New Delhi, September 11
Factory productions expanded at a greater pace for the second month in a row, growing by 6.8 per cent in July against 6.4 per cent a year ago, signalling an industrial recovery.

And the trend, if sustained, could well offset the likely decline in farm output because of an erratic monsoon and help overall growth in the economy this fiscal.

Industrial growth for the first four months stood at 4.6 per cent against 5.6 per cent a year ago, after expansion in factory production is revised to 8.2 per cent in June against 7.8 per cent estimated provisionally.

It was for the first time in June that the industry grew at such a high rate, after hit hard by the global financial crisis in September last year.

While mining grew by a whopping 9.9 per cent in July against a mere 2.8 per cent, manufacturing, which constitutes around 80 per cent in industrial production, expanded by 6.8 per cent - slightly lower than 6.9 per cent a year ago.

Electricity generation stood at 4.2 per cent in July against 4.5 per cent a year ago.

But there is no unanimity whether the high industrial growth would continue. While Finance Secretary Ashok Chawla thinks the revival in industry would continue, many economists do not share this view as the credit offtake is not picking up and a slackening farm production would indirectly impact industry as well.

Asked whether the positive trend in industrial growth continue, Chawla told reporters, "yes." But HDFC Bank Chief Economist Abheek Barua said:

“Clearly there is sign of slow industrial revival. However, going forward, drought will take a toll and I expect IIP between 5 and 5.5 per cent for the current fiscal. The recovery is not sustainable as there is no robust credit growth and the capital goods index is fluctuating."

Crisil Principal Economist DK Joshi also said: “There is definitely an upward trend but sustaining the trend would be a challenge. The credit has yet not picked up”. Industrial growth in July was wide ranging as just two industrial groups - cotton textiles and jute fibre - posted a negative growth.

Consumer durable goods production, which for long registered a negative growth, expanded by a whopping 19.8 per cent in June even on high base of 13.9 per cent a year ago.

Consumer non-durable goods production grew by five per cent against 3.4 per cent a year ago. For the first four months, this sector registered a negative growth of 2.6 per cent, showing dismal performance in earlier months. Consumer goods category is likely to do well in the festival season.

New Delhi, September 11
Drought situation in the country may not be as bad as expected if rains improve towards the end of the monsoon season, said Finance Minister Pranab Mukherjee. While storm clouds gathered in the skies , the affable finance minister tried every possible measure not to stir a proverbial storm in a tea cup, while addressing a gathering at the Indian Women’s Press Club.

However, Mukherjee said the country’s growth would be slow in the next two quarters and the revival can only take place towards the end of the last quarter of this fiscal due to less than expected foodgrain production. The water table is likely to improve with these rains and the rabi crop may be better than expected, said the minister.

“But the full impact of the drought will be felt only in the second quarter and will show in most areas of the economy. There is no reason to revise the growth target which I am expecting 6 per cent plus. There may be some deceleration in second and third quarters…but the fourth quarter will make up,” Mukherjee said.

“Industrial production growth rate is picking up. I hope that it will continue,” said Mukherjee

He also said any improvement in Indian exports hinged on recovery in developed countries. But, ruled out the possibility of compensating for decline in exports with the increase in factory output alone. 

New York, September 11
Twenty Indian companies have made the cut to enter the list of 200 best companies having sales less than $1 billion in the Asian Pacific region, compiled by business magazine Forbes.

Biotech major Biocon, industrial equipment firm AIA Engineering, IT outsourcing firm Allied Digital Services, software entity AurinoPro Solutions and construction materials company Birla feature in the league of 200 companies.

“All have either increased sales and profits over the past 12 months or are forecast to do so in coming quarters.”

Deepak Fertilisers, drug ingredients provider Divi's Laboratories, gas storage products entity Everest Kanto, pharma firm FDC, publishing entity Geodesic and IT consultancy ICSA have also made it to the list.

Others in the 200 league are IT firms GSS America and Micro Technologies, infrastructure firm IVRCL Infrastructure, security systems entity Nitin Fire Protection, medical devices company Opto Circuits, aluminium foil maker Parekh Aluminex, television broadcaster Raj Television and oil exploration firm Selan Exploration Technology. The top 200 companies were picked from over 12,000 publicly-listed firms with sales of less than $1 billion in the Asia-Pacific region. — PTI 

New Delhi, September 11
The Petroleum Ministry has asked Cairn India to pay a production tax on the oil it has started to produce from its prolific Rajasthan fields even though the contract does not clearly lay the onus of the levy on it.

Cairn will have to pay the Rs-2,500 per ton oil cess in proportion to its 70 per cent interest in the Rajasthan fields while state-run Oil and Natural Gas Corp (ONGC) will pay for its 30 per cent stake, Oil Secretary RS Pandey said today.

“In our view and as per legal opinion we have obtained, cess is to be paid by Cairn and ONGC. Cairn has protested (as its liability on cess is not defined in the production sharing contract) but we have told them to pay so they are paying (under protest)," he said.

Pandey said Cairn was likely to challenge the levy of Oil Industry Development Act (OIDA) cess. "They will contest it at appropriate forums. If there is any legal remedy, they can try their luck." The government had in all pre-NELP blocks like Rajasthan that were awarded to foreign firms, clearly stated that the contractor will not bear any cess and royalty on oil and gas.

This liability was vested on licensee, which in the Rajasthan block case is ONGC.

The production sharing contract (PSC) for Rajasthan block clearly makes ONGC liable to pay royalty but there is no specific mention of OIDA cess, which in similar PSCs of that era was also the responsibility of ONGC.

When contacted, a Cairn India spokesperson said: “We will always honour our obligations under the PSC. If, however, there are any disputes we would discuss them with the government and other stakeholders and seek to secure an amicable resolution.”

Cairn was in discussion with the government on the issue. — PTI 

London, September 11
Petroleum and Natural Gas Minister Murli Deora has denied reports that India has quit plans to build a gas pipeline with Iran and Pakistan.

“No, it's not off,” Deora told journalists here on Thursday.

“With Iran the question is still open, but because of the political situation in Pakistan, just now there is a little bit of a stop on that.”

Deora said he had met the relevant Pakistani ministers but “they have not written to us… they met us.”

On plans to procure natural gas from Bangladesh, he said, “Unfortunately we have not progressed on that.”

Murli Deora's statement comes after the Pakistani Ambassador to Iran, Muhammad Bux Abbasi, was quoted in the Tehran Times as saying on Sunday that “India is out” of the troubled pipeline deal.

The 2,775-km pipeline is expected to deliver 30 million cubic metres of natural gas per day to Pakistan - a quantity that is later expected to double. — IANS

New Delhi, September 11
In an effort to ensure early release of spectrum being used by defence services, Cabinet Secretary KM Chandrasekhar today held a meeting with the Defence and Telecom secretaries.

With the Empowered Group of Ministers (EGoM) having decided on the base price for 3G services, vacating of the spectrum by the defence forces has become critical for the process of auction for the third generation spectrum by the end of the year.

In May this year, the Department of Telecommunications (DoT) and the Ministry of Defence (MoD) had signed a memorandum of understanding for release of spectrum. The latter agreed to release 25 Mhz of 3G spectrum and 20 Mhz of 2G spectrum for mobile operators.

It also agreed to release 10 Mhz of spectrum for 3G spectrum and 5 Mhz for the present 2G service to support their expansion, while the remaining share of radio waves would be released in phases.

However, the MoD has been seeking setting up of a dedicated network for armed forces. The DoT has to install a dedicated optical fibre network for them.

The spectrum scenario is not very good, although the DoT claims that it can go ahead with the auction without the defence forces releasing any frequency.

Spectrum from the defence would make things comfortable for the DoT, which is facing scarcity of radio waves in some circles particularly in border states like Rajasthan. Before completing the 3G auction process in the next three months, the DoT wants to have a clear picture of how much spectrum is available for mobile operators.

The government does not want to send a picture of spectrum scarcity to potential bidders, who had anyway backed out after the pre-bid meeting last year. This time the pre-bid meet is expected to be on October 10 or 12.

The meet would discuss the process and schedule of the auction of spectrum or radio frequency, to roll out 3G services that would allow data download on mobile phones at greater speed. The government hopes to get about Rs 25,000 crore from the auction.

New York, September 11
In an all-out effort to restore confidence in its products, General Motors will offer a 60-day money-back guarantee on all its vehicles beginning Monday, says a media report.

In its first major marketing campaign since emerging from bankruptcy, GM is putting its new chairman Edward E Whitacre Jr in the spotlight as the spokesman for the offer to give customers a full refund within 60 days on any GM car or truck, The New York Times said.

The campaign, called "May the Best Car Win," is part of GM's effort to change its image as a financially struggling company with substandard products. The first television ads featuring Whitacre would begin Sunday.

Whitacre is hoping to restore confidence in GM just as Iacocca did with his ads for Chrysler in the 1980s, the report noted.

“I'm happy to do it, I wanted to do it, and I think it is important to do it," quoting Whitacre the report said. — PTI

BRIEFLY

Gorman to be Morgan Stanley CEO
NEW YORK: Financial services firm Morgan Stanley has said its chief executive officer John J Mack was stepping down next year and will be replaced by co-president James Gorman. He would become the CEO of Morgan Stanley with effect from January 1, 2010, while chairman and current CEO Mack would continue to serve as chairman, Morgan Stanley said. — PTI

Security personnel stand guard beside a newly launched standard gauge metro car at a Bharat Earth Movers Limited (BEML) factory in Bangalore on Friday. BEML has manufactured the first-ever standard guage metro cars at their Bangalore factory. — AFP

Godrej Properties IPO
MUMBAI: Godrej Properties will hit the capital market with an initial public offer (IPO) in the next three months, its chairman Adi Godrej said on Friday. “We have got clearance for our draft red herring prospectus from SEBI. We will come out with an IPO in three months time,” Godrej said here. The real estate company will offload 10 per cent equity shares to the public, while 3.5 per cent shares will be available as pre-IPO placement, he said. — PTI

LG investment plans
NEW DELHI: South Korean consumer durables major LG on Friday said it would invest about $1 billion here for marketing and research over the next five years. “We will be investing around $1 billion in the next five years on R&D and marketing,” LG Electronics (India) managing director Moon Bum Shin said. — PTI

Punj Lloyd bags contract
MUMBAI: Engineering major Punj Lloyd on Friday said it had bagged an order worth Rs 550-crore from state-run Mangalore Refinery and Petrochemicals for construction-related works. Under the project, the company would construct coke drum structure package for Mangalore refinery, Punj Lloyd said. — PTI

ICICI Venture equity fund
MUMBAI: Leading private equity firm ICICI Venture plans to raise Rs 2,500 crore private equity fund. The fund will have an option to raise additional Rs 1,500 crore in future, an ICICI Venture spokesperson said here on Friday. — PTI