tribuneindia...Business

	B U S I N E S S	Wednesday, July 22, 1998
weather n spotlight today's calendar

Reliance net profit up by 18 per cent
MUMBAI, July 21 — Reliance Industries Limited (RIL) has posted encouraging results with an 18 per cent increase in its net profit to Rs 441 crore in first quarter, the highest in the corporate sector, as against Rs 375 crore for the corresponding period last year...

Maruti to launch new Zen NEW DELHI, July 21 — To take on the competition from Korean Chaebols Daewoo and Hyundai, Maruti Udyog Ltd will “very shortly” launch a new version of its popular “Zen” car, company sources said here today.The Maruti is “highly unlikely” to increase the price...

‘Check power transmission losses’
NEW DELHI, July 20 — The power tariff hike in Punjab announced yesterday is likely to erode the cost competitiveness of the industry in the state. Industry observers feel the obsolete transmission and distribution (T&D) system...

First ‘jail bharo’, then
Punjab bandh
LUDHIANA, July 21 — Nearly two dozen organisations representing trade and industry in Punjab today announced plans of launching a phased agitation beginning on July 29 in protest against the 33 per cent hike in power tariff announced yesterday...

India committed to reforms: Vajpayee
NEW DELHI, July 21 — Prime Minister Atal Behari Vajpayee today told an American business delegation that India remains committed to economic reforms, which have thrown open completely new vistas for both foreign and domestic investors...

High Court dismisses petition of Mohali’s Inder Industries
CHANDIGARH, July 21 — Mr Justice K.K Srivastava of the Punjab and Haryana High Court today dismissed the petition of Inder Industries Private Limited of Mohali...

Bank credit to farm sector below target
NEW DELHI, July 21 — The net bank credit (NBC) to the agriculture sector from commercial banks is much less than the 18 per cent stipulated by the RBI, the Rajya Sabha was informed today...

JPC probe into Maruti deal ruled out
NEW DELHI, July 21 — The government today rejected the demand for a parliamentary probe into its agreement with Suzuki Motor Corporation (SMC) to settle dispute in joint venture Maruti Udyog Limited (MUL) amidst sharp protests and a noisy walkout by the Opposition...

Escorts to set up tractor unit at Pune
NEW DELHI, July 21 — The Rs 50 crore non-convertible debenture (NCD) of Escorts Ltd has been assigned an LAA (-) rating, showing highest safety, by the (ICRA)...

Reliance net profit up by 18 per cent
MUMBAI, July 21 (PTI) — Reliance Industries Limited (RIL) has posted encouraging results with an 18 per cent increase in its net profit to Rs 441 crore in first quarter, the highest in the corporate sector, as against Rs 375 crore for the corresponding period last year.
Releasing the unaudited results for quarter ended June 30, the company said sales were Rs 3,645 crore against Rs 2,659 crore, a 37 per cent growth.
Production increased from 1.05 million for the first quarter of previous year to over 1.7 million tonnes during this fiscal, representing a growth of 63 per cent.
Total exports, including deemed exports, increased by nearly four times to Rs 170 crore as against Rs 36 crore for the corresponding previous quarter, placing RIL among the top 10 manufacturer exporters in the country.
The total paid up equity share capital remained unchanged at Rs 832 crore, a release said adding the company’s contribution to national exchequer in the form of various taxes increased by 16 per cent to Rs 707 crore over the corresponding previous quarter.
The capital expenditure during the quarter under review was over Rs 700 crore, primarily on Jamnagar Petrochemical complex, the release said adding three weeks construction was affected because of the recent cyclone in Saurashtra region
RIL revalued its plant and machinery at Patalganga and Naroda during 1997-98. Consequent to the revaluation, there is an additional depreciation of Rs 124 crore for the quarter ended June 30 and an equivalent amount had been withdrawn from general reserve.
This had no impact on the profit for quarter, it said.
The company said its foreign exchange borrowings remained fully hedged during the quarter as a result of which there was no adverse impact arising from depreciation of Indian rupee.
The share of the Oil and Gas business more than doubled to 2.4 per cent of sales revenues, from barely one per cent last year, reflecting higher throughput from the Oil and Gas fields at Panna-Mukta and Tapti.

‘Check power transmission losses’
From Gaurav Choudhury
Tribune News Service
NEW DELHI, July 20 — The power tariff hike in Punjab announced yesterday is likely to erode the cost competitiveness of the industry in the state. Industry observers feel the obsolete transmission and distribution (T&D) system, due to which 30 per cent of the power generated is lost, needs to be replaced, free supply of power to the agricultural sector needs to be relooked and focus should be on providing reliable and regular power supply.
The state government should impose the nationally accepted minimum tariff of 50 paise per unit on the agricultural consumers who account for nearly 40 per cent of the total consumption.
This can yield an additional Rs 250 crore for the exchequer.Observers point out that reduction of T&D losses even by 3 per cent per annum would increase the revenue collection by over Rs 100 crore annually.
The World Bank has estimated the total consumption by agricultural consumers to be 6000 MW as against the PSEB estimate of 4000 MW. This means the extra 2000 MW, which has not been accounted for by the PSEB, may be a case of power theft.
During the next 10 years 4000 MW of additional generation capacity has to be created by the state. However, given the lack of funds with the state government for implementing projects of such magnitude , the private and joint sector can be roped in.
The state budget has already made a statement in this regard. The route of competitive bidding as followed in Andhra Pradesh and Orissa may be adopted. It is also important, observers feel, that an independent electricity regulatory commission with quasi-judicial powers be set up to decide on matters relating to tariff, generation and T&D.
This would reduce external interference and make the PSEB more accountable for the performance of the power sector.Moreover, the Indian Electricity Supply (Act) 1948 Section 16 provides for prior consultation on the statement of accounts of the SEBs at a meeting of the ‘Consultative Council’.
This, observers feel, has not been adhered to both in the case of Punjab and Haryana.The Phdcci has suggested that the power tariffs should be fixed on the basis of cost of generation , transmission and distribution plus a fair return to the power utility. For the small-scale sector the cost of power should be fixed by adding a 5 per cent rate of return to the cost of power.

Maruti to launch new Zen car soon
NEW DELHI, July 21 (PTI) — To take on the competition from Korean Chaebols Daewoo and Hyundai, Maruti Udyog Ltd will “very shortly” launch a new version of its popular “Zen” car, company sources said here today.
The Maruti is “highly unlikely” to increase the price of the new version, which will also be powered by the 1000 CC petrol engine, due to the competitive market, sources in the marketing department told PTI.
The new version will have features like audio system as an original equipment, new front appearance, better interiors and safety features like impact side beams.
“In view of the competition, it is highly unlikely that there will be a price rise,” the sources said.
The Maruti has already stopped production of the existing version, priced at around Rs 3.5 lakh in Delhi, and the new model will be despatched to dealers across the country shortly, the sources said.
The sources said with the launch of Hyundai’s “Santro” and Daewoo’s “Matiz”, both expected by September-October, the Zen segment would get very competitive.
Though Daewoo has not officially priced the “Matiz” yet, Hyundai has already announced that it will price the “Santro” - which offers almost all the comfort and better features than the existing Zen model — around Rs 3 lakh.
“This could put the Zen in a highly competitive segment and hence the company is not likely to increase the price to maintain its competitive advantage”, the sources said.
Only recently did Maruti chalk out a new marketing campaign for the “Zen” and position it as a “World car”.
It was the first time Maruti was attributing a “position” to the car, widely perceived to be a state-of-the art and stylish car used as a bench mark by other Indian car manufacturers.
The Rs 8,454 crore Maruti had also come out with a new media campaign to popularise the car and help it fit into the new image.
Zen, which is exported under the brand name Suzuki Alto, is the single largest imported car in the small category segment in European Union, having a marketshare of 48 per cent of all imports to the region.
The marketing strategy was devised to give the car a thrust in the wake of competition from “Mint” of Tata, and Santro, Ford’s Fiesta.
Meanwhile, the sources said test runs for the diesel Zen are continuing in the factory at Gurgaon.
“We have not completed the tests yet and hence no schedule has been drawn up for launching the diesel Zen,” the source said.
The sources said the engine for the diesel Zen is being provided by Peugeot Citroen of France, for which Maruti Managing Director R.S.S.L.N. Bhaskarudu had gone to Paris in April for negotiations.

First ‘jail bharo’, then Punjab bandh
Tribune News Service
LUDHIANA, July 21 — Nearly two dozen organisations representing trade and industry in Punjab today announced plans of launching a phased agitation beginning on July 29 in protest against the 33 per cent hike in power tariff announced yesterday.
The agitation will commence with a “jail bharo” stir on July 29, a hunger strike on August 5 and a state-wide bandh on August 12 when effigies of the Chief Minister and the PSEB Chairman will be burnt.
Announcing this here today at a press conference, Mr Harish Khanna, a Small Industries Association leader, said that a sangharsh samiti was being set up to conduct the agitation.
He alleged that the 33 per cent hike would cast a financial burden of over Rs 1,500 crore on the industrial sector in a full year. The industry would not be able to bear it.

India committed to reforms: Vajpayee
NEW DELHI, July 21 (PTI) — Prime Minister Atal Behari Vajpayee today told an American business delegation that India remains committed to economic reforms, which have thrown open completely new vistas for both foreign and domestic investors.
Mr Vajpayee told the US team, which called on him, that while pursuing its liberalisation programme, government is only concerned about protecting the common man’s interest, an official release said here. The delegation also expressed appreciation for the government’s swift actions on recommendations of the task force on information technology. The delegation included Mark Mileusnic, Managing Director of Chubb Group of Insurance Corp, Ashok Sapra, President of AT&T India Ltd, Pramod Bhasin, President, GE Capital Services and R.C. Bajpai of American Business Council
It represents more than 250 US companies.

High Court dismisses petition
of Mohali’s Inder Industries
By Our Legal Correspondent
CHANDIGARH, July 21 — Mr Justice K.K Srivastava of the Punjab and Haryana High Court today dismissed the petition of Inder Industries Private Limited of Mohali.
Happy Enterprises of Ludhiana had supplied tractor parts to Inder Industries for Rs 1,90,525. Subsequently Inder Industries issued a cheque for Rs 52,525 which bounced due to insufficient funds.
The proprietor K.K Malhotra of Happy Enterprises filed a complaint against IPS Mann, Managing Director of the company, in a court in Ludhiana u/s 138 of the Negotiable Instruments Act.
The court summoned the MD, who filed in the high court a petition u/s 482 of the code of Criminal Procedure for the stay of the proceedings.
The High Court was of the view that in the light of the latest decision of the Supreme Court in the case of Modi Cement Ltd. v/s Kuchil Kumar Nandi that once the cheque was issued by the drawer, a presumption u/s 139 must follow and merely if a drawer issues a notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 to be initiated by the holder of the cheque.

Bank credit to farm sector below target
NEW DELHI, July 21 (PTI) — The net bank credit (NBC) to the agriculture sector from commercial banks is much less than the 18 per cent stipulated by the RBI, the Rajya Sabha was informed today.In a written reply, Minister of State for Finance K.M.R. Janarthanan said despite substantial increase in the ground level flow of credit to agriculture sector from public sector banks, the target of 18 per cent of the NBC to agriculture has not been fully achieved.
He said the outstanding lending to the agriculture sector increased from Rs 23,513 crore at the end of 1994-95 to Rs 34,304 crore at the end of 1997-98 but the percentage of agriculture credit to the NBC was to the tune of 13.91 per cent and 15.72 per cent in 1994-95 and 1997-98, respectively.
The minister said the RBI has advised scheduled commercial banks to make all efforts to achieve the stipulated target for lending to agriculture.He said banks, which have not reached the agricultural lending sub-target of 18 per cent of the NBC, are required to make contributions to rural infrastructural development fund (RIDF) maintained by (Nabard) for providing funds to state governments for investment in rural infrastructure.

JPC probe into Maruti deal ruled out
NEW DELHI, July 21 (PTI) — The government today rejected the demand for a parliamentary probe into its agreement with Suzuki Motor Corporation (SMC) to settle dispute in joint venture Maruti Udyog Limited (MUL) amidst sharp protests and a noisy walkout by the Opposition in the Lok Sabha.
Stoutly rejecting charges of underhand dealing and sell out in the course of reaching an out-of-court settlement, Industry Minister Sikander Bakht took total responsibility for the agreement for the “survival of Maruti” and said “there was no pressure from the Prime Minister or his office.”
Replying to an over three-hour-long special debate, he declared that the government would not dilute its stake from the present 50 per cent in the joint venture car company which has over 80 per cent share in the Indian car market.
He asserted that the agreement was signed to save Maruti from sinking and enable it to get new technology.Without referring to the opposition’s demand for probe by joint parliamentary committee to bring to light the whole gamut of facts behind the deal, Mr Bakht said the agreement was speeded up to avoid the matter being dragged to International Court of Arbitration where it was coming up for hearing in June.
Following this, Mr S. Jaipal Reddy (JD) and Mr K. Karunakaran (Congress) led the walkout saying that the Mr Bakht was not conceding to their demand for a JPC probe and was resorting to “lamentation and protest.”

Escorts to set up tractor unit at Pune
NEW DELHI, July 21 (PTI) — The Rs 50 crore non-convertible debenture (NCD) of Escorts Ltd has been assigned an LAA (-) rating, showing highest safety, by the (ICRA).
The rating of LAA - (L double A minus) takes into account the “established market position” of Escorts, the Delhi-based company of the Nandas, in the higher HP tractor segments, the ICRA said here today.
“In the medium to long term, the operating margins of Escorts Ltd is expected to improve due to benefits accruing from focussed operations following the merger of the high margin Escorts Tractors Ltd (ETL) and hiving off of the relatively low margin non-agri business,” the ICRA said. This exercise has also helped Escorts in reducing the gearing of the company (0.83 times as on March 31, 1997).
“The low returns from the exposure to group companies are mitigated by Escort’s well-established presence in the tractor industry, its low gearing levels and competent management,” the ICRA said adding it expects the long-term debt servicing ability of Escorts to be favourable.
Escorts is planning to set up a manufacturing facility for tractors at Ranjan Gaon, Pune, with an initial capacity of 6,000 tractors that will later be enhanced to 18,000 units annually.
Proceeds from the Rs 50 crore NCD will be used to part-fund the project.

Biz briefs

ITC Hotels plans expansion
NEW DELHI, July 21 (UNI) — About Rs 1,300 crore worth plans have reached the project stage in the Rs 2,000 crore expansion programme of ITC Hotels Limited. The hotel chain has so far committed to spend about 65 per cent of the Rs 2,000 crore Five-Year Plan for its properties coming up at Mumbai, Calcutta, Parel, Bangalore, Delhi, Chennai, Calicut and Jaisalmer. ITC Hotels which manages the Welcom Group Hotels has already spent about Rs 150 crore to buy over 17 acres land in Mumbai and Rs 50 crore to acquire more than four acre land in Calcutta, company sources said. Acquisition of land is the first step in committing expenditure, apart from buying land in Mumbai and Calcutta, the hotel chain is in possession of land in Bangalore and Parel, provided by the parent company ITC Limited. In Delhi, the hotel had spare land. The project completion cost for the hotels at these places would come to Rs 1,300 crore. The hotel chain had announced in 1996 that it would spend Rs 2,000 crore by March 2001 to double its room capacity from its present 3,077 rooms.

Indo Rama project delayed
NEW DELHI, July 21 (UNI) — Faced with a recession-hit market and huge losses to the extent of Rs 87 crore during 1997-98, Indo Rama Synthetics India Limited (IRSIL) is tightening its own belt and has put its ambitious Rs 550 crore textile project on the backburner. “The textile project is not a priority for us right now. Faced with such huge losses, we have to look towards improving our bottomlines,” company sources told UNI here. The O.P. Lohia-promoted Indo Rama had earlier announced with much fanfare plans to set up a textile manufacturing unit in Dharwad. But in the light of the mounting losses, the company is now planning to consolidate its operations. However, senior company officials, when contacted by UNI, said though the project stands to be delayed, there are no plans to shelve it

or put it on the backburner.

Legal hitch in Dunlop takeover
NEW DELHI, July 21 (PTI) — The government today said there were legal constraints in taking over management of Manu Chabbria-controlled Dunlop India Ltd. Replying to supplementaries in Rajya Sabha, Industry Minister Sikander Bakht said Chabbria and his team had not only diverted funds from Dunlop but also “played the trick” of referring the company to (BIFR), making it difficult for the government to take over the company. For his part, Finance Minister Yashwant Sinha assured the House that the government would initiate enquiry to find out whether the LIC nominee Director on the Dunlop Board failed to discharge his duties in protecting the interests of the financial institutions. The Finance Minister’s assurance came following allegations by Left members, Gurudas Dasgupta, Deepanker Mukherjee and Nilotpal Basu that the only financial institution nominee on the Dunlop Board did not attend most of the Board meetings and had failed to discharge his duties.

Modicare plans jv for lingerie
NEW DELHI July 21 (PTI) — Modicare, a well-diversified company of the Modis, is talking to various multinational companies for a joint venture to enter into lingerie and costume jewellery segments by early next year. Modicare has also announced its plans to launch a range of cosmetic and skin care products by the end of this year. The company already has 24 products in various categories like home care, laundry care, personal care as well as water purification units. In the coming months, 20 more product launches are in the pipeline, including the cosmetics range.

Permitted to import currency notes
NEW DELHI, July 21 (PTI) — The government has permitted the RBI to import 3,600 million pieces of printed notes as a one time measure to overcome the shortage of currency notes in the country, Finance Minister Yashwant Sinha informed the Rajya Sabha today.
“All the lines of machines at the RBI would commence full production by the end of the year and would be able to produce 4,770 million pieces of notes,” Sinha said in a written reply.