New Delhi: The textile industry has sought the prime minister's intervention for ensuring availability of cotton for domestic firms considering that exporters registered 55 lakh bales cotton for exports within 10 days of the government initiating the process, reports PTI.
The government has permitted export of 55 lakh bales of cotton (of 170 kg each) for the period ending 15 December 2010. Registration of export contracts was started on 1st October while the shipments are to begin from 1st November.
However, the total contracts have already touched the ceiling of 55 lakh bales, spurring fears of cotton shortage in the country.
"This will lead to a cotton famine in the country and mills will be forced to close down or scale down production drastically," Confederation of Indian Textile industries (CITI) chairman Jaipuria said in a letter to the prime minister.
Completion of export registration within 10 days means that exporters would need to acquire this quantity by November end and ship this out by 15 December 2010, the confederation said.
Even if last year's ending stock of 40.5 lakh bales as estimated by Cotton Advisory Board (CAB) is taken into account, there will be practically no cotton stock left if 55 lakh bales get exported during this time," Mr Jaipuria said.
"This scenario has pushed up cotton prices to over Rs41,000 a candy, as against Rs23,000 a candy that prevailed during this time last year," Citi said while urging the government to delay the cotton exports against the contracts already registered, up to 1 January 2011.
Each candy consists of 356 kg of cotton.
Citi also demanded the withdrawal of export incentive of 1.5% given by government on cotton exports.
Earlier, the government had announced that duty free exports of 55 lakh bales would be allowed in the current cotton marketing season.
The commerce ministry had said that exports beyond 55 lakh bales would attract duty. To curb exports in wake of rising domestic prices of cotton, a duty of Rs2,500 per tonne was imposed.
As per conservative estimates, the cotton production in 2010-11 is likely to be 325 lakh bales. However, the agriculture ministry expects the yield to touch 335 lakh bales.
The country's largest lender aims to tap the retail market through an
attractively-priced bond issue for the first time; plans to create a secondary market for the same to enable further such issues
India's largest public sector bank State Bank of India (SBI) is trying to gauge the feasibility of availing another funding avenue. The bank today announced the public issue of Lower Tier-II Bonds worth Rs500 crore, with an option to retain oversubscription upto Rs500 crore for issuing additional bonds aggregating to a sum of Rs1,000 crore for resident applicants. The bond issue is SBI's first foray into the retail bond market and is part of the bank's strategy to develop another avenue of funding by creating a secondary market around the same.
The issue has been priced rather attractively for a bank which can otherwise access funds at a much lower cost without breaking sweat. Available in two series having maturity of 10 years and 15 years respectively, the issue offers a coupon rate of 9.25% and 9.5% respectively on the same. This is in sharp contrast to the bank's retail deposits which attract rates substantially lower at 7.5%.
SBI chairman OP Bhatt stated categorically that the pricing was purely based on the fact that the bank was coming out with such an issue for the very first time. The current upward bias in interest rates also was a factor behind the pricing, Mr Bhatt said. Commenting on the reason for bringing out such a product, he said, "We want the option of having this market available on tap. We wish to create a secondary market around this avenue, which will allow price discovery to take place."
Depending on the investor response to this issue, SBI will take a call on bringing out more such issues, even on a quarterly basis. Although the stated objective of the issue is to shore up the capital adequacy ratio (CAR) of the lender, it is not the most compelling factor. The chairman pointed out that the bank was looking at the option to avoid a long term liquidity mismatch. "We felt there is a need for having specific long term liquidity in our portfolio," said Mr Bhatt.
The bonds are proposed to be listed on the National Stock Exchange (NSE), where investors will trade freely in the open market. The retail portion forms 50% of the issue size while the balance is being offered to high net-worth individuals (HNIs) and qualified institutional buyers (QIBs). The bonds are to be issued compulsorily in a dematerialised form.
With a minimum application size of Rs10,000, these bonds will be allocated on a 'first-come-first-serve' basis. The issue will be open for subscription from 18 October 2010 and will close on 25 October 2010. The bank has an option to call back the bonds after 5 years and 1 day for the 10-year bonds and 10 years and 1 day for the 15-year bonds. If the bank does not exercise this option, the investor will be offered the coupon rate plus an additional 0.5% on the bonds.
Chandigarh: Keeping a watch on the record $22 billion foreign institutional investor (FII) investments in the booming Indian stock markets this year, the Reserve Bank of India (RBI) today said it will "intervene if the inflows are lumpy and volatile", reports PTI.
"We are watching the situation and our policy is clear.
We will intervene if (FII) inflows are lumpy and volatile or they disrupt macro economic conditions," RBI governor D Subbarao said after a meeting of central bank board here.
The cross-country foreign institutional investors (FII) have pumped in the highest ever $22 billion so far during 2010 calendar.
On 13th October, FII investment crossed the magical $22 billion or Rs 1 lakh crore in stock markets. The total inflows last year were $17 billion.
On robust foreign fund inflow, the rupee rose to touch a 25-month high of about 44 against the US dollar today, giving anxious moments to policy makers and exporters.
According to reports, the RBI had intervened yesterday by buying dollars in the foreign exchange markets to arrest the rise in value of rupee.
The sharp rise in FII flows to Indian stocks has pushed up the benchmark Sensex, which re-gained the psychologically important 20,000 mark in September, after a gap of 32 months.
Mr Subbarao's comments follow finance minister Pranab Mukherjee remarks in an interview to a private television channel ruling out curbing FII inflows.
SBI chairman O P Bhatt said in Mumbai that capital inflows would remain high for some time. But the market would be in a position to absorb them for the next 2-3 months.
"There are things like the disinvestment programme, the Coal India IPO due to which the money will keep coming.
The market will absorb for 2-3-months but I do not know what will happen after that," he said.
According to Ajay Sahai, director general of export body Federation of Indian Export Organisations (FIEO), the FIIs could be dissuaded to bring in the money by putting a six-month cap on repatriation of their funds.
"They (FIIs) should only be allowed to repatriate their investments after six months," he said.
After touching a monthly growth of about 36% in April this fiscal, the export expansion slowed to 22.5% in August reflecting uncertain recovery in the western markets.
The concerns on higher FII inflows have been heightened by the forthcoming mega IPO of Coal India Ltd, which is expected to garner about Rs15,000 crore (about $3.5 billion) with the involvement of FIIs.
"Situation which we are sensitive to, it (Coal India IPO) may put some pressure at least temporally," RBI deputy governor Subir Gokarn said. He was also here to participate in the board meeting.