The Tribune, Chandigarh, India

PSUs allowed to buy raw material assets abroad
Girja Shankar Kaura/TNS

New Delhi, October 13
The government on Thursday approved a new policy that would allow central public sector undertakings with a three-year record of profit to acquire higher raw material assets abroad.

The decision which would also vest more powers with ‘Maharatna’ and ‘Navratna’ companies for such buyouts abroad came at the meeting of the union cabinet chaired by Prime Minister Manmohan Singh here.

In other decisions the cabinet also approved the proposals to bring India Infrastructure Finance Co Ltd. under regulatory oversight of the Reserve Bank of India , to enhance its professional capability and to increase its capital base and allow partial modification of fund allocation under the National Rural Drinking Water Programme.

Briefing reporters after the cabinet meeting Information & Broadcasting Minister Ambika Soni said: “Today the cabinet approved the policy for acquisition of raw material assets abroad by central PSUs. Availability of raw materials is a prerequisite not only for the growth of the manufacturing sector alone, but for the economy as a whole".

The new policy will allow ‘Navratna’ firms to invest up to Rs 3,000 crore in such assets without government approval, as against the present limit of Rs 1,000 crore.

For ‘Maharatna’ firms, the limit is Rs 5,000 crore. The policy will facilitate the acquisition of coal, iron ore and other assets abroad.

Soni said the policy will be applicable to central public sector enterprises in the agriculture, mining, manufacturing and electricity sectors having a three-year record of net profits.

"Powers delegated to the boards of ‘Maharatna’ and ‘Navratna’ will be enhanced for such acquisitions," Soni said, adding a coordinating committee of secretaries headed by the cabinet secretary will be formed.

The committee will examine proposals involving investment beyond the prescribed limits for such acquisitions by central PSEs.

The secretaries’ panel will also facilitate quick and coordinated decision-making, coordinate the grant of concessional credit to foreign enterprises, recommend government funding and decide about the nature of such funding on a case-to-case basis, Soni added.

Hyundai launches Eon at base price of Rs 2.69 lakh
Girja Shankar Kaura/TNS

New Delhi, October 13
The country’s no 2 carmaker, Hyundai Motors India Ltd on Thursday launched a concerted effort to dislodge its main rival Maruti Suzuki India Ltd as India’s largest car manufacturer maker with the launch of its much-awaited entry-level small car, the Eon.

Even though Maruti Suzuki made an effort to shrug off the Eon’s launch by bringing in a limited edition version of its highest selling brand Alto, which would also be the main competitor for the Eon, the South Korean car maker would probably have an upper hand with this model specially designed for India.

The Eon was conceived, designed and produced exclusively for the domestic market and will enter Indian roads at a starting price of Rs 2.69 lakh to Rs 3.71 lakh (ex-showroom Delhi). Although the Eon is positioned against the Alto, it definitely promises a lot more than what the latter offers.

The Eon has been specifically built keeping in mind the varied Indian conditions and special requirements of the customers here. It will further expand our market share in the fast-growing small car segment in the Indian market," Hyundai Motors India MD & CEO HW Park said while launching the car.

Arvind Saxena, Hyundai India’s sales & marketing director, said: "There’s no car that is comparable with the Eon. Yes, it’s an entry-level car but with no compromise”.

The Hyundai Eon sports the 'Fluidic' design characteristic of the restyled Verna that threw a serious challenge to its rivals like the Honda City and the Volkswagen Vento after its makeover.

Food inflation eases a tad, still above comfort level

New Delhi, October 13
Food inflation declined marginally, but was still high at 9.32% for the week ended October 1 as prices of major kitchen staples continued to pinch consumers' pockets. Food inflation, as measured on the basis of the wholesale price index (WPI), stood at 9.41% in the previous week. The rate of price rise in food items stood at 17.14% in the corresponding week of 2010.

The fall in food inflation could be attributed to a moderation in the rate of price rise for some of the items on a week-on-week basis, even though they remained higher on an annual basis.

The fall could also be attributed to the high inflation rate of 17% in the corresponding year-ago period, a phenomenon dubbed the 'high base effect' in economic parlance.

According to data released by the government on Thursday, vegetable prices shot up by 13.01%, with prices of potatoes rising by 3.79% on an annual basis, during the week under review.

In addition, milk became 10.35% costlier and fruit prices rose by 12.19%. Protein-based items like eggs, meat and fish also became 9.92% more expensive on an annual basis. Cereals turned dearer by 5.41%, rice by 5.86% and pulses by 6.87% annually. However, onion prices declined by 10.15% on an annual basis and wheat by 0.24%.

Overall, inflation in primary articles was recorded at 10.60% during the week ended October 1, down from 10.84% in the previous week. Primary articles account for over 20% of wholesale price index inflation.

Inflation in nonfood articles, which include fibres, oilseeds and minerals, stood at 9.59% during the week under review, compared to 10.77% in the previous week. — Reuters

Strike costs Maruti Rs 1,643 crore in lost revenues
Sanjeev Sharma/TNS

New Delhi, October 13
Maruti Suzuki India Ltd has incurred a loss of Rs 1,643 crore in revenues this year due to the labour strike at its manufacturing plants. The excise loss to the central government is to the tune of Rs 372.5 crore, while the loss to the Haryana government is Rs 32.8 crore. Production losses at the auto major's plants are pegged at 54,775 units.

The strike at the company’s plants is also affecting the firm's vendors, most of which are located in the Gurgaon belt. This may have implications for the image of Haryana as an investment destination and the Gurgaon-Manesar as a leading auto hub.

According to a company statement, Maruti's Manesar plant continues to remain captive in the hands of the about 1,500 striking workers inside the plant premises. No production has taken place at the Manesar plant since Friday evening. Output at the firm's Gurgaon unit has also been severely hit as there is no supply of diesel engines and also transmissions from Suzuki Powertrain India Ltd. The Gurgaon plant produced only 600 units against the normal daily production of 2,800 units.

The Haryana labour department has declared the strike at Maruti's Manesar unit as illegal. The state's labour commissioner as well as the Gurgaon deputy commissioner and police commissioner have told the workers to vacate the company's Manesar factory premises immediately.

Meanwhile, Maruti is in touch with the Haryana administration and said no talks were possible till the plant was vacated. The firm has decided to suspend output at its Gurgaon plant on October 14 and 15 in view of unavailability of components for the cars.

Railways to raise Rs 10k crore via taxfree bonds

New Delhi, October 13
Facing a funds crunch, Indian Railways will soon issue taxfree bonds to raise around Rs 10,000 crore. "We have received the notification [clearance] from the Finance Ministry. Based on the notification, we are going ahead for public issue which should materialise by the end of November or beginning of December," financial commissioner Pompa Babbar told PTI.

The Finance Ministry has given notification to four organisations, including PFC and Railways, for raising tax- free bonds.

The market borrowings of railways is pegged at Rs 20,594 crore in the current fiscal, out of which Rs 10,000 crore is expected to be raised through tax-free bonds by Indian Railway Finance Corporation for financing select capacity enhancement work.

Babbar, however, said the amount to be raised through tax-free bonds depends upon market conditions.

"A lot depends on the market appetite...The financial condition of the market. There are lots of ups and downs in the market. But we hope for the best", Babbar said.

Indian Railways has also got temporary relief on account of service tax on freight services.

"The service tax on freight has been kept at abeyance till December 31 and we have got the letter from the finance ministry to this effect,” the official said.

“But the tax relief on the auxiliary services is yet to come and we are fighting for it", the official added.

While the freight taxes are pegged at Rs 1,940 crore, the auxiliary service taxes are about Rs 250 crore.

Faced with the fund crunch and seeking fiscal discipline, Indian Railways has taken away reappropriation power from general managers of zonal railways.

"We’re trying to enforce fiscal discipline and trying to see that money is spent in the best possible manner. Earlier, we had given reappropriation power at the zonal levels to meet the salary and other local requirement.

"However, we found money is being used in some other non-priority areas and we have to give extra fund for meeting salary requirement. So, we had to withdraw the re-appropriation power from our general managers", Babbar said. “This has been done for greater fiscal discipline”, he added. — PTI

India’s gold ETF demand set to jump

Mumbai, October 13
Demand for gold exchange traded funds (ETF) in India is likely to "explode" as investors get accustomed to "click-and-park" mode of investing, shying away from sagging stock markets and as high inflation eats into bank savings, a trade body head told Reuters on Thursday.

"Clearly people are seeing convenience in the form of ETF, going through the same broker which he has for equities," said Ajay Mitra, MD - India & the Middle East, World Gold Council (WGC).

In the last four years, volumes in gold ETFs have grown over 164 per cent.

Mitra said another reason for the attractiveness of paper gold is that unlike in jewellery there is no intermediate costs.

Currently, volume in gold ETFs in India, the world's largest consumer of bullion, is more than 15 tonnes — minuscule compared with the country's annual physical gold demand of 900 tonnes.

Gold prices in India have gained 29 per cent since the start of the year, compared with just 15 per cent gains in the stock market .

The WGC is working on a number of gold-based investment products, but they are still at the "concept stage". "It’s still work in progress. The government is looking at various options to fund the economy," said Mitra. He, however, declined to give details.

The council expects gold prices on the India Multi Commodity Exchange to stabilise in between Rs 27,000 and Rs 28,000 ($549-$569) per 10 grams in October. This will boost demand during Dhanteras, the biggest gold buying festival, along with Diwali. — Reuters

Volvo plans Rs 400 crore investments in India

Bangalore, October 13
Volvo announced plans on Thursday to invest about Rs 400 crore in India over the next five years. "With this kind of investment plan, India will emerge as the second biggest hub after China," Volvo Bus Corp president & CEO Hakan Karlsson told reporters here.

In the first phase, Volvo plans to expand its industrial establishment capacity in Hoskote to 2,500 units in the next two years. At present, the facility can produce 1,000 vehicles, he said.

The company also plans to introduce a range of new products starting in 2012, he said.

"This announcement backs Volvo buses earlier announcement to become a US $1 billion company selling 5,000 buses in 2015," Karlsson said.

The second phase will see Volvo setting up a new industrial establishment, he said. "Business planning process has already begun to set up the second factory in India," Volvo Buses India MD & CEO Akash Passey said, but declined to divulge where it would be.

Globally Volvo has the biggest plan in China to expand its industrial establishment capacity to 3,500, Karlsson said.

“The firm also plans to expand capacity to 30,000 globally by 2015, which would be thrice the existing capacity. We plan to expand our establishments in Asia to 15,000 capacity," Karlsson added.

Volvo expects global revenues to grow by Rs 20,000 to Rs 25,000 crore by 2015, Volvo Bus Corp senior vice president (business region international) Rune Lundberg said. — PTI

Govt to infuse up to $1.6 bn in SBI

New Delhi, October 13
The government will infuse Rs 45 billion to Rs 80 billion (US $919.7 million to $1.6 billion) of funds in top lender State Bank of India by March 2012, secretary of financial services DK Mittal said Thursday.

State-run SBI, which accounts for one quarter of lending in India, has been reeling under higher provisions for bad loans and lower profits in the last two quarters, has since last year sought as much as Rs 200 billion from the central government through a rights issue.

State Bank of India expects surpluses earned during the year, apart from government funds, to help boost its tier-I capital to 9 per cent, which was 7.6 per cent at the end of June, below the government's pledged 8 per cent target in state banks. — Reuters

BlackBerry services restored

New Delhi, October 13
After three days of disruptions, BlackBerry services offering email, messenger and other online services were restored, Canada-based Research in Motion said.

"Email systems are operating and we are continuing to clear any backlogged messages. Support teams are working to minimise the impact on our customers... We’re working to restore normal service levels in all markets as quickly as we can," RIM CIO Robin Bienfait said Thursday.

Since Monday BlackBerry users in Europe, the Middle East, India and Africa, Canada, Latin America and US were facing problems in accessing the email, BBM and other online services caused by a core switch failure. — PTI