Mukesh Ambani led Reliance Industries Limited (RIL) has signed an agreement with oil major British Petroleum (BP) for 30 per cent stake in Reliance Industries' 23 oil and gas blocks including the KG-D6 gas fields. The deal is valued at $7.2 billion and is one of the biggest foreign direct investments (FDI) in the country.

The two companies will also form a 50:50 joint venture for sourcing and marketing of gas in India.

"BP will pay Reliance Industries Limited an aggregate consideration of US$7.2 billion, and completion adjustments, for the interests to be acquired in the 23 production sharing contracts. Future performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries. These payments and combined investment could amount to US$20 billion," RIL said in a statement.

While RIL will get $7.2 billion from BP for 30 per cent stake in its oil and gas blocks, "another $1.8 billion is contingent on finding more hydrocarbon resources. The balance $11 billion is an estimate for the investments over the next many years in building the joint venture," Mukesh Ambani said from London.

"We needed one major global energy partner. In Reliance's assessment BP is the best finder of deep water hydrocarbons in the world," Ambani added on the association with BP.

The 23 oil and gas blocks together cover approximately 270,000 square kilometres. This will make the partnership India's largest private sector holder of exploration acreage.

The deal is "subject to necessary government approvals. All blocks are under NELP and we expect to apply for government approval and expect to get them soon. We expect to close the deal in the April-March 2012 fiscal", Ambani added.

The deal is seen as a positive for Reliance. Ambareesh Baliga of Karvy Stock Broking said the rumour (about the deal) was in the market since the morning. This will play up tomorrow as it is extremely positive news. RIL has been an underperformer for the last 2 years. RIL rose 2.22 per cent on the NSE today though the deal was announced after market hours.

Commenting on the deal former chairman of ONGC RS Sharma said, “This is positive news for the entire E&P (exploration and production) sector for India. The deal covers the entire value chain - upstream and downstream." Referring to the Cairn-Vedanta deal that has failed to take off, Sharma said "the sentiments have been negatively impacted because of one deal...this deal shows confidence in the Indian oil sector."

"This partnership meets BP's strategy of forming alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets," said Mr. Carl-Henric Svanberg, Chairman of BP.

The benchmark emerging market index is in negative territory, having fallen more than three quarters of a percent
London: A month into 2011, one of the biggest swings in asset flows has been the outperformance of previously lagging developed market equities against once red-hot emerging ones.

The chances are that this rotation by investors, encouraged by shifting valuations, inflation concerns and growth spurts in some developed economies, will remain in place for a while -- perhaps six months -- but it is not likely to become a permanent fixture.

Nothing has happened to dilute the overarching view that emerging markets are a long-term, strategic growth story, albeit with somewhat heightened political risk -- as is now being seen in Egypt and Ivory Coast.

Standard & Poor’s cutting of Japan’s sovereign debt rating on Thursday, meanwhile, was a stark reminder that, in contrast to emerging economies, many developed markets continue suffer from government bank balance problems.

But for the time being, the tale of the tape is clear -- the flows are into developed markets and away from emerging.

So far this year, MSCI’s developed market stock index has risen a healthy 3.2% -- healthy in the sense that in the highly unlikely event this rate continues, developed market stocks would have the best compounded gain in at least 40 years.

The benchmark emerging market index, however, is in negative territory, having fallen more than three quarters of a percent.

Individual country indexes show the same pattern. The US S&P 500 is up more than 3% for the year while India’s BSE Sensex has lost around 10%.

The outperformance goes further. On a day-by-day basis last year, developed markets outperformed emerging markets on just 47% of occasions. So far this year, they have done so around 63% of the time.

And in terms of beta, a gauge of how a security reacts to moves in the market, emerging markets are moving closer to being in lockstep with developed markets -- meaning that at the moment there is little to be gained for the extra risk they may carry. Emerging market beta is currently close to 1.0, compared with 1.8 about five years ago.

Buggins’ Turn

Three things have brought this about and the issue for investors is how long each will remain a driver.

First, the popularity of emerging markets has made them a very crowded trade, meaning that prices have arguably got ahead of themselves.

“They had a good run over the past couple of years and the valuations are now looking more full,” said Jason Hepner, investment director at Standard Life Investments.

Second, as a result of their recent growth, many emerging markets are coming up against strong inflationary headwinds which are prompting central banks to enter a tightening cycle.

Food price inflation, a growing issue, is likely to have more impact on emerging markets than on developed ones.

Credit Suisse estimates that food represents about 34% of an Asia ex-Japan consumer price basket. In the United States, it accounts for less than half that. Thirdly, some leading developed economics, particularly the US and Germany, are showing strength.

Fund flow analysts EPFR Global say that the week up to 21 January was the sixth of net inflows to US equity funds that they track out of the past seven, amounting to total net inflows of $17.3 billion.

It compares with net $49 billion outflows from the sector in 2010.

Six Months

So will it last? The indications are that it won’t and that most of the embrace of developed markets has been tactical, a short-term move to grab an opportunity.

Goldman Sachs, for example, has been telling its clients to emphasis US and Japanese stocks in the first half of the year and to go back to emerging markets (along with European) in the second half.

“A cyclical slowdown in parts of EM driven by tighter policy is a concern but the secular trends and the growth leadership of EM is not in doubt,” Peter Oppenheimer, Goldman’s head of European portfolio strategy, said in a note.

There is also a likelihood that some of the factors putting investors off emerging markets at the moment will reverse.

William De Vijlder, chief investment officer at BNP Paribas Investment Partners, reckons inflation pressures will ease in emerging markets along with uncertainty about monetary policy, in part because there is little evidence of China overheating.

Six months should bring down the cost of emerging market equities versus developing as well.

“The appetite for emerging should pick up again. The relative valuation should by then have improved,” he said.

The trigger may be the developed economies. If they slow -- and US recent data has been disappointing, not to mention Europe and Japan’s fiscal problems -- emerging will start to look better more quickly.

If, on the other hand, the US economy takes off, emerging markets might take a back seat for a bit longer.

Under this pact, Kowa Company Ltd will act as an agent for Adani Group for attracting Japanese firms to set up their units in Mundra Port and SEZ Ltd.
Ahmedabad: In a bid to attract Japanese firms to invest in Mundra Port and SEZ Ltd (MPSEZL) and to acquire more vessels for its shipping business, Adani Enterprises Ltd, on Friday signed a long-term pact with Kowa Company Ltd.

Yoshiro Miwa, president and chief executive officer, Kowa Company and Gautam Adani, chairman, Adani Group signed the business alliance agreement today in Kowa Company Ltd has interests in trading, shipping, pharmaceutical, industrial and chemicals, textiles and apparel.

“Under this pact, Kowa Company Ltd will act as an agent for Adani Group for attracting Japanese firms to set up their units in MPSEZL. Kowa will also help us in our future acquisitions of vessels, heavy engineering machinery for thermal and solar power generation, and grow exports to” a spokesperson of Adani Group said.

Earlier this month, Adani Shipping Pte Ltd, the shipping arm of Adani Group, had acquired two capsize vessels to transport coal from the group’s mines in Australia and Indonesia.

“We will be soon acquiring two new capesize cargo vessels of 180,000 DWT (Dead Weight Tonnage) each for loading dry cargo like iron-ore, coal, grains and other materials. We will also buy five tug-boats for operations in Mundra and Hazira ports.

Adani Group plans to have a fleet of 20 capsize vessels by 2020. Kowa will act as Adani Group’s agent in these acquisitions,” the spokesperson said without revealing the financial details of these future deals saying that the detailed specifications for the vessels are yet to be decided.

Adani Group already has 12 tug-boats deployed at Mundra and Hazira ports.Moreover, Kowa Company Ltd will represent Adani Group in and make formal presentations to Japanese firms interested in setting up their units in.

“Kowa will soon start making presentations to Japanese firms on our behalf to attract them to set up their units in Mundra SEZ ” the official said.

In return Adani Group will act in similar capacity to facilitate Kowa’s business interests in, the company said in a statement.

Maintain and use your credit card. It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to use it well and avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short term. This will lay the foundation or provide a sample of how capable you are in managing loans long term, hence this can prove to be an asset to your credit score and help in improving your credit score. 

Yes, its official now! You will be able to access your credit scores in December 2010. The score will range between 300-900, indicating the levels of default and will be available to consumers for a sum not exceeding Rs.100 as prescribed by the RBI. CIBIL, which already has a huge database of credit reports, which are currently consulted by banks before sanctioning a loan is putting up the infrastructure to be ready to service consumers who wish to access their credit reports. Isn’t that great news? Now, many of you maybe wondering how your credit report will look like, how to go about setting any mistakes in the report right, how to maximise the benefits of being able to access your credit score and other such issues. Well, look no further. 

1) GET A COPY OF YOUR CREDIT SCORE EVERY YEAR FOR AN ANNUAL REVIEW
You should study the credit report carefully for any hidden flaws or misinterpretations. If you find anything that you feel requires a second check, do it and if still you are convinced it is indeed a flaw, then you need to address the concern immediately and escalate the issue.

2) TAKE UP ISSUES THROUGH THE FASTER ROUTE
You need to take up issues in your credit report with the bank in question first, if for instance its a debt situation, which has already been paid and is still being recorded as a debt. The bank will then update the credit agency regarding the status and all is well. This approach is less time consuming and far better than directly contacting the credit agency. If in case the bank does not oblige you can take up the matter with the credit agency and the banking ombudsman after waiting for a period of a month, which is the standard waiting period you must provide to the bank to take necessary action.

3) PAY YOUR BILLS ON TIME
Whether they are loans, credit card payments, insurance premiums every payment counts. If you have hassles remembering payments consider setting up an automated system with your bank to get it cleared within the due date. It is sure shot way to improve your credit score.

4) KEEP THAT CREDIT CARD AND USE IT JUDICIOUSLY
Maintain and use your credit card. It serves as an excellent tool to boost a good credit score if utilised properly. However, the trick is to use it well and avoid making late payments. Things like not stretching it too close to your credit limit, regular use of the card but timely payments upfront is proof of how you manage credit lent in the short term. This will lay the foundation or provide a sample of how capable you are in managing loans long term, hence this can prove to be an asset to your credit score and help in improving your credit score.

5) CREDIT TO DEBIT RATIO IS THE KEY FACTOR
As with all logic based reports, your credit report is based on the flow of credit and debt. Here the ratio between these two factors is directly related to your credit score average. For instance, if u have several outstanding debts, even if you pay them on time it would still affect your credit score as your total net worth goes down. Hence try and pay off as much debt as possible and keep them to a minimum before taking a fresh debt or loan.

6) DO NOT CLOSE YOUR CREDIT CARDS
In line with the same credit to debit ratio aspect, closing down your credit card may not help the score. Even if you do not use the credit card, it would still make sense not to to close it. If you have concerns and must absolutely close it, you may choose to do so but be aware that this also has a say in your credit score.

7) QUICKLY ACT UPON ISSUES IN THE CREDIT REPORT
Dispute a bad credit botch always, don’t sit back and let it remain. Try solving the issue by contacting the bank and the credit bureau. If your concerns are taking time to be addressed, credit report systems that are still evolving in India might soon discover at least temporary solutions to the issue like bookmarking the issue as something under the scanner. This will protect you from being evaluated on the basis of a faulty issue in the credit report. This may help you have enough time to resolve the issue with supporting evidence regarding any false debt situations.

Filing tax returns is an annual mandate that tax payers have to comply with, the last date for which is in sight i.e. July 31st, 2010. In a haste to meet the deadline, make sure you do not miss key elements that can cause trouble later.

Critical information should be cross verified

No income tax return will be accepted without the PAN and incorrect PAN can result in a fine being levied. Communication address should be correctly stated as all notices or other communication from the IT department will be sent to the provided address. Also make sure that the MICR code is correct if you want an electronic refund and also ensure that bank account details are correctly stated for hassle free refunds.

Safe keep all relevant documents for future use

The IT department has done away with enclosing documents while filing returns i.e. proof of tax, statement showing computation of taxable income etc. Not having to produce it at the time of filing returns doesn’t meet that you can put away the documents carelessly. In case of scrutiny, the tax authorities may need supporting documents for verifying the claims made in the return.

Disclose exempt income and investments made

Income such as dividends from mutual funds and long-term capital gains on listed securities, are exempt from tax. Even though the tax laws do not require you to pay tax on the same, the law requires you to report these in your tax return.

Investments above a prescribed limit have also to be disclosed as per IT laws. They include:

Mutual fund investment in excess of Rs. 2 lakh
Cash deposits in excess of Rs. 10 lakh
Credit card payment in excess of Rs. 2 lakh
Bond investment in excess of Rs. 5 lakh
Property bought or sold in excess of Rs. 30 lakh

Report income from a previous employer

Employers deduct TDS from the employee’s salary. While computing the TDS, employers generally provide the basic exemption deduction to the employee. If at the time of changing the job, the employee has not informed the new employer, it could lead to a situation where the TDS cut by the new employee would be low, as he may be taking in to consideration the full deduction amount while calculating tax. Thus you may have tax liability at the time of filing returns. Not disclosing income from the previous employer may result in an income tax notice as it will be spotted when the TDS data is being reconciled.

Revision of Income

If the IT return has been filed before the due date i.e. 31st July, tax payers are entitled to submit a revised return in case of any error or omission therein. However, revision is not permitted if the return is filed beyond the due date.

Precautions taken at the time of filing returns will prevent hassles later. To make sure you file your returns before the 31st, start the process now- Procrastination is the thief of time!

Everybody is in the race to earn as much as they can. While your job or occupation generates income and is the primary source of livelihood, you can earn extra money by means of passive income. For example, the dividend income you receive from the shares you own is passive income. 

This is because you are not actively working everyday to earn this income. However, you have invested in it one time and the investment earns you an income as times passes. Any income that is not related to your daily activity is passive income. Strictly speaking, passive income includes only the income for which one does not have to work regularly.
 
Passive income can help you build up wealth over a period of time. It is also a good idea to create sources of passive income that will generate regular income for you once you retire or are unable to work for a time period. For example, if you have purchased an apartment for investment purposes and you let it out, the rental income you earn regularly can be utilized towards your monthly expenses when you retire.
 
It is important that one finds ways to make your money work for you. Create assets and investments that will work to grow your money and supplement your salary. Passive income is extremely important when you cannot work for some reason. For example, in the event of an illness or accident, when you are not able to earn your regular salary, passive income plays a crucial role in maintaining your lifestyle.
 
Passive income is especially important for women. Most women take a break from their employment / occupation at certain points in their life like after marriage or having a child etc. It would boost their confidence if they earn some income even if they are not able to work for some time.

Types of Passive Income:  

Interest Income – This is a very basic form of passive income and can be generated by all individuals. Interest earned on savings account balance, fixed deposits, recurring deposits or bonds is a risk free source of passive income. 

Rent – If you are able to invest in a flat / apartment and do not need to use it for personal purposes, you can give it on rent. Not only can you earn regular income through rent but the deposit money paid by the tenants can fetch interest income. You can also earn passive income by renting out your vehicle. 

Royalty income – If you have a creative streak to you and can earn royalty for any of your work, it is a good source of passive income  

Dividend Income – Investment in shares can earn you dividend income. However, these investments come with a risk of loss, therefore, investing in good reputed companies with sound financial numbers is important.

Residual Income - is another form of passive income. For example, an LIC agent earns commission for the entire policy tenure of the customer even if he does not actively work on it once the purchaser buys the policy. 

All and sundry – any money that you earn besides your job is passive income. Hence if you win a lottery or a competition, the income you earn is passive income. If you have a hobby of painting and you sell any of your paintings, it will generate passive income. If you are a financial controller and can take lectures or seminars in your free time it will generate income. Although, this does not strictly fall under passive income, it has great earning potential and should be considered.
 
Passive income is an important source of income. Therefore, one should create avenues of generating passive income even if it is very small in value. For example, you can begin with a fixed deposit of Rs.10, 000 and add to it as and when you can. The extra income can be utilized to build more wealth or simply spent on pampering yourself!

Measured by profits, Microsoft trounces Apple and Google. In the most recent three months, Microsoft earned $4.52 billion, versus Apple’s $3.25 billion and Google’s $1.8 billion. But, dear investors, where is the love for this beaten-down company?

Frank X. Shaw, Microsoft’s vice president for corporate communications, recently tried a new tack to win respect. In a June 25 blog post titled “Microsoft by the Numbers,” he compared Microsoft’s record in various business categories with that of competitors.

Unfortunately, by trying to argue that Microsoft is doing well in all areas, including those dominated by Apple and Google, Shaw fails to show Microsoft at its best. Lost from view is what arguably is Microsoft’s very best story – its transformation into a powerhouse supplier of the specialized software that meets the complex needs of large corporations, what the trade calls selling to “the enterprise.”

In a conversation this month, Shaw explained what prompted him to write his post. “I noticed some pretty critical conversations going on in the technosphere among the technorati,” he said. “There’s a gap between that conversation – ‘the company is not doing well, period’ – and what the company is actually doing.”

In the blog, he writes, “With Windows 7, Office 2010, Bing, Xbox 360, Kinect, Windows Phone 7, in our cloud platform, and many other products, services and happy customers, 2010 is shaping up as a huge year for us.”

By encompassing just about every product category under the sun – and then calling out Apple and Google, of all targets – Shaw draws attention to Microsoft’s weak spots.

Bing, its search engine, attracted 21.4 million new users in one year, Shaw says. Very well, but he does not mention the following: in 2007, the company’s online services group lost $604 million; in 2008, $1.2 billion; and in 2009, the year of Bing’s introduction, $2.25 billion.