Events of the fortnight and the upcoming ones
All that glitters...: A Tata Nano, touted as the world's cheapest car, stands bedecked with about 80 kg of 22 karat gold, 15 kg of silver and gemstones, at a ceremony on September 19 in Mumbai.
Inflation worries, though, are holding back consumers from flocking to car showrooms. There is labour unrest at Maruti's Manesar plant for a second time this year, while Sanand in Gujarat is the new auto hub.
CORPORATE
Look no further than Corporate India's advance tax payments for July-September to note the slowdown. Almost a quarter of the top 100 companies paid a total of Rs 31,707 crore, a mere 9.9 per cent increase over payments for the same quarter a year ago (Rs 28,863 crore) - all due to pressure on margins and slow growth. In the April-June quarter, the increase was 19 per cent.
Axis Bank is acquiring Enam Securities in a stock deal worth Rs 1,546 crore. Enam shareholders will get 5.7 equity shares of the bank for every share of Enam - totalling 1.38 crore Axis Bank shares, which translates into a 3.3 per cent stake of the bank. The deal will help Axis Bank, the country's third-largest private bank, compete better with rivals ICICI Bank and HDFC Bank. Recognising Axis Bank's aggressive growth path, Business Today featured it in the list of Tomorrow's Goliaths in the issue dated October 2.
Fortis Healthcare Group's hospital businesses are coming under one roof. Fortis Healthcare (India) is acquiring its Singaporebased sister firm Fortis Healthcare International, privately owned by Malvinder Singh and Shivinder Singh, in an all-cash deal. The revenue of the combined entity will be more than $1 billion. The combined network will have over 74 hospitals, and is ready to overtake Apollo Hospitals, with 54 hospitals, to become India's largest hospital chain.
Increasingly, Indian companies are trying to secure fuel in Australia and Indonesia. In the latest round, GVK Power will acquire 79 per cent stake in Australia's Hancock Coal for $1.26 billion. The GVK Group, controlled by G.V. Krishna Reddy, plans to raise $1 billion by selling a stake in GVK Coal Developers (Singapore) to fund the purchase.
Troubled Chennai-based company Everonn Education, whose founder and MD P. Kishore was jailed on charges of bribing a tax official, will sell a 12 per cent stake for Rs 138 crore to Dubai-based GEMS Education. GEMS belongs to the Varkey Group, led by entrepreneur Sunny Varkey. Everonn's troubles prompted veteran J.J. Irani to step down as non-executive chairman.
Hewlett-Packard has done it again. It has fired a third CEO, Lo Apotheker, after just 11 months at the helm. Earlier, it had similarly sacked Carly Fiorina and Mark Hurd in two years. Immediately HP lost $60 billion in market value. Earnings reports under Apotheker, it is said, have been 'disappointing'. Replacing him is former eBay chief Meg Whitman. HP's Indian unit, which employs around 30,000, and all of Silicon Valley will be watching her every move carefully.
London-based SABMiller is acquiring Australia's largest brewer Foster's for $10.2 billion. With this deal, SABMiller will have access to about half of the Australian beer market. SABMiller has higher exposure in emerging markets, including India, than most rivals and is, therefore, considered to have less to lose by increasing its presence in developed markets with Foster's.
US President Barack Obama has taken to heart Sage of Omaha Warren Buffett's advice and has proposed a plan to tax the rich. His $3-trillion plan to cut US deficits by raising taxes on the rich is, however, being strongly opposed by the Republicans.
A rogue London trader has cost Swiss investment banking giant UBS $2.3 billion. As a result, the bank will report a loss for the third quarter of 2011. UBS, which has one office in India with 53 employees, says its India business will not be hit. The capital adequacy ratio for its India business was 90.01 per cent as of March-end. Earlier, the bank announced plans to cut 3,500 jobs to save Euro 1.35 billion.
ECONOMY
Reserve Bank of India Governor D. Subbarao has done it again, raising the repo rate for the 12th time since March 2010. Up by 25 basis points, it now stands at 8.25 per cent. In his reaction, Finance Minister Pranab Mukherjee said there were signs of growth being affected by the monetary tightening.
The International Monetary Fund, or IMF, has trimmed its forecasts of economic growth for India, China and other Asian developing economies, partially because of slower growth in the rest of the world. The IMF expects India's economy to grow 7.8 per cent in 2011 and 7.5 per cent in 2012, down from its June forecasts of 8.2 per cent and 7.8 per cent, respectively.
Come October 1, the Duty Entitlement Passbook Scheme, or DEPB, the tax remission facility for exporters, will end. The items covered will be shifted to the alternative mechanism of duty drawback. Some 2,130 items, including 1,100 which do not fi gure in the drawback schedule, will have new drawback rates. The scheme was scrapped as some nations which import from India alleged the scheme had a subsidy element.
$4.9 bn The projected profit of global airlines in 2012, according to the International Air Transport Association (IATA). Compare this to $6.9 billion in 2011. The question on everyone's lips is: with projected revenues of $632 billion, and a net margin of 0.8 per cent in 2012, how long can the airlines fly on hope and goodwill? Whenever global GDP growth has slowed below two per cent the airline industry has lost money.
$4.2 bn Cut in India's exposure to US debt between May and July this year. The Indian holding of the US treasury bonds - debt securities issued by the world's largest economy - fell by $1 billion in July to $37.9 billion. At the end of April 2011, India held treasury bonds worth $42.2 billion.
MARKETS
Markets are on edge - with good reason. Every day brings more news of the worldwide slowdown. The US Fed warning on the economy and its uninspiring stimulus plan has led to investors dumping equities. Europe continues to slide. S&P has downgraded Italy by one notch to A/A-1 and kept its outlook negative. Greece will run out of money and is likely to default if $11 billion does not come its way by mid-October, which will send shockwaves through the eurozone. The rupee slipped to a two-year low against the dollar, adding to Corporate India's worries.
The health insurance portability service, which allows policyholders to switch insurers - just the way they do with mobile phone connections - comes into force from October 1. There will be no fresh medical check-ups required. The consumer will also get the bonus accruing to him from his past insurer.
Coming Up
The ruling UPA's worst kept secret is now in the public domain: the mutual animus between Finance Minister Pranab Mukherjee and Home Minister P. Chidambaram. It has now emerged that the finance ministry sent a note to the Prime Minister's office way back in March, blaming the finance minister at the time of the 2G scam - 2007/08 - for not taking any substantive steps to prevent it. And who was that finance minister? Chidambaram, of course. The last word has not yet been said on the issue. Watch this space for more news.
CORPORATE
Look no further than Corporate India's advance tax payments for July-September to note the slowdown. Almost a quarter of the top 100 companies paid a total of Rs 31,707 crore, a mere 9.9 per cent increase over payments for the same quarter a year ago (Rs 28,863 crore) - all due to pressure on margins and slow growth. In the April-June quarter, the increase was 19 per cent.
Axis Bank is acquiring Enam Securities in a stock deal worth Rs 1,546 crore. Enam shareholders will get 5.7 equity shares of the bank for every share of Enam - totalling 1.38 crore Axis Bank shares, which translates into a 3.3 per cent stake of the bank. The deal will help Axis Bank, the country's third-largest private bank, compete better with rivals ICICI Bank and HDFC Bank. Recognising Axis Bank's aggressive growth path, Business Today featured it in the list of Tomorrow's Goliaths in the issue dated October 2.
Fortis Healthcare Group's hospital businesses are coming under one roof. Fortis Healthcare (India) is acquiring its Singaporebased sister firm Fortis Healthcare International, privately owned by Malvinder Singh and Shivinder Singh, in an all-cash deal. The revenue of the combined entity will be more than $1 billion. The combined network will have over 74 hospitals, and is ready to overtake Apollo Hospitals, with 54 hospitals, to become India's largest hospital chain.
Increasingly, Indian companies are trying to secure fuel in Australia and Indonesia. In the latest round, GVK Power will acquire 79 per cent stake in Australia's Hancock Coal for $1.26 billion. The GVK Group, controlled by G.V. Krishna Reddy, plans to raise $1 billion by selling a stake in GVK Coal Developers (Singapore) to fund the purchase.
Troubled Chennai-based company Everonn Education, whose founder and MD P. Kishore was jailed on charges of bribing a tax official, will sell a 12 per cent stake for Rs 138 crore to Dubai-based GEMS Education. GEMS belongs to the Varkey Group, led by entrepreneur Sunny Varkey. Everonn's troubles prompted veteran J.J. Irani to step down as non-executive chairman.
Hewlett-Packard has done it again. It has fired a third CEO, Lo Apotheker, after just 11 months at the helm. Earlier, it had similarly sacked Carly Fiorina and Mark Hurd in two years. Immediately HP lost $60 billion in market value. Earnings reports under Apotheker, it is said, have been 'disappointing'. Replacing him is former eBay chief Meg Whitman. HP's Indian unit, which employs around 30,000, and all of Silicon Valley will be watching her every move carefully.
London-based SABMiller is acquiring Australia's largest brewer Foster's for $10.2 billion. With this deal, SABMiller will have access to about half of the Australian beer market. SABMiller has higher exposure in emerging markets, including India, than most rivals and is, therefore, considered to have less to lose by increasing its presence in developed markets with Foster's.
US President Barack Obama has taken to heart Sage of Omaha Warren Buffett's advice and has proposed a plan to tax the rich. His $3-trillion plan to cut US deficits by raising taxes on the rich is, however, being strongly opposed by the Republicans.
A rogue London trader has cost Swiss investment banking giant UBS $2.3 billion. As a result, the bank will report a loss for the third quarter of 2011. UBS, which has one office in India with 53 employees, says its India business will not be hit. The capital adequacy ratio for its India business was 90.01 per cent as of March-end. Earlier, the bank announced plans to cut 3,500 jobs to save Euro 1.35 billion.
ECONOMY
Reserve Bank of India Governor D. Subbarao has done it again, raising the repo rate for the 12th time since March 2010. Up by 25 basis points, it now stands at 8.25 per cent. In his reaction, Finance Minister Pranab Mukherjee said there were signs of growth being affected by the monetary tightening.
The International Monetary Fund, or IMF, has trimmed its forecasts of economic growth for India, China and other Asian developing economies, partially because of slower growth in the rest of the world. The IMF expects India's economy to grow 7.8 per cent in 2011 and 7.5 per cent in 2012, down from its June forecasts of 8.2 per cent and 7.8 per cent, respectively.
Come October 1, the Duty Entitlement Passbook Scheme, or DEPB, the tax remission facility for exporters, will end. The items covered will be shifted to the alternative mechanism of duty drawback. Some 2,130 items, including 1,100 which do not fi gure in the drawback schedule, will have new drawback rates. The scheme was scrapped as some nations which import from India alleged the scheme had a subsidy element.
$4.9 bn The projected profit of global airlines in 2012, according to the International Air Transport Association (IATA). Compare this to $6.9 billion in 2011. The question on everyone's lips is: with projected revenues of $632 billion, and a net margin of 0.8 per cent in 2012, how long can the airlines fly on hope and goodwill? Whenever global GDP growth has slowed below two per cent the airline industry has lost money.
$4.2 bn Cut in India's exposure to US debt between May and July this year. The Indian holding of the US treasury bonds - debt securities issued by the world's largest economy - fell by $1 billion in July to $37.9 billion. At the end of April 2011, India held treasury bonds worth $42.2 billion.
MARKETS
Markets are on edge - with good reason. Every day brings more news of the worldwide slowdown. The US Fed warning on the economy and its uninspiring stimulus plan has led to investors dumping equities. Europe continues to slide. S&P has downgraded Italy by one notch to A/A-1 and kept its outlook negative. Greece will run out of money and is likely to default if $11 billion does not come its way by mid-October, which will send shockwaves through the eurozone. The rupee slipped to a two-year low against the dollar, adding to Corporate India's worries.
The health insurance portability service, which allows policyholders to switch insurers - just the way they do with mobile phone connections - comes into force from October 1. There will be no fresh medical check-ups required. The consumer will also get the bonus accruing to him from his past insurer.
Coming Up
The ruling UPA's worst kept secret is now in the public domain: the mutual animus between Finance Minister Pranab Mukherjee and Home Minister P. Chidambaram. It has now emerged that the finance ministry sent a note to the Prime Minister's office way back in March, blaming the finance minister at the time of the 2G scam - 2007/08 - for not taking any substantive steps to prevent it. And who was that finance minister? Chidambaram, of course. The last word has not yet been said on the issue. Watch this space for more news.
