IRA Bill: trouble yet to begin
NEW DELHI — The insurance industry went through 1998 with bated breath only to see reforms passing it by yet again in the face of continuing tussle between sound economic sense and populism.

Review meetings for PSUs from Jan 15
NEW DELHI, Dec 30 — Minister of State for Industry Sukhbir Singh Badal will commence the second round of review meetings from January 15 to assess the performance of 48 public sector undertakings under the Department of Heavy Industry as also the progress in the joint venture formation of 23 loss-making units.

‘Opposition to economic issues will prove costly’
NEW DELHI, Dec 30 — Political parties should behave more responsibly while opposing crucial infrastructure projects as delay in clearing them might prove costly for the nation, former Prime Minister Deve Gowda said today.

Assocham seeks FIs for small traders
NEW DELHI, Dec 30 — The Associated Chambers of Commerce and Industry of India has called for the creation of financial institutions on the lines of SIDBI and NABARD to enable traders to raise capital with built-in insurance and risk-hedging measures in view of the increased competition from an array of new products in the market.

Sugar mill damaged in fire PHAGWARA, Dec 30 — Sixteen main cables and one rotor of a turbine were gutted in fire at local private sector Oswal Agro Sugar Mill last night causing loss of Rs 15 lakh.

PAU convocation
LUDHIANA, Dec 30 — The Punjab Agricultural University, Ludhiana, and Tractors and Farm Equipment Limited, Chennai, will work in close collaboration for development and testing new farm machinery and equipments.

SAIL runs under heavy losses
STEEL Authority of India Limited is one of the prestigious Navratna of Central Government. It is running under heavy losses much of which is self imposed. One instance is enough to know what is happening inside.

Govt modifies equity linked savings scheme
NEW DELHI, Dec 30 — The Union Government has decided to modify the equity linked savings scheme to permit open ended schemes under the ELSS.

Ranbaxy among top 10
NEW DELHI, Dec 30 — Ranbaxy Laboratories Ltd has achieved the distinction of being ranked among the leading companies in the 1998 edition of Review 200: Asia’s Leading Companies, the annual survey conducted by Far Eastern Economic Review.

STOCKS

IRA Bill: trouble yet to begin

NEW DELHI, (PTI) — The insurance industry went through 1998 with bated breath only to see reforms passing it by yet again in the face of continuing tussle between sound economic sense and populism.

Prime Minister Atal Behari Vajpayee did succeed in getting the Insurance Bill to the Lok Sabha defying opposition from his own party, but its subsequent reference to a select committee of Parliament for further study indicated more uncertainty.

It took successive governments over six years to firm up a view on the quantum of foreign participation in insurance and when the Union Cabinet decided to allow 40 per cent stake for foreign participants, there were protests from within the BJP.

As per the latest decision, the government will permit 40 per cent foreign holding in private ventures, of which 14 per cent will be strictly for non-resident Indians and the rest with foreign insurance firms or overseas corporate bodies.

Seven years after economic reforms were initiated, insurance remains the only component of the financial sector that had been left untouched by the governments led by the Congress, the United Front and the BJP.

The Congress government floated the idea through its Finance Minister Manmohan Singh while the United Front spoke at length of the need to end the state monopoly in insurance but was unsuccessful in getting the Bill through Parliament.

And when finally the BJP government garnered enough courage to propose privatisation in this multicrore industry, its own rank and file have risen in revolt on the grounds that it was a step taken under IMF-World Bank diktat.

Even the Council of Ministers spelt out contradictory statements on the introduction of the insurance regulatory authority (IRA) Bill that aims to lay down crucial operational aspects for private sector participation.

The BJP top brass including, President Kushabhau Thakre, voiced some concern over the move, despite the fact that the party had listed insurance reform in its election manifesto.

On their part, employees of LIC and GIC struck work for a day to protest privatisation, arguing that foreign players will only take the lucrative city business while leaving out rural folk.

As for the prospective participants, the uncertainty is killing.

Many have concrete proposals to tie-up with Indian companies but the dithering by the government has led to a major crisis of confidence with prospective private participants, who are unsure of a level playing field vis-a-vis LIC and GIC.

As of now, the players are worried that a government cornered by both reformists and those against liberalisation may opt for a middle path by opening the sector, but putting up enough financial and procedural hurdles.

While presenting the Budget, Finance Minister Yashwant Sinha did not limit entry of private insurance companies into any specified areas as done by his predecessor P Chidambaram who limited investment only to health segment.

The United Front government though it wise to adopt a creeping way before totally opening up the sector. The BJP, on the other hand, however, opened up the whole industry with swadeshi caveat.

The Bill tabled in Parliament seeks to end the monopoly of LIC and GIC while setting up an insurance regulatory authority (IRA) as the sectors new supercop with powers to frame regulations, issue liceneses, set capital requirements and inspect the books of private insurers.

Finance Minister Yashwant Sinha sought to allay fears of privatisation of LIC and GIC and said the Bill only sought to remove monopoly status and did not envisage dilution of government equity.

In a bid to guard against outflow of funds, the Bill has stipulated that premium income collected by private firms would have to be parked in specific domestic instruments and will not be allowed to be invested abroad.

To stop trafficking in licences, the Bill provides that no insurer would be allowed to transfer business to another promoter or company without IRA’s permission.

However, despite its earlier experience relating to Telecom Regulatory Authority (TRAI), the government has again sought to keep overriding powers over the IRA by stating that its view would be final on all issues.

The troubles are yet to begin. Assuming that the IRA Bill is passed, the government will still be left with he hurdle of amending the LIC Act and the GIC Act.

The Acts were framed to consolidate scattered private insurers across the country under one umbrella. An amendment on this would effectively mean to allow multiple operators in insurance industry.

Apart from mechanics of amending these Acts, the government will have to do some explaining to the 1.5 lakh strong workforce who are up in arms against any move to dilute the powers of the state-run companies.

However, as of now it looks as if the recommendations in the Malhotra committee reports and the subsequent setting up of the IRA are all pushed to the background.

Another guesswork is who will benefit politically with such a reform.

‘Opposition to economic issues will prove costly’

NEW DELHI, Dec 30 (PTI) — Political parties should behave more responsibly while opposing crucial infrastructure projects as delay in clearing them might prove costly for the nation, former Prime Minister Deve Gowda said today.

If one party cleared a particular project, the Opposition is always ready to impute motives. This will lead to cost escalation besides disappointing foreign investors, he said inaugurating the 20th international conference of Non-Resident Indians (NRIs) here.

Gowda particularly referred to the proposed cogentrix power project in Karnataka which had not taken off yet though it signed a memorandum of understanding (MoU) nearly six years back.

But the Enron project showed that foreign investors had a “safety valve” Indian judiciary, he said contrasting it with China.

He commended the NRIs for responding to the resurgent India Bonds (RIB) floated by the government in a big way and pointed out that NRIs were willing to invest provided the right climate was established.

Delhi Chief Minister Sheila Dixit assured speedier decision making for attracting NRI investments into the country.

She also invited them to build the city’s infrastructure in a big way.

Review meetings for PSUs from Jan 15

NEW DELHI, Dec 30 (UNI) — Minister of State for Industry Sukhbir Singh Badal will commence the second round of review meetings from January 15 to assess the performance of 48 public sector undertakings (PSUs) under the Department of Heavy Industry (DHI) as also the progress in the joint venture formation of 23 loss-making units.

The Centre has already initiated the process of joint venture formation as well as divisions’ sell off, besides agreeing to the closing down of eight terminally ill and unviable PSUs, Mr Badal said. “Consultants have been appointed for most of the PSUs which have been shortlisted for the formation of joint ventures.

The process has already been initiated and I will review the progress next month,” he added.The units to be closed down include are National Instruments Limited (NIL), Bharat Ophthalmic Glass Limited (BOGL), Weighird India Limited (WIL), National Bicycle Corporation of India Limited (NBCI), Cycle Corporation of India.

Assocham seeks FIs for small traders

NEW DELHI, Dec 30 (UNI) — The Associated Chambers of Commerce and Industry of India (Assocham) has called for the creation of financial institutions on the lines of SIDBI and NABARD to enable traders to raise capital with built-in insurance and risk-hedging measures in view of the increased competition from an array of new products in the market.

The absence of such an institutional lending mechanism for the wholesale and retail trade has rendered optimal inventory holdings difficult, often leading to artificial shortages and spiralling prices, said a Chamber press note.

Assocham stated that the organised financial sector has long been wary of lending to the trading community, treating it as a high-risk proposition, mainly because the bulk of trading activity is carried on by small and medium traders.

A substantial proportion of the financial capital needed for trading purposes has been supported by the informal sector where the cost of credit is usually higher than in the formal sector. Not surprisingly, therefore, the share of bank credit for wholesale and retail trade is less than 5 per cent of all credit disbursed.

Sugar mill damaged in fire

PHAGWARA, Dec 30 (PTI) — Sixteen main cables and one rotor of a turbine were gutted in fire at local private sector Oswal Agro Sugar Mill last night causing loss of Rs 15 lakh.

The cause of fire was yet to be ascertained, fire brigade sources said.

It would now take 12 days for the mill to resume cane crushing, said Arun Bhagat, Chief Executive of mill here today.

The mill had already suspended crushing operation yesterday due to snag in turbine.

PAU convocation
From Our Correspondent

LUDHIANA, Dec 30 — The Punjab Agricultural University, Ludhiana, and Tractors and Farm Equipment Limited, Chennai, (TAFE) will work in close collaboration for development and testing new farm machinery and equipments.

The TAFE will design and develop new machines and equipments and the engineers of the PAU would test these in the “farmers” fields and provide the feedback.

This was proposed by Ms Mallika Srinivasan, Director, TAFE, while addressing the convocation and prize distribution function of the College of Agricultural Engineering PAU. Dr G.S. Kalkat, Vice Chancellor, PAU presided over the convocation and awarded degrees to students.

SAIL runs under heavy losses
By P.D. Sharma

STEEL Authority of India Limited (SAIL) is one of the prestigious Navratna of Central Government. It is running under heavy losses much of which is self imposed. One instance is enough to know what is happening inside.

SAIL has evolved a policy for 1998-99 of bulk sale through MoU’s. As per this policy for pig iron rebate is allowed @ Rs 200 per MT for lifting 30,000 MT a year; Rs 250 per MT for 45,000 MT and Rs 300 for 60,000 MT. Eighty per cent lifting is compulsory. Seven MoU’s were signed in Punjab and five were successful. If the lifting exceeds the required level rebate of the next slab is applied.

If a particular MoU is for lifting 30,000 the rebate should be Rs 200 per MT. On the excess quantity only rebate of the next slab should be applicable and not on the entire quantity. This is a direct loss to SAIL and unequal competition for the lower bidder.

Emboldened by this money on platter some moneyed persons are asking SAIL to introduce another slab of lifting upto 90,000 MT with a rebate of Rs 450 per MT. If this quantity is lifted by three different bidders in lots of 30,000 MT SAIL losses Rs 200 per MT. On the other hand a single bidder of 90,000 gets a rebate of Rs 450 per MT. This means a direct loss of Rs 250 per MT to SAIL.

A bidder for 60,000 gets a wind fall of Rs 1.80 crore a year and giant bidder of 90,000 shall get any thing above Rs 3.24 crore. See it from another angle. A bidder of 60,000 MT gets Rs 1.80 crore while a bidder of 90,000 MT gets additional Rs 1.24 crore for lifting just 12,000 MT over 60,000. For this bidder the rebate comes out to be Rs 1,200 per MT against Rs 200 for the lowest bidder. This is a calculated policy to wipe out the lowest bidder who can not compete and to cause disaster to SAIL.

SAIL has policy for C.R. Coils as well. In that policy the rebate remains the same if the bidder lifts beyond MoU quantity. What might have prompted to evolve different policy for pig iron is any body’s guess.

Punjab consumes about Rs 35,000 per MT of pig iron a month; 12000 MT in Ludhiana; 12000 MT in Jalandhar and remaining in Batala and other places. Among the successful bidders, Ludhiana and Jalandhar have one each against Batala’s three. One each of such bidders failed in Ludhiana and Jalandhar. From the above calculations it is clear that the manipulative policy shall give one full rake of pig iron free of cost to the lucky bidder of such a policy.

SAIL sell its other products like M.S. rounds through state small industries corporations. The rebate on such products is just nominal. It has also been observed that the material sold through these corporations is cheaper due to rebate while the same product sold direct by SAIL is costlier. SAIL thus piles up inventories in its stock yards. This again is a loss.

Ministry of steel should intervene to check such wrong and manipulative policies to save its prestigious Navratna.

Govt modifies equity linked savings scheme
Tribune News Service

NEW DELHI, Dec 30 — The Union Government has decided to modify the equity linked savings scheme (ELSS) to permit open ended schemes under the ELSS.

Open ended schemes would enable an investor to join the ELSS at a time of his choice and still gain the tax benefits during the financial year of investment.

However, a Mutual Fund would be permitted one open ended fund under the scheme.

The government has taken the decision in tune with the changing requirements of the market and with a view to further encourage investments in equity instruments, an official release said.

It has also been clarified that the three year lock-in specified under the scheme would commence from the date of allotment of holding of units as the case may be and not just first of April regardless of the date of allotment.

The Government had notified the equity linked savings scheme in 1992, under Section 88 of the Income Tax Act, 1961. Investments upto Rs 10,000 under these schemes floated by Mutual Funds and Unit Trust of India qualify for tax rebates.

Ranbaxy among top 10

NEW DELHI, Dec 30 (UNI) — Ranbaxy Laboratories Ltd has achieved the distinction of being ranked among the leading companies in the 1998 edition of Review 200: Asia’s Leading Companies, the annual survey conducted by Far Eastern Economic Review.

The Review 200 published annually since 1993 is an Asiawide survey which identifies top 90 multinational firms based outside Asia plus the top 10 companies from each of the 11 Asian countries. Companies are evaluated on the criteria of leadership characteristics, quality of services and products, management’s long-term vision, financial soundness and being a company that others try to emulate.It is the largest corporate survey in Asia and this year over 4,000 respondents participated to determine the top 200 companies. Ranbaxy’s ranking among the top 10 Indian companies is a recognition of the company’s achievements, management ability and leadership qualities.

STOCKS
Sensex crosses psychological barrier

MUMBAI, Dec 30 (PTI) — Led by the tobacco conglomerate, ITC Ltd, equity prices flared up the stock market here today on all-round speculative buying and bull support and the sensex gained by 64 points to cross 3110-mark psychological barrier.

The bull charge in ITC Ltd was spurred by the company getting a month’s extension to settle excise duty through Kar Vivad Samadhan Scheme (KVSS) which was extended by one month from the existing deadline of December 31, 1998.

Bulls liquidated their positions in Castrol and created large positions in ITC Ltd anticipating fairly good demand from foreign funds in the new calendar year.

Fertiliser scrips were in limelight supported by 35 per cent increase in subsidy on imported DAP fertiliser announced by the government on Monday. However, marketmen felt the subsidy levels were inadequate and below reasonable costs of production and distribution.

Among the consumer goods scrips, Hind Lever shot up sharply on hectic shortcovering. Tata Group continued to get investment support and posted substantial gains in almost all the scrips. Telco and Tisco came under profittaking at higher levels at the close and ended with moderate losses.

Foreign institutional investors (FIIs) bought large lots of ITC Ltd while local funds also purchased this scrips in small lots.

The fresh buying on a large scale was also attributed to first day of trading for the new settlement at the National Stock Exchange (NSE) whereby punters increased large positions to be released on the last day of the settlement.

Software shares also evoked good response from domestic funds and speculators. Satyam Computers, Pentafour Software, Infosys Tech and Zee Telefilms posted handsome gains on interested buying.

Reflecting the market trend, the BSE sensitive index opened higher at 3074.44 and touched a high of 3118.59 before profittaking trimmed the gains at higher levels. The index closed at 3110.33, showing a rise of 64.04 points over the previous close of 3046.29. The BSE-100 closed with a gain of 30.18 points at 1384.87 over the last close of 1354.69. The BSE-200 ended higher at 318.76 and the Dollex at 124.75 from the previous close of 312.52 and 122.54 respectively.

The market witnessed good turnover on the Bolt system. Total turnover amounted to Rs 1514.29 crore with ITC in the lead totalling Rs 321.39 crore. Other scrips with high turnover were Satyam Computers Rs 153.04 crore, Pentafour Software Rs 136.45 crore, Telco Rs 101.89 crore and SBI Rs 94.92 crore.

SBI launches credit card
Tribune News Service

CHANDIGARH, Dec 30 — Mr M.P. Radhakrishnan, Chairman, State Bank of India, today launched SBI card here. Earlier the SBI card was launched in Delhi and Bombay.

Mr K.K.Narula, Chief General Manager, SBI, Chandigarh Circle said that all the branches of SBI and State Bank of Patiala in the city have received a good response from the public of Chandigarh and was confident that the SBI card would soon occupy the pride of place among credit cards in the city.

Later in the evening at a special function, the Governor of Punjab, Lt Gen (retd) B.K.N. Chhibber received Chandigarh’s first SBI card.

Mr Nitin Gupta, Managing Director, GE Capital TFS, expressed his satisfaction with the response received so far and reiterated GE Capital’s commitment to leverage their worldwide operational experience in the area of credit cards for the benefit of Indian consumers as well as the SBI customers.

Mr Radhakrishnan mentioned that SBI’s emergence into the card business will help to usher in a plastic revolution in the country in a big way and help change the customers’ habit of buying and mode of payments.

Any individual with a gross annual income of Rs 60,000 (Rs 75,000 for salaried individuals ) can apply for the SBI card at an attractive joining fee of Rs 250 and an annual fee of Rs 500. Major benefits for an SBI card holder will be access to cash from a large number of designated SBI branches across the country.

The SBI card, which will be issued as a VISA card, offers the Indian consumer attractive payment privileges and service such as : up to 50 days of interest-free credit; extended credit option; 24-hour SBI card helpline facility; free accident insurance cover for loss of life ( Rs 4 lakh-air accident, Rs 2 lakh others ) and cash access from a large number of designated SBI branches.

SBI cards will be accepted at all Visa card-accepting merchant establishments, which currently exceed over 1,00,000 across India and Nepal.

GE Capital, one of the world’s largest issuers of cards, manages over 80 million cardholders worldwide. GE Capital, with assets of over $ 250 billion and 1997 net earnings of $ 3.3 billion, is a global, diversified financial services company with 28 specialised businesses. GE Capital is a wholly owned subsidiary of General Electric Company (GE).

Bank of Baroda

PUNE (UNI): Bank of Baroda (BoB) plans to introduce inter-branch connectivity in its branches in Pune, Baroda, Ahmedabad and hi-tech cities like Bangalore and Hyderabad next year in the first phase of its project to enable customers to bank anywhere in the country, the Chairman, BoB, K. Kannan has said.

The project, called “Anywhere banking”, will begin from Pune City, Chairman K. Kannan said in an informal chat with reporters during his visit to the city.

Global Bank

NEW DELHI (PTI): Global Trust Bank (GTB) has been appointed as the clearing banker for Bombay Stock Exchange (BSE) and the bank is also considering picking up 5 per cent stake in bse Central Depository Services.

“We see a major opportunity in being appointed as a clearing bank of the exchange” gtb Investment Banking General Manager Dirtesh Shah said.

Rural banks

JAIPUR (PTI): Out of the 196 regional rural banks (RRBs) functioning in 23 states, 126 have registered an impressive profit of Rs 303 crore during 1997-98, according to two apex organisations of bank officers and other workers.

Among the remaining RRBs, 56 decreased their losses, while only 14 banks increased their losses, the Chief Coordinator of the All India Gramin Bank Workers Organisation and the All-India Gramin Bank Officers Organisation, S.K. Rathore, said in a statement here.

US $ Rs 42.51/52
Stg £ Rs 71.17/19
D Mark Rs 25.46/48
Jap Yen (100) Rs 36.91/93

The RBI reference rate was Rs 42.54.

Gold falls
NEW DELHI, Dec 30 (PTI) — Silver continued its upward march on the bullion market today on persistent buying by stockists coupled with higher outside notes and closed with more gains. However, gold in restricted activities moved down following lack of buying activities. The quotations: Silver .999 (ready) 7470, delivery 7470, coins buyer 10,500 and seller 10,600. Standard gold 4235, ornaments 4085 and sovereign 3725.

Pepsi
HANOI, Dec 30 (AFP) — US soft-drink giant Pepsico Inc has received official Vietnamese permission to acquire a 96.6-per cent stake in a bottling joint venture in Ho Chi Minh city, its local partner said today.

Kellog India
CHANDIGARH, Dec 30 (TNS) — Kellog India and the Indian Dietetic Association (IDA) have launched a nationwide public service initiative to increase the awareness of iron deficiency anaemia. The launch, themed “Partners in Action”, will be for a period of 12 weeks starting December 17. It is a social marketing approach to nutrition education and was flagged off at a special Kellog oration session held as a part of the two-day annual conference of the IDA at the Institute of Cooperation Management auditorium in Hyderabad.