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Saturday,
August 17, 2002, Chandigarh, India  
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Govt
permits banks to sell defaulters’ assets Anti-dumping
duty hits acrylic industry Amritsar
girl wins Matiz ‘Private
players no challenge to LIC’ |
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Coke to
divest 49 pc stake M &
M goes for export US
investors not aware of Indian firms ICICI
facilities for defence personnel ABN Amro
ties up with UTI Bank
Union Bank: invest at your risk
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Govt permits banks to sell defaulters’ assets
New Delhi, August 16 The decision, taken at a Cabinet meeting, would also permit banks and FIs to create a market for the securitised assets and help improve their asset-liability management. The re-promulgation of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance 2002 will enable banks and FIs to set up asset reconstruction companies which will buy NPAs from banks and securitise them in exchange for debenture units. “This step is necessary to tackle the problem of NPAs assets with the bank and will mark major reforms in the financial sector”, an official spokesperson told reporters after the meeting. The ordinance will, however, not cover agricultural loan and small loans. The re-promulgation of the Ordinance was necessitated in view of the disruption in Parliament as a result of which the Bill to replace the ordinance could only be introduced in the Lok Sabha but could not be passed. The Bill introduced by Jaswant Singh in the recently concluded monsoon session was undiluted and contained stringent provisions to hasten recovery of defaulting loans and mounting NPAs of banks and FIs. The legislation was aimed at changing the legal system for securitisation and empowering banks and financial institutions to take possession of the securities and to sell them without the intervention of the court. Based on the recommendation of the Narasimham Committee report on financial sector reforms, the Bill will enable banks and FIs to realise the long-term assets, manage problems of liquidity, asset-liability mis-matches and improve recovery. According to statement of objects and reasons of the Bill, banks and FIs are empowered to take over the management of companies in the event of default of loans. The Bill, which was to be initially applicable to banks and FIs, empowered the Centre to extend it to non-banking financial companies and other entities. It will, however, not be applicable to security interests in agricultural lands, loans not exceeding Rs 1 lakh and cases where 80 per cent of the loans are repaid by the borrower. There is also a provision to set up a central registry by the Centre for the registration of transactions relating to securitisation, asset reconstruction and creation of security interest. The legislation also provides for appeal against action of any bank or FIs to the debt recovery tribunal concerned and second appeal to the appellate debt recovery tribunal.
PTI
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Anti-dumping duty hits acrylic industry Ludhiana, August 16 According to Mr Madan Mohan Vyas, president of the Ludhiana Spinners Association, they have made a representation to the designated authority in the Directorate General of the Anti-Dumping and Allied Duties in the Ministry of Commerce and the next date for hearing has been fixed for August 19. Mr Vyas said Ludhiana is an industrial town with about 150 acrylic spinning units. Of these about 50 units in the small scale sector are shut down. It constitutes a cluster of the textile industry like knitting, weaving, hosiery, garment fur and pile fabric, mink blanket, dyeing and procession engaged both in the domestic as well as the export market. There are five acrylic fibre manufacturing units in the country. They include IPCL, Pasupati Mills, CFCL, Indina Acrylics Ltd and Vardhman. The total annual production of these units is about 1 lakh metric tonnes with both shrinkable and non-shrinkable fibre. Mr Vyas claimed that these plants are not able to compete with the world market neither in quality nor in pricing. About 30 per cent of the total acrylic consumed in the country has to be imported. The FAFM managed to get anti-dumping duty on import of acrylic from 14 fibre producing countries of the world, allegedly after furnishing insufficient information and making unjustified representations. These manufactures are creating artificial demand buying yarn from the market to create artificial shortage of yarn, making erratic supplies of fibre, hiking prices on their own and depriving the small scale segment a level-playing field. Spinners are demanding the withdrawal of anti-dumping duty on imports of acrylic fibre from the UK, Germany and Bulgaria, Thailand, the USA, Korea, Japan, Portugal, Spain, Italy, Mexico, Formosa and Turkey.
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Amritsar girl wins Matiz Ludhiana, August 16 The function to award the winners of the contest was organised by Vardhman this morning. In the second prize category, Tanishq Jewellery worth Rs 45,000 each, was won by Ms Nirmala from Jind, Ms Sunita Rani from Kaithal and Ms Sushma Mahendru from Ludhiana. The other winners were Ms. Sushma Singh & Ms Motia Devi Chawla from Faridabad, Ms Surinder Virk from
Karnal, Ms Usha Devi from Padrauna and Ms Bibbo Devi from Rai Bareilly each won a LG washing machine in the third category. In the fourth prize category, Ms Chandra from Saharanpur , Vandana from Mandi, Ms Gyanti Sharma from Patiala, Mr Surinder Prasad from Muzzaffarpur, Ms Sadhna Mathesia from Mahrajganj, Mr. Hardeep Singh Sarpanch from Assandh and Ms Jasbir Kaur from patiala each won Aiwa Music
System in the fourth prize category. In the fifth prize category the winners were given IFB microwaves. Vardhaman had launched this scheme last year on August 15 to spread knitting habits among both the ladies and school children. School children were involved in a number of competitions. It was targeted towards
school going children because learning can be best imparted in schools, felt Mr Sachit Jain. Out of 1,00,00 students from 500 school. 36 students won prizes. From Ludhiana, Nikhita from D.A.V. Public School and Sheenam Jain from Sacred Heart Convent School won third prize each.
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‘Private players no challenge to LIC’
Jaipur, August 16 LIC Executive Director (Personnel and Industrial Relations) P.K. Bahal told newspersons that the Corporation had a total of 13.80 lakh policy holders across the country till now. As a large segment of 100 crore population in the country still remained uncovered, opening of life insurance business for private players would make it more competitive and help it reach more people, he maintained. Now apart from LIC, there were a dozen private companies in the field, Mr Bahal said, adding that, however, they cannot match the Corporation’s network that had 120,000 employees and about 8,000 agents across the country. Moreover, LIC had a total of 54 products while these private companies had only 19 products, he pointed out. The Corporation has been expanding its business activities within and outside the country, Mr Bahal said, adding that three new products were launched by LIC last month. Last year, 2.32 crore policies were sold by LIC, he pointed out. The LIC had 98 per cent business in the field and it also fulfilled its social obligations too, he said.
UNI
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Coke to divest 49 pc stake New Delhi, August 16 The disinvestment will made in favour of bottlers, employees and public. The announcement of the company comes a day ahead of August 17 — the deadline set by the government. A statement issued by the company said the 39 per cent stake will be divested to private investors and bottlers, 10 per cent would be offloaded in favour of the company’s employees. ICICI Securities and ABN Amro Corporate Finance will be the advisors while Amarchand Mangaldas will be the legal advisers. “The disinvestment will be made on a private placement basis. Shares will be offered to employees, trusts, present and former Coca-Cola bottlers, suppliers , business associates and private investors”, the statement said. While the company did not specify the time frame, the statement said Hindustan Cola holdings, which own and operates 26 plants and 60 distribution centres, would complete the disinvestment process in a short span of time. “We are happy to bring in significant Indian ownership and broad-base stakeholders in our beverage business like we have done elsewhere around the world. It certainly will fuel the further integration of our business into Indian environment and into the local communities”, the statement said.
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M & M goes
for export
Kolkata, August 16 Company’s Vice-President (Marketing, automotive sector) Rajesh Jejrikar said here today that the company had targeted Indonesia, Malaysia, Russia, South Africa and China as immediate destinations as part of its plan to expand business. Launching “Scorpio”, the latest model of utility vehicle to roll out of the M & M stable in the city, Mr Jejrikar also said the company was at present looking for suitable alliances in those countries for setting up joint ventures.
UNI
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US investors not aware of Indian firms
Washington, August 17 Economic reports point to a weakening U.S. economy even as Indian issues remained steady. Even though U.S. investors were not scrambling to buy shares of companies like Infosys, Wipro, or Satyam, analysts believe that's because American investors are not convinced of their stability. Old time blue-chip companies rose higher and the Dow Jones Industrial Average closed more than 33 points higher closing at 8745.45 in a four-day rally following a sinking week before that. Nasdaq, representing largely tech companies, fell at least 10 points to 1,306 even though it showed a rise for the week as a whole. When investors thought things could not get any worse with WorldCom, the company announced an additional $3 billion accounting irregularity wiping out its year 2000 earnings, raising its total shortfall to $7.2 billion. But the doubled financial restatement did not faze investors who were on a buying spree this week. Unlike past one-day gains in the market, in this week's showing the market seems less intensely focused on accounting malpractices and concentrated more on underlying economy, which according to the latest productivity report continues to be slow. Infosys Technologies closed at $52.21 after a slight rise to $53 in morning trading. Wipro made a slight gain closing at $24.90. Satyam Computer Services closed trading a tad higher than it began at $8.81 today. "Indian companies have been much more stable on Wall Street than American companies and companies founded by Indian Americans — like Juniper or Sycamore," noted Anirban Basu, Director of the Regional Economic Studies Institute near Washington. Infosys is down from its highs of $300 to $50; Wipro is down to $22 from the heydays when it was over $65 a share. "But even with those very astonishing losses, the losses among the American companies like Juniper have been even more severe," Basu pointed out. Computer Associates that has as its CEO Sanjay Kumar, is down to $8 from over $70, he noted. And Sycamore Networks, founded by Gururaj Desh Deshpande, is down from highs of $170 to $3. "So as it turns out, the America-based companies owned by Indians have suffered much more. They more fully participated in the American tech bubble, and now that it has burst, they have been relatively more impacted than the Indian companies," Basu emphasised. "But this is not to say the Indian companies have not suffered losses," he was quick to add. However, Indian companies may have done better on Wall Street if awareness about their stability was more widespread among American investors. "The mystery here is why does Infosys have PE (price earning) ratios below the average for its segment of the technology industry," Basu questions. Other companies that are American and occupy the same industry segment as Infosys have higher PE ratios. "That is telling you that they still have to continue to try to convince the market that they are not only viable but a very smart investment," Basu emphasised. It felt good to see Indian companies holding their own even though they have suffered in the tech decline, even though they are younger companies and India is perceived as a generally riskier market, watchers say.
IANS
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ICICI facilities for defence personnel Bathinda, August 16 Mr Anand Kumar, Regional Head, ICICI Bank, in a press note issued here today said that the multi-city chequebooks would facilitate the fund transfer for the defence personnel, who were transferred frequently. These have been printed specially for them and carry representative photographs of the three armed forces. He said the bank would provide true anywhere banking to the defence personnel. Mr Kumar said the bank planned to install ATMs at Halwara and Adampur shortly.
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ABN Amro ties up with UTI Bank
Ludhiana, August 16 Speaking on the occasion Dr P.J. Nayak, CMD of the UTI Bank said “we feel that shared networks will be the future of the ATM industry, as this will minimise geographical overlap of ATMs and provide better coverage to customers. At the same time, network sharing helps the banks to develop economics of scale and minimise the cost of servicing their customers.” Mr Romesh Sobti, EVP and Country Representative, ABN Amro Bank, India said, “we are happy to announce our tie-up with UTI Bank for sharing the ATM network of the two banks.
TNS
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rc
Union Bank: invest at your risk Issue opens: August 20, 2002 Issue closes: August 28, 2002 Size: Rs 288crore Price: Rs 16 Listing: National and Mumbai Stock Exchanges Banking stocks have caught the fancy of investors for quite sometime now. They have been consistently outperforming the Sensex. The success of Punjab National Bank’s IPO in March was just the trigger public sector banks were waiting for. Since then, a number of them have announced their IPO plans. Stringent capital adequacy norms mandated by the RBI is also forcing PSU banks to enhance their asset size. On the other hand, the government has stated it will not infuse fresh capital into these banks. Also, RBI does not allow banks to raise Tier II capital through the subordinated debt route. It is against this backdrop that Union Bank of India has made its IPO. The present issue of equity shares is being made to augment the long-term resources of the Bank and meet its future capital adequacy requirements. The net profit for the year ended March 31, 2002 has grown by approximately 67 per cent mainly due to growth in treasury profits, which may not be sustainable in the future years. Further, the bank faces pressure on income earned as the annual growth in interest income is 7.57 per cent in FY 2002 as compared to the annual increase in interest income of 12.6 per cent in FY 2002. The bank has, in addition to sustaining the normal growth in advances embarked on a strategy to diversify its income streams through a number of new products and services to maintain growth. A hefty 13 per cent of its industry loan book is accounted for by chemicals and dyes; iron and steel constitutes 11 per cent; and textiles make up around 10 per cent. And that could be a bit of a problem: most of them are plagued by evaporating demand or oversupply. Though net NPAs to net advances have reduced to 6.26 per cent now from 7.66 per cent in 1998, the ratio is significantly high. 44 per cent of its NPAs are covered by provisions. With the pluses balancing the minuses, the determining factor for the success of this IPO is its pricing. As far as the offer price is concerned, it is valued at 1.8 times FY 2002 earnings, which compares favourably with the average P/E of PSU banks of 3.6. The price to book ratio is 0.35 times. By that yardstick, it does appear that the issue has been priced just right. Besides, Punjab National Bank, a comparable bank has had a sensational run at the bourses. While that alone will definitely not ensure a good run for UBI at the bourses, it does reflect the demand for comparatively lower priced banking stocks with not necessarily exceptional, but yet fair growth prospects. And that, at the end of the day, is what UBI represents. Those with the ability to bear risk could consider exposure to this issue hoping that the rewards could come as early as on listing.
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