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Govt’s decision to allow import of duty-free polished diamonds
Industry cheers, cutters & polishers worried

Mumbai, May 16
Finance minister P Chidambaram's decision to permit duty-free import of polished diamonds by the export trade has created a bullish mood in the industry while the large army of cutters and polishers stare penury in the face.

Mallya in high spirits
Buys Whyte & Mackay for Rs 4,819 cr
Mumbai, May 16
Vijay Mallya-promoted United Spirits today acquired Scottish whisky company Whyte & Mackay for £595 million (Rs 4,819 crore) in the largest such deal by an Indian company in the liquor space.
Chairman of the UB Group Dr Vijay Mallya examines bottles of whisky made by Whyte and Mackay after addressing a press conference in Glasgow in Scotland on Wednesday.
Chairman of the UB Group Dr Vijay Mallya examines bottles of whisky made by Whyte and Mackay after addressing a press conference in Glasgow in Scotland on Wednesday. — AFP photo
In video (56k)



EARLIER STORIES

 

Infrastructure needs 8 pc of GDP: Montek
New Delhi, May 16
Expressing concern over low investment in infrastructure, Planning Commission deputy chairman Montek Singh Ahluwalia today said the country would need to spend 8 per cent of its GDP on the sector to ensure a 10 per cent economic growth.

Gujarat NRE acquires Aussie coal mine
Sydney/Mumbai, May 16
Global miner BHP Billiton said on Wednesday it had reached an agreement to sell a coking coal mine in Australia to Gujarat NRE Coke for Aus $49 million ($41 million).

L&T to enter Africa
New Delhi, May 16
Larsen and Toubro (L&T) is planning a foray in the African continent for setting up inter-country power transmission lines as part of its overseas expansion plan.

Rajeev Mittal MS office for Chandigarh
Chandigarh, May 16
With small and medium enterprises (SME) sector in North India being the growth driver for IT industry, Microsoft has announced its plan to set up base here and cater to the growing IT needs of the sector in Punjab, Haryana, Himachal Pradesh and J&K. In an interview with The Tribune, Rajeev Mittal, a group director with Microsoft, said they would set up an office in Chandigarh knowing that the region was a strong market for the SMEs.

UTI MF to float Singapore arm
Mumbai, May 16
Buoyed by the success of entry in Japan in a tie-up with Shinsei Bank, UTI Mutual Fund (UTI MF) plans to tap more foreign markets by setting up a subsidiary in Singapore, besides opening branches in Europe and the Gulf.

Bajaj Auto heads for demerger
Mumbai, May 16
After the ugly drama that preceded the Ambani family split in 2005, India Inc is bracing itself for another one on Thursday, which, however, may not turn out to be as acrimonious as the earlier one.

Energy sector needs $120-150 b: KPMG
New Delhi, May 16
India’s power and upstream energy sectors such as coal, oil and gas need investments to the tune of $120 to 150 billion over the next five years as energy requirements are expected to witness a four-fold increase, according to a report released by KPMG here today.

Equity offerings touch Rs 25,000 cr
New Delhi, May 16 India Inc has mobilised highest-ever Rs 25,000 crore through equity offerings, including initial public offers and follow-on issues, in fiscal 2006-07, a latest study showed.

Corporate Results
Arcelor-Mittal net up 44 pc
London/New Delhi, May 16
Lakshmi Mittal-led Mittal Steel today reported a 43.7 per cent increase in its first quarter net profit, while beating its own forecast due to accelerated synergy generation from its $38 billion takeover of Arcelor last year.
Sukhdarshan Singh Marar

Marar elected chairman of state co-op bank
Chandigarh, May 16
Sukhdarshan Singh Marar, a renowned cooperator and former MLA, Muktsar, was today elected as chairman of the Punjab State Cooperative Agricultural Development Bank Ltd.



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Govt’s decision to allow import of duty-free polished diamonds
Industry cheers, cutters & polishers worried
Shiv Kumar
Tribune News Service

Mumbai, May 16
Finance minister P Chidambaram's decision to permit duty-free import of polished diamonds by the export trade has created a bullish mood in the industry while the large army of cutters and polishers stare penury in the face.

Diamond traders at Mumbai's Opera House, the nerve centre for the diamond trade in the country, say the finance minister's initiatives could help the city emerge as a major international centre for the trade rivalling Antwerp. The government's new initiative comes at a time when the Palanpuri Jain community, which controls a big chunk of the diamond trade even in Antwerp, have been troubled by income tax raids by the local government there.

"Arrests and seizure of stocks by the income tax authorities have shaken the faith of the Indians in the diamond business in that country," a prominent diamond trader from Opera House told this reporter.

According to him, Indians have attracted a lot of rivalry from the international diamond trade ever since the Palanpuri Jains, mainly hailing from Gujarat, virtually displaced centuries-old Jewish traders.

The Indian diamond trade which was built on the back of scores of labourers, who cut and polish small stones discarded by the big international players, worry about rising labour costs in recent times.

Diamond traders here feel that duty-free imports would permit them to import stones from cheap labour areas for processing and re-export.

According to Sanjay Kothari, chairman, Gem and Jewellery Export Promotion Council, India imported $1986.53 million worth of cut & polished diamonds in the last financial year. "With the removal of import duty, the diamond processing industry would be able to import stones in various shapes and sizes for jewellery fabrication," Kothari said.

The Indian diamond industry is emerging as a world leader with even the Diamond Trading Corporation promoted by the De Beers Trading Company, which controls the trade, acknowledging the sub-continental might.

According to De Beers officials in Mumbai, 37 of the 93 'sight-holders' of the company, are Indians. Sight-holders are previleged traders who get to choose from the choicest rough stones for processing.

Some of the big Indian diamond merchants like film exhibitor Bharat Shah, whose family controls the huge Rosy Blue company, are buying international diamond brands and even diamond mines around the world, say sources.

With a lot of diamonds in different shapes and sizes, the trade is waiting for the two million sq ft diamond bourse to be opened in Mumbai later this year. The bourse is expected to be a major magnet rivalling Antwerp, London, Dubai and other centres. The country which exported nearly $16.6 billion worth of stones and jewellery last year is expected to see the industry rivalling the IT sector.

On the other hand, the vast army of diamond cutters and polishers are worried about being thrown out on the streets. Even the traders who run cutting and polishing operations admit that India's low-cost advantage in the diamond trade is fading and the workers may be unemployed.

Harishbhai Sojitra, secretary, Diamond Manufacturers Association, felt that nearly 20 lakh diamond cutters and polishers would be affected.

“Even small jewellers may prefer to import from foreign countries," Sojitra noted.

Sojitra noted that the small businessmen, who account for about 15-20 per cent of the diamond cutting and polishing trade, would be pushed out of business. He said the Chinese were the biggest threat to the Indian cutting and polishing industry. "They have low overhead costs and labour in China is cheap. So diamonds cut and polished in China would be cheaper," he felt.

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Mallya in high spirits
Buys Whyte & Mackay for Rs 4,819 cr

Mumbai, May 16
Vijay Mallya-promoted United Spirits today acquired Scottish whisky company Whyte & Mackay for £595 million (Rs 4,819 crore) in the largest such deal by an Indian company in the liquor space.

The buyout of the Glasgow-based manufacturer of brands such as Whyte & Mackay scotch, Dalmore, Glayva, Isle of Jura and Cluny and Claymore would make United Spirits' promoter UB Group the world's second-largest liquor maker.

Announcing the deal, Mallya said it will help in making available Scotch whisky in India, China and the Gulf.

"We have bought the company at the right time because scotch whisky prices are going up day-by-day and the industry is also looking up in India," he told reporters here through a video conference from Glasgow.

Post-acquisition, United Spirits will have a consolidated sales of 75 million cases per annum. Whyte & Mackay sold nine million cases in the last 12 months, while United Spirits sold 66 million cases for the year ended March 31.

With the acquisition of 100 per cent equity of the scotch whisky company, United Spirits, which has been looking at New York and Singapore among the global stock exchanges for listing, may now look at London, Mallya said.

On funding the acquisition, he said it will be financed through ICICI Bank ($325 million), and Citibank ($310 million) and through sale of United Spirits' treasury stocks.

"The annual operating income of Whyte & Mackay is now approximately £50 million and expected to grow at 20 per cent per annum for the foreseeable future while the revenue line has grown 30 per cent in the current year," a statement issued by United Spirits said.

The earnings of Whyte & Mackay would cover the cost of acquisition in the near future, Mallya said. — PTI 

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Infrastructure needs 8 pc of GDP: Montek

New Delhi, May 16
Expressing concern over low investment in infrastructure, Planning Commission deputy chairman Montek Singh Ahluwalia today said the country would need to spend 8 per cent of its GDP on the sector to ensure a 10 per cent economic growth.

“Investment in the infrastructure sector is not enough for achieving a 10 per cent growth. It should rise to 8 per cent during the 11th Five Year Plan to achieve a sustainable growth rate,” Montek said here.

The infrastructure sector, which presently enjoys an investment of below 5 per cent, would need an annual expenditure of around Rs 1 lakh crore during the plan.

Montek ruled out a separate infrastructure ministry to address the issues. “I don’t think there is any need for a separate ministry of infrastructure. We can continue with the present system and gain experience,” he said.

“There is almost no support among the concerned ministries for an overarching regulatory framework for the infrastructure sector,” he pointed out and suggested that at appellate stage there was no need for a regulator.

“The Planning Commission should be the focal point to convey the message,” he opined.

Montek, however, said there could be a single regulator for the entire energy sector.

He also said the responsibility of improving urban infrastructure can not be sole responsibility of the centre, as it has the onerous task of improving rural infrastructure. — PTI

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Gujarat NRE acquires Aussie coal mine

Sydney/Mumbai, May 16
Global miner BHP Billiton said on Wednesday it had reached an agreement to sell a coking coal mine in Australia to Gujarat NRE Coke for Aus $49 million ($41 million).

Gujarat NRE Coke Limited, in a filing on the Indian stock exchanges today, announced that the company, through its Australian subsidiary Gujarat NRE FCGL Pty Ltd, signed an agreement with Illawarra Coal Holdings Pty Ltd, a BHP Billiton arm for the acquisition of the mine.

“Gujarat NRE is delighted with the acquisition. Apart from providing quality infrastructure and mining equipment for company’s southern coalfields production strategy, including a private rail link, it gives the company additional coking coal reserves,” Gujarat NRE Coke Chairman Arun Jagatramka said.

BHP had ceased the production at the Elouera coal mine, part of its Illawarra Coal business in the eastern state of New South Wales, in June 2005, but it has been operated since then under a limited contract mining agreement with Delta Mining Company. — Agencies

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L&T to enter Africa

New Delhi, May 16
Larsen and Toubro (L&T) is planning a foray in the African continent for setting up inter-country power transmission lines as part of its overseas expansion plan.

“Our next stage of expansion will be in Africa, where we are looking at projects for setting up transmission lines. However, this is at a preliminary stage,” L&T president (construction) and board member K V Rangaswami said here.

He said the company was planning to have a presence in Ghana initially and cater to the surrounding nations.

“In Africa, it is not possible to restrict ones self to only one country. Inevitably, one would have to enter into inter-country power transmission lines,” he added.

About the planned investments for the African foray, he said since the matter was yet to be cleared by the company’s committee of directors, it was premature to comment.

He, however, said this year the company had earmarked Rs 800 crore for its various ongoing projects and had decided to cut down on number of project sites and focus on big value constructions. — PTI

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MS office for Chandigarh
Ruchika M. Khanna
Tribune News Service

Chandigarh, May 16
With small and medium enterprises (SME) sector in North India being the growth driver for IT industry, Microsoft has announced its plan to set up base here and cater to the growing IT needs of the sector in Punjab, Haryana, Himachal Pradesh and J&K.

In an interview with The Tribune, Rajeev Mittal, a group director with Microsoft, said they would set up an office in Chandigarh knowing that the region was a strong market for the SMEs. The company will also continue to operate through a network of channel partners.

“The region houses 25,000 SMEs across industry verticals - hosiery, engineering / auto components, sports goods, hand tools, IT services, agro processing services and pharma industry.

While Chandigarh and Ludhiana are the hubs of IT and manufacturing sector respectively, sports goods industry in Jalandhar, hand tools industry in Amritsar, pharma industry in Baddi and agro processing industry in Solan have shown keen interest in IT adoption. In the recent years, the IT market in these four states has shown an overall growth of 29 per cent, with maximum growth seen in the hardware market.

“We hope that our entry here would contribute 40- 45 per cent in the next three years,” he said.

Mittal said Microsoft had tailormade solutions for the SME segment to integrate and streamline the customer relationship management, supply chain management and financial management.

Mittal added with software piracy being a key challenge in the smaller market, Microsoft was engaging its customers and channel partners to create awareness against the use of pirated software, besides working on the engineering side for creating anti-piracy software.

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UTI MF to float Singapore arm

Mumbai, May 16
Buoyed by the success of entry in Japan in a tie-up with Shinsei Bank, UTI Mutual Fund (UTI MF) plans to tap more foreign markets by setting up a subsidiary in Singapore, besides opening branches in Europe and the Gulf.

The fund house is also open to forge partnerships in Europe and Asia.

“We had a target of $100 million in Japan but within six months we garnered $400 million...now we plan such partnerships in Europe and Asia as well,” UTI MF chairman and managing director U.K. Sinha said here.

“We will be opening a subsidiary in Singapore for which we have received regulatory approvals,” Sinha said, adding the mutual fund also plans to open its branches in Dubai, Bahrain and London. — PTI

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Bajaj Auto heads for demerger

Mumbai, May 16
After the ugly drama that preceded the Ambani family split in 2005, India Inc is bracing itself for another one on Thursday, which, however, may not turn out to be as acrimonious as the earlier one.

The Rahul Bajaj-led Bajaj Auto, at its board meeting on May 17, will be taking up the matter of de-merging its two-wheeler and finance businesses.

While the two-wheeler business is expected to be spearheaded by chairman Rahul Bajaj’s eldest son Rajiv Bajaj, finance business under the aegis of Bajaj Auto Finance is likely to be headed by younger son Sanjiv Bajaj.

Currently, Bajaj Auto is run by Rajiv as the managing director, while Sanjiv is executive director responsible for financial and overseas operations.

While the de-merger is considered as more or less a fait accompli with investors keeping their fingers crossed. While shareholders benefited after the Reliance split, the question on their minds is whether a similar bonanza could be in the offing for them now also.

Chairman Rahul Bajaj has claimed that reason for the de-merger is to “enhance shareholders value”. According to him, the plan to de-merge the company’s financial and investments business, whose present market capitalisation is about Rs 25,950 crore, into a separate entity was based on the intention of unlocking shareholder value by utilising surplus cash and not because of the reported “rift between the brothers”.

Bajaj has indicated that the extra funds the company has could be put to more productive use to fetch better returns than from earnings on equity and investments.

Bajaj Auto has accumulated liquid reserves of around 8,000 crore to fund investment in new models and facilities after the de-merger.

A part of the large cash reserves of Bajaj Auto is expected to be transferred to the new finance company to be headed by Sanjiv Bajaj, for investment in the finance and insurance businesses.

This may leave the presently cash-surplus Bajaj Auto with only a small portion of the resources to sustain its R&D and marketing initiatives. — PTI
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Energy sector needs $120-150 b: KPMG
Tribune News Service

New Delhi, May 16
India’s power and upstream energy sectors such as coal, oil and gas need investments to the tune of $120 to 150 billion over the next five years as energy requirements are expected to witness a four-fold increase, according to a report released by KPMG here today.

The report titled ‘India Energy Outlook 2007’, underlines recent efforts by the government in recognising the need for private participation and ensuring that policies to promote investments are being implemented.

By world standards, India’s current level of energy consumption is very low. However, with a targeted GDP growth rate of over 8 per cent and an estimated energy elasticity of 0.8, it is expected to grow at over 6.4 per cent.

India has only 10.6 per cent of installed electricity capacity in private sector and world’s lowest per capita natural gas consumption.

Arvind Mahajan, executive director, advisory and head (energy, infrastructure and government) KPMG said, “The Atomic Energy Act is expected to be modified shortly allowing private participation and anticipating this many large Indian and international players have started discussions for possible tie-ups.”

Along with private participation, there is a move to bring in market mechanisms under an independent regulatory oversight. A gradual approach is important till the supply side position improves and more players enter the sector so that markets can work effectively.

The government is making efforts to broaden the supply base and intends to diversify fuel basket by increasing shares of natural gas, hydro and even nuclear energy.

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Equity offerings touch Rs 25,000 cr

New Delhi, May 16
India Inc has mobilised highest-ever Rs 25,000 crore through equity offerings, including initial public offers and follow-on issues, in fiscal 2006-07, a latest study showed.

The total mobilisation during the fiscal is pegged at Rs 24,993 crore, which is higher by 5 per cent than preceding year's Rs 23,676 crore, according to Prime, a database in primary capital market.

"The mobilisation in the year could have been higher but for the two secondary market crashes during the year which forced temporary shelving of IPOs as also lack of divestments.

Significantly, the year witnessed the largest equity IPO of Cairn India (Rs 5,789 crore)," said Prithvi Haldea Managing Director of PRIME.

As many as 76 IPOs collectively raised Rs 23,706 crore or 95 per cent of the total amount in FY07 compared to same number of IPOs floated a year-ago mobilising just Rs 10,808 crore.

The response from the public to the equity issues of the year was quite good, Haldea said, adding, the main reason for the good performance of the primary market was the buoyant secondary market almost throughout the year, the economic resurgence and the stable political climate helped the scenario.

However, due to the secondary market crashes as many as eight IPOs (all small) failed to evoke the requisite response and had to be refunded, he added. The major IPOs during the year were from Cairn India (Rs 5,789 crore), Reliance Petroleum (Rs 2,700 crore) and Idea Cellular (Rs 2,444 crore).

However, follow-on public offerings (FPOs) by listed companies witnessed a huge decline during 2006-07 accounting for only 5 per cent of the total mobilisation.

The year saw only nine listed companies raising Rs 1,287 crore as compared to 26 firms with total offer of Rs 12,867 crore in the preceding year, the database showed. The major FPOs during the year were from Patel Engineering (Rs 425 crore), Tanla Solutions (379) and D S Kulkarni (134). The real estate or construction sector had the dominant share with 14 companies, followed by 13 in the textiles sector and eight in the media and entertainment sector, the database said. On the other hand, offers for sale continued to fall, recording only Rs 961 crore compared to Rs 1,668 crore in the previous fiscal. In 2003-04, offers for sale, substantially on account of PSU divestments, had accounted for a huge Rs 15,128 crore, while in 2006-07 12 companies had an offer for sale, the total amount was very small as there was no divestment offer. "The number of issues hitting the market recorded a 17 per cent decline in 2006-07 as the year witnessed 85 public issues compared to 102 in the previous fiscal," Haldea said. — PTI

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Corporate Results
Arcelor-Mittal net up 44 pc

London/New Delhi, May 16
Lakshmi Mittal-led Mittal Steel today reported a 43.7 per cent increase in its first quarter net profit, while beating its own forecast due to accelerated synergy generation from its $38 billion takeover of Arcelor last year.

The world’s largest steel maker, to be renamed Arcelor-Mittal after completion of merger process, said its net income rose to $2.3 billion in the quarter ended March 31.

Mittal Steel said the two companies are actively working to complete the merger as promptly as possible in the course of 2007.

It said the integration process was going as per plans and synergies worth $573 million were captured in the first quarter.

Arcelor-Mittal president and CEO Lakshmi N Mittal said: “These results reflect the strength of Arcelor-Mittal’s global business model and the continuing strong demand for steel generally. The benefits of combining Arcelor and Mittal Steel continue to outperform our expectations and we are on track to deliver synergies as planned.” Mittal Steel also announced the exchange ratio for the merger process.

The company said that the boards of Mittal Steel, Arcelor-Mittal and Arcelor have unanimously decided that merger of Arcelor-Mittal into Arcelor will be effected on the basis of an exchange ratio of seven Arcelor shares for every eight Arcelor-Mittal shares.

Tata Teleservices

Tata Teleservices Limited posted a net profit of Rs 131 crore for the financial year 2006-07 while its overall revenue grew by 30 per cent. The subscriber base of the company grew by 167 percent during the last fiscal. The company recorded average revenue per user for the year 2006-07 at Rs 340. In the enterprise segment, the company recorded a maximum growth of 42 per cent. It plans to invest about Rs 500 crore for the current financial year.

Indo Rama Synthetics

Directors of Indo Rama Synthetics (India) Ltd (IRSL), at their meeting today, declared an annual dividend of 10 per cent in term of Re 1 per equity share for the financial year ended March 31. IRSL net sales stood at Rs 613.36 crore for the fourth quarter ended March 31 and profit after tax was up by 91 per cent at Rs 6.69 crore. The company today posted a 60 per cent drop in net profit for the year ended March 31, however, its total income increased by 7.17 per cent to Rs 2,072.46 crore. The net profit for the fourth quarter ended March 31, grew by 91 per cent to Rs 6.69 crore and total income rose by 20.49 per cent to Rs 636.23 crore, the company informed the BSE. — Agencies

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Marar elected chairman of state co-op bank
Tribune News Service

Chandigarh, May 16
Sukhdarshan Singh Marar, a renowned cooperator and former MLA, Muktsar, was today elected as chairman of the Punjab State Cooperative Agricultural Development Bank Ltd.

Earlier, a no confidence motion was passed by the board of directors against Harpartap Singh Ajnala, chairman of the bank.

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BRIEFLY

Re rebounds
Mumbai, May 16
The rupee today rebounded sharply to close 18 paise higher at 40.78/79 against the US currency due to heavy dollar selling amid weak dollar overseas and smart rise in equity markets. In volatile trade at the forex market, the Indian unit opened on a strong footing at 40.83/85 a dollar from previous close of 40.96/97 a dollar. Later, it moved side-ways in a range of 40.75 and 40.90 on alternate bouts of buying and selling before ending the day sharply up at 40.78/79 a dollar. — PTI

Tata Power
Mumbai, May 16
Tata Power Company Ltd today announced that it has signed a contract for complete boiler island scope on EPC basis with Doosan Heavy Industries & Construction Co Ltd, Korea for the first 4,000 MW ultra mega power project at Mundra, Gujarat. Keeping with the pioneering spirit, the company brings in the first 800 MW unit to India, thereby ushering India into the era of 800 MW technology, which is further to the many firsts including 500 MW unit brought for the first time to the country. — UNI

Hindalco
Mumbai, May 16
Aditya Birla Group's Hindalco Industries today announced the acquisition of Canadian-based Novelis. Novelis will now operate as a subsidiary of Hindalco, an official statement said. The company had, earlier, entered into an agreement with Novelis on February 10 this year to acquire it in an all-cash transaction at approximately $6 billion, including debt. — UNI

Anil Kaushal
Shimla, May 16
Anil Kaushal took over as the chief general manager of BSNL, Himachal Telecom Circle, here today. He replaces S.K. Sharma who has been posted as senior deputy director-general of the corporate office in New Delhi. — TNS

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