Indian Economic Movements. Net losses at Tata Engineering Co (Telco) rose to ( )Rs 60.36 crore, even as it struggled to absorb the full commissioning costs of its ( )Rs 1,700 crore passenger car project.
Turnover during the quarter was more encouraging, jumping 52 per cent to ( )Rs 2,390 crore on the back of strong volume growth in the medium & heavy commercial vehicles segment and higher passenger car sales. Telco said it expected to break even towards the end of the year. Analysts said the Pune-based auto major’s margins came under pressure following lower, less-than-anticipated, profitability in the ambitious Indica project, Telco’s answer to the assault of global car makers in the domestic market. Margins, they said, will remain under pressure thanks to the competition in the commercial vehicles and car businesses.
The relatively-insulated commercial vehicles segment, for instance, will see Swedish truck major Volvo going into expansion mode and Eicher (a newcomer in this segment) will launch its HCV sometime this year. PRODUCTION of petroleum products has fallen by almost 30 per cent in the last four months following a severe drop in refinery margins. Indian Oil Corporation, Reliance Petroleum, Bharat Petroleum and Hindustan Petroleum are amongst the leading refinery companies who are likely to take a hit following the sharp increase in international crude prices which have been rising at a faster pace than the product prices. Standalone refineries like the Mangalore refinery have cut production by almost one-third.
Crude throughput, (processing crude in the refineries) has fallen significantly forcing the government to increase product imports. But theres a risk of getting exposed to a more volatile product market and going in for short term deals which may not always be on the best rates. Sources claimed that they have been fortunate in being able to procure the products at reasonable rates. “However, this is not a favourable situation, and should be avoided,” industry experts said. Sources argued that the benefits of attaining self sufficiency in refining capacity are not being reaped as the domestic refineries cannot function at optimum margin levels under the given duty structure. Had the duties on crude been lower, refineries would be encouraged to import and produce.
“Buying crude at $24 a barrel may still allow you to make your margins, but when you pay an additional $3 just as duties, selling products become unviable.” In an update on an earlier story .. The Government will soon come out with a clear-cut policy to allow more foreign airlines to operate from India after carefully looking into the demands of both Air India and the tourism sector, Civil Aviation Minister Sharad Yadav announced. The ministry is planning to expand the entire civil aviation industry to boost tourism and create more international standard airports. From Smaller airports in Bihar to heritage sites like Kushinagar and Gaya upgrades are happenning and more places are being put on the avation map Interestingly the ministry was open to the idea of either domestic or foreign firms undertaking the contract . INDIANS, it is believed, consume more Scotch whisky than is bottled in Scotland. Unfortunately, quantitative restrictions limit consumption to whatever can be pick ed-up at the duty-free or the bootlegger.
The day is nigh when scotch drinkers will ber able to buy Johnny Walker, Chivas Regal and J&B in India, legitimately. The government has decided to phase out QuantRes on the import of foreign liquor by the end of the year. Bad news for the local distillers though. Most of them are clamouring for high tariffs. United Breweries and Shaw Wallace & Co regard imports as a major threat to their market share. The domestic liquor market sells approx 75 million cases a year.
UB has a 34 per cent market share and SWC an 18 per cent mkt share. The Multinational UDV accounts for only five per cent of the market. “Imported liquor brands will not compete with Indian brands, since the cheapest imported brand cannot be priced at less than ( )Rs 500 per bottle,” he said. “In India, 95 per cent of Indian liquor brands are priced below ( )Rs 200.” Quant Res’s will probably wont be applied because of India’s commitment to WTO. In this case indian manufacturer’s want import duties to be kept as high as possible.
Now the duty on imported alcohol is 245 per cent, down from 400 per cent four years ago. At today’s tariffs, a bottle that costs $20 in duty-free will cost $69 here before sales tax. WORLD Bank managing director Wokchi plans to meet Karnataka chief minister SM Krishna on February 7. The meeting assumes significance as the state has not received any funds from the multilateral agency for the last four years. One of the country’s biggest beneficiaries of World Bank funding in the recent past has been Andhra Pradesh.
They got a huge loan for development projects last year. The Andhra package was the first funding programme to be okayed by the World Bank board after the Pokhran nuclear tests. In the run-up to the `big-meet’, Edwin Lim, a top functionary of World Bank’s India office, is scheduled to meet Mr Krishna on February 4. The state has identified key infrastructure projects for development, crucial to attract investors. It is looking to tap funds from sources including UTI, LIC and NABARD for their implementation.
The only big loan to Karnataka in recent months had been from the ADB. They got $175m for infrastructure development in the state’s coastal belt. The funds to the ( )Rs 1,070 -crore programme was for the development of a water supply network, upgrading the drainage system and roads and development. Soon after the Insurance Regulatory and Development Authority (IRDA) Bill, 1999, the Government wants to completely overhaul the Insurance Act, 1938, to and I quote, “bring it in tune with the requirements of a liberalised environment.” The review of the Act will eventually result in the preparation of comprehensive Bill to replace the earlier Act. “The entire Insurance Act, 1938, has to be rewritten.
There are many provisions in the Act which are no longer relevant or have been rendered redundant with the passage of time,” a top official of the Insurance Division of the Ministry of Finance said. For instance .. .The section on Provident Fund Societies and investment provisions relate to securities issued by the Government of the Uk – and are completely redundant. Officials said that such details were not amended as part of the IRDA Bill in order to retain the focus of the intended legislation, which was to open the insurance sector to private competition. “The present exercise of rewriting the Act is aimed at to bring the entire legislation in tune with the requirements of the reforms proposed in the IRDA Act,” officials said. The ( )Rs 80- crore Indiana group is planning to merger its five associate companies.
Merging was considered to bring down the cost of operations, said DM Bhatia, managing director of the group’s flagship company, Indiana Gratings. The group companies, including Indiana Engineering Works, Indiana Conveyors, Indiana Cable Trays Corporation, Indiana International, and Indiana Gratings. The company is localized in Maharashtra with manufacturing facilities in Jejuri in Pune and Vasai in Thane. The Indiana group is mainly in the business of manufacturing bulk material handling systems and projects. The new unit at Jejuri, which uses the electroforged welding process, has the capacity to produce one square metre of electroforged grating per minute.
The gratings manufactured under the new process have no slots or punched holes and hence, have better load bearing capacity, besides having a homogenous appearance, Mr Bhatia said. MOBILE Telecommunications has acquired a Mumbai based unlisted company. The company Access Information Systems has an estimated revenue of ( )Rs 2 crore. The acquisition cost is estimated to be around ($1.7 m). According to the terms of the acquisition, Mobile will issue about 80 lakh shares to the promoter of Access – B Rangarajan. Subsequently, Mobile plans to merge with Access and consolidate its operations in infotech services.
Post-merger, Mr Rangarajan will take over as MD of Mobile. Mobile, is currently engaged in trading electronic components. But now Vipin Gandhi, Mobile MD says, “The acquisition will pave the way for our entry into the high growth information technology sector”. However, he refused to divulge details of the deal, adding, “We are looking at couple of more acquisitions to consolidate our presence in the IT sector”. Mobile will focus on providing e-business solutions, designing web portals, outsourcing services to the insurance industry and providing IT-enabled services. Access was set up in ’86 to provide solutions to the insurance sector.
It has currently over 50 professionals. The deadlock between Ogden Energy Incorporated and the Assam State Electricity Board continues. There is conflict over reviving the Bogaigaon Thermal Power Station. State power minister Hiten Goswami openly expressed his reservation over the draft agreement saying it may land the state in trouble unless some of its clauses are amended.
What the Ogden consultants said about my department delaying the project was not correct. We are interested to revive the sick units but not at the cost of state’s interest. At first the state had prepared a ( )Rs 170 crore project to renovate the BTPS that failed to start. In the meantime the US power company approached the state government and submitted a ( )Rs 200 crore revival plan in May 1997. The Assam State Electricity Board was asked to examine the proposal when Ogden submitted a new proposal for the same project and the proposed investment went up to ( )Rs 386 crore.
The state dept has no objection to increasing the amount of investment but want to know where and how this money will be invested. The Board is opposed to the Force Measure Clause of the draft agreement. According to its provision, the state will have to bear the total losses if any untoward incident takes place and leads to the disruption of power generation at the unit. Also the price of the power offered by Ogden is much higher than the price which the state pays neighbouring states for power. The power minister clarified that if Ogden does not do the project, it will in no way affect the investment prospect of the state.
Hindustan Thompson Associates hear call of the Orient . HTA has struck a “co-operative alliance” with Japan’s third largest agency, Asatsu DK. This is not a separate business entity or agency, informs Mike Khanna, chief executive, HTA. Now HTA and Contract (Thompson’s second agency) will work with Asatsu on mainly Japanese clients.
This collaboration marks Asatsu’s debut in this. No one is ruling out the possibility of this being the precursor to a proper agency or equity-based joint venture but no one is commenting at present. Increasing Jap investment in India explains the Asatsu venture. And earlier tie-ups like Denstu Young & Rubicam’s with Rediffusion, More recently, Percept joined forces with Hakuhodo.
Unlike Asatsu though, these companies have invested equity in formal agency set-ups here. The feeling is that Asatsu is testing the waters before taking the plunge. Business Essays.
