Rangarajan says inflation may ease to 6.5 per cent in December

 
A fall in vegetable prices is likely to ease headline inflation and retail inflation to 6.5 per cent and 9.20 per cent respectively in December, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said on Sunday.

"Some of the things that have really pushed up inflation are vegetables like onion prices, which have crashed in December. Therefore when December number comes in mid January, we will see retail inflation coming down by 2-2.5 percentage from the current level of 11 per cent or so. There could be a decline in wholesale price index ... could be the order of 1 percentage," Rangarajan told reporters on the sidelines of the silver jubilee celebration of Indira Gandhi Institute of Development Research.

Wholesale price-based inflation (WPI) accelerated to 14-month high of 7.52 per cent in November, while retail inflation quickened to eight-month high of 11.24 per cent during the month.

Going forward, Rangarajan said, the declining trend in inflation will continue and WPI may ease to 6.5 per cent by March-end.

"The RBI has estimated WPI to be around 6.5 per cent by March end. That is the number we are looking at. We will see a decline in December and perhaps it will continue," he said.

Wal-Mart gets CCI nod to buy Bharti's stake in India JV

 
Global retail firm Wal-Mart has got fair trade regulator CCI's green signal for purchase of Bharti Group's almost 50 per cent stake in their Indian joint venture for wholesale stores business.

The JV, Bharti Wal-Mart Private Ltd, was set up to operate wholesale stores under the Best Price Modern Wholesale brand and it presently owns 19 such wholesale cash and carry stores across India. It was not catering directly to retail consumers in the country.

In an order released on Monday, the Competition Commission of India (CCI) said the proposed buyout of Bharti Group's stake in the JV by Wal-Mart "is not likely to have appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed" deal.

After deciding to part ways in October, Bharti group and Wal-Mart approached the CCI last month seeking approval for the deal wherein the US-based global retail giant would acquire the stake held by the Sunil Mittal-led business conglomerate in the venture.

Earlier this month, the CCI had asked Wal-Mart and Bharti Ventures Limited (BVL) to "remove certain defects and provide" certain additional details for the approval.

The split between the two groups involves two inter-connected and inter-dependent transactions with respect to their businesses. The first is the acquisition of 50 per cent minus 515 equity shares of Bharti Wal-Mart Private from BVL and Cedar Support Services Ltd.

The remaining shares are already held by Wal-Mart and the purchase of additional shares would take its total holding in Bharti Wal-Mart Private to 100 per cent.

The second transaction involves the acquisition of 45.58 crore compulsorily convertible debentures (CCDs) of Cedar by BVL from Wal-Mart Mauritius Holdings.

BVL presently holds 100 per cent of Cedar's equity and after the transaction, the Bharti Group would own a 100 per cent stake in Cedar without any CCD holding by Wal-Mart.

After looking into various aspects of the deal, the CCI said, "Presently, the parties to the proposed combination are not competing with each other in the markets for wholesale, retail or real estate services."

"...It is observed that the proposed combination would not result in the elimination of any competition from the markets for the wholesale, retail or the real estate services.

"...It is also observed, from the notice and other documents on record, that wholesale, retail or real estate sectors in India are characterised by the presence of a large number of players and the market share of the parties to the combination in these businesses is also negligible," CCI said.

BVL is an investment holding company of the Bharti group, while Cedar is a wholly owned subsidiary of BVL and provides real estate consultancy services. Bharti Retail, a wholly owned subsidiary of Cedar, is in the retail business and operates stores under the 'Easyday' brand.

RBI restricts FIIs' purchase of additional shares in HDFC Bank

The Reserve Bank of  India on Monday restricted foreign institutional investors (FIIs) from buying additional shares in HDFC Bank, the country's second-largest private lender, as their shareholding has exceeded the limit.

Stakes held by overseas investors, including FIIs, non-resident Indians (NRIs), persons of Indian origin (PIOs), foreign direct investment and global depository receipts, in HDFC Bank have crossed the ceiling of 49 per cent of its paid-up capital, the RBI said in a release.

No further purchases of the bank's shares will be allowed through the stock exchanges on behalf of overseas investors, it said.

FIIs, NRIs and PIOs are allowed to invest in the primary and secondary capital markets through the portfolio investment scheme, under which they can acquire shares and debentures of Indian companies through the stock exchanges.

The RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis.

For effective monitoring of foreign investment ceilings, the RBI has fixed cut-off points that are two percentage points lower than the actual limits.

HDFC Bank shares fell 1.12 per cent to Rs 682.65 at the close on the BSE on Monday.

GSK Pharmaceuticals stock rises on open offer; Torrent, Elder fall

The first day of the week turned out to be a mixed bag for pharmaceutical stocks that have been in the news recently. Shares of GlaxoSmithKline Pharmaceuticals rose on Monday while those of Torrent Pharmaceuticals and Elder Pharmaceuticals slipped.

GSK Pharmaceuticals soared 18.6 per cent to Rs 2,927.40 on the Bombay Stock Exchange after the drug maker's parent announced a voluntary open offer. London-based GSK Plc said it plans to raise its stake in its Indian unit to 75 per cent from 50.7 per cent at Rs 3,100 per share which is at a premium of nearly 26 per cent compared to Friday's closing price of Rs 2,468.40 on the BSE.

At this price, the potential total value of the transaction is about Rs 6,400 crore. GSK Plc also said it intends to keep the unit listed. Securities regulations in India require listed companies to keep a minimum public shareholding of 25 per cent.

Torrent Pharmaceuticals and Elder Pharmaceuticals had little respite. Both stocks have been slipping since December 13, when Torrent agreed to acquire the branded domestic formulations business of Elder Pharma for Rs 2,004 crore. Torrent Pharmaceuticals fell 1.9 per cent to Rs 470.50 on Monday while Elder slumped 8.6 per cent to Rs 272.70.

Analysts feel Torrent shares dropped probably because traders are trying to realign the price after what they call "an expensive deal", which is four-to-five times Elder's sales.

The deal, however, brings to Torrent a complimentary portfolio led by Elder's leading calcium supplement product Shelcal. So far, as Elder Pharma is concerned, investors need to view the deal in the context of what is left with the company, which has around Rs 1,300 crore in debts.

GSM body asks DoT to implement uniform spectrum usage fee

GSM industry body Cellular Operators Association of India (COAI) has written a letter to the Department of Telecommunications requesting it to implement Trai 's recommendation of levying a uniform spectrum usage rate of 3 per cent of adjusted gross revenue.

Implementation of the recommendation would lower spectrum usage charge (SUC) of telecom players while increasing the rate for those have broadband wireless access (BWA) spectrum including Reliance Jio Infocomm (RJIL).

The spectrum usage charge, which is levied annually by government as percentage of revenue earned by telecom companies from telecom services, varies between 3 to 8 per cent in case of mobile operators. It is currently 1 per cent for firms such as RJIL.

The COAI said the BWA spectrum was acquired under a ISP licence and the scope of licence was limited to data services.

"By allowing such licensees to migrate to Unified Licence (new licensing regime)...the terms of NIA have already been changed for the BWA players. These players cannot be heard to say that the terms of NIA are sacrosanct and cannot be changed," COAI Director General Rajan S Mathews said.

The COAI represents GSM telecom operators including Bharti, Vodafone, Idea and Uninor.

RJIL in September had protested against Trai's recommendation saying that 1 per cent of SUC charge was one of conditions in the notice inviting application (NIA) on the basis of which the company purchased spectrum and it is legally binding.

In October, RJIL procured UL with additional payment of of one-time entry fee of about Rs 1,673 crore. The new licence allows RJIL to provide voice telephony as well.

No immediate comments were received from RJIL on the matter.

Mathews said the players contesting against Trai's recommendation "cannot be allowed to selectively pick and and choose the terms of NIA that can be changed."

The DoT has reportedly calculated that uniform SUC as suggested by Trai may lead to loss of Rs 2,657 crore over a period of 10 years.

Mathews, however, said that instead government will gain by lowering SUC as it gets factored in to the business case of operators leading to higher upfront bids.

"As a corollary, continuing with the high escalating charges will not only stifle the participation , but will lead to lower bids," he said.

Mathews added that continuing with high SUC will discourage purchase of spectrum, impose differential and discriminatory spectrum costs on different operators, hinder proposed spectrum reforms and discourage mergers and acquisitions activity.