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Thursday,
August 16, 2001, Chandigarh, India  
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Cellular race in Punjab may hot up
Enron may move out by Nov
Limitations of insurance as a business
Relief for bakery units soon |
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Coke may rethink P&G
venture MindTree gets $40m
from venture fund Petro product exports vault ten-fold Telco open to hive off Indica project India’s gold
demand rises by 7 pc
Flaw can delay Microsoft’s game
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Cellular race in Punjab may hot up New Delhi, Aug 15 While BSNL will launch its services in November, Escotel of the Escorts group will launch its services around ‘Baisakhi’. The existing players Spice Telecom and Magic of the Bharti group will broaden their base to retain and attract new subscribers. “We are planning to invest Rs 500 crore in the state for establishing a world class service,” chief officer of Escotel Mobile Communications Rajiv Burman told The Tribune. Escotel has got licence for Ludhiana and Chandigarh in the fourth licence bid. BSNL will roll out its mobile service in the country by December, 2001, at an expenditure of Rs 2,500 crore. However, the service in Punjab will begin by November and in number of other states by the end of this financial year. The BSNL service will cover all cities in Punjab. With the acquisition of four new circles of Punjab, Uttar Pradesh (East), Rajasthan and Himachal Pradesh, the company has emerged as a major player in Hindi heartland with a presence that stretches from Punjab, Rajasthan in the west to Uttar Pradesh in the east. Giving out the ambitious plans of the company, he said Punjab would be a major revenue earner for Escotel in the coming years and the company will come out with attractive schemes to target the untapped customers. “We are planning to have a subscriber base of one million customers by 2005, which is about 40 per cent of populations of the state,” he said. Mr Burman said the sections of society like students, women and rural sector are the major potential customers apart from the business class. “Fishermen of Kerala find out the prevailing market rates while they are set out with their catch from high sea and move their trawler towards that market which has the highest market price for the sea food that day,” he said, adding that Punjab farmers would soon have the mobiles at their disposal to know the best rates for their produce and move their vehicle to the mandi which offers the best price. “The farmers can have a first hand information about the price and even negotiate the
base price for their produce,” Mr Burman said. Spice Telecom has farm produce price quotes service. As the company has its services in the Northern states, it will be an added advantage for the business community, which frequently travels in the region, to optimally use service to their best advantage, he said. “The pre-paid cards will be the most revenue generating,” he said. The short-message-service facility is an added attraction, which has caught the imagination of many and if used properly, the people could exchange messages at nominal cost from Chandigarh to London, he said.
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Enron may move out by Nov
Mumbai, August 15 According to the sources, a section of the government has mooted the idea of providing a rehabilitation package for Enron's subsidiary — the Dabhol Power Company (DPC) — after the U.S. power major offloads its share to another investor. No decision, however, has been taken on this as yet, sources said. So it is not yet clear if the DPC plant will be brought under the Board for Industrial and Financial Reconstruction (BIFR) and whether a rehabilitation package is being prepared to rescue the project. The 65 per cent stake Enron has in the DPC project has been valued at $1billion. The Maharashtra Government has already contested this valuation, claiming it is inflated. It, however, has not provided its own valuation of the project. There are a number of suitors wanting to pick up Enron's stake in the project. US-based AES Transpower had expressed interest a few months ago. Ratan Tata, Chairman of the Tata group, also expressed interest, saying the conglomerate may consider picking up Enron's stake when the time comes. What could, however, stymie DPC's future is the high power tariff charged by it. At peak production, DPC's power was originally priced between Rs. 4 and Rs.5 per unit. Last July when the offtake of power by the Maharashtra State Electricity Board (MSEB) fell sharply, it was asked to pay Rs. 7.90 for each unit of power. Since then, Enron has agreed to reduce the tariffs to Rs.3.75 per unit, but has not found any takers from among the country's state electricity boards. Sources said initial negotiations with financial institutions to the project indicate that funds for the project may be provided at lower interest rates. At a later stage, agreements signed by DPC with the suppliers of equipment and raw material like naphtha and liquefied natural gas (LNG) would have to be reworked to bring down prices. So far, Enron has refused to consider this scenario. Recommendations made by former bureaucrat Madhav Godbole, who is heading the committee that is looking into the power purchase agreement (PPA) signed between the DPC and the MSEB, have been debunked by Enron. The $3 billion project has run into trouble after the MSEB defaulted on payments to Enron, saying the tariff charged was too expensive. The plant initially generated 740 mw of power in the first phase and had enhanced its capacity to 1444 mw. Its original schedule was to attain the full capacity of 2,184 mw in October after the completion of its second phase.
IANS
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Limitations of insurance as a business DESPITE almost a decade of the economic reforms, we have all the problems that the IMF-World Bank directed “structural adjustment programme” claimed it would cure. In spite of the problems of steep consumer price inflation, large trade and current account deficits, burgeoning interest payments by the government and a prolonged industrial recession, the strategy of this programme is for further liberalisation. But, in the specific context of insurance business, under the (WTO), there is as yet no provision to force India to open up its insurance sector. Insurance is a protected market even in advanced industrial countries. In the U.S., Germany, France and Switzerland markets, the insurance industry enjoys special protection against inroads from foreign insurance companies. In the WTO negotiations in financial services and insurance, a final settlement could not be reached mainly because many of the industrial countries did not agree to open up their insurance industry. But, India has decided to surrender in advance of the WTO agreement of its formal, semi-judicial processes. In fact, the government can find little excuse to privatise India’s public sector Life Insurance Corporation (LIC) and General Insurance Corporation (GIC). The two firms done well financially and pay the government substantial dividents and taxes. The pool of funds from the premiums they gather is a source of sizeable funds for state investment. Their ratios of outstanding claims to total claims, and other indicators of efficiency, are far better than international averages. But, even then, the Insurance Regulatory Development Authority has formally opened up insurance to the private companies. The turnaround in the BJP initial position regarding insurance came when the Finance Minister Yashwant Sinha had declared in October 1998 itself that there had been “an absence of long-term resources for infrastructure development in the country” and “insurance would provide long-term funds for infrastructure development”. Then, the Union Home Minister L.K. Advani also remarked that “the country needed at least $ 25 billion every year to upgrade the infrastructure sector. That this was possible only if foreign investment was allowed into the insurance sector.” In a way, demand for insurance depends on disposable income and the higher this income the larger the share of insurance. General insurance penetration is relatively low in India as its non-life insurance penetration is below what we should expect for its income level. At any rate, general insurance firms will have to keep their investments relatively liquid, so a rise in their premium income would not translate into much long-term funds for infrastructure. Since its nationalisation, LIC has spread its branches in rural or semi-urban areas (such branches now constitute 48 per cent of the total), where the percentage of lower-income households is greater. All this has helped reach life insurance to millions of middle and lower-middle class households. In other words, LIC has gone to a certain extent beyond the profitable market, into low-profit areas, and that would not be considered an attractive market by foreign firms. Had the government been genuinely interested in increasing insurance penetration, it could long ago have instructed the State Bank of India to enter into a joint venture with the LIC. Instead, the SBI is to enter the life insurance sector as a competitor with the LIC — in a joint venture with a foreign firm, enabling that firm to reap the benefits of the SBI infrastructure. Ironically, it is the very infrastructure built up over decades by the public sector that will be employed against the public sector. The opening up of the insurance sector has nothing to do with getting more funds for infrastructure. In fact, “funds for infrastructure” is merely a post-factor alibi. The surrender of the most profitable insurance sector to foreign companies vitally harms the national interest as it affects insurance employees, hands over control of an important part of national savings to them by allowing them to reap profits in speculative and remit dividends abroad. Without ignoring the failures of the public sector, it is true that when insurance firms are state-owned, the pressure of public opinion can force the government to subject their profit motive to directive in the public interest. Before nationalisation, private sector insurance firms in India focussed on solely urban areas and the wealthy. Whereas, after nationalisation, the life and general insurance firms have substantially covered the urban middle, even lower-middle, class and have made a dent in the rural areas, cross-subsidising their poorer clients with the profits made on the wealthy and corporate clients. The insurance industry has to be judged as a means to an end. The end is social and economic security, so that an individual (or a firm or a co-operative) is protested against serious financial loss in various eventualities not of his/her own making. In a rationally organised society, rather than leave it to each individual, society itself would make collective provision for the eventualities in the lives of individual members. The insurance industry provides security only according to a contrast, not according to objective need. All this is no substitute for comprehensive social guarantees, but it also stands in contrast to the operation of private sector firms. Now, however, the privatisation of the insurance sector in India will effect a further attack on the already limited social claims of the working sections, apart from diverting a sizeable part of the nation’s savings to the control of foreign firms.
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Relief for bakery units soon Chandigarh, August 15 Following the approval by the Chief Minister, the memorandum will be submitted to the Council of Ministers for final approval. When contacted, Mr Tikshan Sud, Minister of State for Excise and Taxation, said the department had proposed sales tax only on those bakery items which are baked by rotary machines or automatic plants. There is , perhaps, only one such automatic plant at Rajpura. The bakery and Halwai items prepared manually and through small plants will be given exemption from the tax. While listening the grievances and problems of traders, businessmen and others at Ludhiana on May 15, Mr Badal had promised to grant such an exemption on “halwai” and Bakery goods. However, by granting exemption, Punjab will violate the national consensus on the floor rates of sales tax on various items. As per the national consensus, the sales tax rate on bakery and “halwai” goods is 8 per cent. The department authorities concerned have reportedly conveyed to the Chief Minister’s office about the implications of the violation of national consensus sales tax floor rates. Already, Punjab has violated the national consensus by lowering the sales tax on diesel from 12 to 8 per cent, pesticides from 4 to 2 per cent and fertilisers from 4 per cent to nil. Recently, the Union Government had warned the Punjab and several other states for the violation of the floor rates on these items. Punjab was asked to restore the floor rates by July 30 or face the action. Informed sources said the Punjab Government had decided to ignore the Centre’s warning for the time being. As the restoration of floor rates on fertilisers, diesel and pesticides will hit the farming community, which is a vote bank of Mr Badal’s party, the Government is not prepared take such a risk because of the coming Assembly elections in the state. The Government may also lower the sales tax on sports goods from 3 to 2 per cent and also do away the furnishing of certificate to get exemption of the sales tax on PVC pipes used for installing tubewells for agriculture purpose. The government is ready to amend the section 14( B) of the Sales Tax Act by which penalty is imposed on those who cross into the state without furnishing the required information at the tax barriers in the state. As per the existing provision of the Act, it is mandatory for the authorised officer to charge at least 50 per cent of the total value of the goods, on which tax was evaded, as penalty. There is no discretion for the officer concerned in this connection. A number of times, even those who have all relevant papers and had paid the tax as per rules have been fined because they unintentionally crossed into the state without furnishing documents at the barriers. Recently, a truck loaded with material belonging to the government was fined Rs 8 lakh for not providing required intimation at the barrier. Certain parties, victims of these strict provisions, had also approached the Punjab and Haryana High Court which directed to the department to find a solution of this problem so that genuine parties might not face unnecessary harassment. Sources said the government had prepared an ordinance to amend the section 14(B). However, as the session of the Punjab Vidhan Sabha is to be held next week, now a Bill would be introduced in the Assembly to amend the relevant part of the Act to authorise the Excise and Taxation Commissioner, Punjab, to decide such cases on merit and not to impose the penalty clause in case it is established that the violation on the part of the party concerned was bonafide and not intentional.
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Coke may rethink P&G venture New York, August 15 In February, Coca-Cola and P&G, the consumer products giant with such products as Crest toothpaste and Tide laundry detergent, announced plans to create a stand-alone enterprise to develop and market juices and salted snacks. Atlanta-based Coca-Cola said it would bring its Minute Maid juices, Hi-C, Five-Alive and Fruitopia drinks to the table, while Cincinnati-based P&G’s Sunny Delight juice drinks and Pringles snacks would be part of the new stand-alone company. “Based on the continuing discussions with P&G, we anticipate that the nature and terms of any transaction that may result will differ materially from the transaction originally announced in February 2001,’’ Coca-Cola said in its filing. “Both parties intend to continue working together to complete a mutually beneficial transaction.’’ The company went on to say that it undertakes “no obligation to update or revise the statements’’ made regarding the P&G venture. When P&G reported its quarterly results last week, the company told analysts that it was still working on coming up with a final agreement with Coke that was satisfactory to both parties. Since February, several analysts have said the deal seems like much more of a gamble for Coca-Cola than for P&G. “We have long held the view since this (joint venture) was first announced that it was a mistake for Coke to enter this (joint venture) across many fronts,’’ Sanford C. Bernstein’s William Pecoriello said in a research note issued yesterday, on the heels of Coke’s quarterly filing. Pecoriello said he would view any reversal of the deal or modification of the current terms as a short term negative and longer term positive for Coke and a negative for P&G. He said a change in the deal “could create some uncertainty as Coke shows it is still “tweaking” its strategy and its transition isn’t complete.’’ As for P&G, Pecoriello sees Pringles and Sunny Delight “hindering’’ the company’s need to focus on its key areas, such as fabric care and beauty. Coca-Cola has shuffled its management decks three times in the past 18 months, including departures of key executives. Meanwhile, it faces increased competition from PepsiCo Inc., which has been boosting its lineup of noncarbonated drinks, most recently with its high-profile acquisition of Quaker Oats Co. And its coveted Gatorade sports drink brand.
Reuters |
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MindTree gets $40m from venture fund New York, August 15 MindTree builds affordable IT business solutions for customers through a network of development centres. The company, launched by a team of executives from Wipro Technologies, Cambridge Technology Partners, Lucent Technologies and KPMG, is co-headquartered in Somerset in New Jersey and in Bangalore. "This second round of funding will allow us to continue our global expansion and to strengthen our thought leadership position, particularly in concurrent software development," said Subroto Bagchi, MindTree's Vice-Chairman and President for America. According to the company, which projects a revenue of $231 million by 2005, the second round of capital inflow will also be used to build its infrastructure in the USA, Europe and Asia.
IANS |
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Petro product exports vault ten-fold New Delhi, August 15 The rise in product export was mainly attributed to slowing growth in domestic consumption which saw a less than 3 per cent growth rate in 2000-01 as compared to 7.2 per cent growth rate in 1999-2000, official sources said. Petrol export rose sharply to 1.202 million tonnes in 2000-01 as against 131,000 tonnes last year. Besides naphtha export rose four folds to 2.882 million tonnes from 583,000 tonnes in 1999-2000, sources said. India began exports of Aviation Turbine Fuel (ATF), High Speed Diesel (HSD), Fuel Oil and Coke in 2000-01. It exported 160,000 tonnes of ATF in 2000-01, 1.597 million tonnes of HSD, 508,000 tonnes of fuel oil and 1.601 million tonnes of coke in 2000-01, sources said. There was a quantum increase in exports as a direct resultant of domestic industrial and economic slowdown which saw marginal increase in petroleum product consumption. Total petroleum product consumption in the country rose by 2.8 per cent to 99.84 million tonnes in the reference period as opposed to 97.08 million tonnes in the previous year. Consumption of petrol increased 11.9 per cent in 2000-01 to 6.613 million tonnes as opposed to 5.909 million tonnes in 1999-2000, diesel consumption fell 3.4 per cent to 37.958 million tonnes in 2000-01 as against 39.295 million tonnes in the previous fiscal, they added.
PTI |
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Telco open to hive off Indica project Mumbai, August 15 “We will separate the Indica project at an appropriate time or when we get a strategic partner for it...earlier several foreign companies had evinced interest for a joint venture. We have consolidated now and will look at opportunity as it comes,” Tata told shareholders at the company’s 56th stormy Annual General Meeting here. Over a shareholder’s query, he said Tata Sons were quite “vulnerable” to takeovers with a 25.6 per cent stake in Telco. “This is certainly not a safe level and we may increase our stake close to 50 per cent. Maybe others could also chip in...nothing is on cards as yet. The increase can be by way of creeping acquisitions over the years as well”, Tata told reporters after the meeting. Currently, apart from Tata Sons’s stake, Telco’s shareholding is financial institutions-40 per cent, Daimler Chrysler at 10 per cent and rest 24 per cent are with the public.
PTI |
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India’s gold
demand rises by 7 pc Mumbai, August 15 The total demand for the first half of 2001 was 490.4 tonne, showing a rise of 17 per cent over last year’s first half figure of 417.8 tonne, a World Gold Council (WGC) statement said. The official imports during Q2, 2001 at 177.2 tonne, displayed a rise of 33 per cent over the previous year’s Q2 imports of 133.4 tonne. Meanwhile, unofficial imports fell sharply due to the reduction in import duty from Rs 400 to Rs 250 per 10 gram at the end of February, 2001, which encouraged inflow through official channels, WGC said. As usual, imports for Q2 were initially boosted by heavy seasonal buying during marriages and other festivals. However, in the previous year, 2000, number of marriages was sharply reduced due to low number of auspicious days for weddings in the Hindu calendar.
PTI |
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Rang TVs Oswal Agro Markets closed |
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