New Delhi, March 4
Political unrest in West Asia and North Africa is raising apprehensions of a disruption in production schedule of the Organization of Petroleum Exporting Countries (OPEC). Any such development could fuel price increases in oil, according to a report by Crisil. Crude oil prices rose to $116 per barrel on March 2, the highest level in more than two years.

Protests in Libya have sparked concerns that the violence might spread to neighbouring countries such as Saudi Arabia and Iran. Many oil companies are suspending operations in Libya. Some of them have also begun evacuating their expatriate employees from there.

Dwindling crude oil supplies from Libya — which accounts for 2 per cent of global oil production and 2.1 per cent of global oil exports — are therefore pushing up crude prices.

“West Asia and North Africa, where major OPEC countries are located, meet 40 per cent of world crude oil consumption and hold more than 65 per cent of proven oil reserves,” the report points out.

Sridhar Chandrasekhar, chief, Crisil Research. “In an year when we expect world dependence on OPEC oil supply to increase, concerns over a wider disruption of supplies from OPEC countries will fuel further oil price increases.”

Surging crude oil prices will bring cheer to oil exploration and production companies in India’ private sector as their realisations will increase significantly. Average crude oil prices are likely to rise more than 15 per cent to over $102 per barrel in the fourth quarter of 2010- 11, compared to the previous quarter. Private and government-owned refining companies will also benefit. CRISIL Research expects gross refining margins to rise from $6.8 per barrel in the third quarter of 2010-11 to $8-9 per barrel in the fourth quarter.

Government-owned oil exploration and marketing companies will not benefit as much, as they will have to shoulder an increase in subsidy burden on account of the rising oil prices. The subsidy burden also termed as under-recoveries - the losses incurred on selling petroleum fuels at less than their cost price - will increase significantly to more than Rs 30,000 crore in the fourth quarter, from Rs 15,500 crore in the previous quarter. Total under-recoveries for 2010-11 will exceed Rs 75,000 crore.

Rising under-recoveries will clip the extent of profit increases for government-owned oil companies. “Based on the subsidy-sharing pattern since 2006-07, we expect the government to absorb at least 50 per cent of the under-recoveries. Upstream public sector oil companies will meet about 33 per cent of the under-recoveries, and OMCs will absorb the remainder as marketing losses,” adds Sridhar Chandrasekhar.

Ludhiana, March 4
Ludhiana’s textile, knitting, readymade garments, shawls, hosiery and blanket business observed a bandh today against the imposition of 10% central Excise duty. Representatives of nearly 35 associations under the banner of Knitwear Club gathered near Sita Mata Mandir, Daresi Ground and protested against the government’s proposal to impose 10 per cent Excise duty. Manufacturers, traders, workers and wholesalers participated in the bandh.

Vinod K Thapar, president of Knitwear Club said the excise duty was uncalled for. The industry would be unable to bear the burden, especially when raw material cost has double over the past two years.

Ramesh Jagota, president, All India Mink Blanket Manufacturers Association said unbranded and cheap import of blankets from China will be encouraged after the levy.

“It will derail indigenous units, since Chinese blankets would be available at lower prices. Local manufacturers would not be able to compete,” said Jagota.

The proposal will prove a death knell for the industry which is already passing through a rough phase due to high fibre and yarn prices. “We are trying hard to compete in the international market and now this proposal to levy excise tax has only worsened our problems,” said Tarun Jain, president, Bahaduk-ke Textiles and Knitwear Association.

“The industry has been under tremendous cost pressure over the last year due to unprecedented rise in raw material prices. It has resulted in price increases ranging from 15 to 20 per cent in this period,” said a representative of the Sunder Nagar Hosiery Association.

A memorandum has been sent to the Finance Minister, the Prime Minister and Member Parliament Manish Tiwari.

Chandigarh, March 4
A recent notification by the Directororate General of Foreign Trade allowing export of three superior non-basmati varieties, has angered rice exporters. The March 1 notification does not mention a Minimum Export Price (MEP).

On February 9, the government allowed exports of 1.50 lakh tonnes of three varieties of superior non-basmati rice, grown in the South.

This partial lifting of a 3-year-old ban on export of non-basmati rice was meant to allow farmers in these states realise better prices. At that time, the Empowered Group of Ministers (EGoM), which had allowed for these exports had said that these exports would be allowed after fixing the MEP at $850 per tonne.

However, the notification in its current form allows rice exports at any price that the exporters want. These rice exports without MEP will adversely affect domestic prices, besides encouraging hoarding, profiting and malpractices.

The All India Rice Exporters Association today sought the Prime Minister’s intervention in this matter. “We request you to amend the notifications suitably to give effect to the decision of the government that non-basmati export would be subject to MEP of $850 per MT,” a delegation told the PM.

Currently, these three varieties are sold at Rs 20- 22 per kg in the domestic market. Famers expect prices to rise to Rs 30 per kg (with the MEP in place). Without the MEP, the prices can zoom to the level of the international prices, around Rs 75 per kg).

Vijay Setia, president, All India Rice Exporters Association, said that had requested the government to consider allowing export of other superior non-basmati varieties.

“Popular superior non-basmati varieties grown in Punjab and Haryana — Sugandha, Sharbati, Pepsi and 999 —too, should be included in the list of varieties allowed for exports. When the government’s stocks are overflowing and with government advance estimates again pointing at a bumper harvest, the government should allow all superior non-basmati varieties to be exported,” he said. 

Chandigarh, March 4
The Union Budget would provide direction to some path-breaking reforms like the direct transfer of subsidies to Below Poverty Line families. Legislation on reforms in the financial sector and banking were likely to be introduced in the Budget. Further opening up of the Indian economy was also on the radar of the government. Overall, the Budget was deemed as satisfactory by delegates at a discussion on the Union Budget at the CII (Confederation Of Indian Industry) Northern Region Headquarters today.

H K Thakur, Commissioner, Central Excise Commissionerate, Chandigarh - I, R M Khanna , Chairman, CII Northern Region, Pratik Jain, Executive Director, Indirect Taxes, KPMG, Girish Vanvari, Executive Director, Direct Taxes, KPMG and Rajiv Malhotra, Vice Chairman, CII Himachal Pradesh addressed the gathering.

H K Thakur, Commiserate, Central Excise Commiserate, Chandigarh- I, said that the current Budget mandated intitating prosecution for default in the payment of service tax. The definition of input services has been appropriately amended with some clauses excluded. Calling for voluntary tax compliance, Thakur requested the industry to interact more frequently with the Central Excise and Customs Department.

Presenting an overview of the Budget, R M Khanna described the Budget as balanced and growth-oriented. He complimented the Finance Minister for his commitment to lower the fiscal deficit. which he felt was necessary to sustain the revival in private sector investment.

Pratik Jain, said the retention of the peak rate of excise and service tax rates was a move towards a common Central Goods and Service Tax.

The direct tax structure and rate has been in-lined with the Direct Tax Code Bill, said Girish Vanvari. 

Mumbai, March 4
Diamond exporters in Mumbai and Gujarat are facing anxious moments as supplies of rough stones expected from Zimbabwe have dried up after a fresh spat between the Robert Mugabe government and the World Diamond Council (WDC).

The Surat Diamond Sourcing Company Ltd, an umbrella body representing diamond cutting and polishing units in Western India, was set to import rough diamonds worth $ 1.2 bn from Zimbabwe after getting the green signal under the Kimberley Process Certification Scheme earlier this year. However, news of the fresh setback has been received with dismay.

"It is a major setback but we are hopeful of a settlement being thrashed out soon," says Sanjay Kothari, Vice-Chairman Gem and Jewellery Export Promotion Council said.

Faced with a major shortage of rough stones, cutting and polishing units were dependent on raw material from Zimbabwe's Marange area ahead of the festival season in Europe and America later this year.

The WDC has reportedly cited human rights violation by Zimbabwe in Marange area as a reason for the ban on import of rough stones from the area. A section of the diamond industry is lobbying with Gujarat Chief Minister Narendra Modi to take up the matter with the Central government so that India takes an initiative in negotiations between Zimbabwe and the WDC.

The Indian diamond trade is eying the six million carats of rough diamonds stockpiled by the Zimbabwe government which would have given a fillip to the cutting and polishing industry according to sources.

New Delhi, March 4
Iron ore miner NMDC Ltd today said it has awarded a Rs 760 crore order to a consortium of four firms, including Siemens VAI, for turnkey execution of a sinter plant complex for its proposed Nagarnar steel making facility.

The state-run company will set up a three million tonne per annum integrated steel making facility at Nagarnar in Chhattisgarh with an investment of about Rs 15,000 crore.

"This is the first contract amongst the nine main technological packages for the three MTPA integrated steel plant at Nagarnar in Chhattisgarh and the cost of the project is about Rs 760 crore," NMDC said in a filing to the Bombay Stock Exchange (BSE).

Sinter is a clinker like aggregate normally produced from relatively coarser fine iron ore. This is a highly preferred input in blast furnaces. It improves the operation of blast furnace operation, productivity and reduces coke consumption.

At present, more than 70 per cent of hot metal in the world and 50 per cent in India are produced through sinter.

NMDC said it has signed a contract agreement on March 3 with a consortium comprising Siemens VAI, Austria, SVAI India and NCC Ltd on that.

Company Chairman Rana Som had last month said that the plant is likely to go on stream by 2014.

Apart from Chhattisgarh, NMDC has in joint venture with Russia's Severstal plans to set up a 2-mtpa steel plant in Karnataka. Work on the project is likely to start next year.

It is also in talks with Tata Steel to ink an equal joint venture for setting up a 2-mtpa steel plant at Bastar in Chhattisgarh. — PTI

New Delhi, March 4
Lanco Infratech on Friday said it has finalised the acquisition of Griffin coal mines for Australian dollar (AUD) 730 million in the largest ever investment by any Indian company in West Australia.

“We have finalised our acquisition of Griffin coal mines for AUD 730 million, of which upfront payment was AUD 480 million,” Lanco Infra Chief Financial Officer J Suresh Kumar told PTI.

The infrastructure developer had announced acquisition of Griffin Coal mines in December 2010 to secure fuel for its projects to boost its power generation capacity to 15,000 MW by 2015 from existing 2,100 MW.

Mr Kumar said that of the remaining amount, the company will pay AUD 100 million in the next two years, while the remaining money of about AUD 150 million would be paid after four years.

Western Australia-based Griffin Coal’s assets include thermal coal mines with a production capacity of about 5 million tonnes at present. Lanco Infra plans to increase it to about 18 MT by 2015.

He said the company will infuse $1 billion in the Australian asset to ramp up production to about 18 MT by 2015 and is presently focussing on integrating Griffin with itself.

He added the company was eying acquisition of overseas assets in countries, including Indonesia, Australia and Africa. — PTI