Indo-Lankan trade to open fresh avenues
NEW DELHI, Dec 29 — The bilateral free trade pact between India and Sri Lanka will help speed up the process of implementation of the proposed South Asia Free Trade Association, the Federation of Indian Export Organisations has said.

• Apprehensions on FTP

Euro makes Americans nervous
WASHINGTON, Dec 29 — The arrival of euro, the common currency of 11 European nations is expected to help Europeans put aside their linguistic, cultural and political differences and emerge as a global economic rival to the United States.

• Euro to be quoted from January 4

India may be largest milk producer
NEW DELHI, Dec 29 — India is expected to emerge as the world’s largest milk producer in 1998-99 with output touching 74 million tonnes, according to the Food and Agriculture Organisation .

Edible oil supply may ease in ’99
NEW DELHI, Dec 29 — India’s edible oil scenario is likely to witness an easy supply situation on surplus stocks and prices being kept under leash, industry officials said today.

Salient features of buyback of shares
BUY back of shares means a company buying its own shares. Earlier a company was not allowed to buy its shares nor could it advance money for the purchase of its shares as per Section 77 of the Companies Act, 1956.

• STOCKS

Indo-Lankan trade to open fresh avenues
Tribune News Service

NEW DELHI, Dec 29 — The bilateral free trade pact between India and Sri Lanka will help speed up the process of implementation of the proposed South Asia Free Trade Association (SAFTA), the Federation of Indian Export Organisations has said.

FIEO President, Mr Ramu S Deora, said in a statement here today that the trade agreement between India and Sri Lanka would help in exploring fresh avenues for enhancing economic cooperation on an intensive scale by synergising each countries’ comparative advantages.

This trade pact, he said, would solve trade related issues between the two countries which have been kept in abeyance for a long time.

The first free trade agreement between two members of the SAARC would pave the way for other members of the forum to consider entering into similar agreements and make the South Asian region a free trade zone eventually. The agreement, Mr Deora said would further strengthen the possibility of boosting tourism between the two countries. It demonstrates the logic of regional economic cooperation which is so forceful that it can positively influence the political road blocks, the FIEO chief said.

Mr Deora urged other countries in the region to make similar efforts to turn SAARC into one of the potential high growth regions through bilateral arrangements which give preference to each others commodities. In this context, he said that FIEO has sponsored a high-powered multi-products business delegation to Pakistan to explore new trade avenues, and strengthen the existing ones. This would be a step forward in promoting bilateral trade with one of India’s important trading partners in the SAARC region. FIEO would also make efforts to explore possibilities of exchanging visits with other SAARC member countries in coming months, Mr Deora said.

He said since Sri Lanka has potential for imports for a wide variety of consumer goods, such imports from India would work out to be much more economical for Colombo.

As per the agreement, India would phase out its tariff to zero per cent within three years. The phasing out process should be further rationalised to benefit both the countries keeping in view the volume of business, Mr Deora said.

Apprehensions on FTP

COLOMBO, Dec 29 (PTI) — The free trade pact (FTP) signed by India and Sri Lanka has been received here with a degree of disappointment in view of the failure of the two countries to reach an agreement on the negative list of products to be kept out of its purview.

The vacillation and the last-minute objections raised by bureaucrats of both countries in finalising the "negative list" of items crucial to the success of the pact is being seen here by a section of the media and trade circles as "attempts to water down what was originally perceived to be a bilateral fast track free trade treaty."

A section of the media known for its pro-Pakistan and anti-India stance had been conducting a campaign for the past few weeks dissuading the government from "rushing" through the treaty which, it said, favoured India.

While the official media has hailed the agreement as a "landmark treaty", the private-owned Island newspaper has advocated caution.

Panipat refinery to be commissioned by March end

PANIPAT, Dec 29 (PTI) — After a delay of nearly one year, state-owned Indian Oil Corporation’s (IOC) six million tonne refinery is expected to go on stream within the current financial year.

However, there would be no cost overruns in the Rs 3868 crore project, IOC Executive Director Surinder Singh Saini told visiting newsmen from Delhi.

The company is also drawing up a detailed financial report (DFR) to get clearance for its expansion project for enhancing its capacity to nine million tonnes a year, he said.

“The project has been delayed due to the inability of contractors and suppliers to adhere to their schedule”, Saini said.

Even certain multinational corporations besides public sector and Indian private sector companies were responsible for the project going behind schedule, he said but ruled out any cost overruns due to the delay.

“The contractors were chosen on the basis of their performance in earlier IOC projects and a databank maintained by Engineers India Limited (EIL). In future we will be more careful in selection, particularly for the expansion project”, Saini said.

Punsup Bhavans
Tribune News Service

BATHINDA, Dec 29 — The Punjab Government will open Punsup Bhavan in each district of the state in phased manner. This was stated here today by Mr Kirpal Singh Libra, Chairman of Punsup at a function organised in connection with the foundation laying ceremony of Punsup Bhavan. Mr Libra said that each Punsup Bhavan would be built at the cost of Rs 50 lakh and necessary land for constructing the bhavan at Roopnagar, Gurdaspur, Ferozepore, Hoshiarpur, Ludhiana and Sangrur had been procured. He said that last year Punsup earned a net profit of Rs 55 crore and in the current financial year the profit would be more than the last year. He added that Punsup earned profit for the first time only last year.

Euro makes Americans nervous

WASHINGTON, Dec 29 (PTI) — The arrival of euro, the common currency of 11 European nations is expected to help Europeans put aside their linguistic, cultural and political differences and emerge as a global economic rival to the United States.

The Americans are alarmed that the euro countries of Western Europe, with a gross national product comparable to or exceeding that of the U.S., will integrate politically and challenge their supremacy as the sole superpower in the world, after the introduction of single common currency on new year.

“While a politically United Europe remains a distant dream,” wrote the Washington Post in a front page despatch, “proponents think the single currency will help Europeans put aside their linguistic, cultural and political differences and become a global economic rival to the United States.”

At present, Western Europe is linked to the U.S. through Nato but, in Nato, an American is always Supreme Commander and America dominates Nato.

All this may unravel, the U.S. fears, if Europe is politically united in the wake of the euro replacing national currencies in 2002.

India may be largest milk producer

NEW DELHI, Dec 29 (PTI) — India is expected to emerge as the world’s largest milk producer in 1998-99 with output touching 74 million tonnes, according to the Food and Agriculture Organisation (FAO). This shows a growth rate of 4.2 per cent.

World milk production in 1998-99 is expected to grow by 1.8 per cent to 556 million tonnes as compared to 546 in 1997-98.

Production in East European countries, the Russian federation and Poland in the current year is expected to be 125 million tonnes, 33 million tonnes and 12 million tonnes, respectively, same level as the last year.

Edible oil supply may ease in ’99

NEW DELHI, Dec 29 (PTI) — India’s edible oil scenario is likely to witness an easy supply situation on surplus stocks and prices being kept under leash, industry officials said today.

“There are already huge stocks at the ports. The surplus stocks are expected to exceed demand in the country,” Vanaspati Manufacturers’ Association Executive Director S.K. Chadha told PTI.

The eased supply scene is being predicted despite India’s edible oil shortage being projected at 14 lakh tonnes during the current oilseed year (November 1998-October 1999), the same as the previous crop year.

“Prices should stabilise in the long run, though much would depend on the oilseed production in the country,” centre for oil and oil industry trade Executive Director K.M.L. Chabra said.

Concurring with government’s view of demand-supply gap being stagnant, he said the oilseed crop was expected to be a little better in view of a better production during the rabi season.

Food Ministry sources said the supply scenario was expected to be comfortable next year and government had already taken a number of steps this year to ensure edible oil prices were kept under control.

Mr Chadha pointed out that global prices of edible oil were declining on increased supply.

“Huge stocks have been reported from Malaysia leading to prices easing,” he said.

Refined deodourised and bleached (RBD) palmolein FOB (freight on-board) prices had declined from $ 710 a tonne in August to $ 627 a tonne for January, he said.

“Prices can be lower further in February and March,” he said.

Mr Chabra said unlike this year, Indonesia, which had curbed exports first by banning shipments and then slapping a 40 per cent export tax, was expected to sell more in the global market.

“Indonesia is expected to come out fully in the international market this year and the world outlook for prices look easy,” he said.

However, for the domestic industry getting raw materials to work to the capacity was important.

“The industry can break even only if there is adequate raw material,” Chabra said, adding it would depend on the oilseed crop.

Already, oilseed production was marginally up by 3.5 lakh tonnes during the kharif season, he said.

Big expectations but bigger disappointments

NEW DELHI, Dec 29 (UNI) — The year 1998 would go down in the history as the period of great expectations for the automobile industry and even greater disappointments.

The sector is, in fact, more than willing to wipe off this year from the annual calendars for more reasons than one. And what’s more, the country’s automobile industry, wrecked by poor sales in 1998, has little to cheer about in the new year.

To start with, 1998 saw the deepening of the recession which had hit the sector last year. This had led to major production cuts and slashing down of sales targets by almost every player in the segment, which included market leader Maruti Udyog Limited (MUL). Around mid-year, the industry saw imposition of increased excise which resulted in an upward jump in prices of vehicles and a further drop in sales.

This was, in fact, the year of the dwarfs with three new small cars hitting the country’s streets in three months. While two South Korean giants — Hyundai Motors and Daewoo Motors — have already wheeled out their small cars to take on the might of Maruti. The third car and the most looked forward to — Telco’s Indica — is just round the corner.

The luxury and mid-size segments continued to be among the worst hit in the automobile industry. Despite this, two more sedans — Honda City and Mitsubishi Lancer — made their way into the country and are currently among the top sellers in the segment.

Among those who called off plans to enter this once-lucrative-now-bad automobile arena, the most prominent were Audi Ag and BMW bikes while Escorts and Bajaj Auto swore by their decision to keep away from the car market. While Audi has freezed all investment plans for the Indian market, BMW, after a battered inning, has decided not to revive its venture with Hero Motors for producing and selling BMW bikes in the country.

The year also saw the wildest of diversifications ever and the country got its first multipurpose vehicle and the first sports car. While the former project got underway, the latter, despite pompous announcements, is yet to hit the roads.

Besides, two other probable sports car manufacturers — Overseas Concept Auto Limited of Chandigarh and DLC Sagitta Automotive Industries of Mumbai — who had announced ambitious plans for the country with much fanfare, faced major delays in launches. Their cars are, in fact, yet to be seen on the roads and the future is not bright either.

The year also saw the government bringing about major changes in the country’s first comprehensive, transparent and the most-sought automobile policy. The Directorate-General of Foreign Trade (DGFT) has decided to maintain the indigenisation levels at 50 per cent and 70 per cent at three and five years, respectively, but changed the formula applied to calculate these levels.

As per the new norms, only imports by car companies and by those vendors whose own import contents are more than 50 per cent will be considered while calculating the localisation levels. This meant that if a vendor is importing less than 50 per cent of its inputs, the equipment supplied by it will be treated as indigenous. Hitherto, if a vendor imported even 10 per cent of its inputs, it used to be counted while calculating the vehicle’s import content.

This did bring some cheer for the industry with all car makers making a beeline to the DGFT for signing the policy.

The growth rate for the entire industry — commercial vehicles, cars and two-wheelers — has stymied to a single digit in 1998, from around 12 per cent in 1997 and a peak of about 25 per cent in 1996.

“We are presently caught in a cyclical recession and normally, a recession is only for two years. We have already experienced those two years of turmoil and now it is time to look forward, or rather look up,” Rajat Nandi, Executive Director of the Association of Indian Automobile Manufacturers, said.

So taking his word, it is time for the automobile industry to open their arms wide and welcome the new year. The industry can also go ahead and open the wine bottles and raise a toast for the good health of the industry and for the future.

Leyland

NEW DELHI (PTI): The automobile manufacturer Ashok Leyland has received the 1998 version of ‘QS 9,000’ certification, developed by multinational auto majors Ford, General Motors and Chrysler.

The QS 9000 certification is a necessary qualification for suppliers of auto parts to these companies, a company release said.

Besides attaining the latest quality certification, the company has received ISO 9001 and ISO 9002 certifications.

Sugar mill for Gidderbaha
Tribune News Service

GIDDERBAHA, Dec 29 — The Punjab Government is holding talks with private industrialists to set up a sugar mill in the Muktsar district which has been affected by waterlogging.

Official sources said that talks for setting up a sugar mill in joint venture were on advance stage with three private business houses. The mill would be set up in Gidderbaha assembly segment of the district.

Mr Manpreet Singh Badal, MLA told TNS that government was making efforts to change the crop pattern in the Muktsar district and farmers were being motivated to grow sugarcane instead of cotton crop which had been failing for the last many years.

He said that for promoting sugarcane cultivation in the region, the capacity of Doda, Kotbhai and Jaito distributaries falling in the district would be increased by 25 per cent. He said that Rs 6 crore had been earmarked by the government for this task and out of it Rs 1 crore had already been given to irrigation department.

Mr Badal said that 90 per cent waterlogging in the district had been eradicated and in the remaining problem areas, drains were being dug up. He added that this work would be finished by March 31, 1999.

It may be mentioned here that due to severe waterlogging in this district, the production of cotton crop had become negligible and the cotton growers had to suffer huge monetary losses.

Salient features of buyback of shares
By V.N. Agarwal

BUY back of shares means a company buying its own shares. Earlier a company was not allowed to buy its shares nor could it advance money for the purchase of its shares as per Section 77 of the Companies Act, 1956. By a recent order promulgated on 31.10.98 by the Central Government a new Section 77A has been inserted allowing companies to buy their own shares with certain conditions. These conditions, in brief, are listed below:-

(a) Buy back of shares is allowed upto 25 per cent of paid up capital and free reserves and can be purchased from the existing shareholders, open market, odd lots, sweat equity and stock option, sweat equity means the shares issued to directors or employees of the company.

(b) Buy back of shares are permitted if the Articles of Association of the Company authorise and a special resolution is passed by the Company in its shareholders meeting. The notice will give full disclosure of all material facts viz. necessity of buy back, class of shares and the amount to be invested and the time for completion of the process of buy back etc.

(c) The process of buy back of shares will be completed in 12 months from the date of passing the special resolution and are not allowed to make any further fresh issue for 24 months from the completion of buy back of shares. It is now proposed that this will not apply in respect of the same class of security. Therefore, there will be no restriction for issue of other class of securities as proposed in the bill.

(d) No buy back is allowed if the company has defaulted in repayment of deposits, redemption of debentures/preference shares and repayment of loans to the financial institutions and banks.

(e) The company shall not purchase its own shares through any subsidiary company including its own subsidiary or through any investment company or group of investment companies.

(f) Shares bought back will be physically destroyed within 7 days from the date of buy back in the presence of a Registrar or merchant bankers and the Statutory Auditors.

(g) The listing companies will have to comply with the conditions of SEBI. There are penal and prosecution provisions for the company and the officers in default for the failure to comply with the above conditions.

The above restraints and constraints will enable only a few companies to buy their own shares. With the buy back proposal the corporate concept will of course, be effected.

Euro to be quoted from January 4

MUMBAI, Dec 29 (PTI) — The Euro will be launched on January 1, 1999, but as the international foreign exchange (Forex) market will remain closed from January 1 to January 3, the euro will actually be quoted from January 4. The Indian forex market will remain open on January 1 but the quotations for the euro will not be available since the European and other international markets would remain closed on that day, according to a Foreign Exchange Dealers’ Association of India (FEDAI) release.

STOCKS
ACC leads late rally on FI support

MUMBAI, Dec 29 (PTI) — Led by ACC, a number of key scrips recovered their initial losses and even posted handsome gains on the stock market today as financial institutions and some operators made purchases in good quantity at the fag end.

Tata Sons, a Tata group of companies, has reportedly picked up a sizeable quantity of shares of Tisco, Tata Chem and Telco. The company has been consistently buying shares of its group companies for quite some time now.

A few operators reportedly made purchases on behalf of some foreign institutional investors (FIIs) in key scrips like BHEL, Telco, ACC and others. Domestic institutions bought shares of ONGC, MTNL and Indian Organic Chemicals.

The BSE sensitive index opened moderately lower at 3041.74 and dropped further to the intra-day low of 3014.61 around mid-session. However, late buying helped push up the prices lifting the sensex to close at 3046.29 as against yesterday’s close of 3054.73, netting a minor fall of 8.44 points. The BSE-100 index eased fractionally by 2.23 points to 1354.69 from previous close of 1356.92.

Dealers said operators were seen selling heavily in high priced scrips like Zee Telefilms, Castrol, Hind Lever and Pentafour Software to use the proceeds for investments in side stocks, mainly Arvind Mills, ITC Bhadra and others.