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Monday,
August 4, 2003, Chandigarh, India  
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Industry fears job quotas in private companies will hit growth
Lanka offers market for Indian industry
IBM may shift 3m jobs overseas
IFFCO withdraws from NFL race
India’s top CEOs want VAT and disinvestment AirTel may raise long distance SMS charges |
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Inflation goes down to 4.59 per cent
Market remains clueless as tax raids hit investor confidence Software Auto ancillary FMCG
Hyundai to recruit 1,000 workers
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Industry fears job quotas in private companies will hit growth New Delhi, August 3 Industrial groups and analysts say the suggestion by the Congress, the first by any national outfit, will make the industry less competitive against its rivals. "In a globally competitive atmosphere there is no way you can have such reservations. It is absurd," said Jayant Bhuyan, Secretary General of Assocham. "We understand there is a need to create more job opportunities for educated and disadvantaged groups. But it can't be achieved by using tools like reservation," Bhuyan told IANS. He warned that if the proposal becomes a reality, companies will lose their competitive advantage against their rivals. And investors, even domestic ones, will think twice before investing their money in the private sector. India has maintained quotas for socially disadvantaged classes in public sector jobs and educational institutions for more than half a century. The Indian Constitution established quotas in government jobs and educational institutions for members of Scheduled Castes and Scheduled Tribes with a view to helping end centuries of discrimination against them. In 1990, Parliament passed a law reserving more than a quarter of all government jobs for "other backward classes". While supporters of the proposal to extend the job quota system to the private sector argue they are merely trying to make the social structure fairer, business analysts say the quota system has become a huge political enterprise. "Anything that comes in the way of flexible functioning of the labour market is not good for the economy," said Subir Gokarn, Chief Economist with Crisil. "One can think of proposing these kind of reservation when the economy is generating a lots of jobs. But this is not the case. The job market has been very weak in the last five to 10 years." Quoting study reports, the economist said organised private sector companies employed 8.57 million till the end of last year, marginally down from 8.75 million in 1998. According to Gokarn, all political parties were fighting to stay ahead by using job quotas as a tool to grab votes —and power. "Today everybody realises that a (political) party that has no solution for increasing employment opportunities is going to suffer in the elections. So the parties are projecting the quota system." Those advocating the need for creating the job quotas in the private sector, however, rubbish the argument that the move will put roadblocks in the way of flexible functioning of private sector enterprises. "At a time when the workforce in the public sector is being downsized and fewer new job opportunities are being created, we feel reservation for the weaker sections in the private sector is a good option," said Congress member Prithviraj Chavan. Agrees Tapan Sen, Secretary of the Centre of Indian Trade Unions (CITU). "When a host of public sector firms that offer reservation are making good profits, why should it be any different in the private sector." The BJP is treading cautiously on this politically sensitive issue. "One has to examine this issue sympathetically from the social point of view," said Jagdish Shettigar, a member of BJP's economic cell. "Although we have not formed an official view on this but I believe that any kind of reservation basically goes against the spirit of economic reforms. The emphasis should be on creation of more jobs and not creation of more quotas." The industry is convinced that the idea undermines merit and fair play. "We are not bothered about caste and creed of our professionals. The only thing that matters for us is merit and we hope it will continue to be so," said Sushanto Sen, Deputy Director General of CII. Said Bhuyan of Assocham: "Though it's just a proposal, we hope it doesn't become a reality out of political compulsions."
— IANS
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Lanka offers market for Indian industry Colombo, August 3 The country is already flooded with Indian goods—Bajaj autorickshaws or Kawasaki motor cycles, Hero Honda or TVS Victor bikes. Traders say due to low transport costs, there is a wide scope for the Indian industry. Interestingly the country, which has the per capita income higher than India, has a high literacy rate of over 92 per cent. The wages are slightly higher than in India. What may look as a surprise to Indians is that there are no beggars and the poverty ratio is substantially lower than in India. Despite being a poor country, Sri Lanka's human development index is much higher than that of India. Mr Chetan Ranatunge, an army officer who has taken premature retirement to set up a transport company, said,‘‘There is immense opportunities for Indians to set up new units in the textile, jewellery, herbal medicines and tourism sectors. The coastline of our country offers a good scope to tap the tourism sector and marine products.’’ The Taj group has already constructed a five-star hotel in Bentota, about 60 km from Colombo. Similarly, Apollo Hospital has set up a new hospital here to offer specialised services. The LIC has also started its operations. Ms Jayanati Vikramsinghe, a tea trader, said Sri Lanka is peaceful for the first time. So, traders from India or other countries can now set up the industry and strengthen its economy. Officials in the Ministry of Commerce and Tourism said the government was making all efforts to attract investors, especially in the field of tea plantation, textile, tourism and oil exploration in the sea. The trade between India and Sri Lanka has witnessed a sharp rise in recent months and the opportunities were unlimited, they added.
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IBM may shift 3m jobs overseas
New York, August 3 Some jobs done in the USA like software design assignments will soon move out of the country as part of the tech major's efforts to cut costs and build global supply networks. Several American firms are under pressure to reduce expenses. IBM is also determined to shift its white-collar, often high-paying, jobs overseas despite a possible backlash among politicians and its own employees. "Our competitors are doing it and we have to do it," Tom Lynch, IBM's Director for global employee relations, was quoted as saying in a recorded conference call to corporate colleagues around the world. An IBM employee upset at the move provided a copy of the internal recording to Washington Alliance of Technology Workers, a Seattle-based group seeking to unionise high-technology workers. The alliance passed it on to the New York Times. "In decades past, millions of American manufacturing jobs moved overseas, but in recent years the movement has shifted to the service sector, with everything from low-end call centre jobs to high-paying computer chip design jobs migrating to India, China, Russia, the Philippines and other countries," the daily said. US companies, including IBM, say creating more jobs in lower cost locations overseas "keeps industries competitive, holds costs down for American consumers, and helps to develop poorer nations while supporting overall employment in the US by improving productivity and the nation's global reach," said the Times. However, some in the Bush administration have voiced concern about offshoring at a time when the US economy is weak and the IT sector is in a slump. Forrester Research, a high-technology consulting group, estimates that the number of service sector jobs newly located overseas, many of them tied to the information technology industry, will climb to 3.3 million in 2015 from about 400,000 this year. This represents about 2 per cent of all American jobs. Forrester predicts 4,50,000 computer industry jobs can be transferred abroad in the next 12 years. This is 8 per cent of the nation's computer jobs. "For example, Oracle plans to increase its jobs in India to 6,000 from 3,200, while Microsoft plans to double the size of its software development operation in India to 500 by late this year. Accenture, a leading consulting firm, has 4,400 workers in India, China, Russia and the Philippines," said the daily. David Samson, an Oracle spokesman said the expansion of operations in India was "additive" and was not resulting in any jobs losses in the USA. — IANS
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IFFCO withdraws from NFL race
New Delhi, August 3 However, IFFCO’s Chairman K. Srinivasa Gowda and Managing Director U.S. Awasthi said the co-operative was still in race for acquiring stake in two other PSUs — Madras Fertilisers (MFL) and Rashtriya Chemicals and Fertilisers (RCF), which the government has put on the block. The Board of Director of IFFCO decided to keep out of NFL bidding to enable Kribhco to have a fair chance of acquiring the profit making NFL, Awasthi told reporters here. In return, Kribhco has not offered to withdraw from the race for the two fertiliser PSUs. “There have been no such discussions between the two corporatives and we do not expect any favours,” Awasthi said. With the decision to back out of NFL race, IFFCO, which registered profits of over Rs 550 crore in the last fiscal, would now explore investment possibilities in MFL and RCF. “We are looking at MFL and RCF as investment options... The board has given us the mandate,” he added. IFFCO is currently flush with funds and looking for expansion and diversification activities including forays into the banking sector. The co-operative is already on the look-out for a partner among the bidders for oil PSU Hindustan Petroleum Corporation (HPCL) as part of its efforts to break fresh grounds. When contacted, Disinvestment Ministry officials confirmed that IFFCO had not followed up on its Expression of Interest for NFL, which tantamounted to its withdrawal from the race. It may be recalled that the Cabinet Committee on Disinvestment, during its meeting on July 10, had approved the transaction documents for NFL, thus paving the way for invitation of financial bids. To return govt equity
IFFCO today announced that it would buy back government’s remaining 41 per cent equity at face value of Rs 174 crore within a year. “We are collecting shares from our cooperative. Whatever we collect we shall pay to the government,” IFFCO Chairman K. Srinivasa Gowda told reporters. He, however, said that government equity would be returned only if the cooperatives were prepared to pay back but emphasised that IFFCO would not return government’s equity from its profits.
— PTI
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India’s top CEOs want VAT and disinvestment
New Delhi, August 3 Stressing on the need to continue with the reforms process, CEOs of top business houses said it was important to maintain the current upswing in the performance of the economy. According to the CII CEO snap poll, 72 per cent of the respondents said GDP growth would be above 6 per cent in the current fiscal and the remaining 28 per cent said it would be around 5-6 per cent. Forecasts for the next financial year would same as this year’s expected 6 per cent, 63 per cent respondents said while 37 per cent said it would be around 5-6 per cent. Implementation of VAT and disinvestment of identified PSUs were singled out by the CEOs as two top measures required to ensure sustainability of the upbeat economy in the long run. Other measures cited were pension reforms, restructuring of the FCI, and fixing a ceiling on the issue of guarantees given by central and state governments. The respondents expressed concern about the appreciating rupee exchange rate and suggested immediate intervention of RBI saying it would have a moderate to adverse impact on exports. On the fast increasing forex reserves, 37 per cent said it was due to an increase in FII investments while 34 per cent felt that it was because of NRI deposits. Another 28 per cent said this was a result of an increase in remittances. An overwhelming 91.4 per cent said a significant amount of interest rate arbitrage was occurring in India. Commenting on Companies (Amendment) Bill 2003, 57 per cent of the respondents opposed imposition of a ceiling on the age for appointment of managing or whole time directors. They demanded deletion of this proposal from the Bill. On the issue of women on the board of directors, 94 per cent said selection should be on the basis of merit and not legislation. Regarding individual companies’ growth prospects in the current fiscal, 45.7 per cent of the CEOs expected 10-20 per cent growth, 31.4 per cent said it would be 20-30 per cent. Only three per cent felt that their company would grow by more than 50 per cent during this fiscal. — PTI
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AirTel may raise long distance SMS charges
New Delhi, August 3 Bharti Tele-Ventures Ltd is mulling over such a move also because the number of long distance messages, intra-circle as well as international, has increased of late, company President-Mobility Manoj Kohli told UNI here. Last year, SMS within a circle constituted about 99 per cent of the total messages, while their proportion has come down to 90 per cent now, he said. Also, charges have to be paid to the other operator in whose network such messages terminate, Mr Kohli said. “Various operators are in the process of signing interconnect agreements with each other in this respect which would be finalised within two weeks,” he added. Though the Bharti official did not disclose the amount of likely increase in SMS charges, he said the rise, if effected, would be marginal. However, he clarified that the decision, if taken, would not be implemented immediately. Any new SMS tariffs would on the pattern of call charges. As customers pay different tariffs for local, national and international calls, they may have to do similarly for SMS as well, the Bharti official said.
— UNI
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Inflation goes down to 4.59 per cent
New Delhi, August 3 However, inflation, which fell below the 5 per cent mark for the first time this fiscal during the week ended June 14, was only 2.86 per cent a year ago. A major reason for the fall this week, was the decline in the index of primary articles which fell by 0.6 per cent to 180.0 from last week’s level, mainly because of reduction in the prices of food articles. — UNI
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Market remains clueless as tax raids hit investor confidence Good results from Indian companies have kept the market on its upward journey for the second successive week. The benchmark BSE Sensex ended 29-month high to close above 3800. It gained 89 points during the week to close at 3815. The Sensex has soared 25 per cent in nine consecutive weeks, except for one week. The S&P CNX Nifty gained 33 points for the week to end at 1,195.75 registering its highest close in more than 26 months. Good results from Reliance Industries and HLL led to an institutional and retail buying spree. The market during the coming weeks is expected to remain sober as it waits for a fresh trigger to find a direction. The IT raids on Motilal Oswal and SSKI securities, the two biggest stockbrokers in Mumbai, on Saturday is likely to dampen the sentiment. Investors will be better off to keep booking some profit at every rise and re-enter at every correction. On the technical charts, in the short term, the advance-decline line has come off significantly from its high, although the Sensex continues to scale new highs on expanding volumes not seen for a long time. A short-term correction is due with the index testing the 3750 support level. The 3680 level will be critical for establishing the medium-term trend. In case the Sensex goes below 3680, further upside will be difficult for the time being and the index will remain in a trading range below 3830, at either 3500 or even lower at 3350. If 3680 holds then it is possible for the market to stretch for further upside and even build a move towards 4200.
Software
Technology stocks spurted on the hope that the worst for the sector was over. Infosys shares spurted after its second ADS issue got listed at a significant premium to the domestic price. The scrip climbed by 8 per cent to close at Rs 3,784 i-Gate Global was also a big gainer after the company acquired a 51 per cent stake in Quintant Services for Rs 87 crore. The scrip shot up by 38 per cent to close at an eight-month high. Investors with a high-risk appetite may consider investing in Infosys in the range of Rs 3000-Rs 3100 with a long-term prospective.
Auto ancillary
Auto and auto-ancillary shares surged due to impressive results and volume growth. Telco (now Tata Motors) climbed by 7 per cent to close at Rs 239. M&M surged by 11 per cent at 52-week high. Others like Maruti, Bajaj Auto, Hero Honda and TVS Motors also posted smart gains. Punjab Tractors, however, lost 5 per cent to close at Rs 150. The UK-based CDC has acquired a 23.5 per cent stake in the company from the Punjab Government at Rs 153 per share, which is significantly lower to last week’s market price. The CDC has announced an open offer for acquiring another 20 per cent stake in Punjab Tractors at Rs 153 per share. It also announced open offers for Swaraj Mazda and Swaraj Engines at Rs 140 and Rs 205 per share.
FMCG
Fast moving consumer goods (FMCG) major Hindustan Lever lost 1.2 per cent for the week to settle at Rs 167.55, with the company’s net profit and sales showing sluggish growth. For the quarter ended June 2003, HLL reported a marginal growth in net profit to Rs 450.93 crore as compared to a net profit of Rs 447.34 crore in the June 2002 quarter. Whereas Gillette spurted on the back of excellent results to close the week at Rs 480, a gain of over 27 per cent for the week. Long-term investors can buy into Gillette on declines.
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