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Today's Hot Stories - March 12, 2011

10 Headlines for Today

(1) Navy, Coast Guard to get more teeth to tackle piracy
(2) Army men selling arms won't get away: SC told
(3) Tsunami devastates Japan
(4) Ashok Leyland to be renamed Hinduja Leyland
(5) Breather for India as oil prices tank in face of nature's fury
(6) Apple iPad 2 goes on sale in US
(7) Saina Nehwal ousted from All England
(8) Fernando Torres happy at Chelsea
(9) India opt to bat against South Africa
(10) Harvard is world's top university

5 Stories for Today

(1) Hasan Ali walks free
(2) Dam breaks in northeast Japan, washes away homes: Kyodo
(3) Man who switched off power cuts in Kolkata
(4) Japan earthquake loss fears pile pressure on insurers
(5) January industrial output dips to 3.7%

(1) Hasan Ali walks free

In an embarrassment for the Enforcement Directorate, a local court on Friday rejected its plea seeking remand of Hasan Ali Khan for his custodial interrogation in a money laundering case and granted bail to the controversial businessman.

Special sessions judge ML Tahaliyani said that the ED relied on documents of questionable authenticity to build a case against Hasan Ali Khan. The court granted him bail for Rs 80,000 and two sureties. The court refused to stay the order for ED to file an appeal in the higher court.

The ED had arrested Khan on Monday for money laundering. The court said that the ED failed to prove that there existed a case under Prevention of Money Laundering Act (PMLA). The court also said that the ED did not carry out investigations to prove the authenticity of the documents. The court said that the ED did not make any efforts to arrest Khan till now though the investigations began in 2007.

One of the requirements to invoke PMLA is that the suspect should have committed a criminal offence and generated money from it. The only criminal case against Ali is of using forged documents to obtain multiple passports. The judge said that the ED failed to prove that he generated money in the forgery case and laundered it.

The documents found by the ED in its investigations show a transfer of $8 billion (Rs 36,000 crore) in his bank account in UBS Zurich. UBS has said that the documents submitted by the ED to prove this investment were forged. ED said that $7 lakh (over Rs 3 crore) was transferred from his account his Bank Sarasin Switzerland to Barclays Bank account of SK Financial Services.

Tahaliyani said that the ED failed to prove that there are cross border implications of the offence. The agency could not prove that the crime was committed in India and the property obtained from this crime was transferred outside.

(2) Dam breaks in northeast Japan, washes away homes: Kyodo

A dam in Japan's northeast Fukushima prefecture broke and homes were washed away, Kyodo news reported on Saturday, after the biggest earthquake in the nation's history wreaked death and havoc.

The 8.9-magnitude quake - the seventh biggest ever recorded - generated a monster wall of water that pulverised the northeastern city of Sendai, where police reportedly said that 200-300 bodies had been found on the coast.

At least 310 people were killed in the massive earthquake and following tsunamis, police and press reports said.

The government declared an atomic power emergency as officials rushed to secure key nuclear facilities in the affected regions.

Hours after the quake struck with devastating force, TV images showed huge orange balls of flame rolling up into the night sky as fires raged around a petrochemical complex in Sendai.

A massive fire also engulfed an oil refinery in Iichihara near Tokyo.

(3) Man who switched off power cuts in Kolkata

Sanjiv Goenka Vice chairman of RPG Enterprises, cut his teeth in business when he acquired CESC in 1989, at the age of 29, much against his father Rama Prasad Goenka's wish. He made a push for CESC with the support of his mother and was successful in his foray. Once the deal was sealed, the lengthy power cuts-the dreaded 'load-shedding'-of the '80s became a thing of past.

In a tete-a-tete over Darjeeling tea, at the library of Goenka Nivas, in the posh Alipore locality of Kolkata, Sanjiv spoke at length about his business as well as personal life. The library overlooking a sprawling lawn has a large collection of paintings and sculpture by legends like Bikash Bhattacharya and Ganesh Pyne. He counts his parents, wife and children among his priorities and loves to unwind watching serials and films with his family.

(4) Japan earthquake loss fears pile pressure on insurers

Shares in European insurers fell sharply on Friday morning after Japan was hit by a massive earthquake, the fifth-biggest recorded.

The quake off Japan's northeastern coast, measuring 8.9 on the Richter scale, triggered a 10-metre tsunami that swept away ships, houses and farm buildings locally, and led to warnings around the Pacific basin.

Reinsurers, which help insurance companies absorb large damage claims in exchange for a share of the premiums, took the brunt of the share price falls.

The top three global players - Munich Re, Swiss Re and Hannover Re - were all down more than 5 percent, though off their early lows. French group Scor fell 6.5 percent.

Reinsurers said that it was too early to estimate the damage. "We are unable to say anything at the moment. The situation is still unlcear," said Tom Armitage, a spokesman for Swiss Re, adding that Japan was one of his company's top 10 markets.

Munich Re and Swiss Re have both said that an earthquake in New Zealand in February, plus flooding in Australia, had already exhausted their annual budgets for natural catastrophe claims.

Analysts said that profit warnings were likely. "It is now a near certainty that assuming normalised developments for the rest of the year, this will be another year of above-average natural losses for reinsurers and earnings downgrades would be likely for 2011," Credit Suisse said in a research note.

If Japanese claims were big enough to affect reinsurers' capital base, however, the losses could prompt a broad-based rebound in the prices which reinsurers can charge for risk cover, which could improve the outlook for 2012, Credit Suisse said.

Munich Re, the world's biggest reinsurer, had said on Thursday that it might not reach its 2011 target of earning 2.4 billion euros ($3.3 billion) net profit if big damage claims did not decline to below average in the remainder of the year.

"Japan earthquake risk is significant for Munich Re," board member Torsten Jeworrek said on Thursday, hours before the quake struck.

Swiss Re generates around $688 million in life and non-life in Japan out, compared with $25 billion globally, its spokesman said.

When U.S. markets open, all eyes will be on Bermuda-based reinsurers such as ACE, XL Group, PartnerRe and Everest Re Group, whose shares fell sharply in the wake of the New Zealand quake.

Analysts said not all individual insurers held significant exposure. "At the moment, this is just a kneejerk reaction within the sector as a broader movement, and then people start focusing on exactly where the exposures lie," City Index market analyst Joshua Raymond said.

British, French and German insurers were among the fallers, with Aviva, Allianz and Axa all down around 2.5 percent.

Shares in Prudential, Britain's biggest insurer whose better than expected results this week were driven by strong growth at its flagship Asian operations, fell 2 percent.

Among mid-tier British insurers hit hard by other recent natural disasters such as the earthquakes in Chile and New Zealand and the Australian floods, shares in Amlin and Catlin both fell around 4 percent. Financial investors could stand to lose millions in investments through seven catastrophe bond transactions totalling over a $1 billion in exposure to Japanese earthquake.

Cat bonds are issued by reinsurers, such as Munich Re and Scor, seeking collateralised protection from investors, as opposed to traditional reinsurance market.

(5) January industrial output dips to 3.7%

The country's industrial output slowed to 3.7% in January, dragged down by sluggish manufacturing sector and a sharp decline in capital goods.

The January data was an improvement on the revised 2.5% growth which the sector posted in December and higher than market expectations. Industrial output has slowed in recent months and analysts say that the impact of seven interest rate increases by the Reserve Bank of India (RBI) was visible. But economists expect industrial output to gather some pace in the months ahead as the statistical high base effect wears off. Industrial output in January 2009 stood at 16.8%.

"While we are unlikely to get a double-digit industrial production growth anytime soon, it is not unreasonable to expect industrial production growth to return to its growth level of 8-8.5% in the second quarter of 2011, in our view," Deutsche Bank said in a note.

The mining sector rose 1.6% in January compared to 15.3% in the same month last year, while the key manufacturing sector expanded 3.3%. Manufacturing sector growth in January 2010 stood at 17.9%.

Policymakers expressed concern over the sluggish industrial growth. FM Pranab Mukherjee said that he was unhappy with the numbers despite the fact that the average growth was 8.3% in the first ten months. The electricity sector rose 10.5% this January, compared to 5.6% in January 2010. Industrial output growth in the April-January period stood at 8.3%. But the performance of the capital goods sector remains a key concern. Capital goods fell 18.6%.

This is the second successive month that the sector has declined.

"The growth of manufacturing sector is moderating. The performance of the capital goods sector is of particular concern, as it has witnessed negative growth for the second consecutive month," Rajiv Kumar, deputy director general of the Federation of Indian Chambers of Commerce and Industry, said. "This is a worrying sign, as it may imply that the sector is suffering from strong capacity constraints and the needed investments are not forthcoming. The rising cost of capital may be responsible for this slowdown in investments," he added.

Economists say that high global oil prices and stubborn domestic inflation continue to be risk factors for industrial growth. The RBI is widely expected to raise interest rates in its upcoming monetary policy review to tame inflation and this is likely to impact output in the country's factories and utilities.




           
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