Google, Twitter quizzed on Facebook-Instagram: source

By Alexei Oreskovic

(Reuters) - The U.S. Federal Trade Commission has reached out to Google Inc and Twitter in an investigation into Facebook Inc's $1 billion acquisition of photo-sharing service Instagram, a source familiar with the probe told Reuters.

It was not immediately clear what specific information the FTC was looking for, the source said. The Commission automatically initiates a review of any acquisition of significant size.

The acquisition of the top photo-sharing service on the Internet is a crucial part of Facebook's strategy to bolster its mobile offerings, at a time when consumers are increasingly accessing the Internet through smartphones.

Facebook had said it hopes to complete the deal -- the largest in Facebook's history -- in the second quarter, but some observers think that may be an ambitious target, given the size of the deal and Facebook's status as the world's No.1 Internet social network with roughly 900 million users.

The FTC's review of the deal comes as Facebook is preparing to raise as much as $12 billion in a record-breaking initial public offering that could occur as soon as next week.

Some investors have cited Facebook's limited advertising revenue from the mobile versions of its service as a potential concern with regards to the company's long-term growth potential.

Facebook and Twitter declined to comment. Google was not immediately available for comment.

Markets open lower tracking weak Asian cues

The markets have started the day on a lower note with the Sensex declining 64 points at 16,356 and the Nifty at 4,945, down 21 points.
The rupee movement and the IIP data for March due later today will also be keenly watched. Global stocks advanced for the first time in seven sessions on Thursday on relatively encouraging US jobs data.
The Dow Jones industrial average closed up 0.2% at 12,855, while the Standard & Poor's 500 Index rose 0.3% to 1,358.
Asian shares, however, retreated on Friday, spooked by JPMorgan's $2 billion huge loss from a failed hedging strategy. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3%, while Japan's Nikkei share average opened up 0.1%.
Back home, the Nifty is likely to seek support around 4,930-4,910, while it can face resistance around 5,000-5,020, analysts say.

Europe should have followed US economic lead: Obama

US President Barack Obama said on Thursday that Europe was still in a difficult place economically in part because it did not take some of the steps the United States did.

Addressing about 70 people at a fundraiser in Seattle, Obama said Europe's troubles were among the factors that could affect US growth, also mentioning high gasoline prices as a potential economic drag.

"We've still got headwinds. Europe is still ... in a difficult state, partly because they didn't take some of the decisive steps that we took early on in this recession," Obama said at the event, which was held in a private home.

"Gas prices are still pinching a lot of folks," he said, referring to the US economy. The housing market is still very weak across the country. But the good news is that we have weathered the storm."

The health of the US economy could be decisive for Obama's re-election prospects on November 6. His likely Republican opponent, Mitt Romney, has accused the Democrat of lacking the business acumen to steer the United States out of recession and bring down the unemployment rate.

Obama did not specify which economic steps Europe ought to have followed. But a senior administration official said some examples included the United States' early stress tests on banks, requirements that banks bolster their capital cushions and an aggressive early response by the Federal Reserve, the US central bank.

Source : Reuters

Air India risks losing bailout as pilots agitate

State-owned Air India risks losing a $5.8 billion government bailout, Civil Aviation Minister Ajit Singh said on Thursday, as industrial action by pilots disrupted flights for a fourth day.

The national airline, which has been surviving on taxpayers' money, is scheduled to get $1.3 billion in fresh equity from the government in the current fiscal year but this is linked to its performance.

Court asks AI pilots to end stir

"Pilots need to understand that if Air India does not meet the performance yardsticks set in the plan, that money will not reach them. It's not a one-time deal," Singh told Reuters in an interview.

India's civil aviation industry is suffering under high fuel costs, low fares and a combined debt of $20 billion. Five of the country's six main carriers are losing money.

Cash-strapped Air India was forced to cancel at least 30 flights on Thursday alone, after more than 150 pilots did not report to work, demanding exclusive rights to fly new Boeing Dreamliners.

"The government is not going to keep on pouring money into Air India anymore," the minister said. "Nobody is indispensable."

The carrier has sacked three dozen pilots since the "calling in sick" agitation began on Sunday night and a court has declared the action illegal.

"Air India is in a very bad financial situation. They are not able to pay their employees, they have not cleared airport dues," Singh said, adding that it owed billions of rupees to fuel suppliers.

About 500 Air India pilots who fly international routes have been demanding their colleagues from former state-owned partner Indian Airlines should not be trained to fly Dreamliners, as it may hurt the career prospects of original Air India staff.

The two companies were merged in 2007 but there have been problems with integration. Air India's purchase of Dreamliners was also criticised by a federal auditor last year for "imposing an undue long-term financial burden".

The government would not bow to the pilots' demand, Singh said.

"If a lot of pilots keep reporting sick ... it will cause disruption. But the prospect of disruption is not going to stop us from taking firm action," he said.

Singh said the government was open to private investment in the Air India, which has nearly a fifth of the domestic market, but it would take this up on a case-by-case basis.

"There are a lot of people trying to enter this market," the minister said. "Air India has lots of assets, and I am not talking about only monetary assets. They have the routes, they have the pilots, they have the parking spots."

DB Corp share sale programme oversubscribed

Media conglomerate DB Corp's Rs 176 crore share sale offer has been oversubscribed by 103%, stock exchanges data showed today.

The offer for sale of 90 lakh shares of DB Corp, which publishes leading Hindi daily 'Dainik Bhaskar', received bids for 93.09 lakh shares, the data showed.

The floor price for the sale is Rs 196 apiece, which is at a discount of over 1% to the today's closing price of Rs 198.45.
Based on the minimum bidding price, sale of 93.09 lakh shares would fetch over Rs 182 crore to the company.
DB Corp publishes eight newspapers with 65 editions, 191 sub-editions in four languages (Hindi, Gujarati, English and Marathi) across 13 states in India.
DB Corp had posted a marginal growth in consolidated net profit for the quarter ended March 31, 2012, at Rs 45.4 crore as against Rs 44.99 crore in the same period last year.
The company had appointed Morgan Stanley India Company as the broker for this deal.

FII-TO-FII TRADES: PNB traded at 7% premium

Grasim Ind was traded at second highest premium of 6.02%

Trades between FIIs generated a volume of Rs 32 crore on the BSE Thursday-an increase of 46.13% from Rs 22 crore clocked on Wednesday. As many as four stocks witnessed trades of 5.34 lakh shares on Thursday.

Punjab National Bank (PNB) was traded at highest premium of 6.55% on the BSE with 38,200 shares changing hands at Rs 803.50 as against the spot price of Rs 754.10.

Grasim Industries was traded at second highest premium of 6.02% on the BSE with 54,311 shares changing hands at Rs 2,626.10 as against the spot of Rs 2,477.
 

Scrip	FII Close*	FII shares#	Spot Close@	Premium To spot price %
BSE
PNB	803.50	38200	754.10	6.55
Grasim Ind	2626.10	54311	2477.00	6.02
ING Vysya Bk	362.00	232000	354.85	2.01
IndusInd Bank	316.00	209000	315.40	0.19
* FII-Close is the closing price of the scrip under FII-to-FII trades # FII-Shares is the total number of shares traded under the FII-to-FII trades @ Spot close price is the closing price in the cash market

Yusuf Hamied, Medicine man strikes again

To some—especially western drug companies—he is a ‘pirate’. To others, mostly those in developing countries, he is an unparalleled hero. Either way, Yusuf Hamied, 75, is perhaps the most talked about man in pharmaceutical circles in the last decade.

Most recently, Hamied has courted controversy by dropping the price for one of Cipla’s cancer fighting drugs. Multinational drug giant Bayer, the original maker of the drug called Nexavar, charged Rs 2.8 lakh per month for it. Then, the government stepped in and awarded a 'compulsory licence' to Hyderabad-based pharma company Natco, which started making it for a bargain-basement price of Rs 8,800. Cipla, which had been selling the same drug for Rs 28,000, decided to drop its price to Rs 6,600, which was even below Natco's floor-setting price. It decided to drop the price of many of its other cancer drugs as well.

“MNCs like to operate in areas of monopoly, no two ways about it," Hamied told Business Standard recently. "If they don't get monopoly, they like to delay your process as much as possible," he added. "With 1.3 billion people, we can't afford to play their game. The health of the country is at stake," he says.

Still, looking out for the underserved and impoverished has been good business for Cipla, which is expected to bring in over Rs 7,000 crore in net sales for the just-ended financial year with an expected net profit of over Rs 1,200 crore. Hamied, according to Forbes, is worth $1.7 billion, and spends six months of the year outside the country.

It is the year 2001, more than any other, that sharply focussed the raison d'etre of Hamied. The Gujarat earthquake had just struck, leaving devastation in its wake. It was Hamied's wake-up call. He sent medicines to the state but there were other thoughts working away in his head. "Look at what the hell is happening in our country. AIDS is the worst tragedy this country could ever experience—with the possible exception of a nuclear war—and it is a completely foreseen tragedy. Why are we all donating for Gujarat and doing nothing about this great plague? I decided right then that, if I had to, I would do it by myself. People think this is all about Africa, but it's not. For me, it's about my own home," he told The New Yorker magazine.

Soon after, Cipla began selling dirt-cheap antiretroviral AIDS drugs to African countries. Thanks to Hamied, annual medication, that normally costs up to $24,000, began to cost around $350 in many parts of the developing world. It was nothing short of an epic development in the history of disease and medicine. Hamied went further. Not only did he sell the cocktail of drugs that are used for AIDS treatment for a dollar a day, he was also able to combine three of the medicines that go into the AIDS cocktail into one single pill, making it much easier for patients to be regular with their medication regimen.

Today, at least 50 per cent of AIDS patients in impoverished countries who consume medications, do so with Cipla's drugs. Many countries have reformulated their public-health systems now that there are cheap drugs available to combat a disease that has ravaged the world in the last two decades. Hamied didn't stop there. When the world began confronting the possibility of a bird flu pandemic, pharma giant Roche said that they couldn't produce enough of its drug Tamiflu to spread around the world. Moreover, for a country like Vietnam, where the virus originated, the medication at $60 for a five-day course was simply too expensive. Hamied stepped in and filled the gap.

Hamied's worldview is probably coloured by many things: A nationalist father who was a Muslim from Aligarh, who started Cipla in 1935 and supplied Indian troops free medicine; his Lithuanian Jewish mother, whose parents died in the gas chambers of Nazi Germany; seeing his multi-ethnic and multi-religious home of Bombay going up in sectarian conflagration in the nineties. He was 23 when he returned from Cambridge, armed with a Phd in Chemistry, and joined the family business where he has stayed ever since, helped by his brother and other family members.

As beloved as he is in poorer regions, he is regarded as a scourge in the West by many. "Stealing ideas is not how one provides good health care,'' Shannon Herzfeld, a spokeswoman for the American pharmaceutical industry, once said, referring to Hamied. The reason for their ire is because western pharma companies spend hundreds and millions of dollars on drug research, they say, and people like Hamied rob them off their ability to recoup their investments in R&D.

Or do they? "If you examine the world's top 50 drugs, seventy per cent of them are marketed by companies that didn't invent them in the first place," says Hamied. "Lipitor, Pfizer's blockbuster drug, was not invented by them. Similarly Roche's Tamiflu was not invented by it," he adds. What MNCs do, says Hamied, is 'evergreen' drugs coming off patent, by tweaking them slightly and extending their lives.

Ultimately, these companies are simply used to making 'obscene profits', says Hamied. And this is something that the country simply cannot afford.

There will be a shortage once new fuel supply agreements are signed: S Narsing Rao

Interview with Chairman and Managing Director, Coal India Limited

Coal India Limited (CIL) has been in the news after a presidential decree that forced it to sign fuel supply agreements (FSAs) with power plants. The new chairman and managing director of the company, S Narsing Rao, shares his views on controversies surrounding FSAs and the possible imports that the company may have to resort to. In an exclusive interview with Shine Jacob, Rao explains CIL’s strategies on coal imports and plans to tackle production constraints. Edited excerpts:

Power companies have raised concerns about the new fuel supply agreement (FSA), especially the insignificant penalty clause of 0.01 per cent. Would you consider revisiting the clause?
As far as we are concerned, there are no issues with FSAs. Our subsidiaries have made offers to power companies and they have to respond. Till now, we have signed 13 out of 48 FSAs. Power plants that have not signed power purchase agreements (PPAs) are not eligible to sign FSAs, so some of the units that have not signed are not even eligible.

We are getting some feedback from clients like NTPC. Some have requested for modifications in the clauses. But the clauses were approved by the board. On our part, we can assure that we will do our best to stick to our offers.

You have joined Coal India Limited (CIL) at a crucial time, can you outline your priorities?
To step up production, of course. Dispatch and environmental issues need to be sorted out. We also have to work more closely with the Railways.

We need to liquidate our coal stock of about 71 million tonnes (MT) but infrastructure is a major issue. We have to see how we can step up evacuation of coal from the current level of 6 MT. Our targeted production this fiscal is 464 MT, while the dispatch target is 470 MT, which includes some of our coal stock. To do this, we need a bit of micro planning in logistics, contractors and rake availability.

If new FSAs are signed, you’d need to increase production by 70 MT. Do you think this is achievable with the production target that you have set?
Our assessment is that the requirement would be close to 100 MT. We are expecting to supply about 35 MT to the power sector from our production. So there will be a shortage. There’s a question mark over how we are going to meet that. Import is one possible option.

Last year, CIL failed to find takers among power producers for long-term coal off-take agreements. Do you have a separate strategy in place this time around?
The earlier offer was for long-term deals over a 10-year period. These kinds of long-term deals can be advantageous or disadvantageous depending on many international factors — including prices, freight rates and foreign exchange. Given the volatile factors, prospective consumers may have been unwilling to make a commitment.

I don’t think we may look at that kind of a long-term arrangement now. If we are going to supplement coal supplies to the power sector, it would be on a year-on-year basis — not even on a medium-term basis.

Even if you import, what if power companies want coal supplies delivered at the plants?
As I said, a year-on-year deal can be an option for imports. Whether we do it ourselves or bank on some central public sector undertaking (PSU) that already has expertise in the sector is something we will have to look into. Since a PSU dealing with coal imports will already know the business, it can have a back-to-back arrangement with power companies and we can facilitate it. At this stage, this is a possible idea, but we can look into it only if clients are willing.

If at all we go into that arrangement, we would adopt a hands-free approach. At present, FSAs are yet to be signed. After signing FSAs, imports will come into the picture and we will then be able to assess the shortfall. The question on the views of power companies regarding this proposal will only arise once FSAs are signed.

Is a price increase under consideration at this point in time? Will there be a rollback of the gross calorific value (GCV) system?
We will look into the issue of price rise only after coming out with the financial results. The nine-month impact of the National Coal Wage Agreement (NCWA) IX will have to be factored in. I can’t say when it will happen but prices have to be adjusted from time to time.

The government has notified the GCV system, so I don’t think there will be a rollback. There should be no difference between GCV and useful heat value (UHV) systems, it is only a notification. There may be some issues related to the grading and quality but GCV per se cannot be an objectionable thing.

Last year, CIL failed to meet the production target even after revising it a few times. What are your constraints and how do you plan to increase production?
We are optimistic about our targets. We will clear critical stumbling blocks like rehabilitation and resettlement (R&R) hiccups and departmental works will also have to be improved. I don’t think we can do much more than this in the remaining 10 months. But in the long run, we will invest more on infrastructure facilities. Our capital investment for the next five years is around Rs 32,000 crore.

We will invest more on railway lines and will speed up the three rail projects in the pipeline in Jharkhand, Chhattisgarh and Odisha, which will see a total investment of about Rs 2,000 crore. These projects include the Tori-Shivapur-Hazaribagh line in Jharkhand that is about a 100 km, Mand-Raigad in Chhattisgarh and another 100-120 km railway line between Bhupdevapur and Manoharpur in Talcher, Odisha. If these three projects are implemented, we will be able to evacuate 50 MT through each of these projects.

Do you think environmental concerns are going to become a constraint? How are you going to tackle it?
We are taking more proactive steps and will get in touch with all stakeholders like the environment ministry, state governments, district administration and the locals so that it doesn’t become a major stumbling block. All I can say is we are hopeful of getting the clearances for pending projects. About 70 projects need to be cleared that have a capacity of about 196 MT. Some of these have evacuation problems. So, even if the clearances are in place we may or may not be able to take it forward.

CIL was unsuccessful in overseas acquisitions. Even the Mozambique project is yet to take off. What are the primary issues?
We are not a private company so we can’t take big decisions quickly. They have to go through a process. The government-to-government route is much easier. But that, too, has its own set of problems. For example, working in a foreign territory where there is no expertise, you have to get technology from outside.

On acquisitions, we have to look at properties that can be completely owned by Coal India. And for that, we should look at some African and Southeast Asian countries, rather the developed world.

RBI fights to arrest rupee fall

The Reserve Bank of India on Thursday cracked down on dollar hoarding by exporters to support the domestic currency, which fell 1.3 per cent yesterday to close at a record low.

Exporters were holding on to dollars in anticipation the rupee would continue to weaken against the greenback.

In a circular issued on Thursday, the RBI has asked exporters to sell half the foreign currency in their accounts and directed all exchange earners to surrender 50 per cent of their future earnings for conversion into rupees. The rupee has lost five per cent against the greenback since the start of the current financial year.

“Fifty per cent of the balances in the Exchange Earner’s Foreign Currency (EEFC) accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account holder. This process may be completed within a fortnight,” the RBI said.

At present, the amount held in the EEFC accounts is at $5 billion. According to the new norms, $2.5 billion will have to be converted into rupees, which is likely to boost demand for the rupee. In addition, capital markets regulator Sebi had auctioned the FII (foreign institutional investor) debt limit of $1.5 billion for government and corporate bonds on April 23.

While the money to be invested in government bonds was expected to flow into the market within 45 days of the auction, the flow of funds into corporate bonds was expected within 90 days, bankers said.

The rupee, which recovered two per cent following the RBI’s announcement, had to give up the gains later in the day as market participants were not sure if the measures were enough to check the rupee fall. The currency is caught in the middle of a widening current account deficit domestically and the euro zone debt crisis.

As a result, the rupee’s gains were capped on Thursday. It closed at 53.43 a dollar after hitting an all-time closing low of 53.83 yesterday. This was despite the central bank's foreign exchange intervention in afternoon trade. Traders said banks were seen selling dollars on its behalf at the 53.50 levels, which helped the rupee appreciate towards the end of the day.

According to latest data released by the RBI on Thursday, the central bank's intervention in the spot market was to the tune of $20 billion between September 2011 and March 2012.

The central bank also said exporters had to sell the dollars in the market after meeting their import and travel requirements instead of holding them in EEFC accounts. “This will ensure that the EEFC accounts are used purely for transaction purposes, and not for a hedging purpose. It will certainly ensure the exporters do not misuse facilities given in EEFC accounts, and they don’t keep on buying dollars in spite of having balance in their EEFC account,” said Abhishek Goenka, CEO, India Forex Advisors.

The RBI also allowed banks to take intra-day currency trading positions that are five times their overnight open position limit, a move which could ease intra-day rupee volatility by increasing market liquidity and giving banks more time to cover big orders. Previously, banks could not exceed their overnight limit, although some larger banks had already been allowed by the RBI to increase their intra-day positions.

According to market participants, on Thursday’s measures will boost the rupee in the short run as there is a quantifiable amount of inflows that will come into the market. “On an ongoing basis too, the probability of dollars getting converted into rupees is higher now as the flexibility of exporters has been reduced,” said the treasury head of a foreign bank. However, industry players said more needed to be done for sustained stability. “While the RBI's intervention to curb dollar hoarding is commendable, more needs to be done. This kind of steep depreciation of the rupee does not augur well for the economy. It will push up inflation and increase macroeconomic concerns,” said Adi Godrej, chairman, Godrej Group.

Aegis eyes $2 bn in revenue by 2015

Aegis, the business process outsourcing and information technology company from the Essar Group, is aiming to be a $2-billion company in the next three years.

Having closed 2011-12 revenue at $1 bn (Rs 5,300 crore), it said the next $1bn top line growth would come through the organic (internal growth) route. “We are confident we will be able to maintain a 26 per cent compounded annual growth rate for the next three years to attain this target. We also believe the company will be a $4-bn company in the next five years, but for this we will look at the inorganic (acquisitions) route,” said Aparup Sengupta, managing director and chief executive officer.

The company is confident that despite a difficult macro environment, there is still room for growth. "We see tremendous growth from markets like the Middle East, Africa, Asean and also from mature markets. The focus in North America has been to get additional wallet share from the existing client base," said Sengupta.

He added they were aiming to get a wider investor base, for which they were in talks with private equity firms and bankers. “Before an IPO (public share offer), we would like to have strategic players on board. We are comfortable on diluting 20-25 per cent stake in the company. We should be able to close this transaction by the end of this calendar year,” he said.

When asked if the promoters were looking for an exit, Sengupta said, “After a strategic sale and an IPO, the promoter shareholding will come down. Essar Group has always wanted to play the role of an operating entrepreneur and they have successfully done that. It is time for us to deliver share value and that would be to take the company to the public market.”

AGC Networks, listed subsidiary of Aegis, reported its financial results for the fourth quarter and full year ended March 31. Net profit jumped almost three times to Rs 23.5 crore from Rs 7.5 crore in the same quarter the year before. Revenue at Rs 303 crore grew 56 per cent from Rs 194 crore on a year-on-year basis.

“We have seen impressive growth in the year and will keep the momentum going through our well-defined growth strategy. We are expanding our presence in other geographies of the US, ANZ (Australia-New Zealand), Philippines, and MEA (Middle East/Africa) regions. Most of the revenue has come from the domestic market, but we do see traction picking up in markets like the US and UK,” said S K Jha, managing director and CEO.

For the full year, net profit was Rs 63.4 crore from Rs 29.2 crore in the earlier year. Acquired last year, it reported full-year revenue of Rs 998 crore.

The board of directors of AGC Networks have approved sale of 5.7 million equity shares in Aegis at Rs 170 each to AGC Holdings.

Source : BS

Kingfisher in crisis as pilots go on strike

The management and pilots of debt-trapped carrier Kingfisher Airlines are set for another showdown. Nearly 50 Kingfish-er pilots from Delhi reported sick on Thursday, leading to cancellations of 14 flights. The airline could face more trouble as pilots from other bases, including Mumbai and Bangalore, are threatening to join the agitation over salary delays.

Kingfisher has around 80-90 pilots, including commanders and first officers, in Delhi. Pilots from Mumbai and executive pilots based in Delhi operated flights out of the capital in the wake of the strike. There are about 22 daily departures from Delhi and flights to Shimla, Kullu, Dharamshala, Udaipur, Dehradun and Jaipur were cancelled. "We were promised that salary payments will happen from Wednesday but this did not happen. The management has been making promises but has been unable to stick to them. We will meet in Delhi on Friday and decide on the further course of action,'' a Kingfisher commander said. However, according to an airline source, junior employees began receiving their salary on Thursday.

The airline paid December salary last month but about 200 employees, including engineers and pilots, were paid earlier in May after they went on a flash strike. The carrier has a debt of Rs 7,057.08 crore.

Meanwhile, Mallya-led UB group's United Breweries (Holdings) Ltd on Thursday said Kingfisher Airlines has ceased to be its subsidiary as on February 18, 2012, after the carrier allotted shares against optionally convertible debentures to certain entities.

UB Holdings also said certain corporate guarantees given by the company with respect to Kingfisher have been invoked. The company said it is in negotiations with the beneficiaries to reach a settlement.

Source : BS

Air India seeks contempt proceedings against pilots

The Air India management moved a petition in the Supreme Court, seeking the initiation of criminal contempt proceedings against agitating pilots for allegedly obstructing the implementation of the court's order on the training of pilots for Dreamliner aircraft. It simultaneously sacked nine more pilots who did not report to duty on the third day of the agitation. That took the number of pilots sacked to 46.

The agitation is slowly but surely impacting passengers. Twenty three flights, including 11 domestic, of the airline's 410 daily flights got cancelled on Thursday. Air India, which operates 120 international flights daily, has already lost over Rs 15 crore in revenues during the first two days. The number is rising with more flight cancellations.

Bracing itself for a long battle with the pilots, the airline had stopped taking bookings for international flights for five days. That has now been extended till May 15 and the airline has also waived off penalties on refund, cancellations, date change and rebooking for passengers booked to travel up to May 14. More than 260 pilots have not reported for work in the past three days. That has upset the airline's schedules at a time when it had just got Cabinet clearance for a Rs 30,000-crore bailout package over a period of nine years.

PTI reported quoting Air India’s counsel Lalit Bhasin that the action of the pilots union was in violation of the April 23 and May 2 order of the apex court by which it was made clear that the training programme will be imparted in equal ratio to the pilots of pre-merger Air India and erstwhile Indian Airlines.

The 550-member Indian Pilots Guild (IPG) is opposed to allowing the erstwhile Indian Airlines pilots to operate Dreamliner planes. Also, it wants its members' career progression and time-bound promotions to be the same as those of pilots from the erstwhile Indian Airlines, who operate Airbus planes.

The erstwhile Air India and Indian Airlines followed different policies on training and promotion. The erstwhile Indian Airlines pilots got a commander grade in six years, but it took 10 years in the erstwhile Air India. Meanwhile, the IPG pilots have decided to continue their agitation and have asked Prime Minister Manmohan Singh, Civil Aviation Minister Ajit Singh and United Progressive Chairperson Sonia Gandhi to intervene.

“Salary is not the issue for us. We have been working without salary for the last four months. It is about career progression and promotion. Why did you decide to train both erstwhile Air India and Indian Airlines pilots for flying Dreamliners in a 1:1 ratio even before the implementation of the Dharmadhikari Committee recommendations? We have tried contacting Ajit Singh and seek a meeting with him,” IPG President Jeetendra Awhad said at a press conference in Mumbai on Thursday.

Civil Aviation Minister Ajit Singh, however, was not ready to play ball and said categorically that talks could happen only if the strike was called off. “I am ready to talk to them but they will have to call off the strike first,” he said, adding that the decision to send both Airbus and Boeing pilots for training was on the basis of a Supreme Court order.

Air India has been able to arrest its falling market share in international flights to and from India. It commands a share of over 20 per cent.

Aviation analysts say pilots have been able to flex their muscles in carriers like Air India for two key reasons. One, appointment of new pilots is a lengthy process, so they cannot be replaced immediately. Second, the country faces a large shortage of commanders (of almost 500).

Source : BS

DLF forms team to weigh non-core asset sale

DLF, the largest real estate company has, with the aim of cutting its big debt load, recently set up a core team of five to six people to focus on the process of sale of non-core assets, a company official said.

DLF is targeting to raise Rs 5,000-6,000 crore this financial year from the sale of non-core assets. In 2011-12, it had managed to raise around Rs 1,620 crore from non-core divestments as of December 2011 and in 2010-11, around Rs 1,110 crore. The company had set a medium-term goal of raising Rs 7,500 crore, of which Rs 6,000 crore could be raised by March 2013, according to the latest presentation to analysts.

As of December 2011, it had debt of Rs 22,758 crore. The debt-equity ratio of 0.8:1 compares reasonably well with most healthy companies, chief financial officer Ashok Tyagi had told Business Standard earlier.

The dedicated team for disinvesting non-core assets, with key representatives from finance, was formed so that the core business of DLF could progress without any obstacles, an official said. The idea is to be be able to concentrate on project execution, deliveries and cash flows, while not losing sight of the debt reduction goal.

"This shows the company's intention to fast-track the divestment of non-core assets,” said Anubhav Gupta, analyst, Kim Eng Securities. “However, whether the market is ready to accept the assets on the block in a different thing.”

The company may have to lower its realisation expectations to sell, added another analyst.

The company refers to its hospitality business, mainly the Aman hotel chain, the wind power business and Mumbai land as non-core assets. It has been in serious talks with potential buyers for the sale of Aman hotels, excluding the Delhi property, for more than a year. Valuation of the asset is learnt to have come in the way. DLF is expecting to generate at least Rs 2,000 crore from the sale of its hospitality business. Citi group and Goldman Sachs are advisors for the Aman deal.

For the NTC Mill land in Mumbai, the company is believed to be looking at raising Rs 2,000 crore. The company is getting both international and domestic bids for this land, it is believed. Sale of its wind power generation business is expected to generate Rs 1,000 crore.

Source : BS

CII, govt to jointly launch company for promoting R&D

Fourteen years ago on May 11, as India tested three nuclear devices at Pokhran, the world closed its doors on the country with economic sanctions. The day, now called Technology Day to mark the anniversary of the tests, will see the government launching a company, under a public-private partnership between the Confederation of Indian Industry (CII) and the Department of Science and Technology, to attract the world’s leading technologies and promote innovation in the country.

The joint venture will be called the Global Innovation and Technology Alliance (Gita). It will have an equity of 51 per cent by CII, while the Technology Development Board of the Department of Science and Technology will have 49 per cent. The project has been running on a pilot-basis since 2007-08.

Under the scheme, future government funds allocated for R&D and technology will be assigned to Gita to manage the use of the money. To promote R&D, Gita will disburse funds to industry in the form of loans, equity or grants. It will provide a global networking platform for government, industry and academia,

“The idea behind Gita is that if there is a global innovation and it can be applied to India, then that innovation needs to be routed to India. As of now, we do not have any way of doing it,” said T Ramasami, secretary, Department of Science and Technology.

To attract global R&D, Gita will take the burden of 25 per cent of the R&D if an Indian and a foreign company decide to collaborate to develop a marketable technology. The rest of the money would be shared equally between the two companies and the foreign government.

“India’s emergence as technology leader will largely depend on Indian industry’s investment in research and development. The government, in the 12th five-year Plan, has set an ambitious target of increasing its own expenditure up to one per cent of GDP. At the same time, it has planned to take stimulating measures to increase the private sector’s investment up to one per cent of GDP. This is going to be a tall task, and huge efforts from the government and the private sector is needed,” said Vikram Kirloskar, chairman, Gita.

While the Indian government’s spending on R&D remains low compared to other developed countries, investments by the industry in R&D are even lower. India spends around one per cent of its Gross Domestic Product on R&D.

While the industrially-developed countries like Israel spends four per cent; Japan, three per cent; US, two per cent and China 1.5 per cent. In other countries, the industry spending on R&D is higher than what the government does. However, in India the industry is spending two-three times lower than that of the government.

Source : BS

India drugs inquiry can prompt new US scrutiny

Global drugmakers could face new US scrutiny after a report from lawmakers in India alleged abuses in that country's drug approval process, lawyers familiar with such investigations said.

A parliamentary panel on Wednesday said officials of the Central Drugs Standard Control Organisation (CDSCO) had been colluding with pharmaceutical companies to speed up approval procedures, allowing some drugs that are not permitted in other countries to go on sale.

The US Justice Department and the Securities and Exchange Commission are conducting extensive inquiries into nearly every major drug and medical device manufacturer for potential violations of a US law that bars bribes to officials of foreign governments, the Foreign Corrupt Practices Act.

Many of those probes focus on accusations of bribery in emerging markets, such as China and Latin America, but dealings in India have yet to come under major scrutiny.

"If the Indian parliament issued a report condemning practices, then I'm sure my clients will be getting calls from the DOJ pretty soon," said one lawyer who works with pharmaceutical companies on such investigations. The lawyer spoke on condition of anonymity, as did others who represent drugmakers in FCPA cases.

Other experts familiar with the Justice Department's workings agreed.

"There is certainly going to be Department of Justice interest, said Howard Sklar, who ran anti-corruption programmes for several major companies and now works at Recommind Inc, which makes software used in corporate investigations.

The 78-page report by the parliament's health committee named several major international drug companies including Eli Lilly and Co. and Novartis It cataloged a series of procedural failures that it said raised questions about how certain drugs were allowed to be sold in India, but it did not directly accuse the companies of wrongdoing.

"If these Indian drug regulators were in cahoots, then it's not particularly a stretch of the imagination to say that part of the reward for their laxity was money, and that is very clearly a violation of the FCPA," Sklar said.

Officials at the SEC and the Justice Department had no immediate comment.

Clinicals trials may draw scrutiny

When the Justice Department and the SEC sent letters in April 2010 to several drug manufacturers including Lilly, Bristol-Myers Squibb Co. and AstraZeneca PLC in its foreign bribery probe of the industry, it requested information on countries like Brazil, China, Greece and Russia but did not include India in that list, people familiar with the matter said at the time.

Most of those investigations have focused on sales and marketing practices, people familiar with the investigations said, rather than the higher-level drug approval issues that were cited in India.

Some of those cases are wrapping up. Lilly disclosed last month it was in "advanced discussions" with the SEC to resolve foreign bribery issues in Poland and other countries.

Johnson & Johnson paid $70 million last year to resolve FCPA charges that its subsidiaries made improper payments to healthcare providers employed at state-run hospitals in countries like Greece and Iraq to induce them to purchase its medical devices and drugs.

The same factors have not been at work in India, where much of the booming medical market is privately run, and expensive, brand-name products are rarely purchased by public hospitals, the people said.

But the Justice Department has signaled its interest in examining possible corruption in the clinical trials process, said John Kelly, a former federal healthcare fraud prosecutor now in private practice at the law firm Bass, Berry & Sims.

"With clinical trials, you're going to have constant interaction with either foreign officials or entities that are operated by government entities," Kelly said. "If they weren't (looking at it), they will be now."

Novartis said on Thursday it would investigate the drug approval irregularities alleged in the report. Lilly said on Wednesday it "followed all appropriate regulatory processes required by the regulatory agency in India."

Source : Reuters

Focus on large companies suits us better: Jaideep Khanna

Interview with MD, Corporate & Investment Banking, Barclays India

In 2011, Barclays Bank suspended expansion of its retail banking operations, exited the credit cards and small and medium enterprises businesses, and merged its corporate and investment banking teams in India. The merged charge is headed by Jaideep Khanna, who tells Somasroy Chakraborty the Britain-based lender has no plan to leave the country. Edited excerpts:

You have closed your retail and SME banking businesses. Are you looking to exit India?
The market environment made sense for us to merge the corporate and investment banking businesses. We decided to move away from the SME coverage function and refocused our attention on larger corporates. Foreign banks in India have a limited number of branches. The key success factor in retail and SME businesses is having the ability to be near your clients. Hence, the strategy to focus only on large companies is more suited to our skill sets and the number of branches. We will target companies that are market leaders in their segments, either have overseas operations or the ambition to become global corporations. India has strategic significance for our group. So, we are committed to staying invested in India and it continues to be an area of investment and focus for us.

If you will focus on large companies only, will you be keen to set up a subsidiary here?
We are committed to do what the regulator wants us to do. So, if subsidiarisation is something the central bank feels is good for foreign banks in the country, we will comply. We will continue to operate in this country, either through a subsidiary or a branch. But the guidelines are not clear on some of the issues, like taxation and branch presence. Once these are clarified, we will have better understanding of the benefits and detriments of subsidiarisation.

What are your plans to expand the corporate and investment banking businesses?
The integration is done. Last year, we had launched our equities business. While it is still very early days, we are encouraged by the growth prospects. It was the only segment where we were not present. We already have a strong debt market business. In terms of hiring, we will continue to recruit for our equities business. But we look for quality rather than quantity. Currently, we have 302 employees in the corporate and investment banking business, of which 72 are in coverage and products. We feel we now have, overall, the right manpower size.

You have nine bank branches in India. Will you apply for more licences?
For our strategy, we have the right number of branches. Hence, we don’t have any immediate plans to apply for fresh licences. If we change our strategy, we may either increase or decrease the number of branches.

How do you see the markets? Is India losing its attractiveness among foreign investors because of governance-related issues and policy paralysis?
The markets have been very slow in recent months. We have ongoing dialogues with our clients but I don’t see too many transactions happening. Clearly, the sentiment is a function of the underlying demand, the demography and the regulatory framework. While the demand continues to remain strong, I think if the government takes more steps to provide clarity on the regulatory and legal framework, it will encourage market participants in making investments. Everybody is awaiting clarity and understanding on tax and other regulatory provisions.

Source : BS

Public sector Banks to install 60,000 more ATMs

Process to take two years ATM makers and payment service providers to participate in bidding rural machines to be customised

After a gap of six to eight months, public sector banks (PSBs) have geared up to establish 60,000 more Automated Teller Machines (ATMs) across the country over the next two years. The state-owned lenders had put their ATM expansion on hold as a centralised outsourcing model was being worked out by a committee appointed by the government.

ATM machine manufacturers and payment service providers will be participating in the bidding process, being led by six major PSBs — State Bank of India, Punjab National Bank, Union Bank of India, Bank of India, Bank of Baroda and Canara Bank.

“This will be a completely outsourced model. The requirements for 22 regions across India have been clubbed into 16 bidding circles,” said a senior official from a payment service provider company.

“We expect the whole process to be completed in June and results to be announced by June-end,” the official added.

According to data from National Payments Corporation of India, the number of ATMs in the country — of private, public, foreign and cooperative banks, part of the National Financial Switch connecting all ATMs — had reached 98,025 by the end of April 2012.

A study by ATM manufacturer NCR Corporation India shows about 70 per cent of deployment has been in urban areas.

“Though the total requirement does not specify an urban-rural ratio, a higher deployment in rural areas is being considered,” said a senior official of a large PSB.

Customised ATMs for rural areas are also being tested. “The machines used in metros may not be relevant in rural areas,” said Jaivinder Gill, managing director, NCR Corporation. He said the company had developed machines that could interact with the user in 23 languages and use biometric authorisation as a safety feature if the user was not comfortable with PIN identification.

Of the ATMs in rural India, about 20 per cent are owned by private sector banks. The ratio is expected to change with the entry of non-bank entities or White Label ATM operators. White label ATMs are those owned and operated by non-bank entities.

“The banking space has seen considerable growth through ATMs, but it has been restricted principally to the urban/metro areas,” said the Reserve Bank of India in a draft report on White Label ATMs released in February.

The central bank said allowing entities other than banks would help the overall objective of financial inclusion. The final guidelines on the proposed model are awaited.

Source : BS

Retail investors go for debt over equity funds

Move is driven by market trend over past year, as debt funds offered 9-10% interest and equities tumbled

The financial year ending March 2012 saw a visible trend of investors’ affinity for debt funds at a time when the equity markets remained weak and volatile.

Higher interest rates leading to risk-free guaranteed returns of as high as nine to 10 per cent attracted retail investors to other investment options offered by the fund industry. In 2011-12, pure retail folios in the debt category increased by half a million to 4.5 million as on March, compared with 3.9 million during the corresponding month last year. Even gilt funds, which primarily invest in government securities, saw a rise in the number of investors from 23,310 to 26,222 during the period.

Last year, Subir Gokarn, the Reserve Bank’s deputy governor, had stressed there was a need for mutual funds, especially gilt funds, to promote retail holding in government securities.
 

DEBT FUNDS GAIN OVER EQUITIES
Category	Asset under management*		Number of folios
	March,’11	March,’12	March,’11	March,’12
Gilt funds	150.23	202.32	23,310	26,222
Debt funds	17,836.04	22,005.26	39,29,431	45,01,302
Gold ETFs	1,220.68	2,604.70	2,86,415	4,59,996
Equity funds	1,32,318.51	1,23,548.54	3,86,44,938	3,70,68,734
* Rs crore                               Source : Association of Mutual Funds in India (Amfi)

Ajit Menon, executive vice-president at DSP BlackRock Mutual Fund, says, “The increasing participation of retail investors in debt funds is mainly on account of the poor equity market scenario and higher interest rates. Investors have allocated more money during the year to fixed maturity plans, short-term debt funds and monthly income plans (MIP). Distributors have also shown focus on debt funds.”

According to fund tracker Value Research, of the top 10 fund categories which gave good returns, over the past year (ending May 9, six are either in the debt or gilt category. For instance, short-term debt funds, ultra short-term debt funds and debt income funds gave a return of between 9.2 and 9.6 per cent. Similarly, gilt funds in the medium & long-term and short-term categories offered returns of 7.25 to 7.82 per cent. In contrast, all equity category funds gave negative returns during the period, from minus 1.55 per cent to as low as minus 22.45 per cent.

Statistics from the Association of Mutual Funds in India show the assets under management (AUM) in debt funds grew to Rs 22,005 crore during 2011-12 against 17,836 crore the year before, a rise of 23 per cent. In the gilt category, though it’s a marginal amount in terms of absolute value, the growth was 35 per cent, pushing AUM to Rs 202 crore against Rs 150 crore.

“It’s a healthy trend,” notes Vikaas M Sachdeva, chief executive officer of Edelweiss MF. “Investors got into debt funds because they do not want erosion of capital. In a bad markets scenario, getting a risk-free-return of six to seven per cent makes sense. And, it is not that investors who moved out from equities are the only ones investing in debt funds. New investors are also getting into debt funds.”

Menon says this trend is likely to continue this year and MIP would be the best option for investment in debt funds, as it can provide decent returns. Adding: “That does not mean one should ignore equities. There is no reason to go zero on equities, as markets may see a change in trend.” According to Sachdev, “Investors shouldn’t time the markets. Whether one should opt for debt or equity schemes, it all depends on the investment objectives.”

Source : BS

Nervousness returns to the Street

With the benchmark indices declining more than 10 per cent from the highs reached in February, a December-like pessimism seems to have returned to the markets.

As in late 2011, a fall in global risk sentiment on the back of renewed euro zone concerns and a weak domestic currency have taken a huge toll on the equity markets.

The benchmark Sensex has dropped over 2,000 points, or 11 per cent from 18,428.61, touched on February 21. The 30-stock index on Thursday ended 59.53 points lower at 16,420.05, its lowest close since January 16, while the Nifty closed at 4,965.7, down 9.1 per cent.

Since February 21, of the 30 Sensex stocks, 25 have given negative returns, with nine falling more than 20 per cent. The Sensex had run up 21 per cent between December 20 and February 21. It had seen a fall of nearly 16 per cent from 17,804.8 to 15,175.08 between October 28 and December 20. Foreign investors had pulled out close to Rs 4,500 crore from the Indian markets during this period.

“The prevailing sentiment on Indian equities seems to be returning to the uber-bearishness of late 2011, as the liquidity-fuelled rally of January and February loses momentum,” said Nick Paulson-Ellis, country head (India), Espirito Santo.

“The mood among investors is definitely down with the euro zone problems resurfacing and not much happening on the reforms front in India,” Andrew Holland , chief executive officer, (investment advisory), Ambit Capital.

The tally of investments made by foreign institutional investors (FIIs) in Indian shares so far this calendar year is over Rs 40,000 crore. Since March, they have sold shares worth nearly Rs 2,000 crore due to the worsening macroeconomic conditions and the controversial General Anti-Avoidance Rule (GAAR).

“The rupee depreciation and slowdown in FII investments are the biggest worries for the Indian markets,” said Motilal Oswal, chairman & managing director, Motilal Oswal Financial Services. The domestic currency has declined more than nine per cent from the high of 48.69 against the greenback, reached in February. Oswal, however, believes the market mood appears more bearish than what it actually is, as a fall in activity levels is creating huge volatility. On the bright side, experts believe the current pessimism presents a good buying opportunity.

“Despite the weak sentiment, there are some positives to support the market like falling crude oil prices and deferment of GAAR,” said Holland. Finance Minister Pranab Mukherjee on Monday postponed the implementation of GAAR by a year.

From here on, political push for reforms, drop in oil prices below $100 per barrel and improvement in corporate earnings could be positive triggers for the market, Oswal said.

As a sign of market players turning cautious in their outlook, many strategists at foreign brokerages are recommending clients to reduce risk in their portfolio. Three leading foreign firms — Nomura, Deutsche Bank and UBS have recommended their clients to go overweight on sectors such as FMCG and pharmaceuticals.

Paulson-Ellis believes even thought India's fundamentals won’t improve in a hurry, there are still good investment opportunities in defensive sectors and financials.

Source : BS

JPMorgan has trading loss of $2 bln, reputation hit

JPMorgan Chase & Co said on Thursday that it suffered a trading loss of at least $2 billion from a failed hedging strategy, a surprise disclosure that hit financial stocks and the reputation of the bank and its prominent CEO, Jamie Dimon.

For a bank viewed as a strong risk manager that never reported a loss throughout the financial crisis, the errors are embarrassing, especially in light of Dimon's public criticism of the so-called Volcker rule to ban proprietary trading by big banks, and could lead to more heat from Washington on the sector.

"This puts egg on our face," Dimon said, apologizing in a hastily called conference call with stock analysts and conceded that the losses were linked to a Wall Street Journal report in April about a trader, nicknamed the 'London Whale', who, the report said, had amassed an outsized position.

JPMorgan said in a filing with the Securities and Exchange Commission that since the end of March, its Chief Investment Office has had significant mark-to-market losses in its synthetic credit portfolio. Synthetic portfolios typically include derivatives in a way intended to mimic the performance of securities.
While other gains partially offset the trading loss, the bank estimates the business unit with the portfolio will post a loss of $800 million in the second quarter, excluding private equity results and litigation expenses.
That compares with a profit of about $200 million for the unit it had forecast previously.
"It could cost us as much as $1 billion or more," in addition to the loss estimated so far, Dimon said. "It is risky and it will be for a couple quarters."
BAD STRATEGY
The dollar loss, though, could be less significant than the hit to Dimon and the reputation of the biggest US bank by assets - a bank which was strong enough to take over investment bank Bear Stearns and consumer bank Washington Mutual when they collapsed in 2008.
JPMorgan had $2.32 trillion of assets supported by $190 billion of shareholder equity at the end of March and has been earning more than $4 billion each quarter, on average, for the past two years.
"Jamie has always styled himself as one of the kings of Wall Street," said Nancy Bush, a longtime bank analyst and contributing editor at SNL Financial. "I don't know how this went so bad so quickly with his knowledge and aversion to risk."
JPMorgan shares fell 5% after the closing bell, and other financial shares also fell sharply. Citigroup was down 2.4% and Bank of America was down 1.7%.
Analyst Paul Miller of FBR Capital Markets cut his target for the stock to $37 from $50 in response to the disclosures. The shares were at $40.74 before the news.
Dimon said he still believes in his arguments against the Volcker rule. The problem at JPMorgan, he said, was with the execution of the hedging strategy.
The strategy "morphed over time" and it was "ineffective, poorly monitored, poorly constructed and all of that," he said.
In the call, Dimon said he wouldn't take questions about specific people or their specific trading strategies. But he indicated that some people may lose their jobs as executives sort out what when wrong. "All appropriate corrective action will be taken as necessary in the future," he said.
WHALE OF A LOSS
The April Wall Street Journal report said a trader in JPMorgan's Chief Investment Office, nicknamed the 'London Whale' had amassed an outsized position that had caused hedge funds to bet against his position. In the bank's earnings conference call in April, Dimon called the concern "a complete tempest in a teapot."
But on Thursday, Dimon said the bank's loss had "a bit to do with the article in the press." He added: "I also think we acted a little too defensively to that."
The Chief Investment Office is an arm of the bank that JPMorgan has said is used to make broad bets to hedge its portfolios of individual holdings, such as loans to speculative-grade companies.
"It's a pretty stunning admission for a company that prides itself on its risk management systems and the strength of its balance sheet," said Sterne Agee analyst Todd Hagerman.
"The timing couldn't be worse for the industry," he said. "At the end of the day, it will have ramifications across the broker-dealer community."
Just last week Dimon and leaders of other large banks met with Federal Reserve Governor Daniel Tarullo in New York to question the way the regulators conduct stress tests to see if the banks have enough capital to withstand possible losses. They also made arguments over trading restrictions.
Allegations that traders at the banks take outsized risks with bank capital to earn big bonuses have been among the drivers of government regulations adopted, and pending, since the financial crisis.
JPMorgan spokesman Joseph Evangelisti said the company uses pay formulas to reduce the chance of that happening in the Chief Investment Office and throughout the bank.
Except for people handling the bank's private equity investments, "no one at JPMorgan is paid on their profits and losses," Evangelisti said.
Regulators and lawmakers are now likely to push Dimon for more details about the trades. Those details will guide how regulators now view the issue and its impact on the Volcker rule, said Karen Petrou, managing partner of Washington-based Federal Financial Analytics.
If the trades were meant to hedge against specific risks as opposed to clearly being done as a proprietary bet on the markets, it may not play as clearly into the Volcker rule debate as supporters of the crackdown want it to, she said.
"The question is whether this in fact was a hedge and I think that's to be determined," she said. "That's really the heart of the matter."
But at least some in Washington quickly expressed views on the lessons from the episode. Senator Carl Levin, in statement issued two hours after the news broke, said, "The enormous loss JPMorgan announced today is just the latest evidence that what banks call 'hedges' are often risky bets that so-called 'too big to fail' banks have no business making."

Source : Reuters

Asian shares retreat, China data, Europe eyed

MSCI Pan-Asia index sheds 0.3%, Nikkei opens 0.1% up. US stocks battered on JPMorgan $2-bn loss

Asian shares retreated on Friday, spooked by JPMorgan's $2 billion loss from a failed hedging strategy, with investors warily watching political turmoil in the euro zone as they await new Chinese data for clues on its growth outlook.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3%, after falling to its lowest in nearly four months on Thursday while Japan's Nikkei share average opened up 0.1%.

US stock index futures fell sharply on Thursday evening as JPMorgan Chase & Co stunned investors with news that its chief investment office had incurred "significant mark-to-market losses" that it said could "easily get worse," sending the stock down nearly 7% to $38.05 in after-hours trading.

Prior to the JPMorgan's announcement, European and US stocks rose after data showed US claims for unemployment benefits edged lower last week, soothing concerns that dismal employment growth in April pointed to worsening labour conditions.

Risk appetite will remain muted largely due to heightening political and policy uncertainty in the euro zone.

"We expect the EUR to remain under pressure as a result, especially as the market debate regarding the use of the EUR as a policy tool gains momentum," suggesting that a rate cut aimed at weakening the euro is likely, Morgan Stanley said in a note.
As central banks focus more on growth than inflation, real yield differentials will be more significant in dictating forex market direction, especially for the euro/dollar, it said.
Uncertainty may drive currency market volatility, pegged at historically low levels by aggressive central bank liquidity injections globally, to pick up and prompt an unwinding of carry trades, with the dollar and the yen gaining, it added.
The euro was steady around $1.2931, still within sight of $1.29115 hit on Wednesday, its lowest since January 23.
Investors will also be cautious ahead of data due from China later in the session, seeking clues over the extent of growth slowdown after it posted weaker-than-forecast April trade figures the day before.
Chinese inflation data are due at 0130 GMT while industrial output and retail sales are due for release at 0530 GMT.
The Australian dollar, which is highly sensitive to growth prospects in China, its single biggest export market, also steadied around $1.0060 but near $1.0021 touched on Wednesday, its lowest since December 20.
"Chinese trade data yesterday suggested slowdown in trade. So this time around the focus will be more on growth-related data such as output and investment rather than CPI," said Masayuki Doshida, senior market analyst at Rakuten Securities.
Friday's data are likely to show inflation moderating while output revives, but an uneven recovery could mean contradictory data and more evidence for the China bears.
Oil eased, with Brent crude retreating 0.7% below $112 a barrel, while US crude fell 0.9% to $96.20 a barrel.
Asian credit markets were subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed early on Friday.
Greece struggled to form a government after a majority of voters rejected austerity measures in exchange for a bailout, putting the country at risk of bankruptcy and leaving the euro.
But euro zone officials on Thursday said euro zone countries were prepared to keep financing Greece until Athens forms a new government, whether one emerges from Sunday's election or if new elections have to be held next month.
Greece has also been saved from an imminent insolvency after the euro zone's temporary bailout fund, the European Financial Stability Facility (EFSF), agreed on Wednesday to immediately disburse 4.2 billion out of a 5.2 billion sub-tranche of the bailout to Athens.
Stakes are critically high for the European Union to keep Greece afloat as the EU is now Greece's biggest creditor and a Greek default means euro zone taxpayers will take a hit.
Spain, facing pressure on its fragile banking sector, is expected to present new reforms to complete the clean-up of its banks on Friday, with the government seen approving a plan to force banks to park their toxic real estate assets in holding companies that would later sell them off.

Facebook's IPO already oversubscribed: source

Company may raise existing price band of $28-35 if response is healthy, say analysts

Facebook Inc's record initial public offering is already oversubscribed, a source familiar with the share listing said, days after the world's largest social network embarked on a cross-country roadshow to drum up investor enthusiasm.

Despite concerns about slowing growth, a lofty valuation and signs the company is having trouble ramping up revenue from mobile advertising, institutional investors have so far indicated demand for more shares than Facebook has available, the source told Reuters.

Analysts say the company, which is seeking to raise about $10.6 billion by selling more than 337 million shares at $28 to $35 apiece, may raise that price range if demand turns out to be healthy enough.

One large institutional investor had put in a major order for shares on Wednesday and was calling around syndicate desks trying to acquire more, a second source familiar with the IPO's progress told Reuters, declining to be identified because the details are not public.
Facebook declined to comment.
The company that began as Mark Zuckerberg's Harvard dorm room project is expected to begin trading on May 18 after an IPO that dwarfs the coming-out parties of other tech powerhouses.
With 900 million users, it is challenging established Web businesses such as Google and Yahoo Inc <YHOO.O> for consumers' online time and advertising dollars.
But longer term, analysts say Facebook needs to develop a way to earn money from the increasing number of users who access the social network on mobile devices such as smartphones.
Facebook, which makes most of its money from advertising, began offering limited ads on the mobile version of its service only recently.

Source : Reuters

European stock market, economy and companies update (May 10, 2012)

After the opening the session higher, European equity markets have pared gains. Spain's IBEX-35, which was the worst performer on yesterday's session, has outperformed, while the CAC-40 in France has underperformed. European banks are mostly higher as of the time of writing, following the sharp losses seen on the prior session. Various European banks have reported better than expected results for the session, including Danske Bank [DANSKE.DK] and KBC [KBC.BE]. Upcoming events risks for later today include the BoE's policy meeting and earnings out of large Italian bank Unicredit [UCG.IT]

US stock market, economy and companies update (May 10, 2012)

US and European equities benefitted from hopeful developments in Athens this morning. PASOK party leader Venizelos was handed the mandate to form a government after the failure of New Democracy and Syriza to weld together a coalition. There were rumors that PASOK and New Democracy might be able to temp all or some of far-left wing party Democratic Left into a coalition, and markets are waiting eagerly to hear more about the ongoing negotiations. However the rally is already beginning to fade and the NASDAQ is already in the red, weighed down by shares of Cisco. Recall that overnight, Former ECB member Weber warned that the risk of an uncontrolled Greek default was not off the table.

Indian stock market daily closing report

Indian Markets pared all of its morning gains to end on flat note today. The markets gained around 1% in morning trade tracking strength in rupee but pared all gains due to negative European cues. In addition to lingering concerns regarding Greece, the France industrial production dropped more than expected in the month of March which has weighed on the markets today.

Sintex Industries Q4 PAT seen down 41% at Rs 100 cr

Plastic products manufacturer Sintex Industries is expected to report a fall of 41% year-on-year in its consolidated profit after tax of Rs 100 crore for the fourth quarter of FY12, according to CNBC-TV18 poll.
Total income too is seen going down by 9% to Rs 1,332 crore from Rs 1,464 crore year-on-year. EBITDA is likely to fall 33% to Rs 208 crore from Rs 310 crore during the same period.
Operating profit margin is seen declining at 15.65% for the January-March quarter of 2012 as against 21.16% in the corresponding quarter of last fiscal.
On quarter-on-quarter basis, consolidated total income is seen going up by 15%, profit after tax by 22% and EBITDA by 28%.
Q4FY12 Expectations
Monlithic Biz
Expect revenues to decline YoY due to slowdown in monolithic biz
Monolithic sales are expected to decline due to slowdown in order execution
Monolithic biz also seeing delays in payments from the govt. and stagnant order book
Pre-fab biz
Slowdown in monolithic biz to more than offset the strong growth in pre-fabricated structures biz
Custom Molding biz
Overseas custom molding biz expected to see macroeconomic headwinds
Performance in domestic custom molding biz expected to improve sequentially on the back of settling of labour disputes at Maruti

Sensex falls; banks and autos decline

(Reuters) - The Sensex and the Nifty fell on Thursday on concerns over selling by foreign investors, as banks and auto stocks extended recent falls.

Selling by foreign funds has been a top concern this week, with net sales reaching a provisional 13.4 billion rupees over the previous three sessions, data showed.

Among lenders, State Bank of India (SBI.NS) fell 1.7 percent, while ICICI Bank (ICBK.NS) fell 0.2 percent.

Maruti Suzuki India (MRTI.NS) led the declines in auto stocks, down 3.5 percent.

The Sensex provisionally fell 0.3 percent to 16,435.17 points, while the Nifty lost 0.1 percent to 4,970.90 points.

Check out: Cues that will decide Nifty's course today

The US markets faded in the final minutes of trading to close flat, but still managed to break their longest losing streak in nine months.
The Dow snapped a six-day negative run. The S&P 500 closed a quarter percent higher and the Nasdaq a tad bit weaker as investors continue to be cautious amid ongoing uncertainty in the euro zone.
On the economic data front, weekly jobless claims edged down 1,000 last week to a seasonally adjusted 367,000. However, the US trade deficit widened more than expected in March to USD 51.8 billion, the biggest gain in nearly a year.
Key data to watch in US
Consumer sentiment is expected to come in at 76.2 for May. The data from producer price index would also be eyed today.
Meanwhile, the Federal Reserve chairman Ben Bernanke said the banking system and the financial sector have improved significantly, but still have "more to do" to restore health.
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The European markets rebounded in afternoon trade to close higher, after recoveries were seen in the euro.  There is also some investor optimism that Greek political leaders will form a coalition government.
Key data to watch in Europe
The European commission will unveil its economic forecasts for member states today
Analysts are expecting the data to show further deterioration in the peripheral economies. Spain in particular will be in focus as it is lagging behind on the EU's deficit targets battling a recession at 24% unemployment. The commission said in its last economic forecast that the EU economy will stagnate with the first signs of improvements for GDP coming in the second half of 2012.
Meanwhile, the Asian markets opened mixed today morning.
Back home, it was a very volatile session on the Dalal Street on Thursday. Nifty moved above 5,000 in early trade, but slipped back on weak European cues.
Key data to watch in India
The government will announce the industrial output numbers for March today. A CNBC TV18 poll sees it at 1.5%. versus 4.1% in February.
Currency corner
The euro is trading around 1.29 to the dollar before Italy, Spain and France sell bonds next week amid concern the region's debt crisis is deepening. The dollar index firm above the 80 mark.
The Indian rupee trimmed some of its earlier gains against the dollar on Thrusday, though it remained well above the session lows after the RBI said it would require exporters to convert 50% of their existing foreign currency holdings into rupees (with inputs from Reuters). It appreciated by 22 paise to 53.60 a dollar after hitting a high around 53.20.
Commodities
In the commodities space, crude prices declined after OPEC said that growth in global crude supplies is outpacing demand. Brent crude is currently at USD 111 per barrel levels. Meanwhile, gold continues to trade below USD 1,600 per ounce levels.
Domestic cues
The much awaited insurance sector reforms have been postponed. Cabinet has deferred clearing the Insurance Bill, which means that the foreign direct investment limit in the sector will stay at 26% for now.
However, the MFI bill has received cabinet nod. The bill makes the RBI the regulator of the micro-finance industry. It also overrides state legislations on MFIs, and proposes the setting up of a Microfinance Development Council.
In the telecom space, the presidential reference to Supreme Court in 2G case will come up for hearing in Supreme Court today. A five-judge bench headed by CJI has been constituted to hear the matter
Earnings Central
Dr Reddy's will announce its numbers today. According to a CNBC-TV18 poll, the company may post a 27% revenue growth year on year. Margins and PAT is expected to grow due to the concurrent effect of exclusivities.
From the midcap banks, Indian Bank and the Federal Bank will declare their numbers today.
Stocks in News
Cipla posted a healthy set of numbers yesterday. Its revenues come in 12% higher at Rs 1,865 crores year on year. Also, its exports surged due to supply of Lexapro generic to Teva.
Sintex Industries’ profits came in lower at Rs 91 crores versus Rs 168 crores year on year. Meanwhile, Escorts posted a profit of Rs 18 crores versus Rs 73 crores year on year.
Kingfisher Airlines pilots are on a strike. Seventy two pilots based in northern India have gone on mass sick leave and are trying to convince their counterparts in Mumbai to follow suit. Seventeen KFA flights have been cancelled so far.
LIC has picked 4.68% stake in Bank of Maharashtra through open market and preferential allotment, their total stake now at 9.99%

Pre-market: Markets likely to trade range-bound

The markets are likely to trade range-bound in today’s session following global cues. The rupee movement and the IIP data for March due later today will also be keenly watched. Global stocks advanced for the first time in seven sessions on Thursday on relatively encouraging US jobs data.
The Dow Jones industrial average closed up 0.2% at 12,855, while the Standard & Poor's 500 Index rose 0.3% to 1,358.
Asian shares, however, retreated on Friday, spooked by JPMorgan's $2 billion huge loss from a failed hedging strategy. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3%, while Japan's Nikkei share average opened up 0.1%.
Back home, the Nifty is likely to seek support around 4,930-4,910, while it can face resistance around 5,000-5,020, analysts say. At 710 am Indian Standard Time, the SGX Nifty was trading at 4,934 – down 0.6%.
Among individual stocks, Cipla, Sintex and Escorts will react to their respective March quarter results declared on Thursday.
Rakesh Jhunjhunwala has bought an additional 2.24% stake in Aptech for nearly Rs 8 crore through an open market transaction.
SKS Microfinance plans to reduce its headcount by a third and shut some branches in Andhra Pradesh state amid mounting losses.
Kingfisher Airlines could face more trouble as pilots are threatening to join the agitation over salary delays.
DLF has set up a core team of five to six people to focus on the process of sale of non-core assets, reports suggest.
Also keep a tab on Dr Reddy’s Lab, Thermax, Moser Baer and MTNL as they will announce their respective March quarter results today.

Source : BS

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-> Be cautious and strictly maintain stop loss. Trade safely.

-> Don't buy/sell against the trend. Strictly BUY in UPPER TREND only & SELL only in DOWN TREND.

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