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Thursday,
July 4, 2002, Chandigarh, India  
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Xerox Modicorp faces probe
PFC blames Punjab Govt for losses
CM for developing new citrus varieties
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Steel price hike to hit industry
Buffer stock scenario gets messier
Bajaj may make cheapest bike
ICICI Bank enters Shimla
German Remedies open offer at 300
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Xerox Modicorp faces probe New Delhi, July 3 The issue has rocked both the corporate and political establishment and has threatened to snowball into a major controversy. The ruling BJP has termed it as a clear case of violation of “anti-graft laws”. “The matter, if true, amounts serious violation of Indian laws. It is violation of both anti-graft law as well as company laws”, former Law Minister and BJP spokesperson Arun Jaitley said. “It requires a thorough investigation and the law should be strictly implemented”, he said even as he added that complete details of the issue were still awaited. The office equipment manufacturing major, whose core area of business in the photocopier sector, has revealed in its annual reports filed on Friday with the US Securities Exchange Commission (SEC) that it had made “improper payments” — to the Indian government officials to the extent of $ 700,000. At the 2000 exchange rates, it amounts to approximately Rs 3.15 crore. The “improper payment” — an euphemism for bribes, were made ostensibly to shore up sales of its products to government departments in India. In its report filed to SEC, the company has, however, said that such payments were stopped in 2000. No comment, either from B.K. Modi, whose group holds 28 per cent stake in the $ 108 million joint venture, or from any other company official was immediately available. Sources, however, indicated that the company was likely to notify the government about the “improper payments” shortly. This the third major violation of accounting norms in the US in recent times- despite the stringent norms Generally Accepted Accounting Principles (GAAP) of the US. In recent days, a similar accounting scam by telecom giant WorldCom had shaken investor confidence, and before that energy giant Enron Corporation had hidden information from its books. Experts said that despite GAAP being the most conventional and, apparently, the most stringent accounting framework, there are inherent loopholes which cannot be prevented if auditors decide to hide information from public domain. The GAAP system assumes that information provided by the company is credible and authentic. While the standards in itself are stringent, if the firm, in connivance with the auditors, decides to incorrectly certify the books, the system cannot detect it. While in the case of Enron, the company had hidden material information, the WorldCom auditors had incorrectly certified certain facts of the company. Xerox Modicorp was registered in 1983 in India. The shares of the company, however, were delisted from Indian stock-exchanges following the takeover of the majority stake by the American partner three years ago. In current equity structure, Xerox Corporation holds 68 per cent stake in its Indian arm, 28 per cent by the B.K. Modi Group and the remaining by public. “Under the existing legal framework in India top officials of both Xerox and ModiCorp, could be prosecuted under the Prevention of Corruption Act”, Anand Prasad of Trilegal, corporate law firm said. He said that the blame squarely lies with auditors as they are expected to scrutinise every expense. “If some improper payments had been made, it must have surely come to the knowledge of the auditors”. For Xerox, he said that disclosure about “improper payments” could have been prompted by the possibility of stiffer penalties in case it was found out by some independent agency. “In India they (Xerox) could eventually follow the Enron way, where the energy giant showed some payments made as part of Education expenses. It was common knowledge that Enron was not related to the business of Education at all”, he said.
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PFC blames Punjab Govt for losses Chandigarh, July 3 The Disinvestment Commission in its draft report had recommended the winding of the PFC as its non performing assets had crossed Rs 304.77 crore, 67.16 per cent to total loan assets. The commission observed that due to high cost of funds and negative interest spread, the corporation was suffering losses year after year. It had noted that despite taking corrective steps, the estimated liability would still be about Rs 300 crore. Countering the recommendations of the commission and allegations of some industry associations, Mr B.S. Baidwan, General Secretary, PFC Employees Welfare Association, says, “The corporation has financed about 13,000 units in Punjab, and have contributed by generating employment, income and taxes worth crores of rupees to the state economy. The authorised share capital of the corporation is Rs 100 crore whereas the state government has an equity of Rs 29 crore out of the present equity of Rs 40.54 crore. The commission has no right to recommend winding up of the corporation since 1996-97, the state government has not contributed any money and the PFC has managed all repayments from its own resources.” The management admitted that it had lost heavy amounts due to non-payment of loans by some influential industrialists. It has blamed the populist policies of previous governments, like lowering of interest rate by 1 per cent as compared to other state finance corporations, financing of unviable units at Goindwal, loans to riot-affected, Jodhpur detainees, ex-servicemen and to youth on government recommendations. The senior officials disclosed that the PFC had lost about Rs 47 crore by giving bridge loans to industry against capital subsidy promised by the state government, which has not been paid till today. The commission had observed that the total operating income of PFC has come down from Rs 55.05 crore in 1996-97 to Rs 51.83 crore in 2000-01 showing a decrease of Rs 3.22 crore while the expenditure has gone up by Rs 11 crore during that period. The management points out that at present, it has more than 6,000 live accounts and outstanding worth Rs 453 crore. Interestingly, only 32.78 per cent of these loans are in the standard category and the rest in sub-standard (9.79 per cent), doubtful (43.07 per cent) and loss (14.34 per cent) category. The employees union admitted that some of the officials had taken wrong decisions while sanctioning loans, however, it was not valid to brand all the officials as corrupt. Mr Baidwan pointed out that the Gupta Committee report has suggested the restructuring package worth Rs 190 crore and the state government has already made a provision of Rs 28.50 crore as its share in the current budget. The corporation could be made viable by implementing that package. |
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CM for developing new citrus varieties New Delhi, July 3 Participating in the deliberations with Dr James Keithly, head of research for Tropicana, world’s leading producer and marketeer of branded fruit juice, a team of Pepsi Foods and officials of the Tata Energy Research Institute, the Chief Minister said Punjab was motivating the farming community to switch over to horticulture instead of the traditional agriculture as part of its plans for diversification. He said less than 1 per cent of the total agricultural area was under horticulture. Punjab, with 37,500 hectares in citrus production and annual production of 17,7219 tonnes, accounted for roughly 10.27 per cent of India’s citrus production. Showing deep concern over the poor financial position of the famring community, he said farmers should be encouraged to sow chilly, tomatoes, oil seeds and fruits. The Chief Minister invited Dr Keithly to visit Punjab’s citrus growing areas and PAU, Ludhiana, to assess the potential of improving the
quality of various varieties of citrus. Dr Keithly said he would soon visit Punjab to interact with the representatives of PAIC on the possibility of Tropicana setting up operations in the state.
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Steel price hike to hit industry There are damning news for the Punjab industry from various quarters. Steel prices are sky rocketing. The state government is putting its own revenue pressure and series of proposed cesses are a cause of worry. The steel prices are going to rise for the fourth time from July1. This hike is likely in the range of Rs 1000-1500 per MT. Already the prices have risen by over 20% in just two months. On the other hand pick up of finished goods is sluggish mainly due to higher rates. The USA did the same thing as India imports were curbed. Now steel users in the USA are also crying hoarse against the rising domestic prices of steel. Reason-cartelisation. Free market economy should not encourage monopolies of sorts. The govt. has to break this nexus to safeguard the large number of steel users. Our exports are suffering mainly on price front. Coupled with the hike in the steel prices fuel oils like furance oil etc. are also becoming costlier. Where is the end of the tunnel? Punjab’s industry has additional beating due to rising freights. Diesel prices are rising to add to the woe’s. The industry’s plea for freight equalisation on steel is perhaps falling on deaf ears. If this is enforced Punjab’s industry shall at least be able to compete with the industry located near the steel plants. The Central Government and the Punjab Government propose a series of heavy toll taxes and cesses. This spells doom. The Punjab Government proposes to establish BIFR like mechanism to take care of sick industries. When the state government is not able to disburse due incentives to industries, such proposals are a mere gimmick. Minimum the industry can expect from the government is the removal of hurdles to ensure smooth running. Tinkering in the sales tax regime keeps the business community on tenter-hooks. Most worrisome aspect is that there is absolutely no dialogue between the state government and industrialist. |
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Buffer stock scenario gets messier Chandigarh According to estimates, 42 million tonnes (20 MT of rice and 22 MT of wheat) are likely to be procured for the Central pool during 2002-2003 whereas the likely offtake during the year is expected to be 39.8 MT (19.7 MT of rice and 20.1 MT of wheat). As a result, the country’s buffer will further pile up to 53.1 MT (25.2 MT of rice and 27.9 MT of wheat) by April 1,2003 against the required 15.8 MT (11.8 MT rice and four MT wheat). Though feeling happy about the record foodgrain production of 211.2 MT during 2001-2002, the Commission for Agricultural Costs and Prices has reportedly expressed its concern over the huge accumulation of stocks. The burgeoning stockpile, it says, has resulted not only from relatively higher level of production but also from higher procurement-production ratio for the last few years because of persistently higher Minimum Support Prices of rice and wheat on the one hand and low offtake through the Public Distribution System, open market sale, export and various welfare schemes, on the other. According to the Commission, the procurement-production ratio increased from 11.8 in 1996-97 to 28 in 2001-2002 for wheat and from 14.5 to 20 for rice. Putting the average carrying cost of stocks at Rs.243 per quintal, the Commission feels, that as the storage costs of the burgeoning stocks are a big drain on the exchequer, there is need for taking further measures to increase offtake. It has already recommended parity between the sale prices of grains for above-poverty-line and below-poverty-line stocks. Punjab and Haryana, the two biggest surplus States, have been the worst sufferers of the situation created by the accumulation of surpluses. While huge stocks of foodgrains — a substantial quantity of them a few years old — have remained piled up because of poor offtake and slow movement out of the States, large quantities have been damaged because of their lying in the open. These have become unfit for human consumption. But for some improvement in the offtake in the past two years, India’s buffer would have been much more than what it is now. IPA |
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Bajaj may make cheapest bike
New Delhi, July 3 Codenamed CBM, the motor cycle is expected to cost about Rs 2,000 less than its highest-selling model Boxer which is sold in two variants at about Rs 31,000 and Rs 33,000 in the Delhi market, the sources told PTI here. The new four-stroke model will hit the markets before the end of this financial year. R.L. Ravichandran, Bajaj Auto’s Vice-President (Business Development and Marketing) said the company was currently evaluating development of the new motor cycle as part of efforts to broaden the product portfolio.
PTI
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ICICI Bank enters Shimla Shimla, July 3 The bank also acquired the historic building bank house building on the Mall a land mark of the erstwhile Summer Capital from where the Grindlays Bank had been functioning since 1877. Inaugurating the bank, Mr Harsh Gupta, Chief Secretary to the Himachal Government said that the entry of the ICICI Bank would provide the much-needed fillip to e-banking in the state. Ms Chand Kochar, Executive Director of the bank, revealed that the bank has also acquired the Darjeeling branch of the Grindlays bank as part of its expansion programme. With this the total number of branches had increased to 409. Besides, it had also set up 1042 ATM’s across the country for the benefit of customers.
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German Remedies open offer at 300 German Remedies Ltd’s (GRL) open offer, which opened on June 6, 2002, presents an excellent opportunity to shareholders to monetise their shareholding. Given the low liquidity of GRL’s shares on the bourses and the company’s performance in the last financial year, this is an attractive option for exit said a press release. The offer of Rs 300 per share is at a premium of 15 per cent to the GRL’s last 26 weeks’ average price before the announcement of the offer. Also, the offer price is at 9.9 times FY 2002 earnings which is higher than comparable companies which trade at 7.7 times earnings. The offer closes on Friday July 5, 2002. The financial year ended March, 2002, show that the performance of the company has deteriorated. The sales and income from operations of German Remedies Limited in FY 2001-2002 stood at Rs 226.66 crore as against Rs 233.11 crore in the corresponding period of the previous year. The profit after tax stood at 24.91 crores as against 33.03 crore in 2000-01. Zydus Cadila along with its wholly owned subsidiary, Recon Healthcare Ltd., held 55.40 per cent at the time of open offer. It seeks to acquire the entire public shareholding of 44.60 per cent through the open offer. It is believed that the company has further acquired 3.60 per cent from the open market, bringing the company’s current holding to 59 per cent. Given that the group would focus its energies on Cadila Healthcare Limited, the investors should treat this exit option as an attractive exit point in a lacklustre market. Unitech net dips Construction company Unitech Ltd has posted a 38.1 per cent dip in net profit at Rs 5.33 crore for the year ended March 31, 2002 against Rs 8.6 crore last fiscal. Turnover rose 20 per cent to Rs 212.9 crore during 2001-02 from Rs 176.5 crore a year ago, according to the audited financial results released here today. The Unitech board has recommended a 20 per cent dividend (Rs 2 per equity share of the face value of Rs 10
each). TNS, PTI |
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