The Tribune...Business

	B U S I N E S S	Monday, July 13, 1998
weather n spotlight today's calendar

Maruti panels to have
only advisory powers
NEW DELHI, July 12 — The Industry Ministry is working towards according only advisory powers to the newly-formed Purchase and Marketing Sub-committees in Maruti Udyog Limited (MUL) and keeping the implementation part out of the purview of the two bodies...

Insurance not open to
FDI: Bakht
NEW DELHI, July 12 — Despite its liberal approach towards foreign direct investments, the BJP-led government will not open up sensitive sectors like real estate, insurance, atomic energy, drugs and pharmaceuticals to foreign investors, Industry Minister Sikander Bakht said...

Nokia phone project
put on hold
NEW DELHI, July 12 — Global Cellular Major Nokia has put its cellular phone manufacturing project in India on hold but is going ahead with plans to open its first-ever software development centre in the country, a top company official said...

Punjab sugar scene bad
AMRITSAR, July 12 — The crisis engulfing the Punjab sugar industry due to a drastic fall in the acreage of sugarcane during the past two years is likely to further worsen because of the failure on the part of agricultural scientists to give to the farmers new cane varieties. ..

Market Scan
Sensex crosses 3400 mark

Aviation Notes
For once, passengers happy

Maruti panels to have only advisory powers
NEW DELHI, July 12 (UNI) — The Industry Ministry is working towards according only advisory powers to the newly-formed Purchase and Marketing Sub-committees in Maruti Udyog Limited (MUL) and keeping the implementation part out of the purview of the two bodies.
“The ministry is preparing an order by which the committees would have only advisory powers. They would be only allowed to advise on the purchase and marketing aspects while the implementation part would not be under their control,’’ informed sources told UNI here today.
“An action plan is being drafted and orders regarding the same would be issued shortly,” the sources added.
These sub-committees were formed subsequent to the compromise formula reached between the Government of India and Suzuki Motor Corporation, equal partners in MUL.
As per the agreement entered to by the two partners, part-time Chairman Y. Saito was to head both the committees, who would look into all the aspects of purchasing components and other materials as well as marketing the vehicles produced — the two key functions involving large financial transactions.
According to the sources, some of the government directors on the board had pointed out certain legal hiccups in the formation of these panels, particularly on the extent of powers that could be vested with the proposed panels.
The legal hiccups relate to the move to entrust the proposed panels to vest total authority in the decision-making of all matters pertaining to purchases and marketing in the company. It may be recalled that under the articles of Association of MUL and the Companies Act, 1956, the Managing Director (Mr R.S.S.L.N. Bhaskarudu in this case) shall be the Chief Executive Officer of the company vested with substantial powers of management, including that of marketing and purchases.
Incidentally, Mr Y. Saito, being the part-time Chairman, does not have any executive powers and, moreover, by heading the two sub-committees, he would have stripped Mr Bhaskarudu of all powers.
Besides, under the articles of the Association of MUL and the Companies Act, the Managing Director of the company is held responsible for any act of omission or commission.
Thus, in the case of the panels running the two crucial affairs of the company, it was pointed out that they can easily escape any responsibility for any acts of omission or commission unless there is any change in the articles of association or the Companies Act in this regard.
The directors have further pointed out that the sub-committees could be assigned the task of forming specific guidelines on the decision-making process in the two areas while the implementation part should be left to the board.
According to the Suzuki proposal, while the scope of the panel on purchasing would include mainly appointment and termination of vendors and framing of trade conditions with them, the sub-committee on marketing would look into the appointment and termination of dealers and framing trade conditions with them.
Meanwhile, both Industry Ministry Sikander Bakht and Minister of State for Industry Sukhbir Singh Badal have categorically stated that the government’s stake in Maruti would not be reduced below the present level of 50 per cent.
This assurance was instrumental in the calling-off of the strike by Maruti Udyog Employees Union (MUEU), which was slated for today.
The union today deferred their one-day token strike following the assurance by the ministers that the workers’ interests would be protected.
The employees were protesting against the alleged “illegal” agreement reached between the Government of India and Suzuki Motor Corporation (SMC) of Japan, equal partners in the Rs 8,500 crore car manufacturing joint venture.

Insurance not open to FDI: Bakht
NEW DELHI, July 12 (UNI) — Despite its liberal approach towards foreign direct investments, the BJP-led government will not open up sensitive sectors like real estate, insurance, atomic energy, drugs and pharmaceuticals to foreign investors, Industry Minister Sikander Bakht said.
“These are sensitive and strategic sectors relating to national security and scientific subjects. So, we want to keep it away from foreign investments,” Mr Bakht told UNI in an interview here.
The government is proposing to open the insurance sector only to domestic private sector operators but not to foreign investors, Mr Bakht added.
The government, he said, had adopted a conscious policy for speedy clearance of foreign investment proposals to send out right signals to foreign investors. “It has been decided that an application has to be cleared within 90 days as announced by Prime Minister Atal Behari Vajpayee.”
The minister further stated that the government is also widening the area of automatic approvals for foreign direct investments by including roads, ports and high technology fields in the list. Power projects have already been

included in the list.
“We are working on expanding the automatic approval list to ensure that there are very few restrictions on foreign investors in infrastructure sectors like ports, roads and airports. We need to encourage foreign investment in infrastructure and high technology areas. But the high technology areas, including bio-technology, need to be tackled with an eye on patent laws,” he added.
Besides, the government is also exploring on the other areas which can be included in the list.
Government guidelines, at present, allow FDI proposals to go through automatic approval up to the specified equity cap of 50 per cent, 51 per cent and 74 per cent, according to the sector concerned.
According to Mr Bakht, allowing automatic approvals had also been aimed at reducing the bureaucratic hurdles in the path of FDI inflow. “This would attract more investments into the country not necessarily in the sectors in which automatic approval would be accorded but in other sectors as well.”
If a proposal goes through the automatic approval route, the applicant can bring in foreign equity investment through a simple Reserve Bank of India clearance, without having to go through the FIPB. However, this would not be a precursor to dismantling of the FIP B.
Regarding the board, he said, “it is doing good work and there is no question of dismantling it. In fact, widening the automatic approval list would attract more foreign investments which will be better for the country.”
Riding on these initiatives, the government is targeting a high industrial growth rate of 8 per cent for the 1998-99 fiscal. During April 1998, industrial production grew by 6.3 per cent. In sectors like electricity and manufacturing, this period recorded a 6.8 per cent and 10.1 per cent growth rate as against the rates in April 1997.
High growth rate was recorded in metal products and parts, beverages, tobacco products, transport equipments and parts, non-metallic mineral products and wool while the industry showed a negative growth in wood products, cotton textiles, food products and jute.“We are now aiming at a growth in all sectors,” the minister added.

Punjab sugar scene bad
AMRITSAR, July 12 (UNI) — The crisis engulfing the Punjab sugar industry due to a drastic fall in the acreage of sugarcane during the past two years is likely to further worsen because of the failure on the part of agricultural scientists to give to the farmers new cane varieties which are not only high in sugar content but also weight-wise more profitable to the growers.
Experts at the Sugar Technology Department of Guru Nanak Dev University here, are of the opinion that researchers should lay more stress on varieties which have a harmonious blend of high sugar content and high yield. Though a number of new varieties have been introduced in Punjab in the past 10 years or so unfortunately all these have lacked the harmonious blend, they opined.
At presently, about Rs 1200 crore of the state government is at stake in the 22 cooperative sugar mills, both in the joint and private sectors. The state government could suffer heavy losses if no concrete steps are taken to improve the sugarcane variety and make it viable to the farmers.
The experts here are critical of the manner in which the sugarcane research station at Jalandhar has been functioning for the past decade or so. This station which is under the Punjab Agricultural University (PAU), Ludhiana, is considered as the state’s premier cane research centre.
Though the state government has been encouraging farmers to diversify from foodgrains (paddy and wheat) to cash crops like sugarcane and sunflower, no one seems to be bothered about the manner in which this research station has been functioning. At present, this station is headed by a scientist who is considered an expert on paddy and not sugarcane.
The experts pointed out that in 1976 the sugar industry in Punjab got a sudden boost when the Jalandhar research station developed the COJ-64 variety. This variety not only had a high sugar content but it was profitable to the farmers as it was good yielding and weighed more than the varieties that were then being sown here.
The experts further pointed out that over the years there was a genetic deterioration of the COJ-64 variety as farmers did not adhere to certain rules which experts had recommended to make up for this deterioration. The research station came with a number of varieties in the eighties which included COJ-82, COD-83 and COJ-84 but none of these have so far been as successful as COJ-64, which is now practically extinct in Punjab.
They have mooted a proposal before the state Agricultural Ministry to set up a sugarcane research station in the joint sector at Mohali near Chandigarh.

Market Scan
Sensex crosses 3400 mark
by J.C. Anand
THE stock market had a gala time last week. In just five trading days, the sensex moved up by 323.4 points and crossed 3400 mark. In other words, the sensex was up by 10 per cent.
The NSE-50, too, gained 56.35 points (6 per cent) last week. The difference in the percentage gains in these two indexes can be explained by the differentials in the scrips included and relative weights assigned to them in the composition of these indexes.
The upward movement in the share prices was largely confined to FERA (to use a convenient label) scrips. Glaxo, Novrtis, Pfizer, Parke Davis (all pharma scrips), Hindustan Lever, Nestle, Britannia, Cadbury (all consumer food product companies), ABB, BASF India were prominent gainers. Among the non-FERA companies, Larsen and Toubro, HDFC, BSES, Rallis India and SBI registered some gains.
Almost 90 per cent of the companies registered with the stock exchanges did not participate in the market spurt.This sudden though welcome upward movement in the market can be attributed to a number of factors. One major factor has been the announcement of good first quarter results announced by some blue chip companies.
Clariant India has registered a 26 per cent jump in sales, 57 per cent increase in the net profit, 47 per cent rise in exports in its first quarter results. There is a distinct scope for further rise in the market price of this scrip which is quoting at present around Rs 187 for Rs 10 as face value equity share.
Clariant AG, which is a world leader in speciality chemicals, and has a majority holding in the equity capital of Clariant India, sources around 30 per cent of its global needs from its Indian subsidiary.Bajaj Auto has also reported a 12 per cent growth in its sales. Even TISCO and SAIL have reported higher sales for the first quarter.
TISCO has reported 10.53 per cent and SAIL has announced 18.5 per cent growth in their sales. The HDFC has reported 19.39 per cent increase in its net profits during the first quarter.Analysts believe that Hindustan Lever, Nestle and Cadbury are expected to announce impressive gains in their sales and net profits in their first quarter results.
The foreign institutional investors have also made purchases in these scrips.Another factor contributing to substantial gains in the market prices of some blue chip equities is the report that the US Congress would soften sanctions against India and Pakistan.

So far the only softening has come in removing sanctions on wheat export and other food products. It is likely to benefit Pakistan more than India. But last week much more was expected from the US Congress and this fuelled the bullish sentiments.The market’s expectation for recovery was also aroused by two other factors — the promising parleys between Jaswant Singh the US Deputy Secretary of State Strobe Talbott at Frankfort for improving US-India relations and relaxation of sanctions against India, and the news that the government would soon permit buy back of shares by the corporate sector companies.
Another hopeful factor was the expectation that the BJP-led government would be able to overcome hurdles in the passage of the Budget.The big question is whether this bullish sentiment would persist and the market continue to maintain its upward movement? I am not inclined to believe that the bearish trend has been reversed.
The economy is still in a poor shape. This is evident from the recent analysis made by the Centre For Monitoring Indian Economy. According to the analysis released last week, there will be a slowdown in the GDP growth, decline in food production, fall in exports (as 5 per cent against 5.3 per cent last year), worsening of the balance of payment position and a sharp decline in the index of industrial production.
Inflation rate is likely to hover around 8 per cent.It is a dark foreboding for the Indian economy, but things may change once sanctions imposed by the USA are softened. There is distinctly some hope for a better understanding between India and the USA and the third meeting between Jaswant Singh and the US Deputy Secretary of State is scheduled to be held in New Delhi on July 20 and 21.

Aviation Notes
For once, passengers happy
by K.R. Wadhwaney
THE safety of passengers, safeguard of aircraft and smooth functioning of flow of traffic, incoming and outgoing, are among key areas that the new Airports Authority of India (AAI) chairman B.D. Gupta has to tackle.
The assignment is challenging as also exciting. There are weak zones at international concourses, virtual chaos at national areas of operation and disappointing functioning at other airports which have sadly remained unattended to for years.Indira Gandhi International Airport (IGIA), for example, provides persons easy access to sensitive areas.
There have been instances of ‘undesirable characters’ being issued passes. Why should travel agents be issued passes on the plea of facilitating passengers? There are enough airline officials to handle this assignment.The AAI, with an “army of staff” at the IGIA, has failed to streamline the functioning of the airport. Passengers get stranded, visitors suffer.
The AAI’s public relations at the airport is far from satisfactory.As far as the new airport building is concerned, Indian Airlines’ regular and trusted passengers are satisfied with the facilities provided to them on ground in the new terminal building. “We are getting personal attention”, said three ladies while relaxing at the departure lounge after obtaining their boarding passes.
The new terminal building, much more spacious than the earlier one, has, among other facilities, three lounges for VIPs and business class passengers. Two are managed by the AAI, and one by the national carrier.Indian Airlines, out to win friends and influence people, has furnished its lounge tastefully and meticulously. It has two TV sets and its own pantry among many other facilities. For once, passengers were happy and the staff wore an air of pride. Indeed, a welcome change.

A historic flight
Cathay Pacific and Swissair provided glimpses of the new airport at Hong Kong to 20 Indian travel agents. Cathay Pacific Airways flight CX 889 made history when it became the first commercial aircraft to land at the new airport in Chek Lap Kok.
The CX 889 is known as the ‘Polar one’ as it flew over the North Pole during the first ever non-stop flight from New York to Hong Kong.Cathay Pacific Airways flight CX-907 made to the record books as the first aircraft to depart from the new airport. The flight carried a group of underprivileged children to help celebrate the occasion. It was a great experience for children to take off from the new airport which, according to experts, is one of the finest in the world. The airport has many ultra-modern facilities.

Unbending
“Tatas’ are unbending lohars’. They might have lost many ‘battles’ in the arena of the Tata-SIA link-up, but they seem to have eventually won a war of attrition — they will soon get the government nod to operate in the domestic sector. They are ready for take-off.

Nokia phone project put on hold
NEW DELHI, July 12 (PTI) — Global Cellular Major Nokia has put its cellular phone manufacturing project in India on hold but is going ahead with plans to open its first-ever software development centre in the country, a top company offical said.
“Prevailing market conditions have forced the company to temporarily shelve the cellular phone project,” said Hannu Karavirta, India operations chief of the $ 9.8 billion Finnish company, but reiterated the company’s resolve to go ahead once conditions improved.
“The software development centre would meet Nokia’s global requirements, mainly for the GSM cellular test platform and the built-in GSM cell phones,” Karavirta told PTI, adding that the project site would be Bangalore, Hyderabad or Gurgaon.
Nokia’s decision to set up the centre in India was influenced by advantages like easy availability of qualified software professionals and its volume requirements, he said. The company which started its operations in India in 1994 has been outsourcing software from two Indian companies for a year and a half, and the final decision to open the centre would depend on the performance of these business partners.
Nokia does not have software development centre anywhere in the world, and the proposed centre would be its first such foray.

Biz briefs

Inflation up
NEW DELHI, July 12 (PTI) — The annual rate of inflation shot past 7 per cent to touch a 70-week high of 7.41 per cent for the week-ended June 27 due to the sustained increase in prices of primary food articles. The wholesale price index (WPI) based inflation rose by 0.55 percentage points during the week to 7.41 per cent (provisional) from 6.86 per cent (P) in the previous week and 5.65 per cent in the corresponding week last year. This is the highest since 7.77 per cent recorded in the week ended February 22, 1997. Since the beginning of the current fiscal year, the rate of inflation has increased by over two percentage points. This is mainly on account of increase in the prices of primary food articles, especially vegetables, since the beginning of 1998-99.

Small exporters
PHAGWARA, July 12(FOC) — A special meeting of the Punjab Chamber of Small Exporters with R.L. Kohli in the Chair yesterday resolved to approach the government for provision of 100 per cent exemption of octroi to export productions, particularly engineering items like diesel engines, pumping sets, auto parts, bicycles etc. Chamber vice-president Paramjit Singh Sethi said earlier export productions were given export exemption through the re-export pass system. Another vice-president A.K. Kohli said the Rajasthan Government had abolished octroi to boost export and industry.

New engine
KURUKSHETRA, July 12 (FOCI)— The local Kurita Guyana Kinder of C.C.S AH in collaboration with Pro Agora Seed Company and Detail Fertilisers Limited jointly organised a demonstration of a new engine, operated riding type Chinese paddy transplanted, at Niwarsi village, 16 km from here, on Friday.