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| Monday, July 24, 2000, Chandigarh, India   
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RBI steps to hit government borrowings
Pakistan economy in for severe test ISLAMABAD, July 23 — With an ambitious export target of $10 billion for the current fiscal and time running out fast on debt rescheduling agreements, the Pakistani government’s performance on the economic front would be tested to the hilt in the coming days.
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| FIIs, MFs sell scrips worth Rs 1,276 crore MUMBAI, July 23 — Foreign institutional investors and mutual funds together have withdrawn Rs 1,276.32 crore investments from the equity markets during the week ended July 20, 2000, taking their net sales in the month to Rs 1,746.38 crore. ‘Farmers
can migrate to Canada’ Markfed extends golden handshake
MUMBAI, July 23 (UNI) — Leading money market analysts have cautioned that the RBI’s measures to halt the slide in rupee value is likely to affect the government’s borrowing programme. The first impact of the RBI’s measures is likely to be on the government’s borrowing programme. With only 40 per cent of the government’s borrowings completed (against 55 per cent last year in the same period) in a year that was budgeted to see heavy market borrowings, higher interest rates on gilts raises the possibility of more devolvements and/or private placements of securities with the RBI, analysts at the credence stated. The grimness of the situation is highlighted by the fact that in second half of July the RBI must fund over Rs 10,000 crore worth of redemptions and interest payments on government securities. This leaves the RBI with only September before the busy season begins in October to make up for lost ground. It is likely that in the coming months, even past the start of the busy season, the government will crowd out private borrowings, analysts stated. The RBI on last Friday raised the Benchmark bank rate by 1 percentage point to 8 per cent and banks’ cash reserve ratio by half a percentage point to 8.5 per cent in two stages to pull back the rupee which breached the Rs 45 mark against dollar. As a part of its damage control operation, the RBI also reduced the limit of refinance facilities including the collateralised lending facility by 50 per cent in two stages as temporary measures, which will cut the total refinance available to banks by over Rs 6,000 crore while the hike in CRR will suck out Rs 3,800 crore from the system. Mr Vivek Sinha, Director, Credence Analytics, says what is specially surprising is the use of CRR, which is typically a policy signal, as a tactical instrument in an apparent “reversal” of the policy direction and coming together of all these measures in one go. This points to an unusually grim underlying situation. The rupee has been witnessing sharp drops against the dollar over the past week with drops of 12 to 13 paise per trading session on July 20 and 21. As usual, the reasons attributed to the sharp response of the RBI were to curb speculation against the rupee. In the past too the RBI has administered measures in the internal market to curb the excess volatility in the dollar — rupee exchange rate. The last time around was in mid January, 1998, when the Central Bank had hiked the bank rate by a whopping 200 basis points at one shot when the rupee weakened by approximately 0.8 per cent on a single day as compared to the dollar. It is a mystery as to why the bank has not acted with firm determination earlier during the current fiscal, apart from the intermittent selling of dollar by the PSU banks on its behest, in spite of the fact that the rupee has weakened by approximately 3.25 per cent since the start of the present fiscal year. Even in end May, 2000, during a single day the rupee weakened by approximately 0.5 per cent. Thus is it only to curb the so called speculation in the market? questioned the analysts and remarked that the desperate action does not corroborate the presumption. Sanjoy Choudhury, head of research — fixed income, credence analytics said in his view the dollar demand is genuine, and not speculative. The drop in the foreign exchange reserves in excess of Rs 3,500 crore since April, 2000, FDI slowdown, and net FII outflows during last two months may have prompted the RBI to press the panic button. This further lends credence to a view held by many traders that heavier than usual defence expenditure is putting pressure on these reserves.
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Pakistan economy in for severe test ISLAMABAD, July 23 — With an ambitious export target of $10 billion for the current fiscal and time running out fast on debt rescheduling agreements, the Pakistani government’s performance on the economic front would be tested to the hilt in the coming days. Add to the list an angry trade community — upset over tax surveys — and the fear of the national accountability bureau’s probe and arrest, and the government is set for serious financial problems in January 2001 when the period of debt rescheduling by Paris and London Clubs ends. The government is believed to have worked out details to seek another rescheduling of $3.3 billion from the Paris Club and $900 million by the London Club. On the other hand, the (IMF) delegation that was due to visit Pakistan in May this year has delayed dialogue with the military authorities till January. Revival of economy, part of General Musharraf’s reforms agenda, has faced more problems than solutions in the last nine months, despite the government’s tough decisions. The military regime, despite opposition from political and business quarters, started the tax survey, announced and extended a largely successful tax amnesty scheme, hiked gas and diesel charges and did not bring down petrol prices. The tax survey met with unprecedented traders’ opposition, which is still raging. Traders went on a record 10-day strike, which saw them taking to the streets for the first time. People expected a drop in oil prices as the government promised a review when prices come down in the international market. It did not happen, and a report in Business Recorder said the oil’s import price for the government was Rs. 10.16 per litre. “Nearly 200 per cent extra payment goes to various government charges including development surcharge, sales tax, companies commission and retailer’s margin,” the report said. The government’s tax collection target of Rs. 435.6 billion for the current fiscal is 24 per cent higher than the Rs. 345.31 billion target for 1999-2000. Economists have dismissed it as ambitious and unattainable, though the tax department said it would easily meet the target. Barely 1.2 million of Pakistan’s 140 million people pay taxes. The wealthiest, many of them former politicians, pay only a few hundred dollars. “We have to collect taxes. This is our lifeline,” the chief executive has said. Resistance has been stiff, particularly from businessmen who have operated on a cash-only basis and fear a deeply corrupt tax department. They have been calling weekly strikes and joining hands with religious right-wing groups in what could be a lethal combination for the military government. A $10 billion export target remains a magical figure, though not a new one. It has always been an ideal. During the first administration of Nawaz Sharif with Malik Naeem as commerce minister, the export target was $10 billion and the target achieved was $6.8 billion. Among all this comes the government’s poverty alleviation programme for which it has allocated Rs. 21 billion in the 2000-01 budget. Poverty has increased in Pakistan over the last decade from 17.1 per cent in 1990 to 32.6 per cent in 1998, the last economic survey said. It is a frightening economic picture, straining the government’s efforts to bring down trade deficit and improve debt payment. But the government has reasons to smile. A good agricultural yield, in particular cotton, rice and wheat and improved performance of the manufacturing sector has seen the economy grow by close to 4.5 per cent, which is 50 per cent higher than the previous year.
— IANS |
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FIIs, MFs sell scrips worth Rs 1,276 crore MUMBAI, July 23 (PTI) — Foreign institutional investors (FIIs) and mutual funds (MFs) together have withdrawn Rs 1,276.32 crore investments from the equity markets during the week ended July 20, 2000, taking their net sales in the month to Rs 1,746.38
crore. Their net sales in the equities markets were more pronounced during the latest week with FIIs and MFs unwinding their positions to the tune of Rs 1,127.5 crore (US $ 252.4 million) and Rs 148.82 crore respectively, according to the data provided by the Securities and Exchange Board of India. FIIs and MFs together have unwound their positions in equities to Rs 458.56 crore in the week ended July 13, representing net sales of Rs 306 crore (US $ 68.5 mn) and Rs 152.56 crore respectively. BSE sensex has witnessed a continuous downward trend during the week and lost 305.13 points. FIIs and MFs have, however, made net investments of Rs 9.5 crore (US $ 2.3 mn) and Rs 69.52 crore respectively in the debt market during the week. They have unwound their positions in the equities market to the tune of Rs 1329.9 crore (US $ 297.6 mn) and Rs 416.48 crore respectively during the month till 20th, but were net buyers in debt securities worth Rs 427.40 crore, with MFs being the net buyers to the tune of Rs 396.30 crore. Total FII investments during 2000 till July 20 were at Rs 5085.3 crore (US $ 1174 mn), while their investments since 1993, when they were first allowed to invest in the Indian capital markets, were down at Rs 40,553 crore (US $ 11.38
bn).
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‘Farmers
can migrate to Canada’ CHANDIGARH, July 23 — “Now affluent farmers from Punjab can migrate to Canada as self-employed persons and settle down in British Columbia where agricultural farms are made available for outright purchase and long-term lease. It is expected that primarily, the less educated farmer community is going to benefit from the Canadian Government’s policies,” said Mr Anoo Lal, President and CEO , Alliance (AL) Canada, at a seminar here today. The Canadian government, he said, is keen to attract Indian investments and entrepreneurial talent. The seminar, which was a part of public awareness programme organised by Punjland Overseas Services Pvt. Ltd. detailed various categories under which an individual can legally relocate to Canada. A similar seminar was held at Jalandhar yesterday. |
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Markfed extends golden handshake CHANDIGARH, July 23 — Punjab Markfed has introduced a voluntary retirement scheme (VRS) and about 60 employees and officers have opted for this scheme. Disclosing this here yesterday, Mr D.S. Bains, Managing Director, Markfed, said that the scheme is in the interests of both employees and Markfed. Markfed has launched a number of new technical and commercial ventures requiring technical staff. Besides, a number of industrial units have been closed on account of their non-viability and their staff have become surplus. The golden handshake scheme, introduced recently by the Board of Directors of Markfed, has also been approved by the Registrar, Cooperative Societies, Punjab. |
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by J.C. Anand Early sensex recovery unlikely LAST week, the Sensitive Index shed 281.20 points (5.78 per cent) and S & P CYN Nifty was lower by 85.55 points (5.6 per cent). Even this week, no early recovery seems possible. The traders alone are carrying the stock market load. FIIs have been net sellers this month, and they are unlikely to return to the market as investors at least for some more time. The FIs and the mutual funds are groaning under the weight of ICE investments in their portfolios for the market value of these investments is declining sharply despite good results declared by many of the top ICE
companies. There are at least three factors which, as I see, mitigate against early recovery of the markets. The Maharashtra Government is unrelenting in its resolve to arrest Balasaheb Thackeray despite the deferment of the Supreme Court judgement to a later date. Mumbai is the head and heart of the stock market and the fear that this arrest would lead to serious law and order problem and cause political disruption is turning the traders and investors from “bulls” to “bears”. This week, Parliament will meet for its Monsoon session. It has been seen in the past that the stock market stays quiet and sedate when the Parliament is in session and the leaders of political parties drum up their demands and protests on the floor of the Lok Sabha. The hike in the bank rate by the RBI last week has also put the industry as well as the investors on the defensive. While the lending rates may not be raised immediately (as the Finance Minister has said), hike in the lending rates some times later cannot be ruled out. This development is also a bearish factor for the stock market. The exchange rate of the Indian rupee in relation to the US dollar has touched the all-time low of Rs 45.02 last week though it recovered in unofficial dealings later in the evening to Rs 44.70. It is generally believed that the one major reason for the absence of the FIIs from the Indian stock market as investors is the steady fall in the exchange value of the Indian rupee. It is only when some stability is achieved by the Indian rupee that the FIIs would bring fresh inflow of their funds to India. The results declared last week are a mixed lot. While Hero Honda’s first quarter results report a higher net profit (by 59.48 per cent over that of the corresponding period last year), Escorts has announced poor results with a drop of 17 per cent in its sales. Its net profit would have been very low had it not been for the “other income” of Rs 108.77 crore (as against Rs 8.50 crore for the corresponding period last year). GKN Driveshafts (earlier known as GKN Invel Transmission) has reported better six month results but its EPS is just Rs 1.56 for the first six months. Both Cadbury and Nestle have reported good results. Nestle’s net profit is higher by 30 per cent. Reliance Industries has also done well but its performance is below the market expectations. Larsen & Toubro has reported poor results with a decline of 76 per cent in its net profit. Otis Elevator has declared better results with a net profit of Rs 8.18 crore (as against Rs 6.38 crore) for the first six months. Essel Packaging has announced a bonus issue in the ratio of 3 for 5 shares held. Its bottom line has also improved by 39.19 per cent. It has also achieved 85 per cent of its manufacturing capacity and remains the leader in its line in the country. It has also set up a number of subsidiaries abroad, including one in China. The market has, however, acted adversely because the bonus share ratio has been below the market expectations. The investors should stay back for the time being and watch the movement of the market for some more time. Vikas WSP is a good investment proposition at Rs 630 or so and Coates of India should be picked up in case it drops to Rs 125-130 range. |
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by K.R. Wadhwaney Patna airport a ‘death-trap’ THE Jayaprakash Narayan Airport at Patna is devoid of several gadgets that are essential for smooth operation of flights. The gadgets that are installed are either obsolete or functioning
erratically. In the vicinity of the airport, there are several slaughter houses. This creates problems for pilots. All pilots and co-pilots are compelled to look out to avoid bird
hits. The runway is short. To be precise, it is as much as 1,100 feet shorter than the prescribed length of 7,500 feet. In the monsoon haze, and with many buildings around the thickly populated area, the entire runway is often not clearly visible to the pilot approaching for lending. Many senior pilots consider the Patna airport in particular and entire eastern sector in general a “death-trap” for flying during the monsoon. In the recent Patna tragedy human fallibility is indeed one of the major contributory causes for the accident. But should Capt Sohan Pal and co-pilot Capt A.S. Bagga should be blamed for the crash in which 56 persons were perished? Aviation experts opine that there was little rapport between the Commander and ATC. The Alliance Air Commander had misjudged the height but he should have been directed to correct altitude by the ATC. With all landing gears and flaps down, it is very difficult to orbit at 36 degrees. The ATC should not have permitted the pilot for the second orbit. Had this measure been taken, perhaps the tragedy could have been avoided. The black boxes — CVR (Cockpit Voice Recorder) and DFR (Digital Flight Recorder) have been sent for decoding. The inquiry by the High Court will soon commence, as is ritual in this country. But what good will emerge out of this inquiry when findings are not studied and recommendations not needed?
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from Ashok Kumar in Mumbai Global Tele is for long term Q: Kindly comment on the future prospects of Global Telesystems. The financial track record of the company appears satisfactory and its sales and net profits for the year that ended in March 2000 amounted to Rs 625.2 crore and Rs 109.3 crore respectively thus yielding an EPS of Rs 25.2. With an amount to the tune of Rs 70-80 crore expected to flow in from its divestment of its stake in Global e-commerce, its bottom line is expected to stand enhanced. In the future, it proposes to open branches in the USA and the UK. It already has its marketing setups in Singapore, New Zealand, Australia and the Middle East. Overall, Global Telesystems appears to be a company with fair fundamentals and its long-term prospects appear satisfactory. Q: Do you recommend a hold in the shares of Eicher Motors? Eicher Motors has fared satisfactorily over the years and its future plans include a deeper penetration into both its markets in the domestic as well as on export front through aggressive promotion especially in the overseas market in Africa, Gulf countries and some neighbouring nations. Furthermore, despite the expiry of its contract with Mitsubishi, Eicher Motors continues to supply certain spare parts for the LCVs. In the light of all the abovementioned factors, the future prospects of the company appears fairly bright for those with a medium to long-term perspective. Existing shareholders could continue to stay invested in this scrip. Q: Please comment on the future prospects of Vanavil Dyes and Chemicals. Vanavil Dyes’ performance has been fair and during the year that ended in March 1999, the company posted sales and net-profits of Rs 71.2 crore and Rs 5.7 crore respectively thus yielding an EPS of Rs 11. Notably, the technology for producing pthalo blue pigments was supplied by Colour Chem (I) to Vanavil Dyes. This pigment has tremendous potential for exports too. Overall, Vanavil Dyes appears to be a company with fairly sound fundamentals and satisfactory future prospects. |
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A novel on Internet NEW YORK: Horror author Stephen King will begin publishing a serialised novel on the Internet on Monday following the smash success of his novella “Riding the Bullet,” the first work by a major author to be published exclusively
online. Some websites were unable to cope with the demand when the 66-page novella went online on commercial sites in March. However, this time King has created his own website, www.stephenking.com, where readers can access, from
tomorrow, the first chapter of “The Plant,” a still-unfinished novel he began writing in 1980. The novel is about a climbing plant which takes over the offices of a publishing company, offering it financial success in exchange for human sacrifices. Electronic readers will be asked to pay a dollar each time they read a chapter, in an “honor system” created by King. Despite the suspense King so masterfully creates in his works, readers of “The Plant” will have to wait almost a month, to August 21, to read the book’s second chapter. And they will be able to find out what happens next only if 75 per cent of readers actually pay, by cash or check, for the first two segments, according to the website. “Pay and the story rolls. Steal and the story folds. No stealing from the blind newsboy,” King warns on the website. “The plant” will be the first work by an internationally acclaimed author published on the Internet without the involvement of a publisher, and king recognises the move could revolutionise the publishing world.
— AFP Apology for free
Bible software
DETROIT: General Mills Inc has apologised for including a free software version of the Bible in more than 12 million boxes of cheerios, chex and other brands of breakfast cereal. The ten million-dollar promotion, which included offering a Protestant version of the Bible on a CD-ROM containing games and dictionaries, was scheduled to kick off on Monday and run through August. “While inclusion of the Bible may be seen as added value by some, it is the company’s policy not to advance any particular set of religious beliefs. Inclusion of this material does not conform to our policy, and we
apologies for this lapse,” the company said in a statement. — Reuters |
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Inflation Basmati patent Working group Allahabad Bank Satnam Overseas |
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