SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Core industry growth slows to 0.5% in Jan; may impact IIP
New Delhi, February 28
A dismal output of crude oil and petroleum refinery products pulled down growth in eight key infrastructure industries to a meagre 0.5% from 6.4% a year ago. The growth of key infrastructure sectors, which showed some improvement in December, 2011 at 3.1%, dipped again to a two-month low figure.

Sistema seeks protection of $3 bn investment
New Delhi, February 28
The collateral damage from Supreme Court's ruling canceling 122 2G cellular licences issued during the tenure of former telecom minister A. Raja continues grow bigger. After Norwegian firm Telenor and its Indian partner Unitech moved the Company Law Board separately, trading charges against each other over control of their joint venture, Uninor, Sistema of Russia has now invoked the arbitration clause in a bilateral treaty against the Indian seeking to protect its US $3 billion investments here.

5% stake sale in ONGC okayed
New Delhi, February 28
The empowered group of ministers on Tuesday approved selling a 5% equity stake in state-run Oil & Natural Gas Corp through a share auction, Oil Minister S. Jaipal Reddy said, reviving the government's faltering divestment programme.


EARLIER STORIES


A Lufthansa Boeing 737-500 aircraft flies in to land at Frankfurt/Main airport, Europe's third busiest, on Tuesday. Airport operator Fraport and Lufthansa are seeking an injunction after trade union GdF urged control tower staff to join strike action, now in its third week, by airfield staff at the airport
A Lufthansa Boeing 737-500 aircraft flies in to land at Frankfurt/Main airport, Europe's third busiest, on Tuesday. Airport operator Fraport and Lufthansa are seeking an injunction after trade union GdF urged control tower staff to join strike action, now in its third week, by airfield staff at the airport. — Reuters

‘Govt to ensure clarity in telecom’
New Delhi, February 28
A day after global telecom body GSMA asked TRAI to outline at the earliest the future course of action to bring in transparency and certainty to investments made in India, Telecom Minister Kapil Sibal on Tuesday assured the government was committed to bring clarity in the sector.

HSBC says it may face criminal charges for illegal transactions
London, February 28
HSBC Holdings Plc said on Monday it will likely face criminal or civil charges from an expanding investigation into its ties to allegedly illegal money transactions, including some tied to Iran. The disclosure in a regulatory filing shows the increasingly serious nature of inquiries into the London-based bank's business.

GDP growth may be slowest in over 2 years
Bangalore, February 28
India's economy likely grew at its slowest pace in more than two years during the final months of 2011 as high interest rates and booming input costs hampered manufacturing activity, a Reuters poll predicted.

Reliance Life floats new ULIP
Mumbai, February 28
Reliance Life Insurance Co Ltd has launched a new unit-linked insurance plan (ULIP) offering investors’ dual benefits of protection and market-linked returns.

 
A model of Dassault Aviation's Neuron project European USAV technology demonstrator. The French aerospace giant, maker of the Falcon private jet and Rafale fighter plane, said Tuesday turnover in 2011 slumped 21% from the previous year, in line with forecasts A model of Dassault Aviation's Neuron project European USAV technology demonstrator. The French aerospace giant, maker of the Falcon private jet and Rafale fighter plane, said Tuesday turnover in 2011 slumped 21% from the previous year, in line with forecasts. — AFP

 





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Core industry growth slows to 0.5% in Jan; may impact IIP

New Delhi, February 28
A dismal output of crude oil and petroleum refinery products pulled down growth in eight key infrastructure industries to a meagre 0.5% from 6.4% a year ago. The growth of key infrastructure sectors, which showed some improvement in December, 2011 at 3.1%, dipped again to a two-month low figure.

The decline in growth of eight industries — crude oil, petroleum refinery products, natural gas, fertilizers, coal, electricity, cement and finished steel —indicates a slowdown in economy, which has recorded a GDP growth of 6.9% during July-September quarter, lowest in nine quarters.

According to the data released by the commerce & industry ministry on Tuesday, only four segments — electricity, cement, coal and fertilizers — recorded a positive growth in January 2012, raising concerns for the industry and the government.

The dismal performance of the infrastructure sectors, which have a weight of 37.90% in the overall industrial production, is likely to weigh on the IIP numbers for January, scheduled to be released on March 12.

Economist and FICCI secretary general Rajiv Kumar said the core sector numbers point towards slowdown in the economy. "The government must focus on strong and structural reform measures to prevent further deterioration”.

The natural gas sector was the worst performer posting a negative 8.9% growth in January. Petroleum refinery output contracted to 4.6% from 8.7% and steel production declined by (-)2.9% from 8.7%. Steel production fell by (-)2.9% from 8.7% in January 2011. On the other hand, coal output went up by 7.5% from (-)1.3% year-on-year.

The decline in growth was also witnessed in the cumulative ten months of the current fiscal with April-January displaying an expansion of 4.1% against 5.7% in the same period last year. — PTI

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Sistema seeks protection of $3 bn investment
Girja Shankar Kaura/TNS

New Delhi, February 28
The collateral damage from Supreme Court's ruling canceling 122 2G cellular licences issued during the tenure of former telecom minister A. Raja continues grow bigger. After Norwegian firm Telenor and its Indian partner Unitech moved the Company Law Board separately, trading charges against each other over control of their joint venture, Uninor, Sistema of Russia has now invoked the arbitration clause in a bilateral treaty against the Indian seeking to protect its US $3 billion investments here.

In a statement Sistema said it had sent a formal notice to the government notifying it of a dispute “under the bilateral investment treaty (BIT) between the government of the Russian Federation and the Indian government arising from the decision of the Supreme Court of India issued on February 2, 2012 regarding the cancellation of 122 telecom licences, including 21 licences belonging to Sistema Shyam TeleServices Ltd (SSTL)”.

Sistema, in which the Russian government holds a majority stake in turn owns a 56.68% share in SSTL. Besides another 17% in SSTL is owned directly by the Russian government.

“Sistema believes the cancellation of SSTL's licenses following Sistema's investment of billions of dollars into the Indian cellular sector is contrary to India’s obligations under the BIT, including obligations to provide investments with full protection and security and obligations not to expropriate investments,” the Russian telecom major said in the notices sent to three ministries — external affairs, finance and telecom.

Sistema said it had invoked its right under Article 9.1 of the BIT signed on December 23, 1994 between the Russian and Indian governments for promotion and mutual protection of investments, which came into force on August 5, 1996.

“If the dispute is not amicably resolved by August 28, 2012 Sistema reserves the right to commence proceedings against the Indian government as provided in the BIT,” Sistema said.

Experts point out there are several clauses within the treaty which allow a company to seek arbitration. One of the clauses deals with expropriation of overseas investments, in which case the affected parties can seek arbitration as well as compensation with interest.

The experts added Sistema was clearly giving the Indian government a six-month window to work out the new auction rules following the Supreme Court ruling. The court has set a four-month timeline for the new regulations to be framed and there could be some give and take between Sistema and the Indian government.

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5% stake sale in ONGC okayed

New Delhi, February 28
The empowered group of ministers on Tuesday approved selling a 5% equity stake in state-run Oil & Natural Gas Corp through a share auction, Oil Minister S. Jaipal Reddy said, reviving the government's faltering divestment programme.

The share sale could raise as much as Rs 121 billion ($2.5 billion) at ONGC's closing price of Rs 283.40 a share on Tuesday. The shares closed 0.8% higher in a firm Mumbai market ahead of the announcement.

"The decision is to go in for sale of shares. Now the notice needs to be given to the stock exchange," Reddy told reporters after a meeting of a panel of ministers. "The details can be divulged only after the notice is sent to the stock exchange." He said the panel had decided on a floor price but did not elaborate, adding the auction will be held in a couple of days.

The government had earlier planned to sell ONGC shares through a public offering but that plan was scrapped last October after tepid response from investors amid weak equity markets.

India's stock market posted its first annual fall in three years in 2011, losing nearly 25%. Shares in ONGC, the second-largest listed firm in India by market value, fell 20% in the same period.

India is widely expected to miss by a long chalk its deficit target of 4.6% of GDP for the current fiscal year ending March, partly due to its inability to meet the budget target for more than $8.1 billion in state company share sales. So far this fiscal year, the government has only raised about $250 million. — Reuters

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‘Govt to ensure clarity in telecom’

New Delhi, February 28
A day after global telecom body GSMA asked TRAI to outline at the earliest the future course of action to bring in transparency and certainty to investments made in India, Telecom Minister Kapil Sibal on Tuesday assured the government was committed to bring clarity in the sector.

While saying a level playing field would be provided to all, he added the present crisis being faced by India’s telecom sector was also a “moment of opportunity”. — TNS

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HSBC says it may face criminal charges for illegal transactions

London, February 28
HSBC Holdings Plc said on Monday it will likely face criminal or civil charges from an expanding investigation into its ties to allegedly illegal money transactions, including some tied to Iran. The disclosure in a regulatory filing shows the increasingly serious nature of inquiries into the London-based bank's business.

HSBC already is the subject of multiple US law-enforcement probes for ties to illegal money transactions. Monday's filing was the first time the bank disclosed that Iranian transactions are under scrutiny and that it could face a criminal charge.

The bank's HSBC USA Inc unit said investigations are being conducted by the Justice Department, the district attorney in Manhattan, two Treasury department agencies and the Federal Reserve. It said those inquiries were examining "historical transactions involving Iranian parties and other parties subject to" US economic sanctions. Financial institutions doing business in the United States are prohibited from aiding sanctioned countries or banks.

In recent years, the Manhattan district attorney and Justice Department have settled with a number of European banks that operated transfer systems for Iranian clients. Banks aided clients trying to improperly move money by removing, or stripping out, references that could tip off a US bank system to a transaction tied to Iran or another sanctioned state.

HSBC disclosed the new details in a filing with the US Securities and Exchange Commission as part of the bank's 2011 annual results. HSBC USA provides commercial and consumer banking and operates 461 branches. The bank previously said in securities filings that it was facing inquiries and it had received grand jury subpoenas.

Last month, Reuters reported that HSBC was under investigation by a US Senate panel in a money-laundering inquiry.

In the filing on Monday, HSBC also highlighted the serious nature of the U.S. investigations. It disclosed that it is likely "there will be some form of formal enforcement action, which may be criminal or civil in nature." — Reuters

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GDP growth may be slowest in over 2 years

Bangalore, February 28
India's economy likely grew at its slowest pace in more than two years during the final months of 2011 as high interest rates and booming input costs hampered manufacturing activity, a Reuters poll predicted.

Gross domestic product in Asia's third-largest economy grew at an annual 6.4 percent rate in the quarter to end-December, according to the poll of 26 economists. Forecasts ranged from 6.0 to 7.3 percent with a majority of them lying below the consensus.

That would be a significant slowdown from 6.9% in the previous quarter and would mark the fourth straight quarter of growth below 8%. Only two economists expect growth above the previous reading. India's economy has been sluggish, with growth slowing to 7.7% in the April-June quarter and further to 6.9% in July-September.

"The rate-sensitive sectors such as industrials, construction and mining are so badly affected due to tight monetary conditions that the overall growth number is expected to turn weak," said Siddhartha Sanyal of Barclays Capital.

"At the moment the kind of macro headwinds we're facing both on the domestic and external front makes 8 percent growth seem distant."

The story is similar for China, where the economy grew at its weakest pace in 2-1/2 years in the same period, at an 8.9 percent rate, as it struggles with sagging real estate and export growth.

While the low growth rates in Asia's powerhouses are better than the feeble-to-no-growth in developed nations, there is a growing sense of pessimism India and China lack the momentum to support the faltering global economy. — Reuters

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Reliance Life floats new ULIP

Mumbai, February 28
Reliance Life Insurance Co Ltd has launched a new unit-linked insurance plan (ULIP) offering investors’ dual benefits of protection and market-linked returns.

"With the launch of Reliance Life Insurance Classic Plan-II, we are lowering the entry price for customers seeking ULIP products with in-built protection options for their saving needs," RLI president & ED Malay Ghosh said.

This is also the first time that Reliance Life is introducing a new life cover option in its ULIP portfolio. The plan offers the customer life cover benefit that is equal to the sum assured or the fund value, whichever is higher. The minimum policy term under the plan is 15 years and the maximum is 30 years. The plan comes with four protection riders, which can be added at a marginal cost. — Agencies

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