B U S I N E S S

PSEB not tainted with coal deal
THE country has a total of over 1 lakh MW power generation capacity, out of which 70 per cent is based on coal and gas. Punjab has got three thermal power stations (GNDTP, Bathinda of 4x110 MW, GGSTP Ropar having 6x210 MW capacity and GHTP Lehra Mohabbat of 2x250 MW).

Bidding in Old Master paintings bullish
London
The attack on the World Trade Centre occurred less than a week before auctioneers Christie’s and Sothebys’ big annual sales of Asian art in New York. At first both houses refused to postpone, but after pleading telephone calls from London they changed their minds — the sales took place last week.

Real estate sector needs reforms
“TOWARDS housing for all” is the title of the huge advertisement issued jointly by Government of India, HUDCO and UNCHS that appeared in the leading dailies on world habitat day. The advertisement looks like a show window highlighting the policies of the NDA government, formulated, being formulated and a few those still in the pipeline.

PATUXENT RIVER: An undated handout photo shows the Boeing X-32B Joint Strike Fighter concept demonstrator aircraft flying over the Naval Air Station at Patuxent River, Md. The Pentagon this week awards its richest contract in history — at least $200 billion — for a fighter jet designed to reach supersonic speeds, land vertically and meet the varied needs of the Air Force, Navy and Marines. For five years, Boeing Co. and Lockheed Martin Corp. have been designing, engineering and testing their entries in a competition that will have military, business and economic consequences for decades to come. The winner will be announced Friday. — AP/PTI

Closure of factories continues in Paonta
Paonta Sahib, October 26
There has been a rise in unemployment due to continuous shutdown of factories in Paonta Sahib. Truck Unions, employees and others blame the government’s policy. In Sirmour district there are 25 large-scale factories, 1199 small-scale factories and 87 very small factories.

Tax investors, provide relief to UTI: panel
New Delhi, October 26
The Malegam Committee has suggested that government should not give tax benefits to investors of UTI’s assured return schemes including US-64, but said that dividends paid by the beleaguered mutual fund should be exempted from tax.

CORPORATE NEWS

Britannia net profit soars 18.7 pc
Mumbai, October 26
Britannia Industries has posted 18.7 per cent increase in net profit at Rs 25.3 crore for the second quarter ended September 30, 2001 as compared to Rs 21.3 crore in the corresponding period last year.

• Voltas net down by 19.09 pc
• Hinduja TMT net dips
• Tata Telecom

Govt may drop Nalco ADR plans
New Delhi, October 26
The government is unlikely to take recourse to American Depository Receipt for aluminium major Nalco as part of plans to dilute stake in the company. “We may not go ahead with ADR plans for Nalco as proposed earlier on account of economic factors”, official sources said.

Enron fires Finance Director
London, October 26
US energy major, Enron Corporation, has ousted its Finance Director amid an investigation by the American Government into the company’s business practices. Finance Director, Andrew Fastow, would take a leave of absence and be replaced by Jeffrey McMahon, the former Treasurer, the company said.

Air-India to levy insurance charge
New Delhi, October 26
Passengers travelling by Air-India and purchasing tickets on or after November 1, 2001 will be required to pay an additional surcharge of $ 3.50 for each sector of travel.

PSEB not tainted with coal deal
G. S. Sohal

THE country has a total of over 1 lakh MW power generation capacity, out of which 70 per cent is based on coal and gas. Punjab has got three thermal power stations (GNDTP, Bathinda of 4x110 MW, GGSTP Ropar having 6x210 MW capacity and GHTP Lehra Mohabbat of 2x250 MW).

The large-sized coal reserves are in Bihar, Orissa, Andhra Pradesh and Madhya Pradesh. For Punjab, coal basically comes from Bihar, Jharkhand and West Bengal.

All coal mines are owned by government agencies. Coal India Ltd. (CIL) is the nodel agency. The quantity of coal allocated, is decided by the Coal Linkage Committee under CIL and CEA.

In Punjab maximum demand of power is during paddy season. During this period power demand goes up by 30-35 per cent and the thermal power stations have to be operated at their highest possible plant load factor which means maximum consumption of coal during this period.

For quite sometime, the matter relating to coal have been in the news and some negative perceptions have developed in public mind. It is, therefore, necessary that the issue relating to coal are clarified for the public information.

The first issue is quantity of coal dispatched from mines and received at the power stations. To ensure that the right quantity of coal is dispatched, is the responsibility of public sector companies dispatching the coal. For Punjab major suppliers are Eastern Coal Fields (ECL) and BCCL. Although, there is no formal agreement with the PSEB but the responsibility lies the dispatchers. The PSEB has hired the services of a private company to maintain necessary liaison with ELC and BCCL for timely placement of rakes by railways to supervise arrangements for loading of coal and sampling of coal for joint testing to establish grade of coal. The price of coal per tonne is related to the grade of coal supplied.

There are six grades of coal i.e. A, B, C, D, E, & F. The best combination for a power station is a mix of partly grade-C, D, & E. So depending upon the grade of coal available i.e. C, D & E or a combination of these, the price of coal is calculated. The transaction is between the central public sector companies and the PSEB.

Indian coal falling under grade-D, E & F are having high ash contents, of approximate 40 per cent. Therefore, public perception that the PSEB is paying high price of low grade of coal is absolutely incorrect. In fact, the PSEB, is constantly pursuing the coal supplying companies to see that right grade of coal is supplied.

When the present PSEB management took over in January, 2000, all three thermal power stations were inspected and arrangements of coal received, consumption data etc were examined. Member (Generation) was asked to take specific steps to ensure proper accounting of coal. Till then, no scientific system of proper weighment was operative.

While going through the details of coal consumed, it is observed that there were discrepancies as the coal consumed per unit of electricity were varying from 0.4 to 0.95 kg per unit. A task group was formed to analyse the record to ensure that the correct stock verification is done. Sometimes during middle of last year, the issue was taken up by media and the Punjab Government.

It was desired that the department enquiry may be ordered to further examine the details of coal consumption. The enquiry officer submitted his report which was put up to the board this year and follow up action is being pursued. Primarily, the issue is centred around scientific methods of coal accounting as adopted by central utilities like NTPC so the board’s view point is properly understood by the media, public and other stake holders.

Since, the purchase of coal is a major expenditure for the power stations approximate Rs 1100 crore per year, including railway freight charges, public transparency is a must and as such any clarifications needed can be made available by the PSEB.

Bidding in Old Master paintings bullish
John Windsor

London
The attack on the World Trade Centre occurred less than a week before auctioneers Christie’s and Sothebys’ big annual sales of Asian art in New York. At first both houses refused to postpone, but after pleading telephone calls from London they changed their minds — the sales took place last week.

The caller, Giuseppe Eskenazi, the world’s leading dealer in Oriental art, said: “I fought hard. I spent hours on the phone for two days, saying, “For God’s sake don’t hold these sales — it would be a disservice both to the buyers, who can’t get there, and to the sellers.’’

“What is more, it would have been insensitive, with bodies still being pulled from the rubble. They told me I was getting emotional.”

The intransigence of the big auction houses is one illustration of a new big push to sell art. In the aftermath of the terrorist catastrophe, with war compounding the effects of a worldwide recession, every financial index has nose-dived (though most have since recovered). Auction prices for art, however, have been impervious.

It would be difficult to point to a major auction that has flopped since September 11. Bidding in some sectors, such as Old Master paintings in New York, German expressionist pictures and contemporary ceramics in London, has been positively bullish. Philips’ contemporary ceramics sale on September 26 drew a telephone bid of $ 37,920 - double the previous record — for a Bernard Leach, from a New York collector. Americans were responsible for 38 per cent of the sale total.

Fairs are also thriving. A fortnight after the attack the British Art Fair in London was packed, though sales were about 5 per cent down on last year. Organiser Gay Hutson said big-name artists were being snapped up. “We so relieved”, she said.

Coinex, the fair of the British Numismatic Trade Association, in London on October 5-6, had the best sales for six years, although American visitors were down from about 20 last year to five.

Such buoyancy in times of trouble may seem paradoxical, but the art market has a logic all its own. War puts a premium value on portable wealth such as artworks and coins. In the Second World War art dealers in Paris made fortunes, some by selling Nazi loot. American museums and collectors were still buying; as were the Swiss.

Recession is a genuine enemy of the art market. But it hits art last. Serious collectors stop buying only under dire financial duress and it can take a year or more before confidence evaporates and prices hit bottom.

The last great art market collapse, of 1990-91, did not come until more than 18 months after the sky-high 15 per cent interest rate of 1989, which tipped Britain into recession. By 1990-91 the FTSE All-Share index had almost regained its speculative peak of 1987. The worst was over — but art sales still plunged.

The bad news for collectors of modest means is that the middle art market — under $ 7,000 - is sagging across the board, from Old Masters to furniture, while the top of the market, $ 150,000-plus, has firmed up. It is rich, clued-up connoisseurs who are driving the art market

Dealers are having a thin time. Johnny Van Haeften, leading dealer in seventeenth century Dutch and Flemish Old Master paintings, paid $ 160,000 — four times the US $ 30,000- $ 50,000 estimate - at Christie’s October 3 sale of Old Master paintings in New York for the circular painting, A Wedding Dance by Marten Van Cleve (1527-1581). The same sale notched up a record price for Jan Brueghel II (1601-1678) — US $ 3,856,000 for his The Five Senses, estimated US dollars 1.8m-US dollars 2.2m.

Take a lesson from the last crash, if you will. But the fact is that the art market never stands still. Observer News Service

Real estate sector needs reforms
R. P. Malhotra

“TOWARDS housing for all” is the title of the huge advertisement issued jointly by Government of India, Hudco and UNCHS that appeared in the leading dailies on world habitat day. The advertisement looks like a show window highlighting the policies of the NDA government, formulated, being formulated and a few those still in the pipeline.

For an example, the Model Rent Act after having been passed by both Houses of Parliament and consent accorded by the President since almost two years back, still gathering dust for want of formal notification at the government level for actual implementation. The act, which was ought to be notified in one go through an ordinance to be implemented uniformly all over the country, has not been able to find place even in Delhi. The Apartment Ownership Act is a policy still on papers. Privatisation of colonisation, under the National Housing and Habitat Policy, 1998, is looking like a distant dream, as the construction sector, for the time being, is reining under the government retailing and suffocating clutches of the outdated laws. Words like “the government role is primarily as that of a facilitator to promote the delivery of housing on large scale” are only meant for the false propaganda.

Despite admitting to the fact that the economic situation is grave and the construction sector is the second largest employment generator next only to agriculture, the casual approach of the government towards reforms is beyond anybody’s mind. Sooner is the better that the government should act fast and put its “showcase products” for sale. Speedy implementation of policies rather than callously passing time by extending false hopes is the need of the hour. Acting on the advice of Bimal Jalan, Governor, RBI, the Prime Minister should think about his legacy; rather than the longevity of the coalition government.

Apart from a few promised reforms to the real estate sector a serious thought for amending the existing government policies governing this sector is the need of the hour. Irrationally high rate of stamp duty, various taboos on resale of property, cumbersome documentation, highly commercialised attitude of the government-sponsored housing bodies and ad-hocism in the government departments dealing in real estate matters are hurdles in the way of desired growth of the sector in spite of its having tremendous avenues of contribution to the national growth.

Investor-friendly policies can lure private investor to invest in the real estate sector. The process of underhand and undervalue sales of property, just to evade the unjustified stamp duty and taxes, generates the black money and in turn hampers the development growth of the country. Hence while making efforts to lure private investments and create employment opportunities, existing government laws governing the sector shall have to be amended in order to yield a kick start and long-term improvement in the overall economy of the country. Rational and uniform rate of stamp duty, in addition to checking the generation of black money, shall attract private investment into the sector in a big way.

Low budget buyer under the prevailing laws governing the real estate sector is under total restraint to go for a deal of his requirement facing difficulty in raising funds from any financial institution for want of transfer of ownership due to the imposed resale restrictions. A simplified transfer policy and freehold ownership in the name of the intending purchaser shall definitely enhance the prospects for the low budget buyers to buy a residential unit of their choice and requirement. Uniform Apartment Act all over the country to provide smaller and affordable accommodation to this category of buyers shall be another step forward in the direction of creating affordability and in turn boosting the construction activity. Small private investments accumulated together may prove as an additional push on the accelerator in the speeding up process of the economy.

The following reforms in the real estate sector are suggested:

• Rationalise the rate of stamp duty and make it uniform all over the country.
• Implement a simplified, reformed and balanced rent act, which will provide affordable accommodation on competitive rates besides keeping the investor/landlord’s interest in view.
• Formulate a uniform apartment act all over the country to provide an infrastructure to lure the investor to invest in the real estate.
• Formulate and provide a simplified policy for the transfer of property and freehold ownership to the consumer.
• Privatise colonisation.
• Fix appropriate proportion of share of public investment for the housing sector by way of floating soft housing loans to the consumer, developers and the investors.
• Simplify the real estate documentation by removing the unnecessary hassles and adhocism in the government departments dealing in real estate matters.
  
  
  
  

Closure of factories continues in Paonta
Sarbjit Sakhowalia

Paonta Sahib, October 26
There has been a rise in unemployment due to continuous shutdown of factories in Paonta Sahib. Truck Unions, employees and others blame the government’s policy.

In Sirmour district there are 25 large-scale factories, 1199 small-scale factories and 87 very small factories. The Himachal Cement Factory in Paonta Sahib on the Yamunanagar Road has remained closed for a long time. According to reliable sources the factory netted Rs 75 lakh in 1995. The production of cement in this factory was 25 tonnes. But in 1998, due to an increase in the rate of coal, there was a decrease in the production leading to closure of the factory.

Another factory of steel strips employing 1,000 workers was shutdown because the government impose double tax and also because there was a decrease in the supply of iron in the market.

Many factories were closed down in Paonta Sahib due to multiple reasons. According to Mr Subhodh Abhi, President of the Chamber of Commerce, there is no proper government policy. When these factories were started the owner’s thought that they would get some subsidies. But instead of the subsidies, they had to pay double tax.

Mr Charanjit Singh Channi, President, the Sirmour Truck Operators’ Union, said the truck drivers were also striving for their livelihood because of the shutdown of factories and industries.

Tax investors, provide relief to UTI: panel

New Delhi, October 26
The Malegam Committee has suggested that government should not give tax benefits to investors of UTI’s assured return schemes including US-64, but said that dividends paid by the beleaguered mutual fund should be exempted from tax.

“The Income Tax Act should be amended to provide that dividends received on assured return schemes floated before June 1, 1999, would not be entitled to exemption of tax under Section 10(33),” the committee said in its report submitted to the government recently.

While stressing on withdrawal of tax benefits to investors, the panel said that government should not impose tax on dividends distributed by UTI under Section 115R.

Apart from tax matters, the committee strongly favoured reduction of equity exposure in assured return schemes.

“The portfolios of these schemes should be recast as soon as it is practically possible, to ensure it consists only of government securities and debt instruments, and all investment in equity are disposed of,” it said.

The committee also favoured that in the case of schemes which guaranteed assured return for one year, the income assured should be strictly in line with the earning capacity of the scheme.

The measures are intended to reduce the gap between UTI’s assets and liabilities for most assured return schemes including US-64, before it moved over to net asset value (NAV) linked pricing system.

“It is necessary that before US-64 is made NAV based, provision is made for the contingent liability arising out of the gap, if any, between the available assets and the guaranteed price to individual unitholders holding panel said.

The committee said these changes were necessary before US-64 is made NAV based and the restructuring of UTI is initiated.

The panel also recommended inclusion of a strategic partner who would hold 60 per cent stake in the Asset Management Company, that would run the UTI schemes. PTI

CORPORATE NEWS

Britannia net profit soars 18.7 pc

Mumbai, October 26
Britannia Industries has posted 18.7 per cent increase in net profit at Rs 25.3 crore for the second quarter ended September 30, 2001 as compared to Rs 21.3 crore in the corresponding period last year.

Total sales for the quarter have increased by 8 per cent to Rs 379.6 crore as against Rs 350.7 crore.

Extraordinary items include expenses on voluntary retirement costs of Rs 1.1 crore and reversal (add-back) of previous year’s liabilities of Rs 8.4 crore, it said.

Voltas net down by 19.09 pc

Voltas Ltd has posted a 19.09 per cent decline in net profit at Rs 3.56 crore for second quarter ended September 30 compared to Rs 4.4 crore in the same period last year.

Hinduja TMT net dips

Hinduja TMT (HTMT) has reported a lower net profit of Rs 7.07 crore for the quarter ended September 30, 2001, compared with Rs 9.53 crore of the corresponding quarter, previous year.

However, revenues from IT, its predominant activity, for the quarter ended September 30, 2001 grew by 27 per cent to Rs 13.40 crore from Rs 10.56 crore of the previous quarter ended June 30, 2001.

Net profit from IT activities shot up by 57 per cent to Rs 8.74 crore from Rs 5.58 crore of the earlier quarter.

Tata Telecom

Tata Telecom today reported a 132 per cent rise in profit before tax at Rs 5.70 crore during the second quarter of the financial year, compared to Rs 2.46 crore in the same period the previous year.

The company did not divulge the net profit in the quarter.

In the first half of 2001-02, Tata Telecom’s turnover was pegged at Rs 101.36 crore, 38 per cent growth as compared to Rs 73.20 crore in the corresponding period the previous year. Agencies

Govt may drop Nalco ADR plans

New Delhi, October 26
The government is unlikely to take recourse to American Depository Receipt (ADR) for aluminium major Nalco as part of plans to dilute stake in the company.

Disinvestment Commission had earlier recommended 30 per cent equity dilution in the form of GDR and domestic float. PTI

Enron fires Finance Director

London, October 26
US energy major, Enron Corporation, has ousted its Finance Director amid an investigation by the American Government into the company’s business practices.

Finance Director, Andrew Fastow, would take a leave of absence and be replaced by Jeffrey McMahon, the former Treasurer, the company said.

“In my continued discussions with the financial community, it became clear to me that restoring investor confidence would require us to replace Andy,” Enron’s Chairman Kenneth Lay said.

Billions of dollars worth of transactions between Enron and “limited partnerships” controlled by Fastow are being examined by the Securities and Exchange Commission (SEC), a report in the ‘Times’ daily said today.

Enron, based in Houston, has annual revenues of more than $ 100 billion and is involved in a quarter of America’s electricity and natural gas trades. PTI

Air-India to levy insurance charge
Tribune News Service

New Delhi, October 26
Passengers travelling by Air-India and purchasing tickets on or after November 1, 2001 will be required to pay an additional surcharge of $ 3.50 for each sector of travel.

However, those who undertake a domestic flight to connect to an Air-India international flight will be required to make the payment only once.

An official release from Air-India said that the surcharge has been necessitated to cover the hike in insurance charges levied by insurance companies on airlines following the terrorist strikes in New York and Washington on September 11 last.

While several other airlines had imposed the surcharge earlier, Air-India has taken the decision now. It had been absorbing the liability on its own earlier.