Thursday, November 19, 1998
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B U S I N E S S | Thursday, November 19, 1998 |
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Punjab units not steeled
for recession
Meridien
facelift to cost $ 57m |
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Gadgets invade Lavi trade
fair OECD
predicts lower growth
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Punjab units not steeled for
recession LUDHIANA : Recession has badly hit industrial activity. A number of units have been closed down while some have cut their production. Some of the big units have surrendered their sanctioned power quotas to save money under the minimum charges. “The overall scene is depressing and all sectors have been affected”, observes Mr P.D. Sharma, President, Apex Chamber of Commerce and Industry, Punjab. The worldwide recession coupled with the scarcity of finance, procedural hassles and lack of government support to meet global competition are responsible for the present state of the industry. The steel sector is the worst hit. A number of induction furnaces and steel rerolling mills in Punjab have been closed down. Mandi Gobindgarh is badly affected due to demand recession for steel. “Marriage palaces and shopping complexes are replacing steel-rerolling mills in Mandi Gobindgarh due to the severe demand recession for steel for the past two years”, says Mr R.P. Bhatia, Zonal Chairman of the Steel-Rerolling Mills Association of India. In Punjab only 300 of the 400 steel mills are functioning. The Punjab steel rerolling mills have an investment of Rs 1000 crore and employing 50,000 persons. Production cut The induction furnace units in Punjab have cut down their production by almost 50 per cent due to lack of demand. Half a dozen induction furnace units in Ludhiana have been closed down, says Mr Sharma. Mr Sharma complains that the Union Government has not come to the help of the steel industry, particularly the private sector. Rather the Government is tightening its net on the small steel plants. He cites the example of compounded levy of Rs 5 lakh per induction unit which was earlier Rs 1.5 lakh. The Government is helping big public sector projects despite huge losses suffered by them. SAIL, for instance, lost Rs 600 crore in the first half of the current year. Mini-steel plants (arc-furnaces) have also slashed production drastically and some have surrendered their sanctioned power quota. Punjab has 125 induction furnace units with 250 furnaces and a dozen mini steel plants. The investment in the induction furnace steel industry is worth Rs 700 crore. He alleges that SAIL is selling steel at a high discount which has adversely affected the private sector steel plants. Financial crunch The industry is facing a financial crunch. Private money lenders have stopped lending money in view of the slump and in the wake of rumours of liquidation of some of the units. Whatever money is available in the private sector is given on hefty rates of interest. Many private money lenders are having litigation with some of the units.Banks are not willing to extend credit to the industry. According to Mr Sharma, big units manage to get overdrafts, but small units are not extended any help. Banks are reluctant to make advances because of the sudden closure of factories. Mr Harish Khanna, President, Ludhiana Small Scale Manufacturers Association, alleges that buyers from other States are not remitting payments of goods supplied by Ludhiana manufacturers. Such payments are estimated to be more than Rs 100 crore. The PSEB Chief Engineer, Mr Kirpal Singh, confirms that some steel units and paper units have surrendered their sanctioned power quota. However, demand for fresh power connections is also continuing at the same time, he maintains. Bank officials maintain that there has been delay in realising the money from the industry because of the overall slump. But they claim there is no problem in advancing money to viable units. They point out that industrial units will have to improve their operational efficiency. Mr Harish Khanna demands a separate industry policy for the tiny industry. Exports Recession in the world market has adversely affected the exports of engineering goods, particularly bicycle and bicycle parts, and handtools. According to Mr Satish Dhanda, President, Engineering Export Promotion Council (northern region), Ludhiana is the main supplier of bicycle and cycle parts as more than 80 per cent of the total production is from Ludhiana. All the major bicycle manufacturers of the country buy components from Ludhiana. Similarly handtools are manufactured at Jalandhar and Rajpura in Punjab. The export of bicycle and cycle parts was worth Rs 411 crore during the year 1997-98 which fell by 20.55 per cent interms of dollar value compared to the last two years. The export of handtools fell and was reported at Rs 250 crore last year. Mr Dhanda says that the export of consumer goods has started falling while the export of capital goods is on the increase. He emphasises that the State Government has to provide infrastructure to develop new models for bicycles to compete with the advanced nations. Industrialists and traders
of Punjab have been on warpath with the State Government
for the past sometime due to the alleged harassment by
the sales tax authorities. They allege that the sales tax
officials harass them on flimsy grounds. |
Gadgets invade Lavi trade fair RAMPUR, Nov 18 — The launching of “Armada Grand”, the new de luxe model of luxury vehicle, during the Lavi aptly symbolised the changing character of the 400-year-old trade fair. The decision of the government to accord it the status of an international fair notwithstanding, the Lavi is gradually losing its identity as a traditional mela. The volume of trade has over the years increased manifold but the availability of traditional items like pashmina wool, cheegu, a high-mountain goat found in parts of Tibet and Kinnaur, kalazira, chilgoza and other dry fruits is declining with each passing year. In fact these have been virtually pushed out by modern goods like television, music systems refrigerators and host of house gadgets, which have invaded the Lavi in a big way in recent years. The traditional items now account only for a small portion and these are confined to “Kinnar market” specially created in the fair for the purpose. The resumption of Indo-China border trade through the Ship Kila Pass had also not helped in restoring the old glory of Lavi. Chinese traders have not shown any interest and it has so far remained a one-sided affair with only a few Indians going across to China with their merchandise. They mostly bring back modern items like shoes, garments, thermos flasks and crockery. These days the fair is dominated by traders from Punjab, Haryana, Delhi and Uttar Pradesh who bring along all the modern goods normally available in big city markets and do brisk business steel utensils, ready made garments, quilts and farm implements are sold in huge quantities during the fair. As far as the traditional items are concerned, the price of pashmina, which increased sharply from Rs 1200 to Rs 2200 per kg two years ago, again came down to Rs 1400 per kg this year. The rates of chilgoza, which grows wild in Kinnaur, also shot up considerably. It was available at Rs 280 per kg as against Rs 220 per kg last year. The availability of “cheegu” was also poor and it fetched Rs 2000 to Rs 2500 per animal. The average price of the world famous Chamurti horses, which are known for their “surefootedness” ranged around Rs 1,8000. As usual cultural programmes were organised every evening during the fair. This year the main attraction was the “Gurdas Maan” nite. Various government
departments had also put up stalls to highlight the
developmental activities. |
Coke at Rs 3 NEW DELHI, Nov 18 (UNI) — Coca Cola India is planning to introduce its softdrink brands in small cups and bottles of 135ml to 150ml with the price tag being as low as Rs 3. This will be a step towards realising CCI President and CEO Donald Wilson Short’s dream of making Coke available in the Indian markets at Rs 5. “We are not fixing Rs
5 as the benchmark. We can even go lower, say at Rs 3 but
with lower bottle sizes,’” company sources told
UNI here. |
Pakistan Foreign Minister Sartaj Aziz has said that the hitherto imminent threat of default in repayments is over with the lifting of sanctions and resumption of aid flow. “With the lifting of sanctions by the USA and Japan, Pakistan has retreated from a position of likely default,” Azia has said in an interview. The announcement of lifting of sanctions by Washington and Tokyo has eased pressure on Islamabad which has $ 32 billion in external debt with only $ 500 million in its foreign exchange reserves. — ANI Boutiques Prime Minister Nawaz Sharif’s announcement of a self-employment scheme has brought in a rush of loan requests in banks from entrepreneurs wishing to open either fashion boutiques or grocery stores. A senior banker says banks across the country have received thousands of applications for loans to open boutiques and grocery stores, reports the NNI news agency. Banks are now in a dilemma as they are reluctant to fund such enterprises in which they see little potential for growth. If someone gets a Rs 5,00,000 loan to set up a boutique, how would he be able to return the instalments, pay the rent of shops, utility bills and other expenses, asked the banker. Bankers are now urging applicants to present more viable proposals rather than plans for boutiques and grocery stores. Sharif announced the scheme a couple of months back and is personally supervising it by taking calls about it on Saturday mornings. Bankers see the scheme as a populist measure aimed at boosting the vote bank and popularity of Sharif’s government. — IANS Power tariffs Pakistan has assured the IMF mission that the government will not take any unilateral action against HUBCO and KAPCO to cancel their contracts or lower their power tariffs. Finance Minister Ishaq Dar, has told the IMF mission that the government does not believe in forcing the IPPs to reduce their tariffs. He, however, has made it clear that since the issue relating to HUBCO and KAPCO are already in superior courts, the government cannot concede anything, at least in the immediate future. — ANI Panic imports Pakistan has paid Rs 4.36 billion more for the import of edible oils in the first four months of 1998-99 fiscal as compared to the same period last year. According to the latest foreign trade statistics, from July to October, the country’s private sector imported 88,492 metric tonnes of soyabean worth Rs 2,774 billion and 344,182 metric tonnes of palm oil worth Rs 10,522 billion. The private sector is resorting to panic import of edible oil to mint money in the wake of a possible devaluation of the Pakistani rupee following talks between the federal government and the IMF. Recently the State Bank had delisted edible oil from the essential items list and imposed 30 per cent cash margin restriction to curb panic and unnecessary import of soyabean and palm oil. — ANI Drug prices Health Minister Makhdoom Javed Hashmi has offered a 7 per cent increase in the prices of all drugs, provided drug manufacturers and importers withdraw what he called the “100 to 2000 per cent illegal increase” made in prices of over 100 drugs. “The Health Ministry has investigated the matter and found that 46 drugs are being sold at a price which is 100 to 2000 per cent high,” he added. Hashmi said the ministry
had already initiated an investigation against certain
pharmaceutical companies, who had increased prices
illegally of 46 drugs, and added that a summary in
respect of this increase had already been sent to the
federal Cabinet for scrutiny and action. —
ANI |
OECD predicts lower growth BONN, Nov 18 — The Organisation for Economic Cooperation and Development (OECD) has called on its 29 member countries from the industrial world to resist protectionism as a response to the present downturn in world economic growth. Protectionist measures, as a solution, would create more problems than they would solve, the Paris-based OECD said in its semi annual economic outlook. The OECD, which also forecast quicker growth prospects for Europe as compared to the USA, said markets needed to remain open to exports from emerging countries, and initial adverse conditions on trade must be accepted. Any continuation in the reduction in domestic demand in emerging economies has very negative consequences for the world economy at large. The OECD, as expected lowered its forecasts for growth among the world’s major industrialised nations, citing a slowdown in trade and weakening business confidence after financial trouble hurt emerging markets. Economic growth would slow to 2.2 per cent in 1998 from 3.2 per cent in 1997 and then slow again to 1.7 per cent in 1999 before rebounding to 2.3 per cent in 2000, it predicted. Six month ago, the organisation expected its member economies to grow 2.4 per cent in 1998 and 2.5 per cent in 1999. The OECD, however, warned that its predictions assume the world economy will avoid the worst of a series of potential problems any of which could significantly reduce growth next year. The organisation also noted that its forecasts are based on hopes that damage caused by the so-called millenium bug, or the potential failure of computers to recognise dates after 1999, will be relatively modest, despite the pessimistic predictions by some experts. The report said Europe will expand faster than the USA during the next two years, while Japan’s economy, after contracting 2.6 per cent in 1998, will barely grow during the following two years. The OECD also endorsed political calls for easier availability of money saying central banks in Europe and the USA should cut interest rates to spur their slowing economies. At the same time, it said these countries should not raise government spending or reduce taxes. The OECD said it based its projections on expectations of reductions of at least half a percentage point in interest rate in the USA and Europe by mid-1999. Without an appropriate monetary-policy response to possible setbacks, the report warned, 1999 could be a year of zero growth for the OECD area as a whole. Under such circumstances,
it said, “the USA would experience a recession,
Japan’s economy would continue to contract and
growth in the EU would fall to below 1 per cent.”
(PTI)
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Meridien facelift to cost $ 57m DUBAI, Nov 18 (PTI) — Le Meridien, the United Kingdom’s leading hotel chain, plans to invest at least $ 200 million in the next two years to develop infrastructure in India’s hotel industry. “We plan to invest at least $200 million in India, besides coming up with our own ventures in the region,” Rusell Sharpe, Meridien’s Sales and Marketing Senior Vice-President, told visiting journalists from India. Meridien, which runs a hotel each in New Delhi and Bangalore in a joint venture, plans to open its own unit in Pune early next year. “The Pune venture will set new standards in the hospitality industry in India and the entire structure will be done in Rajasthani style,” Sharpe said. Besides, Meridien was also negotiating five more projects in India, including one in Udaipur, he said. After the Kathmandu venture, Meridien will come up with a villa type unit in Goa. It also plans to set up a hotel in Kochi, where currently the group offers conference facilities to customers. A project is also coming up in Mumbai near Leela Kempinski. “The Delhi hotel is being refurbished at a cost of $ 57 million and Bangalore is also undergoing an uplift at a cost of $ 50 million”, he said. Stating that there was
good scope for construction new hotels in India, Sharpe
said the Indian Government had projected a shortage of
65,000 rooms during its “Visit India Year” in
1999-2000. |
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| PHDCCI CHANDIGARH, Nov 18 (TNS) — A delegation of industry members led by Mr Amarjit Goyal Chairman, Punjab Committee, PHDCCI, met Capt Kanwaljit Singh, Finance Minister of Punjab, yesterday and urged him to withdraw infrastructure cess. It suggested the sales tax structure should be rationalised with not more than four slabs ranging from 2 per cent to 8 per cent as this would lead to better tax compliance thereby improving the state revenues. The chamber pointed out the shortage of ‘C’ forms in the Excise & Taxation Department. ICRA Hi-tech branch Rice millers PNB trust Forex rates US $ Rs 42.46/48 The RBI reference rate was Rs 42.44. Gold weak Godrej |
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