SBI may hike home loan rates from November
The honeymoon seems to be nearly over for the Indian consumers who were once spoilt for choice with cheaper housing loans offered by PSU banks like SBI for last couple of months. Now consumers may well have to gear up for higher interest rates after 7th November, said a top brass of a PSU bank.
 
SBI’s decision to extend the special offer for home loans till end of this festive season (7th November) is to cash in on the 50 lakh central government employees who have recently received 21% hike in their overall salary structure, thanks to the Sixth Pay Commission.
 
There is every indication that home loan rates are going to rise because of rise in inflation, poor agricultural output, rising international crude oil prices and huge government borrowings. Hence the regime of low interest rates is bound to change.
 
There is no doubt that the government will try to keep the rates lower. But the system is not geared to deliver that. “Rollback in home loan interest rates is inevitable keeping in mind the health of the bank(s) after November,” said the top official.
 
SBI’s low interest rate regime was earlier valid till the end of April. The bank had then frozen the interest rate on new home loans at 8% for the first year. The interest rate was expected to be revised as per the prevailing rates. 
 
A top SBI official reiterated that the special low interest rates were aimed at stimulating demand during the current economic slowdown boosting the laggard real estate sector.
 
Said a top official of SBI, “With the central government employees now flush with money which they received as per the Sixth Pay Commission recommendations, we are quite confident to increase our home loan portfolio by targeting them. This is also because the government employees have got additional purchasing power. Our dedicated marketing teams spread across the country have already started targeting the government employees wanting to buy homes.”
 
Thanks to the combined impact of low interest rates and pay commission money, SBI is expecting to increase twofold its home loan disbursals in the current fiscal. The bank has already disbursed Rs6,500 crore between April-August period of 2009 under its special home loan package as against Rs9,300 crore during the whole of the previous fiscal 2008-2009.
Vidyut Kumar Ta [email protected]
 
 
 

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Cost pressure on fertiliser companies to increase if natural gas is not made available to them

Fertiliser companies are staring at heavy losses if they are denied natural gas from Reliance Industries. RIL is producing 40 million metric cubic metres per day (MMCMD) of natural gas. Anil Ambani has also made a claim of 28 MMCMD per day. NTPC has also claimed 12 MMCMD to run its 4,000 MW power project. That will leave fertiliser companies with no input from Reliance Industries.

Fertiliser companies having annual capacity of 7.5 million tonnes based on natural gas could be hit by a major crisis if they are not given natural gas, which is used as a fuel and raw material. On an average, about 950 to 1,000 cubic metres of gas is used for each tonne of fertiliser. Around 20% of natural gas is used as feedstock and 80% is used as a fuel. 

In fact, the Government of India, in its policy decision, insists that fertiliser industry is the first priority for natural gas industry. According to Rashtriya Chemicals & Fertilisers (RCF), Mumbai, public sector fertiliser companies use 20 MMCMD of natural gas. On the question of what impact would be there if RCF is not given any gas allotment, RCF CEO, US Jha, refused to make any comment as this matter will be discussed in the Supreme Court.
 
Already eight fertiliser units are closed in Barauni, Sindri, Haldia, Gorakhpur, Talchar, Ramgundm, Korba and Durgapur. If gas is not made available to fertiliser companies, more units may see closure and that may in turn see sharp rise in fertiliser subsidies. Fertiliser subsidies were around Rs 46,000 crore in 2007-08 and are likely to cross Rs 1,00,000 crore this year.
 
In addition to natural gas, fertilisers can be made from heavy oil and coal. Heavy oil and coal options are very expensive as compared to natural gas. Heavy oil conversion to fertiliser plant will consume 30% more energy and coal conversion to fertiliser plant will consume 70% more energy. Investment cost in heavy oil and coal plants are also very expensive. Heavy oil plant is 40% more expensive and coal based plant is 140% more costly. Production cost as compared to the cost of natural gas is also very high. Heavy oil plant production cost of fertiliser is 20% more and for coal it is 70% .  So if natural gas is not made available to fertiliser plants, cost pressure on other options will create huge losses to the country. 
 

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TV18 blames the Union Budget for poor second-quarter performance!
Elections are the most coveted event for TV news channels and Union Budgets are what business TV channels look forward to. Their viewership shoots up on those occasions—it’s no wonder that TV channels advertise heavily the coverage of Union Budget as an event. That is when they hope to rake in the moolah. This is widely known to the investor community. Therefore it comes as a shock that CNBC blames the just-released poor performance of its September quarter on the Union Budget of July. Raghav Bahl, managing director, Network 18, has said just this in an interview to his own channel.
 
“Unfortunately, the last quarter was a quarter in which we had a budget and we also had a couple of competitive launches in that quarter. So, our cost level has also gone up,” said Bahl to CNBC. In September 2009 quarter all business news channels broadcasted both these events with much fanfare. If revenues don’t come from such mega events why does CNBC advertise them so much?
 
In the March quarter when TV18’s news operations reported a 36% decline in revenues of its news broadcasting business, IDFC-SSKI had blamed the poor performance on the fact that time there was no Union Budget which is normally held in February and boosts the March quarter results.
 
TV18’s news operations reported a loss of Rs33.10 crore for the September quarter which takes the loss in the first half to Rs61.38 crore. Loss for the year ended March 2009 was Rs166.36 crore. The news operation was the only bright spot in an array of lossmaking businesses of the TV18 group— Newswire, Web business and Infomedia—until 2008.

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