacturing sector, which accounts for 80 percent of the factory ouput numbers and a key indicator of consumer demand, saw growth slip to 5.9 percent from 10.6 per cent in August, 2009.

"(The trend is) a little disappointing. Let us see how it fares in annualised terms," Finance Minister Pranab Mukherjee said in his comments on the sharp fall in industrial output growth.

Growth in capital goods -- used by the manufacturing segment -- was a negative 2.6 percent in August compared to a 9.2 expansion in the year-ago period.

The poor showing drew immediate calls from the industry against any further increase in key policy rates by the Reserve Bank, which is slated to review its monetary policy on November two.

The RBI has increased policy rates five times this year to cool inflation, following which the rate for its key short-term lending (repo) stands at 6 per cent and borrowing (reverse repo) at 5 percent.

India Inc believes the deceleration was owing to the tight monetary policy stance that has pushed up interest rates for corporates, as well as for retail customers, most of whom rely on loans or credit to buy auto or other consumer durables.

The disappointing industrial output numbers triggered a huge sale on the bourses, as investors booked profits, pulling down the benchmark Sensex by nearly 225 points in intra-day trade. The losses were curtailed to 137 points at close.

Mukherjee, though disappointed, asserted that the "Indian economy is on the path of robust growth led by increased investment and capital inflows, stronger industrial output and rising aggregate demand."

The Finance Minister expects annual industrial growth to be around 12-13 percent, which could push economic growth to 8.5 percent or more. After over 9 percent growth for three years till 2007-08, GDP expansion slipped to 6.7 percent in 2008-09 post the global financial crisis.

The last time factory output growth was slower was in May 2009 (2.7 percent).

Mining sector output decelerated to 7 percent from 11 percent, electricity generation to 1 per cent from 10.6 percent.

"...the RBI should not raise policy rates any further as it could have a negative impact on consumer demand as well as corporate investment and thereby slowdown economic growth," CII said in a statement.

Industry chamber Ficci too said any further hike in interest rates could impact consumer durables and automotive sector.

"Negative growth in key sectors like capital goods, apparels...is indeed a cause of concern and with appreciation in Rupee and hardening of interest rates, the growth of manufacturing sector may be significantly affected," Ficci secretary general Amit Mitra said.

The central bank will have to draw a balance between the need to check prices, as inflation is still high at 8.5 percent, and push up economic growth.

Commenting on the IIP numbers, RBI Governor D Subbarao said, "We will study (IIP numbers). I cannot make a comment (just yet)."

The only sector that showed a positive trend in August was consumer durables which improved to 26.5 percent from 24.7 percent in August last fiscal.

Further, July IIP was revised upwards to 15.2 percent from 13.8 percent in the provisional estimates.

Finance Secretary Ashok Chawla said, "It (the trend) is purely a cyclical movement. Sometimes it goes up, sometimes (it) goes down...We need to watch."

On decline in capital goods production, India's chief statistician TCA Anant said, "It is very difficult to predict a trend based on month-on-month number. Capital goods production always comes with a lag and is difficult to say that there is any slowdown.

Manufacturing growth is good on the broader trend. This kind of variation takes place."

Consumer non-durables, mainly fast moving consumer goods (FMCG), recorded a negative growth of 1.2 percent, as against expansion of 6.1 percent in the same month last year.

Of the 17 industry groups, as many as 14 have shown positive growth during the month of August.

Meanwhile, the industrial expansion figure for July was revised upwards to 15.2 percent from the earlier estimates of 13.8 percent.

Industrial growth for the first five months of this fiscal stood at 10.6 percent in comparison to 5.9 percent growth in the same period a year ago.

According to Standard Chartered Bank economist, Anubhuti Sahay, "GDP growth and industrial output for the fiscal would be in line with projection...going forward industrial output is expected to moderate due to high base effect."

SAIL achieves best ever Q 2 sales

The July-September quarter of 2010 has been the best-ever Q2 for Steel Authority Of India with sales of 3.17 million tonnes (MT) achieved during the period, sources in Rourkela Steel Plant said Saturday.

In comparison to sales in Q1 SAIL achieved a growth of 30 percent. The previous best Q2 in respect of sales was 3.08 MT achieved in 2009-10, they said.

During this year's Q2 SAIL sold 8.5 lakh tonnes of special and value-added steel products, showing a growth of 10.1 percent over the corresponding period last year. Special steel constituted 30 percent of the total domestic sales achieved in Q2.

Sales growth in Q2 was mainly due to higher intake by construction and manufacturing sectors. This was reflected in higher sales of products such as wife rods, rounds and bars, structurals, CR sheets/coils and galvanised items, the sources added.

IMF projects India's economic growth at 9.7% in 2010

The International Monetary Fund has projected the Indian economy will grow by 9.7 percent in 2010 and 8.4 percent in the next fiscal, driven by robust industrial production and macro-economic performance.

However, neighbouring China is expected to grow at an even faster rate of 10.5 percent in 2010 and 9.6 percent in 2011, driven by domestic demand, the IMF said in its latest World Economic Outlook report.

Advanced economies, on the other hand, are projected to grow by just 2.7 percent in 2010 and 2.2 percent in 2011, the IMF report said, adding that global trade is forecast to expand by 4.8 percent in 2010 and 4.2 percent in 2011, with a temporary slowdown during the second half of 2010 and the first half of 2011.

"India's macroeconomic performance has been vigorous, with industrial production at a two-year high. Leading indicators -- the production manufacturing index and measures of business and consumer confidence -- continue to point up," the IMF said.

"Growth is projected at 9.7 percent in 2010 and 8.4 percent in 2011, led increasingly by domestic demand. Robust corporate profits and favorable external financing will encourage investment," it said.

"Recent activity (10 percent year-over year growth in real GDP at market prices in the second quarter) was driven largely by investment and the contribution from net exports is projected to turn negative in 2011 as the strength in investment further boosts imports," the IMF said.

According to the World Economic Outlook report, growth in emerging Asia economies stands at about 9.5 percent, with robust demand from China, India, and Indonesia benefiting other Asian economies.

In China, a major fiscal stimulus, a large expansion of credit and a number of specific measures to boost household income and consumption increased domestic demand growth to almost 13 percent in 2009, contributing to a large decline in the current account surplus.

The recovery is now well established, and a transition from public stimulus to private-sector-led growth is underway, it said.

Latin America has also recovered strongly, with real GDP growth at about 7 percent.

The recovery in Latin America is being led by Brazil, where real GDP growth has been close to 10 percent since the third quarter of 2009 and the economy is now showing signs of overheating, the report said.

A number of other economies have also returned to solid growth. However, Mexico is lagging behind, partly because of its strong trade linkages with the United States.

Growth in Mexico recently picked up on the back of strengthening exports to the United States, but the output gap remains large.

The World Economic Outlook projects that the output of emerging and developing economies will expand at a rate of 7.1 percent and 6.4 percent, respectively, in 2010 and 2011.

"The global recovery remains fragile, because strong policies to foster internal rebalancing of demand from public to private sources and external rebalancing from deficit to surplus economies are not yet in place," it said.

Maruti sees Sept vehicle sales rising 32-33%

Top Indian car maker Maruti Suzuki expects September vehicle sales to rise an annual 32 to 33%, bolstered by robust domestic demand, its chairman said on Thursday.

RC Bhargava said the company, 54.2% owned by Japan's Suzuki Motor, expects to sell 1.2 million vehicles in the current fiscal year that ends next March from 1.02 million in the previous year.

India is one of the world's fastest growing market for cars as a rapidly expanding economy boosts incomes and consumer spending.

"Clearly, the market continues to hold firm. There is no softening," Bhargava said. "We are now looking fairly optimistically at the rest of the year."

Beginning October, Maruti will increase its annual car-making capacity to 1.3 million units from its current capacity of 1.2 million units, he said.

Maruti plans to invest USD 1.3 billion over the next three years on manufacturing plants to boost capacity, it had said earlier this month.

The company would build its fourth auto plant in India, boosting its output to 1.5 million units a year. The new factory would start operations in 2013, with annual output capacity of 250,000 cars.

Bhargava said September sales would be higher than in August, when they rose 24% from a year earlier to a record for any month.

Maruti's share of the Indian car market at the end of August was 51.8%, he said. This is down from 53.2% in the previous fiscal year and 55.1% in 2008/09.

"We are not focused fundamentally on retaining market share. It's not a worry because we know we have capacity constraints, we have a waiting list," Bhargava said. He also said Japan's Nissan Motor Corp would source less than 30,000 cars this fiscal year from Maruti, compared with 51,072 cars last fiscal year, primarily due to a decline in European demand.

Maruti currently has a contract with Nissan to make and export the Pixo hatchback to European markets.

Shares in Maruti, which has a market value of USD 9.2 billion, were trading up 1% by RS 1,445 at 2.29 pm (0859 GMT) in a subdued Mumbai market. The stock is, however, down 7.4% this year versus a 14% rise in the index.

Sensex scales 20K peak after 32 months; FIIs fuel rally

Upbeat foreign investors Tuesday pushed the stock market benchmark Sensex above the 20,000 points-mark for the first time in 32 months, as they bet on companies that are driving the India growth story.

The barometer closed 95.45 points, or 0.48 percent, up at 20,001.55 - its best closing since January 15, 2008, when the index ended at 20,251.09 points.

Similarly, the 50-share National Stock Exchange benchmark Nifty breached the psychological 6,000 mark and ended at 6,009.05, up 28.6 points, or 0.48 percent.

Some brokers, however, feel that a short-term correction may be round the corner, but would nonetheless provide good investment opportunities.

Happy with the market milestone, Finance Minister Pranab Mukherjee told reporters in New Delhi: "We all know that the Sensex is always a little bit unpredictable. (But) I am happy that for the first time after January 2008, it has crossed 20,000."

Analysts said the rally in Indian market is propelled by strong inflows from overseas fund houses, which have made a net investment of over Rs 71,000 crore in local stocks so far in this year.

"Sensex gushing past 20,000 mark, stands testimony to the attractiveness of India as a preferred investment destination.

With Indian economy structurally well placed for an 8 to 9 percent GDP growth over a long period, domestic equities are in a structural bull run," Angel Broking CMD Dinesh Thakkar said.

Tuesday's close marked the third straight session of gains.

Significantly, the Sensex has completed its journey from 17,971 points on August 31 to 20,000 in just 15 trading days.

Tuesday's gain was fuelled by a smart gain in blue-chips like L&T, HDFC, HDFC Bank, TCS, Infosys and BHEL.

Infosys rose 0.9 percent, TCS 2.5 per cent and Wipro 2.7 percent. Equity analysts said IT stocks rose after IBM Corp announced a USD 1.7 billion takeover.

L&T zoomed 2 percent, Cipla 1.92 per cent and BHEL 1.73 percent. With a net gain of 2.93 percent, Tata Power was the best performer in the Sensex pack.

In the BSE-30 pack, 16 stocks ended with gain, while rest 14 closed in the red.

Even in the broader market, 2,123 stocks declined against 883 advances.

Reliance Industries Ltd, which holds the maximum weight in the Sensex, acted as a drag, closing 0.60 percent lower at Rs 1,033.5.

ITC plunged 2.58 percent and led the losers' pack. Other major losers include Jaiprakash Associates 1.52 percent, DLF 1.38 per cent and Hindalco 1.22 percent.

Asian stocks rose after US homebuilder Lennar Corp posted better-than-estimated profit, boosting optimism in the economic recovery worldwide.

US stocks advanced on Monday, sending the S&P 500 Index to a four-month high on Lennar Corp's profit forecasts and IBM Corp announcing a USD 1.7 billion takeover.

Advance tax numbers indicate good show by finance, auto cos

Advance tax collections for the second quarter, July-September, 2010-11 indicated Wednesday that while sectors like banking, finance and auto have done well, cement and pharma were down as compared to last year's numbers.

As for individual corporate, Mukesh Ambani-led Reliance Industries and Larsen & Toubro paid Rs 1,306 crore and Rs 280 crore respectively, higher than Q2 FY10.

RIL had paid Rs 1,157 crore in the year-ago period, indicating that it is steaming ahead. L&T's had paid Rs 210 crore in Q2 FY 10.

Similarly, Kumar Mangalam Birla-owned Hindalco's tax outgo doubled to Rs 140 crore.

However, it was a mixed bag from the Tata Group as Tata Power Rs 60 crore and Tata Motors Rs 95-crore paid less to the exchequer vis-a-vis last year.

Country's financial capital Mumbai, which contributes a major chunk of direct tax collection, clocked over 13 percent growth, which a top Income Tax official said was below expectations.

"Our expectations were more...some companies in sectors like cement are not showing good numbers," chief commissioner of Income Tax Mumbai, PP Srivastava, told PTI here, after the advance tax collections for September quarter ended Wednesday.

The Mumbai region of Income Tax Department has been assigned a direct tax collection target of Rs 1,50,480-crore for the current financial year, which is 35 per cent of the all India collection target of Rs 4,30,000-crore.

Asked if the target (Mumbai circle) would be met, Srivastava said that "we are hopeful. However, we will have to take extra measures to achieve it."

IT-major Tata Consultancy Services paid Rs 260 crore in advance tax as compared to the previous year's Rs 220 crore, while the payment by Tata Chemicals remained unchanged at Rs 60 crore.

Driven by high growth, advance tax payments in the auto sector were good.

Bajaj Auto paid Rs 243 crore in Q2 FY11, as against last year period's Rs 170 crore, while Mahindra & Mahindra paid Rs 158 crore, up from Rs 112 crore, the source said.

Barring some names, the banking and financial sector witnessed high tax payouts, led by State Bank of India (Rs 1,924 crore), ICICI Bank (Rs 600 crore), HDFC Bank (Rs 600 crore), Central Bank of India (Rs 206 crore), Union Bank of India (Rs 308 crore) and Yes Bank (Rs 105 crore).

Home-loans lender HDFC shelled out Rs 400-crore this quarter, as against Rs 320 crore in the year ago period.

Life Insurance Corporation's payout increased by Rs 128 crore to Rs 1,067-crore, while in the case of General Insurance Corporation, it almost doubled to Rs 92-crore.

The sector which appears to have suffered the most in Q2 FY11 since last year is cement, as payouts by a majority of companies in this segment have fallen sharply.

From last fiscal's Q2 of Rs 150 crore, Ambuja Cement's advance tax payment fell to Rs 90 crore, while UltraTech's payout more than halved to Rs 60 crore.

Cement major Lafarge's advance tax payment declined from Rs 67 crore to Rs 40 crore. In the case of ACC, its advance tax payment plummeted to Rs 60 crore from last fiscal's Q2 of Rs 150 crore.

Consumer electronics major, Videocon, saw its advance tax outgo increase to Rs 35 crore, from last year's Rs 30 crore while state-owned fertiliser company RCF showed a decline to Rs 19 crore from Rs 33 crore in Q2 last fiscal.

Biscuit maker Parle saw its advance tax outgo increase by Rs 3 crore to Rs 12 crore this quarter and Johnson and Johnson paid Rs 22 crore, up from last year's Rs 18 crore.

Two pharma majors -- Lupin and Cipla -- have registered lower payouts at Rs 45 crore and Rs 65 crore respectively as compared to Rs 50 crore and Rs 75 crore, respectively, in the year-ago period.

In the media and entertainment space, Zee Entertainment's payout almost doubled to Rs 60 crore from Rs 32 crore in the year-ago period.

RBI may raise key rates tomorrow to tame inflation: Experts

RBI is likely to raise policy rates by up to 25 basis points in its mid quarterly policy review Thursday to tame inflation, which is still ruling near the double-digit mark, said experts.

Inflation, as per the revised index was 8.51 percent in August, although it was 9.5 percent according to the old index.

Even finance minister Pranab Mukherjee, while responding to decline in inflation, which under the new series fell by 1.3 percentage points during August, had said, "there is no room for complacency... we must continue to be vigilant and be prepared with the instruments of fiscal and monetary policy to use them as and when the need arises."

Citigroup said in its research report said, "given trends in both macro and sectoral data, coupled with the RBI saying that policy rates are still far from a normal position, we expect the RBI to raise both repo and reverse-repo rates by 25 bps in its review on September 16."

The government, Tuesday, came out with a new wholesale price index series that measured inflation in August at 8.5 percent based on 2004-05 prices.

Although the August figure is lower than that of July which was at 9.8 percent, experts believe the supply and demand side pressures still remain and RBI should hike its short-term lending (repo) and borrowing (reverse-repo) rate to control money flow.

RBI deputy governor Subir Gokarn also expressed concern, saying "the inflation rates that the economy is now experiencing, both from the supply and the demand sides, are clearly a matter of great concern. It is incumbent on the government and the central bank to use all the means at their disposal to rein inflation."

This is the first time that the Reserve Bank is coming out with a mid-quarter economic policy review.

"The RBI will go in for a rate hike as robust growth in industrial output and healthy economic growth would give the RBI enough cushion to make money expensive," Deloitte Principal Economist Shanto Ghosh said.

The RBI has raised interest rates four times this year, upping key policy rates by 100 basis points as it tries to combat high inflation in Asia's third-largest economy.

In its first quarter monetary review in July, the central bank had raised short-term lending and borrowing rates by 0.25 percent and 0.50 percent, respectively.

Following the increase, the repo rate stands at 5.75 percent and the reverse repo rate at 4.50 percent.

India's GDP grew by 8.8 percent in the first quarter, against 6 percent in the April-June period last fiscal.

Furthermore, industrial output expanded by 13.8 percent in July from 7.2 percent in the corresponding month last year.

M&M to launch portfolio of bikes by October

Mahindra & Mahindra plans to launch a portfolio of bikes between 100-125 cc, 150c and 250-300 cc by September end or early October. M&M says that these bikes are designed Engines Engineering Company it acquired in 2008.

The company plans to use its existing dealer network to market bikes and hopes to compete with Hero Honda’s dominance in the 125 cc segment inorder to take advantage of the absence of new launches fm Hero Honda in the 125cc segment. M&M Two wheelers have more than 370 dealerships across India.

RBI panel to review repo, reverse repo process

The Reserve Bank of India (RBI) on Monday said its committee on monetary policy will review the operating procedure with respect to repo, reverse repo auctions; width of the interest rate corridor; and frequency and timing of reverse repo and repo auctions.
In its quarterly policy review in July, the RBI had announced its plan to set up a panel to monitor the operating procedure of the monetary policy, including liquidity adjustment facility.
Rate corridor is the spread between repo rate -- the rate at which the RBI infuses liquidity -- and reverse repo rate -- the rate at which liquidity is drained out.
The panel will look at monetary policy in the light of global practices and domestic experience.

The terms of reference include:
* whether there is a need for a rate corridor at all
* whether its width should be fixed or variable
* what are the tools necessary to enable the corridor to function efficiently.

The committee will be headed by Deepak Mohanty, executive director, RBI.
The panel will also compare its monetary policy with operating methods of other central banks, the RBI said.
The RBI had introduced repo and reverse repo rates in June 2000 when it had started the liquidity adjustment facility.
Besides interest rates, other tools such as cash reserve ratio (CRR), open market operations (OMO) and market stabilisation scheme (MSS), have served the monetary policy management well, the RBI said.

"However, India's increasing integration with the global economy, large volatility in capital flows and sharp fluctuations in government cash balances have posed several challenges to liquidity management by the Reserve Bank, particularly in effectively signalling the monetary policy stance," the RBI said, explaining the rationale behind forming the panel.
The committee will also the assess the role of Bank Rate, which has been unchanged since April 2003 and is considered defunct now as no real interest rates are linked to this rate.
Bank Rate was used to signal change in interest rates over medium to long term, while repo and reverse repo rates are short-term rate tools.

July industrial output up 13.8% YoY

India's industrial output in July rose at a faster-than-expected 13.8% from a year earlier, sharply higher than the previous month's 7.1%, government data showed on Friday.

A poll had suggested industrial output to come in at 7.89%.

Industrial output rose 10.4% in the 2009-10 financial year (April-March) , faster than the 2.8% clocked in the previous fiscal year. India's headline inflation for July eased from double digits to 9.97%.

Commenting on India's July factory output figures, deputy chairman of Planning Commission Montek Sigh Ahluwalia said they were better-than-expected and there is a good case for the government to increase its economic growth target for the current fiscal year.

French co Accelya buys 35.6% in Kale Consultants

French back office provider Accelya has acquired a controlling interest in outsourcing services firm, Kale Consultants. Accelya has acquired 35.61% stake at Rs 172 per share in Kale Consultants

Post- acquisition, promoters of Kale Consultants will completely exit the company. However the company says that its MD and CEO Vipul Jain will still remain in the post. The deal will help Kale to reach wider markets, adds the company.

As reported earlier in July, the acquisition will trigger an offer of 20%.

ArcelorMittal, Indiabulls in JV talks for steel project, mining

New Delhi: ArcelorMittal, the world's largest steel-maker, is in discussions with Indiabulls Group to form a joint venture company for scouting and mining iron ore in Rajasthan and setting up a steel plant.


"The discussions are on (between ArcelorMittal and Indiabulls to form a JV company). ArcelorMittal is pitching for a majority stake in the JV company," a person in-the-know of the development told PTI.

"There are indications of iron ore in Rajasthan. It is a mineral-rich state. The JV company would seek to locate and develop it. Then, a steel plant would be developed in the state," the source said.

According to the source, the JV would be between an ArcelorMittal subsidiary or an investment arm of the Mittal family and an Indiabulls Group firm.

ArcelorMittal chief financial officer Aditya Mittal is said to be the brains behind the proposed venture, which aims at tapping the market for steel in North India, where there is no integrated steel plant.

"Promoters of ArcelorMittal and Indiabulls share a good relationship and the new venture would further their partnership," the source added.

Through LNM India Internet Ventures, it is said that L N Mittal already holds an 8.79 per cent stake in Indiabulls Power, which is developing various power projects across the country.

State-owned SAIL has already discovered iron ore deposits in the desert state.

The proposed investment in the JV could not be immediately ascertained. An ArcelorMittal spokesperson did not revert to a PTI query on the cost of the proposed venture.

ArcelorMittal had in July said it expects to start work on one of its proposed Rs 1.3 lakh crore India projects in early 2011.

The world's largest steel-maker, accounting for 8 percent of global production, announced plans to set up projects in Jharkhand in 2005 and in Orissa a year later. In June this year, it signed an MoU with the Karnataka government for a Rs 30,000 crore steel project.

"We believe that in 2011, in one of the projects, we will break the ground, we don't know which one... It is our hope that it should be in the first quarter or the second quarter,"

ArcelorMittal chairman and CEO L N Mittal had said.

Tata steel to up manufacturing capacity 3-fold

Tata Steel will increase its manufacturing capacity in the country three-fold by 2012 to 21 million tonnes per annum (MTPA) from the current 7 million tonnes. "After completion of the 3 million tonnes expansion project at Jamshedpur, the company's steel manufacturing capacity in Indian operations
will enhance to 10 MTPA by 2012," said Ratan Tata, chairman, Tata Steel, at the recently-concluded annual general meeting of Tata Steel.

The company plans to invest R4,500 crore this fiscal followed by R7,000 crore in 2011-12 for various projects.

Industrial growth slides to 13-month low

After months of rapid double digit growth, the Indian industry seems to be cooling off as industrial growth slipped into single digits in June. The fall in industrial production was because of a combination of statistics and a slight moderation in the pace of growth.

Leading industry lobbies, however, voiced no worries and said the drop in production to single digit was due to a high base effect.

'The fall in industrial production was on expected lines as it largely reflects a higher base in the same period last year,' said Chandrajit Banerjee, director general of Confederation of Indian Industry (CII).

India's industrial production grew at a much slower rate of 7.1 per cent in June, compared to 11.5 per cent in the previous month. Manufacturing output rose 7.3 per cent while mining and electricity grew at 9.5 per cent and 3.5 per cent respectively.

While a high base effect was expected to weigh on the index of industrial production this month, the data came in towards the lower end of expectations leaving policy makers disappointed.

Finance Minister Pranab Mukherjee said industrial growth of 7.1 per cent in June, was below his expectations and it could have been better.

"I would say no if its 8.5% GDP growth then industrial growth should be faster than that," said Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The disappointment came in from the capital goods sector where output grew by just over 9 per cent sharply below the 34 per cent growth seen in May.

Growth in consumer durables growth also slowed marginally over last month but remained at a healthy 27.4 per cent.

However, economists feel that a slight moderation in industrial growth may continue over the next few months.

"Global demand coming off, domestic supply side constraints and adverse base effect are all pointing towards a moderation in IIP growth going forward as well. 6-8 per cent is the rough range where IIP growth rate will continue over the next 6 months or so,” said Sonal Varma, an economist with Nomura.

The slip in industrial growth may not do much to change the perspective of policymakers. With the reserve bank maintaining that inflation remains a key concern, more hikes in interest rates still seem inevitable.