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Monday,
July 14, 2003, Chandigarh, India  
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Can the
Maruti IPO story be replicated in other PSUs? Punjab
ignores poultry sector Inflation
moves up to 5.32 pc Godrej
cream in Afghanistan |
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Bids for
NFL by month-end
PNB arm
to be merged with new company FICCI
women’s trade delegation to visit Pak
Market
likely to remain bullish this week
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Can the Maruti IPO story be replicated in other PSUs? New Delhi, July 13 Observers point out that while the Maruti IPO success story has definitely brought back the retail investor to the equity markets, it should not be seen as a generalised yardstick of investor confidence in all PSUs. The official line of thinking appears to be that small investors would prefer to be part of the ownership structure of public sector behemoths and this presented one good opportunity for the government to strike rich in the disinvestment process. Moreover, the IPO route narrows down the scope of opposition that could emanate from within the political establishment as it does not imply a sell-out to strategic investors. Some analysts, however, were not willing to buy this argument as retail investors especially in the wake of the securities scam consider several intangible factors before taking the plunge in the equity roller-coaster. The five companies CMC, Balco, IPCL, IBP and VSNL— from which the government has decided go for a public float is unlikely to carry the same weight of corporate brand equity as was the case in Maruti. Furthermore, analysts argue, unlike Maruti (identified by many as their first car), of these five companies, two are in the services sector ( CMC and VSNL), one ( IBP) is in retail marketing of petro products and the remaining two ( IPCL and Balco) are primarily into production of intermediate goods. “At least three of these companies, CMC, IPCL and Balco, derive their core competence from areas of operation which do not directly affect the final consumer. While CMC is into computer data-base administration, Balco is producing aluminium and IPCL is into petrochemicals. Given such a scenario, it is quite obvious that brand recall for the retail investor may not be as high as it was in the case of Maruti, a Delhi based analyst said. The decision of the government to go for a public float for divesting its residual shares in these companies appears to be rooted in the notion that these are now promoted by professionally managed big industrial houses. While CMC and VSNL is now managed by the Tatas, IPCL is managed by Reliance and Balco by Sterlite. Therefore, the argument goes, any retail investor, who is buying into the IPO of these companies actually gets an opportunity to be shareholders of one India’s finest industrial houses. Analysts said that while the argument holds ground, it would not be prudent to arrive at a gross generalization that the IPO route should hitherto be the preferred option for disinvestment of all PSUs. The Shipping Corporation of India (SCI) is a case in point. The government had to go for a second round of bidding as the first round failed to elicit any response. Even in the second round, it is reported that only four bidders have shown interest. Now if it is decided to float an IPO for SCI, the retail investor is unlikely to show interest as the shipping industry by its very nature goes through frequent cyclical motions, an analyst said.
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Punjab ignores poultry sector Chandigarh, July 13 According to a recent study commissioned by Rabobank International, “Outlook for the Indian poultry sector,” poultry meat is the fastest growing animal protein industry in India. It has grown at a compound annual growth rate of 12 per cent in the past 11 years and is expected to continue to grow at the similar rates. The study observes that the key factors that will play a crucial role in its development include a large population base, conversion from vegetarianism to meat eaters and increasing integration in poultry supply chain. It will reduce end prices to the consumers and make poultry products more affordable leading to higher per capita consumption of poultry products. Sources, however, claim that the higher taxes in comparison to other states, increasing cost of transport and inputs due to a fall in the area under maize feed and poor quality of poultry feed have affected its growth in Punjab. No doubt, Ludhiana, Amritsar, Jalandhar and Patiala are the main markets in the state, but in Haryana the Barwala belt and some towns surrounding the national capital have emerged as the main supplier to Delhi and other markets. The experts admit the per capita consumption of eggs and poultry meat in Punjab is much higher in comparison to the national average, but due lack of assured quality and affordable prices the industry has failed to reap rich dividends. Further the state has not made efforts to encourage the entry of big players and the sector was still dominated by small players. Says Ms Neeta Ramnath, the author of the Rabobank study, ‘‘The poultry sector needs more integrated players, especially in Northern India, to enable the lower and consistent prices across the year. Poultry prices in Southern India are almost half of those existing in many other parts of the country due to higher integration levels and better control over retail points.’’
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Inflation moves up to 5.32 pc
New Delhi, July 13 After hitting the fiscal’s lowest figure of 4.97 per cent in the second week of June, the point-to-point Wholesale Price Index (WPI) inflation had been continuously rising and it was only 2.67 per cent in the year-ago period, showing that living cost had almost doubled. The WPI rose by 0.2 per cent to 174.1 points during the latest reported week as compared to 173.8 in the previous week with primary articles and manufactured products’ prices rising and the index was 165.3 points a year
ago. The data from the Commerce Ministry gives only a partial picture as it is provisional and the final figures are higher than the reported ones.
— PTI
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Godrej cream in Afghanistan
Mumbai, July 13 “The company has launched its hair colour and fairness cream range in the virgin markets of Afghanistan, Somalialand and South Africa,” Godrej said in its annual report for 2002-03. It has also identified the Latin America and African region as key growth markets for its products. To bring down costs, Godrej has tied up on third party manufacturing in Bangladesh which will offer significant cost efficiencies and logistical benefits, it said. Exports of the company in fiscal 2002-03 amounted to Rs 8.3 crore of which about 37 per cent was from the soap segment and 63 per cent from the personal care segment. Godrej said the category accounted for 25 per cent of its total sales and 27 per cent of branded sales during 2002-03. The company’s offerings in the talcum powder and deodorant categories showed a declining growth rates while the fairness cream Godrej FairGlow’s sales are witnessing a longer gestation period, the report added. Through consumer-centric initiatives, Godrej was confident of minimising sector sensitivities and driving growth in toilet soaps category during 2003-04. Godrej, which offers its manufacturing facilities to leading FMCG companies to outsource part of their production, said the contract manufacturing business was on a decline with marketers
preferring to put up their own facilities in the tax-efficient areas.
— PTI
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Bids for NFL by month-end
New Delhi, July 13 Sources associated with the process said the final transaction documents would be circulated to bidders following clearance from the Cabinet Committee on Disinvestment to freeze the documents. The suitors are likely to be given two to three weeks to put in a bid which would be scrutinised by an inter-ministerial group and secretarial panel prior to obtaining cabinet clearance. The revised documents would also incorporate a clause allowing the strategic partner to dispose of the company’s assets for the purpose of modernisation. This follows a suggestion by Deputy Chairman Planning Commission K.C. Pant to allow the company to switch over to viable feedstock. The government also decided to dip into the company’s reserves to the tune of Rs 300 crore out of the total reserves of Rs 800 crore. An inter-ministerial panel headed by Additional Secretary Finance had earlier recommended drawing down reserves by over Rs 500 crores. However, the remaining reserves had been left untouched as the company’s two plants at Bathinda and Panipat would require at least Rs 150 crore each towards modernisation. At least four suitors including Tata Chemicals, Deepak Fertilisers and Indo Gulf group are reported to be in the fray for acquiring government stake. It would offer 51 per cent stake in NFL to a strategic partner, thereby diluting its stake to around 46 per cent.
— PTI
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Once an LIC employee, now
a millionaire This is the success story of Mr L.D. Mittal, Chairman of Sonalika International Tractors Limited at Chakk Gujran village of Hoshiarpur district, who saw potential of profit in commonly-used farm implements about 35 years ago. Mr Mittal said, “After setting up a small industrial shed, I conducted experiments for designing better farm implements while continuing with my job as an LIC employee. I was disheartened when 48 out of 50 threshers, were returned with complaints of faulty design. However, this motivated me to do better ”. Mr Mittal said his company had achieved top slot in the farm implements sector in the country within 10 years of its launch. “In 1996, I finally decided to set up a tractor-manufacturing unit and in 1999, an MoU was signed with Renault Agriculture, France, for technology transfer for the manufacture of tractors between 40 and 60 HP at Chakk Gujran plant of the company,” said Mr Mittal, adding it was the first Indo-French venture in North India. Renault Sonalika International Limited, another unit of the company, had bagged orders from countries like Australia, the European Union, South Africa, Ivan Coast and Bangladesh. He said the biggest achievement of the company was clearance for export of its smoke-free tractors to the USA by US environment protection agency.
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PNB arm to be merged with new company
New Delhi, July 13 “We have tied up with Principal and Vijaya Bank for launching a new AMC and we will merge our present AMC with the new company,’’ PNB officials said. The new AMC, likely to be named as Principal PNB AMC, will come into being by October as “we have to seek approval from investors, unit holders, SEBI and other authorities for this merger.’’ In the proposed company, Principal will be the majority stake holder with 65 per cent followed by PNB with 30 per cent equity and Vijaya Bank which will have 5 per cent stake. Principal had recently acquired 100 per cent ownership of the IDBI-Principal Asset Management Company by purchasing the IDBI’s 50 per cent stake for about $ 20 million. PNB, Principal Financial Services Inc of the USA and Vijaya Bank had recently signed an MoU for setting up five companies in life insurance, pensions and asset management businesses in India. Besides setting up an AMC, the three entities will set up a trustee company, a distribution company for mutual fund products, a life insurance and pension company and an insurance broking company. Barring the insurance business, the equity sharing ratio in the other three ventures will be same — Principal (65 per cent), Punjab National Bank (30 per cent) and Vijaya Bank (5 per cent). Principal first entered the Indian market in September, 2000, focusing on selling mutual funds and related financial services in India.
— UNI
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FICCI women’s trade delegation to visit Pak
New Delhi, July 13 “The women entreprenuers’ delegation will visit Karachi, Islamabad, Peshawar and Lahore and meet concerned ministers and senators to discuss trade related issues,” Chandra Garodia, leader of the delegation and chairperson of FICCI Ladies Organisation, told PTI. “There will be some cultural programmes also,” she said. The delegation will carry with it samples and brochures of products to facilitate business deals in focus areas like health food, cosmetics, jewellery, herbal products and fashion garments.
— PTI
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HSIDC term loans Chandigarh, July 13 A spokesman of the HSIDC said here today that the corporation sanctioned term loans worth over Rs 400 crore during the tenure of the present Government, out of which over Rs 230 crore has already been disbursed. |
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FIIs net buyers in equities PSIDC AP Solvex Malaysia Airlines Maxim Infosys PKF dividend IndusInd Bank |
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Jalandhar, July 13