In what could be a big relief to individual taxpayers, the government has proposed a widening of the three-tier slab structure, with the lowest rate of 10% for Rs 2-5 lakh taxable income, 20% for Rs 5-10 lakh and 30% for higher income. The current slabs are Rs 1.6-5 lakh, Rs 5-8 lakh and above Rs 8 lakh respectively. Tax experts said this would bring significant benefits to taxpayers across the slabs. The Direct Taxes Code (DTC) Bill cleared by Cabinet on Thursday also proposed a 30% corporate tax rate (for domestic companies) sans surcharge or cess. Though this falls short of the proposal in the DTC draft released earlier to bring down the rate to 25%, there would still be nearly a 4 percentage point difference from the current rate which is inclusive of surcharge and cess. The DTC Bill will now be introduced in Parliament. The effective tax rate (ETR) for most companies is in the range of 18-20% at present, thanks to depreciation and other forms of expenses allowed. According to Ajit Krishnan, partner, Ernst & Young, in the DTC regime, the ETR would not change substantially for most companies in the manufacturing industry, while some infrastructure companies could see their tax liability going up a bit on account of the removal of exemptions. But oil and gas companies have little to worry about as the government has committed to retain the capital subsidy scheme for them. The DTC regime would, however, bring IT companies on par with other firms as the tax holiday for export income could go. Current corporate tax rate is also 30%, but inclusive of a 10% surcharge and a 3% education cess, the tax rate works out to be 33.99%. After the Cabinet meeting, finance minister Pranab Mukherjee said: "The whole objective (of DTC) is that a plethora of exemptions will be removed. (Income) tax slabs will be three. Rate of taxes will be taken in the schedule (of the bill) so that they need not be changed every year." In June this year, the government brought out a revised discussion paper on DTC in which it addressed a lot of concerns raised by the original draft released last year. For companies, the biggest relief was withdrawal of minimum alternate tax (MAT) based on gross assets and restoration of MAT regime linked to book profit. It was also clarified that savings in Public Provident Fund (PPF), other employee provident funds, New Pension Scheme and pure life insurance products and annuity schemes will not be subjected to tax at any stage. The much-sought incentive for SEZ units was, however, not granted. Only limited relief was given in terms of grandfathering of profit-linked incentive for existing SEZ units which will be operational at the time of implementation of the code.
India insisted on Friday it would block some BlackBerry services next week if the smartphone maker did not address security concerns, and government officials said they were hopeful for a solution soon. Time is running out for Canada's Research In Motion to give India the means to track and read its secure email and instant messaging services that officials fear could be misused by militants and to create political instability. (For Slideshow: Evolution of the BlackBerry, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2H0RK) Executives of the Canadian firm will meet Indian government officials for a second day on Friday in last-ditch negotiations aimed at finding a solution ahead of an Aug. 31 deadline. The government has said it will take a final decision on Monday. "We will only accept a solution which will enable us lawful interception of BlackBerry services in the interest of national security," a government official close to the talks told Reuters. "The solution, if they come up with it, will have to go through field trials and satisfy our technical experts," he said. "The government's position does not change ... We are hopeful they will come up with some solution." BlackBerry's troubles in India, which could cut it out from one of the world's fastest growing mobile phone markets, are the latest in the firm's global headaches as governments worry its encrypted services could be used for activities from terrorism to peddling pornography. For a graphics on Blackberry's global woes, click http://link.reuters.com/ryr37n India is one of a number of countries putting pressure on RIM for the same reason its BlackBerry device is so popular with business professionals and politicians: confidentiality. The governments of Saudi Arabia and other nations fear it could become a tool to plan militant attacks or for those breaking Islamic laws. SECURITY CONCERNS RIM has offered to lead an industry forum to look at India's need to have "lawful access" to its encrypted email and messenger in an effort to stave off the blocking of the popular services. RIM said singling out BlackBerry for blocking would be counter-productive for India, as it would limit the efficiency and productivity of local firms. But India says nothing short of a solution giving access to secure email would satisfy security agencies. "I think these concerns have been addressed in other parts of the world. I see no reason why the Indian government and its agencies should take any risk at all as far as technology is concerned," junior telecoms minister Sachin Pilot said on Friday. Pilot said he was hopeful the company would offer a solution. A shutdown would affect about 1 million users in India out of a total 41 million BlackBerry users worldwide, allowing them to use the devices only for calls and Internet browsing. RIM uses powerful codes to scramble, or encrypt, email messages as they travel between a BlackBerry device and a computer known as a BlackBerry Enterprise Server (BES) that is designed to secure those emails. RIM has said BlackBerry security is based on a system where the customers create their own key and the company neither has a master key nor any "back door" to allow RIM or any third party to gain access to crucial corporate data.
India's oil minister Murli Deora said his ministry has sought details on the proposed acquisition of majority stake by Vedanta in Cairn India, the local arm of of Britain's Cairn Energy. "We have told Cairn to write to us then we will decide," Deora told reporters on Friday. Vedanta, in its first move into the energy sector, is buying a controlling stake in India's No. 4 oil and gas company from Cairn Energy to capitalise on rising energy demand, economic growth and an expanding population. Cairn Energy Chairman Bill Gammell arrived in New Delhi and had held talks with Indian officials on Tuesday to iron out the approval process for the acquisition. The deal needs Indian government approval because Cairn India has production-sharing contracts (PSCs) with the government for oil and gas exploration blocks. According to the agreement, any ownership change will need federal approval. Approval from state-run explorer ONGC (ONGC.NS : 1259.05 -7.65
), which has a 30 percent stake in Cairn India's Rajasthan oil block called RJ-ON-90/1, is also crucial for any change of ownership.
Buy Deccan Chronical Holdings At CMP target is !50 Above
As the underlying inflationary pressure is easing off, wholesale price inflation could fall to 6% by December, Planning Commission deputy chairman Montek Singh Ahluwalia told FE in an interview. He added that it is this welcome sign reflected in the seasonally adjusted data that should influence policy-making at this juncture, rather than year-on-year figures impacted by the base level effect. Inflation has been in double digits for five months in a row. It stood at 10.55% in June. Source said that the Planning Commission's internal research shows that inflation could even fall to 5.5% by December, even after the impact of fuel price increase, that will show up in July data, is factored in. "Because inflation rose last year quite sharply, the year-on-year rate would remain high and would slowly start coming down (from August-September). The point is that the prices this year have not been rising the way they were last year,"Ahluwalia said, drawing attention to the relatively flat nature of the Wholesale Price Index (WPI) graph so far this fiscal. It was not difficult to "kill" inflation provided "if you don't mind the collateral damage" to the economy, Ahluwalia said. Stating that the less than half way through the current fiscal, the economy's overall prospects looked "good,"he said the "continuing reasonable growth rate" in capital goods output suggested investments were well on track. Even as overall industrial output expanded at a 13-month low of 7.1% in June, capital goods production grew at 9.7%. During April-June, the growth in capital goods production was an impressive 34%. Given the global economic conditions, an 8.5% growth on an average inflation of 6% would represent extremely good macro-economic management, he claimed, adding that going ahead, "we ought to be aiming at somewhat higher growth and somewhat lower inflation." Ahluwalia said his prediction on inflation was based on certain assumptions that have strong grounding. Inflation's underlying momentum is evidently relenting. There is a marked improvement in food availability thanks to good monsoon, adequate food stocks and the recent additional release of food grains. From 17-19% a few weeks ago, food inflation - which forms about 50% of the primary articles that have a 22% weight on WPI - came down to 9.5% for the week ended July 24. (It went up to 11.4% for the week-ended July 31 on predicted lines as food prices had declined in the same period last year). The good monsoon and ample food stocks this fiscal are in sharp contrast to the grossly inadequate rains last year and continuous build-up of speculative pressure on prices. The easing of price pressures was evident in the entire primary products basket, and to a lesser extent, in the manufactured goods segment. He added that he saw no huge pressure on prices globally this year-- either on fuel or other raw materials-- given the rather fragile nature of the global economic recovery. With huge excess capacities in products like steel, it was unlikely that their prices would go up. "If you have failed to notice the base level effect, you would, in order to lower inflation, be wanting to (bring) prices down... ," Ahluwalia warned. He, however, refused to comment specifically on what the RBI's monetary policy trajectory should be. "I'm sure that the governor is aware that the monetary policy should be forward-looking," he said. When an inflationary upsurge occurs, the main policy imperative ought to be to effect a "soft landing," he said. To curb inflation, RBI has raised policy rates four times by a total of 100-125 basis points since March and will review policy on September 16. Ahluwalia said if inflation comes down to 6% by December as predicted, it can barely be attributed to the base effect. The decline would be because the underlying rate of inflation now is much lower than it was last year. The present level of momentum, unless it is disturbed through some unexpected global developments, would ensure that the inflation would ease to 6% by December.
The Sensex (^BSESN : 18143.99 -28.84 India has planned infrastructure spending over Rs 2lakh crore. This has helped the corporate sector perform better and resulted in rising valuations of large cap Sensex companies. These companies were hammered in the wake of the global economic slowdown after the Lehman Brothers bankruptcy. Therefore, it is seen that in the rally from 8,000 to 18,000 points, Sensex stocks like Infosys (INFOSYS.BO : 2864.05 -9.35 Investors need to apply themselves in picking the under-performers. In simple terms, even assuming that Sensex is range-bound between 17,000 and 19,000 points, Sensex stocks have limited space on the upside. I cannot see SBI or RIL outperforming the 30-share index, but at the same time, stocks which are under-performing could outperform as there is no correlation with the benchmark but direct relation with the infrastructure growth. It is also to be understood that small investors are not safe enough in India. There are always chances of investors getting stuck in stocks run by fly-by night operators. Circular trading to create artificial volumes still exists, though regulators are doing their best to prevent such practices. If investors take necessary measures, they will not only help regulators but also themselves and not fall prey to investments in stocks which exist only on paper. I think the best way is to rely on research provided by neutral agencies. NSE (^NSEI: 5439.25 -7.85 Some signs of slowdown are seen in sectors like cement, which clearly suggest the road ahead won't be be very smooth for retail investors. This could make investment in Sensex component stocks a bit risky. In short, investors must follow a bottom-up approach and not top-down, considering the fact that Sensex at 18,000 is expensive compared to the global peers and it is only liquidity which is driving the market. BY Yahoo) is at 18,000-plus points, just 16% away from its all-time high. Despite concerns over the sustainability of global recovery, the Sensex has kept on rising. This comes from the smart recovery in Indian economy and a projected growth rate of 8.5%.), Bhel (BHEL.NS :2507.6 -17.3), SBI (SBIN.NS : 2619.35 -26.35), RIL (RELIANCE.NS :1000.1 -6.95) etc were the outperformers, where retail investors had little exposure. In fact, retail investors continued to exit such shares with every rise on the premise that the rally would not sustain. Thus, one theory suggests that even though the Sensex is over 18,000 points, we are still at 10,000 points, except for a few stocks which are part of the Sensex. If this is to be believed, then there are more opportunities for making good investments out of the Sensex companies.) and BSE have taken positive steps in this direction and have made arrangements with some professional agencies to make such research easily available.
he petroleum ministry has said that the government plans to sell 5 per cent of its stake in Oil and Natural Gas Corporation (ONGC (ONGC.NS : 1230.85 -11.5 The proposal, he said, is for sale of 5 per cent or 10.6 crore equity shares in ONGC through a follow-on public offer (FPO), which at Friday's trading price of R1,233.3 would fetch the government R13,189 crore. In IOC, DoD has proposed to sell 5 per cent of government equity through a FPO. "Simultaneously, IOC also proposes to sell 10 per cent of the expanded equity capital (through an FPO) to raise funds for its expansion plans," he said. Post stake sale, the government's shareholding in ONGC will come down to 69.1 per cent from 74.1 per cent. In Indian Oil Corporation, the twin divestment and stake sale would reduce the government holding from 78.9 per cent to 64.6 per cent. "We are not preparing any Cabinet note. It is the Department of Disinvestment which will do that. We only have to seek approval from the minister (Murli Deora)," Sundareshan said. According to the road map being prepared, IOC would be the first to be disinvested. It will first sell 10 per cent or 24.3 crore equity shares that at Friday's stock price of R363.9 would fetch the company R8,835 crore to help it part-finance its capital expenditure programme of R75,000 crore. This would be followed by the sale of 10 per cent government holding amounting to 19 crore shares to raise R7,000 crore. The nation's largest oil firm wants to take advantage of the recent government decision to free fuel prices by tapping the capital markets.)) and 10 per cent in Indian Oil Corporation (IOC (IOC.NS : 367 +8.4
)) to raise about Rs 21,000 crore this fiscal. "We have received a note from department of disinvestment (DoD) that says they have approval of the finance ministry for divestment of government stake in ONGC and IOC," said Petroleum Secretary S. Sundareshan on Friday.
Everbright is aiming for a nearly $3 billion listing on the Shanghai Stock Exchange on August 18, with a little more than half of the listed shares available to institutional investors and most of the rest allocated to strategic investors. The strategic investor portion of the IPO, which could China's second-biggest this year, was nearly seven-times oversubscribed. The bank has set an undemanding price range of 3.0-3.3 yuan ($0.44-0.49) per share for the listing to whet investor appetite, a source said on Friday. Everbright did not comment directly on its target price range, which will be announced late on Sunday. "In researching the IPO pricing, we will look to offer a discount on the basis of other comparable banks' values, according to appropriate pricing and market principles, in order to ensure that investors can share in the investment value of Everbright Bank," Chairman Tang Shuangning said
Research in Motion's resistance to giving governments access to its BlackBerry network misses a major point -- authorities could probably hack the data on their own if they want it badly enough, security experts say. Indeed, a major attack against BlackBerry users by a telecom in the United Arab Emirates employed that very tactic a year ago, according to RIM. Experts say other malicious programs are likely to be lurking around, readying to be sprung. India, Lebanon, Saudi Arabia and the United Arab Emirates say they need RIM's cooperation so they can decode messages scrambled with BlackBerry's proprietary technology. They have threatened to restrict RIM's operations if the company won't meet their demands, which they say are driven by national security concerns. But if RIM doesn't back down, the governments themselves could instead choose to hack into the BlackBerry network. "I could design a good hundred ways to gain access," said Bruce Schneier, a security expert who is chief security technology officer for BT. Officials with Canada's RIM did not respond to a request for comment. Security experts say they'd almost certainly attack at the network's most vulnerable points: the BlackBerry smartphone itself and the BlackBerry server. Those two pieces of equipment sit at either end of the network where they offer would-be hackers access to unscrambled data. Last year's attack in the UAE is a good example of how a hacker might work. It employed spyware created by SS8, a closely held U.S. security firm, RIM says. Emirates Telecommunications Corp, the UAE's largest telecoms operator, sent the program to its BlackBerry disguised as a software update. It told its customers that the it would enhance the performance of their equipment, but RIM says it was mainly intended to tap into their communications. The telecom declined comment at the time. RIM said it quickly discovered the so-called "malware" because of a glitch in its implementation, and told users not to install it on their phones. But hackers might go undetected, experts say. To prove the point, a security researcher named Tyler Shields released a spyware program earlier this year for attacking BlackBerries via the handset. It allows hackers to intercept messages that reach the device and use its microphone to tap conversations in the immediate vicinity of the phone. "I wanted to demonstrate that BlackBerry handhelds are susceptible to spyware," said Shields, who works for the Burlington, Massachusetts-based security firm Veracode Inc. The program, dubbed TXSBBSpy, did not include installation software as Shields never intended it to be used. He only wanted to show the BlackBerry was not unhackable. A successful attack on a Blackberry Enterprise Server could prove even more devastating because each server manages data for hundreds of users. Hackers could write code to take advantage of vulnerabilities in the software that runs those servers, said Chet Wisniewski, senior security adviser at Sophos, anti-virus software maker. Such a program would allow outsiders to view messages from all the users hooked up to the computer via their handsets.
The Reserve Bank of India has taken adequate measures to manage inflation and expects food inflation to ease on good monsoon rains, a deputy governor at the central bank said on Friday. The statement calmed markets that had feared further steep rate hikes to rein in double-digit inflation. It also echoed the views of government officials who have said price rises would ease with normal monsoon rains despite a record of forecasts that have underestimated inflation. (For HIGHLIGHTS: Deputy governor's comments, click http://in.reuters.com/article/idINIndia-50675920100806) Food inflation has eased to 9.53 percent in the week to July 24 from more than 17 percent in January this year, on account of good monsoon rain, a fall in seasonal prices of fruits and vegetables, and the release of government food grains in the market. "We have done enough to manage inflation. We expect to see the effects in the second half of the year because policy actions act, or have an effect, with a lag," said Subir Gokarn, one of the four deputy governors at the Reserve Bank of India (RBI), who runs the monetary policy division. "You will see them manifested over the next few months." The wholesale price index, India's most closely watched inflation measure, is expected to record a sixth month of double-digit rises in July. (For a graphic on monsoon rain, please click http://graphics.thomsonreuters.com/F/07/IN_MNSRF0810.gif) India's 10-year benchmark bond yield fell as much as 8 basis points after his comments. At 12:43 p.m. (0710 GMT), the yield on the benchmark 10-year bond was down 8 basis points at 7.81 percent from before the comments. It had closed at the day's high of 7.91 percent on Thursday, its highest since May 7. The statement follows media reports last week saying that central bank deputy governor K.C. Chakrabarty was stripped off his portfolio after reported off-the-record comments calling for more forceful policy to tame inflation -- possibly a sign of dissent within the bank over how to rein in price rises. DEMAND PRESSURES Analysts say food prices may moderate in coming months, but due to food inflation spreading to non-manufacturing industries the central bank could raise policy rates by 25 basis points in its next policy review on September 16. "On the demand side, clearly capacity constraints are beginning to show in indicators of demand side inflation," Gokarn said, adding the central bank was trying to address demand pressures through rate actions. Since March, India's central bank has raised its main lending rate by a total of 100 basis points to 5.75 percent and the borrowing rate by 125 basis points to 4.50 percent. Price rises are a hot political issue and Finance Minister Pranab Mukherjee told parliament on Wednesday that rising prices were a cost that Asia's third-largest economy was paying for fast economic growth. The central bank lifted its inflation forecast for the fiscal year ending March 31 to 6 percent from a previous forecast of 5.5 percent, while the economy is expected to grow at 8.5 percent. "I think the concern now is not really food inflation, which is easing, but core inflation which is shooting up and is reflecting demand-side pressures," said N.R. Bhanumurthy, economist with the National Institute of Public Finance and Policy, a New Delhi-based think-tank. "The situation is worrisome and I expect at least another 25 basis points hike in the offing." Gokarn said the impact of a fragile global recovery on capital inflows and commodity prices would ease inflation pressures. "If global growth is slow, the commodity prices tend to soften and that will act to contribute to inflation management." Referring to liquidity, Gokarn said the economy had moved from excess liquidity to a deficit or balanced scenario. "If you look at the change in the call rate, which is effectively the anchor for the short term for the yield curve, it has gone up by the sum of the both reverse repo and the corridor."
Gold traders continued to snap up bullion on Friday afternoon as the rupee hit its highest level in seven weeks, making the dollar-quoted yellow metal cheaper, with premiums continuing to be on the higher side, dealers said. (For Slideshow: More glitter to gold, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTXPMAF) "Deals are happening after every five minutes, I have marked for about 200 kgs from morning," said a dealer with a state-run bank, which deals in bullion. The rupee strengthened to its highest level in nearly seven weeks as some corporate sold dollars, with broad losses in the U.S. unit versus majors and other Asian currencies also boosting sentiment. International gold was buoyed by physical buying interest from jewellers and investors and by the weaker dollar ahead of key jobs data from the United States. Premiums have more than trebled to $1.50/1.60 for an ounce of gold from 40 cents at the start of July. "Banks have hiked premiums by 30-50 cents and even parties are willing to buy at higher premiums," said a dealer with another state-run, bullion-dealing bank. "Last week was execllent for gold sales, premiums would continue to inch higher if prices fall," said Haresh Acharya, head of bullion desk at Ahmedabad-based wholesaler, Parker Agrochem. Indian gold demand is set to pick up for the busy festival season, starting with Raksha Bandhan on Aug. 24, and extending till Dhanteras in November, the single-biggest gold buying day.
With the government yet to consider gas allocations for new power projects, the Anil Ambani group seems to have changed its strategy. It is now seeking gas for the expansion of its existing gas based power projects instead. The first such proposal entailing an investment of Rs 10,000 crore has been submitted by Anil Ambani's Reliance Power Ltd to the government to expand the capacity of its existing 220 megawatt gas-based power project at Samalkot in Andhra Pradesh to 2,400 mw. "The power ministry has recommended an allocation of 8 million standard cubic metres of gas per day (mmscmd) for this project at the July 28 meeting of the Empowered Group of Ministers (EGoM)," said a petroleum ministry official. Asked about the status, he said, "Wait for the minutes of the EGoM meeting to come." A source close to the company said, "Requests for similar gas allocations may also be sought by the company for expanding its existing gas-based power projects at Kochi (165 mw) and Goa (48 mw)." The company's spokesperson refused to comment but confirmed seeking gas supplies for expansion of Samalkot. Gas allocations for Samalkot have been sought by Reliance Power out of its share of gas of 28 million standard cubic metres per day agreed to for the company's gas based power projects following the Supreme Court order in the Ambani's gas dispute case. "We (Reliance Power) request you to immediately allocate 8 mmscmd of natural gas for our Samalkot project from our request of 28 mmscmd," Reliance Power said in a July 20-dated letter to power minister Sushil Kumar Shinde.
Noel Naval Tata's role in the over $71 billion crore salt-to-software conglomerate clearly got bigger last week with his appointment as managing director of Tata International. In the meanwhile, the board of Tata Sons announced on Wednesday it had formed a selection committee, comprising five members, including an external member, to decide on a suitable successor to groups chairman Ratan N Tata, who retires in December 2012 when he turns 75. "The committee has commenced its work," a press release said, adding that "the selection process for a prospective candidate would consider suitable persons from within the Tata Companies, other professionals in India as well as persons overseas with global experience." The committee will comprise two directors from the Sir Dorab Tata Trust and the Sir Ratan Tata Trust, two members from the Tata Sons board and one external, non-Tata Group person. The selection committee names being speculated about are NA Soonawala, Keki Dadiseth, Jamshed J Irani, R Gopalakrishnan, AN Singh and the outsider and Ratan Tata's close confidante and Bombay Dyeing Group chairman Nusli Wadia. Ratan Tata will not be a member of the search committee. Ratan Tata had said in the past that his successor could be an expatriate. "It would be certainly easier if that candidate were an Indian national. But now that 65% of our revenues come from overseas, it could also be an expatriate sitting in that position with justification now that we are a company that has global reach and global presence," Ratan Tata had told The Wall Street Journal last November to a question on how he was conducting the search for his successor "The successor, I would hope, would have integrity and our value systems in the forefront and hopefully would carry on the path that we have tried to set for the company's growth," Mr Tata had observed. The chairman had indicated to a magazine earlier in 2009 that his successor would need up to 18 months as handover time. While names, including Indra Nooyi of PepsiCo and Vikram Pandit of Citigroup have been talked about, Noel Tata has been considered a frontrunner for the group chairman's position. Indeed, the stint at Tata International is expected to give the 53 year-old Noel Tata exposure to the group's overseas businesses; he has spent about a decade at Trent, building the retail business. Tata International, a leather and engineering and trading company has a presence across ten African nations. A graduate of Sussex University, Noel Tata is the son-in-law of Pallonji Mistry, the largest single shareholder in Tata Sons with a stake of 18%. In addition to Mistry, the board of Tata Sons, chaired by Ratan Tata comprises among others FK Kavarana, Jamshed J Irani, Ishaat Hussain, R Gopalakrishnan, RK Krishna Kumar and Arunkumar Gandhi.
Reliance Industries (RELIANCE.NS : 1012.45 -3.6 Reliance will pay a total $392 million, comprising $340 million of cash and $52 million of drilling carry obligations, the company said. Under the deal, Reliance will acquire a 60-percent interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in an equal joint venture between Carrizo and an affiliate of Avista Capital Partners, India's top listed firm said in a statement. Reliance will acquire all of Avista's stake and 20 percent of Carrizo's stake in the existing joint venture, the statement said. (Reporting by Devidutta Tripathy; editing by Malini Menon) (For more business news on Reuters India click http://in.reuters.com) (For Quotes and Interactive Charts of Reliance Industries Ltd http://in.reuters.com/money/quotes/chart?symbol=RELI.BO))
Buy Dlf @ CMP tGT IS 318
Buy Cairn India at CMP target is 355 to 365
Buy Cairn India at CMP target is 355 to 365
Swedish commercial vehicle major Volvo is facing trouble in India as production at its bus manufacturing facility near Bangalore has been severely impacted. Workers at the plant have been on strike for a week, but now it has begun to cripple operations. If the current crisis continue for some more days, the company may not only able to fulfil the domestic demand. It is also expected to postpone export plans, sources closed to the development told FE. Over 500 employees attached to Volvo Buses Workers Union (VBWU) in Volvo Buses India Pvt Ltd (VBIP) have resorted to an indefinite strike after a three-month go-slow, demanding wage hikes and reinstatement of a few suspended employees. Volvo Buses, in which the Swedish parent holds 70%, is a joint venture with Bangalore-based bus body builder Azad Group. The company had initiated wage negotiations with the trade union early this year, with 25 sittings so far. "However the discussion have reached a stand-off since the union now seeks to link this discussion to revoking the suspension of four employees," said a Volvo spokesperson. The company had placed four workers under suspension in April on allegations that they assaulted management staff, besides keeping them hostage for eight hours. A police inquiry in this connection is still underway, he said. "This has caused serious damage to the company. This situation is not sustainable in the current business environment," he said. At present manufacturing at the plant level is being undertaken with the help of management staff and non-union staff. He refused to quantify the loss due to strike, but sources in the company said the production could have come down by half in the past three months. Each of Volvo bus cost in the range of Rs 65-70 lakh. The spokesperson confirmed that the company do not maintain any inventories as it manufacture buses against orders.
BP Plc said it controlled the pressure in its Gulf of Mexico oil well with drilling mud, a “significant milestone” in its attempt to permanently seal the source of the world’s worst accidental oil spill. BP began pumping mud into the top of the well for its “static kill” operation at 3 p.m. local Houston time yesterday and the operation lasted about eight hours. The well “appears to have reached a static condition -- a significant milestone,” BP said in a statement in London today. If the static kill is successful, BP would be able to plug the Macondo well from the top. The company still needs to complete a relief well to permanently seal the damaged well, National Incident Commander Thad Allen said at a Houston press conference. Government scientists issued revised estimates on Aug. 2 that the well spewed 4.9 million barrels of oil, making it the largest accidental maritime oil spill. About 800,000 barrels was captured by BP, and some was skimmed or burned. Scientists expect to quantify within days how much oil remains in the Gulf, potentially in underwater plumes, Allen said. “There’s still residual oil out there,” he said. “Our intention is to size our force based on the requirements -- how much oil is out there and how much do we have to recover.” Three-quarters of the oil leaked from the well has evaporated, dispersed, or been recovered. The remaining oil is so diluted that it doesn’t represent much of a risk for the Gulf, the New York Times reported, citing a government report to be released today. London Trading BP rose 2.55 pence to 415.65 pence in London trading yesterday. It has fallen 37 percent since the Deepwater Horizon drilling rig exploded on April 20, killing 11 workers and triggering the spill. London-based BP reported a record quarterly loss of $17.2 billion when it reporting earnings on July 27 after booking a $32.2 billion pretax charge related to the Gulf of Mexico oil spill. The company said it would expand asset sales to raise as much as $30 billion over 18 months to help pay for cleanup costs and liabilities from the environmental disaster, which also cost Chief Executive Officer Tony Hayward his job. Ecopetrol SA and Talisman Energy Inc. agreed to buy BP’s fields in Colombia for $1.9 billion in cash, the company said in a statement yesterday. Relief Well BP said its relief well, which would inject mud and cement into Macondo from the bottom, will “most likely” intercept the damaged bore by mid-August. The company has said the relief well may complete the permanent kill by the end of the month. Oil continues to wash ashore 20 days after BP stopped the flow by installing a new cap on the well. About 644 miles (1,036 kilometers) of the region’s coastline is oiled, according to a government operational report late yesterday. About a quarter of the Gulf remains closed to fishing, the National Oceanic and Atmospheric Administration said on its website. Storms may drive oil onto shore through hurricane season, which ends Nov. 30, Allen said. Scientists are trying to quantify in the next several days how much oil was skimmed from the surface or burned at sea, how much evaporated, how much was dispersed into the water and how much may yet hit shore, Allen said. Bay of Campeche The Macondo spill exceeds the 3.3 million barrels that the Royal Swedish Academy of Sciences estimated leaked from Mexico’s Ixtoc-1 well in the Bay of Campeche in 1979. The worst spill was in the 1991 Persian Gulf War when retreating Iraqi forces opened valves, releasing 6 million barrels into the sea, according to the U.S. Environmental Protection Agency. BP is accelerating damage payments, saying yesterday it recognizes “frustration” from small-business owners as it transfers authority over claims to an independently administered fund. The company said it processed 2,600 claims during the past three days under an expedited system that eased documentation requirements. The company has issued a total of 93,000 checks for $277 million in damage claims. Some claims will be deferred until later this month, when the $20 billion Gulf Coast Claims Facility run by Kenneth Feinberg will begin operating, BP said.
