India’s big buzz for infra sector, the take-out finance scheme could finally be up and running by November. India Infrastructure Finance Company Ltd (IIFCL) is expected to finalise the specific features of the scheme and also unveil the re-worked refinance window for infra projects. The company has appointed rating agency Crisil as consultant to customise the take-out financing scheme, announced in Budget 2009-10. Crisil will also be expected to look into the viability of the scheme and issues like pricing and stamp duty. It is expected to finalise its recommendations by the month- end, based on which IIFCL will hold discussions with Reserve Bank of India, Indian Banks’ Association and other stakeholders. “We hope to get the scheme approved by the Board of IIFCL by the end of next month,” a finance ministry official said. In take-out finance schemes a project that is expected to take a long time to complete, say 15 years, can be given a loan by a bank for only five years with the commitment that it can sell the loan to another financial company (the take-out) for the rest of the term. This helps banks, since they prefer short-term loans of up to five or seven years yet meets the need of the project developer for assured long term finance. The Prime Minister’s committee on infrastructure has estimated the projected investment requirement for infrastructure at Rs 5,00,000 crore .($125 billion) With the refinance window under IIFCL meeting with limited success, finance minister Pranab Mukherjee had announced the takeout financing scheme in Budget 2009-10 to stimulate private investment in infrastructure. North Block is, therefore, examining ways to iron out creases in the IIFCL’s refinance window for infra projects. This includes permitting existing projects to also tap into the scheme. A final decision on it will be taken by next month, the official said. While IIFCL was permitted to raise Rs 10,000 crore to refinance infra projects in 2008-09, but there haven’t been enough takers for the money. This is because the sum is meant to finance only projects bid on or after January 31, 2009. With few projects having been awarded after the cut-off date, the scheme hasn’t met with much success. Last month, the infra financing SPV asked the finance ministry to enhance the scope of the scheme. IIFCL has been allowed to raise another Rs 20,000 crore in 2009-10. The RBI in its annual report has pointed out that once the government goes through the exit route as normal conditions return in the economy because of fiscal consolidation, this will clip back public investment.

MUMBAI (Reuters) – The rupee continued to trade higher in afternoon session on Tuesday as domestic shares rose more than 1 percent, while gains in other Asian units versus the dollar also underpinned sentiment.

* At 1 p.m., the partially convertible rupee was at 48.59/60 per dollar, largely unchanged from morning levels, but stronger than 48.74/75 at close on Monday, when it had dropped to 48.80 during trade, its weakest since Sept. 4.

* Shares were trading up 1.3 percent, with financial issues such as State Bank of India (SBIN.NS : 2008.05 +51.6) and ICICI Bank (ICICIBANK.NS : 844.4 +19.8) among the gainers on hopes for easier accounting rules for bond holdings.

* Foreign portfolio flows into and out of local stocks set the direction for the rupee. So far this year, net inflows of $8.8 billion have helped the rupee recover from its record low of 52.2 in early March.

* Dealers said they were also watching the dollar’s moves versus majors for cues. The index of the dollar versus six majors was marginally higher.

Most Asian currencies were trading higher against the dollar.

* In the currency futures market , the most traded near-month contracts on the National Stock Exchange (^NSEI : 4892.1 +83.5) and MCX-SX were both at 48.6400, with the total traded volume on the two exchanges at about $965 million.

(For more news on Reuters Money click http://www.reutersmoney.in)

MUMBAI (Reuters) – State Bank of India (SBIN.NS : 2008.05 +51.6), the country’s largest lender, has paid 18.32 billion rupees as advance tax for the July-September quarter, an income tax department source said on Tuesday.

Engineering conglomerate Larsen & Toubro (LT.NS : 1629.5 +24.65) did not pay any advance tax, the source, who did not wish to be named, added.

Indian regulations require a certain percentage of tax payable for the fiscal year be paid in advance every quarter. Sept. 15 is the deadline for the payment for the July-September quarter.

Friday September 11, 12:50 PM INSTANT VIEW – July industrial output up 6.8 pct y/y Click to enlarge photo NEW DELHI (Reuters) – India’s industrial output rose 6.8 percent in July from a year earlier, in line with estimates, data showed on Friday, riding on higher demand for goods such as cars and higher mining activity. – Manufacturing production rose 6.8 percent in July from a year earlier. – June’s annual growth rate was revised up to 8.2 percent from 7.8 percent previously. – Industrial output rose 2.6 percent in the 2008/09 fiscal year (April-March), down from 8.5 percent in 2007/08. COMMENTARY: SHUBHADA RAO, CHIEF ECONOMIST, YES BANK (YESBANK.NS : 169.95 -1), MUMBAI: “We believe IIP yet remains driven by the consumption story. The fiscal and monetary stimulus measures have been playing out. Capital goods however remain subdued in July ,though reflecting a high base effect. Sustained domestic consumption and gradual global recovery should support capital goods going forward. We see an upside risk to our call of 5 percent growth in IIP for FY10 and will likely revise it upwards. The upward revision in the June number is a good lead indicator.” SONAL VARMA, ECONOMIST, NOMURA, MUMBAI: “Industrial output growth is clearly on a recovery path and we expect this momentum to continue. The large policy stimulus has boosted consumer spending and as external demand improves, there will be a further acceleration in industrial growth. “Better industrial output growth and rising input cost pressures are paving the way for the Reserve Bank of India’s gradual exit from the current loose monetary policy stance.” RUPA REGE NITSURE, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI: “This is along expected lines as strong momentum is seen in automobiles, cement, power generation, construction and steel sectors. Foreign direct investment inflows have also been robust. “However, going forward there are concerns about the sustainability of this growth, given the subdued rural demand and on account of the drought conditions and cost pressures arising from rising prices of food articles, fuel and industrial raw materials. “We have slightly brought down our average factory output target for the fiscal year to 5.5-6.0 percent from an earlier estimate of around 7 percent. “From the banking industry perspective the growth in sanction of loans by commercial banks is robust but the actual disbursement is not that high as corporates are waiting for firmer signs of demand revival.” ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, DELHI: “The RBI would want to keep rates on hold till the first quarter of 2010. High growth and inflation are quite correlated and if this growth sustains, it actually pushes up inflation and builds the case for a rate hike.” ANAND RATHI FINANCIAL SERVICES, MUMBAI: “The number is stronger than what we expected and indicates a strong industrial recovery. However, this recovery is surprising as core sector growth is still weak and export growth is strongly in the negative. “At this moment it is difficult to identify reasons for the industrial production recovery, and at the end of the day we have to realise that the industries covered in the IIP data covers less than 20 percent of India’s GDP. “Further, agriculture will be affected this year and there’s no reason to be very optimistic about a strong services performance keeping in light the global situation. So the overall GDP number might not be much impacted by the industrial recovery.” MARKET REACTION: The 10-year benchmark bond yield was down 2 basis point to 7.46 percent from before the data. The partially convertible rupee weakened towards 48.60 per dollar from 48.5350/5400 before the dollar. The stock market fell to be down as much as 0.5 percent after earlier being up 0.3 percent. LINKS: Ministry of Statistics and Programme Implementation website http://www.mospi.nic.in BACKGROUND: – The Planning Commission has forecast 7.8 percent growth in industrial output in 2009/10 (April/March), with the broader economy forecast to grow 6.3 percent. – In July, the central bank said economic growth during 2009/10 (April/March) could be 6 percent with an upward bias, compared with 6.7 percent last year. – More than 40 percent of India’s districts are facing drought, hurting crops and farmers’ income, which could dampen demand for consumer goods from close two-thirds of India’s 1.1 billion-plus population. – A survey showed manufacturing activity held steady in July amid robust local demand and a slight rebound in exports, but intense competition curbed companies’ pricing power even as raw material costs jumped. – The budget for 2009/10 offered tax breaks industrial units, natural gas projects and stepped up spending for infrastructure.

Thursday September 10, 11:55 AM Source: Financial Express BSE Sensex climbs 248 pts Continuing its winning streak for the fifth consecutive session, the Bombay Stock Exchange (^BSESN : 16259.21 +75.66) benchmark index Sensex surged by over 248 points in opening trade on Thursday on increased inflow of foreign funds triggered by firming trend in global markets. The 30-share BSE Sensex rose by 248.87 points or 1.39 per cent to 16,432.42 points in opening trade, with realty, banking and metal sector stocks leading the rally. The BSE barometer had gained over 785 points in the past four sessions. The wide-based National Stock Exchange (^NSEI : 4826.35 +12.1) index Nifty also shot up by 74.80 points or 1.25 per cent to 4,889.05. Brokers said buying in domestic markets picked up momentum in tandem with firming global markets. The major Sensex movers were Reliance Industries (RELIANCE.NS : 2172.4 +3.95)- up 0.70 per cent to Rs 2,184.60, ONG Corp up 0.70 per cent at Rs 1,1880, Reliance Infra up 1.41 per cent at Rs 1,207.80, Rcom (RCOM.NS : 304.5 +5.4) up 1.85 per cent at Rs 305, DLF Ltd up 1.09 per cent at Rs 425, Infosys Technologies (INFOSYS.BO : 2221.4 +28.3) up 1.73 per cent at Rs 2,231.10, Tata Consultancy Services (TCS.NS : 552.9 -7.55) up 1.50 per cent at Rs 568.90 and Wipro (WIPRO.NS : 540.5 -2.05) up 1.32 per cent at Rs 549.40. Telecom major Bharti Airtel (BHARTIARTL.BO : 414.3 +4.45) traded 3.18 per cent higher at Rs 422.90 on the back of speculative buying. Besides, Sterlite Industries moved up by 1.16 per cent to Rs 756.65, State Bank of India (SBIN.NS : 1904 +9.25) by 1.44 per cent to Rs 1,922 and ICICI Bank (ICICIBANK.NS : 819.6 +26.7) by 3.51 per cent to Rs 818.65. Japan’s Nikkei was up 1.6 per cent, while Hong Kong’s Hang Seng surged nearly 2 per cent in morning trade on Thursday. The Dow Jones Industrial Average closed 0.53 per cent higher in yesterday’s trade.

Wednesday September 9, 04:20 PM

Source: Financial Express

SBI looks at 35% growth in Q2 profit
India’s largest state-owned bank, State Bank of India (SBIN.NS : 1894.75 +0.7) (SBI), is expected to witness an increase in net profit of about 30-35% year-on-year in its July to September quarter. At the end of the first fiscal quarter, its net profit grew 42.03% at Rs 2,330 crore, compared to Rs 1,641 crore during the corresponding quarter a year ago. Chairman OP Bhatt said treasury income for the bank could not be hurt this quarter given a sharp spike in bond yields. Bhatt noted that they have yet not incurred any kind of “mark-to-market” losses in the treasury for the July to September quarter. “It all depends on how the 10-year government security yields rise,” said Bhatt. He was speaking on the sidelines of a banking seminar organised by Indian Banks’ Association (IBA) and Federation of Indian Chambers of Commerce and Industry (Ficci). The SBI chairman also noted that since July, the bank has witnessed a growth in credit by Rs 5,000 crore a month. “We need to consolidate, raise capital and need to have two-three more banks bigger than the size of SBI or half a dozen banks of the size of SBI, to support large corporations within the country,” said Bhatt. He added that anything that appeared to be risky during the financial crisis should be regulated now, quoting examples of non-banking financial companies, banks and mutual funds. “Systemic regulation of important entities, including non-financial entities like aviation and telecom, should also be done,” said Bhatt. Talking about the ability to serve large Indian corporations, Bhatt strongly noted that Indian banks are not in a position to serve large companies, as their capital is too small. “In my point of view, even SBI is not large enough to finance big firms. Our capital is too small to enable us to do that,” said Bhatt. He also noted that its credit growth in April to June was flat on account of a high base, as the bank had seen huge retail growth in the first quarter of 2008-09. “On a positive note, there was also huge repayment from oil and food companies in the first quarter of 2009-10,” he added.