New Delhi, June 13
Despite government’s efforts to curb the rising prices, inflation continues to rise unabated.The headline inflation rate for the week ended May 31 soared to a seven-year high of 8.75 per cent as compared to 8.24 per cent in the previous week, the highest in UPA government’s tenure of four years. Food and vegetables continue to be expensive for the common man and there are fears that the prices will continue to keep rising in the coming weeks, when the effect of fuel price hike is factored in.

The rising prices of milk, pulses, spices, fruit and vegetables continue to pose a major challenge before the UPA government in an election year, even as the finance ministry in tandem with the RBI pursued tough policy and monetary measures to tame inflation.

Finance minister P Chidambaram today said the government was confident of bringing down the price rise. Attributing the soaring inflation to the spiralling crude oil prices, he hoped that the meeting called by the Saudi king to discuss the problem of zooming oil prices would bear fruits and rein in the petroleum prices.

On increasing minimum support price of paddy by Rs 105 per quintal to Rs 850, he said, it was a record increase by any government for the welfare of the farmers.

Planning Commission deputy chairman Montek Singh Ahluwalia exuded confidence that a good monsoon would control prices of commodities. “Inflation is on the rise and there is no denying that. It has become a major challenge for the government and we are taking all possible steps to control it,” Ahluwalia said.

Good agricultural growth, thanks to good monsoon, would bring down prices of commodities, he said.

“Production and procurement of wheat have witnessed a great high in this season and if we have a good rainfall, then production of rice will also see an increase, which will in turn bring down the inflation rate to some extent,” he said.

The RBI on Wednesday raised its key lending rate by 25 basis points to 8 per cent to contain inflation, but left all other rates unchanged. India joins central banks in Brazil, China and Russia in increasing borrowing costs to combat inflation, even as economic growth slows. It was the first hike in the repo rate — rate that commercial banks pay to RBI to borrow short-term funds — by the central bank in more than a year. It is expected that further policy-tightening measures like a hike in interest rate will be taken soon as the inflation will touch higher levels in the coming months.

Mumbai, June 13
Anil Ambani may have lost yet another battle to elder brother Mukesh as his company, Reliance Infrastructure, decided to pull out of the bidding process to construct a 22-km long sea link between Sewri in Mumbai and Nhava-Sheva on the mainland. The Navi Mumbai and MahaMumbai Special Economic Zones promoted by Mukesh Ambani's group companies are coming up on the mainland.

Originally, the consortium led by Anil Ambani's Reliance Infrastructure and Hyundai had won the bid to construct the sea link by putting the lowest bids earlier this year. The junior Ambani's consortium had estimated that it would be able to recover the cost of the project and its profits within a timespan of nine years and 11 months. As per the Maharashtra government's own estimates, the project would have taken 40 years to become profitable.

The second highest bid turned out to be the consortium led by Seaking Infrastructure Company of Mukesh Ambani, which quoted a concession period of 75 years.

The Maharashtra government said it had developed second thoughts on awarding the Letter of Intent to the Anil Ambani-led consortium due to the short concession period quoted by it, which raised concerns about the viability of the project. The government then appointed the London-based Dar Consultants to examine the viability of the project.

The company, however, got back saying that the bid proposals of companies led by both brothers were worth considering.

An official of Reliance Infrastructure (formerly Reliance Energy) stated that the company was pulling out of the deal on account of the "indecisiveness of the state government" in awarding it the contract.

"There is no clarity on whether the project will be offered to us in the first place and if so on what date," the company official stated.

Meanwhile, a well-placed state government official stated that the Maharashtra cabinet will take a decision on awarding the contract shortly. The government had requested the Anil Ambani-led consortium to seek an extension of the bid as it needed more time to study the deal. So far, sources say, the company has not sought an extention.

If the Anil Ambani-led company does not apply for an extension and let the project lapse, then his elder brother's company would be a major beneficiary. Mukesh Ambani's SeaKing Infrastructure is partnering IL&FS in bidding for the project.

New Delhi, June 13
The two brothers of the country’s richest family are at it again. After trading charges over sabotage in the early days of their division in the Dhirubhai Ambani family, the brothers — Mukesh and Anil — are at it again.

An Anil Dhirubhai Ambani Group (ADAG) group spokesmen tonight charged the elder brother’s group, Reliance Industries Ltd (RIL), of attempting to sabotage its potential multi-billion dollar deal with South African telecom giant MTN.

The ADAG spokesman said here that last night, in a mala fide effort to disrupt the talks, Reliance Industries Ltd (RIL), part of the Mukesh Ambani group, sent a communication to the MTN Group making a false claim of an alleged right of first refusal to buy the controlling stake in Reliance Communications Ltd (RCOM).

Not surprisingly, the RIL has sent the letter to RCOM only today i.e. after a gap of 24 hours, the spokesman said.

The Mukesh Ambani group, however, declined to comment on allegations from Anil's group that the RIL had communicated to the MTN about its claim to right of first refusal to buy controlling stake in RCOM and it was legally and factually untenable, baseless and misconceived.

An RIL spokesperson declined to comment when asked about the issues raised by ADAG.

The ADAG spokesperson said that the RIL had based its claim on an agreement of January 12, 2006, which was unilaterally signed only by RIL's officials when RCOM was under the RIL's control under a procedure which the Bombay High Court, vide its judgement dated 15th October 2006, has held to be "unfair and unjust."

The RIL's claim is borne out of mounting despair and frustration at Reliance ADA Group's continuing successes, and the support it enjoys from over 10 million investors, the world's largest shareholding family.

Asserting that the new combined entity would have operating profits of Rs 50,000 crore, much higher than the Mukesh Ambani group, the RCOM official alleged that the RIL was seeking to disrupt the creation of one of the world's most valuable telecoms combinations, which would make over a billion Indians proud of our great country, the spokesperson said.

RCOM's officials, however, exuded confidence that the RIL's attempt would not delay the negotiations on the deal, that is believed to be in the region of over $70 billion where Anil Ambani could be chairman of the combined entity with single largest shareholding.

Meanwhile, reports from Johannesburg quoted an MTN spokesperson as saying, “As far as we are concerned, nothing has changed... We (RCOM and MTN) are continuing talks.”

According to him, the new entity from the deal between RCOM and MTN would have 120 million subscribers.

RCOM got into the negotiations with the MTN for a potential deal on May 26, aimed at creating one of the world's 10 largest telecom companies, with a potential size of about $70 billion.

RCOM has been looking at various options, including a share swap in an effort to get the controlling stake in the MTN which would be in the range of $40 billion.

New Delhi, June 13
The Steering Committee on Greenfield airports today gave in-principle approval for greenfield airports at four places in Karnataka — Gulbarga, Bijapur, Hassan and Shimoga — and discussed the three-stage approval procedure for setting up greenfield airports in the country.

In its very first meeting held today, the Steering Committee granted “in-principle” approval to the four projects subject to the condition that Standard Operating Procedure (SOP) would be formalised between DGCA, AAI and ministry of defence regarding air space management for the airports at Gulbarga and Bijapur in view of existing defence operations at Pune and Bidar.

The meeting, headed by civil aviation secretary Ashok Chawla, had representatives from ministry of home affairs, ministry of defence, Department of Economic Affairs, Department of Revenue, Planning Commission, Indian Meteorological Department, Airports Authority and the DGCA.

The committee also discussed the format for applications for greenfield airports. It decided that three-stage approval process would be followed.

In the first stage, the proposal would be considered for site clearance by the Steering Committee based on suitability of location identified and air space management.

Once an applicant has the site clearance it would proceed with project preparation exercise, including preparation of Detailed Project Report and acquisition or buying of land. Once the proposal is formalised, an application to the Steering committee would be made for granting ‘in principle’ approval to the project.

After seeking the ‘in principle’ approval of the Steering Committee, the applicant would approach the DGCA for a licence, which would comprise of the last stage of approval for setting up of the project.

The government on April 24 had approved the policy for greenfield airports, following which the Steering Committee was constituted to coordinate and monitor the setting up of greenfield airports. 

Chandigarh, June 13
The ambitious plan of the government to break the existing chain of foodgrain procurement, by procuring directly from farmers, without the intervention of commission agents, has failed to take off. The government has now decided to allow the commission agents’ involvement in bringing the farm produce to these silos complexes.

The plan was to be implemented in the two silos at Moga (Punjab) and Kaithal (Haryana), which were declared as market yards by the two state governments earlier this year. It was believed that the move would help the Food Corporation of India (FCI) to procure wheat directly at the two state-of-the-art storages, built by Adani Agrilogistics last year. The government, too, would have saved Rs 29 per quintal by getting the wheat directly at the silos storage, which is the expenditure on sorting, packaging and transportation to warehouses.

However, while only 3,000 tonnes of wheat reached the silo directly at Moga, farmers in Haryana brought only 385 tonnes of wheat directly to the silo at Kaithal. This, inspite of the fact that the Centre had announced a bonus of Rs 19.17 per quintal for farmers bringing the produce directly to these storages over and above the minimum support price (MSP) of Rs 1,000 per quintal.

Officials in FCI informed TNS that it was not possible to completely leave out the commission agents from the procurement process. "As a result, we had to transport all grains procured in the mandis to these silos complexes, and this year we have managed to store 2.25 lakh tonnes of grain in each of the two silos," said the official.

Officials in Adani Agrilogistics, however, say that though the response was poor this year, they are expecting a much better response next year. Munishwar Vasudeva, vice-president, Adani Agrilogistics, said the farmers who had come directly to the silos complexes had returned satisfied with the arrangements made, and would spread the word in the coming paddy season.

These silos were built on a build-own-operate basis by Adani Agri Logistics and FCI has given a 20-year guarantee for usage of these storage facilities and will pay the company at the rate of Rs 200 per quintal per annum. While the mother depot at Moga will be linked to three field depots in Chennai, Coimbatore and Bangalore, the one at Kaithal will be linked to Navi Mumbai and Hooghly. 

Mumbai, June 13
Shares of Ranbaxy, the country's biggest drugmaker now being acquired by Japan's Daiichi, and that of Pfizer Ltd, the domestic unit of the world's biggest pharma company, rose by over four per cent amid speculations about a potential counter takeover offer by the US major Pfizer.

Ranbaxy's promoters Malvinder Singh and family, earlier this week agreed to sell their 34.8 per cent stake to Daiichi Sankyo in the biggest sell-out of an Indian promoter group that would be followed by an open offer for an additional 20 per cent stake.

Besides, Daiichi would get further stake of close to 15 per cent through preferential allotment of shares and equity -convertible warrants, taking its stake to over 50 per cent.

However, within days of the deal with Ranbaxy, in the run-up to which the share price of the Indian company had appreciated sharply, a fresh bout of buying activities was seen on the counter today after some media reports said Pfizer is readying a counter offer to acquire Ranbaxy.

Ranbaxy shares soared 4.31 per cent to close at Rs 566.90, while that of Pfizer ended the day Rs 620, up 4.76 per cent.

Shares of NYSE-listed Pfizer Inc, which has a market capitalistion of close to $120 billion, closed 1.03 per cent up at $17.73 in the US market on Thursday.— PTI

New Delhi, June 13
The worst is yet to come for the present UPA regime, with economists projecting that inflation would cross the double digit mark in the coming weeks.

"Once fuel price hike is reflected in the index, the rate may go up to 10 per cent," HDFC Bank chief economist Abheek Barua told PTI.

The government increased the prices of petrol by Rs 5 per litre, diesel by Rs 3 a litre and domestic cooking gas by Rs 50 a cylinder with effect from June 5.

According to petroleum secretary M.S. Srinivasan, the hike could lead to about 0.5-0.6 per cent rise in inflation rate.

The impact of the fuel price hike will be reflected in the inflation data to be released next week.

Inflation rate has already touched 8.75 per cent, the highest level witnessed during the UPA regime. The previous high of 8.77 per cent was recorded in February 2001.

Apart from supply constraints, Barua said the increased domestic demand was adding to the inflationary pressure.

"The current inflation rate was not only supply driven but domestic demand pressures have also started building up," he said.

Similar views were expressed by Crisil principal economist D.K. Joshi, who said inflation in the coming weeks would go up because of the fuel price hike and also on account of base effect.

As regards the Reserve Bank's recent decision to increase short-term lending rate to check price rise, he said it was aimed at containing future demand and may not have any effect on the current inflation. — PTI

Silicon Valley (US), June 13
Yahoo Inc has struck a deal with rival Google to run the online search leader's advertisements alongside its own search results in hopes of boosting its sagging fortunes, hours after announcing that its talks with Microsoft regarding a potential transaction had fallen through.

In a statement, Yahoo said last night it expects the pact — under which it will show Google ads next to its search results on some of its websites in the US and Canada —will increase its revenues by approximately $800 million in the first 12 months, and generate an additional estimated $250 million to $450 million in incremental operating cash flow.

"We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry. Our strategies are specifically designed to capitalise on this convergence — and this agreement helps us move them forward in a significant way," Yahoo CEO and co-founder Jerry Yang said.

Yahoo president Sue Decker said the agreement "provides a source of funds to both deliver financial value to stockholders from search monetisation and to invest in our broader strategy to transform display advertising and advance our starting point objectives with users." The companies have agreed to delay implementation of the agreement for up to three-and-a-half months while the US Department of Justice reviews the arrangement. The partnership with Google was widely anticipated after Yahoo failed to reach an agreement with Microsoft.

Earlier in the day, Yahoo announced that its talks with Microsoft regarding a potential transaction — whether for an acquisition of all of Yahoo or a partial acquisition — had ended. — PTI

BRIEFLY

13 FDI proposals cleared 
New Delhi: The government on Friday approved as many as 13 FDI proposals worth Rs 1,524.70 crore, including one by steel major ArcelorMittal for its operations in India and by Cyprus-based Golboot Holdings, which is reportedly pumping in Rs 700 crore in corporate major M&M. — PTI

Idea’s new plan for HP
Shimla: Mobile phone service provider Idea Cellular Ltd on Friday announced a new plan for its customers in Himachal Pradesh. The plan entails a recharge of Rs 31 which allows the customer to make STD calls at Re 1 and has validity of 30 days, a release from Idea said.— TNS

NYT to buy 5 pc in Deccan Chronicle arm
Mumbai: Deccan Chronicle Holdings, the publisher of English dailies Deccan Chronicle and Asian Age, on Friday said the New York Times Company is in discussion with it to acquire 5 per cent stake in one of its subsidiaries. "The New York Times Company has proposed and is in discussion to acquire a 5 per cent equity stake in Sieger Solutions Ltd, a 100 per cent subsidiary of Deccan Chronicle Holdings," the company said in a filing to the BSE.— PTI

PSL bags BPCL’s 123-cr order
Mumbai: Steel pipe manufacturer PSL Ltd on Friday said it has bagged a Rs 123-crore order from state-run BPCL for its Bina Kota Pipe Line Project. As per the contract, PSL would supply Carbon Steel Bare Line Pipes of varying diameters and thicknesses for a total length of around 262 km, the company said in a filing to the BSE.— PTI

Bihar Tubes to raise $50 m
Mumbai: Infrastructure products maker Bihar Tubes on Friday said it has received shareholders approval raising up to $50 million through issue of securities in the international markets. This is in addition to $20 million already approved by the shareholders on August 6, 2007, subject to approvals as may be necessary in one or more tranches.— PTI

13-cr subsidy to industry
Amritsar: The Punjab government has finally decided to release Rs 13 crore as capital subsidy, which is pending for the past 12 years. According to an industry spokesman, the government will hold a function on June 16 to pay off the subsidy to the hundreds of beneficiaries, who had been facing severe financial crises. — OC