RPL and RIL merger

Yet again, for the second time merger of RPL and RIL is on the cards. In the last board meeting amalgamation of the two companies was announced. However, the ratio in which the shares will be converted is yet to be seen.

In 2002, merger of the two companies RPL and RIL had happened. This was good for the shareholders of both the companies with RIL shareholders benefiting the most. This time as well the same is expected. Earlier RPL has started its first refinery under the name of RPL and when it became operational it got merged with RIL. Then its second refinery was being built under the name of RPL. Now its time when this refinery is about to be operational. So the merger again.

The merger couldnt have been timed any better. This merger will bring two companies together, one of which has good potential to bring in high cash flow and the other having huge reserves for the investment.

Post merger the swap ratio could be anywhere between 1 share of RIL for very 15 or 24 shares of RPL. This would prove profitable to RIL shareholders rather than RPL.

So should we buy these shares next week. Buying RIL early next week would be profitable but its better to avoid RPL.

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New industrial policy for karnataka

With elections in mind the Karnataka government announced a new industrial policy intending to replicate the success achieved in Gujarat.

Some of the features of the new industry policy for 2009-2014 are:-

• Rs 30,000 crore to create additional one million jobs in the industrial sector in the next five years.
• To enhance the contribution of manufacturing sector to the state Gross Domestic Product to 20 per cent by end of policy period and priority for human resources development.
  
• 1000 to 2000 acres of land would be acquired and developed in each district for establishment of industries including foreign investments.
  
• A policy would be framed to ensure better price for farmers towards the land acquired for the purpose.
  
• New airports would come up in Shimoga, Hassan, Gulbarga, Bellary, Bidar and Bijapur districts along with 11 Air strips for other districts.
  
• Investments and concessions to cover new industrial investments including expansion, modernisation and diversification in 166 taluks out of 176 taluks in the state.
  
• interest free loan against VAT payment by large and mega scale industries
• small and medium industries will be eligible for production or employment-linked investment subsidy of Rs 5 lakh to Rs 35 lakh, stamp duty exemption ranging between 75 to 100 per cent in respect of all categories of industries for purchase of approved industrial layout and also for registering their term loan documents.
• five per cent interest subsidy on term loan availed by micro enterprises and incentives and concessions to export oriented industries.
  
• A separate Special Economic Zone (SEZ) policy. The new policy, aiming to facilitate smooth establishment of such zones, will permit acquisition of lands only on the consent of the land owners. It comprised incentives for developers which among others included exemption from state taxes for all purchases exemption of electricity duty, exemption of labour welfare cess and capital subsidy for CETP.
• The Government will also develop four eight-lane roads under the Suvarna Karnataka Development Corridor Programme.
• 4,000 acres of land to Ministry of Defence for setting up of all defence related activities in Challakere taluk of Chitradurga District.

Looking at all the steps taken the state has surely addressed many concerns and one feels like the government is ready to do something for the people unlike the center which only boasted about how it ruled for the last five years in the last budget.

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GDP growth falls to 5.3%

The overall gdp growth has now fallen down to 5.3%. This is purely an impact of the global slowdown that has effected the country's gdp as well. All the industries related to service are affected very badly by this.

The RBI should now take immediate action. Reduction in the intrest rates is likely. Both the repo and the revere repo rate should be reduced by atleast 50 basis for more cash flow in the market.

The agriculture and manufacturing sector is not impacted as much as the service industry and is contributing close to one third of the GDP. However, the service sector of the country is in a bad shape and is in need of some steps to revive it.

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You can expect many more such measures in the coming few weeks.

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