BHEL Said to Seek $500 Million Europe Purchase: Corporate India By Abhishek Shanker and Rajesh Kumar Singh - Sep 24, 2012

Bharat Heavy Electricals Ltd. (BHEL), India’s biggest power-equipment maker, may buy a European provider of metro-rail technology for as much as $500 million to help revive profit growth from a three-year low.
The company plans to use part of its 67 billion rupees ($1.3 billion) of cash reserves and raise debt to fund the purchase, two people familiar with the plans said. Bharat Heavy has identified targets in Italy and the Netherlands and the acquisition may be completed by March 31, said the people, asking not to be identified the talks are private.
The state-owned company is seeking to expand its transportation business to tap metro-rail networks being built in seven Indian cities at an estimated cost of $21.5 billion. Bharat Heavy’s profit may drop for the first time in a decade according to a survey of 37 analysts compiled by Bloomberg, as competition from Chinese rivals including Shanghai Electric Group Co. (601727) and Dongfang Electric Corp. drives down prices, while lack of fuel prompts utilities to delay projects.
“It’s imperative for Bharat Heavy to diversify,” said Lakshminarayana Ganti, an analyst with Standard Chartered Securities in Mumbai, who rates the stock underperform. “The power business is fraught with challenges. The company has rightly identified areas like turnkey project implementation, transport and renewables as new focus areas.”
Profit at the maker of turbines, boilers and switchgear may drop 11 percent to 62.86 billion rupees in the year ending March 31, according to the survey

Sustaining Growth

Bharat Heavy shares have declined 23 percent in the past year, compared with a 16 percent gain in the benchmark Sensitive Index. (SENSEX) They rose 6.7 percent to 247.85 rupees yesterday, the highest in five months.
“Deals are waiting to happen in the technology space in Europe,” said Vijaya Sampath, a senior partner at Lakshmi Kumaran & Sridharan, a Mumbai-based legal firm that specializes in corporate law. “Most of these are family-owned businesses, which are facing liquidity issues or the younger generation wants to sell out.”
Economic and business challenges will make it difficult for the company to sustain past growth rates in the near term, Chairman B. Prasada Rao said in an address to shareholders on Sept. 19. Bharat Heavy earned 76 percent of its revenue from power equipment last financial year and 22 percent from its transport business, which makes electric locomotives and electrical systems for urban rail networks.
The company’s market share in power equipment almost halved to 51 percent in the five years ended March 31 as competition from overseas and local rivals such as BGR Energy Systems Ltd. (BGRL) and Larsen & Toubro Ltd. (LT) intensified.

‘Panic Price’

Prices of boilers, turbines and generators together have fallen 22 percent to 23 million rupees a megawatt, which is “the ultimate panic price,” Pritesh Chheda, Prerna Jhavar and Harshad Shukla, analysts at Emkay Global Financial Services in Mumbai, wrote in a report dated Sept. 20. The average price of the equipment in the previous two to three years was 29.5 million rupees, they said.
Bharat Heavy is expected to maintain its profitability until the financial year ending March 2014 because of orders booked at higher prices, Ganti said, adding that the company’s profit margin is expected to shrink.
Power companies such as Reliance Power Ltd. (RPWR), JSW Energy Ltd. and GVK Power & Infrastructure Ltd. have deferred projects worth at least $35 billion, citing shortage of coal and natural gas, which together fire 66 percent of India’s electricity generation capacity. State-run NTPC Ltd. (NTPC) cut its expansion target by 11,000 megawatts, or 44 percent, for the five years ending March 2017 because of coal shortages.

Half Capacity

About 30,000 megawatts of capacity at existing power plants is lying idle because of coal and natural gas shortages, said Ashok Khurana, director general at the Association of Power Producers, a lobby group for the nation’s generation companies.
As much as $35 billion of debt at state distribution utilities is also hurting the power industry. The utilities, whose tariffs are lower than their costs, have had to cut back on electricity purchases as coal costs increase.
NTPC, the country’s biggest power producer, was forced to cut generation by 13 billion kilowatt hours, or 6 percent of its total production, in the year ended March 31, as state government utilities reduced purchases, Chairman Arup Roy Choudhury said on Aug. 7. The company may have to cut output by almost as much this year.
“As long as these concerns prevail, companies will be reluctant to place new orders,” Khurana said.

Sound Decision

The challenges in the power industry make Bharat Heavy’s push in urban-rail equipment a sound decision, said Standard Chartered’s Ganti.
The government is encouraging Bharat Heavy to “seriously get into” urban transportation, Chairman Rao told analysts in an earnings call on July 26. The company is focusing on metro- rail transportation as about 30 Indian cities are planning to build the networks.
Bharat Heavy plans to bid for a Delhi Metro Rail Corp. project, Rao said on the call, without elaborating. The company also plans to increase production of railway locomotives by 50 percent to 75 this year, he said.
“We are not increasing our presence in the transportation sector because we are despondent about our power business,” Bharat Heavy Finance Director P.K. Bajpai said in a phone interview. “We are doing so because we don’t want to be a peripheral player in anything that we do.”
To contact the reporters on this story: Abhishek Shanker in Mumbai at ashanker1@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

Xi-Li Inherit Weakest Economy Growth Since Deng Opened China By Bloomberg News - Sep 23, 2012

China’s new leaders are poised to inherit the weakest economic growth since Deng Xiaoping three decades ago and may need to borrow from his market-opening tool kit to avert a steeper decline.
As the Communist Party prepares to anoint Vice President Xi Jinping, 59, and Vice Premier Li Keqiang, 57, next month as its so-called fifth generation in charge, data from exports to production signal the government will struggle this year to reach its 7.5 percent expansion target. The retiring top echelon took power in 2003 with growth above 9 percent and their predecessors were bequeathed a 14 percent pace in 1993, a year after Deng toured the southern boomtowns he’d spawned, urging more change.
U.S. and European consumer spending that fueled expansion for decades is waning, while the young labor force that filled China’s factories is starting to shrink. Unless Xi and Li can succeed where their predecessors came up short and curb state enterprises, boost access to credit for private companies and raise consumption, annual growth could slump to about 4 percent by 2014, according to Roubini Global Economics.
“China faces its most pivotal challenges in more than a decade, with a structural economic slowdown coinciding with a major political transition,” said Ramin Toloui, global co-head of emerging-markets portfolio management in Singapore at Pacific Investment Management Co., which operates the world’s largest bond fund. “The old-growth model is gone, but there is not yet a clear and present plan for replacing it.”

Expansion Driver

China’s slowdown is adding to headwinds complicating the global economy’s struggle with Europe’s debt crisis and stunted U.S. job gains. China’s economy, the world’s second-largest, accounted for 36 percent of expansion last year.
Toloui, who helps manage $100 billion in emerging-market bonds at Pimco, sees China’s growth moderating to 7 percent in 2013 and remaining at about the same level through 2015, compared with about 10 percent since Deng began dismantling Mao Zedong’s command economy in the 1980s. Pimco has $10 billion invested in Chinese corporate bonds, yuan debt issued in Hong Kong and currency contracts, Toloui said.
“The global economy has become hooked on supercharged Chinese growth, and we’re not going to have that in future,” said Susan Shirk, chairwoman of the 21st Century China Program at the University of California-San Diego, who was responsible for China at the U.S. State Department from 1997 to 2000. “For the past decade to 15 years, we’ve had a reversal of the reform impulse and the challenge is to get that back on track.”

Overcome Opponents

The next generation of leaders must overcome opponents of change, including state-owned companies and banks that are “powerful, resourceful and resolute in protecting their interests,” according to a February report by the World Bank and the Development Research Center of China’s State Council.
While former Premier Zhu Rongji continued Deng’s legacy of reducing the government’s role by closing some state-run companies in the 1990s and firing millions of workers, the public-sector retreat slowed under current President Hu Jintao and Premier Wen Jiabao. Since 2003, policy has shifted toward supporting state-owned enterprises as a source of strength, Beijing-based GK Dragonomics wrote in a May 24 report.
“The political system has been captured by vested interests,” said Minxin Pei, a professor who specializes in China at Claremont McKenna College in California. “If you want to change the status quo, these interest groups are going to lose out. They are inside the system and will resist.”

Consumer Grail

Officials have vowed since at least 2006 to make domestic consumption an engine of expansion, even as its contribution to GDP slumped to about 35 percent this year from 44 percent a decade ago, according to Capital Economics Ltd. in London.
“Consumer consumption in China is not increasing at a significant rate, contrary to everybody’s hopes,” said Fred Smith, chief executive officer of FedEx Corp. (FDX), operator of the world’s largest cargo airline, on a Sept. 18 analyst conference call. “The locomotive that has driven China’s growth is its export industries, and with the situation in Europe and to a lesser degree in North America, that is a significant issue for the Chinese economy.”
China’s overseas shipments rose less than 3 percent for a second consecutive month in August, industrial output grew at the slowest pace in three years, and foreign direct investment fell for a ninth month out of 10.

Optimism Dims

Manufacturers and retailers have grown less optimistic about sales, with more employers cutting back jobs, a quarterly survey compiled by New York-based research group CBB International LLC showed today. The number of companies reporting net hiring gains this quarter fell nine percentage points to 32 percent, according to the report, which is modeled on the U.S. Federal Reserve’s Beige Book.
Another challenge is that China’s pool of 15-to-24-year- olds -- a mainstay for factories making cheap clothes, toys and electronic products -- will shrink by about 67 million by 2030, according to the United Nations. As the economy moves more toward services, labor shortages will worsen, reaching a shortfall of almost 18 million workers by 2017, said Tao Dong, Credit Suisse Group AG’s Hong Kong-based head of Asia economics excluding Japan.
China’s new leaders can unleash new sources of growth by developing services, getting capital to more innovative private companies, boosting wages, and bolstering pension plans and health care, said Stephen Roach, former nonexecutive chairman at Morgan Stanley in Asia.

Urbanization Trend

He said China still has lots of “low-hanging fruit” to harvest from urbanization, with the Organization for Economic Cooperation and Development estimating as many as 300 million more people will move from the countryside by 2030 to join 600 million already living in cities. With higher-paying jobs, these migrants will boost consumption and trigger more infrastructure and housing construction if the government can improve the social safety net, said Roach, now a senior fellow at Yale University in New Haven, Connecticut.
“The focus has been on expanding the number of people covered by the plans, but not on increasing the benefits,” Roach said. “Until they do that, there’s a risk that all the labor income that China generates through new jobs and urbanization will be saved and not spent.”

Savings Rate

China’s savings rate is estimated at more than 50 percent of GDP this year, the highest among major economies, exceeding 31 percent in India and 13 percent in the U.S., according to the International Monetary Fund.
To boost services, China’s government needs to “get out of the way,” said Stephen Green, head of Greater China research with Standard Chartered Plc in Hong Kong. The new leaders must simplify rules and reduce the involvement of state and provincial governments in businesses such as real estate, hotels, financial services and entertainment, he said.
“This kind of supply-side reform will make or break the growth outlook for the next decade,” Green said. “The real danger” is “a gradual descent into a rigid, uncompetitive and more state-dominated economy, growing only at 3 to 4 percent and vulnerable to shocks.”
The incoming officials should deliver “quick wins” and address short-term risks, said the World Bank and Development Research Center report. These include increasing the flexibility of bank deposit and lending rates, narrowing interest-rate spreads, increasing dividends that state-owned enterprises pay to the national budget and raising the retirement age, currently 60 for men and as high as 55 for women.

Services Gains

The transition to more service-based growth will create investment opportunities in stocks such as Shanghai-based Wuxi PharmaTech (Cayman) Inc. (WX), China’s biggest provider of research and development services for drug companies, said Charlie Awdry, a fund manager at Henderson Global Investors Ltd. in London.
“We are not interested in guys that manufacture T-shirts in China because that’s a sunset industry that is moving offshore,” said Awdry, whose firm had 63.6 billion pounds ($103 billion) in assets at the end of June. “We are interested in guys like Wuxi who are looking to help the big western companies develop their drugs in China and reduce their R&D costs.”
Wuxi’s stock price may surge almost 53 percent within 18 months, from $14.40 on Sept. 21, estimated Ingrid Yin, a New York-based analyst at Oppenheimer & Co. Awdry said he also owns shares of Baidu Inc. (BIDU), China’s biggest Internet search engine, and Tencent Holdings Ltd. (700), its biggest Internet company, partly because the Web is at “the epicenter of all these positive trends of rebalancing and income growth.”

Spending Power

Rising spending power prompted Templeton Emerging Markets Group to hold fashion retailer Giordano International Ltd. (709) and China Merchants Bank Co. (600036), which “reach down into the middle-and even the lower-middle class,” said Hong Kong-based Executive Chairman Mark Mobius, who helps manage $40 billion.
China’s GDP is more than 129 times bigger than in 1978, when Deng ditched hardline Communist policies. His order the following year to create a special economic zone in Shenzhen sparked a market-driven boom that would transform the nation’s economy, luring manufacturers from Hong Kong and Taiwan with tax breaks and cheaper labor.
Other zones sprang up along the coastal belt, following an investment-export formula that propelled industry and construction, driven by what Goldman Sachs Group Inc. called the fastest investment rate of any country it could find in history. That rate is “likely to decline” from about 46 percent of GDP even as it remains a key contributor to growth, Goldman Sachs said in a Sept. 3 note.

‘Not Over’

“China’s investment story is not over,” said Wang Tao, an economist with UBS AG in Hong Kong. “The issue is the pace of investment and to make it sustainable and less wasteful.”
The National Development and Reform Commission this month published approvals for infrastructure projects, including as many as 2,018 kilometers (1,254 miles) of roads, that Nomura Holdings Inc. estimates will cost about 1 trillion yuan ($158 billion). This means that the government still is relying on investment to support expansion in the short term, Wang said.
The men poised to take the helm have given mixed signals about their desire to fashion a more balanced economy. Xi is known both for his market-friendly approach and his support for state-owned enterprises, said Cheng Li, a China scholar at the Washington-based Brookings Institution.

Princeling Leader

He’s a so-called princeling -- a child of Xi Zhongxun, one of the nation’s leading revolutionary figures, whom Deng chose to oversee the economic transformation of Guangdong province, which includes Shenzhen.
As Xi rose through the party ranks, he governed provinces including Zhejiang, home to some of China’s richest private companies, and Shanghai, the commercial capital. He developed a reputation for fighting corruption -- leading an anti-graft campaign in Zhejiang and taking over Shanghai after a 3.7 billion-yuan corruption scandal that brought down the city’s previous party chief, Chen Liangyu.
While Li has championed low-cost housing and improved health care, he may lack Zhu’s “political courage” and “Wen’s quick sense of how to respond to crises,” said Brookings’ Li.
Neither of the two are “big thinkers like Deng,” with the political might to push through economic restructuring, said Melanie Hart in “China’s Real Leadership Question,” an August report from the Washington-based Center for American Progress.

Political Challenges

Even without the economic challenges, the new leaders face a raft of social and political problems. Thirty years of largely unbridled industrial waste will cost at least 680 billion yuan to clean up, estimates the Washington-based International Fund for China’s Environment. The nation’s rural wealth gap last year neared a level the UN says may spawn social unrest. And escalating tension with neighbors from Japan to Vietnam over territorial disputes has led to attacks on Japanese factories in China and the closing of Japanese retail stores there.
China’s new leaders also may suffer from a period of relative inertia as they concentrate on consolidating power within the upper strata of the party, said Steve Tsang, director of the China Policy Institute at the University of Nottingham in England. The ouster in April of former Chongqing leader Bo Xilai from the ruling Politburo created the country’s biggest political scandal in a generation.
All this may further hamper their desire to take on financial institutions and other state businesses. The World Bank and Development Research Center report recommends setting up a commission, supported by top leaders, to deal with enterprises that enjoy partial or full monopolies and benefit from special relationships with decision makers. Postponing market-driven change could “risk the possibility of an economic crisis,” the report said.
Or as Deng once put it: “Reform is China’s second revolution.”
--Kevin Hamlin. With assistance from Mike Forsythe in Beijing. Editors: Adam Majendie, Melinda Grenier
To contact the reporter on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

Cooking-Oil Demand in India to Surge 44%, Boosting Imports

By Swansy Afonso - Sep 22, 2012

Cooking-oil demand in India, the world’s largest palm oil importer, is poised to jump 44 percent in the next eight years as rising incomes boost sales of noodles, cookies and fried foods, a government official said.
Consumption may surge to 23 million metric tons by 2020 from 16 million tons now, D. Bhalla, a joint secretary in the country’s food ministry, told an industry conference in Mumbai today. Imports will rise significantly in coming years to meet this demand, he said. The per capita consumption of edible oils in India is 13.5 kilograms, compared with the global average of about 26 kilograms, he said.
Rising Indian use of cooking oils may help Indonesia and Malaysia, the world’s biggest palm oil producers, to reduce inventories, and potentially stem a decline in prices. India’s imports are set to surpass 10 million tons for the first time next year as dry weather trims supply of domestic oilseed crops and demand increases, GG Patel & Nikhil Research Co. Managing Partner Govindlal G. Patel, who’s traded cooking oils for more than three decades, said yesterday.
“Demand in India will get a boost from a growing economy and lower edible oil prices,” said Dinesh Shahra, managing director of Ruchi Soya Industries Ltd. (RSI), the country’s biggest importer of cooking oils. “Every year consumption is growing at the rate of 4 percent.”

Import Dependence

India, Asia’s third-largest economy, expanded at an average 7.9 percent in the past five years, according to the government.
The South Asian nation, the world’s biggest cooking oil consumer after China, meets more than half its demand through imports. India buys palm oil from Indonesia and Malaysia, and soybean oil from the U.S., Brazil and Argentina. Vegetable-oil imports climbed 19 percent to 8.16 million tons between November and August, according to the Solvent Extractors’ Association of India.
Palm oil imports may reach an all-time high of 8.1 million tons in 2012-2013, compared with 7.5 million tons this year, while soybean oil purchases may climb to 1.2 million tons in 2012-2013 from 1.1 million tons, GG Patel & Nikhil’s Patel said.
Palm oil for December delivery fell 2 percent to 2,763 ringgit ($906) a ton on the Malaysia Derivatives Exchange in Kuala Lumpur on Sept. 21, the lowest price at close since October 2010. Futures have fallen 13 percent this year.
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Indian Finance Ministry Said to Expect 5.3% Budget Gap

By Unni Krishnan - Sep 21, 2012

India lowered a levy on overseas borrowing to spur capital inflows, stepping up efforts to revive a faltering economy, and signaled the budget deficit may be contained at about 5.3 percent of gross domestic product.
A tax on interest paid by local companies to lenders abroad has been cut to 5 percent from 20 percent, the Finance Ministry said today. The ministry expects the fiscal gap in the year that began April 1 to exceed the 5.1 percent goal set in March by 0.2 percentage points, two officials with knowledge of the matter said, asking not to be identified as the projection isn’t public.
The rupee and stocks surged after the tax cut, which follows an increase in diesel prices to pare fuel subsidies and moves to allow more foreign investment, ending months of policy inaction. The deficit forecast is smaller than estimates by Citigroup Inc. and Crisil Ltd., Standard & Poor’s local unit, which predict the gap will widen from last year’s 5.8 percent.
“The full thrust of the government’s actions seems to be on regaining investor sentiment,” said Rupa Rege Nitsure, economist at state-owned Bank of Baroda in Mumbai. “Even though these steps are coming late in the day, what is now critical is that they don’t go back on them.”
The rupee strengthened 1.7 percent to 53.4575 per dollar as of 3:39 p.m. in Mumbai, while the BSE India Sensitive Index (SENSEX) rose 2.2 percent. The yield on the 10-year bonds due June 2022 fell to 8.16 percent from 8.17 percent earlier.

No Reversal

The reduction in the withholding tax will be applicable for three years, effective July 1, 2012, the Finance Ministry said in a statement in New Delhi.
The government raised diesel tariffs on Sept. 14 for the first time in over a year, the same day it opened industries including retail and aviation to more overseas investment. Prime Minister Manmohan Singh is trying to avert a credit-rating downgrade and revive growth with a burst of policy changes.
The overhaul won’t be reversed, the officials said, even after the largest political ally in the ruling coalition said it would quit in protest at the steps. The 14 percent diesel-price rise, forthcoming auctions of mobile-phone permits and planned share sales by state companies should avert a wider budget gap, the officials said.
“Even after the measures announced last week, there are huge risks to the deficit from higher subsidies and a revenue shortfall due to slowing growth,” said Suvodeep Rakshit, an economist at Kotak Securities Ltd. in Mumbai. “I am not too confident about the budget estimates.”

Borrowing Program

The government must curb subsidies to avoid exceeding its 2012-2013 borrowing target of 5.69 trillion rupees ($107 billion), both the officials said. The administration will probably retain that goal at a meeting due this month to outline the borrowing schedule for the second half of the financial year, one of the officials said.
Singh is trying to trim a subsidy bill for food, fuel and fertilizer by 12 percent to 1.9 trillion rupees in the year through March 2013. The government had set a budget-deficit target of 5.1 percent of GDP for the year in the budget released in March. Citigroup predicts a shortfall of 5.9 percent and Crisil forecasts 6.2 percent.
The government intends to raise at least 350 billion rupees from an auction of mobile-phone permits and about 300 billion rupees from the sale of shares in state-owned companies, one of the officials said. An increase in diesel excise duty last week will garner 160 billion to 170 billion rupees, the official said.
The Reserve Bank of India has signaled that curbing the budget shortfall is pivotal to increasing room for interest-rate cuts to bolster economic expansion, which weakened to a nine- year low of 6.5 percent in 2011-2012.
The prime minister’s Congress party-led cabinet allowed overseas retail chains such as Wal-Mart Stores Inc. to open stores in India under last week’s revamp, triggering strikes across the nation yesterday on concern family-run stores, the backbone of the retail market, will be forced out of business.
Standard & Poor’s and Fitch Ratings reduced the outlook on India’s credit rating to negative from stable earlier this year, bringing the nation a step closer to junk status.
To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net.
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Soybean Meal Exports From India to Climb on Record Crop By Swansy Afonso - Sep 20, 2012

Soybean-meal exports from India, Asia’s largest shipper of the animal feed, may advance 5 percent next year as the oilseed harvest is poised to climb to a record for a second year, according to Adani Wilmar Ltd.
Shipments may exceed 4 million metric tons in the year starting Oct. 1, compared with 3.8 million tons this year, said Atul Chaturvedi, chief executive officer at the Ahmedabad-based exporter. The soybean crop in 2012-2013 will be more than the 11.5 million tons estimated by the Soybean Processors Association of India, he said, without giving his own estimate.
Soybean-meal prices have surged about 60 percent this year and reached a record on concern that the worst U.S. drought in at least 50 years will shrink soybean and corn supplies from the world’s largest exporter. U.S. processors including Bunge Ltd. (BG) and Archer Daniels Midland Co. reduced oilseed crushing 9.2 percent last month from July after the rally in prices eroded demand for livestock feed made from soybeans, boosting demand for shipments from India.
“All indications are that when you have a crop on your head, prices normally soften,” said Chaturvedi, whose company is a joint venture with Wilmar International Ltd. (WIL), the largest importer of soybeans into China. “Prices have to come down to make India more competitive in the global market.”
Soybean meal futures have fallen about 8 percent since reaching an all-time high of $541.80 per 2,000 pounds on the Chicago Board of Trade on Sept. 4. Soybeans rose to a record $17.89 a bushel also on Sept. 4 as U.S. farmers will harvest the smallest crop in nine years after June and July were the hottest since 1936.

Export Contracts

India competes with the U.S., Argentina and Brazil to supply animal feed to China, Vietnam, Japan and South Korea. The country usually exports more than 70 percent of its soybean-meal output. Traders have contracted to sell as much as 300,000 tons at prices ranging from $620 a ton to $640 a ton free-on-board to buyers in South East Asia and Africa for shipment in November and December, Rajesh Agrawal, spokesman for the Soybean Processors Association, said on Sept. 18.
Monsoon oilseed production in India this year may be little changed from a year earlier as an increase in soybean output will be offset by a lower peanut crop, Adani’s Chaturvedi said. The country harvested 28.6 million tons of oilseeds 2011-2012, according to the Central Organization of Oil Industry and Trade.
Farmers planted soybeans in 10.7 million hectares (26.4 million acres) as of Sept. 7, compared with 10.3 million hectares a year earlier, according to the farm ministry. The area under all the oilseeds fell to 17 million hectares from 17.5 million a year earlier, it said.

Monsoon Revival

A revival in monsoon this month has brightened prospects for a bigger rapeseed crop this year, Chaturvedi said. Rapeseed, the main oilseed sown in the winter season, totaled 6.03 million tons in 2011-2012, according to central organization’s data.
The monsoon, which accounts for more than 70 percent of annual rainfall, has been 5 percent below a 50-year average as of yesterday, according to the India Meteorological Department. The deficit was 19 percent at the end of July.
“Farmers will plant more because the prices have been superb and we have got very good rains,” Chaturvedi said.
Rapeseed futures on the National Commodity & Derivatives Exchange Ltd. in Mumbai have rallied 40 percent in the past year, reaching a record 4,564 rupees ($84) per 100 kilograms on Aug. 4. The October-delivery contract rose 0.9 percent to 4,150 rupees yesterday.
Vegetable-oil imports by India may increase to as much as a record 9.7 million tons this year from 8.7 million tons this year, Chaturvedi said. Imports climbed 19 percent to 8.16 million tons between November and August, according to the Solvent Extractors’ Association of India.
India meets more than half its edible oil requirement through imports. It 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

India Stocks Fall Most in 2 Weeks as Govt Ally to Quit Co

By Santanu Chakraborty - Sep 20, 2012

Indian (SENSEX) stocks fell the most in two weeks after Prime Minister Manmohan Singh’s largest ally said it was exiting the coalition over reforms announced last week.
The BSE India Sensitive Index, or Sensex, declined 0.6 percent to 18,391.01 at 9:28 a.m., headed for its biggest drop decline since Sept. 5. Reliance Industries Ltd. (RIL), owner of the world’s largest refining complex, fell to a one-week low. ICICI Bank Ltd. (ICICIBC), the third-biggest lender by value, dropped the most in two weeks. The market was closed yesterday for a holiday.
Singh unveiled last week the biggest policy push of his previously gridlocked second term by ending a 14-month freeze in diesel prices to pare the fiscal deficit and allowing more foreign investment in aviation and retail sectors. The Sensex jumped to a 14-month high on Sept. 17. Trinamool Congress ministers will be pulled from the federal cabinet on Sept. 21, party leader Mamata Banerjee said on Sept. 18, allowing a few days that could be a window for compromise.
Losing the backing of Trinamool would put the government about 24 seats short of a majority in the lower house of Parliament, though Singh’s Congress party-led administration has in the past won expressions of support from other groups in the legislature. The proposal to allow more foreign investment in retailers stalled in December amid opposition from Banerjee’s Trinamool Congress.
To contact the reporter on this story: Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

India Consumer-Price Inflation Quickens to 3-Month High

By Tushar Dhara - Sep 18, 2012

Indian consumer prices rose at the fastest pace in three months in August as costs of vegetables and sugar increased.
The consumer-price index climbed 10.03 percent from a year earlier, compared with a 9.86 percent advance reported earlier for July, the Statistics Office said in New Delhi today.
The Reserve Bank of India kept interest rates unchanged yesterday to damp inflation risks from a drop in the rupee and a below-average monsoon that threatens to crimp farm output. At the same time, it cut the amount of deposits banks must set aside as reserves to support lending following the government’s biggest push to revive growth since 2009.
“Inflation remains an overriding concern despite the government’s policy initiatives,” Sujan Hajra, a Mumbai-based economist at Anand Rathi Financial Services Ltd., said before the release. “The Reserve Bank will ease liquidity through buying bonds and cutting the cash reserve ratio rather than cutting policy rates.”
The rupee, which has tumbled about 12 percent against the dollar in the past 12 months, fell 0.5 percent to 54.305 per dollar at 11:19 a.m. in Mumbai. The BSE India Sensitive Index (SENSEX) eased 0.1 percent, while the yield on the 8.15 percent government bond due June 2022 rose one basis point to 8.17 percent from 8.16 percent before the data release.
Vegetable prices climbed 20.79 percent last month from a year earlier, today’s statement showed. Sugar rose 17.51 percent, while pulses gained 16.04 percent.
India boosted diesel tariffs last week to pare its fiscal deficit and allowed more foreign investment in the economy, the most extensive policy overhaul of Prime Minister Manmohan Singh’s previously gridlocked second term.
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.