CHENNAI/KOCHI l THURSDAY l JULY 19 l 2012 X X X I I I V O L N O 6 3 2 0 P A G E S I R s 4 . 0 0 READ TO LEAD P 6 P 19 C O R P O R A T E S TATA STEEL EUROPEAN OPERATIONS TO FACE ‘ENORMOUS’ STRESS FOR NEXT TWO YEARS: RATAN TATA INDICES BSE Sensex Closing Up/down 17,185.01 ▲ 79.71 S&P CNX Nifty 5,216.30 ▲ 23.45 Labour trouble again at Maruti’s Manesar plant Labour trouble once again erupted at Maruti Suzuki's Manesar plant in Haryana on Wednesday evening. Though company officials were not able to provide any confirmation till the time of going to press, sources said that trouble started over the suspension of a worker at the plant over wagerevision issues, and police had to be called in. The Manesar plant, which produces the company’s best-selling models, like Swift and Dzire, had witnessed prolonged labour strike last year impacting output severely. A strike at this point will cost it dear as it has only now started clearing the waiting list for popular models. Consumer inflation in June at 10.02% The annual consumer price inflation slowed slightly in June to 10.02%, but food prices accelerated as concerns rose about below-average monsoon rains. Food inflation in the CPI accelerated to 10.71% in June from 10.66% in May. The revised CPI number for May remained unchanged at 10.36%. ■ Page 2 RESULT CORNER Bajaj Auto net up 1% at R718 crore I N T E R N A T I O N A L US Senate probe panel faults ‘PERFECT STORM’ PREDICTION, LISTS FACTORS THAT CAN HIT ECONOMY HSBC India staff PUBLISHED FROM: AHMEDABAD, BANGALORE, CHANDIGARH, HYDERABAD, KOLKATA, LUCKNOW, MUMBAI, NEW DELHI, PUNE In the news P ‘DR DOOM’ ROUBINI STICKS TO 2013 10 N A T I O N FinancialExpress.com twitter.com/FinancialXpress facebook.com/TheFinancialExpress FinancialExpress/Apps EGoM asks DoT to draft revenue impact models ■ Maya govt abandoned attempt after pilot project fe Bureau New Delhi, July 18 Deepa Jainani Lucknow, July 18 CAUSE & EFFECT EGoM has asked DoT to work on a formula to reduce reserve price and increase spectrum usage charge T HE government’s attempt to auction 2G spectrumbyAugustend, as directed by the Supreme Court, seems to havegotintoanewloop.Ata time when most observers were expecting the telecom regulator-backed reserve price of R18,110 crore for pan-India spectrum to be approved, the empowered group of ministers (EGoM) on spectrum pricing has asked the department of telecom (DoT) to come up with another set of calculations. Though, on the face of it, the new exercise seems aimed at offering some relief to operators by reducing their upfront payment component, in reality, it would introduce several complications. The EGoM headed by home minister P Chidambaram has asked DoT to assessthroughasetof calculations the impact on government revenues and consumertariffsif reserveprice is successively lowered by DoT has been asked to examine the impact on government revenues and consumer tariffs in this exercise EGoM approved the rollout obligations for players who win spectrum in auction The rollout obligations will not apply to incumbent operators as they have met it Next meeting of EGoM to be held on Friday. DoT will present its report in the meeting R1,000 crore and a commenmeetingonFriday .Thequessurate increase is made in tion of deferred payments spectrum usage charge by will also be discussed then, 1%. For instance, what though this Trai suggestion would be the impact on gov- was earlier struck down by ernment revenues and tar- the Telecom Commission. iffsif thereservepriceislowGovernmentsourcessaid ered to around the idea behind R13,000 crore and ■ See Edit: Spectrum the new exercise spectrum usage of woes, Page 8 istoprovidesome charge is hiked relief to operafrom 3% recommended by tors by reducing the upfront theTraito,say ,8%. payment component and inCurrently, operators stead stagger the amount holding 3G spectrum pay 3- through spectrum usage 8% of their adjusted gross chargeovera20-yearperiod, revenue (AGR) as usage while ensuring that the govcharge, while pure 2G play- ernment does not lose any ers pay 2-4%. revenue.Thisoptionisbeing DoTwillpresentitscalcu- explored after Trai chairlations at the next EGoM man Rahul Khullar told the Non-basmati rice drives agri exports up 97% products. Gulf countries, US, UK, Germany, Vietnam and Indonesia were XPORTS of agrileading export destinacultural and protions for Indian products. cessed food prod“There has been a rise ucts nearly doubled in a in demand for non-basyear, thanks mainly to the mati rice from African freeing-up of non-basmati and South Asian counrice exports, but also retries,” Apeda chairman flecting the country’s poAsit Tripathy told FE. tential as a destination for Non-basmati rice saw farm products. thesharpestrise Exports of ■ CCEA to consider after curbs were theseitemsrose raising cane price lifted on rice 97% to R82,480 by 17%, Page 17 exports last Sepcrore during tember. In 20102011-12 from R41,794 crore 11,IndiaexportedonlyR222 in the previous year, show crore of non-basmati rice, data from Agricultural whichrosetoR8,668crorein and Processed Food Prod2011-12. Exports of flagship ucts Export Development agri-product basmati rice Authority (Apeda). Key rose 46% to R15,450 crore export drivers include lastfiscal,thanksmainlyto basmati and non-basmati demand from Gulf counrice, guar gum, groundtries,theEUandUS. nut, meat and organic ■ Continued on Page 2 EGoM last week that the highreservepricewouldneither lead to major increases in tariffs nor adversely impactoperators’bottomlines. However, he also said operatorsfaceproblemsonraising funds since their balance sheets were highly leveragedbecauseof theiraggressivebiddingfor3Gspectrum in2010. However, analysts said even if the EGoM-suggested formula was accepted, it would bring in its own set of complications rather than solving matters. First, if the reserve price is lowered and spectrum usage charge hiked, what happensintheeventbidsexceed the base price? Will the government in that case reduce spectrum usage charge? The second issue confronting the EGoM would be going against the auction normif globalbestpractices aretakenintoaccount.Since spectrum is auctioned, globallythepracticeistokeepthe spectrum usage charge at a minimum 1% just to cover administrativecharges. ■ Continued on Page 2 UP switches to e-tender route for mining leases A PPREHENSIVE that the now-infamous first-come, firstserved policy for allocation of natural resources comes with risks, states are now wiser and embracing the safer option of auctions for these allocations. The newly-elected Akhilesh Yadav government in Uttar Pradesh has introduced an e-tendering system for all leases on mining projects. The decision could impact the future of liquor baroncum-mining czar Ponty Chaddha, who was seen as closely linked to the previous Mayawati government. Under the new system, lease holders will need an environmental clearance for mining if the area exceeds five hectares. Earlier, no such clearance was required and theminingleasewasgivenon a first-come, first-served basis by the respective district magistrates. The step is being considered significant following allegations of large-scale Akhilesh Yadav, Uttar Pradesh chief minister NO MINEFIELD ■ Move could hit future of liquor baron-cum-mining czar Ponty Chaddha ■ Lease holders will now need green nod if the area exceeds five hectares ■ Leases earlier given on first-come, first-served basis by magistrates ■ UP Electronics Corp made e-tendering implementing agency anomalies in allotting mining contracts in the last five years, and complaints of the ‘mining mafia’ operating freely and the local administration turning a blind eye towards it. “Complaints about the mining mafia operating in the state were frequent. In order to ensure transparency and eradicate the mafia, the chief minister had proposed that information technology be used in allotting mining leases. As a result, the Uttar Pradesh Electronics Corporation, which is already handling e-governance projects, has been made the implementing agency for e-tendering of mining leases. It will also handle the entire process of e-tendering, including registration and submission of bid documents, opening and evaluation of bids and awarding the final contract,” said Infrastructure and Industrial Development Commissioner, Anil Kumar Gupta. Having uploaded the details of close to 400 mining areasonthestategovernment’s website, the department of geology and mining has sought bids mainly for sand from the banks of all major rivers that flow through the state, including Ganga, Yamuna, Ghaghra, Betwa and Rohni. ■ Continued on Page 2 GST rollout in April ’13 depends on Centre, says Sushil Modi Sandip Das New Delhi, July 18 E Rajiv Bajaj, Bajaj Auto MD Bajaj Auto reported a marginal 1% y-o-y rise in net profit to R718 crore for Q1 FY13 in line with the street’s expectations. Net revenues rose 3.3% y-o-y to R4,865.66 crore with domestic demand staying subdued. The profit margin weathered a slump in exports of lucrative commercial vehicles. “From here on, things should get better as we ramp up production and realisations improve on the back of a better product mix,” Bajaj Auto MD Rajiv Bajaj said. The scrip rose 5.20% to end the day at R1,522.35 on BSE. ■ P7 AGRICULTURAL AND PROCESSED FOOD EXPORTS IN SIX YEARS In R crore 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 % chg — 21, 805 ▲46.00 31,870 ▲13.88 36,294 ▼ 4.00 34,825 ▲15.50 41, 794 82,480 ▲ 97.00 TOP COMMODITIES EXPORTED during last fiscal in comparison to previous year EDIT P8 Lost in technicalities? June ’13 deadline nears but about 100 listed firms are yet to achieve the minimum public shareholding of 25% Ajay Bahl & Arvind Lakhawat R crore Exports % of 2010-11 2011-12 change Basmati 10,579 15,450 46.00 Meat & meat products 8,762 14,111 61.04 Guar gum 2,812 16,357 481.00 Non-basmati rice 222 8,668 3,805.00 Maize & other cereals 3,604 5,479 52.00 Groundnut 2,094 5,250 150.00 Misc processed items 2,475 3,805 53.00 Onions 1,742 2,021 16.00 Fresh fruit 2,026 2,531 24.00 Processed fruit and juice 1,002 1,659 65.00 Total rice exports (including basmati and non-basmati) during last fiscal were R23,118 crore, which is 28% of the total agricultural exports Source: APEDA Sushil Modi, Bihar deputy CM & chairman of the empowered committee of state FMs W HETHER the Goods and Services tax (GST) willkickinfromApril2013 will depend on the Centre’sabilitytoshowleadership in bringing the politicalpartiestogetheronthis taxreformandhowfarthe states’ concerns are addressed in the relevant Constitutional Amendment Bill, Sushil Kumar Modi,chairmanof theempowered committee of state finance ministers, toldKG Narendranath. Modi listed the steps needed to usher in the tax reform that has missed several dates: Give equal say to the Centre and states in the proposed GST Council, empower it to deal with disputes and decide on rates, deviation etc;drop theplantosetup Dispute Settlement Authority; allow the states the flexibility to raise rates by up to 10% over the “floor rates”. Shortly after the Parliamentary standing committee gives its report on the Constitutional Bill,the Centre should convene an all-party meeting to evolve a consensus on various outstanding issues, Modi said in a telephonic interview from Patna. ■ See Record caFE, Page 9 CHENNAI/KOCHI
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