Wednesday, August 19, 1998
today's calendar
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B U S I N E S S | Wednesday, August 19, 1998 |
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spotlight today's calendar |
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India’s rating under
review: S&P Rouble
to affect India’s exports |
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Coke signs up Kumble
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Ashok hotel for Chandigarh M&M
offers 350 crore investment in Punjab ‘On-line’
lottery soon Chamber
hails power corporations Pedal
on reforms road to car economy Eicher
to roll out 535cc bike by October |
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| Loan for Videocon power project Jay Engineering to end losses |
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Bajaj Auto asked to stop scheme |
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India’s rating under review: S&P MUMBAI, Aug 18 (PTI) — Rating agency Standard & Poor (S&P) is undertaking an annual review of India’s sovereign rating, its Director Ken McLay said here today. Speaking to reporters at a seminar on corporate and financial institution rating here, he however, refused to divulge what the rating might be.Asked if India would stay insulated from a possible second round of the South East Asian crisis, S&P Director Corporate Ratings, Chris Legge, said “It depends on the degree of insulation and control. India is self sufficient to some extent and not highly exposed to other market forces”.However, the Credit Rating and Information Services of India Ltd’s (Crisil) Managing Director R. Ravimohan was of the view that devaluation of the Russian rouble would “force China to relook its currency valuation and can lead to another round of devaluations in South East Asia”. “We should set our house straight rather than wait for a meltdown”, he said, adding that cleaning up of bank balance sheets and a take off in investments in infrastructure should be prioritised. The slowing down of the economy could lead to higher non-performing assets (NPAs), a negative feature for the banking sector, and the consequent higher provisioning could also lead to lower capitalisation, McLay added.Indian banks were at the higher end of the risk spectrum, McLay said adding that risk managements, especially those of public sector banks, were underdeveloped coupled with an unfavourable legal system and regulatory framework. The Narasimham Committee recommendations, if implemented, could push Indian banks to the lower end of the risk spectrum, he said.S&P’s negative outlook for the domestic banking industry was supported by the weakening asset quality and profitability (on account of NPAs and provisioning) and consequent pressure on the capital structure. The economic slowdown,
increase in interest rates and indirect taxes and
slowdown in capital investments in infrastructure were
prominent risks that faced Indian corporates though they
were considerably immune to the crisis in South East
Asia. |
Coke signs up Kumble NEW DELHI, Aug 18 (PTI) — Coca Cola India has signed up former India Vice-Captain and leg spinner Anil Kumble to promote its brands. Kumble is the third cricketer Coca Cola has signed after fast bowler Javagal Srinath and left handed Batsman Sourav Ganguly. Though Coca Cola officials were tightlipped about the financial details of the deal, sources said the signing amount could be around Rs 30 to 40 lakh. “I have been eating cricket and sleeping cricket all my life. Now it is time to drink some Coca Cola,” Kumble said at a function here announcing the signing up of the deal. Meanwhile, the Advertising Agencies Association of India (AAAI) has turned down a complaint by Pepsi’s advertising agency, HTA regarding Coke plagiarising its jingle “Ala re ala”. The association at its executive committee meeting yesterday confirmed its earlier view that the jingles used in Coke and Pepsi commercials appeared to be public property and that the two commercials were dissimilar enough for both to co-exist. The HTA had moved the AAAI
and the Advertising Standards Council of India (AASCI)
against Coke advertising agency Chaitra Leo Burnett
alleging plagiarisation of Pepsi’s commercial
featuring Sachin Tendulkar. |
Tata car by November NEW DELHI, Aug 18 (UNI) — Telco’s much awaited small car, code-named ‘Mint’, will reach the showrooms by November and zip down the city streets by the year-end. Besides, Telco is also planning to roll out upgraded versions of its utility vehicles — Estate and Sierra, Mr Steven G. Foster, Managing Director of Corcorde Motors Limited, a car retailing joint venture between the Tata group and Jardine company of Hong Kong, told UNI here today. “The company has already conducted extensive tests on the small car. It is now all set to hit the streets by the end of this year. The cars are slated to reach the showrooms by November,” Mr Foster said. However, he stated that Telco has been maintaining a stony silence over the name and price tag that the small car would carry. “But they would keep their promise on the price tag and it would be very competitive.” The car is the first to be developed and produced indigenously. The five door hatchback will come in four variants — standard, luxury, right hand drive and left hand drive. It will be offered in options of a petrol and diesel engine. “The prototype of the Sierra is ready and commercial production is likely to commence soon,” Mr Foster said. The new Sierra would have
an increased power of 137 BHP. On the Estate, he said,
the company is looking at introducing a new heart for the
vehicle. Though the new engine would be in the same
displacement as the present one, it is likely to have
more power. |
Rouble to affect India’s
exports NEW DELHI, Aug 18 — The Federation of Indian Chambers of Commerce and Industry (Ficci) has expressed concern about the devaluation of the rouble and said that India should exercise tight vigil to ward off the negative impact . The President of Ficci, Mr K K Modi, said that “contagion” of the South East Asian meltdown seems to be spreading to the other parts of the world. Mr Modi said that coupled with continuing instability in the exchange rate of South East Asian currencies, devaluation of the rouble will set new type of problems to the Indian exporters. The world economic scenario, Mr Modi pointed out, is far from satisfactory. The US economy after a solid growth in the first quarter at 5.5 per cent has slowed down to 1.5 per cent. The US exports are also facing problems due to strengthening of the dollar in the midst of widespread spree of devaluation particularly among Asia countries. The devaluation of yuan and yen by China and Japan respectively could set off a chain of reactions on the Indian shore as well. Assocham said devaluation of currencies by any of India’s competitor in exports was bound to deprive the country of its advantages. “Though the
depreciation of rouble would not have any major impact,
depreciation of yuan and yen could push the
country’s exporters to the wall,” an Assocham
offical said. |
Ashok hotel for Chandigarh CHANDIGARH, Aug 18 — The Union Minister for Tourism, Mr Madan Lal Khurana, will lay the foundation stones of a 5-star hotel in Sector 17 here and a 3-star hotel at Anandpur Sahib tomorrow. Lt-Gen (retd) B.K.N. Chhibber, Governor of Punjab, will preside over the local function. The hotel is expected to be completed by the year 2000 and will have 100 rooms, two restaurants, a coffee shop, two party rooms, a business centre, a shopping mall, a health club and a banquet hall for 500 persons. To be called Chandigarh Ashok, it will be the 34th hotel of the ITDC’s Ashok group. The ITDC already has one hotel in Manali. The hotel at Anandpur Sahib is a joint venture between the India Tourism Development Corporation and the Punjab Tourism Development Corporation. It is expected to be ready by 2000. Mr Parkash Singh Badal will preside over the function at Anandpur Sahib. Mr G.S. Tohra, SGPC President, and Mr Ashok Pradhan, Director-General, Tourism and Chairman and Managing Director, ITDC, will also be present. This hotel will have 500 rooms. The ITDC and the PTDC will hold 51 per cent and 49 per cent equity respectively. This project is expected to cost Rs 7 crore. The first phase, which includes a restaurant, is expected to be completed by March, 1999, to coincide with the tricentenary celebrations of the birth of the Khalsa. When complete the Anandpur
Sahib hotel will have a multi-cuisine restaurant, a
banquet hall to accommodate 100 persons and a tourist
reception centre next door. The total area earmarked for
this project is 6 acres. |
M&M offers 350 crore
investment in Punjab CHANDIGARH, Aug 18 — A high-level team of the Mahindra and Mahindra group led by its Executive Director and President of Infrastructure, Mr A.K. Nanda, called on Mr Parkash Singh Badal today and offered to install a tractor unit and other component units in Punjab involving an investment of over Rs 350 crore. The team agreed to set up other projects like a container freight station, “Super Mal” (a unique shopping complex), a commodities exchange project, industrial parks, a second-hand car market, a software technology park and an information technology institute. Mr Nanda told the Chief Minister that the container freight station will be located near Amritsar so that the cargo facility being created at the international airport could be availed. The Chief Minister asked the team to explore the possibility of promoting tourism at places like Harike, Ropar and Ludhiana.The visiting team also offered management assistance and consultancy services for completion of projects connected with the tricentenary year of the birth of the Khalsa. Mr Ramesh Inder Singh,
Secretary, Industries, Mr S.S. Brar, Managing Director,
PSIDC, also attended the meeting. |
‘On-line’ lottery soon CHANDIGARH, Aug 18 — The winners of the Baisakhi bumper lottery draw were given their prizes at a function here today. Capt Kanwaljit Singh, Finance Minister, was the chief guest. Mrs Despali Dutta Roy of Calcutta won the Ist prize of Rs 1 crore. The Finance Minister said that this year Rs 1,000 crore had been collected and the target for next year had been fixed at Rs 1,400 crore. The Punjab Government will soon start an on-line (computerised) lottery soon. Mr Rajan
Kashyap, Principal Secretary, Finance, Mr Prabhjot Singh
Mand, Director, Lotteries, Mr V.K. Bhalla, Director,
Small Savings, also spoke. |
Chamber hails power corporations CHANDIGARH, Aug 18 — The PHD Chamber of Commerce and Industry today welcomed thecreation of the Haryana Power Generation Corporation and the Haryana Vidyut Prasar Nigam by splitting the state electricity board. In a statement here, Phdcci vice-president Ashok Khanna said the constitution of the two corporations by the Haryana Government would bring “professional and commercial considerations into play instead of the bureaucratic approach.” It should be ensured that
the new authority functioned independently and “free
from the shackles of typical government control and red
tape,” he said. |
Pedal on reforms road to car economy WASHINGTON, Aug 18 (PTI) — Eminent economist Mahbub-ul-Haq has lambasted India and Pakistan for using the East Asian turmoil as a pretext to slow down reforms and said this would be a mistake as the South Asian region required fast-paced liberalisation to become a major global force. “South Asia is a bicycle economy compared to the car economy of East Asia. And the absence of a tyre puncture should be no cause for celebration,” Haq says in an article published posthumously in a United Nations journal. The challenge is to graduate to a car economy, which cannot be accomplished without universal education, raising investment and fast economic liberalisation — the path that East Asia has already taken. “Don’t congratulate yourselves on having escaped East Asia’s turmoil,” Haq says in the United Nations Development Programme (UNDP) publication titled “Choices”. There is nothing intrinsically wrong with East Asian economies, he said adding that the current crisis in East Asia is one of short term liquidity, not long term development. The countries cannot enjoy the fruits of high growth unless they adopt universal education, raise investments and fast economic liberalisation, the path East Asian countries have already taken. I was amazed that a number of South Asian policy-makers, particularly in India and Pakistan, started congratulating themselves on not having adopted the economic liberalisation policies of their East Asian neighbours and having escaped the turbulence. This is a mistaken view,” he said. East Asia started behind South Asia in 1960 and is now 27 times ahead in terms of per capita income. East Asian banks, the Pakistani economist said, made some bad loans, which was not unusual in an exciting period of fast-paced growth. Short-term debts, particularly the inflow of speculation, was not carefully monitored. The US and Japanese economies suffered worse financial troubles in the past. On the current thinking on the East Asian crisis, he said “it is the height of intellectual dishonesty to call an experience the East Asian miracle for the last two decades and then, within a year, to start labelling it as “crony capitalism”. Nothing much has changed in East Asian economic fundamentals.” “What is also amazing is that the International Monetary Fund (IMF) is applying the same cookie-cutter approach to the problems of East Asia as it does to all of its clients in the developing world,” Haq said. “It is also important to remember that private financial markets, and not profligate governments, were the source of financial irresponsibility in East Asia. Why rush in with the same standard recipe of cutting down government spending....” “In fact, the East Asian crisis says more about the lack of global economic governance than about the inefficiency of national actions. “The world simply does not have a credible lender of last resort that can bail out countries from short-term liquidity problems and prevent long term economic damage. The central banks perform this role at the national level. But we have no global central bank,” he said. Coming down heavily on the IMF, he said it was a pale shadow of what it was supposed to be. At the IMF’s creation in 1944, John Maynard Keynes wanted the institution to have resources equal to 50 per cent of world imports. Today, Haq pointed out, IMF’s resources equal a meagre 1 per cent of the world imports. Private speculators can,
in a day, mobilise over ten times as much in financial
flows as the IMF commands in total, Haq said. |
Eicher to roll out 535cc bike by October NEW DELHI, Aug 18 (UNI) — Royal Enfield Motors (REM), part of the Eicher group, is all set to roll out the 535 CC bike by October this year followed by the 624 CC motorcycle. The 535 CC engine has already been developed and tested. The bike is now ready for production and would be introduced in the market by October 1998, Mr Subodh Bhargava, Eicher group Chairman said here. Besides, the design and development work for the 624 CC engines is in progress and the prototypes are expected to be completed by the third quarter of the current fiscal, Mr Bhargava said. The company has already rolled out the new bikes powered with AVL 350 CC upgraded “lean burn engine”. Regarding the
company’s performance, Mr Bhargava said for REM,
1997-98 was a disappointing year due to disturbed
industrial relations on account of stalemate in respect
of negotiations with the workers’ union regarding
long term wage settlement and bonus for the year 1996-97.
This affected production from the second quarter onwards
leading to a lock-out of the Chennai plant from February
6 to April 4. |
Rs 1,250 crore loan for Videocon power project NEW DELHI, Aug 18 (PTI) — A consortium of financial institutions (FIs) led by the Industrial Finance Corporation of India (IFCI) has approved a Rs 1,250 crore loan for the 1050 MW north Chennai project of Videocon Power Ltd. “IFCI along with IDBI and ICICI have approved a Rs 1,250 crore for our power project and we hope to achieve financial closure before the year end,” Videocon Power Director Kuldeep Drabu told PTI. IFCI is the largest lender of the group providing Rs 450 crore to the project, while IDBI and ICICI will lend Rs 400 crore each, he said. IFCI whole-time Director Tapan Ganguly said the fund would carry an interest rate of 3.5 per cent above the prime lending rate (PLR), besides interest tax. The power project is among the large core sector projects in which IFCI is involved. A consortium was formed keeping in mind the size and requirements of the project, he said. The interest rate provided by all the three FIs will be the same and the funds will be finalised shortly, Ganguly said, but declined to give the total funds involved. The Rs 4,600 crore project is jointly promoted by Videocon Limited and Swiss-Swedish engineering giant ABB Ltd. The company is set to raise another Rs 350 crore from the SBI, Infrastructure Investment Bank of India (IIBI) and the Power Finance Corporation (PFC). While the SBI will lend Rs 150 crore, IIBI and PFC will chip in with Rs 100 crore each. The company has already worked out 32 per cent of the total project cost from the domestic market. The project has a debt equity ratio of 70:30 of which the debt part alone is worth Rs 3,500 crores. Videocon has appointed
four leading fund managers including ABN Amro and Credit
Suisse First Boston for arranging foreign currency debt
to the tune of $615 million. |
Bajaj Auto asked to stop prize scheme NEW DELHI, Aug 18 (PTI) — The Monopolies and Restrictive Trade Practices Commission (MRTPC) has directed Bajaj Auto Ltd and its dealers to suspend the prize scheme introduced by the company some time ago to boost the sale of its scooters. “We also direct the company not to float any such prize scheme in any part of the country,” MRTPC Chairman A.N. Divecha and member R.K. Anand said in an ex parte interim order. The order came on a complaint filed by a consumer Ashok Kumar Bajaj alleging that the company raised the price of scooter to meet the expenses incurred on the prize scheme. The prize scheme envisaged a Maruti 800 car as the first prize, a BPL colour TV as the second prize and various other things like a refrigerator, stereo etc. MRTPC said, “in view of the matter, we prima facie think that the balance of convenience is in favour of consumer in general and the present complainant in particular as he feels to have been duped by such scheme.” The complainant alleged that besides raising prices, the company was also selling older models which do not have new technology to meet the pollution norms. Asking the company to comply with the order by August 21, the commission refrained the firm and its dealers from holding any draw of prizes till further orders. The case will come up for
further hearing on September 16. The company has also
been asked to file its reply by September 30. |
Jay Engineering to end losses NEW DELHI, Aug 18 (PTI) — The Jay Engineering Works Ltd, part of Siddharth Shriram group, expects to wipe out its accumulated losses and come out of the purview of the BIFR in the next 12 to 18 months. “Infusion of fresh funds by the promoters and financial institutions along with re-location of its production facility, and cost cutting measures will help the company wipe out its accumulated losses,” Chairman of the company Siddharth Shriram told newspersons here today. The company’s accumulated losses as on March 31, 1998 stood at Rs 77 crore as against Rs 85 crore reported in the previous year. As part of rehabilitation and revival scheme proposed by the BIFR, Rs 33 crore would be brought in by the Siel Ltd, promoter of the company, Rs 15.5 crore by financial institutions and Rs 30 crore by selling land in West Bengal. The company plans to develop and invest in its fans business, tool lines and paint shops in the coming years. It has also shifted its fan and sewing factories to a single location to reduce cost. “We have shifted sewing and fans factory to Gurgaon in July this year and the impact of it would be visible in the next quarter,” Shriram said. The group plans to invest Rs 25 crore in developing its existing factories as well as building marketing infrastructure of Usha International, another group company, Siddharth Shriram said. Usha International markets the products of Jay Engineering under the “Usha” brand owned by it. Siel has already brought in, as part of the rehabilitation scheme proposed by BIFR, Rs 18 crore by subscribing to 1.1 crore shares of Rs 10 each at par aggregating Rs 11 crore and seven lakh 10 per cent redeemable preference shares of Rs 100 aggregating Rs 7 crore in January this year. After the infusion of the money, Jay Engineering has become a subsidiary of Siel Ltd. On future plans for the company, Shriram said, “our thrust would be the small appliances and we are expecting an annual growth rate of 25 per cent.” Jay Engineering had reported a net loss of Rs 95 lakh in the first quarter of the current year compared to Rs 2.30 crore during the similar period last year. The company had reported a
net profit of Rs 7.64 crore on sales of Rs 158 crore
compared to a loss of Rs 21.85 crore in 1996-97 on sales
of Rs 149 crore. |
Usha Intl net up
66 per cent Hewlett Packard
profits up |
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Gold firm Onion falls Lakhotias Honda Siel ‘Ms
Press’ SBI |
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