RBI hikes repo & reverse repo rates by 25 bps

MUMBAI: Reserve Bank of India on Friday raised its key short-term interest rates by 25 basis points each, citing worries over inflation, nearly Wholesale price index (WPI) inflation rose to 10.2 percent in May, from 9.6 percent in April, exceeding expectations. The Reserve Bank of India raised its main lending rate, or repo rate, to 5.50 percent from 5.25 percent, and the reverse repo rate, at which it absorbs excess cash from the banking system, to 4 percent, from 3.75 percent, it said in a statement.

"There has been some moderation in food price inflation, but the price index of food articles continues to increase," the central bank said. "More importantly, the prices of non-food manufactured goods and fuel items have accelerated in recent months," it said.

The rate hike comes soon after the Indian government raised fuel prices that it said would lift inflation by nearly one percentage point.

The central bank said that while inflation and GDP growth data had been available by mid-June, it had been inadvisable to raise policy rates then as the financial system was dealing with liquidity pressures resulting from higher than expected payments for wireless spectrum in government auctions.

"It's a welcome move but probably RBI should have moved a little more aggressively -- not now, but earlier in April or May," said Jay Shankar, economist at Religare capital. "The rate hike quantum is okay as we have a liquidity crunch scene right now. But it has come too late," he said.

Airport body scanners may cause cancer: Scientist

LONDON: At a time when airports around the globe are planning to install full body scanners to maximise security, the US Congress has been warned that the X-ray imaging could increase the risk of skin cancer in air passengers.

The body scanners emit radiation up to 20 times more powerful than previously thought and could be particularly risky for children, said Dr David Brenner, head of Columbia University's centre for radiological research.

Although the "individual risks" associated with X-ray backscatter scanners are probably extremely small, it could multiply with the number of scanning, he said.

"If all 800 million people who use airports every year were screened with X-rays then the very small individual risk multiplied by the large number of screened people might imply a potential public health or societal risk. The population risk has the potential to be significant," Dr Brenner was quoted as saying by the Daily Mail.

There should be more research on the device to look at the way it affects specific groups who could be more sensitive to radiation, he said.

According to him, children and passengers with gene mutations -- around one in 20 of the population -- are more at risk as they are less able to repair X-ray damage to their DNA. The most likely risk from the airport scanners is a common type of skin cancer called basal cell carcinoma, he said.

The cancer is usually curable and often occurs in the head and neck of people aged between 50 and 70. Dr Brenner pointed out that it would be difficult to hide a weapon on the head or neck so proposes missing out that part of the body from the scanning process.

"If there are increases in cancers as a result of irradiation of children, they would most likely appear some decades in the future. It would be prudent not to scan the head and neck," he added.

Dr Brenner, who is originally from Liverpool but now works at the New York university, recently aired his concerns to the Congressional Biomedical Caucus in the US -- members of Congress who meet to exchange ideas on medical research.

He urged them to look at his concerns but said it was important to balance any health issues against passengers' safety when flying.

Nano: Celebrating one year of being on the road

There has been great hype about the Tata Nano, the least expensive production car in the world, right from the time plans were announced till today - over a year after it hit the streets.
Whether you believe it's the people's car of the 21st century or a threat of over congestion on our already crowded city streets, the Nano is highly capable mode of transport for urban commuting.

While it may not be the ideal car for long distance highway driving, Tata Motors' latest endeavour really put the Nano's touring ability to the test.

To celebrate the inauguration of the company's new plant at Sanand in Gujarat, the Tata Nano Superdrive set off from there on June 2 on a 26 day voyage that saw the Nano caravans visit 36 cities around the country.

A total of 9 Nanos, split in three groups of three cars, traveled across India on three different routes christened after the colours of the Indian flag.

The 'Saffron Route' had the cars visiting Udaipur, Jaipur, Hisar, Amritsar, Chandigarh, Delhi, Meerut, Agra, Lucknow, Kanpur, Gwalior and Kota, while the 'White Route' passed through Indore, Bhopal, Nagpur, Raipur, Ranchi, Patna, Kolkata, Bhubneshwar, Vishakhapatnam, Hyderabad and Aurangabad. The 'Green Route' visited cities like Surat, Mumbai, Pune, Goa, Mangalore, Kochi, Coimbatore, Chennai, Bangalore, Kolhapur, Solapur, Nashik and Ahmedabad.The Superdrive branded Nanos also visited prominent landmarks in every city and prospective customers were given an opportunity to drive them as well.

We here at ZigWheels got a chance to be part of this epic drive on the leg on the 'Green Route' which took the cars from Bangalore to Kolhapur. Now while we've have always enjoyed driving the Nano around town, it was difficult to imagine how it would hold up while covering 600km in a day.

While a straight highway like NH4 isn't a challenge for most modern cars, one couldn't help wonder how comfortably the three Nanos would make it to journey's end. But just a few kilometers in, the cars had settled into a rhythm and were maintaining a steady speed of 80-90 km/h heading northward towards Kolhapur, eventually completing the distance in 10 hours.

All three of the Nanos managed an average driving speed of 60km/h without putting a single foot wrong at any time - not bad for a car which has just two cylinders and all of 623cc of cubic capacity.

From Kolhapur, the Nanos continued their epic journey with another set of drivers, finally culminating in Mumbai on June 28 where they were flagged in by Ratan Tata, Chairman, Tata Sons & Tata Motors. Now, a year since its launch, the Nano continues to grow strong and without a doubt, is here to stay!

Tata Motors to set up assembly unit in South Africa

Mumbai: Tata Motors is looking at setting up an assembly unit in South Africa for medium and small trucks by the end of this financial year to boost sales in African markets such as Zambia, Nigeria and Ghana.

“We are looking at assembling medium-sized and small trucks there for now and may later look at the world truck range,” said PM Telang, MD, Tata Motors India. The initial capacity will be 3,000 units, which will later scale up to 4,500 units, he said. At present, the auto major is exporting close to 3,000 units to South Africa.

In 1994, Tata Group set up Tata Africa Holdings in Johannesburg. Later in 2006, it acquired a manufacturing plant of Japanese auto major Nissan in South Africa. South Africa is an integral market for Tata Motors and has charted out a five-year growth plan , officials said.

The company also disclosed it plans to set up an assembly plant in Nigeria in the next two to three years. Tata Motors currently has plants in Thailand , Bangladesh , Spain, UK and South Korea.

Tata Motors is targeting a sale of 2.2 lakh light trucks in the current financial year, which will include around 1.5 lakh ace trucks and around 70,000 magic trucks. Last year, the company sold 1.1 lakh ace and 48,000 magic trucks. The company is looking at a 15% growth in the commercial vehicles segment this fiscal. The auto major also plans to launch four models under its premium Prima range of trucks, which include two tippers, one tractor and one simple truck, between September and March 2011, said Ravi Pisharody, president, commercial vehicles.

The company is also looking at increasing production of the one-tonne Ace mini-truck to 20,000 units from 10,000 units a month at its Pantnagar facility.

India expects to grow at 9 per cent by 2011-12: PM

New Delhi: India expects to grow at 9 per cent by 2011-12, said Prime Minister Dr Manmohan Singh while addressing the G-20 Toronto Summit. He added that the fiscal deficit is expected to halve in the next three years.

The Prime Minister told the world leaders present at the summit that the Indian Government is working to reverse the fiscal stimulus which was introduced to deal with the 2008 crisis and also put forth the ways in which India was handling the current economic situation. He added that effective fiscal and monetary stimulus has enabled the country to fight the global crisis.

In his address at the Working Session of the Summit PM said, "After growing at 9 per cent for four years before the crisis, our economy averaged about 7 per cent growth in the last two years. We expect to grow by 8.5 per cent in 2010-11 and we hope to go back to 9 per cent by 2011-12."

He said, "We are taking steps to reverse the fiscal stimulus we had introduced to deal with the crisis. To this end we have outlined a medium term plan to halve the fiscal deficit by 2013-14."

He stated that the government is providing a stimulus for investment in infrastructure with focus on private-public partnership.

Tshirt Printing and Foil Transfer

Kalanithi Maran , owner of the Sun TV empire, stunned the aviation sector by beating out well-known names in Corporate India to emerge victorious in the race to buy SpiceJet. Mr Maran, whose Sun Network is one of the dominant names in the Indian television entertainment scene, has no experience in aviation. Nor has he partnered with somebody in the aviation business to do the deal. In this interview with ET, he explains the reasons behind his interest in the sector and his plans for SpiceJet. Excerpts:

Currently, you’re running a company with perhaps one of the best profit margins in the media and entertainment space and now you’re getting into a sector where profitability is hard to come by. Why aviation?
I look at the opportunity, at what’s going to happen in the future. Currently, the industry carries four million passengers per month, growing at the rate of 15%. We are seeing the purchasing power percolating to smaller cities. I strongly believe that if you have affordable pricing, you can do mass transportation in India, with infrastructure and new airports also coming up.

But people are sceptical of your entry into this space without past experience or core competency.
I am the chairman of the company, not the CEO. It is the CEO who requires core competency. The chairman requires foresight. I don’t believe in industry’s perception, I believe in creating trends.
When I started satellite television, people laughed at me saying Tamil cannot be in satellite television, it’s too costly. When I started radio, they said television has come, radio is a dead business. When I started DTH, they said there are too many big players. We are now 5.5 million subscribers strong. If I’m going to follow the herd, I’ll be one among the crowd. Let me be clear. All my steps are calculated, I am not going blindly with intuition. I never wanted to do it when oil prices were at $140 per barrel.

What kind of moves can we see on the pricing front? Also, aviation is a loss-making industry. How will you ensure that SpiceJet keeps its head above water?
Right now, SpiceJet and IndiGo are the only two profitable airlines. We picked up one company that is making profits. So it disproves your theory that it’s a loss-making industry. EBITDA for SpiceJet is 19% for FY10. The aviation sector hit rock bottom two years back. Now, it can only go up. That’s how we see it. We have been studying SpiceJet only for three months. Next couple of months, we will consolidate this acquisition.


Do you see your latest venture as a financial investment? How much time will you spend on aviation from now on? Currently, all your time goes to Sun TV. How will you divide you time between aviation and entertainment?
I am not an FII. Whatever business I do, I am an active player. If I wanted to be a financial investor, I would have stayed at 10%. I am not like that. If you see what we’ve done, over a period of three years, we have brought in professionals. We have got one of the best teams for Sun, it is all professionally managed. It is a board-run company.

$1 Trillion in Minerals Discovered in Afghanistan

$1 Trillion in Minerals Discovered in Afghanistan [Daniel Foster]


The New York Times reports that a team of U.S. Defense Department officials and geologists have discovered nearly $1 trillion in untapped iron, copper, cobalt, gold, lithium, and other minerals scattered throughout Afghanistan — enough to “fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.”

E.g.:

— An internal Pentagon memo predicts Afghanistan could become the “Saudi Arabia of lithium,” an important component of high-end batteries.

— “There are a lot of ifs, of course, but I think potentially it is hugely significant,” said CENTCOM Commander Gen. David Petraeus.

— An senior adviser to the Afghan minister of mines predicted the deposits would “become the backbone of the Afghan economy.”

As it stands, Afghanistan’s $14-billion economy is propped up almost entirely by foreign aid and the illicit opium market, and it still faces 35-percent unemployment and a per capita GDP that ranks 219 in the world, between Mozambique and the Central African Republic.

The from-scratch development of the heavy industrial infrastructure it will take to develop the mineral veins will take years or even decades, and will likely spark heavy competition between firms in the U.S. and those in other regional powers like Russia and China. (In the Times story, undersecretary Brinkley also wonders, perfectly irrelevantly, whether the resources can be “be developed in a responsible way, in a way that is environmentally and socially responsible.”)

And of course, the discovery of lucrative natural resources inside Western Asia has not historically proven to be an unmitigated good. As the story notes, it could spur the Taliban to fight even harder to regain power, and could amplify the graft that already pervades government:

The corruption that is already rampant in the Karzai government could also be amplified by the new wealth, particularly if a handful of well-connected oligarchs, some with personal ties to the president, gain control of the resources. Just last year, Afghanistan’s minister of mines was accused by American officials of accepting a $30 million bribe to award China the rights to develop its copper mine. The minister has since been replaced.

Endless fights could erupt between the central government in Kabul and provincial and tribal leaders in mineral-rich districts. Afghanistan has a national mining law, written with the help of advisers from the World Bank, but it has never faced a serious challenge.

“No one has tested that law; no one knows how it will stand up in a fight between the central government and the provinces,” observed Paul A. Brinkley, undersecretary of defense and leader of the Pentagon team that discovered the deposits.

World gets richer by 12 pct in 2009

The combined wealth of households around the world rose 12 per cent last year and nearly surpassed the 2007 high-water mark, yet money managers faced lower revenue and shrinking profit margins, according to an industry study released on Thursday.

Global assets under management rose to $111.5 trillion, just short of the 2007 year-end peak, Boston Consulting Group said in its annual study of the wealth management business. But while client assets have almost recovered from the 2008 financial crisis, client trust in their advisers has not.

North America led the world with a $4.6 trillion increase in total assets, up 15 per cent to $35.1 trillion, while Asia-Pacific countries posted the strongest recovery with a 22 per cent jump, or $3.1 trillion, to $17.1 trillion.

Europe remained the wealthiest corner of the world, weighing in at $37.1 trillion of assets.

Boston Consulting noted that, among world regions, only the United States and Japan had not regained 2007 levels. The collapse of debt markets, followed by a deep recession, led to a 10 per cent plunge in global wealth.

Looking ahead, BCG projects global wealth will increase at an average annual rate of 6 per cent this year through 2014, faster than was reported in the five years ending last year.

Much of that growth will be driven by the Asia Pacific region where, excluding Japan, investable assets will increase at twice the global rate.

"There's no doubt that wealth will continue to grow faster in emerging markets, fueled by strong economic growth," said Tjun Tang, a BCG partner and a coauthor of the report.

OFFSH0RE PRESSURES

Offshoring wealth by the rich also grew 9 per cent last year, with $7.4 trillion in assets placed in countries where the investor has no legal residence. Switzerland remains the largest offshore banking center with $2 trillion, BCG said.

Regulatory pressure on offshoring is expected to reverse that growth. Offshore assets are expected to shrink from 7 per cent of global wealth to just over 6 per cent in 2014.

"Although undeclared assets account for a small and declining share of offshore wealth," said Peter Damisch, a BCG partner and a coauthor of the report, "the push for transparency will compel some clients -- particularly those in North America and Europe -- to move their assets."

Boston Consulting said banks need to adjust their strategy and even abandon certain markets if they want to bolster returns. Zurich-based principal Anna Zakrzewski said global banks support 10 to 15 platforms for clients in multiple cities and countries, a practice than can be costly.

"Banks need to focus their resources on the high growth markets," she told a briefing on the report. Compensation should not be the focus of cost-cutting, she added. though banks can benefit from introducing more performance-based pay.

Revenue has come under pressure as asset-levels shrink, driving down management fees. The mix of business also depressed margins, as anxious clients moved more money into cash and fixed-income investments.

Based on a survey of 114 wealth management firms, assets on average grew 14 per cent last year, but revenue fell 7.3 per cent and revenue margins narrowed 12 basis points to 0.83 per cent. In the wake of the financial crisis, families executed fewer transactions, haggled over fees and shifted their money to lower-margin products like money-market funds.

Expenses last year rose as a proportion of revenue to 74 per cent, squeezing profits.

Looking ahead, advisers cannot just hope that clients will reinvest and stay. Roughly half of the assets "uprooted" and parked in lower-risk vehicles will, when they return to the market, be up for grabs.

Banks "can't assume they will get their fair share of those assets," senior partner Bruce Holley told the briefing. "If they don't actively manage the reallocation of that cash, they'll lose out. It won't happen automatically."

The report also noted that, as wealth rose, it has been concentrated among fewer people. The number of millionaires rose by 14 per cent last year.

Less than 1 per cent of the world's households are millionaires and yet they hold 38 per cent of the money. Families with more than $5 million represent less than one-tenth of a per cent of world households, yet hold 21 per cent of the wealth.

Aegon Religare sets target of Rs 500 crore premium this year

AHMEDABAD: Private life insurance company Aegon Religare has set a target of Rs 500 crore of recieved premium in the current financial year, inwhich the company will expand its presence across the country.

"The company has set a traget to increase in topline to a total recieved premium of Rs 500 crore as compared to a total recieved premium of Rs 166 crore achieved in the financial years 2009-10," said Rajiv Jamkhedekar, MD and CEO of the company.

Talking to the media here about the company's plans to expand its business, he said the company currently operates 57 branches in the country which will be doubled in the current year while over 2000 people will be hired to support the expansion of branch network.

Moreover, he said 13,000 new financial advisors or agents will be added in its network of currently 7,000 financial advisors.

"Besides, we will tie up with banks and third party distribution network to enhance the presence in smaller towns," he said, adding the company will have direct presence in 70 cities across the country by the end of this year.

According to Jhamkhedekar, Aegon Religare has launched a very innovative product to suit the needs of the wide range of customers and in the current year, a few more products will be launched starting with a health product to be launched in July this year.