Bangalore, November 19
In a blow to iron ore miners, the Karnataka High Court today upheld the state government order banning exports of iron ore. The government’s move intended to curb illegal mining in the state.

A number of writ petitions challenging two related orders passed by the state government on July 26 and July 28 were clubbed together by the court for disposal.

By the first order, the state government prohibited the export of iron-ore from 10 ports located in Karnataka. By the next order, it stopped issuing mining dispatch permits for transport of iron-ore meant for export.

“Despite our having considered a large number of submissions (thirteen in all) advanced at the hands of the learned counsel for the petitioners, we have found no infirmity in the impugned orders, on any of the grounds raised before us. We, therefore hereby, uphold the orders dated 26.07.2010 and 28.07.2010. Thus viewed, all the writ petitions are hereby dismissed,” a division bench of Chief Justice J S Khehar and Judge S Abdul Nazeer said.

The bench said it was satisfied “…that the impugned orders were passed, for the sole aim and object of eradicating illegal activities related to mining, transportation and storage of iron-ore.”

The court, however, asked the state government to put a regulatory mechanism in place quickly so that miners not indulging in illegal mining did not suffer for an indefinite period of time.

In case the state government fails to implement regulatory measures within reasonable time, the intention of the state government would come under suspicion, the Bench said.

In a note of caution, the Bench said the state government having taken such strong steps, would have to bear the responsibility of ensuring that henceforth, no illegal mining related activities were carried out in the state.

The Federation of Indian Mineral Industries (FIMI) had earlier said that while illegal mining would definitely be not stopped in Karnataka by the government order, the ban had rendered jobless about 5,000 people directly employed in mining operations and affected about 50,000 people engaged in ancillary works such as truck drivers, attendants, loaders and un-loaders at mines, rail yards and ports.

Singapore/New Delhi: The Karnataka High Court’s decision is move likely to see prices spike as the world's third-largest exporter curbs overseas sales to feed expansion of its steel industry.

Maintaining the ban imposed by the state's government since July as part of a crackdown on illegal mining means exports from India will remain low. That would give Australia and Brazil, the two biggest exporters, an upper hand in negotiations with China, the biggest buyer of the steelmaking raw material.

Shipments from Karnataka account for around a quarter of annual iron ore exports from India, the world's third-largest supplier, which ships about half of its yearly output of over 200 million tonnes.

The ban helped prices recover from seven-month lows hit in July and, along with weather disruption in other parts of India delaying shipments and Chinese stockpiling, had supported a recent surge in iron ore prices to their highest levels since mid-May.

Keeping the ban shows India may be about to give up its stature as a major iron ore exporter to spur the growth of its own steel industry led by the high-profile plans of top steelmaker ArcelorMittal and third-ranked POSCO to build steel plants in the country.

Government officials have said ArcelorMittal can start building its $6.4 billion steel plant in Karnataka by December while South Korea's POSCO's planned $12 billion plant in Orissa — expected to be India's biggest foreign direct investment — is awaiting approval from the environment ministry.

India's iron ore exports fell 47 percent in September from a year earlier, the sharpest monthly drop in nearly two years. At 3.03 million tonnes, it was the lowest in terms of volume since at least April 2007, largely due to the ban and shipments are expected to fall further going forward.

There has been constant debate in India on the merits of exporting iron ore with miners against export curbs while the steel sector has long lobbied for a total ban to conserve more of the raw material for use by domestic plants.

Fewer cargoes out of India will add to an expected tightness in global iron ore supplies next year, which may force Chinese steel mills to accept higher raw material costs. — Reuters

London, November 19
World stocks inched lower and commodities fell on Friday as China raised banks' reserve requirements, but a tense market remained focused on hopes of an Irish bailout and its broader implications for euro zone debt.

European shares .FTSE3 fell, with mining stocks sagging on expectations the order for Chinese lenders to lock up more money with the central bank would cut demand from the world's growth engine, while European banks .SX7P were down on euro zone worries.

The euro recouped losses against the dollar, rising 0.6 percent to move further away from a seven-week low hit earlier this week as traders anticipated an Irish rescue deal emerging from a visit to Dublin by an EU-IMF mission to assess the health of the country's banks.

MSCI's all-country world stock index fell around 0.1 percent and Wall Street looked set for a weaker start.

China said it would raise banks' reserve requirements by 50 basis points, effective Nov. 29 and its second hike in two weeks.

The country is one of the world's largest metals and commodity consumers, and stocks such as BHP Billiton and Rio Tinto were under pressure, losing between 1.75 percent and 2 percent, while South African shares fell 0.5 percent.

Emerging markets .MSCIEF shrugged off Chinese demand concerns, however, rising about 0.2 percent.

Speculation had grown since an official Chinese newspaper suggested that Friday could be a convenient time to raise rates before banks settle accumulated interest on the 20th day of the month, and the move had been broadly priced in already.

"China has stepped up the pace of tightening but the reaction has been fairly muted because the market was expecting a move," said Manik Narain, analyst at UBS in London.

"No one is really bearish because of China. People are defensive because of the euro zone issues and Ireland, that's the dominant theme at the moment." Ireland is in discussions over an aid package potentially worth tens of billions of euros from the European Union, but with Dublin not yet at the point of requesting a loan, talks were expected to run into next week. — Reuters

New Delhi, November 19
With MFIs suffering loss of business particularly in Andhra Pradesh, the Centre today said it does not intend to strangulate the microfinance sector but regulate it. "My idea is not to strangulate them (MFIs), but to regulate it so that the interest that they charge is not exorbitant and the method of realisation, under no circumstances, should be quick," Finance Minister Pranab Mukherjee said at the HT Leadership Summit here.

The microfinance industry has been under pressure after Andhra Pradesh state government introduced an Ordinance last month to regulate its lending practices. MFIs have been criticised for charging very high interest rates and using strong arm tactics for loan recovery.

MFIs say they extend loans to unbanked areas and so the cost associated to it runs up to as high as 34 per cent.

They usually lend money to borrowers through women groups in remote areas.

"The rate of interest should be moderate. Banks are also being instructed to provide them (MFIs) with necessary guidelines (and check) if those guidelines are complied to.

"I would not like to strangulate the system, because it is not possible for the banks to reach large number of people through regular banking services," Mukherjee said.

Earlier, the microfinance institution network had said the companies would cut interest rates to 24 per cent eventually.

Mukherjee said that in certain cases the interest rates charged by MFIs varied between 30-35 per cent. "It (interest rate) cannot be uniform, so some sort of flexibility will have to allowed," he added.

Last month, the Reserve Bank appointed a committee to examine the state of the MFI sector under the chairmanship of Y H Malegam. The committee would submit its report by January. — PTI

New Delhi, November 19
Sharing its frustrations with World Trade Organisation (WTO) chief Pascal Lamy over little progress on global trade talks, India today warned that reaching a concensus on Doha deal is crucial for survival of multilateral trading system itself.

Lamy, who is here for consultations with the Indian government and the industry to an extent agreed with Khullar over high stakes in achieving a trade-opening global deal through multilateral negotiations which were launched almost nine years ago without success.

“What really is at stake is multilateralism and future of an institution...if we want WTO to survive, which we do, then it is very important that Doha gets done," Commerce Secretary Rahul Khullar said in the presence of visiting Lamy here.

"If the Doha Round was to fail, it would be the first in the history of GATT (General Agreement on Tariff and Trade) and WTO since 1948. It would weaken the only institution which governs the rules of world trade and has the ability to adjudicate in the event of dispute between countries," Lamy said. — PTI

Chandigarh, November 19
The Wool and Woollens Export Promotion Council (WWEPC) has asked the textiles ministry to restore the old rates of duty drawback on wool products to reduce exporters’ losses due to foreign exchange rate fluctuation.

With exporters unlikely to achieve the $630 million target for wool exports this fiscal, WWEPC Chairman Ashok Jaidka said: “We have demanded from the textile ministry to revert to earlier rates of duty drawback, which can give some cushion to wool exporters to contain losses.”

Late placement of export orders and uncertainty in exchange rates were behind the fall in exports. “Our bulk buyers, especially in the US, placed late orders this year in anticipation of appreciation of the rupee against the US dollar in order to claim discounts from us. It was the main cause behind the dip in exports volume,” he added.

In September, the Centre slashed the rate of duty drawback on wool products, including wool tops, woollen yarn and woollen fabric, in the range of 5-20 per cent. This was in line with its policy to reduce the fiscal incentive provided to a host of export sectors during the global economic slowdown.

Jaidka added the duty drawback rate on woollen items like sweater, overcoats and wind cheaters was reduced from 10 per cent of the Free On Board (FOB) value to 7.5 per cent.

The appreciation of the rupee against the US dollar in the past few months has also dented the revenue realised from exports, said Jaidka.

Latest data states that the country’s wool and wool -blended exports declined 26.42 per cent during the first four months this fiscal. Exports were valued at Rs 596.71 crore in April-July, 2010, compared with Rs 809.01 crore in the corresponding period last year.

The bulk of the country's wool products are exported to the US and Europe.

Textiles Minister Dayanidhi Maran had also expressed concern over the sharp fall in wool exports at a meeting to review export performance earlier this month.

Total wool exports stood at Rs 2,015.82 crore in 2006-07, but fell to Rs 1,783.13 crore in 2007-08. Wool exports later rose to Rs 2,199.50 crore in 2008-09 and then to Rs 2,262.73 crore last fiscal.

On the advice of textile minister Dayanidhi Maran, the WWEPC will participate in trade fairs in Italy in December, Mexico in January, 2011, Moscow in February, 2011, and Cairo in March, 2011, to boost export volumes. — PTI

London, November 19
Vedanta Resources today said it has entered into financing agreements with a consortium of banks for $6 billion to fund its proposed buyout of up to 60 per cent stake in Cairn India. London-listed Vedanta Resources planned stake acquisition in Cairn India, which was announced in August, is worth as much as $9.6 billion. Announcing the financing agreements, Vedanta in a statement said the proposed 51-60 per cent stake acquisition in Cairn India would be worth about $8.5 - 9.6 billion.

Cairn India is part of Edinburgh-based Cairn Energy. The bank consortium comprises Barclays Capital, Citi, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, Royal Bank of Scotland and Standard Chartered, the statement said. As part of the deal, Vedanta Resources would acquire 31-40 per cent stake in Cairn India while Vedanta's subsidiary Sesa Goa would buy 20 per cent stake.

“The financing announced today provides the group with funding flexibility. We are delighted to announce $6 billion of commitments from leading international banks...," Vedanta Chairman Anil Agarwal said.

The proposed deal is yet to receive necessary government and regulatory approvals. Vedanta was to receive shareholders' nod for the transaction by October 30 but has not yet posted a notice for a shareholders meet.

Further, its mandatory open offer for additional 20 per cent stake in Cairn India is yet to get approval from market regulator Sebi. — Reuters

New Delhi, November 19
Tata Motors today said it will start open sale of its small car Nano in six more states, including Gujarat, Jharkhand and Bihar, from next week. The company also said the Nano facility at Sanand in Gujarat is fully operational now and production is being ramped up. It started selling the car off-the-shelf in four states after inaugurating the facility in June. “Tata Motors today announced open sale of Tata Nano in Gujarat, Andhra Pradesh, Jharkhand, Bihar, Madhya Pradesh and Chhattisgarh from November 22, 2010,” the company said.

"Residents of these states, who desire to drive home a Tata Nano, but had not booked the car during 2009, will be able to purchase a Tata Nano now," it said.

The company is already offering ready deliveries of Nano, touted as the world's cheapest car, in Kerala, Karnataka, Maharashtra, Uttar Pradesh and West Bengal.

"Tata Motors has tied up with 26 banks to offer customers loans for purchasing the Tata Nano at attractive rates of interest. More such arrangements are in process," it said.

Earlier in June, the company had started production at the 1,100-acre Nano facility at Sanand. The plant has been created at an investment of about Rs 2,000 crore.

"Tata Motors' new 2,50,000 cars per year plant at Sanand (Gujarat) is fully operational. Production at the plant is being speedily ramped up for instant delivery," the statement said without giving any details.

The company had selected one lakh customers through a lottery for delivering the car in the first phase. It had said these customers are price-protected and they would get their cars at the announced price of Rs 1.23 lakh-Rs 1.72 (ex-showroom, Delhi). The delivery of these cars is scheduled to get over by 2010.

New Delhi, November 19
Hindustan Construction Company today said its subsidiary, Lavasa Corporation, has been given the green signal for a Rs 2,000-crore initial public offer (IPO) by the Securities and Exchange Board of India.

“... Lavasa Corporation Ltd, subsidiary company of HCC, has received observation letter from Securities and Exchange Board of India (Sebi) for its proposed Initial Public Offering (IPO)," Hindustan Construction Company (HCC) said in a filing to the Bombay Stock Exchange.

In September, Lavasa Corporation had filed a draft red herring prospectus (DRHP) with the market regulator for the proposed IPO.

The IPO may hit the market by November-December, depending on the date of receipt of clearances from regulatory authorities, HCC Chairman Ajit Gulabchand had said earlier.

The real estate developer has roped in ICICI Securities, Kotak Mahindra Capital Company, Morgan Stanley India and Axis Bank as the book running lead managers for the issue.

Hindustan Construction Company (HCC) holds a stake of about 65 per cent in Lavasa, while Gautam Thapar-controlled Avantha Group is the second-largest shareholder with a 16 per cent stake.

Other shareholders include Venkatesh Hatcheries with a 13 per cent stake and Pune-based investor, Vinay Maniar, who holds a 6 per cent stake in the company.

Lavasa is a planned hill city being developed by HCC near Pune. The master plan for Lavasa was drawn up by internationally renowned design consultant HOK of the USA. — PTI