Monday, December 21, 1998
today's calendar
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B U S I N E S S | Monday, December 21, 1998 |
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spotlight today's calendar |
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Patents Bill unlikely to
have smooth sailing
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Foreign proposals for media Essar
allowed chopper flight |
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Patents Bill
unlikely to have smooth sailing NEW DELHI, Dec 20 — The Patents (Amendment) Bill, which is scheduled for voting and discussion in the Rajya Sabha tomorrow, is unlikely to have a smooth passage with the Congress indicating a rethinking on lending support for the legislation. The Congress, which had made the introduction of the controversial Bill in the Rajya Sabha an easy task for the Government by assuring its support, is now scheduled to review its support at a meeting of the Parliamentary Affairs Committee tomorrow morning. The Congress President, Mrs Sonia Gandhi, has called the meeting after several members in the party expressed resentment over the Congress taking the initiative in getting the legislation passed. The opinion amongst a section of the party MPs was that the Government should move the Bill on its own strength and the main Opposition should not be seen as the main force behind it. The MPs, who are not in favour of the amendment, have taken objection to the assurance given by Congress leaders — Dr Manmohan Singh and Mr Pranab Mukherjee — to the BJP that their party would give full support for the passage of the Bill. It was on the basis of the Congress support that the Government changed its strategy and ignored the plea of non-Congress Opposition parties to refer the Bill to a parliamentary committee. Several members within the ruling coalition have also spoken against the proposed legislation. The members had fallen in line in getting the Bill introduced after the Union Industry Minister, Mr Sikander Bakht, convinced them about the necessity to have the legislation in place before the April, 1999, deadline set by the World Trade Organisation. However, the recent RSS conclave at Nagpur spoke firmly against the economic policies of the Vajpayee Government and this could see a fresh wave of opposition within the BJP. According to BJP sources, the Prime Minister, Mr Atal Behari Vajpayee, will hold another round of talks with the party MPs before the Bill is taken up for discussion in the Rajya Sabha. The Left parties have
already announced their decision to move a motion in the
Rajya Sabha to refer the Bill to a parliamentary panel. |
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NEW DELHI, Dec 20 (PTI) — The government is considering three foreign investment proposals pertaining to the media and advertisement of which two have already been referred to the Foreign Investment Promotion Board (FIPB). Seven more proposals are awaiting finalisation of the extent of permissible foreign equity, an official release said here today. The government is also considering the policy regarding the quantum of foreign investment which should be allowed in the film sector. As far as the
advertisement sector is concerned, the government is
planning to lay down norms prescribing the extent of
permissible foreign participation. |
MNCs have to
fit into govt plans: Guruswamy NEW DELHI, Dec 20— Multinational companies are welcome to India “only if they fit into our plans for India”, says a key economic official. Mohan Guruswamy, a top BJP ideologue and economic adviser to Finance Minister Yashwant Sinha, said “foreign investors come here because they see an opportunity to make money. They come here because our system is good, we have a system of laws”. However, if multinationals were looking for assured returns in India, they will never get it, he said. “Our government’s intentions are clear: India comes first, they (multinational corporations) come second. Only if they fit into our plans for India do we welcome them,” Guruswamy told —IANS. He said some multinationals preferred China because they liked to deal with “a single point of control where profits are assured”. “But when you go to courts (in China), you find there are no rights,” Guruswamy said. “In India we have laws, we have an open press, an independent judiciary, we have an elected government, we have politicians, we have Parliament, we have trade unions. “The capital expenditure on agriculture and irrigation has come down from 0.96 to 0.66 of GNP. What kind of a country is this? In India 70 per cent of the population depends on agriculture, 43 per cent of GNP comes from agriculture and yet we only spend 0.66 per cent of our GNP on this sector,” Guruswamy said. This distortion should stop. He said till now opportunities and benefits were being cornered by a few who made the “loudest noise”. Industrial workers have become a power unto themselves. They work 50 days less than their counterparts in the rest of the world. Nowhere in the world do you have the concept of compulsory overtime. The country has legitimised such a system by administrative fiat.” Guruswamy said there are seven public sector companies today whose salary bills exceed their turnover. The aggregate loss of public sector companies in the last ten years is Rs. 2,000 billion. “This has been at the cost of somebody else. This somebody else is not organised, not articulate. They are poor and live in villages. Nobody had cared for them,” he said. He said many people in the country do not have a clear idea what liberalisation meant and most believe that it meant allowing multinational companies to come to the country in the fast food sector. “That was what the previous governments had done. This was crony capitalism,” Guruswamy said. “True liberalisation means the government gets out of the hair of the people. We have to give the community, the village and towns their power. Let them participate in the investment decision-making process. For that to happen there is a need for radical decentralisation of the society. We also need to have specialists in the bureaucracy. We need to induct more people into the bureaucracy from the academia and industry,” he argued. He said the earlier system of control over markets and investment created black money. “Today Indians living in India are supposed to have $500 billion outside the country. They are the top industrialists, top politicians, bureaucrats etc.,” he alleged. He also denied that the
government is unstable. “ Parliament is here, the
courts are here, the military is here, a permanent
bureaucracy is here. Everything is in place. The
politicians may change.” — IANS |
Trade fair
opens in Faridabad FARIDABAD, Dec 20 — Mr Mahavir Prasad, Haryana Governor, here today inaugurated Farindex - 98, an industrial trade fair, on the sprawling grounds of Sector 12. the fair will conclude on December 27. Spread in 75,000 square yards the mela complex has been divided into 11 blocks in which 450 industrial units ranging from machine tools, fabric, crockery, sanitary, footwear, electronics are displaying their goods. Organised by the district
administration in collaboration with various industrial
associations of Faridabad, the fair which is held
regularly for the past four years, provides an
opportunity to the local industry to present its latest
products.
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Right time
for real estate investment? NEW DELHI, Dec 20 — Real estate prices in India have been on the downslide for some time now, but opinion continues to differ on whether this is the right time for buyers to invest in real estate. “This is the right time for NRIs (non-resident Indians), both in terms of price and terms of payment, to buy property in India as the costs have gone down because of low sentiment of the Indian economy,” says Mumbai-based real estate developer Niranjan Hiranandani. But David Fowler, the chief executive officer the Indian subsidiary of La Salle partners, a US-based consultancy company that advises buyers keen to invest in real estate in India, differs. “The market would bottom out within six months to one year, “ he says. “Prudent NRIs should wait and watch the market and start looking at what is on offer.” Urban Affairs Minister Ram Jethmalani says, “We want to encourage both NRIs and foreign real estate developers to come to India. “The government is offering them a plethora of incentives including repatriable dividends and tax holidays. The proposed amendment to the Urban Land Ceiling Act would make available at least 150,000 hectares of trapped land, which would further decrease prices, Fowler says. To help expatriates buy property in India, Citibank, whose 18-month-old housing finance division has 10,000 resident Indian and 500 NRI borrowers, is planning to aggressively target the latter by “increasing awareness among our clients.” “NRIs should make payments only through banks and ensure that there is no delay in payments as that would needlessly attract interest,” says S.C. Sharma, regional manager (Delhi) of the life Insurance Corporation (LIC) Housing Finance Division. “Property prices are
low and the rupee has fallen as compared to the dollar.
All expatriates who want a home in India should buy one
now,” he adds. —IANS |
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MUMBAI, 20 (PTI) The Director General of Civil Aviation (DGCA) has permitted the Essar group to carry out a trial flight, subject to certain strict conditions, from the rooftop helipad of its 21-storeyed building at Mahalaxmi in Mumbai Central. This is the first time that a regulatory body has permitted an industrial house a trial flight, after which it would decide future flights. Essar would use the helicopter for ferrying executives only from the corporate headquarters to the airport, cutting travel time, airport sources said here today. The DGCA has also made it
clear that the Airports Authority of India (AAI) and the
Air Traffic Control would have to be involved in this
trial flight, which must have an experienced pilot as
well as one of its official on board. |
China enjoys spotlight BEIJING, Dec 20 (Reuters) — The red carpet at Tiananmen Square has been well tramped this year by US President Bill Clinton. South Korean Head of State Kim Dae-jung and five EU leaders in almost as many weeks led by Britain’s Tony Blair. Corporate moguls, too, have been tumbling through China’s airport arrival gates. No sooner had Virgin Atlantic boss Richard Branson jetted in than media mogul Rupert Murdoch was calling. On the 20th anniversary of Deng Xiaoping’s economic reforms. China is revelling in all the attention. To Beijing leaders the parade of world figures is a comforting sign that China now matters in the world. In the day of Mao Zedong, China styled itself as the “leader of the Third World”. Now it sits at the head table with the USA, Japan and other global powers. “They are finding themselves more powerful and beginning to feel more confident in their international role,” said US-based China scholar Robert Ross. Twenty years ago, when then Vice-Premier Deng Xiaoping unveiled his ambitious reform programme, China hardly rated a blip in the international economy. The world’s most populous country conducted its foreign trade through a handful of state trading houses. Annual overseas trade was worth a paltry $20 billions, last year it was $325 billions; and growing fast. Indeed, China’s best known export used to be its Maoist militancy. Beijing fomented trouble in Indonesia, Malaysia and the Philippines. Its best friends in Asia were the murderous Khmer Rouge in Cambodia, and Stalinists running North Korea. Deng’s opened-door policies transformed the xenophobic regime into one of the world’s most active economic and political players. China is now the world’s seventh largest economy with the world’s second largest pile of foreign exchange reserves, worth $143 billions. That clout gives Beijing attention and respect. These days, the rush by foreign politicians to meet China’s top leaders is almost unseemly. When Premier Mr Zhu Rongji was in London for an Asia-Europe meeting this year, he was so much in demand he was forced to grant audiences in 10-minute slots. President Jiang Zemin is recognised as a leader of world stature. The country’s
increasingly youthful diplomats shuttle around the globe
to discuss West Asian peace, conflict in the Balkans and
the India-Pakistan nuclear crisis. |
THE stock market continues to limp and this trend is likely to persist during this fortnight. Last year, the Sensitive Index had stabilised in the range of 3200-3400 points but this year it has been moving in the range of 2800-3000 points. The market has been stagnant except for a couple of multinational pharma and speciality chemicals scrips and some select software shares. I expect the market to continue limping during this fortnight too. The second fortnight of December is usually slack for the stock market. It is a time for rest and X’mas merriment, and stock market is an unwanted intrusion. The FIIs close their accounts. Another reason is that the political factor is unfavourable. The market will receive a psychological boost if the Insurance Bill enacted during this session of the Parliament. But it has been referred to the joint select committee which is likely to report only at the time of the Budget session of the Parliament. The same is likely to happen in the case of Patents Amendment Bill. This will in all probability be referred to a committee and approved with some changes in the Budget session. Its postponement will affect the market prices of multinational companies. I expect a fall in their market prices during this fortnight and even later. The economy is in a poor shape and the political situation is equally bad. The year has been a bad year for the market, the year 1999 may not be any better. It will be a year of elections and political turmoils. The US attack on Iraq has complicated the international situation. All these factors will take a heavy toll of the economy in India and South-East Asia. Two sectors of industry may continue to do well — select software and multinational pharma and speciality chemicals companies. Even during the last fortnight, Satyam Pentafour Software companies did well on the stock exchange. Satyam is poised for a further rise even in a stagnant and limping market. It has entered into a number of alliances recently. It is allying itself with the Indian arm of the US computer chip giant, Inter Corp. Infosys Technologies has issued a notice to the stock exchanges that the Tata company will be holding a Board meeting on December 23 to consider a bonus issue. The market expects the bonus issue to be in the ratio of 1 to 1. Since its public issue in February 1993, this will be the third bonus which the company will be issuing to the shareholders. Even though, the multinational pharma and speciality chemical companies are likely to stagnate around their present market price levels, these scrips may be retained for these scrips hold a lot of promise in the coming years. The Patents Amendment Bill is bound to be passed in the Budget session, if not in the present session, and this will bring new vigour to these scrips. The product patent will be available to these companies only in 2005 but the preliminary work is likely to be completed after the Patents Amendment Bill is enacted into law. The exclusive marketing rights to these companies which may be accorded to these companies will not bring any immediate tangible benefit but its psychological impact will be considerable in terms of the market prices. Some of these shares, which have been recommended in this column, during the past six months have done very well. Novarties, recommended around Rs 300 per share, has moved up to Rs 850. Clariant India has moved up from Rs 140 to 270. Glaxo, Parke Davis and Wyeth Lederdale too have moved up very significantly. Astra IDL had moved up to Rs 381 but has now receded to Rs 258. This share cannot move up unless the dispute between the Hindujas and Astra is settled in favour of Astra Sweden so that this multinational gains 50 per cent or more of its equity. In case the present stalemate continues, this scrip may decline further. Voltas has recovered its market price from Rs 40 to Rs 78 or so, but further rise will depend on its annual results. Tata Chemicals is, as I believe, underpriced, and may move up from its present market price of Rs 82 or so if its third quarter results are satisfactory. Vardhman Poly around Rs 27
or so appears to be an attractive scrip. Last year it
paid a dividend at the rate of 40 per cent. Its six month
results though not as good as last year, are quite
satisfactory. |
THE aviation scenario in the country has always been gloomy but the dissolving of the Air India and Indian Airlines joint board has made the situation murkier. Politics and ego clashes have led to further uncertainty. Formation of holding company, disinvestment programme, induction of 50-seater aircraft and board’s stubbornness in bypassing the ministry on certain issues are some of the reasons for government performing a virtual midnight coup. Without going into merits or demerits of the unconventional exercise, the government should have displayed magnanimity and grace in dealing with the situation instead of sending alarm signals in the aviation industry. During a little more than 57 months’ tenure, Mr P.C. Sen had steadied the functioning of the domestic carrier. Despite mounting losses — for which the Chairman and the Managing Director was not to be blamed — there was discipline in all sections. Employees had started displaying pride in working in the domestic carrier. He had only over three months left to complete his five-year deputation term. While reconstituting the board, Mr Sen could have been sent to his parent ministry with grace and dignity. Mr Sen is not the first high-ranking officer, who has been treated roughly by the Civil Aviation Minister. He will not be the last either. His previous incumbent, Air Marshal Shashi Samuel Ramdas, a competent pilot-engineer, was also given similar rude treatment. In this country, the government functions according to its whims and fancies instead of adhering to principles. This is unfortunate. When the reconstitution of the board was announced, it was mentioned that Michael Mascarenhas has been allowed to stay in Air India as Managing Director “for the time being”. This was because the powers that-be were unaware that he had been an airline official for several years and had risen from different positions to the post of the Managing Director. Subsequently, the authorities realised their “misgiving” and let Mr Mascarenhas continue to navigate the airline’s ship. Similarly, where was the need to send packing Alliance Air’s chief Vinoo Kashyap”? The official reason given was the crash of a Donier aircraft in Kochi on July 30. Why did Government wait for so many months? The reason is unconvincing? Holland caterers Aware that India is a ready cash cow, the Netherlands based international corporation De Ster will, serve airlines. It is considered one of the leading mass catering systems in the world. It has so far provided equipment and services to more than 350 airlines. The De Ster system will cater to the needs of passengers on board. De Ster is seeking government’s approval to set up a project in this country. Antarctic expedition Pawan Hans has provided Bell 407 halicopter for the Antarctic expedition. This is the first time that the ocean Development Department has chosen Indian civil aviation operator to provide crucial support for the expedition. Pawan Hans connects remote and inaccessible areas and provides essential service to several companies. It is one of the profit-making companies. New Safety device The activation of the
traffic alert collision system has been done in one of
the Indian Airline Airbus A-320 aircraft. The system is
expected to enhance air safety in the country’s
congested air space. All aircraft are expected to have
this system soon. |
INDIA has a strong manufacturing base for bearings. There are about 12 large and medium units which together produce over 9-10 crore bearings every year. All big names in the international market have a presence in the Indian market through joint ventures. For example, SKF Bearing has AB SKF of Sweden as their collaborator, FAG Precision Bearing is with FAG of Germany, Tata Timken has Timken of USA as its collaborator etc. The bulk of the bearings are only of standard types and are used mostly in the low technology areas like fans, electric motors, water, pumps etc. Almost 60 per cent of the production is absorbed by the original equipment manufacturers (OEM) and the balance 40 per cent goes to the replacement market. The needle, taper and cylindrical roller bearings constitute most of the roller having about 38 per cent of the market share in value terms and these are used by the automobile industry. The balance 2 per cent is made up by spherical roller bearings. Electrical, textile and other industries are the main user segments of these bearings. With the automobile industry displaying negative growth in 97-98, industries whose demand is directly derived from it have landed in deep trouble. This drop has come due to diminished realisations, which has suffered due to imports of low priced bearings of smaller sizes. The major players engaged in the bearings industry viz. SKF Bearings, Fag Precision, Tata Timken and Anti friction Bearings etc. are facing slack demand as user industries like machine tools, infrastructure, textiles and automobiles are facing tough time. Furthermore, the industry is plagued by dumping from Japanese and Chinese companies which give the domestic players a run for their money. SKF Bearings A 51 per cent subsidiary of Aktiebolaget SKF, Sweden, SKF Bearings is a market leader in the bearing industry. The company manufactures ball and roller bearings which find application in the automobile and electrical segments. It enjoys a market share of around 32 per cent. A major part of the production of SKF Bearings is accounted for by the original equipment and during the year that ended in March 1998, the company posted sales and net profits of Rs 362.20 crore and Rs 5.90 crore respectively. Thus, the EPS therefrom stood at Rs 23.4. Nevertheless, the company has also drawn up modernisation cum-expansion plans to the tune of Rs. 200 crore, which are to be implemented over the next two years. FAG Precision FAG Precision Bearings (FPBL), a member of the FAG group, is India’s third largest bearings manufacturer and has market share of around 10 per cent. FPBL has two plants in Baroda, of which one is the most modern plant in the world. The company manufactures ball bearings, cylindrical roller bearings and spherical roller bearings for segments like automobiles, general engineering and railways. On the financial front, the company’s performance has been satisfactory. During the year that ended in March 1998, the company posted sales and net-profits of Rs 161.15 crore and Rs 8.43 crore respectively . Thus, the EPS therefrom stood at Rs 6.2. In the spherical roller bearing segment, it is the largest manufacturer, having a market share of around 50 per cent. The company produces about 250 varieties of ball and roller bearings. While 60 per cent of it’s revenue comes from the original equipment sector, the replacement market accounts for the remaining. It caters to companies like Telco, Bajaj Auto, Maruti, Ashok Leyland, M&M, Crompton Greaves, ABB and Hero Honda. Tata Timken Tata Timken which was
promoted as an Indo-US joint venture between the Tatas
and Timken, manufactures tapered roller bearings and
cartridge tapered roller bearings. The company derives a
major part of its business from being original equipment
manufacturers for the commercial vehicle segment headed
by Telco and also to the Railways segment for the
cartridge lapered roller bearings. On the financial
front, the company’s performance has been
satisfactory. The company also exports its products and
it has bagged a major export order from Rockmell
Corporation and Ealon of USA. With Timken of the USA also
showing greater interest in Tata Timken, the
company’s prospects could improve. |
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| Sony brand NEW DELHI, Dec 20 (PTI) — The Delhi High Court has restrained a local company from manufacturing and selling products under Sony brand name. The order by Justice Dalveer Bhandari came recently on a petition filed by electronic multinational Sony Corporation seeking injunction against the Delhi company engaged in stoves business. The Counsel for Sony, Ms Meera Bhatia, contended that the trade mark Sony being used by Lok Seva Stove was deceptively similar to that of the Japanese company. She contended the Delhi company was also passing its goods as a product of Sony Corporation and thereby causing damage to the reputation of the multinational as a manufacturer and merchant of high quality goods. Inflation
falls Cycle machine Delegates |
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