FC 19/5/09

The union ministry of new and renewable energy (MNRE) is proposing to develop 60 cities in the country as solar cities to achieve at least 10 per cent reduction in the projected demand of conventional energy in the next five years by enhancing the supply of renewable energy sources and energy efficiency measures.

As per this plan, the ministry is presently in the process of appointing national level reputed consulting firms or institutions to prepare the master plan. The consulting firms will be roped in to chart plans for increasing energy efficiency and renewable energy supply in the city, establishing institutional arrangements for the implementation of the master plan and awareness creation and capacity building activities, said an official statement.

ToI 8/5/09

 New Delhi: Talk to any flower seller and you are likely to hear an oft-repeated phrase about the nature of the business: Bika to phool, nahin to dhool (if it sells, it’s a flower; if not, it’s just dust). That says a lot about the perishable nature of the flower trade.

 Take this piece of earthy wisdom in a larger context, and it aptly describes the fickle fortunes of the country’s nascent floriculture export sector — not long ago, the government had raised visions of India emerging as a flower power in the world, but those hopes, like unsold flowers, are turning into dust. Some years ago, government announced a target of Rs 1,000 crore for India’s floriculture exports by 2010. In the fiscal year 2006-07, our exports reached Rs 649.6 crore. But since then, they have been slipping. In 2007-08, when world economy was still galloping, India’s flower exports plummeted 49% to Rs 332 crore. In 2008-09, exporters expect to see a further 30% decline. Currently, India accounts for 0.65% of the $11 billion global flower trade.

 According to the Agricultural & Processed Food Products Export Promotion Authority (Apeda), a commerce ministry body, the revised floriculture export target for 2009-10 is Rs 375 crore — a far cry from initial target of Rs 1,000 crore.

 Now compare that with Kenya, a poorer country but which is the top supplier to Dutch flower auctions — the world’s flower centre — accounting for 37.8% of supplies there in 2008. Despite the general economic slump, it managed to earn more than 250 million euro (Rs 1,648 crore) from sales in Dutch auctions.

 So, what went wrong with India? Experts say given the country’s size and diverse geography and climate, India remains a potential giant in the field. Fresh cut flower exports started with lot of government backing in the early 1990s, but since then, infrastructure inadequacies — coupled with lack of initiative from the growers — has seen the promise wither away.

 “Volumes and quality are the two keys for success in world flower markets. We have not been able to build up volumes, and our quality isn’t consistent,” says industry expert Narendra K Dadlani. “Above all, we have failed to build infrastructure around our natural advantages.” Take the case of Cymbidiums (an orchid variety) from Sikkim and other parts of Northeast. Cymbidiums grown there are among the best in the world, but due to bad roads these flowers can’t reach the gateway airport at Bagdogra in good condition for export. “These gaps need to be filled,” says Dadlani.

 Now, look at Kenya, which like some other equitorial east African countries like Uganda and Ethiopia, have maximized their natural advantages. Like India, they have good sunshine, but they also have similar weather conditions through the year and large swathes of hilly terrain — all ideal for rose cultivation.

 Also, these countries are also closer to the European market, which cuts their frieght costs by half compared to India. Kenya has huge farms with modern technology that gives the country economy of volume as well as quality in rose cultivation.

NOT ROSY ENOUGH

Kenya vs India

Floriculture exports in 2008

Kenya: Rs 1,650 cr* India: Rs 235 cr**

Area under exportable cut flower cultivation in India less than 1/10th that of Kenya

Average size of farms Kenya: 40 ha India: Less than 4 ha

* In Dutch market alone ** Ballpark industry estimates for 2008-09

BL 30/1/09

-No need to worry much, says RBI official.

-Total funded loans

-Six banks have Rs 274.53-crore loan exposure

-Citibank tops list with Rs 196 crore

-Ten banks have investment exposure of Rs 12.49 crore

Hyderabad, Jan. 29 Eighteen banks, which include both Indian and multi-national entities, have varying degrees of exposure to the crisis-ridden Satyam Computer Services. The information, gathered by the Reserve Bank of India from various banks, puts the total exposure at Rs 660.48 crore as on January 8 (a day after Mr B. Ramalinga Raju, the former Chairman of Satyam Computer Services, confessed to fudging the company’s books to the tune of Rs 7,136 crore).

While the total funded exposure stood at Rs 287 crore, the total non-funded exposure was put at Rs 373.47 crore. (Funded exposure refers to advancement of funds as loans to a company or its subsidiaries. The non-funded exposure is issue of letters of credit or guarantees to companies.)

When contacted, a senior RBI official said: “We can say that there is nothing to worry about too much and the banks have enough capital to withstand any scenario”.

Safeguarding interests

Six banks (Citibank, HDFC Bank, Kotak Mahindra Bank, HSBC and ICICI Bank) have an aggregate loan exposure of Rs 274.53 crore to Satyam. Citibank tops the list with Rs 196 crore of total funded loans and advances, followed by HSBC Bank at Rs 16 crore.

Seven banks — Bank of America, Citibank, Bank of Baroda, HDFC Bank, ICICI Bank, BNP Paribas and HSBC Bank — have non-funded exposures totalling Rs 373.47 crore.

This includes contingents and commitments of Rs 118.17 crore and marked-to-market gains of 185.29 crore on derivative contracts with the company.

Ten banks — Bank of America, Allahabad Bank, Central Bank of India, Corporation Bank, OBC, PNB, UCO Bank, Union Bank of India, Indian Bank and Federal Bank — have aggregate investment exposures of Rs 12.49 crore.

“Banks are taking steps to safeguard their securities and interests in respect of their exposures to the Satyam group,” the RBI has assured the Union Government.

Loans to Maytas firms

Though SBI had no exposure to Satyam, it had an exposure of Rs 500 crore to the Maytas firms, promoted by Mr Raju’s kin. State Bank of Hyderabad had not extended any loans to Satyam. But it had advanced Rs 189 crore to Maytas Infra, the company promoted by Mr Raju’s reatives. “The loans were given for specific projects and they are secured loans,” Ms Renu Challu, Managing Director of SBH, told Business Line.

According to Mr R.S. Reddy, Chairman and Managing Director, Andhra Bank, the bank has some “indirect’ exposure” to Maytas for about Rs 45 crore. “This loan was given to a consortium where ICICI Ventures is a majority stakeholder along with some other partners. Maytas Infra has only 15 per cent stake in the project. Even this loan is well secured,” he said.

Deposits

Enquiries made by the RBI with the banks revealed that Satyam had deposits of Rs 78 crore as on January 8, 2009 (as against Rs 65 crore on March 31, 2008. But as per the audited (fudged) figures, the amount was Rs 4,274 crore).

BL 23/12/08

New Delhi, Dec. 22 In the last leg of its term, the UPA Government has come up with a big-bang approach to insurance sector reforms by introducing two Bills in Parliament.

This would pave the way for the much-awaited hike in foreign direct investment (FDI) in an Indian insurance company to 49 per cent from 26 per cent, permit foreign re-insurers to set up branches here and do away with divestment restrictions on Indian promoters of insurance companies to enable entry of more players into the sector.

While a Bill to amend the insurance laws was introduced in the Rajya Sabha, the Government also introduced the Life Insurance Corporation (amendment) Bill in the Lok Sabha, with Left parties lodging stout protests against their introduction in both the Houses, amid a melee.

Later, the Left parties charged that the proposed move to increase the FDI cap was “a shameless move to facilitate greater control of the insurance sector by foreign insurance companies”.

“It was shocking that the Congress-led Government was taking this step at a time when the financial crisis in the US had exposed the pernicious practices of the insurance and financial companies of the West,” the CPI (M) said in a statement.

Shelf life

The Bills were introduced by the Minister of State for Finance, Mr Pawan Kumar Bansal. The Insurance Laws (Amendment) Bill 2008 will have a longer shelf life, beyond the term of the current UPA Government that ends technically by April 2009, as it had been introduced in the Rajya Sabha.

Defining health insurance

Besides providing for a hike in FDI cap to 49 per cent in insurance companies, the Insurance Laws (Amendment) Bill has sought to define “health insurance business” and provide for a minimum paid-up capital of Rs 50 crore for pure health insurance companies. The Bill also seeks to maintain FDI cap at 26 per cent for insurance cooperative societies.

On the re-insurance front, the Bill seeks to permit foreign re-insurers to open branches only for the re-insurance business in India. The proposed amendments would also facilitate the entry of Lloyd’s of London in the insurance business as a foreign company in joint venture with Indian partners, and also as a branch of foreign re-insurer.

Also, the existing restrictions on divestment by Indian promoters of insurance companies are proposed to be removed. Currently, Indian promoters are required to divest to 26 per cent or such other prescribed percentage in the manner and period prescribed by the Central Government.

Moreover, the Bill seeks to allow nationalised general insurance companies to raise money from the market with the permission of the Central Government for increasing their business in the rural and social sectors, to meet solvency margins and other purposes. The proposed amendments seek to provide obligatory underwriting of third-party risks of motor vehicles on the pattern of insurance in rural areas and social sectors.

Newer instruments

The Bill provides for insurance companies to raise “newer capital” through “newer instruments” on the pattern of banks. It would also pave the way for formulating regulations for payment of commission and control of management expenses.

Both Life Insurance Council and General Insurance Council are to be made self-regulating bodies.

The power of adjudication will be with Insurance Regulatory Development Authority (IRDA) and appeal against the decisions of IRDA will rest with Securities Appellate Tribunal.

On penalties and fines, carrying on insurance business without registration could lead to a fine of up to Rs 25 crore and imprisonment of up to 10 years. A penalty “not exceeding Rs 25 crore” could be imposed if an insurer fails to comply with the obligations for rural or social sectors or third party insurance of motor vehicles. All penalties realised would be credited to the Consolidated Fund of India.

Distinction will now be made between a beneficiary nominee and a collector nominee in life insurance policies. The responsibility of appointing insurance agents will rest with insurers and IRDA would regulate their eligibility, qualifications and other aspects.

Life insurance policies are proposed to be made “unchallengeable” on whatsoever ground after five years of issue of the policy. Also, there would be limiting of the grounds for challenge during the period within five years.