On the morning of October 3, a team of five Indian Oil Corporation (IOC) executives descended on the IOC petrol station attached to Mumbai's Centaur hotel. Earlier in the year, on June 5, 2002, the government had sold its stake in the hotel to Batra Hospitality for Rs 83 crore. And the petrol station had been transferred to the new owners (as indeed, it should have been). On the given morning, four months after the event, the IOC execs claimed the ownership of the station reverted to them the instant the hotel was sold. A day later, the Disinvestment Ministry, while sharing details of the transaction at a press conference, produced proof to show that the Petroleum Ministry had known all along about the transfer, but the damage had been done. Union Petroleum Minister Ram Naik, the stormy petrel of the anti-disinvestment brigade had made his point. If arbitrary acts needed to be undertaken to scuttle the disinvestment process then he, Naik, would get people from one of the several oil companies he controlled to undertake them.

Mr Naik, of course, has repeatedly pointed out (as he did in an interview to this magazine last year) that he isn't ''against disinvestment in the oil sector per se, but only against the sale of a strategic stake in the oil PSUs because it does not come with any real advantage''. Instead, he'd love to divest up to 49 per cent of the government's stake in them to the public through an Initial Public Offering. The larger motive: to give the public a share of the profits of the oil-sector PSUs. That's as altruistic as motives can get; only, the path suggested by Naik will also ensure that the oil PSUs remain under the control of the Petroleum Ministry.

	Kabul Inc.
	The 6.7 Per Cent Mirage

Unlike some of his ministerial colleagues, though, Naik's opposition to the disinvestment process isn't a proxy fight on behalf of a corporate group. The man seems rooted in the socialist mindset of India's past that considers all big business evil. And nothing-not even Pumpgate, the scam surrounding the allocation of petrol stations and LPG agencies, something that prompted Prime Minister Atal Bihari Vajpayee to cancel all allotments since January 2000-gets him down.

Naik does have several achievements to his credit. In his tenure, the waiting list for a LPG connection has come down from 1.1 crore to zero. Exploration activity, too, has got a boost under him: the ministry has awarded contracts for the exploration of 47 blocks in the past four years, and received bids for 23 new blocks; in the 10 years preceding that, contracts were awarded for exploring just 22 blocks. And by ensuring that India remains self-sufficient in refining (a capacity of 116.5 million tones), Naik has saved it precious foreign-exchange that would have otherwise gone into the import of more expensive petrol and diesel, rather than the crude it now does.

Unfortunately, it won't be for any of this that the man who started his career as a clerk in the accountant general's office in Mumbai, will be remembered. It will be as the man who stalled the disinvestment process just when it looked like nothing could go wrong with it.

-Ashish Gupta

REPORTER'S DIARY
Kabul Inc.
Our intrepid reporter-photographer duo set out to find the business side of Kabul...

A Day In Kabul: (From top) Kabul's main thoroughfare, the City Road; the Shams Market, one of the city's business centres; and a typical Kabul shop

What must be the quote of our day-long trip to Kabul piggybacking a Confederation of Indian Industry delegation to the 'Made in India' exhibition comes from Adi Godrej, the slim, wiry chairman of Godrej Soaps. "Nothing can sell in Afghanistan right now," says Godrej. "The internal administration is yet to settle". Then, after a pause, "... but consider the size of the market, a mere 27 million". Our efforts to find Kabul Inc, then, proved futile. Still, the trip had its points. Here's what we learnt.

Geographical co-ordinates: Latitude: 34°, 33"N. Longitude: 69°, 13"E. Elevation: 5,876 feet. (Actually, we needn't have come here to find this out)

Population: 27 million

Currency: The newly introduced Afghani that trades at 50,000 to a US dollar, but there are three currencies, other than that currently in circulation throughout Afghanistan-the Pakistani rupee, the Iranian Dinar, and the old Afghan currency. Money-changers are easily found, especially if you have dollars. Just stand in a crowded thoroughfare and wave a greenback about.

Cars: No one is quite sure how many cars there are in Kabul, or in Afghanistan. One estimate (from CII) suggests 50,000. Bicycles are the preferred mode of transport. We saw cars of all makes, from Toyotas to Nissans to Pajeros. Kabul doesn't have a public transport system in place, but there are private mini-bus operators.

Phones: We didn't come across any shops vending prepaid cellular connections of AWCC (Afghan Wireless Communication Company), the Afghan cellular services company that launched its service in June 2002. To date, it has sold 18,000 connections at $370 a pop. Airtime costs Rs 40 a minute on an average. Afghanistan also has a rudimentary terrestrial network, which they call Digital Access Phone, and boasts a teledensity of 0.92 per 1,000 pop.

Organised retail: We didn't see any super-markets. There are the usual Mom & Pop stores and, surprise, surprise, they do stock a wide variety of products from countries as diverse as Iran, China, and Pakistan. Kabul itself seems to have more than its share of medical stores. Our driver told us that most of these were run by Pakistani nationals and sold spurious drugs. Expectedly, the average life expectancy of an Afghan is 40.

Entertainment: Asia's medium, the VCD, it is for Afghanistan. We see several shops with Bollywood titles (pirated, of course)

What we got back: A kilogramme of Chinese tea (yup, it's there to be had in Kabul and quite popular too), for under $2.

What we ate: Kebabs and Afghan bread, for just about $3. All the water we saw was bottled. The Kabul river was dry.

Number of investment bankers in Kabul: Zero

Number of bank-branches we saw: 1 (Da Afghanistan Bank).

Our take: India Inc has no rational reason for being in Kabul. There's more opportunity at home. Of course, if we want to act the region's dude and do something for a neighbour, it is another issue.

text by Moinak Mitra & photographs by Shome Basu

ILLUSION
The 6.7 Per Cent Mirage
Actually, industry has grown by a whopping 6.7 per cent in the first five months of this fiscal, but here's why it won't be able to keep up the pace.

Just when everyone who was anyone in India Inc was beginning to despair, comes the strangely sanguine statistical fragment concerning industry. Industrial growth-a function of the behaviour of six core industries, steel, cement, electricity generation, coal production, crude oil and refining throughput-which clocked an anaemic 1 per cent in the first five months of 2001-02, did a staggering 6.7 per cent between April and August this year. The cement and steel sectors have been at the vanguard of the growth returning figures of 11.6 per cent and 8.9 per cent respectively-last year, they did 1.2 per cent and 1 per cent.

So, are we, in all our collective wisdom allowing our fatalist gene to call the shots when we feel the economy is headed nowhere? Not quite, say most economists. ''These statistics do not take into account the impact of the drought,'' contends Pronab Sen, Advisor, the Planning Commission, referring to the drought-like conditions (that's how the government likes to refer to it) witnessed in most parts of northern India this year. The impact of the drought will likely be evident in the performance of the core sectors in the coming months. That could dent that industrial growth statistic some.

Still, most analysts expect industry to do better this year than it did last when it grew 3.1 per cent. The Planning Commission's Sen predicts an industrial growth of 5.5-6 per cent; Tabassum Inamdar, an analyst at Kotak Securities, 4 per cent. But why have the steel and cement sectors outperformed all other sectors this year? The growth of the steel sector, and the recent jump in steel prices-from $160 for a tonne of hot rolled coil in December 2001 to $270 in August-have left most steel pundits baffled. Some point to an increase in India's steel exports, from 3 million tonnes in 2001-02 to 3.5 million tonnes in 2002-03, mainly to China and a few south East Asian countries. Others attribute the growth to The US' efforts to protect its domestic industry by levying anti-dumping duties on steel imports from Japan, China, and the European Union; India is outside the purview of these duties, they explain, and is benefiting from them.

A.S. Firoz, an advisor to the Ministry of Steel expects prices to come down in the last quarter of 2002, on the back of global overcapacity in the sector, and while there are no signs of that happening as yet it is simply a matter of months before it does: growth in global steel capacity, at 6 per cent, outstrips that in demand, at 4.6 per cent. And with the world market already weighed down with some 200 million tonnes of steel it doesn't need, prices will soon crash.

The Indian cement industry suffers similar ills. It boasts capacity that is 30 million tonnes in excess of what it needs. Kiran Nanda, the Chief Economist at cement major Gujarat Ambuja expects the good times to roll on. ''With the impetus on housing and roads, the demand for cement will increase substantially in the future.'' Her estimates: a consumption growth in excess of 12 per cent a year over the next two-three years.

Other analysts are more circumspect. A Mumbai-based investment banker reckons cartelisation is behind some of the industry's gains. ''There are no large greenfield projects in the offing,'' he argues. Take that 6.7 per cent with a healthy pinch of salt, then.

-Aashish Gupta