Wage bills in the private sector are upward bound once again, but the increases are well below the levels seen in the boom years. Latest results show the employee expenses of 300 leading private sector companies rising by 8 per cent in the first half of 2008-09 over the same period last year. That is far below the increases of 20 per cent-plus witnessed in 2007-08 and 2006-07. However, employee expenses saw a sequential improvement after shrinking in the March quarter of this year.

This analysis takes into account 300 leading private sector companies in the CNX 500 universe which have announced results for the September quarter. Over two-thirds of the companies considered for this analysis witnessed a rise in employee costs in the April-September 2009 period, suggesting that the trend of recovery was fairly broad-based. Higher employee expenses could be indicative of companies either hiking pay packets for their staff or adding to their workforce.

Conservative hikes Companies were conservative in adding to their wage bill, as the increase in employee costs lagged that of their operating profits by a sizeable margin. Operating profits for the 300 companies registered an 18 per cent increase in the first half of this fiscal, while employee costs rose at less than half this rate.

Sector trends Another interesting aspect to be noted is that sector-wise trends in employee costs during the first half closely tracked profit growth. Companies in sectors such as infrastructure, cement and automobiles, that saw the maximum increases in employee costs (15-20 per cent) for the half-year, were the ones that managed a sharp expansion in their operating profits (40-80 per cent) as well. In contrast, the few sectors that saw employee expenses remain flat or drop – realty and steel, for instance – were grappling with steep profit declines in these six months. Large software companies, which have the biggest wage bills, saw employee expenses rise 6.2 per cent for the half year; while their operating profits grew 26 per cent. A portion of their employee costs may also be captured in the selling and administrative costs, not considered for this analysis.

Upward bound Quarterly trends in employee expenses show that they tend to follow trends in corporate profits. After growing at a fast clip until the September quarter of 2008, employee expenses of companies began to flatten out in the December 2008 quarter and actually shrank (2.6 per cent) in the March 2009 quarter. The June quarter saw a sequential improvement of about 4 per cent in the total wage bill, followed by another 3 per cent expansion in the latest September quarter.

MOHALI: Cloaked in an aura of formidability acquired from their back-to-back wins in Nagpur and Delhi, the Indian team under Mahendra Singh Dhoni India eye hat-trick to stretch lead against Aussies would be gunning for a treble of triumphs to stretch their lead against Australia in the fourth cricket One-dayer on Monday. The first three matches of the series have been sort of a statement by Dhoni's men -- that they are ready to take over as the top ODI side of the world and incumbent Australia, laid low by spate of injuries, does not look in a position to halt their rampaging hosts.

So far, India have displayed the consistency that is the hallmark of every great team and bouncing back after losing the series opener speaks volume of their resilience. And in the last two matches, the manner -- and not merely the margin -- of their victories suggest here is a team which can win from all positions. In the Vadodara run-feast, India nearly completed a fairytale chase. The gap between the cup and lip was eventually bridged in Nagpur where they buried their opponents under a run-mountain and the Australians have not recovered from the shellacking yet. The comprehensive win in Nagpur was followed by a clinical victory in Delhi and the six-wicket win on a low Feroz Shah Kotla track would do a world of good to India's booming confidence.

Back in the side after a while, Yuvraj Singh proved he is not just another mindless slogger who looks vulnerable against quality spinners on turning tracks. Dhoni, on his part, once again underlined his maturity and also his growing stature as a finisher. Since the Vadodara defeat, there has been a marked improvement in all three areas which now look in apple-pie order. Suddenly it's a pleasant picture-perfect scenario in the pace department with Ashish Nehra continuing to impress, Ishant Sharma returning to rhythm and Praveen Kumar among the wickets. Among their slow bowl colleagues, Ravindra Jadeja has impressed so much that front-line spinner Harbhajan Singh suddenly finds himself under pressure. Even Dhoni conceded the other day that Harbhajan is not at his best but the off-spinner has never lacked motivation against Australia and, as his captain hopes, is maybe just one game away from being his usual self which makes him such a dreaded opponent.

"Harbhajan is bowling well even though he has not picked that many wickets. But I think he bowled well today and gained lot of confidence. Hopefully he will deliver in the next few matches," Yuvraj said of his teammate. Fielding is the other area where India has made rapid improvements after their slipshod show in Vadodara. Both ground fielding and catching have been impeccable so far. "Harbhajan is bowling well even though he has not picked that many wickets. But I think he bowled well today and gained lot of confidence. Hopefully he will deliver in the next few matches," Yuvraj said of his teammate. Fielding is the other area where India has made rapid improvements after their slipshod show in Vadodara. Both ground fielding and catching have been impeccable so far. The hosts have pulled up their socks in this department so much that the Australians, with a reputation for being a tidy fielding unit, have looked a lousy lot.

The improvement in these two departments notwithstanding, batting remains India's forte and Dhoni has few reasons to worry about the line-up. Sachin Tendulkar is just 47 runs away from his 17,000th ODI runs and the batting great would like to finish the formalities here itself when he walks out to bat on Monday. His opening partner Virender Sehwag is also in good nick even though he has not been able to convert the cameos into match-winning scores. "Viru has given us good starts in the last two games and I'm looking forward to a big century from him," Yuvraj said. Yuvraj himself is in pristine form, pacing his innings in Delhi with amazing maturity that showed his batting is far from being one-dimensional. "Some times I get this criticism from you guys that I cannot play well on such slow tracks. So it was great to prove you guys wrong," Yuvraj said, flashing an impish smile.

In contrast, the mood in the Australian camp is of exasperation and the outfit looked jaded in absence of a number of front-line players. The visitors had already flown in two last-minute replacements to shore up the side but the absence of Brett Lee has been felt in the last two matches. Australia captain Ricky Ponting had no qualms admitting that injuries have made life difficult for him and he himself had to open the innings on Monday in the absence of regular openers. More than batting, injuries have laid bare the thinness of Australia's bowling resources and Ponting apparently doesn't have a quick solution in sight even though he insisted on putting the best foot forward. "Injury has hit us hard. Lot of guys are in and out of the side. Brett (Lee) could play just one game before returning. Mitchell Johnson is only coming up now and James Hopes is not playing yet. But we have to try to get on with it and play the best game we can. We have to give 100 percent," a glum Ponting said.

Teams (from): India: Sachin Tendulkar, Virender Sehwag, Gautam Gambhir, Yuvraj Singh, Mahendra Singh Dhoni (captain), Suresh Raina, Dinesh Karthik, Ravindra Jadeja, Harbhajan Singh, Praveen Kumar, Ashish nehra, Ishant Sharma, Amit Mishra, Virat Kohli, Munaf Patel, Sudip Tyagi. Australia: Shaun Marsh, Shane Watson, Ricky Ponting (captain), Cameron White, Mike Hussey, Adam Vogues, Graham Manou (wicketkeeper), Mitchell Johnson, Nathan Hauritz, Peter Siddle, Ben Hilfenhaus, Doug Bollinger, Moises Henrique, Jon Holland. Umpires: Asoka D Silva (Sri Lanka) and Shavir Tarapore (India) Third Umpire: Sanjay Hazare (India) Match Referee: Chris Broad (England) Match Name: 4th ODI Venue: Punjab Cricket Association Stadium, Mohali Time: 1430 IST Channel: Neo Cricket

COIMBATORE: With the new measures announced by RBI and lacklustre loan growth impacting sentiments and affecting banking stocks, banking-focused mutual funds (MFs), the best performing fund category over the past year, have slipped up in the returns chart. Banking MFs have lost between 7.7% and 9.6% in the past few days. While the sensex lost 5.9% in the post-Diwali market decline (till October 28), the BSE bankex has shed 9.9%. Banking exchange traded funds have declined 8.3% to 9.6% during the period. Despite the fall, banking funds have delivered 91.8% growth in the last one year (up to October 28) and figure among the top performers list in the three and six month periods as well.

“Credit growth has further decelerated in the (second) quarter (1.7% quarter-on-quarter growth),” according to analysts at Anand Rathi financial services. “We expect banks to report a mere 9.8% (year-on-year) profit growth due to slowing business growth, subdued net interest income growth and lower treasury gains.” Falling yields and funds parked in low yielding government securities and reverse repo have led to a decline in net interest margins, observers said. “Credit growth has been muted so far and profits (of banks) also would come down because of the provisioning norms,” said Lakshmi Iyer, head, fixed income and products, Kotak Mahindra MF.

The apex bank has stipulated that provisioning coverage for non-performing assets (NPAs) should be at least 70% by September 2010 in its second quarter monetary policy review. “The RBI’s measures to strengthen the banking system could have a negative impact on banks’ profitability in the short term,” analysts said. With present NPA provisioning lower than 70% for some banks, raising it could squeeze profitability in fiscal 2011, they said. Several banks including market leader SBI and ICICI Bank currently have provisioning lower than 70% for NPAs and this could impact profits by 29% to 44%, estimates made by Anand Rathi showed.

The 70% provision cover requirement would not have any effective impact on valuations as these are based on adjusted book values, analysts at Angel Broking said. “Banks could request the RBI to make initial adjustments through the balance sheet rather than the profit and loss account.” But industry officials and observers believe that the impact would be short-lived. “It is a temporary phenomenon. The second half has been historically better and credit growth would pick up in the next few months,” Kotak’s Lakshmi said. “Low interest rates, reducing leverage in borrowers’ balance sheets due to equity raising and rising earnings will help revive credit demand from the second half (of fiscal),” observers said.

LONDON: The Royal Bank of Scotland, Northern Rock, and Lloyds Banking Group are to sell off as many as 700 branches in the next few years in exchange for the public aid they received during the economic meltdown, a government official said. Britain’s government will create three new high street banks from bailed out lenders Royal Bank of Scotland, Lloyds Banking Group and Northern Rock, media reports said on Sunday.

The huge shake-up comes as the government seeks to recoup taxpayers’ cash used to prop up the banks during the world financial crisis and increase competition. Lloyds is 43% owned by the state and RBS 70%, while Northern Rock was nationalised outright. The government could confirm the move on Tuesday, reports said. The new banks would be retail-focused, concentrating on deposits and mortgages. RBS and Lloyds are also reportedly set to sell off some parts of their businesses, including around 300 branches for RBS. One official said the banks were in negotiations with Britain’s treasury and European regulators over how many assets they would have to give up in return for the help they received from taxpayers.

‘‘Essentially, they are expected to have to divest — each of them — some of their branches,’’ he said. As many as 700 branches could be sold off, the official said. That figure would include all of Northern Rock’s 100 or so branches, as well as chunks from the Lloyds Banking Group’s approximately 3,000 branches and just over 2,200 branches operated by the Royal Bank of Scotland Group. Established players such as Barclays or the Spanish Banco Santander, which owns three UK banking businesses, would not be allowed to bid. The official warned that the figures were subject to change, and spoke on condition of anonymity because the moves had yet to be finalized. The shake-up would come after Britain pumped billions of pounds into its banking sector in an effort to stave off the collapse of its financial system in the wake of the credit crunch.

EU has kept a wary eye on efforts by Britain and other governments to prop up their banks, warning that it may call on banks that got public help to sell off some of their units, a move intended to help counter the advantage they get from massive state recapitalizations. In case of RBS, Northern Rock and Lloyds proceeds from sales would help government recoup some of the money it spent bailing the banks out because it still owns all or parts of them.