Monday, November 9, 1998
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B U S I N E S S | Monday, November 9, 1998 |
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SBI’s Rs 2,536.42
crore locked up in litigation
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MFN status likely to figure
in Indo-Pak talks
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SBI’s 2,536.42 crore locked up in litigation MUMBAI, Nov 8 (PTI) — The State Bank of India (SBI) has the highest amount of Rs 2,536.42 crore locked up in litigation, according to the Reserve Bank of India’s list of borrowal accounts of Rs 1 crore and above against which banks and financial institutions have filed suits for recovery as on March 31, 1998. Altogether 445 accounts make up the sum SBI is seeking to recover through legal means, which includes Rs 812.08 crore from Big Bull Harshad Mehta, the central figure in the securities scam of the early 1990s. Bank of India follows SBI with Rs 1,112.75 crore stuck in litigation against 279 borrowers and the next is the troubled Indian Bank with 175 accounts having to pay up Rs 1,001.58 crore. Bank of Baroda is attempting to recover Rs 606.36 crore through access to legal course. As per the list, C. R. Bhansali’s CRB Capital Market Ltd owes Rs 58.09 crore to SBI, Rs 3.84 crore to State Bank of Travancore and Rs 2.61 crore to Bank of Rajasthan Ltd. A sum of Rs 7.10 crore is due to Bank of Tokyo-Mitsubishi from CRB Capital Ltd, while CRB Corporation Ltd has to pay Bank of Rajasthan Rs 4.50 crore, Rs 8.50 crore to Vysya Bank, Rs 7.52 crore to UTI Bank and Rs 11.03 crore to Indusind Bank. Hyderabad-based Asia Pacific Investment Trust Ltd, which has Field Marshall S H F J Manekshaw as one of its Directors, owes Rs 2.78 crore to State Bank of Hyderabad and Rs 1.05 crore to State Bank of Mysore. Mumbai-based All Seasons Foods Ltd, a company under liquidation and having Mahesh Jethmalani as one of its Directors, is supposed to pay Rs 2.79 crore to Mashreq Bank, Rs 2.41 crore to the Industrial Finance Corporation of India and Rs 1.25 crore to Deutsche Bank AG. Bifora Watch Co Ltd is required to pay SBI Rs 2.32 crore, Industrial Development Bank of India (IDBI) Rs 13.08 crore, IFCI Rs 4.66 crore and ICICI Rs 7.84 crore, while sister company Bifora Clock Industries Owes SBI Rs 1.39 crore. East West Travel and Trade Links Ltd, which promoted the now defunct East West Airlines, owes Rs 9.74 crore to Dena Bank, Rs 18.39 crore to State Bank of Travancore, Rs 11.39 crore to SBI, Rs 16.87 crore to State Bank of Hyderabad, Rs 100.71 crore to Indian Bank, Rs 2.55 crore to Vijaya Bank and Rs 9.63 crore to United Western Bank Ltd. Bank of India has claimed
Rs 2.48 crore from Lazard Credit Capital Finance
Corporation and SBI Rs 7.67 crore from Tata Mills Limited
and Rs 62.60 crore from J K Synthetics Ltd. |
Naidu lures Ambassadors NEW DELHI, Nov 8 (PTI) — Several countries, including the USA and Japan, have shown keen interest in promoting trade and economic relations with Andhra Pradesh. The Ambassadors and High Commissioners of these countries have lauded the “pro-active approach” of the state government and “dynamism” shown by Chief Minister N Chandrababu Naidu, official sources said here today. Foreign diplomats of seven countries expressed their enthusiasm to focus their attention on the state during their participation in the week-long celebrations of the Andhra Pradesh formation day which concluded here yesterday. The Ambassadors of Japan, Germany and Belgium announced the visits of high-level business delegations from their respective countries to the state. The USA ambassador, Dr Richard F Celeste, said his country was keen on promoting trade and economic relations with Andhra Pradesh. Diplomats from Kuwait, Canada and Singapore have said that their offices have initiated measures to strengthen cooperation with the state. The sources quoted Japanese Ambassador Hiroshi Hirabayashi having said that Andhra Pradesh symbolised positive and forward looking approach towards development. Canadian High Commissioner Peter F Walker said his country was aware of the dynamism with which Andhra Pradesh was going about the task of development. German Ambassador D H Hieckmann said his country with a strong federal character was keenly interested in various parts of India and Andhra Pradesh had their utmost attention. The Singapore High Commissioner, Mr Ajit Singh, said his country had strengthed its ties with Andhra Pradesh following the visit of Mr Naidu. Foreign diplomats had
specially referred to the strategy-based approach of
Andhra Pradesh government to provide a “smart”
(simple, moral, accountable, responsive and transparent)
system and its special thrust on information technology
applications for the benefit of the common man. |
MFN status likely to figure in
Indo-Pak talks NEW DELHI, Nov 8 (PTI) — According most favoured nation (MFN) status to India, sale of power and bilateral cooperation in railways and communications are likely to figure prominently in the Commerce Secretary-level talks between India and Pakistan slated to begin here on November 10. While the Indian delegation will be led by Commerce Secretary PR Prabhu, the Pakistani delegation will be headed by his counterpart Mian Iqbal Farid, an official release said today. The talks between the two countries on economic and commercial cooperation is a part of the integrated dialogue between India and Pakistan based on the agreed agenda signed in June last year. Both the countries are also likely to identify new areas for economic cooperation. India’s trade with Pakistan has grown rapidly over the past five years from Rs 337.61 crore in 1993-94 to Rs 676.82 crore in 1997-98. While Indian exports to Pakistan have increased more than 160 per cent to Rs 537.14 crore in 1997-98 from Rs 200.96 crore in 1993-94, Pakistan’s exports to India were more or less static at Rs 139.68 crore in 1997-98 as compared to Rs 136.65 crore in 1993-94. However, Pakistan’s
exports to India have shown significant increase during
April-August this year at Rs 365.54 crore as compared to
Rs 30.30 crore during the same period last year. |
‘Allocate 1,300 crore to power sector’ NEW DELHI, Nov 8 (PTI) — Power Minister P. R. Kumaramangalam has asked the State Bank of India (SBI) to allocate $ 300 million (about Rs 1,300 crore) for the power sector from its $ 4.2 billion collection through Resurgent India Bonds (RIBs). “I will also meet Finance Minister Yashwant Sinha tomorrow to pursue this,” Mr Kumaramangalam told PTI in an interview. SBI Chairman M. S. Verma recently held discussions with the Power Minister when the later visited Mumbai. The minister said he told SBI chief that he should contribute at least $ 300 million for the sector, where annual investment was to the extent of Rs 20,000 crore. Replying to a question, Mr
Kumaramangalam said he had also asked the SBI to give Rs
1,000 crore credit from RIB proceeds to state owned Power
Finance Corporation (PFC). |
Buyback norms may sustain rally NEW DELHI, Nov 8 (PTI) — Stock brokers and market analysts today welcomed the SEBI norms on buyback stating the measures would help market to sustain the rally seen for the last two trading sessions. “The norms are all positive and the market is going to react positively in the next few days,” Delhi Stock Exchange (DSE) President Deepak Chaudhary said. The buyback laws, framed by the market regulator SEBI on Saturday, would check promoters from rigging share prices, he said. SEBI guidelines makes it mandatory for promoters to declare upfront their intent to sell stake to the company and the exact amount of shares that would be tendered, leaving no room for manipulation. A dealer in ANZ Investment Bank’s Capital Markets Division said the current spell of rally which has taken the BSE sensitive index up more than 73 points in the last two trading sessions is expected to continue over the “market friendly measures” announced by SEBI. Another DSE member Vikram Sahny said: “I expect the market to break the psychological barrier of 3000 points in the first few trading sessions, if not on Monday itself.” A salient feature of Saturday’s announcement was in its quickness. “SEBI should be appreciated for the pace at which they announced the norms,” the DSE President said. The implications of buyback on the takeover code would be separately examined by the Bhagwati Committee which is presently taking a relook on the code. However, if the promoter holding in a company increases on account of the buyback with no change in management control it would be granted a general exemption, Mehta said. The committee was also of the view that the regulator should not be involved inpricing, but ensure transparency and protection of investor interests. In case of a Dutch auction, preference would be given to the lowest bidder and the cutoff price made applicable to everyone. However, for a tender offer the exact price would necessarily be prescribed. All methods of buyback, except through stock exchanges would necessarily amount to the creation of an escrow account and handled by a merchant banker. Moreover, only those exchanges with electronic trading would be permitted to participate in an offer for buyback of shares by the company, Mehta said. Promoter holdings with a
lock-in clause would not be eligible for buyback, Mehta
said adding that buyback would cover only equity and that
all payment would have to be made in cash. |
IT careers explained CHANDIGARH, Nov 8 — A presentation to highlight uses of the Internet and career opportunities available in the field of information technology was organised by Rotary Chandigarh Central at Shivalik Public School here today. A large number of students, parents and teachers were present. Mr A S Sandhu, Business Manager of NetXplosion Cybercafe, talked about how to plan a successful career in the field of information technology. Mr Deepak Mohan, Rotary Central President, said: “Students and parents need to be informed that other career streams, besides medicine and engineering, are equally satisfying and need to be explored.” Mr D S Bedi, Principal of
Shivalik Public School, stressed the need for parental
support for students who wish to become more familiar
with the Internet and IT career opportunities. |
DURING the last fortnight, the government has announced a number of measures to revive the economy and the stock market but the market has not responded to it. The “buyback Ordinance” was promulgated on October 31 which amended the Companies Act 1956 to permit buyback of shares by the managements of companies. It also liberalised inter-corporate investments and loans up to 60 per cent of the paid-up capital and free reserves without the prior permission of the government. The Ordinance also permitted the companies to issue “sweat equity shares” but subject to SEBI regulations. The term “sweat equity” means equity shares allotted either on discount or for consideration other than cash for providing knowhow, making available the intellectual rights or value addition. The stock market, however, did not respond to these concessions. The stock exchange indices stayed almost where these had closed on October 30. This can be ascribed to three factors. First, the market has already responded earlier on the authentic reports that the buyback Ordinance would be promulgated. The promulagation of the Ordinance had already been discounted by the market. Secondly, it was realised by the market that only a few cash-rich companies would avail themselves of the buyback, and that too some months later. Thirdly, it was recognised that the industrial and market recession would not be much eased before the second half of 1999. The first half (including the second quarter) results confirm that except for software, aluminium, consumer electronics and pharmaceuticals, the corporate sector has not done well. A leading financial daily has analysed the results of 105 companies that have announced their results for the first half (April-September) and it appears that while the sales have gone up by 20 per cent, the net profits have declined by 6.9 per cent. The automobile, cement and steel industries are still in deep recession. It is generally conceded that the Gross Product Growth for the financial year 1998-99 would be lower than that of the last financial year. Moody’s Investor Services put it for India at not more 4 per cent. Some other experts put it at 5 per cent. The government expects the rate of growth of 6.5 per cent. In any case the industrial sluggishness is likely to continue. We are caught in a vortex of Asian and global recession, and India is doing much better than many Asian economies. The revival is sure to come but not earlier than the first or the second half of 1999-2000. The USA has lifted certain sanctions against India and Pakistan. This may lift the industry and the stock exchanges, even though it may be for a short while. The real revival would come only in 1999-2000 (financial year). The October 31 Ordinance, also makes an important amendment to the Companies Act of 1956: It provides that every holder of shares/debentures/fixed deposits will have the option and right to nominate a person at any time for transmission. This is a very welcome change and it removes a serious lacuna from the Companies Act. At present, in the case of death of a share-holder, the successor has to face serious difficulties in securing the transmission of shares held by the deceased person. In case, the share is held in two names, the process is easy enough for on the production of death certificate of a holder, the share is transferred by the company to the second holder. But where the share is held in only one name, the transmission is possible only on production of a succession certificate issued by a competent court of law. The issue of succession certificates is long laborious and expensive process. Now that the provision for nomination is available (subject to the statutory confirmation of the Ordinance), the transmission of shares will be orderly and easy. Any shareholder (regardless of the fact that the share is held in one name or in joint names) can nominate a person to whom the share will be transferred in case of the death of a holder or holders. The investors should note
that it is always wise to hold shares in joint names. But
where the shares are held only in one name, the investor
must provide for the nomination of successor for the
transmission of share in case of his (or her) death. |
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Thomas Cook (India) THOMAS COOK (India) is a 40 per cent subsidiary of one of the world’s oldest travel companies, Thomas Cook UK. Thomas Cook Holidays, the leisure travel division of the company, has fared particularly well in recent years. According to its top management, the company’s future focus will be on leisure travel. The company continues to be the general sales agent for prominent principals such as Cosmos Tourama of UK Cunard Cruise Lines and Club Med, the world’s largest holiday resort company. Recently, Thomas Cook India launch an international credit card for use by Indian leisure travellers abroad. The company expects a substantial volumes growth in this business in the coming years. In the corporate travels business, the company is focusing on providing travel management services to large multinational corporates to enable them optimise their travel budgets. Watch this scrip. Swaraj Engines Set up with the assistance of the Punjab Government, Swaraj Engines facilities are dedicated to Punjab Tractors Ltd (PTL) and Swaraj Mazda, both of which are sister companies. All its engines are supplied to PTL and job work done on connecting rods is done for Swaraj Mazda. The capacity of the Swaraj Engines for manufacturing tractor engines is lower than that of PTL and as a result, the letter enjoys assured sales. The job work done for Swaraj Mazda is dependent upon the sales income from job work is low in proportion to the overall turnover of the company. Punjab Tractors sales continue to present a record growth, almost double that of industry average. The LCV market was subdued in the last fiscal with Swaraj Mazda witnessing negative growth in sales. The supplies to PTL are priced similar to one which supplies from Kirloskar are received. In view of savings on sales tax, freight and packing costs, Swaraj Engines enjoys an advantage in pricing and these savings get built into the margins. Swaraj Engines has already undertaken an expansion programme to counter the sales loss in view of demand being higher than supply. The company is also creating capacities for some more hi-tech components like crank case, gear casing etc. which are till now being outsourced. With the capacity for assembling engines rising to 42,000 in the current fiscal, the sales for 1998-99 are expected to double as demand would continue to outstrip supply. The supply for connecting rods will continue to decline as the outlook for the LCV segment continues to be bleak. Yet, the overall prospects of this company appear to be quite bright. BSES A PROMINENT player in the power industry, BSES is an integrated power generation and distribution company. The company has excellent credentials and a sound track record. BSES, which started off supplying power to the areas of Mumbai, has now started providing the same to areas in Andhra Pradesh, Madhya Pradesh and Kerala. On the financial front, the company has been posting fairly good results. The company proposes to
raise its capacity to 2000 mw over the next half decade.
It is setting up a coal benefaction plant as a joint
venture with CLI Corporation and Spectrum Technologies of
the USA. The company’s prospects thus appear to be
fairly satisfactory and considering that the price of
this scrip has dipped sharply, one could consider a long
term investment in this scrip. |
Mr Michael Mascarenhas has combined in himself marketing acumen with administrative ability while being at the helm of Air India’s affairs as Managing Director (MD). Aware that the government, caught in its internal bickerings and frequent political and bureaucratic changes, may not be able to bail the airline out with adequate financial aid, Ms Mascarenhas has already embarked upon massive reduction in overhead expenses. Air India has a ‘tiny’ fleet of aircraft. It is grossly inadequate to spread its wings far and wide. But its staff is mammoth. The national carrier has 770 employees for each aircraft while the industry average is less than 300. Why has the airline been over staffed to such an extent? A survey shows that sizable appointments have been made at the behest of politicians and bureaucrats. There have been a number of instances when officials with political backing have gone from strength to strength. There are some who have got out-of-turn promotions and lucrative postings abroad. The scenario in Air India will change if the government gives free hand to the management to drastically cut staff strength. But what has added to the airline’s woes is the increase of retirement age from 58 to 60. Many continue to enjoy huge salaries and perks without contributing much for the growth of the airline. Air India has done a lot of savings in London and New York by clubbing the offices together. This is a laudable measure. Similar measures may be envisaged at Delhi where Scindia house sales office, for example, has been lying locked out because of technical and legal wrangles. Air India has decided to recall many of its personnel posted abroad to reduce non-essential expenditure. Similar exercise may be useful if expenses are reduced on staff stationed in the country. A sizable amount may be saved by channelling work load of officials in different departments, particularly cabin crew, cock-pit crew and commercial units staff. Mr Mascarenhas, at a press conference, recently said that he had asked for the infusion of Rs 1,000 crore from the government, as recommended by the Disinvestment Commission. He has also sought government’s permission to opt for a private ‘strategic alliance partner’ to invest about Rs 770 crore. However, Air India has considerably reduced its operational losses, and “happy days” for the airline may return, if continued and systematic efforts are made to reduce overhead expenses. Analysts, even those who
have been critical of Air India, feel that the national
carrier has done well in not re-routing or cancelling
flights while operating the VVIP flights. The airline has
also done well by maintaining flights schedule instead of
“changing and chopping” as was the case
earlier. |
Millions of
illegal migrants in South-East Asia are feeling the crush
of tight economic times. BANGKOK: When the police pounded on her door, Tooch leapt out of bed, terrified. She grabbed her purse and pulled on whatever clothes she could before being bundled onto a bus headed first for Bangkok’s immigration detention centre, and then for the Cambodian border. “I didn’t want to come to Thailand,’ said the 35-year-old factory worker, ‘but I couldn’t find work at home.” Tooch and her sister Sinai were both swept up in a raid against illegal workers by Thai immigration officials. Like millions of illegal migrants in South-East Asia, they are feeling the crush of tight times as economies shudder under the weight of financial turmoil. Once the darlings of labour-hungry Tiger economies, illegal workers are increasingly unwelcome. Immigration policies are getting tougher as national unemployment rises, and undocumented men and women are being sent home by the thousands in reaction to battered budgets. Worst affected Thailand and Indonesia have been shaken hardest. In Thailand growth plunged from 6 per cent in 1996 to almost zero in 1997, with prospects for 1998 even grimmer. Indonesia looks even worse. From 8 per cent growth well into the latter part of 1997, experts foresee an absolute decline of 5 per cent for late 1998, a prediction made before Jakarta’s economic crisis turned violent. Earlier in 1998, the Thai labour minister announced 300,000 illegal foreign workers would have to leave by the end of June 1998 to make way for some of the nearly two million unemployed virtually full employment in pre-crisis days. Malaysia, the other South-East Asian country which has cracked down severely on illegal workers, plans to deport 10,000 illegal foreigners each month in 1 9 9 8. Of its 2.2 million foreigners, about a million are undocumented Indonesians. Women hit Particularly hard hit by the clampdown are women. In the 1970s they accounted for about 15 per cent of the Asian migrant workforce. Today, half of those seeking work abroad are women. ‘They are concentrated in the most precarious forms of wage employment and are thus more vulnerable to lay-offs,’ according to ‘The Social Impact of the Asian Financial Crisis’, an International Labour Organisation (ILO) report released in April 1998. Women are also more widely dispersed, making it harder for organised labour to reach them. The Malaysian and Thai deportation announcements may have had less than the desired effect. By some reports, workers sent home from Thailand are being replaced almost instantly by clandestine newcomers. Malaysia, which detained 8,833 illegal workers in 1997, apprehended 3,026 in just two weeks in February 1 9 9 8. ‘Administrative systems along South-East Asia’s borders are not that well developed,’ said Piyasiri Wickramasekara, senior specialist on labour market policies at the East Asia Multidisciplinary Advisory Team. ‘Sending foreign workers home at least shows politically that governments are dealing with the problem. But often the workers sneak right back and this creates a backlash. There is a danger they will be seen as scapegoats.’ Activist groups worry clandestine and illegal migration will grow as border controls get tighter, worsening conditions for remaining workers and leading to greater abuse. In Thailand, there are fears prostitution and bonded labour could rise as more families sink below the poverty line and try to make ends meet by sending their daughters away to work. Human rights workers are
also worried about possible political repercussions once
deportees get home. Of particular concern are Burmese
returning to a country which does not want them back and
Indonesians from the Sumatran province of Aceh which many
fled years ago during an anti-government independence
struggle. Foreign embassy compounds have been stormed in
desperate bids to avoid expulsion and riots have broken
out in detention centres set up to receive returnees.
— TWNF |
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| IOB network NEW DELHI, Nov 8 (UNI) — Indian Overseas Bank (IOB) is launching “anytime” computerised system of banking operations in the national capital tomorrow. IOB’s branches here are connected in a network. “This means that instead of being a customer of just one branch in Delhi, you become a customer of all its outlets in the metropolis”, IOB Chairman and Managing Director K Subramanian said here. Unocal Insurance Power plant Inflation up BSEL Info |
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