More investment room for NBFCs
Steel, cement companies fuel recovery
ONGC keen on Petronet terminals
Lever keeps stock split issue open
SAIL confident of cutting loss
Hyundai to roll out luxury car, MUV
Ford picks 2 for steerings
TVS Suzuki unveils Fiero

 
 
MORE INVESTMENT ROOM FOR NBFCS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 13 
The Reserve Bank of India (RBI) has allowed non-banking finance companies (NBFCs) to keep up to five per cent of their public deposits in the form of term deposits with scheduled commercial banks as part of the changes announced today in the norms governing the sector.

RBI officials said the relaxation was aimed at helping finance companies which are required under existing norms to keep 15 per cent of their public deposits in liquid assets and invest them in government securities — held by banks on their behalf.

Of this 15 per cent, 5 per cent can now be retained in bank fixed-deposits. Finance companies in small towns and semi-urban areas, which often find it difficult to buy government securities, stand to benefit from the move, an RBI official said here today.

Under the present regime, companies must retain a fixed proportion of their public deposits in the form liquid assets. “We found that in many small towns, NBFCs were finding it difficult to buy government securities. Therefore, it was necessary to given them this leeway,” the official said.

However, finance companies will have to follow a uniform accounting year ending March 31 with effect from 2000-2001.

Those with assets of over Rs 50 crore must constitute audit committees with at least three director-members. “The panel will furnish information on suits pending against the company and declare ‘decreed’ debt in reports sent to the central bank,” an RBI press release said.

Micro-finance and potential ‘Nidhi’ companies have been exempted from getting themselves registered as NBFCs; nidhi companies have also been freed from maintenance liquid assets and a reserve fund. In a move aimed at tightening supervision and policing, the RBI has introduced regulations on the opening and closure of branches and asked auditors to report cases of non-compliance.

More important, new norms have been unveiled that will make opening an account with an NBFC more like banks. For instance. the central bank has said firms must obtain a proper introduction from an existing account-holder before opening a new account.

“They will also have to obtain written confirmation from the current account holder while opening a new account,” the RBI official said.

The central bank has clarified that NBFCs not holding public deposits will not have to submit liquid-asset returns. It also said agents who mobilise deposits should be appointed carefully because companies are ‘responsible as principals for their agents’ acts of omission and commission’.

Under the RBI norms announced in October 1999, NBFCs have to give a public notice of three months before they close a branch or transfer management control. A series of relaxations for NBFCs were announced following the Vasudev committee report. These included limited access to public deposits even for unrated firms. The central bank had also indicated its intention to raise the capital to risk-weighted assets ratio (CRAR) for all NBFCs to 15 per cent in a progressive manner and hiked the quantum of deposits that a company with lowest investment rating could accept.

The RBI has issued guidelines on asset liability management (ALM) for term lending and refinancing institutions, mainly addressing liquidity and interest rate risks. It has directed that the chief executive should head the asset liability committee to ensure commitment of the top management and likely response to market dynamics. The management committee of the board or any other specific committee constituted by the board should oversee the implementation of the ALM system and review its functioning periodically.    


 
 
STEEL, CEMENT COMPANIES FUEL RECOVERY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 13 
A host of sectors have reported rosy growth figures for the eight-month period between April and November last year in what is yet another piece of evidence that the economic upturn is durable and self-sustaining.

According to an Associations Council of the Confederation of Indian Industry (Ascon) report released here today, sugar, telecom cables, software and auto-component firms logged excellent growth rates in April-November 1999 over April-November 1998. Others like steel, cement, castings processed food — roiled by a lingering recession — appeared to have bounced back.

Of the 86 sectors surveyed, 16 recorded excellent growth rates of more than 20 per cent, 30 posted high growth rates between 10 and 20 per cent, 34 logged moderate growth rates between 0 per cent and 10 per cent, while seven turned in negative rates.

The high-growth sectors included steel, cars, auto components and the infotech sector. Steel was the star performer with a growth rate of 11.5 per cent as against a negative growth rate of 2.8 per cent in April-November 1998. Flat/sheet glass and refractories have recorded modest increases while the growth rates were unchanged in several others.

Though there has been a decline in negative-growth sectors, this has to be assessed in the light of the fact that the number reviewed this time has fallen to 86 from 120. Even so, tea, malted food and scooters were at the top of the negative growth list.

The Ascon report forecasts excellent growth rates in four sectors for the next six months (December-May 2000). These could include automotive components, consumer electronics, housing finance and information technology.

Fourteen sectors are expected to witness high growth rates of 10-20 per cent. These include automobiles, cement, ceramics, construction and electronic components.

Twenty two sectors are expected to witness production growth rates below 10 per cent.

Two sectors, leasing/hire purchase and tea, are likely to reel under negative growth rates.    


 
 
ONGC KEEN ON PETRONET TERMINALS 
 
 
FROM R. SASANKAN
 
New Delhi, Jan 13 
From R. Sasankan New Delhi, Jan 13 Oil and Natural Gas Corporation (ONGC), one of the original promoters of Petronet LNG Ltd, will soon stake its claim to set up liquefied natural gas (LNG) terminals at Dahej and Cochin. The ONGC management is upset with the fact that it has been ignored by the petroleum and natural gas and the Petronet LNG management in the allocation of business among promoters.

It has been agreed that transporting of gas and marketing will be shared among Gail, Indian Oil and Bharat Petroleum, three of the four original promoters. The question being debated is why ONGC should continue to be in Petronet LNG when it has no role to play whatsoever.

The only other work left is construction and operation of terminals which could be far more remunerative than transporting and marketing. ONGC has the resources to finance these terminals. It could join hands with NTPC, which is expected to join Petronet LNG as its fifth promoter.

Sources in ONGC say though the proposal is being considered for the last two weeks, no formal decision has been taken. It is not clear whether it requires clearance of the board.

Among the four promoters, ONGC has the highest credit-worthiness and its exit could make it difficult for Petronet LNG to achieve financial closure.

Petronet LNG has signed up with Ras Gas of Qatar for the import 7.5 million tonnes of LNG every year.

Petronet LNG has proposed two LNG terminals, one at Dahej in Gujarat and the other at Cochin in Kerala. Initially, Gail asked for exclusive marketing rights since Petronet LNG relies heavily on its HBJ gas pipeline network for transportation and marketing.

Gail, the only company with experience in the marketing of gas, could not have its way because IOC wanted a role in marketing to make up for its loss of naphtha clients. Power companies using naphtha would switch over to gas after imports begin.

Then, there is the financial aspect. Gail’s balance sheet was not strong enough to ensure that it could pay for the entire gas.

ONGC, on the other hand, is being wooed by IOC to invest in some of its projects whose financial viability is still a subject of speculation.

For instance, IOC wanted ONGC to be a partner in Panipat power project and the East Coast Refinery proposed at Paradeep.

Sources in ONGC say investment in LNG terminals would be far more attractive. ONGC’s claim may be resisted by other partners in Petronet LNG.

However, the presence of S. Narayanan, secretary in the ministry, on the board of Petronet LNG will have a sobering effect on other representatives.    


 
 
LEVER KEEPS STOCK SPLIT ISSUE OPEN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 13 
Hindustan Lever (HLL) today informed the Bombay Stock Exchange (BSE) that it will consider a stock split at an ‘appropriate time’ but made it clear that a bonus issue is not on the cards.

The clarification came after the exchange told the company to respond to press reports which suggested that a bonus and a stock split were being considered at the same time.

The Lever share opened at Rs 2,711, up from Wednesday’s close of Rs 2,645.95 hit an intra-day high of Rs 2857.60 but slumped to an intra-day low of Rs 2672.50 after the company’s assertion. It later recovered sharply to close at Rs 2778.

“The management is not in favour of a bonus issue but it would, at an appropriate stage, be willing to consider a stock split to lower the price of the share and make it affordable to common investors,” the company said in statement.

Lever also denied there were proposals to consider the bonus or share split. Neither has a board meeting been convened to consider the issues. “If and when the proposal is considered, stock exchanges will be the first to know,” the company told the BSE.

Lever chairman K B Dadiseth’s had observed during several AGMs in the past that management’s favoured stock splits over a bonus issue.

The Bombay Stock Exchange witnessed volatile trading today with profit-taking by operators slashing the initial gains registered by the sensex. The benchmark 30-share index had opened sharply up at 5,568.64 and zoomed to the day’s high of 5,652.22 in the early stages. However, it tumbled by over 221 points to a low of 5430.81 before closing at 5444.82.    


 
 
SAIL CONFIDENT OF CUTTING LOSS 
 
 
BY PALLAB BHATTACHARYA & SUTANUKA GHOSAL
 
Calcutta, Jan 13 
Buoyed by a massive spurt in third quarter sales and expectations of higher demand in the last quarter, Steel Authority of India Ltd (SAIL) is hoping to substantially cut down losses for the current financial year. The public sector steel behemoth suffered a whopping Rs 1,600- crore loss in the first half of 1999-2000.

SAIL spokesman Shoeb Ahmed said the company is trying to keep this fiscal’s loss below last year’s level of Rs 1,300 crore.

The company’s stock of steel now is the lowest since 1998, prompting the management to reopen the furnaces which were shut down earlier for lack of demand of steel products.

Ahmed said the demand for steel has picked up both in India and abroad which has put an end to the discount regime. “We have increased our prices and now both the sales volume and price realisation are extremely encouraging,” he said. The company would end up the year by exporting over eight lakh tonnes of steel.

“ Although we are facing some hurdles in export to the US, especially in the plate segment, we have got new markets in south-east Asia and Mexico,” Ahmed said.

However, the improvement in SAIL’s performance is largely dependent the financial and business restructuring packages that are awaiting Union Cabinet’s approval. The financial restructuring , when in place, will give a great breather to SAIL by writing off the Rs 5,000 crore loan from the Steel Development Fund.

“This alone will help us turn the corner in the next financial year as our interest burden will come down substantially by over Rs 400 crore,” the official said.

Company sources said the Union finance and steel ministries have approved the packages in principle.    


 
 
HYUNDAI TO ROLL OUT LUXURY CAR, MUV 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 13 
Hyundai Motors India Limited (HMIL) plans to introduce a luxury car and a multi-purpose vehicle in India along with a new version of Accent, to be launched in the second half of this year, which will have an automatic transmission system. “A study is being conducted on the two models which will be launched in the country. This will be sourced from more than ten models available with us at Kia Motors and Hyundai,’’ HMIL president A.P. Gandhi said.

The company hopes to finalise its plans on the luxury vehicle in the next three months, while it will take another three months to decide on the MPV model which will run on compressed natural gas (CNG) and liquefied petroleum gas (LPG).

Hyundai is actively considering two popular MPV models, Starex and Towner; its is also planning to road test two models in the luxury segment, its own Ranger and Sportage from Kia Motors.

It has set a target to sell about 66,000 Santros and about 12,000 Accents in the current financial year.

At the Auto Expo 2000, the company showcased a number of cars including Grandeur XG that has a three-litre V6 engine and a horsepower of 196/6000 rpm and torque of 27.2/4000 kgm/rpm.

Hyundai also displayed its sports car Tiburon Turbulence which is powered by a 2 litre beta DOCH engine.    


 
 
FORD PICKS 2 FOR STEERINGS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 13 
Ford Motor Corporation has shortlisted some Indian companies to supply it with steering systems for its global operations.

Sandip Sanyal, vice president, supply, Ford India Limited, said: “We have identified two manufacturers who will supply the components to Ford. A report about the two companies would soon be submitted to Ford Motor Company. This could be finalised in a couple of months.’’

Tatra Udyog, a joint venture company between Czech auto giant Tatra and Venus Udyog of India, will launch three new heavy vehicles for construction, mining and shipping industries by January end. It will introduce a 20-tonner mobile crane, a tractor trailor and a cement mixer, R. S. Kahlon managing director of Tatra Udyog said.    


 
 
TVS SUZUKI UNVEILS FIERO 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 13 
TVS Suzuki today unveiled its environment friendly, 150cc, four-stroke motorcycle Fiero at the Auto Expo here today. Priced at about Rs 50,000, Fiero would be launched in phases in the country and would be available everywhere by April.

The company has invested about Rs 70 crore in the project and plans to sell 50,000 to 70,000 units in the next financial year.

The bike would be manufactured at TVS’s Hosur plant in Tamil Nadu, which has the capacity to produce 1,50,000 units a year.

“Fiero has a 95 per cent localisation content which we hope to increase to 100 per cent by the end of this year,’’ TVS president C.P. Raman said.

Fiero is expected to deliver 12 brake horse power (bhp) and has a fuel efficiency of 58 kms. The bike has an acceleration of 0 to 60 kms in 5.5 seconds. The motorcycle incorporates latest features.    

 

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