Fillip for foreign issues

New Delhi, Nov. 27: The government today allowed firms to issue global depository receipts and foreign currency convertible bonds at lower prices than earlier permitted. The move is expected to help firms whose stock prices have plunged to raise money from abroad more easily. Under the revised norms, the floor price of a share will be the average of the weekly high and low price of the scrip for two weeks leading to the 30 days preceding the opening of the issue, the finance ministry said in a statement. “The government has received a number of representations that the extant pricing norms affect corporates adversely in a bearish market,” finance minister P. Chidambaram said. The country’s benchmark share index has fallen more than 55 per cent since January and the earlier rules, which mandated a higher floor price for listing overseas, would have dampened investor appetite for such issues. The new rules will apply to global depository receipts, American depository receipts and foreign currency convertible bonds (FCCB). A depository receipt is a type of financial security that is traded on a local stock exchange but represents a security, usually in the form of equity, that is issued by a foreign public listed company. A FCCB is a type of convertible bond issued in a currency different than the issuer’s domestic currency.

Oil venture

New Delhi, Nov. 27: Saudi Aramco, the world’s largest oil company, is likely to step in as a joint venture partner with Lakshmi Mittal in the refinery-cum-petrochemical project at Visakhapatnam. However, the Mittals, who have lost £17 billion in the global financial crisis, have decided to put on hold their investments in the $10-billion project in Andhra Pradesh. “They (Mittals) have informed us that they would like to go slow or rather put a pause on their investment in the proposed project in Andhra Pradesh,” said Arun Balakrishnan, chairman of HPCL, one of the five promoter firms of the project. Mittal will, however, invest Rs 18,919 crore in HPCL’s 9-million-tonne Bhatinda refinery in Punjab. Balakrishnan said Saudi Aramco had shown interest in the Vizag project. “It will cost around Rs 50,000 crore. Their presence will ensure crude oil supplies to the project,” he said.

Inflation falls

New Delhi, Nov. 27: Inflation fell for the third consecutive week to over a five-month low of 8.84 per cent. According to analysts, the drop in inflation rate provides ample room to the RBI to cut interest rates to spur economic growth amid fears of moderation. Inflation fell 0.06 percentage points for the week ended November 15 from 8.90 per cent a week ago, even as prices of many food and manufactured products rose. “We can expect the RBI to cut interest rate. We are expecting a 50-basis-point cut in the repo and reserve repo rates,” D.K. Joshi, principal economist with ratings agency Crisil, said.

HDFC rates

New Delhi, Nov. 27: Housing finance lender HDFC today said it would cut interest rates only if its cost of funds declined. “Cost of funds is still high, so once it comes down, we will reduce the interest rates,” HDFC chairman Deepak Parekh told reporters, adding that the bank will review rates at its asset liability committee meet next week. Earlier this week, finance minister P. Chidambaram had said “competition from PSU banks will force lenders in private sector to cut interest rates sooner than later”. In response to monetary measures taken by the RBI to ease the liquidity situation, some PSU banks have slashed their prime lending rates by 75 basis points.

Mittal job cuts

London, Nov. 27: ArcelorMittal today said it would trim its workforce by up to 9,000 by offering a voluntary separation programme. The focus would be primarily on non-production employees, particularly those in SG&A (selling, general and administrative) functions across the globe, a statement from ArcelorMittal said. “These programmes may involve up to 9,000 employees, approximately three per cent of the total global workforce,” it said. Hit by the global economic meltdown that has led to a slump in demand for steel, the LN Mittal-led firm said its move to launch a voluntary separation programme for employees was to help “achieve the company’s stated aim of reducing SG&A expenditure by $1 billion in response to the current economic situation”.

Woolworths move

London, Nov. 27: Woolworths Group Plc today announced that it had put its century-old retail business into administration after failed attempts at a fire sale. The company said discussions to sell its 800-store retail business had ended without a sale, resulting in the need to put both the business and the subsidiary that distributes music and videos to retailers, in the hands of administrators. “The boards of Woolworths Plc and Entertainment UK Ltd have concluded that there is no longer any prospect of those businesses being able to operate as a going concern,” the company said in a statement.