Posco-India yet to renew MoU for steel plant project

The South Korean steel producer is unhappy about the job quota the Orissa government is insisting on for all new projects in the state

Bhubaneswar: Though six months have passed since its memorandum of understanding with the Orissa government for a 12 million-tonne-per-annum greenfield steel mill lapsed, Posco-India is yet to reply to queries by the state government for the renewal of the MoU, official sources said on Thursday.

"Certain queries have been made to Posco-India. But it has yet to respond. Once the response is received, there should be no problem in renewing the MoU," chief secretary, B K Patnaik told journalists here. The MoU issue came up following the clearance from the environment ministry for the Posco project on 31st January.

The five-year MoU with the South Korean steel major lapsed on 21 June 2010, official sources said, as efforts to set up the steel plant near Paradip did not make headway.

"We will renew the MoU with Posco at an appropriate time," Raghunath Mohanty, minister for steel and mines, said.

Sources said that Posco-India was reluctant to accept any new clause in the MoU to be renewed as suggested by the state government. The state government has decided to reserve jobs for local people in all mega projects and wanted this to be incorporated in the MoU, sources said.

According to the new job reservation policy, all industries setting up units in the state would be required to provide at least 90% jobs in the unskilled category to local people, including families affected by the project and up to 60% jobs in the semi-skilled category. Similarly, 30% of jobs in the supervisor and managerial cadre also have to be given to local people. The new policy allows senior executive posts to be filled from the open market.

While other mega projects, including Tata Steel and Jindal, have already accepted the state's job reservation policy that has not been notified till today, Posco-India has been reluctant to accept this saying that job reservation on a geographical basis does not conform to the constitutional provisions of India.
 

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India resolves crude payment issue with Iran

Banks like State Bank of India had refused to facilitate payments for Iranian oil after the RBI on 23rd December clamped down on the main conduit used by the Indian companies to pay for the Persian Gulf nation imports

New Delhi: Ending a six-week long stalemate, India today decided to use the euro to pay for Iranian crude oil but will route the payment through a German bank instead of its central bank, reports PTI.

Banks like State Bank of India (SBI) had refused to facilitate payments for Iranian oil after the Reserve Bank of India (RBI) on 23rd December clamped down on the main conduit used by the Indian companies to pay for the Persian Gulf nation imports, which make up for over 12% of the nation's oil needs.

But, Iran had continued to supply oil on credit despite the outstanding amount crossing a staggering $3 billion.

"It was decided today that euro payments will be made through Hamburg-based Europisch-Iranische Handelsbank AG (EIH Bank)," a finance ministry official said after a high-level meeting called to end the deadlock.

The meeting was attended by national security advisor Shiv Shankar Menon, economic affairs secretary R Gopalan, foreign secretary Nirupama Rao and oil secretary S Sundareshan.

"SBI has been instructed to start clearing the backlog payments beginning this evening," the official said. Oil companies like Essar Oil will transfer money to SBI, which in turn will use its Frankfurt branch to route payments to EIH.

The nation's largest lender will first clear the over $2 billion payment backlog for the four-month period beginning September 2010.

An additional $1.3 billion worth of oil was bought after 23rd December, when the RBI disallowed payments for Iranian crude using a long-standing clearing house system run by the central banks of nine countries-including India and Iran-dubbed as the Asian Clearing Union.

National Iranian Oil Co (NIOC) has an account in EIH and the Central bank of Germany, Deutsche Bundesbank (DBB) had cleared it for receiving euro payments for Iranian crude.

DBB has agreed to receive euro payments for the Iranian oil, provided the importing entity or its bank issues a certificate that the money will not be used for trade in any commodity that is under UN or European sanction, the official said.

He added import of crude oil from Iran has not been banned by either UN or European Union.

EIH was suggested for routing payments even earlier but SBI had resisted it fearing its business in US might get affected. It wanted a comfort from the government and both NSA and the foreign secretary fully backed euro payments through EIH, he said.

India imported 21.3 million tonnes of crude oil from Iran in 2009-10 and imports in 2010-11 are expected to amount to around 18 million tonnes, as Reliance Industries has totally stopped using crude oil from the Persian Gulf nation.

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Sensex, Nifty embark on a slow rally: Thursday Closing Report

The Sensex and Nifty ended positive today at 18,449 and 5,527, the market is not likely to run away. Nifty may reach 5,700 from here over the next few days

The market opened on a steady note this morning, riding on its own strength in the absence of any triggers from the Asian bourses. Overcoming initial hiccups and a sharp rise in the weekly food inflation numbers, the indices continued their upward journey that began yesterday. The market witnessed some consolidation in the noon session, with buying support improving later to take the indices to a higher trajectory in post-noon trade.

Both Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty finally settled off the day's highs, ending higher by 2% thus making it a second straight day of gains.

Yesterday we suggested that a fresh sharp decline may be on the cards and this could be the last in the current phase of decline. Our forecast was that this would lead to a retracement of some of the fall. However, the market did not break the recent bottom of 5,402 and 17,982 (Nifty and Sensex) and so the bulls tried to push the market up today. The Sensex and Nifty fell a bit in the morning session below yesterday's lows to 18,065 and 5,418 but a rally started soon which took the Sensex and Nifty above yesterday's high.

The Sensex even briefly crossed the Tuesday's high of 18,452. The intra-day low on the Sensex was 18,466 and 5,533 on the Nifty. Although both the key indices ended positive today at 18,449 (up 359 points) and 5,527 (up 95 points) the market is not likely to run away. The advance-decline on the NSE stocks was 1,191:676. However, the short-term indicators are at extreme levels of bearishness and we expect that from today a slow rally has started.

The market breadth on the Sensex and Nifty was also in line with the overall performance of other indices. The Sensex had 29 gainers and one loser and the Nifty went home with 42 advancing stocks, seven in declining list while one stock remained unchanged. Although the broader indices settled in the positive zone, they underperformed the Sensex. The BSE Mid-cap index gained 1.09% and the BSE Small-cap index rose 1.21%.

The sectoral space was a sea of green today, led by BSE Realty (up 3.93%), BSE Capital Goods (up 2.51%), BSE Metal (up 2.19%), BSE Bankex (up 2.04%) and BSE PSU (up 1.71%).

The top performers on the Sensex were DLF (up 7.42%), Jaiprakash Associates (up 6.06%), Bharti Airtel (up 5.12%), Hindalco Industries (up 4.62%) and Tata Motors (up 4.08%). Bajaj Auto (down 0.51%) was the lone loser today.

Food inflation for the week ended 22nd January rose to 17.05%, which led finance minister Pranab Mukherjee expressing "grave concern" and assured steps to moderate it.

Driven by higher prices of vegetable, fruits and eggs, food inflation increased for the second week in a row, soaring by 1.48 percentage points from 15.57% in the previous week. Food inflation had stood at 20.56% during the same period a year ago.

Speaking on the performance of the markets, the finance minister said stock markets have seen volatility over the past few days due to selling pressure from foreign institutional investors (FIIs) but the government still expects a growth of 8.5% in the current financial year ending March 2011.

In Asian markets, the Nikkei 225 closed 0.25% lower today as quarterly numbers from corporates were below expectations. Concerns about the crisis in the Middle East also weighed on investor sentiments. All other markets were closed due to the Lunar New Year holiday.

Back home, FIIs were net sellers of stocks worth Rs81.73 crore on Wednesday. On the other hand, domestic institutional investors were net buyers and bought equities worth Rs680.38 crore. At close, the Instanex FII Index was up 1.95% at 385.61 and the Instanex DII 15 portfolio was up 1.96%.

Sun Pharmaceutical Industries (up 0.54%) has received an approval from the US health regulator to sell generic drug galantamine hydrobromide used in treating mild to moderate Alzheimer's disease in the American market. The approval is for an abbreviated new drug application (ANDA) to market the generic version of Razadyne ER, a registered trademark of Ortho-McNeil Janssen Pharmaceuticals. Sun Pharma will market the drug in multiple strengths of extended-release capsules, 8 mg (base), 16 mg (base) and 24 mg (base).

Oracle Financial Services Software (down 3.27%) has informed BSE that Allied Irish Banks plc (AIB), a customer in Ireland, has filed a lawsuit in the Irish High Court against the company and one of its subsidiaries, claiming damages of upwards of Euro 84 million. AIB claim alleges breach of contract, misrepresentation and negligence.

CNI Research (up 13.56%) has announced its foray into the print media. The company, however, is awaiting the final approval from the Registrar of Newspapers for launching a newspaper. The foray into print media is in line with the company's philosophy of diversifying its revenue streams and creating value for various shareholders.

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