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Today's Hot Stories - April 03, 2010

10 Headlines for Today

(1) Congress in no hurry to push Muslim quota
(2) Haryana proceeds to strip Rathore of police medal
(3) Maoists attack CRPF camp in Gaya
(4) SAIL, JSW and Essar increased prices of their products by up to Rs. 2,500 a tonne
(5) Coal India issue to be restricted to 10 per cent
(6) Carmakers post major sales jump in U.S. market on deals
(7) Pietersen's maiden half ton takes RCB to 6-wicket win over Kings XI
(8) Yusuf is most valuable player in IPL 3 so far
(9) Roddick rocks Nadal to reach Miami final
(10) Professional line sitter loses iPad race to German blogger

5 Stories for Today

(1) Justice Dinakaran asked to go on leave
(2) Flood of fears over China's projects
(3) Oilcos may lose Rs 80000 crore
(4) Pilots union threatens legal action against Air India management
(5) SEBI issues note to ‘guide’ investors

(1) Justice Dinakaran asked to go on leave

The Supreme Court collegium headed by Chief Justice of India K.G. Balakrishnan has advised Karnataka High Court Chief Justice P.D. Dinakaran to go on leave. Since December last, Justice Dinakaran has not been performing judicial work.

In his place, the acting Chief Justice of the Delhi High Court, Justice Madan B. Lokur, is being appointed Chief Justice of the Karnataka High Court.

The decision to advise Justice Dinakaran to go on leave was taken by the collegium on Thursday, following representations that in the absence of the Chief Justice at the helm of affairs, judicial work in Karnataka suffered to a great extent.

It was felt that the three-member committee headed by Justice V.S. Sirpurkar might take at least a year or so to complete the probe into charges against Justice Dinakaran and till then the High Court could not remain idle without a regular Chief Justice.

After Rajya Sabha Chairman Hamid Ansari admitted a motion seeking his removal on charges of corruption, land-grab and abuse of judicial office, Justice Dinakaran has not been performing judicial functions.

It all started in August 2009 with the collegium recommending the elevation of Justice Dinakaran as Supreme Court judge along with four others.

The Chennai-based Forum for Judicial Accountability, in September 2009, furnished a list of charges against Justice Dinakaran, including allegations of land encroachment at Kaverirajapuram in Tamil Nadu.

After this allegation was confirmed by the Tiruvallur Collector in two reports, the collegium dropped Justice Dinakaran's name for elevation. Thereafter on a complaint from 76 members of Parliament, the Rajya Sabha Chairman admitted a motion for the removal of Justice Dinakaran.

Pending the completion of enquiry, he is now being asked to go on leave.

(2) Flood of fears over China's projects

China's dam-building spree along the Mekong river in south-western Yunnan province has raised fears among several of its neighbours, who say the dams have led to shrinking levels of water downstream.

Officials from Thailand, Laos, Vietnam and Cambodia, countries which lie in the Mekong basin, will on Sunday voice their concerns over eight dams that China is building along the Mekong, in talks with Chinese officials in Thailand.

The four countries in 1995 set up the Mekong River Commission (MRC) to facilitate joint management and water-sharing in the Mekong region, though China and Myanmar have so far refused to formally join the body. The Mekong runs almost half of its 4,400 km course in China's south-west, where it is known as the Lancang, before entering Myanmar and Laos.

The MRC's concerns closely echo those voiced by India in the past over China's plans to build dams along the Brahmaputra, or the Yarlung Tsangpo as it is known in Tibet. In both cases, China's position as an upper riparian or upstream-lying state has given it an advantage in controlling the rivers' resources, say experts. International laws allow China to build hydropower projects that do not divert or substantially alter the course of the rivers, though the absence of robust water-sharing arrangements has led to persisting concerns in several downstream countries, including India, over the future of their water security.

“We can see the level of the water is getting lower,” said Abhisit Vejjajiva, Prime Minister, of Thailand, last month. “We will ask the Foreign Ministry to talk with a representative from China in terms of co-operation and in terms of management systems in the region.”

An estimated 60 million people depend on the Mekong river in the five countries that lie downstream. China has already built three dams in Yunnan. Five more are in the works, including the massive $4-billion Xiaowan dam, scheduled to open in 2012, which is the world's highest dam.

But whether the dams are behind the Mekong's shrinking levels downstream still remains a much-contested question.In May, the United Nations Environment Programme warned of a “considerable threat” the dams posed to water management in areas downstream, though China says the course and flow of the Mekong have been unaffected by its projects.

Chen Mingzhong, deputy Director-General of the Department of International Cooperation at China's Water Resources Ministry, said on Friday the dry weather in the lower Mekong areas was the “root cause” of the reduced run-off water downstream, and that the dams would help, not hinder, water management. Officials say the river's flow in China only accounts for 13.5 per cent of its net flow, according to their data.

The Chinese government views the dams as crucial to maintaining water security in its south-west, which is currently facing its worst drought in five decades, affecting more than 24 million people. The government has allocated 27 billion Yuan ($4 billion) to build more reservoirs and dams in Yunnan alone.

“The hydropower stations built on the Lancang River will not increase the chance of flood and drought disasters in the downstream. Instead, it will considerably enhance the capacity of flood control, drought relief, irrigation and water supply for the downstream countries,” Mr. Chen argued.

But his country's neighbours, however, remain unconvinced.

(3) Oilcos may lose Rs 80000 crore

If the current price of crude at around $85 per barrel continues and government does not hike the petrol and diesel prices, the losses of government-owned IndianOil, Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) may jump over 66% to Rs 80,000 crore in 2010-11 due to under-recovery.

According to one estimate, these three fuel retailers lost around Rs 48,000 crore on selling petrol, diesel, cooking gas and kerosene below cost in 2009-10. The firming of global crude had led to upward revision in estimates for under-recoveries to Rs 48,000 crore for 2009-10, from earlier projection of Rs 45,000 crore. In 2009-10, losses were lower as crude prices fell due to slowdown in the global economy. But prices are now firming up with recovery in the world economy.

IndianOIL, BPCL and HPCL currently sell petrol at a loss of Rs 6.12 per litre and diesel at Rs 4.60 per litre. Sale of Kerosene through public distribution system leads to maximum losses, with an under-recovery of around Rs 18.42 per litre. They also lose Rs 265.27 per cylinder of cooking gas.

According to another estimate, if the price of crude jumps to $100 per barrel, losses of oil companies will touch Rs 1,20,000 crore in 2010-11.Refiners, who sell the final products in markets at lower than the cost of production, are worried over indecision on part of government regarding sharing of losses by the crude producing companies like ONGC. In 2009-10, a part of losses on petrol and diesel has to be met by upstream firms like ONGC as per a prescribed formula and the government is supposed to bear the losses on sale of cooking fuels.

However, government has provided for only Rs 12,000 crore of the total loss of Rs 20,989 crore on the sale of cooking gas and kerosene in the first nine months of 2009-10. The losses further surged in the fourth quarter as the crude prices increased. But the government is yet to make any payment towards this end.

Out of the provisioning of Rs 12,000 crore, IOC would get Rs 7,100.18 crore, BPCL Rs 2,370.77 crore and HPCL Rs 2,529.05 crore.

(4) Pilots union threatens legal action against Air India management

The Indian Commercial Pilots Association (ICPA), the union that represents 560 Air India (AI) pilots has threatened legal action if the management of India's national carrier goes ahead with plans to recruit 40 trainee pilots for the airline's international operations.

In a letter dated March 31 and addressed to the Chairman and Managing Director of AI, the ICPA has stated that as per the Memorandum of Settlement signed in July 2006 between the union and the management, it was agreed that their pilots “would fly up to 90 hours per month and 240 hours in a quarter.”

However, the ICPA says that at present, the base average for pilots of the National Aviation Company of India (Indian Airlines) — the holding company of the erstwhile Indian Airlines — had “dropped to about 60 hours per month and in some cases as low as 40 hours.” This, the ICPA says, is a clear indication that pilots belonging to the erstwhile Indian Airlines but who now fly under the AI banner after the merger of the two airlines, “were under-utilised.” These pilots primarily fly domestic routes and to neighbouring countries.

Citing this under-utilisation, the ICPA has written that “it would be prudent to redeploy pilots to various fleets (like Air India's international operations), depending on requirements rather than induct fresh trainee pilots which would result in additional financial expenditure.”

According to the ICPA, by 2011, AI's domestic arm, the erstwhile Indian Airlines will have 43 aircraft including new acquisitions. This will necessitate, if one were to go by the existing pattern of five sets of two pilots for each aircraft, 430 pilots in all.

Against this the erstwhile Indian Airlines already has 560 ICPA-affiliated pilots and another 249 executive pilots made up from the ranks of directors, general managers and deputy general managers; 379 pilots in excess of what is ideally required for AI's domestic operations.

According to an ICPA office-bearer, it was surprising that “though a merger had taken place between Air India and Indian Airlines in 2007, the management has not yet explored the possibility of redeploying pilots where they are in excess to fleets were they are needed.”

(5) SEBI issues note to ‘guide’ investors

In an effort to improve financial literacy, market regulator Securities and Exchange Board of India (SEBI) has come out with an ‘easy-to-understand guidance’ note, asking the investor community how to navigate offer documents and read risk factors before making investment decisions.

SEBI, in its ‘Guide to Understanding Offer Document’, advises investors to go through the risks factors and look at ‘the promise-vs-performance columns’ before investing in a company.

“It is generally advised that investors should go through all the risk factors of the company before making an investment decision,” the document says. The regulator also says in case investors find instance of misinformation or lack of information, they may send their complaint to the lead manager of the issue and/or to SEBI.

Informing investors about the basic knowledge before investing in public issues or rights issues, SEBI says, “The application forms for applying or bidding for shares are available with all syndicate members, collection centres, the brokers to the issue and the bankers to the issue.”

For the aggrieved investors with respect to non-receipt of shares, delay in refund among other things, SEBI says, “Investors can approach the compliance officer of the issue, whose name and contact number are mentioned on the cover page of the offer document.” The SEBI document also clarifies that all public issues of over Rs 10 crore are compulsorily in demat mode. It says an issue can be kept open for 3-10 working days, extendable by three days in case of a revision in the price band, while rights issue can be kept open for 15-30 days.

“You can get refunds in an issue through various modes such as registered or ordinary post, direct credit, real-time gross settlement (RTGS), electronic clearing service (ECS) and national electronic fund transfer (NEFT),” says SEBI.

In book-built public issues — through which a company discovers the actual price of the share in the market — the listing of shares gets done within three weeks after the closure of the issue. “Book-building is a process of price discovery. After the bidding process is complete, the cut-off price is arrived at based on the demand of securities. Only the retail investors have the option of bidding at a cut-off price,” SEBI says.

Last month, the regulator had approved regulations for the Investor Protection and Education Fund (IPEF) which may be even used for initiating legal proceedings against listed companies. In addition to funding legal battles in the interest of investors, the fund can also be utilised for activities like educating investors and disseminating information through media, the regulator said in a release after the board meeting.

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