Wednesday, July 11, 2012

 Duma Ratifies Russia’s WTO Accession Protocol
Dumma Russia's parliament ratifies entry into WTO this is after 18 years of talks, Russia is set to join the World Trade Organization.State Duma, the lower house of Russian parliament, voted on Tuesday to ratify a protocol on Russia’s accession to the World Trade Organization (WTO).The protocol was supported by MPs of the ruling United Russia party, while the opposition voted against the document.

Russia signed a protocol on accession to the world trade club on December 16, 2011 after 18 years of talks and had to complete the ratification process by July 23 to avoid the need to renegotiate the entire agreement.
The Russian opposition has claimed on many occasions that Russia’s accession to the WTO was detrimental to Russia’s national sovereignty and security and could ruin whole sectors of the domestic economy.

“Our country is totally unprepared for WTO entry and is doing so on unfavorable terms," Communist leader Zyuganov wrote in mid-June in an official letter to the government urging rejection of the protocol.
Russia’s Constitutional Court on Monday ruled legitimate the country’s WTO accession protocol following a challenge by the oppositio

The Duma country's lower house ratified the agreement on Tuesday. The bill is expected to clear the upper house by July 23rd, and then signed by President Vladimir Putin.The move will allow Russia, the largest economy outside the WTO, to join the organization as early as next month.

Russia first submitted its membership bid in 1993. But trade disputes with the United States and the EU over agriculture, energy and other industries hampered its entry. The war with Georgia in 2008 was also a factor.

Russia will be obliged to cut its cap on tariffs in phases from the current average of 10.3 percent to 7.1 percent.

Foreign countries expect that Russia's entry into the WTO will lead to expanded trade and an improved investment environment for their business.


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Steps Taken by the DHI to Revive/Restructure ITS Sick/Loss Making CPSEs


There are 17 Central Public Sector Enterprises (CPSEs) under the Department of Heavy Industries (DHI), Government of India, which are incurring losses.  The Ministry’s approach in such cases is to restructure/ revive these PSEs to reduce the sick and loss making PSEs as also their aggregate losses. Renowned consultants are being appointed through competitive bidding for formulation of appropriate revival plan / strategy to be adopted in re-structuring these PSEs so as to enable them to reduce their losses and become profit making organizations.  Out of 15 PSEs which were revived/restructured, 8 PSEs have started making profit.

Besides reviewing the performance of each CPSE periodically, the Department also provides budgetary support for addressing such issues. Italso provides support for financial investment plans for technological up-gradations of the manufacturing processes of these CPSEs.

Revival schemes involving cash infusion and financial restructuring in respect of sick PSEs like HMT, NEPA, NPPC, SIL are under process for approval of the Govt.

The steps taken to revive/restructure sick/loss making CPSEs, like NEPA, NPPC, HMT Group, TCIL and SIL are:

NEPA Ltd:  The Company is a sick unit and under Board for Industrial and Financial Reconstruction (BIFR) since May, 1998.  On 23 August 2007, Cabinet approved revival of Nepa through a Joint Venture Partner in private sector by disinvestment of Government of India’s equity, preferably to the extent of 74% or 100% and introduction of Nepa Limited (Disinvestment of Ownership) Bill 2007 in the Parliament. The Bill was referred to Department related Parliamentary Standing Committee (DRPSC) for detailed examination.  The Committee opined that sincere efforts should be made by the Government to revive NEPA Limited. “The Nepa Limited (Disinvestment of Ownership) Bill 2007” lapsed due to dissolution of parliament.

In a bid to revive the company, the Department prepared a revival plan, which was appraised and approved by the BRPSE.  Accordingly, it is proposed to revive Nepa Limited through financial restructuring and fresh fund infusion. The estimated expenditure on Revival of Nepa Limited has been assessed at Rs. 362.18 crore (GoI – Rs. 234.18 crore and borrowing from Bank/FI –Rs. 128 crore). In addition, non-fund based assistance of Rs. 930.14 crore through waiver/conversion of GoI/GoMP loan/interest etc. The Cabinet Note is being finalized incorporating the comments of other concerned Ministries/Departments.

Apart from above, the Ministry is giving continuous support to the company in the form of salary/wages and statutory dues to its employees. The Ministry has provided Rs. 27.96 crore to the company during 2011-12.  Due to continuous support in the form of loan for up-gradation, the Company achieved highest ever turnover in its history during 2011-12.

Nagaland Pulp & Paper Company Limited (NPPC) :     This is also a sick company and under the purview of BIFR.  The Union Cabinet in its meeting held on 8 November 2006 approved the revival of Nagaland Pulp and Paper Company Limited at an estimated cost of Rs. 552.44 crore with Rs. 261.26 crore as Government’s equity, Rs. 252.99 crore as loan from banks/financial institutions with Government guarantee and Rs. 38.19 crore as 5% non cumulative preference share.  However, it was found that the cost of the project escalated to Rs. 1102.85 crore thereby making it unviable proposition with estimated IRR of 5.5% only.

After protracted deliberations on various options suggested by the consultant, it was decided to bring up the NPPC project with reconfigured technology and product mix - both for pulp and paper in place of original consideration of writing & printing variety of paper only.  Investment of estimated cost of Rs. 679 crore has been considered in two phases. A fund based Capital Investment Subsidy (CIS) 30% of investment for Plant & Machinery (Rs. 476.47crore) which is approximately Rs. 150 crore has also been considered. Accordingly, a note for the consideration of PIB has been prepared and circulated.

Apart from above, the Ministry is giving continuous support to the company in the form of salary/wages and statutory dues to its employees. The Ministry has provided Rs. 8.81crore to the company during 2011-12.

Cement Corporation of India Ltd. (CCI): CCI was incorporated in the year 1965 as a company wholly owned by the Government of India. The company started incurring losses from 1984-85 onwards, referred to the BIFR in 1996 and declared sick. The Cabinet, at its meeting held on 9 March 2006, considered and approved a package for revival of CCI, which included closure and sale of assets of seven non-operating Units and expansion/modernization of Bokajan, Tandur and Rajban units at a cost of Rs.90.51 crore, Rs.43.80 crore and Rs.6.80 crore respectively.  The revival package also included measures like waiver of outstanding interest on Government loans (Rs.886.22 crore), conversion of loan into redeemable preference share capital (Rs.355.43 crore), waiver of unpaid Government Guarantee fees on past loans (Rs.10.60 crore), release of fresh loan (Rs.153.62 crore) and plan assistance (Rs.30.67 Crore) and Government guarantee for obtaining working capital loan from commercial banks without payment of guarantee fees (Rs.15.70 crore).

The Government has also approved implementation of 2007 pay revision, enhancement in the age of retirement from 58 to 60 years and freezing of interest on non-plan loan of Rs. 128.62 crore.

The performance of the company has improved in terms of production and turnover. It has started earning net profits consistently from the year 2006-07.

Heavy Engineering Corporation Ltd. (HEC):      HEC was incorporated on 31 December 1958 with the objective of achieving self-reliance in the field of design and manufacture of heavy equipments and machineries for core industries, especially the steel industry. Subsequently, HEC diversified its area of operation in the field of mining, railways and defence. The company became sick and the BIFR passed orders for its winding up in July, 2004. In fact, despite the vast infrastructure facility, the company had been incurring losses in the pastthroughout, except for the years 1976-77, 1977-78 and 1988-89, till BIFR recommended its closure.

Pursuant to the appeal against the orders of BIFR, a revival package was approved by the Government in December, 2005. With the implementation of the revival package, there had been marked improvement in the performance of the company. However, to address certain other issues affecting the performance of the company, a further package was approved by the Government in September, 2008. These packages included conversion/waiver of outstanding government loans and interest, provision for  bridge loan, settlement of various liabilities through transfer of land and mobilization of resources from surplus assets for CAPEX, settlement of dues, etc and government guarantee to meet working capital requirements.

Under these two packages, non-cash assistance of Rs.1307.05 crore and cash assistance of Rs.60 crore was given to the company. The Government has also approved implementation of 2007 pay scales and extension of Government guarantee of Rs. 253 crore up to 31 March 2014 to ensure availability of working capital loans from banks.  With the implementation of the revival package, the company has come out of sickness and is making net profits since 2006-07.

Scooters India Limited (SIL): SIL was set up in 1972 with a second hand plant bought from M/s. Innocenti of Italy is engaged in manufacturing and marketing of three wheelers. SIL incurred losses continuously since inception and was declared as sick company on 11 August 1992 and came under the purview of BIFR. Consequently, a revival scheme for SIL was sanctioned on 9 September 1996.  However, SIL again started incurring operating losses from 2002-03 and net losses from 2006-07 onwards. SIL was declared sick in 2010 and came under the purview of BIFR.

Based on the recommendations of BRPSE, a proposal for revival of SIL by Reduction/transfer of entire Government equity to a suitable identified strategic partner through Department of Disinvestment was initiated.   For implementing the Cabinet decision, a Resolution seeking Parliamentary approval to facilitate induction of a strategic partner for revival of SIL was moved and listed during the Monsoon Session, 2011 of Parliament. Subsequently, the Ministry re-examined the matter and the resolution introduced was withdrawn.  In view of improved performance of the company during 2011-12, it was decided to revise the proposal approved by Cabinet on 19 May 2011.  A reference was made to Prime Minister’s Office (PMO). PMO directed that revival proposal be brought before the Cabinet.  Accordingly, a joint study was carried out by Automotive Research Association of India (ARAI) and Scooters India Limited (SIL). Based on the study, a revised proposal for revival of SIL has been prepared and proposed by SIL envisaging infusion of Capex/working capital and financial restructuring through waiver/conversion of GoI.  The proposal of revival of SIL on its own is at present under process.  

Tyre Corporation of India Limited (TCIL): TCIL was incorporated on 5 March 1984 by vesting the assets of two sick companies namely, M/s. IncheckTyre Limited, Kankinara and M/s. National Rubber Manufacturers Ltd., Tangra by the Nationalisation Act No.17 of 1984. Initially, TCIL was referred to the BIFR in May 1992. Cabinet in its meeting held on 12 June 2000 approved ‘in principle’ the financial and capital restructuring package for the Tyre Division, Kankinara and directed for exploring the possibility of Joint Venture(s) through strategic sale(s). For the Tangra Unit, the Cabinet directed closure/winding up by offering Voluntary Separation Scheme (VSS) to its employees. Tangra Unit was closed in August, 2001 and assets were sold to the highest bidder by Asset Sales Committee under the supervision of BIFR. 

Subsequent to above, the proposal for revival of TCIL was considered by the Cabinet, in its meeting held in November, 2008 wherein it approved the financial restructuring of TCIL through cleaning of the balance sheet and subsequent disinvestment of the company.  Consequently, the financial sanctions for waiver of interest on GoI loans, unpaid guarantee fee and reduction of duty (enhanced) amounting to Rs. 815.59 crore have been issued.  At present the disinvestment of TCIL through outright sale, through Department of Disinvestment (DoD) is under process.

HMT Ltd:  Since the company had been incurring loss over the years, a revival plan was mooted. The revival plan was considered by BRPSE in 2006.  Based on the recommendations of BRPSE a draft Note for CCEA was formulated and circulated to concerned Ministries/Departments for obtaining their comments. The revival proposal was not supported by Ministry of Finance and Planning Commission. The company was asked to get the revival plan vetted by a technical consultant. The revival plan was revised in the light of the recommendations of the Technical Consultant (ARAI) and finalized. The Note for CCEA was sent to Cabinet Secretariat. The note was returned with the direction for obtaining fresh approval of BRPSE in view of the changes in the economic scenario. The company has been incurring loss over the years and it is unable to generate adequate resources to make payment of statutory dues to its employees. The total Government loan including budgetary support for statutory dues as on 31 March 2012 is Rs. 417.62 crore.  It was decided by this Department (DHI)  that an experienced consultant should be engaged to study the HMT Group of companies and recommend revival with a firmed up business plan or otherwise. Based on the report of the consultant, a revival plan was formulated and sent to BRPSE for consideration and approval. BRPSE in its meeting held on 29 March 2012 considered the revival plan and approved it. The Note for the Union Cabinet based on the recommendations of BRPSE is under consideration. The revival plan envisages cash infusion of Rs. 441.30 crore and non-cash assistance of Rs. 551.69 crore.[Total Rs. 992.99 crore].

HMT Bearings Ltd:HMT Bearings Ltd is a BIFR referred company since December, 2008. A revival plan sanctioned in 2005-06 could not yield the desired result as the company could not raise loan for funding CAPEX and working capital for an amount of Rs.17.40 crore against GOI guarantee as envisaged in the revival plan.  While the revival plan was sanctioned in 2005-06 the GOI guarantee could be issued in August 2008 as the banks were not willing to extend loan at the interest rate prescribed by Ministry of Finance.  The performance of the Company deteriorated sharply and the Company has been referred to BIFR towards December, 2008 for declaring it as a sick unit.

The company has been incurring loss over the years and it is unable to generate adequate resources to make payment of salary/wages to its employees. The total Government loan including budgetary support for salary/wages and statutory dues as on 31 March 2012 is Rs. 43.03 crore.

It was decided to appoint an experienced Consultant to study the HMT group of companies including HMT Bearings Ltd. and make recommendations with a firmed up business plan or otherwise.  Based on the report of the consultant a revival plan for HMT Bearings Ltd has been under process for obtaining approval of BRPSE. The revival plan envisages Cash infusion of Rs. 55.91 crore and non-cash assistance of Rs. 56.92 crore [Total Rs. 112.83 crore].

HMT Watches Ltd: As regards the HMT Watches Ltd. the company had been incurring losses from its inception as subsidiary in the year 2000. A revival plan was mooted and it was approved by BRPSE in 2006. A draft Note for CCEA on the  revival proposals based on the recommendations of BRPSE had been circulated to concerned Ministries/Departments. As the revival plan was not supported by the Ministry of Finance and Planning Commission the proposal was reviewed and the Company was asked to get the revival plan vetted by a Consultant with respect to marketing, product diversification and technology. The Company appointed a Consultant M/s ICRA Management Consultancy Services Ltd. and based on the report of the Consultant the company prepared the revised revival proposals.  The revival plan had been under consideration and JV formation along with limited financial restructuring in order to clean up the balance sheet was mooted.

The company has been incurring loss over the years and it is unable to generate adequate resources to make payment of salary/wages and statutory dues to its employees. The total Government loan including budgetary support for salary/wages and statutory dues as on 31 March 2012 is Rs. 694.52 crore.

It was decided to appoint an experienced Consultant to study the HMT group of companies including HMT Watches Ltd. and make recommendations with a firmed up business plan or otherwise.  Based on the report of the Consultant a revival plan  has been formulated and  it is under consideration for obtaining approval of BRPSE.The revival plan envisages cash infusion of Rs. 252.70 crore and non-cash assistance of Rs. 1247.00 crore [ Total Rs. 1499.70 crore].


Indian Railways have carried 244.81 million tonnes of revenue earning freight traffic during April-June 2012. The freight carried shows an increase of 11.15 million tonnes over the freight traffic of 233.66 million tonnes actually carried during the corresponding period last year, registering an increase of 4.77 per cent.

During the month of June 2012, the revenue earning freight traffic carried by Indian Railways was 80.43 million tonnes. There is an increase of 4.00 million tonnes over the actual freight traffic of 76.43 million tonnes carried by the Indian Railways during the same period last year, showing an increase of 5.23 per cent.

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