The Tribune...Business

	B U S I N E S S	Monday, July 20, 1998
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Accord priority to exports: Phdcci
CHANDIGARH , July 19 — The PHD Chamber of Commerce and Industry has suggested to the Punjab government to carve out an attractive export policy and also set up trade information centres...

PFC identifies 1,450 MW projects
NEW DELHI, July 19 — Power Finance Corporation has identified projects of a combined generation capacity of 1,450 MWs for sanctioning Rs 1,600 crore...

India Telecom to be registered under Companies Act
NEW DELHI, July 19 — The proposed corporate “India Telecom” of the Department of Telecommunications (DoT) is likely to be registered as a corporate entity...

LG to invest in India
NEW DELHI, July 19 — South Korean Electronics Giant LG is planning to invest about $ 300 million in India over the next 10 years, quite undeterred by the South East Asian currency crisis...

FCI to increase storage capacity
NEW DELHI, July 19 — State-owned Food Corporation of India (FCI) has chalked out an ambitious plan to create additional storage capacity of 20 million tonnes, including containerisation and a novel vacuum process system ...
FIPB clears SBI-GE joint venture
NEW DELHI, July 19— The Foreign Investment Promotion Board (FIPB) has approved the proposals of GE Capital Services to set up a joint venture with State Bank of India (SBI) for credit card services and for financial consultancy...
LIC’s life fund crosses Rs 1,00,000-cr mark
CHANDIGARH, July 19 — Mr G. Krishnamurthy, Chairman, Life Insurance Corporation of India while announcing the financial results of the corporation for the fiscal 1997-98, informed that the LIC’s life fund crossed the Rs 1,00,000 crore mark...
Kribhco has Rs 1000 cr surplus funds
RAJKOT, July 19 — Krishak Bharati Cooperative (Kribhco) has a surplus fund of Rs 1000 crore and if sanction for expansion of the Hajira unit is granted early production can increase, according to its Director, Ramnik Dhami...
Aviation notes
Market Grapevine

Accord priority to exports: Phdcci
By U.K. Bhanot
Tribune News Service
CHANDIGARH , July 19 — The PHD Chamber of Commerce and Industry has suggested to the Punjab government to carve out an attractive export policy and also set up trade information centres. This, it says, will not only boost exports and help create a healthy environment for industrial growth in the state.
The chamber has expressed the view that the government should accord priority to exports through development of quality infrastructure and announcement of incentives which should be in the form of exemption rather than cash disbursement. The industrial units exporting 25 per cent of their production should be the criteria for their recognition.
Priority, it says, should be given in allotment of land, sanction and energising of power connection, NOC from Pollution Control Board ( if required), sanction and disbursement of loan from the State Financial Corporation on priority and exemption from octroi. The 100 per cent export units should be encouraged irrespective of being small, medium or large scale. It has also suggested that at least three export zones i.e. Ludhiana, Dera Bassi-Lalru and Jalandhar should be identified for priority upgradation development of infrastructure , irrespective of location category.
It points out that the Government of India reimburses Central Sales Tax on purchases from other states to the 100 per cent export oriented units (EOUs). In fact , due to this benefit, the EOUs are discouraged to purchase raw materials from within the state which is against the interest of local industry and trade. Hence exemption be given from state taxes and levies such as purchases tax, market fee, rural development cess for procurement of raw materials. Such units should be exempted from payment of electricity duty for initial period of five years irrespective of sanctioned load. A nodal authority should be appointed to coordinate the problems of exporters at the state level with the Central Government as also those within the state.
Recognising the need for easy access to the latest information, the state governments should establish trade information centres which should be easily accessible and efficient. The formalities required to be fulfilled with respect of the rules of the state government also create a very unfavourable working environment. In order to really bring the business community at a level playing field with their counterparts abroad, it is essential to work continuously towards simplifying and streamlining the procedures along with strict monitoring and timely disposal of each and every case. Internet facility can be used not just for marketing of products in the world market but also for marketing of potential importers abroad.
The Excise and Taxation Department has subjected export related incentive such as Advance Licence, Special Import Licence, Exim Scrip, REP and DEPB Licences to sales tax. The export unit should be favourable consideration in this respect.
These incentives are given by the Government of India to exporters for compensating the higher cost of inputs. Many a time, the Punjab Warehousing Corporation does not make the containers available to exporters and the cargo loads on the trucks are delayed for want of containers and the shipments get delayed.
It is understood that various state electricity boards in the country monitor consumption of permissible power load on the basis of contract demand. Since all large supply consumers have installed electronic meters which record data including maximum demand (MDI) every few minutes, the PSEB should also rely on the maximum demand and disband the current practice of checking connected load. Therefore, the maximum demand should be considered as the basis for excercising control of contract demand and not the connected load. The local taxes/levies add to the cost of final product thereby adversely affecting the price competitiveness of rice in the international market.

India Telecom to be registered
under Companies Act
NEW DELHI, July 19 (PTI) — The proposed corporate “India Telecom” of the Department of Telecommunications (DoT) is likely to be registered as a corporate entity under the Companies Act, 1956, with provisions for disinvestment, highly placed government sources said.
Incorporating the company under the Act, will impart India Telecom with much-needed flexibility to raise resources including valuable foreign exchange through global depository receipts (GDR), said a draft note prepared by DoT for the cabinet, they said.
The note also explains details of the statutory model which can come through an Act of Parliament. However, this has been discounted by DoT, which said it will not allow India Telecom, without further amendments in the original Act, sources said.
The note also contains three different approaches, suggested by DoT. To deal with a liability of Rs 12,067 crore towards payment to its employees as retirement benefits at the time of corporatisation, the sources said.
One of these is to be approved by the Cabinet, they said.
The note proposes that DoT raise private borrowings to meet this huge expense from domestic financial institutions or resort to external commercial borrowings as the last option.
DoT has suggested debt-equity ratios with least, moderate and maximum debt proportions. A ratio of 0.19:1 was proposed in the least category, while 0.53:1 in the moderate and a 1.09:1 in the maximum category.
Meanwhile, telecom officials continued talks with representatives of employees in an effort to garner support for corporatisation.
Although most unions have accepted the corporatisation decision, the move to register the company under the Companies Act has attracted employees’ ire.
Mr N.K. Chhokar, General Secretary of the Indian Telecom Service Association (ITSA), said this is a clear indication of the government buckling under pressure from multinational companies and the World Trade Organisation (WTO).
The Finance Ministry asked for corporatisation since the government needed more foreign exchange and DoT disinvestment would bring in valuable forex, Chhokar said, adding, the association would fight it out.
Mr S. Basu, heading the telegraphic engineers service association, representing group “B” officers, said any move to register “India Telecom” under the Companies Act will meet with stiff opposition since only an Act of Parliament can make it truly self-regulatory.

PFC identifies 1,450 MW projects
NEW DELHI, July 19 (UNI) — Power Finance Corporation has identified projects of a combined generation capacity of 1,450 MWs for sanctioning Rs 1,600 crore in the current fiscal.
The projects which are likely to receive green signal from PFC during 1998-99 are two units of 210 MW at Kharparkheda in Maharashtra, four units at Maneri Bali of 76 MW in Uttar Pradesh, three units of 42 MW at Largi in Himachal Pradesh, Tonk Hydro Electric Scheme in Madhya Pradesh, two units of 70 MW of Orissa Hydro Power Corporation at Bali Mela and a few small projects in Tamil Nadu.
Talking to UNI, PFC Director, Projects, K.K. Govil said, “these hydro electricity projects were languishing for some time but have now come up for consideration for getting loans. On completion of these projects, they will produce over 1,000 MW.” The state-owned PFC has set apart a total of Rs 1,000 crore in the current fiscal to finance these hydro units, while Rs 600 crore is for thermal power plants, he added.
Among the coal-based projects, the apex financing body in the power sector has identified two thermal units — Panipat Unit VI of 210 MW in Haryana and the second unit of Surat Garh of 250 MW in Rajasthan, Mr Govil said.
PFC gives to the extent of 35 per cent of the total project cost in hydro electricity units and 30 per cent in thermal units. The actual disbursements of loans after sanctions will be done according to the pace of the project, PFC officals said.
“The chances of these projects getting loan sanctions are very high as PFC, after interacting with the respective state electricity boards, is aware of their problems and potential,” Mr Govil said.
“We will sanction upto Rs 1,200 crore for thermal R and M work and Rs 100 crore for hydro units in 1998-99,” Mr Govil said. The loans will benefit thermal projects of 10,000 MW and hydro units of 1,100 MW to improve their plant load factor, he added.
The corporation intends to mobilise about Rs 1,950 crore for the current fiscal and its disbursal target has been set at Rs 2,500 crore.

LG to invest in India
NEW DELHI, July 19 (PTI) — South Korean Electronics Giant LG is planning to invest about $ 300 million in India over the next 10 years, quite undeterred by the South East Asian currency crisis.
“We have absolutely no plans to freeze investments or rollback investments, in India, on the contrary, we are going to step up our operations in India as there is a huge market for consumer electronics and home appliances,” said Rajiv Karwal, Vice President, Marketing and Sales, LG Electronics India.
LG set up shop in India in May last year, investing about $ 60 million, which is to be stepped up to $ 150 million by 2000 AD, he told PTI.
Mr Karwal added that his company was not hit by sanctions as it had no plans at the moment to raise any debt from overseas institutions. “Most of our debt is raised in India itself and we have tied up with domestic financial institutions like industrial credit and investment corporation of India (ICICI) for our needs,” he said.
Mr Karwal said that while some of LG’s rival companies had put on hold some of their projects in India because of the uncertain atmosphere created by sanctions since the Pokhran nuclear tests, we are going ahead with our scheduled plans.

FCI to increase storage capacity
NEW DELHI, July 19 (PTI) — State-owned Food Corporation of India (FCI) has chalked out an ambitious plan to create additional storage capacity of 20 million tonnes, including containerisation and a novel vacuum process system (VPS).
“Already we are facing storage problems. There has also been no addition to capacity in the last five to six years necessitating increasing capacity by about 18 to 20 million tonnes to meet additional procurement of grains,” FCI Chairman B. Narsimhan told PTI.
The FCI has a storage capacity of 27 million tonnes, which is not sufficient to meet the corporation’s present requirements.
This makes it dependent on state procurement agencies and private players for extra storage capacity.
According to an estimate, about Rs 180 crore is needed to create additional storage capacity for meeting future requirements.
The corporation also plans to create new capacities in consuming areas, plan logistics in a better way and avoid double transportation of foodgrains, Narsimhan said.
The vacuum process system, which uses PVC containers, is considered a superior storage method and does not need covered space as it can be kept in the open without any loss in quality or quantity.
Foodgrains stored in such containers do not face the danger of contamination, fungal infection and can be stored for three to four years, experts said.

FIPB clears SBI-GE joint venture
NEW DELHI, July 19 (PTI) — The Foreign Investment Promotion Board (FIPB) has approved the proposals of GE Capital Services to set up a joint venture with State Bank of India (SBI) for credit card services and for financial consultancy.
In the first joint venture for credit cards, SBI will hold 60 per cent stake while GE Caps will hold the remaining 40 per cent.
However, in the consultancy joint venture GE Caps will initially hold 60 per cent stake and this would later be raised to 75 per cent, sources at the FIPB said after a meeting yesterday.
The consultancy joint venture will provide services for issuances of payment cards.
Total foreign investment by GE Caps in the two ventures would be about Rs 70 crore, with about Rs 40 crore for the consultancy venture and Rs 30 crore for the credit card venture, the sources said.
The SBI-GE Caps venture is getting the nod after months of delay primarily due to the department of economic affairs seeking more time to clarify certain norms in the proposal.

LIC’s life fund crosses Rs 1,00,000-cr mark
Tribune News Service
CHANDIGARH, July 19 — Mr G. Krishnamurthy, Chairman, Life Insurance Corporation of India while announcing the financial results of the corporation for the fiscal 1997-98, informed that the LIC’s life fund crossed the Rs 1,00,000 crore mark.
The LIC also registered considerable increase in new business as well as financial growth. This growth reflected the corporation’s efforts to increase the penetration into the life insurance market and that 1997-98 was a landmark year.
LIC’s life fund, has registered a growth of 20.59 per cent and the total premium income was Rs 19,252.07 crore reflecting a growth of 18.55 per cent.
The LIC’s total claim settlement was to the tune of Rs 6,673.07 crore showing an increase of 16.61 per cent over the previous year.

Kribhco has Rs 1000 cr surplus funds
RAJKOT, July 19 (PTI) — Krishak Bharati Cooperative (Kribhco) has a surplus fund of Rs 1000 crore and if sanction for expansion of the Hajira unit is granted early production can increase, according to its Director, Ramnik Dhami.
Speaking at a seminar here today, Mr Dhami urged the Union Government to take early action to raise commission because a number of member societies have asked for an increase in commission.The organisation also was ready to help establish basic facilities to the farmers like drip irrigation system and construction of check dams, he said.
Earlier, inaugurating the seminar organised by the Kribhco, Union Minister of State for Chemical and Fertilizer, Dr A.K. Patel, hailed performance of the cooperative sector engaged in fertiliser production.These plants had registered record production of over 125 per cent.
Besides, local people in large numbers were being employed in the plants, he added.State Minister of Road and Building, Savjibhai Korat, was also present on the occasion.

Aviation notes
‘India an ideal aviation hub’
by K.R. Wadhwaney
ALL foreign airline officials undergoing their lucrative tenure of postings in this country hum one tune: need of level play-field for the growth of aviation industry.
The demand, on the face of it, may be understandable. But can any foreign airline official honestly state that his country offers level play-field to its rivals?
The aviation experts emphasise that there is far greater disparity in USA, Germany, France, Singapore, Japan and many other countries than in this country. The difference is that the affluent airline powers do not succumb, while India is ever ready to wilt under pressure. Foreign airline officials are fully aware of Indians weakness and they are quick to exploit it to their complete advantage.
In many foreign countries India is unable to obtain a suitable slot for landing and taking off. The more India pleads, the less it is granted. Why should then officials, like Leo Van Wijk (KLM) ask for a level play-field?
On the vex subject of impartiality or otherwise, I am reminded of an amusing incident that took place in the Allahabad High Court decades ago. A promising criminal lawyer was arguing a ticklish murder case in the Chief Justice’s court headed by his father. As the case reached climax of arguments and counter-arguments, the opponent lawyer accused the Chief Justice for being partial to him, meaning his son. The Chief Justice did not take amiss the accusation. He quietly rose from his high chair and said: “You are right. If father does not help his son, who would? You?” There was a laughter in the court.
If the national government does not safeguard the interests of its national carrier or carriers, who would? KLM or Air France or United Airlines?
The fact of the matter is that all airlines are guilty of malpractices and

unethical dealings. If the dispassionate survey is undertaken, it will be realised that two national carriers, Air India and Indian Airlines, are angels as compared to many affluent carriers, which are making hay while sun shines.
The foreign carriers are prospering in this country because of weakling policy of the Directorate-General of Civil Aviation (DGCA). There are any number of instances when foreign pilots, through their ground staff or public relations unit, have ‘bribed’ air traffic controllers to secure clearance for landing quicker than aircraft belonging to national carriers. Foreign aircraft are provided lower level than Air India and Indian Airlines.
The gameplan of foreign carriers is simple: money saved on fuel for quick landing is much more than negligible money spent in providing costly gave-aways to the ATCs. There are several dubious methods that foreign carriers adopt while operating through this country
KLM’s chief Wijk has gone on record saying that India is ideally suited to become an aviation hub connecting the east and the west. This is indeed true. But India does not need help from foreign powers. There are many technically qualified officials and aviation experts who can upgrade existing Indian airports and their facilities to international standards. What is the need of the hour is stable Government so that plans and programmes envisaged are completed.

Another controversy
Frequent changes in government and thereby Minister for Aviation give rise to nothing by controversy. On the Rs 2700 crore Bangalore Airport project, Tatas say one thing, while the minister says another.
According to Tatas, they have withdrawn from the project because of ‘insurmountable’ hitches on road to the project. The Minister of State for Civil Aviation Ananth Kumar says “there are no hitches on Tatas continued involvement in the project”. Who is right? Nobody knows. But it adds chaos into already existing confusion.
One thing, however, is certain that Tatas are coming to operate their flights on the domestic sectors.

Market Grapevine
Buy-back in offing — Who benefits?
Contrary to the Finance Minister Yashwant Sinha’s earlier pronouncement that the Bill pertaining to the permission for corporates to buy-back their own shares would be introduced only in the Winter session of Parliament, the shakeout at the bourses in recent times seems to have forced him to press the fast forward button on this issue. The million dollar question now is — which are the companies that will benefit therefrom — market experts seem unanimous in their opinion that three major beneficiaries will be the shareholders of Reliance Industries, ITC and SBI. Is that why the share prices of these pivotal scrips have already begun moving up?

Tata Timken : Time to switch?
An Indo-US joint-venture between the Tatas and Timken of the USA this company manufactures tapered roller bearings and cartridge tapered roller bearings. The company derives a major portion of its business from being the original equipment manufacturers for the commercial vehicles segment headed by Telco and also to the Railways for the cartridge tapered roller bearings. A recently tabled research report of a brokerage house has recommended a switch over from this scrip. Why ? The findings of the research team seems to suggest that it is unlikely that the company will be able to maintain the momentum it recorded during the previous financial year considering the fragile state of the economy in general and the industry it is engaged in, in particular.

Harrisons Malayalam
A constituent of the RPG Group, Harrisons Malayalam is a leading player in the tea and rubber industry. It is Kochi based and also has tissue culture and engineering divisions. Under its belt are the brands Mountain Mist, Harrisons Gold and Surya Tea. Tea contributes the major part of its turnover. The company is in the process of setting up a new tea manufacturing factory. It has three brands and is currently operating in the states of Kerala, Karnataka and Goa. It is also planning to launch its branded tea in the states of Tamil Nadu and Andhra Pradesh. Expected to enhance its brands acceptance in many parts of the country, the prospects of the company appear to be encouraging. At least, that is what a recently tabled FII research report on the tea industry seems to suggest.

German Remedies
The share price of this pharma major, which is engaged in the manufacture of bulk drug and pharmaceutical formulations has been see-sawed between Rs 300 and Rs 500 over the last few months. To recap, the possibility of a bonus announcement had led to a sharp increase in the price of this scrip, which has dipped again after the announcement did not materialise. However, with sound fundamentals and the increased possibility of a bonus announcement during this financial year, this scrip has again whetted the appetite of institutional investors. Anyone interested?

Biz briefs

Inflation
NEW DELHI, July 19 (PTI) — Continuing its upward rise, the annual rate of inflation touched a 71-week high of 7.59 per cent for the week-ended July 4, with prices of vegetables and edible oil showing no signs of relenting. Inflation based on the wholesale price index (WPI) increased by 0.18 percentage points during the week to 7.59 per cent (provisional) from 7.41 per cent (P) in the previous week and 4.41 per cent in the corresponding week last year.

NIFCA
CHANDIGARH, July 19 (TNS)— National Institute of Fashion and Creative Arts (NIFCA) was inaugurated here today by noted sculptor Shiv Singh. NIFCA has decided to start two courses in fashion designing and textile designing of the duration of one and two years. The institute plans to impart scientific, technical and professional approach in the fields concerned. Mr G.L. Kaushal and Mr R.S. Gautam, the directors of the institute informed that these courses have high job potential.

Special software
NEW DELHI, July 19 (TNS) — Price Waterhouse Associates Pvt Limited (PWA) and Oracle Software India Ltd has announced the launch of an integrated IT solution for the power sector specially designed to suit Indian conditions. Called EM power, the software includes all key commercial functions and data, related to power generation, transmission and distribution, covering all aspects of billing and collection, materials management, work order monitoring, customer enquiry, loan accounting, coal accounting and other features.

Hearing aids
NASIK, July 19 (PTI) — A hearing aid, with a combination of digital signal processing and twin mike system which allows digitisation of incoming signal for quick analysis of the acoustic signal and filters out noise, has recently been launched by Siemens. The product “Prisma”, having advanced multi-directional microphones, allows the user to understand conversations even in noisy environments.