SPECIAL COVERAGE
CHANDIGARH

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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

India, Iran oil row escalates
New Delhi, December 30
A payments dispute between India and Iran escalated after Tehran refused to sell oil to India under New Delhi's prohibitive new rules, sources on both sides said on Wednesday.

Govt clears Rs 1,200 cr equity infusion in Air India
New Delhi, December 30
The Cabinet today cleared an additional investment of Rs 1,200 crore for Air India; amended the archaic Mines Act to make it stringent with enhanced penalties for operators and also okayed a new hospitality board to specifically clear hotel projects across the country.

PSB lists at Rs 146, up 22 pc
Mumbai, December 30
Punjab & Sind Bank's Executive Director PK Anand (C), General Manager GS Arora (L) and Chief General Manager HS Makker (R) and Managing Director of ICICI Securities Madhabi Puri Buch at the listing of Punjab and Sind Bank on the Bombay Stock Exchange in Mumbai on Thursday. State-run Punjab and Sind Bank (PSB) had an impressive listing today, shooting nearly 22 per cent in first trades

Punjab & Sind Bank's Executive Director PK Anand (C), General Manager GS Arora (L) and Chief General Manager HS Makker (R) and Managing Director of ICICI Securities Madhabi Puri Buch at the listing of Punjab and Sind Bank on the Bombay Stock Exchange in Mumbai on Thursday. — PTI

Soaring onion prices push food inflation to 14.44%
New Delhi, December 30
Soaring onion prices pushed food inflation to a 10-week high of 14.44 per cent for the week ended December 18, a development that may prompt the Reserve Bank to hike key policy rates next month to check price rise.

Core sector growth slows to 2.3 pc in Nov
New Delhi, December 30
The growth of six infrastructure industries slowed to 2.3 per cent in November, the lowest in the current fiscal, mainly due to contraction in production of cement and petroleum refinery products.



EARLIER STORIES

Telcos start paying penalty
December 29, 2010
Over 100 public issues to be launched in 2011
December 28, 2010
Oswal seeks separate policy for textile industry
December 27, 2010
Montek sees 9 pc growth in FY 12
December 26, 2010
Tata Steel considers options for Riversdal
December 25, 2010
New US healthcare Act to hit Indian IT’s profitability
December 24, 2010
Kalia seeks probe into NAFED’s role
December 23, 2010
JSW Steel to buy Ispat controlling stake
December 22, 2010
Congress wants decade of economic justice
December 21, 2010
PM’s panel for capping margins of MFIs
December 20, 2010
Honda’s plant to resume production today
December 19, 2010
Going it solo a huge challenge for Hero Group
December 18, 2010
India, China aim at $100 bn trade by 2015
December 17, 2010
Deals worth $16 billion signed
December 16, 2010


Govt advances ONGC's FPO to March
New Delhi, December 30
The government has advanved the follow-on public offering of ONGC to March 2011, while pushing back the share sale of Indian Oil Corp (IOC) to the next fiscal. "The FPO of ONGC will happen before end of March 2011," Oil Secretary S Sundareshan told at a news conference here.

FM hints at more steps to ease inflation
New Delhi, December 30
Finance Minister Pranab Mukherjee today indicated more steps to check rising prices as food inflation surged to a 10-week high of 14.44 per cent while pegging the overall inflation rate at 6.5 per cent by this fiscal end, a bit higher than projected earlier.

Carrefour enters India, sets up first store
New Delhi, December 30
The world's second-largest retailer, Carrefour, today announced that it has opened its first 'cash-and-carry' outlet in the country in New Delhi.

Nod to Societe Generale for ODIs
Mumbai, December 30
Market regulator SEBI today allowed French institutional investor Societe Generale to issue overseas derivative instruments, revoking about a year long ban on the FII. "... interim direction issued against Societe Generale (SG) ... stands revoked with immediate effect. Societe Generale is directed to issue off-shore derivative instruments ...," SEBI said in an order. — PTI





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India, Iran oil row escalates

New Delhi, December 30
A payments dispute between India and Iran escalated after Tehran refused to sell oil to India under New Delhi's prohibitive new rules, sources on both sides said on Wednesday.

The Indian sources said officials from the central banks of the two countries will meet on Friday as Iran seeks to rescue trade worth around $12 billion a year, at risk from rising US pressure on countries trading with Iran to abandon all dealings.

Last week, the Reserve Bank of India said deals with Iran must be settled outside the Asian Clearing Union (ACU) system, used by central banks of member nations to settle bilateral trades.

Analysts predicted talks would be tough and that New Delhi may face a costly bill if it abandons Iranian oil imports.

Iran is under global pressure over its nuclear programme, and though United Nations sanctions do not forbid the purchase of Iranian oil, the United States has pressed hard for governments and companies to stop dealing with Tehran.

India is the biggest buyer of Iranian crude among ACU members, with state-owned refiners and privately owned Essar Oil taking around 400,000 barrels per day.

Two Indian industry sources said on Wednesday that National Iranian Oil Co (NIOC) had turned down Indian oil firms' request for payments outside the ACU. The ACU includes the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.

"Indian firms had asked Iran to immediately nominate a bank in Europe through which payment can be made. But NIOC refused," said one of the sources.

When asked if NIOC was willing to accept any mechanism outside the ACU, a NIOC source said: "It is not acceptable to NIOC as this exercise...(has been)in place for so many years."

Iran's central bank requested a meeting with its Indian counterpart, a Reserve Bank of India (RBI) spokesperson said, adding no date had been set.

But an oil industry source, who will take part in the meeting, said the talks would be on Friday in Mumbai.

He said India's oil ministry has suggested that RBI stick to the old mechanism of guaranteed payments for oil for now.

Ambika Sharma, Deputy Secretary General at the Federation of Indian Chambers of Commerce and Industry, said: "The two central banks could look at settling the trade transaction in a currency other than the euro and the US dollar".

US Pressure

Indian analysts said the oil dispute was the result of US pressure on the international community to stop dealing with Tehran to force it to abandon its nuclear programme. The White House on Wednesday praised the Reserve Bank of India for reducing its dealings with Iran's central bank.

"We think the Reserve Bank of India has made the right decision to carefully scrutinize and reduce its financial dealings with the Central Bank of Iran," White House spokesman Tommy Vietor said in an email.

"This latest action adds to the growing list of companies, financial institutions and governments that are increasingly concerned about Iran's misuse of trade and financial relationships to support illicit activity, including its nuclear programme." — Reuters

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Govt clears Rs 1,200 cr equity infusion in Air India 
Tribune News Service

New Delhi, December 30
The Cabinet today cleared an additional investment of Rs 1,200 crore for Air India; amended the archaic Mines Act to make it stringent with enhanced penalties for operators and also okayed a new hospitality board to specifically clear hotel projects across the country.

In case of Air India the government approved the infusion of the second tranche of equity of Rs 1,200 crore to ailing airline, albeit with a rider. The management has been asked to rationalise the wage structure of over 25,000 employees.

Announcing the decision of the Cabinet Committee on Economic Affairs for further equity infusion, Civil Aviation Minister Praful Patel said: “This will not only help restructuring the airline, but will also shore up its finances”.

The first tranche of equity infusion of Rs 800 crore was made in February this year for its revival plan. “The infusion of enhanced equity fund would give the much needed impetus to Air India for its revival plan”, an official statement said.

Sources said the equity infusion was being made in a phased manner as it was based on the performance parameters of Air India. The directive is aimed at cutting costs while employees’ unions have been opposing moves to slash wages or allowances, citing that the airline's wage bill was only 18 per cent of the total turnover, as against a global average of about 22 per cent for most international carriers.

The Cabinet also approved the introduction of a Bill in Parliament to amend the Mines Act, 1952. The Bill proposes to amend and consolidate the law relating to regulation of condition of work and welfare of persons employed in mines. The Act will also make it humane and provide for measures to prevent accidents and occupational diseases and contain provision of some basic amenities to miners. 

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PSB lists at Rs 146, up 22 pc

Mumbai, December 30
State-run Punjab and Sind Bank (PSB) had an impressive listing today, shooting nearly 22 per cent in first trades, even as the lender's management said a new round of capital infusion will be required in two years.

The shares, which were allotted at Rs 120 through an Initial Public Offer, opened nearly 22 per cent up at Rs 146.10 on the Bombay Stock Exchange. As the trading session progressed, the scrip stabilised at around eight per cent gains over the allotment price.

The New Delhi-headquartered bank's Executive Director P K Anand said Rs 470 crore the bank has raised via the IPO will sustain the bank for two years, after which it will have to go for a new round of capital raising.

"Looking at market conditions, we can think of an FPO, a rights issue or (raising money through other) tier-II (instruments like bonds)," Anand said, adding the IPO has helped the bank to achieve an overall capital adequacy ratio of 14 per cent.

PSB is last of the 19 public sector banks to list and the IPO was over-subscribed 50 times primarily because of lower valuation. The Government has diluted around 18 per cent through the issue. — PTI 

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Soaring onion prices push food inflation to 14.44%

New Delhi, December 30
Soaring onion prices pushed food inflation to a 10-week high of 14.44 per cent for the week ended December 18, a development that may prompt the Reserve Bank to hike key policy rates next month to check price rise.

"This is an area of concern no doubt... there has been real increase in the prices of certain food items. We are looking into it," Finance Minister Pranab Mukherjee said.

Food inflation rose for the fifth consecutive week on the back of onion prices which rose by almost 40 per cent on an annual basis touching Rs 75-80 per kg in the retail market.

Onion prices, however, have declined since then. The price rise was also quite steep in case of vegetables, fruits and protein-based products like milk, egg, fish and meat. The price rise in these products ranged between 17 to 30 per cent.

"So far as onion is concerned, we have taken care of it... but the fluctuation in milk, fruit, vegetable and certain commodities have contributed to the inflation. We are waiting for the full monthly figure," Mukherjee said.

"Weekly variations are there. Whether these are corrected in the coming week ...is to be seen. But I am still holding that year-end inflation may be around 6.5 per cent," he added.

The rising in food inflation by 2.31 percentage points from 12.13 per cent in the previous reporting week, experts said, will force the central bank to review its pause on hiking the short-term key policy rates at its quarterly review of the credit policy on January 25. Food inflation was 21.29 per cent a year ago.

Moreover, the impact of the recent hike in petrol price by about Rs 3 per litre, also pushed up the index of fuel and power by 11.63 per cent year-on-year during the week. The rise in index on account of increase in price of petrol was over 25 per cent. — PTI

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Core sector growth slows to 2.3 pc in Nov

New Delhi, December 30
The growth of six infrastructure industries slowed to 2.3 per cent in November, the lowest in the current fiscal, mainly due to contraction in production of cement and petroleum refinery products.

The six core sectors -- crude oil, petroleum refinery products, coal, electricity, cement and finished steel -- had expanded by 5.9 per cent in November 2009. Petroleum refinery output contracted by 3.7 per cent and that of cement by 11.6 per cent in November, data released by the industry ministry today revealed. The refinery production had expanded by 4.8 per cent and cement by 9 per cent in November 2009.

Coal production too witnessed a sluggish growth of 0.7 per cent this November against 4.7 per cent in the comparable month last year. Growth in the finished steel sector too was slow. The data said that it expanded by 4.4 per cent in November as compared to 11.7 per cent in the same month last year. During April-November the core sector grew by 5 per cent, against 4.5 per cent in same period of 2009-10. — PTI 

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Govt advances ONGC's FPO to March

New Delhi, December 30
The government has advanved the follow-on public offering of ONGC to March 2011, while pushing back the share sale of Indian Oil Corp (IOC) to the next fiscal. "The FPO of ONGC will happen before end of March 2011," Oil Secretary S Sundareshan told at a news conference here.

The Cabinet had on December 1 approved sale of government's 5 per cent stake in ONGC, the nation's highest profit earning firm, to raise up to Rs 13,000 crore.

The share offering of IOC, which previously was said to happen in the third or fourth week of January, would now happen next fiscal.

"As far as IOC FPO is concerned, there was no decision (of the Cabinet) for the share offering," he said. "The department of disinvestment says only one issue from the oil sector can take place this fiscal and that will be ONGC." The Cabinet has not yet approved sale of its 10 per cent shareholding in IOC that at current market price would fetch close to Rs 9,000 crore. IOC has already appointed six merchant bankers for the FPO, which was to be clubbed with a similar size offering to raise funds for company's expansion plans.

"The rise in crude oil prices to $90 per barrel has made IOC less attractive to investors as it does not have freedom to sell auto and cooking fuel at market rates. The firming up of international oil prices means that it will lose more money on fuel sales as difference between domestic retail price and imported cost widens," a source said. On the other hand, ONGC has become attractive as the company gets international price for the crude oil it produces.

"Merchant bankers for the ONGC FPO will be appointed in January, while the red herring prospectus that will incorporate financial details of the first three quarters, will be filed by January-end," another source said. Post offer, the government shareholding in ONGC would come down to 69.14 per cent from current 74.14 per cent.

As a precursor to the share sale, ONGC will split equity shares with a face value of Rs 10 each into two shares of Rs 5 each. It will also issue a 1:1 bonus — one free share for every existing equity held by shareholders. — PTI

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FM hints at more steps to ease inflation

New Delhi, December 30
Finance Minister Pranab Mukherjee today indicated more steps to check rising prices as food inflation surged to a 10-week high of 14.44 per cent while pegging the overall inflation rate at 6.5 per cent by this fiscal end, a bit higher than projected earlier.

The high inflation rate is not due to (statistical technicality called) base effect and is real, the Finance Minister told reporters here. "We are looking into it. So far as onion is concerned, we have taken care of it... but the fluctuation in milk, fruit, vegetables and certain commodities have contributed to the inflation," Mukherjee said. "This is an area of concern... earlier we thought that it is because of the base effect but it is not merely the base effect. There has been real increase in the prices of certain food items," he said. — PTI

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Carrefour enters India, sets up first store

New Delhi, December 30
The world's second-largest retailer, Carrefour, today announced that it has opened its first 'cash-and-carry' outlet in the country in New Delhi.

"The opening of this first store marks Carrefour's entry into the Indian market and will be followed shortly by the opening of other cash-and-carry stores," Carrefour CEO Lars Olofsson said in a statement. Carrefour has made its intent to enter the multi-brand retail segment in the country known and is understood to be at an advanced stage of talks with home-grown retail giant, Future Group.

However, the existing policy of the Indian government does not permit FDI in multi-brand retail, as it is feared that traditional kirana ('mom-and-pop') outlets would be wiped out. Nevertheless, it is understood the two companies could sign a deal as early as next year for a partnership in India.

Olafsson said opening of the first store was essential to allow Carrefour's teams to fully understand the modalities of doing business in the India market before building the company's presence in other formats. The company however, did not disclose investment details.

The new store -- Carrefour Wholesale Cash&Carry -- in Seelampur area of New Delhi is spread across 5,200 square meter and will house over 10,000 stock-keeping units to cater to professional businesses, institutions, restaurants and local retailers. — PTI

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