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| Saturday, February
17, 2001, Chandigarh, India   
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Economy: what next ?
Punjab to
have asset reconstruction company Indian
rakes in billions by investing in stocks |
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No FDI
in print media: RBI UTI
hikes US-64 sale, repurchase prices FDI
shoots up 15 pc Spice
unveils collect call Cairn
strikes oil again
HFCL
offers Punjab help in e-governance
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Economy:
what next? THE
devastating quake in Gujarat, a not-too-impressive performance of the
manufacturing sector, a burgeoning fiscal deficit and less than
anticipated disinvestment proceeds are among the several constraints
within which Union Finance Minister Yashwant Sinha has to tread while
preparing the general Budget for 2001-02. Already, there are signs of some bold decisions and Prime Minister Atal Behari Vajpayee has been in the vanguard urging the people to be ready for hard measures. A 2 per cent surcharge is already in place. Mr Sinha has to ensure that resource mobilisation through additional taxation does not manifest in declining demand. Again, the unfinished agenda of second generation reforms warrants some radical policy prescription like levying user charges on public utilities. T.V.
Lakshminarayan & Gaurav Choudhury put pointed posers to the
captains of industry concerning the Union Budget.
Q: What are your expectations from the Budget 2001? The Budget in my opinion should be a balanced one and that one fulfils the need of the hour. With the Gujarat earthquake taking place, the budget process has already begun. Whether you impose taxes on February 28 or earlier, it does not matter. In my assessment, the Budget should be one that carries the reforms process forward. The more you reduce taxes, the more revenue you earn and this has been proved. The Finance Minister has been hinting that don’t expect any more reduction. I feel he should continue with the reforms in the taxation process irrespective of political opposition. The government has to do something for the industry and it needs to be encouraged. Q:
What should be the direction of the Budget? There is the general impression that industry is anti-consumer. In the name of protecting consumerism, the industry is being thrashed. Often one talks about the high level of productivity in China. Now what can the Industry do about it. Can the labour in China go on strike. In India, whether it is the organised sector or the unorganised sector, some
section is always closed. I feel the industry needs to be helped or else we will become a nation of traders. Q:
How can the industry be helped? The government can help the industry by bringing in reforms in the labour sector and infrastructure. Infrastructure is very important and once it starts coming up, industry will benefit. The construction of roads as envisaged by the Prime Minister will be a big booster. There has been too much of hype about hi-tech industries. The old economy like brick and mortar is being neglected. Now what will Information Technology do without power? There has been talk about adjustments in the interest rate. That is not the problem. Indian banks are flush with money but they will not lend to small and medium scale industries. No finances means no working capital which results in sickness. A sick industry hits the banks. It is a vicious cycle and this needs to be addressed. Another area is to make the anti-dumping laws stricter. There has been concern about dumping of Chinese goods. Honestly some of the goods are not of such good quality. Given a level-playing field consumers will definitely buy Indian goods. The Finance Minister has to take steps to help the manufacturers by providing them a suitable environment. Q:
What do you think is generally lacking in the Budget proposals? He problem is every department thinks in isolation. The Customs Department thinks about how much money it can raise. The Excise Department works out its own figures. Then you have the states which determine the sales tax, octroi etc. Now everybody thinks individually. We are one nation and there should be a composite thinking. If you want to compete internationally, you have to think in international terms. Q:
What, according to you, should be the focus of the reforms? First and foremost reforms can succeed only when these reach the common man. The man on the street should benefit from it. Despite all the talk of reforms, we are a society bound with a plethora of rules and regulations. Daily life is complicated. Inspector Raj is still there. All you want is “Mujhe jeene do
(allow me to survive)”. Q: What do you think about the regular dose of surcharge? If the nation demands you have to pay it. But the Government can avoid it if it tightens its belt. Secondly, the surcharge should be temporary and should be spent for what it has been earmarked. Our fear has always been that it gets diverted to pay salaries, car fuel and other expenditure. The government should continue to widen the tax base. It is a step in the right direction. Internal reforms in the Government should be speeded up and taxes must be collected in an efficient manner. |
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Punjab to have asset reconstruction company Chandigarh, February 16 Its purpose will be to study such public entities — public sector undertakings and apex co-operative institutions — as are in the red and despite the government decision to shut them down they continue to exist, technically and legally. The proposed organisation will work on ways and means to retire government equity, loans and employees. This decision comes at a time when the Finance Minister, Capt. Kanwaljit Singh, in his March 22 Budget (2000-2001) speech had rued the performance of the state’s 39 PSUs (including apex
co-operative institutions), the Core Group having made certain specific recommendations in respect of these white elephants and a public sector disinvestment commission is in position. The Core Group, with Chief Secretary, Mr N.K. Arora, in the chair, at its meeting on Tuesday last decided on such a step. An appropriate memorandum will be placed before the Council of Ministers in about three weeks
time. This is to be a company of professionals because non-closure of at least six PSUs has upset the Group. An appraisal report by the Directorate of institutional finance and banking and public enterprises (1998-99) presents a very dismal picture of 37 corporations in which government has heavily invested by way of equity and loans. The involvement is to the tune of Rs 7,335.50
crore. The returns on equity is a mere flash in the pan — 0.04 per cent (1998-99). The report is a telling comment on the performance of 37 PSUs and apex co-operative institutions, employing 112,453 employees. The following quote from the report will sum up the performance of these public entities as much as will reflect on the role of bureaucrats who use political levers to get appointed as Managing Directors. At the end of their tenure no questions are asked, no recoveries effected from their pocket and several manage to hop from one lucrative PSU to the other without qualms. The report says, “...the affairs persisting in a majority of PSUs are disquieting as non-finalisation of accounts within prescribed time schedule not only results in concealment of hidden scandals but also adversely affect the finalisation of accounts of subsequent financial years...accounts of 14 entities have gone into arrears ranging between one year and eight years...” Here is an example of one apex co-operative institute, Markfed. This is a delinquent member of the cooperative family where figures are fudged to show profits, ex-gratia grants and dividend given to employees despite losses, frequent foreign jaunts undertaken by officials at the drop of a hat, requests made to the powers that be to “write-off” losses, decisions taken without approval of the competent authority and selection list releases held up at the bidding of politicians. According to union sources in Markfed, if the latest audit report for the year ending, March 31, 2000, is any indication, Asia’s biggest co-operative creeks with corruption, pilferage, inflated profits and concealed losses; a typical case of a “hidden scandal”. The modus operandi is simple: Markfed shows profit without offsetting losses and adding such losses to the head “profit and loss appropriation account”. This has been happening since 1995-96 when Markfed did not adjust a loss of Rs 56.96 crore against the profit of subsequent years. The basic budgeting system is thus screwed up. Under the same head, incidental of Rs 105. 87 crore accrued on wheat/paddy in September 2000 have been accounted in the audited year. Income and expenditure relating to the previous year were accounted in the current year, thereby, showing an additional profit of Rs 6.91 crore. But valuation of closing stock of paddy crop, 1995-96 to 1997-98, for Rs 1.93 crore was not evaluated after considering the health of stock. Thus profits to that extent were inflated. Even physical verification of paddy stock till March 31, 2000, was not done which does not enable calculating Markfed’s profitability, says the report. By selling damaged paddy to millers Markfed suffered a loss of Rs 44.32 lakh. No responsibility has been fixed. A sum of Rs 1.33 crore is due to Markfed from rice mills. The management has failed to take action on over subscribing the order for placement of gunny bags (bardana) to the tune of Rs 58.79 lakh. Moreover, shortage of these gunny bags, worth Rs 35.31 lakh, was also detected by the audit. This remains to be recovered from the officers and officials responsible. The Managing Director, Mr D.S. Bains’s request to the government to “write off” a loss of Rs 1.72 crore on potato business Markfed undertook in 1992-93 has been rejected. “In business, losses are not written-off. These are off-set against next year’s profits”, he was told. |
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Indian rakes in billions by investing in stocks New York, February 16 Forty-six year old Khosla had raked in $ 15 billion by investing in about half a dozen makers of breakthrough telecom gear. Khosla, Forbes says, has made a career of determining which companies will thrive and that none is shrewder than him in the field. Indeed, many venture capitalists have lost where Khosla has succeeded, it said. Despite the crash of dot-coms and hints of recession in the US economy, Khosla continues to invest in selected companies. “This is a reckoning, but this is no time to retreat,” says Khosla, described by Forbes as superstar partner in VC firm Kleiner Perkins Caufield and Byers in Menlo Park in California. “The TechWreck is a stock-market phenomenon caused by fear and greed. It doesn’t change the underlying cycle of technology innovation. That’s the Tech Trend.” Lower-profile and less loquacious than John Doerr, his headline-happy partner, Khosla has Rivaled Doerr’s impressive record in 15 years in the business. Mining the extreme fringe, Khosla has funded some futuristic flopsypen-based computers, interactive games and such. But he also has backed some of the richest payoffs in high-tech. Khosla’s investment success, both for himself and his partners, Forbes says, is a key component of his appearance at the top of the Midas list of venture capital power brokers. Midas members include entrepreneurs and the investors who nurture their ideas, the venture capitalists who fund them, the technical advisers who pass judgment on their technology and the lawyers who patent it, and the investment bankers who gift-wrap the whole package and sell it to the public. Khosla was born in 1955 into a military family in New Delhi and earned degrees from some of the world’s best tech-savvy institutions including the Indian Institute of Technology, Carnegie Mellon in Pittsburgh and the Stanford Business School in northern California. After Stanford he and a Ph.D candidate, Andy Bechtolsheim, divined the idea that led them to find Sun Microsystems. Khosla ran Sun until 1984, when he was replaced by his MBA classmate and pal, Scott McNealy. Just 30 at the time, Khosla could have retired, but Doerr persuaded him to work “part time” for Kleiner Perkins. “Staying at Kleiner was never in the plans,” says Khosla, who had hoped to return to far-out research. Then he decided a “stable” career in venture capital was a safer bet. He spent a decade at Kleiner as the firm prospered, and by 1995 Khosla, Doerr and other partners set off the race to the internet bubble by backing netscape. It went public 16 months after its founding. Khosla also backed Web portal Excite, while Doerr pushed cable-modem marketer Athome, Amazon.Com and Healtheon. Excite and Athome later joined in a Hail Mary merger, and a faltering Netscape sold out to Americaonline. Together Amazon, MebMD and Exciteathome have lost $ 52 billion of market value, Forbes estimates. While doerr ran into turbulence, Forbes says Khosla has assembled a stable of lasting blockbusters the likes of which the venture community has rarely seen. Since summer 1999, Khosla has seen three of his optical networking outlets Extreme Networks, Juniper and Corvisygo public on the Nasdaq. Even off 50 to 80 per cent from their highs, their combined market cap approaches $ 60 billion, the magazine adds. Khosla says the real revolution will take hold when old companies infuse their business with digital tools. His payoff comes in funding the firms that try to enable that. Corio went public in July. Its shares are down 72 per cent from their high. Kleiner Perkins already owns 10 per cent of the company, yet in November Khosla spent $ 3.1 million of his own money to buy shares worth another 2 per cent. “I’m not worried about risk. The best thing that happened to Corio is that the category tanked. Its competition dried up! I am worried about people becoming gun-shy about funding. But one of the advantages of that is only good ventures get funded,” Khosla said.
PTI
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Mumbai, February 16 The apex bank today issued a notification amending its earlier one in May 2000 on foreign investment in the print media, the RBI said in a statement here. The RBI in consultation with the Government of India, has with immediate effect withdrawn the facility for acquisition of shares and convertible debentures of Indian companies engaged in the print media sector for foreign venture capital investors, FIIs as also by NRIs and overseas corporate bodies. The RBI statement said the restriction would also apply to investment by NRIs/OCBs on a non-repatriation basis. The controversy over Midday Multimedia Ltd’s proposal to go in for foreign institutional investment (FII) has blown over with the company communicating to the Information and Broadcasting Ministry that it does not intend to go ahead with it in view of the government’s policy against foreign equity in print media. In a letter to I and B Minister Sushma Swaraj and the RBI, the company has informed them of their decision, Mrs Swaraj told reporters today. She said she had written to the Finance Ministry and the RBI earlier drawing their attention to the fact that the RBI permission to the company would be a “total clandestine affair” as it went against the government’s declared policy of not allowing foreign print media. The minister said the Finance Ministry has also written to the RBI that notwithstanding provisions of fema, foreign portfolio investments cannot be envisaged in companies which are engaged in activities where foreign investment per se is not allowed. |
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UTI hikes US-64 sale, repurchase prices Mumbai, February 16 With this revision, UTI has revised its sale by 5.93 per cent and repurchase price by 6.06 per cent in the last seven months of the financial year ending June 2001. The sale and repurchase were first revised to Rs 13.65 and Rs 13.35 in August 2000 from Rs 13.50 and Rs 13.20 in July 2000. The rates were further hiked to Rs 13.90 and Rs 13.60 in October 2000 and Rs 14.00 and Rs 13.70 in November 2000. Distribution for two schemes UTI has declared a maiden dividend of Rs 1.50 per cent (face value of Rs 10 per unit) for its index select equity fund. UTI also declared a divident of Re 1 per unit (Rs 10 face value) under its Grandmaster 93. The book-closure in both cases is fixed from March 15 to 19, 2001. Index select equity fund, launched in June 1997, as a close-ended equity fund, was made open-ended from October 16, 2000.
UNI, PTI |
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FDI shoots up 15 pc New Delhi, February 16 According to official figures released by the Commerce Ministry, the last two years have shown a significant step-up in the inflow-approval ratio and the current realisation rate of FDI into India was around 52 per cent. With this inflow, cumulative FDI inflows into India from January, 1991 to December 2000 stood at about $ 23.6 billion. Total FDI approval between January, 1991 and December, 2000, stood at $ 68.3 billion. The sectoral composition in the FDI approvals continues to be consistent with the country’s economic priorities. Fuels, telecommunications, electrical equipment, computer software and electronics, transportation industry, service sector, metallurgical industry, chemicals, food processing industries and hotel and tourism are among the top sectors in which FDI approvals were provided. |
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Spice unveils
collect call New Delhi, February 16 Spice Communications has also formed an alliance with NCIC of USA and has launched India’s first collect call facility through mobile phones and has also tied up with Smart Data to launch portal services for it’s subscribers in Punjab. Spice Communications, subsidiary of Modicorp, is a cellular service provider for Punjab. |
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Cairn strikes
oil again New Delhi, February 16 The exploratory well drilled encountered multiple oil bearing zones and flowed both oil and some associated gas during production testing. Although, the flow rate did not stabilise during testing, the well produced fluids at a rate varying from 1200 to 2200 barrels with 5 to 25 per cent water as per information received from the Operator. |
rc
HFCL offers
Punjab help in e-governance Chandigarh, February 16 Mr Nahata who was here in the city to attend a symposium on micro-electronics stated that while the policies of the Indian Government regarding telecom will help attain tele-density of 15 per cent by the end of 2010, Punjab will be able to reach the same density within seven years only. The company, which has recently launched limited mobility Services in Punjab and Chandigarh has got 50 “friendly” users availing the service, though bookings will start in another two weeks after CDMA handsets are imported. “Initially we will be providing the CDMA hand sets ourselves, and later on these will be available in the market also after more companies venture in to it”, Mr Nahata said. He said that the company aims to provide reliable cost-effective telecom and value added broadband services. HFCL has already started providing Internet connections and will soon be providing cable connections facilitating access of Internet via cable, tele-medicine, tele-banking facilities et al. Confident of capturing a substantial share in the market, Mr Nahata said that the company expects to rake in Rs 1,000 per subscriber per month, thereby resulting in a revenue of as high as Rs 400 crore, three years from now from the region. When questioned about possibilities of getting subscribers willing to pay such an amount, he said that the amount will be for a bundle of services and not merely telephony, “though more effort will have to be put in for the same”, he added. Reportedly, seven companies have applied to the telecom department for licences for the basic services in Punjab, thereby likely to increase the competition in telephony all the more.” Entry of other competitors is imminent but by the end, only two- three, serious ones are expected to remain. Atleast half of the licence seekers will withdraw when the government asks them to deposit money or furnish bank guarantees. We hope to get 50 per cent of the new subscribers”, he said. He also feels that the cellphone (GSM) operators will not be at the losing end because more competition will increase opportunities and widen the market. HFCL has recently signed up three joint ventures with Australian media barons James and Karry Packer for producing software and infotech enabled services, a B2B e-commerce JV and another one putting the company into broadcasting and even producing films and music. As per Nahata’s reckoning, while the software venture will fetch close to Rs 500 crore three years from now, media business would help it earn a hundred crore in the first year itself. Though optimistic about the plans of the government regarding telecom, Nahata strongly feels that for the manufacturing industry to become globally competitive, cost of production has to be reduced. “ Local industry has to pay sales tax, while there is no sales tax on direct imports. This increases the production costs by atleast 10 per cent and survival becomes difficult . Under such circumstances, how can we expect manufacturing industry to be at par with the international standards ?”, he questioned. Professionals in the region will be offered more employment opportunities , he promises. “We have already employed 700 professionals and in future also engineers, diploma holders from the region will be given preference”, said Mr nahata.
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Daewoo Motor sends layoff notices China to lay off 6.5 m workers a month Computer giant Dell axes 1,700 jobs Oracle denies talk of Clinton directorship |
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ETA General Sharper image Virtual Mahazine Sun Pharma Exim Bank MD Raghu Mody |
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