Asian Stocks Fall for Third Week on Europe Crisis, China Property Concerns

By Jonathan Burgos - Nov 19, 2011 4:17 AM GMT+0530

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Nov. 18 (Bloomberg) -- Vineer Bhansali, a portfolio manager at Pacific Investment Management Co., talks about the European sovereign debt crisis and investment strategy. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

Asian stocks declined for a third- straight week, with the regional benchmark index within a percent of erasing October’s gains, amid concern about China’s property sector and evidence that Europe’s debt crisis is infecting major economies.

HSBC Holdings Plc (HSBA) and Commonwealth Bank of Australia led declines among lenders amid concern about contagion in Europe as Spain holds a general election this weekend. China Overseas Land & Investment Ltd. (688), the biggest mainland developer listed in Hong Kong, slid 6.9 percent after home prices in 33 Chinese cities dropped and the country’s banking regulator said loans to developers may sour. BHP Billiton Ltd. (BHP), the world’s biggest mining company, fell 4.4 percent as copper futures dropped for a third week.

“There will be pressure on European banks as the crisis drags on and that might have some global impact,” said Yoji Takeda, who manages about $1.1 billion at RBC Investment Management (Asia) Ltd. in Hong Kong. “China is trying to fine- tune its monetary policy to orchestrate a soft-landing, but at the same time they want to see lower property prices.”

The MSCI Asia Pacific Index dropped 2.7 percent to 114.20 this week, extending a three-week decline to 8.4 percent, as bond yields in Italy and Spain surged near the 7 percent threshold that led Greece, Ireland and Portugal to seek bailouts.

Hong Kong’s Hang Seng Index declined 3.4 percent this week, while China’s Shanghai Composite Index fell 2.6 percent. Japan’s Nikkei 225 (NKY) Stock Average fell 1.6 percent. Australia’s S&P/ASX 200 dropped 2.8 percent.

India’s Sensitive Index slumped 2.1 percent, the most among the Asia-Pacific indexes, as the rupee dropped against the dollar for a third week as Europe’s worsening debt crisis prompted investors to favor safer assets such as the dollar.

U.S. Debt

Stocks declined this week as Fitch Ratings said the creditworthiness of U.S. banks will deteriorate if Europe’s debt crisis spreads beyond the Europe’s five most-troubled nations. In the U.S., Republicans and Democrats on a congressional committee are struggling to find a compromise before a Nov. 23 deadline to produce a U.S. deficit-cutting plan.

HSBC, Europe’s largest bank, fell 4 percent to HK$59.25 in Hong Kong. Commonwealth Bank, Australia’s No. 1 lender, retreated 3.8 percent to A$47.73 in Sydney and was the biggest drag on a measure of financial companies in the Asia-Pacific index. Standard Chartered Plc (STAN), a London-based bank that makes most of its revenue in emerging markets, declined 7.5 percent to HK$159.40.
Political Turmoil

The sovereign-debt crisis has stirred political turmoil across Europe, with Italy and Greece replacing their leaders this month. Spain may speed up the timetable for forming a new government after the election on Nov. 20 so the first Cabinet meeting can be held on Dec. 23, ABC reported, citing officials in the People’s Party it didn’t name.

Exporters to Europe also dropped after the Bank of England said on Nov. 16 Britain’s economy faces a “markedly weaker” outlook and Spain cut its economic forecast.

Esprit Holdings Ltd., the clothier that counts Europe as its biggest market, tumbled 8.5 percent to HK$9.10 in Hong Kong. Canon Inc. (7751), the camera maker that gets about 32 percent of sales from Europe, dropped 2.5 percent to 3,350 yen in Tokyo. Mazda Motor Corp. (7261), the Japanese carmaker most dependent on Europe, declined 2.8 percent to 137 yen.
‘High Risk’

Chinese property developers and lenders fell as a government report showed home prices fell in 33 of 70 cities monitored by the government in October. The China Banking Regulatory Commission told lenders last week to step up debt restructuring for struggling local government financing vehicles and cut “high-risk” loans to developers, a person with knowledge of the matter said.

China Overseas Land sank 6.9 percent to HK$12.38. China Resources Land Ltd. (1109), a state-owned developer, slumped 5.3 percent to HK$10.70. Industrial & Commercial Bank of China (1398) Ltd., the nation’s biggest lender, dropped 8.3 percent to HK$4.44.

Gauges of raw material and energy producers led declines among the 10 industry groups in the MSCI Asia Pacific as copper futures decreased for a second week and a six-week rally in crude oil fizzled out.

BHP Billiton fell 4.4 percent to A$36.13 in Sydney. Rio Tinto Group, the world’s second-biggest mining company by sales, slid 3.4 percent to A$67.05. Cnooc Ltd. (883), China’s largest offshore oil producer, dropped 3.8 percent to HK$14.82 in Hong Kong.
Olympus Rebounds

Among stocks that advanced, Olympus Corp. (7733) jumped 36 percent to 625 yen in Tokyo on speculation the optical-equipment maker that admitted to hiding losses tied to acquisitions for decades may avoid delisting. The gain pared to 75 percent its decline in the five weeks after its ousted President Michael C. Woodford called for an investigation into the company’s past acquisitions.

“Not many people will dare to buy the shares with the risk of delisting, but some investors in short positions were buying back the shares,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $84 billion. “Some people who believe the company won’t be delisted are buying the shares.”

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.
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India Searches Vodafone, Airtel Offices in Probe

By Abhishek Shanker - Nov 19, 2011 3:47 PM GMT+0530

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India’s federal investigators searched offices of telecommunications carriers Bharti Airtel Ltd. (BHARTI) and Vodafone India Ltd. in a probe into alleged irregularities in allocations of spectrum in 2001 and 2002.

Central Bureau of Investigation entered the providers’ premises in Mumbai, New Delhi and Gurgaon, near New Delhi, after registering a case against them, said Dharini Mishra, spokeswoman at the bureau. Spokesmen at Bharti Airtel, India’s biggest mobile-phone company, and Vodafone India, unit of Vodafone Group Plc (VOD), confirmed the searches.

The probe seeks information about possible malpractice in allocating spectrum during 2001-02 when Pramod Mahajan was the telecom minister under the National Democratic Alliance government led by Bhartiya Janta Party, the main opposition in the current government, Mishra said.

The bureau also searched residences of Shyamal Ghosh, the telecom secretary in the federal government during 2001-02, and J.R. Gupta, then director at state-owned telecom company Bharat Sanchar Nigam Ltd.

“All our documents are in complete compliance with the governing laws and regulations,” Suresh Rangarajan, spokesman at Vodafone, said in an e-mailed statement today. “Vodafone India is completely co-operating with the officials and will provide them all the required details as part of their checks.”

Bharti Airtel’s spokesman Prem Subedi said the company secured all spectrum blocks as per the government policy.
Revenue Losses

In a separate probe, India’s chief auditor said last year that former minister Andimuthu Raja in the Congress-led government and others conspired to grant licenses to unqualified companies for personal benefit, reducing state revenue by as much as $31 billion. The CBI put the loss at 220 billion rupees ($4.3 billion)

The scandal has weakened Manmohan Singh’s government, lowered investor confidence in the economy, paralyzed legislation in parliament and sparked nationwide street protests. The government is cracking down on corruption as it is under pressure from social activists and opposition parties to curb official graft and make a stronger anti-corruption law. The government may seek lawmakers’ approval for such a law in its winter session from Nov. 22 to Dec. 21.

“The government is only trying to use its powers to find answers for some tough questioning on corruption issues in the upcoming parliament session,” N. Bhaskara Rao, chairman of Centre for Media Studies, said by phone today. “It has no inkling in solving the issue and regaining investors confidence.”

To contact the reporter on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net
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Southeast Asian Slowdown Looms as Thai Floods Compound Europe Demand Slump By Chong Pooi Koon and Suttinee Yuvejwattana - Nov 18, 2011

Growth in Southeast Asian economies including Malaysia and Thailand may have peaked last quarter as the European debt crisis and Thai floods hurt the outlook for exports, adding pressure on policy makers to cut interest rates.

Malaysia’s gross domestic product increased 4.8 percent in the three months through September from a year earlier, after a 4 percent expansion the previous quarter, according to the median of 25 estimates in a Bloomberg News survey. Thailand’s growth probably quickened to 4.5 percent from 2.6 percent, according to a survey of 11 economists.

“Exports will likely soften in the coming months as Europe slides into a recession,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. “Both Bank Negara Malaysia and Bank of Thailand will keep their options open and ease if growth readings turn ugly in coming months.”

Authorities in Singapore and Indonesia have cut growth forecasts in recent weeks and the Asian Development Bank said economies in the region may expand at a slower pace than earlier estimated. Most Asian currencies fell in the past three months on concern the nations that led the recovery from the 2009 global recession will falter, and United Overseas Bank Ltd. said policy makers may allow more weakening to support exports.

“It’s part of monetary easing if they let their currencies weaken,” said Ho Woei Chen, an economist at United Overseas Bank in Singapore who expects Malaysia and Thailand to highlight the risks to growth going forward. “Probably they are not cutting interest rates that aggressively but letting their currency depreciate.”
Ringgit Falls

Malaysia’s central bank will release GDP data at 6 p.m. today. Thailand will give its economic report for the third quarter on Nov. 21.

The Malaysian ringgit has fallen more than 5 percent in the past three months and the Thai baht has weakened 3.6 percent. Neither Malaysia nor Thailand have cut rates even as Indonesia and Australia lowered borrowing costs this quarter. The ringgit fell 0.2 percent to 3.1648 a dollar at 1:19 p.m. in Kuala Lumpur, and the baht slid 0.6 percent to 31.03 a dollar.

Singapore, which uses the island’s dollar as its main tool to manage inflation, said in October it will reduce the pace at which the currency strengthens. The nation’s exports fell the most in more than two years in October as electronics shipments by companies such as contract manufacturer Venture Corp. dropped 31.2 percent, a report showed yesterday.

Revised third-quarter GDP data due Nov. 21 may show Singapore’s economy grew faster than the government estimated earlier, a Bloomberg survey showed.
Major Risks

Exports and domestic demand probably helped Thailand and Malaysia expand faster last quarter, before the deepening European sovereign-debt crisis and the worst Thai floods in almost 70 years threatened global growth and regional trade.

“Strong domestic demand continued to drive growth” in Malaysia, said Daniel Wilson, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Looking ahead, one of the major risks to growth is a slowdown in the external sector spilling over into the domestic economy. Supply chain disruptions stemming from Thai floods may depress industrial production in the short run.”

Investment has accelerated in Southeast Asia’s third- largest economy since Prime Minister Najib Razak’s government last year identified $444 billion worth of private sector-led projects to spur growth.

International Business Machines Corp., Toshiba Corp. and Agilent Technologies Inc. are among companies pledging new investments in Malaysia. Exports grew at the fastest pace in more than a year in September as companies shipped abroad more electronics and commodities.
Thai Floods

“Most of the emerging economies like ours are still experiencing growth even though we may experience a moderation in growth because of the challenging global environment,” Bank Negara Malaysia Governor Zeti Akhtar Aziz said this week.

Thai leader Yingluck Shinawatra is struggling to rescue the nation from floods that have claimed at least 567 lives, swamped thousands of factories and threatened the homes of 20 percent of the country’s 67 million people since late July. Yingluck was sworn in as the nation’s first female prime minister in early August.
Thai Signal

The Bank of Thailand has signaled it may consider cutting rates as the disaster curbs growth. It kept rates unchanged in October for the first time in 2011.

The flood damage could cost as much as 400 billion baht ($13 billion), or 4 percent of GDP, Rahul Bajoria, a Singapore- based regional economist at Barclays Plc said in a research note yesterday. He revised down his forecast for Thai economic growth this year to 2.4 percent and predicted the central bank will cut the benchmark rate by 50 basis points to “shore up consumer and business confidence.”

“The strong growth we’ve seen in all GDP components in the third quarter will turn opposite this quarter,” said Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok. “The flooding is far worse than what we had expected as the water spread through most of our capital. We expect the central bank to come up with a drastic move of a 50 basis-point cut at the upcoming meeting if they want to rescue the economy.”

Malaysia’s benchmark rate stands at 3 percent, and Thailand’s is 3.5 percent.

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Southeast Asia Growth Slowdown Looms By Chong Pooi Koon and Suttinee Yuvejwattana - Nov 17, 2011

Growth in Southeast Asian economies including Malaysia and Thailand may have peaked last quarter as the European debt crisis and Thai floods hurt the outlook for exports, adding pressure on policy makers to cut interest rates.

Malaysia’s gross domestic product increased 4.8 percent in the three months through September from a year earlier, after a 4 percent expansion the previous quarter, according to the median of 25 estimates in a Bloomberg News survey. Thailand’s growth probably quickened to 4.5 percent from 2.6 percent, according to a survey of 11 economists.

“Exports will likely soften in the coming months as Europe slides into a recession,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch. “Both Bank Negara Malaysia and Bank of Thailand will keep their options open and ease if growth readings turn ugly in coming months.”

Authorities in Singapore and Indonesia have cut growth forecasts in recent weeks and the Asian Development Bank said economies in the region may expand at a slower pace than earlier estimated. Most Asian currencies fell in the past three months on concern the nations that led the recovery from the 2009 global recession will falter, and United Overseas Bank Ltd. said policy makers may allow more weakening to support exports.

“It’s part of monetary easing if they let their currencies weaken,” said Ho Woei Chen, an economist at United Overseas Bank in Singapore who expects Malaysia and Thailand to highlight the risks to growth going forward. “Probably they are not cutting interest rates that aggressively but letting their currency depreciate.”
Ringgit Falls

Malaysia’s central bank will release GDP data at 6 p.m. today. Thailand will give its economic report for the third quarter on Nov. 21.

The Malaysian ringgit has fallen more than 5 percent in the past three months and the Thai baht has weakened 3.3 percent. Neither have cut rates even as Indonesia and Australia lowered borrowing costs this quarter.

Singapore, which uses the island’s dollar as its main tool to manage inflation, said in October it will reduce the pace at which the currency strengthens. The nation’s exports fell the most in more than two years in October as electronics shipments by companies such as contract manufacturer Venture Corp. dropped 31.2 percent, a report showed yesterday.

Revised third-quarter GDP data due Nov. 21 may show Singapore’s economy grew faster than the government estimated earlier, a Bloomberg survey showed.
Major Risks

Exports and domestic demand probably helped Thailand and Malaysia expand faster last quarter, before the deepening European sovereign-debt crisis and the worst Thai floods in almost 70 years threatened global growth and regional trade.

“Strong domestic demand continued to drive growth” in Malaysia, said Daniel Wilson, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Looking ahead, one of the major risks to growth is a slowdown in the external sector spilling over into the domestic economy. Supply chain disruptions stemming from Thai floods may depress industrial production in the short run.”

Investment has accelerated in Southeast Asia’s third- largest economy since Prime Minister Najib Razak’s government last year identified $444 billion worth of private sector-led projects to spur growth.

International Business Machines Corp., Toshiba Corp. and Agilent Technologies Inc. are among companies pledging new investments in Malaysia. Exports grew at the fastest pace in more than a year in September as companies shipped abroad more electronics and commodities.
Thai Floods

“Most of the emerging economies like ours are still experiencing growth even though we may experience a moderation in growth because of the challenging global environment,” Bank Negara Malaysia Governor Zeti Akhtar Aziz said this week.

Thai leader Yingluck Shinawatra is struggling to rescue the nation from floods that have claimed at least 567 lives, swamped thousands of factories and threatened the homes of 20 percent of the country’s 67 million people since late July. Yingluck was sworn in as the nation’s first female prime minister in early August.

The Bank of Thailand has signaled it may consider cutting rates as the disaster curbs growth. It kept rates unchanged in October for the first time in 2011.

The flood damage could cost as much as 400 billion baht ($13 billion), or 4 percent of GDP, Rahul Bajoria, a Singapore- based regional economist at Barclays Plc said in a research note yesterday. He revised down his forecast for Thai economic growth this year to 2.4 percent and predicted the central bank will cut the benchmark rate by 50 basis points to “shore up consumer and business confidence.”

“The strong growth we’ve seen in all GDP components in the third quarter will turn opposite this quarter,” said Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok. “The flooding is far worse than what we had expected as the water spread through most of our capital. We expect the central bank to come up with a drastic move of a 50 basis-point cut at the upcoming meeting if they want to rescue the economy.”

To contact the reporters on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

India’s Debt at 70% of GDP Is ‘Constraint’ to Higher Rating, Moody’s Says By Kartik Goyal - Nov 16, 2011

India’s public debt at 70 percent of its gross domestic product is preventing Asia’s third-biggest economy from securing an investment-grade rating, Moody’s Investors Service said.

The nation’s fiscal deficit and “the debt burden, which is high relative to similarly rated countries,” are among the constraints, Atsi Sheth, a sovereign analyst at Moody’s, said in a telephone interview from Mumbai yesterday. “For the ratings to be improved, we will have to be comfortable that India’s government debt is at a level that can be sustained over the medium term.”

India’s finance ministry pitched for a higher rating in a meeting with Moody’s officials on Nov. 14, R. Gopalan, secretary, Department of Economic Affairs, said a day later. The government raised its planned borrowing for the six months through March 31 by 32 percent as revenue collections fall short of target. Finance Minister Pranab Mukherjee said Oct. 4 that it may be hard to meet his goal of cutting the budget deficit to a four-year low of 4.6 percent of GDP.

Moody’s rates India’s rupee sovereign debt a Ba1, the highest junk grade, a level shared by Indonesia and Morocco. India’s foreign-currency debt is rated at Baa3, the lowest investment grade. Sheth, who declined to comment on the lobbying by the finance ministry, expects the budget gap to be as high as 5.5 percent in the year ending March 31. Mukherjee said yesterday the government isn’t revising its deficit target yet.
Rising Bond Yields

The yield on the benchmark 10-year government bond has risen 96 basis points this year, the most in Asia, to 8.88 percent, as inflation remained untamed above 9 percent for a 11th consecutive month in October, while increased supply damped demand. The Reserve Bank of India has increased borrowing costs 13 times starting March, 2010, to slow the pace of price gains, and expects inflation will cool to 7 percent by the end of March.

“It might be optimistic to expect a rating upgrade at this juncture when there are significant risks” on account of the deficit, said Suvodeep Rakshit, an economist at Kotak Securities Ltd. in Mumbai. “The government’s finances are under severe pressure this year due to slowing growth and higher rates.”

Slowing economic growth may also exacerbate the deficit, Sheth said. The $1.7 trillion economy is likely to expand 7.6 percent in the fiscal year to March, 2012, slower than 8.5 percent in the previous year, according to the central bank.

“The deficit is going to be higher due to growth slowdown,” Sheth said. “Growth and profitability have been lower than the government had assumed and that will be reflected in revenue growth.”
Revenue Collection

India’s receipts grew 38.7 percent in the six months to September from a year earlier, slower than 58.4 percent gain in the same period a year ago, according to government estimates. Fourteen of the 30 companies that comprise the benchmark Sensitive Index reported profits that fell short of analyst estimates in the quarter ended Sept. 30.

The government will also spend more on oil and food subsidies, she said. The state caps retail prices of fuels including diesel, cooking gas and kerosene to rein in inflation and shield about 828 million people the World Bank says live on less than $2 a day.

Standard & Poor’s and Fitch Ratings have a BBB- rating on India’s local-currency debt, the lowest level in the investment category.

“A high debt burden, we believe, limits the fiscal flexibility that the government has to respond to future shocks, as well as invest in India’s social and physical infrastructure Needs,” Sheth said.

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Mallya Denies Kingfisher Air May Collapse By Siddharth Philip and George Smith Alexander - Nov 15, 2011

Vijay Mallya, the billionaire chairman of Kingfisher Airlines Ltd. (KAIR), dismissed speculation the carrier may collapse as it cuts flights, seeks new loans and asks for government assistance.

“To suggest an immediate grounding of the airline is neither fair nor reasonable,” Mallya, 55, told reporters in Mumbai yesterday. Cancellations “have been blamed on entirely the wrong reasons,” he said.

The airline rose in Mumbai trading during the almost two- hour-long press conference, while Jet Airways (India) Ltd. tumbled, as Mallya said Kingfisher will seek new loans, delay Airbus SAS A380s and may import jet fuel as part of a turnaround. Bangalore-based Kingfisher has made 16 straight quarterly losses because of a price war, debts and rising fuel costs.

Mallya “has given very positive words for his company, but again the whole question is how the industry will go ahead,” said Sharan Lillaney, an analyst at Angel Broking Ltd. in Mumbai. “In the end, it’s all about profits.”

Kingfisher plans to raise about 10 billion rupees in new loans, including 1.5 billion rupees for reconfiguring planes, Ravi Nedungadi, chief financial officer at parent UB Group, said without giving a time frame. It may also hold a rights offer before the end of March and sell property in Mumbai to raise funds, he said.

An Indian investor has also approached Kingfisher about buying a stake, Mallya said, without elaboration. He also called on the government to ease restrictions on overseas carriers investing in Indian airlines.
A380 Delays

The carrier will delay its orders for five A380 superjumbos because of market conditions, Mallya said. Deliveries were due to start in 2016. He didn’t give a new time frame. The carrier is also working on plans to buy jet fuel from overseas to avoid Indian taxes, he said.

Kingfisher will also delay deliveries of some A320 planes as reconfiguration of existing fleet will increase capacity, Mallya said without elaboration.

Kingfisher rose 1.9 percent to 21.8 rupees yesterday. Jet Airways, the nation’s biggest carrier, dropped 8.1 percent, reversing earlier gains. SpiceJet Ltd. (SJET) fell 5.6 percent.

Kingfisher has canceled 40 of 340 flights a day, it said last week, as it ends its Kingfisher Red low-cost unit and reconfigures the aircraft for the full-service operations. The main business offers better margins and has less competition, while the low-cost segment is likely heading for a “bloodbath,” Mallya said.

The carrier also cut flights that “were heavily loss- making,” he said. “I accept we could have handled it better.”
No Bailout

Mallya said that Kingfisher hadn’t asked for a government bailout and that it wouldn’t fire any of its about 7,000 employees. The carrier has asked banks to boost working-capital facilities and also sought to lower interest costs, he said.

Kingfisher has raised about 8 billion rupees of loans this year from Mallya’s “friends, relatives and well wishers,” Nedungadi said. That debt may be partly or completely converted into equity of the carrier during the rights offer, he said.

The airline hasn’t defaulted on interest repayments, Mallya said. It has also paid off bills with two of its three main fuel suppliers, Mallya said.

The finance ministry may ask lenders to help Kingfisher recast debt following an approach from the carrier, Civil Aviation Minister Vayalar Ravi said last week when the carrier’s shares slumped 18 percent in two trading days. The oil ministry may also extend more credit to airlines, he said.

Kingfisher posted a net loss of 4.69 billion rupees for the quarter ended Sept. 30. That was double the year-earlier figure.

Kingfisher said spending on fuel surged 71 percent in the quarter, eroding gains from a 12 percent increase in passenger numbers. The airline filled 76 percent of its seats, compared with 79 percent a year earlier.

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Tata Motors Net Income Misses Estimates By Siddharth Philip - Nov 14, 2011

Tata Motors Ltd. (TTMT), the maker of the world’s cheapest car Nano, posted a 15 percent drop in profit as raw material costs surged and because of currency losses.

Second-quarter net income declined to 18.8 billion rupees ($373 million) from 22.2 billion rupees a year earlier, Tata Motors said in a statement yesterday. Profit lagged behind the 20.9 billion-rupee median of 26 analysts’ estimates compiled by Bloomberg. Sales rose 27 percent to 359.4 billion rupees.

The weakening of the rupee against the U.S. dollar resulted in Tata Motors losing money in the quarter on the revaluation of outstanding foreign currency borrowings. The company’s raw material costs including steel and aluminum in the period increased 30 percent and it spent more on marketing its cars in India, according to Chief Financial Officer C. Ramakrishnan.

“Going forward, because of the slowdown in the Indian market, Tata Motors will have to spend more on marketing,” said Umesh Karne, an analyst at Brics Securities Ltd. in Mumbai. “For the full year, pressure on margins will remain.”

Raw material costs increased to 221.1 billion rupees from 170.2 billion rupees, the company said yesterday.
Foreign Currency

Tata Motors incurred a loss of 4.4 billion rupees in the period on revaluing outstanding foreign currency borrowings, compared with a gain of 1.3 billion rupees in the year-earlier quarter as the rupee weakened, the company said.

The rupee slid 8.7 percent against the U.S. dollar in the quarter, the worst performer in Asia after the South Korean won, according to Bloomberg data.

Tata Motors fell 2 percent to 177.80 rupees, the lowest level in a month, in Mumbai yesterday. The benchmark Sensitive Index declined 0.4 percent. The earnings were announced after the close of trading.

Sales of Tata Motors’ passenger vehicles, excluding Jaguar and Land Rover, in India slumped 22 percent to 60,340 units in the three months through Sept. 30 as rising interest rates and fuel prices damped demand. Shipments increased 46 percent in the year-earlier period, according to press releases posted on the company’s website.

Deliveries of the Nano plunged 67 percent in the quarter to 7,398 units, according to company press releases.
Slowing Local Sales

Annual industry vehicle sales will expand at the slowest pace in three years, according to the Society of Indian Automobile Manufacturers, which has cut its forecast for nationwide deliveries twice this year.

India’s central bank last month raised key interest rates for the 13th time since mid-March 2010. Asian nations from Indonesia to South Korea are either cutting rates or keeping them on hold to protect expansion as Europe’s debt crisis threatens to trigger a global slump.

Tata Motors is turning to the British luxury brands it purchased from Ford Motor Co. for growth and to drive international ambitions. The Jaguar Land Rover unit, based in Gaydon, England, generated 57 percent of Tata Motors’ revenue for the year ended March 31, up from 53 percent a year earlier.

“The situation in Europe is very difficult to predict so we are trying to be fit to weather the storm,” Ralf Speth, chief executive officer at Jaguar Land Rover, said at a press conference in Mumbai yesterday. “In principle, emerging market sales help to overcome critical situations in Europe.”
Jaguar Land Rover

Sales of Jaguar and Land Rover vehicles rose 23 percent to 68,000 units in the quarter as it sold more in China and Russia, the company said yesterday. Sales of Jaguar declined 7 percent to 13,306 units, while Land Rover deliveries increased 34 percent to 54,694 units.

Tata Motors began delivering the new Evoque sport-utility vehicle on Sept. 9 and plans to introduce a new Defender model in 2015. It has a wait list for the Evoque running into the first quarter of next year, John Edwards, global brand director for Land Rover, said on Nov. 10.

Land Rover sold about 7,700 units of Evoque till September, Tata Motors said yesterday. The company has got “positive response” for the Jaguar XF with the new 2.2 liter diesel engine, it said.

“The outlook for Tata Motors looks favorable as the new Evoque and the new XF will propel JLR volumes,” Mahantesh Sabarad, an analyst with Fortune Equity Brokers India Ltd. in Mumbai, said before the earnings announcement. “And we may see Indian passenger car sales rising in the March quarter.”
Strikes, Borrowing Costs

Indian passenger vehicle sales tumbled the most in more than a decade after labor strikes idled factories at Maruti Suzuki India Ltd. and rising borrowing costs turned off consumers. Deliveries declined for a fourth month, dropping 24 percent to 138,521 vehicles in October, according to the industry group.

India’s central bank raised its key interest rate to 8.50 percent last month to cool inflation that has exceeded 9 percent since December, driving down demand for cars in a country where about 80 percent of automobile purchases are funded through loans.

Local gasoline prices were raised by refiners including Indian Oil Corp. on Nov. 4 for a third time in six months.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

India to Meet Business Leaders This Week to Discuss Ways to Boost Growth By Kartik Goyal - Nov 13, 2011

India’s government will meet with business leaders this week to discuss ways to spur economic growth after factory output and merchandise exports grew at the slowest pace in two years.

Prime Minister Manmohan Singh’s government may invite businessmen tomorrow, Commerce Minister Anand Sharma told reporters at a conference organized by the World Economic Forum in Mumbai yesterday. Factory production increased 1.9 percent in September. Exports rose 10.8 percent to $19.9 billion last month from a year earlier, according to Commerce Secretary Rahul Khullar.

The $1.7 trillion economy is slowing after India raised interest rates 13 times since March 2010 and Europe’s debt crisis cut demand for the nation’s products. Businessmen will ask the government to quicken approvals for infrastructure projects and ease land acquisition rules after anti-corruption protests stymied decision making, said Chandrajit Banerjee, director general of the Confederation of Indian Industry.

“Corruption, bureaucratic hurdles all are adding to uncertainties,” Ashok Hinduja, chairman of Hinduja Ventures Ltd. (HVL), said in an interview in Mumbai yesterday. “All these uncertainties are delaying our expansion plans.” He didn’t give details.

The government is taking fewer decisions after a minister, bureaucrats and company officials were jailed over graft charges related to airwaves sales. India’s auditor reported in November last year that permits to run mobile-phone services were sold at “unbelievably low” prices, estimating the potential loss to the government at $31 billion.
Corruption Cost

The number of cabinet approvals fell 39 percent to 33 in the first six months of this year from a year earlier, according to government data. Ministers passed 67 proposals in the first half of 2009 and 129 in 2008, the data show.

India’s gross domestic product growth could approach China’s -- more than 9 percent -- if corruption were reduced, according to a March survey of chief executive officers in India by consulting firm KPMG. Investment from abroad would rise if foreign companies believed corruption had been curbed, the CEOs said.

The Reserve Bank of India on Oct. 25 predicted India’s economy will expand 7.6 percent in the year ending March 31, lower than the 8 percent it estimated earlier. Governor Duvvuri Subbarao has increased the central bank’s repurchase rate by 375 basis points since the start of 2010. That’s the fastest round of increases since the monetary authority was established in 1935, Bloomberg data show. The repurchase rate is 8.5 percent.
‘Paralyzed’

Steel production by companies including Tata Steel Ltd. (TATA), India’s largest producer, grew 6.6 percent in September from a year earlier, compared with an 8 percent gain in August, the commerce ministry said on Oct. 31. Cement production growth slowed to 0.9 percent from 7.2 percent during the period, the statement showed.

“We need policy formulation that will aid fund flow into the country,” said Subba Rao Amarthaluru, group chief financial officer of GMR Group. “We have demand and opportunities here but you need capital.”

The government also needs to build roads, ports and power stations to increase access to goods and services in a country that’s attracting 11 million people demanding such services every year, ICICI Bank Ltd. (ICICIBC) Chief Executive Officer Chanda Kochhar said in Mumbai yesterday.

The government and the industry are moving toward the same direction “but we shouldn’t be saying that because of democracy we will be paralyzed,” Reliance Industries Ltd.’s billionaire Chairman Mukesh Ambani said at the conference in Mumbai. “That’s what worries me.”

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.