Corporatise state power boards: PM
KAYAMKULAM (Kerala), Jan 17 — Prime Minister Atal Behari Vajpayee today suggested corporatisation of the state electricity boards and rationalisation of power tariff to making the SEBs viable and efficient.

More ‘four-strokes’ on two wheels
IN 1985, when Hero Honda Motors Ltd. launched its first small four-stroke contender, CD-100, in the motor cycle segment, the only other four-stroke bike in the market was the venerable ‘Bullet”.

‘Raising duty on gold no solution’ NEW DELHI, Jan 17 — Former Finance Minister Manmohan Singh said today raising import duties on gold was no solution to curb its imports.

India not likely to drag USA to WTO
NEW DELHI, Jan 17 — India is unlikely to take the USA to the World Trade Organisation against export curbs imposed by Washington on 40 Indian companies and 200 of their subsidiaries after the nuclear tests conducted in May last, official sources said today.

New model of Santro not yet
NEW DELHI, Jan 17 — Hyundai Motor India Limited has decided not to hurry with the introduction of the semi-automatic version of its 999cc small car ‘Santro’.

Rs 950 crore banking fraud unearthed
MUMBAI, Jan 17 — The Directorate of Revenue Intelligence has unearthed a Rs 950 crore fraud by the city-based Hamco group of companies through foreign letters of credit route and handed over the case to the Directorate of Enforcement as it involves massive FERA violations.

Corporatise state power boards: PM

KAYAMKULAM (Kerala), Jan 17 (PTI) — Prime Minister Atal Behari Vajpayee today suggested corporatisation of the state electricity boards (SEBs) and rationalisation of power tariff to making the SEBs viable and efficient.

Speaking after commissioning the 115 MW first unit of the Rs 1,310 crore World Bank funded 350 MW Kayamkulam combined cycle power project here, Vajpayee said financial ill-health of SEBs was the “biggest problem in power sector”.

A state like Orissa had largely benefited after its electricity board was corporatised, he pointed out and expressed confidence that other states too would follow suit to solve the immediate and long-term problems in the power sector.

He said that “power tariff of SEBs does not cover the cost of generation, compelling industries to resort to captive generation”.

SEBs lost more than Rs 6,000 crore annually, he said and asked “How long can we continue like this ?”

He wanted the state governments to ensure that SEBs improved their functioning by providing adequate and quality power to the people. “Farmers are willing to pay reasonable tariff provided they are assured of adequate and quality power,” he said.

According to the India Infrastructure Report, the country would need 1,11,500 mw power in the next 10 years, requiring an investment of Rs 6,24,400 crore. The only way this could be afforded was to make all consumers pay their due share.

There was an urgent need to improve the transmission and distribution (td) systems to reduce losses, which was 20 per cent compared to the 10 per cent world average.

States that have begun to carry out these reforms were beginning to benefit. Orissa, for instance, had reduced the losses by 10 per cent after the SEB was corporatised.

The Prime Minister expressed the hope that other states, too, would follow suit so that they could go a long way in solving the problems in the power sector.

Hinting at a new energy policy, he said the states and the Centre had to work out the total energy requirement in an integrated manner as a prelude to the formulation of an energy policy.

The state governments should participate actively in efforts to tap non-conventional energy sources in a big way. Wind-energy-based projects alone could generate 20,000 mW, while 10,000 mw could be generated from small hydro-power and 17,000 mw from biomass energy.

Non-conventional energy was a key sector as over-dependence on hydrocarbon fuels was not in the long term interests of the country both for energy security and environment protection, he noted.

Union Power Minister Rangarajan Kumaramangalam said the total installed capacity of the NTPC would go up from 17,000 mw to 30,000 mw by 2000. The power grid corporation was also taking steps to strengthen transmission system to cope with the future demand.

Chief Minister e k Nayanar said the Left Democratic Front government was committed to making the state a power-surplus one by the turn of the century. In the last two-and-a-half years the total capacity of the state electricity board had gone up from 191 mw to 298 mw.

Economic reforms have not delivered: Shekhar
Tribune News Service

NEW DELHI, Jan 17— A former Prime Minister, Mr Chandra Shekhar, today asked the Government to adopt a people-oriented economic policy as the liberalisation programme has not served their cause.

Urging the government to take immediate measures in this direction, he said the seven years of economic reforms programme had not achieved its aim and had left the common man “disenchanted”. He warned that if the situation was allowed to persist, the common man may take to the streets to force the Government to change its policies.

“It is still not very late for the Government to change its course and amend the liberalisation programme to meet the aspirations of the people”, he told a press conference here.

Releasing a document on the progress of the liberalisation programme, started in 1991, Mr Chandra Shekhar provided empirical data to prove his claim that the performance of the economy has been unsatisfactory during the post-liberalisation programme.

He said the data on the rate of growth presented a dismal picture of the economy with the performance of every sector being disturbing. Except for marginal increase in capital and intermediate goods, every other industrial group had suffered seriously.

The expected massive inflow of foreign investments remained elusive, the rupee had slid down considerably, and the trade balance has been deteriorating causing strains on the balance of payments and the much publicised reserves of foreign exchange had large constituents of “hot” money and debt component.

He said the fiscal situation had been under severe pressure in the last three years and the social sectors, including health and education, had been neglected. He said large increases would have to be made in the allocations for the social services sector. For this purpose, the resources of the States would have to be strengthened by devolving larger amounts to them for the purpose.

India may face BoP crisis: Manmohan

NEW DELHI, Jan 17 (PTI) — Former Finance Minister Manmohan Singh warned that India could face a serious balance of payment crisis in the wake of the gloomy economic scenario resulting from a “crisis of governance”.

“In many ways you have a crisis of governance. .. I think the government has to learn to govern, learn to govern effectively,” he said in an interview to PTI.

He accused the Vajpayee government of not being serious about tackling “financial and fiscal problems in right earnest.”

Criticising the government as being “arbitrary” in decision-making, particularly economic, the Leader of the Opposition in the Rajya Sabha said its management of the fallout of nuclear tests on the economy (i.e the US. Sanctions) and fanning of communal passion by groups close to ruling party was sending wrong signals to the world.

Budget-making needs to be demystified to ensure decisions are taken in a rational way rather than under political pressure, he said.

Describing the overall economic situation as gloomy, Dr Manmohan Singh said for the second consecutive year, the economy would not grow more than 5 per cent.

“This is not a good enough performance. We have several weak points,” he said adding even the 5 per cent growth was influenced by the fact that agriculture grew at 3 per cent or more.

Industrial growth at around 4 per cent was awfully “unsatisfactory” and export growth has virtually collapsed. if this was not reversed it could lead to a breakdown in the balance of payments staking the country’s credit worthiness.

The Prime Minister’s actions fall far short of his promises. The way the joint board of Air India and Indian Airlines has been dismissed without any valid reason and the outstanding issues in the telecom sector are evidence of this.

This indicates the government is acting in an arbitrary manner, he said.

Pointing out the high revenue deficit, Dr Manmohan Singh said it could, however, not be corrected overnight.

More ‘four-strokes’ on two wheels
By Abhilash Gaur

IN 1985, when Hero Honda Motors Ltd. launched its first small four-stroke contender, CD-100, in the motor cycle segment, the only other four-stroke bike in the market was the venerable ‘Bullet”. Since, at that time, terms like “tail-pipe emissions” were unheard of, the CD-100 sold solely on the strength of its phenomenal fuel-efficiency.

However, over the years, popular perceptions and priorities have changed and today four stroke engines are preferred on two-wheelers. Not surprisingly, manufacturers have also responded with new products and today a two-wheeler buyer in Chandigarh may pick from no less than 19 four-stroke options offered by six different manufactures.

More than the sharp increase in the number of contenders, what is notable about the present day four-stroke-two-wheeler (FSTW) market is the conscious attempt at product variation on the part of the manufacturers. Unlike the ‘CD-100’ and ‘Bullet’ of 13 years back, which were targeted at “none and all” (!) and promoted through single-point, product-centric advertising that merely extolled a particular virtue of the product viz. economy (Hero Honda’s “Fill it, shut it, forget it” line) or ruggedness (Enfield’s “Yeh Bullet meri jaan.....” theme”, the current crop of FSTWs are positioned to meet the specific demands of different buyers. Thus, for instance, we have Hero Honda Motors Ltd. (HHML) selling six distinctly positioned models employing the same CD-100 engine while, in contrast, Royal Enfield Motors Ltd. (REML) has spawned eight variants by using four different engines on identical frames and mechanicals.

An interesting example of product variation is Bajaj Auto Ltd’s ‘Boxer’. By stripping its ‘4S-Champion’ of its frills — such as the head-lamp cowl — and providing it with a removable pillion that conceals a luggage carrier, BAL has created a workhorse model priced lower than the 4S-Champion and suited to the needs of rural areas. As opposed to this, by incorporating changes in its saddle, silencer and colour-scheme, REML has transformed its staid ‘Bullet’ into the flamboyant ‘Machismo’, popular amongst urban youth. Other note-worthy examples of product variation include HHML’s ‘CD-100 SS’ and ‘Splendor’ bikes, the later being the overall best-seller in the motor cycle segment.

The last couple of years particularly 1998, have witnessed 11 new models being introduced, nine of which — excluding BAL’s ‘Legend’ and ‘Caliber’ — are already available in Chandigarh. The intent to carve out exclusive inches is apparent from the specifications of the new entrants. For instance, four-stroke segment debutante TVS has positioned its ‘Spectra’ as a stylish up-market scooter while Escorts Yamaha Motors Ltd. has sought to tap the latent demand for a small but powerful four-stroke bike with its 11 bhp ‘YBX-125’. Higher up in segment, we have the ‘Lightning 500’, a cruiser, and the ‘Machismo A-350’, featuring an AVL (Austria) designed ‘lean-burn’ engine, from REML while, lower down, there is the ‘K4-100’ step-through motor cycle from Kinetic Engineering Ltd. priced at a light-on-the-pocket Rs 28,500/-. In addition to these, there is HHML’s ‘Street’ which boasts of a unique clutchless-rotary-gear system that makes city riding easy.

No doubt, the availability of all these models can do much to drive a large chunk of demand away from polluting two-strokes, however, there still exist segments wherein no four-stroke alternatives are available. These include ungeared scooters and scooterettes, mopeds and geared scooters priced below Rs 25,000. Since together these segments command more than 50 per cent of all two-wheeler sales, the need of the hour is to introduce four-stroke two-wheelers in them.

‘Raising duty on gold no solution’

NEW DELHI, Jan 17 (PTI) — Former Finance Minister Manmohan Singh said today raising import duties on gold was no solution to curb its imports.

“If gold demand has to be curbed, the government has to put in place a stable macroeconomic framework, control inflation and law and order and have a firm commitment for the rule of law,” he told PTI.

The worldwide trend showed that more gold was acquired by people in those countries where there was a lot of instability and distrust of state policies, he said.

The increase in import duty on gold from Rs 250 to Rs 400 per 10 grams effected by the BJP government recently would at the most help it to mop up revenue.

India not likely to drag USA to WTO

NEW DELHI, Jan 17 (PTI) — India is unlikely to take the USA to the World Trade Organisation (WTO) against export curbs imposed by Washington on 40 Indian companies and 200 of their subsidiaries after the nuclear tests conducted in May last, official sources said today.

Though India had initially toyed with the idea of referring the entities list issue, under which dual-use technology item exports to select Indian companies have been banned, to WTO’s dispute settlement mechanism, it was now not inclined to do it due to experts’ views that the success rate would be low in fighting the issue at the multilateral level.

India had, however, decided to register its objections in writing to the USA on the issue by tomorrow, the deadline for filing such objections, the sources said.

The objection would in general point out that companies blacklisted for exports were in no way related to research in the nuclear field.

The Union Cabinet, while clearing the line of India’s action in objecting to the list, also decided to leave it to individual companies to raise their objections on the issue.

The entities list banning exports to companies like Bharat Earth Movers, Bharat Electronics, Bharat Heavy Electronics Ltd and Hindustan Aeronautics Limited was published in November last under the Glenn amendment.

New model of Santro not yet

NEW DELHI, Jan 17 (UNI) — Hyundai Motor India Limited (HMIL) has decided not to hurry with the introduction of the semi-automatic version of its 999cc small car ‘Santro’.

A decision to this effect was taken in view of the emerging market condition and the realisation that a semi-automatic version would not fetch mass sales, HMIL President A.P. Gandhi told UNI here.

“However, that does not mean that we have put the project in the backburner or decided to shelve it. The project is still on. In fact, the engines are ready and we have sent it to the Automotive Research Association of India (ARAI).

Rs 950 crore banking fraud unearthed

MUMBAI, Jan 17 (PTI) — The Directorate of Revenue Intelligence (DRI) has unearthed a Rs 950 crore fraud by the city-based Hamco group of companies through foreign letters of credit route and handed over the case to the Directorate of Enforcement as it involves massive FERA violations.

Hamco group Chairman Babubhai M Patel has also applied in the city sessions court for anticipatory bail and made the DRI and the Enforcement Directorate as respondents, DRI sources said.

An amount of Rs 950 crore was remitted against the LoCs drawn and the goods not shipped or received were to the tune of Rs 675 crore.

The RBI has also appointed special auditors to go into the transactions.

The Hamco group operated mainly through Canara Bank’s Nariman Point branch, Vijaya Bank’s Excelsior branch, State Bank of Patiala’s Dadar (West) branch and Federal Bank Ltd’s Dadar (East) branch.

The group comprising Hamco Mining and Smelting Ltd, Dravya Chemicals Ltd, Nariman Point Chemicals Ltd and Hindustan Industrial Chemicals Ltd — all public limited companies — opened foreign LoCs during the last three years for the import of non-ferrous metals for CIF value of approximately Rs 1,000 crore.

by J.C. Anand
Time to book profit in software shares

THE early birds of the corporate sector have already announced their third quarter results and, as expected, these results are good. The software shares, however, take the cake. Infoys Technologies and Software Solutions are issuing bonus shares. Satyam Computer has reported a jump of 91.7 per cent over its corresponding net profit for the same period last year. NIIT has more than doubled its net profit for the third quarter. BPL Software’s net profit for the first nine months is Rs 1747.11 lakh as against Rs 547.78 lakh for the corresponding period last year. DSQ Software has also doubled its net profit for its first three months’ operations. Sonata Software, which made its public issue last month has announced a net profit of 751.20 lakh for the first nine months on the equity capital of Rs 558.39 lakh.

These software shares are expected to maintain their high profitability in their annual accounting year too, but the market rates of these shares have soared to a point where it may not be gainful to the long-term investors to invest in these scrips at this time. It may even be wise to book profit in some of these high flying scrips and divert their net gains to other promising shares. But even if an investor decides to stay put in the software scrips, nothing would be lost, for this sector is expected to perform well for at least another two years.

Some other companies too have declared good third-quarter results. Vanavil Dyes has announced a higher net profit of Rs 4.26 crore for its first nine months as against Rs 2.54 crore for the corresponding period last year. Rallies India’s third quarter net profit has doubled to Rs 8.48 crore and the company has made up for relatively poor results in its second quarter. Vikas WSP has announced a 47 per cent rise in its net profit during the third quarter of the current fiscal year and the company is expected to achieve an EPS of Rs 28 or so for its annual results.

Archies Greetings too has almost doubled its net profit for its first nine months working (Rs 621.45 crore as against Rs 338.91 crore). Nagarjuna Fertilizers has also announced improved results with its net profit moving up to Rs 122.80 crore as against Rs 98.95 crore for its first nine months operations.

These results are indeed good and encouraging but investors should take a cautious view of the overall working of the corporate sector. The present stock market provides a highly deceptive image. Its upper crust, comprising not more than 200 to 250 companies has been doing well and is expected to maintain it but the bulk of the companies, constituting almost 95 per cent and more are in a poor shape and cannot be expected to perform well. A discerning investor should invest for a long term only in well-managed companies with excellent fundamentals and low debt-equity ratios.

The economy, too, is not in a good shape. In the long run, the economy and the corporate sector keep their correspondence and the corporate sector cannot perform well if the economy is doing badly. The Centre for Monitoring Indian Economy (CMIE) has in its recent analysis indicated that there is no sign yet of a turnaround of the slowdown in Indian economic growth, and for the year ending March 31,2000, growth will be unchanged at 4.5 per cent. There may be a slight improvement in the agricultural sector but stagnant conditions would continue to persist in the industry.

A similar view emerges from a lengthy discussion among a number of financial experts and business executives, which had been organised by a leading financial paper for its weekly pull-out. Against this background of stagnant economy and relatively poor performance of the corporate sector in the current and the coming financial year, the investors have to be very cautious.

But even in a slack market conditions, it is possible to spot some good investment propositions. Tea shares are in general expected to do well in the current year. The tea crop in Kenya is likely to suffer due to the failure of seasonal short rains. This would raise international prices of tea and the top Indian companies, particularly Tata Tea, would gain considerably. The third quarter results of Tata Tea are expected to be very good. Even a long-term investment in Tata Tea would be rewarding.

Another company which has reported excellent results is Vikas WSP. This company has a near monopoly in guar gum polymers in India and has very good export prospects. Even with an expected EPS of Rs 28, the company is stagnating in the market at Rs 136 per share. It is also moving toward zero-debt phase and as a 100 per cent export-oriented unit, it has virtually no tax obligation.

by K.R. Wadhwaney
Will ATC system prove effective?

TIME alone will reveal the effectiveness and reliability of the new air traffic control system installed at Indira Gandhi International Airport (IGIA) four years behind schedule on January 14.

The contract was signed in 1993 and the system was scheduled for commission in 1995. But there were numerous objections by the Airports Authority of India (AAI) and consequent clarifications by the Leington-based Raytheon Company.

The Technical snags, and unfavourable weather were given causes for delay. Former AAI incumbents had some reservations about the system which, according to them, was not up to the promise made by the manufacturers. The stalemate was broken when new chairman VD Gupta took over.

“The system going ‘live’ is a tribute to the hard work and close cooperation of AAI officers and Raytheon engineers”, said Mr Frank S, Marcchilena, company’s command control, communication and information systems business segment. He, however, did not explain why there was an inordinate delay in the installation.

According to the company Raytheon’s ATCS for the Delhi Flight Information Region was accepted by the AAI in March 1998 after the successful completion of a series of rigorous operational tests. Since accomplishing this milestone Raytheon and AAI has continued working hard transition the air traffic controllers from the existing system to the new system during over 24 months of intensive onsite training which was conducted before the installation.

Workshop

Air India will save a sizeable foreign exchange with the functioning of a workshop at Santa Cruz Airport for overhauling and repair of Pratt and Whitney 4056 engines (Boeing 747-400).

Inaugurating the workshop, AI’s Managing Director Michael Mascarenhas said that it was in confirmity with international standards. It is capable of handling 10-12 large turbofan engines at a time. “Facilities for chemical and mechanical cleaning and crack detection of aircraft and engine parts will also be commissioned later this year”, he said.

AI engineering base which handles servicing and maintenance is considered on par with any other leading international airline. The airline’s engine overhaul unit, with 80 aircraft engineers and 343 foremen and technicians, provides facilities to other domestic airlines. The airline has also provided service to some other airlines from neighbouring countries.

An ambitious plan

Hindustan Aeronautical Limited has an ambitious plan of manufacturing 100-seater passengers jets by the turn of this century.

“You make we will buy Civil Aviation Minister Ananath Kumar said at the golden jubilee seminar of the Aeronautical Society of India.

Describing these aircraft as ‘Swadeshi jets’, the minister said that he had already had a word with Defence Minister George Fernandes and his scientific adviser, Dr APJ Abdul Kalam, on the subject.

Mr Kumar was emphatic that the government would divest 51 per cent of IA’s stakes while allocating 40 per cent AI’s equity for the international strategic partner.

United Airlines

United Airlines has temporarily suspended its daily flights between Delhi and London and Delhi and Hong Kong due to disappointing profits. “It is a lean season and we have no option except to resort to this strategy”, according to Mr Davi Solloway, country director-India.

The airline remains uncertain about the resumption of its non-stop US-Delhi flights.

Bank pulled up
MUMBAI, Jan 17 (PTI) — In a significant judgement in the multi-crore securities scam, a special court here has come down heavily on Standard Chartered Bank for putting up an exaggerated claim for losses of Rs 1253 crore in dealings with Hiten Dalal, a notified party, in 1992. Justice S.N. Variava, in a hard-hitting order, ruled in December end that the bank’s claim to the extent of Rs 795 crore losses was disproved. He also held that the bank could prove losses only to the tune of Rs 280 crore.

Patents
NEW DELHI, Jan 17 (PTI) —The government has strongly defended the compulsory licensing provisions in the patents amendment ordinance and will present the changed laws to the World Trade Organisation (WTO) on January 25 at Geneva. Indian Ambassador to WTO S. Narayanan will inform the Dispute Settlement Board (DSB) on the changes next Monday when the board assembles for its monthly meetings, Industry Ministry officials said.