The Tribune, Chandigarh, India

Govt to strengthen policy environment
Sanjeev Sharma
Tribune News Service

FAST-TRACK

Push reform Bills like the hike in FDI in insurance

Removal of 10 per cent voting right cap in banks

Acceleration of project clearances.

Stepping up cultivation of oilseeds and pulses

New Delhi, February 15
Presentations by government officials at an investor conference by leading Foreign Institutional Investor (FII), Bank of America Merrill Lynch indicate that some policy measures could be initiated to change the current uncertain policy environment. The government could push reform Bills like the hike in FDI in insurance, removal of 10 per cent voting right cap in banks and acceleration of project clearances.

A report by Bank of America Merrill Lynch says that several policy makers made presentations at its investor conference. It adds the government is taking measures to fight agri-inflation. These include stepping up cultivation of oilseeds and pulses - which face chronic excess demand- in 60,000 villages, reforming agri marketing by letting in corporate in the next few months. With a medium-term perspective, renewed focus on micro irrigation and fertiliser production should improve matters as current yields are half of optimal yields.

Policy makers at the conference highlighted that inflation remains a concern and GDP is expected to grow at 8.5 per cent. There was also an understanding that rate hikes are likely to continue to control inflation, which is leading to worries about growth.

The current liquidity crunch in the system is expected to ease by April and the government is resolute about cutting fiscal deficit to around 4.8 per cent of GDP. The government is also keen to enact the Food Security Bill providing good grains at subsidized rates to the poor. There are also indications that capital account restrictions could kick in if inflows cross the $ 75 billion mark.

The investor mood remains negative on India and investors are focused on what can turn the negative sentiment.

According to the report, this year would be a tough one with continued worries over high inflation, rising interest rates, slowing industrial production numbers and earnings downgrades.

However, it says the sentiment could turn with fall in global commodity prices and revival of capex spend as regulatory bottlenecks ease.

The company presentations reinforced the macro view that margin pressure will lead to earnings downgrades.

Most companies attending the conference highlighted the strong consumption demand, especially in rural areas. This is visible across a range of sectors such as FMCG (HUL, Dabur, Asian Paints), airlines (Jet, Spicejet), Auto (Maruti) among others.

Corporate margins are under pressure and cost pressure is the big concern for most companies in FMCG and auto, while pricing is a concern for cement companies.

The report adds companies still have plans to invest in capacities, but projects are being delayed.

India, Japan to ink free trade pact today

New Delhi, February 15
India will sign a Comprehensive Economic Partnership Agreement (CEPA) with Japan tomorrow, setting the stage for free bilateral trade of goods and services. The pact will be India's third major market-opening pact within an year and will be initialled by Indian Commerce and Industry Minister Anand Sharma and Japanese Foreign Affairs Minister Seiji Maehara, in Tokyo.

"It is expected that this agreement will promote liberalisation and facilitation of trade and investment between the two countries and will further vitalise both economies by strengthening reciprocal economic ties in wide-ranging fields," a statement by Japanese Ministry of Economy, Trade and Industry said.

As per the the pact, both countries would reduce Customs duty on merchandise trade from April, and will eventually eliminate it in the coming 10 years.

Around 90 per cent of the $12-billion trade would be covered under the Free Trade Agreement (FTA).

In services, restrictions on movement of professionals such as chefs, accountants, english teachers, doctors and nurses would be eased.

Pharmaceuticals, one of the ticklish areas in the FTA negotiations, has been resolved with Japan agreeing to provide market access to Indian pharma companies in the highly- regulated market.

India has been demanding that the drugs approved by the US Food and Drugs Administration (FDA) should be allowed in the Japanese market. However, the Japan had been insisting that pharmaceuticals imports must comply with the Japanese standards.

Certain sectors like automobile and agri products have been kept out of the pact by India, to protect its domestic manufacturers and farmers from the impact of cheap imports.

The CEPA with Japan was finalised last October, during Prime Minister Manmohan Singh's visit to Tokyo. The Commerce Ministry is pursuing similar pact with the European Union which is expected to be signed within 2011.

India, earlier has entered into FTA with Association of Southeast Nations (ASEAN) and South Korea. India's trade only in merchandise goods, with ASEAN, Japan and South Korea is about $85 billion - 16 per cent of the country's total global commerce.

In the absence of progress in the Doha Round of negotiations for a multi-lateral trade-opening deal, countries around the world are entering into the region and signing bilateral agreements for liberalising trade. — PTI

Jaypee Group restructures Power vertical
Sanjeev Sharma
Tribune News Service

New Delhi, February 15
In a restructuring exercise at the Rs 15,000-crore Jaypee Group, its power arm Jaiprakash Power Ventures Ltd (JPVL) has announced the amalgamation of Jaypee Karcham Hydro Corporation Ltd (JKHCL) & Bina Power Supply Company Ltd (BPSCL) with itself.

JPVL is the largest producer of hydro power in the private sector with 700 MW in operation. It is also setting up a 1320-MW Super Critical Technology Thermal Power Project based on captive coal, a company statement said.

JKHCL is a subsidiary of JPVL (56.9%) setting up the 1000-MW Karcham Wangtoo Hydro Electric Project in Himachal Pradesh.

BPSCL, a wholly-owned subsidiary of JPVL is mandated to set up a 1500-MW Thermal Power Project at Bina in District Sagar, Madhya Pradesh with Phase-I consisting of 500 MW (2X250 MW) which is under advanced stages of implementation and is expected to commence operations within the 11th five year plan.

With the proposed amalgamation, JPVL as a standalone company shall have a power portfolio of 4520 MW of which 2200 MW (including 700 MW already in operation) will be operational within the 11th five year plan.

Re-organizing JKHCL & BPSCL and amalgamating them with JPVL would create synergies by consolidating ownership and would give an opportunity to the shareholders of the Company to reap the benefits of two more power entities.

The proposed amalgamation is in line with the global trends to achieve size, scale, integration and greater financial strength and flexibility and in the interests of maximizing shareholder value.

Rs 2,000 crore SBI bond issue to hit markets on Feb 21

Mumbai, February 15
The nation's largest lender State Bank today said it will raise Rs 2,000 crore from the market through a retail bond issue that will open next Monday. The bonds will attract coupon rates between 9.75 per cent to 9.95 per cent for retail investors.

The issue is of Rs 1,000 crore with an option to increase it by a similar amount if the market demands it, and is part of the bank's planned Rs 10,000-crore retail bond programme in FY11 through FY12, to shore up its Tier 2 capital.

A senior bank official, who did not wish to be identified, told PTI here today that the bank will hit the market with a Rs 2,000-crore bond issue from February 21.

"These bonds will be of two maturities - 10 and 15 years.

While the 10-year bonds will offer a coupon of 9.75 per cent to the retail investor, the 15-year bond will fetch 9.95 per cent to him. The bonds that will open on February 21 and close on 28, will be listed on both the BSE and NSE," the official added.

The state-run bank has been awaiting the Finance Ministry's nod to launch an ambitious Rs 20,000-crore rights issue since the beginning of this fiscal.

Though the banking secretary gave his nod last month, a formal notification is awaited and considering the time needed for Sebi's permission, it's certain that the bank will not be able to raise the money this fiscal.

The bank official further said that the bonds will fetch 9.3 per cent and 9.45 per cent to the non-retail investors for 10 and 15 years respectively. The 10-year bonds will carry a call option in the fifth year, while the 15-year issue will have the call option in the 10th year. — PTI

Tata Motors to reformulate distribution plans for Fiat
Tribune News Service

New Delhi, February 15
With Fiat sales not picking up in the country, its joint venture partner Tata Motors today said that it would redraw distribution plans for the Italian car-maker. As part of the plan, Fiat will now have its own independent brand showroom to showcase its products, although it will continue to sell cars through Tata Motors’ showroom.

In 2007, Tata Motors and Fiat had signed a 50:50 joint venture. Under the deal they had agreed to a joint distribution network and back-end support besides co-manufacturing of products at the Ranjangaon facility near Pune.

Speaking to reporters on the sidelines of a company function where it announced its motor sports initiative, 'Tata Motors Full Throttle' which will steer the company's participation in motor-sports, Tata Motors Vice-President (Commercial-Passenger Car Business Unit)

R Ramakrishnan said, “We are looking at ways to improve sales. We are not where we want to be…….we are redrawing the plans to boost sales.”

For this fiscal, in the April-January period, Fiat sold 17,840 units compared with 20,280 units in the same period last fiscal, down 12.03 per cent.

“To improve image, we plan to open image brand centres (for Fiat). To begin with, two centres will be opened in Delhi and Pune,” he said.

Meanwhile, Tata Motors Full Throttle, will help the company in organising and synergising all efforts and activities in the area of motorsports, including development and testing.

“This will help in identification and brand-building,” he said.

Tata Motors global sales rose 16 per cent to 98,998 units in January on robust demand for both commercial and passenger vehicles, over the same month previous fiscal.

Haier opens centre in Ludhiana
Charu Chhibber
Tribune News Service

Ludhiana, February 15
It was a misconception that Chinese products have harmed the financial interests of Indian business, said Eric Braganza, president, Haier Appliances, India. "May be some parts of the Indian market are taken over by China. However, it is wrong to say that China has taken over all spheres,” remarked Braganza, who was the in the city today to inaugurate Haier Experience Centre. Haier is a Chinese consumer durables company with operations in India.

Braganza added Ludhiana was one of the biggest potential markets in India and the company had great expectations from the city.

“This is the second store of Haier in Punjab, but we have major expansion plans across the state,” he said. Braganza added, “If China is the global leader in white goods, it’s because of superior quality of its products, which are available at a much lower cost than counterparts across the world.”

He said there was no reason for the domestic industry to feel threatened. “The aim should be to raise our own standards,” he remarked. Braganza, however, agreed that China has taken over the Indian electronics market in a big way. “Eighty per cent of the world’s microwaves come from China, which also has a massive share in the global refrigerator market. They have beaten other companies in the field,” he said.

Braganza refuted the allegation that Chinese products are low on durability. “The success of Chinese phones, microwaves and refrigerators across the globe is proof enough that the goods are value for money,” he said.

Don’t fall prey to bogus prize money offers: RBI

New Delhi, February 15
The Reserve Bank of India (RBI) today warned the public to not fall prey to fictitious offers of large prize money through e-mails, letters and other electronic modes of communications on payment of service charges.

"Such offers (of large prize money from abroad) are fraudulent and...the public should immediately register a complaint with the local police/cyber crime authorities when they receive such offers or become a victim of any such fraud", the central bank said in a release.

The central bank further said that people should not make any payments towards schemes from unknown entities as "such remittances are illegal and any resident in India collecting and effecting/remitting such payments directly/indirectly outside India is liable to be proceeded against for contravention of the FEMA Act, 1999." The central bank, it added, will not be responsible for recovering moneys remitted in response to such bogus communications.

"Banks have also been advised to take up with law enforcing agencies whenever accounts of their customers are misused for such fraudulent activities," it added.

"The offers are apparently signed by top executives/senior officials of such authorities. However, only the names of the officials may be correct but their signatures are faked," it added. — PTI