The Hindu Business Line : Weekly News Round-up

Attempting to tame inflation from its 13-year high, the RBI sharply raised key interest rate last Tuesday, which is expected to trigger an across-the-board hike in bank lending rates, including corporate, home and consumer loans.

The central bank marked up Repo by 50 basis points to 9 per cent, and the CRR by 25 basis points to 9 per cent.

While the hike in repo was with immediate effect, the increase in CRR takes effect from the fortnight beginning August 30, 2008.

ICICI Bank and HDFC hiked home loan rates by a massive 0.75 percentage points, moving quickly to preserve margins in the wake of RBI raising key interest rates.

ICICI Bank hiked the floating reference rate for consumer loans to 14.25 per cent from 13.5 per cent, with effect from July 31.

HDFC's floating rate home loans will be priced at a minimum of 11.75 per cent, and the fixed rate remains unchanged at 14 per cent.

Larsen & Toubro and Punj Lloyd figure in the list of several international companies that have teamed up to implement the multi-billion dollar construction project for two new modern cities, one each in Djibouti and the other at Yemen, and a massive rail-road-pipeline network across the Red Sea, connecting the two cities.

This huge project, conceptualised by Sheikh Tarek Bin Laden, brother of Osama Bin laden, who owns Al Noor Holding Investment, will be responsible for its execution in phases spread over 12-15 years.

Despite making a huge provision for marked-to-market losses, SBI reported a 15-per cent increase in first quarter net profit.

The country's largest bank made a whopping Rs 1,549-crore provision (net of NPA write-back) for the quarter ended June 30, against Rs 159 crore in the same period last year - nearly a ten-fold increase.

Net profit increased to Rs 1,640.79 crore from Rs 1,425.81 crore in the year-ago period. The bank's net interest income improved to Rs 4,817 crore from Rs 4,202 crore.

Larsen & Toubro has posted a 33 per cent rise in net profit at Rs 502 crore for the first quarter of the fiscal as revenues rose and margins from its key engineering and construction (E&C) business looked up.

Gross sales rose by 53 per cent at Rs 6,993 crore.

While several public sector banks reported flat growth in profit and some even losses, Mumbai-based Bank of India's net profit surged by 78 per cent to Rs 562 crore in the quarter ended June 30, 2008, against Rs 315 crore in the corresponding period last fiscal.

The bank achieved this by focusing on core banking operations, prudent NPA management and keeping the investment portfolio to the minimum.

Provisional figures released by the Department of Commerce show that the country's exports during June 2008 at $14.66 billion were 23.5 per cent higher than the level of $11.87 billion in June 2007. In rupee terms, exports touched Rs 62,790 crore in June 2008, which was 29.7 per cent higher than the value of exports of Rs 48,400 crore in June 2007.

Tata Steel Ltd posted a 21.78-per-cent increase in its standalone net profit at Rs 1,488.40 crore for the quarter-ended June 30, against Rs 1,222.11 crore logged in the same period last fiscal. This is despite a Rs 303.42-crore loss accounted for on the foreign exchange front.

Total income rose 43.48 per cent at Rs 6,177.25 crore for the quarter, against Rs. 4,305.33 crore in the corresponding quarter of last fiscal.

Inflation, to cap it all, rose to 11.98 per cent for the week ended July 19, higher than the previous week's rise of 11.89 per cent. The year-on-year inflation rate surged on account of hike in prices of manufactured goods.

The annual rate of inflation stood at 4.65 per cent during the corresponding week a year ago.

Compiled by M J Madhavan
Podcast by S. Vasudevan