Jindal Steel Terminates $2.1 Billion Bolivia Iron Project By Alex Emery - Jul 17, 2012

Jindal Steel & Power Ltd. (JSP), India’s second-biggest steelmaker by market value, said it terminated a contract to build the $2.1 billion El Mutun iron mine in Bolivia, the biggest investment project to be canceled since President Evo Morales took office in 2006.

Bolivia offered a quarter of the 10 million cubic meters a day of natural gas originally pledged and failed to provide enough land for the project, New Delhi-based Jindal said today in a statement posted on its website. Bolivia’s government said it will call for new bids for the project within six months.

“Due to the non-fulfillment of the contractual obligations and unwillingness to fulfill the contract on the part of the government of Bolivia, Jindal has been forced to terminate the contract,” the company said, adding it plans to pursue international arbitration.

Jindal, which signed a contract in 2007 to develop 20 billion tons of iron-ore reserves at El Mutun, had planned to build a 1.7 million ton-per-year steel plant in addition to a sponge-iron factory, a pellet unit and a power project, according to the company’s website. Jindal has spent $90 million on the project to date, according to the company.

Investment has dwindled in the landlocked Andean nation since Morales nationalized gas fields, telecommunications and electricity companies. During the past month, the government has seized mines belonging to Glencore International Plc (GLEN) and South American Silver Corp. (SAC)

‘Economic Weakness’

Jindal withdrew from the project for lack of funds and not because of government pressure, Mining Minister Mario Virreira said. The government seized the company’s $36 million guarantee for failing to meet its contract, he said.

“We’re all aware of Jindal’s lack of serious economic management and economic weakness,” Virreira said today in a press conference in La Paz broadcast by state Radio Patria Nueva. “This puts an end to Jindal’s participation in the country.”

Future bidders will have to provide financial guarantees for at least 25 percent of investment commitments, Virreira said.

Jindal’s New Delhi-based spokesman Vivek Sharma didn’t immediately respond to a telephone call and e-mail outside business hours.

Jindal, which posted a $1 billion profit on $3.55 billion in revenue last year, fell 0.8 percent to 415.65 rupees in Bombay. The shares have dropped 8 percent this year.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net;

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

Gold Climbs as U.S. Retail Data Increase Stimulus Speculation By Glenys Sim - Jul 16, 2012

Gold advanced after data showed that U.S. retail sales unexpectedly declined last month, increasing speculation that the Federal Reserve will take more steps to shore up the world’s biggest economy.

Spot gold climbed as much as 0.4 percent to $1,596.25 an ounce, and was at $1,595 at 9:42 a.m. in Singapore. August- delivery bullion gained as much as 0.3 percent to $1,596 an ounce on the Comex in New York, and traded at $1,594.50.

Data yesterday showed U.S. retail sales dropped 0.5 percent in June, after a 0.2 percent fall in May, and compared with a 0.2 percent gain projected in a Bloomberg survey. The dollar was lower against most of its major counterparts before Fed Chairman Ben S. Bernanke testifies before Congress today and tomorrow, and addresses the outlook for growth.

“The probability of being right about new quantitative easing is growing with each poor data print,” Bart Melek, head of commodity strategy at TD Securities Inc., wrote in a note. “Gold tends to rally anytime economic data materially disappoints, with the logic being that the Fed is more likely to expand its balance sheet and other central banks are more likely to stimulate if the economy is performing badly.”

The International Monetary Fund yesterday cut its 2013 global growth forecast as Europe’s debt crisis slows expansion in emerging markets from China to India. A U.S. rebound is moderating, the fund said, predicting growth worldwide will be 3.9 percent next year, less than the 4.1 percent target in April.

Cash gold almost doubled from December 2008 to June 2011 after the Fed bought $2.3 trillion of bonds in two rounds of so- called quantitative easing to stimulate the economy. Last month, the U.S. central bank expanded a program of replacing short-term bonds in its portfolio with longer-term debt.

Spot silver gained as much as 0.7 percent to $27.5325 an ounce, and traded at $27.4875. Cash platinum rose as much as 0.8 percent to $1,428.75 an ounce, and was at $1,427.25. Palladium advanced as much as 0.9 percent to $582.25 an ounce, and was at $581.75.

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

Easing Prices Bypass India as RBI Lacks Tetangco Scope By Clarissa Batino and Max Estayo - Jul 15, 2012

Moderating inflation pressure across most of Asia offers central banks scope to cut interest rates further in coming months, with India an exception as consumer prices probably jumped at a faster pace last month.
The Asian Development Bank lowered its inflation forecast for the region last week and China reported the smallest price gains in more than two years. By contrast, India today will report wholesale prices rose at a faster pace in June from a year earlier, according to the median estimate in a Bloomberg News survey.
India’s accelerating inflation leaves its central bank constrained as counterparts across emerging economies take action. South Korea and China surprised markets with a reduction in interest rates this month and Governor Amando Tetangco said three days ago the Philippines has scope to ease monetary policy.
Emerging-market policy makers “have by far the greatest room to counteract economic weakness,” JPMorgan Chase & Co. analysts led by Jan Loeys, chief market strategist in New York, wrote in a July 13 note. They can “boost spending through monetary stimulus, fiscal stimulus, or simply by providing more clarity about their future actions,” they said.
Emerging-market policy rates remain a percentage point above emerging-market inflation and have plenty of room to come down in nominal terms, the analysts wrote.
The ADB reduced its inflation estimate for developing Asia to 4.4 percent this year from a 4.6 percent pace forecast in April. The Manila-based lender also cut its 2012 growth forecast for Asian economies excluding Japan to 6.6 percent from 6.9 percent, citing the impact of Europe’s debt crisis and slower expansion in China and India.

Moderating Inflation

Price gains are easing across most emerging markets, helped by a decline in food and commodity prices. Inflation in China, Asia’s biggest economy, slowed to 2.2 percent in June from a year earlier and producer prices dropped for a fourth month.
In India, a weaker rupee, government spending and rising food prices are contributing to inflation. The benchmark wholesale-price index probably rose 7.61 percent in June from a year earlier, according to the median estimate of 36 analysts, the second straight acceleration.
The fastest inflation among the biggest emerging markets prompted the Reserve Bank of India to unexpectedly leave interest rates unchanged on June 18 even after the economy expanded at the slowest pace since 2003.

Complex Politics

“We expect the growth risks eventually to dominate the RBI’s thinking and lead to greater monetary easing in the coming months,” Barclays Plc economists led by Singapore-based Nigel Chalk wrote in a July 13 note. “However, given the complex domestic politics, the timing of any policy loosening is difficult to predict, especially given the RBI’s recent hawkishness.”
The People’s Bank of China unexpectedly announced a reduction in benchmark lending and deposit rates on July 5, the second cut in a month, while the Bank of Korea lowered its benchmark repurchase rate last week for the first time in more than three years.
China’s economy grew at the slowest pace in three years in the second quarter, data released July 13 showed, and Premier Wen Jiabao said yesterday the government will intensify fine- tuning policies as the momentum for a recovery has yet to be established.

Policy Space

Bangko Sentral ng Pilipinas Governor Tetangco said more easing may be possible as inflation in the Philippines moderates.
“The stance of monetary policy remains appropriate but things can change -- a possible easing cannot be ruled out,” he said in an interview in Manila on July 13. “While we have sources of resilience, we also have policy space on the monetary and fiscal sides to do more if necessary.”
Price pressures have cooled even as the $225 billion economy expanded 6.4 percent in the first quarter from a year earlier, the fastest pace in Southeast Asia based on a basket of 17 Asia-Pacific economies tracked by Bloomberg. Consumer-price gains slowed to 2.8 percent last month from a year earlier.
“One is never out of danger on inflation, but at this point in time risks are on the downside,” Tetangco said. “The growth of the economy is not at the level that would lead to a breach of the inflation target.”
Inflation will be in the lower half of his 3 percent to 5 percent target, said Tetangco, adding his forecast applies to 2012 and 2013. Economic expansion in the second quarter probably remained healthy, he said, without providing an estimate. The data are due to be released next month.

‘More Dovish’

The central bank cut the rate it pays lenders for overnight deposits twice earlier this year, by a combined 0.5 percentage point to 4 percent, before leaving it unchanged in April and June. The next policy rate review is on July 26.
Central banks in emerging markets “have become more dovish over the past one or two months and we do expect some monetary loosening,” Sebastien Barbe, Paris-based head of emerging markets research and strategy at Credit Agricole CIB, wrote in a July 12 note. “They may refrain from lowering rates quickly in the short term, just in case the global economic momentum re- accelerates at the end of the year, making the global backdrop more prone to generate inflation pressure.”
To contact the reporters responsible for this story: Clarissa Batino at cbatino@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net;

Kingfisher Scraps 40 Flights as Workers Protest Wage Non-Payment

By Pratik Parija - Jul 14, 2012

Kingfisher Airlines Ltd. (KAIR) canceled about 40 flights after some employees refused to work as they haven’t been paid, prompting Indian billionaire Chairman Vijay Mallya to say they may hamper efforts to revive the carrier.
“Damaging the future of Kingfisher in the public eyes is not going to produce cash,” Mallya said in a letter to employees posted on the company’s website today. “This only makes my recapitalization efforts more difficult by causing concern and apprehension among our potential investors.”
More than 75 percent of employees received their salaries on the “committed” date of July 13, Kingfisher said in a statement today. The company said it has assured staff the rest will get paid on July 16. The airline is operating 20 planes after reducing services to about 120 a day, compared with 66 aircraft and about 340 daily flights in March 2011.
Kingfisher’s market share in April dropped to the lowest among India’s six airline operators from second in October as it ended a discount service and grounded planes following more than 10 quarters of losses.
Kingfisher may post a loss of as much as 14 billion rupees ($254 million) this fiscal year and needs about $1 billion of funds, CAPA Centre for Aviation, an industry consultant, said in May. The airline has pledged its brand, office furniture and other assets against 64.2 billion rupees of debt, Junior Finance Minister Namo Narain Meena said in parliament in New Delhi on Dec. 9.
“We worked hard to gain the trust and confidence of our guests,” Mallya said. “Today, by forcibly canceling several flights we have lost most of that.”
To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net;

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Indian Rupee Climbs as Trade Deficit Narrows to 15-Month Low By Tushar Dhara - Jul 13, 2012

Indian exports fell for the third time in four months in June, while a trade deficit that has pressured the rupee was the narrowest in more than a year as imports slid, government figures showed. The currency rose.

Merchandise shipments fell 5.45 percent from a year earlier to $25.06 billion, Director General of Foreign Trade Anup Pujari said at a briefing in New Delhi today. Imports slipped 13.46 percent to $35.3 billion, leaving a trade deficit of $10.3 billion, he said. The data are provisional.

India’s overseas sales of items such as engineering goods and cars have struggled this year as Europe’s debt crisis, slower Chinese growth and elevated unemployment in the U.S. crimp demand for Asian products. The rupee is down 19 percent against the dollar in the past 12 months, after being pressured by a trade shortfall that swelled to a record last fiscal year.

“Exports will stay weak till at least October,” said Sujan Hajra, chief economist at Anand Rathi Financial Services Ltd. in Mumbai. “But, on the other hand, the shrinking trade deficit is great news for the rupee,” which will appreciate to 54 per dollar by end-October and 48 by March 2013, Hajra said.

The rupee strengthened 1 percent to 55.3650 as of 3:42 p.m. in Mumbai. The benchmark BSE India Sensitive Index of stocks was little changed.

Narrower Deficit

The contraction in imports was the largest since 2009, while the trade deficit was the smallest since March 2011, based on historical data the government released on April 19, official monthly trade statements and today’s release.

The trade gap in the fiscal year that started April 1 may shrink from the level in 2011-2012, Pujari said. The deficit in the 12 months ended March was an unprecedented $184.9 billion. Exports are likely to pick up in a couple of months, Commerce Secretary S.R. Rao said at the same briefing.

Slowing economic growth, budget and trade shortfalls and uncertainty over tax changes have added pressure on Prime Minister Manmohan Singh’s government to overhaul policies and support the expansion in Asia’s third-largest economy.

India doubled the import tax on gold bars and coins and platinum to 4 percent from April to try and pare the trade imbalance, and last month said it will prolong a policy of providing subsidized credit for some exporters through the current fiscal year.

The Reserve Bank of India left interest rates unchanged in June after a cut in April, and has signaled price pressures may limit scope to join nations from China to South Korea in easing monetary policy this month.

Indian inflation probably accelerated to 7.61 percent in June from 7.55 percent in May, according to the median estimate in a Bloomberg News survey ahead of a report next week.

To contact the reporter on this story: Tushar Dhara in New Delhi at tdhara1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.

Tata Consultancy Rises After Profit Exceeds Estimate

By Ketaki Gokhale - Jul 13, 2012

Tata Consultancy Services Ltd. (TCS), India’s largest software exporter, rose the most in more than two months after profit beat estimates and the company reiterated its sales will expand faster than industry average.

The shares rose as much as 4 percent to 1,285 rupees and changed hands up 1.9 percent as of 9:54 a.m. in Mumbai. Tata’s closest rival Infosys Ltd. (INFO), which yesterday cut its sales forecast for the year ending in March, slumped for a second day.

Chief Executive Officer Natarajan Chandrasekaran said Tata has a “pretty healthy” pipeline of deals after reporting a 38 percent increase in first-quarter net income. Accenture Plc (ACN) also reported profits that exceeded estimates as customers outsource more work, a trend that prompted researcher Gartner Inc. (IT) to raise its growth forecast for global information technology spending earlier this month.

“TCS has been getting a lot of market share from its customers’ vendor consolidation exercises,” said Ankita Somani, an analyst at Angel Broking Ltd. in Mumbai. “It is benefiting from a push in emerging economies, like Latin America.”

Profit in the three months ended in June totaled 32.8 billion rupees ($590 million), beating the estimate for 31.8 billion rupees. Revenue was 148.7 billion rupees, compared with the 146.6 billion-rupee median of 46 analyst estimates compiled by Bloomberg.

Order Outlook

“The deal pipeline is pretty healthy,” Chandrasekaran said in an interview with Bloomberg UTV today. “We also have a very disciplined approach in terms of what we can take on and what we can’t.”

Tata Consultancy will post sales growth higher than the forecast made by National Association for Software & Services Companies, Chandrasekaran said yesterday. The association has predicted industrywide revenue growth of as much as 14 percent in the year ending March 31.

The company won new contracts in the quarter from mobility, data, cloud computing and social media services, Chandrasekaran said at a press conference in Mumbai yesterday. The decline in the rupee helped the company mitigate the impact of wage increases, training and visa costs, he said.

The Indian rupee was Asia’s worst-performing currency against the dollar in the three months ended June, with an 8.6 percent depreciation over the period.

Tata Consultancy draws the majority of its revenue in dollars and euros from clients based in U.S. and Europe. A weakening in the rupee inflates the repatriated value of overseas sales.

“The unprecedented volatility among major currencies and the Indian rupee will continue to be a challenge in the short term,” Chief Financial Officer S. Mahalingam said in a statement. “We are taking the steps to mitigate any risks arising from this scenario.”

Infosys Lags Estimates

Infosys, India’s second-largest software exporter, cut its sales forecast yesterday after reporting first-quarter profit of 22.9 billion rupees, compared with the 24.2 billion-rupee median of 31 analysts’ estimates compiled by Bloomberg.

Sales in the year ending in March may rise to at least $7.34 billion, Infosys said in a statement yesterday, compared with an April forecast of $7.55 billion. The company sees “challenges” in the global economic situation and that’s “resulting in slower IT spends by large corporations,” Chief Executive Officer S.D. Shibulal said in the statement.

Shares of Infosys fell 0.4 percent to 2,254.75 rupees as of 9:54 a.m. in Mumbai.

Tata Consultancy, which provides computer services and back-office support to clients including Citigroup Inc. (C) and Singapore Airlines Ltd. (SIA), added 29 clients during the quarter.

The company derived 53.3 percent of its revenue from companies in North America, 15.2 percent from the U.K., and 10.1 percent from continental Europe last year, according to its last annual report.

Tata Consultancy added a net 4,962 employees during the quarter for a total of 243,545, according to the statement. Workers left the company at a rate of 12 percent in the quarter ended June 30, down from 14.8 percent a year earlier.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Cooking-Oil Imports by India Fall as Rupee Drop Deter Buyers

By Swansy Afonso - Jul 11, 2012

Cooking-oil purchases by India, the world’s biggest consumer after China, probably dropped for the first time in five months in June after a plunge in the rupee to a record low deterred importers.

Shipments slid to 850,000 metric tons last month from 862,550 tons a year earlier, according to the median estimate in a Bloomberg survey of five processors and brokers. Imports of crude and refined palm oil declined 16 percent to 600,000 tons from 712,356 tons, the survey showed. The Solvent Extractors’ Association of India will publish shipment data next week.

Palm oil, used in candy and fuel, has slumped 17 percent from a 13-month high in April on concerns that a slowdown in China and the European debt crisis may curb demand. Lower Indian imports may boost inventories in Malaysia, second-largest palm oil supplier, as production enters the peak period. The rupee sank to a low of 57.3275 to a dollar on June 22, raising the cost of commodities priced in the U.S. currency.

“The rupee depreciation made imports expensive and kept importers away,” said Sandeep Bajoria, chief executive officer of Mumbai-based brokerage Sunvin Group. “Buyers were also holding back purchases to take advantage of the lower Indonesian export tax in July.”

Indonesia cut the tax rate for exports of crude palm oil in July to 15 percent, a level last seen in January, from 19.5 percent in June, Deddy Saleh, director general of foreign trade at the Trade Ministry, said June 25. The base price to calculate the levy was cut to $944 a ton from $1,098, he said.

Monsoon Delay

Palm oil for September-delivery fell as much as 2.3 percent to 3,011 ringgit ($946) a ton, the biggest loss for the most- active contract since June 14, and was at 3,015 ringgit at 8:25 a.m. in Mumbai. Futures rose to a 13-month high of 3,628 ringgit on the Malaysia Derivatives Exchange on April 10.

A surge in imports in the past four months lifted cooking- oil inventories including those at Indian ports to a record 1.7 million tons last month, according to the extractor’s association. Stockpiles may be about 1.6 million tons as of July 1, Sunvin’s Bajoria said.

Purchases will increase in the next four months as the worst start to the monsoon in three years delays soybean and peanut sowing, he said. Imports will be between 800,000 tons and 900,000 tons a month until October, Bajoria said.

The area under oilseeds dropped to 2.65 million hectares (6.5 million acres) as of July 6 from 3.73 million hectares a year earlier, according to the farm ministry. Soybean planting was 26 percent lower at 1.89 million hectares, it said.

Dwindling Supplies

Imports in the seven months through May jumped 32 percent to 5.61 million tons, according to the extractors’ association. India bought 8.7 million tons in 2010-2011. Purchases will climb to 9.7 million tons this year as local supplies are set to decline to 6.65 million tons from 7.25 million tons, GG Patel & Nikhil’s managing partner Govindlal G. Patel, who has traded edible oils for more than three decades, said last month.

Crude soybean-oil imports probably surged to 125,000 tons in June from 50,616 tons a year earlier, while sunflower-oil purchases may have risen to 110,000 tons from 50,560 tons, the Bloomberg survey showed.

Palm oil comprises almost 80 percent of India’s cooking-oil imports. The nation buys palm from Indonesia and Malaysia, and soybean oil from Brazil and Argentina.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.