Tuesday, October 9, 2001, Chandigarh, India





B U S I N E S S

Rupee falls12 paise; sensex down 47 points
No reason to worry, says Jalan
New Delhi, October 8
The Indian economy, which is already in the midst of a severe downslide, is likely to be adversely impacted by the US attacks on Afghanistan, even as the government exuded confidence that the strikes will have little impact on the country’s economy.

Attacks deepens uncertainty over world economy
Hong Kong, October 8
US-led strikes on Afghanistan have deepened uncertainty over a dire world economy despite weekend efforts by the Group of Seven nations to shore up confidence, economists said today.

Idiot box set to shed its image
T
ELEVISION will no longer remain an idiot box going by a study of the International Data Corporation, India, The TV is all set to shed its image and become active. IDC (India) Limited was formed in 1987 as an affiliate of IDC based in Framingham, Mass, USA.



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TERCENTENARY CELEBRATIONS
 

PM fulfils Himachal’s Annual Plan promise
Shimla, October 8
The Prime Minister, Mr Atal Behari Vajpayee, has fulfilled his promise to protect the size of the Annual Plan through a special dispensation of Rs 300 crore to the hill state. However, it will not be easy for the government to raise the required Rs 508 crore to meet its plan commitment through non-SLR borrowings in the prevailing uncertain condition of the financial market.

Direct flights to Canada from today
New Delhi, October 8
At a time when most airlines around the world are pruning their staff and cutting down on its operation costs taking advantage of the September 11 terrorist attacks in the USA, a Canadian airlines is launching its operations in India tomorrow, which would offer direct flights to Canada.

Bicycle exporters lose Rs 300 crore
Ludhiana, October 8
Indian exporters of bicycle and bicycle parts have suffered a loss of about Rs 300 crore as the two international fairs of bicycles and parts in Europe failed to attract buyers after the September 11 attacks on the World Trade Center and Pentagon in the USA. Two annual fairs were marred by the events of September 11.

IFCI not to hike exposure in DPC
New Delhi, October 8
IFCI said today it would consider enhancing exposure in the $ 2.9 billion Dabhol Power Company only after the buyer for Enron’s stake was finalised, hopefully by the end of this month.

JPC for revamp of stock exchanges
New Delhi, October 8
The Joint Parliamentary Committee probing the recent stock scam today explored the possibility of having professional managements in major stock exchanges on the line of the National Stock Exchange.

Website for farmers launched
Shimla, October 8
The District Agriculture Technology Management Agency today launched its website to enable progressive farmers to keep abreast of the latest technology through the Internet.

Moser Baer net up 68 pc
New Delhi, October 8
Magnetic and optical data storage company Moser Baer India Ltd has posted a 68 per cent increase in net profit to Rs 54.13 crore for the second quarter against Rs 32.18 crore during the same period last year.

ABB to install substations in Haryana
New Delhi, October 8
ABB has been awarded a Rs 337 million order by Haryana Vidyut Prasaran Nigam Ltd for construction and augmentation of 132 KV and 220 KV substations as part of its efforts to improve the electricity supply and distribution network in the state.


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Rupee falls12 paise; sensex down 47 points
No reason to worry, says Jalan
Tribune News Service

New Delhi, October 8
The Indian economy, which is already in the midst of a severe downslide, is likely to be adversely impacted by the US attacks on Afghanistan, even as the government exuded confidence that the strikes will have little impact on the country’s economy.

The rupee has already recorded an all time low vis-à-vis the dollar and closed the day at Rs 48.1275 to a dollar— down by 12.25 paise as compared to the previous day’s closing.

Stock markets reacted cautiously with the BSE Sensex closing the day at 2765.37 points — down by 47.53 points or 1.69 per cent.

“ I see no reason to rush into anything at this point of time. It is a limited operation (the US strikes in Afghanistan)”, Union Finance Minister Yashwant Sinha told newspersons here today.

“Apart from some decline in stock market and a little pressure on rupee, nothing else is happening”, the Finance Minister said, adding that the situation did not call for an immediate knee-jerk reaction.

Mr Sinha, however, indicated that the government might put in place some measures to boost up the stock markets if the situation so warranted.

The Governor of the RBI, Dr Bimal Jalan, who met the Finance Minister today, said there was “no reason to worry about. We are, however, watching the situation”.

Dr Jalan, who is scheduled to announce the busy season credit policy on October 22, said the RBI, would intervene to prop up the rupee as and when the situation demand. “RBI is there to meet the temporary demand —supply imbalances in the currency market”, the RBI Governor said.

The industry, however, was not as confident as the government and believed that the US attacks on Afghanistan will have some immediate adverse affect on the Indian economy.

President of Assocham Raghu Mody said a hike in prices of oil and petroleum products could be the immediate fallout of the military attacks. This could bring about a substantial increase in insurance premia, which the industry will have to bear.

Exporters fear a fall in the export revenue due to the retaliatory military strikes carried out by the USA on Afghanistan.

The USA has been India’s largest export destination over the years and the share of India’s exports to the USA has been way ahead of other countries. The USA accounts for more than one-fifth of India’s exports and its share in India’s exports in the last five years has shown a steady upward trend, growing from 17 per cent in 1995-96 to a little less than 23 per cent in 1999-2000.

The USA is currently in the midst of a severe economic downtrend and the slowdown had already started affecting Indian exports and exporters feel that the attacks will depress demand, as consumer spending was likely to freeze.

“ The United States is the biggest economy on the world. And the fact the towers housing several of the world’s largest corporations and the New York Stock Exchange is bound to have a serious effect across the world economy”, a New Delhi based analyst said here.

The World Economic Outlook (May 2001) had revised the GDP growth rate in the United States has been revised downward by 1.7 percentage points to 1.5 per cent, the lowest level for a decade.

In fact, the impact has started to be felt with Indian exports to the USA in February, 2001, having actually fallen to $705.89 million compared to the figure of $768.43 million in corresponding month of the previous year.
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Attacks deepens uncertainty over world economy
Nick Edwards

Hong Kong, October 8
US-led strikes on Afghanistan have deepened uncertainty over a dire world economy despite weekend efforts by the Group of Seven nations to shore up confidence, economists said today.

They said the reaction among US consumers would be key to any possible recovery, but for now the mood was extremely cautious.

“The world had bet on the fact that the US consumer would start to do all right. Now we expect consumption to slow quite markedly in the months ahead,” a senior economist at one US Investment bank in Hong Kong said.

“This conflict isn’t helping.”

The return of US consumer confidence — at five and a half year lows, with unemployment at four year highs and rising — is the crucial factor economists want to see before calling the start of an economic recovery.

Analysts at Dutch investment bank ING Barings forecast US Private consumption growth would sink to 2.7 per cent in 2001 from 5.3 per cent a year ago, recovering to only 3.2 per cent in 2002.

The United States yesterday led bombing raids on Afghanistan the country President George W. Bush accuses of sheltering Osama bin Laden, the prime suspect behind the September 11 attacks on New York and Washington which killed about 5,600 people.

Global growth forecasts have been slashed since the attacks with the prevailing view that their negative impact on US Consumer sentiment has tipped the world economy into recession.

The World Bank sharply cut its 2002 forecast for growth in industrialised countries to one per cent-1.5 per cent from an original estimate of 2.2 per cent in the wake of the attacks and major investment banks have made similarly sharp revisions.

Asian stock markets were paring losses in late trade on Monday after early falls, bonds spreads were slightly wider but stable and currencies were holding ground, though trade was dulled by market holidays in Japan and the United States.

“It all depends on what the strikes achieve,” Li Lian Ong, regional economist at MacQuarie Bank in Hong Kong, told Reuters.

“The strikes could be very successful and everyone will be upbeat, or things could drag on for months and nothing would be achieved,” Ong said.

Economists said they wanted the dust to settle around any knee-jerk reaction to the retaliation before considering if further revisions to forecasts were necessary.

“This US military response was by and large expected by the markets. It was not a question of if they would, but when and how ferocious the attack (was going to be),’’ Mike Moran, north Asia economist at Standard Chartered Bank in Hong Kong said.

“We have to assess how stability really pans out over the next six months and certainly for the course of this military response,’’ he told Reuters Television.

Eurodollar futures traded on the SGX market in Singapore climbed to contract highs today as investors moved to price in at least another 25 basis point cut in key Fed rates.

Some fed watchers in New York say the central bank could be considering cutting nominal interest rates to zero — a policy adopted by Japan in a bid to restart its sickly economy.

G7 finance ministers from the world’s most powerful economies met in Washington over the weekend, anxious to counter the view that last month’s attacks had substantially raised the risks of a steep global slowdown.

After a day-long meeting at the US Treasury, the G7 — the United States, Britain, Canada, France, Germany, Italy and Japan — said they would do whatever was needed to kickstart recovery.

“We are strongly committed to bringing forward needed measures to increase economic growth and preserve the health of our financial markets,” they said in a statement, but said this did not imply a unified programme of fiscal or monetary action.

US Treasury Secretary Paul O’Neill said that Bush administration proposals for stimulating the US economy should bring a rebound in growth next year.

The Bush administration on Friday urged Congress to move swiftly to deliver at least $ 60 billion in tax relief to consumers as part of new stimulus measures worth up to $75 billion. That proposal was on top of about $ 55 billion in emergency spending and aid to airlines since the attacks. Reuters

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Idiot box set to shed its image
Peeyush Agnihotri

TELEVISION will no longer remain an idiot box going by a study of the International Data Corporation (IDC), India, The TV is all set to shed its image and become active. IDC (India) Limited was formed in 1987 as an affiliate of IDC based in Framingham, Mass, USA.

IDC in its report titled ‘Outlook for TV services in India,’ concludes that with the advent of innovative technologies, TV will become more interactive and a good source of revenue not only for the broadcasting companies but also a host of other industries like content creation, advertising, cable operators and satellite service providers. Further, TV services such as iTV (Interactive TV), VOD (Video on Demand) and t-commerce (television commerce) are fuelling the process of TV becoming a major source of active entertainment and revenue in developed countries.

IDC after analysing the dynamics of this market in India both from the supply side and the demand side found that the TV services market in India is in a nascent stage, as the overall subscriber base and the revenue numbers are not very high. The study predicts that DTH services revenue is likely to reach Rs 1.57 billion by 2006. The primary driver to this is the governmental policy in the market space, which would encourage the advent of players and also competition among players.

Also, the pay per view services revenue may touch Rs 1.11 billion by 2006 provided that there are stringent controls put in place by the government to check the piracy of movies and increase the monthly cable TV subscription rates.

If the government continues to liberalise it’s policies governing the Information and Broadcasting industries and the bandwidth issue is resolved then VOD services revenue may increase to Rs 1.17 billion by 2006, the study says.

The study also concludes that no consortia would be powerful enough to dictate the prices in any of the TV services segment over the next few years and that the adoption rate of the various TV services would be slow initially but would gradually pick up.

With a global network of more than 700 plus analysts in over 40 countries worldwide, IDC is the industry’s most comprehensive resource on worldwide IT markets, products, vendors, and geographies.

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PM fulfils Himachal’s Annual Plan promise
Rakesh Lohumi
Tribune News Service

Shimla, October 8
The Prime Minister, Mr Atal Behari Vajpayee, has fulfilled his promise to protect the size of the Annual Plan through a special dispensation of Rs 300 crore to the hill state. However, it will not be easy for the government to raise the required Rs 508 crore to meet its plan commitment through non-SLR borrowings in the prevailing uncertain condition of the financial market.

The centre’s insistence that the state should peg its market borrowings at around Rs 500 crore may turn out to be blessing in disguise. In the budget the state proposed to raise Rs 1325 crore through which would have been a tall order in view of the continuing down slide in the financial market, particularly after the terrorist attack on the World Trade Centre. More so when the state is raising fresh loans to pay the old ones. While maintaining that such high level of borrowings was unsustainable for a state with meagre resources, the centre raised the quantum of SLR borrowings to Rs 345 crore for the years. This along with special central assistance of Rs 200 crore at the behest of Mr Vajpayee and an additional untied assistance of Rs 100 crore by the Planning Commission helped the state in keeping the borrowings to the desired level.

Raising funds from market will become all the more difficult as the state Electricity Board is also coming out with an issue of 250 crore to raise funds for the repayment of earlier loans due for December 1. This means that no other government agency could go to the market over the next two months to avoid competition. The government will thus have very little time to raise about Rs 400 crore during the year.

After the UTI debacle the financial institutions have become very cautious and they are not blindly investing in government issues anymore. The recent guidelines of the RBI advising banks to give preference to investment in “rated instruments” is also having a bearing on the investment profile of financial institutions. Despite surplus funds they are holding back on investments and waiting for the economic turnaround.

There is one positive spin-off of the delay by the government in going to market for raising funds. It would save on interest payments. The cut in interest rates on small savings and General Provident Fund and Nabard loans will also lead to substantial reduction in interest liabilities. The total savings on interest were likely to be around Rs 140 crore. Further, the non-tax revenue was likely to be go up by Rs 50 crore.

The government has also secured its arrears of central assistance on account of non-furnishing of details of expenditure since 1984. The centre deducts one percent of the assistance if details of expenditure are not supplied. The total amount came to Rs 45 crore. Similarly, it has recovered Rs 38 crore due from the NHPC and managed to get Rs 40 crore from the NTPC for, land acquired by it for the Kol Dam project.

Out of the Rs 345 crore to be raised through SLR borrowings Rs 162 has already been raised. The government has so far been living on year-to-year basis and center has to time and again come to its rescue. However, this time the centre has asked it to come out with a medium term fiscal restructuring plan to speed up the reform process and find a permanent solution to the perennial financial crisis.

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Direct flights to Canada from today
Tribune News Service

New Delhi, October 8
At a time when most airlines around the world are pruning their staff and cutting down on its operation costs taking advantage of the September 11 terrorist attacks in the USA, a Canadian airlines is launching its operations in India tomorrow, which would offer direct flights to Canada.

Canada-3000, the second largest operator in Canada after Air Canada, would bring in its inaugural flight from Toronto to Delhi tomorrow. It will be the only airlines in India to offer direct flights between Delhi and two destinations in Canada greatly reducing the travel time between the two countries.

Canada-3000, which has bought a brand new A-340 aircraft for its operations from India, will offer three direct flights a week for travellers from Delhi. While two flights will be to Toronto, another one in between would be to Vancouver.

Colin G. Tubb, Vice-President of the airlines, said this is the only airlines which will offer a direct connection between India and Canada and reduce the travel time to just 14 hours.

Besides the airlines will also offer the cheapest fairs (Rs 25,000 one-way to Toronto and Rs 27,000 one way to Vancouver) between the destination besides a convenient departure time.

Mr Tubb said unlike the other airlines, Canada-3000 is looking forward to promoting India as a tourist destination and will also start its operations from Mumbai in November. It plans to offer a package deal to tourists travelling to India through the airlines, which includes all travel and accomodation expenses.

However, initially the airlines is looking to establish itself in India in the next one year and looking forward to providing better flight services to travellers from North India particularly from Punjab and Haryana.

The airlines, which started its operation in 1988, is also looking forward to establishing Canada as the gateway to North America, specially with the innumerable connecting flights it offers between the two countries. As part of expansion, the airlines is to buy10 A-319 aircrafts in the coming months.

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Bicycle exporters lose Rs 300 crore
K. S. Chawla

Ludhiana, October 8
Indian exporters of bicycle and bicycle parts have suffered a loss of about Rs 300 crore as the two international fairs of bicycles and parts in Europe failed to attract buyers after the September 11 attacks on the World Trade Center and Pentagon in the USA. Two annual fairs were marred by the events of September 11. One fair was held at Kolone in Germany from September 13 to 16 and the other at Milan in Italy from September 18 to 23.

Mr Satish Dhanda, Vice-Chairman of the Engineering Export Promotion Council (EEPC) told this reporter that they were expecting transactions worth over Rs 500 crore at the two fairs but there were not more than Rs 200 crore worth of transactions. There were no buyers from the USA and Latin American countries and some buyers from African countries and South Asia turned up for the two fairs.

Mr Dhanda said they could procure orders from African and South Asian countries.

He said shipping companies had levied a surcharge of $ 100 as insurance surcharge per 20 feet container. The sea freight for the Dubai port is $ 300 and they had to pay a surcharge of $ 100. Similarly, the sea freight for European ports is $ 800 and they have to pay extra $ 100 as surcharge. Exporters of engineering goods have also suffered losses as a number of buyers have cancelled their orders.

Mr Onkar Singh, Director (Exports), Avon Cycles, said the situation with regard to the export of bicycles and bicycle parts has not witnessed much worse conditions in Africa. They are exporting bicycles and parts in the countries with annual turnover worth Rs 80 crore.

Mr Onkar Singh while welcoming the restoration of the duty drawback said the government should implement it from June 7 when it was withdrawn.
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IFCI not to hike exposure in DPC

New Delhi, October 8
IFCI said today it would consider enhancing exposure in the $ 2.9 billion Dabhol Power Company (DPC) only after the buyer for Enron’s stake was finalised, hopefully by the end of this month.

“We will decide after the Enron issue is sorted out and a private player is identified (for buying Enron’s 65 per cent stake),” IFCI Chairman V.P. Singh told reporters here.

IFCI was unlikely to hike its exposure before the buyer was finalised, he said, adding there was no further commitments to the project since the second phase of the project had been stalled.

The move comes in the wake of IFCI deciding to reduce its exposure in power sector which were at Rs 1,653.93 crore or 8.29 per cent of the total Rs 19,952.71 crore till March 2001.

IDBI had also given similar indication on further loans to the Enron-promoted company.

IDBI, along with ICICI, IFCI, LIC, SBI and other lenders have over Rs 6,200 crore exposure in DPC, which ran into rough weather after Enron decided to quit India.

The IDBI-led consortium was considering at least three alternatives including rescheduling of loans and reduction in interest rates by 1.5 per cent to 15 per cent, as part of restructuring plan of 1,444 MW Phase-II of the project.

So far, Tata Power Company and BSES had bid for the 65 per cent stake of the Enron company, Singh confirmed.

On the overall power scenario, Singh said IFCI had been asking for escrow arrangement since many states had not reformed their power sector and were still continuing with irrationally low tariff structure. PTI

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JPC for revamp of stock exchanges
Tribune News Service

New Delhi, October 8
The Joint Parliamentary Committee probing the recent stock scam today explored the possibility of having professional managements in major stock exchanges on the line of the National Stock Exchange.

The JPC members headed by Chairman P.M. Tripathi questioned top officials of the NSE, including its Chairman C.G.M. Vajpayee and Managing Director Ravi Narayan and enquired on how managements in major stock exchanges could be demutualised.

NSE functions on a demutualised form where the ownership, management and trading rights are separate and distinct. On the other hand in stock exchanges like the BSE, the broker is also an official of the exchange.

The committee also asked several questions on the automatic levying and borrowing mechanism of which NSE are the pioneers. It was pointed out when the mechanism was launched it did not make a mark and the outgo was only around Rs 2 crore. However, from April-May 2000 it picked up “unnaturally” and touched Rs 3000 crore and further jumped to Rs 6000 crore.

Mr Tripathi said NSE officials failed to a give a definite answer on why this happened.

The JPC is now scheduled to talk to the officials of the Calcutta Stock Exchange and IndusInd Bank and ICICI Bank to enquire about the payment crisis in the stock market at the height of the scam.
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Website for farmers launched
Tribune News Service

Shimla, October 8
The District Agriculture Technology Management Agency today launched its website to enable progressive farmers to keep abreast of the latest technology through the Internet.

Launching the site www.ATMA Shimla.org Mr P.C. Katoch, Deputy Commissioner, said Shimla was the first district in the country to have such a site.

Referring to activities of the agency he said construction of farmer information and advisory centre buildings at each block headquarters of the district had been completed at a cost of Rs 27 lakh. All these centres had been equipped with the modern facilities like telephone, fax, computer and photocopier to ensure better communication systems with the departments concerned and scientists of various universities.

As many as 264 community-based farmer Internet groups had been formulated and 20 technical skill upgradation camps were organised for the member of the groups. At least 467 one-day training camps were organised at the village level to develop existing farming system and encourage the farmers for diversification and production improvement, which were attended by 17,912 farmers. Besides 78 exposure visits of 2,050 farmers were also organised to various places within and outside the pradesh.

Mr Katoch said 711 demonstrations were laid at 2,213 farmer’s fields on various technical aspects, besides 129 research trials were carried out by scientists of state horticulture university.
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Moser Baer net up 68 pc

New Delhi, October 8
Magnetic and optical data storage company Moser Baer India Ltd has posted a 68 per cent increase in net profit to Rs 54.13 crore for the second quarter against Rs 32.18 crore during the same period last year.

Sales for the quarter grew by 130 per cent to Rs 166.87 crore from Rs 72.5 crore in the corresponding quarter last year.

The company attributed the growth in revenues and earnings to the booming optical growth in optical media products category.

During Q2, the company has been able to bring down the cost of capital owing to its ECA credit line of $ 88 million. PTI

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ABB to install substations in Haryana
Tribune News Service

New Delhi, October 8
ABB has been awarded a Rs 337 million order by Haryana Vidyut Prasaran Nigam Ltd (HVPNL) for construction and augmentation of 132 KV and 220 KV substations as part of its efforts to improve the electricity supply and distribution network in the state.

The order was won against stiff competition from major domestic and international players.

The scope of the turnkey order includes design, manufacture, procurement, supply, associated civil works, erection and commissioning of 220 KV and 132 KV substations at Rohtak, Meham, Sampla, Bhiwani, Behal, Loharu, Harsnkalan and Kharkhoda.

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Paper on dial-up Internet access
Tribune News Service

New Delhi, October 8
TRAI today issued consultation paper on quality of service of dial up Internet access services, which aims at benchmarking on quality of service parameters with a view to establishing accountability and improve the performance of existing services provided by internet service providers to the dial up Internet users.

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BIZ BRIEFS

Birla Sun Life
Mumbai, October 8
Birla Sun Life Insurance Company Ltd (BSLIC) today introduced its group protection solutions, a yearly renewable policy, even as it plans to launch group superannuation and group gratuity products shortly. “Minimum size of the group has to be 50 persons and the plan will be available to professional as well as borrower-lender groups”, BSLIC Director, Vijay Singh said. PTI

Ericsson Tele
Mumbai, October 8
Ericsson Telecommunications has bagged a $ 70 million plus infrastructure order from Bharti Group for providing GSM services to its five circles of Punjab, Haryana, West Uttar Pradesh, Tamil Nadu and Kerala. PTI

BSNL
Mumbai, October 8
Bharat Sanchar Nigam Ltd (BSNL) today said it will roll out the much awaited cellular service with an investment of Rs 250 crore in Maharashtra telecom circle by end of this fiscal. PTI

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