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Monday,
May 27, 2002, Chandigarh, India  
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Second-hand scooters get very cheap Customer: Bhai, mera saat saal purana scooter kine da vik jaauga?
Keep strict watch on spurious drugs
Hold
HDFC Bank shares |
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Revival of IT sector likely
Old IT returns
Tread cautiously
Yamaha
maker dies at 90
‘Common Asian currency possible’
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Second-hand scooters get very cheap Overheard in a scooter market — Customer:
Bhai, mera saat saal purana scooter kine da vik jaauga? (For how much will my seven-year-old scooter sell?) Scooter dealer:
Rate taan laa laange. Pehlaan grahak taan laab layiye? (We’ll fix the rate afterwards. Let’s find a purchaser first.) Readers might find the conversation amusing. No hyperbole. This is the state of affairs in scooter market at present. Call it the invasion of new technology or an era of the pampered chips-off-the-old-blocks, the second-hand scooter market is on the deathbed. Snazzy motor cycles are digging its grave and wily financiers are writing the epitaph. As an outcome, the prices of hand-me-down scooters have plummeted. Hit the rock bottom, you may say. Getting a Priya scooter on the
black-market and a Bajaj Chetak with foreign currency was the talk of the last millennium. Today, a few scooter models have simply vanished from the showrooms, available only if you place an order. Even getting a brand new scooter is no more a bourgeois achievement. Scooter manufacturers, too, have sensed the winds of change and are busy launching motor cycles, relegating this good old hand-geared two wheeler to the background. “Who would buy a second hand scooter when a customer can get a new one on easy loans and instalments. The cut-throat competition in the finance market has seen to it that no scooter loan goes for more than 13 to 14 per cent flat rate of interest,” says Sumit from a scooter agency. “Why scooters? Even second hand cars are going cheap just because of this phenomenon,” he adds. Most of the two-wheeler purchasers prefer motor cycles to scooters because of high average per litre of petrol of the former. Almost all 100 cc mean machines promise 70 to 80 kmpl while scooters are not crossing the 60 kmpl mark. Taru, a collegiate, who picked up a second hand mobike from a scooter market quotes a different reason. “Oh! Scooter is a Bau (office-goers) vehicle. I preferred mobike over scooter because of its ‘Yankee’ looks,” he says. Ditto for Nitin, another graduation student. His father purchased a second hand scooter for him so that he could go in for tuitions and attend college. Still, he prefers to wait for his elder brother to return home and then he stealthily takes away his Honda CBZ leaving his fuming father, elder brother and a scooter, that is gathering dust, behind. Praveen a.k.a. Raju, a seasoned mechanic who has seen the ups and downs of the scooter market, thinks that second hand two-wheelers are now being purchased either by students or not-well-to-do category. The former category is opting for the motor cycles while the latter category has created a sort of price barrier. Hira Lal, a scooter dealer-cum-mechanic is bewildered. “I am at a loss to understand why second-hand scooter market (and his business) is not doing well. Scooters are easily repaired, they usually come with stepney, cheap spares and are dependable. Still, people are not picking them up from the hand-me-down market,” he says and confides that his commission from the sale of such vehicles has come down to just Rs 1,000 per month from Rs 5,000 that he used to earn till two years ago. Nidhi, an electronics company employee, views this more philosophically: “Either you ride the winds of change or you get under it. The new two wheelers are coming with new technology. Why not wait for a few months and purchase a new one, altogether, than going in for old-fashioned things. Kick-starts are obsolete now,” she declares with air of snobbery. Market analysts say a good second-hand scooter remains a wise bargain. It carries lot of features that a mobike doesn’t. The second-hand market is brimming with them and they are waiting to be purchased. All the market lacks is prudent buyers.
*Depreciation rates may vary depending on the condition of the scooter *Rates as prevalent in Chandigarh scooter market
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by Pushpa Girimaji Keep strict watch on spurious drugs Whether you are buying an analgesic or an antibiotic, an antacid or a steroid, you cannot overlook the possibility of the medicine being spurious. This is the highly disturbing conclusion that one can draw from the recent police raids on three medicine manufacturing units in Delhi, Haryana and Uttar Pradesh. In fact what was really frightening about the raids was the magnitude of the trade in fake medicines that it uncovered. There were duplicates for a wide variety of commonly used medicines of well known manufacturers, many of them, over- the-counter drugs bought without a prescription and most likely, without a bill. And the quantity seized was equally shocking- 662 kg of finished medicines and 1000 kg of raw materials. Externally, the fakes resembled the originals so closely that it was impossible to detect the fraud. But the content was vastly different from the original — the major ingredient in most of them being powdered chalk or starch. Besides their failure to treat the condition for which they are consumed and the consequential threat to health and life, these medicines could well be the cause of fresh health problems. And according to the police, these medicines were distributed and sold in West Bengal, Assam and Bihar, besides Delhi. If one puts together pieces of information on spurious drugs reported from different parts of the country, the alarming picture that emerges is that the menace is not restricted to one or two states, but is quite widespread. In November last year, for example, the drug control administration in Andhra Pradesh had unearthed a spurious medicines racket and seized 25,000 samples of an antibiotic manufactured and sold in the name of a reputed company, besides large quantities of an injection prescribed for pregnant women. The officials had told the media that in the previous six months, out of 2000 samples of drugs tested in the state, 94 were found to be spurious. And in the previous six years, 1081 different spurious drugs had been detected in the markets of Andhra Pradesh. Similarly, about two months ago, the minister of State for health in Haryana had told the legislative assembly that during April to December 2001, 32 samples collected from chemists, doctors and manufacturers in the State were found to be spurious. On November 21 last year, replying to questions on the subject from seven members of Parliament, the Union Health Minister, Dr
C.P. Thakur admitted that spurious drugs faking the names of reputed companies were being sold in most of the States in the country. On the measures being taken to curb the problem, he said the state governments had been advised to provide adequate enforcement machinery and drug testing facilities and to keep a strict watch over inter-state movement of spurious drugs. In addition, he said, the state drug controllers had been advised, among others, to (a) constitute or reactivate state drug advisory committees and ensure representation of associations of consumers as well as trade and industry on them. (b) establish separate intelligence-cum legal machinery with police assistance, (c) train select officials in the modalities of intelligence work, prosecution in respect of spurious drugs, (d) ensure speedy analysis of drug samples by establishing state level drug testing facilities, (e) develop efficient communication facilities and recall procedures and (f) undertake surveillance of suspected dealers. These are all good suggestions, which, if implemented diligently, can curb the menace. However, they do not tackle the basic problem that state governments say that they face.-lack of funds to provide adequate staff and testing facilities. In order to overcome this, and launch a concerted drive to eliminate spurious drugs, state governments need to involve universities and educational institutions. Laboratories in universities and select educational institutions, for example, can be upgraded to provide for drug testing facilities. Since a war on spurious drugs would also benefit pharmaceutical companies whose brands are being imitated, funds required for improving these laboratories could be sought from the industry. And students can be engaged in surveillance work as well as collection of samples and even testing them. In fact some of the colleges and universities in the country have expressed their willingness to take up such work that would not only benefit the community but also give their students some practical training and education. Governments should immediately take up such offers and work with universities, teachers and students. Coming back to the recent raids, the government will prosecute all those involved, under the Drugs and Cosmetics Act, but that is not enough. A consumer group or a group of consumers should file a class action suit before the consumer courts constituted under the Consumer Protection Act, demanding compensation to consumers who have been sold such medicines. If it is not possible to identify the consumers, the compensation amount should go towards a consumer welfare fund that can be utilized for setting up state-of-the art drug testing laboratories. Under the Consumer Protection Act, even the government can file such a complaint before the consumer court on behalf of consumers. Social boycott of those found involved in manufacturing, distributing and selling such medicines is also essential. |
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Hold HDFC Bank shares Q: How safe is an investment in HDFC Bank? — Vijaypal Singh, Amritsar Ans: The bank has a retail base of 2.2 million customers. It has increased its branch network to 171 (131 branches as on March 31, 2001) and the automated teller machine network to 479 from 207 at the end of last fiscal. HDFC Bank is among the top three in key segments like car loans, personal loans, loans against shares and the market leader in debit cards, demat accounts, cash management services. For the fiscal ended March 2002 sales were Rs 2036.2 crore, PBIDT was 73.6 per cent, net profit was Rs 297 crore and the EPS was Rs 10.6. The company appears to be one with very good fundamentals and holding on to this scrip could prove beneficial. However, considering its valuations, fresh investment could ideally be considered at declines. Q: Should I stay invested in Trent? — H. Suraj Rathee, Shimla Ans: Trent was formed after the erstwhile Lakme sold its cosmetics brand to HLL. With large cash inflows and sensing the growth potential in organised retailing, Trent entered into retailing sector by taking over 100 per cent equity of Littlewoods International (India) from British retail store Littlewoods International. Trent owns large format speciality stores, named “Westside”, the branded lifestyle store, having its own range of products. Trent’s rationale for its in-house developed brand retain model is primarily better margins. Food and groceries account for the lion’s share of the retailing business in India, but are dominated by the ‘unorganised’ sector. For the fiscal ended March 2001, sales stood at Rs 41.9 crore, PBIDT was 26.7 per cent, net profit was Rs 8.9 crore and the EPS was Rs 6.1. For the quarter ended December 2001 sales were Rs 24 crore, PBIDT was 13.8 per cent and net profit was Rs 2.5 crore. Trent has got all bases covered and therefore, holding on to its shares could prove remunerative in the long run. Q: Do you recommend investment in GNFC? — K.Rudra Kumar,
Ferozepore Ans: The principal activities of the company are manufacturer and sale of fertilizers such as urea, ammonium nitro-phosphate and calcium ammonium nitrate; chemicals such as ammonia, methanol, formic acid, acetic acid, nitric acid, ammonium nitrate melt, and electronics such as digital switching systems and printed circuit boards. The company has invested substantially in a broad-band network and also made a foray into information technology. GNFC has received an ISP licence and is in the process of establishing earth stations for Internet gateway and connectivity. The company is also looking for strategic alliance in software services. It has entered into strategic alliance with US-based TIW systems for satellite communications technology development. The government policies on fertiliser do not have much impact on the revenues of GNFC as controlled fertiliser has only 27 per cent contribution, the rest being put in by decontrolled fertiliser and chemicals. With strong financials and a diversified business presence, the company is seen as likely to attract several suitors whenever it is put on the block. Overall, the scrip appears to be a fairly good bet. |
Revival of IT sector likely “Like any other ambitious young man I used to dreams of joining the civil services as it promised status power and most of the things you would desire. In fact there was a reason to it as my sister had topped in the Civil Services among the women. I did my M. Phil in Geography and went ahead for the Ph. D to get a deep insight into the subject to enable me to perform better in the examinations”, says Mr Navsher Singh Nain, Managing Director of Netland Information Private Limited, a leading Information Technology company. Mr Nain goes on to say “However, life had something else in store for me. I decided to give up the pursuit for Civil Services and instead got interested in Information Technology, which was just coming up in our country in 1993”. It was a time when the IT boom was not at its best. The IT concept was still in its formative phase. There were very few institutions offering IT training and that too at a very high cost. And not many people would come forward to learn computers, as they were hardly aware of its importance. I, therefore, decided to take the plunge. Initially I started with a bank loan of Rs 12 lakh only and applied for the Aptech franchise and by the grace of God I never looked back since then. Today, I have six Aptech training centres, four in Ludhiana, two in Ferozepore, besides the Netland Information Private Limited, which specialises in software development. Until last year, before the slow down in the United States the company turnovers touched Rs 4 crore, but recession in the US has affected the software development and this year the turnover are expected to drop by about 40 per cent to around Rs 2.5 crore. One of the secrets of my success has been the core team of six odd people who have stuck with me from day one. I feel proud to claim that I have been successful enough to establish myself in this world. But the success did not come ordinarily. In fact it never does, needless to say, it required a lot of hard work and a lot more perseverance. Because, things do not work always according to your expectations. They can go contrary as well and sometime they do. But you need to hold your foot down and emerge stronger.
Some observations
Talking from my experience, I think that any first generation entrepreneur should try to ensure that he is thoroughly trained in management skills. In fact it is a lifelong learning process. But there is a need for some sort of formal and well-defined approach. Then it is your vision, which helps you to grow. And not just the first generation entrepreneurs, in fact everyone in business should have firm and strict financial control. I implemented what I had read about Bill Gates and recruited every person in the company upto the peon level myself.
Future trends
I believe that web designing and software development has a lot of scope in India. There is a great demand for web designing and software development abroad. Given the cheap labour available in our country, there is all likelihood of this area achieving a phenomenal growth. Although there is a general perception that the IT bubble has burst, but I don’t believe that it will remain so for ever. The IT industry is likely to revive within six months or a year. I foresee a major revival in the IT sector once again, because there are a lot of diversified things and projects. I think networking will emerge as a major section, besides hardware and software servicing. In fact it would not be any exaggeration to conclude that India may be only next to the United States in computer networking. Besides, software development is still growing in India. The computerization in industry is far from complete. So far even in major companies there is not total computerisation and only certain sections are computerised. It will come down to the small business and day-to-day routine also. Most small businesses are involved in Entrepreneur Resource Planning (ERP) for the purpose of cost cutting, sales, inventory, etc which is also a solution to the industrial recession. Since computerisation in the small industry has just started, the IT has a tremendous scope.
Future plans
My future plans included, getting into the major developmental projects for the country and also abroad. I am also planning to set up call centre operations in Mohali, besides consolidating the gains already made in the training industry. I am quite optimistic about the IT talent available in India. Some of our big cities like Hyderabad and Bangalore are identified with the IT only and Chandigarh is also emerging as a good IT centre. (As told to Naveen S. Garewal) |
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R.N. Lakhotia Old IT returns Q: I am 88 years old and handicapped. With great difficulty I get my IT Return filled and delivered. Once acknowledged I should not be compelled to keep the old returns and documents for more than two years. Guidance solicited. —
H.R. Bagga, Chandigarh Ans: You should keep you old records for the last six years to avoid any problem at a future date.
Senior citizen Q: I am a senior citizen aged 73. I retired from the State Electricity Board in August 1986. I am getting my pension since then. In addition I am getting some pension from abroad since I worked on part time basis for sometime due to being 100 per cent handicapped there during my part time job. The pension is received since 1/97 in Indian rupee through the bank after tax deduction if due according to the Rules and Regulation of that company. The pensions amount is so small that 0 per cent tax card is issued. (1) Kindly advise whether the amount of pension so received on being the 100 per cent handicapped is to be added in my pension income received through my State Electricity Board from where I originally retired? (2) What is the limit of tax rebate to the 100 per cent handicapped person (permissible since 97-98 to 2001-2002
yearwise) in India. (3) I am regularly submitting my I.T. return to
I.T. Deptt. on receipt of Form 16-A (Statement of pension) from the
S.E.B. — N.L. Gulati Ans: There is no special tax exemption in respect of pension income derived by persons who are handicapped. However, as per section 80U deduction would be permissible upto Rs 40,000 in computing the total income of an individual who suffers from permanent physical disability. Please go through in detail the provisions of the Income-tax law as contained in Rule 11D which defines the quantum of permanent disability to be eligible to claim the said tax
benefit.
TDS on interest Q:
What is a bank’s modus operandi with regard to TDS on bank deposit total interest Rs 6700 in a year? — S.S. Bhat, Ludhiana Ans: The bank will deduct income-tax at source @ 10% + surcharge @ 5% on
I.T. on total amount of bank interest paid to you in a year.
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Tread cautiously Following Prime Minister Atal Behari Vajpayee’s statement on Thursday that ‘the skies are clear though sometimes lightning can strike,” the market staged a comeback on Friday, after eight straight sessions of losses, ending on an optimistic note for the week. The Sensex ended with a loss of 78.14 points or 2.3 per cent for the week to settle at 3,255.62, from the previous week’s close of 3,333.76. The Sensex had shed nearly 10 per cent in the previous eight trading sessions and was ripe for a bounce. The market had absorbed leverage sales position and the selling pressure had eased considerably. Infrastructure sectors had notched up substantial growth during April 2002. Then attractive current valuations saw the buying emerge at lower levels. Firm US markets also added pep to the techs.
PSUs continue upmove The PSU stocks saw renewed buying interest. According to reports, the Cabinet Committee on Disinvestment will meet in the first half of June to chalk out the schedule for the divestment programme. Divestment of HPCL and BPCL will also figure in its discussions. HPCL was up 6 per cent at Rs 274 while BPCL gained three per cent at its week’s close of Rs 281.
IPCL Petrochemicals major IPCL got a boost from aggressive bidding for the government stake by Reliance Industries (RIL). IPCL gained 16.8 per cent last week to settle at Rs 155.10 from the previous week’s close at 132.70. On May 18, 2002, the government cleared RIL’s bid for acquiring 26 per cent stake in IPCL at a price of Rs 231 per share — a huge 74 per cent premium on IPCL’s ruling price of Rs 132.70 on May 17, 2002. IPCL is a leading petrochemicals company. Its business comprises polymers, synthetic fibres, fibre intermediates, solvents, surfactants, industrial chemicals, catalysts and
absorbents. Backed by a strong research centre and product application and technology management centres, the company is continuously innovating its processes and products. After acquiring the Centre’s 26 per cent stake, Reliance will now have the right of refusal over the remaining 25 per cent government equity (the Centre had 51 per cent stake in IPCL before disinvestment). Coming to financials, the third quarter IPCL posted a 17.05 per cent decline in the profit to Rs 19.22 crore compared to Rs 23.17 crore in the corresponding period of the previous year. Net sales dropped by 8.13 per cent to Rs 1,072.73 crore. Given the financials, the current valuation and the bid price of Reliance looks stretched. But given the fact that RIL is giving an open offer for another 20 per cent stake in the company at Rs 231 per share the investors can buy the stock in small lots for a decent return in a short period.
Coming fortnight The market ended the trading session last Friday on a firm note on the back of a strong pull back in index heavyweights. Reliance Industries, Infosys and HLL were responsible for 75 of the 141 points notched up by the Sensex. Volumes were high and the market breadth was positive. The current rise in the market is a corrective one and trading on the long side should be undertaken with strict stop losses. In case the 3275 level is surpassed, the Sensex will face resistance in the 3290-3310 range. The market could see some upside from current levels. So we may tread cautiously. |
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Yamaha maker dies at 90
Tokyo, May 26 Genichi Kawakami, who died yesterday, took over his father’s company in 1950 and developed it into the world’s largest maker of pianos, reports said. The company also developed electric organs, including the “Electone.’’ Under Kawakami’s leadership, the company went into motorbike production in 1954, a project that was later spun off as Yamaha Motor Co, now the world’s second largest manufacturer of motor-cycles. Kawakami had been in hospital for some months prior to his death, the media said.
Reuters
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‘Common Asian currency possible’
Beijing, May 26 Such currency swap arrangements were needed to head off future currency fluctuations since other measures, such as improved liquidity at the International Monetary Fund, were not enough, Haruhiko Kuroda, Japan’s top financial diplomat, told an Asia-Pacific Economic Cooperation forum in Beijing. “In light of the experience that the Asian currency crisis quickly spread to
neighbouring countries, regional financial cooperation is a logical way to proceed in preventing, managing and resolving a crisis,” Kuroda said. Still recovering from the 1997-8 regional financial crisis, Asian nations have struck six bilateral currency swap deals — five involving Japan — as part of the Chiang Mai Initiative that aims to have the central banks of 13 countries exchange currencies as needed. In a related development on Sunday, a South Korean finance official said Seoul hoped to sign a currency swap deal with Beijing next month.
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LUDHIANA: He looked ahead to foresee future and succeeded.