New Delhi, May 12
In the wake of rising crude oil prices in the international market, the public sector oil companies - Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum - that are reeling under huge under-recoveries (difference between purchase price of crude and selling price of petroleum products like petrol, diesel etc) have written to the petroleum ministry stating that if the situation was not looked into, these companies would go bust in the near future.

The letter written by these three companies assumes significance because crude oil prices are rising, around $120 per barrel (Indian crude basket), but the selling price of products — petrol, diesel, kerosene and LPG — have been kept constant.

The government, in order to compensate the PSUs for these under-recoveries, has been issuing oil bonds, but now the situation is getting grave and very soon these companies will not be able to pay the suppliers of crude oil, thus disrupting the production, say analysts.

The situation is so bad that the oil PSUs have stated that they would not be able to make timely payments to domestic crude oil producers like ONGC and OIL as well. Besides, they have stated that in future a cash crunch would mean making a payment to oil producers through oil bonds.

This, analysts say, is a sign of worry because the oil bonds that have been issued by the government to these PSUs are already selling at a discount. They are selling at discount because these bonds do not have a sovereign status like other government bonds, adding to the losses of the oil PSUs. Another implication of paying ONGC and OIL through oil bonds would mean that these two companies will also have to bear the burden of loss. ONGC and OIL are already paying to the government some part of the under-recovery, but when it comes to realisation of money through sale of bonds, it will mean additional drag on these two oil producers, say analysts.

The under-recovery for 2007-08 for three oil PSUs is around Rs 77,000 crore, and it is estimated that in the current year it may rise to Rs 1,60,000 crore. The under-recovery on petrol is Rs 13.97 per litre, diesel Rs 20.97 per litre, kerosene Rs 28.72 per litre and on cooking gas, it is Rs 305 per cylinder.

The oil PSUs, owing to a cash crunch, have also deferred their expansion plans and development of any new capital projects. In addition to this, companies fear that in the coming fiscal 2008-09, they will not be able to pay the government yearly dividend.

In the wake of such a crisis, the oil PSUs have suggested that the customs duty and excise duty on petrol and diesel should be reduced by 5 per cent and Rs 1 per litre, respectively. There is also a suggestion to increase the retail selling price by Rs 2 per litre for petrol and Rs 1 per litre for diesel. Besides, the companies have also suggested that there should be a targeted subsidy for kerosene and gas cylinders only for the people who are below the poverty line.

If the situation gets worse, the companies fear that with the cash crunch resulting in non-paying ability, it may restrict the production of petrol and diesel to indigenous availability of crude oil, as they may not be able to buy crude from outside the country. 

New Delhi, May 12
It is not just the common man, but the inflationary situation is now hurting the industry as well. According to the figures released today, the industrial output, measured by the Index of Industrial Production (IIP), the industrial growth has slowed down to 3 per cent during the month of March 2008.

Industrial production growth in 2007-08 has been hit by a appreciating rupee as well as rising interest rates, say economists. According to them, it will continue to do so in the coming year.

The data, which was released by the Central Statistical Organisation today, revealed that production in manufacturing sector, which has an 80 per cent share in the IIP, grew by 2.9 per cent as against a robust 16 per cent in the month of March 2007.

Consequently, growth in industrial production during the year fell to 8.1 per cent from 11.6 per cent in 2006-07, mainly due to poor showing of the manufacturing sector that accounts for over two-third of the IIP.

In the April to March period of 2007-08, overall industrial production growth stood at 8.1 per cent as against 11.6 per cent in the same period of 2006-07.

Consumer durables production in March 2008 dipped by 2.1 per cent as against a growth of 3.8 per cent in March 2007. Capital goods production in March grew by 8.6 per cent as against 18.1 per cent in the same month previous year

Basic goods production in March 2008 grew by 3.1 per cent as against 11.9 per cent in the year ago month. Intermediate goods production in the month was up by only 3.5 per cent, as against 15.3 per cent in the corresponding month of the previous year.

New Delhi, May 12
Inflation is expected to come down to the acceptable level of 5 to 5.5 per cent after four months due to an anticipated good monsoon and measures taken by the government and Reserve Bank, Prime Minister's Economic Advisory Council chairman C Rangarajan said today.

"Inflation is likely to come down to 6 per cent in the next three to four months. Thereafter it can come down to 5-5.5 per cent depending upon the monsoon and other factors," he told reporters here on the sidelines of an international tax conference.

It is not only due to monetary measures announced by the Reserve Bank, but due to other factors as well, he said.

Also, it would be due to the base effect, as inflation was rising at a slower rate at this time last year. Despite all assumptions, it would come down, he said.

"Much will depend upon the monsoon, much will depend on the way how the output behaves.. it is possible to go down to 5 to 5.5 per cent. At present, the expectations are that monsoon will be good," he said.

On the impact of fiscal measures taken by the government to curb inflation on tax collections, he said, "There will be, of course, some impact of fiscal measures but I think it could be taken care of." He also said the high oil crude oil prices, which have crossed $120 a barrel, could slow down the GDP growth though it would not "derail" the growth process. "I think high oil prices will have its impact (on GDP growth). It could slow down growth," he said.

"In January, the council had projected the GDP growth at 8.5 per cent, but now I would say that it could be between 8 and 8.5 per cent," Rangarajan said.

According to advance estimates of the Central Statistical Organisation, the Indian economy is expected to register 8.9 per cent growth in 2007-08.

Rating agency ICRA has projected the Indian economy to grow at a lower rate of 7.8 per cent this fiscal.

Earlier, addressing the conference, he said there was a need to "re-visit" the tax structure on oil products in view of the rising international crude oil prices.

Later, when asked about the need, he said the comment was in view of the "environmental aspect" as the taxes are imposed partly to curb oil consumption. 
— PTI

New Delhi, May 12
After months of discussions, Bajaj Auto and the Renault-Nissan alliance today announced that they would form a joint-venture company to develop, produce and market the ultra low-cost small car expected to take on the Nano of Tata Motors.

The commercial production of the $2,500 car will begin in 2011 and a subsequent launch, in the early half of that year.

Code-named as ULC, the project will see the formation of a new company jointly owned by Bajaj Auto (50 per cent), Renault (25 per cent) and Nissan (25 per cent). This will be Renault and Nissan's third joint venture project in India.

A release from Bajaj and Renault stated, "Targeting the growing Indian new vehicle market, the ULC will be made at an all-new plant to be constructed in Chakan in India”.

Initial planned capacity will be 4,00,000 units per year. Sales will start in early 2011 in India, as a primary market, with growth potential in other emerging markets around the world.

The feasibility has already extended into joint product development and the project is on line to meet targeted performance and cost, company officials said.

The company would initially invest Rs 1,000 cr in the venture. Renault and Bajaj will manufacture engines for the small car and LCV.

Chandigarh, May 12
The flip-flopping rates of interest in the home loan segment has drawn a new challenge with the banks of retaining customers, who are swapping their loans from one bank to the other.

Sources in the banking industry informed TNS that over the past two years, the percentage of these ‘floating customers’ is on the rise. The number of floating customers has increased to almost 4 per cent during this time. The problem has become more serious in Punjab and Haryana, where the home loan market is pegged at almost Rs 3,500 crore. This increase is mainly because of frequent hike in interest rates, thanks to a frequent increase in the Cash Reserve Ratio (CRR) by the Reserve Bank of India.

In the past two years, the interest rate on home loans has increased by almost 2 per cent. With banks vying with each other by offering competitive interest rates, the customers are quickly swapping their loans. Since the two leading private sector banks — HDFC and ICICI Bank are the worst hit, they have decided to take the bull by its horns.

Officials in HDFC informed that in order to desist customers from shifting to other banks, they have started counselling them on the hidden riders of the rival banks. “We are also charging them a pre-payment charge of 2 per cent, which desists most customers from changing banks. Since most customers shift to other banks to avail other loans, we, too, have started offering ‘top up loans’ for education, vehicle finance or personal purposes,” said a top official. He added that each time the rate of interest is hiked, the bank offers a step up repayment facility (where the EMI is increased gradually).

ICICI Bank has announced that it will not increase the equated monthly instalment (EMI) for its borrowers, it would rather increase the tenor of the loans. The step follows a large NPA in the home loans, after the benchmark prime lending rate (BPLR) for the floating rate borrowers was increased thrice - in December 2006, February 2007 and March 2007. A number of borrowers had reportedly not started paying the higher EMI and were instead demanding that the tenure of the loan be increased.

During this period (from December 2006 onwards), a number of borrowers had also started swapping their loans with other public sector banks. Earlier this year, when most banks had reduced interest rates on cues from the government, ICICI Bank had not cut rates, prompting their borrowers to shift to banks that charged lower interest. 

New Delhi, May 12
The expansion plans of the telecom companies in Jammu and Kashmir and Punjab, in the border region, may come to halt with the state police and other security agencies, especially the Intelligence Bureau (IB) denying them permission to erect towers near the borders of the two states with Pakistan.

According to reports, state-run BSNL and other private mobile companies operating in the militancy-hit state and neighbouring Punjab have been prohibited from erecting towers along the international border and Line of Control until they have put in place a mechanism to block or weaken signals from travelling to Pakistan or Pakistan-occupied-Kashmir.

The move apparently comes following the IB report that Indian mobile phone signals across the international border was facilitating communication between terrorists, and the service providers had failed to ensure that the signal is rendered unusable within 500 metres of the border.

IB had also said that not only were signals available across the border in many places, but subscriber verification was also far from satisfactory, the two mandatory conditions laid down by DoT for service providers to operate in the area.

Recent checks by the security agencies brought out that the signals of BSNL and private companies were available within the range of 10 km of the LoC and the border and it was found that active signals were drifting across.

The Department of Telecom (DoT) has been asked to impose strict conditions on the licensees so that they use the requisite technology to ensure that the signals become unusable within 500 metres of the international border round the clock.

The service providers are not allowed to provide mobile signals within the ‘no service zone' which is a distance of 500 metres from the border. The service providers are also not permitted to install Base Trans-Receiver Station (BTS) in the buffer zone of 10-km along the LoC, LAC and the international border between Akhnoor and Pathankot.

The security agencies initiated this move after signals of Pakistani telecom companies were seen travelling into J&K freely. Besides, the defence ministry had also conveyed to the ministry of communications that these guidelines thwart infiltration attempts by militants and their dilution would lead to "adverse security implications".

BRIEFLY

Rupee crosses 42-mark
Mumbai: The Indian rupee on Monday tumbled by 47 paise to close at a nearly 13-month low at 42.05/06 against the greenback following heavy dollar buying by oil refiners as crude oil prices remained firm. Concerns over the widening trade deficit due to higher global crude oil prices and also sustained rise in inflation and steep fall in industrial production mainly weighed on the rupee, dealers said. — PTI

Ranbaxy in pact with Merck
Mumbai: Pharma major Ranbaxy Laboratories on Monday said it has signed a collaboration agreement with US-based Merck & Co for drug discovery and clinical development of new products in anti-infective field. Both firms would work together to develop clinically validated anti-bacterial and anti-fungal drug candidates, Ranbaxy said. — PTI

Jindal Stainless in Indonesia
New Delhi: Jindal Stainless and Indonesian mining major Antam on Monday signed an agreement to jointly develop a nickel smelting and stainless steel plant with an investment of about $700 million in South East Sulwasi (Indonesia). This was announced by Jindal Stainless director N.C. Mathur. — PTI

Tata launches cash-&-carry biz
New Delhi: Tata group company , Tata Chemicals Ltd and Ireland-based Total Produce joint venture company, Khet-Se Agriproduce has launched its wholesale business for fresh fruits and vegetables sourcing, packaging and distribution in Punjab. The company has opened a new procurement and distribution facility at Malerkotla. It is also expected to begin operations in Mumbai in the next six months.— PTI

Sprite’s summer campaign
Chandigarh: Sprite has launched a digital initiative using mobile phone technology that has been designed to connect and engage with the youth across the country. The initiative has been designed as a youthful expression of ‘Sprite — 2008 summer campaign’. It offers consumers a chance to win free talk time and is applicable to both GSM and CDMA mobile consumers across all leading mobile service operators.
— TNS

Satyam’s Middle East revenues
Dubai: Satyam Computer Services has reported a growth of more than 100 per cent in revenues to $28 million from Middle East in fiscal year ending March 2008. “In the last fiscal year, we experienced about 100 per cent growth in Middle East, with growth doubling in countries such as Kuwait and Bahrain. Qatar and the UAE also saw extensive growth,” Satyam director and senior vice-president (Asia-Pacific, West Asia, India and Africa) Virender Aggarwal said. — PTI

Kingfisher flights to Lanka
Colombo: Private air carrier Kingfisher Airlines is planning to operate flights to four more destinations, including Sri Lanka by the year-end. "We would be flying to Bangladesh, Houston and New York by end of August. Sri Lanka has been in the list of Kingfisher's expansion of horizons for a long time," regional manager trade sales, of the airline, Ritam Saha said here.— PTI