 |
Monday, September 30, 2002,
Chandigarh, India  
|
Customise your second
innings in life |
|
|||||||||||||||||||||||||||||||||||||||||
Inflation
crosses 4 pc mark
Facilitation
centre to assist consumers
Block deals made news
last week
|
||||||||||||||
|
Daewoo: elusive buyers, apprehensive owners
LET’s start off with rubbishing a market canard- that a buyer gets one Matiz or Cielo free if he purchases five (the numbers keep varying as the rumour hops from one mouth to another). This is false and baseless. “Till last month we used to get nearly 50 calls a day asking us to clarify whether this really is happening. Such rumours were purportedly spread by our competitors,” says H.S. Saluja, a Chandigarh-based Daewoo dealer. The ground realities are that Daewoo Motor is facing takeover problems in India, the company has put up the shutters in many of its offices countrywide, most of the phone lines have been surrendered, dealers are dropping the company like hot potato. All said and done, these otherwise technologically perfect cars are finding few takers. Not even in the hand-me-down market.
Messy situation Sumit Passi, a former Daewoo dealer and now a Fiat one, recalls why he literally washed his hands of the Daewoo agency and a Cielo car he once owned. “Daewoo had uncertain future. The Government of Korea is interested in the takeover but for GM (General Motors) there are a lot of issues that perhaps need to be thrashed out. This made the whole Daewoo business really shaky and we were on a lookout for better prospects. So we bid adieu to Daewoo and joined hands with Fiat,” he says. “I don’t regret the decision but would like to point out that the Daewoo products were good. It’s unfortunate for the company to be in such a mess,” he adds. Recent media reports say that creditors of Daewoo Motors plan to write off 77 per cent of the $ 15.72 billion debt, paving the way for GM to take over the bankrupt company. In April this year, GM had agreed to lead a joint venture along with Japan’s Suzuki to revive the company as GM Daewoo Auto and Technology Co. is expected to be launched in October.
Indian subsidiary Sadly, Daewoo India is not a part of the deal and that is what continues to torment the purchasers. GM while proposing a 42.1 per cent equity stake in the parent company excluded Indian operations and will not even supply kits and components to Daewoo India’ according to a news agency. The Indian subsidiary had initially relied on GM taking over its NCR operations. But the US giant already has its presence in Gujarat. Industry experts opine that due to its own Indian business interests and huge liabilities involved (Rs 3,000 crore of debt, approximately) in the takeover, GM might put the whole Indian issue on the backburner. YJ Kim, marketing head of the company based at Noida, says that he is aware of the happenings in Korea. “We are hopeful that something good will come out of it,” Kim says, and adds that spare parts will not be a problem in near future at least. “Recently, we received two consignments of spare parts. Nearly 20 per cent of the parts are Korean, the rest are being made in India.” On being asked about the Indian company’s debt scenario and GM’s decision to take it over, Kim says: “Sorry, I do not have a clear idea of what is happening. I am just marketing the product here. Our bosses in Korea know better about all this.”
Daewoo India’s manager, sales and marketing, M. Ali agrees that sales recently have not been very good and dealers are looking elsewhere for better options. “We plan to combat all this by building up a team of at least 50 healthy dealers who might sell the cars side-by-side along with other ‘non-rival’ products like, say two-wheelers. For this we are looking at dealer feasibility. Then talks are on with GM and since the GM-Daewoo tie-up might start operations by October 1 in Korea so things might just work out well for India as fallout.” As far as the debt scenario goes, the company had said recently that it was hopeful of reaching an agreement with domestic financial institutions and banks on its debt portfolio. More recently, lenders had approached domestic carmakers to acquire assets of the ailing company. “We are talking and negotiating everywhere and are too hopeful for a solution,” Ali says.
No buyers Bad for a car company whose products became an instant hit when they were launched towards the end of the last century. Today Cielo has to be ordered to be purchased, Matiz sales have hit rock bottom and there is just one dealer in Chandigarh who is holding the fort. The same goes for cars on resale. A 2000 model commands just Rs 1.7 lakh (if there’s a buyer at all), much below other competitors in the same league. “Second-hand Matiz is not finding any purchasers and most of the Cielo buyers purchase it just to convert it to an LPG-run “personal commercial” (small-time businessmen and vendors) vehicle,” says Chandigarh-based car dealer. “Customers today have a lot of choice. Who wants to get caught in a quagmire deliberately,” asks Satpal, another car dealer. “Spare parts might become a big problem in coming years. These cars are worth a lot and because of panic that has started gripping Cielo and Matiz owners these are not (re) selling “properly.” With a small number of Daewoo cars why will even a local manufacturer give a back-up with spare parts,” Satpal wonders.
Good cars Car owners, on one hand, are apprehensive about the future and, on the other, vouch for the product’s reliability. “The car is very good. I purchased it in 2000. I do not face any difficulty though I tried selling it once but I found no takers. Since 80 per cent of spares are indigenous, I feel I might not face any problem in future. Not at least for next six to seven years,” says Sandeep Arora, a businessman. Kartar Singh, a plastics merchant, says it’s not the product’s fault if the company gets into a soup: “Korean products are reliable. I purchased a second-hand Cielo and it has proved good. I am hopeful that someone will purchase the Indian set-up and even the spare-part problem anxiety will be taken care of.” Owners are satisfied with the cars. New buyers are apprehensive just because they do not know the company’s fate. For the time being the market sentiment is wait-and-watch. The scene may change overnight once the Indian-operation dilemma finds a viable solution.
|
|
Insurance firms as catalyst for infrastructure investment A
glaring omission in the recent budget is the absence of positive action to trigger infrastructure investment through long-term domestic savings. The role of insurance companies as channels of long-term savings for fulfilling the infrastructure needs of the country has not received due recognition in the budget. Insurance firms have been at the forefront of triggering the infrastructure boom in several countries, making massive investment in roads, bridges, airports, railways, power plants, industrial estates and a host of long gestation projects. The 32 top life insurance companies in the world hold collective assets of US$ 5.3 trillion as of end 2000. The budget seeks to abolish the tax rebate of 20 per cent of the amount invested by taxpayers in designated avenues. This tax-rebate has at present a limited bias for infrastructure investment, directly or indirectly. Investors now claim tax rebate for investment for as short as three years through insurance policies or subscribing to infrastructure bonds. Issuers of most such securities qualifying for tax rebate have no compulsion to prove the end use of funds mobilized in identified infrastructure projects. This has led to such issues ending up supporting their general corporate treasury needs by lowering the average cost of funds. The proposal to abolish the incentive altogether for all those earning above Rs 5 lakh is a step in the wrong direction. We need positive fiscal measures to encourage long-term savings that can support investment in projects with long gestation. Japan has over the years provided a positive bias for long-term household saving, such as offering tax relief to funds parked in saving accounts opened by anyone without regard to income levels at post offices for long duration. This has resulted in postal savings accumulating to trillions of yen that flow into long-term projects. We need this positive bias to give a boost to our infrastructure. The Expert Group on Infrastructure set up by the government had recommended that our annual investment in infrastructure is now Rs 60,000 crore which should go up by three times by 2006, and that 85 per cent of the amount should be domestically financed. The life insurance companies are the best medium to play this role. Life insurance contracts for 10 years or longer should enjoy a strong fiscal support, through enhanced level of tax rebate at the hands of individuals. Those who take such long-term life cover are in fact providing for the financial security of their families, given our poor social security system. Life insurance companies have technical capabilities to evaluate the risks of long gestation projects. They have the skills and resources to monitor the completion of projects and the cash flows as per agreed financial covenants. Representatives of insurance companies sit on project monitoring committees in several countries to keep vigil on the usage of funds, and fulfilment of project funding conditions such as escrow mechanism or toll collections. In most infrastructure project funding today, especially projects promoted by state level agencies through public issue or private placement of debt, there is no worthwhile monitoring by any responsible outside agency. Such fund mobilisations are mostly backdoor borrowing by state entities to support their revenue budget. Involvement of life insurance companies would over a period raise the level of accountability of public projects. Life insurance companies prefer long dated investments. They wish to lower their asset liability mismatch by picking investments that have long-term horizon, since life insurance contracts are long term in nature. Insurance companies are keen to minimise reinvestment risks arising from the interest income they receive not finding matching fresh investment opportunities. Ideally they look for zero coupon investments of varying maturities, which would get redeemed at face value implying no reinvestment risk. We need to provide a positive bias for long-term life insurance contracts to receive liberal tax treatment for household savings. Only through sustained long-term savings that are channelised in productive avenues with the help of agencies such as life insurance companies, can we hope to raise the quality and standards of our infrastructure. The author is MD and CEO, SBI Life Insurance Co. Ltd.
|
Customise your second innings in life PLANNING for retirement needs a careful look at various aspects that are likely to cause concern after you cross the age 60 mark. While most people start thinking about retirement close to the actual date when they would cease to work, intelligent planning should be done way in advance says Mr. Y.R Sharma, Associate Vice President (Delhi Region) of Om Kotak Mahindra. With over two decades of experience in insurance and retirement planning. Customised solutions advocated
Concern about dying young Surveys have suggested that the fear of dying young is the most prevalent concern. But in reality the average age of Indians / longevity has increased over the years due to better health care, etc resulting in a need for more funds in the post retirement period. Since, a person can longer be expected to retire from his life style, insurance sector is cashing on this sentiment resulting in advertisements that emphasise the point "when I retire I’ll retire only from my office", says Mr. Sharma. It therefore pays to get funds both in lump sum (endowment) and periodically (annuity) to prepare one for the second inning in life. Insure both life and health Most insurance companies realise the importance of covering health and life together and therefore most policies available today either have the health factor bundled in with the policy or provide an opportunity to buy an add on. He therefore suggests that every insurance seeker must get a policy that covers both. His company has packaged the health factor that takes care of 12 vital diseases and promises to make payment upfront once the disease is diagnosed. Several policies require you to make payments and then make claims, so one should carefully study the terms and conditions of the claim. Sensitivity a mustThe opening up of the insurance sector has resulted in increased sensitivity on part of both the clients and the agents. Today, purely customised solutions are being offered, designed keeping in mind the persons paying capacity, number of earning members in the house, etc. Increased sensitivity and personalised attention has led to policies such as the K-CAP or the Child Advantage Plan in which both the insurer and the child covered, it is designed to meet the child’s future needs. Maturity value of this endowment can be as high as Rs 25 lakh depending upon the premium. Such policies offer add on such as the Life Guardian benefit where in case of the death of the premium payer, this benefit keeps the policy alive by waiving all future premiums. The same is true of another add on - the Accidental Disability Guardian Benefit. Look for dealer networkMr Sharma says that like any other industry, in the insurance sector too a quick response to a customers needs is a must. This factor becomes even more important once the customer is a retired person whose age and health may not permit him / her to make frequent trips to the company he / she has done business with. Therefore, it becomes imperative that before you make a commitment with a company that promises you financial security in your post retirement phase, everyone must look at the network of the company in the region where the person resides or plan to settle after retirement. Doing business with a company that has a larger presence is likely to address your problems quicker than a company whose staff is not located close to you. In conclusion Mr. Sharma says that everyone who is seriously planning their retirement must be open and frank with the people who customised solutions for them in a manner that they are able to work out their needs and requirement for the future and at the same time are realistic about their objectives so that they are met as planned. As told to Naveen S. Garewal
|
|
Government to phase out tax exemptions
New Delhi, September 29 The policy measures are likely to be part of Tenth Plan document being drawn up by Planning Commission, which would be submitted to the Prime Minister next month. The medium term fiscal measures of the Centre would be to eliminate all exemptions under corporate tax progressively, align Custom Duties with Asean levels and move towards a single Excise Duty structure. Sources said the government will also tighten the tax structure to phase out exemptions, especially to the small scale sector. In fact, the government is planning to eliminate all exemptions and concessions that distort the tariff structure of the country. Comprehensive computerisation of income tax systems and universal usage of tax identification numbers in monetary transactions would be made mandatory for facilitating tax administration, they said. Centre would also broaden the service tax net to ensure buoyancy in revenue collection. The government would also continue to implement the Expenditure Reforms Commission in progressively reducing fertiliser subsidy and elimination of petroleum subsidies.
PTI
|
|
Inflation crosses 4 pc mark New Delhi, September 29 The inflation rate for the week ended September 14 has risen to 4.03 per cent as compared to 3.77 per cent in the previous week. It was 4.60 per cent during the corresponding week last year. However, the wholesale price index (WPI) for all commodities (base 1993-94) during the week remained unchanged at its previous level of 167.8. The final WPI for all commodities stood at 165.7 during the week ended July 20 against the provisional index of 165.5. The inflation rate based final index worked out to 2.86 per cent as against 2.73 per cent based on provisional index.
UNI |
by Pushpa Girimaji Facilitation centre to assist consumers THE fourteenth anniversary of the apex consumer court last month provided consumer representatives with a rare opportunity to air their views on the working of the consumer courts in the country. And they minced no words in expressing their disappointment and frustration over the way these quasi judicial bodies had turned out. A full bench of the apex consumer court — National Consumer Disputes Redressal Commission — heard the consumer representatives, as one after another they gave vent to their unhappiness over the functioning of the Forums at the state and the district levels. They spoke about the repeated adjournments given by consumer courts at the behest of lawyers, the highly complicated procedures adopted by them, absence of adequate infrastructure, problems of enforcement of the orders of the courts and the overall delays in resolution of disputes. There was also concern over the fact that the compensation awarded by consumer courts was too meager in most cases to make any impact on the manufacturer or the service provider. In other words, the compensation failed to act as a deterrent, they said. In a bid to take stock of the working of the quasi judicial bodies, the apex consumer court had used the occasion of its Foundation Day to invite consumer representatives from different parts of the country, besides advocates appearing before these courts and the Presidents of the State Consumer Disputes Redressal Commissions. The purpose of the “Open House” was to facilitate free exchange of views. As the President of the National Commission Justice D.P. Wadhwa put it, it was an occasion to draw up a balance sheet on the successes and failures of the consumer courts. And he got sufficient inputs from the consumer groups on what ailed consumer courts. As can be expected, one of the issues that dominated the discussion was the role of lawyers before these forums. Consumer groups, which have been demanding restrictions on the appearance of advocates before these courts, complained that the lawyers had turned even the simple, summary procedure before these forums, highly complicated and technical. They adopted dilatory tactics, thereby unnecessarily delaying the process of adjudication. The lawyers however, pleaded not guilty to the charges. One of them — a senior advocate- however called for introspection over the role of lawyers in consumer courts and suggested an internal mechanism for peer review. The Presidents of the State Commissions presented their case — they suffered from acute shortage of facilities, including secretarial assistance and many of them were working under the most difficult of circumstances. The National Commission’s verdict was that every effort needed to be made to ensure that the common man/woman for whose benefit these forums had been constituted, did not lose faith in the consumer justice system. Justice Wadhwa in fact shared the anguish of the consumer groups, when he said that during his tour of various forums in the country, he had been receiving innumerable complaints about how the forums were fast becoming civil courts. This had to change. He also pointed out that it had not been possible for the National Commission to exercise proper administrative control over the State Commissions and the District Forums under Section 24B of the CP Act. Unfortunately, the State Commission which had supervisory powers over the District forums in their States did not exercise proper supervision and control, he said. He also expressed concern over the fact that the National Commission was being increasingly used by large enterprises to settle commercial disputes with service providers such as insurance companies and banks. In fact the large number of cases against insurance companies made him wonder whether this was another insurance court. Many of these cases involved large amounts of money and elaborate hearings, taking a great deal of the Commission’s time. This was perhaps not the intention of the law makers, who drafted the Consumer Protection Act to provide succor to the common man, he said. Justice Wadhwa also lamented that even though the CP Act provided for class action suits, wherein a large class of consumers with a similar complaint can file one common petition seeking relief through a common order, there were very few such cases. In the United States for
example, consumers used class action suits extensively to claim damages from manufacturers and service providers against defective and unsafe goods and deficient services, he said.. There were also some constructive suggestions from the participants on improving the functioning of consumer courts. These included creation of a “facilitation-cum information” center attached to every consumer court to assist consumers in filing complaints, orientation courses for judicial members of consumer courts who tended to treat these quasi judicial bodies as civil courts, a grievance cell at the apex court to receive complaints from consumers on the working of the courts at all levels, and a thorough review of the functioning of the courts at the district and the state levels. The exercise should be aimed at cutting down on delays and simplifying the procedure, it was suggested. All in all, the Open House provided a good forum for stocktaking and hopefully, will mark the beginning of a process of improving the functioning of these courts. |
by Lalit Batra Block deals made news last week MARKETS
shrugged off the terrorist attack on a temple in Gandhinagar (Gujarat), on Tuesday and a subsequent bandh on Thursday. The 30-share Bombay Stock Exchange Sensitive Index (Sensex) settled with a gain of 12.91 points for the week at 3,037.26. The S&P CNX Nifty closed with a gain of 6.85 points at 976.45. Barring a few major block deals, institutional activity was thin. Technology stocks remained range-bound on the back of weak global markets, with the Nasdaq plunging to a six-year low on Tuesday. Concern over the sluggish progress of the government’s PSU divestment program after the delay in the sell-off of two state-run oil firms HPCL and BPCL and a surge in global crude oil prices, amid fears of an US-Iraq war, have affected the bourses in the last few trading sessions. ICICI Bank On Thursday, ICICI Bank negotiated a block deal of 10.1 crore share on the BSE. The huge block deal for 10.1 crore shares comprised placement of equity shares that were held by a special purpose vehicle (SPV) of ICICI Bank, to a couple of leading foreign institutional investors. These shares constituted 16.5 per cent of ICICI Bank’s equity. The block deal worth Rs 1,300 crore was probably the biggest ever such deal executed in the secondary market. The block deal took place at Rs 130 per share. The ICICI Bank share closed the week at Rs 137.85. HDFC A block deal of about 3 lakh shares of HDFC took place on BSE on Thursday. It is rumoured that an index based fund tracking the Sensex bought the stock for adjusting the portfolio in tune with the change in the Sensex’s composition. HDFC will replace Reliance Petroleum (RPL) on the benchmark index with effect from October 10, 2002 when the merger of RPL with Reliance Industries becomes effective on the bourses. The country’s premier housing finance company is, however, witnessing increasing competition from others in the segment, specially from banks which are now aggressively playing in what is considered a lucrative area. The stock has gained over 6.6 per cent in the last one month to close at Rs 600 on Friday. Coming fortnight Fundamentally, the market lacks at trigger and clear direction. The marco factors of the Indian economy are also a cause of concern. Technically, the market is going through a corrective bounce and could lift the index to 3075 or to higher levels. In case the Sensex manages to cross the 3075-3080 range, the market could move up and test the 20 DMA. As far as IT stocks are concerned, investors are keenly awaiting the results and future guidance that software companies give at the time of announcing their second quarter results. Some defensive buying may be witnessed in FMCG and cement sectors.  |
 |
| Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Editorial | | Business | Sport | World | Mailbag | In Spotlight | Chandigarh Tribune | Ludhiana Tribune 50 years of Independence | Tercentenary Celebrations | | 122 Years of Trust | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail | |
