Daily Excelsior...Business

Dahej LNG terminal to become operational by Jan .....

Ranbaxy to sell loratadine tablets in US OTC market soon .....

ICRA reaffirms LA- rating to the NCD programme of HSI....

JPC to look into soft drinks controversy .....

Infant food advertising banned to promote mother’s milk

NEW DELHI, Aug 21: An eleven year old law has been amended to ban advertising of infant milk substitutes and other infant foods from November 1, 2003 on all mass media, it was announced today.

The move, notified by the Human Resource Development Ministry, is intended to protect and promote breast-feeding, an official statement said.

For years, nutrition experts have reported that infants thrive best on exclusive breastfeeding for the first six months of life and on breast milk and complementary foods for 18 months thereafter.

As early as 1994, the World Health assembly by a resolution called on member states of the World Health Organisation to foster such feeding practices for infants.

The Government has issued notification to enforce the amendments to the infant milk substitutes, feeding bottles and infant foods (regulation of production, supply and distribution) act, 1992 approved by Parliament earlier this year.

The amendments took into account inputs of a Government-appointed task force and the National Commission for Women and "difficulties being experienced" in implementing the act owing to expansion of electronic media over the years.

They expand the purview of the act to include diverse products being marketed as complements to breast milk and cover a larger set of personnel associated with the industry who could incur punishment in the event of violations.

The key amendments:

— Strengthening the existing provisions on publicity and advertisement to cover recent methods of advertising and promotion such as electronic transmission and audio-visual transmission.

— Continued breastfeeding ‘up to the age of two years’ along with complementary food after ‘six months’— unlike four months before— incorporated in the definition of "infant food".

— Continued breastfeeding "up to the age of two years" incorporated in the definition of "infant milk substitute."

— To cover recent products which may attempt to get around the principal act, "infant foods" have been brought at par with "infant milk substitutes" insofar as advertising, promotion and other regulations are concerned.

— Health care workers, pharmacies and drug stores and professional associations of health workers have been brought within the purview of the act.

— Violations of the rules made under the act have also been made punishable. (UNI)

M and M board gives nod for valtra’s tractor business bid

NEW DELHI, Aug 21: India’s largest tractor manufacturer Mahindra and Mahindra Ltd today said it would bid for tractor maker valtra, which finnish engineer kone corporation plans to divest.

The board of directors of M and M authorised submission of an offer for acquiring the tractor business of Valtra OY AB, Finland, and Valtra Do Brasil ITDA, Brazil.

Valtra, which had 2002 net sales of 762 million Euros, is a part of kone corporation, a global services and engineering firm. As part of its restructuring exercise, Kone is seeking new owners for its tractor business as well as for its forest machines business.

It has two tractor production plants, one in Finland and another in Brazil. The company also has a diesel engine factory Sisu diesel INC, located in Nokia, Finland.

According to reports, there are three bidders in fray for Valtra’s tractor business.

Valtra tractors are market leader in the nordic countries and ranked third in Latin America. Its tractors are marketed in more than 70 countries. It has 2,508 employees — 1,541 in Finland and 710 in Brazil.

M and M posted a Q1 net profit of Rs 42.49 crore, up from Rs 7.79 crore in the same period of 2002-03. Total income rose 22 per cent to Rs 1,013.77 crore this fiscal. (UNI)

Labour costs keep US grocers in doldrums

NEW YORK, Aug 21: Supermarkets nationwide are in a funk. Looking at their lacklustre sales and profits one would wonder if Americans were perhaps going without food.

Although grocers have historically been regarded as one of the most resilient sectors in retail, the past two years have seen them losing more customers to drugstores, warehouse clubs, and even dollar stores.

It’s not only tough competition impacting on supermarkets, but rising staff benefits and wage costs, which stem from the industry’s staunchly unionised past.

As a result, companies like Kroger Co., Safeway Inc and Albertsons Inc. are scrambling to keep costs down to better costs down to better compete with their nonunion rivals, particularly Wal-Mart Stores Inc.

Even with an aggressive growth programme, Wal-Mart — the largest private sector employer — has steered clear of costly union contracts, a step that has, however, made it a big target for unions seeking to organise on its floor.

There are about 38 labour-related lawsuits in 30 states filed against Wal-Mart, but that is not stopping the discounter from taking more market turf.

Wal-mart’s size matters

For the first time in its history, Wal-Mart’s supercentres with full-line grocery stores will outnumber the company’s traditional discount stores by the end of this year, heaping even more pressure on mainstream grocery chains.

"Grocers have to try to close the gap between their labour costs per hour and those of nonunion competitors like Wal-Mart," said Mark Husson, a Merrill Lynch supermarket industry analyst.

"They’ve got to get their cost down," he added.

Wal-mart, besides being the world’s largest company, has expanded to become the biggest player in the fiercely competitive 680 billion US Grocery industry it joined only a decade ago.

Size allows Wal-mart to extract better terms from suppliers, allowing it to buy and sell goods cheaper than the competition.

But causing more headaches for supermarket executives is the prospect that the discounter, as well as smaller less-unionised chains, could gain even more ground amid any failure to win labour concessions on costs.

Selling food is not cheap

According to the food marketing institute, the supermarket business remains one of the most labour-intensive industries, employing 3.5 million workers in the United States alone.

The FMI estimates that last year 15.7 per cent of the average supermarket’s sales and more than half of gross margin went to pay employee costs, including wages and benefits.

Recent data from the bureau of labor statistics also shows that average hourly earnings at supermarkets since 1992 have risen 37 per cent to about 10.35 from 7.56.

However, at Wal-Mart - which is no friend of unions — the average hourly wage stands at around 8, according to the United Food and Commercial Workers Union (UFCW), with 1.4 million members. (AGENCIES)

CII asks for rational power tariff policy for investments

NEW DELHI, Aug 21: Welcoming the Electricity Act, 2003, the Confederation of Indian Industry today said to achieve the capacity addition target of 100,000 mw by 2012, the tariff policy being taken out by the Government should provide a conducive environment for investment not only by existing utilities but also by new investors.

In its submission to the Ministry of Power, CII suggested that rate of return on investments was a key area to attract investors as well as lenders park their funds.

"For attracting new investments, competitive bidding should be adopted by the regulators wherein the role of the regulator is limited to ensuring that competition exists at each step.

"In case competitive bidding is not feasible, the regulator should pronounce benchmark tariff as ceiling limit and the levelised constant benchmark tariff below or equal to the ceiling limit should be followed over the life of the plant," the chamber said.

This methodology will minismise regulatory uncertainty and will give developers a free hand in undertaking financial engineering of the project, it added.

CII said while competitive bidding was the most desirable method, in the interim, existing utilities like the CPSUs and other public and private utilities would have a significant role in installing new capacity. "The tariff norms should be such that the utilities are enabled to invest in the sector.

"For existing investors, returns could be fixed on considering return on equity and interest on loan on normative basis, while interest on loans could be limited with PLR "3 per cent and foreign exchange rate variation dispensed with."

The chamber said to encourage optimum utilisation of existing capacity, incentives and disincentives should be introduced on equitable basis allowing utilities to gain incentives while operating above normative availability level and on the other hand disincentivised in case of under-performance.

"Other operating parameters should also be fixed in a way to encourage and reward efficiency and penalise dismal operations." CII, in its submission, also called for domestic lenders to offer long-term debts for power projects so that the existing high rates of depreciation, leading to front loading of the tariffs, could be brought down and investors could take economic benefit of depreciation throughout the useful life of the assets.

"The draft tariff should also provide a framework to facilitate Regulatory Commission’s responsibility of asset revaluation during the unbundling and restructuring exercise of the existing state utilities.

"Initially, the tariff period of three years could be fixed and thereafter the multi-year tariffs concept of five years could be followed so that the regulatory uncertainty is minimised."

Commenting on the use of transmission system and transmission tariffs, CII said there was a need to build adequate redundancy in the transmission system. For inter-connection with the transmission grid, there is a need to create level-playing field for all the investors with no undue favours to the central sector power undertakings, it said.

The draft policy must strongly enunciate a framework, which specifies percentage reduction in transmission and distribution losses that the utilities will have to achieve on yearly basis. The carrot and stick policy should be followed incentivising states that are able to reduce losses in a shorter time, it said.

"If open access has to be meaningfully put to use, the policy must also stipulate a time frame for the gradual phase out of cross subsidy and thus the cross subsidy surcharge to reflect true cost of power," it added. (UNI)

HSBC to focus on personal finance, retail banking in mid-term future

MUMBAI, Aug 21: India is one of the four prime markets for the Hongkong and Shanghai Banking Corporation (HSBC) to grow in personal finance and retail banking business in mid-term future, according to the group Chief Executive Officer of HSBC holdings stephen green.

In an interaction with mediapersons here today, Mr Green said that the household finance business would be put in top gear for growth in countries like India, China, Mexico and Brazil. There were also ample opportunities to service the small corporate firms, he said.

Outlining three areas of activities such as personal finance, retail finance, small corporate business, he said, these were the growing markets where substantial return could be expected on investment.

In March, HSBC had infused US 15 million to its Indian operations for expansion activities such as branch networking and setting up the back-office and research centres in Bangalore and Pune. India is one of three major global resourcing centres after China and Malaysia for HSBC holding, he said.

In reply to a question, Mr Green said that his bank has no immediate plans to acquire any assets or institutions in India. "We prefer to grow organically through expansion of branch network and grab the business opportunities as and when these come," he said.

"We are careful to benchmark ourselves in respect of revenue earnings, cost efficiency and client services at global level in order to compete with the local big players like State Bank of India in India and few other foreign banks," he observed. The bank is looking at the opening up of the insurance and pension fund markets in India for future growth.

Mr Green who is scheduled to meet senior officials of the Union Finance Ministry and Reserve Bank of India (RBI) during his stay in India, said that his visit to India was to get acquaintance with the bank’s business activities here.

HSBC India contributed about US 70 million to the total earnings of the HSBC holding in the first half of the current year. Nearly 40-50 per cent business is coming from emerging markets like India. (UNI)

Refining capacity of crude oil has doubled: Minister

NEW DELHI, Aug 21: Union Petroleum and Natural Gas Minister Ram Naik today said the installed refining capacity of crude oil has increased in the country from 58 million metric tonnes (mmt) to 116 mmt in the past four years.

Similarly, the capacity utilisation has risen between 95 to 98 per cent in various refineries, he told the Lok Sabha during question hour.

When asked by opposition members and few members of the ruling alliance, to specify the cost of domestic production of the liquified petroleum gas (LPG), Mr Naik evaded a direct reply, saying it is not done internationally. He said there is a process to evaluate its pricing and the Saudi Arabian crude price is taken as the basic floor price for that purpose. Apart from this the production cost also varies from refinery to refinery.

He said though it is correct to say that LPG is primarily produced indigenously in the country but it is produced from crude oil which is mostly being imported from outside.

He said LPG is being produced by fractioning crude oil in the crude distillation unit and in secondary processing units like fluidised catalytic cracking unit, hydrocracker and coke fractionators separate LPG from natural gas. The process yields multiple products like petrol, diesel, naphtha, kerosene and LPG. Separate costing for various products is not done, he asserted. (UNI)

Dahej LNG terminal to become operational by Jan

NEW DELHI, Aug 21: Large quantities of Liquified Natural Gas (LNG) will start flowing into the country from the Dahej terminal in Gujarat when it becomes operational from January next year, Petroleum and Natural Gas Minister Ram Naik said today.

Construction of the new terminal at Dahej would be completed by December this year and "large quantities" of LNG will start flowing in from January next which could be used in any state of the country, Naik told Lok Dabha during question hour.

Replying to a series of questions, he said 16 foreign companies, besides Indian firms, had submitted their bids in the first three rounds of the New Exploration Licensing Policy (NELP) and the exact response from the companies for the fourth round would be known after the bid closing date on September 30 this year.

He said the Indian oil PSUs, which were doing "extremely good work", were going abroad for oil exploration and had already invested Rs 3,900 crore in Sudan among others.

Refuting an opposition charge that all gas and crude from Gujarat wells were being sent out of the state, he said the crude storage at Pipavav would get gas whenever new production started in the state.

During seismic survey and drilling wells in the Cambay basin adjoining Kutch, there were "good indications" of hydrocarbons but commercial reserves of oil and gas have not been established as yet, he said.

To another question, Naik said about 82 million metric tonnes of crude, valued at over Rs 76 crore, was imported in 2002-03.

"With a view to ensure security of supplies, the oil psus have entered into term-contracts for crude supply with national oil companies of Saudi Arabia, Kuwait, UAE, Malaysia, Iran and Libya", the Petroleum Minister said.

He said several steps were being undertaken to reduce oil import dependence including increasing the exploration efforts under the NELP, improving the recovery factor from the existing major fields, exploring new areas especially in deep waters, faster development of newly discovered fields and acquiring acreages abroad.

Besides these steps, the Government was also mandating ethanol blending of petrol in certain states and Union Territories, he said.

In reply to another query, Naik said the Government proposed to introduce Euro-III emission norms, with a maximum sulphur content of 0.035 per cent, from April 1, 2005. At present, diesel conforming to Bharat Stage-II, which is equivalent to Euro-II emission norms, is being supplied in Delhi, he added. (PTI)

Ranbaxy to sell loratadine tablets in US OTC market soon

NEW DELHI, Aug 21: Ohm Laboratories INC (Ohm), a wholly-owned subsidiary of New Jersey-based Ranbaxy Pharmaceuticals INC (RPI), will soon launch anti-allergic loratadine into the US OTC store brand market.

Loratadine 10 Mg tablets, that have made the switch from the prescription to the OTC (Over-The-Counter), will be available to pharmacies, including the retail pharmacy market, pharma major Ranbaxy Laboratories Ltd (RLL) said here today.

The city-based drugmaker said it has received approval from the US food and drug administration to manufacture and market a generic version of schering-plough corp’s anti-allergy claritin tablets in the 10 Mg strength.

Earlier, RLL had received a tentative approval for the 10 Mg loratadine tablets in December 2001.

After its patent expired last year, the drug is being sold in the over-the-counter market in the US by several generic firms, besides the innovator schering.

"Ohm will be participating in the launch of the first approved version of an OTC, non-sedating antihistamine drug. This will provide greater access to a product with a proven track record of clinical success that will be made available at an affordable cost to patients and health payors," RPI, a wholly-owned subsidiary of RLL, president Dipak Chattaraj said.

Loratadine is the generic equivalent of schering-plough’s long-acting tricyclic anti-histamine agent claritin, which had US sales of 944 million dollars in the 12 months to June 2003.

The product is indicated for the relief of nasal and non-nasal symptoms of seasonal allergic rhinitis and for the treatment of chronic idiopathic urticaria in patients two years of age or older. (UNI)

ICRA reaffirms LA- rating to the NCD programme of HSI

NEW DELHI, Aug 21: Credit Rating Agency (ICRA) has reaffirmed the LA- (L A minus) rating assigned to the Rs 40 crore NCD programme of Hindustan Sanitaryware Industries Limited (HSI) indicating adequate safety.

ICRA has also reaffirmed the A1 (a one) rating to the CP programme of HSI for an enhanced amount of Rs 60 crore, indicating highest safety in the short-term.

While reaffirming the ratings, ICRA has considered improvement in the glass business of the company which lead to an overall improvement in the financial performance of the company for the year ended March 31, 2003. The impact of recovery in glass business (which accounts for almost half of the capital deployed) was partially negated by continuing weakness in the sanitaryware business (the other half) which is plagued by increasing competition in the industry.

The ratings are also constrained by the relatively high gearing and expected moderate Albeit improving profitability in the medium term. The coverage indicators are likely to remain adequate with progressive repayment of debt and limited capital expenditure requirements of the company in the medium term.

As of now, HSI is the only manufacturer of glass containers in the state of Andhra Pradesh, which is a major consuming centre for industries like soft-drinks, food, liquor and pharmaceuticals. During 2002-03, the performance of the glass division improved with consolidation in the industry, following the closure of owens brockway, which led to an overall firming up of the prices in the industry. HSI also gained by a change in its product-mix in favour of more remunerative categories.

HSI is currently the second largest player in the domestic sanitaryware industry behind Eid Parry, which is the market leader. Although HSI enjoys significant brand strength and established market position in the sanitaryware division, it has been loosing market share to the unorganised sector in the lower end of the market and from imports and Eid Parry in the higher end of the market.

ICRA expects HSI’s profits to remain modest mainly because of competitive pressures in the sanitaryware division and capital intensive nature of the business. (UNI)

JPC to look into soft drinks controversy

NEW DELHI, Aug 21: A joint Parliamentary Committee would be set up to probe the reports about high percentage of pesticide residues in coca cola, pepsi cola and ten other soft drink brands.

Lok Sabha Speaker Manohar Joshi told the House the matter was going to be investigated by a JPC.

Pacifying the agitated members, Joshi said according to the procedure, the Government would move a motion in this regard.

Joshi gave the ruling after Health Minister Sushma Swaraj made a statement on the issue and replied to the queries of the members.

Denying the opposition charge that the Government had given "any certificate" to the multi-national companies, Swaraj said two sets of soft drink samples were sent to the Central Food Technological Research Institute (CFTRI), Mysore and Central Food Laboratory (CFI), Kolkata for analysis and her statement that they did not have pestiside residues of high order was based on the findings.

Asking the opposition not to make allegations for gaining political mileage, she said that such charges would destroy the credibility of the CFTRI which enjoyed international reputation.

Reacting strongly when Congress member Satyavrata Chaturvedi wanted to know how much donation had been received before the statement was made, Swaraj challenged him to name the person who had got the fund.

Asserting that the Government had no objection to a probe into the matter by a JPC, the minister said she would go to the extent to suggest that let it have no members from the ruling benches.

Earlier, Lok Janshakti Party leader Ram Vilas Paswan said "you have given a certificate" and wanted to know whether the Government had conducted any investigation prior to to the findings of the Delhi-based NGO, Centre for Science and Environment, which had let to the boycott of these drinks all over the country resulting in losses running into hundreds of crores.

As soon as Swaraj completed her statement, Samajwadi party leader Mulayam Singh Yadav suggested that a Joint Parliamentary Committee be set up to look into the issue.

The Speaker then intervened to say that he would not allow any member to speak on the issue and observed that the Government would move a motion for setting up of a JPC to probe the matter. (PTI)