| Insurers see higher FDI limit |
Finance Minister P Chidambaram
A day after Manmohan Singh won the trust vote, sans Left support, rating agencies Moody's Investor Services and Icra said the insurance sector will get a huge boost if the government paves the way for greater foreign participation in Indian companies. Analysts said liberalising foreign investment will particularly help the life insurance business in India, where the capital requirement is higher compared with the general insurance sector.
The statement came along with an indication from Finance Minister P Chidambaram that the government will now reach out to political parties like the Bharatiya Janata Party, which had voted agaist the government confidence motion, for faster economic reforms and passage of Bills. At least three Bills for opening up the pension, banking and insurance sectors have been pending for lack of support from the Left. The finance ministry is ready with a Bill to amend the law, which among other things will raise the foreign investment ceiling from 26 per cent to 49 per cent.
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"Raising the foreign investment limit will allow higher capital inflows for the industry. We may not feel the need for higher capital right now, but in the long term, as the industry grows in size, foreign capital will become indispensable. Raising foreign cap will give more access to the international markets," ICICI Prudential Life Insurance Managing Director and CEO Shikha Sharma said.
SBI Life Managing Director and CEO U S Roy added that the move will help companies deploy capital across various segments of the business. "It is a signal that we are open to developing the Indian insurance industry. But the government will need to make a lot of changes on the regulation front as well to increase the limit to
49 per cent."
With a rise in the ceiling, the government and the insurance regulator will have to rework the guidelines, which require the Indian partner to divest stake to the public after 10 years of incorporation, an executive said.
At a time when Indian companies have mega expansion plans, more capital from the foreign partner will help them tide over whatever liquidity issues that they may be facing, though almost all the Indian promoters are large conglomerates with insurance being a smaller part of the business. The regulations mandate a solvency margin of
150 per cent. |
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Biotech sector posts 20 per cent growth
Biotechnology, a nascent sector in India, posted 20 per cent growth during 2007-08, with revenues of US$ 2.56 billion, against US$ 2.1 billion during the last fiscal, according to an industry survey. In the last fiscal, investments increased by 21 per cent at US$ 637,607 million with 48 per cent of the total biotech market shared between the 20 leading Indian companies. N. Suresh of BioSpectrum, (BioSpectrum commissioned the survey), said on July 15, 2008, "Though the sector grew at a healthy 20 per cent, it was lower than 30 per cent growth posted over the previous five consecutive years, largely due to the rupee appreciating by 12 per cent and pricing pressures impacting export earnings." According to the findings of the survey, (carried out by Association of Biotech Led Enterprises [ABLE]), 56 per cent of the sector's revenue (US$ 1.44 billion) came from exports. Around 70 per cent of exports were from Bio-pharma, and 26 per cent from bio-services segments.
"Going by the current trend and the new biotech policy of the central government, the sector is poised to generate US$ 13-16 billion by 2015. The revenue could go higher if innovative products in the pipeline get regulatory approval on time," Suresh informed. Pune-based Serum Institute led the sector for the third consecutive year with US$ 228,843 million, ahead of Biocon, Panacea Biotech and Nuziveedu Seeds.
Nuziveedu Seeds – a Hyderabad-based firm topped the bio-agri segment, with US$ 70.265 million followed by Salem-based Rasi Seeds. The highest growth rate was posted by Bio-services at 43 per cent, followed by Bio-informatics at 31 per cent. Bio-pharma and bio-agri segments showed sluggish growth during the current fiscal. Despite the fact that bio-pharma accounted for two-thirds of the sector revenue, grew by only 16 per cent. "The biopharma segment, which is coming of age, is poised for a trajectory growth over the next five years. While bioservices will continue to attract significant interest, bio-generic exports to the regulated markets are set for a quantum leap in earnings," informed ABLE director-general Shrikumar Suryanarayan
Source: IBEF
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Indian Railways' profits to cross US$ 23.54 billion by next fiscal |
Indian Railways' profits are set to cross US$ 23.54 billion by the next financial year. Railway Minister, Lalu Prasad, made this announcement while laying the foundation stone for the US$ 333.58 million train wheel factory at Bela, Bihar. The Bela factory will produce one lakh wheels annually. Indian Railways has posted a 22.80 per cent rise in its revenue earnings for the July 11-20, 2008, period against the corresponding period last year. The overall estimated earnings of the Railways on originating basis during the same period was US$ 494.84 million against US$ 403.16 million during the same period in 2007. Correspondingly, the entire goods earnings has increased from US$ 273.98 million during July 11-20, 2007 to US$ 339.50 million during July 11-20, 2008, posting an increase of 23.85 per cent, according to an official release. The overall passenger revenue earnings during July 11-20, 2008, was US$ 141.51 million against US$ 115.70 million against the corresponding period last year, registering a 22.30 per cent rise.
Source: IBEF |
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Industrial production to see 10 per cent growth in FY 2008-09
According to the Centre for Monitoring Indian Economy (CMIE), India is likely to see 10 per cent growth in industrial production during fiscal year 2008-09, up from 8.3 per cent in the last fiscal. In its recent report, CMIE has stated "We expect growth in industrial production to accelerate to 10 per cent in 2008-09 compared with the 8.3 per cent growth recorded in 2007-08." The leading sectors fuelling this growth would be machinery, chemicals and transport. Apart from these sectors, metals, non-metallic mineral products and textiles would also augment the industrial growth.
"The industry is creating fresh capacities at an aggressive pace and, as these new capacities get commissioned, supplies would increase to meet the soaring demand. As a result, we believe that the current slowdown seen in the Index of Industrial Production (IIP) numbers is a short-term phenomenon that would be reversed by the middle of 2008-09," the report stated.
"The chemical industry will show modest growth. It would grow from 10.4 per cent in 2007-08 to 13.2 per cent in 2008-09," the report said. In the current financial year, the cement industry would grow by 11.5 per cent, the report added.
In fiscal year 2009, the machinery industry is likely to grow by 22 per cent and the transport sector by 10.2 per cent. Moreover, increased capacity expansion along with greater consumption of metals is expected to further raise the growth of the basic metals sector by 12.6 per cent.
Source : IBEF
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STC records highest ever turnover
The State Trading Corporation of India Ltd (STC) has achieved the highest ever first quarter turnover of over Rs 4200 crore as per the provisional unaudited financial results for the period Apr-Jun ’08 taken on record by the Board of Directors of the Corporation in its meeting held on 30.07.2008 at New Delhi. The total turnover reflects a growth of 53% over the quarter a year ago and has also surpassed the proportionate MOU target despite there being no imports of wheat during the quarter.
During the period, the Corporation earned a trading profit of Rs 39 crore which is 47% higher than the quarter a year ago. The Profit before Tax of Rs 23 crore is also marginally higher than the previous year. STC continued with its domestic operations involving direct procurement of tea from small growers and processing thereof. These operations are being extended further by enlisting more growers and taking another processing unit on long term lease. STC is also undertaking paddy procurement operation on minimum support price on behalf of FCI under Custom Milled Rice (CMR) scheme announced by the Govt. of India.
STC has made significant progress in developing bio fuel business. It is planning an entry in mining and power generation activities very shortly. Thus, as the year progresses, the business activities of STC are likely to accelerate further.
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