Dear reader although this topic require deep insight and intensive study of different policies of government and their impact, which I was not able to do due to lack of time. The will article serve as a basic block for further understanding of the issue. The information provided below is collected from various sources.
The Indian Government raised petrol prices by 11 per cent to stem losses, running at an estimated $137 million a day, suffered by the country's state-owned petrol companies. The price of diesel was increased by 9per cent and cooking gas 17 per cent.
Interestingly the move shows a mixed response Economists as few says that the move was much needed and necessary for economy. How is it so, is discussed in subsequent paragraphs. Other says that the move could derail economic growth in the region, stoke inflation and influence Indian elections.
Manmohan Singh, the Indian Prime Minister, said the move was inevitable: “Our oil companies cannot go on incurring losses. They will have no money to import crude oil from abroad.”
The oil companies of India have reported Rs 77,000 crores under realisation due to subsidy on oil of which Rs 33,500 crores were taken by the government in the form of oil bonds and the rest amount of Rs 43,500 crores was taken as loss in the balance sheet of PSU oil companies. Had the oil companies being owned by private sectors, either that would have closed down or people would have been purchasing the oil at cost more than three times the present level. It has already happened when Reliance was not able to sell the petrol and diesel at the price equal to PSU companies, it closed several of its retail outlets of petroleum products in the country.
There is popular support for policies to minimize fuel prices by subsidies or reduced taxes. But price-minimization policies are likely to harm consumers and the economy overall by increasing total fuel consumption and vehicle travel, and associated costs such as traffic and parking congestion, infrastructure costs, traffic crashes, import costs and pollution emissions. Fuel price reductions are an inappropriate way to provide more affordable mobility for low-income households, other strategies can help them more while also increasing transport system efficiency.
Subsidy In India
The Indian government provide subsidy to control oil prices in the country. The subsidy is massive - hidden by a disingenuous device called oil bonds. Here are some rock solid facts. IOC, HPCL and BPCL are currently losing $137 million a day (i.e., Rs 582 crore per day at Rs 42.50 = $1). They lose Rs 16.34 for each litre of petrol, and Rs 23.49 for each litre of diesel sold in Delhi.
Union Finance ministry has allowed the oil companies to issue oil bonds to meet losses. But according to the officials of ministry, before issuing oil bonds there is need to increase domestic prices of crude oil but this is not the condition before issuing the bonds.
It is a well-known fact that to neutralise subsidy burden on the oil importing companies, government is issuing the oil bonds, which the PSU banks and LIC are forced to subscribe. If yields on these bonds go down, banks succumb to losses, which they try to recover by increasing price of its services as well as increasing interest rate.
Fuel Prices in few of the other countries(as on 3rd June 08)
Turkey: Rs 113.30 per litre
Norway (Oslo): Rs 112 per litre
United Kingdom: Rs 95.50 per litre
Hong Kong: Rs 84.10 per litre
Brazil (Sao Paolo): Rs 66 per litre
Canada: Rs 57 per litre
Pakistan: Rs 44.80 per litre
The United States: Rs 44.25 per litre
Russia (Moscow): Rs 42.275 per litre
China: Rs 31.30 per litre
Malaysia (Kuala Lumpur): Rs 25.40 per litre
United Arab Emirates: Rs 15.65 per litre
Saudi Arabia (Riyadh): Rs 5 per litre
Venezuela (Caracas): Rs 2.12 per litre
Tuesday, July 15, 2008
TATA Acquires JLR – Preparing Itself for Economic Challenges
Tata Motors today acquired the Jaguar Land Rover businesses from Ford Motor Company for a net consideration of US $2.3 billion, as announced on March 26, in an all-cash transaction. As part of the transaction, Ford will continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components, in addition to a variety of technologies, such as environmental and platform technologies. Ford also has committed to provide engineering support, including research and development, plus information technology, accounting and other services.
It is been predicted that the automobile industry including Tata Motors is expected to face challenging times ahead due to unprecedented increase in input prices and continuing adverse economic situation in India and globally. Today on 2nd June, Tata Motors announced an increase in the prices of its passenger vehicles from 1 to 3%, because of increasing prices of inputs.
TATA is preparing itself for the tough time ahead. This year the Company marked with two path breaking events - the unveiling of the Tata Nano - the world’s least expensive car and the signing of the definitive agreement with Ford Motor Company for purchase of the Jaguar and Land Rover businesses.
Making itself ready for the future challenges, Tata Motors’ come up with a new plant at Pant Nagar (in Uttarakhand) for Ace and Magic range of vehicles during 2007-08, construction activity is on at Singur (in West Bengal) for the Tata Nano and at Dharwad (in Karnataka) for buses to be manufactured by the Company’s joint venture, Tata Marcopolo Motors Limited. The existing plants at Pune, Jamshedpur and Lucknow are undergoing expansion and modernization. Also TATA plans to launch a number of new products towards the end of the year, in both the ranges - passenger vehicles as well as Commercial vehicles.
Dated: 3rd June 2008
It is been predicted that the automobile industry including Tata Motors is expected to face challenging times ahead due to unprecedented increase in input prices and continuing adverse economic situation in India and globally. Today on 2nd June, Tata Motors announced an increase in the prices of its passenger vehicles from 1 to 3%, because of increasing prices of inputs.
TATA is preparing itself for the tough time ahead. This year the Company marked with two path breaking events - the unveiling of the Tata Nano - the world’s least expensive car and the signing of the definitive agreement with Ford Motor Company for purchase of the Jaguar and Land Rover businesses.
Making itself ready for the future challenges, Tata Motors’ come up with a new plant at Pant Nagar (in Uttarakhand) for Ace and Magic range of vehicles during 2007-08, construction activity is on at Singur (in West Bengal) for the Tata Nano and at Dharwad (in Karnataka) for buses to be manufactured by the Company’s joint venture, Tata Marcopolo Motors Limited. The existing plants at Pune, Jamshedpur and Lucknow are undergoing expansion and modernization. Also TATA plans to launch a number of new products towards the end of the year, in both the ranges - passenger vehicles as well as Commercial vehicles.
Dated: 3rd June 2008
Increase in Rubber Prices
Rubber prices hit an all-time high of Rs 13,500 per quintal at Kottayam spot market in Kerala following a rise in crude oil prices and firm global market. Production in 2007-08 fell to 825,000 tonnes from 853,000 tonnes in the previous year, chiefly because of heavy rains in Kerala, a key rubber producing state, and a viral fever that kept tappers away from work for more than a month.
Production of rubber in India
Kanyakumari in Tamil Nadu
Districts of Kerala.
Coastal regions of Karnataka
Goa
Andhra Pradesh
Orissa
Some areas of Maharashtra
Northeastern states (mainly Tripura)
Andaman and Nicobar Islands
Use of Rubber
The use of rubber is widespread, ranging from household to industrial products, entering the production stream at the intermediate stage or as final products. Tires and tubes are the largest consumers of rubber. accounting for around 56% total consumption in 2005. The remaining 44% are taken up by the general rubber goods (GRG) sector, which includes all products except tires and tubes.
Other significant uses of rubber are door and window profiles, hoses, belts, matting, flooring and dampeners. Gloves (medical, household and industrial) are also large consumers of rubber and toy balloons. Significant tonnage of rubber is used as adhesives in many manufacturing industries and products, although the two most noticeable are the paper and the carpet industry. Rubber is also commonly used to make rubber bands and pencil erasers.
Additionally, rubber produced as a fiber sometimes called elastic, has significant value for use in the textile industry.
Impact on Rubber Industry
The continued rise in the prices of natural rubber in the current financial year has set the Rs 19,000-crore tyre industry behind by almost Rs 1,000 crore. Combine this with tyre manufacturers' inability to pass on the increased cost to the consumers in view of the increased competition and it's double whammy for the tyre industry. According to Automotive Tyre Manufacturers Association (ATMA) the natural rubber (RSS-4) price that ruled at Rs 103 a kg at the beginning of the new financial year is currently hovering around Rs 120 a kg. This means a rise of Re 1 a kg every second day.
Figures released by the Rubber Board show tyre industry's consumption of natural rubber at 4.91 lakh MT. Back of the envelope calculation will show that every one rupee increase in natural rubber cost is adding an incremental cost of Rs 49 crore on the industry.
Natural rubber itself accounts for 42 per cent cost of raw material cost of the industry. The other raw materials are crude and steel based and both are facing inflationary pressures adding to the agony of the tyre industry.
Future Trend for Rubber Prices
The price of rubber is likely to increase further due to the shortage of the commodity and the upwrd trend in the price at international market, according to traders. The shortage in production was due to unfavourable climatic conditions and the unseasonal rains for the past couple of months.The fall in production was to the extent of 60% on an average and there is substantial loss in tapping days due to rain, traders said. If India plans to increase its rubber production in its costal areas, than the economic status of farmers is for sure going to improve.
Dated: 28th May 2008
Production of rubber in India
Kanyakumari in Tamil Nadu
Districts of Kerala.
Coastal regions of Karnataka
Goa
Andhra Pradesh
Orissa
Some areas of Maharashtra
Northeastern states (mainly Tripura)
Andaman and Nicobar Islands
Use of Rubber
The use of rubber is widespread, ranging from household to industrial products, entering the production stream at the intermediate stage or as final products. Tires and tubes are the largest consumers of rubber. accounting for around 56% total consumption in 2005. The remaining 44% are taken up by the general rubber goods (GRG) sector, which includes all products except tires and tubes.
Other significant uses of rubber are door and window profiles, hoses, belts, matting, flooring and dampeners. Gloves (medical, household and industrial) are also large consumers of rubber and toy balloons. Significant tonnage of rubber is used as adhesives in many manufacturing industries and products, although the two most noticeable are the paper and the carpet industry. Rubber is also commonly used to make rubber bands and pencil erasers.
Additionally, rubber produced as a fiber sometimes called elastic, has significant value for use in the textile industry.
Impact on Rubber Industry
The continued rise in the prices of natural rubber in the current financial year has set the Rs 19,000-crore tyre industry behind by almost Rs 1,000 crore. Combine this with tyre manufacturers' inability to pass on the increased cost to the consumers in view of the increased competition and it's double whammy for the tyre industry. According to Automotive Tyre Manufacturers Association (ATMA) the natural rubber (RSS-4) price that ruled at Rs 103 a kg at the beginning of the new financial year is currently hovering around Rs 120 a kg. This means a rise of Re 1 a kg every second day.
Figures released by the Rubber Board show tyre industry's consumption of natural rubber at 4.91 lakh MT. Back of the envelope calculation will show that every one rupee increase in natural rubber cost is adding an incremental cost of Rs 49 crore on the industry.
Natural rubber itself accounts for 42 per cent cost of raw material cost of the industry. The other raw materials are crude and steel based and both are facing inflationary pressures adding to the agony of the tyre industry.
Future Trend for Rubber Prices
The price of rubber is likely to increase further due to the shortage of the commodity and the upwrd trend in the price at international market, according to traders. The shortage in production was due to unfavourable climatic conditions and the unseasonal rains for the past couple of months.The fall in production was to the extent of 60% on an average and there is substantial loss in tapping days due to rain, traders said. If India plans to increase its rubber production in its costal areas, than the economic status of farmers is for sure going to improve.
Dated: 28th May 2008
Reliance Globalcomm Advances In Global Market
Reliance Globalcomm is a 100% subsidiary of Reliance Communications. Recent advances of Reliance Globalcomm like acquiring U.K. based VANCO Group and with talks going with MTN Group clearly indicates the Anil Ambani’s vision of creating a global customer base in telecommunication market. With the advancement in Communication domain and coming up of new Wireless technologies, becoming global is a much needed step for survival in this competitive market. Lets take an overview on recent activities of Reliance Communications.
Reliance Globalcom acquires U.K. based Global Managed Network Services provider VANCO Group Limited
May 26th 2008: Reliance Globalcom Limited, subsidiary of India’s largest integrated telecom Service provider Reliance Communications, today announced signing of an agreement to acquire the London headquartered pioneering Global Managed Network Services, VANCO Group Limited through one of its wholly-owned subsidiary. The acquisition of VANCO would add $365 Million (Rs. 1,550 crore) to the annual revenue of Reliance Globalcom through secure Long-term contracts with largest enterprise customers.
VANCO is recognised by Gartner to be amongst world’s top 5 Managed Global Network players with over 220 MNC customers. Its blue chip customer base includes AVIS, British Airways, Siemens, Virgin Megastores. VANCO increases the Reliance Globalcom’s tally of enterprise customers to over 1,400. VANCO has been rated as Worlds “Best Network Service Provider” for three years in a row since 2005. VANCO Managed Network services are currently available in over 40,000 locations across 163 countries.
Reliance Communications and MTN GROUP to enter into exclusive negotiations
Reliance Communications and MTN Group, a leading emerging market telecom operator, have agreed to enter into exclusive negotiations for a period of up to 45 days with respect to a potential combination of their businesses.
Reliance Communications and Alcatel - Lucent forms Joint Venture
Mumbai, May 12th 2008 - Reliance Communications and Alcatel-Lucent (Euronext Paris and NYSE: ALU) today announced forming a global joint venture. Combining the unique strengths of Alcatel-Lucent and Reliance Communications, the Joint Venture Company would foray in the fast growing $ 16 Bn (Rs. 64,000 Crore) Managed Network Services Industry and will cater to telecom operators, both CDMA and GSM, across the globe.
Reliance Communications forays in International Mobile market with GSM License in Uganda.
21 February 2008: Reliance Communications Limited today announced acquisition of Uganda based Anupam Global Soft (U) Ltd, a company holding Public Infrastructure Provider License (PIPL) and Public Service Provider License (PSPL) issued by Uganda Communications Commission. The acquisition, made through a subsidiary of Reliance Communications Limited, marks the first step in the Company’s plans in the International Mobile market.
Reliance recently acquired eWave World, a 4G operator focused on emerging markets across Asia, Latin America, Western Europe and Africa. Last year
Reliance Globalcom had acquired a world leading US based Ethernet Service provider, Yipes Holding Inc. for $ 300 Mn (Rs. 1200 cr) in 2007.
Dated : 27th May 2008
Reliance Globalcom acquires U.K. based Global Managed Network Services provider VANCO Group Limited
May 26th 2008: Reliance Globalcom Limited, subsidiary of India’s largest integrated telecom Service provider Reliance Communications, today announced signing of an agreement to acquire the London headquartered pioneering Global Managed Network Services, VANCO Group Limited through one of its wholly-owned subsidiary. The acquisition of VANCO would add $365 Million (Rs. 1,550 crore) to the annual revenue of Reliance Globalcom through secure Long-term contracts with largest enterprise customers.
VANCO is recognised by Gartner to be amongst world’s top 5 Managed Global Network players with over 220 MNC customers. Its blue chip customer base includes AVIS, British Airways, Siemens, Virgin Megastores. VANCO increases the Reliance Globalcom’s tally of enterprise customers to over 1,400. VANCO has been rated as Worlds “Best Network Service Provider” for three years in a row since 2005. VANCO Managed Network services are currently available in over 40,000 locations across 163 countries.
Reliance Communications and MTN GROUP to enter into exclusive negotiations
Reliance Communications and MTN Group, a leading emerging market telecom operator, have agreed to enter into exclusive negotiations for a period of up to 45 days with respect to a potential combination of their businesses.
Reliance Communications and Alcatel - Lucent forms Joint Venture
Mumbai, May 12th 2008 - Reliance Communications and Alcatel-Lucent (Euronext Paris and NYSE: ALU) today announced forming a global joint venture. Combining the unique strengths of Alcatel-Lucent and Reliance Communications, the Joint Venture Company would foray in the fast growing $ 16 Bn (Rs. 64,000 Crore) Managed Network Services Industry and will cater to telecom operators, both CDMA and GSM, across the globe.
Reliance Communications forays in International Mobile market with GSM License in Uganda.
21 February 2008: Reliance Communications Limited today announced acquisition of Uganda based Anupam Global Soft (U) Ltd, a company holding Public Infrastructure Provider License (PIPL) and Public Service Provider License (PSPL) issued by Uganda Communications Commission. The acquisition, made through a subsidiary of Reliance Communications Limited, marks the first step in the Company’s plans in the International Mobile market.
Reliance recently acquired eWave World, a 4G operator focused on emerging markets across Asia, Latin America, Western Europe and Africa. Last year
Reliance Globalcom had acquired a world leading US based Ethernet Service provider, Yipes Holding Inc. for $ 300 Mn (Rs. 1200 cr) in 2007.
Dated : 27th May 2008
Effect of Nigeria Militancy on Oil Prices
Apart from problems with much talked oil producers Iraq and Iran, the militancy problem in Nigeria is also accounting its share, although little, in the current increase in oil prices. The current article will give an overview of Nigeria’s oil strength and its current status.
Nigeria is the largest oil producer in Africa, the eleventh largest producer of crude oil in the world and a member of the Organization of Petroleum Exporting Countries (OPEC). According to Oil and Gas Journal (OGJ), Nigeria had 36.2 billion barrels of proven oil reserves as of January 2007. The majority of reserves are found along the country's Niger River Delta, in southern Nigeria and offshore in the Bight of Benin, Gulf of Guinea and Bight of Bonny. Nigeria has total production capacity (total potential production capacity if all oil currently shut-in came back online) of three million barrels per day.
Nigeria is the world’s eighth largest exporter of crude oil and the country is a major oil exporter to the United States. In 2006, Nigeria’s total oil exports reached an estimated 2.15 million bbl/d. Nigeria shipped approximately one million bbl/d or 42 percent of its crude exports to the United States in 2006. Additional importers of Nigerian crude oil include Europe (19 percent), South America (7.6 percent), Asia and the Caribbean.
Since December 2005, Nigeria has experienced increased pipeline vandalism, kidnappings, and militant takeover of oil facilities in the Niger Delta. As of April 2007, an estimated 587,000 bbl/d of crude production is shut-in. The militant activity in the Niger Delta (especially near Warri and Port Harcourt) has severely impacted Nigeria’s oil production potential by shutting-in an estimated 20 percent of total production.
As per a report – “Violence in the Niger Delta has reduced Nigeria's total oil production by a quarter in the past two years”.
With the help of new projects coming online, the Nigerian government hopes to increase oil production capacity to four million bbl/d by 2010. The Nigerian Government is also talking steps to curb militancy, but right now nothing could be said in such a volatile situation, lets hope for some good results in the coming future.
Dated : 23rd May 08
Nigeria is the largest oil producer in Africa, the eleventh largest producer of crude oil in the world and a member of the Organization of Petroleum Exporting Countries (OPEC). According to Oil and Gas Journal (OGJ), Nigeria had 36.2 billion barrels of proven oil reserves as of January 2007. The majority of reserves are found along the country's Niger River Delta, in southern Nigeria and offshore in the Bight of Benin, Gulf of Guinea and Bight of Bonny. Nigeria has total production capacity (total potential production capacity if all oil currently shut-in came back online) of three million barrels per day.
Nigeria is the world’s eighth largest exporter of crude oil and the country is a major oil exporter to the United States. In 2006, Nigeria’s total oil exports reached an estimated 2.15 million bbl/d. Nigeria shipped approximately one million bbl/d or 42 percent of its crude exports to the United States in 2006. Additional importers of Nigerian crude oil include Europe (19 percent), South America (7.6 percent), Asia and the Caribbean.
Since December 2005, Nigeria has experienced increased pipeline vandalism, kidnappings, and militant takeover of oil facilities in the Niger Delta. As of April 2007, an estimated 587,000 bbl/d of crude production is shut-in. The militant activity in the Niger Delta (especially near Warri and Port Harcourt) has severely impacted Nigeria’s oil production potential by shutting-in an estimated 20 percent of total production.
As per a report – “Violence in the Niger Delta has reduced Nigeria's total oil production by a quarter in the past two years”.
With the help of new projects coming online, the Nigerian government hopes to increase oil production capacity to four million bbl/d by 2010. The Nigerian Government is also talking steps to curb militancy, but right now nothing could be said in such a volatile situation, lets hope for some good results in the coming future.
Dated : 23rd May 08
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