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| Monday, November 13, 2000, Chandigarh, India   
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Economy likely to grow at 6 pc: HSBC
Mittals bidding for Air
India JCT Electronics
plans debt recast eQ essential for tomorrow’s
world |
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| TCS to set
up centre in Hungary NEW DELHI, Nov 12 — Close on the heels of coming up with an overseas development centre in Canada, Indian infotech major Tata Consultancy Services (TCS) is planning to set up a facility in Hungary by year end in a bid to increase its presence in the European Union.
Book profit as economy is slowing
down
Lesson from
Singapore
Music for
Internet-savvy Spice gets
new MD
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Economy likely to grow at 6 pc: HSBC NEW DELHI, Nov 12 (PTI) — Hongkong & Shanghai Banking Corporation (HSBC) has toned down India’s growth projection to 6 per cent from the earlier 6.4 per cent due to the dampened performance of industry and agriculture while the fiscal deficit is expected to be 5.6 per cent of GDP. “We are lowering our GDP growth target to around 6 per cent from 6.4 per cent in financial year 2000-01 due to downward revision of growth expectations in industry and agriculture,” HSBC said in its latest report ‘Eco Pulse’. Pointing to “mixed fortunes” in the monsoon, the report on India said agriculture was likely to post a meagre 2 per cent growth as against an earlier forecast of 3.5 per cent. “Poor rainfall in the north-west and central regions implies that production of oilseeds, cotton and foodgrains is likely to be affected,” HSBC said. Industrial growth was also pegged down to 5.5 per cent as against the previous 6 per cent by HSBC due to the downtrend of 4.8 to 5.3 per cent growth in the first half. “Lower growth can be attributed to a slowdown in the manufacturing sector as well as in electricity,” it said, adding that infrastructure grew by only 3.1 per cent in the first half. Although the refinery sector witnessed a 34.5 per cent growth due to the commissioning of new refineries, other industrial items like consumer durables, including refrigerators, washing machines, passenger cars and CTVs witnessed poor growth. HSBC, however, retained the fiscal deficit target of 5.6 per cent but said the government expenditure was expected to go up in the coming months. HSBC lauded the Centre for maintaining a “tight rein” on fiscal deficit at Rs 36,450 crore during April-August 2000, as against Rs 48,000 crore last year. “This can be attributed to higher growth in tax receipts (of 19.2 per cent) and low expenditure growth,” it said. Direct tax collection grew by 43.3 per cent at Rs 26,541 crore while indirect taxes were up by only 10.4 per cent at Rs 50,531 crore. HSBC said the rise in the prices of petroleum products may have a possible reason for a strong 14.1 per cent growth in excise in the face of falling industrial performance. “The picture will become clear over the next few months, as excise duties have been cut while tackling the oil pool deficit, and a lower excise can be expected,” it said. The oil pool deficit, which went up by Rs 3,000 crore in the second quarter this year as compared to last year’s level, and the higher investory costs pulled up credit demand by over Rs 3,600 crore. Despite this, HSBC said the credit growth has slowed down in the second quarter and expected to fall further in the coming months. Demand for credit and supply of funds will match and interest may revive again.. “Although short-term rates may be eased, long-term rates will remain high due to the large fiscal overhang and reluctance of banks to take long-tenor risks,” the report said. |
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NEW DELHI, Nov 11 (UNI) — The global advisers for Air India and Indian Airlines disinvestment will screen the bids that have come in and put them before the government next week, official sources said today. “The process of due diligence will be started and closed next week’’, the sources said, indicating that it could be as early as Wednesday. The deadline for receiving Expression of Interest ended last evening. While J Morgan Stanley is the global advisers for Air India, the ANZ consortium, comprising ANZ Investment Bank, Speedwings and IDBI, are looking at Indian Airlines. Disinvestment Minister Arun Shourie, expressing satisfaction at the response to Air India and Indian Airlines’s disinvestment plans, told UNI that the government has taken a cautious stand and will not reveal the names of the bidders. “As a policy decision neither are we going to give the number of bidders or their names’’, the minister said. This decision had been taken to avoid cartelisation among bidders and stop financial muscle being used, the minister said. Mr Shourie said the government could do nothing if the bidders themselves went public. Meanwhile, British Airways today said here that along with alliance partner Quantas it will be a technical adviser to an Indian consortium, led by l n Mittal and Kotak Mahindra, that had bid for 40 per cent stake in Air India. Under the consortium’s current plan, Mr Mittal’s LNM Group will hold 26 per cent equity and Kotak Mahindra will have 14 per cent, a British Airways spokesperson said. The London-based Mittals were surprise bidders for Air India, their Expression of Interest coming in after the Tatas and Hindujas announced that they were both going for the two carriers. The Sky Team of Delta Airlines-Air France, Emirates Airlines and the Indian Pilots Guild are the others among the six who have bid for Air India. For Air India there is the likelihood of more players being involved as the process moves forward because the bidders will be allowed to change their joint venture partners or consortium members and include new members in the consortium till the time of submission of the technical bid. But the government has the sole discretion to determine the impact of any change in membership on the structure or quality of the joint venture or consortium and reject the proposal without assigning any reason. Shortlisted bidders will be allowed access to data room and due diligence. Post-due diligence, bidders will be allowed to revise their initial technical proposals. The strategic sale of the two airlines is to be completed by February end but indications were that the shortlisting may be over by only June 30 and the entire process would be completed only by September 30. A contentious issue would be the shareholders agreement, sources said. |
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JCT Electronics plans debt recast NEW DELHI, Nov 12 (PTI) — Thapar group company JCT Electronics today announced a financial restructuring plan wherein it will improve its Rs 300 crore debt portfolio and bring in Rs 55 crore as fresh funds. The cash-strapped Colour Picture Tube (CPT) maker, which has been facing funds crunch for almost two years now, has restructured the debt portfolio to substantially reduce the interest burden, a senior company official said here. “We cannot reduce debt right now because no money is coming from anywhere. The only way to better manage finances is to extend the short-term debt of six years to nine years,” Chief Operating Officer (COO) of JCT Electronics Anil Nayar told PTI. He said he had spoken to the financial institutions to reduce interest rate to 14 per cent from the earier 19.5-20 per cent.” These two measures will go a long way in helping the company’s working capital requirements. Nayar said the promoters, including the Thapar family and Hitachi, have also agreed to pump in Rs 55 crore as fresh equity soon to help the company tide over the present crisis. While the promoters hold 35 per cent equity in JCT Electronics, 7 per cent is held by Japanese electronics major Hitachi. Financial institutions hold 20 per cent stake, while the public and other investors (including overseas commercial bodies) hold 20 per cent and 10 per cent stake respectively. |
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eQ essential for tomorrow’s world DORTMUND (Germany), Nov 12 (DPA) — You’ve probably heard of the IQ as a measurement of a person’s intelligence. Well, how about your eQ — or electronic intelligence quotient? German tennis star Boris Becker revealed that he possessed “electronic intelligence” when he recently released his own web site, at www.Sportgate.de. Now the term is beginning to be bandied about with increasing frequency. IBM’s Dietmar Wendt, Vice-President for the memory solutions division of the giant computer firm, was one of the first to describe eQ. “An ATM, an information touch screen, or a computer -they all demand a certain understanding of electronics,” says Wendt in his book “Success with eQ.” Wendt maintains that today a high eQ can provide one with a competitive edge over colleagues and competitors. It can also be the deciding factor in professional success or failure, the researcher adds. In the future, one’s eQ may even be essential for mastering everyday tasks. An “intelligent house’’ recently opened by the home appliance manufacturer Electrolux on a Swedish island near Stockholm, Sweden, points to that future. It is one of the first intelligent houses for sale in Europe. The doors of the house, for example, are controlled by fingerprint readers. Control is centralised in the “Screenfridge”: a multimedia refrigerator. It lets users send and receive e-mail and video messages. The device also offers radio and TV functionality. When the owner leaves the house, he or she can check a terminal at the door to see whether the stove is off or whether the refrigerator is closed properly. While all of this sounds very practical, experts point out that these complex electronic systems become a problem if the owner doesn’t know how to use them properly. “The main demand this technology needs to meet is ease of use, especially for the elderly,” says Ulrich Gartner, a spokesperson for Electrolux. Senior citizens are an important target group. “They have more financial power, aren’t quite as mobile anymore, and are grateful if they don’t need to run every shopping errand themselves,” says Gartner. The refrigerator may soon be able to order groceries automatically, for example, when milk runs out. A service will be set up to deliver the groceries to the home. The “Delphi-Study 2014,’’ conducted by German-based Munich Circle, an association for communication research, indicates that these technologies will soon become ubiquitous. The study polled some 400 international decisionmakers from several industries. Three of four polled believed that remote control of household appliances would be a standard feature of homes after 2009. Every second respondent expects communication devices and household appliances to be linked wirelessly. |
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TCS to set
up centre in Hungary NEW DELHI, Nov 12 (PTI) — Close on the heels of coming up with an overseas development centre in Canada, Indian infotech major Tata Consultancy Services (TCS) is planning to set up a facility in Hungary by year end in a bid to increase its presence in the European Union. “The company is planning to set up software development operations in Hungary over the next two months. The facility is expected to house about 30 professionals,” TCS Chief Executive Officer S. Ramadorai told PTI here. He said that the company had chosen Hungary as the East European nation was important from the point of view of serving the EU market’s requirements, which contributes a significant share in the company’s export revenues. The country was also identified as a possible centre for software development considering the relatively lower cost of availing software professionals. Ramadorai, however, declined to comment on the investment earmarked for the upcoming software facility. |
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— by R. N. Lakhotia Q: I am Punjab Government pensioner having D.O.B. 01-06-1936. I am receiving Rs 7136/- as my pension and Rs 4191/- as family pension per month. I am also receiving Rs 520 as interest P.M. on my M.I.S. and same amount of interest on my deceased wife M.I.S. account. I am also getting Rs 15000/- as interest annually from my other small saving deposits. Will you be kind enough to tell me about my tax liability. Ans: From your pension amount you will be eligible to receive a standard deduction @ 331/3rd of the pension subject to a maximum of Rs 25,000. The income received from monthly income schemes of Mutual Fund and UTI would be completely exempt from Income-tax. The other interest income of yours if it is from bank, NSC etc then the same would be exempt to the maximum extent of Rs 12,000/- U/S 80-L. Q: I am a bank officer. I have been provided with subsidised accommodation. Bank is paying rent of Rs 1800 and is recovering Rs 100 per month from me. I had availed loan of Rs 100000 in 1990 for purchase of plot. I could not built the house thereon. Repayment of the loan started in June 1991. I sold the plot in October 1999 and purchased a new one. I started construction of the house in Oct. 1999 by availing additional housing loan. The construction of house is likely to be completed by March 2000. I plan to shift to my house on 01-04-2000. Please advise:- (i) Whether I will get rebate under Section 88 for the repayment made by me during 1999-2000 for housing loan availed in 1991. I have not claimed any rebate for that loan upto 31-03-1999. (ii) Whether I will get rebate upto Rs 75,000 for interest applied in both the abovesaid loans during the year 1999-2000. Please also advise whether it will make any difference if I shift to my house before 31-03-2000. Ans: You will be eligible for tax rebate U/S 88 for repayment of the housing loan. The interest for loan for construction of the house upto Rs 75,000 for the Financial Year 1999-2000 would be available to you specially because you have taken the loan after Ist April, 1999 and that the earlier loan taken by you prior to 1-4-1999 is not resulting into heavy amount of interest. It will not make any difference if you had shifted to your house before 31st March, 2000. Please do remember that for the Financial Year 2000-2001 the maximum deduction in respect of interest on loan has been enhanced to Rs 1.00 lakh. Q: I am over 70 now. I purchased DDA single-storey Janta flat, on hire/purchase basis, in Delhi in 1976 in the name of my eldest daughter. But I have a telephone in my own name in the said flat as a head of the family in Ration Card. My eldest daughter was married to a Chandigarh boy in 1982 and they have their own residential house in Chandigarh. I have no other residential house for me and members of my family in any other part of India except the said flat. Please tell me, have I full ownership rights legally of the said flat? If yes, am I liable to pay tax, under one out of six criteria. Ans: On the facts stated by you, you are not liable to file your Income-tax return under one out of six criteria. Legally speaking the flat purchased by you of your fund in the name of the eldest daughter will be treated as yours and you would be the legal owner for tax purposes. |
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Book profit as economy is slowing
down DESPITE some fluctuations, the stock exchange indices have remained almost unchanged in the last week’s trading. FIIs were net purchasers but this did not push up the market. The market sentiment is depressed due to reports that the rate of industrial growth is falling and the economy is not in a good shape. The second quarter results announced by the corporate sector were moderately good but below market expectations. While there was improvement in the sales and net profits, there was a slight decline in the operating margins. The third quarter results are expected to be lower than even the second quarter results. The Finance Minister has now admitted that the GDP rate of growth may be lowered by 1 per cent than the earlier estimates and that there is a slowdown in the economy. He attributed it to various factors such as oil price hike, the weakening rupee, the collapse of technology stock on Nasdaq and the erratic monsoon. This has been confirmed by the recent data released by the Central Statistical Organisation, according to which, the industrial growth rate for the current half year is 5.5 per cent as against 6.4 per cent for the corresponding period last year. The capital goods sector recorded a negative 1.1 per cent growth. It will be futile to expect any substantial rise in the stock exchange indices. Trading activity at times, might give the impression of a boom, but ultimately the fundamental economic and related socio-political factors shape the market sentiment. It was a surprise to me when I read in a financial daily that a major broking agency had held a conference of clients and institutional investors and that it projected a very rosy picture of the stock market during the next one and a half year. It was stated that the sensex would scale up to 8,500 points. In general, it is always difficult to forecast the shape of things on the stock market for the next one year and longer. Much depends on the changing economic, political and even international factors. In the case of India, the behaviour of the monsoons and agricultural growth are matters of vital importance in determining the contours of our economy and the resultant behaviour of the stock market. As I see it, the year 2001-02 is likely to be a difficult year because of the elections to a number of state legislatures. Moreover, the declining growth rate in the economy is surely likely to cast its shadow on the next year’s economy. Moreover, a well-known equity research firm, Solomon Smith has in its economic review stated that there is a global slowdown in the economy. The Asian growth forecast lowers the growth rate by 0.2 per cent and indicates that the Philippines, Thailand and Indonesia are vulnerable economies. It is, therefore, proper that the long-term investors should book profit in scrips which are quoting much above their intrinsic worth. The P/E ratio should be one indicator for this analysis. Another indicator is RONW (Return on net worth) data. The operating margin factor should also be kept in mind. Wild fluctuations in share prices reveal high-scale speculation. For instance, Sterlite OPT, a Rs 5 paid share carved out of Sterlite Industries when it was reconstituted, was quoting at Rs 1189 on Thursday last week. A day later, it was quoted at Rs 1080/-. Again, Siemens India announced excellent results with a net profit of Rs 84 crore for the year ended September 30, 2000 (139 per cent jump) but the market price went down. The speculators thought it fit to book profit regardless of its long-term prospects. |
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Lesson from Singapore SINGAPORE Airlines (SIA) Boeing 747-400 that crashed recently (81 persons died and 82 injured) reportedly took off from the wrong runway and hit construction equipments. Captain C.K. Foong, a Malaysian, admitted that his plane struck an object on take-off as it barrelled down the runway. A Los Angeles bound flight burst into flame at Taipei’s Chiang Kai-shek International Airport. When the commander attempted a take-off, it is said a typhoon was whirling off Taiwan’s southern coast lashing the island with rain. Many analysts are of the view that the commander should have abandoned take-off. But the airline officials have different views saying that wind speed and visibility levels were sufficient for the commander to take-off. Airline crashes indeed cause panic among travelling passengers but the airline is unperturbed because this was first time the airline was facing direct fatal accident. Its one and only disaster came in 1997 when a plane operated by its subsidiary Silk Air crashed in Indonesia in which 104 persons were killed. As the airline has flawless performance, it is unbothered although investors are shaken a bit. The SIA airline has now taken additional measures for the safety of passengers and aircraft. Maintenance of aircraft has been intensified and pilots directed to be more vigilant. Why can’t airlines and pilots of Air India and Indian Airlines take a leaf out of the book of SIA? Bidding starts As the date for filing of expressions of interest in Air India by prospective bidders is over, the Disinvestment Ministry along with global adviser J.M. Morgan Stanley are scanning through papers and documents submitted by the parties concerned. As this exercise is completed, the bidders will be provided all relevant information concerning airline’s data and details of court cases. The multi-round bidding process is a very fine method. The best bidder at the end of each round is declared. He is placed as the lowest bidder for the next round. The short-listed bidders are then required to provide final technical and financial details. |
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Music for Internet-savvy HAMBURG: Most tech-savvy music lovers know that there are two places where anyone can pick up commercial music these days: in a music store and on the Internet. Yet until now the possibility of exchanging songs online as MP3 data — the audio file format that has won the hearts of plugged-in music lovers around the world — has caused more than a little uneasiness within the recording industry. After all, online swap services like Napster allow surfers to acquire musical works without paying for them, despite the violation of copyright law. Today though record firms are moving toward using the concept themselves. “Music on demand” — that is, music distribution over the Internet — is the catch phrase of the moment. What has been standard practice for thousands of Net-savvy music fans operating in a grey zone of the law will soon become legal — for a price. Driving the music industry’s new stance toward Internet music delivery are the high financial losses caused, according to music industry officials, by the unauthorised downloading of songs. “A fast growing cancer” is how the situation was described by one European agency, the Association of the German Phonographic Industry, located in Hamburg. For many songs the record companies and artists lose out entirely on the licence fees to which they are entitled. Estimates on annual revenue losses world-wide run into the multimillion dollar range.
— DPA Spice gets
new MD CHANDIGARH: Vinod Sawhney, who has just joined as Managing Director of Spice Telecom, finds Chandigarh a non-hassled city where one can easily put in 11-12 hours of work without being worn out. That’s understandable because Vinod has worked mostly in metros. Before joining Spice, the leading cellular service provider of Punjab, Karnataka Calcutta, Vinod spent some 17 years with the Godrej group. He was instrumental in setting up the Mohali refrigerator unit of Godrej. His last assignment with the group was as the Vice-President (Sales and Marketing) of Godrej GE Appliances. A mechanical engineer from BITS, Pilani, and a business management postgraduate from XLRI, Jamshedpur, Vinod now wants to make “Spice Telecom the most sought after brand Punjab now ranks among the top five circles, he says and adds that Spice will not only be a means of communication for a Punjabi consumer. But also make his life easier and more accessible. Vinod aims to target the rural segment since Spice has already spread fast in cities and major towns, particularly in the Doaba region. Asked why should a ruralite buy a cellphone, he said because of the services Spice offers like mandi information, health care, vehicle breakdown and religious services. “From booking your cinema tickets to catching a snake, to
ambulance services, it covers all.” — TNS |
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