RBI steps in…raises CRR to 8%

In a bid to control inflation, RBI raised CRR to 8% from 7.50%. This would be done in two stages, first 25bps to be raised effective from April 26 and second would be effective from May 10.

In a statement, the Reserve Bank of India said, “On a review of current liquidity situation, it is considered desirable to increase the cash reserve ratio (CRR) of the scheduled commercial banks, regional rural banks (RRBs), scheduled state co-operative banks and scheduled primary (urban) co-operative banks by 50 basis points to 8.0 per cent in two stages, effective from specified fortnights: First 25bps to be raised effective from April 26 and second would be effective from May 10. “It may be recalled that in the Third Quarter Review of the Annual Statement of the Monetary Policy for the year 2007-08, the stance of monetary policy was set out. The review had stated that over the period ahead, liquidity management will continue to assume priority in the conduct of monetary policy. It was further stated that the liquidity conditions are being shaped by several underlying factors and their developments have implications for liquidity management going forward and warrant appropriate and timely action, “ according to the statement. “The liquidity adjustment facility (LAF) had been in an injection mode persistently during the second half of March 2008. Subsequently, there was a large turnaround and, an average amount of Rs.40,088 crore was absorbed through the LAF during April 3-17, 2008 as against average daily injection of liquidity of Rs. 27,385 crore during March 17-31, 2008, according to the statement. Year-on-year WPI inflation, which was 3.83 per cent on January 12, 2008, i.e., at the time of the announcement of Third Quarter Review, increased to 7.41 per cent on March 29, 2008 and remained at 7.14 per cent as on April 5, 2008 and its overall impact on inflation expectations requires to be monitored and moderated.

All Eyes on TCS Now

After Infosys, all eyes would be on the quarterly numbers to be announced on Wednesday.
It was a weak start to the session as the benchmark Sensex fell over 200 points in the opening trades itself. However, as IT bellwether Infosys announced its quarterly numbers which were fairly decent, meeting the market expectation lifted the key indices to positive territory and from there on was in the northward direction.

Other IT majors like TCS, Satyam and Wipro joined the ride up north. And as buying gathered momentum, it turned out to be a strong session for stocks across the board. Finally, the BSE benchmark Sensex ended 401 points higher to close at 16,208 and the Nifty index ended 118 points higher to 4,895.

Overall about 1,790 stocks advanced; 871 stocks declined while 48 stocks remained unchanged. Among the 50-Nifty 9 stocks ended in red and 41 stocks ended in green.

Shares of Infosys surged by over 6% after the company announced that it posted a net profit after tax, exceptional items and minority interest of Rs12,490 million for the quarter ended March 31, 2008 as compared to Rs11,440mn for the quarter ended March 31, 2007. Total Income increased from Rs38,910mn for the quarter ended March 31, 2007 to Rs46,810mn for the quarter ended March 31, 2008.

Gail gained by 1% to Rs447 after the company said that it is in with China Gas for Coalbed Methane exploration. The scrip touched an intra-day high of Rs452 and a low of Rs442 and recorded volumes of over 4,00,000 shares on BSE.

Subex was up by 2% to Rs205 as the leading global provider of Operations Support Systems (OSS) for communications service providers, continues to record new contract wins for its Revenue Maximization and Fulfilment Assurance solutions in the Latin America region. During the past six months the company had closed seven new customer deals within one of the fastest-growing BSS/OSS markets in the world.

The scrip touched an intra-day high of Rs208 and a low of Rs203 and recorded volumes of over 10,000 shares on BSE.

Aban Offshore advanced by 2% to Rs3368 after the company said that it signed contract with Exxon Neftegas Ltd for the deployment of the Jack-up rig Murmanskaya Offshore Russia for a 2 well programme. The estimated revenues from the Contract (with an estimated duration of approx 160 days) is approx US$34mn. The scrip touched an intra-day high of Rs3449 and a low of Rs3226 and recorded volumes of over 40,000 shares on BSE.

LITL advanced by over 4% to Rs410 after reports stated that the company won mandate for two super critical power projects for development of 3,300MW in Uttar Pradesh. Reports also stated that the company plans to set up an end-to-end solar complex in Chennai and targets 10,000 mw wind farms in two years. The scrip touched an intra-day high of Rs415 and a low of Rs390 and recorded volumes of over 5,00,000 shares on BSE.

Zee News surged by over 8% to Rs57 after the company announced its Q4 net profit at Rs153mn vs Rs13mn and Q4 revenue rose by 60% to Rs1.1bn. The scrip touched an intra-day high of Rs58 and a low of Rs51 and recorded volumes of over 15,00,000 shares on BSE.

Bhagyanagar India rallied by over 16% to Rs45 as the company said that the board of directors would consider buy-back of equity shares on April 22, 2008. The scrip touched an intra-day high of Rs46 and a low of Rs39 and recorded volumes of over 3,00,000 shares on BSE.

Surana Telecom was frozen at 20% upper circuit to Ra32.75 after the board of directors of the company announced that they would consider buy-back of equity shares on April 22. The scrip touched an intra-day high of Rs32.75 and a low of Rs27 and recorded volumes of over 86,000 shares on BSE.

Ranbaxy surged by over 8% to Rs481 after the company along with Astrazeneca signed manufacturing, distribution pacts. The scrip touched an intra-day high of Rs499 and a low of Rs440 and recorded volumes of over 21,00,000 shares on BSE.

Steel Strips Wheels was down by a percent to Rs171. The company said that they secured export order from Kromag. The scrip touched an intra-day high of Rs174 and a low of Rs163 and recorded volumes of over 4,000 shares on BSE.

Satyam Computer surged by over 4% to Rs452 as reports stated that the company announced it will set up a new campus at the Geelong Technology Precint, Victoria in Australia. The scrip touched an intra-day high of Rs455 and a low of Rs428 and recorded volumes of over 10,00,000 shares on NSE.

There were also reports stating that Satyam Computer is scouting for a sub-US$50mn overseas acquisition in the knowledge process outsourcing space.

Lehman sues Marubeni for $352 million

Lehman sues Marubeni for $352 million
Michiyo Nakamoto / Tokyo April 1, 2008
Lehman Brothers filed suit on Monday against Marubeni, one of Japan's biggest trading firms, for Y35 billion ($352 million) after the US bank fell victim to an alleged fraud perpetrated by two former employees of the Japanese group.

Lehman’s complaint, filed with the Tokyo District Court, aims to try to recover money lost in a complex scheme that potentially involved forged documents and a third man posing as a senior general manager of the Japanese firm.

Marubeni claimed it was itself a victim of the fraud conducted by a few individuals and said it knew nothing of the scheme until contacted by Lehman. “Marubeni is a victim of having agreements and other documents forged in its name, and a criminal report has been submitted to the police,” it said.

The amounts involved in the Lehman claim pale in comparison with the ¤4.9 billion ($7.4 billion) lost by Société Générale on the positions built by the French bank’s rogue trader but there are fears that the vehicle at the heart of the Marubeni case could have raised money from a number of other investors.

According to Lehman, the Y35 billion in funds and fees related to an investment in a medical business.

The bank entered into a transaction with two Marubeni employees, who were then senior leaders of the trading group’s life care business department.

The two employees have been fired but Marubeni has not disclosed the reason — saying only that they are former employees.

Under the agreement, Lehman was to be repaid the funds with fees, with the first payment due on February 29.

Yet Marubeni failed to pass on any payments and then claimed the documents governing the investment were fake.

An internal investigation by Marubeni “confirmed that Marubeni had no involvement in the forgery of these documents”, the Japanese bank said. “Accordingly, we have no obligation to pay any of these demands.”It also said the medical business itself was “fictional”.

Lehman said it was confident it undertook all appropriate measures on the transaction and was commencing legal action against Marubeni to seek recovery of funds it believed to have been fraudulently misappropriated from transactions in which an affiliate provided financing.

The bank was confident in its case and expected funds to be repaid.

Tata Motors-Fiat JV to invest Rs23.41bn in Pune

Both players will invest Rs6.5bn each and the balance will come from debt. Fiat India plans to launch Grande Punto and Linea from the Ranjangaon plant

Fiat India Automobiles Pvt. Ltd., a 50:50 joint venture between Fiat Group Automobiles SpA and Tata Motors, has announced plans for expanding production capacity and backward integration at its Ranjangaon facility near Pune.

Fiat India yesterday signed a Memorandum of Understanding (MoU) with the Maharashtra Government for an additional investment of Rs23.4bn. With this investment, the company is taking the overall investment in Pune to Rs40.2bn.
Both players would invest Rs6.5bn each and the balance would come from debt, Fiat India CEO Rajeev Kapoor said.

Fiat India plans to launch two cars - Grande Punto and Linea - in the B and C segments, respectively from the Ranjangaon plant later this year.

By 2012, the capacity of the plant would be expanded to two lakh cars, three lakh diesel engines, and three lakh spare parts and accessories per annum. At present, the plant has a capacity to produce one lakh cars and two lakh engines.

Apart from the Grand Punto and Linea, the Ranjangaon facility would also make Fiat's 1.3 litre multijet diesel engines and 1.2 & 1.4 litre fire gasoline engines. The facility would also produce Tata Motors passenger cars.

At present, Fiat makes Palio Stile 1.1 and 1.6 models at Ranjangaon.

The Ranjangaon facility employs about 850 people and the capacity expansion is expected to create another 1,000 direct jobs. The overall employment potential of the plant, at its maximum capacity, has been pegged at 4,000 direct and indirect jobs.