Saturday, January 31, 2009

Hope and aspiration are the main engines driving India’s growth today: Kamal Nath

Shri Kamal Nath, Union Minister of Commerce & Industry, has stated that hope and aspiration in India is leading to social mobility and prosperity and these are the engines that are driving India’s growth today. Speaking at a Breakfast Session on “Surviving the Meltdown and Brand India”, at Davos today, Shri Nath said that Brand India will be sustained by millions of “new” consumers seamlessly and further added that India neither needs to export a large part of its economy to balance domestic demand and supply, nor does it need to import large amounts of capital to balance domestic demand and supply. 

During the interaction, the Minister said that Brand India will be sustained by India’s IT sector and history shows us that in a downturn, exports tend to slow, as is happening now, since companies and buyers across the world cut down purchase of merchandise. “However, international trade in the service sector slows at a much slower pace, because it involves business processes. According to NASSCOM the nation's IT sector managed to grow some 20% in 2008”, he added. 

“The rise of India's aspiring middle class — a group that lives well above the poverty line, but hasn't yet attained true membership in modern consumer society — is hardly a new story. But what's surprising is the resilience of this cohort and the extent to which it has counterbalanced the global credit crisis and the slump in the global export economy of which India is a key player”, the Minister said. 

Shri Kamal Nath also informed the participants that Brand India will be sustained by a disciplined private sector and over the years, Indian businessmen and consumers have paid a high cost to expand or borrow. Investment plans have traditionally been set with a high rate of return in mind and not as stepping stones to gaining market share — which is a mindset that implied free capital fosters.

ASEAN Secretariat Holds Forum on Global Financial Crisis

With the global financial crisis sending major economies into a recession, Asian countries should stand ready to make substantial adjustments to keep their economies afloat and support growth. This was the key message from the fifth Brown Bag Series by the ASEAN Secretariat titled “The Global Financial Crisis: Prospects, Challenges and Responses from ASEAN and East Asia” which was held today at the ASEAN Secretariat. Guest speakers were Prof Masahiro Kawai, Dean of the Asian Development Bank Institute and Dr William E. Wallace, Lead Economist of World Bank Jakarta.

“Obviously, Asia (including ASEAN and East Asia) needs to adjust by rebalancing its sources of growth and turning to domestic demand-driven growth rather than export-driven growth,” Prof Kawai said. 

Since the financial crisis intensified in September 2008, the region has been confronted with many challenges arising from slowing growth, tighter external financing conditions, volatile capital flows, and increased vulnerabilities. Once thought to be relatively well insulated from the downturn, Asia is rapidly feeling the mounting economic pain. The crisis is deepening and the broader economic environment is seen to be getting worse before the situation will improve.

Nonetheless, Asia is in a better position to respond to the crisis because of its much better fundamentals compared to the crisis in 1997 and 1998. According to Prof Kawai, Asia is the only region that still shows strong growth in the global economy, hence Asia’s policy is going to be quite important for the future of the global economy. He further said that there is a need for more coordinated action because of high economic interdependence in Asia. Asia needs to strengthen real sector cooperation for integration, in addition to strengthening financial systems through better supervision and regulation, particularly through regional financial cooperation.

Commenting on Asia’s response to the crisis, Dr Wallace said that policy coordination is critical to the region’s smooth adjustment to the crisis. “In addition to policies that promote domestically sourced growth, ASEAN countries should try to coordinate their policy initiatives by agreeing for example, on the targets and timing of their fiscal expansion,” he said.  

Since last year, many countries in the region have put in place various policy measures to recapitalise and inject liquidity into financial institutions, in addition to huge stimulus packages that are being implemented in some economies to firm up domestic demand.

“Given the severity of the crisis, policy makers in East Asia must remain committed to pursue policy actions more decisively. The timely activation of the Chiang Mai Initiative Multilaterisation (CMIM) facility and the strengthening of regional surveillance mechanism are steps in the right direction, to help the region cope with this crisis as well as future ones,” said Mr Pushpanathan Sundram, Deputy Secretary-General of ASEAN for ASEAN Economic Community who moderated the discussion. He added that the establishment of the ASEAN Economic Community by 2015 will deepen and widen trade and economic collaboration in the Asian region as well as internationally thus strengthening policy coordination.  

The event, held in collaboration with the Asian Development Bank, GTZ supported ASEAN-German Regional Forest Programme and Australia’s Development Assistance Agency, was attended by key members of Jakarta-based business community, diplomatic and government officials, staff of the ASEAN Secretariat and media representatives. 

More ASEC Brown Bag Series on contemporary topics of interest to ASEAN will be organised in the coming months as the ASEAN Secretariat intensifies its public outreach efforts to promote the ASEAN Community and the work of ASEAN.

U.S. Navy retires last Lockheed Martin s-3b viking from fleet service;

 carrier-based multi-mission aircraft completes 35-Year Career

NAS JACKSONVILLE, Fla., January 30, 2009 – The U.S. Navy retired the last Lockheed Martin [NYSE: LMT] S-3 Viking from fleet service in ceremonies here this morning, closing out the aircraft’s distinguished 35-year Naval career.

Development of the S-3 began in August 1969, and first flight occurred on January 21, 1972. Sea Control Squadron 41 (VS-41), the S-3 training unit known as the Shamrocks and the first operational S-3 unit, received its first aircraft in February 1974. A total of 187 S-3s were built (eight test and 179 operational aircraft) between 1971 and 1978. Over its career, the Viking served with 18 Navy squadrons and accumulated approximately 1.7 million flight hours.

“The S-3 Viking was known as the ‘Swiss Army Knife of Naval Aviation’ and served the U.S. Navy well in a wide variety of roles over the course of its operational service life,” said Ray Burick, Lockheed Martin vice president of P-3/S-3 programs. “The Viking has played a critical role in carrier-based anti-submarine and anti-surface warfare, as well as overland operations, refueling, targeting, and electronic surveillance. And of course Lockheed Martin is proud of the role it will continue to play in support of these critical Navy carrier-based missions, as many of these missions will eventually be carried out by the F-35C Lightning II.”

The first S-3 was built at the then-Lockheed Aircraft Co. plant in Burbank, Calif., and was trucked to the company’s facility in Palmdale, Calif., for first flight. Company pilots John Christiansen and Lyle Schaefer were at the controls, kicking off a 26-month test program. Among its notable firsts, the S-3 was the first antisubmarine warfare (ASW) platform to have a computerized acoustic system.

Sea Control Squadron 29 (VS-29), known as the Dragonfires, made the first S-3 deployment aboard the USS John F. Kennedy (CVN-67) in July 1975. The S-3 fleet surpassed 100,000 flight hours less than two years after that first deployment.

Several variants of the S-3 carried out a range of missions for the U.S. Navy. Seven aircraft were modified to US-3A Carrier Onboard Delivery aircraft, capable of carrying 4,250 lbs. of cargo. The ES-3A Shadow was designed for fleet electronic surveillance, replacing the EA-3B. Sixteen aircraft were modified to ES-3A configuration, and the first mission capable Shadow flew in May 1991. Development of a KS-3A tanker variant began in 1979; although the KS-3A was never produced, it did prove the concept of “buddy tanking” (aerial refueling using a wing-mounted pod), which most S-3s later performed. At the height of combat operations during Operation Iraqi Freedom, S-3 crews transferred nearly eight million pounds of fuel to Coalition aircraft.

The significantly improved S-3B was developed in the early 1980s to better detect quiet Soviet submarines, identify targets and carry standoff weapons. The S-3B flew for the first time in prototype form in September 1984. During Operation Iraqi Freedom, an S-3B from VS-38, the World Famous Red Griffins, carried out the first S-3 attack mission, disabling Saddam Hussein’s ocean-going yacht with a laser-guided Maverick air-to-surface missile. In 2003, an S-3B from VS-35 became the first aircraft ever to have the Navy One call sign when it carried former President George W. Bush to the USS Abraham Lincoln (CVN-72).

Under the S-3 Integrated Maintenance Program (IMP), Lockheed Martin and Navy personnel worked side-by-side to perform scheduled depot maintenance and repairs on the S-3s to return the Vikings rapidly to the operational fleet. The program began in 2001, primarily as a means of reducing the backlog at Naval Aviation depots. IMP increased S-3 aircraft operational availability by 53 percent and reduced maintenance tasking by 47 percent over the depot-level maintenance plan. IMP also resulted in significantly reduced costs to the Navy. A total of 149 aircraft were processed through the IMP inspections, and nearly all of the aircraft were redelivered to the Navy on or ahead of schedule. The program concluded in 2007, as the Viking fleet was being drawn down. 

“The S-3 Viking will long be remembered for its mission capability, its flexibility and its reliability,” said Burick. “The aircraft has served the U.S. Navy admirably for more than three decades. We salute all who have flown and supported the Viking.” 

The NASA Glenn Research Center near Cleveland, Ohio, currently has four S-3B Vikings, performing aircraft icing research missions. It is likely that four S-3Bs will remain in Navy service, although in a support role providing range surveillance at the Naval Air Warfare Center Weapons Division at Point Mugu, Calif.

Headquartered in Bethesda, Md., Lockheed Martin is a global security company that employs about 146,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. The corporation reported 2008 sales of $42.7 billion.

Friday, January 30, 2009

Text of Kamal Nath’s Speech on Reviving Global Economic Growth

Following is the full text of speech of Shri Kamal Nath, Union Minister for Commerce and Industry’, on “Reviving Global Economic Growth” at World Economic Forum in Davos today: 

“The global economic crisis started impacting India from the beginning of last year. Rising crude prices, along with the global food grain shortage, caused a spillover into the real economy. As inflation rose, India was forced to repeatedly tighten credit and money supply. 

By the middle of September 2008, it became apparent that the global credit crisis had deepened and key financial institutions were in need of help. Governments and central banks across the world started intervening to cut interest rates, inject liquidity and recapitalize weakening banks and financial institutions. 

The scale of intervention — through the various bailouts and other fiscal and monetary measures — has been unparalleled in the history of the global financial system. 

Of course, the priority now is to ensure financial stability and lessen turmoil in the capital and money markets. But once a certain amount of stability in financial markets is achieved, there are bound to be long-lasting changes in the way financial, commodity and consumer markets are regulated. 

In the new framework, there will be calls for much greater transparency required from banks and other financial institutions, restrictions on the extent of leverage, restrictions on the use of complex financial products and a mandate to build reserves when times are good. 

The issues of government and corporate accountability have taken centre stage once again. There can be no other way forward but for increasing the ethical standards of corporate and capitalist behavior. It is important to start an international movement for identifying a core set of ethical values that will be expected to become the operating norm for capitalism as we go forward. 

Another question facing us today, specially after the financial crisis, is that often the national regulatory process is found wanting and this can result in collateral damage far beyond the geographic borders of the country where the errant firms/corporations are based and under whose national regulatory jurisdiction they operate. With corporates becoming truly global and without borders, should we not try and move towards a global regulatory mechanism? This is not a call for creating a ‘supra international regulator’ which some may find desirable, but for designing a system of regulatory norms that are then followed in all national jurisdictions, or it could, for example, alert national regulators of risks building in the financial system, have influence over the alignment of exchange rates or oversee global financial institutions whose activities spill across borders. 

For such an institution to have credibility and political legitimacy, it must have representation not only from advanced economies but also from emerging ones, which have so far not had a fair say in the Bretton Woods institutions. 

The G-20 is the best forum to discuss the setting up of such a body. The G-20 has already shown that it is a voice to reckon with. It has issued a joint statement demanding a bigger role in shaping the new global financial architecture. It has called for wholesale reform of global financial institutions, affording them stronger representation within the World Bank and the IMF. 

Already, the BRIC nations (Brazil, Russia, India and China) have secured a greater voice for emerging economies at the recent G-20 summit in Washington. The final communiqué stated that emerging and developing economies “should have a greater voice and representation” and called for an urgent expansion of the Financial Stability Forum (FSF) to allow “a broader membership of emerging economies”. Finally at this critical juncture in the global economic history we must guard against protectionism. Trade has grown spectacularly over the last two decades bringing prosperity to the world. History is witness that whenever countries try to prop up protectionism, it intensifies depression. The Great Depression of 1930’s is a case in point; economists think that America’s Smoot – Hawley tariff, which increased nearly 900 import duties is regarded as one of the major contributors of the Great Depression. The world needs to ensure that protectionist tendencies are avoided.”


Mumbai,  2009: Cosmo Films Limited announced today that it has entered into an agreement to purchase the GBC Commercial Print Finishing business from ACCO Brands Corporation U.S.A. The acquisition, which is expected to close late in the second quarter of 2009, is subject to certain conditions precedent to closing including regulatory approvals. Terms of the transaction were not disclosed.
With revenues of approximately $100 million, GBC Commercial Print Finishing is a leader in the industry, providing thermal lamination films and equipment in Europe, North America, Japan and the Pacific Rim. It has three manufacturing sites – Hagerstown in Maryland, USA, Kerkrade in Netherlands and Asan in Korea.

Cosmo Films Ltd is a leading manufacturer of BOPP and thermal lamination films with global sales of approximately $140 million. It is the largest exporter of BOPP films of India.

Ashok Jaipuria, Chairman and CEO of Cosmo Films, said, “The combination of Cosmo Films and the GBC Commercial print finishing business presents an exciting opportunity. By maximizing the strengths of both organizations we will have a vertically integrated, financially robust organization with broad management, sales and technical expertise. The combination will allow us to better serve our customers and bring in greater value to all our stakeholders.”

About Cosmo Films Ltd:

Cosmo Films Ltd (CFL) promoted by Ashok Jaipuria, is a market leader in the manufacturing of Bi-axially Oriented Polypropylene (BOPP) and is also the largest BOPP film exporter from the Country. In addition, the company is the largest manufacturer of thermal lamination films in India.

The company’s product range includes: Co-extruded Plain Film (Transparent, Matte, Silky Matte, Opaque, Pearlised, Metallisable & Metallised), Co-extruded Heat Sealable Film (Transparent, Opaque, Pearlised, Metallisable & Metallised),Synthetic Paper, Extrusion Coated Film (based on BOPP, BOPET & BOPA) and Water and Solvent based coated films.
Cosmo Films presently has a total of 2 manufacturing locations in Aurangabad (Maharashtra) and Vadodara (Gujarat). CFL is associated with leading FMCG Brands for providing cost-effective innovative packaging solutions to enhance their value. Apart from being ISO 9000 certified, CFL has also got accredited with American Institute of Baking (AIB) and British Retail Consortium (BRC) Certification for Safety and Hygiene of Food related products. The company has planned a capital expenditure of $48 million to increase its capacities from 56,000 MT of BOPP Films to 1,36,000 MT of BOPP films in two phases. The first phase incorporating an increase of BOPP capacity to 96000 MT is on schedule and is expected to be completed by March 2009. The second phase of the expansion will be completed in fiscal 2010.
Major end-uses of BOPP films are: Food–Snacks, Confectionary, Cosmetics-Toiletries, Label Films, Stationary, and Cigarettes over wraps, Self Adhesive Tapes, Lamination. In a survey by "FORBES" in 2003. Cosmo has been recognized one of the best 200 companies out of 19000 listed companies with revenue of less than 1 Billion US$ outside US. 

‘The Great Personalities Week’

A brand new series for children on Tata Sky

Mumbai, January 2009: Continuing with the tradition of imparting knowledge to the younger generation, Tata Sky Ltd., the JV between the TATA Group and STAR, today launched a brand new series titled “The Great Personalities Week” for children from the age group of 2-7yrs old on its interactive platform, ActveTM Stories.

The series would educate and narrate children about the lives of leading personalities & visionaries like APJ Abdul Kalam - former President of India, Nobel laureate Mother Teresa, Father of the Nation Mahatma Gandhi, Bhagat Singh, Subhash Chandra Bose, Kalpana Chawla - the first woman of Indian origin to step into space, among others which made them part of India’s illustrious history.

Commenting on the launch, Mr. Vikram Mehra, Chief Marketing Officer, Tata Sky Ltd. said, “Today, parents find teaching their children on Tata Sky ActveTM Stories, a TV based story book more effective, interesting and informative. It allows children to read, listen and learn at their own pace. The latest series is targeted at teaching them about the lives of our great leaders who have made significant contributions for the country in a fun and informative way.”

This brand new series will go “ON AIR” from 27th January and will continue till 3rd February 2009. 

About Tata Sky Ltd.
Tata Sky Ltd., the JV between the TATA Group and STAR is committed to offering viewers the best of pay television through its nationwide satellite television service. Tata Sky offers subscribers over 160 channels and interactive services in DVD quality picture and CD quality sound

Leading bankers and developers confident that economic slowdown will not affect Real Estate sector

Present economic slowdown will not affect Real Estate sector in view of the prevalent housing shortage in the country, increasing population and series of proactive measurers taken by the government to boost up the sector, according to leading bankers and developers of Gujarat. This optimism was expressed by them while participating in an Interactive Session on "Opportunities & Challenges in Finance & Banking for Real Estate Sector" yesterday in Ahmedabad, jointly organized by the Gujarat Chamber of Commerce & Industry and The Gujarat Institute of Housing & Estate Developers [GIHED]


Shri H.C. Patnaik, CGM of the Gujarat Circle of State Bank of India, said that there is shortage of 2.7 million housing units in urban India and India's population is increasing at the rate of 2% and therefore there is no reason for any disappointment in the Real Estate Sector. Moreover, the Central Govt. RBI and SBI has announced number of stimulus packages, for this sector, including reduction in the interest rate on housing loan. SBI has signed MOUs for an investment of Rs.30,000 crore at the recent Vibrant Gujarat Summit and 20 to 25% of the investment will be done in real estates. He assured that there will be no hurdles in sanctioning of bankable housing projects. Shri Patnaik called for speedy clearance of proposals for NA for land, reduce stamp duty, and increase FSI and limits of the areas under Municipal Corporation for rapid growth of Real Estate Sector.


Shri S. Srinivasan, CEO, Kotak Real Fund Estate urged builders and developers to reduce adequate pricing of housing units, which will automatically boost up the demand. He said that housing units in Gujarat were more affordable because of cheaper land and labour and therefore there is no serious impact of the recession in Gujarat. He was optimistic that the present situation will further improve in the next six months. 


Shri Irfan Qureshi, General Manager, HDFC Ltd. appealed the developers not to be complacent or pessimistic about the present economic crisis but to face it by adopting realistic and professional approach. He was confident that we will overcome the present difficulties in one and half to two years by increasing transparency in our dealings. Shri Qureshi said increasing urbanization, shortage of dwelling units, reduced rate of interest on housing loan and tax benefits etc. will gradually revive this sector.


Shri Suresh Patel, Vice President of GIHED, said that India has not been trapped in the vicious circle of global recession ,because we have even now maintained economic growth of 7%.Millions of poor and low income group families are still deprived as basic need of housing and therefore there is no reason to have fear of receiving in housing sector. Shri Patel appealed the banks in Gujarat to co-operate with builders by providing more credit for housing projects and reduce interest rate. He said that the builders in Gujarat are realistic and conservative with higher credit worthiness. Shri Vijay Shah, Coordinator of GIHED also urged the banks to give up their over cautious approach, trust builders and provide more loan for housing projects.


Shri Rupesh Shah, President of the Chamber was confident that the economic slowdown will not affect industries in India except export oriented industries. He urged banks in Gujarat to be more helpful towards more and more industries by providing working capital to the needy industries like the diamond industry. Shri Shah said that the Government can also be helpful by undertaking infrastructure projects on a massive scale.

The NFL Taps Motorola to Provide Wireless Internet Access for Media Venues at Super Bowl XLIII

TAMPA BAY, Fla., Jan 29, 2009 /PRNewswire-FirstCall via COMTEX/ -- Motorola's wireless enterprise solution overcomes challenging radio frequency environment to keep media connected so fans stay informed 
The National Football League (NFL) today announced that it has selected Motorola, Inc. (NYSE: MOT) as the official supplier of end-to-end 802.11a/b/g (Wi-Fi) wireless networking solutions for all media covering Super Bowl XLIII. For the fourth year, the NFL will leverage Motorola's expertise in secure enterprise-class wireless communications to offer reliable wireless connectivity for the more than 4,000 media members covering every pregame and game-day Super Bowl story. 

Super Bowl XLIII is a demanding environment due to the business critical expectations, temporary facilities, high user density and radio frequency (RF) congestion. Motorola's wireless network overcomes these challenges to enable the media to seamlessly access the Internet while moving through several on-site Super Bowl venues. Media interested in accessing the wireless network, powered by Motorola, can easily connect to the Internet from the media areas at the Super Bowl XLIII Media Center (Tampa Convention Center), in the team hotels and at the press areas of Raymond James Stadium by using their Wi-Fi compliant computing devices (laptops, PDAs or cellular phones). 

Motorola is an industry leader in providing end-to-end networking solutions for the home, business and government. For Super Bowl XLIII, Motorola has deployed Motorola RFS6000 wireless switches, AP300 access ports, AP5131 mesh-enabled access points and Motorola AirDefense Solutions wireless security sensors. Offering industry-leading security and resiliency, the Super Bowl XLIII wireless network will allow members of the media to access and upload rich multimedia content, file news stories or blog about their experiences from any Wi-Fi-enabled device they carry. 

About Motorola 

Motorola is known around the world for innovation in communications. The company develops technologies, products and services that make mobile experiences possible. Our portfolio includes communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. Motorola is committed to delivering next generation communication solutions to people, businesses and governments. A Fortune 100 company with global presence and impact, Motorola had sales of US $36.6 billion in 2007. For more information about our company, our people and our innovations, please visit 

MOTOROLA and the stylized M Logo are registered in the US Patent & Trademark Office. All other product or service names are the property of their respective owners. (C) Motorola, Inc. 2009. All rights reserved. 

Siemens to Design, Supply and Install Process and Electrical Equipment for New Wastewater Treatment Plant in Thailand

Siemens has been awarded a $10M USD contract from Advance Agro Ethanol (aAE), a subsidiary of Advance Agro Public Co., Ltd., to provide process and electrical equipment for a wastewater treatment plant. The new plant will be located in Tha Toom, Prachinburi Province, Thailand. The Siemens equipment, scheduled to be installed in the fourth quarter of 2009, will treat the wastewater from ethanol production to meet effluent standards and to obtain biogas that will be used as an alternative energy source. Siemens will design the plant, supply all process and mechanical equipment as well as the electrical, control and instrumentation system, and will install, test and commission the plant. 

Volkswagen Financial Services AG founds subsidiary in India

Volkswagen Finance Pvt. Ltd. opens for business  

Provision of Financial Services products for dealers and customers

Mumbai, January 2009: Volkswagen Financial Services AG (VWFSAG) has founded a wholly-owned subsidiary in India, Volkswagen Finance Pvt. Ltd., with effect from 16 January 2009. The company has its headquarters in Mumbai. 

With the foundation of the Indian company, Volkswagen Financial Service Providers are now in a position to offer both dealers and end customers their financial services products. This offer applies specifically to the Group brands Volkswagen, Volkswagen Commercial Vehicles, Audi and Škoda. Volkswagen Finance Pvt. Ltd. will also support these Group brands further through the important development and expansion of the Indian dealer network. 

Volkswagen Finance Pvt. Ltd. will conclude cooperation agreements with Indian financial institutions and insurance companies with a view to realising efficient market penetration.

Usha Martin's Q-III consolidated net profit at Rs 39.08 Crores marginally down by 5%


Kolkata, January 29, 2009: Usha Martin Limited, leading producer of speciality steel and one of the largest wire rope manufacturers globally, has posted satisfactory performance considering the current market scenario. The key highlights of consolidated financials for the quarter ended 31st December, 2008, were:


· Net sales grew by 33.0% to Rs738.33 crores

· PBT grew by 3.7% to Rs.56.79 crores

· PAT declined by 5.2% to Rs.39.08 crores


During the nine months of the financial year 2008-09, the consolidated Profit before tax rose to Rs.236.41 crores from Rs.172.33 crores (an increase of 25.3%)and Profit after tax at Rs.156.51 crores from Rs.124.86 crores (an increase of 25.3%). The net sales [net of inter segment adjustment] rose to Rs.2243.39 crores from Rs.1636.27 crores, registering a growth of 37.1%.


During the quarter III of the financial year 2008-09, the standalone profit before tax stood at Rs.38.70 crores from Rs.42.02 crores (a decrease of 7.9%) and profit after tax stood at Rs. 26.74 crores from Rs.32.45 crores (a decrease of 17.6%). The net sales (net of inter segment adjustment) rose to Rs.512.93 crores from Rs. 402.65 crores, registering a growth of 27.4%.


During the nine months of the financial year 2008-09, the standalone Profit before tax rose to Rs.182.95 crores from Rs.137.77 crores (an increase of 32.8%)and Profit after tax to Rs.125.29 crores from Rs.100.53 crores (an increase of 24.6%). The net sales [net of inter segment adjustment] rose to Rs.1597.18 crores from Rs.1162.83 crores, registering a growth of 37.4%.


The Company has provided foreign exchange loss of Rs.11.50 crores [net] during the quarter and Rs.67.35 crores [net] during the nine months period on account of valuation of foreign currency loans and trade exposures, as per AS 11 as against gain of Rs.6.80 crores and Rs.30.75 crores in the corresponding periods last year.


The other key highlights of the quarter under review:

a) All the subsidiaries continued to perform well.

b) Global Wire Ropes production grew by 4% compared to corresponding period of previous year.

c) Operational PBDIT margin (excluding foreign exchange loss) at 20.0% (Consolidated)

d) Slow down in auto sector has affected the steel volume and margins.

e) Value added product share at 58 % of steel produced.

f) Coal mine integration is in progress.

Usha Martin has manufacturing facilities at Ranchi, Jamshedpur, Hoshiarpur, UK, Thailand, UAE and USA. It has created a worldwide distribution, service and marketing network spread across the US, UK, Europe, Africa, the Middle East, South East Asia and Australia.

Orchid registers turnover of Rs 310 crore during Q3 FY09

Maintains operational profitability (PBT) at Rs 28 crore
Earnings for the quarter ended December 31, 2008 (Q3 FY09)

 Standalone earnings

Chennai-based pharma major Orchid Chemicals & Pharmaceuticals Ltd. (Orchid) achieved a turnover and operating income of Rs 310.21 crore for the quarter ended December 31, 2008 (Q3 FY 08-09) in comparison to Rs 330.76 crore registered during the corresponding third quarter of last fiscal. Earnings before Interest & Tax (EBIT) stood at Rs 66.10 crore compared to Rs 74.87 crore during the corresponding quarter of last year. 

Due to the depreciation in the value of Rupee vis-à-vis Dollar, a notional loss on FCCBs is reflected in the accounts as opposed to the notional gain reflected in the accounts of the corresponding quarter of the previous fiscal (due to the earlier rupee appreciation). Profit/loss before tax (prior to exceptional item of Rs 31.15 crore on account of exchange loss/gain on the FCCBs) was Rs 28.13 crore as against Rs 55.35 crore of the corresponding Q3 of the last fiscal. After considering the exceptional item on account of exchange loss/gain on the FCCBs, there was a marginal loss before tax of Rs 3.02 crore in Q3 of this fiscal compared to a profit of Rs 61.78 crore during the corresponding Q3 of the last fiscal. For the quarter under review, at the net level, the company registered a loss (due to the loss on the exceptional item of Rs 31.15 crore) of Rs 6.31 crore compared to a PAT of Rs 54.12 crore (which included the exceptional item gain of Rs 6.43 crore) of the corresponding Q3 of the last fiscal. EPS was notionally negative at Rs 0.92 compared to Rs 8.20 of the corresponding period of last fiscal.

Consolidated earnings

On a consolidated basis, Orchid’s turnover for the quarter ended December 31, 2008 was Rs 336.12 crore as against Rs 347.38 crore registered during the corresponding quarter of last fiscal. Profit/loss after tax (after considering a loss of Rs 31.15 crore due to the exceptional item of foreign exchange loss on FCCBs) stood at a loss of Rs 4.67 crore as compared to a gain of Rs 49.96 crore of the corresponding quarter of last fiscal (which included an exceptional item due to foreign exchange gain on FCCBs of Rs 6.43 crore).

Earnings for the nine months ended December 31, 2008
Standalone earnings

Orchid’s turnover and operating income for the nine months ended December 31, 2008 registered a growth of 12% and stood at Rs 964.98 crore as compared to Rs 860.63 crore registered during the corresponding period of last fiscal. Earnings before Interest & Tax (EBIT) stood at Rs 190.49 crore compared to Rs 199.77 crore registered during the corresponding period of the previous year. 

The depreciation in the value of Rupee vis-à-vis Dollar resulted in a notional loss on FCCBs which is reflected in the accounts for this period as opposed to the notional gain reflected in the accounts of the corresponding period of the previous fiscal. Profit/loss before tax (prior to exceptional item on account of exchange loss/gain on the FCCBs) was Rs 91.04 crore as against Rs 142.92 crore of the corresponding nine months of the last fiscal. After considering the exceptional item on account of exchange loss/gain on the FCCBs, for the nine months ended December 31, 2008 the company registered a loss of Rs 80.49 crore compared to a profit of Rs 221.97 crore registered during the corresponding nine months of the last fiscal. At the net (PAT) level, the company registered a loss (due to the loss on the exceptional item of Rs 171.52 crore) of Rs 78.62 crore compared to a PAT of Rs 168.68 crore (which included the exceptional item gain of Rs 79.05 crore) of the corresponding nine months of the last fiscal. EPS for the period was negative at Rs 11.46 compared to a positive EPS of Rs 25.55 of the corresponding period of last year.

Consolidated earnings

On a consolidated basis for the nine months ended December 31, 2008, Orchid achieved a turnover and operating income of Rs 1035.45 crore as compared to Rs 908.48 crore achieved during the corresponding period of last year. Earnings before Interest & Tax (EBIT) stood at Rs 193.52 crore compared to Rs 191.4 crore of the corresponding period of last fiscal. 

At the Profit after tax (PAT) level, the company registered a loss (due to the loss on the exceptional item of Rs 171.52 crore) of Rs 76.48 crore compared to a positive PAT of Rs 159.41 crore (which included the exceptional item gain of Rs 79.05 crore) registered during the corresponding nine months of the last fiscal.

Quote from the Managing Director

“Orchid’s overall business segments have witnessed a steady revenue pattern during the third quarter of this fiscal. We are confident that our strong product pipeline spanning key therapeutic segments of Cephalosporins, Penicillin Injectables and Non-antibiotics will power the overall growth and profitability in the ensuing quarters”, said Mr K Raghavendra Rao, Managing Director, Orchid Chemicals & Pharmaceuticals Ltd. 

API Business

Orchid’s base API business posted a sale of Rs 119.23 crore compared to Rs 124.88 crore registered during the corresponding period of last fiscal. Increasing share of API production continued to be integrated with manufacture and sale of formulations for various markets, led by the US.

Formulations Business
Regulated Generics

During the 3rd quarter of this fiscal, Orchid consolidated its market position in the US generics market. Key products launched earlier such as Cefepime, Cefdinir and Cefoxitin continued to post stable sales. Non-antibiotic products, Terbinafine and Granisetron, also started to generate a good scale. 

During the quarter under review, Orchid clocked USD 26.8 million (Rs 130.20 crore) in revenues from the US market.

Emerging markets

Orchid’s emerging markets (including domestic) business posted a healthy growth of 17% to register a turnover of Rs 33.91 crore during the quarter under review. Key markets like India, Latin America, CIS countries and others contributed positively to the overall turnover of the business. 
Regulatory update
Orchid continued to enhance its regulatory pipeline by filing Abbreviated New Drug Applications (ANDAs), Marketing Authorisations (MAs) and Para IV FTF applications. 
Filings - API

In the API (Active Pharmaceutical Ingredients) segment, Orchid increased its cumulative US DMF (Drug Master File) filing count to 70. The break-up of the total filings is 26 in the Cephalosporin segment, 31 in the NPNC segment, 2 in the Penicillin Injectables segment and 11 in the Carbapenems segment. 

In the European market space the cumulative filings of CoS (Certificate of Suitability) at 20 which included 12 in the Cephalosporin segment, 7 in the NPNC segment and 1 in the Penicillin Injectables segment.

Filings - Formulations

During the quarter under review, Orchid filed 4 ANDAs for the US market, taking the cumulative count of ANDA filings to 57. This includes another Para IV FTF (First-To-File) filing for a key product, taking the total Para IV FTF ANDA filing tally to 7. Of the total ANDAs filed 29 pertain to the Cephalosporin space, 5 in the Penicillin injectables segment, 20 in the NPNC space and 3 in the Carbapenems space. 

In the EU market, of the cumulative count of Marketing Authorizations at 19, 15 pertain to the Cephalosporin segment, 1 to the Penicillin injectables segment and 3 to the NPNC segment. A few more dossiers have been lined up for filing in Q4 of this fiscal, based on the DCP slots allotted by the respective RMS (Reference Member States) countries in the EU.


During the quarter under review, Orchid received USFDA approvals for Cefuroxime Sodium Injections range in the Cephalosporin segment and for Divalproex delayed release tablets in the NPNC (Non-penicillin, Non-cephalosporin) segment. With these 4 approvals, the cumulative count of ANDA approvals by the USFDA has moved to 29, out of which 26 are in Cephalosporin segment and 3 are in the NPNC segment. 

In the EU market, Orchid received its second MA (Marketing Authorisation) approval (Cefpodoxime Proxetil tablets) during the quarter under review. The first MA approval of Orchid pertains to Piperacillin-Tazobactam Injections which was received earlier.

Further approvals from the USFDA for other products which are in the final stages of review are expected in the current quarter. Similarly, Orchid expects further approvals in other regulated markets like Canada, EU & ANZ in the ensuing quarters.

Rio Tinto reaches agreement to sell potash assets and Brazilian iron ore operation

Rio Tinto has signed definitive agreements to sell its undeveloped potash assets, largely comprising the Potasio Rio Colorado (PRC) potash project in Argentina, and its Corumbá iron ore mine in Brazil and the associated river logistics operations in Paraguay to Vale, the Brazilian mining company, for a total cash consideration of US$1.6 billion. Completion of the Corumbá transaction remains subject to receipt of the relevant regulatory approvals, whilst no approvals are required in order to complete the potash transaction. 

“This transaction demonstrates the depth and quality of our asset portfolio and our ability to unlock value for shareholders despite tough credit markets and economic conditions,” said Guy Elliott, chief financial officer, Rio Tinto. “This is a very positive step towards meeting our commitment to reduce debt by US$10 billion in 2009”. 

In December 2008, Rio Tinto announced a detailed package of measures in response to the rapidity and severity of the global economic downturn. One aspect of those measures included expanding the scope of the Group’s existing asset divestment programme. 

During 2008, Rio Tinto realised almost US$3 billion from asset sales, comprising the Greens Creek mine in Alaska for US$750 million, its interest in the Cortez operation in Nevada for US$1.695 billion and the Kintyre uranium project in Western Australia for US$495 million. In January 2009, the Group announced the divestment of its interest in the Ningxia aluminum smelter in China for US$125 million. 

The potash transaction, comprising PRC and the Regina exploration asset in Canada, is targeting completion and receipt of the cash proceeds in February. The Corumbá transaction will complete when appropriate consents are received, and completion is expected in the second half of 2009. The sales proceeds are allocated US$850 million to the potash assets and US$750 million to the Corumbá assets. 

The earnings of the Corumbá iron ore mine were US$6 million for the six months ending 30 June 2008 and US$(12) million for the year ended 31 December 2007. There were no earnings for the potash assets, which are undeveloped. Evaluation expenditure on the potash projects in the first half of 2008 was US$18 million. The gross assets of the Corumbá operations as at 30 June 2008 were US$263 million. Gross assets of the PRC assets were US$33 million as at 30 June 2008. The proceeds from these divestments will be used for the repayment of debt. 

About Potasio Rio Colorado
Potasio Rio Colorado – Argentina’s first potash project – is a tier 1 asset located in the Malargüe department in the province of Mendoza. The project is in the feasibility stage and if fully developed will allow Argentina to become one of the world’s major producers of potash, an essential crop nutrient. The life of the mine is projected to last more than 50 years. 

About Regina Potash 
Regina Potash is a large 1,200km2 property east of the Belle Plaine mine in Saskatchewan, Canada. The project is currently at early evaluation stage and is located close to existing infrastructure.

About Corumbá Operations
Corumbá mine operations are located in western Brazil, in the state of Mato Grosso do Sul. The iron ore is mined from an open pit, processed on site then barged by Transbarge Navegación (Rio Tinto 100%) along the Paraguay River for onward delivery to South American and European customers. Corumbá currently has an annual capacity of 2 million tonnes. 

About Rio Tinto 
Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

Thursday, January 29, 2009

GDP to be 7 to 8% in 2008-09 -- India’s path to Recovery Faster



Shri Kamal Nath, Union Minister of Commerce & Industry, has stated that India’s GDP would be in the range of 7 to 8% in 2008-09 and added that GDP growth in real terms in the first half of the fiscal year has been at 7.8%, which is fairly robust. Speaking at the Breakfast Session of Boston Consulting Group (BCG) on “Defying the downturn: How Rapidly Developing Economies are Dealing with the Global Slowdown” at World Economic Forum in Davos today, the Minister said that India’s path to recovery will be faster than for the rest of the world. “For example, after industrial downturn in October 2008, the November 2008 figure was positive at 2.4%. The financial situation has eased somewhat and liquidity is accessible in the domestic markets. I would like to point out here that India is still a low-cost high quality competitive manufacturing environment, and with falling shipping rates, it may be more cost effective to set up production facilities in India”, he added. 

“FDI inflow has maintained its pace – with inflow of $ 19.7 billion during the period April – November 2008. Even during the financial crisis was playing out, an inflow of more than USD 1 billion took place in November 2008”, Shri Kamal Nath said. 

During the interaction, Shri Kamal Nath pointed out that India has seen rapid economic growth averaging 8.8% for the past five years; savings and investments as a proportion of GDP have gone up to 36 and 38% respectively; share of services in the economy has increased to around 60%; trade as a percentage of GDP is in excess of 40%, reflecting India’s increased integration with the world and added that India that has gradually integrated with the global economy has not escaped unscathed from the global economic turmoil. “We have a dynamic young population with a large and growing middle class consumers of 300-400 million. Agricultural growth has been robust, maintaining the incomes of 65% of the workforce that is dependent on the sector for livelihood”, the Minister said. 

Addressing the gathering, Shri Kamal Nath underlined the measures taken by the Indian government to mitigate the effects of global economic crisis: “Interest rates have been reduced and cash reserve ratios have been lowered. The repo rate was reduced from 9% to 6.5%, while CRR came down from 9% to 5.5%. Term repo facility for an amount of $12 billion was instituted to ease liquidity stress faced by mutual funds and non banking financial companies. Provisioning requirements for reduced agricultural and SME loans. Excise rates have been slashed across the board. External borrowing limits have been raised and FII limits for corporate bonds have doubled. Tax-free infrastructure bonds have been announced to increase funds available for the sector. Fiscal measures worth $ 5 billion have been announced”

Kamal Nath at Davos: India story is intact

New Delhi: On Day One at Davos, CEOs quizzed Indian policymakers on Satyam, exchanged notes on the impact of the global economic downturn summed up by a report released by PricewaterhouseCoopers, while the consulting firm’s global CEO winged his way to India to assess the fallout from the IT firm’s case on its operations in the country. 

The head of the Indian delegation, commerce & industry minister Kamal Nath, said the India story was far more broad-based than evident from the Satyam affair. He recalled the performance of the economy over the past decade to point out the huge investments from the US and Europe. Parrying questions on the Satyam scam, Nath said investors were not looking at the episode as a red flag. He said some 60% of Fortune 500 companies are invested in India due to the confidence they have in the country. 

Nath also fielded queries about the World Bank ban on Wipro, the weakening of the country’s GDP growth and a possible pullout by FIIs. He said the ban was the outcome of a World Bank employee buying Wipro shares and not any wrongdoing by the IT firm. The minister insisted that India would not be hit as badly as other nations by the financial crisis. 

In an interview with BBC Hardtalk, he said, “India’s growth story is based on domestic demand. It is not based on the export market entirely. We can continue to keep our domestic demand-driven growth.” On FIIs pulling out $13.5 billion from Indian stocks in 2008, Nath said it was “not because of India’s fundamentals or because India was no more attractive”. 

“(The pullout) is a tribute to the Indian financial governance sector that when they needed cash, the best way they could raise that cash was by selling Indian securities, not with a hit, but with a profit,” he said. Nath said the UPA government would, in the next couple of months, kick-start a $4-billion stimulus package for the infrastructure sector. 

Meanwhile, to tackle the crisis at audit arm Price Waterhouse, whose India assurance leader Thoma Mathew stepped down and two of its partners were suspended in connection with the Rs 7,800-crore fraud, PricewaterhouseCoopers global CEO Samuel DiPiazza flew to India from Davos, where he was to attend the World Economic Forum. 

The overall mood at the Swiss ski resort was one of gloom. Of the 1,100 CEOs polled by the PwC annual survey, only a fifth were confident that their firm’s revenue would show a growth in the next 12 months. This confidence level was the lowest in the seven-year-old survey. In a similar poll a year ago, half the polled CEOs were confident of revenue growth. A majority of CEOs this year said they expect some recovery only over the next three years.

Ombudsman criticises Commission for inadequate register of documents

The European Ombudsman, P. Nikiforos Diamandouros, has urged the European Commission to set up a comprehensive register of the documents it produces or receives. This follows a complaint from the British NGO, Statewatch, about the Commission's failure to register the vast majority of its documents. According to the Commission, the establishment of a comprehensive register is impossible at this point in time, mainly because of the use of incompatible registers in its different departments. The Ombudsman was unconvinced. He considered the Commission's failure to comply with the legal obligation to establish such a register to constitute maladministration.

Mr Diamandouros said: "The European Parliament and the Council have set up satisfactory registers. I, therefore, see no reason why the Commission should not be able to do so. In the current debate on the reform of access to document rules, I called for clearer guidelines on what registers should contain. Unfortunately, the Commission has chosen instead to propose a narrower definition of what a document is. In my view, this will lead to fewer rather than more EU documents being accessible to the public." 


EU legislation on public access to EU documents requires the EU institutions to set up public registers of the documents they receive and produce. These registers should have been in place by 2002.

In October 2006, the British NGO, Statewatch, turned to the Ombudsman, pointing out that the Commission had failed to comply with its legal obligation. According to the complainant, the Commission's register only contained legislative texts and Commission's reports that had already been adopted. The vast majority of documents was missing.

The Commission argued that the relevant legislation did not oblige the institutions to list all their documents. Furthermore, it was impossible to set up a comprehensive register because of the use of incompatible registers in its different departments. The Commission announced, however, its intention to launch a new centralised system by 2010.

The Ombudsman was not convinced. In his view, the Commission had had enough time since 2002 to establish its register. And even a new centralised system was no guarantee of comprehensiveness, he said. 


London and Sydney, 29 January 2009

Summary Coal Reserves and Coal Resources Information

The following summary of Coal Reserves and Coal Resources is extracted from the “Ore Reserves and Mineral Resources Report” published by Xstrata on 29 January 2009. A copy of the full report is available at

 Xstrata Coal

Total reported managed Coal Resources increased by 2.1 billion tonnes, comprising 1.6 billion tonnes of Measured and Indicated Resources and 0.5 billion tonnes of Inferred Resources. Recoverable Coal Reserves increased by 1.2 billion tonnes. 

Included in these figures is a substantial increase in the Coal Resource at the Wandoan Project to over 2.5 billion tonnes, an increase of approximately 1.4 billion tonnes, together with the declaration, for the first time, of a Coal Reserve of 540 million tonnes.

Other key reserve movements include a combined increase of approximately 300 million tonnes for the expansion of open cut operations in the Ravensworth West/Cumnock areas and a combined increase of more than 300 million tonnes from recent acquisitions Mangoola, Tahmoor and Ravensworth Underground.

 Total Coal Resources as at 30 June 2008 are 18.7 billion tonnes and total Coal Reserves 3.6 billion tonnes, equivalent to a nominal life of 28 years at 2008 mining rates. The Coal Resources are inclusive of the Coal Reserves.

 “This significant increase in reserves demonstrates the long term strength of our current operations, supported by substantial resources which will ensure our continued growth,” said Peter Freyberg, Chief Executive, Xstrata Coal. 


The recently completed prefeasibility study of the Wandoan Project in the Surat Basin of Queensland, delineated more than 540 million tonnes Coal Reserves and an increase of more than 470 million tonnes in Measured and Indicated Coal Resources.

 “The successes achieved in the exploration, geological and mining studies of the Wandoan Project once again confirms that Xstrata Coal is well positioned to meet future global energy needs and market demand for quality thermal coal,” said Mr Freyberg.

 “The Wandoan sample pit generated washed coal for market testing and trial burns with favourable results in mid 2008 and we continue to make good progress.”

 The Wandoan project is expected to deliver over 20 million tonnes of thermal coal annually on a managed basis.




· 2 for 1 fully underwritten Rights Issue of approximately 1.96 billion New Shares at £2.10 per share to raise approximately £4.1 billion (approximately $5.9 billion) (before costs), to repay debt

· One of a series of pro-active measures in response to challenging operating conditions and uncertain near-term outlook to strengthen Xstrata’s financial position

· Post Rights Issue net debt to reduce to approximately $12.6 billion, with gearing of less than 30%, at the lower end of the target range

· Proposed Acquisition of the world-class Prodeco thermal coal assets from Glencore, for a cash consideration of $2 billion

Commenting, Mick Davis, Xstrata Chief Executive said:

“The significant and extensive range of actions being taken across Xstrata to optimise cash, together with our actions in May and October to refinance short-term debt, have provided the Group with significant headroom, comfortable interest cover and no significant debt refinancing requirements until 2011.

“Nonetheless, it is clear that, while appropriate for market conditions experienced in the first three quarters of 2008 and indeed in the past few years, in the aftermath of an unprecedented financial crisis, Xstrata’s absolute level of debt is now perceived as a potential constraint on the Group, given the uncertainty that exists over the near-term outlook for commodities.

“Our announcement today of a proposed 2 for 1 Rights Issue to raise approximately £4.1 billion (approximately $5.9 billion) excluding costs, will provide a significant injection of capital, mitigate the risks presented by the current uncertainty and remove this potential constraint.

“In addition, the planned Rights Issue, together with Glencore’s ongoing support for Xstrata, have provided Xstrata with an opportunity to acquire Glencore’s world-class, cash generative Prodeco coal operations in Colombia for a consideration of $2 billion. These low-cost, premier quality operations benefit from significant growth potential and will consolidate Xstrata Coal’s global leadership in thermal coal and strengthen our strategic position in Colombia, to supply both the European and US markets. 


“However, Xstrata and Glencore failed to reach full agreement on an appropriate valuation of the Prodeco assets and as a result the transaction includes a Call Option, under which Glencore may buy back the Prodeco assets from Xstrata at any point up to the first anniversary of the closing date, for a total cash consideration of $2.25 billion, plus the net balance of any cash invested by Xstrata and any profits accrued but not distributed to Xstrata. The Call Option Agreement ensures that, should the option be exercised, Glencore will pay a repurchase price that adequately compensates Xstrata’s Shareholders for the option granted. In my view, these arrangements are fair to both parties and at the same time facilitate an orderly Rights Issue process, which is to the benefit of all of Xstrata’s Shareholders.  

“The primary objective of the Rights Issue we have announced today is to ensure that Xstrata remains financially robust during current challenging market conditions and going forward, given the lack of visibility into near-term economic conditions. Looking through the prevailing period of uncertainty to the return of a more benign environment, the proposed capital raising also provides the Group with an enhanced platform from which, at the appropriate time, to initiate the next stage of Xstrata’s growth.

“Xstrata continues to operate a suite of cash generative operations across a broad range of geographies, with excellent growth potential and a strong competitive position in each of its key commodity markets. Against a background of strong medium to longer term fundamentals for the Group’s products and near-term actions to secure Xstrata’s financial position, I am confident that the prospects for Xstrata remain very encouraging.”


Rights Issue

The proceeds of the Rights Issue will be used to repay existing debt, including debt drawn under the Group’s existing facilities to finance the Proposed Acquisition. As a result, net debt is expected to reduce to approximately $12.6 billion, with gearing (defined as net debt to net debt plus equity) of less than 30%.

The Issue Price of £2.10 per New Share represents a discount of approximately 40% to the theoretical ex-rights price (TERP) of £3.48 per Ordinary Share and a discount of approximately 66% to the Closing Price of £6.23 on 28 January 2009.

Glencore, Xstrata’s major Shareholder with an interest of approximately 34.5%, has provided irrevocable undertakings to take up its rights in full, and the remainder of the Rights Issue has been fully underwritten. The issue of New Shares will be subject to Shareholder approval, in respect of which Glencore has also irrevocably undertaken to vote in favour.

The Rights Issue is one of a series of ongoing, decisive measures taken by Xstrata management to strengthen its financial position in response to the financial crisis and ensuing economic downturn. These initiatives include:

· suspending or closing higher cost or unprofitable production, including the Lennard Shelf zinc-lead joint venture and the Falcondo ferronickel operation;

· reducing production at existing operations to respond to weaker demand, including the suspension of 80% of the Xstrata-Merafe Chrome Venture’s annual production capacity and suspending longwall operations at Oaky No. 1 coking coal mine;

· continuing to drive down operating costs across Xstrata’s commodity businesses through restructurings, productivity improvements and commencement of lower cost supply;

· improved working capital management, with approximately $1 billion of cash released in the second half of 2008; and

· substantially reducing discretionary sustaining and expansionary capital expenditure, with approximately $3 billion identified for 2009, whilst retaining the Group’s growth options.

In addition to these commodity-business led initiatives, on 1 October 2008, Xstrata entered into a $5 billion Club Facility to refinance and extend the maturity of the Group’s existing debt portfolio and provide further headroom. On 2 January 2009, the Club Facility was increased by an additional $459 million to approximately $5.46 billion.

In light of the proposed capital raising, the Board has decided not to declare a final dividend for 2008. The total dividend for the year is therefore 18 cents per share, paid as the interim dividend on 10 October 2008. The Board intends to resume dividend payments to Shareholders at the earliest opportunity, while seeking to maintain a prudent capital structure against the backdrop of the macroeconomic climate and the Group’s cash flow, capital requirements and dividend cover. 

Including the proceeds from the Rights Issue, after the acquisition of Prodeco, the combined impact of the actions taken by the Group to conserve cash and reduce operating and capital costs will add over $7 billion and ensure that Xstrata maintains a robust financial position, even in the event of an unexpectedly prolonged period of depressed commodity prices. This is in line with the Xstrata Group’s firm commitment to retain an investment grade balance sheet throughout the economic cycle.

Xstrata’s management will continue to focus on taking decisive action with a view to ensuring that Xstrata’s businesses remain cash positive and financially robust, including, where necessary, further reductions in capital expenditure, the suspension or closure of unprofitable or high cost operations and the optimisation of operating costs and working capital.

Acquisition of Prodeco

Xstrata has conditionally agreed to acquire the Prodeco Business from Glencore, for a consideration of $2 billion, to be satisfied in cash on the Prodeco Closing Date. The Prodeco Business is a strategically attractive asset with excellent growth potential that will add significant long-term value to Xstrata.

As part of the Proposed Acquisition, Xstrata has conditionally agreed to grant Glencore a Call Option to repurchase the Prodeco Business at any time up to the business day following the first anniversary of the Prodeco Closing Date. The aggregate consideration payable by Glencore on exercise of the Call Option is $2.25 billion, plus all profits of the Prodeco Business accrued and not distributed to the Xstrata Group and any cash paid into the Prodeco Business by Xstrata, less any amounts distributed by Prodeco to the Xstrata Group, in each case in the period since 1 January 2009.

The Prodeco Business comprises Glencore’s Colombian high grade thermal coal mining operations and associated infrastructure. The acquisition of the Prodeco Business will provide Xstrata with access to a high quality, low cost thermal coal complex with excellent growth potential in a strategically attractive region with the ability to supply the European and North American energy markets.

The Proposed Acquisition will add significant value to the Xstrata Group by:

· enhancing the Xstrata Group’s industry leading thermal coal portfolio through the addition of long-life high-quality thermal coal assets;

· consolidating the Xstrata Group’s strategic position in Colombia, enhancing Xstrata’s competitive position in the important European market and positioning the business for growth in the United States market for low-sulphur, high-quality thermal coal imports;

· offering significant further brownfield growth potential from the purchased assets and optionality through future growth opportunities in the region; and

· leveraging Xstrata Coal’s management expertise and operational experience to deliver operational upside through productivity and technical enhancements.

The Effective Date for the acquisition will be 1 January 2009.

Since Xstrata’s substantial Shareholder, Glencore, is the vendor of the Prodeco Business, the Proposed Acquisition is a related party transaction for the purposes of the Listing Rules, and requires independent Shareholder approval. The Rights Issue and the Proposed Acquisition are inter-conditional. Shareholder approval for the Proposed Acquisition and for the resolutions required for the Rights Issue will be sought at an Extraordinary General Meeting to be held in early March 2009. A Circular including the notice convening the Extraordinary General Meeting and a Prospectus in connection with the Rights Issue and the Proposed Acquisition are expected to be published within the next week.

JPMorgan Cazenove and Deutsche Bank are acting as joint sponsors, joint financial advisers and joint brokers to Xstrata and J.P. Morgan Securities Ltd. and Deutsche Bank are joint underwriters of the Rights Issue. Rothschild is acting as independent financial adviser to Xstrata in connection with the Proposed Acquisition.

Xstrata plc announces preliminary results for the year ended 31 December 2008


¡ Despite economic downturn, EBITDA was $9.7 billion, 11% lower than the record profitability achieved in 2007 

¡ Record annual production of platinum, coking coal, thermal coal, mined nickel, zinc in concentrate and lead in concentrate

¡ Record thermal and coking coal and ferrochrome contracts settled during 2008 

¡ Real cost savings of $184 million achieved from productivity improvements, despite ongoing cost pressures 

¡ Successful commissioning and ramp up of new, lower cost production and integration of Resource Pacific, Jubilee and Tahmoor acquisitions

¡ Refinancing of $5.5 billion of debt means no significant refinancing requirements until 2011 

¡ Pro-active and decisive response to financial crisis: curtailment or suspension of marginal operations; substantial reductions in capital expenditure; and significant operating cost savings

Mick Davis, chief executive officer commented:


“Despite the sudden and severe impact of a global banking crisis that dramatically slowed economic growth from the third quarter and led to a precipitous fall in commodity prices, Xstrata’s businesses achieved a highly creditable result in 2008, generating EBITDA of $9.7 billion, 11% lower than the record profitability achieved in 2007. Earnings per share of $4.90 were 13% lower than the prior year. The impact of markedly lower commodity prices in the final quarter was largely offset by the benefit of record thermal and coking coal and ferrochrome contracts settled during the year, together with robust copper prices for the majority of 2008. 


“A strong operating performance at Xstrata’s coal, alloys, nickel and zinc operations, the successful integration of the acquired Tahmoor and Resource Pacific coal operations and Jubilee nickel assets, the commissioning of the Perseverance zinc mine and Elandsfontein PGM operations led to record production across a number of the Group’s key commodities. Copper volumes increased by 16% in the second half compared to the first half, when lower grades and a number of one-off operational difficulties reduced volumes.


“Our businesses have acted promptly and decisively in response to sudden lower demand for key commodities and conserve cash during a period of heightened uncertainty by:

suspending or closing higher cost or unprofitable production; 
aligning production with reduced demand; 
redoubling efforts to drive down operating costs and tightly control working capital; and 
substantially reducing discretionary sustaining and expansionary capital expenditure.  

“The financial crisis has produced a marked lack of visibility into short term economic activity, and as such, the outlook for 2009 is uncertain. Investment in infrastructure is set to increase during 2009 and 2010, reflecting the significant stimulus packages announced by many major governments which prioritise commodity-intensive investment in many cases. 


“Xstrata continues to operate a suite of cash generative operations across a broad range of geographies, with excellent growth potential and a strong competitive position in each of its key commodity markets. Against a background of strong medium to longer term fundamentals for the Group’s products and near-term actions to secure Xstrata’s financial position, I am confident that the prospects for Xstrata remain very encouraging.”


--North American and global support organizations certified by Service & Capability Performance Standards--

HOUSTON – Landmark, a brand of Halliburton’s (NYSE: HAL) Drilling and Evaluation Division, has announced that its North American and global Customer Support organizations have received certification under the prestigious Service Capability & Performance (SCP) Support Standards program, a highly regarded international standard that recognizes excellence in technology service and support operations. 

This is the 11th consecutive year that the North American support operation has received SCP certification and the seventh consecutive year its global operations have met the stringent standards. Halliburton is the only oilfield services company to have any of its divisions achieve global SCP certification, putting Landmark among the ranks of more than 200 prestigious technology support organizations around the world, including Lockheed Martin Incorporated, GE Healthcare, McKesson Corporation, Nokia and others.

"The SCP Standards Certification quantifies effectiveness of customer service and support based upon stringent performance standards and represents best practices in the industry," says Paul Koeller, vice president Halliburton Software and Asset Solutions. "It is an honor to be recognized for our commitment in these areas as we dedicate ourselves to providing customers with an unmatched level of support they can’t get from any other E&P software and services company." 

The SCP Standards Certification highlights Landmark’s commitment to providing complete customer satisfaction. Landmark provides its customers with not only the highest level of technological support and service, but also the leading technologies, training, support courses and industry expertise they need in order to optimize production and maximize their technology investments. Achieving global SCP Standards Certification is particularly valuable for Landmark’s international customer base—no matter their location, customers receive the same high-quality and dependable customer service and support. 

Developed by Service Strategies, in cooperation with approximately 50 leading service and support organizations from around the world, the SCP Standards have enhanced the capabilities and performance of service operations worldwide since 1998. The SCP Standards establish the global benchmark for service excellence, and Landmark has met that standard since 1997.

To receive SCP certification, Landmark underwent comprehensive annual, internal audits to confirm that they met the requirements of the program. The SCP Standards audit includes a complete review all customer support program criteria and elements, examination of process documentation, reports and other materials and interviews with staff and management team members. 

About Landmark

Landmark is the premier provider of software and technology services for the upstream oil and gas industry. Our software solutions, built for the DecisionSpace® environment, help improve insight from data in ways never possible before, across the entire exploration and production lifecycle. Landmark’s technology deployment and hosting services, petrotechnical computing portfolio, software training, and certified customer support are globally available to help our customers realize the maximum return on their technology investments.

About Halliburton

Founded in 1919, Halliburton is one of the world's largest providers of products and services to the energy industry. With more than 55,000 employees in approximately 70 countries, the company serves the upstream oil and gas industry throughout the life cycle of the reservoir-from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field. 

Motorola AirDefense's annual retail wireless survey finds 20 percent more retailers are improving their network security

  ATLANTA, Jan. 28 /PRNewswire-FirstCall/ -- The Enterprise Mobility business of Motorola, Inc. (NYSE: MOT) today announced results of its second annual Motorola AirDefense Retail Shopping Wireless Security Survey, which shows 44 percent of the wireless devices used by retailers - such as laptops, mobile computers and barcode scanners - could be compromised. While this is a surprisingly high percentage, it is significantly lower than results from the
same retail shopping survey conducted in 2007 which showed security vulnerabilities in 85 percent of wireless devices.
  Survey research included a review of wireless data security at more than 4,000 stores in some of the world's busiest shopping cities including Atlanta, Boston, Chicago, London, Los Angeles, New York City, San Francisco, Paris, Seoul and Sydney.
  Security vulnerabilities in wireless networks typically are the result of weak encryption, data leakage, mis-configured access points and outdated access point (AP) firmware. One of the more overlooked issues with large retailers is a "cookie-cutter" approach to wireless technology. By using the same technology, configuration, security and/or naming conventions at all retail locations, vulnerabilities repeat themselves across the entire store chain, rendering them susceptible to attacks as well as Payment Card Industry (PCI) non-compliance.
  "Retailers nationwide are improving wireless security, as quantified by the significant drop in vulnerable wireless devices that were discovered during this year's monitoring efforts," said Richard Rushing, senior director of information security, Mobile Devices, Motorola. "However, a significant majority of retailers are still susceptible to a network intrusion - a sign that wireless security remains an afterthought for many."
  Motorola AirDefense's Wireless Security Survey monitored 7,940 access points - the hardware that connects wireless devices to wired computer networks - and discovered 32 percent were unencrypted, compared to 26 percent in last year's survey. Finding the same result as last year, 25 percent of APs were still using Wired Equivalent Privacy (WEP), the weakest protocol for
wireless data encryption, which can be cracked in minutes. PCI Data Security Standard (DSS) version 1.2 prohibits new WEP deployments in the Cardholder Data Environment (CDE) beyond March 31, 2009 and requires the elimination of WEP from the CDE beyond June 30, 2010.
  Other interesting survey findings include:
  Retailers in Los Angeles and New York City were deploying some form of encryption on 77 percent of their wireless APs. Paris retailers ranked second with 76 percent. Retailers in London and Boston ranked the lowest with only 51 percent and 60 percent of APs, respectively, using some form of encryption. 
  12 percent of all APs monitored were using WiFi Protected Access (WPA) while another 27 percent were using WPA-PSK (pre shared key), which is only as strong as the shared password used to protect them. In total, only 7 percent of retailers were using WPA2, which is the strongest WiFi security protocol available today.
  22 percent, or 1,740, of APs were mis-configured, an increase from 13 percent in the 2007 survey.
  Some networks were deployed using default configurations and service set identification (SSID), such as "Retail Wireless," "Cash Register," "POS WiFi," or "store#1234," and "Default". This signals to hackers that nothing has been changed on these devices or the entire wireless network. 
  WiFi signage has become popular for retailers, advertising they offer wireless. However, advertising an open wireless network may tip hackers in targeting other customers, who may not be using effective data security tools.
  32 percent of retail locations were leaking unencrypted traffic, with an additional 34 percent of retail locations leaking encrypted traffic, for a total of 66 percent. Data leakage is easily solved with simple configuration changes or modifications.
  "PCI compliance requires the immediate elimination of unauthorized wireless devices from the CDE as well as an upgrade from WEP to WPA within the next 18 months," said Sujai Hajela, vice president and general manager of Enterprise WLAN, Motorola Enterprise Mobility business. "Several high profile retail data breaches have exploited wireless vulnerabilities, resulting in
millions of credit card numbers being compromised. Retailers need to understand that they cannot properly secure their corporate or customer data with a passive approach to wireless security."
  Using Motorola AirDefense technology, Motorola scanned the airwaves at major shopping centers for the presence of wireless networks and evaluated what wireless data security practices were currently in use. This evaluation took place during the third quarter and fourth quarter of 2008. No personal credit card information was obtained as the goal of this survey was to raise awareness among retailers about the importance of deploying best practices in
wireless security to better protect the information on retailer networks.
  About Motorola
  Motorola is known around the world for innovation in communications. The company develops technologies, products and services that make mobile experiences possible. Our portfolio includes communications infrastructure, enterprise mobility solutions, digital set-tops, cable modems, mobile devices and Bluetooth accessories. Motorola is committed to delivering next generation communication solutions to people, businesses and governments. A Fortune 100
company with global presence and impact, Motorola had sales of US $36.6 billion in 2007.

Wednesday, January 28, 2009

General Dynamics Reports Strong Fourth Quarter, Outstanding Full-Year 2008

· Fourth-quarter Earnings Per Share from Continuing Operations Increase 14 percent

· Total Backlog increases 22.5 percent

FALLS CHURCH, Va. – General Dynamics (NYSE: GD) today reported that earnings from continuing operations in the fourth quarter of 2008 were $630 million, or $1.62 per share on a fully diluted basis, compared to 2007 fourth-quarter earnings from continuing operations of $578 million, or $1.42 per share fully diluted. Revenue increased to $7.9 billion in the quarter, compared to fourth-quarter 2007 revenue of $7.5 billion.
Full-year 2008 Results 
Earnings from continuing operations for the full year of 2008 were $2.48 billion, or $6.22 per share on a fully diluted basis, an increase of 19.1 percent over 2007 full-year earnings from continuing operations of $2.1 billion, or $5.10 per share fully diluted. Revenue for the full year of 2008 was $29.3 billion, compared with $27.2 billion for 2007, an increase of 7.6 percent.
Net cash provided by operating activities from continuing operations totaled $805 million in the quarter and $3.1 billion for the year. Free cash flow from operations, defined as net cash provided by operating activities from continuing operations less capital expenditures, was $629 million in the quarter and $2.6 billion for the year.
The company’s total backlog grew by $13.6 billion in the fourth quarter of 2008, to $74.1 billion. Compared to year-end 2007, total backlog increased by $27.3 billion. Funded backlog at year-end 2008 was $51.7 billion, an increase of $14.5 billion over the prior year.

Global hotel specialist launches new website for India

Global hotel specialist®, has launched an India website, catering specifically to the needs of Indian travellers. The site can be found at or and is part of the worldwide roll-out of new local websites.

The local Indian website makes it easy for both business and leisure travellers to select and book the hotel of their choice through the site.

The India site has a local interface, including pricing in Indian Rupee. There is also enhanced map functionality and the ability to subscribe to newsletters with hotel offers. Customers using the site are also supported by a customer service centre, available 7 days a week from 9:00 to 19:00 IST. 

With innovative search functionality and a fresh look and feel, the new local site enables Indian travellers to easily search and book 80,000 hotels located around the world. Travellers are able to search by amenities, hotel star rating as well as by specific geographic locations and neighbourhoods. Over time, there will be an increasing amount of localised hotel content and travellers will be able to post and read Indian user reviews.

Siemens Receives Multi-Million Dollar Contract from SSAB for Vacuum Tank Degassing Facility

Svenskt Stål AB (SSAB) has awarded Siemens a contract for more than $14 million for a Vacuum Tank Degassing (VTD) facility for its Mobile, Ala. facility. Siemens is scheduled to complete the VTD project in May 2010. This VTD project is part of a major investment program announced by SSAB in August 2008 with the aim to further develop the company’s production base in Sweden and the United States. The investment will result in a major increase of the volume of quenched and tempered steels. The installation of the VTD facility will enable SSAB to provide more value-added products to its customers.
Siemens’ experience as a market leader in the metals industry enables the company to provide a complete solution for the project. Siemens will provide two tanks, two cover lifting devices and one vacuum pump system for the VTD facility. Additionally, Siemens will supply a primary de-dusting system, an automatic alloy and flux feeding system, condenser and machine cooling water system.
Level 1 and Level 2 automation packages are also included in the scope of supply. The Level 1 automation package consists of all necessary hardware and software for basic control of the degassing equipment: human-machine interface (HMI) system, programmable logic controllers (PLCs), panels for the control rooms and operation stations for motors and pumps. The Level 2 automation package provides the industry-specific hardware and software used to optimize the actual steel production of the degassing unit. The metallurgical data stored within the Level 2 system is used to calculate the requirements necessary for the successful degassing of ladles of liquid steel.
SSAB is a global niche producer of high strength steels with a leading market position in quenched and tempered steels. SSAB North American Division is the number one supplier of plate in North America. The Mobile steelworks has an annual capacity of 1.25 million tons and has expanded SAB’s value-added product lines to include blast and painted products, as well as quench and tempered and normalized plate products.
“Siemens is pleased to have been selected for this important project and is committed to exceeding SSAB’s expectations for delivery and performance,” says David Blunden, U.S. Vice-President for Siemens Metals Technologies. “The company is proud of its longstanding and successful business relationship with the SSAB.”

Panax To Explore In Slovakia

Panax Geothermal Ltd (“Panax”) has signed a Memorandum of Understanding for the exploration and potential feasibility and development of geothermal licences in Slovakia in central Europe.

Panax Managing Director Bertus de Graaf said under the terms of the MOU with Geopark Limited, Panax will have direct and exclusive access to a large and comprehensive data-base of historical exploration information.

“It comprises data from approximately 200 deep wells along with a significant amount of seismic data information that is exclusively available to Panax from GeoPark,” he said.

“The MOU forms the basis by which the parties will work co-operatively together to proceed to the selection of specific geothermal licence areas in Slovakia that are prospective for geothermal development.

“Slovakia is characterised by a high supply / demand gap for electricity along with very attractive electricity tariffs, in place to encourage the development of Slovakia’s geothermal generating potential.”

He said Slovakia has an excellent power transmission grid in place, while the Slovakian Government encourages geothermal development by providing tariffs of approximately A$385 per MWh.

“These tariffs are highly attractive, and this has led to considerable interest being displayed in regard to the potential for geothermal exploration and development in Slovakia, although no deep geothermal drilling has been completed.”

Meanwhile, an independent assessment of Panax’s Limestone Coast Geothermal Project in South Australia has declared a total Inferred Resource or stored heat of 111,000 petajoules (PJ).

Dr de Graaf said following last week’s announcement of an Inferred Resource of 41,000PJ for the Penola Trough in GEL 223, it had gained additional Inferred Resources in its Rivoli/St Clair and Rendelsham Troughs.

Dr de Graaf said the independent assessment of the areas by Hot Dry Rocks Pty Ltd (HDRPL) found the Rivoli/St Clair Troughs had an Inferred Resource of 53,000PJ and the Rendelsham Trough 17,000PJ.

“The Limestone Coast Geothermal Project has the potential to become a renewable energy project of national importance,” he said.

Panax is scheduled to start drilling its first production well, Salamander 1, in mid 2009. The completion of this well is expected to lead to the conversion of part of the geothermal resources to geothermal reserves.

Panax is a pure geothermal company with about $7 million in cash, and no debt. The company’s focus is on exploring existing reservoirs containing hot geothermal fluids, which have less risks than hot fractured rock geothermal projects and have a much shorter development time.

Tuesday, January 27, 2009

Need to Fix Banking Sector for Stimulus to Work, IMF Chief Says

Economic recovery calls for revamping banking sector

IMF experience in banking crises shows losses must be fully recognized

Strauss-Kahn says financial sector continues to undermine confidence

Economic stimulus alone cannot pull the world out of the current tailspin and more needs to be done to fix the underlying causes of the crisis, particularly in the banking sector, IMF Managing Director Dominique Strauss-Kahn said.

"If there's not a restructuring of the banking system, then all the money that you can put into [monetary and fiscal] stimulus will just go into a black hole," Strauss-Kahn told a panel discussion at Georgetown University in Washington DC.

Restructuring the banking system would involve fully recognizing losses, segregating bad assets held by banks, preferably through a public institution that can take them over, and downsizing the sector "which means that it has in some way to shrink, that some part of it has to disappear." To do this would need strong public intervention.

While a lot had been said about recapitalizing banks and recognizing losses, not enough had been done so far and the sector continued to undermine confidence, he told the panel discussion organized by the Financial Times and Georgetown University on January 26. Panelists also included Roger Altman, Chairman of Evercore Partners and a former U.S. Deputy Treasury Secretary, and William Gale, Director of Economic Studies at the Brookings Institution.

Gale reinforced the Managing Director's remarks. "We have to address the situation in the financial sector. This isn't the usual recession. This is the very deep, very long, very difficult-to-get-out-of type of recession," he said.

Spreading crisis

Strauss-Kahn, a former finance minister of France who took over as head of the IMF in November 2007, has said that the world faces a deepening economic crisis, with the slowdown in advanced economies now spreading to major emerging markets such as China, India, and Brazil.

The IMF will significantly adjust downward its forecast for world growth for 2009 when the 185-member international institution announces a revised assessment of the global economy on January 28. In an update released last November, the IMF had said that advanced economies would see a contraction in output in 2009—the first since World War II—but that growth in major emerging markets would still enable the global economy to advance by 2.2 percent in 2009.

Politically difficult

Strauss-Kahn recognized that putting more public money into the banking sector to restructure it can be unpopular politically. "But the reality is that one dollar spent in restructuring the banking sector today is much more useful to achieve recovery than the same dollar spent on bridges, hospitals etc."

The reason was that troubles in the banking sector were continuing to undermine the real economy. "Roots of the crisis are in the linkages between the financial sector and the real economy. We are experiencing a very adverse feedback loop between the financial sector and the real economy."

Fiscal stimulus, plus monetary measures such as very low interest rates, would not be enough without tackling the troubles in the banking sector. Only then could confidence be restored and recovery get under way. "As long as confidence does not come back, you can put as much money as you want into the economy, you won't have this recovery."

Removing toxic assets

The IMF has experience of 122 banking crises, Strauss-Kahn told the students. "One thing is constant, until all the losses have been recognized—not only from real estate, but also [others] resulting from the downturn in the economy—not until all the banks have been cleaned up can we find any way for recovery."

The Managing Director said that Sweden provided a good example of how to tackle a banking crisis. In the 1990s, Sweden had set up a special public company to take over the toxic assets and remove them from the banking system. Later, after the system had recovered the assets were sold off and the company had ended up recovering some public money.

Strauss-Kahn said it was probably better if a public company took over the bad assets, though another solution was for the assets to be segregated within a bank.

Similarly, Altman said he also favored going back to the original purpose of the relief package launched in the United States in October 2008, known as the Troubled Asset Relief Program (TARP). TARP allows the United States to purchase or insure up to $700 billion of "troubled" assets, but it was later revised to enable capital injections into the banking system and other forms of relief.

"We should remove large chunks of these toxic assets, put them under the administration of a special public company, which could then dispose of them over time," Altman said. But he recognized that TARP was not a popular program "So the politics are difficult and are only going to get tougher." But more money would be needed to clean up the system.

Strauss-Kahn pointed out that while TARP was a U.S. program, the crisis was global and thus needed global solutions. Cooperation with other countries was vital to ensure coordination around the world. More needs to be done to make good on the promises of the leaders of the Group of Twenty (G-20) leaders who met in Washington last November to tackle the crisis.

China's currency

Asked to comment on whether he thought that China's currency remained misaligned, Strauss-Kahn said that the IMF had been straightforward about the value of the renminbi, stating on several occasions that it needed to appreciate. But in the middle of a crisis, the world needed China's growth. The question was how to get China to shift policy and not to get into name-calling.

He said that the Chinese currency was still significantly undervalued from a medium-term perspective and that China recognized that it was in its own best interest to shift away from export-led growth to domestic-led expansion. Beijing realized that it was necessary to rebalance the economy and change policy. But this could not be done overnight.



The three months ended 31 December 2008, represented a significant transitional period for Perilya’s Broken Hill Operations:


· Share placement to raise $45.5 million in cash and strategic alliance with Zhongjin Lingnan, China’s third largest zinc producer to be put to shareholders for approval on 5 February 2009, with FIRB approvals in progress.

· Cash on hand at 31 December 2008 of $19.0 million (31 October 2008: $10.9 million) including $10.0 million deposit received from Zhongjin Lingnan. No corporate debt.

· Independent expert values Perilya (post Zhongjin Lingnan transaction) at 28 cents to 30 cents per share.

· CBH withdrew its unsolicited takeover offer (on 21 January 2009).

Broken Hill

· Implementation of new operating plan completed.  

· Quarterly combined metal production of 25,800 tonnes of contained zinc and lead exceeded new plan targets. 

· Continuous improvement in productivity (tonnes mined per employee) and costs achieved throughout the quarter. 

· Pillars development expected to increase average grades in the March quarter in line with longer-term range leading to further unit cost improvement.

· Resource and Ore Reserves update completed leading to an increase in the Life of Mine to approximately 8 to 9 years. 

· Net cash costs per pound of payable zinc down 39% from prior quarter. Unit mining and processing costs in line with plan.

· Current negotiations on treatment charges are signalling strong movements in favour of miners.


· Positive cash flow contribution from sales of 24,018 tonnes of DSO ore during the quarter. 

Mount Oxide Copper Project

· A resource update is in progress and expected to show both an increase in contained tonnes of copper and an improved resource confidence level as a result of the drill program completed.



“The December quarter experienced further major turbulence in the financial and commodity markets and this was reflected in significant falls in metal prices for both zinc and lead.

I am pleased to report that against this backdrop the resizing of the Broken Hill Operations to a lower cost and production profile has been fully implemented during the quarter. This new operating plan builds on major productivity improvements already achieved and has enabled Perilya to significantly reduce our historically high fixed costs and puts the Broken Hill Operations in a strong position to endure these difficult economic and market conditions.

The effort of all employees at Broken Hill in bringing this new plan into operation and the achievement of a number of productivity improvements is a credit to the strength of the Broken Hill Operations. Having said this the Board and management recognises that there is further work required to enhance productivity and lower the cost basis in order to be operating on a cash positive basis in the current low metal price environment.

The Board and management have also acted pro-actively in response to the turbulence in world markets through the introduction of a strong strategic partner. After discussions with a number of companies the selection of Zhongjin Lingnan, China’s third largest zinc producer, and the proposed $45.5 million share placement, brings cash and a strong partner to Perilya which will both help put the Company in the best possible position to weather a prolonged period of low metal prices. 

Zhongjin Lingnan is an ideal strategic partner and one that shares our confidence in Perilya’s production plan which has been re-sized in response to the current market challenges. Zhongjin Lingnan conducted a due diligence on Perilya’s Broken Hill Operations and is supportive of the current operating plan and committed to the long-term future of Broken Hill.

I encourage all shareholders to consider and support this important transaction and to register your proxy vote for the Extraordinary General Meeting on 5 February, 2009.”

Paul Arndt

Managing Director and CEO