CII pushes for decontrol of sugar sector

“The government should remove levy obligation on sugar industry and instead it should buy sugar from open market for supply through PDS,” CII national committee on sugar chairman Ajay Shriram advocated

New Delhi: The Confederation of Indian Industries (CII) on Monday demanded that the government should give freedom to the sugar industry to sell sugar in the market and also stop taking the sweetener from mills at a subsidised price for running ration shops, reports PTI.

Pointing out that sugar industry is being ‘strangulated’ by so many government controls and has become a ‘politically punching bag’, CII said levy obligation as well as monthly release mechanism should be removed for vibrant growth of the sector.

The government asks mills to contribute 10% of their production (called levy sugar) at a cheaper rate to run public distribution system. Through monthly release mechanism, the Centre fixes the monthly sugar quota that mills can sell in the open market and ration shops.

“The government should remove levy obligation on sugar industry and instead it should buy sugar from open market for supply through PDS,” CII national committee on sugar chairman Ajay Shriram told reporters here.

The industry supplies levy sugar at 60% of the cost of production, resulting in a loss of about Rs2,500-Rs3,000 crore every year, he observed.

“We are told how much to sell in the market every month. The government should remove monthly release mechanism. To intervene in market, it can maintain strategic buffer stock, which can be stored at mills,” he said.

On giving freedom to farmers to sell their sugarcane, Mr Shriram said the de-reservation of cane area can be done in the next phase of reform as he feared that some mills could face the shortage of sugarcane.

Making a strong case for decontrol of the sector, CII said that consumption pattern shows that two-third of sugar demand is from bulk users such as manufacturers of beverages and ice-cream.

The share of sugar is just 2.4% and 1.5% of the total consumer expenditure for rural and urban India, respectively, therefore, some increase in prices would not have much impact on monthly food expense, it added.

“The government is micro-managing the sector. We beg the government to stop micro-managing. We know how to take care of farmers,” national committee on sugar vice chairperson Rajshree Pathy said.

Ms Pathy said that the committee had started pushing for sugar decontrol with the government, which “is looking at our demand with compassion”.

“This is the good time for decontrol because of surplus production and there should be some decontrol,” she said in an optimistic note.

The production has risen to 24.2 million tonnes in 2010-11 season (October-September) against 18.8 million tonnes in the previous year. Domestic demand is pegged at 21 million tonnes. In next season, output is seen at 26 million tonnes.

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35% fund managers believe Indian market undervalued: Survey

In terms of market return for the rest of the calendar year 2011, global fund mangers are more bearish compared to domestic fund managers. Earnings expectation has been revised downwards in the last three months from 15%-20% to 10%-15% for 2011-12 as well as 2012-13, ICICI Securities said

Mumbai: With the stock market losing over 11% in the last three months, most of fund managers believe that the equity valuations have dropped to fair to undervalued zone, reports PTI.

“Most of the fund managers believe that the equity market valuations have come to a fair to undervalued zone. With more than 10% correction in the last three months since the previous survey in May 2011, most fund managers believe that valuations have turned more favourable,” the survey by ICICI Securities said.

According to most of the respondents, European sovereign crises and higher crude oil prices remain a major global risk to the Indian markets.

Most of the fund managers have adopted a neutral to bearish view for the short term due to global concerns like European sovereign crises, higher crude oil prices and slow US economic recovery, the survey said.

In terms of market return for the rest of the calendar year 2011, global fund mangers are more bearish compared to domestic fund managers, the study noted.

Earnings expectation has been revised downwards in the last three months from 15%-20% to 10%-15% for 2011-12 as well as 2012-13, it said.

Most of the fund managers believe that allocation towards equity markets at current levels should be increased with an investment horizon of one year and above.

On sectoral basis, banks, FMCG and pharma continued to be the most preferred sectors, according to the survey.

Telecom has gained significantly as a preferred sector in contrast to the previous survey where it was among the least preferred zone, it added.

Besides, IT which was one among the most preferred sectors in the last survey has lost its sheen due to concerns over economic recovery in developed markets, it noted.

Opinion was divided over large-caps and mid-caps. Due to the volatile environment 57% of the fund managers prefer large-caps as compared to 38% in the previous survey.

With a cautious outlook for equity markets in the short-term, a higher number of fund managers believe that Indian debt markets may be a better investment option with an investment horizon of three to four months.

The Fund Manager Survey is conducted on a quarterly basis. The previous survey was done in May.

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Govt ‘committed’ to SBI rights issue: SBI chairman

At present, the government has a 59.4% stake in the bank. In case a rights issue is approved and the government wants to retain its holding at the current level, it would need to subscribe to 59.4% of the total rights being issued

Mumbai: State Bank of India (SBI) chairman Pratip Chaudhuri on Monday said the government is ‘committed’ to infusing funds into it through the bank’s proposed rights issue, reports PTI.

“The government is quite committed on the rights issue and it is not right for the bank to put a finger on the quantum,” Mr Chaudhuri told reporters here.

He was speaking on the sidelines of a function held to announce help for a school as a part of the bank’s corporate social responsibility.

SBI has proposed to come out with a rights of Rs20,000 crore. At present, the government has a 59.4% stake in the bank. In case a rights issue is approved and the government wants to retain its holding at the current level, it would need to subscribe to 59.4% of the total rights being issued.

While the country’s largest lender had a total capital adequacy of 11.6% as on 30th June the core tier-I component stood at 7.6%.

The bank’s chief financial officer Diwakar Gupta had last week said that it can see through this fiscal considering its credit growth targets but will definitely need to augment it in next fiscal.

Mr Chaudhuri yesterday said the bank is looking at a credit growth of 16%-19% for the fiscal.

The SBI chairman added that the bank is sufficiently capitalised on tier-II and will not be looking at any bond sale in the near-term.

SBI will be adding 600-800 branches to its present network of over 13,000 branches, he said.

He said the bank will be spending Rs80 crore this fiscal on CSR initiatives which will involve donation of 10 fans each to a school in the vicinity of all the 13,000 branches.

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