Business Standard
MONDAY, 18 APRIL 2011
22 PAGES IN 2 SECTIONS
MUMBAI (CITY)
`3.50
Volume XV Number 212
Published simultaneously from Ahmedabad, Bangalore,
Bhubaneswar, Chandigarh, Chennai, Hyderabad, Kochi,
Kolkata, Lucknow, Mumbai, New Delhi and Pune.
MARKET METER
(How markets performed
last week)
Index on *One-
Apr 15 week currency
SENSEX 19,387 -0.3
NIFTY 5,825 -0.3
DOW JONES 12,342
NASDAQ 2,765
-0.3
-0.6
HANG SENG 24,008 -1.6
NIKKEI 9,592 -1.8
FTSE 5,996 -1.0
DAX 7,178 -0.5
*Change (%) over previous week
[IN BRIEF]
CHINA RAISES
RESERVE RATIO
China raised banks’
required reserves on Sunday
for the fourth time this year,
extending the fight against
excessive liquidity and
stubbornly high inflation in
the world’s second-largest
economy. +14
Global rebalancing
The Reserve Bank of India
has said global rebalancing
will require deficit
economies to save more
and consume less while
depending more on
external demand. +8
RIL board meeting
Next week, on April 21,
when the board of Reliance
Industries (RIL) meets,
RIL’s plans for the financial
sector will be high on the
agenda and final details of
the deal with DE Shaw
would be discussed. +4
Growth target
Prodded by Prime Minister
Manmohan Singh, the
Planning Commission is
likely to come out with a
target of 10 per cent
average annual economic
growth rate for the 12th
Five-Year Plan (2012-13 to
2016-17). +6
ZTE plans for India
Despite security concerns
about the use of Chinese
telecom equipment in
India, ZTE Corporation has
said it is mulling a
manufacturing plant in the
country to tap into the
growing market, especially
3G services.
Hazare on Lokpal Bill
In an apparent softening of
stand, Anna Hazare has said
Parliament is supreme and
he will accept its decision
on the Lokpal Bill. +5
1Q&A1
‘We acquire for
either input needs
or new markets’ +2
NARESH NAYYAR
MD & CEO, ESSAR OIL
BS SPECIAL
DIGITAL CONSUMER
DOODLING @
GOOGLE
Adds more fun, colour
to its homepage +11
BRAND WORLD
STAR SETS A NEW
FREQUENCY +10
Redefines rules with
HD, fresh programming
Change (%) on
Dec 31, 2010 www.business-standard.com
Local in US
$
-5.5 -4.7
-5.1 -4.3
6.6
4.2
6.6
4.2
4.2 4.2
-6.2 -7.9
1.6 6.3
3.8 13.0
Source : Bloomberg
SBI TO MAKE LOANS
DEARER, OTHERS
TO FOLLOW SUIT
Set to increase its base rate by 25 basis points
PARNIKA SOKHI
Mumbai, 17 April
S
TATE Bank of India
(SBI), the country’s
largest lender, is set to
increase its base rate —
the benchmark rate for all loans
— by 25 basis points. Top SBI
officials said the rate hike may
happen even before the Re-
serve Bank of India’s (RBI’s)
annual policy review scheduled
for May 3.
SBI’s base rate, which is at
8.25 per cent, is the lowest
among major banks. Most oth-
er public sector banks have set
their base rates at 9.5 per cent.
The base rate of ICICI Bank,
which is the largest private sec-
tor lender, is at 8.75 per cent.
Bankers said other banks
will increase their base rates if
SBI goes ahead with the pro-
posed hike.
“We (SBI) are looking at re-
vising the base rate. We need to
increase it as the cost of funds
has gone up. The decision will
be taken in the asset-liability
committee meeting this
month,” an official said, adding
this is necessary to protect net
interest margins (NIMs). A 25
basis points rate hike is a pos-
sibility, he added.
According to the official, the
cost of funds has gone up as the
bank offered high rates for de-
posits, both for retail and bulk
deposits, in the last couple of
months. Most of the banks had
offered higher rates on deposits
during the last quarter of the
previous financial year to meet
their yearly targets. Besides,
offering home loans at a lower
rate has exerted additional
pressure on SBI’s margin.
Banks were also funding
their deposit base via certifi-
cates of deposits (CDs) at high
Tatas plan `1.2-lakh-cr
investments in India
BS REPORTER & PTI
Mumbai, 17 April
UNPERTURBED by a series
of scams hitting India Inc in
the recent past, salt-to-soft-
ware conglomerate Tata
Group has reaffirmed its India
commitment, lining up mega
investments in the domestic
power and steel sectors.
The group will be investing
up to a whopping `1.2 lakh crore
($27 billion) in the next five years
across sectors in the domestic
market with an aim to double its
current revenues to `6.64 lakh
crore ($150 billion) by then.
The current turnover of the
group is nearly $68 billion, up
from about $8 billion 10 years
ago. In 2009-10, about 57 per
cent of its revenues of $67.4 bil-
lion came from domestic
operations.
The Tata Group, which has
over 90 operating companies,
will put in half of the planned
investment in the power sec-
tor, while the other significant
portions will be in the steel and
automobile sectors.
In an interview to news
agency PTI, Tata Industries
Managing Director Kishor A
Chaukar said, “We have be-
come a significant player glob-
ally in each of the sectors that
we are present in. In the next
five years, the pace of growth
of the group will continue...
The current investment as-
sessment for the next five
years is around `1.1 lakh crore
to `1.2 lakh crore.” Tata In-
dustries is one of the invest-
ment arms of Tata Group.
THE STRATEGIST SEPARATE SECTION
NOKIA PREPARES FOR A BITTER
BATTLE FOR MARKET SHARES
SBI’S BASE RATE, AT 8.25 PER CENT,
is the lowest among major banks
rates in the last quarter of 2010-
11. According to the latest RBI
data, banks issued over Rs
70,000 crore of CDs in the fort-
night ended March 11, 2011.
This was at a time when short-
term rates were hovering
around the 10 per cent level.
The increase in cost on the
liabilities side will eat into mar-
gins, if not passed to the cus-
tomers. According to a report
by ICICI Securities, the full-
quarter impact of higher lend-
ing rates and subsequent de-
posit rate hike by banks in the
third quarter will be felt in the
last quarter.
“We had expected NIMs (of
SBI) to come off gradually, by
40 bps over the next four quar-
ters. However, the pace of in-
crease in system deposits im-
plies that the NIM compression
can be greater and could be
front-loaded as well. Although
TATA SHINING
„ Group to invest `1.2 lakh
crore in five years in India
„ Projected group turnover by
2016: $150 billion
„ Group turnover in 2009-10:
$67.4 billion
„ 57% of revenues came
from India in 2009-10
THE INDIAN BIG & MIGHTY LIST
RIL
Current Target
turnover
$80 billion
$ 44 billion by 2020
When asked about the ex-
pected revenue of the group
after the investment is made,
Chaukar said, “It will be more
than double in less than five
years. I think it will be around
$140 billion to $150 billion.”
Just to put the numbers in
perspective, in 2010, US multi-
national conglomerate Gener-
al Electric Company (GE) had
made $104.6 billion in rev-
enues. On a trailing 12 months
basis, US energy giant Exxon
Mobil had a $342.6-billion
turnover in December 2010,
while Toyota Motor Corpora-
tion, the global automaker, had
revenues of a little over $228
billion in FY2010. British-Aus-
tralian mining giant Rio Tinto
Group clocked $56.5 billion in
the same period.
RIL Group, India’s largest
private sector enterprise, is al-
WORLD P14
THE RAIDER IN WINTER:
CARL ICAHN AT 75
Union Finance Minister and Congress leader Pranab Mukherjee with actor Sharad Kapur (left) waves during the Assembly election
campaign for his son, Abhijit Mukherjee, in Birbhum district of West Bengal on Sunday. PHOTO: REUTERS RELATED REPORT ON P5
Sebi moves apex court on Sahara
N SUNDARESHA SUBRAMANIAN Sahara India Real Estate to prevent any ex parte deci- tion, which had restrained the
Mumbai, 17 April Corporation and Sahara Hous-
ing Investment Corporation
sions (those taken in the ab-
sence of one of the parties to a
two firms from raising money
from the public.
SBI has raised retail deposit THE Securities and Exchange are under the capital market case) on the matter. Turn to Page 16
rates since June 2010 to a near- Board of India (Sebi) has filed regulator’s scanner for raising Sahara said on Friday it had
peak level of 9.25 per cent, the a caveat in the Supreme Court money from the public through filed a special leave petition in www.business-standard.com
full impact of this has not yet fil- claiming that any petition on optionally fully convertible the Supreme Court seeking re- ALSO READ:
tered through into deposit its ongoing case against two Sa- debentures. lief against the Allahabad High APRIL 16: Sebi public notice against
costs,” a report by Morgan hara group entities cannot be A Sebi counsel said the Court’s April 7 order vacating Sahara group companies
Stanley said. SBI’s NIM was at decided without its knowledge. caveat, filed on Saturday, aims a stay on an earlier Sebi direc- www.business-standard.com/432438/
3.40 per cent in the first nine
months of 2010-11.
Banks have resisted a rate
hike since RBI’s policy rate
hike of 25 bps in mid-March.
With inflation hovering around
9 per cent, much above the
comfort zone of the central
bank, more hikes in policy rates
are expected.
Tighter liquidity conditions
in the coming days may also
push up interest rates. Gold-
man Sachs had said in a recent
report that liquidity may re-
main tight due to government
borrowing, high credit-deposit
ratio and a weaker balance of
payments.
THE GLOBAL BIG &
MIGHTY LIST
Revenues in 2010
Exxon Mobil: $342.6 billion
GE: $104.6 billion
Toyota: $228 billion
Source: Yahoo finance, Wikipedia
ADITYA BIRLA GROUP
Current Target
turnover
$65 billion
$30 billion by 2015
so a diversified group with an
annual revenue in excess of
$44 billion. RIL Chairman
Mukesh Ambani in his last
AGM speech had said his aim
was to make RIL a $80-billion
powerhouse by 2020 through
its ongoing diversification
drives into power, shale gas
and financial services.
Even Aditya Birla Group,
currently a $30-billion corpo-
ration, has ambitious plans to
grow the empire with a target
of $65 billion in group turnover
by 2015.
Chaukar said Tata Group’s
investment war chest had been
planned essentially for the In-
dian market. Other than the cash
guzzling power and steel space,
significant investments would
go into the auto, telecommuni-
cations and chemicals sectors.
Turn to Page 16