Real estate players under scanner

Concerned over huge tax evasion in realty sector, the Income Tax department is likely to scrutinise tax returns of all real estate players, be it a property dealer or a builder, with annual turnover of Rs 5 crore in the current fiscal.

"The Central Board of Direct Taxes (CBDT) has asked the field Income Tax officials to sent scrutiny notices to all builders having an annual turnover of Rs 5 crore or more," a Finance Ministry source said.

An official comment from the ministry on the issue could not be obtained.

The source said through these notices, assessing officials could ask builders to appear before them to explain the sources of income, net profit, tax deduction at source (TDS). They could also be asked to disclose details of income and expenditure during past three years.

A decision in this regard was recently taken as part of the annual action plan of the department to take measures for meeting direct tax collections' target of Rs 2,67,490 crore and unearth black money in realty sector.

"It has also come to our notice that many builders are selling flats by taking money partly in cash, and not disclosing it in the annual returns," the source said.

He said though many builders were taking money from home buyers in advance, but they show income in tax returns after the completion of projects only. Information collected from banks was collated in this regard, he said.



FIIs lap up shares worth Rs 676 cr

Jitters in overseas markets sent the domestic bourses crashing twice in the past eight days, but foreign investors were busy grabbing stocks here seeing attractive buying opportunities after the 1,000-point plunge.

Some big names of the FII clan, including Merrill Lynch, Morgan Stanley and Citigroup, purchased stocks worth over Rs 676 crore between July 27 and August 1, when the market recorded its two biggest crashes of this fiscal.

Interestingly, most purchases were recorded on these two days only, even as the overall market sentiment was bearish following the 542 and 615-point fall in the benchmark Sensex.

An analysis of the bulk and block deals recorded on the stocks exchanges shows that foreign funds purchased shares worth Rs 676.32 crore in the period when the Sensex tanked over 1,000 points in two routs between July 27 and August 1.

Besides, the funds are believed to have purchased additional stocks in smaller quantities, but their exact estimates could not be known. Bulk deal refers to trading in a company's shares for over 0.5 per cent of the total shares of the firm listed on the exchange. During this period of six trading sessions, the Sensex closed below the 15,000 mark on two occasions.

Morgan Stanley and Co International did some big time shopping during the period buying shares worth over Rs 487 crore in six companies, including Ansal Infrastructure, GVK Power Infrastructure and IDFC among others in bulk deals on the BSE. In contrast, it offloaded shares worth just Rs 2.98 crore in the past seven trading sessions.

Similarly, Citigroup Global Markets Mauritius bought shares worth over Rs 26 crore in four deals, while it sold shares worth six crore during the period. Among other major foreign shoppers were Goldman Sachs, Copthall Mauritius Investment and Merrill Lynch Capital Market Espana who were also seen buying stocks during the crash.

In total, the foreign funds sold shares worth about Rs 82 crore during the same period, with most of the sale deals being executed after booking significant gains on investments.

While Merrill Lynch Capital Market sold shares worth about Rs 50 crore, selling by Copthall and Lehman Brothers were relatively small in the range of Rs 4-5 crore.

Interestingly, the FIIs refrained from any big selling or purchase on August 2 and 3, when the Sensex was seen in a recovery mode and gained over 200 points. Five new foreign institutional investors have been registered with market regulator SEBI within the past week, taking the total number to 1,070.

FIIs have recorded a net investment of close to Rs 42,000 crore (about $10 billion) in Indian stocks so far in 2007, which is more than 8.5 billion dollars recorded in the entire 2006.

However, on collective basis, FIIs were net sellers to the tune of about Rs 1,200 crore on July 27 and about Rs 1,000 crore on August 1, the data available with SEBI show.



RCom to launch money transfer via mobile

Reliance mobile users will soon be able to send money orders through their handsets, with the company exploring tie-ups with financial institutions for the service that will see its about 1.5 lakh retail outlets doubling as collection points.

"We will launch a new service - Mobile Money Order in Reliance mobiles, which will enable people to send and receive money through their handsets. About 1.5 lakh retail outlets of the company will act as collection points," Mahesh Prasad, president (applications, solutions & content group), Reliance Communications told PTI.

The service is expected to be launched by the year end, he said, adding: "We are closely working with financial institutions and banks for introducing this service."

Reliance has a mobile subscriber base of over 31 million.

With this, the company is aiming to capture a significant market share in the Rs 5,000 crore Value-Added Service (VAS) industry.

"VAS currently contributes 10-15% of the service providers revenues. The market for VAS is expected to reach Rs 5,000 crore by this year end from Rs 2,750 crore last year," Prasad said.

The company is also looking at various other verticals such as finance, e-medicine and advisory services among others for introducing VAS on its mobile network.

He said we are evaluating the possibility of developing regional content such as something that would be of interest to a farmer like prices of agri items at the local market.

VAS in the financial space may include information on loans, insurance schemes and collection of premium. Through e-medicine, customers in the rural areas would be able to locate primary medical centres and details of visiting doctors specific to their village.



China mobiles to flood GSM mart

Chinese manufacturers are making a major dent in the mobile phone market, from May this year, collectively selling over 1 million mobile phones mostly as original equipment manufacturers (OEMs) to operators.

That figure estimated by the Indian Cellular Association (ICA), the apex body for phone manufacturers, constitutes nearly 17 per cent of the 6 million per month mobile market.

According to industry estimates, Chinese manufacturers are expected to sell around 1.5 million phones a month, nearly one-fifth of the total market.

A few months ago, the share of Chinese manufacturers in the mobile market was far below and their attempts to sell cheap GSM phones directly to consumers came a cropper.

The quiet entry has been prodded by the launch of Reliance Communications’ “Classic” range of mobile phones, which were offered at Rs 777 from April this year. Industry estimates that as much as 65 per cent of the phones are sourced from Chinese manufacturers like TCL, Huawei and ZTE.

According to industry figures, in the CDMA space the share of Chinese manufacturers in the top cities have shot up from around 38 per cent in April this year to around 54 per cent in June.

The share of Classic phones (the bulk were supplied by Chinese manufacturers) has gone up from around 40 per cent in April to 60 per cent in June. Obviously other competitors, which include companies such as LG, Samsung, Nokia and Motorola, have collectively seen a fall in their market share.

Industry analysts say that Reliance bought over 5 million phones (65 per cent of it from China) and it exhausted in four months. A Reliance spokesperson declined to comment on issues relating to the phone sourcing.

In the GSM space, where the Chinese companies have hardly any significant presence –because bundling has not been the norm, the scenario is about to change.

According to handset manufacturers, operators expect that about 15 per cent to 20 per cent of the incremental subscribers (around about 5 million GSM subscribers) to come from bundled offerings.

Says national secretary of the Indian Cellular Association, Adarsh Shastri: “My estimate is that 70 per cent of this GSM bundled market will be dominated by the Chinese manufacturers with price advantage, while the rest will be served by the tier one mobile phone makers”.

According to Shastri’s estimates, about 6 lakh GSM mobile phones per month will be supplied by Chinese manufacturers which will be either branded under their name or under an operator brand name.

However, he says that the lower end market could explode and the incremental increase in subscriber base could be much higher (COAI estimates it will hit 10 million per month).

The main attraction is of course price, which reduces the cost of entry barrier, as operators get into smaller towns and rural India.

Says Rajesh Sharma head of sales of Chinese mobile phone manufacturer Bird Corporation: “Of course price is the key which makes us attractive. We are aggressively moving towards tying up with companies like Airtel and Hutch to give bundled offerings”.

Industry estimates that differences in price could range from anything between Rs 250 and Rs 1,000 a piece at the entry level depending on the size of the order. For instance, Chinese companies are offering phones at Rs 1,000 and even below.

But says Sunil Dutt, former head of marketing in Nokia India, who is planning to set up his retailing business: “The price differential is narrowing and might not be more than $ 5–$6 and companies such as Nokia which also manufacture phones in China will not find it difficult to combat the challenge”.



RIL gets ministry rap for oil retail delay

The petroleum ministry has rapped Reliance Industries for failing to meet its obligations of opening and operating 10 per cent of its petrol and diesel retail outlets in remote and low-service areas.

In its reply to a recent ministry communication to this effect, the company has said that this was because of the government control on prices of auto fuels resulting in losses from the overall fuel retailing business.

RIL, along with private sector companies, Shell and Essar, was given permission to retail automobile fuels in the country in 2002. RIL’s plan was to open almost 5,000 retail outlets across the country, but the company has so far opened around 1,800 retail outlets.

Most of the company’s retail outlets are located on national highways, which are high-revenue areas.

“The number of retail outlets that the company has opened in remote and low-service areas is far less than the 10 per cent obligation. Moreover, most of the outlets that they have opened in remote areas are not running,” a government official said.

An RIL spokesperson said that as the government did not compensate the company for the losses it incurred on retailing petrol and diesel, it had not been able to meet its obligations of servicing the remote areas.

In a letter to the petroleum ministry, RIL says: “We hope that the government may change its policy of selective compensation and treat all players equally.”

The Mukesh Ambani-controlled company also says that the “authorisation of marketing fuels is a consequence of the stated policy (of allowing fuel prices to be determined by the market)”, adding that the “unfulfilled promise of market-driven pricing leaves no scope to subsidise operations in low-service and remote areas”.

The public sector oil marketing companies are compensated for their retailing losses by a mechanism through which the government, the state-owned oil exploration companies (such as ONGC) and the oil marketing companies (such as Indian Oil) equally share the losses.

RIL on an average sells its petrol and diesel at Re 1 a litre higher than the government-owned oil marketing companies. This has resulted in RIL losing its market share to around 4.3 per cent from around 13 per cent in the middle of last year.

The government-owned oil marketing companies – Indian Oil, Bharat Petroleum and Hindustan Petroleum – too are going slow on opening new retail outlets but are focusing on modernising existing outlets to improve appearance and provide facilities to customers.



P&G plans $30 bn share buyback

Procter & Gamble, the largest US consumer-goods company, forecast annual profit that trailed analysts’ estimates and said it would spend as much as $30 billion over the next three years to buy back shares.

Fourth-quarter profit rose 19 per cent and sales climbed 8 per cent, both exceeding estimates, P&G said today. The company benefited from demand for new varieties of Tide detergent and Olay skin lotion.

Earnings this year will be as much as $3.47 a share, P&G said in a statement. That lags behind an estimate of $3.48, the average of 18 analyst projections compiled by Bloomberg.

“The guidance may be interpreted as a little disappointing,’’ said Walter Todd, who helps manage P&G shares at Greenwood Capital Associates in South Carolina. His firm is affiliated with WealthTrust, which has holdings in nine investment firms that manage $6 billion.

Chief Financial Officer Clayton Daley said the company, facing higher costs for commodities, may raise prices again this year after increases on Folgers coffee and detergents lifted sales. Unilever, the maker of Dove soap and Knorr soup, said yesterday it would cut 11 per cent of jobs as it tries to catch up to P&G’s 14 per cent sales growth of the past five years.

P&G’s fourth-quarter net income climbed to $2.27 billion, or 67 cents a share, 1 cent more than analysts estimated. Profit a year earlier was $1.9 billion, or 55 cents. Sales rose to $19.3 billion in the three months through June, exceeding estimates by $200 million.




Emami Realty plans to invest Rs 700 cr in 3 years

Emami Realty Private (ERPL), a wholly owned subsidiary of FMCG major Emami, has lined up Rs 700 crore for 10 of its real estate projects in Kolkata, Coimbatore and Hyderabad. The projects will be completed in 2010-11 with an estimated payback period of three years.

Money will be raised partly through internal accruals and partly by borrowing from banks and FDI Funding in FDI compliant projects at a debt equity ratio of 2:1.

In the first phase, ERPL will complete construction of more than 5 million sq ft. It is also looking for joint ventures with local partners wherever necessary.

It is also in the final stage of identifying residential projects in Kharagpur, Asansol, Jamshedpur and Bhubaneswar.

Speaking to Business Standard, Raj Sureka, director, ERPL, said, “We are in the process of building four IT parks, four residential and two retail projects in three locations as of now.”

While Coimbatore and Hyderabad are likely to see more bungalows by ERPL, Kolkata will have more apartments.

ERPL is also in the process of identifying the multiplexes that will set up shops in its retail ventures. The company’s retail projects will also house offices in the premises.

“We have not yet decided the selling price of our projects because they all are due for completion in 2010-11 and by then real estate prices are likely to stabilise or fall. We will be able to take a final call sometimes in 2009,” said Sureka.

ERPL has also roped in some of the world’s best architects from both India and abroad. These include Bental of South Africa, Hafeez Contractor, Genesis, and Agarwal & Agarwal.

“For all our projects, we will ensure that proper sewerage treatment facilities, water recycling, and water harvesting are in place. We are also trying to put together more greenery, open spaces and natural light for our projects,” added Sureka. Emami floated a wholly owned subsidiary, Emami Realty Private, in May this year to make a foray into the real estate sector.

To ensure that income stream would remain unaffected by cyclical turns in the personal care products industry, Emami first diversified into paper. Next came ballpoint pen tips manufacturing, an entry into the healthcare segment with a hospital and pharmacies, followed by real estate, cement and recently in April, bio-diesel.




RPG merges subsidiaries

RPG Enterprises has decided to merge RPG Transmission and National Information Technologies with KEC International.

KEC and RPG Transmission are both engaged in the setting up of power transmission lines, power distribution networks and railway electrification. Last year, KEC posted a net profit of nearly Rs 100 crore on a total income of Rs 2,100 crore. The company has operations in the North American, central Asian, West Asian and African markets.

RPG Transmission is a relatively small company, which recorded a net profit of nearly Rs 26 crore on a total income of Rs 370 crore last year. National Information Technologies is an unlisted company of the group, engaged in setting up and operating telecom infrastructure.

The boards of directors of these companies will meet on Monday to approve the merger proposal. Following the approval of the boards, the shareholders’ nod will be sought through postal ballot.

The companies are expected to announce the merger ratio on Monday.

Experts said the proposed merger would provide an opportunity for KEC to get into the growing telecom infrastructure space. Also, the merger would enable National Information Technologies to take on its bigger competitors.

In short, an analyst said, the merger would create a formidable entity which could post a total income of Rs 3,200 crore by the end of this year and Rs 4,000 crore by 2009.

Kolkata-based RPG Enterprises, which holds a 40 per cent stake in RPG Transmission and 35 per cent stake in KEC, has been streamlining its operations over the last few years. Recently, its pharma outfit RPG Life Sciences, formerly known as Searle India, had hived off its investment subsidiary. Prior to that, the group’s tyre company, CEAT, spun off its investment companies.

Analysts said the RPG group was consolidating its business in the power infrastructure business before taking a big plunge into the power business. It had recently announced an investment of Rs 12,000 crore in the power sector. For the power business, the group is looking at opportunities in West Bengal, Jharkhand and Orissa.

On Friday, the share prices of KEC closed 3.4 per cent higher at Rs 593.80, while the RPG Transmission stock closed at Rs 268 on the BSE, 7.29 per cent higher than the previous close.



Sybase to increase its focus in India

Global IT software company, Sybase, is increasing its focus in India. With 250 people in its research and development centre in Pune, the company plans to ramp up its presence significantly by 2008 while simultaneously focusing on its mobile business.

Barrie D Sheers, who recently joined as senior vice president and general manager (Asia-Pacific) Sybase, told Business Standard: “Clearly we want to increase resources and commitment in India. We will be increasing our partner strength as well as revenues coming from them.

While we will be looking at acquiring new technology, getting new customers will be crucial.” He was in India to chalk out a growth strategy for the Asia-Pacific (APAC) region in general and for India in particular.

Sybase, which was known as a database company for long, recently acquired Mobile 365 (now known as Sybase 365), which has a significant presence in India. Terming India and China as its growth engines, the company feels India offers many business opportunities. The expenditure on infrastructure building too is far greater in India as compared to any of the other countries in Asia.

“With Sybase 365, we can now expand our offering in the mobile banking space. It is a huge potential area especially in India where rural banking has just taken off. The best part of this platform is that it is mobile-handset and service provider agnostic,” said Sheers. The company already has few banks as its customers in the APAC region and has done a few proof of concepts with some Indian companies.

By integrating its mobile solutions into Sybase 365, the company plans to leverage its position in the mobile interoperator messaging including SMS and multi-media messaging (MMS). It already delivers more than 3.5 billion messages per month.

Through its extensive network of approximately 700 mobile operators, including Verizon Wireless, Vodafone, T-Mobile, Cingular, Telefonica and China Mobile, Sybase 365 will continue to focus on enabling the world’s leading content providers and global brands, such as Citibank, Yahoo!, AOL, MSN and Twentieth Century Fox to mobilise their content and applications.

Catering to globally clients like China Telecom, American Airlines, Dun and Bradstreet, Sony Communication Network among others, the R&D unit has provided some significant additions to its global products. Hari Nair, director, emerging technologies, information technologies solution group, Sybase, said: “It is a key centre for our data management side and for IQ database and ASE database products. Significant amount of core work is done here.” The Centre is also actively engaged in creation of IPR in the mobility and database areas

Nair feels the company’s approach to keep the team small has paid out well. “The model that we have taken is to start with a small team of people and we gave them high-end work rather than maintenance work and the plan has worked well for us. The attrition is at its minimum while the work is world-class.” The team at Pune has contributed significantly to all Sybase products.



MRPL eyes petrochem biz in Africa

Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of Oil and Natural Gas Commission (ONGC), is planning to set up a joint venture with the State Trading Corporation (STC) of Mauritius to set up large storage oil terminals in Mauritius and jointly explore petroleum products market in African countries. The discussions are at a preliminary stage.

An in-principle agreement to set up a joint venture for large storage terminals has been agreed between MRPL and Mauritius government authorities, said R Rajamani, managing director, MRPL.

“At present Mauritius lacks large storage facilities for oil, which prevents large tankers to dock and supply. Once large storage terminals are in place, we could use these facilities and also save in logistics,” he said.

He added it is too early to assess the investment required for the project.

STC of Mauritius is the sole authority for oil supply in that country through oil companies like Indian Oil and Shell. The joint venture could be beneficial for MRPL to not only augment its supplies, but also to tap the potential of the African markets.

Geographically, Mauritius is the gateway to enter South Africa and other African markets.

MRPL started exports of petroleum products last year to Dubai, with supplies to the Emirates Oil Company. With the planned expansion of the refining capacity from the current 9.69 million metric tonnes per annum (MMTPA) to 15 MMTPA by 2010, MRPL hopes to increase its exports.

Two weeks ago, MRPL and STC had entered into supply of one million MTPA of petroleum products worth over $ 2 billion for a period of three years to meet the entire petroleum products requirements of Mauritius.

According to the contract, MRPL will supply motor gasoline, diesel, aviation turbine fuel and furnace oil for a period of three years commencing from August 2007.

MRPL already has an existing supply pact with STC Mauritius to supply one MMTPA of various petroleum products which comes to an end in August.



Nalco`s coal crisis solved

The government has found a solution to the public sector aluminium company Nalco’s current coal crisis.

The coal ministry, in consultation with railways, Nalco and coal companies has taken a decision to provide coal to Nalco from other coal companies and sources to ensure that there is no shortage of coal as against the linked quantity allocated to Nalco.

The coal ministry has clarified that Mahanadi Coalfields Ltd (MCL) supplies 14,000 tonnes of coal per day to Nalco’s captive power plants in Angul on normative basis.

However, due to adverse mining conditions in the linked mines as well as evacuation problem in merry-go-round (MGR), there has been a shortfall in supply from the linked mine.

The shortfall was being met from other mines of MCL using Indian railways wagons. However, due to unavailability of railway wagons for supply of coal from other MCL mines in Talcher area, there has been lesser supply.

Nalco had recently said that if its acute coal crisis continued unabated, then it might have to lay off employees, which made the ministry of mines to seek the prime minister’s intervention on ensuring adequate supply of coal for the company.

Acute paucity of coal has already compelled the Orissa-based Nalco to close down two of its captive power plants as coal supply from the Mahanadi Coalfields Limited (MCL) has dwindled to around 9,000 tonnes from 15,000 tonnes a day.



IFCI to invite bids for stake sale by mid-Aug

IFCI, the country’s oldest financial institution, will invite expression of interest (EoI) from strategic investors in the middle of this month to sell 26 per cent stake in the company.

The board, which met on Saturday, approved the draft report submitted by consultant Ernst & Young, on induction of a strategic investor to revive the business of the financial institution.

“Expression of interest will be invited in the middle of this month and the process will culminate in 4-6 months,” an IFCI source said.

Based on the EoIs, the company would shortlist investors and issue request for proposal by October. The strategic investor induction process is likely to be completed by January 2008. IFCI, which was in red since 2000, recorded a net profit of Rs 898 crore in 2006-07.

The company has also began lending money in a small way in 2006-07. It lent Rs 1,000 crore to top corporates in 2006-07 and expects to disburse Rs 2,500 crore in the current financial year.

IFCI may go for a partner that brings in money as well as new product strategy to position it as a viable business proposition in the long-term.

It has made provisions for entire non-performing assets (NPAs) and net NPAs stood at zero as of March 2007. The company’s accumulated losses stood at Rs 4,600 crore till March 31, 2006.

Shareholding in IFCI is widely dispersed. LIC holds 8.4 per cent while IDBI holds 5.01 per cent stake in IFCI.




India retains `sovereign right` to explode N-device

The US has said India retains the “sovereign right” to explode a nuclear device but hoped that such a situation will not arise.

“India retains its sovereign rights, but the US retains its legal rights as well,” US Under Secretary of State Nicholas Burns told a group of journalists here yesterday when asked whether New Delhi has the right to test.

Noting that the agreement has taken into account the “worst case” scenario, he said “but we hope very much that it (right of return of nuclear fuel and technology) won’t be necessary because we hope that conditions that prompt” it “will not materialise”.

Burns suggested that New Delhi may not explode an atomic device as “advanced nuclear powers” like the US and UK “largely do not test nuclear weapons” in the modern world.

He said the US preserved the “legal right” to recall fuel and technology but that would be the “choice” of the President of the day and “not automatic”.

“If you look ahead and you try to envision what would constitute a discontinuity of supply, how would that happen. There are four or five or six ways that could happen and only one of them has to do with a nuclear test,” Burns said.

“If somehow supplies for environmental reasons, for political reasons is discontinued to India, then of course India has the benefit of working with the US and other countries in construction of a strategic fuel supply reserve that could help it, if there is discontinuity,” he said.

“I think there are probably more likely scenarios than the one you are asking about — nuclear testing,” Burns said, a day after the text of the 123 agreement was made public.

Noting that it was for the Indian government to decide on nuclear test, Burns said “but obviously in the modern world, the 21st century, advanced nuclear powers largely do not test nuclear weapons. The United States does not test its weapons, Britain is not testing its weapons.”

Observing that India lives up to its commitments, the senior US administration official was reluctant to discuss if he visualised any problems in the future.

“It is hard to deal in hypotheticals because they are very far from the reality of the situations. The reality is that India is not in a situation where it is currently testing,” he said.

But if there is a nuclear test, then American law says the President of the US would have to decide whether or not to ask for fuel and technology back, Burns said.

“We have preserved that legal right in our law. But it is a choice; it is not automatic,” said Burns, who was the main negotiator of the agreement from the US side.

He hoped the situation demanding recall of fuel and technology will not arise.

Asked if the Right of Return is exercised what is it that America could ask for, he said “it is very hard to say without knowing the specifics of what happened, why it happened and how. But the legal right to do something has been protected.”



HDFC eyes investment banking business

HDFC Bank, the second largest private sector bank in the country, is gearing up to enter the investment banking business. The bank has applied to the Securities and Exchange Board of India (Sebi).

Recently, Credit Suisse received a merchant banking licence from the market regulator.

Among its peers, ICICI Bank, UTI Bank and State Bank of India are the major domestic players in the investment banking space. Even the top corporate houses such as the Tatas and Anil Ambani-promoted Reliance Capital have big plans in the investment banking space.

So far this year, the total crossborder deals in India stood at $44.3 billion, said a recent report by Thomson Financial.

The Hutchison Essar-Vodafone deal valued at $18.2 billion largely contributed to India’s active crossborder inbound activity. The business potential is huge and lucrative in this segment, hence, banks are rushing into this business.

HDFC Bank’s close competitor, ICICI Bank – with offices across 18 countries – has the highest market share in the $11.5 billion foreign currency loan market.

“We have drafted a business plan and applied to the Sebi seeking its approval to enter the merchant banking business. The business will be headed by an official from the corporate banking team. We have traditionally been active in working capital financing, now the bank will set up a project finance department and will be an active player in this space,’’ said a senior HDFC Bank executive.

“To complement the investment banking business, the bank will set up branches overseas. It has received RBI approval to set up branches in Bahrain, Hong Kong and London. We will now approach the local regulators in the respective geographies,’’ added the executive.

The bank, in a bid to give a push to its existing retail banking business, is in the process of setting up a non-banking finance company (NBFC).

“The NBFC will set up branches in locations where the bank is not present. Our strategy is to sanction smaller ticket size loans to the tune of Rs 25,000 through the NBFC outlets,’’ said the executive.



Jindal Steel planning aviation foray

Jindal Steel and Power is preparing to enter the country’s aviation sector, arguably the fastest growing aviation market in the world.

The Naveen Jindal-led company’s board of directors on Saturday decided to alter the ‘Other Object’ clause of the company’s Memorandum of Association by inserting a paragraph related to the running of the aviation business, a notice from the company to BSE said.
Steel plants

The company is currently working on two six-million tonne steel plants in Orissa and Jharkhand respectively. Jindal Power, a 100 per cent subsidiary, is pursuing a 1,000-MW thermal power plant in Chhattisgarh.

The group has also set up a 750-acre industrial-estate in Chhattisgarh and carries out reconnaissance and survey for diamonds in central India and some overseas countries.

The company reported net profit of Rs 706 crore last fiscal on net total income of Rs 3,548 crore.
Air travel growth

Indian private airlines are trying to cash in on the country’s growing appetite for air travel.

During April-May 2006-07, Indian airports saw 19.3 million domestic and international passengers, 27.2 per cent higher over the same period a year ago at 15.17 million passengers, according to Airports Authority of India.

Domestic passenger growth during the period was higher, at over 30 per cent, while international passenger growth was 17 per cent.



SBI eyes more fee income from credit card purchases

State Bank of India wants to use its vast branch network to get a little more of the fee income from credit card purchases. It plans to acquire one million Point of Sale (POS) terminals — machines used to swipe credit cards — over the next three years and put them up at shops.Mr O.P. Bhatt, Chairman and Managing Director, State Bank of India, said that the bank’s strong presence in various cities would act as a benefit in this venture. “It will act as a source of income for the bank. However, the customer would not be charged for the same.”

Some of these POS terminals are owned by ICICI Bank, HDFC Bank, HSBC and Citibank. These banks pay the merchantsthe value of purchases made by cardholders. Banks that give cash to the merchants are in effect doing it on behalf of the bank that has issued the credit card in the first place. Hence they get to keep a small portion of the cash discount that the merchant establishment offers on the value of the purchase.

There are approximately 3.7 lakh such terminals, mostly in cities. Considering the vast retail trade network in the country, SBI reckons that there is immense scope for installation of more such terminals. It plans to tap the boom in retail trade by setting up POS in towns where it has a stronger presence.

The POS will enable the bank to have access to more customers and will also act as a source of income for the bank. The bank is in talks with several vendors to finalise the plan by the end of this year.
Gold card launch

Mr Bhatt was speaking at the sidelines of the launch of SBI Gold International Debit Card in association with Visa International. SBI has launched the Gold Card, which is first in the series the bank plans to launch with Visa.

The bank also plans to increase the number of ATMs by nearly three times. It has about 7,200 ATMs at present and is planning to set up 25,000 more within three years.