B U S I N E S S

CORPORATE NEWS
Tisco net dips 80 pc
Mumbai, July 18
Badly shaken out by general slowdown in the domestic economy, Tata Iron and Steel Company Limited net profit declined sharply by 80 per cent (79.75 per cent) at Rs 20.80 crore during the quarter ended June 30, 2001, as against Rs 101.40 crore reported in the corresponding period a year ago.

• L&T net inches up

• Balmer Lawrie net up

• E Merck net rises

• Syndicate Bank

• Colgate Palmolive

• Varun Shipping

• MTNL to pay 45 pc

Kerry Packer cuts India operations
Sydney, July 18
Australian media mogul Kerry Packer has finally initiated action to cut a string of losses that his company, Consolidated Press Holding, has suffered in India.

Car, two-wheeler sales up
New Delhi, July 18
Led by a spurt in the sales of Maruti, Ford and Hyundai, car sales went up by 30.4 per cent in June 2001 as compared to the same month last year. Total sales increased to 48,243 cars from 36,974 cars sold in the year-ago month, figures released by the Society of Indian Automobile Manufacturers showed today.

• Hyundai unveils Sonata

No increase in bonus of policy-holders: LIC
Shimla, July 18
Mr A. Ramamurti, Managing Director of the Life Insurance Corporation, today said that the corporation would maintain the present level of bonus to policy holders despite the fall in rates of interest.

Telco rolls out CNG Indica
Mumbai, July 18
Tata Engineering (Telco) has rolled out the Compressed Natural Gas version of its Indica cars in select markets of Delhi and Mumbai. The car’s standard version was priced at Rs 3.29 lakh whereas the air-conditioned version was priced at Rs 3.49 lakh ex-showroom, Delhi, Telco said in a release here today.

Simputer for sales in Sept
New Delhi, July 18
Computer for the common man is soon expected to become a reality in the country, with the affordable Simputer slated for commercial sales in September. The Simputer which promises affordability, is expected to be priced at about Rs 9,000.

NEWS ANALYSIS

Woes of UTI’s small investors not over
New Delhi
At long last, the Unit Trust of India has announced the de-freezing of the repurchase of units in the flagship scheme US-64 by “small” investors. The Finance Minister had given the UTI a fortnight’s time to review its decision to suspend the sale and purchase of units in the scheme and formulate a bailout package to enable “small” investors to take the exit route.

ROUND-UP

Computer sales grow 34 per cent
New Delhi, July 18
The desktop personal computer market has crossed 1.88 million units, registering a growth of 34 per cent in 2000-01 over the previous year. PC sales in the second half of 2000-01 grew by 25 per cent over the second half, the latest figures released by MAIT, the apex body representing the hardware, training and services sectors of the IT industry today revealed. 

• Intel profit falls 94 pc

• Yaadein’s rights at Rs 8.44 cr

CORPORATE NEWS
Tisco net dips 80 pc

Mumbai, July 18
Badly shaken out by general slowdown in the domestic economy, Tata Iron and Steel Company Limited (Tisco) net profit declined sharply by 80 per cent (79.75 per cent) at Rs 20.80 crore during the quarter ended June 30, 2001, as against Rs 101.40 crore reported in the corresponding period a year ago.

Tisco Chairman Ratan Tata attributed the drastic fall in company’s net profit to the lower sales and general slowdown.

According to him, exports of the Indian steel were restricted due to trade actions taken by the USA and other countries.

The first quarter also witnessed the lowest flat product prices in the international price cycle which impacted on domestic flat product prices. As a result, these were much lower than the prices prevailing in the first quarter of the previous year, Mr Tata said.

Tisco’s sales came down by Rs 116.86 crore during the first quarter ended June 30, 2001, and stood at Rs 1,611.41 crore as against Rs 1,728.27 crore recorded in the corresponding quarter previous year.

L&T net inches up

Larsen and Toubro has announced marginal improvement in its net profit to Rs 248.66 crore for the first quarter ended June 30, 2001 against Rs 248.55 crore in the same period last year.

The net sales during the quarter stood at Rs 1,830.97 crore against Rs 1663.36 crore, thus registering an increase of 10.07 per cent from the previous quarter. Income from other sources also went up to Rs 45.67 crore from Rs 32.61 crore in the same period last year.

The total expenditure stood at Rs 1,615.54 crore against Rs 1516.54 crore in the corresponding period last year. Depreciation charged stood at Rs 81.76 crore against Rs 75.09 crore in the same period last year. Earnings per share also increased to Rs 2.57 from Rs 0.76 in the last quarter.

Balmer Lawrie net up

Balmer Lawrie and Company announced a net profit of Rs 0.27 crore for the first quarter against Rs 3.11 crore in the corresponding period last year.

The total income for the quarter stood at Rs 180.53 crore from Rs 177.70 crore in the same period last year thus registering an increase of 1.59 per cent during the period.

E Merck net rises

E Merck (India) Ltd has posted a 10.16 per cent rise in net profit at Rs 12.51 crore for the second quarter ended June 30, 2001, as against Rs 11.36 crore in the same period of last fiscal.

The net sales for the period under review stood at Rs 88.11 crore (Rs 79.14 crore in April-June 2000).

Total pharma sales stood at Rs 54.11 crore for the second quarter (Rs 52.18 crore) while total chemical sales were at Rs 33.99 crore for April-June 2001 (Rs 26.95 crore).

The company had declared an interim dividend of Rs 3 per share amounting to Rs 5.05 crore in june last week.

Syndicate Bank

Syndicate Bank has posted a marginal 3.55 per cent rise in net profit at Rs 73.8 crore for first quarter ended June 30, 2001, as against Rs 71.27 crore for the corresponding period last fiscal.

The total income for the period under review was slightly up at Rs 764.8 crore (Rs 760.29 crore for April-June 2000).

Voluntary Retirement Scheme expenses of Rs 42.58 crore being an extraordinary item has been charged during the first quarter and an amount of Rs 37.57 crore being full liability of leave encashment for employees, whose applications are accepted this year.

Colgate Palmolive

The Board of Colgate-Palmolive (India) Limited has recommended a special dividend of Rs 4.75 per share in addition to an annual dividend of Rs 3.50 per share for the year ended March 2001.

The decision to reward its shareholders with a special dividend came since the bonus share issue at the current level of capitalisation was not feasible, a company release stated.

The total outflow towards this dividend payment to the company will be Rs 112.19 crore as dividend and Rs 11.14 crore as dividend tax, the release added.

Varun Shipping

Varun Shipping Company Ltd has posted a 73.66 per cent rise in net profit at Rs 2.48 crore for the first quarter ended June 30, 2001 as compared to Rs 1.43 crore in the corresponding period previous fiscal.

Total sales for the reporting quarter stood at Rs 53.79 crore as against Rs 47.47 crore for the quarter ended June 30, 2000.

MTNL to pay 45 pc

Mumbai, July 18
The Board of Mahanagar Telephone Nigam Ltd today recommended a 45 per cent dividend on the paid-up equity capital of the company.

Agencies

Kerry Packer cuts India operations

Sydney, July 18
Australian media mogul Kerry Packer has finally initiated action to cut a string of losses that his company, Consolidated Press Holding (CPH), has suffered in India.

As part of this damage control operation, about 75 per cent of staff at Consolidated Futuristic Solutions, a CPH subsidiary producing software in India, has been sacked. The Australian and North American offices of the beleaguered company have been shut down.

The software unit of Consolidated Solutions, also known as coFuture, would be doing the massive downsizing in a week. It has already reportedly sacked 25 of its 150 employees.

Packer’s partner company in India, HFCL, holds 51 per cent stake in Consolidated Software Solutions. Australian newspapers have quoted HFCL Chairman Mahendra Nahata as saying that in the future the focus would be kept on the core business, that is telecommunication equipment.

He has blamed the slowdown in the market and the failure of Consolidated Solutions to make any “significant sales.”

The mass sackings in a CPH-HFCL subsidiary have come close on the heels of the report that Packer, the owner of Channel Nine television network, had suffered huge losses from his recent investments in India.

Industry experts had termed these investments by Packer and Murdoch, an American, as exercises to get a foothold in the Indian IT industry that was bursting at the seams at that time.

In March, 2000, Packer managers had announced the buying of 10 per cent stake in HFCL. They had paid almost 400 million Australian dollars for the stake in the Indian company. A part of this capital was used to run Consolidated Solutions.

Much has changed since those frenzied forays. There has been a significant decline in the value of hi-tech shares all over the world. HFCL shares have lost 90 per cent of their value since the Internet bubble burst soon after Packer’s highly publicized India visit.

The CPH-HFCL combination also got a drubbing in the Indian cable television project with the decision not to bid for Doordarshan’s programming slots.

Packer’s woes have been made worse by the collapse of Australian telecommunications company Onetel. The heir apparent to the Packer throne, James Packer, was deeply involved in this project along with the other rising star on the Australian corporate scene, and son of Rupert Murdoch, Lachlan Murdoch.

The two have lost hundreds of million Australian dollars in the collapse that shocked Australia.

Financial analysts here believe it would not be easy for Packer and his son James, said to be responsible for deciding to enter the Indian market, to go out of the Indian market.

The future of the venture capital fund which Packer, Australia’s richest man, launched with Indian stock broker Ketan Parekh and HFCL Chairman Vinay Maloo is also stated to be unknown. The $250 million project has not even taken off while Parekh has been jailed for a bank scam. IANS

Car, two-wheeler sales up

New Delhi, July 18
Led by a spurt in the sales of Maruti, Ford and Hyundai, car sales went up by 30.4 per cent in June 2001 as compared to the same month last year.

Total sales increased to 48,243 cars from 36,974 cars sold in the year-ago month, figures released by the Society of Indian Automobile Manufacturers (SIAM) showed today.

Ford India Ltd registered a whopping 73.2 per cent increase in sales at 2,993 units over 1,728 units in the same month last year.

Maruti Udyog, a joint venture between the Indian Government and Japan’s Suzuki Motor Company, posted an impressive 64.3 per cent sales growth at 26,129 units against 15,898 units sold in June last year.

Cumulative car sales (April-June 2001-02) went up by 3.4 per cent at 147,995 units over 143,066 cars sold during the same period last fiscal.

All the other sectors of the industry like commercial vehicles, multi-utility-vehicles (MUVs) and three-wheelers recorded a dip in sales while two-wheeler sales recorded rise in sales during the month under review.

Sales of commercial vehicles, a yardstick of economic growth, declined by 7.8 per cent month-on-month at 10,937 units over 11,874 units sold in June last year.

MUV sales also declined by 8.9 per cent at 8,894 units in the review month as aginst 9,771 units a year ago.

Sales of two-wheelers went up by 5.97 per cent at 324,187 units in June 2001 over 305,929 units last year due to growth in motorcycle sales.

Luxury car maker Mercedes Benz sold 143 cars in June 2001 as against a mere 47 units a year ago, recording a spectacular 204 per cent rise in sales.

Hyundai Motor India, a 100 per cent subsidiary of South Korea’s Hyundai Motor Co., recorded a 37.8 per cent rise in car sales at 8,472 units in June 2001 over 6,146 units sold a year ago.

Beleagured Tata Engineering (Telco) posted a 18 per cent rise in sales at 4,837 units over 4,096 units last year.

Sales of Hyundai’s country cousin, Daewoo Motors India, fell by a massive 56.7 per cent to 2,033 cars from 4,702 units last year.

Multi-utility-vehicles sales declined mainly due to a 17.4 per cent, 12.7 per cent and 10.7 per cent dip in Mahindra & Mahindra, Telco and Toyota Kirloskar’s sales. PTI

Hyundai unveils Sonata

New Delhi, July 18
Hyundai Motor India (HMIL) today rolled out its super luxury sedan Sonata in two variants carrying price tags of Rs 11.9 lakh and Rs 13.1 lakh.

The four-cylinder premium car to be available in six different shades will cost Rs 11.9 lakh for GLS and Rs 13.1 lakh for gold variant in the Capital (ex-showroom).

HMIL Director (marketing and sales) B.V. R. Subbu said the company had set a sales target of 2,000 units in the current financial year.

Drops IPO

HMIL said it had dropped plans for an initial public offer or private placement of equity and would now fund its expansion programme through internal accruals.

“We have decided against an IPO or private placement and opted for internal accruals as market conditions are not conducive for going public now,” B.V.R. Subbu said. PTI

No increase in bonus of policy-holders: LIC
Tribune News Service

Shimla, July 18
Mr A. Ramamurti, Managing Director of the Life Insurance Corporation, today said that the corporation would maintain the present level of bonus to policy holders despite the fall in rates of interest.

Addressing a press conference here today he said there was no possibility of increasing the bonus even though the corporation had been doing well in all the areas. The annual income from premium and trading had crossed the Rs 55,000 crore mark last year, whereas the payments against claims amounted to Rs 22,000 crore.

Mr Ramamurti said the corporation was expanding in a big way and there was no need for introducing a voluntary retirement scheme. There was ample scope for absorbing the staff rendered surplus owning to computerisation on which Rs 260 crore were spent. All the one hundred offices and 2,048 branches of the corporation had been computerised so far.

The entry of private sector, particularly foreign insurance companies, would not have much impact on the corporation which was fully geared up to meet the challenge.

The availability of state-of-the-art telecommunication facility and Internet connectivity had made the operations cheaper and quicker. While the policyholders had already been provided the facility to remit premium through the Internet the registration of policies on the Internet would start over the next 15 days. The policyholders would be able to know the status of their policies and could change the address or nominees through user cards or passwords in all policies simultaneously.

He said a new comprehensive policy would be introduced shortly after the closure of the “Bima Nivesh” policy on July 23. The old policyholders would get the benefits at old rates but the new scheme would be quite different.

The LIC set a new record by selling two crore policies last year and paid Rs 1910 crore as death claims and Rs 9757 crore as maturity claims. The complaint rate had declined to one in 20,000 and three division had already achieved the zero complaint rates.

Telco rolls out CNG Indica

Mumbai, July 18
Tata Engineering (Telco) has rolled out the Compressed Natural Gas (CNG) version of its Indica cars in select markets of Delhi and Mumbai.

Simputer for sales in Sept

New Delhi, July 18
Computer for the common man is soon expected to become a reality in the country, with the affordable Simputer slated for commercial sales in September.

The Simputer which promises affordability, is expected to be priced at about Rs 9,000.

“The product is being licensed to 12 players, including some Indian manufacturers. We expect the commercial sales to begin by September end,” Vinay L. Deshpande, Chairman and CEO of Encore Software told reporters here.

Encore is one of the licensees of Simputer for solutions.

The price of Simputer is likely to come down further as the demand picked up. The Simputer or simple computer is expected to be targeted at educational institutions, sales force automation, government, and health segment amongst others. PTI

NEWS ANALYSIS

Woes of UTI’s small investors not over
C.M. Kulshreshtha

New Delhi
At long last, the Unit Trust of India (UTI) has announced the de-freezing of the repurchase of units in the flagship scheme US-64 by “small” investors.

The Finance Minister had given the UTI a fortnight’s time to review its decision to suspend the sale and purchase of units in the scheme and formulate a bailout package to enable “small” investors to take the exit route.

It may be mentioned that corporate bodies had withdrawn amounts worth Rs 4,151 crore in the months of May and June alone, presumably in view of the lackluster performance of the scheme as reflected in the repurchase price of Rs 14.25 — a mere 6 per cent return on the sale price of Rs 13.50 in July 2000. Reliance got Rs 800 crore back and Videocon Rs 280 crore.

The retail investor, was also not entirely unaware of the trend as there were reports that US-64’s net asset value (NAV) had dipped to below par and that the last chance to exit will be over in May, since the pricing was soon to be NAV-based as recommended by Deepak Parekh committee. But many remained invested, either due to sloth or wishful thinking.

What shocked most was not the paltry dividend of 10 per cent but the announcement of suspension of the sale and repurchase of units for a period of six months upsetting the calculations of retail investors who had invested funds in units not only for seasonal requirements, but also for specific purposes like marriages, house repairs and unforeseen emergencies. But withdrawal of liquidity created a panic. Hence the review to provide some relief to the small investors.

Judged against the background, the repurchase offer of Rs 10 from August to the small investor is not only equitable but also innovative. An additional 10 paise would be added every month in the repurchase price till May 2003. A dividend would also be paid regularly. It was also decided to make the US-64 scheme NAV-based from January 2002.

The package will make longer term investor stay. Not that there is a dearth of options: Skipping the dividend; offer at NAV-based price; offer at July 2000 sale price of Rs 13.50; and a rate of Rs 12 plus Re 1 by way of dividend. But each option leads to a blind alley.

The trustees had been working overtime to devise a pragmatic solution; so have been members of the special group constituted for the purpose. Many investors may cry foul as their high expectations are not governed strictly by economic considerations, but by leverage sentiment. What is more, the issue is also being exploited by opposition parties. It is ironical that the same politicians who treated the UTI as a milch-cow for their favourite projects have suddenly turned protagonists of the small investors interest.

Coming to the definition of “small” investor, since the ceiling of Rs 20,000 as stipulated in the revised Companies Act is not applicable in this case, wild projections were raised even to Rs two lakh.

Given the circumstances, the cap of 3,000 units is equitable since 47 per cent of retail unit holders have units within this range.

The package comes in the wake of appointment of the new Chairman, Mr M. Damodaran who brings with him not only his experience in reviving sick banks, but also a broader vision. The Trust has had enough of “professionals” with expertise in adventurism with the investors’ funds.

The package has been uncharitably criticised as imposing a burden on public sector banks. But the banks are only returning the aid given to them in the past by UTI.

Thus there is still hope of revival of the Rs 12,778 crore assets of US-64, which can now be restructured by following prudential norms.

It is also time for the retail investor to realise that units carry market risks, as distinct from bank deposits. They would do well to remember the words of the legendary George Soros: “to be in the game, you have to be willing to endure the pain”. IPA

ROUND-UP

Computer sales grow 34 per cent

New Delhi, July 18
The desktop personal computer market has crossed 1.88 million units, registering a growth of 34 per cent in 2000-01 over the previous year.

PC sales in the second half of 2000-01 grew by 25 per cent over the second half, the latest figures released by MAIT, the apex body representing the hardware, training and services sectors of the IT industry today revealed. It has predicted that sales would touch 2.5 million units in 2001-02.

Sales had clocked a growth of 37 per cent in the financial year 1999-2000 over that of 1998-99. Earlier due to slow take-off in the first half, the sales projection for FY 2000-01 had been revised from 1.9 million units to 1.75 million units. UNI

Intel profit falls 94 pc

San Jose (California)
Second-quarter profit at Intel Corp fell 94 per cent, but the world’s leading maker of computer chips beat Wall Street’s expectations.

In the three-month period ending June 30, Intel reported a net profit of $196 million, or 3 cents per share, down from $3.14 billion, or 45 cents per share, in the year-ago period. Revenue was $6.3 billion, down from $8.3 billion a year ago.

Intel’s President and CEO, Craig Barrett said the microprocessor business “performed better than expected,” though sales of communications and flash memory chips were soft.

Barrett said Intel would speed up its rollout of the high-end Pentium 4 processor into “all mainstream PC price points by the end of the year.” With Microsoft rolling out its latest and more advanced operating system, Windows XP, Intel wants to give consumers another reason to upgrade. AP

Yaadein’s rights at Rs 8.44 cr

Mumbai
Mukta Arts has contracted the domestic theatrical rights of Yaadein with various distributors in their respective territories (except Mumbai) for a total amount of Rs 8.44 crore.

However, the Mumbai territory would be distributed by Mukta Movies Distributors, a division of Mukta Arts, the company informed the Bombay Stock Exchange today. PTI

BIZ BRIEFS

Scheme for NRIs
Phagwara, July 18
The local branch of the IndusInd Bank has extended the benefits of its senior citizens scheme to NRIs, according to Mr H.S. Kalra, Assistance Vice-President of the branch here today. The bank had offered 11 per cent interest rate to senior NRI citizens on their deposits for a period exceeding one year and up to three years. The scheme is designed for the NRIs aged 60 years and above. TNS

IDBI Bank
Ludhiana, July 18
IDBI Bank has introduced Sweeping Savings Account which, primarily, is a fixed deposit linked to a zero balance savings accounts. Mr Sandeep Mookerjee, Head-Retail Liabilities said, to avail of this sweep-in facility, the customer just needs to open a fixed deposit of Rs 25000 which has to be maintained at all times. TNS

Birla Sun Life
Chandigarh, July 18
Birla Sun Life Insurance and Dewan Housing Finance Corporation Ltd. (DHFL), second largest Housing Finance Company in the Indian private sector formally announced their intent to work together for distributing Birla Sun Life Insurance products. TNS

LML scooter
Chandigarh, July 18
LML Limited a two wheelers manufacturer based at Kanpur today introduced a new model Prithvi Low Cost scooter into 150 cc segment in the market at a price segment Rs 23,699 (ex-showroom) in Punjab and Rs 23,886 in Chandigarh. TNS

Kenwood
Chandigarh, July 18
Nippon Audiotronix Ltd (NAL), the manufacturer of Kenwood in India has introduced an attractive offer on Kenwood’s KRC.387 car audio system with a pair of 4” Kenwood speakers. The company has introduced a special offer for its customers which gives them the stereo system and the speakers at a discounted price. TNS

STG
Chandigarh, July 18
STG, an IT services company today announced the start of its Moscow software education centre. STG is offering courses, which will be in Russian language ranging from IT awareness courses to high-end technology courses to meet the advanced skill demands of the IT industry. TNS

Vectra
Chennai, July 18
General Motors (GM) India is planning to roll out “Vectra” one of its luxury car models to compete in the emerging “D” segment of passenger cars in India, Aditya Vij, President and Managing Director of GM India said today. PTI