Monday, October 26, 1998
today's calendar
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B U S I N E S S | Monday, October 26, 1998 |
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spotlight today's calendar |
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Advani suggests
‘swadeshi’ globalisation
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‘Cheap imports can
hurt’ SC
clarifies on sales tax |
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Under capitalism, money rules FOR those of us who grew up believing capitalism is the foundation of democracy, market freedom, and the good life it has been a rude awakening to realise that under capitalism, democracy is now for sale to the highest bidder, the market is centrally planned by global mega-corporations larger than most countries, denying one’s brothers and sisters a source of livelihood is now rewarded as an economic virtue, and the destruction of nature and life to make money for the already rich is treated as progress. The world is now ruled by a global financial casino staffed by faceless bankers and hedge fund speculators who operate with a herd mentality in the shadowy world of global finance. Each day they move more than two trillion dollars around the world in search of quick profits and safe havens sending exchange rates and stock markets into wild gyrations wholly unrelated to any underlying economic reality. With abandon they make and break national economies, buy and sell corporations, and hold the most powerful politicians hostage to their interests. When their bets pay off they claim the winnings as their own. When they lose, they run to governments and public institutions to protect them against loss with pronouncements about how the poor must tighten their belts and become more fiscally prudent. In the USA, the media keep the public preoccupied with the details of the President’s sex life and calls for his impeachment for lying about an inconsequential affair. Meanwhile, Congress and the President are working out of view to push through funding increases for the IMF to bail out the banks who put the entire global financial system at risk with reckless lending. They are advancing financial deregulation to encourage even more reckless financial speculation. And they are negotiating international agreements such as the multilateral agreement on investment intended to make the world safe for financial speculators by preventing governments from intervening to regulate their activities. To understand what is happening we must educate ourselves about the nature of money and the ways of those who decide who will have access to it and who will not. The fact that few of us think of the money system as an instrument of control makes it more powerful and efficient as an instrument of wealth extraction. One reason we fail to recognise the seriousness of our predicament is because we fail to see how capitalism is destroying the world’s real wealth. It destroys living capital when it strip-mines forests, fisheries and mineral deposits, aggressively markets toxic chemicals and dumps hazardous wastes. It destroys human capital with substandard working conditions. It destroys social capital when it breaks up unions, bids down wages, and treats workers as expendable commodities, leaving society to absorb the family and community breakdown and violence that are inevitable consequences. It destroys institutional capital when it undermines the function of governments and democracy by buying politicians, weakening environmental health and labour standards, and extracting public subsidies, bailouts and tax exemptions which inflate corporate profits while passing the burdens of risk to governments and the working poor. Democracy and markets are wonderful ways of organising the political and economic life of a society to allocate resources fairly and efficiently while securing the freedom and sovereignty of the individual. But modern capitalism is about using money to make money for people who already have more of it than they need. Its institutions breed inequality, exclusion, environmental destruction, social irresponsibility and economic instability while homogenising cultures, weakening institutions of democracy and eroding the moral and social fabric of society. Though capitalism cloaks itself in the rhetoric of democracy and the market, it is dedicated to the principle that sovereignty properly resides not in the person, but rather in money and property. Under democracy and the market, the people rule. Under capitalism, money rules. The challenge is to replace the global capitalist economy with a properly regulated and locally rooted market economy that invests in the regeneration of living capital, increases net beneficial economic output, distributes that output justly and equitably to meet the basic needs of everyone, strengthens the institutions of democracy and the market, and returns money to its proper role as the servant of productive activity. It should favour smaller local enterprise over global corporations, encourage local ownership, penalise financial speculation, and give priority to meeting the basic needs of the many over-providing luxuries and diversions for the wealthy few. In most aspects it should do exactly the opposite of what the global capitalist economy is doing. Most of the responsibility and initiative must come from local and national levels. Supporting nations and localities in this task should become the core agenda of the United Nations, as the protection of people and communities from predatory global corporations and finance is arguably the central security issue of our time. — The Guardian (Dr David Korten
is President of the People-Centred Development Forum in
Washington State, USA, and the author of “When
Corporations Rule The World.”) |
Advani suggests
‘swadeshi’ globalisation NEW DELHI, Oct 25 — The Union Home Minister, Mr L K Advani today called upon industrialists to evolve a culture that gave no scope for corruption. Addressing members of (FICCI) here today, Mr Advani said that the country should be prepared for globalisation with its feet strongly rooted in swadeshi ideals. Stating that there is direct correlationship between rapid economic development and good security environment, Mr Advani said that there is a considerable degree of national consensus on the need to promote foreign investment in core areas like infrastructure. However, if efforts at attracting investments during the past few years have received an unsatisfactory response, it is because the successive governments allowed the security environment to deteriorate in many parts of the country, he said. Underlining the need for good governance, Mr Advani said that it meant not only good governance by the political executive but also within business and industrial establishments. It is encouraging to observe that the concept of good corporate governance, which is gaining currency, incorporates many thoughts and principles which are central to good governance in the context of running a government, he said. Mr Advani said that
swadeshi should be aided by “suraj” (good
governance), “suchita” ( probity ) and
“suraksha” (security). |
‘Cheap imports can hurt’ NEW DELHI, Oct 25 (PTI) — Planning Commission member Montek Singh Ahluwalia today cautioned the government against cheap imports that could hurt domestic industry. Participating in the 71st annual session of the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Ahluwalia who was Finance Secretary for the past seven years, said the government should respond faster to cases of dumping from abroad. “We should benchmark our procedures regarding dumping to that of other countries, so that we can respond effectively and positively,” he said. Stressing on reduction of fiscal deficit, he said resources had to move from subsidies and unproductive expenditure to issues of social development like health and basic education and individual states had to follow likewise. To implement market tariffs on infrastructure services and assure private sector of a level playing field, the role of regulatory authorities should be strengthened, he added. The National Council of
Applied Economic Research (NCEAR) Director Rakesh Mohan
also urged the government to play a more positive role in
providing basic services, especially in rural areas. |
Apparel mart for Gurgaon TIRUPUR, Oct 25 (PTI) — To enable importers meet their wide range of garment requirements under one roof, an apparel international mart is being set up at Gurgaon, according to the Apparel Export Promotion Council (AEPC) Chairman, A. Shaktivel. The Rs 52 crore project, on lines of the World Trade Centre in the USA with 300 stalls, would serve as a permanent showroom for displaying Indian apparels for the benefit of importers, Mr Shaktivel told newsmen here last night. Saying that 5 acres of land near Gurgaon airport in Haryana, bordering national capital, had already been acquired at a cost of Rs 12 crore, Mr Shaktivel said Rs 40 crore would be mobilised through lease and licence fees from manufacturers willing to establish their stalls. The mart, likely to be completed by turn of the century, would have an exhibition hall, business centre, conference hall and an auditorium. The office of the AEPC would also be shifted to the mart, he said. A high-level committee headed by former AEPC Chairman K.L. Madan had been constituted for the implementation of the project, he said. For instant communication
and information exchange between buyers and sellers,
computers with V-Sat link would also be installed in the
centre, Mr Shaktivel said. |
SC clarifies on sales tax NEW DELHI, Oct 25 (PTI) — The Supreme Court has held that no sales tax was payable on goods imported by a company but sold in high seas before the consignment reached the territorial waters of India. A Division Bench, comprising Justice S.P. Bharucha and Justice N. Khare, gave this ruling in their recent judgement, setting aside an Orissa High Court verdict allowing levy of sales tax in the MMTC for selling in the high seas tin mill black plate (TMBP) coils worth $ 1.9 million to Steel Authority of India (SAIL) after importing them from Korea. The Bench in its 10-page order said: “The facts stated, based upon documents, show that the Bill of landing had been endorsed in favour of SAIL while the consignment of the said coils was still upon the high seas.” “The sale, therefore,
was a sale in the course of the import of the said coils
into the territory of India; it was effected by transfer
of the documents to the said coils before they had
crossed the limits of the customs station at Paradeep
port,” the Bench observed |
IT is shocking that Ratan Tata should go on record saying that “Government policy on aviation has been subverted by vested interests”. Nothing can be more disturbing than this far-reaching statement and it is high time Prime Minister Atal Behari Vajpayee took a dispassionate “look” into it to save aviation and tourism. The government’s decision to liberalise skies might have been hasty, but it was this “illogical” decision which saw to it that the Indian Airlines (IA) woke up from its deep slumber. The competition, although negligible, led to the national carrier setting its “house” in order resulting in that, despite several impediments, it is now keeping afloat. In its success, the opposition from the private operators has died a natural death although a few airlines continue to expand their operations. Experts feel that it is a temporary phase and soon these operators will fly into rough weather because, apart from failing to pay their dues to the government, they have been defaulting in paying to their staff. According to airline experts, it is nothing but fallacy and needless panic that Tata Airlines, if and when it gets the government clearance, will bite into the revenue of the national carrier. Experts feel that the private operators, will be affected while the national carrier will continue to fly higher and higher. IA has steadied because of opposition and it will further steady its operations if there is more competition than has been the case at present. Let there be no dubious assertions. The real, perhaps the only reason, for the Tata Airlines not getting clearance is that governments have been unstable and ministers for aviation have been more concerned about their ego than interest of aviation. When told that Members of Parliament had objected to clearance to the Tata Airlines, Ratan reportedly shot back: Where were they when other private operators were being given clearance? His argument had a lot of force as the governments, for some unknown reasons, have been wavering where the Tatas are concerned but they have been liberal to other private operators. The policy, according to aviation experts, has to be one and not two-prone — one for “favourites” and another for others. While Tatas have been
‘virtually prevented’ from operating in Indian
skies, the fares have gone up four times in five years.
The increase in fares is not mainly because of national
carrier to gain but other “players also to profit by
it”. The game that is being played at government
level is to offer benefits to “minor players”
instead of the national carrier. In this war of
attrition, the paying public is unfortunately the
sufferer.
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Q: What is your esteemed opinion about the long term prospects of Tudor India? — Talvinder Bhinder, Patiala Ans: Tudor India is a subsidiary of Exide Corporation of USA which is the largest manufacturer of automotive batteries in the world. The increase in stake of the foreign collaborators indicates greater commitment to this Indian company by providing better technology to it. Tudor India is engaged in the manufacture of batteries with its present capacity to manufacture 4 lakh units which would be increased to 8 lakh units through an expansion. The company has been recording losses over the years due to a time overrun of more than a year on its project, and consequently, a huge cost overrun. Moreover, considerable time was lost in replacing critical equipment to streamline the production process. However, things are now under control and the company is launching new products like two-wheeler batteries and Valve-Regulated Lead Acid (VRLA) batteries. At present, the company is unable to use “Exide” as a brand name as the same is used by Exide India of Rajan Raheja Group. However, litigation has commenced in the High Court for using the Exide brand name in India, and till such time as the decision is made, the company is selling its products under the brand name “Prestolite”. Notwithstanding the fact that the company is still not out of the woods, its long term prospects look set to improve. Q: Do you recommend an immediate investment in the shares of Voltas Limited? — Balagopal Menon, Chandigarh Ans: Voltas Ltd., a Tata Group company was once the leader in the window ACs segment. The company has not been able to retain its position since liberalisation and has been steadily losing out on its market share. Voltas has an excellent distribution network with dealers in all major cities. The company had the advantage of being a big player in the consumer products segment. However, this has also proved to be counterproductive as it is vulnerable to the recession in the white goods segment as 50 per cent of its sales are forwarded from this segment. The changing ambience has badly affected the company’s bottomline. To combat this crisis it has decided to restructure its strategies and cut costs. It has decided to reduce expenses, use extensive information technology and improve overall on all parameters. It has also decided to make a foray in the unexploited areas like railway coaches where other players had a niche. Hence, inspite of a battered bottomline, one can expect it to emerge out of the current crisis. But, for now, a wait and watch attitude would serve best. Q: Please comment on the prospects of Hitech Drilling in which I hold shares? — Somnath Sharma, Nalagarh Ans: Owing to a significant increase in exploratory activity and an increase in crude prices over the last few years, the rates for rigs have shot up by 100 per cent. Hitech Drilling is engaged in providing drilling and related services. The company has two offshore rigs, Hitdrill-1 and Marine 201. The offshore drilling rig Hitdrill-1 is operating for the ONGC. With drilling activities continuing to move ahead with gusto, getting a contract would not be difficult for the company. The Tata group has a 55 per cent stake in Hitech Drilling while institutions and FIIs hold 7 per cent of the Rs 20.32 crores equity base. The good run for the company is likely to continue for a couple more of years with the management expecting the demand for drilling rigs to remain high both in India and abroad. Furthermore, there could be an improvement in the profitability margins as the level of expenditure on stores, spares and maintenance is likely to come down. Overall, the prospects of this company appear to be quite promising. Q: I am considering investing in the shares of Amtrex Appliances. Can you advise me about its prospects? — Dinanath Chaturvedi, Solan Ans: Incorporated in 1985 as an affiliate of the Sanjay Lalbhai Group, the Ahmedabad based Amtrex Appliances Ltd, is a well based player in the airconditioner industry. The key assets of the company are its innovative technology and a good market position. The company has grown by leaps and bound and now is bidding for the third position in the window split ACs. It has a technical understanding with Hitachi of Japan and covers a range of cooling which extends from 0.75 ton in the window segment to 30 ton chillers. The company first initiated the concept of split AC’s in India and also pioneered wall mounted split AC’s. Since the company does not have manufacturing facilities for compressors, it sources them from Shriram Tecumesh, Kirloskar Copeland and Hitachi. The company has well knit network of 362 dealers which has resulted in 17 percent market share of the company in the window ACs. The company claims to have a market share of 8 per cent in the packaged segment too. On the financial front, the company’s performance has been moderate. Although the company does not have any expansion plan, it is making a beeline for the foreign market. It plans to target the Middle East and West Asian market through local dealers. It is also commencing its operations in Sri Lanka and Bangladesh. Thus the company’s future prospects seem reasonably satisfactory. Q: Do you recommend investing in the shares of BHEL at the present price level? —
Karan Rai, Chandigarh Ans:
While the power and capital goods segments witnessed
negative growth, Bharat Heavy Electricals Ltd (BHEL) has
consistently outperformed its contemporaries. The
capacity utilisation across all segments of BHEL was over
70 per cent during 1997-98. With depreciated plants and a
phenomenal cash generation of Rs 950 crore per annum,
BHEL is in a position to meet its recurring capital
investment of Rs 100 crore per annum over the next few
years, meet annual debt repayments of Rs 140 crore and
even provide suppliers credit. It has bagged a major
share of prestigious orders for centrifugal compressors
and heat exchangers for various refineries. On March 31,
1998, BHEL had an order book of Rs 10,000 crores, of
which fresh orders aggregated Rs 5853 crores. BHEL
expects a turnover growth of 10 per cent during
’98-99 with a matching increase in profits. Notably,
about half of these orders will be executed during
’98-99. Considering these facts, it would be
worthwhile for investors to monitor the share price of
this company closely and pouch it at declines. |
Lupin Lab LUPIN Laboratories Ltd. (LLL) is engaged in the manufacture of pharmaceutical formulations, bulk oral cephalosphrins, rifampicin, cephaloxorins, etc. Its plants are located at Aurangabad and Mandideep. The company also enjoys a strong presence in the anti-cancer and cardiovascular segments. The financial performance of the company has been satisfactory. The company plans to invest as much as Rs 50 crore for global operations and wishes to venture into the world generic cephalosporins, thus planning to modernise the manufacturing facilities of the same. It has entered into an agreement with two companies, Generics (UK) and Fujisawa (US), whereby, LLL will be entitled to receive 50 per cent of the profits of these companies made by the sale of its products. The company has been posting improved performance on the export front over the past few years. The company’s strength lies in cephalosorins and its attempts to venture into the vast global market could prove beneficial. In a very competitive market, LLL has managed to hold its own and is now set to consolidate its position. It appears that the company is headed in the right direction and considering its strengthened presence in the booming pharma industry, its shares merit the attention of discerning long-term investors. Sesa Goa BASED in Goa, Sesa Goa Ltd. (SGL) is recognised as the third largest iron ore exporter and largest in the private sector. The company was in the news recently, when its parent, Finisder International of Italy was taken over by Mitsui & Company, thus enabling the former to gain control of SGL. The company’s products are marketed in Europe, Japan, China. etc. and it also manufactures pig iron through a subsidiary. SGL has a joint venture with an Australian company, Kembla Coal and Coke, through which it manufactures metallurgical coke. On the financial front, the company has fared satisfactorily over the years. While Mitsui came under a cloud owing to allegations of violation of SEBI regulations during its take-over, SGL is expected to benefit favourably from Mitsui’s involvement irrespective of SEBI’s decision. Finally, in the future, the Japanese company has plans of undertaking an expansion of capacities of its Indian arm. To conclude, in view of these factors, SGL appears to be a company with fairly satisfactory long term prospects. Vesuvius India A PART of the Vesuvius
group of UK, Vesuvius India Ltd (VIL) is a leading
manufacturer of continuous castings refractories
(CCR’s) in India. CCR’s are recognised as the
fastest growing refractories in the world. The parent
company enjoys a 56 per cent stake in the company and is
a leader in the world market, with a 70 per cent market
share. It has not been all smooth sailing for VIL.
Commencing production in 1994, the company weathered
tough times with losses in the early years. However, the
company posted a turnaround and has since then been
performing satisfactorily. Demand for CCRs is expected to
increase substantially from the current 3200 tpa to 9600
tpa by 2000 AD because of a shift towards the continuous
casting process of steel making and many steel projects
coming up by the turn of the century. VIL could benefit
from the decreased import duty on one of its main raw
materials. Considering its turnaround performance and
fair prospects, the overall outlook for this company
appears to be quite promising making it worth a look-in
at price declines. |
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NEW DELHI, Oct 25 (PTI)
— The annual rate of inflation fell further by 0.12
percentage points to 8.10 per cent for the week ended
October 10, despite the continued increase in prices of
food articles. During the week, inflation rate, based on
the wholesale price index (WPI), fell to 8.10 per cent
(provisional) from 8.22 per cent (p) in the previous week
and 4.70 per cent in the corresponding week of last year. |
China to study India’s finance plans BEIJING (PTI): China plans to study and emulate India’s successful micro-finance schemes which have played a key role in poverty alleviation programmes in rural areas, especially in the States of Maharashtra and Tamil Nadu. India’s successful micro-finance programmes have caught the attention of China and witnessing these first-hand will give the Chinese side a better understanding of how India is tackling rural poverty, Mr VK Jain, Adviser, World Food programme (WFP), said. The study team will bring back to China the rich experience of Indian rural development and micro-finance projects to international finance for agriculture development (IFAD) and world food programmes (WFP) projects which are being implemented in China. ‘Sin’ taxes KUALA LUMPUR (AFP): After imposing controversial capital controls, Malaysian Premier Mahathir Mohamad is now pinning his hopes on a recession-busting budget to tow the country out of turbulent economic and political waters. Mahathir, who took over the Finance Ministry after sacking his deputy Anwar Ibrahim in September, on Friday unveiled a 1999 Budget which rejects austerity measures prescribed elsewhere by the IMF. In a populist stroke he announced an income tax exemption for 1999 - in reality an adjustment of the tax base year with no revenue loss for the government - and other forms of financial relief to stimulate demand. He raised “sin taxes” on tobacco, liquor and gambling. Obuchi’s vow TOKYO (Reuters): Embattled Japanese Prime Minister Keizo Obuchi has vowed to lift Japan’s economy out of the worst recession in decades and urged citizens to stay calm over the nation’s troubled financial system. Obuchi, whose popularity has steadily been declining since he took office in late July, told a seminar that he will try to put the economy on a recovery track within a year or two. “I will stake the life of my Cabinet on putting the real economy on a recovery path,” Obuchi said. Banks JAKARTA (Pool-Antara): The Indonesian Government is allowing foreign investor to hold a 100 per cent stake in the country’s commercial banks in a move that aims to speed up its economic recovery programme. Under a new banking Bill that has been approved by the house of representatives on Friday, foreign investors will be allowed to control a 100 per cent stake of the country’s commercial banks. New policy DHAKA (IANS): Bangladesh is to unveil a new industrial policy to attract much-needed foreign capital with latest official showing that prospective investors are still shying away from the country. Although the Bangladesh Board of Investment (BOI) has registered proposals worth about $ 4.2 billion from 278 joint ventures between July 1996 and July 1998, the actual foreign direct investment (FDI) to have come in is slightly more than half of this. Trade surplus MANILA (Dow Jones): The Philippines recorded a trade surplus for the third straight month in August as imports continued to decline, but some economists believe signs are emerging that the economy may have hit the bottom. The Philippines posted a trade surplus of $ 144 million in August compared with a deficit of $ 1.02 billion in the same month a year back. In July, the country posted a $ 36 million surplus. Export target BEIJING (PTI): China, the
world’s tenth largest trading nation, has conceded
defeat in its latest attempts to revive its exports
sector in the face of the severe Asian financial
turmoil.The government set a 10 per cent growth rate
target for exports at the beginning of this year, but
this has proved too demanding for the country’s
exports sector, which is seriously weakened by the Asian
currency crisis, the official China daily business weekly
has said.
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| Ghee launched CHANDIGARH, Oct 25 (TNS) — Modern Dairies Limited has launched a brand of pure ghee, Shweta Pure Danedar Ghee. The ghee is characterised by granular form and a rich aroma. It is produced under ISO 9002 quality standards. Telephone
stand Small savings FICCI award |
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