COMPANIES

BHEL plans acquisitions; aims at Rs45,000 crore turnover of by 2012
Mumbai: Public sector power equipment maker Bharat Heavy Electricals Ltd (BHEL) is looking at mergers and acquisitions to fuel inorganic growth and has targeted a turnover of Rs45,000 crore by 2012.

BHEL has drawn up a 'strategic plan 2012' to ensure sustainable profitable growth over the next five years, reaching a turnover of Rs45,000 crore, BHEL chairman and managing director A K Puri told a shareholders meeting.

He said the company will pursue the merger and acquisition route to avail inorganic growth opportunities and enlarge operations both in domestic as well as export markets.

He said BHEL's growth planks for the next five years will be driven by capacity and capability enhancement that will leverage the company's core areas of power supported by industry, transmission, exports and spares and services businesses.

BHEL's turnover hit an all-time high of Rs18,739 crore, registering a growth of 29 per cent, while net profit increased by 44 per cent to touch Rs2,415 crore in 2006-07.

The company declared a final dividend of 60 per cent on the enhanced paid-up share capital consequent to 1:1 bonus issue.

BHEL paid the highest ever dividend of nearly Rs600 crore for 2006-07, which is 245 per cent of the paid-up capital pre-bonus, he said.

Puri said with an order book position of Rs55,000 crore, BHEL expects to achieve robust growth in 2007-08 and beyond. The company is well on its way to increasing its size of operations supported by phased manufacturing capacity expansion where a capacity of 10,000 MW per annum will be completed by December 2007 and 15,000 MW per annum by December 2009, he said.

The company booked export orders worth Rs1,903 crore in 2006-07 against an average yearly order book of Rs1,275 crore of the last five years, Puri said.
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GENERAL

How is spectrum allocated?
It's a spectrum of opportunities so at least a dozen suitors are chasing to bid for the telecom spectrum, reports CNBC-TV18. But how exactly are the allocations done? Some say auctioning is the best mode while others feel "beauty parading" works better.

Whose spectrum is it anyways - one who can pay for it or one who needs it most! In Europe as in most other developed telecom markets like the US and Australia Spectrum belongs to the one with the thickest wallet!

Almost seven years ago, UK auctioned 5 3G licenses. It got bids from 13 players. The reserve price for the spectrum was £500 million pounds but after £150 rounds and two months of bidding, the government managed to rake in over $22 billion, the most successful spectrum auction in the world in terms of revenues.

But it sounded a death sentence for a whole lot of players who could not sustain the cost of operation and had to either sell out or fold up completely. This did not deter other countries from auctioning licenses since they believe that auctioning is the best way of ensuring the most efficient use of a scarce resource.

So the US, Australia, New Zealand have all auctioned spectrum. But in these cases operators learnt from Europe's mistakes and bid at more reasonable prices. Though most auctions have not really encouraged new entrants or ensured better utilisation of spectrum.

The lesser mature telecom markets like countries in South Asia and Scandinavia follow the 'beauty parade' system where there is higher level of government regulation. The regulator on their merit as perceived gives out spectrum. This ensures spectrum is given out to genuine players, and not for resale. This has worked well till now in countries like Malaysia but with the entry of more operators, this method is allegedly opaque and encourages inefficient usage.

In India opinions are divided but most experts are in favour of auctioning; They say that new and old players should be given equal opportunity to get spectrum. It will also make sure that existing operators invest in equipment to utilise the spectrum more efficiently rather than consider it bounty from the govt. But of course it could bid goodbye cheap talk or to some players! But alls fair in a free market!
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New duty neutralisation scheme for exporters soon: Kamal Nath
Mumbai: The government is in the process of formulating an alternative duty neutralisation scheme for exporters and will announce the new scheme soon, commerce and industry minister Kamal Nath said.

"The new scheme is in the final stage. It will be announced soon," he said at the annual conference of United Planters' Association of Southern India.

The commerce ministry had asked the National Council of Applied Economic Research (NCAER) and the Economic Law Forum to work out an alternative scheme, which would neutralise all levies - customs and excise duties along with state levies - while being WTO compatible.

The objective of the DEPB was to neutralise the incidence of customs duty on the import content of the exported product. The neutralisation is provided through grant of duty credit against the export product. The scheme was to expire this year and was extended for another year till March 31, 2008.
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General Motors, UAW near deal as contract talks adjourn
Mumbai: General Motors Corporation and the United Auto Workers union have called a break in the contract negotiations with both sides agreeing to return to the bargaining table later in the day.

Negotiators for the UAW and GM agreed to a break in contract talks after a marathon 16-hour bargaining session that raised expectations the union and the top US automaker were nearing an agreement.

The UAW has agreed to extend its contract with the top US automaker on an hour-to-hour basis as talks continue and around 73,000 GM factory workers prepare to return to work.

The outcome of the contract talks is seen as crucial to efforts by the three Detroit-based automakers -- GM, Ford Motor Co. and Chrysler LLC - to recover from combined losses of $15 billion last year and sales difficulties that have driven their slice of the US market below 50 per cent.

GM, Ford and Chrysler are seeking sweeping concessions from the UAW to close a cost gap with Toyota Motor Corp they say amounts to more than $30 per hour for the average factory worker.
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Telecom Regulatory Authority suggests subsidy for remote area broadband connectivity
Mumbai: The Telecom Regulatory Authority of India (TRAI) has issued a new draft that recommends subsidising the service in remote and hilly areas.

The subsidy would be given out of the Universal Service Obligation fund, to which telecom companies contribute a portion of their profits. Boadband service providers could access the subsidies once they are made eligible for support from USO, the draft suggestions said.

USO funds would be provided as subsidy for providing broadband services through satellite in remote and hilly areas where back haul charges were initially up to 40 per cent, it said.

TRAI has sought the industry's response to the recommendations.

India had 2.47 million broadband connections as of July, against the department of telecom's target of 20 million broadband subscribers by 2010.
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BANKING AND FINANCE

Northern Rock stock tumbles as deposits disappear
Mumbai: Nervous customers, worried the bank would go under, have pulled out 2 billion pounds ($4 billion) from UK mortgage lender Northern Rock sending its shares down as much as 41 per cent.

Shares of Northern Rock, which closed down 35 per cent at 288 pence, have now dropped around 50 per cent since the company announced it might get an unspecified amount of funding from the Bank of England.

Northern Rock opened an hour early to meet the demands of customers wanting their cash who flocked over the weekend - either lining up at branches, or via phone and the internet - to withdraw money from the lender.

As of September 13, Northern Rock had 24 billion pounds in deposits.

The news dented the British pound once more and dragged stock markets in the UK and Europe lower for a second day.

The turmoil in Northern Rock shares fuelled additional speculation about a potential takeover, with the bank seen as having less and less sway over possible buyers.

Meanwhile, the Bank of England has reversed its stance on whether it would provide the funding it's giving to Northern Rock to a prospective suitor.

Talks with Northern Rock and another UK bank, Lloyds TSB, collapsed last week on concerns that the central bank's funding would stop once Northern Rock was purchased, according to press reports.
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Reserve Bank of India to sell Rs1,000-crore Punjab government loan
Mumbai: The Reserve Bank of India (RBI) will auction a Rs1,000-crore 10-year loan on September 20, a spokesman of the state government's finance department said.

The stock would be sold through RBI, Mumbai office (PDO) Fort, Mumbai by auction at a coupon rate to be determined by the RBI at the yield auction under multiple price format and interest would be paid half yearly on every March 21 and September 21, he said.

The application form duly filled in with the bids could be submitted to the aforesaid RBI office on September 20, 2007 and the payment by the successful bidders would be on September 21, 2007.

This stock would be issued for a minimum amount of Rs10,000 (face value) and in multiples thereof.
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ICICI Bank plans $20-23 billion funding for India's infrastructure sector
Mumbai: ICICI Bank is anticipating investmement of $20-$23 billion in the Indian infrastructure space as investor focus shifts over the next few years.

"ICICI Bank believes that it would contribute $20-23 billion in the $500 billion capital expenditure requirement of the infrastructure sector in the next three years," the bank's deputy managing director Chanda Kochhar said in an interview.

She said the sector would need about $500 billion, with infrastructure projects accounting for nearly half this amount, through 2010.

The country's largest private lender had recently announced a $2 billion infrastructure fund where it is pooling in capital from foreign investors to be invested in various infrastructure projects in India. The bank is already believed to have received commitments for one-fourth of the fund size and is likely to contribute about 15 per cent ($300 million) of its own funds.

ICICI Bank is looking to follow this fund with a larger one worth $5 billion in 2-3 years. Back to News Review index page   Currency converter

INTERNATIONAL

Merrill Lynch plans job cut at First Franklin Financial Corporation
Mumbai: Merrill Lynch & Co. Inc, the world's largest brokerage, has announced plans for a job cut as its First Franklin Financial Corporation unit's $1.3 billion bet on sub prime lending was hit by the market meltdown.

Merrill Lynch declined to say how many jobs were being cut.

Merrill Lynch bought San Jose-California-based First Franklin in December at a high premium amid a meltdown in the market for risky subprime mortgages.

Reports filed with the US banking regulators show that First Franklin franchise Merrill Lynch Bank & Trust Co lost $111 million through the first half of 2007.

"We have adjusted our staffing levels to be in line with current business requirements," the company said in a statement.

First Franklin relies on independent brokers to find borrowers and to submit loans applications. This model keeps overhead costs lower than a branch-based approach. But Merrill's peers, including Lehman Brothers Holdings, have abandoned or sharply curtailed funding loans sourced by independent brokers.
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