Tuesday, March 9, 1999
today's calendar
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B U S I N E S S | Tuesday, March 9, 1999 |
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spotlight today's calendar |
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High court rejects
operators’ petition Indian
team in Pak to promote trade No
move to ban, regulate manufacture of diesel cars Privatisation
of Modern Food challenged Agro
Dutch Foods to raise capacity MTNL
net profit to cross 1,500 crore Silver
declines
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Gold scheme
doesn’t glitter for common man NEW DELHI, March 8 — The recently announced Gold Deposit Scheme, which initially generated much interest, is losing its glitter even before the RBI is yet to officially notify the details of the scheme. Under the Scheme, announced in the Union Budget for 1999-2000, selected banks would be permitted to accept gold deposits and issue interest bearing certificates or bonds which, on maturity, can be reclaimed in gold. This is expected to free depositors from the problems of storage, movement and security for the gold in their possession, while providing them with a regular source of income. Also, the scheme is expected to reduce the country’s dependence on imported gold. According to official sources, the bond issued against gold is expected to yield around 4 per cent interest and this would be exempted from Income Tax. Also, the value of assets deposited in the gold scheme would be exempted from wealth tax and capital gains made on these gold bonds or certificates through trading or at redemption would be exempt from capital gains tax. With the tax concessions, the effective interest rate on these gold bonds is expected to be around 8 per cent. This sounds good but then there is a major flaw with the scheme. In the first place, gold jewellery, the most common form of gold in the country, cannot be deposited under the scheme. Only gold in pure form, that is in the form of biscuits, can be deposited in the select banks notified by the RBI. In other words, the common man is virtually left out of the scheme as the huge amounts of gold in their hands is in the form of jewellery. “There is a lot of sentiments attached to the jewellery and the common man will not be prepared to melt it and take advantage of the Gold Deposit Scheme”, a jeweller in South Delhi said. In any case melting jewellery would reduce the value of gold by around 20 per cent, which is the making charges. It is estimated that Indians own one-fourths of the world’s gold stocks of 122,400 tonnes and the bulk of it is in the form of jewellery. Another disadvantage with the scheme is that it does not offer any amnesty for unrevealed or undeclared income hitherto stored in the form of gold. The authorities are free to raise questions about the source of the gold. Gold traders say that a majority of jewellery held by people is not accounted for with the Income Tax authorities and this clause would be a major damper for the common man. For instance, jewellery given at weddings are never accounted for either by the bride’s side or for that matter the groom’s side and for all practical purposes huge amounts of jewellery in the country have no account. The biggest gainers of the scheme could be the jewellers themselves who buy raw gold for their trade. Bullion merchants could utilise the scheme for safe-keeping of their gold stocks and also earn additional income. In other words the banks would be paying for warehousing their stocks. As for the banks who accept the gold, half of the amount is expected to be deposited with the RBI, and the rest they would be able to sell and earn higher interest of around 10 to 12 per cent on the money realised from it. The banks would probably depend on fresh deposits of unornamental gold to redeem gold deposited with them. This is expected to increase the bottomline of several banks. This would also ensure that there is lot of recycled gold available in the bullion market and this would ease the pressure on imports. In other words operators
in the bullion markets say that this scheme would benefit
the big time traders of gold and the banks themselves.
The majority of the population would have little to gain
from the scheme. |
High court rejects operators’ petition NEW DELHI, March 8 (PTI) — The High Court today rejected the petition of four private telecom operators seeking interim injunction against the Department of Telecom (DOT) from encashing their bank guarantee. Justice M.K. Sharma said “the petitioners fail to make a prima facie case for granting interim injunction.” The four petitioners — Birla AT T, Essar, Tata Teleservices and Hughes Ispat — likely to file an appeal against the judgement in a Division Bench of the High Court tomorrow. The four petitioners had failed to pay 20 per cent licence fee by February 28, the last date set by the Ministry of Telecommunications, and approached the court for interim injunction. Six basic telecom operators owe the government a whopping Rs 944 crore as licence fee and interest, the Rajya Sabha was informed today. Hughes Ispat owes the
government Rs 422.33 crore, while Essar has to pay Rs
141.02 crore. Dues of Reliance run into Rs 103.70 crore,
that of Telelink is Rs 128.36 crore and of Tata
Teleservices would be about Rs 128.13, Minister of State
for Communications Kabindra Purkayastha said in a written
reply. |
Steep hike in local call charges, rentals likely NEW DELHI, Mar 8 (PTI) — The Telecom Regulatory Authority of India (TRAI) will announce tomorrow new tariff for the entire telecom sector with a steep hike in rentals and local call charges and cutting down long distance call charges. The new tariff, proposed in two years of setting up of TRAI is likely to come into effect from April 1 after the official gazette notification, expected later this month. The tariff was arrived at after prolonged consultations held by TRAI with operators, consumers and the Parliamentary Standing Committee on Communications. A number of rationalisation measures are expected in the new tariff bringing the rural and urban consumers on a par in different aspects. These measures are expected to remove the cross subsidy currently offered to rural subscribers at the expense of urban phone users. A Number of bi-monthly free calls is expected to be made uniform for rural and urban users against the existing pattern of up to 150 free calls in urban areas and 250 calls in rural areas, while increasing the rentals over 100 per cent. Long distance callers will benefit much from the new tariff with the removal of cross-subsidy. The consultation paper had proposed four slabs with Rs 0.43 per minute for up to 50 km, Rs 3.90 for upto 200 km, Rs 9.75 for up to 500 km and Rs 19.50 for above 500 km. However, the proposed tariff is understood to have pruned down taking into account the recommendations of the Parliamentary Consultative Committee on communications. The consultative paper released on September 9 had proposed charging local calls both in the rural and urban areas at a flat rate of Rs 1.30 after adjusting for 120 free calls bi-monthly. Monthly rental is proposed to be increased to Rs 120 from Rs 50 in rural areas, while for non-rural areas the tariff is proposed to be in the range of Rs 160 to Rs 310, up from prevalent Rs 75 to Rs 190. For the international calls, TRAI proposed a tariff cap of Rs 19.50 per minute in case of the SAARC and other neighbouring countries, Rs 30 for countries in Africa, Europe, Gulf, Asia and Oceania and Rs 39 for countries in the American continent and other places in western hemisphere. For value added cellular,
TRAI had proposed cutting down call charge with a cap of
Rs 6 per minute from a peak of Rs 16.80 while suggesting
an over 200 per cent increase in rental at Rs 600 per
month as against Rs 156 now. |
No move to ban, regulate manufacture of diesel cars NEW DELHI, March 8 (PTI) — The government has no proposal to ban or regulate the manufacture of diesel cars, even in metropolitan cities to curb vehicular pollution, the Rajya Sabha was informed today. Industry Minister Sikander Bakht said in a written reply that to control vehicular pollution, progressive emission norms had been notified at manufacturing states. Besides, cleaner fuels like unleaded petrol, low sulphur diesel and compressed natural gas were also being gradually introduced. Bakht said the manufacture of passenger car had been delicenced and manufacturers had only to file an industrial entrepreneurs memorandum (IEMs). No distinction had been made between cars based on diesel or petrol, he said, adding between January 1, 1996 and December 31, 1998, 16 IEMs had been filed for manufacture of motor cars. A total of 17 proposal to
set up joint ventures or wholly-owned subsidiaries by
foreign companies had also been approved.
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Privatisation of Modern Food challenged NEW DELHI, March 8 (PTI) — The Delhi High Court today asked the Centre and five other respondents to file replies on a petition by employees of Modern Food Industries Ltd (MFIL) challenging its privatisation. Issuing notices to the
Cabinet Secretary, Ministry of Food Processing
Industries, the Disinvestment Commission, ANZ Investment
Bank, MFIL and its Chairman on a petition by the Modern
Food Industries Employees Association, Justice K.
Ramamoorthy asked them to file replies by April 16.
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Haryana buys
Rs 8 cr worth medicines at ‘inflated rates’ CHANDIGARH, March 8 — The Haryana Pharmaceutical Manufacturers Association has decided to challenge in the Punjab and Haryana High Court the Haryana Health Department’s purchase of medicines worth Rs 8 crore through tenders at allegedly inflated rates, ignoring the lowest bidders. At a meeting in Panchkula yesterday, the Association General Secretary, Mr T.C. Kansal, said a lobby comprising MNCs and top Indian companies had influenced the purchase policy of the State Health Department. To substantiate the charges, Mr Kansal said the tenders inviting bids for 250 medicines contained brand names of certain multinationals. “If particular brands of medicines were to be purchased, why did the Controller of Stores invite bids? The particular brands of medicines could have been purchased direct from the manufacturing companies.” The Association President, Mr P.K. Gupta, said the bids were finalised in November, 1998 — more than two years after the tenders were floated. He said there are 300 pharmaceutical units in Haryana accounting for a total turnover of Rs 500 crore and exports worth Rs 50 crore. Not a single unit of the State had been found fit to supply the required medicines. This is despite the fact, added Mr Kansal, that prices quoted by Haryana manufacturers were much lower than that of certain MNCs. He urged the Haryana Government to scrap the tenders and invite fresh bids under the supervision of a “competent and non-partisan authority.” By buying medicines at
inflated rates, the Health Department has caused a
considerable loss to the exchequer, Mr Kansal added.
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Indian team in Pak to promote trade KARACHI, March 8 (AFP) — A 60-member team of Indian exporters has begun a week-long tour of Pakistan as part of confidence-building moves following a landmark summit between the two countries last month, officials said today. Indian diplomats underlined New Delhi’s desire to boost trade links with Pakistan as the team led by Navratan Samidria, President of the Federation of Indian Exporters Organisation, arrived here late yesterday. The visit triggered condemnation by Pakistan’s main Islamic party, which bitterly opposed the February 20-21 summit meeting between Nawaz Sharif and Atal Behari Vajpayee in Lahore. Pakistan should not engage in any trade exchanges with India until New Delhi “withdraws its troops from occupied Kashmir,” the chief of the Jamaat-i-Islami, Qazi Hussain Ahmad, was quoted by the news daily as saying. The Jamaat backs a Muslim separatist campaign in the Indian-held southern two-thirds of the disputed Himalayan State of Kashmir, of which Pakistan holds the northern third. Anwarul Haq, Secretary General of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said the Indian delegation would meet Pakistani counterparts to promote two-way trade. The delegation is expected to sign memoranda of understanding with the chambers in Pakistan, he said. In Karachi, it will hold talks with officials and businessmen and also tour industrial sites, later the delegation will visit Lahore, Rawalpindi and Islamabad. Abdullah Ismail, President of the Karachi Chamber, said Pakistan could obtain industrial raw materials from India at economical rates to make its exports competitive in the international market. “I think Pakistan must allow import of industrial raw materials from India as the prices will be cheaper and the transportation cost will also be minimal”, he said. Ismail, however, opposed the import of finished goods from India, saying this would hurt local industry. Indian High Commissioner G. Parthasarthy told local businessmen here on Saturday that India was willing to develop trade and other business links with Pakistan. Pakistan exported goods worth $ 89 million to India last year while its imports from the neighbouring country stood at $ 153.4 million, according to official figures. During their landmark summit in Lahore, the Indian and Pakistani sides agreed to set up an Indo-Pakistan Chamber of Commerce. Trade officials said the
panel would eventually work on lifting import curbs on
2,000 commodities on the Indian side and 500 from
Pakistan and “open up opportunities for bilateral
trade.” |
Agro Dutch
Foods to raise capacity NEW DELHI, March 8 — Punjab-based Agro Dutch Foods, an exporter of mushrooms, has attracted least anti-dumping duty of 6.28 per cent in the world. The company has more than 50 per cent market share in exports from India. The imposition of duties by the US Department of Commerce has rationalised the mushroom market. The prices which hovered around $14 a case have now stabilised at around $20 a case of mushrooms. In January last year, American mushroom producers had filed an anti-dumping case against imports from China, Indonesia, Chile and India. The duties levied range from 6.28 per cent to 248 per cent. Mushroom prices had crashed to an all-time low in 1996 and 1997 because of excessive production in China. Producers in the USA as well as India suffered heavily. As the lowest-cost producer, Agro Dutch Foods managed to withstand the low price realisation. Encouraged by the bullish trend in international markets, Agro Dutch Foods has finalised plans to raise capacity by 5,000 tonnes every year to take total capacity to 30,000 tonnes by 2002. The total cost of Rs 7 crore will be funded through internal accruals. The expansion will make Agro Dutch Foods a significant player in the world market. The company set up a 100 per cent export-oriented unit in joint sector with Punjab Agro Industries Corporation in 1994 for the manufacture and export of canned white button mushrooms with an installed capacity of 3,500 tonnes per annum. The company began production in July 1994 and has manoeuvred itself into a strategic position by increasing production during the lean period from 3,500 tonnes to the present level of 10,300 tonnes. During the 12 months ended March 1998, the company reported sales of Rs 23.51 crore and a net profit of Rs 90 lakh. Performance has been quite encouraging in the first nine months of the current fiscal. On sales of Rs 29.11 crore, Agro Dutch Foods reported a net profit of Rs 3.76 crore. The company has a paid up equity capital of Rs 13.78 crore. The total world production
and consumption of mushrooms is about two million tonnes
a year. The USA is the world’s leading importer,
importing about one lakh tonnes out of the world trade of
about five lakh tonnes a year. |
MTNL net profit to cross 1,500 crore NEW DELHI, March 8 (PTI) — State-owned Mahanagar Telephone Nigam Ltd (MTNL) is likely to record a higher net profit of more than Rs 1,500 crore for the running fiscal ending March 31 as against Rs 1,215 crore last year, a top MTNL official said here today. “This year, we are expecting a net profit between Rs 1,500 crore to Rs 1,600 crore for the current financial year on a turnover of more than Rs 5,000 crore”, MTNL Chief Executive, S. Rajagopalan said. Last year MTNL had posted a net profit of Rs 1,215 crore on a turnover of about Rs 4,200 crore, he said at a meeting organised by the CII. MTNL was also planning to invest Rs 200 to 300 crore for Information Technology upgradation of the department which, Rajagopalan said, was the weakest area of MTNL. About MTNL’s plan to operate in Madras and Calcutta, he said the proposal was still with the government. MTNL was well aware of
growing competition with the entry of private operators,
Rajagopalan said adding the company had embarked upon a
customer care programme and was keen to become a
“one-stop company for entire telecom services.”
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NEW DELHI, March 8 (PTI) — Silver delivery nosedived on the bullion market today on lack of buying by speculators in the face of easy supply and closed with notable losses. Marketmen said scared speculators did not extend support to silver on fear of a weak trend in the near future. Stockists also turned sellers which further fueled the falling trend, they added. However, gold was slightly better on being purchased by local parties and finished higher with small gains. Silver weekly delivery lost Rs 325 at Rs 7,825 per kilo on stockists selling against reduced buying by speculators. Silver .999 (ready) was down by Rs 25 at Rs 7825 per kilo. Silver coins were traded at last level of Rs 10,500/10,700 per 100 coins. Standard gold and
ornaments were better by Rs 5 each at Rs 4,405 and Rs
4,255 per 10 gram respectively. Sovereign remained
unchanged at Rs 3,800 per piece of 8 grams. |
SINGAPORE (Reuters): Asia should not get too excited about recent surges in industrial output as there is little evidence they will be sustained, say analysts. South Korea, Taiwan and Singapore all posted double-digit year-on-year rises in industrial production for January, while Thailand was the pace of decline slow. Malaysia rebounded 6.4 per cent in December from the month before. It was down 9.4 per cent from December 1997, a slight improvement after months of falls in excess of 10 per cent. The surge in output in January has been mostly attributed to the base effect — the Lunar New Year holidays were in January last year, sharply reducing economic activity across the region. But analysts say there are growing signs production has bottomed out in many of these countries, though the upturn is likely to be gradual at best. S&P’s caution TOKYO, (AFP): Investors should be cautious in putting money into China and be wary if a government guarantee is needed to justify risk, a senior director from the US ratings agency Standard and Poor (S and P)’s said today. His warning comes after the failure of Guangdong International Trust and Investment Corp, the insolvent investment arm of the Guangdong provincial government which was abruptly closed down last October. “If a venture is genuine equity investment maybe it should not be undertaken if a government guarantee is required to justify the risk,” said Christopher Irwin, a Director of S and P infrastructure ratings group. “Investment strategies should focus on strong economic fundamentals and should be compatible with central government policy,” he said in a statement released on Monday. Trade surplus BEIJING (AFP): China will need to find new money-spinning ways to ensure it attains its 7 per cent economic growth rate target, as its top economic planners admit there will be no trade surplus this year. Falling export growth rate is combining with depressed domestic demand to provide the communist leadership with an economic headache. In 1998 China registered a bumper trade surplus of $ 43.6 billion despite nearly flat export growth rate of 0.5 per cent — compared with a 20.9 per cent rise in 1997 — and a 1.5 per cent drop in imports. The government was forced to revise its original export growth target of 10 per cent after crisis-struck Asian neighbours failed to absorb Chinese export sales. Deficit HONG KONG (ANI): Chinese Financial Minister Xiang Huaicheng has defended a massive rise in the country’s budgetary deficit, saying it is essential to keep the national economy moving. Xiang, who was addressing the National People’s Congress (Parliament), said the budgetary deficit would rise 57 per cent to 150.3 billion yuan as the government had invested a large amount of money to develop infrastructure with an aim of achieving a target of 7 per cent gross domestic product growth. He said that if such
measures were not adopted, it would be difficult to
maintain a steady economic growth and the government
would not be able to solve the burgeoning problem of
unemployment. |
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| Forex rates MUMBAI, March 8 (PTI) — The following were interbank forex and RBI rates (in rupees per unit): US $ Rs 42.49/50 Stg £ Rs 68.33/35 Euro Rs 46.38/40 Jap Yen (100) Rs 35.2/04 The RBI reference rate was Rs 42.50. Strike Tea traders Petro sector Patents |
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