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IFCI likely to be
merged with PNB Industrial output
grows 7.4 pc
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Sale of Dabhol
plant soon PAIC, Solvent
Extractor tie up Like obesity,
deficit can be fatal, warns US economist Capital Bank
plans more branches
Moser Baer to up FII limit to
74 pc
Kinetic chairman Arun Firodia
greets Leopoldo Tartirini, founder of Italjet, in Mumbai on Monday to announce
an alliance for modern scooters and will launch seven international scooters
from Italjet. — PTI photo
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IFCI likely to be merged with PNB
New Delhi, January 12 Days after Finance Minister Jaswant Singh announced the government’s intention to merge the ailing FI with a bank, the IFCI board met here today to consider various options. Official sources said the board had taken up the merger plan but declined to give the name of the bank with whom the oldest FI of the country would be merged. PNB and BoB’s name figured among the prospective banks which can take over the IFCI but the
possibility of a merger of the IFCI with the State Bank of India was ruled out. “A bank which have assets common to that of the IFCI is best suited for the merger. But the merger of the IFCI with a bank is possible only after the balance sheet and manpower is restructured and tax sops are provided to the bank which takes over the good assets of the IFCI,” a board member told PTI after the meeting. The sources declined to reveal whether there would be share-swap or a cash deal but said the merger could be completed within April, 2004. BoB Chairman did not comment while PNB chief was out of town. The IFCI Chairman could not be contacted. According to the plan, the acquirer bank would seek tax incentives for offsetting the losses of the IFCI against the profit of the bank. Moreover, the liabilities would have to be restructured and staff strength reduced through the ongoing VRS. In a bid to improve the IFCI’s financial health, the government had earlier announced a Rs 5,220 crore financial support over 10 years for meeting principle and interest liabilities, of which Rs 2,096 crore has been already provided till now. The government would service the borrowings of the IFCI from the ADB and KfW, the sources said, adding that liabilities of the IFCI in respect of government guaranteed SLR bonds and retail borrowings of investors below Rs 1 lakh would be taken over by the Centre. The Centre would also bear the difference between the existing coupon rate and current G-Sec rate on SLR bonds held by PSUs and FIs till maturity. Out of the total Rs 5,220 crore package, sources said a sum of Rs 523 crore has been released as loan during 2003-03 and another sum of Rs 1,573 crore as grant has been released during 2003-04 to the IFCI. After the initial tranche of assistance, the IFCI reduced its losses to Rs 259.70 crore last fiscal from Rs 884.70 crore from in 2001-02 and 261.93 crore in 2000-01. As part of reducing the losses further, the government has asked the ailing FI to reduce NPAs to 9 per cent by 2004-05 from the present 22 per cent by transferring the bad loans to its Asset Care Enterprise (ACE) within the next three years. The government has also asked the IFCI to stop fresh borrowing and deposit mobilisation while bring down the staff strength by 5 per cent annually.
— PTI
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Industrial output grows 7.4 pc New Delhi, January 12 According to quick estimates released by the Central Statistical Organisation (CSO), the Index of Industrial Production (IIP) for November 2003 stood at 186.8. The indices of industrial production for the mining, manufacturing and electricity sectors for November 2003 stood at 146.8, 194.2 and 170.6, respectively, with the growth rates being 4.1 per cent, 8.1 per cent and 4.3 per cent, respectively, as compared to November 2002. The cumulative growths during April to November 2003-04 over the corresponding period of 2002-03 in the three sectors have been 3.9 per cent, 6.8 per cent and 3.1 per cent. As many as 14 of the 17 two-digit industry groups have shown a positive growth during November 2003 as compared to the corresponding month of the previous year.
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Sale of Dabhol plant soon
Singapore, January 12 The U.S. government-backed Overseas Private Investment Corporation (OPIC) is seeking to sell its 65 per cent stake — formerly owned by Enron — in the $2.9 billion Dabhol project, the biggest foreign direct investment since India opened its economy in 1991. Foreign lenders also want to cash out of the project. “The Government of India has announced it would like to start the official sales process by the end of this month by allowing interested parties to bid for the equity,’’ said the source, who asked not to be identified. “But you know, even if some sort of official process starts soon, this would take a lot of time to get it sorted out,” he said. “One of the key complications right now is that you have so many different parties in there with different objectives.” Nearly 30 banks and financial institutions were involved in lending $1.9 billion for construction of the 2,184 megawatt gas-fired power plant and an adjacent liquefied natural gas facility. The total loans from overseas creditors, including the Overseas Private Investment Corp, amount to $600 million. General Electric Co and privately held Bechtel group Inc own 10 per cent each, while the Maharashtra State Electricity Board (MSEB) — the sole buyer of the power generated by Dabhol — holds 15 per cent. Companies said to be interested in OPIC’s stake are Indian firms, including the Reliance group and Tata Power Co, India’s largest private utility firm. No foreign companies had shown an interest in the project as many were leaving Asia to repay debts following the 2001 Enron collapse, the source said. “I just think it (the Dabhol project) is too messy for most international power companies.” The market value of the Dabhol project had yet to be worked out, given the plant had been sitting idle on the west coast of India for more than two years. Enron shut it down after the MSEB fell $240 million behind in payments.
— Reuters
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PAIC, Solvent Extractor tie up Chandigarh, January 12 Mr
A.R. Sharma, President of association and Mr Himmat Singh, Managing Director,
PAIC, signed the MoU. As per the agreement, joint efforts would be made by both agencies to bring at least 5 lakh acre under oilseed cultivation in the next few years through contract farming. They would try to develop infrastructure to strengthen the post harvest processing, marketing and quality of the produce to meet international standards. Later, Mr U.S
Bhargava, GM, Punjab National Bank, assured the farmers and the state government that bank would provide required finance and expertise for the success of the contract farming in the state.
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Like obesity, deficit can be fatal, warns US economist
Mumbai, January 12 Delivering the Eighth L.K. Jha Memorial Lecture at the RBI here, Mr Feldsetin, who is a professor of Economics at Harvard University, stated, “unfortunately, it is easy to ignore budget deficits and postpone dealing with them because the adverse effects of budget deficits are rarely immediate.” Mr Feldstein compared fiscal deficits to “obesity” saying: “you can see your weight rising on the scale and notice that your clothing size is increasing, but there is no sign of urgency in dealing with the problem.” He said, “that is so even though the long-term consequences of being overweight include an increased risk of a sudden heart attack as well as of various chronic conditions like diabetes.” Continuing in the same vein, Mr Feldsteing said: “like obesity, government deficits are the result of too much self-indulgent living as the government spends more than it collects as taxes.” And also like obesity, the more severe the problem, the harder it is to correct: the overweight man has a harder time during an exercise that could reduce his weight — and the economy with a large deficit and debt is trapped by increasing interest payments that cause the deficit and debt to rise more quickly, he explained. Mr Feldstein, who is also the President of the National Bureau of Economic Research in the USA, said the appropriate size of the national debt, like the ideal weight for an individual, is a complex question. But basic commonsense tells that the ratio of debt to GDP should not be allowed to rise year after year. “I may not know my optimal weight but I know that I am in trouble if I am gaining five pounds a year, or even three pounds a year,” he said. In fiscal terms, the Harvard Economist said, a country should recognize that it is in trouble if it sees its ratio of debt to GDP rising year after year. There is, therefore, nothing arcane about the appropriate standard of a sound fiscal policy. The basic rule is that government revenue must exceed government non-interest outlays, he said adding: “The excess of revenue over non-interest outlays must be sufficient to finance
enough of the interest payments on the public debt to avoid rising ratio of debt to GDP.” Though budget deficit is traditionally defined as the difference between total government outlays — including the interest on the national debt — and the government’s revenue receipts, a more complete definition of the deficit is that it is the difference between the size of the government debt at the end of the year and the corresponding size of the debt one year earlier. These two are equivalent if the government debt is defined as the stock outstanding bonds. However, Mr Feldstein said, a more general definition of the government debt would include the value of off-budget liabilities like future social security pensions and such contingent liabilities as the cost of dealing with insolvent banks and money losing state enterprises. Unfortunately, the available statistics on debt and deficits generally ignore these broader considerations, he said.
— UNI
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Capital Bank plans more branches Chandigarh, January 12 Mr S.S. Samra, Managing Director of the bank, speaking at a function held to celebrate the completion of four years of the bank, the bank has become No. 1 local area bank in India with a total business amounting to Rs 162 crore and 10 branches spread over the districts of Jalandhar, Kapurthala and Hoshiarpur Capital Bank has a CD ratio of 60 per cent (as against 18 per cent of the area). The bank has envisaged massive expansion plans. It proposes to open 27 branches by March, 2009, with a total business of about 650 crore. The bank also plans to interconnect all branches and ATMs during 2004-05 which will provide anywhere, anytime banking facility to customers. The bank plans to open a branch in Jalandhar city during the year 2004-05. It also proposes to expand its operations to more districts and ultimately to the entire state.
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Moser Baer to up FII limit to 74 pc
Mumbai, January 12 Informing the Bombay Stock Exchange, the company said the Board of Directors at the meeting held on January 11 approved the hike in the FII limit from 40 per cent to 74 per cent and also the increase in the authorised share capital from Rs 110 crore to Rs 150 crore. Further, it also gave clearance for the issue of ADRs, GDRs, etc to the extent of 2.01 crore equity shares, on preferential basis to various institutional investors. This is not limited to existing FII shareholders, such as affiliates of Warburg Pincus Llc, Electra Partners Mauritius Ltd, the International Finance Corporation, Washington, at a premium of not less than Rs 319 per share of nominal value of Rs 10 each. The board also approved the increase in the number of equity shares in the ESOP plan from 22 lakh to 44 lakh shares in view of the corporate action of 1:1 bonus issue undertaken by the company.
Mastek net drops Mastek Ltd has posted a sharp drop in its consolidated net profit at Rs 4.09 crore for the second quarter ended December, 2003, as against Rs 16.26 crore in the same period in 2002. The consolidated total revenue for the reporting quarter were also down at Rs 95.52 crore compared to Rs 97.43 crore in October-December, 2002, the company informed the Bombay Stock Exchange today. On stand alone basis, the IT company’s net profit and revenue for the second quarter stood at Rs 1.01 crore (Rs 15.75 crore) and Rs 27.09 crore (Rs 38.86 crore), it said. |
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Kinetic ties up with Italjet
Mumbai, January 12 The rights include sale of the seven scooters in a phased manner in India in the next two years as well as for exports, Kinetic joint managing director Sulajja Firodia Motwani told newspersons here today. The seven models, ranging from 50 cc to 250 cc, are “Jetset”, “Dragster”, “Formula”, “Torpedo”, “Velicofero”, “Millennium” and “Jupiter”, she said adding that “Jetset” was likely to be introduced in the Indian market by July followed by either “Jupiter” or “Millennium” six months later. The prices would be competitive and in line with the Indian market, she said. Kinetic group chairman Arun Firodia said the investment for the new models would be “marginal” as the necessary platforms were already in place. Additionally, under the agreement with Tartarini, the founder of the privately held Italjet will also design scooters, specially for the Kinetic group, for the next five years.
TVS to invest 600 cr Two-wheeler maker TVS Motor Co. will invest Rs 500-600 crore in the next three years, which will be partly utilised to set up an overseas manufacturing base, a senior company official said. The company also aims 3-4 per cent sales growth this fiscal to 1.1 million units while motor cycle sales would remain flat at slightly more than 700,000 units, its President C.P. Raman said launching 100cc motorcycle Centra. The Chennai-based firm, which has been witnessing dwindling motor cycle sales, said it hoped to sell 1.2 million motor cycles and 1.6 million overall two-wheelers during 2004-05. During the next fiscal, TVS Motor also targets to sell 300,000 units of “Centra”.
— Agencies |
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Aptech ties up with AIESEC Travel policy Marico Ind Polaris awarded TDS deadline PTDC pump Best refinery |
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Buoyed by robust growth in the manufacturing sector, industrial production registered a strong 7.4 per cent growth in November 2003 as compared to the corresponding month, last year.