31.07.2008

• Titbits about Kinetic scooter
• The scooter was launched in 1984 as India’s first gearless scooter, by the Kinetic group. The group itself made its debut with Luna in 1974.
• Penetration levels for scooters are still low at 48 vehicles per 1,000 people.
• What is the FSSA?
• Food Safety & Standards Act.
• The ministry of health has proposed a clause, making it mandatory for all packaged foods to contain nutritional labelling under this upcoming Act.
• According to this, all packaged foods need to declare mandatory nutritional labelling of protein, fat, carbohydrate and energy content. Besides, claims need to be quantified.
• The implementation of the Act involves integrating packaged food laws that fall under the Agriculture and Health ministries. This is causing some delay in its implementation.
• As of now, food-regulation norms, including labelling, fall under the Prevention of Food Adulteration (PFA) Act. Once the FSSA is implemented, the existing PFA will be repealed.
• Look at how under recoveries are hitting the oil behemoths…
• Refining and marketing leader — Indian Oil Corporation (IOC) — has recorded a sharp decline of 71% in the net profit for Q1 2008-09 owing to the huge surge in crude oil prices and skewed pricing structure.
• Net profit of the company fell to Rs 415 crore in the first quarter of the current fiscal on a turnover of Rs 80,735 crore. The company had registered a net profit of Rs 1,468 crore in the same period last year on a gross turnover of Rs 58,205 crore.
• The company’s profit slipped despite it earning the highest ever gross refining margin (GRM) this quarter. The average GRM of the company in the Q1 of current fiscal was $16.81/barrel compared to $10.70/barrel in the same period last year. This GRM compares favourably with that of RIL.
• Domestic Convertible Bonds
• In these instruments, the equity component is carved out from a hybrid instrument of debt and equity. Announced in this year's budget, this instrument got a leg up from the finance ministry, which has asked market regulator SEBI to implement this decision within two months.
• Companies can strip the equity component from convertible bonds so as to trade them separately. This is expected to develop the market for corporate bonds, which the government thinks is the best way to fund the country’s infrastructure requirements.
• Companies that issue convertible bonds are able to borrow funds at a lesser cost as the investor agrees to accept a lower interest because of the option to convert debt into the company’s equity. This difference in the interest burden is the value of the equity component, which is being separated into a new instrument now.
• One more nail in the coffin of the WTO talks
• The anticoncentration clause.
• Championed by the US, it stipulates that sensitive tariff lines not subject to full tariff cuts cannot be concentrated in one particular sector. This limits the developing countries’ flexibility to decide which items they would like to protect.
• But are the talks dead for good?
• No. Most countries have realised the huge spin-offs from lower tariff barriers and have lowered them unilaterally. India being a prime example — our peak tariff rate is now 10%, down from about 30% at the start of the Doha Round. Even so, it is important that the collapse of the mini-ministerial does not cause the world as a whole to lose faith in multilateral trade pacts; the alternative ‘spaghetti bowl’ of bilateral agreements is both messier and less equitable, especially to developing countries.
• This will ensure that dawn of realisation that a return to the negotiating table, sooner rather than later, is the way to go.
• Estimate of our fiscal deficit
• The farm loan waiver, the Pay Commission award, oil bonds, and rising off-budget subsidies for oil and fertiliser consumers could take the real fiscal deficit to anything between 6 and 7.5% of GDP.
• On policy reform of defence offset
• I have excerpted for you from a very good article that appeared in today’s ET. Look at it here.
• On VAT reform
• Some of you have been asking me to write something on taxation in India. I have not been able to do so as I was hard pressed for time.
• But today’s ET carried an article on VAT that lists three concerns that need to be addressed to see VAT succeed in India. A good read.
• Priciest foods
• Edible gold leaf is the most expensive with a price tag of $15,000 per pound.
• White truffles and caviar are the next costliest food items.
• Then comes the Indian saffron, at fourth place.