Companies & Sectors
Ashok Leyland gets bus orders worth Rs1,500 crore from STUs

Ashok Leyland will market its 'JanBus’, which it claimed was the 'world’s first front-engine, single-step entry, full-flat floor bus’ in international markets too.

 

Ashok Leyland Ltd has secured orders for 4,000 buses valued at nearly Rs1,500 crore from various state transport undertakings (STUs) under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

 

Ashok Leyland will also market its 'JanBus’, which it claimed was the 'world’s first front-engine, single-step entry, full-flat floor bus’ in international markets too. Vinod K Dasari, managing director, Ashok Leyland, said that JanBus was specifically designed for urban transportation, offering higher safety and 'substantially enhanced operating economics for the STUs’.

 

Ashok Leyland in a regulatory filing said that 22 STUs from across the country have placed orders for the buses. The company had also received orders from international market for the vehicle and said 'soon JanBus will be running in many countries’, Dasari added.

 

At 2.15pm Tuesday, Ashok Leyland was trading 5.2% up at Rs40.6 on the BSE, while the 30-share Sensex was marginally down at 27,218.

User

Why a European version of quantitative easing (QE) will be tough
In the US, UK and Japan quantitative easing is straight forward. The central banks just add a couple of extra zeros to their balance sheets and then go on a spending spree buying the country’s debt. If the ECB wanted to do quantitative easing it would have to buy the debt of its members. This might be exceptionally difficult
 
I wrote last May that the European economy was stagnating. It still is. With the exception of the equity and bond markets, the European economy has not got better since the beginning of the summer. Last month, the French gross domestic product (GDP) was flat. The Italian economy was in recession. Even the mighty German economy went negative. The Eurozone, as a whole, had stopped growing at all. So as usual, Mario Draghi and the European Central Bank (ECB) rode to the rescue. Last week, they announced a new stimulus package. The markets loved it at least for a day, but will it actually work?
 
Markets are all hoping and praying for a European version of quantitative easing (QE). But there is a problem. In the US, UK and Japan, quantitative easing is relatively straight forward. The central banks just add a couple of extra zeros to their balance sheets and then go on a spending spree buying the country’s debt. The ECB has no such luxury. If it wanted to do quantitative easing, it would have to buy the debt of its members. This might be exceptionally difficult.
 
It is not clear how the ECB would decide, how much of its member’s bonds to buy, but the effect would be uneven. If it bought bonds relative to output, it would buy mostly German bonds. Since the German 10-year bonds are already under 1%, it is doubtful that further buying will have much of an effect.
 
Buying other Eurozone sovereign bonds entails a large credit risk. Many of the countries are deeply in debt. Forecasts expect Greek debt to rise to 177.2% of GDP this year, Italy's to 135.2 %, Cyprus to 122.2 % and Spain's to 100.2%. Greece has already had a technical default. Ireland, Portugal, Greece and Cyprus have had bailouts. Italy’s bonds are rated Baa2, two levels above junk, as are Spain’s bonds.
 
It is not only the credit risk that a Eurozone QE would entail. There is also a large investment risk. Both, Italian and Spanish bonds are extremely high and yield less than much higher rated US bonds. Given their high debt and the weakness in the European economy, they have to fall sometime. If these bonds were owned by the ECB, it, or rather German taxpayers, might have to bear the loss.
 
So rather than attempt to tackle the political issues surrounding a full-blown QE, the ECB opted for purchasing asset backed securities (ABS). Asset backed securities are loans made by banks and other financial institutions, which then are sliced, diced and repackaged as bonds with various risk levels and resold to investors. The loans could be for anything from used cars to houses. You might remember them from the financial crisis. In the bad old days, US financial institutions repackaged loans secured by mortgages from risky borrowers known as subprime. At the time it was deemed “toxic sludge”. How times have changed.
 
Under the proposed plan, the ECB will buy up an unspecified amount of ABS. The idea is to take the ABS off the books of the banks in order to free up capital. In theory, the ECB would purchase hundreds of billions of euros of these instruments. But there is a problem. Since the financial crisis, the ABS market in Europe has been moribund. In the second quarter of 2014 to total amount for ABS issue was only €19 billion, which was 6% less than last year. The total amount issued last year was only €79 billion and the total outstanding instruments are only about €150 billion. Even if you add in the €200 billion mortgage backed securities, you really don’t get to the size contemplated by the ECB.
 
There are also many other problems. The infamous toxic sludge of the US markets was created to fill a burgeoning demand. The regulatory environment put in place since the crash, is supposed to prevent this, but it will also make the creation of new ABSs more difficult. If the regulations are relaxed, which is not under ECB control, all the money pouring into this sector almost guarantees a lot of really bad paper to be stuffed onto the ECB’s balance sheet.
 
This is especially true because the ECB has signalled its willingness to buy riskier ‘mezzanine’ tranches, provided Eurozone members are willing to guarantee the paper. The temptation to guarantee the debt of politicos’ cronies will be huge. You can just smell the corruption.
 
This is assuming that Europeans really want to borrow. Americans used to be more indebted than Europeans. Not anymore. Now American’s household debt in 105% of income after tax. Europeans are burdened with 110%.
 
It’s not just consumers. Many parts of the Eurozone are still hobbled by unsustainable debt built up by both the public and private sectors prior to the crash. With so much debt, they are actually paying it down, not adding to it. The additional cash is simply not wanted.
 
The cheap money already created by the ECB and other central banks has created real estate bubbles in various European countries: Belgium, Finland and France within the Eurozone. Norway, Sweden and Britain outside of it. Buying mortgage backed ABS will make this problem worse.
 
Since it will be extremely difficult for an ABS program to achieve the scale desired by the ECB, it is almost certain that QE will be back on the agenda. The risks I discussed earlier will make it extremely difficult. To get it passed Mario Draghi will need to get the Germans on board. It might be possible if France and Italy carried out structural reforms, which seems highly improbable.
 
The paradox is that more money will probably not have the desire effect on European economies without the structured reforms, but the extra money lessens the need for reforms. European countries wasted the years when the ECB bought them with the low interest rates. Their voters certainly do not see any need now.   
 
Rock bottom interest rates have forced investors in Europe and elsewhere to pile into riskier assets in the search for yield. Many of these assets from real estate, to junk bonds, equities, sovereign bonds are arguably well into bubble territory. More money is not going to help. Further, it helps prop up weak creditors or zombie companies, preventing those from going under and reallocating capital to more successful enterprises that could actually help grow economies.
 
For years, investors and markets have been enthralled with central bankers. European wars and African plagues barely made it above the radar. Slow or no growth doesn’t matter. Just a few sentences from a central banker about more easy money were good for a rally. It is appealing to think that a few computer strokes can cure a continent’s ills, but I am afraid it doesn’t. This is one illusion that may be on its last legs and the hangover could last quite a while. 
 
(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first-hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and speaks four languages.) 
 

User

Floods in J&K: Massive rescue operations underway
Rescue teams will be focusing on the inundated city of Srinagar and south Kashmir belt where an estimated four lakh people are believed to be trapped in floods which have claimed nearly 200 lives in the Jammu & Kashmir
 
Mammoth multi-agency rescue efforts were underway in Jammu and Kashmir  (J&K) to rescue lakhs of people trapped in flood-ravaged areas, with choppers from Indian Air Force (AIF) and transport aircraft undertaking non-stop sorties overnight to carry men and relief material to the submerged parts.
 
Rescue teams will be focusing on the inundated city of Srinagar and south Kashmir belt where an estimated four lakh people are believed to be trapped in floods which have claimed nearly 200 lives in the State.
 
Two more units of Army and NDRF have been airdropped to Pancheri in Udhampur where 30 people are missing after a landslide hit the area.
 
“Seven bodies and a limb of a person have been so far recovered in Udhampur but the operation to locate those trapped is very difficult,” DIG Garib Das said.
 
However, the situation in the rest of Jammu belt has stabilised and the focus is now on providing relief material on the ground, officials said.
 
They said a massive rescue and relief operation is on in Kashmir Valley with more helicopters and rescue material, including boats, pressed into service.
 
floods, J & K, Jammu & Kashmir, Srinagar, rescue operations, Indian Air Force,  DIG Garib Das.Almost 30 sorties of IL-76 and AN 32 have been undertaken to Srinagar overnight to carry men and relief material, boats cutters and other equipment, besides huge quantity of medicines and water bottles.
 
Speaking about the rescue efforts, Army Lt Chetan said: “We are rescuing 10-15 people in every round we make per boat. We make 50-60 rounds per day. We have all equipment to rescue people. We will move out only after rescuing everybody.’’
 
Army Chief Gen Dalbir Suhag had said in Delhi that “Soldiers won’t return to barracks until last man is helped.”
 
Army medical officer Jagdish Singh said, “We have set up medical camps and are treating 230-300 people everyday."
 
“We have ambulances and surgeons. District hospitals and NGOs are also working with us,” he added.
 
Lt Gen DS Hooda, General-Officer-Commanding of the Army’s Northern Command had said yesterday that the focus will be now on Srinagar.
 
The heavy floods triggered by torrential rains have snapped the Valley’s telecommunication links with the rest of the country.
 
BSNL has launched an operation on a war-footing with the Army and IAF to restore mobile services through satellite network and the telecom network is expected to be partially restored today, officials said.
 
To provide relief to the displaced, 68 camps have been set up in Jammu.
 
Seven helicopters have been pressed to ferry relief material to Rajouri, Poonch, Reasi, Mahore, Doda, Kishtwar belts, officials said.
 
The Centre has rushed more National Disaster Response Forces (NDRF) teams equipped with boats and other flood relief equipment to Kashmir Valley. Naval commandos have also been deployed for the first time.
 
Army, Air Force, NDRF and state agencies have so far rescued more than 25,000 people and lodged them in higher places in the Valley.
 
Boats have been pressed into service in many flooded parts to rescue the residents huddled on rooftops and upper floors of their houses.
 
Meanwhile, the pilgrimage to Vaishno Devi shrine in Reasi district was on with over 25,000 people offering prayers since yesterday.
 
Efforts are on to restore helicopter services to the cave shrine, Das said.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)