Mumbai: Indian IT bellwether Infosys Technologies Ltd is investing around Rs2,500 crore to set up its seventh special economic zone (SEZ) in Sarjapur near Bangalore, the company's chief executive said recently. The SEZ would have around 18,000 seats and will be operational by end-March 2011.
"Infosys has acquired 202 acres of land in Sarjapur, near Bangalore, to build an SEZ. The total investment earmarked for the project is Rs2,500 crore and work is expected to begin in August-September this year", Infosys' chief executive and managing director, S Gopalakrishnan told PTI in an e-mail interview.
The project is likely to get operational by March-end 2011 and the facility will generate 18,000 employment opportunities, he added.
This would be the company's seventh SEZ project. It presently has facilities in Jaipur, Chennai, Chandigarh, Pune, Mangalore and Thiruvananthapuram.
The IT major plans to expand its seat capacity in these centres by 25,000 in the current fiscal. On its acquisition plans, Mr Gopalakrishnan said the company was open to inorganic growth in emerging markets.
"We are continuously looking for acquisitions and have certain profiles of what kind of a company we want. If an opportunity arises, we will go for it", he said. Banking and retail verticals would be the growth-drivers for the company, he added.
Mumbai: Ratings agency CRISIL said it believes that the credit risk profiles of India’s diamond and diamond jewellery players will remain stable over the medium term, on the back of steady demand expected in key markets, and improved prices of polished diamond in 2010-11. This outlook for the gems and jewellery industry is based on a CRISIL study of the credit risk profiles of the 142 players from the industry in its rated portfolio.
In a release, CRISIL said the players are also likely to maintain a prudent approach to working capital management, a measure they adopted to cope with the recent slowdown in the global economy.
Subodh Rai, head, CRISIL Ratings, said, “Over the medium term, gems and jewellery players are expected to maintain the prudent working capital management practices they adopted during the recent slowdown in the economy.”
In the second half of 2009-10, India’s gems and jewellery exports increased by 46% over the corresponding period of the previous year, backed by buoyant demand and restocking by retailers. Gems and jewellery exports exceeded $28 billion in terms of value in 2009-10, up from $24.4 billion for 2008-09.
CRISIL said it believes that demand from the US market, which accounts for more than half of India’s gems and jewellery exports, will be steady, backed by a stable economy, and will result in moderate buoyancy in exports by Indian players over the medium term. However, deterioration in recessionary conditions prevailing in the European Monetary Union (Eurozone), which accounts for around a fifth of the global demand for diamond jewellery, can impact the export of gems and jewellery from India, the ratings agency cautioned.
Gurpreet Chhatwal, director, CRISIL Ratings, said, “In addition to an increase in actual consumption, restocking by retailers also drove a sharp turnaround in demand in the second half of 2009-10.”
Most retailers maintained minimal inventory during the second half of 2008-09 and the first half of 2009-10, expecting the slump in demand to continue. However, the trend was reversed in the second half of 2009-10, with demand increasing, prompting retailers to begin restocking of diamond jewellery, the ratings agency said.
CRISIL said with improvement in global demand, the prices of cut and polished diamonds rebounded in the second half of 2009-10 from the weak levels seen in the second half of 2008-09. However, the prices lag the increase in the prices set for rough diamonds by miners during the period. CRISIL believes that the prices of polished diamonds will remain firm over the medium term, with exporters passing on, to customers, increases in the costs of procuring rough diamond.
“By now, most retailers have completed the process of restocking. Demand growth will, therefore, now be driven largely by actual consumption. Export growth will, therefore, moderate from the high levels witnessed in the second half of 2009-10, and yet, remain healthy over the medium term,” Mr Chhatwal added.
Mumbai: Ratings agency Standard & Poor’s (S&P) said growth in India’s banking sector will remain high, bolstered by sound economic growth prospects and despite the challenges of high domestic inflation, intense competition, and evolving risk management processes.
“A robust economy, along with a stable retail deposit base and a prudent regulatory environment, has underpinned the resilience of India’s banking sector to the global financial slowdown. We expect credit growth of about 20% in the next fiscal year,” said S&P’s credit analyst Geeta Chugh in a release.
According to a report titled “The Indian Banking Industry Is Resilient And Buoyed By Strong Economic Growth Prospects” and published by the ratings agency, the asset quality of the Indian banking sector came under some pressure in the fiscal year ended 31 March 2010.
“Nonperforming loans (NPLs) increased moderately from their historical lows. The gross NPLs for our portfolio of rated Indian banks increased to 2.5% as of 31 March 2010, from 2.2% a year ago. This was in line with our expectation,” the report said.
S&P said the increase in NPLs was contained by the quick economic recovery, modest leverage, low sectoral concentration in the banks’ loan books, and low exposure to sensitive sectors. Loan restructuring by banks availing of the onetime dispensation by the Reserve Bank of India to restructure loans without classifying them as NPLs, on meeting certain criteria, also reined in NPLs. Slippages or loans moving to NPL, from restructured loans were 5%-20% in the six months following the completion of the restructuring exercise in June 2009. “We expect 25%-50% of the restructured loans to slip to NPL in the next two years,” it said.
The report from S&P further said, “We expect credit growth to continue to exceed nominal GDP for the next five years. The impetus for overall credit growth is likely to come from India’s low credit penetration, large-scale infrastructure investments, companies reconsidering large acquisitions, and revived demand for working capital and capital expenditure. We also anticipate that secured retail credit will pick up moderately due to an increase in auto and housing sales, attractive interest rates, and improved job security.”
Increased capital is the key to the banking industry’s future growth. S&P said its rated private-sector banks are well capitalised and have adequate access to capital markets. Additional capital would, however, support the growth plans of all government-owned banks. The government’s limited resources and regulations that necessitate government shareholding of at least 51% have partly constrained these plans. These banks could now benefit from the government’s proposed Rs16,500 crore recapitalisation programme for increasing banks’ capital adequacy ratio to a minimum of 11%. This step is part of the government's measures to ensure sustained availability of credit in India, the report added.