By Jeanette Rodrigues and Anoop Agrawal - Mar 12, 2012
India’s banks have quadrupled purchases of government bonds to bring their total ownership to a record, undermining policy makers’ efforts to inject cash into Asia’s third-biggest economy.
Lenders, which bought 130 billion rupees ($2.6 billion) in the final three months of last year, added 522 billion rupees this quarter, taking holdings to 17.4 trillion rupees. Federal securities will be a “good investment proposition,” Indian Overseas Bank Chairman and Managing Director M. Narendra said in an interview from the southern Indian city of Chennai yesterday.
The central bank cut reserve requirements for lenders by 75 basis points on March 9 to ease a shortage of cash in the financial system as companies pay taxes this month. In the U.S., banks and treasuries bought more government and related debt in the first two months of 2012 than they did in all of 2011.
Indian notes have returned an annualized 17.5 percent this year, compared with Chinese securities that earned 1.1 percent and U.S. debt that lost 3.1 percent, according to Bank of America-Merrill Lynch data. Yields on rupee-denominated bonds will drop further as the central bank cuts its benchmark repurchase rate by 100 basis points in the fiscal year starting April, according to IDBI Bank Ltd. (IDBI) and IndusInd Bank Ltd.
‘High Amount’
“Government securities are very attractive, and with rate cuts expected, bank treasuries would be buying bonds,” N.S. Venkatesh, Mumbai-based head of treasury at state-run IDBI, said in an interview on March 9. “Sovereign yields are likely to fall further.”
Commercial lenders in the U.S. purchased $78.2 billion of Treasuries and securities of agencies in January and February, compared with $62.6 billion in all of 2011, bringing their holdings to $1.78 trillion, Federal Reserve data show.
India’s banks boosted holdings of government bonds by 415.3 billion rupees in the two weeks through Feb. 10, the largest increase since the period ended Oct. 7. Lenders hold a “high amount” of sovereign debt and need to reduce ownership, Reserve Bank of India Governor Duvvuri Subbarao said on March 9, when the monetary authority cut reserve requirements to 4.75 percent.
The yield on India’s benchmark bonds rose one basis point, or 0.01 percentage point, to 8.31 percent today, before tomorrow’s government data that economists predict will show inflation accelerated to 6.7 percent in February from 6.6 percent the month before. The increase in yield pared the drop for this year to 27 basis points. Yields on similar-maturity securities have climbed 11 basis points in China (CTCNY10Y) in 2012 and 16 basis points in the U.S (USGG10YR).
Slowing Economy
Credit growth at Indian banks is slowing as lenders put more money into government bonds. Loans rose 15.6 percent in the year through Feb. 24, the least since 12 months through January 2010, according to central bank data.
Rupee-denominated debt will rally further as a stalling economy prompts policy makers to cut the repurchase rate by 50 basis points in 2012, according to state-owned Bank of India. Gross domestic product rose 6.1 percent in three months through December, the least since the first quarter of 2009, according to government data.
“It is reasonable to position oneself with expectations that rate reductions will start soon,” N. Seshadri, a Mumbai- based executive director at Bank of India, said in an interview yesterday. “The present level of interest rates aren’t helping achieve sustainable growth.”
Bank Borrowings
The rally in bonds is attracting global funds, which have boosted their holdings of Indian debt every month since October. They have raised their ownership by $5.1 billion in 2012, spurring gains in the rupee. The currency strengthened 0.1 percent to 49.9250 per dollar today. The rupee has rebounded 6.3 percent this year after slumping 16 percent in 2011, the worst performance in Asia.
Cash availability at lenders has worsened on speculation the central bank kept buying rupees to stem the decline in the currency. Banks borrowed an average 1.33 trillion rupees a day from the Reserve Bank this month, more than double the 600 billion-rupee limit favored by the monetary authority.
The shortage of funds is likely to persist as Finance Minister Pranab Mukherjee will announce a higher borrowing program for the fiscal year starting April when he unveils the federal budget on March 16, according to FirstRand Ltd., a unit of South Africa’s second-largest banking group. The government increased its borrowing plan by 23 percent in the current fiscal year as revenue dropped because of slowing economic growth.
‘Likely to Persist’
“The market seems to be pricing in repo-rate reductions starting as early as April,” Krishnamurthy Harihar, a Mumbai- based treasurer at FirstRand, said in an interview on March 9. “However, with the likelihood of a large and front-loaded government borrowing program next fiscal year, liquidity tightness is likely to persist and yields are unlikely to fall much.”
The 10-year yield could stay at about 8.25 percent “for the coming months,” he predicted.
The cost of protecting the debt of State Bank of India (SBIN) against default has slid this year. Credit-default swaps on the lender, which some investors consider a proxy for the sovereign, have fallen to 319 basis points from 395 basis points at the end of last year, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in privately negotiated markets. The swaps pay face value should a company fail to adhere to its agreements.
The difference between India’s 10-year bonds and similar- maturity U.S. Treasuries has narrowed to 626 basis points from a record 697 basis points touched in November.
“Government bonds are going to be a good investment proposition,” Indian Overseas Bank’s Narendra said in a telephone interview. “Yields have priced in most of the risks and they are above where they should be. I expect a slide.”
To contact the reporters on this story: Jeanette Rodrigues in Mumbai at jrodrigues26@bloomberg.net; Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Monday, March 12, 2012
Sunday, March 11, 2012
India’s Industrial Output Growth Beats Estimates, Spurring Sensex Advance
India’s Industrial Output Rises at Fastest Pace in Seven Months
By Kartik Goyal - Mar 12, 2012
India’s industrial production rose at the fastest pace in seven months in January, weathering the highest interest rates since 2008 and weaker global growth.
Output at factories, utilities and mines advanced 6.8 percent from a year earlier, after a revised 2.5 percent climb in December, the Central Statistical Office said in a statement in New Delhi today. The figure exceeded all 26 estimates in a Bloomberg News survey.
The gain signals production is withstanding the impact of the elevated cost of credit on domestic demand and the fallout for exports from Europe’s debt crisis. India’s central bank, which moved to inject cash into the economy last week and reviews rates on March 15, has signaled readiness to join nations from Brazil to the Philippines in cutting borrowing costs as inflation eases.
“Notwithstanding today’s data, which has been quite volatile, growth is likely to remain weak in the coming quarters,” said N.R. Bhanumurthy, a New-Delhi based economist at the National Institute of Public Finance and Policy. “The RBI will be watching inflation data more closely to decide on its rate moves.”
The rupee weakened 0.2 percent to 49.9775 per dollar at 11:10 a.m. local time. It has rebounded 6.2 percent so far in 2012 after sliding 16 percent last year, the worst fall in Asia. The BSE India Sensitive Index rose 0.7 percent. The yield on the 8.79 percent note due November 2021 rose three basis points, or 0.03 percentage point, to 8.29 percent after the report.
Deteriorating Outlook
Policy gridlock and fiscal and trade deficits have fanned concern that the outlook for Asia’s third-largest economy is deteriorating.
Finance Minister Pranab Mukherjee presents the budget for the year through March 2013 the day after the Reserve Bank of India assesses rates. The central bank has signaled steps to tackle price pressures by paring the fiscal gap can boost its scope to cut borrowing costs.
India’s gross domestic product rose 6.1 percent last quarter from a year earlier, the slowest pace since 2009. It climbed 8.4 percent in each of the last two fiscal years.
The Reserve Bank raised its repurchase rate by a record 3.75 percentage points from March 2010 to October 2011, to 8.5 percent, to restrain the cost of living in a nation where more than two-thirds of the population live on less than $2 per day.
Easing Inflation
Inflation held at close to the lowest level in 26 months in February, with the wholesale-price index gaining 6.7 percent from a year earlier, according to a Bloomberg survey.
That would still be the fastest pace in the so-called BRIC group of economies that also includes Brazil, Russia and China. This year’s 17 percent climb in the price of Brent crude oil, the benchmark for almost all of India’s imports, threatens to spur price rises.
“Growth is slowing and at the same time there are fresh risks to inflation from rising crude oil prices,” said Radhika Rao, an economist at Forecast Pte in Singapore.
Steel production by companies including Tata Steel Ltd., India’s biggest producer of the alloy, declined 2.9 percent in January from a year earlier, compared with an 8.7 percent gain in December, according to commerce ministry data. Electricity output gained 2.4 percent, easing from an 8.9 percent pace.
The Reserve Bank reduced the amount of deposits lenders need to set aside as reserves on March 9, to 4.75 percent from 5.5 percent, saying the cut will add 480 billion rupees ($9.6 billion) into lenders. The bank last reduced the ratio on Jan. 24, by 0.5 percentage point, as it strives to ease a cash squeeze.
Indian officials are under pressure to revive growth. Prime Minister Manmohan Singh is trying to preserve an economic turnaround that began in the 1990s, when as finance minister he helped engineer a shift toward free-market policies. Singh’s ruling Congress party was recently routed in regional elections.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Shamim Adam in Singapore at sadam2@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
By Kartik Goyal - Mar 12, 2012
India’s industrial production rose at the fastest pace in seven months in January, weathering the highest interest rates since 2008 and weaker global growth.
Output at factories, utilities and mines advanced 6.8 percent from a year earlier, after a revised 2.5 percent climb in December, the Central Statistical Office said in a statement in New Delhi today. The figure exceeded all 26 estimates in a Bloomberg News survey.
The gain signals production is withstanding the impact of the elevated cost of credit on domestic demand and the fallout for exports from Europe’s debt crisis. India’s central bank, which moved to inject cash into the economy last week and reviews rates on March 15, has signaled readiness to join nations from Brazil to the Philippines in cutting borrowing costs as inflation eases.
“Notwithstanding today’s data, which has been quite volatile, growth is likely to remain weak in the coming quarters,” said N.R. Bhanumurthy, a New-Delhi based economist at the National Institute of Public Finance and Policy. “The RBI will be watching inflation data more closely to decide on its rate moves.”
The rupee weakened 0.2 percent to 49.9775 per dollar at 11:10 a.m. local time. It has rebounded 6.2 percent so far in 2012 after sliding 16 percent last year, the worst fall in Asia. The BSE India Sensitive Index rose 0.7 percent. The yield on the 8.79 percent note due November 2021 rose three basis points, or 0.03 percentage point, to 8.29 percent after the report.
Deteriorating Outlook
Policy gridlock and fiscal and trade deficits have fanned concern that the outlook for Asia’s third-largest economy is deteriorating.
Finance Minister Pranab Mukherjee presents the budget for the year through March 2013 the day after the Reserve Bank of India assesses rates. The central bank has signaled steps to tackle price pressures by paring the fiscal gap can boost its scope to cut borrowing costs.
India’s gross domestic product rose 6.1 percent last quarter from a year earlier, the slowest pace since 2009. It climbed 8.4 percent in each of the last two fiscal years.
The Reserve Bank raised its repurchase rate by a record 3.75 percentage points from March 2010 to October 2011, to 8.5 percent, to restrain the cost of living in a nation where more than two-thirds of the population live on less than $2 per day.
Easing Inflation
Inflation held at close to the lowest level in 26 months in February, with the wholesale-price index gaining 6.7 percent from a year earlier, according to a Bloomberg survey.
That would still be the fastest pace in the so-called BRIC group of economies that also includes Brazil, Russia and China. This year’s 17 percent climb in the price of Brent crude oil, the benchmark for almost all of India’s imports, threatens to spur price rises.
“Growth is slowing and at the same time there are fresh risks to inflation from rising crude oil prices,” said Radhika Rao, an economist at Forecast Pte in Singapore.
Steel production by companies including Tata Steel Ltd., India’s biggest producer of the alloy, declined 2.9 percent in January from a year earlier, compared with an 8.7 percent gain in December, according to commerce ministry data. Electricity output gained 2.4 percent, easing from an 8.9 percent pace.
The Reserve Bank reduced the amount of deposits lenders need to set aside as reserves on March 9, to 4.75 percent from 5.5 percent, saying the cut will add 480 billion rupees ($9.6 billion) into lenders. The bank last reduced the ratio on Jan. 24, by 0.5 percentage point, as it strives to ease a cash squeeze.
Indian officials are under pressure to revive growth. Prime Minister Manmohan Singh is trying to preserve an economic turnaround that began in the 1990s, when as finance minister he helped engineer a shift toward free-market policies. Singh’s ruling Congress party was recently routed in regional elections.
To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net
To contact the editor responsible for this story: Shamim Adam in Singapore at sadam2@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Friday, March 9, 2012
India’s Central Bank Cuts Reserve Ratio as Cash Squeeze Threatens Economy By Kartik Goyal - Mar 9, 2012
India’s central bank unexpectedly cut the amount of deposits lenders need to set aside as reserves to ease a cash squeeze in the banking system that threatens to deepen an economic slowdown.
The Reserve Bank of India reduced the cash reserve ratio to 4.75 percent from 5.5 percent, according to an e-mailed statement in Mumbai yesterday. The move, the first such action outside a policy meeting since July 2010, will add 480 billion rupees ($9.6 billion) into lenders, it said. The bank last reduced the ratio by 50 basis points, or 0.5 percentage point, on Jan. 24.
The unscheduled step before a March 15 policy review underscores the RBI’s concern the shortage of cash in the banking system will hurt the economy, forecast to expand the least in three years in the fiscal period ending March 31. Asian nations including China and the Philippines have eased monetary policy to spur growth amid Europe’s debt crisis.
“The current liquidity situation is hurting economic growth and that explains the emergency move,” said Vivek Rajpal, a Mumbai-based fixed-income strategist at Nomura Holdings Inc. “The stressful liquidity condition is not healthy for expanding credit needs of the economy.”
Lenders borrowed an average 1.33 trillion rupees a day from the Reserve Bank so far this month, according to central bank data, more than double the 600 billion-rupee limit favored by the monetary authority, and signaling their shortage of funds.
‘Comfort Level’
The reduction, which was announced after markets closed yesterday, is effective from March 10, according to the statement. The central bank lowered the cash reserve ratio in anticipation of companies withdrawing money from the system to pay taxes by a March 15 deadline.
“The liquidity deficit is expected to increase significantly during the second week of March due to advance tax outflows,” the central bank said in the statement. “Thus, the overall deficit in the system persists above the comfort level of the Reserve Bank.”
The rupee strengthened 0.9 percent to 49.8550 per dollar at the close in Mumbai yesterday. It has rebounded about 6.5 percent so far in 2012 after sliding 16 percent last year, the worst fall in Asia. The BSE India Sensitive Index (SENSEX) advanced 2.1 percent. The yield on the 8.79 percent note due November 2021 rose four basis points to 8.29 percent.
Cash availability with Indian lenders dropped after the central bank bought rupees to stem the decline in the currency, and companies borrowed to finance imports, said Roy Paul, a deputy general manager at Federal Bank Ltd. (FB) in Mumbai.
BRIC Nations
Economic expansion in India is already waning after the central bank raised interest rates by 3.75 percentage points between March 2010 and October 2011 to tame the fastest inflation among BRIC nations that include Brazil, Russia and China. India’s gross domestic product rose 6.1 percent in the three months ended Dec. 31, the weakest expansion since the first quarter of 2009.
To ease the liquidity shortage in the banking system, the Reserve Bank has also injected about 1.2 trillion rupees this fiscal year purchasing government bonds, the central bank said.
China reduced the amount of cash that banks must set aside as reserves by half a percentage point to 20.5 percent from Feb. 24. The Philippines central bank lowered the rate it pays lenders for overnight deposits by a quarter of a percentage point to 4 percent on March 1.
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
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
The Reserve Bank of India reduced the cash reserve ratio to 4.75 percent from 5.5 percent, according to an e-mailed statement in Mumbai yesterday. The move, the first such action outside a policy meeting since July 2010, will add 480 billion rupees ($9.6 billion) into lenders, it said. The bank last reduced the ratio by 50 basis points, or 0.5 percentage point, on Jan. 24.
The unscheduled step before a March 15 policy review underscores the RBI’s concern the shortage of cash in the banking system will hurt the economy, forecast to expand the least in three years in the fiscal period ending March 31. Asian nations including China and the Philippines have eased monetary policy to spur growth amid Europe’s debt crisis.
“The current liquidity situation is hurting economic growth and that explains the emergency move,” said Vivek Rajpal, a Mumbai-based fixed-income strategist at Nomura Holdings Inc. “The stressful liquidity condition is not healthy for expanding credit needs of the economy.”
Lenders borrowed an average 1.33 trillion rupees a day from the Reserve Bank so far this month, according to central bank data, more than double the 600 billion-rupee limit favored by the monetary authority, and signaling their shortage of funds.
‘Comfort Level’
The reduction, which was announced after markets closed yesterday, is effective from March 10, according to the statement. The central bank lowered the cash reserve ratio in anticipation of companies withdrawing money from the system to pay taxes by a March 15 deadline.
“The liquidity deficit is expected to increase significantly during the second week of March due to advance tax outflows,” the central bank said in the statement. “Thus, the overall deficit in the system persists above the comfort level of the Reserve Bank.”
The rupee strengthened 0.9 percent to 49.8550 per dollar at the close in Mumbai yesterday. It has rebounded about 6.5 percent so far in 2012 after sliding 16 percent last year, the worst fall in Asia. The BSE India Sensitive Index (SENSEX) advanced 2.1 percent. The yield on the 8.79 percent note due November 2021 rose four basis points to 8.29 percent.
Cash availability with Indian lenders dropped after the central bank bought rupees to stem the decline in the currency, and companies borrowed to finance imports, said Roy Paul, a deputy general manager at Federal Bank Ltd. (FB) in Mumbai.
BRIC Nations
Economic expansion in India is already waning after the central bank raised interest rates by 3.75 percentage points between March 2010 and October 2011 to tame the fastest inflation among BRIC nations that include Brazil, Russia and China. India’s gross domestic product rose 6.1 percent in the three months ended Dec. 31, the weakest expansion since the first quarter of 2009.
To ease the liquidity shortage in the banking system, the Reserve Bank has also injected about 1.2 trillion rupees this fiscal year purchasing government bonds, the central bank said.
China reduced the amount of cash that banks must set aside as reserves by half a percentage point to 20.5 percent from Feb. 24. The Philippines central bank lowered the rate it pays lenders for overnight deposits by a quarter of a percentage point to 4 percent on March 1.
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
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Thursday, March 8, 2012
Singh Seeks Record Dividend From Resources Companies With $27 Billion Cash By Rakteem Katakey - Mar 8, 2012
Oil & Natural Gas Corp. (ONGC) is set to lead India’s top state resources companies in paying a record dividend as Prime Minister Manmohan Singh seeks to use part of their $27 billion cash hoard to fund his government’s deficit.
Eight energy, mining and metals companies will likely pay at least 157.1 billion rupees ($3.1 billion) for the year ending March 31, based on interim payouts and Bloomberg forecasts for special and final dividends. That’s 6.7 percent higher than the amount that ONGC, Coal India Ltd. (COAL), Oil India Ltd. (OINL), NMDC Ltd. (NMDC), GAIL India Ltd. (GAIL), NTPC Ltd., Steel Authority of India Ltd. and Bharat Heavy Electricals Ltd. (BHEL) paid in the previous fiscal year.
Singh’s government has asked its companies to increase dividends and buy back shares for the first time as it struggles to raise money by paring stakes in some of them. It received $2.5 billion this month selling a 5 percent interest in ONGC, with investors bidding for fewer shares than offered. India’s budget deficit topped the target for the year in the 10 months through January, adding pressure for steps to restrain the gap.
The government is “apparently using public sector undertakings as piggy banks,” said Seth Freeman, San Francisco- based chief executive officer at EM Capital Management LLC, which manages assets in emerging markets including India and China. “It is becoming an activist shareholder by asking companies for higher dividends and to buy back shares.”
ONGC Chairman Sudhir Vasudeva and Coal India finance director Asok Kumar Sinha didn’t answer two calls each to their mobile phones seeking comment. Finance Ministry spokesman D.S. Malik wasn’t available in his office for comment after two attempts to reach him by telephone.
Board Meetings
The board of Coal India, the world’s biggest producer of the commodity, is scheduled to meet March 12 to vote on a midyear payout. The Kolkata-based company may declare an interim dividend of 4 rupees a share, according to Bloomberg forecasts, matching the previous year’s total payout.
New Delhi-based ONGC’s board meets March 15 to decide on a second interim dividend after approving an initial payout of 6.25 rupees a share on Jan. 4. Bloomberg forecasts the country’s biggest oil and gas explorer may pay an additional 4.25 rupees. It paid a total of 8.75 rupees in the previous year.
Coal India and ONGC are also likely to declare final dividends after they report full-year earnings in May, said Jagannadham Thunuguntla, a strategist at SMC Global Securities Ltd. in New Delhi. He expects the government to exceed the dividend collection target for the year by at least 100 billion rupees, or 43 percent.
Budget Deficit
Finance Minister Pranab Mukherjee aims to cut the budget deficit to 4.6 percent of gross domestic product this fiscal, the lowest in four years. Slowing economic growth has reduced revenue and a 25 percent drop in the benchmark stock index last year hampered his plan to raise 400 billion rupees selling shares in state-run companies.
Mukherjee is due to present the budget statement for the year starting April 1 to Parliament on March 16.
“The government is desperate for funds,” said Pauli Laursen, an Aabenraa, Denmark-based fund manager at SydInvest Asset Management, who manages about $700 million shares of BRIC companies, including Indian state-run firms. While “dividends would be the best way to get money as it benefits minority shareholders,” higher payouts may curb investments and growth of the companies and the country, he said.
Cash Hoard
ONGC plans to spend 1.64 trillion rupees in the five years to March 2017, 31 percent higher than in the preceding five years, to raise oil and gas output, Chairman Vasudeva said Feb. 1. The company is India’s biggest by net income in the past 12 months, followed by Reliance Industries Ltd. and Coal India, according to data compiled by Bloomberg.
The explorer had 274.4 billion rupees of cash and equivalents as of Sept. 30. Coal India holds the largest cash hoard among state-run companies, excluding banks, with 549.8 billion rupees.
Oil India, the second-biggest state explorer, has announced two midyear dividends totaling 35 rupees a share, its highest payout to date. NTPC, the nation’s biggest electricity generator, agreed to pay 3.5 rupees a share, its highest interim dividend, on Jan. 27, according to data compiled by Bloomberg.
In the budget for the current fiscal presented last year, Mukherjee anticipated 234.9 billion rupees in dividend payouts, which was 9.6 percent lower than the estimated 259.8 billion rupees collected in the previous year. He said Jan. 11 it will be “difficult” for the government to achieve its deficit target for the year.
‘ATM Cards’
At a Jan. 12 meeting in New Delhi, the Finance Ministry asked chiefs of state companies to increase payouts, according to a ministry official with direct knowledge of the matter.
Asia’s third-largest economy expanded 6.1 percent in the three months ended Dec. 31, the slowest pace in more than two years. Growth slowed for fourth straight quarter as domestic demand weakened and the global recovery faltered.
“The government will try and make up a lot of the shortfall from stake sales through higher dividends,” SMC Global’s Thunuguntla said. “ONGC and Coal India are becoming the government’s ATM cards.”
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Eight energy, mining and metals companies will likely pay at least 157.1 billion rupees ($3.1 billion) for the year ending March 31, based on interim payouts and Bloomberg forecasts for special and final dividends. That’s 6.7 percent higher than the amount that ONGC, Coal India Ltd. (COAL), Oil India Ltd. (OINL), NMDC Ltd. (NMDC), GAIL India Ltd. (GAIL), NTPC Ltd., Steel Authority of India Ltd. and Bharat Heavy Electricals Ltd. (BHEL) paid in the previous fiscal year.
Singh’s government has asked its companies to increase dividends and buy back shares for the first time as it struggles to raise money by paring stakes in some of them. It received $2.5 billion this month selling a 5 percent interest in ONGC, with investors bidding for fewer shares than offered. India’s budget deficit topped the target for the year in the 10 months through January, adding pressure for steps to restrain the gap.
The government is “apparently using public sector undertakings as piggy banks,” said Seth Freeman, San Francisco- based chief executive officer at EM Capital Management LLC, which manages assets in emerging markets including India and China. “It is becoming an activist shareholder by asking companies for higher dividends and to buy back shares.”
ONGC Chairman Sudhir Vasudeva and Coal India finance director Asok Kumar Sinha didn’t answer two calls each to their mobile phones seeking comment. Finance Ministry spokesman D.S. Malik wasn’t available in his office for comment after two attempts to reach him by telephone.
Board Meetings
The board of Coal India, the world’s biggest producer of the commodity, is scheduled to meet March 12 to vote on a midyear payout. The Kolkata-based company may declare an interim dividend of 4 rupees a share, according to Bloomberg forecasts, matching the previous year’s total payout.
New Delhi-based ONGC’s board meets March 15 to decide on a second interim dividend after approving an initial payout of 6.25 rupees a share on Jan. 4. Bloomberg forecasts the country’s biggest oil and gas explorer may pay an additional 4.25 rupees. It paid a total of 8.75 rupees in the previous year.
Coal India and ONGC are also likely to declare final dividends after they report full-year earnings in May, said Jagannadham Thunuguntla, a strategist at SMC Global Securities Ltd. in New Delhi. He expects the government to exceed the dividend collection target for the year by at least 100 billion rupees, or 43 percent.
Budget Deficit
Finance Minister Pranab Mukherjee aims to cut the budget deficit to 4.6 percent of gross domestic product this fiscal, the lowest in four years. Slowing economic growth has reduced revenue and a 25 percent drop in the benchmark stock index last year hampered his plan to raise 400 billion rupees selling shares in state-run companies.
Mukherjee is due to present the budget statement for the year starting April 1 to Parliament on March 16.
“The government is desperate for funds,” said Pauli Laursen, an Aabenraa, Denmark-based fund manager at SydInvest Asset Management, who manages about $700 million shares of BRIC companies, including Indian state-run firms. While “dividends would be the best way to get money as it benefits minority shareholders,” higher payouts may curb investments and growth of the companies and the country, he said.
Cash Hoard
ONGC plans to spend 1.64 trillion rupees in the five years to March 2017, 31 percent higher than in the preceding five years, to raise oil and gas output, Chairman Vasudeva said Feb. 1. The company is India’s biggest by net income in the past 12 months, followed by Reliance Industries Ltd. and Coal India, according to data compiled by Bloomberg.
The explorer had 274.4 billion rupees of cash and equivalents as of Sept. 30. Coal India holds the largest cash hoard among state-run companies, excluding banks, with 549.8 billion rupees.
Oil India, the second-biggest state explorer, has announced two midyear dividends totaling 35 rupees a share, its highest payout to date. NTPC, the nation’s biggest electricity generator, agreed to pay 3.5 rupees a share, its highest interim dividend, on Jan. 27, according to data compiled by Bloomberg.
In the budget for the current fiscal presented last year, Mukherjee anticipated 234.9 billion rupees in dividend payouts, which was 9.6 percent lower than the estimated 259.8 billion rupees collected in the previous year. He said Jan. 11 it will be “difficult” for the government to achieve its deficit target for the year.
‘ATM Cards’
At a Jan. 12 meeting in New Delhi, the Finance Ministry asked chiefs of state companies to increase payouts, according to a ministry official with direct knowledge of the matter.
Asia’s third-largest economy expanded 6.1 percent in the three months ended Dec. 31, the slowest pace in more than two years. Growth slowed for fourth straight quarter as domestic demand weakened and the global recovery faltered.
“The government will try and make up a lot of the shortfall from stake sales through higher dividends,” SMC Global’s Thunuguntla said. “ONGC and Coal India are becoming the government’s ATM cards.”
To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Tuesday, March 6, 2012
Gold Set for Worst Run This Year as Commodities Slump on European Concerns By Glenys Sim - Mar 6, 2012
Gold may drop for a fourth day in the worst run this year as concern resurfaced that Europe’s debt crisis will slow growth, strengthening the dollar and eroding demand for alternative investments. Silver fell.
Spot gold was little changed at $1,673.77 an ounce at 9:30 a.m. Singapore time even as bullion assets held by exchange- traded products reached a record. The precious metal slumped to $1,663.30 yesterday, the lowest price since Jan. 25. The last time gold fell for four days was in the period to Dec. 15.
The Standard & Poor’s GSCI Spot Index of 24 commodities dropped 1.5 percent to close at 692.61 in New York yesterday, the biggest loss since Dec. 14, as equities tumbled. Gold has lost 2.6 percent in the past three days as the dollar advanced 1.3 percent against a six-currency basket including the euro.
“Risk sold off overnight as concerns re-emerged that Greece’s sovereign-debt restructure won’t be finalized by the deadline,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in a note today. “Gold fell as the U.S. dollar gained following the negative European news.”
The Greek government said it will use collective-action clauses to compel bondholders to accept its debt swap if it receives sufficient consent from investors. Europe’s economy shrank 0.3 percent last quarter, data yesterday showed, adding to signs the region’s debt crisis is hurting growth.
Bullion assets in ETPs expanded for a fifth day to 2,406.313 metric tons yesterday, data tracked by Bloomberg show. April-delivery gold traded little changed at $1,674.40 an ounce on the Comex in New York after dropping for three days.
Silver, this year’s best-performing metal, fell for a fourth day in the worst run since September, dropping 0.4 percent to $32.8275 an ounce. It slid to $32.48 an ounce yesterday, the lowest price since Jan. 25.
Spot platinum gained 0.4 percent to $1,621.75 an ounce, snapping three days of declines. Palladium climbed 0.8 percent to $673 an ounce, gaining for the first day in four.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Spot gold was little changed at $1,673.77 an ounce at 9:30 a.m. Singapore time even as bullion assets held by exchange- traded products reached a record. The precious metal slumped to $1,663.30 yesterday, the lowest price since Jan. 25. The last time gold fell for four days was in the period to Dec. 15.
The Standard & Poor’s GSCI Spot Index of 24 commodities dropped 1.5 percent to close at 692.61 in New York yesterday, the biggest loss since Dec. 14, as equities tumbled. Gold has lost 2.6 percent in the past three days as the dollar advanced 1.3 percent against a six-currency basket including the euro.
“Risk sold off overnight as concerns re-emerged that Greece’s sovereign-debt restructure won’t be finalized by the deadline,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in a note today. “Gold fell as the U.S. dollar gained following the negative European news.”
The Greek government said it will use collective-action clauses to compel bondholders to accept its debt swap if it receives sufficient consent from investors. Europe’s economy shrank 0.3 percent last quarter, data yesterday showed, adding to signs the region’s debt crisis is hurting growth.
Bullion assets in ETPs expanded for a fifth day to 2,406.313 metric tons yesterday, data tracked by Bloomberg show. April-delivery gold traded little changed at $1,674.40 an ounce on the Comex in New York after dropping for three days.
Silver, this year’s best-performing metal, fell for a fourth day in the worst run since September, dropping 0.4 percent to $32.8275 an ounce. It slid to $32.48 an ounce yesterday, the lowest price since Jan. 25.
Spot platinum gained 0.4 percent to $1,621.75 an ounce, snapping three days of declines. Palladium climbed 0.8 percent to $673 an ounce, gaining for the first day in four.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Monday, March 5, 2012
India’s Ban on Cotton Exports May Unravel Deals After 2011 Disputes Surged By Marvin G. Perez - Mar 5, 2012
A halt in cotton exports by India, the world’s second-biggest shipper, may boost contract disputes after arbitration cases surged to a record in 2011 following the slump in prices from the all-time high, analysts said.
Yesterday, India effectively revoked export certificates for as much as 2.6 million bales. The nation banned shipments after sales reached 9.4 million bales in the year that began Oct. 1, 12 percent more than an estimated surplus. Cotton surged the most in nine months on ICE Futures U.S. in New York, and the exchange boosted margins by 76 percent.
In 2011, the U.K.-based International Cotton Association got 242 requests for technical arbitration, more than five times the yearly average and double the record in 2008. From Jan. 1 to mid-February, the group received 41 cases, Nicky Simon, a spokeswoman, said last month in an e-mail.
More defaults probably will involve “Indian merchants to mills outside of India,” Jordan Lea, the chairman of Greenville, South Carolina-based Eastern Trading Co., said in an e-mail. “I understand that most of the Indian cotton that was sold, but yet unshipped, is owed to China.”
About 12 million bales had been registered for export, Prem Malik, the deputy chairman of Confederation of the Indian Textile Industry, said yesterday. The government said in a statement that “export against registration certificates already issued” won’t be allowed.
An India bale weighs 170 kilograms (375 pounds). China is the top importer, and the U.S. is the biggest exporter. Jordan of Eastern Trading is the former president of the American Cotton Shippers Association.
Limit Up
Cotton futures for May delivery climbed by the exchange limit of 4 cents, or 4.5 percent, to settle at 92.23 cents a pound yesterday on ICE, the biggest gain since May 31.
The price has tumbled 58 percent from a record $2.197 on March 7. Glencore International Plc said today that its agricultural-trading unit had a loss of $8 million in the second half of 2011 following an “unprecedented cotton market,” compared with profit of $659 million a year earlier.
“The cotton industry is at a crossroads,” Antonio Esteve, the president of the International Cotton Association, said in a statement on Jan. 10. “It is easy to succumb to the attraction of short-term gains, but history shows that this will create irreparable damage that will affect the long-term economic sustainability of the cotton-supply chain.”
Buyers ‘Scrambling’
Most of the 2011 defaults occurred in Bangladesh, Vietnam, Indonesia, Thailand and China, Bill May, the current president of the Memphis, Tennessee-based U.S. cotton shipping group, said in an e-mail on Feb. 14.
India’s move yesterday sent “foreign buyers, particularly Chinese, scrambling,” Andy Ryan, a senior risk manager at INTL FCStone in Nashville, Tennessee, said yesterday in a report.
“At the end of the day, India has exported more cotton already than we thought they might all year,” Lea of Eastern Trading said.
ICE said yesterday in a statement that the minimum cash deposit for speculative cotton-futures trading will increase by $1,430 to $3,300 effective tomorrow for a contract of 50,000 pounds (22,680 kilograms).
“Small traders are going to get out,” Derrick Lewis, a trader at ClearTrade Commodities in Chicago, said in a telephone interview. “With India halting exports, we may have another run-up in the market.”
To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Yesterday, India effectively revoked export certificates for as much as 2.6 million bales. The nation banned shipments after sales reached 9.4 million bales in the year that began Oct. 1, 12 percent more than an estimated surplus. Cotton surged the most in nine months on ICE Futures U.S. in New York, and the exchange boosted margins by 76 percent.
In 2011, the U.K.-based International Cotton Association got 242 requests for technical arbitration, more than five times the yearly average and double the record in 2008. From Jan. 1 to mid-February, the group received 41 cases, Nicky Simon, a spokeswoman, said last month in an e-mail.
More defaults probably will involve “Indian merchants to mills outside of India,” Jordan Lea, the chairman of Greenville, South Carolina-based Eastern Trading Co., said in an e-mail. “I understand that most of the Indian cotton that was sold, but yet unshipped, is owed to China.”
About 12 million bales had been registered for export, Prem Malik, the deputy chairman of Confederation of the Indian Textile Industry, said yesterday. The government said in a statement that “export against registration certificates already issued” won’t be allowed.
An India bale weighs 170 kilograms (375 pounds). China is the top importer, and the U.S. is the biggest exporter. Jordan of Eastern Trading is the former president of the American Cotton Shippers Association.
Limit Up
Cotton futures for May delivery climbed by the exchange limit of 4 cents, or 4.5 percent, to settle at 92.23 cents a pound yesterday on ICE, the biggest gain since May 31.
The price has tumbled 58 percent from a record $2.197 on March 7. Glencore International Plc said today that its agricultural-trading unit had a loss of $8 million in the second half of 2011 following an “unprecedented cotton market,” compared with profit of $659 million a year earlier.
“The cotton industry is at a crossroads,” Antonio Esteve, the president of the International Cotton Association, said in a statement on Jan. 10. “It is easy to succumb to the attraction of short-term gains, but history shows that this will create irreparable damage that will affect the long-term economic sustainability of the cotton-supply chain.”
Buyers ‘Scrambling’
Most of the 2011 defaults occurred in Bangladesh, Vietnam, Indonesia, Thailand and China, Bill May, the current president of the Memphis, Tennessee-based U.S. cotton shipping group, said in an e-mail on Feb. 14.
India’s move yesterday sent “foreign buyers, particularly Chinese, scrambling,” Andy Ryan, a senior risk manager at INTL FCStone in Nashville, Tennessee, said yesterday in a report.
“At the end of the day, India has exported more cotton already than we thought they might all year,” Lea of Eastern Trading said.
ICE said yesterday in a statement that the minimum cash deposit for speculative cotton-futures trading will increase by $1,430 to $3,300 effective tomorrow for a contract of 50,000 pounds (22,680 kilograms).
“Small traders are going to get out,” Derrick Lewis, a trader at ClearTrade Commodities in Chicago, said in a telephone interview. “With India halting exports, we may have another run-up in the market.”
To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Sunday, March 4, 2012
Ducati Eyed by Hero MotoCorp as Indian Motorbike Maker Looks for Takeovers By Siddharth Philip - Mar 4, 2012
Ducati Motor Holding SpA (DMH), maker of luxury bikes ridden by celebrities such as Brad Pitt, is among assets being examined by Hero MotoCorp Ltd. (HMCL) as India’s biggest motorcycle maker looks for acquisitions to expand overseas.
“Lots of people have been coming to us with Ducati -- Not one banker but many bankers,” Pawan Kant Munjal, managing director of Hero, said in a March 2 interview in New Delhi. “We’re talking to a lot of people. Not just Ducati, whoever comes to us, we talk to them.”
Ducati would add products such as the $28,000 Superbike 1199 Panigale S Tricolore to a company that’s amassed a $1 billion war chest selling bikes for as little as 38,053 rupees ($768). Hero may be seeking to replicate the success of Tata Motors Ltd. (TTMT), maker of the world’s cheapest car, which is seeing profits surge after its purchase of Jaguar Land Rover Plc.
“It is an excellent fit -- Ducati is a big brand and has a lot of technology; Hero is looking to be a serious global player,” said Deepesh Rathore, managing director of IHS Automotive in India. “Hero might get it cheap. Thanks to the European slowdown, Ducati’s numbers haven’t been great.”
Hero, which in December 2010 decided to exit a 26-year partnership with Honda Motor Co. (7267), the world’s largest motorcycle maker, is looking to gain technology through partnerships and acquisitions after that licensing relationship ends in 2014. Last month, Hero entered into a partnership with Erik Buell Racing, where Hero would sponsor two EBR teams in the AMA Pro Racing National Guard Superbike Championship in return for technology and design support for future models.
Hong Kong IPO
Hero has cash reserves of about $1 billion, Munjal said. The company had investments of 37.5 billion rupees, cash and bank balances of 1.4 billion rupees, as well as reserves and surpluses of 40.8 billion rupees as of Sept. 30, according to company’s latest half-year earnings statement.
Investindustrial SpA, the Milan-based private-equity firm that owns Ducati, may hold an initial public offering of the luxury-motorcycle maker in Hong Kong this year or sell it to a rival, two people familiar with the plans said last month. A spokesman for Investindustrial wasn’t immediately available to comment late last week.
Investindustrial is seeking to sell or list Ducati for as much as 1 billion euros ($1.3 billion), the Financial Times reported last month, citing Andrea Bonomi, chairman of the European buyout firm.
Bayerische Motoren Werke AG (BMW) said last month it’s not interested in buying Ducati, which was delisted in 2008 from the Milan stock exchange.
Expanding Outside India
Hero and Bajaj Auto Ltd. (BJAUT) are looking to expand overseas as competition intensifies in India, the world’s second-biggest motorcycle market after China, as Honda, Yamaha Motor Co. (7272) and Suzuki Motor Corp. (7269) expand capacity in the country.
Honda is increasing its operations in India after separating from Hero, and will spend as much as 10 billion rupees on its third factory near Bangalore in southern India that will be ready in 2013, the company said in August. When complete, Honda will have a capacity to build 4 million two- wheelers in India annually.
Motorcycle sales in India grew 15 percent in 2011 to 9.95 million units, according to data from the Society of Indian Automobile Manufacturers. The industry body said Jan. 10 it expects deliveries of two-wheelers, including motorcycles and scooters, in the year beginning April 1 will increase 11 percent to 14 percent.
Africa, Latin America
Still, the Indian market is still profitable for Hero. Net income at Hero rose 43 percent to 6.13 billion rupees ($121.7 million) in the third quarter ended Dec. 31 and expects to sell more than 6 million units in the year to March 31, New Delhi- based Hero said on Jan. 19. In the 11 months to February, Hero has sold 5.7 million two-wheelers, it said on March 1.
Hero is looking to begin sales in Africa and Latin America this year, following Bajaj Auto, which sells more than 35 percent of its products overseas and expects to exceed its export target of 1.5 million units in the year ending March 31.
Hero aims to export 1 million units annually in five or six years, Munjal said.
“We’ve been seen as a utility-bike maker, fuel-efficient bikes, and somebody who’s at the lower level of the market, who’s more small-town and rural-market focused,” said Munjal. “So our ambition is to become one of the biggest global two- wheeler players and to do that, you cannot only be in one small segment.”
Following Tata
Hero shares have risen 2.2 percent this year, underperforming the 14 percent gain in the BSE India Sensitive Index. (SENSEX) The stock last closed at 1,947.15 rupees.
Indian companies have bought luxury brands and succeeded before. Jaguar, bought by Tata Motors from Ford Motor Co. (F) in 2008 for $2.4 billion, has helped drive profitability for India’s biggest automaker. Tata’s net income last quarter increased 41 percent to a record 34.1 billion rupees, led by the Jaguar unit, which is generating more than half of the parent’s revenue.
Hero may follow Tata’s lead should the motorcycle maker negotiate a cheap price for Ducati, according to Basudeb Banerjee, an analyst with Quant Broking Pvt.
“If they pay the current market price, it could be negative as Ducati will take at least two years to turn around,” said Banerjee, who’s based in Mumbai. “If they get it a low price, then it could be good for Hero as they will gain technology and also the Ducati brand, which is strong around the world.”
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
“Lots of people have been coming to us with Ducati -- Not one banker but many bankers,” Pawan Kant Munjal, managing director of Hero, said in a March 2 interview in New Delhi. “We’re talking to a lot of people. Not just Ducati, whoever comes to us, we talk to them.”
Ducati would add products such as the $28,000 Superbike 1199 Panigale S Tricolore to a company that’s amassed a $1 billion war chest selling bikes for as little as 38,053 rupees ($768). Hero may be seeking to replicate the success of Tata Motors Ltd. (TTMT), maker of the world’s cheapest car, which is seeing profits surge after its purchase of Jaguar Land Rover Plc.
“It is an excellent fit -- Ducati is a big brand and has a lot of technology; Hero is looking to be a serious global player,” said Deepesh Rathore, managing director of IHS Automotive in India. “Hero might get it cheap. Thanks to the European slowdown, Ducati’s numbers haven’t been great.”
Hero, which in December 2010 decided to exit a 26-year partnership with Honda Motor Co. (7267), the world’s largest motorcycle maker, is looking to gain technology through partnerships and acquisitions after that licensing relationship ends in 2014. Last month, Hero entered into a partnership with Erik Buell Racing, where Hero would sponsor two EBR teams in the AMA Pro Racing National Guard Superbike Championship in return for technology and design support for future models.
Hong Kong IPO
Hero has cash reserves of about $1 billion, Munjal said. The company had investments of 37.5 billion rupees, cash and bank balances of 1.4 billion rupees, as well as reserves and surpluses of 40.8 billion rupees as of Sept. 30, according to company’s latest half-year earnings statement.
Investindustrial SpA, the Milan-based private-equity firm that owns Ducati, may hold an initial public offering of the luxury-motorcycle maker in Hong Kong this year or sell it to a rival, two people familiar with the plans said last month. A spokesman for Investindustrial wasn’t immediately available to comment late last week.
Investindustrial is seeking to sell or list Ducati for as much as 1 billion euros ($1.3 billion), the Financial Times reported last month, citing Andrea Bonomi, chairman of the European buyout firm.
Bayerische Motoren Werke AG (BMW) said last month it’s not interested in buying Ducati, which was delisted in 2008 from the Milan stock exchange.
Expanding Outside India
Hero and Bajaj Auto Ltd. (BJAUT) are looking to expand overseas as competition intensifies in India, the world’s second-biggest motorcycle market after China, as Honda, Yamaha Motor Co. (7272) and Suzuki Motor Corp. (7269) expand capacity in the country.
Honda is increasing its operations in India after separating from Hero, and will spend as much as 10 billion rupees on its third factory near Bangalore in southern India that will be ready in 2013, the company said in August. When complete, Honda will have a capacity to build 4 million two- wheelers in India annually.
Motorcycle sales in India grew 15 percent in 2011 to 9.95 million units, according to data from the Society of Indian Automobile Manufacturers. The industry body said Jan. 10 it expects deliveries of two-wheelers, including motorcycles and scooters, in the year beginning April 1 will increase 11 percent to 14 percent.
Africa, Latin America
Still, the Indian market is still profitable for Hero. Net income at Hero rose 43 percent to 6.13 billion rupees ($121.7 million) in the third quarter ended Dec. 31 and expects to sell more than 6 million units in the year to March 31, New Delhi- based Hero said on Jan. 19. In the 11 months to February, Hero has sold 5.7 million two-wheelers, it said on March 1.
Hero is looking to begin sales in Africa and Latin America this year, following Bajaj Auto, which sells more than 35 percent of its products overseas and expects to exceed its export target of 1.5 million units in the year ending March 31.
Hero aims to export 1 million units annually in five or six years, Munjal said.
“We’ve been seen as a utility-bike maker, fuel-efficient bikes, and somebody who’s at the lower level of the market, who’s more small-town and rural-market focused,” said Munjal. “So our ambition is to become one of the biggest global two- wheeler players and to do that, you cannot only be in one small segment.”
Following Tata
Hero shares have risen 2.2 percent this year, underperforming the 14 percent gain in the BSE India Sensitive Index. (SENSEX) The stock last closed at 1,947.15 rupees.
Indian companies have bought luxury brands and succeeded before. Jaguar, bought by Tata Motors from Ford Motor Co. (F) in 2008 for $2.4 billion, has helped drive profitability for India’s biggest automaker. Tata’s net income last quarter increased 41 percent to a record 34.1 billion rupees, led by the Jaguar unit, which is generating more than half of the parent’s revenue.
Hero may follow Tata’s lead should the motorcycle maker negotiate a cheap price for Ducati, according to Basudeb Banerjee, an analyst with Quant Broking Pvt.
“If they pay the current market price, it could be negative as Ducati will take at least two years to turn around,” said Banerjee, who’s based in Mumbai. “If they get it a low price, then it could be good for Hero as they will gain technology and also the Ducati brand, which is strong around the world.”
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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