Monday, August 3, 1998
today's calendar
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B U S I N E S S | Monday, August 3, 1998 |
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spotlight today's calendar |
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Ambiguities in policy hit
FDI inflow |
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FEMA, MLP Bills to be introduced : FM |
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No commitment to open up
life insurance MTNL
to take on DoT for basic services FIPB
clears Essar, Escort Yamaha proposals DSE to have wide area network facility
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Ambiguities in policy hit FDI inflow NEW DELHI, Aug 2 (PTI) — Ambiguities in policy, lack of co-ordination between the Central and state governments and delays in decision making have hampered the inflow of Foreign Direct Investments (FDI) into the country, says a study. Though FDI proposals worth $ 14.9 billion were approved during the first eleven months of 1997, the actual inflow was a mere 20.9 per cent at $ 3.1 billion, the study by the PHD Chamber of Commerce and Industry (Phdcci) said. “Though some time lag between approvals and actual inflows is understandable, the actual inflows persistently not exceeding one fifth or at best a quarter of the total approvals is clearly due to man-made blocks,” the study said. The study points out that bulk of FDI since 1991 has been in the priority sector as opposed to the trend in 1980s.Of the total FDI approvals since 1991 nearly 50 per cent has been in the telecommunications, power, oil refinery and other fuel sectors.According to the study, United States continues to be the largest investor in India and NRI investments have risen to $ 241 million in 1997-98 from $ 217 million in 1993-94. However, in percentage terms the share of NRI investments in FDI has come down to 7.54 per cent in 1997-98 from 37.03 per cent in 1993-94, it said.According to the study, though the attitude of the government towards multinational companies has radically changed, there is still an element of caution, particularly with regard to their entry into the core/infrastructure sector and apprehensions over their growing importance in consumer goods sector. “While in some components of the infrastructure sector, lack of transparent guidelines and governmental delays are acting as bottlenecks, unviable schemes like build-own-operate-transfer (Boot) and build-own-lease-transfer (Bolt) are holding up progress in the remaining sectors,” it said. Nearly 15 per cent of investments worth $ 115 to 130 billion required in infrastructure sector over the next five years, according to the study, is expected to come from foreign sources.India will have to continue relying on foreign savings to bridge the gap in investment and saving and to ensure gross domestic product (GDP) growth rate of over 7per cent. The study has estimated
foreign investment and savings rate of over 28 and 2 per
cent, respectively, for achieving 7 per cent GDP growth
rate. |
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Government to introduce FEMA, MLP NEW DELHI, Aug 2 (PTI) — The government is making all efforts to introduce twin legislations on money laundering prevention (MLP) and foreign exchange management (FEMA) in the Lok Sabha next week to prove its total commitment to economic reforms. “We (BJP) have been described as anti reformist. The fact that we have finalised the bills and are bringing it before the house next week shows our determination to pursue economic reforms,” Finance Minister Yashwant Sinha told PTI here.Mr Sinha said the government stands committed to economic reforms and we want to debunk the myth that we are anti reformist. “We have made a commitment and we adhere to it,” he said. The previous two governments —the Congress and the United Front — failed to bring these legislations before Parliament. But we have finalised these bills and are bringing it forward, he said.Mr Sinha’s predecessor P. Chidambaram made strong commitments to bringing these legislations during the United Front regime but failed to do so largely due to political uncertainties caused by the coalition nature of the government. Asked if the government would refer the two bills to the standing committee on finance after introduction, Mr Sinha declined to give a firm answer except to say “let’s see how things work out in the House.The FEMA and MLP bills approved by the cabinet seek to liberalise the foreign exchange regime in step with the government’s plans to eventually switch over to capital account convertibility and remove all outdated draconian provisions of the Foreign Exchange Regulation Act (FERA) dreaded by industry and trade. Industry has repeatedly asked for FERA’s withdrawal saying it has outlived its utility and is no longer relevant in today’s liberalised economy. FEMA, unlike
the FERA it replaces, brings all foreign exchange
violations under civil laws inviting only monetary
penalties. FERA recognised these as criminal offences.The
Money Laundering Prevention Bill seeks to tackle the
crime of laundering black money abroad through proceeds
of narcotics trade and other economic offences making the
crime cognizable and non-bailable. It also seeks to
create a separate regulatory authority to track down
offenders and punish them. Penalty for the crime is as
high as seven years RI. |
Government disfavours ECBs for power sector NEW DELHI, Aug 2 (PTI) — Power Minister P.R. Kumaramangalam today asked central power utilities to look for concessional loans from international financial institutions instead of opting for the costlier external commercial borrowings (ECBs). “The option for funds from institutions like World Bank is still there, ECB will be our final option,” the minister said when asked about Finance Ministry turning down a proposal of National Thermal Power Corporation (NTPC) for raising $ 1 billion through the ECB route. NTPC had sought this loan for its 2000 mw Talcher phase ii expansion in Orissa and other projects in view of delays in finalisation of its $ 1.2 billion loan agreement with the World Bank.Resources are not an acute problem in the power sector, Kumaramangalam told reporters in the presence of the Finance Minister Yashwant Sinha after both of them had witnessed the signing of counter-guarantees for $ 1.4 billion Bhadrawati Power Project in Maharashtra. The Finance Minister has assured of all possible financial assitance if resources became a problem, he said.Commenting on NTPC’s Talcher project, Kumaramangalam said the problem was not so much of funding but of the Orissa Government’s demand for 12 per cent free power, and this could make the project “viable”. Reiterating government’s commitment to reform the power sector towards making it more attractive for investment, Kumaramangalam said a majority of the states were going ahead with setting up of the State Electricity Regulatory Commissions (SERCS).“All the regulatory commissions would be in place by the end of the financial year,” he said. He said the Central
Electricity Regulatory Commission (CERC), headed by S.L.
Rao, had already been constituted and an office has been
finalised for its operations.The minister said government
would work towards issuance of counter guarantee for the
remaining fast track projects soon. NTPC had sought about
Rs 3,000 crore loan from the World Bank to part Finance
Talcher project, which the multi-lateral agency had not
yet committed due to the sanctions. |
Plea for infrastructure
development company SHIMLA, Aug 2 — The PHD Chamber of Commerce and Industry (Phdcci) has urged the Himachal Pradesh Government to set up an infrastructure development company with equity holding of specialised agencies to help accelerate the pace of industrialisation in the state. A delegation of the Phdcci, headed by its President, Mr O.P. Vaish, met Mr P.K. Dhumal, Chief Minister, and said the company could raise funds and undertake integrated development of industrial infrastructure, townships and maintenance of existing industrial estates. It suggested that in the Ninth Plan intensive development of existing industrial corridors in Baddi-Barotiwala-Nalagarh, Parwanoo-Solan-Shogi, Kala Amb-Paonta Sahib and Mehatpur-Amb should be undertaken.Mr Vaish stressed that the private sector should be encouraged to exploit the hydro power potential of the state by laying transparent guidelines for competitive bidding and ensuring quick decisions. The independent power producers were willing to give 20 per cent free power as royalty, he said.He said time-bound implementation, evacuation of power, facilitating bankable agreements with financial institutions and obtaining international finance should be given top priority to facilitate actual investment which would have spin-off benefits for employment and the state economy. Mr Vaish said
service sector had the potential to emerge as an
important generator of employment for the educated youth
of the state and there was ample scope to develop tourism
transport and trade along scientific lines. Commercial
city centres should be developed in district towns for
locating banks, sales offices, shopping arcades and
restaurants. |
No commitment to open up life insurance NEW DELHI, Aug 2 (PTI) — India made no commitments to open up life insurance while offering limited entry into general insurance categories like freight when it endorsed the recent World Trade Organisation (WTO) pacts on liberalising its financial services, official sources said. “All commitments (in financial services) are subject to entry domestic laws, rules and regulations and the terms and conditions of RBI, Sebi and any other competent Authority of India,” they said. The pact paved the way for re-insurance to be taken up with foreign players to the extent of the residual uncovered risk which could be done after obligatory or statutory placements with Indian companies domestically, they said.On the other hand, India had withdrawn most-favoured nation (MFN) exemptions in the insurance, banking and non-banking financial services. “This (MFN exemption withdrawal) was done as a reciprocal measure in view of our major trading partners withdrawing their MFN exemptions,” the sources said. In banking and financial services, the country was committed to acceptance of deposits, participation in issue of securities, stock broking, consultancy services, factoring, leasing and venture capital. While committed to allowing acceptance of deposits and other repayable funds from the public in the banking sector, lending of all types, including consumer credit, mortgage credit and financial of commercial transactions excluding factoring would be allowed under the third mode. It means commercial presence, which would require operations through foreign bank branches that were licensed and supervised as a bank in the country of origin.It is also subject to grant of licence as permissible under existing laws and a limit of 12 licences per year for both new entrants and existing banks. Banks were allowed to set up any time money (ATM) provisions at branches and other places identified by them.ATM installation in places other than in licenced branches would be treated as a new place of business and require licence. Such licence would not be
included in the ceiling of the 12 licences.Also
investments in other branches of foreign banks to do
banking business individually should not exceed 10 per
cent of owned funds or 30 per cent of the invested
company’s capital, whichever was lower. |
MTNL to take on DoT for basic services NEW DELHI, Aug 2 (UNI) — Mahanagar Telephone Nigam Limited (MTNL) is all set to come in direct competition with its parent company — Department of Telecommunications (DoT) following its decision to bid for operating basic telephone services in Tamil Nadu and West Bengal. MTNL has already initiated formation of a joint venture company with the TCIL to bid for these state circles, MTNL Chairman and Managing Director S. Rajagopalan told UNI in an exclusive interview.The joint venture company, he said, is at present looking at handling only two state circles. “The Board of Directors of both the companies have already approved the proposal and we will be going ahead with it shortly,’’ Mr Rajagopalan added.MTNL is seeking to control the majority 60 per cent stake in the joint venture company, “the idea that we have floated with the government is that we would initially start the venture with TCIL. However, at a later stage, there are plans to even expand the company by inducting other public sector companies like VSNL. etc.’’However, the venture would remain only between PSUs, “we are not looking at inducting any private sector company as a partner.’’TCIL, he said, has the expertise in building networks and MTNL is strong in operating the basic service network. The jv would combine these two strengths.“Operating basic services is our core business and we intend to strengthen our presence there by foraying into the state circles,’’ he said. The company is seeking to
expand at the rate of 14 per cent in its core business
over the next five years and reach 5.5 million lines by
2002 from the present 3.5 million lines, “our vision
is to provide all telecom services under one
roof.’’ |
FIPB clears Essar, Escort Yamaha proposals NEW DELHI, Aug 2 (PTI) — Foreign Investment Promotion Board (FIPB) today cleared 30 proposals amounting to a foreign direct investment (FDI) of Rs 570 crore including that of Essar, Escorts Yamaha and Bayer. The high-powered board cleared the Essar Power proposal to increase foreign equity capital to 100 per cent from the present 49 per cent.Mauritius-based company Prime Hazira is bringing in Rs 260 crore to buy the 51 per cent stake in the Indian company, FIPB sources said today. The sources said the proposal was cleared as the new guidelines permitted 100 per cent foreign holding in power companies.The FIPB also cleared the Rs 108 crore proposal of R and H Power Company to set up a mini oil refinery in the country. The proposal, which was earlier rejected due to a sectoral cap of 49 per cent foreign equity holding, was cleared after the company reduced the foreign equity holding from 51 per cent to 49 per cent. The proposal of Escorts Yamaha India Ltd to issue preference shares to the tune of Rs 30 crore to the Japanese partner to fund the Rs 525 crore expansion plans was also cleared.Two liquor proposals — Seagram’s application to manufacture non-molasses based spirit and that of Brown Foreman — were deferred as FIPB is going slow on such applications, the sources said. A proposal by Ispat Industries to relocate its proposed refinery from Paradip to Kakinada has also been deferred for three weeks.The permission to bring foreign currency from Reserve Bank to Ispat has been invalidated since the company has not been able to select a foreign partner. Ispat wanted to relocate the project since Indian Oil Corporation (IOC) along with Kuwait Refineries are also setting up a refinery at the Orissa Port.A proposal from Banque Nationale De Paris (BNP) to start non-banking finance activities in the country has also been deferred as the Finance Ministry wanted more time to study the proposal, the sources said. The proposal of
Singapore-based Lappkabel Accessories to enhance paid
capital from 50 lakh Deutche Mark to 60 lakh Deutche Mark
in their cable accessories project has been approved.A
proposal by TTK Tantex to issue preference share to the
tune of Rs 9 crore has also got the FIPB nod. |
Samsung to diversify NEW DELHI, Aug 2 (PTI) — Korean Electronics giant Samsung is planning an aggressive foray into the white goods and home appliances market this year in a bid to increase its sales turnover by over 50 per cent to Rs 600 crore in 1998-99. “We’re looking to achieve 20 per cent of our entire sales turnover this year from white goods by strengthening our white goods lineup, enhancing penetration levels and by focusing our sales efforts on home appliances,’’ Samsung India Electronics Managing Director B.M. Park told PTI. This is a marked shift from Samsung’s sole concentration on colour television sales since it set shop in India two years ago, which has been responsible for generating almost the entire sales revenue this far.Samsung is getting into the home air conditioner market, the direct cool (above 165 litre) refrigerator segments and semi-automatic washing machines besides beginning manufacture of its microwave ovens this year. It has already announced
plans to launch five new air conditioner models next
month.The range will comprise 1.5 tonne and 2 tonne
capacity room, Window and split type models. Samsung
already has two 1.5 tonne models in the market. |
DSE to have wide area network facility NEW DELHI, Aug 2 (PTI) — The Delhi Stock Exchange (DSE) is all set to go countrywide as Sebi has given its nod for wide area network (WAN).With this, the DSE would be the third bourse, after National Stock Exchange and Bombay Stock Exchange, to have its On-Line Trading (DOTS) terminals all over the country. DSE Executive Director S.S. Sodhi said the exchange initially selected 57 non-exchange centres in eight North Indian states for setting up of DoTs terminals by the middle of this month.“Gradually we will expand our network in other parts of the country to have national presence,” he said, adding by covering more areas and more investors. The volume of business would jump up by many fold, enhance liquidity and provide smooth service.Sebi approval for wan came in the wake of the exchange starting its trade guarantee fund (TGF) on July 27, which is mandatory under Sebi norms for expansion of trading service outside the city. Mr Sodhi said the 57 cities were selected where no stock exchange exists. Brokers in these cities would find it more convenient to execute easy pay-in and pay-out as DSE is very close to them compared to other bourses. DSE President Deepak Chowdhry said the exchange presently have 130 member brokers within the city, successfully availing the services of satellite-based terminals in their offices outside the exchange premises. “Taking the terminals outside the city would not have any problem. Software for this purpose is already developed by the exchange,” he said.The eight states for these 57 centres were identified by actual applications received from member brokers of the exchange and each centre would have about two terminals each, he added.The service in these areas would be provided by the brokers either directly opening a branch or through a sub-broker duly authorised and registered with the Sebi for the purpose. The contracts and order would be executed in Delhi and investors’ grievances would be resolved by the DSE.Meanwhile, the Sebi has asked the exchange to ensure an adequate monitoring and surveillance mechanism for these outstation terminals. The exchange would also
comply with various directives of Sebi regarding margins,
capital adequacy and arbitration mechanism. |
Canara Bank’s net profit up BANGALORE, Aug 2 (PTI) — Canara Bank, whose net profit for 1997-98 jumped to Rs 203.02 crore reflecting a robust 38 per cent growth over the previous year, has aimed to hit the target of Rs 75,000 crore in deposits in the next five years. Chairman and Managing Director T.R. Sridharan told reporters here yesterday that Canara Bank, whose deposits now stood at Rs 38.045 crore, expected an average growth of 18 per cent in the next five years. The bank had posted a net
profit of Rs 147.40 crore during 1996-97, he said, adding
its non-performing assets (NPAs) ratio had also declined
from 9.32 per cent to 7.52 per cent with focus on
effective asset management and recovery. |
Q: Should
I hold or sell the shares of BOC (I)? Q: What
is your opinion the long term investment prospects of
BPL? Q: Please
advise me whether I should invest in the shares of
Carrier Aircon? Q: Is an
investment in Zenith Computers worth considering. Q: Please
comment on the advisability of an investment in the
shares of Indian Oil Corporation? |
Merit in hostesses’ recruitment vital THERE was a time when Air India’s cabin service was considered ‘most outstanding’. Passengers, particularly foreigners, chose to fly Air India because hostesses, slim and smartly attired, were polite, meticulous, considerate and efficient. This was the time when regular Indian flyers felt neglected that they were provided second class treatment in comparison to the foreigners.During these palmy days of the Tata-Kooka-Dastur, Air India was voted the best airline in the world. Even European and American carriers were no match to Air India in cabin service. Attired in sober colour sarees and captivating ‘Namaskar-smile’ on board the flight as doors of the aircraft were serenely closed, hostesses were a true symbol of the ‘Maharajah’ on the different version of aircraft.The cycle has taken a full circle. From lofty standards of cabin service, it has been reduced to slovenly drudgery for hostesses, who were once pride of Air India. Why this sudden change? There may be many reasons, including general decline in values and etiquette. What has, however, caused havoc with the airline is Government’s interference in fixing quota for recruitment of hostesses from backward classes and scheduled castes. There is absolutely no quarrel in providing opportunities to girls coming from ‘poor environment’ but efficiency and other vital qualifications should not be sacrificed, come what may.Regular flyers, who have been using national carrier for years, feel — and perhaps rightly — that modern hostess is irritable, edgy and unwilling worker. This is a cause for concern because almost all the international carriers, including Pakistan Airline, have attached a lot of importance in the functions and efficiency of the cabin crew.Just as there cannot be any compromise on the efficiency of commanders, there should not be any relaxation of the qualifications of hostesses. Conduct of hostesses on board the aircraft is as vital as performance of commanders in cock-pit. Not for nothing, therefore, commanders and hostesses are provided huge perks for their arduous and demanding duties.Some of the important ministers, including Ram Jethmalani, have shown refreshing outlook in advocating for sticking to the existing retirement age of hostesses. But some ministers, ill-informed and out for cheap publicity, continue to advocate for the increase of retirement age of hostesses. As it is, some of the roly-poly hostesses look like ‘aunties’ and ‘mothers’. If the age is increased, some of them may look like ‘naanis’ and ‘dadis’. This will be a sad day for the airline, which is already passing through a difficult phase in the chequered career since India attained Independence 50 years ago.Hostesses are not particularly motivated to continue to fly. But their protest is that they will be subjected to loss of huge flying perks. Should Air India lose its image further for the sake of a few aging hostesses?The real value of the hostess is assessed when there is an emergency. It is here that the hostess has to display her agility, swiftness and presence of mind. She has to help in evacuating the passengers. If the hostess finds herself in a difficult situation because of her advancing age and physique, how will she perform her duties at a machine-like rattling speed. The powers that-be in Parliament and ministry should exercise their mind dispassionately before pressing for the increase in retiring age of hostesses. If the survey of standard of hostesses worldwide is taken, it will be seen that modern Indian hostesses look much inferior to hostesses belonging to other countries. Accidents It is time the Government should deal with them ruthlessly so that peace descends on the Indian aviation scenario.It is also time that additional precautions are taken so that accidents and incidents are successfully combated. Bird menace should be dealt with on war footing. There are committees and
committees. Meetings are held with monotonous regularity.
But little action is taken to curb the menace. Bird
menace is a worldwide phenomenon. But why should the
incidence of bird hit be higher in this country than in
any other country? |
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Inflation Price index OBC Canara Bank MoU signed |
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