The News Review:

- Forex reserves rise $1.3 bn to $313.5 bn; bank credit falls
- UBI provides for forex hedge loss
- Zimbabwe: Hotels Seek Forex Incentive to Retain Staff
- Indian SWF?- Editorials-Opinion-The Economic Times
- Heard on the street
- Cipla Q4 net up 43% to Rs 180 cr

Forex reserves rise $1.3 bn to $313.5 bn; bank credit falls
Economic Times – Apr 26, 2008
Foreign exchange (forex) reserves continued to rise, adding $1. 26 billion
to the kitty in the latest
week. According to figures
released by the Reserve Bank of India in its weekly statistical supplement
(WSS), credit extended by commercial banks dipped Rs 7,464 crore during the
fortnight ended April 11 to touch Rs 23,41,030 crore. While food credit dipped
Rs 5,270 crore, non-food credit fell Rs 2,194 crore.

UBI provides for forex hedge loss
Times of India – Apr 26, 2008
More than the damage, it is the apprehension that
derivatives could lead to depreciation in their or clients’ investments that is
prompting banks to accord top priority for such provisioning. Announcing the financial results for 2007-08 on Friday, UBI chairman
and MD P K Gupta said that the bank had taken a hit of Rs 110 crore for
provisioning and Rs 73 crore on account of depreciation on investments, among
others. The fear among banks became more pronounced after market
leader State Bank of India’s chairman O P Bhatt said that losses to clients on
account of currency derivatives could be in the range of Rs 600 to Rs 700 crore. The disclosure by Bhatt, earlier this week, came within days of ICICI Bank and
others being dragged to courts by some of their clients for losses suffered on
the derivatives front.

Zimbabwe: Hotels Seek Forex Incentive to Retain Staff
AllAfrica.com – Apr 26, 2008
thezimbabwestandard. Standardbusiness heard last week that the industry had lost key staff to neighbouring countries such as South Africa and Botswana which offer attractive packages. GA_googleFillSlot(”AllAfrica_Story_Inset”);Reports of an exodus of staff in the food and beverages sectors were confirmed by industry insiders last week. Most workers were not lasting for a year in their jobs, it was reported. Cornelius Nyahunda, Hospitality Association of Zimbabwe president confirmed at least six corporations in the industry had sought approval from the central bank.

Indian SWF?- Editorials-Opinion-The Economic Times
Economic Times – Apr 26, 2008
Also because our reserves buildup comes from capital flows,
rather than current account surpluses in the country?s balance of
payments, making them more vulnerable to sudden shifts in global sentiment. Having said that, there are two possible explanations for the apparent shift in
the RBI?s position. One, forex reserves are now over $300
billion and with the return on US Treasury bills falling steadily, the RBI is,
perhaps, more willing to look at alternative avenues of investment to improve
earnings from forex reserves. More so when rising domestic interest
rates widens the gap between the interest paid on monetary stabilisation scheme
(MSS) bonds and earnings on forex assets. The IMF estimates that SWFs will rise
from $2-3 trillion today to about $6-10 trillion within five years, with China,
Kuwait, Norway, Russia, Saudi Arabia, Singapore, and the United Arab Emirates
becoming sizeable players. Clearly, India cannot be left out of the
race. Especially since SWFs can be deployed to protect and project the
country?s strategic interests ? China, for instance, has
successfully used its SWFs to improve the country?s access to natural
resources such as minerals and oil by picking up stakes in companies in Africa.

Heard on the street
Economic Times – Apr 26, 2008
Marketmen say Suzlon has
suffered mark-to-market losses on forex hedging in the quarter ended March 2008. When contacted, the company
spokesperson said the loss, if any, will be negligible compared to the balance
sheet size. ?The company will provide for the loss in its profit and loss
account for FY08, if required,? the official said. However, the buzz is that the
loss could be as much as Rs 200 crore.

Cipla Q4 net up 43% to Rs 180 cr
Economic Times – Apr 26, 2008
7 crore
during the corresponding quarter in the previous
year. Increased export business
has contributed to the growth in revenues, as export sales contributed a higher
59% share to the total revenues. The company has reported forex
gains of Rs 25 crore for the quarter, leading to more than a 84% rise in the
company?s other income to Rs 41 crore. Lower taxation on account of tax
benefits also helped the company report improved profits. Increased operating profit led
to a 200 bps increase in operating profit margin (OPM) pegged at 15%. The
company?s scrip closed 0. 8% lower on BSE at Rs 224.