Mandi Gobindgarh, April 7
Futures trading; holding back stocks by traders and manufacturers in the wait of price rise next month; and, speculation on the regulatory measures to be introduced by the government, is leading to sharp fluctuations in steel prices here.

If speculation on the likely government intervention to rein in steel prices led to a fall of Rs 2,000-Rs 2,500 per metric tonne, the fact that the government did nothing more than abolishing the customs duty and do away with the DEPB scheme on April 4, led to the steel prices bouncing back by Rs 1,500 per MT today. Later in the day, as news about the union government again imposing some harsher restrictions tomorrow gained ground, the steel prices fell by Rs 500 per metric tonne.

This fluctuation is desisting the industry here from entering into long-term contracts for supply, which is affecting their production. "With prices fluctuating every week, we cannot enter into long-term contracts for supply as the iron and steel scrap price could go up anytime. In case of long-term contracts, the producer here will have to sell at the rate when they signed the contract, while the cost of inputs like iron and steel can go up anytime now," says Vinod Vashishth, president of All India Steel Rolling Mills Association.

Nowhere would the impact of steel prices be more than in this 'steel town of India', as the steel prices for the region are first determined here. The total steel production is 2.5 million metric tonne and the annual turnover of the industry here is around Rs 8,000 crore. With over 500 steel units — furnaces, steel rolling mills, forging hammers, pipe plants and foundries — located in this town, even minor aberration in steel prices here has a ripple effect on the steel-based industry in the neighbouring cities of Ludhiana and Jalandhar.

Since steel prices have been shooting up sharply since November 2007, steel units here are now squeezing their profit margins. Says Rohit Gupta, managing partner of Vishnu Steels, "We have had to cut down on our profit margins by about 15 per cent in the past three months. The input costs — iron and steel scrap, ferro alloys and coking coal — have shot up by almost 100 per cent, but we have increased the price of finished goods by only 36 per cent, leading to a squeeze in profits," he says.

Agrees Pankaj Garg, director of Bharat Ispat Udyog, "The money in circulation is getting tight and most of the steel producers are going to the banks for a hike in their credit limit. The small manufacturer is the worst sufferer as his credit limit has gone down. He now gets fewer raw materials for the same amount than he was getting three months back. As a result, his production is going down. Because of the high input costs, everybody here is trying to cut on cost of production by using coking coal instead of the more expensive furnace oil".

With the global steel prices continuing to soar, another price hike by the main steel producers (inspite of the regulatory mechanism introduced by the government) is imminent in May. As a result, a majority of producers and steel traders here have decided to hold back their stocks, and make a profit once the prices soar. This has further led to a gap in demand and supply, and the steel dependent industry — bicycle and bicycle parts manufacturing industry and auto component industry — in Ludhiana is feeling the pinch. 

Jalandhar, April 7
Indian hand tools manufacturers failed to bag even a single order from buyers at the International Trade Fair held at Cologne recently owing to the high prices of steel in the country.

Hand tools, bicycle and auto products manufactured in the country are 30 per cent costlier than those made in China, a country, which ironically, imports steel and iron ore from India.

Jagdish Singh, a representative of the Association of Indian Forging Industry and CMD of GNA Enterprises, said China was controlling the world steel market and the impact of the same was being witnessed here. “The cost of steel has increased by 33 per cent within the past two months. As a result, our products are Rs 14-15 costlier than Chinese products,” he added while addressing mediapersons here today.

He said the need of the hour was to ban the export of steel as has been done by Taiwan, China, Japan, Argentina, Korea and other countries keeping in view the need of their domestic industries.

He warned that if the situation was not checked, Chinese goods would flood Indian hand tool/auto component/bicycle and casting industry, leading to the closure of thousands of industries and rendering lakhs of workers jobless.

In fact, many entrepreneurs have already visited China to select places to set up their units. To stop this, the government should ensure that our mills sell steel at par with that of the US and Chinese ones, he added.

Singh said India’s status as a global small car hub and also a major sourcing for vehicular industry was under a major threat.

S.C. Ralhan, CEO, Sri Tools, said he had met Prime Minister Manmohan Singh on March 19, who, he said, would discuss the matter with the steel minister. Nothing came out of it and the prices of steel continue to rise by the day.

Citing the case of hand tools, he said China was importing steel from India, making the product and selling it at 30 per cent cheaper in the international market. “How can we compete with them if the government does not ban the export of steel as a short-term measure and ban the export of iron ore as a long- term one,” he questioned.

Similarly, Satish Dhanda from the cycle industry, said the export of bicycle parts too had taken a beating on this account. Steel prices had played havoc with their inventory and they were struggling to complete their orders in time, he added. The industrialists demanded that a steel regulator should be appointed to regulate the prices of steel and export of iron ore should be banned.

Mumbai, April 7
Market regulator Sebi is considering measures to smoothen the procedures of cross-listing of companies on bourses in India and abroad, its chairman C B Bhave said today.

"It is our belief that companies which are listed abroad would be interested to come to the Indian market...Similarly, Indian companies which have operations in other countries would be interested in listing abroad. We want to see how to smoothen this process," Bhave told reporters on the sidelines of a seminar here.

He said the US and European markets were already making serious efforts to promote cross-listing of companies.

The market regulator's comments came close on the heels of remarks of New York Stock Exchange Euronext CEO Duncan L Niederauer that the exchange was considering listing in Asian markets, including India.

Earlier, speaking at the seminar on 'India-Hong Kong Financial Sector Cooperation', Bhave said the country is looking to enhance cooperation between the two countries for mutual benefit.

The country's financial sector is opening up and it is welcoming foreign fund managers, brokerages and investment bankers to set up shop here.

"We welcome foreign investment through FIIs into the domestic market," he said.

On listing of foreign corporates on Indian bourses, Bhave said this was yet to happen.

"Even after formulating regulations for Indian Depository Receipts, a way by which foreign corporates can have an exposure to this market, we are yet to get a response from foreign corporates," Bhave said.

"Flows are not only in terms of investment in capital markets. There are different kinds of capital flows like trade flows," he said.

Bhave said the regulator was keen to safeguard the interests of investors and would encourage innovation in the market.

On FIIs collaterals investment, he said Sebi would hold a meeting with FIIs, the custodians and all institutional participants before finalising any regulation. — PTI 

Guwahati, April 7
The industrialists and manufacturers in the North-East have seen red over union finance ministry’s latest notification, imposing restrictions on excise duty (ED) relief benefits for the region as granted in the special North-East Industrial Policy aimed at facilitating setting up of industries in the backward region.

The Federation of Industries and Commerce North-Eastern Region (FINER) demands that the notification, which was unilaterally imposed by the finance ministry, should be withdrawn immediately failing which it would force closure of many units in the region besides driving away prospective investors from the region.

The FINER said in case the notification is kept in force, the ambitious Rs 5,400-crore Brahmaputra Valley Gas Cracker and Polymer Project would become unviable because of sharp cost escalation.

In the Central Excise Tariff notification, which was issued on March 27 last without giving any chance of hearing for the industrialists based in the North-East, the union finance ministry has withdrawn the total exemption of excise duty paid from the personal ledger account (PLA) and allowed exemption only up to 56 per cent of total excise duty. The rates of exemption would now vary from sector to sector.

FINER president R.S. Joshi said the industries of the NE Region covered under the Central Government NE Industrial and Investment Promotion Policy (NEIIPP) 2007 or under the North East Industrial Policy 1997 were taken aback by this notification which has drastically curtailed and restricted the central excise refund.

Calling this step as counterproductive to the spirit of industrialisation, the trade body said while most of the manufacturing units would be compelled to go for a complete closure, many others, including most of the FMCG companies, would prefer manufacturing in the more congenial atmosphere at Uttarakhand and Himachal Pradesh.

According to FINER, the notification will affect excise duty refund to the tune of Rs 700 crore. Meanwhile, Assam industries and commerce minister Pradyut Bardoloi assured the FINER to take up the matter with finance minister, P Chidambaram.

FINER director Sandip Khaitan said though the federation would prefer a quick out-of-court settlement on the issue, yet many individual units might resort to legal action against the government over the notification.

New Delhi, April 7
Industry chamber Assocham has carried out a survey on inflation taking opinion of nearly 165 CEOs. According to the study, the problem of rising inflation lies in the shortage of goods, particularly food and metals, and not with the excess money in the economy.

The solution to the issue, the survey says, lays not in raising interest rates or tightening the liquidity system through cash reserve ratio, but in increasing supplies and strengthening the Public Distribution System (PDS).

About 87 per cent of the CEOs said the government and RBI should adopt a two- pronged strategy. In the long term, they should adopt measures to boost farm production and divert resources towards increasing productivity.

''Government should aim at improving the functioning of the public distribution system by making use of the modern technology. The quality of food provided under public distribution system should also be improved,'' said Assocham president Venugopal N Dhoot.

The industry leaders also believed that the Centre alone might not be able to handle the critical issue of inflation. About 68 per cent of those surveyed said, the state machinery should be geared up to deal with the problem. Also, the state governments might consider reducing VAT, octroi and turnover tax on essential food items.

Sixty-three per cent of them said instead of using money tightening as the primary tool, the RBI should ensure enhanced credit allocation to the critical sectors.

Zurich, April 7
Novartis AG has agreed to buy Nestle AG's 77 per cent stake in US company Alcon in a deal worth up to $39 billion to boost its eye care business, the Swiss drugmaker said on Monday. Novartis will acquire a first, 25 per cent stake in Alcon for $11 billion and is set to buy Nestle's remaining 52 per cent for a fixed price of $28 billion between January 2010 and July 2011.

''The margins are higher than our pharma business and are obviously very attractive,'' Novartis chief executive Daniel Vasella told reporters. Novartis is keen to broaden its business from prescription drugs, which face increasing competition from generic medicines and a tougher path to markets, to non-traditional areas like vaccines, eye care and generics. The price of the first stake is at a 4 per cent discount to Alcon's closing price on Friday.

Novartis, Europe's second-largest pharmaceuticals company by market capitalisation, would pay a 22 per cent premium to Alcon's closing price if it went ahead with the purchase of the second tranche. Nestle can force through the purchase of the second tranche, but Novartis can opt out if there is a material change in the business, Novartis said. The acquisition of the first stake values Alcon at 22.8 times expected 2008 earnings and the possible second step at a 2010 multiple of 22.5, according to Novartis.

The deal represents ''a very rich price in our view despite the double-digit growth projected for the company (Alcon),'' WestLB analyst Andreas Theisen said in a note.

Nestle, the world's largest food group, said the transaction would have a positive effect on its 2008 earnings per share.

Shares in Nestle were 2.15 percent higher at 522.50 Swiss francs by 0739 GMT. Novartis shares fell 0.6 percent to 52.10 francs.

''Alcon's sales and margins are clearly higher than Novartis's. However, the takeover structure may make cost savings difficult for several years,'' said Landsbanki Kepler analyst Denise Anderson.

Alcon, the world's largest eye care company with sales of $5.6 billion, will add to Novartis's own contact lens and eye medicine business, which had 2007 revenues of about $2.5 billion. — Reuters

Chandigarh, April 7
Haryana has emerged as a leading state in poultry farming business in the northern region as Punjab's poultry industry has been adversely affected with the boom in the real estate sector.

Interestingly, other reason for Haryana becoming destination for this industry is the low prices of land in the interiors of state and its proximity to the National Capital Region.

The industry is shifting to Haryana as farmers in Punjab are selling out their lands to the real estate developers to earn high profits. In the past few years, most of the agro-based industries in Punjab have been vanishing and poultry is one of them, which was a leading employment generator business sometime back.

One of the entrepreneurs revealed that there was no doubt that the poultry industry was declining in Punjab as the egg production has gone down steeply and the broiler business had also become stagnant. He said one of the reasons for this decline of this business in Punjab was rise in prices of maize feed and concentration of people towards real estate.

According to the experts, the poultry farming is now becoming popular in Haryana with Barwala surfacing as a big industry for eggs in the region. Jind is also emerging as a big market for the broilers in the state. Expansion of this industry could be noticed in some parts of Hisar and periphery area of National Capital Region (NCR) as Delhi is the biggest market of poultry products in this region.

Interestingly, the poultry farmers are not investing in NCR, but in its periphery districts as they have to invest less on land in these areas and they could easily avail the markets of the NCR for selling their products.

According to statistics, more than 1.5 crore eggs are laid by chicks in Haryana per day whereas the figure for Punjab is one crore eggs. Similarly, the availability of broilers in Haryana is 45 to 50 lakh in comparison to 25 to 30 lakh in Punjab .

New Delhi, April 7
Seeking to complement its domestic target of doubling its presence to 20,000 outlets this year, Anil Ambani group's Reliance Money has drawn out an aggressive expansion plan for the overseas market to set shop in about half a dozen locations by the end of the current fiscal. "We will be setting up offices in six-seven strategic locations around the world in 2008-09," Reliance Money CEO Sudip Bandyopadhyay said.

The brokerage and financial products distribution firm, which is part of ADAG's Reliance Capital, has identified locations like Kuwait, Bahrain and Doha in the West Asia, while it is looking at Singapore and Hong Kong in South Asia, according to Bandyopadhyay. The London office would come up in the next six months while the West Asian branches are expected to be functional during the first quarter. — PTI

BRIEFLY

Jet Airways in codeshare pact with Japan's ANA
New Delhi: In a first code sharing agreement between Indian and Japanese airlines, Jet Airways has partnered Tokyo-based ANA to commence operations on the Mumbai-Tokyo route from next month. Jet Airways, which currently operates a fleet of 81 aircraft, and ANA, which carries 50 million passengers a year, "will commence a code sharing and network-wide reciprocal frequent flier partnership effective May 21, 2008, subject to regulatory approval", an official release said.— PTI

Petron Engg bags Rs 84 cr contract
Mumbai: Petron Engineering Construction said on Monday it has bagged a Rs 84.27-crore contract from Bharat Oman Refineries (BORL) for mechanical work at Bina Refinery in Madhya Pradesh. BORL, which is setting up the Rs 10,400-crore Bina refinery, is a joint venture of Bharat Petroleum Corp Ltd and Oman Oil Company.— PTI

UB fixes rights issue price at Rs 177
Mumbai: The committee of directors of United Breweries (UB) Ltd have decided the price for its rights issue at Rs 177 per equity share. The company informed the BSE on Monday that it would issue one rights issue share for every nine equity shares held on the record date. — UNI

AIG’s World Gold Fund
Mumbai: Encashing on the low sentiments prevailing in the capital market, AIG Investments on Monday announced the launch of AIG World Gold Fund in India to tap funds from the country for gold mining companies world wide. AIG Global Asset Management Company India CEO Saurabh Sonthalia told newspersons here that the New Fund Offer opening for purchase from April 15 to May 14, was an open-ended fund of funds scheme investing in companies engaged in extracting, processing and marketing of gold through an international fund.— UNI

Hindustan Unilever CEO
Mumbai: FMCG major Hindustan Unilever on Monday announced the appointment of Nitin Paranjpe as the CEO and managing director of the company, while Douglas Baillie will be elevated as the Unilever group executive. Paranjpe would replace Baillie, who would also be the group president for Unilever's business in western Europe, HUL said in a filing to the Bombay Stock Exchange.— PTI