Daiichi Sankyo posts $3.7 bln Q3 loss on Ranbaxy

Daiichi Sankyo, Japan's third-largest drugmaker, posted a $3.7 billion quarterly loss and forecast its first ever annual loss, hit by a slide in the value of its stake in Ranbaxy Laboratories.

Shares of Daiichi Sankyo were down about 1 percent after the announcement, outperforming a 3.7 percent fall in the benchmark Nikkei average.

Japanese drugmakers, under growing price pressure and hurt by the yen's strength, are also seeing their earnings battered by one-off costs and losses stemming from recent acquisitions.

Like their global rivals, they are using acquisitions to head off large drops in revenue after patent expirations on key drugs.

Daiichi Sankyo bought a controlling 63.9 percent stake in Ranbaxy, a major generic drugmaker, last year for nearly 500 billion yen to diversify its revenue base

Earlier this month Daiichi Sankyo said it would book an appraisal loss of 354 billion yen on the stake after Ranbaxy shares lost more than half their value amid the stock market turmoil and after the U.S. blocked dozens of Ranbaxy drugs due to procedural violations at the drugmaker's plants in India.

Daiichi Sankyo, created through a merger in 2005, incurred a net loss of 331.8 billion yen ($3.7 billion) in the three months to December, compared with a 36.18 billion yen profit a year ago, while revenues shrank 12 percent on a stronger yen and government-mandated price cuts.

For the full year to March, the company now forecasts a net loss of 316 billion yen ($3.5 billion), compared with the previous estimate of a 65 billion yen profit and the average forecast for a 280.4 billion yen loss from seven analysts polled by Reuters Estimates.

The company, however, kept unchanged its plan to pay a dividend of 80 yen per share for the full year, up from 70 yen last year.

Shares of Daiichi Sankyo lost 22 percent in October-December, roughly in line with the Nikkei average.

As war nears end, India's power blunted in Sri Lanka

After decades of strong-arming tiny neighbour Sri Lanka, India finds itself jostling for influence as the civil war nears an end, its power blunted by the island nation's growing ties with Pakistan and China.

While domestic political sensitivities over the fate of Sri Lanka's Tamils forced India to ease its leverage, rivals China and Pakistan stepped into the breach, offering Colombo military assistance in its war against the Tamil Tiger rebels.

China has sold Jian-7 fighters, anti-aircraft guns and JY-11 3D air surveillance radars to the resurgent Sri Lankan army as it seeks to finish one of Asia's longest-running wars by squeezing the Liberation Tigers of Tamil Eelam fighters in a shrinking patch of jungle in the north.

Pakistan also supplied the army small arms, multi-barrel rocket launchers and trained Sri Lankan air force in precision guided attacks against the rebels, strategic analysts said.

"There have been several shipments of weapons from Pakistan. What has made a real difference to the outcome of the war is the Sri Lankan air force which has been rigorously trained by Pakistan in precision-guided attacks.," retired Indian army major general Ashok Mehta said.

India, by contrast, has limited its military assistance to the Sri Lankan army to "defensive weapons".

India has been limited by its insistence on protection of Sri lanka's Tamils, who are closely linked to 60 million Tamils in the Indian state of Tamil Nadu, across a narrow strait from Sri Lanka.

"The shine has somewhat gone off from the leverage India has over Sri Lanka, partly because India has allowed it to happen," said Pakiasothy Saravanamuttu of the Colombo-based Centre for Policy Alternative.

China's and Pakistan's help against Tamil Tiger rebels may have been crucial, a former Sri Lankan official said.

"If not for China and Pakistan, we would not have been able to finish off the insurgency," K. Godage, a former deputy head of Sri Lanka's foreign office, told Reuters.

India trained and armed Tamil Tiger rebels in the early 1980s and followed it up a disastrous 1987-1990 peacekeeping foray into Sri Lanka, which has cast a long shadow over the war and made Sri Lanka wary of its giant neighbour.

National Security Adviser M.K. Narayanan asked Sri Lanka to stop seeking arms from China or Pakistan last year, saying India as the regional power would still meet its defence requirements.

Narayanan made an unscheduled visit to Colombo last year to ensure Sri Lanka did not become a cockpit of regional rivalry, as with Afghanistan where Islamabad fears the influence of India.

This week, Indian Foreign Minister Pranab Mukherjee visited Sri Lankan President Mahinda Rajapaksa, and the two discussed safety measures for Tamils trapped in fighting between the army and Tamil Tigers separatists, and post-war reconstruction.

The visit was also to cool tensions with Tamil Nadu politicians in India's ruling coalition who are sympathetic to the Tigers and demand India broker a ceasefire.

WIDER POWER STRUGGLE

The strategic battle in Sri Lanka is seen as part of a wider power struggle in South Asia, involving not only India and Pakistan but also China, which seeks to gain influence in the important economic region.

China has made strides developing strategic assets, like the Gwadar port in Pakistan, the Sri Lankan port of Hambantota and assets in Yangon, part of a strategy to protect shipping lanes.

Sri Lanka sits next to shipping lanes that feed 80 percent of China's and 65 percent of India's oil needs.

"There is a convergence of strategic interest in Sri Lanaka among regional powers," said security analyst C. Uday Bhaskar.

But ignoring India may be hard for Sri Lanka. As the war appears to draws to a close, the focus is turning to the state of Sri Lanka's $32 billion economy.

Sri Lanka is suffering from costly short-term foreign debt. The war is expected to cost nearly $2 billion this year.

Indian investments in Sri Lanka have grown. Bharti Airtel Ltd., India's top mobile operator, launched operations in Sri Lanka with a $200 million investment this month. Sri Lanka is also dependent on India for much of its fuel.

"Strategic relationship is also governed by trade, and India has a lot of room to manoeuvre in Sri Lanka," Saravanamuttu said.

LPG cheaper by Rs25, petrol down Rs5, diesel Rs2

New Delhi: The UPA government on Wednesday night slashed fuel prices, making cooking gas cheaper by Rs25 per cylinder in a major relief to consumers just three months ahead of the next Lok Sabha elections.

The prices of petrol were slashed by Rs5 per litre and diesel by Rs2 a litre in line with the fall in global crude rates. The revised prices are effective from Wednesday midnight. There is, however, no change in the prices of kerosene.

The announcement to slash the fuel prices came just a day after Congress president Sonia Gandhi had indicated it at a political rally in Uttar Pradesh.

Retail petrol will now cost Rs 44.80 per litre in Mumbai, while diesel will be sold at Rs 34.69 per litre in the city. An LPG cylinder will now cost Rs25 less per 14.2-kg cylinder in Mumbai.

After a marathon Cabinet meeting late on Wednesday, RS Pandey, secretary, ministry of petroleum and natural gases, told reporters, "Under-recoveries for the oil market companies will be calculated on trade parity basis as a special dispensation for this financial year. Rs 32,000 crore of that will come from upstream companies (like ONGC and Oil India Ltd) and the rest from the government as oil bonds."

Last December, the government reduced prices of petrol by Rs 5 per litre and that of diesel by Rs 2 per litre as an interim measure after international crude oil prices dropped almost $100 -- over 71% -- in less than seven months to about $42 a barrel from an all-time high of $147.27 a barrel on July 11 last year.

India demolish Lanka by 6 wickets, take 1-0 lead in series

An unflappable Mahendra Singh Dhoni led by example as India relied on a clinical all-round display to thrash Sri Lanka by six wickets and take a 1-0 lead in the five-match cricket ODI series here today. Chasing 247, India rode on substantial contributions from Gautam Gambhir (62) and Suresh Raina (54) before losing both the set batsmen but Dhoni (61 not out) was his composed self as he guided the team to victory with 11 balls to spare.

The ageing Sanath Jayasuriya's 28th ODI century went in vain as the Indians never allowed the islanders to break loose on a slow track. Kumar Sangakkara contributed 44 as Sri Lanka posted 246 for seven wickets in their allotted 50 overs.

Both the teams now move to Colombo for the second match on Saturday. This was India's sixth ODI win in a row, coming after their 5-0 whitewash of England at home.

With a hip injury keeping Virender Sehwag out of action and Sachin Tendulkar (5) back in the hut in the fourth over, the chase on a sluggish track was far from easy. But with Gambhir and Raina on song, India hardly had a reason to worry.

The left-handed duo went on to stitch together a 113-run stand for the second wicket which laid the perfect foundation for a successful chase, besides offsetting the setback of losing Tendulkar early in the innings. Thilana Thushara's ball had pitched bit outside the leg stump before rapping Tendulkar's pad and Kumar Dharmasena, making his ODI debut as umpire, took his time before upholding the vociferous appeal.

RBI holds rates, asks banks to pass on easing

MUMBAI - The Reserve Bank of India left its key interest rates steady on Tuesday, saying banks still had to pass on the benefits of previous cuts, but analysts expect another reduction in coming months to shore up the slowing economy.

Asia's third-largest economy is poised to grow at 7 percent or less in 2008/09, its slowest in six years, the central bank said in its quarterly review, as a global downturn following the financial crisis hurt the economy much more than expected.

"To arrest the moderation in economic growth, it is critical that banks expand the flow of credit to productive sectors of the economy and do so at viable rates," the central bank said.

It also warned that fiscal measures to rev up growth combined with slowing tax receipts and a raft of spending increases would sharply widen the federal government's fiscal deficit, which economist said could blunt the impact of monetary easing.

"We need more cuts, we need more fiscal stimulus. But yes, additional fiscal stimulus would mean more government borrowing and will therefore offset the rate cuts somewhat," said Sonal Varma, analyst at Nomura in Mumbai. "It will crowd out the private investments and may lead to some hardening in yields."

Since the global financial crisis really hit India hard last September, the Reserve Bank of India (RBI) has cut its short-term lending rate by 350 basis points and slashed reserve requirements to keep credit flowing, while the government has taken a slew of fiscal steps to stimulate the economy.

"The unchanged interest rates are not a surprise. However, the tone of the statement and the factors the RBI highlighted are on the mark," said Atsi Sheth, chief economist at Reliance Equities.

"It recognises that the transmission of monetary policy to the real economy via the banking system is the key priority over the next six months," she said, adding she expected rates and cash reserve requirements to be cut by 100 basis points by June.

The central bank said there was now clear evidence of further slowdown as a consequence of global downturn and urged banks to do more in response to its rate cuts.

"In the Reserve Bank's view, the policy easing done by it in the last few months allows for considerable room for banks to respond more actively to the policy cues," it said.

STEADY RATES

The central bank left its lending rate steady at 5.5 percent and its reverse repo rate , at which it absorbs surplus cash from the system, unchanged at 4.0 percent.

It had been narrowly tipped to hold interest rates steady in a Reuters poll last week.

It also kept the cash reserve ratio , the amount of funds banks have to keep on deposit with it, at 5.0 percent.

The 10-year bond yield spiked to 5.95 percent after the policy announcement from the previous close of 5.72 percent, but has slipped to 5.84 percent in afternoon trade. The rupee rose to 48.81/82 from the previous close of 49.27/29.

The central bank's cut in its growth forecast from October's 7.5-8.0 percent, brought it broadly in line with recent government and market predictions of a marked slowdown from growth of 9 percent or more over the last three fiscal years.

Wholesale price inflation was projected to fall below 3 percent by the end of the fiscal year in March from peaks near 13 percent scaled in August, but the central bank noted consumer price inflation was yet to moderate.

WIDENING DEFICIT

The RBI said the federal government's fiscal deficit for 2008/09 was set to balloon to at least 5.9 percent of gross domestic product from earlier estimated 2.5 percent, possibly bringing the total federal and state shortfall to 8.5 percent.

The estimates highlighted the limited scope for more stimulus even though cuts in factory gate taxes and import duties and $4 billion extra spending announced in past months paled in comparison with China's nearly $600 billion package.

The central bank said while circumstances warranted some reversal of the fiscal consolidation of the last several years, it was critically important to resume the process once the immediacy of the crisis had passed.

We were molested in the name of God

MANGALOORU: “The entire scene has been playing out in my mind over and over again,” said a woman who was in ‘Amnesia,’ the pub that was attacked by a mob of Sri Ram Sene members on Saturday. She was sitting at the reception counter when the mob entered the compound and was witness to the incident from beginning to end.

She said that before barging into the pub, the mob went into a huddle and prayed silently. They then began raising slogans ‘Bharat Mata ki Jai,’ ‘Jai Sri Ram,’ ‘Bajrang Dal ki Jai’ and ‘Sri Ram Sene ki Jai.’

“We have been molested and humiliated in the name of God and country by people who obviously have no regard for either of the two,” she told The Hindu on Monday.

Around 4 p.m. on January 24, a group of over 40 people, wearing saffron headbands and scarves, came in through the main gate and approached the bouncer of the pub. “They asked to be let in so that they could get everybody out of the joint,” she said. Even as the bouncers negotiated with them at the entrance, the pub’s staff quickly closed the doors, and locked the woman and the bouncers outside.

Hearing the noise, a curious kitchen staffer opened the rear door to see what was happening. The mob seized this opportunity and barged in through the kitchen. The victim too followed the mob indoors through the back door. “Once inside, they went straight for the women guests. They rounded them up at the centre of the dance floor and then started beating them mercilessly,” she said. After the initial beating, some of the assailants began to single out some of them and molested them.

“One of them stripped a girl and groped her. She was also badly beaten up. We are still trying to trace her,” she said. According to her, several girls were targeted similarly. “They were laughing when they were doing all this. It was just fun for them,” she said. The attackers then targeted the men who dared come to the rescue of the girls. The narrator herself was slapped a few times.

What tormented her was the reaction of certain sections of the media. “They arrived on the scene even before the attackers did,” she said, and added, “there was no nude dancing or prostitution going on there as reported.”

She and a few other victims are now trying to form a support group of those who were attacked in the incident. “Some of the women are in shock because of the humiliation they had to face on television,” she said. “We are trying to get professional counsellors for the victims and for their families.”

Asserting her right to frequent the pub, she said, “We will also soon launch a protest on the streets to voice our opposition. We want to tell the world that we will not tolerate the growth of a Taliban-style group in this city.”

Column : Ten truths from Satyam

Against Enron's backdrop, one need not really be embarrassed about something like Satyam happening in India. Globalisation means that everything is possible everywhere, and the fact that Satyam was listed overseas supports this point.

That no one knew about this scam until the protagonist himself revealed all speaks volumes about institutional failure. In fact, if he had not been honest about his dishonesty, this story would not have come out. If we look deeper, there are at least ten institutional shibboleths that have been shattered.

The first is that all individual CEOs who become celebrities need to be looked at with suspicion, especially those who are aggressively hyped. Second, organisations that are flashy and dynamic are more prone to mischief than the staid ones, and this holds more for new generation companies. Third, when mischief is done, the entire management needs to be investigated. After all, the mischief in professionally run organisations is a joint effort as all work towards the same goal of self-enrichment.

Fourth, auditors are no longer a credible lot, or rather are credible only until such time that the truth on untruth is out. The entire fraternity gets a bad name, as it will now be generalised that they have also colluded with the company to get their fees. Either they did not ask the hard questions or they did not attend to the distasteful things around them, before submitting the certifications on which they stake their reputation. Fifth, investment banks and so-called advisors to public issues are not above board as they too work for a fee and their own profits; and on grounds of confidentiality may tread the road of apparent ignorance. This cannot be escaped in a capitalist society.

The sixth institution that has taken a beating is the concept of a Board of Directors, which it now appears can be kept in the dark most of the time. In this case, they spent not more than 15 hours in a year with the company and could not have had a hold on what was happening. What then should be their stance and as a corollary, what is its relevance? The seventh hit has been taken by the credit rating agencies that give ratings based on audited information, which is subject to manipulation. In fact, in Satyam's case, the accounts were there to be seen even at the SEC. Therefore, there was no reason to suspect the numbers. But, does this really help the investor?

The eighth blow is to the usual punching bag, the regulator, who is always found napping when such things happen. We can all ask what the regulator was doing. The regulator in such instances always appears to be swift to spot the small miscreant, but cannot see big mischief. But, to be fair to the regulators all across the world, they take a lot of flak for scams, when it is impossible to really stop crime from taking place. Stringent regulation only reduces the incidence. Besides, this is nothing compared to the so called collapse of Citi Bank, where no one saw the accounts disappear for a whole year despite all the talk of Basel II and stern regulation.

Ninth, corporate governance has been exposed as a sham. From now on, no one will pay much attention to what the annual report says, as eloquent words and lofty thoughts are rarely followed in actual practice. Lastly, there is going to be even more cynicism concerning the entire business of corporate awards. Satyam had, after all, bagged many such awards.

Amidst all this ado, how do we stand as individuals? Employees will continue to feel jittery but then the law of markets dictates that risk goes along with their pay packets. Shareholders should not really be our concern because when the prices of these stocks increased to dizzy heights, no one asked why they were rewarded. This is part of the game. And for the common man, this is just another subject for discussion after the financial crisis and terrorist attacks. Umbrage and incessant banter, which is typical of the middle class, will continue till the next big episode comes on air.

—The author is chief economist of NCDEX Ltd. These are his personal views
Madan Sabnavis