SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Exports dip 29% in May
New Delhi, July 1
India's exports continued to fall like there was no bottom, dipping by 29.2 per cent in May, and raised hopes for sops in the budget in the absence of any sign of recovery."... projections were 33 per cent in May and 30 per cent in June, but the final figure is 29.2 per cent," Commerce and Industry Minister Anand Sharma told reporters here today.

RIL not to sign pact with RNRL 
Mumbai, July 1
Rejecting offer for talks, Mukesh Ambani-run RIL yesterday told Anil Ambani group firm RNRL that it would not sign any agreement on the gas supply issue without the approval of the government on price, quantity and tenure, a stand firmly contested by the other side.

Roll back minimum alternate tax: IT industry 
New Delhi, July 1
Just days ahead of the presentation of the Union Budget, expectations in the Information Technology (IT) and IT-enabled Services (ITeS) sector are running high, especially keeping in mind the global slowdown and the protectionist policies of the new US administration.

 

EARLIER STORIES



Bollywood actress Bipasha Basu presents Reebok's new range of apparel and footwear in New Delhi on Wednesday.
Bollywood actress Bipasha Basu presents Reebok's new range of apparel and footwear in New Delhi on Wednesday. Tribune photo:Manas Ranjan Bhui

Pawan Hans on a roll, to expand chopper fleet
New Delhi, July 1
Unlike the state-owned National Aviation Co of India Ltd (NACIL), currently in a deep financial mess, sister concern Pawan Hans Helicopters Ltd has been on the upswing since 2006-07. It posted a threefold jump in operating profit at Rs 20 crore last fiscal (2008-09), up from Rs 6.21 crore in FY08, remarkable at a time when airlines around the world are massive losses. In 2006-07 its operating profit was only Rs 2.78 crore.

Frauds: Banks asked to share borrowers’ info
Chandigarh, July 1
The rise in companies having multiple banking arrangements getting involved in fraudulent practices has now caught the attention of RBI. The apex bank has asked all banks to share information about status of borrowers enjoying credit facilities under ‘multiple banking arrangement’ so as to avoid frauds in borrowal accounts.

Industrialists scoff at World Bank report
Ludhiana, July 1
The local industrialists are taking the fact with a pinch of salt that it was easiest to start a small or medium scale business in Ludhiana as per World Bank's recent survey. They feel that survey was based on a few parameters while all other major factors, on which the growth of the industry depends, were not taken into account by the experts. The findings of the report may sound good but reality was altogether different, feel the industrialists.

A model poses with Lenovo laptop at the launch of new Lenovo series, in New Delhi on Tuesday. Lenovo launched seven new notebooks and netbooks in the Indian market in the Rs 22,500 - Rs 1.04 lakh price range.
A model poses with Lenovo laptop at the launch of new Lenovo series, in New Delhi on Tuesday. Lenovo launched seven new notebooks and netbooks in the Indian market in the Rs 22,500 - Rs 1.04 lakh price range. Tribune photo: Manas Ranjan Bhui

No decision on forming EGoM on KG gas yet
New Delhi, July 1
The government has not decided on reconstituting a high-powered ministers panel on Krishna Godavari basin gas field owned by Reliance Industries Ltd (RIL), a top official said today.

Car sales in top gear
New Delhi, July 1
The country's largest car maker, Maruti Suzuki India Ltd (MSIL), today reported a 22.63 per cent jump in its sales at 75,109 units in June against 61,247 units in the same month last year.Its closet competitor and country’s second largest car manufacturer Hyunday Motors India Ltd (HMIL) saw the domestic market take a turn for the positive as sales grew by 5.2 per cent as compared to sales in June, 2008. The cumulative sales also saw a healthy growth of 17.6 per cent.





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Exports dip 29% in May

New Delhi, July 1
India's exports continued to fall like there was no bottom, dipping by 29.2 per cent in May, and raised hopes for sops in the budget in the absence of any sign of recovery."... projections were 33 per cent in May and 30 per cent in June, but the final figure is 29.2 per cent," Commerce and Industry Minister Anand Sharma told reporters here today.

The government data showed that exports shrank to $11.01 billion in May from $15.55 billion a year ago — an indication that there was no demand in the recession-hit global economies.

Imports, too, dropped by 39.2 per cent for the fifth consecutive month to $16.21 billion in May, helping halve the trade deficit in the month to $5.20 billion.

Expressing concern over the decline, Sharma said that the dip is across-the-board, particularly in the labour-intensive sectors like leather, engineering and handicrafts.

"There is a fall and this trend is continuing," he said.

Expressing hope the minister said "there will be some relief (in the Budget) and also availability of credit on easier terms, so that India's exports can be more competitive" and the second half of 2009-10 would be better for exports.

"Of course, it (continuous fall in exports) is a matter of concern... (overall) there are no signs of revival in the exports demand yet," Commerce Secretary Rahul Khullar told reporters here.

"...I expect more sops for exporters in the budget," Khullar said, adding that the silver lining was that trade in gems and jewellery was picking up.

"It is not surprising (decline in exports)... this reflects recession in global economies," chief economist of rating agency Crisil Subir Gokarn said.

The Commerce Secretary also said that some exporters have raised concern over rising rupee due to inflow of foreign funds. The domestic currency appreciated by about 23 per cent in 2008.

Oil imports during May 2009 plunged by 60.6 per cent to $4.13 billion from $10.49 billion in the corresponding period of the previous year. Non-oil imports during the month declined by 25.4 per cent to $12.07 billion from $16.18 billion. Imports during the first two months of the current fiscal were $31.95 billion against $51.50 billion.

The trade deficit during April-May 2009-10 was $10.20 billion against $19.88 billion.

During April-May 2009-10, oil and non-oil imports dipped to $7.76 billion and $24.19 billion, respectively.

Oil and non-oil imports in April-May 2008-09 were $19.24 billion and $32.26 billion, respectively.

Overseas shipments grew by a meagre 3.4 per cent to $168.7 billion in 2008-09 after the global slowdown began to pinch in the second half of the previous fiscal. — PTI 

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RIL not to sign pact with RNRL 

Mumbai, July 1
Rejecting offer for talks, Mukesh Ambani-run RIL yesterday told Anil Ambani group firm RNRL that it would not sign any agreement on the gas supply issue without the approval of the government on price, quantity and tenure, a stand firmly contested by the other side.

"We have been advised that where as there is lack of clarity on this aspect in the judgment, our position remains we cannot sign any agreement without the approval of the government on price, quantity and tenure," RIL, which is believed to to be preparing to move the Supreme Court early next month, said in a statement today.

This stand was immediately contested by Reliance Natural Resources which said there is no ambiguity regarding price or tenure in the court order.

"The aspects of price, quantity and tenure are adequately covered in the judgement and there is no ambiguity in this regard, an RNRL spokesperson said.

Sticking to the stand it had taken in the high court, RIL said, "Aspects such as price, quantity and tenure to be incorporated into any agreement or any arrangement would be subject to approval of government of India".

The Bombay High Court in its verdict on June 15 on the dispute gave the two companies a month's time to work out firm gas volumes, price, timelines and other commercial details for sourcing the fuel from Krishna-Godavari basin fields.

The High Court has ordered Reliance Industries to honour a 2005 family agreement to supply 28-million cubic meters per day (mmscmd) of gas from its fields at $2.34 per mmBtu for 17 years to Reliance Natural Resources Ltd.

On June 15, the Court gave the two companies a month's time to work out a firm gas volumes, price, time-lines and other commercial details for sourcing the fuel from KG basin.— PTI 

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Roll back minimum alternate tax: IT industry 
Girja Shankar Kaura
Tribune News Service

New Delhi, July 1
Just days ahead of the presentation of the Union Budget, expectations in the Information Technology (IT) and IT-enabled Services (ITeS) sector are running high, especially keeping in mind the global slowdown and the protectionist policies of the new US administration.

The sector, which contributes nearly six per cent to the national GDP and employs 2.2 million people directly and eight million indirectly, is facing many challenges.

While the representatives from the sector, part of the CII, have aired their set of concerns and expectations from the Budget, the sector on the whole is looking forward to major sops for the industry keeping in mind the problems that India is facing as a cost-effective outsourcing destination to new emerging countries like Philippines and Japan.

The industry is hopeful that the government would look favorably towards removing the disparity between the units in Software Technology Parks (STP) and those in Special Economic Zones (SEZs).

There is also hope that the tax holiday for the units in STPs would continue beyond 2010.

Industry experts point out that the units in STPs no longer enjoy a pure tax-free status. They are also subjected to minimum alternate tax (MAT) of 11.33 per cent.

They feel that since the levy of MAT contradicts providing a tax-free status to the industry, it should be rolled back. This would also ensure parity between units in STP and SEZ schemes. Incidentally, they say that the SEZ exemption is also available to only the new units being set up and there are no tax benefits for relocating an existing unit in SEZ.

Although Finance Minister has indicated removing the anomalies but the industry would feel relieved only when such changes are announced in the coming Budget.

There are also concerns about the service tax and the Fringe Benefit Tax (FBT). The government had made changes in service tax benefit to SEZs, which grants exemption to services which are wholly consumed within the SEZ and also allows refund on other services.

Experts say that as a result of this, the SEZs are classifying more and more services as being eligible for the exemption. On the other hand, service providers to SEZs are levying service tax on most services which is creating confusion and should be removed, they feel.

They also point out that there was an urgent need for rationalisation of various provisions available to the industry. There was also a need to take a look at the FBT levied on the industry. The industry feels that this should be abolished as this would help improve the competitiveness of the Indian IT companies in the global market. The industry is also looking at clarity in interpretation of contentious issues and streamlining of tax administrative procedures especially in the area of tax refunds.

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Pawan Hans on a roll, to expand chopper fleet
Vibha Sharma
Tribune News Service

New Delhi, July 1
Unlike the state-owned National Aviation Co of India Ltd (NACIL), currently in a deep financial mess, sister concern Pawan Hans Helicopters Ltd has been on the upswing since 2006-07. It posted a threefold jump in operating profit at Rs 20 crore last fiscal (2008-09), up from Rs 6.21 crore in FY08, remarkable at a time when airlines around the world are massive losses. In 2006-07 its operating profit was only Rs 2.78 crore.

The country’s largest helicopter company now plans to increase its existing fleet of 36 choppers to 100 over the next two years. It is also set to launch seaplane operations in the Andaman & Nicobar Islands - a first in India's aviation history - as well as maintenance, repair and overhaul (MRO) services for choppers.

Much of the firm’s success lies in Pawan Hans chairman & MD RK Tyagi’s vision of turning it into a one-stop entity for helicopter operations in the country. “We are telling people buy helicopters and leave the hassles to us. We are talking to law enforcement and disaster management agencies, hospitals, fire brigades and others. We are encouraging them to own helicopters and assuring them they would be maintained by us. We will soon launch MRO services in Delhi and Mumbai. A one stop-arrangement for chopper operations is what we are planning to offer,” he stated.

Tyagi said during the next two years the firm’s strategy will be to increase its work space and operating profits by flying that “one extra sortie and one more passenger than our competitors”, remarking, “We like our competitors... they keep us alert”.

“Today we have 36 helicopters and plan to increase this number to a hundred over the next two years. We are talking to various PSUs, asking them to provide us funds for new helicopters in return for which we would service them”, he said.

With just a single dedicated helicopter at present for medical emergency services in the country, a major boost for the company is expected to come from the medical sector. The lone chopper serves ONGC. In contrast the United States has over 700 helicopters engaged in medical services.

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Frauds: Banks asked to share borrowers’ info
Ruchika M. Khanna
Tribune News Service

Chandigarh, July 1
The rise in companies having multiple banking arrangements getting involved in fraudulent practices has now caught the attention of RBI. The apex bank has asked all banks to share information about status of borrowers enjoying credit facilities under ‘multiple banking arrangement’ so as to avoid frauds in borrowal accounts.

RBI has asked banks to initiate a system of obtaining regular certification from borrowers, exchange of information among banks on regular intervals and obtaining regular certification by a professional regarding compliance of various statutory prescriptions by the borrower. Banks have now been asked to exchange this information on multilateral basis regarding incidents of fraud, legal actions initiated and covert operations of the borrower after the fraud.

The move follows a spurt in cases where unscrupulous borrowers enjoying credit facilities under multiple banking arrangement have defrauded one of the financing banks and continued to enjoy the facilities with other financing banks, and in some cases availed even higher limits at those banks. It has also come to the notice of RBI that in certain cases these borrowers used the accounts maintained at other financing banks to siphon off funds from the bank where they committed a fraud.

“This has been possible largely because of lack of formal arrangement for exchange of information among various lending banks. While the affected bank was engaged in recovery through initiating legal action at its end, the borrowers went about perpetrating fraud in their accounts with the other financing banks. In some of the fraud cases that have now been reported by the banks, it was learnt later that the securities offered by the borrowers to different banks were the same,” said a senior official in RBI.

RBI has said that it is imperative on the part of banks to have a consolidated view of the frauds committed by a borrower on different banks so as to ascertain the quantum of fraud, loss caused by frauds and perceived ramifications. “Thus all banks which have financed a borrower under multiple banking arrangement should take coordinated action against such borrowers and the coordination should be driven by the bank which detects the fraud first, or by the bank which has the maximum exposure, and share the details of fraud with all other banks,” said the RBI official. 

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Industrialists scoff at World Bank report
Shivani Bhakoo
Tribune News Service

Ludhiana, July 1
The local industrialists are taking the fact with a pinch of salt that it was easiest to start a small or medium scale business in Ludhiana as per World Bank's recent survey. They feel that survey was based on a few parameters while all other major factors, on which the growth of the industry depends, were not taken into account by the experts. The findings of the report may sound good but reality was altogether different, feel the industrialists.

Ramesh Rattan, chairman of Small Scale Industries and Traders Association, said things were different before the Master Plan of Ludhiana. Today, getting a small scale industry number from District Industry Centre had become a Herculean task.

"You may find it easy with the paper work but a businessman starts a new venture keeping in mind its growth and development. When you are not able to get the code numbers for import and export, you will not be given any benefit. You can not expand the business. World Bank may have given the report in Ludhiana's favour but who will invest in the city in absence of infrastructure", asked Rattan.

S C Ralhan, chairman, Engineering Export Promotion Council, said he was surprised to learn about the findings. He said perhaps experts did not go in depth before submitting the report. He said," Any business depends on important factors like labour force, security measures, condition of roads, state of electricity, infrastructure etc. In the absence of all these factors there was no fun of starting new venture in city. Nobody will invest heavily if the returns are not good. Nobody will start the venture on just the parameter that paper work was easy or enforcing contracts or closing a business will not be a problem", he said.

Another industrialist, V P Chopra feels that this was a good sign that World Bank had found it easy to start new venture in Ludhiana but state government had to act as a motivational force on the issue by providing necessary infrastructure to small and medium investors.

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No decision on forming EGoM on KG gas yet

New Delhi, July 1
The government has not decided on reconstituting a high-powered ministers panel on Krishna Godavari basin gas field owned by Reliance Industries Ltd (RIL), a top official said today.

"Where is the need to constitute or re-constitute the Empowered Group of Ministers (EGOM) just now? The EGoM had previously been constituted to firstly approve of a selling price of the gas and then to prioritise usage of the gas. Both the tasks have been accomplished and gas is being sold in accordance with that decision," the official said.

Consumers for close to 45 million standard cubic meters per day of gas from the D6 fields of RIL have already been tied-up and there are no issues regarding delivery of the fuel to the intended customers.

Users of gas when production rises above these levels can be decided at the level of Petroleum Ministry as the broad priority had already been set. RIL is currently producing 28-30 mmscmd.

The official said the government was not party to the family dispute between Mukesh and Anil Ambani. — PTI 

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Car sales in top gear
Tribune News Service

New Delhi, July 1
The country's largest car maker, Maruti Suzuki India Ltd (MSIL), today reported a 22.63 per cent jump in its sales at 75,109 units in June against 61,247 units in the same month last year.

Its closet competitor and country’s second largest car manufacturer Hyunday Motors India Ltd (HMIL) saw the domestic market take a turn for the positive as sales grew by 5.2 per cent as compared to sales in June, 2008. The cumulative sales also saw a healthy growth of 17.6 per cent. In comparision, Honda Siel Cars India (HSCI), leading manufacturer of premium cars recorded 6.5 per cent increase in sales for the month of June 2009 with 5,039 units as against 4,732 units sold in June 2008.

Maruti’s sales in the domestic market grew by 9.51 per cent to 61,773 units in June from 56,411 units in the same month last year. Exports rose by nearly three-fold to 13,336 units compared to 4,836 units in the year-ago period.

In a statement here MSIL said company's sales crossed 70,000-units mark for the sixth consecutive month, besides registering highest-ever export for a single month, it added.

The cumulative sales at HMIL also saw a healthy growth buoyed by large orders from some European countries like UK, Germany and strong demand for the recently launched i20 which sold over 72,000 units in the last two months.

HMIL’s total sales for June, 2009 stood at 47,267 units against 40,182 units in June, 2008. The domestic sales it accounted for 23,016 units as against 21,881 units last June while it was the overseas sales which grew from 18,301 units in June, 2008 to 24,251 units in June, 2009. Honda’s globally acclaimed Jazz, deliveries of which started on June 10 sold impressive 2,032 units in the first month of its launch.

Country's largest two-wheeler maker, Hero Honda Motors Ltd, reported a 23.70 per cent jump in its sales at 3,65,734 units in June compared to sales in the same month last year. The company sold 2,95,675 units in June last year.

Its cumulative sales for the first quarter (April-June) of this fiscal registered a jump of 25.13 per cent to 11,18,987 units of two-wheelers from 8,94,244 units during the corresponding quarter of 2008-09. TVS Motor Company reported a six per cent increase in its sales at 1,15,448 units in June against 109,082 units in the same month last year. 

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