The Tribune, Chandigarh, India

Petrol Price
Rising global trend warranted hike: IOC
Sanjeev Sharma
Tribune News Service

Air fares to go up?

Airlines, it seems, are thinking of imposing another fare hike on passengers. The hint came directly from a leading operator and was not refuted by the government. Jet Airways chief Naresh Goyal said when ATF prices go up, airlines were left with no other option but to increase fares. "If costs rise, how can it not get reflected (in fares)," he said. Civil Aviation Minister Praful Patel said the ministry stepped in to intervene only if the increase was unjustified. "It is natural that when ATF prices increase, it will affect airfares," he said. — TNS

New Delhi, January 17
IndianOil Corporation (IOC) has said the current increase in the retail selling price of petrol was warranted and it has softened the impact on the consumer by not passing on the full extent of the rise in global oil prices.

According to an IOC statement, based on current price levels in the international oil market, the desired increase in the retail selling price of petrol in a market like New Delhi should have been Rs 3.72 per litre. However, IndianOil has chosen to soften the impact on the customer by increasing the price by Rs 2.50 per litre only and not passing on the balance required increase of Rs 1.22 per litre.

Even during the previous revision of the price of petrol with effect from 16th December, a month back as against the required increase of Rs 4.90 per litre in the price at New Delhi, the actual increase was confined to Rs 2.96 per litre thus leaving a gap of Rs 1.94 per litre in anticipation of a likely fall in the price levels in the global oil market.

However, IOC says with the persistent rising trend in the international oil prices, average prices of the Indian crude basket have gone up from $87.83 per barrel during the earlier petrol price revision in December to the current level of $92.31 per barrel amounting to an increase of $4.48 per barrel. Average global prices of petrol during the same period have gone through an even higher increase of $5.17 per barrel, rising from a level of $95.30 per barrel to $100.47 per barrel.

Owing to the substantial increase in oil prices, the oil marketing companies (OMCs) are continuing to incur huge amounts of under-realisations on the sales of other sensitive petroleum products, including diesel, kerosene (PDS) and LPG.

Based on the current price levels in the international oil market, the retail selling prices (inclusive of the tax elements) of diesel, kerosene and LPG should have been higher by Rs 7.65 per litre, Rs 19.60 per litre and Rs.366.28 per 14.2 kg cylinder, respectively at New Delhi with corresponding increases across the rest of the country.

IndianOil is currently incurring an under-realisation of about Rs 159 crore per day on the sales of these three sensitive products. The gross under-realisation for the year 2010-11 is projected to be as high as Rs 40,600 crore for IndianOil and Rs 73,600 crore for all the PSU OMCs.

Tough time ahead for corporate borrowers
Banks asked to check end use of funds
Ruchika M. Khanna/TNS

Chandigarh, January 17
Corporate borrowers will now find it difficult to divert the money that they raise from any bank. The RBI has now asked all commercial banks to ensure the correct end use of funds by borrowers.

With the RBI detecting large scale diversion of funds by borrowers, allegedly because of the failure of the lending banks in due diligence, it (RBI) has now asked all commercial banks to improve the efficacy of the existing machinery for post-sanction supervision and ensure a “robust follow-up and evaluation” of advances given by them.

It may be mentioned that as part of its ongoing supervision, RBI had undertaken an assessment of the practices in vogue to ascertain the end use of funds. This review then revealed how the funds were being diverted because the expected level of due diligence had not been done by the banks extending loans. This review showed that term loan disbursements were being credited to the current/cash credit accounts of borrowers.

Sources in the banking industry say as a practice most corporate borrowers divert 15- 20 per cent of the total loan amount into their personal accounts, to be used as capital base. These borrowers utilise these funds for their day-to-day operations. Since the banks were mostly dependant on the certification given by chartered accountants for infusion of promoter’s contribution and deployment of banks’ funds, the diversion of loans were going unnoticed.

Based on this, RBI has now asked all scheduled commercial banks to ensure a ‘meaningful’ scrutiny of the periodical progress reports and operating/financial statements of borrowers. Banks have been asked to send its own officers on regular basis to the assisted units and inspect the securities charged/hypothecated to the banks, besides checking the account books of borrowers.

Other measures include introduction of stock audits, getting certificates from the borrowers that funds are being used for the purpose approved by the bank. In case of any digression, banks can take legal recourse against the errant borrowers. Sources in the banking sector said implementation of these steps by banks would not only act as a deterrent for borrowers to misuse funds but also safeguard the interest of the banks.

Telecom cos gear up for MNP rollout
Girja Shankar Kaura/TNS

New Delhi, January 17
With the all India rollout of the Mobile Number Portability (MNP) slated for January 20, the telcom companies, both private and state-run, are preparing to brace themselves of its impact.

While Aditya Birla group firm Idea Cellular today started a helpline to guide over 700 million mobile users on various aspects of the service, the other telecom operators in the country are expected to follow suit over the next two days.

MNP enables subscribers to change operator while retaining their mobile numbers and is also expected to give rise to genuine competition, which could also result in improvement in the quality of service.

Operators are waiting to see the full impact of the MNP rollout before deciding the further course of action. While they are not much worried about the pre-paid sector as subscribers in it are anyway habitual to number change, the operators are more worried about the post-paid subscribers.

This, as it has the most number of high-end users and which incidentally, has always received a step-motherly treatment from the operators when compared to the pre-paid customers.

The post-paid segment is the strong base of an operator's revenues. Although it accounts for about five per cent of the subscriber base of a big operator, it brings in 20-25 per cent of revenues.

While most operators expect the MNP impact to be negligible, they would still wait to access the situation before deciding whether or not to work harder on their service delivery to retain or attract customers.

On the other hand, experts feel that there could be a reasonably high subscriber churn after the launch of MNP of as much as 17 per cent in the pre-paid category and 19 per cent in the post-paid segment. In the high (average revenue per user) segment, this level rises to 20 per cent, climbing to 22 per cent in the enterprise market and 18 per cent in the business category.

Meanwhile, Idea took the lead in attracting subscribers looking to change with the launch of its toll-free helpline.

“Idea’s new Toll Free Number 1800-270-0000 will offer all relevant information on the processes and procedures of availing MNP and porting requests from mobile subscribers who wish to switch to Idea,” Idea Cellular said.

ADAG pack tumbles up to 8.45%

Mumbai, January 17
Anil Ambani group companies today tumbled by up to 8.45 per cent on the BSE on the first day of trading after Reliance Infrastructure and RNRL agreed to abstain, as per a regulatory settlement with SEBI, from investing in listed stocks till the next year.

Shares of R-Infra plummeted by 7.84 per cent to close at Rs 735.70 on the Bombay Stock Exchange, becoming the worst performer on the 30-share benchmark. The scrip during the day had hit an year-low of Rs 714. Similarly, R-Power with whom RNRL has now merged, fell by 6.13 per cent to settle at Rs 137.90.

Among other group companies, Reliance Capital declined by 6.45 per cent while RCom was down 4.77 per cent. Reliance MediaWorks witnessed a slide of 8.45 per cent on the BSE.

In a consent order after market closed on Friday last week, SEBI said it has settled a probe into alleged violation of regulations for foreign investment and unfair trade practices by RNRL and R-Infra after the two companies offered to abstain from investing in secondary market till December 2012.

As part of the settlement, Anil Ambani, Chairman of both the companies, and four other directors would also not invest in listed stocks till December 2011.

Despite Anil's clarification yesterday that his group firms settled the SEBI probe voluntarily and his claim that the regulator has not imposed any ban on its own from participation in the capital market, the group stocks fell sharply. — PTI

Haier to launch more products in India
Shiv Kumar/TNS

Varca (Goa), January 17
Haier, the Chinese consumer products company, has announced an ambitious target of Rs 1,700 crore worth of sales in 2011, according to Eric Braganza, President, Haier India.

Addressing a press conference here, Braganza said the company will be bringing in a number of products in the Indian market as part of its growth strategy. The company will introduce laptops, cameras and home theatres, Braganza said. The company had acheived a turnover of Rs 825 cr in 2010, a 135 per cent increase from the previous year, Braganza said.

Despite its spectacular growth, Haier accounts for just five per cent of the white goods market in India, according to Braganza. Haier will also enter the eco-friendly segment this year with the launch of Ecolife range of products, Braganza added. "Haier under the Ecolife initiative not only develops more energy-efficient, state-of-the-art products but also encourages customers to live eco-conscious lifestyles," Braganza added.

A number of Haier's product categories like refrigerators, washing machines, air-conditioners and LED/LCD televisions will be available under the Ecolife range, Braganza added. He added that Haier was beefing up its dealer network in the country. The company will have more than 300 dealers by March this year, Braganza said.

Himachal power projects
FinMin inks $208 m loan pact with ADB
Sanjeev Sharma
Tribune News Service

New Delhi, January 17
The Finance Ministry today signed a loan agreement with the Asian Development Bank (ADB) for $208 million for the third tranche of the Himachal Pradesh Clean Energy Development Investment Program.

According to a Finance Ministry statement, this facility is for a series of loans to provide funding for four hydropower projects totalling 856 MW in Himachal Pradesh, for an amount of $800 million from ADB. This particular loan provides partial funding for stages II & III of the integrated Kashang hydroelectric project totalling 195 MW located in Kinnaur, and for the 100 MW Sainj hydroelectric project located in Kullu.

Himachal Pradesh has abundant water resources, with five major rivers flowing from the western Himalayas. Its power generation potential is about 23,000 MW - about one fourth of India’s total hydropower potential - out of which about 6,480 MW has been developed. Recognising the state’s comparative advantage, the state government in 2006 approved a hydropower policy that aims to make Himachal Pradesh the “hydropower state” of India.

Venu Rajamony, Joint Secretary, Department of Economic Affairs, Ministry of Finance, signed the loan on behalf of the government.

Rajamony said on the occasion, “The Himachal Pradesh Power Corporation, the implementing agency for this project is also taking the lead in development and accreditation of its project for availing carbon credits.”

“Himachal Pradesh’s focus on hydropower development is vital to meet all in-state demand by providing affordable, reliable power to its residents as the state currently meets only about 50% of its power demand through its own power generating capacity. Harnessing this hydropower will also enable the export of excess power to the rest of the country for the benefit of power deficient states ,” said Andrew Jeffries, senior energy specialist at ADB’s South Asia Department.

Corporate Results
TCS Q3 profit up 30%, declares 200 pc dividend

Mumbai, January 17
Country's largest software firm Tata Consultancy Services (TCS) today posted 29.93 per cent jump in consolidated net profit at Rs 2,369.83 crore for the third quarter ended December 31, 2010.

The company has announced 200 per cent dividend. It has declared the third interim dividend of Rs 2 per equity share of Re 1 each.

Axis Bank

Private lender Axis Bank today said its net profit jumped 35.88 per cent to Rs 891.36 crore for the quarter ended December 31, 2010.

During the October-December period, the bank's total income stood at Rs 4,986.02 crore, up from Rs 3,871.74 crore in the same period of 2009.

L&T net up 11 pc

Larsen & Toubro today reported a jump of 10.78 per cent in net profit for the December quarter at Rs 840.63 crore.

Total income also rose to Rs 11,413.08 crore in the third quarter ended December 31, 2010 against Rs 8,145.61 crore in the corresponding quarter last fiscal, it added.

IndusInd Bank

Private sector lender IndusInd Bank Ltd today posted a 74.76 per cent growth in its net profit for the quarter ended December 31, 2010 at Rs 153.86 crore.

The total income of the lender also increased to Rs 1,110.86 crore in the quarter ended December from Rs 818.94 crore over the corresponding period last year. — PTI

Bankers for ONGC FPO shortlisted

New Delhi, January 17
Bank of America, Citigroup and HSBC are among six banks that will manage the sale of government's 5 per cent stake in ONGC.

"Six merchant bankers - Bank of America Corp, Nomura Holdings, HSBC Holdings Plc, JM Financial Services, Citigroup Inc and Morgan Stanley, have been shortlisted for the follow-on public offer (FPO) of ONGC," a senior official said.

"The appointment of the six book running lead managers will be done once Finance Minister Pranab Mukherjee approves of it," he said. — PTI