New Delhi, April 21
The issue of banning futures in essential commodities- wheat, rice and pulses- has got conflicting interests of various ministries. Commerce Ministry and Agriculture Ministry are in favor of continuing the commodities trading, whereas Finance Ministry is against the essential commodity trading. Sharad Pawar in the Parliament last week has stated that he is mulling a ban on trading and is awaiting a report from the Abhijit Sengupta Committee on the same. But the draft report by the Sen committee on futures trading has not found conclusive evidence in rising prices and trading of commodities.

Sources in the Food Ministry, which support Pawar, say that when markets have been opened for trading commodities there will be convulsions in prices and the society will have to bear the same in the interest of the farmers for a while.

The trading in futures was brought in with the idea of farmers getting a better price for their produce besides trading would only help in building up the markets, added Food Ministry sources.

However, Finance Ministry sources said that excess speculation could create havoc in the domestic prices. “We should wait for the markets for these commodities to mature before allowing trading in them.”

Traders say that the government is panicking and making them a scapegoat for its faults. There is no question of hoarding wheat or rice and the government is trying to deflect the masses from the mismanagement that has taken place.

Traders claimed hoarding commodities required large-scale facilities and these could not be built overnight, the government tried to go after some traders to show that it had taken action but nothing much has come out of those raids. The government machinery knew where grains were hoarded and if there was any truth behind this then there would be large seizures. But there had been no seizures as there are no surplus stocks, add traders. The Sen committee has stated in its draft report that a well functioning futures markets have the potential of bringing about price stability over medium to long term.

The government had set up the committee to study the impact of futures trading on prices of farm commodities.

New Delhi, April 21
The government has withdrawn incentives given under various schemes for exports of skimmed milk and other dairy products, a move aimed to boost supplies in the domestic market and contain the high inflation rate.

Benefits provided under Vishesh Krishi and Gram Udyog Yojana (VKGUY), Focus Market Scheme and Duty Entitlement Pass Book (DEPB) rates have been withdrawn for export of SMP, casein (milk protein) and other milk products as well.

“Export of skimmed milk product, casein and any other milk product shall not be entitled for the benefit of VKGUY and Focus Market scheme with immediate effect,” a notice by the Directorate General of Foreign Trade notice said. It also specified that these products would not be entitled for DEPB.

Commenting on the move, Amul General Manager, (Marketing), R S Sodhi told PTI, “It seems the measure has been taken to discourage milk exports and thus improve the availability in the domestic market.” He said incentives have been withdrawn even on exports of consumer packs of milk and value-added products like cheese.

Meanwhile, the wholesale price index of milk has risen 1 per cent for the week ended April 5.

CRISIL Principal Economist D K Joshi said, “Although WPI of milk rose 1 per cent last week, this is not the prime driver for inflation, which is hovering over 7 per cent.” Sodhi said such moves would not help exporters like Amul as India may lose credibility and assured market globally. — PTI

New Delhi, April 21
Income Tax Department has slapped a Rs 1,768.49 crore tax claim on state-run Oil and Natural Gas Corp (ONGC) mainly for the price discount it gives to refiners for subsidising cooking and auto fuels.

ONGC gives discount on the crude oil it sells to Indian Oil, Bharat Petroleum and Hindustan Petroleum after the Cabinet asked to bear 28.5 per cent of revenue loss on sale of petrol, diesel, domestic LPG and PDS kerosene.

The Dehra Dun range of I-T department treated Rs 17,023.87 crore worth of subsidy discounts ONGC gave in 2007-08 as income and imposed a tax penalty of Rs 1,548.54 crore, industry sources said. Subsidy discounts are expenditure and the firm never receives those revenues.

The department also disallowed deduction of Rs 5,016.57 crore under section 80-IB that provides tax holiday on production of mineral oil and imposed a tax claim of Rs 1,688.58 crore.

Further, Rs 752.6 crore of prior period expenditure was disallowed and a tax demand of Rs 253.33 crore placed, they said, adding that the total tax demand placed on ONGC after including other smaller amounts was Rs 4,213.36 crore. And after adjusting Rs 2,634.34 crore tax refund claimed by the company, the IT department placed a demand of Rs 1,579.02 crore plus an interest of Rs 189.47 crore.

Bending its own rules, the IT department on March 25, asked ONGC to pay Rs 1,000 crore within five days and the balance 768.49 crore within 30 days.

Sources said ONGC had appealed against the tax claims in the Nainital bench of the Uttarakhand High Court, which has reportedly stayed IT department’s March 25 demand order. The court is likely to hear the matter this week.

ONGC, in its appeal before the Nainital bench of the Uttarakhand HC, said discount on crude oil price given to IOC, BPCL and HPCL constituted expense and not income.

On deductions under section 80-IB, ONGC claimed that each well constitutes a separate undertaking and income from sale of oil produced from it was eligible for exemption under the 80-IB (9) tax holiday.

The oil major also claimed that the I-T department overlooked the over two decade old understanding it had with the company for allowing prior period expenditure that had not been accounted for in the previous tax returns. — PTI

New Delhi, April 21
Country’s largest private sector lender ICICI Bank jacked up auto loan interest rates by up to 0.75 per cent even before the RBI decided to increase statutory deposits last week as a part of inflation controlling measure.

“Rates have increased in between 50-75 basis points for certain segment of auto loans from the first week of April,” ICICI Bank group business (head) Vehicle Loans N R Narayanan said.

“The decision to increase auto loan was taken in March, but we kept it on hold till the beginning of the new fiscal,” he said.

Auto loan prior to the hike, he said, was in the range of 13.5-14 per cent, which have gone up by 0.75 per cent during the month.

ICICI Bank, going forward, could further revise rates depending on the market condition and competition.

Decision on interest rates would depend on how competitors behave. “You have to take all this into account before you do any rate adjustment,” he had said last week.

As ICICI Bank is the largest player the auto loan market, its decision to raise the interest rates would have bearing on the industry.

When asked about reason for the hike, the ICICI Bank spokesperson said the decision is taken based on cost of fund and operating expenses.

Loans on two-wheeler have been increased by half a percentage point, he added.

Last week, the Reserve Bank (RBI) hiked Cash Reserve Ratio, the amount of depositors’ money that banks need to park with it, by half a per cent to tighten money supply. — PTI

New Delhi, April 21
World’s largest truck maker Daimler AG and India’s Hero group today said they will invest Rs 4,400 crore in the next five years through a joint venture to develop and manufacture commercial vehicles (CV) in India by 2010.

The two companies have signed a joint venture agreement in which the German partner will have 60 per cent stake and the rest will be with the Hero Group in a company named Daimler Hero Motor Corporation (DHMC).

As a part of the agreement, Daimler will invest Rs 1368 crore while the Hero Group will put in Rs 900 crore.

“This joint venture will first focus on light and medium commercial vehicles which will be developed with specific Indian conditions in mind to be launched by 2010. By 2012 it will roll out heavy commercial vehicles,” Daimler Trucks head Andreas Renschler told reporters here.

Currently, the partners are scouting for a location to set up a greenfield plant.

“We have identified three locations-Haryana, Chennai and Pune. In another four to six weeks time we expect to finalise the location,” Hero Corporate Services chairman Sunil Kant Munjal said.

The plant will have an initial production capacity of 70,000 units and will be scalable in future, he added. The joint venture aims to have a localisation level of 80 per cent when it starts entering the Indian commercial vehicles market by 2010.

Renschler said the JV with Hero would be responsible for products that are specifically developed for the Indian market and exports to other emerging markets.

“Any import of existing products to India from Daimler’s portfolio will go to Mercedes Benz India and the JV will develop new products for the Indian market,” he added.

He said as Daimler already has a research and development centre in Bangalore, the JV should be able to leverage from it.

Asked about the intended spend on R&D, he declined a direct comment but said it will be significant. Renschler also said Daimler had no plans to exit from Tata Motors, where it has 6.6 per cent stake although it will “see” on how to go about the 3.6 per cent stake in Eicher Motors. — PTI

New Delhi, April 21
Burman family, the promoters of the Dabur Group, have exited completely from Dabur Pharma by selling their entire stake (65 per cent) in the company.

The sale of the stake, priced at Rs 76.50 per share was signed in New Delhi and is awaiting requisite regulatory approvals, said a release today.

Commenting on the deal, Dr Anand C Burman, founder and director of Dabur Pharma said, “We are happy to have created significant shareholder value through this business and are confident that this business will continue to grow and strengthen under the able guidance of Fresenius group. This is definitely a win-win situation for the shareholders and employees of DPL and Fresenius Kabi.” European health care firm Fresenius Kabi had earlier said it would launch a public offer to purchase further 20 per cent stake, while it prepares to invest about 70 million dollars in further expanding its activities in India.

Fresenius Kabi had spent Rs 878.2 crore in acquiring the 73.3 per cent stake and the open offer, if fully subscribed, would cost the new owner around Rs 240 crore at Rs 76.59 per equity share.

Announcing further plans, Baule said Fresenius would invest about $ 60 million towards marketing expenses every year and a majority of this would be spent on expanding Dabur Pharma’s oncology business globally, Baule said.

Besides this, it would invest an additional $ 0 million in augmenting the production capacity of Dabur Pharma’s active pharmaceutical ingredients (API) plant located near Kolkata.

The company would primarily invest in getting approvals for Dabur Pharma’s oncology products globally and particularly European countries.

Fresenius Kabi would also expand the present workforce of Dabur’s oncology division.

India will also be the manufacturing hub of Fresenius for oncology products. The European firm has made it clear that it has no plan to delist Dabur Pharma after the acquisition. The existing management of Dabur Pharma will continue to function. 
— Agencies

Mumbai, April 21
Reliance Money today joined hands with the Bombay Stock Exchange and Bombay Bullion Association to launch the country’s first organised bullion trading platform, the Bullion Spot Market (BSM).

BSM, billed as the first of its kind in the country, would help jewellers monitor international bullion price fluctuation on real time basis and facilitate retail investors in purchase of gold coins and bars.

“BSM would be in operation within a month and the trading will take place over the counter to determine the price in world gold markets,” Reliance Money’s director and CEO Sudip Bandyopadhyay said here.

Apart from the BSE and Reliance Money, the venture will be in association with the National Multi-Commodities Stock Exchange and IT People (India) Ltd.

Currently, gold prices are governed by London Bullion market as a reference point. Existing practices lack transparency, uniformity in quality and value realisation for the jewellers and retail customers. — PTI

BRIEFLY

Mumbai
Binani to invest Rs 2k cr: Binani Cement would invest Rs 2,000 crore to double its capacity to 12 million tonne per year by 2012. It would put up a two-mtpa greenfield plant in Gujarat with an investment of Rs 800 crore, Deputy MD Vinod Juneja said here. The company would also set up a one mtpa grinding unit in Bharuch at cost of Rs 200 crore. — PTI

TIRUCHIRAPALLI
BHEL wins contract: BHEL has won orders worth around Rs 2,030 crore for supply and installation of the main plant package at the 1,000 MW Nabinagar Thermal Power plant project in Bihar. The orders have been placed by Bharathiya Rail Bijlee Company Limited. — PTI

MUMBAI
PSL bags orders: PSL Ltd has bagged two orders worth Rs 1,225 crore from L&T and HPCL-Mittal for laying pipelines. “With the aforesaid two contracts valuing around Rs 1,225 crore by the two firms, PSL could achieve its desired objectives of the current financial year 2008-09,” it said. — PTI

Mumbai
L&T’s 3500 cr complex: L&T has entered into a pact with CIDCO to develop a world-class Integrated Commercial Complex at Seawoods railway station, Navi Mumbai at a cost of Rs 3,500 crore. — PTI