SEBI seeks SC nod to gain access to Raju brothers

With Ramalinga Raju continuing to elude SEBI even after spending weeks behind bars, the market regulator on Monday moved the Supreme Court seeking permission to interrogate the tainted Satyam-founder on the Rs 7,800 crore fraud in the IT major.

In its request, SEBI said that it was constrained to approach the apex court for urgent relief related to the most serious financial scam that had large-scale national and international ramifications.

A bench headed by Chief Justice KG Balakrishnan allowed SEBI to mention the matter tomorrow after Solicitor General GE Vahanvati and counsel Pratap Venugopal submitted the market regulator’s request.

Meanwhile, in another significant development that may help Satyam Computers' potential suitor to get control of the IT company at an affordable price, SEBI today said that it would amend regulations governing open offer to ensure transparent pricing.

The SEBI move followed a request from Satyam Board in this regard to relax the norm of 26-week average price to make an open offer.

"It was decided to appropriately amend the regulations to enable a transparent process for arriving at the price for such acquisition," SEBI Chairman CB Bhave told reporters in Mumbai after the Board meeting.

SEBI at SC

The market regulator moved SC today seeking permission to interrogate Ramalinga Raju on the Satyam fraud after the Andhra Pradesh High Court last week deferred to February 9, hearing on its request to quiz the tainted ex-chairman and his brother Rama Raju.

SEBI had moved the High Court challenging a lower court order, which denied it permission to interrogate the Raju brothers, who were arrested by the state police on January 9 -- the day a SEBI probe team had summoned them to appear before it in Hyderabad.

The Raju brothers, along with Satyam's former CFO Vadlamani Srinivas, are now in judicial custody.

The 6th Additional Chief Metropolitan Magistrate, Hyderabad, had refused permission on the ground that SEBI was not an investigating agency and there was no provision in law under which it could interrogate the Raju brothers.

A probe team from SEBI had landed in Hyderabad on January 8, a day after Ramalinga Raju disclosed the massive accounting fraud in the IT company.

Challenging the High Court order, SEBI said that it had appointed an investigator after Raju confessed to accounting irregularities in a letter to Satyam's Board of Directors.

According to the market regulator, the High Court should have seen that the Raju brothers cannot use judicial custody as a shield to avoid probe by expert agencies.

SEBI further said that just as police apply for custody, any other agency can also apply for access or custody and the same can be granted and the refusal to permit SEBI even to record the statements of the accused while in the custody was "arbitrary, unreasonable and perverse".

According to SEBI, merely because investigations by different agencies like CID, Enforcement Directorate, Serious Frauds Investigation Office, Registrar of Companies etc may overlap, it cannot be said that they cannot investigate simultaneously pursuant to the power conferred on them under their respective statutes.

Stating that the scam in the NYSE-listed Satyam Computers was the worst in the country's history, the advocates said that the company's market capitalisation has fallen from Rs 15,000 crores to Rs 2,000 crores.

SEBI to amend open offer rules

Even as SEBI announced the move to amend regulations governing open offer, its chairman Bhave said that the amendments will be made not only for the Satyam case, but for all similar situations that may arise in the future.

The Board recognises that the issue needs to be dealt with in a general context and not as a specific case, Bhave said, referring to the Satyam request.

Though Bhave declined to give any timeframe for the amendments in pricing rule, he said: "We are aware about the urgency of the situation."

Engineering major Larsen & Toubro has increased its stake in Satyam to over 12 percent. If it crosses 15 percent, the company would have to make an open offer to purchase another 20 percent from the market.

Among the other decisions taken today, SEBI made it mandatory for listed companies to declare dividend on per share basis instead of percentage basis followed at present.

Besides, the regulator has reduced the timeline for the completion of bonus issue to 15 days if the shareholder approval is not required and to 60 days where the approval is required. At present, the timeline for this procedure is six months.

SEBI also decided to shorten the timeframe to announce the price band for IPO in today's Board meeting. With this, the price band should be declared two days prior to the opening of IPO.

The regulator has also upped the up-front margin to be paid by allottees of warrants to 25 percent as against 10 percent at present.

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US GDP shrinks 3.8%, most in 26 yrs

The world's largest economy US has contracted 3.8 per cent in the fourth quarter of 2008, the most since 1982, as the worst ever financial turmoil in nearly 80 years crimped consumer and business spending.
The nation's economy which officially entered into recession in December 2007, shrunk 3.8 per cent in the December quarter, according to the advanced estimates from the Bureau of Economic Analysis.

Moreover, the decline is the worst since the GDP fell 6.4 per cent in the first quarter of 1982.
"Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 3.8 per cent in the fourth quarter of 2008," the BEA which is part of the Commerce Department said in a statement today.
In the third quarter of last year, the GDP had declined 0.5 per cent.
Reportedly, experts had expected the economy to shrink 5.4 per cent in the fourth quarter. Nonetheless, the figure is grim considering the worsening financial situation.
However, the BEA noted that that the fourth quarter advance estimates are based on "source data that are incomplete or subject to further revision..."
For the full year 2008, American economy grew just 1.3 per cent compared to two per cent rise in the year-ago period.
According to the statement, the drop in fourth quarter real GDP was mainly due to negative contributions from exports, personal consumption expenditures, equipment and software and residential fixed investment.
Noting that most of the major components contributed to the decrease in fourth quarter real GDP, BEA said, "the largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports".
Regarding the full year 2008 advanced GDP figure of 1.3 per cent, the BEA pointed out that the growth was primarily on account of exports, personal consumption expenditures (PCE) for services, federal government spending, non-residential structures, state and local government spending.
"These were partly offset by residential fixed investment, PCE for goods, equipment and software, and private inventory investment," the statement said.
On the other hand, BEA noted that deceleration in real GDP (as compared to a growth of two per cent in 2007) primarily reflected a sharp fall in PCE, a downturn in equipment and software, and decelerations in exports and in state and local government spending.
Meanwhile, American President Barack Obama is expected to come up wtih an 819-billion dollar stimulus package to bolster the nation's sagging economy and also create nearly four million jobs.

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Spice Group bids to acquire Satyam

B K Modi-led Spice group on Thursday made a formal bid to acquire scam-hit Satyam Computer, although engineering major Larsen & Toubro has been courting the IT company for a while now.

"Yes, we have given the letter of Expression of Interest to the interim board of Satyam for acquiring controlling stake," diversified Spice group chairman B K Modi said.

The company, sources said, has told the government- appointed board that it has proven management track-record and was hence most suited to turn around the IT company.

Spice group is into the entire domain of entertainment, BPO, IT, retail and mobile handsets business. No price has been discussed so far.

Engineering giant L&T had last week emerged as the front runner for Satyam, which is smarting from a Rs 7,800 crore accounting fraud disclosed by its founder Ramalinga Raju, by increasing its stake in Satyam to over 12 per cent through open market transactions on Friday.

L&T Chairman A M Naik had last Wednesday called on Corporate Affairs Minister Prem Chand Gupta, apparently to discuss its plans for Satyam, whose board met the very next day.

Incidentally, LIC, which has four per cent stake in Satyam and is also the single-largest shareholder of L&T, had said that was not averse to the idea of the IT firm's sale. The board had this week ruled out part sale of the company, saying it was not its mandate to do so at this stage.

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Stimulus packages working, 7% growth likely: Pranab

The two stimulus packages given by the government to boost the economy have started working and the economic growth in the current year is likely to be seven per cent, External Affairs Minister Pranab Mukherjee, who is also holding the charge of the Finance Ministry, said here.
"The two stimulus packages have started working...That has been reiterated by the Reserve bank Governor while announcing the (third-quarterly review of the) credit policy," Mukherjee said after his first meeting with Minister of State for finance P K Bansal and senior officials of the ministry at North Block.

Mukherjee took charge of the Finance Ministry as the Prime Minister Manmohan Singh, who was looking after the finance portfolio, is recuperating from a heart surgery at the All-Indian Institute of Medical Science.

The minister was briefed by the senior officials of the finance ministry on various issues, including preparation for interim budget which is to be presented in Parliament next month.

As regards economic growth, Mukherjee said, "though the economy will not grow at 8.9 or 8.8 per cent, it will grow around 7 per cent. There is no doubt about that ... Indian economy is sound and will bounce back ".

The RBI in its review of the credit policy projected a growth rate of 7 per cent for the current fiscal, down from 7.5 to 8 per cent estimated earlier.

On his priority as in-charge of the Finance Ministry, Mukherjee said, "My first priority is to get the vote on account passed. That is the top most priority and it is also a constitutional requirement."

As general elections are due later in the year, the government will have to present an interim budget and get the vote on account approved by Parliament to carry on the essential expenditure.

The government has already convened a fortnight-long session of Parliament on February 12 for completing the essential business.

In addition to secretaries, economic advisor Arvind Virmani and members of the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) were also present at the meeting to brief Mukherjee.

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Seven suitors line up for Satyam Computers

New Delhi, Jan 29: Scam-hit Satyam Computer has been approached by as many as seven possible suitors, including private equity players, even as the company's investment bankers are trying to find the best match.
"So far we are aware of four (companies that have approached Satyam Computer). But we have heard that another two or three firms are also interested," Satyam Computer board member Tarun Das, who is also the chief mentor of industry body CII told reporters here.

Investment bankers are talking to everybody and finding out which firm is interested, what is the level of seriousness and are evaluating the proposal before getting back to the board. The process is likely to take six weeks, Das added.

Earlier this week, the board of Satyam Computer Services appointed Goldman Sachs and Avendus Capital as investment bankers and mandated Boston Consulting Group (BCG) to act as its management adviser.

Asked whether Satyam's founder Ramalinga Raju had inflated employee numbers as claimed by the Andhra Pradesh police, Das said: "We have done a head count using external agencies and we believe in the basis of investigation that we are well over 50,000 people in Satyam. So I do not think that there is any inflated numbers."

Earlier, Andhra Pradesh CID had claimed in a court that there were 13,000 ghost employees on the rolls of the IT firm, following which the human resources department of Satyam Computer Services conducted a verification of the head count.

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Raju created 300 firms to divert funds: Govt

The government said today that Satyam Computers' disgraced founder Ramalinga Raju created a network of about 300 companies and diverted funds from one company to another in a complex but carefully planned process.
"There has been an issue of siphoning (off of) funds. This is what we have understood from the information we have received from (the) RoC, SFIO and various other agencies (probing the Satyam case)," Union Minister of Corporate Affairs Prem Chand Gupta said in a TV interview.
Gupta said, "Our information is that there was a network of almost 300 compnaies and funds were diverted from one company to (another) and then to (a) third."
"So like this, it was a very complex process he had adopted," Gupta said, but added that "unless the investigation is complete we can't say what exactly happened".
Asked if it meant a carefully planned process to avoid detection, Gupta said, "...Well, to some extent I would agree with you that it was a carefully planned operation, but ... still what we personally feel it was a complex process."
Asked if other people might also be involved in the scam, Gupta said, "I feel there are other people involved."
"But if you go into the systematic inspection and investigation of the structure of the company, you come to the conclusion that the whole thing (revolves) around the Raju family only."

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IBM quietly cuts thousands of jobs

With the recession forcing tech companies to announce thousands of layoffs, IBM Corp. is joining the fray — but not advertising it.
The Armonk, New York-based company has cut thousands of jobs over the past week, including positions in sales as well as the software and hardware divisions. IBM says the cuts are simply part of its ongoing efforts to watch costs, and the company won't release specific numbers, even as reports of firings stream in from IBM facilities across the country.
Workers have reported layoffs in Tucson, Arizona; San Jose, California; Rochester, Minnesota; Research Triangle Park, North Carolina; East Fishkill, New York; Austin, Texas; and Burlington, Vermont.
Meanwhile, other tech companies such as Intel Corp.,Microsoft Corp., Texas Instruments Inc., Sprint Nextel Corp. and Google Inc. have all publicly revealed job cuts as part of their strategies for riding out the economic crisis. More than 20,000 jobs will be lost from those companies.
One of IBM's biggest rivals — Hewlett-Packard Co. — is also laying people off. HP is shedding 24,600 jobs, nearly 8 percent of its 320,000 employee work force, as it digests the acquisition of Electronic Data Systems Corp.
IBM says it doesn't have to reveal the number of jobs it is cutting, since the Securities and Exchange Commission requires companies to disclose only "material" events. And IBM considers its job cuts a regular part of the company's business model, since thousands of jobs are cut every year but are usually added back in other places.
Because of that, IBM contends it doesn't have to break out its layoffs in regulatory filings unless it suddenly changes course and makes substantially more or fewer job cuts.
That's why while IBM's head count keeps growing, topping 400,000 at the end of 2008, laid-off IBM workers have flooded online job boards with complaints about the company's stealth cuts.
One estimate of IBM's recent cuts put the number at more than 4,000 jobs lost since IBM's fourth-quarter earnings announcement last week. Those earnings contained an unexpected surprise: IBM forecast at least $9.20 per share in profit in 2009. IBM shares are up more than 10 percent since then.
To get the cost savings that will help spur the higher profits, IBM appears to have acted quickly. The estimate of at least 4,000 jobs cut comes from AllianceAtIBM, a union that is affiliated with the Communications Workers of America and represents a small number of IBM workers.
The Associated Press reviewed one document sent to laid-off workers that identified some of the positions that were cut. Employees weren't identified by name, but positions and the workers' ages were listed. The document listed nearly 3,000 jobs.
In Vermont, IBM remained tightlipped about layoffs at its Essex Junction facility, but state Labor Commissioner Patricia Moulton Powden said the total number would be less than 500.
IBM recently employed 5,300 workers at the Essex Junction plant, down from 8,500 in 2001.
Jim Gallo, 48, who said he worked in IBM Software support for 27 years, was among those let go from that facility. Gallo, drinking a Grey Goose and ginger ale at nearby Lincoln Inn on Tuesday, said he hadn't told his four children yet.
He said he has until Feb. 26 to find another job in IBM, but he put his chances at "slim to none." Gallo said he gets six months' pay as part of a severance package.
"It's too bad they're not doing what they were doing before. They offered some sweet packages for people to jump out," he said.
IBM's ongoing labor adjustments have led the company to add bodies in cheaper and higher-growth parts of the world, like India.
In 2007, the last full year for which detailed employment numbers are available, 121,000 of IBM's 387,000 workers were in the U.S., down slightly from the year before. Meanwhile, staffing in India has jumped from just 9,000 workers in 2003 to 74,000 workers in 2007.

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Satyam board appoints new chairman; seeks funds

Hyderabad, Jan 17: The new board of fraud-hit Satyam Computer Services on Saturday cleared the name of TN Manoharan, as the group’s new chairman. According to reports, Manoharan is a former President of ICAI and also a part of the present Satyam board.
Amarchand & Mangaldas, Suresh A Shroff and Co have been appointed legal advisers to Satyam board. Where as Chartered accountants Brahmayya and Co of Chennai have been named internal auditors with immediate effect.

The decision in this regard was taken by the board members, who met to look for ways to raise new funds after both the government and the company rejected talks of a state rescue bid.

The Satyam board has decided to meet on weekly basis with each member taking turns to chair meeting.

However, the search for CEO and CFO still continues. The board is currently engaged in discussions with banks and financial institutions to address liquidity issue.

Discussions about the financial situation of the company in the backdrop of Ram Mynampati's SoS to the Corporate Affairs Ministry is expected to dominate the agenda, as also complaints from accounting regulator ICAI about the board's choice of auditor to restate Satyam's financials.

Ahead of the crucial board meeting Kiran Karnik, one of the six members of the newly constituted board of the crisis-ridden IT firm, said they may discuss the issue of funding as well as the appointment of CEO and CFO.

"The most important issue is funding.... I do think that if we can tie up some funding then it will give great comfort to the employees and to the customers...," Karnik told a TV channel.

Another board member Tarun Das said, “Our priority is to safeguard Satyam employees and customer interests.”

Satyam, India's No 4 software services exporter, has been battling for survival since chairman Ramalinga Raju suddenly resigned last week, revealing profits had been falsified for years and that USD 1 billion of cash on the books did not exist.

Media speculation of government aid has mounted as analysts questioned whether India's biggest corporate fraud had left the outsourcing firm with enough money to pay its 50,000 staff.

Meanwhile, NASSCOM has asked its members not to grab Satyam’s clients. Reportedly, several Satyam clients have got in touch with it.

But Economic Affairs Secretary Ashok Chawla told reporters on Thursday that the government was not looking at any direct support for the company or bailout "at this stage”.

Deepak Parekh, a senior banker and Satyam board member, said it had Rs 17 billion (USD 348 million) in receivables and may not need new funding if the money came in on time.

But Parekh added the board would consider bank loans if necessary.

However, reports suggested said that Satyam has not asked government for any financial aid. After the formation of the new Satyam board some banks have come forward and offered help to the troubled company. Earlier company’s new board had sought bank loans.

The government, which dissolved Satyam's previous board last week, appointed three new directors on Sunday and another three late on Thursday to help steer the company out of crisis.

Company Affairs Minister Prem Chand Gupta said the first impression from the new directors about the company is that its operations are sound and that "by and large" major customers were willing to remain with the firm.

"All these are steps in the right direction ... but they need to get a CEO and CFO in place first to run the company's daily operations. That should be a priority," said Gajendra Nagpal, chief executive of Unicon Financial.

The expanded Satyam board is yet to decide on the appointment of new CEO and CFO to bring back the company's operation to normalcy.

Although the board had appointed KPMG and Deloitte, ICAI had objected to the appointment of KPMG, since it is not the member of ICAI, which may also figure in the meeting.

Satyam's shares jumped as much as 40 percent on Friday to 28.40 rupees after the government doubled the size of the board, but the stock has still lost over 80 percent of its value since the massive fraud was revealed.

Many questions about the accounting scandal remain to be answered: how large is it, who benefited, and how did the perpetrators manage to conceal it for so long?

Even if Satyam escapes a near-term cash crunch, it faces a long road to recovery.

The new board will have to keep clients from defecting to Satyam's rivals, fend off a growing number of lawsuits over the scandal and try to rebuild investor trust.

Lazard Asset Management said in a notice to the stock exchange on Friday it had sold all of its 5.3 percent holding in Satyam through open market transactions on Thursday.

Satyam's clients include corporate giants such as Nestle and General Electric.

Satyam's founder Raju, his brother who was the managing director of the company and the former chief financial officer, have been charged and are being held in a jail.

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Sensex up 299 pts, closes at 9,370

The markets finally shrugged off the Satyam shock on Wednesday with benchmark Sensex recording a gain of nearly 300 points on buying support, led by market leader Reliance Industries and blue-chips Reliance Communication Infosys Technologies.

The BSE barometer, which had lost nearly 17 percent in a string of losses since January 7 when Satyam fraud came to light, today jumped 299.13 points to close at 9,370.49.

Similarly, the wide-based National Stock Exchange index Nifty also shot up by 90.35 points at 2813.45.

Reliance Communications soared 10.38 percent to come out as the biggest gainer among the Sensex stocks today. Reliance Industries, the most valued private sector company, surged nine percent as the stock looked more attractive following reports that promoters have increased their stake in the company to over 49 percent as of December quarter.

IT bellwether Infosys which yesterday posted over 33 percent growth for the December quarter rose for the second day in succession. With today's gain of 6.07 percent, the software company has jumped over 12 percent in two days. Mahindra & Mahindra, which launched the multipurpose vehicle Xylo was the another prominent gainer at 5.39 percent.

RIL and Infosys together carry nearly 23 percent weightage on the Sensex.

Expectations of further fall in inflation, the weekly data for which will be announced tomorrow, and firm global trend weres other boosting factors for the equity markets.

Among sectoral indices, Oil & Gas index was the best performer today at 5.85 percent, followed by IT index at 5.02 percent. Tech, reatly and metal indices also closed higher in the range of over 4 percent.

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Employees face fallout of Satyam fiasco

Satyam's tag line is "Business Transformation. Together". In the last one week, its 50000 employees have seen their lives transformed in a way they never anticipated. If the Satyam I-card was once a coveted passport, now it seems banks and car dealers have become extremely wary of the Satyam brandname.

On Saturday, a day after Ramalinga Raju was arrested, CEO of Satnav Technologies Amit Prasad got two SMSes and a call from his three credit card agencies. All of them informing him that his credit card limit had been slashed by 80 to 90 per cent. Prasad suspects this is because the agencies perhaps still have his name as a Satyam employee even though he quit the company five years back.

"It is too much of a coincidence that three people call or SMS me on the same day and say your credit limit is slashed by 80 per cent. It is a case of people going overboard. Other examples are a pearl dealer saying discounts are no longer available on a certain identity card. If I am walking in with cash, why should that be there. If I am ready to pay cash for a car loan, why should I be denied a discount?'' he says.

The fallout of the Satyam fiasco is being felt by other IT professionals as well. In the last one week, many of them were reportedly asked to furnish their December salary certificate to banks that have extended home loans to them.

Vikram Kumar, director (India), MAQ Software, says: "A number of my friends told me that their project and HR managers are being contacted to ask whether they are viable and worth giving the credit cards and home loans.''

For Satyam employees, clearly the period of uncertainty is made worse by what seems to be the larger impact of working for what was one of India's most respected software companies.

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Rupee holds steady at 48.56 against dollar

Indian rupee pared most of its early gains against the dollar on Monday, as demand for the US currency from importers and a state-run banks weighed.
The Indian currency had appreciated in the intraday trade as the mood remained bullish after hefty rate cuts by the central Bank.
Rupee closed at 48.56/58 per dollar, little changed from its Friday's close of 48.58/60.

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Govt announces second stimulus package

Announcing the second stimulus package so that Indian economy weathers the global financial crises with success, Government on Friday liberalised various rules and regulations that will up liquidity and give a boost to spending and investment.

Admitting that the year 2009 is going to be difficult for the world, Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the initiatives taken by the government were to ensure that there are no impediments to Indian economic growth.

Following are the measures that have been announced:

An SPV will be designated to provide liquidity support against investment grade paper to Non Banking Finance Companies (NBFCs) fulfilling certain conditions. The scale of liquidity potentially available through this window is Rs.25,000 crores.

An arrangement will be worked out with leading Public Sector Banks to provide a line of credit to NBFCs specifically for purchase of commercial vehicles.

Credit targets of Public Sector Banks are being revised upward to reflect the needs of the economy. Government will closely monitor, on a fortnightly basis, the provision of sectoral credit by public sector banks.

Special monthly meetings of State Level Bankers’ Committees would be held to oversee the resolution of credit issues of micro, small and medium enterprises by banks. Department of MSME and Department of Financial Services will jointly set up a Cell to monitor progress on this front.

Recently the guarantee cover under Credit Guarantee Scheme for micro and small enterprises on loans was extended from Rs 50 lakh to Rs 1 crore with a guarantee cover of 50%. In order to enhance flow of credit to micro enterprises, it has been further decided to increase the guarantee cover extended by Credit Guarantee Fund Trust to 85% for credit facility upto Rs 5 lakh. This will benefit about 84% of the total number of accounts accorded guarantee cover.

State Governments are facing constraints in financing expenditure because of slower revenue growth. To help maintain the momentum of expenditure at the state government level, states will be allowed to raise in the current financial year additional market borrowings of 0.5% of their Gross State Domestic Product (GSDP), amounting to about Rs 30,000 crore, for capital expenditures.

India Infrastructure Finance Company (IIFCL), which has already been authorized to raise Rs 10,000 cr. through tax free bonds by 31.03.2009 for refinancing bank lending of longer maturity to eligible infrastructure bid based PPP projects, will be accessing the market next week for raising the first tranche of the amount. This will enable the funding of mainly highways and port projects on hand of about Rs 25,000 crore. To fund additional projects of about Rs 75,000 crore at competitive rates over the next 18 months, IIFCL is being enabled to access in tranches an additional Rs 30,000 crores by way of tax free bonds once funds raised in the current year are effectively utilized.

Steps for helping exporters

Exporters are especially hit by recessionary conditions globally. To support exports a number of steps have been taken. As a further measure:

Taking into account the fact that the rupee has appreciated nearly four per cent against the dollar since November 2008, it has been decided to restore DEPB rates to those prevailing prior to November 2008. In order to provide predictability and stability of regime in the short term for future contracts, the DEPB Scheme would be extended till 31.12.2009.

Duty drawback benefits on certain items including knitted fabrics, bicycles, agricultural hand tools and specified categories of yarn are being enhanced. These changes will take effect retrospectively from September 1, 2008.

Exporters have raised a number of procedural issues where modification of procedures could reduce delays faced by exporters. To consider these and similar problems, Government has decided to constitute a Committee under the chairmanship of the Finance Secretary including Secretaries of the Departments of Revenue and Commerce to look into and resolve these issues on a fast-track basis.

EXIM Bank has obtained from RBI a line of credit of Rs 5000 crore and will provide pre-shipment and post-shipment credit, in rupees or dollars, to Indian exporters at competitive rates.

Other measures

Other measures designed to counter recessionary trends are the following:

Exemptions from CVD on TMT bars and structurals, and from CVD and Special CVD on cement, which were given to contain inflation, are being withdrawn. Full exemption from basic customs duty on zinc and ferro alloys, which was also provided to contain inflation, is being similarly withdrawn.

GOI will work with state govts to encourage them to release land for low income and middle income housing schemes.

States, as a one time measure upto 30.06.2009, will be provided assistance under the JNNURM for the purchase of buses for their urban transport systems. A scheme towards this end will be announced shortly.

Accelerated depreciation of 50% will be provided for commercial vehicles to be purchased on or after 1.1.2009 upto 31.03.09.

Government is closely monitoring its spending to expedite the pace of expenditure for all schemes and programmes. Government will set up a fast track monitoring committee to ensure expeditious approval and implementation of central projects. Chief Ministers are being advised to do the same.

The measures outlined above taken together with steps taken earlier constitute a substantial counter-cyclical stimulus in the current year.

Government does not envisage any further measures in the current fiscal year. However, Government is aware that the measures required to provide an economic stimulus to the economy have to extend beyond the current financial year.

Towards this end, it is finalising Plan and Non-Plan expenditure that will be required in the next financial year to maintain the tempo. The Plan for the next year will include proposals for recapitalization of the public sector banks.

The recapitalization is expected to be of the order of Rs.20000 crore over the next two years. This will help to ensure that the banking system will not suffer from capital adequacy constraints in order to provide credit growth needed to sustain the economic momentum in 2009-10.

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Sensex Rises 1% on new years' 1st day

The year 2009 commenced on a promising note as the Bombay Stock Exchange benchmark Sensex on Thursday surged over 256 points on heavy buying by funds on falling inflation data and expectations of another stimulus package from the government.

The 30-share BSE Sensex gained 256.15, or 2.66 per cent, at 9,903.46, as traders started buying for the new year, buoyed by hopes of an economic package and rate cuts, after it slumped more than half in 2008 -- its worst annual fall.

The key index touched the day's high of 9,921.70 and a low of 9,711.64 with some investors offloading shares on fears that the market boosters might not give a sharp turnaround to the economy amid dismal corporate earnings and the global economic downturn and financial market turmoil.

The 50-share National Stock Exchange benchmark Nifty oscillated between 3,039.25 and 2,963.30 before ending with a gain of 74.30 points at 3,033.45.

Marketmen said the inflation rate falling to a 10-month low at 6.38 per cent and the prospect of another stimulus package and the RBI's rate cuts boosted trading sentiment.

They said general investors are still not confident of joining the rally, and are offloading.

The realty sector index gained the most, by 6.52 per cent, to 2,422.43 on the expectation of another round of interest rate cuts. The metal sector index was the second-best performer, rising 6.02 per cent at 5,528.38, influenced by a rally at the London Metal Exchange last evening.

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Anil Ambani : Billionaire Blowups of 2008

Industrialist Anil Ambani continues to be on the focus of US magazine Forbes but this time around for topping the list of 'Billionaire Blowups of 2008' by virtue of turning the biggest loser of wealth in less than a year of being touted as the biggest gainer in the world.

Besides ranking him as sixth richest person in the world with a net worth of 42 billion dollars, Forbes had credited him for having added maximum wealth in its last annual rankings in March.

Since then, his net worth has declined to 12 billion dollars, the magazine said in a news report titled "Billionaire Blowups of 2008".

"The biggest loser of all was Anil Ambani. Touted on the cover of our 2008 billionaires issue for having added 24 billion dollars to his fortune in one year, Ambani has dropped 30 billion dollars since then," the report said.

The report further added that three of "his fellow countrymen--estranged brother Mukesh, steel tycoon Lakshmi Mittal and Indian K P Singh, all of whom ranked earlier among the world's 10 richest--lost more than 20 billion dollar apiece."

Noting that 2008 was "a dreadful year for the world's wealthiest as markets and currencies around the world tumbled," Forbes said that over 300 of the 1,125 billionaires have lost at least one billion dollars since March.

While several dozen have lost more than five billion dollars, the 10 richest from annual 2008 rankings have lost about 150 billion dollars.

This is primarily driven by steel tycoon Lakshmi Mittal, estranged brothers Mukesh and Anil Ambani and property baron K P Singh together losing 100 billion dollars.

The publication has also listed out its top "10 Billionaire Blowups," noting that "even in such an awful year, the stories of a few billionaires and now former billionaires stand out as particularly dreadful."

"The biggest billionaire gainer last March is now the year's biggest loser. Ambani lost 30 billion dollars in the past nine months, more than anyone in the world.

"Stock of his telecom company dropped after his estranged brother helped scuttle a deal with African telecom MTN."

Forbes, however, noted that with 12 billion dollars worth of fortune, Anil Ambani "remains quite wealthy... That is something many others can't claim".

The list of 10 billionaire blowups includes two more Indians -- wind power major Suzlon's chief Tulsi Tanti and online gambling firm PartyGaming's founder Anurag Dikshit.

"Dozens of the world's wealthiest lost billions in recent months, yet these 10 distinguish themselves for some of the biggest flops. But they lost more than money. Some lost board seats. Several faced margin calls. A couple got in trouble with the law. All suffered hits to their reputations."

Tulsi Tanti's wealth dropped by 2.5 billion dollars to stand at 500 million dollars, while Dikshit's current net worth is about one billion dollars, down from 1.6 billion dollars in March 2008.

Others among these 10 include Russian billionaire Oleg Deripaska, Iceland's Bjorgflur Gudmundsson, Spain's real estate player Luis Portillo, China's Wong Kwong Yu and Larry Yung and Ukraine's Konstantin Zhevago.

On Tanti, it said that the wind was knocked out of Tanti and his wind firm, Suzlon Energy, amid reports about the poor quality of its wind turbine blades, some of which cracked.

"The company's 25 million dollar provision to fix faulty blades didn't do much to boost investor confidence. The stock has plunged 80 per cent since March," it added.

Dikshit, the designer of the software for PartyPoker game recently pleaded guilty for violating American web gaming laws and also agreed to forfeit 300 million dollars.

"He could face up to two years in jail but apparently won't be sentenced until 2010. He has already paid 100 million dollars of his fine and will pay the rest in two instalments next year," the magazine said.

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India may see deflation next year: Bankers

Indian economy may go into deflation by the second quarter of financial year 2009-10, as there are fears of inflation going below zero per cent in the face of unprecedented fall in crude and commodity prices.
"If the current pace in inflation-decline continues, the figure (in WPI based inflation) may slide below two per cent by end-fiscal," HDFC Bank's Head of Treasury, Ashish Parthasarathy, said, adding "it may fall further to below zero per cent by Q2 FY'10".
Inflation almost halved to a nine-month low of 6.61 per cent from this year's peak of 12.91 per cent, giving more space to the RBI to signal further cuts in interest rates.
Deflation occurs in an economy when the negative inflation prevails for a long period. In the event of deflation, the Reserve Bank will have to enhance money supply and lower rates further "to support inflation", IDBI Gilts' Economist Amol Agarwal said. Citibank India's Chief Financial Officer Abhijit Sen echoed this view saying that the rapid decline in the headline inflation is likely to continue in the coming months.
"In my view, deflation is a remote possibility in this economy. However, if the inflation continue to fall to much lower levels, this would have an impact on the profitability of banks, as it would affect the credit demand," Sen said. The sharp decline in inflation has given a headroom for the Reserve Bank to slash its reverse repo rate by 0.5-1 per cent, he said.
"A lower inflation rate has offered the opportunity to the Reserve Bank to explore further monetary policy options including a cut in the short-term reverse repo rate," Sen said.
Wholesale prices-based inflation declined by 0.23 percentage points for the seventh consecutive time during the week-ended December 13 as manufactured goods and food items became cheaper due to the cascading effect of fuel price cuts amongst other factors.
"(The) declining inflation rate provides more leeway to the RBI to further slash interest rates. I expect a 100 basis points cut in both the repo (short-term lending rate) and reverse repo (short-term borrowing) rates," said Crisil's Principal Economist D K Joshi.
The Reserve Bank had hiked its key policy rates several times till October to hold off skyrocketting inflation rate that rose to a multi-year high of around 13 per cent early this year.
However, with inflation now on the decline, the Central Bank has shifted its focus from fighting inflation to supporting economic growth with a series of rate cuts.
It cut the Cash Reserve Ratio (CRR), the percentage of cash banks are required to park with the apex bank to 5.5 per cent from nine per cent and the repo and reverse repo rates to 6.5 per cent and five per cent respectively.

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Tatas get extra land for Nano at Uttarakhand

Tata Motors' delayed Nano project has got a boost with the Uttarakhand government providing the company an additional 45 acres of land at its Pantnagar facility.

"The state government has taken a decision to provide 45 acres of land to the Tata Group at Pantnagar, where it is already manufacturing Ace (mini) trucks and few parts of the Nano," State Chief Secretary I K Pandey said.

The decision was taken at a high-powered meeting held chaired recently by the state Chief Minister B C Khanduri, he added.

Tata Motors was given 955 acres of land for its Ace truck plant at Pantnagar by the previous Congress government. The company was promised a total 1,000 acres but has been allotted only 955 acres, Pandey added.

The allotment is expected to help the company in rolling out the world's least priced car at Rs one lakh, after delays due to the Singur imbroglio.

The company had to shift the mother plant to Sanand in Gujarat from Singur, where it was originally planned due to opposition from Trinamool Congress over land acquisition.

It had planned to invest Rs 1,500 crore at Singur but the investment was increased to Rs 2,000 crore, when it shifted to Sanand.

The Nano was originally planned to be commercially launched around Durga Puja this year but has been postponed to the last quarter of this fiscal. The company is planning to produce the Nano from its various locations, including Pune and Pantnagar till the mother plant at Sanand is ready.

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BOI, BOB cut lending rates

after India's largest lender, State Bank of India (SBI) slashed its interest rates; two more public-sector banks-- Bank of India and Bank of Baroda today reduced their lending, deposit rates from January 1.

Both banks today reduced their prime lending rates by 0.75 percent each to 12.5 percent.

The reduction in PLR will provide relief to both the existing and new customers of these banks including education, auto and home loan borrowers, bank officials told reporters here.

The banks have also reduced their deposit rates in the range of 0.5-1 percent across various maturities.

Other state-owned lenders, which have cut their interest rates in the recent period include Union Bank of India and Canara Bank.

In the private sector, the country's largest housing loan financer, Housing Development Finance Corporation and leading private sector lender, Bank of Rahasthan had cut their lending rates last week.

BoR today announced a cut in its deposit rates except in the 91-120 days maturity.For 91-120 days maturity deposits, customers will now get 1.25 percent more interest effective from December 22, the bank said.

State Bank of India had announced a 0.75 percent cut in its prime lending rate and a 0.25-1 percent reduction in deposit rates last week.

With this, State Bank's PLR now stands reduced at 12.25 percent.

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Sensex closes above 10K as inflation plunges

benchmark Sensex on BSE on Thursday closed above the crucial 10,000-point level for the first time in six weeks on buying sparked by a sharp fall in inflation which fuelled hopes of cut in lending rates amid anticipation of a second stimulus package to boost the economy.

The bellwether index steadily rose, except for a brief period in the morning session, and and closed with gains of 361.14 points at 10,076.43, a level last seen on November 5.

Interest rate sensitive realty and banking shares soared 7.27 percent and 7.06 percent respectively on expectations of lending rates coming down.

Experts said with the rate of price rise declining sharply to nine-month low of 6.84 percent for the week ended December 6, the focus may shift to back growth from taming high inflation.

The wide-based National Stock Exchange index Nifty also shot up by 106.40 points at 3060.75.

Marketmen said the fall in inflation was greater than expected. They said buying got further momentum at the fag-end after the finance ministry said that falling inflation rate would result in further lowering of interest rates.

Reports of government raising the cap for tax rebate on interest paid on home loans in the second stimulus package made realty stocks attractive.

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Rupee ends below 48-level for first time in a month

Extending the gains for second day on Tuesday, the Indian rupee on Tuesday closed below 48 level at 47.91/92 against the greenback for the first time in a month on demand for the local currency amid strong expectations of fresh capital inflows.
The domestic unit closed the day up 13 paise, helped by firm equity markets.Traders in foreign exchange said expectations US Federal Reserve cutting the interest rates in the meeting late on Tuesday fuelled hopes of dollar flowing into the country's share markets.
In a volatile trade at the Interbank Foreign exchange (Forex) market, the local unit opened slightly better at 48.00/02.
After moving erratically for most part of the day, the rupee touched a high of 47.79 per dollar in the concluding session, helped by a sudden rise in benchmark Sensex.
However, fag-end dollar buying by importers as well as short coverings by exporters ahead of the US Fed meeting pushed the rupee downwards. It finally settled the day at 47.91/92. The local unit had surged by 41 paise yesterday.
The Indian benchmark Sensex rose nearly 145 points boosting the rupee sentiment.
Weak dollar against basket of currencies also aided the rupee rise. It slipped against both the yen and the euro, striking a two-month low against the single European currency as traders continued to exit long dollar positions, spooked by uncertainty over the fate of US automakers.

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