High newsprint prices may affect print media profits, says Fitch

In May 2011, domestic newsprint prices had increased by 13.4% compared to average prices in 2010

Fitch Ratings expects higher newsprint prices to negatively impact the profitability of the Indian print media industry in the short to medium term. In May 2011, domestic newsprint prices had increased by 13.4% compared to average prices in 2010. On the same basis, international newsprint prices (US) were up 7.2%. Newsprint cost is the largest operating cost for newspaper publishers and typically accounts for 40%-50% of total operating costs. At the same time, the agency notes that competition is likely to prohibit newspaper publishers from raising cover prices significantly (and thus passing on incremental costs to the consumers).

However, the agency expects that an increase in advertising revenues may partly offset the rising cost of newsprint. Newspaper publishers generate about 70% of revenues from advertising, with the remainder coming predominantly from circulations. It should be noted however, that expectations of moderate economic growth will negatively affect advertising revenue growth. In its "Global Economic Outlook", dated March 2011, Fitch Ratings marginally revised its expectations for Indian GDP in FY12, to 8.3% from 8.5%; this was further reduced to 7.7% in its report "Global Economic Outlook", dated June 2011.

Newsprint prices peaked at Rs43,500 per tonne during June to September 2008 and  troughed at Rs25,500 per tonne during August 2009 to February 2010. Since then, prices have increased by 21.6%, to Rs31,000 per tonne in May 2011 (from the CY10 average of Rs27,333 per tonne). Increasing freight costs-due to high crude oil prices have also increased the effective cost of international newsprint.

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CRISIL launches Gilt Index

The CRISIL Gilt Index will provide market participants a benchmark to analyse and measure the performance of sovereign investments

CRISIL Research has launched the CRISIL Gilt Index which will track the performance of government securities. The CRISIL Gilt Index will provide market participants a benchmark to analyse and measure the performance of sovereign investments. This is the eighth index introduced by CRISIL.  

Through its Gilt Index, CRISIL aims at providing a realistic representation of the performance of the most liquid and dominant segment of the Indian debt market.

The CRISIL Gilt Index comprises twelve most liquid government securities. For the construction of the index, CRISIL has adopted a two-fold approach based on liquidity and the amount outstanding.

The selection of government securities is based on liquidity, while allocation of weights is based on the amount outstanding. The index is then calculated using a total return approach, capturing both coupon and clean price returns for the selected government securities across maturities. The base date of the index is 1 January 1997.

According to Tarun Bhatia, director, capital markets, CRISIL Research, "The CRISIL Gilt Index is expected to serve both as a benchmark and as an underlying index for investment products such as exchange-traded funds (ETFs) in government securities."

On Tuesday, CRISIL ended 1.19% down at Rs7,279 on the Bombay Stock Exchange, while the benchmark Sensex declined 1.65% to 18,411.62.

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Barclays Capital appoints Bhavtosh Vajpayee as head of equities–India

Bhavtosh Vajpayee will be based in Mumbai and will report to Mike Di Iorio, head of equities–Asia Pacific

Barclays Capital, the investment banking unit of Barclays Bank PLC, said that it has appointed Bhavtosh Vajpayee as the managing director, head of equities-India.

Mr Vajpayee will be responsible for leading and developing Barclays Capital's India equity research, sales and trading business. He will be based in Mumbai and will report to Mike Di Iorio, head of equities-Asia Pacific.

Mr Vajpayee joins Barclays Capital from CLSA where he worked for the previous 10-year and was most recently head of technology research. Mr Vajpayee was previously the #1 ranked technology (software and IT Services) analyst in the All-Asia Institutional Investor Research Survey in 2008, 2009 and 2010.  Prior to CLSA Mr Vajpayee worked in the corporate finance business at JM Morgan Stanley.

Mike Di Iorio said: "Bhavtosh's expertise will provide great impetus to the development of our equities business in India. We are on track with our stated ambition to provide our clients with a top ranked global equities platform. The continued development of Barclays Capital's Asia Pacific Equities franchise is central to completing this aim which is why we will continue to invest in the best talent and technology to establish leading equities businesses in the major Asia Pacific markets.  By the end of 2011 we expect to have established fully operational equities sales, trading and research businesses in India, Taiwan and Korea alongside our existing equities hubs in Hong Kong and Japan."

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