New Delhi, August 4
Concerns over the financial health of power distribution utilities are mounting as some states have not been raising tariffs for years.

The chief cause for the losses is inadequate and irrational revision of tariffs. Only 16 states have revised tariffs in 2010.

Not only is there is a delay in tariff revision often there is a substantial time lag between successive revisions, according to a note for the Group of Ministers on (GOM) on power headed by the Power Minister, Sushil Kumar Shinde.

In 2008-2009, the financial loss of the utilities on subsidy received basis was Rs 32,678 crore. If the present trend continues, projected losses in the year 2014-15 will be Rs 1.16 lakh crore as per a study conducted for the 13th Finance Commission. Cumulative losses of the distribution utilities in March 2009 are estimated to be Rs 75,000 crore.

Of the 40 utilities of the states that have unbundled their state electricity board (SEB) on subsidy received basis, only 11 utilities are in profit. There is a widening of the gap between average cost of supply (ACS) and average revenue realized (ARR).

The compounded annual growth rate (CAGR) of tariff is less than the CAGR of power cost. The CAGR for tariff estimated by CAG is only 6.95 per cent while the for power purchase cost is estimated at 11.90 per cent.

This implies that the utilities are purchasing costlier power and selling it at cheaper rates every year.

One of the causes of mounting losses is inadequate subsidy being received by discoms in lieu of subsidised power being supplied to consumers though according to section 65 of the Electricity Act, 2003 the subsidy has to be released in advance by the states.

It is also seen that in many states, timely auditing of accounts of distribution utilities is not being carried out. Also, annual accounts are not finalised in time due to old and conventional manual accounting system still in vogue in many states. 

New Delhi, August 4
Air India today got a fresh equity infusion of Rs 1,200 crore in the third instance of financial assistance to the beleaguered national carrier from the government.

The decision was taken at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh.

The airline, which is incurring Rs 600 crore monthly loss, has so far received Rs 2,000 crore in the past two financial years. As AI is passing through critical financial crunch, the equity induction would not only ease the cash flow into the company but also preclude borrowings from markets at high costs, a release said.— PTI

Paris, August 4
A French court ordered an investigation on Thursday into the role of IMF head Christine Lagarde in a large settlement paid to a businessman friend of President Nicolas Sarkozy when she was finance minister.

The investigation will get under way at once into Lagarde’s alleged complicity in the misuse of public funds in her approval of a 285 million euro ($407 million) arbitration payout to Bernard Tapie in 2008, the court's prosecutor said.

Lagarde — who took up her post as International Monetary Fund managing director last month — has denied any misconduct and her lawyer said the probe would be "in no way incompatible" with her functions at the global lender.

Analysts said the development would be awkward for Lagarde as she makes her IMF debut and tries to turn the page from her predecessor Dominique Strauss-Kahn's exit from the post in a sex assault scandal -- but they also said it should not immediately hurt her credibility.

"Today's news is politically unhelpful but on the other hand I would be surprised if this triggered a dynamic making this a major issue and affecting Lagarde's stewardship at this stage," said Thomas Klau of the European Council on Foreign Affairs.

There has never been any question that Lagarde benefited personally from the affair. Lagarde is accused of overruling objections from advisers to settle the case with Tapie, who said Credit Lyonnais bank had defrauded him in the 1993 sale of his stake in sports clothing group Adidas.— Reuters

New Delhi, August 4
American luxury motorcycle maker Harley-Davidson on Thursday launched a new version of its Fat-Boy bike in the country, priced at Rs 19.7 lakh (ex-showroom Delhi). "This model will be imported as a completely built unit and will be available across all dealerships in addition to the 14 models currently available in the 2011 line-up," the company said.

The company said the model was launched in line with the strategy of introducing new models and commencement of complete knockdown assembly operations in India.

The bike is powered by electronic sequential port fuel injection (ESPFI) engine which produces 125 NM of peak torque at 3,500 rpm. "Six-speed cruise drive transmission features a new helical-cut fifth gear for smooth operation," it added.

"This arrangement will help more motorcycle enthusiasts realise their dream of joining the Harley-Davidson community," Harley-Davidson India's MD Anoop Prakash said.

New Delhi/Mumbai, August 4
Steelmaker JSW Steel on Thursday denied allegations of wrongdoing levelled by the Lokayukta— Karnataka’s anti-graft watchdog— and also said the firm has cut production at its steel plant owing to a court ban on mining in a part of southern India.

The report by the Lokayukta, which has also named several others miners including National Mineral Development Corp., Sesa Goa and Adani Enterprises, has already created a political storm and led to the resignation of the chief minister BS Yediyurappa.

The alleged mining scam, the latest in a series of corruption scandals to have hit India, has dented the country's image and hurt foreign investor sentiment at a time when the economy is slowing and the government is facing public ire over rising prices.

JSW Steel, in which Japan's JFE Holdings owns 14.8 per cent, is not looking at legal recourse on the conclusions drawn in a report for now but may do so in the future, Seshagiri Rao, joint managing director and group CFO, told a press conference in New Delhi.

Anti-graft watchdog of India's Karnataka state, known as Lokayukta, had cited certain alleged illegal purchase of iron ore and transactions linking the company and a group firm.

The firm got its woes compounded when India's top court put an interim ban on the mining in iron-ore rich district of Bellary in Karnataka, from where JSW Steel sources most of its ore requirement for its 10 million tonne steel plant— PTI

Chandigarh, August 4
Over 1,200 small and medium enterprises in Punjab will have to wait longer in order to get capital subsidy promised to them by the Punjab government.

Though the Punjab and Haryana High Court had directed the state government to release the subsidy and other incentives due to them, the state government has referred the matter to the Advocate General, for an appeal in the higher court.

Officials said that Punjab government’s policy does not allow providing subsidy to units that have closed down, or have changed the nature of business for which subsidy was given.

Thus, they have sought a legal opinion on whether they should go to appeal in this case.

“We have had an instance where a CBI inquiry was ordered against the officials of the department, after capital subsidy was disbursed to industrial units that had closed down. This subsidy, too, was disbursed following a court directive for disbursal of subsidy. We are adopting a cautious approach and a final decision on disbursal will be taken only after we receive the opinion of the Advocate General, Punjab,” said S S Channy, principal secretary, Industries.

Interestingly, 20 of these units got the subsidy (to the tune of Rs 3.15 crore) after they approached the court, and interim relief was granted to them.

After receiving the subsidy, these units decided not to pursue the case against the Punjab government, and no final decision was given by the court as these cases became infructuous.

Punjab and Haryana High Court had directed the state government to release the subsidy and other incentives due to 1,215 industrial units, in May this year. The department has worked out that the liability for paying the subsidy to these 1,215 units.

This capital subsidy scheme was announced by Punjab in its industrial policy in 1993. At that time, it was announced that those setting up new industry in the state would get a 20 per cent subsidy (up to a limit of Rs 30 lakh) on plant and machinery.

New Delhi, August 5
The Reserve Bank today said prepaid payment instruments like smart cards, magnetic stripe cards, mobile wallets can be issued by banks only to corporates listed in India.

In a circular issued to all banks, the Reserve Bank said, "Prepaid payment instruments can be issues only to corporate entities listed in any of the stock exchanges in India".

It further said the corporates would have to verify the identity of the employee to whom the card would be issued, along with copies of photograph and a proof of identity.

"The corporate is also required to make available details of bank accounts of the employee to the bank," the RBI said. The central bank said the maximum value of an individual prepaid payment instrument should not exceed Rs 50,000.

In 2009, the Reserve bank had allowed all banks and non-banking financial institutions (NBFC), meeting the regulatory capital adequacy norms, to issue the instruments which can be used for purchase of goods and services. Corporates usually avail this facility from the bank for onward issuance to their employees.

Pre-paid payment instruments — issued as smart cards, magnetic stripe cards, mobile wallets, paper vouchers, gift cards and travel cards among others — facilitate purchase of goods and services against the value stored in it.— PTI

Chandigarh, August 4
Reliance Securities Ltd, a part of Reliance Capital, today announced the launch of Regular Stock Purchase plan, a plan providing investors with a systematic way to invest directly in equity markets at regular intervals.

The plan was announced by Vikrant Gugnani, Executive Director, Reliance Securities, today.

“Our new plan is aimed to inculcate a habit of regular investment in fundamentally good stocks. This will help average out price volatility and generates better returns in the long term to investors. The plan allows buying scrip at regular interval, over a period of time, for specified amounts or defined quantities”, said Gugnani. — TNS

BRIEFLY

Shishir Kumar new Airtel CEO Upper North
Chandigarh: Bharti Airtel on Thursday announced the appointment of Shishir Kumar as CEO of the company’s B2C operations in Upper North (Punjab, Haryana, Himachal Pradesh & J&K) circle. He will report to Ajai Puri, Operations Director, North, East & Bangladesh. The move is part of the company’s new restructuring decision. — TNS