Mumbai, March 2
The boards of Reliance Industries (RIL) and Reliance Petroleum Ltd (RPL) today formally approved the merger of the two companies that would create the world's largest refining complex at Jamnagar in Gujarat.

As per the merger formula approved by the two boards, share holders of Reliance Petroleum would be offered one share of Reliance Industries for every 16 shares held by them. At present, RIL holds 70 per cent of Reliance Petroleum's shares. In all, RIL will issue 6.92 crore new shares to the shareholders of RPL.

The merger process is to be completed in three to six months' time. It comes into effect from April 1, 2008, according to the two companies.

In a statement announcing their respective boards' approvals, Reliance Industries Ltd said the merger would help the company sharply reduce costs from the very first year of operations. RPL began trial operations of its refinery in December last. Full-fledged production is due to commence in April.

Executives of RIL pointed out that the merger was an indication of the ambitious plans of the petrochemical and oil producing giant. "This merger is about size. We aimed to create a larger integrated energy major that can take on projects much larger than before," chief financial officer Alok Agarwal told reporters.

Agarwal added that the merged entity would be able to drive huge bargains while purchasing crude oil from global producers. "When you look at two large refineries co-located next to each other, the... synergies are tremendous,” Agarwal added.

Explaining the benefits for shareholders of RIL and RPL, Agarwal added that RIL would be getting a new refinery with minimum project risk, while RPL shareholders get a slice of a well-performing company.

However, the news of the merger was received negatively by the markets as the shares of both RIL and RPL tanked. Particularly irked were RPL subscribers who had purchased the company's shares at the height of the bull run in late-2007 and 2008. The value of RPL has fallen by more than a third since its highs. RIL hasn't fallen this much, moan investors in the RPL.

On the whole, analysts were optimistic of the combined entity's prospects. In a statement released here, Standard & Poor’s said the proposed merger would further enhance RIL's global scale of integrated production facilities and improve its strong competitive position in petrochemicals and oil refining.

Reliance Petroleum's 580,000 bpd refinery along with RIL's existing 660,000 bpd refinery at Jamnagar would be able to process 1.24 million barrels per day of oil.

The new refinery would be able to process the heavier crude that is available cheaper globally and thus increase RIL's margins, analysts said.

RIL also announced that it would buy out the stake of American oil major Chevron in RPL. Chevron holds a five per cent stake in RPL and RIL would pay it Rs 60 per share, the price originally paid by it to acquire the stake. The total outgo to buy out Chevron would be Rs 1350 crore.

Following the acquisition, the promoters' stake in RIL would fall to 47 per cent from 49 per cent.

New Delhi, March 2
India’s exports witnessed sharp fall in January as the global downturn slowed demand for ‘made-in-India’ goods. Exports in January 2009 fell by 15.9 per cent to $12.38 billion as compared to $14.72 billion in January 2008.

Imports also shrank 18.2 per cent from a year earlier to $18.4 billion. Much of this could be related to oil imports that have contracted 47.5 per cent from a year earlier in January to $4.5 billion, while non-oil imports fell 0.5 per cent to $13.9 billion.

The trade deficit narrowed to $6.1 billion from $7.6 billion in December and $7.8 billion a year earlier.

As the recession paces up in Europe and US, which are the key markets for Indian products, the effect can be seen in declining exports, say experts.

Responding to the trade figures, A Sakthivel, president, Federation of Indian Export Organisations (FIEO), said the decline in exports was by far the largest since October 2008, when the negative trend commenced. “These figures indicate further slowdown in next few months unless bold decisions are taken by the government to make exports competitive,” he said.

The sectors which took the most severe drubbing during the month include textiles, handicrafts, gems & jewellery, leather, plastics, metals and rice, as per the initial estimates brought out by the Commerce Department earlier this month. The early estimates had painted a darker picture by putting the drop in exports at 22 per cent.

The FIEO reiterated its demands for increase in drawback and DEPB rates, abolition of FBT and exemption from service tax besides neutralisation of higher costs of credit.

Total value of exports for the period April-January (2008-09) was $144.26 billion as against $127.45 billion in the first 10 months of 2007-08 registering a growth of 13.2 per cent.

Trade Minister Kamal Nath revised India’s export target for the current fiscal downwards to $170-175 billion from $200 billion fixed earlier. The minister is, however, optimistic that in the next fiscal, it will be possible to meet the $200 billion target. India exported goods worth $162 billion in 2007-08.

New Delhi, March 2
India today lifted the ban on importing toys from China provided they conform to international safety norms. India had earlier on January 23 banned the import of Chinese toys for six months on grounds of public health and safety.

According to a public notice by the Commerce Ministry, the import of toys from China will be allowed if they conform to the standards prescribed in "ASTM F963" or "ISO 8124 (parts I - III) or IS 9873 (parts I - III)". These regulations primarily deal with safety and health hazards.

The government further said that the imports from China will have to be accompanied by a requisite certificate from laboratories accredited to the International Laboratory Accreditation Cooperation.

Following the restrictions on toys, the Chinese media had reported that Beijing was contemplating dragging India to the WTO challenging the ban. The toys market in India is estimated at Rs 2,500 crore. — PTI 

London, March 2
Europe's largest bank HSBC will be cutting as many as 6,100 jobs in America, as the entity has decided to close down majority of its business network for consumer finance segment. The job losses come as the bank would cease to write new consumer finance business through the HFC and Beneficial brands in the US.

Household Bank is a trading name of HFC Bank Ltd, which is a member of the HSBC Group.

"... we will close the majority of the HFC and Beneficial-branded US branch network, regrettably with the loss of 6,100 jobs. This will result in a restructuring charge of $265 million in the first half of 2009," HSBC today said in a statement while announcing its annual results.

The firm has reported a pre-tax profit of $9.3 billion for the full year 2008, a decline of 62 per cent as compared to the year-ago period.

HSBC attributed the decision not to write new consumer business, to lack of home equity, the deteriorating outlook for house price appreciation and very limited refinancing opportunities available to this customer segment in the near term.

For North America, the company reported a loss of $15.5 billion, including the goodwill impairment charge of $10.6 billion in Personal Financial Services. — PTI 

Mumbai, March 2
The Indian rupee today ended at an all-time low of 51.93/94 against the American dollar, cheaper by 1.58 per cent from the last close, due mainly to heightened worries about continued capital outflows from the equity market.

Dealers at the forex market said a sharp slide in local stocks was the main cause of concern as foreign funds are likely pull out from the weak equity market.

The exchange market witnessed fairly wide movements in a range of 51.50 and 51.95 during the day after resuming lower at 51.50/55 a dollar from its last weekend's close of 51.12/14 a dollar.

They said declining exports also weighed on the rupee sentiment. India's exports fell for the fourth straight month due to the global slowdown, affecting dollar inflows into the Asia's fourth-largest economy. — PTI

Chandigarh, March 2
The apex regulatory bank, RBI, has suggested banks to be cautious about remittances and other financial instruments received from certain countries in West Asia and Africa, because of deficiencies in anti-money laundering legislation (AML)/combating of financial terrorism regime in these countries.

The directions come in the wake of statement issued by Financial Action Task Force (FATF), an inter-governmental body for development of policies to combat money laundering and terrorist financing, which has pointed out gross deficiencies in anti-money laundering legislation in Uzbekistan, Iran, Pakistan, Turkmenistan, Republic of Sao Tome and Principe and northern part of Cypress.

The FATF report says that though Pakistan has adopted an anti- money laundering legislation, the remaining deficiencies in Pakistan’s AML system constitutes a money laundering/financing of terrorism vulnerability in the international financial system. The report also raises concern over similar risks posed by Republic of Sao Tome and Principe.

This comes in the wake of recent suggestion made by the USA, asking India to work towards becoming a full-fledged member of FATF. Though Parliament has recently passed the Prevention of Money Laundering (Amendment) Bill, the US State Department has suggested that India should make necessary legislative amendments to bring its anti-money laundering and counter terrorism finance regime in conformity to FATF.

The US State Department had suggested that given the number of terrorist attacks in India and the fact that in India hawala is directly linked to terrorist financing, India should prioritise cooperation with international initiatives that provide increased transparency in alternative remittance systems.

It is estimated that remittances to India sent through legal, formal channels in 2007-2008 was to the tune of $42.6 billion, while funds transferred through the billion dollar hawala market are estimated to be around 30 to 40 per cent of the formal market.

New Delhi, March 2
The downturn in the automobile sector seems to be easing off with most of the automotive companies showing a major jump in sales during the month of February.

While the country’s largest car manufacturer, Maruti Suzuki India Ltd (MSIL), recorded its highest-ever sales in the month of February, country’s largest two-wheeler manufacturer, Honda Motors Ltd, reported a 24 per cent jump in sales.

Similar was the case with the country’s second largest car manufacturer, Hyundai Motor India Ltd (HMIL), which reported a 45.31 per cent jump in domestic passenger car sales.

According to a statement released by MSIL, the company reported a 24.08 per cent rise in its total sales during February at 79,190 units compared with 63,822 units in the same month last year.

After September last year, MSI's sales had declined drastically for the next three months by 7.1 per cent, 27.4 per cent and 10 per cent, respectively. In January, the company's sales, however, rose by 5.39 per cent.

The domestic sales of MSI stood at 70,625 units in February compared to 59,311 units in the same month a year-ago, up by 19.08 per cent, the company said.

MSIL registered the highest ever exports at 8,565 units as against 4,511 units in the corresponding month last year, a jump of 89.87 per cent.

HMIL reported a 45.31 per cent jump in domestic passenger car sales at 21,215 units during February as against 14,600 units a year ago. The company's cumulative sales (including exports) during February were up by 31.91 per cent at 38,254 units compared to 29,001 units in the same month a year ago.

Its exports for the month rose by 18.32 per cent at 17,039 units compared to 14,401 units during the same month previous year.

Two-wheeler maker Hero Honda Motors reported a 24 per cent jump in its total sales for the month of February, at 3,29,055 units, as compared to 2,65,431 units in the same month last year.

Another two-wheeler maker Yamaha Motor also reported an almost three-fold increase in sales during February at 15,033 units as against 5,746 units sold in the same month last year.

However, Bajaj Auto Ltd said there was a 16.94 per cent fall in its motorcycle sales in February at 1,31,785 units as against 1,58,662 units in the same month last year. BAL's exports also plummeted by 19.70 per cent at 50,738 units in February from 63,182 units a year ago.

BRIEFLY

Fidelity ups stake in Satyam
New Delhi: Fidelity has raised its stake in embattled Satyam Computer Services by 0.27 per cent to 10.17 per cent through open market purchases, it said in a regulatory filing to the stock exchange on Monday. Engineering firm Larsen & Toubro holds about 12 per cent of Satyam and is the single-largest shareholder of the fraud-hit firm, whose board is in the process of inviting interests from potential bidders. — Reuters

P&S Bank, Maruti in pact
New Delhi: Public sector lender Punjab & Sind Bank on Monday joined hands with the country's largest carmaker, Maruti Suzuki, to offer retail finance facilities for car buyers. "This tie-up arrangement for car financing shall have focused attention on rural and semi-urban areas in the state of Punjab, Haryana, J&K, Chandigarh and NCR Delhi, where the bank is having a strong presence," Punjab & Sind Bank said in a statement.— PTI

Allahabad Bank donates Rs 1 cr
Chandigarh: K R Kamath, chairman & managing director of Allahabad Bank, on Monday handed over a cheque for Rs 1 crore to External Affairs Minister Pranab Mukherjee in Kolkata as a donation to the Prime Minister's National Relief Fund. The amount represents one day's wage contributed by staff members and management of the bank. — TNS

PepsiCo launches Nimbooz
Chandigarh: PepsiCo India launched its lemon-flavoured drink, Nimbooz, here on Monday. Alpana Titus, executive vice president- flavours, said with the launch of this drink, the traditional lime water, they were hoping to capture a market of one billion cases. This is almost double the size of the packaged soft drinks market in India. “We will be launching a massive marketing strategy of providing free samples to people to popularise this drink, besides educating people about the quality of packaged lime water,” she said. — TNS

Yes Bank to expand network
Chandigarh: Yes Bank will be opening 130 new branches across the country by March 2010, with almost 70 of these branches in North India. This was said by Ravi Shankar, country head, direct marketing and cash management, while announcing its next-gen retail banking services across all its 117 branches. — TNS