Wednesday, October 3, 2001, Chandigarh, India





THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Debilitating the economy — Punjab style

Whereas prescription of an economic policy without political acceptability can be nothing more than an exercise in futility, the political decisions that are not based on sound economic principles and are not socially compatible can also debilitate the economy and spell disaster for the society. * ‘Sangat darshan’ aimed at buying rural votes
* State Planning Board has not met for the past five years
* Less than 10 per cent of the budget is left for development
* Free power, water benefiting only the rich
* Punjab grain is being described inferior in the market

LML scooter sales skid 20.9 per cent
New Delhi, October 2
Domestic two-wheeler sales declined by 6 per cent during April-August this fiscal with a predictable dip in scooter and moped sales even as motor cycles continued to record growth in sales.

Govt for probe into CMC price rise
New Delhi, October 2
The government today said that there was a need for probing the sharp rise in share prices of CMC Ltd (which doubled to over Rs 300 a share in a matter of months) coinciding with the process of privatisation of the computer maintenance giant.



EARLIER STORIES

 

IBP to complete selloff by Dec
Kolkata, October 2
The much publicised disinvestment process of IBP Company Ltd, Rs 8388 crore petroleum giant, will be completed by December this year, IBP Chairman and Managing Director S.N. Mathur has said.

Plan to revamp power sector, says Prabhu
Amritsar, October 2
The Union Power Minister, Mr Suresh Prabhu, painted a grim power picture in the country. Talking to mediapersons after inaugurating the South Asian Federation of Accountant here, the minister said there was a shortfall of around 15 to 20 per cent in the power generation and the government was preparing comprehensive programme to chalk out high investment in the sector.

Cabinet to consider new buyback norms soon
New Delhi, October 2
In a bid to boost market sentiments, the government is likely to relax the buyback norms enabling companies to buy back their shares from the market after six months instead of the present two year time-frame.

PM assures video conferencing in UP
New Delhi, October 2
Prime Minister Atal Behari Vajpayee today assured the UP Government Rs 12 crore for the establishment of video conferencing facility connecting all 70 districts of the state by December 25 this year.

StanChart Bank to open branch in city
Chandigarh, October 2
Mr Jaspal Singh Bindra, CEO, Standard Chartered Grindlays Bank said the bank plans to open two branches in Chandigarh and Ludhiana each within six months followed by another branches at Lucknow and Jaipur. At present the bank has 60 branches in India.

US cyber world next on hit list?
Washington, October 2
The U.S. could next be the victim of a cyber attack by terrorists — a high-tech strike on critical computer systems such as those controlling power grids or financial networks, experts have warned.

CORPORATE NEWS

Plan to hive off Usha India
New Delhi, October 2
The Usha group is planning to hive off its semi-conductor business Usha India by offloading up to 49 per cent equity to a strategic partner in the wake of the group defaulting in loan repayments to financial institutions.

  • Tata Steel output up
  • Unitech plans to invest Rs 28 cr
  • Satyam Infoway, ABM Knowledgeware tie-up
  • Dr Reddy’s cancer drug
  • Dividend in Birla Cash Plus


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Debilitating the economy — Punjab style
S. S. Johl

Whereas prescription of an economic policy without political acceptability can be nothing more than an exercise in futility, the political decisions that are not based on sound economic principles and are not socially compatible can also debilitate the economy and spell disaster for the society. Unfortunately, Punjab is caught up in this diabolical situation generated by the series of vote-bank based political decisions that defy economic logic and social justification.

The Akali-BJP regime began with a flush of gusto and engaged the three universities of the state and some other institutes for preparing block level development plans. Spending a period of more than one and a half years, some three dozen such block level development plans were prepared by these institutions and were presented to the government. With action duck, nobody knows the fate of these plans. Instead the political leadership subjected the state finances the depredations of so-called sangat darshans aimed at buying the rural votes on election eve.

Incidentally Punjab has a State Planning Board with outstanding professionals and experts as members. Its term is extended almost annually as a ritual, every time long after the annual budget is passed and funds get allocated. Ironically, no meeting of this board has ever been held during the past five years and it has never been called upon to deliberate on investment planning and projects prioritisation during this regime.

It is indeed surprising that the state government even under such a severe financial crunch has no concept of and value for prioritisation of projects and programmes. While more than 65 per cent of the budget is being eaten up by the salaries and about 25 per cent on interest payments, less than 10 per cent of the budget only is left for development purposes. It is an irony of fate that these scarce resources are being frittered away on trivialties, perhaps because this government has otherwise very little to show on the development front.

Substantive part of village and approach roads have remained unattended to during the last over four years, particularly so in the constituencies of the opposition MLAs. Villages in the state stink to high heaven as ever before. Most of the village level produce markets and purchase centres are no more than dusty fields when dry and muddy slush during rains. There are no adequate pucca floors and sheds to cover the unloaded produce and no requisite covered storage.

Some 80 per cent of the market fees get appropriated for payment of salaries and the rest get fooled away on programmes of little significance. Agricultural produce in the market before and after purchase remains at the mercy of the rain gods. Unemployment of youth, particularly village youth, is at its peak. Drug pushers are having a field day. Liquor flows free and unchecked in this regime. Education in the villages has become an absolute farce. Health services and medical facilities are almost non-existent. Farmers are committing suicides, many of them under the burden of indebtedness. Corruption has reached its zenith. Government jobs and even transfers have become money matters with merit having no place in the system.

Unfortunately all this in the times of tricentenary celebrations of the birth of the Khalsa, which came like a thunder and went like a storm and the Khalsa Panth remained where it was, rather more divided and disoriented.

The government has in fact been very imprudently burning its financial candle at both the ends. The fund-starved state has been suffering from indulgence of the ruling political combing combine in throwing unsavoury sops to the people such as supply of free water and electricity to the agriculture sector, abolition of land revenue, non charging of house tax and even water and sewerage charges in the urban areas (abolition of octroi in the pipeline), which has benefitted, if at all, only the richer classes in the rural and urban sectors.

On the other hand the cheap vote-bank political of so-called sangat darshans and unplanned whimsical spendings that remind us of the ways of maharajas have debilitated the state so much that development planning and project prioritisation have been left with no meanings in this state.

Perhaps this is why the need of planning board meetings have never been felt. As a consequence, these cheap jack policies followed in the agriculture sector, the farm enterprise, which is the main stay of the state, has come under an acute income squeeze and has suffered from lack of capital formation, the very motive force of growth process. The wheat-rice rotation that brought about the Green Revolution in the country is becoming less and less profitable day by day, because there is virtually no demand for Punjab foodgrains in the domestic and international market. This is because the traditionally deficit states of the country are becoming progressively self-sufficient and the Punjab grain is being described inferior in quality in the national and international markets. Huge stocks of over 60 million tone in the central pool is compelling the Centre to drag its feet on procurement.

The reluctantly and partially obliging Central Government, while bailing out the politically cooperating Akali-BJP combine on this front, in the face of uncomfortable build up of food stocks, has been in fact harming the interests of the farm sector and contributing to the process of debilitation of the state economy and degradation of the ecology of the state in the long run. These unwarranted palliatives served as relaxants and carried off all pressures on the government that would otherwise dissuade them from following the disastrous policies like free supply of water and electricity to the farm sector and adequately express concern in research and extension supported by an effective policy for diversification.

Farmers having calculative mind found no reason to shift areas from under wheat and rice to some other enterprises. Setting up of non-delivering committees on WTO, expenditure restructuring, diversification, disinvestments etc notwith-standing, as a consequence of these short-sighted policies the farm sector has landed into a “chakkar-view” of the worst order from where it has become almost impossible to get out, thanks to the stubbornly ruthless, persistently short-sighted and illogically ad hoc policies and programmes being pursued by the state government during the last more than four years.

Secondary sector, specially the small scale industry, is also in a dire state. There is no demand for investment credit because of the slowdown in the national economy and world market. Inventories have built up and non-performing assets of the banks are soaring to insufferable levels, because the small industry borrowers are in no position to retire interest and loans due. There is no state policy, in fact there has never been any, that would aim at coming to the rescue to this beleaguered sector.

Unfortunately the alternative party leadership is also not hinting at any wiser programmes. Although at this stage it is not possible and even right to assume what the main planks of the contesting parties would be in the ensuing elections, one does hope that the reality will dawn upon the political leadership of the state that unless the grievous problems being faced by the economy in the primary and secondary sectors are handled with care and due sensitivity is shown to the economic and social fallouts of policy dispensations, we may be in for serious trouble on all fronts and no government at the Centre can keep bailing out even the most cooperating state government forever.

(The writer is a former Vice-Chancellor of Punjabi University, Patiala)
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LML scooter sales skid 20.9 per cent

New Delhi, October 2
Domestic two-wheeler sales declined by 6 per cent during April-August this fiscal with a predictable dip in scooter and moped sales even as motor cycles continued to record growth in sales.

Total two-wheeler sales nosedived to 14 lakh units from 15 lakh units during the same period last year, data compiled by the Society of Indian Automobile Manufacturers (SIAM) showed.

Scooter sales fell 4.5 per cent at 3.8 lakh units against 3.9 lakh units during the year-ago period. On the other hand, motorcycle sales rose by 25.4 per cent at 10 lakh units over 8 lakh units sold during the corresponding period last year.

Moped sales also registered a dip of 34.6 per cent at 1.8 lakh units over 2.8 lakh units during April-August 2000-01.

Scooter sales of LML declined by 20.9 per cent at 60,377 units (76,398 scooters in the year-ago period).

However, Bajaj Auto posted a 4.9 per cent rise in scooter sales at 1.7 lakh units (1.6 lakh units).

TVS-Suzuki registered a 2.2 per cent decline at 65,321 units during April-August 2001-02 (63,907 units).

Kinetic Motor Company’s scooter sales stood at 48,736 units over 47,588 units, a decline of 2.4 per cent.

Honda Motorcycle and Scooters India, a wholly-owned subsidiary of Honda Motors of Japan, sold 10,100 units in this fiscal.

TVS-Suzuki posted a 1.8 per cent decline in motor cycle sales at 137,227 units (139,745 units).

Indicating a turnaround, Yamaha Motor posted a 36.8 per cent rise at 79,300 motor cycles (57,947 units).

Sales of LML, which entered the motor cycle market last year in alliance with Korea’s Daelim Motor Company, increased to 15,646 units from a mere 143 units last year.

Royal Enfield Motors recorded a 12.3 per cent dip in sales year-on-year at 7,851 units over 8,956 units.

Kinetic Engineering, a new entrant in the segment, sold 18,172 units during the period under the review.

Moped sales declined as all players including Bajaj Auto, TVS-Suzuki and Kinetic Engineering witnessed negative growth in sales. PTI
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Govt for probe into CMC price rise

New Delhi, October 2
The government today said that there was a need for probing the sharp rise in share prices of CMC Ltd (which doubled to over Rs 300 a share in a matter of months) coinciding with the process of privatisation of the computer maintenance giant.

“The whole issue (rise in CMC share prices) needs to be looked into,” Disinvestment Minister Arun Shourie said.

Cabinet Committee on Disinvestment (CCD) would meet here on Wednesday to take a decision on price bids received for CMC and Hindustan Teleprinters (HTL), Shourie said, adding “we are trying to get more information on CMC share price movement from one or two more sources.”

CMC’s equity has shot up to about Rs 310 a share from just over Rs 150 a share earlier this year as the movement for disinvestment of over 50 per cent government equity to a strategic partner neared culmination.

While Tata Consultancy Services (TCS) has emerged as the sole bidder for CMC, albeit quoting a price of about Rs 200 a share, Hindustan Futuristic and Uniword Telecom Ltd have submitted the final price bid for HTL.

Sources said that though TCS has quoted a figure of about Rs 150 for majority equity in CMC, it is well above the ‘upset’ price (a kind of reserve price determined by government using a combination of pricing formule) set up by the Department of Disinvestment.

Informed sources said despite an intensified debate on whether or not to accept the bid at this juncture, CCD is likely to accept the TCS bid to accomplish the first privatisation during the current fiscal on way to meet the ambitious Rs 12,000 crore disinvestment target set for 2001-02.

If accepted, TCS would have to make an open offer for CMC’s floating shares equaling about 17 per cent of the profit making company that has a turnover of over Rs 250 crore. PTI
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IBP to complete selloff by Dec

Kolkata, October 2
The much publicised disinvestment process of IBP Company Ltd, Rs 8388 crore petroleum giant, will be completed by December this year, IBP Chairman and Managing Director S.N. Mathur has said.

Speaking to newsmen here last night about the company’s future plans, Mr Mathur said the process to divest the government’s stake in IBP by 33.58 per cent from the present 59.58 per cent in favour of a strategic partner “has been proceeding quite smoothly and was expected to be over by December 31.”

He said of the 15 parties which had shown interest in the disinvestment process, three had opted out leaving 12 serious bidders.

However, refusing to divulge the identity of any of the 12 bidding companies, Mr Mathur only said while six of them were international companies, three each were private and public sector units and all of them were related to either Petroleum or chemical industries.

Answering to queries about the price of disinvestment the IBP CMD said it was yet to be fixed. While the government was making its own valuation in accordance with the present market value and share prices, each of the 12 bidders after visiting the company and evaluating all pros and cons had simultaneously been preparing their respective offer prices. However, things would be cleared only on the opening of the bidding papers later this month, he said.

To a query about the benefits the IBP proposed to reap from the government disinvestment, Mr Mathur said it would be three prong. After the disinvestment the IBP would not only become a debt free company but also be having several backup products in hand to ensure a healthy 15 per cent growth in an otherwise saturated but fiercely competitive market. UNI
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Plan to revamp power sector, says Prabhu
Our Correspondent

Amritsar, October 2
The Union Power Minister, Mr Suresh Prabhu, painted a grim power picture in the country. Talking to mediapersons after inaugurating the South Asian Federation of Accountant here, the minister said there was a shortfall of around 15 to 20 per cent in the power generation and the government was preparing comprehensive programme to chalk out high investment in the sector.

Mr Prabhu also hinted at the revamping of the entire transmission system in the country. He said the government favoured the handing over of the distribution network to the private sector as the old system was proving a big drain.

The transmission and distribution losses were around 30 per cent to 40 per cent. He pointed out that more than 40 per cent of the transformers had become obsolete and needed immediate replacement. This step could save the losses to great extent, he said.
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Cabinet to consider new buyback norms soon

New Delhi, October 2
In a bid to boost market sentiments, the government is likely to relax the buyback norms enabling companies to buy back their shares from the market after six months instead of the present two year time-frame.

The Law Ministry has given the final touches to the new buyback norms and the issue is likely to be taken up by the Cabinet soon, official sources said.

The relaxation of buyback norms is expected to boost market sentiments as companies would be allowed to buy back their shares from the market within a shorter time duration, which in turn would ensure higher shareholders’ value.

The decision comes after the market crash following the terrorist attacks in the USA on September 11.

The relaxation of the buyback norms was considered following a recommendation of SEBI and certain sections of industry.

Currently, promoters of a company can acquire shares from the market either through the creeping acquisition route or buyback.

The creeping acquisition route allows companies to acquire only 5 per cent of their shares from the market every year.
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PM assures video conferencing in UP
Tribune News Service

New Delhi, October 2
Prime Minister Atal Behari Vajpayee today assured the UP Government Rs 12 crore for the establishment of video conferencing facility connecting all 70 districts of the state by December 25 this year.

Once the facility is established, UP will be only the second state in the country after Andhra Pradesh to have such a electronically networked communication facility.

Mr Vajpayee said that the facility will be of great help in the governance of a vast state such as UP.
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StanChart Bank to open branch in city
Tribune News Service

Chandigarh, October 2
Mr Jaspal Singh Bindra, CEO, Standard Chartered Grindlays Bank said the bank plans to open two branches in Chandigarh and Ludhiana each within six months followed by another branches at Lucknow and Jaipur. At present the bank has 60 branches in India.

While addressing newsman here last evening , Mr Bindra said due to lowest penetration of credit cards in India, the bank has entered into this regime in a big way. The bank is negotiating with leading card issuers and will install 2000 ATMs by December 1 this year.

The bank has recently launched its own website and more to follow soon. The bank’s last year turnover was Rs 20,000 crore.

The bank has no NPA problem as it is less than one per cent said Mr Bindra.

Mr Bindra claims that ShanChart Grindlays Bank is second to State Bank of India and fears stiff competition with ICICI Bank and HDFC Bank in Chandigarh. 

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US cyber world next on hit list?

Washington, October 2
The U.S. could next be the victim of a cyber attack by terrorists — a high-tech strike on critical computer systems such as those controlling power grids or financial networks, experts have warned.

The nation's computer infrastructure remains highly vulnerable to attacks, intelligence and cyber-security experts told Congress only days after the September 11 terror attacks on American cities.

U.S. officials, however, said it was unlikely the cyber strikes would come from Osama bin Laden's Al Qaida network — the prime suspect in the terror attacks — which despite having used computer technology in the past seems focused on dramatic attacks on physical symbols.

The attacks could, however, be launched by computer savvy people sympathetic to his cause, other terrorist networks or nations such as Iraq that are believed to be developing cyber warfare capabilities, the San Jose Mercury Report said.

In view of these warnings, the Bush administration recently named Richard Clarke, who heads the government's counter-terrorism team, to focus on cyber security efforts.

The White House also plans to name Wayne Downing, former chief of the U.S.Special Operations Command, as coordinator of intelligence and military resources in the anti-terror campaign.

The report quoted Dorothy Denning, a computer-science professor at Georgetown University, who has studied cyber terrorism, as saying: "It's my understanding that they're not teaching this in the terrorist-training camps. It's these thousands of affiliates or sympathizers... and some of them may decide to take it upon themselves to see what they can do that is more disruptive, if not destructive."

Attacks by such sympathisers have taken place following other crises, such as the downing of a U.S. spy plane by China earlier this year, according to a report released by the Institute for Security Technology Studies at Dartmouth College.

"Terrorists themselves are not highly likely to engage in cyber attacks right now because we haven't seen a lot of cyber-attacks by terrorist groups," said Michael Vatis, the institute's director.

"But if, in response to the September 11 attacks, the USA engages in military strikes and retaliation against the terrorist infrastructure... it is our view that terrorist attacks are likely to occur."

Within days of the attacks, the FBI's National Infrastructure Protection Centre issued warnings about increased hacking of web sites, spreading of computer viruses and so-called "distributed denial of service" attacks, which try to bring down a computer network by flooding it with e-mail.

The "Nimda" computer worm, which flooded many e-mail servers and personal computer hard drives with data, started spreading after the attacks. But there is no evidence linking the worm to the attackers.

The Internet itself could be jeopardized if simultaneous assaults were to succeed in harming the 13 root servers that are the Web's ultimate address book.

The larger concern is an attack on computer systems used to control important functions, such as electric power grids, nuclear power plants or telecommunications.

"One of the most frightening images of cyber terrorism is a scenario in which terrorists take over the air-traffic control system to cause an aircraft to crash or two planes to collide in flight," was the start of a chapter in a book on international cyber attacks published this year by the Hoover Institution at Stanford.

Terrorists proved last month they could accomplish a similar goal without having to infiltrate computer systems. But their plan required 19 people in a well-coordinated effort to hijack four airplanes. For a cyber attack, "you need one guy and a laptop," said Vatis, who also is the former director of the National Infrastructure Protection Centre.

Tim Belcher, CTO for Riptech, a Virginia-based information security firm, said many computer systems, such as those controlling power grids and water supplies, are surprisingly accessible through the Internet.

The U.S. military has an information warfare strategy to disrupt such systems in foreign countries, so it's logical that terrorist groups would look to do the same, said Belcher, who worked on cyber security for the Defence Department.

"It's not like the typical battlefield where the army with more tanks wins," he said. "This is technology. This is something that anybody can embrace and become an expert in."

Stephen Northcutt, who runs an information warfare simulation for the SANS Institute, a network security and research organization in Bethesda, said:"You can potentially paralyse commerce, and you might be able to accomplish a cascading failure of the electronic grid." IANS
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CORPORATE NEWS

Plan to hive off Usha India

New Delhi, October 2
The Usha group is planning to hive off its semi-conductor business Usha India by offloading up to 49 per cent equity to a strategic partner in the wake of the group defaulting in loan repayments to financial institutions.

“With the approval of FIs, we are planning to hive off Usha India and one of the ways to do so is by disinvestment of equity,” Vinay Rai, Chairman of the Usha group told PTI.

Usha India has defaulted in payment to the FIs during last six months mainly due to slowdown in IT and electronics and has sought rescheduling of its loan liabilities of about Rs 73 crore.

Tata Steel output up

Tata Steel said today it has surpassed its last year’s production results in the area of saleable steel, crude steel and hot metal production.

The company’s saleable steel production at 1.73 million tonnes was up by 2.1 per cent over last year’s corresponding figure of 1.70 mt, Chief of Corporate Communications Sanjay Singh said.

Unitech plans to invest Rs 28 cr

Unitech plans to invest Rs 28 crore in a bid to strengthen its information technology (IT) wing.

“We are planning to invest Rs 28 crore over the next three years in developing our IT wing,” Ramesh Chandra, Unitech Managing Director, told PTI.

The Rs 400 crore company had recently diversified into IT education by setting up the Institute for International Management and Technology (IIMT).

Satyam Infoway, ABM Knowledgeware tie-up

Satyam Infoway (Sify) has today signed a memorandum of understanding with ABM Knowledgeware to jointly promote ABM’s e-governance solutions.

According to an ABM release, ABM and Sify are together planning to provide some innovative options and solutions in the field of e-governance, based on state-of-the-art technology and AMB’s proven products.

Dr Reddy’s cancer drug

Dr Reddy’s Laboratories has received approval from the Drug Controller General of India (DCGI) for launching biotech cancer medicine titled “Grastim” with a new product insert on October 3.

The new product will be priced at Rs 2,460 MRP for 300 mcg vial, which is much lower than that offered by any innovator company.

Dividend in Birla Cash Plus

Birla Sun Life AMC today declared 8.34 per cent dividend on its dividend repayment scheme even as it announced a weekly dividend under the Dividend Reinvestment Option in Birla Cash Plus. Agencies

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BIZ BRIEFS

Lenzing
New Delhi, October 2
Leading manufacturer of Viscose fibre, Lenzing AG Austria, has launched Modal and Lyocell brand fibres in the country. The fibres made from eco-friendly products can be used for the manufacturing of different textiles. OC

HDFC Bank
Chandigarh, October 2
HDFC Bank has entered into an alliance with Chandigarh Engineering Department (CED) for payment of electricity bills, through “BillPay”. HDFC Bank’s BillPay — a third-party utility payment facility, allows customers to use the bank’s e-Age channels to make utility bill payments from the comfort to their homes. TNS

PNB Kisan card
Nahan, October 2
Punjab National Bank launched its Kisan Credit card scheme in Sirmaur district here today by distributing credit cards worth Rs 6 lakh to 40 beneficiaries. Mr Rakesh Kaushal, Deputy Commissioner Sirmaur on this occasion hoped that Sirmaur district will cross its target of 2600 credit cards this year. OC

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