Monday, February 28, 2000,
Chandigarh, India






THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Sinha’s Budget to carry railway burden
NEW DELHI, Feb 27 — A tight rope walk is inevitable for Yashwant Sinha who will have to blend hard decisions with political compulsions in the general Budget for 2000-01 to be presented on Tuesday in the wake of mounting fiscal deficit arising out of shortfall in disinvestment targets, increased borrowings and runaway expenditure.

A model displays a gown designed by India's Ritu Kumar during the Tree of Life fashion show, part of the India into the New Millennium Fashion Extravaganza in Hong Kong oN Saturday
HONG KONG : A model displays a gown designed by India's Ritu Kumar during the Tree of Life fashion show, part of the India into the New Millennium Fashion Extravaganza in Hong Kong oN Saturday. The show was one of several cultural events held over a period of 5 days in Hong Kong, organized by the India Trade Promotion Organization and the Indian consulate, to celebrate India's golden anniversary as a republic and 50 years of diplomatic relations with China. — AP/PTI photo
Phone rings alert for postal dept
IT has happened in the West and now it is happening in India — the telephone is proving to be the bane of the postal department. Factors such as convenience, affordability, expanding reach and instant feedback that the telephone offers have ensured that, within the ‘local call’ range at least, people prefer ringing up to writing letters.


Tell-all site on Chandigarh
CHANDIGARH, Feb 27 — Want a job? Want to interact with a doctor, an agony aunt? Want to book a banquet hall, a table in a restaurant or a cinema ticket? Want a plumber, an electrician, a carpenter? Want to consult an astrologer? Everything available online in Chandigarh! Just log on to hellochandigarh.com.



EARLIER STORIES
 
A minister’s revenge
CHENNAI, Feb 27 — It was a “sweet revenge’’ for Union Environment and Forest Minister t r baalu against his Cabinet colleague Kashiram Rana, Minister for Textiles, at a function here today.

Ashok Leyland goes hi-tech
ASHOK Leyland will employ hi-tech marketing strategy using the internet to step up sales of its commercial vehicles. “We are setting up a nationwide Business to Consumers (B2C) network to market our vehicles on the Internet,” General Manager N. Mohanakrishnan told PTI.

WTO shadow on small units
THE Ministry of SSI and Agro and Rural Industries (SSI & AARI) has started awareness programme for SMEs in view of the WTO agreements. Punjab has one of the biggest concentration of the SSI. One such-programme was conducted by SIDBI some 15-day ago and another will be held on March 6 when a team led by the Development Commissioner for SSI will come to Ludhiana.

Tata Tea buys out Tetley
MUMBAI, Feb 27 — In the biggest-ever deal in Indian corporate history, Tata Tea has bought out all the brands of Tetley Tea of the UK for 271 million (Rs 1,870 crore).

SBP branches computerised
CHANDIGARH, Feb 27 — The Chief General Manager, Mr Sitarama Murty, has said that the 100th branch of the bank will be computerised tomorrow. By the year end, 70 per cent of the bank business will be covered on computers.

Mumbai boy is Grasim Mr India
HYDERABAD, Feb 27 — Aryan Vaid from Mumbai won the Millennium Grasim Mr India title at a function held at Ramoji Film City here last night.

Inflation falls to 2.37 pc
NEW DELHI, Feb 27 — The inflation rate plunged to a 20-week low of 2.37 per cent for the week ended February 12 on account of a sharp decline in the prices of primary articles.








 

Sinha’s Budget to carry railway burden

NEW DELHI, Feb 27 (PTI) — A tight rope walk is inevitable for Yashwant Sinha who will have to blend hard decisions with political compulsions in the general Budget for 2000-01 to be presented on Tuesday in the wake of mounting fiscal deficit arising out of shortfall in disinvestment targets, increased borrowings and runaway expenditure.

With fiscal deficit expected to be much beyond the targeted 4.4 per cent of GDP this financial year, Sinha will have to come with innovative plans to step up revenue generation in his third Budget.

He will have to cut non-plan expenditure which has shot up due to the Orissa’s killer cyclone and the Kargil operations besides increased expenditure of States due to implementation of the Fifth Pay Commission’s recommendations, trade and industry sources said.

Coupled with these problems, the Railway Budget has put pressure on the Finance Ministry due to a 40 per cent increase in budgetary support as well as the decision to defer dividend payment of Rs 1,500 crore to central exchequer.

Speculations are rife that Sinha will move towards single rate excise duty, remove slabs in the Customs duty structure and widen the income tax net by trying to make a beginning on taxing farm income of rich agriculturists.

Officials hinted that tax reforms will form an important component of the Budget that will move towards zero-based budgeting for expenditure control and privatisation of PSUs through strategic sale.

The fiscal deficit of the States is even more alarming as it has crossed Rs 75,000 crore in 1998-99 which was 4.3 per cent of the GDP. This is mainly due to populist measures pursued by the States year after year which are becoming unsustainable.

During his meeting with Sinha earlier in the month, Finance Commission Chairman A.N. Khusro has, however come out with policy prescriptions for bringing down the fiscal deficit of the States to around 2.5 per cent of GDP.

President K.R.Narayanan has minced no words in emphasising the growing fiscal deficit was major concern of the Government and that this was ‘the most challenging macro-economic problem faced by us’’.

He also called for modernising the tax system to improve the tax-GDP ratio which had fallen by 2 per cent during the last few years.

Prime Minister Atal Behari Vajpayee has corroborated the President’s concern over the fiscal deficit saying it was time that “strong doses of medicines’’ was given to the economy in the Budget.

Even as Sinha takes hard decisions to contain fiscal profligacy, he would have to find resources to raise the budgetary support to the 2000-01 annual plan which is to be hiked by a little over 10 per cent to Rs 88,500 crore.

Taking the cue from Mamata Banerjee who stepped up the Railway’s annual plan by over 15 per cent to Rs 11,000 crore will have to do some adjustments to find resources for the annual plan.

Total plan support and central assistance to the States aggregated Rs 77,000 crore in 1999-2000 and this was likely to increase by about Rs 11,500 crore.

The Finance Ministry officials concede that the economy could accumulate a fiscal deficit (FD) of Rs 52,000 crore and did not rule out a harsh Budget.

As against an income of Rs 1.72 lakh crore, there was an expenditure of Rs 2.13 lakh crore this fiscal year, they said.

Widening the service tax could be one innovative measure to widen the tax net as the booming IT sector alone is estimated to have potential to garner up to Rs 20,000 crore.

Officials are also weighing the pros and cons of the feasibility of such a tax in the wake of rolling back on one or two items from the service tax list last year due to wide pressure.
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Phone rings alert for postal dept
By Abhilash Gaur

IT has happened in the West and now it is happening in India — the telephone is proving to be the bane of the postal department. Factors such as convenience, affordability, expanding reach and instant feedback that the telephone offers have ensured that, within the ‘local call’ range at least, people prefer ringing up to writing letters.

Says Col Tilak Raj, Chief Postmaster General, Punjab Circle, “The days of monopoly are over. Now people rarely write to their local friends and relatives. It is only during the festive season that local mail gathers bulk due to greeting cards. As for premium services, we face stiff competition from private couriers.” Predictably, this has meant loss of revenue for the department, forcing officials to think up new ways of staying in business.

While modern services such an Hybrid Mail, Satellite Money Order Service, Express Money Order Service etc have been available at major post offices for several years now, the department’s focus has shifted to innovating for greater consumer satisfaction.

For instance, a few months back, five new mail boxes, marked, Mumbai, Calcutta, Punjab, Haryana and Uttar Pradesh were added outside the GPO in Sector 17, Chandigarh. According to officials at Sandesh Bhavan, this was done to streamline sorting for the five major postal destinations to which mail is sent from the city. Regarding the results of the experiment, an official says, the time saved on sorting means a reduction of 22 to 25 per cent in delivery time at no extra cost to the senders.

While officials are considering extending the experiment to other post offices in the city, note-counting machines are being added at the Jalandhar, Ludhiana and Amritsar head offices to speed up work. Meanwhile, all four philatelic bureaus in the circle have already been computerised.

Col Raj says 10 new branch offices will be opened in Punjab circle this year to improve services while 10 more offices will be connected to the Circle’s two VSAT stations at Ludhiana and Jalandhar, bringing the total to 25.

Perhaps, taking a cue from the cigarette and newspaper industries, the postal department has also latched on to the idea of ‘catch ‘em young’. To initiate children into letter writing and philately, the department plans to organise creative-writing competitions and philatelic exhibitions in the circle.

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Tell-all site on Chandigarh
Tribune News Service

CHANDIGARH, Feb 27 — Want a job? Want to interact with a doctor, an agony aunt? Want to book a banquet hall, a table in a restaurant or a cinema ticket? Want a plumber, an electrician, a carpenter? Want to consult an astrologer? Everything available online in Chandigarh! Just log on to hellochandigarh.com.

City-based V.R. Technologies Pvt Ltd., which provides services like software development, website designing and maintenance, today announced the launch of a site on Chandigarh. The site, which will be operational within a week, comes with a helpline and a Hello Club.

The company has been promoted by four local young entrepreneurs — Rajesh Jain, Vikas Dayal, Raveesh Dewan and Vikas Saini.

Briefing the media, Mr Rajesh Jain said the site offers information about tourism, education, business, employment, lifestyle, fashion & beauty, health and so on.

Apart from the regular online services like site search, category wise yellow pages, online listing of companies on the site, online shopping, the site provides educational informational, career counselling and chatting.

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A minister’s revenge

CHENNAI, Feb 27 (UNI) — It was a “sweet revenge’’ for Union Environment and Forest Minister t r baalu against his Cabinet colleague Kashiram Rana, Minister for Textiles, at a function here today.

If Mr Rana had put Mr Baalu in a piquant position when he delivered his speech in Gujarati at an official function in North India sometime ago, it was the turn of Mr Baalu at a foundation stone laying ceremony for the National Institute of Fashion Technology (NIFT) at Taramani, near here.

Delivering his speech in Tamil, Mr Baalu turned to Union Minister of State for Textiles Gingee Ramachandran and Tamil Nadu Handloom Minister n k k periasamy, who flanked Mr Rana, to translate his speech for the benefit of the latter, just as Mr Rana’s Gujarati speech was translated to him by officials around recently.

However, neither Mr Rana showed any inclination to listen to Mr Baalu’s speech nor the two Ministers took pain to translate the speech.

Mr Baalu also embarrassed the NIFT officials by doing some plain-speaking. Pointing to the mementoes (silver plates kept in glass boxes), bouquets, huge garlands and silk shawls at the function, he pulled them up for not being austere as such spending would only invite unnecessary criticism.

He also chided the officials for not being time conscious as the function extended up to three hours. He also faulted Mr Periasamy, Mr Ramachandran and a couple of officials for their lengthy speeches.
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Ashok Leyland goes hi-tech

ASHOK Leyland will employ hi-tech marketing strategy using the internet to step up sales of its commercial vehicles.

“We are setting up a nationwide Business to Consumers (B2C) network to market our vehicles on the Internet,” General Manager N. Mohanakrishnan told PTI. The company also plans to move into business to business (B2B) for dealing with its vendors and dealers within a year.

ITC’s dark market

The top management of ITC Limited is now veering around the view that the tobacco industry can safely be considered a “dark market” as anti-smoking lobbyists in a number of countries including India are clamouring for a ban.

ITC board level sources told PTI that the company has drawn up a medium-term strategy that all investments in diversified areas like hotels, paper and software will be funded by the tobacco business as it still continued to be the mainstay of the company.

Kotak Mahindra MF

Kotak Mahindra Mutual Fund is considering an index fund with investment in the two most popular indices — BSE Sensex and S&P CNX Nifty.

“Plans are to launch index funds with a minimum corpus of Rs 100 crore after the index futures trading starts on the two stock markets,” Kotak Mahindra Asset Management Company CEO Shekhar Sathe told PTI.

Datacraft RPG

Datacraft RPG Ltd, an integrator of communications and networking systems, has lined up a strategic acquisition plan, backed by a war-chest of about US & 60 million of the Singapore-based Datacraft Asia Ltd, for taking over companies which complement its operations in the country.

Binary Semantics

Delhi-based software firm Binary Semantics Ltd (BSL) will come out with a Rs 25 crore IPO next month offering 16 lakh shares to fund its expansion plans in India as well as abroad, Akhil Choudhary, Managing Director of BSL, told PTI.

Chemox Labs

P. Rajarathinam Associates’ efforts to revive its recently acquired Chemox Laboratories have suffered a blow following the Appellate Authority for Industrial and Financial Reconstruction’s order for a special investigative audit. — Agencies.
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WTO shadow on small units
By P.D. Sharma

THE Ministry of SSI and Agro and Rural Industries (SSI & AARI) has started awareness programme for SMEs in view of the WTO agreements. Punjab has one of the biggest concentration of the SSI. One such-programme was conducted by SIDBI some 15-day ago and another will be held on March 6 when a team led by the Development Commissioner for SSI will come to Ludhiana.

India made its first global statement two years ago when it reduced direct tax rates to 30 per cent. Now it is the turn for indirect taxes. The Union budget is likely to set tone for this. India is committed to remove all quantitative restrictions on imports by March 2001. Some 715 items in the negative list are to be freed by March 2000 as per the agreement with the USA. This contains mainly consumer goods, agriculture and textile items.

Our weighted average import tariff is about 28 per cent against ASEAN level of 10 to 13 per cent. For developed countries this ratio is about 5 per cent. Our average tariff had come down to 22 per cent in 1997 which went up because of global recession. It had resulted in flood of cheap imports which hit the domestic industry. Average duty can be reduced by slashing duty on oil which constitutes 25 per cent of our imports. By reducing duty by 10 per cent on oil will reduce average duty by 2 per cent. Customs duty and excise duty are symbiotically linked. If the Customs duty is to be reduced then the corresponding reduction in the excise duty is inevitable to keep the industry competitive.

The SSI sector has to face problems due to other WTO related issues. Trade and Environment, trade and investment, Government procurement and competition policy may add to the woes of SSIs. Exports from the SSI sector may be affected not only due to production processes but also on packaging of products.

The Government is the larger buyer of SSI products through reservation and price support policies. In view of a multilateral agreement on government procurement, the market constituted by the Government may also have to be opened for foreign competition.

The awareness programme of the Government will remain hollow if not followed by concrete policy back up. The SSI sector cannot stay in competition in the global market without updated technology. This demands higher investment. The Government has already handicapped the SSI sector by reducing the investment limit to Rs 1 crore. Hue and cry from lower segment within SSI is bereft of sound argument when due protection is available to the tiny sector with investment limit of Rs 25 lakh. The Government can allow individual industrial sectors higher investment limit and this discretion should be used liberally.

Input costs of industrial products are going up due to taxes and other burdens arising out of the State Government policies. Sales tax rates and power tariff rates are worth tackling to keep this sector competitive. Recent exercise of uniform sales taxes has produced rather opposite results. The Centre has assured the SSI sector that uniform sales tax rates exclusively for the sector shall be enforced. The Budget may come up with some beginning in this regard.

Procedural hassles are hampering SSI growth. At present this sector has to satisfy 52 laws. The Government has started an exercise to reduce this and have single legislation for the SSI sector. This exercise need to be put in place at the earliest.
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Tata Tea buys out Tetley

MUMBAI, Feb 27 (PTI) — In the biggest-ever deal in Indian corporate history, Tata Tea has bought out all the brands of Tetley Tea of the UK for 271 million (Rs 1,870 crore).

This acquisition of the worldwide Tetley tea business, which is twice the size of Tata Tea, represents the largest cross-border takeover of an international brand by an Indian company.

As per the terms of agreement signed on Saturday night, Tata Tea will through a 100 per cent subsidiary in the UK make a formal offer for acquiring all the shareholding of the Tetley group.

The takeover includes the private label tea business in the USA but excludes its coffee business there, which was recently sold by the existing shareholders separately.

Tata group Chairman Ratan Tata said it was a momentous occasion for the Tatas as this was the largest ever acquisition by an Indian company abroad in terms of acquiring an international brand.

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SBP branches computerised
Tribune News Service

CHANDIGARH, Feb 27 — The Chief General Manager, Mr Sitarama Murty, has said that the 100th branch of the bank will be computerised tomorrow. By the year end, 70 per cent of the bank business will be covered on computers. The bank has also connected all administrative offices by VSAT and is shortly going to inter-connect the city branches at Delhi, Chandigarh and Ludhiana.

Addressing a seminar of the branch heads at Ludhiana yesterday, he impressed upon them the need for customer satisfaction and business growth of the bank. Mr S.P. Mittal, DGM, said that the bank has a CD ratio of 106 per cent in Ludhiana district and 5000 Patiala Bank Kisan Cards have been issued up to date in Ludhiana district.

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Mumbai boy is Grasim Mr India

HYDERABAD, Feb 27 (PTI) — Aryan Vaid from Mumbai won the Millennium Grasim Mr India title at a function held at Ramoji Film City here last night.

Vaid, who was chosen from among 26 contestants in a grand show which included firework display, dance and music, will represent India at the Grasim Mr International contest to be held in October.

The first runner-up prize went to Ikram Sandhu of Chandigarh while Ajay Malik of Sonepat (Haryana) won the second runners-up prize.

Well-known actress Sridevi, her husband and film producer, Bonny Kapoor, along with actor Nagarjuna were among the nine judges.

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Inflation falls to 2.37 pc

NEW DELHI, Feb 27 (PTI) — The inflation rate plunged to a 20-week low of 2.37 per cent for the week ended February 12 on account of a sharp decline in the prices of primary articles.

The 0.19 percentage points drop in the annual inflation rate to 2.37 per cent (provisional) from 2.56 per cent in the previous week was triggered by the decline in the indices of both primary articles and manufactured products.

The lowest rate of inflation previously recorded was 1.95 per cent for the week ended October 2, 1999.

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TAX & YOU

by R. N. Lakhotia

Q: I have taken voluntary retirement w.e.f. 1.6.99. As per Government of India, Ministry of Industry (Bureau of Public Enterprises) letter No. 2(36)/86-BPE(WC) dated 5.10.88, employee is entitled to an ex gratia payment equivalent to 1 months emoluments for each completed year of service or service left before normal retirement, whichever is less. My employer i.e. Coal India Limited has accepted my VRS with stipulation that monthly ex gratia payment shall be made from the date of voluntary retirement to the date of normal retirement by monthly post dated cheques. In this respect kindly advise:

a) That the action of my employer is justified by paying monthly emoluments instead of lump-sum amount.

b) That whether I am liable to pay tax on the basis of monthly ex gratia as no tax is deducted when an employee is paid lump-sum ex gratia.

Capt S.C. Sood

Ans: The matter for justification of paying monthly emoluments instead of lumpsum amount is between you and your employer. Under the Income Tax law total payment under VRS is exempted to the tune of Rs 5 lakh. When you are receiving monthly ex gratia of the payment of VRS, then also no Income tax will be deducted at source because the total amount exempted under VRS is up to Rs 5 lakh.

Q: I along with my father and brother jointly has taken loan of Rs 3 lakh from HDFC for purchase of flat, the instalment of loan is Rs 58000 p.a. including interest @ 13 per cent p.a. out of the above three I am the only tax payer. My father is retired and brother is unemployed at present. How much benefit I will get in my income tax. Kindly suggest.

Navinder Singh Sital, Nakodar

Ans: If the loan has been taken after 1st April, ‘99 and the flat is constructed by 31st March, 2001, then the maximum interest which can be claimed in respect of such loan is Rs 75,000 per annum. If the loan has been taken prior to 1.4.99 the interest deduction will be to the tune of Rs 30,000 per annum only. If the flat is to be owned by three of you jointly, then you will be entitled to 1/3rd of the interest amount only. However, if the flat is to be owned by you, it is recommended that you may delete their names and yourself you contribute full amount towards the cost of flat.

Q: I am a senior citizen of Amritsar city. I own telephone and a residential house on 250 sq. yards. Kindly explain in detail according to one by six criteria a senior citizen having house in some specific area or in any area is exempted from filing the return. I have read your answer, but area is not mentioned. Please clear this point.

Surinder Singh, Amritsar

Ans: A senior citizen with the house and a telephone is exempted from filing Income tax return compulsorily. Please remember for Amritsar the size of the area on which the house/flat should be situate is 1100 sq. feet or more.

Q: I am a government employee. My son, aged 9, is suffering from the following ailments:

i) Permanent physical disability of Hamiparesis left side of the body (52 per cent). The relative certificate has been issued by the Civil Surgeon of Government Hospital.

ii) He is suffering from a neurological disease, which is one of the specified chronic diseases listed as per the relevant Rule 11-DD. The relative certificate on Form 10-I has been issued by the prescribed authority i.e. Neuro Surgeon registered with Indian Medical Association and holding Postgraduate qualification.

Under the above circumstances, please clarify whether I am entitled for the deduction of Rs 80,000 from my total income from April 1999 to March 2000 under the following sections:

i) Deduction of Rs 40,000 under Section 80 DD.

ii) Deduction of Rs 40,000 under Section 80 DDB.

It will be a personal favour to me if you please advise me on these two points, for which I shall be highly indebted to you.

D.S. Makin, Jalandhar

Ans: On the facts stated by you, you would be entitled to deduction u/s 80 DD amounting to Rs 40,000. You would also to be entitled to deduction u/s 80 DDB amounting to Rs 40,000 provided the disease specified by you is mentioned in Rule 11DD of the Income Tax Rules, 1962. Hence, it is suggested that you may please have a look at the various specified diseases and ailments for the purposes of deduction u/s 80 DDB which are contained in Rule 11 DD.
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ANALYST'S DIARY

by Ashok Kumar

Three non-ICE picks

WITH ICE (Information Technology, Communications and Entertainment) stocks being the buzzword in market circles these days, there are several anxious investors who seeks advice on their non-ICE holdings. Three companies that regularly evoke interest are Castrol India, Essel Packaging and Hindalco.

Castrol

Incorporated in 1979, Castrol India is the largest player in the lubricants segment and commands an overall market share of 18 per cent in India. The company has seven production centres spread out in the country and has a capacity of three lakh KL. On the financial front, Castrol India has fared well over the years. The company, which recently set up a new facility in Silvassa which is engaged in the manufacture of 150 different types of products, is also undertaking a modernisation of its other plants.

In all, the company has 300 types of lubricants. Castrol India is a company with a sound track record and bright future prospects and given these factors, it merits a hold recommendation in one’s portfolio.

Essel Packaging

The company which entered into the business of flexible packaging around a decade and a half ago has been riding high on the growth of the fast consumer goods (FMCG) segment, particularly the dental care products and cosmetics, owing to its privileged clientele comprising large multinationals, in its business of laminated collapsible tubes. And now that the company has acquired a virtual monopoly status in the domestic segment with a market share of more than 90 per cent, Essel Packaging has set its eyes on the neighbouring countries like China and Nepal.

While more than 90 per cent of the sales turnover of the company is generated out of the collapsible laminated tubes segment, it is also into the manufacture of seamless tubes. The Financial track record of Essel Packaging also appears quite satisfactory. A company with sound fundamentals, its shares could be picked up at price declines for decent gains in the medium to long term.

Hindalco

The single largest player in the private sector in the aluminium industry, Hindalco has managed to weather the storms in the earlier period of reversals in the aluminium segment, by ensuring that it was able to use such periods for consolidating its asset building exercise.

Hindalco is well set to surge ahead to maintain its supremacy in the aluminium industry. However, it could be a good idea to wait a while and watch the progress of the company before taking up a larger position therein.

In the meanwhile, the countdown for the announcement of the latest Union Budget has commenced. More on that later.
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INVESTMENT PLANNER

by Ashok Kumar

Prospects of VSNL bright

Q. Kindly comment on the prospects of VSNL?

— Rakhi Vinod, Patiala

VSNL is the public sector telecom giant of the industry.The company has a monopoly on all calls made in and out of the country till 2004. It has introduced several services like leased lines e-mail, Internet, video conferencing and frame relay. It was rated among the top 20 provides of of leased lines internationally in a user survey in Data Communications in May 1997. The company has planned a series of expansion plans, including the setting up of international gate ways at all four metros, 14 satellite earth stations and there under sea cables. It has also undertaken a 4600 km fibre optic undersea cable system fibre optic link about the globe (FLAG) gateway expansions metro switch commissioning etc. VSNL is planning a direct to hone service platform for Indian satellite channels, has tied-up with Comsat Telstra TMI and USA Sprint. So long as VSNL continues to be free of a competitor on the domestic front, its future prospects appear secure.

Q. Would it be advisable to invest in the shares of Bayer Diagnostics?

— Umesh Luthra, Faridabad

Formerly known as Miles India. Bayer Diagnostics is a part of the Bayer group, with Bayer Germany holding a 33 per cent staker in the company and the Indian counterpart,Bayer India holding 18 per cent stake in the company .BSIL is recognised as a clinical diagnostics company. The company’s products include a wide range,from instruments used in pathological labs to point care segments used in hospital wards. Its products also cater to the home care segment. On the financial front, the performance of the company can be termed as good.

The company is renowned for the manufacture of strips and is a pioneer in the same. It is likely that the company may introduce more products in the future considering that not all of its parents products are introduced in the Indian market yet. The company’s fortunes appear good in view of the fact that the clinical diagnostics segment is expected to witness good growth in the coming years.The growth rate is likely to be around 20 per cent for the same and for consumables around 50 per cent. The company is making concerted efforts for indigenising diagnostic products and plans to conduct research in clinical biochemistry. Overall, the prospects of the company appear encouraging and an investment in its shares could yield decent gains in the medium to long term.

Q. Please comment on the medium to long term prospects of Jyoti Structures.

— Kshitij Pinag, Rohera

Jyoti Structures Ltd (JSL) is a leading player in the transmission line towers industry. Though the company boasts of a good track record, the economic slowdown has adversely affected the performance of the company, with reference to the low growth. The environment in the industry was affected by the nuclear test which hampered the Power Grids fund raising exercise.The company was also affected by few internal developments. However, the scenario appears to be improving, now that Power Grid is expected to go ahead with some of its projects. JSL is planning to invest Rs 2 crore, half of which is for implementing ERP and the rest for its facilities a Raipur and Nasik.

At present the company is implementing turnkey projects in the nature of tower supply,construction work and bought out components. The company’s export scenario is also looking good having bagged the orders from Australia Canada, Thailand, etc. It is all set to complete a project for BSES in Dubai. Summing up, the prospects of the company appear satisfactory, and hence an investment in this scrip could prove rewarding in the medium to long term.

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Cadila Healthcare

Issue opens/closes: 28.2/6.3.2000
Instrument: Equity (FV-Rs 5)
Issue size: 14.89 lakh shares
Offer price: Rs 250

Analysis: The objectives of the entire issue, which includes its completed book-building process is to raise funds to finance its new formulations unit at Morayia in Gujarat, a R&D centre and to expand of its bulk drugs unit at Ankleshwar in Gujarat. It is worth noting here that repayment of debts and funding of brand acquisitions also figure in the company’s fund deployment objectives. Cadila Healthcare is a leading player in the formulations segment and can boast of 8 brands that rank among the top 300 brands in the domestic market. 31.8 per cent of its revenue generating products however fall under DPCO, but in spite of this, the financial track record of the company is quite impressive. Its OPM growth has been steady which has yielded it a compounded annual growth rate of more than 90 per cent in net profits over the past four years.

The company has projected sales of Rs 474 crore and a net profit of Rs 40.4 crore for the year ending March, 2000 which does not seem out of its reach when one considers that it performed quite well during the first half. Cadila Healthcare‘s biggest plus points include its strong marketing and distribution strengths and its focus on technology, both of which are crucial for the future success of any pharmaceutical company in the country today.

At a P/E ratio of around 35, the offer price of Rs 250 offers moderate scope for capital appreciation to the short-term investor, but those willing to take a longer term perspective could see an investment in this issue yielding them solid and steady returns over the years.

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