RBI sees food price risks, adds to rate view

The Reserve Bank of India (RBI) warned on Tuesday of persistent inflationary pressures on the economy from rising food prices, adding to expectations that the RBI will raise interest rates in November.

Bond yields, which have been moving to factor in India's sixth rate rise this year, ticked higher on the comments from Deputy Governor Subir Gokarn, who said structural changes in the emerging economy could have an adverse impact on inflation and inflation expectations.

"Persistent price increases in commodities for which there are less effective substitutes, with other things remaining equal, will raise the potential rate of inflation over a period of time," Gokarn said in a speech.

"This means that actual inflation or interest rates will be higher than they would be in the absence of such increases," said Gokarn, whose brief at the RBI includes monetary policy.

Still, the finance ministry urged the RBI not to choke off the country's growth. It said in a report on Tuesday that GDP could rise 8.5% to 9.7% in the fiscal year to the end of March 2011.

"It has to be ensured that monetary tightening does not adversely affect the pace of recovery at this stage," the Finance Ministry wrote in the report.

The RBI is widely expected to raise interest rates by 25 basis points on Nov. 2 as it battles wholesale inflation that has been persistently above its perceived comfort zone of 5 percent to 6 percent. The RBI has forecast inflation will ease to 6 percent by March.

The wholesale price index, India's main inflation measure, rose by 8.62% in September over a year earlier.

After the central banker's comments the yield on the benchmark 10-year bond rose 5 basis points to 8.18%.

The 10-year yield has been rising since the start of this month and touched a 25-month high last Thursday as dealers priced in the risk of a rate rise.

Concerns that India is struggling to bring inflation under control has led to a reversal in the flattening of the interest rate swap curve over the past two weeks.

Traders now expect the spread between 5-year swap rates and 1-year swap rates to widen to 55-60 basis points, led by a rise in the long end, from 48 basis points on Tuesday as the market prices in the potential for policy rates to rise 50-75 basis points by the end of March.

Two weeks ago, traders were pricing in a greater chance of a pause in rate hikes after December. However, after the September inflation release, they now expect the rate tightening to continue through March.

Food inflation

Annual food price inflation was 15.53% in early October and has remained stubbornly high, in part a reflection of rising incomes in the fast emerging economy.

"When we take into consideration the impact of structural food price shocks such as the ones India is experiencing, the policy implications become complex," Gokarn said.

He cited the example of pulses, a main source of protein in the Indian diet. The price of some pulses has roughly doubled in the past three years as production has failed to keep pace with a rise in demand.

"Rise in income has increased the share of proteins in peoples' diet. Rising affluence has also led to an increase in demand for proteins and nutrition," Gokarn said.

Gokarn said the conventional view suggested monetary tools would have no impact in combating a rise in food prices due to temporary supply disruption. Indeed, it could hurt economic growth prospects.

"However, if the economy is at or close to capacity utilisation, even temporary price shocks can aggravate inflation expectations, which may justify monetary response even though shock is temporary and will die out before the actions take effect," he said.

The RBI has raised interest rates five times this year, taking the repo rate to 6% and the reverse repo rate to 5%, to control inflation, which was in double-digits for six months through July.

Tata Coffee Q2 net up 12.8 pc to Rs 10 cr; sales decline

Tata Coffee today said its consolidated net profit for the quarter ended on September 30 2010, rose by 12.8 per cent to Rs 10.1 crore as against the corresponding quarter last fiscal. 

The company had reported a net profit of Rs 8.9 crore for the second quarter of the last fiscal, Tata Coffee said in a filing to Bombay Stock Exchange. 

During the July-September quarter of this fiscal, the company's total income declined by 5.6 per cent to Rs 299.56 crore as against Rs 317.36 crore for the year-ago period. 

The company said that instant coffee operations, which were adversely affected by the global recession in the previous year, have made significant improvement recording higher volume of production and sales compared to the previous period. 

Meanwhile, in a separate filing to the stock exchange, Tata Coffee said its board, at its meeting held yesterday, has appointed Deepak Kumar as additional director and executive director 'Finance' for three years with immediate effect.

Jindal Steel and Power Ltd's Q2 net up 57 percent

Steel major Jindal Steel and Power Ltd on Tuesday reported an increase of 57 percent in its net profit for the quarter ended Sep 30, which stood at Rs.478.17 crore as against Rs.305.01 crore in the like period of 2009. 

The company's net sales also increased by 43 percent to reach Rs.2,295.47 crore as compared to Rs.1,608.54 crore in the previous year's corresponding period. 

The consolidated result of the company jumped by 11 percent and stood at Rs.894.24 crore in the second quarter as against Rs.808.36 crore in the second quarter of 2009. 

According to the company, its consolidated net sales were also up by 25 percent at Rs.3,077.95 crore, from Rs.2,455.58 crore for the quarter ended Sep 30, 2009. 

The company also said that growth has been seen in production of sponge iron, steel products and electrical power generation.


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SKS Microfinance net profit rises in Q2

India's largest private small scale lender, SKS Microfinance Saturday reported a rise of 116 percent at Rs.80.54 for the quarter ended Sep 30 compared to Rs.37.35 crore in the previous corresponding period.

The total income went up by 77 percent at Rs.366.56 crore in the quarter under review compared to Rs.207.49 crore in the year-ago period, the company said in a regulatory filing.

The core business of SKS, which is the only private microfinance company to get listed, is to provide collateral-free loans to poor women in rural areas.

The company recently fired its chief executive Suresh Gurumani because of "interpersonal issues" with the senior management. The incident took place less than two months after SKS made a stupendous stock market debut, listing at a market capitalisation exceeding Rs.8,000 crore.

A high court bench of Justice G. Bhavani Prasad, however, passed an interim order asking the company to retain Gurumani on its board of directors till further orders and restrained newly appointed chief executive and managing director M.R. Rao from taking any major policy decisions.

Vodafone International gets a bitter bill

The Income Tax Department has raised a tax demand of Rs11,217.95 crore on Vodafone International Holdings BV for failure to deduct tax before making a payment of $11,076 million to Hutchinson Telecommunications International when it bought the latter's mobile telephony operations in India. The tax is to be paid within 30 days of the receipt of the notice for tax demand. The company meanwhile is contesting the IT department's claim. "As per the Supreme Court directive, the Income Tax department needed to come out with the total tax demand by October 25. However, even though the Mumbai High Court indicated that some parts of the deal were not taxable, the tax authorities have not apportioned the tax amount correspondingly," said a spokesperson for Vodafone International Holdings who did not wish to be named. He however refused to say whether the company would pay the apportioned amount.

He added that the company will wait until Monday for better clarity on the issue, even though it believes that it does not owe any tax to the Indian authorities on the transaction. In its official statement released to the media, the company said it disagreed with the tax calculation released by the Indian Tax Office and it is not liable for any tax on this transaction involving the transfer of a company outside of India. "Further, Vodafone was the acquirer and not the vendor and has made no gain on the transaction. In this “test case”, the tax authority is attempting to interpret Indian law as it has never been interpreted for the past 50 years, and this interpretation also goes against internationally recognized tax norms. Vodafone will continue to take whatever actions are necessary to defend itself in this matter," the statement said.

The tax demand has been raised after the Supreme Court on September 27 asked the Income Tax Assessing Officer to determine and quantify the tax liability of Vodafone within four weeks. The case will be heard by the apex court on October 25.

Raymond, union agree to Rs 309-cr compensation

Textiles major Raymond’s plan to develop a realty project on its 126-acre Thane unit received a shot in the arm on Friday as the company reached an out-of-court settlement with its labour union after a nearly one-year long stalemate over the terms of a voluntary retirement package. The two sides agreed upon a compensation package worth 309 crore, double of the company’s initial offer of Rs 150 crore. 

The compensation will be paid to all 1,885 workers of the unit in two tranches spread over three years. The first tranche of Rs 150 crore and dues worth Rs 49 crore will be paid in the next one week while the balance Rs 110 crore will be paid after three years. The compensation package represents workers’ full wages and other benefits payable until their age of retirement. 

ET in its edition on October 15 had reported that the company has revised its compensation package offer to around Rs 300 crore that will be paid in two tranches and was close to reaching an agreement with the union. 

The union had initially sought a compensation package of Rs 350 crore but lowered its demand to Rs 328 crore. 

“It is not downsizing, its relocating (of operations ). This particular plant had become completely uneconomical... You will not see any other plant of ours offering a VRS scheme,” said Gautam Hari Singhania, chairman and managing director. He said the outlook for textiles business continues to be bright. 

Mr Singhania refused to comment on the company’s plan for the land where the textile factory was set up in 1925 and operations suspended in November 2009. 

Reacting to the news of the settlement, shares of Raymond closed at 408.30 on Friday on the National Stock Exchange , up nearly 8% from Thursday’s closing price. The Sensex, the most widely followed index, fell 0.5% on Friday. 

Mr Singhania said as per the agreement, all four writ petitions filed by the labour union against the company’s plan to develop a realty project will be withdrawn immediately. However, local MLA Pratap Sarnaik, who has also filed a petition jointly with union leader Jintedra Joshi, said he will not withdraw his petition until workers’ entire dues are paid. 

After nearly 11 months of negotiations with the management, the labour union had filed a writ petition in the Bombay High Court in September seeking a ban on the proposed realty project claiming that the closure of the Thane unit was “illegal and unconstitutional”. 

The court had directed the Thane municipal corporation not to grant any approvals to the company for redevelopment of the land. The Maharashtra government had also refused to provide a no objection certificate for the realty project until the company resolved the compensation dispute with its workers.

Citibank launches PremierMiles credit card

One problem frequent flyers often face is limited choice, while spends on airline tickets earn them loyalty points, they do not have the freedom to redeem them against their choice of airline tickets. 

To cater to this segment of flyers, Citibank has come up with PremierMiles credit card that helps them accumulate reward points, in the form of ‘PremierMiles’, and redeem the same against flight tickets of close to 50 domestic and international carriers. In that sense, the loyalty scheme is airline-neutral. 

Deutsche Bank and American Express also offer similar programmes linked to their specialised credit cards. Such programmes help those who opt for low-cost carriers, which mostly do not offer such schemes, to earn frequent flyer points. 

Under the programme, card members earn 10 premier miles for every 100 spent on airline ticket bookings made at airline-owned websites, airline booking counters or through the PremierMiles portal. For each non-airline spend worth 100, the card holder can earn 2.5 miles. 

Upon activation, the card account is credited with 5,000 premier miles. If you incur expenses of 4 lakh using this card in a year, you will be entitled to a bonus of 2,500 premier miles. The points so earned cannot be clubbed with the frequent flyer points you may have earned. 

The card membership also entitles the holder access to VIP lounges at airports across the world and offers on accommodation at hotels in the network. The card comes with a built-in overseas medical insurance and fraud protection plan. 

Those wishing to obtain the card will have to shell out an annual fee of 5,000, which could be seen by some, particularly those looking for a diverse rewards programme, as trifle expensive for a primarily airline focused card. To redeem the points collected, card holders will have to visit the bank’s designated portal. They can also make their flight ticket bookings through the site. 

Why go for it: 

The rewards programme is not restricted to any particular airline. Miles accumulated can be redeemed for tickets of several international and domestic airlines, including low-cost carriers. 

Why not: 

While the choice is not limited in terms of airlines, the travel-focus of the card means that points earned can be redeemed only against airline tickets and hotel accommodation – something that may not appeal to those keen on variety.

Credit card companies offer good schemes in festive season

Festivals and spending are inseparable twins. What most spenders like about the festive season is the huge discounts, attractive schemes and offers most consumer durable companies come out on their products and services. With the economy picking up and the credit card usage increasing once again, card issuing companies too have tied up with various brands to offer tempting discounts, cash back offers, finance schemes. 

And these offers are not just applicable on credit cards alone but are extended to some debit cards as well. “Apart from offering bonus points over and above the regular reward points earned on spending on the ICICI Bank debit and credit cards this season, we have come out with exclusive discounts on lifestyle and electronics too, “ says an ICICI spokesperson. 

During the coming week, when you go shopping make sure you corner those extra savings and rewards that your credit card can offer you. 

Apparel: You can avail discounts of up to 10% if you swipe your cards from HSBC and Axis bank to purchase clothes. HSBC, for instance, has come out with festive scheme — Happy Swipes, where its credit and debit cardholders are eligible for cash back of 5% on making any purchase from Fabindia and Jashn stores on a minimum transaction of Rs 2,500 and Rs 5,000, respectively. 

In case you wish to pick something from Star Bazaar this season, you can avail 5% cash back on a minimum spend of Rs 1,500. Under the cash back offer, the money gets credited to your account after the purchase has taken place. Similarly, by making a minimum purchase of Rs 3,000 on your Axis bank credit or debit card, you can avail additional 10% discount on purchase of any apparel at Central and Pantaloon outlets. 

Dining: There is something for your palate too. As an American Express cardholder, if you book a flight to Hong Kong through Cathay Pacific Airline this month, and can participate in the “Hong Kong Wine and Dine Festival”, which is being organised from October 28 to October 31, you would get a free wine pass. However, if you travel first or business class (card), you would receive 5 wine tokens in addition to it. 

Travel: If you are in a holiday mood this season, make sure you book tickets online. Several credit card issuers like HSBC and SBI have tied up with online travel portals like makemytrip.com, ezeego1.com for cash back offers of up to 30% on booking through them. 

Under IRCTC and SBI card tie-up, you are eligible for refund up to 17% on all hotel and railway bookings, if the transaction is worth Rs 7,500 and above. Also, you can earn discounted tickets this season by using your card. Under the ‘Bonus Pe Flying Bonus’ offer by SBI cards, you can earn one discounted Kingfisher airline ticket if you swipe your card for purchase worth between Rs 60,000-one lakh. 

Any purchase above Rs 1 lakh can get you two such tickets. “These offers are for both new as well as existing cardholders, provided the new cardholders have enrolled within the offer period,” says Abhay Kumar Singh, CEO, SBI Card. Similarly, you can save up to 10% on the base fare of your GoAir ticket by using your HSBC credit or debit card. 

For your city travel you can make use of your Indian Oil Citibank credit card wherein you will get free fuel worth Rs 300 (maximum Rs 600) on every spend of Rs 30,000 on the card. The free fuel would be credited as Turbo Points to your card and will reflect in your credit card statement. The scheme, which has been running under its special offer is valid till the end of November. 

LIC HF homes in on 37% net growth

LIC HOUSING Finance has reported a net profit of Rs 234.2 crore for the quarter ended September 2010 — an increase of 37% over Rs 171 crore in the corresponding quarter last year. Profits were driven by healthy growth in loan book, coupled with a leash on expenditure. 

According to a statement issued by the company, loans disbursed during the quarter rose 36% to Rs 5,101 crore while sanctions jumped 43% to Rs 7,667 crore. Following the increase in interest income , net interest margins for the second quarter improved to 2.93% compared with 2.44% in the same period of the previous year. 

Sequentially, there has been a slowdown in sanction growth. The first quarter of the current fiscal had seen home loans sanctions grow 51%. The company said it is yet to receive the proceeds of sale of shares of LIC Mutual Fund sold to Nomura Asset Management Strategic Investment. 

LICHF is due to realise Rs 138.4 crore from the sale. The transaction is pending procedural requirements a statement said. Sources said the money was likely to come in during the second half of the current fiscal. 
According to a report by Kotak Securities , strong retail demand for housing is the key growth driver for LIC Housing finance . 

The company’s asset quality has also improved sequentially. The outstanding mortgage portfolio as on September 30, 2010, was Rs 43,385 crore against Rs 31,890 crore on September 30, 2009, thus registering a growth of 36%. Gross NPA of the company stood at 0.74% (Rs 319.59 crore) on September 30, 2010, against 1.28% (Rs 408.55 crore) in the September 2009 quarter. Net NPAs were 0.21% (Rs 90.16 crore) against 0.62% (Rs 198.25 crore) for the corresponding dates. 

In a statement issued here on Thursday , LIC Housing Finance managing director RR Nair said: “The year continues to be good on all the operational matrices , and we are confident of maintaining the good performance.”

LIC crosses Rs 1,000 crore mark under new ULIP Plans

Country's largest insurer, Life Insurance Corporation (LIC), today said it has crossed the Rs 1,000 crore-mark from its two new unit-linked plans, which were launched after the latest guidelines of the sectoral regulator IRDA took effect last month. 

"Life Insurance Corporation of India has crossed the Rs 1,000 crore mark under the new ULIP plans, Pension Plus and Endowment Plus. The total premium income under these two plans as at October 18, 2010 was an awesome Rs 1,282 crore approximately," LIC said in a statement. 

The new plans were introduced last month. Pension Plus was launched on September 2 and about Rs 150 crore of premium have been collected under it from more than 30,000 policies. 

Endowment Plus plan was launched on September 20 and it was LIC's 16th linked product. Over Rs 1,000 crore has been garnered from Endowment Plus alone from over 2 lakh policies, in merely 29 days. 

As per new guidelines, effective September 1, Insurance Regulatory and Development Authority (IRDA), the commission paid to distributors and expenses charged by insurers will no longer be front-loaded. Instead, they will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier. 

Currently, ULIP products account for over 50 per cent of the total premium collected by the life insurance companies.


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Axis MF launches new exchange traded gold fund

Axis Mutual Fund today launched its new open-ended exchange traded fund, Axis Gold ETF, focused on gold-related investment and derivatives. 

The fund will allocate a maximum of 100 per cent of its corpus for investment in gold, including derivatives. It might also invest up to 10 per cent of its corpus in money market instruments. 

Market sources said Axis MF aims to mop up Rs 300 crore through the new fund offer (NFO), which closes on November 3. 

The minimum investment in the Axis Gold ETF NFO is Rs 5,000, Axis MF said in a statement. 

"Axis Gold ETF will give investors an opportunity to participate in gold as an asset class. Investors prefer gold in their portfolio as it acts as a shield in times of market turmoil," Axis AMC Managing Director & CEO Rajiv Anand said. 

The scheme will be benchmarked against the domestic price of gold. The ETFs will be listed on the National Stock Exchange. 

Following its listing, Axis Gold ETF will be the seventh listed gold ETF on the Indian bourses. The total assets under management (AUM) of the six fund houses that had listed gold ETFs on domestic exchanges as of September 30 was over Rs 3,000 crore. 

"Performance of gold has been good in the last six years. ETF investment would provide investors liquidity as they can trade in the instrument," Anand said.

Nifty lackluster; Wipro, Sesa Goa, Axis Bank down

Benchmarks were witnessing a sluggish session due to lack of buying activity after a sharp rise a day ago. Subdued opening of European markets also kept the markets under check. 

At 1 pm, National Stock Exchange’s Nifty was at 6097.60, down 3.95 points or 0.06 per cent. The index touched a high of 6121.10 and low of 6079.70. 

Bombay Stock Exchange’s Sensex was at 20228.66, down 31.92 points or 0.16 per cent. The index touched a high of 20351.74 and low of 20222.97. 

BSE Midcap Index inched 0.32 per cent higher and BSE Smallcap Index climbed 0.51 per cent. 

Amongst the sectoral indices, BSE IT Index gained 1.17 per cent and BSE Oil&gas Index advanced 0.40 per cent. BSE Realty Index fell 1.10 per cent and BSE FMCG Index declined 0.94 per cent. 

TCS (5.29%), Siemens (3.32%), Power Grid (1.23%),Ranbaxy Laboratories (1.01%) and Reliance Communications (1.01%) were the top Nifty gainers. 

TCS beat market expectations by reporting quarterly revenues of $2 billion for the first time, widening its lead over sector rival Infosys and also narrowing the historic margin gap. Net profit rose 32% to Rs 2,169 crore for the July-September quarter, and operating margins improved to 28% — the best TCS has managed over the past few years. 

Wipro (-5.03%), Sesa Goa (-2.80%), Axis Bank (-2.24%), DLF (-1.98%) and HCL Tech (-1.88%) resisted the upmove. 

Meanwhile, Wipro, India's third largest software services firm, missed forecasts with a 10 per cent rise in second-quarter profit as higher salaries and currency volatility hit margins, but the company said strong outsourcing demand would boost IT revenue. 

The company forecast IT services revenue of $1.32 billion to $1.34 billion for the third quarter ending in December, up 3.5 to 5.5 per cent from the second quarter. On average, analysts had expected the firm to forecast a four to five per cent increase in IT services revenue. 

Market breadth was positive on the NSE with 1717 advances against 1540 declines. 

European markets were witnessing some profit booking. FTSE 100 was down 0.27 per cent, CAC 40 slipped 0.37 per cent and DAX declined 0.18 per cent.

Wipro Sept qtr profit up 9.75% to Rs 1285 cr

Bangalore headquartered IT service provider, Wipro Ltd, posted a 9.75 per cent rise in its consolidated net profit to Rs 1284.9 crore in the second quarter ending September 30 as compared to Rs 1170.7 crore reported in the corresponding period last year.

Net income from sales rose to Rs 7730.5 crore in this period, up 12 per cent over the same period last year.

Operating profit of the company witnessed a growth of 6.8 per cent to Rs 1356.4 crore as compared to Rs 1269.8 crore reported last year.
    
The IT services business, which contributed 74 per cent of the total revenue during the second quarter, added 29 new clients, the company release said.
    
“We saw strong momentum in demand as customers tried to catch up with the under-investment in IT in the previous years. We continue to enhance our investments in transformational capabilities, client partners and domain solutions,” Azim Premji, chairman of Wipro said. 
    
While the macro-economic environment continues to remain uncertain, there is higher degree of confidence at the micro level, he added.

Coal India IPO subscribed 15.28 times

The initial public offer (IPO) of India's largest coal producing company Coal India (CIL) has seen huge response from investors and has received bids for more than USD 53 billion worth of equity shares as against issue size of USD 3.5 billion on last day.
The issue has been subscribed more than 15.28 times, including major contribution from qualified institutional buyers (QIBs) followed by non-institutional investors (NIIs) and retail investors.
For the reserved portion of QIBs (which closed on Wednesday and was subscribed 24.7 times), foreign institutional investors put in bids for USD 27.5 billion worth of equity shares followed by domestic financial institutions and mutual funds with USD 10 billion and USD 1.4 billion, respectively. (USD 1 = Rs 44)

The reserved portion of non-institutional investors was subscribed 25.4 times and retail 2.31 times while employees' portion was subscribed just 0.1 times.
Institutional investors have gone all out for Coal India with the IPO getting highest-ever demand received by an Indian issue. QIB generated demand for CIL was at Rs 1,73,398 crore with 100% margin while Rs 1,88,923 crore with 10% margin in case of Reliance Power IPO, which launched in 2008. In case of Reliance Power, QIBs' portion had subscribed 30.68 times.
A price band of the issue is at Rs 225-245 a share. Prasad Baji of Edelweiss Securities said that the market needs to treat CIL as an utility play. According to him, CIL’s fair value is at Rs 316 per share as coal prices are unlikely to come down in India. "Our assessment of fair value is Rs 316 based on a DCF valuation. Even on EV/EBITDA basis we are getting at Rs 300 price so there is some amount left on the table in this issue," he said.
However, Paresh Jain of Angel Broking differs. According to Jain, CIL’s fair value is at Rs 294 per share, which is based on the DCF valuation methodology. "We feel that the downside from the issue price is capped. There are no anchor investors in this particular issue. Most of the long only issue funds that need a good chunk of the stock would have to come and purchase it from the open market. That would give a boost to your stock price. I would advice investors to hold on to the stock because clearly our country is deficit in coal. Going forward as you see the washeries coming in, you will see earnings growth much faster 2013 onwards," he reasoned.
It would be the largest ever IPO by an Indian company. All issue proceeds will be received by the selling shareholder (GoI), which stake will be 89.99% post the issue. The offer shall constitute 10% of the post offer paid-up equity share capital of company.
However, Baji says, 26% mining profit share is a key risk, not just for Coal India but for the entire mining space. "In case of Coal India, there are certain mitigating factors. They spend 4% of their revenues on social activity. There is some case here that the management has been speaking to set it off against any kind of distribution of profits." he explained.

Book running lead mangers to the issue are Citigroup Global Markets India Private Limited, Deutsche Equities (India) Private Limited, DSP Merrill Lynch Limited, ENAM Securities Private Limited, Kotak Mahindra Capital Company Limited and Morgan Stanley India Company Private Limited.

Wipro consolidated Q2 net up 9.75% y-o-y

Wipro today reported 9.75% growth in consolidated net profit at Rs 12,849 million for the second quarter ended September 30.

The company had a net profit of Rs 11,707 million in the September quarter of the previous fiscal (2009-10), Wipro said in a filing to the Bombay Stock Exchange.

The total income has increased from Rs 70,349 million for the quarter ended Sept. 30, 2009 to Rs 78,727 million for the quarter ended Sept. 30, 2010, representing a rise of 12%.

Azim Premji, Chairman of Wipro, commenting on the results said, ``We saw strong momentum in demand as customers tried to catch up w ith the under-investment in IT in the previous y ears. We continue to enhance our investments in Transformational Capabilities, Client Partners and Domain Solutions. While the macro-economic environment continues to remain uncertain, there is higher degree of confidence at the micro level. For the quarter ended December 31, 2010, we expect Revenues from our IT Services business to be in the range of $1,317 million to $1,34 3 million, a sequential increase of 3.5% to 5.5%.``
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said, ``We saw a strong volume growth of 6.6% driven by higher offshore mix. The Operating Margins for IT Services declined during the quarter due to the impact of employee progressions, Restricted Stock Units grants and lower foreign exchange realizations.``
Highlights:

> IT Services Revenues were Rs. 57.4 7 billion (USD 1.29 billion), representing an increase of 15% over the same period last year.

> IT Services Earnings Before Interest and Tax (EBIT) was Rs.12.75 billion (USD 286 million), representing an increase of 7% over the same period last y ear.

> IT Services recorded a 6.6% volume grow th in the quarter.

> IT Services added 29 new clients in the quarter.

Net addition of 2,975 employees in the current quarter in IT Services.

> IT Products recorded sequential grow th in Revenues of 29% in the current quarter.

> Consumer Care and Lighting Revenue grew 20% over the same period last year and EBIT grew 13%.
Shares of Wipro gained Rs 6.75, or 1.46%, to trade at Rs 469.75. The total volume of shares traded was 128,805 at the BSE (Thursday).

Infosys to invest $100 m in China operations

It bellwether Infosys is looking at investing around $100 million in its Chinese operations over a period of time and would strengthen the employee count there to 4,000 from the existing 2,850, said MD & CEO S Gopalakrishnan .

“All our centres are capable of handling all projects — be it in Hyderabad, Bangalore, Chennai or Mangalore. We hope to create a similar centre in China too and have initiated talks with the government there to acquire land on lease. We will build our campus once we have land,” he said after addressing the regional council of CII in Hyderabad on Thursday.



The company is planning to offer midterm promotions to its around 12,000 employees this month. “Promotions and hikes will now be a part of our routine cycle. We had already given promotions in April. While attrition in the past two years had gone down to single digits, from last quarter to this quarter we have observed that it is down. We believe stability would happen next quarter,” he said. On UK’s move to scale down IT budgets, he said, “Globally, even though we have come out of recession, the growth is muted. Problems that were there on the business side have now moved to governments. So, governments are looking at austerity measures.”

Vodafone to spend $500 m on 3G equipment

Vodafone Essar will spend $400 million to $500 million on its third-generation services electronic equipment before they are launched in the first quarter of 2011, Marten Pieters, chief executive officer said. The company will fund it through bank loans and by issuing some new shares to its existing shareholders, Vodafone Group and Essar Group, Mr Pieters said on the sidelines of a company demonstration of the 3G services it will be launching.

In May, Vodafone Essar — India’s third-largest telecom operator by subscribers — paid Rs 11,618 crore for spectrum, or radio frequency, in nine services areas. The company paid such a high price because of an artificial scarcity of bandwidth, Mr Pieters said. Vodafone’s services will be launched in a phased manner. Beginning from metro areas Delhi and Mumbai, 3G services will be rolled out in all circles including Chennai, Kolkata, Maharashtra, Gujarat, Tamil Nadu, Haryana, Uttar Pradesh (East) and West Bengal, Sanjoy Mukerji, director (business operations) of Vodafone Essar said.

Mr Pieters said Vodafone is in talks with quality and long-term operators — including Bharti Airtel and Idea Cellular — to offer 3G services in areas where it does not have 3G airwaves. The end objective of these tie-ups will be to allow customers to seamlessly experience 3G across the country, irrespective of whether it is a Vodafone circle or another operator, Sunil Sood, the company’s other director of business operations said.

Mr Mukerji said 3G services would be competitively priced, adding that every bouquet of services would be priced differently according to use and location. For example, video calling may be priced higher in a remote location than in cities with adequate mobile access.

In an interview with ET, Vodafone Group’s chief executive Vittorio Colao had said: “I don’t think 3G services here will imply all you can use plans — these are being withdrawn from European and US markets. In India, the amount of frequencies are less and it is not compatible with such plans. Data will be segmented and the plans will be tailor-made for different segments of the population.”

Vodafone is likely to be one of the later private players to launch these services. Tata DoCoMo is expected to announce that it will begin offering its high-speed services from the first week of November. State-run telecoms are already providing 3G services in select circles.

In a highly-competitive Indian telecom market, 3G services are being considered the next revenue generator after regular value- added services. Consumers may take time to adopt data services that would be priced much higher than existing voice tariffs, which have recently seen radical reduction. “These (3G) services should push up average revenue per user,” said Mr Mukerji without detailing the potential increase. Vodafone expects 10% of 2G network users in India to switch or upgrade to 3G in a year, depending on the proliferation of 3G enabled handsets, he said.

In India, data users make up less than 10% of the company’s existing consumer base and are expected to increase as 3G usage will be an upgrade from voice calls and not in its place. Only 2% of Vodafone’s global 3G consumer base uses video calling, a trend that may find only lower numbers in India.

Last week, Vodafone Essar gave a three-year contract, estimated to be $500 million, to Ericsson and Nokia Siemens Networks to roll out 3G network. Vodafone owns 67% in Vodafone Essar. India’s Essar Group holds the rest and has an option sell its entire stake to Vodafone for $5 billion by May 2011.

(source - ET)

Sensex trades in narrow range; tech gains

 

The Sensex was trading at 20693, up 5 points and the Nifty was at 6234, up 0.95 points. The broader indices were outperforming benchmarks; were up 0.3-0.5%. The October futures were trading at 35 points premium.

Top gainers - Tata Steel was trading at Rs 654.90, up 2.64%; Wipro was at Rs 494.10, up 2.36%; Infosys was at Rs 3,192.55, up 1.31%; Jaiprakash Associates was at Rs 136.25, up 1.08%; Jindal Steel was at Rs 726.30, up 1.03%; Sesa Goa was at Rs 372.40, up 3.69% and Ambuja Cements was at Rs 145.20, up 1.36%.

Top losers - BPCL was trading at Rs 733.15, down 3.65%; L&T was at Rs 2,027.40, down 2.44%; Reliance Communications was at Rs 184.45, down 1.42%; NTPC was at Rs 205.25, down 1.35%; Reliance Power was at Rs 164.25, down 1.26%; Cipla was at Rs 336.30, down 0.94% and ONGC was at Rs 1,367.25, down 0.86%.

New Listings

Sea TV Network was trading at Rs 109.60, up 9.60% over issue price of Rs 100 a share.

Ashoka Buildcon was trading at Rs 347.40, up 7.22% ove IPO price of Rs 324 a share.

Bedmutha Industries was trading at at Rs 112.90, up 10.69% over issue price of Rs 102 a share.

In midcap space, United Bank, Rashtriya Chemical, Chambal Fertiliser, National Fertiliser and Allcargo Global were up 4.5-7.5% while Honeywell Automation, Apollo Hospital, IBN18 Broadcast, UTV Software and M&M Financial lost 2.5-4.7%.

In smallcap space, Cosmo Films, Sujana Metal, India Glycols, Gulf Oil Corp and Indian Hume Pipe rallied 6-13% while Subhkam Capital, Kanani Industries, Kajaria Ceramic, Supreme Petro and Gateway Distripark fell 3.6-5%.

About 1655 shares advanced while 1627 shares declined on BSE. Nearly 146 shares were unchanged

At 12:50 hours IST - the 30-share BSE Sensex was trading in a narrow range of 20650-20750, which was around its previous closing value. Technology (ahead of Infosys numbers on Friday), FMCG, select metal and auto companies' shares along with Reliance Industries, DLF, Tata Power and Dr Reddys Labs were quite supportive to the benchmarks.

However, consistent selling in capital goods, power, financial, telecom and PSU oil & gas companies' shares capped almost all gains.