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MUMBAI | 28 PAGES | ` 2.50 OR ` 5.00 ALONG WITH THE TIMES OF INDIA THURSDAY, 5 MAY 2011

“More than reforms, we should recognise that we are at the crossroads. We should not celebrate
too early... As we go ahead, the government has to be more of an umpire than getting involved in the game”

Diesel & Petrol

Will Osama’s death reduce geo-political
tensions in India’s neighbourhood?

7%
YES
90%
NO
3%
CAN’T SAY
May Cost `5 More Mukesh Ambani Raises Energy
TODAY’S QUESTION
Is it the right time to sell
precious metals?
http://economictimes.indiatimes.com
from Next Week
EGoM to consider oilmin plan on May 11
Levels for Digital Revolution who claims to have sat observing
Govt is only
airteL FREE, YET IN CHAINS: In June ’10, petrol price was freed. Since Reliance boss aims leopards for hours in many forests.
The skills that Ambani wants RIL partner in
then, prices of crude and petro-products have had no correlation: for a bigger play in to internalise, the brilliant execu-
tion that has always been its forte
gas profits, but
upload videos from Crude* 61.4% energy & pan-India coupled with a new-found empha-
we are the sole
wherever you are Petrol 13.5
sis on safety and total regulatory takers of risk

SMS 3G to 121 www.airteL.in/3g -5.9% Diesel **

Inside Story
PVR to Sell Phoenix Mills
Property for Over `100 Crore
PVR has put on block the only real estate as-
set it has on its books, the Phoenix Mills
property in Mumbai, which houses a
7-screen theatre, for over `100 crore, per-
sons familiar with the developments told ET.
Corporate

5
Arunachal Pradesh Chief Minister
Dorjee Khandu’s Body Found
Five days after his helicopter went missing
on way from Tawang to Itanagar, Arunachal
CM Dorjee Khandu’s body was found in Lugu-
thang in Tawang district, bordering China.
The Political Theatre

3
Hero Honda Net Profit Slips 14%
in 2010-11 to `1,928 crore
Hero Honda on Wednesday reported a 14%
decline in net profit for FY11 at `1,928 crore,
mainly due to rising input costs and higher
advertising spend during the ICC World Cup.
Corporate

6
Coke Boss Kent Sees India Becoming
One of Top 5 Markets for Cola Maker
CEO and Chairman of the Board of Directors of
Coca-Cola, Muhtar Kent, tells ET he “won’t be
surprised” if India becomes one of the top 5
markets for the cola giant in five years.
Corporate

8
JK Paper Weighs Plan to Build a
Pulp Mill in South Asia
JK Paper, India's third-largest paper manu-
facturer, is exploring options to build a pulp
mill in South Asia, that would give the com-
pany ownership of the raw material.
Corporate

9
Analjit Singh Planning to Enter Hotel
Business with Own Brand
Analjit Singh, the chairman of the hospitals-
to-insurance group, Max India, is planning to
enter the hotels business with his own brand,
two people familiar with his intentions said.
Corporate

7
PSUs May Get to Call Bids, Park More
Surplus Funds With Private Banks
The government may allow central PSUs to
call for competitive bids from banks before
parking their surplus funds. It may also per-
mit these companies to keep more of their
surplus money with private banks.
Economy

17
IIFL
Kerosene+ 3.3%
LPG 0%
(% change in prices since June 2010)
All Delhi prices. *Indian crude basket, +PDS, **drop because Delhi lowered taxes
RAJEEV JAYASWAL
NEW DELHI
F
uel prices will rise next
week as the government is
planning to increase the
state-set price of diesel by up to
`5 per litre while oil companies
are preparing to raise petrol
rates by a similar amount after
assembly polls end on May 10.
The empowered group of min-
isters (EGoM) on fuel prices,
which fixes the price of diesel,
cooking gas and kerosene, will
meet on May 11 to consider the
oil ministry’s proposal to raise
diesel prices by `5 per litre —
the first increase since June last
year. The ministers would also
consider increasing the price of
cooking gas and kerosene.
The government last raised
the price of diesel by `2 per litre
on June 26, the day it freed pric-
ing of petrol. Crude prices have
risen from about $75 per barrel
then to more than $120 a barrel.
Senior executives of state-run
oil companies said they would
meet soon to raise petrol prices
for the seventh time since June
last year. While oil firms are
free to raise petrol prices, they
have not increased rates since
January as the government in-
formally told them to wait until
assembly elections were over.
“A final decision about the
quantum of hike would be tak-
Jet Told to Pay `478 cr
to Sahara in 2 Weeks
MANISHA SINGHAL
MUMBAI
Jet Airways will have to pay `478 crore to
Sahara India within two weeks as dues
for the takeover of Air Sahara, the
Bombay High Court said on Wednesday.
Jet, India’s largest carrier by market
share, has defaulted on its agreement to pay
on time dues from the `1,450-crore renego-
tiated deal to buy Air Sahara from Sahara
India Commercial Corporation in 2007.
“Jet has defaulted as there was a condi-
tion that payments would be made with-
out deductions, and Jet Airways was not
entitled to make any deductions,” Justice
DY Chandrachud said in his judgement.
Naresh Goyal-promoted Jet had paid
`900 crore up front for Air Sahara, re-
named JetLite, and the balance was to be
paid in four interest-free annual equal in-
stallments commencing on or before
March 2008 without deductions.
With the court order, Sahara will now
get `116 crore more from Jet as interest
at 9% per annum from 2008. The court
also directed Jet to pay interest of over
`9 lakh a day beginning May 1, 2011, till
such time as it pays the entire amount
to Sahara.
Jet Airways shares closed down 4.88%
at `447.1 on the Bombay Stock Exchange.
The court, however, rejected Sahara
India's petition claiming `2,000 crore as
the total takeover amount, instead of the
renegotiated Rs 1,450 crore, saying it had
not disclosed its tax liabilities to Jet.
Sahara's legal advisors, DSK Legal, said
they were "likely to challenge the judge-
ment and appeal against it to the
Division Bench". On March 26, 2009,
Sahara India had filed a petition in the
Bombay High Court alleging Jet had
part-defaulted in its yearly installment
and deduction in that amount.
digital vision compliance, are part of what
Ambani, 54, describes as his mis-
and loss. If we
don’t produce,
sion to “institutionalise” RIL. it is our own
“After getting the kill, the leopard money which
HIMANGSHU WATTS & goes back to the
we don’t
BODHISATVA GANGULI top of the tree and
MUMBAI Ambani looks sits there aaram recover or on
The leopard—the sleekest of the at intriguing se,” he adds. which we lose
en only after a green signal great cats that hunt for prey in the mix of old Much has return
from the government. After all, African Savannah—is an unlikely economy changed in
the government is the majority source of inspiration for Mukesh biz & newer Reliance since
shareholder. In certain compa- Ambani, a man whose name is ones close to the 1970s, then
nies, it indirectly holds 80-90% usually preceded by the adjective cutting-edge symbolised by
stake,” one executive said on billionaire. But in an interview in technology bare-knuckled ag-
condition of anonymity. The his office on the fourth floor of gression of the
three state-owned firms control Maker Chambers IV—the tradi- legendary Dhiru-
over 95% of the domestic fuel tional seat of power of the busi- bhai Ambani who We are becoming an MNC but with an
retail business. ness dynasty founded by his father, rose from a petrol Indian soul: Mukesh Ambani
The Mukesh pump attendant
“As public sector companies, the late Dhirubhai, in 1958—
we can’t pass on the entire bur- wildlife enthusiast Ambani says Ambani at a gas station in world’s sixth richest, who was in stuff but we shouldn’t be in a hur-
den to consumers. Even after the leopard’s hunting skills are a Interview Aden into one of an expansive and relaxed mood, ry. We should feel absolutely safe
the increase, petrol prices will metaphor for what RIL, India’s

14, 15 the biggest busi- spoke to ET for over two hours on that we are not going to hurt our-
be lower than market rates,” a most valuable private company, ness tycoons in independent his vision of Reliance over the selves. And we’ll never do it for
director in a state-run oil com- should take a few lessons from. India. As RIL strives to be a next decade. He advocates caution ego’s sake. Our watchword is: does
pany said, requesting anonymi- “I love the leopard. It sits on top of multinational, this raw and for RIL in betting the company’s it generate value for our share-
ty. Fuel compa- a tree. It doesn’t take any risk. brazen aggression is fast being enormous cash pile of `42,000 holders on a sustainable and long-
nies are selling Whenever it sees it can make a kill, replaced by a culture of calculat- crore, or $9 billion, into new busi- term basis?”
Kerosene petrol about `8 it rapidly makes the kill. It just ed risk-taking. nesses. “It’s important to keep the
could see a `3 a litre below happens in a flash,” said Ambani, Ambani, India’s richest and the balance sheet capability to do this Vision to Tap New Avenues

23
per litre hike market rate in
RIL Confident of Ramping Up KG-D6 Output
while LPG New Delhi.
price could go Officials said
up by `50 per the govern-
cylinder ment did not
have the politi- Co won’t go for quick-fix remedies that can damage gas reservoir To Invest $12 B
cal will to deregulate diesel at
this juncture as it would mean
a `18 per litre jump in prices,
largest gas reservoir, Chairman
Mukesh Ambani said.
hydrocarbons. He also expects mar-
ket-related price of gas in future.
in Chemicals Biz
which would accelerate infla- In an exclusive interview to ET, Gas output from the D6 block has Reliance Industries is
tion besides giving a handle to Ambani also asserted there was declined because of technical rea- drawing ambitious
the opposition. “Even a `5 per Reliance Industries is confident it much more to Reliance’s explo- sons, raising concerns among its
plans to be a world
litre rise in the price of diesel will ramp up output from its KG- ration business than its trophy as- key customers, particularly power
immediately after assembly D6 field, but it will cautiously set – the KG-D6 block. The Kaveri stations and fertiliser units, many leader in rubber, and is invest-
elections will be politically dif- analyse data for a few quarters basin, where natural gas gushed of whom have argued that Reliance ing up to $12 billion in the
ficult,” one of them said on con- with the help of BP before boost- out of the first well the company should quickly boost output.
dition of anonymity. ing production because quick-fix drilled, and the Mahanadi basin chemicals business.
remedies can damage India’s also have “reasonable” amounts of No Need for Rash Steps

25 Full Report

7
EGoM May be Deferred

25
Takeoff Time
End of Case may Benefit Both
The Deal
Jet Airways buys Air Sahara for
`1,450 crore. It pays `900 crore in
April ’07 and agrees to pay the rest
in equal instalments of `137.5 crore
The Dispute
On March 26, 2009, Sahara moves
HC alleging default of payment.
The Verdict
The HC asks Jet to pay Sahara
`478 crore in two weeks
The Impact
Paying the amount will help Jet
release attached properties and
execute a planned land deal,
though it will negatively impact its
short-term cash flow
Over 2008 and 2009, Jet had paid `87
crore less, saying it was the income-tax
dues of Sahara.
During the course of the hearing, some
properties of Jet were attached, and the
airline had given an undertaking in
March 2009 that it would not dispose of
the property till the dispute was settled
"Since the court had concluded that Jet's
liability was `1,450 crore, the 2009 under-
taking by Jet need not continue and shall
be dissolved after it makes the payment
as directed," Chandrachud said.
Sahara may Push for Original Claim

23

Market May be Headed for Bear Zone

Sensex falls for the eighth straight day, longest losing streak in nine years
OUR BUREAU
MUMBAI
Indian equities, which record-
ed the longest-losing streak in
nine years, run the risk of slip-
ping into a bear market as in-
vestors fret about rising fund-
ing costs with policymakers
determined to rein in prices
sacrificing economic growth.
“There is a possibility of an-
other 10% correction in the
Indian market near term as the
impact of the RBI’s rate hike
sets in,” said Saurabh
Mukherjea, head of equities,
Ambit Capital.
India’s Sensex is the worst
performer in Asia this year
with a 10% loss after returning
17% last year. Investors worry
that steep valuations and pos-
sible slowdown of the economy
could squeeze corporate earn-
ings. A 20% fall in key indices
is broadly accepted as a bear
market.
The BSE’s 30-share Sensex fell
65.33, or 0.35%, to 18469, ex-
tending losses for the eighth
straight day. The NSE’s 50-
share Nifty dropped 28.10
points, or 0.50%, to 5537.15.
The Reserve Bank of India
(RBI) on Tuesday raised the
rates for the ninth time in 13
months to fight inflation that is
well above the comfort level.
Governor Duvvuri Subbarao
said, “Inflation is inimical to
sustained growth as it harms
investment by creating uncer-
tainty. Bringing them down,
therefore, even at the cost of
some growth in the short-run,
should take precedence.”
Economic growth forecast for
this year is at 8%, down from
8.6% last year. Foreign funds
have pulled out close to ` 2,000
crore in the past few days, in-
cluding Wednesday’s provi-
sional figures.
Analysts are expected to
downgrade earnings for com-
panies as they may see slower
sales growth and a squeeze in
profitability with borrowing,
and raw materials eating up
cash.
More Pressure

23