Freedom eludes oil majors
Investor protection fund ready for takeoff
Advanced tech key to dairy growth

 
 
FREEDOM ELUDES OIL MAJORS 
 
 
FROM R.SASANKAN
 
New Delhi, Oct 14: 
Whether or not the proposed total deregulation of the petroleum sector takes place on April 1, 2002 as scheduled, public sector oil and gas companies such as Indian Oil Corporation, Oil and Natural Gas Corporation and Gas Authority of India Ltd will continue to be regulated by the ministry of petroleum and natural gas.

The ministry, by virtue of being the owner, will decide the areas of their operation and rein them in if they deviate too much from their areas of core competence.

For instance, IOC cannot outwit Gail in gas business. Its diversification into gas either alone or in association with anybody else cannot in any way undermine the interest of Gail which will remain the flagship company in gas.

The ministry has made it clear to the managements of IOC, ONGC and Gail that it got the Cabinet mandate to retain 51 per cent equity in these companies on the specific assurance that each of the three will remain the leader in their areas of operation—ONGC in exploration, Gail in gas and IOC in liquid fuel marketing.

Diversification into other areas can only be marginal and that too with its permission.

The ministry has not taken kindly to IOC’s plan to make a major foray into gas business. It should acknowledge Gail as the flagship company in gas. It is in this context that the ministry questioned IOC’s memorandum of understanding with Enron to market latter’s liquefied natural gas on the west coast.

Official sources say IOC will have to drop the plan for LNG business with Enron on the west coast.

IOC tries to justify its decision on the plea that the previous secretary in the ministry T.S.Vijayaraghavan had permitted these companies to do LNG business in areas other than Dahej and Cochin where Petronet LNG is supposed to set up terminals. The ministry’s representatives on the board of IOC had cleared the MoU with Enron. IOC is critical of the double standard being applied by the ministry. It has not objected to Gail going with Tatas and Total of France for a LNG terminal at Trombay, they pointed out.

The ministry does not believe that the Trombay project will ever take off. However, IOC cannot claim parity with Gail in opportunities to do gas business.

The ministry is also critical of the tendency on the part of IOC to sign MoUs wherever its team visits. Most of the joint ventures floated by IOC have flopped financially, said a senior ministry official.

Industry sources say ministry of petroleum and natural gas has contributed immensely to the present mess. By forcing the equity swap arrangement, it encouraged them to diversify into each others area. For instance, IOC tried its luck in oil exploration, a totally unknown area for it. Gail also went in for exploration. ONGC refused to fall into the trap. Despite repeated requests from IOC, the ONGC management did not entertain its invitation to invest either in refineries or power projects.

The political and bureaucratic controls over these undertakings after the deregulation could limit their growth. For instance, an emerging company like Reliance Petroleum could overtake IOC if it is not allowed to plan its growth strategy.    


 
 
INVESTOR PROTECTION FUND READY FOR TAKEOFF 
 
 
FROM NITHYA SUBRAMANIAN
 
New Delhi, Oct 14: 
The much hyped investor protection fund, which is yet to see the light of the day courtesy the delay in finalising guidlelines, may finally make it.

Minister for law and company affairs Arun Jaitley has finally wielded the stick and asked the department of company affairs (DCA) to come up with the guidelines by the end of this month.

Department sources said, “The creation of the investor protection fund was part of the amendments to the Companies Bill 1999 and was cleared by the government last year itself. But so far neither have the rules been formulated nor has the fund been created.” Officials said that the guidelines would help in proper disbursal of funds, besides help in working out the compensation package and even the method of disbursal.

They said that the initial corpus of the fund would be over Rs 50 crore which will be increased over the years. “Every year almost Rs 200 crore goes into the consolidated fund of India, accumulated from unclaimed dividends, dead bank accounts and the like. With the creation of the investor protection fund, money from such accounts would be transferred to this fund.”

According to official estimates, close to Rs 350 crore worth of investors’ money has been lost due to the disappearance of about 80 companies whichentered the capital markets.

“These companies entered the markets with low priced public issues, which promised bright prospects, but vanished after mopping up money,” they added. Similarly, NBFCs have also disappeared after collecting large amounts of depositors money.

The setting up of the fund will be the first step towards ensuring investor protection. The government has already constituted a high level committee comprising representatives from the Reserve Bank of India (RBI), DCA, Securities and Exchange Board of India (Sebi), the National Law School and consumer protection groups. The committee is soon expected to come up with a new Investor Protection Law.    


 
 
ADVANCED TECH KEY TO DAIRY GROWTH 
 
 
BY RAJA GHOSAL
 
 
The Indian dairy industry is at the cross-roads. India is the largest producer of milk, churning out about 78.5 million tonnes of milk annually. Yet, the density of milk production in terms of area is poor and consequently collection costs are higher. The industry has been unable to use its advantages to become a global player. Animesh Banerjee, president of the Indian Dairy Association (IDA), dwells on the main challenges facing the Indian dairy industry and calls for more policy initiatives from the government.

What are the problems facing the Indian dairy industry?

The government is not taking any policy initiatives to further growth. The need of the hour is advanced technology. However, in the present scenario, we have to cough up a 27 per cent excise duty on milking machines which is really unfortunate. There should be more soft financing, deferred payment facilities and direct incentives for mechanised farming. To compete globally we have to act globally. The average export subsidy on milk powder presently given to European Union and US exporters is around $ 1,000 (Rs 43,000) per tonne. We have no similar subsidies in India.

Does non-branded milk have a bleak future?

Non-branded milk runs the risk of adulteration as it is usually sold loose. The problem is that while the per capita consumption of milk in the country is very low, only 184 gms, purchasing power of a large section of the populace is also very low. Hence, sale of loose cheap milk will continue, though it may not be very healthy for the industry. However, as an apex body, we promote the virtues of consuming packaged and branded milk rather than running a campaign against un-branded milk.

What is the prime issue before the Indian dairy industry at present?

The key issue is quality upgradation. Unless we improve quality, we will be unable to compete. In the globalisation era when your brand has to compete with the best of the world, export potential is also likely to increase manifold by improving quality.

Why has Calcutta been chosen as the venue for the 30th dairy industry conference scheduled for December? n The conference is returning to the city after 16 years. It is being organised by Indian Dairy Association (East Zone) which is a zonal branch of IDA, functional for the last thirty years. Eastern India has secured an important position in the Indian dairy industry. West Bengal has a laudable record in the Operation Flood programme. All cities and large towns in the state have been linked with modern milk plants. Of course, the scope of the conference will be national. The theme of the conference, ‘Paradigm shift in dairying,’ aims to spur the Indian dairy industry to do some bold decision making.

What issue are likely to be discussed in the conference?

Quality will probably feature as the prime concern, as it is vital for the sustenance of the Indian dairy industry. Global competition is crucial and hence the compatibility of the Indian milk industry with the global market is an area that needs our special attention. Besides, cost effectiveness and enhancement of productivity to match global competition will also be high on the agenda.    

 

FRONT PAGE / NATIONAL / EDITORIAL / BUSINESS / THE EAST / SPORTS
ABOUT US /FEEDBACK / ARCHIVE 
 
Maintained by Web Development Company