Bi-Weekly Column

·         GOLD

Gold pride of Croesus and store of wealth since time immemorial has turned out to be a very bad investment of late. A mere two years after its price raced to a nominal high, gold is sinking – fast its price has fallen 17 % since late 2011.  New York Times says, now, thinks are looking up for the economy and as a result, down for gold.  A prospect that drove investors to gold – have so far proved to be unfounded. Goldman Sachs became the latest big bank to predict further declines, forecasting that the price of gold would sink to $ 1390 within a year, down 11 % from where it traded, recently. Societe Generale of France last week issued a report titled, ‘The End of the Gold Era,” which said the price should fall to $ 1375 by the end of the year and could keep falling for years.

·         CITIGROUP : NET PROFIT RISES

Citigroup net profit rises 30 % as fixed-income unit beats estimates. Net income rises to $ 3.81 bn, revenue increases to $ 20.5 bn from $ 19.4 bn in the same quarter last year. This is the third biggest US bank. CEO Corbat is firing workers and closing branches as he seeks to make Citigroup more efficient.

·         INFOSYS’S RESULTS

Infosys Ltd declared its fourth quarter and full year results for the financial year 2012-13.  The revenue growth was lower than the guidance. The operating margins were the lowest in history. The company saw an increase in attrition levels. Most importantly It gave growth guidance for next year which is lower than NASSCOM’s guidance for the entire industry. It declined to give earnings guidance. 

The fundamentals for the Indian IT industry are strong over the long term. Infosys is a company that has the necessary cavalry to take advantage of these opportunities. 

·         POOR GOVERNANCE IN INDIA

India is likely to be considered a failing BRIC  viz. Brazil, Russia, India and China due to poor governance. Prime Minister attributes about compulsions of working with coalition partners. A lot has been written about the mess made in the telecom sector, once considered a success story and a matter of pride.  Great example of poor workings of Government companies are Air India, BSNL and MTNL. MTNL’s net worth is likely to be wiped out this year. BSNL is expected to suffer a Rs 10000 mn loss. 

·         STRIFE IN SYRIA HALTS BHEL’S RS 2000 MN PROJECT

The civil strife in Syria has affected state-owned Bharat Heavy Electricals Ltd with work on the 400 mw Tishreen power project awarded to India’s largest power generation equipment maker, coming to a halt. India has offered a line of credit of $ 240 mn to the Syrian government for financing this project.

·         SIEMENS TO CUT OVER 3000 JOBS IN INDUSTRIAL DIVISION

German engineering giant Siemens – is planning to cut over 3000 jobs in its industrial division as part of a vsst plany to save six billion euros as it faces falling profits.

·         JP MORGAN MAY PICK UP STAKE IN BHASKAR GROUP’S DILIGENT POWER

JPMorgan Asset Management may invest around Rs 8150 mn in the Bhaskar Group’s Diligent Power P Ltd indicating renewed interest in India’s electricity sector.

·         LODHA DEVELOPERS TO RAISE RS 19500 MN OF BANK LOANS FOR PRIME MUMBAI PROJECTS

Lodha Developers Ltd has tied up Rs 19500 mn in bank loans for three projects at prime locations in Mumbai even as banks remains wary of the real estate sector because of its various struggles in the past few years, mainly with declining sales. The long-term loans for Lodha’s projects are primarily for financing their construction.

·         L&T TO ACQUIRE 50 % OF L&T – KOMATSU

Engineering and Construction Company Larsen & Toubro Ltd will acquire 50 % stake in L&T-Komatsu Ltd held by Komatsu Asia and Pacific Pte Ltd and Pacific Pte Ltd – a wholly owned subsidiary of Komatsu Ltd, Japan.

·         SBI RAISES ONE BILLION DOLLARS VIA BOND SALE

State Bank of India has mopped up one billion dollars in an international bond sale programme according to one of the merchant bankers Citigroup Inc.

·         KKR SET TO ACQUIRE ALLIANCE TIRE GROUP

Private equity frim KKR and Co has agreed to buy a controlling stake in  Mumbai based Alliance Tire Group from Warburg Fincus Lic for an undisclosed sum. 

·         IMF SAYS INDIAN ECONOMY HAS BOTTOMED OUT, RISKS REMAIN

The International Monetary Fund said that growth in the Indian economy has bottomed out and would recover on the back of improved external demand and recent policy moves by the Indian government.

·         INCOME INEQUALITIES

Alarming rise in income inequalities is one of the biggest dangers in the world today.  It is bad for economic growth and also leads to socio-political instability.  In an article in Business Insider about the distribution of wealth in the US.  The top 1 % of Americans control nearly 40 % of the country’s total wealth. The bottom 80 % together own merely 7 % of America’s net worth. The wealth inequality in the US has never been so worse since the 1920s

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L A U G H

On a sign outside a lawyer’s office : “Where there’s a will, there’s a way. Where there’s a way, there’s a law. Where there’s a law, there’s a loophole. Where there’s a loophole, there’s me. WALK IN.