AIR SURCHARGE OF RS 3.00 FOR AGARTALA & RS 4.00 FOR PORT BLAIR KOLKATA l FRIDAY l JULY 20 l 2012 V O L X X I N O 2 2 3 2 4 P A G E S I R s 4 . 0 0 READ TO LEAD P2 P10 N E W S RAHUL SAYS READY FOR BIGGER ROLE IN PARTY & GOVERNMENT; SONIA & PM TO DECIDE TIMING I N T E R N A T I O N A L UK judge says Apple must publish notice P6 Samsung didn’t copy iPad P U B L I S H E D F R O M : A H M E DA B A D, B A N G A LO R E , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D, KO C H I , LU C K N OW, M U M B A I , N E W D E L H I , P U N E FinancialExpress.com C O R P O R A T E S PIRAMAL HEALTHCARE REBUILDING BUSINESSES AFTER ABBOTT DEAL, SAYS CHAIRMAN AJAY PIRAMAL twitter.com/FinancialXpress facebook.com/TheFinancialExpress New board to speed up project approvals ■ Ministries will report project status to board fe Bureau New Delhi, July 19 E VEN before the dust settled on the presidential polls on Thursday, a revitalised Prime Minister's Office (PMO) set in motion a plan to bolster investor confidence, revival of which is crucial to create demand required for propping up the economy . Prime Minister Manmohan Singh has decided to set up a Project Clearance Board (PCB) to facilitate time-bound approvals for investment proposals in energy and infrastructure sectors, the PMO said in a statement. The board will be chaired by the Cabinet secretary and will be on the lines of the Foreign Investment Promotion Board (FIPB) where different ministries are represented. The board will meet every month to review the status of approvals for energy and infrastructure projects and expedite security and other clearances. Ministries would report the status of issuing of clearances to this board, the PMO said. Earlier this month,Singh had instituted a system for monitoring the performance of public-private projects to ensure accountabili- In the news INDICES BSE Sensex Closing Up/down 17,278.85 ▲ 93.84 S&P CNX Nifty 5,242.70 ▲ 26.40 The burnt down reception block of Maruti Suzuki’s factory at Manesar on Thursday after workers went on a rampage in the plant late on Wednesday evening. General manager (HR) Avnish Kumar Dev was charred to death in the fire and 100 others were injured. Police arrested nearly 100 workers. As the labour unrest showed no sign of abating on Thursday, over 1,200 policemen were deployed at the plant and work suspended indefinitely. RESULT CORNER Maruti plant closed; HR chief dead in riot Anandita Singh Mankotia Manesar, July 19 Uday Kotak, Kotak Mahindra Bank VC & MD In spite of a healthy jump in core income, Kotak Mahindra Bank on Thursday reported a muted 11% growth in net profit for the June quarter at R282 crore due to higher provisioning and stressed assets. ■ Details on Page 18 ■ Dr Reddy’s Q1 net up 28% at R335.98 crore on strong generic sales, P6 FinMin ask PSBs to restrict bulk deposits to 15% The fnance ministry has asked public sector banks not to accept bulk deposits beyond 15% of total deposits to improve asset-liability management. “Ten per cent is the bulk deposit above the card rate and 5% is the CDs (certificates of deposit). So overall, a cap of 15%. With that banks have flexibility,” department of financial services secretary DK Mittal said on Thursday. ■ P18 HDFC to raise up to R500 cr via bonds Housing Development Finance Corp is planning to raise up to R500 crore through five-year bonds at 9.50%, a source told Reuters on Thursday. Raheja Group wins Malad land battle The Bombay High Court on Thursday allowed real estate developer Raheja Group to sell the developed area and allowed further construction in the 600-acre disputed plot at Malad in suburban Mumbai, which was caught in a legal fight with Nusli Wadia. ■ P7 EDIT P8 Prioritise poor drought victims Industry will also suffer but government has to concentrate on contingency plans for farmers T Nanda Kumar F ACTORY tools and car parts used to attack officials and destroy property lay strewn across the burnt and damaged factory of Maruti Suzuki’s Manesar plant building top-selling models Swift and Dzire, a day after 3,000 workers at India’s largest carmaker rioted, killing an official and wounding 100. Policemen moved in and out of the closed factory even as the injured officials received treatment at nearby hospitals. The police have formed a special investigative team under assistant commissioner Ravinder Tomar and arrested around 90 people. Around 1,200 policemen 1,200 POLICEMEN HAVE TAKEN CHARGE OF THE PLANT PREMISES. POLICE HAVE FORMED A SPECIAL TEAM AND ARRESTED 100 WORKERS have taken control of the factory premises. The tragic highlight of the day was when the charred body was identified to be the plant's HR manager Awanish Kumar Dev. Senior officials and ministers blamed the violence solely on workers. Industry minister Randeep Singh Surjewala said: “Workers have been arrested under various charges including murder, attempt to murder and destruction of property.” Chief secretary PK Chaudhery said no guilty person would be spared, adding it was not a labourrelated issue but one concerning disciplinary action. Haryana director general of police Ranjiv Singh Dalal, who visited the site said: “No justification can be given for this kind of violence. We will soon arrest everyone behind this.” Unlike the last time Maruti workers struck work, there's no sympathy for workers among the police and the local population this time. “Maruti pays the highest wages in the region; so, there’s no reason for such acts,”said a constable at the site. ■ Continued on Page 2 Prime Minister SAIL stake sale, duty on power equipment T HE government on Thursday approved divesting 10.82% in SAIL and decided to impose an effective import duty of 22.3% on power equipment – a move that would help state-owned Bhel and private firm L&T. Sources said the Cabinet also okayed the demerger of surplus land of VSNL. The auction of 740.6 acres may earn R10,000 crore for the exchequer. ■ Details on Page 2 ty, efficiency and economy in spending as more and more sectors now rely on this mode for infrastructure development. While fast-tracking pro- Even if euro-zone crisis contained, global growth may be cut by up to 1.5%: WB W ORLD Bank president Jim Yong Kim has warned that even if the euro-zone crisis is contained, it could still reduce growth in most of the world’s regions by as much as 1.5%. ■ Details on Page 10 ■ Indian economy to grow at slowest pace in 10 years. Asian economic powerhouses subdued, recovery to be muted, P2 Don’t single out PM for country’s economic troubles: Ratan Tata fe Bureau Mumbai, July 19: Tata Group chairman Ratan Tata on Thursday came out in support of Prime Minister Manmohan Singh, saying it would not be right to single him out for the sorry state of affairs. Nonetheless, Tata put the onus on the PM to take immediate initiatives on reforms that could revive the economy . The tech-savvy Tata chose microblogging website Twitter to express his views, posting a letter titled “Let’s Do The Right Thing” on his page. “Now is the time when our prime minister must break convention, restore the government’s credibility place , Ratan Tata, Tata Group chairman TATASPEAK ■ Prime Minister Manmohan Singh must restore govt credibility and place the country on a growth path once again by implementing promised reforms ■ The Opposition, media and “some members of the ruling party” blamed. It is “grossly misdirected” to single out the Prime Minister and blame him for the economic woes the country is facing ■ See Edit: Murder at Maruti, Page 8 ■ Investors catch Maruti fright, Page 13 At R2.25 lakh, FCI labourers beat top babus at pay Banikinkar Pattanayak New Delhi, July 19 W HO says there’s no inclusive growth? Inclusive of all benefits, the peak wage of an unskilled labourer doing loading and unloading work for the state-run Food Corporation Of India (FCI) has reached R2,25,000 a month, says the latest Commission for Agricultural Costs and Prices (CACP) report. Compare this with the basic Economic cost (R/Qtl) Kotak Bank posts muted June Q net growth at 11% Manmohan Singh, ject approvals is one way to reverse the declining investment rate over the last few quarters, the government is also expected to take a few reform measures including “some adjustments” in diesel price shortly officials , indicated. “One of the biggest hurdles to speedy implementation of projects is the delays faced by project implementing agencies and private firms with concessions, in obtaining security related clearances from many agencies,” the PMO stated. Recent months have seen slippages in virtually all infrastructure areas. While road and port sector projects have faced delays due to the rising cost of finance, increase in cost of materials due to inflation and investor apathy, progress in exploration work in over 70 oil blocks awarded under the new exploration licensing policy (NELP) has slowed down due to lack of clearances from agencies like the Department of Space and the Defence Research and Development Organisation. The board will review and issue one-time clearances, including security clearance, the PMO said. ■ Continued on Page 2 FinancialExpress/Apps Rice y= 5.2,471x + 1,198.8 99-00 1,500 00-01 97-98 1,400 98-99 03-04 98 02-03 1,300 01-02 04-05 1,200 96-97 93-94 06-07 1,100 95-96 98 94-95 1,000 9.0 14.0 19.0 24.0 Source: CACP 09-10 07-08 05-06 ■ Average cost of labourers, including 29.0 34.0 39.0 Procurement (mn tonne) Note: Economic cost of rice is in real terms at 2004-05 prices pay of a Cabinet secretary, the country’s top bureaucrat, which stands at R90,000 a month and HEAVY DUTY ■ Peak wage of an unskilled FCI labourer is R2,25,000/month, average cost of a departmental labourer is R75,000/month 10-11 08-09 contractual ones, is R35,000/month, five times that of a private labourer who is engaged for loading and unloading R80,000 that the secretaries to the central government get, after the Sixth Pay Commission award. Of course,the babus get sundry perks that take their effective compensation to much higher levels, but the FCI labourer might still give them a competition. The high wages and other benefits,coupled with an up to 14.5% impost as taxes and other charges on grain procurement not only inflate the Centre’s food subsidy bill by driving up purchase costs but also threaten to make the whole system unsustainable, CACP chairman Ashok Gulati told FE. They also make exports of grain from official reserves difficult without subsidy . ■ Continued on Page 2 the country on a growth path again by implementing promised reforms, removing roadblocks to growth and controlling crony capitalism,” head of the country's biggest business house wrote. “Yes, it is true that our country lost its growth momentum over the past 12 months,that investment confidence has declined, that inflation has soared and that government action has been ‘too little too late,” the chairman observed. ■ Continued on Page 2 ■ See Edit: Tata to paralysis? Page 8 Bailout schemes fail to push states on power reforms Noor Mohammad New Delhi, July 19 T HE government’s promise of another reform-linked megabailout for power distribution companies comes even though there is little evidence that such largesse prompts states to mend their ways and restructure the sector. In July 2008, the Centre had launched the Restructured-Accelerated Power Development and Reform Programme (R-APDRP) scheme to help states finance projects and reduce theft and other “commercial losses” that undermined the viability of the sector. The plan was to provide loans of R52,000 crore with the promise of converting them into grants as and when projects were completed. Four years later, just R8,500 crore of R-APDRP funds have been disbursed, as states have failed to ensure that the electricity boards and discoms operate on a commercial basis with freedom to revise tariffs when needed. Even Power Finance Corporation (PFC), the nodal agency implementing the scheme, conceded that it has so far done “only basic work” of compiling baseline data relating to aggregate technical and commercial (AT&C) losses. These investments will start showing results only from 2013-14, a PFC official told FE on condition of anonymity . Earlier this week, on the sidelines of a conference of state power ministers organised by the Planning Commission here, the Union power secretary had said the government was considering a fresh debt recast package for power discoms whose combined debt has reached an unmanageable R2 lakh crore. Analysts see the roots of the crisis in the failure of state governments to undertake necessary reforms so that power distribution becomes a viable business. The Union power ministry has already prepared a debt-restructuring plan, which would force banks and financial institutions with significant exposure to the power sector to take haircuts. “Central assistance should be linked to specific action by states so that states that fail to meet targets can be deprived of benefits. But that is not the case with the R- R-APDRP scheme planned in July 2008 to reduce AT&C losses to below 15% in 1,402 towns Budget outlay (R crore) 10,000 40,000 Implementation phases with corresponding expenditure Part-A Part-B 1,177 Part- C Work Sanctions (R crore) Disbursement (R crore) IT, SCADA Upgrade of sub-transmission & distribution system Capacity building 6,640 24,776 4,162 4,338 APDRP which has certain implementation gaps,” said former Union power secretary RV Shahi. “Both carrots and sticks should be used to push states on power reform path,” he added. R-APDRP has achieved some progress, but there is room for much more,said Seshan Balakrishnan,director, infrastructure advisory services, E&Y. “The technical definition of the scheme should be relaxed and all areas peripheral to R-APDRP towns (scheme coverage is 1,400 towns), part of contiguous urban habitation, etc, ought to be covered under the scheme. In essence, except for agricultural needs, all power consumption should be covered under the scheme irrespective of municipal limits as currently defined,” Balakrishnan said. Balakrishnan added that though R-APDRP is comprehensive, addressing preliminary issues consumed a lot of time, leading to staggered disbursement of funds and impeding capital expenditure. Source say PFC has reduced fund estimates for the scheme by around R17,500 crore. The PFC official,however, added that the scheme has indeed helped reduce AT&C losses in several states. Andhra Pradesh and Karnataka have each reduced its AT&C losses by 1-10% and 213%,respectively 22 towns ,in by implementing the scheme, Gujarat by 1-10% in 35 towns and Madhya Pradesh 3-11% in 16 towns. ■ CERC keeps Tata and Adani Power petitions on hold, P2
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