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Wednesday,
December 26, 2001, Chandigarh, India  
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Dabhol
Power: will there ever be light? Car market
— a pandora of paradox Budget may
push up investment FCI:
export cereals to solve problems |
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WTO:
Punjab needs a practical approach CM’s
order on Info Centres shifting Sensex
touches an eight-year low in Sept Indo-B’desh
trade talks postponed Graphic: Govt
investment in nationalised banks
Elder
Pharma shares get raw deal on price
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Dabhol Power: will there ever be light?
Mumbai, December 25 Once a
magnificent site, the $ 3 billion DPC plant, with its two smokeless chimneys and high cooling towers, has been now lying idle and incomplete since may last. A new power game is now in the offing. The wheel has turned a full circle with hassled Indian financial institutions led by IDBI, exposed to the tune of over Rs 6,204 crore in this $ 3 billion project, saddled with an enormous but inevitable responsibility of finding a suitable buyer and saving the burden of spiralling non-performing assets. The clock began ticking on May 23, 2001, when one of the partners, “the mute and obedient wife”, the MSEB in this case, took the unbelievable courage to rescind or cancel the ritualistic PPA, simply excusing itself from buying the high profile and often “arrogant” DPC’s “expensive power”. DPC, which had already slapped a pre-termination notice on April 19 over the MSEB’s payment defaults to the tune of Rs 600 odd crore, embarked upon an offensive, commenced its never-ending trial of invoking state government’s guarantees. While the energy major was busy showing off its might by dragging all and sundry from Maharashtra to the Centre for international arbitration, on June 17 DPC’s construction contractors GE and Bechtel, who own 10 per cent equity stake each, with Enron Engineering terminated work of the almost complete phase-II, including the five million tonne liqufied natural gas (LNG) terminal of the project. The state government is on record stating that it has already put Rs 1,700 crore through the MSEB in DPC’s kitty for supply of costly power till April’01. The MSEB took a tough stand by slapping a Rs 400 crore fine on DPC in retaliation, claiming that the multinational had used substandard equipment, which was unable to ramp up its capacity within three hours of the stipulated time as per the PPA. The board further tightened DPC’s financial condition and successfully barred the energy major from invoking its Rs 136 crore letter of credit by approaching the Mumbai court. All was not over as yet, come September and Enron Corp President Kenneth Lay, after an unsuccessful India tour, wrote to the Indian Prime Minister offering to sell the controversial property for $ 1.2 billion “at cost”. Lay warned if the dispute heads for international arbitration, the centre, state and MSEB would collectively have to cough up $ 5 billion as liabilities, nothing less! In October last, the Securities and Exchange Commission of the USA asked Enron Corp to disclose its financial books to the regulator and ensuing investigations showed that the energy major had inflated its profits by 20 per cent for last four years.
PTI
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Car market — a pandora of paradox
New Delhi, December 25 Companies were also undeterred by the downslide in sales as price hikes became a norm rather than an exception in desperate efforts by producers to stay afloat. Even market leader Maruti struggled hard to wipe out the red from its balance sheet during the first half. It finally managed to show profit after a dismal performance last year. The government also played its part in adding spice to the industry by opening the doors for import of new and second- hand cars into the Indian market. Even, excise duties were slashed which brought car prices crashing down albeit for a short period. These steps coupled with rise in consumer expectations led to the birth of a new luxury car segment in 2001. The sporadic launches of new cars made the industry more exciting and competitive and, on the flip side, left the bottomlines of some companies red as they tried to grapple with decline in sales and increasing investments. This led Maruti to explore new areas in services sector besides cutting costs to boost bottomlines. This paid off as the company posted a net profit of Rs 30 crore during April-September 2001-02 over a net loss of Rs 104 crore a year ago. It was, however, the high volume ‘B’ or the premium small car segment which ruled the roost this year like earlier years. Maruti led the spate of new car launches by recently rolling out the ‘Versa’, a new multi-purpose- vehicle (MPV), in an attempt to create a different segment in the crowded market. The MPV segment is becoming popular in the USA and European markets and it remains to be seen how the ‘Versa’ fares in the market next year. The company at present, boasts of the maximum number of variants in the car market, especially of the ‘Maruti800’, ‘Zen’, ‘Alto’ and ‘WagonR’. Now, it is pruning these variants to about 35 from 42 for reducing costs. Maruti, was also in the news this year due to the ongoing disinvestment programme under which the government would divest its 50 per cent stake in the company. Maruti’s closest rival in the ‘B’ segment — South Korea’s Hyundai continued with the success of ‘Santro’ which was primarily responsible for the Chennai-based company’s record profits in the last financial year. Beset by a loss of Rs 500 crore in last fiscal, largely due to dipping sales of premium small car ‘Indica’ coupled with consumer complaints about the car, Tata Engineering (Telco) rolled out improved variants this year, including even with a petrol engine. This worked wonders as sales during the last three months moved upwards. Besides, Telco also introduced more user-friendly versions of the multi-utility-vehicle ‘Sumo’ following the success of Toyota’s ‘Qualis’. Italian car maker Fiat also rolled out the much-waited ‘Palio’. The car, with its attractive pricing, drew customers in the price-conscious small car market, giving relief to the struggling firm as its earlier cars ‘Uno’, “Siena’ and ‘Siena Weekend’ failed to make a proper dent in the market. Interestingly, market leader Maruti after the downslide last year managed to recapture some lost marketshare through ‘Alto’, ‘Wagonr’ and, of course, ‘Zen’. The fast growth in the ‘C’ or the mid-size segment coupled with good sales of DaimlerChrysler (formerly Mercedes Benz) cars prompted Honda, Hyundai and Ford to launch high priced cars with advanced
features. PTI
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Budget may push up investment
New Delhi, December 25 The reforms are expected to cover both direct and indirect taxes including possible rate cuts, removal of exemptions and rationalisation of export incentives as part of simplification. The Budget, coming after a series of setbacks like the stock market crash, September 11 and December 13 terror attacks coupled with global recession, will give a new impetus to agriculture and thrust to investment in sectors like roads, power and civil aviation, Finance Minister Yashwant Sinha told PTI in a wide-ranging interview. During the hour-long interview, he touched upon various subjects ranging from war psychosis, economic outlook and dismantling Administered Price Mechanism in the oil sector to reform of the power sector. “It is my feeling that in some areas private sector investment has been encouraging and forthcoming like in telecom and ports, but in other areas it has not been as much. “Therefore those are some of the areas where government will come up with a mix of private and public sector investments and a regime which will make investment worth the while,” he said. Mr Sinha said the hope in this year’s budget that reduction of taxes would be made up by a buoyant economy was belied as it continued to be in a slowdown mode. The minister said he had brought about stability of rate structure in direct taxes in the last few years and “we will be looking at a further simplification of direct taxes.” He said “if the simplification calls for any change in rates, then I am not ruling out that.” On the plethora of exemptions, he said now that a certain ability has been achieved, the need for exemptions are obviated. “Therefore, I have appointed committees to look at exemptions in direct taxes. We will have to see their relevance in today’s context and I will be taking a close look at them.” Referring to exemptions in indirect taxes, he said any removal would affect only the concerned sector bringing taxes on similar products to the same level.
PTI
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FCI: export cereals to solve problems Chandigarh, December 25 While the demand for foodgrain within the country is in elastic and the
production is rising due to improved agricultural practices , it is not difficult for the Indian wheat to dominate the world market, he said. He insisted on adoption of better storage facilities by using good technology which can help procure higher value our foodgrains in the international market. “Better storage would ensure that the foodgrains last for a minimum period of six years”, he said. To sustain agriculture in the state, the farmers need to be made aware on earmarking areas suitable to the agro climate conditions for different categories of wheat in order to fetch better prices, stated he. Mr D.S. Bains, MD, Markfed suggested that there should be differential pricing for procurement of wheat so that hard wheat could be segregated and sent to international markets. Mr S.S. Brar, Secretary, Co-operation, Punjab emphasised on the need of a long term policy for export of grains so that investment can be made at the ports. He said the state government has already moved a proposal for sustained export of two lakh tonnes of wheat per month through Markfed from Mundra Port. Mr Bains gave a presentation on storage development project and agreed to forward a proposal of export of durum wheat through FCI.
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WTO: Punjab needs a practical approach With the new World Trade Order coming into operation, it is but natural for Punjab farmer to view the apprehension of intrusion of cheap and quality agriculture produce in abundance from the agriculturally advanced countries making the home produce incompetitive and less wanted. The farmer need not lose heart and waste more time on crying over the spilt milk but to take the bull by the horns through harnessing the powers of head and heart to carve out a niche in the global market which in no way is beyond our reach. For this purpose, the entire farming community, the state government, the private sector and also the institutional network will have to integrate efforts to make agriculture in tune with the quality norms of international standards at the competitive price so that our produce is not rejected outrightly on the sanitary and phyto sanitary grounds or for being incompetitive price-wise. To accomplish this task, our bold, hard working and innovative farmer should leave no stone unturned in rejuvenating the degraded health of the soil by replenishing the micro nutrient reserves which have almost gone exhausted to the critical level due to long sustainability of the wheat-paddy monoculture. For this purpose, the best course is to switch back to the old organic culture i.e. green desi manures instead of chemical fertilisers and sizeably reduce the area under the much maligned wheat-paddy rotation. Besides, PAU should gird up its loins to herald the second green revolution by integrating its efforts with the research organisations/institutions within the country and abroad and make new recommendations close to the yield standards of the agriculturally advanced countries of the world and resistant to the plethora of crop diseases and which also are cost effective. The state should spare no effort to suitably strengthen/update the research infrastructure by according preferential treatment to the research component which is the crying need of the hour. Similarly, endeavour will have to be on the neem-based solutions, IPM techniques instead of pesticides/insecticides, which have already wrought havoc to the irreparable extent owing to their excessive/injudicious use. Any more delay on the part of the state government to attend to the priority problem of its depleting sweet water acquifers in central districts would prove suicidal as these have already gone down to the alarming level and need immediate solution through making radical changes in the cropping pattern, step-up soil and water conservation measures, extending the green cover and checking erosion in the submontane/Kandi area. I would point out here that in case proper treatment is made to harness the vast potential of the 10 per cent Kandi zone of the state by taking recourse to the drip irrigation technique this area alone can herald a revolution in vegetable, fruit, forestry and medicinal plants which would go a long way to equip the state favourably to compete in the world market and would also ensure employment to the people of this backward area round the year. To sum up, once the health of the soil and status of the watertable gets improved and new high yielding/disease-resistant seed varieties are made available to the farmer who is quite receptive to the new technology, I am sure we can certainly carve out a place of pride in the home as well as global market by ensuring regular/supply of cheap and quality agri produce. Once confidence is established in the international sphere, there will be no looking back then.
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CM’s order on Info Centres shifting Chandigarh, December 25 The members of the chamber asked for the support of the Punjab Government to help the industry to face the ongoing recession. The chamber emphasised that the small scale sector needs the investment subsidy to be reimbursed to them. Mr Arun Kapoor, President, PHDCCI, requested the CM to formulate a cabinet sub-committee to consider recommendations of various Chief Secretaries’ summits organised by the chamber on the industry. Mr Ashok Khanna, ex-President and Chairman, the Northern Regional Development Council, said no sales tax or surcharge should be charged from units which had been exempted from tax.
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Sensex touches an eight-year low in Sept
Mumbai, December 25 However, the concluding quarter of the year witnessed some revival in automobile, cement and pharma sectors in the midst of significant developments in the world economy and capital markets in the light of September 11 terrorists strike on twin towers of World Trade Centre (WTC) and Pentagaon. IT sector has been hit hard primarily because of the weak American economy and consistent flow of profit warnings by number of high-tech US companies, with the sectorial BSE IT index losing by more than 1015 points or 38.25 per cent over the year. The IT index was quoted at 1640.07 at close on December 18 as against 2655.81 at the end of last year. IT meltdown at home was attributed largely to the destruction of the twin WTC towers having catastrophic impact on investors wealth in Indian technology stocks within eight days of the attack. The year was packed with unprecedented steps by Federal Reserves that cut the interest rates by a record eleven times in a bid to boost the sagging US Economy, but successive negative developments followed by terrorists attack toppling the WTC towers forced the New York Stock Exchange to remain closed for trading for four days, and prevented any visible recovery in the economy.
PTI
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Indo-B’desh trade
talks postponed Dhaka, December 25 The Bangla daily also said that the Indian Commerce Ministry did not agree to deliberate on fixed agenda proposed by Bangladesh. The agenda proposed by Bangladesh was discussion on duty free entry to Indian market of 25 Bangladesh export items proposed in 1999, to remove all kinds of tariff or non-tariff barriers for export and import trade by both countries and the renewal of the trade agreement with modifications. The report said India expressed its readiness to hold talks on open agenda. The meeting was scheduled as a follow up of the earlier Secretary level meeting held on May 10-11 in New Delhi where it was decided to meet again this year in Dhaka. No fresh date has been proposed by any side.
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by Ashok Kumar Elder Pharma shares get raw deal on price I never tire of advising my management students, especially those specialising in finance to view the movie ‘Wall Street’. One of the most poignant scenes in this movie revolves around trade unionist father explaining to his son that Gordon Gekko, the corporate raider, was interested only in multiplying his personal wealth and the interests of the company he proposed to acquire were furthest from his heart. I couldn’t but help remembering this scene when I heard that Mr Jagdish Saxena, the promoter and Managing Director of Elder Pharmaceuticals had refused fairly generous offers from large pharma companies to buy out his company’s prime brand. ‘Shelcal’. During the course of a recent lunch meeting I had with him, I enquired why he had not exercised this option. After all, the sum of offer was a fairly mind-boggling one. His response, that he was averse to selling off a brand that his team and he had so assiduously created, clearly reflected, to my mind, the kind of passion and faith that Mr Saxena has in his company and the sense of commitment to his co-workers. Post lunch, he briefed me about his company’s product profile (some of which were very interesting and which I promise to share with you over the next couple of months) and the manner in which Elder Pharmaceuticals had positioned itself as a niche player in the Indian pharma segment. The stock market may have thus far given his company’s share price a raw deal, but I am quite certain that over the next couple of years, the real genius of the Indian pharma companies will be seen at its best. Finally, before I move on to my next diary jotting, it is only fair that I inform you where ‘Shelcal’, Elder Pharma’s much sought after brand finds usage. It is a widely recommended medicine for the cure of ‘osteoporosis’, a disease characterised by progressive bone thinning. The deterioration of bone tissue can lead to bone fragility and fracture, especially of the hip, spine and wrist. These are bones that directly support the weight of a person. ‘Shelcal’ has calcium carbonate with vitamin D-3 containing the highest proportion of elemental calcium to be used in various calcium deficiency states. Moving on to a more cheerful topic, it is X’Mas time now, and there are scores of friends I need to call up and wish. Figuring high on that list is Clifton DeSilva, a prominent NSE member and former fund manager with the Tata group who is widely respected in financial circles. Unlike the run of the mill BSE broker and for that matter several NSE members too, Clifton is a class apart. I respect his sense of professionalism and fair play while executing transactions and what I like best is his uncanny knack of remaining very nonchalant about his God given ability to call the markets right most of the time. Another thing I like about this man is his clarity of thought on most companies, be it a buy or sell or even hold recommendation he is reeling off and his resolve never to engage in or be part of any price rigging activity. As I happily reflect over my association with him over the past several years, I cannot but help wonder why it is that our markets cannot acknowledge ‘real heroes’ like him, and instead hanker over manipulative ‘Big Bulls’, ‘New Bulls’ and the likes. Perhaps, there is yet another lesson that the final short from the movie Wall Street provides us — Gordon Gekko goes to the slammer for insider trading. Perhaps, I am an eternal optimist but I firmly believe the adage ‘Satyameva Jayathe’ — truth shall always prevail.
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