Daily Excelsior...Business

Foreign made cigarettes flood Indian markets

MUMBAI, May 27: The Directorate of Revenue Intelligence (DRI) is keeping a watch on the clandestine entry into the Indian market of foreign-made .......more

CII against extending deadline for FERA cases

NEW DELHI, May 27: The Confederation of Indian Industry has suggested that the deadline of May 31 for resolving old cases under the repealed Foreign ...more

Skindia GDR index recovers, premiums dip

MUMBAI, May 27: The Skindia Global Depository Receipts (GDRs) index recovered by 0.85 per cent to 524.30 .......more

Britain suspends arms exports to India and Pakistan: Cook

LONDON, May 27: Britain has "suspended" the export licence for the sale of 66 ....more

Call rate eases on subdued demand, gilts slip on renewed war fears

MUMBAI, May 27: The overnight interest rate ruled easy below the refinance .....more

OIL proposes merger
of refineries

GUWAHATI, May 27: The Oil India Limited has mooted a proposal of bringing together all the four refineries of Assam under it for economic viability of the company. ......more

Review pricing formula
of controller of capital
issues: PHDCCI

NEW DELHI, May 27: a PHD Chamber of Commerce and Industry’s (PHDCCI) study has called for review of the pricing formula of the Controller of Capital Issues (CCI). ....more

RBI favours softer rates,
says Govt borrowing to
sail smooth

NEW DELHI, May 27: Favouring a softer interest rate bias, Reserve Bank said today that the centre’s borrowing programme of over Rs 1,42,000 crore would sail through without putting pressure on the bank rate. ....more

UTI sells Abbott Lab
shares to Pharmacia

MUMBAI, May 27: The Unit Trust of India (UTI), India’s largest mutual fund, has sold 2,41,749 fully paid-up equity shares of Abbott Laboratories (India) Ltd at Rs 245 per share to Pharmacia Corporation of USA against their ...more

Foreign made cigarettes flood Indian markets

MUMBAI, May 27: The Directorate of Revenue Intelligence (DRI) is keeping a watch on the clandestine entry into the Indian market of foreign-made cigarettes which today command a higher profit margin than gold.

It was presumed that gold was smuggled in larger quantity but of late because of liberalisation and easing of import restrictions, clandestine entry of the yellow metal had declined.

"The margin in cigarettes is more nowadays and smugglers are now flooding the Indian market with foreign made cigarettes as well as their fake versions," a senior DRI Investigator told UNI here.

In the last two years, investigative agencies were successful in being able to bust some of the rackets in smuggled cigarettes.

A visit to the cigarette shops in South Mumbai reveals that the most common brands of these cigarettes are 555, Malboro and Benson and Hedges. "Even the fake brands manufactured in Korea and China are also available here," DRI sources said.

DRI sources said that in April 2001 they arrested two persons in Mumbai and seized from them 8,496 cartons of foreign-made cigarettes valued at Rs 42.48 lakh.

These were imported by falsely declaring them to be household and personal goods. "The same were to be fraudulently cleared by swapping the container number of one of the already examined containers of household goods. The modus-operandi was busted after receiving a tip-off and the defaulters were caught," the sources said.

But the smuggling continues and has extended its tentacles beyond Mumbai. These cigrattes arrive by sea route to port cities like Chennai and Kolkata too and later these consignments are passed on to the interior parts of the country, they explained. In October last year, officers of DRI’s zonal unit detained a container that had left Nhava-Sheva Port located off Mumbai, for Aurangabad.

The sources told UNI that the container was declared to contain polypropylene granules. Examination of the container, however, revealed that there were 431 boxes containing 21,550 cartons of cigarettes of foreign origin totally valued at Rs 1.30 crore. The goods were seized under the Customs Act and five persons were arrested in the case.

The DRI also had some successes in detecting counterfeit currency.

The sources said that in May 2001, on the basis of intelligence information given by this zonal unit, the Mumbai Police seized of Indian counterfeit notes of Rs 500 denomination to the tune of Rs 10 lakh.

These notes were concealed in parcels of Chilli coming to Mumbai from Hyderabad. Two persons were arrested in this connection.

Of late, because of steps taken by the Reserve Bank of India and the change in the design of the notes, counterfeiting has been reduced to a large extent.

In June last, a hotel was raided and a person who arrived from Sharjah was nabbed by the DRI Mumbai zonal unit and 4,800 notes of Rs 100 denomination were seized from him.

As a follow up of the same case, another person was arrested with 2,400 notes of Rs 500 denomination which were concealed in a tin labelled milk powder.

Influx of foreign-made consumer goods, especially from China is yet another activity on which the DRI is maintaining a strict vigil.

In March 2001, a country craft ‘Al Mahyoddin’ from Dubai was impounded in a joint operation by DRI and coast guard as it entered the Mumbai harbour.

Consumer goods like perfumes, cigarettes and cameras were found in the cargo hold of the vessel. The goods were valued at Rs 30 lakh. In the subsequent month, in a similar operation, goods worth Rs 50 lakh were seized. (UNI)

CII against extending deadline for FERA cases

NEW DELHI, May 27: The Confederation of Indian Industry has suggested that the deadline of May 31 for resolving old cases under the repealed Foreign Exchange Regulation Act (FERA) should not be extended further.

The launching of criminal prosecution by the Enforcement Directorate should be restricted to cases where there was a genuine loss of foreign exchange, it said.

The CII said that in case of FERA, non-bailable arrest was possible even on grounds of suspicion. The Foreign Exchange Management Act (FEMA), however, when enacted provided that no court will take cognizance of an offence under the repealed act and no adjudicating officer shall take notice of any contravention after the expiry of a period of two years from the date of commencement of the act.

In a representation to the Government, the CII said that launching criminal prosecution in all those cases where investigation or adjudication is still pending was unwarranted and will reflect poorly on the trust and credibility of the Government. According to CII, extending the deadline and therefore keeping issues open will create uncertainty and instability in the business environment as most of the cases where such prosecution had been initiated related to procedural irregularities and did not result in any foreign exchange loss.

Even where there is a loss of foreign exchange, the CII said, it is for most cases due to non-realisation of export proceeds which is not a contravention under fema. The CII said that criminal action should not be commenced where there had not been even any adjudication on the show cause notice issued earlier.

The CII has said that it will be contrary to the spirit of the new legislation FEMA which provided for sufficient safeguards relating to national economic interests relating to foreign exchange transactions but did not contemplate the launching of criminal action.

According to CII, the introduction and enactment of the Foreign Exchange Management Act (FEMA), which replaced the Foreign Exchange Regulation Act (FERA), is a major achievement of the Government and is in tune with India’s liberal economic outlook.

The most important change brought about by FEMA was that violations under its provisions, unlike fera, were not criminal offences and were of civil nature, making the penalties commensurate with the nature of offence. (UNI)

Britain suspends arms exports to India and Pakistan: Cook

LONDON, May 27: Britain has "suspended" the export licence for the sale of 66 hawks worth an estimated one billion pounds to India in order not to have a destabilising effect in the region.

"The decision is consistent with Government policy not to allow exports to areas where they may have destabilising effect" Robin Cook, leader of the commons told the BBC’s on the record programme.

"In the present circumstances it would be plainly wholly consistent with those criteria we set out that we would not provide weapons in places where there is a risk those weapons would fuel tension."

Patricia Hewitt, the Trade and Industry Secretary, in charge of arms exports, signed the order last Thursday halting export licences to India and Pakistan.

The Department of Trade and Industry, however, drew a distinction between an embargo and the suspension of specific export licences.

"There are no plans for an arms embargo," a spokesman said adding "however, the situation in the region is taken fully into account in considering export licence decisions".

The decision could prove fatal to negotiations between BAE Systems and India on the sale of the advanced jet trainers (hawks).

British Foreign Secretary Jack Straw will explain the decision to Prime Minister Atal Behari Vajpayee and Defence Minister George Fernandes when he travels to New Delhi on Wednesday.

The suspension affects only arms and equipment which has already been sold to India and Pakistan and is due for export.

In the case of hawks, the negotiations were at a final stage on the question price of fixation. The deal is considered crucial to the survival of the hawk production line, which has been run down over the past few years as orders have dried up.

The future of about 1,500 jobs at BAE’s plant at brough, in the heart of Deputy Prime Minister, John Prescott’s Hull East constituency, hangs on the successful outcome of negotiations.

It is understood that the suspension will be lifted if tension eases. (PTI)

Call rate eases on subdued demand, gilts slip on renewed war fears

MUMBAI, May 27: The overnight interest rate ruled easy below the refinance rate on subdued demand on the second week of the reporting fortnight, coupled with improved supply by state-run banks at the interbank call money market today.

Government Securities, across the maturity, fell on nervous selling by market players on the back of renewed border tension following the test firing of missiles by Pakistan, dealers said.

Call rate which opened on a firm note at 6.60-6.80 per cent, however stayed in a narrow range of 6.40-6.80 per cent during the session and gradually drifted lower on waning demand and sufficient supply.

Call rate closed at 6.40-6.60 per cent, marginally down from 6.50-6.75 per cent of its Friday’s close.

Dealers said the demand for funds remained lower as most players had already covered their reserve requirements in the first week itself.

Reserve Bank of India (RBI) accepted half of the amount it received in its daily repo auction, while no bid was received in reverse repo auctions. RBI accepted Rs 3,750 crore at 6 per cent in repo auction out of Rs 7,500 crore it received.

Government bonds which staged a smart rally in the previous week-end, once again reversed to southwards as Pakistani test firing of misiles renewed the war concerns. Market players are awaiting the Pak President’s national address slated tonight, dealers said.

In afternoon session, the 11.50 per cent, 2011, GOI Securities was trading 45 paise down at Rs 125.20 as against Rs 125.60 of its previous day’s close, while the 11.03 per cent, 2012, Gilt fell by 50 paise to Rs 122.20 from Rs 122.70 it closed on Friday.

Call rate is likely to drift lower during the week as demand is expected to fall towards the reporting Friday, a dealer said. However, any auction announcement would put pressure on the liquidity.

The movement in gilt prices will be influenced by the border developments while an auction announcement and the subsequent tightness in the money market will also impact the bond market, he added. (UNI)

OIL proposes merger of refineries

GUWAHATI, May 27: The Oil India Limited has mooted a proposal of bringing together all the four refineries of Assam under it for economic viability of the company.

According to senior company officials, the idea was mooted by new Chairman-cum-Managing Director R K Dutta immediately after he took over early this month for the long run economic viability of the company, facing tough time for not being able to find new oil fields.

Assam has four refineries - Digboi, Numaligarh, Guwahati and Bongaigaon. While the Digboi and Guwahati are under the Indian Oil Corporation (IOC), the other two have separate entities.

The OIL sources, however, said they were not much optimistic about the merger of the Digboi and Guwahati refineries, but they were pushing ahead for the merger of the Numaligarh Refinery Limited and Bongaigaon Refinery Petrochemicals Limited (BRPL).

The Petroleum Ministry was considering a proposal to form an integrated oil company for the north-east region by merging the two refining companies - Bongaigaon Refinery (BRPL) and Numaligarh Refinery - with the crude producing company of that region.

The OIL is hardpressed for not being able to find any new field, while they have been deprived of exploration in the proven Rohmoroiya oil field in Dibrugarh district because of ongoing stalemate over flood erosion. The OIL’s future is largely dependant on Rohmoriya, which is supposed to produce 100 kilo litre per day but the local people have been opposing any exploration demanding flood control measures by the OIL India Limited.

According to the sources, the proposed entity will have interests in exploration, refining and marketing petro-products. Since the OIL is already a crude producer in that region and supplies oil to these refineries, this merger would be a natural synergy in operation.

All these reineriere are small and less than standard 3 million tonne capacity. In fact Digboi refinery is the oldest refinery of the country. The BRPL is a subsidiary of the Indian Oil Corporation, while the Bharat Petroleum Corporation Limited (BPCL) has 42 per cent stake in NRL.

However, the grand design of the OIL is to have a six million tonne company by merging all the refineries as well as the north east India’s operation of the Oil and Natural Gas Commission (ONGC).

"This is a big dream and naturally will be very tough to impress upon the Petroleum Ministry," he said. Notably Mr R K Dutta was the CMD of the NRL and had recently joined as the OIL’s CMD.

The Oil India Limited (OIL) has been actively looking for strategic mergers for its own survival as neither has the company in the past decade neither made any significant discovery in the oil field nor have they done any strategic merger to keep its future prospect bright.

According to an internal survey, carried out by the Oil India Limited through a multinational company, the diversification is the only key to the future growth of Oil India Limited with the report going to suggest of using the abundant gas to produce power for the region. (UNI)

Review pricing formula of controller of capital issues: PHDCCI

NEW DELHI, May 27: a PHD Chamber of Commerce and Industry’s (PHDCCI) study has called for review of the pricing formula of the Controller of Capital Issues (CCI).

The Chamber, elaborating the study, states that the basic thrust of the changes should be to enable a higher and more rational valuation. For example, CCI norms take into account the net asset value, profit earning capacity and market price in the case of existing listed companies to arrive at the fair value of equity.

There are areas where modifications and improvements can be brought about to suit the current day liberalised environment.

While calculating Profit Earning Capacity Value (PECV) the CCI formula used a standard rate of capitalisation of 100/15 in case of manufacturing companies like PE ratio of 6.67.

Instead of this one may go by the PE ratio related to a particular industry. Likewise, many more changes can be brought about.

The study states that the need to have adequate entry barriers to ensure minimum quality of paper entering the market, is necessary. However, the barriers should not impede the supply of paper. Certain regulations put in place in reaction to the market scams have proved to be deterrent for some of the good companies desirous of approaching the market.

The entry barriers should be revised and emphasis should be on liquidity, accompanied by fair and full disclosures.

In this respect, the eligibility requirement such as net tangible assets, market capitalisation, total revenues and pre-tax income combined with a minimum bid price, minimum number of shareholders, market makers and conditions of corporate goverenance could be adopted keeping the Indian scenario in mind, the chamber added. (UNI)

RBI favours softer rates, says Govt borrowing to sail smooth

"I don’t expect too much trouble in the Government’s borrowing programme. We will do whatever is necessary which will be conducive for growth," RBI Governor Bimal Jalan said after a meeting with Finance Minister Yashwant Sinha here.

He allayed fears that high borrowing would put pressure on interest rate. Centre’s borrowing is targeted at Rs 1,42,279 crore which is Rs 10,000 crore more than the previous fiscal’s borrowing.

The centre has mopped up a little over Rs 35,000 crore till middle of May.

Asked if RBI would continue with the softer interest rate regime, Jalan said "yes, of course."

The RBI’s credit policy statement indicated that the bank rate, the rate at which RBI lends funds to banks, would be reduced by 0.5 per cent from 6.5 per cent prevailing now.

Jalan said the central bank was keeping a close watch on the liquidity situation, days before the proposed cut in Cash Reserve Ratio (CRR) of banks.

RBI had advanced the date of the 0.5 per cent cut in CRR to June one from June 15.

It is expected that cut in CRR would pump in more than Rs 6,000 crore into the banking system. (PTI)