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Forget Nano, Chinese car maker eyes Bengal

Wednesday, November 5th, 2008

Nano may have veered off Singur, but there’s a sliver of hope for the troubled land yet.
Representatives of a Chinese automobile major met chief minister Buddhadeb Bhattacharjee on Tuesday, seeking 600 acres — about the same amount that is ‘undisputed’ in Singur — to set up a small car factory in Bengal.

While the government hopes the company would slip into the Nano site vacated by Tata Motors, it will also showcase other locations at Kalyani, Kharagpur and Haldia.

China’s First Automobile Works (FAW), in collaboration with Ural India, an Indo-Russian joint venture, wants to set up a Rs 1,500-crore automobile manufacturing unit in Bengal. And, the first vehicle to roll out of the plant in 2010 will most likely be a small car priced at a cool Rs 1.6 lakh.

A tie-up between Ural India, in which the state government has 11%, and FAW will be formalized through an MoU in the first phase. J K Saraf, chairman of Ural India and Ren Diansheng, vice-director of FAW, led the five-member delegation of the company that called on Bhattacharjee.

The company is expected to start manufacturing small cars and then go on to buses. “We plan to price the small car at Rs 1.6 lakh to keep it competitive,” Saraf said. However, Ural is yet to decide on the name of the car.

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India to have near 0% inflation in H2 of ’09

Wednesday, November 5th, 2008

The country is likely to have near zero inflation in certain periods of second half of 2009 on account of economic slowdown and falling commodity prices, says a report by broking house Edelweiss Securities.

Inflation stood at 10.68 for the week ended October 18. “Given the possibility of a further strong softening in commodity prices amidst a marked global slowdown, domestic inflation can be zero or near zero during H2 CY’09,” Edelweiss analyst Siddhartha Sanyal in his research report.

The US and the UK have already reported contraction in output and most emerging economies are also likely to be hit in CY09, the report said, adding that the slowdown is likely to soften overall price levels in most economies.

Slowing global industrial production will further weaken the base metal prices, especially after the decline in demand from China. Economic slowdown is expected to significantly cut down energy demand, the report noted.

A softened crude price will mean lower prices of various chemicals, fertilisers, etc. Accordingly, recession accompanied by deflation is a strong possibility in case of several industrial economies, it said.

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RBI cuts rates to induce Rs 85,000 cr; signals interest cut

Sunday, November 2nd, 2008

In a major move to inject an additional estimated Rs 85,000 crore into the system, Reserve Bank of India today cut key deposit requirements for banks by 1 per cent and its short-term lending rate by 0.5 per cent, a decision that may help soften general interest rates.

The decisions to cut the Cash Reserve Ratio and Statutory Liquidity Ratio by one per cent each and Repo Rate by 0.50 per cent come a week after the busy season credit policy review by RBI in which it had given an assurance of more measures to boost economic growth.

“Global financial conditions continue to remain uncertain and unsettled and early signs of a global recession are becoming evident. These developments are being reflected in sharp declines in stock markets across the world and heightened volatility in currency movement.

“International money markets are yet to regain calm and confidence and return to normal functioning,” a statement from the Bank said, announcing the decisions, while adding it will continue to closely monitor development in global and domestic financial markets and take swift and effective action as appropriate. With today’s measures, the RBI has pumped in about Rs 270,000 crore in the system since October, but industry leaders and bankers feel that more is needed to effectively bring down the commercial lending rates.

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Insurance: India Inc hails FDI hike decision

Saturday, November 1st, 2008

The government’s decision to table a bill in Parliament to hike FDI cap in private insurance firms was hailed by industry chambers and insurers as a move to bring in much needed capital in the sector.”The insurance sector being a capital intensive sector requires huge investments over a prolonged period of time, and therefore, there is constant need for capital infusion.

“A hike in the sectoral FDI cap to 49 per cent would further grow the insurance sector and bring in much needed FDI to the country,” MetLife India Insurance’s managing director Rajesh Relan said in a statement.

The Confederation of Indian Industries, termed the bill as a much-awaited one, and said, that this bill “would further help in development of the insurance sector”.

The industry body, which had played an active role in preparing the draft bill, hoped that it would find a quick and easy passage in Parliament.

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ArcelorMittal planning to shut units?

Saturday, November 1st, 2008

ArcelorMittal workers in France and Belgium said on Thursday that the company has told them it will stop steel output at some plants this winter as demand drops. 

The Luxembourg-based steelmaker, the world’s largest, declined to confirm that it will temporarily halt output but said it was “taking prudent and responsible steps to adapt supply to demand in the light of present market conditions.” 

It said it will provide details when it reports third-quarter earnings on November 5. 

The company has already announced a 15-percent cut in European output as its main customers — the construction and the car industries — see sales slip. 

Trade union representatives in France said management at the Fos-sur-Mer plant had told workers that it would reduce output and asked workers to take vacations of up to 16 days from November 1 and December 31. One furnace will cease work until the end of January, said Alain Nougue, a delegate from the CGT. 

Another steel plant at Florange in eastern France would also stop output for the month of December, Jean-Marc Verin of the CFDT union said. 

In Belgium, local press said workers had been told that ArcelorMittal plants at Genk and Chatelet would cease production for four weeks at the end of the year while facilities at Seraing and Ghent would decrease output levels. 

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More players join the fray for SpiceJet stake

Thursday, July 10th, 2008

The more the merrier that’s the SpiceJet story as the race for this low cost airline hots up.

So besides the king of good and bad times Vijay Mallya and Wilbur Ross, SpiceJet’s bankers Rothschild have shortlisted two more bidders till now.

This takes the suitor tally to four, out of which three are just investors while the fourth Vijay Mallya is looking a big bang merger with SpiceJet.

Mallya’s offer involves a share swap, which could be either 1:3 or higher along with a cash advance of about Rs 200 crore. Under this offer once the share swap is done both the airlines will merge.
The present promoter will get Kingfisher Airline shares with a lock in period after which the promoters can exit.

The other simpler option for SpiceJet management is to bring in investors like Wibur Ross or other PE funds that specialise in stressed sales.

SpiceJet will issue fresh equity to these investors giving them about 14.9 per cent stake in the company and raising about $70-80 million.

Wibur Ross, the buyout guru of distressed assets, is the frontrunner among these investors which also includes PE funds from US.

While this will be less complex than a buyout, it could be only a short term solution to meet the cash flow needs of the company.

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