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Tata Steel Swings to 603-cr Q3 Loss

noreply@blogger.com (Akbar Jiwani) — Fri, 10 Feb 2012 05:12:00 +0000

High input costs, weak European demand hit performance

Tata Steel, India's biggest producer, swung to an unexpected loss in its third quarter after raw material costs gained and demand waned in Europe, its largest market.

The loss, including that of unit Tata Steel Europe, was . 603 crore ($122 million) in the three months ended December 31, compared with a profit of . 1,000 crore a year earlier, the Mumbai-based company said. The median profit estimate of 28 analysts in a Bloomberg survey was . 257 crore. Sales gained 15% to . 32,960 crore.
The debt crisis in Europe, which contributes about two-third of Tata's production, has cut steel demand and prices. Global use of the alloy will rise 4.5% in 2012, the slowest in three years, according to the median estimate of 14 steelmakers, analysts and traders surveyed by Bloomberg.
Total costs rose 22% to . 32,550 crore, while raw material expenses climbed 21% to . 12,620 crore in the quarter. Tata Steel earned . 138 crore from sources other than its main business, the company said. Tata Steel Europe chief executive officer Karl-Ulrich Koehler in November predicted a"difficult" third quarter. The European unit, which buys all the raw material it needs from outside suppliers, faced a 17% increase in coking coal prices, compared with a 3.5% increase in the price of steel hot-rolled coils in the last quarter. The company on December 2 said it mothballed the Llanwern hot strip mill in Newport, UK, cutting 115 jobs. The mill will remain shut until the UK economy and steel demand justify a restart, it then said.
Rival ArcelorMittal, the world's largest steel producer, reported on February 7 fourth-quarter earnings before interest, tax, depreciation and amortization fell to $1.71 billion from $1.85 billion a year earlier. That compared with the $1.68 billion median estimate of 16 analysts surveyed by Bloomberg.
Hard Hit

• Total costs rose 22% to . 32,550 crore, while raw material expenses climbed 21% to . 12,620 crore

• Tata Steel earned . 138 crore from sources other than its main business, the company said

• The European unit faced a 17% increase in coking coal prices, compared with a 3.5% increase in the price of steel hot-rolled coils last quarter

GDP growth seen dipping to a 3-year low of 6.9%

noreply@blogger.com (Akbar Jiwani) — Wed, 08 Feb 2012 02:07:00 +0000

New Delhi: India's economy is expected to grow by 6.9% in 2011-12, the slowest pace of expansion in three years, dragged down by sluggish industrial growth and a decline in the mining sector.
    Data released by the Central Statistics Office on Tuesday showed that growth in 2011-12 is estimated to be a shade below the 7-7.5% being projected by policymakers
and below the 9% estimated last year. This is the slowest pace of growth since the 2008-09 global crisis which pushed down India's gross domestic product growth to 6.7%. But the economy recovered and grew 8.4% in 2010-11. GDP numbers may pick up, says FM
New Delhi: The Indian economy, Asia's third-largest, has been hit by stubbornly high inflation, high interest rates, a slowing global economy and policy paralysis in the aftermath of a slew of scandals that emerged last year. Tuesday's CSO data showed that the key farm sector is estimated to grow by 2.5% in 2011-12, lower than the 7% posted in the previous year and below policymakers' expectations. A slowdown in investments hurt manufacturing growth, which is expected to ease to 3.9% in 2011-12 compared to 7.6% in the previous year.
    The mining and quarrying sector emerged as a laggard and is expected to decline 2.2% in 2011-12 compared to a growth of 5% in the previous year. The sector has been hit hard by policy delays and implementation of projects. The construction sector is estimated to grow 4.8%, slower than the 8% registered in 2010-11. Overall, the services sector, which accounts for more than 55% of the economy, is expected to grow by 9.4% in 2011-12, nearly similar to the 9.3% growth in 2010-11.
    Finance minister Pranab Mukherjee said though the advance estimates for GDP for the current fiscal year looked somewhat disappointing, given the recent growth experience, the figure was not all that surprising considering the current global context and the slowdown in the domestic industrial sector. He said there had been some encouraging signs in recent weeks on business sentiments, rupee exchange rate, moderation in headline inflation, possibility of a bumper rabi crop, and continued strong performance of the service sector which should help in recovering the growth momentum.
    The finance minister said he anticipated an upward revision in the GDP numbers when the full data for 2011-12 becomes available. Analysts say the Budget, which will be presented in Parliament on March 16, will hold the key to reviving sentiment and boosting growth. C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said he expected growth in 2011-12 to be around 7% as industrial output was expected to gather pace. "My own estimate is that it would be around 7%. However, there is still a possibility that when the revised estimate comes, it will be slightly higher. Growth will be around 7% or a little above 7%," he said.
    Some economists said they expected growth to pick up in the months ahead on the back of an improving policy scenario, slowing inflation and expectations of lower interest rates. "Looking ahead, we expect real GDP growth to rise to 7.4% yearon-year in FY13 from 6.9% in FY12. High interest rates and elevated inflation—the two key headwinds to growth—should turn tailwinds this year. Government policy remains a joker in the pack," Sonal Varma, analyst at Nomura, said in a research note.

GDP growth seen dipping to a 3-year low of 6.9%

noreply@blogger.com (Akbar Jiwani) — Wed, 08 Feb 2012 01:51:00 +0000

New Delhi: India's economy is expected to grow by 6.9% in 2011-12, the slowest pace of expansion in three years, dragged down by sluggish industrial growth and a decline in the mining sector.

    Data released by the Central Statistics Office on Tuesday showed that growth in 2011-12 is estimated to be a shade below the 7-7.5% being projected by policymakers
and below the 9% estimated last year. This is the slowest pace of growth since the 2008-09 global crisis which pushed down India's gross domestic product growth to 6.7%. But the economy recovered and grew 8.4% in 2010-11. GDP numbers may pick up, says FM
New Delhi: The Indian economy, Asia's third-largest, has been hit by stubbornly high inflation, high interest rates, a slowing global economy and policy paralysis in the aftermath of a slew of scandals that emerged last year. Tuesday's CSO data showed that the key farm sector is estimated to grow by 2.5% in 2011-12, lower than the 7% posted in the previous year and below policymakers' expectations. A slowdown in investments hurt manufacturing growth, which is expected to ease to 3.9% in 2011-12 compared to 7.6% in the previous year.
    The mining and quarrying sector emerged as a laggard and is expected to decline 2.2% in 2011-12 compared to a growth of 5% in the previous year. The sector has been hit hard by policy delays and implementation of projects. The construction sector is estimated to grow 4.8%, slower than the 8% registered in 2010-11. Overall, the services sector, which accounts for more than 55% of the economy, is expected to grow by 9.4% in 2011-12, nearly similar to the 9.3% growth in 2010-11.
    Finance minister Pranab Mukherjee said though the advance estimates for GDP for the current fiscal year looked somewhat disappointing, given the recent growth experience, the figure was not all that surprising considering the current global context and the slowdown in the domestic industrial sector. He said there had been some encouraging signs in recent weeks on business sentiments, rupee exchange rate, moderation in headline inflation, possibility of a bumper rabi crop, and continued strong performance of the service sector which should help in recovering the growth momentum.
    The finance minister said he anticipated an upward revision in the GDP numbers when the full data for 2011-12 becomes available. Analysts say the Budget, which will be presented in Parliament on March 16, will hold the key to reviving sentiment and boosting growth. C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said he expected growth in 2011-12 to be around 7% as industrial output was expected to gather pace. "My own estimate is that it would be around 7%. However, there is still a possibility that when the revised estimate comes, it will be slightly higher. Growth will be around 7% or a little above 7%," he said.
    Some economists said they expected growth to pick up in the months ahead on the back of an improving policy scenario, slowing inflation and expectations of lower interest rates. "Looking ahead, we expect real GDP growth to rise to 7.4% yearon-year in FY13 from 6.9% in FY12. High interest rates and elevated inflation—the two key headwinds to growth—should turn tailwinds this year. Government policy remains a joker in the pack," Sonal Varma, analyst at Nomura, said in a research note.

HEAVY DISCOUNTS, MARKET RALLY BRING BACK BUYERS

noreply@blogger.com (Akbar Jiwani) — Tue, 07 Feb 2012 05:31:00 +0000

Revival Hopes Take Wing as Shoppers Throng Street

Consumer electronics, automobile and lifestyle retail chains see double-digit sales growth in Jan

Sales of consumer electronics, cars and lifestyle products bounced back in January after a tough quarter, raising hopes of a revival in consumer sentiment in 2012.

Companies, including Samsung, Nokia, Hyundai Motors and Reliance Retail, have reported up to double-digit sales growth in products such as flat-panel televisions, smartphones, cars and fashion garments in January, as aggressive discount offers on the back of a recovering stock market and appreciating rupee lured shoppers back to the main street.
"Not just consumer but overall economic confidence has also picked up in January due to a host of factors such as rupee appreciation, stock market and some policy-level changes like singlebrand FDI," says Godrej Group Chairman Adi Godrej. "So the fear of declining stock market and rupee depreciation has been replaced by positive consumer sentiment, which is interlinked and is reflecting in healthy consumption," he adds.
Shantanu DasGupta, durable maker Whirlpool's VP (corporate affairs & strategy-South Asia), says sales increased across product categories in January. "While demand has been bullish across the country, certain pockets in the north and west performed exceptionally well. The summer looks positive," he says.
Carmakers too are upbeat after a tough 2011 when sales rose just 4.24%. Companies are optimistic that new models and stable interest rates on loans could bring back the boom.
"The new year seems to have started on a positive note," says Hyundai Motor India Director (marketing and sales) Arvind Saxena. Hyundai saw a 12% jump in sales to 33,900 cars in January. But marketers are still cautious. Several segments are still growing on the back of heavy discounts and end-of-season sales.
TRIGGERS FOR REVIVAL
Rupee gains 7.45% against US dollar in January, its best monthly gain in 17 years Sensex rises 11.3% in January, its highest gain in January in 18 yearsForeign funds' net inflows at $2.1 b after net outflows of about $500 m in 2011 RBI cuts CRR from 6% to 5.5% Inflation falls to 7.5% in December from 9.1% in November, food inflation in negative zone
Consumer durables makers stabilise
prices on lower commodity costs Heavy discounts across categoriesApparel retailers advance end-of-season offers to lift waning salesConsumer Sentiment not Clear Yet
Analysts say consumer sentiment is not clear despite the positive signs. "The environment is still challenging," says Anand Ramanathan, associate director at management consultancy KPMG. "Interest rates are high and consumer sentiment remains uncertain," he adds. Sandeep Kulhalli, VP-retail and marketing at Titan Industries' jewellery chain Tanishq, says, "Much of the positiveness is because the whole market is on discount offers." All eyes are now on the Budget over whether the growth momentum in January will sustain over the next quarter by increasing disposable incomes or moves to boost demand.
RUPEE IMPACT
The rupee's gain in January after a downward spiral in the second half of 2011 helped stabilise prices of consumer durables and electronics products, which require imported raw materials, and boost demand. Korean electronics maker Samsung's flat-panel television sales grew 50% over last January and more than 85% compared with December 2011.
"The rupee stabilising against the dollar is one factor for higher sales," says Samsung India VPhome appliances Mahesh Krishnan. Rupee depreciation had prompted several companies to increase prices by 5-10% in several tranches late last year. The personal computer market bounced back to low double-digit growth in January. Several brands also cut prices that brought back market into shape, says S Rajendran, Acer India chief marketing officer.
NEW LAUNCHES TOO HELP
The country's largest phone maker, Nokia India, launched five new devices under Lumia and Asha series that boosted sales in January, both over last year and compared with November-December.
Sunil Dutt, MD of Research in Motion India, which makes Black-Berry smartphones, says smartphone sales increased 40-50% since the second week of January compared with a flat November-December 2010. "The market is back to its natural growth momentum." Bijou Kurien, president and CEO of Reliance Retail-lifestyle, says good performance of export and IT firms in the third quarter had a rub off on consumer confidence in terms of bonuses and increments. J Suresh, MD and CEO of Arvind Brands and Retail, however, cautions that it would be best not to get carried away by performance in the end-of-season sales period.

HUL Q3 profit up 18% at 754 crore

noreply@blogger.com (Akbar Jiwani) — Tue, 07 Feb 2012 05:14:00 +0000

Profit Rises On Price Hikes, Higher Volumes, But Growth Slower Than Q2

Mumbai: Buoyed by a mix of product price increases and volumes, fast-moving consumer goods (FMCG) major Hindustan Unilever (HUL) posted an 18% growth in net profit at Rs 754 crore for the third quarter ended December 31, 2011, compared to Rs 638 crore in the corresponding period last year. Net sales rose 16% to Rs 5,853 crore from Rs 5,027 crore during the period. Trebling of its rural reach as well as the expansion in the number of urban outlets bolstered growth in the December quarter, said the maker of Lux soap, Dove shampoo and Lipton tea.

    During the quarter, domestic consumer business grew at about 17% with an underlying volume growth of 9%. Soaps and detergents grew by 21% with growth ahead of the market, with laundry registering a double-digit growth across all brands. Personal products delivered a broad-based volume led growth of 14%, with Fair & Lovely, Vaseline and Ponds growing in double-digits. The company's growth in hair care was steered by Dove, Clinic Plus and Clear; however, oral care registered a modest growth in a competitive environment. Beverages, on the other hand, delivered competitive growth of 11% with both tea and coffee growing in double digits, while packaged foods grew by 14%. However, the performance of Knorr soups was muted during the quarter on account of slowdown in the market.
    However, the topline and bottomline growth in the December quarter is a tad lower than what HUL posted in the September quarter. Inflationary pressures during the third quarter were primarily on account of currency depreciation. The company said cost pressures were managed dynamically through aggressive savings programmes coupled with judicious pricing. The intensity of competitive environment pushed HUL to continue investing behind brands with advertising and promotion at nearly 12% of its turnover.
    "We have delivered another strong quarter of competitive growth with improvement in margins. The results, delivered against a backdrop of an uncertain economic environment, are reflective of the strength of our brands, consistency in our strategy and relentless focus on execution. We will continue to manage our business dynamically to deliver competitive, profitable and sustainable growth," said Harish Manwani, chairman, HUL.
    Despite the challenging environment, operating profit margins improved by 2.3% during the quarter. HUL's scrip declined 3.5% on BSE on Monday to close at Rs 387.

India’s stable rating faces risk: S&P

noreply@blogger.com (Akbar Jiwani) — Tue, 07 Feb 2012 05:14:00 +0000

High Inflation, Weak Fiscal Position, Sluggish Growth Weigh On Outlook

New Delhi: India's stable rating outlook faces some challenges due to high inflation, weak fiscal position and slower economic growth, a report by global ratings agency Standard &Poor's cautioned on Monday.

    The warning came in a report titled 'Several Factors could weigh on India's Current Stable Rating in 2012'. S&P has an investment grade BBB- rating for India.
    "Standard & Poor's Ratings Services doesn't expect to revise the rating outlook on India in the near future. However, if the Indian government fails to address the structural problems in the economy and growth prospects decline significantly in the medium term (several years), the sovereign rating could come under pressure," the report said.
    It said India, like many countries, was facing some challenges on a few fronts, and the balance of risk factors for the sovereign credit rating may be shifting slightly to wards the negative. "High inflation, a weak government fiscal position, and slower economic growth have hurt in vestor confidence in the rupee, triggered a capital outflow, and weighed on the stable sov ereign outlook on India in 2012," the report said.
    "Our stable outlook on the 'BBB-' long-term rating on India currently reflects our expectation of strong economic growth in the medium term and gradually improving fiscal performances," said Takahira Ogawa, ratings analyst at Standard & Poor's. "We have factored in inflation and political uncertainty, which may lead to higher government subsidies and stalled reform efforts," he said.
    The report said, given the nature of its coalition, the Indian government's ability to implement policies has weakened due to the slow and complex decision making. The report said it expects the implementation of the Goods and Services Tax to be delayed further.
    "In our view, how and to the extent to which the UPA government can implement measures will be vital to boosting confidence in India," the report said. It added that weaker economic growth prospects and high commodity prices could hurt the government's fiscal consolidation efforts.
MILD THREAT
Govt has found it difficult to implement policies
General government deficit to remain high
Balance of risk factors for stable sovereign rating (BBB-) maybe shifting slightly towards negative Weak global markets, European debt problems could add to pressure
GDP growth estimated at 6.8% for 2011-12 and 6.5% for 2012-13
Consolidated government deficit estimated at 8.5% of GDP in 2011-12 and 8.1% in 2012-12
India's medium-term growth prospects remain strong, positive rating factor

LIC may Step in to Bail out Small Govt Banks

noreply@blogger.com (Akbar Jiwani) — Mon, 06 Feb 2012 09:38:00 +0000

Recapitalisation move by public sector insurance co may help govt retain its holding in banks indirectly

Sandwiched between an urgent need for capital and a financially wreck owner, small state-run banks will knock on the doors of Life Insurance Corporation as they prepare to sell new shares to raise funds, said three people familiar with the plans. Dena Bank and the Bangalore-based Syndicate Bank may be the first among nearly a dozen small public sector banks which will sell shares in the next few months to raise a few thousand crores, they said.
LIC, the biggest institutional investor in India with annual equity investments of about . 40,000 crore, will walk along with the government in capitalising the banks which are facing a rise in bad loans and demands for restructuring loans.
The government, which is set to breach its own fiscal deficit target of 4.6% of the gross domestic product by a percentage point, has committed . 18,000 crore for recapitalisation of large banks such as State Bank of India, Punjab National Bank and Central Bank of India.
"There is a chance that LIC may step in to support the government," said an executive with a bank that hasn't received any government commitment on capital. "The pricing will be based on a Sebi formula and therefore it does not leave any room for speculation."
A government starved of resources and a weak equity market despite a 14% rise this year are hampering the fund raising plans of public sector banks. With the government unwilling to see its holdings fall, it is leaning on LIC to buy shares. This could be comforting for the government, which could indirectly retain its ownership of banks and without any stake dilution.
"The expectation of equity injection provides some stability to the viability ratings of government banks, particularly as the base case stress scenarios do not envisage a loss for most Indian banks under the expected non-performing loans rise in 2012,'' Fitch Ratings said in a recent note. Dena Bank board meets on Monday to consider a share sale to insurance companies and government-sponsored mutual funds. Syndicate Bank, in which LIC holds over 10%, will consider a share sale to the government or others on February 11 .
The government has so far allotted Rs 7,900 crore to SBI, Rs 1,285 crore to PNB and Rs 700 crore to Central Bank of India. Union Bank of India and Indian Overseas Bank too have received commitment on capital, but not the size of support.

Cancel Leases of 49 Mines, Says SC Panel

noreply@blogger.com (Akbar Jiwani) — Mon, 06 Feb 2012 09:36:00 +0000

KARNATAKA ILLEGAL MINING INVESTIGATION

SC-appointed committee says the mines violated terms of their licence

Acommittee set up by the Supreme Court tasked with investigating illegal mining in Karnataka has submitted its final report containing recommendations that could radically change how mining is done in the country and jeopardise planned investments in steel plants in the southern state.

The Central Empowered Committee, in its report submitted on Saturday, has recommended the cancellation of leases of 49 mines that have violated the terms of their licence.
It is also believed to have recommended the auction of these leases, according to people familiar with its contents. These mines produce up to 10 million tonnes of iron ore per year.
The people familiar with the report said 45 mines cleared of any wrong doing will be allowed to mine as soon as the ban is lifted, while 72 other mines will resume only after they have paid penalties.
The collected fines could be used to establish a Sustainable Mining Development
Fund and setting up dedicated mining infrastructure for the area. A moratorium on future leases until the state has recovered forest lost to illegal mining and established dedicated mining infrastructure, is also on the cards.
The CEC is also believed to have agreed with a report by the Council for Forest Research and Education that had recommended capping iron ore production in Karnataka at 30 million tonnes.
The report, commissioned by the apex court, had said this was the state's so-called carrying capacity, meaning that production beyond 30 million would cause irreparable damage to the environment.
However, accepting this figure, which meets current requirements, would leave little room to accommodate planned investments of players such as Arcelor-Mittal and Posco.
Two years ago, Karnataka signed a long list of MoU's with NMDC, Bhushan, Tata Metaliks, Adhunik and Kirloskar for setting up steel plants. These MoUs largely committed the state to providing captive iron ore mines to meet a part of the requirement of these proposed plants. Before the court banned all mining activity in the state in July 2011, the state is believed to have been on the verge of recommending captive blocks for ArcelorMittal, JSW and state owned KIOCL in the Ramandurg area, which has rich deposits of iron ore.
Both Posco and ArcelorMittal have in the past maintained that they would not be putting up a plant without access to captive iron ore. If the court accepts the regional cap and moratorium on new leases, steelmakers could be waiting a long time while for their promised mines. "The report seeks to fix permanently the weakness in existing frameworks that were abused for illegal mining to this extent, so that the Supreme Court need not intervene all the time," said a person familiar with the recommendations. There could be suggestions for the Indian Bureau of Mines which did not monitor individual mines leading to many producing beyond their licenses capacities.
The Supreme Court has so far only allowed state miner, NMDC to produce a million tone of ore a month.
meera .mohanty @timesgroup .com

Pvt Labels Pip National Brands in Own Stores

noreply@blogger.com (Akbar Jiwani) — Mon, 06 Feb 2012 09:33:00 +0000

Hit by soaring inflation & uncertain economic condition, consumers opt for best bargain

Private labels owned by retailers such as Bharti Retail, Future Group and Aditya Birla Retail outsold several national brands in home care and packaged food categories at their retail stores as value conscious consumers opted for best bargain in an uncertain economic condition and soaring headline inflation despite consumer goods companies aggressively betting on modern retail to drive future growth rate.

For instance, Bharti Walmart's private brand 'Great Value' top tops the floor cleaner segment with 50% share and are in the top three selling spot in terms of market share in categories such as tea, wheat flour, rice and branded snacks according to Nielsen latest retail index service during July-September 2011 period for the India FMCG Private Label market.
"Customers have begun to like private labels due to better quality, high food safety standards, international look and feel of products, customized packaging created after customer feedback and the credibility of the retailer," said William Savage, chief merchandising officer, Bharti Walmart, which has Private labels owned by retailers such as Bharti Retail, Future Group and Aditya Birla Retail outsell several national brands in certain home care and food categories at their retail stores even as big brands push more sales through modern retail.
In the country's largest retailer Future group's Big Bazaar and Bharti Retail's Easy Day outlets, for example, private labels Clean Mate and Great Value, respectively, top the floor cleaner segment, according to market researcher Nielsen's data for July-September 2011 period, the latest available. Coming at a time when national brands increasingly bet on modern retail to drive their future growth, analysts say even large manufacturers such as Hindustan Unilever and Reckitt Benckiser are impacted.
"In short term, national companies will have to either go for promotions or discounting to fight back market share," says Gautam Duggad, an analyst at brokerage Prabhudas Lilladhar. "But it also means losing margins and that's a trade-off call the companies will have to take," he adds.
While retailers attribute the success of their own brands to value offers, good packaging and their increasing credibility, consumer product makers say private labels are gaining mostly in low-involvement categories.
QUALITY AT LOW PRICE
"Customers have begun to like private labels due to better quality, high food safety standards, international look and feel of products, customized packaging created after customer feedback and the credibility of the retailer," said William Savage, chief merchandising officer, Bharti Walmart, which has over 35% market share in wheat flour segment, close to 22% in tea and 20% in salty snacks, or namkeen (see table).
Private labels are mostly priced much lower that branded products because of substantial marketing and distribution savings. Retailers make up for
lack of media marketing through in-store promotions and prominent display.
In Big Bazaar stores, which started selling own brands four years ago, private labels are among the best sellers in at least a dozen product segments. Future Group Chairman Kishore Biyani believes its brands such as tasty treat and Clean Mate are now established. "Three years ago, our private label sales grew mainly because of experimentation and trials by consumers. But now, sales are driven by repeat purchases," says Biyani. "We have quality products packed innovatively, priced attractively and placed strategically at our retail stores. So the success of private brands is a combination of all four Ps," he adds.
Aditya Birla Retail CEO Thomas Varghese says its More Value and More Choice brands have got good traction after the firm repositioned its private labels two years ago. Its private label pickles, with the widest range of regional variants, outsell the likes of Mother's Recipe and Priya Pickles in More outlets. Hand wash, toilet and floor cleaners and disposable tissues are among the other segments More brands are among the best sellers.
MARKETERS UNFAZED
While companies such as Dabur, Emami and Parle acknowledge that private labels are gaining ground, they say it's on segments where product differentiation is low and have relatively lower shopper involvement in purchase decisions, and that it will be tough for retailers to challenge national brands in high-involvement segments.
"When it comes to foods or personal and beauty care products, consu1mers have been loyal to branded items and will continue to remain so," Dabur India Ltd Executive Director—Sales George Angelo says. He expects retailers to reduce product launches and rationalise range in this space.
Emami CEO Krishna Mohan says it will be difficult to make strong private labels in personal care and over-the-counter health care segments because they require stronger consumer understanding and brands will need to innovate to provide extra benefit to consumers. But he expects retailers to eventually get there. "We are sure they are working on the same and eventually will venture into these categories which are huge."
Private brands already account for close to 7% of modern trade sales in India, compared to 1% in China, according to a Nielsen survey that covered more than 50 countries last year.
And the scope is huge. Private brands account for more than 40% of the total sales of the world's largest retailer Walmart. The rise of private labels comes at a time when modern retail is increasing its contribution to the top line of most consumer goods firms. For instance, the country's largest consumer goods company HUL gets around 12% of its . 20,000-crore annual sales by selling goods at modern retail stores compared with just 5% four years ago.

Three years ago, our private label sales grew mainly because of experimentation and trials by consumers. But now, sales are driven by repeat purchases. We have quality products packed innovatively, priced attractively and placed strategically at our retail stores
KISHORE BIYANI
Chairman, Future Group

LIC may Bail out Fund-starved Banks

noreply@blogger.com (Akbar Jiwani) — Mon, 06 Feb 2012 09:32:00 +0000

DENA, SYNDICATE MAY SOON SELL SHARES

Sandwiched between an urgent need for capital and financially wrecked government, small state-run banks will knock on the doors of the Life Insurance Corp as they prepare to sell new shares to raise funds, reports Sangita Mehta from Mumbai. Dena Bank and Syndicate Bank may be first among nearly a dozen small PSU banks that will sell shares in the next few months to raise a few thousand crores.

The Man who Mints Money from Metal

noreply@blogger.com (Akbar Jiwani) — Mon, 06 Feb 2012 09:30:00 +0000

Man Behind the Scenes Away from the spotlight, Tarun Jain has been stoking Anil Agarwal's growth engine for 25 years

In April 2007, Anil Agarwal, chairman of the London-listed Vedanta Resources, threw a private party in a south Mumbai hotel to celebrate the acquisition of Sesa Goa from Mitsui of Japan. Amidst a swarm of 200-odd people, a gentleman of middle age and medium height was seen taking Agarwal around and introducing him to guests, mostly pinstriped bankers. When not in Agarwal's company, the man would retreat to a corner, with a lime juice for company.

The bloke in the corner is at Agarwal's side not just at such glitzy shindigs but at virtually every step of Vedanta's growth path. That's Tarun Jain, 51, who is never in the spotlight but almost always the reason for it.
Jain hates crowds and speaks little, but don't let that fool you. He's the finance whiz who has implemented Agarwal's growth ambitions for 25 years. He's the bean counter-turned-game changer who has been at the forefront of executing Agarwal's vision of transforming a small cable company into a $11-billion global conglomerate with interests in mining, metals and energy. Ask Jain to list out his accomplishments and he's likely to dismiss it with a shrug. "Our chairman is a visionary. We are in charge of execution," is all that he would say when this writer met him with a request for an interview, which he turned down. Jain Has a Commonsensical Approach
A finance whiz, Jain has helped Agarwal realise his dream of a global conglomerate
Agarwal too did not participate in this story. Emails sent to his office and subsequent followups failed to elicit a response.Indeed, both Agarwal and Jain are private people. Another similarity: they are humble yet aggressive. But that's where the likeness ends. If Agarwal sees the large canvas, Jain is the nuts and bolts man, fitting pieces big and small into the big picture — a perfect recipe for a high-octane growth formula. "They complement each other," says a person who has worked closely with them for a few years at Sterlite Industries, Vedanta's flagship in India.
"Jain's approach to work is commonsensical," says Vallabh Bhanshali, founder-chairman of Enam, a Mumbai-based financial services company. "He identifies himself with the cause of the organisation, uses his intelligence for the cause, and works for the company and its founder." Jain's minimalist manners and garb — he's dressed in a regular full sleeves shirt on most days in office and puts on a jacket when he goes out for a meeting — are in stark contrast to his reservoir of experience. In nearly 30 years as a finance professional, he has risen from a company secretary and chief accountant to a finance director.
Till March 31, 2011, he was director (finance) at Agarwal's Indian metals and mining flagship Sterlite Industries. He's now in the chairman's office in a more strategic role that goes beyond finance matters.
But finance is the arena in which Jain has earned his biggest spurs over the past 25-odd years. He's helped raise money for new projects and to finance big-bang acquisitions inside and outside India with a slew of one-of-a-kind finance instruments. These range from an initial share sale of Sterlite at a premium in 1988 to the listing of the company's shares on the New York Stock Exchange in 2007, to a $2-billion issue of American depository receipts in the same year. He was also at hand when Agarwal had to raise some $8 billion to finance the acquisitions of Sesa Goa and Cairn India.
"His creativity does not allow him to accept anything only because it's popular or it's established," says Bhanshali about "kid brother" Jain, whom he knows since the latter's early days in Sterlite.
"Tarun may not have invented everything but he definitely has implemented everything in finance," adds the Enam chairman.
Yet, at times, the group's financial ingenuity hasn't found all-round approval — not from small investors, for sure. In 2002, Sterlite earned the wrath of minority investors when it appeared to be forcing them to tender their shares by mailing cheques to them; the company had to withdraw the proposal because of the ensuing protests.
Six years later, investors were once again up in arms against Vedanta's proposal to restructure businesses of Sesa Goa, Sterlite and Madras Aluminium into three commodity-focused groups. Minority shareholders in Sterlite, in which Vedanta holds a little over 60%, felt they were being short-changed because the new structure would increase their exposure to seemingly riskier assets (such as mines in Zambia) and reduce their presence in the fastergrowing domestic aluminium business. The company shelved the plan.
The flip side: investors are richer for the efforts of the Agarwal-Jain duo. A . 100 investment in Sterlite's initial offering in 1988 would have burgeoned to a little under . 87,000 today. You could attribute some of Jain's acumen in creating wealth to his quest for academic excellence. He regularly topped the class in school, was a gold medallist at the under-grad level and a ranker holder in the CA and CS programmes. The small-town boy from Rajasthan's Ajmer district moved to Mumbai along with three friends when he was a second-year student of BCom. From the refuge of hostels in the city, Jain would put 18 hours daily into his studies. His first job was with Indian Rayon, a part of the Aditya Birla Group, as a management trainee. He lasted nine months there till he was asked to shift to an upcoming cement unit in Karnataka. He then moved to real estate firm Kalpataru; and then to Sterlite in 1984 when Anil Agarwal and his brother Navin were running their cable firm out of a 2,500 sq ft office in Mumbai's Nariman Point.
Anand Rathi, founder-chairman of the eponymous financial services firm, was a president at the Birla company when Jain left. Rathi says he was impressed with Jain's decision to leave a big group. "It showed that he was focused on what he wanted to achieve," says Rathi, who remembers him as "a man of numbers, with an eye for detail and a quiet risk-taker".
Risk-taking is a passion for Jain when he is outside the Vedanta universe. A person close to him says Jain is an active investor in equities. Bhanshali points out that Jain's market-related activities are aimed at giving back to society. "He once took me to the Andheri hostel where he once stayed and told me he wants to do something for the students there," Bhanshali adds.

TARUN JAIN
BCom, CA, CS & ICWAI
DoB: 6th March, 1960 Marital Status: Married Kids: Two kids. Daughter is an MBA student while son is doing CA Interests: M&A, legal and regulatory compliance and risk management What he Loves: Equity What he Hates:Gossip

Should you buy these bonds?

noreply@blogger.com (Akbar Jiwani) — Mon, 30 Jan 2012 01:15:00 +0000

Both Hudco and IRFC bonds offer good tax-adjusted returns, but retail investors should buy only if they don't plan to sell them on listing.

The recently ended tax-free bond issues from the National Highways Authority of India (NHAI) and Power Finance Corporation (PFC) have received a good response from all categories of investors, especially the high net worth individuals (HNIs) and institutional investors. While this helped the infrastructure companies to close the issues in advance, it left many retail investors in a quandary because they were waiting to apply at the last minute. As the interest rates have started declining after the issues, experts hope that these bonds will start trading at a premium to their issue prices. "The listing premium of NHAI/PFC bonds should be around 2-3%," says Vikram Dalal, managing director, Synergee Capital Services. However, retail investors don't have to enter the secondary market to buy the NHAI/PFC bonds because two more tax-free bond issues are currently available in the primary market. These are from the Housing and Urban Development Corporation (Hudco) and Indian Railways Finance Corporation (IRFC).

Why you should rush
Though the closing date for the Hudco issue is 6 February, and for the IRFC issue, it's 10 February, investors are advised to submit their applications at the earliest. This is because the probability of an early close in this case is also very high and, therefore, anyone waiting for the last minute is likely to be disappointed. As per the offer documents, the issuer has the right to close before the stated date, subject to the condition that it remains open for a minimum of three days. There is also another reason for this rush—both Hudco and IRFC bonds will be alloted to the investors on a first come, first serve basis upto the limit reserved for each category of investors. So, the early birds will get the allotment.
Lower rate
The retail investors who apply for these bonds, including the Hindu undivided families (HUFs) who can invest up to 5 lakh should be a little more careful this time. This is because the higher rate offered to retail investors is applicable to the first allottee only. Anyone who buys these bonds from retail investors will only get the lower rates applicable to other investors' category. This implies that the price offered will also be less, so you should be ready for a much lower listing premium compared with that of the NHAI/PFC bonds. Though this should not affect the long-term investors, who are ready to hold these bonds till maturity, it may be a hindrance for those who want to sell it on listing.
Other features
Note that there is no cumulative option in these bonds and the interest payment will be on an annual basis. Though these bonds are available in dematerialised form, investors can also apply for them in the physical form, if they so desire. The minimum investment amount is 10,000 for Hudco and IRFC, but there is a minor difference. In the case of Hudco, investors can subsequently apply in multiples of 1,000, while for IRFC, it has to be in multiples of 5,000. There is also a difference in their rating levels—while IRFC is AAA rated, Hudco is only AA+ rated. "Since both are central government undertakings, there is no problem with their credit quality," says Dalal. Since Hudco is offering a bit more, you can settle for it, especially ifyou have to choose between the two due to lack of resources.
Lock in at higher yields
The timing of these bond issues is very important. The RBI has cut the cash reserve ratio in its previous policy review meet, and it is only a matter of time before it begins cutting the key policy rates. So, this is the right time to buy for investors who want to lock in at the existing high yields. Since bond price rates and bond yields are inversely related, the fall in interest rates will push up the prices of these bonds. Hence, these bonds also offer a good long-term trading opportunity to investors who want to apply now and sell it after 1-2 years after most of the rate reduction is over. "Once the interest rates start coming down, the prices of these bonds will start going up. Since the interest rates are expected to come down in the next 1-2 years, the combined return on these bonds, that is, the capital gain and interest earned, should be much higher for a 1-2 year holding period," says Virendra Kothari, managing director, Etica Wealth Management.
Who should apply?
Remember that these are tax-free bonds, not tax-saving infrastructure bonds and, therefore, the amount invested will not be allowed as deduction from your total income. While the interest is tax-free in these bonds, the interest earned on tax-saving bonds is taxable. So, these will be more beneficial for investors who are in the higher tax brackets. The pre-tax yield for retail investors who are in the highest tax bracket works out to be 12.01% for IRFC bonds and 12.08% for Hudco bonds.

Ambani Bros may Plan a Joint CBM Play

noreply@blogger.com (Akbar Jiwani) — Mon, 30 Jan 2012 01:07:00 +0000

RIL & Rel Power have held initial talks to minimise costs by developing common infra for their blocks

RAJEEV JAYASWAL NEW DELHI

Mukesh Ambani's Reliance Industries and his younger brother Anil's Reliance Power have held initial talks to jointly develop their adjoining coal-bed methane (CBM) blocks, giving the estranged brothers another opportunity to join forces apart from the potential handshake in the telecom sector.
Executives of RIL and Reliance Power confirmed that the two companies had initiated discussions a few months ago to optimise costs by developing common infrastructure at the contiguous CBM blocks in Madhya Pradesh. But talks were preliminary and so far they have not made significant headway, they said. Cash-rich energy major RIL, which has the skills to drill on land and the deep sea, is close to starting production from its Sohagpur CBM block in 2012-13 and is locked in a dispute with the oil ministry over CBM pricing. It does not want to talk about collaboration. "We will not offer any comments," a spokesman said. Reliance Power said it was open to cooperation. "The company always evaluates possibilities of cooperation with other organisations in the zone of our investment area for expeditious execution of our projects," it said in response to a specific query from ET on cooperation in CBM with RIL.
The Ambani brothers, who fought an acrimonious, public battle after they divided the business empire, had issued a joint statement in May 2010 saying that they had cancelled non-compete arrangements between them and hoped to create "an overall environment of harmony, co-operation and collaboration between the two groups".
ET had reported in November that Reliance Industries was likely to use the towers and fibre optic cables of Anil Ambani's telecom company to provide high-speed data services, although this would not involve any equity investment. Last month, the Ambani family got together in a public display of bonhomie on the birth anniversary of their father, but no business announcements followed. Industry officials said that compared to the telecommunication sector that has a grand, country-wide operation, CBM, which involves commercial extraction of methane gas trapped in coal deposits, is a new and relatively small business. Companies such as RIL have opposed the government's move to tightly control CBM sales and pricing. RIL has opposed the oil ministry's directive that the government will choose the customers with whom it can negotiate prices — a constraint that the company says is a contractual violation that restricts its ability to recover costs. Reliance wants to use the pricing formula prevalent in LNG trade, which the government has opposed. According to oil ministry officials, RIL has completed CBM exploration activities and is expected to start gas production from Sohagpur fields in 2012-13. The government has approved development plans for RIL's Sohagpur blocks, an official said. Reliance Power has drilled about a dozen exploration wells in Sohagpur-East and plans to enter the next phase of drilling test wells to finalise the field development programme. The peak gas production from the three blocks is estimated at around 7 million standard cubic meters per day (mmscmd), about one-fifth of current output from RIL's KG-D6 block. While RIL has two blocks — Sohagpur-West and Sohagpur-East — Reliance Power has one block, Sohagpur-North.
RIL bagged the two Sohagpur blocks in the first CBM bidding round in 2002. The West block has an area of 500 sq km, while the east block is spread on 495 sq km. RIL holds 100% interest in the two blocks. The government had awarded Sohagpur-North block to the Reliance Power-led consortium in September 2006 under the third bidding round. Geopetrol International is its partner in the project with 10% stake in the block, with an area of 609 sq km. India has the world's fourth-largest coal reserves, which are estimated to hold about 92 trillion cubic feet of coal-bed methane. The government has awarded over 30 CBM blocks and Great Eastern Energy-operated Raniganj block is commercially producing CBM.

Sebi Probes Patni Delisting on Shareholders’ Complaints

noreply@blogger.com (Akbar Jiwani) — Mon, 30 Jan 2012 01:06:00 +0000

Some shareholders have complained that iGate has announced plans to delist Patni without first reducing stake to 75%; Phaneesh Murthy says co has got nod for all its plans

The capital market regulator is inquiring if technology outsourcer Patni Computer Systems can delist without lowering its promoter stake to 75% as mandated by law.

The move follows complaints by some shareholders in Patni alleging that USbased software maker iGate has violated norms by announcing delisting of the Indian company without first paring its stake from 83% to 75%.
"The regulator is looking into it after some shareholders complained," said a person familiar with the matter.
In a public announcement on January 11, 2011, iGate had said it would delist Patni shares, after completion of the open offer, under the Sebi (Delisting of Equity Shares) Regulations 2009. But Sebi objected to the delisting after the open offer. The regulator, however, approved the open offer after the acquirer gave a commitment that it will not delist Patni without bringing down its stake.
"Sebi cleared the open offer after an understanding that it will not delist the company without bringing down the promoters stake to 75%," said a merchant banker familiar with the issue. He said after this, Patni released a corrigendum in newspapers on March 30, 2011, withdrawing its earlier announcement to delist.
After the open offer, the shareholding of the acquirers reached around 83%. However, on November 16, Patni again announced its plan to delist by bringing down the promoter stake.
iGate Patni CEO Phaneesh Murthy told ET: "We have followed all laws and havegot all approvals for whatever we are doing." Sebi did not respond to ET queries.
Murthy has repeatedly said in the past that the company will bring back the shareholding of promoters in line with regulations. 'Yes, whatever are the current norms… we will comply with them and one of the norms, like you said, is very clear that we have to try and bring it down to 75%. You typically get a year to plan that out and do that. So we do not anticipate that we will be running foul of any of the regulators," he had told ET NOW on June 28, 2011.
According to a ministry of finance notification, "every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of one year from the date of such fall." Patni scrip touched a one-year low of . 250 in August last year due to bad market conditions and news that shares will not be delisted before bringing down the promoter stake. It closed at . 466 on Friday.
An iGate-led consortium had clinched a deal to buy nearly 63% stake in India's sixth-largest IT firm Patni Computer for about $1.2 billion by buying the entire 45.6% stake of Patni brothers — Narendra Patni, Ashok Patni and Gajendra Patni — along with General Atlantic's 17.4% stake. The acquirers also bought another 20% from the public at . 503.50 a share via the mandatory open offer route.

Nasscom Sees Cloudy Skies for Indian IT

noreply@blogger.com (Akbar Jiwani) — Mon, 30 Jan 2012 01:04:00 +0000

Exports may shrink in 2012-13 as clients hold back spending due to uncertain environment

HARSIMRAN JULKA & SHRUTI SABHARWAL

The apex body of Indian technology companies is likely to forecast a slowdown in software exports in 2012-13, as corporations keep a wary eye on the global economic uncertainty and control expenses on information technology outsourcing.

"As of now, two things are certain: we might not be able to beat the upper end of this year's forecast, and it's unlikely the industry will grow any faster next year," said an official at the National Association of Software and Services Companies, or Nasscom.
The person requested anonymity because he was not authorised to share projections before Nasscom's annual summit in Mumbai in February.
"Double-digit growth for financial year ending March 2013 would be a safe prediction," the official added.
Nasscom's members, which include companies such as Infosys, Tata Consultancy Services and Wipro, are struggling to provide clarity about demand. In a normal year, Nasscom officials are more or less certain about the growth forecast by the end of January. But this time companies are still negotiating with customers on outsourcing budgets.
Usually, Nasscom compiles forecasts from member companies, both Indian and multinationals, by January, and polls top analysts before giving its annual growth projection for the Indian IT industry sometime in February.
"It doesn't look as robust. The picture is hazy this year. You can't see the goal unless the road is clear. We might revise it upwards during the year, if the picture becomes clearer," said another official. He added that companies are yet to submit revenue forecasts for the year, so an accurate prediction is not possible now. India's IT services and BPO exports were predicted by Nasscom to grow 16-18% in 2011-12 to $70 billion. The industry is likely to meet the target.
V Balakrishnan, chief financial officer of Infosys, said clients have become cautious because of the uncertainty. Even though they have the budgets to spend, they may not do so, leading to fluctuations in forecasts by companies.
"In such an environment, forecasting becomes a problem more than anything else because unlike earlier, growth does not come in a straight line," he said. Research firm Gartner has lowered its IT spend forecast from 4.6% to 3.7%. US, Europe still in Turmoil
"US dollar-based IT spending in western Europe will contract in 2012 as the ongoing political uncertainty and a mild recession lead businesses and consumers in Europe to be cautious in the coming months about spending on IT products and services," said Richard Gordon of Gartner.
Mid-sized tech company Mind-Tree is of the view that the depreciation of the rupee is hitting multinational software outsourcing firms, which contribute a significant portion of India's total IT exports.
"If you look at most of the large Indian IT companies, they are growing at the upper end of Nasscom's guidance, so the problem is not there. What is impacting overall growth is that for multinationals and large US companies' captives, growth has been impacted because of the significant rupee depreciation," CFO Rostow Ravanan said.
Outsourcing experts believe business started slowing down in mid-2011, and is yet to pick up momentum.
Amneet Singh, vice-president of global sourcing at Everest Group, said total outsourcing activity in 2011 would be marginally lower than 2010, impacting the entire industry.
"We are not seeing any positive indicators; the momentum is still weak. The US has political problems and Europe has the sovereign debt crisis which will continue to impact growth even in calendar year 2012."

Sari cancer a threat for women: Docs

noreply@blogger.com (Akbar Jiwani) — Mon, 30 Jan 2012 01:03:00 +0000

Mum Medics Cite Three Instances

Chennai: The next time you drape a sari, you might want to re-tie that petticoat knot. According to an article in the November issue of the Journal of the Indian Medical Association, doctors at Grant Medical College (GMC) in Mumbai have reported cases of what they are referring to as 'sari' cancer.

    "We have treated three women for waist or sari cancer in the past couple of years," says author of the article Dr G D Bakhshi, who is an associate professor of surgery at GMC. He authored the piece with colleagues Dr Ashok D Borisa and Dr Mukund B Tayade. While two of the patients diagnosed a couple of years ago are mentioned in the article, the third was detected three months ago. All the women were above the age of 40.
    "The sari petticoat, if tied in the same place day after day, can cause chronic irritation along the waistline," says the report. "The constant irritation can result in scaling or pigmentation. But most sariwearers don't notice it until it gets chronic," says Dr Bakhshi. He adds that women need to be cautious because waist dermatoses can turn malignant as it did in the case of the three women treated at GMC.
    Dr Bakhshi advises sariwearers to tie their petticoats looser or switch from the usual rope-like belt to broader ones that reduce pressure on the area. He also suggests that they keep changing the level at which they tie saris. "This kind of cancer does not really affect those wearing pants or belts because the pressure is spread over a larger area, unlike in the case of a petticoat nada or string," he says.
    Treatment depends on the stage at which the cancer has been diagnosed. "If detected early, it can be treated with reconstructive surgery. But if the cancer has spread to the lymph nodes then we need to remove the malignancy," says Dr Bakhshi. He adds that if detected early the cancer is curable.
    Chennai-based dermatologist Dr Maya Vedamurthy says that around 3% of sariwearers who come to her have waist dermatoses but she has not seen any cases where it has turned malignant. "The moment I notice it, I tell the patient to start wearing the nada a little looser or switch to a broader string," she says.
    Like sari cancer, there are several lifestyle-related cancers that are increasingly being seen in India, such as breast, ovarian and tobaccorelated cancers. "There are many types of tobacco-related cancers from lung and stomach to bladder and pancreatic. The cancer is also lifestyle-related, caused by smoking as well as increased levels of pollution in the environment," says Dr T Rajkumar, professor and head of molecular oncology, Cancer Institute, Adyar.
SAFE RATHER THAN SARI
Tie your petticoat string looser
Get a broader string so the pressure on the waist is less
Keep changing the position of the string each time you wear a sari
If you notice scaling or pigmentation at the waistline, consult a doctor

RBI may Hold Rates Despite Slowing Growth, Inflation

noreply@blogger.com (Akbar Jiwani) — Mon, 23 Jan 2012 06:09:00 +0000

Few are forecasting an interest rate cut by Reserve Bank of India Governor Duvvuri Subbarao on Tuesday, despite growth slowing and inflation at a two-year low. Some are hoping for a cut in cash reserve ratio (CRR) without conviction. But everyone is praying, rather impatiently, that he does 'something' soon to revive the animal spirits.

The first detailed monetary policy review since the curbs to arrest the rupee's slide against the dollar may dwell on the latest threat to economic management from the currency when domestic demand-fuelled inflation itself is yet to ebb.
The inflation forecast of 7% by March may be retained, but the GDP growth estimate may be sliced to 7%, from 7.6%, amid falling demand for goods and subdued export growth due to the simmering European crisis. Any action will be a surprise.
"It's worth keeping in mind that there are still upside risks to inflation from pent-upcommodity price pressures, fiscal slippages, and slow progress on structural reform," said Leif Eskesen, economist at HSBC. "With growth conditions improving slightly and core inflation still elevated, there is no compelling case to ease monetary policy this time around."
A steadfast Subbarao has conditioned the market not to expect anything that would lead to compromising his anti-inflationary stance, even though some dodgy data such as the Index of Industrial Production have in the past prompted calls for monetary easing Guv Averse to Committing to Lowering Rates
Although he has promised not to raise interest rates as focus shifts to reviving growth, the governor is averse to committing to lowering rates when crude and other commodity prices are either rising, or are subsidised.
With the government poised to lift prices of many administered commodities such as oil, coal and fertilisers to limit the damage to its finances, Subbarao may highlight the potential for reversal in price rise to justify his pause, and not a cut in rates.
"Economy is largely depending on diesel price," said Petroleum Minister Jaipal Reddy. "Any increase in price will have a cascading affect. Inflation is coming down at the moment. We will, therefore, wait for an appropriate moment and talk to state governments and take a decision." Inflation as measured by the Wholesale Price Index fell to a two-year low of 7.5% in December 2011, lower than a two-year average of about 9%. But it was influenced by lower food product inflation, which turned negative, while the central bank's barometer — manufacturing prices — continued to climb.

RIL Earnings to Feel the Margin Pressure

noreply@blogger.com (Akbar Jiwani) — Fri, 20 Jan 2012 01:25:00 +0000

Quarter Preview

Refiner may report a fall in Q3 profit, but interest income to support bottomline

Reliance Industries' December '11 quarter numbers are likely to be dismal, following a pressure on refining and petrochemical margins and weakness in KG basin gas volumes. This will be its first time in the past two quarters to show a fall in profit. A spurt in its other income could be the only positive factor in its earnings.

RIL's all three major business segments will face a fall in profit for the December '11 quarter, according to analyst estimates. The petroleum refining business, which brings in over two-third of its revenues, will see gross refining between $7 and $8 per barrel — substantially lower to $10.2 of the first half of FY12.
The demand for petrochemical industry has remained under pressure due to slowing economic growth throughout the December '11 quarter. This is likely to impact RIL's second-largest business segment, which contributes more than a fifth of the behemoth's topline.
The company's gas production from KG D6 basin has been on a steady fall after briefly touching 80 MMSCMD in December 2009. The production is likely to have averaged 41-42 MMSCMD for the December '11 quarter. Further, the 30% stake sale to BP would reduce RIL's contribution from the gas sale.
However, this time, its sagging earnings will have support from a new fourth segment — other income. After the BP deal, RIL is sitting on a cash pile in excess of . 75,000 crore, interest income on which could prove a significant support to the bottomline.
At the aggregate level, the company's profits are likely to be down 5-12% from the year-ago level of . 5,136 crore. Whereas, net revenues are expected to show a growth of 19-33% over . 59,789 crore of December 2010. RIL's cash pile continues to bulge, which is a good thing for its balance sheet. However, analyst community remains concerned about its potential use. "Cash flow is greater than capex, and a significant part of incremental cash flows are being driven to non-core businesses, which in our view are return dilutive," mentioned a Morgan Stanley research report that downgraded RIL to 'underweight.'
ramkrishna .kashelkar
@timesgroup .com

LIC, HDFC MF Go against the Tide, Stock Up on SBI LIC increased stake to 12.76%, HDFC MF bought 1.7% even as stock fell 13% in Q3

noreply@blogger.com (Akbar Jiwani) — Fri, 20 Jan 2012 01:24:00 +0000

Two of India's largest institutional investors stocked up on shares of State Bank of India in the three months to December 31, when many on the Dalal Street were shunning the stock because of worries about the lender's asset quality.
Life Insurance Corporation (LIC), India's largest institutional investor in equities, increased its stake in SBI to 12.76% from 8.68% while the country's largest asset manager HDFC Mutual Fund bought 1.7% stake for its Top 200 product.
SBI shares, which closed at . 1,883.70 on Thursday, fell 13% during the quarter and touched a 52-week low of . 1,576 on December 20. BSE's Bankex dropped 15% and the Sensex declined 6% during the period. Brokers said LIC's investment in SBI last quarter was in line with its 'contrarian' investment strategy --buy when the crowd is bearish and vice-versa.
During the quarter, domestic institutions, including insurance companies and mutual funds, raised their holding in SBI to 18.70% from 18.53% while foreign institutionscut their stake to 7.88% from 8.65% "Last quarter was a good time to accumulate SBI. The bank has many structural positives, especially with the possibility of RBI changing its stance some time soon," said Vaibhav Agrawal, VP – research at Angel Broking.
Investors have been concerned about the state-run bank's asset quality as a slowing economy and high interest rates threatened to increase its non-performing assets. Analysts said such worries persist. "With an ever-ballooning restructured portfolio (at over 4% of the loan book) that has already witnessed slippages at 20%, we factor in marginally higher NPLs (higher slippages and lower recoveries) during FY13E," said Ambit Capital analysts, in a recent note. The brokerage has a 'sell' rating on the stock with a price target of . 1,590.
Recent reports that SBI has classified its exposure to Kingfisher Airlines as an non-performing asset had heightened worries.
"Over the last quarter, the market was concerned about its asset quality. But hopefully, the stress assets will peak over the next two quarters, giving a positive boost to valuations. This will also coincide with a favourable turn in the interest rate cycle," said Rajat Rajgarhia, director – research at Motilal Oswal Financial Services. "For investors looking at a long-term horizon, SBI is trading at attractive valuations," he said.

PRE-PREF ISSUE LOCK-IN TO GO Sebi to Make it Easier for Cos to Tap MF, FI Funds

noreply@blogger.com (Akbar Jiwani) — Fri, 20 Jan 2012 01:22:00 +0000

Market regulator Sebi plans to allow mutual funds and insurance firms to subscribe to preferential issues of companies even if they have traded the shares of the issuing corporates in the past six months, to boost liquidity in the markets and make it easier for firms to raise funds. Such transactions are currently banned, blocking a key source of funds for companies. "The removal of the pre-preferential issue lock-in norm for financial firms would help India Inc raise resources from the domestic market," said the head of a foreign investment bank.

But this restriction will continue to be in place for promoters. A Sebi official said institutional investors such as mutual funds and insurance companies play an important role in ensuring liquidity in the secondary market. "It is felt that they should be differentiated from promoters while applying the lock-in relating to pre-preferential issue. This unduly restricts the trading ability of institutional investors," he said.
This restriction was imposed in 2004 to prevent institutional investors and promoters from manipulating the price at which shares were issued through preferential allotments. A preferential allotment is done by issuing shares of a company to a select group of investors at a price that is not less than the average price of the last six weeks. The revised norms are likely to be announced at a Sebi board meeting on January 28 in Delhi. The board is also planning to change the guidelines for foreign currency convertible bonds (FCCBs) and optionally convertible debentures (OCDs), and disallow the holders of these instruments from subscribing to bonus and rights issues.
At present, the issuing company makes a provision in its books for bonus or rights shares in proportion to the FCCB holder's entitlement and transfers them at the time of conversion. In addition, bondholders are allowed to lower their conversion price in proportion to the equity expansion through these two routes.
According to Sebi, these provisions result in granting twin benefits to such instrument holders, and it plans to correct this situation by doing away with their entitlement for bonus and rights shares.
What's on Anvil
Insurance firms and mutual funds will be exempted from six-month lock-in prior to preferential allotment. However, the lock-in on shares allotted in preferential issue will continue
The six-month prepreferential issue lock-in for promoters to stay FCCB and OCD holders will not be allowed to subscribe t o
bonus and rights shares Compulsorily convertible
debenture holders will continue to be eligible for bonus and right issues Market Report
Nifty Clears 5k on FII Buying, Strong Results OUR BUREAU MUMBAI
The Nifty closed above the psychological mark of 5000 for the first time in six weeks, mirroring the strength in Asian markets, on news the International Monetary Fund (IMF) was seeking to boost its resources to tackle the euro zone debt turmoil. Strong demand for French and Spanish debt auctions also alleviated investor concerns over the crisis.
BSE Sensex advanced 1.17% to close at 16643.74, while Nifty rose 1.26% to close at 5018 – the first time since December 7.
Strong third quarter results from private lender HDFC Bank and two wheeler makers – Bajaj Auto and Hero MotoCorp – contributed to the upbeat mood, boosted by foreign institutional buying to the tune of . 630 crore on Thursday. So far in 2012, these investors have pumped in over $1 billion (. 5,023 crore), compared with $385 million of net sales in the whole of 2011.
Aviral Gupta, fund manager - equity, Indiabulls Mutual Fund, said, "We expect FII inflows to be maintained throughout the year. There is negligible shock value in the system. We expect things to improve on both global and domestic fronts going ahead."
Reliance Industries will be keenly watched as its board meets on Friday to consider and approve a share buyback proposal. Its stock price extended Wednesday'sgains by around 1% to close at . 785 on Thursday.
Yields declined in France's bond sale on Thursday, the country's first auction since Standard & Poor's downgrade of the country's AAA credit rating. Spain's longer-term debt has received strong response, with yields down more than 150 basis points from a previous sale of the same bonds in November, according to agency reports.
"These results are bullish for both Spain and the broader periphery, and stand to further underpin the ongoing 'risk-on' tone," Richard McGuire, rate strategist at Rabobank, told Reuters. The FTSE Eurofirst 300 was up 0.8% and the Euro Stoxx 50 has risen 1.4% at the time of going to the press. In Asia, MSCI Asia Apex 50 rose 1.4%, with Hong Kong's Hang Seng Index closing up 1.3% and China's Shanghai Composite Index also gaining 1.3%.
Investors will now turn their focus to RBI's rate-setting meeting next Tuesday. While the central bank is more likely to keep the rates steady, investors are on the lookout for RBI's outlook on inflation and interest rates. "The RBI will most likely adopt a 'wait and watch' approach. The opinion on a possible CRR cut is divided," says Amar Ambani, research head, IIFL. "Much of the recent moderation in inflation is due to a combination of improved supplies and a high base, while the core manufacturing inflation remains sticky. There is a likelihood that food inflation might turn back up as the base effect starts to wear off," he said.

Starbucks closing in on deal with Tata Coffee

noreply@blogger.com (Akbar Jiwani) — Fri, 20 Jan 2012 01:20:00 +0000

Mumbai: Starbucks Corp, the world's largest coffee company, is finalizing its retail partnership with Tata Coffee and hopes to announce the deal by the end of this month, a senior official of the Indian company said on Thursday. In early 2011, the Seattle-based company signed a pact with the Tata group firm to buy coffee from India and explore opening retail stores in the country.

    "We are close to finalizing it and are working on the final details. We hope to make an announcement very soon," M D Kumar, chief financial officer of Tata Coffee, said. Tata Coffee plans to open a Starbucks coffee shop by the end of this year, MD Hameed Huq told reporters on the sidelines of the International Coffee Festival in Delhi earlier in the day.
    In India, where tea has long been the beverage of choice, an increasingly affluent and urban population with westernized tastes is embracing cafes.
    The two companies had planned to open the first Starbucks outlet in India by mid-2011, but the plan was delayed on account of difficulties in acquiring real estate, Tata Coffee chairman R K Krishnakumar had said in August. REUTERS

Google Benefits from Illegal Content: Delhi HC

noreply@blogger.com (Akbar Jiwani) — Tue, 17 Jan 2012 05:04:00 +0000

The Delhi High Court on Monday said that websites such as Google and Facebook could be liable for the content posted on their platform by users, as they benefit from it. Google India's counsel Neeraj Kishan Kaul argued before the court that the complainant Vinay Rai has failed to find out the bloggers or users who are posting such images and 'instead blaming the landlord for what a tenant does'.

"The landlord can't be held liable for an illegal activity carried out by a tenant in his house," said Kaul to a packed courtroom.
In response, justice Suresh Cait said, "In this case, the landlord is benefiting from the illegal activity carried out by a tenant. Thus the landlord is liable."
Hariharan, the counsel for complainant Vinay Rai, countered Google India's argument that Google India does not control or benefit from the platforms, such as YouTube, Orkut or Blogger.
Hariharan said that every click on a Google-owned website gets it revenue for the content. He said that Google India is wrong in stating that it is just an ad collection subsidiary of Google Inc. "The memorandum of association of Google India shows that it is in the business of production of software, internet products, computer-aided design, analysis, selling internet search, engineering platforms and solutions. Thus it is not only in the business of advertising, as it states."
Google India has filed a petition in the Delhi High Court to quash summons against it in a lower court, on the premise that it does not control Google .com, or You -Tube.com, but just collects ads on behalf of Google Inc.
The complainant countered Google India's argument that it is a separate legal entity. "The memorandum states that the office of Google India's managing director will be vacated upon direction of Google Inc. Its trademark can also not be changed without Google Inc's permission. Thus, both are closely linked," senior counsel Hariharan said.
He also said that entirely all, but one share, of Google India, are held by Google Inc, and thus it is a direct beneficiary of the parent. "Google Inc owns about 91,294 shares in Google India. Only one share vests with some party," Hariharan said. Speaking earlier, Facebook's lawyer Sidharth Luthra said that the evidence collected by the complainant is not testified as an electronic record, and thus should not be admitted. Luthra cited the Tehelka case which he represented, where the images taken by Tehelka .com were not being admitted as electronic evidence, until the hard disk where it was stored was certified as per section 29 of Indian Penal Code. Lawyers for Google and Facebook argued that wholesale blocking of certain so-called 'obscene' keywords will limit the internet.
Additional solicitor general AS Chandhiok, who was also present in the courtroom, said the government has given a sanction to prosecute these websites. "The government held four meetings with them last year. Despite bringing to their notice the content was not removed," he added. The court expressed the urgency to hear the matter on a daily basis. Justice Cait said there are about 2,000 criminal complaints pending before the court, but the court wants to hear this matter urgently, as it is very important for the nation. The high court has given Jan 19, as the next date of hearing. The court's decision will also be important for the internet users in India, about one-third (42 million) of whom are hooked on to Facebook. About 3 million access the Google Plus and Twitter while Google's Search is used by almost 100 million users.
"Right now, the laws are ambiguous and unclear," says Yogesh Bansal, CEO ofApnacircle .com, an internet portal for professional networking. If you are operating in India, you have to follow the law of the land. None wants website content to create a law and order problem in the society and create tensions among communities. But people should decide what's good for society," Bansal added.

It Pays More to Ferry Goods than Men

noreply@blogger.com (Akbar Jiwani) — Tue, 17 Jan 2012 05:03:00 +0000

PASSENGER TRANSPORT FIRMS LAG BEHIND

In transportation — rail, road and air — it is not the glamorous passenger business that makes money. Moving cargo is where the profits are. In the past three years, as the economy lurched from one crisis to another and aviation companies took a beating, goods transporters have defied conventional wisdom and performed better on a host of parameters, a study by the Economic Times Intelligence Group shows. They have better margins, earn better return on capital and have posted a decent growth in net profit compared to the passenger transport sector, showing that goods transportation is probably more profitable than the volatile, service-oriented passenger transport business.

Take, for example, the financials for the year ended March 2011. While all airlines posted 20%-plus growth in revenue, their profits were severely battered. Jet Airways posted a net loss of . 86 crore, while Kingfisher's net loss stood at . 1,027 crore. Goods carriers, on the other hand, fared much better. Container Corporation of India posted an 11.35% rise in net profit, Gati's profit rose 48.42%, while profits at Blue Dart Express jumped 54.8%. Jet earned a margin of 11.24% compared with Container Corp's 31.15% for that year. Cargo companies were also able to use their capital more effectively. Allcargo's return on capital employed was 17.5% for March 2011, compared with SpiceJet's 13.41%. Blue Dart's ROCE was much higher at 28.2%.
"In passengeroriented industries such as aviation, high competition has reduced pricing power, whereas there isn't as much competition in logistics. It is more of a wholesale market and hence its profitability would accordingly be stronger," says Sandip Sabharwal, chief investment officer, PMS, at Prabhudas Lilladher.
There are a number of reasons for this. Ferrying passengers from one place to another is expensive. The capital expenditure is very high, whether it is airlines or road transport. Companies rarely have pricing power and when they do, it is only for a short period, such as the holiday season from November to February. Even Indian Railways, a monopoly, makes little money in its passenger businesses. In the past five years, the contribution from passenger business to the Railways' turnover has dipped to about 26.97% in 2009-10 from 30% six years ago. Revenue from goods transportation is more than double that of the passenger business. For the year ending March 2010, 67% of Railways' revenue came from goods traffic while the rest was from passenger transportation.
"Airlines are a more capital-intensive business. These companies have more debt on their balance sheets and have to pay high interest to service loans. Fuel is also not subsidised for airlines, and they have to pay tax on the fuel. On the other hand, cargo companies get subsidised fuel and have lower debt on their books," says Saurabh Mukherjee, head of equities, Ambit Capital. In order to spend money, airlines borrow. If revenues sag or the capital markets tank, the gap is usually filled by more borrowings.
After some time, it becomes a vicious cycle, forcing airline companies to take on ever higher levels of debt. "It is not that logistics carriers are doing anything great in a slowing economy; it's just that airlines have done poorly because of high fuel taxes and more government controls. The high debt has compounded the situation for airlines," said AK Prabhakar, senior VP, Anand Rathi Securities.
Goods carriers also have pricing power as they work on a cost-plus basis. For passenger carriers, it is the other way round. Increasing ticket prices invites a backlash in the form lower bookings and revenue. The only consolation for aviation/passenger companies is that everybody suffers during bad economic conditions. All cargo companies suffered in the year ended March 2010 with only Allcargo and Patel Integrated managing to keep their heads above water.
But if you are an investor looking for safe, steady returns in a volatile market, what would you choose? An airline saddled with debt and bleeding profusely or an unglamorous goods carrier with little debt and a steady track record? Over the past year, the share prices of the three listed airlines —SpiceJet, Jet Airways and Kingfisher — have declined 71%, 66% and 55%, respectively.

Hectic Policy Action Coming in Budget to Revive Economy

noreply@blogger.com (Akbar Jiwani) — Tue, 17 Jan 2012 05:01:00 +0000

countdown to the BUDGET

String of sops lined up for core, labour-intensive sectors

Finance Minister Pranab Mukherjee will attempt to nudge entrepreneurs to invest more by unveiling a raft of investor-friendly policies in the budget to be presented in March, as the government looks to revive the economy without raising fiscal deficit.

These policies include sops for infrastructure and labour-intensive industries and incentives to attract investment in sectors such as urea, a commonly-used fertiliser, and cold chains and supply chains that help maintain the quality of food produce. "Driving investments will be one of the key areas... focus would be on measures for sectors such as infrastructure and those that benefit agriculture and employment generation," said a government official.
A combination of high interest rates and slow decision-making by the government, widely referred to as policy paralysis, had stalled investments. Gross fixed capital formation, a measure of investments, contracted 0.7% in the second quarter of the current fiscal from a year ago.
Unlike 2008, the government does not have the leeway to step up spending to generate demand and is looking to spur private spending through policy impetus.
"The scope for providing fiscal concessions is very limited... policy measures targeted at specific sectors could be taken up to provide stimulus..." said C Rangarajan, chairman, Prime Minister's Economic Advisory Council.
Mukherjee has conceded that the government is likely to miss the fiscal deficit target of 4.6% of GDP in the current fiscal, increasing pressure to rein in spending.
The budget could announce easing of norms governing foreign investment in infrastructure and set up a dedicated infrastructure debt fund to provide support to public-private projects. It may also attempt to spur urea production by subsidising use of imported natural gas. The subsidy will be limited to the difference between imported and cheaper domestic gas and is intended to protect the investor and government from large fluctuations in gas prices. The cold chain policy in the works may allow the operator of the chain to source farm products from anywhere in the country rather than from the state where it is located.
"Sentiments are down... They must take measures in the budget and make it a policy statement," said Rajiv Kumar, secretary general, FICCI.
But some experts said attention should also be paid to fiscal consolidation. "They will have to make pro-investment noises. Fiscal deficit is key because that will determine cost of funding...," said Abheek Barua, chief economist, HDFC Bank.

9 EU nations downgraded by S&P

noreply@blogger.com (Akbar Jiwani) — Sun, 15 Jan 2012 07:35:00 +0000

Berlin/Athens: Ratings agency Standard & Poor's on Friday downgraded the credit ratings of nine Eurozone countries. While France and Austria have lost their coveted triple-A status, Germany has emerged unscathed, retaining its triple-A rating and a stable outlook.

While S&P cut the ratings of Italy, Spain, Portugal and Cyprus by two notches,
the standings of France, Austria, Malta, Slovakia and Slovenia have gone down a notch each. The decision puts the highly indebted Italy on the same BBB+ level as Kazakhstan and pushes Portugal into junk status.
The move resulted in the euro falling by more than a cent to $1.2650.

Ways2trade

Tata Steel Swings to 603-cr Q3 Loss

High input costs, weak European demand hit performance

Tata Steel, India's biggest producer, swung to an unexpected loss in its third quarter after raw material costs gained and demand waned in Europe, its largest market.

GDP growth seen dipping to a 3-year low of 6.9%

GDP growth seen dipping to a 3-year low of 6.9%

New Delhi: India's economy is expected to grow by 6.9% in 2011-12, the slowest pace of expansion in three years, dragged down by sluggish industrial growth and a decline in the mining sector.

HEAVY DISCOUNTS, MARKET RALLY BRING BACK BUYERS

Revival Hopes Take Wing as Shoppers Throng Street

Consumer electronics, automobile and lifestyle retail chains see double-digit sales growth in Jan

Sales of consumer electronics, cars and lifestyle products bounced back in January after a tough quarter, raising hopes of a revival in consumer sentiment in 2012.

HUL Q3 profit up 18% at 754 crore

Profit Rises On Price Hikes, Higher Volumes, But Growth Slower Than Q2

India’s stable rating faces risk: S&P

High Inflation, Weak Fiscal Position, Sluggish Growth Weigh On Outlook

New Delhi: India's stable rating outlook faces some challenges due to high inflation, weak fiscal position and slower economic growth, a report by global ratings agency Standard &Poor's cautioned on Monday.

LIC may Step in to Bail out Small Govt Banks

Recapitalisation move by public sector insurance co may help govt retain its holding in banks indirectly

Cancel Leases of 49 Mines, Says SC Panel

KARNATAKA ILLEGAL MINING INVESTIGATION

SC-appointed committee says the mines violated terms of their licence

Acommittee set up by the Supreme Court tasked with investigating illegal mining in Karnataka has submitted its final report containing recommendations that could radically change how mining is done in the country and jeopardise planned investments in steel plants in the southern state.

Pvt Labels Pip National Brands in Own Stores

Hit by soaring inflation & uncertain economic condition, consumers opt for best bargain

LIC may Bail out Fund-starved Banks

DENA, SYNDICATE MAY SOON SELL SHARES

The Man who Mints Money from Metal

Man Behind the Scenes Away from the spotlight, Tarun Jain has been stoking Anil Agarwal's growth engine for 25 years

Should you buy these bonds?

Both Hudco and IRFC bonds offer good tax-adjusted returns, but retail investors should buy only if they don't plan to sell them on listing.

Ambani Bros may Plan a Joint CBM Play

RIL & Rel Power have held initial talks to minimise costs by developing common infra for their blocks

RAJEEV JAYASWAL NEW DELHI

Sebi Probes Patni Delisting on Shareholders’ Complaints

Some shareholders have complained that iGate has announced plans to delist Patni without first reducing stake to 75%; Phaneesh Murthy says co has got nod for all its plans

The capital market regulator is inquiring if technology outsourcer Patni Computer Systems can delist without lowering its promoter stake to 75% as mandated by law.

Nasscom Sees Cloudy Skies for Indian IT

Exports may shrink in 2012-13 as clients hold back spending due to uncertain environment

HARSIMRAN JULKA & SHRUTI SABHARWAL The apex body of Indian technology companies is likely to forecast a slowdown in software exports in 2012-13, as corporations keep a wary eye on the global economic uncertainty and control expenses on information technology outsourcing.

Sari cancer a threat for women: Docs

Mum Medics Cite Three Instances

Chennai: The next time you drape a sari, you might want to re-tie that petticoat knot. According to an article in the November issue of the Journal of the Indian Medical Association, doctors at Grant Medical College (GMC) in Mumbai have reported cases of what they are referring to as 'sari' cancer.

RBI may Hold Rates Despite Slowing Growth, Inflation

RIL Earnings to Feel the Margin Pressure

Quarter Preview

Refiner may report a fall in Q3 profit, but interest income to support bottomline

LIC, HDFC MF Go against the Tide, Stock Up on SBI LIC increased stake to 12.76%, HDFC MF bought 1.7% even as stock fell 13% in Q3

PRE-PREF ISSUE LOCK-IN TO GO Sebi to Make it Easier for Cos to Tap MF, FI Funds

Starbucks closing in on deal with Tata Coffee

Google Benefits from Illegal Content: Delhi HC

It Pays More to Ferry Goods than Men

PASSENGER TRANSPORT FIRMS LAG BEHIND

Hectic Policy Action Coming in Budget to Revive Economy

countdown to the BUDGET

String of sops lined up for core, labour-intensive sectors

Finance Minister Pranab Mukherjee will attempt to nudge entrepreneurs to invest more by unveiling a raft of investor-friendly policies in the budget to be presented in March, as the government looks to revive the economy without raising fiscal deficit.

9 EU nations downgraded by S&P

Berlin/Athens: Ratings agency Standard & Poor's on Friday downgraded the credit ratings of nine Eurozone countries. While France and Austria have lost their coveted triple-A status, Germany has emerged unscathed, retaining its triple-A rating and a stable outlook.

HARSIMRAN JULKA & SHRUTI SABHARWAL

The apex body of Indian technology companies is likely to forecast a slowdown in software exports in 2012-13, as corporations keep a wary eye on the global economic uncertainty and control expenses on information technology outsourcing.