The Tribune, Chandigarh, India

Hero Group splits
Manav Mander
Tribune News Service

Who gets what

Brijmohan Lall Munjal family: Hero Honda Motors, Rockman Cycle, Hero Corporate Service, Hero ITeS, Hero Mindmine, Hero Soft and Easybill
Om Prakash Munjal family: Hero Cycles
Satyanand Munjal family: Majestic Auto, Highway Cycle, Munjal Auto and Munjal Showa
Ashok Munjal and brother: Sunbeam Auto, Hero Exports

Ludhiana, June 10
While the Ambani brothers have patched up after a long battle, the Munjals of the Hero Group have chosen to split. The Munjals of Hero Honda have separated their cross-holdings in more than 20 group companies.

The separation has been done in a planned manner that each family member is getting ownership of the business they are currently managing. Billions of dollars of businesses and investments and much more have all been assigned to the different Munjals.

Hero Honda Motors, the flagship of the Munjal family, will be owned and managed by the Brijmohan Lall Munjal family with all 26 per cent stake in the company. His sons Pawan Kant, Sunil Kant, Suman Kant and the late Raman Kant’s family will have a combined ownership. Under the family settlement, Brijmohan’s family will also own Rockman Cycle, Hero Corporate Service, Hero ITeS, Hero Mindmine, Hero Soft and Easybill.

Brijmohan’s three brothers and their kin will manage firms such as Hero Cycles and Munjal Showa, according to the settlement. But there will be no change for employees, suppliers and clients of every group.

Om Prakash Munjal and his family will now control and manage Hero Cycles. Brijmohan’s other brother Satyanand Munjal’s sons have got Majestic Auto, Highway Cycle, Munjal Auto and Munjal Showa. Ashok Munjal, son of late Dayanand Munjal gets Sunbeam Auto while his brother Vijay gets Hero Exports.

Later, in the evening a communiqué by Ashwani Sharma, a spokesperson of the chairman, Hero Corporate Service Limited, said the Munjal family had decided to realign the ownership of their businesses. The realignment was secured in an atmosphere of trust, harmony and deep regard among the constituent members of the Munjal family.

He said all promoter cross-holding had been untangled and consolidated in the name of the relevant family. “In line with the basic realignment premise, there will be absolutely no change in the manner in which the group companies will be run and managed from here on. There has been no disruption in the business entities or in the manner in which they function and deal with each other,” he added.

Rs 9,150 cr plan outlay for Punjab
Ajay Banerjee/TNS

New Delhi, June 10
The Planning Commission today okayed a Rs 9,150 crore plan outlay for Punjab during the ongoing fiscal, including a an additional central assistance of Rs 333 crore earmarked for the priority projects, with 30 per cent as central grant component, while energy sector spending will get the highest priority.

The outlay is Rs 450 crore more than last years outlay of Rs 8,600 crore. The outlay for irrigation and rural development schemes are likely to go up.

The outlay was finalised at a meeting between Planning Commission Deputy Chairman Montek Singh Ahluwalia and Punjab Chief Minister Parkash Singh Badal.

Punjab asked the commission to lift the ceiling imposed on it for assessing the funds allocated for central schmes and loans for energy sector following the reforms carried out in the power sector in the state.

Top priority has been accorded to the energy sector for which 36 per cent of the plan outlay has been earmarked. A major share of the outlay will be spent on power generation, distribution and upgradation of transmission. The state also asked to set up a Central Sector Thermal Plant in the state.

The social services sector gets 26 per cent of the outlay. This will cover skill development and employment generation, rural water supply schemes, urban development and welfare of weaker sections. Road Transport sector will get 16 per cent of the share.

Badal said the target for growth of the state’s economy had been fixed at 5.90 per cent during the 11th Five Year Plan ending 2012. The economic growth during the first three years of the plan had been more than the target.

The Chief Minister also raised the issue of accumulated debt that was Rs 64, 924 crore coupled with the heavy borrowings to the tune of Rs.9,000 crore 2010-11 and debt servicing of Rs.6570 crore. A large part of the debt was due to the accumulated militancy period loans. Punjab requested for one-time package to provide complete debt waiver.

The state has projected a revenue deficit of Rs 3,788 crore and fiscal deficit of Rs 6,706 crore. A Punjab team pointed out to the commission that the formula adopted by the 13th Finance Commission for inter-se distribution among the states was also not favourable to a developed state like Punjab.

Badal also urged it that prices should be fixed by providing a margin of 50 per cent over the cost of production as suggested by Dr. Swaminathan, apart from strengthening the marketing infrastructure.

Tax sops, loan waiver on wishlist
Sarbjit Dhaliwal
Tribune News Service

Jalandhar, June 10
Punjab has urged the Centre to grant various tax exemptions for a few years to set up big automobile units in the state. “We took up this issue with the Planning Commission today in New Delhi”, says Manpreet Singh Badal, Finance Minister. Earlier, the Centre had given exemptions to hill states to promote the industry.

“Big auto units will give a big push to Punjab’s economy. And that push is required at this stage”, adds Manpreet Singh. Many ancillary units would come up once the big auto companies came in the state.

He says the commission is told to remove the sealing on securing various loans as Punjab has already gone for reforms in the power sector. The PSEB has been unbundled and the power tariff on agriculture sector imposed, though not fully. “ In the light of these reforms, the Centre should remove the sealing on various loans to be secured for various development projects”, he adds.

Punjab has also told Montek Singh Ahluwalia that it is prepared to switch over to the Good and Services Tax (GST) that will replace VAT across the country, provided the Centre gives guarantee to protect the purchase tax charged by the state on the sale of various foodgrains to the central pool.

The commission is informed that the rural development fund and the Punjab Infrastructure Development Fund charged on foodgrains are main sources to fund the annual plan. Denial of purchase tax on foodgrains will hit the state’s development process.

Punjab, which is keen to shift from paddy to other crops, has urged the Centre to fix the procurement price of bt maize and other coarse grains to provide secure market system to farmers. The state is also keen to give big push to dairy farming. “We have planned to hold another meeting with the commission on issues related to the agriculture sector”, said Manpreet.

Besides it, Punjab is pressing the Centre hard to resolve its debt problem. The debt burden has gone up to Rs 71,000 crore and it has become a burden on the state exchequer. Major part of the state’s revenue is eaten by the interest that is paid on the debt.

‘Eurozone may lead to another banking crisis’

Mumbai, June 10
The ongoing turbulence in the eurozone can lead to a second banking crisis due to the weakness in the financial sector of Europe and the US, an expert said today.

"The situation is very serious. The fiscal crisis can lead to a second banking crisis worldwide. Even smaller issues can shake the banking system in the US and the EU and everywhere. It is far from being healthy," online foreign exchange trading service provider Alpari (UK) CEO Andrey Vedikhin told PTI on the sidelines of a function held by the company's Indian arm to launch exchange-traded currency for local markets.

"Worldwide, toxic assets are in the range of $10 trillion, which will be able to destroy the whole financial system in the world," he said.

The media as well as the governments concerned ere trying to not spread panic in this regard to save the eurozone and the world from a bigger financial crisis, he said.

"If everybody panics, worse can happen. Now, reports are there about the crisis spreading to more countries. Banks are now looking for funds from governments. But the governments, themselves, are in trouble," he said.

According to Vedikhin, keeping all countries together within the eurozone is the only way to overcome the crisis. "But chances are there for a split within the eurozone," he said.

Many countries that have higher fiscal deficit are forced by bigger economies like Germany and France to lower it through lesser spending on the public sector, he said.

"This move will lead to job losses and, subsequently, a series of defaults. The unemployment rate in the EU was the highest last week," Vedikhin said.

According to him, banks from strong economies such as Germany or France have greater exposure to the trouble-ridden Eastern Europe.

"A few years ago, there was a bubble in these countries. Without realising that, banks from stronger economies in Europe invested heavily there. Now the bubble is gone. Things went wrong in these countries and the banks are affected," he said. — PTI

Food inflation rises to 16.74 pc

New Delhi, June 10
Food inflation rose for the second consecutive week, pushed by higher prices of fruits, pulses and milk to 16.74 per cent, prompting speculation that the Reserve Bank may tighten money supply at its policy meet next month.

Food prices increased by 0.19 percentage point for the week ended May 29 from 16.55 per cent in the previous week.

Prices of pulses shot up by 31 per cent, that of milk by 21.1 per cent and fruits by 18.7 per cent.

Consumer staples, such as rice and wheat, turned costlier by 7 per cent and 3 per cent, respectively.

However, prices of potatoes and onions eased by 30.87 per cent and 12.27 per cent, respectively.

The RBI, according to analysts, may take steps to control money supply in a bid to cool inflation, which has remained at an elevated level despite moderation from 20 per cent in December.

The central bank is scheduled to announce its first quarter review of monetary policy on July 27.

The RBI may tighten monetary policy in the quarterly review next month, said Crisil chief economist D K Joshi.

"Food inflation will remain range-bound until the next harvest season as there has been no sustained decline in food items. Once monsoon arrives, cereal prices may see a decline. So, food inflation will ease in the second half of the fiscal," he said.

On week-on-week basis, prices of beef rose by 8 per cent, that of sea water fish by 3 per cent and arhar, moong and fruits and vegetables by one per cent each. However, bajra prices fell by a per cent.

Earlier this week, Planning Commission deputy chairman Montek Singh Ahluwalia had said inflation was likely to fall to 5-6 per cent by the end of the year.

"Inflation is too high to be comfortable...It is now decelerating...I am sure that by the end of this year, it will come down to 5-6 per cent," Ahluwalia had said.

In April, the wholesale price-based inflation stood at 9.59 per cent, slightly lower than the March number. The RBI has pegged the wholesale price-based inflation at 5.5 per cent in the current fiscal. — PTI

Orchid acquires US firm

Mumbai, June 10
Orchid Chemicals & Pharmaceuticals today said it had signed an agreement to acquire US-based Karalex Pharma for an undisclosed sum, a move to establish its presence in the US drug retailing market.

The acquisition is likely to be completed this month, subject to customary closing conditions. "With this acquisition, Orchid has established its presence in the generic sales and marketing area. This acquisition will provide a strong commercial US-based sales capability to Orchid, paving the way for synergistic returns from our upcoming and long-term strategic generic pharmaceuticals pipeline comprising key first-to-file and Paragraph-IV products," Orchid Chemicals MD K Raghavendra Rao told reporters here.

“This acquisition will help the drug-maker to directly sell its products in the US market. It will add $ 20-million to the company's revenue in the current fiscal year," Rao said.

This move also endows Orchid, for the first time, with a complete end-to-end coverage capability of the entire generic pharmaceutical business cycle from product development to product sales and will enable the company to internalise value. — PTI

RPower to buy two Indonesian coal firms

Mumbai, June 10
ADAG firm Reliance Power today said it would buy two Indonesian coal companies through its unit Reliance Coal Resources. Reliance Coal Resources has entered into share purchase agreements with two Indonesian coal firms that own three coal mines there, Reliance Power said.

However, the company did not disclose the financial details of the transaction.

The coal from Indonesia would be used for the Krishnapatnam ultra mega power project and other power projects of Reliance Power, it added. Krishnapatnam ultra mega power project is a 4,000-MW supercritical coal-fired power generation facility. — PTI

JSW Energy to buy 70 pc in SA firm

New Delhi, June 10
JSW Energy today said it might pick up 70 per cent stake in South Africa-based Indian Ocean Mining, a move that will help the company in enhancing its fuel security.

"JSW Energy has entered into a memorandum of understanding with Osho Venture FZCO, Dubai (Osho) and Indian Oceam Mining Ltd (IOM) with an intention to acquire 70 per cent equity interest in IOM from Osho," the company informed the Bombay Stock Exchange.

The MoU is part of the company's strategy to enhance fuel security for which the company is continuously evaluating various strategies and proposals to secure long-term imported coal linkages, it said.

The pact is subject to company carrying out due diligence, execution of definitive agreements and compliance with regulatory requirements. — PTI

Essar Energy joins FTSE 100

London, June 10
Essar Energy has won the distinction of becoming the first Indian group company to figure in the London Stock Exchange's benchmark index FTSE 100. Essar Energy will join the elite group on June 21, FTSE Group, which manages the index, said in a statement. The prestigious index represents the 100 biggest UK companies by market capitalisation.

London-based Essar Energy, which raised 1.2 billion pounds in the biggest issue here since December 2007, is a group company of Ruias-led Indian conglomerate Essar Group. Essar Energy was listed on LSE last month.

".... Integrated energy company Essar Energy will be joining the FTSE 100 Index for the first time," the statement said.

"All changes from this review will be implemented at the close of business on June 18 and will take effect from the start of trading on June 21, 2010," the statement noted. — PTI