New Delhi, August 12
Industrial growth almost halved to 5.2 per cent in the first quarter of this fiscal from 10.3 per cent a year ago, as rising interest rates continued to drag down manufacturing.

Growth of six core infrastructure industries, which account for 26.68 per cent of industrial production expansion, was a sluggish 3.5 per cent in the April-June quarter against 6.4 per cent a year ago.

Inferring from the Q1 data of industrial growth, as measured by the Index of Industrial Production (IIP), economists believe that economic growth this fiscal would moderate at below 8 per cent level against 9.1 per cent in 2007-08.

“Economic growth is likely to be 7.7 per cent this fiscal. It is unlikely to be more than this, though it may fall below,” HDFC chief economist Abheek Barua said here.

Standard and Poor’s chief economist (Asia Pacific) Subir Gokaran said the rating agency’s forecast of 7.8 per cent GDP growth for this year takes into account the pattern in the industry and the industrial slowdown is not surprising.

In the month of June, industrial growth slowed down to 5.4 per cent from 8.9 per cent a year ago as manufacturing growth decelerated to 5.9 per cent from 9.7 per cent and electricity generation to 5.4 per cent from 8.9 per cent.

“Interest rates have moved up and there has been a slowdown in exports to US, rest of Asia and cost of fuel has increased, slowing down the manufacturing sector," Barua said.

Consumer durables sector, which was a cause of concern for the government till recently, however, revived growing by 3.5 per cent in June against a fall of 3.6 per cent a year ago.

However, economists could not explain the revival. "This phenomenon is puzzling. Retail credit has slowed down. There is huge anomaly," Barua said.

Among infrastructure industries, crude production fell by 0.2 per cent in the first quarter against 0.7 per cent a year ago. In the month of June, the fall was sharper at 4.7 per cent against 1.8 per cent in the same month in 2007.

“Crude production is supply side problem. It is not suggestive of any long-term trend," Barua said.

Among industries, consumer non-durables grew by a whopping 12.2 per cent in June against 6.3 per cent a year ago.

Growth in the consumer non-durables sector, which mainly comprises clothing and food, may be because of good monsoon, Barua added.

However, capital goods growth, which is crucial for future industrial growth, declined substantially to 5.6 per cent from 23.1 per cent in June and 6.5 per cent from 19.1 per cent in the first quarter.

Analysts said capital goods production was exceptionally high last year. The slowdown this time was also attributed to low investment activity. Among broader definition of industry, electricity generation grew by 2.6 per cent in June against 6.8 per cent a year ago. In the first quarter, electricity generation grew by two per cent from 8.3 per cent.

Mining output growth, however, was up by 2.9 per cent in June from 1.5 per cent a year ago and 4.7 per cent in the first quarter against 2.7 per cent in 2008-09. 
— PTI

New Delhi, August 12
Finance minister P Chidambaram is expected to take stock of the recent hikes in interest rates at a meeting with heads of the public sector banks tomorrow, a day after official data showed industrial growth slowing down in the first quarter due to rising costs of borrowing.

Chidambaram would be meeting the bankers for the first time after the quarterly review of monetary policy by the Reserve Bank on July 29. The apex bank raised the key policy rate to 9 per cent following which most of the PSU banks, including the largest lender SBI hiked their lending rates by 50-100 basis points.

The meeting is coming a day after official data showed that industrial growth nearly halved to 5.2 per cent in the first quarter this fiscal from 10.3 per cent a year ago.

Economists attributed the slowdown to poor performance of the manufacturing sector due to rising interest rates. They projected the economy to grow at sub-eight per cent this fiscal from 9.1 per cent last year.

It is expected that the finance minister would also review the implementation of debt waiver scheme and interest rate scenario, sources said.

Chidambaram may even ask the bank to increase credit exposure to productive sectors and cut down credit growth to unproductive segment.

The sources also said banks could be asked to keep interest rate as low as possible for key areas like housing, up to certain category, and education loan.

Margins of banks are already under pressure due to successive hikes in the mandatory cash reserve and repo rate (short-term lending rate) by the RBI to contain inflation.

Throughout the current fiscal, the central bank has been following a stringent monetary policy, which saw repo rate surging by 1.25 per cent and CRR by 1.5 per cent. — PTI

New Delhi, August 12
Global rating agency Standard & Poor’s expects inflation in India to remain in double-digit figure till February 2009, which could propel another rate hike from the Reserve Bank of India in October.

“We expect the wholesale price index (WPI) to continue in double-digit figures till February next year and after which it will drop below that level and remain favourable beyond March 2009,” Standard and Poor’s (Asia-Pacific) chief economist Subir Gokarn said.

Asked about the stance of the RBI to curb the growing inflation, Gokarn said another hike in repo rate could be expected in October.

“After a rate hike in October, another rise in interest rates may be expected in January next year, if oil prices go back to their peak, but it has lesser probability,” he added.

On July 29, the RBI had raised banks’ cash reserve ratio, mandatory deposits banks keep with the apex bank, by 0.25 per cent and short-term lending rate to banks or repo rate by 0.50 per cent.

The RBI had hiked CRR for the fourth time this fiscal and repo rate the third time and had said these steps would suck up about Rs 8,000 crore from the banking system, to moderate credit growth.

Preferring moderation of liquidity to curb price rise, the central bank lowered economic growth projection to eight per cent from 8-8.5 per cent, while raising inflation target to 7 per cent from the earlier estimate of 5-5.5 per cent. Inflation had surged to 12.1 per cent, the highest in over 13 years, for the week ended July 26.

Country’s WPI had entered the double digit figure, when it touched a 13-year high of 11.05 per cent as on June 7, after a partial pass through of increase in global crude prices. — PTI

New Delhi, August 12
Looking at bringing in the country’s biggest ever initial public offer (IPO) at $10 billion, state-owned Bharat Sanchar Nigam Ltd (BSNL) is hopeful of getting its unions on board for the issue.

Talking to reporters on the sidelines of a company event, BSNL chief Kuldeep Goyal said: “There are positive responses. They (unions) are discussing with the employees. They have said they will have an open mind on it.”

BSNL has more than 300,000 employees and several unions. Its major unions recently held a meeting with telecom minister A. Raja but were opposed to the plan of 10 per cent of the company equity being divested through IPO on fears the move would lead to job losses.

Experts, meanwhile, said the company would have to rekindle the foreign investor interest if it wants its IPO to be successful. This, especially, as the share markets have been going down. The company expects the issue in six months and reports suggest that the target can be met only if the process is fast tracked and other issues such as union opposition are ironed out.

This, the experts point out is important as without foreign participation, the IPO may not be as successful.

Now equity is no longer the preferred place for investment, point out the market analysts.

Incidentally, the country’s biggest IPO, January’s $3 billion offer from Reliance Power, was subscribed within minutes of opening, helped by big institutional funds. Foreign funds own 4.7 per cent of the firm or nearly half the stake sold in the IPO.

Its success was due in part to heavy subscription from foreign hedge funds, overseas banks and portfolio managers.

However, such has not been the case ever since.

New Delhi, August 12
Within a fortnight of the collapse of trade talks in Geneva, a die-hard optimist WTO chief today sought clear “political” signal from the Indian leadership whether New Delhi will support the renewed attempts to wrap up a Doha deal by year-end.

After exuding confidence that there was still a possibility to reach a market opening and subsidy cut agreement among 153 nations, World Trade Organisation director General Pascal Lamy met Prime Minister Manmohan Singh.

“Lamy sought a political message from the Prime Minister whether India wants to keep working or take time out,” a source close to WTO director-general said.

Lamy would be visiting Washington next week to assess the political mood in the US administration as well. “My simple message here in Delhi and next week in Washington is that (members should) look carefully at what is on the table and not on results,” he said at a CII meeting.

Earlier in the day, sharing a FICCI-CUTS platform with Lamy, commerce and industry minister Kamal Nath said India is ready for another go at reaching an agreement, if flaws which work in favour of the developed nations are removed. “India is committed to the round,” Nath said, adding the industrialised nations have to come to the negotiations not with a mindset of “what you can get, but what you can give”.

However, if the principles of discussions have to change keeping in view the interest of the rich nations, “it would be a tough going,” he said. — PTI 

New Delhi, August 12
As part of the United Progressive Alliance (UPA) government’s focus on development of the north-east region, Oil and Natural Gas Corporation (ONGC) has drawn up an ambitious ‘Assam renewal project’ package with an investment of Rs 4,608 crore involving comprehensive replacement and expansion of equipment and facilities, drilling of hi-tech wells and revamping of drilling rigs.

After having being delayed for the last one year, the project is now being bid by five companies namely Punj Lloyd, Larsen and Toubro along with Indian Oil tanking Ltd, Oil India with Kalpataru power and Transmission Ltd, and a consortium of Megha Engineering and Infrastructures (MEI) with Sai Rama Engineering Enterprises (SREE) and an obscure Russian-Ukranian company Nafco Volgograd and Kazaki engineering company Kazstroy Services Infrastructure.

The consortium of MEI-SREE were the lowest bidders for the project. Later, it was found that MEI was in construction of irrigation projects and water treatment plants with no capabilities or past experience in oil engineering let alone doing turnkey jobs for oil companies. SREE, which has a postal address of Hyderabad, surprisingly has the same email address and telephone numbers as Megha Engineering and Infrastructures.

Another startling fact about the consortium is that SREE - leader of the consortium - has only 2.5 per cent share, MEI on the other has 92.5 per cent share and Nafco Volvograd has 5 per cent.

When contacted, director (onshore) A.K Hazarika , who is incharge of the project, refused to comment on the opening of the bids or the two questionable entities.

The bid of OilIndia that has gas blocks in Assam and operational expertise in oil and gas fields have not been opened as also the bid of Kazstroy Services and Infrastructures. Their bids were not opened because, according to Hazarika, the companies do not have enough expertise of carrying out oil engineering projects. On the other hand, obscure companies with water irrigation experience are being asked to bid for such an important oil renewal project. The tender documents states clearly that companies who participate should have a similar work experience in oil and gas renewal projects, thus, disqualifying Sai Rama and Megha Engineering from bidding.

Considering the future production profile of these fields, these surface facilities need major upgradation and expansion for sustained and trouble-free operations in the coming years. 

Chandigarh, August 12
Hit by the burgeoning subsidy bill and rising input costs, the fertiliser industry has asked the government to evolve a mechanism to provide fertilisers to farmers at low prices without involving the industry.

Satish Chander, director general of Fertiliser Association of India, said because of the high subsidy on fertilisers, growth in the fertiliser industry had remained stagnant for the past one decade. “If this industry has to grow, the government will have to find a new way of subsidising the farmers without interfering with the interests of the industry,” he said.

The fertiliser industry is also plagued by the declining recovery of cost from the retail prices of urea and DAP. Till three years ago, the industry would get 70 per cent of the costs through maximum retail price (MRP), while the remaining would come from the government as subsidy. However, the hike in input costs and high consumption pattern has led to the decline in share from the MRP from 70 per cent to 20 per cent.

What has made matters worse is that the government has started compensating the industry by issuing them bonds for the subsidy on account of inadequate budgetary provisions for fertilisers. Even this year, as against a subsidy requirement of Rs 119,772 crore, the government has made a budget estimate of just Rs 30,986 crore. “This budgetary provision is already been exhausted. Last year, too, after the budget was exhausted, we were issued bonds. But we want cash as we have to buy raw material, otherwise the production, of fertilisers will be hit,” said Chander.

New Delhi, August 12
Hindustan Unilever has appointed Justice MS Rane (retd) as the ombudsman for consumer disputes redressal. This initiative is aimed at providing an independent and expert mediation procedure in a transparent manner for the benefit of consumers. The ombudsman will further augment efforts of the company’s consumer care helpline-Levercare.

Justice Rane was a judge at Mumbai High Court (appointed in 1992). He is a well known expert in the area of Consumer Disputes Redressal and was the President of the State Consumer Disputes Redressal Commission from 2000 to 2004.

“HUL is committed to providing branded products and services which consistently offer value in terms of price and quality, which are safe for their intended use, and conform to the relevant industry and regulatory standards,” said Mr Ashok Gupta, executive director, (Legal), Hindustan Unilever Limited.

In a significant step towards placing consumers and customers at the heart of all our business operations, HUL embarked on an ambitious project — LeverCare in 2007. The primary objective of LeverCare is to set up a world-class consumer connect system to help consumers reach the company, and equally in future, to help brands reach out to consumers. 

BRIEFLY

MUMBAI
Gold, silver at 8-month low: Both precious metals crashed to an eight-month low on Tuesday with silver sliding by Rs 995 per kg and Gold by Rs 515 per 10 gm, on sustained heavy selling pressure by industrial users and bearish global cues, traders at the Bombay Bullion Association said. The white metal opened below the 22k mark at Rs 21,070 per kg on lower buying support, and finished at Rs 21,445 with a big loss of Rs 995 per kg from its previous close on heavy selling pressure by industrial users. — UNI

Panacea Biotec: Panacea Biotec on Tuesday said it has secured Rs 143 crore-contract from the United Nations Children’s Fund (UNICEF) for supplying vaccine ‘EasyFive’, which combats five infectious diseases of early childhood. Panacea Biotec is the first Indian firm to receive this order from UNICEF for its vaccines in fully liquid form, the company said. ‘EasyFive’ is a combination of five vaccines (pentavalent), providing protection against infectious diseases including Diphtheria, Tetanus and Hepatitis-B. — PTI

Air India loan facility: Air India on Tuesday said it has signed a 214.118 million loan facility for purchase of eight aircraft. Air India's holding company National Aviation Company of India has signed a pre-delivery finance loan facility for purchase of three 777-200LRs and five 777-300ERs to be delivered in 2009 and 2010, a press release here said. — PTI

IOB hikes lending rate: Indian Overseas Bank (IOB) on Tuesday announced a 0.50 per cent hike in benchmark lending rate to 14 per cent with effect from August 16, but spared housing loans up to Rs 30 lakh and education advances from the increase. The existing housing loans and education loans, which are linked to BPLR, are exempted from the present revision, IOB said. — PTI

Larsen & Toubro: L&T in consortium with Global technology partners, has secured EPC orders aggregating Rs 3,816 crore from various customers in the metals industry. L&T in consortium with Outotec of Germany for pellet plant and Paul Wurth, Italia for blast furnace has bagged EPC orders worth Rs 2,545 crore from Tata Steel. — UNI

NEW DELHI
Avalon Academy: Avalon Academy, the aviation and hospitality training subsidiary of Aptech Ltd, announced the launch of the ‘Higher National Diploma in Hospitality Management’ in affiliation with the Scotland’s Colleges International of the UK. The two-year program will be delivered partly at Avalon centres in India and partly on campus at Scotland. — TNS