Hyundai may up prices of Santro
CHANDIGARH, Oct 29 — The three-day Consumer Fair’ 99 took off to a “hot” start today at Chandigarh’s Parade Ground with Hyundai Motors India President A.P. Gandhi announcing a likely 5 per cent increase in the prices of Santro car displayed along with the latest Accent as part of the auto show.

New Metro Tyres plant in Ludhiana
LUDHIANA, Oct 29 — Mr M. marx, Managing Director (2 wheel division), Continental AG of Germany, today inaugurated Metro Tyres’ state-of-the art, plant here.

CRR cut may not lower PLRs: bankers

MUMBAI, Oct 29 (PTI) — Top bankers today ruled out reduction in the Prime Lending Rates (PLR) as a consequence of the 1 per cent cut in Cash Reserve Ratio (CRR) by the RBI to inject Rs 7000 crore in the banking system.

SBI Chairman G.G. Vaidya said the policy was not aimed at lowering interest rates, adding that “a reduction in PLRs is unlikely. Rather, the policy ensures stable interest rates and better liquidity.”

The CRR slash announced by the RBI in its mid-term review of credit and monetary policy, would increase liquidity in the system and impart momentum to the economic upturn, bankers said.

According to them, it would create an environment that enables banks to fund more productive credit requirements.

Bank of Baroda CMD K. Kannan felt that the CRR cut may translate into a review of deposit rates in the banking industry, but he did not expect a fall in PLRs.

Union Bank of India CMD A.T Pannir Selvam said PLRs are not going to be affected by the extra liquidity in the market.

Corporation Bank CMD R.S. Hugar concurred with this view, and added that the flexibility in lending with respect to the PLR was a welcome step.

However, IDBI Chairman G.P. Gupta felt the CRR cut was likely to soften interest rates over some period of time. He said the removal of absolute limit for banks in the core sector funding would lead to increased participation by them.

“PLRs may be slightly reduced as a result of the CRR cut”, he observed.

The CRR cut will shore up banks’ profitability and the raising of the housing finance limit will give a boost to the sector, Ramesh Mishra, CMD of Dena Bank, said adding a PLR cut was not on the cards immediately.

“It is a well drafted credit policy and the one per cent CRR is certainly going to help banks improve their bottomlines”, said Dalbir Singh, CMD of Oriental Bank of Commerce (OBC), said.

Infrastructure funding has been stressed upon and banks are likely to step up core sector funding, Singh said adding a lot more procedural simplifications had been carried out.

“It is a positive policy which will induce competition among banks. For the NRIs it is a good development as for their requirements they can now approach the individual banks directly instead of through the RBI”, Ranjana Kumar, Executive Director and Chairman (incharge) of Canara Bank, said.

HDFC Chairman Deepak Parekh said the policy was progressive and gave operational flexibility to bankers. He welcomed the measures introduced to boost housing and trade sectors.

Industry welcomes it

Assocham President K P Singh said besides increasing liquidity in the banking system it would also enable them to “lower lending rates and sustain recovery process and growth in the industry.

CII President Rahul Bajaj said “Coming at a time when the industry is on the path of recovery, the busy season credit policy would reinvigorate growth in the economy.”

PHDCII President Ashok Khanna appreciated withdrawal of interest rate surcharge of 30 per cent on import finance as also the withdrawal of minimum rate of 20 per cent interest on overdue export bills.

The worst is over, says Khusro
By Sarbjit Singh
Tribune News Service

CHANDIGARH, Oct 29 — "We have left the worst behind". This observation was made here today by the Chairman of the National Finance Commission, Prof A.M. Khusro, when asked to comment on the economic scenario in the country.

Listing reasons for making such an optimistic remark, Prof Khusro said that recession was phasing itself out and the industry, by and large, had started showing growth in profit. For the three to four years, the industry was in the grip of recession as markets were down.

The consumer market was showing good results and the stock market and the export market also recovered to a large extent.

The growth rate which had come down below 5 per cent was now showing an upward trend. Many other worst things had disappeared and the foreign exchange rate had remained almost steady as compared to the past years when it was unsteady. Prof Khusro was here on the invitation of Mr Rashpal Malhotra, Director of the Centre for Research in Rural and Industrial Development.

The political scenario, which emerged after the recent Lok Sabha poll, had also given a bit of confidence to the investors, especially from abroad. The new government installed after the election "looks like a stable one" and with this the expectations of foreign investment in the country had gone up.

The basic fundamentals of the economy were in good shape. The interest rate had remained stable, food stocks were on the higher side and the foreign exchange reserves worth Rs 33 billion were quite sufficient.

Moreover the economic programme and priorities presented by the Central Government in the President's Address in Parliament augur well for the country. The focus would be on the "selective liberalisation and selective privatisation" and not to blindly follow the new economic order. There was also emphasis on building infrastructure and to strengthen the social sector like education and health services.

Prof Khusro said the country could not afford to neglect the farm sector. He added that there would be adequate emphasis to improve this sector as the government had stated. "All these factors made me optimistic about the future economic scenario", Prof Khusro remarked.

Asked about the completion of the task assigned to the commission, he said the organisation was supposed to submit its report by the end of December but now it would be possible only in June. The elections in the past three months impeded the functioning of the commission. Already commission members led by him had interacted with the Chief Ministers and others concerned of 17 states and the remaining states would be covered in due course. However, the commission intended to submit its interim report some time in February before the presentation of the Budget in Parliament.

The Central Government has expanded the purview of the commission by adding certain new terms of reference. The commission's report would be for a period pertaining to year 2000 to 2005. The main thrust of the commission's report would be to improve the finances of the Centre and the states, which, according to him, were in a mess. The Budget of almost all states and the Centre were in deficit.

The commission would suggest ways and means to bring the states out of such a situation.

The main task of the commission was to recommend the share to the states from Central excise and income tax. Apart from this the task is to advise and recommend restructuring of the finances of the states and the Centre, budgetary balance, new methods for raising resources and revenue and expending the existing resources, reduction and rationalisation of expenditure, and to maintain the macro-economic stability and devolution of powers to local self-government institutions.

The commission members will visit Punjab and Haryana soon to enlist the views of Punjab and Haryana Chief Ministers and others concerned, including academicians, and opinion makers.

RBI boost to housing loans

MUMBAI, Oct 29 (PTI) — In a boost to the housing sector loans, RBI today decided to provide more flexibility to banks in increasing the flow of credit directly and indirectly through intermediary agencies — National Housing Bank (NHB) and Housing and Urban Development Corporation (Hudco).

In its mid-term monetary review announced here, RBI has doubled the limit for priority sector loans in urban and metropolitan areas to Rs 10 lakh from Rs 5 lakh, which was the same for rural and urban areas earlier.

The central bank has also done away with limits on loans extended by banks to housing intermediary agencies and said all indirect housing loans extended by banks to these agencies against the loans sanctioned by them will be reckoned as part of housing finance allocation.

There was a per borrower limit for such intermediary agencies earlier at Rs 5 lakh in rural/semi-urban areas and Rs 10 lakh in urban/metropolitan areas.

Besides, all the investment in bonds issued by NHB or Hudco exclusively for financing of housing irrespective of the loan size per dwelling unit will be reckoned for inclusion under priority sector advances.

Hyundai may up prices of Santro
Tribune News Service

CHANDIGARH, Oct 29 — The three-day Consumer Fair’ 99 took off to a “hot” start today at Chandigarh’s Parade Ground with Hyundai Motors India President A.P. Gandhi announcing a likely 5 per cent increase in the prices of Santro car displayed along with the latest Accent as part of the auto show.

Though a final decision is yet to be taken, Mr Gandhi attributed the proposed price hike to increased transportation costs and labour wages, and hastened to assure press persons that the customers who had already booked the Santro would be delivered the car at the old rates.

When effected, this will be the second price hike. The Santro prices were raised by about Rs 6,000 a few months ago.

Mr Gandhi claimed that Santro had outsold Zen in August and September, and “we are No 1 now”.

Hyundai’s local dealer Geeta Talwar said despite limited supplies a total of 2,000 Santro cars had been sold in Chandigarh in the past 365 days.

Mr Gandhi handed over the keys of the Santro to a customer, Mr T.K Magazine of Ranbaxy Laboratories Ltd., at Ultimate Hyundai, Chandigarh.

New Metro Tyres plant in Ludhiana
Tribune News Service

LUDHIANA, Oct 29 — Mr M. marx, Managing Director (2 wheel division), Continental AG of Germany, today inaugurated Metro Tyres’ state-of-the art, plant here. This plant using latest “bag o matic” presses technology is the first of its kind in the Indian cycle tyre industry.

Following an agreement with Continental, Metro Tyres becomes the first company in India to produce Continental brand of tyres and tubes for the world market. Metro Tyres Ltd — the flagship company of the Rs 300 crore Metro group — will have the facility to produce and sell 1,50,000 tyres and 1,50,000 tubes per day. The company also exports tyres to over 30 countries in the USA, Europe and West Asia.

Metro Tyres has invested about Rs 40 crore in this new unit. The plant has been imported from Trelleborg of Sweden and has begun production.

Corporate India suffers a big jolt

Top losers:

Larsen & Toubro has posted a drop in its net profit by Rs 27.85 crore at Rs 161.86 crore during the first half year ended September 30, ’99 as against Rs 189.71 crore recorded in the corresponding period a year ago.

Net sales and income of the company stood higher at Rs 3371.68 crore during the first of this year as against Rs 3092.95 crore in the corresponding period of last year.

The company has attributed the drop in the net profit to the lower income through sale of ship at Rs 12.69 crore as against Rs 76.06 crore in the corresponding period last year and interest rise in the interest payment at Rs 180.77 crore as against Rs 70.33 crore.

The company, however, booked order worth Rs 4163 crore during the first half ended September 30, ’99 registering an increase of 11 per cent over the corresponding period of last year.

Dabur India has suffered a massive net loss of 24 per cent at Rs 18.91 crore during the second quarter of this financial year compared to Rs 23.75 crore during the previous Q2. The company attributed the slowdown in its performance to severe floods in key markets and the recent election process in the country.

The company registered an 80 per cent growth in the net profit at Rs 44.28 crore during the first half of this financial year against Rs 24.53 crore during the previous H1.

IFCI on Friday announced over 31 per cent fall in the net profit during April-September this year at Rs 46.9 crore as against Rs 68.3 crore in the corresponding period last year.

Higher investments in new brands and substantial decline in exports led to a 23.11 per cent decline in the net profit of Tata Tea Limited to Rs 72.60 crore during the first half of the current financial year as against Rs 94.42 crore in the corresponding period previous year.

Official sources said after a Board meeting to consider the second quarter results that the net profit during the quarter ended September, 1999 came down by 16.47 per cent to Rs 46.21 crore from Rs 55.32 crore last year.

Another reason attributed to decline in profit was last year’s first half result benefited by exceptionally high prices, higher production on company’s plantations.

SAIL today reported a net loss of Rs 1,348 crore during the first half of current financial year as against Rs 617 crore in the same period last year.

“The market driven severe drop in prices adversely affected our bottomline. However, we were able to neutralise the rise in capital charges as well as input costs through benefits from cost reduction and growth in sales volume,” SAIL CMD Arvind Pande said.

SAIL also attributed the rise in losses to increased capital charges.

The capital charges increased by Rs 320 crore during the period. Interest charges stood at Rs 1,119 crore up by 23 per cent while depreciation charges stood at Rs 616 crore up by 21 per cent.

LML Ltd has posted a 54.3 per cent drop in the net profit to Rs 5.14 crore during the first half of the current fiscal against Rs 11.25 crore in the same period last year.

Gross sales of the company also declined by 16.3 per cent to Rs 359.15 crore in April-September compared to Rs 427.09 crore in the comparable period last year.

Despite a slight fall in its income from operations in the second quarter ended September, BHEL’s net sales during the first half have risen by 5.3 per cent to Rs 273.97 crore from Rs 2443.97 crore in same period last year. The net profit stood at Rs 144.20 crore, 8,84 per cent more than profits of Rs 132.48 earned in same period last year.

The net profit of Vesuvius Industries came down by 19.97 per cent in the second quarter of the current financial year leading to a 14.97 per cent fall in the first half compared with last year.

CESC Limited has managed to reduce its net loss by Rs 48 crore to Rs 24 crore in the second quarter ended September 30, 1999. The net sales of the company increased to Rs 457 crore from Rs 412 crore in the corresponding quarter of previous year which included receipts from special appropriation following latest tariff revision.

.....and gainers:

WIPRO Ltd has recorded a 79 per cent jump in its net profit at Rs 119 crore for the half year ending September 30, on a 23 per cent rise in net sales to Rs 985.2 crore.

While the software and service business registered a 55 per cent rise in sales to Rs 440.7 crore during the period, the profit before interest and tax from this segment was up 39 per cent at Rs 114.6 crore, a company statement here said.

J.K. Industries Ltd, a leading player in the radial tyre segment on Friday reported a 65 per cent jump in its net profit for the first six months at Rs 16.42 crore against Rs 9.94 crore in the corresponding period last year. The company registered a growth of 32.6 per cent in net profit at Rs 6.87 crore corresponding to Rs 5.18 crore in 1998-99.

Vardhman Polytex Limited has recorded an increase of 22 per cent in its net profit from Rs 3.15 crore in the corresponding quarter of previous year to Rs 3.84 crore in the quarter ended September ‘99. The cash accruals also increased from Rs 6.26 crore to Rs 7.17 crore during the said period, registering an increase of about 14.5 per cent from Rs 56.39 per cent.

Global Trust Bank registered a growth of 18.29 per cent with his deposits crossing Rs 4,600 crore during the first half of the financial year ending on September, 1999.

The net profit of Jindal Polyester increased to Rs 2.55 crore during the quarter ended September 30, 1999, from Rs 2.07 crore in the same quarter last year, leading to a rise of Rs 1.45 crore in the net profit of first half of the current financial year at Rs 8.06 crore over last year.

TVS-Suzuki on Friday announced a marginal increase in net profits at Rs 24.77 crore for the second quarter of 1999-2000 on an enhanced turnover of Rs 420.63 crore. The company’s turnover for July-September rose by over 25 per cent to Rs 420.63 crore from Rs 335 crore a year ago. In the first six months of the current financial year, turnover touched Rs 785.67 crore from Rs 609.42 crore last fiscal year.

Mahindra & Mahindra Ltd (M&M) has posted over 26 per cent rise in the net profit at Rs 60.37 crore during the second quarter ended September on net sales of Rs 830.74 crore, up 3.16 per cent over the same period last year. The company reported gross sales of Rs 1015.11 crore, up 4.88 per cent over the same period previous year.

SKF Bearings registered a net profit of Rs 40 lakh during the first half of this calender year compared to a net loss of Rs 23.90 crore the previous half. The company has not moved out of the red as it suffered a net loss of Rs 3 crore during the second quarter against Rs 13.5 crore last year.

— agencies

Eicher group
LUDHIANA, Oct 29 (FOC) — Mr S. Sandilya has been appointed as the new group Vice-Chairman and nominated as the group chief Executive designate of the Eicher group. Mr Sandilya, who succeeds Mr Subodh K. Bhargava, will assume office from April 1, 2000, a press release from the Eicher group said.

Spice Telecom
CHANDIGARH, Oct 29 (TNS) — With the Delhi High Court’s stay order stopping implementation of TRAI’s CPP principle — which meant free incoming calls on mobile phone to be effective from November 1, Punjab’s Spice Telecom has decided to hold back its new tariff plans designed for the CPP regime.

Nidhi cos
NEW DELHI, Oct 29 (TNS) — The Government has decided to appoint its Directors on defaulting Nidhi companies to reinforce confidence of investors. The decision follows a recent tripartite meeting at Chennai where the Department of Company Affairs, RBI and Chamber of Nidhi discussed liquidity crunch faced by some Nidhi companies. According to an official release, the Government was preparing fresh guidelines for tightening regulations in respect of Nidhi companies.