Indian Economy: News and Discussion

[Pintu]

Wipro Q1 net profit up 11.78% at Rs 1015.5 crore- Earnings-News By Company-News-The Economic Times

Wipro Q1 net profit up 11.78% at Rs 1015.5 crore
22 Jul 2009, 1500 hrs IST, ET Bureau

Client wins in new markets lifted India’s third biggest software exporter Wipro’s first-quarter by 11.78% to Rs 1015.5 crore, even as the company prepared to cope with lower IT spend among its top customers including Citigroup. Wipro said its revenues during the first quarter rose 5% to Rs 6,274 crore up from Rs 5,967 crore it reported a year before.

"We are starting to see the first signs of stability in the business as ramp-downs start to taper off and volumes start to stabilise," said Azim Premji, chairman of Wipro. A Reuters poll had forecast a net profit of Rs 914 billion crore for the New York-listed Wipro, which counts Citigroup, Cisco, General Motors, Nokia Siemens Networks and Credit Suiss among its clients.

The company however provided a cautious and flat forecast for the quarter ending September 2009 -- similar to what peers TCS and Infosys provided -- reflecting lower demand for India’s $40-billion software export industry. "Looking ahead for the quarter ending September 30, 2009, we expect revenues from our IT services business to be in the range of $1,035 million to $1,053 million," he added.

In April, Wipro had said its software services revenues will fall to $1 billion-$1.03 billion in June quarter, down from around $1.05 billion the company reported for quarter ended March 2009. IT services revenues for Q1 to June, 2009, was $1.033 billion, a sequential decline of 1.3% and year-on-year decline of 3.3%.

For the full year, Wipro management declared a guidance of 0-2% growth despite the tough market situation. The management said that it expected slow growth for the next two to three quarters, adding that growth was likely to pick up in 2010. It also said that the IT spend would be lessened in the next one–two quarters.

The company also improved its operating margins from around 20.8% during quarter ended March 2009 to 22.3% during the first quarter ended June this year. The tech major though suffered a sequential fall in net sales from Rs 6482.1 crore posted in March 2009 while net profit remained almost flat against March levels of Rs 1,010 crore.

The company was also able to grow its revenues during the year because of its $127 million acquisition of Citi Technology Services, which will bring assured revenues of around $500 million over the next few years. "It was another quarter of strong performance. We improved on several operating parameters to deliver margin expansion of 0.65 to 22.3% in the IT services segment," says Suresh Senapaty, executive director and CFO of Wipro.

While the company’s IT services added 26 new clients during the quarter, the IT products division recorded a 2% year-on-year growth in revenues and 27% year-on-year growth in profit before interest and tax. Wipro Consumer Care and Lighting business revenue grew 7% year-on-year while PBIT was up 29% year-on-year. IT services revenues accounted for 77% of the revenue and 93% of PBIT for the first quarter.

Wipro counts a nine-year outsourcing deal with Unitech Wireless and a transformational deal with multi-brand speciality apparel retailer as its major deal wins in the first quarter. While it didn’t provide attrition figures, the firm had 98,521 people on its rolls as on June 30, 2009.

The company has a healthy pipeline of projects for the near term but closing deals worth more than $100 million was taking longer than before, Wipro Chief Financial Officer Suresh Senapaty said. "We are seeing lot of new projects that are happening," he told reporters. "It is improving but one can't say that it is done and therefore one has to be little cautious," he said referring to the business environment.

Geographywise, United States’ share in the firm’s revenues dropped to 43% in June 2009 from 44% a year ago while Europe saw a decline to 20% from 24%. India’s share remained constant at 21%.

Wipro's earnings follow results from bigger rivals Tata Consultancy Services and Infosys Technologies Both posted profit growth above forecasts that helped dispel some gloom surrounding the $60 billion software and services sector but had warned the business environment was challenging.

After a scorching pace of growth for years, India's export-led outsourcing sector has been battling a slowdown over the past year as top global customers struggled to stay afloat, went bust or tackled severe cost cuts, halting technology spending.

Morgan Stanley said in a recent report it was concerned about risks to the outsourcing sector's earnings from an uncertain macro environment that could lead to slower-than-expected recovery, stagnant tech spending and incremental pressure on fees.

Wipro shares were hovering at around Rs 451.10 in late afternoon trade Wednesday on the BSE, up from a low of rs 446 but retracing from highs of Rs 470. The broader market was down 161 points with IT one of the sectors pulling it down.

 

[Pintu]

Wipro Q1 net up 12% at Rs 1,015 cr- Software & Services-News-Indiatimes - Infotech

Wipro Q1 net up 12% at Rs 1,015 cr
22 Jul, 2009, 1004 hrs IST,PTI

MUMBAI: Software major Wipro today reported 11.86 per cent increase in consolidated net profit at Rs 1,015.50 crore for the first quarter ended June 30, 2009.

The IT firm had a net profit of Rs 907.80 crore in the June quarter of previous fiscal, Wipro said in a filing to the Bombay Stock Exchange.

Income from sales rose to Rs 6,289.10 crore in the June quarter, up 4.80 per cent from Rs 6,001.30 crore in the same period previous fiscal.

The IT services business added 26 new clients during the quarter, the company said.

"We are starting to see the first signs of stability in the business as ramp downs start to taper off and volumes start to stabilize," Wipro Chairman Azim Premji said.

The company's revenue from IT Services declined 3.3 per cent on an year-on-year basis to $1,033 million (about Rs 4,998 crore) in the June quarter.

"Looking ahead, for the quarter ending September 30, 2009, we expect revenues from our IT Services business to be in the range of $1,035 million to $1,053 million" Premji added.

On a standalone basis, Wipro posted two-fold growth in net profit at Rs 1,197.90 crore for the first quarter ended June 30. It had a net profit of Rs 546 crore in the first quarter of FY'09. Total income rose 12 per cent to Rs 5,383.4 crore in the June quarter.

 

[Pintu]

India should keep up pressure on US on protectionism: Premji- Jobs-News By Industry-News-The Economic Times

India should keep up pressure on US on protectionism: Premji
22 Jul 2009, 1917 hrs IST, PTI

BANGALORE: Wipro chairman Azim Premji on Wednesday said India should continue to exert pressure on the United States not to switch over to an era of protectionism.

Premji said the visit of the US Secretary of State Hillary Clinton to India had stated that Washington would not "switch over to protectionism".

"I think our Prime Minister (Manmohan Singh) and the External Affairs Minister (S M Krishna) have taken this up at the appropriate levels in Washington", he told reporters in response to questions. "The Prime Minister has taken this up three times with President Barack Obama," he said.

So, as of now, the issue seemed to have been contained, the Chairman of the software major, listed on New York Stock Exchange, said.

"But one should be alert to the fact that the US is facing an unprecedented degree of unemployment...excess of 9.8 per cent", Premji said, adding, one should continue to keep the pressure on the US not to "switch over to the methodology of protectionism".

He also said Wipro was taking proactive steps to increase the number of local people in its workforce in overseas operations. Today, locals constitute as much as 30 per cent of its headcount overseas.

 

[Pintu]

Central bank paves way for IDRs

Central bank paves way for IDRs
BS Reporter / Mumbai July 23, 2009, 0:41 IST

Immediate repatriation of money raised; 1-yr lock-in for conversion into equity.

In order to encourage foreign companies facing fund crunch globally to raise resources from Indian markets, the Reserve Bank of India (RBI) has issued guidelines that will allow them to issue Indian Depository Receipts (IDRs).

However, the resources raised through IDRs will have to be repatriated immediately.

The guidelines could prompt several foreign companies such as Standard Chartered Bank to raise money through IDRs. The bank has already gone on record to say that it will be interested in exploring this option.

The guidelines would allow companies outside India and foreign financial or banking companies with presence in India, either through a branch or subsidiary, to raise funds through IDRs. But they would require the approval of regulators concerned, such as RBI, Sebi and Irda, before issuing IDRs.

Also, IDRs, which will be denominated in Indian rupees, will not be redeemable into underlying equity shares before one year from the date of issue. So, the lock-in period is one year.

There won’t be any automatic fungibility of IDRs. That is, companies will not be allowed to purchase any property or assets in India using the resources.

Mutual funds investing in IDRs may either sell or continue to hold the underlying shares as per Foreign Exchange Management Act (Fema) guidelines. Individual investors can only hold the shares for the purpose of sale within 30 days from the date of conversion.

IDRs, an equivalent of Global Depository Receipts (GDRs) or American Depository Receipts (ADRs), are receipts issued by a foreign firm to raise funds from the Indian capital market. These receipts are eventually redeemed into shares of the company.

Bankers explained that this was the right time to operationalise this instrument. At present, many smaller international companies are finding it difficult to raise funds from the US and European markets due to risk aversion following the dollar crunch and the global economic slowdown.

“Also, subsidiaries of Indian companies and banks abroad, which were finding it difficult to raise dollar resources, may also get to raise funds through this route,” added bankers.

The government had announced the introduction of IDRs, denominated in India rupees, in 2004. However, the new RBI guidelines will now operationalise it by making necessary changes in Fema.

RBI has also allowed Foreign Institutional Investors (FIIs), including Sebi-approved sub-accounts, and Non-Resident Indians (NRIs) to invest, buy, hold and transfer IDRs.

NRIs will also be allowed to invest in IDRs out of funds held in their NRE/FCNR(B) accounts, maintained with authorised dealers/banks. NRE or FCNR (B) accounts are Indian rupee and foreign currency denominated deposit accounts, respectively.

 

[Pintu]

HDFC: It's business as usual

HDFC: It's business as usual
Shobhana Subramanian / Mumbai July 23, 2009, 0:41 IST

In a difficult environment, the home loan firm has turned in reasonably good results

The Housing Development Finance Company (HDFC) stock slipped around 4.5 per cent on Wednesday to Rs 2,410 after the home loan company announced results for the June 2009 quarter. The Street was perhaps somewhat disappointed with 13 per cent growth in the loan book — HDFC has typically clocked growth of at least 20 per cent and this is the lowest increase in several quarters.

However, it’s possible there was some amount of pre-payment of loans during the quarter. Nevertheless, business appears to be picking up with sanctions and disbursements during the quarter growing a reasonably good 23 per cent and 21 per cent, respectively.

It should be remembered that HDFC has been securitising assets — in the March 2009 quarter, loans amounting to around Rs 4,000 crore were securitised. Over a 12-month period, the amount has been close to Rs 6,000 crore. The 11 per cent year-on-year growth in net interest income in the June quarter may not have been very strong but was creditable given the challenging environment.

HDFC’s portfolio remains as clean as ever with non-performing loans (due for over six months) down to 0.58 per cent from 0.71 per cent at the end of June 2008. The HDFC stock has had a good run — since the start of the year, it has gained 60 per cent compared with around 50 per cent rise for the Sensex. Since April, the stock has risen 71 per cent compared with just 53 per cent gain for the Sensex. Analysts put a sum-of-the-parts value to the stock of Rs 2,500-2,700 per share.

 

[Pintu]

http://ptinews.com/news/188883_RBI-gives-nod-to-foreign-cos-for-raising-fund-via-IDR

RBI gives nod to foreign cos for raising fund via IDR

STAFF WRITER 21:8 HRS IST

Mumbai, July 22 (PTI) The Reserve Bank today allowed the foreign companies to raise money from the Indian stock markets through Indian Depository Receipts.

"It has been decided to operationalise the IDR Rules with immediate effect," the central bank said in a notification.

Thus, overseas companies can now issue Indian Depository Receipts (IDRs) through a domestic depository and can purchase, possess, transfer and redeem IDRs.

However, financial/banking companies having presence in India, either through a branch or subsidiary, have to get permission of the sectoral regulator like RBI or IRDA before issuing IDRs.

The RBI said that FEMA Regulations will not apply to persons resident in India for investing in IDRs and also subsequent transfer arising out of transaction on a recognised stock exchange.

Foreign Institutional Investors (FIIs), including SEBI-approved sub-accounts of the FIIs, NRIs, have also been allowed to invest, purchase, hold and transfer IDRs.

 

[Pintu]

ONGC Q1 Net dips 27% to Rs 4,848 crore - India Business - Business - NEWS - The Times of India

ONGC Q1 Net dips 27% to Rs 4,848 crore
PTI 23 July 2009, 06:04pm IST

NEW DELHI: State-run Oil and Natural Gas Corporation (ONGC) on Thursday reported 27% decline in net profit at Rs 4,847.92 crore for the first quarter ended June 30, 2009.

The oil and natural gas explorer had a net profit of Rs 6,636.33 crore in the first quarter of last fiscal, ONGC said in a filing to the Bombay Stock Exchange.

Total income of the company dipped 24.54% to Rs 15,924.08 crore during the June quarter of FY’10 from Rs 21,102.22 crore in the corresponding period of FY’09. Shares of ONGC ended unchanged over previous close at Rs 1,092.85 on the BSE.

 

[Pintu]

ONGC Profit Falls 27% - WSJ.com

JULY 23, 2009, 7:59 A.M. ET

ONGC Profit Falls 27%

By RAKESH SHARMA

NEW DELHI -- Oil and Natural Gas Corp. Thursday reported a fourth consecutive drop in quarterly profits as global crude oil prices slipped.

Net profit for the April-June quarter fell 27% to 48.48 billion rupees from 66.36 billion a year earlier, India's largest oil producer said in a note to the Bombay Stock Exchange.

Profit was lower than the 49.48 billion rupees ($100 billion) average of estimates in a Dow Jones Newswires poll of eight analysts.

Net sales for the quarter decreased by 26% to 148.79 billion rupees from 200.52 billion rupees, the state-run company said.

Write to Rakesh Sharma at [email protected]

 

[Pintu]

Sun Pharma plunges 8 pc on BSE- Stocks in News-Stocks-Markets-The Economic Times

Sun Pharma plunges 8 pc on BSE
23 Jul 2009, 1123 hrs IST, PTI

MUMBAI: Shares of Sun Pharmaceutical on Thursday plunged nearly eight per cent in the early trade on the Bombay Stock Exchange amid reports that a class action law suit has been filed in the US District Court against its arm Caraco.

Shares of Sun Pharma opened weak on the BSE and lost further ground to a low of Rs 1,158, down 7.71 per cent over the previous close.

According to reports, US-based law firm Izard LLP has filed the case on behalf of some of Caraco's shareholders in a Michigan court on July 17 for allegedly not disclosing adequate information about US regulatory action that hurt its shares.

Earlier on June 25, the US Food and Drug Administration (FDA) had seized all drug products manufactured by generic drug maker Caraco at its Michigan facilities in Detroit following repeated violations of the manufacturing standards.

Following the US FDA's move, shares of Caraco nosedived 43 per cent to USD 2.39 on the American Stock Exchange. Also Sun Pharma plunged 18 per cent on the BSE the next day.

On the National Stock Exchange the scrip skid 8 per cent to Rs 1,156. It was later quoting at Rs 1,208, down 3.72 per cent on the BSE and with a loss of 3.79 per cent at Rs 1,208.80 on the NSE.

In 1997, Sun Pharma acquired a majority stake in Caraco and subsequently, the two companies entered into a technology transfer agreement.

 

[Pintu]

http://www.ptinews.com/news/192347_Rupee-surges-further-by-22-50-paise-vs-dollar

Rupee surges further by 22.50 paise vs dollar

STAFF WRITER 18:1 HRS IST

Mumbai, July 24 (PTI) Buoyed by a weak dollar overseas, the Indian rupee today surged by another 22.50 paise to 48.22/23 against the US currency in tandem with firm equity markets amid some dollar demand from oil refiners.

In otherwise restricted activity at the Interbank Foreign Exchange market, the domestic currency moved in a small range of 48.20 and 48.41 during the day after resuming higher at 48.40/41 a dollar against its last close of 48.4450/4550 a dollar.

Forex dealers said the rupee drew support from positive FII activity in equity markets, raising hopes of increased capital inflows.

They said oil refiners, however, were seen making some dollar purchases.

After gaining by nearly 388 points the Indian benchmark Sensex today improved further by about 148 points or 0.97 per cent. Asian indices also ended in the green, supporting rupee sentiment.

 

[Pintu]

India remittance news-India tops in global remittance flow: World Bank

India tops in global remittance flow: WB

Updated on Friday, July 24, 2009, 20:43 IST

New Delhi: India has retained its position as the highest recipient of global remittance flow at USD 52 million in 2008, the World Bank said in a report.

Other than India, China and Mexico, the top 10 recipients of remittances include the Philippines, Poland, Nigeria, Romania, Egypt, Bangladesh and Vietnam.

Remittance flow to South and East Asia has continued to post strong growth, largely on the fact that the gulf countries, a major destination for Asian migrants, have not significantly reduced hiring migrants.

According to the World Bank Migration and Development brief, India with USD 52 million, China (USD 40.6 million) and Mexico (USD 26.3 million) have retained their positions as the top recipients of migrant remittances amongst the developing countries despite the fact that remittances have slowed down in many corridors since the last quarter of 2008.

Growth of remittances to South and East Asia is also because of the switch in motivation for remittances from consumption to investment: falling asset prices, rising interest rate differentials and a depreciation of the local currency.

However, the World Bank observed that the outlook for this year looks bleak because of deterioration in the economic and employment situation in the migrant - destination countries in the first half of this year.

Bureau Report

 

[Pintu]

Reliance Industries net profit dips 11.5 percent

IANS
Reliance Industries net profit dips 11.5 percent

2009-07-24 21:10:00

The net profit of oil-to-petrochemicals major Reliance Industries (RIL) dropped 11.5 percent to Rs.3,636 crore ($759 million) for the quarter ended June 30, compared to the Rs.4,110 crore it netted in the corresponding period last fiscal.

In a regulatory statement Friday, the company said it has registered a turnover of Rs.33,309 crore ($7 billion), a decrease of 22.6 percent from the Rs.43,050 crore it earned in the year-ago period.

RIL, ranked 117 in on the global list of Fortune 500 companies in 2009 based on profits, said a decrease in oil prices had hit revenues, though this was partially offset by higher volumes.

The Reliance scrip ended 1.2 percent down at Rs.2,013.75 Friday on the Bombay Stock Exchange (BSE). The results were announced after the markets closed.

Refining, which constituted about 65 percent of RIL's revenue for the first quarter of 2009-10, was impacted with earnings per barrel dipping to $7.5 from $15.7 a barrel in the corresponding quarter the previous fiscal.

However, lower refining margins can be offset in future with profits from gas production at the company's Krishna Godavari (KG) basin finds.

'Timely completion of the deep-water, oil and gas KG D6 block will play a significant role in shaping the future growth at RIL,' said RIL chairman and managing director Mukesh Ambani.

RIL currently supplies about 30 million units gas to 15 fertiliser, 15 power and two steel companies. Supply of an additional five million units is expected to commence soon.

 

[Pintu]

ITC Ltd to scale up hotel biz with 8Kcr- Hotels / Restaurants-Services-News By Industry-News-The Economic Times

ITC Ltd to scale up hotel biz with 8Kcr
24 Jul 2009, 2106 hrs IST, Sutanuka & Anuradha, ET Bureau

KOLKATA: Tobacco-to-hotels major ITC Ltd has lined up an investment of Rs 8,000 crore to scale up its hotels business. The company is looking at both the organic and the inorganic routes to expand and is also open to the idea of picking up a strategic stake in a hotel project.

Addressing mediapersons after the company’s 98th AGM in Kolkata, ITC chairman Y.C. Deveshwar said: "We are looking at various opportunities in the hotels space within the country. Senior officials from ITC led by chief executive of the developmental cell are scouting for properties in the country. Talks are on with a number of people including real estate developers for acquiring properties. The hotels business continues to pursue an aggressive investment led growth strategy recognising the long-term potential of this sector and the need for greater room capacities commensurate with India’s economic growth. We are extremely bullish about the hotels business."

Elaborating, Mr Deveshwar said, the Rs 8000 crore investment will entail developing hotels in Amritsar, Bhubaneswar, Ahmedabad and Coimbatore. "We already have land in these places. Negotiations are also on to set up a hotel in Gurgaon. We have also paid Rs 150 crore to Andhra Pradesh government for a plot in Hyderabad. Unfortunately, the AP government has been dragged to the court on this particular plot," he added.

Incidentally, ITC is in the process of setting up a 650-room hotel in Chennai, a 280-room hotel in Bangalore and a 470 room hotel in Kolkata. On the company’s plans to pick up a 26% stake in a hotel project, ITC chairman said, "The majority ownership may remain with the prospective partner but we plan to operate and market it."

The company is also looking at investing Rs 4000-5,000 crore in a greenfield paper plant. "We will need some 1500-to-
2,000 acres for this greenfield plant which will have a capacity as big as our existing one. Our present capacity is half a million tonnes. Getting land is a crucial issue for the greenfield project and we are scouting for land in Gujarat, Madhya Pradesh and Andhra Pradesh. We are hopeful of getting land at the earliest. It will take 3 to 4 years to build the plant," he added.

Earlier at the AGM, Mr Deveshwar said: "We are not interested in a hostile takeover of hotel chains EIH Ltd and Hotel Leelaventures. These are good investments and has helped us earn good profits over the years. Sometime, if the other side ever thinks that joining hands with ITC will be good business, this investment will come in handy. We have still not come to a stage of market operations of West."

ITC, which runs the Welcomgroup of hotels, owns 14.98 % of EIH which runs the Trident and Oberoi chain of hotels, and less than 5 % of Hotel Leela through its investment arm Russell Credit. Responding to a shareholder’s comments on the cigarette business, the ITC chairman said businesses which have high risk of tax evasion should be in the hands of responsible companies. It may be mentioned that those smuggling cigarettes into the country or producing cigarettes illegally evade payment of tax leading to huge loss to the exchequer.

Regarding the company’s plans to set up a food-processing unit in West Bengal, Mr Deveshwar said though the company has already made the necessary payments for some 40 acres near Kolkata, the state government could not give them land as the acquiring agency, West Bengal Industrial Infrastructure Development Corporation, has been dragged to court on this plot of land.

"It is an unfortunate thing even though chief minister Buddhadeb Bhattacharjee went out of his way to give us the land. But we are committed to the project and we will do it," asserted Mr Deveshwar.

 

[Pintu]

Ranbaxy posts Rs 693cr profit on stronger rupee - India Business - Business - NEWS - The Times of India

Ranbaxy posts Rs 693cr profit on stronger rupee
TNN 25 July 2009, 01:44am IST

NEW DELHI: Ranbaxy is back in the black and reported its first profit in four quarters at Rs 693 crore for the second quarter ended June 2009, after the rupee strengthened against the dollar, allowing it to reverse some losses.

During the quarter, the company reversed a substantial part of its mark-to-market losses or losses on foreign exchange
hedges which totalled Rs 919 crore in the first quarter of this year.

Of those, Rs 807 crore has been wiped out during the second quarter. The TOI had first reported on May 15 that the company will trim its losses on account of the rupee strengthening during the second quarter. But stripping out the currency gains, Ranbaxy posted a second-quarter net profit of Rs 63 crore.

The company's CEO and MD Atul Sobti said on Friday that it was sticking to an earlier guidance of a loss of $150 million for the year. "The forex situation is still volatile so we are not changing the forecast," he said. The company's net sales on a consolidated basis stood at Rs 1,795 crore, a de-growth of 2% over the corresponding period last year.

The company returned to profits at the operational level during the quarter, due to an improvement in sales in some emerging markets, improvement in gross margins and a close management of costs, says company statement. Sales in developed markets stood at $125 million, a de-growth of 26% over the corresponding quarter previous year, primarily on account of reduced scale of business in US, which was impacted by the USFDA issues. Sales were at the same level as the first quarter. Emerging markets grew at 19%, while sales in developed markets were at the same level as the previous quarter.

Ranbaxy is also expecting a reply by the end of this month on the corrective action plan submitted by it to the USFDA in May this year for its Paonta Sahib (Himachal Pradesh) facility.

FDA had banned import of 30 drugs manufactured at Paonta Sahib and Dewas plants for violation of good manufacturing practices.

 

[thakur_ritesh]

India among top recipients of remittances: World Bank
IANS 14 July 2009, 07:39pm IST


NEW DELHI: As per official estimates, India has the largest diaspora of 25 million spread over 136 countries.

According to the Reserve Bank of India, private transfer receipts, comprising mainly remittances from Indians working overseas, increased to $46.4 billion (4 percent of GDP) during 2008-09 from $ 43.5 billion (3.7 per cent of GDP) in the previous year.

"India, China and Mexico retain their position as the top recipients of migrant remittances among developing countries," the World Bank said.

"Remittance flows to developing countries are expected to be $304 billion in 2009, down from an estimated $328 billion in 2008," it said in a report on migration and remittances.

India among top recipients of remittances: World Bank - India Business - Business - NEWS - The Times of India

India remittance news-India tops in global remittance flow: World Bank

India tops in global remittance flow: WB

Updated on Friday, July 24, 2009, 20:43 IST

New Delhi: India has retained its position as the highest recipient of global remittance flow at USD 52 million in 2008, the World Bank said in a report.

Other than India, China and Mexico, the top 10 recipients of remittances include the Philippines, Poland, Nigeria, Romania, Egypt, Bangladesh and Vietnam.

According to the World Bank Migration and Development brief, India with USD 52 million, China (USD 40.6 million) and Mexico (USD 26.3 million) have retained their positions as the top recipients of migrant remittances amongst the developing countries despite the fact that remittances have slowed down in many corridors since the last quarter of 2008.

well its truly surprising how the two reports are a complete contrast of each other and the second brief of the world bank is talking in terms of millions and not billions is again a surprise. i cross checked both these reports and the same figures have been carried right across the spectrum, either the world bank is at fault or the agency carrying the report is at fault.

another interesting thing is the mention of b'desh in the top 10 and no place for pakistan who have been boasting a big increase in their remittance which they project at over 7b usd for the just gone by fiscal. can some one quote the remittance figure for b'desh and is this the moment where b'desh would start tipping pakistan in terms of economic growth.

i am sure b'desh must have done better growth rate figs than pakistan for the last fiscal and that too without any financial assistance, well some virtues of not letting dictators take country for a ride.

pintuda, I-G, or someone else, please throw in some light on the b'desh, pakistan comparison.
thanks.

 

[Pintu]

First , I would like to thank Riteshji, for going through and highlighting the errors which prevailing stark contrasts in the reports published by the World Bank which erred itself while bailing out the data, I had overlooked this while posting.

As per request from Riteshji, I am to state that Bangladesh has seen a tremendous rate of growth in remittance earning in past few moths, with Asia contributing overwhelmingly major share in the job market of skilled / unskilled migrant workers in the developed nations, I think main reason is that demand of the Bangladeshi migrant professionals , workers and domestic helps are on the rise in the different developed country, mainly in the USA , the UK and other western nations, and major chunk of the total remittance also inflows to Bangladesh from Gulf Countries which do have construction booms.

In below I am posting a report published by the group of 'Developing 8' ( Group of 8 Developing Islamic nations) secretariat way back in 2007 about Bangladesh's astonishing growth in this field, this report also supports Figure in Billion terms.

Developing 8

Bangladesh’s remittance earnings up 29% in 7 months

Dhaka, Bangladesh | July 02, 2007 by D-8 Secretariat

Bangladeshi expatriates sent home a record 3.32 billion U.S. dollars in the first seven months of the current fiscal year, marking a 29 percent growth over the same period of the last fiscal year, according to the central bank, the Bangladesh Bank.

According to the provisional estimates of the central bank, the country received 3.32 billion dollars in remittance during the July-January period of fiscal 2006-07 year (July 2006-June 2007) against 2.57 billion dollars in the same period of the previous fiscal year, local daily The Financial Express reported Tuesday.

The remittance earnings in the period came as a continuation of last fiscal's trend and record inflow of 4.81 billion dollars. The growth in fiscal 2005-06 (July 2005-June 2006) was 24.89 percent over the previous fiscal. The country's foreign exchange reserve stood at 3.76 billion dollars on Monday due to the robust growth of remittances from Bangladeshis working abroad.

Last December, the total amount of foreign exchange remitted by Bangladeshi wage earners amounted to 555 million dollars, which was 138 million dollars higher than that of the corresponding month of the previous fiscal. A senior official of the Bangladesh Bank said the central bank is continuously pursuing the banks for taking necessary measures to boost the flow of inward remittances.

"With all this potential in mind, we want to put more focus on this D-8 migrant worker issue considering that the remittance sent home plays a quite significant role in cutting down poverty lines in our member states," says D-8 Secretary General in its headquarter in Istanbul, on Saturday. He added that the remittance are allocated for food, education, health, housing, as well as for developing micro industry or small & middle enterprises.

Secretary General is taking a concentrated initiative to set up a D-8 working group on this issue to help member countries to better route this potential remittance for the development of the D-8 member countries.

and the efforts are on to reach out the remittance money to the beneficiaries in rural area are also on as stated the 2008 report published by the same authority.

Developing 8


Reaching Out Into Remore Areas: Bangladesh Recent Remittance Manoeuvre

Dhaka, Bangladesh | February 29, 2008 by D-8 Secretariat

A local private commercial bank has tied up with a leading micro-credit lender to reach out remittances to its beneficiaries in rural remote areas fast, as reported by Bangladeshi media. The National Credit and Commerce Bank Limited has taken the initiative yesterday by joining hands with Thengamara Mohila Sabuj Sangha (TMSS), a micro-credit NGO (non-governmental organisation), in this regard.

“I hope NCC Bank’s partnership with TMSS will help the bank to a great extent to fulfil its remittance delivery obligations using the branches of the NGO that are located at remote areas,” Bangladesh Bank (BB) Governor Dr Salehuddin Ahmed told the deal signing ceremony in Dhaka to launch the remittance project.

Chaired by Tofazzal Hossain, the NCC Bank chairman, the function was also attended by Chris Austin, country representative of the Department for International Development, UK, as special guest.

The BB governor said commercial banks very often do not go by the central bank instructions that asked them to reach out remittances in a time limit of 48 hours to urban beneficiaries and within 72 hours to the rural ones.

“The new initiative will help the banks and financial institutions to comply with the Bangladesh Bank instructions,” he added.

On note forgery, the central bank chief asked for speedy trial of the persons involved in printing fake currency notes. According to the BB sources, there are some 3600 note forgery cases remain pending. The NCC Bank initiative, the first of its kind in Bangladesh, would be launched in early April this year.

The NCC Bank-TMSS project worth Tk 8crore would enable installation of electronic point of sale (POS) technology in all the 53 NCC Bank branches and 250 remote branches of TMSS. According to the project initiator, the remittance beneficiaries will be provided with free debit and prepaid cards, which would allow them to use card transaction up to the amount of their remittance.

The beneficiaries will be allowed to conveniently draw out their remittances in cash on the spot or as and when necessary at the branches of both the organizations to use automated teller machines (ATMs) and buy goods and services from the merchants having POS machines. However the central bank chief advocated ensuring more facilities for the wage earners, compared to the ones being provided to the wage earners in other countries.

Remittances sector has indeed been growing into a gigantic industry. It has more than doubled since 2000, and with globalization increasing the numbers of people on the move, there’s no end in sight. In a recent report, the World Bank said that globally, remittances totaled nearly $276 billion in 2006. This mean that if all the guest workers incorporated as a company, their migrant multinational would rank No. 3 on the Fortune 500 list, trailing only Wal-Mart and Exxon Mobil in annual revenue.

“With all this potential in mind, we want to put more focus on this D-8 migrant worker issue considering that the remittance sent home plays a quite significant role in cutting down poverty lines in our member states,” says D-8 Secretary General, Dr. Dipo Alam. He added that the remittance are allocated for food, education, health, housing, as well as for developing micro industry or small & middle enterprises.

D-8 Secretariat is taking a concentrated initiative to set up a D-8 working group on this issue to help member countries to better route this potential remittance for the development of the D-8 member countries. Secretariat had contacted some participants who attended International Meeting on Migrant Workers in Brussels, Belgium, to work with D-8 Organization on ideas to set up a Working Group on Migrant Workers and Remittances. This would also include cooperation of international organization such as ADB, World Bank and IMF.

However, recession having a crunch in inflow of remittance , second biggest source of country's foreign income, which inflows into our subcontinental neighbour due to economic recession in world wide as I have said earlier huge chunk of the earning come from Gulf countries .

Developing 8

Bangladesh: Global Financial Crunch Set to Cut Remittances

Dhaka, Bangladesh | December 03, 2008 by D-8 Secretariat

Remittances are Bangladesh's second-biggest source of
foreign income

Millions of Bangladeshis will be hit by an expected downturn in remittances because of the global financial crisis, experts warn.

Some five million Bangladeshis work abroad, mostly in the Middle East, in healthcare, engineering, domestic service and manual labour.

“We won’t feel the blow of the cut in overseas employment immediately, but after two to three years remittances will definitely dry up if no major changes take place,” Syed Ashraf Ali, former executive director of the Bangladesh Bank, in Dhaka said.

Although foreign workers make up just 2.8 percent of the population, they contribute more than 9 percent of gross domestic product (GDP).

Remittances are Bangladesh’s second-biggest source of foreign income after ready-made garments, which earned US$10.7 billion in the last fiscal year.

“Remittances are like a goldmine for Bangladesh, playing a key role for stability in the balance of payments and mitigating unemployment problems here,” said economist Atiur Rahman, chairman of Shamunnoy, an NGO. “We will be in deep crisis if remittances are destroyed.”

Remittances at $10 billion

Bangladeshis working abroad sent home $7.5 billion in the first 10 months of 2008, up 37 percent on the same period a year earlier.

The central bank expects the inflow of remittances to reach $10 billion in the current financial year (July 2008-June 2009).

But as the global financial crisis worsens, those figures will likely decrease, as major labour markets reduce their quotas.

“Signs are there that the demand for Bangladeshi labour will drastically slide in the Middle and Far Eastern countries,” Jahangir Kabir Chowdhury, a leading recruiting agent, told IRIN, adding that Saudi Arabia and Malaysia, two major employers of Bangladesh migrant labour, had already slashed their quota for Bangladesh from September.

At a recent conference in Dhaka, Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development (UNCTAD) warned that the ongoing global economic slowdown would further affect remittances to third world countries, including Bangladesh, where approximately 38 percent of inhabitants live below the poverty line.

While there are no exact figures on how many people will be affected, throughout Bangladesh at least one family in every village is dependent on regular remittances to survive.

Citing International Labour Organisation (ILO) statistics, Supachai said the financial crisis would raise global unemployment by 20 million in 2009 and push 40 million people into extreme poverty.

Globally, migrant workers remitted $250 billion in 2008, he said.

Saudi Arabia tops the list of remittances to Bangladesh followed by the USA, United Arab Emirates, Qatar, Oman, Bahrain, Kuwait, Libya, Iran, Hong Kong, UK, Germany, Japan, Malaysia, Singapore, Australia, Italy and South Korea.

About three million Bangladeshis living in the Middle East send approximately 70 percent of all remittances.

According to the statistics for the latest fiscal year, Bangladesh received about 27 percent of its remittances from the US and European countries.

The number of workers who went abroad for jobs in 2000-2005 ranged between 180,000 and 250,000, while about 380,000 workers left in 2006 and 832,000 in 2007, according to the Bureau of Manpower Employment and Training.

Today 1.5 million wage earners live in Saudi Arabia alone.

Bangladesh stands fifth among the top remittance recipient countries in the world.

D-8 Secretariat has been taking a concentrated initiative to set up a D-8 working group on remittance issue since last year to help member countries to better route this potential remittance for the development of the D-8 member countries. Secretariat had contacted some participants who attended International Meeting on Migrant Workers in Brussels, Belgium, to work with D-8 Organization on ideas to set up a Working Group on Migrant Workers and Remittances. This would also include cooperation of international organization such as ADB, World Bank and IMF.

News Contributor: UN Office for the Coordination of Humanitarian Affairs

This reports help to understand us , Bangladesh's high growth in remittance earning.

Regards

PS: For Pakistan I'll write in another post.

 

[Pintu]

In continuance with the previous post .......................................

Pakistan

Remittance are one of the main contributor's in Pakistan's economy as per Wikipedia, it contributes 4 % of GDP and equivalent to 22% of annual exports.

This old report of 2006 is held as the source of information in Wiki.

Daily Times - Leading News Resource of Pakistan

Remittances contribute 4% to Pakistan GDP

Staff Report

ISLAMABAD: An IMF research paper has revealed that workers’ remittances contribute 4% to the GDP of Pakistan and are equivalent to about 22 percent of annual exports of goods and services.

These flows have historically been an important component of Pakistan’s balance of payments and have also contributed to the strengthening of the Pakistani rupee. Therefore, remittances play an important role in the country’s external position and influence the conduct of monetary and exchange rate policy.

IMF Working Paper “Altruism and Workers” Remittances: Evidence from Selected Countries in the Middle East and Central Asia” prepared by Jacques Bouhga-Hagbe1 revealed this.

According to the analysis of the paper, people working outside their home country regularly transfer money home. These flows play an increasingly important role in the external positions of the recipient countries. During the period 2000-04, workers’ remittances amounted to about 3.5 percent of GDP in Egypt, 20 percent in Jordan, eight percent in Morocco, four percent in Pakistan, and five percent in Tunisia. These inflows compare to a trade deficit of about 7.5 percent of GDP in Egypt, 24 percent in Jordan, 10 percent in Morocco, 1.5 percent in Pakistan, and 10 percent in Tunisia. Moreover, remittance flows to these countries have been larger than foreign direct investment flows.

The paper suggests that a sudden drop or reversal of remittance flows to the countries we consider is unlikely in a foreseeable future, as many of those who are receiving this assistance are likely to continue to depend on it in the coming years. Therefore, remittances are likely to continue to be an important element mitigating the external vulnerabilities of the countries considered.

In the above countries, the stability of remittance flows is an important policy issue that is relevant to the analysis of their external vulnerabilities. This issue becomes even more important given the fact that all these countries, with the exception of Egypt, are net importers of oil, and therefore are likely to experience the negative impact on their external positions of the current high oil prices. Remittances and tourism for some countries tend to mitigate the impact of unfavorable shocks on their balance of payments. Remittances also affect the liquidity in their banking systems and, therefore, indirectly influence the conduct of monetary policy. Assessing the stability of such flows could thus also be useful to understanding the challenges these countries face in the conduct of monetary and exchange rate policy.

However, this is interesting link of research work about state of Pakistan's remittance inflow:

Remittances in crises: a case study from Pakistan

Interesting point to note :

I am quoting from Wikipedia , the year wise list of top recipients of remittance and their share , where we can see , Pakistan which have earned more than Bangladesh in 2003-04 comprehensively overtaken by Bangladesh at the end of the table (2007-08)

Country ↓ Remittances (2003–2004) ↓ Remittances (2005–2006) ↓ Remittances (2006–2007) ↓ Remittances* (2007–2008) ↓
India $21.7 billion $26.9 billion $27 billion $45 billion
China $21.3 billion $22.52 billion $25.7 billion $34.5 billion
Mexico $18.1 billion $24.7 billion $23.97 billion $26.2 billion
Philippines $12 billion $17 billion $18.26 billion
France $12 billion $12.5 billion $13.75 billion
Bangladesh $3.4 billion $ 5.97 billion $8.9 billion
Pakistan $3.9 billion $5.493 billion $6.50 billion $7.0 billion
Morocco $5.70 billion $6.7 billion

I think this is the main reason why Pakistan excluded in 2009-10 , while India along with made an astonishing growth ,Pakistan's growth was only $ 500 million up from 2006-2007 $ 6.5 Billion to $ 7.0 billion i.e. 7 % growth which is negligible while to be compared with its neighbours.

The recent earth quakes took toll in Pakistan's inflow of remittance. the above link I mentioned can explain it.

Regards

 

[NSG_Blackcats]

Bill Gates urges India to move from low-cost to R&D

NEW DELHI (Reuters) - Billionaire Bill Gates on Friday urged India to move away from low-cost labour toward high-end research and development to keep its giant IT sector competitive.
On a visit to New Delhi, the co-founder of Microsoft Corp called on the Indian government to speed up its commitment to R&D and to boost low number of home-grown PhD students.Gates told a panel discussion that India's "IT success story" should strive to add value and move away from low-cost labour as other developing countries play catch-up.
"At first some of that (IT boom) was built on low-cost labour. And, of course, as time goes on, you don't want to have that as the only differentiator and it's not a sustainable thing, because others can come along with that as well," Gates said. India's R&D sector has made strides in recent years and attracted some big foreign hitters, including Microsoft, in keeping with its IT- and service-driven economic boom.
But hampered by structural problems and a lack of government commitment, India's R&D still lags behind the United States and Asian rival China. China has more than 1,100 R&D centres compared to less than 800 in India.

"Leading companies here are contributing a lot of ideas and techniques. Even more of that has to happen and bring it to its full potential," Gates said.

"You've got to get the government, universities ... and companies like Microsoft to deepen their commitment to R&D."
India produces 100 computer science PhDs a year -- a fraction of China or the U.S -- even as it exports a large number of students abroad. While English-speaking India is cheaper than China for R&D, New Delhi gives few incentives to researchers.
Beijing offers incentives like tax breaks for R&D centres, and special economic zones provide infrastructure for hi-tech and R&D industries.

Link

 

[prahladh]

Govt is not determined in improving our country in such areas. Corruption is still high. It took 6 months for customs to clear our systems that were sent from U.S.

 

[NSG_Blackcats]

Our Finance Minister has announced a 150% advanced tax rebate on R & D across the board in this budget. Earlier it was only limited to pharma companies. It means the company will get Rs 150 tax rebate on each Rs 100 they spent on R & D. It is a step in the right direction.