Monday, August 31, 1998
today's calendar
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B U S I N E S S | Monday, August 31, 1998 |
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spotlight today's calendar |
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New crop insurance scheme
to cover left-out farmers: FM Punjab
to create Rs 80 lakh unit for Dairy Expo-98 |
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Punjab Govt may pick up
equity Mustard
ban hits oil companies |
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....... VSNL
to float tenders Raasi
share holder lodges complaint 800
participate in walk |
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New crop insurance scheme to HYDERABAD, Aug 30 (UNI) — Union Finance Minister Yashwant Sinha today announced that a new crop insurance scheme would be evolved in the next two months to bring farmers uncovered by the scheme in its fold. Addressing a press conference, he said his ministry was holding discussions with the Agriculture Ministry and the insurance companies on the proposed scheme,the jurisdiction of which would go beyond the 24 districts covered under the existing scheme. The current scheme was linked to loans and did not cover non-loanee farmers. The new scheme would cover one or two major crops cultivated in a year. The banks had been instructed by the RBI to work out a settlement with the farmers when the interest burden renders payment impossible. He pointed out that the earlier scheme of granting remission to all loans attracted widespread criticism that it did a lot of damage to the system. “We have to find out a via media. The bank’s money has to be returned and at the same time if the farmer is not a wilful defaulter, the banks should sort out the problem on a case by case basis.” Mr Sinha said an arrangement was being worked out to ensure that there was moderate fiscal impact at the time of redemption of Resurgent India Bonds (RBIs). He said he proposed to use about Rs 18,000 crore raised through the bonds for building rural, urban and industrial infrastructure. Asked how he hoped to peg the fiscal deficit at 5.6 per cent without initiating new revenue measures, he said the fiscal deficit shot up last year because of the tremendous shortfall in the revenue receipts. He expressed confidence that there would be no shortfall this year in the revenue receipts. “With this intention I am talking to my officials. On the revenue side we will be able to meet the target.” Answering another query,
he said income tax arrears amounting to Rs 45,000 crore
was involved in litigation. The Kar-Vivad-Samadhan scheme
was evolved to see if the arrears could be settled out of
court. With regard to the ‘astronomical’ Rs
45,000 crore of non-performing assets (NPAs) of banks, he
said that debt recovery tribunals were already
established in various states and hoped that the measure
would reduce the NPAs. |
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Punjab Govt may pick up equity NEW DELHI, Aug 30 (PTI) — Hindustan Petroleum Corporation Limited (HPCL) hopes to kick start its new refinery project at Bathinda once the Public Investment Board (PIB) accords the second stage clearance for its investment proposals. “The detailed feasibility report (DFR) for the nine million tonne grassroot refinery has already been submitted for approval and once the PIB clears the second stage investment proposals we can hasten the project,” HPCL Executive Director R.K. Madan told PTI here. HPCL is now in an advanced stage of negotiations with the US oil multinational Exxon which is to be its joint venture partner for promoting the refinery. Exxon is also likely to be the technology provider for the projects which have been hanging fire for the last six years. The Bathinda refinery is among the three refinery projects cleared by the government in July 1992 to augment petroleum product supplies. HPCL will have a 26 per cent stake in the refinery and offer an equal stake to its foreign joint venture partner. The Punjab Government has shown interest in picking up stake in the project. Financial institutions have also evinced interest in having equity participation in the project, which is expected to step up supplies in the northern region. Recently Kribhco had also shown interest in picking up a stake in the refinery. “We hope to finalise the equity pattern once Exxon takes a final decision on participation in the project,” Madan said, adding that the US company was looking at various options, including marketing of the products. The Bathinda project will have HPCL holding 26 per cent equity and Exxon or the Punjab Government with a matching participation. Financial institutions like IDBI, IFCI and ICICI will be offered equity of about 12 to 15 per cent with the stake of each varying according to its networth. The remaining
40 per cent is to be held by the public. |
Punjab to create Rs 80 lakh CHANDIGARH, Aug 30 — Mr Uji Wallish, Agriculture Councillor, Embassy of Israel, called on Mr Parkash Singh Badal here Today and discussed various arrangements for Dairy Expo-98 to be organised by the CII in the Parade Ground here from December 2 to 6. The Chief Minister invited the Deputy Prime Minister of Israel, Mr Rafael Eitan, to the fair. The Punjab Government has agreed to earmark Rs 80 lakh for the creation of an integrated dairy farming and processing unit at the “Diary Expo” pavilion which will later serve as a demonstration project for diary farmers of Punjab. Mr Piyush Bahl, Regional Director, CII, said nearly 30,000 farmers from Punjab and about 1.5 lakh people from all over the country will visit this fair. There will be conferences on several topics related to agriculture and allied sector. These include dairy management, fruit and vegetable processing, cold chain, poultry farming, bio-technology and water management. Mr Ramesh Inder Singh,
Principal Secretary to the Chief Minister, also took part
in the discussion. |
Mustard ban hits oil companies NEW DELHI, Aug 30 — The ban imposed on the sale of mustard oil is likely to hit selling branded products like Dhara, Postman, Kohinoor etc. These companies have started lifting stocks of mustard oil from the retailers as a part of an image restoring exercise. A brand like Dhara was selling 1500 to 2000 tonnes of mustard oil a month in Delhi alone. Company officials were, not willing to divulge the exact losses. Pickle manufacturers are also fearing a downturn. Mustard oil is one of the main ingredients of any kind of pickle. Experts have warned that the oil used in pickle could be as harmful as loose mustard oil and have cautioned people against consuming pickle without correctly finding out the brand of oil that has been used. Pickle manufacturers of Gali Batasha in Khari Baoli of Old Delhi said that they had been pushing the merchandisers on personal guarantee that only well known brands have been used. But the blacklisting of these brands have made matters difficult, they added. Meanwhile, the commodities market has been witnessing an upward trend for refined oils price ever since the ban on mustard was imposed. Palmolien refined moved up
to Rs 640/670 from Rs 630/650 a tin on strong demand and
in tanker it was quoted at Rs 4150 a quintal. The prices
vanaspati and soyabean oils have displayed upward trend
in the last two days, market observers said. |
VSNL to float tenders NEW DELHI, Aug 30 (PTI) — Videsh Sanchar Nigam Limited (VSNL) will float global tenders for its proposed multimedia inter-city ATM communication network within a fortnight. Tenders will be invited within two weeks for a 7.000 km high-speed communication link that would simultaneously carry video and data, which will be in operation by September next year. VSNL Chairman and Managing Director Amitabh Kumar told PTI here. As part of the core
business expansion programme, the company will initially
link six major cities through an ATM. |
Raasi share holder lodges complaint MUMBAI, Aug 30 (PTI) — A shareholder of Raasi Cement Ltd (RCL) has lodged a complaint with the Securities and Exchange Board of India (Sebi) over the role of financial institutions (FIs) in the transfer of 40 per cent of Sri Vishnu Cement Ltd’s (SVCL) shares from RCL to nine companies controlled by Dr B.V. Raju. The shareholder Mr M.Z. Khan from Hyderabad, has asked that how could the FIs allow sale of SVCL shares held by RCL at par (Rs 10) and now sell their own holdings at “inflated” prices. SVCL shares were sold to
the nine companies before Madras- based India Cements Ltd
(ICL) acquired the Hyderabad-based RCL. |
800 participate in walk PANCHKULA, Aug 30 — Reebok India Company organised an Independence walk, which was flagged off by Mr Alok Mittal, SP, this morning from Swastik Vihar here. Around 800 sportspersons, mostly children from different schools of Panchkula Chandigarh and Himachal Pradesh, participated in the walk. They were also served snacks Around 25 schools participated in the event from Panchkula itself. Coaches from dirrerent fields like badminton table-tennis, skating, cricket, gymnastics, athletics, yoga, boxing, handball also participated. The closing ceremony was performed by Mr Baldev Dogra (DSO). Coaches were presented with gifts. The first 400 participants
were also given surprise gifts. |
OVER the last couple of years, the paper industry has been passing through a bad phase, which has been characterised by low demand and a sluggish economy. Burdened with intensified competition and rising imports, the paper producers are forced to offer hefty discounts. Furthermore, the entry of Sinar Mas, an Indonesian paper major, which has set up a 115000 tpa plant to manufacture writing and printing paper has further complicated the situation for domestic players. The paper boards segment has also had to weather rough times on account of the sluggish demand growth in the user segments and the prevailing oversupply. The newsprint industry has also suffered badly on account of its being put under the open general licence (OGL) scheme. The major announcements in the Union Budget 1998-99 which have affected the industry one way or the other include a substantial hike in effective import duty, which is a relief for the industry and more so for the integrated players. A substantial increase in the landed cost of paper is also likely to prompt domestic producers to hike their prices to better their margins. Companies which are dependent on the imports of pulp and waste paper, will be benefited less by this, as the cost of their inputs will also increase. However, the Budget on the whole has had a negative impact on the news print industry. Already faced with tough competition from cheap imports from Korea, the industry is likely to be affected with the reduction in import duty on newsprint. The domestic demand for industrial paper is also expected to grow by 13-15 per cent, while the demand for cultural paper is also expected to grow by six per cent. However, the demand for niche segments such as cigarettes and stationery are expected to grow at a higher pace, while the newsprint segment is likely to grow by 9-10 per cent. Hence, at the end of the day, the real consolation for this segment is that its worst day seem to be behind it. ITC Bhadra The company has been suffering losses on account of the economic slowdown and as well as its high interest burden. Due to this, the company’s expansion project worth Rs 660 crore for manufacturing coated packaging boards with an annual capacity of 1.2 lakh tonne has been delayed by more than a year. The company plans to set up a new board machine and also plans to phase out its production of writing and printing paper. Though the company has the advantage of importing less than 10 per cent of its raw material requirements making it is a net forex earner its immediate prospects seem moderate. Rama Newsprint TN Newsprint Apart from the slowdown the industry and the losses suffered by the company, it has been able to utilise only 30 per cent of its mechanical bagasse pulping facility as against an envisaged 50 per cent, and is now facing an outflow of foreign exchange. Ballarpur Indus The company has also started R&D projects in order to develop high yielding pulp wood trees through clonal technology, to boost production of plantations. On the financial front the company’s performance has been unexceptional. Ballarpur Industries is setting up a new pulp mill with a capacity of 150 ton per day, in order to produce pulp of international quality. It is also investing in a major paper machine alongside an upgradation of its paper finishing facility. The company’s being a
net foreign exchange earner depicts that the decline in
the value of rupee is going to enhance its revenues. And
since its raw material requirements are indigenously met,
its import costs are minimal. Its long term prospects
thus seem to be improving, albeit slowly. |
Q: What is your opinion about the long term prospects of Ballarpur Industries? — Major B.K. Singh, Patiala A: Ballarpur Industries is a prominent player in the paper industry. However, the company, like most of its contemporaries, has been adversely affected on account of the slowdown in the industry. It has signed a MoU with Ahlstrom Paper Group, OY, Finland, for transfer of technology to manufacture speciality products like automotive filter papers, cores and core boards etc. The company has also started R&D projects in order to develop high yielding pulp wood trees through clonal technology, to boost the production at its plantations. On the financial front, the company’s performance has been unexceptional. During the six-month period that ended in September, 1997 the company posted sales and net-profit of Rs 677.03 crore and Rs 7.62 crore. Ballarpur Industries is setting up a new pulp will with a capacity of 150 tonne per day, in order to produce pulp of international quality. It is also going in for investment in a major paper machine along with upgradation of paper finishing facility. The company’s being a net foreign exchange earner suggests that the decline in the value of the rupee will enhance its revenues. Furthermore, its raw materials are indigenously procured, thus making the prospects of the company seem encouraging. Q: My broker recommends investment in the shares of Himatsingka Seide (HSL). What is your esteemed opinion? — Shalini Sinha, Chandigarh A: Based in Bangalore, Himatsingka Seide is a leading player in the textile industry, and involved mainly in the synthetic silk segment. The company manufactures silk fabrics, premium furnishings, wall coverings and silk dress materials which are well-known for its quality and creativity and also exports the same to the most discerning of buyer. Despite the slide in the value of the rupee on account of which, the textile industry has been badly affected, the company’s performance has been good on account of quality exports. During the year that ended in March 1998, the company posted sales and net profits of Rs 59.49 crore and Rs 23.91 crore respectively, thus translating into an EPS of Rs 25. It has also decided to set up a weaving unit to produce cotton and blended fabrics. Thus, given its strong brand equity among foreign buyers and high divided payment history one could keep an eye on this scrip. Q: Should I buy the shares of Indian Aluminium Company (Indal) at the current price level? — Mathew Cherian, Chandigarh A: A prominent player in the aluminium industry, Indal faced many problems during the major part of the year 1997. Due to metal prices rising again this year, the company had little choice but to make the price hikes at the domestic and international level. The company’s performance on the financial front has been satisfactory. During the year that ended in March 1998, the company posted sales and net-profits of Rs 1038.02 crore and Rs 68.53 crore respectively, translating into an EPS of Rs 9.6. Though, the company had to bear with the economic crises in the consumer durables, automotives and packaging sectors, it has fared satisfactorily in the area of aluminium exports. Thus, it is advisable to adopt a wait and watch approach, especially since the last is yet to be heard on Sterlite’s takeover bid on the company. Q: I am considering investing in the shares of TTK Prestige. Please comment. — Bitoo Nayyar, Shimla A: Based in Bangalore, TTK Prestige is a market leader in the pressure cooker segment. It is a market leader in terms of volume and has the capacity to produce 2 million pieces per month and this accounts for more than 70 per cent of its turnover. The company is also engaged in the manufacture of other cookware items like barbecues, sterilisers, idli stand and kitchen knives. On the financial front,
the company’s performance has not been satisfactory
and during the financial year that ended in March 1998,
the company posted sales and net profits of Rs 111.43
crore and Rs 5.08 crore respectively, thus translating
into an EPS of Rs 4.5 crore. The company has also
undertaken a capital expenditure programme aggregating Rs
10 crore which includes modernisation, expansion and
manufacturing new products. On one hand, the company is
under pressure of competition and on the other its
increased cost of raw material, low margins and labour
problems are making its base weak. An investment decision
in this scrip would best be deferred. |
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