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l SATURDAY l SEPTEMBER 15 l 2012

19

FIGURE it out

MARKET Watch

$22.5 mn
A New Zealand man threw away a winning lottery ticket worth NZ$27 million after reading the wrong results and thinking it was useless
World markets at 1830 hours IST Source: BSE, NSE, REUTERS

443.11 142.30 164.24 582.15 40.28 89.26 206.51 41.52

SENSEX Intra-day
High:18,498.5 Low: 18,285.0

NSE Intra-day
High: 5,587.0 Low: 5,527.0 % change: 2.62

TOP Gainers

BSE Jindal Steel Hindalco Inds IVRCL LTD DLF Essar Oil Indiabulls Real Est Indiabulls Fin Pantaloon Retl GVK Power Jaiprakash Asso Closing % chg 372.25 8.83 118.10 8.00 41.60 7.49 216.80 7.49 51.95 7.45 49.05 6.98 208.35 6.93 157.60 6.92 11.83 6.87 73.70 6.81

TOP Losers
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% change: 2.50

MAIN Indices
Indices BSE MIDCAP BSE SMLCAP BSE REALTY BSE METAL BSE BANKEX BSE AUTO BSE OIL&GAS BSE IT BSE PSU BSE POWER Closing %chg 6,244.90 0.88 6,623.12 0.45 1,633.05 4.78 10,370.27 4.25 12,188.84 4.15 9,945.45 2.89 8,717.01 2.88 6,203.68 1.38 7,179.81 0.98 1,880.58 0.79

FOREX Market
Exchange rate with rupee US dollar 54.30 Pound Sterling 88.11 Euro 71.15 Japan Yen 69.63 BULLION Rates (Mumbai) Stand gold R32,200 Pure gold R32,355 Silver spot R63,665

Brent crude $118.01 1.60 NYMEX crude $99.87 $1.56

Markets at 1830 hours IST

18,464.3 18,285.0 5,528.3

5,578.0

9.00 am September 14 4.00 pm

9.00 am September 14 4.00 pm

Market to tarmac, reforms trolley gets a push

Foreign carriers get to buy 49% in Indian airlines
ENS ECONOMIC BUREAU
NEW DELHI, SEPTEMBER 14

Nod for 51% FDI in multi-brand retail, norms for single brand softened
ENS ECONOMIC BUREAU HE government on Friday announced a relaxation of the Foreign Direct Investment (FDI) norms in the retail sector, allowing up to 51 per cent FDI in multibrand retail and 100 per cent FDI in single-brand retail. The move enables global retail firms such as Wal-Mart Stores, Tesco and Carrefour to set shop with a local partner and sell directly to consumers for the first time. This could transform India's $450 billion retail market. Stating that the implementation of the FDI is up to the states, commerce minister Anand Sharma said that states such as Andhra Pradesh, Assam, Haryana, Delhi, Rajasthan, Manipur, Jammu and Kashmir want FDI. "There are states that have reservations about FDI in retail but modern technology is necessary. Remunerative pricing, sourcing is needed," Sharma added. Terming the government policy on multi-brand retail

Govt clears way for Tesco, Wal-Mart entry into India

SAFEGUARDS FOR MULTI-BRAND RETAIL
Minimum amount to be

FDI limit in broadcast pushed up to 74%

ENS ECONOMIC BUREAU
NEW DELHI, SEPTEMBER 14

AFTER almost a year of discussions, the government on Friday cleared the proposal to allow foreign airlines buy up to 49 per cent stake in Indian carriers. "The Cabinet today approved the proposal of allowingforeignairlinestopickupto 49 per cent stakes in Indian carriers," civil aviation minister Ajit Singh said after the Cabinet meeting. This decision will help airlines such as SpiceJet, Kingfisher Airlines and GoAir, who are open to foreign airlines' investments. Cash-strapped Kingfisher has reportedly been talking to International Airlines Group (IAG), the parent company of British Airways, and West Asian carriers for a possible stake sale. "We will now be able to reengage with prospective airline investors in a more meaningful manner and move towards re-capitalisation and ramp up of operations," the airline said in a statement. SpiceJet has also reportedly been holding preliminary talks with carriers from West Asia for a possible stake sale. Jet Airways too has welcomed the proposal. "This permission will create access to capital, global connectivity, technology and best practices for Indian carriers. The passengers will also get to benefit through in-

NEW DELHI, SEPTEMBER 14

creased competition that would lead to better offerings, and cheaper airfares," said Amber Dubey, partner and head-Aviation at global consultancy KPMG. "International carriers have all been watching the sector with interest and informal discussions have taken place in several cases. But the balance sheets of most of the incumbent carriers are relatively weak, and the sector faces numerous structural challenges," said Kapil Kaul, CEO, Centre for Asia Pacific Aviation. While IAG and Emirates have welcomed the move, they said they are not interested in buying stake in Indian carriers. Kaul, however, feels that the view of "not being interested" will change. "GoAir and SpiceJet are perhaps the carriers with the greatest prospects of attracting investment but this will take time," he added. Stocks of Jet Airways rose1.97 per cent to close at Rs 368.35. Stocks of SpiceJet rose by 4.39 per cent to close at Rs 34.50, while that of and Kingfisher rose 7.88 per cent and Rs 10.81, respectively.

brought in, as FDI by the foreign investor, would be $100 million At least 50% of total FDI brought to be invested in backend infrastructure At least 30% of the procurement sourced from Indian small industries

Retail sales locations only in

cities with a population of more than 10 lakh (2011 Census) Government will have the first right to procurement of agricultural products Fresh agri produce, fruits, vegetables, flowers, grains, may be unbranded

FDI as an "enabling" provision, Sharma said that it has an 'Indian signature' to it. He also announced relaxation of sourcing norms for FDI in single brand retail. "For FDI proposals beyond 51 per cent in single brand retail, 30 per cent sourcing from small industries has been made mandatory," an official statement issued after the CCEA meeting said. "The move will attract investment, create employment," Sharma said.

The government had allowed 51 per cent FDI in multi-brand retail in December last year but the decision was kept in abeyance following widespread opposition from the allies and opposition parties. Kishore Biyani, chairman of Future Group, welcomed the move. "We are hoping this time the government will stick to its decision because that is absolutely essential," he said. "The decision to let individual states decide on

whether they want it is a good decision. This should satisfy people who are opposing it. The industry is convinced once a few states implement it the others will see the benefits and definitely consider it as well," he added. On FDI in single-brand retail, the government has diluted the sourcing norms brand ownership norms. For bringing in FDI above 51 per cent, the entity will have to mandatorily source 30 per cent of the value of goods purchased from India, preferably from small and medium enterprises (SMEs) and not mandatorily from SMEs as proposed earlier. Keeping in mind the constraints faced by foreign investors, the government has amended the norm that mandated foreign investor to be the owner of the brand. The tweaking of the single-brand policy comes in the wake of reservations raised by foreign retailers such as Swedish furniture major IKEA and the UK-based footwear firm Pavers on restrictive clauses in the singlebrand FDI policy.

THE government today liberalised the foreign direct investment norms for the broadcast sector, raising the FDI cap for companies operating in DTH, cablenetworks,mobileTVand head-end in the sky services. The Cabinet Committee on Economic Affairs (CCEA) raised the limits from the existing 49 per cent to 74 per cent. Up to 49 per cent FDI would be permitted through automatic route while beyond that, government's approval would be required. However, for TV news channels and FM radio, the existing FDI cap of 26 per cent has been kept untouched, and for cable networks, the existing

Dissecting News

SEMI-C LUMN

. ,

limit of 49 per cent under the automatic route will continue. The CCEA also approved rationalisation of the methodology of calculating FDI in the broadcast sector, according to which,foreigninvestmentlimit willinclude,inadditiontoFDI, FII, FCCBs, ADRs, GDRs and convertible preference shares held by foreign entities. To rescue cash-strapped Prasar Bharati, the Cabinet cleared a proposal for its financial restructuring as part of which the government will waive off the broadcaster's debt of over 1,300 crore and foot all salary and salary-related expenses in the next five years. The CCEA has also allowed FDI up to 49 per cent in Power Trading Exchanges.

Connecting Ideas

SUBHOMOY BHATTACHARJEE

FDI in airlines will open up... opportunities for carriers which wish to participate in the growth potential for civil aviation in our country
KINGFISHER AIRLINES

It is good for the industry and the common man. We need more airlines and this move will bring a number of overseas carriers to India
Founder of low-cost airline model

CAPT GR GOPINATH,

FDI in multi brand retail is a welcome step. It will help in creation of more job. People will realise it is a win-win for all
KISHORE BIYANI,
CEO, Future Group

We are grateful that the government has realised and appreciated the value that we will bring to strengthen Indian economy
RAJ JAIN,
President, Wal-Mart India

Running on subsidised fuel

THIS IS an interesting piece of statistic to tell the defenders of diesel subsidisation. Across India, huge percentage of power companies which use furnace oil to produce electricity have shifted to subsidised diesel to run their plants. Even after Thursdays revision, at Rs 47 per litre (Delhi price) will be Rs 11.35 cheaper than the price of furnace oil at Rs 58.35. The price difference is a measure of the distance that diesel prices still have to travel to eliminate the awesome distortions that have crept into the economy as a result of the subsidised oil economy. This is a scale of subsidisation that has taken the economy way beyond the usual arguments of diesel versus petrol The decision of the driven cars in deciding on how far Cabinet Committee on diesel should be subsidised. Political Affairs to The decision of the Cabinet present a new oil bill Committee on Political Affairs to to the economy has to be read accordingly as present a new oil bill to the economy has to be read accordingly as the first in a long the first in a long series of painful series of painful adjustments. The markets and inadjustments dustry are pleased but only because they too see it as the first among a series of such measures. The household managers too know this and so do the political parties which too have reacted on expected lines. The rise in the price of diesel by Rs 5 per litre and a cap on the number of subsidised cylinders of cooking gas to six in a year will only shave off Rs 20,300 crore from the under recovery of public sector oil marketing companies still leaving an uncovered gap of Rs 1,67,000 crore for them in 2012-13. The only unknown is how the UPA-led government will react to its own announcement. The election calendar becomes extremely busy from now but if that excuse is used to make this a one off affair the losses for oil companies, the worsening fiscal deficit and Indias junk grade will soon loom large on the horizon again. Of the total under recovery for the oil marketing companies the biggest ingredient is diesel at Rs 1,03,000 crore in 2012-13. The situation has not come about suddenly. The empowered group of ministers had on June 25, 2010,decided to go in for market determined pricing for diesel. But the in-principle decision was held back on the fig leaf of inflationary impact. Even now as diesel prices get corrected progressively, the overall impact on the economy will be to push inflation by at least one per cent more. But at prices that are 18.8 per cent lower than even Nepal, the domestic prices had become a sort of a joke. subhomoy.bhattacharjee@expressindia.com

CCEA okays stake sale in 4 PSUs

ENS ECONOMIC BUREAU
NEW DELHI, SEPTEMBER 14

AVIATION & RETAIL: THE CURRENT SCENARIO

NET LOSS/PROFIT OF AIRLINES
(FIGURES IN RS CR)

MODE OF ENTRY, OPERATION OF FOREIGN RETAILERS

BATA Country: Czech Republic Mode of entry in India: Manufacturing Present mode of operation in India: Wholly-owned subsidiary GIORGIO ARMANI Country: Italy Mode of entry in India: Joint venture in single brand retail Present mode of operation in India: Joint venture in single brand retail METRO Country: Germany Mode of entry in India: Wholesale cash and carry Present mode of operation in India: Wholesale cash and carry REEBOK Country: US (subsidiary of Adidas since 2005) Mode of entry in India: Exclusive licensing agreement Present mode of operation in India: Wholly-owned subsidiary TESCO Country: UK Mode of entry in India: Wholesale cash and carry Present mode of operation in India: Wholesale cash and carry UNITED COLORS OF BENETTON Country: Italy Mode of entry in India: 50:50 Joint Venture with Cloth Mill Present mode of operation in India: Wholly-owned subsidiary
SOURCE: ICRIER

AIRLINES JET AIRWAYS SPICEJET KINGFISHER AIRLINES

FY 2012 -1,236.10 -605.77 -2,328.01

Q1 2013 24.70 56.15 -650.79

THE Cabinet Committee on Economic Affairs (CCEA) on Friday approved disinvestment of four public sector units (PSUs) including MMTC, Hindustan Copper, Nalco and Oil India to rake in around Rs 15,000 crore. Of the government holding of 99.33 per cent in MMTC, the CCEA approved disinvestment of 9.33 per cent paid up equity while 12.15 per cent equity of Nalco from the government holding of 87.15 per cent, commerce and industry minister Anand Sharma told reporters. In Oil India, the CCEA approved the disinvestment of 10 per cent equity of the governments holding of 78.43 per cent while it allowed disinvestment of 9.59 per cent equity in Hindustan Copper from the governments stake of 99.59 per cent. The process of divestment would be via the offer-for-sale route (OSF), an official statement said. Finance ministry sources said that the current fiscals target of Rs 30,000-crore disinvestment is likely to be met. Last fiscal, the government could not achieve the budgetary target of Rs 40,000 crore due to uncertain market conditions. It managed to raise only Rs 14,000 crore last year. The CCEA, did not take up the issue of stake sale in Neyveli Lignite Corporation.

SHARHOLDING PATTERN
KINGFISHER AIRLINES (PROMOTER:
35.86%, *FII: 0.98%, **DII: 13.21%, OTHERS: 49.95%)

United Breweries (Holding) Ltd: 24.46%; Kingfisher Finvest India Ltd: 7.85%; Vijay Mallya: 1.87%; UB Overseas: 1.68%

JET AIRWAYS (PROMOTER: 80%, FII: 7.12%, DII: 7.15%, OTHERS: 5.73%) Tailwinds Ltd: 79.99%; Naresh Goyal: 0.01%; Anita Naresh Goyal: 0.00% (1,000 shares) SPICEJET (PROMOTER: 48.59%, FII: 3.59%,
DII: 12.36%, OTHERS: 35.46%) Kal Airways Pvt Ltd: 32.32%; Kalanithi Maran: 16.27%

WAL-MART Country: US Mode of entry in India: Wholesale cash and carry Present mode of operation in India: Wholesale cash and carry

Air India, IndiGo and GoAir are not listed entities. SOURCE: BSE

SHARE OF SEGMENTS IN INDIAN RETAIL MARKET

CATEGORY Food & Grocery Healthcare Apparel & Home Textiles Housing Education Telecom 2009 50.4 6.7 6.3 6.2 5.6 4.9 2014 45.9 7.9 6.1 6.4 6.4 5.7 Jewellery & Watches Personal Transport Travel & Leisure Consumer Durables Home Furniture, Furnishing Personal Care Restaurants/fast food 4.9 4.7 2.4 2.2 2.1 1.9 0.9

(figures in %)

AIRLINES FAVOURING FDI IN AVIATION

INTERESTED: Kingfisher Airlines, SpiceJet, GoAir NOT INTERESTED: Jet Airways, IndiGo

INDIAN CARRIERS

(Parent company of British Airways)

INTERESTED: Qatar Airways, Ethiad International Airlines Group

FOREIGN CARRIERS

Source: Reports; *FII: foreign institutional investor; ** DII: domestic institutional investor

Source: Technopak (2010)

4.9 5.3 2.8 2.4 2.0 2.0 1.1

Spain and Greece top agenda of EU finance ministers meeting

JAMES KANTER
NICOSIA, SEPTEMBER 14

INANCE ministers from the euro area and international lenders began a twoday meeting here on Friday focused on how urgently they will need to channel aid to Spain and whether Greece should be granted easier terms to reform its beleaguered economy.

In an unusual moment for the three-year crisis, there is some breathing room at least in the case of Spain and that should also give ministers the opportunity to consider broader policy goals such as plans to integrate the euro area further. Since the European Central Bank agreed early this month to buy short-term debt of vulnerable countries, there has been a significant easing of market

IMF MD Christine Lagarde and European Central Bank President Mario Draghi at the EU Informal Economic and Financial Affairs Council (ECOFIN) meeting in Nicosia, Cyprus on Friday. REUTERS

pressures in countries like Spain. The mood of optimism continued this week after the Dutch voted in larger numbers than expected for pro-EU candidates and the German constitutional court gave the green light for a new bailout fund for euro-area countries. Policymakers in Brussels also moved forward with a plan to make bank regulation more robust. Arriving at the meeting, Jan Kees de

Jager, the Dutch finance minister, said Greece could be granted additional time to meet its commitments under the current bailout programme. Even so, he insisted that the country should not be given more funds. Officials from the European Commission, the IMF and the European Central Bank are currently in Greece to assess the countrys progress. NYT