|B U S I N E S S||
Thursday, October 22, 1998
Mutual fund dividend to be
gets panels nod
Punjab Tractors net profit
climbs 42 per cent
WB aid to Nathpa project to
Page transfers subscribers of Punjab to Punwire
Wallace to set up R&D centre
Mutual fund dividend to be tax free?
MUMBAI, Oct 21 (PTI) Making mutual fund dividend tax free in the hands of investors was one of the means discussed to revive the capital markets during a meeting between Union Finance Secretary Vijay Kelkar with the trustees of Unit Trust of India UTI sources said.
During the two-hour long meeting at the UTI headquarters here it was felt that the revival of capital markets would itself resolve the crisis faced by UTIs flagship unit scheme 1964, the sources said.
The discussion centered around enabling UTI to continue to play a dominant role in the capital market as it had been doing, as otherwise foreign institutional investors (FIIs) would become the key players.
The meeting also expressed concern over the continuing redemptions in US-64 since net outgo of money would cripple UTIs dominant position in the market.
The UTI has faced redemptions of over Rs 800 crore in US-64 since the disclosure early this month that the schemes investments depreciated by over Rs 3,000 crore as on June 30.
A perception has to go down in the market that the UTI is still a major buyer and it should be made to continue to play a dominant role in the market, was the message conveyed to the visiting Finance Secretary.
Mr Kelkar said a number of ideas and proposals came up at the meeting with UTI trustees, but refused to divulge details as he had to first brief the Finance Minister.
The sources said IDBI had also decided to become active in the secondary market since UTI is the only major buyer in the market.
IDBIs board has already agreed for such a move and its approval for the guidelines would be obtained at its next meeting.
IDBI would be placing a prudential cap on its secondary market operations, but even a 5 per cent ceiling would mean an amount of Rs 10,000 crores.
The meeting, which was attended by UTI Chairman P.S. Subramanyam, State Bank of India Chairman M.S. Verma and IDBI chairman G.P. Gupta, also discussed whether US-64 is a savings scheme or a product for which declaration of net asset value (NAV) is essential.
Trustees, however, stated that US-64 is a savings scheme and hence its NAV cannot be declared.
The meeting dwelled on how to revive confidence in UTI and US-64 and market boosting measures were suggested as a turnaround in the stock markets would raise US-64s NAV, which is currently below par.
Punjab Tractors net profit climbs 42 per
CHANDIGARH, Oct 21 Punjab Tractors Limited (PTL), based in S.A.S. Nagar, today reported a 42.5 per cent rise in its net profit for the half year April-September 98 at Rs 58.7 crore over the first half of last financial year.
This represents an annualised EPS of Rs 57.97 against Rs 40.69 achieved for the corresponding period of the previous year.
While the cash profit for the half year has jumped to Rs 88.8 crore from the corresponding last year level of Rs 62.9 crore for a margin of 19.5 per cent (last year 17.1 per cent), PBT has risen 40 per cent, reaching Rs 82.0 crore (last year Rs 58.4 crore). More than 95 per cent of PTLs profit growth in the first half has come from its mainline business.
Our healthy performance was powered by a 23.2 per cent growth in the total revenue which has reached Rs 454.5 crore, said Mr Yash Mahajan, the companys Vice-Chairman and Managing Director. The encouraging performance is despite excessive rain and the traditional lean season for the tractor industry.
In the quarter July-September, the company sold 10,514 Swaraj tractors against last years 9,623 tractors. As against this the industrys performance was virtually flat with the aggregate volumes moving to 60,132 tractors for the second quarter.
The better-than-market performance during both the first and second quarters has enabled Swaraj to raise its first half volumes to 22,522 tractors (last year 18,936) against the comparative industry volume of 123,359 (last year 122,035).
Consequently, Swarajs market share has risen to 18.3 per cent from 15.5 per cent posted for the first half of 1997-98. The improvement has been across the country.
The combine-harvesters offtakes continued to be buoyant, taking the total despatches for the first half to 127 against 75 sold in the previous fiscal. The forklifts sales remained flat at 30 (last year 35) due to poor demand.
The volume growth
coupled with intensive efforts to manage the cost
structure has led to a sound growth at all earning
levels, said Mr Mahajan. Despite funding the
capacity expansion outlays entirely through internal
accruals, finance charges continue to be a
net earner Rs 1.7 crore for the half year ended
September 30, 1998 (0.8 crore for first half last
Help rain-hit farmers, RBI tells
CHANDIGARH, Oct 21 The Reserve Bank of India today advised senior bankers to instruct their branch managers to adopt a sympathetic approach while dealing with requests of farmers for rescheduling of loans.
The RBI called a meeting of senior bankers here to impress upon them the need for providing relief to farmers who have been adversely affected by unseasonal rain in Punjab and Himachal Pradesh.
The meeting was chaired by Mr K. Vijayaragyhavan, General Manager and Officer-in-Charge, RBI, Chandigarh, and also attended by officials of the State Government.
A suggestion was also made
to hold farmers meetings for explaining to them
various facilities available from banks. The bankers were
also advised to consider requests of farmers for
sanctioning of consumption loans as per the RBI
Concor gets panels nod
NEW DELHI, Oct 21 (PTI) The Cabinet Committee on Disinvestment today decided to go ahead with divesting of government equity in Container Corporation of India (Concor).
We are going ahead with the disinvestment of Concor as soon as possible, Finance Minister Yashwant Sinha, who heads the Cabinet committee, told newsmen after a 90-minute meeting.
Asked if it would be done this month itself, Mr Sinha said time frame and pricing of shares were being worked out.
WB aid to Nathpa project to continue
NEW DELHI, Oct 21 The Union Power Secretary, Mr V.K.Pandit, today said there was no question of suspending the $437 million World Bank loan for the 1500 mw Nathpa-Jhakri power project being executed jointly by NJPC and the Himachal Pradesh Government.
Mr Pandit said this at a
meeting with the Himachal Pradesh Financial Commissioner
and Chairman of the State Electricity Board, Mr
A.K.Goswami, here. Mr Pandit also informed the Himachal
official that the case of revised cost estimate of the
Nathpa-Jhakri hydro power project would be discussed at
the Project Investment Boards meeting being
H.P. to boost software units
NEW DELHI, Oct 21 (PTI) Himachal Pradesh has drawn up an ambitious plan to boost electronic, software and other pollution-free industries and offered many incentives to investors in this sector.
State Chief Minister Prem Kumar Dhumal, who was here last week to negotiate the annual plan for the state with the Planning Commission, said the state had identified software, electronics, hydel power, textile, horticulture and agro-based industries for development during the next decade.
He said special emphasis would be given to software and electronics industries as the state had greater scope for this because of 100 per cent pollution-free atmosphere.
The state government has drawn up a plan for this sector and proposed to make full utilisation of existing infrastructure created for Shimla and medium range electronic and software industries at Hoghi near Shimla.
If entrepreneurs respond in a positive manner, similar facilities would by provided at other ideally suited places, he said.
The Chief Minister said to ensure development of industrial sector, the Centre has extended the tax holiday for industries in Himachal till 2000 and the state government wanted to take full advantage of this facility.
Mr Dhumal said rules relating to provision of land to the industries had been simplified and it was being given on no-profit basis with the government only charging 30 per cent of the developmental cost initially.
The remaining 70 per cent cost would be charged within next five years in instalments, he said.
He said Himachal was the only state in the north where industrialists need not worry about the power supply.
With the commissioning of some major hydel projects within next three to four years, the state would have power in abundance, he claimed.
He said the government was determined to exploit the states huge hydel power potential to the best of its capacity and had received a positive response for investment in this sector.
He said an 86-mw project at Malana in Kulu district had been offered to Bhwara group and the government proposed several concessions to the private sector if the projects were completed within the scheduled time or before it.
Nathpa-Jhakri and Chamera Phase-III were among the major
power projects to be commissioned in the near future and
2151-mw Rbati, 800-mw Kol Dam and 600-mw Rampu projects
were the next priority of the state, he said.
THE recently concluded Indo-Pak talks have come to the rescue of sugar exporters in Pakistan who were complaining of favoured treatment to business rivals in the country with powerful connections.
Islamabad has decided in principle to meet the long-standing demand of the exporters to restore road trade with India, which is expected to end the monopoly of a handful of sugar barons on exports to India.
Five sugar mills in the Punjab province had reportedly acquired all available wagons of Pakistan Railways which are used for sending the commodity to India.
However, the restoration of road trade with India is expected to make things easier for other exporters. This step is part of the proposed confidence-building measures between the two countries and is to be discussed in the second phase of the bilateral talks scheduled for early next month in New Delhi. IANS
Crisis-hit Pakistan has fallen behind in repayments on existing World Bank loans and a spokesman has said the bank is watching the situation closely.
Pakistan, already in default with some of its creditors is now more than 30 days late with a World Bank payment of $ 25.8 million. This is enough to cause alarm, but not to trigger full default under World Bank rules.
World Bank rules view a 60-day payment delay as default which means that all payments on existing loans are halted and new loans cannot be brought before the World Bank Board.
But a first warning bell is rung when payments are delayed by 30 days, and there is a second warning after 45 days.
Pakistan is already in political and economic hot water with the international community, both because of nuclear tests carried out in May and because Islamabad, hit by international sanctions imposed after the tests, has fallen behind in payments on its $ 30 billion foreign debt. Reuters
With the postponement of the bailout visit by IMF Managing Director Michel Camdessus, there is serious concern in Pakistan about the economy.
The IMF team was expected in Islamabad on Wednesday to begin the third round of talks for resumption of critical financial assistance to Pakistan. But with the Sharif government going in for 30 days per cent reduction in power tariffs, the IMF was apparently left fuming at the governments reneging on a negotiated agreement to bridge its resource gap.
Pakistan had been hoping that once agreement was reached with the IMF, it would unlock assistance from other international donors and also secure a debt-rescheduling agreement with creditors. The country has not met most of its international debt obligations since the middle August and has built up huge arrears.
Foreign exchange reserve have plunged to $ 600 million, or equivalent to two weeks of imports and, added to the current account deficit of $ 5 billion, the stagnant industrial sector, weakening exports and lower investments, it seems extremely unlikely for Pakistans economy to stage an early revival. IANS
Federal Minister for Commerce Ishaq Dar has declared that the rupee will not be devalued and that the existing dual exchange rate will continue to be adhered to by the State Bank of Pakistan.
parameters have been agreed upon regarding the policy
matters with the IMF and the World Bank and there will be
no upfront devaluation and the exchange rate of Pakistan
rupee will continue to be Rs 46 vis-a-vis a US
dollar, Dar told mediapersons. ANI
INDUSTRIAL estates in the country have failed to catalyse industrialisation to desired levels due to the absence of a comprehensive industrial estate process and other besieging problems.
Development of industrial estates has not been based on a sound conceptual framework or a concrete methodology, says a CII study.
The state industrial development corporations which are responsible for development of the estates, have limited in-house design capabilities, resulting in under-designed or over-designed infrastructure facilities. PTI
The government should utilise its scarce resources judiciously and take up equity stakes in select projects as its role in the growth of the infrastructure sector is crucial, says the CII report titled Issues facing Indias infrastructure development to be released here on Thursday.
In areas where user costs are unlikely to be fully covered, the government can play a decisive role in attracting private investments by one-time grants in the forms of capital or land. However, there is a need to restrict this form of government support to projects where private participation is otherwise not viable. A grant to a private project that would come up in any case would be a waste of resources. PTI
The RBI should reduce the prime lending rate (PLR) and narrow down the spread between borrowing and lending rates of banks in the forthcoming busy season credit policy.
If spreads between operating (borrowing) and lending rate of banks is reduced then there can be significant reduction in the prime lending rate, says a FICCI statement.
The RBI will announce the busy season credit policy on October 30.
Lending rates of banks should be brought down to 11-12 per cent while real rates of interest need to be between 5 and 6 per cent within the three years for Indian companies to become competitive internationally.
Calling for more flexibility to banks on the statutory liquidity ratio (SLR), the statement said banks should be allowed to subscribe to financial institutions bonds and these should be considered as SLR investments.
The credit policy should also introduce hedging instruments like interest rate futures and derivatives and repos should be permitted in all traded securities. PTI
Assocham has suggested an increase in the creep limit from 2 to at least 5 per cent of equity in a company.
In a note to SEBI on takeovers, Assocham has stated that the persons in control be allowed to consolidate beyond 2 per cent creep limit through open offers without the requirement of minimum offer of 20 per cent.
The persons holding above 51 per cent should also be allowed to acquire through the creeping route. The acquisitions by them be totally outside the SEBI regulations of 1997. TNS
Failure of the state governments in paying adequate attention to enhancing productivity of the trade sector has resulted in extensive loss to the economy, a regional chamber has said.
The existing policies of the government towards this sector evolved over the years are purely in the context of safeguarding the interest of consumers and revenue, says the PHDCCI.
SEBI overseas cell
MUMBAI, Oct 21 (PTI) SEBI has created an overseas investor grievance cell to address and answer queries on registration procedures, formalities and other investment related issues pertaining to the market regulator.
The cell, which is an extension of the already existing non-resident Indian cell, would facilitate investments by overseas investors and enhance their confidence in Indias regulatory and redressal mechanisms, SEBI said.
Shaw Wallace to set up R&D centre
CHANDIGARH, Oct 21 Liquor major Shaw Wallace has decided to set up a research and development centre at Aurangabad. The state-of-the-art centre will be housed in Shaw Wallaces flagship distillery, Maharashtra Distilleries Limited, said a company release here today.
Worldwide, quality and consistency have been identified as the two most cherished attributes of spirit brands. As Indias foremost brand builder, Shaw Wallace needed to invest in R&D for continued leadership, said Mr Ravi Jain, Managing Director, Shaw Wallace.
Shaw Wallace has emerged as the largest exporter of alcoholic beverages from the country for six years in succession. The company has been conferred the Government of India recognition for outstanding export performance.
Max Page transfers subscribers
CHANDIGARH, Oct 21 Hutchison Max Telecom, a leading player in the Indian paging and cellular industry, today announced that it will transfer all subscribers in the Punjab circle to Punwire.
The paging services in Ludhiana and Chandigarh, which are outside the Punjab licence, will remain unaffected. This will be effective from 31 October 31, 98.
Mr Sandip Das, Chief Operating Officer. Hutchison Max Telecom, said the transfer applied only to Max Pages Punjab state licence. Services in the seven Indian cities for which the company holds licences, other than Punjab, the Chandigarh, Ludhiana, Bangalore, Ahmedabad, Hyderabad, Pune and Vadodara will continue to be provided by Max Page. In Ludhiana Max Page enjoys an 80 per cent market share, while it has over 50 per cent of the market in Chandigarh, claimed the company in a press release here.
In the Punjab circle the growth in subscriber base has been below expectations. Mr Das said 60 to 70 per cent of the revenues in telecom service businesses are going to the government in one form or another a major component of which is the licence fee. It is becoming difficult to sustain business in Punjab where the subscriber ramp-up is very low and basic paging infrastructure has been set up in various cities.
Operators have requested
for an extension in the licence fee period as well as
support on spreading infrastructure through the VSAT
connectivity etc to lower intrastructural costs. However,
DoT has been unable to respond to these proposals.
DoT has decided to cancel our Punjab licence. This,
in turn, makes the transfer possible Mr Das added.
MUMBAI, Oct 21 (PTI) There will be no issue of interbank forex exchange and money market reports today and tomorrow due to closure of banks here on account of Hindu new year and Bhaibeej, respectively.
A1 + for Bata
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