Oil and Natural Gas Corp on Wednesday, 13 November, reported modest profit growth in the second quarter, raising concerns about its ability to finance a major investment programme while shouldering the burden of hefty domestic subsidies.India's largest oil and gas exploration company, ONGC is raising debt for a spate of acquisitions over the past year that gave it interests in overseas oil and gas blocks. It is also looking to spend heavily to maintain output at ageing production fields in India and for exploration of newer blocks there."The realisations (earnings per barrel) are much less than what we need to maintain production," ONGC Chairman Sudhir Vasudeva told reporters in New Delhi, adding that if the current situation continues, the company may have to draw down reserves."It will not only affect us but also reflect on (overseas arm) ONGC Videsh because the cost of capital will increase."India imports nearly 80 per cent of its crude needs. Its state-run oil firms have been hit hard this year because the government, facing tough state and national elections, has not allowed significant increases in retail fuel prices to offset the impact of higher crude prices and a sharp fall in the rupee.Fuel subsidies for the fiscal year ending March 2014 are expected to be Rs 1.4 trillion, more than double the budgeted number. Explorers such as ONGC and Oil India are forced to share the burden by selling crude to state refiners at a fixed $56 per barrel discount to global prices.ONGC posted a net profit of Rs 6,064 crore for the quarter ended September 30, up 2.8 per cent from Rs 5,897 crore last year. Net sales rose 12.8 per cent to Rs 22,312 crore.Analysts, on average, had expected a net profit of Rs 5,900 crore, according to Thomson Reuters Starmine data."Their margins are under pressure. The subsidy burden is taking its toll, but its not something they have control over," said Jagannadham Thunuguntla, head of research at SMC Global Securities.These are the first results since ONGC entered into a $2.6 billion deal to acquire a 10 percent stake in Mozambique's offshore Rovuma gas basin. Last month, it also agreed to buy a 12 per cent of a Brazilian oil block in a $529 million deal.The flat profit may lower the comfort level for investors and lenders at a time when ONGC is raising funds in the debt markets to finance its growth plans.State-owned retailers Indian Oil Corp, Hindustan Petroleum Corp and Bharat Petroleum Corp reported steep profit declines for the quarter, hit by foreign exchange losses and lower subsidy compensation from the government.Analysts expect the finances of state fuel retailers to remain under pressure for the next few quarters, given their high level of borrowings and the expected delay of about six months in receiving compensation for the losses on fuel sales.ONGC said it gave discounts of 137.96 billion rupees to state refiners compared with 123.30 billion a year earlier. As a result, its net realisation fell to $44.8 per barrel from $46.8 a barrel a year ago. The company estimates it needs around $60 a barrel to keep operations viable.Shares of ONGC, India's fourth-biggest company by market value, closed 1.1 percent higher ahead of the results. The stock is nearly flat so far in 2013, compared to a 2 per cent fall in the sectoral index.(Reuters)
Read More
Rights campaigners on Wednesday, 13 November, demanded that the head of India's top investigation agency resign after he said during a panel discussion on sports ethics that "if you can't prevent rape, you enjoy it".Ranjit Sinha, director of the Central Bureau of Investigation (CBI), which tackles corruption and other high-profile cases, apologised for the remark, but it was roundly criticised.The issue of sexual violence has been in the spotlight since the fatal gang rape of a young woman on a Delhi bus last year sparked nationwide protests."Do we have the enforcement?" Sinha said at a CBI conference in New Delhi on Tuesday (12 November) about whether sports betting should be legalised. "It is very easy to say that if you can't enforce it, it's like saying if you can't prevent rape, you enjoy it."Sinha sought to explain his comments, which civil campaigners and opposition politicians said risked trivialising rape and raised questions over the CBI's ability to investigate serious sexual assault cases."I regret any hurt caused," Sinha said in a statement after the original remarks dominated news channels. "I gave my opinion that betting should be legalised and that if the laws cannot be enforced, that does not mean that laws should not be made."This is as erroneous as saying that if rape is inevitable one should lie back and enjoy it. I reiterate my deep sense of regard and respect for women and my commitment for gender issues."Kavita Krishnan, an activist with the All India Progressive Women's Association, called for Sinha to step down."How can he remain the head of India's premier investigation agency?" she said.Nirmala Sitharaman, spokeswoman for the main opposition group, the Bharatiya Janata Party, called the remarks "shocking"."Wonder if his colleagues in the Bureau, his family and well-wishers approve of his view," she wrote on Twitter.There were more than 24,000 reported rapes in India in 2011, but activists say the real number is many times higher.Following a public outcry over the Delhi attack, India introduced tougher rape laws in March, which include the death penalty for repeat offenders and for those whose victims are left in a "vegetative state".The row comes at a bad time for the CBI, widely accused of acting as a tool for the government to pressure political rivals. Its very legality is also being challenged in court.The CBI, which is similar to the Federal Bureau of Investigation (FBI) in the United States, was set up to fight corruption by government employees, but also investigates other important cases, including murder, rape and terrorism. (Reuters)
Read More
The rupee rose on 13 November' 2013, snapping a five-session losing streak, as the Reserve Bank of India (RBI) stepped in to calm markets, saying that it would not rush with tapering its oil dollar swap window. RBI Governor Raghuram Rajan, in a hurriedly called press conference, said that the central bank has now routed back most of the dollar demand from oil companies to the market. He also said that there were various options for the oil companies to repay the dollars to the central bank when the swaps under the oil window matured. The central bank was also cited intervening in early trades after the rupee fell in line with other Asian currencies on chatter about an early taper of the US monetary stimulus. The rupee ended at 63.30/31 to the dollar versus its Tuesday close of 63.71/72. It rose 0.6 per cent, its biggest single-day gain in nearly a month. Earlier in the session, it had fallen to 63.90, a nine-week low. In the offshore non-deliverable forwards, the one-month contract was at 64.03, while the three-month was at 65.17. (Reuters)
Read More
The Reserve Bank of India is likely to have stepped in to prop up the rupee via state-run banks, from falling further after it opened at a nine-week low of 63.90 to the dollar, traders said.The rupee was trading at 63.76/77 versus its close of 63.71/72 on 12 November.The rupee is heading for a sixth straight-session slump, tracking the unexpected quickening of retail inflation in October, sparking rate hike fears as well as concerns over tapering of the dollar-swap window for oil firms.India's annual consumer price inflation for October rose 10.09 per cent on the back of high food and fuel prices, government data showed on 12 November.The rupee has already shed around 3.3 per cent over the last five sessions.(Reuters)
Read More
Continuing its slide for the sixth straight day, the rupee on 13 November lost 17 paise to trade at a fresh two-month low of 63.88 in early trade on strong dollar demand from importers amid weak local equities.At the Interbank Foreign Exchange (Forex) market, the local currency opened lower at 63.88 a dollar from its previous close of 63.71.Meanwhile, the retail inflation measured in terms of consumer price index (CPI) rose to 10.09 per cent in October, entering double digits after seven months. The industrial production grew by two per cent in September, mainly on account of better performance by power and mining sectors.Forex dealers said besides sustained demand for the US currency from importers and a lower opening in the domestic equity market also put pressure on the rupee but dollar's weakness against euro in the global markets capped the fall.The rupee had depreciated by 47 paise to close at 63.71 against the dollar in the previous session.Meanwhile, the BSE benchmark Sensex fell by 53.97 points, or 0.27 per cent, to 20,227.94 in early trade on Wednesday.(PTI)
Read More
How does an organisation tackle periods of slowdown? That was probably the question on everyone’s mind as they gathered to celebrate the finest in corporate India at the BW Real 500 awards on 26 October at the Taj Mahal Palace Hotel in Mumbai. The topic was discussed threadbare by a panel moderated by Pratip Chaudhuri, the just-retired chairman of the country’s largest bank, SBI. Some of the brightest minds from corporate India shared their thoughts on the topic. Sheshagiri Rao, joint MD at JSW Steel, kick-started the discussion saying growth has to come from maintaining profitability. Dr Habil Khorakiwala, chairman of Wockhardt, underlined the need to focus on long-term survival irrespective of the state of the economic cycle. Rashesh Shah, chairman Edelweiss, who spoke next, stressed that companies should pay particular attention to cash flows in the current cycle, where capital is hard to come by. He said it was ‘good to see’ that companies were not giving up on toplines, but the focus should be on profitability and cash flows. Shekhar Bajaj, chairman and MD of Bajaj Electrical brought in an additional aspect of how companies should not make the mistake of going for higher sales at the cost of tighter margins. According to Kaku Nakhate, president and country head at Bank of America, it is important to envisage that a downturn is coming and to increase market share ahead of it. Click here to view slide showThe panel then took questions from the audience. Most questions pertained to the slowdown such as entrepreneurship during periods of dull growth, sectors that lead during such times, and the kind of role that the government should play.Then came the highlight of the evening, with chief guest Praful Patel, minister for heavy industry and public enterprises, delivering his address ahead of the awards presentation. Patel said that India’s biggest push was coming from the rural markets, with aspirations having shot up in a relatively short span of time, putting the onus on the government to do much more. The minister then presented the awards to India's biggest and best companies to cap the evening's proceedings. (This story was published in BW | Businessworld Issue Dated 02-12-2013)
Read More
Continuing its slide for the fifth straight day, the Indian rupee on 12 November lost 23 paise to trade at 63.47 on strong dollar demand from importers.At the Interbank Foreign Exchange (Forex) market, the local currency opened lower at 63.47 a dollar from its previous close of 63.24.Forex dealers said besides sustained demand for the US currency from importers and capital outflows, dollar's strength against other currencies overseas weighed on the domestic currency.The rupee had depreciated by 77 paise to close at an almost two month low of 63.24 against the dollar in the previous session.Meanwhile, the Bombay Stock Exchange Sensex gained by 93.26 points, or 0.45 per cent, to 20,584.22 in early trade on Tuesday.(PTI)
Read More
In a stern warning to 10 lakh service tax defaulters, Finance Minister P Chidambaram on Monday, 11 November, asked them to come clean so as to avoid punishment."We have reached the tipping point where we have to pause, take stock, talk to you, offer a fair and generous transition method and persuade as many of you to come over to paying taxes before the tax is enforced in a strict manner."VCES is just that. The one who has not paid service tax to draw a curtain on the past and move on to a new chapter in his business. That is what VCES is," he said.He was meeting representatives of various trade and industry associations and chambers of commerce and industry to encourage them to take advantage of the service tax amnesty scheme -- Voluntary Compliance Encouragement Scheme (VCES).Chidambaram said that of the total 17 lakh registered service tax payers, only seven lakh of them were paying the levy."This scheme is aimed at 10 lakh people who either are non filer or stop filer. Many of the 10 lakh have not filed at all, or not paid service tax at all. Many have paid from certain period and then stopped paying. I don't know who is cleverer, the guy who never pays or who stops paying," he said.The Finance Minister, who earlier had a similar interaction in Chennai, said he does not believe in harsh penalties, but "sometimes it is necessary to send a stern message".Both the non-filer and stop-filer are treading on dangerous ground, he cautioned."We have enough information today about business companies, firms, partnerships. We have the PAN numbers. We have digitised most of our operations," he said. .Chidambaram also advocated a low and stable tax regime along with a tax payer friendly tax administration.VCES had been introduced with effect from May 10, 2013 as a one-time amnesty scheme for paying service tax dues for the period October 1, 2007 to December 31, 2012 without interest and penalty.Chidambaram would hold similar interactions with the industry in Mumbai on November 14.Earlier in the day, the Finance Minister released two commemorative coins to mark the culmination of 125th anniversary of freedom figher and country's first education minister Maulana Abul Kalam Azad.Speaking at the occasion Chidambaram said that Maulana Azad was nationalist, patriot and secular.(PTI)
Read More
US job growth slowed sharply in October with the unemployment rate ticking higher to 7.3 per cent as a partial shutdown of the government kept workers at home, undercutting an already lethargic labour market. Non-agricultural payrolls are expected to have risen by only 125,000 jobs last month, according to Reuters, down from an increase of 148,000 in September. Economists estimate the 16-day federal shutdown reduced payrolls by as much as 50,000 jobs, and they expect them to bounce back in coming months. Even so, it would only suggest the labour market remains on its gradual recovery course.Tax SmartTwitter, Facebook and 10 other tech firms have enough stock-option tax breaks to avoid paying billions of dollars in taxes on the next $11.4 billion of US income they collectively earn, Citizens for Tax Justice (CTJ) recently said. CTJ had analysed US Securities and Exchange Commission 2012 filings for these firms. Twitter (which just debuted on NYSE) has $107 million of unused stock option deductions and Facebook has $2.2 billion — the latter’s next $6.2 billion in US earnings could be tax free, CTJ said. Firms paying their employees in corporate stock options can take a tax deduction for the difference between what the employees pay for the options and what the stocks are worth when the options are exercised later — and this becomes an effective tax avoidance tool.Hammer And TongsImpressionist and modern art achieved strong prices on 6 November as Sotheby’s held one of its biggest auctions ever, in a dramatic turnaround from two nights of disappointing sales at Christie’s earlier. Led by Giacometti’s sculpture “Grande tete de Diego” and Picasso’s oil “Tete de femme”, which fetched $50 million and $39.9 million, respectively, the sale totalled more than $290 million, with 81 per cent of 64 lots finding buyers. It was Sotheby’s best Impressionist and modern art result apart from its May 2012 sale at which one of the versions of Munch’s “The Scream” sold for a record $120 million. The strong sales were likely to calm market jitters that followed Christie’s results, which fell far short of expectations. As the hammer came down on the final lot, applause and whoops broke out in the salesroom. Auctioneer Tobias Meyer responded to the reaction, saying, “So the market is alive, huh?”Not Just BaristasStarbucks is looking for thousands of good men — and women. The coffee chain said it would commit to hiring at least 10,000 veterans and spouses of active military in five years. It also said five new and existing US Starbucks cafés on or near military bases will share a portion of each sale with NGOs that help veterans re-enter the workforce. Many US firms have committed to hiring thousands of military veterans who served in Iraq and Afghanistan. “This demographic represents one of the most underutilised talent pools in our country,” said former US defence secretary Robert Gates, now a Starbucks director.Another Stimulus?The euro zone’s economic recovery lost a little momentum in October, as the purchasing managers’ indices (PMIs) from Markit showed only modest growth in German and French businesses. Data from non-euro zone Britain impressed again, however, and German industrial orders jumped underlining the uneven nature of overall European recovery. Taken as a whole, the PMIs pointed to fragile economic growth that will do little to ease the pressure on the European Central Bank (ECB) to take some action. With surprisingly low inflation last month, speculation in markets and among economists has grown that the ECB is primed to stimulate the economy again.Love’s Libor LostFour European banks recently paid a heavy price in a clean-up of the financial industry, with Rabobank being fined $1 billion and three other lenders preparing for possibly huge legal costs after a string of scandals. Dutch Rabobank said it would pay regulators in the US, UK and the Netherlands €774 million after 30 employees were involved in “inappropriate conduct” linked to interest rate manipulation. CEO Piet Moerland resigned, becoming the second CEO of a bank involved in the rate rigging scandal to quit following Bob Diamond’s departure from British bank Barclays last year. The other banks in the fray are Deutsche Bank, UBS and Lloyds Banking Group.P(l)ay OnSony Corp plans to charge a monthly fee of $9.99 in the US and €6.99 in Europe for playing multiplayer online games on its new PlayStation 4 (PS4) console, the Nikkei business daily reported. Multiplayer games can be played for free on PlayStation 3. Sony plans to charge 500 yen ($5.00) a month for multiplayer games in Japan when the new console debuts in February. The $9.99 monthly option was announced by the company in June this year, according to a spokeswoman for Sony Computer Entertainment America. Sony plans to make PS4 more attractive by including more social networking functions.Inked! Ukraine recently signed a $10-billion shale gas production-sharing agreement with US Chevron, another step in a drive for more energy independence from Russia. The deal to develop its western Olesska field followed a similar shale gas agreement with Royal Dutch Shell in January. “The agreements with Shell and Chevron...will enable us to have full sufficiency in gas by 2020 and, under an optimistic scenario, even enable us to export energy,” said Ukranian President Viktor Yanukovich. The highest end of expectations for Olesska’s potential reserves would match around three years of European Union’s gas demand.Fifth GearHuawei Technologies will invest at least $600 million in 5G research over the next four years, the Chinese telecommunications equipment manufacturer said in a statement. “While we continue to evolve our existing 4G network capabilities, we plan to invest a minimum of $600 million over the next five years on research and innovation for 5G mobile network technologies to ensure that we are meeting consumers’ demands for increasingly faster and better connections,” Eric Xu, Huawei’s current rotating chief executive, said on the company’s website. This figure does not include investment in 5G products, he said. The company sees 5G networks ready for commercial deployment by 2020, delivering data speeds 100 times faster than 4G networks.Mission StatementSamsung Electronics vowed to double its dividend yield, invest in new technology and boost marketing as it sought to topple Apple in the mobile devices segment and ease investor concerns over its sagging share price. The world’s leading maker of smartphones, memory chips and TVs recently outlined its strategy at a meeting with analysts designed to reassure investors that it is listening to complaints about low returns and poor use of capital. (This story was published in BW | Businessworld Issue Dated 02-12-2013)
Read More
Those involved in it went on a fool’s errand, that’s just a fact”— John McCain, former Republican presidential candidate, on his party-led government shutdown“I wish to God that Apple and Google were partners in the future”— Steve Wozniak, co-founder of Apple, in a television interview“Shinde has a life beyond Patna blasts”— Salman Khurshid, defending home minister Sushil Kumar Shinde who attended a music release just after the blasts“Apple’s not a bank... Shareholders haven’t bought the stock to be a bank”— Carl Icahn, billionaire investor, pointing out that Apple is failing to return cash to shareholders Francois Hollande“As a priority? It is a joke”— Bill Gates, founder Microsoft, on connecting the world’s population via the Internet “This effort (is) demanded of businesses that choose to pay such high annual salaries” — Francois Hollande, President of France, to French football club owners, on the 75 per cent tax on salaries exceeding 1 million euros“BlackBerry is hemorrhaging employees, it is hemorrhaging customers. The only thing that’s growing is doubt” — John Stephenson, senior vice-president, First Asset Investment Management, one of BlackBerry’s investors, post BlackBerry’s $1-billion deal with Canadian investor Prem Watsa(This story was published in BW | Businessworld Issue Dated 02-12-2013)
Read More
