Monday, May 24, 1999
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B U S I N E S S | Monday, May 24, 1999 |
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Set up task force to cut
bottlenecks: CII Indian stocks cheapest: study |
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 One of two swans is showered with rose petals at the annual parade, on its return to the Boston Public Garden lagoon. — AP/PTI |
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Inflation falls to 84-week low ‘Corporates flout TDS
norms’ Court penalises ATN ‘Hike import tariff’ Power supply in North improves
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Set up task force to cut
bottlenecks: CII SHIMLA, May 23 — The CII has urged the Government to set up a joint task force to identify and remove the bottlenecks in the way of speedy industrialisation of the State. This was one of the major recommendation of the Regional Council of the CII which met here yesterday. Briefing newsmen, Mr Sunil Kant Munjal, Chairman of the council, said although the State Government was quite responsive and anxious to attract investment, there was a lot to be done to create an investor-friendly environment in the State. A joint task force comprising officers and representatives of the CII could go a long way in solving the problems expeditiously. There was an urgent need to tone up the administration to increase efficiency and cut down procedural delays and the best way to do it was to induct information technology in a big way on the pattern of Andhra Pradesh where computerisation had helped making the officials accountable. The Chief Minister had been personally monitoring problem areas like power daily and that was enough to keep the officers on their toes. He said restrictions on the purchase of land in Himachal Pradesh was still a major problem which hindered industrialisation. Although Himachal was the first State to involve the private sector in power generation, its efforts had not yielded the desired results so for. There were several problem areas which could be looked into by the task force. Besides, the State had a vast scope for the development of tourism, particularly adventure sports and agro-based industries. In fact, industry could not only play a vital role in processing of fruits but could help in increasing agricultural productivity. At present only 8 per cent of the fruit produced in the country was being processed as against 40 to 80 per cent in advanced countries. Consequently, there was a a lot of spoilage and, thus, loss to the country and farmers concerned Environment was another
area of concern and the CII had launched awaste exchange
programme to which would help utilise polluting waste. It
had also set up an environment management laboratory at
Chandigarh with the help of the Canadian International
Development Agency. |
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NEW DELHI, May 23 (PTI) — Indian Stock Markets, even after the recent boom, are the cheapest among the emerging markets of South-East Asia based on price-earning (Pe) ratio, a study by FICCI has said. The study titled “An Analysis into the Capital Market Boom” says as against the average P/E Ratio of Indian stocks at 16.6, the competing ratio in countries like China 1825.8, South Korea 25.3, Indonesia 23.1 and Malaysia 19.8. The FICCI analysis reveals that the P/E Ratio in India has the potential for reaching around 25, a gain of about 50 per cent from the current levels. The reason for higher P/E ratio for Indian stocks is the focus of FIIs due to low inflation rate which is unlikely to depreciate the Rupee along with higher earning expecations, an increased export growth and better indirect tax relisation, the study said. The analysis by FICCI was worked out after close scrutiny of 42 stocks which witnessed the most intensive buying in the current rally leading the BSE Sensex to cross the 4,000 mark. The current boom in the capital markets seems to be a sustained one and the Sensex will rule at over 4,000 mark in the coming months, a chamber statement said today. The FICCI said, India’s economic recovery has coincided with a period when investment opportunities in other emerging markets are limited. “Indian companies with low P/E ratio and strong fundamentals are expected to gain from FII investment”, it said. The chamber said, despite political uncertainity Indian economy is expected to achieve a growth rate of around 6 per cent and the fall of BJP government made opportune time for FIIs to buy Indian stocks. The study further said the current boom in the capital market is here to stay at least in the medium term (till the next mid-term election) as UTI had been looking for booking profits for their annual closing and is expected to be back from July onwards. “Armed with
increased inflow, the Indian mutual funds May target
scrips where P/E ratios remain low even after the current
spate of FII buying”, it said adding that the
purchases are likely to spread over to select B-1 scrips
with sound fundamentals. |
Betting on
dark horses THERE is always a class of investors in the market that makes or at least attempts to make money by dealing exclusively in, what is referred to in market parlance as “junk” stocks. Some of these stocks do turn out to be dark horse winners for a while and those who are able to cash in on the opportunity do laugh their way to the bank. So let us now proceed to glance at three such scrips, which having basked in relative glory at some point of time in the past have now lost their lustre. Sanghi Polyesters There was a time when this flagship company of the Sanghi group was in the limelight at the bourses. Big time operators vied with one another to pick up this scrip then, but its fortunes seem to have swung southwards and today, its share price languishes well below even its par value. Overall, its margins have been severaly hurt due to a stiff competition and a sharp downtrend in the yarn market globally. Yet, considering that its price has bottomed out and is currently quoting close to its 52-week low, there are operators who are picking up this scrip tipping it to be a dark horse bet, whose fortunes will revive a soon as demand in the yarn segment improves. Indian Org Chem Trapped in an industry suffering from glut, Indian Organic Chamicals Ltd. is struggling to stay afloat. Its agreement with Nakoda Indistries fizzled out due to lack of financial capacity. In India, polyester limited to textiles. It is also useful in car upholstery, cushions, pillows, road inlays etc. The per capita consumption is very low, so demand is expected to pick up, now that cotton has become dearer. The focus is now on aromatics and the export market. In aromatics, for better margins, value-addition is essential as basic products are available in plently. Although this strategy seems sound, investors are unlikely to be impressed in the absence of some concrete results. SAIL Steel Authority of India
Ltd. (SAIL) has been adverely affected by the glut in its
segment of the steel manufacturing industry. Lower
Customs duties on HR and CR products and softening
international prices saw the steel giant slash its
prices, after being forced to offer huge discounts. The
production of saleable steel in all its plants, barring
Bhilai, has declined adversely. The equity base of SAIL
stands at an imposing Rs 4130.4 crores, which is
noteworthy. |
Inflation falls to 84-week low NEW DELHI, May 23 (PTI) — The annual rate of inflation fell to an 84-week low of 3.67 per cent for the week ended May 8, as the rate of increase in prices declined for the sixth consecutive week. This is the lowest wholesale price index (WPI) based inflation rate since September 27, 1997 when it touched 3.47 per cent. During the week, annual inflation declined by 0.03 percentage points to 3.67 per cent (provisional) from 3.70 per cent (p) a week ago. The inflation rate had stood at 6.58 per cent during the corresponding week of the last year. Interestingly, inflation has been falling continuously ever since the beginning of the current fiscal despite a steady increase in the overall index number during the period. Meanwhile, the Industry
Ministry, which releases data on wholesale prices, said
the final inflation rate for the week ended March 13,
remained unchanged at its provisional level of 5.1 per
cent as final index was the same as the provisional index
of 353.8. |
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NEW DELHI, May 23 (PTI) — The Indian Oil Corporation (IOC), NIIT and HCL among other corporates have been covered by a survey conducted by the Income Tax Department to detect any violations in tax deduction at source (TDS) for inadmissible payments made, according to highly placed IT officials. “Income Tax Department had carried out the survey in April this year on certain corporates on tax deduction at source (TDS) violation wherein names of NIIT, HCL and IOC have figured,” sources in IT Department said. Employees in these companies were given certain allowances under heads such as uniform allowance, professional upgradation allowance among others, which have been found to be claimed as exempted from Income Tax, the sources said. These were claimed as miscellaneous rebates by the companies. “Investigations in the TDS violations by the companies which figured in the survey are still on”, sources said adding that details like the amount of evasion could not be disclosed as it might affect the process of investigation. The Income Tax
Department has launched a major drive this year for TDS
collections and thus evasions under TDS are being taken
very seriously. |
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NEW DELHI, May 23 (PTI) — A Delhi consumer court has penalised a private satellite entertainment channel Asia Television Network, for not returning depositors’ money on maturity and directed it to return the same with penal interest. The Delhi Consumer Disputes Redressal Forum-II has directed Asian Television Network Limited (ATN) to return depositors money along with the agreed rate of interest and also pay further interest at the rate of 18 per cent from the date of maturity till the date of payment. The court also ordered ATN to pay a litigation cost of Rs 500 to each of the complainants. ATN had mobilised deposits from the public by various cumulative, non-cumulative and monthly schemes assuring returns at the agreed rates in 1997 and 1998. However, even after the lapse of the maturity periods, ATN failed to return the deposits. Thereafter, several depositors filed complaints with the forum demanding compensation for deficiency in service. Meanwhile, ATN circulated a letter dated March this year, informing its investors that with the resumption of their channel they expected to raise revenue within three or four months and sought cooperation of depositors for another six months to pay back their amount. ATN also promised in the same letter that it would pay interest for the delayed period at the time of maturity. “Poor liquidity of funds is no ground for holding deposits”, the court president T.C.Gupta and member Nargis Rajkumar observed adding that in another judgement in a case between Family Planning and Medical Aid Trust vs Poona Cooperative Bank in 1993, the same argument was upheld. Several depositors had also complained that ATN did not even issue fixed deposits receipt (FDRs) despite the fact that the payment had been already made. The notice of complaints were sent to ATN at their Mumbai and Delhi offices. However the company did not appear before the forum, the judgement said. The court directed ATN
to pay back depositors within three months from the date
of the order, failing which further action will be taken. |
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JALANDHAR, May 23 (UNI) — The National Executive of the Indian Trade Union Congress (INTUC) has demanded an increase in import tariff to protect Indian industry and workers from the threat of being swamped by multinational corporations. Briefing the media about the resolutions adopted at the two-day annual conference of the organisation which concluded here last night, INTUC National President G.Sanjiva Reddy urged the government to hand over all sick and uneconomical units to trade unions to enable them run these units by forming workers cooperatives to save millions of jobs in the country. He said a Reserve Bank analysis had revealed that 95 per cent of industrial sickness was due to “faulty planning and operations, misappropriation and mismanagements” and only 5 of per cent of industrial sickness could be attributed to labour problems caused by activities of militant trade unions. Mr Reddy, however, urged the workers to function in a responsible manner to save public sector units. The conference suggested formation of a coordination committee of various trade unions to safeguard the collective interests of the working class which had been hit hard by liberal economic policies. The conference suggested the government to set up a corpus with contributions from the employers and the government and provide relief to idle workers at a rate of Rs 1,500 per month for two years or till such time they were redeployed, whichever was earlier. The trade union urged the Union Government to revive joint consultative machinery (JCM) for resolution of employee-employer disputes through dialogue. It urged the Centre to revive the defunct JCM to settle all pending issues and anomalies that have arisen from the implementation of the Fifth Pay Commission. Urging for removal of the bonus ceiling, the INTUC working committee said that unrealistic ceiling in the bonus had lost its relevance now because 95 per cent of employees were out of the purview of the Act. Demanding payment of
bonus to all, it said that it was in the interest of the
national economy to strengthen the incentive regime. |
Power
supply in North improves CHANDIGARH, May 22 — There has been an overall improvement in the power supply position in the Northern Region States during the past two years although an overall peaking shortage of about 1900 MW was witnessed in 1998-99, reveals a study by the PHDCCI. A study by the Chamber on “Power Supply Position — Northern region” was conducted in the Northern States of Punjab, Haryana, Rajasthan, Uttar Pradesh, Delhi, Himachal Pradesh, Jammu & Kashmir and UT of Chandigarh. The present installed generating capacity (Dec. ’98) in the Northern region is about 25,000 MW, comprising of 7652 MW Hydro, 16,403 MW Thermal and 895 MW nuclear. About 9900 MW (40 per cent) is contributed by Central Sector power plants. The study shows that during April ’98-January ’99, a peak demand of about 17,900 MW was met against a restricted peak requirement of 19,800 MW. There was thus overall peaking shortage of about 1900 MW, i.e. 9.7 per cent as compared to a peaking shortage of 11.3 per cent (2100 MW) during 1997-98. Individually, UP had a peaking shortage of 20 per cent, J&K 13 per cent and Haryana about 8 per cent. Even Delhi had a peaking shortage of 8 per cent. There was a marginal energy shortage of about 4.4 per cent (4800 MU) as compared to 5.1 per cent (6200 MU) during last year. A capacity addition of 9850 MW was planned in the region during the 8th Plan against which the actual realisation was 4200 MW only (i.e. an achievement of only 42 per cent). A large number of projects programmed for 8th Plan in Delhi, U.P., Punjab, Haryana and J8K as well as the central projects have slipped beyond the 8th plan, points out PHDCCI. As per the 15th Power Survey, the peak demand in the region is estimated to increase by about 9400 MW to 31,735 MW by the end of 9th Plan (2001-02). This would require an additional generating capacity of about 13,000 MW during the Plan. The Chamber is distressed over the fact that two years of the 9th Plan are almost over but 9th Plan has still not been finalised. A capacity of 780 MW (420 MW) at Bathinda (Punjab), 110 MW at Tanda (UP-NTPC) and 250 MW at Suratgarh (Rajasthan) has so far been added in the region. The spillover and other projects already under construction include Thein Dam (600 MW) in Punjab, Nathpa Jhakri Hydel Project (1500MW) a Central Project located in HP, NTPC projects of Anta II (650 MW), Auriya II (650 MW) and Faridabad (400 MW) Gas based power plants are likely to get commissioned during the Plan period. No major project is, however, likely to get commissioned in Delhi, says the study. In Delhi, it is
primarily due to large scale theft/pilferage of power in
unauthorised colonies/JJ clusters etc. where regular
connections were not being given. It is necessary that
urgent steps are taken to measure energy received and
supplied from the various 33 KV sub-stations which should
be considered as profit centres. There is also an urgent
need to strengthen/augment the T&D systems to reduce
the technical T&D losses. These measures could
generate additional revenues which could be ploughed back
to further improve/augment T&D system. As the SEBs do
not have adequate financial resources to undertake
Augmentation of T&D system, privatisation of
distribution system, on a selective basis, would also
need to be considered on an urgent basis suggests PHDCCI.
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Ballarpur Industries ALTHOUGH Ballarpur Industries, which is the largest player in the domestic paper industry, has been experiencing tough times it has the potential to bounce back. The company is setting up a new pulp mill with a capacity of 150 tonnes a day to produce pulp of international quality, and also going in for a major paper machine alongwith upgradation of paper finishing facility. It has signed an MoU with Ahlstrom Paper Group, OY, Finland, for the transfer of technology to manufacture speciality products like automative filfter papers, cores and core boards. It has also initiated R&D project to develop high-yielding pulpwood trees through clonal technology, Its performance for the years is expected to be better and it being a net foreign exchange earner, the depreciation of the rupee will enhance lits revenues. At the same time, it being less dependent on import for its raw materials (65 per cent of its requirements are met indigenously) would mean that its cost would not go up much. Those with a long-term perspective could watch this scrip closely. Hindustan Lever With a million-odd retailers and over 7,000 stockists all over India, HLL’s products are ubiquitous. This 51 per cent subsidiary of the Anglo-Dutch conglomerate, Unilever plc, is definitely the star of the Indian bourses. Its high market capitalisation makes its the most capitalised company on the Indian markets. The company has for long synonymous with oral health-care products. The Colage brand of oral healthcare products like toothpaste, powder and brushes had a near monopolistic hold on the Indian markets. It retains its market leader status but the hold is no longer monopolistic. The company also has a moderate presence in the personal care segments with products under the Palmolive brandname. The key factors that make HLL distinctive are: (1) Market leadership in he segments it operates in has led to earnings stability and growth for the company. (2) The parent comapny Nestle SA of Switzerland is a global leader in most of the areas is operates in. (3) Committed support of the parent through access to its global pool of brands and markets is a sure strength. Overall, the prospects of this MNC appear exceptionally good. Otis Elevator Otis Elevator Company is
a leading player in the elevator business with a 60 per
cent market share. It currently has a base of about 3,000
elevators and services 21,000 elevatorss annually.
Although the recent years have witnessed a slump in the
real estate market and overall construction activity,
Otis has done well in managing a decent growth. Moreover,
a cost cutting exercise and improved efficiency have led
to a rise in operating margin. Otis new plant at
Bangalore, which has been established produce the Otis
new plant at Bangalore, which has been established
produces the Otis 300 VF, a variable frequency elevator.
Otis has a sophisticated manufacturing facility to
produce 1,800 elevators annually and also a strong
service network covering over 70 cities. Though the
domestic market is becoming more competitive with
increasing presence of international players like Hyundai
and Mitsubishi, these players are mainly active in the
more lucrative hotel and commercial segments, and have
managed to bag good orders, However, the household sector
remains Otis mainstay, and few companies will be able to
match its geographical coverage. While the household
sector accounts for about 50 per cent of units sold and
for 40 per cent of revenues, the hotel and industrial
sector accounts for 30 per cent of sales in terms of
units. It may be able to hold on to its market share
despite increased competition because of its ability to
introduce and service new products. Better products with
latest technology should result in reasonable growth.
Amendment of the Urban Land Ceiling Act by the states
will also result in better growth. Meanwhile, with an
enlarged installed base, service income is likely to
growth at a healthy pace. The company’s long-term
prospective remain undoubtedly promising, and whenever
industrial activity picks up, Otisle is sure to benefit. |
Nuchem I invested Rs 5000 with Nuchem Ltd vide FDR No. 11001 and it was due for payment in July 1998. The FDR was deposited with the said company office. I have not received my amount alongwith interest till todate despite many reminders. S.C. TANEJA Taurus I have not received the redemption warrant of Taurus shares bearing Folio No. 94010121153 destinctive No. 042102801 to 3800 CFT. NO 00421029 to 38 of 1000 sent to Mafatlal Consultant. Services (I) Ltd. on 14.2.1999 despite many reminders. SURINDER K.
SHARMA Altos India I purchased 200 shares of Altos India Ltd with certificate Nos. 272860, 90231, 95074 and 95075 and sent to company at Narnaul address (Agarsain Chowk, Narnaul) for transfer in my name. Till todate I have not received the shares back. AJIT SINGH II We purchased 200 shares each of Altos India Ltd with certificate Nos 95080 to 95083 and 95076 to 95069 and sent to company office Agarsain Chowk, Narnaul for transfer in our name & we have not received the shares book after transfer. NISHA GOYAL AND
SATISH KUMAR DCM I have 99 debentures in DCM Ltd Folio No. K 00382, certificate No. 00012621 and 00012630. Three instalments of interest on the debentures from May 98 uptil today has been not paid by the company. KEWAL KRISHAN
BEHL |
LAST week the stock market touched 4123.6 points on the sensitive index and 1777.7 points on the Nifty index, which were the highest so far in 1999. But the market closed lower on Friday last week at 4015.8 points on the Sensitive Index and 1728.7 points on the Nifty Index. Even then the market has performed very well during the past three weeks. Between April 28 and May 21, the Sensitive Index has moved higher by 743.1 points (22.70 per cent) and the NIFTY Index is up by 306.8 points (21.57 per cent). It is a tremendous gain by any standard but I do not expect the market to rise any further during this fortnight. No significant fall too is expected. The market is likely to fluctuate around the present market rates within a narrow range. This view is based on three considerations. The market has risen handsomely during the past three weeks even when are no signs of industrial revival. Now the market has to pause for a breath. First, the market rise has been triggered and fuelled by large inflow of FII investments. Now, the FII investments are slowing down. Even some profit-taking by the FIIs is on the cards. Secondly, the political situation is getting foggy and complicated once again. The recent split in the Congress has injected a fresh doze of uncertainty into the political situation. It is not clear what kind of new grouping of political parties and groups has to take place. It is also felt that the Congress may not be able to perform well during the coming Lok Sabha elections, and it is not certain whether the beneficiary would be the BJP-led groups of political parties. Thirdly, during these months, the UTI generally liquidates a significant part of its investments to raise fund to service its dividend and interest liabilities on its various schemes, including the UGS-64. The traders as well as smell investors too may book the profits. Incidently, the investors in the UGS-64 are anxious about both security and the dividend return. About the security, there is no doubt that the UTI and the government cannot afford to let this scheme go down. But the dividend return on this scheme will have to be adjusted within by its revenues and to the prevailing rates of interest in the money market. I do not expect the UTI to maintain its dividend at 20 per cent this July. It has to be scaled down to about 17 to 17.5 per cent. Later, the return may be fixed at around 11.5 per cent on the invested amount. During this week, a number of companies are likely to announce bonus shares. Clariant India is expected to announce a bonus issue regarding shares in the ratios of 1 to 2. The board meeting is scheduled to meet on May 25. The announcement by Colour Chem and Noverties is expected later. Both these companies appear to be underpriced at present and there is no risk in making investments in these companies. Colour Chem is quoting around Rs 1021-22 for its Rs 100 face value share. It has equity capital of Rs 11.65 crore with a book value of Rs 1131.2. Its “earning-per-share” is likely to be Rs 200 for its accounting year ending March 31, 1999. There is no risk of any slippage in the market price and there is a good prospect for a substancial rise. Britania Industries Board is holding a meeting regarding its accounts and the issue of bonus shares on May 26. The market expectation is an bonus issue in the ratio of 1 to1. The last bonus issue was made in 1989,. Its book value is Rs 64.2 per share with equity capital of Rs 18.57 crore. Soundcraft Industries’s Board is meeting shortly to consider a bonus issue. Hindustan Petroleum has already annouced its intention to consider a bonus issue, and the expectation in that the ratio of the bonus issue is likely to be 1 to 2. The market also expects a bonus issue from Bharat Petroleum Corporation. There was a strong expection of a bonus issue from Tata Tea but the company has disappointed the market in this respect. Otherwise the company has done very well its net profit moving up by 26 per cent to Rs 128.81 crore. It has also raised its dividend to Rs 11 per share. SKF Bearings, on the
other hand, had reported a loss of Rs 44.3 crore as
against the profit of Rs 5.9 crore in the previous year.
A major part of the loss is due to voluntary retirement
scheme expenditure. |
INDIAN Airline’s metro shuttle between Delhi and Mumbai on an hourly basis has become popular with corporate officials. “Time is money” as business tycoons emphasise, and they now reach the airport and board any flight instead of securing reservation. The passengers at Indira Gandhi International Airport say the system is ideal and it should be extended to other sectors. The passengers have reasons to feel satisfied because the national carrier has risen to the occasion in providing a punctual service. Airline officials maintain that they have been operating 92 per cent on-time flights and they are now working on providing better performance. The officials are engages in offering similar facility on other important routes so that passengers may walk in and get on board the flight instead of undergoing reservation hazards. Along with the metro service, the national carrier has widened its umbrella on several other sectors. The airline officials are optimistic for bringing about further improvements for the satisfaction of the passengers. The officials have been engaged in the fleet renewal programme. They have not achieved much success in this direction. It is because there are wheels with wheels in the ministry and the government. But they continue to be undaunted. They have, in the meantime, provided refurbishment of its fleet so that aircraft provides new ambience inside the cabin. The ultra modern departure control system will help the airline’s efficiency. Trial operations are on and the system will be fully operational before the end of August. The system is currently being installed in Delhi and Mumbai. But soon eight other stations will have the facility. There was time — not long ago — when the airline had ‘closed mind’. It cared little for suggestions. Now the airline bigwigs discuss with regular flyers. On the basis of feed-bag, the airline has been improving its cabin service. New snack and meal menu has been finalised and soon it will be put to operation. Holiday resorts In a bid to promote out-bound tourism in European hills and mountains, a team of senior officials of the eleven classic Alpine Resorts were here to have a pow-wow with travel agents to sell their product which, according to them, was nothing short of “holiday in magnificent”. “The best of the Alps”, according to General Secretary Amade Perrig, stands for quality. The resorts in Austria, France, Germany, Italy and Swirzerland are unique in many ways and holidaying there is much more satisfying than spending time in the cities of Europe. The change of season is particularly spectacular in the Alpine region. When the snow recedes valley floors and slopes become carpeted with magnificent colourful flowers. The Indian travel
agents’ reaction is positive and some of them feel
that holidaying in European resorts can be projected. |
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