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Oracle buys Sun Microsystems
New York, April 20
The world's number two software company, Oracle Corporation, today agreed to buy hardware company provider Sun Microsystems Inc for $7.4 billion, or $9.50 a share, in cash, pushing the software company into high-end computing system.

Monetary Policy
RBI unlikely to cut key rates
New Delhi, April 20
Despite the Indian industry pushing the apex bank, RBI, to cut key interest rates, it is highly unlikely that there would be any move on interest rates tomorrow when the annual credit policy is announced.

Lowers growth forecast
Mumbai, April 20
The RBI has painted a cautious picture of the country's economy slowing down in the coming months. Ahead of the bank's annual economic policy review tomorrow, the RBI, quoting the Central Statistical Organisation, predicted that India's Gross Domestic Product would grow a tad above 5 per cent in the year 2009-10, lower than estimates of 6 per cent made earlier. GDP growth has been seen lowering from 9 per cent in the past year to 7 per cent before being reset lower.

Murthy to continue as Satyam CEO
Tech Mahindra deposits Rs 2910 cr;  open offer today
Hyderabad, April 20
IT firm Tech Mahindra today formally took over management control of the fraud-hit software giant Satyam Computer Services and deposited Rs 2,910 crore for a 51 per cent stake in the company.



EARLIER STORIES



Mention nominee’s name on passbook, RBI tells banks
Chandigarh, April 20
Tracing the nominee of a bank account holder, fixed/term deposit holder or locker hirer. The apex regulatory bank, RBI, has now asked all banks to indicate the name of the nominee on the bank passbook, statement of account and fixed deposit receipts.

Tata Tele to spend $2 b on capex in FY ’10
Tata Teleservices managing director Anil Kumar Sardana (L) poses with Kanwalinder Singh, president Qualcomm India, at the launch of Quickfinder AGPS service in New Delhi on Monday. New Delhi, April 20
Looking at increasing its presence in the world’s fastest-growing telecom market, telecom operator Tata Teleservices has drawn up a capital expenditure plan of $2 billion for the current fiscal (FY'10), especially for its upcoming GSM-based mobile services which will be launched in a few weeks.

Tata Teleservices managing director Anil Kumar Sardana (L) poses with Kanwalinder Singh, president Qualcomm India, at the launch of Quickfinder AGPS service in New Delhi on Monday. Tribune photo: Manas Ranjan Bhui 


A model stands next to a BMW AC Schnitzer car at the Shanghai International Auto show on Monday.
A model stands next to a BMW AC Schnitzer car at the Shanghai International Auto show on Monday. — Reuters

Global IPO value dips 95%
New Delhi, April 20
There has been a lull in the primary market scenario across the world, with the global IPO value registering a decline of 95 per cent at $1.6 billion so far this year. According to global deal tracking firm Dealogic, the "global IPO volume stands at $1.6 billion via 53 deals in 2009 compared to the $37.3 billion raised via 255 deals in 2008 YTD".

Recession to hit airlines’ profit
Hyderabad, April 20
The airline industry is set to face further losses in the current financial year due to the ongoing recession. The private players, who comprise of 75 per cent of the domestic aviation market, will have to bear the brunt of losses, experts at an international symposium here said.

 





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Oracle buys Sun Microsystems

New York, April 20
The world's number two software company, Oracle Corporation, today agreed to buy hardware company provider Sun Microsystems Inc for $7.4 billion, or $9.50 a share, in cash, pushing the software company into high-end computing system.

"We expect this acquisition to be accretive to Oracle’s earnings by at least 15 cents on a non-GAAP basis in the first full year after closing. The business will contribute over $1.5 billion to Oracle’s non-GAAP operating profit in the first year, increasing to over $2 billion in the second year," Oracle president Safra Catz said in a statement.

The deal comes a month after IBM abandoned its bid to buy Sun. Most analysts see the deal strengthening Oracle's position against IBM.

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," Oracle CEO Larry Ellison said.

The impact of this acquisition in India, where both companies are present for a long time, is not clear at the moment. An Oracle spokesperson said they did not comment on country-specific operations.

Oracle is one of the largest multinational employers in India with more than 25,000 employees. Sun Microsystem has 1,200 employees in India.

The per share price of $9.5 is 42 per cent more than Sun's closing price on April 17.

"This (the deal) would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," Catz said.

"There are substantial long-term strategic customer advantages to Oracle owning two key Sun software assets: Java and Solaris. Java is one of the computer industry's best-known brands and most widely deployed technologies, and it is the most important software Oracle has ever acquired," the statement said.

The Sun Solaris operating system is the leading platform for the Oracle database, Oracle's largest business, and has been for a long time.

With the acquisition of Sun, Oracle can optimise Oracle database for some of the unique, high-end features of Solaris.

"Oracle and Sun have been industry pioneers and close partners for more than 20 years," Sun chairman Scott McNealy said.

The board of directors of Sun Microsystems has unanimously approved the transaction. The deal is anticipated to close this summer, subject to Sun stockholders' approval, certain regulatory approvals and customary closing conditions.— PTI

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Monetary Policy
RBI unlikely to cut key rates
Bhagyashree Pande
Tribune News Service

New Delhi, April 20
Despite the Indian industry pushing the apex bank, RBI, to cut key interest rates, it is highly unlikely that there would be any move on interest rates tomorrow when the annual credit policy is announced.

There are many reasons for the status quo by the RBI. The inflation in the wholesale price index is showing weekly dip. The near-zero inflation rate is prevalent because the same period last year saw very high inflation rate as the commodity prices were shooting through the roof on account of speculation in the world commodity market, and in India. When compared to the commodity prices now, which are at a more realistic level, the inflation looks negative. The fact, however, remains that consumer price index, the prices of food and vegetables are still ruling at 9-10 per cent. Hence the situation of too much money chasing too few goods, as inflation is defined, continues to be a party spoiler and the apex bank will be wary of releasing more liquidity into the system if it has to rein in inflation.

Another reason, bankers say, is that there is an ample liquidity in the system but the demand for credit is lukewarm. There is a conventional reason for this also, which is that till monsoon, the industrial production is slightly slow, and only after the first quarter, the production picks up and so does the demand for credit.

Most of the production in India takes place depending on how the monsoon has behaved and the companies ramp up production based on this performance. However, this time, the lukewarm response has also been because of inventory piling up due to slowdown in sales in the past two quarters.

The companies are also waiting for commodity prices to come down further and it is expected that inflation will touch negative. The companies will start sourcing raw material once the prices hit rock bottom, which is yet to come. The credit demand will also depend on this factor, add bankers.

Moreover, there has been a slowdown in the industrial production, as can be seen in the Index of Industrial Production (IIP), which has been negative in the second and third quarter of 2008-09. What the RBI will see is the performance of industrial production in the fourth quarter of 2008-09 and if there is no rebound, then the action will be taken on interest rates, say bankers. This means that interest rate cuts, if any, will take place only at the end of the first quarter review of the RBI’s policy.

Besides this, there has been a good growth in rural demand due to high minimum support prices and bumper crop production. In addition to this, the meteorological department has recently predicted good and timely monsoon, which means that crop production and demand of credit from rural sector is likely to grow in the coming quarter.

Another reason, bankers say for the status quo is that the full effect of the two economic stimulus packages and drastic rate cuts by RBI done previously, has still not been seen on the economy. There has been an infusion of Rs 4,00,000 crore since October 2008 into the economy. Bankers say that the full effect of the packages and rate cuts cannot be seen in just two months ( last package was announced in January 2009).

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Lowers growth forecast
Shiv Kumar
Tribune News Service

Mumbai, April 20
The RBI has painted a cautious picture of the country's economy slowing down in the coming months. Ahead of the bank's annual economic policy review tomorrow, the RBI, quoting the Central Statistical Organisation, predicted that India's Gross Domestic Product would grow a tad above 5 per cent in the year 2009-10, lower than estimates of 6 per cent made earlier. GDP growth has been seen lowering from 9 per cent in the past year to 7 per cent before being reset lower.

The RBI, which has cut rates by 400 basis points since October last, said lending rates by banks have begun to fall. The RBI was also hopeful that the stimulus packages announced by the government would help boost the economy. "While private consumption and investment are witnessing moderation, the fiscal stimulus along with other committed expenditures of the government could, however, arrest the moderation in growth," the RBI said.

The central bank sounded positive that India's agricultural sector would remain buoyant. "In the wake of a near-normal long range monsoon forecast of the IMD during the South-West monsoon season 2009, the prospects for agricultural production remain satisfactory," the RBI said. The apex bank was also hopeful that inflation would be under control as commodity prices globally rule low. The RBI was, however, concerned that consumer price inflation continued to remain high despite reduction in the wholesale price inflation.

"The transmission of lower inflation from the wholesale level to the retail stage had emerged as a key issue for monetary policy," RBI said. The higher level of consumer price inflation as compared to WPI inflation in recent months could be attributed to higher prices of food articles which have higher weight in CPI, RBI added.

The RBI noted that the turmoil in the global financial markets had badly affected the inflow of foreign debt though FDI investment continued to be robust. "The adverse impact of the global financial market turmoil was also felt in terms of reduced inflow of the long and short-term debt and reversal of portfolio inflows. A positive development was, however, relative resilience of FDI inflows ($31.7 billion in April-February 2008-09) in the face of reversal of capital flows, reflecting the attractiveness of India as a long term investment destination," RBI said.

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Murthy to continue as Satyam CEO
Tech Mahindra deposits Rs 2910 cr;  open offer today
Suresh Dharur
Tribune News Service

Hyderabad, April 20
IT firm Tech Mahindra today formally took over management control of the fraud-hit software giant Satyam Computer Services and deposited Rs 2,910 crore for a 51 per cent stake in the company.

Of the total amount deposited in the escrow account, Rs 1,756 crore is for 31 per cent stake and Rs 1,150 crore is for 20 per cent through open offer which will begin tomorrow, Satyam Board chairman Kiran Karnik told reporters after the board meeting in which Tech Mahindra officials and Mahindra Group chief Anand Mahindra were the invitees.

“Satyam will remain a standalone unit for the foreseeable future and its leadership will also continue to drive operations. It is going to be a very strong and viable entity,” Anand Mahindra said after interacting with the six-member government-appointed board of the beleaguered IT firm.

Asserting that restoring financial health of Satyam was his top priority, Mahindra hoped that the company would win back clients and clinch new deals.

Vineet Nayyar, vice-chairman and chief executive of Tech Mahindra, said the new chief financial officer (CFO) would be named in the next few weeks. He did not rule out the possibility of layoffs.

“Now I can’t say anything. The company has to be viable and we will work at it. This (layoffs) will be the last option. Our first priority is to make the company financially viable,” Nayyar said.

Stating that an integration team was already in place, Nayyar said the company was on the lookout for a CFO and was hopeful that they will have a new CFO in the next few weeks.

The new buyer said ASR Murthy would continue as the CEO of the company. Murthy, appointed as CEO by the government-appointed board, has expressed his willingness to continue.

Meanwhile, Karnik said the six directors appointed to the board by the government would continue in their posts till further orders from the Company Law Board. Tech Mahindra will appoint up to four more members.

The board has submitted a list of 100 key Satyam employees to Tech Mahindra who would continue in their posts. No decision had been taken yet on the continuation of Ram Manyampati, who was the interim chief executive after disgraced former chairman B. Ramalinga Raju stepped down.

All financial resources required for the acquisition were raised through the local markets and non- banking financial companies, apart from internal resources and issue of NCBs, commercial papers and through receivable, Anand Mahindra said.

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Mention nominee’s name on passbook, RBI tells banks
Ruchika M. Khanna
Tribune News Service

Chandigarh, April 20
Tracing the nominee of a bank account holder, fixed/term deposit holder or locker hirer. The apex regulatory bank, RBI, has now asked all banks to indicate the name of the nominee on the bank passbook, statement of account and fixed deposit receipts.

In a letter issued to all banks, RBI has asked the banks to introduce a position regarding nomination facility on passbooks, statement of accounts and fixed deposit receipts. “The name of the nominee may be mentioned on these documents, if the holder agrees to do so. In case the holder does not want the name of nominee to be printed on these documents, the banks must at least record on the face of the passbook the position regarding availment of nomination facility with the legend — Nomination Registered,” says the regulatory bank.

These directions will go a long way in helping innumerable dependents of account/fixed/ term deposit/locker holders, who have to take to legal recourse for claiming the amount that lawfully belongs to them. In case the nominee has not been appointed by the holder, his next of kin not only have to fight a long legal battle to avail the benefits, but also spend huge litigation costs.

It is learnt that if the customer declines to fill the nomination form while opening the account, the banks are supposed to explain the advantages of nomination. However, if the customer still declines to avail the nomination facility, he will have to give it in writing to the bank.

RBI has also proposed that banks should have a system to acknowledge the receipt of a duly completed nomination form/ cancellation and/or change in nomination. Earlier, some banks had such a system in place, but did not give this in writing to their customers, depositors and locker-hirers. RBI has said that such acknowledgement should be given to all customers, irrespective of the act that it is demanded by the customers or not.

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Tata Tele to spend $2 b on capex in FY ’10
Tribune News Service

New Delhi, April 20
Looking at increasing its presence in the world’s fastest-growing telecom market, telecom operator Tata Teleservices has drawn up a capital expenditure plan of $2 billion for the current fiscal (FY'10), especially for its upcoming GSM-based mobile services which will be launched in a few weeks.

"We have a capex of $2 billion in FY'10 for our GSM services, which will be launched in a few weeks from now," Tata Teleservices managing director Anil Sardana said here during the company's conference to announce its new value-added services.

Tata Teleservices would launch its GSM services initially in the southern region of the country and then will move to eastern part, Sardana said.

The launch from Tatas would make it the second private telecom company offering services on both CDMA and GSM platforms, after Reliance Communications (RCom). RCom launched GSM services earlier this year. State-run telecom companies, BSNL and MTNL are also offering both technologies.

Meanwhile, Tata Teleservices announced the launch of a unique Quickfinder A-GPS (Assisted Global Positioning System) service. The first-of-its-kind location-based service will be available exclusively to Tata Indicom subscribers, and is powered by Qualcomm’s QPoint solution and gpsOne technology integrated into Qualcomm chipsets.

QuickFinder will deliver advanced location-based services, enabling consumers and enterprises to pin-point locations of interest or track vehicles and consignments from origin to destination in real time.

To begin with it would be available with Blackberry 8830 World Edition and MotoRAZR V3 handsets.

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Global IPO value dips 95%

New Delhi, April 20
There has been a lull in the primary market scenario across the world, with the global IPO value registering a decline of 95 per cent at $1.6 billion so far this year. According to global deal tracking firm Dealogic, the "global IPO volume stands at $1.6 billion via 53 deals in 2009 compared to the $37.3 billion raised via 255 deals in 2008 YTD".

There was very little activity in the United States and the EMEA (Europe, the Middle East and Africa) region, while there was no activity at all in the European region.

Some of the firms braving the weak primary market include US software firm Rosetta Stone, which will raise $115 million in an IPO, while Vodafone Qatar is expected to price its IPO this month for raising $952 million.

Apart from them, there were no IPOs by European issuers since Resolution Ltd raised $970 million via Bank of America-Merrill Lynch, Citi and HSBC on December 5, 2008, Dealogic added. — PTI 

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Recession to hit airlines’ profit
Suresh Dharur
Tribune News Service

Hyderabad, April 20
The airline industry is set to face further losses in the current financial year due to the ongoing recession. The private players, who comprise of 75 per cent of the domestic aviation market, will have to bear the brunt of losses, experts at an international symposium here said.

“Most of the private airlines are going through unacceptable levels of losses. Markets are under extreme price competition. Bulk of the growth has come from low price points, but disappeared when airlines attempted to raise fares to break-even,’’ senior general manager of Jet Airways Gilbert George said.

He was speaking at a three-day symposium on “Opportunities and challenges facing aviation industry in Indian subcontinent’’ organised by the Vaughn College of Aeronautics & Tech, USA, National Aerospace Laboratories and city-based Sreenidhi Institute of Science & Technology (SIST).

Participating in various technical sessions at the event, christened as “Aerofest-2009”, the industry experts felt that the airline industry was plagued by myriad problems, including high aviation turbine fuel prices, rising labour costs, shortage of skilled labour, rapid fleet expansion and intense price competition among players.

International Air Transport Association (IATA), the industry body, expects cargo traffic to fall 13 per cent, passenger traffic to go down by 5.7 per cent and airline revenues to decline by 12 per cent or $63 billion in 2009.

"The Indian aviation industry has transformed from being a regulated and poorly managed sector to an open, friendly and strategically important industry for the country’s economy. However, rapid growth resulted in resource crunch and the infrastructure is not in line with expansion," managing director, South Asia, Airbus, Aajay K Mehra said.

Like the previous recessions that had hit travel markets, the ongoing crisis is expected to continue for some more time and IATA said the traffic growth above 4 per cent was not possible until 2011.

“Economic forecasts imply that airline traffic will remain below the previous trend over the medium-term, with passenger travel forecast to be 9 per cent lower by 2016 than pre-crisis industry forecasts," the IATA said.

Meanwhile, Centre for Asia Pacific Aviation estimated that $30 billion would be spent for construction of airports by 2020. Similarly, $80 billion will be invested in aircraft fleet augmentation over the next 10 years and $120 billion will be spent over the next 15 years to meet India’s aviation needs.

SIST director, M Narasimham said the current financial environment across the globe required a careful review of the status of the aviation industry. The Indian Civil Aviation Ministry has forecast a growth of up to 80 million passengers by 2020 and the target is to double the figure over the next decade.

The symposium provided a platform for industry leaders and academicians to share their perspectives to deal with the current challenges and deliberate on short-term and long-term scenarios.

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BRIEFLY

TCS Q4 net falls 2.1 pc to Rs 1,333 cr
Mumbai
: The country's top software exporter, Tata Consultancy Services, on Monday reported a 2.1 per cent decline in its net profit at Rs 1,333 crore for the fourth quarter ended March 31, 2009. The revenue for the fourth quarter stood at Rs 7,172 crore, down 1.40 per cent quarter-on-quarter basis, the company said. The consolidated net sales in 2008-09 stood at Rs 27,812.88 crore, up 21.65 per cent over the previous year.— PTI

Shikha Sharma is Axis Bank CEO
Mumbai
: Private sector lender Axis Bank on Monday said its board has recommended the appointment of Shikha Sharma, currently chief of ICICI group's life insurance business, as its next managing director and CEO. The appointment of Sharma would be for a period of five years, the bank said.— PTI

Bajaj Finserv, Allianz form JV
Mumbai
: Marking its foray into the mutual fund business, Bajaj Finserv, the financial services arm of Bajaj Group, on Monday said it has entered into an agreement with Germany-based Allianz Global Investors to set up an asset management joint venture firm in the country. Under the agreement, Allianz would hold a 51 per cent stake in the joint venture firm, while the remaining 49 per cent stake would be with the Indian partner, Bajaj Finserv said in a filing to the BSE. — PTI

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