New Delhi, July 1
Growth in eight infrastructure industries slowed to 2.3 per cent in May mainly due to contraction in crude oil, natural gas, coal and fertiliser output.

The eight core industries had expanded at a rate of 7.2 per cent in the same period last year.

The combined index of these industries - coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity - was at 159.2 in May 2013 with a growth rate of 2.3 per cent, according to official data.

"The decline in the growth rate in May was mainly on account of negative growth witnessed in the production of coal, crude oil, natural gas and fertiliser," the Ministry of Commerce and Industry said.

The contraction in production of coal, crude oil, natural gas and fertiliser in the month under review this year was at 3.3 per cent, 2.4 per cent, 18.7 per cent and 2 per cent, respectively.

The eight core sector industries have a weight of about 38 per cent in the overall industrial production.

Petroleum refinery production showed an expansion of 5 per cent. However, the growth was subdued as compared to 23.4 per cent registered in May 2012.

Steel production grew by 4.1 per cent as against 3.8 per cent, while cement output was up by only 3 per cent against 15.4 per cent in the review period.

Growth in electricity generation stood at 6.2 per cent, as against 5.9 per cent expansion registered in the May 2012.

The growth in eight infrastructure industries was 3.2 per cent in 2012-13 as against 5 per cent in the previous financial year. — PTI

New Delhi, July 1
Even as diesel prices were raised again by 50 paisa per litre today as part of the monthly increase, the weakness in the rupee has wiped out the under-recovery gains for the oil companies.

Oil companies are increasing prices according to a Cabinet decision taken in January this year to increase the retail selling price of diesel within a small range every month until further orders.

As per a statement by Indian Oil Corporation (IOC), the under-recovery on sale of diesel has been steadily increasing mainly due to depreciation in rupee coupled with increasing international prices. Even after today’s increase, there shall still be an under-recovery of Rs 8.10 per litre.

According to a report by ratings agency ICRA, the estimates of gross under-recovery of the oil companies and the government have been upset by the sharp depreciation of the rupee versus the US dollar which threatens to undo the gains that were expected to be realised by the partial deregulation of diesel and lower prices of crude oil.

The Indian rupee has depreciated sharply by about 10.5 per cent against the US dollar since the beginning of the financial year 2014 and has plummeted past the 60-mark to the US dollar.

As the purchases and sales of oil marketing companies (OMCs) are dollar denominated, depreciation of the rupee makes both crude oil and refined products costlier, says ICRA.

However, as the prices of sensitive products are regulated, as per the report, the rupee selling prices of these remain either unchanged or increase marginally, thereby increasing the gross under-recovery burden of oil companies.

ICRA estimates that the annual under-recoveries increase to the extent of about Rs 8,100 crore for every one rupee depreciation against the dollar.

With the weakness in the rupee losses on diesel and cooking fuel are estimated to climb to Rs 1.58 lakh crore.

Oil companies had at the beginning of the fiscal estimated Rs 80,000 crore revenue loss on selling diesel, cooking gas (LPG) and kerosene at government-controlled rates.

In 2012-13, oil firms lost Rs 1.61 lakh crore in revenues at an average crude price of $107.07 per barrel and an exchange rate of Rs 54.45 to the dollar.

New Delhi, July 1
Car sales in India appear to be heading for a record eighth consecutive month of decline with major firms, including Maruti Suzuki, Tata Motors, Toyota and General Motors, reporting drop in June as economic slowdown and low consumer sentiments continue to affect demand.

Honda Cars India, however, posted over three-fold jump in June sales on the back of its newly launched compact sedan Amaze. Hyundai Motor India and Ford India also reported increase in domestic sales bucking the declining trend.

In June 2013, Maruti Suzuki India (MSI) registered 7.8 per cent decline in domestic sales at 77,002 units as against 83,531 units in June 2012, the company said.

MSI's sales in mini segment, including the M800, A-Star, Alto and WagonR, declined by 8.4 per cent to 31,314 units, while in the compact segment (comprising Estilo, Swift and Ritz), MSI witnessed 7.2 per cent fall in sales at 20,996 units. Sales of the DZiRE model fell by 8.7 per cent to 12,548 units.

Tata Motors said its total passenger vehicle sales in the domestic market stood at 11,804 units in June, down 31.54 per cent from 17,244 units in the same month last year.

Likewise, Toyota Kirloskar Motor also reported 19.45 per cent decline in its domestic car sales at 13,805 units in June. It had sold 17,140 units in the corresponding month of last year.

Toyota Kirloskar Motor (TKM) Deputy Managing Director and COO Sandeep Singh said the overall weak economic conditions continue to keep the market sentiments low and the market sluggish.

Mahindra & Mahindra domestic sales stood at 36,207 units as against 38,951 units in the same month last year, down 7.04 per cent.

"We have witnessed a de-growth in the month of June, 2013 amid an overall decline in the auto industry. The depreciating rupee resulting in spiralling fuel costs coupled with high interest rates and the additional excise duty on SUVs has further dampened the industry without any substantial revenue to government," M&M chief executive Pravin Shah said.

Following the trend, General Motors India also reported 10.71 per cent decline in sales at 6,575 units in June 2013.— PTI

New Delhi, July 1
The government’s decision to double the prices of natural gas will hurt the prospects of the consumer industries like power and fertiliser.

Rating agency ICRA said in a report the CCEA approval of the Rangarajan gas pricing formula is positive for the upstream sector’s earnings and sentiments but negative for all categories of consumers.

ICRA expects meaningful addition to gas production to be some years away due to the long and complex approvals processes endemic in the upstream sector. However, the impact on the bottom lines of the producers would be immediate once the gas price comes into effect from April 1, 2014, which, however, would be tempered for the PSU players if the government decides to increase the subsidy burden.

K Ravichandran, senior vice-president and co-head, corporate ratings, ICRA, said: “While the government has clarified that pricing formula has been fixed for the producers of gas, consumer prices could be lower for certain category of consumers, possibly power and fertiliser sectors, through additional support and subsidy, the timeliness and quantum of such support remains uncertain at this juncture.”

However, there are issues surrounding the implementation of the policy. Ravichandran added while the CCEA has gone ahead with approval of the new gas pricing regime, its implementation will be mostly left to the new government formed post General Elections scheduled in early 2014 given the huge impact on the fertiliser and power sectors and the politically sensitive nature of the issue.

“Additionally, the government is also considering lowering the input cost for the sensitive sectors - fertiliser and power; hence the implementation of the new gas pricing formula remains subjected to regulatory risk”.

India Ratings & Research expects the operating profitability of urea manufacturers to decline significantly post the recent revision in gas prices primarily due to lower operating profits from sales above the cut-off quantity. The revision in gas prices could also lead to an additional burden of Rs 8,300 crore on the government towards higher subsidy outgo.

It believes that operating profits will be maintained on an absolute basis for urea sales up to the cut-off quantity because fuel cost is a pass-through in the urea subsidy till the cut-off quantity under the retention pricing scheme.

New Delhi, July 1
In a major setback to telecom companies Essar Teleholdings Ltd and Loop Telecom, the Supreme Court today rejected their pleas for shifting their trial in the 2G scam case from the special CBI court to a magistrate court.

A Bench headed by Justice GS Singhvi delivered the verdict on the petitions filed by the two companies contending that they should be tried by a magistrate court as they had not been charged under the Prevention of Corruption Act (PCA).

The CBI had, however, opposed their plea contending that the PCA charges against the other accused in the case were inter-linked with the common charges of cheating under Section 420 and criminal conspiracy under 120B of IPC and as such splitting the trial was not practical.

The special court has been set up on the orders of the SC to hold trial against the two companies and their promoters - Anshuman and Ravi Ruia of the Essar Group and Kiran Khaitan and her husband IP Khaitan of Loop Telecom - besides Essar Group Director Vikash Saraf. Among the 17 others facing trial are former Telecom Minister A Raja (main accused), his former private secretary RK Chandolia, former Telecom Secretary Siddharth Behura, DMK MP Kanimozhi and officials of Reliance ADAG.

The Supreme Court did not accept the contention that simple offences of cheating and criminal conspiracy which did not come under the PCA were beyond the jurisdiction of the special judge. 

New Delhi, July 1
In its first overseas acquisition after parting ways with Honda, Hero MotoCorp (HMC) today it has picked up 49.2 per cent stake in US-based high-end motorcycle maker Erik Buell Racing (EBR) for $25 million (about Rs 148 crore).

The development comes more than a year after the two companies had entered into design and technology sourcing pact as the Indian firm looks to strengthen presence in the global markets.

"This is the first time that Hero has gone out of India to buy equity into a company. This is the first step of Hero in terms of financial investment (into a company) on the road towards globalisation of the Hero brand," Hero MotoCorp managing director and CEO Pawan Munjal told reporters here.

To carry out the acquisition, HMC said it has incorporated a subsidiary in the US by the name of HMCL (NA). — PTI

Mumbai, July 1
AirAsia India, which is planning to start operations in the country with three planes later this year, today said it will add at least 10 planes annually and was looking at carving out "a new market" here.

"The airline is here not to take anybody else's business market share away, but to create a new market in this 1.2-billion market," AirAsia Group chief executive Tony Fernandes said. He was addressing the media during his maiden visit after the airlines announced its JV with the Tatas and Delhi businessman Arun Bhatia in February.

Stating that he has not faced any bureaucratic hurdles so far, Fernandes, flanked by his deputy Kamarudin Merananun and India chief Mittu Chandilya, also said he is travelling to the national capital this evening and will meet Aviation Minister Ajit Singh tomorrow.

He said this in reply to a query that the minister, after the announcement of the 49:30:21 joint venture, had said he would have been happy had Tatas themselves launched the airline instead of it being done through a foreign joint venture.

When asked how he will achieve scale and success with just three planes and that too connecting only southern region, Fernandes said: "We will aggressively expand the fleet size and are looking to add at least 10 planes a year."

On pricing strategy, Fernandes said AirAsia will want to offer the lowest possible fares in this market.

The AirAsia Group CEO added that with a huge online population in the country, he is hopeful of achieving scale through lower priced tickets and cutting costs by offering most of the tickets online, keeping the agents away as much as possible. — PTI

Berlin, July 1
Finnish telecommunications company Nokia today said it had agreed to buy German engineering giant Siemens' 50 percent stake in their mobile broadband joint venture NSN for 1.7 billion euros ($2.2 billion).

Once the deal is concluded in the third quarter of 2013, "Nokia Siemens Networks will become a wholly owned subsidiary of Nokia", both companies said in a statement.

Siemens' decision to sell its stake comes as part of a strategic repositioning in the market. It announced in June it would shut down its loss-making solar energy unit after failing to find a buyer.

The NSN deal will allow Nokia, which has been subject to speculation it could be up for sale, to take full control of its most profitable business.

Once the star performer on the Helsinki stock exchange, Nokia has seen its market value plunge by 30 percent in the past two years.

The firm reported a net loss in seven of the past eight quarters amid fierce competition from Apple's high-end iPhone and Samsung's Galaxy.

The NSN joint venture, which specialises in high-speed mobile broadband, was set up in 2007 and the partnership agreement expired in April.

Nokia said NSN would retain its headquarters in Espoo, Finland, and press on with its ongoing restructuring plan, which includes the closure of 16 sites in Germany, shedding 1,000 jobs.

The buyout will see Siemens receiving 1.2 billion euros in cash at the closing of the transaction, the statement added. The remaining 500 million euros will be paid through a secured loan. — AFP

The report further noted that any cut in revenue guidance and lower QoQ margins could limit FY'14 EPS upgrades despite rupee depreciation. — PTI

BRIEFLY

New Delhi
ATF price hiked by steep 5.8%:The prices of Aviation Turbine Fuel (ATF) were hiked by a steep 5.8 per cent on Sunday, the second consecutive increase since June, as rupee depreciation made imports costlier. ATF price at Delhi was hiked by Rs 3,617.84 per kilolitre (kl), or 5.8 per cent, to Rs 66,034 per kl, according to Indian Oil Corp, the nation's largest fuel retailer. — PTI

Mumbai
L&T Construction wins mega orders: Construction major L&T on Monday said its June order book touched Rs 3,057 crore across various business segments. The building and factories business secured orders worth Rs 1,808 crore, while the water and renewable energy business bagged orders worth Rs 628 crore, said SN Subrahmanyan, executive director at L&T's infrastructure & construction vertical. In the power transmission and distribution business, it got orders worth Rs 442 crore from the Delhi Metro. — PTI

Mumbai
M&M increases prices by 0.5%: Mahindra and Mahindra on Monday announced a nominal 0.5 per cent price hike across all models, except for the premium SUVs XUV 500 and Rexton, despite falling sales, which dipped nearly 8 per cent in June. The company’s monthly sales for June fell to 38,092 units in June from 41,322 units a gear ago, a fall of 7.8 per cent, the company said. — PTI

Mumbai
RCom shares surge over 12%: Shares of Reliance Communications (RCom) soared by over 12 per cent on Monday after the company said it has made full repayment of two loans amounting to $1 billion (around Rs 6,000 crore) during the June quarter. After surging nearly 13 per cent to Rs 133.25 - its 52-week high on the BSE - the stock finally ended at Rs 132.50, up 12.19 per cent from its previous close. At the NSE, the scrip was up 12.15 per cent to settle at Rs 132.95. — PTI

New Delhi
Samsung to invest `500 cr in India: Samsung is planning to invest over Rs 500 crore to ramp up its mobile production capacity in India, industry sources said. "The company had approached the government in this regard to take benefit of policy announcements and other incentives. The investment proposals have been cleared at Department of Electronics and IT (DEITY) level," a source said. — PTI

New Delhi
SIDBI to raise Rs 13,500 crore: Small Industries Development Bank of India (SIDBI) plans to raise Rs 13,500 crore through a mix of bonds and other instruments during the current fiscal to fund its business activities. "We plan to raise Rs 13,500 crore from the market in 2013-14," SIDBI chairman Sushil Muhnot said. — PTI

New Delhi
Jewellery exports decline 16.5% in May: Gems and jewellery exports declined 16.5 per cent year-on-year to $2.70 billion in May due to a weak demand from western markets, an industry body said on Monday. In May 2012, these exports stood at $3.24 billion, according to the data by the Gems and Jewellery Export Promotion Council. — PTI

Mumbai
MStanley buys into United Spirits: Shares of United Spirits jumped nearly 14 per cent on Monday after foreign fund house Morgan Stanley Asia increased its exposure to the company by buying about 10.80 lakh shares for an estimated Rs 229 crore. The shares closed 13.33 per cent higher at Rs 2,460.35, after touching a high of Rs 2,484.45 in intra-day trade on the BSE. — PTI