B U S I N E S S

Mounting subsidy deepens Centre’s woes
Chandigarh
While this year’s wheat procurement season, which has just ended, has increased the Centre’s worries over mounting food subsidy and burgeoning buffer, it has proved to be a bonanza for Punjab and Haryana farmers as also for the governments of the two biggest surplus states.

SSI units seek fair share in rebate
Ludhiana, July 14
Small-scale units owners who purchase steel from the Punjab Small Industries and Export Corporation (PSIEC), have demanded an adequate share in the joint plant rebate that was availed by the PSIEC on their behalf.

Industrialists oppose acquisition move
Gurgaon, July 14
Nearly 40 small-scale industrial units are on the verge of being uprooted on account of the government’s proposed acquisition of the land on which they are situated.

Forex reserves swell by $ 141 m
Mumbai, July 14
India’s foreign currency reserves continued their upswing with a further increase of $ 141 million to $ 43,596 million for week ended July 6, 2001.

Proposal to export shawls to China
Amritsar, July 14
The Shawl Club (India) in collaboration with the Woolmark company, is considering a proposal to export Indian woollen shawls to China. The chairman of the club, Mr J.S. Madan told newsmen here today that a delegation was proposed to be taken to China and to other countries to explore the possibilities in these countries.

‘Talking’ cars
New York, July 14
Oracle Corp, the worlds’ number two software company, on Thursday signed a partnership with Wingcast, a joint venture between automaker Ford Motor Co and wireless software developer Qualcomm Inc, to help bring talking cars to the masses.

Mounting subsidy deepens Centre’s woes
B.K. Chum

Chandigarh
While this year’s wheat procurement season, which has just ended, has increased the Centre’s worries over mounting food subsidy and burgeoning buffer, it has proved to be a bonanza for Punjab and Haryana farmers as also for the governments of the two biggest surplus states.

The two wheat producers have earned an additional income of over Rs 650 crore and Rs 1150 crore this year as a result of their increased marketable surpluses of 10.5 lakh tonnes and 19 lakh tonnes which they have sold in the mandis of Punjab and Haryana, respectively. The hike of Rs 30 per quintal in the Minimum Support Price of wheat granted by the Centre alone has yielded an additional income of Rs 310 crore and Rs 200 crore to the farmers in the two states. The total market arrivals of wheat in Punjab and Haryana this year were 105.50 lakh tonnes and over 64 lakh tonnes, respectively, as against last year's over 95 lakh tonnes and 45 lakh tonnes.

The rise in market arrivals has also helped the Punjab and Haryana governments to earn an additional revenue of over Rs 55 crore and Rs 100 crore in the form of Purchase Tax, Rural Development Cess and Market Fee. Although Haryana exchequer was the exclusive beneficiary of the increased tax revenue, this could not be said about the additional income accruing to Haryana farmers. Farmers from Uttar Pradesh and Rajasthan had brought larger quantities of wheat this year than last year for sale in Haryana mandis. But unlike Punjab and Haryana, the two states do not have regulated markets. In Punjab, almost the entire wheat arrivals represented the marketable surplus of the state’s own farmers.

In view of the uncertainties on the economic front, it will be difficult to share Union Finance Minister Yashwant Sinha’s optimism that the record wheat surpluses this year and the consequent increased money with farmers would help rural demand to pick up and better economy’s growth rate. Last year also, Punjab and Haryana farmers had earned huge additional income from the substantial increase in wheat production and larger marketable surpluses compared to the previous year. But the rural demand did not witness any perceptible pick-up which could help in accelerating the economy’s growth rate.

In fact, the government’s own confused and directionless food policy has largely contributed to its woes on the food subsidy front and aggravated the problems of plenty.

For instance, the Centre, as also the Commission for Agricultural Costs and Prices have, for the past over two years, been opposing any increase in the MSPs of wheat and paddy. But, under the pressure from its ruling allies in Punjab and Haryana who represent the strong farm lobby, the Centre has been granting increases in the MSPs of both the commodities.

Even for this year’s wheat procurement season, the CACP in its supplementary recommendation had reportedly suggested that the wheat MSP should be brought down to Rs 520 per quintal from last year’s Rs 580.

But both Parkash Singh Badal and Om Prakash Chautala, Chief Ministers of Punjab and Haryana, took up the issue with Prime Minister Vajpayee and not only opposed any cut in the MSP but also demanded an increase in it. The Centre went out of its way to please the two Chief Ministers. It increased the MSP by Rs 30 a quintal which surprised even Mr Badal who, in the given situation, was expecting an increase of only Rs 10 a quintal.

On the other hand, although successive Punjab and Haryana Governments have, for the past few years, been stressing the need for diversification of agriculture by changing the wheat-paddy cropping pattern, which is not only creating problems of unmanageable surpluses but is also playing havoc with underground water resources. When wheat and paddy producers who have assured market for the commodities are given increases in their MSPs every year, they feel encouraged to continue growing these crops. The government has neither provided assured market nor guaranteed MSPs for other crops which it wants the farmers to switch over to. It is not surprising that in such a scenario, the mounting food surpluses have been adding to the Centre’s woes as also its food subsidy bill. IPA

SSI units seek fair share in rebate
Tribune News Service

Ludhiana, July 14
Small-scale units owners who purchase steel from the Punjab Small Industries and Export Corporation (PSIEC), have demanded an adequate share in the joint plant rebate that was availed by the PSIEC on their behalf. The Ludhiana Electroplaters’ Association, in a memorandum submitted to the PSIEC management, has sought a fair share in the rebate of Rs 470 per tonne, which was made available to it from the steel plants under the Steel Development Fund.

The industry sources say the PSIEC passes Rs 180 per tonne to the small units and the remaining share of rebate without providing any additional service to them. The small-scale units engaged in the production of cycle parts purchase about 10 to 12,000 tonnes of steel from the PSIEC every year.

The same amount of better quality steel, made at Vishakhapatnam in Andhra Pradesh, is purchased from an agent of Rashtriya Ispat Nigam Ltd (RINL). The small-scale units get rebate only if they purchase steel from PSIEC or the sole agent of RINL in the city.

Industrialists oppose acquisition move
Ravi S. Singh
Tribune News Service

Gurgaon, July 14
Nearly 40 small-scale industrial units are on the verge of being uprooted on account of the government’s proposed acquisition of the land on which they are situated.

A delegation of the Gurgaon Industrial Association (GIA), led by its president, Mr Jagan Nath Mangla, yesterday met the Deputy Commissioner, Mr Apoorva Kumar Singh, and urged him to stall the acquisition move.

The move to acquire about four acres of land at Govindpuri on Basai road has gathered momentum following a court’s ruling in favour of the government’s acquisition proceedings. Action had been initiated by the government under Sections 4 and 6 of the Land Acquisition Act. After this, Section 9 is invoked, followed by the finalisation of the awards by way of compensation to the owners of the land acquired.

After Section 6 was invoked, the matter was moved to the court in 1987. The Punjab and Haryana High Court recently ruled in favour of the acquisition proceedings.

Constitutional provisions are there, mandating the state’s act of acquiring private land for a public cause. The apex court has also upheld the interpretation of the concerned constitutional provisions in the same light in a legion of cases. Also, with the right to private property being reduced to a mere right from part of fundamental rights on account of an amendment to the Constitution, the government has the authority to have its way on the issue.

Considering themselves on a weak wicket, the industrialists likely to be affected are now banking on the goodwill of the administration. They got a lukewarm response from the local administrative office of the Haryana Urban Development Authority (HUDA), yesterday.

Following this they met the Deputy Commissioner. Building up a case in their favour, the GIA submitted him a memorandum. The Deputy Commissioner has asked for the relevant records and documents from them to establish the justness of their claims against the proposed acquisition.

A member of the administration said many of the entrepreneurs bought the land during the pendency of the case in the court.

The memorandum points out that the entrepreneurs purchased the land with their hard earned money and invested on the construction of factory buildings, installation of machinery and getting electricity connections.

Forex reserves swell by $ 141 m

Mumbai, July 14
India’s foreign currency reserves continued their upswing with a further increase of $ 141 million to $ 43,596 million for week ended July 6, 2001.

The foreign currency assets (FCA) rose to $ 40,794 million, up by $ 159 million, in the reporting week, according to RBI’s weekly statistical supplement here.

The gold reserves, however, declined by $ 18 million to $ 2,798 million. Special drawing rights remained static at $ 4 million, the apex bank said.

Bank credit in the reporting fortnight increased by Rs 1,992 crore to Rs 5,18,657 crore. PTI

Proposal to export shawls to China
Our Correspondent

Amritsar, July 14
The Shawl Club (India) in collaboration with the Woolmark company, is considering a proposal to export Indian woollen shawls to China. The chairman of the club, Mr J.S. Madan told newsmen here today that a delegation was proposed to be taken to China and to other countries to explore the possibilities in these countries.

Dr S.K. Chaudhari, Director, International Wool Secretariat (India) and south-east Asia), while addressing a gathering, said the Woolmark company, alongwith the Shawl Club, had developed various designs to be marketed in India and abroad.

Mr O.P. Soni, MLA, inaugurated an exhibition held on this occasion. Mr Madan requested Dr Chaudhari to reschedule the timing of the exhibition and the retailers’ meeting.

Earlier, the Woolmark company and the Shawl Club (India) had jointly organised an exhibition of various designs of shawls here for two days . The exhibition featured designs of students of National Institute of Fashion Technology and National Institute of Design.

‘Talking’ cars

New York, July 14
Oracle Corp, the worlds’ number two software company, on Thursday signed a partnership with Wingcast, a joint venture between automaker Ford Motor Co and wireless software developer Qualcomm Inc, to help bring talking cars to the masses.

In the hit TV series Knight Rider, David Hasselhoff plays the crimefighter, Michael Knight, whose partner, Kitt, is a futuristic talking car that constantly updates Knight with information about the quickest route to their destination or the whereabouts of criminals.

Now Oracle, Ford and Qualcomm plan to mimic that technology in modern cars using telematics.

Telematics is the fusion of computers and wireless communications technology inside cars to enable, for example, motor vehicles to ‘speak’ instructions to drivers about such things as traffic conditions and weather conditions.

“The cars will not only be giving you advice as to the right freeway to go on but they’ll tell you which freeway has the most traffic on it,” Mr Larry Ellison, Oracle’s Chairman and Chief Executive, said.

Mr Ellison said cars using the service would be equipped with global satellite positioning technology, which beams the location and speed of the car to a central computer at Wingcast’s headquarters.

The computer then uses that information to send back relevant data to the driver’s whereabouts. Using speech recognition technology — which Wingcast said it is developing in conjunction with an as yet unnamed partner — that data is then “spoken” back to the driver minutes later.

In addition to traffic information, the service also enables drivers to connect wirelessly to the Internet and check their corporate e-mail and have the messages read back to them in the car.

“A salesperson will not only be able to pick up their mail ... while watching the road with their hands on the wheel, but they will also be able to receive new leads ... and directly link up with a perspective customer,” Mr Ellison said.

The idea is to enable all of Oracle’s software so that they can be delivered wirelessly to automobiles via Wingcast’s service, Mr Ellison said.

Industry research firm international Data Corp has estimated that the telematics market will grow to $42 billion by 1010 from $1 billion in 1998. For that reason, automakers around the globe are racing to develop such futuristic services.

San Diego-based Wingcast was founded in October 2000. Although Ford and Qualcomm have a majority holding in the venture, Mr Harel Kodesh, Chief Executive of Wingcast, said car maker Nissan Motor Co Ltd has agreed to include Wingcast’s telematics technology in its vehicles next year.

Wingcast said it will also sign deals with telecommunications service providers, although Kodesh said it was too early to name partners.

Mr Kodesh added that the deal with Oracle was not exclusive and that Wingcast would offer connections to corporate data, like e-mail, stored in other software firms’ applications, as well as information on the Internet.

Having originally said the service would be available later this year, Wingcast in May delayed the launch of its in-vehicle communications service until mid-2002.

The delay sets Wingcast further behind rival General Motors Corp OnStar telecommunications service, which since its launch in 1996 has grown to over 1 million subscribers. OnStar is available on 32 GM vehicles, or about half of its fleet. Reuters

ANALYST’S DIARY

Taxpayers’ money not for bail-outs

THERE is an unwritten rule in the money market. It suggests that there is no room for any sympathy for losers. Since time immemorial, it is always the retail investor who has borne the brunt of every cruel twist at the bourses. Being unexposed to the international equity market culture till very recently when FIIs forayed into the Indian market, the retail investors got used to treating the UTI’s schemes like sure-fire winners equivalent to a sovereign debt.

Somewhere along the way, the bubble burst and in June, 1999 the Finance Minister made the cardinal mistake of letting good money chase bad money by bailing out UTI’s US-64 through some deft accounting entries coupled with some Budget sops. Unwittingly perhaps, the latter move triggered off a rally that was hijacked by market manipulators. And the rest, as they say is history!

Tragically, ditto seems to be the case with UTI’s US-64 investors. For the record, the UTI has suspended the sale and repurchase of US-64 for six months and announced one of the lowest-ever dividends of 10 per cent for the financial year ended June 30, 2001. Almost inevitably, its Chairman was the first casualty having to resign, though the biggest casualty as usual was the retail investor.

However, the retail investor here cannot be absolved of guilt and like I said earlier, there is no room for sympathy in money markets. That UTI as an institution itself was not as investor-friendly as gullible investors believed it to be was first evident in the mid-90’s when under the “able” guidance of Dave who headed it then, it did a cynical deal with the Reliance group as a result of which it procured shares of the group’s flagship company at a price far in excess of its ruling price.

Investors stood by and watched quietly silenced by the decent dividend dole-out little realising that every dividend dole-out meant a further erosion in its fast eroding capital. The fact is the attractive dividends doled out year after year by UTI ensured that the investors ignored its systematic capital erosion. If you cannot call this investors stupidity laced with greed, what else can you call it. Then, UTI’s overexposure to Reliance is legendary by now, though the latter group has been smart enough to cut its exposure to UTI sharply and just in time. Good timing, isn’t it?

Then, there were always some kind of whispers doing the round that UTI was piggy-backing on the latest market manipulator Ketan Parekh’s back to salvage its position through infotech stock investments.

Unfortunately for UTI, the infotech bubble suddenly burst and the market manipulator is now headed to where he belongs — jail. As for UTI, well, the writing was always on the wall — those who chose not to see it, can now repent at leisure.

Finally, the Finance Minister, whose propensity to react to every stock market development is alarming, would be well advised to avoid another contrived bail-out attempt. Tax-payers money is not for bail-outs. If it happens too, the tragic part will be that the same UTI unit holder in all probability will be the tax-payer who subsidises some hare-brained bailout scheme.

RENT CASES

Approval-condition precedent

Consequently, the S.C. allowed the appeal, order of the H.C. was set aside and that of the trial court was restored.

CHECK OUT

Spurious brands: grave threat to consumers

I remember those days in the early eighties, when Mr Gyan Pandit, who ran a consumer organisation in Delhi, used to regularly hold an exhibition on counterfeit brands. Mr Pandit, who is no more, was passionately involved in educating consumers about spurious brands and would go about diligently collecting such products and would hold his exhibition appropriately titled “Asli-nakli” in schools, colleges and at consumer meets.

With a little cooperation and encouragement from the industry, the exhibition could well have expanded from counterfeit medicines and cosmetics to cover a wide range of fake goods that we see in the market today. It could have also heralded the beginning of a movement against imitation goods by all those affected by it — consumers, the industry and of course the government.

But unfortunately, even though the industry admitted that counterfeit products were eroding their credibility and their profit margins, no effort was made to educate consumers on the issue. The industry also fought shy of joining up with consumers and consumer groups to tackle the problem. Many of them would hire private investigators to trace the source of counterfeit brands and launch prosecution under the Trade and Merchandise Marks Act, but given the delays in the legal system and certain lacunae in the law, the measure was not enough to curb the malpractice.

To a manufacturer, a spurious product may represent a cut in his market share, but to a consumer the threat from such a product is far more grave. A counterfeit automobile part, for example, could mean loss of life if it were to cause a major accident. Similarly, a house built with spurious cement may well come down like a pack of cards; sub-standard GI pipes could lead to contamination of drinking water; a spurious LPG cylinder could burst, killing and injuring those around and also damaging property; fake electrical gadgets and accessories could cause a major fire or destroy valuable electronic equipment.

And consumption of spurious medicines and food could be life threatening. And now over the years, the spurious menace has spread to such an extent that it is not just popular brands which are being imitated. Even the standard ISI seal of the Bureau of Indian Standards is being copied. And when it happens to essential goods that are under mandatory quality certification, it defeats the very purpose of such quality control orders.

Estimates on the parallel trade varies from sector to sector and from 5 per cent to 50 per cent. A study on spurious automobile spare parts industry, conducted in 1994 by the National council of Applied Economic Research (NCAER) and sponsored by Automotive Component Manufacturers Association and the CII, had put the market share of spurious automobile manufacturers at 42.23 per cent! FICCI, which has recently constituted a brand protection committee, pledged to eliminate fake products and sought the cooperation of consumers and the government in this effort, estimates that in the non-durable consumer products market alone, consumers end up buying as much as Rs 2500 worth of fake products in a year.

While FICCI’s initiative in the area is welcome, far more needs to be done to tackle the problem. In fact the government needs to take a more active role in combating the crime. After all, it has a duty to protect the interests of consumers. Besides, it is losing heavily on the revenue front on account of such products. So the first step should be to form a task force consisting representatives of central and state governments, enforcement agencies, trade, industry and consumer representatives to put stop to trading in spurious goods through consumer education and better enforcement of laws and regulations.

Those found guilty of manufacturing and selling counterfeits should also be made to pay huge amounts towards a fund administered by the task force to educate, protect and compensate consumers. The task force, which should be under the Ministry of Consumer Affairs, should also explore the use of holograms for identifying genuine products and quality seals.

Manufacturers on their part should use packaging that does not lend itself easily to duplication or re-use. Plastic bottles used for soft drinks and water, for example, are discarded after use and can be picked up and re-used by those in the ‘duplication business’. Manufacturers should also provide on packages, toll-free numbers on which a consumer can call and check, in case of doubt, the genuineness of a product.

BIZ BRIEFS

Lucky draw
Chandigarh, July 14
The greeting cards section of ITC Ltd has started a “How Lucky is Your Loved One” contest for its customers at its select outlets. A customer who buys an “Expressions” card gets a gift voucher on which he has to fill the details of his loved one. The lucky ones will be able to gift prizes, including Hyundai Santro car, microwave ovens, wrist watches, and crew neck t-shirts to their loved ones. TNS

Plastech 2001
Chandigarh, July 14
Plastech 2001, a two day seminar-cum-exposition on “Plastics -Emerging Technologies and Applications,” organised by the CII in association with the Indian Plastics Institute concluded here today. The latest trends in the field, plastics and environmental issues and growth potential of the industry were discussed on the second day of the seminar. TNS

HDFC Bank
Chandigarh, July 14
HDFC Bank has launched a unique “Debit Grab-It Use-N-Win” offer for its International Debit Card Holders. All HDFC Bank debit card holders (Visa Electron, Maestro and Times Access Card) who shop with the debit cards at shops acrosss India and overseas 6 times over a 3-month period — from July 1 to Sept 30, 2001 — become automatic participants in a lucky draw to be conducted in October 2001. TNS

Metal traders
Yamunanagar, July 14
A delegation of the Jagadhri Metal Traders Welfare Association yesterday submitted a memorandum to Haryana Chief Minister Om Prakash Chautala during his visit here. The general secretary of the association, Mr Rajinder Bajaj, demanded that Sales Tax be reduced from 4 per cent to 2 per cent. OC

Yoga session
Chandigarh, July 14
A session on Yoga was jointly organised by the PHD Chambers of Commerce and Industry and Art of Living organisation for the members of the chambers. OC

Garment fair
New Delhi, July 14
International Garment Fair which began here today will educate garment exporters and attract overseas buyers in a large number, Apparel Export Promotion Council Director Rakesh Sharma. PTI