Daily Excelsior...Business

Free Trade Agreement delayed by a few months .......

Experts fear derailment of fiscal reforms in tn following rollbacks ......

Spices export decline both in quantity and value .......

Exxon, Aramco, Sinopec advance China refinery plan ......

ONGC,GAIL will not be privatised: Singh

NEW DELHI, May 20: Prime Minister Designate Manmohan Singh today said ONGC, GAIL will not be privatised.

"We are not pursuing privatisation as part of our ideological commitment. India needs a strong private sector as also a public sector," he told reporters here.

"PSUs like GAIL and ONGC will remain in the public sector. There is no intention to privatise them. Similarly there are nationalised banks which will remain in public sector. These will not be privatised," he said.

He said "we will not do anything which will throw large pool of workers jobless". (PTI)

Asia gold sets European stage after holding gains

SYDNEY, May 20: Gold held on to overnight gains in Asian trading on Thursday, paving the way for a firm open in Europe.

Sporadic profit taking in asia failed to put much of a dent in a reinvigorated gold price, which leapt nearly seven dollars in the last US session as the dollar recoiled against major rivals and global political tensions led investors to safe-haven buys.

"Some profit taking was hard to resist, but overall the market is being supported," a bullion dealer said.

Spot gold was quoted at 381.70.00/ 382.20 an ounce at 0400 gmt, versus 382.75/ 383.50 in late New York. Bullion was last fixed in London at 380.75 an ounce.

Turmoil in the middle east was contributing to demand for gold, suggesting it would hold gains ahead of more active European physical market trading, dealers said.

Overnight comex June gold rose 1.9 percent as a dollar sell-off prompted investors to search for bargains in precious metals.

Chart traders pegged the next major technical barrier at 385 an ounce.

In Tokyo gold futures, the benchmark April contract was up two yen per gram at 1,387 yen per gram.

The dollar has weakened broadly due to a recovery in global markets that has made investors more risk-friendly, boosting currencies that offer high interest rates.

The yen rose against the euro and was steady against the dollar.

The Japanese currency was around 135.20 yen per euro up more than half a yen from late US levels.

The dollar was at 112.80 yen compared with around 112.90 in late US trade.

The euro was fetching about 1.1990 versus 1.2015.

Spot silver was last quoted at 5.87/ 5.90 an ounce versus 5.91/ 5.95 in New York.

Spot platinum fetched 803.00/ 808.00 an ounce against late New York’s 804.00/808.00.

Spot palladium was down 1 at 240.00/245.00. (AGENCIES)

Wockhardt on acquisition spree, eyes
business deals in US

NEW DELHI, May 20: After acquiring German pharma major esparma for 11 million dollars, leading drugmaker Wockhardt Ltd is planning to strike similar business deals in the US as part of its market enhancing strategy.

"We are open to positive business acquisitions in the United States, in line with our plans to strengthen the company’s market presence there.

"At present, we are in talks with few companies and negotiations are in different stages," Wockhardt chairman Habil Khorakiwala told UNI.

Recently, the Mumbai-based pharma company set up a marketing subsidiary in the US with a view to expanding business opportunities and product portfolio.

Clarifying that the company has no plan to acquire manufacturing facilities in the US, he pointed out that the products will be sourced from the domestic plant and the recently-acquired UK-based CP pharma facility as well.

Earlier this month, Wockhardt announced its third international acquisition when it bought Esparma which has strong presence in urology, neurology and diabetology.

"The acquisition of German pharma firm is in line with Workhardt’s therapeutic strengths. It will drive the company’s growth into the European market," Mr Khorakiwala said adding that the acquisition gave Wockhardt an entry into the largest branded generic market in Europe.

With this acquisition, Europe will account for 40 per cent of Wockhardt’s total sales while 40 per cent will come from India and 10 per cent each from the US and the rest of the world.

Prior to the German deal, Wockhardt had acquired UK-based Wallis Laboratories and CP pharmaceuticals in 1998 and 2003, respectively.

Besides being the biggest Indian pharmaceutical company in the UK, Wockhardt is among the top ten generic players there.

Mr Khorakiwala said the company is all set to start human clinical trials on its antibacterial compound for treating respiratory infection.

Wockhardt has already received approval from the Drug Controller General of India (DCGI) to conduct phase I clinical trials on its new chemical entity WCK 1152.

He said this compound was efficacious against the multi-drug resistant pneumococcal bacteria. Apparently, pre-clinical studies had indicated the molecule had great potential in the treatment of upper and lower respiratory tract infections such as sinusitis, bronchitis, pharyngitis, community-acquired pneumonia and otitis media.

Wockhardt has developed oral and intravenous formulations of the product. Other drugs used at present in the management of respiratory ailments include amoxycillin, augmentin, erythromycin, azithromycin, gatifloxacin, levofloxacin and clarithromycin, many of them billion dollar products. (UNI)

Reforms will continue with human face: Manmohan Singh

NEW DELHI, May 20: Unveiling the economic agenda of the new Congress-led coalition Government, Prime Minister-designate Manmohan Singh today said reforms would be continued with a human face and the Government was committed to building strong private and public sectors while pursuing selective disinvestment.

"Development will be key priority, the aim of reforms would be to remove poverty, increase employment through relief to decentralised sectors," Singh said asserting "privatisation was not part of our ideology and psus like ONGC and GAIL will not be privatised".

"PSUs like GAIL and ONGC will remain in the public sector. There is no intention to privatise them. Similarly, there are nationalised banks which will remain in public sector. These will not be privatised," he said.

"If they can’t compete at equal footing with the private sector or become a drag on the exchequer, then by all means they will be allowed to raise resources from market through disinvestment," he said promising that the interest of the workers would be protected.

"We will not do anything which will throw large pool of workers jobless", he said emphasising that "while remaining as public enterprises, if they (PSUs) want to raise resources through disinvestment or through sale of equity, they are most welcome".

Wherever public sector enterprises want to compete with private sector in domestic and foreign, there is no reason why they should not be allowed to go forward, he said.

Seventy-one year old Singh, the architect of India’s economic reforms, said details of the Government’s economic agenda would be spelt out in the Common Minimum Programme which would be finalised in consultation with the allies in a day or two.

Dwelling at length on the need to have reforms with a human face, Singh said the Government would endeavour to realise late Rajiv Gandhi’s dream "to make 21st century as India’s century".

He said the main stress of reforms would be to provide education, health for all, improve environment, housing for millions of slum dwellers and increase agriculture production.

"This will be our new agenda," he said and quoted the famous writer victor hugo that "no power on earth can stop an idea whose time has come."

But there were difficulties and the Government was committed to overcome them. India was emerging as a major economic power and the country could only move forward, he said.

Singh said the emergence of India as a major global economic power was one such idea whose time had come. "Our Government worked sincerely to realise that dream when we were in power from 1991-1996."

"We achieved substantial success but it would be wrong on my part to say that the task is complete, the task is far from being complete," he said, adding this Congress-led coalition Government has pledged itself to fight against poverty and ignorance.

Asked if the Left parties would be an impediment to the reform process, Singh said "life is never free from contradictions and the coalition Government will try to promote strong and stable Government and create relations with allies to fight against poverty, ignorance and disease".

"They (Left parties) are also great patriots," Singh said adding he did not foresee any difficulties in pursuing economic policies and moving forward on the basis of the Common Minimum Programme.

The CMP would be growth-oriented and progressive and create an environment that was investment-friendly. "There should not be any misgivings in this regard".

Seeking the support of NRIs for economic development, Singh said "I invite them to show much more interest in the development of the country and the Government will create an environment where our industrialists, both NRIs and domestic, could increase investments and create more wealth in the country". (PTI)

EOUs’ exports up 21 pc demand sops on par with SEZs

NEW DELHI, May 20: The 100 per cent Export Oriented Units (EOUs), which registered 21 per cent increase in exports to Rs 27,000 crore during the last fiscal, today demanded sops at par with Special Economic Zones (SEZs) for ensuring their survival following the gradual withdrawal of benefits conferred upon them.

"The EOUs are complementary to units in SEZs as they cater to the needs of local industry. Despite above average export growth rate and creating infrastructure in backward areas, the Government has neglected the sector for the past few years," Confederation of Export Units (CEU) president S K Saraf told reporters here.

CEU is the apex body of 100 per cent EOUs in the country. There are 1764 EOUs across India, which contribute 18 per cent of the country’s total exports.

The Ministry of Commerce had said that EOUs and SEZs are incomparable schemes. "This is gross misconception and mutiliation of earlier policy announcements," he said.

The sunset clause of withdrawal under section 10-B of the income tax, which disallows tax benefits to EOUs beyond March 31, 2009, is a negative measure discouraging investment. "It should be deleted immediately and profits from EOUs must be tax exempt irrespective of being from exports or Domestic Tariff Area (DTA)," CEU founder president R Veeramani said.

Since the policies of SEZs as well as EOUs flow from same principles, the proposed SEZ Act should be converted into SEZ and EOU Act. "Exemption from service tax, provided to SEZs and SEZ developers, must also be extended to EOUs. EOUs are loaded with 8 per cent service tax, which comes to a staggering 3 per cent of FoB (Freight on Board). This should be removed."

Further, the payment of sales tax, states taxes and duties increases transaction costs as well as paper work. "Refund of taxes is a time conusming process which affects cash liquidity of units. These should be abolished," Mr Veeramani said.

Mr Saraf said any supply from DTAs to EOUs must be treated as physical exports and benefits of depb (duty exemption pass book) scheme must flow to eous as is being given to units in SEZs.

Moreover, EOUs are required to obtain procurement certificate for import shipments. This delays clearance of samples and spare parts for critical imported machines. "Since an open bond is already submitted to the customs authorities and quarterly statements of import/export are being furnished by eous, this requirement must be done away with," he added.

Labour laws for EOUs and SEZs are also different despite the two schemes flowing from the same principles, being under the same ministry, having a common council as well as a development commissioner, Mr Veeramani said.

The Exit Policy, for debonding by EOUs, must be liberalised so that benefits under various export promotion schemes offered by the Government. "In fact, those EOUs, which have completed their export obligation and fulfilled the net foreign earning requirements must have a one-time option to quit the scheme without payment of any duty," he said.

The Government must abolish cost recovery charges and extend fast track clearance to recognised EOUs, he added. (UNI)

Sensex stabilises at around 5000 level at midsession

MUMBAI, May 20: After early volatility, the sensex stabilised at the midsession, hovering around its overnight closing levels as the political drama ended with the appointment of Manmohan Singh as the next Prime Minister.

The BSE benchmark 30-share index, which witnessed wide movements in a range of about 150 points during the first 15 minutes of trading, stabilised at around 5000 level and was quoted at 5000.48 at 12.45 pm. As against yesterday’s close of 5006.10.

It fluctuated widely between 5073.70 and 4927.62 after opening firm at 5048.17.

The market seemed to be confident about the continuity of economic reforms with Manmohan Singh heading the Congress-led United Progressive Alliance but investors were cautious ahead of the finalisation of the Common Minimum Programme (CMP) by the Congress and its allies. (PTI)

Free Trade Agreement delayed by a few months

SINGAPORE, May 20: Singapore’s impending Free Trade Agreement (FTA) with India is likely to be delayed by a few months in view of the new Indian Government’s expected pre-occupation with domestic politics and presentation of the national budget next month, the Straits Time reported today, citing observers.

It said the next round of negotiations for the FTA, due this week, has been postponed. The new date is yet to be fixed.

India’s chief FTA negotiator and commerce secretary Dipak Chatterjee was understood to have asked for time to brief the Congress-led Government’s new ministers on the Comprehensive Economic Cooperation Agreement (CECA), an enlarged FTA that India and Singapore have been working on for more than a year and was believed to have run into 700 pages.

Singapore’s chief FTA negotiator and permanent secretary at the trade and industry ministry, Mr Heng Sweet Keat said he was optimistic that CECA would proceed.

Meanwhile, the India’s new High Commissioner to Singapore Mr Alok Prasad has assured that the next round of negotiations would be held in new Delhi soon.

"A number of complex issues are being discussed and we are making good progress," he said.

The last round of negotiations were held in Singapore in mid-March.

Top officials of both countries were expecting to conclude the negotiations by the middle of this year. (UNI)

Experts fear derailment of fiscal reforms
in tn following rollbacks

CHENNAI, May 20: With the Tamil Nadu Government withdrawing cost-cutting measures and restoring subsidies to appease the common man in the wake of the election debacle the ruling party suffered in the Lok Sabha polls, experts here fear that the decision could derail the process of financial reforms in the state.

Stung by the resounding defeat in the recently-concluded Lok Sabha elections, Chief Minister J Jayalalithaa had on Tuesday last decided to withdraw the income ceiling of Rs 5,000 to be eligible to buy commodities in the public distribution system and also to do away with the system of ‘H’ endorsement on ration cards.

The Government has also decided not to meter electricity connections to farm pump sets and huts.

Ms Jayalalithaa had announced that all farmers and hut-dwellers would get totally free electricity and the Government would pay the entire tariff on electricity directly to the Tamil Nadu Electricity Board.

Besides, school students from class I to XII, including private students, would get free bus passes, while college students would get a 50 per cent travel concession.

The Chief Minister had also announced the decision to include egg twice a week in the menu of the noon-meal scheme.

While bringing out a white paper in 2001 on the poor financial condition of the state due to the "mismanagement of the previous DMK Government," Ms Jayalalithaa had told the people that the "bitter pill" was necessary to restore the fiscal health of the state.

Her reforms in the last three years were estimated to have helped the Government to reduce the expenditure on subsidies and other benefits by over Rs 3,000 crore.

But, with the rollback the acceleration of growth is expected to come down.

By relenting from her rigid stand in the wake of the outcome of the Parliamentary elections, she seemed to have resorted to populism, relegating the development-oriented measures to the back burner.

The Government had said in the white paper that the burden to the exchequer on account of supplying subsidised foodgrains through the PDS was among the highest at Rs 1,540 crore. The Government brought down the coverage under the PDS in phases and last year announced that only families with a monthly income of less than Rs 5,000 could purchase goods from the PDS.

The offtake of foodgrains was around 1.6 lakh tonnes per month at present and if the consumption increased it would entail a huge burden on the coffer, official sources said.

The provision for noon-meal scheme in this year’s budget was Rs 685 crore and the free power was estimated to cost over Rs 2,500 crore a year.

The metering system and reimbursements to small and marginal farmers through money orders had reportedly saved the Government Rs 1,000 crore.

The million dollar question that arises now is whether the Government will allow the power and transport corporations to revise their tariffs in the wake of the recent sops.

If the Government sought to make budgetary allocation instead of revision of tariffs, it would undo all the steps taken in the last three years to place the state’s finances back on rails, the sources said. (UNI)

Spices export decline both in quantity and value

THIRUVANANTHAPURAM, May 20: The export of spices from the country declined in terms of quantity and value during the last financial year.

The export fell from 264,107 tonnes to 246,566 tonnes. In rupee terms, there was a decline of Rs 181.63 crore, from Rs 2,086 crore to Rs 1,905.08 crore. In dollar terms, the export earnings fell from 431.45 million to 415.15 million, spices board sources said here. However, the exports were as per the target set, they added.

The Sudan dye issue notwithstanding, Chilli exports registered an increase along with turmeric, coriander, vanilla, celery, fennel and garlic. However, the fall in revenue was owing to lower exports of pepper, fenugreek, cumin, curry powder, spice oils and oleoresins.

While the total quantity exported declined, the targets set for the year were achieved. Against an export target of Rs 1,900 crore, the achievement Rs 1,905.08 crore. Targets were achieved in the case of chilli, turmeric, coriander, celery, fennel, curry powder, mint products and garlic. While exports of spice oils and oleoresins achieved quantity targets, vanilla crossed only the value target, the sources said.

The drop in export of mint products had contributed to the fall in value. However, the figures were likely to improve, as several of the exporters were not registered with the board. The different commissioners of customs at major ports in the country had been asked to advise all exporters to register with the board.

Chilli export, which had to surmount several problems in the wake of rejections after detection of the chemical dye Sudan I, surpassed the target of 76,000 tonnes. Exports were up at 81,500 tonnes, worth Rs 355.11 crore, compared to the previous year’s 81,022 tonnes, worth Rs 315.15 crore.

This was mainly owing to the poor crop in China and Pakistan. Also, after the red alerts by the European Union, the board had made it mandatory for exporters to get their consignments tested before exporting.

Turmeric exports went up to 32,402 tonnes, valued at Rs 103.38 crore. Coriander exports were up to 21,000 tonnes worth Rs 71.04 crore. The high unit value of ginger in the international market had helped in maintaining the value realisation, though there was a 3,461 tonne fall in quantity. Pepper continued to be on the decline, falling to 16,700 tonnes, worth Rs 143.51 crore, from 21,609 tonnes, valued at Rs 178.88 crore, the sources added. (UNI)

Exxon, Aramco, Sinopec advance China refinery plan

BEIJING, May 20: Exxonmobil Corp, Saudi Aramco and Sinopec Corp aim to start building a 3.6 billion refining and petrochemicals complex in China in late 2005, an industry source said on Thursday.

"The project is moving ahead. Bids for engineering contracts are being evaluated and will be awarded as soon as July," the source said on the sidelines of a China oil and gas conference.

The integrated mega-project, planned for China’s southeast coastal province of Fujian, has lagged similar investments involving multinationals such as BP PLC and Basf Ag due to stumbling blocks that have prevented access by foreign partners to China’s petroleum products market.

"Both Exxonmobil and Saudi Aramco are now assured of the market access," said the source, adding that market access was agreed among the parties involved before Saudi Oil Minister Ali-al-Naimi’s visit to Beijing in April.

The joint-venture agreement will give Exxonmobil and Saudi Aramco 25 percent each in the project, while Sinopec will hold 50 percent ownership.

The complex will triple the capacity of an existing Sinopec refinery to 12 million Tonnes Per Year (TPY) from four million TPY, and will add an 800,000-TPY ethylene plant.

The expanded refinery is expected to begin operating from 2006/2007, and the ethylene plant not until after 2010.

Under its commitment to the World Trade Organisation, China is due to open its domestic oil sector in 2004.

China’s largest refinery, Zhenhai Refining and Chemical Co Ltd, also plans to build the country’s biggest petrochemical complex at 20 billion yuan ( 2.4 billion), by 2010, Chinese industry officials said on Wednesday.

The proposal for the one-million-tonne-per-year ethylene project in Ningbo city in Zhejiang province, which is likely to be funded domestically, is awaiting Beijing’s approval and will be followed by a feasibility study. (AGENCIES)