Mumbai realty inventory peaks; price fall imminent: Orbit

Ramashrya Yadav, Head Finance & Strategies, Orbit Corporation says most realty developer has huge a inventory pile-up that will result in 20-22% drop in prices across market.

Orbit's inventory pipeline currently stands at 65 percent compared to the normal range of 30-35 percent.

Moreover, Yadav expects earnings to remain weak for the coming three to four quarters, since they have not been able to launch any new projects for almost last eight quarters.

Commenting on SC order, he says around 90-95 percent Mumbai realty developers have been collecting the value added tax (VAT) for the last 3-4 years and some of them have been paying it to the government too. Therefore, he does not expect any incremental negative form the Supreme Court order.

The Supreme Court had upheld the earlier Bombay High Court verdict that asked builders to pay 5% value-added tax for sale of underconstruction houses between 2006 and 2010 in Maharastra.

Also read: Realtors hope to clear inventory on freebies, festive sales

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Is this fresh negative, have you ever sold flats for which you have not paid VAT or not collected it from your customer?

A: As far as real estate companies in Mumbai are concerned a lot of us have been collecting and paying the value added tax (VAT) for about last three-and-a-half-four years.

The real contention was the service tax, which was on the basis that if the building was not completely delivered, it would amount service to the buyer. That is what Supreme Court has taken into account and has ruled out any non-collection or payment of VAT for real estate companies.

However, 90-95 percent of the developers have been collecting VAT and although some of them have been holding it back, others have been depositing it. So, I would not consider it as a fresh blow. It was already in the offering, it was just the matter of getting it upheld at the Supreme Court.

Q: Can you come again about the service tax. Is that separate from the VAT or is that included in the VAT?

A: It is separate from the VAT and it is 3.79 percent for the flat sizes above 1,000 square feet or the value above Rs 1 crore.

Q: Do customers have to pay it only after delivering?

A: The customers have to pay it along with the payments that they make on ongoing basis for the projects.

Q : What was different about what the Supreme Court said?

A: The Supreme Court has basically upheld, whatever already was communicated and the developers were anyways doing that. So, the blow was already on the customers for about last four-five years. It is just that it has been now regularised and legitimate.

Q: The other issue is the inventory levels that have reached record highs for this sector. In Mumbai itself what are the inventory levels like and do you think that is restricting and we are seeing lower demand because of that and lower sales as well?

A: Inventory if bifurcated into two parts; (1) the inventory which is not matured, which is under pipeline and (b) which is already on the ground.

If you look at the percentage or the ratio, it is almost 60-70 percent of the inventory which is in pipeline which was invested between the periods of 2008 to 2011, which has not even come up on the ground.

So, there is a double whammy for developers (a) the cost of holding that inventory has been considerably putting down the performance and the RoE and (b) there is only 30 percent of the inventory which is on the offering, which is not throwing a lot of volumes.

Q: For orbit what are the inventory levels like?

A: 65 percent of inventory currently invested is in pipeline projects and only 35 percent is on the ground. That is the scenario with almost every developer.

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SKS completes securitisation transaction worth Rs 321 crore

SKS Microfinance Limited , India's only listed micro-lender today said it has concluded a securitisation transaction for Rs 321 crore with a major public sector bank.

The transaction was rated A1+ (SO) by a leading rating agency, SKS said in a press release.

Also read: ING Vysya Bank up 17% as ING seeks buyer for stake sale

The company said the transaction is perhaps the first substantial securitisation deal in FY14 in the micro finance sector. The name of the bank was, however, not revealed.

"The present transaction generates liquidity of Rs 321 crore for SKS Microfinance Limited, and enables the company to extend micro loans to 4,75,000 rural women entrepreneurs," S Dilli Raj, Chief Financial Officer, SKS Micro finance, said.

He said this is the first securitisation deal in the current fiscal.

"Notably, 29 percent of the pool is from loans extended to women entrepreneurs from Scheduled Castes and Scheduled Tribes, 17 percent from minorities, 37 percent from Backward Castes and the remaining 17 percent from women belonging to the other castes. The entire pool thus qualifies for weaker section treatment for the bank," he added.

According to him, the transaction further corroborates the fact that securitisation is emerging as a meaningful financial inclusion tool. SKS shares are trading at Rs 131.00 up 2.70 percent on BSE during morning trade.

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Siemens bags Rs 271 crore order from Rashtriya Ispat Nigam

Diversified firm Siemens Ltd today said it has bagged an order worth Rs 271 crore from Rashtriya Ispat Nigam (RINL) for renewing the state-run firm's steel plant at Vishkhapatnam.

"A consortium comprising Siemens AG (Germany) and Siemens Ltd has received an order from state-owned Rashtriya Ispat Nigam to thoroughly modernise its Vishakhapatnam steel plant," Siemens Ltd said in a stock exchange filing.

Also read: RINL aims to double exports to Rs 1,200 crore in near-term

The share of the order value for Siemens Ltd is Rs 271 crore, the company said in the filing.    

Modernization work will boost the furnace's inner volume from 3,200 to 3,820 cubic metres and production increase from 1.7 million tonnes per annum to 2.5 million tonnes per annum, it said.

Vizag steel plant's modernisation is a part of the expansion project which is intended to boost annual pig iron production to 7.3 million tonnes.

Pig iron is crude iron as first obtained from a smelting furnace.

Shares of Siemens Ltd were trading at Rs 475.75, down 0.89 percent on the BSE.

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A-Pac firms to see big changes in HR functions: Survey

About one-third of Asia Pacific- based companies plan to make significant changes in their human resources strategies in coming days to improve operational efficiency, a survey report said.

A majority of Asia Pacific-based companies are seeking greater efficiencies to improve the processes within the function, global professional services company Towers Watson said in its survey.

The 2013 HR Service Delivery and Technology Survey, which covered 1,025 companies, including 578 based in Asia Pacific, found that 33 percent of the respondents are likely to make a change to their HR structure by the end of the next year.

While 51 percent of companies in Asia Pacific already have a defined HR strategy in place, further 31 percent of entities plan to implement such strategies within the next 18 months.

Among companies changing their HR structure, nearly three-quarters (73 percent) are doing so to realise further operational efficiencies, over half (52 percent) are doing so to improve quality and 38 per cent are pursuing a change in business strategy or seeking to achieve cost savings (24 percent).

"Without question, HR service delivery is in a state of change," Towers Watson's Asia Pacific HR Service Delivery practice director Robert Zampetti said.

"What is really interesting is the continued trend towards replacing core HR systems, and a willingness to invest in new technology and a growing shift towards software-as-a-service," he added.

For the Asia-Pacific region, the survey said the spending on HR technology remains steady and strong despite cost reductions in other areas of HR.

More than half of organisations (53 percent) indicated their investment in HR technology this year will match last year's investment levels, while more than a quarter (27 percent) will either increase or significantly increase their HR
technology investments.

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Nationwide ban on earth mining for bricks and roads: NGT

In a blow to brick-kiln industry and road contractors, the National Green Tribunal has banned digging of earth across the country for making bricks and roads without prior environment clearance (EC).

A bench headed by Justice P Jyothimani has directed the Chief Secretaries of all the states and union territories to ensure that its interim order is adhered to.

"We restrain any person, company and authority to carry out any such digging activities of brick earth or ordinary earth against the directives issued by the Ministry of Environment and Forests (MoEF) of June 24, 2013 in any part of the country without obtaining EC from the competent authority.

"The Chief Secretaries of all states/Union Territories (UTS) are to ensure strict adherence to this order," it said.

The tribunal issued notices to Uttar Pradesh seeking its response on the plea for directions to the state government to stop extraction of earth for making bricks and roads, which is allegedly going on in violation of a Supreme Court decision as well as directions of the MoEF to all the states.

"Considering the seriousness of the issue", the bench restrained the UP government from permitting such digging until further orders of the tribunal.

The NGT made the order applicable to all the states saying "as the judgement of the apex court as well as the directives issued by MoEF has got the effect and applicability throughout the territory of India,... what is applicable to respondents (UP government) by our interim order is applicable to all the other states and UTs also".

The ban on brick earth mining comes one-and-a-half months after the NGT banned sand mining from river beds, without environment clearance, across the country.

As per the petition, MoEF in its office memorandum to the states has directed that digging of earth for making bricks and roads requires EC from the competent authority.

The petition has alleged that in spite of the decision of the apex court and the directives of the MoEF, the Uttar Pradesh government has not framed rules/guidelines for the purpose of obtaining EC and are allowing indiscriminate digging of earth.

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US aircraft lessor ILFC sends rental default notice to Jet

Naresh Goyal-promoted Jet Airways has been slapped with a default notice by one of its lessors, ILFC, for non-payment of rentals.

Also Read: Jet-Etihad deal: CVC may close complaints of irregularities

Jet, however, said it is negotiating with the US-based International Lease Finance Corp (ILFC), and hopes to reach an amicable settlement.

The default amount could not be ascertained. According to reports, Jet has been served a notice by ILFC for non-payment of rentals of its about six Boeing 737s.

The aircraft for which the rentals have not been paid are currently with both Jet Airways and its low-cost arm JetLite.

"Jet Airways has a long and excellent relationship with ILFC. Jet and ILFC are currently in discussions to reconcile their respective accounts to identify the exact dues. On completion of the same, the accounts will be settled," a Jet spokesperson told PTI.

The Jet Group has 115 planes, both narrow-body and wide-body aircraft, a majority of them leased.

The airline reported a net loss of Rs 355.38 crore in the June quarter and is pinning hopes on the impending Rs 2,058 crore deal by divesting 24 percent stake to Etihad to overcome the financial problems.

The deal, which is awaiting approval from the Cabinet, the market regulator Sebi and competition watchdog CCI, has been challenged in the Supreme Court by BJP leader Subramanian Swamy, alleging corruption.

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NALCO plans new ventures, expansion, diversification

Despite declining prices and adverse market conditions, aluminium giant NALCO , which posted 4.75 per cent jump in sales turnover at Rs 6,809 crore in 2012-13, has plans for ambitious new ventures, expansion and diversification programmes, a top company official said today.

Also Read: See FY14 output at 3.5 lakh tonne: Nalco

Nalco is pursuing with Odisha government plans to obtain Pottangi Bauxite Mines, which has a mineable reserve of about 70 million tonnes, NALCO CMD Ansuman Das said at the 32nd annual general meeting of the Navaratna PSU here.

Subject to availability of Pottangi Mines, the company has plans to go for 5th stream Refinery based on medium pressure digestion technology at Damanjodi, he said.

The capacity of the stream will be approximately 1 million tonnes per annum and investment will be approximately Rs 5,000 crore.

The CMD said NALCO is planning to set up a Rs 5,500 crore greenfield Alumina Refinery in Gujarat with 1 MTPA capacity, for which Bauxite shall be supplied by Gujarat Mineral Development Corporation.

Listing the achievements of NALCO, the CMD said: "The company has posted a higher net sales turnover of Rs 6,809 crore, which is 4.75 per cent over Rs 6,500 crore achieved in the previous fiscal."

The rise in sales turnover was mostly attributed to higher production and sale of alumina, he said. However, the net profit of the company was Rs 593 crore during the year as compared to Rs 850 crore in the previous fiscal, primarily due to high input costs, Das said.

NALCO achieved in last fiscal the highest-ever performance in Bauxite transportation of 54.19 lakh tonnes (LT), against the previous best of 50.03 LT in 2011-12, the CMD said.

At the same time, Nalco's Alumina Refinery has produced 18.02 lakh tonnes of alumina hydrate, which is an all-time high, against the previous best of 16.87 LT achieved in 2011-12, he said.

The Aluminium Smelter Plant at Angul achieved cast metal production of 4.03 LT against 4.13 LT achieved in 2011-12, Das said.

On sales, the Nalco CMD said the company achieved total chemical sale of 9.85 LT in 2012-13 compared to 8.43 LT achieved during 2011-12. This includes Calcined Alumina Export of 9.44 LT made during 2012-13 compared to 7.92 LT export during 2011-12.

The total metal sale during 2012-13 was 4.03 LT compared to 4.15 LT during 2011-12. Total metal sale consists of domestic sale of 2.59 LT and export of 1.44 LT.

Total metal sales during the year was lower due to production curtailment at Smelter Plant because of high input costs, he said.

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Brokers may boycott trading on MCX: NSEL Investors Forum

Brokers may boycott trading on the Multi Commodity Exchange ( MCX ) for a day as a protest against the government authorities' "failure" to resolve the National Spot Exchange Ltd (NSEL) payment crisis.

Also read: Is Satyam-style takeover of NSEL possible?

"We will shortly decide the date for boycotting the trade on the Multi Commodity Exchange (MCX) for a day towards protest against government authorities' failure to resolve the National Spot Exchange Ltd (NSEL) payment crisis involving Rs 5,500 crore," NSEL Investors Forum President Sharad Kumar Saraf told reporters here today.

The brokers are also considering to boycott the trading for a day on all the exchanges, Saraf said.

Reacting to Finance Miniser P Chidambaram's remark that NSEL was an unregulated entity and violated norms from day one, Saraf said: "We have not done any speculation and disappointed by the slow progress of the government's role in resolving the matter."

The Mayaram panel report has suggested that CBI, FMC and MCA will take appropriate action. They have listed out the irregularities. These authorities are looking into the matter and take action, Chidambaram said on Thursday.

A panel headed by economic affairs secretary Arvind Mayaram had been tasked to look into alleged irregularities in the functioning of NSEL, which is grappling with a Rs 5,500- crore payment crisis.

"The battle for recovering Rs 5,500 crore will be a long one and we need to have patience. The NSEL Investor's Forum will be converted into NSEL Investor's Society to get it registered to fight the legal cases," he said.

The forum has also requested its members and brokers to contribute money required to fight legal cases against 24 defaulters and NSEL promoters, he added.

The forum has already filed a complaint with Economic Offence Wing (EOW) and filed a writ in the Bombay High Court today seeking time-bound investigation process.

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Hettich opens Rs 100-crore plant in Vadodara

Germany-based global furniture fittings brand Hettich today inaugurated a Rs 100-crore plant near here in Gujarat, the company's first in the country.

Talking to reporters after inaugurating the plant, Andreas Hettich, Global CEO, Hettich, said, "This is our first factory in India and also the first for wire products anywhere. The products will add to our existing portfolio of 10,000 products."

"Our experience (in India) has given us the confidence to start thinking about setting up new product lines and factories," he said.

The move will help the company in expanding its market share in the local market and also de-risk global businesses. he added.

"We are confident that the Vadodara plant will further strengthen our position as one of the leading companies in the furniture fittings space globally," Hettich added.

The facility will make Cargotech Wire Basket, a kitchen segment product, for domestic use first and then to meet global requirements, company officials said.

The plant will manufacture other complementary products at a later stage.

The company is also mulling further expansion in the country by pumping in over Rs 500 crore in the next five years at its Vadodara unit as it thinks India can become an efficient base for servicing the growing markets in South and West Asia.

Hettich, having a turnover in excess of USD 1.2 billion, has a presence in 110 countries. The 125 year old brand has fittings and hardwares to cater to all three segments of furniture manufacturing  - office, residential, kitchen & bath - with over 10,000 products in its portfolio.

The firm established operations in India by setting up a 50:50 joint venture with Adventz, a Saroj Poddar Group firm, in 2000.

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MCA widens NSEL probe; seeks details of related entities

Widening its probe into the NSEL matter, the Corporate Affairs Ministry has sought financial reports and other details from the spot exchange's parent firm FT Group and other related entities. 
    
National Spot Exchange Ltd (NSEL), promoted by Jignesh Shah-led Financial Technologies group, is already being probed by various other regulators and investigative agencies with regard to a Rs 5,600-crore payment default and persistent violations of various regulations.

Also read: CBI, other bodies to take action against NSEL: Chidambaram
    
While the Ministry of Corporate Affairs (MCA) had previously asked Registrar of Companies (RoC) Mumbai to collect details of NSEL, it has now sought details about other group entities as well.
    
Besides NSEL, FT group has promoted the country's top commodity bourse MCX (Multi Commodity Exchange), stock exchange MCX-SX, as also entities engaged in the business of clearing corporation and exchange technology solutions, among others.
    
Asked about the probe into NSEL matter, Corporate Affairs Minister Sachin Pilot today told reporters: " As far as Ministry of Corporate Affairs is concerned, we will look at all companies and all entities in question and we have asked for reports from the registrar of companies for all the numbers, figures, balance sheets, financial statements and to see if there has been any company law violations".
    
"As soon as we get reports from registrar of companies on all the companies that are under question, we will take action," he added.
    
The Minister also said that so far MCA has not made any recommendation on the NSEL matter.      

"If we believe there has been substantial violation on the company law, facts will prevail and we will take action and I can assure you anyone who has done any violation will be taken to task and law will take its course," Pilot said.
    
Yesterday, Finance Minister P Chidambaram had said that NSEL was violating rules from the day one and the matter was being looked into by MCA, CBI and commodity markets regulator FMC, among others.
    
Earlier the MCA had sought from RoC a report on NSEL under Section 234 of the Companies Act. Under this section, the RoC has powers to call for any information or explanation from a company.

After receipt of a report from RoC under this section, the central government can appoint one or more competent persons as inspectors to investigate the affairs of a company and submit a probe report.
    
Pilot said that the Finance Minister has assigned different tasks regarding the matter to different agencies.     

"As and when we get more details on the matter, concerned agencies would look into it," Pilot said.
    
He also added that "CBI has got request to register a few cases through the enforcement directorate and income tax wing".
    
Pilot was speaking on the sidelines of an event organized by All India Management Association.

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Bajaj Auto may raise motorcycle prices soon: Rajiv Bajaj

Sep 27, 2013, 01.00 PM IST

"It seems likely that we have to raise prices because commodity prices have gone up significantly, partly owing also to the way forex has moved," Bajaj told reporters on the sidelines of a business conference.

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Bajaj Auto may raise motorcycle prices soon: Rajiv Bajaj

"It seems likely that we have to raise prices because commodity prices have gone up significantly, partly owing also to the way forex has moved," Bajaj told reporters on the sidelines of a business conference.

Like this story, share it with millions of investors on M3

Bajaj Auto may raise motorcycle prices soon: Rajiv Bajaj

"It seems likely that we have to raise prices because commodity prices have gone up significantly, partly owing also to the way forex has moved," Bajaj told reporters on the sidelines of a business conference.

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Motorcycle manufacturer Bajaj Auto is likely to raise prices of its vehicles in the near term to offset the impact of high input costs and a weak rupee, its Managing Director Rajiv Bajaj said on Friday.

"It seems likely that we have to raise prices because commodity prices have gone up significantly, partly owing also to the way forex has moved," Bajaj told reporters on the sidelines of a business conference.

He did not give the quantum of the planned price rise.

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NSEL fiasco: Exchange-broker-client nexus under scanner

A possible collusion between the exchange officials, brokers and clients, including HNIs and politically connected entities, has come to the fore in the NSEL matter being probed by multiple agencies and regulators.
    
Preliminary investigations conducted by capital markets regulator Sebi and inputs from other regulators and government departments suggest that some brokers were offering structured financial products to their HNI clients under some portfolio investments schemes for high returns of 10-20 percent.

Also read: MCA widens NSEL probe; seeks details of related entities
    
The brokers are believed to have been working in close coordination with some top officials at National Spot Exchange Limited (NSEL), as also certain other group entities, while many of the clients could also have been in the loop about such structured products being in contravention of the extant norms, a senior official said.

While investigations are as yet in initial stages, further evidence in these directions could lead to formal proceedings against the suspected entities under regulations governing fraudulent and unfair trade practices, portfolio management schemes and rules governing code of conduct of market intermediaries, he added.

Sources said that the NSEL fiasco is turning out to be a unique case where even the investors could be among the main culprits, as they were not the common people who usually get conned in ponzi schemes and other investment frauds. In contrast, most of these so-called victims are rather well-heeled brokers or high networth individuals (HNIs) and some of them have been found to have close connections with certain politically active persons in Mumbai, he added.
    
Sebi is also ascertaining facts from Financial Technologies on withdrawal of report by its auditor. Deloitte Haskins & Sells had withdrawn its audit report certifying accounts of the company for FY'13 fiscal as Rs 5,500-crore payment crisis at its group company NSEL ballooned.
    
The regulator has already sought details from various brokers about their direct and indirect exposure to the NSEL.
    
Besides, it has also sought to ascertain whether the brokerage firms and individual brokers have put in place effective 'chinese-wall' like structure to ensure that the problems in spot commodity markets do not spill over to the equity and other segments.
     
NSEL, which offers an electronic platform for spot market trading in various farm commodities as also bullion contracts, has suspended trade in almost all its products.
     
A major crisis erupted at NSEL last month after it suspended most trades on its platform, prompting the government to order an enquiry by the commodity regulator FMC, while Sebi also began a separate probe.
    
Sebi is probing into the matter and is looking into potential violations of rules related to insider trading, fraudulent trade practices and possible payment defaults.
    
Besides, the Consumer Affairs Ministry, Finance Ministry, commodity regulator FMC and Corporate Affairs Ministry are also keeping a close watch on the situation.

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Petrobras, IBV wells show major new oil find in Brazil

A drilling campaign off Brazil's northeastern coast shows that an area controlled by Petrobras and an Indian partner likely holds more than a billion barrels of oil, government and industry officials told Reuters, bolstering hopes that the region will soon become the country's biggest new oil frontier.

Petroleo Brasileiro SA , as Brazil's state-run oil company is formally known, and IBV Brasil, a 50-50 joint venture between India's Bharat Petroleum Corp (BPCL) and Videocon Industries Ltd , have determined the SEAL-11 exploration block contains very large amounts of high-quality light crude oil and natural gas, according to five government and industry sources with direct knowledge of the drilling results. ( Read More )

The SEAL-11 block and adjacent areas, 100 kilometers (62 miles) off the coast of the Brazilian state of Sergipe, may hold more than 3 billion barrels of oil in place, according to two of the sources. If confirmed, that would make the block - owned 60 percent by Petrobras and 40 percent by IBV - one of the biggest global discoveries of the year.

Petrobras has been betting that the waters off Sergipe hold large quantities of oil and gas since it bought rights to drill in the area a decade ago. As the block's operator, Petrobras has registered finds in the area with Brazilian regulators in recent years as required by law, but has yet to announce estimates of the potential size of the resource. The latest drilling makes clear how large the find may be, the sources said.

The area, where Petrobras is now drilling evaluation wells, also offers the chance to boost Brazilian output with resources that are cheaper and easier to drill than the country's giant deepwater "subsalt" reserves more than 1,500 kilometers to the south. First production from SEAL-11 and adjacent areas is expected in 2018, Petrobras said in a statement.

"Sergipe, without a doubt, has great potential and excellent perspectives," a Brazilian government official with direct knowledge of Petrobras and IBV's discoveries and development plans told Reuters. "I would say that Sergipe is the best area in Brazil in terms of perspective after the subsalt."

The subsalt is the name given to a series of oil reserves trapped far beneath the seabed under a layer of salt south of Rio de Janeiro in the Campos and Santos basins.

The Sergipe estimates and outlooks shared with Reuters are based on at least 10 oil and gas strikes in seven wells reported to Brazil's petroleum regulator, the ANP, since June 16, 2011.

In an emailed response to questions, Petrobras declined to say how much oil they believe is in SEAL-11 and adjacent blocks, but said 16 wells drilled in the Sergipe deep-water area since 2008 have found several oil accumulations "that comprise a new petroleum province in the region."

The exact numbers will only be known once appraisal plans are completed sometime in 2015, a BPCL source in India said on condition of anonymity. Some industry experts worry the tests could take longer because Petrobras is currently burdened with other giant investments and is struggling to raise money.

The BPCL source said that SEAL-11 likely has between 1 billion and 2 billion barrels of "oil in place," a term than includes unrecoverable resources as well as those that can be economically produced. That amount may rise when resources in adjacent blocks are included.

If the area proves to have 3 billion barrels or more in place, it could ultimately produce 1 billion barrels based on Brazilian recovery rates of 25 percent to 30 percent of oil in place, a Brazil-based oil industry expert with direct knowledge of the drilling program said.

Petrobras and its partners continue to drill in the area and have asked the ANP to approve eight discovery evaluation plans for the offshore region, the last step before a field is declared commercially viable.

GIANT OR SUPER-GIANT?

In addition to SEAL-11, Petrobras has made at least eight strikes in the neighboring SEAL-10 block, which it owns by itself, and two more strikes in the nearby SEAL-4 block, owned 75 percent by Petrobras and 25 percent by India's Oil & Natural Gas Corp , according to ANP data.

Strikes do not necessarily indicate the discovery of commercial quantities of oil or gas. All oil and gas found while drilling, however insignificant, must be reported to the ANP.

Petrobras' reluctance to estimate reserves at the Sergipe field is not unusual in the oil industry, where many companies will only confirm reserve estimates after extensive drilling.

That is in contrast to Brazil's eagerness to tout the super-giant Libra area in the Santos Basin. In May the ANP said Libra has 8 billion to 12 billion barrels of recoverable oil based on the drilling of a single well. The government plans to auction production rights for Libra, Brazil's biggest-ever oil discovery, on October 21.

If the Sergipe find is confirmed, the oil and gas found in SEAL-11 could become Brazil's first "super-giant," or billion-barrel-plus discovery, outside of the subsalt region where Libra is located.

Recent drilling also suggests that a giant natural gas field may extend well beyond SEAL-11 with enough gas to supply all of Brazil's current needs "for decades," one of the sources said.

Even if recoverable volumes in Sergipe fall in the "giant" category, or in the hundreds of millions of barrels, the area would still be the first major offshore find in Brazil's Northeast, one of the country's poorest regions.

"The discovery is very large and if developed would transform the economy of our state and the region," Jose de Oliveira Junior, sub-secretary for sustainable energy development for Sergipe's government, told Reuters.

Oliveira Junior said he was unable to give an estimate of the size of resources in SEAL-11, but that they were so large that Petrobras told the government that it will probably be unable to consider developing the area for about six years.

Government officials in Sergipe are anxious to develop the area quickly. While oil has long been produced in the state, mostly on shore, current volumes are small. Monthly output in Sergipe is less than Brazil's biggest fields produce in hours.

The fruits of the find, though, may take years to trickle down to shareholders and Sergipe residents, even though its proximity to shore, higher quality oil and less complex reservoirs suggest it would be cheaper to develop per barrel than the giant subsalt fields further south, the sources said.

Trapped in connected reservoirs in porous and permeable rock, the light oil should be relatively easy to coax from the earth compared with the subsalt where the oil is heavier and trapped in denser rocks, an industry source said.

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MSF rate to fall more, base rate hikes on hold: Yes Bank

Money has got cheaper in terms of incremental deposits though the market is still adjusting to the new rates that the Reserve Bank (RBI) has set, says Rajat Monga, CFO, Yes Bank . He says the industry is expecting a further 75 bps falls in MSF rates by RBI's next policy meet. Until then the banking industry will put base rate revision on hold.

The RBI, in its September 20 mid-quarter policy review had lowered MSF rate and hiked repo rate.

Also Read: SBI well capitalised; rating cut won't impact local biz: MD

Below is the verbatim transcript of Rajat Monga's interview on CNBC-TV18

Q: Has money got less expensive for people like you. What is the improvement in terms of cost of money?

A: Money has got cheaper in terms of incremental deposits though the market is still adjusting to the new rates that Reserve Bank of India (RBI) has set. I think one can assume that the money will get cheaper by up to 75 bps. The deposit market is a bit sticky on the way up as well as on the way down. So, while it was not pricing in the full increase that RBI had push through in its earlier stance, it is also taking a little bit of time to adjust to the now reduced corridor that RBI has set on the marginal standing facility (MSF).

Q: Do you see base rate hike in the system on the back of what came out of the RBI policy on Friday?

A: I do not think it is a given any more. Had RBI not taken this reduction of the MSF rate, base rate increase in industry would have been in order. Possibly the banks that have not raised base rates might still be looking to rework their numbers and we might see some base rate increase. However, I do not think it is a very clear given, since the expectation of the MSF rate coming down further remains. MSF rate may come down by another 75 bps by the end of October, by RBI next policy. I think that is a risk which people will want to see before they take a view on base rates.

Q: How would margins pan out this quarter and next quarter compared to what it was in the first quarter?

A: The margins should be in a reasonably narrow range as we were relatively early in raising our base rate. So, what base rate increases do normally is that it does the reprising of the whole loan book and at Yes Bank we do have a fairly substantial, I would say up to 90 percent of our loan book is floating. So, the reprising of the loan book overcomes a lot of the reprising on deposits because the deposit reprising is coming only from new deposits and that would be maybe 5-10 percent every month that the new deposits are going to be reprised. So, as of the current situation, margins are in a tight range. If the RBI policy persists and for much longer then margins would be a case of management.

Q: What about loan growth, what is your estimate about loan growth going ahead because the view in the market is that because of repo rate hike it could threaten an already sluggish credit growth that we have seen in the system?

A: At some level I have a bit of a different view which is that as interest rates go up, loan growth increases because loan growth has two components in my judgment; one component is the real economic activity so we can proxy that for real gross domestic product (GDP) and the second component that loan growth will have is interest rates. So, I would add these two. So, whatever is the nominal interest rate and the real GDP growth on the ground is something that should total to credit growth in the banking system.

These are very approximate kind of indicators but it is something which we have seen many times in the past. So, loan growth falls only when interest rates fall. Typically the fall in interest rate is also concurrent to a slow economy. Today, we have a bit of the off the cycle situation where interest rates are going up and economic growth is going down and we are also seeing loan growth increasing as a bit in terms of the effects on the ground being felt.

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Spectrum auction expected in Jan, target Rs 11k cr revenue

The Department of Telecom is likely to conduct the third round of spectrum auction by January and expects to garner a minimum revenue of about Rs 11,000 crore this fiscal, a top official said.

Also Read: TRAI recommendations favour incumbent 2G operators: SSTL

Replying to a query on expected time-line for the next round of spectrum auction, Telecom Secretary MF Farooqui said, "By January... this financial year. That's what we are working for."

He was speaking on the sidelines of an event where BSNL and MTNL signed an agreement to jointly offer services to business organisations and share their infrastructure required for this purpose on pan-India level. On the revenue estimate, Farooqui said, the government is expecting a minimum of Rs 11,000 crore from the spectrum auction in this financial year.

The government has set a total revenue target of Rs 40,874.5 crore this fiscal from spectrum, including auction amount, one-time spectrum charge and annual regular licence fee.

Telecom regulator Trai in its recommendations has suggested up to 60 per cent cut in the floor price of mobile phone spectrum for the upcoming auction after two previous sales drew lukewarm response due to high reserve price. DoT formed an internal committee on September 9 to study and submit the report after receiving the same from a standing committee. The committee, headed by Member (Technology) at DoT, was given 10 days to submit its report.

"The report should come this month," Farooqui said. After receiving the standing committee's report, the DoT would place the matter before the Telecom Commission. The stand taken by the Telecom Commission will be placed before the Empowered Group of Ministers on spectrum for a decision on the third round of auction, the source said.

Trai, in its recommendations, released on September 9 suggested a pan-India reserve price of Rs 1,496 crore per MHz in the 1800 band, down 37 percent from the base price set in the previous auction. In the 900 MHz band, it recommended a reserve price of Rs 288 crore per MHz for Delhi, Rs 262 crore for Mumbai and Rs 100 crore for Kolkata. These rates are about 60 per cent lower than the reserve price set in the previous auction.

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BSNL, MTNL to share network, offer some services jointly

State-run telecommunications carriers - Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd - signed a pact on Tuesday to share their infrastructure and provide joint services to corporate customers.

BSNL operates mobile, fixed-line and Internet services in 20 of India's 22 telecommunications zones, while MTNL operates in the key Delhi and Mumbai zones. Hit by intense competition from private sector rivals, both carriers have seen their market share eroding, and lost money in the past four fiscal years.

Under the pact, the two carriers will share assets like buildings, mobile masts and international long-distance phone networks, the companies said in a joint statement.

MTNL shares rose 9.7 percent to 15.25 rupees by 11.30 am. BSNL is not publicly traded.

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Diageo revenue to flow in from October: Vijay Mallya

Sep 24, 2013, 01.55 PM IST

Reeling under tremendous debt-burden, Mallya, through United Breweries and other group companies, agreed in November to sell stake in United Spirits, India's largest distiller, to Diageo.

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Diageo revenue to flow in from October: Vijay Mallya

Reeling under tremendous debt-burden, Mallya, through United Breweries and other group companies, agreed in November to sell stake in United Spirits, India's largest distiller, to Diageo.

Like this story, share it with millions of investors on M3

Diageo revenue to flow in from October: Vijay Mallya

Reeling under tremendous debt-burden, Mallya, through United Breweries and other group companies, agreed in November to sell stake in United Spirits, India's largest distiller, to Diageo.

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Liquor baron Vijay Mallya says the consumer franchise for United Spirits Limted  (USL) remains very strong, adding that the integration with Diageo will be done in phases. He expects revenues from Diageo to flow in from October. "The board will consider Anand Kripalu's name for USL MD post," he told shareholders at the USL annual general meeting (AGM). 

Reeling under tremendous debt-burden, Mallya, through United Breweries and other group companies, agreed in November to sell stake in United Spirits, India's largest distiller, to Diageo.

Mallya says Diageo will sell USL brands in emerging markets. Also, former Diageo CEO Paul Walsh has joined the USL board. HDFC managing director Renu Sud Karnad has joined the USL board as a director.

This news has just come in and complete details will follow shortly. We can send you an email alert when the details come. Register for your alert here.

HEALTHCARE: Future of Healthcare

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Confident of growth; see margins in 4.2-4.5% range: HDFC Bk

Aditya Puri, MD and CEO, HDFC Bank is hopeful that the bank is likely to maintain its margins in the range of 4.2-4.5 percent. However, cautions of minor impact on margin, which would be made up in the rest of the year.

Speaking to CNBC-TV18's Latha Venkatesh, he said that the private sector expects its growth to continue given the fact that it does not have any loan growth pressures.

"Our NPLs range in 1-1.2 percent, that remains intact and we have a substantial operating leverage, because we have gone into rural India and opened almost 45 percent of our branches there in the last two years and taken our entire product range there. So, we are absolutely confident of growth," he elaborated. 

Meanwhile, he expects the 10-year bond yields to settle in between 8.4-8.6 percent range, because the RBI will focus primarily on controlling inflation and that has to be built into the pricing.

Below is the verbatim transcript of Aditya Puri's interview on CNBC-TV18.

Q: How much points will you give first monetary policy statement on a scale of 10?

A: I will be a nut not to give a 10.

Q: What does it mean basically to a bank? Does it mean a higher cost of money because repo rate has gone up?

A: The difference from where I can see your question is coming from and the way I look at it. I look at it over a period of time. So, I would rather define where I see the policy taking me and the economy than just saying what happens to this repo rate because that rate can also change depending upon the state of the economy.

I am very happy with the policy for two reasons. One, it clearly sets out the basis on which policy will be decided and what is the end result. So inflation is important, growth is important and the rupee stability is important.

It also says that whatever measures were taken in July to stem the movement of the rupee based on favourable trends continuing will be unwound. The disruption came with the July measures.

First thing he has done is on the short tenor 75 basis points down, this will bring the call rate down, the certificate of deposit (CD) is already down to 9.5 percent, it will bring the CD rate further down. It will bring the rates in terms of bulk deposits down which is a large proportion, it won't happen overnight, so don't ask me when will you lower your base rate because there is an issue in transmission.

He had clarified that liquidity will also come as the foreign currency non-residential (FCNR) deposits keep coming in and the regular monetary policy will be restored once he has confidence in terms of the actual functioning of the economy. So, I don't think we could have asked for more.

Q: What do you think the cost of money will look like? Is it likely to inch up or lower?

A: In the short run it will inch up a bit. In a six month horizon, it will go down.

Q: What has been your response in your bank to the FCNR (B) product? Is it a decent response and do you see it increasing by November?

A: Yes, absolutely. Any product that we introduce is four days old. It takes a while for it to gather momentum. But this is the best opportunity NRIs are going to get in their life. Where the hell can you take almost a country risk or a bank risk and depending upon the number of times they leverage you get between 16 and 18 percent. So, there will be lot of money coming in there.

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Coal India unions agree to defer three-day strike

Trade unions at Coal India have put off a three-day workers strike, after a meeting with company officials, a company director said on Saturday.

The state miner's five trade unions had earlier served a strike notice, mainly to protest against the government's plan to sell off five percent of the company's equity. Last month, India selected seven banks to manage the stake sale that could raise USD 1.2 billion, prompting intensified opposition from the unions.

"They have deferred it to December after we agreed to some of their demands relating to VRS (voluntary retirement schemes) and other issues," Personnel & Industrial Relations Director R Mohan Das said by telephone from Kolkata. "The divestment should go through now."

Coal India , which accounts for about 80 percent of India's coal output, has missed its production target so far this year, which will likely result in costly imports, and the 3-day strike would have further squeezed supply.

The government hopes to sell the Coal India stake as part of a divestment target to raise 400 billion rupees from stake sales in the current fiscal year, as it looks to trim the fiscal deficit. India sold a 10 percent stake in the world's largest coal miner in 2010, raising USD 3.4 billion in an initial public offer.

Coal India shares ended 1.43 percent higher on Friday at Rs 301.70 on the National Stock Exchange.

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'See India as South Asia's biggest mkt; eye expansion'

Christopher Fordyce, Regional Commercial Manager (South Asia), British Airways feels that India has the potential to be one of the biggest South Asian markets in the world. In an interview to CNBC-TV18's Shereen Bhan, he said that the company is keen to expand in India to different areas of Delhi, Hyderabad and Chennai, he says.

"We are also getting new A380s and 787s into the fleet, which is a part of a bigger investment program", he added.

Below is the edited transcript of his interview to CNBC-TV18.

Q: It is 84 years for British Airways flying in India this year. What is the outlook looking like? India has been one of your fastest growing markets; second to the United States. Is it looking at exciting? We have seen the growth rates drop quite significantly as far as the broader economy is concerned. From 8 percent we are talking 5.5 percent. Has your outlook changed as well?

A: This is a very exciting place to be and is also a very exciting year as a carrier. We are getting new aircrafts into our fleets. We have got A380s and 787s joining the fleet. They are all part of a big investment program that we have been putting into market since 2011.

This really marks the most visible change in terms of the BA products. We are on different course than some of the other carriers and that is really helping us stay ahead of where the market is going. We are still very excited about India as a place to fly to. We are expanding here.

We are now moving to Delhi, Hyderabad and Chennai. It is a very competitive place to fly to. There are a lot of carriers out there that are also really fighting to be in India and really have a position in the market, because it is going to be one of the biggest South Asian markets in the world.

Q: What is the British Airways' strategic positioning going to be as far as the Indian market is concerned?

A: We enjoy competition. Our investment plan is going to keep us ahead. We really focus on investing in onboard products or services of food, lounges and all of this is part of the customer experience that will help customers being more loyal to us.

Q: Isn't everybody else doing that too?

A: Everyone else is going to be trying to do the same thing. We have started on a path a couple of years ago and a lot of that has been starting to really come through. We have been bringing new cabinets to India in economy and world traveller class and in first class.

We also need to keep investing as cabinets can become outdated. The focus is on delivering what the customers want. We have launched the program a couple of years ago called Know Me and that was all about using customer insight to design a service around an individual customer and every point in terms of check-in, onboard.

Having a lot of information about that customer allows you to deliver a much more personalised service. So they are not just another customer. They are customers that you understand and you can give them what they want and that is what we are using to try and attract more customers in this market and the rest of the places that we fly to.

Q: What is the outlook then in terms of market share? The last available data that I have of is of April for 2011-2012. They put British Airways at the 6th spot with about 2.7 percent of the total market share. Emirates is at 13 percent, Jet at 15 percent. Lufthansa at number 4. So what is the strategy going to be in order for you to aggressively up your market share?

A: Our key markets are to UK and to North America and we operate as a premium carrier. We have more premium seats in terms of percentage of our seats than pretty much carrier.

Q: Which means you enjoy higher margins as well?

A: It means that we have larger premium cabins. So we will have larger numbers of premium passengers, which means the volume becomes less in the total aircraft. But it means that we have to really fight for that premium space. So we have to give more in terms of products and in terms of our onboard service than maybe another carrier.

Q: So you are less vulnerable to a dogfight as far as prices go.

A: We are vulnerable to anything. I would not like to think that we are in a different stratosphere than anybody else. I think we have to compete in that space and it really is about investing, it is really about focusing on the customer and giving them what they want and then allowing them to choose us when it is maybe not just about the price. Everyone quotes India is very price sensitive, it is just the cheapest that everyone wanted.

Q: That is not your experience.

A: We are not always the cheapest, but people are so choosing us. So what we are seeing is it is a very value conscious market. They really expect a lot when they spend the money, maybe more than some other markets do in terms of onboard service. They are very demanding, but if you can give it to them they are very loyal and they are willing to spend.

It is about making sure they do not feel that they are not getting a good deal and that is where you try and move out the space with just being about price, because then there is a commodity and in effect we are investing in product and service.

There is no point doing that which is a commoditise product and that is where we really position ourselves not being a commodity, it is about a product that people choose within a price bracket that they can afford.

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Govt to set up 4,000 MW solar project in Rajasthan

The government today said it has initiated the process of setting up 4,000 MW ultra mega green solar power project near Sambhar lake in Rajasthan.

"The Department of Heavy Industry (DHI) initiated the process of setting up the Sambhar Ultra Mega Green Solar Power Project in the 23,000 acre area of Sambhar Salts Limited (SSL), subsidiary of Hindustan Salts Limited (HSL) located in Rajasthan," an official release said.

The government has finalised setting up of the project in Rajasthan, in the SSL area close to Sambhar Lake, with a total capacity of 4,000 Mega Watt (MW). Therefore, this will be the largest solar based power project in the world, it said.

"The first phase of the project, which will be 1,000 MW is likely to be commissioned in three years i.e. by the end of 2016," the release said.

"The first phase of the project is expected to be implemented through a joint venture (JV) company to be formed with equity from BHEL, Solar Energy Corporation of India, Power Grid Corporation, Satluj Jal Vidyut Nigam and Rajasthan Electronics and Instruments Ltd," it said.

Based on the experience gained during implementation of the first phase of project, the remaining capacity would be implemented through a variety of models, it added.

When the 4,000 MW of project would be fully commissioned, it will generate 6,000 million units of power per annum. The project will supply power to the distribution companies of various states through the National Grid, the release said.

Being the first project of this scale, it is expected to set a trend for large scale solar power development in the world, it added.

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Full marks to policy; banks may up base rates: HDFC Bank

The Reserve Bank of India released its monetary policy today  and Aditya Puri, MD and CEO, HDFC Bank believes banks may hike their base rates marginally. Speaking to CNBC-TV18's Latha Venkatesh, Puri says that any rate increase will not come because of the policy but because of the shortage of liquidity in the last three months.

Below is the verbatim transcript of Aditya Puri's interview on CNBC-TV18.

Q: How much points will you give first monetary policy statement on a scale of 10?

A: I will be a nut not to give a 10.

Q: What does it mean basically to a bank? Does it mean a higher cost of money because repo rate has gone up?

A: The difference from where I can see your question is coming from and the way I look at it. I look at it over a period of time. So, I would rather define where I see the policy taking me and the economy than just saying what happens to this repo rate because that rate can also change depending upon the state of the economy.

I am very happy with the policy for two reasons. One, it clearly sets out the basis on which policy will be decided and what is the end result. So inflation is important, growth is important and the rupee stability is important.

It also says that whatever measures were taken in July to stem the movement of the rupee based on favourable trends continuing will be unwound. The disruption came with the July measures.

First thing he has done is on the short tenor 75 basis points down, this will bring the call rate down, the certificate of deposit (CD) is already down to 9.5 percent, it will bring the CD rate further down. It will bring the rates in terms of bulk deposits down which is a large proportion, it won't happen overnight, so don't ask me when will you lower your base rate because there is an issue in transmission.

He had clarified that liquidity will also come as the foreign currency non-residential (FCNR) deposits keep coming in and the regular monetary policy will be restored once he has confidence in terms of the actual functioning of the economy. So, I don't think we could have asked for more.

Q: The last action from the previous governor was that of cutting rates repo rate. Now the repo rate has been increased. Also, when we asked for the next move he said the repo rate and the marginal standing facility (MSF) rate have to be only 100 basis points eventually and the MSF rate will do more walking. The repo rate has bottomed out and is already 7.5 percent, are you getting a feeling that base rates will actually rise?

A: Base rates may rise temporary not because of the policy because people have taken deposits one year deposits were at 10.5 percent, short-term deposits were even higher so, that cost may be reflected in the base rate.

With regards to repo rate going up or down, inflation has also gone up. So, what he said was that repo will move both ways depending upon the state of the economy. If we have good monsoon, if the rupee remains where it is then why do you not look at 7.25 percent again.

So, I am actually quite happy with the statement that has been made that depending upon which way the dice falls it could go up or down but inflation is important and so is growth. He also wants to see the rupee stability or the strength that has possibly come in and the measures that the government has now taken will they result in growth? If they result in growth which is my own thought, too much emphasis on growth interest rate is not the only issue, I think our growth has stalled for other reasons.

Q: What is your next step on interest rates, base rates and deposit rates? What will be the banking industries response because bankers were still pricing their loans on the repo rate as the base because everyone thought that this MSF is an artificial and temporary phase and so, people were basing it on repo which has gone up. What will you do and what do you expect the industry to do?

A: You could see a marginal increase in base rate. More of an adjustment in terms of understanding that the tight money conditions will remain for a while, it is not that they were based on the repo rate. Lot of people had sat back and said let us see if this is temporary till September 20, then there is no point raising it.

Let us wait and see what is the stance of the RBI and if the cost will remain high to some extent then we will raise it. However, any rate increase will not come because of the policy. It will come because of the last three months to shore yourself up because of shortage of liquidity that a lot of people have run and taken bulk deposits which will be reflected. Again, base rates just like repo, could also come down very fast.

Let me give you another scenario, what if the USD 15 billion come in under FCNR and he doesn't mop up that liquidity, interest rates will go down. So, I am just being a little cautious because there are lot of balls in the air which is why I think while setting the roadmap he has not taken definitive action because while the green shoots are great, a little caution is warranted to see how it actually pans out.

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BusinessWorld sale: Is digital media becoming mainstream

R Jagannathan
Firstpost.com

It is now time for us to flip our thinking about media. I am willing to bet that in less than five years -assuming certain minimum levels of broadband access - digital news media in India will become mainstream and mainstream will become sidestream -or niche.

This morning's newspapers have reported the purchase of BusinessWorld magazine by exchange4media, a digital media publisher, among other things -one of the first purchases of mainstream by a news portal. Of course, one swallow does not make a summer's day, but the logic of digital is unbeatable. But it is an early indicator of which way the wind is blowing.

The first question I am asked by people is always this: how will digital make money when you are giving it away free?

I don't claim to have all the answers, but the point is this: how does the mainstream media make money? Newspapers are given away practically free, with most of the price paid being swallowed up by distribution and subscriber acquisition costs. News TV channels are now earning a bit better after digitisation, but they are essentially nearly free to viewers. And they have much bigger overheads than digital media.

So, my mixed answer to how digital newsrooms will make money is simple: it will happen when the penny drops for advertisers. Advertisers already know that they are paying top dollar to buy readers for newspapers. Once they know that there are credible digital publications which can deliver multiple times the audience at a fraction of the cost, they will wonder whether they were being gypped so far by mainstream media.

The BusinessWorld purchase must be seen not as a vote of confidence in mainstream, but as an effort by digital media to gain access and build mainstream-like editorial credibility. It is not about the magazine itself.

Amazon boss Jeff Bezos' purchase of The Washington Post is not about reinventing the newspaper, but about buying a brand that could one day rule the digital space.

The New York Times, which went digital with a vengeance some years ago, is already beginning to show revenues that indicate the kind of potential digital has.

Henry Blodget, writing in the Business Insider , reckons that NYT's digital revenues are in the range of USD 350 million (versus total revenues of around USD 2 billion). Assuming digital revenues soon rise to levels of USD 400 million, the NYT's digital edition itself would be able to support 850 journalists costing around USD 130 million.

Blodget writes: "Specifically, a USD 130 million annual newsroom budget could fund a newsroom of (around) 850 writers, editors, producers, videographers, and photographers who make an average of USD 150,000 a year all-in (salary, bonus, benefits, office, and T&E costs)."

Of course, the NYT is the NYT, and other digital newsrooms are going to have their work cut out in generating enough revenues to keep their heads above water, especially in India.

But the logic of costs is actually stronger in India, since journalism costs less here, and the digital revolution is going to be even bigger.

For four reasons.

One, smartphones and tablets are leading the digital access revolution here. This is where digital news will be consumed most in future. Add cheap 4G services in cities, and the last mile issues could get addressed quickly.

Two, the internet is really the mother of all media - with its capability to deliver text, voice and video over the same pipe.

Third, news consumers may not in future want to sit at a particular time in front of a TV or look for a newspaper to read news. They may prefer to consume news when they are free, rather than when it's prime-time. The internet and smartphones make it easier to access news at a time and a place of your choosing.

Four, delivery costs for digital will rise more slowly than for physical products such as newspapers. If wages and distribution costs are only going to rise, and advertising is going to taper or fall, the economic logic is moving in the direction of digital.

The idea of mainstream media clearly needs a rethink. Digital publications, once the child of mainstream, is on it way to becoming the parent.

The writer is editor-in-chief, digital and publishing, Network18 Group

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No issues with Tata-Singapore Air deal: Ajit Singh

A day after Tata group decided to launch an airline in partnership with Singapore Airlines, civil aviation minister Ajit Singh said he has no issues with the deal.

However, he also added that the Sebi (Securities and Exchange Board of India) and the ministry of corporate affairs will look into issues of conflict of interest.

Also read: Interest conflict likely in Tata airline deals: Ajay Prasad

"As far as civil aviation ministry is concerned, our rules don't say anything about it. If there are any conflicts, I doubt if there are any problems, but if there is, it is for the corporate affairs ministry and Sebi", said civil aviation minister Ajit Singh.

Meanwhile sources tell CNBC-TV18 that the Tatas had informed Air Asia about their decision to partner with Singapore Airlines and that AirAsia does not see this as an issue at all.

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Multi-platform BBM to strengthen IM community: BlackBerry

BlackBerry Messenger (BBM), the instant chat application, will now be available for rival devices using Google Inc's Android software and for Apple's iPhone starting this week. In an exclusive interview to CNBC-TV18's Malvika Jain, Sunil Lalvani, MD, BlackBerry says the move will create a strong, engaged social community of instant messaging users, irrespective of the already existing three platforms. "Once we have done that, the endeavour is then to launch BBM Channels", he adds. 

Below is the verbatim transcript of his interview on CNBC-TV18

Q: By when can we expect BBM to become available across platforms and devices?

A: We are happy to share that BBM would now be available across Android and IOS devices so any user of Android or ice cream sandwich version 4 upwards or IOS 6 upwards can now have BBM downloaded and can have BBM services enabled on their devices starting this week.

Q: Would BBM now be available to all smart phone users without any charge or would users have to pay for it?

A: We are launching it (BBM) as a free application. Anyone who gets on to the Android player or the I-store can download it as a free application. There is going to be no charge.

Q: How would Blackberry generate revenues from BBM? To the best of my understanding the sole purpose of selling BBM as an independent service was to enhance revenues?

A: Before I talk about that element, I think it is important to understand what we are doing with BBM. BBM is an iconic product. People who use BBM or continue to use BBM swear by it, some of the strengths that BBM provides. What we have been hearing in the last one year the whole instant messaging market is extremely fragmented. You have over a billion users of IOS, Android and Blackberry there but there is a clear fragmentation of the instant messaging market.

The BBM comes with its core strengths and that's what we are looking at and taking. Looking at the iconic BBM we are making it available for Android and IOS users. In doing so our first step is to create a really strong, engaged social community of instant messaging users out there, irrespective of these three platforms.

Once we have done that the endeavour is then to launch BBM Channels. Channels are going to be the next level of evolution. It is really going to be BBM Channels talking about the socially engaged groups, brands, individuals, corporates, you can name any kind of socially engaged community can be formed and leveraged upon BBM.

Q: What is going to be Blackberry's future strategy particularly in emerging markets like India? The sense has been that now the focus of the company would have to shift to such markets.

 A: You are absolutely right. There is a lot of focus on markets like India especially for services like BBM. We have seen the youth community here. The user community for both BBM and other IM tools is extremely active and a typical BBM user, we analyse this globally and India is no exception to this.

We have seen the user community, 60 million BBM users send or receive 10 billion messages a day. That's a huge number of messages and what is interesting is that half the number of these messages is read within 20 seconds. This just shows you how socially engaged the BBM user community is. What we are seeing in India is this youth community or this socially engaged user community wants to leverage the power of BBM.

Q: Now that BBM has been launched as a separate product, would it be appropriate to assume that the focus of Blackberry is now going to be more on enterprise. Also, now that competitors like Apple are targeting multiple segments in addition to the high end segment, what would your strategy be for your handset division?

A: Blackberry has always been in both the services and handset segment. So BBM as a service has been around for many years. On the enterprise side we have a lot of services that come in the form of software and services which we cater to enterprises with. The handset or the hardware business is one part pf our overall revenue model. Services and software has always been an integral part of our overall revenue model.

What we are doing is with BBM across platforms and then BBM Channels is really taking that services portfolio to the next level and expanding that portfolio to non-blackberry devices, typically Android and IOS to begin with. Similarly on the enterprise side we have the best management capabilities for blackberry devices.

What we are doing now is taking that management capability that we call as BES and have rolled out something called BES10 or Blackberry Enterprise Service 10 which gives you the ability to manage Android, IOS and Blackberry devices through a central server so what we have actually done is that in the last six months we expanded our portfolio of software services to take it across platforms so on the enterprise side we already do it with BES 10, for BBM we are now taking it for the consumer segment as well. So it is actually a two pronged strategy for both enterprise and consumer.

Q: We have been hearing about possible restructuring at Blackberry. Are we going to be seeing some lay offs?

A: There is a lot of speculation that's been happening in terms of lay offs. I wouldn't want to comment on speculation. However, definitely the company is going through a restructuring, part of rolling out of services has to do with that. The alignment of the business model for BBM across platforms and BES 10 across platforms is a part of the restructuring exercise.

Our restructuring is more aligned to the business dynamics, the market dynamics which is every user of android, IOS or blackberry out there is a potential customer for me in the enterprise segment because I can sell management MDM capabilities to them, every user of an Android or IOS devise out there is a potential customer for me for BBM services so really the restructuring is aligned more to the business dynamics and the market needs right now. That is what our restructuring is all about.

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India's business confidence at four-year low: Survey

India Inc.'s self confidence has slipped from a year ago to a four-year low, according to a survey released on Monday, as Asia's third largest economy struggles to raise slow growth and businesses try to cope with a weak rupee .

The Indian currency is down about 12 percent this year and had a particularly bad fall in July and August, when the survey by Federation of Indian Chambers of Commerce and Industry, or FICCI, was conducted.

"Business sentiment has been hit adversely and investment prospects don't seem very promising. A sense of apprehension continues to grip members of India Inc.," FICCI said in the study.

In the latest survey, the confidence index declined to 49 from the March-April reading, which was 57.4. The latest number is the lowest in 17 quarters and FICCI said the level of confidence was reminiscent of the 2008/9 global financial crisis.

Rising labour costs and weak demand remained key factors constraining companies' growth. The low availability and high cost of credit emerged as serious concerns affecting performance, respondents reported.

India's central bank has taken a series of measures to stabilise the rupee, including draining liquidity from the banking system, which has restrained credit availability.

India's economy grew at an annual 4.4 percent in the April-June quarter, its slowest rate since the first three months of 2009.

A majority of the companies that participated in the survey said they don't intend to hire any time soon. Respondents expected a "moderately to substantially worse" performance in the economy and industry in the coming months.

"The near term outlook of respondents with regard to sales, profits and investments remained subdued. The outlook with regard to exports and employment was muted as well," FICCI wrote in the report.

The rupee's slide to record lows also adversely affected the input costs of companies, lowering their profitability, the trade group noted. Companies now say they are trapped as they cannot pass on increased costs to customers, according to the survey.

Many respondents said that improving basic infrastructure and expediting stalled projects will help revive flagging industrial growth. Simplifying procedures and policies in starting and running businesses would also boost confidence, they noted, according to the survey, which drew responses from about 200 companies.

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Will fight to get board seat for Akula: SKS Trust

SKS Trust, one of the bigger shareholders in SKS Microfinance , pushing for Vikram Akula's nomination to the board, is yet to hear a formal response. Akula was the founder of the microfiance company who had quit under pressure and the company is opposed to offering him a board seat. Biksham Gujja, Chairmam of SKS Trust says it is a very straightforward request that a 12.6 percent shareholder needs to get a board seat. He fails to understand the objections

Also Read: SKS Micro won't let Akula on board, may review other names

Though he is still expecting a formal reply, he is not opposed to taking all the actions necessary to get its rights back, including the legal route.

Below is the verbatim transcript of Biksham Gujja's interview on CNBC-TV18

Q: If you can tell us the facts as of now, have you made a formal request that Vikram Akula should represent SKS Trust. What has been the board's response?

A: I wrote a letter to SKS board nominating Vikram Akula who started SKS, who also started SKS Trust, to be our representative when we reached 12.6 percent of the SKS Microfinance ; we are the largest shareholders of the company. I have not got a formal response to that simple and polite request. Instead, there were several media reports wherin questions were raised on unrelated matters. The objections were not factually correct either, like SKS Trust not being governed properly or no shareholder is eligible to nominate (implying) Vikram Akula is not accepted.

I am reading all these in the media, but we have not received any formal reply for a very simple straightforward request from the trust which is the largest shareholder today, to get a board seat and then my nomination of Vikram Akula to the board of the SKS.

Q: If they continue with the silence, what will be your next step?

A: We are exploring all our options and I want them to communicate to me as to what their concerns are. Vikram Akula had started SKS. I am not able to see what the objections are, instead of it they are saying that the Trust is not managed properly.

We are shareholders of the SKS, they are not our shareholders. If they have concerns about it, certainly they can come out and openly debate and discuss but these are not related ones. An extremely simple request, very straightforward that 12.6 percent shareholder needs to get a board seat and there are number of board members with much less shareholding. It is certainly a convention to have a largest shareholder represented in the board.

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Need more clarity on FCNRs to lure investors: Federal Bank

Shyam Shrinivasan, managing director and chief executive officer, Federal Bank believes more clarifications on foreign currency non-resident deposits (FCNR) are required to draw more investors to the scheme.

Speaking to CNBC-TV18, he said, this currency-swap scheme could help bring in USD 8-10 billion in the Indian market. "It is quite possible, but I must add that there needs to be substantial clarity on their ability to borrow locally and bring in so that the borrowing cost for them is vastly lower than the opportunity that is there through the FCNR route," he adds.

Also read: RBI move gives scope to raise dollar deposits

Below is the edited transcript of Shrinivasan's interview to CNBC-TV18.

Q: Have you hawked the new product, have you got in more money. Can you give us some facts?

A: The foreign currency non-resident (FCNR) product is more attractively priced. It is Libor plus 400 for more than three year tenure and it is beginning to evince interest but  the rupee deposits seem to be doing robustly. I suspect that the leverage aspect, which is very unclear yet for the customers overseas is getting sorted out. So, there must be some kind of a wait-and-watch. Therefore, right now, the amount flowing in is not profound and we are seeing movement after the increase in rates.

Q: Can you elaborate what is this leverage rule that NRI depositors are waiting clarity upon?

A: The depositors would like to see if they can get a local leverage and bring in more and try to earn on the entire amount and then, there is an obvious opportunity for them. It is probably unclear for them what the impact of the leverage is and maybe the different lenders are also trying to establish clarity so that there is no violation of any regulatory standards. That part is yet unclear and I suspect it will get sorted out in a few days and then one you will see materially more money coming in through the FCNR dollar route.

Q: Why you are saying you will get clarity. Have you approached the Reserve Bank of India (RBI)? Have they said they will write back to you shortly?

A: It is not that banks here, it's the lending banks. I do not have an overseas branch or a network there. We only have field presence. So, they have find leverage opportunity by either the foreign banks or the banks which have overseas presence.

Q: There is an expectation by the industry and most of the industry watchers that there could an inflow of around USD 10 billion dollars into the system by November 30. Would you concur what is the on ground reality that you are facing?

A: The same number is being talked of USD 8-10 billion, which doesn't seem inconceivable. It is quite possible, but I must add that there needs to be substantial clarity on their ability to borrow locally and bring in so that the borrowing cost for them is vastly lower than the opportunity that is there through the FCNR route. Once that clarity emerges, I am sure that the numbers that has been spoken of USD 8-10 billion is quite possible and I am sure all banks are gearing up for that. In the meantime, the unleveraged money is coming in but not in a large sum. We have seen millions of dollars, not billions of dollars.

Q: The other kind of swap offered by the RBI on September 4 was that you could raise overseas bonds up to 100 percent of your tier I capital which also could be swapped at lower than market rates. Are you exploring that route?

A: Yes, that we are. We are active in the market. We have raised some money and it is not like one tranche raising. Everyday is an opportunity and at the moment this window was open, there are enough sellers and there are enough buyers, so a bargaining of price is going on and heavily dependent on the risk and the alliance that you have on overseas banks.

We are in the market. We have raised some money and we have swapped into rupees, the swap gains are not entirely one percent it could be one plus or one minus depending on the days in which. RBI allows you to swap on one given day and our day is one day so to that extent there is a variation. There is a more encouraging opportunity and we are in the markets so are other banks. So, the price discovery happens everyday.

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Demand up despite price rise, worst over for steel: SAIL

CS Verma, chairman, SAIL , expects to see good times for the company as worst seems to be over for the metal industry The company raised steel prices in line with increase in international prices. While flat product prices were raised by about Rs 1500 per tonne, those of long products were increased by about Rs 1000 per tonne in line with hike in international prices to the tune of USD 20 per tonner for flat products and USD 4-5 per tonne for long products.

SAIL's inventory stands at about 0.5 tonne, which would be needed to cater to their vast marketing network of more than 3000 dealers.

He further adds that improvement in China's economic data too was responsible for steel environment improving. "In calendar year 2012, China's growth in crude steel production was about 2 percent but from January to July 2013 China growth of crude steel production was about 7 percent."

Below is the verbatim transcript of his interview on CNBC-TV18

Q: What kind of price hikes have you taken at SAIL and what are your current inventory levels?

A: From the beginning of the current month, we increased the prices for flat products by about Rs 1500 per tonne and in the long product segment by about Rs 1000 per tonne. This is in line with the international price levels because internationally too the prices have gone up in the last two months by about USD 20 per tonne for flat products and by about USD 4-5 per tonne for long products.

Last four-five months there has been stagnation in price level whereas the input prices have firmed up with passage of time. International iron ore prices which had fallen to a low of about USD 95 per tonne about three-four months back, today they are around USD 140 per tonne.

Even the coking coal prices have firmed up by about USD 10-15 per tonne in the last couple of months. Since the steel prices had been stagnant in last four-five months, this increase has been effected from beginning of the current month.

As far as inventory level is concerned we are holding about 0.5 million tonne of inventory in all our stock yards. Looking at our vast marketing network wherein we have about more than 3000 number of dealers and about 54 warehouses in India. So this inventory level will be needed to cater to our marketing network.

Q: You don't feel the rise in prices has impacted demand in any fashion?

A: No, in fact demand has gone up. I also think the worst is over as far as metal or steel industry in particular is concerned.

To be more data specific, in the year 2012 globally, growth in crude steel production was 0.7 percent at 1.5 billion tonnes. From January to July 2013 of the current calendar year, the growth has gone up from 0.7 percent to 2.1 percent.

Even China growth is coming back. For example in calendar year 2012, China's growth in crude steel production was about 2 percent but from January to July 2013 China growth of crude steel production is about 7 percent.  India's growth in crude steel production for the first five months of the current financial year is about 5 percent. So now that worst scenario seems to be over and steel industry being a metal industry and is subject to cyclic movement, I think now there are good times ahead for us.

more to come

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RIL slams DGH move to snatch gas discoveries as arbitrary

Reliance Industries has slammed the DGH's move to snatch 86 percent of its KG-D6 block area, including eight gas discoveries worth USD 10 billion, as "arbitrary" and said the oil regulator was responsible for the delay in developing the finds.

Reliance Executive Director P.M.S. Prasad on August 24 wrote a strongly worded letter to Oil Secretary Vivek Rae, questioning the intent of the Directorate General of Hydrocarbons (DGH) in asking the company to give up 6,601 sq km out of the total 7,645 sq km area in the block on the grounds that the time line to develop the fields had expired.

Of the eight discoveries in the area, the DGH refused to consider investment plans for five, with 0.8 trillion cubic feet of reserves, saying they were not viable at the current price of USD 4.2 per million British thermal units.

Also read: OilMin seeks legal opinion on levying $781mn penalty on RIL

The regulator refused to recognise the other three as discoveries in the absence of prescribed tests to confirm them and then disallowed pleas by Reliance and partner BP Plc for time to do the tests.

"In spite of the PSC providing for sale of gas at market prices, and the approved price of USD 4.2 being only valid until March 31, 2014, DGH insisted on evaluating the proposed development plan (of five discoveries) at a gas price of USD 4.2 and declared them to be unviable," Mr. Prasad said, adding this was done even after the knowledge that the field would start production much later than April 2014.

Mr. Prasad said Reliance-BP had agreed to carry out the DGH-prescribed drill stem test to confirm the three discoveries but the regulator never approved them and was now insisting on relinquishment of the areas.

In the 11-page letter with point-by-point rebuttals to the DGH claims, a copy of which was marked to Oil Minister M. Veerappa Moily, Mr. Prasad asked Mr. Rae to "advise the concerned to rectify the errors and remove the hurdles which are needlessly delaying further progression in these discoveries."

RIL had offered to relinquish 4,233 sq km of "low prospectivity area" in the eastern offshore KG-DWN-98/3 or KG-D6 block in keeping with the contractual requirement to retain only portions needed to produce oil and gas.

The area RIL is seeking to retain contains the 20 oil and gas finds it has made till date.

"Needlessly projecting RIL as a defaulter and forcing the contractor to relinquish discovered resources will not only hurt the investor but considerably reduce the chances of many of these discoveries ever being produced," Mr. Prasad said.

"Contractor (RIL) is of the view that the action is clearly an afterthought, based on arbitrary decision and tantamount to disputing completely valid discoveries made at the contractor's risk," he wrote.

Mr. Prasad said the discoveries were unilaterally declared unviable by the DGH without a discussion by the block oversight panel or taking its views into consideration.

"Under normal course it would be considered bad faith to take a biased unilateral view, which...delayed further progress for development, and then turn around to blame the contractor for expiry of time period," he said.

RIL, he said, had "spent enormous amount of time and money on bringing these discoveries to fruition" and would "suffer immensely if pushed to a situation of forced relinquishment of rightful discoveries."

The area proposed for cessation has at least 1.15 trillion cubic feet of known recoverable gas reserves valued at USD 4.83 billion at current prices.

Of the 20 finds, RIL began crude oil production from MA field in September 2008. It started gas output from MA field and Dhirubhai-1 & 3, the largest of the gas discoveries in the block, in April 2009.

The DGH proposed that RIL should retain only an area of 1,044 sq km, which holds the currently producing D1 and D3 gas and MA oil and gas fields, besides a cluster of four satellite fields (D-2, 6, 19 and 22) and another D-34 discovery.

RIL had in its March 13 proposal wanted to retain 3,412 sq km containing all the oil and gas finds made till date.

Contractually, companies are required to relinquish 25 per cent of the area in an oil and gas block at the end of the first phase of exploration that spans three years.

At the end of second phase, 50 per cent of the area is to be given up. By the third phase, only the area needed for development and production of a discovery is allowed to be retained. The second and third phases are of two years duration each.

RIL was awarded the KG-D6 block in 2000. The three-year first phase ended on June 7, 2003, and the third phase ended on June 7, 2007.

Sources said the DGH in 2006 agreed to RIL's proposal to declare the entire area as a discovery, allowing the company to retain it. The decision was ratified by a committee headed by additional secretary in the ministry and by the Oil Minister thereafter.

However, the decision was questioned by the Comptroller and Auditor General of India, the government auditor, as only 79 per cent of the block area had been covered by 3D seismic survey at the end of the third phase and yet it had been declared a discovery area.

The CAG, in its performance audit in 2011, had asked the ministry to review the determination of the entire KG-D6 contract area as a 'discovery area'

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'Doubt Ranbaxy claim that Mohali product filings not hit'

The US Food & Drug Administration (USFDA) issued an import alert on Ranbaxy 's Mohali unit on September 13. The inspectional observation was made way back earlier this year, but was not revealed by Ranbaxy, says Vikas Dandekar, India Bureau Chief, PharmAsiaNews.Com. Whenever there is an import alert, the company needs to redo all its manufacturing practices, give a renewed submission and that is reviewed, he says. So, it is a long haul again and it is like a repeat of history which happened in 2008, he adds.

Also Read: Ranbaxy crashes 35% on USFDA import alert for Mohali unit

Generally import alerts do not give deviations that have happened in the manufacturing system, but broadly it is a detention without any physical inspection, Dandekar says. The import alert was due to non compliance with drug good manufacturing practices (GMPs). The only recourse the company has now is to have site transfers of their product filings to Ohm Laboratories, he says.

However, the Ranbaxy management has consistently maintained that it is doing its product filing and nothing has stopped so far as Mohali is concerned, says Dandekar. So, that question needs to be resolved as to what exactly is happening in terms of product filing and why is Ranbaxy saying that the product filings have not been impacted, he adds.

Below is the verbatim transcript of Vikas Dandekar's interview on CNBC-TV18

Q: Explain to us the last note that the US FDA has carried on its website on Ranbaxy and what does it mean for the company?

A: It is a September 13 notice. Generally import alerts do not give the deviations that have happened in the manufacturing system, but broadly it is a detention without any physical inspection. It follows inspectional observation which were made way back earlier this year which was not revealed by Ranbaxy but it came out and it had issues with product contaminations and filings were stopped at that point of time and that was also a result why Atorvastatin had stopped coming out from the Mohali site.

So, in the natural course we would have expected a warning letter to come out of the FDA's office after the inspectional observation but that did not happen, it came straight on import alert.

Whenever there is an import alert we have a situation where the company needs to redo all its manufacturing practices, give a renewed submission and that is reviewed. So, it is a long haul again and it is like a repeat of history which has happened in 2008 which is a second time an import alert has been issued on Ranbaxy side.

Q: In terms of earnings growth will it adversely impact its upcoming product launches like Diovan and Nexium or do you think the company can monetise all these three products from the Ohm Laboratories?

A: That is the only recourse that the company will to have site transfers of their product filings to Ohm Laboratories and that's exactly what saved Ranbaxy from losing its exclusivity on atorvastatin. The product filings will move or probably has already moved to Ohm Labs. However, both Diovan and Valcyte were in question. September 22, 2012, was when it was expected, but it's almost over a year now that has not happened. So, it is a big question mark.

The point which is curious is that the Ranbaxy management has consistently maintained that it is doing its product filing and nothing has stopped so far as Mohali is concerned. So, that question needs to be resolved as to what exactly is happening in terms of product filing and why is Ranbaxy saying that the product filings have not been impacted.

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See FY14 loan growth at 15%: Shriram Transport Fin

Non-banking finance company Shriram Transport Finance is hopeful of maintaining its FY14 loan growth guidance of 15 percent. Managing Director Umesh Revankar told CNBC-TV18 that the company does not expect to see decline in margins for this quarter since it has been able to pass on the cost to the customers.

He further added that as of now there is not much demand for new vehicles, but the situation is likely to improve post monsoon. However, there is a constant demand for used vehicles, he said.

Also read: Sun Pharmaceuticals files ANDAs for 4 products in Q1FY14

Below is the verbatim transcript of his interview on CNBC-TV18

Q: We just get noises about the mining ban getting removed but things are still pretty bleak as far as that segment is concerned, are you seeing any improvement in demand for trucks at all?

A: If you are asking me for new vehicle sales, I don't see any kind of a demand coming up right now because even in the mining area, it has been raining and normally mining activity starts after the rains. So you can see the activity post October or September. Even then I don't see having huge demand for new vehicle sales.

However, as far as used vehicles are concerned, there is constant demand because of the day-to-day activities that is continuing in this country.

Q: Just one follow-up question to that although there may not be too much improvement in demand, there is a sense that there are higher non-performing assets (NPAs) that you might see in the truck financial vertical because of the pressures that the sector has seen. Do you expect to see more asset quality pressure, defaulting of loans etc and hence do you think that your gross NPA levels could rise above the 3 percent that you have clocked in?

A: The NPA levels keep going up when economy is slowing and when the income of the truck operators are coming down, so there could be  part payment and postponement of payment. However, this is a part of the cyclical change and every company has to undergo this kind of some disturbed stress level.

For us customer relationship is important, so we manage the NPAs through a good relationship and we are handholding our customers through the crisis or difficult times. So gross NPAs could rise little up but it is not alarmingly bad and we are confident of managing the situation along with the customer. Individual operators do find their own business and they keep running their truck and earn and keep paying us.

Q: You are going to raise money through non-convertible debentures (NCDs) - what is the approximate yield that you will pay as well what is your cost of money for this quarter?

A: We have not decided on the pricing right now because we felt that we should wait till the RBI monetary policy,  only then we will be able to come out with our rate because there are so many other factors affecting the cost.

As far as this quarter is concerned, we have not raised any resources this quarter. So there is no repricing on our cost but overall there is a small jump in the cost in this financial year because of less liquidity.

For this particular quarter, it could be around 10 bps more than the previous quarter, not really big.

Q: How much will margins decline therefore?

A: We are able to pass on the costs to our customers. So there will not be decline in margins for us. We have increased the margin requirement from the customer, so that customer is able to take a smaller loan and repay it. That is our strategy is. We have gone slow but we are able to pass on our cost to the customer.

Q: What is your NPA recognition level now; is it still 180 days by when have you to move to 90 days?

A: It is still 180 days; there is no change in policy as of now, so we are not likely to move till there is a different direction or guidelines from the RBI on the same.

Q: How much loan growth will you do this year?

A: We had given a guidance of 15 percent in the beginning of the year and we would like to maintain that. Even though we had grown a little faster in Q1 but since then, we have been trying to go little slow and trying to put control on our lending by lower loan-to-value (LTV), still we should be able to do that 15 percent growth because demand for used vehicle is quite constant across.

We don't see much slowdown there and also with the coming quarter seeing a good harvest, there will be demand from rural segment.

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