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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

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B U S I N E S S

Inflation soars to 2-yr high at 6.58 pc
New Delhi, February 9
Fuelled by continuous increase in prices of food and other primary goods, the inflation has touched a two-year high of 6.58 per cent, triggering expectations of further monetary intervention by the Reserve Bank of India.

Suzlon in race for German REpower
Mumbai, February 9
After the Tata-CSN battle for acquiring Corus, Indian wind energy major Suzlon is now set to lock horns with French energy major Areva SA to acquire German wind turbine manufacturer REpower Systems.

43 pc of Punjab Tractors on the block
Chandigarh, February 9
The two main investors in Punjab Tractors Limited (PTL) - Actis and the investment arm of Dabur India - have decided to sell their stake in the company. Following the complete financial turnaround of the company in the past three years, some of the top players in the auto market are now in race to acquire a total of 43 per cent stake of the company.


EARLIER STORIES

 
Jennifer Lopez poses at the Rodeo Drive Walk of Style Award event honouring Italian fashion designers Donatella Versace and her late brother Gianni in Beverly Hills, California, on Thursday.
Jennifer Lopez poses at the Rodeo Drive Walk of Style Award event honouring Italian fashion designers Donatella Versace and her late brother Gianni in Beverly Hills, California, on Thursday. The Versaces were honoured for their contribution to the world of fashion and entertainment. — Reuters photo

Bajaj Auto heads for demerger
New Delhi, February 9
Two-wheeler giant Bajaj Auto is all set to be carved into separate auto and finance entities, to be headed by group chief Rahul Bajaj's sons Rajiv and Sanjiv, respectively.

  • Scrip soars by Rs 163

Indo-Asean FTA soon: Pranab
New Delhi, February 9
Striving for an Asian economic grouping following the Asean and East Asia summits held in the Phillipines last month encompassing the security aspect as well, External Affairs Minister Pranab Mukherjee today expressed confidence that a bilateral Free Trade Agreement (FTA) will be concluded with Asean soon.

Hutch race: Vodafone, Reliance submit bid
Mumbai/London, February 9
Three telecom majors — Reliance Communication, UK-based Vodafone and NRI Hindujas are understood to have submitted bids for acquiring majority stake in India's fourth largest mobile player Hutch-Essar.

ONGC, Gazprom to explore 8 projects jointly
New Delhi, February 9

The ONGC and Russia's state-run Gazprom have signed an agreement to jointly explore oil and gas fields in India, Russia and other countries and the Russian company has invited ONGC's participation in eight projects in Eastern Siberia and the Far East.

Designer Tomotaka Takahashi unveils humanoid robot "Manoi PF01" of Japan's radio-controlled model maker Kyosho in Tokyo on Friday.
Designer Tomotaka Takahashi unveils humanoid robot "Manoi PF01" of Japan's radio-controlled model maker Kyosho in Tokyo on Friday. — AFP photo

India ‘ahead’ of China in IPR
Beijing, February 9
India fares better than China in protecting intellectual property rights (IPR) and providing skilled personnel for multinational giants, but it does not enjoy any advantage over the communist giant on labour cost front, an US think-tank said today.

Rate war rages among banks
Mumbai, February 9
With large banks vying to up their deposit rates, the `rate war’ in the banking sector has intensified, pushing deposit rates to their highest level in the past five years. Saraswat Bank, the country’s largest co-operative bank, leads the pack as it has announced a 10 per cent interest on its 15-month deposits. “This marks the first time that any lender is offering interest rates on deposits in double-digits in the past five years,” bankers say.

Cut in free power quota urged
Malokhar (Solan), February 9
With a view to encouraging hydel power projects in Himachal the government should bring down its quota of free power from 30 to 15 per cent as the quantum of free power to be given to the state by the hydel projects was among the highest in Himachal, making power costlier. 

A Japan Steel Works employee displays a fuel cell-powered scooter made by Taiwan's motor cycle maker Taigene Electric Machinery at the annual International Hydrogen and Fuel Cell Expo in Tokyo on Friday.
A Japan Steel Works employee displays a fuel cell-powered scooter made by Taiwan's motor cycle maker Taigene Electric Machinery at the annual International Hydrogen and Fuel Cell Expo in Tokyo on Friday. — AFP photo

Videocon revises bid for Daewoo
New Delhi, February 9
A month after losing the preferred bidder status for acquiring South Korea's Daewoo Electronics, the Videocon-led consortium has submitted a revised bid to the creditors of the ailing electronics gaint. Sources said despite submitting a bid, which had been scaled down by 13 per cent from the original price of 700 billion won (about $728 million), the consortium of Videocon and US-based fund Ripplewood is confident of clinching the deal this time.

GSM base: Haryana tops in B circles
New Delhi, February 9
The all-India GSM subscriber base grew from 105.4 million in December, 2006, to 110.5 million in January.

Credit estimate of Rs 23,264 cr for Haryana proposed
Chandigarh, February 9
The National Bank for Agriculture and Rural Development (NABARD) has proposed a credit estimate of Rs 23,264 crore under priority sector lendings to Haryana during the next financial year 2007-08.

 

 

 

 

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Inflation soars to 2-yr high at 6.58 pc
S Satyanarayanan
Tribune News Service

New Delhi, February 9
Fuelled by continuous increase in prices of food and other primary goods, the inflation has touched a two-year high of 6.58 per cent, triggering expectations of further monetary intervention by the Reserve Bank of India.

The wholesale price index (WPI) showed inflation climbed by nearly half a percentage point to 6.58 per cent for the week ended January 27 from 6.11 per cent the previous week.

The rate of inflation was well under control at 4.04 per cent for the corresponding week last year.

The rate is significantly above the 5.0-5.5 per cent tolerance limit set by the RBI, which has been using a variety of tools to fight inflation since it began a tightening cycle in late 2004.

Keeping in mind the possible political fallout with three North Indian states going for polls and the crucial Assembly elections in Uttar Pradesh due later this year, Prime Minister Manmohan Singh and Finance Minister P Chidambaram had been reiterating the Congress-led UPA government’s commitment to check inflation.

In fact, the RBI had last month raised its key short-term borrowing rate by a quarter percentage point to 7.5 per cent and in December raised the cash reserve ratio (CRR) by 50 basis points in a bid to take cash out of the banking system and tame rampant credit growth that is fuelling inflation.

On the supply management side, the Finance Ministry cut customs duties on cooking oil, cement and other products in a bid to lower prices of basic necessities.

The inflation, based on the WPI, has been pushed on sequential basis by 0.47 per cent within a week from 6.11 per cent on January 20 this year, mainly on account of rise in prices of food articles like vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent), fruits and oil seeds (1.7 per cent each).

However, prices of pulses, sugar, processed food products and other manufacturing products marginally came down during the week.

WPI rose by 0.1 per cent to 208.8 from 208.5 per cent, according to official figures issued here today.

As per the revised official figures released today, inflation stood at 5.36 per cent on December 2, 2006, as compared to 5.16 per cent provisional figures.

Expressing concern over rising prices, Finance Minister P Chidambaram had yesterday said the government was committed to moderate the rising inflation with additional steps that would take some time to bring down prices.

Analysts, however, feel that the government may find it difficult to contain inflation through conventional fiscal and monetary measures.

The government may also consider improving the availability of food grains by beefing up of the targeted PDS system, they added.

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Suzlon in race for German REpower

Mumbai, February 9
After the Tata-CSN battle for acquiring Corus, Indian wind energy major Suzlon is now set to lock horns with French energy major Areva SA to acquire German wind turbine manufacturer REpower Systems.

Suzlon Energy has placed a whopping 20 per cent higher counter-bid at Euro 126 per share to win the race from the French major, which has offered a cash offer of 105 euro per share.

The total deal value, according to a source at Suzlon Energy, is expected to go up anywhere between $1 and 1.5 billion.

However, Suzlon's journey is not expected to be smooth as Areva, the major shareholder of REpower Systems, holds nearly a 30 per cent stake in the company for over a year.

Suzlon plans to foot the acquisition bill through debt and internal accruals.

Analysts said that Suzlon's 'hostile' bid as against the 'friendly' one of Areva might not pay the price as the French major would receive a sound backing from the European community.

"REpower and Areva have successfully worked together in various business fields for a long time and we have also known the company as our major shareholder...our cooperation until now has shown that Areva supports our strategy and will accelerate our future growth through their commercial and financial strength.

"This is why we believe that Areva - as one of the leading companies in the energy sector- is the right partner for us," REpower's Chief Executive Officer Fritz Vahrenholt said at the time of receiving the bid from Areva. — PTI 

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43 pc of Punjab Tractors on the block
Actis, Dabur willing to exit
Ruchika M. Khanna
Tribune News Service

Chandigarh, February 9
The two main investors in Punjab Tractors Limited (PTL) - Actis and the investment arm of Dabur India - have decided to sell their stake in the company. Following the complete financial turnaround of the company in the past three years, some of the top players in the auto market are now in race to acquire a total of 43 per cent stake of the company.

Highly placed sources informed TNS that after Actis had decided to sell its 29 per cent stake, the other major private shareholder - Dabur India, too, has decided to sell its 14.5 per cent stake. “The latter could offer their share to the same company that is successful in the bidding for the 29 per cent share of Actis,” the source informed.

It is learnt that Tata Motors, Mahindra and Mahindra, John Deere and Tafe are in the race to acquire the stake of Actis. Even the former Chairman of PTL, Mr Yash Mahajan, is believed to have tied up with some investment bankers, and is in the race to acquire shares of the company.

Actis, which had acquired the shares of PTL at Rs 150 per share by investing Rs 200-Rs 225 crore, is hoping to make a clean profit of Rs 300 crore now, as the value of the PTL shares have increased to Rs 337.65 per share now. The value of the Dabur India promoted company’s shareholding is estimated at Rs 250 crore.

Sources said the market capitalisation of the company is around Rs 1,700 crore and with the steady increase in the value of shares, the new investors, too, would be happy at the decision taken by Dabur India to sell its stake. 

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Bajaj Auto heads for demerger

New Delhi, February 9
Two-wheeler giant Bajaj Auto is all set to be carved into separate auto and finance entities, to be headed by group chief Rahul Bajaj's sons Rajiv and Sanjiv, respectively.

A plan for demerger to utilise the company's cash surplus will be put before Bajaj Auto Board in the coming months, sources in the know of the development said, amid reports of differences between Rajiv and Sanjiv, neither of whom could be contacted for comments.

According to the sources, Bajaj Auto Board is likely to consider, either in its March or May meeting, a proposal to demerge the automobile and financial and investments businesses to utilise cash surplus and cash equivalent (in the form of investments such as bonds and in other companies).

This could be carved out either as a separate entity or merge into Bajaj Auto Finance, they said.

As per the plans, Rajiv, who is currently the Managing Director of Bajaj Auto and credited for turning around the company would continue to look after the core automobile business, the sources said.

On the other hand, the financial services company is expected to be headed by Sanjiv, a management graduate from Harvard.

 

Scrip soars by Rs 163

Mumbai: Shares of Bajaj Auto today surged by over Rs 163 at the BSE, fuelled by the demerger reports.

The scrip touched an intra-day high of Rs 3,171.90, gaining Rs 163 or 5 per cent in early trade but pared some gains at the end of the day to close at Rs 3047.10, up Rs 38.89 or 1.29 per cent on the BSE. — PTI

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Indo-Asean FTA soon: Pranab
T.R. Ramachandran
Tribune News Service

New Delhi, February 9
Striving for an Asian economic grouping following the Asean and East Asia summits held in the Phillipines last month encompassing the security aspect as well, External Affairs Minister Pranab Mukherjee today expressed confidence that a bilateral Free Trade Agreement (FTA) will be concluded with Asean soon.

Affirming that "we hope to conclude a bilateral FTA with Asean," Mr Mukherjee said India believed that an Asian Economic Community will be the driver of growth and economic integration in the entire region.

Addressing a two-day security conference on evolving the security dynamics of Asia here, Mr Mukherjee said the Asian Economic Community would be the "third pole" of the global economy after the European Union and the North American Free Trade Area (NAFTA).

Referring to Prime Minister Manmohan Singh's vision of a pan-Asian FTA, the External Affairs Minister observed such an arrangement could prove a starting point for a virtual Asian Economic Community.

"Our focus, including in our bilateral talks and cooperative activities with neighbouring states in Southeast and East Asia, has been on issues like border security, maritime security, counter terrorism and energy security," Mr Mukherjee emphasised.

Alluding to India's greater recognition now of being a stabilising factor in the region and its role as a firewall against destabilising influences, the minister drew pointed attention to the political and economic resurgence of Asia and the trend towards regional economic integration.

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Hutch race: Vodafone, Reliance submit bid

Mumbai/London, February 9
Three telecom majors — Reliance Communication, UK-based Vodafone and NRI Hindujas are understood to have submitted bids for acquiring majority stake in India's fourth largest mobile player Hutch-Essar.

Essar, the Indian partner in the joint venture with 33 per cent stake, is believed to be exercising its First Right of Refusal (RoFR) and wait for the emergence of top bidder, possibly to match.

Spokesperson of either of the aspirants, including Reliance, Vodafone and Essar declined to comment.

Hutchison Telecom Internation Limited (HTIL), which has put its 67 per cent stake on the block, also declined to comment. — PTI

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ONGC, Gazprom to explore 8 projects jointly
Sharma to stay on till new ONGC CMD appointed
Tribune News Service

New Delhi, February 9
The ONGC and Russia's state-run Gazprom have signed an agreement to jointly explore oil and gas fields in India, Russia and other countries and the Russian company has invited ONGC's participation in eight projects in Eastern Siberia and the Far East.

The ONGC has invited Gazprom to participate in integrated petrochemicals, LNG and power projects in India.

The two firms also explored possibilities of joint participation in Qatar, Myanmar, Libya, Vietnam, Cuba and the CIS.

Meanwhile, Mr R.S. Sharma, whose appointment as the chief of India’s largest profit-making firm was culled earlier this week, has decided not to quit as acting Chairman and Managing Director till the government appoints a full-time head.

Mr Sharma, who has been officiating as the ONGC CMD since May-end, 2006, when the government decided not to extend the term of Mr Subir Raha, was selected for the top job by the Public Enterprise Selection Board on August 30, 2006. But despite getting all necessary clearances, the Prime Minister’s Office this week scrapped the recommendations and called for fresh interviews for the top ONGC job.

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India ‘ahead’ of China in IPR

Beijing, February 9
India fares better than China in protecting intellectual property rights (IPR) and providing skilled personnel for multinational giants, but it does not enjoy any advantage over the communist giant on labour cost front, an US think-tank said today.

Executive Vice-President and Chief Economist of "The Conference Board" Gail Fosler said labour cost in India was somewhat the same as that in China.

So there is no cost advantage in India, Fosler was quoted as saying by the Global Times, a newspaper run by the People's Daily, the ruling Communist Party's official mouthpiece.

India might have advantages in skilled workers in certain industry and its intellectual property protection also functions better than that in China. That's why it is possible for some enterprises to consider setting up research and development labs in India, she said.

Pointing out that China is facing the problem of having scarce professional expert resources, she said, for instance, when an international enterprise plans to build a lab in China, it needs 60 engineers who are able to combine modern business experiences with advanced technology, as well as the ability to think of key problem and broad view.

"Unfortunately such talent in China's market is not enough at present. Besides, some companies will invest factories in other countries considering multiple investments.

Countries like Vietnam are attracting large foreign capitals with low cost advantages," she said. — PTI

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Rate war rages among banks

Mumbai, February 9
With large banks vying to up their deposit rates, the `rate war’ in the banking sector has intensified, pushing deposit rates to their highest level in the past five years.

Saraswat Bank, the country’s largest co-operative bank, leads the pack as it has announced a 10 per cent interest on its 15-month deposits. “This marks the first time that any lender is offering interest rates on deposits in double-digits in the past five years,” bankers say.

While depositors have cause to celebrate, small banks will be hit hard as they might have to increase their rates to remain competitive in the market place, they added.

The rate war had originally broken out among big banks such as the SBI, ICICI Bank and a few other public sector banks.

There are over 1,000 small-to-medium banks in the private and co-operative sector in the country and they might be forced to match their deposit rates with those offered by the bigger lenders.

As per Mr Arvind Deshpande, CEO, Maharashtra Urban Co-operative Banks Federation, the rate war may force the small and medium sized banks to increase their lending rates.

However, this could increase their non-performing assets (NPAs) of smaller banks as there could be very few creditworthy borrowers who would readily borrow at 13 or 14 per cent and they would be forced to lend to not-so-creditworthy borrowers.

Mr Uday Karve, Chairman, Dombivli Nagri Sahakari Bank, a medium-sized co-operative said normally smaller banks used to offer 1 to 2 per cent higher interest rate on deposits as compared to big lenders. Now, for the first time, big banks are offering rates which are higher than their smaller counterparts.

He said he was surprised by the aggressiveness exhibited by the SBI, which declared a 9 per cent interest rate recently.

Mr Karve said while existing depositors might not withdraw their money and shift to other banks, competition would intensify for attracting new ones. This was because these depositors now had the option to park their money with the highest offerer.

Pointing out that smaller banks might be forced to hike lending rates, Mr Karve said borrowers were, however, interest rate-sensitive and hence it might not be prudent for these banks to raise their lending rates by a high degree. This, in turn, could negatively impact their spread and bottomlines, he maintained.

V Y Tarale, CEO, Maharashtra State Co-operative Bank Association, expected banks to raise their deposit rates but added not many would offer a 10 per cent rate like Saraswat.

Ultimately, banks would take a call on their rates, guided primarily by their requirement of funds.—PTI 

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Cut in free power quota urged
Ambika Sharma

Malokhar (Solan), February 9
With a view to encouraging hydel power projects in Himachal the government should bring down its quota of free power from 30 to 15 per cent as the quantum of free power to be given to the state by the hydel projects was among the highest in Himachal, making power costlier.

Mr Manoj Gaur, Executive Chairman of Jaiprakash Associates Limited, said here that the higher percentage of free power reflected in the power tariff, making electricity costlier. This could be averted by reducing the free power mandate from the existing 30 per cent. The free power quota was between 15 and 18 per cent in other states.

He said once an MoU was signed, the state government should facilitate an investor to acquire land at the earliest. Ruing the inordinate delay caused in acquiring land for various projects, he said it had cost the company dear in the Karcham Wangtu project as the cost had escalated immensely. The company had to acquire land for the project at an exorbitant cost in which nearly one and a half years was lost.

The company’s Rs 1667.34-crore Baspa project suffered further due to flash- floods in 2005 which again added to the cost. He, however, asserted the company was hopeful of favourable tariff fixation by the electricity regulatory commission. The interim tariff fixed by the government had become a contentious issue and the matter was before the regulatory commission.

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Videocon revises bid for Daewoo

New Delhi, February 9
A month after losing the preferred bidder status for acquiring South Korea's Daewoo Electronics, the Videocon-led consortium has submitted a revised bid to the creditors of the ailing electronics gaint.

Sources said despite submitting a bid, which had been scaled down by 13 per cent from the original price of 700 billion won (about $728 million), the consortium of Videocon and US-based fund Ripplewood is confident of clinching the deal this time.

Sources, however, said the consortium was expecting a positive reply from the creditors of Daewoo, led by Woori Bank, within four to five days.

South Korea-based fund MRK Partners, promoted by the Carlyle Group, is expected to give the consortium competition but sources said Videocon was confident of getting through. — PTI 

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GSM base: Haryana tops in B circles

New Delhi, February 9
The all-India GSM subscriber base grew from 105.4 million in December, 2006, to 110.5 million in January.

Mr T.V. Ramachandran, Director-General, COAI, said among all circles, category C circles witnessed the highest rate of growth at 5.9 per cent, followed by category B circles at 5.4 per cent.

In category B circles, Haryana recorded the highest growth at 9.1 per cent, followed by West Bengal andAndaman & Nicobar at 7.7 per cent. — TNS

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Credit estimate of Rs 23,264 cr for Haryana proposed
Tribune News Service

Chandigarh, February 9
The National Bank for Agriculture and Rural Development (NABARD) has proposed a credit estimate of Rs 23,264 crore under priority sector lendings to Haryana during the next financial year 2007-08.

This was disclosed by the Chief General Manager, NABARD, Mr S.R. Aluru, during the State Credit Seminar for Haryana organised here today. The Chief Secretary, Haryana, Mr Prem Prashant, was the chairman on this occasion.

Mr Aluru said that the projected credit estimate for the next fiscal year was much higher than Rs 18,428 crore projected during 2006-07.

Of the Rs 23,264 crore projected for the state in the next fiscal, the share of crop loan would be 54 per cent (Rs 12,716 crore), followed by agricultural and allied sector term loan (capital formative investment credit) at 14 per cent (Rs 3,156 crore), non-farm sector (NFS) at 17 per cent (Rs 3,895 crore) and other priority sector at 15 per cent (Rs 3497 crore).

Mr Aluru expressed concern that the GDP growth rate in Haryana is not keeping pace with the country as a whole. The share of primary sector is falling. He stressed the need for adopting approaches for value addition in agriculture.

Speaking on the occasion, Mr Prem Prashant said that the intra-distribution of the agri-capital investment credit estimate, is reflective of the state government’s thrust to sustain the Green Revolution and White Revolution and usher in a Blue Revolution in the state.

He, however, felt that the declining share of agriculture is a sign of progress, provided there is a commensurate reduction in the population which is dependent on agriculture. He harped on the integrated sustainable model of rural development strategy.

The state focus paper for Haryana, which was released today, has focused on the current concerns of the state on the agricultural front - deteriorating soil health, falling groundwater table and the need for crop diversification, agro-processing, and modernisation of agri-marketing infrastructure (legal as well as physical).

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