Monday, September 13, 1999
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B U S I N E S S | Monday, September 13, 1999 |
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Workers
protest raids on powerlooms |
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Haryana financial crisis may
worsen New tariff may make cell phones
cheaper Material Managers Day celebrated GVR: why keep IOC out of
IPCL’s bidding? |
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Workers
protest raids on powerlooms LUDHIANA, Sept 12 — Thousands of powerlooms manufacturing shawls and “lois” in Punjab have closed down following raids conducted by the enforcement staff of the Directorate of Industries in pursuance of a directive issued by the Punjab and Haryana High Court. Nearly half a dozen factories manufacturing shawls and “lois” were sealed by the enforcement staff in different parts of Ludhiana yesterday. The remaining units downed their shutters in protest. The workers and powerloom owners staged an angry demonstration against the raids. The closure has thrown out of employment nearly one and a half lakh labour force engaged in the industry. “This is the peak season for us”, said Mr Bhushan Abbi, President of the Motinagar United Factory Association and general secretary of the Ludhiana Textile Federation in a talk with TNS here today. “The industry produces goods worth about Rs 20 crore annually. Closure at this time of the year will spell ruin for us”, he lamented. The basic problem facing the powerloom industry here is that the Government of India has reserved certain items for the handloom sector only. Originally, 22 items were banned for the powerloom sector but plain shawls and lois were exempted. However, in 1996, the Government reduced the list of banned items from 22 to 11 but included shawls and lois. This ban is the source of the present trouble for the powerloom sector. Certain handloom operators have approached the high court for enforcement of the Government of India order. The high court directed the Directorate of Industries to take steps in this direction which led to yesterday’s raids in the megacity. The Punjab Chief Minister, Mr Parkash Singh Badal, wrote to the government of India in February urging it lift the ban on the manufacture of acrylic/cashmilon shawls and lois by the powerlooms. He had pointed out that production of shawls and lois on powerlooms was much more cost effective than those made on handlooms.. Mr Jiwan Dhawan, President of the Punjab PCC, who is himself a manufacturer, points out that the production of shawls and lois on powerlooms was continuing in different parts of the country despite the so-called ban. At Panipat in Haryana, all handlooms have concerted to powerlooms and are now manufacturing fine quality bed sheets and curtain cloth which are also banned on the Government of India order. These items are being sold not only within the country but also exported. At Sholapur in Maharashtra, powerlooms are manufacturing towels and supplying them to the entire country. “I will like to
know why this discrimination against the powerlooms
owners of Punjab alone?” he asks. |
How safe
are investments in Golden group? CHANDIGARH: The Golden group, started in 1987 by Mr Rakesh Kant Syal, is not new to controversy. This time it faces a vigilance inquiry ordered by Mr Parkash Singh Badal. The Punjab Chief Minister has questioned the legality of certain land deals of the group. The Golden group owns about 6,000 acres of land in different states. The inquiry will obviously cover land purchases made in Punjab only. Promoted with Manimajra-based Golden Forests (India) Ltd, the group, which now operates from a massive secretariat on the Chandigarh-Ambala highway, includes six other main companies: Golden Tourist Resorts and Developer (b) Golden Projects (c) Golden Lease Finance Ltd (d) Golden Agro-Based Industrial Company (e) Himachal Country Resorts and (f) Indian Overseas Peace Foundation Trust. In twelve and a half years, Mr Syal, aged 48, and a simple graduate from Panjab University, has raised an empire which owns assets worth Rs 1,500 crore, has 40 lakh investors and provides employment to 14 lakh families across the country. The Golden group has raised very large amounts from the public by promising to double investment in three and a half years, make it three times in six years and 222 times in 25 years. There are add-ons like free accidental insurance, loans and transfer facilities. Many companies, particularly those engaged in agro-forestry, offering time-share holidays and non-banking finance companies, had mushroomed in the recent past and then disappeared with huge amounts of public money. Will Golden Forests survive? Will it be able to pay back investments on maturity? Has the Golden group violated the law by buying such vast tracts of land? Business Tribune sent a questionnaire to Mr Syal, who has responded with very guarded replies. Here are excerpts: Q. The Punjab Government has ordered an inquiry into land purchases by various companies of the Golden group. Are these land deals in violation of the Punjab Land Reforms Act, 1972, as is alleged? The Golden group has always welcomed any type of inquiry from any quarter. To understand the group activities, it is essential to understand its nomenclature, its formation and aims, and to some extent, its achievements. The group has conducted no such activities as are not in accordance with the law. The group was formed to provide a safe and secure sector to the general investing public against fixed assets managed by the organisation and ensure proper return from the organised rural sector. Till date the group has ensured the maturity payment to about 15 lakh investors amounting to Rs 800 crore. Though registered under the Companies Act, the group is a co-operative society. Each investor with the group is a share or unit holder in the holding of the group and a due lien is created under Section 125 of the Companies Act. Our regulatory body is the Registrar of Companies and the Department of Companies Affairs. The group is classified under Code No. 05. Q. Is the inquiry politically motivated? Do you contribute funds to political parties? The group does not indulge in any activity which is not in accordance with the law. Ours is a trust comprising public money. So at the cost of public money, we can’t afford any type of activity which is not in the interest of our investors. Q. Many agro-forestry companies have gone bust. How does Golden Forests propose to succeed where others have failed? We can’t explain the success or failure of other companies, but so far as Golden Forests is concerned, we do possess security worth 210 per cent in comparison to our liabilities. The group owns assets worth Rs 1,500 crore against liabilities of Rs 761 crore. Q. Crisil had not rated the Golden group investments favourably. Will the investments yield the desired returns? Since Crisil does not possess the required qualifications of rating a company owning fixed assets, its rating does not have any meaning so far as our group is concerned. However, we have provided our valuation on the direction of the Bombay High Court where SEBI had filed a public interest litigation (No 344 of 1998) and we have submitted to the court the required information/valuation/personal guarantees, premature refund schemes. Now as directed by the Bombay High Court and subsequently endorsed by the Supreme Court, we are conducting our business and ensuring maturates well in accordance with the law. Q. Does the group have sufficient cash generation to pay back investors as promised? The group has reasonable
cash and fixed assets in the shape of rural lands and
built-up properties, and thus has a reasonable back-up to
meet its liabilities. It is now permitted by the Bombay
High Court to negotiate its fixed assets to meet its
liabilities. |
Insurance employees may get wage hike MUMBAI, Sept 12 (PTI) — The insurance industry employees are likely to get a wage hike between 11.5 to 12 per cent in their next salary revision. This time round salaries would have the productivity element factored into it, senior insurance sector officials told PTI. Both the General Insurance Corporation (GIC) and the Life Insurance Corporation (LIC) have sent in their recommendations to the Finance Ministry, the officials said. Both GIC and LIC have put in place their models of productivity-linked wage structure, where broadly the performance of each division is taken into account and a weighted average arrived at for computing the income. Pay revision in the insurance sector usually follows immediately after that in the banking sector and the quantum of wage hike is also related to the hike given to bank employees. The banks have settled
for a wage hike of 12.25 per cent under the seventh
bi-partite wage negotiations. |
Haryana financial crisis may worsen NEW DELHI, Sept 12 (PTI) — Haryana’s financial situation may worsen if the State Government fails to initiate steps to raise revenue through tax reforms, the PHDCCI said today. In a paper “Broad trends in Government finances”, it said the State Government can improve revenue earning by reducing multiplicity of tax rates to three slabs and improve tax to state domestic product ratio. Efforts to raise revenue by raising sales tax can be very much effective since Haryana was committed to reform the revenue system that incorporated the value-added tax (VAT) principle. Three new slabs for taxes can be decided on the basis of spread of rate categories and the concentration of commodities around a particular rate, it added. Such restructuring will
prepare ground for introducing the VAT principle into
sales tax and bring in additional revenue on account of
higher buoyancy, the PHDCCI said. |
New tariff may make cell phones cheaper NEW DELHI, Sept 12 (PTI) — Telecom Regulatory Authority of India (TRAI) will announce new tariff this week for cellular telephone which is expected to make mobile phone service cheaper and affordable to the middle class. The authority will come out with an order this week fixing new rentals and call charges as part of the calling party pays (CPP) regime to be implemented from November 1, the TRAI Chairman, Justice S.S. Sodhi, told PTI here. He declined to give any indication about the new tariff saying “wait for a few more days.” In its consultation paper released last month, TRAI had proposed to bring down the monthly rentals for cellular phones from Rs 600 to Rs 475 and call charges from Rs 6 to Rs 4. The CPP regime would enable cell phone users to receive incoming calls free of charge against the current system of charging on the same rate of outgoing calls. TRAI’s proposal to
charge callers from fixed phones to cell phones at an
enhanced rate against the prevailing local call rates had
attracted criticism from consumers at a recent open house
conducted for deliberating the consultation paper. |
Material
Managers Day celebrated CHANDIGARH, Sept 12 — The world has become a global village with advancement in telecom and infotech, resulting in liberalised international business. Materials managers have to develop a high knowledge base on global economy, said Dr Reena Ramachandran, an eminent management personality and CMD of the Rs 500 crore public sector Hindustan Organic Chemicals Ltd., Mumbai, while delivering the keynote address at the 14th annual day celebrations of the Indian Institute of materials management here, today. Mr T.K.A. Nair, Chairman, Public Enterprises Selection Board, said that the conference theme “Managing procurement and supply in a global knowledge economy” is appropriate in today’s economic scenario with e-commerce, and instant global connectivity fast replacing the traditional business approach, in a paperless working environment. Mr V.K. Jain, National president, IIMM, and General Manager of Indian Airlines, said that IIMM as the apex body for promoting the profession of materials management in the country is gearing up in research and upgrading systems in materials management, to keep pace with the requirements of running modern industry in the next millennium. Mr M.K. Bhardwaj, Vice-President-North of IIMM, highlighted the role played by the Institute in applying materials management techniques in agro-production and storage for the benefit of the farmers. Welcoming over 200 professionals from North India, Mr T.K. Magazine, Branch Chairman, said that 70 per cent of working capital in the industry is spent on materials and every rupee saved in effective buying adds to industry’s profits, and industry is adopting green purchase culture. Mr Vikram Patil took
over as Chairman of the branch for 1999-2000. |
GVR: why keep IOC out of IPCL’s bidding? NEW DELHI, Sept 12 (PTI) — Disinvestment Commission chief G.V. Ramakrishna today opposed the move to keep out Indian Oil Corporation from bidding for 25 per cent stake in Indian Petrochemicals Ltd (IPCL) for management control saying the Government’s sole objective should be to get the highest price. “Why should IOC be kept out from the competitive bidding? No public sector company should be kept out from the global competitive bidding for government equity in other companies,” Ramakrishna told PTI commenting on the report that the Core Group of Secretaries on Disinvestment disfavoured IOC’s participation. The Government had decided to bring down its equity from 60 per cent to 35 per cent to privatise IPCL along with the transfer of management control to its strategic partner. The Commission Chairman pooh-poohed the suggestion that the transfer of equity to IOC would not tantamount to privatisation of IPCL. “If this was so, why the Government allowed cross-holding of equity in oil PSUs by selling its stake?” he asked. In a global competitive bid, the Government should sell equity to IOC only if it was the highest bidder and “the main objective should be to get the highest value for its shares.” IOC Chairman M.A. Pathan had said last week that he had sought the Petroleum Ministry’s support for its bid to pick 25 per cent stake and become the strategic partner in IPCL as there was a synergy in the operations of the two PSUs. While the Reliance group, Dow Chemicals and Soros had bid for government equity in IPCL, IOC submitted its letter of interest in July. The core group at its meeting earlier this month is reported to have disfavoured IOC’s bid on grounds that it had come well after the last date. The group was also believed to have opposed IOC as it would not tantamount to privatisation of IPCL as decided by the Cabinet. Ramakrishna also apprehended that the disinvestment target of Rs 10,000 crore set by the Government for the current fiscal would not be met and the proceeds were likely to be around Rs 3,000 crore only. “Disinvestment per se is not bad. But the manner and process of disinvestment by the governments since 1991 is not in the national interest,” Ramakrishna said. Clearly favouring the
discontinuation of the present practice of disinvestment,
the Chairman said that the Government should put the
disinvestment proceeds into a separate fund from the next
year instead of mixing it up with the Budget for filling
deficit. |
GONE are the days when the International Air Transport Association (IATA) rules were strictly adhered to by airlines. Those who violated them were heavily fined. Now they have formulated their own rules caring little about IATA which, according to the airlines, has become obsolete. In a cut-throat competition each foreign airline has entered into a “secret” deal with travel agents who are offered heavy commission. Amid this turbulent weather, a new tribe has emerged on the playing-field which causes problem to the industry. The new tribe is called consolidator or whole-saler. He is given commission of about 30 per cent. He steals a decisive march over an IATA agent, who gets 9 per cent and a GSA (general sales agent), who receives 12 per cent. Apart from this, the consolidator is provided with the facility of lock bookings. He gets many other facilities and perks. Unlike a GSA, who can be a GSA for only one airline in a particular area the consolidator is free to be a whole-sale for as many airlines as he chooses. He receives different terms from each airline depending upon the business. There is a considerable turmoil among IATA agents and GSAs. They have been hit with the initiation of the consolidators. There was time when most of the European and US airlines operating through India had cared for their reputation and adhered to rules. Now these carriers violate the rules with impunity. The agents and airlines blame each other. It causes inconvenience to innocent passenger who does not know intricacies. Sometime he is off-loaded even when he holds a confirmed booking. This is because he does not have a god-father at the airport or in town office. Amid this scenario, there is a European carrier which is seriously considering to close its territorial operations and pass it on to the GSA. Among several aspirants, there are two powerful agents pushing their claims. They have influence and wherewithal to outsmart other competitors. Certification: Air
India’s engine overhaul department was recently
presented the ISO 9002 certification by the
Director-General, Bureau of Indian Standards, Mr P.S.
Das. The certificate will help the national carrier to
offer engine overhaul services to other carriers. The
national carrier is also initiating the process of
acquiring the JAR 145 certification from the Joint
Aviation Authority of Europe. |
DURING the last fortnight, the market moved within a narrow range of 4800-4700 points on the Sensitive Index. The business volumes declined and the traders were unwilling to enlarge their commitment. The Sensitive Index declined by 2.25 per cent. There were several factors at work in keeping the market in a subdued mood. Bombay Stock Exchange authorities had warned traders of the highly speculative nature of the present boom as the corporate performance, at least for the present, did not warrant it. Trading margins were raised to curb excessive trading. Even the traders did not want to take any unnecessary risks in the election month. Both FIIs and institutions kept away from the market; indeed the FIIs booked profit in some over-rated scrips. In view of the fact that elections to both the Lok Sabha and the Vidhan Sabha are taking place in Maharashtra, it was but natural that the stock market activity should decline. I do not think that any change an be expected in the market during this fortnight. When one moves from the market indices to individual scrips, some interesting facts come to light. Whereas the blue-chip equities marked time or declines in the market, some second category scrips took flight and attained all-time new levels in prices. One such case is that of Superior Air Products, a company which had skipped dividend in 1997-98 and 1998-99 and was moving within a narrow range of Rs 28-32 on the stock market, has suddenly flared up. It moved by stages from Rs 32 to Rs 44 (freeze), then to Rs 55 (freeze) and now Rs 66 (again freeze). There are no sellers but there are a large number of buyers. It is not clear what led to such a sudden rise in the scrip’s price. One can only make some guesses. I do not think that the company’s performance has improved to the extent that it has been propelled from Rs 32 to Rs 66 within a fortnight. No doubt, the company had now consolidated itself for a good performance by the structural changes that were brought about during the last four years or so. Perhaps, the probable reason is that its foreign collaborator and major shareholder (holding 50.977 per cent of equity) may be planning to enhance its equity further and may offer to buy equity holding from the small shareholders at an attractive prices. Airgas Inc of the USA is a leading company in the air-gas business and has been moving into India in a big way. Perhaps a partial profit-taking is in order. Another interesting case is that of Alpha Drugs, a company whose scrip moved up from Rs 23 to Rs 40 during the last fortnight but now comes the news that the company is seeking the shareholders’ approval for referring the company for the BIFR. The company’s accumulated losses exceed 50 per cent of its networth. The share price has suddenly moved down to Rs 32-33 range. It may move down further. It is also interesting to note that some Indian pharma companies have outshone the multinational pharma companies in recent months. Ranbaxy is now being quoted (in its post-bonus scrip) at around 82 per cent times its latest earnings. Another scrip in this category is Sun pharmaceuticals, which has moved up by 31 per cent during the last fortnight. The company is seeking some patents for its products in the USA. Automobile auxiliaries are also performing very well. Ceat, Modi Rubber, Apollo Tyres, Automobile Corporation of Goa, Jaybharat Maruti, GKN. Invel Transmissions among many other such companies have moved up very significantly. The contrarian approach for long-term investment is perhaps an effective way to make good money on the stock market. Buy, when the market is low, and sell, when the market is very high. But the contrarian approach needs a number of prerequisites: one has to be a long term investor, the investment should be made only in well-managed companies and one must have sufficient patience to wait for his opportunity to buy and sell at the right time. By the mid-October, the political situation will clear up. The public opinion polls indicate that the BJP-led alliance of political parties may bag more than 320 seats in the Lok Sabha. In case these findings prove to be correct, the market will soar to new heights. It is also now certain that the industry is doing better and recession is on its way out. The Central Statistical Organisation’s latest estimates show that the cumulative growth rate has been now hovering around 5.4 per cent since April 1999, as against 4.2 per cent in the corresponding period last year. Political stability,
good leadership, and industrial revival will cumulatively
push up the Sensitive Index to 5500 points and above. |
Dunlop India I and my family members have invested Rs 22,000 in the fixed deposit scheme with M/s Dunlop India Limited, Dunlop House, 57-B, Mirza Ghalib Street, Calcutta 16, for 3 years (1996-1999) with FDR Nos. 3T20035, 3T20065, 3V20023, 3P20069, 3K20104 and 3T20038. The FDRs in original duly discharged were forwarded to the company on March 4,’99. Despite several reminders, we have not received the amount. Vijay Kumar
Bassi ATN I invested Rs 25,000 with Asia Television Network Ltd Colaba, Mumbai for one year vide FDR no. D/N00 2257 dated 10.1.98. The company having defaulted in making payment. The Western region Bench Mumbai of the Company Law Board, was approached on 2.9.98 vide application No. 5397 for taking suitable action in this matter. The Bench heard the case on 8.3.1999 and directed the company to repay the applicant depositors their principal amount in four equal instalments along with the outstanding interest. The company has not made any payment so far. Kaushalya Sahnem DCM I am holding jointly with my wife Mrs Sushma Dhir, privately placed debentures of DCM Limited for Rs 10,000 bearing Nos 14253 to 14262 of Rs 1000 each, relating to Folio no. 101107 dated February 2, 1998. Those were due for redemption on 13.8.1998 and were sent on 20.7.98, to the company. In spite of reminders, the redemption money or interest has not yet been received. Yash Paul Dhir Reinz Talbros I am holder of Reinz Talbros Ltd’s debentures with Folio No. RT 7562 and certificate Nos. 1115, 1722 and 1723. The debentures in original have been sent to the company on maturity, but we have not received the redeemed amount. Manroop Kaur |
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