B U S I N E S S

Govt to refer insurance bill to standing committee
New Delhi, December 24
The controversial Insurance Reforms Bill that seeks to raise foreign investment limit in private sector insurance companies to 49 per cent will be scrutinised by Parliamentary Standing Committee even as the government today said it had an open mind on the issue.

Tainted milk firm goes bust in China
Wellington (NZ), December 24
The Chinese firm that sparked a nationwide tainted milk crisis that made nearly 300,000 children ill and killed six has been declared bankrupt, New Zealand shareholder Fonterra said today.

Maruti mulls production cut
New Delhi, December 24
Country’s largest car manufacturer Maruti Suzuki India Limited (MSIL) is the latest in line to be affected by the global meltdown. The company said today it might consider production cut if the market does not improve.

‘Ineligible’ tag takes toll on Satyam
Mumbai, December 24
Satyam Computer Services today plunged over 18 per cent on the bourses after the World Bank declared the domestic IT major as “ineligible” for eight years to receive direct contracts.

A woman walks past a store at a shopping mall in Glendale, California, on Tuesday. California Governor Arnold Schwarzenegger last week refused to sign an $18 billion deficit-reduction plan passed by California lawmakers and issued an executive order requiring state employees to take two unpaid offs every month. — AFP

PHDCC for stimulus package in one go
New Delhi, December 24
PHD Chamber has said the only way to lift sentiment of the business community was by announcing the stimulus packages in one go. This would help businessmen to manage the liquidity crunch that they were facing from the banks. The chamber has pitched for more public investment, infusion of adequate credit to industry and rationalisation of taxes to give a fillip to the economy.

Sluggish growth at best for Asia-Pacific in ’09: Moody’s
New Delhi, December 24
Asia-Pacific economies will record sluggish growth at best in 2009 and some may experience outright contraction, a Moody’s report said today.

Indian Space Research Organisation chairman  G. Madhavan Nair during a felicitation ceremony in New Delhi on Wednesday. The Confederation of Indian Industry (CII) honoured officials  of the Chandrayan-1 team. Tribune photo: Manas Ranjan Bhui

Govt announces fertiliser bonds
Mumbai, December 24
The government today issued ‘6.20 per cent fertiliser companies’ Government of India special bonds, 2022’ for Rs. 4,000 crore at par to 16 fertiliser companies as compensation towards fertiliser subsidy during the current financial year.

Toyota’s global sales at 8-yr low
Tokyo, December 24
Japan’s No 1 automaker said its global vehicle sales plunged 21.8 per cent in November, its biggest drop in eight years. The news comes just days after the company predicted that this fiscal year it would report its first operating loss in 70 years.

Japan clears ‘unprecedented’ recession budget
Tokyo, December 24
The Japanese government today approved a record high budget, vowing to take “unprecedented” action to weather a painful recession that it expected would only get worse in the New Year.

Petron Civil Engineering
“Petron Engineering” should have read as “Petron Civil Engineering Private Limited, Mumbai”, on these pages on December 23.

Govt to refer insurance bill to standing committee
Tribune News Service & PTI

New Delhi, December 24
The controversial Insurance Reforms Bill that seeks to raise foreign investment limit in private sector insurance companies to 49 per cent will be scrutinised by Parliamentary Standing Committee even as the government today said it had an open mind on the issue.

The bill will now go to the Standing Committee on Finance, Minister Of State For Parliamentary Affairs Pawan Kumar Bansal said.

The Insurance Laws (Amendment) Bill, which was introduced in the Rajya Sabha on December 22 amid stiff resistance from the CPM and its new found allies the AIADMK and the Telegu Desam party, seeks to raise the foreign direct investment (FDI) cap in the private insurance companies from 26 per cent at present to 49 per cent.

It took over four years for the government to pursue the proposal of raising the FDI limit in private insurance firms.

The intention to raise cap was announced by the then Finance Minister P Chidambaram in 2004 Budget, but the proposal was kept in abeyance because of opposition from the Left, which was then providing extended crucial outside support to the UPA government.

To a question on the strong protests both inside and outside the House on the Insurance Reforms Bill, Bansal said the government had an open mind on it.

On the protest that followed the introduction of the LIC (Amendment) Bill in the Lok Sabha, he said the left parties mistook the bill with the Insurance Reforms Bill.

The LIC Bill, he added, was aimed at raising the capital of state-owned company to Rs 100 crore from Rs 5 crore to make it stronger to implement welfare schemes like Aam Aadmi Bima Yojna.

In wake of opposition from the Left parties, the government referred the matter to the group of ministers headed by External Affairs Minister Pranab Mukherjee.

The reforms could only move ahead after the Left parties withdrew support to the government in July.

Although the Insurance Reforms Bill evoked good response from the government, the trade unions went on a strike on Tuesday in protest.

In addition to state-owned companies, more than three dozen private sector players are engaged in insurance business in the country.

As the UPA government has brought these Bills towards the fag end of the term, the onus of pursuing the Bills would be left to the next government, that will be elected after the Lok Sabha elections due in April-May next year.

Tainted milk firm goes bust in China

Wellington (NZ), December 24
The Chinese firm that sparked a nationwide tainted milk crisis that made nearly 300,000 children ill and killed six has been declared bankrupt, New Zealand shareholder Fonterra said today.

A court in Shijiazhuang in the northern province of Hebei had issued a bankruptcy order against Sanlu Group, the company whose melamine-tainted baby formula triggered the crisis in September, said Fonterra.

The world’s biggest international trader of dairy products, Fonterra held a 43 per cent stake in Sanlu, one of 22 dairy companies identified as selling toxic milk products.

“This bankruptcy order is not a surprise to us. We were aware that Sanlu was in a very difficult situation and faced mounting debts as a result of the melamine contamination crisis,” said Fonterra chief executive Andrew Ferrier.

Fonterra has written off its $114 million US investment in Sanlu.

Earlier this month, China dramatically raised the official tally of children sickened by dairy products laced with the industrial chemical melamine to 2,94,000, and said six babies 
may have died from drinking toxic milk.

Melamine is a chemical normally used in making plastics but it emerged in September that it had been routinely mixed into watered-down Chinese milk and dairy products to give the impression of higher protein content.

Melamine can cause kidney stones if taken in excessive levels and babies who were fed tainted milk powder suffered the worst. — AFP

Maruti mulls production cut
Tribune News Service & PTI

New Delhi, December 24
Country’s largest car manufacturer Maruti Suzuki India Limited (MSIL) is the latest in line to be affected by the global meltdown. The company said today it might consider production cut if the market does not improve.

The automobile sector has been hit hard by the downturn around the world that has already forced some of the car manufacturers here to revise their sales targets for the year. MSIL, however, said it would wait and watch before taking a final decision.

Talking to reporters at a function, MSIL managing director Shinzo Nakanishi said there had been a slowdown in demand across the world, including China, India and other BRIC countries. “I hope not but if we are obliged then we will do it,” he said when asked specifically if the company would go for a production cut.

MSIL, 54.2 per cent owned by Japan's Suzuki Motor Corp, hopes to boost sales in the next three months following price cuts, he added.

The company, which has been negotiating contract-manufacturing deal for its A-Star model with Nissan, also expects to begin shipping its A-star small car to latter from February-March for sale in Europe.

Nakanishi said Maruti was yet to agree on the exact volume of cars it would supply to Nissan but added that shipment to Europe is “expected by about February-March next year”.

“Our focus is on the network stocks. If the network stock is overflowing, then the company would take appropriate measure,” he added.

In the April-November period, the company's sales growth witnessed a negative growth of three per cent compared with the corresponding period last year. Commenting on the company’s sales growth prospects this fiscal, MSI chairman R.C Bhargava said: “Compared to last year, I doubt there will be growth. It may be just about (the same) level with last year.”

On the company’s plans to deal with the long back-order for its premium hatchback ‘Swift’ and sedan ‘DziRE’, Bhargava said: “We are increasing the production of Swift and DZiRE and that may require some production of Swift to come to Gurgaon.” He, however, said it was just an option that the company was considering at the moment.

‘Ineligible’ tag takes toll on Satyam

Mumbai, December 24
Satyam Computer Services today plunged over 18 per cent on the bourses after the World Bank declared the domestic IT major as “ineligible” for eight years to receive direct contracts.

In a statement issued yesterday, World Bank said: “Satyam was declared ineligible for contracts for providing improper benefits to bank staff and failing to maintain documentation to support fees charges for its sub- contractors.” On the National Stock Exchange, the scrip nose-dived 18.59 per cent to its 52-week-low.

World Bank’s decision was effective from September and earlier Satyam was temporarily suspended in February.

World Bank said it declared Satyam ineligible to receive direct contracts under its corporate procurement programme.

The statement also noted that there was no evidence that the Indian company was involved in malicious attacks on the bank’s information systems. The development comes at a time when the company is facing massive hammering in its share price over its abortive $1.6 billion acquisition deal for two infrastructure firms - Maytas Infra and Maytas Properties.

The market regulator Securities and Exchange Board of India and the government had said they would look into the matter. — PTI

PHDCC for stimulus package in one go
Bhagyashree Pande
Tribune News Service

New Delhi, December 24
PHD Chamber has said the only way to lift sentiment of the business community was by announcing the stimulus packages in one go. This would help businessmen to manage the liquidity crunch that they were facing from the banks. The chamber has pitched for more public investment, infusion of adequate credit to industry and rationalisation of taxes to give a fillip to the economy.

Newly elected president of the PHD Chamber Satish Bagrodia said the immediate challenge was to rekindle business sentiment by creating an environment conducive to growth. The only way this could be achieved was by contemplating bold demand inducing measures and addressing the issue of credit availability to the industry. The fiscal stimulus announced by the government so far was too small to make much of a difference to the sagging business confidence.

Bagrodia also stated that priority should be given to a major expansion of public investment in infrastructure, including early completion of projects under the National Highway Development Project, most of which are behind schedule. There is need to facilitate public-private partnerships in providing infrastructure services at an accelerated pace in India.

He also called for intensifying initiatives for facilitating human resource development, skill development and bridging the skill deficit in the economy. “Improving the quality of education and encouraging market-oriented vocational education should also receive immediate attention,” he said.

Pitching for immediate attention for boosting the housing sector, the chamber president suggested that there was a shortage of about 25 million housing units in the country. “Focused measures are required to provide affordable housing to the masses and to reduce the cost of housing units,” he added.

Calling for reduction of tax burden from around 30 per cent to 25 per cent to stimulate demand,. Bagrodia said there should be fine-tuning of taxation structure against the backdrop of the current economic slowdown.

Sluggish growth at best for Asia-Pacific in ’09: Moody’s

New Delhi, December 24
Asia-Pacific economies will record sluggish growth at best in 2009 and some may experience outright contraction, a Moody’s report said today.

Exports will slow considerably in the first half of the year, rising unemployment will depress private consumption, and there will be more fiscal stimulus and monetary policy easing, Moody’s Economy.com, a subsidiary of Moody’s Corp, said in the report.

Economist Sherman Chan said in the report: “Asia-Pacific economies are in for a tough 2009. The region’s fundamentals were solid in the first half of 2008, giving weight to the idea of global decoupling. This belief has been proven wrong, however; no economy now seems immune from the US-led downturn.”

Chan said growth might decelerate sharply in the first half of 2009, as all engines run out of steam. Economies already in recession will continue to face harsh conditions through much of the year.

She says the worst for the Asia-Pacific has still not come. With a forecast that the US will begin to recover in late 2009, Chan said the Asia-Pacific slowdown might end shortly after that, though a solid rebound is not expected until 2010.

“The global downturn hurts the Asia-Pacific region most immediately via trade. The EU and the US directly account for a significant proportion of the region’s exports,” Chan said in her report.

Investment in the region, too, is expected to be subdued through 2009. Business confidence is weak and access to credit is still a concern, while the outlook of corporate earnings remains downbeat, the report said.

“All central banks across the region will continue to loosen monetary policy,” she said, adding that more fiscal stimulus measures are expected. — PTI

Govt announces fertiliser bonds

Mumbai, December 24
The government today issued ‘6.20 per cent fertiliser companies’ Government of India special bonds, 2022’ for Rs. 4,000 crore at par to 16 fertiliser companies as compensation towards fertiliser subsidy during the current financial year.

The investment in the special bonds by the banks and insurance companies will not be reckoned as an eligible investment in government securities for their statutory requirements, the RBI said in a release.

However, such investments by the insurance companies will be eligible to be reckoned as investment under ‘other approved securities’ category as defined under the Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Further, the investment by the provident funds, gratuity funds and superannuation funds in the special bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance.

The special bonds will be transferable and eligible for market ready forward transactions. — UNI

Toyota’s global sales at 8-yr low

Tokyo, December 24
Japan’s No 1 automaker said its global vehicle sales plunged 21.8 per cent in November, its biggest drop in eight years. The news comes just days after the company predicted that this fiscal year it would report its first operating loss in 70 years.

Toyota Motors sold 618,000 automobiles in November, down 21.8 per cent from last November.

That’s the biggest year-on-year slide since Toyota began tracking comparable data in January 2000. Such declines never reached 20 per cent in the past, the company said.

Toyota said Monday that it expected to report an operating loss of $1.66 billion for the fiscal year ending March 2009, its first such annual loss since 1938, the year after the company was founded. — AP

Japan clears ‘unprecedented’ recession budget

Tokyo, December 24
The Japanese government today approved a record high budget, vowing to take “unprecedented” action to weather a painful recession that it expected would only get worse in the New Year.

The cabinet sent to Parliament an 88.55 trillion yen ($980 billion) budget for 2009 that covers tax cuts and cash rebates but slashes foreign aid and worsens an already ballooning debt.

“We need to take unprecedented measures when in an extraordinary economic situation," Aso told a news conference soon after his cabinet approved the budget.

“Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession,” he said.

He warned “conditions next year around the world to drop rapidly”.

Japan’s economy, the world’s second largest, has contracted for two straight quarters as demand overseas dries up for its cars, electronics and other exports. — AFP

BRIEFLY

A man looks at a screen showing the Prime Minister of Japan in front of a securities company in Tokyo on Wednesday. Japanese share prices closed down 2.37 per cent on persistent worries about the auto sector after Toyota slashed forecasts and US carmakers’ shares skidded on Wall Street. — AFP

Re up 70 paise
MUMBAI: The rupee on Wednesday closed higher by 70 paise against the greenback after a steep fall in early trade amid hectic dollar selling by exporters and banks. The rupee’s gain comes after three days of continuous losses in which it had lost a massive 181 paise. During the day it plunged by 40 paise to breach the 49-level. Finally, it ended at 48.06/08 a dollar, higher by 70 paise from its last close. — PTI

Cadbury sells Australian unit
LONDON: British confectionery maker Cadbury has agreed to sell its Australian beverage business to Asahi Breweries for £550 million ($811 million), it said on Wednesday. Cadbury had announced in a trading update earlier this month it intended to sell the business, which has annual sales of £300 million pounds from brands including Schweppes, Cottee's and Solo. — Reuters

BHEL bags NTPC contract
NEW DELHI: State-run Bharat Heavy Electricals on Wednesday said it had bagged a Rs 2,100-crore order to supply and install main plant equipment for NTPC's Mauda Super Thermal Power Project in Nagpur. Meanwhile, BHEL recently won a Rs 1,175-crore contract for setting up a 500 MW thermal power plant at Bina in Madhya Pradesh from Jaypee Group Company Bina Power Company Ltd. — PTI

Fortis rights issue
MUMBAI: Fortis Healthcare on Wednesday said it would raise Rs 1,000 crore through sale of shares to its existing shareholders by June and the funds would be used for part refinancing its debts and business expansion needs. The proceeds of the rights issue would be used primarily for funding projects, repayment of short-term debt, upgradation of existing facilities and tapping future investment opportunities, the company said. — PTI

Toyota to up prices from Jan
BANGALORE: Toyota Kirloskar Motor will increase the prices of its key models, Innova and Corolla Altis, between Rs 10,000 and Rs 25,000 from January next. The prices of different models of Innova would be costlier by Rs 10,000 to Rs 25,000, while Corolla Altis would cost Rs 16,000 to 25,000 more, a company release said on Wednesday. — UNI

New Rs 5 coins
CHANDIGARH: The Reserve Bank of India will shortly release ferratic stainless steel coins of Rs 5 denomination to commemorate Jagat Guru Shree Narayana Gurudev. The circular coins will be 23 mm in diameter and weigh six grams, an official release said. — TNS