Hegde promises to cut procedures
MUMBAI, March 7 — Union Commerce Minister Ramakrishna Hegde has assured exporters of chemical and pharmaceutical products to solve their problems like cascading effect of sales tax, octroi, turnover tax and other levies on export products.

India invited to G-7 meeting
BONN, March 7 — India, in the forefront in calls for overhauling the global financial institutions, is one of the developing countries invited by Group of Seven industrialised nations to evolve a strategy to regulate world currency and financial markets and to avoid financial crisis.

Pesticide ban opposed CHANDIGARH, March 7 — The Pesticides Association of India has in separate representations to the governments of Punjab, Haryana and Rajasthan opposed the proposed ban on the spraying of pyrethroids on the cotton crop in the coming kharif season.

HSBC predicts 4 per cent GDP growth

NEW DELHI, March 7 (PTI) — Leading international market analyst HSBC Securities has predicted a poor 4 per cent GDP growth in Indian economy during 1999-2000 and rupee touching the 48-mark against dollar due to poor initiatives in the Budget to boost overall investments in the economy.

“The Budget lacks any major initiative to enhance overall investments in the economy and we maintain our earlier macro-economic forecasts - 4 per cent growth in GDP and 3 per cent growth in agriculture,” HSBC Securities said in a special number on the Union Budget.

With exports expected to decline by 5 per cent and stagnation in imports, rupee would be under pressure. As the current account deficit was also continuously drifting towards 3 per cent level, rupee would trade around Rs 44 against dollar by the end of this month and reach 48-mark by March next year, the analysis said.

The positive news for the capital market would only be a short-term driver and noted that long-term change in the market trend required change in the economic scenario.

Since the Budget was neutral overall in the corporate front, preference is cast on software, fast moving consumer goods (FMCG) and pharmaceutical scrips.

Although uniform long-term capital gains tax of 10 per cent on stocks and zero tax on dividends from equity-oriented and open-ended mutual funds was good for the capital market, surcharge on corporate taxes was a negative aspect.

Fiscal incentives proposed for housing construction would provide impetus to construction industry, but are unlikely to lead to any major upsurge in housing construction that could impact overall investments in the economy.

Since these incentives for housing construction would create only a marginal increase in steel and cement output, it would not have any significant impact on industrial and GDP growth.

Interest, subsidies, defence and salaries continued to eat up over 100 per cent of government revenue and with public sector deficit at 10 per cent of GDP, the pressure would be maintained on interest rates in the medium term.

If PSU disinvestment was made in the domestic market and this did not lead to fresh inflow of foreign funds, there would be further pressure on interest rates, HSBC said.

Inflation is expected to be about 7.5 per cent during the financial year on account of an anticipated 20 per cent increase in money supply and depreciation of rupee. Increase in diesel price and the consequent freight charges would buttress this increase.

Budget impact

Positive: Information technology ,telecom, pharma, oil (downstream), FMCG, automobiles (two and three-wheelers).

Negative: Banks and financial institutions, cement, hotels, power, steel.

Neutral: Auto ancilliaries, capital goods, chemicals & fertilisers, paints and petrochemicals.

Hegde promises to cut procedures

MUMBAI, March 7 (UNI) — Union Commerce Minister Ramakrishna Hegde has assured exporters of chemical and pharmaceutical products to solve their problems like cascading effect of sales tax, octroi, turnover tax and other levies on export products.

Addressing leading exporters-members of the Basic Chemicals, Pharmaceuticals and Cosmetics Export Promotion Council, Mr Hegde said here today that he will write to the Commerce Ministers of the USA, Japan, China, Korea and other European countries to recognise Indian ayurvedic products for the health care purposes in their countries.

He promised to make the policy simpler with less procedural hassles of transaction cost which erodes the competitiveness of Indian exporters in the international markets.

SBI to have double shifts

NEW DELHI, March 7 (PTI) — The State Bank of India (SBI) is moving towards double shift banking soon in the face of mounting competition from private and foreign banks.

“We are moving towards double shifts soon and have already received a positive response from our union officials for increasing banking hours,” SBI deputy Managing Director Y Radhakrishnan told PTI.

Double shifts will provide customers increased banking hours and optimum utilisation of staff.

Under the extended banking hours facility, the SBI will serve customers for additional two hours till 4 p.m. from its usual time of 2 p.m.

Banking hours for the proposed double shifts will be from 8 a.m. to 2 p.m. and from 2 p.m. to 10 p.m.

However, he declined to specify the time-period for the proposed double-shift banking.

The SBI is also working towards single-window transactions under which retail clients will be provided all services at a single counter.

Pesticide ban opposed
Tribune News Service

CHANDIGARH, March 7 — The Pesticides Association of India has in separate representations to the governments of Punjab, Haryana and Rajasthan opposed the proposed ban on the spraying of pyrethroids on the cotton crop in the coming kharif season.

The association claims that after the introduction of pyrethroids in the eighties cotton productivity has gone up by 15 to 20 per cent because the use of photostable analogues of natural pyrethrins (pyrethroids) are found to be very effective in controlling the bollworms which causes heavy damage to the cotton crop and are not controlled by available organo phosphates.

India invited to G-7 meeting

BONN, March 7 (PTI) — India, in the forefront in calls for overhauling the global financial institutions, is one of the developing countries invited by Group of Seven industrialised nations (G-7) to evolve a strategy to regulate world currency and financial markets and to avoid financial crisis.

A meeting of top officials of a grouping of 33 countries (G-33), including the G-7, has been convened by Germany, the current Chairman of G-7, in Bonn on Thursday to discuss the entire gamut of “the international financial architecture”.

The one-day meeting, to be presided by German state Finance Secretary Heiner Flassheck, will be attended by senior representatives of the Finance Ministries and the central banks of the invited countries.

World watch
Two-month-old euro needs a doctor

TWO months after its birth, the euro is suffering an attack of colic. The family, the politicians and central bankers, are trying to pretend to the neighbours that nothing is wrong while rowing among themselves. Lots of outsiders reckon it’s time to call the doctor.

It is hard not to feel a degree of sympathy for Euroland’s policymakers. Despite the doubters, they got the currency off in decent style and might have hoped for a spell basking in the approval of the markets. Dream on. Over the last two months the euro has lost almost 10 per cent of its value. If it carries on like this it will have lost half its value by the time we reach the millennium.

In part, the causes of decline are outside policymakers’ control. The euro was launched on a wave of optimism that it would become a reserve currency to rival the dollar, that Euroland’s economy would pick up speed while that of the USA would slow. “Buy” signals all.

Such expectations have been disappointed. The euro may yet prove a global reserve, but not yet; the critical economies in Euroland are slowing, that of the USA continues to defy economic conventions.

All-male no more

One of the financial world’s most famous names, the New York-based investment bank Goldman Sachs, has abandoned its second tradition in a week. Wall Street’s last major partnership, which earlier last week announced plans for a flotation, on Saturday named two women to join its powerful management committee — the first time in its 130-year history that the company has deviated from an all-male committee membership.

Women run several of Goldman’s businesses, such as municipal finance and global banking, but this is the first time that women have been involved in central decision-making.

Goldman’s move comes at a time when Wall Street is coming under increasing pressure to increase the number of women and minorities in a sector still dominated by old boys’ networks. Despite the growing number of women working in financial services, few of them occupy top positions in securities.

Banana split

At first sight, bananas appear an unlikely commodity over which to embark on a trade war. The industry is a tiny fraction of trans Atlantic trade, and no jobs in either the USA or the European Union are really at risk.

Yet the war has reached such a pitch, after years of desultory negotiation and arbitration, it threatens collateral damage to thousands of British and European jobs.

American firms control production of two thirds of the 3.9 million tonnes eaten in Europe each year, four times as many as come from Africa and the Caribbean.

The Clinton Administration claims that the EU has given unfair preferential access in issuing of import licences to African and Caribbean countries, mainly former colonies, at the expense of the so-called dollar bananas grown in Central and Latin America for US multi-nationals such as Chiquita, Dole and Del Monte.

The companies are accomplished lobbyists in Washington; what grates on the Europeans is that Chiquita in particular has made political donations. The Clinton Administration lodged its complaint to the World Trade Organisation within 24 hours of Chiquita’s chairman, Carl H. Lindner Jnr, donating $500,000 to Democratic Party funds.

Diamond forever

Diamond specialist De Beers is planning a marketing blitz for the millennium, using high-quality stones specially branded with laser technology. The group will announce this on Tuesday alongside 1998 figures expected to show severe damage caused by world economic turmoil.

Analysts expect earnings at the mining combine to have dropped by 30 per cent, but all eyes will be on the De Beers dividend as investors try to work out if the worst is over. With booming American sales accounting for nearly half of all diamond business worldwide, there are fears that a Wall Street crash could plunge the gemstone empire into its worst crisis since the 1930s.

De Beers is planning to push 20,000 high-quality stones with a twist on its famous slogan: “Millennia may come and go, but a diamond is forever”.

— The Guardian

Why so many committees?

The Finance Minister in his Budget speech has proposed to set up 12 commission/committees to suggest ways and means after study of the Working/guidelines on some of economic proposals. These are:

(i) Committee to examine the issues and propose a modern competition law.

(ii) Two high level committees to review the present drug policy to reduce the price controls and to identify the required support to the Indian pharmaceuticals companies to undertake R&D.

(iii) Technology missions on vaccines for medical and health systems.

(iv) Material Bio-Resources Board under the Ministry of Science and Technology.

(v) Five debt recovery tribunals and four debt recovery appellate tribunals.

(vi) Settlement advisory committees for settlement of chronic cases of overdue loans in the banks.

(vii) High powered committee to make recommendations for reducing cost in transactions in foreign trade.

(viii) Foreign investment implementation authority for quick disposal of foreign direct investment projects.

(ix) Joint mechanism between SEBI and Department of Company Affairs for taking stringent action against the unscrupulous promotors who raise money from investors and misutilise.

(x) Expenditure reforms commission to reduce the government expenditure on administration.

(xi) National statistical commission to examine the deficiencies of present statistical system.

— VNA

Tech parks for women

NEW DELHI, March 7 (PTI) — The government will launch two technology parks exclusively for women — one in the western coast and the other in the Himalayan region — on the occasion of International Day of Women tomorrow.

The two parks, to be set up by the Department of Science and Technology (DST) under the “Science and technology for women” scheme, will create awareness about new women-friendly technologies and improve the socio-economic status of women through rural-oriented programmes.

The parks, to be launched by DST Secretary VS Ramamurthy and Manju Sharma, Secretary, Department of Biotechnology (DBT), will also help improve living conditions of women by providing income opportunities and better healthcare.

The coastal zone park covering Maharashtra, Karnataka, Goa, Tamil Nadu, Kerala and Gujarat will function through a network of non-governmental organisations (NGOs) in these States. Bharatiya Vikas Trust, a Manipal-based NGO will collaborate in setting up the park.

The other park will be coordinated by a Chamoli-based NGO called Himalayan Environmental Studies and Conservation Organisation and will cover Himachal Pradesh, North-Eastern States and hilly parts of Uttar Pradesh.

Modest tax proposals
By V.N. Agarwal

BUDGET 1999 contains modest tax proposals. The salient features are, the long term capital gains on the transfer of shares and securities is now proposed to be taxed at the rate of 10 per cent instead of existing rate of 20 per cent. This rate has been brought at par with Non-Resident Indians. The reduced rate of 10 per cent will be applicable without benefit of indexation. There is option for the domestic investors to avail the existing rate of 20 per cent with the cost of indexation or 10 per cent without indexation whichever is lower according to the clarification by CBDT Chairman. For example a capital asset whose acquisition cost is 1 lakh and is sold for 1.50 lakh. The capital gain before indexation is 50,000 and as per Budget proposal 10 per cent capital gains tax will be 5000. But if the cost after indexation is 1.30 lakh, then on a capital gain of 20,000, the tax @ 20 per cent will come to 4000. Therefore the lower tax of 4,000 will be payable.

The reduction of tax on capital gains will boost the capital market. The tax on dividends on US-64 scheme of UTI, other open ended equity linked plans of UTI and other mutual funds having 50 per cent investment in equity is now exempt from tax and will also cheer the capital market.

To encourage the housing sector, an individual has been allowed exemption of interest on borrowed capital for construction or purchase of a self occupied property up to 75,000 instead of present 30,000. Further, higher depreciation rate of 40 per cent will be available against present 20 per cent on the dwelling units purchased by the business sector for their employees. This will encourage the prices of shares of housing finance companies. The religious institutions will have to spent 5 per cent of their income to enable the donor to claim deduction of donations. Deduction of medical insurance premium has been raised to 15,000 from 10,000. Leave encashment compensation paid to the non-government employees have also been exempted upto ten months salary from the existing eight months salary to be calculated as per Income-Tax rules to bring it on a par basis with government employees.

There has been no relief to the salaried class assessees. Rather 10 per cent surcharge on income-tax has been levied across the board on Corporate and other assessees. At least salaried class assessees should have been spared. The individual and HUFs whose income is upto 60,000 will however be exempt from this surcharge. But in case the taxable income exceeds 60,000, except marginal relief, the whole amount of income-tax will be subjected to this surcharge. The surcharge will be also applicable on the rates of tax deduction at source except Non-Resident Indians. The thrust of the budget is on the housing/development of villages and agriculture sector.

by K.R. Wadhwaney
The bug and the airlines

SINCE 1960s, computer software designers have used two digits to represent each year in the 1900s. It means that some computers will interpret the year 2000 as 100 years earlier, that is 1900.

Aware of this possibility, world’s two leading manufacturers, Airbus Industrie and Boeing, have been working overtime to ensure that all on board computer systems are millennium-compliant. This is being done by manufacturers and airlines so that there is no problem on board when the millennium change-over period begins.

British Airways, for example, is tackling the millennium-bug in all its earnest. It has set up a ‘year 2000’ programme with a 100 full-time staff and a commitment to meeting its targets for compliance well ahead of the deadline.

Award

Air Transport World (ATW) has given an award to the Airbus Industrie for developing the first widebody twin-engine aircraft A-300.

“When the first A-300 took off, it took Airbus Industrie with it”, said Senior Vice-President, commercial, John Leahy.

AI’s maintenance hangar

A massive maintenance hangar for Boeing 747-400 aircraft is under construction at Air India’s engineering base located at the old airport (Kalina-Mumbai). The 60-foot-high hangar spanning 423 feet, is 291 feet wide and will be able to accommodate two aircraft simultaneously.

The entire roof structure of 1,23,000 square feet, weighing 1200 metric tons, was fabricated on the ground and will be lifted to its final position with 12 hydraulic jacks. The whole operation is considered a unique engineering feat.

It will also be the largest hangar structure in this country without any column support in between. The new hangar is expected to be operational before the year is out.

New Manager

Alok Sawhney has been appointed Area Sales and Marketing Manager (South Asia) at Delhi by the British Airways. Previously, Sawhney was Sales Manager of North India and Nepal. Now he will be in charge of activities in India, Bangladesh, Pakistan, Sri Lanka and Nepal.

Alfa Geo

I had applied 100 shares of Alfa Geo (India) Ltd in 1994. Refund Order No. 562052 received by me in 1994 was misplaced somewhere, however, the same has been found by me now and it was sent in original to M/s. Sathguru Management Consultant Pvt. Ltd. for revalidation in October 1998. It is regretted that I have not received revalidated refund order till date despite reminders.

Usha Rani
Chandigarh

IGGI Resorts

I deposited Rs 32000 with the IGGI Resorts International Ltd., Chennai vide receipt Nos. N-Z/CH/71380 dated 14.8.96, N-Z/CH/77856 dated 23.12.96, N-Z/CH/82207 dated 5.4.97 and S-Z/MG/85554 dated 10.9.97 for the purchase of “Time Share” for which the company provides facilities at their resorts. More than a year has passed, even after my repeated requests, the company did not bother to send me the related documents.

Amrit Malik
Amritsar

US-64

I am not getting 20 per cent dividend of following units period ending June 1998-4019311300990 (1000), 401950140087286 (200) and 401970200072105 (100). In this connection, I have written to Branch Manager, UTI Surya Kiran, Phase II, 92, The Mall Ludhiana, but I have not received the dividend.

J.S. Salaria
Pathankot

II

I have not received the US-64 dividend due in July 1998. My folio number is 401980010001649.

Rajiv Garg
Bathinda

Arihant Cotsyn

I was allotted 20 FCD vide Folio No AC 100701 of Rs 150 each by Arihant Cotsyn Limited, Regd. Office B-35, Phase V, Focal Point, Ludhiana on 23.1.93. The part A of FCD of Rs 50 each was converted into share. The part B of Rs 100 each was to carry interest @ 14 per cent till its conversion. Original letter of allotment part B had been sent to the Board of Directors on 10.6.96 but I have not heard from you till todate despite reminders.

Amrik Singh
Chandigarh

by Ashok Kumar

Q: Do you think this is the right time to invest in the shares of Gujarat Ambuja Cement?

— Vinod Sethi, Chandigarh

Ans: Of all the core industries, the cement industry is the one that has encountered major reversals over the past one and a half years. However, even under such difficult times, Gujarat Ambuja Cements Ltd. (GACL) has remained relatively unaffected. GACL commenced with an initial capacity of 7 lakh tonnes per annum (TPA) in Gujarat in 1987. It scored over its competitors on account of efficiency to complete projects in time and optimally utilising its capacity which has now touched 4.5 million TPA. It also reaps benefits from facilities for shipping its despatches within and outside the country through its fleet. It has its own terminals and generates power for captive consumption too. Hence, GACL may thrive over the next couple of years, even though it may take some more time for the cement industry to recover. Furthermore, with GACL injecting Rs 166 crore to acquire and revive the ailing Modi Cements which has an installed capacity of 1.7 million TPA GACL is working to extend its presence in the far eastern states.

Due to the meltdown in South-East Asian currency values, Indian cement exports have turned costly. Yet at the end of the day, GACL emerges as an outperformed in the cement segment. Discerning long-term investors could well consider investing in the shares of this company at price declines.

Q: Kindly comment on the prospects of Pidilite Industries?

— Swarnima Dey, New Delhi

Ans: Pidilite Industries has strong brands which command a premium in the market. The company has 40 established brands and over 400 varied products including the well-known brand Fevicol. Its other brands include Fevicryl, Fevikwik, Fevibond, Fevitite, PV Seal, Pidivyl etc. The company enjoys market leadership in the adhesive products segment with a 60 per cent market share. The company would generate sizable cash flows which would be used to repay out-standing debt since no major capital expenditure is budgeted for the next couple of years. The company stands to benefit from the thrust given to the housing sector in the 98-99 Budget. The market for premium construction chemicals, which the company created a couple of years back, is expected to clock high growth. Products in this segment include integral cement water proofing compound — Pidiproof and tile fixing adhesive Fevimate.

Of the remaining, exports account for 7.5 per cent and agency division 1 per cent of sales. After growing at a rate of over 25 per cent, sales growth slackened to 11 per cent over the last two years. This can be attributed largely to a fall in growth rates of the industrial segment, in line with the fall in growth rates of its user industries. Major customers for the industrial division include the packaging, paint, printing ink, plastic and textiles manufacturers. Growth rates in this would remain subdued till the industrial growth rate picks up, which we feel would happen in 1999 as a fallout of increased infrastructure investments which would fuel demand for other products. On the whole thus, this company’s future prospects appear to be quite bright.

Q: How the future outlook for Wartsila NSD India appear?

— Amarpreet Bagga, Amritsar

Ans: Wartsila Diesel Indian Ltd (WDIL) is the leader in the domestic medium-speed diesel engine segment with a market share of 70 per cent. It benefits from the technological support of its parent, Wartsila Oy, Finland, which has a global market share of 22 per cent diesel and gas engines of above 1 MW output. WDIL imports components from the parent company and assembles diesel engine sets with a capacity of less than 6MW output at its plant in Khopoli, Mumbai. It earns a commission on sales of its parents engines in the Indian market. The company has been appointed the civil contractor for four IPPs with a combined generation capacity of over 400 MW to be delivered by Wartsila NSD Oy, Finland. Wartsila NSD has a 70 per cent share of the medium speed diesel engine market in the country. The competition in this segment has been restricted to mainly two other players, MAN of Germany and Mireless of UK. The government, in its Budget for 98-99, has laid considerable stress on investments in the power sector. The budgeted investment in the power sector has been raised to Rs 9,950 crore in 98-99 from Rs 8,188 crore the year before. The government is also trying to speed up private sector investment for capacity addition in the power sector through IPPs. Towards this, end, the government has announced a new liquid fuel policy which has kept all liquid fuels excluding naphtha outside the purview of the 12,000 MW cap imposed earlier. This should give a major boost to demand for liquid fuel base diesel engine NSD’s multi-fuel engines would stand to gain from this. However, since all engines over 6 MW capacity are supplied by the Finnish parent, the Indian company’s gain would be restricted to commission on sales and income from providing service. Yet, the overall outlook for this company appears to be positive.

Q: Please comment on the long term prospects of Amara Raja Batteries?

— Murli Malhotra, Chandigarh

Ans: Amara Raja Batteries (ARB) manufactures batteries in technical collaboration with GNB Industrial Battery, USA, a pioneer in the technological development of such batteries. ARB markets its batteries under the Power Stack and Power Plus brand names. Under the technical assistance and license agreement with JC, ARB plans to manufacture new products like hybrid alloy batteries and VRLA absorbed glass matrix batteries. ARB had recently increased its battery manufacturing capacity from 1 lakh pa to 1.8 lakh pa and is integrating backwards into the manufacture of plastic cases. The growth rate witnessed by the VRLA battery segment is greater than that of industrial battery segment, since its penetration level in various user-segments, including telecom and railways, is increasing. DoT plans to increase the number of telephone lines substantially and the private cellular and basic service will also add to the demand. ARB’s tested products have good potential and are fast replacing conventional batteries. Increased investments and a wider product portfolio should also improve the company’s valuation.

The company has recently completed its expansion project, increasing its battery manufacturing capacity from 1 lakh pa to 1.8 lakh pa at a cost of about Rs 10.5 cr which was financed through internal accruals term loans.

Both telecom and railways, the major user segments of VRLA batteries, are currently going through a major structural change which is irreversible, and the procurement are bound to increase. The DoT is going to increase its telephone lines tremendously in the coming years and the private cellular and basic services would also add on to the demand. ARB’s products, tested over the years, have good potential and are fast replacing conventional batteries. Overall, the long term prospects of this company seem fairly promising.

Health club
CHANDIGARH, March 7 (TNS) — Rama Health Care Ltd today set up “Women’s Fitness Point” in Sector 23-C here. The health club was inaugurated by Mrs Anuradha Gupta, Home Secretary, Chandigarh, in the presence of Mr Satya Pal Jain, MP, Kewal Krishan Adiwal, Mayor, Mrs Kamla Sharma, Chairman, Social Welfare Advisory Board.

Textile policy
COIMBATORE, March 7 (PTI) — The 12-member committee set up to formulate a new textile policy will submit its report to the Centre by next month end, Chairman of the committee S. Sathyam said today. The committee has made all efforts to review and address the inter-sectoral conflicts and anomalies, mainly concerning fiscal issues in the entire textile sector, he told reporters here.

HCL Tech
NEW DELHI, March 7 (PTI) — Software giant HCL Technologies yesterday announced that it has increased its equity in James Martin Inc (JMI) to 100 per cent thereby making it a wholly-owned subsidiary of the former. HCL JMI was set up in 1996 as an international information technology consulting and systems re-development organisation.