FRIDAY, 21 SEPTEMBER 2012

82 pages in 3 sections

www.business-standard.com

MUMBAI (CITY) ~4.00

VOLUME XVII NUMBER 34

THE MARKETS TODAY

Sensex Nifty Nifty Futures* Dollar Euro Yen (100 yen) Gold (10 gm) 18,349.25 5,554.25 5,571.00 ~54.39 ~70.39 ~69.61 ~31,960.00 146.76 45.80 16.75 ~54.00** ~70.57** ~68.67** ~160.00
**Previous days close

COMPANIES P2

WORLD P12

CCI NOTICE TO AUTO FIRMS TO HIT FOREIGN PLAYERS HARDER

BRITISH REGULATOR DECLARES BSKYB FIT AND PROPER

*(September) Premium on Nifty Spot

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> IN

BRIEF
SLOWDOWN BLUES
Part 4 of a five-part series on the slowdown that companies are facing

FDI moves now official, no signs of reforms abating

No rollback of diesel price hike; PM to take govts side of the story to the people
BS REPORTER
New Delhi, 20 September

UPA govt gets by with a little help from friends

Open to acquiring more friends, says Chidambaram; Mamata unable to foil Left bandh at home
BS REPORTER
New Delhi, 20 September

Blurred picture for PCs

The Indian personal computer (PC) market, which grew 15.7 per cent during April-June 2012 over the same period of the previous year, would appear to be going great. However, a closer look shows a different picture. According to CyberMedia Research, the Indian PC markets growth in CY2012 will be just eight per cent. 2>

Former Reebok executives in seven days police custody

Four former employees of Reebok India, arrested on Wednesday for allegedly cheating the company of ~870 crore, have been remanded in police custody. A Gurgaon judicial magistrate sent all four accused, including former MD Subhinder Singh Prem and former COO Vishnu Bhagat, in custody for seven days. 2>

NPPA revises drug pricing norms

The prices of essential medicines may drop, as the National Pharmaceutical Pricing Authority (NPPA) has made significant changes in its norms to rationalise price approvals. The NPPA would soon issue new guidelines for price approvals. 6>
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GoM may use weighted avg formula

The GoM on the proposed National Pharmaceutical Pricing Policy is likely to recommend the formula suggested by the commerce ministry to determine prices of essential drugs in the country based on weighted average.
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6>

States deciding on retail FDI legal

The policy to let states decide whether to allow or prohibit FDI in multi-brand retail will stand the scrutiny of law, according to leading lawyers this newspaper spoke to.
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Telecom subscriber ranks surprise

Idea Cellular has topped the list of companies with a high percentage of active subscribers, followed by Bharti and Vodafone. At 92.8 per cent, Idea Cellular had the highest percentage of visitor-local-register subscribers in July. 2 >
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IMG suggests scrapping more blocks

The government panel reviewing progress of coal blocks has recommended cancelling two more acreages being developed by five companies, including Grasim Industries Ltd, Gujarat Ambuja Cement Ltd and Lafarge India Pvt Ltd. 7>
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ndeterred by protests from the Opposition and some of its allies, the UPA government today carried out its decision on FDI reforms and offered no signs of a rollback of the rise in diesel prices. The government is set to go ahead with its reform agenda be it restructuring of loans to state electricity boards or a hike in the cap on FDI (foreign direct investment) in the insurance sector though it postponed the Cabinet meeting scheduled for tomorrow. Prime Minister Manmohan Singh, who initiated the first large-scale economic reforms in the country back in 1991 as the finance minister, has resolved to show the government's commitment to the recent reforms and is likely to convey the positive side of the measures in an address to the people tomorrow. Even a truce between the government and Vodafone appears in sight, which would end the prolonged battle between the two sides on the capital gains tax issue. Analysts say that would boost investor sentiment. The finance ministry is likely to put the Kelkar committee report on fiscal consolidation in the public domain soon, showing its commitment to correct the state of public finances. The government today issued all five notifications on FDI reforms cleared by the Cabinet last week. With that, up to 51 per cent FDI in multi-brand retail, relaxed conditions for 100 per cent FDI in singlebrand retail, clarity on foreign investment in power trading, 49 per cent FDI for foreign airlines in Indian carriers and a hike in the FDI limit in certain category of media, such as DTH, have been permitted. The notifications were issued a day before the Trinamool Congress ministers were likely to submit their resignation letters to the Prime Minister. Trinamool chief Mamata Banerjee termed the notifications shocking. News agency PTI said the Prime Minister was likely to explain to the nation the reasons behind the recent

GOVT SEES OUT THE STORM BJP supporters take out a rally during the Bharat Bandh to protest against government actions on FDI and diesel and LPG prices in Mumbai on Thursday PHOTO: KAMLESH PEDNEKAR

NOT TAKING THE FOOT OFF THE PEDAL

| All five notifications on recent FDI decisions issued | No move towards partial withdrawal of fuel price hikes | Next on agenda are reforms in power sector and a hike in the FDI cap in insurance | Finance ministry, Vodafone appear to be smoking peace pipe on tax issue | Kelkar panel report on fiscal consolidation may be uploaded soon FDI reforms, the hike in diesel prices by ~5 a litre and the capping of subsidised LPG cylinders at six a year per household. The thrust of the message would be on the benefits the steps would entail. The Prime Ministers explanation could be in the form of a written message or a televised address, PTI said, quoting sources. Officials said the government would soon come out with a plan for the financial restructuring of power distribution companies suffering huge losses. The scheme would lay down certain mandatory conditions on the state governments, including conversion of loans to equity and ushering in private participation in distribution. The Centre would do its bit by putting in place a transitional finance mechanism. A proposal, which involves the issuance of bonds for half the short-term liabilities of state electricity boards backed by the Centre and rescheduling of the remaining debts, is likely to be taken up in the next Cabinet meeting, which may take place on Tuesday. A proposal to hike FDI in private insurers to 49 per cent from 26 per cent may not come up in the meeting but is on the agenda and is likely to feature in the next meeting. In fact, Parliaments standing committee on finance had recommended retaining the FDI cap in the insurance sector at 26 per cent. ECONOMY, P6 Retail FDI notified, red sign for e-commerce

The parting of ways between the Trinamool Congress (TMC) and the United Progressive Alliance (UPA) is final, but the Congress is not short of friends and is open to making new ones. This was the political message on a day when a semi-successful Bharat Bandh saw some parts of the country, most notably West Bengal, down shutters in protest against the rise in diesel prices and opening of multi-brand retail to foreign investment. Congress ministers in the West Bengal government will be asked to resign tomorrow in tandem with TMC chief Mamata Banerjees letter to the President, saying her party is pulling out from the government. The UPA will scout, among others, for a new railway minister. Just to rile Banerjee, it could be a Congress candidate from West Bengal. The government exuded confidence today, buoyed by the BJPs reiteration that the party had no intention of asking the government to prove its parliamentary majority. We had enough friends yesterday, we have enough friends today. So, I dont think why you should doubt our stability, Finance Minister P Chidambaram told reporters here. Asked whether the government would look for new allies, he said, If we can acquire new friends, why would we not? Information and Broadcasting Minister Ambika Soni said the government was stable as it had the support of over 300 MPs in the 545-member Lok Sabha. We have support of over 300 members of Parliament who do realise that these are difficult times and know that hard decisions need to be taken, she said, rejecting the perception that the government had been reduced to a minority. Soni said a number of leaders had made it clear early elections were not in the national interest. The government got a further boost when Samajwadi Party chief Mulayam Singh Yadav said it was supporting the UPA and would decide when to pull out, later. The party was to have decided what its strategy was going to be today but put off the deliberations until bitter rival Mayawatis announcement of her position on October 9.

The agenda before the Cabinet tomorrow is bristling with economic decisions. After tomorrow, a Cabinet reshuffle will become inevitable and consultations have already begun on who will be drafted and who will be asked to move to the party. The bandh today was moderately successful, but no clashes or violence were reported. In most states, shops opened late and stayed open. In UP, SP workers locked the entrance of Bharti-Walmarts store on Sultanpur Road. The womens wing of the party was also seen asking traders to down shutters in some local markets. According to the UP home department, train movement was disrupted at 19 places by bandh supporters, while the AgraGwalior highway was also blocked by protesters. However, no untoward incident was reported from anywhere till the time of filing of this report. While there was no order for closure of schools and colleges in the state, some educational institutions voluntarily declared a holiday as a preemptive step. In Delhi, though some markets were shut, especially in the inner city and traffic was thin, offices were open. Road and train services were also hit in several parts of Bihar. A group of BJP workers blocked rail traffic at Patna junction and stopped movement of a number of long-distance express and passenger trains. Life in Kolkata and elsewhere in West Bengal was disrupted due to the 12-hour bandh called by Left parties. This could be bad news for the beleaguered TMC government, which had resolved not to allow disruption of services because of the bandh. The final word came from the Nationalist Congress Party (NCP), a UPA ally. A senior NCP leader said they were wholeheartedly with the UPA on FDI in retail. As for the dissenting noises against the diesel price hike and the demands for a rollback from the NCP unit in Maharashtra, he said, These are necessary political rituals to keep the party afloat in the state. This is akin to what Mulayam Singh Yadav is doing or the DMK is doing right now. ECONOMY, P6 Discom restructuring next on govt agenda ECONOMY, P7 Govt must dump its panel report to please Nitish TSI, 1 Brokerages hopeful on progress despite TMC jolt

ECONOMY, P7

Power ministry now under CBI scanner in coal block cases

After proceeding against a number of private companies given coal blocks, the CBI is now questioning the power ministry. It has sent questionnaires to the ministry to know the basis on which it had recommended names of companies to the screening committee for allocation, GYAN VARMA reports from New Delhi.

Monsoon expected to start receding

After a late revival, the south-west monsoon is expected to start withdrawing from the northwestern parts of the country from Monday, Met officials have said. Earlier, the officials had said the withdrawal could start from September 15-20 but that got delayed, too, because of favourable weather.
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Tablets beat netbooks in Indian mkt

According to the annual PC sales data by the hardware industry body, Manufacturers Association for Information Technology, only 280,000 units of netbooks were sold in 2011-12. However, the industry estimates about 350,000 tablets were sold in India during the period. 14 >

Emu business took flight on interest-free govt loans

Nabard website says birds bankable, economic value of a pair ~16 lakh
N SUNDARESHA SUBRAMANIAN
New Delhi, 20 September

INSIDE

BRAND WORLD Quanto: M&Ms new price warrior TAKE TWO The changing face of Philips

13 > 9>

The Union government was giving interest-free loans to entrepreneurs setting up emu farms, which have now turned into a multi-crore scam in Tamil Nadu. These loans were granted under the central governments Poultry Venture Capital Fund and were routed through the National Bank for Agriculture and Rural Development (Nabard) and commercial banks. Though the scheme was for all poultry, emus find a mention in the scheme documents and several emu farms in southern states, including Tamil Nadu, have availed themselves of loans under these schemes, say officials. A senior Nabard official looking after the investment credit department said, Nabard was just acting as an intermediating agency to pass on the subsidy. The loans were given not only by public sector banks, but by all commercial banks, Nabard was only refinancing them and passing on the subsidy. The scheme was originally floated as a pilot titled Venture Capital Scheme for Dairy and Poultry by the Department of Animal Husbandry, Dairying and Fisheries of the central government in 200506. In 2009-10, a separate scheme called Poultry Venture Capital Fund was carved out of this to focus more on the poultry sector. That scheme

| Emu farms funded under poultry venture capital fund subsidy scheme | Over ~10 crore disbursed as subsidy under the scheme since 2011 | Nabard projection based on 1997 paper by a French firm executive | Ground reality far removed from Nabard estimates was further modified into Poultry Venture Capital Fund (Subsidy) Scheme with effect from April 2011. Under the new scheme, Breeding farms for low input technology birds like turkey, duck, Japanese quail, emu, etc were eligible for backended capital subsidy of 25 per cent of the total outlay. According to Nabard officials, over ~10 crore has been released as government subsidy under the latest scheme since April 2011. According to the website, a pair of ostriches (including emus) can

COMING HOME TO ROOST

earn up to $30,000 (over ~16 lakh) in a period of 12 months. The projection is based on a paper presented by an executive of a French company at a 1997 Indo-French food seminar in Bangalore. According to the projection, a pair of emus is capable of producing 30 offspring in a year. These 30 birds can produce meat of 60 pounds each. At the rate of $10 a pound, the meat alone would fetch $18,000 (~9.72 lakh) every year. In addition to that, emus were said to produce hides worth $10,500 (~5.5 lakh) every year, not to mention the plumage value of $1,500 (~81,000). These unverified estimates put out on the Nabard website were the basis on which the farms were designed. Many websites peddling emus also quote the same or similar figures. It gave newcomers an assurance that since state-owned institutions were involved, there was a legitimate business. Even now, farmers are hoping a Nabard-funded project to produce emu oil will bail them out, said Anand, a farm owner in Bangalore. While poultry experts say there is no business case as emu meat is not a widely consumed delicacy, a Nabard official expressed hope that emu oil-producing units, when set up, would create a steady demand for these birds. But, he was not sure if even that would suffice, given the disproportionate breeding that had taken place already.