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Wednesday,
September 3, 2003, Chandigarh, India
  
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Rs
2,500-cr relief package for BSNL, says Cabinet Corruption
affecting growth in North: CII
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FDI actual
inflows to total approvals below 50 pc Maruti
cuts Alto price Bank
chiefs welcome S & P rating upgrade PNB pays
dividend to govt
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Rs 2,500-cr relief package for BSNL, says Cabinet
New Delhi, September 2 A meeting of the Cabinet, chaired by Prime Minister Atal Bihari Vajpayee, also extended till March 31, 2005, the moratorium on the repayment of a government loan of Rs 7,500 crore by BSNL and flexibility in dividend payment on the Rs 5,000 crore government equity. The licence fee varies from 12 per cent of revenue for metros and A category circles, 10 per cent for B category circles to 8 per cent for C category circles. The spectrum fee ranges between 2 per cent and 4 per cent of the revenue depending on the usage of spectrum. The relief on account of licence fee and spectrum charges, which has been extended for a year upto March 31, 2004, works out to about Rs 2,500 crore as BSNL has an annual revenue of about Rs 25,000 crore. The relief, given earlier for three years, expired in March this year. The moratorium on payment of principal and interest on the loan has been extended till March 31, 2005. The rate of interest on this loan would be re-examined by the Finance Ministry, an official spokesman told reporters. The quantum of dividend payable by BSNL has been left to the BSNL Board for a decision. The Ministries of Finance and Telecommunication will, meanwhile, examine ways to ensure that the rural telephony and BSNL do not suffer. Under the National Telecom Policy, the government is committed to providing access to all people for basic telecom services at affordable and at reasonable prices by providing voice and low speed data to all villages, Internet access to all district headquarters and telephone on demand in urban and rural areas by 2007. All this has to be implemented by BSNL. The cash flow of BSNL has been further adversely affected due to the steep fall in international and national long distance tariffs and the implementation of regulation regarding cost-based tariffs. On an average, BSNL suffers a loss of Rs 4,000 crore annually in providing services to rural areas. Its establishment costs have also increased as a result of absorption of over 3.4 lakh
group C and D category employees on industrial dearness allowance pay scales.
— UNI
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Corruption affecting growth in North: CII Chandigarh, September 2 It claims that during 90s the Northern states had shown a GDP growth rate of 5 per cent as compared to 7.2 per cent in the South and the West. If the present trends continued over the next 10 years, it points out, the West and the South will each garner about 30 per cent of the national income, while the share of the North will decline to less than half of either the West or the South. Combined with the fact that the population growth rate is higher in the North compared to either the West or the South, it will affect the lifestyles in the region. Why are the Northern states lagging behind? Though during 80s these states had higher growth rate, now they are lagging behind due to various reasons. The Northern states have less than 5 per cent of the total exporting units against over 11 per cent in the West or the South. Maharashtra, Tamil Nadu, Gujarat and Karnataka are emerging ahead of Punjab, Haryana, UP and Rajasthan. Most of the MNCs coming to India are investing in the coastal belt. A break-up of the research labs set up by MNCs in India showed that 60 per cent had been set up in the South, as against only 12 per cent in the North. The CII study claims that low attention to training, quality issues, inadequate government-industry interaction and corruption at various levels in the Northern states are affecting the investment and consequently the growth rate. Based on a questionnaire survey of 106 companies, interaction with 50 CEOs and visits to 35 manufacturing plants, the study points out that in the North, it is only the NCR region, and some pockets which attract a large proportion of investment. Most of the respondents in the North said if corruption at the operational level could be controlled, it would help them concentrate on improving performance. To improve the competitiveness in the North, it suggests that the small and medium-scale units would have to look outward to expand their markets.
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Dabur Pharma forms 6-member board
New Delhi, September 2 "The Board of Dabur Pharma will be expanded in near future to include independent directors who will be carefully chosen from different areas of specialisation following global best practices on corporate governance," DIL Vice Chairman Anand Burman said here today. The company has proposed to strengthen the board with the induction of independent directors within the next three months, he added. The six-member board includes Dr Anand Burman, Amit Burman, P.D. Narang, Ajay Vij, Dr Rama Mukherjee and Dr P.S. Srinivasan. The new pharma company will have identical shareholding pattern as in DIL and is expected to be listed by the end of third quarter on the stock exchanges after the Delhi High Court grants its approval, said Dabur Group Director P.D. Narang. The Board of Directors of DIL had decided to demerge its Pharma Division into a separate company in May this year and had subsequently filed a petition with the Delhi High Court seeking approval. Under the scheme of the demerger, it has been proposed that each shareholder of DIL would be issued one additional share of DPL for every two shares of Dabur India held. The company also proposed to transfer assets of Rs 214 crore pertaining to the pharma business, out of the total asset base of Rs 521 crore, to DPL as part of the demerger. As a pre-requisite for the court’s approval, the shareholders and creditors have to approve the scheme of the demerger in the court-convened meetings presided by the Chairman appointed by the Court. Dabur India Ltd had obtained these approvals with an overwhelming majority in the meetings held on August 2, 2003, and has filed confirmation petition with the Delhi High Court for approval which is expected by third quarter of this fiscal.
— UNI
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FDI actual inflows to total approvals below 50 pc New Delhi, September 2 From 1992 to 1997, only 20 to 30 per cent of the total FDI approved actually flowed into India, though the quantum of both FDI approvals and inflows increased steadily, the study carried out by the PHD Chamber of Commerce and Industry (PHDCCI) said. In 1997, while the approved FDI was Rs 548.9 billion, only Rs 164.3 billion (29.9 per cent) actually flowed in. In 1998, due to political uncertainty, both approvals (Rs 308.1 billion) and inflows (Rs 133.4 billion) fell down considerably though the inflows as a percentage of approved investment went up to 43.3 per cent. In the period 1998 to 2002, the approvals fluctuated up and down, but never reached the peak achieved in 1997, though inflows showed an upward trend. The realisation rate also approved quite significantly during this period in 2001 (71.7 per cent) and 2002 (191.1 per cent). According to the PHDCCI study, FDI inflows, which stood at $ 97 million in 1990-91, reached a peak of $ 3,557 million in 1997-98. But subsequently on account of various reasons such as political uncertainty, the failure to enact some important legislation, the nuclear tests, conflict with Pakistan, the east Asian financial crisis, etc, FDI inflows fell and more or less stagnated in the next three years. From 2000-01 onwards, coverage of FDI inflows in India has been widened, by adding reinvested earnings and inter-company debt transactions of FDI entities etc to approach international best practices. FDI inflows, in accordance, with the new definition, in 2000-01, 2001-02 and 2002-03 stood at $ 4029 million, $ 6131 million and $ 4,660 million respectively. The share of FDI inflows coming via the mergers and acquisitions (M&A) route as opposed to
green-field projects has increased in the 1990s. While during the pre-1991 period, over 90 per cent of the total FDI inflows were in green-field projects, in the post 1991 period the share has dropped to around 60 per cent.
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Maruti cuts Alto price
New Delhi, September 2 MUL, which yesterday said August sales dropped 4.2 per cent at 23,127 units against the corresponding month last year, has been facing pressure for quite sometime with rival Hyundai Motor India Ltd
(HMIL) as well as Tata Motors' Indica gradually gaining foothold. The revised (ex-showroom Delhi) price of Alto LX will now be Rs 2,65,013 while that of Alto LXi Rs 2,84,756. The company said it had taken the step on the back of internal cost-cutting measures in the production of Alto as well as keeping in mind the rising demand for the hatchback.
— UNI
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Bank chiefs welcome S & P rating upgrade
Bangalore, September 2 Participating in a panel discussion on a business channel here, Canara Bank Chairman and Managing Director R.V. Shastri said the re-rating was long over-due, considering the improved performance of banks over the last two years. Corporation Bank CMD Cherian Verghese attributed the improved outlook to the law on securitisation of assets and the setting of asset management companies, which he said would lower risk levels for banks. At the same time, there was need for banks to be transparent while invoking the provisions of the securitisation law, he added. CEO of private sector ING Vysya Bank Bart Hellmans was of the opinion that while core profitability of banks had improved, there still remained a lot of volatility in the banking industry and risk management continued to be an issue. Furthermore, the first half of the current financial year had not seen new investments or expansion by manufacturing companies, resulting in slow off-take of big-ticket loans. However, Mr Shastri was optimistic that the second half of the year would see the level of advances picking up even though margins would continue to remain under pressure. Dhanalakshmi Bank CMD P. Muthuswamy was of the view that banks’ push to acquire assets of wilful defaulters was bound to hit road-blocks but this should not prevent them from fully implementing the provisions of the Securitisation Law. On technology upgradation, Global Trust Bank President P. Narayanan said it was critically important to ensure round-the-clock reliability of hardware and software systems. Also, greater importance would have to be attached to ensuring security of transactions, he added. Mr Verghese expressed the view that the expenses incurred in upgrading technology would have to be recovered and this would mean a rationalisation in the cost of services. Mr Shastri predicted that when full computerisation would be completed by December 2004, banks would be faced with the problem of managing surplus staff. State Bank of Mysore Managing Director M. Sitarama Murthy said it was possible to address this problem as the number of services provided by banks would increase in the future and it would be possible to retrain staff for redeployment in the newer areas.
— UNI
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PNB pays dividend to govt
New Delhi, September 2 PNB Chairman and Managing Director S.S. Kohli presented the Rs 74.28 crore cheque to the Union Banking and Insurance secretary N.S. Sisodia. The bank has paid the dividend at the rate of 35 per cent of the capital. The bank earned a net profits of Rs 842.20 crore during 2002-03 recording a 49.8 per cent increase over the previous year. The bank's capital and reserves showed a growth of 25.4 per cent to Rs 4,033 crore from Rs 3,216 crore in last year, the official release said.
— PTI
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