Pre-Budget 2008-2009 Analysis by Investorline

Pre-Budget Analysis

WITH JUST few days to go for the annual budget of 2008-09, it is time to speculate as to what changes can be expected in this budget. Budget is an important & most awaited event in the economic life of our country, with key pronouncements on taxes, financial allocations and benefits, and on developmental agenda. But what changes can be expected? There are questions galore and the expectations from the Finance Minister are sky-high. Will this be the budget where building the infrastructure backbone of the economy be further advanced by extending support to the Bharat Nirman program? Will the budget bring in cheers to millions through a much-awaited cut in income tax rates? Or will the Finance Minister succumb to the electoral necessities and present a 'populist' budget? Will there be any measures to counteract the effects of the recession of the United States economy?

Economic Outlook:

The Indian economy has been one of the best-performing economies globally in CY07. The Government of India and the Reserve Bank of India (RBI) have been able to mitigate the threat of rising inflation and inflationary expectations through several fiscal and monetary measures. According to the Central Statistical Organisation estimates, the economy is on course to grow by 8.6% in 2007- 08. The government, in its bid to sustain the high growth, is looking at policy adjustments to capture the mood of the nation. This is especially in view of recent global uncertainties and developments. In earlier Bugdets, more emphasis was laid on reducing the inflation rate, but it is expected that in the current budget emphasis would be laid on both controlling the inflation as well as sustaining high GDP growth rate. Needless to say, these twin issues will remain high on the priority list of the Finance Minister, as he gives final touches to the Budget document. Along with these, increased allocations for a balanced and inclusive growth will be important for him in his last full Budget before the general elections in 2009. For the first time, direct tax collections have surpassed indirect tax collections which are in line with the developed economies across the globe. During the first nine months of the current fiscal, personal income-tax collections rose by50%and corporate tax revenues by 39.84% compared with the same period last year. Such a phenomenal increase in the net tax collection could be attributed to strong economic growth, better tax administration and relatively improved compliance levels. Finance Minister had indicated that there could be a significant revamp in the taxation schemes. The direct taxes could be reduced from the existing 33.6 per cent, inclusive of surcharge to about 25 - 30 per cent. Thus, the reduction in the direct taxes would come as a sigh of relief to the several individuals as well as corporate who are affected by the direct taxes. Reducing the tax rates could also provide an incentive to taxpayers to declare their entire income honestly so that the overall tax collections can be improved. Plus the surcharge on tax, which is paid, by individuals and association of people who have an annual income greater than Rs 10 lakh is expected to reduce. Currently, there is 10 per cent surcharge on personal and corporation income tax, which may plummet in this budget. It could come down to as low as 5 per cent. Partnership firms and domestic organizations, whose income is greater than Rs 1 crore would also benefit from this. With such positive signs on the tax compliance and collections front, the common man is definitely looking at great expectations from the finance minister.

Domestic and global developments that will shape Budget 2008-09:

We are probably in the midst of the strongest growth run in the post-independence India. All the structural factors necessary for a sustained high growth phase seems to be in place but some cyclical headwinds are probably making our journey a little more turbulent than what we would have otherwise liked. The key concerns for the 2008-09 year are: a) possible inflationary pressure from food and oil, b) a slowdown in the growth rate from the heights of the past two years, c) increased pressure on fiscal, and d) the continued availability to funds to complete the ongoing investment cycle at viable interest rates. Our achievement on growth front, over the Tenth Plan period was very close to target and it is no surprise that the Eleventh Plan wants to take us closer to our aspirational target of double-digit growth. While the growth process has gathered its own momentum, Union Budget 2008-09 is expected to remove the hurdles towards conquering the next frontier by extending the reforms process to reap long-term gains. In the short run, maybe a little demand fillip will do wonders for an economy where incoming data have been flashing some intermittent signs of growth concerns. Let us take a look at the economic and political backdrop against which the contours of the Union Budget 2008-09 will be drawn up.

1) Focus on GDP Growth & Sustained Balanced Growth:

With regards to the composition of GDP, the percentage shares of various sectors have largely changed. The percentage share of the agriculture in the total GDP has declined, on the contrary the percentage share of services in theGDPis rising faster. The percentage share of various sectors of India's Economy in the total GDP in the earlier years is as follows:

As to the above diagram, the contribution of India's agriculture to the total GDP of the country is experiencing a declining trend. On the contrary the percentage share of services sector to the total GDP is rising at a faster pace. In the latest data we can see that the share of services has increased to 55.1% and that of agriculture has reduced to 18.5%. Keeping in view the poor performance of the agriculture in India's Economy, the upcoming Budget 2008-09 is expected to come with more perks for the farmers in India. More over the Budget 2008-09 is expected to draw more attention on consumption led growth, which is needed for strengthening and sustaining the economic growth of the country. India's GDP growth has averaged about 8.8% over the past four years. This has been made possible by continued investments over these years, ably supported by growing consumption. The main focus of the government is to maintain the GDP growth rate as the recent weakness in global economies has added an element of uncertainty to the prospects of sustained high growth rates in the future. The target GDP growth rate for the Eleventh Five Year Plan is9%and this year's budget is expected to contain such measures, which will facilitate sustenance of healthy GDP growth rates. Towards this, continued measures for the power, roads, highways, ports and other infrastructure are expected. The fund requirement for this purpose is put at more than $450 bn (Rs.18 trn) over the 2007-12 Five Year Plan. Of these, the estimated requirement in the transport infrastructure segment alone is over Rs.6 trn comprising railways (Rs.2.5 trn), roads (Rs.3 trn), ports (Rs.740 bn) and airports (Rs.350 bn).

2) Political Angle to the Budget:

One thing we cannot ignore is that this will be the last budget of the current coalition government. The Lok Sabha election is due, in 2009, and the United Progressive Alliance, with the dispute over the nuclear deal with the Left, has been on the brink of divorce. Thus, the FM might not present a budget that could stir up a political storm and bring the ruling government down. He would rather play safe. We might expect a popular budget with the aim of appeasing specifically targeted sections of the voting community. Thus vote bank politics could again play a vital role in this year's annual budget. However, Finance Minister P Chidambaram would be in a tight corner to maintain a fine balance between fiscal discipline and political demands arising from the next General Elections. With the first year already gone without a Plan in place, political constraints in the second year of the Plan, will further diminish the chances of the Eleventh Plan (2007-11) being implemented in letter and spirit. This being the terminal year for the Fiscal Responsibility and Budget Management Act (FRBMA), the Finance Ministry will not be in a position to create extra resources needed to meet both political requirements and economic demands for growth. Indications are that the Budget will depend heavily on generating extra funds through Public Sector Undertakings. However, the Budget would have to make provision for the schemes already announced during the course of the year. Thus, funds would have to be provided for the Skill Development Mission, schemes relating to the agricultural sector like Rashtriya Krishi Vikas Yojna and the Food Security Mission, clubbed with additional commitments in the education and health sectors. Availability of funds will be further constrained, as both the Central government and States will have to earmark funds for implementing the Sixth Pay Commission Report. With the Railway Ministry already being asked to keep apart Rs 9,000 crore for this purpose, indications are that the burden on the Central government alone would be to the tune of Rs 30,000 crores. Mr Chidambaram would thus have to keep a careful watch so that inflation does not get out of hand while ensuring that positive trends in the core sectors of the economy are not adversely affected beyond a point. In short, the Budget is set to witness a tug of war between demands economic growth and political wish lists.

3) Focus on Inflation Control:

Headline inflation for most part of FY08 has been benign to say the least. This could be a positive outcome of a judicious mix of fiscal and monetary policies and could be highlighted as one of the success stories of last year's budget. Inflation management has been accorded top priority by policymakers across the globe. The conscious policy choice of reducing import duties and banning futures trading in some agri commodities has helped in reining in headline inflation numbers. Global inflation has been on an uptrend in the later half of 2007, riding on crude oil reaching the magical 3 figure mark and food prices forcing inflation to reach multi-year highs in both developed and developing nations. The apparent immunity of Indian inflation to these global developments should not be thought of as resilience. Although a rapidly appreciating rupee has mitigated some of the impact of imported inflation, there is still incomplete pass-through. Some harsh decisions need to be taken as early as possible to align domestic prices with international prices in both the energy and food sectors because increasing off-balance sheet exposure (oil bonds) is making the financial health of the government a little more fragile.

4) Education & Rural Development:

Education and Rural development would get top priority in the coming Union Budget as said by the Finance Minister. Education sector is being given importance as literacy alone could make India a super power. The UPA Government in the last three years had allocated Rs 28,600 crore for the education sector lending, of which Rs 17,636 crore had already been distributed. The amount was four times more than what was allocated during the BJP-ledNDA regime, the Finance Minister said. The government could announce a special scheme in the coming Union Budget. “It (the scheme) may be christened Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and may be in line with the 11th Plan (2007-12) objective of improving gross enrolment ratio and also to reduce inequalities. A tentative allocation of Rs500 crore for preparation work for the scheme is being worked out to be announced in the Union Budget of 2008-09,” said a senior government official, who did not wish to be identified. The Centre plans to spend Rs 35,567 crore on improving secondary education in the 11th Plan and will contribute75%of the total funds required for the programme, with the states putting up the rest. In the 12th Plan, this ratio is expected to be 50:50. Rural development may get substantially more funds in this budget - about Rs 50000 crore from Rs 41000 crore last year. Allocations for rural development in the national budget have been rising steadily in India. In 2004-05, it was Rs 16000 crore, which went up to Rs 24700 crore in 2005-06 and Rs 31000 crore in 2006-07. It was Rs 41000 crore in the 2007-2008. Substantial increase is likely to be announced in the social sector schemes and those relating to rural development, including the Horticulture Mission, Rural Water Supply Scheme, Rural Sanitation Programme, Sarv Siksha Abhiyan, National Rural Health Mission, NREGP, Indira Awas Yojna (rural housing), Pradhan Manrti Gram Sadak Yojna, Accelerated Power Development Programme(APDP), Integrated Child Development Scheme, Jawaharlal Nehru Urban Renewal Mission, Rashrtriya Krishi Vikas Yojna, and Backward Region Grant Fund.

5) Capital Flows:

The other macroeconomic factor, which has dominated economic debates in the last year or so and will be a crucial consideration for this year's budget, is the deluge of capital flows that the country has received. Finance Minister has himself dubbed them as 'copious' and it seems that this process of receiving foreign flows is going to sustain for some time to come. While in FY07 there was a BoP surplus of USD 35bn on the back of around USD 46bn of capital flows, it will not be a surprise if both these numbers would double in FY08! Monetary policymakers have been torn between letting the rupee appreciate and intervening in the currency markets to inject more rupee liquidity, which could be potentially inflationary in nature. Rupee has been one of the strongest appreciating currencies in the Asian region in 2007 even while RBI has continued its policy of back-to-back intervention and sterilization of the rupee liquidity through issuance of Market Stabilization bonds and CRR hikes.

6) Stock Markets:

Riding on robust economic growth and extremely positive business sentiment, the buoyant and largely bullish stock market, has also contributed significantly to the excellent growth in tax collections, with collection of securities transaction tax (STT) growing by a sharp 57.61% in the current fiscal. To top it, increased investor interest in equities induced by strong economic fundamentals, robust flows from foreign institutional investors and an attractive short-term capital gains tax rate have also contributed to the increased tax collections. People are investing like never before and the per capita income has increased manifold. The government must be keen to capitalize on this investment boom and strike a balance between inflation and growth.

7) Mutual Fund Industry:

Indian Mutual Fund industry has recorded and astonishing growth of 71% in AUM in this year. The AUM increased from about 3.21-lakh crore in Dec 2006 to 5.49 lakh crore in Dec 2007. The mutual fund industry has become more mature now and has given more products this year. TheMFindustry also has certain expectations from the coming budget. Its wishlist includes: Indian mutual fund firms have asked the government to allow them to offer investors multiple tax planning equity funds, seeking relaxation of a rule that limits the options they can offer to customers. A regulation framed in 2005 restricts them to just one such fund or equity linked savings scheme (ELSS), limiting options for investors who have been increasingly using them to save tax. Two years ago, India allowed savers to claim tax benefit on investment of up to 100,000 rupees in ELSS, making them hugely popular among investors with assets of such funds rising nearly 25 times to 154 billion rupees in past three years The industry also wants fund of funds (FoFs), which invest in equity schemes, and other funds investing in overseas equities to be treated as equity funds to enable them to pay less tax. Indian regulations classify funds investing more than 35 percent of assets in foreign equities and FoFs as debt funds and subject to higher taxes, making them unattractive. Dividend Distribution Tax on corporates and equity and non-liquid Mutual Funds to be reduced to 10%from 15% at present. Dividend Distribution Tax on money market and Liquid Mutual Funds to be reduced to 10% from 25% at present. Sec 80C deduction level to be raised from Rs1 lakh to Rs3 lakh. Howmuch of this wishlist gets achieved waits to be seen, given our coalition based policy.

8) Managing the Exchange rate shock:

The recession of the United States economy has meant that the rupee has appreciated a great deal. The exporters are feeling the brunt as their profit margins continue to go down. It is predicted that this trend is likely to continue. The RBI is expected to address this issue through its monetary policy and tax cuts in order to reduce the load on the exporters can also be expected. The suddenness and the magnitude of the exchange rate shock has affected several sectors in the economy which were export dependent with limited import content and did not have enough profit margins. Anecdotal and industry estimates suggest possibility of huge job losses in several industries including textiles and the approach of Finance Minister to address this issue could be one of the highlights of Budget 2008-09. Most likely this is going to be the last budget of Finance Minister before the general elections. So there will be expectations from him to satisfy a large number of pressure groups who will be the key to electoral success. It will be the Finance Minister's endeavor to see that the resultant force of these often opposing demands does not lead to a lopsided budget, which will be a setback for economic reforms. The last piece in the backdrop for this year's budget will be the slowly unfolding global developments. After almost 4 years of unprecedented global growth, there is a possibility that the global economy might enter a phase of moderation in 2008, mainly on the back of a severe slowdown in the US economy. At a macro level budget policy formulation by the Finance Minister will have to take into account all the above factors.

1) Indirect Taxes:

In the previous Budget, the peak import duty was brought down to 10%. The Government is committed to bringing down import duties to Asean levels. In addition to this, currently there is an overriding concern of rising inflation. On the other hand, adequate protection is needed for several emerging/weaker sectors. Moreover, the Finance minister also has to consider the revenue implications. The slowing global growth can impact India's GDP growth, going ahead and consequently tax collections also. Taking into account these factors, we expect moderation in import duties with continued protection to few sectors. The Finance Minister has already indicated that diverse rates of excise duty on various goods are expected to converge at the Cenvat rate of 16%.We expect further steps in this direction. Growth in excise duty collections in the first nine months of FY08 has been about 5.1%, which is lower than the target growth of about 11% for the fiscal. Thus, there may not be significant reduction in excise duty rates.We also expect the CST rate to be further reduced from 3% levels, in line with the process started in the previous Budget. The contribution of service tax to overall tax revenues of the Government is lower when compared to the fact that services account for more than 50% of the GDP. For 9MFY08, collections from service tax were up about 37% YoY v/s a targeted rise of 32% for FY08. We believe the Finance Minister will bring in more services under the tax net to increase the contribution of services to tax revenues

2) Direct Taxes:

Direct taxes have been the high point of FY08, with collections having grown by40%in the first 10 months against the fiscal target growth of 17%. Exceeding indirect tax receipts for the first time, direct tax collection now looks set to cross Rs 3 lakh crore or (Rs 3 trillion) this fiscal. The budget estimate of a tax (both direct and indirect) to GDP ratio of 11.8% is likely to be exceeded. The government had set a target of Rs 2.67 lakh crore for direct tax receipts for this fiscal. The Government's initiatives for bringing in more people under the tax net have paid dividends with an increase in the number of taxpayers. The rising income levels of Indians have also resulted in more taxpayers. In the backdrop of a strong growth in tax collections, some relief to smaller taxpayers in the form of a higher exemption limit can be expected. Investments in long-term savings instruments may be encouraged with specifically directed tax exemptions. Some reduction in dividend distribution tax (DDT) is also expected.

Issue of Tax Compliance in Budget 2008 (expected)

On 6th of December 2007, the Finance Ministry announced the issue of tax compliance in budget 2008. It is learnt that the taxpayers would be benefited reviewing the direct tax rates and increasing the voluntary compliance. The level of tax compliance is increasing significantly for the last two or three years. During the fiscal year 2006-07, almost 31.9 million tax payers of India have filled their income tax returns, which is not an exciting figure at all keeping in mind the population in India. Government would like to get in more and more people to pay taxes in this fiscal. But the government has announced that it will focus more on the tax compliance issues. The Finance Ministry will not increase the maximum marginal rate of personal income tax further, for it may result in voluntary compliance. The Advisor to the Union Finance Minister of India has said that, the government will now be able to keep track on the ups and downs of voluntary compliance. Maximum marginal rate of personal income tax will be 30%. However, the base of the taxpayer is not large, as it ought to be because a big portion of the population of the Indian economy lies below the poverty line.

Sector Wise Expectations:

Automobilies:

Industry expects a uniform excise duty rate of16%for all cars- large and small. Currently, small cars are levied16%excise duty whereas all other cars and SUV's are levied 24%. Expectations of reduction of excise duty rate on two-wheelers from 16% to 12%or 8%.

Banking:

The moderating credit growth (22-23% YoY) and a relatively higher deposit growth would make RBI comfortable. The headline inflation has also moderated in the last couple of months. The interest rates have almost peaked and are likely to move southward from the next quarter purely due to demand and supply factors. Even though RBI has not given any signal by cutting benchmark rates, banks are expected to start reducing rates in due course of time. This is also evident from recent moves by many banks like SBI, Canara Bank, Allahabad Bank and Bank of India. Industry expects Relaxation in lock in period for savings to qualify for tax benefits, increase in ceiling for TDS on fixed deposits, tax exemptions on infrastructure financing. If the above expectations are fulfilled, it would have a positive impact on the sector as a whole and would help banks correct their asset liability mis-match. Increase in FII/FDI limits in PSU Banks from currently 20% to 49%. This would be a positive move, as it will help these banks raise capital for funding their growth and meeting the Basel II norms.

Capital Goods:

In the power sector, India expects to add a capacity of 80,000MWby 2012 and provide power for all. To attain this ambitious target, the Government had outlined a proposal for nine ultra mega power projects (each project having a capacity of 4,000 MWor more). Till date, only two of theseUMPPs have taken off. Investments in key industrial sectors are expected to soar to Rs.6924 bn over the next five years as compared with Rs.2274 bn worth of investments made over the past five years. Over the next five years, growth in investments will be driven by strong capacity additions, led by healthy growth in demand and high existing operating rates across some of the key industries. Reduction in excise duties on power equipment: Currently, while there is zero customs duty on mega power projects and 5% customs duty on non-mega size projects, excise duty continues to stay at 16%. Project developers are demanding reduction in excise duty to 8%, which is intended to translate into lower operational cost for consumers. Reduction in excise duty on energy efficient ACs: With a view to promote energy conservation, it is expected that the Government may reduce excise duty from 16% to 8% for ACs meeting Bureau of Energy Efficiency (BEE) standards. This should benefit consumer durables manufacturers like Voltas and Blue Star.

Construction:

Union Budget 2008-09 is expected to be positive for the infrastructure sector with higher budgetary allocations in different segments such as roads, irrigation, ports, airports, power etc. With infrastructure development requiring around $492 bn in the next five years, companies with significant experience in executing projects in this key segments are likely to benefit significantly.

Information Technology:

The IT/BPO services industry is expected to achieve 25% growth in FY08 to about $50 bn. Of these, exports are expected to grow by more than26%to nearly $40 bn. The sector has been facing significant challenges in FY08. Over the past three quarters, the challenge has been in the form of an appreciating rupee. The rupee has appreciated by about 10% in FY08, posing challenges for the sector and more so, for smaller companies. Since Q3FY08, the economic growth in the US has been slowing with an increasing probability of a recession. In case there is a prolonged recession in the US, the volume growth for Indian IT services/BPO sector can be impacted. Industry on the whole expects extension of tax exemption beyond FY10 & also Deemed fringe benefit at higher levels v/s IT service companies- should be treated at par. Nasscom expects extension of the Software Technology Parks (STPI) scheme beyond 2009.

FMCG:

India continues to remain a domestic consumption driven economy. To some extent, this insulates the Indian economy from global shocks in the form of a possible US recession or a financial credit crunch gripping other developed economies. Last year, the FMCG sector grew to Rs.750 bn at 10-15%, backed by growth in urban markets and a surge in demand for premium products. There are indications that the Sixth Pay Commission, expected to be passed this year, will recommend salary hike. This will put more purchasing power in the hands of the 4mn strong central government work force and induce households to upgrade to premium brands in personal care and non-durable consumer goods. Industry expects Relief on existing 16% excise duty on soaps and detergents & hoping reduction in the CST from 3% to 2%. Other expectations include reduction in VAT across food processing industry from 12.5% to around 4%. Reduction in CST will help boost consumption and demand buoyancy and would prove to be beneficial for food processing industry.

Healthcare:

Healthcare has emerged as one of the largest service sectors in India. Strong economic growth, along with increasing percapita income, growing healthcare awareness and expanding insurance coverage is creating a new and continuously expanding group of consumers. In the coming Budget the sector is hoping for incentivizing research and development, hoping to receive more tax benefits in order to enhance healthcare service/delivery. Significant medical needs of the Indian population provide huge potential for Indian healthcare service/delivery sector. This sector requires enormous investment over the next five years (approximately US$5 bn for bed additions). The Finance Minister may provide a boost to the sector's prospects by qualitative measures like, infrastructure status, increasing health spending allocation and providing incentives for the sector to grow.

Media:

From a longer-term perspective, it can be said that on the back of greater spending power, growing consumerism – offshoots of the healthy economic growth being projected -consumer discretionary sectors like media and entertainment will continue to enjoy healthy growth prospects. India's evolving demographics, with a high proportion in the income earning age, is expected to support consumption growth. Broadcasters are subject to levy of service tax@ 12.24% unlike print media that is exempt from the levy of service tax, therefore broadcasters expect parity to be drawn between the print and electronic medium. Multiplex alongwith the retail industry expects the removal of 12.36% service tax or allow set off against sales tax. Other expectations include reduction in excise duty and customs duty on equipments like set top boxes.

Metals & Mining:

Indian steel consumption is growing at a record rate of 12.6%. This is almost twice the 6.6% growth in supply (April-December 2007 period). India will turn net importer of steel for the first time in a decade as Indian steelmakers are struggling with greenfield expansions, primarily due to problems in mine allocations and land acquisition. Steel product prices are expected to rise sharply(>15%) during the year. However, unlike in the past, it would not boost the net profits of most of the Indian steel companies as the price rise is mainly driven by sustained raw material cost pressures. The environment is extremely positive for companies engaged in key raw materials of steel like coking coal, ferroalloy ores and iron ore. These companies are price takers and dependant of international product prices. Coal is fast emerging as a scare commodity. There has been sharp surge in coal prices globally driven by a massive fall in inventory levels and emerging supply constraints. Industry expects that customs duty of5%should be scrapped on import of coke and refractories. This move is very necessary for the Indian steel industry as it is unable to cope up with the sharp jump in coke prices, which is one of the critical raw materials and Indian industry is import dependent at large. Other expectations include cut in Import duty of nickel from present 5% to 2% & also reduction in ceiling on chrome ore xport. Current ceiling of 0.40MMTto be reduced to 0.30MMT.

Oil & Gas:

The Oil Ministry is seeking a series of tax and duty changes related to petroleum products retailing and energy exploration in a bid to reduce prices, subsidies and attract greater investment. Oil - FY08 has been negative for the Indian oil industry. With rising crude prices, the industry did quite well at the upstream front. However, the downstream sector faced severe problems regarding subsidies, taxes and pricing. OMCs continue to remain dependent on oil bonds. The practice of issuing oil bonds does not resolve the problem as it only defers the resolution while compounding economic and financial costs. Gas - The country's natural gas supply by FY10 is likely to more than double from current levels due to expected supply from the KG basin. Currently, a majority of the gas consumption in India is industrial, with city gas distribution (CNG and PNG) accounting for less than10%of the total consumption. Key expectations from this budget include equalization on import duty, which is presently 5% for crude and 7.5% for petroleum products.

Pharmaceuticals:

The pharmaceutical industry is facing several challenges like an appreciating rupee against foreign currencies, domestic pricing pressure and pressure on finding and developing new molecules. Given the huge potential held by the Indian Pharma sector, the Finance Minister is likely to give a boost to the sector's prospects by qualitative measures like reduction in duties, extending time line for exemption in respect of profits of a 100%EOU, tax exemption on income from intellectual properties. Industry expects to extend income tax exemption by another 5 years or till 2012, relaxation in certain conditions to avail 150% weighted average deduction on R&D expenditures. Expenditures on clinical trials and patent filings should be eligible for tax benefits.

Power:

In the Eleventh Five Year Plan period, the Government is aiming to add 78 GWcapacity and another 80 GWduring the Twelfth Five Year plan. Of the Eleventh Five Year Plan's additions, 50GWof capacity is already under construction and the orders for the rest are expected to be placed in the next six months. The Government has awarded three ultra mega power projects (UMPPs) and has plans to award another four projects. The recently awarded UMPPs and the other upcoming ones are expected to get an extension of tax holidays from 2010 to 2017, though they will continue to pay the Minimum Alternate Tax (MAT). The decision to extend is mainly due to noncommissioning of any of theUMPPunits by the stipulated period. To partially offset sharp spikes in prices of imported natural gas, the government is likely to withdraw the 5% customs duties for theLNGthat is used in the power generation projects. The above move will be welcome one for the power sector.

Aviation:

India's air carriers want the sales tax on jet fuel to be slashed to a uniform rate of four percent across the country and import duty to fall to five percent in the forthcoming budget to ease cost pressures. Jet fuel, which is almost three fourths costlier than international benchmarks, accounts for 40 percent of the operating cost of an Indian airline.

Pre-Budget 2008-2009 Analysis Report by Investorline (NJ IndiaInvest)

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Expectations from Union-Budget 2008-09

Tax incentive for long term savings

We recommend a separate limit for deductions under Section 80C for long-term saving instruments like life insurance. Currently the Rs 1 lakh deduction under Section 80C also includes short-term saving instruments like some Mutual Funds and Fixed Deposits. Life Insurance and Pensions are the only segments of financial services that address the needs of individuals in the long-term. Hence, the Government should look at encouraging people to save for long-term by providing a separate limit for long-term savings.

Incentive to invest in Pensions & Annuities

The tax benefit on pensions and long-term savings contribution need to be increased. The world over, the development of much needed long-term saving instruments have been supported by tax exemptions. Countries like the UK and Ireland provide incentives in form of tax credits even to non-tax payers by topping up their contributions by 20 to 25% and even upto to 40% for higher tax payers. If the government does not implement the tax benefit to at least Rs 1 lakh, separately, for pensions, we will see less long-term retirement savings amongst the masses. The salaried section will be hit badly as the corpus on retirement will be insufficient as most people are investing only Rs. 1 lakh at present in both long-term and short-term saving instruments.

Carry forward of losses for long-term gestation businessesInsurance business is a long-term gestation business. Currently, we are allowed to carry forward losses for only 8 years. Most insurers do not make profit even in the 10th year. Hence, we recommend that the period for carry forward of losses is increased to 12 years.

Service Tax

As per Notification no. 6/2005-ST dated 1-3-2005, there is no service tax chargeable for a person whose annual turnover is less than Rs 8 lakh per annum. However in the insurance sector, the insurance company is liable to pay service tax for its agents. We even have to pay for agents with turnover under Rs 8 lakh per annum. We recommend that insurers should not be liable to pay service tax on behalf of the agents whose turnover was less than 8 lakhs in the previous year.

Will foreign equity investment go up?

This is something that was promised to the life insurance players and has been discussed in every budget and we hope the Government is able to take a decision on the same at the earliest.

The growth of the Indian insurance sector is critical from the aspect of a social security measure. Fresh Foreign Direct Investment (FDI) is required to fuel this and to ensure that customers in India get access to world-class products, which the foreign partners bring into India. The increase in FDI will give the Indian insurance industry the necessary capital infusion required for its development and expansion.

We should also bear in mind the beneficial impact that the entry of foreign players to the insurance sector has had on both direct and indirect employment in India. This together with the huge CSR initiatives launched by most companies has had a direct positive impact on Indias economy. Increased FDI limits will accelerate these trends.

We are hoping that all political parties will look at the FDI limit in an overall perspective and encourage the growth of the insurance industry in the country. In insurance the proposal is to raise FDI to only 49%, so the majority control still remains with the Indian partners.

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Reliance MF launches new Fixed Horizon Fund

Reliance MF launches new Fixed Horizon Fund

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Name of Fund: Reliance Fixed Horizon Fund VII-Series 2

Scheme: It is a close-ended income scheme.

Objective: The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of central and state government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility.

Fund Opens: 22 February 2008

Fund Closes: 25 February 2008

Face Value: Rs 10 per unit.

Investment Options: The scheme will have growth and dividend option.

Entry Load: Being a close end scheme it will not charge any entry load during the initial offer.

Exit Load: The scheme charges an exit load of 2.00% if redeemed on or before completion of 6 months and 1.00% if redeemed between 6 months-1 day and maturity of the scheme.

Minimum Investment Amount: The minimum investment amount is Rs 5,000 and in multiple of Re 1 thereafter.

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ICICI Prudential Fixed Maturity Plan Series 41 Fifteen Months Plan

ICICI Prudential MF launches new scheme

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Name of Fund: ICICI Prudential Fixed Maturity Plan Series 41 Fifteen Months Plan

Scheme: Close-ended debt fund.

NFO period: 15-27 February 2008

Objective: A close-ended debt Scheme seeking to generate returns by investing in a portfolio of fixed income securities/ debt instruments normally maturing in line with the time profile of the Scheme.

Asset Allocation: The scheme will invest upto 100% in Money Market instruments, Short term and medium term debt securities/debt instruments and securitised debt. (The investments in central and state government securities will be in normal circumstances limited to 50% of the net assets of the Plan. Under the scheme, it is proposed to make investments in debt securities having tenure of approx. 450 days. Including securitised debt of upto 50% of the net assets and derivatives instruments to the extent of 50% of the net assets of the Scheme.)

Face Value: Rs 10 per unit.

Investment Options: Presently, there are two options available under each Plan of the Scheme i.e. Retail Option and Institutional Option. Cumulative and Dividend sub-options will be available under the Scheme. Dividend Payout is the only facility available under Dividend sub-option. Retail Option shall be the default option. Cumulative sub-option shall be the default sub-option under the Scheme.

Entry Load: Being a close end scheme it will not charge any entry load under all the series during the initial offer.

Exit Load: The investors may redeem the units on the stipulated dates on which Repurchase facility is provided, at NAV based prices subject to exit load provisions.

For redemptions made on Maturity No Exit load.

For redemptions made during repurchase facility period 2% of the applicable NAV.

Minimum Investment Amount: The minimum investment amount under retail plan is Rs 5,000 and in multiple of Re 1 thereafter. The minimum investment amount under institutional plan is Rs 1 crore per option and in multiple of Re 1 thereafter.

Target Amount: During the New Fund Offer period of the Scheme seeks to raise a minimum subscription of Rs.2 Crore.

Benchmark Index: Crisil Liquid Fund Index.

Fund Manager: Mr. Chaitanya Pande

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Mutual Funds News 22 feb 2008

Mutual Funds News 22 feb 2008

ICICI MF declares dividend

ICICI Mutual Fund has announced 27 February 2008 as the record date for declaration of dividend under dividend option of ICICI Prudential Monthly Income Plan Quarterly and Half Yearly Frequencies and ICICI Prudential Gilt Fund- Treasury Plan-Quarterly Frequency.

The quantum of dividend is as follows:

Scheme name	Amount of dividend per unit (Rs)	Rate of dividend	NAV as on 20 February 2008 (Per unit)	Face value
ICICI Prudential Monthly Income Plan Quarterly Frequency	Re. 0.25	2.50%	Rs 12.1520	Rs 10
ICICI Prudential Monthly Income Plan Half Yearly Frequency	Re. 0.50	5%	Rs 12.1651
ICICI Prudential Gilt Fund- Treasury Plan-Quarterly Frequency	Re. 0.15	1.50%	Rs 10.8581

ICICI Prudential Monthly Income Plan Quarterly and Half Yearly Frequencies is an open-ended scheme. The investment objective of the scheme is to seek to generate regular income through investment in fixed income securities.

ICICI Prudential Gilt Fund- Treasury Plan-Quarterly Frequency is also an open-ended short-term gilt fund, with an investment objective of generating regular income through investment made in gilts.

Principal PNB MF declares dividend

The Principle PNB mutual fund has announced the declaration of dividend under dividend option of Principle Personal Tax Saver Fund. The record date for dividend will be 26 February 2008.

The quantum of dividend is 200% i.e. Rs. 20 per unit on the face value of Rs. 10. The NAV of the scheme was recorded at Rs 170.44 as on 20 February 2008.

Principle Personal Tax Saver Fund is an open-ended equity linked savings scheme, whose investment objective is to provide long-term growth of capital. It aims to achieve a return on assets in excess of the performance of BSE 100 Index.

Principal PNB MF unveils FMP Series

Principal PNB MF has announced the launch of Principal Pnb Fixed Maturity Plan 460 Days - Series IV and it is a close-ended scheme. The primary objective of the scheme is to build an income-oriented portfolio and provide returns along with regular liquidity to investors. The fund will invest up to 0%-100% in debt securities (including securitized debt) and money market instruments. It will have investment of 0-100% in government securities. Investment in securitised debt may be up to 100% of the net assets of the scheme.

Reliance MF files an offer document with SEBI

Reliance MF plans to launch Reliance Fixed Horizon Fund - IX and it is a close-ended income scheme. The scheme offers 12 Series with different maturity. The offers under Series 1 to 4 having 15 to 18 months duration, Series 5 to 8 having 18 months 1 day to 21 months and Series 9 to 12 with maturity period 21 months 1 day to 25 months.

The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of central and state government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility. The scheme will invest 0-70% in money market instruments. The scheme will invest 30-100% in government securities issued by central and/or state government & other fixed income/ debt securities including but not limited to corporate bonds and securitised debt. Debt securities will also include securitized debt, which may go up to 100% of the portfolio. The average maturity of the securities will be in line with the maturity profile of the scheme.

JM Financial ML MF declares dividend

The JM Financial ML Financial mutual fund has announced the declaration of dividend under dividend option of the regular and institutional plan of JM ML Fixed Maturity Fund -Series VI- Quarterly Plan 5. The record date for dividend will be 25 February 2008. The AMC plans to distribute realized appreciation in the NAV of the plan / option from 27 December 2007 till the record date as dividend. The NAV of the scheme was recorded at Rs 10.1238 under regular plan and Rs 10.1314 under institutional plan as on 19 February 2008. JM ML Fixed Maturity Plan -Series VI- Quarterly Plan 5 is a close-ended income scheme, whose primary investment objective is to seek to generate regular returns through investment in fixed income securities normally maturing in line with the time profile of the respective plan.

Fund houses woo Aussies to put money in Indian market

Global funds are tapping the large Australian retail investor base to invest in the Indian stock market, which has grown 40%-plus annually in the last three years.

Two funds one from Kotak Mahindra Bank and another from Fidelity have already tapped Australian retail investors. Now, according to Rashmi Hansi Mehrotra, the principal business leader for investment consulting at Mercer, adviser to the worlds largest funds, a third fund will soon tap the Australian retail market for investing in the booming Indian equity markets.

Kotak Mahindra collected $69 million last year through India Equity Fund, which rose by 45% in value $100 million as of December 2007.

The other fund that collected money from Australian retail investors is Fidelitys Fiducian India Fund. There is a big retail investor market waiting to be tapped.

Australia is the fourth largest retail market with 25 million people. The rule that 9% of salaries of Australian investors should be locked in superannuation schemes till 65 years forces them to invest in attractive markets like India.

Fidelitys Fiducian India Fund is a blended portfolio of stocks selected by two Indian fund managers, State Bank of India Funds Management and Sundaram BNP Paribas Asset Management. SBIFM focuses on large-cap stocks, while Sundaram focuses on mid-cap stocks.

Indian stock markets have all kinds of investors, including offshore hedge funds, endowment funds and pension funds.

Wall Street banks such as Citigroup, Merrill Lynch, Fidelity, Goldman Sachs, Morgan Stanley, among others, raise funds for India from their overseas clients. They are also managing funds of their Indian clients through the private banking business.

Birla Sun Life MF declares dividend

The Birla Sun Life mutual fund has announced the declaration of dividend under dividend option of Birla Sun Life Interval Income Fund- Quarterly Plan-Series I for its both retail and institutional plan. The AMC plans to distribute 100% of distributable surplus as on record date on the face value of Rs. 10. The record date for dividend is set as 26 February 2008.

The NAV of the scheme was recorded at Rs 10.2060 under retail plan and Rs 10.2085 under institutional plan as on 20 February 2008.

Birla Sun Life Interval Income Fund- Quarterly Plan-Series I is an interval income scheme with an objective to generate regular income through investments in debt and money market instruments. It may not charge an entry. The scheme may charge 0.50% an exit load for redemption before date of maturity.

ING MF declares dividend

ING India Mutual Fund has announced 27 February 2008 as the record date for declaration of dividend under dividend option of ING Fixed Maturity Fund-Series XXX. The AMC plans to distribute entire appreciation in the NAV of dividend option from the date of allotment to 27 February 2008 as dividend. The NAV under retail plan is Rs 10.1549 as on 20 February 2008.

ING Fixed Maturity Fund-Series XXX is a close-ended scheme offering an investment plan of 92 days maturity, investing in a portfolio of government securities, or highly rated corporate bonds maturing close to the maturity of the scheme so as to generate returns comparable with alternative fixed income instruments of similar maturity.

Principal Pnb MF extends NFO period for FMP

Principal Pnb mutual fund has extended the new fund-offering (NFO) period of Principal Pnb Fixed Maturity Plan 460 Days - Series IV from 21 February 2008 to 4 March 2008.

Principal Pnb Fixed Maturity Plan 460 Days - Series IV is a close-ended scheme. The NFO price for the fund is Rs 10 per unit. The minimum investment amount under regular plan is Rs 1000 and any amount thereafter. Under institutional plan, the minimum investment amount is Rs 50 lakh and any amount thereafter.

The primary objective of the scheme is to build an income-oriented portfolio and provide returns along with regular liquidity to investors.

No entry load will be charged during the new fund offer of the scheme. The scheme may levy 1% an exit load on redemption of investment from the date allotment to 400 days. The scheme may not charge an exit load for redemption from 401st day to maturity.

Satyam Computer Services loses by 2.44%

Share prices of Satyam Computer Services went down by 2.44% to Rs. 447.00 reported at BSE at 10.54 a.m. on 22 February 2008 against previous day close of Rs 458.20.

Declining share prices may have negative impact on NAV of mutual fund schemes, which holds their stake in the company. Franklin India Taxshield 99 is likely to lose as it has the highest percentage hold of the stocks of the company compared to its peer groups who have invested in the stocks of the company. Franklin India Taxshield 99 has 14.17% of its total portfolio size invested in the stocks of the company as on 31 January 2008. The scheme holds 16280 units of the company in January 2008 compared to its peer groups who have invested in the stocks of the company.

Other schemes, which may affect includes Franklin Infotech Fund - (G) with 3.47 lakh units (10.66% of its portfolio), UTI-Software Fund (D) with holding of 2.00 lakh units (10.27%) as on 31 January 2008.

Mirae Asset MF appoints new CFO

Mirae Asset mutual fund has appointed Mr. Wan Youn Cho as the Chief Financial Officer with effect from 14 February 2008. Mr. Wan Youn Cho has 12 years of work experience in the field of financial services. He is responsible for the overall financial functions of the Company. Prior to this assignment, Mr Cho was Head of Trustee Division with Mirae Asset Securities Company. He has also been associated with organizations like Samsung Securities Company, Seoul and Boram Bank.

He has done Business administration from Seoul.

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Markets on 22nd Feb 2008

Markets on 22^nd Feb 2008

Markets end in red on the back of weak global cues

The markets opened in the negative on the back of weak global cues and remained in a range for the rest of the session. They finally closed near the lows of the day. While the Sensex was down 385.61 points or 2.17% at 17,349.07, the Nifty lost 81.05 points or 1.56% to close at 5110.75. Broadmarket indices also fell but to a smaller extent as the BSE Midcap and Smallcap indices lost 0.97% and 1.01% respectively. The market breadth was negative as A/D ratio was 1:2 on the BSE. NSE cash turnover was Rs.10201.49 cr vs. Rs. 12193.69cr yesterday.

Sectorally, barring the BSE Consumer Durables and Healthcare indices that ended flat, all the other BSE Indices ended lower. The biggest losers were the BSE IT and Bankex which lost 3.06% and 3.14% respectively. Gainers from the index pivotals were Cipla, Hindalco and Maruti Suzuki. Major losers were Bajaj Auto, HDFC Bank, Satyam Comp, ICICI Bank and Infosys.

With the Nifty closing near the 5100 support levels which also correspond to the 200 day EMA, Monday’s trading session would be crucial. A close below these important supports could lead to a sharp fall and a testing of the 5000 and 4800 supports. We continue with our go slow approach on fresh long positions.

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Industry News 22 Feb 2008

Industry News 22 Feb 2008

Bihar's first step in software export

In the news for many a positive change, Bihar is set to add another feather to its cap in the form of its first software technology park (STP). Located in Patna, the park 49th of its kind in the country will have facilities to accommodate around ten small and medium level software firms. Chief minister Nitish Kumar will inaugurate the park on Feb 22 at a function which will also be attended by Union minister of state for communication and information technology Shakeel Ahmed. A team of senior officials of the Software Technology Park of India (STPI), including director (east) P K Das and New Delhi-based senior director Omkar Rai reached Patna on Feb 21 to supervise the preparations for the inauguration. Earlier the state had just one regulatory office of the STPI and software exported from Bihar were routed through the STP located in Bhubaneswar.

The building of the park has already been completed and additional facilities would be in place within a month's time. "Though this park can accommodate only small and medium level software firms, it can provide a launching pad to entrepreneurs for setting up larger firms," Patnaik added. He hoped the park would not face much problem as far as optimum utilisation of the facilities is concerned since Bihar has as many as 11 registered software export firms.

Bank of Baroda cuts prime lending rate by 50 bps

State-run Bank of Baroda said on Friday it had cut its prime lending rate by 50 basis points to 12.75 per cent.

The reduction, to be effective from February 27, is aimed to stimulate demand for consumer and investment credit in a slowing economy, it said in a statement.

SBI and Canara Bank cut their rates by 25 basis points each while Bank of India and Union Bank of India cut rates by 50 basis points each. Ahead of the news, shares in Bank of Baroda ended 0.71 per cent down at Rs 377.50 in a weak Mumbai market.

No hike in power tariff in capital this year

With an eye on the forthcoming assembly polls, Delhi government today decided not to hike power tariff this year.

The government also decided to enforce the proposed subsidy on power to domestic electricity consumers from April one.

The Minister said the proposed subsidy for all domestic consumers of electricity up to 200 units per month during peak winter and summer months declared last year would be enforced from April one.

Fake CVs: Firms increase check points

With candidates of questionable background swamping the job market, enterprises are now beefing up their security thresholds by adding more layers to the hiring process.

A number of players, including big ones like KPMG and Hong Kong-based Quest Research, have stepped in to make the recruitment procedure for companies more stringent with compulsory pre-employment screening, background checks, including criminal record checks and credential validation and verification.

Fed's rate cuts force Asia back to control regime

Ben S Bernanke, the champion of free markets, is driving Asia’s governments back to controlled economies. Under Bernanke’s chairmanship, the Federal Reserve’s steepest interest-rate cuts since 1990 are limiting his Asian counterparts’ options to curb inflation. Instead of raising their own borrowing costs or letting their currencies appreciate faster, governments are resorting to regulating meat and egg prices in China, stockpiling cooking oil in Malaysia and subsidising utility bills in Indonesia and the Philippines.

Such measures may backfire. Artificial price curbs and subsidies only feed more demand for oil and other commodities, and ultimately will make it harder to contain inflationary pressures worldwide, officials from the Group of Seven nations warned at their February 9 meeting in Tokyo.

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Corporate News 22 Feb 2008

Corporate News 22 Feb 2008

Rural Electrification Corporation (REC) IPO subscribed 4.67 times

The initial public offer of Rural Electrification Corporation (REC), a state-run power sector lender, got subscribed 4.67 times at 11:00 IST on last day of its issue today, 22 February 2008. The price band for the IPO is Rs 90 to Rs 105. The book building process, which opened on February 19, is scheduled to close on February 22. The issue would constitute about 18.18% of the fully diluted post-issue capital of REC. It is looking to raise about Rs 16.40 billion through sale of 156 million equity shares in a price band of Rs 90-105 in the IPO.

Most of the bids today came from the institutional investors that made the portion reserved for Qualified Institutional Buyers (QIBs) getting subscribed 4.52 times.

Rural Electrification is offering shares in a price band of 90 rupees to 105 rupees. The 156.1 million shares on offer will account for 18.2% of the lender's post-issue capital. The holding of the government, which fully owns the company, will be reduced to about 81.8%. IL&FS Investsmart Ltd., ICICI Securities Ltd. and SBI Capital Markets Ltd. are managing the share sale.

Rural Electrification Corporation is a public sector enterprise and is engaged in financing and promoting transmission, distribution and generation projects across the country. The company provides financial assistance to public sector power utilities at the central and state levels, private sector power utilities, and joint sector clients. Its financial products include long-term loans, short-term loans, bridge loans and debt refinancing provided through its corporate office in New Delhi and 17 field units across India.

Govt approves securities for SBI rights issue

New Delhi: The government on Feb 21 approved issuing special marketable securities worth Rs 9,995.99 crore to subscribe to State Bank of India's rights offer.The Cabinet, which met in New Delhi on Thursday, gave its approval to modify an earlier decision to give SLR (statutory liquidity ratio) status to the government securities. The issuance of such securities would have allowed SBI to meet a part of its SLR requirement.

Under SLR provisions, banks have to park 25 per cent of their deposits in government bonds. SBI has decided to raise Rs 16,736.31 crore by issuing about 10.5 crore shares on a rights basis. The issue, which opened on February 18 will close on March 18.

ICICI Prudential Life hires retired armed forces personnel to sell policies news

Chennai: Private life insurer ICICI Prudential Life Insurance Company Limited has begun hiring graduate non-commissioned officers of the armed forces or ex-servicemen to sell policies in rural areas. The source said that the retired servicemen with 10 years experience are eligible to become unit manager in rural areas. On successful completion of training, the selected ex-servicemen will be given a Certificate of Insurance Management and absorbed by the life insurer. Till date the company has recruited around 231 retired armed forces personnel across the country and nearly 48 per cent of them belong to South India.This move is expected to boost ICICI Prudential Life's premium income and its agency field force in rural areas, which currently numbers 30,000 rural agents who contribute around 3 per cent of fresh business.

Indiabulls Financial - Application for setting up Mutual Fund

Indiabulls Financial Services Ltd has informed that Securities and Exchange Board of India (SEBI) has approved setting up of an Asset Management Company and a Trustee Company, pursuant to application of the Company for setting up a Mutual Fund.

The Company is in the process of setting up of an Asset Management Company and a Trustee Company in terms of the approval of the SEBI, for setting up the Mutual Fund.

Pidilite Industries - Updates

Pidilite Industries Ltd has informed about the following:

1. The Company has acquired entire issued and Paid-up Capital of following Companies by investing Rs 1,70,000/- each: a. Bhimad Commercial Co. Pvt. Ltd. b. Madhumala Traders Pvt. Ltd. The current business of both these Companies is Investment.

2. Both the above Companies which are now Wholly Owned Subsidiaries of the Company have joined as Partners in the existing firm, M/s. Nitin Enterprises engaged in the business of manufacturing of branded Sealants and Adhesives in the State of Jammu & Kashmir.

3. The Company also acquired assets and business of branded Sealants and Adhesives from M/s. Hardcastle & Waud Manufacturing Co Ltd., and associates.

Dr Reddys - Allotment of equity shares under ESOP

Dr Reddys Laboratories Ltd has informed that pursuant to Dr. Reddy's Employees Stock Option Scheme, 2002, the Compensation Committee of the Board of Directors of the Company has allotted 37,094 equity shares of Rs 5 each of the Company on February 21, 2008, to Employees who have exercised their Stock Options.

Jaiprakash Associates signs shareholders' agreement with Steel Authority of India

Jaiprakash Associates has signed the shareholders' agreement with Steel Authority of India (SAIL) for setting up of 2.1 MTPA capacity slag-based cement plant at Bokaro Steel City, Jharkhand in joint venture through a special purpose vehicle to be incorporated for the purpose.

Jaiprakash Associates shall hold 74% equity in the joint venture company and 26% equity of the same shall be held by SAIL.

The company made this announcement after the trading hours on Thursday, 21 February 2008.

GlaxoSmithKline Pharmaceuticals recommends dividend

The board of GlaxoSmithKline Pharmaceuticals has recommended dividend at the rate of Rs 18 per share for the year ended 31 December 2007.

This was recommended at the board meeting held on 22 February 2008.

Info Edge India's FIIs limit increases to 40%

Info Edge India has announced that the FIIs investment limit under portfolio investment scheme stands increased to 40% of the paid-up equity share capital of the company.

The company made this announcement during the trading hours today, 22 February 2008.

Satyam Computer Services sets-up Life Sciences Center of Excellence

Satyam Computer Services has announced the setting up of the Life Sciences Center of Excellence (CoE). The facility was inaugurated by Satyams founder and chairman, B Ramalinga Raju on the sidelines of RxCellence, the Life Sciences conclave which Satyam hosted at its state-of-art Satyam school of leadership in Hyderabad. The theme for the conference was faster, safer and smarter strategies for Life Sciences Industry. The day was filled with compelling, insightful and thought-provoking speaker sessions and panel discussions on the progressive accomplishments in the pharmaceutical, biomedical and generics industry. Thought Leaders CXOs, business leaders, consultants, analysts, scientists and senior executives from different parts of the world attended the event. Some of the eminent dignitaries were from the Life Sciences advisory board members comprising ex-senior executives / ex-CXOs of leading Life S companies.

The Life Sciences CoE will showcase Satyams domain expertise and thought leadership in the industry. The CoE will house solutions cutting across the value chain, addressing a number of industry pain points. While there are quite a few discrete point solutions attempting to address various industry pain points, they are often incomplete requiring huge amount of customization and complex integration. The CoE solutions will provide the necessary frameworks with flexibility and ease of customization enabling faster implementations and therefore a better Rol. These solutions leverage extensive domain experience that Satyam has built over the years in the industry. The CoE addresses industry needs in the areas of clinical drug accountability, drug counterfeiting, cell line management systems, high throughput analytics, clinical development, bioinformatics, supply chain, CRM, key opinion leader portals etc.

The Satyam CoE solutions are being reviewed and validated regularly by their customers and the life sciences advisory board comprising eminent personalities with decades of experience in the industry. With all the inputs being received and the consequent refinements and enhancements being made, Satyam is confident that the organization will be able to make a step change in the quality and delivered value of services to customers.

The company made this announcement during the trading hours today, 22 February 2008.

Megasoft recommends dividend

The board of Megasoft has recommended dividend at the rate of 12%.

This was recommended at the board meeting held on 22 February 2008.

Vesuvius India recommends dividend

The board of Vesuvius India has recommended dividend at the rate of Rs 3.75 per share (37.50%) for the year ended 31 December 2007.

This was recommended at the board meeting held on 22 February 2008.

NPIL Research & Development enters into agreement with department of biotechnology

Nicholas Piramal India has announced that NPIL Research & Development has signed an agreement with the department of biotechnology, New Delhi on screening for bio-molecules from microbial diversity collected from different ecological niches, thereby initiating an industry - university / national institute partnership programme in drug discovery.

The project envisages a mega-scale screening programme for various environmental isolates. This is the first project in the country in which industry and academia will work together to screen such a large number of bacterial isolates. Different academic institutes will isolate organisms specific to diverse ecological niches. For each sample, isolation of bacteria will be carried out on 30 different growth media.

This multi-institutional effort will generate approximately 7000 isolates / month (~1000/institute), which will be regularly sent to NRDL, the industrial partner of the project. Each of these institutes is an expert in niche areas of microbial biodiversity. The microbial isolates have not been tested for potent medicinal properties, if any. The purpose of this study is to exploit the biodiversity of microbes. This will help in identifying specific therapeutic properties that may be further used to identify novel molecules, which may then be passed on to the drug development phase.

At NRDL's facility at Goregaon, Mumbai, a team of scientists have been concerting their skills and have established high-end technologies using High-throughput robotics, which help in identifying specific properties that can be further developed. Most biological assays involve the use of living cells under in vitro conditions to measure the therapeutic potential of the extract. If this is found to be positive and better than the existing controls, a collective decision may be taken to move forward to the various steps involved in the development phase of the drug.

Natural diversity appears to be a novel source for new drugs worldwide. In the pursuit of new drug development, new drugs are needed so that an effective pipeline of molecules is established whose properties can be effectively validated in vitro using modern techniques in proteomics and genomics.

Screening will be carried out for anti-cancer, anti-infective, anti-diabetes and anti-inflammation properties. In addition to the culture-dependent method, the culture-independent approach will also be adopted for a few selected samples.

There are hopes that a bank of novel leads with specific potential will soon be developed. This will aid In the long-drawn process of drug discovery. Natural diversity appears to be a novel source for new drugs worldwide. In the pursuit of new drug development, new drugs are needed so that an effective pipeline of molecules is established whose properties can be effectively validated in vitro using modern techniques in proteomics and genomics.Screening will be carried out for anti-cancer, anti-infective, anti-diabetes and anti-inflammation properties. In addition to the culture-dependent method, the culture-independent approach will also be adopted for a few selected samples.There are hopes that a bank of novel leads with specific potential will soon be developed. This will aid In the long-drawn process of drug discovery. The project will lead to the selection of potential candidate molecules, which will be taken to process scale-up strategies with appropriate partners. The credit-sharing in this project amongst the PI and industry has been mutually worked out.

The company made this announcement during the trading hours today, 22 February 2008.

City Union Bank declares interim dividend

The board of City Union Bank has recommended an interim dividend of 30% on the equity shares for the financial year 2007-2008.

This was recommended at the board meeting held on 22 February 2008.

Jaiprakash Associates appoints director

The board of Jaiprakash Associates has appointed S C Gupta as director in the existing vacancy with effect from February 21, 2008.

He was appointed at the board meeting held on 21 February 2008.

ICICI Bank allots equity shares

ICICI Bank has allotted 8,003 equity shares of face value Rs 10 each under ESOS, 2000.

These shares were allotted by the bank on 18 February 2008.

Power Grid Corporation to consider interim dividend

The board meeting of Power Grid Corporation of India will be held on 05 March 2008 for declaration of interim dividend for the financial year 2007-08.

The company made this announcement during the trading hours today, 22 February 2008.

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