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B U S I N E S S | ![]() Monday, May 17, 1999 |
weather n
spotlight today's calendar |
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Foodgrains & sugar
rot in FCI godowns |
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APEC calls for new body
to cut capital flow risks Carpet exports collapse |
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Paper scrips in limelight
Swaraj Eng dividend to be 200 pc Upswing may continue Inflation declines to 78-week low Court order to MTNL |
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Foodgrains & sugar rot in FCI godowns NEW DELHI, May 16 (UNI) Huge stocks of 11.60 lakh metric tonnes of foodgrains and one lakh tonnes of sugar lying in godowns of the Food Corporation of India (FCI) for more than two years have become unfit for human consumption. Besides causing a loss to the FCI, these undisposed stocks are creating scarcity in storage capacity for the new bumper wheat crop,which has already crossed the official procurement target of 70 million tonnes, official sources said here today. The stocks got accumulated as the FCI did not strictly adhere to the principle of FIFO (first in, first out). In addition to this, the government, till date, has not adopted any clear policy on the disposal of the perished stocks, despite severe strictures passed on it by a parliamentary panel in its report presented to the Lok Sabha in the last session. The panel was irked over the fact that no countrywide authentic data regarding the storage losses of foodgrains is being maintained by the government. It suggested initiating of a national level project for assessment of storage losses in foodgrains for minimising the grain losses in the future. On the rotten foodgrain stocks and their accumulation, the Food Ministry shifts the blame to state governments and unavailability of covered storage space. The foodgrain stocks for the public distribution system (PDS) from FCI depots are being issued on a first in, first out principle. However, stocks of old rice got accumulated mainly because state governments were reluctant to lift these stocks under the PDS and other welfare schemes as the old rice did not have presentable appearance due to shredding of bran and presence of small broken rice. Sometimes, labour unrest and unavailability of covered storage space also lead to the deterioration of stocks and hence their accumulation, the officials said. Besides this, the stocks of rice purchased under relaxed specifications during the crop year 1997-98 were to be issued on over-riding priority which retarded the release of old stocks. The FCI also has around one million tonnes of wet and sweat sugar which got accumulated because of sugar stocks getting damaged in transit and in the storage due to unavoidable operational reasons, the officials said. On the other hand the
Parliamentary Standing Committee of Food and Civil
Supplies stressed the need for reassessment of existing
storage space with FCI, creating of additional capacity
with construction of more godowns, involving the Central
Warehousing Corporation and the private agencies. Modern
scientific storage of foodgrains is the immediate need of
the country, the committee observed.
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APEC calls for new body to cut capital flow risks LANGKAWI (Malaysia), May 16 (AP) The Pacific-rim Finance Ministers today called for the establishment of a new and permanent body, with members from rich and poor nations, to study ways of improving the global financial system and reducing the risks associated with volatile short-term capital flows. In their final communiqué, the ministers from the 21-member Asia-Pacific Economic Cooperation (APEC) forum called on their deputies to study whether some rules could be imposed on currency traders and hedge-fund operators. They were to present their findings to heads of state at their annual summit in New Zealand in September. The 16-page statement, however, fell short of calling for the regulation of capital markets, as has been demanded by host Malaysia. While we recognise that efforts to reform the international financial architecture will take time, we see the need for the momentum to be maintained, notwithstanding the recent return of stability to financial markets, the communiqué read. The ministers called for more transparency and disclosure standards within the member economies, as well as private financial institutions and highly-leveraged hedge-funds. We also recognise the need for appropriate transparency by market participants, including highly-leveraged institutions, the statement said. Since early yesterday, the finance ministers have been discussing strategies to prevent the kind of crisis which crippled many Asian economies in the last two years. The ministers exhibited signs of optimism that the worst may be over for many of their economies, while recognising that serious challenges lie ahead. The meeting comes at a time when Asian economies are pulling out of recession, many of them with the help of the IMF packages. The APEC ministers said since their meeting last year, the financial crisis in the region has abated and there are signs of a return in investor confidence. A senior US treasury official, who spoke on condition of anonymity, said the ministers focused on both reassuring economic picture and upon aspects of the global financial system, ranging from currency regimes to capital controls. Malaysia last year imposed curbs on short-term capital flight and a pegged exchange rate, ending offshore trading of its currency, the ringgit. Yesterday, Malaysian Finance Minister Daim Zainuddin called on APEC to take up the challenge of drafting international standards and regulations for hedge-fund operators and currency traders, whom Malaysia blames for much of the Asian economic crisis. The G-7, through the Switzerland-based bank for international settlements, last year agreed to study the possible regulation of currency speculators. The USA opposes restrictions on the free flow of capital between markets, believing curbs increase the chances of future crises. But more recently, it has become acutely aware of the dangers of unchecked hedge-fund operations because of the near-collapse of prominent hedge-fund long term capital management. Nobody is saying there shouldnt be any rules, one senior delegate said after the final session this afternoon. But there is not yet consensus on how to write them and what will be the right way to do things. Mr Kiichi Miyazawa, Japans Minister of Finance, who offered support to Asian economies yesterday by helping win new confidence in capital markets through a system of debt guarantees, has suggested that developing countries consider pegging their currency to a basket of other currencies, the US official said. The US Treasury
Secretary-Designate, Lawrence Summers, had previously
expressed support for the Japans debt guarantee
initiative, but indicated Washington still has
reservations about any kind of pegged exchange rate
system. |
Carpet
exports collapse AMRITSAR, May 16 The carpet industry at Rajasansi, near here, is on the verge of closure due to a fall in exports and a rise in octroi and sales tax. Mr Joginder Singh, who has been in this trade for the last 30 years, says that about 50 per cent units have closed down as there are virtually no exports. Earlier, carpets were exported to the USA, Germany and England. Carpets consignments go from here but these are not received at the ports and keep lying there for days. He said if they get their carpet consignments back, they suffer huge losses. They have to pay 12 per cent sales tax and octroi twice first on the raw material and then on carpets . If they get back unsold carpets, they are again forced to pay octroi. There are about 25 carpet units in Rajasansi. Six are big ones. Their main sales depend on exports. They do sell to private showroom owners, but the profit margin is lower. A carpet, which actually costs about Rs 4000-6000, is sold by big showrooms at Rs 12,000- 40,000. The sufferers are the manufacturers. The main carpet made here is Bukhara, which is world famous. Persian and Afghani carpets are also made. It takes about a month to prepare a carpet. Eighty per cent of the carpets are made in villages near Rajasansi. Earlier, the annual turnover was about Rs 6 crore which has now fallen to Rs 3 crore. In Punjab Amritsar is the main market for carpets. About 25,000 labourers are involved in carpet making. Arjinder Singh, who has been in the business of carpets for the last 10 years, says: We are unable to pay the labourers as we have no profits. There are no sales. We can only opt to shift from this place. Rajasansi, at one stage, was ahead of Pakistan in this business, but now Pakistan is flourishing with government help. Kuldip Singh, a carpet
maker said it is a tough job. Sometimes our fingers
get cuts. But we get Rs 40-60 per day only, he
adds. |
Swaraj Eng
dividend to be 200 pc CHANDIGARH, May 16 Swaraj Engines Limited has stepped up dividend to 200 per cent for the financial year 1998-99 against 100 per cent paid for 1997-98. The net profit had jumped 45 per cent to Rs 15.65 crore, raising the EPS to Rs 37.8 from Rs 26.06. Taking advantage of the increased capacity of Punjab Tractors Limited, Swaraj Engines has raised the engine output to 24,706, a 42 per cent climb over 1997-98 production of 17,418. The production in the last quarter (Jan-Mar 99) crossed 7,150 engines. Despite additional interest and depreciation on expansion outlays, pre-tax profit at Rs 21.8 crore has improved sharply, 54 per cent over last fiscal. The company incurred an
additional expenditure of Rs 7.10 crore on expansion. |
Upswing
may continue NEW DELHI, May 15 The current bull run in the capital markets is not a freak case with analysts predicting that the markets will be in the upswing for quite some months to come. Most market observers do not expect inflows to dry up suddenly. Most commodity stocks in India are cheaper on regional valuation basis and the rush to buy them would not reduce suddenly, a Delhi based broker said. The current rally is likely to continue for a few months as unlike earlier rallies this time it is not driven by speculators, say brokers. The market is entering a two-year bull run now. It will stabilise with corrections of 80 to 90 points, but it is unlikely that there could be a crash like situation an analyst said. Helped by a steady stream of inflows of foreign funds,there has been a major reversal of trends in share prices as traders are riding on a wave of buying by foreign institutional investors (FIIs) in cyclical and software stocks. The hectic FII buying has helped recoup most of the Rs 70,000 crore lost in of April due to political uncertainty. Market observers say the money flowing into India is essentially a part of the entire allocation of FIIs for the emerging and recovering Asian economies. CEO of Kotak Mahindra C Jayaram said the enhanced money flight to India does not actually reflect what FIIs see in India. Essentially more money has been allocated to Asian markets like, Thailand, Korea and funds flow to India is actually a part of this allocation, Mr Jayaram told the TNS adding that the money flow has been primarily driven by recovery in the bigger markets in the region. India has become one of the attractive markets for the FIIs as markets in India could not keep pace with the incipient boom in other markets such as Singapore, Thailand and Korea, a Delhi-based analyst said pointing out that the these markets had outpaced India and hence FIIs are looking towards India to cash in on the opportunities. The renewed interest in Asia has also been driven by the lack of opportunities in Europe, Latin America and Russia. There are also tendencies of the recession bottoming out in the rest of the world which is reflected by the rising demand. Some of the commodity stocks which have received market attention in India are Indian Aluminium, Hindalco, Reliance Industries and Ballarpur Industries. The political uncertainty also appears to have been relegated to the backdrop mainly because of the fact that the funds flowing into India are part of larger portfolio of FIIs into emerging markets. The FII funds are primarily flowing into cyclical and software scrips and also into shares of major banks. Observers said that the rally in bank shares has been driven by the cut in the cash reserve ratio (CRR) which became effective from May 8.Moreover, no movement in interest rates would take place before October, when the busy season credit policy will be announced, and the rate of inflation remaining low, the yield from such shares actually increases significantly. Observers said foreigners are placing there bet on India as it is seen amongst the fastest growing economies in the region and also the fact that the slowdown witnessed in South East Asia will not unduly impact India. This has convinced them
to chase banking and commodity stocks, pushing up
indices. Even though commodity stocks have not caught the
fancy of the local investors, FII have seen some value in
SBI, MTNL, BHEL, refinery and cement stocks, marketmen
noted.
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Inflation declines to 78-week low NEW DELHI, May 16 (PTI) Continuing its downward movement for the fifth consecutive week, the annual rate of inflation fell to a 78-week low of 3.70 per cent for the week ended May 1, despite a marginal increase in the wholesale price index (WPI). This is the lowest rate since November 8, 1997, when inflation had touched 3.70 per cent. Inflation, based on WPI, declined by 0.22 percentage points to 3.70 per cent (provisional) from 3.92 per cent (P) a week ago. Inflation had stood at 6.45 per cent during the corresponding week of the last year. During the reference week, prices of food product, basic metals, alloys and metal products eased substantially. The index for all commodities (base: 1981-82-100), however, increased by 0.2 per cent to 355.8 (provisional) as against 355.1 (p) in the previous week. Meanwhile, inflation based on the final index for the week ended February 27 stood at 5.3 per cent compared to 5.2 per cent based on the provisional index. The present decline is
mainly due to ease in the prices of maida, atta, suji,
solvent extracted groundnut oil, drums and barrels. |
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