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Monday,
June 30, 2003, Chandigarh, India  
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NEWS ANALYSIS
Steel
prices to go up from today |
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FIIs
record net inflows of 9,640 cr FIEO’s
9-point charter to RBI Investors
again shifting to UTI mutual funds Two-wheeler
sales slow down Bank
officers demand early wage revision
It’s
time to book profit
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NEWS ANALYSIS Last Saturday the world's longest steel-arched bridge across the Huangpu river, built at a cost of 2.5 billion yuan ($302 million), was opened in Shanghai, not by a politician, but by a Chinese basketball player. The player, Yao Ming, led a fun race of about 1,000 people on the bridge to mark the event. Called the Lupu bridge, it is built from steel and its 550-metre arch is longer than the previous record holder bridge in Virginia. China is spending billions of dollars to build bridges, tunnels, roads and a massive subway network. Shanghai will also have the world's tallest building, a 492-metre high skyscraper by 2007. It is doing things differently, in a much bigger way and in keeping with its status of being the world’s fastest growing economy. China’s phenomenal growth in recent years has proved wrong what they taught us in school and college, that is, India is poor because it has a large population. China’s population is placed at 1.3 billion. Life expectancy is 69 years for men and 73 years for women. Their average annual income is $890. These are UN figures. We Indians have not yet learned to deal with China. From Nehru’s “bhai-bhai” talk to the 1962 humiliation, the harbouring of the Dalai Lama and his followers to Sikkim, Fernandes’s loose talk of China being “enemy No 1” to Prime Minister Vajpayee’s conflicting statements on Tibet, our attitude towards China swings from plain hostility to open admiration. The past weighs on us and clouds our future. The two countries share more than 4,000 km of border and its demarcation is disputed. Everyone will breathe much easier if economics and pragmatism dislodge politics from the centrestage. When Chinese Premier Zhu Rongji visited India in January, 2002, he did not let politics interfere with his mission. An admirer of India’s software strength, he wanted China to excel in IT, the only field in which it is behind India. So he went to India’s IT hub, Bangalore, visited the Infosys office, met N. R. Naryana Murthy and Azim Premji, and invited Indian companies to Shanghai’s Pudong Software Park. Today India’s best in IT — Infosys, Wipro and Satyam — have operations in China. NIIT is fast spreading its wings there. By 2005 it will have some 500 software training centres and tie-ups with Chinese universities. Local universities still distrust corporates. Compare the Zhu visit with that of our Prime Minister and his 100-member business delegation. Back home wide-eyed, they all have a lot to talk about, but pretty little that makes sense. The media wastes reams of paper and readers’ time interpreting ambiguous diplomatic gestures and jargon. They will say everything except what is required. When cheap Chinese toys, TV sets, bicycles and other small products arrived in India, the industry raised hell and clamoured for protection. A few years down the line, none bothers. Their quality is questioned. Dumping is always welcome. Why should consumers be forced to pay more to save inefficient local units? Dr Reddy’s Lab, a big name in pharmaceuticals, used to produce norfloxacin, an ingredient in antibiotics, until the Chinese made it available in the Indian market at half the price. Dr Reddy’s Lab now buys cheaper raw material from China to cut costs. So does Ranbaxy. Work culture in China is investor friendly. Officialdom is functional, not a hurdle. It took Ranbaxy 11 years to relocate its Delhi office from a run-down place to a posh locality matching its global status. China’s labour laws allow companies more freedom, workers’ unions don’t strike work so often. Their wages are three times those in India. World class infrastructure is coming up. Small wonder that direct foreign investment in that country is more than 20 times that in India ($ 46.8 billion in 2001 compared to India’s $2.3 billion). Finally, what has made China’s high growth possible: favourable tax policies, incentives to foreign companies, special economic zones, high-tech parks, open economic areas, bonded and free trade zones. China is the world’s largest producer of coal and second largest producer of electricity. Their efficient manufacturing, economies of scale and lower rates of utilities ensure cheaper products. India opened up its economy in 1991, China did it in 1978. China abandoned Marxism and became pragmatic: “the colour of the cat doesn’t matter as long as it catches mice”. India is still dithering on reforms. Politics, corruption, red-tape, bloated
bureaucracy, old mindset, resistance to change, lack of effective leadership and public awareness have all slowed down the march of this elephant. That is why Indian talent, sick of systemic hassles and a taxing work culture, blooms in a freer environment abroad.
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Steel prices to go up from today
New Delhi, June 29 Steel demand from China which had slowed down due to SARS has started picking up again and its impact can be felt on global prices and thus a price rise on the domestic front is natural, industry sources told PTI here. All the leading manufacturers SAIL, Tata, Essar, Ispat and Jindal Vijaynagar are expected to undertake an upward price revision from Monday. China had also been a bit restrained in buying as it was facing the problem of stock piling, they said and added that now with the construction activity going full swing after it recovered from SARS, the demand is expected to go up further. Steel prices, after witnessing a continuous northward movement in the first quarter of the calendar year, had stabilised considerably on the global as well as domestic front. The price rise is expected to be in all product segments including HR coils and flat products. HR coil prices are currently ruling around Rs 18,900-20,500 per tonne while CR Sheet is at Rs 23,000-25,350 per tonne. Sources said demand of flat products from China will be consistent at least for three years as China did not have capacities in flat products and fresh capacity addition will take at least two-three years.
— PTI
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FIIs record net inflows of 9,640 cr
Mumbai, June 29 FIIs have invested Rs 33,806 crore while recording sales of Rs 24,165 crore during the period under review, according to data available with SEBI here. Out of the total net purchases of Rs 9,640 crore, almost one third of net inflows at Rs 3,210.7 crore ($ 681.1 mn) came in the month of June itself. The net investment by foreign funds into Indian capital market till June 28 was at Rs 68,589.3 crore ($ 17,339.2 mn) while the number of registered FIIs stood at 509, it said. In the month of June, FIIs were active in equity market with net purchases of Rs 2,330.5 crore ($ 494.3 mn). On the debt front, they recorded net inflows of Rs 880.1 crore ($ 186.7 mn).
— PTI
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FIEO’s 9-point charter to RBI
New Delhi, June 29 In a memorandum submitted to RBI Deputy Governor, The Federation of Indian Exporters Organisation has asked the government to ensure concessional rate for export finance for 360 days. The memorandum was submitted by FIEO vice president Subash Mittal along with O.P. Garg, FIEO managing committee member and Ganesh Kumar, FIEO chairman to Vepa Kamesam, Deputy Governor, RBI. Pointing out that as the status holders a period of 360 days had been allowed for realisation of export proceeds, FIEO Vice President Subhash Mittal told PTI that banks too should be directed to allow them a repatriation time of 360 days as per RBI norms, charging a concessional rate of interest for the entire 360-day period. Mittal said banks should also charge interest on term loans on the same basis as they charge interest on packing credit and added that there was also a need for them to not charge any stamp duty on export bills as it did not have any legal sanctity in foreign land
.— PTI
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Investors again shifting
to UTI mutual funds Chandigarh, June 29 The analysts say that despite stiff competition from private mutual fund players, the UTI debt funds have done quite well in the recent past. They offer relatively low risk yields and easy liquidity. Unlike investment in high risk equity market, in the debt schemes one is assured that investment would be made in rated corporate debt papers and government securities. The UTI Bond Fund in one such scheme, in which about Rs 1700 crore had been invested. Since launched in 1998, it has yielded a return of 12.47 per cent under growth plan and 12.62 per cent under income plan. During the past year, the growth linked option has yielded 10.64 per cent interest and under income plan option, the investors have got 11.15 per cent returns. The Financial analysts admit that the scheme may not offer as much high returns in the future, but it is expected to yield returns above bank term deposit interest rates. The UTI has invested the fund in 100 per cent debentures of highly rated companies like the Reliance Industries, Jet Airways, of banks like the SBI, PNB, IDBI, ICICI and housing and finance companies such as LIC Housing Finance, HDFC and GE Capital service India. Says Col. MGS Khurana (Retd), a leading Financial Advisor here, ‘‘A large number of investors in the region are shifting towards low risk mutual funds. Though there is lack of awareness among the investors about risk factor, but the fact is that they are relatively safer than the shares, and offer decent returns.’’ He says the investors which are ready to expose a part of their investment to equity instruments, can invest in the UTI Regular income scheme Floated in September, 2002, it is an open ended debt oriented fund, where a minimum of 90 per cent funds are invested in debt and government securities and a maximum of 10 per cent in equity instruments. Says another financial expert, the investors who just want to have an experience of mutual funds, could invest in UTI G Sec Fund, where 100 per cent investment is being made in Central government securities, including call money, treasury bills and
reports of varying maturities with a view to generate credit free return. Its
net asset value (NAV) for growth option is hovering around Rs 16.88 and for income option Rs 10.88. The fund has shown an annualised return of 13.69 per cent in the last one year and 14.99 per cent since its inception in August 1999.
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Two-wheeler sales slow down
New Delhi, June 29 This was primarily because of a modest increase in motorcycle demand even as scooters and mopeds continued to ride into negative territory, data compiled by the Society of Indian Automobile Manufacturers showed. A total of 8.20 lakh two-wheelers were sold in the country during April-May 2003 against 8.08 lakh units in the same period last year, the data showed. Motor cycles, which witnessed strong growth till recent months, posted a modest 6.7 per cent increase to 6.50 lakh units (6.10 lakh units during April-May 2002-03). India’s biggest motor cycle maker, Hero Honda Motors recorded a 5.4 per cent rise to 2.95 lakh units while its closest rival, Bajaj Auto, posted a 2.15 per cent growth at 1.53 lakh units. Motor cycle sales of Chennai-based TVS Motor Company went up by 10.4 per cent to 1.20 lakh units, propelled by its 110cc motor cycle ‘Victor’. Sales of Kanpur-based LML soared by 689.2 per cent to 38,514 units on the back of strong demand for the recently-launched 110cc motor cycle ‘Freedom’. However, the wholly-owned subsidiary of Yamaha Motor of Japan suffered a 42.1 per cent drop to 32,147 units. Motor cycle sales of Kinetic Engineering and Royal Enfield also registered decline of 18 and 12.7 per cent to 5,015 and 3,585 units respectively.
— PTI
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Bank officers demand early wage revision Chandigarh, June 29 The government has taken some steps, on the demand of AIBOC, against the defaulters of banks in the form of Securitisation Act. However, steps have not been effectively implemented so far. The results are not to the expected levels. AIBOC is pursuing the matter with the government to bring about changes in the law and make defaults in banks loans as criminal offence, said Mr Aggarwal while addressing the bank officers.
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Inflation falls Bajaj Auto IIM Indore NIIT BoP branch ICICI Bank Maruti listing |
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