The document provides a summary of recent economic and business news items from India. It discusses the BRICS nations proposing to allow trade using local currencies which could reduce demand for the US dollar. It also mentions India's balance of payments falling into deficit for the first time since 2008 due to a widening trade deficit and inadequate capital inflows. On the corporate front, it discusses Reliance Industries facing a setback in a cost recovery dispute over a gas field, and Suzlon Energy appointing a new CFO.

1. Top Headlines
 Korea’s KEPCO Acquires 22.7% In Pioneer Gas Power’s
$250M Project.
 GEF, IFC To Invest $11.5M In Kalki Communication.
 Rupee likely to wobble again as BoP deficit touches
highest level in 20 years.
 Tano Capital Reinvests In Shilpa Medicare, Picks Up 1.5%
 VenturEast, Zephyr Peacock Invest $6M In e2E RAIL
 Suzlon names Vagadia CFO, replacing Banerjee
Weekly Economic Review
The five-nation summit held in Delhi during the week has thrown up a
proposal that could shake up the global trade. Leaders of the so-called
BRICS nations, Brazil, Russia, India, China and South Africa got together
on Thursday to discuss issues ranging from international financial
institutions to US sanctions on Iran. But one significant proposal from
the summit has to do with currencies. BRICS nations have signed an
agreement that will allow trade between them to take place in local
currencies. The caveat is that this can only happen through government-
run development banks. The declaration says the move will reduce
transactions costs between BRICS countries. Of course, if the proposal
actually goes through and becomes a success, it could reduce demand
for the U-S dollar and make BRICS nations less dependent on it.
And speaking of trade, India’s balance of payments isn’t looking very
healthy at the moment. Data released by the Reserve Bank on Friday
show it has fallen into negative for the first time since the financial crisis
of 2008. The deficit in the balance of payments for the third quarter was
$12.8 billion. In the same period last year, India had a surplus of $4
billion. The Reserve Bank said a widening trade deficit and inadequate
capital inflows ate into foreign exchange reserves.
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2. But that’s not all. India’s current account deficit has more than doubled
compared to the year-ago period. For the December quarter it stood at
$19.6 billion. That’s compared to just $9.7 billion during the same
quarter in the previous fiscal.
Moving to corporate news, Mukesh Ambani’s Reliance Industries has
suffered a setback in its stand-off with the government over the KG D-6
gas field. Mint has learnt that the government has decided not to
participate in an arbitration to resolve a cost recovery dispute. That
means RIL will either have to accept the government’s line or go to the
courts. RIL has claimed $1.24 billion in costs for developing the D-6 field
in the Bay of Bengal. The company had pushed for an arbitration
process after indications that authorities planned to link the
compensation amount with actual utilization. Earlier a CAG report had
said RIL was in violation of its contract because it failed to increase gas
output despite claiming cost recoveries.
The World Bank’s outgoing president Robert Zoelick has made the case
for the U-S to lead some major financial institutions. Speaking to
reporters in Delhi on Friday, he said the U-S did not traditionally head
other institutions like the WTO or IMF. Zoelick’s comments came a day
after the BRICS leaders called a merit-based selection in both the World
Bank and IMF.
And Finally in newsGMR Infrastructure plans to begin a consulting
service for airports around the world. Group CFO Subba Rao
Amarthaluru has told Mint the company is talking to international funds
about a partnership that can do consulting and also buy stakes in some
airports.Staying with GMR, fees at Delhi’s airport are unlikely to rise for
another two months. But this means its operator GMR will be able to
charge more later on. The delay is likely because airports regulator Aera
will need about two months to process related data. Delhi airport
charges were set to increase by 334% starting the first of April.
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3. Inside The Story
Korea’s KEPCO Acquires 22.7% In Pioneer Gas Power’s
$250M Project
Korean Western Power Co. Ltd (KOWEPO), a subsidiary of South
Korea’s $38.7 billion power giant KEPCO, has acquired 22.7 per cent
stake in Pioneer Gas Power Ltd for an undisclosed amount. Pioneer Gas
is setting up a 388 MW gas-based power plant in Raigad,
Maharashtra.KOWEPO has plans to take its stake up to 40 per cent in
the project which is expected to cost $250 million and will be
operational by the end of 2013. Earlier, a media report had indicated
that Rs 500 crore ($100 million) would be the deal value for picking up
40 per cent stake in the project.
GEF, IFC To Invest $11.5M In Kalki Communication
International Finance Corporation (IFC) and a fund managed by Global
Environment Fund (GEF) are looking to invest $4.5 million in energy
efficiency firm Kalki Communication Technologies Pvt Ltd. The deal
would also include another $7 million investment for the second and
third round of funding for the Bangalore-headquartered company.GEF is
making the investment through its South Asia Clean Energy Fund, L.P.
IFC is investing $1.35 million in the first round through quasi-equity or
convertible instrument.
Rupee likely to wobble again as BoP deficit touches
highest level in 20 years
India's position of commercial transactions with the rest of the world,
known as Balance of Payments, fell to a deficit in the December quarter
for the first time since the Lehman Brothers collapse, as imports far
exceeded exports and capital flows slowed, stoking fears the currency
may wobble again. But it may improve in the fiscal fourth quarter
ending March because of a surge in overseas fund flows since January at
$9 billion, and slowing gold demand, a substantial portion of the
imports, due to high prices and taxes. Balance of Payments, a record of
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4. Trade in goods, invisible services and capital flows into and out of the
country, ended in a deficit of $12.8 billion in the December quarter. The
current account deficit, the excess of imports of goods and services over
exports, touched $19.4 billion, or 4% of the gross domestic product
which is considered inimical to economic growth by economists,
provisional figures from the Reserve Bank of India show.
Tano Capital Reinvests In Shilpa Medicare, Picks Up 1.5%
One-and-a-half year after its exit from active pharmaceutical ingredients
manufacturer Shilpa Medicare Ltd, private equity player Tano Capital
has reinvested in the public-listed company by acquiring 1.5 per cent
stake for around Rs 8 crore ($1.5 million).Tano acquired 3.5 lakh shares
from ICICI Prudential Mutual Fund at Rs 225 a share on Friday. The
company’s scrip closed at Rs 239.60 a share, up 5.6 per cent on the BSE
in a strong Mumbai market.The PE firm had invested around $2 million
in Shilpa Medicare in early 2006 from its Fund I. Prior to that, Strategic
Ventures Fund Ltd (SVF), a private equity fund managed by Frontline
Strategy, also exited Shilpa Medicare with 4x returns.
VenturEast, Zephyr Peacock Invest $6M In e2E RAIL
VenturEast Proactive Fund and Zephyr Peacock have invested $6
million or Rs 30 crore in Bangalore-based e2E RAIL, a rail services
company primarily focusing on signalling, track and electrification
sectors. The two private equity funds also plan to invest another $6
million in the subsequent years. The funding will be used by e2E to
ramp up its global presence, training facilities and working capital
capacity.AGacquisitions & Co. was the exclusive investment bankers to
e2E RAIL on this transaction.e2E has operations in India and overseas
markets, having worked in projects for Indian Railways, Delhi Airport
Metro Express Link, Port Hedland project in Western Australia, Malaysia
Railways, London Under Ground and Mecca Metro in Saudi Arabia. It
has also worked with most of the leading global signalling OEM
companies, both in India and abroad.As a part of the transaction, Rakesh
Chopra, will join the Board of E2E as an Independent Director. Chopra,
an officer of Indian Railway Service of Engineers (IRSE) of 1971 exam
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5. Batch, was previously Member (Engineering), Railway Board and ex-
officio Secretary to the Government of India.
Suzlon names Vagadia CFO, replacing Banerjee
Kirti Vagadia has been named chief financial officer of Indian wind
turbine maker Suzlon Energy Ltd, replacing Robin Banerjee, who is
taking up a position outside the company, said a statement from the
firm’s parent, the Suzlon Group.Vagadia previously headed finance at
the group level.
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