8.5 % growth achievable despite global slow down

In spite of several negatives like a soaring global inflation, rising rupee, and hardening domestic interest rates, the Indian economy seems to be doing pretty well and is still expected to grow by a healthy 8-8.5 percent. Robust export performance during the fiscal 2007-08 is another testimony to our economic resilience.

- Chillibreeze Business Research Team

Government Policy & Infrastructure
Economy
Sector Specific – Telecom
Banking & Finance
Power
Steel
Cement
International
Agriculture

Government policy & Infrastructure

Govt to bring in new policy for investment in fertiliser sector

The Union Government is soon expected to announce a new policy for investment in the fertiliser sector in order to promote domestic production, Mr Ram Vilas Paswan, Minister for Chemicals and Fertilisers, has said.

The Government has already decided to revive the eight closed units of the Fertiliser Corporation of India and Hindustan Fertiliser Corporation and the work on these units is expected to start in the next few months. Besides, the Centre also proposes to bring ammonium sulphate and sulphur under the subsidy regime, as the use of products containing sulphur increases agricultural productivity, the Minister said while laying the foundation stone of the Gypsum panel project of the Fertilisers and Chemicals Travancore Ltd (FACT) here on Saturday.

As part of promoting fertiliser production, the Government is also taking steps to promote sulphur application in the country by extending the normal subsidy regime to single sulphur phosphate (SSP) from May 1. Instead of uniform ad hoc subsidy of Rs 1,125 a tonne being paid till April 30, the subsidy for SSP manufactured from imported rock will be Rs 5,630 a tonne and on that produced using indigenous rock will be Rs 3,650 a tonne.
Mr Paswan said that the Centre is deeply concerned with the wellbeing of the farmers and the need to increase consumption of fertilisers in the country. This is necessary in order to provide the nation with the much required food security.

The Government has not revised the MRPs of fertilisers in the last four years, in spite of rising international prices and increase in manufacturing costs, he said.

May 4th, 2008
Source: The Hindubusinessline

Processed food ind to attract Rs 95k cr investment in 3 years

The Indian processed food industry, which constitutes only a mere 1.3 per cent of total agricultural products, will see investments of over Rs 95,000 crore in the next three years, says a report.

"Investments to the tune of 23.5 billion dollars in the food processing sector over the next three years is in the pipeline," said the report, 'India Food Report 2008', which is expected to be released at the Food Forum India in Mumbai.

This is just the right time for global firms to invest in the food processing sector, especially when the government seems eager to boost rural and farm incomes, it added.

Food segment that contributes about 13 per cent of the total organised retail pie offers huge scope for investment. Nearly 80 per cent of agricultural products in developed countries get processed and packaged, the report said. However, it is just about 1.3 per cent in India.

In this backdrop, the country's food industry is gearing up for the first food forum, to be held on May 6-7 in the financial capital of the country and over 300 companies from across the globe are expected to take part in the event.

May 4th, 2008
Source: Economic Times

RBI to launch credit cards

Reserve Bank of India (RBI) will launch an IndiaPay credit card - an Indian version of the China UnionPay card - by the end of next year.
"Inspired by the success of the China UnionPay card, we will be launching a similar one in our country to promote the use of plastic money among Indians. The credit card will be especially designed for the common people with low interest rates and risk reduction facilities," RBI executive director RB Barman told reporters on the sidelines of a press conference Saturday evening.

Barman said the National Payment Council of India (NPCI) is working on the registration process of the card. The NPCI authorities would decide on the type of the card - whether it would be a smart card or something else.

"If all our plans and government procedures gel well then we can hope to release this card in the market by the end of 2009," he added.

The China UnionPay card was introduced in 2002. The card gives access to over 85,000 ATM counters of 14 major and other minor banks across the world. Besides, the card can function as regular MasterCard or Visa credit cards abroad.

May 4th, 2008
Source: Hindustan Times

ONGC gets nod to appraise KG find

Oil and Natural Gas Corporation (ONGC) can now go ahead and exploit oil and gas from its successful Krishna-Godavari basin fields, which includes the first successful ultra deepwater (UD1) discovery in the region.

The company has recently got Government nod to conduct appraisal programme in KG-DWN-98/2. ONGC will have to complete the programme by July 2010.

An appraisal programme helps the exploration companies in establishing the commerciality of the discovery. ONGC, which holds 90 per cent in the block, with Cairn India owning the remaining 10 per cent, proposes to further dilute its stake to 65 per cent. ONGC board has already approved dilution of stake in favour of Brazil’s Petrobras by 15 per cent, Norway’s StatoilHydro 10 per cent to exploit their deepwater expertise.

The company had submitted two programmes, one pertaining to ultra deepwater, and the other, dealing with deepwater activities in the area. In KG-DWN-98/2, which includes the UD1 discovery, the company plans to drill eight wells — six deepwater wells and two ultra deepwater wells.

In December 2006, it had struck gas in UD1 well in its KG block having in place reserve estimates for between two and 14 trillion cubic feet (TCF) of gas. The block is adjacent to Reliance Industries’ prolific KG find.

In the deepwater appraisal and conceptual plan, ONGC had clubbed the development of KG-DWN-98/2 with the discoveries in the adjoining area that it holds as nomination blocks. According to sources, the company has pegged in-place reserves of more than 6.37 TCF and also plans to produce oil from the region.
ONGC’s appraisal plan outlines integrated development of the discoveries in shallow to deepwater of the northern part of the KG-DWN-98/2 block, along with other finds in the adjoining nomination region including G-29 and GS-4.

May 2ndh, 2008
Source: The Hindubusinessline

Centre plans to provide edible oil for PDS supply

The central government would supply edible oil, either soya or palm oil, through public distribution system (PDS) from June, food secretary T Nanda Kumar told reporters here on Wednesday.

One kg of oil per month per family would be provided on subsidised rate to beneficiaries of below poverty line (BPL) and Antodya-Ann-yojna from June next, Mr Kumar, who also holds PDS portfolio, said.

About one million tonne of edible oil has been ordered and it would be landing anytime in May, he said, adding that one kg of oil would cost around Rs 42 to beneficiaries after providing a subsidy of Rs 15 per kg. All state governments have been advised to place their requirements, he added.

There is no shortage of foodgrain in PDS system in the country to meet the target of 27 million tonnes wheat and rice for BPL, Mr Kumar said. He said despite of chilly weather and frost, wheat production has touched 76 million tonnes, which was 0.8 million tonnes more than the previous rabi season.

Similarly, rice production has risen to 96 million tonnes this year, about 2 million tonnes more than last year, he said.

May 1st, 2008
Source: Economic Times

Economy

Corporate India’s profit growth decelerates sharply in Q4

BL Research Bureau Corporate India’s earnings growth numbers have slowed, and quite sharply at that, in the fourth quarter (March 2008) compared with the previous year.
The 800-odd companies that have declared their March numbers till date have notched up a 17 per cent growth in net profits as against 40 per cent in the fourth quarter of fiscal ‘07.

On turnover, too, the growth rate is lower at 21 per cent as against 30 per cent in the previous year.

Both operating margins (26 per cent) and net profit margins (12.4 per cent) are at the same levels as last year. But interest costs did dent earnings, though. Compared with last year, interest cost as a percentage of operating profit has risen to over 50.6 per cent from 45 per cent. With interest rates showing no sign of softening in the near term, the pressure on this front may be here to stay. Surprisingly, tax incidence on an average appears to have reduced.

For those worrying about a slowdown, the trend in sequential sales growth offers some hope. Sales growth for the 800 companies picked up pace in the March quarter, after slowing in the December quarter. From 6.2 per cent growth in the December quarter, revenues in the March quarter have grown at 10.4 per cent. But this has come at some sacrifice as net profits have, on a sequential basis, declined by 5.8 per cent. Lower operating profit margins (OPMs) and rising interest cost appear to have been the key villains here. On a sequential basis, OPMs have come under pressure; dipping by 1.3 percentage points.

A final picture of corporate India’s growth performance must, however, await the announcement of results of more companies as over two-thirds of the listed companies are yet to declare their numbers for the March quarter.

May 4th, 2008
Source: The Hindubusinessline

Eco growth at 8-8.5%, inflation to fall in 3-months: Rangarajan

Inflation is expected to reduce to 6 per cent in the next three months from the present high-level of over 7.5 per cent, while the country's economy is expected to grow at 8-8.5 per cent despite the global turbulence, a senior government official said.

"Inflation has reached uncomfortable levels and several actions have been taken on the monetary and fiscal sides. I think in the next three months it (inflation) could come down to six per cent," Prime Minister's Economic Advisory Council Chairman, C Rangarajan, told reporters on the sidelines of an SME conference in Mumbai on Saturday.

Rangarajan said while the impact of the fiscal and monetary measures taken to contain inflation would take some time to show results, a good procurement and reasonably good monsoon expectation would also contribute towards moderating inflation.

"I do think that apart from the impact of fiscal and monetary measures, procurement has been good and the monsoons are expected to be reasonably good," Rangarajan said, adding that this too would help in moderating inflation.

He said the base effect on food price index has also caused the exaggerated inflation figure.
However, despite the slowdown globally, the country's economy is expected to grow at 8-8.5 per cent, Rangarajan said. "I think the economy will grow at 8-8.5 per cent. In fact, the Economic Advisory Council has estimated the growth at 8.5 per cent three to four months back...I think it is achievable," he said.

May 4th, 2008
Source: Hindustan Times

Despite govt measures, inflation crosses 7.5%

Rising prices of staples like vegetables, rice and milk as well as manufactured goods like steel have contributed significantly to the latest surge in the wholesale price index-based annual rate of inflation at 7.57 per cent for the week ended April 19, the highest in 42 months. For the corresponding week in 2007, the inflation rate stood at 6.07 per cent.

The latest data, which come two days after the government said that it would report the WPI inflation numbers every month instead of weekly from the end of this year, may result in further fiscal and administrative steps to control prices of commodities iron ore and finished products like steel that continue to rise.

Today, Finance Minister P Chidambaram promised that inflation will be tamed and said that food prices will "come down sooner than other prices". Talking to reporters in Bangalore, he said: "You cannot announce something on Friday and expect to have its impact on Saturday. My appeal to people is that they must be patient."

However, economists do not expect the inflation rate to come under 7 per cent in the next few weeks. "Even if the WPI rises by 20 basis points every week starting from April 19, the inflation rate would reach 8.07 per cent by June 7 this year. A 30-basis-point increase in WPI would eventually take inflation to 8.22 per cent in the same period," said Axis Bank Vice-President Saugata Bhattacharya.

May 3rd, 2008
Source: Business Standard

Exports grow 23% despite firm rupee

Amid constraints including a persistently rising rupee that eroded the margin of exporters and high transaction cost, the country’s export during 2007-08 hit $155.5 billion with exports in the final month March alone touching $16.28 billion.

Provisional foreign trade data released by the Commerce Ministry show that the country’s exports in March were $16.28 billion. Cumulative value of exports for the whole fiscal year 2007-08 amounted to $155.5 billion, against $126.4 billion in 2006-07, logging a growth of 23.02 per cent.

In rupee terms, exports grew by 9.39 per cent at Rs 6,25,471.22 crore in 2007-08 (Rs 5,71,779 crore).

Imports in March at $23.17 billion showed an increase of 35.24 per cent over $17.13 billion in the corresponding month of 2007. Cumulatively, the value of imports during 2007-08 at $235.9 billion saw a growth of 27.01 per cent ($185.7 billion). In rupee terms, imports during 2007-08 at Rs 9,49,133.82 crore (Rs 8, 40,506 crore) registered a growth of close to 13 per cent.

Non-oil imports during March at $14.54 billion was 18.73 per cent higher than $12.24 billion in March 2007, while cumulatively non-oil imports registered a growth of 23.36 per cent in 2007-08 at $15.9 billion ($12.9 billion).

Talking to media persons, the Commerce Secretary, Mr Gopal K. Pillai, said that the annual policy supplement released by the Ministry last month did indicate that export target would fall short by $5 billion but the actual turned out to be $4.5 billion.

He said engineering, chemicals, pharmaceuticals, gem and jewellery and petroleum products did well last fiscal and export of textiles and articles of apparel also now show some pickup.

May 2nd, 2008
Source: The Hindubusinessline

Sector Specific

Telecom

Rural areas: New emerging focal points for telcos

The battle for supremacy among telecom operators has moved beyond tariff wars and has shifted to rural hinterland. With phone penetration in rural areas at only 8 per cent of the population, the rural consumer has now become the target area for telecom operators.
Bharti Airtel, this week, launched a joint venture with Indian Farmers Fertiliser Cooperative limited (IFFCO). The company is clear that this initiative will give it the leverage to reach the rural consumer.

On May 2, both partners launched their joint venture company, IFFCO Kisan Sanchar Limited (IKSL), through which Bharti will have access to IFFCO's 55 million members covering 98 per cent of the country's villages.

The tariff rates, while competitive, may not be the cheapest with call rates fixed at 50 paise per minute for calls between IFFCO members.

Reliance Communication has also targeted the rural segment in a big way with its low tariff initiative like the Grameen Programme. The company has introduced its ‘Grameen packs' for rural subscribers. The two packs were priced at Rs 49 for the rural variant. For its life time pack, the cost is Rs 249 in rural areas while in urban areas it costs Rs 299.
Vineet Bhatia, COO, Delhi and NCR, and regional head, North, Tata Teleservices Ltd said: "We already have affordable tariff plans in place with a flat 49 paise per minute for all Tata Indicom to other Indicom users. For example, under our North and South corridor schemes customers can call up within their respective regions at nominal tariffs."

However, analysts said in rural areas the tariff would not be as much of an incentive for customers as the entry price point. An analyst said that Bharti had land coverage of about 70 per cent while its competitors have land coverage of up to 45 per cent, so this move gives Bharti a clear advantage in rural areas.

However, the analyst added that within two years all players will have the same coverage area.

May 4th, 2008
Source: Business Standard

Power

RPower buys 3 coal mines in Indonesia

Anil Ambani-controlled Reliance Power Ltd has acquired three coal mines in Indonesia in an attempt to produce power at a cheaper cost. Coal from Indonesian mines will be used for power generation in Maharashtra and Andhra Pradesh.

The company, however, has not disclosed the valuation for the acquisitions. A Reliance Power release said the company plans to invest $1 billion (Rs 4,100 crore) for the expansion of these mines. The announcement had little impact on the company’s share price, which closed at Rs 396.75, up 0.62 per cent, on the Bombay Stock Exchange on Friday when the benchmark Sensex was up 323.96 points to close at 17611.27.

With the company laying the ground for getting additional coal, it proposesto set up another 4000 MW-coal fired power plant in Gujarat or Tamil Nadu. "Now we have additional linkage to coal. We are planning to set up another 4000 mw capacity," said J P Chalasani, CEO of Reliance Power. After the proposed expansion plans, the company’s total power generation capacity will reach 32,200 MW.

As coal-based power plants are becoming more attractive due to lesser cost of production, power generation companies are trying to acquire mine assets across the globe, according to analysts. Last year, Tata Power paid $1.1 billion to pick up 30 per cent stake in two Indonesian coal mines owned by PT Bumi Resources. Currently India has a power shortage of over 75,000 MW. The Union power ministry is targeting to produce one lakh MW over the next five years.

"With the announcement of ultra mega projects and the current power shortage scenario, companies are looking for cheaper source of power generation and this makes coal the most preferred option," said a Mumbai-based analyst working with institutional broking firm Edelweiss Securities. Reliance Power has acquired mines which are situated in the South Sumatra region of Indonesia.

The mines are estimated to house over 2 billion metric tonne of coal reserves, spread over 40,000 hectors. They include SreeVijaya Bin Tank Piga, Brayayan Bing Tang Tiga NLG and Sujico Pensdragon Energy, which are currently owned by mine concessionaires of Indonesia.

May 4th, 2008
Source: Hindustan Times

Banking & Finance

New venue for investors

Real estate mutual funds (REMFs) hold promise as a viable option for retail investors to participate in real estate as an asset class. While this could be a challenge to the mutual fund industry to manage a different asset class, the scheme could prove to be a boon for the real-estate industry that often struggles to churn capital due to difficulty in offloading assets developed.

REMFs would be close ended with units listed on a recognised stock exchange. The funds can invest in real-estate assets, equity and debt instruments of real-estate companies or those dealing in such assets.

The fund’s NAV would be declared on a daily basis, although valuations of real-estate assets held by the fund would be done on a quarterly timeframe. This essentially means that there would be little change in NAVs on a daily basis; changes in the price of securities held by the fund would be the only dynamic component in the NAV on a daily basis.

REMFs seek to gain exposure to three segments — completed real-estate assets, stocks of realty companies and mortgage-backed securities that yield income. While investors may be familiar with the last two classes of investments, exposure to real-estate assets is the new feature these funds will seek to offer.

REMFs are required to hold at least 35 per cent of their total funds in real-estate assets and are also subject to a cap on exposure to individual projects or a single city.
Investments in real-estate assets can however be made by funds only in completed projects. This essentially means that REMFs would generate income through lease of assets held by them or capital appreciation through sale of such assets.

Traditionally, profitability of real-estate companies has come from developing low-cost land. REMFs may not be able to participate in such gains given that they cannot invest directly in projects under development. They can at best invest in securities of such companies that are developing the projects.

Investors in REMFs can at best view this product as an exposure to another asset class — viz. real estate. “Investments of REMFs would be illiquid,” says Mr Jai Mavani, Executive Director, KPMG. “However they offer a mid-path to investors, between low risk, low return REITs and high risk, high return real-estate venture funds.”
Investors equating these products to equity investments or those looking to see their NAVs move like stock prices may be in for disappointment as the funds may not be selling and buying property frequently. The close-ended nature would also provide fewer exit options. REMFs would also not get the status enjoyed by equity funds for tax purposes as they would be required to invest not less than 35 per cent in realty assets. Investors would, therefore, suffer long term capital gains or short-term capital gains at applicable rates. However, without an equity fund status, they would not be subject to securities transaction tax.

On the positive side, income generated through leases may be distributed in the form of tax-free dividends, thus providing an income-generating investment.

May 4th, 2008
Source: The Hindubusinessline

‘PSBs unlikely to raise lending rates’

The Union Finance Minister, Mr P. Chidambaram, on Thursday said that he did not expect public sector banks (PSBs) to hike lending rates in the “reasonable future”, because of the increase in the cash reserve ratio (CRR) by 75 basis points by the RBI in the last fortnight.

“By and large, banks have welcomed the stance of the RBI in the latest monetary policy statement. They are quite happy that only CRR has been hiked and policy rates have been untouched. They do not expect the CRR hike to impact interest rates. Going forward, in the reasonable future, I do not expect any increase in interest rates by PSBs,” Mr Chidambaram told reporters after a meeting with the chief executives of PSBs here today.
At the meeting, the Finance Minister also asked the PSBs to review their portfolio on derivatives and ensure that their clients understand the “exotic” derivative products, before they are sold to them.

“He was keen that there be no mis-selling of exotic derivative products to companies. The whole focus was on exotics and not on vanilla products that banks anyway offer,” a banker said. Indications are that the RBI would come up with more guidelines on the issue of derivatives.

Mr Chidambaram also said that the housing loan category could expect higher credit flow without impacting interest rates in the wake of the RBI’s move to lower risk weight for home loans up to Rs 30 lakh.

Bank credit to the housing sector during 2007-08 stood at Rs 2,51,688 crore up to February 15, 2008, compared with Rs 2,24,758 crore during the same period in the previous year. Home loans to individuals grew 16.44 per cent to Rs 1,48,489 crore during 2007-08 compared with Rs 1,27,322 crore in previous year.

On the RBI estimate that, going forward, deposits will grow by 17 per cent and advances will grow by 20 per cent, Mr Chidambaram said “17 and 20 appear to be slightly conservative estimates, but 17 and 20 are satisfactory growth rates for 2008-09.”
The RBI had, in the last fortnight, announced hike in the CRR in three phases i.e from 7.5 per cent to 7.75 per cent effective from April 26, from 7.75 per cent to 8 per cent effective from May 10 and from 8 per cent to 8.25 per cent effective from May 24. This is expected to mop up roughly Rs 27,000 crore of liquidity in the system.

May 2nd, 2008
Source: The Hindubusinessline

Steel

Export duty on steel may not improve domestic supplies, say producers

The imposition of export duty on iron and steel products may not yield the desirable increase in the domestic market’s availability of steel.

This was the mood among steel manufacturers after the Finance Minister announced a slew of fiscal measures aimed at checking rising steel prices.

Welcoming the move, the President of the Indian Steel Alliance (ISA), Mr Moosa Raza, said “We support the Government in all actions that help control inflation. However, ISA is not very sure whether imposition of export duty will add significantly to the availability of steel in India.” However, he also pointed out that the export duty may be a short-term measure and Indian suppliers to overseas buyers would not like to lose their long-term market by dishonouring commitments and there are also EPCG obligations.
“The net effect may be the margins of the Indian steel industry may be affected , without significantly adding to the overall availability,” he said.

The Director of Essar Steel Holdings, Mr J. Mehra, said, “The Government’s move to impose export duty on steel is an attempt to solve the immediate problem with serious implications.”

“On long-term supply management issues, unless the Government takes definite initiatives in facilitating additional steel making capacities, measures taken (as of now) are counter productive as they reduce the capabilities of the steel companies to plough back and increase steel capacities which is the need of the hour,” he said.

May 1st, 2008
Source: The Hindubusinessline

Cement

Cement price control under Govt consideration

Serious in its intent to rein-in cement prices, the Government is contemplating using a practically abandoned provision of the Industries (Development and Regulation) Act, 1951, which empowers it to regulate prices and supplies of industrial commodities.
This provision, Section 18G, continues to be on the statute books but has not been used for almost 19 years after a Cabinet decision in 1989 not to invoke it. Section 18G provides for control on prices and supplies of industrial products without bringing them under the purview of the Essential Commodities Act under which powers are vested with States.

Contacted by Business Line for a confirmation, the Minister of State for Industries, Mr Ashwani Kumar, said his Ministry was conducting a study on whether the cement industry was into cartelisation and profiteering. “Our Ministry is analysing the pricing of the cement industry,” he said.

The analysis is being done on the basis of data provided by public sector Cement Corporation of India, the Bureau of Industrial Costs and Prices, the National Productivity Council, Cement Manufacturers Association and also private players. The departmental exercise is expected to be completed in another two to three days.

“If there is any prima facie evidence, we will resort to the strictest administrative measures to ensure fairness and reasonability of prices,” he said.
The Minister made it clear that the Government was not intending to curb profits by industry; nor was it keen to go back to the licence control Raj, but industry too would have to keep the interests of the consumers in mind. “The industry should take the Prime Minister’s call to refrain from windfall profits in an era of shortages very seriously,” he added.

Currently, cement prices are ruling in the range of Rs 190 to Rs 250 for a 50-kg bag. “I have asked for reasons for such variations across States. The industry keeps saying it is increase in transport cost but that is not convincing,” Mr Kumar said.

The Minister pointed out that the domestic cement industry has a capacity of 168.31 million tonnes a year and plants were spread over 19 States. “So the cement produced in north, south or the eastern region gets consumed within the region, which does not involve huge transport costs,” he explained.

Taking note of the fact that despite banning exports cement producers had not cut prices, the Government was putting infrastructure in place to increase imports from Pakistan which has excess annual capacity of around 6 million tonnes.

May 2nd, 2008
Source: The Hindubusinessline

Cement realisations hit in Jan-March quarter

The Government’s measures to keep cement prices under check seem to have had a cascading effect on companies’ price realisations.

Industry majors – ACC, Ambuja Cement and UltraTech – have reported a drop or flat net realisation per tonne.

On a sequential basis, ACC’s net realisation dropped 3 per cent to Rs 3,325 a tonne. Net sales increased less than one per cent at Rs 17,958 crore (Rs 17,855 crore).
Raw material cost was up 11 per cent to Rs 2,730 crore (Rs 2,465 crore) in the first quarter of the calendar year 2008. Freight cost jumped 9 per cent to Rs 2,435 crore (Rs 2,236 crore).

“Coal pricing mechanism would shift from a controlled regime to a market-driven one, posing stiff challenges for ACC with almost 90 per cent dependence on domestic coal,” said Mr Kamlesh Bagmar, research analyst, Prabhudas Lilladher.

Ambuja Cement’s realisation dipped 3.4 per cent to Rs 3,448 a tonne (Rs 3,571) on sequential basis. Raw material cost zoomed 62 per cent to Rs 255 crore (Rs 157 crore), while freight cost was up 24 per cent to Rs 274 crore (Rs 221 crore).

UltraTech Cement’s realisation was down one per cent on sequential basis at Rs 3,796 a tonne (Rs 3,838).

May 3rd, 2008
Source: The Hindubusinessline

International

Southeast Asia to cooperate over food security

Southeast Asia nations meeting in Bali have agreed to cooperate over the rice market, Malaysia's Trade Minister said on Saturday, as rocketing prices shock a region where the grain is a core part of most meals.

The issue of food security has hijacked the weekend trade meeting of the 10-member Association of Southeast Asian Nations (ASEAN) on the Indonesian resort island.
Malaysian Trade Minister Muhyiddin Yassin told reporters that a statement due to be released on Saturday -- a day earlier than expected -- would include rice.
Asked whether ASEAN members had agreed to cooperate over rice, he said: "Yes, yes," without elaborating.

Indonesian Trade Minister Mari Pangestu said earlier on Saturday that rice had been a key part of the discussions.
The group already had a scheme known as the ASEAN emergency rice reserve, which had about 87,000 tonnes of rice committed and was designed to be used for emergency purposes, she added.

The meeting is also discussing efforts to build momentum for long-delayed world trade talks, as well as freeing up trade in ASEAN, a region with a $1 trillion combined Economy that aims to conclude a free trade zone by 2015.
Asian rice prices have almost trebled this year and prices on the Chicago Board of Trade have risen more than 80 per cent.
But Asian countries face different issues over rice, with the region home to the world's biggest importer, the Philippines, and the world's top exporter, Thailand.
Thailand, which expects to export more than 9 million tonnes of rice this year, has sought to soothe market concerns as other top rice exporters such as India and Vietnam have spooked major importers by moving to curb exports to ensure domestic supply.

May 4th, 2008
Source: Reuters

Videocon eyeing Motorola’s handset biz

World’s third largest mobile handset brand Motorola could soon have an Indian owner. Consumer durables major Videocon has sent an expression of interest to Motorola for buying out the US-based company’s troubled handset business.

“We have expressed our interest in acquiring Motorola’s handset business. Owning a global handset business is in complete synergy with our existing telecom and retail plans. With a huge growth in the cellular segment we have always wanted to foray into the mobile handset space,” Mr Venugopal Dhoot, Chairman, Videocon Group, told Business Line.

The move comes after Motorola had decided, on March 26, that it will hive off the troubled mobile device business into a separate company. One of the key investors in Motorola, Mr Carl Icahn, wants the company to sell the business. The phone maker has lost a third of its market share last year as its once-popular Razr phone faded and as rival products garnered more buzz and sales.

In India too Motorola has not been performing well in the handset segment despite having some of the cheapest products in the market. Motorola has a handset manufacturing facility in Chennai where the company makes both CDMA and GSM mobile phones.

When contacted, Motorola spokesperson said that the company did not comment on speculation and rumours. Sources said that it was unlikely that Motorola will sell its business to Videocon as it did not have a global brand value when compared to that of Motorola.

May 2nd , 2008
Source: The Hindubusinessline

Agriculture

Import curbs, stock limits may make pulses dearer

Higher global pulses prices and stock limits imposed by state governments that slowed down imports, along with a fall in winter crop output, may push up domestic prices in next two months, industry officials said.

Prices of a majority of pulses fell sharply in local spot markets in the last one month after state governments raided traders to check hoarding, but are still above last year’s levels.

The Centre in February extended powers of state governments for six months under the Essential Commodities Act, 1955, to prevent hoarding of key commodities to control prices.

Price of chana, a major pulse, fell 7.6% to Rs 2,519 per 100 kg in a month to April 30 at the Delhi market, but higher than around Rs 2,300 a year earlier. The import price of chana in Mumbai port is around Rs 2,750.

“Import is not a feasible option. Prices of pulses are higher by 6 to 12% in the international market,” said Prem Kogta, a dal miller based in Jalgaon, Maharashtra, who has a procurement centre in Myanmar.

India, the world’s biggest producer, consumer and importer of pulses, battling rising prices, allowed duty-free pulses import and banned export in 2006 and extended it till March 2009.

Though there is no stock limit on imported pulses, traders are going slow on imports due to government moves to check hoarding, said KC Bhartiya, president, Pulses Importers’ Association of India, adding “Government agencies should import more to rein in prices in the domestic market”.

May 1st , 2008
Source: Economic Times

90 lakh tonne wheat procured from Punjab

Wheat procurement in Punjab has touched 90 lakh tonne mark, even as state's contribution towards national pool has reached 85.74 lakh tonne so far during the current rabi marketing season.

The spokesman said that six government agencies and private millers have procured over 89.86 lakh tonne of wheat in Punjab out of which 85.74 lakh tonne has been procured for the central pool and 1,86,045 tonne (2.1 per cent) has been procured for the state pool.

According to an official spokesman, out of total procurement of 89,86,330 tonne of wheat in all the procurement centers of Punjab, private millers lifted 2,25,545 tonne which is 2.5 per cent of total wheat lifting.

PUNGRAIN procured 15, 88,557 tonne, MARKFED procured 20, 29,801 tonne, PUNSUP procured 19, 53, 028 tonne, PSWC procured 10, 92,022 tonne whereas PAIC was able to procure 9, 90,347 tonne of wheat for the central pool.
FCI had been able to procure 9, 20,985 tonne for the central pool. The Punjab Government has made a payment of more than Rs. 8000 crore to the farmers of the State for wheat procured up to May1 ensuring payment to the farmers within 48 hours of lifting of their wheat.

May 4th, 2008
Source: Business Standard