Tuesday, October 5, 1999
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B U S I N E S S | Tuesday, October 5, 1999 |
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South Asian growth highest: World
Bank |
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Mittal, Murdoch to fund
tech firms Industrialists resent show-cause
notices CBI case against bank manager for
fraud Asian Paints acquires Sri Lankan
company Cybertech net profit rises by 70
per cent |
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Set up fund for bad loans: Verma panel MUMBAI, Oct 4 (PTI) — The Verma panel report on restructuring of weak public sector banks has recommended setting up of Asset Reconstruction Fund (ARF) with an initial capital of Rs 15 crore under a special Act of Parliament. The ARF, to be protected by the act “against obstructive litigation from the borrowers” and also “provide for quick and effective enforcement of its rights,” will be buying impaired loans from weak banks and either recover them or sell them. According to the report, the payment in respect of assets purchased from the weak banks may be made by the ARF by issuing special bonds for the purpose bearing a suitable rate of interest. The bonds can be issued to the weak banks with an initial lock-in period of at least two years. “These bonds as also those which will be issued for raising funds against the security of assets purchased by the ARF may have a maturity of five years,” the report says. The transfer price for the non-performing assets would be arrived at by mutual agreement between the parties. The report suggests that it would be adequate for the ARF to have a life of not more than seven years. Further the ARF may buy NPAs only from the banks which have been identified as weak “though the option of buying loans from other banks should not be closed.” The ownership of the asset management company (AMC) entrusted with managing the ARF would be largely with the Government to the extent of upto 49 per cent, the remaining stake being with institutions and parties from the private sector. United Bank of India’s gross NPAs were Rs 1,549 crore on March 31, 1999, UCO Bank’s Rs 1,716 crore and that of Indian Bank Rs 3,709 crore. Recapitalisation: Recapitalisation of weak banks has to be accompanied by strict conditions relating to operating as well as managerial aspects of their working, the Verma Panel on restructuring of weak banks has observed. Capital infusion in three weak banks — UCO, United Bank and Indian Bank — has so far amounted to Rs 6,740 crore and fresh recapitalisation is required to meet the cost of moving some portion of bad debts out of books, cost of modernisation, technology, manpower reduction and capital adequacy. According to the report, technology upgradation will require between Rs 300 and 400 crore, a VRS would require between Rs 1,100 and 1,200 crore, Rs 1,000 crore for buying out bad debts and Rs 3,000 crore for capital adequacy. Funds for tech upgradation and VRS would come by way of cash and for the other items through the prevailing system of recap bonds, the report has suggested. Voluntary retirement: Voluntary retirement schemes (VRS) are a sore point with bank unions but the Verma panel on weak banks today recommended VRS for the three weak banks — Indian Bank, UCO and United Bank of India — to reduce staff strength upto 25 per cent initially along with a freeze on all future wage increases. If the proposed VRS does not lead to the needed cost reduction, the panel said “there will be no alternative left but to resort to an across-the-board wage cut” which would lead to the required reduction in costs. According to the report
the VRS for the three banks would cost somewhere between
Rs 1,100 crore and 1,200 crore while the reduction in
staff costs as a result would work out to Rs 107 crore
(Indian Bank), Rs 121 crore (UCO) and Rs 85 crore (United
Bank) respectively. |
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NEW DELHI, Oct 4 (UNI) — Earthquake in Taiwan has led the Indian personal computer industry to jack up prices. “We have raised prices by 5 per cent across the board and will be making a formal announcement soon”, Zenith Computers chief Raj Saraj told UNI. While other vendors like Wipro, HCL Infosys and MNC firms have not yet announced a revision the PC prices, the pressure of shortages and ballooning prices of critical components like motherboards and memory are leaving an impact. Prices by these vendors would be revised sooner than expected. Over 80 per cent of the global supply of motherboards and memory is sourced from Taiwan. The September 21 earthquake has disrupted the production as power supply has been badly damaged. A senior marketing official of Wipro said he was not in a position to give a time-frame but admitted a strong possibility of a price revision. HCL Infosystems said it is raising the PC prices by 4 to 5 per cent. “The formal announcement will come anytime. It can come even tomorrow”, Ashok Zutshi of HCL Infosys said. “Prices in the unorganised sector have gone up by 8 to 10 per cent since the delivery of components like motherboard or memory has been affected and prices shot up in the sourcing centres”, Manish Agarwal of Vintron said. Prices of 32 MB memory have gone up to $ 76 from $ 16 in July. Likewise, the motherboard prices have gone up from $ 40 to $ 47. Prices of components had started hardening even before the earthquake, Mr Zutshi said. A senior marketing official of Wipro said he was not in a position to give a time-frame but admitted a strong possibility of a price revision. “Definitely there
is a pressure in the market”, Vinnie Mehta of the
Manufacturers Association of Information Technology
(MAIT) said. while vendors in the organised sector might
be in a position to absorb the price and demand pressure
for some more time, the situation in the grey market
accounting for 57 per cent of the Indian PC Industry is
perplexed.
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South Asian growth highest: World Bank NEW DELHI, Oct 4 (PTI) — South Asian region, including India, is the highest growing region with an estimated 5.2 per cent GDP in 1998 and a relative stable short-term external debt, the World Bank has said in its latest report.“South Asian GDP grew at an estimated 5.2 per cent in 1998, slightly below 1991-97 average of 5.7 per cent, but faster than other regions,” the 1999 WB annual report said. The report, however, called South Asia the least integrated region into the world economy accounting for only one per cent of the world trade, 3.6 per cent of net capital inflow and a large fiscal deficit. Calling child labour a formidable challenge in the region, with more than a third of world’s working children residing here, it said South Asia needs to take drastic steps to tackle the menace. “Nearly 29 million, more than third of the world’s working children aged 10 to 14 live in South Asia”, it said. The bank cautioned that sound macroeconomic conditions are alone not enough to sustain equitable growth and said that social development and other safety nets are vital in reducing sharply rising inequality within and between countries. The report placed
India’s growth at 5.8 per cent, compared to some 7
per cent in the mid-80s, the immediate cause of 1.2 per
cent fall, it said could be the post nuclear test
sanctions imposed on India and Pakistan. |
Mittal, Murdoch to fund tech firms NEW DELHI, Oct 4 (PTI) — Ispat group promoter P.K. Mittal today joined hands with Rupert Murdoch of NewsCorp and US Internet venture capitalists Softbank and Partners to finance start-up technology firms in India. The fund christened as “Ventures India” will identify high profile Indian ventures and assist them to grow into full potential with generous funding from Softbank and NewsCorp. This venture capital firm is expected to assist Indian entrepreneurs to develop their ideas and ventures into full blown and successful entities, an Ventures statement said. In a parallel development, an Internet incubator focussing on leading edge start-ups namely “Acquavit Inc” has merged with Ventures. Promoters of Acquavit Inc namely Neeraj Bhargava, Rajesh Jog and Sandeep Singhal have been made partners of Ventures India. Commenting on the
alliance, Murdoch, Chairman and Chief Executive of
NewsCorp said “we want to help the emerging
entrepreneurial community in India, which is showing an
uncommon touch for the new world economy.” |
Industrialists resent show-cause
notices GURGAON, Oct 4 — In an interactive session with Mr T.R. Rustagi, Commissioner, Central Excise, Delhi Commissionerate-III, organised by the Gurgaon Chamber of Commerce and Industry (GCCI), it was felt that the frequent recourse to litigation was a sheer waste of monetary and human resources. Unnecessary and ill-considered show-cause notices, delay in refunds, classification of goods, interpretation of the price of variations, lack of co-relation between business practices and different approaches adopted by audit teams were some of the problems which created situations for litigation. The Commissioner has already ordered that an officer not lower than Assistant Commissioner would issue show-cause notices to assesses. The industrialists demanded availability of officials on government holiday for exporting units considering tight schedules, and need for time-bound shipments, According to the GCCI,
the district has only one lead bank in spite of the fact
that there has been rapid expansion in the number of
industries in Gurgaon during the last decade. There have
been instances when the despatches of the finished goods
had been held up for the reason of non-acceptance of the
deposit in time. |
CBI case
against bank manager for fraud NEW DELHI, Oct 4 — The Central Bureau of Investigation (CBI) has registered a case against a branch manager of the State Bank of Patiala for causing a loss of Rs 26.34 lakh to the bank. The accused, posted in Patiala, had conspired with an unspecified number of people to defraud the bank by sanctioning 17 loans in the names of bogus firms in disregard of bank procedure, a bureau release said here today. In most cases, no balance sheet was on record and beneficiaries’ addresses were incomplete. Investigations were in
progress, the release added.
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Asian Paints acquires Sri Lankan company MUMBAI, Oct 4 (PTI) — Asian Paints (India) Ltd has acquired Sri Lanka’s second largest paint company, Delmege Forsyth & Co (Paints) Ltd. Asian Paints, through its subsidiary Asian Paints International Ltd, will hold 76 per cent of equity stake in Delmege. Delmege Forsyth enjoys 12 per cent share in the island country’s paints market with a turnover of Indian Rs 16 crore. “The acquisition in
Sri Lanka will strengthen our presence in the
sub-continent, with the company being market leader in
India and Nepal”, Asian Paints Vice-Chairman &
Managing Director Ashwin Dani said in a statement here
today. |
Cybertech net profit rises by 70 per cent Mumbai-based Cybertech Systems became the first corporate to announce results for the quarter that ended on September 30 when it reported a 100 per cent growth in turnover at Rs 10.1 crore and a 70 per cent jump in net profits at Rs 6.14 crore. Cybertech reported a turnover of Rs 16.05 crore for six months ended on September 30 against Rs 8.56 crore in the same period last year, an increase of close to 100 per cent, the company said here today. Net profits for the six-month period rose from Rs 5.70 crore to Rs 8.54 crore the same period last year. The company reported an annualised earning per share (EPS) of 23.86 on the reported net profit, considering the the total equity capital of Rs 10.3 crore. Engaged in software development and exports, Cybertech had reported a net profit of Rs 12 crore on a turnover of Rs 22.2 crore for the year ended March 31 last. The Board of Directors which took the accounts also announced an interim dividend of 30 per cent. TVS-Suzuki: Two-wheeler major TVS-Suzuki today announced a 24 per cent growth in its sales volume in the first half of the current financial year, selling over 4.13 lakh units during the period. Led by a robust growth in the scooter and motor cycle segments, the company managed to sell 4,13,244 units between April and September this year compared to 3,34,377 units over the same period in 1998-99, a company statement here said. Commenting on the performance, TVS-Suzuki president C.P. Raman said it was on account of the strong growth shown in all the product segments of the company, right from mopeds to the scooterettes, scooters and motor cycles. During September, the company sold 69,331 units compared to 61,430 units last year, a growth of 13 per cent. Raman said sales during the last month could have been higher in all segments but for the number of holidays which resulted in restricted supply from various outlets in the country. Oil India: SEBI has turned down the proposal of Oil India Ltd (OIL) to list its shares on the stock market. “SEBI has not accepted our request saying that OIL had not complied with the guidelines of SEBI,” OIL Chairman and Managing Director B.B. Sharma told newspersons here today. After giving its employees shares under the Employees Stock Option (ESOP) scheme, the cash-rich OIL had sought listing of its shares, but market regulator SEBI said it was not possible in the absence of any public offering. Announcing a net profit of Rs 291.60 crore on a turnover of Rs 1,469.38 crore during 1998-99, Sharma said OIL would invest a total of Rs 2,700 crore during the Ninth Plan period, including Rs 1650 crore towards exploration and development. Keeping in mind the oil sector deregulation by the year 2002, the corporation has decided to diversify into downstream refining and pipeline sectors for assured profits, Sharma said adding that OIL was acquiring about 10 per cent stake in the Numaligarh Refinery at an investment of Rs 100 crore. The corporation, which declared a 55 per cent dividend at an outgo of Rs 78.47 crore, has earmarked an investment of Rs 250 crore for diversification and new alliances to ensure better returns for its stake holders. Essar Steel: Essar Steel Ltd today proposed to present three different options to its FRN (floating rate note) holders at a meeting on October 20 to extend the maturity profile of its loans. The company, the first Indian corporate to default on its FRN liabilities, has offered its FRN holders the option to extend the maturity by 12 years and be on par with secured creditors, extend the maturity by five years and continue as unsecured creditors or exit on a negotiated basis. In a statement here today, Essar said it proposed to request the secured creditors, including domestic financial institutions (FIs) and banks, to extend the maturity profile of their loans so as to be in line with the maturity profile of other steel companies which is around eight years. It also proposes to seek extension of the maturity period from overseas lenders, Bank of America and Union Bank of Switzerland, which have provided export advance to Essar. Essar Steel has been in
consultation with Indian FIs and foreign creditors to
arrive at a restructuring plan that is both feasible and
fair to all parties, it stated. — Agencies |
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