Auto biz challenging; eye long-term profit: Mercedes-Benz

In this edition of CNBC-TV18's The Forbes India Show, Eberhard Kern, MD, Mercedes-Benz India says that the six months since he assumed charge were full of challenges such as the slump in overall auto sales and the depreciation in the rupee .

Also read: The luxury car battle: Audi's plans to stay on top

Eberhard Kern adds that fall in the value of the rupee against dollar has started to impact margins and highlights that a decision will be taken to change revise pricing by July or August.

The growth of rivals Audi and BMW do not disturb Kern who says that he remains focused on establishing a sustainable and profitable business at Mercedes-Benz India.

Below is the edited transcript of the show on CNBC-TV18

Q: Your first six months in India has been a pretty eventful — auto sales slumped to record lows, the rupee has sunk almost 9 percent in the last two months and the finance Minister paid particular attention to the luxury auto segment during the Budget. How are you faring?

A: Yes, it was quite a challenging time since I arrived in December. The past six months have not only been challenging, but fascinating as well. The tax impact was not planned and the Budget this year took us by surprise. Indian customers have to now pay more than 50 percent in taxes.

Q: How badly has the fall of rupee hurt you?

A: The euro is much more important to us than the dollar as we import most of our products, kits or parts from the euro zone. In December 2012, the euro was around 70 and we established a defensive strategy for the year after taking into consideration a probable rise of the euro to rise to 74 against the rupee. But now it is at 78-79.

This of course directly impacts our costing which involves purchasing in the euro and selling in the rupee. Our  profit margins will start to face some pressure. So far, we have been able  sustain the price level, but if the rupee continues to wobble over the next few weeks or months, we may have to re-examine our pricing as well.

Q: How long will you wait before you take a decision?

A: We will have to come to a decision latest by July-August.

Q: Your stint began when Mercedes-Benz in India lost its position at the top to rivals Audi and BMW. Was restoring the company's position one of your goals when you took over the helm in India?

A: No, there was no such goal this. Our goal is to establish a business that is sustainable and profitable and we have formulated our plans accordingly. We face competition everywhere in the world and that includes India as well. Yes, we are ambitious but we follow plans of our own.

Q: Let us talk about those plans. Will you be able to beat the competition with the launch of the A-Class?

A: We have been in this business for years. The E-Class, as you mentioned correctly, is one of our most important models today. Of the over 2,000 cars we sold in the first quarter which was 5 percent better than last year's Q1 sales, the sales of the E-Class contributed 40 percent. So it is one of our most important models.

Overall, we are the leaders in all the segments that we are present in. There are also segments in the market that we were able to develop quite successfully in the last one-to-two years such as the mid-sized luxury SUV and the small-sized luxury SUV. As we do not have any products in those segments right now, we are not able to participate in them.

Q: Why did that happen? Was it a lack of foresight or planned?

A: There are different reasons for this. In the mid-sized luxury SUV segment, we have the Mercedes-Benz GLK, but unfortunately the only model on offer is the model with the left hand drive.

We hope this will change with the successor model we plan to introduce in two year's time. Though we do not have a product in the small-sized SUV segment right now, you may recall that a few months ago at the Shanghai Motor Show we exhibited the Concept GLA.

This model had a very, very positive response in the Indian market as well. So I am quite confident that we will be able to launch this model into India in one-and-a-half year's time.

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AirAsia to start India operations later this year

Malaysian low-cost carrier AirAsia on Saturday said its Indian operations should begin later in 2013 with flights for South India and the company would also look at setting up some ancillary businesses in the country.

"Though September may be too ambitious, we are hopeful of starting Indian operations later this year with three aircraft serving South India, " AirAsia Group CEO Tony Fernandes said. The airline would expand its services to other parts of the country in the second stage, he said.

Speaking to CNBC-TV18, Tony Fernandes says that he expects fierce competition in India and adds that the low-cost carrier is not looking at Mumbai and Delhi for now. The airline is to start operations with three aircraft and will add 1 aircraft every month.

AirAsia would also look at setting up ancillary services like air travel insurance and duty-free shops in the country, said Fernandes. AirAsia has already put in place a strong leadership team for its India operations, which is a joint venture with Tatas and Telestra Tradeplace.

Former TCS chief S Ramadorai has been appointed chairman while top industry leader Ratan Tata has been named as chief adviser to the board of AirAsia India.

Besides, R Venkataraman (former executive assistant to Ratan Tata) and Bharat Vasani (chief legal counsel of the Tata Group), are among the directors on the board.

AirAsia India is a joint venture of Air Asia, Tata Sons and Arun Bhatia of Telestra Tradeplace with 49:30:21 holding. AirAsia will be represented by Tony Fernandes and Kamarudin Bin Meranu. In May, Fernandes had named Mittu Chandilya as the CEO of AirAsia India.

AirAsia is expected to bring in competitive pricing in the Indian aviation market with its "nano" airfares. These announcements had come within days after aviation minister Ajit Singh said all the issues regarding AirAsia's India applications had been resolved.

(With inputs from PTI)

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Gas price hike will revive investor sentiment: RS Sharma

The gas price hike will result in a big turnaround in investor sentiment says RS Sharma, former CMD, ONGC . Talking to CNBC-TV18. he says that as ONGC is a company that contributes towards the under-recoveries of the oil marketing companies (OMCs), this is good for them as they need liquidity.

Below is the edited transcript of his interview with CNBC-TV18

Q: We have often had many conversations about whether the government will move on this or won't it, but they finally decided to bite the bullet. USD 8.4 per mmbtu, that has been the decision that has been taken by the Cabinet Committee on Economic Affairs (CCEA) today?

A: I can only say that as a true patriot for the country,  I am a very happy person today because the investment sentiment in the country had really hit rock bottom. In my more than two decades of active career at that level I had not seen the sentiments of investment to be so low in India.

So, I feel this gives a big turnaround for the investment sentiment and look at it from pure economic point of view. We have increasingly increasing our import dependence and we know that that is reflecting in a big way on our forex reserves exchanges parity and the more worrisome and more disturbing aspect is that we have got resource base in our own backyard, which is not being exploited because the domestic production is getting a price of one fourth of the international parity price.

I feel that is a step in the right direction and also look at it, when the Rangarajan Committee was constituted very high top class economists they have given recommendations.

There has to be sanctity with those recommendations. So, I feel that is very much needed, very timely and going forward it will improve the sentiments much better.

Q: I know you are no longer operationally involved with Oil and Natural Gas Corporation (ONGC), but as a past chairman of ONGC take us through what this is going to mean specifically for the company because ONGC stands to be one of the biggest beneficiary of this move?

A: Yes. One has to also keep in mind this is a company that contributes, this year estimated contribution of Rs 60,000 crore towards the under-recoveries of the oil marketing companies (OMCs). So even if in this gas price revision there is an upside of Rs 6,000-7,000 crore, that is in absolute term it sounds very substantial.

But in comparative terms that is not very high and at least that gives comfort to ONGC that they will be able to absorb that sort of subsidy level. First time after many years we have seen that ONGC's profit after tax (PAT) going down almost 18-20 percent, that is worrisome for the investors and worrisome for ONGC, look at the kind of acquisition plans they have for overseas for the energy security of the country. They do need liquidity and that is again a thing in the positive direction.

Q: You brought up the issue about subsidy and understandably this will lead the government perhaps to take back a little bit more from ONGC and Oil India because in a sense they have given you the opportunity to make good on these gas prices. But that would perhaps be fair because all of these blocks were nominations blocks and so there was no profit sharing agreement with the government?

A: I don't think ONGC management should resent that because in a way as it is we are contributing to the economy. This will be another step for ONGC to contribute more, atleast ONGC will have a resource base to contribute more. So, I have to take it in that perspective.

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CCEA clears 7.64% NFL stake sale; to rake in over Rs 125 cr

The Cabinet on Thursday cleared the proposal for 7.64-percent stake sale in National Fertilisers Ltd (NFL), which is expected to fetch around Rs 125 crore to the exchequer. "The CCEA has approved disinvestment of NFL though the offer for sale (OFS) route," sources said.

The government plans to disinvest 7.64-percent stake, or over 3.74 crore shares of NFL in the domestic market. At the current market price of Rs 33.90 apiece, the 7.64 per cent stake sale could fetch over Rs 125 crore to the exchequer. At present, the government holds 97.64 per cent stake in
NFL.

The department of disinvestment (DoD) has approached the CCEA for stake sale in the company through four merchant bankers — IDBI Capital Market Services, Avendus Capital, SBI Cap and Kotak Investment Banking — were in fray for managing the stake sale of NFL.

An inter-ministerial panel, headed by disinvestment secretary, had cleared the NFL stake-sale in May. The paid-up equity capital of the company, as on March 31, 2012, was Rs 490.58 crore. The stake-sale in NFL is part of DoD's effort to meet the minimum 10-percent public shareholding norm as stipulated by market regulator Sebi for PSUs.

The government uses the OFS route, popularly known as auction method, to divest its stake in PSUs that come in top 100 companies in terms of market capitalisation. It has already used the route to sell stake in Oil India , NTPC , NMDC and Hindustan Copper during last fiscal. The government proposes to raise Rs 40,000 crore by way of disinvestment in the current fiscal.

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CERC seeks fresh testing of Sasan UMPP unit

Electricity regulator CERC has asked Reliance Power to carry out fresh testing of the first 660 MW unit of its 3,960 MW Sasan ultra mega power project.

The Central Electricity Regulatory Commission's order came on a petition filed by the Western Regional Load Despatch Centre (WRLDC), part of state-owned Power Grid Corp. "... we are of the view that the certificate given by the Independent Engineer for declaration of COD (Commissioning Date) for 101.38 MW cannot be sustained," the Central Electricity Regulatory Commission (CERC) said in its order dated June 20.

"Consequently, we direct that Sasan Power Ltd shall undertake fresh testing of the unit to achieve the tested capacity...," it added. When contacted, a Reliance Power spokesperson said: "The first unit of 660 MW of 4,000 MW Sasan UMPP achieved commercial operations, as certified by the Independent Engineer (IE), appointed jointly by the procurers and Sasan Power, on 30.03.2013 which was duly accepted in writing by all the 14 (fourteen) procurers".

According to him, WRLDC has no locus standi to question the commissioning date. WRLDC in its plea had sought to look into the veracity of the certificate issued by the Independent Engineer "in view of deliberate suppression and misrepresentation of the facts". WRLDC is part of Power System Operation Corp, a wholly-owned subsidiary of Power Grid.

Sasan project, located in Madhya Pradesh, is being implemented by Sasan Power Ltd. As per the CERC order, the power injected by the generating station till declaration of commissioning date by Sasan Power "shall be treated as infirm power in accordance with the regulations of the Commission".

Meanwhile, Reliance Power spokesperson said WRLDC petition was listed before CERC on 23.05.2013 for hearing on maintainability only and the hearing was accordingly confined to maintainability.

"It is surprising that CERC vide order dated 20.06.2013 chose to deal with the merits of Independent Engineer Certificate without even hearing Sasan Power or Independent Engineer," the spokesperson said.

Further, he noted that the order effectively is an ex parte order.
"WRLDC order is violative of principles of natural justice and is not tenable in law. "Sasan Power is approaching Appellate Tribunal to quash the untenable order of CERC," the spokesperson added.

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EcoSport to drive Ford's profitability in India: Singh

Joginder Singh, president, Ford India said the company is betting big on the new EcoSport to drive it to profitability in India and deliver returns on the USD 2 billion dollars, the global car company has committed to this market.

Ford has priced its new sport utility vehicle (SUV) Ecosport at a very aggressive Rs 5.59 lakhs. At this price, not only has Ford created a new entry level SUV category but it will also compete with the likes of the Maruti Dzire and the Hyundai i20.

Also Read: Ford bets on EcoSport to ride mini-SUV boom in India

The EcoSport will not be impacted by the additional excise duty on SUV, and in fact is a beneficiary of the small car duty as it is under-4 metre in length.

Singh said, we expect our customers to come from a whole variety of segments. "Existing sedan owners, people who own hatchbacks, people who own small SUVs, people who own big SUVs, they might think that this is the right size SUV for their lifestyle," he added.

Below are the excerpts of his interview with CNBC-TV18's Shereen Bhan

Q: What are your plans for India?

A: The interesting thing about India is that there are new segments emerging all the time. We are in the sub 4 metre category it is the right SUV.

What we have announced today was the icing on the cake that we were able to offer such a compelling price proposition. This is what I call a 'Dhamaka' that we have been able to combine these things so well.

Q: You have been very aggressively been able to price this product. How much of the design specifications for instance and I pick up on the point that you just made about this being sub four metres because that will ensure that you get the small car benefits, that will also ensure that you don't fall now under the governments SUV category which means you don't have to pay the higher excise duty. How much of the design specification was driven by the eventual price that you wanted to offer?

A: There is more than just a design specification. Ofcourse we have to design what the needs of the market are when we think there is a strong demand in the sub four metre category.

However, it's more than that, the reason why we have been able to offer such a great proposition to the customer. First of all we have the advantage of scale. The EcoSport product is being produced in our factory in Chennai but it will satisfy customers not only in the Indian market but also be satisfying customers in the export market as well.

The second factor in addition to the design efficiency that we have is the very satisfactory level of localization we have in this product.

We have been engaged in this localization strategy over a period of time, to make sure that we take advantage of our global suppliers that are helping Ford worldwide. They are also helping us in India in Chennai as well as in the upcoming factory in Sanand.

Q: So, who are you going to be competing against because the assumption was this is going to take on the Renault Duster which is an entirely different category and it's an entirely different price category as well. So, who do you believe is going to be your competitor?

A: It is a new space. We expect our customers to come from a whole variety of segments. So, existing sedan owners, people who own hatchbacks, people who own small SUVs, people who own big SUVs, they might think that this is the right size SUV for their lifestyle. Therefore, our draw for customers is going to be from a whole range.

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Highest fin inclusion in Kerala; see 25-50 bps cut: Crisil

Jun 25, 2013, 11.10 PM IST

Crisil MD and CEO Roopa Kudva says, in an interview to CNBC-TV18, that financial inclusion in Kerala, Pondicherry and Chandigarh was the highest in the country and expects to see the rupee settle at 56 in FY14.

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Highest fin inclusion in Kerala; see 25-50 bps cut: Crisil

Crisil MD and CEO Roopa Kudva says, in an interview to CNBC-TV18, that financial inclusion in Kerala, Pondicherry and Chandigarh was the highest in the country and expects to see the rupee settle at 56 in FY14.

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Highest fin inclusion in Kerala; see 25-50 bps cut: Crisil

Crisil MD and CEO Roopa Kudva says, in an interview to CNBC-TV18, that financial inclusion in Kerala, Pondicherry and Chandigarh was the highest in the country and expects to see the rupee settle at 56 in FY14.

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I expect the rural economy to do well

In a computation of financial inclusion in 632 districts across

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Tata Motors' passenger unit eyes 3% growth in market share

Tata Motors on Tuesday said its passenger vehicle unit intends to increase market share by 3 percent to 15 percent. "Our intention is to gain market share and move closer to where we were last year. Market share last year dropped down to around 12 percent, we intend to grow that by 2-3 percent to reach 14 or 15 percent," Tata Motors president (passenger vehicle business unit) Ranjit Yadav told reporters on the sidelines of a company event in Bangalore.

Also Read: Tata Motors upgrades cars as rivals launch new ones

Indicating that next couple of quarters are likely to be weak he said the company's market growth would be flat. "We have seen six to seven months of decline, these things can turnaround but next couple of quarters is going to be weak, so I would expect it to be flat to declining," he added.

Declining to give guidance on Tata Nano production, he said, "Our manufacturing is matching the requirement. We saw weakness in the market very early and have made significant correction in stocks for our channel partners and dealers, so our actual sales are higher than reported."

Trying hard to improve its customer service initiatives, Tata Motors said it is revamping its sales outlets across the country and will have 150 revamped outlets by the end of this year.

Tata Motors had reported a 23.37-percent decline in total vehicle sales in May, at 49,304 units. Its total passenger vehicle sales in the domestic market stood at 11,134 units during the month, down 45.69 percent from 20,503 units in the same month last year.

Earlier at the event, the company felicitated Srikarunya Subrahmanyam, a Bangalore-based motoring enthusiast and his team, for entering the Guinness World Records in the presence of Formula One motor racing driver, Narain Karthikeyan.

Subrahmanyam was feted for accomplishing the longest journey of 10,218 km in a Tata Nano in 10 days, breaking the current record of 8046.74 km.

A book 'Atop the World' written and edited by Thomas Chacko was also unveiled at the event. Chacko is a Kochi-based, 63-year old motoring enthusiast, who completed a 78-day long national expedition in a Tata Nano, covering 26,500 km across the length and breadth of the country.

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RBI eases ECB norms, paves way for low cost home projects

Moneycontrol Bureau

The Reserve Bank of India (RBI) on Monday eased fund raising norms through external commercial borrowing (ECB) route for the low cost affordable housing projects. Both housing finance companies (HFCs) and developers are the direct beneficiaries while home buyers too will enjoy their share in terms of concessional interest rates and better availablity of low cost homes.

HFCs can now mop up cheap funds to lend at concessional rates. Developers/builders too can avail such funds via ECB route and will be encouraged to promote low cost housings. Millions of low-income Indian families still struggle to buy their own homes due to lack of affordability.

Builder experience eased

"Developers/builders should have a minimum of three years experience in undertaking residential projects as against five years prescribed earlier and should have good track record in terms of quality and delivery," RBI said in a notification.

No bar for paid-up capital of HFCs

The central bank also revoked the benchmark of minimum paid-up capital of HFCs to get ECB funding. Earlier, it was "not less than Rs 50 crore" as per the latest audited balance sheet for those companies. However, the condition of the minimum net owned funds (NoF) of Rs. 300 crore for the past three financial years remains unchanged.

ECB limit extended

"The aggregate limit for ECB under the low cost affordable housing scheme is extended for the financial years 2013-14 and 2014-15 with a ceiling of USD 1 billion in each of the two years, subject to review thereafter," RBI said.

Must read: RBI creates sub-sector for housing, paves credit flow

Impact

Those steps, no doubt, will expand the reach of affordable housings. More HFCs will be able to fund such projects wherein home buyers can also get cheap credit from lenders. The relaxation on developers' experience criteria is expected to encourage more builders to get into affordable housings. Currently, the number of low cost housings is not adequate. In coming days, you can expect some activities in this residential segment.

Support to falling rupee

According to the RBI, the ECB availed of by developers and builders shall be swapped into rupees for the entire maturity on fully hedged basis. This move would bring some support to the tumbling Indian rupee against the US dollar. The conversion from (majorly) dollar to rupee will bring in some inflows giving strength to the local currency against the greenback. It had slumped to record low of 59.98/USD on June 20.

Also read: ANALYSIS: Here's how NDF factor works for rupee/dollar rate

Yardstick for affordable housing

While applying for ECBs, HFCs will have to adhere to certain prescribed norms which qualify under the scheme of affordable housings. Some of those are:

• To submit a certificate from NHB, the nodal agency, that the availment of ECB is for financing prospective owners of individual units for the low cost affordable housing;
• To ensure that cost of such individual units does not exceed Rs. 30 lakh and loan amount does not exceed Rs. 25 lakh;
• To ensure that the units financed are having maximum carpet area of 60 square metres.

saikat.das@network18online.com

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LIC gears upto achieve growth target after FM report card

Indian insurance giant Life Insurance Corporation (LIC) is gearing up for some serious business. After finance minister P Chidambaram visited LIC and expressed dissatisfaction with the PSU's performance in May, a series of internal and board meetings were held to address the problem.

Also Read: Mining minerals needed for development: Chidambaram

During the latest meeting on Saturday, the board decided to not just refurbish the existing process but also set up small 300 offices across India by end of June, reports CNBC-TV18's Manasvi Ghelani, quoting sources.

According to sources finance minister P Chidambaram visited LIC's  Mumbai office in May month and handed over a list of about 20 strategic changes to be made in the organisation to achieve a desired year-end target of about Rs 33,000 crore.

The changes include refurbishing of marketing processes, a change in the investment strategy and also changes in the products on offer. With the finance minister monitoring LIC's performance, officials at the PSU are tightening loose ends. Around 19,000 underperforming agents have been terminated in the last two months alone. At the same, one lakh fresh recruits are being trained to achieve at least 50 percent of the premium collection target by September 2013.

A series of internal meetings and board meetings were conducted in June. In the latest meeting, the members included economic affairs secretary Arvind Mayaram and financial services secretary, Rajiv Takru and a decision to open 300 mini offices across India during this week was finalised.

Current LIC chairman Thomas Mathew has confirmed that these offices are a part of LIC's growth plan to set up 1,700 branches by December.

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Sahara freeze order gets Sebi Rs 52 cr in cash, investments

Market regulator Sebi has been able to get hold of cash and investments totalling about Rs 52 crore and details of more than 450 acres of land so far through its attachment orders against Sahara group entities.

In the high-profile case involving refund of over Rs 24,000 crore to the bondholders of two Sahara companies, Sebi had passed orders for attachment of various properties and freezing of accounts in February after the entities failed to deposit the entire money.

Also Read: Sebi asks Sahara investors to give information for refunds

The cash totalling over Rs 23 crore, received from various banks pursuant to these orders, has been invested in a term deposit for now, while investments worth about Rs 28 crore in mutual funds and demat accounts have also been frozen, sources said.

After passing its attachment orders, Sebi informed all the banks, depositories, mutual funds and NBFCs, among others, about the matter and also requested Reserve Bank of India (RBI) to direct the chiefs of the banks to transfer the money of Sahara firms to a designated Sebi account.

Sebi had also approached the Collectors of as many as 600 districts to request them not to permit the concerned Sahara entities and persons from any sale or transfer of properties attached by the regulator.

As a result, the District Collectors and Revenue Officers from various parts of the country have provided Sebi details of more than 450 acres of land belonging to Saharas, sources added.

The regulator has already asked the Supreme Court to allow it to appoint an Officer of Special Duty and other officers to deal with the objections and claims relating to the property to be sold and for conducting the sale of the property to garner funds for refunding the investors' money.

Saharas have so far deposited Rs 5,120 crore with Sebi towards the refund and claims that this amount is more than sufficient to meet the outstanding liabilities towards its bondholders as the group has already paid close to Rs 20,000 crore directly to the investors.

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Mining minerals needed for development: Chidambaram

Union Finance Minister P Chidambaram today made out a strong case for mining mineral deposits such as coal and iron ore, saying these would help in the country's development.

"Some people do not want to mine mineral deposits...their attitude is that let it be there as deposits... this will not in any way help in the development of the country," he said after inaugurating a branch of Andhra Bank at Malampatti near here in his native district.

Proposed FDI cap review by Cabinet in July 3rd week: FM

He said China had achieved rapid development because its approach and attitude were conducive to development.

"But in India, there are many criticisms about development...They want coal deposits to remain as deposits.

Coal is necessary for power generation and power is essential for industrial development," the Minister said.

He said Jamshedpur would not have achieved so much development without mining iron ore deposits found there 100 years ago.

Chidambaram said since he got elected to Lok Sabha from Sivaganga in 2009, he had come to his constituency 74 times.

"This is my 74th visit... I want to score century..and visit my constituency 100 times."

He said Andhra Bank was founded in 1923 by Dr Bogharaju Pattibi Sitaramiah, who was a close friend of Mahathama Gandhi. The bank had Rs 10,000 crore deposits in Tamil Nadu and had given advances to the tune of Rs 11,800 crore.

Executive Director of the Bank S K Kalra was also present on the occasion.

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Bajaj Hindusthan to sell investment in two group firms

Country's largest sugar firm Bajaj Hindusthan today said it will seek shareholders' nod for sale of investment in two group firms related to power venture, Bajaj Energy and a subsidiary in Singapore. Bajaj Hindusthan has 26 per cent stake in Bajaj Energy, while Bajaj Hindusthan (Singapore) Pte Ltd is a wholly-owned subsidiary set up to acquire coal mine in Indonesia.

In a filing to the BSE, the company said the board of directors has approved seeking consent of shareholders by way of postal ballot for sale of investment in Bajaj Energy Pvt Ltd and Bajaj Hindusthan (Singapore) Pte Ltd. According to sources, Bajaj Hindusthan is likely to sell investment in these two firms to group firms only to enable the company to fund investment in its 1980-MW thermal power project at Lalitpur in Uttar Pradesh.

Bajaj Energy has set up coal based power plants of 90 MW each in the vicinity of 5 of its existing sugar units. These projects have been commissioned in March 2012 at a cost of around Rs 2,300 crore. Bajaj Hindusthan had set up a subsidiary Bajaj Hindusthan (Singapore) Pvt Ltd, which is engaged in trading in commodities and also exploring opportunities for coal mine acquisition in Indonesia. The Singapore subsidiary has already acquired coal mine in Indonesia.

That apart, Bajaj Hindusthan is also developing two mega thermal power projects in Lalitpur district of UP of 1,980 MW each through consortium. Shareholders' approval would be taken for re-appointment and payment of remuneration to company's Chairman and Managing Director Shishir Bajaj for a further period of 5 years with effect from July 1 2013.

The shareholders nod would also be taken for payment of minimum remuneration in case of loss or inadequacy of profit for a period of three years. Share price fell by 3.2 per cent to Rs 14.45 on BSE.

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AFTI applauds lawmakers for taking their case against India

The recently established Alliance for Fair Trade with India has commended both the House and Senate for calling on Obama Administration to end the alleged Indian discriminatory trade practices hurting American jobs.

Co-Chaired by National Association of Manufacturers (NAM) and the US Chamber of Commerce's Global Intellectual Property Center (GIPC), AFTI represents top American business and advocacy groups. It was formed early this week.

"The overwhelming bipartisan support from Congress pressing for action to stop India's unfair and damaging practices shows the scope and impact on American businesses and jobs," said NAM Vice President of International Economic
Affairs Linda Dempsey. "Our hope is that Secretary Kerry can engage India's leaders at the highest levels and urge them to put an end to these discriminatory practices," Dempsey said.

Also Read: New US trade chief focused on India, striking deals

"India's deteriorating intellectual property system is a detriment to economic growth, future innovation and competitiveness-for both India and the global economy," said GIPC executive vice president Mark Elliot. "The bipartisan support of more than 200 members of the House and Senate rings loud that Indian intellectual property practices cannot stand," he said.

In nearly half a dozen separate letters, more than 200 members of the House of Representatives and 42 influential Senators expressing concerns with India's discriminatory trade and intellectual property practices urged US President Barack Obama and Secretary of State John Kerry to take immediate action
to address them. The Alliance for Fair Trade with India was launched earlier this week by 15 multi-industry business groups to work with the Administration and members of Congress in pursuing public policy options that help create a level playing field for US exporters and innovative companies operating in India.

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The Week That Was: Fedspeak, Weak Rupee, Truant Weather Rock Nation

Its been a week of high drama. A natural catastrophe led to the death of thousands in Uttarkhand , while a bloodbath was seen in the Indian and US markets on the back of Fed chairman Ben Bernanke tapering quantitative easing. Adding to investor woes, the rupee was hammered as FIIs withdrew from the debt market. And in politics, the Cabinet was again reshuffled.

Here's a lowdown of the micro, macro and everything else that made headlines this week.

Welcome To The Week that was

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Unlikely to be at SBI's next annual general meet: Chaudhuri

Jun 21, 2013, 10.33 PM IST

State Bank of India Chairman, Pratip Chaudhuri said that he was unlikely to be a part of the bank's next annual general meeting.

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Unlikely to be at SBI's next annual general meet: Chaudhuri

State Bank of India Chairman, Pratip Chaudhuri said that he was unlikely to be a part of the bank's next annual general meeting.

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Unlikely to be at SBI's next annual general meet: Chaudhuri

State Bank of India Chairman, Pratip Chaudhuri said that he was unlikely to be a part of the bank's next annual general meeting.

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State Bank of India has written to aviation regulator DGCA expressing concern over the grounded Paramount Airways plans to re-launch the carrier, saying it has been in default for long.

Also read: SBI objects to Paramount's revival plan over dues

Meanwhile responding to a question at the SBI AGM today, State Bank of India Chairman, Pratip Chaudhuri said that he was unlikely to be a part of the bank's next annual general meeting.

However, in May end there were rumors that Pratip Chaudhuri may get an extension as SBI Chairman.

From DJ EU Officials Spain Aid Cap Of 100 Bn Euros 'should Be Enough'

The latest earning numbers FIRST on CNBC-TV18

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Data market war: Idea slashes tariff by 90% in 8 circles

Triggering a tariff war, Idea Cellular on Thursday slashed data charges by 90 percent in eight circles, following Bharti Airtel and Vodafone, who recently cut their rates by similar margins in select circles.

" Idea Cellular ...has revised data tariff in eight circles across the country...users can now access data for 2 paise/10 KB, which is a 90 per cent reduction in the existing tariff of 2 paise/KB," Idea Cellular said in a statement.

Also read: Airtel slashes data usage rates by 90% in Punjab, Haryana

Bharti Airtel had yesterday slashed data usage charges by 90 percent for pre-paid subscribers in Punjab and Haryana, a day after Vodafone lowered its data charges by 80 per cent for pre-paid and post-paid customers in three circles.

Airtel has reduced the price to 1 paisa per 10 KB from 10 paisa per 10 KB and Vodafone slashed the tariff from 10 paisa per 10 KB to 2 paisa per 10 KB.

Idea's new tariff is applicable to all 2G data users who use data on pay-as-you-go basis and also on an average on regular data from July 1, 2013 and the offer will be valid for 90 days, the statement added.

 "The new data rate will be automatically implemented for all Idea 2G postpaid subscribers in these markets, effective July 1...prepaid users can avail the new rate with a value recharge priced between Rs 5-10," the statement said.

 Idea said Tamil Nadu & Chennai, Karnataka, Kolkata, West Bengal, Assam, North East, Bihar, and Orissa circles will benefit from the revised data tariff.

"These eight circles comprise one-third of the total mobile users in India, with a large number of users waiting to board the mobile broadband wagon. Availability of data at such affordable rates will usher in a new wave of mobile data growth in the country," Idea Cellular deputy managing director Ambrish Jain said.

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Affordable housing: Mphasis founder Jerry Rao's next foray

From software in the 1990's to affordable housing in 2010, Jerry Rao has always aimed at riding the next big wave.

The former Mphasis founder speaks to CNBC-TV18's Vineetha Athrey exclusively about his new venture; Value and Budget Housing Corporation (VBHC) and how it is attracting big ticket investors like the World Bank.

Also read: RBI policy big letdown for realty sector: MCHI-CREDAI

Betting on affordable housing

Affordable housing is still to pick up in India but that has not stopped Jerry Rao's venture Value & Budget Housing Corporation (VBHC) from attracting investors.

According to Rao, the World Bank-backed International Finance Corporation (IFC) is coming on board and will invest Rs 60 crore as equity which translates to a 12 percent stake.

With HDFC , Caspian and Carlyle having invested Rs 120 crore for a 36 percent stake in the company, the corporation already has big name on its board. At their end, the promoters hold around 36 percent.

"The purpose is to strengthen capital base of the parent company and use it for individual project jd or purchase of land", says Jerry Rao, chairman, VBHC.

With annual revenues of a Rs 100 crore, VBHC offers homes in the Rs 15-25 lakh range and has six ongoing projects across Bangalore, Mumbai, Chennai and Delhi.

VBHC's plans

The company is looking to launch six to eight new projects this fiscal. It is also eyeing new markets such as Gujarat, Greater Mumbai and Rajasthan.

In addition to IFC, it is in talks with other financial institutions to raise Rs 30-40crore at the special purpose vehicle (SPV) levels for these projects.

"We raise anywhere between 20 and 70 percent of the equity component of the project. There are institutions, funds and wealthy individuals who are willing to invest with us", says Rao.

Affordable homes, a good bet?

But the way forward may not be all-smooth. The fact is, affordable housing has not really taken off in India on a very strong note

Surging raw material costs, especially those of cement and steel, might throw more spanners in Rao's wheel. To counter this, Rao admits he has no choice but to raise prices by three to five percent across the board on a quarterly basis; a move that might not go down very well with its price sensitive clientele.

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Tourism Fin Corp to seek licence from RBI to set up bank

The Tourism Finance Corporation of India Ltd (TFCI) on Wednesday said the board has approved a proposal to seek licence from the RBI for setting up a bank. "TFCI, in terms of the approval by the board of  directors, is submitting application with RBI for a banking licence," the company said in a filing on the BSE.

Also Read: RBI to come out with paper on banking structure: D Subbarao

The Industrial Finance Corporation of India Ltd (IFCI) is the majority owner of the TFCI with 42.50 percent stake, while State Bank of India , LIC and Bank of India has 9.19 per cent, 7.70 percent and 4.70 percent respectively.

The TFCI functions as a specialised all-India development financial institution to cater to the financial needs of tourism industry. Shares of the company closed at Rs 22.25 per unit, down by 1.1 percent on the BSE.

Earlier this month, RBI while issuing clarification on new bank licence guidelines said, the entities getting licences to open new banks will be given 18 months to open branches against 12 months prescribed earlier, and promoters would have to transfer their holdings to the non-operative financial holding company (NOFHC) in a stipulated period.

The NOFHC envisages holding of the bank and other regulated financial services entities of the promoters under the NOFHC and prudential exposure norms for the regulated entities. India has 26 public sector banks, 22 private sector banks and 56 regional rural banks.

Ten banks were licenced on the basis of guidelines issued in January 1993. The guidelines were revised in January 2001 based on the experience gained from the functioning of these banks, and fresh applications were invited. Of the 10 licences issued in 1993, four banks merged with other lenders over a period of time. Times Bank merged with HDFC Bank , while Global Trust Bank was amalgamated with the state-owned Oriental Bank of Commerce .

Centurion Bank took over Bank of Punjab to become Centurion Bank of Punjab, which merged with HDFC Bank in 2008.

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EU-US FTA will promote growth around world: Joao Cravinho

The two biggest players in the global economy, that is the European Union (EU) and the United States (US) are about to launch negotiations on a free trade agreement (FTA). According to Joao Cravinho, ambassador of the European Union in India, EU-US FTA will promote growth around the world.

He believes that this trade agreement can add as much as USD 100 billion to world gross domestic product (GDP), excluding what it will add to the US and the EU side. He told CNBC-TV18 that the talks could last for two years.

Talking about the long-running negotiations between India and the European Union on a FTA, he said it is nearing completion.

Also read: India-EU FTA in jeopardy? Here's why

Below is the verbatim transcript of his interview to CNBC-TV18

Q: Can you give us a sense of the proposed timeline for this US-EU free trade agreement (FTA)?

A: We are ready to start talks as of now. We are waiting for the United States approval to come from the US Congress. Hopefully that will come in the manner that will allow us to start negotiations before the summer.

So, in the very near future we will be beginning a negotiation process. We think it could last for around two years and that could have a major impact on world trade. A major impact ofcourse for the European Union (EU) and for the United States (US), but more widely on world trade flows as well.

Q: Both the US and the EU have been facing serious economic challenges. Is the US-EU FTA being seen in a sense as a panacea for its economic woes?

A: Certainly boosting trade is good for the economy. Whether the economy is growing well or whether the economy is having a difficult time. As you rightly point out matters have not been easy on either side of the Atlantic and we expect that this is part of the solution. It will promote growth on both sides of the Atlantic.

One important thing though, it will promote growth around the world because world trade or the world economy is now so integrated. So many goods imply an integrated global value chain that the knock-on effect for other countries can also be quite significant. We expect that this trade agreement can add as much as USD 100 billion to world gross domestic product (GDP) excluding what it will add to the US and the EU side. So, it will be good for the world as well.

Q: US and the EU are the biggest players in the global market and the global economy. Won't this FTA impact trade with its partners like India? There are concerns on trade diversion for instance.

A: I don't think so. You are quite right, we are talking about the two biggest players in the world. EU is slightly bigger than the US economy. Together they are almost 50 percent of global GDP. So, this will have a major knock-on effect around the world.

However if EU and US increase the trade between them, they are also going to increase demand for raw materials. They are going to increase the need to source products all around the world or source raw materials around the world. This is why we believe that this kind of agreement will not be trade diversionary on the contrary it will be a stimulus to international trade and the available studies that have been made indicate this quite substantially.

Q: The EU will also have to deploy a majority of its resources in terms of negotiators for the US and Japan FTAs, will that not impact the India-EU FTA talks which have already been going back and forth, seen years of delays?

A: I think that the pace of talks is dictated by other factors. We are now very close to finalizing the talks. We haven't reached that moment yet but we are very close. We believe that we have a very fortunate time horizon ahead of us because the trade talks with the US, which we believe can be launched now will really intensify the end of the year 2014 will be a very intense year.

We hope that we can finish the talks with India before that happens sometime in the next two or three months. So, in terms of our calendar we believe that we have got things just right and we are looking forward to an enormous amount of hard work.

Q: For months now we have been hearing about how both sides are close to finalizing the agreement. In the light of the fact that negotiations with the US and Japan are going to start, are you really still hopeful about the India-EU FTA going through?

A: There is more than hope, there is optimism. Both sides understand that in this process of evolving world trade patterns it is fundamental that EU and India story be central part of the global story. That means finalizing this deal now. In any negotiation it is in the last moments that we find the most difficult and intractable problems.

However looking at the big picture, I think that both sides realize that they have much more to gain than to lose. Those difficult decisions which have to be taken at the end of negotiations are now very close to being taken.

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CIE Automotive make Rs 207 cr open offers for 2 MM firms

Spanish group CIE Automotive's entities have made open offers worth over Rs 207 crore to the shareholders of Mahindra Forgings and Mahindra Composites , as part of its deal with conglomerate Mahindra & Mahindra  (M&M).

Also read: Deal with CIE a marriage made in heaven, says M&M's Luthra
    
The open offers for acquiring 26 percent stake each in Mahindra Forgings and Mahindra Composites have been made by Participaciones Internacionales Autometal Dos, S.L. along with Autometal S.A. and CIE Automotive S.A.
    
The three entities have made an open offer worth over Rs 198 crore to acquire about 2.45 crore shares in Mahindra Forgings. These scrips are proposed to be purchased at a price of Rs 81 apiece, according to a public announcement.
    
In another announcement, these entities have offered to buy about 11.65 lakh shares in Mahindra Composites for around Rs 8.7 crore. The offer price is Rs 74.70 per scrip.
    
M&M would be selling its stake in Mahindra Forgings.
    
In the case of Mahindra Composites, M&M as well as Mahindra Holding would be offloading shares.     

Under a multi-layered deal, M&M on June 15 had announced that it would acquire 13.5 percent stake in CIE Automotive for 96.24 million euros.
    
In turn, M&M would offload stakes in its three group firms to Participaciones Internacionales Autometal Dos, SL, CIE Automotive SA and Autometal, SA.

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Unilever open offer price for HUL 'fair, reasonable': Panel

FMCG major Hindustan Unilever today said the committee of independent directors that looked into parent firm Unilever's proposed USD 5.4 billion open offer, is of the view that the offer price of Rs 600 per share is "fair and reasonable".
    
"After a review of the public announcement, detailed public statement, the draft letter of offer, and the aforesaid points, the independent directors committee (IDC) is of the opinion that the offer price of Rs 600 per equity share is fair and reasonable," Hindustan Unilever Ltd (HUL) said in a filing with BSE.

Also read: Unilever to begin raising stake in HUL from June 21
    
Last month, the company had constituted a committee of independent directors, including five independent directors of the company--Aditya Narayan, S Ramadorai, R A Mashelkar, O P Bhatt and Sanjiv Misra, to give recommendation on the open offer to the shareholders.
    
The offer price is at a 29 percent premium to the volume weighted average market price of the equity shares for a period of 60 trading days, the committee said in its recommendations.     

"The offer price is at a premium to the highest ever market price of the equity shares of face value of Rs 1 each, up to the date of public announcement of the open offer," it added.
    
The USD 5.4 billion-open offer by Unilever Plc to buy 22.52 percent stake in HUL would begin on June 21 and close on July 4.

Once complete, the open offer would be one of the biggest deals and fifth largest India inbound M&A transaction on record till date.

Anglo-Dutch consumer goods giant Unilever Plc is looking to hike stake in its Indian arm HUL to 75 percent through the open offer. Currently, it has a stake of 52.48 percent.     

Unilever will pay Rs 600 a share, valuing the open offer at USD 5.4 billion.
   
HUL's portfolio includes leading brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Sunsilk, Pepsodent, Closeup Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall's and Pureit.
    
The company, which employs over 16,000 employees, posted net sales of Rs 26,317.15 crore for the 2012-13 fiscal.     

Shares of HUL today closed at Rs 595.60 on the BSE, up 0.02 percent from its previous close.

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Export parity price will lead refineries into red: Moily

Admonishing the export parity pricing model for fuel products, Oil Minister, Veerappa Moily told CNBC-TV18 that if adopted this pricing model would lead all refineries in to red and no new refineries would come up.

It must be noted that just a month back Finance Minister P Chidambaram had strongly stated that oil marketing companies will get only Rs 20,000 crore from the government and Rs 60,000 crore from upsteam companies. However sudden depreciation in rupee is likely to severely impact OMCs under recovery.

Moily stressed that he had raised concerns relating to export parity pricing to the Prime Minister Manmohan Singh. " Prime minister having intervened and Kirit Parikh committee being constituted, the recommendation of the Kirit Parikh committee will have weightage," Moily said. However he added that if Kirit Parikh Committee also recommends going for export parity pricing then refineries will be the biggest losers. 

Kirit Parikh Committee report is expected in two-three month. Moily argued that export parity pricing is not suitable for India as the country meets 80 percent of its fuel requirement through import.

"If you want to make it only 100 percent export then the companies will go red, almost all the refineries will go red, and no new refinery will come up," Moily said.

Below is the verbatim transcript of Moily's interview

Q: Let me start by asking you about the impact of the depreciating rupee and as far as global crude prices are concerned, there was relief on that front because global crude prices have been coming off and have been stable between USD 102-104 per barrel but the depreciating rupee has offset all the relief that you enjoyed on account of the fall in global commodity prices. We have been speaking with oil marketing companies (OMCs) and they are clearly worried at this point in time about the impact, what is your own assessment of the rupee's impact as far as the under-recovery is concerned?

A: It is a matter of great worry and the worst hit are oil companies. We have to stabilise this because now by every rupee depreciated, all companies put together we lose about Rs 9,000 crore. It is a disaster. We need to address it. Hopefully I think within two-three days time, rupee will stabilise.

Q: Have you had any conversations with the finance ministry on the possible options because you are clearly one of the most impacted parties, has there been any conversation with the finance ministry on what the repercussions of depreciating rupee could be, how oil marketing companies could be spared?

A: Yes we are in constant dialogue with them. That is why I am now reassured that within two-three days time, rupee will stabalise.
 
Q: What is the basis of that reassurance?

A: I think the Reserve Bank of India (RBI) can do some mid-course corrections, and the number of measures government has taken particularly on attracting foreign institutional investors (FIIs) and also the foreign direct investment (FDI) would also help. The investors' confidence will rise. Once the investors' confidence rises then possibly the rupee will stabilise.

Q: You are saying that you have been given an assurance by the finance ministry that steps will be unveiled within the next week or so that will perhaps boost foreign investor interest into the country and hence stabilise the rupee so you have been given that assurance because that is the sense that we are getting as well?

A: Ultimately, the fundamental of the economy of this country is still strong. To be very frank, this is only an aberration which can take place from time to time. For which at sometime we must have a structural change with regards to certain financial policy, but at the same time, nothing can substitute particularly for attraction of the FIIs and FDIs and also inspiring the confidence among the investors.

Q: While what the government finally does in terms of FDI cap for bringing in more FII money into the market is a separate story but if we see the volatility in the rupee continue, what is the likely impact as far as the subsidy is concerned. Rs 80,000 crore is what was earlier estimated, oil market companies saying already that the subsidy has gone beyond Rs 1,00,000 crore, if this trajectory for the rupee continues, how bad is it likely to be?

A: The under-recovery will increase. Again we have the problem, the finance ministry wants export parity price and we want trade parity price, which was in practice. Last year's under-recovery has been reimbursed by the finance ministry.

Q: Export parity price?

A: No, I am not agreed on that.

Q: Finance ministry believes that a decision has been taken as far as export parity is concerned?

A: Now fortunately, the prime minister intervened. In the presence of the finance minister, I presented, by that time I had already appointed Kirit Parikh Committee then I told the finance minister that you go through the reference which we have made and you can have your representatives in the Kirit Parikh Committee. Now the proposal has come from them. They want that export parity matter should also be included in their terms of reference. So Kirit Parikh Committee will look into it. Yesterday we constituted the committee and revised the terms of reference and maybe that of course we want the report to come within two months, possibly two-three months time, the report will come thereafter we will go in for that. That will address the under-recovery question.

Q: Let me talk about the under-recoveries and Kirit Parikh report is still as you yourself pointed out two-three months away, the finance minister has made it very clear, he has categorically stated, I am not going to give oil marketing companies anything more than Rs 20,000 crore, Rs 60,000 crore will come from upstream companies, I will only give Rs 20,000 crore. If your under-recoveries continue to move in the trajectory with the depreciating rupee, are you going to be able to convince the finance minister?

A: I think you are only reiterating the statement which is made by the finance minister before prime minister intervened in the matter. Prime minister having intervened and Kirit Parikh committee being constituted, the recommendation of the Kirit Parikh committee will have weightage. Whatever Kirit Parikh committee recommends I am prepared to go for it.

Q: Hypothetically, if he three months down the line says export parity is the way ahead, will the oil ministry agree?

A: You must know the history of this parity prices. Rangarajan Committee, Kirit Parikh Committee, all these committees had recommended trade parity. Because, what is our export. 80 percent we are importing, not exporting. When we were importing, the formula was 80 percent import price and 20 percent export price that is how the combinations were done. If you want to make it only 100 percent export then the companies will go red, almost all the refineries will go red, and no new refinery will come up.

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India set to become a hub for Ford, says its CEO

With India leading the small SUV market and attracting majority of investments from Ford Motor Company, the country is set to become a hub for the US automobile major, a top official said today.
    
"Yes. Absolutely. That is our dream. India is great market and an indicator of about what people really want in vehicles around the world. The (latest SUV from Ford) Ecosport is a really good example", Ford Motor Company President and Chief Executive Officer, Alan Mulally told reporters here.

Also read: Ford India sales down 22.46% in May

Observing that India is one of the important markets for Ford globally, he said, "small SUV segment on the B size platform is the fastest growing segments which is led by India. We are making Ecosport in five locations around the world. And it is going to be most popular vehicle worldwide. So it (The launch) is very important launch for us".
    
He said Ford is making long-term commitments on strategies in rolling out products and currently is on a "positive path" on its growth.
    
"We are number one brand in United States and number two in all Americas. In Europe we are the fastest growing brand. We have made tremendous commitment in terms of man and money investments", he said.
    
Asked about the company's focus on its Asia-Pacific operations, Mulally said the management has not made any specific time frame on reaping profits, but expects a
significant revenue to be contributed from this region.
    
"Clearly, in the next few years,it (Asia Pacific region) is going to be a major contributor to Ford. I think in four-five years, 40 percent of revenue will come from Asia Pacific. This is the largest growing region in the world", he said.
   
Currently, Ford has garnered about three per cent market share in the Asia Pacific region.

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