The government has rolled out an expanded farm debt waiver scheme, which will cost the exchequer a whopping Rs 71,600 crore, 20% higher than the initial estimate of Rs 60,000 crore. The scheme will now include more than four crore farmers and will also cover those with land holdings in excess of two hectares.
The expanded loan waiver scheme, which was announced in the Union Budget 2008-09, will now include farmers engaged in allied activities such as poultry, dairy farming. Direct agricultural loans taken under a Kisan Credit Card, as well as loans of self-help and joint-liability groups would also be covered. Farmers in drought-prone areas covered under the Prime Minister’s relief plan have also been included in the scheme. While small and marginal farmers are eligible for debt waiver, others are eligible for a one-time settlement (OTS) scheme. The government has also decided to waive off restructured loans, including those under the Vidharba package and calamity relief, whether or not they were overdue.
In a separate development, RBI has asked banks to take necessary steps to complete the debt waiver scheme by June 30.
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Reliance Communications (RCOM) is all set to acquire UK-based global mobile virtual network operator (MVNO) Vanco. According to sources, RCOM is learnt to have emerged as the highest bidder and both the companies have already finalised 100% buyout deal, in which, RCOM may also take over Vanco’s £123-million debt. Earlier this month its CEO and founder Allen Timpany parted ways with the company, after it came out with a major profit warning, it was put on the block. Trading in the shares was also suspended earlier this month. RCOM will have to pay a very small sum for the troubled telco, which was at its peak (about two years ago) and had a market cap of close to $800 million. The deal is likely to be inked today, sources added. Like in earlier acquisitions, RCOM is expected to retain the workforce including the top management of Vanco.
Vanco is among the leading MVNOs in the world with its services available in over 200 countries.
An MVNO does not own any network assets, but leases infrastructure and bandwidth from others to serve its customers. This acquisition would bring under RCOM’s fold a virtual network in 230 countries across the world with over 800 new product offerings that Vanco has developed over the last 20 years. The ailing telco also has over $650 million worth of secure long-term contracts from its customers that would be accrued over the next 3-5 years.
With Vanco’s business model revolving around virtual networks, RCOM would be able to cut significant costs through routing the traffic on its own network which will result in considerable enhancement in EBIDTA of its global business, which has been looking towards forging alliances with regional and domestic carriers. Vanco has alliances with 700 carriers across the world. The acquisition is also in line with RCom's strategy of becoming one of the world's top five data communications players.
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As global auto majors go for more intelligent cars, the benefits are being reaped back in India by Tata Elxsi, which has the automobile sector as a key vertical in its product design services domain. The research and development of a number of path-breaking features that mark new vehicles are being developed at the company’s development centres, which presently have staff strength of roughly 700. Typically, the high-end cars of the world have as many as 70 little computers, or electronic control units (ECUs), which also mean that about 60% of the cost of automobiles are contributed by the electronics that they feature. This is in contrast to 10 ECUs in high end Indian cars at present.
The company is engaged in some of the cutting-edge work including bending the beam of vehicle lights while taking curves, night vision, elevating or dipping the beam as required and adaptive front lighting system (AFLS) which enabled drivers to prevent light from vehicles coming in the opposite direction blinding them temporarily. Some of the product designs undergoing development included censors that would automatically measure body temperature and pulse of the driver and accordingly adjust air-conditioning in the vehicle, adjust air-conditioning levels according to personal comfort levels of each passenger, and airbags that would open to the levels required for passengers of different weights.
Tata Elxsi has seven global development centers in the country, besides one centre in Japan. The centre here is targeted to have strength of 2,000 software professionals within the next two years. The increasing electronics constituent in automobiles means more business for Tata Elxsi, which has a strong presence in the automobile vertical.
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RCom is believed to have initiated talks with MTN Group, South Africa's largest telecom operator, even as Bharti Airtel decided to pull out of the negotiations citing differences with the management. Reliance is among the four telcom companies that have shown an interest in MTN. Russian telcom company Vimpel Communications, European major Deutsche Telecom and UAE telecom giant Etisalat are the other suitors that have announced their interest in bidding for the South African company. This is the second attempt by RCom to acquire MTN Group. RCom Chairman Anil Ambani had met Nhleko last year, but the talks were not successful.
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Housing Development and Infrastructure Ltd (HDIL), India’s third-largest realty player, is diversifying into the oil and gas sector. The company will bid for 10 of the 57 hydrocarbon blocks on offer in the seventh round of the New Exploration Licensing Policy (Nelp VII). The gambit is to offset softening growth in the real estate sector. HDIL is likely to bid with a foreign partner as it lacks the experience in oil exploration. However this was not confirmed by the management.
Meanwhile, as part of its airport slum rehabilitation project, HDIL has acquired 110 acres of the 170 acres that it needs to relocate 85,000 families. The average cost of the acquisition is Rs 22 crore per acre. The acquisition includes 53 acres in Kurla, where the Premier Automobiles car factory was once located. IL&FS sold the land for Rs 1,900 crore.
HDIL is expected to relocate 20,000 families to this place in the first phase of the rehab project. HDIL’s airport project is moving on schedule. This can unlock a lot of capital in the next two years. The company will get around Rs 10,000 crores from the project. HDIL’s current revenues are around Rs 17,000 crore, with a net profit of around Rs 1,301 crore.
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In a boost to the domestic tea vending industry, the Government has allowed export-oriented units (EoUs) to sell more ‘instant tea’ in the domestic market to meet the growing demand in the country. There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.
The Commerce Ministry has now increased the cap on EoU sales of ‘instant tea’ in the domestic tariff area (DTA) from the existing 20 per cent of free-on-board value of exports to 30 per cent. This will improve availability of ‘instant tea’ for tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players. The domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35 per cent compounded annual growth rate (CAGR) in the recent years, say industry observers.
This is a progressive welcome step. The cap should have been raised to 50 per cent as available for a number of products. Generally at present, EoUs are permitted to sell up to 50 per cent of their free-on-board (f.o.b.) value of exports in the DTA. Government has taken this supply side measure to control domestic inflation in food and food products. This will give Tea companies the flexibility in selling its products in the market which fetches highest price.
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State-run Bharat Heavy Electricals Ltd (BHEL) has bagged a Rs 1,150 crore turnkey contract for setting up an energy-efficient 153-MW captive power plant at the upcoming Guru Gobind Singh Refinery at Bhatinda in Punjab. The Rs 1,150 crore order has been placed on the company by HMEL, a joint venture of HPCL and Mittal Energy Ltd.
The company won the contract under international competitive bidding (ICB). The designing, engineering, manufacturing, supply, erection and commissioning work of the captive power plant in addition to complete civil works would be done by BHEL. The 153-MW gas turbine-based combined cycle power plant to be commissioned in a period of 30 months would meet the power and process steam requirement of the upcoming refinery.
The equipments for the project would be supplied by BHEL’s plants in Tiruchi, Ranipet, Bhopal, Jhansi and the Electronics Division in Bangalore. The civil works, erection and commissioning of the plant would be carried out by BHEL’s Power Sector-Northern Region. BHEL has so far supplied and commissioned more than 700 steam turbine and gas turbine-based plant for industries such as metal, paper, sugar, cement and process industries like refineries, petrochemicals, fertiliser in both domestic and overseas market.
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RIL is set to be the first oil and gas private major to develop an oil and gas market in the country. It will be inviting price quotes from oil refining companies. This would also set the first benchmark for market-driven prices in the crude oil sector. RIL has had initial round of talks with refinery companies such as Hindustan Petroleum Corp for its Vizag refinery, Mangalore Refinery & Petrochemicals and Chennai Petroleum Corp, to name a few.
RIL would float the tender in a few days when the company would set an indicative benchmarked price based on the quality of the crude. Initial tests have shown the crude to be sweet and light in nature, which is a premium crude. Refinery companies bidding for the crude oil will have to quote a price that is a discount or a premium to the indicative price. Although a final decision is yet to be taken, RIL which has two refineries, including the one being developed by Reliance Petroleum will not bid for the crude. This is aimed at keeping the price discovery process as fair and transparent as possible.
The company is planning to produce 40,000 barrels of oil from the MA field, which is a part of RIL’s D6 block. The government has approved $2.2-billion field development plan (FDP) of the MA field. The production is likely to commence in the second half of 2008.
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India's largest bank State Bank of India revised upwards interest rates on deposits of two years and more with effect from June 1. The deposits for the duration - two years to less than three years will now earn an interest of 8.75 per cent. Also, interest rate on deposits of three years to less than five years has been increased to 8.85 per cent from 8.5 per cent. Interest rates on deposits of five years and up to 10 years will be 9 per cent as against 8.5 per cent at present.
For senior citizens, the deposit of two years and up to 10 years has been bifurcated into two categories of deposits of three years to less than five years and 5 years to 10 years. The interest rates on the new buckets will be 9.35 per cent and 9.5 per cent as against 9 per cent earlier. Interest rates on senior citizen deposits of one year to less than two years will continue to be 9.25 per cent.
The counter-intuitive move to offer higher deposit rates, and crunch its spreads in times of dormant credit off take and rising inflation was not expected at this moment. However, long term loans are seeing growth as there is demand of loans from infrastructure projects, and to manage these, the bank may have hiked deposit rates.
However, SBI says that their move to raise rates is to realign them with that offered by the peers. Besides, the bank is looking at raising long term loans in the early part of the year in order to reduce any pressure on deposit mobilisation at the end of the year. It may also be recalled that SBI had decided to increase its market share in deposit market by 0.25% every quarter.
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