Satyam getting new contracts: Murty

Even as a few customers have left in the wake of the financial fraud committed by its erstwhile promoter, Satyam Computer on Wednesday said it is continuously getting new software services orders and existing clients have showed faith in the company.

"A significant majority of our clients have indicated their support for Satyam, and are staying with us. Orders continue to come in, and the organisation is (making) efforts to grow new businesses," Satyam Computer CEO A S Murty told a news agency.

Asked if he visualises Satyam regaining its earlier position of the fourth-largest software exporter, the CEO said, "The board and senior management have been in constant contact with customers and associates to assure them of business continuity. To this point, our efforts to provide clear, consistent and forthright communications are working."

Earlier Infosys, TCS and mid-sized IT firm Infotech had said some Satyam clients have approached them.



In January, State Farm Insurance Co of the US terminated its contract with Satyam. Its other key customers -- GE, Nestle, Coca Cola, and National Australia Bank -- had earlier said it would suspend new contracts given to Satyam.



On working alongside the rivals, Murty said, "We continue to compete for new businesses with Infosys and TCS and other companies in all the markets we serve.


"With a new management at the helm of affairs, Satyam Computer is also looking at long-term strategic options and reviewing its legal liabilities.

"My immediate short-term priority as CEO would be to initiate and continue measures that will instill confidence in all our stakeholders, customers, associates, alliance partners, vendors, etc. and to ensure business continuity."

The CEO said his priorities are also to address key customer concerns, focus on delivery, reinforce associate confidence and introduce key retention measures.

With Satyam's market value plunging to less than $700 million from $7 billion in May 2008, the company is weighing long-term strategic options.

"Our other priorities are evaluating long-term strategic options, assessing and managing legal liabilities and resuming investments in identified areas," Murty said, adding the company recently got a financial commitment of Rs 600 crore for working capital needs and has receivables of up to Rs 1,700 crore.

BK Modi's Spice Corp and L&T Infotech, which is a 12 percent shareholder, are among the possible firms interested in taking over the scam-hit company.



The focus is on assessing the company's financial position and taking measures to ensure business continuity as well as evaluating cost-rationalisation alternatives, he added. He, however, did not elaborate on cost-control measures. It could mean staff reduction wherever possible.


Murty said, "We are in the process of creating detailed plans for the next 30, 60, and 90 days. Having secured funding, our immediate focus remains on working closely with our associates, customers and partners, determining Satyam's strategic options, and providing stability and leadership.”

“When these are achieved, we will turn our attention to medium- and long-term programs. The options will address the interests of all stakeholders", he said.

The company has formed a task force to look at cost optimisation, which will involve exploring options such as optimising infrastructure spend, non-billable travel, and balancing onsite-offshore people-related costs and sabbatical to keep expenses in tune with revenue.

Large-scale layoff is definitely not among the options Satyam is considering at this time, company officials said.

Satyam's founder B Ramalinga Raju on 7th January confessed to doctoring the accounts of the firm, resulting in a Rs 7,800 crore fraud.


Satyam Computer was trading at Rs 42.35, down 4.19 percent, in morning trade on the Bombay Stock Exchange.

Govt infuses Rs 3,800 cr in 3 banks to raise capital adequacy

The government on Wenesday announced a Rs 3,800-crore fund infusion into state-run lenders - UCO Bank, Central Bank of India and Vijaya Bank - to shore up their capital adequacy.

Under the recapitalisation package Central Bank of India will get Rs 1,400 crore, while UCO Bank and Vijaya Bank will get Rs 1,200 crore each, Home Minister P Chidambaram told reporters after the cabinet meeting.

The capital infusion would be done in two tranches, he said, adding the first tranche would be made available during the current fiscal and the remaining in 2009-10.

As part of the first tranche, UCO Bank will get Rs 450 crore, while Central Bank of India and Vijaya Bank will get Rs 700 and Rs 500 crore, respectively, in the current fiscal.

Spelling out the reason for the capital infusion, Chidambaram said, this will help banks raise capital adequacy over 12 per cent much above the Basel II norms of 9 per cent.

In the next tranche, UCO Bank will get Rs 750 crore, while Central Bank of India and Vijaya Bank to get Rs 700 crore each, he said.

The amount would be form a part of Tier I Capital, he said, adding the infusion would increase the government holding in the three state-run banks.

The increase in the government's holding in these banks would depend on the instruments that they subscribe to, Chidambaram said, adding, such decisions would be taken by respective boards.

Under Tier I, banks can raise capital as equity and innovative instruments like perpetual non-cumulative preference shares and perpetual bonds.

The government holding in Central Bank of India currently stands at 80.20 per cent, UCO Bank 75.98 per cent, while in Vijaya Bank it is 53.87 per cent.

When asked whether these banks would be allowed to tap the primary market, Chidambaram said, accessing capital market is not a viable option."

Last year in November, the government restructured the capital structure of UCO Bank by converting Rs 250 crore equity into preference shares, to enable the bank raise fund in the market when required.

This conversion of equity into perpetual non-cumulative preference shares is in accordance with RBI circular dated 29th October, 2007.

Foreign investment via Indian firm out of FDI cap purview: Chidambaram

Foreign investment through an investing Indian company will not be taken into account in determining the sector FDI cap, the government on Wednesday said.

The Cabinet Committee on Economic Affairs (CCEA) approved the changes in the guidelines for calculating total foreign investment, direct and indirect, in Indian companies.

"The objective is to make it simple and transparent, according to the Department of Industrial Policy and Promotion (DIPP)," Home Minister P Chidambaram told reporters after the CCEA meeting.

Intel announces $7bn plant plan

Computer chipmaker Intel has announced plans to build new plants worth $7bn (£4.78bn) weeks after announcing the closure of five plants.

The world's biggest chipmaker says the investment will fund 7,000 jobs in Oregon, Arizona and New Mexico.

Last month, Intel said it was cutting up to 6,000 jobs in response to slowing consumer demand for computers.

It also aims to increase production of faster chips. Two of the plants being closed make older-style chips.

"Spending this money will lower our costs and give us more competitive products. It's something that's fundamental to our business model," said Intel chief executive Paul Otellini.

"From our perspective this is a cheaper, better technology," he said.

Nanometer race

Intel has the advantage of the being the largest chipmaker and is using its bigger purse to expand while some of its rivals scale down.

California-based Intel is hoping to boost its fortunes by using the new plants to produce 32 nanometer chip technology, which will lead to its products performing faster and more efficiently.

A nanometer is one billionth of a meter and the majority of Intel's chips use 45 nanometer technology.

Intel's nearest competitor, Advanced Micro Devices (AMD) is already busy upgrading plants, though it is still lags some way behind Intel. AMD is phasing in 45 nanometer technology to replace 65 nanometers.

Intel said in January it would close five plants in California, Oregon, Malaysia and the Philippines with the loss of between 5,000 and 6,000 jobs.

It said the two US factories were based on older microchip technology.

Intel's plans come as joblessness in the US soars. In January the US unemployment rate reached 7.6%, the highest level since 1992.

GM confirms 10,000 jobs are to go

US carmaker General Motors has confirmed it is cutting 10,000 jobs from its workforce by the end of 2009.

GM said it would reduce its global salaried staff to about 63,000 from its current level of 73,000.

The company said it was forced to act by a "severe drop" in vehicle sales worldwide and by the need to restructure "for long-term viability".

About 3,400 cuts will be made in the US. These had already been outlined in a plan put forward to the government.

Restructuring plan

The cost-cutting was part of an initial restructuring plan GM submitted to Congress on 2 December 2008 as part of a request for aid.

The chief executives of Ford and GM also offered to work for $1 a year to persuade Congress to approve the emergency aid.

At the end of last year, the US government gave GM $10.4bn in loans and Chrysler $4bn. A further $4bn was to be provided to both firms at a later date.

GM's car loan arm GMAC also received a $5bn rescue package from the US government.

Under the terms of the deal, the US Treasury agreed to buy shares in GMAC.

Pay cuts

On Monday, GM also announced "a temporary pay reduction for a majority of US salaried employees" from 1 May to the end of the year, when it will be reviewed.

Executives' pay will be cut by 10%, while "many others" will see reductions of 3% to 7%, the carmaker said.

"Other countries are currently reviewing compensation and benefits for salaried employees," GM said.

China's exports see sharp decline

China's exports fell more than expected in January, down 17.5% from a year earlier, marking the biggest drop in more than 10 years, figures have shown.

Imports were down 43.1% in the month compared with a year ago, as China's economy continued to be hit by the global economic slowdown.

Analysts say the slowdown could prompt more factory closures and job losses.

China's global trade surplus widened to $39.1bn last month, after recording a surplus of $39bn in December.

Jobs pressure

"The numbers are terrible. The environment is awful," said Ken Peng, an economist at Citigroup.

"The pressure on unemployment will be huge," he added.

Some analysts argue that this worsening trend will continue, as the world economy contracts.

Last month, China's crude oil imports fell to their lowest level for 15 months - down 8% year-on-year.

The country shipped in 12.82 million tonnes of crude oil, nearly 11% lower than in December.

Shares fall after US banking plan

Global investors have given the $1.5 trillion (£1.02 trillion) US bank bail-out plan a muted response, following sharp falls overnight on Wall Street.

Analysts says there is scepticism over whether the proposal will work, and worries over both a perceived lack of detail and the sums of money involved.

At the core of the plan is a new $500bn fund to absorb toxic bank assets.

The UK's FTSE 100 was down 0.4% in early trading. America's main Dow Jones slumped 4.6% on Tuesday.

"This is not a clear-cut plan," said analyst Bucky Hellwig.

Mr Hellwig, who works for Morgan Asset Management, added that it wasn't "what investors are looking for", and that the package was "convoluted".

Dow slump

In early Wednesday trading in London, the FTSE 100 was 0.4%, or 18 points, lower at 4,195, while France's Cac had lost 1%.

Hong Kong's Hang Seng index was down 431 points, or 3.1%, in afternoon trading at 13,450.

Meanwhile, the top index of Australian shares closed down 10.3 points, or 0.3%, at 3,418. The Japanese stock market was closed for a public holiday.

The falls came after the US Dow Jones index slumped 382 points, or 4.6%, to 7,889 on Tuesday.

Mr Geithner said the new bank bail-out package was vital as "critical parts of our financial system are damaged".

"Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added.

Oil holds above USD 40 as stimulus, bank plans mulled

Oil prices hovered near USD 40 a barrel in Asia on Monday as investors weighed a massive stimulus package and a bank rescue plan from the US this week against soaring unemployment and falling demand for crude.

Light, sweet crude for March delivery rose 9 cents to USD 40.26 a barrel by midday in Singapore on the New York Mercantile Exchange.



The contract fell USD 1.00 on Friday to USD 40.17 a barrel after the Labor Department said the US lost 598,000

jobs in January and the unemployment rate rose to 7.6 per cent, the highest since 1992.



For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures, marking the biggest annual loss on record.



"Considering the staggering magnitude of the jobs data, oil held up quite well," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.



"The downward momentum in oil pricing appears to have been broken as the USD 40 level has proven to be a very strong support level."



Investors will be watching as a huge stimulus bill makes its way through the US legislature this week.



A USD 827 billion stimulus package will likely pass the Senate by Tuesday, though it will have to be reconciled with a version the House of Representatives approved earlier that's about USD 7 billion apart in cost and overlaps in numerous ways.

India's GDP expansion to be slower at 7.1% in FY'09

India's economy is expected to expand by 7.1 percent in 2008-09, slower than last year's 9 percent, as the global financial crisis hammered manufacturing, financial services and farm sector output.

Mining and other services may, however, act as a prop to the economy, say the estimates released on Monday by the Central Statistical Organisation.

Whether or not growth will slow down further next year would depend on continuation of fiscal stimulus, Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

"We can continue the fiscal stimulus in the next year. It can be done as part of the full budget...In my view there would be a continuing need for fiscal stimulus and I hope we can do that," he said.

Farm sector output is projected to grow by 2.6 per cent in FY'09, slower than last year's 4.9 per cent, manufacturing by 4.1 per cent, down from 8.2 per cent, construction by 6.5 per cent against last year's 10.1 per cent and financing, insurance, real estate, business services by 8.6 per cent against 11.7 per cent.

Commenting on the outlook for the Indian economy, Ahluwalia said, "The Indian economy should not be slowing down like the rest of the world."

The estimates match the one projected by the Prime Minister's Economic Advisory Council and are a tad higher than what the Reserve Bank has estimated.

Manufacturing sector growth is likely to drop by half in percentage terms this fiscal. The sector comprises 80 per cent of the country's industrial output, which in turn contributes 25 per cent to the GDP.

However, mining and quarrying would grow 4.7 per cent, up from 3.3 per cent; trade, hotels, transport and communication by 10.3 per cent from 12.4 per cent; and community, social and personal services by 8.6 per cent from 11.7 per cent.

Electricity, gas and water supply is likely to grow by 4.3 per cent from 5.3 per cent a year ago.

Enthused by the numbers, Finance Secretary Arun Ramanathan said, "There is room for optimism. That is what (GDP) numbers indicate."

Ahluwalia expects growth to be the same next fiscal. "I think it should be similar to this year -- seven per cent or more would be a reasonable outlook for next year."

The final growth figures may not be exactly as projected by advance estimates of the CSO.

"The possibility of agriculture figures revising is there. There will be some upward revision in the agriculture figures. There is possibility that there will be some downward revision in services... Net net even with the revision, the GDP would be between 6.8 and 7.1 per cent," HDFC Bank Chief Economist Abheek Barua said.

If the national income is evenly distributed among the people, each person will get Rs 38,084 during 2008-09.

In other words, per capita income during the current fiscal grew by 14.4 per cent from Rs 33,283 in 2007-08.

The CSO numbers present a gloomy picture for steel, which is projected to grow by 2.7 per cent in the April-December period of the current fiscal against 6.4 per cent a year ago.

Cement production is also slated to expand by seven per cent in the first nine months of this fiscal against 7.7 per cent in the corresponding period of 2007-08.

Also, the production of commercial vehicles witnessed a fall of 15.5 per cent against the growth of 4.8 per cent in April-December 2007-08.

Passengers handled in civil aviation decreased by 6.3 per cent against the growth of 20.4 per cent over the period.

The farm sector growth is based on anticipated growth of six per cent in horticulture crops, 5.5 per cent in livestock products and six per cent in fisheries.

Crisil Chief Economist D K Joshi described the farm growth as on the lines of trend growth rate. "The trend growth rate has been 3 per cent... last year we achieved exceptional growth, now we are back to trend... and then base is also much...Our expectation was 2.5 per cent," he said.

Many economists attributed the good numbers for community, social and personal services to increase in government expenditure.

Crisil's chief economist said, "The private consumption has gone down and the government consumption has gone up. Lots of government spending, subsidies, oil bonds... so increased government expenditure is what is responsible for this."

Private final consumption expenditure at current and constant prices are estimated to grow by 55.1 per cent and 57 per cent, respectively, in FY09 against 55 per cent and 57.2 per cent last fiscal, while government final consumption expenditure may grow by 11.1 per cent and 10.6 per cent, respectively, against 10.1 per cent and 9.8 per cent in FY08.

Part of the growth maintained by this category reflects the implementation of pay revision for government employees as well.

"The growth in community, social and personal services partly reflects the pay hike which have been implemented and also it constitutes largely of the government services," Abheek Barua said.

The country's total national income is likely to be Rs 29,61,249 crore in the current fiscal, showing a rise of 7.1 per cent against 9.1 per cent a year ago.

Gross fixed capital formation, which represents fixed assets bought by the government, businesses and households on net basis, is estimated to grow by 34.6 and 32.1 per cent this fiscal against 34 per cent and 31.6 per cent last year.

Good GFCF numbers indicate that future business activity will remain strong.

Japan corporate bankruptcies soar

Corporate bankruptcies in Japan reached 1,360 cases in January, a 15.8% increase on the previous year and a six-year monthly high, new data shows.

Bankruptcies at market listed companies hit a record high of 35 for the year to 31 March, the highest since World War II, said Tokyo Shoko Research.

It said smaller companies have been particularly affected as banks focus on lending to bigger rivals.

Bankruptcies have been especially prominent in the manufacturing sector.

It was the eighth consecutive month that the number of bankruptcies increased.

Several carmakers in Japan and around the world have cut production as consumers grow more cautious about splashing out on big ticket items.

Secondary parts suppliers, and companies involved in the peripheries of the manufacturing trade have also been badly hit by the economic downturn.

Japanese firms are also being hit by the strong yen - which with electronic firms particularly affected.

A stronger yen makes Japanese products less competitive and cuts into the value of overseas earnings.

Tokyo Shoko Research said the number of bankruptcies was not likely to decelerate in the near future as a range of manufacturers - from car and electronics manufacturers to semiconductor makers - continue to see profits hit by economic conditions.

Barclays makes profit of £6.1bn

Barclays Bank has reported profits before tax of £6.08bn ($9bn) for the full year of 2008, down 14% on its profits taken in 2007.

Chairman Marcus Agius said the bank had been "solidly profitable despite strong headwinds" experienced during the year.

The bank's charges on bad debt, including US sub-prime mortgages, almost doubled to £5.4bn.

Last month, the bank wrote an open letter to investors, forecasting profits of more than £5.3bn.

'Compensation' review

The letter was prompted by sharp falls in Barclays' share price on the back of worries over the bank's financial strength.

The bank also announced that it would not pay any bonuses to directors for 2008.

"For 2009 and beyond, we are reviewing our compensation policies and practices to ensure that they evolve appropriately," said chief executive John Varley.

Barclays' profits included £2.41bn of gains from acquisitions, mainly from its takeover of the North American operations of Lehman Brothers, the failed US bank.

Profits from retail banking were up 7%, from £1.28bn in 2007 to £1.37bn.

However, at the bank's commercial arm, profits were down by 7%, from £1.36bn to £1.27bn.

The bank said lending to both retail and commercial customers increased on the previous year.

Germany gets new economy minister

Karl-Theodor zu Guttenberg is to become Germany's new economy minister, following the surprise resignation of his predecessor Michael Glos.

Mr Zu Guttenberg has been proposed by his party, the Bavarian-based Christian Social Union (CSU), and his appointment is due to be a formality.

At 37-years-old, he will become the youngest ever person to fill the role.

The CSU is part of the coalition government led by Angela Merkel's Christian Democrats.

Mr Zu Guttenberg is already the leader of the CSU, and considered to be one of the rising stars of German politics.

Ms Merkel said on Monday morning that she would accept the resignation of Mr Glos.