The Tribune...Business

	B U S I N E S S	Wednesday, July 15, 1998
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Bathinda refinery clears main hurdles
NEW DELHI, July 14 — Decks are almost cleared for the setting up of the petroleum refinery at Bathinda. The Planning Commission has given its nod. Only one hitch remains: clearance of the Rajasthan Government for the laying of the pipeline from the Gujarat coast to Punjab has to be obtained before the final green signal for the project is formally announced...

OBC declares 30 pc dividend
LUDHIANA, July 14 — The Oriental Bank of Commerce (OBC) has registered an all-time high net profit of Rs 210 crore for the year ended March 31, 1998, a quantum leap of 16.5 per cent over the previous year’s net...
Why the long wait for telephone
NEW DELHI, July 14(PTI)— The government today admitted that the objective of providing telephone on demand by 1997 could not be achieved and attributed it to the delay in the entry of the private sector in the field of basic services...
IMF expanding ‘gambling outlets'
IN the land of the blind, the one-eyed man is king — and when it comes to addressing problems in the crisis-prone global financial system, the one-eyed men of the Wall Street and the IMF...

Furnace oil denied
LUDHIANA, July 14 — Industrial units face an acute shortage of furnace oil — basic input of the forging industry.Punjab’s industry, which requires above 20,000 kilo litres of furnace oil per month, gets its supplies from Ambala, Jalandhar and Mathura depots...

Finance Ministry rejects Sebi order on Hind Lever

Bathinda refinery clears main hurdles
From Shubhabrata Bhattacharya
Tribune News Service
NEW DELHI, July 14 — Decks are almost cleared for the setting up of the petroleum refinery at Bathinda. The Planning Commission has given its nod. Only one hitch remains: clearance of the Rajasthan Government for the laying of the pipeline from the Gujarat coast to Punjab has to be obtained before the final green signal for the project is formally announced.
A meeting took place in the Udyog Bhawan office of the Minister of State for Industry, Mr Sukhbir Badal, and the officers of various ministries concerned in which representatives of the Prime Minister’s Office were also present.
While the Gujarat and Haryana governments have cleared the laying of the oil pipeline, a similar clearance from Rajasthan, which lies en route, is yet to be obtained.
Today’s meeting reviewed the “nuts and bolts” position of the project and Mr Sukhbir Badal is likely to formally write letters on behalf of the Centre to the state governments concerned and other agencies from whom an in-principle clearance has to be sought after the Planning Commission’s approval of the project.
The Bathinda refinery which alone will be bringing in an investment of around Rs 16,000 crore is part of the plan for mobilising investments to the tune of around Rs 30,000 crore over the next few years for industrialisation and development of Punjab.As the Minister of State for Industry, Mr Sukhbir Badal, while looking after the departmental charge assigned to him as well as concentrating on the future plans of 48 public sector units which report to him, is on a daily basis monitoring the projects concerning Punjab.
Mr Sukhbir Badal has two plastic document holders facing him on his table — one is the usual appointments list and the other is a list of Punjab projects which need to be monitored by him during the day.
This list includes the projects concerning the HMT plant at Mohali, the expansion of BHEL at Goindwal Sahib, Gujarat Ambuja’s cement plant in Bathinda, the Apollo Tyres plant at Ropar, besides the Bathinda Refinery. The setting up of Industrial Training Institutes at Ludhiana and Jalandhar are also included in his priority list.
According to sources, negotiations are on with other private sector companies to attract investment into Punjab. Major investments in Punjab so far have been limited to the public sector or with local entrepreneurs like the Oswals and the Munjals.
A major drive has now been undertaken to attract private capital from other states into Punjab.“Bathinda will soon be like Ludhiana”, says a beaming Mr Sukhbir Badal while explaining the details of the plans for Punjab. Besides the refinery and the cement plant, a full scale ancilliary township is likely to grow in this new industrial town which will also have the benefit of the 1,000 mw power plant which should be using as raw material the byproducts of the refinery, he points out.
Two thousand acres of land worth around Rs 70 crore has already been acquired for the refinery project (being set up by Hindustan Petroleum Corporation Limited) and once the “nuts and bolts” of the project are in place, the development plan for industries in Punjab will take off, he points out.

OBC declares 30 pc dividend
Tribune News Service
LUDHIANA, July 14 — The Oriental Bank of Commerce (OBC) has registered an all-time high net profit of Rs 210 crore for the year ended March 31, 1998, a quantum leap of 16.5 per cent over the previous year’s net, which stood at Rs 180.25 crore.
The Board of Directors has declared a dividend of 30 per cent.Speaking at the customer meet here yesterday, Mr Dalbir Singh, Chairman Managing Director of OBC, said that prudent financial management, high deposit growth rate and steps to enhance employee productivity have all combined as multipliers in producing the results.
The deposits grew to Rs 13,058 crore during the year. This represents a rise of 31.3 per cent in core deposits against industry average of 18.9 per cent. Moving in tandem, the advances reached a growth of over 29.3 per cent over the previous year, with the outflow adding up to Rs 6318,46 crore, as against the industry average of 17.6 per cent.
This was achieved in spite of the bank tightening lending norms in an effort to improve upon its non-performing assets rate (NPA at 4.5 per cent in one of the lowest among public sector banks).
As regards non-food credit to the commercial sector including investments in public and private sector bonds, shares, debentures etc. OBC’c commitment increased by Rs 2,637 crore.
Crisil has rated OBC’s certificate of deposits P1+ and its fixed deposits FAAA indicating the highest safety on timely payment of interest and principal. OBC has reached a total working amount (deposits plus advances) of over Rs 20,000 crore.
The bank’s productivity per employee, which is a measure of business to profit per employee, stood at Rs 135 lakh for the year, up by 24 per cent over the previous period.OBC plans to open 50 more branches.
The bank in association with Citibank and Master Card, is launching a credit card service in the next two months. OBC also plans to launch new loan schemes specifically for traders and farmers.
OBC recently set up one more training college in Chandigarh, equipped with the latest educational tools. For the year 1998-99, OBC is targeting to achieve a 25 per cent growth in both deposits and advances, Mr Dalbir Singh added.

Why the long wait for telephone
NEW DELHI, July 14(PTI)— The government today admitted that the objective of providing telephone on demand by 1997 could not be achieved and attributed it to the delay in the entry of the private sector in the field of basic services.
Responding to supplementaries during question hour in the Rajya Sabha, Communication Minister Sushma Swaraj said the department has submitted the Ninth Plan (1997-2002) proposals to the Planning Commission for approval envisaging provision of telephone on demand by the end of the 9th Plan with the private sector supplementing the efforts of the government.
Six private companies had signed licence agreements for providing basic telephone services in six circles and one among them has already started service in Madhya Pradesh.
Replying to a question on the waiting list, the minister said 27 lakh telephone connections were given against 27.57 lakh wait-listed phones. She said the government would reconstitute telephone advisory committees (TAC) immediately after the end of the Budget session of Parliament.

Furnace oil denied
From Our Correspondent
LUDHIANA, July 14 — Industrial units face an acute shortage of furnace oil — basic input of the forging industry.Punjab’s industry, which requires above 20,000 kilo litres of furnace oil per month, gets its supplies from Ambala, Jalandhar and Mathura depots.
However, various industrial federations have alleged irregularities at the Ambala depot and as a result, no supply is being given to Punjab.Mr P.D. Sharma, president of the Apex Chamber of Commerce and Industry, Punjab, said that the Ambala depot is catering only to the demands of Haryana, which consumes about 35,000 kilo litres of furnace oil.
Mr Joginder Kumar, president of the Federation of Tiny and Small Industries of India, has also criticised the non-supply of furnace oil by Indian Oil Corporation Ltd, Chandigarh, from Ambala cantt to industrial units in Punjab, although their allocation was sent to the Ambala cantt depot.
Leaders of various industrial associations have urged the Chief Minister to take up the matter with the central government and ensure regular supply of furnace oil to the industry in Punjab.

IMF expanding ‘gambling outlets'
From Kevin Watkins
IN the land of the blind, the one-eyed man is king — and when it comes to addressing problems in the crisis-prone global financial system, the one-eyed men of the Wall Street and the International Monetary Fund are firmly in control. During the 1990s, the destructive power of capital markets has been seen in Mexico, East Asia and Russia.
The scenario has become all to familiar. Unexplained euphoria takes hold and sucks vast sums into unstable markets, generating huge profits for foreign investors.
Then panic takes hold, capital takes flight, the currency collapses and the IMF springs into action, bailing out foolhardly investors, leaving behind economic collapse and social disintegration.The IMF is being revolutionised.
Countries borrowing from the fund will be required to liberalise their financial systems; the upshot will be an unprecedented transfer of sovereignty to global markets dominated by the Wall Street’s increasingly monopolistic conglomerates.
The conglomerates, led by Citigroup and Chase Manhattan, see the IMF as a mechanism for access to outlets for bonds, equities and commercial loans. According to the fund’s Managing Director Michel Camdessus, capital markets are no different from any others, and liberalisation will maximise efficiency and output.
Evidence from each successive financial crisis in the world suggests otherwise.Take the case of Indonesia. This year, the economy will contract by 15 to 20 per cent, dragging another 40 million into poverty. Investment has collapsed due to high rates and import shortages.
Unemployment has tripled to over 20 per cent. Thousands of private companies, viable before the crisis, have been pushed into bankruptcy.Indonesia is a microcosm of all that is wrong with financial regulation.
Commercial banks ignored clear warnings and increased lending to the country by 20 per cent during the first half of 1997 with over half of the new lending in high-interest loans of short maturity.
When a force devaluation quadrupled Indonesia’s external debt, the IMF loan secured repayments for foreign investors by nationalising foreign debt and transferring the costs of adjustment to the public budget, reversing over three decades of poverty reduction in the process.Not content with creating a risk-free casino for reckless foreign speculators, the IMF is now seeking to expand their gambling outlets.
At present, Vietnam forbids foreign banks from holding more than 10 per cent of operating capital in US dollars. In Chile, short-term equity flows are heavily taxed to prevent speculative activity. Such measures have helped to prevent a build-up of unsustainable foreign debt, yet they would be outlawed under the new IMF regime.
Radically different approaches are needed. Institutional investors such as mutual fund (unit trust) and pension fund managers should be required to make provisions for losses commensurate with the risk of their investments. This would help reduce the incentives for speculative investment and lower the potential for financial panic.
So, too, would an international tax on currency transfers.Better international surveillance of banking systems would also help at the margins, but the best way to ensure prudent lending is through international rules making imprudent lending genuinely risky.In the the case of East Asia, the authority of the IMF should have been used to force foreign investors to accept very large debt write-offs, and an immediate moratorium on repayments.
It should not be used to subordinate the interests of the world’s poor to those of the Wall Street. — The Guardian

‘Price rise not due to Budget’
NEW DELHI, July 14 (PTI) — Finance Minister Yashwant Sinha today said the government would strengthen the country’s international economic position through revival of exports and reduce reliance on borrowed funds as part of its long term goal towards capital account convertibility (CAC).
The government would calibrate the pace and character of integration with the world economy while achieving this objective, Sinha said in a written reply to Dr B.B. Dutta in the Rajya Sabha.Sinha said it is incorrect to say that the Budget has stoked inflation.
Neither is excess money supply responsible for it.Money supply last year was as high 17 per cent and the total borrowings amounted to Rs 86,000 crore, yet inflation was under check, he said.
But the government was aware money supply can have a bearing on prices apart from seasonal factors and hence it was keeping a tight control on money supply at 15 to 15.5 per cent.
To put the blame on the Budget for soaring prices was wrong as there was nothing in budget that could have had a cascading effect on prices, he maintained.
The Budget had not raised prices of fruits and vegetables nor had diesel prices and railway freight been increased.If at all the Budget has done anything it has reduced special Customs duty to 4 per cent and reduced duty on edible oil to check prices.
Though imports of edible oil come under OGL, large scale imports did not take place because of high international prices in major edible exporting South East Asian countries.Asked about the meeting of the core group of Secretaries on disinvestment, Sinha said he was yet to ascertain details of the meeting.Meanwhile, the core group of officials on disinvestment headed by Cabinet Secretary Prabhat Kumar, which met today, decided to move forward. “We are on target and its on track.
We will meet again next month,” sources said.The Cabinet Committee on Information Technology also met today under the chairmanship of the Finance Minister.
Sinha said the meeting considered operationalisation of recommendations of the task force on information technology.The Cabinet committee will meet again on Friday.

Sharif cancels ‘bailout’ tour
ISLAMABAD, July 14 (UNI) —Prime Minister Nawaz Sharif’s visit to a number of European countries has been called off after the host nations refused “concrete assurances” to rescue Pakistan from its present economic quagmire, officials today said.
Mr Sharif’s trips to the major European countries, including Britain, France and Germany, were aimed at getting the international community to soften sanctions, imposed following the nuclear tests in May.
Officials said Pakistani missions in Europe informed Islamabad that while the European leaders would like them to sign the Comprehensive Test Ban Treaty, they would offer no concrete assurance for an economic bailout in return.
The Prime Minister was of the view that face-to-face meetings with G-8 leaders would prove fruitful. Officials said that the meeting with British Prime Minister Tony Blair had already been finalised.

Finance Ministry rejects Sebi
order on Hind Lever
NEW DELHI, July 14 (PTI) — The Finance Ministry today overruled a Securities and Exchange Board of India (SEBI) order to prosecute Hindustan Lever Ltd (HLL) in the alleged insider trading case.
“Sebi was not justified in ordering prosecution of the appellants,” the order by the appellate authority said today.The order by Finance Secretary Montek Singh Ahluwalia and Special Secretary (Banking) C.M. Vasudev however, said Sebi was free to consider adjudication mechanism under the Sebi Act after following prescribed procedure for determining desirability and legality of imposing penalty on HLL.
It said: “We do not feel that it was open to Sebi to initiate investigations under Sebi regulations and then without passing an order under the regulations chose to take recourse to powers under the Act for awarding compensation.
”“We also find it difficult to agree with the view of Sebi that despite specific provisions in the act and the regulations it is open to it to use the general powers available under the Act.”HLL had appealed to the apellate authority against the Sebi order to prosecute five of its directors and directing it to pay UTI Rs 3.04 crore as compensation in the insider trading case during the merger of Brooke Bond Lipton India Ltd with HLL.
Sebi ordered on March 11 that it would launch criminal prosecution against the multinational and its five directors — former Chairman S.M. Datta, present Chairman K.B. Daisheth, and Vice-Chairman R. Gopalakrishna, A. Lahiri and M.K. Sharma.HLL had bought eight lakh shares of Brooke Bond Lipton India Limited (BBLIL) from UTI two weeks prior to the announcement of the merger at a price of Rs 350 per share on March 25, 1996.

Biz briefs

Coke vs Pepsi
NEW DELHI, July 14 (PTI) —Coca-Cola India garnered over 56 per cent of the soft-drinks market in May this year to lead arch rival Pepsico India’s 40 per cent, despite trailing in six cities, a study reveals. Figures from the survey conducted by the market research agency ORG-MARG hired by Coca-Cola India indicated that CCI brands mustered 56.6 per cent of the market in 23 cities where the survey was conducted. Pepsico on the other hand garnered 39.7 per cent with its brands like Pepsi, Mirinda,Teem, Seven Up and Duke. CCI brands — Coke, Fanta, Thums up, Limca, Citra, Gold Spot and Maaza — however trailed its rival in six cities including Mumbai, Bangalore, Pune and Coimbatore.

Crisil rating
MUMBAI, July 14 (PTI) — Crisil has assigned a “Grade-V” rating, indicating high uncertainty, to the collective investment schemes of United Capital Services (India) Limited and Endowment Agro Projects (India) Limited. The rating reflects the adverse overall risk profile of both Chandigarh-based companies on account of nascent stage of operations, high dependence on success of their plantations which are at preliminary stages, high financial risk on account of low operational cash inflows.

Kalp Vriksha
MUMBAI, July 14 (PTI) — The Investment Information and Credit Rating Agency (ICRA) has assigned the “CS 5” rating to a collective investment scheme “Kalp Sanchay” of Kalp Vriksha Plantations Limited (KVPL), indicating it involves high risk and speculation. The company, promoted by a retired railway employee at Haridwar in Uttar Pradesh and Karnal district of Haryana, has to repay money raised under several existing schemes in the next two to four years, ICRA said.

Bank MoUs
Tribune News Service
CHANDIGARH, July 14 — Punjab State Cooperative Bank and all 17 central cooperative banks in Punjab signed memoranda of understanding with Nabard yesterday to revitalise the working of cooperative banks. With the implementation of the MoUs the disbursement by CCBs in Punjab will increase from Rs 1962 crore in 1,997-98 to Rs 2,428 crore.

IT show
Tribune News Service
NEW DELHI, July 14 — IT World 98-Comdex India, a major information technology event, is scheduled to be held from December 2 to 5 this year in New Delhi by Business India Exhibitions and Ziff Davis.