Article

Wanted, a ‘Ministry of Logistics’

Hemant Bhattbhatt, Transportation Leader, Deloitte (India), explains the importance of integrating processes
to improve efficiencies

The market for manufacturing is looking up. But logistics is groaning under the strain. End users say low
cost and low investment leads to slow turnaround time in delivery. What are the steps needed to improve
this?

HB:
manufacturing activity and the increasing expectations of the users of logistics services that contribute to the
increasing pressure on the sector. Both are irreversible and welcome trends that the logistics industry will
have to adjust to. Indian competitiveness in global markets is predominantly based on ‘price’ and the edge is
owing to the low cost of manufacture. In its obsession with costs, scant attention has been paid to issues like
standardisation of material handling equipment and storage facilities, enhanced usage of web based
technologies and GPS, manpower training etc. The approach has been more tactical and less strategic. The
initial focus has been on transportation infrastructure improvement and rightly so. However as the economy
matures, we now need to shift our attention to the other parts of the logistics industry and adopt a more
holistic view of the situation. A huge integrator is ‘meaningful, real-time, accurate information’. Especially
there is a need for creation of ‘transparent spot markets’ that can address the market imperfections arising
from lack of information on options available in terms of service and cost, which often weds service users to
service providers into unhappy marriages. Such competition will deliver efficiencies, lower costs and
improve turnaround times. A lot will need to be done to better the lot of the unorganised sector’s extremely
micro-enterprises, like truckers, constituting the spine of the supply-chains. The continuous power imbalance
vis-à-vis service users that these constituents have suffered has come back to haunt the users in the form of
poor service and slow pace of technology adaptation.

The market for expert 3PLs holds huge promise. Companies need to move from a low cost internal 2PL
model to a complex and competitive 3PL model? Do you foresee this happening? How can it be done?
HB:
model in its effective form is more than just an assembly of capabilities to handle all aspects of the supply
chain like transportation, material handling, storage and paperwork. It is more about the ‘logical’ part rather
than the physical part. Clients need the assurance that there is either a cost advantage, or a value added
advantage or both to patronise 3PL’s in big way. Service providers’ capabilities in creatively and efficiently
handling the ‘end to end logistics’ challenges of clients and the ability to demonstrate the superiority of their
suggestions through quick and structured options analysis would go a long way in convincing companies to
shift from 2PL models to 3PL models. The more sophisticated 3PLs have already recognized that while
infrastructure and assets are important they are not the end-all. Key to their growth is building supply chain
design capabilities and they are wisely investing in.

A huge chunk of manufacturers are dismissive of using rail as a viable option to move goods in the near- to
medium-term. What are the issues here that need to be rectified?

HB:
industry corridors being executed it would not be honest to dismiss rail as a viable option and I can
foresee the same sceptics lining up to set up industries alongside to benefit from the development. I take the
dismissal as an indication of exasperation of the industry. Rail can never beat road transportation so far as
last mile connectivity is concerned. Where it can is handling bulk, providing timeliness and safe/ secure
transportation. The subsidisation of passenger transport at the cost of cargo can be addressed by increasing
private participation.

What are the changes needed to improve road transport to bring in efficiencies?

HB:
tolling stoppages, state-to-state restrictions, frequent detentions for checking, poor infrastructure for drivers,
lack of standardisation of storage, handling and transport equipment among others. Setting-up of ‘Transport-
nagars’, introduction of e-tolling/smart cards, transporter registration for stoppage free carriage across state
borders, creation of ring roads etc. are the different changes that can bring in efficiencies. I would very much
like to see a ‘Ministry of Logistics’ emerge with an overriding charter to coordinate and dovetail the
initiatives of the ministries of different modes of transport from an end user perspective.

How can companies develop an efficient supply chain, while managing current functions?

HB:
revisiting the design for optimisation. Of course depending on the scale in-house logistics also makes sense.
Companies should monetise the different non-monetary benefits they receive from alternative logistics
solutions and then make sharper comparisons in making a choice. It is also critical to integrate procurement-
to-despatch processes. A lot of predictability in terms of timing of logistics needs would result from a
superior integration of the functional silos existing in these companies and their breakdown for handling
logistics would help companies develop efficient supply chains.
NEWS ROUNDUP

Ports / Shipping

Kandla Port handles record cargo in 2009-10

Despite recession affecting businesses across the globe and throughputs falling in most all ports over the
country, Kandla Port, has handled a cargo volume of 79.50 million tonnes during 2009-10.

This is the third year in a row that Kandla Port has handled the highest volume of cargo among all the ports.
Chairman, Mr P. D. Vaghela Mr Vaghela credited this achievement to the support and cooperation of Port
users, employees and others.

This was only possible because of steps taken by the Port’s administration, for developing infrastructure and
facilities for improving cargo handling and by maintaining harmonious relationship between the trade, the
workers and officials.

While transparency and customer focus continued to be the primary attaction of the Kandla Port
administration, there was huge appreciation and support by the Port’s users whose contribution was
remarkable.
The throughput of the fiscal just ended (2009-10) is a 10 per cent increase over the 72.22 million tonnes the
Port handled in 2008-09.

Kakinada port awaits nod for three more berths

The Kakinada deep water port, being operated by the Kakinada Seaports Ltd, handled 10.45 million tonnes
of cargo during 2009-10 and is aiming at 13 million tonnes during 2010-11, according to Mr K.V. Rao,
Chairman and Managing Director.

It was also said the target was to reach 20 million tonnes by 2013. A joint venture project with Singapore's
Sembawang has been taken up to set up a marine repair facility for merchant vessels, offshore vessels and
rigs at a cost of $375 million.

It would also be required to employ 1500 people in the marine repair facility. Rao denied that any cargo was
being diverted to the deep water port from the old Kakinada anchorage port and the new port was not
adversely affecting the interests of workers dependent on the old port.

He said the new port was well within its rights to handle cargo generated on its own and the controversy was
not necessary on the issue.

IIF to invest Rs 150 cr in Karaikal Port

India Infrastructure Fund (IIF), managed by IDFC Project Equity Company Ltd, is to invest Rs 150 crore in
Karaikal Port Pvt Ltd to fund the second phase of expansion.

The division of Marg Ltd, IIF, will take an equity stake in Karaikal Port Pvt Ltd to fund its phase II
expansion plan. KPPL has finalised the fund raising plans for the Rs 1,500-crore expansion plan to be
completed by September 2011. Karaikal port is a deep-water port in Puducherry about 320 km to the south
of Chennai port.

Phase I of the development is operational with two berths for coal and general cargo.

The phase II will take the capacity of the port to 21 mt. It is being implemented in three phases and when
completed in 2016, will have nine berths capable of handling 47 MTPA.

MARG is a Chennai-based infrastructure and real estate development company developing the Karaikal Port
on BOT basis based on a 30-year concession from the Government of Puducherry.

Kandla port sets new 1-day coal handling record

A new single-day discharge record was established at the Kandla Port when 41,163 tonnes of South African
coal in bulk was unloaded from the vessel m.v. Tai Hunter from March 28 at 0800 hrs to March 29 at 0800
hrs.

The discharge was undertaken by stevedoring agent Maheshwari Handling Agency Pvt. Ltd, Gandhidham.
The vessel was under the agency of BS Shipping Agencies.

The cargo was imported by Anik Industries.

The vessel arrived with 53,504 tonnes of coal on March 27 at 0845 hrs, berthed at 1400 hrs. The discharge
commenced at 1630 hrs the same day.

The entire operation was completed at 0900 hrs on March 29 and the vessel sailed off three hours later.

The earlier discharge record was on June 20, 2008, when 37,973 tonnes of coal was unloaded from m.v.
Gemini Pioneer.

Machilipatnam port contract award flayed

The Comptroller and Auditor General (CAG) in its report filed in the Assembly found fault with the award
of contract for development of Machilipatnam port to Maytas Infra Ltd, involving payment of Rs 335 crore
in violation of the prescribed Government guidelines.

In its report, the CAG said that the contract for development of port at location Gilakaldinne near
Machipatnam of Krishna district was given to a party which did not initially submit the bid for the changed
location.
Consequently, the Government was burdened with the payment of Rs 335 crore against nil investment
initially contemplated.

The Government stated that Maytas submitted the proposal for development of the port at Gogileru near
Machipatnam with an estimated cost of Rs 1,255 crore.

Due to representation received from the public it was decided to develop the port at Gilakaladinne and not at
original site.

Thereafter Maytas sought payment of Rs 335 crore for development of the port at the new location. It also
maintained that payment of additional cost of Rs 335 crore was certified by WAPCOS (Inda) Ltd, New
Delhi.

The CAG found this reply unacceptable. It felt that from the point of view of safeguarding Government's
interest, the competitive bidding procedure is prescribed. The benefit of calling for bid accrues only when
sufficient number of parties participates in the bids and gives their quotes.

Therefore, the award of contract in the changed location and also decision to pay Rs 335 crore due to this
new location to the developer was faulted by the CAG.

GMB ports set 35 pc growth rate in cargo handling

Ports functioning under the Gujarat Maritime Board (GMB) registered 34.60 per cent growth in throughput,
at 206 million tonnes, in 2009-10, compared to the 153 million tonnes they handled in 2008-09.

The distinct GMB growth model of business, focuses on utilizing the state’s 1,600-km coastline through
policy reforms.

GMB’s ports have the capacity to handle even 244 million tonnes per annum in 2009-10.

The growth was driven by ports like Navlakhi, Magdalla, Jafrabad, Sikka, Pipavav and Mundra (new), which
achieved traffic growth of 57 per cent, 13 per cent, 16 per cent, 64 per cent, 76 per cent and 10 per cent,
respectively, in 2009-10 over 2008-09.

Cargo traffic at Sikka port increased from 65 million tonnes to 107 million tonnes, while at Navlakhi the rise
was from 2.83 million tonnes to 4.46 million tonnes. Traffic at Port Pipavav increased from 2 million tonnes
to 3.56 million tonnes.

Container traffic too improved at Port Pipavav and Mundra. Nearly 90 per cent more TEUs and FEUs were
handled at Port Pipavav.

At the Alang Recycling Yard, 50 per cent more steel was recovered, from 19.31 lakh tonnes in 2008-09 to
29.54 lakh tonnes.
Gujarat’s non-major ports handle a variety of cargoes, for which the facilities include container terminals,
LNG terminals, dry bulk and liquid bulk cargo terminals, SPM-fast liquid cargo handling terminals, car
terminals, ro-ro terminals, terminals for handling over dimensional cargo (ODC), deepwater berths/jetties,
shipbuilding yards, etc.

GMB continues to chart strategies for further progress. It has started the process for setting up cluster-based
marine shipbuilding parks, with the government recently approving three projects. As part of strengthening
the road network in and around ports, concreting work has been taken up in a phased manner.

With the Bharuch-Dahej Rail Company being established under an SPV, the project of building the 64-km
long Bharuch-Dahej broad gauge rail connection is under implementation.

Mumbai Port records considerable growth rate

Mumbai Port recorded a cargo throughput of 54.54 million tonnes in 2009-10, surpassing 2008-09’s traffic
of 51.88 million tonnes, registering a commendable growth of 5 per cent.
The major commodities and products handled during the period were imports of iron and steel, POL and
POL products, coal, pulses; exports of iron and steel and motor vehicles. Shipments of iron and steel, pulses
and coal registered a growth.
The growth was possible due to the proactive policies followed by the Port and the measures taken to reduce
handling costs.

Mr Rahul Asthana, Chairman of the Mumbai Port Trust, assured that the growth momentum would be
continued with more attention paid to the requirements of the maritime fraternity. Various projects were
being planned in all segments of cargo handling activities, including containers, general cargo, POL,
chemical and cruisers, he revealed.

In its effort to improve services, the Port had also migrated from Quality Management Services ISO-
9001:2000 to ISO-9001:2008. The improved version of Quality Management Services envisages insistence
on quality for outsourced services, training to the employees for improving their competitiveness resulting in
productivity and bringing the information technology (IT) within the ambit of the infrastructure.

Greatship Mohini delivered

Greatship Global Offshore Services Pte. Ltd has taken delivery of Greatship Mohini, a multi-purpose
platform supply and support vessel, from Keppel Singmarine Pte. Ltd., Singapore.

With this, the current owned and/or operated fleet of Greatship (India) Ltd (GIL) and its subsidiaries stands
at six (Platform Supply Vessel)PSVs, eight AHTSVs, two jack-up rigs and one (Multipurpose Platform
Supply and Support Vessel) MPSSV.

The current order book of GIL and its subsidiaries comprises 10 vessels, two MPSSVs in Singapore, two
MSVs in India, four ROVSVs in Sri Lanka and two 150 TBP AHTSVs in Singapore.
INFRASTRUCTURE/NEW LAUNCHES/OPERATIONS

BDP International enters India

US-based BDP International has launched a joint venture in India with a local company, Unique Global
Logistics, having strong expertise in the energy sector, including oil and gas.

The joint venture company, BOP Global Logistics (India), will target the country's expanding chemicals, life
sciences, healthcare, retail, telecom and manufacturing sectors, it is learnt. Chemicals accounts for 13-14 per
cent of India's exports and 8-9 per cent of imports.

BDP, an acknowledged leader in the chemical sector and active in more than 120 countries, has also
announced the Indian launch of its new technology, which is a vendor management tool that provides
logistics managers with visibility of each stage of an international purchase.

Meanwhile, GAC Marine Logistics has opened an office in Chennai to house its fast growing dedicated
customer service team. The office, launched a few months ago, proved to be inadequate to handle the
growing business, particularly the international client portfolio and to provide round-the-clock service.

Mega food park in Orissa planned

The Union government is considering setting up a mega marine food park in Orissa, the Food Processing
Minister, Mr Subodh Kant Sahai stated.

The proposed park may be located at Malipara near Khurda and cover 282 acres, he indicated.
The state has no major food processing companies in spite of the fact that is has sufficent natural resources.

Kolkata airport modernisation cost raised to Rs 2,325 crore

Due to a cost overrun the revised project cost of Kolkata airport modernisation is expected to be Rs 2,325
crore, against Rs 1,942 crore estimated earlier. The estimate received approval of the board of Airport
Authority of India.

The revised estimate, however, does not include the cost of setting up a new air traffic control tower which
was a part of the initial investment plan.

The setting up of the ATC tower would thus entail an additional Rs 300 crore investment over and above the
revised estimate, according to sources in the Airport Authority of India (AAI).

Apart from increase in cost of construction, some new additions in the project also led to the cost overrun,
Mr R. Srinivasan, Kolkata Airport Director stated. These included setting up of a baggage sorting system
that would automatically sort luggage of different airlines and route them to the respective belly-holds, he
said.
TVS Motor Company posts 24 % growth in March 2010
Completing the year on the continuous growth path, TVS Motor Company has posted a growth of 24 % in
March 2010. Significant contributions across all segments has resulted in total two wheeler sales of 146,736
units when compared to 118,000 units in the same month of the previous financial year.

Cumulative growth for the period April 2009 to March 2010 stood at 15%, with1,521,912 units against
1,325,754 units in the comparable period of the previous year.

The company's three wheeler business was also substantially higher in March 2010 than over the same
period of the previous year.
Domestic sales grew 25% registering sales of 126,669 units in March 2010 when compared to 101,660 units
recorded in March 2009.

Exports, maintained its upward course posting double digit growth of 23% during the month of March 2010
registering sales of 20,067 units against 16,340 units in March 2009.

Three wheeler sales too continued its voluminous growth posting sales of 2,431 units in March 2010 against
650 units in March 2009; cumulative sales for the period April 2009 to March 2010 thus adding up to 14,980
units.

Aegis Logistics acquires Shell Gas (LPG) India

Oil and gas logistics provider Aegis Logistics has acquired Shell Gas (LPG) India, pursuant to which the
latter has become the subsidiary of the company.

Aegis Logistics, in a filing to the Bombay Stock Exchange (BSE), said it has completed the acquisition of
3.23 crore equity shares of Shell Gas (LPG) India.

It, however, did not disclose the financial details of the transaction.

The company, on December 31, had entered into a share purchase agreement with Shell Gas (LPG) India to
acquire it.

Shell Gas (LPG) India Pvt Ltd has a gas infrastructure facility at Pipavav Port and a LPG filling plant in
Gujarat.

The company also carries out business of import and marketing of wholesale LPG.

Aegis Logistics acquires Shell Gas (LPG) India

Tata Motors has paid the lease rent of Rs 1 crore till March next year for its land at Singur, where the
company's small car 'Nano' was initially scheduled to roll out from.

Officials of the West Bengal Industrial Development Corporation (WBIDC) said that the company paid the
advance annual lease rent of Rs 1 crore last month for the year 2010-11.
Tata Motors had withdrawn the 'Nano' project from Singur in West Bengal in October 2008 and shifted it to
Sanand in Gujarat as it faced opposition from displaced farmers.

When asked whether Tata Motors was willing to retain the land, a company spokesman said, "Paying the
rent indicates that the land is with us on lease".

The West Bengal government had sought return of the Singur land from the Tatas for the purpose of having
an alternate project as proposed by the Railways Ministry.

RAILWAYS

Rail link to Vallarpadam ICTT completed right on time

Work on rail connectivity to the international container transhipment terminal (ICTT) coming up at
Vallarpadam has been completed, Mr Kesava Chandran, Joint General Manager, Rail Vikas Nigam Ltd
(RVNL), announced.

The Cochin Port Trust (CoPT) had fixed March 31 for completion of laying the rail track.

The track, which cost Rs 350 crore to build, covers 8.86 km to Vallarpadam from Edappally near the existing
Southern Railway network. This is a line dedicated only for goods traffic.

The project has the longest bridge in the country at 4.62 km and other four small bridges, which passes
through thickly populated areas to reach Vallarpadam, where a new railway station is being constructed, Mr
Chandran said.

CoPT and DP World had signed the licence agreement on January 31, 2005, for the development of ICTT at
Vallarpadam. According to the agreement, CoPT has to provide rail connectivity, a four-lane national
highway connectivity and deeper and wider navigational channels so as to facilitate entry of 8,000-TEU
capacity vessels.

Referring to the road connectivity, the CoPT Chairman, Mr N. Ramachandran, said that the two-lane
connectivity, covering a distance of 17.2 km, is scheduled for commissioning by June and 84 per cent of the
work has been done. The work is being executed by the National Highways Authority of India (NHAI).

The capital dredging work to provide a draught of 14.5 metres is also in progress and the Port is expecting a
soft launch of the terminal towards the end of June, he revealed.

Construction, which commenced on December 15, 2007, is progressing expeditiously.

New member for Rly board

Mr Sanjiv Handa, has taken over as Member Mechanical, Railway Board and ex-officio Secretary to the
Government of India here today. This follows the superannuation of Mr Praveen Kumar from the post on
Wednesday.

Mr Handa is Special Class Railways Apprentice Officer of 1969 Batch. He joined the Indian Railways
Service of Mechanical Engineering on January 19, 1974. Prior to joining as Member Mechanical, Railway
Board, Mr Handa was holding the post of General Manager, East Central Railway since November 19, 2009.

Service tax levy on railway freight deferred to July 1

The Finance Ministry has deferred the implementation of service tax levy on transport of goods by rail to
July 1, as against the earlier proposed date of April 1.

With the wholesale price index-based inflation already surpassing the 8.5 per cent projection by the Reserve
Bank of India, the Government is keen to ensure that its actions do not fuel inflationary expectations. It is in
this context that the three-month deferment should be viewed, official sources say.
The Finance Ministry has also deferred the implementation of service tax exemption on certain goods carried
by the Railways such as pulses, foodgrains, petroleum products for PDS, organic and chemical manure and
motor vehicles. The exemption will now come into effect from July 1, along with the 70 per cent abatement.

After the Budget announcement of the service tax levy, the Railways had indicated that it would have no
choice but to pass on the tax burden to its freight customers. The Railway Minister, Ms Mamata Banerjee,
has also been strongly lobbying against the service tax levy on railway freight. A service tax levy on railway
freight would have a cascading impact on coal, cement and steel prices, a section of industry had contended
soon after the Budget announcement.

Between April 2009 and February 2010, the Railways transported 357.86 million tonnes of coal, registering
freight earnings of Rs 20,194.33 crore. In the case of cement, the Railways transported 83.75 million tonnes
and earned Rs 4,722.61 crore during the same period. The Railways freight earnings on pig iron and steel
stood at Rs 3,003.78 crore, for transporting 27.73 million tonnes.

The projected annual freight earnings of the Railways for 2010-11 is Rs 62,489 crore. The Finance Ministry
is looking to garner close to Rs 1,000 crore from the service tax levy on railway freight.

RCF, Kapurthala rolls out first double-decker AC coach

The Kapurthala-based Rail Coach Factory (RCF) has rolled out country's first air conditioned (AC) double-
decker coach for oscillation trials on the Delhi- Muradabad section.

RCF will start manufacturing these coaches after successful completion of oscillation trials.

This new design coach has a seating capacity for 128 passengers as compared to 78 passengers in Shatabdi
chair cars, which is an almost 70 per cent increase in capacity.

The first double-decker train is expected to be operational by end of this year.

A totally new coach shell design, capable of running at a speed of 160 kmph, was developed by the RCF
engineers with Research Design and Standard Organisation (RDSO) within nine months.

The overall height of double-decker coach has been increased by four and a half inches, keeping in view the
constraints such as overhead structures, bridges, electric traction equipment and platforms.

This was done to ensure that these coaches can be used without modifying any of the fixed structures except
for clearing some minor infringements. Space for the two-decks has been generated by optimally using the
well space between the two bogies.

To save upon space, it was decided to use a design where power for train lighting and air-conditioning is
supplied by two power cars, attached at both ends of the train. The coach is fitted with control discharge
toilet system.

Howrah-Delhi Duronto Expres

The bi-weekly Howrah-New Delhi Duronto Express will leave Howrah on Friday, April 2, according to a
release issued by Eastern Railway. 2274DN New Delhi-Howrah Bi-weekly Duronto Express was flagged off
by the Railway Minister, Miss Mamata Banerjee, at New Delhi station.

From Howrah, the services will be available on Mondays and Fridays, leaving Howrah station at 1 pm and
reaching New Delhi station the next morning at 6.05 am.

Similarly, from New Delhi, the train will leave on Tuesdays and Saturdays at 1 pm and reach Howrah the
next morning at 6.00 am, the release added.

SC Rly posts 16% growth in freight

The South Central Railway has registered a 16.4 per cent growth in its freight loading to touch 85.87 million
tonnes in 2009-10, as against 73.80 million tonnes in the previous fiscal.

While the Secunderabad Division registered a growth of 58.43 per cent, the Vijayawada and Guntakal
divisions recorded 16 per cent and 7.5 per cent respectively.

Out of the incremental loading of 12 million tonnes, coal contributed about 9.4 million tonnes. While the
wagon holding of the zone increased by a mere 2 per cent, the loading was increased by 16.4 per cent. The
turn around for these wagons was reduced by about 8.3 per cent from an average of 2.4 days in 2008-09 to
2.2 days in 2009-10, which increased wagon availability.

Railways incur losses due to loading ban

The Orissa Government's order leading to suspension of rake loading and rail transportation of iron ore in
large parts of iron ore rich Keonjhar district has hit the Railways hard. The revenue loss so far, it is
estimated, will be more than Rs 150 crore. The bulk of it, around Rs 120 crore, has already been suffered by
the South Eastern Railway (SER) alone and the balance by the East Coast Railway.

Daily average loading of iron ore by SER dropped by 20 rakes. The revenue earning from each rake is Rs 22
lakh a day. The loss in earning, thus, comes to more than Rs 4 crore a day. It is nearly a month now since the
suspension has been in force, thus indicating nearly Rs 120 crore of revenue loss.

In addition, a total of six loaded rakes were detained at various railway goods shed. The loss of revenue due
to the detention is estimated at roughly Rs 10 crore. Inquiries with the East Coast Railway reveal that it has
suffered revenue loss due to shortfall in loading and movement of empty rakes into three east coast ports of
Paradip, Gangavaram and Visakhapatnam to clear the accumulated imported bulk cargo, particularly coal.
Earlier, rakes moving to the ports with iron ore for exports were used for back-loading of imports.

ROAD TRANSPORT

Failure to notify new toll rates causes revenue loss

The rates at 24 toll plazas of National Highways (NH) covering about 1,270 km of public funded NH
projects will go up from Thursday.

The extent of the increase is linked to the wholesale price index and varies for each stretch.

This increase takes effect because the Government has notified the toll charges for these identified stretches,
according to the new toll policy norms that were firmed up in December 2008.

However, the Ministry of Road Transport and Highways has not yet notified the new toll policy for another
74 toll plazas located on the public funded NH stretches, resulting in revenue loss to the NHAI (National
Highways Authority of India).

Currently, about 8,500 km of highways are under the public funded projects of NHAI and the tolls are
collected at 98 plazas.

And about 2,800 km of highways are operated by private concessionaires on a build-operate-transfer basis
(BOT), which are covered with 47 toll plazas.

The toll charges for private funded NH stretches, which have been bid out after 2008 December, are as per
the new toll policy. For others, the toll policy is as specified in the concession agreement.

Two mega highway proj for Rs 7800 cr to be bid out in 2 months

The National Highways Authority of India plans to bid out two big-ticket projects worth Rs 7,800 crore in
the next two months
The two projects, of the identified nine, to go off the block are for Kishangarh-Udaipur-Ahmedabad stretch
in Rajasthan and Gujarat and Ichapuram-Vishakhapatnam-Rajahmundry section of national highway (NH) 5
in Andhra Pradesh.

While the first project is expected to cost Rs 4,284 crore, the second has an estimated cost of Rs 3,550 crore.
The other seven are likely to be awarded over two years, the source added.

These highway works will be awarded on a revenue-share basis, under which the developers pay a part of the
toll earnings to the government, the source said.

Soon after taking charge last year, Transport Minister Kamal Nath had said 'mega' projects of 400 km each
would be awarded to speed up the road building programme in the country.

The NHAI had then identified a total of nine such projects requiring an investment of about Rs 4,000 crore
each.

The length of the identified stretch varies between 390 km and 700 km. The usual size of a highway contract
otherwise ranges between 20-150 kms.

The development of highways in the country would cost about USD 80 billion (about Rs 3,76,000 crore) in
the next four years, according to government estimates and about 50-60 percent of these expected to come
from the private sector.

NHAI to remove PM, Sonia pics from billboards

After a rap from the PMO, the National Highway Authority of India (NHAI) will be replacing billboards
carrying photographs of PM Manmohan Singh and UPA chairperson Sonia Gandhi along the highway
network. In response to a RTI query by activist S C Agrawal, NHAI said it will either remove the boards or
replace them with photographs of project highways or its facilities.

In its letter dated February 26 to the ministry of road transport and highways, NHAI said it is "proposed not
to provide display boards with photographs of prime minister and chairperson of UPA in view of letter from
PMO wherein it has directed not to use the photographs of PM without specific approval from PMO''.

The letter added, "The display boards already erected will either be removed or the photographs of PM and
chairperson of UPA will be replaced with the photographs of project highways or facilities.''

Earlier, the authority had planned to erect about 1,500 billboards with pictures of PM and Sonia every 25 km
on the national highways. A circular was issued to all its project directors regarding provision of display
boards at 25 km interval on both sides alternatively in English, Hindi and the local language.

The PMO has issued instructions to all ministries to take its approval before using the PM's photographs.

Ramesh pulls up NHAI for slow progress

Appalled by the slow progress of the four-lane highway in Assam, Union Environment Minister Jairam
Ramesh said he would take up the matter with the National Highway Authority of India (NHAI).

The minister, who travelled on road to Kaziranga National Park, expressed surprise at the "extremely slow
pace of work."
People were urged to establish cottage industries to produce bamboo products for their economic uplift as
the state had tremendous potential in bamboo cultivation.

The Centre would take up the initiative to ensure that the products find a proper market, he said.

The Union minister also announced that Rs 30 crore was earmarked for development of the Kolong river in
the state.

Jairam asks Nath to go take a walk

Blamed by his Cabinet colleagues, particularly surface transport minister Kamal Nath, of stalling projects,
environment minister Jairam Ramesh hit back saying he would further increase the rejection rate of projects.

“More than 95% projects get environment approval and more than 85% gets forest approval. I am trying my
best to increase the rejection rate as we were somewhat liberal in the past and overlooked environmental
issues,” Mr Ramesh said.

Making it clear that he means business, Mr Ramesh said that his ministry has lowered its specifications on
roads passing through national forests.

Instead of four-lane highways, states and NHAI has been asked to make two lane roads while passing
through forests and night time restrictions on speed limits have been imposed.

He made it clear that his ministry would not okay projects that would adversely impact natural reserves and
the environment.

Earlier this month, Mr Kamal Nath had complained to Prime Minister Manmohan Singh about the delay, on
account of environment and forest clearances, in 11 key projects of the National Highway Authority of India
including expansion of a stretch of the National Highway-7 that passes through Pench tiger reserve in
Madhya Pradesh that falls within Nath’s parliamentary constituency, Chhindwara.

The environment ministry did not accord approval as the road was to pass through a tiger reserve.

Following Mr Nath’s complain, Cabinet Secretary K M Chandrasekhar met the officials from the surface
transport and environment ministries twice to find out a solution. “My view on NH-7 has not changed. The
alignment proposed through the tiger corridor is unacceptable and rejected by the ministry,” Mr Ramesh
said.

Mr Ramesh stressed that his job was to implement the Environment Protection Act, 1986; the Forest
Conservation Act, 1980, and the Wildlife Protection Act, 1972, in a “transparent and professional” manner.
“I can not merely rubber stamp what forest advisory committee approves,” he said.

The environment minister said that it was at his insistence that the Cabinet agreed that while it would accord
in-principle approval to highway projects, to facilitate preparation of detailed project report, it would not
allow on-site expenditure till all environment and forest clearances have been secured.

This ‘compromise,’ Mr Ramesh claimed, was arrived at after one too many highway projects were being
brought for Cabinet approval. He also put NHAI on the mat saying that its afforestation programme could
not match with its record of cutting down the trees.

AIRWAYS

Jet Airways inks maintenance pact with ST Aerospace

Jet Airways and JetLite, have signed a 10-year contract with the Singapore-based ST Aerospace for
maintenance support to CFM56-7B engines that power their fleet of 67 Boeing 737 next -generation aircraft.
The maintenance-by-the-hour contract is worth $750 million (Rs 3,375 crore) and will commence
immediately.

The agreement encompasses the commissioning of an ‘Engine Hospital Shop' at Jet Airways' hangar facility
in Mumbai. Its commissioning will enable the airline to maintain and service the engines of its Boeing 737
fleet.
The company expects the maintenance agreement to provide a “high standard of maintenance quality with
improvement in technical reliability and longer on-wing life of the engines”.

HAL posts Rs 11,400-cr sales; flies first light combat chopper

Military aircraft maker, Hindustan Aeronautics Ltd, posted provisional pre-tax profit of Rs 2,617 crore and
sales of Rs 11,415 crore for the fiscal year ended March.

Sales grew 10 per cent and profit before tax (PBT) 12 per cent over the previous fiscal.

HAL has orders worth over Rs 12,000 crore with new orders for domestic and export projects. An interim
dividend of Rs 300 crore has been declared.

For the first time, HAL flew the technology demonstrator version of the indigenously designed light combat
helicopter (LCH). The performance during the 20-minute venture was satisfactory, it said. The attack
helicopter, the first of its kind to be made in the country, is HAL's currently most prestigious product under
development. Derived from HAL's civil product - the advanced light helicopter ‘Dhruv' - the combat
helicopter project is estimated to cost over Rs 350 crore.

The LCH version, which is to be formally launched shortly, can be fitted with missiles and weapons. It also
offers the most stealth features to avoid detection by radars. It can be deployed in battles, in counter-
insurgency and also offer escort and support in rescue operations.

Bombardier in financing cooperation with CDB Leasing Co

Bombardier Aerospace has signed a memorandum of understanding (MOU) with China’s CDB Leasing Co.
(CLC) which clears the way for CLC to offer pre-delivery payment financing, delivery financing and leasing
solutions to customers of Bombardier CSeries, Q400 and CRJ aircraft. The capital available from CLC for
domestic and international transactions of Bombardier aircraft is up to $3.85 billion US.

NACIL forms four committees

NACIL has formed four committees - one each for human resources, audit, strategy and finance. These
committees will give their reports on the turnaround plan for the airline in the next 30 days, a senior Air
India official said after the meeting.

While Amit Mitra, secretary general of the industry lobby Federation of Indian Chambers of Commerce &
Industry (FICCI), will head the HR committee, Anand Mahindra, vice-chairman and managing director of
Mahindra & Mahindra, will steer the committee on audit and finance.

“This is a part of airline’s initiative for a turnaround plan focusing on on fleet and manpower rationalisation,
route profitability, and structural changes,” said the official.

The plan envisages benefits of Rs.1,911 crore. But Civil Aviation Minister Praful Patel recently told
parliament that these initiatives taken by the airline will only result in savings of Rs.753 crore in fiscal 2010-
11.

According to the minister, the national carrier is expected to incur losses of around Rs.5,400 crore this fiscal
and the trend is likely to continue for a few more years.

“With the expected losses of Rs.5,400 crore in 2009-10, the carrier’s losses will mount to over Rs.13,174
crore in three straight fiscals. The carrier had incurred a loss of Rs.2,226.16 crore in 2007-08 and Rs.5,548
crore in 2008-09,” he had told the Rajya Sabha last month.

The airline has also cut excess capacity and is currently carrying out an exercise to pare loss-making routes.
The airline is waiting for a cabinet nod to raise its working capital by Rs.1,000 crore. Currently the airline’s
working capital is Rs.17,000 crore.

It recently received the government’s sanction for an equity infusion of Rs.800 crore with a provision of an
additional Rs.1,200 crore in the next fiscal. It has also raised over Rs.700 crore from bonds for aircraft
acquisition.

In February this year the government approved equity infusion of Rs.800 crore for the ailing carrier in two
instalments to tide over the cash flow problem and finance fleet acquisition plans.

APPOINTMENT

Shivshankar Menon formally approved as NSA

A cabinet panel on Tuesday formally approved the appointment of former foreign secretary Shivshankar
Menon as the National Security Advisor (NSA).

Menon, who was named on January 21 to take over the role of chief adviser to the national government on
matters of security, will hold the status of minister of state. He assumed office January 23.

A brief statement by the ministry of personnel, public grievances and pensions said: "The appointments
committee of the cabinet has approved the appointment of Shivshankar Menon, IFS (retd), as the National
Security Advisor from the date of assumption of charge and until further orders."

"The competent authority has also approved that during his tenure as National Security Advisor Shivshankar
Menon will have the status of minister of state," the statement said.
The 60-year-old career diplomat succeeded M.K. Narayanan as the NSA.

Menon played a key role in the negotiations on the historic India-US civil nuclear deal. The 1972-batch
Indian Foreign Service officer had earlier served in China, Pakistan, Israel, Austria, Japan and Sri Lanka and
was advisor in the Department of Atomic Energy during the course of his diplomatic career.

He served as foreign secretary for about three years before retiring July 31 last year. He also did a three-year
stint as high commissioner to Pakistan.

Gustav Baldauf appointed Air India chief operating officer

In a bid to bring about a turnaround in the ailing national carrier, Gustav Baldauf, Austrian Airlines’
executive vice-president, flight operations, was Tuesday appointed chief operating officer (COO) of Air
India.

Baldauf’s appointment was decided at a meeting of the board of directors of the National Aviation Company
India Ltd (NACIL) - which operates Air India - at its Mumbai headquarters.

Air India had shortlisted three candidates for the post of COO. Besides Baldauf, those in the running were
Brock Friesen, COO of Air Malta, and George Reeleder, managing director of Rapidair - a domestic service
of Air Canada. The three were chosen from 140 applicants for the post.

Baldauf, the first ever COO of the airline, will have the task of salvaging Air India’s fortunes in the next
three years. He had worked with Jet Airways as its vice-president for flight operations earlier.

It may be mentioned here that Austrian Airlines, the current workplace of Baldauf, is a member of Star
Alliance, which Air India is expected to join.
INTERNATIONAL NEWS

Volvo goes with gas in diesel engines

Which fuels will replace oil? Nobody yet knows the answer. However, Volvo Trucks is investing in a
solution that is financially sustainable and that may form a bridge between fossil and renewable fuels: diesel
engines running on methane gas.

“We have chosen a route where we combine the diesel engine’s superior efficiency rating with the benefits
of gas. This gives us a truck that is significantly more energy-efficient than traditional gas trucks,” says Mats
Franzén, Manager Engine Strategy and Planning, Volvo Trucks.

This innovative approach is bound to attract attention in the transport sector, where the gas-powered trucks
currently in use have spark plug internal combustion engines adapted for gas operation.

There is a simple logic behind Volvo Trucks’ decision to slightly modify its proven diesel engines, says
Mats Franzén, Manager Engine Strategy and Planning.

“A diesel engine has a 30 to 40 percent better efficiency rating than an ordinary spark plug engine running
on petrol or an internal combustion engine. Whatever fuels either engine type runs on, the diesel engine is
always far more energy-efficient. That’s why all heavy vehicles have diesel engines,” he explains.

Volvo Trucks’ aim is for its trucks to operate on 75% methane gas and 25% diesel in the initial stage.

Optimum efficiency is achieved if the methane gas is chilled to -160ºC. At that temperature the gas becomes
liquid, the volume is reduced and you get twice the amount of fuel. With liquid methane gas in the tank and a
fuel consumption of 75% methane gas and 25% diesel, it is now possible to drive more than 500 km before
refuelling.

At present, the network of filling stations that distribute liquid methane gas is unevenly developed in Europe.
There are plenty of filling stations in the UK, while some countries, such as Sweden, have none at all.
However, filling stations will soon be built in Sweden’s three largest cities, partly as a result of Volvo
Trucks’ drive, which is taking place in close cooperation with gas suppliers in Sweden.

A common argument against methane gas is that natural gas has to be used because not enough biogas is
produced. Critics argue that replacing one fossil fuel with another is unsatisfactory.

Field testing of methane diesel engines will start in Sweden and the UK in 2010. Potential customers are
showing high interest, not least in the public sector, which already makes strict environmental requirements
during procurement and plays a key role in driving development forward.

Navistar Introduces Next Generation Class 8 Truck, International ProStar+

Navistar, Inc. has introduced the all-new International(R) ProStar(R)+ (Plus) at the Mid-America Trucking
Show.

As the top-selling Class 8 on-highway truck in the combined U.S. and Canada market, the International
ProStar(R) set the standard as the industry's most aerodynamic and fuel-efficient tractor on the road. The
2010 ProStar+ raises the bar even higher.

Powered exclusively by the Advanced EGR MaxxForce(R) 11 and MaxxForce(R) 13, the ProStar+ is the
only no-hassle 2010 emissions solution. With MaxxForce Advanced EGR, customers won't have the worry
or inconvenience of finding or filling liquid urea.

Storage has been dramatically improved, with the Hi-Rise model seeing a 150 percent increase in captured
storage and a 50 percent improvement in total storage.
In addition, the ProStar+ cab environment has become even quieter.

The ProStar+ offers new aerodynamic enhancements, including optional full-length chassis skirts for
sleepers as well as a new cab roof air fairing for day cab models. ProStar+ also includes many new
powertrain features that improve fuel economy, including a clutched air compressor, variable speed fan, low
viscosity engine oil and fuel-efficient rear axle lubricant.

As vehicle weight continues to be a top priority for customers, the ProStar+ is 700 pounds lighter than its
predecessor. When you include the MaxxForce 13, with its durable, lightweight compacted graphite iron
(CGI) cylinder block, and MaxxForce Advanced EGR emissions technology, the ProStar+ has an additional
600-pound advantage versus the leading 15-liter engine, providing an extra 1,300 pounds of added payload
capacity and fuel economy benefits.

Disclaimer: All information contained in this report has been obtained from sources believed to be
accurate by DVV Media India Pvt Ltd. While reasonable care has been taken in its preparation DVV
Media and CIIL make no representation, warranty, express or implied as to the accuracy, timeliness or
completeness of any such information. All information should be considered solely as statements of
opinion and neither DVV Media nor CIIL will be liable for any loss incurred by users from use of the
contents of this report.

© 2008 Confederation of Indian Industry. All rights reserved.