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Monday,
June 18, 2001, Chandigarh, India  
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CAG: 87
PSUs accumulate Rs 37,970 cr loss
Indo-China
trade set to cross $ 2 b |
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Few
takers for sewing machines 10th
Plan strategy to be firmed up Mittal
says no to aggressive bidding Stone of
coop bank laid Hafed
godowns for farmers Green
house for Ludhiana
Reshuffling
may delay AI selloff
Infosys,
Wipro likely in options list
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CAG: 87 PSUs accumulate Rs 37,970 cr loss
New Delhi, June 17 “An investment of Rs 6,162.92 crore in the equity capital of 87 companies under 19 ministries and departments has been completely eroded as on March 31, 2000, as a result of losses accumulated by these companies,” CAG said in a recent report. Companies where capital erosion was over Rs 50 crore include Fertilizer Corporation with an accumulated loss of Rs 5,904 crore, Hindustan Fertilizer (Rs 4,193 crore), National Jute Manufacturers Corporation (Rs 2,137 crore), National Textile Corporation (MN) Ltd (Rs 1,222 crore), Heavy Engineering Corporation (Rs 1,152 crore), Hindustan Photo (Rs 1,147 crore), Hindustan Shipyards (Rs 1,071 crore), Indian Drugs and Pharmaceuticals (Rs 1,022 crore). Major PSU companies whose accumulated losses were less than Rs 1,000 crore but had eroded government equity include Cement Corporation (Rs 975 crore), Indian Airlines (Rs 559 crore) and IISCO (Rs 430 crore). “Net worth of these companies at present is negative and recovery of all the loans given by the government and other agencies to these companies has become doubtful,” CAG said. The total Central Government loans outstanding against these companies amounted to Rs 9,467.14 crore as on March 2000, it said. Of the 87 ailing companies, CAG said 58 companies have been already referred to the Board for Industrial and Financial Restructuring (BIFR). “Out of the companies referred to BIFR, a revival package had been approved only in case of 18 companies. Of these, action for revival as recommended by the BIFR has been initiated in 12 companies,” CAG noted. Of the remaining 40 PSUs, cases in respect of 38 were outstanding with BIFR for more than five years and cases of two were similarly outstanding for more than three years, it said. According to the CAG report, the maximum number of companies that have eroded government equity belong to the heavy industry followed by textiles, chemicals and petrochemicals, fertilizer, and tourism ministry. The accumulated losses by the 87 companies increased to Rs 37,970 crore in 1999-2000 from Rs 36,609 crore in the previous year and Rs 33,055 crore during 1997-98, it said. Accumulated losses grew in the three years despite increase in loans to Rs 9,467 crore in 1999-2000 as against Rs 8,087 crore in 1997-98. The net worth — measured in terms of paid-up capital plus reserves minus accumulated losses and miscellaneous expenditure to the extent not written off — of the 87 companies declined from negative Rs 26,938 crore in 1997-98 to negative Rs 31,481 crore, it added.
PTI
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Indo-China trade
set to cross $ 2 b Ludhiana, June 17 A study conducted by the Engineering Export Promotion Council of India says there’s a growing interest of Chinese businessmen in India and many companies are setting up liaison offices in India and are jointly executing projects in steel and mining sectors. The study observes that due to its size, trade patterns and political inclinations, China has been relatively unscathed by the financial crisis which began in Southeast Asia in 1997. The regional crisis has affected China primarily at the margin, mainly through decreased foreign direct investment and a drop in the growth of its exports. However, China has huge reserves, a currency that is not freely convertible and capital inflows that consist of long-term investments. For these reasons it has remained largely insulated from the regional crisis and its commitment not to devalue its currency has been a major stabilising reform, fearing an increase in umeployment and accompanying social instability. China has experimented with decentralisation of its foreign system and has sought to integrate itself into the world trading system. As part of China’s negotiations for accession to the WTO, the country has significantly reduced import tariffs. The release of trade rights has allowed a great number of private enterprises to engage in imports and exports independently, the report points out. The report says there is a scope for exporting automobile parts to China. The development of China’s automobile industry brings about not only challenges but also market opportunities to foreign automobile manufacturers. The domestic automobile industry can hardly ensure that some kind of parts can be adequately supplied, also, some home made parts cannot fully satisfy the technical requirements. The growing demand of domestic automobile manufacturers can only be met with the imports. At present, the import tariff for automobile parts is lower than that for the whole vehicles, which is favourable to the expansion of trade in automobile parts. The report points out that in view of the fact many places of China have tightened the requirements for environmental protection in the use of vehicles, there will be a long-term growing demand for the equipment related to emission control such as electrostatic spray unit. The report further mentions that there is scope for export of steel products to China. The annual steel output of China is above 100 million metric tonnes, which is among the highest in the world. The annual consumption of China’s steel market also amounts to approximately 100 million tonnes. Because of the lack of production capacity for certain varieties of steel and also some special grades to meet the needs of customers, China imports some steels, such as cold-rolled steel, galvanised steel, tinned steel and stainless steel. With the rapid growth of such products as sedan cars and household electrical appliances in China, the market of imported high grade and high quality steel will further expand. The machine tools too have a big scope for export to China. Presently, among the imported machine tools, the metal forming machine tool takes the biggest share in the import value, followed by lapping and polishing machines, then drilling, boring, milling and tapping machines.
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Few takers for sewing machines Ludhiana, June 17 The industry bigwigs are worried about how can they compete with cheap imports when the raw material and labour costs are rising. There are about 175 units in the country producing about 18 lakh machines worth Rs 150 crore for the domestic market. Machines and their parts worth Rs 5 crore are also exported to Bangladesh and some African countries. At least 75 per cent of the total units in the country are concentrated in Ludhiana, Batala, Bassi Pathana and other small towns of Punjab. The other units are in Delhi, Calcutta and Jammu. The industry in the city alone is providing employment to more than 25,000 persons directly or indirectly. The most famous 15 K model produced, is a hand operated machine used mostly by the lower middle class in urban and rural area. The machine is usually purchased by the household at the time of marriage. The tailors also use hand operated and electric motor operated machines for sewing clothes. The life span of the machine is anywhere between 10-15 years. Regarding the present state of affairs, Mr D.S. Dhiman, Chairman, Punjab Sewing Machine Industries, says, ‘‘About 60 per cent of the market is served by the large scale units such as Usha and Singer, the remaining share is mostly in the hands of small scale units. The cost of production in the past few years has gone up affecting the profit margin. The cut throat competition has forced them to keep the price at the lowest level about Rs 850 per piece.’’ Mr B.S. Sangha, General Manager, Research and Development Centre for Bicycle and Sewing Machine, says, ‘‘The industry has failed to modernise in the past decade though number of new models and methods have been developed by the centre. What the industry is trying today, should have been done a decade ago.’’ Mr Dhiman agrees that they have failed to built up any brand name by investing in modernisation like the cycle industry. He says,‘‘Most of us are just working for the big units who are not ready to modernise.’’
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10th Plan strategy to be firmed up
New Delhi, June 17 Planning Commission Deputy Chairman K. C. Pant will have detailed discussions with the Finance Minister Yashwant Sinha soon after Sinha’s return from United States in the middle of next week. The crucial meeting is being held in the backdrop of the draft approach paper for the Tenth Five Year Plan (2002-07), which was released recently to elicit views from experts on the strategy for pushing up annual growth to 8 per cent. Planning commission sources said the falling tax-GDP ratio has been a major concern of the government even though it had improved marginally to 9.2 per cent in 2001-02. The Tenth Plan proposes to raise it back to at least 11.7 per cent by 2006-07 in a bid to reduce the fiscal deficit from the present level of about 5 per cent of GDP to about 2-2.5 per cent of the GDP by the end of the Tenth Plan in 2007. Though the big ticket disinvestment is yet to take off, government is confident that it would be garnering much higher receipts in the coming years as the groundwork has been completed for privatisation of 27 PSUs. In an effort to carry forward the tax reform, the meeting would explore the scope to extend value added tax to both goods and services. Government had introduced uniform Sales Tax last year as part of the efforts to introduce Value added tax system by April, 2002 throughout the country. Sources said despite government being unable to achieve disinvestment targets for the last two years, it proposed to raise the target to Rs 16,000 crore annually to mop up around Rs 80,000 crore during the 5 year plan in a bid to retire some of the high cost debts. They said government would work for early passage of the fiscal responsibility bill as fiscal consolidation was implicit in the legislation. Falling investment, particularly in agriculture, has been one of the areas of concern and the commission proposes to evolve strategy to push up investment ratio from the present level of 25 per cent to 35 per cent per annum during the Five Year Plan period. The meeting would also discuss the issue of raising Gross Budgetary Support to the plan by one per cent to 5 per cent of the GDP. As part of expenditure control the meeting would strive to formulate measures to downsize Central Government employees by about three per cent per annum as mooted by the Fifth Pay Commission.
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Mittal says no to aggressive bidding New Delhi, June 17 “We will definitely bid for 8-9 circles in the forthcoming bid. Our focus will be bidding for at least two circles in each region,” Sunil Mittal, Chairman and Managing Director of Bharti Group, said while emphasising that he was not in favour of aggressive bidding as it could have long-term impact on the company’s financial performance. Tentatively, the company has decided to go for Gujarat, Mumbai and Maharashtra in the Western region, Kerala and Tamil Nadu in the Southern region and Haryana, Punjab and Uttar Pradesh (West) in the Northern region. “We are bidding for nine circles and we hope to win about five circles,” he added. Bharti is already offering cellular services under ‘AirTel’ brand name in the circles of Delhi, Andhra Pradesh, Karnataka and Himachal Pradesh besides offering basic services in Madhya Pradesh. Bharti has also applied for basic services licence in almost same circles, Mittal said, adding that having both types of services in a circle was a long-term strategy of the company.
PTI |
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Stone of coop
bank laid Jhajjar, June 17 Laying the foundation stone of the building of the Jhajjar Central Cooperative Bank, with an estimated cost of Rs 1 crore, Chief Minister Om Prakash Chautala said the bank will provide loans to villagers and unemployed youths to help them in adopting new technologies in the field of
agriculture and also launching their own occupation. Mr Chautala said turnover of the cooperative banks has now reached up to Rs 3,500 crore from Rs 8 crore when Haryana came into existance. The three-storey building of the bank will be completed in six months. He, later, launched a website in the name of Jhajjar that is
http://www.jhajjar.nic.in.. |
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Hafed godowns for farmers Chandigarh, June 17 Giving this information here today, a spokesman of Hafed said that on the basis of storage receipts issued to farmers, they would be able to draw loans or advances from the commercial banks to cope with their financial needs. In addition to dry warehousing, Hafed was also providing wet warehousing services to farmers in its cold storage at Shahabad, Taraori and Hisar where 11,000 MT space was available for perishable produce like potatoes, apples, organges, chillies and eggs, he said. He said that it had decided to construct warehousing-cum-cold storage complex at Delhi to meet the requirement of warehouses facilities in terminal market of Delhi. The spokesman said that the increased warehousing facilities at Delhi would be utilised for marketing of hafed commodities like rice, wheat, mustard oil kachchi ghani, mustard refined oil, cotton seed refined oil and barley malt. The cold storage at Delhi would be utilised for storage of dry fruits, karyana items, groceries, fruits, vegetables and eggs. This would help in diversifying the activities of Hafed to achieve more value addition and also provide better prices to the farmers for their produce.
PTI |
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Green house for Ludhiana Jaito, June 17 The Israel company will invest 24 per cent while 76 per cent will be invested by Markfed, this was told to PTI by Jagdish Singh Walia, Chairman, Markfed here today. The Chairman felt proud to launch its first custom hire basis operation of paddy transplanters through a well known technology for sowing paddy seedling through mechanised method. It is a well-known fact that such paddy transplanters are being used by the advanced countries to get increased production from the field which can reach to the level of 3 qtls. per acre. The quality of rice produced is also very good as proper nutrition to the plant is available from the soil, fertiliser and air.
PTI |
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by K. R. Wadhwaney Reshuffling may delay AI selloff With politicians and bureaucrats on different wave-length, the problems of Air India continue to multiply instead of reducing. There are personality clashes which affect the smooth functioning of the airline. There are corruption charges against some senior officials, two of whom have since been suspended. The plea for suspension is that the probe should be made without any hindrance. There are unseeming controversies over bilateral rights and ground handling rights. These controversies could have been avoided if the subjects were addressed meticulously. Amidst these problems, employees of some of the unions have tried to raise their head. There are only two bidders left in the fray but the disinvestment process may be delayed if the ministers’ reshuffle comes about in the next 2-3 weeks. According to aviation watchers it is better to defer the process instead of under selling. Why should, Maharaja, be devalued for no fault of his? Indian Airlines is in no better position than Air India. It has, however, much less bickerings within the organisation than has been the case with Air India. The suspension of the Michael Mascarenhas has aggravated the situation. He had only six months left to retire after 30 years of service. The Ministry could have handled the situation more judiciously instead of inviting negative publicity at the time Maharaja is on sale. Theme-song Regarding potential of tourism in this country, Tourism Minister Ananth Kumar stressed the need to correct the inaccuracies and poor image prevailing in the region. “We must also redress the image of instability and lack of safety which are prime concerns of foreigners”, he said. Air India’s scheme To say ‘thank you for choosing Air India verbally and non-verbally” is one thing but display warmth to passengers is another. There was time when Air India officials cared for carrier’s image, reputation and served passengers with care and dedication. The airline’s service on board the aircraft was second to none. Now cabin crew does not display similar keenness and commitment in handling passengers. |
rc
Wrong number The grapevine has it that with Hughes Telecom making sustained progress into MTNL’s areas of Domain in the metro of Mumbai, it will not be long before FIIs begin another round of selling at the counter of MTNL. But can one hear someone whispering about Reliance Telecom? Shhhhh.........
Costly report While the FIIs and some analysts waxed eloquent about the ‘designer’ Annual Report put out by Polaris Software this year, a veteran BSE broker has been wondering aloud how much higher the dividend payout to shareholders could have been had this ‘designer’ annual report exercise been avoided. Food for thought!
Hardly safe ICICI is back in the market, this time with an even larger Rs 400 crore bond issue. Given the state of the economy and the limited investment avenues available in the Indian markets, there seems to be considerable doubt where this huge sum of money will be deployed. And to think ICICI has reportedly embarked on a Balance Sheet cleansing exercise.
Bitter pill What’s cooking at Glaxo’s counter? After a furious selling spree by some FIIs there has been some bottom-fishing too by another set of FIIs. There definitely seems to be two schools of perception on the company’s financial figures and forecasts. Time will tell who will have to swallow the bitter pill.
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by J. C. Anand Infosys, Wipro likely in options list This fortnight will mark the end of an era in the history of Indian stock market. The traditional badla system of forward trading will disappear yielding place to options trading and delivery-based rolling system. All outstanding positions acquired after May 15 will have to be compulsorily liquidated. Arbitrage opportunities will disappear to a great extent as there will be a uniform settlement day for all stock exchanges. Forward trading will be restricted to options trading in the derivatives for equity shares. An interesting aspect of the new system will be an almost complete segregation between the investment-based transactions and forward trading. Do not expect any sudden and unexpected flare-ups or downward plunges in the share prices under the new system. Do not expect that Satyam will jump overnight from Rs 4,200/- to Rs 5,100/- and then to Rs 6,200/- on the next trading day, as it happened some months back. Forward trading in options will not fuel market prices of shares which are in the rolling settlement to the extent that it did in the past. Conversely, the corporate performance in delivery-based shares may deeply influence forward-traded derivatives. The traders under the new system would be aware of the extent of risk involved in the “long” and “short” positions taken in the options trading. It is yet not clear which shares are likely to be selected for options trading. SEBI, as usual, is slow in taking its decisions on vital matters to the detriment of the stock market. One report puts the number at 15 to begin with. Another report puts it at about 30. The shares of the following companies are likely to be included in the options list: Infosys, Satyam, Wipro, Reliance, Reliance Petro, Larsen and Toubro, ITC, Global Tele, Grasim, Hindustan Lever, TISCO, Dr Reddy, Nestle and two public sector giants. There is no doubt that trading volumes will fall and it will take a long time before this business picks up. In South Korea, for instance, the options trading was mooted in 1998 and it took two to three years before the business boomed. Many analysts believe that it will take at least one-and-a-half to two years for a similar transformation to take place in our country. In this column last fortnight, it was stated that the market would drift lower in June. In fact, during the last fortnight, the Sensex lost 5.10 per cent, and out of the 10 trading days the market made minor gains only on two days. This is not surprising because no trader is interested in taking up any new position in the market. The investors are keeping away because they expect the market to go down further. Uncertainty and the novelty of the new system are also dampening investor’s interest in the market. I am of the considered opinion that the investors should keep away from the market at present. Apart from the teething troubles of the new system, the economy is in a poor shape. The automobile sector is so sick that some of the top companies have cut down their production by observing only the 5-day week. The results of the Telco are the worst. Even otherwise, the industrial growth rate has come down to 2.5 per cent during the current months. After July 15, the first quarter results of the corporate sector will be announced and there is little doubt that except for some top ICE companies, these results will be disappointing. Under the present circumstances, it is best to remain cash-rich and avoid any investment buying. Strike when the market is attractively low for investment purposes.
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Inflation static FII net buyers Award for Coke Complex in Shimla |
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