BUSINESS NEWS APRIL 2009

Wednesday, April 01st 2009
Restrictions on ATM usage lifted
Starting April 1, 2009, all bank customers can withdraw money using their ATM cards from the automatic teller machines of any bank, without being charged any extra money. This comes into effect due to a directive from the Reserve Bank of India which instructs banks not to charge any fee for cash withdrawals using ATM and debit cards issued by other banks. However banks are at liberty to charge fees in case of withdrawal of money using credit cards or from ATMs located outside India.

Wednesday, April 01st 2009
Leadership change at Wockhardt
Founder Chairman and Managing Director of healthcare major Wockhardt Group Habil Khorakiwala has passed on the reins of leadership to his sons Murtaza and Huzaifa as news of growing financial pressures and liquidity concerns make the rounds. Murtaza Khorakiwala will be the new MD while elder brother Huzaifa has been appointed as whole-time director. Habil Khorakiwala will continue as executive chairman. Meanwhile the company has admitted that it will approach its lead banker ICICI Bank for corporate debt restructuring in the face of mounting debt and adverse market conditions. There have also been some speculative reports about the company selling part of its stake or exiting certain businesses, one of the prospective buyers being the Fortis healthcare chain.

Wednesday, April 01st 2009
New trade fund proposal from World Bank
On the eve of the meeting of the Group of 20 nations in London, The World Bank has proposed a $50 billion Global Trade Liquidity Programme which is expected to revive sagging global trade and has asked the G-20 to endorse it. The programme will come with an initial $1 billion investment from the World Bank and governments and funds leveraged from regional development banks such as Standard Chartered, Standard Bank, and Rabobank.   World Bank Group president Robert B Zoellick has predicted a sharp economic slowdown in the developing and developed parts of the world and has called upon the G-20 to combine thoughts and action to restore confidence in the global economy. 

Thursday, April 02nd 2009
Project investments by corporate India up
The economic thinktank, Centre for Monitoring Indian Economy (CMIE), has said that project investments during January-March 2009, measured by the total of all new investment projects added during the quarter, have risen to Rs 8.13 lakh which is almost double the amount recorded in the corresponding period last year. Projects added include those which were announced or implemented or are presently at varying stages of implementation. This is seen as a heartening sign amidst the general economic gloom prevailing, since new projects or expansion of existing ones are considered to be signs of increasing economic activity. However several experts feel that the data may merely capture the investment intentions of companies, rather than concrete on-the-ground investment activity.

Thursday, April 02nd 2009
China and Argentina swap $10 bn worth of currency
In a move that will allow them to bypass the US dollar, China and Argentina have entered a tentative agreement to swap $10bn (£7bn) worth of their currencies. This will also make it easier for Argentine businesses to buy Chinese imports, paying for them directly with the yuan. The swap comes shortly after China proposed that a new reserve currency in place of the US dollar be created and globally accepted and is being seen by many as an indication of China's ambitions in South America. The swap will also provide Argentina some hard cash at a time when it finds its economy hit by the global economic crisis. 

Thursday, April 02nd 2009
Suzlon Energy signs deal with Australian power firm
Suzlon Energy Australia Pty Ltd, a wholly owned subsidiary of Indian wind power major Suzlon, has entered into a contract with Australia's biggest electricity and gas retailer AGL energy. Under the deal, Suzlon will provide 63 of its S88-2.1 mw wind turbine generators for engineering, procurement and construction in a $341million wind-power project in South Australia. The exact value of the transaction was not disclosed.

Friday, April 03rd 2009
RIL starts KG basin gas flow
Natural Gas production from the D6 block of Reliance Industries Ltd. in the Krishna Godavari Basin started late on Wednesday, April 1, and is slated to reach its peak levels of 80 mmscmd per day within a year, resulting in a doubling of gas production within the country. The KG basin gas streams are projected to cut $9 billion annually from India's oil import bill, thus greatly reducing India's trade deficit as well the subsidy burden on fertilizers. It may also give a fillip to investment by oil multinationals in exploration below Indian seas. Meanwhile RIL has indicated that it will invest an additional $5.91 billion (around Rs29,800 crore) in developing nine more finds in its prolific eastern offshore KG-D6 block.

Friday, April 03rd 2009
Sensex rises on G-20 cues
As the meeting of the leaders of the Group of 20 Nations ended with the injection of a trillion-dollar booster package for the ailing global economy, markets in the West, especially the US, responded enthusiastically and Asian markets picked up the cues. The G20 decision came on the back of more good news in the form of US auto sales rebounding from a 27-month low. The Bombay Stock Index too rallied to close 447 points higher – near a five month closing high. The major gainers in the market were realty, metals and oil and gas. The NSE Nifty too rose by 151 points.

Monday, April 06th 2009
HCL bags five year IT contract worth $170 million
HCL has received a 5-year contract worth $170 million or Rs. 848 crore from software major Microsoft Corporation for providing back-end technology support to Microsoft's online services business, under which it provides communication and collaboration software to enterprises on subscription basis. This is just one in a series of major contracts won by HCL technologies this year, the most recent ones being a $350 million IT services outsourcing contract from The Readers Digest Association and a Rs. 393 crore IT services outsourcing deal from the National Insurance Company. 

Monday, April 06th 2009
No Sun-IBM deal?
Acquisition talks between IBM Corp and computer and software company Sun Microsystems Inc seem to have collapsed following disagreements over valuation, with Sun reportedly rejecting IBM's offer of $9.40 or less per share. This deal was being viewed as a positive development for both Sun and IBM by the business fraternity – it would be the key to Sun Micro's survival and would bring greater competitiveness for IBM against rivals like Hewlett-Packard, also broadening the latter's software portfolio. Recent reports had been indicating that IBM was close to securing the deal at close to $7 billion. However, this was much lower than the price discussed initially and it is most likely IBM's lowering of offer that has led to collapse of talks. 

Monday, April 06th 2009
India to seek $5.2 billion loan from World Bank
According to some official reports, India might ask for $5.2 billion in loan from the World Bank to fund its financial sector and infrastructural projects. The loan will be primarily used for re-capitalisation of public sector banks (PSBs) over the next two to three years, while the rest will be used to restructure infrastructure finance companies, and power grid corporations. However, Prime Minister Manmohan Singh has ruled out any borrowings from the International Monetary Fund at present. There are also no immediate plans to raise borrowings from the Asian Development Bank. 

Tuesday, April 07th 2009
End of Danone-Wadia partnership in Britannia
Leila Lands, a 100% subsidiary of a Wadia group firm, has decided to acquire French giant Danone's 50% stake in Britannia in a $200 million transaction. This will give Wadias complete control over one of India's largest food companies and end a long-running feud between them and the French major. Leila Lands has already sent notice of acquisition to the stock exchange which is a requirement by law and SEBI guidelines. Britannia shares rose 2.93% on the back of the announcement even as the BSE FMCG index as a whole fell 1.82%.

Tuesday, April 07th 2009
Third stimulus for ailing Japanese economy
Japan, which has been reeling under its worst economic crisis since the Second World War, is set to see a third stimulus in the form of a proposed $100 billion package from the government. The package would include measures to help laid-off workers, enable cash-strapped companies secure access to credit, encourage greater use of renewable sources of energy and the develop new technologies for tapping these sources. This package however takes the planned spending on stimulus packages to 4% of Japan's GDP, almost double the recommended 2% by the International Monetary Fund. The Japanese economy registered its worst-ever performance in 35 years in the last quarter of 2008 and is expected to shrink 6.6% in 2009. 

Tuesday, April 07th 2009
HCL Tech enters data services and transformation deal with Xerox
In yet another in a series of major contracts won recently, HCL Tech has bagged a six-year multiregional deal with printing major Xerox Corporation to render services in disaster recovery, data centre hosting and migration, virtualization and consolidation across the latter's data centres in North America and Europe. HCL will also centralize and standardize data centre infrastructure for Xerox. Unconfirmed sources put the transaction value at $100 million. In 2008, the companies had struck a strategic alliance under which HCL emerged as the systems integrator for Xerox's managed print services offering for enterprises. 

Thursday, April 09th 2009
JLR to receive E366 million in loan
The European Investment Bank (EIB) has approved a 366-million-Euro loan for Tata Group-owner Jaguar Land Rover to be invested in fuel-efficient cars with low carbon emissions. However, JLR will receive the cash only after the loan is guaranteed by the government. Incidentally, EIB has also approved a loan for another EU automaker Nissan to be used for the same purpose. Although the loans have been approved in an effort to encourage development of greener cars, they will also be a big boost for the severely recession-hit industry as a whole.

Friday, April 10th 2009
Fall in IIP, but markets expect good news
Data released by the Indian government on Thursday (April 9) showed that industrial output for the month of February contracted to -1.2% in February, the lowest in 14 years. However, given the fact that the initial December decline of 2% in Index of Industrial Production (IIP) was subsequently revised to a much lower decline of 0.6% and that the reported fall of 0.5% for January was revised to a positive growth of 0.4%, analysts expect the February contraction to be revised too. Even if there is no revision, the growth in the capital goods (10.4%) and consumer durables (5.7%) sectors creates positive sentiments. Hardening steel and cement prices also indicate sustained investment growth.

Friday, April 10th 2009
No finance for commercial vehicles?
Disturbed by the absence of clear guidelines from the Reserve Bank of India regarding repossession of vehicles from defaulting borrowers, private bankers have decided for the moment to steer clear of financing commercial vehicle ownership. Fresh sanctions of auto loans have come down sharply in both public and private banking sectors. According to the RBI however, credit flow to all sectors has been witnessing negative growth and no bank has officially made a statement so far saying that they will no longer offer auto loans.

Friday, April 10th 2009
Obama's outsourcing policy bodes ill for Indian IT sector
According to experts in leading software firms across India, the continuing financial downturn in US markets coupled with US President Obama's outsourcing policy could well translate into significant job losses for the IT industry (IT, ITES, BPO) as a whole this year. According to Infosys board member T V Mohandas Pai, Bangalore, considered widely to be the Silicon valley of India, could alone account for 25000-30000 job cuts in fiscal 2009-10. He already estimates close to 30000 job losses in IT in Bangalore over the period April 2008 – March 2009. Mr Ravi Ramu, CFO of realty firm Puravankara, sees about 50000 jobs at risk in the coming year. However, NASSCOM is not so worried. According to them, companies in a recession-hit economy are more focused on performance issues and this is likely to impact hiring. But retrenchment is not at an alarming level. Though there will be a slow down as compared to preceding years, NASSCOM still expects ITES to grow at 16-17% in the current fiscal.

Saturday, April 11th 2009
Cisco to acquire Tidal Software
Network equipment manufacturer Cisco Systems Inc. has announced plans to buy Tidal Software Inc., which offers management software such as job scheduling systems and applications that automate and control business processes, in a deal worth $105 million. According to Cisco, this will make its range of products and services for corporate data centers more competitive and robust. The deal is expected to be closed by July. 

Monday, April 13th 2009
Tech Mahindra wins Satyam bid
The Satyam board has selected Venturbay Consultants, a subsidiary of M&M-promoted Tech Mahindra to acquire a controlling stake in the company, subject to the approval of the Company Law Board. Tech Mahindra won the stake with a highest bid of Rs.58 per share and would pay Rs1,757 crore for a 31 per cent stake in the troubled IT company. Tech Mahindra will run Satyam as an independent company with separate liabilities.

Monday, April 13th 2009
Pantaloon to be split into 3 entities
In a major revamp of Pantaloon Retail, the Future Group has decided to hive off the retail major into three separate firms – a FMCG & Consumer Durables firm, a retail firm and one focused on the fashion segment. The Group also plans to raise between Rs.1400- Rs.1500 crore through preferential allotment to promoters and PE majors such as Carlyle, Blackstone, Bain Capital, KKR and the PE arm of Goldman Sachs. A board meeting is scheduled today when necessary approvals will be sought.

Tuesday, April 14th 2009
Tech Mahindra gears up for challenges post acquisition
Having put in the winning bid for fraud-hit Satyam Computer Services Tech Mahindra is now preparing to compete with the three biggies in Indian IT, namely TCS, Infosys and Wipro as well as multinationals such as IBM and Accenture. But even that is not the greatest challenge it faces. What makes the winning bidder's position less enviable than it normally would be is the fact that it is now faced with battling class action lawsuits in the USA, restoring customer confidence and reviving the morale of its employees. Venturebay Consultants, the Tech Mahindra subsidiary that won the bid, will acquire 51-per cent stake in Satyam for a sum of Rs.2890 crore that includes the mandatory open offer for a 20-per cent stake as well as Rs. 58 a share for the remaining 31%. Unsuccessful bidder Larsen & Toubro, which had built up a strategic 12-per cent stake in Satyam Computer Services, plans to hold on to its stake.

Tuesday, April 14th 2009
Pfizer aims to raise stake in Indian arm
US-drugmaker Pfizer Inc. plans to raise its stake in its Indian arm Pfizer Ltd to 75%, by making a tender offer to acquire an additional 33.77% at a price of Rs.675 per share. The deal would amount to Rs.680 crore or close to $136 million and would represent a premium of more than 8.6 per cent on the April 9-closing price for Mumbai-based Pfizer Ltd. The offer is expected to open in June and would be subject to regulatory approvals.

Saturday, April 25th 2009
Bill introduced in US Senate to curb H1B visas
A new bill has been introduced in the US Senate pertaining to issue of H1B visas, which if passed might make it difficult for Indian IT companies to send employees to America for contractual work. The bill if passed will require all employers who want to hire an H-1B guestworker to first make a good-faith attempt to recruit a qualified American worker (something it doesn't require now). It also forbids companies to issue 'H-1B only' ads and hire additional H-1B and L-1 guest-workers if more than 50% of their employees are already in those categories. The bill has come in for severe criticism by Indian authorities and other analysts as a piecemeal approach to address immigration issues in the USA and even accused of being "protectionist" by nature. Indian IT body Nasscom has aptly pointed out that free trade cannot only be about the movement of goods and has to encompass services too.

Sunday, April 26th 2009
IMF may issue bonds to raise capital
In an attempt to raise cash to finance loans to slump-hit member nations, the International Monetary Fund (IMF) is planning to sell bonds to emerging countries such as the BRIC. However, these nations including Brazil and China, have indicated that they would not be interested in investing in the recapitalization of IMF unless they acquire more power in the form of voting rights at the Fund. If the IMF could recast quotas or voting rights in a way that reflects the economic and political clout of the emerging and other developing economies, then these countries may be willing to look at bonds as an instrument of boosting the loanable funds of the international body. These decisions were conveyed by Brazilian Finance Minister Guido Mantega during talks among the 26 participants in the New Arrangements to Borrow (NAB) and representatives of other IMF member countries.

Monday, April 27th 2009
Good News for Indian Job-seekers
According to eclectic reports in the media, the future may not be as gloomy for job-seekers in India as reports over the current recession would normally lead us to believe. According to reports, the Director of the Institute of Banking Personnel Selection (IBPS), M Balachandran has said that public sector banks appear likely to hire as many as 30000 people during 2009-10 alone, with opportunities rising mainly due to branch expansion by various lenders and aggressive marketing. A gap has also been created due to large scale superannuation in many banks. In other news, it was revealed that Internet major Yahoo is also looking to fill 150 positions in India though there have been reports of cuts in its global workforce. Further, firms like TCS and Punj Lloyd are reportedly thinking of relocating staff based in offshore locations such as the USA and UK to India and also hiring more people in Asian centres.

Tuesday, April 28th 2009
GM offers equity for bonds to avert bankruptcy
Troubled US carmaker General Motors has offered its bondholders 10% of equity in the restructured organization in lieu of claims worth $27 billion. Bondholders have also been promised accrued interest in cash if they give up their holdings for equity. The bond offer is contingent on another reduction of liabilities worth at least $20 billion through a deal with United Auto Workers over a retiree medical fund and conversion of government loans to equity. GM faces a deadline for restructuring mandated by the Obama administration and if the debt-equity swap offer fails, it may well have to file for bankruptcy. Meanwhile, the company has also announced that it will cut 23000 jobs in the US, bring down US dealerships by almost 3000 and phase out its Pontiac Brand by 2010.

Tuesday, April 28th 2009
US-China trade deals to boost economy
Chinese firms have signed 32 trade and investment deals worth $10.6 billion with their US counterparts at a forum hosted by the US Chamber of Commerce and the China Chamber of Commerce for Import and Export of Machinery and Electronic Products in Washington. These are expected to support the US economy, strengthen trade ties and create jobs both in the US and China. Firms that have been reported to be the greatest beneficiaries of these deals are Ford Motors, IBM, Dell, Cisco Systems, Hewlett-Packard, Microsoft, EMC, Oracle, Sun Microsystems and Amway.

Wednesday, April 29th 2009
Swine Flu hits markets too
Even as global markets struggle to revive from the economic slump, the first steps toward recovery could well receive a setback with the outbreak of the swine flu epidemic. Reports of the flu having spread across continents and even into the West Asia and Asia Pacific regions have made investors, particularly in sectors related to travel such as hospitality and aviation, nervous and resulted in stocks in these industries falling sharply. Among Asian markets, Indian markets were affected strongest, with the Sensex shedding 370 points – the biggest single session loss in nearly a month. However not all of it could be attributed to the fear psychosis on account of swine flu; global sentiment was also down on the back of reports that American banks had failed the government's stress test and could well have to raise more capital to see them through the crisis. However, some analysts say that the fall in Sensex and Nifty could just be due to market corrections as the market had risen very fast without any major improvement in economic fundamentals.

Wednesday, April 29th 2009
IBM joins hands with network equipment maker Brocade
IBM Corporation has entered into an agreement with Brocade Communications Systems under which all Ethernet switching and routing products manufactured by Brocade will now be rebranded as IBM products and sold to mutual corporate customers. According to sources in Brocade, this is likely to increase revenue for the company, given the reach that IBM has. The partnership is being viewed by many as a fall-out of the stiff rivalry between IBM and market leaders in network equipment, Cisco Systems.

Thursday, April 30th 2009
Swine Flu: What does India Inc. have at stake?
With reports of the swine flu epidemic spreading, Corporate India has to sit up and take note, given the stake that it has across economies affected by the flu virus. In Mexico alone, where the disease originated and has claimed more than 150 lives, Indian companies reportedly have $2.6 billion stake in the economy. Leading Indian companies, such as Infosys, Wipro, Dr. Reddy's Laboratories, JK Tyres, Videocon and many others, have delivery or manufacturing centres in the North American country, which has traditionally posed advantages to Indian companies on account of its proximity to USA and lower cost of operations. All companies with offshore locations in Mexico are now initiating steps to mitigate any possible effect that the outbreak may have on their employees based there or business operations.