The Hindu Business Line : Weekly News Round-up

SEBI has cautioned FIIs that overseas lending and borrowing of Indian securities could attract sterner measures. The regulator said it disapproved of this particular activity of FIIs, which caused selling pressure in the cash market in India. The lending/borrowing is being monitored and if necessary, stronger measures will be taken by SEBI as considered appropriate, it said.

The Reserve Bank of India on Monday slashed its key short-term interest rate, Repo rate, by 100 basis points to 8 per cent, as part of its ongoing efforts to ease the pressure in the credit market. It has not effected any further changes in its half yearly monetary policy review meeting held on Friday. The sharp 100 basis point cut in repo with immediate effect is seen as a clear signal to banks to cut interest rates. The repo is the rate at which RBI lends money to banks against the collateral of government securities.

The rupee continued its free fall against the dollar during the week and crossed the psychologically important mark of 50 in an extremely volatile market. The domestic unit opened on Monday at 48.71/73, touched a low of 50.15 and later closed on Friday at 49.95/97. With FIIs pulling out money from the domestic stock markets, there is huge demand for the greenback. The Indian currency depreciated by nearly Rs 1.06 paise this week tracking the losses in the domestic equity indices. Commenting on the fall, the Union Commerce and Industry Minister, Mr Kamal Nath, said, there was no need to panic. According to him, the Rupee slide was an aberration, arising out of heavy dollar outflow.

Reliance Industries said its second quarter net profit rose 7 per cent, the lowest for any quarter in two and a half years as narrowing refining margins muted profit growth. Net profit for the quarter stood at Rs 4,122 crore, against Rs 3,837 crore a year ago. The gross refining margin fell to $13.4 a barrel from $ 15.6 a barrel in the year-ago quarter. Refining accounts for over 60 per cent of the company's turnover. Revenue for the quarter rose 38 per cent, to Rs 46,113 crore from Rs 33,402 crore. Exports were up 51 per cent at Rs 29,823 crore.

Continuing with its declining trend, the annual Wholesale Price Index-based inflation was at 11.07 per cent during the week ended October 11, below the previous week's annual rise of 11.44 per cent, on account of an across-the-board dip in prices of vegetables, milk etc., Government data showed on Thursday. Inflation in the same period of previous fiscal was at a significantly lower level of 3.07 per cent.

Tata Consultancy Services reported flat growth in profit after tax for the quarter ended September 30, 2008 as it suffered losses related to forex hedging, and made provisions for two customers impacted by the US sub-prime crisis. The company reported a 1.5 per cent growth in net profit, at Rs 1,271 crore against Rs 1,251.6 crore in the same quarter a year ago. On a sequential basis the company's net profit was down 1.5 per cent. Revenues, however, were up by 25.3 per cent on a year ago basis to Rs 6,953 crore.

Steel Authority of India Ltd announced an 18 per cent increase in its profit after tax for the second quarter of the current fiscal at Rs 2,009.6 crore, propelled by a 33 per cent increase in the production of value added and special steel products. Total turnover for the quarter stood at Rs 13,544 crore. With domestic steel prices on a downturn following declining international prices, the company feels that margins would come under pressure in the third quarter

The Union Finance Minister, Mr P Chidambaram, on Monday sought Parliament's nod for issuing oil bonds worth Rs 65,942 crore to oil marketing companies towards estimated "under recoveries" on account of sale of sensitive petroleum products. Approval has also been sought for providing fertiliser subsidy, amounting to Rs 38,863 crore.

The Anil Ambani Group company Reliance Natural Resources Ltd has asked Reliance Industries Ltd to pay the difference between the price at which Reliance Industries will sell gas to other buyers ($2.34 per million British thermal unit), and the rate at which RNRL is seeking supply of gas. The suggestion was made by RNRL counsel Mukul Rohatgi as an interim solution to the ongoing dispute between RIL and RNRL over supply of gas. Mr Rohatgi submitted to the Division Bench of the Bombay High Court that it may ask Reliance Industries to pay to RNRL the difference in price for three years.

Digital satellite radio broadcasting company, WorldSpace Inc, has filed for bankruptcy protection in a US court after failing to obtain new financing. According to reports, the Maryland-based company has listed a debt of $2.1 billion and assets of $307.4 million as of June 30, 2008. WorldSpace has sought bankruptcy protection so as to be able to raise fresh funds to repay its debts.

WorldSpace is present in over 130 countries worldwide. It launched its India services in 2000 with over 35 free-to-air channels.

Compiled by M J Madhavan
Podcast by S Vasudevan