Reliance Industries [Get Quote] Chairman Mukesh Ambani on Wednesday backed the Tata group's Nano car project, saying industry and politicians need to work together for the country's industrial growth.
"A fear psychosis is being created to slow down certain projects of national importance," Ambani said, adding that the "political move" will be counter-productive for the country's economic growth, its global image as well as the ability to attract investments from across the world.
Ambani's statement comes after Tata group Chairman Ratan Tata threatened to pull out from Singur, where the Nano car project is coming up, due to continued political opposition led by Trinamool Congress.
West Bengal Chief Minister Buddhadeb Bhattacharjee on Monday made an unconditional offer of talks with Trinamool Congress, which, however, rejected the overture.
"The Nano project is an unique and innovative initiative that will establish India's position as a small car hub. Indian industry must be encouraged to make such large investments in order to build the country's competitiveness as well as support job creation," he said.
Ambani called for industry and the political leadership to work together to meet the aspirations of millions of Indians in urban and rural areas.
Ambani had also faced stiff resistance from political circles, especially in Uttar Pradesh where his Reliance Fresh super market stores were shut down because of protests from farmers.
Thursday, August 28, 2008
HP Strategy in India
THE combined entity of HP and EDS in India will have over Rs 15,000 crore in revenues and over 56,000 employees, taking it a notch closer to IBM’s very significant presence in the sub-continent. In terms of offshore presence, the two together will overtake the other significant player in the services space, Accenture, that plans to take its headcount to 50,000 in about a year’s time.
In India, HP is structured across three major divisions, personal systems group, technology solutions group and the imaging and printing group, while MphasiS is mainly present in the IT services and BPO. The combined entity will see very diverse set of IT business ranging from hardware, software, services, BPO and R&D, says industry observers.
But given that the key driver for the acquisition is to beef up the service portfolio and pose a credible challenge to IBM, India may play a much more central role in the future strategy of the combined entity. “Customers will now have a very clear choice between three large vendors — IBM, HP-EDS and Accenture. IBM will still be significantly ahead in terms of its offshore strategy — it has made significant investments in India. The combination of HP and EDS doesn’t immediately solve that problem,” said Gartner vice-president (research), Ben Pring.
While EDS has much stronger services portfolio globally, its offshore presence in India through MphasiS is fairly recent. MphasiS itself has started getting direction and a cohesive offshore strategy even more recently after a new management team has been appointed. HP, on the other hand, has been unable to capitalise substantially on the offshore presence it acquired through Compaq in Digital Equipment Services.
Mr Pring said that while there may be some redundancies because of overlap of functions, there may not be a substantial number because ‘HP is clearly buying EDS for its people’. However, a few former MphasiS employees expressed the view said that there would be overlapping of some roles especially in the area of IT services and BPO as HP also has strong presence in these segments.
HP also has a very strong presence in the Indian market with both its hardware and system integration capabilities leveraging the services delivery for the domestic market. It has already got certain marquee clients such as Bank of Baroda, Britannia and has stated its intention of enlarging the scale. On the other hand, MphasiS provides BPO services to domestic clients such as Bharti Airtel.
In India, HP is structured across three major divisions, personal systems group, technology solutions group and the imaging and printing group, while MphasiS is mainly present in the IT services and BPO. The combined entity will see very diverse set of IT business ranging from hardware, software, services, BPO and R&D, says industry observers.
But given that the key driver for the acquisition is to beef up the service portfolio and pose a credible challenge to IBM, India may play a much more central role in the future strategy of the combined entity. “Customers will now have a very clear choice between three large vendors — IBM, HP-EDS and Accenture. IBM will still be significantly ahead in terms of its offshore strategy — it has made significant investments in India. The combination of HP and EDS doesn’t immediately solve that problem,” said Gartner vice-president (research), Ben Pring.
While EDS has much stronger services portfolio globally, its offshore presence in India through MphasiS is fairly recent. MphasiS itself has started getting direction and a cohesive offshore strategy even more recently after a new management team has been appointed. HP, on the other hand, has been unable to capitalise substantially on the offshore presence it acquired through Compaq in Digital Equipment Services.
Mr Pring said that while there may be some redundancies because of overlap of functions, there may not be a substantial number because ‘HP is clearly buying EDS for its people’. However, a few former MphasiS employees expressed the view said that there would be overlapping of some roles especially in the area of IT services and BPO as HP also has strong presence in these segments.
HP also has a very strong presence in the Indian market with both its hardware and system integration capabilities leveraging the services delivery for the domestic market. It has already got certain marquee clients such as Bank of Baroda, Britannia and has stated its intention of enlarging the scale. On the other hand, MphasiS provides BPO services to domestic clients such as Bharti Airtel.
Indias New G Spots
For decades, the enduring aphorism that best condensed the economic theory of trickle-down benefits of high economic growth has been "A rising tide lifts all boats". The ultimate mantra of free market evangelists popularised by John F. Kennedy finds vindication across India too.
As India migrated from a $500-per-capita income at the beginning of the decade to $1000 now, higher earnings fuelled consumption and created markets in new geographic landscapes, extending beyond the big metros and even Tier II submetros. Kolhapur, better known for its hand-made chappals; Kannur, famous for the export of communism; cotton town
Erode and Yamunanagar, best known for the manufacture of utensils, are now the destinations for companies seeking consumers and market share.
If Future Group Chairman Kishore Biyani has chosen small town Jharkhand boy Mahendra Singh Dhoni as the brand ambassador for Big Bazaar, it is not just for cricket but market economics too.
True, the stereotypical images of the unpaved economy growing haphazardly persist, but the picture has changed. In fact, the optimism of an 8-plus per cent GDP growth this year, despite the high inflation and the spectre of slowdown, is driven by the new width acquired by the economy.
Thanks to the resurgence of manufacturing which led to the revival of small and medium enterprises, these small towns are now emerging as the fountainheads of entrepreneurship. A study derived from the RKSWAMY/BBDO Guide reveals the emergence of new markets that are driving incremental growth in basic durables, automobiles, mobile phones and FMCG. Thanks to growth in both rural and urban incomes, district towns have emerged as hot spots.
In fact, according to the RKSWAMY/BBDO study, 60 district towns of less than five lakh account for a tenth of national consumption. Indeed the top 13 district towns combined could match the consumption of Mumbai and Delhi markets.
You could say that the emergence of these new towns is the result of a serendipitous coming together of factors.
The boom in manufacturing, the priming of the rural economy with a spend of over Rs 2,00,000 crore by the Government and investments in new industrial estates and IT enclaves all combined to generate employment and higher incomes in urban and rural economies. This fuelled consumption of goods, services and real estate triggering the virtuous cycle.
Evidence of the coming together is reflected in the transformation of the towns: take Kolhapur, for instance. Nestled in a fertile valley fed by four rivers, it has always been an agri hub with higher-than-average income levels.
But it is the revival of the textile industry coupled with the opening up of textile and IT parks that has created economic viability. Erode, a small town in west Tamil Nadu, is abuzz with activity every Monday evening as people from as far as Jammu in the north, Assam in the east and Gujarat in the west descend for the weekly Monday Market, which winds up only by Tuesday dawn.
Yarn, processed and cotton fabric are sold and bought from this market. "Nearly 70 per cent of raw materials needed for the Indian textile market flow through Erode," says S. Sivananthan, secretary, Erode Textile and Garments Exporters' Association.
Plastics and steel are the new areas of growth. In a sense, Erode has built on its traditional strengths to emerge as a multifaceted economy." To start with, plastic industries were set up to supply spares for textile companies.
Today we manufacture spares for the automobile sector too, for companies like Hyundai, Tata Motors and TVS Motors," says M.Venkatachalam, managing partner, Jayanthi Plastics.
Evidence of a diversifying economy is visible in the north too. Yamunanagar is no longer a one-business town. Besides hosting biggies like Ballarpur Industries and Saraswati Sugar Mills, it is emerging as a major centre for plywood production. With new projects like the 600 MW Reliance Energy thermal power plant, this town is evolving into a commercial hub.
Ditto with Patiala. Located in Punjab's farm-rich Malwa region, it has been in the fast lane of development since 2000. While agriculture remains the mainstay of the economy, the emergence of the service sector and the presence of a mélange of institutions, including two universities, the Thapar Institute of Engineering and Technology, two medical colleges and two of Punjab's best known public schools, has delivered sustainability.
As India migrated from a $500-per-capita income at the beginning of the decade to $1000 now, higher earnings fuelled consumption and created markets in new geographic landscapes, extending beyond the big metros and even Tier II submetros. Kolhapur, better known for its hand-made chappals; Kannur, famous for the export of communism; cotton town
Erode and Yamunanagar, best known for the manufacture of utensils, are now the destinations for companies seeking consumers and market share.
If Future Group Chairman Kishore Biyani has chosen small town Jharkhand boy Mahendra Singh Dhoni as the brand ambassador for Big Bazaar, it is not just for cricket but market economics too.
True, the stereotypical images of the unpaved economy growing haphazardly persist, but the picture has changed. In fact, the optimism of an 8-plus per cent GDP growth this year, despite the high inflation and the spectre of slowdown, is driven by the new width acquired by the economy.
Thanks to the resurgence of manufacturing which led to the revival of small and medium enterprises, these small towns are now emerging as the fountainheads of entrepreneurship. A study derived from the RKSWAMY/BBDO Guide reveals the emergence of new markets that are driving incremental growth in basic durables, automobiles, mobile phones and FMCG. Thanks to growth in both rural and urban incomes, district towns have emerged as hot spots.
In fact, according to the RKSWAMY/BBDO study, 60 district towns of less than five lakh account for a tenth of national consumption. Indeed the top 13 district towns combined could match the consumption of Mumbai and Delhi markets.
You could say that the emergence of these new towns is the result of a serendipitous coming together of factors.
The boom in manufacturing, the priming of the rural economy with a spend of over Rs 2,00,000 crore by the Government and investments in new industrial estates and IT enclaves all combined to generate employment and higher incomes in urban and rural economies. This fuelled consumption of goods, services and real estate triggering the virtuous cycle.
Evidence of the coming together is reflected in the transformation of the towns: take Kolhapur, for instance. Nestled in a fertile valley fed by four rivers, it has always been an agri hub with higher-than-average income levels.
But it is the revival of the textile industry coupled with the opening up of textile and IT parks that has created economic viability. Erode, a small town in west Tamil Nadu, is abuzz with activity every Monday evening as people from as far as Jammu in the north, Assam in the east and Gujarat in the west descend for the weekly Monday Market, which winds up only by Tuesday dawn.
Yarn, processed and cotton fabric are sold and bought from this market. "Nearly 70 per cent of raw materials needed for the Indian textile market flow through Erode," says S. Sivananthan, secretary, Erode Textile and Garments Exporters' Association.
Plastics and steel are the new areas of growth. In a sense, Erode has built on its traditional strengths to emerge as a multifaceted economy." To start with, plastic industries were set up to supply spares for textile companies.
Today we manufacture spares for the automobile sector too, for companies like Hyundai, Tata Motors and TVS Motors," says M.Venkatachalam, managing partner, Jayanthi Plastics.
Evidence of a diversifying economy is visible in the north too. Yamunanagar is no longer a one-business town. Besides hosting biggies like Ballarpur Industries and Saraswati Sugar Mills, it is emerging as a major centre for plywood production. With new projects like the 600 MW Reliance Energy thermal power plant, this town is evolving into a commercial hub.
Ditto with Patiala. Located in Punjab's farm-rich Malwa region, it has been in the fast lane of development since 2000. While agriculture remains the mainstay of the economy, the emergence of the service sector and the presence of a mélange of institutions, including two universities, the Thapar Institute of Engineering and Technology, two medical colleges and two of Punjab's best known public schools, has delivered sustainability.
Dollar Index rises
The domestic equity markets have outperformed the world markets as a direct consequence of a swift rise in the bellwether US Dollar Index since July 15 this year.
Both equity benchmarks--the Sensex of the Bombay Stock Exchange and the Nifty of the National Stock Exchange-- have gained 14 per cent and 12 per cent, respectively, as the USDX rose by a quick 7.83 per cent in over a month. It touched a high of 77.50 on August 26.
Compared to this, the benchmarks in Brazil and Russia, which are predominantly commodity exporters, have declined in the range of 10-21 per cent during the same period.
Only the equity benchmark of the FTSE 100 has gained by 4 per cent, while the benchmarks in Hong Kong and Japan declined marginally.
On the other hand, the benchmark index in China has fallen 15 per cent as metal and refining stocks have high weight in the index.
The USDX, which is exclusively traded on the Intercontinental Exchange platform, is a measure of the value of the US dollar relative to a basket of foreign currencies, including the Euro, Japanese yen, pound sterling, Canadian dollar, Swedish kroner and Swiss frank.
The index is a weighted geometric mean of the dollar's value compared to the six currencies.
The USDX touched a low of 71.33 on April 22, 2008, and traded in a narrow range for three months before it started making a quick move upwards since July 15.
According to market analysts, hedge funds around the world have made USDX a benchmark to take positions in the commodity and equity markets. They buy in commodity and related stocks around the world when the dollar falls and reverse it when the dollar advances. This way they can hedge the currency risk exposure without any exposure to a single currency pair.
Samir Arora, fund manager at Helios Capital, said: "It is true that currently investor interest is moving towards commodity-consuming countries rather than those which export them. Also, there is unwinding of position in commodities as the dollar is rising."
According to Deepak Sawhney, head of research at Networth Stock Broking [Get Quote], a huge buying of dollar worldwide is one of the main reasons why commodity prices are falling.
"Currently, funds are betting big on a dollar rise and taking positions in equity which is benefited by it. This is the chief reason why the Indian markets are holding firm even while the other markets are falling as India is not a commodity-exporting country," he said.
This is evident from the fact that stocks of domestic information technology companies, the biggest beneficiaries of the rise in the dollar, underperformed the markets during the bull-run in the domestic equity markets which lasted from 2005-2008.
During this period, the USDX witnessed a bear phase and fell from the high of 92.33 in November 2005 to bottom out recently at 71.33 in April 2008. On the other hand, the rally in domestic markets was led by commodity related oil, metal and real estate stocks.
The IT index on the BSE, however, has now moved up sharply by 8.50 per cent since July 15. While both the metal and the oil & gas indices on the BSE have declined over 10 per cent in the past four months, which was a consolidation phase for the USDX since it touched a low in April this year.
Both equity benchmarks--the Sensex of the Bombay Stock Exchange and the Nifty of the National Stock Exchange-- have gained 14 per cent and 12 per cent, respectively, as the USDX rose by a quick 7.83 per cent in over a month. It touched a high of 77.50 on August 26.
Compared to this, the benchmarks in Brazil and Russia, which are predominantly commodity exporters, have declined in the range of 10-21 per cent during the same period.
Only the equity benchmark of the FTSE 100 has gained by 4 per cent, while the benchmarks in Hong Kong and Japan declined marginally.
On the other hand, the benchmark index in China has fallen 15 per cent as metal and refining stocks have high weight in the index.
The USDX, which is exclusively traded on the Intercontinental Exchange platform, is a measure of the value of the US dollar relative to a basket of foreign currencies, including the Euro, Japanese yen, pound sterling, Canadian dollar, Swedish kroner and Swiss frank.
The index is a weighted geometric mean of the dollar's value compared to the six currencies.
The USDX touched a low of 71.33 on April 22, 2008, and traded in a narrow range for three months before it started making a quick move upwards since July 15.
According to market analysts, hedge funds around the world have made USDX a benchmark to take positions in the commodity and equity markets. They buy in commodity and related stocks around the world when the dollar falls and reverse it when the dollar advances. This way they can hedge the currency risk exposure without any exposure to a single currency pair.
Samir Arora, fund manager at Helios Capital, said: "It is true that currently investor interest is moving towards commodity-consuming countries rather than those which export them. Also, there is unwinding of position in commodities as the dollar is rising."
According to Deepak Sawhney, head of research at Networth Stock Broking [Get Quote], a huge buying of dollar worldwide is one of the main reasons why commodity prices are falling.
"Currently, funds are betting big on a dollar rise and taking positions in equity which is benefited by it. This is the chief reason why the Indian markets are holding firm even while the other markets are falling as India is not a commodity-exporting country," he said.
This is evident from the fact that stocks of domestic information technology companies, the biggest beneficiaries of the rise in the dollar, underperformed the markets during the bull-run in the domestic equity markets which lasted from 2005-2008.
During this period, the USDX witnessed a bear phase and fell from the high of 92.33 in November 2005 to bottom out recently at 71.33 in April 2008. On the other hand, the rally in domestic markets was led by commodity related oil, metal and real estate stocks.
The IT index on the BSE, however, has now moved up sharply by 8.50 per cent since July 15. While both the metal and the oil & gas indices on the BSE have declined over 10 per cent in the past four months, which was a consolidation phase for the USDX since it touched a low in April this year.
Inflation falls to 12.4%
Inflation, for the week ended August 16, slipped a bit to fall to 12.40 per cent.
The government's efforts to bring down inflation to tolerable limits and curb runaway prices might have begun to bear some fruit.
Slightly lower prices of food items like fruits, vegetables and milk pushed inflation down to to 12.40 per cent from 12.63 per cent a week ago.
Items that pushed up the wholesale prices-based inflation by 0.19 per cent include tea, pulses, cotton yarn and cement.
Inflation was 4.24 per cent during the corresponding week last year.
"Annual inflation of 30 essential commodities, however, continues to be range bound 5.7 per cent to 6.7 per cent in 19 weeks of the current fiscal," said a finance ministry statement.
The government's efforts to bring down inflation to tolerable limits and curb runaway prices might have begun to bear some fruit.
Slightly lower prices of food items like fruits, vegetables and milk pushed inflation down to to 12.40 per cent from 12.63 per cent a week ago.
Items that pushed up the wholesale prices-based inflation by 0.19 per cent include tea, pulses, cotton yarn and cement.
Inflation was 4.24 per cent during the corresponding week last year.
"Annual inflation of 30 essential commodities, however, continues to be range bound 5.7 per cent to 6.7 per cent in 19 weeks of the current fiscal," said a finance ministry statement.
Monday, August 18, 2008
PBGC downplays
The federal agency charged with backstopping pension benefits for 44 million Americans has understated the risks of its new investment policy, a congressional watchdog said Monday.
The Government Accountability Office said in a report that the Pension Benefit Guaranty Corp.'s new strategy could significantly boost the PBGC's investment returns, but it "will likely also carry more risk than acknowledged by PBGC's analysis."
The PBGC said earlier this year that it would take a more aggressive investment approach by investing more in stocks and adding new alternative investments, such as real estate and private equity funds.
The agency, which has assets of $68 billion, hopes the strategy will help it close a $14 billion gap between those assets and its liabilities. Otherwise, taxpayers could be called upon to pony up extra funding, the director of the PBGC has warned.
The PBGC has said its new approach will reduce risk because it will result in a more diversified portfolio of 45 percent stocks, 45 percent bonds, and 10 percent in alternative investments.
Previously, its targets were 75 percent to 85 percent bonds and 15 percent to 25 percent in stocks, though the actual figure reached 28 percent last year. The agency is seeking bids from Wall Street firms to help manage the switch.
The GAO, however, said that under certain scenarios the new strategy would have more volatile results than the old approach. The report said that's risky because PBGC pays out more than $4 billion a year to retirees and needs access to cash.
That need increases the risk of "any investment strategy that allocates significant portions of the portfolio to volatile or illiquid assets," the GAO said. Funds allocated to private equity, for example, may not be returned for up to seven years, the report said.
But Charles Millard, PBGC's director, said the report shows that even under the GAO's calculations, the new strategy takes on less risk than most institutional investors and could provide an additional $20 billion to $40 billion in investment gains over 30 years. That's enough to close the agency's deficit.
"The whole point of the new policy is to make it far less likely that Congress will have to engineer a bailout," he said.
The PBGC is one of the government's largest corporations and insures approximately 30,000 defined benefit pension plans. Defined benefit plans pay benefits based on years of service, salary levels and other factors. They are being increasingly replaced by 401(k)-style plans in which benefits depend on the employee's contributions. The PBGC doesn't insure 401(k) plans.
The PBGC's finances have come under strain as it has taken over several large pension plans in recent years from bankrupt airline and steel companies, including a $17 billion plan maintained by UAL Corp., parent of United Airlines. United emerged from bankruptcy in 2006.
The PBGC is funded by fees paid by the companies it insures, assets from failed pension plans, recoveries from bankruptcies and returns on invested assets. It doesn't receive taxpayer funds.
The agency now covers pensions for 1.3 million Americans who are either retired or soon will be. That's up from 624,000 in 2001.
The GAO report also urged the PBGC's board, which is chaired by the Labor Secretary, to more closely monitor the agency's investments.
The board "has not taken an active and engaged role," the GAO said, and should require more formal reporting by the PBGC's director about the new investment plan.
Labor Secretary Elaine Chao, in a letter included in the report, said the board has increased its oversight recently and reviews the PBGC's investment policy "at least" every two years and approves it "at least" every four years.
The GAO report was requested by four senators, including Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, chairman and senior Republican on the Senate Finance Committee.
Some members of Congress have criticized the PBGC for taking a conservative investment approach. It adopted the 15 percent to 25 percent equity limit in 2004.
Rep. Earl Pomeroy, D-N.D., said in an interview last week that the adoption of the equity cap cost the agency "billions of dollars."
In its 2007 annual report, the PBGC acknowledged that an investment portfolio with 60 percent in stocks and 40 percent bonds would have produced $7.3 billion more in returns over five years than the more conservative approach..
The Government Accountability Office said in a report that the Pension Benefit Guaranty Corp.'s new strategy could significantly boost the PBGC's investment returns, but it "will likely also carry more risk than acknowledged by PBGC's analysis."
The PBGC said earlier this year that it would take a more aggressive investment approach by investing more in stocks and adding new alternative investments, such as real estate and private equity funds.
The agency, which has assets of $68 billion, hopes the strategy will help it close a $14 billion gap between those assets and its liabilities. Otherwise, taxpayers could be called upon to pony up extra funding, the director of the PBGC has warned.
The PBGC has said its new approach will reduce risk because it will result in a more diversified portfolio of 45 percent stocks, 45 percent bonds, and 10 percent in alternative investments.
Previously, its targets were 75 percent to 85 percent bonds and 15 percent to 25 percent in stocks, though the actual figure reached 28 percent last year. The agency is seeking bids from Wall Street firms to help manage the switch.
The GAO, however, said that under certain scenarios the new strategy would have more volatile results than the old approach. The report said that's risky because PBGC pays out more than $4 billion a year to retirees and needs access to cash.
That need increases the risk of "any investment strategy that allocates significant portions of the portfolio to volatile or illiquid assets," the GAO said. Funds allocated to private equity, for example, may not be returned for up to seven years, the report said.
But Charles Millard, PBGC's director, said the report shows that even under the GAO's calculations, the new strategy takes on less risk than most institutional investors and could provide an additional $20 billion to $40 billion in investment gains over 30 years. That's enough to close the agency's deficit.
"The whole point of the new policy is to make it far less likely that Congress will have to engineer a bailout," he said.
The PBGC is one of the government's largest corporations and insures approximately 30,000 defined benefit pension plans. Defined benefit plans pay benefits based on years of service, salary levels and other factors. They are being increasingly replaced by 401(k)-style plans in which benefits depend on the employee's contributions. The PBGC doesn't insure 401(k) plans.
The PBGC's finances have come under strain as it has taken over several large pension plans in recent years from bankrupt airline and steel companies, including a $17 billion plan maintained by UAL Corp., parent of United Airlines. United emerged from bankruptcy in 2006.
The PBGC is funded by fees paid by the companies it insures, assets from failed pension plans, recoveries from bankruptcies and returns on invested assets. It doesn't receive taxpayer funds.
The agency now covers pensions for 1.3 million Americans who are either retired or soon will be. That's up from 624,000 in 2001.
The GAO report also urged the PBGC's board, which is chaired by the Labor Secretary, to more closely monitor the agency's investments.
The board "has not taken an active and engaged role," the GAO said, and should require more formal reporting by the PBGC's director about the new investment plan.
Labor Secretary Elaine Chao, in a letter included in the report, said the board has increased its oversight recently and reviews the PBGC's investment policy "at least" every two years and approves it "at least" every four years.
The GAO report was requested by four senators, including Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, chairman and senior Republican on the Senate Finance Committee.
Some members of Congress have criticized the PBGC for taking a conservative investment approach. It adopted the 15 percent to 25 percent equity limit in 2004.
Rep. Earl Pomeroy, D-N.D., said in an interview last week that the adoption of the equity cap cost the agency "billions of dollars."
In its 2007 annual report, the PBGC acknowledged that an investment portfolio with 60 percent in stocks and 40 percent bonds would have produced $7.3 billion more in returns over five years than the more conservative approach..
Lowe's Cos.Inc
Lowe's Cos. Inc. is offering a downbeat sales and profit outlook as the nation's second-largest home improvement retailer says its second-quarter profit fell 7.9 percent.
The Mooresville, N.C.-based retailer said Monday that it expects earnings per share to be in the range of 27 cents to 31 cents in the fiscal third quarter which ends Oct. 31. Thomson Reuters says analysts were expecting 33 cents a share.
The company expects total sales to increase a modest 1 to 2 percent for the quarter while sales at stores open at least a year fall 5 to 7 percent.
For the fiscal year, the company expects earnings per share to be in the range of $1.48 to $1.56 per share. Thomson Reuters says analysts were looking for $1.50 a share for the year.
The Mooresville, N.C.-based retailer said Monday that it expects earnings per share to be in the range of 27 cents to 31 cents in the fiscal third quarter which ends Oct. 31. Thomson Reuters says analysts were expecting 33 cents a share.
The company expects total sales to increase a modest 1 to 2 percent for the quarter while sales at stores open at least a year fall 5 to 7 percent.
For the fiscal year, the company expects earnings per share to be in the range of $1.48 to $1.56 per share. Thomson Reuters says analysts were looking for $1.50 a share for the year.
Crude Eases $113
U.S. crude fell 42 cents to $113.35 a barrel by 8:05 a.m. EDT, off an intra-day high of $115.35. It settled down $1.24 at $113.77l on Friday, after dipping to $111.34, the lowest since May 1.
London Brent crude fell 46 cents to $112.09.
"The sentiment is still very bearish," said John Kemp, economist at RBS Sempra. "What you see are a series of what would otherwise be bullish news stories -- whether it is the conflict between Russia and Georgia and now the report that the transit rail line across Georgia has been damaged -- failing to produce sustained rallies," he said.
"The hurricane is largely irrelevant, there is no shortage of refinery capacity in the United States even if the hurricane were to damage one of the refineries."
The storm was on Sunday expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Center forecast.
Some computer models, however, predict it may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.
Supply concerns in other regions also failed to provide support for the market.
BP Plc (LSE:BP.L - News) said exports of Azeri oil by rail to Georgia had stopped due to "damage" to a railway line in Georgia.
Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11, as growing global economic problems and high fuel prices weigh on demand.
Kemp said there was still a lot of selling interests in the market with some institutional investors liquidating positions and some hedge funds turning aggressively short.
Worsening economic outlook suggests oil prices may fall further, the Centre for Global Energy Studies said its Monthly report on Monday.
"But OPEC, whose members are due to meet in early September, may act to prevent them from falling too far," it added.
London Brent crude fell 46 cents to $112.09.
"The sentiment is still very bearish," said John Kemp, economist at RBS Sempra. "What you see are a series of what would otherwise be bullish news stories -- whether it is the conflict between Russia and Georgia and now the report that the transit rail line across Georgia has been damaged -- failing to produce sustained rallies," he said.
"The hurricane is largely irrelevant, there is no shortage of refinery capacity in the United States even if the hurricane were to damage one of the refineries."
The storm was on Sunday expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Center forecast.
Some computer models, however, predict it may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.
Supply concerns in other regions also failed to provide support for the market.
BP Plc (LSE:BP.L - News) said exports of Azeri oil by rail to Georgia had stopped due to "damage" to a railway line in Georgia.
Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11, as growing global economic problems and high fuel prices weigh on demand.
Kemp said there was still a lot of selling interests in the market with some institutional investors liquidating positions and some hedge funds turning aggressively short.
Worsening economic outlook suggests oil prices may fall further, the Centre for Global Energy Studies said its Monthly report on Monday.
"But OPEC, whose members are due to meet in early September, may act to prevent them from falling too far," it added.
Sunday, August 17, 2008
RPower UP Projects
Hyderabad: Lanco Infratech Ltd (LITL) has pipped Reliance Power, NTPC and Jindal Steel & Power to win two super critical power projects in Uttar Pradesh totalling 3,300 mw in installed capacity through competitive bidding.
L Madhusudhan Rao, chairman, said the company will invest about Rs 14,000 crore on the two projects, which takes the total capacity under various stages of implementation by LITL to 13,000 mw. The company, which had suffered a major setback when it had to give up the Sasan ultra mega power project after bagging it, has since won several large coal-fired projects.
With the Prayagraj and Sangam projects, Uttar Pradesh becomes the biggest client-state for LITL. Including the 1,200 mw Anpara project, the total capacity won by it in the state is a whopping 4,500 mw.
Almost 90% of the power produced by the 1,980 mw Prayagraj project and the 1,320 mw Sangam project must be sold to the government of Uttar Pradesh, with LITL free to sell the remaining through the merchant market.
All linkages for the two projects, which will be implemented on a 80:20 debt:equity basis, will be provided by the state government.
These include road, water, fuel and rail linkages. LITL was the lowest bidder for the two projects with a quote of Rs 2.88 per unit for Prayagraj compared with Rs 2.94 from Reliance, Rs 3.44 from NTPC and Rs 3.591 from Jindal.
Likewise for the Sangam project, which had five contenders in the fray, the company quoted Rs 2.838 per unit compared with Rs 3.051 by Reliance, Rs 3.389 by CESE and Rs 3.51 by JSPL.
LITL will have to raise Rs 2,800 crore in equity over the next 54 months for the two projects, apart from the Rs 11,200 crore in debt over the next 12 months, DV Rao, joint managing director, LITL said. “Raising funds is not an issue considering there are ample avenues for which we will be structuring accordingly,” he added.
“LITL has made significant progress towards adding 7,000 mw generation capacity with about 3,400 mw of power generation capacity already under construction (having achieved financial closure),” Kotak Securities analyst Aman Batra said in an earlier report, setting a target price of Rs 670 per share with a value of Rs 331 per share from the power portfolio.
LITL has a good mix of PPAbased and merchant projects at 75:25 ration, which is a good mix of secure cash flows and marketbased upsides, which should accrue from the tightening power demand-supply situation in the country, Edelweiss Securities analysts Shankar K and Shashikiran Rao said in a report.
L Madhusudhan Rao, chairman, said the company will invest about Rs 14,000 crore on the two projects, which takes the total capacity under various stages of implementation by LITL to 13,000 mw. The company, which had suffered a major setback when it had to give up the Sasan ultra mega power project after bagging it, has since won several large coal-fired projects.
With the Prayagraj and Sangam projects, Uttar Pradesh becomes the biggest client-state for LITL. Including the 1,200 mw Anpara project, the total capacity won by it in the state is a whopping 4,500 mw.
Almost 90% of the power produced by the 1,980 mw Prayagraj project and the 1,320 mw Sangam project must be sold to the government of Uttar Pradesh, with LITL free to sell the remaining through the merchant market.
All linkages for the two projects, which will be implemented on a 80:20 debt:equity basis, will be provided by the state government.
These include road, water, fuel and rail linkages. LITL was the lowest bidder for the two projects with a quote of Rs 2.88 per unit for Prayagraj compared with Rs 2.94 from Reliance, Rs 3.44 from NTPC and Rs 3.591 from Jindal.
Likewise for the Sangam project, which had five contenders in the fray, the company quoted Rs 2.838 per unit compared with Rs 3.051 by Reliance, Rs 3.389 by CESE and Rs 3.51 by JSPL.
LITL will have to raise Rs 2,800 crore in equity over the next 54 months for the two projects, apart from the Rs 11,200 crore in debt over the next 12 months, DV Rao, joint managing director, LITL said. “Raising funds is not an issue considering there are ample avenues for which we will be structuring accordingly,” he added.
“LITL has made significant progress towards adding 7,000 mw generation capacity with about 3,400 mw of power generation capacity already under construction (having achieved financial closure),” Kotak Securities analyst Aman Batra said in an earlier report, setting a target price of Rs 670 per share with a value of Rs 331 per share from the power portfolio.
LITL has a good mix of PPAbased and merchant projects at 75:25 ration, which is a good mix of secure cash flows and marketbased upsides, which should accrue from the tightening power demand-supply situation in the country, Edelweiss Securities analysts Shankar K and Shashikiran Rao said in a report.
RPower Get More Power
In an apparent attempt to compensate battered shareholders, Reliance Power Chairman Anil Ambani on Sunday announced that the Board has approved the issuance of bonus shares. The bonus shares will be issued to the investors in 3:5 ratio, Ambani announced. Ambani will lower his stake in the company in order to make up for the bonus shares. After this move his stake in the Reliance Power will go down to 40% from 45%.
The public stake in the company, after issuance of bonus shares will go upto, 15%. This move will protect dilution of REL stake in Reliance Power while promoters will accept dilution of their own stake. The move will also reduce cost of acquisition for shareholders.
After the issue of bonus shares the price of the Reliance Power ‘s share will go down to Rs 269 for retail investors and Rs 281 for institutional investors.
While announcing the move, Anil Ambani hinted at some foul play in the way the price of Reliance Power’s share fell to nearly Rs 380 from the listing price of Rs 540. He said the shares most likely plunged due to price hammering by an entity working against his company.
The public stake in the company, after issuance of bonus shares will go upto, 15%. This move will protect dilution of REL stake in Reliance Power while promoters will accept dilution of their own stake. The move will also reduce cost of acquisition for shareholders.
After the issue of bonus shares the price of the Reliance Power ‘s share will go down to Rs 269 for retail investors and Rs 281 for institutional investors.
While announcing the move, Anil Ambani hinted at some foul play in the way the price of Reliance Power’s share fell to nearly Rs 380 from the listing price of Rs 540. He said the shares most likely plunged due to price hammering by an entity working against his company.
RPower New Project Will Come Soon
The 300 mw Group Captive Power Project (GCPP) being set up by Vidarbha Industries Power (VIPL), a special purpose vehicle (SPV) formed by Reliance [Get Quote] Power, at Butibori near Nagpur in Maharashtra, will soon enter the construction phase. Sources said the required land has been acquired and the Maharashtra Pollution Control Board (MPCB) has given the green signal for setting up the project.
Reliance Power will soon award the engineering, procurement and construction (EPC) contract for the Rs 1500 crore (Rs 15 billion) project. The project is expected to take off by 2010, said sources. The BUTIBORI PROJECT is one of the first major power projects being set up in India under the GCPP concept. Power produced from the plant will be mainly supplied to the industrial consumers in Maharashtra at subsidised tariffs.
The project was awarded to Reliance Power by Maharashtra Industrial Development Corporation (MIDC), a nodal development agency of the Maharashtra government, through a competitive international bidding process. The project will be beneficial to the consumers and developers alike. Industrial consumers will get discounted tariff up to 25 paise a unit and developers will garner better returns as the tariff will be higher than long-term power purchase agreements (PPA), said sources.
Reliance Power has ensured coal linkage for the project from Western Coalfields. Maharashtra Industrial Development Corporation (MIDC) has allotted the land and committed adequate water from the Wadgaon dam near Nagpur. Other statutory approvals and environmental clearances are expected soon, said sources. Reliance Power is setting up 13 power projects with a combined capacity of 28,200 mw. This includes two ultra mega power projects of 4000 mw capacity at Sasan and Krishnapatinam.
Reliance Power will soon award the engineering, procurement and construction (EPC) contract for the Rs 1500 crore (Rs 15 billion) project. The project is expected to take off by 2010, said sources. The BUTIBORI PROJECT is one of the first major power projects being set up in India under the GCPP concept. Power produced from the plant will be mainly supplied to the industrial consumers in Maharashtra at subsidised tariffs.
The project was awarded to Reliance Power by Maharashtra Industrial Development Corporation (MIDC), a nodal development agency of the Maharashtra government, through a competitive international bidding process. The project will be beneficial to the consumers and developers alike. Industrial consumers will get discounted tariff up to 25 paise a unit and developers will garner better returns as the tariff will be higher than long-term power purchase agreements (PPA), said sources.
Reliance Power has ensured coal linkage for the project from Western Coalfields. Maharashtra Industrial Development Corporation (MIDC) has allotted the land and committed adequate water from the Wadgaon dam near Nagpur. Other statutory approvals and environmental clearances are expected soon, said sources. Reliance Power is setting up 13 power projects with a combined capacity of 28,200 mw. This includes two ultra mega power projects of 4000 mw capacity at Sasan and Krishnapatinam.
RPower Sets $200 bn
It is unprecedented, even if you call it plain euphoria. Nowhere in the world has an initial public offer of shares by a new company evoked as much response as the Reliance Power issue that closed on Friday. For a company that is yet to commence business or show income from operations, investors from across the world placed bids worth $200 billion for its shares worth $2.9 billion on offer. Retail investors put in 5.1 million applications for shares worth $47 billion or Rs 188,000 crore. Since as per rules, retail applicants can pay just a fourth of the total money initially, at least Rs 50,000 crore has been invested in the issue. For the sake of comparison, the collections are a fourth of the total direct tax collections for last year. The overwhelming response for the issue is based on expectations that Reliance Power will be able to complete its 13 power projects in the next couple of years. The sale will increase the wealth of Anil Ambani, already India's third richest man after his Reliance Energy quadrupled in value last year. His wealth more than tripled last year to $45 billion, according to Forbes magazine, behind elder brother Mukesh Ambani and Lakshmi Mittal. On listing of REPL, there is speculation that Anil may replace Mukesh as the richest Indian.
RPower Comes at for NIFTY:
Bears are gaining support from unexpected quarters. The Index Maintenance Sub-Committee of the National Stock Exchange has decided to replace Dr Reddy’s Laboratories with Reliance Power in Nifty. These changes will be effective from September 10, 2008. Experts say this will put further pressure on the Nifty as it will increase the market capitalisation of the index while net profit will decline, pushing-up the index price to earning (PE) multiple.
This will provide another excuse to bears to go short. Brokerages are now expected to bring down Sensex targets as the P/E ratio will go up. A P/E ratio is a valuation ratio and can be calculated by dividing the total market capitalisation of the index by its total earnings.
Besides making Nifty expensive, the move will further tilt the bias in the index towards the power-sector stocks. The index already has stocks such as NTPC (which has a weightage of 5.4% in the Nifty as on July 31) Tata Power (weightage of 1%), PowerGrid (1.5%) and Reliance Infra (0.9%), representing power utilities and stocks such as ABB (0.6%), BHEL (3.2%), Siemens (0.7%) and Suzlon (1.3%), representing power equipment manufacturers.
Reliance Power has a market capitalisation of close to Rs 37,000 crore and Dr Reddy’s Lab has a market cap of Rs 10,000 crore. Therefore, the inclusion of the new scrip in the index would raise the index market cap by around Rs 27,000 crore. Reliance Power reported a net profit of Rs 94 crore during FY08 compared with Rs 475 crore reported by Dr Reddy’s Lab during the same period.
In the first quarter ended June 2008, Reliance Power reported a net profit of Rs 59.7 crore on a total income of Rs 77.67 crore in Q1 June 2008. Comparable figures of the previous period were not available. Dr Reddy’s Lab reported a net profit of Rs 210 crore during the first quarter.
Market participants say this will lift the valuations of the index as its P/E ratio will go up by few basis points due to decrease in earning per share (EPS) of Nifty.
“The liquidity on the bourse is declining and fundamental factors are continuously unfavourable. These structural changes will add further pressure on the equity market,” says an analyst. The point to note is that Reliance Power will not be generating any profit from its core operations in the next few years to come. The profit so far generated is from treasury operations. Various institutions while valuing the market, consider these aspects.
Global investors in particular use key indices as a proxy to define a market as attractive or costly. The stocks for inclusion in Nifty have to satisfy several criteria such as liquidity (measured by impact cost), market capitalisation and floating stocks.
This will provide another excuse to bears to go short. Brokerages are now expected to bring down Sensex targets as the P/E ratio will go up. A P/E ratio is a valuation ratio and can be calculated by dividing the total market capitalisation of the index by its total earnings.
Besides making Nifty expensive, the move will further tilt the bias in the index towards the power-sector stocks. The index already has stocks such as NTPC (which has a weightage of 5.4% in the Nifty as on July 31) Tata Power (weightage of 1%), PowerGrid (1.5%) and Reliance Infra (0.9%), representing power utilities and stocks such as ABB (0.6%), BHEL (3.2%), Siemens (0.7%) and Suzlon (1.3%), representing power equipment manufacturers.
Reliance Power has a market capitalisation of close to Rs 37,000 crore and Dr Reddy’s Lab has a market cap of Rs 10,000 crore. Therefore, the inclusion of the new scrip in the index would raise the index market cap by around Rs 27,000 crore. Reliance Power reported a net profit of Rs 94 crore during FY08 compared with Rs 475 crore reported by Dr Reddy’s Lab during the same period.
In the first quarter ended June 2008, Reliance Power reported a net profit of Rs 59.7 crore on a total income of Rs 77.67 crore in Q1 June 2008. Comparable figures of the previous period were not available. Dr Reddy’s Lab reported a net profit of Rs 210 crore during the first quarter.
Market participants say this will lift the valuations of the index as its P/E ratio will go up by few basis points due to decrease in earning per share (EPS) of Nifty.
“The liquidity on the bourse is declining and fundamental factors are continuously unfavourable. These structural changes will add further pressure on the equity market,” says an analyst. The point to note is that Reliance Power will not be generating any profit from its core operations in the next few years to come. The profit so far generated is from treasury operations. Various institutions while valuing the market, consider these aspects.
Global investors in particular use key indices as a proxy to define a market as attractive or costly. The stocks for inclusion in Nifty have to satisfy several criteria such as liquidity (measured by impact cost), market capitalisation and floating stocks.
Friday, August 15, 2008
Reliance Power Bonus Issue
Reliance Power Ltd (RPL) plans to issue bonus shares to all equity holders other than the founders, hoping to cheer retail investors after the firm’s shares tumbled following a record $3 billion (Rs11,910 crore) initial public offering (IPO). RPL’s board is scheduled to meet on 24 February to consider issuing bonus shares and/or other measures, which the company said would effectively reduce the cost of the company’s shares.
“This will include a proposal for issuing free bonus shares to all categories of shareholders excluding the promoter group, thereby protecting investors from even short-term losses on their shareholdings,” RPL said.
Reliance Power’s shares, which listed on the stock exchange on 11 February, had fallen by a quarter but recovered to close 15% below the IPO price of Rs450 a share on Friday, helped by a three-day market rally which saw the benchmark index climb 9%.
The slump in Reliance Power, a unit of the Anil Dhirubhai Ambani Group, infuriated investors, many of whom complained they were lured to invest in the company because of promises from the firm, which has no operating power plants and is unlikely to report strong profits for five years.
Reliance’s supporters say the Ambani family has a strong track record of executing projects on schedule and delivering strong returns to investors, attracting millions of investors to bid for its shares offered in India’s biggest IPO.
The company said its shares were hit by weak market sentiment and blamed rivals, who were not identified, for hammering shares of companies in the Anil Dhirubhai Ambani Group. The company also reminded investors that there were risks attached to equity investments.
“Equity shares, by their very nature, are risk-bearing instruments and there is no obligation on behalf of any issuer to insure investors against possible losses,” the company said.
However, the company’s board would consider a bonus issue and other steps as the group had a “fundamental and overriding philosophy of creating value for genuine long- term investors.”
The fall in Reliance Power’s shares followed market turbulence that knocked out a few IPOs, including the $1.6 billion issue from Emaar MGF Land Ltd, the Indian unit of Dubai’s Emaar Properties PJSC.
Reliance Communications Ltd, another Anil Ambani firm, is planning an IPO for its telecom towers unit, Reliance Infratel Ltd, which media reports and bankers say hopes to raise $1-1.5 billion. Founded by Dhirubhai Ambani, the Reliance companies were divided between the late Ambani’s sons in 2005. Anil has interests in telecoms, financials, media and power, while elder brother Mukesh Ambani controls India’s top listed firm, Reliance Industries Ltd.
“This will include a proposal for issuing free bonus shares to all categories of shareholders excluding the promoter group, thereby protecting investors from even short-term losses on their shareholdings,” RPL said.
Reliance Power’s shares, which listed on the stock exchange on 11 February, had fallen by a quarter but recovered to close 15% below the IPO price of Rs450 a share on Friday, helped by a three-day market rally which saw the benchmark index climb 9%.
The slump in Reliance Power, a unit of the Anil Dhirubhai Ambani Group, infuriated investors, many of whom complained they were lured to invest in the company because of promises from the firm, which has no operating power plants and is unlikely to report strong profits for five years.
Reliance’s supporters say the Ambani family has a strong track record of executing projects on schedule and delivering strong returns to investors, attracting millions of investors to bid for its shares offered in India’s biggest IPO.
The company said its shares were hit by weak market sentiment and blamed rivals, who were not identified, for hammering shares of companies in the Anil Dhirubhai Ambani Group. The company also reminded investors that there were risks attached to equity investments.
“Equity shares, by their very nature, are risk-bearing instruments and there is no obligation on behalf of any issuer to insure investors against possible losses,” the company said.
However, the company’s board would consider a bonus issue and other steps as the group had a “fundamental and overriding philosophy of creating value for genuine long- term investors.”
The fall in Reliance Power’s shares followed market turbulence that knocked out a few IPOs, including the $1.6 billion issue from Emaar MGF Land Ltd, the Indian unit of Dubai’s Emaar Properties PJSC.
Reliance Communications Ltd, another Anil Ambani firm, is planning an IPO for its telecom towers unit, Reliance Infratel Ltd, which media reports and bankers say hopes to raise $1-1.5 billion. Founded by Dhirubhai Ambani, the Reliance companies were divided between the late Ambani’s sons in 2005. Anil has interests in telecoms, financials, media and power, while elder brother Mukesh Ambani controls India’s top listed firm, Reliance Industries Ltd.
Reliance Power Bonus
Reliance Power has remained in controversies at every stage, even before it was conceived and even after the public issue. Certainly enough, the public issue was not a reason to the recent damp in the market, but unfortunately Reliance Power became scapegoat for the crash.
Many guesses were made about the listing price , and one of guess was that if Anil Ambani could keep the price of Reliance Power above 900-00 , he would be richest person. Thus before the IPO premium was nearly 400-00+ but soon after the market crash all the premium and high hopes for listing above 900-00 were vanished.
After the listing Reliance Power has been available below the issue price of 450-00 and the investors are cursing the management for it, as if the company could really tackle the pricing in the market.
Now, the management has come up with a novel and generous idea of issuing bonus shares, only to public, and not to the promoters, to cover the short term losses of the investors .
This generous gesture of the company has made me say , wow!! Reliance Power has been really amazing company in every respect. The company collects 44 times more premium on its face value, which has no business, no assets at the moment going to public, earliest project will commence after nealry 4 years, still IPO is oversubscribed 70 times or more, finds its place in Future and Option segament from the first day , traded below issue price, and then bonus issue from nowhere.
To me, the move of issuing bonus share is perhaps simply to encourage price hikes. More particularly, as the management is issuing bonus to only to public which is wise move, other wise a bonus issue to all the shareholders, increase share capital and dilute earnings.
So, one can expect good price move in Reliance Power in short term. Which will give opprtunity to exit from the scrip.
Many guesses were made about the listing price , and one of guess was that if Anil Ambani could keep the price of Reliance Power above 900-00 , he would be richest person. Thus before the IPO premium was nearly 400-00+ but soon after the market crash all the premium and high hopes for listing above 900-00 were vanished.
After the listing Reliance Power has been available below the issue price of 450-00 and the investors are cursing the management for it, as if the company could really tackle the pricing in the market.
Now, the management has come up with a novel and generous idea of issuing bonus shares, only to public, and not to the promoters, to cover the short term losses of the investors .
This generous gesture of the company has made me say , wow!! Reliance Power has been really amazing company in every respect. The company collects 44 times more premium on its face value, which has no business, no assets at the moment going to public, earliest project will commence after nealry 4 years, still IPO is oversubscribed 70 times or more, finds its place in Future and Option segament from the first day , traded below issue price, and then bonus issue from nowhere.
To me, the move of issuing bonus share is perhaps simply to encourage price hikes. More particularly, as the management is issuing bonus to only to public which is wise move, other wise a bonus issue to all the shareholders, increase share capital and dilute earnings.
So, one can expect good price move in Reliance Power in short term. Which will give opprtunity to exit from the scrip.
Reliance - RIL Showing Directions
Reliance Industry (RIL) is considered as torch bearer for Indian Stock Market, and it is, without much doubt. After the recent crash RIL recovered on 9th April onwards, earlier than the market, and NIFTY followed it. On 17th April RIL showed high of 2714, but closed in red at 2640.
Thereafter, RIL remained strongly between 2600-2700, even during the continuous fall in NIFTY for six consecutive trading session from 2nd May to 9th May, and eventually RIL slipped below 2600 on 9th May.
Thereafter it tried to recover with the market, but gradually it has been slipping beyond 2500 and on 30th May it went to the low of 2390 and closed at 2403, showing weakness in the trend.
Last two falls were with greater volume, almost double, than average trading days. Increase in volume suggests that people inclined towards the current trend. So in a down day more volume shows that there was large sell of than average and it is also negative indicator. People who have been holding the script since some time sees no upside in near future thus start selling off.
Such attitude is clearly reflected in Chaikin Money Flow (CMF) indicator . On 30th May RIL generated largest negative bar on CMF in its recent history, which shows people are distributing (selling) the script.
Accumlation/distribution line is very clear. A/D line is sliding since 21st May and eventually has gone in negative territory , after more than six weeks it has gone in negative territory, lastly it was in negative on during third week of March’08.
Interstingly , MACD lines have been sliding down since 9th May, earlier than all other indicators, and with negative histogram. MACD 20 line is now in negative territory.
Thereafter, RIL remained strongly between 2600-2700, even during the continuous fall in NIFTY for six consecutive trading session from 2nd May to 9th May, and eventually RIL slipped below 2600 on 9th May.
Thereafter it tried to recover with the market, but gradually it has been slipping beyond 2500 and on 30th May it went to the low of 2390 and closed at 2403, showing weakness in the trend.
Last two falls were with greater volume, almost double, than average trading days. Increase in volume suggests that people inclined towards the current trend. So in a down day more volume shows that there was large sell of than average and it is also negative indicator. People who have been holding the script since some time sees no upside in near future thus start selling off.
Such attitude is clearly reflected in Chaikin Money Flow (CMF) indicator . On 30th May RIL generated largest negative bar on CMF in its recent history, which shows people are distributing (selling) the script.
Accumlation/distribution line is very clear. A/D line is sliding since 21st May and eventually has gone in negative territory , after more than six weeks it has gone in negative territory, lastly it was in negative on during third week of March’08.
Interstingly , MACD lines have been sliding down since 9th May, earlier than all other indicators, and with negative histogram. MACD 20 line is now in negative territory.
Reserve Bank of India
THE Reserve Bank of India (RBI) has extended a special dispensation to State Bank of India (SBI) , helping the country’s largest bank prop up its bottom line for 2007-08. The central bank has allowed for a liberal valuation of a portion of the bank’s bond portfolio, enabling the bank to set aside lesser funds for depreciation provisions.
The special dispensation pertains to the set of government bonds SBI subscribed to, for funding the government’s investment in the bank’s rights issue. Since these bonds are different from securities that form part of the centre’s annual borrowing programme, they do not qualify for meeting statutory liquidity requirements (SLR) guidelines that mandate bank investments in government bonds. The normal practice for valuing bonds that do not qualify for SLR is to use a benchmark yield 50 basis points higher than the yield on government bonds of the same tenure.
However, SBI has been allowed to do a mark-to-market of these bonds in such a way that they yield a return of only 25 basis points over the yield on regular g o v e r n m e n t bonds of the same maturity. To show a higher yield, the bank has to write down the market value of the bond. The special dispensation to use a lower yield benchmark has saved the bank Rs 168 crore in mark-to-market losses in the fourth quarter ending March 2008.
At a mark-up of 50 basis points, SBI would have suffered a loss of Rs 336 crore. However, since RBI has given them a special dispensation of 25 basis points the losses have been reduced to Rs 168 crore. SBI officials justify the special dispensation saying that had they not been forced to invest in these bonds to fund the government investment, the bank would not have to provide for even the Rs 168 crore. Officials said the bank had, in fact, asked RBI to treat these bonds on a par with SLR bonds.
SBI had subscribed to Rs 9,996 crore of 8.35% 2024 bond to fund the government investment in the bank’s rights issue. However, days after the ,issue bond prices crashed following fears of monetary tightening to tame inflation. In end-March, 2008 bonds maturing in 2023 were trading at a yield of 8.37%. SBI has valued its bonds at a yield of 8.62% — 25 basis points over 8.37%. Currently, there is no government paper maturing in 2024 and therefore, the 2023 bonds were used as a valuation benchmark.
SBI’s net profit for the fourth quarter jumped 26% to Rs 1,883 crore, above the market expectation of Rs 1,600-1,700 crore. The fourth quarter provisions, which include the Rs 168 crore mark-to-market losses on Rs 9,996 crore bonds, rose 14% to Rs 1,620 crore from Rs 1,413 crore. Money market dealers say that the special dispensation is unusual because this leads to some discrepancies in the way non-SLR government bonds are valued. Even the oil bonds issued by the government do not enjoy an SLR status and are at a mark-up of 50 basis points over government securities of the same tenor.
Bull Market
There are two classic market types used to characterize the general direction of the market. Bull markets are when the market is generally rising, typically the result of a strong economy. A bull market is typified by generally rising stock prices, high economic growth, and strong investor confidence in the economy. Bear markets are the opposite. A bear market is typified by falling stock prices, bad economic news, and low investor confidence in the economy. A bull market is a financial market where prices of instruments (e.g., stocks) are, on average, trending higher. The bull market tends to be associated with rising investor confidence and expectations of further capital gains. A market in which prices are rising. A market participant who believes prices will move higher is called a "bull". A news item is considered bullish if it is expected to result in higher prices.An advancing trend in stock prices that usually occurs for a time period of months or years. Bull markets are generally characterized by high trading volume. Bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low. Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation.
A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value and then selling them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Investors often attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward. Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures and currencies they believe will gain value. Growth is what most bull investors seek.
Stock Option
Stock Option refers to a stock as a instrument of security. It is known as a “call contract” when bought and “put contract” when sold. It is a contract where the buyer has a option to buy stocks at a pre-determined rate. This can also mean that a member holding stock option can sell the same after a specific time period. There maybe restrictions guided by agreements for the call and put contracts.
Infact There are two definitions of stock options.
1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies.
2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration.
Employee stock options are stock options for the company’s own stock that are often offered to upper-level employees as part of the executive compensation package. An employee stock option is identical to a call option on the company’s stock, with some extra restrictions.
Also there are Performance Stock Options which are vested only if a pre decided measure of performance is achieved. The options can be only exercised only if those performance goals are reached.
Infact There are two definitions of stock options.
1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies.
2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration.
Employee stock options are stock options for the company’s own stock that are often offered to upper-level employees as part of the executive compensation package. An employee stock option is identical to a call option on the company’s stock, with some extra restrictions.
Also there are Performance Stock Options which are vested only if a pre decided measure of performance is achieved. The options can be only exercised only if those performance goals are reached.
Monday, August 11, 2008
Tata Steel
Tata Steel, the country’s largest steel maker and is one of the lowest cost producers in the world, has put up a stellar show in the recent quarter. Net profit for the three months ended September 30 jumped 75.9 per cent to Rs 115 crore from Rs 65.4 crore in the same period last year. Sales rose to Rs 1,870 crore in the second quarter from Rs 1,707 crore. Tisco’s decade-long modernisation programme was completed this year. Tisco has spent nearly Rs 7,000 crore ($1.5 billion) to completely modernise its 90-year old steel plant, and had set up a cold-rolling mill. The reason for optimism is that this is just the beginning of the move up the value chain. Tisco is now looking at new areas of businesses. It plans to diversify and cut its debts with cash surpluses. The company management is also bullish on the third quarter. Steel prices are higher than last year and the company has resumed exports to southeast Asia after a gap of three years. The company has also developed USA as a new market after the south Asian crisis and will continue to reap more benefits in future. The demand surge in construction and infrastructure sectors augur for the steel company. The stock has offlate been witnessing good volumes and may appreciate further.
Date: November 03, 2000. Price:Rs 105.65
Date: November 03, 2000. Price:Rs 105.65
Reliance Power IPO may raise $2.97 bln - sources
MUMBAI (Reuters) - India's Reliance Power Ltd is set to launch an initial public offering to raise up to $2.97 billion in the country's biggest IPO, three investment banking sources close to the deal said on Wednesday.
The company will issue 260 million shares at an indicated price band of 405-450 rupees each, the sources at banks that are managers to the issue said.
The offering is likely to open on Jan. 15 and close on Jan. 18, they said.
A Reliance Power spokesman declined comment, saying a final approval was awaited.
The company, which is 50 percent owned by utility Reliance Energy Ltd, plans to use the funds from the issue to build power plants across the country.
Dhirubhai Anil Ambani Group, which controls Reliance Energy, has said the IPO entails a sale of a 10.1 percent stake and media reports earlier said that could raise up to $2.8 billion.
The group, which also has interests in telecoms, financial services, infrastructure and entertainment, has said it planned to offer up to 30 percent of the shares to retail clients, with a further 10 percent going to wealthy individuals.
Institutional investors will be offered 60 percent, and may get more if retail demand is weak, it has said.
India's market regulator last week disposed of a complaint against the IPO, and directed the group's quota in the offering, or 20 percent of the capital, be locked-in for five years from the date of allotment.
The issue is managed by UBS, ABN AMRO, JPMorgan, Deutsche Bank, Enam Securities, ICICI Securities, JM Financial and Kotak Mahindra Capital.
Macquarie and SBI Capital Markets are co-managers.
Last July, real estate firm DLF Ltd had raised $2.25 billion in India's biggest IPO to date.
Indian firms raised $8.2 billion from 88 IPOs in 2007, data from Thomson Financial showed, compared with $4.7 billion in 2006, helped by a stock market that rose more than 47 percent.
The company will issue 260 million shares at an indicated price band of 405-450 rupees each, the sources at banks that are managers to the issue said.
The offering is likely to open on Jan. 15 and close on Jan. 18, they said.
A Reliance Power spokesman declined comment, saying a final approval was awaited.
The company, which is 50 percent owned by utility Reliance Energy Ltd, plans to use the funds from the issue to build power plants across the country.
Dhirubhai Anil Ambani Group, which controls Reliance Energy, has said the IPO entails a sale of a 10.1 percent stake and media reports earlier said that could raise up to $2.8 billion.
The group, which also has interests in telecoms, financial services, infrastructure and entertainment, has said it planned to offer up to 30 percent of the shares to retail clients, with a further 10 percent going to wealthy individuals.
Institutional investors will be offered 60 percent, and may get more if retail demand is weak, it has said.
India's market regulator last week disposed of a complaint against the IPO, and directed the group's quota in the offering, or 20 percent of the capital, be locked-in for five years from the date of allotment.
The issue is managed by UBS, ABN AMRO, JPMorgan, Deutsche Bank, Enam Securities, ICICI Securities, JM Financial and Kotak Mahindra Capital.
Macquarie and SBI Capital Markets are co-managers.
Last July, real estate firm DLF Ltd had raised $2.25 billion in India's biggest IPO to date.
Indian firms raised $8.2 billion from 88 IPOs in 2007, data from Thomson Financial showed, compared with $4.7 billion in 2006, helped by a stock market that rose more than 47 percent.
Reliance Power kicks off record $3 bln IPO
Mumbai: Reliance Power launches its $3 billion initial public offering, set to be India's biggest, on Tuesday, kicking off a busy period for capital raising in the booming economy. Reliance Power plans to build power plants across India using funds raised by selling 10 per cent equity in the firm, which is 50 per cent owned by utility Reliance Energy Ltd.
Analysts say the issue is likely to get an enthusiastic response as the Indian stock market, revved by a four-year record-breaking bull run and strong flows of foreign funds, has attracted hordes of retail and institutional investors.
Indian IPO volumes soared to a record in 2007 when new listings raised $8.3 billion from 91 issues, including real estate firm DLF's $2.3 billion issue, which is so far India's biggest IPO.
Billionaire Anil Ambani's Reliance Power is poised to overtake DLF, helped by investors' faith in the family name as a result of the group of companies set up by his father, legendary business tycoon Dhirubhai Ambani.
The group was split in 2005 between Anil Ambani, who has interests in telecoms, financials, media and power sectors, and his brother Mukesh, who controls India's top listed firm, oil and petrochemicals giant Reliance Industries.
"The IPO is going to be very well received in the market, looking at the group's aspirations and because investors have faith in their execution capabilities," said Nikunj Doshi, Investment Manager at Envision Capital.
Indian companies are expected to raise $15.8 billion from 35 IPOs issues this year, almost twice as much as the record in 2007, according to Thomson Financial data.
"The markets are doing very well and investors are getting good returns. There is a fair amount of investor appetite for IPOs," said Ved Prakash Chaturvedi, managing director at Tata Mutual Fund.
The benchmark index of the Bombay Stock Exchange rose 47.1 per cent in 2007, recording its strongest growth in four years. It rose nearly 73 per cent in 2003, 13 per cent in 2004, 42 per cent in 2005 and 46.7 per cent in 2006.
In comparison, South Korea's Composite Stock Price Index gained 32 per cent, China's Shanghai Composite Index soared 97 per cent and Japan's Nikkei fell 11 per cent in 2007.
Analysts say the issue is likely to get an enthusiastic response as the Indian stock market, revved by a four-year record-breaking bull run and strong flows of foreign funds, has attracted hordes of retail and institutional investors.
Indian IPO volumes soared to a record in 2007 when new listings raised $8.3 billion from 91 issues, including real estate firm DLF's $2.3 billion issue, which is so far India's biggest IPO.
Billionaire Anil Ambani's Reliance Power is poised to overtake DLF, helped by investors' faith in the family name as a result of the group of companies set up by his father, legendary business tycoon Dhirubhai Ambani.
The group was split in 2005 between Anil Ambani, who has interests in telecoms, financials, media and power sectors, and his brother Mukesh, who controls India's top listed firm, oil and petrochemicals giant Reliance Industries.
"The IPO is going to be very well received in the market, looking at the group's aspirations and because investors have faith in their execution capabilities," said Nikunj Doshi, Investment Manager at Envision Capital.
Indian companies are expected to raise $15.8 billion from 35 IPOs issues this year, almost twice as much as the record in 2007, according to Thomson Financial data.
"The markets are doing very well and investors are getting good returns. There is a fair amount of investor appetite for IPOs," said Ved Prakash Chaturvedi, managing director at Tata Mutual Fund.
The benchmark index of the Bombay Stock Exchange rose 47.1 per cent in 2007, recording its strongest growth in four years. It rose nearly 73 per cent in 2003, 13 per cent in 2004, 42 per cent in 2005 and 46.7 per cent in 2006.
In comparison, South Korea's Composite Stock Price Index gained 32 per cent, China's Shanghai Composite Index soared 97 per cent and Japan's Nikkei fell 11 per cent in 2007.
JPAssociates - Cement Division
Cement Division
JAL produces various grades of Ordinary Portland Cement (OPC) and Pozzulana Portland Cement (PPC) or blended cement. Currently, its product mix consists of 35% OPC and 65% PPC. JAL markets PPC cement under its well-established brands of “Buniyad” and “Buland”. It supplies mainly to the markets of eastern and central UP, northern MP and Bihar . Currently, the cement division is working at over 100% capacity utilisation. All its plants are ISO- 9002 certified.
Limestone, the raw material for manufacturing cement, is abundantly available in Rewa district of Chattisgarh. JAL also owns captive limestone mines. Cement manufacturing is highly energy-intensive with power and fuel constituting around 45% of the variable cost. At present, the average cost of power for the company is Rs.5.5/unit. However, with the commissioning of two captive power projects, the average cost of power is expected to reduce to Rs.3.07/unit. The cement industry is highly sensitive to demand and supply and performance is dependent on various macro-economic indicators. Till recently, JAL’s cement business was in the red with the company incurring operational losses as late as FY00. However, starting FY02 there has been a revival in the cement business which has translated into improved realisations.
The company’s total volume of cement sales declined marginally from 4.5 MTPA in FY03 to 4.4 MTPA in FY04 due to lower dispatches as the UP state government imposed strict restrictions on the load-carrying capacity of trucks plying in the state. About 90% of JAL’s cement sales are to retail and corporate customers. Sales to government agencies account for 4%, and the remaining 6% is captively consumed. The company is building a 3 million tonnes green-field plant in Himachal Pradesh to boost capacity. The plant is expected to be operational in March 2007.
JAL produces various grades of Ordinary Portland Cement (OPC) and Pozzulana Portland Cement (PPC) or blended cement. Currently, its product mix consists of 35% OPC and 65% PPC. JAL markets PPC cement under its well-established brands of “Buniyad” and “Buland”. It supplies mainly to the markets of eastern and central UP, northern MP and Bihar . Currently, the cement division is working at over 100% capacity utilisation. All its plants are ISO- 9002 certified.
Limestone, the raw material for manufacturing cement, is abundantly available in Rewa district of Chattisgarh. JAL also owns captive limestone mines. Cement manufacturing is highly energy-intensive with power and fuel constituting around 45% of the variable cost. At present, the average cost of power for the company is Rs.5.5/unit. However, with the commissioning of two captive power projects, the average cost of power is expected to reduce to Rs.3.07/unit. The cement industry is highly sensitive to demand and supply and performance is dependent on various macro-economic indicators. Till recently, JAL’s cement business was in the red with the company incurring operational losses as late as FY00. However, starting FY02 there has been a revival in the cement business which has translated into improved realisations.
The company’s total volume of cement sales declined marginally from 4.5 MTPA in FY03 to 4.4 MTPA in FY04 due to lower dispatches as the UP state government imposed strict restrictions on the load-carrying capacity of trucks plying in the state. About 90% of JAL’s cement sales are to retail and corporate customers. Sales to government agencies account for 4%, and the remaining 6% is captively consumed. The company is building a 3 million tonnes green-field plant in Himachal Pradesh to boost capacity. The plant is expected to be operational in March 2007.
BBMP budget
It is a privilege to present the budget of Bruhat Bangalore Mahanagara Palike for the year 2008-09.
Bangalore has been firmly established as the “Future City” of an emergent India. As a technology hub, Bangalore, the capital of Karnataka has made great strides in the field of IT and BT, being home to virtually every major IT company of the world. Greater opportunities, rising income levels coupled with a salubrious climate have all contributed to increasing Bangalore’s population beyond seven million. Consequently, the city infrastructure is severely stressed with reduced road space, per capita availability of civic services and general quality of life. There is an urgent need to improve the infrastructure in terms of better roads, water supply and drainage system, more parking facilities for vehicles, better illumination of streets, scientific disposal of solid waste and greater green coverage. All these require investment of a much higher order than is available. However, a recent report of RBI on Municipal Finance in India indicates that per capita revenue of Bangalore, compared to other major cities, is the lowest. (Annexure-1)
There is a mismatch between the resources required to keep up with the growth of Bangalore especially after formation of the BBMP, and the resources available. BBMP as the provider of civic services to the citizens is thus, continually faced with the huge challenge of bridging this resource gap. This budget attempts to address the critical needs of the city and find the required resources.
Improved Disclosure :
Unlike in the previous years, this budget document includes eight separate volumes (subsidiary statements) to make the BBMP Budget more transparent, intelligible and informative. This is an era of Right to Information and most of the applications received from citizens pertain to the activities undertaken by BBMP. In order to facilitate dissemination of information about the programmes of BBMP in an easy and comprehensible manner, the following documents are being brought out for the first time along with the budget.
1) Annual Financial Statement (AFS)
2) Budget Highlights
3) Appendix ‘B’ to the Budget (Pay and allowances of various positions)
4) Budget Memorandum ( debt liability)
5) Appendix ‘E’ – List of on-going works
6) Appendix ‘E’ – Programme of new works
7) Special Component Plan (18% Works and Welfare Schemes)
8) Action Taken Report (ATR) in respect of 07-08 Budget
Review of BBMP’s Finances :
The revised estimates for receipts and expenditure for the year 2007-08 work out to Rs 1900 Crores and Rs 2036 Crores, as against the BE provision of Rs.3302 Crores and Rs.3317 Crores, respectively.
The shortfall in anticipated receipts during the 07-08 is on account of the following :
Property Tax :
The property tax collection has fallen below the budget target of Rs.610 crores as nearly 3 lakh properties are still outside the tax net and no revision of property tax rates have taken place in the last eight years. Increased coverage was anticipated through the regularization of such properties under the Sakrama Scheme. Moreover, the collection of arrears of tax is low, as the entire revenue machinery is engaged in election related duties since November 2007.
Other Cesses / Fees :
Storm Water Drain Cess (@ 10% of property tax) was envisaged to be introduced in lieu of the Education Cess to fund the SWD Projects. However, in the absence of an elected body both at the ULB and State level, the required amendment to the KMC Act has been deferred. Similarly, Impact Fee has also been deferred for the same reason. The total short fall is Rs.71 crores.
Improvement Charges :
There is a shortfall of Rs 38 crores in collection of improvement charges due to Sakrama Scheme, which envisages levy of similar fees/penalties.
Sakrama Scheme :
Shortfall in collection of fees of Rs 137 Crores as the scheme is under litigation. Moreover, the fee structure is also under revision by the Government.
Income from land leases :
BBMP has leased a large number of properties to various bodies. The lease rent collected is a mere Rs 1.5 crores, which is far less in comparison to market potential. While BBMP will make efforts to improve collections from lease rentals, the major constraint is that the lease rates are under long term agreements ranging from 30 to 99 years.
JNNURM Scheme :
The total allocation for Karnataka under JNNURM is only Rs.1737 crores to be shared between Bangalore and Mysore. BBMP has got 19 projects approved under the scheme. As against anticipated receipts of Rs. 600 Crores, the actual receipt is Rs. 119.00 Crores during the year.
Overall there has been a shortfall of Rs 1402 Crores in the projected receipts during 2007-08. However, this has been the trend in Receipts of BBMP over the last ten years. The gap in some years is as high as 40% resulting in un-fulfillment of certain assurances made.
Significant strides in other receipts :
Advertisement tax :
There is a substantial jump in revenues from Advertisement tax and lease rights. The total receipts is Rs 70 Crores as against last year’s collection of Rs 9 Crores, i.e. a record increase of 800%. This has been possible due to streamlining of the advertisement rights through introduction of tender cum auction and better enforcement of the Bye Laws.
Non tax receipts :
The non tax revenues have also increased substantially to Rs. 288 Crores as against Rs. 110 Crores during the previous year (162% appreciation) mainly because revision of various long standing fees pertaining to issue of building license, ground rent, Khatha transfer, improvement charges, user charges, etc as well as better monitoring of their levy and collection.
In view of this, total revenue realization has by far exceeded the figures of the previous year and consequently a large number of fresh works could be taken up in the new areas. The Capital Expenditure of Rs 2036 Crores during 2007-08 is substantially higher compared to the previous year (Rs. 1089 crores), i.e., a growth of 87%.
Significant achievements in 07-08 :
For the first time we are making effort to present an Action Taken Report (ATR) on the budget assurances of 07-08. Some of the significant achievements during 2007-08 are given below :
• BBMP received National Award under JNNURM for improvement in delivery of municipal services for 2007-08 from Government of India for Storm Water Drains.
• Advertisement tax revenue of BBMP increased from Rs 9.98 crores (2006-07) to Rs 67 Crores in 2007-08 accounting for 800% growth.
• Own Non-Tax Receipts of BBMP increased from Rs 110 crores (2006-07) to Rs 288 Crores in 2007-08 accounting for 162% growth.
• Storm Water Drains – 113 critical and vulnerable areas prone to flooding have been tackled - BBMP’s efforts appreciated by Lok Adalat.
• Drive for clearance of encroachment of Raja Kaluve - More than 20 acres of prime land has been reclaimed around valleys.
• Long standing and recurring problems of the flood prone areas of Bangalore such as Puttenahalli, Nayandahalli, Silk Board Junction, Bhadrappa layout, Victoria lay out, Kamakya theatre, Bandeppa Colony, Arakere lay out, Air-port road flyover junction, MES area at Challagahatta, etc got addressed during current year.
• 683.50 kms of roads asphalted and upgraded.
• 128.8 kms of concrete roads added.
• 4665 kms of roads repaired / asphalted. Out of this, 1753 kms of roads tackled in the new zones.
• Widening of four major roads viz., Bellary Road, Palace Road, Race Course Road, Hosur Laskar Road commenced.
• The technology of Segmented Box Elements improvised by BBMP for creation of Underpasses and Surface passes. An underpass at Kaveri theatre junction completed in record time.
• Work of creation of Underpasses and Overpasses on Bellary road initiated to make it signal free.
• Malleswaram grade separator leading to Sampige Road opened.
• 19439 Sodium / Mercury Vapour lights and 95 High Mast lights installed.
• 5410 borewells being maintained in the New Zones including 410 new borewells added for water supply.
• 90 Rain water harvesting units set up in BBMP parks.
• Group Insurance for auto rickshaw drivers operationalised – premium of Rs.265 per driver payable by BBMP.
• 2893 SC/ST and 5554 BCM beneficiaries trained in gainful activities (computer software, driving training etc.).
• 10,000 women beneficiaries trained in tailoring / knitting / embroidery / coir craft for gainful employment.
• 22,000 students in 133 schools have been given nourishing mid-day meal every day. Similarly, 6846 senior citizens are provided with nourishing meals daily under Akshaya Patra Scheme in partnership with ISKCON.
• Subsidy given to 514 beneficiaries for vehicles under self employment scheme.
• Sports facilities built at Brindavan Nagar (Rajiv Gandhi Sports Complex), Dr. Ambedkar Stadium Basaveshwarnagar, Kittur Rani Chennamma Complex.
• Aryoga melas conducted in six referral hospitals.
• Animal Birth Control (ABC) for dogs extended to five new zones and implemented through NGO’s.
• Madilu (Post Natal Kits) and Sanjivini (nourishment) schemes operationalised in maternity homes.
• Birth and Death records between 1947-2005 computerized.
• Construction of 200 transit sheds completed. Construction of 250 dwelling units in five slums taken up.
• 538 parks upgraded and maintained.
• 1,35,000 saplings planted, 80 fully grown trees transplanted.
BUDGET PROPOSALS :-
In pursuance of the Vision Statement of Bangalore as envisaged in the City Development Plan to retain its position as a City of the Future, BBMP proposes to strive at a planned and equitable development of various localities of Bangalore, including the newly added zones. The Budget envisages consolidation of the integration process of these zones and 110 villages which started in 2007, through unified administrative structure and standardized service delivery. The thrust areas for 2008-09 will be improved city infrastructure, cleaner and greener environment, basic services for the urban poor and better services for improved quality of life for all.
Estimated Tax Receipts for 08-09 :
The tax sources of BBMP are quite limited. With the abolition of Octori and non transfer of Professional tax and Entertainment taxes to Urban Local bodies, there are very few own sources of revenue available with BBMP. The removal of additional stamp duty of 2 % and replacing it with only a 2% surcharge on the stamp duty, has resulted in reduction of receipts from this source alone by 90%. The two important sources of Tax revenue with BBMP are the Property tax and the Advertisement tax. Keeping in mind these constraints, I am happy to inform you that due care has been taken to project realistic estimates of receipts for the year 2008-09.
Property Tax :
The estimated Property tax receipt for 08-09 is Rs 605 Crores. As mandated by law, BBMP will be collecting the property tax under Capital Value System (CVS) from assessment year 08-09 for all properties. CVS method of computing property tax is not new to the five new zones which have come under the fold of the Corporation after the creation of BBMP. However, in the three zones of erstwhile BMP, the Annual Rental Value (ARV) system is still being followed. But, as the KMC Act does not provide for ARV system of Property Tax assessment and a uniform tax system needs to be introduced in the entire jurisdiction of BBMP, we are implementing the CVS system of tax assessment in the BBMP area. The transition to the new property tax assessment system in Bangalore will not be smooth and easy. But, no efforts will be spared to spread greater awareness about the scheme and help the property owners to file the tax returns without any hassle. A Hand book containing all relevant information about the tax rates, property guidance values, model calculations and Frequently Asked Questions (FAQs) will be released soon. Similarly, a Tax Calculator will be available in the BBMP’s website for online computation and payment of tax.
It may be noted that shifting over to CVS system of property tax assessment will not put additional tax burden on every property owner. Some may pay less tax than what they have been paying under the ARV system. Greater revenue realization is, however, anticipated by increasing the coverage, ie., bringing more properties under the tax net. Nearly three lakh properties are expected to be regularized under the “Regularisation of certain Unauthorized Developments or Constructions Scheme” (Sakrama), initiated by the Government. After regularization, these properties will be taken up for assessment of tax. Similarly, tax enforcement will be taken up intensively to minimize non/under assessment of tax.
Further, BBMP will be availing the help of latest technology to improve its tax revenues. The GIS based mapping of properties has been completed in 30 wards in East, West and South Zones. In the five new zones, this work is nearing completion.
Intensive survey will be taken up in all other wards including the newly added areas to complete GIS database for property taxation. To facilitate easy computation and payment of tax, a web enabled tax calculator will be introduced for on line calculation of tax and remittance of payment. BBMP will encourage the tax payers to avail of this facility apart from the services offered by the Citizen Centers and Bangalore One Centers, conforming to the IT culture in the city.
Advertisement Tax - Auctioning of advertisement rights of LED boards, displays on electric poles on arterial roads, bus bays etc., is likely yield substantial revenue from advertisement. Better enforcement is envisaged through Radio Frequency Detection (RFD) devices attached to the bill boards in place of the strips indicating the BBMP permission to display. Expected revenue from advertisement tax and license fees is Rs 91 crores.
NON TAX REVENUES :
Sakrama fees – More than three lakhs properties are expected to be regularized under the scheme. The likely inflow to the Infrastructure Fund on account of fees/penalty will be Rs.100 crores.
Trade Licenses – Renewal of annual trade licenses through self assessment has been streamlined with the help of FKCCI. This move on the part of BBMP has been appreciated by the traders and Hoteliers associations. The licensing procedures have been made simple and easy to increase compliance by the trades.
License Fees - Various town planning fees and charges have been revised during 2007. This will yield additional revenue of Rs.80 crores.
The total non tax revenues are likely to go up to Rs.250 crores.
GRANTS
The divisible pool of SFC has increased by Rs. 500 Crores as per the State Budget. Hence the devolution in favour of BBMP is expected at Rs.400 Crores. However, unlike the previous year, no special development grant is envisaged for improvement of civic amenities in the newly added areas. The only other grant will be in terms of the contribution from both Government of India and Government of Karnataka for the on going JNNURM Projects to the tune of Rs.356 Crores. BBMP will raise matching resources to fund projects through borrowings.
The total estimated receipts for 2008-09 are Rs 2842.48 crores and the same is reflected in the Annual Finance Statement.
UTILISATION OF RESOURCES
In a major thrust towards improvement of infrastructure and better quality of life in Bangalore, BBMP proposes a total outlay of Rs.2918.71 crores during 2008-09. Capital investments account for 57 percent of this outlay. Salaries and Administrative expenses add up to 20 percent, with a marginal increase of only 2 percent over the previous year. A substantial investment of Rs.600 crore is envisaged on Welfare schemes, Education and Health sector.
Infrastructure initiatives for smoother flow of traffic :
Road widening
91 roads for a stretch of 144 kms identified for widening in a phased manner. Land is to be acquired under TDR scheme. Widening of following roads will be completed during the year:
• Bellary Road
• Race Course Road
• Palace Road
• Seshadri road
In addition, widening of the following other roads will be taken up:
• Kasturba Road
• Nrupathunga Road
• Hosur Road (Lalbagh Main gate to Yankee factory)
• Hosur-Laskar Road
• Jaya Mahal road
• Airport Road
• Mysore Road (from Sirsi Circle to Ring Road)
• Padarayanapura main road
• Lower Agaram Road (HOSMAT to National Games Village, Koramangala)
• Sarjapura Road (Kendriya Sadana upto Ring Road cross)
• Hennur Road (Pottery road to Ring road)
• Banaswadi Road
• Wheeler Road
An allocation of Rs.40 crore is made in the budget in this regard.
Major infrastructure initiatives :
Mysore Road Elevated Corridor from Sirsi Circle upto Kengeri – Mysore Road is a major corridor connecting Bangalore to Mysore, which has been upgraded to a four lane road from Kengari onwards. However, within the city, a large number of intersections on this road severely restrict movement of vehicles. For smoother flow of traffic, an elevated corridor from Sirsi Circle to Kengari is proposed for an approximate length of 10.2 kms. The estimated traffic density is more than 15,000 PCUs a day. An initial allocation of Rs.15 crores is made.
Elevated corridor from Rajajinagar entrance to Yashwanthpur Junction (Dr. Rajkumar Road)
Dr. Rajkumar Road is one of the busiest roads in the city which acts as a link between Tumkur Road and city center. To accommodate the growing volume of traffic and facilitate signal free movement, an elevated corridor is proposed for an approximate length of 3.20 kms with a Budgetary provision of Rs.15 crores.
Elevated Road using structural steel along JC Road (Minerva Circle to Hudson Circle)
It is again one of the busiest roads radiating from city center to the southern part, with a one way movement. In order to facilitate bidirectional movement of traffic along this corridor, especially for light vehicles, it is proposed to construct a 1.5 km long elevated corridor made of steel. Rs.20 crore is provided in the budget for this purpose.
Formation of Road between Rajiv Gandhi Circle (Platform Road) and Srirampuram under bridge (behind Mantri Greens)
This proposed road will give direct access to Yashwanthpur from the Platform road along the Railway parallel line. This four lane bidirectional road with an approximate length of 700 mtrs, will substantially reduce the traffic congestion on the Sampige Road. It is proposed to have 1.2 mtr wide central median and 1.5 mtr, wide footpath on either side of this road. The budget provision is Rs.2 crores.
Underpasses / Grade Separators
The following projects approved under JNNURM have been taken up :
• Gali Anjanaya Temple junction
• Yeshwanthpur circle
• Nagavara - Ring Road junction
• Hennur- Banasavadi Ring Road
• Kadirenahalli Ring road
• Puttenhalli Ring road
• Prof C N R Rao circle
• Tagore circle
Under Pass using Pre-Cast Segment
In addition, 46 locations have been identified for construction of underpasses using prefabricated element technology to give immediate relief at these busy junctions. Work has commenced in three places, such as BDA Junction, CBI Junction and Ananda Nagar. Other important junctions identified are:
• Windsor Manor Junction
• Kanakapura Road Ring Road junction
• JP Nagar
• Bannerghatta
• Kamakya Theatre
• Shivananda Store junction
• Race Course Road junction
• Lalbagh Road – Siddaiah Road junction (near Urvashi theatre)
• Nayandahalli bus stop junction
Pedestrian Subways
Construction of Pedestrian Subways at Vijayanagar and Town Hall is underway and will be completed shortly. Further 36 Pedestrian Subways using the precast segmented technology are contemplated at important locations like:
• Cauvery Bhavan
• Lalbagh Main gate
• KG Road (Aryabhavan)
• Tumkur Road (RNS Motors)
• JC Road (Ravindra Kalakshetra)
• Race Cource Road (Chalukya Hotel)
• Airport Road, (Marath Halli Junction)
• Palace Road (Mount Carmel College)
• Bharatiya Vidhya Bhavan (Devaraj Urs Road)
ROBs/RUBs - Construction of ROB’s and RUB’s across the railway lines locations will be taken up in collaboration with the Railways on deposit contribution basis at:
• Hoodi Devasandra (Jolarpet Chennai Railway line)
• Allalasandra
• Bapujinagar Pipe line road
• Jalahalli MES
• Virupakshapura
• Srirampuram
• Gangappa-Narasimhaiah Compound in Binnypet
The Budgetary provision for all these road related infrastructure is Rs 450 Crores.
Storm Water Drains - DPR’s have been prepared for construction/remodeling of SWD network especially in the new areas and submitted to Government of India for funding under JNNURM. The on-going works in the four major valley’s namely; Challaghatta, Koramangala, Vrushabavathi and Hebbal will be expedited during the year. More emphasis will be given to diverting sewage from entering the SWD’s and for this purpose, setting up of 13 Sewage Treatment Plants have been envisaged at select locations. After secondary treatment, the water will be released to the SWD to keep up the flow and minimize flooding. Constructions of bridges and culverts over SWD’s at 25 locations will be taken up and completed, using precast segmented technology.
BBMP intends to develop a portion of Vrushabavathi Valley into a model river front on the lines of the Sabarmathi River Valley Development project.
Total allocation for SWD is Rs. 204 crores.
Road Over Storm Water Drains – Four such roads are proposed to be taken up under the Swiss Challenge method at the following stretches:
• KH Road to Inner Ring Road of Koromangala (5.10 Kms)
• Old Madras Road to Airport Road in Challghatta valley (2.70 Kms)
• Airport Road to Bellandur Tank in Challghatta valley (4.20 Kms)
• Outer Ring Road to Raja Canal STP of Hebbal Valley (2.70 Kms)
Skywalks, Bus Stops and Public Toilets:
In order to help pedestrians to cross the increasingly busy roads, elevated skywalks with citizen friendly escalators are envisaged at 36 locations. The project will be executed on a BOT basis, where the funding will be through Advertisement rights over the concession period. These will be auctioned for better transparency and competition.
BBMP recognizes the need to facilitate Public Transport to reduce the congestion on the city roads on account increasing number of private vehicles, especially the two wheelers. Apart from road widening to create more space for the buses to ply, 1100 Bus stops are proposed to be constructed along all major roads to help the bus commuters. These will be funded by auction of Advertisement rights and executed on BOT basis.
BBMP gratefully acknowledges the PPP initiative taken in the past under the Nirmala Nagara programme to construct Pay and use Public Toilets. These have been very useful to the
public in terms of convenience and hygiene. However, many of these toilets are in need of repairs and renovation. BBMP proposes Rs 50 lakhs for repairs and maintenance of these toilets. Additionally 40 modern public toilets are proposed to be constructed on BOT basis through advertisement rights.
Development of New zones
During 2007-08, BBMP has taken up a number of developmental works in the newly added zones towards provision of better roads, drains, street lights, water supply and waste disposal. As against a total expenditure of Rs 116 Crores incurred during the Year 2006-07 by all the erstwhile CMCs, BBMP has approved works worth Rs 401 Crores (3958 works) during 2007-08, i.e. an increase of 245% over the previous year. On completion of these works, the concerned localities will benefit directly on account of BBMP formation. In further recognition of the need to provide better infrastructure and civic services, a fresh allocation of Rs. 225 Crores is made in the Budget. Admittedly, this provision is inadequate to fulfill the aspirations of these areas, especially to bring them on par with the core areas of Bangalore. However, additional works will be taken up depending on the buoyancy of resources in course of the year.
Significantly however, a specific provision has been made for improvement of the approach roads to the villages integrated with BBMP. Rs 20 Crores have been provided for this purpose. One such road identified for up-gradation is the link from Banaswadi- Bharmau- Jayanthigram- Khanisandra up to Billasival Rampura Cross over a stretch of 7 Kms.
Welfare Measures :
SC / ST Welfare :
For the first time a provision exceeding Rs. 205 Crores has been made in the BBMP budget for the Welfare of the SC/ST community. While ensuring that statutory allocation of 18% under the Government directive is met with, due care is given to carry over the unspent balance amount of previous years too. In order to ensure full and effective utilization of the funds provided, inter-se allocation among various welfare schemes is left to respective Zones depending upon the local needs. With a view to assessing the needs of the local communities, a consultation process was initiated with civil societies and stake holders and a lot of constructive suggestions were received. Based on these interactions, the following new schemes are envisaged during 2008-09:
• Training program to acquire BPO / Call Centre working skills.
• English Speaking Course and Capacity Building training programme
• Training in Para-Medical courses like Ophthalomology, Lab technician, Physiotherapy, Radiology etc.
• Improvements to SC/ST Hostels run by Social Welfare Department, GoK.
• Economic support Dr. Ambedkar Development Corporation for micro credit project.
• Deputation of bright SC/ST students of Middle & High school to recognised residential schools like Ramakrishna Ashram, Visheshwariah Residential schools etc.
• Medical aid/services to victims of natural calamity/riots / atrocities.
• Grants to Educational Institutions run by SC/ST managements
• Insurance Scheme for Safai Karmacharies, Cobblers etc.
• Financial assistance for construction of new houses in association with Rajiv Gandhi Rural Housing Corporation Limited.
• Insurance Scheme for Slum Dwellers.
Each BBMP zone have been allocated Rs.8 crore and a total provision of Rs.64 crore is made in the budget to promote these welfare activities. Similarly, various engineering works are proposed to be taken up for the benefit of the SC/ST communities at a total outlay of Rs.70 crores. Further an additional outlay of Rs. 4 crores has been made to the reserved assembly segments keeping in view the local needs. Some of the important works proposed are:
• Construction of community halls.
• Construction of community toilets.
• Construction of New Anganwadi Schools in slum areas.
• Purchase of land for construction of dwelling units/rehabilitation of slum dwellers.
• Upgradation of school buildings for provision of drinking water, library, toilets.
• Construction of additional class rooms in schools with greater population of SC/ST students.
In addition, other major works proposed include:
• Construction of Dr. B.R. Ambedkar Bhavan in each of the five new Zones for which an allocation of Rs. 5 crores has been made.
• A Pourakarmika Bhavan will also be constructed for which an allocation of Rs. 1 crore has been made.
Welfare of women :
The major initiatives include the following :
• Opening of an Apparel Training and Design Centre (GOI entrepreneurship) in order to train women in new Garment technology for better job opportunities.
• Sponsoring of eligible women beneficiaries for training in the National Institute for Fashion Technology (NIFT)
• Help Centres for destitutes, abused and oppressed women to be opened with the help of NGO’s.
• Free Health Kits for women, Pourakarmikas to improve their general health, hygiene and well being.
• Financial Assistance to self help groups (SHG’s) for their self employment.
• Improvement and maintenance of Anganwadis within BBMP jurisdiction.
Other schemes :
• A new scheme for the Welfare of Sexual Minorities through NGO’s will be initiated.
• BBMP will continue to provide mid-day meal to senior citizens at select locations. In addition, Medical Care program will be introduced for the benefit of Urban Poor.
• One Service Center for the benefit of the physically challenged will be opened in each zone in association with NGO’s.
The total allocation for the welfare of Backward Classes, Minorities, Women and others is Rs. 32 crores.
Welfare of Urban Poor :
BBMP has 324 slums under its jurisdiction with a sizable population of urban poor. Housing for these poor with water supply, sanitation and other amenities is a crying need of the hour. BBMP has got housing projects approved under the JNNURM at 18 slums for creation of 1774 dwelling units for the beneficiaries. Each apartment unit will have a bed room, hall, kitchen and toilet over an area of 275 sft. 200 Transit accommodations have already been constructed for in-situ development in 4 slums. 250 dwelling units are under advanced stage of construction in the following five slums:
• Bakshi Garden slum
• Kalyani slum
• Kodihalli slum
• Jasma Bhavan slum
• Netaji Subhash Chandra Bose slum
These will be ready for occupation shortly.
BBMP has also entered into an MOU with the Police Housing Corporation for construction of 1524 dwelling units for 7170 beneficiaries in the following slums:
• Ambedkar Slums (in four wards).
• Muniyappa Garden slums.
• Gopalapura slum.
• Indira Gandhi slum.
• Urs Colony.
• Vinobhanagar slum.
• R K Mutt slum.
• Gautam Colony.
• Samatha Nagar slum.
• Ananthashram slum.
The total allocation for slum improvement works is Rs 77 Crores.
Education & Sports
BBMP recognizes the need to impart better education to the students studying in its schools, who are basically from the poorer section of the society. In this direction, the mid-day meal scheme and special coaching will be continued. Additionally, health check up for children studying in the Corporation schools will be introduced from this year. The pass percentage has increased from 48% to 58% during the year. BBMP will strive to improve the pass percentage to above 75%. The education budget has been doubled over the previous year’s spending to Rs. 58 crores.
In order to promote sports, construction of New Stadia in the new zones of BBMP will be taken up for which an allocation of Rs 5 crores has been made.
Health
• A new Engineering wing under the Health Department will be created in order to provide Health Infrastructure in the newly added areas. Construction of Maternity Homes in each of the new zones will be undertaken.
• Byelaws for Domestic Dog Control Programme will be introduced.
• Training of Medical Officers of Health and Hoteliers will be conducted on Health and Hygiene under the prevention of Food adulteration.
• A report on surveillance of Public Health will be brought out and published every week for the benefit of the Citizens.
• Managed Health Care with agencies such as ‘Medi Assist’ will be taken up. A pilot project will be launched in June ‘08 in Bommanahalli zone.
• In order to ensure that the Urban Poor living in the City have access to medical treatment which they cannot afford, BBMP will open Evening Health Clinics across its jurisdiction. These clinics will provide OPD facilities and will be open between 5.30 PM to 8.30 PM every day, manned by doctors taken on contract basis.
Crematoria & Burial Grounds :
• A new crematorium at Chamarajpet will be completed in May 2008. Further, construction of crematoria, one in each of the five new zones will be taken up at total outlay of Rs. 5 crores.
• For better management and upkeep of burial grounds, BBMP has entered into an MOU with Vaikutadham trust as a PPP initiative. Maintenance of 3 burial grounds has been taken up initially under this initiative.
Solid Waste Management :
• The City generates more than 3000 Tonnes of Solid Waste a Day. Disposal of Solid Waste is a stupendous task as existing capacity of land fills is insufficient to
meet the requirement. During the coming year, BBMP will augment the land fill capacity to 3000 tonnes.
* BBMP has entered into MOU with Terrafirma to process 1000 metric tonnes a day at their disposal site in Doddaballapur.
* Waste to Energy project of M/s SGRRL will process 500 tonnes initially and subsequently increasing to 1000 tonnes from April 2008 which is taken up on BOT.
* Land fill at Rajarajeshwarinagar near Kumbalgod to dispose dry waste. Will be made operational by September 2008.
* KCDC will also increase the capacity from 300 Metric Tonnes a day to 600 metric tonnes a day.
* A Master Plan for MSW Management is being prepared by IDECK and Project Reports will be prepared for submission for funding under the JNNURM.
* 2 Transfer Stations on BOT have been proposed at Hennur and Devara Chikkanahalli.
Litter Cops will be appointed from members of the Territorial Army.
Bangalore has been firmly established as the “Future City” of an emergent India. As a technology hub, Bangalore, the capital of Karnataka has made great strides in the field of IT and BT, being home to virtually every major IT company of the world. Greater opportunities, rising income levels coupled with a salubrious climate have all contributed to increasing Bangalore’s population beyond seven million. Consequently, the city infrastructure is severely stressed with reduced road space, per capita availability of civic services and general quality of life. There is an urgent need to improve the infrastructure in terms of better roads, water supply and drainage system, more parking facilities for vehicles, better illumination of streets, scientific disposal of solid waste and greater green coverage. All these require investment of a much higher order than is available. However, a recent report of RBI on Municipal Finance in India indicates that per capita revenue of Bangalore, compared to other major cities, is the lowest. (Annexure-1)
There is a mismatch between the resources required to keep up with the growth of Bangalore especially after formation of the BBMP, and the resources available. BBMP as the provider of civic services to the citizens is thus, continually faced with the huge challenge of bridging this resource gap. This budget attempts to address the critical needs of the city and find the required resources.
Improved Disclosure :
Unlike in the previous years, this budget document includes eight separate volumes (subsidiary statements) to make the BBMP Budget more transparent, intelligible and informative. This is an era of Right to Information and most of the applications received from citizens pertain to the activities undertaken by BBMP. In order to facilitate dissemination of information about the programmes of BBMP in an easy and comprehensible manner, the following documents are being brought out for the first time along with the budget.
1) Annual Financial Statement (AFS)
2) Budget Highlights
3) Appendix ‘B’ to the Budget (Pay and allowances of various positions)
4) Budget Memorandum ( debt liability)
5) Appendix ‘E’ – List of on-going works
6) Appendix ‘E’ – Programme of new works
7) Special Component Plan (18% Works and Welfare Schemes)
8) Action Taken Report (ATR) in respect of 07-08 Budget
Review of BBMP’s Finances :
The revised estimates for receipts and expenditure for the year 2007-08 work out to Rs 1900 Crores and Rs 2036 Crores, as against the BE provision of Rs.3302 Crores and Rs.3317 Crores, respectively.
The shortfall in anticipated receipts during the 07-08 is on account of the following :
Property Tax :
The property tax collection has fallen below the budget target of Rs.610 crores as nearly 3 lakh properties are still outside the tax net and no revision of property tax rates have taken place in the last eight years. Increased coverage was anticipated through the regularization of such properties under the Sakrama Scheme. Moreover, the collection of arrears of tax is low, as the entire revenue machinery is engaged in election related duties since November 2007.
Other Cesses / Fees :
Storm Water Drain Cess (@ 10% of property tax) was envisaged to be introduced in lieu of the Education Cess to fund the SWD Projects. However, in the absence of an elected body both at the ULB and State level, the required amendment to the KMC Act has been deferred. Similarly, Impact Fee has also been deferred for the same reason. The total short fall is Rs.71 crores.
Improvement Charges :
There is a shortfall of Rs 38 crores in collection of improvement charges due to Sakrama Scheme, which envisages levy of similar fees/penalties.
Sakrama Scheme :
Shortfall in collection of fees of Rs 137 Crores as the scheme is under litigation. Moreover, the fee structure is also under revision by the Government.
Income from land leases :
BBMP has leased a large number of properties to various bodies. The lease rent collected is a mere Rs 1.5 crores, which is far less in comparison to market potential. While BBMP will make efforts to improve collections from lease rentals, the major constraint is that the lease rates are under long term agreements ranging from 30 to 99 years.
JNNURM Scheme :
The total allocation for Karnataka under JNNURM is only Rs.1737 crores to be shared between Bangalore and Mysore. BBMP has got 19 projects approved under the scheme. As against anticipated receipts of Rs. 600 Crores, the actual receipt is Rs. 119.00 Crores during the year.
Overall there has been a shortfall of Rs 1402 Crores in the projected receipts during 2007-08. However, this has been the trend in Receipts of BBMP over the last ten years. The gap in some years is as high as 40% resulting in un-fulfillment of certain assurances made.
Significant strides in other receipts :
Advertisement tax :
There is a substantial jump in revenues from Advertisement tax and lease rights. The total receipts is Rs 70 Crores as against last year’s collection of Rs 9 Crores, i.e. a record increase of 800%. This has been possible due to streamlining of the advertisement rights through introduction of tender cum auction and better enforcement of the Bye Laws.
Non tax receipts :
The non tax revenues have also increased substantially to Rs. 288 Crores as against Rs. 110 Crores during the previous year (162% appreciation) mainly because revision of various long standing fees pertaining to issue of building license, ground rent, Khatha transfer, improvement charges, user charges, etc as well as better monitoring of their levy and collection.
In view of this, total revenue realization has by far exceeded the figures of the previous year and consequently a large number of fresh works could be taken up in the new areas. The Capital Expenditure of Rs 2036 Crores during 2007-08 is substantially higher compared to the previous year (Rs. 1089 crores), i.e., a growth of 87%.
Significant achievements in 07-08 :
For the first time we are making effort to present an Action Taken Report (ATR) on the budget assurances of 07-08. Some of the significant achievements during 2007-08 are given below :
• BBMP received National Award under JNNURM for improvement in delivery of municipal services for 2007-08 from Government of India for Storm Water Drains.
• Advertisement tax revenue of BBMP increased from Rs 9.98 crores (2006-07) to Rs 67 Crores in 2007-08 accounting for 800% growth.
• Own Non-Tax Receipts of BBMP increased from Rs 110 crores (2006-07) to Rs 288 Crores in 2007-08 accounting for 162% growth.
• Storm Water Drains – 113 critical and vulnerable areas prone to flooding have been tackled - BBMP’s efforts appreciated by Lok Adalat.
• Drive for clearance of encroachment of Raja Kaluve - More than 20 acres of prime land has been reclaimed around valleys.
• Long standing and recurring problems of the flood prone areas of Bangalore such as Puttenahalli, Nayandahalli, Silk Board Junction, Bhadrappa layout, Victoria lay out, Kamakya theatre, Bandeppa Colony, Arakere lay out, Air-port road flyover junction, MES area at Challagahatta, etc got addressed during current year.
• 683.50 kms of roads asphalted and upgraded.
• 128.8 kms of concrete roads added.
• 4665 kms of roads repaired / asphalted. Out of this, 1753 kms of roads tackled in the new zones.
• Widening of four major roads viz., Bellary Road, Palace Road, Race Course Road, Hosur Laskar Road commenced.
• The technology of Segmented Box Elements improvised by BBMP for creation of Underpasses and Surface passes. An underpass at Kaveri theatre junction completed in record time.
• Work of creation of Underpasses and Overpasses on Bellary road initiated to make it signal free.
• Malleswaram grade separator leading to Sampige Road opened.
• 19439 Sodium / Mercury Vapour lights and 95 High Mast lights installed.
• 5410 borewells being maintained in the New Zones including 410 new borewells added for water supply.
• 90 Rain water harvesting units set up in BBMP parks.
• Group Insurance for auto rickshaw drivers operationalised – premium of Rs.265 per driver payable by BBMP.
• 2893 SC/ST and 5554 BCM beneficiaries trained in gainful activities (computer software, driving training etc.).
• 10,000 women beneficiaries trained in tailoring / knitting / embroidery / coir craft for gainful employment.
• 22,000 students in 133 schools have been given nourishing mid-day meal every day. Similarly, 6846 senior citizens are provided with nourishing meals daily under Akshaya Patra Scheme in partnership with ISKCON.
• Subsidy given to 514 beneficiaries for vehicles under self employment scheme.
• Sports facilities built at Brindavan Nagar (Rajiv Gandhi Sports Complex), Dr. Ambedkar Stadium Basaveshwarnagar, Kittur Rani Chennamma Complex.
• Aryoga melas conducted in six referral hospitals.
• Animal Birth Control (ABC) for dogs extended to five new zones and implemented through NGO’s.
• Madilu (Post Natal Kits) and Sanjivini (nourishment) schemes operationalised in maternity homes.
• Birth and Death records between 1947-2005 computerized.
• Construction of 200 transit sheds completed. Construction of 250 dwelling units in five slums taken up.
• 538 parks upgraded and maintained.
• 1,35,000 saplings planted, 80 fully grown trees transplanted.
BUDGET PROPOSALS :-
In pursuance of the Vision Statement of Bangalore as envisaged in the City Development Plan to retain its position as a City of the Future, BBMP proposes to strive at a planned and equitable development of various localities of Bangalore, including the newly added zones. The Budget envisages consolidation of the integration process of these zones and 110 villages which started in 2007, through unified administrative structure and standardized service delivery. The thrust areas for 2008-09 will be improved city infrastructure, cleaner and greener environment, basic services for the urban poor and better services for improved quality of life for all.
Estimated Tax Receipts for 08-09 :
The tax sources of BBMP are quite limited. With the abolition of Octori and non transfer of Professional tax and Entertainment taxes to Urban Local bodies, there are very few own sources of revenue available with BBMP. The removal of additional stamp duty of 2 % and replacing it with only a 2% surcharge on the stamp duty, has resulted in reduction of receipts from this source alone by 90%. The two important sources of Tax revenue with BBMP are the Property tax and the Advertisement tax. Keeping in mind these constraints, I am happy to inform you that due care has been taken to project realistic estimates of receipts for the year 2008-09.
Property Tax :
The estimated Property tax receipt for 08-09 is Rs 605 Crores. As mandated by law, BBMP will be collecting the property tax under Capital Value System (CVS) from assessment year 08-09 for all properties. CVS method of computing property tax is not new to the five new zones which have come under the fold of the Corporation after the creation of BBMP. However, in the three zones of erstwhile BMP, the Annual Rental Value (ARV) system is still being followed. But, as the KMC Act does not provide for ARV system of Property Tax assessment and a uniform tax system needs to be introduced in the entire jurisdiction of BBMP, we are implementing the CVS system of tax assessment in the BBMP area. The transition to the new property tax assessment system in Bangalore will not be smooth and easy. But, no efforts will be spared to spread greater awareness about the scheme and help the property owners to file the tax returns without any hassle. A Hand book containing all relevant information about the tax rates, property guidance values, model calculations and Frequently Asked Questions (FAQs) will be released soon. Similarly, a Tax Calculator will be available in the BBMP’s website for online computation and payment of tax.
It may be noted that shifting over to CVS system of property tax assessment will not put additional tax burden on every property owner. Some may pay less tax than what they have been paying under the ARV system. Greater revenue realization is, however, anticipated by increasing the coverage, ie., bringing more properties under the tax net. Nearly three lakh properties are expected to be regularized under the “Regularisation of certain Unauthorized Developments or Constructions Scheme” (Sakrama), initiated by the Government. After regularization, these properties will be taken up for assessment of tax. Similarly, tax enforcement will be taken up intensively to minimize non/under assessment of tax.
Further, BBMP will be availing the help of latest technology to improve its tax revenues. The GIS based mapping of properties has been completed in 30 wards in East, West and South Zones. In the five new zones, this work is nearing completion.
Intensive survey will be taken up in all other wards including the newly added areas to complete GIS database for property taxation. To facilitate easy computation and payment of tax, a web enabled tax calculator will be introduced for on line calculation of tax and remittance of payment. BBMP will encourage the tax payers to avail of this facility apart from the services offered by the Citizen Centers and Bangalore One Centers, conforming to the IT culture in the city.
Advertisement Tax - Auctioning of advertisement rights of LED boards, displays on electric poles on arterial roads, bus bays etc., is likely yield substantial revenue from advertisement. Better enforcement is envisaged through Radio Frequency Detection (RFD) devices attached to the bill boards in place of the strips indicating the BBMP permission to display. Expected revenue from advertisement tax and license fees is Rs 91 crores.
NON TAX REVENUES :
Sakrama fees – More than three lakhs properties are expected to be regularized under the scheme. The likely inflow to the Infrastructure Fund on account of fees/penalty will be Rs.100 crores.
Trade Licenses – Renewal of annual trade licenses through self assessment has been streamlined with the help of FKCCI. This move on the part of BBMP has been appreciated by the traders and Hoteliers associations. The licensing procedures have been made simple and easy to increase compliance by the trades.
License Fees - Various town planning fees and charges have been revised during 2007. This will yield additional revenue of Rs.80 crores.
The total non tax revenues are likely to go up to Rs.250 crores.
GRANTS
The divisible pool of SFC has increased by Rs. 500 Crores as per the State Budget. Hence the devolution in favour of BBMP is expected at Rs.400 Crores. However, unlike the previous year, no special development grant is envisaged for improvement of civic amenities in the newly added areas. The only other grant will be in terms of the contribution from both Government of India and Government of Karnataka for the on going JNNURM Projects to the tune of Rs.356 Crores. BBMP will raise matching resources to fund projects through borrowings.
The total estimated receipts for 2008-09 are Rs 2842.48 crores and the same is reflected in the Annual Finance Statement.
UTILISATION OF RESOURCES
In a major thrust towards improvement of infrastructure and better quality of life in Bangalore, BBMP proposes a total outlay of Rs.2918.71 crores during 2008-09. Capital investments account for 57 percent of this outlay. Salaries and Administrative expenses add up to 20 percent, with a marginal increase of only 2 percent over the previous year. A substantial investment of Rs.600 crore is envisaged on Welfare schemes, Education and Health sector.
Infrastructure initiatives for smoother flow of traffic :
Road widening
91 roads for a stretch of 144 kms identified for widening in a phased manner. Land is to be acquired under TDR scheme. Widening of following roads will be completed during the year:
• Bellary Road
• Race Course Road
• Palace Road
• Seshadri road
In addition, widening of the following other roads will be taken up:
• Kasturba Road
• Nrupathunga Road
• Hosur Road (Lalbagh Main gate to Yankee factory)
• Hosur-Laskar Road
• Jaya Mahal road
• Airport Road
• Mysore Road (from Sirsi Circle to Ring Road)
• Padarayanapura main road
• Lower Agaram Road (HOSMAT to National Games Village, Koramangala)
• Sarjapura Road (Kendriya Sadana upto Ring Road cross)
• Hennur Road (Pottery road to Ring road)
• Banaswadi Road
• Wheeler Road
An allocation of Rs.40 crore is made in the budget in this regard.
Major infrastructure initiatives :
Mysore Road Elevated Corridor from Sirsi Circle upto Kengeri – Mysore Road is a major corridor connecting Bangalore to Mysore, which has been upgraded to a four lane road from Kengari onwards. However, within the city, a large number of intersections on this road severely restrict movement of vehicles. For smoother flow of traffic, an elevated corridor from Sirsi Circle to Kengari is proposed for an approximate length of 10.2 kms. The estimated traffic density is more than 15,000 PCUs a day. An initial allocation of Rs.15 crores is made.
Elevated corridor from Rajajinagar entrance to Yashwanthpur Junction (Dr. Rajkumar Road)
Dr. Rajkumar Road is one of the busiest roads in the city which acts as a link between Tumkur Road and city center. To accommodate the growing volume of traffic and facilitate signal free movement, an elevated corridor is proposed for an approximate length of 3.20 kms with a Budgetary provision of Rs.15 crores.
Elevated Road using structural steel along JC Road (Minerva Circle to Hudson Circle)
It is again one of the busiest roads radiating from city center to the southern part, with a one way movement. In order to facilitate bidirectional movement of traffic along this corridor, especially for light vehicles, it is proposed to construct a 1.5 km long elevated corridor made of steel. Rs.20 crore is provided in the budget for this purpose.
Formation of Road between Rajiv Gandhi Circle (Platform Road) and Srirampuram under bridge (behind Mantri Greens)
This proposed road will give direct access to Yashwanthpur from the Platform road along the Railway parallel line. This four lane bidirectional road with an approximate length of 700 mtrs, will substantially reduce the traffic congestion on the Sampige Road. It is proposed to have 1.2 mtr wide central median and 1.5 mtr, wide footpath on either side of this road. The budget provision is Rs.2 crores.
Underpasses / Grade Separators
The following projects approved under JNNURM have been taken up :
• Gali Anjanaya Temple junction
• Yeshwanthpur circle
• Nagavara - Ring Road junction
• Hennur- Banasavadi Ring Road
• Kadirenahalli Ring road
• Puttenhalli Ring road
• Prof C N R Rao circle
• Tagore circle
Under Pass using Pre-Cast Segment
In addition, 46 locations have been identified for construction of underpasses using prefabricated element technology to give immediate relief at these busy junctions. Work has commenced in three places, such as BDA Junction, CBI Junction and Ananda Nagar. Other important junctions identified are:
• Windsor Manor Junction
• Kanakapura Road Ring Road junction
• JP Nagar
• Bannerghatta
• Kamakya Theatre
• Shivananda Store junction
• Race Course Road junction
• Lalbagh Road – Siddaiah Road junction (near Urvashi theatre)
• Nayandahalli bus stop junction
Pedestrian Subways
Construction of Pedestrian Subways at Vijayanagar and Town Hall is underway and will be completed shortly. Further 36 Pedestrian Subways using the precast segmented technology are contemplated at important locations like:
• Cauvery Bhavan
• Lalbagh Main gate
• KG Road (Aryabhavan)
• Tumkur Road (RNS Motors)
• JC Road (Ravindra Kalakshetra)
• Race Cource Road (Chalukya Hotel)
• Airport Road, (Marath Halli Junction)
• Palace Road (Mount Carmel College)
• Bharatiya Vidhya Bhavan (Devaraj Urs Road)
ROBs/RUBs - Construction of ROB’s and RUB’s across the railway lines locations will be taken up in collaboration with the Railways on deposit contribution basis at:
• Hoodi Devasandra (Jolarpet Chennai Railway line)
• Allalasandra
• Bapujinagar Pipe line road
• Jalahalli MES
• Virupakshapura
• Srirampuram
• Gangappa-Narasimhaiah Compound in Binnypet
The Budgetary provision for all these road related infrastructure is Rs 450 Crores.
Storm Water Drains - DPR’s have been prepared for construction/remodeling of SWD network especially in the new areas and submitted to Government of India for funding under JNNURM. The on-going works in the four major valley’s namely; Challaghatta, Koramangala, Vrushabavathi and Hebbal will be expedited during the year. More emphasis will be given to diverting sewage from entering the SWD’s and for this purpose, setting up of 13 Sewage Treatment Plants have been envisaged at select locations. After secondary treatment, the water will be released to the SWD to keep up the flow and minimize flooding. Constructions of bridges and culverts over SWD’s at 25 locations will be taken up and completed, using precast segmented technology.
BBMP intends to develop a portion of Vrushabavathi Valley into a model river front on the lines of the Sabarmathi River Valley Development project.
Total allocation for SWD is Rs. 204 crores.
Road Over Storm Water Drains – Four such roads are proposed to be taken up under the Swiss Challenge method at the following stretches:
• KH Road to Inner Ring Road of Koromangala (5.10 Kms)
• Old Madras Road to Airport Road in Challghatta valley (2.70 Kms)
• Airport Road to Bellandur Tank in Challghatta valley (4.20 Kms)
• Outer Ring Road to Raja Canal STP of Hebbal Valley (2.70 Kms)
Skywalks, Bus Stops and Public Toilets:
In order to help pedestrians to cross the increasingly busy roads, elevated skywalks with citizen friendly escalators are envisaged at 36 locations. The project will be executed on a BOT basis, where the funding will be through Advertisement rights over the concession period. These will be auctioned for better transparency and competition.
BBMP recognizes the need to facilitate Public Transport to reduce the congestion on the city roads on account increasing number of private vehicles, especially the two wheelers. Apart from road widening to create more space for the buses to ply, 1100 Bus stops are proposed to be constructed along all major roads to help the bus commuters. These will be funded by auction of Advertisement rights and executed on BOT basis.
BBMP gratefully acknowledges the PPP initiative taken in the past under the Nirmala Nagara programme to construct Pay and use Public Toilets. These have been very useful to the
public in terms of convenience and hygiene. However, many of these toilets are in need of repairs and renovation. BBMP proposes Rs 50 lakhs for repairs and maintenance of these toilets. Additionally 40 modern public toilets are proposed to be constructed on BOT basis through advertisement rights.
Development of New zones
During 2007-08, BBMP has taken up a number of developmental works in the newly added zones towards provision of better roads, drains, street lights, water supply and waste disposal. As against a total expenditure of Rs 116 Crores incurred during the Year 2006-07 by all the erstwhile CMCs, BBMP has approved works worth Rs 401 Crores (3958 works) during 2007-08, i.e. an increase of 245% over the previous year. On completion of these works, the concerned localities will benefit directly on account of BBMP formation. In further recognition of the need to provide better infrastructure and civic services, a fresh allocation of Rs. 225 Crores is made in the Budget. Admittedly, this provision is inadequate to fulfill the aspirations of these areas, especially to bring them on par with the core areas of Bangalore. However, additional works will be taken up depending on the buoyancy of resources in course of the year.
Significantly however, a specific provision has been made for improvement of the approach roads to the villages integrated with BBMP. Rs 20 Crores have been provided for this purpose. One such road identified for up-gradation is the link from Banaswadi- Bharmau- Jayanthigram- Khanisandra up to Billasival Rampura Cross over a stretch of 7 Kms.
Welfare Measures :
SC / ST Welfare :
For the first time a provision exceeding Rs. 205 Crores has been made in the BBMP budget for the Welfare of the SC/ST community. While ensuring that statutory allocation of 18% under the Government directive is met with, due care is given to carry over the unspent balance amount of previous years too. In order to ensure full and effective utilization of the funds provided, inter-se allocation among various welfare schemes is left to respective Zones depending upon the local needs. With a view to assessing the needs of the local communities, a consultation process was initiated with civil societies and stake holders and a lot of constructive suggestions were received. Based on these interactions, the following new schemes are envisaged during 2008-09:
• Training program to acquire BPO / Call Centre working skills.
• English Speaking Course and Capacity Building training programme
• Training in Para-Medical courses like Ophthalomology, Lab technician, Physiotherapy, Radiology etc.
• Improvements to SC/ST Hostels run by Social Welfare Department, GoK.
• Economic support Dr. Ambedkar Development Corporation for micro credit project.
• Deputation of bright SC/ST students of Middle & High school to recognised residential schools like Ramakrishna Ashram, Visheshwariah Residential schools etc.
• Medical aid/services to victims of natural calamity/riots / atrocities.
• Grants to Educational Institutions run by SC/ST managements
• Insurance Scheme for Safai Karmacharies, Cobblers etc.
• Financial assistance for construction of new houses in association with Rajiv Gandhi Rural Housing Corporation Limited.
• Insurance Scheme for Slum Dwellers.
Each BBMP zone have been allocated Rs.8 crore and a total provision of Rs.64 crore is made in the budget to promote these welfare activities. Similarly, various engineering works are proposed to be taken up for the benefit of the SC/ST communities at a total outlay of Rs.70 crores. Further an additional outlay of Rs. 4 crores has been made to the reserved assembly segments keeping in view the local needs. Some of the important works proposed are:
• Construction of community halls.
• Construction of community toilets.
• Construction of New Anganwadi Schools in slum areas.
• Purchase of land for construction of dwelling units/rehabilitation of slum dwellers.
• Upgradation of school buildings for provision of drinking water, library, toilets.
• Construction of additional class rooms in schools with greater population of SC/ST students.
In addition, other major works proposed include:
• Construction of Dr. B.R. Ambedkar Bhavan in each of the five new Zones for which an allocation of Rs. 5 crores has been made.
• A Pourakarmika Bhavan will also be constructed for which an allocation of Rs. 1 crore has been made.
Welfare of women :
The major initiatives include the following :
• Opening of an Apparel Training and Design Centre (GOI entrepreneurship) in order to train women in new Garment technology for better job opportunities.
• Sponsoring of eligible women beneficiaries for training in the National Institute for Fashion Technology (NIFT)
• Help Centres for destitutes, abused and oppressed women to be opened with the help of NGO’s.
• Free Health Kits for women, Pourakarmikas to improve their general health, hygiene and well being.
• Financial Assistance to self help groups (SHG’s) for their self employment.
• Improvement and maintenance of Anganwadis within BBMP jurisdiction.
Other schemes :
• A new scheme for the Welfare of Sexual Minorities through NGO’s will be initiated.
• BBMP will continue to provide mid-day meal to senior citizens at select locations. In addition, Medical Care program will be introduced for the benefit of Urban Poor.
• One Service Center for the benefit of the physically challenged will be opened in each zone in association with NGO’s.
The total allocation for the welfare of Backward Classes, Minorities, Women and others is Rs. 32 crores.
Welfare of Urban Poor :
BBMP has 324 slums under its jurisdiction with a sizable population of urban poor. Housing for these poor with water supply, sanitation and other amenities is a crying need of the hour. BBMP has got housing projects approved under the JNNURM at 18 slums for creation of 1774 dwelling units for the beneficiaries. Each apartment unit will have a bed room, hall, kitchen and toilet over an area of 275 sft. 200 Transit accommodations have already been constructed for in-situ development in 4 slums. 250 dwelling units are under advanced stage of construction in the following five slums:
• Bakshi Garden slum
• Kalyani slum
• Kodihalli slum
• Jasma Bhavan slum
• Netaji Subhash Chandra Bose slum
These will be ready for occupation shortly.
BBMP has also entered into an MOU with the Police Housing Corporation for construction of 1524 dwelling units for 7170 beneficiaries in the following slums:
• Ambedkar Slums (in four wards).
• Muniyappa Garden slums.
• Gopalapura slum.
• Indira Gandhi slum.
• Urs Colony.
• Vinobhanagar slum.
• R K Mutt slum.
• Gautam Colony.
• Samatha Nagar slum.
• Ananthashram slum.
The total allocation for slum improvement works is Rs 77 Crores.
Education & Sports
BBMP recognizes the need to impart better education to the students studying in its schools, who are basically from the poorer section of the society. In this direction, the mid-day meal scheme and special coaching will be continued. Additionally, health check up for children studying in the Corporation schools will be introduced from this year. The pass percentage has increased from 48% to 58% during the year. BBMP will strive to improve the pass percentage to above 75%. The education budget has been doubled over the previous year’s spending to Rs. 58 crores.
In order to promote sports, construction of New Stadia in the new zones of BBMP will be taken up for which an allocation of Rs 5 crores has been made.
Health
• A new Engineering wing under the Health Department will be created in order to provide Health Infrastructure in the newly added areas. Construction of Maternity Homes in each of the new zones will be undertaken.
• Byelaws for Domestic Dog Control Programme will be introduced.
• Training of Medical Officers of Health and Hoteliers will be conducted on Health and Hygiene under the prevention of Food adulteration.
• A report on surveillance of Public Health will be brought out and published every week for the benefit of the Citizens.
• Managed Health Care with agencies such as ‘Medi Assist’ will be taken up. A pilot project will be launched in June ‘08 in Bommanahalli zone.
• In order to ensure that the Urban Poor living in the City have access to medical treatment which they cannot afford, BBMP will open Evening Health Clinics across its jurisdiction. These clinics will provide OPD facilities and will be open between 5.30 PM to 8.30 PM every day, manned by doctors taken on contract basis.
Crematoria & Burial Grounds :
• A new crematorium at Chamarajpet will be completed in May 2008. Further, construction of crematoria, one in each of the five new zones will be taken up at total outlay of Rs. 5 crores.
• For better management and upkeep of burial grounds, BBMP has entered into an MOU with Vaikutadham trust as a PPP initiative. Maintenance of 3 burial grounds has been taken up initially under this initiative.
Solid Waste Management :
• The City generates more than 3000 Tonnes of Solid Waste a Day. Disposal of Solid Waste is a stupendous task as existing capacity of land fills is insufficient to
meet the requirement. During the coming year, BBMP will augment the land fill capacity to 3000 tonnes.
* BBMP has entered into MOU with Terrafirma to process 1000 metric tonnes a day at their disposal site in Doddaballapur.
* Waste to Energy project of M/s SGRRL will process 500 tonnes initially and subsequently increasing to 1000 tonnes from April 2008 which is taken up on BOT.
* Land fill at Rajarajeshwarinagar near Kumbalgod to dispose dry waste. Will be made operational by September 2008.
* KCDC will also increase the capacity from 300 Metric Tonnes a day to 600 metric tonnes a day.
* A Master Plan for MSW Management is being prepared by IDECK and Project Reports will be prepared for submission for funding under the JNNURM.
* 2 Transfer Stations on BOT have been proposed at Hennur and Devara Chikkanahalli.
Litter Cops will be appointed from members of the Territorial Army.
Jaiprakash Associates Ltd.(JAIASS)
aiprakash Associates Ltd (JAL),the flagship of the Jaypee Group, is the second largest engineering and construction (E&C) company in India. It is also the country’s leading low-cost cement manufacturer in the lucrative northern region. The company is poised to become India’s largest private hydro power generator on a build-own-operate (BOO) basis. A favourable business outlook, coupled with strong E&C order book and profitable investments in subsidiaries, makeJAL an attractive investment idea.
Company Background
The Jaypee Group is a well-diversified infrastructural industrial group with a turnover of over Rs 3000 crore. The group began as a partnership firm in 1972 under the name Jaiprakash Associates. It is engaged in E&G, construction, cement, private hydropower, road projects and hospitality. The group, which has over 25,000 employees, is managed by a professional team backed by a competent technical cadre.
Major Divisions
JAL operates in two segments – E&C and cement. While the engineering business contributes 64% to total income, the cement business accounts for 35%.
Engineering and Construction (E&C) Division
JAL’s E&C division operates mainly in the niche areas of river valley and hydro-power projects. It is an acknowledged leader in constructing multi-purpose river valley and hydropower projects and has been involved in major engineering works.
Over the years, JAL has successfully completed several projects, both in India and abroad, as an engineering, procurement and construction (EPC) contractor. It has earned a reputation of completing projects in a time-bound schedule. It has acquired abundant tunnelling experience (a very complex operation) in the tough Himalayan terrain. JAL’s main clients include state and central government bodies like NHPC, SPVs like Satluj Jal Vidyut Nigam Ltd and Narmada Hydroelectric Development Corporation Ltd.
Company Background
The Jaypee Group is a well-diversified infrastructural industrial group with a turnover of over Rs 3000 crore. The group began as a partnership firm in 1972 under the name Jaiprakash Associates. It is engaged in E&G, construction, cement, private hydropower, road projects and hospitality. The group, which has over 25,000 employees, is managed by a professional team backed by a competent technical cadre.
Major Divisions
JAL operates in two segments – E&C and cement. While the engineering business contributes 64% to total income, the cement business accounts for 35%.
Engineering and Construction (E&C) Division
JAL’s E&C division operates mainly in the niche areas of river valley and hydro-power projects. It is an acknowledged leader in constructing multi-purpose river valley and hydropower projects and has been involved in major engineering works.
Over the years, JAL has successfully completed several projects, both in India and abroad, as an engineering, procurement and construction (EPC) contractor. It has earned a reputation of completing projects in a time-bound schedule. It has acquired abundant tunnelling experience (a very complex operation) in the tough Himalayan terrain. JAL’s main clients include state and central government bodies like NHPC, SPVs like Satluj Jal Vidyut Nigam Ltd and Narmada Hydroelectric Development Corporation Ltd.
Saturday, August 9, 2008
Reliance Power IPO to Climb upwards after November 2008
Reliance Power IPO to climb upwards after November 2008
Introduction:
The listing of Reliance Power IPO, which was awaited eagerly,turned out to be a nightmare for small investors because it ended below its issue price. Thousands of investors subscribed to the Reliance Power IPO in the hope of booking quick profits. While the issue price was Rs. 450, it opened at Rs. 530 but declined soon after closing at Rs.372 on National Stock Exchange creating a dent in their net investment.
Astrological Analysis:
The company was incorporated on 17-01-95 as Bawana Power Pvt. Ltd., name changed to Reliance Delhi Power Pvt. Ltd. to Reliance E. Gen Pvt. Ltd. to Reliance Energy Generation Pv. Ltd. to Reliance Energy Generation Ltd. to Reliance Power Ltd. with effect from 4th July 07.
Looking at Sun chart, there is Capricorn rising Ascendant. Saturn is posited in 2nd house. Jupiter is posited with Venus in 11th house. Rahu is in 10th house and Moon is in Cancer. Retrograde Mars is in Leo sign. Here Sun, Jupiter, Saturn and Venus are Vargottam planets.
Ganesha had predicted that the favorable time for Listing Muhurata of this IPO was Post Diwali, around 15th November, 2008, Labhpanchmi Day, which is considered to be the most auspicious day, especially in Gujarat. But due to certain reasons, the top management had postponed the Listing Muhurata.
The IPO has been launched during the retrogression of Mercury and Saturn. As per company's natal chart, Saturn is ruled as Ascendant and Mercury is ruled as Lord of sixth and ninth house.
Introduction:
The listing of Reliance Power IPO, which was awaited eagerly,turned out to be a nightmare for small investors because it ended below its issue price. Thousands of investors subscribed to the Reliance Power IPO in the hope of booking quick profits. While the issue price was Rs. 450, it opened at Rs. 530 but declined soon after closing at Rs.372 on National Stock Exchange creating a dent in their net investment.
Astrological Analysis:
The company was incorporated on 17-01-95 as Bawana Power Pvt. Ltd., name changed to Reliance Delhi Power Pvt. Ltd. to Reliance E. Gen Pvt. Ltd. to Reliance Energy Generation Pv. Ltd. to Reliance Energy Generation Ltd. to Reliance Power Ltd. with effect from 4th July 07.
Looking at Sun chart, there is Capricorn rising Ascendant. Saturn is posited in 2nd house. Jupiter is posited with Venus in 11th house. Rahu is in 10th house and Moon is in Cancer. Retrograde Mars is in Leo sign. Here Sun, Jupiter, Saturn and Venus are Vargottam planets.
Ganesha had predicted that the favorable time for Listing Muhurata of this IPO was Post Diwali, around 15th November, 2008, Labhpanchmi Day, which is considered to be the most auspicious day, especially in Gujarat. But due to certain reasons, the top management had postponed the Listing Muhurata.
The IPO has been launched during the retrogression of Mercury and Saturn. As per company's natal chart, Saturn is ruled as Ascendant and Mercury is ruled as Lord of sixth and ninth house.
Wednesday, August 6, 2008
Reliance Power to Raise
Mumbai: Reliance Power Ltd is planning to raise as much as $2.5 billion equivalent in a rupee loan to fund its power project, two bankers familiar with the matter said on Wednesday.
Reliance Power Q1 net at Rs 61.22 cr
Reliance Power, part of India's Anil Dhirubhai Ambani Group, has hired SBI Capital Markets to raise the funds for its 3,960 megawatt coal-fired power project in Sasan in the central state of Madhya Pradesh, the sources said.
The bankers, who spoke on condition of annonymity because they are not authorised to speak to the media, said the deal was expected to close by early October.
Reliance Power Q1 net at Rs 61.22 cr
Reliance Power, part of India's Anil Dhirubhai Ambani Group, has hired SBI Capital Markets to raise the funds for its 3,960 megawatt coal-fired power project in Sasan in the central state of Madhya Pradesh, the sources said.
The bankers, who spoke on condition of annonymity because they are not authorised to speak to the media, said the deal was expected to close by early October.
HCC consortium bags 1,398 cr project
Mumbai: Infrastructure firm Hindustan Construction Company (HCC) led consortium has bagged a contract worth Rs 1,398.50 crore from Andhra Pradesh Government for irrigation project.
HCC Q1 net slips 11.8%
The company has been awarded the contract along with two other companies Megha Engineering & Infrastructure (MIEL) and Czech Republic-based CKD Blansko Engineering (CBE) for J Chokka Rao Devadula Lift Irrigation Scheme, HCC said in a filing to the Bombay Stock Exchange. Hindustan Construction Company has a share of 45 per cent or Rs 629.33 crore in the total value of the contract, the company added.
HCC will spin off and list four of its businesses
Under the project, given by the Irrigation and Command Area Development Department, about 3.43 acres of land would be irrigated in Warangal District of Telengana region and is expected to be completed in 36 months.
HCC at present is involved in the construction of Godavari Lift Irrigation project and is executing four major projects in Andhra Pradesh. Shares of Hindustan Construction were trading at Rs 103.55, up 0.68 per cent in afternoon trade on the BSE.
HCC Q1 net slips 11.8%
The company has been awarded the contract along with two other companies Megha Engineering & Infrastructure (MIEL) and Czech Republic-based CKD Blansko Engineering (CBE) for J Chokka Rao Devadula Lift Irrigation Scheme, HCC said in a filing to the Bombay Stock Exchange. Hindustan Construction Company has a share of 45 per cent or Rs 629.33 crore in the total value of the contract, the company added.
HCC will spin off and list four of its businesses
Under the project, given by the Irrigation and Command Area Development Department, about 3.43 acres of land would be irrigated in Warangal District of Telengana region and is expected to be completed in 36 months.
HCC at present is involved in the construction of Godavari Lift Irrigation project and is executing four major projects in Andhra Pradesh. Shares of Hindustan Construction were trading at Rs 103.55, up 0.68 per cent in afternoon trade on the BSE.
ShareMarket Tips
Never chase a stock.
Buy when markets are in the grip of panic.
Only buy fundamentally strong stocks, which are undervalued.
Buy stocks grown in top line and bottom line over the past years.
Invest in companies with proven management.
Avoid loss-making companies.
PE Ratio and Growth in earnings per share are the key.
Look for the dividend paying record.
Invest in stocks for sure returns.
Stocks have been the high yielding asset class over the past.
Stocks are an asset class.
The basic property of any asset class is to grow.
Buy when everyone is selling and sell when everyone buys.
Invest a fixed amount each month.
Buy when markets are in the grip of panic.
Only buy fundamentally strong stocks, which are undervalued.
Buy stocks grown in top line and bottom line over the past years.
Invest in companies with proven management.
Avoid loss-making companies.
PE Ratio and Growth in earnings per share are the key.
Look for the dividend paying record.
Invest in stocks for sure returns.
Stocks have been the high yielding asset class over the past.
Stocks are an asset class.
The basic property of any asset class is to grow.
Buy when everyone is selling and sell when everyone buys.
Invest a fixed amount each month.
Tuesday, August 5, 2008
Rupert Murdoch
Chairman and CEO, News Corp.
News Corp. is a global force across the board - film, television, print, and even online (it owns the social networking site MySpace).
Murdoch wanted more, and he got it with the $5 billion acquisition of Dow Jones. It was the crowning achievement of a career that started in 1953 when he inherited control of two Australian newspapers. Murdoch expanded to Britain in the 1960s, the U.S. in the '70s, and Asia in the 1990s. In Britain he owns the biggest tabloid, the Sun, and in the U.S. the New York Post and his Fox News Network are known for their take-no-prisoners attitude.
Derided by his critics as a tabloid hound all too willing to kowtow to China for the sake of commercial gain, the purchase of the Wall Street Journal was a particularly sweet victory.
At 76, Murdoch appears to be at the height of his powers. He views Dow Jones, along with the recent launch of the Fox Business Network, as steps in the creation of a globe-spanning financial news powerhouse. Can he do it? The breadth of his ambition could be his Achilles heel - the more dominant News Corp. becomes, the more opposition it tends to provoke. Still, Murdoch has proved time and again that counting him out is a high-risk strategy. --Tim Arango
No-one who saw Melvyn Bragg's dramatic interview with Dennis Potter in 1994 will ever forget it. Potter, who was terminally ill with cancer, yet had lost none of his waspish wit, mused on his life, his work...and his illness.
"I call my cancer Rupert," he told Bragg. "Because that man Murdoch is the one who, if I had the time (I've got too much writing to do)... I would shoot the bugger if I could.
"There is no one person more responsible for the pollution of what was already a fairly polluted press."
In recent years, Australian-born billionaire Rupert Murdoch has used the U.S. government's increasingly lax media regulations to consolidate his hold over the media and wider political debate in America. Consider Murdoch's empire: According to Businessweek, "his satellites deliver TV programs in five continents, all but dominating Britain, Italy, and wide swaths of Asia and the Middle East. He publishes 175 newspapers, including the New York Post and The Times of London. In the U.S., he owns the Twentieth Century Fox Studio, Fox Network, and 35 TV stations that reach more than 40% of the country...His cable channels include fast-growing Fox News, and 19 regional sports channels. In all, as many as one in five American homes at any given time will be tuned into a show News Corp. either produced or delivered." But who is the real Rupert Murdoch? As this report shows, he is a far-right partisan who has used his empire explicitly to pull American political debate to the right. He is also an enabler of the oppressive tactics employed by dictatorial regimes, and a man who admits to having hidden money in tax havens. In short, there more to Rupert Murdoch than meets the eye.
In 2003, Rupert Murdoch told a congressional panel that his use of "political influence in our newspapers or television" is "nonsense." But a close look at the record shows Murdoch has imparted his far-right agenda throughout his media empire.
MURDOCH THE WAR MONGER: Just after the Iraq invasion, the New York Times reported, "The war has illuminated anew the exceptional power in the hands of Murdoch, 72, the chairman of News Corp… In the last several months, the editorial policies of almost all his English-language news organizations have hewn very closely to Murdoch's own stridently hawkish political views, making his voice among the loudest in the Anglophone world in the international debate over the American-led war with Iraq." The Guardian reported before the war Murdoch gave "his full backing to war, praising George Bush as acting 'morally' and 'correctly' and describing Tony Blair as 'full of guts'" for his support of the war. Murdoch said just before the war, "We can't back down now – I think Bush is acting very morally, very correctly." [New York Times, 4/9/03; Guardian, 2/12/03]
MURDOCH THE NEOCONSERVATIVE: Murdoch owns the Weekly Standard, the neoconservative journal that employed key figures who pushed for war in Iraq. As the American Journalism Review noted, the circulation of Murdoch's Weekly Standard "hovers at only around 65,000. But its voice is much louder than those numbers suggest." Editor Bill Kristol "is particularly adept at steering Washington policy debates by inserting himself and his views into the discussion." In the early weeks of the War on Terror, Kristol "shepherded a letter to President Bush, signed by 40 D.c= opinion-makers, urging a wider military engagement." [Source: AJR, 12/01]
Rupert Murdoch inherited a small Australian newspaper in 1952 and aggressively turned it into one of the biggest media corporations in the world, News Corp., a conglomerate that includes television, feature films, online services, newspapers and books. Over the years Murdoch acquired more and more media outlets all over the world, from Australia and Europe to the U.S. and China. Now one of the world's wealthiest men, he is frequently criticized for his political views and for "lowering the standards" of the publications and outlets he acquires. In the 1980s he became a U.S. citizen in order to meet requirements for owning TV stations. In the early 1990s his empire was stretched thin financially, but by the end of the '90s it had bounced back with successes on cable television and with the network Asian Star Television. News Corp.'s holdings include the Fox TV Network, HarperCollins Books, 20th Century Fox and The New York Post.
MURDOCH THE OIL IMPERIALIST: Murdoch has acknowledged his major rationale for supporting the Iraq invasion: oil. While both American and British politicians strenuously deny the significance of oil in the war, the Guardian of London notes, "Murdoch wasn't so reticent. He believes that deposing the Iraqi leader would lead to cheaper oil." Murdoch said before the war, "The greatest thing to come out of this for the world economy...would be $20 a barrel for oil. That's bigger than any tax cut in any country." He buttressed this statement when he later said, "Once [Iraq] is behind us, the whole world will benefit from cheaper oil which will be a bigger stimulus than anything else." [Guardian, 2/17/03]
MURDOCH THE INTIMIDATOR: According to Agence France-Press, "Rupert Murdoch's Fox News Channel threatened to sue the makers of 'The Simpsons' over a parody of the channel's right-wing political stance…In an interview this week with National Public Radio, Matt Groening recalled how the news channel had considered legal action, despite the fact that 'The Simpsons' is broadcast on sister network, Fox Entertainment. According to Groening, Fox took exception took a Simpsons' version of the Fox News rolling news ticker which parodied the channel's anti-Democrat stance with headlines like 'Do Democrats Cause Cancer?'" [Source: Agence France-Press, 10/29/03]
MURDOCH THE NEWS EDITOR: "When The New York Post tore up its front page on Monday night to trumpet an apparent exclusive that Representative Richard A. Gephardt would be Senator John Kerry's running mate, the newspaper based its decision on a very high-ranking source: Rupert Murdoch, the man who controls the company that owns The Post, an employee said yesterday. The Post employee demanded anonymity, saying senior editors had warned that those who discussed the Gephardt gaffe with other news organizations would lose their jobs." [NY Times, 7/9/04]
Just as Fox claims to be "fair and balanced," Rupert Murdoch claims to stay out of partisan politics. But he has made his views quite clear – and used his media empire to implement his wishes. As a former News Corp. executive told Fortune Magazine, Murdoch "hungered for the kind of influence in the United States that he had in England and Australia" and that meant "part of our political strategy [in the U.S.] was the New York Post and the creation of Fox News and the Weekly Standard."
MURDOCH THE BUSH SUPPORTER: Murdoch told Newsweek before the war, Bush "will either go down in history as a very great president or he'll crash and burn. I'm optimistic it will be the former by a ratio of 2 to 1…One senses he is a man of great character and deep humility." [Newsweek, 2/17/03]
MURDOCH THE BUSH FAMILY EMPLOYER: As Slate reports, Murdoch "put George W. Bush cousin John Ellis in charge of [Fox's] Election Night vote-counting operation: Ellis made Fox the first network to declare Bush the victor" even as the New Yorker reported that Ellis spent the evening discussing the election with George W. and Jeb Bush. After the election, Fox bragged that it attracted 6.8 million viewers on Election Night, meaning Ellis was in a key position to tilt the election for President Bush. [Source: Slate, 11/22/00; New Yorker, 11/20/00]
MURDOCH THE MIXER OF BUSINESS AND POLITICS: James Fallows of the Atlantic Monthly points out that most of Murdoch's actions "are consistent with the use of political influence for corporate advantage." In other words, he uses his publications to advance a political agenda that will make him money. The New York Times reports that in 2001, for example, The Sun, Britain's most widely read newspaper, followed Murdoch's lead in dropping its traditional conservative affiliation to endorse Tony Blair, the New Labor candidate. News Corp.'s other British papers, The Times of London, The Sunday Times and the tabloid News of the World, all concurred. The papers account for about 35% of the newspaper market in Britain. Blair backed "a communications bill in the British Parliament that would loosen restrictions on foreign media ownership and allow a major newspaper publisher to own a broadcast television station as well a provision its critics call the 'Murdoch clause' because it seems to apply mainly to News Corp." [Atlantic Monthly, 9/03; New York Times, 4/9/03]
MURDOCH THE NEW YORK CITY POLITICAL BOSS: The Columbia Journalism Review reported that during New York Mayor Rudolph Giuliani's first term "News Corp. received a $20.7 million tax break for the mid-Manhattan office building that houses the Post, Fox News Channel, TV Guide and other operations. During Giuliani's 1997 reelection campaign, News Corp. was also angling for hefty city tax breaks and other incentives to set up a new printing plant in New York City. Most dramatically, Giuliani jumped in to aggressively champion News Corp. when it battled Time Warner over a slot for the Fox News Channel on Time Warner's local cable system…Three years into Giuliani's first term, veteran Village Voice political reporter Wayne Barrett asked Post editorial page editor Eric Breindel if the paper had run a single editorial critical of the administration; Breindel, he says, admitted it had not. According to Barrett, the paper pulled off a perfect four-year streak" of not one critical editorial. [Columbia Journalism Review, 6/98]
Rupert Murdoch thinks of himself as a staunch anti-communist. But a look at the record shows that when his own profits are on the line, he is willing to do favors for the most repressive regimes on the planet.
MURDOCH THE DEFENDER OF REPRESSIVE REGIMES: The last governor of Hong Kong before it was handed back to China, Chris Patten, signed a contract to write his memoirs with Murdoch's publishing company, HarperCollins. But according to the Evening Standard, when "Murdoch heard that the book, East and West, would say unflattering things about the Chinese leadership, with whom he was doing satellite TV business, the contract was cancelled. It caused a furor in the press - except, of course, in the Murdoch papers, which barely mentioned the story." According to BusinessWeek, internal memos surfaced suggesting the canceling of the contract was motivated by "corporate worries about friction with China, where HarperCollins' boss, Rupert Murdoch, has many business interests." [Evening Standard, 8/13/03; BusinessWeek, 9/15/98]
MURDOCH THE APOLOGIST FOR DICTATORSHIPS: Time Magazine reported that while Murdoch is supposedly "a devout anti-Soviet and anti-communist" he "became bewitched by China in the early '90s." In an effort to persuade Chinese dictators that he would never challenge their behavior, Murdoch "threw the BBC off Star TV" (his satellite network operating in China) after BBC aired reports about Chinese human rights violations. Murdoch argued the BBC "was gratuitously attacking the regime, playing film of the massacre in Tiananmen Square over and over again." In 1998 Chinese President Jiang Zemin praised Murdoch for the "objective" way in which his papers and television covered China. [Source: Time Magazine, 10/25/99]
MURDOCH THE PROPAGANDIST FOR DICTATORS: While Murdoch justifies his global media empire as a threat to "totalitarian regimes everywhere," according to Time Magazine, Murdoch actually pays the salary of a top TV consultant working to improve the Chinese government's communist state-run television CCTV. As Time notes, "nowadays, News Corp. and CCTV International are partners of sorts," exchanging agreements to air each other's content, even though CCTV is "a key propaganda arm of the Communist Party." [Source: Time Magazine, 7/6/04]
MURDOCH THE ENABLER OF HUMAN RIGHTS VIOLATORS: According to the LA Times, Murdoch had his son James, now in charge of News Corp.'s China initiative, attack the Falun Gong, the spiritual movement banned by the Chinese government after 10,000 of its followers protested in Tiananmen Square. With Rupert in attendance, James Murdoch called the movement a "dangerous" and "apocalyptic cult" and lambasted the Western press for its negative portrayal of China's awful human rights record. Murdoch "startled even China's supporters with his zealous defense of that government's harsh crackdown on Falun Gong and criticism of Hong Kong democracy supporters." Murdoch also "said Hong Kong democracy advocates should accept the reality of life under a strong-willed 'absolutist' government." It "appeared to some to be a blatant effort to curry favor" with the China's repressive government. [LA Times, 3/23/01]
MURDOCH THE HIDER OF MONEY IN COMMUNIST CUBA: Despite a U.S. embargo of communist Cuba, the Washington Post reports, "News Corp.'s organizational chart consists of no less than 789 business units incorporated in 52 countries, including Mauritius, Fiji and even Cuba." [Washington Post, 12/7/97]
From union busting to tax evading, Rupert Murdoch has established a shady business record that raises serious questions about his corporate ethics.
MURDOCH THE UNION BUSTER: The Economist reported that in 1986 Murdoch "helped smash the British print unions by transferring the production of his newspapers to a non-union plant at Wapping in East London." The move "proved to be a turning-point in Britain's dreadful industrial relations." AP reported Murdoch specifically "slashed employment levels" at the union plant and said he would "dismiss the 6,000 striking workers" who were trying to force concessions out of the media baron. The London Evening Standard called the tactics "the biggest union-busting operation in history." [Sources: The Economist, 4/18/98; AP, 1/27/86; Evening Standard, 11/12/98]
MURDOCH THE CORPORATE TAX EVADER: The BBC reported that "Mr. Murdoch's die-hard loyalty to the tax loophole has drawn wide criticism" after a report found that in the four years prior to June 30, 1998, "Murdoch's News Corporation and its subsidiaries paid only $325 million in corporate taxes worldwide. That translates as 6% of the $5.4 billion consolidated pre-tax profits for the same period…By comparison another multi-national media empire, Disney, paid 31%. The corporate tax rates for the three main countries in which News Corp. operates - Australia, the United States and the UK - are 36%, 35% and 30% respectively. Further research reveals that Mr. Murdoch's main British holding company, News Corp. Investments, has paid no net corporation tax within these shores over the past 11 years. This is despite accumulated pre-tax profits of nearly $3 billion." [Source: BBC, 3/25/99]
MURDOCH THE LOVER OF OFFSHORE TAX HAVENS: When a congressional panel asked if he was hiding money in tax havens, including communist Cuba, Murdoch responded "we might have in the past, I'm not denying that." The Washington Post reports, "through the deft use of international accounting loopholes and offshore tax havens, Murdoch has paid corporate income taxes at one-fifth the rate of his chief U.S. rivals throughout the 1990s, according to corporate documents and company officials." Murdoch "has mastered the use of the offshore tax haven." His company "reduces its annual tax bill by channeling profits through dozens of subsidiaries in low-tax or no-tax places such as the Cayman Islands and Bermuda. The overseas profits from movies made by 20th Century Fox, for instance, flow into a News Corp.-controlled company in the Caymans, where they are not taxed." [Source: Congressional Testimony, 5/8/03; Washington Post, 12/7/97]
MURDOCH THE ABUSER OF TAX LOOPHOLES: Even though Murdoch changed his citizenship in order to comply with U.S. media ownership rules, many of his companies have remained Australian, allowing them "to utilize arcane accounting rules that have pumped up reported profits and greatly aided Murdoch's periodic acquisition sprees." IRS officials point out that "U.S.-based companies face U.S. taxes on their offshore subsidiaries in the Caymans and elsewhere if more than 50 percent of the subsidiary is controlled by American shareholders. But that doesn't apply to News Corp., an Australian company." [Source: Congressional Testimony, 5/8/03; Washington Post, 12/7/97]
You know you've arrived as a media mogul when both liberals and conservatives think you're bad news. To critics on the left, Rupert Murdoch's Fox News Channel—and the right-leaning publications that his News Corp. owns—proves that he's a conservative press baron using his control of information to try to influence political life. To social conservatives, his company's entertainment offerings—especially those on the Fox Television network—convict him as a corporate sleaze peddler with a rap sheet stretching from Married ... with Children to The Swan.
The chairman and CEO's conservative credentials are no secret—though in his younger years he was liberal enough to earn the nickname "Red Rupert." But he is also a living example of the contradictions of business, willing to undermine the very principles of the politicians he supports if that will draw eyeballs and dollars.
Murdoch cut his teeth on the Australian tabloid business, and his genius has been to apply the tabloid attitude—get attention by any and all means—to broadcasting. His media properties make you pay attention. The same sensibility that built a soapbox for Bill O'Reilly's lapel-grabbing fulminations gave us Fox's subversive Arrested Development and FX's shocking, Golden Globe-winning Nip/Tuck.
The most important fact about Murdoch is not that he's a conservative; it is that he's a monarch. And at age 74, as he pursues plans to combine the distribution power of recently acquired DirecTV with News Corp.'s vast content assets, he seems bent on expanding his empire.
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