New Delhi, August 6
Prime Minister Manmohan Singh today constituted an Empowered Group of Ministers (EGoM) to go into the issue of pricing of natural gas to be produced by Mukesh Ambani's Reliance Industries from its eastern offshore Krishna Godavari basin block.

The Prime Minister conveyed the decision to set up the EGoM when petroleum minister Murli Deora met him this morning on the issue, official sources said.

RIL, drawing from its right under the contract for KG-D6 block, proposed to price the gas between $4.33 per million British thermal unit and $4.58 per mBtu. The rate was opposed by key consuming sectors like fertilizer and power in general and Mukesh's younger brother Anil in particular.

Though the petroleum ministry was the competent authority to decide on the issue, Deora asked the Prime Minister's Office to constitute a committee of secretaries (CoS) to look into the issue.

The CoS, headed by cabinet secretary K M Chandrasekhar, in its report relied heavily on the 'emotive' issue of RIL gas supply to state-run power utility NTPC.

Sources said the EGoM would be headed by external affairs minister Pranab Mukherjee and would give its decision on the issue within a month.

When contacted, Deora said the sanctity of the contracts signed under New Exploration Licensing Policy (NELP) would not be compromised.

RIL has said it followed a transparent process of inviting bids from all consumers with more than one million standard cubic metres per day of gas consumption on its Kakinada-Ahmedabad pipeline. However, the Anil Ambani Group has described the pricing as arbitrary, non-transparent and lacking competitive bidding process.

RIL has stated it did not invite companies like Anil Dhirubhai Ambani Group to bid as it is not a consumer of gas.

Sources said RIL, which has received threats from lead vendors and bankers of stopping equipment supplies and finances to the KG-D6 field development, has been mulling putting the $5.2-billion investment on hold.

A leading European lender and several equipment suppliers have over the past few weeks raised serious queries about the cash flow Reliance has projected from sale of gas from KG-D6 fields beginning July 2008, in absence of the government approval for the gas price.

More serious is the threat from vendors who have asked Reliance if they can squeeze in works of rivals like Oil and Natural Gas Corp (ONGC) and Gujarat State Petroleum Corp (GSPC), in their already overbooked production facilities.

Once vendors take up work of ONGC or GSPC, Reliance may not get a berth for at least next couple of years due to tight global supply scenario.

Sources said Reliance is sending its top officials to Europe and the US next week to allay fears of further delays in gas price approval. — PTI 

New Delhi, August 6
The world’s biggest retailer, Wal-Mart today signed an equal-venture agreement with Bharti Enterprises to set up wholesale stores and a supply chain in the country, almost eight months after it signed an initial accord.

The venture, known as Bharti Wal-Mart Pvt, will seek to offer “great prices under one roof,” said Raj Jain, president of emerging markets at Wal-Mart’s international unit. The wholesale stores will cater to small retailers, hotels and restaurants, the company said.

Jain said, “As a wholesale cash-and-carry business, our endeavour is to work with and develop local suppliers and create local beneficiaries along the supply chain. It is our hope that big and small retailers and businesses will be our customers, take advantage of the efficiencies we provide and derive significant benefits for their businesses.”

The first wholesale store would be operational by the end of 2008 in North India, Rajan Mittal, joint managing director of Bharti Enterprises said.

Company sources indicated that Punjab, especially Ludhiana, is being considered as the location for venture to roll out its India operations.

The venture plans to open 10 to 15 wholesale stores in seven years, located in Tier-2 and Tier-3 cities and employ 5,000 people, the company said.

The 50-50 venture will provide wholesale cash-and-carry and back-end supply chain management operations in the country, the companies said in a joint statement.

Rules in India do not allow multiple-brand retailers like Wal-Mart to sell directly to the end-consumer, but they can run wholesale operations and provide back-end support to Indian retailers.

The proposed Bharti venture seeks to serve the retail market by supplying it with goods directly from producers such as agriculturists, craftsmen and artisans, Mittal said.

Bharti Wal-Mart will also supply retailers like Bharti Retail, a unit of Bharti Enterprises that is setting up a separate wholly owned retail chain in India that will sell directly to the end consumer.

Wal-Mart would be a “natural choice” for a partner when India lifts restrictions on foreign direct investment in the sector, Mittal said. Bharti has said that its retail arm would spend $2.5 billion by 2015 to build multiple-format retail stores across India. 

Mumbai, August 6
The State Bank of India (SBI), country's largest lender, today raised interest rates on deposits for longer tenure of more than three years to 8.5 per cent, but lowered or kept unchanged rates on most short-term maturities.

The term deposit of 271 days (nine months) to less than one year will get an interest rate of 6.75 per cent, while the bank reduced rate on 1-2 year deposits to 8 per cent per year, SBI informed the Bombay Stock Exchange.

The new rates would come into effect from August 9. The bank last revised its rates on January 22 this year.

The rate of 2-3 years maturities has been increased to 8.25 per cent. At the same time, fixed deposits with three-year maturity would now attract 8.5 per cent against 8.25 per cent earlier.

However, senior citizens would earn lesser interest on 1-2 year deposits at 8.5 per cent while that on 2-3 year term deposit has been increased to 8.75 per cent. Earlier, 8.75 per cent interest was paid on deposits of 3-5 years maturities.

Deposits of 3-10 years would now get interest at the rate of 9 per cent.

The revision comes barely a week after RBI hiked the amount of depositors' money commercial banks need to park with the central bank by half a percentage point.

Earlier today, finance minister P Chidambaram said he expected banks to lower deposit rates by 0.5 per cent.

"Some banks have already done that and interest rate have come down to 8.5 per cent. My impression is that it will stabilise at that level," he said.

SBI also reduced the interest offered on its Super Saver Term Deposit Scheme for a tenure of four years and above but less than five years by 0.25 per cent from 9.50 per cent to 9.25 per cent. The interest rate for tenors of five years and above under this scheme will be aligned to the card rates of corresponding maturity.aOn SBI Smart Deposit Scheme, the bank said the interest rate offered on the 550-day deposit scheme 'SBI Smart Deposit' would also be reduced by 0.25 per cent from 9.50 per cent to 9.25 per cent with effect from August 9.— PTI

New Delhi, August 6
Finance Minister P Chidambaram today ruled out any quantitative ceiling on home loans and said interest rates would moderate in tandem with inflation.

“There is demand for housing loans.. We cannot have quantitative ceilings for housing loans, because there is aspiration (for homes),” he told PTI today.

He was responding to a query if there was an effort by the government and the Reserve Bank to moderate the growth in housing and consumer loans.

“I do not think that it is right to put restrictions on housing loans. Since there is a rather high growth, it could lead to a bubble. The RBI was right in increasing risk weight and making some regulatory prudential requirements to cool down the sector,” the minister said.

He pointed out it was not for the first time that interest rates had gone up. In 1999-2000 and 2000-01 also, interest rates were high.

“What you need to look at is the real interest rate. With inflation around 6 per cent, it works out to be only 6 per cent. When inflation comes down, interest rate will also come down,” Chidambaram said.

RBI had taken some policy initiatives to moderate over 30 per cent growth in housing and consumer finance. Some of the leading financial institutions and banks have also reported a fall in disbursal of such loans.

The interest rate on home loans have moved from around 8 per cent to over 11 per cent over the past two years, adversely affecting the monthly budget of home buyers.

Chidambaram said the RBI has clearly indicated it would continue to follow a tight monetary policy. But factors such as fuel and food prices were beyond its control.

The RBI monetary policy works on core inflation... that is, minus fuel and minus food items. This is the case all over the world. So when fuel and food drive inflation, of course, you have to tighten monetary aggregates. That is what the RBI is doing,” he said.

According to RBI’s quarterly review of monetary policy, growth in housing and real estate loans has decelerated modestly to 24.6 per cent and 69.8 per cent, respectively, during January-March 2007. However, credit to these sectors continue to remain at elevated levels.

Finance Minister said current inflation was fuelled only by primary commodities - both food and non-food articles. It was too early to say whether inflation had come down, he said.

“It seems to go down for a couple of weeks and it goes up for a couple of weeks. Partly it is also seasonal,” because of the monsoon disruptions,” Chidambaram said.

Unless there was a stable and clear trend for at least six to eight weeks it would be too early to come to any conclusion, he said. — PTI

Bangalore, August 6
India's third largest IT firm Wipro today said it has agreed to acquire US-based Infocrossing Inc, a leader in data centre space and IT outsourcing, for $600 million (nearly Rs 2,400 crore) in cash.

Wipro would acquire Infocrossing for $18.70 per share in a deal that would create one of the world leaders in end-to-end IT infrastructure management solutions, the company said in a statement.

Suresh Senapathy, chief financial officer, Wipro, said the enterprise value of the deal was $600 million.

The acquisition would be conducted through a tender offer for all of the outstanding shares of Infocrossing, followed by a merger of Infocrossing with a Wipro subsidiary, it said.

Infocrossing operates five data centres in the United States and provides a full portfolio of infrastructure management solutions, including server management, mainframe outsourcing, network management and security services.— PTI 

New Delhi, August 6
Bharti Airtel Broadband and Telephone Services today said it has partnered with search engine Google to provide customised services like e-mail, chat, and search to its subscribers.

“The company will provide customised home page to customers to give them a new Internet experience,” company’s president Atul Bindal said here.

The suite of services will be offered, free of cost, to all Airtel broadband subscribers.

Bharti Airtel will also launch its much-awaited direct-to-home (DTH) services by January-March 2008 and will roll out the IPTV services starting with the national capital by December this year.

“The process is on track and we hope that Bharti will come out with its DTH portfolio early next year,” Bindal said today. He said the IPTV will be launched in Delhi by the end of this calendar year. Next year, it will be launched in five major cities.

Bindal, however, refused to comment on whether the company has got license for the DTH services, but said that everything is on track for its early next year roll-out. The company is tying with number of channel partners, both national and global, including Cisco for the IPTV launch. — Agencies

Bangalore, August 6
India’s business process outsourcing (BPO) industry, which has been a runaway success till recently, is now looking at the union government to intervene to take care of interest rates and the rising rupee besides stressing on the need to continue with a tax holiday to ensure the industry remains competitive.

There was a feeling of despondency at the Nasscom India ITES- BPO Strategy Summit, 2007, which opened here today, with the industry feeling that time had caught up with it and the early advantages it enjoyed were being washed away. The situation is such that the BPO industry is now pleading that the government takes steps to ensure it remains in India.

Citing the rising rupee, increase in salaries and costly real estate as factors, which had already reduced margins considerably, industry captains said Indian companies were now looking at increasing their offshore presence in other countries. Nasscom and its president Kiran Karnik, who represent the IT and IT-enabled service sector in the country, made a case for bailing out the BPO industry by saying if Indian IT companies increase their offshore presence, it would reduce employment opportunities in India.

Karnik, while talking to TNS on the sidelines of the summit, said the government could intervene in the same manner in which it had intervened to help the textile industry. “The government can intervene to take care of interest rates in extreme situations. The industry cannot take this for long”, he said while talking about the huge appreciation of the rupee vis a vis the dollar in the past few months.

Karnik said the sector, which was already under pressure to compete internationally in such conditions, now also had to contend with the government decision to withdraw the tax holiday to the BPO industry after 2009. “Some multi-nationals are taking a close second look at how much they should invest in India”, he said, adding the STPI scheme could be extended for another 10 years to ensure the BPO industry was able to take advantage of tax concessions.

He said presently small and medium BPO companies were finding it difficult to remain competitive due to lack of BPO clusters.

Speaking about the short-term steps, which the government could take, Karnik recommended doing away with minimum alternate tax (MAT). He said this was also affecting the small players as big companies could offset this by paying tax in other jurisdictions. He admitted there was not much progress in convincing the government to remove MAT with the Ministry of Finance not supporting the move.

BPO players including Vikram Talwar, CEO EXL Service, said the magnitude of the effect of withdrawal of the tax holiday was still to be understood. “The BPO industry has still not matured and other industries, including the IT industry, have enjoyed this benefit for a much longer time”, he added. 

Chandigarh, August 6
“Perform or wind up”. This message was conveyed here today to the officials of Milkfed, the accumulated loss of which is in the range of Rs 124 crore, by Capt Kanwaljit Singh, Punjab’s cooperation minister. Milkfed has a vast network of 5,932 milk societies and number of milk producers is 3.60 lakh across the state. Investment worth Rs 800 crore has been involved in Milkfed.

However, its share of milk collection is just 6 per cent from the total surplus milk available in the state. It has milk societies only in 48 per cent villages, while others remain uncovered by it. Of the estimated average daily production of 234 lakh litres of milk, 117 lakh litres is made available by producers for procurement to various agencies, including milk vendors and other private players. Of it, however, Milkfed’s daily collection on average is 7.8 lakh litre. On average, per milk society, collection is just 130 litres per day.

From 5th place, Punjab has slipped to 9th place in milk procurement, said Capt Kanwaljit Singh. “ Over all performance of Milkfed is so disheartening that I told all officials concerned, elected directors of Milkfed and milk unions to ethier show drastic improvement in a year or close down the organisation”, he said. “There is a huge demand for Verka products, brand name of Milkfed, but we are unable to cope with the demand”, said Capt Kanwaljit Singh. In fact, Verka brand itself has value of millions of dollars in the international market.

Listing reasons, Capt Kanwaljit Singh said poor management, lack of policy direction and lack of initiative for performance are the reasons for its dismal performance. Only its three milk unions — Ropar, Ludhiana and Faridkot — are doing well, he said.

To improve availability of Milkfed, some incentives have been announced. Each milk producer will be given loan by cooperative banks to buy one milch cattle and he or she would also get incentive, to be decided by the district milk unions at their own level, over the fixed price of milk for enhancing annual contribution of milk to milk society. Veterinary health services would also be made available to all milk producers. Proposal has been prepared to set up 100 big dairy farms. Officers have been given targets to cover 73 per cent villages under milk societies in a year and to enhance the capacity utilisation of milk plants by 400 per cent in next four years.

Performance of each general manager would be monitored and he would be retained on the post only if he performed to the satisfaction of the authorities.

“Milkfed can change the face of the economy of state. Its brand is one of most respected in the country. And then there is huge market available in Punjab and around”, said Capt Kanwaljit Singh. He said because of the enforcement of WTO norms in the European market, subsidy was being gradually withdrawn from dairy sector and Milkfed had a scope to capture that market in due course. “I have told officers to prepare accordingly”, he said.