Prime Minister Manmohan Singh has ruled out a cut in prices of petrol and diesel till the time Indian oil companies stopped making losses due to the various subsidies they contend with.

“There are limits to what the government can do on subsidising", the Prime Minister said when asked specifically about reduction in fuel prices as the cost of oil has come down in the international market. “The government will consider cutting petrol and diesel prices after oil companies stop making losses,” he said.

"When we see that the Indian oil companies are able to sustain a reduction, that will be the right (time for such a) decision," Singh told reporters while returning to New Delhi following his three-day visit to the Gulf region.

Oil companies have started making profit on sale of petrol but they continue to incur losses due to subsidy on diesel and more importantly on LPG.

"Oil companies have to bear a very heavy burden due to the subsidies,” he said.

Indian Oil, Bharat Petroleum and Hindustan Petroleum currently make a profit of Rs 4.12 a litre on petrol but lose Rs 0.96 per litre on diesel.

Together with domestic LPG and kerosene they are expected to lose Rs 1,28,135 crore in revenue this fiscal.

Mumbai, November 11
Continued bad news from the global economies caused the Sensex to be hammered sharply today and the benchmark index closed 696 points lower at 9,839 points. In the broader markets, the Nifty closed down 209 points at 2,938.

Among the biggest losers today were realty and metal stocks. Among the Sensex stocks, the biggest loser was JP Associates, which was down 12.2 per cent to Rs 84. Sterlite, Tata Steel and Hindalco also fell sharply.

The markets' initial enthusiasm over the $ 600 billion stimulus package by China gave way to concern as gloomy news came in from the US overnight.

News of Indian exports falling also added to the negative sentiment in the markets.

The BSE realty index was the biggest loser falling more than 10 per cent. The biggest loser in the pack was IndiaBulls Real Estate, which was down 15 per cent. Other big losers included Mahindra Lifespace Developers, HDIL, and Orbit Corp.

The other major loser was the BSE metal index which was down 8.4 per cent while the capital goods index lost 7.2 per cent.

New Delhi, November 11
This is yet another exercise by the government to strengthen liquidity and make money available to borrowers. Finance minister P Chidambaram today met heads of central public sector enterprises (CPSEs) and urged them to park surplus funds with public sector banks (PSBs) as per the government directive issued early this year.

Among the prominent heads of PSUs who attended the meeting were GAIL chairman U.D. Choubey, SAIL chairman S.K. Roongta, BSNL chief Kuldeep Goyal and senior officials of the petroleum, power and finance ministries.

The meeting comes amid complaints by PSU banks that CPSEs are not following the finance ministry guideline issued in January asking them to park at least 60 per cent of their surplus funds with the public sector banks.

It has been a practice for the past few years of CPSEs to park their funds with private banks, who give better returns because of the relative freedom they have in interests that they can offer to their depositors and the interest they can charge from their borrowers, say sources .

While going for the meeting with the finance minister, GAIL chairman Choubey said, “parking of funds is the agenda,” but he did not elaborate on it.

In August, Chidambaram had said, “CPSEs are continuing to call for competitive bids from public sector banks, nor are they observing the guidelines that 60 per cent of the public sector companies monies should be kept with the public sector banks.”

To earn higher interest rates, CPSEs with surplus cash call for bids from banks for depositing funds. This exercise has marginalised PSU banks as against private sector banks, who offer higher rate for big deposits.

PNB chairman K.C. Chakrabarty today said CPSEs must park their surplus funds with the public sector banks as per the guidelines.

“If public sector banks are accountable to meet the objective of the government, the CPSEs must give them first preference, even private sector banks must give first priority to public sector banks,” he said, strengthening the case for public sector banks.

New Delhi, November 11
Softening global commodity prices coupled with a good monsoon at home could pull down the inflation to single digit early next year, Prime Minister’s Economic Advisory Council (PMEAC) chairman Suresh Tendulkar said while pitching for a further lowering of interest rates by the RBI.

“Inflation seems to be on the decline as international commodity prices are coming down and the domestic harvest is good. Early next year inflation would be in single digit,” Tendulkar said.

The inflation rate, however, will show upward movement next month on account of the base effect, he added.

“I expect that due to base effect inflation is expected to shoot up in December before coming down to single digit,” Tendulkar said.

Pointing out that there is still a case for lowering policy rates by the RBI, Tendulkar said, “Personally I feel that there would be some scope for a further rate cut.”

The RBI since October has already reduced several benchmark rates, including the mandatory deposit that banks keep with the central bank (cash reserve ratio), the amount which banks have to mandatorily park in government securities (statutory liquidity ratio) and short-term lending (repo) rate to unlock banks funds and trigger a low interest rate regime.

Inflation, having declined for the past few weeks, inched up to 10.72 per cent for the week ended October 25, mainly on account of rising prices of essential commodities like vegetables, pulses and cereals, and some manufactured items.

New Delhi, November 11
Country's largest steel producer SAIL may cut production as the demand for the commodity has declined, a top steel ministry official said today.

"SAIL may have to lower output for some of its products as its offtake in October dipped by as much as 37 per cent," steel secretary P.K. Rastogi told PTI on phone from Hyderabad.

Sources said SAIL's Rourkela plant has lowered its normal production. The Rourkela steel plant has sold about nine lakh tonnes of salebale steel (average 1.40 lakh tonnes per month) during the first half of the current financial year against its annual target of about 17 lakh tonnes. It posted a net profit of Rs 800 crore till September 2008.

Owing to declining demand for steel in the global market, the plant could manage to sell only about 90,000 tonnes of saleable steel during October 2008, sources in the steel plant had said.

Other leading steel producers like JSW, Essar and Ispat have already announced cutting their productions by over 20 per cent.

Sajjan Jindal-led JSW Steel said it would rationalise the product mix as per the current market conditions and modify the production programme to effectively reduce the total production by around 20 per cent from November.

Ruias-promoted Essar Steel and Vinod Mittal-led Ispat Industries are already operating below the optimum capacity. — PTI

New York, November 11
The global financial crisis closed in on two more victims today after General Motors said it would need a government rescue and major US electronics retailer Circuit City filed for bankruptcy.

The news capped another day of gloomy developments in the United States, the world's largest economy, undermining hopes that coordinated action by governments around the world could keep the global downturn from getting worse.

Fannie Mae, the US mortgage giant bailed out by the government earlier this year, posted a $29 billion loss.

Meanwhile, the United States expanded its bailout of insurer AIG to more than $150 billion. The latest dire reports from the United States triggered more woe for Asian stock markets, which lost ground today in line with US shares. Tokyo lost 3 per cent while Hong Kong was off 0.6 per cent at the mid-day break.

General Motors CEO Rick Wagoner said the US automaker would need state help before Barack Obama takes over the White House in January, telling industry publication Automotive News that time was of the essence.

"This is an issue that needs to be addressed urgently," he said, calling on the government to "overshoot, not undershoot" the level of assistance.

His call for support came as GM shares lost 23 per cent yesterday after analysts at Deutsche Bank said they expected the stock eventually to be worth nothing at all. — AFP

Chandigarh, November 11
Hit by high rentals and poor sales, Devyani International (DIL), an associate company of Rs 1,500-crore RJ Corp., is now mulling closing down of some Disney Artist stores.

DIL, a multi-business conglomerate, with interests in Pepsi bottling, edible oil, beer, real estate and education, besides being the franchisee for Pizza Hut, KFC, Costa Coffee, had ventured into the retail sector last year. DIL had entered into an agreement with US retail giant, Disney, to own and operate these stores across India for selling Disney school stationery, colouring products, toys and social stationery.

Top officials in the company confirmed to TNS that they are in the process of closing down some of its stores, where losses have mounted because of poor sales. Though the officials refused to divulge the locations where these stores will be closed, it is learnt that at least two stores in Panchkula and Ludhiana are being closed down next week.

These stores are now selling all products on a 50 per cent rebate, and employees have been informed that the stores would be closed down within a week from now. As a compensation for the layoff, employees have been given a one month’s salary in advance.

The company has halted its expansion plans for its retail venture, and decided to adopt a wait-and-watch policy. As of now, the company owns and operates 15 Disney Artist stores located in Punjab, Haryana, Delhi and Uttar Pradesh.

Viraj Joshi, CEO, Devyani International, said they were in the process of winding up stores that were not profitable. “The high rentals and strong cost parameters have forced us to take this decision. We have also decided not to start new outlets. Till there is a correction in the realty sector, we will not be rolling out more outlets,” he added.