The Tribune, Chandigarh, India

	Govt bans FDI in tobacco items Tribune News Service New Delhi, April 8 The government today decided to ban foreign direct investment (FDI) in tobacco products, including cigarette manufacturing. The decision was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh. In other decisions taken by the CCEA, a proposal of the Steel Authority of India Ltd to raise additional capital through sale of the government’s stake in the company was approved besides to reconstitute the board of Balmer Lawrie Investment Ltd (BLIL). Briefing newsmen after the meeting Union Home Minister P. Chidambaram said the proposal of the commerce and industry ministry to ban foreign direct investment (FDI) in tobacco products, including cigarette manufacturing had been approved. “This (FDI) will be prohibited for manufacturing of cigarettes whether or not they are for domestic or foreign consumption,” he added. Currently, 100 per cent FDI is allowed in the sector. This policy change would only ban fresh inflow and wont have an impact on existing tobacco companies with foreign investment, it was clarified. The ban is expected to “enhance public accountability by way of the government’s commitment towards proliferation of anti-smoking regime in the country,” said Chidambaram. India is signatory to the World Health Organisation-sponsored framework convention on tobacco control. It is committed to lower tobacco cultivation and consumption in India. The CCEA also approved a proposal of the Steel Authority of India Ltd to raise additional capital through sale of the government’s stake in the company and issue of fresh equity in two tranches. It was also decided to approve a proposal of the Petroleum Ministry to reconstitute the board of BLIL. “This follows the transfer of the administrative control of BLIL from Department of Disinvestment to Ministry of Petroleum and Natural Gas,” Chidambaram said.
	Essar to raise $2.5 bn from UK listing London, April 8 Ruias-owned Essar Group today said it would raise $ 2.5 billion (about Rs 11,250 crore) by listing its energy and power businesses on the London Stock Exchange, the largest initial public offering by an Indian firm overseas. Essar Energy, a holding company for the group's energy businesses, will sell 20 to 25 per cent stake to institutional investors in the UK to raise funds for power, refinery and oil and gas exploration projects. The company today filed “intention to float” document with the UK regulatory authorities and will list on the London Stock Exchange in the "coming week", Essar Energy vice-chairman Prashant Ruia told a media conference call. The Essar Group will retain a minimum of 75 per cent in Essar Energy, which is incorporated in the UK and has its registered office in London and its head office in Mauritius. The company may file a prospectus and start roadshows from April 19 and may start taking orders from institutional buyers by late April. The share sale will be the biggest by an Indian firm overseas through an initial offering, but behind Reliance Power's $ 2.9 billion IPO in the domestic market in 2008. ICICI Bank had raised about $ 5 billion through follow-on sales in two tranches one each in in the US and India in 2007. The IPO will be the largest in London since Scotish insurer Standard Life Plc's $ 4.5 billion offering in July, 2006. The listing could make it the first Indian company to enter London's main market since Anil Agarwal-led Vedanta Resources seven years ago. — PTI
	Mphasis acquires US IT company Mumbai, April 8 Mphasis today said it would acquire the US-based Fortify Infrastructure Services (FIS) for an initial payment of $15.5 million (about Rs 90 crore). FIS provides offshore IT operations and management services and has offices in the US and India. “The company has entered into an agreement to acquire Fortify Infrastructure Services and for this, the base consideration is $15.5 million. This is an earn-out based transaction,” Mphasis chief corporate development officer Dinesh Venugopal said today. He, however, did not divulge the details of the performance-based payout. The total market size of the IT operations and management services is $12 billion globally, of which offshore contributes to $4 billion. “This acquisition will catapult us ahead as a provider of offshore-based remote IT operations and management services,” Mphasis chief executive Ganesh Ayyar said. The acquisition would give Mphasis access to customers, management team and a platform to provide remote IT operations and management services, the filing added. FIS is a privately held company with presence in India and the US with 250 employees. Shares of Mphasis closed at Rs 650.65 on BSE, up 2.73 per cent from previous close. — PTI
	Food inflation rises to 17.7 pc New Delhi, April 8 Driven by the rising prices of milk, fruits and pulses, food inflation jumped to the month's high of 17.7 per cent in the last week of March and may prompt the RBI to further tighten key rates in its policy due on April 20. Food inflation rose by 1.35 percentage points to 17.7 per cent over 16.35 per cent in the previous reporting week and will have implications for the overall inflation data for March, which will be released next week. The overall inflation rate, which includes changes in prices of manufactured goods, was 9.89 per cent in February and is expected to cross the double-digit mark in March. "Now, it (food inflation) is spreading to non-food items which implies that the RBI may have to start tightening the monetary policy. Tightening the monetary policy is something which may have to be done and that's the only way we can proceed further," the Prime Minister's Economic Advisory Council member G Govinda Rao said. The central bank had last month raised the repo and reverse repo rates, which are the rates at which RBI lends and borrows from money from banks, by 25 basis points to 5 per cent and 3.5 per cent, respectively, to prevent food inflation from spreading to manufactured goods. It may take more steps in the annual monetary policy to be unveiled on April 20. — PTI
	Decision on PF rate today likely New Delhi, April 8 Over 4.7 crore employees are likely to get an interest of 8.5 per cent in 2010-11 on their provident fund deposits of about Rs 2.5 lakh crore, a return authorities have been giving for the past five years. The decision is likely to be taken tomorrow at the meeting of the Central Board of Trustees (CBT) turning down the trade unions’ demand for 8.75 per cent as it would result in huge deficit. The EPFO, which has a corpus of about Rs 2.5 lakh crore, will have a surplus of Rs 15.26 crore after paying an interest of 8.5 per cent. However, the payment of 8.75 per cent interest, as is being demanded by trade unions, will leave it with a deficit of Rs 426.23 crore. The Finance and Investment Committee (FIC) of the EPFO had earlier recommended 8.5 per cent interest rate for the current fiscal for which a final decision will have to be taken by CBT, a body headed by Labour and Employment Minister Mallikarjun Kharge. — PTI
	Re’s gain is exporters’ loss Ruchika M. Khanna Tribune News Service Chandigarh, April 8 The volatility in the currency market, with the rupee appreciating against major currencies like dollar, euro and pound, has left exporters in the region in jitters. With exports from the region failing to match the pace with growth during the pre-recession period, this appreciation of rupee is further hitting exporters by shrinking their profit margins. During the past couple of days, rupee has appreciated by 12 per cent against the dollar and euro, and by 17.5 per cent against the pound. This has adversely affected the exporters, who are now getting less money in rupee terms. Moreover, the exporters rue that though they are doing forward-booking for dollar while accepting big orders, most of them had not been forward-booking for euro and pound. The exporters complain that even forward-booking against these currencies is not a solution, as this cannot be done on a long-term basis. With these currencies slipping continuously over the past fortnight, exporters are sceptical of accepting long-term orders. If the dollar slides further, exporters who book their orders now will be able to realise less as profits. Says Anil Kumar Sood, a leading auto component exporter from Ludhiana, said exporters were hit hard also because of the rising input costs. “Most exporters booked their orders (that are being delivered now) at a time when the value of dollar was Rs 47- 48. But over the past few days, rupee has appreciated to an average Rs 44.50. This has meant a loss of 10-15 per cent on our profit margins,” he complained. It is learnt that the higher FII inflows have put a pressure on rupee. It is learnt that the investments by these FIIs in March was at a high of $ 12.2 billion in bonds and $ 77.2 billion in equities, which has created rupee volatility and adversely impacted the lean export margins. A K Kohli, senior vice president, Punjab Chamber of Small Exporters, said raw material prices had gone up by 20 per cent in past two months and currency was appreciating. “As a result, we are losing money on orders booked, especially in engineering goods exports. In these circumstances, the government should give a common platform to export-oriented units and other export houses not having the status of EOUs, by giving the former exemption in income tax on exports. This will ensure that inflow of foreign exchange to the country is assured against the sale of products, and not just FIIs who can withdraw their money any time,” he said. S C Ralhan, regional chairman, Engineering Export Promotion Council, said it was time that the government should come to the rescue of exporters, since most of them were small and medium enterprises. “Like China, India too needs to fix the exchange rate, or we will lose our market to Chinese exporters. Because of a parity exchange rate, the Chinese exporters have an advantage over us because of higher profit margins than Indian exporters. Since they are able to quote less rates to clients, they are bagging most export orders,” he said.
	3G auction kicks off today Tribune News Service New Delhi, April 8 Come Friday and there will be excitement running high in the telecom circles with the country getting ready to usher in a new era of communication. While the government is hoping to reap around Rs 35,000 crore from the auction of the third generation (3G) airwaves, the follow-up auction of broadband wireless access spectrum will be the largest such sale in recent years. As a start the DoT has already conducted the mock auction to familiarise the nine 3G and 11 broadband wireless access (BWA) bidders with the system. Bidders were asked to log onto the DoT’s mock auction network to understand the finer points and grey areas if any from the bidders point of view. NM Rothschild, which designed the auction process, has also made a presentation to the bidders in a meeting on Tuesday. The 3G spectrum would allow not only high speed multimedia services but also high speed data transfer, besides providing the subscribers with host of other options, which are not available on mobile phones now. Nine telecom companies, including Bharti Airtel, Vodafone Essar, Reliance Telecom and Idea Cellular, are in the final list of bidders for three-four slots of 5MHz of 3G spectrum, while there are 11 bidders for two slots of BWA. The process of e-auction allows applicants to bid from their computers. The reserve price for a pan-India 3G licence is Rs 3,500 crore while that of BWA is Rs 1,750 crore, but analysts is of the view that it would go much higher. Officials at the Sanchar Bhawan were optimistic that the government would be able to achieve the target it has set for itself. This especially, as the market is congested and early starter would have the advantage over the other at a later stage. The addition of 3G is seen giving a major boost to a mobile market already growing by 15 to 20 million subscribers a month. On last count, country had a mobile subscriber base of 545 million and it is still growing at the fastest pace in the world. JPMorgan said in a report the bidding could “stretch balance sheets” of mobile companies that have already been undermined by fierce tariff battles which have reduced calling costs to less than a cent a minute and hit revenues. Incidentally, reports said even if the government was able to raise Rs 35,000 crore (approx $8 billion) from the auction, it would be nowhere near the $19 billion raised by the US government two years ago and the $35 billion earned by Britain in 2000.
	Corporate News Rs 716 cr deal for Aban Offshore Mumbai, April 8 Aban Offshore today said it had bagged a contract valued at $159 million (about Rs 716 crore) from Brunel Shell Petroleum Sendirian Berhad for the deployment of the jack-up rigs. The company estimates to earn a revenue of $159 million and the deployment is likely to commence during the third quarter of the calendar year 2010. Brunei Shell Petroleum Company primarily operates in the field of exploration and production of crude oil and natural gas from onshore and offshore fields. Sun Pharma arm gets USFDA nod Sun Pharmaceutical today said its subsidiary had received approval from the US health regulator to market Bupropion Hydrochloride anti-depressants tablets. The US-based subsidiary of the company has received the Food and Drug Administration approval to market its drug Bupropion Hydrochloride Bupropion Hydrochloride Extended-Release, Sun Pharmaceutical said. Suzlon turbines for Italy firm Suzlon Energy today said its subsidiary REpower Systems AG has bagged a contract from an Italian company for supplying 18 wind turbines to Daunia Savignano, a subsidiary of Italian Tozzi Group, Suzlon said. REpower will be responsible for the supply, erection and commissioning of these wind turbines at Savignano wind farm in southern Italy. GVK Power eyes stake in airports GVK Power and Infrastructure today said it was open to acquire a majority stake in Mumbai and Bangalore International Airports if the target parties were willing to sell the stake. At present, the company holds nearly 37 per cent stake in Mumbai International Airport and around 29 per cent in Bangalore International Airport. The company also has plans to develop malls and hotels in around 200 acres of land near the airport over the next 10 years. — PTI