Foreign stake in ICICI up 9 pc
NEW DELHI, Oct 10 — The foreign shareholding in the domestic financial institution, ICICI, has gone up 9 per cent to 44 per cent after its recent American Depository Receipts (ADR) issue, a top company official said.

Over 22 pc Govt bank employees redundant: study NEW DELHI, Oct 10 — Nearly a quarter of bank employees in public sector banks including State Bank of India (SBI) are redundant, a chamber study has said.

Cut sick units’ concessions to one year
RISING level of NPA’s; faint chances of economic revival in the near future and negative credit growth in the public sector banks during the first five months of this fiscal years is a cause of concern.

Defence Expo from Oct 12
NEW DELHI, Oct 10 — A four-day Defence Exposition (DEFEXPO) here will exhibit for the first time the entire spectrum of Land and Naval system in the country.

UTI Bank net rises
MUMBAI, Oct 10 — UTI Bank has registered a higher net profit of Rs 20.95 crore in the second quarter of the current financial year as compared to Rs 16.81 crore in the corresponding quarter last year.

LIC can reject claim if person conceals facts

MUMBAI, Oct 10 (PTI) — In a landmark verdict, Maharashtra’s Consumer Disputes Redressal Commission has held that the LIC was entitled to reject the claim of an insured person if he had concealed in the proposal form the ailment suffered by him, albeit it may not be the cause of his death.

“The relation between the life assured and the insurance corporation are strictly that of trust, faithfulness and correctness, and if they are breached the latter was entitled to repudiate the claim”, a three-member Bench headed by President A.A. Halbe, noted in a recent order.

Allowing an appeal filed by LIC, the State Commission set aside the order of Kolhapur District Consumer Forum which ordered the LIC to pay Rs 25,000 and Rs 50,000 as the sums assured in two policies to heirs of Prakash Vedar, who died following a heart attack on June 7, 1993.

Vedar had taken out two policies in March 1991 on different dates. He passed away in June 1993 but since the death occurred within five years of commencement of policies, the LIC probed the cause of his death.

During investigations, it was revealed that Vedar was on medical leave and also suffered from “pyrexxia of unkwown origin”.

He had taken leave for a month from January 7, 1991 and again from February 11 to February 24, 1991.

The commission noted that both the periods covered the policies and were beyond one week duration. Despite being on leave for the above period, Vedar concealed these material facts from the insurance company.

The forum was not impressed with LIC’s report and opposed the repudiation by ordering the LIC to pay the policy amount, aggregating Rs 75,000, to the heirs of the deceased.

Counsel for the complainant, contended that the documents tendered by LIC were not reliable and that the cause of death could not be attributed to the ailment suffered by him.

LIC admitted that the cause of death had nothing to do with the ailment suffered by Vedar but said that as per the policy requirement, he was expected to answer faithfully and correctly questions posed to him in the proposal form.

The questions were whether the person was sick or under medical treatment for more than a week during the past five years from the commencement of policy and if so whether he was on medical leave due to sickness and also what was his normal health. In all these questions, Vedar gave a negative answer.

The LIC drew the attention of the commission to the certificate issued on February 26, 1991 by Dr Tasgaonkar who stated that the deceased was under his treatment since last one month and was required to take two months rest as he suffered from “pyrexxia of unknown origin”.

The commission’s attention was also drawn to postcard written by the deceased to his employer MSEB stating that he had been admitted to a hospital under care of Dr Tasgaonkar.

Industry for cut in CRR, bank rate

NEW DELHI, Oct 10 (PTI) — Leading industry chambers today demanded a 2 to 3 per cent cut in cash reserve ratio (CRR) and bank rate by RBI in its busy season credit policy this month-end.

In a letter to RBI Governor Bimal Jalan, Assocham said RBI must also pursue realignment of export credit and abolition of all residuary selective credit controls in the policy to be announced on October 29.

As part of phased opening of capital account for residents, RBI should also permit investments by individuals upto $ 250,000 per year, Assocham President, K.P. Singh said in the letter to Jalan.

Another industry chamber, PHDCCI called for a reduction in lending rates by 2 to 3 per cent saying the domestic rates were higher compared to the international lending rates.

“Interest rates should be based on some rational norms and have relationship with fund cost and inflation rates with the spread level of 2 to 3 per cent as per the overseas rates,” PHDCCI President Ashok Khanna said in a letter to the RBI Governor.

Regarding lending rate, Assocham said it should be deregulated below Rs 2 lakh and administered in tune with the savings bank accounts.

The chamber said reduction in the general rates of interest should be given utmost priority by the apex bank while drafting the busy season policy.

Lending rates followed by five top banks were in the range of 12 to 12.5 in September compared to 12.75 to 13 per cent during the corresponding period last year.

It said a cut in CRR from 10 to 7 per cent would enhance liquidity by Rs 12,000 crore and give banks gross return of about Rs 700 crore.

PHDCCI President said since inflation was below 3 per cent and banks were flush with funds, there was enough reason for reducing lending rates by at least 2 per cent.

“There should be variable interest rates, but Indian banks have long-term deposits unlike banks in the west where they prefer short-term investments and pay interest accordingly,” Khanna said.

He said variable interest rates would bring down short-term liability of banks.

Both Assocham and PHDCCI also demanded easing of credit rating methods for borrowers for a free flow of funds to corporates.

Big names add fizz to Y2K campaign

NEW DELHI, Oct 10 (PTI) — “I thought I would be the last person on earth to be affected by Y2K bug,” says cricketer Ajay Jadeja in an advertisement released by the Department of Electronics (DoE) on a Y2K awareness campaign.

The teenage heart throb is not the only one warning you about the impending danger, there is the scion of the Tata Empire Ratan Tata, Hindustan Lever Chief K.B. Dadiseth, RBI Governor Bimal Jalan, Planning Commission member Montek Singh Ahluwalia and a host of others.

The advertisements are part of “Good Morning 2000” campaign to raise awareness among public about the the Y2K bug, which could wreck computer systems on the midnight of 1999-2000.

“The present media campaign, created by Lintas, is being conducted as part of an effort to educate the public about the hazards of Y2K on computer systems at the start of the new millennium,” S. Ramakrishnan, Senior Director, DoE, and National Y2K Coordinator told PTI here.

The Department has set up a budget of Rs 10.4 crore for the campaign, of which half has already been spent.

“Initially DAVP was doing newspaper ads, but we were thinking about Doordarshan and other private channels and so we brought in Lintas,” he said.

The initial ad budget of Rs 4 crore was later increased to Rs 6 crore, covering newspapers, periodicals and TV channels, Ramakrishnan said.

The advertisement, which runs in a three part series, opens with a teaser in publications telling what is Y2K and the second part which is still running in different newspapers and magazines details the issues of Y2K.

“The teaser was continued for about a week to make the commonman aware about the bug and later on we started with the issues dealing with how a person who has no business with computers can be affected by Y2K,” Preet Bedi, Director of Lintas, said.

Jadeja, fashion designer Ritu Beri and Dr K.G. Nair, Medical Director of Breach Candy Hospital were selected for the ad to make it clear that even common people can be affected by the Y2K bug, Bedi said.

“People initially didn’t like the idea of using people like Jadeja and Ritu for the advertisement but after the completion of the whole assignment they did realise about the significance,” Benny Thomas, Creative Director of Lintas and one of the brains behind the campaign, said.

The agency did an in-depth research which revealed that even computer literates knew little about Y2K and there were people who knew about the problem but were not sure if it would affect them, he said.

“The print ads consist of a coupon which could be sent to the Y2K Cell for a free booklet about the problem and its solutions,” Bedi said adding about 6000 queries have been received till now.

Incidentally, India is the only country other than Britain and USA to launch such an awareness campaign.

“We have gone one step ahead of them by making it a three stage ad. The third part will be the confidence building measures wherein all the personalities part of the campaign starting with Ahluwalia, Chairman Y2K task force, will appear in the ads to impress upon people about efforts made by the Government and industry to attain Y2K compliance,” Bedi said.

The third part will appear by the end of this month and will run till November.

The advertisement received rave reviews abroad, especially Japan and China. Even in the UK, which has done a similar exercise on the issue, the response was good, Ramakrishnan said.

According to Ramakrishnan the situation in India is well under control and tremendous progress has been made in the past six months with regard to Y2K compliance and the advertisement would definitely have a major role to play in it.

“We have received many enquiries about Y2K after the ad was put out and hope that common man as well as different government institutions and industrial sectors will be well aware about the problem before it hits them,” he added.

Over 22 pc Govt bank employees redundant: study

NEW DELHI, Oct10 (PTI) — Nearly a quarter of bank employees in public sector banks including State Bank of India (SBI) are redundant, a chamber study has said.

The study by FICCI said there are about 1,77,405 redundant employees accounting for 22 per cent of staff in 16 nationalised banks if one takes the benchmark of Rs 125 lakh BPE (business per employee) in 1998-99.

The figure of redundant employees would become lesser at 7.46 per cent in 20 banks if the benchmarking is reduced to Rs 100 lakh BPE, the study “Staff contributions to nationalised banks” said.

Stating that banking sector should get rid of its excess staff, the report said SBI needs to reduce staff strength by 15,205 in order to achieve a BPE ratio of Rs 100 lakh and 57,978 employees to attain Rs 125 lakh BPE.

It said Rs 125 lakh BPE in 1998-99 was not a stiff benchmark as Bank of Baroda, Corporation Bank, Dena Bank and Oriental Bank of Commerce had achieved that level then.

Out of the 20 nationalised banks studied by FICCI, as many as eight nationalised banks have shown BPE ratio of Rs 100 lakh. These are Canara Bank, Punjab and Sind Bank, Indian Overseas Bank and Union Bank of India, in addition to four banks under Rs 125 lakh BPE scale.

These are indicative of structural imbalances caused by high expenses on employees. The seriousness of the problem of over-staffing can be gauged by a comparison of the per employee profit of the nationalised banks vis-a-vis the new private sector banks and foreign banks, the study said.

The banks which have shown higher profit per employee during 1998-99 was Corporation Bank (Rs 1.89 lakh), Oriental Bank of Commerce Rs 1.60 lakh), Dena Bank (Rs 0.76 lakh), Allahabad Bank Rs 0.60 lakh), Bank of Baroda (Rs 0.95 lakh), Andhra Bank (Rs 0.69 lakh), Punjab National Bank (Rs 0.57 lakh, and Union Bank of India Rs 0.59 lakh).

The profit conditions of three nationalised banks are at a precarious condition, it said adding two of these namely UCO Bank and Indian Bank have incurred losses in the year ending March 31, 1999 and the third bank United Bank of India has earned a meagre profit of Rs 7,000 profit per employee.

Even the SBI has not fared well in terms of profit per employee with the bank seeing a sharp drop in profit per employee from Rs 77,000 in 1997-98 to Rs 43,000 in 1998-99, it said.

Foreign stake in ICICI up 9 pc

NEW DELHI, Oct 10 (PTI) — The foreign shareholding in the domestic financial institution, ICICI, has gone up 9 per cent to 44 per cent after its recent American Depository Receipts (ADR) issue, a top company official said.

“Prior to the ADRs, the foreign stake in ICICI was about 35 per cent and this has gone up to 44 per cent,” Senior General Manager of ICICI, Kalpana Morparia, told PTI.

She said the institution has also given time till October 29 for its Global Depository Receipts (GDRs) holders to convert their holdings into ADRs. “As a consequence of this exchange programme, we will delist the GDRs from the London Stock Exchange,” Morparia said.

Each GDR/ADR represents five equity shares. By November 1, the GDR will be exchanged for ADRs and will trade on the New York Stock Exchange, she said.

ICICI officials said they expect all GDR holders to use the option to convert their GDRs into ADRs as after the delisting they will have no exit option from the shares listed on the LSE.

The ADRs are currently trading at a slight premium over the shares traded on the London bourse.

Cut sick units’ concessions to one year
By P.D. Sharma

RISING level of NPA’s; faint chances of economic revival in the near future and negative credit growth in the public sector banks during the first five months of this fiscal years is a cause of concern. In the name of liberalisation small and medium sectors of industry are getting wiped out. Major decisions in the liberalised regime have been taken in consultation with the largest of the large. With new Government in place economic matters of concern should be discussed in big conferences with representatives from all over the country.

RBI has extended some notional concessions to sick units to reduce the level of NPA’s. Socalled concessions for sick accounts by RBI are quite inadequate. Businesses become sick due to environmental effects such as unhealthy competition due to policies as such. Multinational companies are effecting all types of indigenous industry and particularly the SSI sector. Indian industry is lagging in international market as our costs of production is higher mainly due to State Government policies. With this background softer view has to be taken in respect of sick units. In some sectors like steel, textile and paper sectors environments are so bad that hundreds of units have closed while others have suffered heavy losses. In such cases entrepreneurs can’t be blamed and much softer view has to be taken.

Concessions are available to sick units which are three year’s old as sick units. This needs to be reduced to one year. Simple interest rate upto 10 per cent can be charged. This is much higher and should be reduced to a maximum of 5 per cent with stress on no interest. Appeal against the decisions of Debt Recovery Tribunals (DRT) can only be made after depositing 75 per cent of the recoverable amount as decided by DRT. This is an impossible condition and virtually it is the denial of opportunity for appeal. Mortgaged property lies with the bank and in most of the cases it is the only possible recovery. As such condition of 75 per cent should be waived off. Conditions for appeal should be the same as are applicable in civil courts.

Move is afoot to treat NPA as land revenue. Nothing can be more draconian than this. Business is always a risky activity with most of the things beyond the control of the businessman. In the case of agriculture there is a strong lobby and land revenue is waived off under pressure. This is not possible in the case of businessman. This move should be rejected out of hand.

RBI has started novel exercise. It wants to involve trade association to take care of collateral security aspect. For recovery also this mode may be utilised as no body can conceal the real facts from the fraternity. This will reduce unnecessary harassment to the sick units and honest entrepreneurs can utilise their talent and energy in other ventures.

Increase in bank credit is sine qua non of any long term economic revival. In the absence of banks’ willingness to lend it is only a matter of time before growth impulses peter out. Banks prefer to invest in less risky avenues such as Government securities.

Banks are reluctant to lend to SSI sector in particular due to risk factor. It is a fact that of the total NPA level SSI’s share is hardly 30 per cent although the number may be very large. Refusal of credit to SSI sector may lead to bigger national crisis. Unemployment may rise to an unmanageable level.

Finance Ministry should look the things in perspective. In money terms our State Government leak like sieves. They have spent over Rs 85,000 crore over many years without getting this spending regularised by Accountant Generals. Some even forgot to get excess spending voted by their legislatures. Against this colossal waste NPA of SSI sector is insignificant. Then Harshad Mehta remains listed as the country’s top defaulter in the files of income and wealth tax. In all Mehta, members of his family, brokers and companies linked to security scam owe an estimated Rs 9,000 crore to income and wealth taxes.

New Government should have wider consultations on the issue and then take steps to revive the sagging industrial economy instead of remaining tagged to only few big houses.

Defence Expo from Oct 12

NEW DELHI, Oct 10 (PTI) — A four-day Defence Exposition (DEFEXPO) here will exhibit for the first time the entire spectrum of Land and Naval system in the country. Defence Minister George Fernandes would inaugurate on October 12 the exhibition — DEFEXPO India 99 — organised in cooperation with CII, a CII release said here.

DEFEXPO will have at least 194 exhibitors, including 117 from countries like Russia, Israel, the United Kingdom, Sweden and South Africa, it said.

As many as 77 Indian defence suppliers would also exhibit their ware and would have an access to the latest international technologies and products.

Thirty countries including Indonesia, Singapore, Mauritius, Kenya, Aaudi Arabia and Oman will be sending their official delegation to the DEFEXPO.

UTI Bank net rises

MUMBAI, Oct 10 (PTI) — UTI Bank has registered a higher net profit of Rs 20.95 crore in the second quarter of the current financial year as compared to Rs 16.81 crore in the corresponding quarter last year.

The total income in the first six months of the running fiscal has risen to Rs 255.37 crore, showing a 32.37 per cent increase from Rs 193.07 crore in the corresponding period in the previous year, according to the unaudited financial results released by the bank here today.

The total expenditure of the bank also rose 28.52 per cent to Rs 211.79 crore in the April-September period of 1999, from Rs 164.80 crore in the same period last year.

UTI Bank’s total deposits as on September 30, 1999 stood at Rs 3,358.94 crore, 30.58 per cent higher than the level Rs 2,572.27 crore exactly one year ago.

Two long-term buys: Monsanto Chemicals & Gestetner
by Ashok Kumar

TWO companies with good long-term potential are Monsanto Chemicals and Gestetner India.

Monsanto Chemicals of India (MCIL) is one of the leading producers of herbicides used on rice, wheat and tea crops. MCIL markets its herbicides under brand names such as Machete (R), Lasso (R), Avadex (R), Round Up (R) and Monlon (R). The company’s enhanced performance can be primarily attributed to the benefits arising from its new plant at Silvassa, which was commissioned in November, 1996. As a result thereof, the company’s capacity increased from 4,000 kl of formulations to 19,000 kl of formulations and 6,000 tpa of grandules. The reduction in excise duty and import duty on raw materials have also helped to enhance demand and profit margins. The low consumption of herbicides and weedicides in India is due to availability of cheap labour for weeding operation. However, labour costs in rural areas are rising and industry experts feel that the consumption pattern of Indian pesticides will gradually move towards the international pattern, ensuring high growth for herbicides. MCIL is, reportedly, likely to introduce at least six new formulations as part of a plan to increase its turn-over from Rs 100 crore to Rs 500 crore over the next 5-7 years. Among the new products will be Spark, Polaris and the dry version of Round Up. The company is currently carrying out field tests for these products. Moreover, this year, in line with the having off a Monsanto’s Chemicals businesses worldwide into a new company, Solutia, MICL’s industrial chemicals business is likely to be hived off into a new company — a subsidiary of Solutia in India. Thus, MCIL will, henceforth, focus on the crop protection business only. MCIL is a 40 per cent subsidiary of Monsanto Chemicals, US, a Fortune 500 company. Though the parent also has 100 per cent subsidiaries, it currently does not intend to transfer any of the existing brands from MCIL, and these existing brands are strong enough to sustain high growth in the future. Hence, MCIL’s prospects appear to be quite promising.

A 51 per cent subsidiary of Gestetner, UK, Gestetner (India) Ltd (GIL) is atop the ladder in the duplicators segment, boasting of a market share of 70 per cent. The parent has the distinction of being a leader in the global market. Prior to 1994-95, the company’s performance was far from satisfactory. In February 1997, the company launched new models of copy printers. Now that the parent is Ricoh, GIL can take advantage of the former’s technology expertise and can introduce models of superior quality. All signs point towards excellent growth in the future. Thus, discerning investors could consider investing in this scrip.

Agents polluting travel industry
by K.R. Wadhwaney

EVERY new minister, bureaucrat and president of the national civil aviation/tourism body announces his own ideas, plans and decisions when he takes over his new office.

When Pradeep Madhavji was made President of the Travel Agents Association of India (TAAI) at Bangalore recently, he came out with new plans to strengthen the body. He also lodged a complaint against British Airways for offering “over-the-shoulder” discounts to passengers.

Without getting into merits or demerits of his complaint, one is entitled to know as to how many among 1,200 members are not indulging in dubious and unethical practices?

A study shows that there are quite a few known agents who indulge in objectionable and unethical practices. These agents — some of whom have contacts with politicians and airlines — have polluted the travel industry.

There is a virtual ‘jungle raj’ prevailing in the travel industry. Not many people know what quantum of discount they are entitled to receive? One passenger may get the ticket, for example, Delhi-New York-Delhi in a particular airline on the same day at much lower price than the other passenger. The difference in price is sizeable. This disturbs the rhythm of the industry.

TAAI has said that it will lodge a strong protest with the Board of Airlines Representatives (BAR). What good will come out of it except meetings and more meetings after getting “spirited” in five-star atmosphere. During the last two decades or more, BAR has issued several warnings to airlines and agents to ‘stay clean’. Has it succeeded in reducing the evil of under-cutting? The passage of time has shown that the unholy practices have increased manifold during the last half-a-decade. It is only because there is no accountability among bodies that control the industry. The agents have resorted to dubious methods only because bosses controlling them are themselves involved in this deal.

The International Air Transport Association is no more than a paper body with no teeth at all. Similarly, the bodies on domestic circuit are at best ‘social units’ which meet once in a while to renew their contacts. All lofty assurances evaporate in thin air as they walk out of the hotel. All they, however, remember is the date and the venue of the next meeting!

The travel industry — aviation and tourism — is passing through a very critical phase. The industry is in the hands of those who cannot be called “clean”. FERA violators and collectors of funds through dubious means are at the helm of affairs in airline trade. One needs a very strong broom to clean the face of carriers flying on the domestic sectors.

Morepan Lab

I invested Rs 10,000 through Bajaj Capitals, Chandigarh with Morepan Laboratories Limited, New Delhi vide Cheque No 426603 dated 1.1.99 for one year. Bajaj Capitals, issued Receipt No. 16693 dated 31.12.98. A number of reminders have been issued to the firm for issue of FDR. Morepan Lab neither issued me FDR nor acknowledged my letter.

N.D. Rattan
Patiala

Padmini Poly

I sent shares certificate on 4.11.98 to Padmini Polymers, 240, Okhla Industrial Estate-III, New Delhi-20 for transfer with Nos. 153965, 0374743, 036132 and distinctive Nos. 15651999 to 15652098, 026589390 to 026589489, 04613935 to 04614034, respectively. I have not received certificates back despite many reminders.

Shakti Kumar
Ludhiana

Kiran Overseas

I purchased 100 shares of Kiran Overseas Exports Ltd bearing Certificate No. 00026407 and Folio No 0027332, Distinctive No 14687101 to 14687200. I have sent so many letters for transferring the share certificate but till to date, I have not received back my shares after transfer.

P.K. Kaushik
Kurukshetra

Krishna Valley

I hold 14 bonds of Maharashtra Krishna Valley Development Corporation under Folio No. MKR 039868. The corporation has not paid me interest from 30.6.98 to 31.12.98 despite requests.

R.C. Arora
Mohali

Inflation falls

NEW DELHI, Oct 10 (PTI) — After hovering a little over 2 per cent mark for a couple of weeks, inflation again dropped to 1.88 per cent for the week ended September 25, mainly on account of a decline in prices of manufactured products. Annual rate of inflation, based on Wholesale Price Index, declined by 0.14 percentage points to 1.88 per cent (provisional) from 2.02 per cent (P) in the previous week.

Conference

NEW DELHI, Oct 10 (PTI) — An international conference will be held here later this month to discuss deregulation and privatisation of the transport industry in South Asia, including India. As many as 22 countries are likely to participate in the three-day conference-cum-exposition to be held from October 25 to 27.

Technofest-2000

MUMBAI, Oct 10 (PTI) — The Indian Institute of Technology (IIT) here will host a three-day technology festival, “Technofest-2000”, from next January 28 to 30. The aim of the festival would be to present technologies in a manner that would enable the common man to relate to his needs, IIT sources said.

BHEL

NEW DELHI, Oct 10 (PTI) — Heavy engineering giant BHEL has bagged Rs 85 crore order to supply compressor and turbines for Gas Authority of India Ltd (GAIL’s) gas processing plant at Gandhar in Gujarat. The state-owned company won the order for compressor, turbines and other services under stiff international competitive bidding process, BHEL release said.

Rel woolmark

NEW DELHI, Oct 10 (UNI) — Reliance Industries Limited (RIL) will become the first global licencee of the new logo to be introduced by the International Wool Secretariat (IWS) on October 12 for promoting wool blended fabrics.