New Delhi, April 4
The government failure to take action on the Rangarajan Committee report has hit hard oil companies already bleeding from rising international crude prices.

The committee, constituted by Prime Minister Manmohan Singh to look into the pricing of oil products, has recommended an increase “of Rs 75 per LPG cylinder, target subsidised kerosene only to below poverty line families, and a hike in the petrol and diesel prices by Rs 1.21 and Rs 1.96 per litre, respectively, to partially set off the mounting losses of oil companies.”

It submitted its report in February before the presentation of Budget in Parliament. Oil companies were disappointed when the Finance Minister thought it prudent to bypass the report to avoid strong opposition from Left parties.

Oil companies lament that due to a ‘political delay’ in taking a decision and further rise in the international crude prices— now hovering around $ 67 per barrel— their losses have substantially increased.

In March alone, Indian Oil has reported Rs 1,700-crore losses on account of subsidy on the sale of petrol, diesel, LPG and kerosene. The combined losses of HPCL, BPCL, IOC and IBP for nine months ending December, 2005, which were pegged at Rs 9,700 crore, have substantially increased with the spurt in international crude prices.

Oil companies have urged the government either to raise the oil prices or provide them a direct subsidy from the Budget to compensate their burgeoning losses. It amounts to under recovery of around Rs 40,000 crore during the past fiscal due to subsidised oil products.

According to a senior official in the Petroleum Ministry, “the government is unlikely to take a decision before the completion of the final phase of the assembly elections by May-end.”

Petroleum Minister Murli Deora met Prime Minister Manmohan Singh in this regard last month, where it was decided that the Petroleum and Finance Ministers would jointly take a decision on the passing of ‘oil cess currently touching Rs 60,000 crore to oil companies and review of oil duties.”But both ministers have still to meet in this regard.

“We have told the government that industry is suffering under-recovery of Rs 199 per cylinder on LPG, Rs 14 per litre on kerosene, Rs 5.40 per litre on diesel and Rs 4 per litre on petrol. Hopefully, it would take a decision before oil companies become bankrupt,” said a senior official of the IOC.

New Delhi, April 4
Singapore-based Flextronics, a provider of contract manufacturing services to electronics industry, has picked up minority stake in SemIndia’s $3 billion project to set up a chip manufacturing facility in Hyderabad.

Under the strategic partnership between the two companies, Flextronics will manufacture electronics products for SemIndia, which in turn would make semiconductor chips for various product categories of the Singapore-based firm like cell phones, set-top boxes and personal computers, Communications and IT Minister Dayanidhi Maran said today.

The exact investment or the stake of Flextronics in the chip-manufacturing project was not disclosed. SemIndia is a chip-manufacturing consortium.

“We will make a minority investment... I can’t quantify the investment,” Mr Peter Tan, President and MD, Flextronics Asia, said.

The $3 billion project has a 2:1 debt equity ratio where $1 billion is being raised as equity and $2 billion will be taken in as debt, Mr Vinod Agarwal, Chairman of the Board & CEO SemIndia Inc said. The $1 billion equity will have $250 million each from Government of India and strategic partners (like Flextronics and others) and $500 million investment is to come from private equity investors.

The $2 billion debt has been arranged from global and Indian financial institutions.

The project will also have some equity by Andhra Pradesh government, he said, adding that the state government would not put any direct funds in the project.

Apart from Flextronics, other partners in SemIndia project include chip-maker Advanced Micro Devices, Government of India and Government of Andhra Pradesh and India Semiconductor Association.

Speaking on the occasion, Andhra Pradesh Chief Minister Y.S. Rajsekhara Reddy said the project would result in a major economic development in the state through significant employment creation and investment flow.

As per an Indian Semiconductor Association and Frost & Sullivan report, the total market for semiconductors in India would be over $40 billion by 2010. — PTI

Bangalore, April 4
City-based Hindustan Aeronautics Limited (HAL) will tie up with an Israeli firm to market the Dhruv Advance Light Helicopters globally.

The tie-up would be a joint venture company that HAL would float with Israel Aircraft Industries, to market the Dhruv ALHs in international market, HAL Chairman Ashok K Baweja said today.

“We are forming a joint venture company. The Board has cleared it, and the process is on. It will be a 50:50 venture.

Both of us are investing $2 million each”, Mr Baweja said here.

A few countries in South America, mid-Europe and the Malaysian-Indonesian region were keen to buy Dhruv, he added.

HAL has cruised past the Rs 5,000-crore mark with a sales turnover of Rs 5,375 crore.

The company, which declared financial year results for 2005-06, recorded a growth of 18.5 per cent over the previous year.

The value of production also went up by 16.4 per cent at Rs 5,750 crore, while the profit of the company (profit before tax) soared to Rs 1,002 crore, an increase of 32 per cent over last year’s performance.

Paris, April 4
Arcelor today announced a sharp increase in its proposed 2005 shareholder dividend in a move that dealers said could help shield it against the hostile takeover bid by Mittal Steel.

Luxembourg-based Arcelor raised the proposed 2005 dividend payout to 1.85 euros per share from the 1.20 euros announced in February and promised to return a further five billion euros to shareholders over the coming months in the form of share buybacks or exceptional dividends.

Arcelor said it had also incorporated Dofasco, its recently acquired Canadian steel producer that Mittal planned to sell if his bid for Arcelor succeeded, into a separate entity.

Dealers said the transaction would make it very difficult for Mittal to divest the company, which Arcelor acquired in late January for 3.95 billion euros.

Mittal has that once in control of Arcelor it will sell Dofasco to Germany’s leading steel-maker, ThyssenKrupp.

Dealers predicted that the actions announced by Arcelor could force Mittal to improve the terms of his 18.6-billion-euro (22.6-billion-dollar) cash and share offer for Arcelor, a step Mittal has so far refused to take.

The receding chances of a successful Mittal acquisition prompted the selling of Arcelor shares on the Paris stock exchange today, analysts said.

Arcelor shares were down 2.20 per cent at 32.07 euros in mid-morning trade on the CAC 40 index, which was showing a loss of 0.58 per cent. — AFP

New Delhi, April 4
Insurance regulator IRDA has issued anti- money laundering (AML) guidelines that include strict adherence of ‘Know Your Customer’ (KYC) norms by insurance companies.

IRDA has asked the insurers to put in place a proper policy framework by July 1 as the AML regime becomes effective from August 1.

The AML makes it mandatory for insurers to comply with ‘Know Your Customer’ (KYC) norms by obtaining documents to clearly establish the customer identity in the case of all new insurance contracts.

Where the premium is Rs 1 lakh per annum in the case of individual policies, a detailed due diligence should be exercised to establish KYC.

If the insurance premium is paid by person other than the policy holder, the insurer should look into to establish the motive behind it.

The companies are advised to classify the customer into high risk and low risk, based on the individual’s profile and product profile, to decide upon the extent of due diligence.

Products like stand-alone health insurance, group insurance issued by a company and term life insurance contract are exempted from the AML purview.— PTI

Chandigarh, April 4
For providing quality infotainment and communication services, UK’s premiere mobile interactive community service provider, Ice 365, is setting up its facility at Mohali, with an investment of $1 million.

Group President Paul Shoker said as mobile penetration increases in India, they propose to expand their services and an investment of another $10 million would be made in their India operations. “Our investment will be in manpower, hardware, software, brand building and customer relations. We hope to recruit about a 100 persons at Mohali, and from a 3,500 square feet facility, would be expanding our operations to 10,000 square feet area,” he said.

From mobile gaming applications to music applications and from dating applications to advertisement applications - Ice 365 will provide a gamut of facilities to its clientele - cellphone operators, subscribers and media entities.

“We realised that India is a big market, and thus decided to expand our operations here. In the next three years, we hope to do business worth $100 million and in the coming years, we see at least 50 per cent of the revenue coming from India,” he said.

After having signed a pact with Airtel today for providing gaming services in 23 telecom circles of Airtel, Ice 365 is now negotiating with another cellphone operator for the launch of its services. “We cannot reveal the names of our partners now, because are at the final stages of negotiations,” said Mr Shoker. 

Mumbai, April 4
SEBI announced the guidelines for Indian depository receipts (IDR) yesterday. SEBI has set Rs 50 crore as the lower limit for the IDRs to be issued by Indian companies. As per the norms, the minimum investment required in an IDR issue has been set at Rs 2 lakh.

NRIs and foreign institutional investors (FIIs) have been restricted from purchasing or possessing IDRs without special permission from the RBI.

If the IDR issuer fails to receive minimum 90 per cent subscription on the date of closure of the issue, or the subscription level later falls below 90 per cent due to cheques not being honoured or withdrawl of applications, the company has to refund the entire subscription amount received, SEBI said. —UNI