News roundup

Geometric Software completes acquisition of US firm

Geometric Software Solutions, provider of product lifecycle management (PLM) services, on Friday said it has acquired 17.74 per cent equity stake in US-based TekSoft Inc, making it a wholly owned subsidiary of the company. However, the company did not furnish any financial details of the acquisition.

The company already held 82.26 per cent stake in TekSoft and with this buy out, the US firm has now become a wholly owned subsidiary of Geometric Software Solutions Inc, it said in a filing to the Bombay Stock Exchange.

Geometric Software Solutions Inc is a wholly owned subsidiary of Geometric Software Solutions, it said. The company had acquired Arizona-based Teksoft Inc in January 2005 to leverage channel management, sales and marketing.

Teksoft would continue to develop, market and also act as the distributor for Geometric's Desktop software products and be the strategic marketing arm for Geometric technologies.




NTPC replaces Dabur India on Nifty, CNX 100 indices

State-run power major NTPC Ltd will replace Dabur India in two indices of National Stock Exchange - S&P CNX Nifty Index and CNX 100 index - from September 24.

The index maintenance sub-committee has decided to exclude Dabur from the two indices and inducted NTPC in its place during its periodic review. The changes would become effective from September 24, the NSE said in a press release.

Besides, the committee excluded fifteen companies such as Aditya Birla Nuvo, United Spirits, Indiabulls Financial Services, Jindal Steel & Power and Bank of India from the CNX Midcap Index.

In their place, 15 other companies such as Essar Steel, Lanco Infratech, Biocon, HT Media, Tata Tea and Yes Bank have been included, the release said.

Further, 10 companies were excluded from the S&P CNX 500 index and in their place 10 other were included namely - Idea Cellular, Sobha Developers, Television Eighteen India and Power Finance Corporation, the release added.

The committee has also announced various changes in sectoral indices. In the CNX Energy Index, Cairn India replaced Neyveli Lignite Corporation while in the CNX IT Index MindTree Consulting replaced Mastek.

Idea Cellular and Financial Technologies (India) replaced Union Bank of India and Oriental Bank of Commerce in the CNX Service Sector Index.

S&P CNX Nifty is the leading index for large companies on NSE and includes 50 stocks. CNX 100 is computed using market capitalisation weighted method, wherein the level of the index reflects the total market value of all the stocks in the index relative to a particular base period.



Jet, Air India in hot chase for US pie

Jet Airways, which recently launched its Mumbai-Brussels-Newark (US) flight, plans to start a Delhi-Brussels-New York service in November this year. Its domestic rival Air India, is planning a non-stop New Delhi-New York service for October this year.

The competition in the India-US sector is hotting up, with domestic airlines competing not only on fares but racing to offer new services on key sectors as well.

A senior official in Jet Airways told Business Line, "We would be commencing Delhi-Brussels-JFK flight in November." And, according to sources, the national carrier plans to start its non-stop flight from Delhi by Octobe r-end.

While Jet Airways already claims to have 90 per cent load factor on its newly launched Mumbai-Brussels-Newark flight, Air India, after a slow start, is hoping for better days for its non-stop Mumbai-New York flight, especially as it has slashed its ticket prices .

Mr S. Venkat, Executive Director Finance, of Air India, said: "Although the load factor is not much as of now, it's a fantastic product and as we progress and people get to know about it, things will change drastically."

As regards the response from the market, Mr Subhash Motwani, Director, Compact Travels, a travel agency, said, "Jet Airways has an advantage over Air India because it can pick up passengers from Brussels and also started with lower fares as compared to the national carrier. Now that Air India has slashed its prices it should pick up."

Ms Anjali Thomas, Vice President of Quest 2 Travel.com India Private Ltd, said: "Air India has a great product, newer aircraft and now that they have lowered prices, the response is likely to go up."

On the issue of Jet gaining over Air India with a halt at Brussels, she said, "I feel if one is young, wants to enjoy on-demand in-flight entertainment system and doesn't mind travelling, Air India would be a good choice, going straight to JFK. If you are old or someone who doesn't mind spending time at a halt, one can opt for Jet."

However, Mr Motwani said that with more airlines coming in the sector, the one offering lowest and best fares would ultimately win. "This is a lean time so only students and business persons travel now. Once the leisure travel season begins, fares would play an important role in determining the winner."



Tata Tea plans to enter Russia, CIS markets

Tata Tea Ltd proposes to enter Russia in a big way. "We're working on setting up a path-breaking venture in Russia and with it in the former CIS countries such as Ukraine, Kazakhstan and other countries which are now on growth path and getting into the European mode," Mr R.K. Krishna Kumar, Vice-Chairman, told newspersons at the end of the company's annual general meeting here on Friday.
50-50 joint ventures

The plan for Russia, as Mr Krishna Kumar explained, would be to launch joint ventures, most probably on 50-50 basis, for undertaking manufacturing and packaging activities. "The markets hold out promise for tea coffee and other value-added beverages," he observed. The initial structure should be in place fairly soon and the joint ventures should be ready by the end of the current fiscal, he said indicating that the Russian outfits should be used to enter other markets in the region.

Tata Tea's proposed entry process started a few years ago with the acquisition of Tetley in the UK and the company is already present in China, Canada, the US and other countries through acquisitions and joint ventures. The joint venture in China would be leveraged to expand operations in South East Asia and Far East. "We're also planning to enter South America," he said.
Focus on US

The company, as it was indicated, was also focusing on the US market which was most attractive from the beverage business point of view. "The Glaceau has taught what we should or should not be doing in the US market," Mr Krishna Kumar said.

Earlier, while addressing shareholders, Mr Ratan Tata, Chairman, said the company was set to transform itself from a plantation company to an integrated well being and beverage company. "It will be Indian-owned global company," Mr Tata observed predicting a very exciting future for the company and substantial addition to shareholders' value.
Resources

Mr Tata discounted the possibility of bonus shares, at least in near future, making it clear that the company's resources would be used to fund acquisitions and expand operations to achieve further growth ultimately benefiting shareholders. The stock split would be considered in future and restructuring and amalgamation would take place at appropriate time, also taking into consideration the tax implications.

The restructuring of the South Indian gardens had yielded desired results and similar exercise was on in respect of the North Indian gardens, hoping similar benefits would follow from the exercise. The produce of these gardens would be bought at auction prices, he said.

Mr Tata estimated Tata Tea's current year's capital expenditure at Rs 15 crore. The rupee appreciation would have negative impact on the company to the tune of Rs 3 crore and on the group to the tune of Rs 10 crore, he added.




Raja for extending tax holiday for IT cos

The IT and Communications Minister, Mr A. Raja, is understood to have supported the Indian IT industry's long-standing demand for extension of the tax holiday beyond 2009. Mr Raja has written to the Finance Minister seeking a "healthy discussion" and also pitched for the tax holiday up to 2019.

Sources said that the Minister felt that an extension would ensure continuous flow of investments in the IT and BPO industry, and fuel the growth in the hi-tech sector which is targeting revenues of $49-50 billion in FY08.

The Indian industry has been demanding continuation of tax concessions under the Software Technology Parks of India (STPI) scheme beyond the sunset clause of 2009. Under the scheme, IT firms housed in a software technology park are exempted from paying tax on their export revenue.

Mr Kiran Karnik, President of software association Nasscom, speaking at a recent BPO summit in Bangalore, had pointed out that extension of tax incentives would partially offset the losses being caused by the rising rupee.

The rupee has risen about nine per cent against the dollar since January 1 this year. That, compounded by wage inflation and visa costs, has put pressure on the IT software and services companies.

However, Finance Minister in this year's Budget did not mention about extending the scheme and, in fact, brought the IT industry under the ambit of Minimum Alternate Tax (MAT).

"Given the intense competition, countries like China, the Philippines and South Africa are wooing IT and BPO companies by offering attractive incentives. The extension of the tax holiday will ensure that India remains competitive in the global IT services map. Moreover, the STPI scheme has fostered entrepreneurship in the sector, as units do not have to be physically located in a specific facility as is the case with SEZs," Mr Karnik argues.

While the IT industry has been seeking extension of the STPI scheme, the debate gathered momentum after the announcement of the SEZ scheme under which units located within an SEZ would enjoy tax benefits.




ONGC-Mittal wins gas block in Trinidad & Tobago

India-born billionaire Lakshmi N Mittal's joint venture with ONGC Videsh has won a gas block in Trinidad & Tobago that is estimated to have reserves of two trillion cubic feet.

ONGC-Mittal Energy won the offshore block NCMA-2 beating Britain's Centrica Plc in Trinidad & Tobago's latest bidding round, industry sources said.

The NCMA-2 block is gas bearing and is estimated to hold at least two trillion cubic feet of gas reserves.

Trinidad & Tobago had in January 2006 offered eight onshore and three shallow marine blocks for bidding. OMEL and Centrica were tied for NCMA-2 when bids came in April this year and Trinidad & Tobago's Ministry of Energy and Energy Industries invited the two to submit new proposals.

OMEL edged out Centrica in revised bids, sources said.

This is OMEL's second biggest success after Nigeria where it had acquired two exploration blocks.

Mittal had in July 2005 inked a joint venture agreement with ONGC Videsh, the overseas arm of state-run Oil and Natural Gas Corp (ONGC), for acquisition of oil and gas fields, refinery business and LNG projects in 27 countries.



BoI reduces interest rates on term deposits

Bank of India, today reduced interest rates on its domestic rupee term deposits.

The rates have been reduced for various maturity terms of 1-year and above for deposits less than Rs 15-lakh and for Rs 15-lakh and above but less than Rs 5-crore, a bank release said here today.

The revised interest rates will be applicable only on fresh deposits and on renewal of maturing deposits with effect from Monday.

For deposits less than Rs 15 lakh and for a maturity of two years to less than three years, the rate has been reduced from 9.50% to 9%.

For three years to less than five years and five years and above, the rates have been reduced from 9.60% to 9.25% and 9.50%, respectively.

The interest rate on floating rate deposit scheme will be 0.25% over the term deposit rates applicable for the relevant tenures of deposits for maturities of three years and above, on the day the deposit is made.

Senior citizens will get an additional 0.5% per annum interest above the card rates on their deposits of six months and above maturity on all deposit schemes uniformally.




Adani plans Rs 1,000cr supply chain fillip

Adani Agri Fresh, part of Rs 20,000 crore Adani group, is planning to invest Rs 1,000 crore in the next couple of years to expand its supply chain network in the country.

The company is planning to expand its network to 25 towns in the country, under its trade brand Farm Pick through which it sells to retailers and wholesellers. The company has already invested Rs 200 crore in the venture, said Ravindra Jain, President, Adani Agri Fresh.

''Adani AgriFresh is setting up a strong integrated supply chain for fruits and vegetables covering sourcing, world class product handling, storage and distribution, to make high quality properly graded fresh produce available to Indian and international consumers. This is being achieved through strong backward integration with farmers for produce availability, developing post harvest management infrastructure and processes and associated supply chain in the states where retail revolution is now unfolding,'' Jain said.

The company supplies fresh produce to the major retailers including Food Bazaar, ITC's Chaupal Fresh, Metro, Heritage (AP and Karnataka), Trinetra (Aditya Birla Group), FabMall, Mother Dairy, Big apple, Namdhari etc, he said.

The company, which sources apples from Himachal Pradesh, currently plans to get into other fruits including mangoes, oranges, pomegranates and vegetables. Ultimately, the company intends to get into processed fruits also, Jain said. AAFL procured over 5,000 tonne of apples in 2006, which is expected to touch 25,000 tonne during the current year.



Australia bans Asian shrimps

Australia has banned the import of raw prawns from Asian countries such as China, Vietnam, Taiwan, Indonesia, Malaysia, Philippines and Thailand, a directive released by the country's import regulator said.

The ban on China and Asean countries may turn out to be a boon for Indian shrimp exporters, as currently the country's exports to Australia are negligible.

Announcing that the ban would be effective next month onwards, Biosecurity Australia (BA) said more stringent environmental safety tests would be required for importing prawn meat and cutlets. Australia banned imports after a survey conducted by the Australian Quarantine and Inspection Service had found that 31 per cent of a sample of prawns, fish, crabs and eels from the Asian countries contained low levels of antibiotics and anti-microbial agents.

The residue was not desirable although it posed no direct risk to human health. The Australian Agriculture minister released the preliminary results of the survey last week and later the ban was announced. The move of the Australian government to introduce quarantine requirements in last June are non-tariff barriers to trade, aimed at protecting the $51 million domestic industry from the $2 billion import industry, according to Thai officials.

China, Vietnam, Taiwan, Indonesia, Malaysia and Phillippines have already brought the issue before the World Trade Organisation (WTO) dispute panel and Thailand would soon join the group.

Thailand is joining the Asean nations in the wake of aborted discussions with BA recently. BA will introduce the new measures for prawn imports from September onwards, by which all raw prawn imports would be banned and additional environmental safety tests will be required for prawn meat and cutlets.

The WTO dispute panel will consider the issue in its meeting scheduled in October. Thailand believes that the Australian decision was onerous and scientifically unsound.

It is likely that the Asean nations will seek compensation for losses due to ban on import.

If Australia loses the dispute at WTO it may face compensation payments of $500 million for every year the restrictions lasts. India had also sought WTO intervention over the anti-dumping duty and customs bond requirements imposed by the US Department of Commerce.

The final hearing of the case was held during the last week of July in Geneva and verdict is expected soon. Ecuador had won its case on anti-dumping duty and the US administration had forced to withdraw the duty recently.



ICICI to pursue $1.5 bn ECB

ICICI Bank, the largest private sector bank in India, will continue with its $1.5 billion overseas loan borrowing despite the recent change in guidelines for external commercial borrowings (ECBs), Deputy Managing Director Chanda Kochhar said.

"We will continue with the loan programme. The bank is also exploring the option of exercising a greenshoe option,'' Kochhar said. According to the new regulations, ECBs of over $20 million must be spent outside. However, rupee expenditure in ECBs up to $20 million has been allowed with prior approval from the banking regulator, the Reserve Bank of India. The syndicated loan will be raised in three tranches of $500 million each with tenures ranging from one to three years. The one-year loan was raised at 27 basis points over the London interbank offer rate (Libor) for yen, two-year loan at 44 basis points over Libor and three-year loan at 65 basis points over Libor.

Bayern LB, BNP Paribas, Calyon, Commerzbank, Goldman Sachs, HSBC, Intesa Sanpaolo, Natixis, Standard Chartered Bank and Sumitomo Mitsui Banking Corp are the lead managers to the issue. ICICI Bank plans to complete the loan syndication by the first week of September.

Reacting to the new ECB guidelines Kochhar said, "The borrowing cost of Indian companies may rise by a few basis points in the short-term. The government move on ECBs is not likely to impact the credit scenario over the long haul."

She added that the recent credit crisis in the US will not impact Indian corporates and institutions as the demand and liquidity for Indian papers is still high because there is no problem with credit risk. "ICICI Bank has no exposure to the subprime market," Kochhar said.