Monday, June 7, 1999
today's calendar
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B U S I N E S S | Monday, June 7, 1999 |
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spotlight today's calendar |
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Economic mood upbeat
despite Kargil |
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 The space shuttle Discovery with a crew of seven aboard returns in a rare night landing to Kennedy Space Center, Fla. on Sunday. The shuttle completed a repair and supply mission to the International Space Station. — AP/PTI |
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BHEL bags Rs 45 crore contract Oil companies win patent case MTNL allowed to offer discounts |
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Economic
mood upbeat despite Kargil NEW DELHI, June 6 (PTI) — Over 75 per cent of corporate India is confident of an economic turnaround within the next six months, despite tensions breaking between India and Pakistan, a survey has revealed. A majority of the respondents said business sentiment had shown a considerable improvement this year, with vastly improved macro economic fundamentals in the latest FICCI survey on business confidence. The FICCI report mentions tensions in Kargil, political turmoil and a split in the Congress as important events which occurred during the last three weeks of May, a period over which the survey was conducted. Among the sectors in which the current slowdown would get reversed before the year end were consumer goods, services, automobiles, steel, commodities, chemicals and pharmaceuticals, as per the survey. “The economy is already on the turnaround track, end of the current recession is imminent,” said respondents from chemicals and commodities sectors. The vastly improved economic outlook of Indian corporates is in sharp contrast to that expressed during the previous such survey FICCI conducted in December last year. Six months back, an overwhelming 89 per cent of the corporate chiefs were uncertain of a recovery trend setting in anytime before fiscal 2000-2001. Among the parameters which perceptibly improved since December last were interest rates, GDP growth rate, inflation and industrial growth rate expectations. “There has been a considerable improvement in business sentiment this year. Interest rates have come down to 12 from 14 per cent; GDP has improved to 5.5 per cent while industrial growth rate expectations have buoyed to four per cent,” the survey findings reveal. Inflation rate has also improved from 7 per cent in the last survey to 5.5 per cent now. Commenting on macro economic issues, majority of survey respondents said these would hold steady or improve in the near term. Topping the reasons for continuing recessionary trends were demand-side bottlenecks, with 34 per cent of the corporate leaders polled, listing this as the single largest reason. Fluid political situation, infrastructural bottlenecks and low public expenditure emerged as the four most important internal factors contrybuting to recession. Coming to the external factors which hindered economic growth, slowdown in international trade emerged as the single most important factor, with an overwhelming 65 per cent of all the respondents pinpointing this. In another significant viewpoint, 60 per cent of corporate India felt that measures announced in this year’s Union Budget might not prove effective enough for kickstarting the economy in the short run. Regarding political
uncertainty, 62 per cent of the respondents felt that it
had completely or adversely affected the country’s
economic scenario. NEW DELHI, June 6 (UNI) — Close on the heels of official data suggesting recovery in many sectors, a CII survey has shown considerable improvement in the overall business confidence in the Indian industry after touching a two-year-low six months ago. The survey reveals “expectations of improvement by a majority of the respondents in several factors such as step-up in production, increase in the total order position, capacity utilisation and a pick-up in retail sales”. Significantly expectations regarding profit margins for the next six months have also improved. The CII survey comes days after the official figures showed marked improvement in the revenue collections by 21.3 per cent in the first two months of the current financial year. These figures had shown that the excise and Customs collections had increased by 27.8 per cent and 11.4 per cent respectively over the same period last year. Indications were that cement, passenger, utility vehicles, two wheelers, auto ancillaries, capital goods, consumer durables, plastics, synthetic yarns, pharmaceuticals and electrical cables were showing a revival. It also reflects the return of stability on the price front and the continued fall in the weekly rate of inflation as measured by the wholesale price index. “There is a near unanimity amongst the respondents that the rate of inflation would remain within single digit levels,” the survey said. Interestingly, the survey toes a different line from the stock market in so far as the impact of political stability on the business is concerned. While the foreign institutional investors-led rally continued in the stock market, the survey revealed that political instability as a constraint to the growth was rated the highest during the past six months. It is also “foreseen to be a major hurdle in the next six months, by a majority of respondents’’. It listed certain
internal variables contributing to restrict output. These
include high cost of funds, a lack of orders from the
government and domestic customers and collateral
requirement from the banks. |
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NEW DELHI, June 6 (PTI) — India’s foreign exchange earnings from tourism dipped marginally to $ 3132.53 million in 1998 from $ 3151.70 million in 1997, due to both a fall in international arrivals and devaluation of the Indian rupee. Notwithstanding a fall of 0.7 per cent in the international tourist arrivals at 2.36 million during the year gone by, India’s earnings in rupee terms shot up by 6.3 per cent, thus reflecting the slippage in the value of the Indian currency. According to figures compiled by the Tourism Ministry, the tourist traffic from the world over however, showed signs of improvement in the current calendar year with January witnessing a growth of 2.3 per cent and consequently an increase of 9.4 per cent in rupee earnings. Total foreign arrivals during January 1999 was 2,52,770 as against 2,40,569 January last. Of these 37,595 were from Pakistan and Bangladesh. The country attracted a large number of visitors from Central and South America indicating a jump of 39.3 per cent followed by 22.7 per cent from Australia, 8.2 from Africa, 7 per cent from Eastern Europe, and 2.7 per cent from Western Europe, according to the Ministry figures. But arrivals from West Asia, South Asia, South East Asia, East Asia, including Pakistan and Bangladesh declined. Tourists from Pakistan and Bangladesh fell from 4,00,447 during 1997 to 3,83,814 in 1998. However, earnings from these two countries stood at Rs 238.11 crore during the period as against Rs 231.24 crore in 1997. The country’s
outbound tourism, which has the highest growth rate in
Asia, is growing fast with a large number of Indians
going abroad. |
BHEL bags Rs 45 crore contract NEW DELHI, June 6 (PTI) — BHEL has bagged a contract worth Rs 45 crore from Gas Authority of India Ltd (GAIL) to supply a compressor and drive gas turbine package. Bhel would supply these equipments for GAIL’s LPG recovery plant at Vijaipur in Uttar Pradesh and the project is to be executed in a 14 months time, a BHEL statement said. The order envisages design, manufacture, testing and supply of two numbers centrifugal compressors and drive gas turbines and associated auxiliaries and mandatory spares. The equipments will be manufactured at the BHEL’s Hyderabad plant. BHEL had earlier
supplied gas turbine and steam turbine driven compressors
for its recovery projects in Vijaipur, Auraiya, Lakwa and
Usar, it said. |
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NEW DELHI, June 6 (PTI) — Leading oil companies — Indian Oil, Bharat Petroleum, Hindustan Petroleum and Castrol — scored major victories in the Delhi High Court, which allowed them to sell auto lubricants in pouches while rejecting Standipack Private Limited’s claim that it had the patent over pouches. Justice M.K. Sharma, in a recent order, said: “Documentary evidence on record proves that construction of said pouches was publicly known and used in India before the date when the patent was granted in favour of Standipack on October 11, 1990.” The court order came on a number of petitions filed by Standipack seeking interim injunction restraining major oil companies and two leading pouch makers — Rollatainers Limited and Flex Engineering — from manufacturing and using “the patented pouches of the petitioner”. Castrol India through its counsel Manmohan Singh also filed a petition before the court for revocation of the patent to Standipack, saying that the pouches were in use with many oil companies prior to the grant of patent by Controller of Patents and Designs. The court accepted the contentions of leading public sector oil companies, Castrol, Rollatainers and Flex Engineering, and said it was crystal clear that the making of pouches was already known prior to the date of patent. Citing a Supreme Court judgement which held that a patentable product must involve invention producing new result, the High Court said the pouches made by Standipack did not satisfy the conditions for an invention. The judge further said Standipack had failed to make any prima facie case for the grant of temporary injunction in its favour. While these proceedings were pending before the Delhi High Court, Standipack filed a suit against Castrol in Ambala District Court and obtained an injunction against Rollatainers, the manufacturer of pouches used by Castrol. Standipack concealed from the Ambala court the fact that a suit for patent infringement had already been filed by it against Rollatainers before the Delhi High Court, which refused to grant any interim injunction. Following Ambala court order, Castrol and Rollatainers moved the Supreme Court, under special provision, against the District Court order. The Supreme Court while staying Ambala court order directed all petitions filed in this regard to be transferred to the Delhi High Court. The Delhi High Court
also vacated the stay granted by Ambala court in favour
of Standipack. |
MTNL allowed to offer discounts NEW DELHI, June 6 (PTI) — The Department of Telecommunication (DoT) has empowered Mahanagar Telephone Nigam Limited (MTNL) to offer discounts and tariff concessions to its major commercial subscribers in the growing competitive market. “DoT has given us powers to offer discounts and give concessions on tariff to commercially important customers,” MTNL Chairman and Managing Director S. Rajagopalan told PTI. MTNL, a state-owned undertaking under the Communications Ministry, is facing competition from private basic service provider Hughes Ispat in Mumbai, which started its services a few months ago. Talking about growing competition and tendency to offer discounts, Mr Rajagopalan said though MTNL would not like to undercut its competitors, if private players resorted to such tactics “we would offer discounts and come out with innovative schemes for retaining our major subscribers”. The government has also constituted a high-level committee which is considering various innovative schemes and benefits which could be offered to its subscribers. He said MTNL was contemplating giving free Internet connection to subscribers subject to minimum usage time. This is likely to be recommended by the committee, he added. The committee under the
convenership of Senior Deputy Director General D.P.S.
Seth of DoT has members, including Mr Rajagopaalan, two
chief general managers of MTNL and other senior DoT
officials from all over India. |
UTI THE cash strapped Unit Trust of India must be feeling a great sense of gratitude towards the foreign Institutional investors (FIIs), whose hectic buying had propelled the BSE Sensex from a despondent 3200 points level past the 4000 points level. How did this benefit the UTI? Well, who do you think stalled the progress of the Sensex through heavy sales once it touched the 4000 points level? Big bull in fray Whenever a rally commences at the bourses, rumours start flowing thick and fast. Almost inevitably, the rumours then revolve around the erstwhile Big Bull, and the countries he is operating. But as market veterans warn — it is a sure fire signal that the rally will soon end! Media software After the Information Technology boom, the segment that seems likeliest to follow its course, according to one of the shrewdest operators on the BSE is the Media Software segment. His picks therefrom? Crest Communications and Sri Adhikari Brothers. Any takers? Ispat group Could there be any credibility in the rumour that the Ispat group is down and out for the count? The grapevine has it that a fervent appeal was sent out to Big Brothers in London, but from the looks of it the pleas seem to have fallen on deaf ears. Watch this space for further developments. German Rem A Mumbai-based bull operator has been accumulating the share of German Remedies notwithstanding the cooling off of the frenzy for pharma stocks. Why? A close aide of his whispers that a bonus issue is on the cards! MTNL The grapevine has it
that MTNL’s cellphone services will commence before
the turn of the millennium. Wonder where that leaves the
likes of BPL and Maxtouch who will be forced to cut down
on their air-time rates?
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President K.R. Narayanan has categorically disallowed disinvestment in Indian Airlines at this point of time. He is reported to have observed that it is major policy decision which may be taken by a duly elected government instead of a caretaker one. The President’s decision has been taken in stride national carrier’s staff who feel that privatisation is not the answer to bring about a turn-around of the carrier. Experts hold the view that the national carrier has been performing superbly at present and it should be allowed to function freely without much political interference privatisation will not only take a long time of more than five years, but it will cause further problems in the airline which, according to them, is overstaffed. Most of the problems of the airline will get automatically sorted out if “good for nothing” officials are shunted out of the airline. According to statistics, the strength of the airline is at least three times more than the fleet available with the carrier. The domestic carrier’s innovative metro shuttle service between Delhi and Mumbai has been a great success. Some private operators have started offering increased commission to its travel agents. While they are free to offer any amount of commission to their agents, they should at least be prompt in paying Inland travel tax to the government. Most of the private operators have been quilty of not paying ITT on-time and the interest saved is said to be more than sizable. ‘Lounge in space’ While most of the affluent airlines have taken measures to fly into millennium with added comforts and amenities to passengers, British Airways has gone on record saying that it has already made radical changes to redefine long-haul business travel and set new benchmarks in comfort. BA plans to create a “lounge in the sky” for the Club World passengers who, among other facilties, will be provided “flat beds” As BA continues to
expand, it has restarted flights to Tripoli. This is
airline’s 75th new destination in a decade. The
flight to Libyan capital has become possible following
United Nation’s lifting of sanctions in April this
year. |
ON May 21, the sensitive index had closed at 4015.8 points and last week, that is a fortnight later, this index closed at 4042.5 points. In other words, there has not been any substantial change in the index. The same is true of Nifty index. But during the fortnight, the market had sharp fluctuations, and the sensitive index fluctuated between 3773.3 and 4042.5 points. A part of these fluctuations can be explained in terms of traders’ somersaults, but a part can be ascribed to the changing situation in the Kargil sector. It had been stated in this column last fortnight that there was little possibility of any substantial rise in the market during June and July, and that the market may decline in August — September. I still hold on to this view, though in every market, whether bear or bull, a wise investor can pick up good scrips for appreciation and good dividend return. Now almost all major companies have declared their annual results and the market has reacted to them. There is not much to enthuse the investors and traders to push up the market any further. There are also reports that the demand for cement is looking up. These reports are based upon the assumption that as the cement manufacturers have raised the marked price of cement, so the demand for cement must have picked up. But in the monsoon season, the demand is likely to be depressed rather than improved. There is also a report that the total tax collections (direct and indirect) in May have increased by 12.87 per cent, as compared with the collections in May 1998. This is indeed a happy sign but a clear picture will emerge only when this trend is sustained. Direct tax collections, however, are lower. The automobile sector, or at least some segments of this sector, is moving out of recession. But these straws in the wind are not enough to say that the revival of industry has started. The first quarter results of corporate sector would provide more trustworthy evidence on this issue. During the last fortnight, Clariant India declared bonus shares in the ratio of one for two held. Britannia Industries also announced bonus shares in the ratio of one for two shares. Investment in equity shares is made primarily for short-term or long-term appreciation. But, at present, good investment can be made for handsome return in the form of good dividends. Of course, investment in equity shares is always prone to some risk but this element is reduced to the minimum in the shares discussed below. I would like to put these scrips in two categories: one in which return is handsome but there is not much prospect for appreciation, and the second which combine good return with prospect of appreciation in a year or so. Some of the second category share are discussed here. Tata Chemicals (50% dividend payable within the next three months and at present quoting around Rs 66) is one of these shares. It is at present cum-dividend. This year’s net profit (before the addition of the carry forward amount available) is Rs 181.67 crore on the equity capital of Rs 180.70 crore. Another share in this category is Vardhman Polytex which is cum-dividend (books close on July 1, 1999) and has declared a dividend of 40 per cent and is quoting around Rs 30 or so. Vardhman Spinning and Mahavir Spinning can also be recommended. Vardhman Spinning has recommended a dividend of 40 per cent and is quoted around Rs 59. Mahavir Spinning also paying a dividend of 40 per cent is quoting around Rs 44/45. In the first category are the following cum-dividend shares: Can Fin Homes (dividend 22 per cent and quoting aroundRs 17). The market parice is likely to decline to Rs 14 or so on ex-dividend basis but it will surely recover to Rs 17 or more in June 2000). GNFC (dividend 22 per cent, quoting around Rs 19 or so. Some chance of appreciation a year later), Nagarjuna Fertilizers (dividend 20 per cent and quoting around Rs 16) T.N. Petroproducts (dividend 24 per cent and quoting around Rs 19.50. Book closing on June 29). Tata Electric companies also provide good net dividend income. A very promising share
can also be recommended to be kept on the watch list.
This share is Electrosteel Castings with equity capital
of Rs 8.09 crore and free reserves of Rs 166.16 crore.
Its net profit for 1998-99 is Rs 60.66 crore and it has a
monopoly in its area. |
PSB Finance I deposited Rs 15,000 and Rs 10,000 as commulative deposit with PSB Finance & Leasing Ltd. and PSB Finance & Investments Ltd., Nicholson Road, Ambala Cantt vide CDR No. 55382 and 52845 on March 7, 1998 which was due for maturity on March 7, 1999. Even after I handed over the concerned CDRs in original duly discharged in all respects to the company manager for making the payment along with interest accrued, the company Manager is delaying the payment and not releasing the payment despite my repeated requests. Zorawar Singh DCM I subscribed to 30 NCD of DCM Ltd. New Delhi of Rs 1000 each in February 1997 with Folio No 200558 which were due for payment on 14.8.98. The same were sent back duly discharged for payment on 3.7.98. Despite several reminders, the company has failed to discharge its obligation to pay back the principal amount with interest. Kirandeep Kaur DCM Finance Myself and my husband invested Rs 40,000 with DCM financial Services Ltd, New Delhi under Folio No DF 200274, DF-200275 and DF 201268, in NCD, matured in May 1998. The company has not released the payment despite reminders. Pushpa Kapoor |
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| Inflation goes up to 3.95
per cent NEW DELHI, June 6 (PTI) — The annual rate of inflation continued its upward movement for the second successive week and increased by 0.11 percentage points to 3.95 per cent for the week ended May 22 mainly due to costlier primary articles. During the week, the annual inflation rate based on the wholesale price index (WPI) increased to 3.95 (Provisional) from 3.84 per cent (P) a week ago. The inflation rate had stood at 6.67 per cent during the corresponding week last year. ATV Projects declared sick Farooq lauds
ethnic food CMA elections
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