Getting ready for Seattle
NEW DELHI, Aug 29 — The Government should consult consumer rights organisations while preparing India’s official agenda to be presented at the forthcoming Seattle WTO ministerial conference, a national alliance of consumer groups has said.

Insured to make heavy losses
MUMBAI, Aug 29 — Claims lodged by Essar Oil Ltd and Reliance Petrochemicals on general insurance subsidiaries for the damages suffered by their refineries in Jamnagar in last year’s cyclone, are expected to have a crippling effect on the balance-sheets of the insurance companies.

MRTPC upholds Pfizer’s contention on drug prices
NEW DELHI, Aug 29 —The MRTPC has upheld pharma major Pfizer Ltd’s contention that the price list prepared as per the Drugs Prices Control Order need not mention the products can be sold at below their respective prices mentioned in the list.

HDFC scouts for partner
MUMBAI, Aug 29 — HDFC is holding parleys with British Insurance major Standard Life and other multinational fund managers for partnership in its proposed asset management company.

Notification decried
AMRITSAR, Aug 29 — The notification issued by the Department of Agriculture on June 9, raising cash security and demanding bank guarantee of 2 per cent from all licence holders of market committees, which include fruit and vegetable, grain dealers, rice and flour millers and commission agents, has been strongly condemned.

• Inflation declines

Fiscal deficit may belie hopes: Crisil

NEW DELHI, Aug 29 (PTI) — Credit rating agency Crisil has warned of slippage in fiscal deficit and GDP growth rate targets in the current fiscal year due to higher defence and election expenditure and lower revenue collections.

“A likely shortage in the revenue collections coupled with expectations of disinvestment targets not being achieved and expenditure targets likely to be missed due to election expenses and higher defence expenses may lead to slippage in the fiscal deficit/GDP ratio.” Crisil said in its monthly economic bulletin “EcoView”.

Inadequate export growth and infrastructural bottlenecks are likely to restrict the growth in industrial production at 5 per cent during the current fiscal.

“External demand in the form of exports are unlikely to grow significantly during 1999-2000. Investment demand is also likely to be low with companies more likely to focus on improving capacity utilisation levels rather than building new capacities,” the agency said.

Constraints on economic growth are also likely to be encountered on the infrastructure side in terms of roads, ports and power facilities, it said.

However, the excellent performance of the agriculture sector in the previous fiscal is likely to lead to an increase in the purchasing power in the rural areas, it said adding the prospects of a normal monsoon and good kharif crop would enhance this trend thus boosting the industrial production to some extent.

The growth rate of overall industrial production increased by 5.6 per cent in April-June this year as compared to first quarter in the previous fiscal.

Exports in dollar terms during first quarter of this year grew at 6.5 per cent in contrast to decline of 7.8 per cent in the same period last year. However, the target for 1999-2000 has been set at 11 per cent.

Referring to the import bill, the rating agency said the oil import bill was likely to touch $ 8-8.5 billion as international prices were firming up.

This was against the government projected level of $ 6 billion estimated at the crude rate of $ 16 per barrel, Crisil said.

Imports grew by 4.5 per cent in the first three months in 1999-2000 as against 3.9 per cent in April-June last year, as per official data.

Of this oil product imports increased by 53.4 per cent in dollar terms while non-oil imports declined by 3 per cent over the corresponding period last year.

The drop in non-oil imports till May were due to a fall in the capital goods and gold imports, Crisil said adding the trend could reverse with rise in capital good imports since the Government went back on its exim policy statement of banning import of second hand capital goods.

With international oil prices likely to remain upbeat, the Customs revenue through oil imports was expected to remain buoyant during the year, Crisil said.

The excise collections remained buoyant in April-June due to upswing in production in sectors like cement, auto and consumer goods, it said.

The excise target for 1999-2000 may not be achieved as the industrial growth for the year may fall short by two per cent of the targetted seven per cent, it said.

Inflation declines

NEW DELHI, Aug 29 (PTI) — The annual rate of inflation fell by 0.14 percentage points to 1.56 per cent for the week ended August 14, despite continued rise in the prices of major food articles. The inflation rate, based on the WPI, had fallen to a two-decade low of 1.19 per cent (Provisional) for the week-ended July 24, but had been rising since then.

The low rate of inflation witnessed during the current year is mainly due to the comparison with a higher base last year when prices of food articles, especially vegetables had shown abnormal surge. Despite a remarkable rise in the vegetables prices this year, the index is rising at a much lower rate compared to last year.

Getting ready for Seattle

NEW DELHI, Aug 29 (PTI) — The Government should consult consumer rights organisations while preparing India’s official agenda to be presented at the forthcoming Seattle WTO ministerial conference, a national alliance of consumer groups has said.

In a memorandum to the Prime Minister several consumer bodies have requested him to advocate with the Commerce Ministry to include representatives from consumer and non-government organisations (NGOs) in trade delegations and missions to the conference.

“By evolving a proper consultative mechanism with consumer and other organisations at the concerned levels the larger interest of the consumers could be protected from the adverse impact of globalisation,” they said.

Giving a sector-wise analysis of the issues to be taken up at the Seattle conference, Consumer Unity and Trust Society (CUTS) said there was a strong possibility that discussion on a Multilateral Agreement on Investment (MAI) would begin.

This was expected in view of the failure of a similar effort at the Organisation for Economic Cooperation and Development (OECD), it said.

“We need to analyse whether there is a need for MAI when cross-border investment is flowing without any multilateral agreement”, CUTS Secretary General Pradeep S. Mehta told PTI.

India’s lack of a predictable policy for attracting foreign direct investment (FDI) was depriving consumers from exploiting benefits of competitive pricing, he added.

“Our domestic agenda is to hold the sovereignty of the nation in choosing its own standards and regulations for the protection of the interests of people and the environment vis-a-vis FDI,” CUTS which is spearheading the movement, said.

Suggesting an analysis of the stand taken by developed and developing countries, it said India should take a minimalist approach in case MAI becomes necessary.

On inclusion of services in the WTO negotiations, CUTS said Indian consumers would benefit from liberalisation of the services sector as domestic competition increases.

India should push for a institutionalised international regulatory body to monitor global trade in services and urge removal of qualitative and quantitative restrictions barriers to facilitate consumers’ right of choice, Mehta said.

Making propaganda on Net
From Ajay Kaul

NEW DELHI, Aug 29 — Pro-Khalistan elements, with active assistance of Pakistan’s Inter-Services Intelligence (ISI), have resorted to the use of the Internet in their renewed campaign of “propagating falsehood” to revive militancy in Punjab, according to officials here.

Internet is the latest means adopted by these elements to “spread lies” about Punjab to whip up sentiments of the Sikh community to misguide them, they said.

Substantiating the assertion, they cited that the per capita income in the State was Rs 19,000, the highest in the country.

The overall economy of Punjab is growing at the rate of 10 per cent per annum, the officials said, adding that the index of relative development of infrastructure of the State is the highest at 191.4 as compared to the national average of 100.

Employment in the organised sector, both public and private, has registered an increase of 2.72 per cent over the last five years.

The growth of large and medium industries has been marked. While 355 such units existed in 1989-90, the number stood at 620 in 1997-98. The production has increased many times from Rs 5,458 crore in terms of cost to Rs 28,000 crore.

The fixed investment has also witnessed a three-fold increase from Rs 3,083 crore in 1989-90 to Rs 10,500 crore in 1997-98.

The number of small-scale industries has risen from 1,46,443 in 1989-90 to 1,95,400 in 1997-98 and production by these units has recorded more than three-fold increase from Rs 3,504 crore to Rs 13,000 crore in terms of cost.

Fixed investment in these industries rose from Rs 1,218 crore to Rs 2,855 crore.

Export of industrial goods from Punjab also rose from Rs 769 crore in 1990-91 to Rs 4,200 crore in 1997-98.

The net area sown in the State is 84 per cent, which is the highest in the country. The State’s per capita foodgrain production of 993 kg is also the highest in the country and 4.5 times the national average.

Punjab also has the highest contribution of wheat (59 per cent) and rice (44 per cent) to the central pool, the sources said. — PTI

Insured to make heavy losses

MUMBAI, Aug 29 (PTI) — Claims lodged by Essar Oil Ltd and Reliance Petrochemicals on general insurance subsidiaries for the damages suffered by their refineries in Jamnagar in last year’s cyclone, are expected to have a crippling effect on the balance-sheets of the insurance companies.

New India Assurance and United India Insurance will be the worst affected as United has the maximum exposure to Essar Oil while New India has the maximum exposure to Reliance, insurance industry sources said.

Essar Oil’s claim — which has been assessed at a maximum of Rs 520 crore (against an assured sum of Rs 4654.5 crore) consisting of Rs 100 crore material damages and Rs 420 crore due to advance loss of profits (ALOP) — will set back United by a total of Rs 312 crore, as it is the lead insurer with an exposure to the extent of 60 per cent.

According to documents available with PTI, out of the total claim registered, United has already paid up Rs 30 crore — Rs 20 crore first interim payment and another Rs 10 crore as additional interim payment.

The actual liability of United was limited to the extent of Rs 18 crore as it was shared by its co-insurers in the project — Oriental (7.5 crore), National (3 crore) and New India (1.5 crore).

However, the bulk of the claim payment — which is dependent on as and when the expenses are incurred — is expected to be in the current year, sources said.

While reliance’s claim on New India and Oriental is still being processed (the sum insured was around Rs 3000 crore), sources said that the assessed claim would be in excess of Rs 200 crore.

During 1998-99, all the insurance subsidiaries, barring New India, have reported underwriting losses. New India has actually posted an underwriting profit of Rs 13 crore and sources said that this was mainly due to the income earned on investments by the company, which was somewhere between Rs 500 crore and Rs 600 crore.

MRTPC upholds Pfizer’s contention on drug prices

NEW DELHI, Aug 29 (PTI) —The MRTPC has upheld pharma major Pfizer Ltd’s contention that the price list prepared as per the Drugs Prices Control Order need not mention the products can be sold at below their respective prices mentioned in the list.Discharging a complaint filed by the Director General of Investigation and Registration (DGIR) alleging restrictive trade practices, the MRTPC said prices fixed under the Drugs Order were authorised by law and therefore not necessary for the company to expressly mention that retailers were free to sell products below their respective prices mentioned in the price list.

“Pfizer cannot be held guilty of restrictive trade practices for fixing prices of its pharmaceutical products in accordance with the Drug Order of 1995,” a three-member Bench Chairman A.N. Divecha and members S.K. Parthasarathy and Moksh Mahajan said in its order.

Referring to a Supreme Court ruling in Union of India vs Cynamide India Ltd case, the commission said price fixation by the Drug Order was a legislative activity and a cease and desist order could not be passed against a trade practice which was authorised by law.

“Even otherwise,... when the prices are mentioned as maximum retail prices, it is obvious that retailers are authorised to seal products in question at prices below those mentioned in the price list,” the order said.

“When prices in the price-list were mentioned as maximum retail prices, retailers are injucted against charging prices higher than prices mentioned in the list for various products but they are given an express authority to sell such products below the prices mentioned in the list,” the commission said.

DGIR had referred to a Division Bench ruling in the case of DGIR vs E Merck (India) Ltd which held that non-mentioning in the price list that retailers could sell at prices below the mention ones would amount to restrictive trade practices.

As this was in apparent conflict with another Division Bench ruling in DGIR vs Rallis India Ltd, the case was referred to a three-member Bench which upheld the latter saying that the earlier case had not referred to any Drug Order in force at that time.

The DGIR had also charged Pfizer of offering discount in varying terms on its pharmaceutical products and animal health products which the MRTPC dismissed.

The MRTPC said the discount of 10 per cent was not contrary to the Drug Order as it allowed discount upto 16 per cent of the prices mentioned in the price-list.

“Even otherwise, if uniform discount is given to the retailers, it cannot be said that the respondent has indulged in any unfair trade practices,” it said.

On animal health products, the commission maintained that the uniform discount of 4 per cent offered by Pfizer would not amount to any restrictive trade practice.

HDFC scouts for partner

MUMBAI, Aug 29 (PTI) — HDFC is holding parleys with British Insurance major Standard Life and other multinational fund managers for partnership in its proposed asset management company (AMC).

“We are talking to Standard Life as well as other foreign players on the formation of the AMC, but nothing has been finalised so far”, HDFC officials told PTI.

HDFC has also a standing agreement with Standard Life for a joint insurance venture in the country, as and when the sector is opened up.

“Since we already have an existing understanding with Standard Life which is a financial services major, it was natural for us to discuss the AMC also with them”, the officials said.

“Most of the major players in the asset management business have approached us”, HDFC Managing Director Deepak Satwalekar said.

“Discussions are on with all who have approached us but it is premature to make any conclusion. We plan to have the AMC in place in 1999 itself”, he said.

The HDFC officials said the institution had yet to decide on critical issues regarding the AMC like the equity pattern and the initial corpus.

Notification decried
From Our Correspondent

AMRITSAR, Aug 29 — The notification issued by the Department of Agriculture on June 9, raising cash security and demanding bank guarantee of 2 per cent from all licence holders of market committees, which include fruit and vegetable, grain dealers, rice and flour millers and commission agents, has been strongly condemned. A joint meeting of various associations held here last night took exception to the notification which was released to the public during this week.

A spokesman of the associations told newsmen that tax being imposed in the State is the highest in the country, which comprises 2 per cent market fee, 2 per cent rural development fund, 4 per cent purchase tax and 1 per cent cess for infrastructure. The associations demanded immediate scrapping of the notification which otherwise would spell doom for thousands of grain, commission, vegetable and fruit agents and rice and flour millers.

by K.R. Wadhwaney
Make a penny, lose a pound

AMERICANS and Europeans care for their reputation. They undertake positive measures to build their image. Indian aviation and airline officials do not care for it. Indians, in fact, have no reputation to lose. Foreigners lose a penny but make a pound. Indian carriers lose a pound and make a penny. The foreigners welcome tourists and visitors. They initiate low fares to woo them. Indians levy exorbitant air fares and room tariffs. No wonder, the Indian aviation and tourism industries have been staying standstill for the last a few decades. There are some analysts who emphasise that both these vital industries are walking backward.

In the fare war the three airlines/Indian Airlines’ Jet Airways and Sahara — have been rather unimaginative, if not unfair, to foreign tourists. The dollar fare has been much more than the rupee fare. The difference widens with an added quantum of discount and facilities to Indian passengers.

Hotel managements are no different from airlines. They virtually “swindle” the foreign tourists. While tariffs are exorbitant, facilities in rooms are negligible. No wonder the tourist traffic is diminishing.

Many senior officials of three carriers are paying courtesy calls to top-notch officers of corporate offices. The exercise, they maintain, is routine to stay in touch with “our own customers”. Was any airline bigwig doing this before the start of the fare war?

Instead of wasting time and energy to woo corporate bigwigs, why can’t they get in touch with the foreign tourist leaders to raise the flow of traffic. If the foreign traffic increases, both airline and hotel authorities will be the beneficiaries. The more occupancy, the more will be the profit. The more profit will lead to better health of the airlines and hotels. But is there anyone who cares for the reputation?

Sen honoured: A “Lifetime Tribute Card” was presented to Nobel Laureate Dr Amartya Sen by Indian Airlines. It is a laudable gesture which entitles him unlimited travel on Indian Airlines and Alliance Air flights.

The card was presented to Sen by airline’s Chairman and Managing Director Anil Baijal. Sen is the second person to receive such an a ward. The first was Mother Teresa.

In 1997, as part of the commemoration of the 50th anniversary of Independence, a golden tribute card was presented to 14 surviving members of the Constituent Assembly of India.

While appreciating the gesture, Sen complimented the airline for many improvements, innovation and punctuality on flights operation.

Onam on flights: Air India has started depicting Onam on flights operating from Kerala. Apart from depicting the snake-boat race, which attracts thousand of spectators, the airline has begun placing colourful Onam card on all meal trays.

by J.C. Anand
Some blue-chip shares still under-priced

THE stock market has set new records. The BSE Sensitive Index closed at an all-time high of 4870.66 points (after touching the peak of 4896.36 points) and the NSE S&P CNX Nifty Index set a new record by closing at 1417.50 points last week. This week too the market indices are likely to scale new heights. A fresh opinion poll this week (if issued is likely) might push up the Sensitive Index to 5000 points and even higher.

This bull upsurge is indeed amazing. It is very unusual for the stock market to take to high flight in the pre-election fortnight but this time the market has done it. The market continued to move up even when the FIIs turned into sellers and the UTI also unloaded a part of its holdings. Now, of course, the FIIs have also returned as investors once again. The current bull phase has both breath and depth. Even the BSE B-1 and B-2 scrips have been covered by it. The volumes of stock market have gone up significantly. Even the delivery-based transactions are higher; and this shows that long-term investors are returning to the market in good numbers.

Frankly, I did not expect the market to move up so high but what has happened is all for the good. Long-term investors are the real gainers. This market upsurge is based more on the expectation of what may follow in the way of corporate performance and political stability than on the present fundamentals. There is no doubt that there has been a shift from industrial recession to industrial revival.

The Reserve Bank’s annual report for 1998-99 has affirmed that the economy is firmly on the road to recovery, and has projected real gross domestic product growth at between six and six and a half per cent for 1999-2000. It is now broadly accepted that the cement industry is on its way up. According to the official sources in the steel industry, the total production in July was 18.82 lakh as against 16.26 lakh in July 1998. Another review report by the Government agencies indicated that infrastructure sector has also registered a 5.7 per cent growth during April-July 1999.

The other factor propelling the stock market indices is the expectation that the BJP-led front of political parties would be able to gain absolute majority in the 13th Lok Sabha. In case this expectation proves to be right, the stock market would certainly gain in strength further. But if the contrary happens, the market might receive a big jolt.

The long-term investors should concentrate on scrips which are even now being rated as under priced; they should also hold on firmly to such blue-chip equities which are expected both to stand recession and to bring good speculative gains in a buoyant market.

In the first category, I would include Sterlite Industries (moving around Rs 367 or so), Vanavil Dyes (moving around Rs 65/- or so). In the second category, I would include Larsen & Toubro, ABB, Novarties, Mahindra & Mahindra and some or the medium-priced software scrips.

I would have normally included scrips like Glaxo and Hoechst in the category of under-priced shares. But the recent cut in the price of vitamins and some other drugs has persuaded me to place these shares on the watch-list, for there may be some further decline in the market price of these scrips. But these may be picked up when they have moved lower, for in terms of the future, each of the two scrips has the potential to move up from 30 to 40 per cent.

Pfizer may be put on the block and converted into some other blue-chip scrip. Pfizer USA has now got permission to set up a new subsidiary in India with its entire equity capital held by the principal company. All new drugs to be introduced in India would be through the new subsidiary. Perhaps, the role of Pfizer Ltd (in which the Pfizer India has less than 40 per cent equity holding) would be used for marketing proposes.

Aluminium shares should also be placed on the watch list and picked up when these are attractively priced.

The stock market would flourish in the financial year 2000-2001 in case the industrial recovery is sustained, political stability is secured and the Indo-Pakistan relations do not lead to an open war. Another factor to be marked would be the reasonable behaviour of the monsoons next year.

Rockland Leas

We invested in Rockland Leasing Ltd and Rock Land Thermionics Ltd under FDR No. 38878 dated 11.4.98 for Rs 11610 and FDR No. 2163 dated 27.4.98 for Rs 10449 and FDR No. 31234 dated 31.5.97 for Rs 10,000 through Khanna Branch Manager, Mr G.S. Sheetal. Now after date of maturity, we deposited FDRs with the company but nothing has been heard from the company so far.

Gurinder Singh
Amrik Kaur
Sirhind

II

I invested Rs 20,000 in two debentures of Rs 10,000 each (no. 12755 dated 24.5.97 and 12216 dated 21.4.97) with Rockland Leasing, New Delhi. The zonal office sent a letter to me in 12/98 in which some court had directed the company to return the amount to the investors by 31.12.98 and they asked me to return the said debentures duly discharged which I handed over to the Zonal Manager on 15.12.98. I have not received the amount despite reminders.

Manu Sharma

Patiala Videocon Intl

I am a holder of 200 bonds of Videocon International Ltd under Folio No. S-0003563 and S-15277 which were due for redemption on 28.2.98. I received the amount on 16.1.99 after about eleven months without interest. I had written registered as well as ordinary letters for remitting the interest but in vain.

Sarla Kumari Mittal.
Mansa

ATN

I invested Rs 10,000 in the Fixed Deposit with Asia Television Network Ltd (ATN) Colaba Mumbai for one year for which FDR No. 000102 dated 3.12.96 was issued. As per the agreement a sum of Rs 11607 was to be paid on 3.12.97. The FDR, in original, duly discharged was forwarded to the firm in 29.10.97. I have not received the money despite reminder.

Ajit Kaur Sethi
Patiala