Thursday, August 26, 1999
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B U S I N E S S | Thursday, August 26, 1999 |
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Review IMF voting: Jalan |
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Nanak Food shifts to Haryana US Fed hikes interest rates Group on IT services Vesuvius India sales grow 19% Hindustan Inks net up 40 per cent |
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MUMBAI, Aug 25 (UNI) — Reserve Bank Governor Bimal Jalan has called for a review of the voting structure of the IMF and the World Bank. Delivering the 49th anniversary lecture of the Central Bank of Sri Lanka in Colombo today, Dr Jalan said that it was one of the ironies of the past 40 years that although developing countries as a group, had grown much faster than the developed countries and their relative economic strength in terms of output and trade increased substantially, their actual voting power in Bretton Woods institutions had tended to decline. This needs to be corrected in the next round of quota exercises in the IMF and capital increase in the World Bank, Dr Jalan said. Deliberating on the over-arching issues that needed to be kept in view in the arrangements for financial cooperation in the new millennium, the RBI Governor said that some general agreement on the principles that should guide efforts to enhance the effectiveness of the international financial institutions (FIs) had already been reached. These included arrangements to enhance accountability, an inclusive process that facilitates a broad range of countries and other institutions and a more participative and open decision-making process. Dr Jalan stressed that an important consideration that the international community must pay attention was the hard reality that these new arrangements could not operate successfully without equal partnership between the developed and developing nations. India has been involved in almost all discussions where developing countries have been represented including the G-22 sponsored by the USA and G-33 sponsored by G-7 and an effort has been made by our representatives to present India’s and developing nations’ perspective on various issues, he added. In the context of the role of the official sector in forestalling a debt crisis, Dr Jalan remarked that the evolution of the contingent credit line (CCL) would depend on how flexibly the eligibility criteria in the new IMF facility was operated in practice. He felt that for the success of the scheme, it seems necessary to ensure that the performance criteria are in fact appropriate and objective so that there is no room for subjectivity or introduction of political and other non-economic considerations. The scheme is likely to succeed in avoiding potential problems only if it is operated in a more or less automatic way subject to certain pre-determined quantitative and objective criteria being satisfied by the country. On the IMF’s role
in capital account liberalisation, Dr Jalan said that
each country would need to decide on its own path of such
liberalisation with regard to the timing and sequencing.
This in turn was likely to depend to a large extent on
the stability and institutional structure of the domestic
financial sector. A constructive consultative process
between the IMF and member countries on these issues
should be adequate to achieve the objectives of capital
account convertibility, he added. |
‘Bank stocks unlikely to rise’ NEW DELHI, Aug 25 (UNI) - Bank scrips are unlikely to register smart gains in the short term despite buoyancy at the stock exchanges unless the quality of their assets is improved, Mr R. Ravimohan, Managing Director of Crisil, said. Sentiments over the bank scrips will remain damp till the banks, as a precondition of enhancing asset quality, provide for the huge pile-up of their non-performing assets either in one shot or “digest them over a period of time’’, the Crisil MD told newspersons here. Mr Ravimohan regretted that the provision for NPAs to the extent of Rs 20,000 crore has been via government capitalisation. “Organic efforts to curb NPAs in the banking system are not sufficiently visible,’’ he added. Markets are watching whether banks are emphasising surveillance, credit ratings even while intensifying risk assessment abilities. “The banks will have to install loss protection measures at the time of giving loans. Besides, special skills and systems need to be devised for a forward looking risk assessment,’’ Mr Ravimohan said. The Indian banking system is estimated to have amassed Rs 45,650 crore NPAs at the end of March 1998 and the government has capitalised weak banks up to Rs 20,000 crore through budgetary provisions in a bid to improve their capital adequacy ratio. However, as a per cent of total advances, the ratio has declined from 23.2 per cent at the end of March 1993 to 16 per cent at the end of March 1998. The Crisil MD said the asset quality of banks will remain bleak unless they are able to beef up their capital. This will require revival of primary markets. Mr Ravimohan said some
banks have started working on stopping further slippages
of loans into NPAs by improving their risk assessment
abilities. “Crisil is training officials of three
public sector banks including Canara bank on a credit
risk assessment model which will help manage their credit
risks.’’ |
States owe
1,000 crore to PowerGrid NEW DELHI, Aug 25 — The PowerGrid Corporation of India Limited (PGCIL) has an outstanding of Rs 1,000 crore with the States, primarily due to the non-payment by Jammu and Kashmir and Bihar, Chairman and Managing Director, Mr R. P. Singh said here today. “The real problem has arisen with Bihar and Jammu and Kashmir who have suddenly stopped making payments”, Mr Singh told reporters here today adding that despite such a situation, PGCIL is helping these states. While Delhi Vidyut Board (DVB) has been paying 100 per cent current bills through the Letter of Credit (LC) route, Bihar is only paying its monthly arrears. PGCIL has envisaged an investment of about Rs 11,000 crore for identified ongoing and new schemes during the Ninth Five Year Plan.It does not envisage any problem in mobilising funds for making such a massive investment and has raised Rs 850 crore of loans with maturity period of 15 to 20 years from the domestic market. A foreign currency loan of $ 100 million was also received through Bank of India with 24 years maturity period. In addition, loan worth Rs 3500 crore were negotiated which include $ 450 million with the World Bank, $ 125 million with J-Exim and another $ 250 million is under negotiation with the Asian Development Bank, Mr Singh said. He said that private companies could enter as transmission licensee under the regulatory umbrella of the Central Electricity Commission and State Electricity Regulatory Commissions which would provide comfort and confidence to private investors. PGCIL is planning to
encourage private participation either through the joint
venture route or through independent transmission
company, Mr Singh said adding that the corporation is
establishing the necessary technical, commercial and
financial framework. |
Nanak Food
shifts to Haryana NEW DELHI, Aug 25 — Milk and milk products supplier to the Indian Armed Forces, Nanak Food Industries Limited is shifting its production base from Ghaziabad in Uttar Pradesh to Hodal in Haryana. The company officials were recently booked by the Ghaziabad police for selling adulterated milk. However, the Allahabad High Court has quashed the FIR lodged by the police. Nanak Food Industries is planning sue the UP Government for a sum of Rs 11.5 crore as damages for “tarnishing” the image of the company. The Managing Partner of
Nanak Food (Nanak Milk), Mr Shivraj Singh told The
Tribune that the production in the new plant is expected
to commence within a week’s time and the machinery
and equipment has already been transported to Hodal. |
Morepen jv with German company NEW DELHI, Aug 25 (UNI) — Morepen Laboratories Limited has decided to convert its marketing arrangement with Pari GMBH of Germany for inhalation therapy equipment into a joint venture company. The plant for the venture to produce inhalation and other medical equipment is being set up at Baddi in Himachal Pradesh, Mr Susheel Suri, Director (Finance), Morepen Laboratories, told UNI here. Though both partners
have decided to convert the tie-up into a joint venture
company, the exact equity distribution is still being
finalised. “We would ideally settle for a 50-50
equity structure with the manufacturing part under our
control. |
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WASHINGTON, Aug 25 (AFP) — The US Federal Reserve’s policy-making body raised key interest rates by one quarter point to 5.25 per cent, in a move the Open Market Committee said should diminish the risk of inflation. The committee hiked the Federal funds rate to 5.25 per cent yesterday and raised the discount rate by a quarter point to 4.75 per cent. It was the first increase in the discount rate since February 1991. The increase in the Fed funds rate is the second in the past seven weeks, as the US central bank moves to prevent a buildup of inflationary pressure, the first came on June 30. Some analysts said an
increase in the largely symbolic discount rate would be a
signal that the Fed is prepared to raise short-term
interest rates again, perhaps as soon as the next meeting
of the Open Market Committee on October 5, in order to
keep the economy from overheating. |
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NEW DELHI, Aug 25 (PTI) — The Telecom Commission will constitute a group on information technology (IT) enabled services to recommend steps for improving telecom infrastructure for such businesses. The group to be headed
by Senior Deputy Director General of Commission DPG Seth
will give suggestions to upgrade the communication
backbone for services, including call centres, tele
medicine and medical transcription, an official release
said here today. The 10-member panel, besides the
Chairman, is expected to submit its report within three
months after its first meeting. |
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CALCUTTA, Aug 25 (PTI) — The sales of Vesuvius India Limited, a major refractory manufacturer in the country, has grown 19 per cent in the first quarter of 1999-2000. The company recorded sales of Rs 13.71 crore as against Rs 11.48 crore in 1998-99. The net profit of the company during the current first quarter was Rs 1.80 crore, up from Rs 1.74 crore in same period last year. The board of Vesuvius declared a dividend of 20 per cent to equity shareholders in 1998-99. Announcing this at the
annual general meeting of the company here today, the
Chairman of Vesuvius India Jahar Sengupta said that the
company was planning to acquire a refractory unit at a
price of Rs 7 crore. |
Hindustan
Inks net up 40 per cent CHANDIGARH, Aug 25 — Hindustan Inks & Resins Limited, India’s largest company in the printing ink industry, has posted impressive results for the first quarter. Net sales are up by 27 per cent at 43.6 crore as compared to the same period of last year (34.23 crore). Net profit and EPS have increased by 40 and 37 per cent respectively During the last one
year, the company has undertaken major expansion plans
and the full impact is likely to be seen in the coming
quarters. The company has set a turnover target of Rs 240
crore plus (gross) for the current financial year. The
impressive growth is largely the result of superior
technology and better quality products. |
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