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2 FEB, 2012, 05.18AM IST, KAILASH BABAR,ET BUREAU

GIC Real Estate to invest $100 million in Godrej Properties office project
MUMBAI: GIC Real Estate, a part of Singapore government's sovereign fund GIC, is investing over $100 million in a Godrej Properties office project in Mumbai's Bandra Kurla Complex. The project is being developed on a 2.5-acre land, for which Godrej Properties had signed a joint development agreement with Jet Airways. Godrej's move to sell stake in the special purpose vehicle set up for this project is aimed at easing its debt-equity ratio that currently stands around 2 times, said people familiar with the development. Apart from direct equity dilution in this SPV, both GIC and Godrej are also considering another option of forward sale of the entire commercial project. Spokespersons of both Godrej Properties and GIC declined to comment. In August 2011, Godrej Properties entered into an agreement with Jet Airways to develop the latter's 2.5-acre land parcel in BKC in Mumbai. Under this agreement, Godrej is expected to develop a commercial complex with around 1 million sq ft saleable area to be completed in three years, and share profits with Jet equally. Apart from the 1 million sq ft of office space that can be sold to third parties, Godrej Properties has agreed to sell 161,460 sq ft of carpet area to Jet Airways at development cost to be used as the new headquarters of Jet Airways. As part of this deal, Godrej agreed to pay Jet Airways 135 crore to compensate them for expenses that have already been incurred, and has acquired the Rs 360 crore debt obligation Jet Airways had on the property. According to analysts, Godrej Properties' debt-equity ratio has moved out of its stated target range of 1-1.5 times owing to this additional debt obligation. Recently, Godrej Properties' managing director and chief executive officer designate Pirojsha Godrej had admitted that the company's debt-equity ratio is on the higher side and said it was looking to reduce the debt by monetising commercial assets in Kolkata and Vikhroli.

2 FEB, 2012, 06.16PM IST, PTI

RBI asks banks to evaluate risk of unhedged forex of companies

To prevent adverse impact of volatile forex market movement on corporates and their lenders, the Reserve Bank has directed banks to evaluate risks from unhedged foreign currency exposure of companies while extending them credit facilities. "In view of the importance of prudent management of foreign exchange risk, it has been decided that banks, while extending fund based and non-fund based credit facilities to corporates, should rigorously evaluate the risks arising out of unhedged foreign currency exposure of the corporates and price them in the credit risk premium," the Reserve Bank said in a circular today. It also directed lenders to fix a limit on unhedged exposure of corporates on the basis of bank's board approved policy. "Recent events relating to derivative trades have shown that excessive risk taking by corporates could lead to severe distress to them and large potential credit loss to their bankers in the event of sharp adverse movements in currencies," it said. The circular comes a few months after the apex bank had, in its second quarter review of monetary policy in October 2011, warned against unhedged forex exposure of corporates. "Unhedged forex exposure of corporates is a source of risk to corporates and a source of credit risk to financing banks. If the unhedged position is large, it can have serious consequences for the solvency of corporates in the event of large depreciation of the home currency and can result in large credit losses to the financing banks," the policy review has said. According to RBI, the recent volatility in rupee exchange rate has underlined the importance of prudent management of foreign exchange risk. The rupee depreciated by over 15 per cent against the US dollar between August and December 2011. In mid-December, the rupee had weakened to an all-time low of Rs 53.72/73 to a US dollar. However, it has since then strengthened and is currently trading at around Rs 49 a dollar.

Sensex to touch 20,000-mark by June: Survey

PTI New Delhi February 1, 2012
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Sensex gains 107 pts, RIL up 1.8% Rupee hits 3-month high on dollar inflows

The stock market barometer Sensex could rise to the 20,000 points-mark by June, up from the present 17,000-level, despite subdued business confidence, a survey by JP Morgan Asset Management said. "Indian investors and advisors appear unaffected by the recent volatility in stock markets. Forty-eight per cent of retail investors and 76 per cent of advisors expect the benchmark index to trade between 17,000 and 20,000 in June, 2012," JP Morgan Asset Management said in a report titled, 'Investor Confidence Index'. JP Morgan AMC said investment by retail investors in mutual funds has revived significantly since the last quarter. The index showed no signs of revival in the current quarter and remained almost flat between July and December, 2011. "Although the overall investment sentiment currently appears subdued, the optimism about global and Indian economic growth is improving marginally. Most interestingly, corporate, advisors and HNIs are now more optimistic than they were in July, 2011, even as the mass of retail investors have become more pessimistic," the survey added. The survey conducted among 1,635 retail investors, 50 corporate treasuries and 282

advisors said retail investment activity in mutual funds has picked up by 9 percentage points vis-a-vis the previous quarter to reach 70 per cent, while in stocks, it fell by 6 percentage points. Risk-averse investors have shown less preference for stocks (down from 70 per cent in March, 2011, to 56 per cent in December), but increased preference for mutual funds (from 44 per cent to 68 per cent), according to the survey. In addition, rising gold prices appear to have affected investment activity in gold. As a result, the percentage of investors investing in this asset class has fallen by 19 percentage points since December, 2010. "The weak investment sentiment is probably a reflection of volatility surrounding the country's macroeconomic environment. "The Sensex downslide, rupee depreciation, a ballooning fiscal deficit, high inflation rates, combined with rising global uncertainty, triggered by deepening of the euro zone crisis, have hurt the investment sentiment," JP Morgan Asset Management MD and CEO Nandkumar Surti said. The index published jointly by JP Morgan and ValueNotes, was conducted in December across Mumbai, the Delhi/NCR, Kolkata, Chennai, Ahmedabad, Bangalore, Pune and Hyderabad. The survey focused on business and investment outlook for the following six months.