Monday, September 7, 1998
today's calendar
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B U S I N E S S | Monday, September 7, 1998 |
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spotlight today's calendar |
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LML claims Rs 300 crore
from Piaggio
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Hyderabad chosen for top
school of business
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Law
shields adulterators ST
exemption policy misused ‘95
per cent SSI units unauthorised’ No
dilution of money laundering Bill:FM Morgan
bids for IA’s IPO |
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LML claims Rs 300 crore from Piaggio NEW DELHI, Sept 6 (PTI) — LML Limited has filed a claim against Piaggio and CSPA in the International Chamber of Commerce (ICC), Paris, demanding Rs 300 crore damage for making “vague and baseless allegations” against it in an arbitration plea filed by the Italian company at ICC, Singapore. LML is seeking intervention of ICC, Paris, to know the basis of the allegations levelled against it by Piaggio and CSPA, a 100 per cent subsidiary of the Italian firm, as it has not given any detail of the “breach of various agreements” in its arbitration plea at Singapore, LML said in a release here today. The Kanpur-based LML Ltd filed its claim in the ICC yesterday.“Allegations of breach of various agreements are baseless and made only with a view to providing an excuse and a cover-up to Piaggio and CSPA for its defaults,” LML said. In July, the Indian promoters of LML, including D.K. Singhania, L.K. Singhania, Sanjiv Shriya and others holding 23.6 per cent stake in the country’s second largest scooter maker, had moved the Kanpur court seeking orders to acquire 23.6 per cent stake of Piaggio. The Singhanias had cited a clause in the joint venture agreement based on which the Indian promoters enjoyed the right to acquire shares of Piaggio following the death of its owner Giovanni Agnellin in December last year. Piaggio and CSPA, has in the past, admitted to defaults, delays and non-performance by it of several licence and engineering and machinery supply agreements with LML Limited and has shown anxiety to get waiver from LML on more than one occasion, LML alleged. LML claimed that a preferential issue of capital planned by the company for part financing of the approved business plan under the joint venture agreement had to be put off due to the insistence of Piaggio for a similar waiver from LML in December 1997 as a pre-condition to their subscribing to the preferential issue. The Singhanias, had earlier on August 20 challenged in a Kanpur court the contention of its joint venture partner, Piaggio to transfer their court case to the ICC in Singapore. Later on September 3, the Kanpur court of the senior judge had fixed September 17 as the date for hearing the case. The Singhanias had earlier
claimed before the Kanpur court that as per the joint
venture agreement (jva) the equity shares of the deceased
person can be sold to the Indian promoters only and not
to any third party. |
Hyderabad chosen for top school of business HYDERABAD, Sept 6 (PTI) —The prestigious Indian School of Business (ISB), a world class school being established by the cream of corporate majors, will be set up in Hyderabad on a 250 acre campus adjoining the Indian Institute of Information Technology. A memorandum of understanding to this effect was signed in the presence of Andhra Pradesh Chief Minister N. Chandrababu Naidu at a simple function here today. Anil Ambani, Director of Reliance Industries and Deepak Parekh, Chairman of HDFC on behalf of the ISB and Hariharan, Principal Secretary, Municipal Administration representing the state government signed the MoU. Mumbai, Chennai and Bangalore were the other cities which had offered land for the ISB but the board decided in favour of Hyderabad, Ambani told reporters. Besides Ambani, the business school project was initiated by Rahul Bajaj (Bajaj Auto), Kumamr-mangalam Birla (A.V. Birla group), Keki B. Dadiseth (Hindustan Lever) Y.C. Deveshwar (ITC) Adi Godrej (Godrej Soaps), K.V. Kamath (ICICI), Anand Mahindra (Mahindra and Mahindra) and Ratan Tata (Tata Sons), among others.Godrej, Kamath and Mahindra expressed confidence that the ISB would be developed into a major knowledge destination. The Chief Minister said his government had plans to convert the state capital into a knowledge hub of the nation and it would be the transit point between Europe and China in the coming days. The ISB will be an independent, non-profit making institution affiliated to leading business schools —Wharton School of University of Pennsylvania and J.L. Kellog Graduate School of Management at North-Western University. The school will provide
world class academic and residential facilities to
students and faculty and will begin functioning from the
academic year 2000-01, Ambani said. |
Law shields adulterators NEW DELHI, Sept 6 (PTI) — Today it’s dropsy, tomorrow it may be another disaster waiting to happen with consumers forced to take pulses mixed with clay and stones, urea in milk, papaya seeds in pepper and brick powder with red chillies — yet adulterators get away with murder, thanks to toothless laws. As consumer activists demand changes in the more than 30-year old Prevention of Food Adulteration (PFA) Act, officials plead inadequate infrastructure and shoe-string staff as the main reasons for their failure to curb adulteration. Fortyseven died and over 1400 were taken ill in the Capital after taking adulterated mustard oil in the last two weeks, casting serious doubts over the “quality control mechanism” in the country.“There is need take a fresh look at the whole criminal jurisprudence. Traders and manufacturers who sell such adulterated products must realise the gravity of their crime,” says Mr H.D. Shourie of the Common Cause.The consumer groups working for the cause of people should see that culprits do not go scotfree, he says. “The incident has shown the total failure of the quality control measures in our system, and unless there is pressure from the public to keep a check on quality, adulteration cannot be checked, he saidHowever, consumers have a little say in what they are going to eat or use. Recycled engine oil, tins, syringes, adulterated eatables — are all they get in the profit-driven market economy, she says.“Adulteration in mustard oil rocked Calcutta some 10 years back. But the government failed to take any concrete measures to check the menace,” say officials of Voice, a consumer forum, adding that “had any steps been taken, the present tragedy of dropsy could have been avoided. ”“As law is weak, enforcement is zero and we do not have any central testing facilities, adulteration has become a way of life,” says Mr Iqbal Malik, director of the Vatavaran, an NGO, citing cases of adulteration in petrol, pulses, vegetables, cosmetics and toiletries. There have been earlier instances of adulteration of petrol, kesari dal, sweets, vegetables being coloured with melathion chemical to give them bright green colour, chalk powder being added to talcum, which if applied in excess can even choke a child to death, Mr Malik says. “Mustard oil has always been adulterated with argemone seeds. But the amount was not so high and neither was it being done by known brands,” she says adding, that “it is when demand-supply gap rises that adulteration reaches beyond dangerous levels and epidemics occur. ”“Recent incidents of dropsy show a total breakdown of government machinery which is supposed to protect the health of the people, says Mr Bijon Mishra, adviser to the Consumer Coordination Council. Demanding a more stringent act, Voice officials say heavy fines should be imposed on manufacturers and traders to make such activity unprofitable.But officials of PFA Department say that “the absence of a licencing policy for foodstuffs and authority to prosecute the offenders has resulted in adulteration on such a scale. ”The PFA Act, 1954, prescribes quality standards for various food products, but food inspectors say the absence of any powers to them under the act renders it ineffective.“Once a sample is found adulterated, we move the designated court, which in turn directs the central food laboratory to take fresh sample and starts prosecution only on the basis of that report. “The manufacturer or
the retailer gets enough time in between to replace the
adulterated lot and thus goes scot free, many
times,” senior PFA officials say, calling for an
amendment in this regard. |
Iffco plant for Sangrur BARNALA, Sept 6 — The Union Chemical Fertiliser and Food Minister, Mr Surjeet Singh Barnala, today said IFFCO would set up a fertiliser plant in Sangrur district.Speaking on the occasion of “balance fertiliser programme” organised by IFFCO at Raisar village, 7 km from here, Mr Barnala said Central Government would grant sanction for the plant shortly. The minister said
pesticide plants would be better set up in the
cooperative sector to provide good quality pesticides to
farmers.Mr Gobind Singh Kanjala, state minister, Mr
Surinder Jakhar, Chairman, and Mr Balwinder Singh Nakai,
vice-chairman, IFFCO, were also present. |
ST exemption policy misused PATIALA, Sept 6 — Recent raids by the Excise and Taxation Department on industrial concerns have revealed that the provision of sales tax exemption is misused.Industrialists setting up new units are exempted from sales tax for seven years after which they are expected to pay tax if they do not go in for any expansion or diversification. Most units, however, continue to avail exemption without fulfilling this condition.Assistant Excise and Taxation Commissioner H.M.S. Rosha told TNS that a recent verification of such exempted units in Dera Bassi and Mandi Gobindgarh revealed that a unit was operating a clandestine business in the name of another firm which was filing nil returns with the department. The inspecting parties found bills of heavy amounts issued by this firm. Raids on six units yesterday revealed that three of them appeared to be carrying on clandestine transactions. Discrepancies were detected in their stocks.Mr Rosha said the present policy had not yielded the right results as the revenue receipts in the past three to four years had stagnated while the state revenue should have increased by 20 per cent over the last couple of years taking into consideration the increase in prices alone, no such thing had happened. This was despite an increase in the industrial output. The government has been giving sops to industry and trade by way of tax holidays and concessions with almost every new unit coming up in Punjab being exempt from the payment of sales tax and purchase tax. Due to this the growth by
way of industrial output is not reflected in the tax
receipts.Mr Rosha said even sops given to the trading
community by way of reducing the rates of tax on many
items like vanaspati ghee, paper, iron and steel, besides
hosiery had not been passed on to consumers. Prices of
these commodities have not declined. |
Inflation up NEW DELHI, Sept 6 (PTI)
— The annual rate of inflation rose above the 8 per
cent mark once again and touched 8.21 per cent for the
week ended August 22. Inflation, based on wholesale price
index, increased by 0.27 percentage points during the
week from 7.94 per cent to 8.21 per cent, more than
double the rate of 3.65 per cent recorded in the
corresponding week of last year. |
DHAKA(Reuters): Bangladesh Prime Minister Sheikh Hasina has said South Asian countries should liberalise their economic policies to promote regional trade.“In the course of economic liberalisation, all the South Asian countries should enact substantive and meaningful change in their investment, import and export trade laws,” she told a meeting of South Asian investors on Saturday.Bangladesh had already made steps in the liberalisation of its economy by reducing tariff rates and relaxing import rules, she said. More powers MANILA (AFP): Philippine President Joseph Estrada has endorsed a call by the country’s main business group to arm him emergency powers to deal with fallout from the regional economic crisis.“Well, why not? That will give me more elbow room and at the same time, it will expedite the projects that they (the business group) have in mind,” Estrada said. Darkest stage TOKYO (AFP): Japan’s economy is at its ‘darkest stage’, says Taichi Sakaiya, head of the economic planning agency.Japan is in the grip of recession and with industrial output and prices falling deflation is now threatening to bring down the government’s attempts to revive the economy.Sakaiya blames the poor summer weather for pressuring spending. A powerful typhoon, which has killed 16 and left thousands homeless in northern Japan, is also expected to take its toll on the economy. Currency BEIJING (PTI): China has warned currency punters to desist from speculating on the yuan and Hong Kong dollar saying speculators could end up burning their fingers in the forex markets.“Rumour mongers dare not over-estimate their strength. They know they can never manipulate the yuan’s exchange rate through rumours,” says Li Guobin, a senior economist in the Chinese Cabinet.If international currency speculators dare to attack the Hong Kong dollar, Beijing will respond to any request of the Hong Kong Government for a “helping hand” to defeat them. Package SEOUL (AFP): South Korea
has unveiled an emergency stimulus package worth billions
of dollars to lift the sagging economy, forecast to
contract by 5 per cent this year.The measures presented
to President Kim Dae-Jung include plans to shore up
domestic demand, investments and exports, as well as for
financial support to carry out a crucial shake-up of the
banking sector.“It is highly likely that a vicious
cycle of economic recession could occur this year amid
mounting economic instability and continuing credit
crunch,” Finance-Economy Minister Lee Kyu-Sung told
President Kim. |
‘95 per cent SSI units
unauthorised’ ROHTAK, Sept 5 — Because of lack of infrastructure, over 95 per cent of the 10 lakh small-scale industries (SSI) in the country are located in non-conforming or unauthorised areas. The SSI sector believes that its plight has not been understood properly as it has never been truly represented at the decision making levels. “Has the micro and tiny industries been represented in the corridors of North and South blocks, or even in the most vocal confederations and chambers, the situation would have been different,” says Mr Rajiv Chawla, General Secretary, Faridabad Small Industries Association. Faridabad alone has more than 18000 small and tiny units. Most of whom are ancillary to the Maruti Udyog, Escorts and Hero Honda. But over the last 50 years, less than 3000 plots have been allocated to these units by the agencies like Huda and HSIDC. Mr Chawla says that the incentives to the SSI vis-Avis medium and large sectors can atleast be described as token. The sales tax and income tax and slabs of other duties and taxes were the same for the SSI as for the large and medium sectors, he argues. In the mattter of advancing loans, the financial institutions prefer the creamiest among the SSI sector. Although
banks press for providing concessional interest rates to
the SSI, the credit limit of such schemes range between
Rs 2 to 5 lakh. |
No dilution of money laundering Bill:FM NEW DELHI, Sept 6 (PTI) — Finance Minister Yashwant Sinha has virtually ruled out any dilution in the penal provisions in the Money Laundering Prevention (MLP) Bill saying stringent laws were necessary to deal with severe crimes. “Laws will have to be stringent when you are dealing with crimes in the nature of drug trafficking, terrorism, corruption and gun running”, Sinha told PTI in an interview.The only major objection to the Bill from the trade and industry pertained to the clause on “falsification of accounts”. That is a matter now before the parliamentary standing committee on finance, he said adding “I am looking forward to their recommendations with regard to the Bill.”Sinha was asked the response of the government to various chambers’ objections to the clubbing some of the economic offences like falsification of accounts with more serious ones like drug trafficking and illegal arms trade in the Bill. The Finance Minister hoped the twin legislation on money laundering prevention and foreign exchange management would be passed in the winter session of Parliament. When the Bills were introduced in Parliament, the CII, Ficci, Assocham and Phdcci felt that there was no need to place falsification of accounts under Section 477 of the IPC and make it a criminal offence. The CII particularly had said while falsification of accounts was certainly a serious issue it could not be treated on a par with crimes under the Suppression of Immoral Traffic Act and the Narcotic Traffic Control Act.Ficci expressed distress that powers vested in officers by the money laundering Bill would enable them to arrest people merely on suspicion and attach their property. The onus of the proof should lie with the prosecuting agencies, its former President K.K. Modi said.Assocham President K. Lakshman said that the provision regarding falsification of accounts had to be corrected as otherwise anything could be termed as falsification of accounts. Phdcci chief O.P. Vaish
said that the money laundering Bill contained some
“draconian” and “arbitrary” powers
which were open to misuse and which could lead to
harassment. |
Morgan bids for IA’s IPO NEW DELHI, Sept 6 (PTI) — Leading investment bankers including HSBC Capital Markets, Morgan Stanley and SBI Capital have bid for managing the initial public offering (IPO) of national domestic carrier Indian Airlines (IA).Seven investment bankers have made presentation to the top IA management on IPO, financial restructuring and devising stock options for the national carrier employees. The banks including HSBC
Capital Markets, Morgan Stanley-JM Financial consortium,
SBI Capital Markets, ICICI Securities, UTI Securities,
IDBI and Bank of Baroda Capital Markets have made their
presentations to the IA management on mobilising fresh
funds through commercial borrowings. |
EXPERTS reiterate that history of aviation shows a spate of mishaps occur once one fatal accident takes place in any part of the world. The crash landing of Swissair MD 11 jet in Peggy’s cove (Canada) killing all 229, including 14 crew members, is an unfortunate signal that the “aircraft accident season” has begun. This may be no more than superstition but it should be taken lightly.Whether this theory, advanced by so-called aviation experts, has any logical support or not, Air India (AI) and Indian Airlines (IA) and also other private airlines must take measures to ensure safety of passengers which has been vulnerable for years. A number of aircraft in both national carriers have aged; some of them have been operating exceeding their capacity. While it may be accepted that all safety norms, as laid down by the Directorate-General of Civil Aviation (DGCA) are being adhered to, it will be in the interest of two airlines if greater attention is given to maintenance and service of aircraft. The Indian aviation scene is far from rosy. This is because “we as a nation take one step forward and two behind”. Corridors have been widened but this measure is not enough because vital gadgets at several airports are functioning erratically. Some of these have become obsolete. Engineers and technicians have made written representations in this regard but of little avail. The DGCA, like the ministry is badly managed where personnel have the ultimate say. The DGCA is controlled by
politicians who without undertaking in depth study sign
appointment and promotion orders when the former Aviation
Minister C.M. Ibrahim was about to make his exit, he
signed promotion orders not caring whether they were in
the interest of airlines or not. |
THE stock market moved within narrow limits during the last fortnight. The sensitive index was up by 1.79 per cent and the S & P CNX Index was higher by 1.29 per cent. The downward trend has been halted, and that in itself is an healthy development. In case the market is able to maintain its equilibrium during this fortnight, it may be an indication that the market is stabilising itself.It would, however, be hasty to conclude that the market is now set for revival. In this game of “snakes and ladders”, there are more snakes than ladders for the stock market to revive early. An analysis of the first quarter (April-June 1998) results of the corporate sector (which has been made by the ICICI) indicates that growth is confined only to a few sectors. High growth in net profits and sales was evident only in the service sector, covering software, construction, banking and finance, telecommunication and drilling. Nitrogenous fertilisers, electrical equipment, consumer electronics, drugs and pharmaceuticals, pesticides and paints also reported improved results. Tea and aluminium and other textiles earned higher profits but there was a low growth in sales.The slowdown, as the analysis indicated, was most evident in other chemicals, cotton and blended yarn, tyres and tubes, hotels, power generation, automobiles and automobile-ancillaries, cement, glass and ceramics. The iron and steel industry is in a poor shape. It may be of some interest to note that a leading international agency has revised the profitability of Tisco downward. In the commercial vehicles sectors, conditions are so bad that Ashok Leyland has adopted a three-day working per week to adjust its manufacturing activity to the declining demand in the market. There has been, however, some improvement in the light-weight trucks.The domestic as well as global factors are hindering industrial and market revival. In the domestic sphere, political instability (thanks to the Lady Macbeth syndrome of the AIDMK boss), the forthcoming elections to the Vidhan Sabha in some states and the Union Territory of Delhi in November, the pending sale of the equity shares of a number of public sector units, tardy implementation of government plans to revive the economy, the recent floods, the slackening growth in the exports and the general mood of dejection stand in the way of the early revival of the market. The financial institutions have put steel on the “hit” and cement on the “watch” lists.But all blame should not be placed on the government and the corporate sector for the present conditions of the economy and the stock market. India has been caught in the whirlpool of the global depression which has its hub in South East Asia. The currency crisis and the market collapse in the South Asian countries were bound to affect the Indian economy. The recent fall of the Russian Rouble is likely to affect the Indian exports even more sharply than it has done in respect of exports to South East Asia.The research team of US-based Morgan Stanley Bank has in fact complimented India for its performance during the recent global recession. India, as the report indicates, has outperformed the Asia-pacific region and India’s fundamentals remain healthier than anywhere else in the region. The fact that India is rather conservative in implementing the policy of economic liberalisation imposed by the World Bank has helped India to meet the crisis better than South Korea, Indonesia and the other South East Asian economies.It will take at least a year or so for the global recession to recede and disappear. For the same reason it should take a year or so for the Indian economy to recover from its present depression. In case, long-term investors decide to pick up good blue-chip equities from the market, it should be done with a two to three years perspective lock-up period. The best sectors for investment are multinational pharma and speciality chemicals scrips, Indian Rayon, Essel Packaging, Larsen & Toubro, Satyam Computers, State Bank of India and Reliance. A more detailed analysis
of some other promising scrips will be made next
fortnight.It may be of some interest to the investors to
note that the cost Inflation Index for the financial year
1998-99 has been notified: it is Rs 351 with 1981-82 as
the base year rating of Rs 100. This is necessary for
calculating long-term capital gains for income tax
purposes. |
Design Finance Narinder Mohan Dewan,Chandigarh Delhi Automobiles V.K. Kansal, Chandigarh Yogi Pharma Jadish Chander Ahuja, Nilokheri JCT Narnider Nath Abrol, Patiala DCM Finance Pushpa Kapur, Ambala City Videocon Parveen Sharma (Mrs), Mohali Pentafour Prod Vidhyotma Sachan,Chandigarh Videocon Intl Yoginder
Nath Soni, Sushil Soni, Fazilka |
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