Obama to unveil plans for financial sector overhaul

President Barack Obama will unveil on Wednesday his plans for reshaping US financial regulation, with proposals to close one bank regulator and create new overseers for big-picture economic risk and consumer financial product safety.

In a package of reforms that takes on many tough jobs while avoiding at least one, the administration will call for tighter oversight aimed at preventing a repeat of the severe banking and capital markets crisis that has shaken economies around the world.

Months of debate in the US Congress lie ahead. Committees of both the Senate and the House of Representatives have scheduled more than a dozen hearings on regulatory reform between now and mid-July. Conservative House Republicans have already offered their own rival plan.

Obama will present his proposals at 12:50 pm EDT on Wednesday, the White House said. Treasury secretary Timothy Geithner, members of Congress, regulators and representatives from the financial industry

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Consensus on reserve price, 3G auction soo

Finally, the long-awaited auctions of 3G spectrum, the airwaves that enable faster data download and video streaming on mobile phones, is poised to take place within two months.

The way for the auctions has been cleared on Tuesday after the finance ministry and the department of telecommunications (DoT) have buried their differences over what should be the minimum reserve price for the auctions. The two have agreed on a reserve price of Rs 3,510 crore, which is higher than Rs 2,020 crore proposed by DoT earlier and lower than Rs 4,040 crore suggested by the finance ministry.

Another significant development is that a 2% administrative charge, proposed by the Telecom Regulatory Authority of India (Trai), on the successful bidders annually has been dropped.

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High Court asks Ambanis to frame new gas pact

The Bombay High Court on Monday ordered Mukesh Ambani-owned Reliance Industries Ltd, India’s largest company, to sell natural gas to brother Anil Ambani’s Reliance Natural Resources Ltd at a price that is 44% lower than the price proposed by the government earlier.

The order could significantly impact the contours of the natural gas economy in the country. RIL has been asked to supply natural gas to RNRL for 17 years at $2.34 per million British thermal units. RNRL, however, cannot trade the gas but can use it as raw material in its power projects. Natural gas accounts for about 18% of the total energy-mix of the Indian economy.

An RIL spokesperson said: “The full text of the judgment of the honourable High Court has been received by us and is being reviewed by us.

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China venture capitalists most-favoured, India in 2nd spot

Even as recent industrial output numbers signal that the Indian economy is gradually heading towards the recovery path, it is China that catches the fancy of venture capitalists (VCs).

“Apparently, among venture capitalists, there’s China and there’s everyone else,” says a recent global survey by Deloitte Touche Tohmatsu (Deloitte) on VC sentiment in the times of recession.

The survey reveals that 50% of global and non-India based Asian investors who plan to increase their investments over the next three years look at China as the favourite location.

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Tata Tea scouts global buys

Tata Tea, the world’s second-largest tea company after FMCG giant Unilever with FY09 revenues of Rs 4,874 crore, on Thursday said it wants to acquire global brands in Russia, South America, Asia Pacific and Africa. These proposed acquisitions are part of Tata Tea’s new thrust on attaining global leadership in beverages.

Tata Tea is planning to operationally integrate five areas of its business—products & categories, brands, distribution, people, and processes—under an overarching management team of six people: Tetley CEO Peter Unsworth, Tata Tea MD Percy Siganporia, Tata Tea CFO L Krishnakumar, Tata Coffee MD Hamid Ashraff, Tata Tea HR head Nalin Miglani, and Tetley head of brands and marketing John Nicholas.

Branded tea contributes around 86% to Tata Tea’s consolidated worldwide turnover, with the remaining coming from bulk tea, coffee, and investment income. Two-thirds of Tata Tea’s revenues accrue from international markets.

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Honda Jazz-es up compact car segment

After over a decade-long presence in India with bigger cars like Honda City, Civic, Accord and Honda CR-V, Honda Siel Cars India (HSCI) on Wednesday forayed into the mass volume compact car segment with Honda Jazz. The car, which is available in three variants, is priced between Rs 6.98 lakh and Rs 7.33 lakh (ex showroom Delhi) and is so far the most expensive super-mini car available in the country.

“Around 75-80% of the total passenger car industry in India is compact cars, and with Jazz we have entered into this segment,” says Masahiro Takedagawa, president and CEO, HSCI, adding that the segment should contribute to expanding the company's business in India and eventually take up its market share to double digit as against 4-5% now.

According to Takedagawa, the company is looking at selling close to 2,000 to 2,500 units of Jazz a month, which would be half the number of Honda City. HSCI, on an average, sells 3,500 to 4,000 units of Honda City a month.

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Satyam unveils results

Barely days before Tech Mahindra’s open offer for an additional 20% stake, Satyam Computer Services made public the unaudited financial details that it had shared with bidders earlier. In a filing with exchanges, Satyam said soon after founder B Ramalinga Raju confessed to perpetrating a Rs 7,000-crore fraud in early January, the company lost about $183 million in contracts from 56 clients up to March 26.

However, Satyam says it received new business orders from 215 mostly existing customers with contract values totalling $380 million during the same period. The company had a bank balance of Rs 373 crore at the end of March 2009, but outstanding bank loans worth Rs 469 crore.

In the quarter ended December 31, 2008, the company had a PAT of Rs 181 crore on revenues of Rs 2,206 crore. Figures for the same period the previous year were not available for comparison. In January, Satyam had a PAT of Rs 4 crore on revenues of Rs 647 crore, and for February, it had a PAT of Rs 52 crore on revenues of Rs 637 crore.

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Mumbai special economic zone puts Raigad project on hold

Reliance Industries-promoted Mumbai special economic zone (SEZ) has put on hold, the implementation of a Rs 40,000crore multi-product SEZ on 10,000 hectare in the coastal Raigad district. Mumbai SEZ, a company pursuing the proposed SEZ, whose petition was dis missed by the Supreme Court when it refused to extend the time for land acquisition, now does not want to proceed further till the Bombay High Court decides the matter. The apex court has asked the Bombay High Court to change the bench and conduct the proceedings.

However, Mumbai SEZ may exercise an alternative option and pursue land acquisition as the permission it has received under the Bombay Tenancy Agricultural Land Act still holds. According to this act, whatever land the company has acquired so far can be transferred on its name.

Mumbai SEZ has so far acquired 1,000 hectare of non-contiguous land and thus it may have to drop the multi-product SEZ.

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Air India won't get Rs 15,000 crore bailout

The government has indicated that a bailout package for the crisis-ridden Air India will not be possible beyond $1-1.5 billion (Rs 5,000-5,500 crore) against the $3 billion sought by the airline. A hectic reworking of the capital restructuring possibilities is underway and is expected to be submitted by June 22.

“An equity infusion of up to Rs 1,500 crore, plus a soft loan of Rs 3,000-3,500 crore will be considered on a priority basis. There is no chance of the Airline receiving a package of Rs 14,000 to 15,000-crore package,” a very senior source in the civil aviation ministrty said. “In fact, the civil aviation ministry and Air India are currently involved in the preparation of exact details and a package. It is expected to be submitted around June 22 and thereafter the government will take a final decision,” top government sources told FE on Sunday on the condition of anonymity.

On Saturday, the civil aviation ministry held initial discussions in this regard with the National Aviation Company of India Ltd (Nacil), created through Air India-Indian Airlines merger in 2007.

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Multiplexes, producers agree on formula, first show June 12

The two-month-old row between producers and multiplex owners over revenue sharing has ended, paving the way for a slew of releases from June 12. Both sides had met several times over the last month, but ultimately thrashed out their differences at a marathon 14-hour session at Yash Raj Studios on Thursday. The deal—BIG Cinemas was first to sign on the dotted line—was sealed at 3.30 am.

“Both sides have agreed to the deal,” said Reliance BIG Entertainment chairman Amit Khanna. However, other exhibitors such as PVR, Fame, Inox and Cinemax are yet to ink the agreement, said Kishore Lulla, CEO of Eros International, one of the industry’s largest producers and distributors. According to sources, they are expected to sign on Monday.

Under the terms agreed, producers and exhibitors will now share 50% of the box-office revenues in week one, then 42.5%, 37.5% and 30% in subsequent weeks.

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Industrial Credit and Investment Corporation of India Bank cuts loan rates, Public Sector Banks are next

Even as public sector banks gear up to announce further rate cuts by next week, the country’s second-largest lender, ICICI Bank, on Thursday announced a 0.50% reduction in both retail and corporate rates. All existing floating-rate retail loan customers will benefit from the reduction. This is the third time the bank has pared its rates in the last six months. Explaining the decision, a bank spokesperson said, “Our cost of funds has fallen.”

ICICI Bank’s new floating reference rate is applicable to all floating-rate retail loans (including home loans) and will come into effect from Friday. The revised FRR stands at 12.75% pa, against 13.25% pa at present. The bank also announced a 0.50% reduction in its benchmark advance rate to 15.75% pa.

However, ICICI Bank has ruled out any more rate cuts in the immediate future. “We would not follow public sector banks in cutting our rates further,” the spokesperson said.

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Nuke deal opens new biz doors for Indian companies

With the successful passage of the Indo-US civil nuclear cooperation agreement, and the exemption granted to the 45 member states of the nuclear suppliers’ group to engage India, have opened up tremendous new business opportunities for Indian companies.

Now, the Indian companies will get access to high technology from the US and other major technologically advanced countries.

At the same time, to minimise risks of unauthorised diversion, these same countries will institute stricter licensing requirements for acquisition, manufacture and trade in a range of sectors including nuclear, chemical, pharmaceutical, biotechnology, electronics, aerospace, lasers, nano-technology and specialty materials, etc. This will call for greater “responsible” action by Indian companies as well.

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Layoffs begin at Satyam, non-techies first to go

Though corporate affairs minister Salman Khursheed had hinted at government intervention, the first phase of layoffs has started at Satyam Computer Services. Trainers, HR and sales & marketing executives are being singled out for action by Tech Mahindra, Satyam’s new owner.

“The first phase of layoffs has started. In the second phase, employees who have been on the bench for less than three months would go away,” said an official source. It couldn’t be ascertained how many on the bench have been asked to leave. “Some senior executives on the bench are being offered almost 50% of their salary or an option to go on a sabbatical. Several benched senior executives have moved out,” the source said.

On Monday, commenting on media reports that 10,000 employees could be retrenched at Satyam, Khursheed had stated, “Layoffs is something we are not going to turn a blind eye to, as we have a relevant presence in decision making (in Satyam Computer Services.)”

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Axis Bank to raise Rs 3,000-crore debt

Axis Bank, the country’s third largest private sector bank, on Monday announced plans to raise Rs 3,000-crore debt in local or overseas markets for meeting its tier-I and tier-II capital needs.

Presiding over her first board meeting, on her first day in office as managing director & CEO of Axis Bank, Shikha Sharma, former MD & founder CEO of ICICI Prudential Life Insurance, announced plans for raising the capital in tranches.

The bank plans to raise Rs 500 crore of debt for its tier-I capital and the rest towards tier-II capital.

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Key bills to set stage for financial sector reforms

While finance minister Pranab Mukherjee has asserted that the next wave of economic reforms will provide a sustained stimulus to growth, the finance ministry has listed out seven important pending reform bills—on insurance, pension and banking reforms for ‘priority’ passage by Parliament.

These bills form part of the 100-day agenda, being finalised by Prime Minister Manmohan Singh’s office, officials said. “The Cabinet’s approval will be required afresh to introduce the bills (except the Insurance Amendment Bill) again in the ensuing session of the next Lok Sabha,” the finance ministry has submitted in a note to Cabinet secretary KM Chandrasekhar and the PMO.

Officials said the government was keen to push through the insurance sector bills quickly which aim to raise the foreign direct investment limit to 49% from the current 26%.

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