India plans to ease takeover rules for “abnormal cases” in a move that could ease the sale of Satyam Computer Services, which has been snared in India’s biggest corporate scandal.
The Securities and Exchange Board of India (Sebi) said on Monday it would set new guidelines and amend existing rules which force an investor who has acquired 15 per cent of a company to make an open offer for an extra 20 per cent at a six-month average share price.
EDITOR’S CHOICE
Satyam suitors warned over risks of purchase - Feb-01
Satyam auditors face collusion claims - Jan-29
PwC chief in India as Satyam probe widens - Jan-27
PwC staff detained in Satyam probe - Jan-25
Business Life: Outsourcing clients on the lookout - Jan-22
Details of alleged Satyam fraud emerge - Jan-22
The relaxation of the rules would make Satyam more attractive to an acquirer.
The average share price of the IT outsourcing group has been about Rs40 ($0.82) since its then-chairman B. Ramalinga Raju confessed last month to manipulating the group’s books. This compares with the Rs255 level which would be the average price under the current takeover rules.
Larsen & Toubro, the Indian engineering group, has become the front runner to take over the company. It recently trebled its stake in Satyam to 12 per cent.
“Sebi has moved in the right direction, but we will have to see at what price it sets the open offer…L&T thinks something between Rs50 and Rs40 would be fair. At that point it would make a move on Satyam,” said a person close to the engineering company.
C.B. Bhave, Sebi’s chairman said: “We will amend our regulations through guidelines to enable a transparent process for arriving at a price in case of such acquisitions.”
Under the new rules, the period over which the price is calculated is likely to be shorter, to give a company that has been hit by a scandal a fairer price, said analysts.
Sebi’s proposed amendments followed a request from Satyam’s government-appointed board to ease the open offer pricing rules.
“If Sebi decided not to introduce some changes to the takeover rules then nobody would make an offer for the company, it would be simply over priced,” said Vinay Agrawal, executive director at Angel Broking.
Satyam’s overall market value has dropped to about $800m from $7bn in May last year.
Other companies that have shown interest in Satyam are Spice Group, the Indian conglomerate headed by BK Modi, Hinduja Global Solutions, the IT arm of the Hinduja conglomerate, and iGate, the US-based outsourcer.
Satyam shares closed up 6.6 per cent on Monday at Rs57.60 on the Bombay Stock Exchange.
Wednesday, February 4, 2009
Obama Orders Pay Limits at Banks Getting Future Aid
Feb. 4 (Bloomberg) -- President Barack Obama called bonus payouts at banks getting rescue funds “shameful” as he and Treasury Secretary Timothy Geithner announced the government will require financial companies getting aid in the future to cap compensation of top officials at $500,000 a year.
“To restore our financial system, we’ve got to restore trust,” Obama said at the White House as he set out new rules for companies that seek “exceptional” assistance from the Treasury. “And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.”
Geithner said the economic crisis has been “made worse by a loss in faith” in the judgments of executives.
“There is a deep sense across the country that those who are not responsible for this crisis are bearing a greater burden than those who were,” he said, adding that he will outline a “comprehensive” program for stabilizing the financial system next week.
Obama also urged Congress to finish work on economic stimulus legislation, saying that a failure to act “will turn crisis into a catastrophe and guarantee a longer recession.”
Congressional Support
The new conditions won support from Democrats and Republicans in Congress, who say they’ve been getting angry calls and mail from constituents over bonuses paid to bankers being rescued by the government. Several lawmakers said they may pursue even greater restrictions.
“If anyone is looking for the taxpayer to help bail their company out, these type of executive pay caps are appropriate,” House Republican leader John Boehner said.
Democrat Christopher Dodd, chairman of the Senate Banking Committee, said reports about executive pay and bonuses are “infuriating” the public.
“Americans understand a lot of things about this whole process, but one of the things they don’t understand is how it is their money is going to institutions that are simultaneously rewarding executives with outrageously big levels of compensation,” he said.
Senator Claire McCaskill, a Missouri Democrat who proposed legislation last week to cap executive compensation at $400,000 a year, said today that Obama “is on the right track.” She said she still will try to attach her proposal to the economic stimulus legislation being debated in the Senate.
‘Right Direction’
Representative Adam Putnam, a Florida Republican, said Obama’s action is “a step in the right direction.” He called the $500,000 limit “a good start; it may need to be lower.”
While executive pay would be limited under the administration’s plan, there are provisions that would allow additional compensation in the form of restricted stock that can’t be sold until taxpayers have been paid back with interest. Senior executive compensation plans also must be submitted to a non-binding shareholder resolution.
The compensation cap may be waived for companies getting aid through what the administration terms “generally available capital access programs,” through full public disclosure and submission of a resolution to shareholders if requested.
Companies also must have in place provisions to reclaim, or “claw back,” bonuses and incentives from the top 25 senior executives if they are found to engage in deceptive practices.
Golden Parachutes
The terms announced today also expand the ban on “golden parachute” severance packages to a company’s top 10 executives from five in existing programs. In addition, the next 25 executives would be prohibited from getting severance greater than one year’s compensation.
The rules won’t be applied retroactively to companies that already have received “exceptional” aid from the Treasury Department through the $700 billion Troubled Asset Relief Program, such as Citigroup Inc. and American International Group Inc. The limits would be applied if those companies seek a fresh round of assistance.
The restrictions are aimed at top executives who make decisions for the company, according to an administration official who briefed reporters after the president spoke. The $500,000 limit was arrived at based on language in the original TARP legislation and tax law, the official said.
The number of executives covered by the compensation limit would be determined on a case-by-case basis and set out in a contract for the aid.
Disclosure Requirements
The administration also is imposing conditions that it says would force companies to disclose more about expenses such as corporate jets, office renovations, entertainment and holiday parties.
White House press secretary Robert Gibbs said such “‘name and shame’ provisions” would have as much impact as regulations on correcting corporate behavior.
He cited the publicity and subsequent outcry that caused Citigroup’s retreat on the purchase of a $50 million corporate jet and by Wells Fargo & Co. to cancel a four-day event in Las Vegas. Citigroup got $45 billion through TARP and Wells Fargo received $25 billion.
While TARP is directed primarily at financial firms, the restrictions would apply to any company that seeks new government aid. That includes automakers General Motors Corp. and Chrysler LLC, which were approved for a total of $17.4 billion in loans from TARP funds in December, the official, who spoke on condition of anonymity, said. That contract set out limits on compensation and the new restrictions would apply only if they seek assistance again.
Bonus Report
Outrage among the public and lawmakers has been building since October, when Congress passed the rescue plan for financial firms. Lawmakers complained that the $350 billion first half of the fund was doled out with little public accounting of how the money was spent. A New York state comptroller report that $18.4 billion in bonuses were paid to Wall Street executives and employees as the U.S. sank into a recession further inflamed Americans.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said.
The compensation restrictions announced today are part of a wider White House plan to overhaul rules governing the remaining $350 billion in TARP money, free up credit markets and tighten regulation of financial markets.
New Strategy
Geithner said he would outline a strategy next week. He met privately with House and Senate Democratic leaders at the Capitol this afternoon.
On Wall Street, there is concern that compensation curbs would hinder a company’s ability to attract top-notch employees, and that would lead to a talent drain, Meredith Whitney, an analyst at Oppenheimer & Co., said on Bloomberg Television.
“If you cap compensation, the best and the brightest are still going to figure out a way to make money, and it may not be on Wall Street,” Whitney said.
William Cohan, a former investment banker at Lazard Ltd. and JPMorgan and author of “The Last Tycoons” about Lazard, disputed that notion.
“What do they do? They push paper around,” Cohan said, “Where else can you get paid $500,000 to do that?”
Measuring Performance
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said this week that it’s wrong for politicians to criticize Wall Street pay without differentiating between companies where compensation is commensurate with performance.
“It’s unfair to talk about us as one,” Dimon, who was paid $1 million last year and didn’t accept a bonus, said at a conference in New York. “Not every company was responsible.”
Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. awarded their employees a cumulative $145 billion in bonuses from 2003 through 2007, according to estimates based on company reports.
That is more than the annual gross domestic product of the Philippines. Lehman has since gone bankrupt, while Bear Stearns and Merrill have been taken over by commercial banks.
Wall Street firms’ pay has traditionally been tied to performance of the companies. As the bonus portion of employees’ pay has grown, many started to expect it regardless of performance. Some employees have been receiving incentives “for basically turning up,” Barclays Plc Chairman Marcus Agius said last week at the World Economic Forum in Davos.
As the public outcry over Wall Street pay escalated, top executives at Morgan Stanley, Bank of America Corp., Goldman Sachs and Citigroup have agreed to forgo bonuses. Governments in the U.K., Switzerland and France have pressured banks, including UBS AG and Royal Bank of Scotland Group Plc to limit executive pay after taxpayer-funded bailouts.
“To restore our financial system, we’ve got to restore trust,” Obama said at the White House as he set out new rules for companies that seek “exceptional” assistance from the Treasury. “And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.”
Geithner said the economic crisis has been “made worse by a loss in faith” in the judgments of executives.
“There is a deep sense across the country that those who are not responsible for this crisis are bearing a greater burden than those who were,” he said, adding that he will outline a “comprehensive” program for stabilizing the financial system next week.
Obama also urged Congress to finish work on economic stimulus legislation, saying that a failure to act “will turn crisis into a catastrophe and guarantee a longer recession.”
Congressional Support
The new conditions won support from Democrats and Republicans in Congress, who say they’ve been getting angry calls and mail from constituents over bonuses paid to bankers being rescued by the government. Several lawmakers said they may pursue even greater restrictions.
“If anyone is looking for the taxpayer to help bail their company out, these type of executive pay caps are appropriate,” House Republican leader John Boehner said.
Democrat Christopher Dodd, chairman of the Senate Banking Committee, said reports about executive pay and bonuses are “infuriating” the public.
“Americans understand a lot of things about this whole process, but one of the things they don’t understand is how it is their money is going to institutions that are simultaneously rewarding executives with outrageously big levels of compensation,” he said.
Senator Claire McCaskill, a Missouri Democrat who proposed legislation last week to cap executive compensation at $400,000 a year, said today that Obama “is on the right track.” She said she still will try to attach her proposal to the economic stimulus legislation being debated in the Senate.
‘Right Direction’
Representative Adam Putnam, a Florida Republican, said Obama’s action is “a step in the right direction.” He called the $500,000 limit “a good start; it may need to be lower.”
While executive pay would be limited under the administration’s plan, there are provisions that would allow additional compensation in the form of restricted stock that can’t be sold until taxpayers have been paid back with interest. Senior executive compensation plans also must be submitted to a non-binding shareholder resolution.
The compensation cap may be waived for companies getting aid through what the administration terms “generally available capital access programs,” through full public disclosure and submission of a resolution to shareholders if requested.
Companies also must have in place provisions to reclaim, or “claw back,” bonuses and incentives from the top 25 senior executives if they are found to engage in deceptive practices.
Golden Parachutes
The terms announced today also expand the ban on “golden parachute” severance packages to a company’s top 10 executives from five in existing programs. In addition, the next 25 executives would be prohibited from getting severance greater than one year’s compensation.
The rules won’t be applied retroactively to companies that already have received “exceptional” aid from the Treasury Department through the $700 billion Troubled Asset Relief Program, such as Citigroup Inc. and American International Group Inc. The limits would be applied if those companies seek a fresh round of assistance.
The restrictions are aimed at top executives who make decisions for the company, according to an administration official who briefed reporters after the president spoke. The $500,000 limit was arrived at based on language in the original TARP legislation and tax law, the official said.
The number of executives covered by the compensation limit would be determined on a case-by-case basis and set out in a contract for the aid.
Disclosure Requirements
The administration also is imposing conditions that it says would force companies to disclose more about expenses such as corporate jets, office renovations, entertainment and holiday parties.
White House press secretary Robert Gibbs said such “‘name and shame’ provisions” would have as much impact as regulations on correcting corporate behavior.
He cited the publicity and subsequent outcry that caused Citigroup’s retreat on the purchase of a $50 million corporate jet and by Wells Fargo & Co. to cancel a four-day event in Las Vegas. Citigroup got $45 billion through TARP and Wells Fargo received $25 billion.
While TARP is directed primarily at financial firms, the restrictions would apply to any company that seeks new government aid. That includes automakers General Motors Corp. and Chrysler LLC, which were approved for a total of $17.4 billion in loans from TARP funds in December, the official, who spoke on condition of anonymity, said. That contract set out limits on compensation and the new restrictions would apply only if they seek assistance again.
Bonus Report
Outrage among the public and lawmakers has been building since October, when Congress passed the rescue plan for financial firms. Lawmakers complained that the $350 billion first half of the fund was doled out with little public accounting of how the money was spent. A New York state comptroller report that $18.4 billion in bonuses were paid to Wall Street executives and employees as the U.S. sank into a recession further inflamed Americans.
“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president,” Obama said.
The compensation restrictions announced today are part of a wider White House plan to overhaul rules governing the remaining $350 billion in TARP money, free up credit markets and tighten regulation of financial markets.
New Strategy
Geithner said he would outline a strategy next week. He met privately with House and Senate Democratic leaders at the Capitol this afternoon.
On Wall Street, there is concern that compensation curbs would hinder a company’s ability to attract top-notch employees, and that would lead to a talent drain, Meredith Whitney, an analyst at Oppenheimer & Co., said on Bloomberg Television.
“If you cap compensation, the best and the brightest are still going to figure out a way to make money, and it may not be on Wall Street,” Whitney said.
William Cohan, a former investment banker at Lazard Ltd. and JPMorgan and author of “The Last Tycoons” about Lazard, disputed that notion.
“What do they do? They push paper around,” Cohan said, “Where else can you get paid $500,000 to do that?”
Measuring Performance
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said this week that it’s wrong for politicians to criticize Wall Street pay without differentiating between companies where compensation is commensurate with performance.
“It’s unfair to talk about us as one,” Dimon, who was paid $1 million last year and didn’t accept a bonus, said at a conference in New York. “Not every company was responsible.”
Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. awarded their employees a cumulative $145 billion in bonuses from 2003 through 2007, according to estimates based on company reports.
That is more than the annual gross domestic product of the Philippines. Lehman has since gone bankrupt, while Bear Stearns and Merrill have been taken over by commercial banks.
Wall Street firms’ pay has traditionally been tied to performance of the companies. As the bonus portion of employees’ pay has grown, many started to expect it regardless of performance. Some employees have been receiving incentives “for basically turning up,” Barclays Plc Chairman Marcus Agius said last week at the World Economic Forum in Davos.
As the public outcry over Wall Street pay escalated, top executives at Morgan Stanley, Bank of America Corp., Goldman Sachs and Citigroup have agreed to forgo bonuses. Governments in the U.K., Switzerland and France have pressured banks, including UBS AG and Royal Bank of Scotland Group Plc to limit executive pay after taxpayer-funded bailouts.
Sri Lanka Seeks to Boost Stock Trading With India
Feb. 5 (Bloomberg) -- Sri Lanka, whose benchmark stock index surged 20 percent this year on prospects the nation’s civil war may be ending, is in talks to form an alliance with an Indian equity market to help bolster trading.
Regulators aim to start trading in derivatives by the end of the year, Channa de Silva, director general of the nation’s Securities and Exchange Commission, said in an interview. Sri Lanka also may offer a stake in the island-nation’s bourse to the National Stock Exchange of India Ltd., de Silva said.
Sri Lanka’s $5.2 billion exchange, Asia’s smallest, is counting on an end to the 26-year civil war to draw back investors to its $32 billion tea and textile-exporting economy. President Mahinda Rajapaksa said in his Independence Day speech yesterday that the country will defeat the rebel Liberation Tigers of Tamil Eelam within “a few days.”
“The conflict is on the verge of ending, and that will result in huge economic potential,” de Silva said in a telephone interview yesterday. “Sri Lanka is so small, even if it gets $10 billion, this market will just run, and this amount is petty cash for foreign investors.”
The National Stock Exchange said in an e-mail that it wouldn’t comment.
‘Good Quality Companies’
The gains in Sri Lanka’s benchmark index, the best performer this year among 90 tracked by Bloomberg, came as a military offensive drove Tamil rebels to an area less than 300 square kilometers (120 square miles) in the northeast. Daily trading during the rally was 132.2 million rupees ($1.2 million), less than a third of the average over the previous three years.
“Sri Lanka has a number of good-quality companies, it has fantastic natural resources with everything from tourism, tea plantations, and ports and logistics potential,” said David Gait, a fund manager at First State Investment Management Ltd., which manages $15 billion in emerging market equities. “Still, it sits on the higher risk spectrum among emerging markets.”
Gait said by phone yesterday his funds remain invested in Sri Lankan companies including John Keells Holdings Ltd., which has the third-highest weighting on the key index, and has no immediate decision on adding to those holdings.
The rally in Sri Lanka so far has drawn mainly local investors and funds, said Gavin D’Rosairo, who oversees assets worth 24 billion Sri Lankan rupees ($210 million) at Eagle NDB Fund Management Co., one of the nation’s largest money managers. That raises the concern that the rally will falter as signs of slowing economic growth overwhelm optimism spurred by the government’s victories in the civil war.
‘Set to Implode’
“Even if large-scale military confrontations end soon, the economy is set to implode from the impact of the global recession on exports,” Sisira Jayasuriya, a professor of economics and Sri Lanka specialist at La Trobe University in Melbourne, said in an interview Jan. 30. “Business confidence is at rock-bottom.”
Gross domestic product expanded 6.3 percent in the quarter ended September, down from 7 percent in the previous three months, on falling exports of tea, rubber and textiles, the statistics department said Dec. 16. The economy will expand by between 5 percent and 5.5 percent this year, according to central bank estimates.
Boutique hotel operators including Pegasus Hotels of Ceylon Ltd. and Eden Hotel Lanka Ltd. are among the 10 biggest gainers this year. Dialog Telekom Ltd., the nation’s largest mobile- phone company and a unit of Malaysia’s TM International Bhd., and Tokyo Cement Co., partly owned by Japan’s Mitsui Mining Co., are among the largest decliners.
Cushioning the Recession
The country also unveiled a 16 billion-rupee stimulus package on Dec. 31 to help ease the economic crunch. The expected spending after the war boosted shares of construction- related stocks, including Lanka Cement Plc, which doubled this year, and Alufab Ltd., which gained 90 percent.
“A chunk of the budget could be spent on rebuilding the country, the north in particular, which economically could cushion the effects of a global recession,” said Hugh Young, managing director at Aberdeen Asset Managers Ltd.’s Asian unit, which oversees $37.3 billion, including Sri Lankan shares. “All that, at the moment, is rather wishful thinking.”
Regulators aim to start trading in derivatives by the end of the year, Channa de Silva, director general of the nation’s Securities and Exchange Commission, said in an interview. Sri Lanka also may offer a stake in the island-nation’s bourse to the National Stock Exchange of India Ltd., de Silva said.
Sri Lanka’s $5.2 billion exchange, Asia’s smallest, is counting on an end to the 26-year civil war to draw back investors to its $32 billion tea and textile-exporting economy. President Mahinda Rajapaksa said in his Independence Day speech yesterday that the country will defeat the rebel Liberation Tigers of Tamil Eelam within “a few days.”
“The conflict is on the verge of ending, and that will result in huge economic potential,” de Silva said in a telephone interview yesterday. “Sri Lanka is so small, even if it gets $10 billion, this market will just run, and this amount is petty cash for foreign investors.”
The National Stock Exchange said in an e-mail that it wouldn’t comment.
‘Good Quality Companies’
The gains in Sri Lanka’s benchmark index, the best performer this year among 90 tracked by Bloomberg, came as a military offensive drove Tamil rebels to an area less than 300 square kilometers (120 square miles) in the northeast. Daily trading during the rally was 132.2 million rupees ($1.2 million), less than a third of the average over the previous three years.
“Sri Lanka has a number of good-quality companies, it has fantastic natural resources with everything from tourism, tea plantations, and ports and logistics potential,” said David Gait, a fund manager at First State Investment Management Ltd., which manages $15 billion in emerging market equities. “Still, it sits on the higher risk spectrum among emerging markets.”
Gait said by phone yesterday his funds remain invested in Sri Lankan companies including John Keells Holdings Ltd., which has the third-highest weighting on the key index, and has no immediate decision on adding to those holdings.
The rally in Sri Lanka so far has drawn mainly local investors and funds, said Gavin D’Rosairo, who oversees assets worth 24 billion Sri Lankan rupees ($210 million) at Eagle NDB Fund Management Co., one of the nation’s largest money managers. That raises the concern that the rally will falter as signs of slowing economic growth overwhelm optimism spurred by the government’s victories in the civil war.
‘Set to Implode’
“Even if large-scale military confrontations end soon, the economy is set to implode from the impact of the global recession on exports,” Sisira Jayasuriya, a professor of economics and Sri Lanka specialist at La Trobe University in Melbourne, said in an interview Jan. 30. “Business confidence is at rock-bottom.”
Gross domestic product expanded 6.3 percent in the quarter ended September, down from 7 percent in the previous three months, on falling exports of tea, rubber and textiles, the statistics department said Dec. 16. The economy will expand by between 5 percent and 5.5 percent this year, according to central bank estimates.
Boutique hotel operators including Pegasus Hotels of Ceylon Ltd. and Eden Hotel Lanka Ltd. are among the 10 biggest gainers this year. Dialog Telekom Ltd., the nation’s largest mobile- phone company and a unit of Malaysia’s TM International Bhd., and Tokyo Cement Co., partly owned by Japan’s Mitsui Mining Co., are among the largest decliners.
Cushioning the Recession
The country also unveiled a 16 billion-rupee stimulus package on Dec. 31 to help ease the economic crunch. The expected spending after the war boosted shares of construction- related stocks, including Lanka Cement Plc, which doubled this year, and Alufab Ltd., which gained 90 percent.
“A chunk of the budget could be spent on rebuilding the country, the north in particular, which economically could cushion the effects of a global recession,” said Hugh Young, managing director at Aberdeen Asset Managers Ltd.’s Asian unit, which oversees $37.3 billion, including Sri Lankan shares. “All that, at the moment, is rather wishful thinking.”
Asian Stocks Fall on Renewed Recession Concern; Qantas Slumps
Feb. 5 (Bloomberg) -- Asian stocks fell for the first time in three days as reduced earnings forecasts in Japan and share sales in Australia fueled concerns that the global recession is deepening.
Casio Computer Co., the maker of G-Shock watches, slumped 6 percent after cutting its earnings forecasts. Qantas Airways Ltd., Australia’s largest airline, and developer Lend Lease Corp. slumped more than 16 percent in Sydney after selling stock at discounts to bolster their balance sheets.
“The global recession continues to weigh on investor sentiment,” Mitsushige Akino, who oversees $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index dipped 0.3 percent to 82.92 as of 10:35 a.m. in Tokyo, with two stocks declining for each one that fell. Japan’s Nikkei 225 Stock Average dropped 1.2 percent, while Australia’s S&P/ASX 200 Index lost 0.3 percent.
Futures on the Standard & Poor’s 500 Index fell 0.7 as Cisco Systems Inc., the largest maker of networking equipment, forecast sales that missed analyst estimates. The gauge dropped 0.8 percent yesterday after disappointing earnings at Kraft Foods Inc. and Walt Disney Co.
Casio dropped 6 percent to 648 yen. Net income is projected to fall 88 percent to 1.5 billion yen ($17 million) in the year ending March 31, less than the company’s earlier forecast of 13.5 billion yen.
A decline in demand and anticipated “greater setbacks” in the global economy led the company to cut its outlook, Tokyo- based Casio said yesterday after the market closed.
“There has been a massive downward revision to earnings estimates, and that’s a very difficult headwind for the market to have to face,” said Mark Freeman, a portfolio manager at Westwood Management Corp., which oversees $7.5 billion in Dallas.
Qantas plunged 17 to A$1.89 in Sydney. It sold A$500 million ($321 million) new shares at a 19 percent discount.
Lend Lease, the developer involved in building London’s Olympic Village, tumbled 17 percent after raising A$302.5 million selling shares at an 11 percent discount.
Casio Computer Co., the maker of G-Shock watches, slumped 6 percent after cutting its earnings forecasts. Qantas Airways Ltd., Australia’s largest airline, and developer Lend Lease Corp. slumped more than 16 percent in Sydney after selling stock at discounts to bolster their balance sheets.
“The global recession continues to weigh on investor sentiment,” Mitsushige Akino, who oversees $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index dipped 0.3 percent to 82.92 as of 10:35 a.m. in Tokyo, with two stocks declining for each one that fell. Japan’s Nikkei 225 Stock Average dropped 1.2 percent, while Australia’s S&P/ASX 200 Index lost 0.3 percent.
Futures on the Standard & Poor’s 500 Index fell 0.7 as Cisco Systems Inc., the largest maker of networking equipment, forecast sales that missed analyst estimates. The gauge dropped 0.8 percent yesterday after disappointing earnings at Kraft Foods Inc. and Walt Disney Co.
Casio dropped 6 percent to 648 yen. Net income is projected to fall 88 percent to 1.5 billion yen ($17 million) in the year ending March 31, less than the company’s earlier forecast of 13.5 billion yen.
A decline in demand and anticipated “greater setbacks” in the global economy led the company to cut its outlook, Tokyo- based Casio said yesterday after the market closed.
“There has been a massive downward revision to earnings estimates, and that’s a very difficult headwind for the market to have to face,” said Mark Freeman, a portfolio manager at Westwood Management Corp., which oversees $7.5 billion in Dallas.
Qantas plunged 17 to A$1.89 in Sydney. It sold A$500 million ($321 million) new shares at a 19 percent discount.
Lend Lease, the developer involved in building London’s Olympic Village, tumbled 17 percent after raising A$302.5 million selling shares at an 11 percent discount.
Tuesday, February 3, 2009
One crore jobs may be lost Labour Intensive Industries Feared Taking The Hit
New Delhi: Ahead of general elections, massive job cuts in labour-intensive industries are giving UPA government the heebie-jeebies. Exports for January have nosedived by 22% and projections indicate that up to one crore persons could lose jobs in the current fiscal ending March.
The export sector data flowing in has increased pressure on the government which has been trying to spur domestic demand to offset decline in overseas orders ever since the global economic slowdown kicked in around September last year. Based on order books, industry inputs predicted a crore of job losses, an estimate that has worried the government.
Aware that the economy might become an election issue, Congress’s draft manifesto has promised greater employment and populist schemes. If the bad news of the economy gets worse, these claims will sound less than convincing. Ficci found that faced with a slump and piled up inventories, industries like textiles, garments, chemicals and gems and jewellery had cut production by 10-50%.
The commerce ministry, through surveys carried out by its own field officials recently, found over one lakh people had already lost jobs up to January 15 in just the 400 units examined. The one crore figure has been compiled by the Federation of Indian Export Organisations which says it has carried out an intensive survey. Ajai Sahai, director general of Fieo, told TOI that textile, garments and handicraft sectors were the worst affected.
The export sector data flowing in has increased pressure on the government which has been trying to spur domestic demand to offset decline in overseas orders ever since the global economic slowdown kicked in around September last year. Based on order books, industry inputs predicted a crore of job losses, an estimate that has worried the government.
Aware that the economy might become an election issue, Congress’s draft manifesto has promised greater employment and populist schemes. If the bad news of the economy gets worse, these claims will sound less than convincing. Ficci found that faced with a slump and piled up inventories, industries like textiles, garments, chemicals and gems and jewellery had cut production by 10-50%.
The commerce ministry, through surveys carried out by its own field officials recently, found over one lakh people had already lost jobs up to January 15 in just the 400 units examined. The one crore figure has been compiled by the Federation of Indian Export Organisations which says it has carried out an intensive survey. Ajai Sahai, director general of Fieo, told TOI that textile, garments and handicraft sectors were the worst affected.
Getting home loans still not easy
New Delhi: Despite interest rates easing, people are still finding it difficult to take a home loan. Reason: Banks now insist that borrowers need to contribute 20-30% of the value of the property upfront, instead of 10-15% earlier.
As the finance proportion of the banks has come down from 85-90% of the property value to 70-80%, borrowers (mainly the younger lot) are finding it difficult to go for a home loan. SBI, which has brought down its home loan rate to 8%, lends only 80% of the value of house if the requirement is between Rs 20 lakh and Rs 75 lakh. If the loan is more than Rs 75 lakh, the bank lends only 75% of the amount. Punjab National Bank (PNB) lends 75% of the loan for a property of above Rs 20 lakh. Other PSU banks like Union Bank and UCO Bank also lend only up to 80% of the value of the house. Private sector banks like ICICI Bank ask for 20-30% buyer’s contribution while giving a home loan.
The average price of a three-bed room apartment in metros like Mumbai, Delhi/NCR and Bangalore is around Rs 40 lakh. In other big cities like Kolkata, Chennai and Pune, it is around Rs 30 lakh. So, the buyer’s contribution to buy a house of Rs 40 lakh has increased to Rs 8-10 lakh, from Rs 4-5 lakh earlier. For a young buyer (in the age group of 30-35 years), it acts as a deterrent. However, bankers are not really bothered. UCO Bank executive director T M Bhasin said as real estate price is declining, banks have increased the buyer’s contribution so that the market value of the property should not fall below the loan amount during the course of repayment. He said if the bank lends 85% of the transaction and the market value of the house falls by 20% within six months, the loan amount will become more than the value of the property taken as security.
In that scenario, the borrower can decide to walk off—surrender the house to the bank, and saying recover the money by selling the property. To avoid this, the bank has increased the buyer’s contribution. And this factor has played a big role in the current US crisis.
CAUGHT IN TRAP
Borrowers now need to contribute 20-30% of the value of the house upfront, instead of 10-15% earlier
So, buyer's contribution for a house of Rs 40 lakh has increased to Rs 8-10 lakh, from Rs 4-5 lakh earlier
EMI limit has been reduced to 40% of monthly income, from 50% earlier
As the finance proportion of the banks has come down from 85-90% of the property value to 70-80%, borrowers (mainly the younger lot) are finding it difficult to go for a home loan. SBI, which has brought down its home loan rate to 8%, lends only 80% of the value of house if the requirement is between Rs 20 lakh and Rs 75 lakh. If the loan is more than Rs 75 lakh, the bank lends only 75% of the amount. Punjab National Bank (PNB) lends 75% of the loan for a property of above Rs 20 lakh. Other PSU banks like Union Bank and UCO Bank also lend only up to 80% of the value of the house. Private sector banks like ICICI Bank ask for 20-30% buyer’s contribution while giving a home loan.
The average price of a three-bed room apartment in metros like Mumbai, Delhi/NCR and Bangalore is around Rs 40 lakh. In other big cities like Kolkata, Chennai and Pune, it is around Rs 30 lakh. So, the buyer’s contribution to buy a house of Rs 40 lakh has increased to Rs 8-10 lakh, from Rs 4-5 lakh earlier. For a young buyer (in the age group of 30-35 years), it acts as a deterrent. However, bankers are not really bothered. UCO Bank executive director T M Bhasin said as real estate price is declining, banks have increased the buyer’s contribution so that the market value of the property should not fall below the loan amount during the course of repayment. He said if the bank lends 85% of the transaction and the market value of the house falls by 20% within six months, the loan amount will become more than the value of the property taken as security.
In that scenario, the borrower can decide to walk off—surrender the house to the bank, and saying recover the money by selling the property. To avoid this, the bank has increased the buyer’s contribution. And this factor has played a big role in the current US crisis.
CAUGHT IN TRAP
Borrowers now need to contribute 20-30% of the value of the house upfront, instead of 10-15% earlier
So, buyer's contribution for a house of Rs 40 lakh has increased to Rs 8-10 lakh, from Rs 4-5 lakh earlier
EMI limit has been reduced to 40% of monthly income, from 50% earlier
Healthy wallets, unhealthy food
New Delhi: India’s rising consumption level is edging the country into a nutritional black hole. With greater amounts of money in hand to spend, as the quick estimates of national accounts for 2007-08 show, people have begun to move away from cereals, proteins and other healthy foods towards beverages and addictive items like tobacco.
Alarm bells are being sounded on how India’s nutritional security could be challenged even as its economic security gets better. For a country that still can’t provide enough for its poor, the results say the rich and the middle classes may be heading towards the other end of the spectrum—spending on unhealthy food.
Statistics on private final consumption expenditure—an indication of consumer spending trends—show that expenditure on food, beverages and tobacco continues to comprise the largest chunk of household budgets—about 42.3% in 2007-08. But it has come down when compared to 2000-01, when it stood at 48.2%.
The expenditure on cereals and bread has shown a decline from 11.7% in 2000-01 to 9.6% in 2007-08. Spending on pulses has dipped from 1.2% to 1.1% and on fruits and vegetables from 9.5% to 7.7%. The same holds good for other health food with spending on milk and milk products having declined from 7.1% to 6.2% and on meat, eggs and fish from 4.0% to 3.7% between 2000-01 and 2007-08.
This, while the spending on unhealthy items like beverages, paan and intoxicants has increased from 1.6% in 2000-01 to 3.1% in 2007-08. Similarly, expenditure on hotels and restaurants has also shown an increase—from 1.9% to 2.6%—in the same period.
With the economy growing, India is spending more on services. According to the data, the fastest growing components of household spending were related to the service sector, such as healthcare and communications. Consumers tend to spend relatively little on food and more on healthcare as their incomes increase. Spending on medicare, edu up: CSO
New Delhi: The quick estimates of national output, spending, savings and investment for 2007-08 released by the Central Statistical Organisation (CSO) reflect a clear hike in spending on medical care and health services—from 4.7% in 2000-01 to 5.7% in 2007-08.
During the same period, transportation and communication expenditure grew from 14.4% to 16.3% of the total household expenditure. Similarly, spending on recreation, education and cultural services has gone up from 3.7% to 5% of the Rs 26,05,859 crore consumption expenditure in the domestic market in 2007-08. Private consumption expenditure on durables grew from 3.3% to 4%.
Alarm bells are being sounded on how India’s nutritional security could be challenged even as its economic security gets better. For a country that still can’t provide enough for its poor, the results say the rich and the middle classes may be heading towards the other end of the spectrum—spending on unhealthy food.
Statistics on private final consumption expenditure—an indication of consumer spending trends—show that expenditure on food, beverages and tobacco continues to comprise the largest chunk of household budgets—about 42.3% in 2007-08. But it has come down when compared to 2000-01, when it stood at 48.2%.
The expenditure on cereals and bread has shown a decline from 11.7% in 2000-01 to 9.6% in 2007-08. Spending on pulses has dipped from 1.2% to 1.1% and on fruits and vegetables from 9.5% to 7.7%. The same holds good for other health food with spending on milk and milk products having declined from 7.1% to 6.2% and on meat, eggs and fish from 4.0% to 3.7% between 2000-01 and 2007-08.
This, while the spending on unhealthy items like beverages, paan and intoxicants has increased from 1.6% in 2000-01 to 3.1% in 2007-08. Similarly, expenditure on hotels and restaurants has also shown an increase—from 1.9% to 2.6%—in the same period.
With the economy growing, India is spending more on services. According to the data, the fastest growing components of household spending were related to the service sector, such as healthcare and communications. Consumers tend to spend relatively little on food and more on healthcare as their incomes increase. Spending on medicare, edu up: CSO
New Delhi: The quick estimates of national output, spending, savings and investment for 2007-08 released by the Central Statistical Organisation (CSO) reflect a clear hike in spending on medical care and health services—from 4.7% in 2000-01 to 5.7% in 2007-08.
During the same period, transportation and communication expenditure grew from 14.4% to 16.3% of the total household expenditure. Similarly, spending on recreation, education and cultural services has gone up from 3.7% to 5% of the Rs 26,05,859 crore consumption expenditure in the domestic market in 2007-08. Private consumption expenditure on durables grew from 3.3% to 4%.
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