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B U S I N E S S

EPF interest rate remains 8.5 pc
New Delhi, July 23
Under pressure from Left-backed trade unions, the Employees Provident Fund Board (EPFB) today agreed to retain 8.5 per cent interest rate to its nearly four crore subscribers for the financial year 2006-07 even as there was indication over the possibility of an upward revision for the current fiscal.
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Oscar Fernandes
Union Minister for Labour Oscar Fernandes at Employees Provident Fund meeting in New Delhi on Monday. — PTI

Rural investors ‘prefer’ FDs
New Delhi, July 23
Despite booming stock markets, average urban and metro investors are more excited to park their savings in equity-linked insurance schemes whereas in rural areas, the investors prefer fixed deposit schemes, a survey conducted by Assocham has revealed.

SEZ to generate lakhs of jobs: Pillai
Chennai, July 23
Union commerce secretary G K Pillai today said the investments in special economic zones (SEZs) across the country is likely to cross Rs 1,00,000-crore mark by 2008.

Barclays ups ABN Amro bid
London/Beijing, July 23
British bank Barclays raised its bid for Dutch group ABN Amro to Euro 67.5 billion ($93 billion) on Monday, helped by some of the biggest-ever overseas investments by China and Singapore.


 


EARLIER STORIES

 
Workers shout slogans as they attend a demonstration outside the office of footwear maker Nike, at the Jakarta Stock Exchange (JSE) building in Jakarta on Monday. Workers protested against Nike’s announcement to stop ordering from its two Indonesian subcontractors. Nike has announced it will stop ordering from two Indonesian subcontracting companies— PT Hardaya Aneka Shoes Industry and Nagasakti Paramashoes Industry — as they failed to maintain Nike’s production standards and export schedules.
Workers shout slogans as they attend a demonstration outside the office of footwear maker Nike, at the Jakarta Stock Exchange (JSE) building in Jakarta on Monday. Workers protested against Nike’s announcement to stop ordering from its two Indonesian subcontractors. Nike has announced it will stop ordering from two Indonesian subcontracting companies— PT Hardaya Aneka Shoes Industry and Nagasakti Paramashoes Industry — as they failed to maintain Nike’s production standards and export schedules. — AFP

IT’s top four grapple with employee exodus 
New Delhi, July 23
Indian IT companies, grappling with an appreciating rupee eating into their profits, are also finding it hard to retain employees with the top-four firms -TCS, Infosys, Wipro and Satyam - witnessing an exodus of about 10,000 persons in the first quarter.

UB aviation stake on block
Mumbai, July 23
United Breweries (Holdings) Ltd plans to sell stake in aviation business for between $250 million and $300 million and use the money to fund expansion, an investment banking source said on Monday.

GE takes 15 pc in Tithgarh Wagons
New Delhi, July 23
GE Equipment Services and Kolkata-based Titagarh Wagons Ltd (TWL) today tied up to advance the country’s rail infrastructure. GE has made an investment in TWL, receiving 15 per cent of its equity. “We are looking at multiple markets for the investments but we will be disclosing the amounts in the near future,” GE Equipment Services president and CEO (India) Dhananjay Nalawade said.

Dollar drubbed

A man works under a monitor displaying the US dollar rate against the yen and Japan’s Nikkei average at a foreign exchange brokerage in Tokyo on Monday. The dollar hit a record low against the euro and more than 20-year lows versus sterling and the New Zealand dollar on worries that problems in the US subprime mortgage sector may trickle into the broader economy. The GB pound rose to its strongest in 26 years against the dollar on speculation the Bank of England will keep raising interest rates. Against the dollar, the pound rose to 2.0597 US dollar in London. Meanwhile, braving the Reserve Bank blockades and turning deaf on exporter woes, the rupee also touched 40.23 per US dollar, a fresh nine-year high, during the intra-day trade. Later, it came down to close the day at 40.28/29 per USD.
A man works under a monitor displaying the US dollar rate against the yen and Japan’s Nikkei average at a foreign exchange brokerage in Tokyo on Monday. The dollar hit a record low against the euro and more than 20-year lows versus sterling and the New Zealand dollar on worries that problems in the US subprime mortgage sector may trickle into the broader economy. The GB pound rose to its strongest in 26 years against the dollar on speculation the Bank of England will keep raising interest rates. Against the dollar, the pound rose to 2.0597 US dollar in London. Meanwhile, braving the Reserve Bank blockades and turning deaf on exporter woes, the rupee also touched 40.23 per US dollar, a fresh nine-year high, during the intra-day trade. Later, it came down to close the day at 40.28/29 per USD. — Reuters 

Himalaya plans unit in Baddi
Chandigarh, July 23
With their presence already in over 70 countries including the US, Malaysia, Singapore, West Asia and Switzerland, the Himalaya drug company is all set to make its presence felt in the region.

Tag bogs down Tata car part suppliers
Mumbai, July 23
High raw material costs and production delays could force top Indian vehicle maker Tata Motors to raise the price of the world's cheapest car, with suppliers resisting pressure to lower prices any further.

Corporate Results
Dr Reddys’ profit increases by 10 per cent 

New Delhi, July 23
Dr Reddys Laboratories Ltd today said it has reported a 10.53 per cent increase in its net profit at Rs 145.69 crore for the quarter ended June 30 compared to Rs 131.81 crore in the same quarter last year.

 

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EPF interest rate remains 8.5 pc
Tribune News Service

New Delhi, July 23
Under pressure from Left-backed trade unions, the Employees Provident Fund Board (EPFB) today agreed to retain 8.5 per cent interest rate to its nearly four crore subscribers for the financial year 2006-07 even as there was indication over the possibility of an upward revision for the current fiscal.

The interest burden for the EPFB for the fiscal 2006-07 would be Rs 450 crore, which would be offset from a surplus of Rs 590 crore lying in the contingency reserve fund, special reserve fund and interest suspense account.

“It has been decided to pay 8.5 per cent interest rate on provident fund. The Board will submit its recommendation to the Finance Ministry, which is expected to notify the rate shortly,” Labour Minister Oscar Fernandes told newspersons after the meeting of the EPF Central Board of Trustees.

The EPF has a corpus of Rs 94,000 crore, including pension fund and total interest outgo for 2006-07 will be to the tune of Rs 7,800 crore, Fernandes said.

Asked about fixing of interest rate for the current fiscal, the minister said the decision pertaining to interest payment for the current fiscal would be decided later.

Referring to the demand of trade unions to pay higher interest rate, Fernandes said “the Board has fixed interest rate only for the previous year. Since the bank rates have gone up mainly this year, the Board can consider revising interest rate for 2007-08 later.”

Fernandes said the EPF Board had constituted a sub-committee to assess finances. The report of the committee placed before the meeting for deliberation noted that there would be a surplus of Rs 595 crore with the Board.

Even after paying 8.5 per cent interest rate, the fund would be having a surplus of Rs 83 crore.

Fernandes also disclosed that though the Board discussed the government’s suggestion to invest 5 per cent of the corpus in the stock market, no decision was taken at today’s meeting.

Meanwhile, the Left-affiliated trade unions rejected the decision of the Board and demanded at least 9.5 per cent interest rate.

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Rural investors ‘prefer’ FDs
Tribune News Service

New Delhi, July 23
Despite booming stock markets, average urban and metro investors are more excited to park their savings in equity-linked insurance schemes whereas in rural areas, the investors prefer fixed deposit schemes, a survey conducted by Assocham has revealed.

The sample survey on 1,028 investors, belonging to rural-urban metropolis and consisting of businessmen, professionals, salaried personnel and agriculturists, reveal that “rural India is more inclined towards investing in fixed deposits (36.33 per cent), while the urban (24.81 per cent) and metro (21.86 per cent) segments chose equity-linked insurance schemes over other investment tools.”

Commenting on the survey, Assocham president Venugopal Dhoot said despite the stock market going through a boom period, most of the people opted for a traditional mode of investment like fixed deposits. Even professionals and businessmen have not opted for stock market.

In all, a total of 202 people in the rural segment, 373 in the urban centres and 453 in the metro cities were surveyed. Occupation-wise, 220 people were chosen from the business pie, 273 among professionals, 382 from the salaried and 153 among agriculturists.

On an average, 24.9 per cent people went for fixed deposits, 21.3 per cent equity-linked insurance schemes, 15.95 per cent mutual funds, 15.08 per cent real estate, 12.84 per cent stock market, 7.88 per cent gold and silver and 2.04 per cent others.

The survey also found more variety across the diverse occupations. Large group of businessmen (25 per cent) felt equity-linked insurance schemes were most fruitful in terms of reaping high returns with insurance cover, while majority of professionals (23.08 per cent) found mutual funds to play that role for them amongst different investment instruments through portfolio mix.

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SEZ to generate lakhs of jobs: Pillai

Chennai, July 23
Union commerce secretary G K Pillai today said the investments in special economic zones (SEZs) across the country is likely to cross Rs 1,00,000-crore mark by 2008.

Addressing a one-day national seminar on SEZ here, he said apart from the benefits of investment, they would generate about one lakh jobs this year.

“The commerce ministry is expecting another three-lakh-crore investment in SEZs by the end of 2009, which would generate three lakh more jobs,” he said.

On SEZ Act, which brought enormous FDI, Pillai said the government’s vision on SEZs had tremendous potential to succeed.

“Nokia, Flextronics, Ascendas, Foxconn Tech and Apache Software have already invested in India because of the SEZs,” he said. Pillai, who is also the chairman of the Board of Approval for SEZ, said the SEZs were fairly distributed across the country except for some places in Bihar and north-eastern states.

According to the statistics given by the officials on the latest statewise SEZs position in India, Maharastra leads the table with 60 SEZs followed by Tamil Nadu with 36 , Harayana (22), Karnataka (20), Gujarat and Andhra Pradesh (19), West Bengal (10), Orissa (8) and Uttar Pradesh (6).

Meanwhile, commerce ministry is expected to sign an MoU with the Japanese government for setting up a freight corridor connecting Delhi-Mumbai-Kolkata, Pillai said today. — Agencies

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Barclays ups ABN Amro bid

London/Beijing, July 23
British bank Barclays raised its bid for Dutch group ABN Amro to Euro 67.5 billion ($93 billion) on Monday, helped by some of the biggest-ever overseas investments by China and Singapore.

Barclays said its new bid included Euro 24.8 billion in cash and was up from its previous all-stock offer of Euro 65 billion. The offer is still below a rival Euro 71 billion bid from a group of European banks led by Royal Bank of Scotland (RBS).

A deal with either Barclays or the RBS team, which includes Spain's Santander and Belgian-Dutch group Fortis, would be the biggest-ever bank takeover.

Analysts said Barclays was playing a shrewd game, signalling it would not engage in a destructive bidding war but also creating the possibility that a strong rise in its shares could push the value of its bid towards the RBS team's price.

"We continue to believe the (RBS) consortium will prevail," Bernstein analysts said in a research note.

"But with the value gap to the consortium offer now only about 7 per cent and the offer remaining 63 per cent stock, gains in Barclays share price would further close the gap."

Barclays, Britain's third-biggest bank, said its new offer had not been recommended by ABN Amro, but Chief Executive John Varley said he hoped and expected that it would be.

China Development Bank will take a 3.1 per cent stake in Barclays, potentially rising to 8 per cent of an enlarged Barclays, while Temasek will take a 2.1 per cent stake in Barclays, potentially rising to just over 3 per cent.

Barclays CEO Varley said China Development Bank's stake would be the biggest overseas investment by China and he was "entirely comfortable" with it becoming the biggest shareholder. — Reuters

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IT’s top four grapple with employee exodus 

New Delhi, July 23
Indian IT companies, grappling with an appreciating rupee eating into their profits, are also finding it hard to retain employees with the top-four firms -TCS, Infosys, Wipro and Satyam - witnessing an exodus of about 10,000 persons in the first quarter.

Although, all four firms collectively hired more than 25,000 employees in the April-June period, the net addition was just about 16,300 - taking their total headcount to 2,85,357 employees.

Except for Satyam Computers, attrition rate went higher at Infosys, Tata Consultancy Service and Wipro from both previous quarter as well as the year-ago period.

All four companies reported an adverse impact of rupee rise on their profitability and margins, and are looking at various hedging measures, which includes improving employee utilisation rates.

However, analysts believe the high attrition rates, mostly triggered by employees seeking higher salaries, could adversely impact the companies' plans to improve utilisation rates.

TCS, the biggest in terms of revenue as well as headcount, saw an exodus of about 2,500 employees, while just over 2,000 persons quit the country's second largest software exporter, Infosys.

The employee loss is estimated to be much higher at about 3,500 at Wipro, the country's third-biggest IT firm, while Satyam, the smallest of the four, saw the lowest number - about 1,600 persons - leaving.

However, Wipro is anticipating a decline in attrition going forward as the company has decided to advance annual wage hikes to August, while it does not expect people leaving for higher education to be a factor.

Infosys' Director Human Resources Mohandas Pai said exodus has somewhat stabilised at the company in the past one year, after taking into consideration the 1.5 per cent involuntary attrition at the fresher level.

Pai said this accounted for persons who joined at the fresher level but did not complete the training after failing the qualifying test.

"Second quarter of last year we had 2,040 persons leave us, third quarter 2,040 and the fourth quarter it came down to 1,640 because of seasonalities. And this quarter it is 2,010," Pai said at a conference call on July 11 after announcing the company's first quarter results.

Wipro also recorded 1.4 per cent of forced attrition rate in the quarter. In the year-ago quarter, almost 2 percentage points of attrition was due to voluntary separation. — PTI 

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UB aviation stake on block

Mumbai, July 23
United Breweries (Holdings) Ltd plans to sell stake in aviation business for between $250 million and $300 million and use the money to fund expansion, an investment banking source said on Monday.

"Yes, we have the mandate," an investment banker with Edelweiss Capital said on condition of anonymity.

"We are looking at private equity, debt and other modes of fund raising."

A UB group spokeswoman said the company would not make any comment immediately.

Earlier, a business daily had reported citing sources that UB (Holdings) plans to sell 20 per cent of its aviation business to private equity investors.

Four private equity firms including Cerberus Capital, TPG and Blackstone have initiated talks, with Cerebrus believed to be the frontrunners. — Reuters

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GE takes 15 pc in Tithgarh Wagons

New Delhi, July 23
GE Equipment Services and Kolkata-based Titagarh Wagons Ltd (TWL) today tied up to advance the country’s rail infrastructure. GE has made an investment in TWL, receiving 15 per cent of its equity. “We are looking at multiple markets for the investments but we will be disclosing the amounts in the near future,” GE Equipment Services president and CEO (India) Dhananjay Nalawade said.

GE Equipment Services, a global provider of financing, maintenance and asset intelligence services for transportation assets, and TWL, a leading railway wagon manufacturer in the country, intend to serve all aspects of the country’s infrastructure, the movement of raw materials and finished goods with financing, operating and monitoring services.

This is GE’s first equity investment in the Indian transportation sector. It will also become the preferred provider of vendor financing for Titagarh. — UNI 

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Himalaya plans unit in Baddi
Tribune News Service

Chandigarh, July 23
With their presence already in over 70 countries including the US, Malaysia, Singapore, West Asia and Switzerland, the Himalaya drug company is all set to make its presence felt in the region.

“We have plans of opening stores in the city, Jalandhar, Ludhiana and Amritsar this year.

We will also be opening shop-in-shops across Punjab and Chandigarh by the end of this year,” stated Saket Gore, Business Head, Consumer Products division, Himalaya, in an interview with The Tribune.

Himalaya is also planning to set up operations in the Baddi-Barotiwala pharma hub. Not wanting to disclose much Gore informed that the blueprint of the set up was in the final stages.

“It will be a medium level plant,” he stated. Himalaya is also planning to set up a plant in Europe. “The plant will be set up in Switzerland and operations should begin by November,” he informs.

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Tag bogs down Tata car part suppliers

Mumbai, July 23
High raw material costs and production delays could force top Indian vehicle maker Tata Motors to raise the price of the world's cheapest car, with suppliers resisting pressure to lower prices any further.

Tata Motors is turning the screws on parts makers as it pushes to launch the car next spring or summer, despite delays in construction of the plant in West Bengal after farmers opposed the acquisition of land.

The company, India's third-biggest auto maker, had earlier announced the launch would be in early 2008.

Suppliers, already grappling with volatile raw material costs and softer domestic demand, are baulking at Tata's price and delivery targets. Some have reportedly turned down orders and others are seeking guarantees on volumes and prices.

"The Tatas' demands are pretty aggressive, be it on product, cost or delivery," said one supplier who asked not to be identified. "We're being stretched."

Tata Motors has promised to sell the car for Rs 1 lakh but some analysts say it will now have to price it 25 per cent higher in order to maintain a profit margin of 8 per cent.

A sticker price of Rs 1,25,000 would put the vehicle in line with other low-cost cars being considered by competitors such as Renault and Nissan.

A car priced so cheap in a country where small cars make up two-thirds of sales could have a potential market of one million units, Chairman Tata had said.

Suppliers say they have been told to gear up for an initial run of 2,50,000-3,00,000 units.

Tata Motors also has been encouraging suppliers to set up factories near the new plant to reduce transport and packaging costs, which can make up 8-10 per cent of total manufacturing costs, while also enabling "just-in-time" deliveries that reduce the need to hold costly inventories.

The company, which is estimated to have invested about $450 million in the project so far, also has said it may use satellite assembly units owned by franchisees, alternate materials like General Electric's re-engineered plastics, and some modern adhesives instead of welding to cut costs.

Its plan has prompted Carlos Ghosn, the head of Renault and Nissan Motor Co, to study the feasibility of making a $3,000 car with an Indian vehicle maker.

Toyota Motor Corp, Honda Motor Co, Fiat, Volkswagen and Bajaj Auto are also looking to build small, low-cost cars, but others say a car so cheap cannot meet strict emission and safety standards.

"It is a shared responsibility, so if specs are followed in a disciplined manner, they can do it (the launch) as planned," says Manish Mathur, a principal at consultancy A.T. Kearney.

Still, analysts say suppliers may take a hit initially.

"We could see a higher price after a month, two months, but at least at launch they will absorb the additional cost," says Mohit Arora, director for India at J.D. Power Asia-Pacific.

"The whole world will be watching, so they wouldn't want to be seen as backing off from that promise," he says. — Reuters

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Corporate Results
Dr Reddys’ profit increases by 10 per cent 

New Delhi, July 23
Dr Reddys Laboratories Ltd today said it has reported a 10.53 per cent increase in its net profit at Rs 145.69 crore for the quarter ended June 30 compared to Rs 131.81 crore in the same quarter last year.

The total income grew from Rs 772.18 crore for 2006 to Rs 801.84 crore in the corresponding period this year, a press note said.

The group has posted a net profit of Rs 187.23 crore for the quarter and the total income has decreased from Rs 1,373.67 crore in 2006 to Rs 1,252.49 crore during 2007.

UBI gains 35 pc

The Union Bank of India has posted a 34.95 per cent growth in the net profit for the quarter ended June 30. Net profit grew to Rs 225.1 crore from Rs 166.8 crore in the corresponding period last year.

Total income grew from Rs 1,791.4 crore to Rs 2,289.4 crore during the period, the bank said in a communique to the BSE. Operating profits grew from Rs 426.48 crore to Rs 525.48 crore for the quarter while earnings per share increased to Rs 4.46 from Rs 3.3l.

Siemens Ltd

Siemens Ltd today said it has registered a 30.89 per cent growth in its net profit at Rs 81.78 crore for the third quarter ended June 30 as compared to Rs 56.517 crore in the same quarter last year. The total income also increased from Rs 1,048.96 crore in 2006 to Rs 1,819.7 crore during 2007, a press note said.

Dabur India

Dabur India Ltd has said the net profit of the company rose by 17.93 per cent at Rs 54.06 crore for the quarter ended June 30 as compared to Rs 45.84 crore in the corresponding quarter last year.

The total income also increased to Rs 451.04 crore from Rs 393.05 crore in the previous fiscal, a press note said.

Aptech net up

Aptech Ltd has said its net profit has increased by 24.26 per cent to Rs 1.69 crore for the quarter ended June 30 from Rs 1.28 crore during the same period a year ago.

The company’s net sales also recorded a hike of 9.16 per cent at Rs 24.01 crore from Rs 21.81 crore in the same quarter during the previous fiscal.

MRPL net rises

Mangalore Refinery and Petrochemicals Ltd (MRPL) today said its net profit grew by 41.41 per cent at Rs 368.55 crore for the quarter ended June 30 as compared to Rs 215.91 crore during the same quarter a year ago. Total income also shot up by 14.45 per cent to Rs 7,572.44 crore in 2007 as against Rs 6,478.08 crore during the first quarter of the previous fiscal, a press note said. — Agencies

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BRIEFLY

Patni takes Taratec for $27 m
Mumbai, July 23
Patni Computer Systems Ltd today said it had acquired US-based life-sciences services consultancy Taratec Development Corp for $27.2 million. Taratec, which had annual revenues of $20 million, provides business, information technology and regulatory compliance products and services for the life-sciences industry, Patni said in a statement. — Reuters

SEL public offer
New Delhi, July 23
SEL Manufacturing Company Limited, a Ludhiana-based garment manufacturing company, is entering the capital market with an IPO of 41,38,410 equity shares. The IPO will open for subscription on July 26 and will close on July 31. The company has fixed the price band for the IPO between Rs 80 and Rs 90 per share. — TNS

Dayim Punj
New Delhi, July 23
Dayim Punj Lloyd Construction Contracting Company, a JV company of engineering firm Punj Lloyd Ltd, today said it has secured Rs 320 crore order from Saudi Kayan Petrochemical Company (SABIC). The project is scheduled to be completed by January 2009, a statement said. — UNI

IVRCL Infra
Mumbai, July 23
IVRCL Infrastructures and Projects today said it has secured four irrigation-related contracts worth Rs 641.39 crore from Andhra Pradesh Irrigation Department. The contracts would be executed by IVRCL-Sew-Prasad, the company’s JV with Sew Constructions and Prasad and Company. — PTI

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