J.P. Morgan Chase & Co. posted a 53% decline in second-quarter net income as credit-loss provisions more than doubled and its investment bank cut the value of leveraged-loan and mortgage-related securities by a further $1.1 billion.
The nation's biggest bank by market value, which has been battered less than others by the credit crisis, reported net income of $2 billion, or 54 cents a share, compared with $4.23 billion, or $1.24 a share, a year earlier. Net revenue fell 3% to $18.4 billion. Analysts polled by Thomson Reuters had expected earnings of 44 cents a share on revenue of $16.55 billion. Shares rose 4.1% in premarket trading.
Chief Executive Jamie Dimon said he expects "the economic environment to continue to be weak -- and to likely get weaker -- and for the capital markets to remain under stress." He added that "since substantial risks still remain on our balance sheet, these factors will likely affect our business for the remainder of the year or longer."
What to expect from other major companies -- including analyst forecasts for profit and revenue -- as they report quarterly earnings
The latest results included a $540 million loss related to the company's purchase of Bear Stearns Cos. In mid-May, Mr. Dimon said J.P. Morgan's $1.08 billion purchase of Bear would reduce J.P. Morgan's quarterly earnings by $500 million, plus or minus several hundred million dollars, due to its share of Bear's losses and merger costs.
Mr. Dimon noted Thursday that "through the truly remarkable partnership and efforts of our people in extremely difficult times, we made great progress towards full integration, while also significantly reducing our combined risk positions. We now have an expanded platform to better serve our institutional clients -- one which we fully expect will make our franchise stronger over time."
The bank's return on equity -- an important measure of profitability at financial firms -- fell to 6% from 14%, and credit-loss provisions more than doubled to $3.45 billion but fell 22% from the first quarter. Home-equity charge-offs surged to 2.16% from 0.44%, while subprime-mortgage charge-offs quadrupled. Charge-offs for prime mortgages surged to 0.91% from 0.05%.
The company's investment bank saw profit plunge 67% amid the markdowns as revenue fell 5.7%. Its retail-bank operations saw earnings fall 23% on the surging credit-loss provisions, as revenue increased 15%.
The provisions also hurt the credit-card business, where earnings slumped 67% amid a 2% revenue drop. The charge-off rate surged to 4.98% from 3.62% a year earlier and 4.37% in the first quarter. At an investor conference in May, Mr. Dimon said the firm expected the quarter's losses to be about 5%, exceed that level in the second half of the year and possibly average 6% in 2009.
Thursday, July 17, 2008
India sees good harvest
India expects a good harvest of rice, corn and soybean this year, and may release 6 million tonnes of wheat into the local market to further ease prices, farm minister Sharad Pawar said, raising hopes export curbs may be relaxed.
Pawar told reporters that India had seen adequate and well-distributed monsoon rains, adding government incentives encouraging farmers to use fertilisers would boost farm output.
India had to import wheat in each of the past two years, and this year it clamped down on rice and corn exports and cut import duties on edible oils as part of efforts to tame inflation that hit a 13-year high of 11.89 percent in end-June.
"We are hopeful of a rich harvest, especially of rice, maize and soybean," Pawar told a conference.
The weather office said in a statement monsoon rains were 6 percent above normal so far but the distritution was uneven. Rainfall was 77 percent above normal in the northwest but 34 percent below the long-term average in southern India.
Pawar said the government would take a decision on selling wheat in the domestic market by Thursday.
"We are planning open-market sales of six million tonnes of wheat," Pawar told reporters. He said prices of the grain were rising in some parts of the country.
Traders said pricing of the grain would determine the impact.
"They will have to sell below their economic cost ... The government has procured at higher levels and incurred the cost of holding and transporting grains," a New Dehi-based trader said.
A trader in Singapore said the move to sell wheat in the open market signalled a good harvest.
"Some quantities might make it to the international market. There is surplus production for both wheat and corn, I hope India resumes exports," he said. India's government bought a record 22.5 million tonnes of wheat from farmers this year, filling its granaries and easing concerns of scarcity.
Pawar said India was likely to buy 27.5 million tonnes of rice from farmers by the end of the crop year to September.
The country has banned exports of non-basmati rice and the government has said in the past that it would review the ban only by November, after assessing the new harvest.
Pawar said India was also sending half a million tonnes of rice to Africa as promised by Prime Minister Manmohan Singh at the recent G-8 summit.
The country has also shipped 186,305 tonnes of rice to neighbouring Bangladesh, part of the 500,000 tonnes it had offered Dhaka after the country was ravaged by a cyclone last November.
Pawar told reporters that India had seen adequate and well-distributed monsoon rains, adding government incentives encouraging farmers to use fertilisers would boost farm output.
India had to import wheat in each of the past two years, and this year it clamped down on rice and corn exports and cut import duties on edible oils as part of efforts to tame inflation that hit a 13-year high of 11.89 percent in end-June.
"We are hopeful of a rich harvest, especially of rice, maize and soybean," Pawar told a conference.
The weather office said in a statement monsoon rains were 6 percent above normal so far but the distritution was uneven. Rainfall was 77 percent above normal in the northwest but 34 percent below the long-term average in southern India.
Pawar said the government would take a decision on selling wheat in the domestic market by Thursday.
"We are planning open-market sales of six million tonnes of wheat," Pawar told reporters. He said prices of the grain were rising in some parts of the country.
Traders said pricing of the grain would determine the impact.
"They will have to sell below their economic cost ... The government has procured at higher levels and incurred the cost of holding and transporting grains," a New Dehi-based trader said.
A trader in Singapore said the move to sell wheat in the open market signalled a good harvest.
"Some quantities might make it to the international market. There is surplus production for both wheat and corn, I hope India resumes exports," he said. India's government bought a record 22.5 million tonnes of wheat from farmers this year, filling its granaries and easing concerns of scarcity.
Pawar said India was likely to buy 27.5 million tonnes of rice from farmers by the end of the crop year to September.
The country has banned exports of non-basmati rice and the government has said in the past that it would review the ban only by November, after assessing the new harvest.
Pawar said India was also sending half a million tonnes of rice to Africa as promised by Prime Minister Manmohan Singh at the recent G-8 summit.
The country has also shipped 186,305 tonnes of rice to neighbouring Bangladesh, part of the 500,000 tonnes it had offered Dhaka after the country was ravaged by a cyclone last November.
Chidambaram says pressure on prices remains
India's finance minister, Palaniappan Chidambaram, said on Thursday pressure on prices remained but there were signs that central bank moves to tighten policy and lower inflation were working.
"There are signs that monetary steps are taking effect," Chidambaram told reporters. He added the government could take more measures and that the central bank's assessment on inflation was "fair and correct".
India's annual wholesale price inflation rate surged to nearly 12 percent in June, its highest in at least 13 years.
"There are signs that monetary steps are taking effect," Chidambaram told reporters. He added the government could take more measures and that the central bank's assessment on inflation was "fair and correct".
India's annual wholesale price inflation rate surged to nearly 12 percent in June, its highest in at least 13 years.
Tuesday, July 15, 2008
Stagflation is back. Here's how to beat it
The world is running short on energy, food, and water. The answer: a massive dose of technology.
Three decades ago, in a bleak stretch of the 1970s, an economic phenomenon emerged that was as ugly as its name: stagflation. It was the sound of the world hitting a wall, a combination of no growth and inflation. It created an existential crisis for the global economy, leading many to argue that the world had reached its limits of growth and prosperity. That day of reckoning was postponed, but now, after a 30-year hiatus, at least a mild bout of stagflation has returned, and matters could get much worse. We are back to the future, with the question we asked 30 years ago: How can we combine robust economic growth with tight global supplies of such critical commodities as energy, food, and water? It's worth comparing the earlier episode of stagflation with our current travails to help us find our way. In fact, this time the resource constraints will prove even harder to overcome than in the last round, since the world economy is much larger and the constraints are much tighter than before.
The similarities with the first half of the 1970s are eerie. Then as now, the world economy was growing rapidly, around 5% per year, in the lead-up to surging commodities prices. Then as now, the United States was engaged in a costly, unpopular, and unsuccessful war (Vietnam), financed by large budget deficits and foreign borrowing. The Middle East, as now, was racked by turmoil and war, notably the 1973 Arab-Israeli war. The dollar was in free fall, pushed off its strong-currency pedestal by overly expansionary U.S. monetary policy. And then as now, the surge in commodity prices was dramatic. Oil markets turned extremely tight in the early 1970s, not mainly because of the Arab oil boycott following the 1973 war, but because mounting global demand hit a limited supply. Oil prices quadrupled. Food prices also soared, fueled by strong world demand, surging fertilizer prices, and massive climate shocks, especially a powerful El Niño in 1972.
Here we go again. Oil prices have roughly quintupled since 2002, once again the result of strong global demand running into limited global supply. World grain prices have doubled in the past year. Just as in 1972, the recent run-up in food prices is aggravated by climate shocks. Australia's drought and Europe's heat waves put a lid on grain production in 2005-06. Even the politics are strangely similar. In both 1974 and 2008, an unpopular Republican President, battling historically low approval ratings, was distracted from serious macroeconomic policymaking. The country was adrift.
Then as now, Dick Cheney was close to the helm. What's more, the erroneous lessons he took away from the 1970s contribute to the problems that haunt us today. Cheney was Gerald Ford's chief of staff in 1976, when soaring oil prices helped doom Ford's reelection campaign. Cheney became obsessed with the fight to control the flow of Middle Eastern oil. That obsession, which by many accounts contributed to Cheney's urge to launch the Iraq war, has made the United States much more vulnerable in terms of energy, not only by tying the United States down in a disastrous military effort but also by diverting attention from a more coherent energy strategy.
The first stagflation was overcome at very high cost, including 15 years of slower global growth. While the world economy expanded by about 5.1% during the period 1960-73, it grew by a much slower 3.2% during the period 1973-89. A lot of the slowdown had to do with the worldwide profit squeeze and restraint on investments, jobs, and growth caused by tight energy supplies. A side effect of rising oil prices was to heighten financial turmoil, since central banks around the world, including the Federal Reserve, initially tried to use monetary expansion to overcome the supply-side constraints. The result was inflation rather than a restoration of economic growth. That is a key lesson for today, at a time when the Fed seems intent on lowering interest rates despite fast-rising commodity prices. There are limits to what a central bank can do in the face of a severe resource squeeze.
The first episode of stagflation opened a great debate about the global adequacy of primary commodities, especially energy and food. In 1972 the Club of Rome published its manifesto, "Limits to Growth," which predicted that the global economy would "overshoot" the earth's natural-resource limits and subsequently collapse. Yet once the world economy surmounted the extreme stagflation and returned to lower inflation and stronger growth from the mid-1980s onward, it became fashionable to dismiss the earlier fears of resource pessimism. Critics mocked "neo-Malthusians," who, inspired by the warnings of the late-18th-century thinker Thomas Malthus, predicted that society would outstrip the earth's carrying capacity. Didn't the Malthusians know that scarcity would generate new resource discoveries, new substitutes for scarce commodities, and new technologies?
Now the debate has returned with a vengeance, and a careful look back to the first stagflation is a sobering one. Yes, the world economy surmounted the stagflation, but not easily and not robustly. To an important extent, the workarounds on resource constraints were themselves limited and are showing decided strains today. We are not exactly running out of resources, but we are once again running up against serious resource and ecological limits that can hold back global economic progress. We will need to put a much greater priority on easing those constraints.
Conventional oil supplies will remain tight in the years ahead. New discoveries will not suffice. World crude-oil production nearly tripled in 1960-73 (from 21 million barrels a day to 56 million), but has grown a mere 30% since then, to around 73 million barrels per day in 2006. In fact, Persian Gulf crude-oil production stopped growing entirely after 1974, peaking at around 21 million barrels per day. Discoveries and production increases outside the Middle East rose only modestly and now in many cases are in decline in such fields as Britain's North Sea and Alaska's North Slope.
The simultaneous food scarcity of the 1970s proved to be shorter-lived than the energy scarcity, since the 1970s ushered in a nearly worldwide "green revolution" of higher grain yields, based on the adoption of improved seed varieties, intensive inputs of fertilizer, and vast increases of irrigation. The achievement was stunning but also not without its limits. Many areas of increased food production, such as in India and China, have relied on massive pumping of ground water for irrigation, and that ground water is being depleted. Heavy use of fertilizer, often inappropriately applied, has also proved to be an environmental threat in some parts of the world, as runoff creates dead zones in places like the Gulf of Mexico.
To make matters worse, human-made climate change is now adding enormous risks to global food production. Today's dry land regions, as varied as the U.S. Southwest, the Sahel of Africa, the Mediterranean, and Australia, are facing the increased frequency and severity of droughts, with hugely adverse consequences for global food security. A host of other global environmental problems also threaten the global food supply: disappearing glaciers (which feed rivers and irrigation), temperature stress, soil erosion, destruction of fragile habitats, and the loss of biodiversity, including the dramatic decline of birds and insects that pollinate food crops.
The climate-change challenge is incomparably greater than in the 1970s. In 1973 the world emitted roughly 17 billion tons of carbon dioxide from fossil-fuel use. Today the world emits roughly 30 billion tons from those sources. The atmospheric CO2 concentration, which stood at 325 parts per million (ppm) and was rising at roughly one ppm each year in 1973, has risen dangerously, to 385 ppm and now increases by 2.4 ppm each year.
Global resource constraints
The implications are clear and sobering. Our global resource binds are much tighter now than in the 1970s, because the world economy is that much larger, the resource constraints are tighter, and quick fixes are harder to find. In 1974 the world population was four billion, and total world income was around $23 trillion (in today's dollars adjusted for purchasing power). Now the world population is 6.7 billion, and the economy is around $65 trillion. The same annual growth rate of the world economy, say 4% per annum, requires vastly more natural resources - energy, water, and arable land - than in the 1970s and poses much larger risks for the world's climate and ecosystems.
We are therefore facing a prolonged period in which global economic growth will be constrained not by broad macroeconomic policies or market institutions, nor by limits of global trade, nor by the general ability of today's emerging markets to invest in new industries. The more pressing limits will be in resources and a safe climate. It took 15 tumultuous years to overcome the limits on energy and food after 1973. Unless we act more cleverly today, we could face an even more harrowing and prolonged adjustment ahead.
Fortunately, there is a better way forward than we took after 1974. We need to adopt coherent national and global technology policies to address critical needs in energy, food, water, and climate change. Just as we invest $30 billion of public funds each year in the National Institutes of Health, we should invest at least as much each year in a new National Institutes of Sustainable Technologies. Just as private biomedical firms live in a kind of symbiosis with NIH, the energy and food sectors should be backstopped by a major public effort to promote sustainable technologies.
There is certainly no shortage of promising ideas, merely a lack of federal commitment to support their timely development, demonstration, and diffusion. Solar power, for example, has the potential to meet the world's energy needs many times over, and engineers are closer than ever to cutting costs and solving the problems of intermittency (cloudy days), nighttime storage, and long-distance transmission from sunny deserts to population centers. High-mileage automobiles (like plug-in hybrids with advanced batteries), green buildings, carbon capture, cellulose-based ethanol, safe nuclear power, and countless other technologies on the horizon can reconcile a world of growing energy demands with increasingly scarce fossil fuels and rising threats of human-made climate change. As for food supplies, new drought-resistant crop varieties have the potential to bolster global food security in the face of an already changing climate. New irrigation technologies can help impoverished farmers move from one subsistence crop to several high-value crops year round.
Yet as promising as these alternatives are, we have not been investing enough to bring them to fruition. While we squander hundreds of billions of dollars in Iraq, the U.S. government spends a mere $3 billion or so per year on all its energy research - around 36 hours of Pentagon spending! Yet it will be the new technologies, deployed quickly and on a global scale, that offer the real keys to energy and food security, and the chances for sustained economic development globally. In the years ahead, technological development, with both public and private funding, must become a core part of our national economic and security arsenal.
Three decades ago, in a bleak stretch of the 1970s, an economic phenomenon emerged that was as ugly as its name: stagflation. It was the sound of the world hitting a wall, a combination of no growth and inflation. It created an existential crisis for the global economy, leading many to argue that the world had reached its limits of growth and prosperity. That day of reckoning was postponed, but now, after a 30-year hiatus, at least a mild bout of stagflation has returned, and matters could get much worse. We are back to the future, with the question we asked 30 years ago: How can we combine robust economic growth with tight global supplies of such critical commodities as energy, food, and water? It's worth comparing the earlier episode of stagflation with our current travails to help us find our way. In fact, this time the resource constraints will prove even harder to overcome than in the last round, since the world economy is much larger and the constraints are much tighter than before.
The similarities with the first half of the 1970s are eerie. Then as now, the world economy was growing rapidly, around 5% per year, in the lead-up to surging commodities prices. Then as now, the United States was engaged in a costly, unpopular, and unsuccessful war (Vietnam), financed by large budget deficits and foreign borrowing. The Middle East, as now, was racked by turmoil and war, notably the 1973 Arab-Israeli war. The dollar was in free fall, pushed off its strong-currency pedestal by overly expansionary U.S. monetary policy. And then as now, the surge in commodity prices was dramatic. Oil markets turned extremely tight in the early 1970s, not mainly because of the Arab oil boycott following the 1973 war, but because mounting global demand hit a limited supply. Oil prices quadrupled. Food prices also soared, fueled by strong world demand, surging fertilizer prices, and massive climate shocks, especially a powerful El Niño in 1972.
Here we go again. Oil prices have roughly quintupled since 2002, once again the result of strong global demand running into limited global supply. World grain prices have doubled in the past year. Just as in 1972, the recent run-up in food prices is aggravated by climate shocks. Australia's drought and Europe's heat waves put a lid on grain production in 2005-06. Even the politics are strangely similar. In both 1974 and 2008, an unpopular Republican President, battling historically low approval ratings, was distracted from serious macroeconomic policymaking. The country was adrift.
Then as now, Dick Cheney was close to the helm. What's more, the erroneous lessons he took away from the 1970s contribute to the problems that haunt us today. Cheney was Gerald Ford's chief of staff in 1976, when soaring oil prices helped doom Ford's reelection campaign. Cheney became obsessed with the fight to control the flow of Middle Eastern oil. That obsession, which by many accounts contributed to Cheney's urge to launch the Iraq war, has made the United States much more vulnerable in terms of energy, not only by tying the United States down in a disastrous military effort but also by diverting attention from a more coherent energy strategy.
The first stagflation was overcome at very high cost, including 15 years of slower global growth. While the world economy expanded by about 5.1% during the period 1960-73, it grew by a much slower 3.2% during the period 1973-89. A lot of the slowdown had to do with the worldwide profit squeeze and restraint on investments, jobs, and growth caused by tight energy supplies. A side effect of rising oil prices was to heighten financial turmoil, since central banks around the world, including the Federal Reserve, initially tried to use monetary expansion to overcome the supply-side constraints. The result was inflation rather than a restoration of economic growth. That is a key lesson for today, at a time when the Fed seems intent on lowering interest rates despite fast-rising commodity prices. There are limits to what a central bank can do in the face of a severe resource squeeze.
The first episode of stagflation opened a great debate about the global adequacy of primary commodities, especially energy and food. In 1972 the Club of Rome published its manifesto, "Limits to Growth," which predicted that the global economy would "overshoot" the earth's natural-resource limits and subsequently collapse. Yet once the world economy surmounted the extreme stagflation and returned to lower inflation and stronger growth from the mid-1980s onward, it became fashionable to dismiss the earlier fears of resource pessimism. Critics mocked "neo-Malthusians," who, inspired by the warnings of the late-18th-century thinker Thomas Malthus, predicted that society would outstrip the earth's carrying capacity. Didn't the Malthusians know that scarcity would generate new resource discoveries, new substitutes for scarce commodities, and new technologies?
Now the debate has returned with a vengeance, and a careful look back to the first stagflation is a sobering one. Yes, the world economy surmounted the stagflation, but not easily and not robustly. To an important extent, the workarounds on resource constraints were themselves limited and are showing decided strains today. We are not exactly running out of resources, but we are once again running up against serious resource and ecological limits that can hold back global economic progress. We will need to put a much greater priority on easing those constraints.
Conventional oil supplies will remain tight in the years ahead. New discoveries will not suffice. World crude-oil production nearly tripled in 1960-73 (from 21 million barrels a day to 56 million), but has grown a mere 30% since then, to around 73 million barrels per day in 2006. In fact, Persian Gulf crude-oil production stopped growing entirely after 1974, peaking at around 21 million barrels per day. Discoveries and production increases outside the Middle East rose only modestly and now in many cases are in decline in such fields as Britain's North Sea and Alaska's North Slope.
The simultaneous food scarcity of the 1970s proved to be shorter-lived than the energy scarcity, since the 1970s ushered in a nearly worldwide "green revolution" of higher grain yields, based on the adoption of improved seed varieties, intensive inputs of fertilizer, and vast increases of irrigation. The achievement was stunning but also not without its limits. Many areas of increased food production, such as in India and China, have relied on massive pumping of ground water for irrigation, and that ground water is being depleted. Heavy use of fertilizer, often inappropriately applied, has also proved to be an environmental threat in some parts of the world, as runoff creates dead zones in places like the Gulf of Mexico.
To make matters worse, human-made climate change is now adding enormous risks to global food production. Today's dry land regions, as varied as the U.S. Southwest, the Sahel of Africa, the Mediterranean, and Australia, are facing the increased frequency and severity of droughts, with hugely adverse consequences for global food security. A host of other global environmental problems also threaten the global food supply: disappearing glaciers (which feed rivers and irrigation), temperature stress, soil erosion, destruction of fragile habitats, and the loss of biodiversity, including the dramatic decline of birds and insects that pollinate food crops.
The climate-change challenge is incomparably greater than in the 1970s. In 1973 the world emitted roughly 17 billion tons of carbon dioxide from fossil-fuel use. Today the world emits roughly 30 billion tons from those sources. The atmospheric CO2 concentration, which stood at 325 parts per million (ppm) and was rising at roughly one ppm each year in 1973, has risen dangerously, to 385 ppm and now increases by 2.4 ppm each year.
Global resource constraints
The implications are clear and sobering. Our global resource binds are much tighter now than in the 1970s, because the world economy is that much larger, the resource constraints are tighter, and quick fixes are harder to find. In 1974 the world population was four billion, and total world income was around $23 trillion (in today's dollars adjusted for purchasing power). Now the world population is 6.7 billion, and the economy is around $65 trillion. The same annual growth rate of the world economy, say 4% per annum, requires vastly more natural resources - energy, water, and arable land - than in the 1970s and poses much larger risks for the world's climate and ecosystems.
We are therefore facing a prolonged period in which global economic growth will be constrained not by broad macroeconomic policies or market institutions, nor by limits of global trade, nor by the general ability of today's emerging markets to invest in new industries. The more pressing limits will be in resources and a safe climate. It took 15 tumultuous years to overcome the limits on energy and food after 1973. Unless we act more cleverly today, we could face an even more harrowing and prolonged adjustment ahead.
Fortunately, there is a better way forward than we took after 1974. We need to adopt coherent national and global technology policies to address critical needs in energy, food, water, and climate change. Just as we invest $30 billion of public funds each year in the National Institutes of Health, we should invest at least as much each year in a new National Institutes of Sustainable Technologies. Just as private biomedical firms live in a kind of symbiosis with NIH, the energy and food sectors should be backstopped by a major public effort to promote sustainable technologies.
There is certainly no shortage of promising ideas, merely a lack of federal commitment to support their timely development, demonstration, and diffusion. Solar power, for example, has the potential to meet the world's energy needs many times over, and engineers are closer than ever to cutting costs and solving the problems of intermittency (cloudy days), nighttime storage, and long-distance transmission from sunny deserts to population centers. High-mileage automobiles (like plug-in hybrids with advanced batteries), green buildings, carbon capture, cellulose-based ethanol, safe nuclear power, and countless other technologies on the horizon can reconcile a world of growing energy demands with increasingly scarce fossil fuels and rising threats of human-made climate change. As for food supplies, new drought-resistant crop varieties have the potential to bolster global food security in the face of an already changing climate. New irrigation technologies can help impoverished farmers move from one subsistence crop to several high-value crops year round.
Yet as promising as these alternatives are, we have not been investing enough to bring them to fruition. While we squander hundreds of billions of dollars in Iraq, the U.S. government spends a mere $3 billion or so per year on all its energy research - around 36 hours of Pentagon spending! Yet it will be the new technologies, deployed quickly and on a global scale, that offer the real keys to energy and food security, and the chances for sustained economic development globally. In the years ahead, technological development, with both public and private funding, must become a core part of our national economic and security arsenal.
That ’70s Look: Stagflation
Lately, many people are hearing an echo — faintly perhaps but distinctly audible — of the stagflation of the 1970s.
Even as economic growth sags, oil and gasoline prices are surging to new heights. Gold is on the rise, along with the prices of such basic commodities as wheat and steel. And on Wednesday, with the latest government report on consumer prices, there are signs that overall inflation, after years of only modest increases, may be breaking out of its box.
For the Federal Reserve and its chairman, Ben S. Bernanke, all this could not come at a worse time. With the credit markets in disarray from the collapse of the housing bubble, Mr. Bernanke is cutting rates in a headlong rush to blunt the risks of recession.
But in putting its emphasis above all on reviving growth, America’s central bank, according to some economists and even a few Fed officials, may face a bigger inflation problem down the road.
“They are cutting rates with a bill to be paid later," said John Ryding, chief United States economist at Bear Stearns. “The question is not, will we get inflation, but how much will it cost to stuff the genie back in the bottle. This has the feel of 1970s stagflation.”
Over the last 12 months, consumer prices are up 4.3 percent on average, according to the Labor Department. The core index of consumer price inflation, which excludes food and oil, was 2.5 percent higher in January than a year earlier, significantly above the Fed’s unofficial comfort zone of a 1 to 2 percent underlying inflation rate. That’s a far cry from the double-digit inflation rates that battered the economy at times in the 1970s, but still worrisome.
Analysts like Mr. Ryding say that by tolerating such price rises and maybe even allowing them to escalate, the Federal Reserve is risking its hard-won credibility as an inflation fighter, which will ultimately require it to push up interest rates higher than otherwise to contain the damage.
Most economists still expect the Fed’s policy-making committee to cut interest rates again when it meets on March 18, engineering its sixth reduction since September. But the fears of a revival of inflation underline the difficult decisions it now faces.
Like the Fed, economists generally remain more concerned about the immediate threat of recession than the more distant fear of higher inflation. Recent data suggests an economy that may be in a downturn or close to it. The consensus view is that the expected slowdown is likely to create enough spare capacity to suck inflationary pressures out of the economy.
Moreover, even if some additional inflation is a side effect of the Fed’s prescription, many economists say, it sure beats the alternative. Once the interest rate cuts have nursed the economy through the next few difficult quarters, they say, the Fed can easily raise rates again to respond to any pickup in inflation.
“They are going to fix the wound now,” said David Darst, chief investment strategist of the Global Wealth Management Group of Morgan Stanley. “They are going to take care of the growth situation and then fight inflation when the economy gets stronger.”
Reinforcing this view, there are few signs that inflation is seeping into the labor market and pushing up wages in anticipation of higher prices to come.
That may be comforting to the Fed, but keeping inflation contained still may not be easy. In recent days some officials at the central bank have gone out of their way to warn that they are not prepared to let down their guard — even if it means that the Fed has to be less aggressive about cutting interest rates.
In a speech this month, Richard W. Fisher, president of the Federal Reserve Bank of Dallas, said “the Fed has to be very careful now to add just the right amount of stimulus to the punch bowl without mixing in the potential to juice up inflation once the effect of the new punch kicks in.”
Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, echoed that view, saying in a speech that “we cannot be confident that a slow-growing economy in early 2008 will by itself reduce inflation.”
“As we learned from the experience of the 1970s,” Mr. Plosser added, “once the public loses confidence in the Fed’s commitment to price stability, it is very costly to the economy for the Fed to regain that confidence.”
In a telephone interview, Mr. Plosser explained that the Fed seemed to be making progress against inflation in the first half of 2007 but he started to become more worried during the second half.
“Since the summer almost all of the measures of inflation that we look at have begun to accelerate again, and in some cases pretty sharply,” Mr. Plosser said. “Perhaps the inflationary pressures are more broad-based than just energy.”
While Mr. Plosser said he hoped that inflation was about to moderate on its own, “we do have a dual mandate after all — one is price stability and the other is growth.”
“We can’t just throw one out of the window when it is convenient.”
To Bernard Baumohl, managing director of the Economic Outlook Group, such talk is seen on Wall Street as a clever tactic intended to help jawbone inflationary expectations downward while the Fed continues to cut rates for at least a while longer.
“We expect Fed officials will ramp up their rhetoric in speeches and in testimony that they will work diligently to keep inflation expectations under control,” Mr. Baumohl wrote to clients after the latest consumer price figures were released Wednesday. “Mere words, to be sure. But it would be a mistake to construe them as hollow.”
Zach Pandl, an economist at Lehman Brothers, said that the statements so far have been by less important Fed officials and that the Fed’s real views should be measured by its actions, which are to cut rates aggressively with less concern about inflation.
Those actions have led a number of economists to warn that the Fed’s aggressive easing moves, combined with the strong demand for industrial and agricultural commodities from emerging global economic powers like China and India, may be laying the groundwork for a new era of rising inflation.
“The period of falling inflation that we have been in for all the ‘80s and ‘90s and early 2000s has come to an end,” said Michael Darda, chief economist at MKM Partners, a research and trading firm in Greenwich, Conn. “That is over.”
Mr. Darda points to the surge in commodity prices, including food and oil. Long-term rates are rising in the bond market, reflecting the view that both growth and inflation may pick up later this year and into 2009, as well as fears about bad debt.
And, according to Mr. Pandl, a measure of investors’ inflation expectations provided by the difference between the yield on normal Treasury securities and Treasury inflation-protected securities “spiked quite a bit higher” after the Fed cut rates in January even though it “has been trading lower since then.”
Then there is gold, which has historically been a refuge for investors seeking protection from eroding currencies.
Gold “has risen a lot since the Fed began lowering rates,” Mr. Darda said. “That’s an ominous sign. Once we are in 2009 and 2010, we are going to figure out that inflation is far less benign.”
Even as economic growth sags, oil and gasoline prices are surging to new heights. Gold is on the rise, along with the prices of such basic commodities as wheat and steel. And on Wednesday, with the latest government report on consumer prices, there are signs that overall inflation, after years of only modest increases, may be breaking out of its box.
For the Federal Reserve and its chairman, Ben S. Bernanke, all this could not come at a worse time. With the credit markets in disarray from the collapse of the housing bubble, Mr. Bernanke is cutting rates in a headlong rush to blunt the risks of recession.
But in putting its emphasis above all on reviving growth, America’s central bank, according to some economists and even a few Fed officials, may face a bigger inflation problem down the road.
“They are cutting rates with a bill to be paid later," said John Ryding, chief United States economist at Bear Stearns. “The question is not, will we get inflation, but how much will it cost to stuff the genie back in the bottle. This has the feel of 1970s stagflation.”
Over the last 12 months, consumer prices are up 4.3 percent on average, according to the Labor Department. The core index of consumer price inflation, which excludes food and oil, was 2.5 percent higher in January than a year earlier, significantly above the Fed’s unofficial comfort zone of a 1 to 2 percent underlying inflation rate. That’s a far cry from the double-digit inflation rates that battered the economy at times in the 1970s, but still worrisome.
Analysts like Mr. Ryding say that by tolerating such price rises and maybe even allowing them to escalate, the Federal Reserve is risking its hard-won credibility as an inflation fighter, which will ultimately require it to push up interest rates higher than otherwise to contain the damage.
Most economists still expect the Fed’s policy-making committee to cut interest rates again when it meets on March 18, engineering its sixth reduction since September. But the fears of a revival of inflation underline the difficult decisions it now faces.
Like the Fed, economists generally remain more concerned about the immediate threat of recession than the more distant fear of higher inflation. Recent data suggests an economy that may be in a downturn or close to it. The consensus view is that the expected slowdown is likely to create enough spare capacity to suck inflationary pressures out of the economy.
Moreover, even if some additional inflation is a side effect of the Fed’s prescription, many economists say, it sure beats the alternative. Once the interest rate cuts have nursed the economy through the next few difficult quarters, they say, the Fed can easily raise rates again to respond to any pickup in inflation.
“They are going to fix the wound now,” said David Darst, chief investment strategist of the Global Wealth Management Group of Morgan Stanley. “They are going to take care of the growth situation and then fight inflation when the economy gets stronger.”
Reinforcing this view, there are few signs that inflation is seeping into the labor market and pushing up wages in anticipation of higher prices to come.
That may be comforting to the Fed, but keeping inflation contained still may not be easy. In recent days some officials at the central bank have gone out of their way to warn that they are not prepared to let down their guard — even if it means that the Fed has to be less aggressive about cutting interest rates.
In a speech this month, Richard W. Fisher, president of the Federal Reserve Bank of Dallas, said “the Fed has to be very careful now to add just the right amount of stimulus to the punch bowl without mixing in the potential to juice up inflation once the effect of the new punch kicks in.”
Charles I. Plosser, president of the Federal Reserve Bank of Philadelphia, echoed that view, saying in a speech that “we cannot be confident that a slow-growing economy in early 2008 will by itself reduce inflation.”
“As we learned from the experience of the 1970s,” Mr. Plosser added, “once the public loses confidence in the Fed’s commitment to price stability, it is very costly to the economy for the Fed to regain that confidence.”
In a telephone interview, Mr. Plosser explained that the Fed seemed to be making progress against inflation in the first half of 2007 but he started to become more worried during the second half.
“Since the summer almost all of the measures of inflation that we look at have begun to accelerate again, and in some cases pretty sharply,” Mr. Plosser said. “Perhaps the inflationary pressures are more broad-based than just energy.”
While Mr. Plosser said he hoped that inflation was about to moderate on its own, “we do have a dual mandate after all — one is price stability and the other is growth.”
“We can’t just throw one out of the window when it is convenient.”
To Bernard Baumohl, managing director of the Economic Outlook Group, such talk is seen on Wall Street as a clever tactic intended to help jawbone inflationary expectations downward while the Fed continues to cut rates for at least a while longer.
“We expect Fed officials will ramp up their rhetoric in speeches and in testimony that they will work diligently to keep inflation expectations under control,” Mr. Baumohl wrote to clients after the latest consumer price figures were released Wednesday. “Mere words, to be sure. But it would be a mistake to construe them as hollow.”
Zach Pandl, an economist at Lehman Brothers, said that the statements so far have been by less important Fed officials and that the Fed’s real views should be measured by its actions, which are to cut rates aggressively with less concern about inflation.
Those actions have led a number of economists to warn that the Fed’s aggressive easing moves, combined with the strong demand for industrial and agricultural commodities from emerging global economic powers like China and India, may be laying the groundwork for a new era of rising inflation.
“The period of falling inflation that we have been in for all the ‘80s and ‘90s and early 2000s has come to an end,” said Michael Darda, chief economist at MKM Partners, a research and trading firm in Greenwich, Conn. “That is over.”
Mr. Darda points to the surge in commodity prices, including food and oil. Long-term rates are rising in the bond market, reflecting the view that both growth and inflation may pick up later this year and into 2009, as well as fears about bad debt.
And, according to Mr. Pandl, a measure of investors’ inflation expectations provided by the difference between the yield on normal Treasury securities and Treasury inflation-protected securities “spiked quite a bit higher” after the Fed cut rates in January even though it “has been trading lower since then.”
Then there is gold, which has historically been a refuge for investors seeking protection from eroding currencies.
Gold “has risen a lot since the Fed began lowering rates,” Mr. Darda said. “That’s an ominous sign. Once we are in 2009 and 2010, we are going to figure out that inflation is far less benign.”
Sunday, July 13, 2008
Eight mistakes to avoid while investing
Investing is not just about picking winners, but also about avoiding mistakes. Retail investors can be better off if they avoid making the following mistakes.
Overconfidence - Don't be unrealistically optimistic
A bull market makes retail investors believe that they are geniuses - after all, anything they put money into goes up. This overconfidence in their own abilities leads to a complete disregard of the risks involved. Every new generation that invests in the market ignores past experience. These new investors wrongly believe that stock prices only go up.
Don't be overconfident and don't start believing that you have superior skills compared to the market. Recognise that in a bull market you are benefiting because the whole market is going up. If those around you are getting unrealistically optimistic, start managing your risk accordingly. Remember that sometimes markets do come crashing down.
Over enthusiasm to trade - Not every ball should be hit
Good batsmen realise that some balls outside the off-stump should be left alone. Similarly, professional investors realise that sometimes its better to just stand still than to rush into a stock. Retail investors often make the mistake of "flashing outside the off-stump" because they cannot resist the temptation to trade in every opportunity. And, like an inexperienced batsman, they suffer the same fate.
Too much trading will lead to a lot of churn, extra commissions to your broker and huge tax implications for you. Some of the world's best investors follow a buy and hold strategy - you should too.
Missing the benefits of compounding of capital -
Learn from Einstein
Albert Einstein is reputed to have said that compounding of capital is the 8th wonder of the world because it allows for the systematic accumulation of wealth. Even though any one in class 5 could tell you how compounding works, retail investors ignore this basic concept.
Compounding of capital can benefit you only if you leave your money uninterrupted for a long period of time. The sooner you start investing, the bigger the pool of capital you will end up with for your middle-aged and retirement years.
Don't wait to start investing only when you have a large amount of money to put to work. Start early, even if it's with a small amount. Watch this grow to a very large amount with the passage of time.
Worrying about the market - But there is no answer to your favourite question
Smart investors don't worry about the direction of the market - they worry about the business prospects of the companies whose stocks they own. Retail investors are obsessed with the question "Where do you think the market will go?" This is a wrong question to ask. In fact, no one knows the answer.
The right question to ask is whether the company, whose stock you are buying, is going to be a much bigger business 10 years from now or not? Don't take a view on the market, take a view on long-term industry trends and how your chosen companies can create value by exploiting these trends.
Timing the market - Around 99% of investors will fail in this strategy
Its very difficult to time the market, i.e, be smart enough to buy at the absolute bottom and sell at the absolute top. Professionals understand that timing the market is a wasted exercise.
Retail investors always wait for that elusive best opportunity to get in or to get out. But by waiting they let great investment opportunities go by. You should use systematic or regular investment plans to make investments. You'll have to make fewer decisions and yet can accumulate substantial wealth over time.
Selling in times of panic - You should be doing the opposite
The best opportunity to buy is when the markets are falling and there is fear in the minds of investors. Yet, many retail investors do exactly the opposite. They sell when the markets are falling and buy only when the markets are high. This way they end up losing twice - by selling low and buying high, when they should be doing exactly the opposite.
If nothing has changed about the long-term outlook for the company that you own, then you should not sell this company's stock. Use this opportunity to buy more of the same stock in falling markets. Some of the world's biggest fortunes were made by buying when others were selling in panic.
Focusing on past performance - Its like driving forward while looking backwards
It is a very common perception that because a stock has done well in the past one year, it's the best stock to invest in. Retail investors do not realise that often the best performers will underperform the market in the future because their optimistic outlook has already been priced into the stock.
Don't go after hot sectors that are currently producing high returns. Don't let greed drive your investment decisions. Look forward to see whether the gains produced in the past can get repeated or not. Short-term trends of the past might not get repeated in the future.
Diversifying too much will kill you - Investing is all about staying alive
Beyond a point, having too many names in a portfolio can be counterproductive. You might end up duplicating, or end up taking too much exposure to a sector. Over-diversification can upset your portfolio, especially when you have not done enough research on all the companies you have invested in.
If you are an active investor in the stock market, maintain a manageable portfolio of 15-25 names. Instead of adding new names to this portfolio, recognise ideal ones. Then back them with more capital. In the long-run, this will produce better returns for you than adding another 20 names to your portfolio. Investing is all is about patience and discipline. By avoiding mistakes you can improve the long-term performance of your portfolio, whatever the economic conditions prevailing in the market.
Overconfidence - Don't be unrealistically optimistic
A bull market makes retail investors believe that they are geniuses - after all, anything they put money into goes up. This overconfidence in their own abilities leads to a complete disregard of the risks involved. Every new generation that invests in the market ignores past experience. These new investors wrongly believe that stock prices only go up.
Don't be overconfident and don't start believing that you have superior skills compared to the market. Recognise that in a bull market you are benefiting because the whole market is going up. If those around you are getting unrealistically optimistic, start managing your risk accordingly. Remember that sometimes markets do come crashing down.
Over enthusiasm to trade - Not every ball should be hit
Good batsmen realise that some balls outside the off-stump should be left alone. Similarly, professional investors realise that sometimes its better to just stand still than to rush into a stock. Retail investors often make the mistake of "flashing outside the off-stump" because they cannot resist the temptation to trade in every opportunity. And, like an inexperienced batsman, they suffer the same fate.
Too much trading will lead to a lot of churn, extra commissions to your broker and huge tax implications for you. Some of the world's best investors follow a buy and hold strategy - you should too.
Missing the benefits of compounding of capital -
Learn from Einstein
Albert Einstein is reputed to have said that compounding of capital is the 8th wonder of the world because it allows for the systematic accumulation of wealth. Even though any one in class 5 could tell you how compounding works, retail investors ignore this basic concept.
Compounding of capital can benefit you only if you leave your money uninterrupted for a long period of time. The sooner you start investing, the bigger the pool of capital you will end up with for your middle-aged and retirement years.
Don't wait to start investing only when you have a large amount of money to put to work. Start early, even if it's with a small amount. Watch this grow to a very large amount with the passage of time.
Worrying about the market - But there is no answer to your favourite question
Smart investors don't worry about the direction of the market - they worry about the business prospects of the companies whose stocks they own. Retail investors are obsessed with the question "Where do you think the market will go?" This is a wrong question to ask. In fact, no one knows the answer.
The right question to ask is whether the company, whose stock you are buying, is going to be a much bigger business 10 years from now or not? Don't take a view on the market, take a view on long-term industry trends and how your chosen companies can create value by exploiting these trends.
Timing the market - Around 99% of investors will fail in this strategy
Its very difficult to time the market, i.e, be smart enough to buy at the absolute bottom and sell at the absolute top. Professionals understand that timing the market is a wasted exercise.
Retail investors always wait for that elusive best opportunity to get in or to get out. But by waiting they let great investment opportunities go by. You should use systematic or regular investment plans to make investments. You'll have to make fewer decisions and yet can accumulate substantial wealth over time.
Selling in times of panic - You should be doing the opposite
The best opportunity to buy is when the markets are falling and there is fear in the minds of investors. Yet, many retail investors do exactly the opposite. They sell when the markets are falling and buy only when the markets are high. This way they end up losing twice - by selling low and buying high, when they should be doing exactly the opposite.
If nothing has changed about the long-term outlook for the company that you own, then you should not sell this company's stock. Use this opportunity to buy more of the same stock in falling markets. Some of the world's biggest fortunes were made by buying when others were selling in panic.
Focusing on past performance - Its like driving forward while looking backwards
It is a very common perception that because a stock has done well in the past one year, it's the best stock to invest in. Retail investors do not realise that often the best performers will underperform the market in the future because their optimistic outlook has already been priced into the stock.
Don't go after hot sectors that are currently producing high returns. Don't let greed drive your investment decisions. Look forward to see whether the gains produced in the past can get repeated or not. Short-term trends of the past might not get repeated in the future.
Diversifying too much will kill you - Investing is all about staying alive
Beyond a point, having too many names in a portfolio can be counterproductive. You might end up duplicating, or end up taking too much exposure to a sector. Over-diversification can upset your portfolio, especially when you have not done enough research on all the companies you have invested in.
If you are an active investor in the stock market, maintain a manageable portfolio of 15-25 names. Instead of adding new names to this portfolio, recognise ideal ones. Then back them with more capital. In the long-run, this will produce better returns for you than adding another 20 names to your portfolio. Investing is all is about patience and discipline. By avoiding mistakes you can improve the long-term performance of your portfolio, whatever the economic conditions prevailing in the market.
Friday, July 11, 2008
Indian industry growth hits 6-yr low, inflation jumps
Indian industrial output grew at its slowest rate in six years in May, but a jump in inflation to nearly 12 percent dashed any hopes that weakening growth could persuade the central bank to hold off with interest rate rises.
The central bank's tightening campaign to tame price pressures stoked by soaring oil costs bit into consumption and capital goods production in the $1 trillion economy, casting doubt over official forecasts for 8.0-8.5 percent economic growth this fiscal year.
But economists saw no respite on rates even after two increases in June, given that inflation has more than tripled over the past sixth months, raising the spectre of a backlash against the government at elections due by May 2009.
"The slowdown is across the board with both consumer and capital goods much weaker than expected," said Sonal Varma, economists at Lehman Brothers in Mumbai.
"Slowing growth and rising inflation adds to the monetary policy dilemma," she said, adding she expected the central bank to raise its key lending rate from 8.5 percent later in July.
The benchmark stock index fell sharply after the output data, bringing the day's losses to more than 2 percent. The 10-year bond yield edged down 2 basis points to 9.42 percent, in a sign the market judged the central bank might now be only slightly less aggressive than anticipated with future policy tightening.
Industrial output rose 3.8 percent in May from a year earlier, sharply less than previous month's downwardly revised 6.2 percent and well below forecasts for 7.2 percent. It is the slowest rate of growth since March 2002.
Manufacturing production rose 3.9 percent in May from a year earlier and capital goods output growth slowed to 2.5 percent annually, compared with a fierce 22.4 percent a year ago.
The output data coincided with the release of the wholesale price index, India's most widely watched inflation measure, which rose 11.89 percent in the 12 months to June 28. The rise was the highest since annual numbers in the current series became available in April 1995, outstripping the previous week's annual rise of 11.63 percent and the market's 11.75 percent forecast.
As well as raising interest rates, the central bank has jacked up banks' reserve requirements as part of its campaign to stamp out knock-on price increases expected from a 10 percent rise in administered fuel prices in June.
Robert Prior-Wandesforde, an economist at HSBC in Singapore, said the central bank was less concerned about growth than inflation, which he thought would hit 15 percent later this year. Accordingly, he expected the monetary authority to raise both interest rates and banks' reserve requirements again at a policy review this month.
International rating agency Standard & Poor's said on Friday India's credit profile had worsened in the past year due to higher inflation and growing fiscal and current account deficits and the risks to its BBB- investment grade rating were increasing.
The central bank's tightening campaign to tame price pressures stoked by soaring oil costs bit into consumption and capital goods production in the $1 trillion economy, casting doubt over official forecasts for 8.0-8.5 percent economic growth this fiscal year.
But economists saw no respite on rates even after two increases in June, given that inflation has more than tripled over the past sixth months, raising the spectre of a backlash against the government at elections due by May 2009.
"The slowdown is across the board with both consumer and capital goods much weaker than expected," said Sonal Varma, economists at Lehman Brothers in Mumbai.
"Slowing growth and rising inflation adds to the monetary policy dilemma," she said, adding she expected the central bank to raise its key lending rate from 8.5 percent later in July.
The benchmark stock index fell sharply after the output data, bringing the day's losses to more than 2 percent. The 10-year bond yield edged down 2 basis points to 9.42 percent, in a sign the market judged the central bank might now be only slightly less aggressive than anticipated with future policy tightening.
Industrial output rose 3.8 percent in May from a year earlier, sharply less than previous month's downwardly revised 6.2 percent and well below forecasts for 7.2 percent. It is the slowest rate of growth since March 2002.
Manufacturing production rose 3.9 percent in May from a year earlier and capital goods output growth slowed to 2.5 percent annually, compared with a fierce 22.4 percent a year ago.
The output data coincided with the release of the wholesale price index, India's most widely watched inflation measure, which rose 11.89 percent in the 12 months to June 28. The rise was the highest since annual numbers in the current series became available in April 1995, outstripping the previous week's annual rise of 11.63 percent and the market's 11.75 percent forecast.
As well as raising interest rates, the central bank has jacked up banks' reserve requirements as part of its campaign to stamp out knock-on price increases expected from a 10 percent rise in administered fuel prices in June.
Robert Prior-Wandesforde, an economist at HSBC in Singapore, said the central bank was less concerned about growth than inflation, which he thought would hit 15 percent later this year. Accordingly, he expected the monetary authority to raise both interest rates and banks' reserve requirements again at a policy review this month.
International rating agency Standard & Poor's said on Friday India's credit profile had worsened in the past year due to higher inflation and growing fiscal and current account deficits and the risks to its BBB- investment grade rating were increasing.
A4, the new Audi kid on the block
German luxury car maker Audi today launched its new Audi A4 sedan in the country. Prices of the new vehicle starts at Rs 29 lakh, and Audi is looking at this launch to help it achieve total sales of 1,000 cars by the end of this year.
With this, Audi will have five models in its portfolio. These are the A6, A8, TT, Audi Q7 and the A4. The company is planning to ramp up its presence in the luxury car segment through the introduction of new models and by opening more dealerships. Recently, the car maker indicated that it could launch its sports car, the R8, in India towards the end of this year.
The new Audi A4 is being launched with two engines —the “2.0 TDI multitronic” with a power-output range of 143 bhp and the “3.2 FSI tiptronic quattro” with 265 bhp. Both of them use the direct fuel injection principle. Among the two, while the first model will come at a ex-showroom price of Rs 29 lakh, the other car will be priced at Rs 36 lakh.
Audi plans to import the car initially and by the end of this year, built it locally as a completely knocked down unit at its facility in Aurangabad, Maharashtra. It now has five dealerships in the country and the new Audi A4 will be offered at five more locations coming up in the next six months — Ahmedabad, Chennai, Kochi, Calcutta and Ludhiana.
Called as the sportiest luxury sedan, the A4 has an overall length of 4.70 metres. Speaking to newspersons at the launch here today, Benoit Tiers, managing director, Audi India, said that the car also had a substantial road presence. He said that its 480-litre boot and the leg room for rear passengers are larger than any of its direct competitors.
The car is equipped with Audi Drive Select wherein drivers can adjust the operating characteristics of the engine, automatic transmission and steering to suit their preference and adjust suspension to suit the road conditions. It also features an optical parking system with a rear view camera and Bang & Olufsen sound system.
Audi, which sold close to 350 cars in India last year, is optimistic of its success in view of the strong growth of luxury cars in India.
Officials here said that the sales of such vehicles had been showing growth of over 200 per cent in some months.
With this, Audi will have five models in its portfolio. These are the A6, A8, TT, Audi Q7 and the A4. The company is planning to ramp up its presence in the luxury car segment through the introduction of new models and by opening more dealerships. Recently, the car maker indicated that it could launch its sports car, the R8, in India towards the end of this year.
The new Audi A4 is being launched with two engines —the “2.0 TDI multitronic” with a power-output range of 143 bhp and the “3.2 FSI tiptronic quattro” with 265 bhp. Both of them use the direct fuel injection principle. Among the two, while the first model will come at a ex-showroom price of Rs 29 lakh, the other car will be priced at Rs 36 lakh.
Audi plans to import the car initially and by the end of this year, built it locally as a completely knocked down unit at its facility in Aurangabad, Maharashtra. It now has five dealerships in the country and the new Audi A4 will be offered at five more locations coming up in the next six months — Ahmedabad, Chennai, Kochi, Calcutta and Ludhiana.
Called as the sportiest luxury sedan, the A4 has an overall length of 4.70 metres. Speaking to newspersons at the launch here today, Benoit Tiers, managing director, Audi India, said that the car also had a substantial road presence. He said that its 480-litre boot and the leg room for rear passengers are larger than any of its direct competitors.
The car is equipped with Audi Drive Select wherein drivers can adjust the operating characteristics of the engine, automatic transmission and steering to suit their preference and adjust suspension to suit the road conditions. It also features an optical parking system with a rear view camera and Bang & Olufsen sound system.
Audi, which sold close to 350 cars in India last year, is optimistic of its success in view of the strong growth of luxury cars in India.
Officials here said that the sales of such vehicles had been showing growth of over 200 per cent in some months.
Thursday, July 10, 2008
SC sends Tata-Birla row over Idea for arbitration
The two year-old dispute between the Tata Industries and the A.V. Birla Group over Idea Cellular took a fresh turn on Wednesday with the Supreme Court deciding to set up an arbitrator to resolve the issue.
The apex court’s decision is in favour of the Tatas’ plea seeking arbitration on the dispute, wherein it had alleged that the Birla Group had violated the shareholders’ agreement.
If the arbitration is settled in Tata Group’s favour, it will have the right to buy out Birla’s stake in Idea Cellular.
Govt rules
The dispute dates back to 2006 when the Tata Group was holding 48.14 per cent stake in Idea Cellular.
However since the Tatas were also having another mobile venture under Tata Teleservices, the Birla Group sought the Government intervention in getting the Tatas to exit from Idea Cellular.
The Birlas claimed that the Tata Group was not allowing Idea Cellular to grow and was more focused on Tata Teleservices.
The Tatas had to finally exit Idea Cellular because the Government rules do not allow a company to hold more than 10 per cent stake in two different telecom companies offering services in the same area.
The Aditya Birla Group acquired the entire 48.14 per cent stake of the Tata group in Idea Cellular for Rs 4,406 crore.
Two notices
However, the confrontation between the two companies did not end; before selling its stake in Idea Cellular, the Tatas served two termination notices to the Birla Group citing violation of the shareholders agreement.
In the first case, the Tatas took the Birlas to court claiming that the latter had violated the shareholders’ agreement by disclosing sensitive information relating to Idea Cellular on the A.V. Birla Group Web site.
Tata Industries served another notice to the Birla Group for applying for a telecom licence for offering mobile services in Mumbai.
The Tatas claimed that as per the shareholders agreement between the two companies, any new licences should be taken through Idea Cellular, and in case the Birla Group wanted to apply for a licence on its own, it should have taken the clearance from the Tatas.
The Tatas have claimed that as per the shareholders’ agreement, they can buy out Birla’s stake in Idea Cellular for the alleged violation.
Tatas’ plea
While the Tatas had sought arbitration on the issue, the Birlas had taken a stance that there was no offence committed that needs an arbitrator.
Based on the Tatas’ plea, the Supreme Court has now appointed former Chief Justice, Mr A. S. Anand, former Supreme Court judges Mr Arun Kumar and Mr P. K. Balasubramanian as arbitrators.
The apex court’s decision is in favour of the Tatas’ plea seeking arbitration on the dispute, wherein it had alleged that the Birla Group had violated the shareholders’ agreement.
If the arbitration is settled in Tata Group’s favour, it will have the right to buy out Birla’s stake in Idea Cellular.
Govt rules
The dispute dates back to 2006 when the Tata Group was holding 48.14 per cent stake in Idea Cellular.
However since the Tatas were also having another mobile venture under Tata Teleservices, the Birla Group sought the Government intervention in getting the Tatas to exit from Idea Cellular.
The Birlas claimed that the Tata Group was not allowing Idea Cellular to grow and was more focused on Tata Teleservices.
The Tatas had to finally exit Idea Cellular because the Government rules do not allow a company to hold more than 10 per cent stake in two different telecom companies offering services in the same area.
The Aditya Birla Group acquired the entire 48.14 per cent stake of the Tata group in Idea Cellular for Rs 4,406 crore.
Two notices
However, the confrontation between the two companies did not end; before selling its stake in Idea Cellular, the Tatas served two termination notices to the Birla Group citing violation of the shareholders agreement.
In the first case, the Tatas took the Birlas to court claiming that the latter had violated the shareholders’ agreement by disclosing sensitive information relating to Idea Cellular on the A.V. Birla Group Web site.
Tata Industries served another notice to the Birla Group for applying for a telecom licence for offering mobile services in Mumbai.
The Tatas claimed that as per the shareholders agreement between the two companies, any new licences should be taken through Idea Cellular, and in case the Birla Group wanted to apply for a licence on its own, it should have taken the clearance from the Tatas.
The Tatas have claimed that as per the shareholders’ agreement, they can buy out Birla’s stake in Idea Cellular for the alleged violation.
Tatas’ plea
While the Tatas had sought arbitration on the issue, the Birlas had taken a stance that there was no offence committed that needs an arbitrator.
Based on the Tatas’ plea, the Supreme Court has now appointed former Chief Justice, Mr A. S. Anand, former Supreme Court judges Mr Arun Kumar and Mr P. K. Balasubramanian as arbitrators.
NUCLEAR POWER IN INDIA
India has 14 reactors in commercial operation and nine under construction
Nuclear power supplies about 3% of India's electricity
By 2050, nuclear power is expected to provide 25% of the country's electricity
India has limited coal and uranium reserves
Its huge thorium reserves - about 25% of the world's total - are expected to fuel its nuclear power programme long-term
Source: Uranium Information Center
Nuclear power supplies about 3% of India's electricity
By 2050, nuclear power is expected to provide 25% of the country's electricity
India has limited coal and uranium reserves
Its huge thorium reserves - about 25% of the world's total - are expected to fuel its nuclear power programme long-term
Source: Uranium Information Center
India gives nuclear plans to IAEA
India has submitted its plans for safeguarding its civilian nuclear facilities to the world nuclear regulatory body.
The International Atomic Energy Agency's (IAEA) approval of the plan is a key condition for putting into effect a nuclear deal between India and US.
Left-wing parties in India have pulled out of the governing coalition in protest against the deal.
The government says it is needed to meet soaring energy demands.
India is under pressure from Washington to sign the accord before the US presidential elections in November.
Reports say a restricted draft of India's plans for safeguarding nuclear facilities has been given to IAEA's 35 member nations ahead of a meeting to approve the agreement.
'Big problem'
Daryl Kimball of the Washington-based Arms Control Association told Reuters news agency that there were several points in the draft that appear to restrict international monitoring of India's atomic programme.
He said the draft says India may "take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies".
Fuel supplies could be disrupted only if India were to resume testing nuclear weapons, experts say.
"Does this mean that India intends to withdraw from what are supposed to be permanent safeguards if it tests and other states decide to terminate fuel supplies?" Mr Kimball said.
"If so, that is a big problem and the Indian government has not clarified what it means."
The US had restricted nuclear co-operation with India - which has not signed the 1972 Non-Proliferation Treaty (NPT) - since it first tested a nuclear weapon in 1974.
Under the terms of the nuclear accord, India would get access to US civilian nuclear technology and fuel.
In return, Delhi would open its civilian nuclear facilities to inspection - but its nuclear weapons sites would remain off-limits.
US President George W Bush has spoken again of the importance of the deal in talks with Indian PM Manmohan Singh on the sidelines of the G8 summit in Japan on Wednesday.
Critics of the deal fear assistance to India's civil programme could free-up additional radioactive material for bomb-making purposes.
The deal now needs to be approved by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), as well as by the 45-nation Nuclear Suppliers Group, which regulates global civilian nuclear trade.
Separately, Mr Singh is due to meet the Indian president to discuss political developments arising out of the left-wing parties' withdrawal of support to the government.
The communists, who command 59 seats in the lower house of parliament, formally withdrew support for the government on Wednesday after it vowed to press ahead with the agreement.
The Congress-led government is hoping that a regional party will help them survive a vote of confidence and fend off early elections.
The International Atomic Energy Agency's (IAEA) approval of the plan is a key condition for putting into effect a nuclear deal between India and US.
Left-wing parties in India have pulled out of the governing coalition in protest against the deal.
The government says it is needed to meet soaring energy demands.
India is under pressure from Washington to sign the accord before the US presidential elections in November.
Reports say a restricted draft of India's plans for safeguarding nuclear facilities has been given to IAEA's 35 member nations ahead of a meeting to approve the agreement.
'Big problem'
Daryl Kimball of the Washington-based Arms Control Association told Reuters news agency that there were several points in the draft that appear to restrict international monitoring of India's atomic programme.
He said the draft says India may "take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies".
Fuel supplies could be disrupted only if India were to resume testing nuclear weapons, experts say.
"Does this mean that India intends to withdraw from what are supposed to be permanent safeguards if it tests and other states decide to terminate fuel supplies?" Mr Kimball said.
"If so, that is a big problem and the Indian government has not clarified what it means."
The US had restricted nuclear co-operation with India - which has not signed the 1972 Non-Proliferation Treaty (NPT) - since it first tested a nuclear weapon in 1974.
Under the terms of the nuclear accord, India would get access to US civilian nuclear technology and fuel.
In return, Delhi would open its civilian nuclear facilities to inspection - but its nuclear weapons sites would remain off-limits.
US President George W Bush has spoken again of the importance of the deal in talks with Indian PM Manmohan Singh on the sidelines of the G8 summit in Japan on Wednesday.
Critics of the deal fear assistance to India's civil programme could free-up additional radioactive material for bomb-making purposes.
The deal now needs to be approved by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), as well as by the 45-nation Nuclear Suppliers Group, which regulates global civilian nuclear trade.
Separately, Mr Singh is due to meet the Indian president to discuss political developments arising out of the left-wing parties' withdrawal of support to the government.
The communists, who command 59 seats in the lower house of parliament, formally withdrew support for the government on Wednesday after it vowed to press ahead with the agreement.
The Congress-led government is hoping that a regional party will help them survive a vote of confidence and fend off early elections.
President Patil to meet Manmohan over confidence vote
President Pratibha Patil will meet Prime Minister Manmohan Singh on Thursday, with a confidence vote expected to be the main topic after the government's left allies withdrew support to protest a nuclear deal with the United States.
The withdrawal means Singh's four-year-old government needs the support of other parties. The government has secured backing of the key regional Samajwadi Party but it is still unclear if the ruling coalition has enough votes for a parliamentary majority.
On Wednesday evening, President Patil issued a statement saying she would meet Singh on Thursday "to have his views on these developments", referring to the left's exit.
"Possibly a special session of parliament to seek a confidence vote will come up in the meeting," said a government official, who asked not to be named.
The meeting is due to start at 7:30 p.m.
India has submitted a draft nuclear safeguards accord to the International Atomic Energy Agency governors for approval, a crucial step to finalising a deal first agreed in 2005 between Singh and U.S. President George W. Bush.
Dates for both the confidence vote and an IAEA board of governors meeting to consider India's nuclear document were unclear. Both were expected, though, later this month.
A defeat for the government in parliament would trigger an early election, probably destroying chances of the nuclear pact going ahead and sparking political uncertainty just as the country struggles with record inflation and rising interest rates.
The pact's approval would be a victory for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West as it seeks energy sources for its booming, trillion-dollar economy.
But first the government must win the confidence vote.
It still needs several votes from other smaller parties, and must hope there is no rebellion within the ranks of the Samajwadi Party against the nuclear deal, which critics say gives the United States too much influence over India.
India's 543-member house includes scores of small parties from dozens of ethnic groups and castes, making it unclear whether the government has the necessary support.
The IAEA announcement that India had submitted the nuclear accord came despite Foreign Minister Pranab Mukherjee saying on Tuesday that India would seek approval from the nuclear watchdog only after the vote of confidence.
Critics say the deal reverses 30 years of U.S. policy opposing nuclear cooperation with India after it developed nuclear weapons.
But time is running out if it is to be passed by the U.S. Congress before President Bush leaves office.
After the IAEA, India still needs to seek approval for the deal from the 45-nation Nuclear Suppliers Group, where there is doubt because India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The withdrawal means Singh's four-year-old government needs the support of other parties. The government has secured backing of the key regional Samajwadi Party but it is still unclear if the ruling coalition has enough votes for a parliamentary majority.
On Wednesday evening, President Patil issued a statement saying she would meet Singh on Thursday "to have his views on these developments", referring to the left's exit.
"Possibly a special session of parliament to seek a confidence vote will come up in the meeting," said a government official, who asked not to be named.
The meeting is due to start at 7:30 p.m.
India has submitted a draft nuclear safeguards accord to the International Atomic Energy Agency governors for approval, a crucial step to finalising a deal first agreed in 2005 between Singh and U.S. President George W. Bush.
Dates for both the confidence vote and an IAEA board of governors meeting to consider India's nuclear document were unclear. Both were expected, though, later this month.
A defeat for the government in parliament would trigger an early election, probably destroying chances of the nuclear pact going ahead and sparking political uncertainty just as the country struggles with record inflation and rising interest rates.
The pact's approval would be a victory for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West as it seeks energy sources for its booming, trillion-dollar economy.
But first the government must win the confidence vote.
It still needs several votes from other smaller parties, and must hope there is no rebellion within the ranks of the Samajwadi Party against the nuclear deal, which critics say gives the United States too much influence over India.
India's 543-member house includes scores of small parties from dozens of ethnic groups and castes, making it unclear whether the government has the necessary support.
The IAEA announcement that India had submitted the nuclear accord came despite Foreign Minister Pranab Mukherjee saying on Tuesday that India would seek approval from the nuclear watchdog only after the vote of confidence.
Critics say the deal reverses 30 years of U.S. policy opposing nuclear cooperation with India after it developed nuclear weapons.
But time is running out if it is to be passed by the U.S. Congress before President Bush leaves office.
After the IAEA, India still needs to seek approval for the deal from the 45-nation Nuclear Suppliers Group, where there is doubt because India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
Bidders line up for SpiceJet, deal likely by month-end
Bidders are queueing up for a stake in SpiceJet. Apart from Vijay Mallya-promoted UB Group, the airline, is also negotiating US-based distress fund owner Wilbur Ross. But differences in valuation have not led to much headway with either of them and the airline could end up in different hands, said market sources.
Airline promoters, who helped build one of the most efficient low-cost carrier (LCC) that today enjoys a 10% market share, are looking for a good value. The Anil Ambani-led ADAG has been keen on entering the airline sector and tried its luck with Air Deccan last year. If SpiceJet promoters don't lock the deal with Mallya or Ross, they may end up with ADAG or some other big players with deep pockets. The deal is likely to come through by this month-end.
But why is everyone so desperate for SpiceJet in these tough times when aviation is a loss-making business? "Today Kingfisher-Deccan and Jet-JetLite combines are neck-and-neck with almost 30% market share each. Getting SpiceJet's 10% and then some other small acquisitions like a GoAir will make the successful bidder the clear and undisputed market leader. He can dictate the fares in the market. That's why Mallya wants SpiceJet and other players are trying to ensure it doesn't land in his lap," said a top industry player.
According to the top player, Mallya had almost clinched the deal last week when things changed suddenly. "It could have been either difference in valuation or some other player's intervention," said the player. At the current share price, the airline is valued at over Rs 600 crore and acquiring the 26% stake that's held by two promoters would mean paying up nearly Rs 155 crore.
Airline promoters, who helped build one of the most efficient low-cost carrier (LCC) that today enjoys a 10% market share, are looking for a good value. The Anil Ambani-led ADAG has been keen on entering the airline sector and tried its luck with Air Deccan last year. If SpiceJet promoters don't lock the deal with Mallya or Ross, they may end up with ADAG or some other big players with deep pockets. The deal is likely to come through by this month-end.
But why is everyone so desperate for SpiceJet in these tough times when aviation is a loss-making business? "Today Kingfisher-Deccan and Jet-JetLite combines are neck-and-neck with almost 30% market share each. Getting SpiceJet's 10% and then some other small acquisitions like a GoAir will make the successful bidder the clear and undisputed market leader. He can dictate the fares in the market. That's why Mallya wants SpiceJet and other players are trying to ensure it doesn't land in his lap," said a top industry player.
According to the top player, Mallya had almost clinched the deal last week when things changed suddenly. "It could have been either difference in valuation or some other player's intervention," said the player. At the current share price, the airline is valued at over Rs 600 crore and acquiring the 26% stake that's held by two promoters would mean paying up nearly Rs 155 crore.
Wednesday, July 09, 2008
G8 summit must focus on biofuel policies, says IPCC
The Inter-Governmental Panel on Climate Change (IPCC) has hoped that the ongoing G8 Summit in Japan would address the issue of biofuel policies, including subsidy that was contributing to the rising food prices, which could push an additional 100 million people into poverty.
Talking to journalists here on Tuesday, IPCC chairperson R. K. Pachauri said subsidies on grain and oil seed biofuels was making farmers shift from growing food grains to biofuel plantation, leaving millions hungry. Unbalanced policies disproportionately burden the poor and the G8 should tackle the interconnected challenges of climate change, food prices and development, he said.
According to Dr. Pachauri, subsidies on ethanol and palm oil had brought in distortions. Not only “food was being converted into fuel,” but also forests were being cleared for growing crops to produce ethanol and palm oil, he said. Governments should promote Jatropha plantation on wasteland so that there was no conflict with food production.
Advocating the removal of subsidy on kerosene, Dr. Pachauri said it made no sense in the wake of such high oil prices as it was being used for adulteration and black-marketing.
Emission reduction
Seeking a clear statement from the developed countries on emission reduction and their willingness to take action, Dr. Pachauri said that on India’s part, implementation of the national action plan on climate change would be the right path.
The release of action plan comes at a critical juncture, where society was grappling with growing problems of declining food security and high food process, unprecedented global process of crude oil and the threat of climate change, which had the potential to exacerbate some of these conditions, he said.
“Operationalising the action plan, however, provides significant challenges for allocations of resources and effective implementation, and specific policies under the plan need to be formulated with care to ensure their efficacy.”
But, a key aspect of promoting renewable energy was to divert resources allocated to subsidies for non-renewable fuel, particularly if they were being misused. Kerosene subsidies, while having aided the poor to obtain lighting in the past, were not only incompatible with a climate change mitigation policy, but also becoming exorbitant in terms of social costs because of the rising fuel prices, he said.
Greenpeace has called upon the G8 to take action on climate change. By adopting binding emission reduction targets and investing in an energy revolution based on real solutions – a switch to renewable energies and massive increase in efficiency – the G8 would give a constructive response to rocketing oil prices and finally tackle climate change, it said.
“The food crisis can only be resolved by addressing the core causes behind it. The G8 must shift investments to ecological methods that provide higher yields, better food and more resilience to climate change.”
Talking to journalists here on Tuesday, IPCC chairperson R. K. Pachauri said subsidies on grain and oil seed biofuels was making farmers shift from growing food grains to biofuel plantation, leaving millions hungry. Unbalanced policies disproportionately burden the poor and the G8 should tackle the interconnected challenges of climate change, food prices and development, he said.
According to Dr. Pachauri, subsidies on ethanol and palm oil had brought in distortions. Not only “food was being converted into fuel,” but also forests were being cleared for growing crops to produce ethanol and palm oil, he said. Governments should promote Jatropha plantation on wasteland so that there was no conflict with food production.
Advocating the removal of subsidy on kerosene, Dr. Pachauri said it made no sense in the wake of such high oil prices as it was being used for adulteration and black-marketing.
Emission reduction
Seeking a clear statement from the developed countries on emission reduction and their willingness to take action, Dr. Pachauri said that on India’s part, implementation of the national action plan on climate change would be the right path.
The release of action plan comes at a critical juncture, where society was grappling with growing problems of declining food security and high food process, unprecedented global process of crude oil and the threat of climate change, which had the potential to exacerbate some of these conditions, he said.
“Operationalising the action plan, however, provides significant challenges for allocations of resources and effective implementation, and specific policies under the plan need to be formulated with care to ensure their efficacy.”
But, a key aspect of promoting renewable energy was to divert resources allocated to subsidies for non-renewable fuel, particularly if they were being misused. Kerosene subsidies, while having aided the poor to obtain lighting in the past, were not only incompatible with a climate change mitigation policy, but also becoming exorbitant in terms of social costs because of the rising fuel prices, he said.
Greenpeace has called upon the G8 to take action on climate change. By adopting binding emission reduction targets and investing in an energy revolution based on real solutions – a switch to renewable energies and massive increase in efficiency – the G8 would give a constructive response to rocketing oil prices and finally tackle climate change, it said.
“The food crisis can only be resolved by addressing the core causes behind it. The G8 must shift investments to ecological methods that provide higher yields, better food and more resilience to climate change.”
Tuesday, July 08, 2008
Left meets over ending government support
India's communist parties will discuss on Tuesday whether to withdraw support for the government after Prime Minister Manmohan Singh said he would press ahead with a civilian nuclear deal with the United States "very soon".
Prime Minister Singh arrived in Japan on Monday for a G8 summit where he is expected to tell U.S. President George W. Bush -- the man who shook hands with Singh on the accord at the White House in 2005 -- that the delayed deal will go ahead.
The pact would be a major success for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West.
Leftist parties, which have given Singh a parliamentary majority over the last four years, threaten to withdraw if he moves the deal ahead with the International Atomic Energy Agency, the next step required for the accord to take effect.
A withdrawal would likely lead to a vote of confidence in the government, plunging India into more political uncertainty that has already hit markets. The government believes it will survive the vote, having won the backing of the regional Samajwadi Party.
Singh's comments on Monday about approaching the IAEA "soon" may have been the final straw for the left.
"By making this statement, the PM has put the entire democratic process in a ridiculous position," Communist Party of India (CPI) leader D. Raja was quoted in local media as saying.
"The left now has to act and withdraw," Raja added. The CPI is one of four leftist parties that prop up the ruling coalition in parliament.
Other left leaders said they may wait until Thursday to announce their formal withdrawal, when a meeting between the government and the communist parties is planned.
TOO LATE FOR THE DEAL?
IAEA diplomats said on Monday there was talk of a special July 28 board gathering to discuss the deal but any timetable for advancing it would be unclear until Singh authorised the IAEA to proceed.
"This meeting would be India-specific, but no date for it has been set yet. It would be premature at this point," said an IAEA official who, like the diplomats, asked for anonymity due to political sensitivities.
But some say it could already be too late for the deal to be passed before the end of Bush's term.
With time running out before the U.S. election in November, India needs to seek approval for the deal from the IAEA, then the 45-nation Nuclear Suppliers Group, where there is doubt about it since India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The nuclear deal is potentially worth billions of dollars to U.S. and European nuclear supply companies and would give India more energy alternatives to drive its booming economy.
The support of the SP, which has a history of pragmatic alliances with governments, should ensure that Singh wins the vote and avoids an early election this year just as the government grapples with inflation at a 13-year high and signs of economic slowdown.
The Samajwadi Party has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try to win the other five seats from smaller parties.
India's political uncertainty has hit markets. Stocks fell 2.5 percent last week, pushed down not only by worries over the government's future but also by record oil prices and inflation.
On Monday, stocks rose 0.5 percent, partly on news that the government has secured the support of the Samajwadi Party.
Prime Minister Singh arrived in Japan on Monday for a G8 summit where he is expected to tell U.S. President George W. Bush -- the man who shook hands with Singh on the accord at the White House in 2005 -- that the delayed deal will go ahead.
The pact would be a major success for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West.
Leftist parties, which have given Singh a parliamentary majority over the last four years, threaten to withdraw if he moves the deal ahead with the International Atomic Energy Agency, the next step required for the accord to take effect.
A withdrawal would likely lead to a vote of confidence in the government, plunging India into more political uncertainty that has already hit markets. The government believes it will survive the vote, having won the backing of the regional Samajwadi Party.
Singh's comments on Monday about approaching the IAEA "soon" may have been the final straw for the left.
"By making this statement, the PM has put the entire democratic process in a ridiculous position," Communist Party of India (CPI) leader D. Raja was quoted in local media as saying.
"The left now has to act and withdraw," Raja added. The CPI is one of four leftist parties that prop up the ruling coalition in parliament.
Other left leaders said they may wait until Thursday to announce their formal withdrawal, when a meeting between the government and the communist parties is planned.
TOO LATE FOR THE DEAL?
IAEA diplomats said on Monday there was talk of a special July 28 board gathering to discuss the deal but any timetable for advancing it would be unclear until Singh authorised the IAEA to proceed.
"This meeting would be India-specific, but no date for it has been set yet. It would be premature at this point," said an IAEA official who, like the diplomats, asked for anonymity due to political sensitivities.
But some say it could already be too late for the deal to be passed before the end of Bush's term.
With time running out before the U.S. election in November, India needs to seek approval for the deal from the IAEA, then the 45-nation Nuclear Suppliers Group, where there is doubt about it since India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The nuclear deal is potentially worth billions of dollars to U.S. and European nuclear supply companies and would give India more energy alternatives to drive its booming economy.
The support of the SP, which has a history of pragmatic alliances with governments, should ensure that Singh wins the vote and avoids an early election this year just as the government grapples with inflation at a 13-year high and signs of economic slowdown.
The Samajwadi Party has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. It would try to win the other five seats from smaller parties.
India's political uncertainty has hit markets. Stocks fell 2.5 percent last week, pushed down not only by worries over the government's future but also by record oil prices and inflation.
On Monday, stocks rose 0.5 percent, partly on news that the government has secured the support of the Samajwadi Party.
MARKET PREDICTION
GLOBAL MARKETS ARE EXTREMELY NEGATIVE DUE TO MORE FINANCIAL DERIVATIVE LOSS EXPECTATION.
INDIAN MARKET WILL REMAIN VOLATILE DUE TO RESULT SESSION KNOCKING AT THE DOOR.
NIFTY WILL OPEN IN NEGATIVE NOTE.
TOTAL OI IS 66 K CR AND JULY SERIES IS 57 K CR .
PUT CALL RATIO IS INCHED UPTO 1.19%.
MARKET WOULD TRADE IN BROADER RANGE OF 3850-4050.
TODAY'S LEVELS 3850-3920-3950-4000-4050.
POSITIVE SECTOR IS IT DUE TO RUPEE DEPRECIATION AND NEGATIVE SECTOR IS OIL MARKETING SECTOR AND AVATION DUE TO CRUDE STABILITY AT HIGHER LEVEL.
HAVE A NICE TRADING DAY.
-MR SAM
INDIAN MARKET WILL REMAIN VOLATILE DUE TO RESULT SESSION KNOCKING AT THE DOOR.
NIFTY WILL OPEN IN NEGATIVE NOTE.
TOTAL OI IS 66 K CR AND JULY SERIES IS 57 K CR .
PUT CALL RATIO IS INCHED UPTO 1.19%.
MARKET WOULD TRADE IN BROADER RANGE OF 3850-4050.
TODAY'S LEVELS 3850-3920-3950-4000-4050.
POSITIVE SECTOR IS IT DUE TO RUPEE DEPRECIATION AND NEGATIVE SECTOR IS OIL MARKETING SECTOR AND AVATION DUE TO CRUDE STABILITY AT HIGHER LEVEL.
HAVE A NICE TRADING DAY.
-MR SAM
EU optimistic about climate change deal
The Group of Eight leaders are set on Tuesday to take an "important step" forward on fighting global warming, the stickiest issue at their summit, a European Union source said.
The European Union and Japan have been pressing for a G8 statement that goes beyond a summit pledge last year to "seriously consider" a goal of halving global carbon emissions by mid-century and refers to the need for interim targets as well.
Senior G8 officials met late into the night in Japan to thrash out wording that would allow President George W. Bush to put aside deep misgivings and sign on to a long-term global goal, the EU source said, asking not to be named.
The officials had reached a tentative agreement on the statement, according to both the EU source and a Japanese government source. Neither would give details of the pact.
Bush has insisted that Washington cannot agree to binding targets unless big polluters such as China and India commit to reining in their emissions of the greenhouse gases that cause global warming.
"The European Commission is confident and optimistic about the outcome and that this will mean an important step compared with Heiligendamm," the EU source told Reuters, referring to last year's G8 summit in Germany.
"You know what the (European Commission) president's idea of success was and when he was briefed this morning there was a smile on his face."
The agreement was expected to be unveiled later on Tuesday.
German Chancellor Angela Merkel said on Tuesday after a morning meeting with U.S. President George W. Bush that she was "very satisfied" with the G8's work on the issues of climate change as well as on soaring food and oil prices, also high on the agenda.
Bush did not mention those issues in his brief comments after the bilateral talks.
The statement on climate change is expected to highlight agreements to develop new technologies and provide funds to help poor countries limit greenhouse gas emissions.
But activists were wary of prospects for real progress until a new U.S. president takes office next year.
"It's a little bit of a kabuki play," said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists. "Everyone is just waiting for the next president to see how that changes things."
SOARING FOOD AND FUEL PRICES
Global warming ties into other big themes at the three-day meeting at a plush mountain-top hotel on the northern Japanese island of Hokkaido, where 21,000 police have been mobilized.
U.N. Secretary-General Ban Ki-moon, who attended talks on Monday with African leaders, said the drive to reach eight Millennium Development Goals (MDGs) set by the U.N. General Assembly to reduce world poverty by 2015 was being directly hampered by global warming.
He urged the G8 to send a strong political signal by setting a long-term goal of halving greenhouse gas emissions by 2050, backed by intermediate targets that would set market forces in train to reduce energy consumption.
The G8 will set out its positions on climate change, aid to Africa, rising food prices and the global economy in a raft of statements due to be issued later on Tuesday.
Japan's Yomiuri newspaper said on Monday that the leaders' communique would highlight downside risks to the world economy and label rising food and oil prices a "serious threat".
The higher price of oil, which hit a record high of $145.85 a barrel last week, is taking a particularly heavy toll on the world's poor. A World Bank study issued last week said up to 105 million people could drop below the poverty line due to the leap in food prices, including 30 million in Africa.
"How we respond to this double jeopardy of soaring food and oil prices is a test of the global system's commitment to help the most vulnerable," World Bank President Robert Zoellick said on Monday.
"It is a test we cannot afford to fail," he told reporters.
To help cushion the blow, officials said the G8 would unveil a series of measures to help Africa, especially its farmers, and would affirm its commitment to double aid to give $50 billion extra in aid by 2010, with half to go to the world's poorest continent.
The summit wraps up on Wednesday with a Major Economies Meeting comprising the G8 and eight other big greenhouse gas-emitting countries, including India, China and Australia.
The European Union and Japan have been pressing for a G8 statement that goes beyond a summit pledge last year to "seriously consider" a goal of halving global carbon emissions by mid-century and refers to the need for interim targets as well.
Senior G8 officials met late into the night in Japan to thrash out wording that would allow President George W. Bush to put aside deep misgivings and sign on to a long-term global goal, the EU source said, asking not to be named.
The officials had reached a tentative agreement on the statement, according to both the EU source and a Japanese government source. Neither would give details of the pact.
Bush has insisted that Washington cannot agree to binding targets unless big polluters such as China and India commit to reining in their emissions of the greenhouse gases that cause global warming.
"The European Commission is confident and optimistic about the outcome and that this will mean an important step compared with Heiligendamm," the EU source told Reuters, referring to last year's G8 summit in Germany.
"You know what the (European Commission) president's idea of success was and when he was briefed this morning there was a smile on his face."
The agreement was expected to be unveiled later on Tuesday.
German Chancellor Angela Merkel said on Tuesday after a morning meeting with U.S. President George W. Bush that she was "very satisfied" with the G8's work on the issues of climate change as well as on soaring food and oil prices, also high on the agenda.
Bush did not mention those issues in his brief comments after the bilateral talks.
The statement on climate change is expected to highlight agreements to develop new technologies and provide funds to help poor countries limit greenhouse gas emissions.
But activists were wary of prospects for real progress until a new U.S. president takes office next year.
"It's a little bit of a kabuki play," said Alden Meyer, director of strategy and policy for the Union of Concerned Scientists. "Everyone is just waiting for the next president to see how that changes things."
SOARING FOOD AND FUEL PRICES
Global warming ties into other big themes at the three-day meeting at a plush mountain-top hotel on the northern Japanese island of Hokkaido, where 21,000 police have been mobilized.
U.N. Secretary-General Ban Ki-moon, who attended talks on Monday with African leaders, said the drive to reach eight Millennium Development Goals (MDGs) set by the U.N. General Assembly to reduce world poverty by 2015 was being directly hampered by global warming.
He urged the G8 to send a strong political signal by setting a long-term goal of halving greenhouse gas emissions by 2050, backed by intermediate targets that would set market forces in train to reduce energy consumption.
The G8 will set out its positions on climate change, aid to Africa, rising food prices and the global economy in a raft of statements due to be issued later on Tuesday.
Japan's Yomiuri newspaper said on Monday that the leaders' communique would highlight downside risks to the world economy and label rising food and oil prices a "serious threat".
The higher price of oil, which hit a record high of $145.85 a barrel last week, is taking a particularly heavy toll on the world's poor. A World Bank study issued last week said up to 105 million people could drop below the poverty line due to the leap in food prices, including 30 million in Africa.
"How we respond to this double jeopardy of soaring food and oil prices is a test of the global system's commitment to help the most vulnerable," World Bank President Robert Zoellick said on Monday.
"It is a test we cannot afford to fail," he told reporters.
To help cushion the blow, officials said the G8 would unveil a series of measures to help Africa, especially its farmers, and would affirm its commitment to double aid to give $50 billion extra in aid by 2010, with half to go to the world's poorest continent.
The summit wraps up on Wednesday with a Major Economies Meeting comprising the G8 and eight other big greenhouse gas-emitting countries, including India, China and Australia.
Monday, July 07, 2008
India steel cos sell direct to users to curb price
Indian steel firms have started selling products directly to small buyers to help save costs, as part of their commitment to keep prices down and stave off inflationary pressures, company officials said.
While steelmakers themselves would be unaffected by the move, small and medium enterprises (SMEs) who have been forced to buy through middlemen because of the smaller size of orders may save between 20 percent and 25 percent of their costs, they said.
About 5 percent of hot-rolled products are marketed through retailers who buy from the steel companies at the same price as major buyers and sell it to SME consumers at a marked-up price.
"The ultimate beneficiary (of the current system) is the middleman. As a support to the government to fight inflation, we are selling directly to the end-consumers to ensure they get the right price," a senior official at JSW Steel Ltd (JSTL.BO: Quote, Profile, Research) said.
Steel firms promised to take steps to fight inflation last week including reviewing trading arrangements and setting a maximum retail price, the government said in a release last week.
Other steps include advertising the price and facility for small buyers to buy through the internet, the government said.
JSW Steel Ltd (JSTL.BO: Quote, Profile, Research), India's third biggest producer, said in an advertisement on Monday it will make up to 10 tonnes steel available to actual users through its warehouses across India.
Ispat Industries Ltd (ISPT.BO: Quote, Profile, Research), which supplies around 90 percent of its output directly to re-rollers such as Bhushan Steel (BSSL.BO: Quote, Profile, Research) and Uttam Galva Steels (UTTM.BO: Quote, Profile, Research), recently started direct marketing to the SMEs.
"Now, we are catering to small customers directly. We directly process their requests online. This is to ensure price transparency," an Ispat spokesman said.
Prices of steel, used in construction, auto parts, engineering goods and heavy equipment, have risen by a third in India and doubled globally.
Tata Steel Ltd (TISC.BO: Quote, Profile, Research), world's sixth biggest producer, sells only 20-25 percent to retailers and has no plans for direct retail sales. Jindal Steel & Power (JNSP.BO: Quote, Profile, Research), part of $8 billion Jindal group, said it doesn't have any such plans "as of now."
Shares in steel companies were firm on Monday in a strong Mumbai market with JSW Steel rising as much as 6.99 percent to 804.80 rupees and Ispat up 5.57 percent at 21.80 rupees. Tata Steel was up 2.3 percent at 658.35 rupees.
While steelmakers themselves would be unaffected by the move, small and medium enterprises (SMEs) who have been forced to buy through middlemen because of the smaller size of orders may save between 20 percent and 25 percent of their costs, they said.
About 5 percent of hot-rolled products are marketed through retailers who buy from the steel companies at the same price as major buyers and sell it to SME consumers at a marked-up price.
"The ultimate beneficiary (of the current system) is the middleman. As a support to the government to fight inflation, we are selling directly to the end-consumers to ensure they get the right price," a senior official at JSW Steel Ltd (JSTL.BO: Quote, Profile, Research) said.
Steel firms promised to take steps to fight inflation last week including reviewing trading arrangements and setting a maximum retail price, the government said in a release last week.
Other steps include advertising the price and facility for small buyers to buy through the internet, the government said.
JSW Steel Ltd (JSTL.BO: Quote, Profile, Research), India's third biggest producer, said in an advertisement on Monday it will make up to 10 tonnes steel available to actual users through its warehouses across India.
Ispat Industries Ltd (ISPT.BO: Quote, Profile, Research), which supplies around 90 percent of its output directly to re-rollers such as Bhushan Steel (BSSL.BO: Quote, Profile, Research) and Uttam Galva Steels (UTTM.BO: Quote, Profile, Research), recently started direct marketing to the SMEs.
"Now, we are catering to small customers directly. We directly process their requests online. This is to ensure price transparency," an Ispat spokesman said.
Prices of steel, used in construction, auto parts, engineering goods and heavy equipment, have risen by a third in India and doubled globally.
Tata Steel Ltd (TISC.BO: Quote, Profile, Research), world's sixth biggest producer, sells only 20-25 percent to retailers and has no plans for direct retail sales. Jindal Steel & Power (JNSP.BO: Quote, Profile, Research), part of $8 billion Jindal group, said it doesn't have any such plans "as of now."
Shares in steel companies were firm on Monday in a strong Mumbai market with JSW Steel rising as much as 6.99 percent to 804.80 rupees and Ispat up 5.57 percent at 21.80 rupees. Tata Steel was up 2.3 percent at 658.35 rupees.
Govt approves 23 coal blocks to Essar, JSPL, Ispat
The government is understood to have approved allocation of 23 coking and non-coking coal blocks to leading steel, cement and power producers, including Essar, JSPL, Grasim, Monnet and Ispat.
While four coking coal blocks have been allocated in Madhya Pradesh, the rest 19 non-coking blocks are in West Bengal, Madhya Pradesh, Chhatisgarh, Jharkhand, Maharashtra and Andhra Pradesh, a senior government official told PTI.
In its meeting held last week, the Screening Committee of Coal Ministry, headed by Coal Secretary H C Gupta, decided to allocate the Behrabandh coking coal block to Vinod Mittal-led Ispat Industries on a sharing basis with Essar, Mukund Steel and Ind Synergy.
Of the total 170 million tons reserves, Ispat Industries was allocated 70 million tons, while Essar and Mukund 53 and 25 million tons respectively. Orissa's Ind Synergy got the rest.
Coking coal is a major raw material for steel making in addition to iron ore.
The committee has also approved the Urtan coking coal block, which has an estimated reserves of about 42 million tons, to Jindal Steel and Power Ltd and Monnet Ispat on a sharing basis.
The Urtan North coking coal block with an estimated reserves of about 54 million tons was approved for Bhushan Steel and Prakash Industries.
Of the major non-coking coal blocks, Moira and Madhujore (North and South) in West Bengal were allocated to Adhunik Group on a sharing basis with Uttam Galva, ACC, Vikas Metal and Power Ltd, Mideast Integrated and Ramsarup Lohh Udyog.
The block has a reserve of over 685 million tons, of which Adhunik Group was allocated the maximum 30 per cent of the total reserves.
While four coking coal blocks have been allocated in Madhya Pradesh, the rest 19 non-coking blocks are in West Bengal, Madhya Pradesh, Chhatisgarh, Jharkhand, Maharashtra and Andhra Pradesh, a senior government official told PTI.
In its meeting held last week, the Screening Committee of Coal Ministry, headed by Coal Secretary H C Gupta, decided to allocate the Behrabandh coking coal block to Vinod Mittal-led Ispat Industries on a sharing basis with Essar, Mukund Steel and Ind Synergy.
Of the total 170 million tons reserves, Ispat Industries was allocated 70 million tons, while Essar and Mukund 53 and 25 million tons respectively. Orissa's Ind Synergy got the rest.
Coking coal is a major raw material for steel making in addition to iron ore.
The committee has also approved the Urtan coking coal block, which has an estimated reserves of about 42 million tons, to Jindal Steel and Power Ltd and Monnet Ispat on a sharing basis.
The Urtan North coking coal block with an estimated reserves of about 54 million tons was approved for Bhushan Steel and Prakash Industries.
Of the major non-coking coal blocks, Moira and Madhujore (North and South) in West Bengal were allocated to Adhunik Group on a sharing basis with Uttam Galva, ACC, Vikas Metal and Power Ltd, Mideast Integrated and Ramsarup Lohh Udyog.
The block has a reserve of over 685 million tons, of which Adhunik Group was allocated the maximum 30 per cent of the total reserves.
Korea, India, Vietnam Currency Interventions May Fail
South Korea, India and Vietnam will fail to halt declines in their currencies by using intervention because their economies are slowing and trade deficits widening, said Morgan Stanley, the second-biggest U.S. securities firm.
Central banks in each of the countries have ``repeatedly'' been buying and selling foreign-exchange this year as their currencies have weakened, Stewart Newnham, a research analyst at Morgan Stanley, wrote in a note to clients. The won, rupee and dong have all fallen at least 5 percent in 2008, threatening to quicken inflation by increasing import costs. Korea, the world's sixth-biggest holder of foreign-exchange reserves, pledged today to take ``stern action'' to stabilize the won.
``Their intervention will ultimately fail,'' Hong Kong- based Newnham wrote in the note, which he confirmed by telephone today. ``The best they can hope for, in our view, is to engineer an orderly decline through a `smoothing operation.' And maybe Vietnam cannot even achieve that.''
The won has fallen 10.2 percent this year to 1,042.85 per dollar according to Seoul Money Brokerage Services Ltd. It is the second biggest loser against the dollar in the period of the 10 most-traded Asian currencies outside Japan. India's rupee has weakened 8.7 percent to 43.165 and the dong has slipped 5 percent to 16,846.50.
Minister Dismissed
Korea's currency snapped two days of losses today, gaining 0.7 percent, after the Ministry of Finance and the Bank of Korea said they will use foreign-exchange reserves to stabilize the won and ``take strong necessary measures if the imbalance seems excessive.'' President Lee Myung Bak today dismissed Vice Finance Minister Choi Joong Kyung, who was in charge of currency policy, as part of a wider cabinet reshuffle.
``By far, the strongest pressure is on the Vietnamese dong'' due to its limited foreign-exchange reserves, Newnham wrote. Morgan Stanley estimates Vietnam's reserves to be $27 billion, India's $302 billion, the world's fourth biggest, and South Korea's $258 billion.
Vietnam will be forced to ``realign'' the dong, Newnham said. Traders are pricing in an 18 percent decline in the coming year to 20,500 per dollar, according to offshore 12-month non- deliverable forwards.
Accelerating inflation has pushed so-called ``real rates,'' which are interest rates accounted for inflation, towards zero or negative levels because ``interest-rate stances are not sufficiently tight,'' Newnham wrote.
Not Credible
Korea's benchmark rate is at 5 percent and Vietnam's at 14 percent, compared with inflation of 5.5 percent and 26.8 percent respectively. India's policy rate is at 8.5 percent, compared with its wholesale price index at 11.63 percent.
``Their interest-rate and exchange-rate policies are not internally consistent for currency intervention to be regarded as credible,'' Newnham said in the note.
Banks in the three countries are ``showing signs of discomfort and this could feed through into foreign-exchange weakness,'' Newnham wrote, citing high loan-to-deposit ratios, a shortage of dollars onshore and property loans.
Central banks in each of the countries have ``repeatedly'' been buying and selling foreign-exchange this year as their currencies have weakened, Stewart Newnham, a research analyst at Morgan Stanley, wrote in a note to clients. The won, rupee and dong have all fallen at least 5 percent in 2008, threatening to quicken inflation by increasing import costs. Korea, the world's sixth-biggest holder of foreign-exchange reserves, pledged today to take ``stern action'' to stabilize the won.
``Their intervention will ultimately fail,'' Hong Kong- based Newnham wrote in the note, which he confirmed by telephone today. ``The best they can hope for, in our view, is to engineer an orderly decline through a `smoothing operation.' And maybe Vietnam cannot even achieve that.''
The won has fallen 10.2 percent this year to 1,042.85 per dollar according to Seoul Money Brokerage Services Ltd. It is the second biggest loser against the dollar in the period of the 10 most-traded Asian currencies outside Japan. India's rupee has weakened 8.7 percent to 43.165 and the dong has slipped 5 percent to 16,846.50.
Minister Dismissed
Korea's currency snapped two days of losses today, gaining 0.7 percent, after the Ministry of Finance and the Bank of Korea said they will use foreign-exchange reserves to stabilize the won and ``take strong necessary measures if the imbalance seems excessive.'' President Lee Myung Bak today dismissed Vice Finance Minister Choi Joong Kyung, who was in charge of currency policy, as part of a wider cabinet reshuffle.
``By far, the strongest pressure is on the Vietnamese dong'' due to its limited foreign-exchange reserves, Newnham wrote. Morgan Stanley estimates Vietnam's reserves to be $27 billion, India's $302 billion, the world's fourth biggest, and South Korea's $258 billion.
Vietnam will be forced to ``realign'' the dong, Newnham said. Traders are pricing in an 18 percent decline in the coming year to 20,500 per dollar, according to offshore 12-month non- deliverable forwards.
Accelerating inflation has pushed so-called ``real rates,'' which are interest rates accounted for inflation, towards zero or negative levels because ``interest-rate stances are not sufficiently tight,'' Newnham wrote.
Not Credible
Korea's benchmark rate is at 5 percent and Vietnam's at 14 percent, compared with inflation of 5.5 percent and 26.8 percent respectively. India's policy rate is at 8.5 percent, compared with its wholesale price index at 11.63 percent.
``Their interest-rate and exchange-rate policies are not internally consistent for currency intervention to be regarded as credible,'' Newnham said in the note.
Banks in the three countries are ``showing signs of discomfort and this could feed through into foreign-exchange weakness,'' Newnham wrote, citing high loan-to-deposit ratios, a shortage of dollars onshore and property loans.
Dubai International Says Asia Is the Place to Invest in 2008
Dubai International Capital LLC, the asset management firm with more than $12 billion, said any investments made in 2008 will be in Asia, where economies may expand faster than the global average this year.
The firm has earmarked $5 billion over the next two-to-three years for Asia, especially China and India, Sameer al-Ansari, the company's chief executive officer, said in an interview in Japan's Fukuoka prefecture. Cash is the best option for now as private equity deals have come to a halt in Europe and in the U.S., he said.
Dubai International has bought stakes in ICICI Bank Ltd., HSBC Holdings Plc and Sony Corp. with money from investors, including Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, as the second-biggest sheikhdom in the United Arab Emirates seeks to diversify its sources of income away from real estate and oil.
``The focus has shifted to emerging markets and Asia where we see the better opportunities,'' said al-Ansari, who was attending the Asia Innovation Initiative conference in Japan's southwestern island of Kyushu. ``We strongly believe that cash is king at the moment and that there will be phenomenal investment opportunities.''
Infrastructure, construction and services are the industries that the fund is focused on, according to al-Ansari, as well as on companies that can benefit from growth in Dubai and neighboring countries.
China, India
Dubai International aims to invest about $1 billion each in India and China, al-Ansari said. The fund is currently in ``advanced talks'' with manufacturers in the U.A.E. and India, he said, declining to be more specific.
``Asia is very important for our investment strategy, and a year ago we started saying we want to invest more in Asia,'' al- Ansari said. ``We're looking to build long-term relationships that help us for diversification and will benefit Dubai and the region.''
Economies in Asia will expand 6.2 percent this year, according to the International Monetary Fund. That's more than the 4.1 percent global average the IMF projects.
In April, Dubai International said it plans to set up a $1 billion fund with Hong Kong-based First Eastern Investment Group to focus on China. China Dubai Capital fund will invest in Chinese companies in the infrastructure, resources and health- care industries, according to Dubai International and First Eastern.
`Serious Money'
``We want to be investing heavily in China,'' al-Ansari said. ``It's impossible to say one has a global investment strategy and not have serious money in China.''
Dubai International last July said it bought a 2.87 percent stake in ICICI Bank, India's biggest lender by market value, worth about $730 million.
It bought shares in Sony, the world's second-largest maker of consumer electronics, in 2007, its first investment in a Japanese company. The fund has no plans to make additional investments in Japan, al-Ansari said, citing Japanese companies' reluctance to sell to foreigners.
``If you ask me today, are you close to making any investment in a Japanese public company, the answer would be no,'' he said. Still, ``Japan is also very much on the radar screen.''
The firm has earmarked $5 billion over the next two-to-three years for Asia, especially China and India, Sameer al-Ansari, the company's chief executive officer, said in an interview in Japan's Fukuoka prefecture. Cash is the best option for now as private equity deals have come to a halt in Europe and in the U.S., he said.
Dubai International has bought stakes in ICICI Bank Ltd., HSBC Holdings Plc and Sony Corp. with money from investors, including Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, as the second-biggest sheikhdom in the United Arab Emirates seeks to diversify its sources of income away from real estate and oil.
``The focus has shifted to emerging markets and Asia where we see the better opportunities,'' said al-Ansari, who was attending the Asia Innovation Initiative conference in Japan's southwestern island of Kyushu. ``We strongly believe that cash is king at the moment and that there will be phenomenal investment opportunities.''
Infrastructure, construction and services are the industries that the fund is focused on, according to al-Ansari, as well as on companies that can benefit from growth in Dubai and neighboring countries.
China, India
Dubai International aims to invest about $1 billion each in India and China, al-Ansari said. The fund is currently in ``advanced talks'' with manufacturers in the U.A.E. and India, he said, declining to be more specific.
``Asia is very important for our investment strategy, and a year ago we started saying we want to invest more in Asia,'' al- Ansari said. ``We're looking to build long-term relationships that help us for diversification and will benefit Dubai and the region.''
Economies in Asia will expand 6.2 percent this year, according to the International Monetary Fund. That's more than the 4.1 percent global average the IMF projects.
In April, Dubai International said it plans to set up a $1 billion fund with Hong Kong-based First Eastern Investment Group to focus on China. China Dubai Capital fund will invest in Chinese companies in the infrastructure, resources and health- care industries, according to Dubai International and First Eastern.
`Serious Money'
``We want to be investing heavily in China,'' al-Ansari said. ``It's impossible to say one has a global investment strategy and not have serious money in China.''
Dubai International last July said it bought a 2.87 percent stake in ICICI Bank, India's biggest lender by market value, worth about $730 million.
It bought shares in Sony, the world's second-largest maker of consumer electronics, in 2007, its first investment in a Japanese company. The fund has no plans to make additional investments in Japan, al-Ansari said, citing Japanese companies' reluctance to sell to foreigners.
``If you ask me today, are you close to making any investment in a Japanese public company, the answer would be no,'' he said. Still, ``Japan is also very much on the radar screen.''
Indian shares rise for 2nd day but worries remain
Indian shares rose 0.5 percent on Monday but there was little conviction for a recovery as the market shed most of the day's gains with investors bracing for an interest rate rise.
With little sign of inflation easing in the near term from a 13-year-high of 11.6 percent in late June, the Reserve Bank of India is expected to again tighten policy to calm nerves about rising prices, traders said.
Export-focused software companies led the market higher on hopes for strong quarterly earnings, with a weaker rupee seen helping revenue. Bellwether Infosys Technologies, which reports earnings on Friday, rose 2.6 percent to 1,801.20.
The 30-share BSE index closed up 0.54 percent, or 71.99 points, at 13,525.99, stretching gains into a second successive session. Twenty-two components rose.
The benchmark had risen 2.5 percent during trade after the Congress party-led coalition won assurance of support from a regional party on Saturday for a U.S. nuclear deal helped ease concerns about political stability after the government's left allies threatened to withdraw support.
Jigar Shah, head of research at Kim Eng Securities India, said the early rebound was on hopes the government would stay, but on the economic front there was little cheer.
"The negative factors are still there. So volatility will continue," he said, referring to expectation for further monetary tightening by the central bank to contain inflation.
The BSE index, which has lost nearly a fifth in the last five weeks, is down more than a third this year with foreign funds dumping shares worth $6.6 billion.
No. 4 mutual fund UTI Asset Management has decided to defer its planned $480 million share sale because of a subdued market, six sources with direct knowledge of the matter told Reuters.
Refiner Reliance Industries, the heaviest stock in the main index, fell 3.4 percent to 2,028.15 rupees after a newspaper reported the government was considering higher taxes on private sector refiners to pay for high oil prices.
No. 2 mobile operator Reliance Communications reversed gains to close 4.2 percent lower at 419.80 rupees as investors awaited for clarity on its exclusive tie-up talks with South Africa's MTN that ends on Tuesday.
Analysts and media reports have said the deadline could be extended.
In the broader market, gainers led losers by more than two-to-one. Volume was high at 584 million shares, helped by a block deal of 282.9 million shares in Spice Communications.
The 50-share NSE index closed 0.35 percent higher at 4,030.
Elsewhere in the region, Karachi's 100-share index fell 0.7 percent to 11,878.38 and Colombo's All-share index slipped 0.14 percent to 2,401.17.
STOCKS THAT MOVED
Shares in top lender State Bank of India gained 3.9 percent to 1,171.75 rupees and ICICI Bank added 0.5 percent to 603.75 rupees as investors bought bargains after heavy falls in recent weeks.
* Software services providers Wipro gained 2.5 percent to 440 rupees and while Satyam firmed 4.3 percent to 481.95 rupees in anticipation of good quarterly results.
* State-run Oil and Natural Gas Corp rose 1.2 percent to 887.10 rupees. The company has qualified to bid as an operator for Angolan deepwater blocks, which are likely to be offered after elections in the African nation.
* SpiceJet Ltd rose 21.8 percent to 30.45 rupees, extending gains for the fourth straight session, on media reports that founders of the low-cost carrier were close to a stake sale deal with Vijay Mallya-owned rival Kingfisher Airlines.
MAIN TOP THREE BY VOLUME
* Spice Communications on 286 million shares
* Reliance Natural Resources on 26.4 million shares
* IFCI Ltd on 20.6 million shares
With little sign of inflation easing in the near term from a 13-year-high of 11.6 percent in late June, the Reserve Bank of India is expected to again tighten policy to calm nerves about rising prices, traders said.
Export-focused software companies led the market higher on hopes for strong quarterly earnings, with a weaker rupee seen helping revenue. Bellwether Infosys Technologies, which reports earnings on Friday, rose 2.6 percent to 1,801.20.
The 30-share BSE index closed up 0.54 percent, or 71.99 points, at 13,525.99, stretching gains into a second successive session. Twenty-two components rose.
The benchmark had risen 2.5 percent during trade after the Congress party-led coalition won assurance of support from a regional party on Saturday for a U.S. nuclear deal helped ease concerns about political stability after the government's left allies threatened to withdraw support.
Jigar Shah, head of research at Kim Eng Securities India, said the early rebound was on hopes the government would stay, but on the economic front there was little cheer.
"The negative factors are still there. So volatility will continue," he said, referring to expectation for further monetary tightening by the central bank to contain inflation.
The BSE index, which has lost nearly a fifth in the last five weeks, is down more than a third this year with foreign funds dumping shares worth $6.6 billion.
No. 4 mutual fund UTI Asset Management has decided to defer its planned $480 million share sale because of a subdued market, six sources with direct knowledge of the matter told Reuters.
Refiner Reliance Industries, the heaviest stock in the main index, fell 3.4 percent to 2,028.15 rupees after a newspaper reported the government was considering higher taxes on private sector refiners to pay for high oil prices.
No. 2 mobile operator Reliance Communications reversed gains to close 4.2 percent lower at 419.80 rupees as investors awaited for clarity on its exclusive tie-up talks with South Africa's MTN that ends on Tuesday.
Analysts and media reports have said the deadline could be extended.
In the broader market, gainers led losers by more than two-to-one. Volume was high at 584 million shares, helped by a block deal of 282.9 million shares in Spice Communications.
The 50-share NSE index closed 0.35 percent higher at 4,030.
Elsewhere in the region, Karachi's 100-share index fell 0.7 percent to 11,878.38 and Colombo's All-share index slipped 0.14 percent to 2,401.17.
STOCKS THAT MOVED
Shares in top lender State Bank of India gained 3.9 percent to 1,171.75 rupees and ICICI Bank added 0.5 percent to 603.75 rupees as investors bought bargains after heavy falls in recent weeks.
* Software services providers Wipro gained 2.5 percent to 440 rupees and while Satyam firmed 4.3 percent to 481.95 rupees in anticipation of good quarterly results.
* State-run Oil and Natural Gas Corp rose 1.2 percent to 887.10 rupees. The company has qualified to bid as an operator for Angolan deepwater blocks, which are likely to be offered after elections in the African nation.
* SpiceJet Ltd rose 21.8 percent to 30.45 rupees, extending gains for the fourth straight session, on media reports that founders of the low-cost carrier were close to a stake sale deal with Vijay Mallya-owned rival Kingfisher Airlines.
MAIN TOP THREE BY VOLUME
* Spice Communications on 286 million shares
* Reliance Natural Resources on 26.4 million shares
* IFCI Ltd on 20.6 million shares
Hybrid cars may get cheaper
In a major boost to eco-friendly hybrid cars, the government is planning to slash excise and customs duties on such vehicles. The move aims at encouraging the use of alternative sources of fuel. At present, Honda Civic is the only hybrid version in the country. Several other manufacturers like Mahindra and Tatas are planning to join the race soon.
Policy makers are examining the proposal to encourage use of such cars that run both on fossil fuel and electric battery in the country, an official said. As per the proposal mooted by the Department of Heavy Industries, excise duty on such cars should be reduced to 12% from existing 14%. It has also demanded a reduction in customs duty which is over 100% on such imports.
“The finance ministry has responded positively to our proposal to bring hybrid cars at par with small cars for levying excise duty in the first phase and reduce it further in later phases,” an official in the department of heavy industries (DHI) said.
Hybrid cars receive a favourable tax treatment in other countries as they consume less fossil fuel. Honda Civic, the only hybrid car available in the domestic market is currently being imported as a completely built unit (CBU) attracting an import duty of 104%.
Mahindra and Tata are expected to follow with their hybrid variants of Scorpio and Indica, respectively, next year. Toyota is also likely to come out with its hybrid variant of Prius. In the international market popular hybrid brands are priced in the $18,000-$30,000 range. The cars produced in India would be much cheaper and more so if a favourable tax treatment is given.
According to recent statistics, there are close to 51 lakh petrol cars on Indian roads, consuming around 315 crore litre of petrol a year. Introduction of hybrid cars in the market can bring it down.
Policy makers are examining the proposal to encourage use of such cars that run both on fossil fuel and electric battery in the country, an official said. As per the proposal mooted by the Department of Heavy Industries, excise duty on such cars should be reduced to 12% from existing 14%. It has also demanded a reduction in customs duty which is over 100% on such imports.
“The finance ministry has responded positively to our proposal to bring hybrid cars at par with small cars for levying excise duty in the first phase and reduce it further in later phases,” an official in the department of heavy industries (DHI) said.
Hybrid cars receive a favourable tax treatment in other countries as they consume less fossil fuel. Honda Civic, the only hybrid car available in the domestic market is currently being imported as a completely built unit (CBU) attracting an import duty of 104%.
Mahindra and Tata are expected to follow with their hybrid variants of Scorpio and Indica, respectively, next year. Toyota is also likely to come out with its hybrid variant of Prius. In the international market popular hybrid brands are priced in the $18,000-$30,000 range. The cars produced in India would be much cheaper and more so if a favourable tax treatment is given.
According to recent statistics, there are close to 51 lakh petrol cars on Indian roads, consuming around 315 crore litre of petrol a year. Introduction of hybrid cars in the market can bring it down.
Made-in-India cars for the world
Call it the Nano engineering gold rush. Indian engineering skills are suddenly hot property as global auto companies source competence, along with components, for their next-gen models. Sourcing cheaper components to cut costs for cars sold in India and globally is now de rigeur.
The second wave of sourcing focuses on skills, particularly in small cars where India has a core competence. As world markets move to smaller and less fuel-hungry vehicles, Big Auto is looking to India for scale and expertise. Maruti Suzuki’s soon-to-debut A-Star has some Indian content, which was played up alongside the Nano’s global outing at the Geneva Motor Show this March. But now Suzuki is planning to step on the gas, outsourcing its costly model development to India for the next-gen small cars.
“These cars will be developed in India and made in India for the world,” said a Maruti official. “By 2012, that line-up should start rolling out.” Suzuki is focussing on R&D in a big way in India to crank up its engineering pool for the purpose.
India will be the small car hub not just in terms of manufacturing but also in terms of product development, the ultimate holy grail in Motown. Other global car majors like Hyundai, Honda and GM are working on both ends of this trend—developing small car models that will be accepted in India and other similar markets and using India as a sourcing hub for parts and skills.
Hyundai, which like Maruti has a big local footprint in manufacturing, is now focussing on R&D in India. The Korean company has set up a $40 million computer-aided design centre in Hyderabad. Says Hyundai Motor India chief HS Lheem: “Our future launches, especially for the compact segment, are being developed keeping in mind the potential of the Indian market.”
For GM, the $60-million technical centre in Bangalore will be its powerhouse for developing future technologies and shaping new cars. “We have lined up a design centre, engineering services and an R&D facility at Bangalore. It will conceive future products for India and other emerging markets,” said GM India vice-president P Balendran.
The second wave of sourcing focuses on skills, particularly in small cars where India has a core competence. As world markets move to smaller and less fuel-hungry vehicles, Big Auto is looking to India for scale and expertise. Maruti Suzuki’s soon-to-debut A-Star has some Indian content, which was played up alongside the Nano’s global outing at the Geneva Motor Show this March. But now Suzuki is planning to step on the gas, outsourcing its costly model development to India for the next-gen small cars.
“These cars will be developed in India and made in India for the world,” said a Maruti official. “By 2012, that line-up should start rolling out.” Suzuki is focussing on R&D in a big way in India to crank up its engineering pool for the purpose.
India will be the small car hub not just in terms of manufacturing but also in terms of product development, the ultimate holy grail in Motown. Other global car majors like Hyundai, Honda and GM are working on both ends of this trend—developing small car models that will be accepted in India and other similar markets and using India as a sourcing hub for parts and skills.
Hyundai, which like Maruti has a big local footprint in manufacturing, is now focussing on R&D in India. The Korean company has set up a $40 million computer-aided design centre in Hyderabad. Says Hyundai Motor India chief HS Lheem: “Our future launches, especially for the compact segment, are being developed keeping in mind the potential of the Indian market.”
For GM, the $60-million technical centre in Bangalore will be its powerhouse for developing future technologies and shaping new cars. “We have lined up a design centre, engineering services and an R&D facility at Bangalore. It will conceive future products for India and other emerging markets,” said GM India vice-president P Balendran.
Saturday, July 05, 2008
Greenpeace Urges G-8 Leaders to Adopt Binding Emissions Targets
Greenpeace called on the Group of Eight industrialized nations to adopt binding targets to reduce greenhouse gas emissions, a day after United Nations Secretary- General Ban Ki-Moon said the group should discuss ``concrete measures'' to address climate change at its meeting next week.
Greenpeace wants the G-8 to commit to cutting emissions by at least 30 percent from 1990 levels by 2020 and by as much as 90 percent by 2050, according to a statement on its Web site.
``Renewables and increased efficiency are key to reducing greenhouse gas emissions, not the false and misleading claims of 'clean' coal or expensive and dangerous nuclear power,'' Greenpeace said in the statement.
Emission reductions are crucial to avoid the worst effects of climate change, including rising sea levels and increased droughts, the UN and the International Energy Agency have said. G-8 environment ministers pledged to cut emissions by half by 2050 in a statement after talks in Japan on May 26.
The proposals, including funding plans, are in a draft agreement approved at a June 23 conference in Seoul by delegates from 16 countries that account for about 80 percent of the greenhouse gases released worldwide. They didn't agree on specific limits on emissions.
Ban told diplomats at a breakfast seminar in Seoul yesterday that G-8 leaders have a ``historical responsibility'' to support carbon emission targets when they meet in Hokkaido, Japan, for three days from July 7. Ban will attend the summit as an observer.
Japan must commit to a 25 percent to 40 percent reduction in its emissions by 2020 ``to be a credible summit host,'' Greenpeace said in the statement.
No `Concrete Promises'
``I don't think we will hear any concrete promises, especially from the U.S.,'' said Mauricio Bermudez, a senior analyst at Point Carbon in London, in an interview in Spanish with Bloomberg television yesterday.
Leaders of the world's richest nations must also increase investment in developing ``climate change-resilient farming'' to ensure food security, Greenpeace said.
The Group of Eight includes Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States.
Greenpeace wants the G-8 to commit to cutting emissions by at least 30 percent from 1990 levels by 2020 and by as much as 90 percent by 2050, according to a statement on its Web site.
``Renewables and increased efficiency are key to reducing greenhouse gas emissions, not the false and misleading claims of 'clean' coal or expensive and dangerous nuclear power,'' Greenpeace said in the statement.
Emission reductions are crucial to avoid the worst effects of climate change, including rising sea levels and increased droughts, the UN and the International Energy Agency have said. G-8 environment ministers pledged to cut emissions by half by 2050 in a statement after talks in Japan on May 26.
The proposals, including funding plans, are in a draft agreement approved at a June 23 conference in Seoul by delegates from 16 countries that account for about 80 percent of the greenhouse gases released worldwide. They didn't agree on specific limits on emissions.
Ban told diplomats at a breakfast seminar in Seoul yesterday that G-8 leaders have a ``historical responsibility'' to support carbon emission targets when they meet in Hokkaido, Japan, for three days from July 7. Ban will attend the summit as an observer.
Japan must commit to a 25 percent to 40 percent reduction in its emissions by 2020 ``to be a credible summit host,'' Greenpeace said in the statement.
No `Concrete Promises'
``I don't think we will hear any concrete promises, especially from the U.S.,'' said Mauricio Bermudez, a senior analyst at Point Carbon in London, in an interview in Spanish with Bloomberg television yesterday.
Leaders of the world's richest nations must also increase investment in developing ``climate change-resilient farming'' to ensure food security, Greenpeace said.
The Group of Eight includes Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States.
Iran says its nuclear stance unchanged
Iran said on Saturday its nuclear stance had not changed and it was ready to hold talks with world major powers over its disputed nuclear programme based on international regulations.
"Iran's stance has not changed (on uranium enrichment) and we are ready to hold talks on the common points of the P5+1 incentives package and Iran's package," government spokesman Gholamhossein Elham told a weekly news conference.
Iran said on Friday it agreed to hold further discussions later this month about the incentives package offered by six world powers aimed at resolving a stand-off over its disputed nuclear ambitions, but has so far rejected their demand to suspend uranium enrichment.
There has been no word on the content of Iran's reply, submitted to European Union foreign policy chief Javier Solana, to the offer of talks on economic and other benefits if it in return halts nuclear work the West suspects is aimed at making bombs.
Iran's chief nuclear negotiator Saeed Jalili told Solana on Friday Tehran had prepared its response with a "constructive and creative outlook".
The offer of trade and other incentives proposed by the United States, China, Russia, Germany, Britain and France was presented to Iran by Solana last month.
Iran has put forward its own package of proposals aimed at resolving the row and has said it was encouraged by common points between the two separate proposals.
The six powers have told Iran that formal negotiations on the offer, which includes help to develop a civilian nuclear programme, can start as soon as it suspends uranium enrichment.
But analysts and diplomats say it is uncertain whether Iran might accept a "freeze-for-freeze" idea to get preparatory talks going.
Such a step would involve Tehran freezing expansion of nuclear enrichment in return for world powers halting moves to add to three rounds of U.N. sanctions already imposed.
Enriched uranium can be used as fuel for power plants but also, if refined much more, provide material for nuclear bombs.
Iran, the world's fourth-largest oil exporter, says its nuclear programme is solely aimed at generating electricity so that it can sell more of its oil and gas.
"Iran's stance has not changed (on uranium enrichment) and we are ready to hold talks on the common points of the P5+1 incentives package and Iran's package," government spokesman Gholamhossein Elham told a weekly news conference.
Iran said on Friday it agreed to hold further discussions later this month about the incentives package offered by six world powers aimed at resolving a stand-off over its disputed nuclear ambitions, but has so far rejected their demand to suspend uranium enrichment.
There has been no word on the content of Iran's reply, submitted to European Union foreign policy chief Javier Solana, to the offer of talks on economic and other benefits if it in return halts nuclear work the West suspects is aimed at making bombs.
Iran's chief nuclear negotiator Saeed Jalili told Solana on Friday Tehran had prepared its response with a "constructive and creative outlook".
The offer of trade and other incentives proposed by the United States, China, Russia, Germany, Britain and France was presented to Iran by Solana last month.
Iran has put forward its own package of proposals aimed at resolving the row and has said it was encouraged by common points between the two separate proposals.
The six powers have told Iran that formal negotiations on the offer, which includes help to develop a civilian nuclear programme, can start as soon as it suspends uranium enrichment.
But analysts and diplomats say it is uncertain whether Iran might accept a "freeze-for-freeze" idea to get preparatory talks going.
Such a step would involve Tehran freezing expansion of nuclear enrichment in return for world powers halting moves to add to three rounds of U.N. sanctions already imposed.
Enriched uranium can be used as fuel for power plants but also, if refined much more, provide material for nuclear bombs.
Iran, the world's fourth-largest oil exporter, says its nuclear programme is solely aimed at generating electricity so that it can sell more of its oil and gas.
Samajwadi Party backs government over nuclear deal
The Samajwadi Party (SP) said on Saturday it backed the government over a controversial nuclear energy agreement with the United States, easing concerns the pact could trigger early elections.
"The deal is in the interest of the nation, we should have come out in support of the deal a year ago," SP leader Amar Singh told reporters in New Delhi.
Support from the SP is likely to help the Congress Party-led government secure a parliamentary majority if its communist allies carry out their threat to withdraw support in protest at the nuclear deal.
"We will not vote against the government, even if the communists and other parties do," Singh added.
"The deal is in the interest of the nation, we should have come out in support of the deal a year ago," SP leader Amar Singh told reporters in New Delhi.
Support from the SP is likely to help the Congress Party-led government secure a parliamentary majority if its communist allies carry out their threat to withdraw support in protest at the nuclear deal.
"We will not vote against the government, even if the communists and other parties do," Singh added.
Friday, July 04, 2008
Natural rubber production surges 43 pc in June
The production of natural rubber rose by 43 per cent to 62,000 tons last month as against 43,480 tons in the year-ago period, according to the Rubber Board's provisional data.
"Increase in production is due to favourable climatic conditions, increase in tapping days and better price," a senior Rubber Board official told PTI.
However, natural rubber consumption in June increased marginally by 2.16 per cent to 71,000 tons, against 69,495 tons in the year-ago period.
During the period under review, the export of natural rubber has more than doubled to 8,500 tons, compared to 4,105 tons, while import witnessed a marginal increase to 7,200 tons as against 7,198 tons in the same period last year.
"Export during June 2008 doubled than June 2007 due to price differential. However, there is least scope for import due to hike in international price," he said.
In its projection for the entire 2008-09 fiscal, the Rubber Board has pegged the natural rubber output at 8.75 lakh tons and consumption at 8.99 lakh tons in 2008-09.
The exports and imports are estimated at 50,000 tons and 80,000 tons respectively for 2008-09 fiscal.
In 2007-08 fiscal, the production of natural rubber declined by three per cent to 8.25 lakh tons from 8.52 lakh tons in the previous fiscal.
The consumption, however, increased by five per cent to nearly 8.6 lakh tons during 2007-08 as against 8.2 lakh tons in the year-ago period.
India exported 51,381 tons in 2007-08 as compared to 56,545 tons in the previous fiscal. The imports stood at 87,219 tons, against 89,699 tons during the period under review.
"Increase in production is due to favourable climatic conditions, increase in tapping days and better price," a senior Rubber Board official told PTI.
However, natural rubber consumption in June increased marginally by 2.16 per cent to 71,000 tons, against 69,495 tons in the year-ago period.
During the period under review, the export of natural rubber has more than doubled to 8,500 tons, compared to 4,105 tons, while import witnessed a marginal increase to 7,200 tons as against 7,198 tons in the same period last year.
"Export during June 2008 doubled than June 2007 due to price differential. However, there is least scope for import due to hike in international price," he said.
In its projection for the entire 2008-09 fiscal, the Rubber Board has pegged the natural rubber output at 8.75 lakh tons and consumption at 8.99 lakh tons in 2008-09.
The exports and imports are estimated at 50,000 tons and 80,000 tons respectively for 2008-09 fiscal.
In 2007-08 fiscal, the production of natural rubber declined by three per cent to 8.25 lakh tons from 8.52 lakh tons in the previous fiscal.
The consumption, however, increased by five per cent to nearly 8.6 lakh tons during 2007-08 as against 8.2 lakh tons in the year-ago period.
India exported 51,381 tons in 2007-08 as compared to 56,545 tons in the previous fiscal. The imports stood at 87,219 tons, against 89,699 tons during the period under review.
Sugar crisis looms large, wheat, rice comfortable: ICRIER
The country is likely to face a severe shortage of sugar and pulses by 2021, with supply falling by over half the demand, according to a study by economic think tank ICRIER.
The study by the Indian Council for Research on International Economic Relations (ICRIER) said India's demand for sugar will rise to 55 million tons (MT) against the supply of 26 MT by 2021 if the gross domestic product (GDP) of the country grows at 8 per cent.
The demand for sugar will rise further to 65.7 MT, if the GDP grows at 9 per cent, it points out. The demand-supply mismatch projection of sugar is a serious concern for the government, which currently gives many a sops to the industry that is plagued by the problems of plenty. Indian sugar industry is facing glut in the domestic market for the second year in a row as production at 26 MT far outstrips demand of 20 MT.
The demand for pulses, too, may spiral to 38.7 MT compared with a supply of 17.6 MT by 2021 at 8 per cent GDP, ICRIER says, adding requirement would rise further to 42.5 MT if economic growth rate strikes 9 per cent.
The situation doesn't get any better for edible oils. The demand is likely to surge to 26.7 MT against a projected supply of 12.5 MT by 2021. However, it's not that worse considering that India currently imports about 5 MT of edible oils, which is about half of its annual need.
However, there is good news on rice and wheat front as the study projects a higher supply of grains than demand. The demand for rice may rise to 96.9 MT, compared with the supply of 105.8 MT, while that for wheat will shoot up to 66.8 MT against supply of 91.6 MT.
The study by the Indian Council for Research on International Economic Relations (ICRIER) said India's demand for sugar will rise to 55 million tons (MT) against the supply of 26 MT by 2021 if the gross domestic product (GDP) of the country grows at 8 per cent.
The demand for sugar will rise further to 65.7 MT, if the GDP grows at 9 per cent, it points out. The demand-supply mismatch projection of sugar is a serious concern for the government, which currently gives many a sops to the industry that is plagued by the problems of plenty. Indian sugar industry is facing glut in the domestic market for the second year in a row as production at 26 MT far outstrips demand of 20 MT.
The demand for pulses, too, may spiral to 38.7 MT compared with a supply of 17.6 MT by 2021 at 8 per cent GDP, ICRIER says, adding requirement would rise further to 42.5 MT if economic growth rate strikes 9 per cent.
The situation doesn't get any better for edible oils. The demand is likely to surge to 26.7 MT against a projected supply of 12.5 MT by 2021. However, it's not that worse considering that India currently imports about 5 MT of edible oils, which is about half of its annual need.
However, there is good news on rice and wheat front as the study projects a higher supply of grains than demand. The demand for rice may rise to 96.9 MT, compared with the supply of 105.8 MT, while that for wheat will shoot up to 66.8 MT against supply of 91.6 MT.
India seeks Kuwait's help for fertiliser sector
India has sought help from Kuwait for reviving its fertiliser industry, plagued by supply constraints and lack of investments for capacity expansion.
"India seeks Kuwaiti participation in revival of Indian fertiliser industry," Commerce and Industry Minister Kamal Nath said in a meeting with Kuwait's Minister of Finance Mustafa Jassim Al-Shamali. The highly subsidised fertiliser industry has not been able to attract fresh investments, resulting in stagnating supplies. With demand for fertilisers on the rise, India depends on imports to meet its requirements.
The government has been undertaking a series of measures to ease the fertiliser subsidy burden and increase availability of fertilisers in the country. It has been looking at setting up units in countries such as Saudi Arabia, Kuwait, Egypt and Nigeria where natural gas, the main fuel for urea plants, is easily available.
Inviting investments for development of infrastructure, power, petroleum and petro-chemical sectors, Nath said the two countries can enhance trade in leather goods, drugs, steel and tourism. In 2007-08, non-oil trade between the two countries amounted to $958.41 million. India's exports to Kuwait during April 2007 and February 2008 was worth $589.78 million, with basmati rice, machinery, meat and preparations, manufactures of metals, primary and semi-finished iron and steel being the major items shipped.
India imported petroleum, crude products, organic chemicals, metal scraps and fertiliser manufactured from Kuwait.
"India seeks Kuwaiti participation in revival of Indian fertiliser industry," Commerce and Industry Minister Kamal Nath said in a meeting with Kuwait's Minister of Finance Mustafa Jassim Al-Shamali. The highly subsidised fertiliser industry has not been able to attract fresh investments, resulting in stagnating supplies. With demand for fertilisers on the rise, India depends on imports to meet its requirements.
The government has been undertaking a series of measures to ease the fertiliser subsidy burden and increase availability of fertilisers in the country. It has been looking at setting up units in countries such as Saudi Arabia, Kuwait, Egypt and Nigeria where natural gas, the main fuel for urea plants, is easily available.
Inviting investments for development of infrastructure, power, petroleum and petro-chemical sectors, Nath said the two countries can enhance trade in leather goods, drugs, steel and tourism. In 2007-08, non-oil trade between the two countries amounted to $958.41 million. India's exports to Kuwait during April 2007 and February 2008 was worth $589.78 million, with basmati rice, machinery, meat and preparations, manufactures of metals, primary and semi-finished iron and steel being the major items shipped.
India imported petroleum, crude products, organic chemicals, metal scraps and fertiliser manufactured from Kuwait.
G8 leaders face worst economic outlook amid high prices
Between surging oil prices, food inflation and a credit crunch that's depressed global growth, leaders from the Group of Eight economic powers face the gravest combination of economic woes in at least a decade when they gather next week.
The outlook has darkened dramatically since last year's summit in Germany, when the leaders declared the global economy was in ``good condition'' and oil cost US$70 a barrel, which seemed high at the time.
Since then, the US subprime mortgage crisis has erupted, roiling markets and battering financial firms. Oil has doubled to above US$140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability.
``Things have changed for the worse across the board,'' said Robert Hormats, vice chairman at Goldman Sachs (International) Corp in New York.
Hormats argues that the economic problems now are more serious and widespread than during the Asian financial crisis of 1997-98, where the pain was largely limited to emerging markets.
``Now you have a financial disorder where the epicenter is the US,'' he said. And fuel and food inflation ``are serious matters that affect large numbers of people.''
Host Japan had put global warming at the top of the summit's agenda, but the dilemma of how to respond to accelerating inflation and slowing global economic growth could grab the spotlight.
Prime Minister Yasuo Fukuda has said he hopes the July 7-9 meeting at a hot springs resort in Hokkaido, Japan's northern island, will ``show some direction'' in tackling oil and food prices but stressed it was only ``one step'' in a longer process.
On oil, analysts are skeptical that the G-8 leaders representing the US, Japan, Britain, France, Germany, Russia, Italy and Canada will come up with much beyond urging major petroleum producers to boost output, reiterating the message of their finance ministers, who met last month in Osaka.
Foreshadowing possible disagreement among the leaders, the finance ministers were divided on where to assign blame for the run-up in oil prices. Germany, France and Italy held speculators largely accountable, while the U.S. and Britain said the focus needed to be on boosting production capacity that has barely kept up with growing global demand.
Soaring crude prices have already forced India, Malaysia, and Indonesia to cut subsidies and raise state-set prices on gasoline and other fuels. Last month, China hiked fuel prices as much as 18 percent.
At the same time, prices of corn, wheat, rice and soybeans and other farm goods have surged due to changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation.
Spiraling fuel and food costs could drive millions into poverty, the Asian Development Bank has warned. In India, inflation has jumped to a 13-year high of 11.4 percent.
On the food front, the G-8 leaders may announce an aid package or pledging agricultural investment in poorer countries, experts say.
The credit crisis and global market turmoil are sure to be discussed, but with central bankers absent the leaders will most likely avoid saying anything specific about interest rates and currencies. The European Central Bank raised its benchmark interest rate a quarter point Thursday, suggesting it saw inflation as a greater threat than slower growth.
Overall, the summit's main goal will be demonstrating confidence that they can ``work through the oil crisis without causing the global economy to melt down,'' said Tom Cooley, dean of New York University's Stern School of Business.
Given the meeting's emphasis on climate change, the leaders could highlight the links between energy issues and global warming by stressing the importance of energy efficiency and alternative forms of energy, said Goldman's Hormats.
``The key thing is not what they do at these meetings but what they do at home,'' he said.
Oil and energy have remained recurring themes at the annual summits, said Hormats, who participated in several of the first meetings, which started in 1975. That initial gathering came after the 1973-74 oil embargo, when fuel prices surged after Middle East oil producers cut off the U.S. and other countries supporting Israel.
``We now have another oil crisis,'' Hormats said. The summits were originally meant to focus on economic issues, but the agenda has expanded to include terrorism, Africa's development and the environment.
The group's membership also has grown from six to eight, adding Russia in 1997.
But many argue that it should be expanded to include China, the world's fourth-largest economy, and other emerging powerhouses like India and Brazil especially to tackle global issues like energy and climate change.
``At what point will the G-8 realize we're no longer the steering committee for the world economy?'' said Lael Brainard, a former deputy national economic adviser in the Clinton administration who attended several summits in the 1990s and now is a director at the Brookings Institution, a Washington think tank.
Already, the G-8 has been reaching out. It plans meetings with African leaders on the summit's first day, and later with leaders from China, India, Mexico, Brazil and South Africa countries that someday might be a part of the Group of 13.
``These countries are critical to the solution of any of these problems,'' said Brainard. ``I believe it's only a matter of time'' until the club expands.
The outlook has darkened dramatically since last year's summit in Germany, when the leaders declared the global economy was in ``good condition'' and oil cost US$70 a barrel, which seemed high at the time.
Since then, the US subprime mortgage crisis has erupted, roiling markets and battering financial firms. Oil has doubled to above US$140 and food prices have jumped, hurting the poor in particular and raising the threat of political instability.
``Things have changed for the worse across the board,'' said Robert Hormats, vice chairman at Goldman Sachs (International) Corp in New York.
Hormats argues that the economic problems now are more serious and widespread than during the Asian financial crisis of 1997-98, where the pain was largely limited to emerging markets.
``Now you have a financial disorder where the epicenter is the US,'' he said. And fuel and food inflation ``are serious matters that affect large numbers of people.''
Host Japan had put global warming at the top of the summit's agenda, but the dilemma of how to respond to accelerating inflation and slowing global economic growth could grab the spotlight.
Prime Minister Yasuo Fukuda has said he hopes the July 7-9 meeting at a hot springs resort in Hokkaido, Japan's northern island, will ``show some direction'' in tackling oil and food prices but stressed it was only ``one step'' in a longer process.
On oil, analysts are skeptical that the G-8 leaders representing the US, Japan, Britain, France, Germany, Russia, Italy and Canada will come up with much beyond urging major petroleum producers to boost output, reiterating the message of their finance ministers, who met last month in Osaka.
Foreshadowing possible disagreement among the leaders, the finance ministers were divided on where to assign blame for the run-up in oil prices. Germany, France and Italy held speculators largely accountable, while the U.S. and Britain said the focus needed to be on boosting production capacity that has barely kept up with growing global demand.
Soaring crude prices have already forced India, Malaysia, and Indonesia to cut subsidies and raise state-set prices on gasoline and other fuels. Last month, China hiked fuel prices as much as 18 percent.
At the same time, prices of corn, wheat, rice and soybeans and other farm goods have surged due to changing diets, urbanization, expanding populations, extreme weather, growth in biofuel production and speculation.
Spiraling fuel and food costs could drive millions into poverty, the Asian Development Bank has warned. In India, inflation has jumped to a 13-year high of 11.4 percent.
On the food front, the G-8 leaders may announce an aid package or pledging agricultural investment in poorer countries, experts say.
The credit crisis and global market turmoil are sure to be discussed, but with central bankers absent the leaders will most likely avoid saying anything specific about interest rates and currencies. The European Central Bank raised its benchmark interest rate a quarter point Thursday, suggesting it saw inflation as a greater threat than slower growth.
Overall, the summit's main goal will be demonstrating confidence that they can ``work through the oil crisis without causing the global economy to melt down,'' said Tom Cooley, dean of New York University's Stern School of Business.
Given the meeting's emphasis on climate change, the leaders could highlight the links between energy issues and global warming by stressing the importance of energy efficiency and alternative forms of energy, said Goldman's Hormats.
``The key thing is not what they do at these meetings but what they do at home,'' he said.
Oil and energy have remained recurring themes at the annual summits, said Hormats, who participated in several of the first meetings, which started in 1975. That initial gathering came after the 1973-74 oil embargo, when fuel prices surged after Middle East oil producers cut off the U.S. and other countries supporting Israel.
``We now have another oil crisis,'' Hormats said. The summits were originally meant to focus on economic issues, but the agenda has expanded to include terrorism, Africa's development and the environment.
The group's membership also has grown from six to eight, adding Russia in 1997.
But many argue that it should be expanded to include China, the world's fourth-largest economy, and other emerging powerhouses like India and Brazil especially to tackle global issues like energy and climate change.
``At what point will the G-8 realize we're no longer the steering committee for the world economy?'' said Lael Brainard, a former deputy national economic adviser in the Clinton administration who attended several summits in the 1990s and now is a director at the Brookings Institution, a Washington think tank.
Already, the G-8 has been reaching out. It plans meetings with African leaders on the summit's first day, and later with leaders from China, India, Mexico, Brazil and South Africa countries that someday might be a part of the Group of 13.
``These countries are critical to the solution of any of these problems,'' said Brainard. ``I believe it's only a matter of time'' until the club expands.
Thursday, July 03, 2008
MF industry witnesses 5.9 pc fall in assets in June
Country's mutual fund industry witnessed a 5.9 per cent drop in its assets in June, buckling under the pressure of the meltdown in the stock market and the slow growth in the fixed income schemes in the month.
The combined average assets under management(AUM) of the 33 fund houses in the country dropped to Rs 5,64,599.28 crore at the end of June as compared to Rs 6,00,266.32 crore in May, according to data released by the Association of Mutual Funds in India.
"The main reasons, which impacted the growth in assets were the advance tax payments by corporates at the end of June, which led to almost no growth in the fixed income schemes, while equity investments were obviously impacted by the fall of about 18 per cent in the Sensex," mutual fund tracking firm Value Research Online CEO Dhirendra Kumar said.
Reliance Mutual Fund continues to be the top fund house in the country despite its average AUM falling to Rs 90,813.45 crore at the end of June from Rs 98,430.93 crore in the previous month.
However, ICICI Prudential, the second largest mutual fund, witnessed a marginal gain of Rs 413 crore in its assets at Rs 59,473.58 crore as against Rs 59,060.02 crore in the previous month.
Taurus Mutual Fund Director R K Gupta believe that more than the equity side, the assets may have been impacted by banks and corporates pulling out from income schemes because of the hike in interest rates.
"July could be the worst hit period for the mutual funds as withdrawals from corporates and banks in these schemes are likely to increase further," Gupta added.
HDFC MF has moved ahead of UTI MF as the third largest fund house in the country with AUM of Rs 52,710.80 crore at the end of last month as against the state-run fund house's Rs 50,770.56 crore.
UTI MF's average assets under management dropped Rs 3,881 crore to Rs 50,770.56 crore last month as against Rs 54,651.68 crore in May.
Besides, AUM of Franklin Templeton MF stood at Rs 24,742.06 crore as against Rs 27,990.87 crore in the previous month.
The combined average assets under management(AUM) of the 33 fund houses in the country dropped to Rs 5,64,599.28 crore at the end of June as compared to Rs 6,00,266.32 crore in May, according to data released by the Association of Mutual Funds in India.
"The main reasons, which impacted the growth in assets were the advance tax payments by corporates at the end of June, which led to almost no growth in the fixed income schemes, while equity investments were obviously impacted by the fall of about 18 per cent in the Sensex," mutual fund tracking firm Value Research Online CEO Dhirendra Kumar said.
Reliance Mutual Fund continues to be the top fund house in the country despite its average AUM falling to Rs 90,813.45 crore at the end of June from Rs 98,430.93 crore in the previous month.
However, ICICI Prudential, the second largest mutual fund, witnessed a marginal gain of Rs 413 crore in its assets at Rs 59,473.58 crore as against Rs 59,060.02 crore in the previous month.
Taurus Mutual Fund Director R K Gupta believe that more than the equity side, the assets may have been impacted by banks and corporates pulling out from income schemes because of the hike in interest rates.
"July could be the worst hit period for the mutual funds as withdrawals from corporates and banks in these schemes are likely to increase further," Gupta added.
HDFC MF has moved ahead of UTI MF as the third largest fund house in the country with AUM of Rs 52,710.80 crore at the end of last month as against the state-run fund house's Rs 50,770.56 crore.
UTI MF's average assets under management dropped Rs 3,881 crore to Rs 50,770.56 crore last month as against Rs 54,651.68 crore in May.
Besides, AUM of Franklin Templeton MF stood at Rs 24,742.06 crore as against Rs 27,990.87 crore in the previous month.
Oil hits new peak on dollar, supply concerns
Oil jumped about $1 to fresh records on Thursday, as the dollar fell on gloomy U.S. jobs data and a broad equity sell-off, while a higher-than-expected fall in U.S. crude stocks raised supply concerns.
London Brent crude rose as much as $1.49 to a record of $145.75 a barrel. It was up $1.34 at $145.60 by 0715 GMT.
U.S. crude rose as much as $1.00 to an all-time high of $144.57 a barrel, before easing back to $144.54.
The dollar hit a two-month low against the euro on Thursday, after a report a day ago showed U.S. private employers cut the most jobs in nearly six years and as the U.S. Dow Jones industrial average sank into bear market.
Later on Thursday, traders will focus on the outcome of a European Central Bank meeting due at 1145 GMT, which may result in an interest rate hike that could weaken the U.S. dollar further.
Oil has risen more than 50 percent this year, helped by inflows of speculative money as investors seek to hedge against the falling dollar and inflation.
"We have the weaker U.S. dollar, the reduction in U.S. oil stocks... We may see a bit of profit taking tonight but it all depends on the U.S. dollar," said Gerard Rigby of Fuel First Consulting in Sydney.
In the latest of a series of news this week which stoked supply concerns, official data showed U.S. crude oil stocks fell more than expected last week, down 2 million barrels to 299.8 million barrels, putting commercial inventories below 300 million barrels for the first time since January.
Oil prices have jumped seven-fold since 2002, as demand from emerging economies such as China and India stretches supply growth.
In the Middle East, fears of an escalation in the tensions between Iran and the West over Tehran's nuclear programme continued to support oil prices.
The United States has said it would defend shipping in the Gulf if Iran made good on threats to block the Strait of Hormuz, in the event OPEC's No.2 producer was attacked.
Forty percent of the world's seaborne oil passes through the Strait.
But Iranian Foreign Minister Manouchehr Mottaki struck a conciliatory tone on Wednesday, saying Tehran would reply shortly to an offer from Western powers designed to curb its nuclear work.
Western nations say Iran's nuclear programme is aimed at developing atomic weapons, while Tehran insists it has only peaceful purposes
London Brent crude rose as much as $1.49 to a record of $145.75 a barrel. It was up $1.34 at $145.60 by 0715 GMT.
U.S. crude rose as much as $1.00 to an all-time high of $144.57 a barrel, before easing back to $144.54.
The dollar hit a two-month low against the euro on Thursday, after a report a day ago showed U.S. private employers cut the most jobs in nearly six years and as the U.S. Dow Jones industrial average sank into bear market.
Later on Thursday, traders will focus on the outcome of a European Central Bank meeting due at 1145 GMT, which may result in an interest rate hike that could weaken the U.S. dollar further.
Oil has risen more than 50 percent this year, helped by inflows of speculative money as investors seek to hedge against the falling dollar and inflation.
"We have the weaker U.S. dollar, the reduction in U.S. oil stocks... We may see a bit of profit taking tonight but it all depends on the U.S. dollar," said Gerard Rigby of Fuel First Consulting in Sydney.
In the latest of a series of news this week which stoked supply concerns, official data showed U.S. crude oil stocks fell more than expected last week, down 2 million barrels to 299.8 million barrels, putting commercial inventories below 300 million barrels for the first time since January.
Oil prices have jumped seven-fold since 2002, as demand from emerging economies such as China and India stretches supply growth.
In the Middle East, fears of an escalation in the tensions between Iran and the West over Tehran's nuclear programme continued to support oil prices.
The United States has said it would defend shipping in the Gulf if Iran made good on threats to block the Strait of Hormuz, in the event OPEC's No.2 producer was attacked.
Forty percent of the world's seaborne oil passes through the Strait.
But Iranian Foreign Minister Manouchehr Mottaki struck a conciliatory tone on Wednesday, saying Tehran would reply shortly to an offer from Western powers designed to curb its nuclear work.
Western nations say Iran's nuclear programme is aimed at developing atomic weapons, while Tehran insists it has only peaceful purposes
Wednesday, July 02, 2008
MARKET PREDICTION
GLOBAL MARKETS ARE IN RED.
NIFTY CLOSED YESTERDAY IN HUGE DISCOUNT IT MEANS HEAVY SHORT BUILD UP.
TOTAL O I IS 59 K CR JULY SERISE 51 K CR AND 7 K CR IN AUG.
PUT CALL RATIO IS .99%,CRUDE TOUCH $142.29.
NIFTY LEVEL TO BE WATCH OUT 3775-3850-3920-3960-4000.
BUY FROM 3800 LEVEL WITH SL OF 3775 AND GO SHORT FROM 3960-3980 LEVEL WITH SL OF 4000
IN POSITIVE SIDE PHARMA AND IT LOOKS STRONG AND IN NEGATIVE SIDE BFSI, CONSTRUCTION AND REALTY ARE IN BAD SHAPE.
HAVE A NICE TRADING DAY........
-MR SAM
NIFTY CLOSED YESTERDAY IN HUGE DISCOUNT IT MEANS HEAVY SHORT BUILD UP.
TOTAL O I IS 59 K CR JULY SERISE 51 K CR AND 7 K CR IN AUG.
PUT CALL RATIO IS .99%,CRUDE TOUCH $142.29.
NIFTY LEVEL TO BE WATCH OUT 3775-3850-3920-3960-4000.
BUY FROM 3800 LEVEL WITH SL OF 3775 AND GO SHORT FROM 3960-3980 LEVEL WITH SL OF 4000
IN POSITIVE SIDE PHARMA AND IT LOOKS STRONG AND IN NEGATIVE SIDE BFSI, CONSTRUCTION AND REALTY ARE IN BAD SHAPE.
HAVE A NICE TRADING DAY........
-MR SAM
Tuesday, July 01, 2008
Largest biorefinery in Europe to open in 2009
The largest biorefinery in the European Union could be operational in the first half of 2009.
The refinery, which UK biofuels firm Ensus is building in northeast England, will make bioethanol and a protein rich animal feed co-product from about 1.2 to 1.3 million tonnes of UK wheat.
'We are well into construction now and we will be producing ethanol and animal feed in Q1or Q2 next year,' Ensus CEO Alwyn Hughes comments.
The plant will be the first major bioethanol plant in the UK, producing around 330,000 tonnes of the biofuel, far larger than the current leader, a British Sugar facility in eastern England with an annual capacity of around 55,000 tonnes.
The Ensus plant will also produce 350,000 tonnes of animal feed.
It will consume a substantial amount of the UK's exportable wheat surplus. The UK traditionally has an exportable wheat surplus of about 2.5 million tonnes.
Ensus, a start-up company which was acquired last year by two US private equity funds, the Carlyle Group and Riverstone, has a contract to sell all the bioethanol produced in Wilton to oil major Shell.
The plant is expected to supply one-third of UK demand for ethanol under the UK's Renewable Transport Fuels Obligation (RTFO) which mandates that 5% of motor fuel should come from renewable resources by 2010.
The refinery, which UK biofuels firm Ensus is building in northeast England, will make bioethanol and a protein rich animal feed co-product from about 1.2 to 1.3 million tonnes of UK wheat.
'We are well into construction now and we will be producing ethanol and animal feed in Q1or Q2 next year,' Ensus CEO Alwyn Hughes comments.
The plant will be the first major bioethanol plant in the UK, producing around 330,000 tonnes of the biofuel, far larger than the current leader, a British Sugar facility in eastern England with an annual capacity of around 55,000 tonnes.
The Ensus plant will also produce 350,000 tonnes of animal feed.
It will consume a substantial amount of the UK's exportable wheat surplus. The UK traditionally has an exportable wheat surplus of about 2.5 million tonnes.
Ensus, a start-up company which was acquired last year by two US private equity funds, the Carlyle Group and Riverstone, has a contract to sell all the bioethanol produced in Wilton to oil major Shell.
The plant is expected to supply one-third of UK demand for ethanol under the UK's Renewable Transport Fuels Obligation (RTFO) which mandates that 5% of motor fuel should come from renewable resources by 2010.
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