Tuesday, August 11, 1998
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B U S I N E S S | Tuesday, August 11, 1998 |
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spotlight today's calendar |
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Duff & Phelps
downgrades India Oriflame
achieves Rs 34 crore turnover |
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‘Liberalise external
borrowings’ |
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Managers asked to cut down
costs |
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| Infosys team expanded Teamlink radios for taxis Anubhav resumes fund collection
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Tisco bonds Nestle poised for majority stake Cotton yarn exports fall by 15 pc
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Duff & Phelps downgrades India MUMBAI, Aug 10 (UNI) — Duff and Phelps credit rating company (DCR) has downgraded the foreign currency rating of India to BB+ from “BBB” and the local currency rating to “BBB” from “BBB” — in the light of significant fiscal slippage and the potential for balance of payment deterioration in the coming years. However, it stated that the outlook on the ratings was stable.This is the third major credit rating agency after Moody’s and S&P to have downgraded India’s rating.It stated that fiscal pressures intensified in India in 1997-98 leading to a deficit of 6.1 per cent of GDP against the government’s target of 4.5 per cent. The 1997-98 out-turn and the 1998-99 budget and its 5.6 per cent of GDP deficit target, recently released by the BJP government, are inconsistent with DCR’s previous expectation of gradually narrowing fiscal imbalances. DCR had based India’s previously improving credit story in the country’s gradually narrowing fiscal imbalances. Furthermore, measures de-signed to stimulate the lacklustre performance of domestic industry, such as an import levy of 4 per cent, reflect the new government’s more protectionist approach towards economic policy. Persistent high fiscal deficits are likely to postpone reduction in the central government debt (at 61 per cent of GDP in 1997-98) and the government’s very high interest burden (at 47 per cent of government revenues in 1997-98). High government borrowing in turn will put upward pressures on interest rates, crowding out private investment.DCR also expressed concern over the pace of economic reform under India’s coalition governments. Previous coalition governments have been restrained in making bold and much-needed economic reforms. Differing priorities within the present coalition could constrain the government’s ability to undertake critical reforms in the areas of fiscal consolidation, privatisation, infrastructure development and export promotion. The dramatic slowdown in the export growth in 1997-98 to 2.6 per cent from an average annual rate of nearly 20 per cent in 1993-96 is a major credit concern, the credit rating agency pointed out.DCR further warned that the prospect for a recovery in Indian exports remains uncertain as the sharp depreciation of currencies in some Asian countries has adversely affected Indian competitiveness. Besides, persistent
infrastructure bottlenecks will constrain Indian export
growth in the medium term. A slow recovery in exports
would put pressure on the balance of payments, prevent a
faster reduction in the external debt burden and provide
little stimulus to growth. |
‘Liberalise
external
borrowings’ NEW DELHI, Aug 10 — The external commercial borrowings (ECBs) need further liberalisation so that even small and medium enterprises (SMEs) can avail the facility, says the Phdcci. In a communication to the government, the chamber has suggested that to provide greater ECB access to SMEs, the prescribed amount needs to be reduced to $ 25,000.Creditors should be provided with some freedom in utilisation of funds collected through the ECB route under predefined norms. Funds raised as ECBs also need forward cover to eliminate risk and speculation.Besides, financial institutions should arrange special lines of credit for easier access to ECBs. It is also imperative to expand contacts with overseas sources for potential access to funds for developmental lending, the chamber said. There is also an urgent need to restructure the organisational set-up of the banking industry with a view to speeding up the decision-making process in banks. The existing tiers of decision making in banks should be minimised. This objective can be achieved through the introduction of the concept of “level jumping” for quick disposal of cases.The banking sector should also focus on non-fund based activities such as custodianship, capital market services, trusteeship and bank guarantees with a view to enhancing the resource base and profitability of banks. This can also
help in softening interest rates for the fund base
activities of banks, thus providing a competitive
advantage to trade and industry, the chamber said. |
Foreign banks equity rules modified NEW DELHI, Aug 10 (PTI) — The government today modified guidelines for foreign equity participation in private banks allowing up to 20 per cent equity participation by foreign investors, including multilateral institutions. So far foreign equity investment in private sector banks could be made by foreign banking companies or finance companies, including multilateral financial institutions of up to 20 per cent as technical collaborator or co-promoters only. The new guidelines also
allow multilateral institutions to contribute foreign
equity to the extent of shortfall by NRI investors in
private sector banks, an official release said. |
Oriflame achieves Rs 34 crore
turnover CHANDIGARH, Aug 10 — Oriflame India Ltd, promoted by Swedish natural cosmetic company, Oriflame International SA, and Rallscon (India) Ltd has achieved a turnover of Rs 34 crore in the first year of its operations in India. This was announced by Mr Lajinder Bawa, CEO, Oriflame India Ltd, after opening the company’s branch office in Sector 9 here today. Addressing a press conference, he said the Chandigarh branch will oversee the company’s operations in Punjab, Chandigarh, Himachal Pradesh and Jammu & Kashmir. It is the third branch in the north after Delhi and Jaipur. The northern region accounts for 30 per cent of the company’s turnover with a distributor base of over 20,000. Oriflame, a pioneer in direct selling, commenced operations in December 1996, with 60 products and 300 distributors in New Delhi and Mumbai. Today it has over 100
products in all cosmetic categories of skin care, hair
care, colour cosmetics body care and fragrances, and
60,000 distributors in 140 cities. |
Infosys team expanded BANGALORE, Aug 10 (PTI) — Infosys Technologies, a leader in providing software consulting and software services, today announced the expansion of its top management team by elevating Nandan M. Nilekani as Managing Director, President and Chief Operating Officer. Mr Nilekani would be in
charge of all day-to-day operations, and would report to
Narayana Murthy who will be the Chairman and CEO. |
Managers asked to cut down costs CHANDIGARH, Aug 10 — Mr Richard Moras, President, Indian Institute of Materials Management, has asked materials managers to cut down service time, procure zero defect materials, adopt green purchase culture and build up vendor partnership alliances to keep pace with the requirements of the 21st century. He was speaking at the “Chief executives meet organised by the IIMM which celebrated its 13th annual day here yesterday. Twelve chief executives representing various industries in Chandigarh and neighbouring states and 200 delegates participated. Padma Shri Chander Mohan moderated the panel discussion.Mr T.K. Magazine, Chandigarh branch Chairman, said that 70 per cent of industries’ capital cost and working capital is spent by materials managers. Therefore, responsibility is on the profession to cut down costs. He said 58 students had qualified from Chandigarh in graduate/postgraduate programmes in MM.Dr M.J. Zarabi, Chairman of Semiconductor Complex Ltd., said that cutting down delivery time of equipment is essential to ensure speedy progress.Mr S.K. Dhar, MD, Haryana State Forest Corporation Ltd, warned of tough times ahead due to wanton depletion of forests, water resources, inadequate solid waste management, and emission of industrial gases and pollutants. Dr Deepak Nanda, JMD,
Trident Infotech, stressed the need for integration of
materials management systems with the infotech highway
for speedy industrial progress. |
No industrial recovery yet: NCAER NEW DELHI, Aug 10 (PTI) — The economy gripped by low growth and low business confidence will not see any recovery in industrial activity during second quarter of this fiscal, the National Council for Applied Economic Research (NCAER) has said. The economic think tank in its economic forecast “Macro track’s” said that no turnaround in industrial growth is expected during the second quarter more so on the backdrop of economic sanctions. Higher interest rate and expected rupee depreciation are unlikely to allow the upswing in credit and imports to continue, it added. As a consequence any growth in manufacturing activity is unlikely NCAER report said adding governments massive borrowing programmes would put pressure on domestic financial resources leading to rise is interest rates. The latest survey of 526 firms by NCAER revealed steepest decline in business confidence index (BCI) cover any period until now. Index slipped to record low of 68.3, a erosion of whooping 18 per cent over its level in March 1998. The region wise, only west registered an improvement in BCI, with industry expecting for some improvement financial position in the public sector, but private sector would remain in dire financial conditions, survey added. Adverse perception of the
foreign investors would lower private investment flows,
survey said adding foreign inflows are expected to be
down by $ 1 billion leading to decline in fixed
investment to 23.3 of GDP. |
Tisco bonds MUMBAI, Aug 10 (PTI) — Credit Rating Information Services of India Ltd (Crisil) has downgraded the outstanding ratings of non-convertible debenture and bond programmes of Tisco to AA+ from AAA. The FAAA rating assigned
to the fixed deposit programme has, however, been
reaffirmed and P1+ rating has been assigned to
Tisco’s Rs 3 billion commercial paper programme,
Crisil said. |
Nestle for majority stake in Excelsia NEW DELHI, Aug 10 (PTI) — Nestle India is all set to wrest majority control in Excelsia Foods from Dabur India, a senior company official said.Excelsia Foods, a 60:40 joint venture between Dabur and Osem of Israel, manufactures biscuits and extruded foods. Nestle took over Osem’s worldwide operations late last year and has been vying for majority stake in Excelsia Foods ever since.“Discussions are on and we will dilute our stake to at least 49 per cent in Excelsia Foods in the coming three months,” Chief Executive Officer and Director of Dabur Foods Amit Burman told PTI today. “Worldwide, Nestle operates in every joint venture by holding a majority stake, it wants to do the same in Excelsia Foods, technically, ever since it took over Osem Worldwide, we’ve been operating with Nestle as a partner anyway,” Burman added. While this move by Nestle will dilute Dabur’s holding to a minority, Burman refused to divulge the amount Nestle is willing to pay to hike its stake in Excelsia.Dabur has already installed a new manufacturing facility with total investment of Rs 12-13 crore at Sahibabad to enable new launches from the Excelsia stable as soon as the stakes are reversed. The plant has an installed
capacity of about 3,600 tonnes per annum, Burman said.
Excelsia Foods, set up two years ago to manufacture
biscuits and extruded foods, has only one brand of
biscuits called Creamwhich with five flavours in the
market right now. |
Punwire arm’s radio sets for
Bangalore taxis CHANDIGARH, Aug 10 —Teamlink, a subsidiary of Punwire Trunking Services Ltd, has been selected as the sole telecom service provider for Bangalore’s radio taxis, according to sources. Teamlink has signed a three-year MoU with Bangalore’s Road Transport Authority. The company was chosen over licencees which had bid for the project. Punwire, a DoT licencee, operates “PageMe” services in the rest of Karnataka, Tamil Nadu and other states, besides radio trunking in Bangalore and 20 other cities.Punwire is ready to equip up to 75 taxis with wireless sets as soon as taxi operators received their RTA permits. Another 100 sets had been
indented from the company’s facility in Mohali where
it manufactures the Japanese Kenwood radio sets. |
Justice Satpal to head CLB? NEW DELHI, Aug 10 (PTI) — The government has appointed S. Balasubramanaian as acting Chairman of the Company Law Board (CLB) in place of Justice P.K. Majumdar.Mr Balasubramanian, Vice-Chairman, CLB, took additional charge from August 1, an offical statement issued here said today. Meanwhile, CLB sources said the selection committee has recommended the name of retired High Court Judge, Justice Satpal, for the post of CLB’s Chairman.Justice Satpal was selected from 29 candidates identified to head the quasi judicial body. The northern bench for a CLB member also lies vacant following A.R. Ramanathan’s joining the Central Electricity Regulatory Commission (CERC).The cases pertaining to this Bench are presently being taken up by other regional bench members. Sources said it will take
at least two months for fresh appointments to be
confirmed as the Minister of Law, Justice and Company
Affairs has to recommend the name to the Cabinet for
approval.Despite two key positions lying vacant, cases
coming up for hearing before the board have not been
affected, sources said. |
Cotton yarn exports fall by 15 pc NEW DELHI, Aug 10 (PTI) —India’s cotton yarn exports fell by 15 per cent during April-June this year resulting in an 8.2 per cent decline in total cotton textile exports during this period, data released by the cotton textile export promotion council (Texprocil) says. Yarn exports, which had
almost doubled during the last three years, fell to 11.84
million kg valued at Rs 1,372.60 crore during April-June
against shipment of 131.29 million kg worth Rs 1,530.57
crore achieved a year ago.Total cotton textile exports
slid to $ 827.81 million (Rs 3363.30 crore) during the
first quarter against $ 902.91 million (Rs 3,232 crore)
in the same period last year. |
Anubhav resumes fund collection CHENNAI, Aug 10 (PTI) — Unfazed by non-investment grade rating, city-based Anubhav Plantations has resumed mobilising investments for its teak scheme after over five months, while its competitor Sterling Tree Magnum (STM) is yet to restart the schemes for want of a rating. Anubhav officials said the company had begun raising funds for its Rs 50 crore “teak farm” collective investment scheme, which had received a DCR Ind 4 (CIS) rating from Duff & Phelps Credit Rating India Pvt Ltd. The rating indicates the ability to meet obligations to investors on time could be considered “unsatisfactory.”Sterling sources said the company had raised some objections to the basis of credit rating procedure and expected the rating only after this issue was sorted out. They admitted cash inflow
had dried up, but hoped to be back on track soon with a
rating. |
Welspun to pay 15 pc MUMBAI, Aug 10 (PTI) — Welspun India, has posted a net profit of Rs 7.74 crore on a turnover of Rs 168.11 crore for the year ended March 31, 1998 and the company had decided to pay a dividend of 15 per cent. In the corresponding period last year, the company earned net profit of Rs 7.31 crore on a turnover of Rs 146.61 crore, a company statement said here today. The financial results of two years were not comparable as synthetic yarn division that contributed to turnover and profits for 1996-97 had since been hived off, it said. Welspun India, the flagship company of the Rs 300 crore Welspun Group, produced 3231 MT of terry towels during the year, realisations on terry towels has shown an increasing trend from Rs 236.69 in 1995-96 to Rs 279.59 in 1997-98. The company’s share of the total terry towel exports to EU countries has increased from 13 per cent last year to 21 per cent this fiscal.Krone launches “Premisnet” NEW DELHI, Aug 10 (PTI)
— German communication major, Krone today launched
in India a unique package for structured cabling
solutions to support multimedia applications and fast
network technologies. The package “Premisnet”,
that can support technologies such as fast ethernet,
gigabit ethernet and asynchronous transfer mode (ATM)
with four different levels of speed and bandwidth
performance, would support the networks and applications
which are currently used by the Indian companies, Bala K.
Chandran, India chief of Krone told reporters here.
Premisnet is engineered to handle the most demanding
network applications and can connect end-to-end fibre and
copper technologies simultaneously, he said. Krone
products pass through every technology in the field such
as Siemens, Fujitsu, Ericsson, Alcatel, Lucent and C-DoT. |
BEIJING (PTI): China will overcome the effects of the ongoing Asian financial crisis and would continue to post high economic growth rates, a top Chinese analyst has said. “Compared with industrialised countries, China can achieve a higher economic growth rate by expanding investment and rationalising its industrial structure,” says Chen Dezhao, a senior expert with the China Centre for International Studies. As a result, in the foreseeable future, China will keep raising its economic status in the world, Chen said. “But the current problem of China’s economy is not how fast it will develop but how well it will grow,” he says. Since China adopted radical reforms and opened up its economy in the late 1970s, it has seen annual economic growth rates of 9.8 per cent from 1979 to 1997, leading to trebling of its gross national product (GNP) in less than two decades. In 1997, China’s economy grew 8.8 per cent but during the first half of this year, it fell to 7 per cent, the lowest growth rate since 1991. A World Bank report last year said if China maintained a growth of 7 per cent, it would replace the USA as the world’s biggest economic power sometime between 2020 and 2030. Hyundai The standoff between the management and the union is expected to persist as the union said workers would down tools until the management agrees not to sack any workers. The Ulsan factories have been closed since July 20 as union workers refused to work in protest against the company’s decision to sack more than 1,500 workers. The factories were closed last week for summer holidays. Hyundai reopened factories for one day on July 28, but closed them again the next day as union workers downed tools immediately. The union demands the company agree to take back 1,569 workers it sacked last month in the first ever mass layoffs in south. Bad loans The loans will be sold to foreign brokers at a discount but this will not result in any fresh losses for the Osaka-based bank as it has already set aside loan-loss reserves. “ We have already started procedures in the sales of problem loans worth some 100 billion yen to several foreign securities firms,” a bank spokesman said on Monday. The spokesman did not disclose the names of foreign brokerages that will purchase problem loans, which disclosed the bank, totalled 958.1 billion yen as of March 31. Bangla trade “Deregulation of the Indian mindset and the tariff and non-tariff barriers are essential to allow more exports from Bangladesh and bridge the trade gap between the two countries,” Bangladesh Commerce Secretary Syed Alamgir Chowdhury has said. Speaking at a seminar on
“Indo Bangla trade” Chowdhury urged the Indian
government to remove quantitative restrictions, licensing
and quota system that block the access of Bangladeshi
goods to the Indian market. |
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