An effort by Stockyard in association with mantra consulting

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10 June 2008 Issue 6

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 Economic Triggers

Exports excel in April; up 31.5 per cent

India began fiscal 2008-09 with an impressive 31.5 per cent growth in exports, but surge in oil
prices pushed the import expansion to 36.6 per cent in April. Exports grew to 14.4 billion
dollars in April 2008-09, against 10.95 billion dollars a year ago. Imports, fueled by a big rise in
purchase of crude oil from abroad, went up to 24.27 billion dollars against 17.76 billion
dollars. Trade deficit widened to 9.87 billion dollars in the opening month of the current fiscal
against 6.81 billion dollars in the same period last year. Oil imports amounted to 8.02 billion
dollars, showing a rise of 46.2 per cent over the corresponding month last year.

The export performance in April was seen as commendable in the backdrop of the impact of
strong rupee on exporters' margins in 2007-08 when the overall growth was limited to 23.02
per cent. While rupee started losing ground since May, the positive impact on imports could
be seen in the next few months.

RBI sees some moderation in food prices

Food prices in India have shown some signs of moderation in 2008, Reserve Bank of India
Governor Yaga Venugopal Reddy said. While increase in food prices was led by wheat during
2006, rice and edible oil also joined the price rise during 2007. “However, food prices have
exhibited some moderation during 2008. The wholesale price index of food articles during
2008/09 as on May 17 has increased by around 2.5 percent as compared with 3.1 percent in
the previous year during the corresponding period," he said.

India's annual inflation rate measured by the wholesale price index rose to a 3-1/2 year high
of 8.1 percent in the week to May 17. Analysts expect it to rise above 9 percent in early June
after an increase in state-set retail fuel prices this week. Rising global food prices have
prompted Indian policy makers to take a slew of steps to try to contain local prices, including
banning exports of some commodities and cutting import duties on some food items.

"Overall, some abatement of global prices, indication of better domestic supplies and
addition of buffer stocks, including the series of measures already taken by the government
on the supply side, are expected to yield results in the months to come," Reddy said.

Last month, the OECD and the UN's FAO food agency said food prices would remain high over
the next decade even if they fall from current records, meaning millions more risk further
hardship or hunger. Indian food grains production grew at 1.2 percent during 1990-2007,
slower than an annual rate of increase in population of 1.9 percent in the same period,
government data showed.
India: 4th most attractive Investment destination:
India has been rated as the fourth most attractive investment destination in the world,
according to a global survey. The survey conducted by Ernst and Young found the South Asian
country being preferred after China, Central Europe and Western Europe in terms of
prospects of alternative business locations and the criteria that drives the perceptions of
respondents.

While China received 47 per cent votes, Central Europe and Western Europe got 42 per cent
and 33 per cent votes respectively, says the survey of 834 respondents across the world. With
30 per cent votes, India emerges ahead of the US and Russia, which receives 21 per cent votes
each. About 21 per cent investors voted in favour of India as one of the top three innovative
countries, ahead of UK, France, Finland and Sweden. The US with 50 per cent votes and China
with 34 per cent votes stand out in investors’ minds as the most innovative countries. Around
22 per cent investors ranked India second as a preferred global location for relocating
projects, following China that received 36 per cent votes. According to the survey, investors
pay more attention to political and legal stability and telecom infrastructure than labour
costs.

Corporate can borrow up to $50 m overseas: Relaxing ECB norms,

boosting Inflows
With pressures of excessive foreign exchange inflows receding, the Centre has relaxed
external commercial borrowing (ECB) norms for companies, besides hiking foreign
institutional investors’ (FII) exposure limits in Government securities and corporate bonds.
Companies can now undertake borrowings of up to $50 million for incurring rupee
expenditure for permissible end uses under the Reserve Bank of India’s Approval Route. In
the case of borrowers in the infrastructure sector, the limit has been fixed even higher at
$100 million.

Currently, borrowers could avail themselves of ECB of only up to $20 million for rupee
expenditure for permissible end-uses requiring prior approval from the RBI. In other words,
not only has the ECB limit been hiked from $20 million to $50 million, but a separate higher
limit of $100 million has been created for companies in the infrastructure sector.
Simultaneously, the Centre has relaxed the all-in-cost ceilings for ECBs which applies to
borrowings both under the Approval as well as Automatic routes.

For borrowings with average maturity of 3-5 years, the all-in-cost ceiling over six-month Libor
has been raised from 150 basis points to 200 basis points. In the case ECBs above 5 year
tenor, the same has been increased from 250 to 350 basis points. The Centre also enhanced
the FII investment limits in Government Securities from $3.2 billion to $5 billion and for
corporate bonds, from $1.5 billion to $3 billion.

Impact of curbs
The Government had in August 2007 imposed curbs on use of ECB monies for undertaking
rupee expenditures in view of the surge in capital inflows, leading to strengthening of the
rupee and excess domestic money supply. More than $20 millions corporate borrowing was
made to retain the proceeds abroad or use them solely for imports and other foreign
currency expenditures.

During 2007-08, the RBI’s foreign currency assets rose by $107.31 billion, whereas they have
gone up by only $4.89 billion in the current fiscal as on May 16. Also, unlike last year, the
rupee has in recent weeks depreciated against the dollar, which means there is less case for
discouraging capital inflows, officials said.

All other aspects of ECB policy such as $500 million limit per company per year under the
Automatic Route, eligible borrower, recognized lender, end-use of foreign currency
expenditure for import of capital goods and overseas investments, average maturity period,
and reporting arrangements remained unchanged.
 Indian Economy
Speaking Indicator
Crude above 120$/bbl: The biggest threat to Economy:

Expecting crude to correct to the level of 110 within 15-30 days

When crude was at below 90 level, economy grew at 9% around.
I expect crude at 110+ to erode growth by 1%, at 120+ to erode growth by 2.5%,
assuming level to sustain for entire year.
Growth rate expected : 8% (crude below 110);6-6.5%(crude 120 level)

Crude prospect:

US & EU demand falling

China overheating
Demand to fall overall
Possibly crude will be at 110-115 level in a month(60% chances)

Other triggers:

ECB relaxation upto $ 50 million +

RBI & Govt. will do their best to increase foreign inflow in the country to:

Tame inflation
Reduce crude shock
Increase growth rate without risking inflation

Rupee Movement:

Volatility is the rule of the game

Convertibility panel sees Rupee to be at 48 levels
RBI is uncomfortable above 45
Rupee to be in range 40-45
Target H2: 40-41
Target Q2: 41-42

Foreign inflow likely to resume in near to mid –term

India Story changing

Foreign Institutions not very impressed

Fundamentals need a push upward

Inflation:

To be 6.5% around in a month

Q2 average inflation :6%
Food inflation already contained in my views
Only risk to inflation is high crude prices
Industrial commodities prices are also cooling down in past 15 days or at least
stabilizing.

Growth:

If inflation reduces to 6% level, and economic scenario doesn’t improve, RBI may
think loosening of monetary policies.
US Fed preparing itself to fight with inflation as it believes that it has won the war
against growth concerns and recessions.
Interest rate hike in US likely.
That will strengthen $ against major currencies.
Crude is about to take a hit downward as $ appreciates.
 World Economic Outlook

Testimony of the top Policymaker

Following is the excerpt of speech of

Fed Chairman Ben S. Bernanke

At the International Monetary Conference,

Barcelona, Spain (via satellite) on June 3, 2008.

We are here giving the text in original, for our

readers. The remarks are the US Policymakers
perspective of the recent messed up scenario of
global economic crisis. The write up is interesting in the way that it tries to unfold the
reasons and explanations of what went wrong in the process that could have been avoided.

According to Mr Barnanke, several longer-term developments served as prologue for the

recent turmoil:

The first of these was the U.S. housing boom, which began in the mid-1990s and picked up
steam around 2000. Between 1996 and 2005, house prices nationwide increased about 90
percent. During the years from 2000 to 2005 alone, house prices increased by roughly 60
percent--far outstripping the increases in incomes and general prices--and single-family home
construction increased by about 40 percent. Starting in 2006, the boom turned to bust. Over
the past two years, building activity has fallen by more than half and now is well below where
it was in 2000.

A second critical development was an even broader credit boom, in which lenders and
investors aggressively sought out new opportunities to take credit risk even as market risk
premiums contracted. Aspects of the credit boom included rapid growth in the volumes of
private equity deals and leveraged lending and the increased use of complex and often opaque
investment vehicles, including structured credit products.

A third longer-term factor contributing to recent financial and economic developments is the
unprecedented growth in developing and emerging market economies. From the U.S.
perspective, this growth has been a double-edged sword. On the one hand, low-cost imports
from emerging markets for many years increased U.S. living standards and made the Fed's job
of managing inflation easier. Moreover, currently, the demand for U.S. exports arising from
strong global growth has been an important offset to the factors restraining domestic demand,
including housing and tight credit. On the other hand, the rapid growth in the emerging
markets and the associated sharp rise in their demand for raw materials have been--together
with a variety of constraints on supply--a major cause of the escalation in the relative prices of
oil and other commodities, which has placed intense economic pressure on many U.S.
households and businesses.

In the financial sphere, the three longer-term developments are linked by the fact that a
substantial increase in the net supply of saving in emerging market economies contributed
to both the U.S. housing boom and the broader credit boom. The sources of this increase in
net saving included rapid growth in high-saving East Asian countries and, outside of China,
reduced investment rates in that region; large buildups in foreign exchange reserves in a
number of emerging markets; and the enormous increases in the revenues received by
exporters of oil and other commodities. The pressure of these net savings flows led to lower
long-term real interest rates around the world, stimulated asset prices (including house
prices), and pushed current accounts toward deficit in the industrial countries--notably the
United States--that received these flows.

The current economic and financial situation reflects, in significant part, the unwinding of
two of these longer-term developments--the housing boom and the credit boom--and the
continuation of the pressure of global demand on commodity prices.

The housing boom came to an end because rising prices made housing increasingly
unaffordable. The end of rapid house price increases in turn undermined a basic premise of
many adjustable-rate subprime loans--that home price appreciation alone would always
generate enough equity to permit the borrower to refinance and thereby avoid ever having
to pay the fully-indexed interest rate. When that premise was shown to be false and defaults
on subprime mortgages rose sharply, investors quickly backpedaled from mortgage-related
securities. The reduced availability of mortgage credit caused housing to weaken further.

The losses from subprime mortgages have been significant in themselves, but their greater
impact was to trigger the end of the broader credit boom. Notably, as subprime losses forced
the credit rating agencies to downgrade what had been highly rated mortgage-backed
securities, investors also came to doubt the reliability of ratings that had been awarded to
other highly complex securities. As a result, investors became much more cautious and
reversed their aggressive risk-taking of the credit boom period. The resulting pullback affected
a much broader range of securities, including leveraged and syndicated loans, asset-backed
commercial paper, commercial mortgage-backed securities, and a variety of structured credit
products. Large financial institutions, especially in the United States and Europe, were
particularly affected by these events, having reported a total of roughly $300 billion in write-
downs and credit losses. These institutions have also been forced to bring onto their balance
sheets the assets of sponsored investment vehicles that can no longer be financed on a
standalone basis.
The Outlook
With this broader perspective as background, I turn now to a brief discussion of the current
situation and outlook. Broadly speaking, the functioning of financial markets has improved of
late, but conditions remain strained and some key funding and securitization markets have
shown only tentative signs of recovery. Some borrowers, such as highly-rated corporations,
retain good access to credit, but credit conditions generally remain restrictive in areas related
to residential or commercial real estate.

Residential construction continues to contract, and the overhang of unsold new homes
remains large, although it has declined some in absolute terms. Consumer spending has thus
far held up a bit better than expected, but households continue to face significant headwinds,
including falling house prices, a softer job market, tighter credit, and higher energy prices, and
consumer sentiment has declined sharply since the fall. Businesses are also facing challenges,
including rapidly escalating costs of raw materials and weaker domestic demand. However,
the strength of foreign demand for U.S. goods and services has offset, to some extent, the
slowing of domestic sales.

Inflation has remained high, largely reflecting continued sharp increases in the prices of
globally traded commodities. Thus far, the pass-through of high raw materials costs to
domestic labor costs and the prices of most other products have been limited, in part because
of softening domestic demand. However, the continuation of this pattern is not guaranteed
and will bear close attention. Futures markets continue to predict--albeit with a great range
of uncertainty--that commodity prices will level out, a forecast consistent with our
expectation of some overall slowing in the global economy and thus in the demand for raw
materials. A rough stabilization of commodity prices, even at high levels, would result in a
relatively rapid moderation of inflation, consistent with the projections of Federal Reserve
governors and Reserve Bank presidents for 2009 and 2010.
 Corporate Radar

Adhunik group plans Jharkhand plant

Neepaz Infrastructure and Developers (NIL) of the Adhunik Group has applied to the
Jharkhand government for an MoU for setting up a 16 million tonne pellet plant to meet the
raw material requirement of steel producers in and around the state. The company has
proposed also to develop a 2500 acre industrial park at Padampur in West Singhbhum district
which has major iron-ore mines.

Mineral-rich Jharkhand was deemed by the company as an ideal location as the project,
estimated to cost Rs 5,850 crore, required significant quantities of iron-ore fines and would
serve the growing raw material requirement of steel mills in the state. Adhunik Group would
develop the land and provide it to players interested in setting up units there.

Power would be provided at a concessional rate for an arrangement of 25 years through

group company which is setting up a 1000 mw thermal power plant in the state.

The other facilities of the proposed project are a benefication plant and a township. The
industrial park if developed would attract huge investment in the state and generate direct
and indirect employment for around 20,000 people.

Gujarat NRE to raise coal output in Australian mines

Gujarat NRE Coke Ltd, which is increasing coal production at its mines in Australia, is planning
to acquire half-a-dozen bulk carriers to bring coal to India.

"We are in the process of acquiring on lease charter six bulk carriers with the option of buying
them out. These carriers are now under construction in shipyards and will be progressively
put into use from 2010 onwards," said the vice-chairman and managing director, Arun Kumar
Jagatramka.

The company is planning to increase its production substantially from the two Australian
mines it owns in the next couple of years and is evaluating plans to ramp up processing
capacities in India to deal with the increase in production, he said.
Gujarat NRE Coke is aiming to garner a substantial share in the 25 million tons coke market
globally, which is expected to triple to 75 million tons by 2011-12. It is the largest non-captive
manufacturer of low-ash metallurgical coke in the country.

"Originally, we planned to mine about 7 million tons coking coal. However, considering the
ongoing prices of coal, we have upped the target. We are currently revising our plans and
would mine about 10-12 million tons of coal as part of our desire to emerge among the top 10
players in the sector globally."

Gujarat NRE produced about 9 lakh tons of coking coal during 2006-07, compared with 6 lakh
tons the year before. The soaring coking coal prices were perceived as speculative
phenomena initially but it is increasing firmly.

Asked about the plans for the company's coking units in India, Jagatramka said, "We are
evaluating our plans for Indian units. We might expand the existing capacity or set up new
facility. We don't see coal prices coming down in the near future."

Gujarat NRE is the first and only Indian company to own and operate coal mines in Australia.
Through its listed subsidiaries in Australia, the company operates two mines in the New South
Wales region, with combined resources of more than 560 million tons of premium quality
hard coking coal and their ownership accords the company the much sought after cover
against erratic supplies.

Mine ownership also provides a hedge against global price fluctuations. The company also has
strategic investments in resource prospecting companies in Australia.
Gujarat NRE’s plan draws ire of Greens

Company's plans to excavate under Sydney’s water catchment area have raised hackles of the
Australia's Greens party and other environment groups.

Plans presented to the Australian Securities Exchange earlier this month show that Gujarat
NRE wants to mine within 500 meters of the Cataract Dam near Wollongong.
Greens MP Lee Rhiannon said mining so close to the dam could cause the wall to crack and
could lead to gas leak.

Gujarat NRE acquired Elouera Colliery from BHP in December and merged it with neighboring
Avondale Colliery to create a single giant mine.

The company's documents say it intends to extract 350,000 tonne of coking coal this year,
rising to 1.3 million tonne in 2010, with longer-term targets of 2.5 to 3 million tonne a year,
by mining areas close to the dam.

Sujana close to acquiring sponge iron unit

Hyderabad-based Sujana Metal Products is close to acquiring a sponge iron unit and one billet
plant over the next couple of months.

The acquisition will be done in the next two months," Sujana Group of Companies' Group
Director, V S R Murthy, said. Both the target companies are based in Hyderabad.

Rohit Ferro to buy 60% in PSP's mining firms

Rohit Ferro Tech Ltd (RFTL) signed a Memorandum of Understanding (MoU) with PSP group of
Indonesia to acquire 60 per cent stake in the two coal mining companies of the PSP group.

The first company has mining concession for thermal coal with coverage area of 3,843
hectares and the mine has estimate reserves of 20 million tonnes of coal. The second
subsidiary has rights for coking coal in area spread over 3,851 hectares and coal reserves are
estimated at 15 millions. The concession areas of both the companies are located in the
Central Kailmanthan area of the Indonesian archipelago.

Besides meeting RFTL's current coking coal requirements and requirement for company's
proposed 110 captive power plants, company will utilize the output of mines for commercial
sales.
Orissa govt clears Rs 2200 cr Apeejay project

The High Level Clearance Authority (HLCA) of the Orissa government headed by Chief Minister
Naveen Patnaik today cleared the Rs 2200 crore ship building yard and ship repairing project
of the Apeejay Shipping Ltd. It also decided to commit Rs 2700 crore expenditure to the Union
government towards infrastructure development for the Petroleum, Chemicals and Petro-
Chemicals Investment Region (PCPIR) at Paradip.

The ninth HLCA meeting chaired by Patnaik cleared 10 projects in the steel, power and petro-
chemical sector which were earlier approved by the State Level Single Window Clearance
Authority (SLSWCA) headed by the chief secretary.

Talking to the media persons after the HLCA meeting, chief secretary Ajit Kumar Tripathy said,
the ship building yard and repairing project will be implemented through a joint venture
company named as Oceanic Shipyard Ltd (OSL) formed by APJ Shipping and Bharati Shipyard.

The project will be implemented in three phases with an estimated investment Rs 2200 crore
in the first phase. Official sources said, the state government is likely to benefit about Rs.3700
crore over next 25-30 years in the form of taxes and duties. Besides, it will generate direct
and indirect employment opportunities for about 51,300 persons when fully commissioned.

The company has indicated to the Orissa government that it will complete all phases of the
project within 72 months. It has sought 1050 acres of land and the state government has
already accorded the administrative approval for the acquisition of the required land for this
employment intensive project, sources added.

Similarly, the Welspun Power and Steel Ltd's proposal for setting up a 5 million tonne per
annum iron ore beneficiation plant and 3 million tonne per annum pelletisation plant at
Dhamra was given in principle clearance.

While the company had received approval for setting up of a 3 million tonne per annum
(MTPA) steel plant at Tangi at an investment of Rs 6103.8 crore earlier, it proposed to set up a
iron ore beneficiation and 3 MTPA palletisation plant at Dhamra. This entails an additional
investment of Rs 1830 crore.

The committee also cleared the capacity expansion plan of the Essar Steel from 4 million
tonne to 6 million tonne per annum along with a 8 million tonne per annum iron ore
beneficiation plant. The company intended to change its steel making technology from the
sponge iron route to blast furnace route.

The project, in its revised form, entails an investment of about 10,724 crore. While the
company requires about 2200 acres of land, it has acquired about 103 acres.
Besides, the proposal of the SMC Power Generation Ltd to expand capacity from 0.5mtpa to
1mtpa, increasing the capacity of MSP Metaliks from 0.25 mtpa to 1 mtpa, enhancement of
steel making capacity of Bhusan Steels from 3.10 million tonne to 9 million tonne per annum
were approved by HLCA.

The proposal of Bhusan Energy Ltd for 2000 Mw thermal power plant at one go, 1000 Mw
thermal power plant by Monnet Ispat and Energy at one go instead of two phases and 1000
Mw thermal power plant at one go also received the nod of HLCA.

About the PCPIR at paradip, Ashok Kumar Meena, managing director, Industrial Promotion
and Investment Corporation of Orissa Ltd (Ipicol) said, HLCA has given in principle approval to
the state's Rs 2700 crore expenditure commitment for infrastructural development for PCPIR.
An estimated Rs 15,275 crore is proposed to be invested in the project.

The Central support for PCPIR is projected at about Rs 5008 crore while the remaining Rs
7517 crore will be mobilized through public-private-partnership (PPP), he pointed out.

Coal Ventures to access coking coal from Australia

The Coal Ventures International (CVI), a joint venture of SAIL, RINL, Coal India, NMDC and
NTPC, is likely to access soon coking coal mines in New South Wales (NSW), Australia.

Minister of State for Steel Jitin Prasada was assured of coking coal linkages from NSW during
his meeting today with NSW Minister for Primary Industries, Energy, Mineral Resources and
State Development Ian Macdonald. Prasada is currently leading a five-member delegation to
Australia.

"Prasada emphasized allocation of mineral resources for Coal Ventures International. Ian
Macdonald assured full cooperation in meeting the requirement of this company," a
statement by the Steel Ministry said today.

The delegation visited some coal mines near Sydney and Wollongong/Port Kembla Coal
Terminal (PKCT) from where a large chunk of NSW coking coal destined for India is shipped.

EIL to form JV with Italian firm

Engineering and consultancy firm Engineers India will enter into a joint venture with Italian
firm Tecnimont SPA and also pick up 30 per cent stake in the new company.

The Cabinet on Thursday approved the formation of the joint venture company and
authorized EIL to pick up 30 per cent stake in the proposed venture, Information and
Broadcasting Minister P R Dasmunsi told reporters after the meeting of the Union Cabinet.
Set up in 1965, EIL provides engineering and technical services to petroleum and other
industries.

For the quarter ended March 2008, EIL posted a net profit of Rs 56.68 crore, compared to Rs
42.52 crore during the same quarter in 2007. Total income for the quarter increased to Rs
287.77 crore from Rs 209.26 crore in the year-ago period. For the year ended March 31, 2008,
the company posted net profit of Rs 194.60 crore, against Rs 142.99 crore a year ago.

Tacnimont SPA is an international EPC contractor with a strong presence in oil and gas,
petrochemical and chemical sector.

The Board also recommended a final dividend of 70 per cent on the paid up share capital.
Shares of EIL were trading at Rs 576 down by 2.12 per cent on the Bombay Stock Exchange.

Nalco to invest INR 40,000 crore in expansion projects

Kalinga Times reported that Orissa based National Aluminum Company Limited has drawn up
ambitious growth plans involving massive investment of around INR 40,000 crore in next 5
years. The proposed investments would be made in alumina smelter and power projects in
Indonesia, South Africa and Iran and Brownfield and Greenfield growth projects within India.

Nalco, which now enjoys more managerial powers and commercial autonomy to chart its own
course in the world market, has decided to start its third phase expansion after the
completion of the second phase expansion work. The second phase expansion is under
implementation at an investment of INR 4092 crore and the same is scheduled to be
completed by 2008 end.

Now, plans are afoot for 3rd phase expansion, which is likely to entail expenditure to the tune
of INR 6000 crore. Under this expansion, the bauxite mining capacity shall be enhanced to
around 90,000 tonnes, alumina refining to 30,000 tonnes, aluminum smelting to 630,000
tonnes and power generation to 1700 MW per annum. The proposed third phase expansion is
likely to entail an expenditure to the tune of INR 6000 crore.

Besides, Nalco also has plans to set up at least two new projects in India. A mines and refinery
complex is being planned in Andhra Pradesh in which the bauxite mines capacity will be 4.2
million tonnes, while the refinery will have a capacity of 1.4 million tonnes. The draft MoU for
the project is under negotiation with the Andhra Pradesh government and the project will
involve an investment of INR 7000 crore.

About overseas project, Nalco has already signed a MoU with Indonesia to set up a 500,000
tonne smelter and a 1250 MW captive power plant. It plans to invest around INR 14,000 crore
in this Greenfield project. Besides, it is exploring the possibilities of setting up a smelter and
power plant in South Africa at an investment of around INR 16,000 crore.
In Iran, a 310,000 tonne smelter has also been planned, in two phases, as a JV with ALPHA.
The MoU for the project was signed in March 2008. The project cost will be approximately
INR 8000 crore.

Adhunik Metaliks 2007-08 net profit up by 3.85% YoY

Adhunik Metaliks has posted net profit of INR 21.90 crore for the January to March 2008
quarter up by 2.9% YoY as compared to INR 21.58 crore during January to March 2007
quarter. Net sales for the quarter surged by 66% YoY to INR 311.92 crore as compared to INR
188.03 crore.

For year ended March 31st 2008, net profit rose by 3.85% YoY to INR 80.45 crore as against
INR 77.47 crore for the year ended March 31st 2007.

UTV new media acquires 76% stake in IT Nation

UTV New Media, the digital media arm of UTV Software communications Ltd, on Monday
announced its foray into the digital media space with the acquisition of a controlling stake of
76 per cent in 'IT Nation', a leading online informediary, for Rs 15 crore.

"UTV New Media envisages an investment of around Rs 120 crore over the next two years
into ... the internet space with a portfolio of 10 portals... UTV will acquire 20,000 music titles,
including Jodhaa Akbar and upcoming Akshay Kumar starrer 'Singh is king'," T N Prabhu, CEO
of UTV New Media said in a statement in Mumbai.

The investment will also include online technology space with IT Nation and in the online
business space with UTVi.com, the business website for the recently launched UTVi business
channel, he said.

The intention is to create digital assets such as images, music, ring tones and videos for the
catalogues. Also in place are relationships and arrangements with 65 mobile operators across
the world to distribute the mobile content, he added.
Visa Steel to invest Rs 10,000 cr

Mineral to metals company, Visa Steel, will be putting up a 2.5 million tonne integrated steel
project in Chhattisgarh at a cost of around Rs 10,000 crore.

Vishambhar Saran, chairman, Visa Steel said, the technical feasibility report was underway
and would be completed by the end of July. Saran was speaking at a press conference to
announce the company's results.

In the first phase, Visa Steel would set up a one million tonne rolling mill, which would cost Rs
500-600 crore. The full project would be completed over a period of 5-6 years.
Vishal Agarwal, managing director, Visa Steel said, the balance would have to be acquired and
the full requirement would emerge once the feasibility report was completed.

The Chhattisgarh plant would produce long products for the domestic market while the Orissa
project would be partly for domestic and export markets.

Agarwal said, "Our strategy remains to establish a globally competitive and world class
integrated facility of special and stainless steel making in Orissa, with captive power
generation and backward linkage of raw materials mines."

Visa Steel is planning to integrate backwards into mining of iron ore, chrome ore and coal.
Iron ore is currently being sourced from Orissa Mining Corporation (OMC) until
commencement of its own mining operations.

So far, Visa has invested around Rs 1,000 crore in pig iron, coke and ferro chrome projects.
Saran said, orders worth Rs 800 crore had been place for further expansion in Orissa.

The 3 lakh tonne sponge iron plant with and the power plants were nearing completion.

A part of the Patrapada coal block at Talcher with 54 million tonne deposit has been allotted
to the company. Visa Steel is also developing a chrome ore deposit through its subsidiary
company, Ghotaringa Minerals Ltd.

The requirement of coking coal is being imported from Australia.

Visa Steel has posted net profit of Rs 20.99 crore for the fourth quarter ended March 2008
from Rs 65 lakhs in the corresponding period last year. The company's revenue for the
quarter under review rose by 78 per cent to Rs 259.68 crore as against Rs 145.98 crore during
the quarter ended March 2007.
It has recorded Rs 682.81 crore revenue for the financial year ended March 2008 as against Rs
537.93 crore in the previous year. Visa Steel's net profit for the financial year ended March
2008 increased by 110 per cent to Rs 43.15 crore from Rs 20.52 crore an year ago.

Vishal Agarwal, managing director, Visa Steel, said, " The growth in revenues and profit for
FY07-08 have been driven by better realization in products like pig iron, coke and
ferro chrome combined with higher volume growth in the coke and ferro chrome
operations."

Srei Infra sub to set up 25,000 IT kiosks

SREI Sahaj e-Village Ltd, a subsidiary of Kolkata-based SREI Infrastructure Finance Ltd (SIFL),
would set up 25,000 IT kiosks to be known as common service centers (CSC) across six states,
with a total investment of around Rs 1000 crore over the next two years. The six states are
West Bengal, Bihar Orissa, Assam, Uttar Pradesh and Tamil Nadu.Under this project, every
centers would provide a bouquet of services starting from e-governance, e-commerce to e-
learning and thereby linking rural areas with the entire world.

"We will set up 25,000 IT kiosks in six states in east and south India, for setting up rural IT
infrastructure, within a span of two years," said Hemant Kanoria, chairman and managing
director of SIFL, said here. "About 25000 village level entrepreneurs (VLE) would run these
centers and they in turn would create direct employment of another 75,000 persons in rural
areas. They would offer services which the government would provide in the rural areas like
birth certificates, land records among others. Srei Sahaj would add the e-commerce and e-
learning products to make it remunerative for the VLEs," he added.

The cost of setting up one kiosk is estimated to be Rs 2.5 lakh of which a VLE would have to
provide Rs 1.25 lakh and the rest would borne by Srei Sahaj. The revenue for each of the
centres is projected at a minimum of Rs 10,000 with in six months from starting the on line
services.

"We have made arrangements with the banks for financing the VLEs," said Sabahat S Azim,
CEO, Srei Sahaj E-Village Ltd.

For on line services the revenue would be shared equally between Srei and VLE.

"Already 1500 centers are operational in West Bengal and by the end of 2009 the number is
slated to go up to 4397 covering 14 districts of the state," Azim added.

This programme is under the national e-Governance Plan (NeGP), which entails setting up of
100,000 centers across the country.
Neyveli Lignite posts higher Q4 net

Neyveli Lignite Corporation's net profit for the fourth quarter of last year was nearly 15 times
as much as in the corresponding quarter of the previous year, but that was more due to a
quirk of accounting rather than performance.

In fourth quarter last year, the company had to make some adjustments for over-provisions
made in the previous years --basically, the company had assumed certain tariffs for its power,
but later, the Central Electricity Regulatory Commission allowed it a lesser tariff. For the full
year 2006-07, NLC had to reduce its profits by about Rs 500 crore on account of the
'adjustments' it had to make. Nevertheless, the company's performance for 2007-08 was
marked by record mining of lignite and power generation. It produced 17.45 billion units last
year compared with 14.77 billion units in the previous year.

NLC's installed capacity will increase from 2,490 MW, between its two stations in Neyveli. By
the end of this year, the installed capacity will go up by 500 MW. The addition will come
equally from expansion at Neyveli and a new plant in Rajasthan.

New projects

NLC's Chairman and Managing Director, S. Jayaraman, said that the Rs 2,030-crore project for
expansion of Thermal Power Station II at Neyveli is underway. The project is to put up two
units of 250 MW each. The first of them will be commissioned this financial year and the next,
a few months later. Lignite for these plants will come from Mine-II, whose capacity is also
being expanded to 15 million tons from 10.5 million tons at a cost of Rs 2,161 crore.

The Rs 1,114-crore thermal power project in Rajasthan will go on stream this year. This
project is for putting up two units of 125 MW each, lignite for which will come from the
Barsingar mine in the State. The mine is also being developed by NLC at a cost of Rs 254 crore.
Feasibility report for the 1,500 MW Jayamkondan project is expected to be ready next month,
Mr Jayaraman said. On the 2,000 MW Hirma project in Orissa, Jayaraman said that the mining
and power generation operations would be done through separate companies.

India becomes 3rd largest importer of Chinese tyres
As Indian tyre manufacturers reel under the
high prices of raw materials like natural
rubber, crude oil and carbon black, they face a
tough challenge from China even as its exports
to India climbs multi fold. According to data
provided by Automotive Tyre Manufacturers
Association, from 39th rank in 2002-03, India
climbed to the 3rd position in 2007. During
April 2007 to February 2008 period, Indian
imports from China surged almost two fold to
1.2 million units from 660,000 units. The
Indian tyre market comprising tyres of cars,
UV, OTR, trucks and buses, is worth INR
20,000 crore currently.
Mr Rajiv Bhudhraja director general of ATMA
said that "The average price of a pair of
Chinese truck tyre is about INR 7,500, which is
significantly lower than Indian prices which
Power demand in India to reach 335 GW by 2017 - Report
According to the McKinsey & Company’s
Electric Power & Natural Gas Practice study,
with soaring crude oil prices, the time has
come for the Indian power sector to explore
substitutes. If India continues to grow at an
average rate of 8% for the next 10 years,
power demands may rise from the present
120 GW to 315-335 GW by 2017, 100 GW
higher than current estimates.
The study said that India is gradually
progressing towards a service led economy
from an agrarian economy. Supply and
production have increased but demand has
doubled. It added that the demand can only
be met through a 5 to 10 fold rise in power
production. This means investments in the
power sector will increase over USD 600
billion in the next 10 years.
Consumer demand across rural and urban
sectors is growing at 14% over the next 10
years, whereas India’s GDP growth is just 8%
Industry Watch
retail at about INR 13,000 to INR 15,000. More
than 100,000 Chinese tyres are imported
every month, totaling to about INR 900 crore
yearly. More alarming is the fact that people
have changed their perspective about
products from China, which was once thought
to be sub standard." He added that "China has
been able to sell radial tyres at such lower
rates to India because of the very low cost of
manufacturing in that country and also due to
under voicing the imports and selling them
without paying VAT here. In addition, China
has huge capacities of radial tyres."
The domestic tyre market consists of leading
players like MRF followed by Apollo,
Bridgestone, CEAT, JK Tyres, Michelin,
Goodyear, among others.
a year. The second reason is the
government’s plan to provide electricity to
everyone by 2012. This means 23 million
below poverty line households should be
added in the power grid. The third reason is
the 24X7 supply of electricity to consumers
and the industrial demand to switch to
expensive diesel based power. When the
demand rises to 335 GW, India’s power
sector will have to generate 415 to 440 GW
for plant availability adjustments and 5%
spinning reserves. Adding 300 GW by 2017
will mean increasing the annual capacity by
30 GW against the current growth capacity
of 9 GW.
The McKinsey & Company’s report,
however, said that India will be able to add
only 160-180 GW by 2017 even in case of
best development trajectory. If these
estimates are to be broken, India needs to
increase its capacity at a fast pace.
 Industry Watch
Mining industry to touch $30 bn by 2012

Country's mining industry is projected to touch over $30 billion (about Rs 1,27,662 crore)
accounting for about 2.5 per cent of the GDP in the next four years, a latest report said.

"Considering India's mineral resources, we believe there is strong potential for further
development and scaling up of the country's mining industry. We believe that the mining
industry could grow to $30 billion plus by FY'12 and reach 2.5 per cent of GDP, if India
develops a conducive regulatory framework and attracts significant investment in
exploration, mine development and infrastructure," a report by financial services firm
Edelweiss stated.

The report on metals and mining pointed out that India has immense natural resources and
is ranked among top 10 globally for deposits in iron ore at 25.2 billion tonnes (BT), coal
257.4 BT and bauxite 3.3 BT, which constitute 3 per cent, 10 per cent, and 4 per cent
respectively of the world's resources. The country also holds leading position globally in
mica (No 1), barytes (No 2), chromite (No 4), kaolin (No 4), and manganese (No 7), the
report said.

"These are significant numbers and imply that India has the potential to develop a scaled
up, world class mining industry. Some progress has been made and in iron ore, for instance,
India ranks third amongst various exporting countries," it said.

Coal Industry in India:

The Indian coal industry is the fourth largest in terms of coal reserves and third largest in
terms of coal production in the world. But despite its huge resource base, till date, India has
not been able to minimize its coal deficit.

Coal has been recognized as the most important source of energy for electricity generation
and industries such as steel, cement, fertilizers and chemicals are major sectors of coal
consumption. So in order to satisfy the coal demand, the Indian coal industry needs more
investment and private players to raise its production level. The coal washeries have to take
bigger role in the industry to produce less moisture and ash based coal to sustain in strict
environment regulations.

Some of the salient points are:

Coal requirement for the power utility will grow at a CAGR of around 10% during 2007-08 to 2011-12.
Private coal washeries have rapidly increased the production of washed non coking coal in India
during 2002-03 to 2006-07.
High coking coal demand by the Indian steel industry and low reserve base has boosted the import of
coking coals.
Coal demand from the Indian cement industry looks bright and it is expected that coal requirement
by the industry will rise steadily from 2007-08 to 2011-12.

Coking coal requirement in steel production is expected to touch over 85.34 million tonnes in 2011-
12.
Banking Sector: Is it in the doldrums of Economic Politics or Political Economy ?
(Based on Moody’s Report)

High Interest Rate and relatively stable growth momentum.

Relatively stable core revenues and sound profitability ratios, which act as a moderately
positive rating driver.
The net profits of all commercial banks increased by around 27 per cent last fiscal and
the core recurring income and profits are rising continuously.
The commercial banks in the country are leveraging the growth opportunity that
currently exists in the country and are enhancing their earning capacity.
The enhanced capacity has worked as a catalyst in strengthening the financial muscle of
banks while as compared to international rates, domestic interest rates are as high as 13
per cent.
The banking sector witnessed a sustained flow of core revenues mainly due to increased
lending activities, both at corporate and small and medium enterprise level.
The fierce competition in the banking sector has put pressures on the net interest
margin of banks, leading to a decline from 2.81 per cent to 2.69 per cent in FY'08.

Banks to maintain high profitability in FY'09

Riding on the back of a high interest rate regime, Indian banks are likely to continue
with their growth momentum in terms of profitability during the current fiscal, rating
agency Moody's said in a report.
"For the moment the rating agency maintains positive stance with rated banks'
relatively stable core revenues and sound profitability ratios, which act as a moderately
positive rating driver," Moody's said in a report titled Banking System Outlook.
The net profits of all commercial banks increased by around 27 per cent last fiscal and
the core recurring income and profits are rising continuously.
“The commercial banks in the country are leveraging the growth opportunity that
currently exists in the country and are enhancing their earning capacity", it said.
The enhanced capacity, the report said, has worked as a catalyst in strengthening the
financial muscle of banks.
As compared to international rates, domestic interest rates are as high as 13 per cent.
The banking sector witnessed a sustained flow of core revenues mainly due to increased
lending activities, both at corporate and small and medium enterprise level.
However, the rating agency said the margins of banks were likely to remain under
pressure due to increasing competition in the domestic banking system.
The fierce competition in the banking sector has put pressures on the net interest
margin of banks, leading to a decline from 2.81 per cent to 2.69 per cent in FY'08.
It also said lesser interference and competition for good-quality credits could exert
some pressure on banks revenue flow.

A desperate call for a second ‘green revolution’
It is not happening the first time, for if we
ask our grand parents, they would tell us
that world has been on the brink of
starvation several other times as well. In
1960S, on one such turning point of human
history, humanity witnessed famine in
several parts of world.However; we saved
ourselves from those difficult times
A massive programme of investment in
agricultural research and infrastructure –
avidly supported by the US out of a cold-war-
fuelled fear that hungry countries could fall
into the arms of the Soviet Union – led to an
explosion in farm productivity. Nations that
never dreamt of being able to feed
themselves were transformed into net
exporters of food. Those efforts, led by
Norman Borlaug, an American agronomist
who was later awarded the Nobel peace
prize, resulted in the development of higher-
yielding seeds and an exceptional expansion
in the use of irrigation, fertilizers and
pesticides in developing countries. By 1968
the jump in farm productivity was so clear –
India, for example, harvested a record wheat
crop, as did the Philippines for rice – that
William Gaud, administrator of the US
Agency for International Development, said
the world was witnessing the “makings of a
new revolution”.
“It is not a violent red revolution like that of
the Soviets, nor is it a white revolution like
that of the Shah of Iran,” Gaud said in a
speech 40 years ago. “I call it the green
revolution,” he added, coining a term that
has long survived him. Yet, like its
counterparts elsewhere on the spectrum,
the green revolution eventually lost
momentum. Today, the world stands on the
Global Food crisis
brink again as agricultural commodity prices
surge, triggering food riots in countries from
Haiti to Bangladesh.
Variations in the food prices across Asia have
implications on the region’s immediate
macro- economic outlook, a latest report by
Standard and Poor’s says.
“Vietnam is by far the most adversely
affected, with consumer prices of food rising
by year-on-year rates for over 20 per cent
every month this year. China and Indonesia
have also had persistent double-digit
increases in food prices, “Standard and
poor’s Asia-Pacific Chief Economist Subir
Gokran said.
Besides, other ASEAN (Association of South
East Asian Nations) countries have seen
relatively modest increases. “In short, while
food prices may be a global problem, at least
in Asia they are clearly a greater problem for
some than for others. According to the
article, ‘short Production Cycles Key to Asia’s
Food Supply Safety’, price index numbers
can distort the realities that consumers face.
Virtually all countries in the region have
elaborate control mechanisms covering
production and distribution of food, which,
among other things, tend to suppress the
reporting of inflationary tendencies that
consumers actually have to deal with.
S&P further said that there are several
macro-economic implications arising from
food-price hikes. Central banks are not in a
position to ease up on liquidity, while
governments’ facing food shortages would
restrict exports, thus creating price pressures
for those countries dependent on imports.
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