New Delhi: India and Japan have decided to further strengthen their cooperation in the maritime sector as a part of the overall robust bilateral relations. The two countries agreed to enhance their interaction through the existing forums and through port-to-port exchanges.
These issues came up for a discussion between the Union Minister of Shipping Shri G.K. Vasan, who is on an official visit to Japan and his Japanese counterpart Shri Akihiro Ohta, Minister of land, Industries and Transport & Tourism, Government of Japan.
Shri Vasan explained the developments that were taking place in India in the Ports sector and assured Shri Ohta that concerns regarding infrastructure and connectivity of ports are being addressed expeditiously. In particular, he said that the ports in Ennore and Chennai are catering to the Japanese car exporters like Toyota and Nissan who have so far exported about 42000 and 300000 cars respectively from these ports.
During the talks, Shri Vasan thanked the Japanese government for its support to various Indian Ports and infrastructure projects through the Japan International Cooperation Agency (JICA). He also mentioned the possibility of JICA assistance to VOC Port at Thoothukudi for the upcoming Outer Harbour Project.
Japanese Minister Shri Ohta, while acknowledging the existing cordial relationship between India and Japan, assured that Japan will carry forward the momentum. He also thanked Shri Vasan for his efforts in this direction and expressed Japan’s interest in shipbuilding and recycling industries in India.
Shri Vasan later visited the Yokohama port where he was received by Shri Nobuya Suzuki, Deputy Mayor of Yokohama city and Shri Masaharu Ikegami, the Vice Director General of the Ministry of Land, Industries and Transport & Tourism, (MLIT) Government of Japan.
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HDFC Bank launches rural financial literacy initiative in Kerala
New Delhi: HDFC Bank Ltd has launched its rural financial literacy initiative in the village of Palakkad Marutha Road, in Kerala, under the aegis of the Reserve Bank of India (RBI).
HDFC Bank will conduct financial literacy camps in 39 rural and semi-urban branches across Kerala. As per instructions from the RBI, these branches will serve the Malampuzha block in Palakkad district and the Mathilakam block in Trichur district of Kerala. The camps will enable both adults and school children from 234 Panchayath wards in 26 villages to attain a conceptual understanding of financial products and services.
This initiative is in line with the RBI's recent circular which recommended that banks should scale up financial literacy efforts in rural areas through their branch networks.
HDFC Bank will use the Financial Literacy Guide, provided by the RBI as the standard curriculum while conducting these camps. This material is currently available in Hindi and English.
HDFC Bank has gone a step further in Kerala and is the first bank to translate the guide into Malayalam, which is the local language. This has been done in consultation with the RBI and will greatly increase the impact and efficacy of these camps in Kerala will allow the participants to understand the material in the language they are most comfortable with.
HDFC Bank will conduct financial literacy camps in 39 rural and semi-urban branches across Kerala. As per instructions from the RBI, these branches will serve the Malampuzha block in Palakkad district and the Mathilakam block in Trichur district of Kerala. The camps will enable both adults and school children from 234 Panchayath wards in 26 villages to attain a conceptual understanding of financial products and services.
This initiative is in line with the RBI's recent circular which recommended that banks should scale up financial literacy efforts in rural areas through their branch networks.
HDFC Bank will use the Financial Literacy Guide, provided by the RBI as the standard curriculum while conducting these camps. This material is currently available in Hindi and English.
HDFC Bank has gone a step further in Kerala and is the first bank to translate the guide into Malayalam, which is the local language. This has been done in consultation with the RBI and will greatly increase the impact and efficacy of these camps in Kerala will allow the participants to understand the material in the language they are most comfortable with.
Airtel launches 3G services in Bangladesh
Mumbai: Airtel Bangladesh, a unit of Bharti Airtel, has launched 3G services in Bangladesh’s Dhaka and Chittagong cities.
“We are excited to offer innovative products and affordable prices for our 3G services with highest speed, innovative contents for all segments, which will mark a major milestone for Airtel in Bangladesh. As the country ushers in an era of high speed mobile telephony, it will be Airtel’s endeavour to be at the forefront of this growth story,” Airtel Bangladesh Managing Director and Chief Executive Officer, Chris Tobit, said.
“We will continue with our philosophy of bringing unique and world-class services, which will provide value for money for our customers backed by the latest technology. With this offer, I believe Airtel will capture a unique position among its customers in terms of communication in the form of entertainment, infotainment, edutainment, m-health, m-commerce etc.”
Airtel 3G data packs are available for Bangladeshi taka (BDT) 15 for 15 MB. Video calls between Airtel to Airtel customers will be levied at BDT 1 per minute.
“We are excited to offer innovative products and affordable prices for our 3G services with highest speed, innovative contents for all segments, which will mark a major milestone for Airtel in Bangladesh. As the country ushers in an era of high speed mobile telephony, it will be Airtel’s endeavour to be at the forefront of this growth story,” Airtel Bangladesh Managing Director and Chief Executive Officer, Chris Tobit, said.
“We will continue with our philosophy of bringing unique and world-class services, which will provide value for money for our customers backed by the latest technology. With this offer, I believe Airtel will capture a unique position among its customers in terms of communication in the form of entertainment, infotainment, edutainment, m-health, m-commerce etc.”
Airtel 3G data packs are available for Bangladeshi taka (BDT) 15 for 15 MB. Video calls between Airtel to Airtel customers will be levied at BDT 1 per minute.
Chocolatier Mars brings Galaxy to India
New Delhi: Mars International India, which imports and markets its chocolate brands in India, is scouting for locations to start manufacturing here.
The company, which so far has been focussing on growing its Snickers brand, launched its tablet chocolate brand Galaxy in India on Thursday.
Asked about plans to start manufacturing its chocolates in India, M.V. Natarajan, General Manager, Chocolate business, Mars International India, said the company was evaluating suitable locations and could start manufacturing in the next 2-3 years.
“We are looking at India as a long-term opportunity. We will continue to evaluate opportunities for manufacturing. Local supply will be a critical focus,” he added.
The company expects Galaxy to fuel its future growth in India. Raghav Rekhi, Marketing Director, Mars International India, said India was one of the few markets where tablet chocolates constituted nearly 50 per cent of the estimated Rs 5,000-crore chocolate market, which is growing at 20 per cent compounded annual growth rate.
“Galaxy is one of our biggest brands globally. It is not just about transporting a global product into India. We have focused on tailoring the product for the Indian market, making the brand accessible at the right price point, bringing in innovation on packaging based on Indian consumer’s insights and supporting it by the right communication plan and distribution which ensures that the quality of the product is maintained,” he added.
The company has roped in actor Arjun Rampal and television actor Sapna Pabbi to endorse the brand.
Galaxy chocolate is currently available at Rs 15 and Rs 40.
Natarajan said the company would continue to evaluate opportunities for other price points and sizes. The brand will be available across the key urban regions in the next 4-6 months.
The company has been looking at various strategies to grow its market share in India. Earlier this year, it launched vegetarian Snickers, keeping the Indian consumer in mind.
The company, which so far has been focussing on growing its Snickers brand, launched its tablet chocolate brand Galaxy in India on Thursday.
Asked about plans to start manufacturing its chocolates in India, M.V. Natarajan, General Manager, Chocolate business, Mars International India, said the company was evaluating suitable locations and could start manufacturing in the next 2-3 years.
“We are looking at India as a long-term opportunity. We will continue to evaluate opportunities for manufacturing. Local supply will be a critical focus,” he added.
The company expects Galaxy to fuel its future growth in India. Raghav Rekhi, Marketing Director, Mars International India, said India was one of the few markets where tablet chocolates constituted nearly 50 per cent of the estimated Rs 5,000-crore chocolate market, which is growing at 20 per cent compounded annual growth rate.
“Galaxy is one of our biggest brands globally. It is not just about transporting a global product into India. We have focused on tailoring the product for the Indian market, making the brand accessible at the right price point, bringing in innovation on packaging based on Indian consumer’s insights and supporting it by the right communication plan and distribution which ensures that the quality of the product is maintained,” he added.
The company has roped in actor Arjun Rampal and television actor Sapna Pabbi to endorse the brand.
Galaxy chocolate is currently available at Rs 15 and Rs 40.
Natarajan said the company would continue to evaluate opportunities for other price points and sizes. The brand will be available across the key urban regions in the next 4-6 months.
The company has been looking at various strategies to grow its market share in India. Earlier this year, it launched vegetarian Snickers, keeping the Indian consumer in mind.
CRI Pumps opens unit in China
Coimbatore: Pump manufacturing major CRI Pumps has opened its subsidiary – CRI Pumps Shanghai Co Ltd — in China. This is the pump major's sixth foreign subsidiary company. It has one subsidiary company each in Brazil, South Africa, the UAE, Spain and Turkey.
The Chinese subsidiary is expected to become fully operational in about a month’s time.
G. Soundararajan, Vice-Chairman, said the investment in the China facility would be around $6 million.
CRI China would focus on industrial, mining, process industries, pressure boosting systems, building services segment and projects in the first phase, he said.
“We acquired the industrial pumps business of UK-based Pumps & Process Systems about a year ago. We will be leveraging this acquisition for entering the China market,” he told Business Line.
On the company's foray into China, he said: “Mcilvaine survey has estimated the pump market in China at $8.4 billion by 2015. Around 13.5 million units of various types of pumps are sold there in a year. The market there is undergoing a major transition and we intend to leverage our strength and capitalise on the developments”.
On the company's performance, he said: “Our turnover last year was Rs 1,025 crore, of which Rs 170 crore was from our international business. Exports are growing at 35-40 per cent now. We are targeting to achieve a turnover of Rs 1,300 crore this fiscal, including Rs 230 crore from our international operations.”
The Chinese subsidiary is expected to become fully operational in about a month’s time.
G. Soundararajan, Vice-Chairman, said the investment in the China facility would be around $6 million.
CRI China would focus on industrial, mining, process industries, pressure boosting systems, building services segment and projects in the first phase, he said.
“We acquired the industrial pumps business of UK-based Pumps & Process Systems about a year ago. We will be leveraging this acquisition for entering the China market,” he told Business Line.
On the company's foray into China, he said: “Mcilvaine survey has estimated the pump market in China at $8.4 billion by 2015. Around 13.5 million units of various types of pumps are sold there in a year. The market there is undergoing a major transition and we intend to leverage our strength and capitalise on the developments”.
On the company's performance, he said: “Our turnover last year was Rs 1,025 crore, of which Rs 170 crore was from our international business. Exports are growing at 35-40 per cent now. We are targeting to achieve a turnover of Rs 1,300 crore this fiscal, including Rs 230 crore from our international operations.”
Rs 100-cr science city project for Hyderabad
Hyderabad: The Andhra Pradesh State Council of Science and Technology, an autonomous body under the State government, has submitted a proposal to set up a Rs 100-crore science city on the outskirts of Hyderabad.
While the State government is to share Rs 40 crore, the Centre is likely to bear the rest of the cost. “The Centre is considering the proposal and we hope to get the approval soon. We already have a 20-acre plot for the project,” Y. Nagesh Kumar, Member Secretary, told media persons on the sidelines of a CII meeting with Innovation Norway delegation here today.
The council was floated by the State government in 1986 to formulate measures to foster the spirit of science at all levels of society, especially among students, teachers and academicians, apart from transferring new technologies from the laboratories to the field.
The proposed Science City would house interactive exhibits on various topics of science, ranging from astronomy to biology, a planetarium and galleries.
It has also planned a Centre for Creativity within the science city, which will be a facilitator for innovators, including research scholars and teachers. “This centre would cost about $ 50 million. We are in talks with Innovation Norway to participate in the setting up of the centre,” Kumar said.
The council is setting up the second Regional Science Centre at Warangal, after the one in Vijayawada. “The Warangal facility being set up at a cost of Rs 5 crore is expected to be ready next month. It will house science exhibits that will explain science in pictorial forms to the youth,” he said, adding that there were proposals to set up a sub-regional science centre at Rajahmundry at a cost of Rs 5 crore.
Earlier, a delegation from Innovation Norway, which funds and facilitates research in innovative technologies, interacted with industrialists, scienctists and entrepreneurs.
Ole Johan Sandvaer, Regional Director, said Innovation Norway was present in 35 countries, including India. “We are increasing focus on India. We will be opening our second Indian office in Mumbai in the first quarter of next year,” he said.
While the State government is to share Rs 40 crore, the Centre is likely to bear the rest of the cost. “The Centre is considering the proposal and we hope to get the approval soon. We already have a 20-acre plot for the project,” Y. Nagesh Kumar, Member Secretary, told media persons on the sidelines of a CII meeting with Innovation Norway delegation here today.
The council was floated by the State government in 1986 to formulate measures to foster the spirit of science at all levels of society, especially among students, teachers and academicians, apart from transferring new technologies from the laboratories to the field.
The proposed Science City would house interactive exhibits on various topics of science, ranging from astronomy to biology, a planetarium and galleries.
It has also planned a Centre for Creativity within the science city, which will be a facilitator for innovators, including research scholars and teachers. “This centre would cost about $ 50 million. We are in talks with Innovation Norway to participate in the setting up of the centre,” Kumar said.
The council is setting up the second Regional Science Centre at Warangal, after the one in Vijayawada. “The Warangal facility being set up at a cost of Rs 5 crore is expected to be ready next month. It will house science exhibits that will explain science in pictorial forms to the youth,” he said, adding that there were proposals to set up a sub-regional science centre at Rajahmundry at a cost of Rs 5 crore.
Earlier, a delegation from Innovation Norway, which funds and facilitates research in innovative technologies, interacted with industrialists, scienctists and entrepreneurs.
Ole Johan Sandvaer, Regional Director, said Innovation Norway was present in 35 countries, including India. “We are increasing focus on India. We will be opening our second Indian office in Mumbai in the first quarter of next year,” he said.
Mumbai top most city in internet penetration
New Delhi: Move over Bangalore, the much touted IT city, it's Mumbai which has the highest penetration of internet users in the country. Mumbai with 12 million internet users has emerged as the top most city, followed by Delhi with 8.1 million internet users and Hyderabad with 4.7 million internet users. Chennai with 4.5 million internet users and Kolkata with 4.4 million internet users are fourth and fifth respectively, according to a statement by Internet & Mobile Association of India (IAMAI).
Bangalore, with 3.8 million users is sixth in internet user penetration. In 2012, Mumbai had 8.3 million internet users, while Delhi had 8.1 million internet users. There were 3.6 million internet users in Hyderabad in 2012, while Chennai had 3.4 million internet users and Kolkata had 3 million internet users.
With 47 per cent y-o-y growth, Kolkata, however, registered the highest growth of internet users among all the top cities in India. Mumbai with 45 per cent y-o-y growth is second while Bangalore with a growth y-o-y of 43 per cent is third. Pune, with a growth of 37 per cent is fourth while Delhi with a y-o-y growth of 35 per cent is fifth.
Ahmedabad, with y-o-y 26 per cent, registered the lowest growth rate among the top eight cities.Overall, the the top 4 metros have a 37 per cent penetration of Active Internet Users.
Among the other 4 Metros, Hyderabad leads the charge with a penetration of 37 per cent Active Internet Users. Coimbatore with a 40 per cent penetration leads in the Small Metros category.
Bangalore, with 3.8 million users is sixth in internet user penetration. In 2012, Mumbai had 8.3 million internet users, while Delhi had 8.1 million internet users. There were 3.6 million internet users in Hyderabad in 2012, while Chennai had 3.4 million internet users and Kolkata had 3 million internet users.
With 47 per cent y-o-y growth, Kolkata, however, registered the highest growth of internet users among all the top cities in India. Mumbai with 45 per cent y-o-y growth is second while Bangalore with a growth y-o-y of 43 per cent is third. Pune, with a growth of 37 per cent is fourth while Delhi with a y-o-y growth of 35 per cent is fifth.
Ahmedabad, with y-o-y 26 per cent, registered the lowest growth rate among the top eight cities.Overall, the the top 4 metros have a 37 per cent penetration of Active Internet Users.
Among the other 4 Metros, Hyderabad leads the charge with a penetration of 37 per cent Active Internet Users. Coimbatore with a 40 per cent penetration leads in the Small Metros category.
RBI unveils norms for foreign banks to set up wholly-owned units
Mumbai: Foreign banks that want to set up operations in India will have to do so through an independent subsidiary. This means they cannot operate as a branch of the parent bank.
The Reserve Bank of India has announced new guidelines with a view to ring-fence the local operations of foreign banks from adverse developments in their home countries.
However, the RBI will allow some foreign banks to operate in India as a branch of their parent bank.
The wholly-owned subsidiary (WOS) model will be compulsory for banks which have complex structures, are perceived as systemically important and belong to jurisdictions which give preferential treatment to deposits of home country.
Currently, foreign banks as a group are entitled to open 12 branches in India every year, according to WTO commitments. India has usually allowed a higher number.
The new dispensation will probably help foreign bank branches proliferate — provided, of course, their countries have reciprocal arrangements for Indian banks in their territories.
Old foreign banks that set up shop prior to August 2010 (such as Citibank, HSBC, Standard Chartered and DBS) will have the option to continue operating as a branch of their foreign parent, but they will be “incentivised” to convert into WoS.
To prevent foreign banks from dominating the banking system, the RBI said that it will put in place certain restrictions. Requiring foreign banks to get RBI’s prior approval before getting liquidity infusion from their parent bank would be one such condition.
The initial minimum capital for a WoS will be Rs 500 crore, which foreign banks would need to bring upfront; this applies to even existing foreign banks which wish to convert.
Further, the RBI said that the WoS will be required to meet Basel-III requirements (9 per cent Tier-I capital) right from Day One. For the first three years, the WoS will have to maintain Tier-I capital at 10 per cent.
The Priority Sector Lending (PSL) requirement will be 40 per cent for WoSs, such as domestic scheduled commercial banks. Existing foreign bank branches converting into WoS will be given “adequate” time to comply with the PSL targets.
Branch Operations
On opening of new branches, the RBI has sought to bring the WOSs on a par with domestic banks.
They will be allowed to open branches in Tier 1- centres without taking prior permission from the RBI provided at least 25 per cent of their branches are opened in un-banked rural centres (Tier 5 and Tier 6).
Board of Directors
The RBI also mandated that at least a third of the directors should be independent of the management of the subsidiary in India, its parent or associates. It also wants at least a third of the directors to be Indian nationals resident in India.
The Reserve Bank of India has announced new guidelines with a view to ring-fence the local operations of foreign banks from adverse developments in their home countries.
However, the RBI will allow some foreign banks to operate in India as a branch of their parent bank.
The wholly-owned subsidiary (WOS) model will be compulsory for banks which have complex structures, are perceived as systemically important and belong to jurisdictions which give preferential treatment to deposits of home country.
Currently, foreign banks as a group are entitled to open 12 branches in India every year, according to WTO commitments. India has usually allowed a higher number.
The new dispensation will probably help foreign bank branches proliferate — provided, of course, their countries have reciprocal arrangements for Indian banks in their territories.
Old foreign banks that set up shop prior to August 2010 (such as Citibank, HSBC, Standard Chartered and DBS) will have the option to continue operating as a branch of their foreign parent, but they will be “incentivised” to convert into WoS.
To prevent foreign banks from dominating the banking system, the RBI said that it will put in place certain restrictions. Requiring foreign banks to get RBI’s prior approval before getting liquidity infusion from their parent bank would be one such condition.
The initial minimum capital for a WoS will be Rs 500 crore, which foreign banks would need to bring upfront; this applies to even existing foreign banks which wish to convert.
Further, the RBI said that the WoS will be required to meet Basel-III requirements (9 per cent Tier-I capital) right from Day One. For the first three years, the WoS will have to maintain Tier-I capital at 10 per cent.
The Priority Sector Lending (PSL) requirement will be 40 per cent for WoSs, such as domestic scheduled commercial banks. Existing foreign bank branches converting into WoS will be given “adequate” time to comply with the PSL targets.
Branch Operations
On opening of new branches, the RBI has sought to bring the WOSs on a par with domestic banks.
They will be allowed to open branches in Tier 1- centres without taking prior permission from the RBI provided at least 25 per cent of their branches are opened in un-banked rural centres (Tier 5 and Tier 6).
Board of Directors
The RBI also mandated that at least a third of the directors should be independent of the management of the subsidiary in India, its parent or associates. It also wants at least a third of the directors to be Indian nationals resident in India.
Vasan-led team heads to Japan to promote Indian ports
Chennai: Indian ports hope to work with their counterparts in Japan to increase capacity utilisation here.
G. K. Vasan, Union Shipping Minister, will lead a delegation to Japan to discuss with the Government and business community there for increased utilisation of Indian ports, especially Chennai and Ennore.
He will be in Japan from November 7 to 12 at the invitation of Akihiro Ohta, Minister of Land, Infrastructure Transport and Tourism, Japan.
The delegation members include Vishwapati Trivedi, Shipping Secretary, and M.A. Bhaskarachar, Chairman, Ennore Port Ltd (EPL). The delegation will visit ports of Yokohama and Nagoya to explore operations and technologies in these two ports. The Minister will hold discussions with Japanese funding agency JICA to fund the Outer Harbour project of VOC port, Tuticorin, according to a press release issued by EPL.
There are around 240 Japanese companies, including Toyota, Mitsubushi, Isuzu, Nissan, Toshiba and Metal One, located in and around Chennai.
The Japanese Government has also expressed interest in developing the Chennai-Bangalore Industrial Corridor, as part of the Penninsular Region Industrial Development.
Ennore port has been identified as a main logistic hub in industrial corridor development. JICA has already commenced the study, the release said.
G. K. Vasan, Union Shipping Minister, will lead a delegation to Japan to discuss with the Government and business community there for increased utilisation of Indian ports, especially Chennai and Ennore.
He will be in Japan from November 7 to 12 at the invitation of Akihiro Ohta, Minister of Land, Infrastructure Transport and Tourism, Japan.
The delegation members include Vishwapati Trivedi, Shipping Secretary, and M.A. Bhaskarachar, Chairman, Ennore Port Ltd (EPL). The delegation will visit ports of Yokohama and Nagoya to explore operations and technologies in these two ports. The Minister will hold discussions with Japanese funding agency JICA to fund the Outer Harbour project of VOC port, Tuticorin, according to a press release issued by EPL.
There are around 240 Japanese companies, including Toyota, Mitsubushi, Isuzu, Nissan, Toshiba and Metal One, located in and around Chennai.
The Japanese Government has also expressed interest in developing the Chennai-Bangalore Industrial Corridor, as part of the Penninsular Region Industrial Development.
Ennore port has been identified as a main logistic hub in industrial corridor development. JICA has already commenced the study, the release said.
Fertiliser firms to get special bank credit of Rs 5,500 cr
New Delhi: The Government has approved a Special Banking Arrangement (SBA) for fertiliser companies against the subsidy due for the current financial year.
“The arrangement will help fertiliser companies get Rs 5,500 crore from banks as loan. Interest will be charged at the rate of 10.5 per cent. The Government will bear 8 per cent interest, while remaining has to be paid by the company,” a senior Government official told Business Line. This kind of arrangement was also made last year when Rs 5,000 crore bank loans were availed.
Later in the evening, Government sources said that the State Bank of India was not ready to lend at 10.5 per cent. “Instead, it is asking for 10.85 per cent rate of interest,” a source said while added that there will be meeting with bankers on Thursday. This is 60-day credit in lieu of the subsidy due. While the industry estimates an additional subsidy of Rs 30,000 crore in the current fiscal, the Fertiliser Ministry in September had sought Rs 12,000 crore from the Finance Ministry under SBA to clear the subsidy arrears. Now, the final arrangement is even lower than that.
The industry feels that the present arrangement will partially ease the liquidity crisis. It will help in clearing subsidy arrears for domestically produced urea in June and July, sources said. All eyes are now on the second supplementary demand for grants during the winter session of Parliament.
For fiscal 2013-14, the Government had reduced fertiliser subsidy to Rs 65,971.50 crore from the revised estimate of Rs 65,974 crore in 2012-13. Of this, the Government is expected to provide Rs 15,544 crore as subsidy for imported urea, Rs 21,000 crore for domestically produced urea and Rs 29,426 crore for decontrolled fertilisers, including di-ammonium phosphate and muriate of potash and other complexes.
Meanwhile, a senior official said the Finance Ministry was unlikely to agree to significant additional money in the second supplementary demand for grants keeping the fiscal deficit target in mind. The Finance Minister, P. Chidambaram, has repeatedly said that every effort will be made to keep the fiscal deficit within the budgeted target. There is already additional allocation for the petroleum sector with more expected, while revenue collection is still below the target.
However, tracking the approval of banking arrangement, shares of fertiliser companies edged up to close higher on Wednesday. Shares of Chambal Fertiliser closed higher at Rs 38.85 gaining 2.78 per cent, while Coromandel International rose 0.67 per cent to end at Rs 219.45. Shares of National Fertiliser gained 0.62 per cent to close at Rs 24.30.
“The arrangement will help fertiliser companies get Rs 5,500 crore from banks as loan. Interest will be charged at the rate of 10.5 per cent. The Government will bear 8 per cent interest, while remaining has to be paid by the company,” a senior Government official told Business Line. This kind of arrangement was also made last year when Rs 5,000 crore bank loans were availed.
Later in the evening, Government sources said that the State Bank of India was not ready to lend at 10.5 per cent. “Instead, it is asking for 10.85 per cent rate of interest,” a source said while added that there will be meeting with bankers on Thursday. This is 60-day credit in lieu of the subsidy due. While the industry estimates an additional subsidy of Rs 30,000 crore in the current fiscal, the Fertiliser Ministry in September had sought Rs 12,000 crore from the Finance Ministry under SBA to clear the subsidy arrears. Now, the final arrangement is even lower than that.
The industry feels that the present arrangement will partially ease the liquidity crisis. It will help in clearing subsidy arrears for domestically produced urea in June and July, sources said. All eyes are now on the second supplementary demand for grants during the winter session of Parliament.
For fiscal 2013-14, the Government had reduced fertiliser subsidy to Rs 65,971.50 crore from the revised estimate of Rs 65,974 crore in 2012-13. Of this, the Government is expected to provide Rs 15,544 crore as subsidy for imported urea, Rs 21,000 crore for domestically produced urea and Rs 29,426 crore for decontrolled fertilisers, including di-ammonium phosphate and muriate of potash and other complexes.
Meanwhile, a senior official said the Finance Ministry was unlikely to agree to significant additional money in the second supplementary demand for grants keeping the fiscal deficit target in mind. The Finance Minister, P. Chidambaram, has repeatedly said that every effort will be made to keep the fiscal deficit within the budgeted target. There is already additional allocation for the petroleum sector with more expected, while revenue collection is still below the target.
However, tracking the approval of banking arrangement, shares of fertiliser companies edged up to close higher on Wednesday. Shares of Chambal Fertiliser closed higher at Rs 38.85 gaining 2.78 per cent, while Coromandel International rose 0.67 per cent to end at Rs 219.45. Shares of National Fertiliser gained 0.62 per cent to close at Rs 24.30.
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