Selloff list leaves market cold
State to extend sops to central PSUs
Rivals give Maruti a hot chase
Two-day closure rekindles layoff fears at Hind Motors
Eastern Coalfields again at BIFR doors
Imported car to add josh to Ford sales
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 23 
Investors today punished shares, especially those of state-owned companies, to express their dismay at a government which promised them a big-bang disinvestment initiative, but delivered what was little more than a whimper.

The Bombay Stock Exchange (BSE) sensex shed 72.46 points to close at 4721.70 after a selloff by local funds disappointed at the manner in which an opportunity to launch a major disinvestment drive in key public sector companies was frittered away.

As hopes of bold initiatives on privatisation were belied, marketmen scurried to liquidate their long positions in leading public sector companies. The selling came after an early-session technology selloff in which many big names saw their gains evaporate.

The market was unhappy that the government announced the divestment of its stake only in second and third-rung PSUs such as Balco, Nepa and Bharat Leather.

“We are clearly disappointed. The dithering by the government, after it made so much of a noise about it, has cast doubts on its credibility and its seriousness to carry the selloff process to its logical conclusion,” a dealer said.

Minutes after the market discovered that the Cabinet meeting on disinvestment had left out heavyweights like Maruti Udyog, VSNL, MTNL, HPCL and BPCL, PSU stocks went into a tailspin.

Disinvestment decisions in MMTC, STC, Shipping Corporation of India and IBP failed to enthuse foreign funds and local institutions, which had expected major announcements on the privatisation of MTNL, VSNL and Maruti Udyog.

Local funds offloaded heavily in index-based PSUs such as MTNL, BHEL and HPCL, besides pressing sales in other old-economy shares which make up the 30-scrip sensex.

The downbeat mood spread to the infotech, communication and entertainment (ICE) counters as well.

Most shares in this group turned weak right from the start of the session. Thursday’s steep fall in the Nasdaq Composite Index also contributed to the tech wobble.

The 30-scrip key market barometer opened lower at 4771.07 and moved up to its intra-day high of 4822.63. Later, profit-selling pruned some of the early gains and sent it to its intra-day trough of 4687.31. It closed at 4721.70 as against Thursday’s finish of 4794.16 in a decline of 72.46 points or 1.51 per cent.

FMCG major Hindustan Lever came to the rescue of a falling market yet again, as speculators made purchases in the scrip which is going into the no-delivery period from July 3. It shot up by Rs 152.10 at Rs 2806.40.

State Bank of India was also in the spotlight, in large part because of the excellent working results it unveiled for 1999-2000 on Thursday. Even though profit-taking at the fag end of the session swept away most of its initial gains, it closed in positive territory by gaining Rs 5.95 to Rs 236.40. L&T was another big draw on bourses, gaining Rs 4.75 at Rs 230.70.

Of the 139 traded specified shares, 114, including Pentamedia Graphic which closed at the 12 per cent lower price band, showed losses. Only 22 finished with gains.

The BSE-100 index dropped by 49.67 points to 2363.63. The BSE-200 and the dollex were quoted sharply lower at 511.73 and 190.64 respectively. The BSE-500 index declined by 31.54 points to 1547.33.

Reliance Industries was the top traded scrip with a turnover of Rs 560.12 crore on a total volume of Rs 4470.02 crore. Other actively traded shares were Himachal Futuristic (Rs 549.01 crore) and Satyam Computer (Rs 428.34 crore).

However, Reliance finished the day with a loss of Rs 14.50 at Rs 334.25, HFCL slipped by Rs 66.95 at Rs 1502.15, Satyam Computers by a whopping Rs 204.30 at Rs 2922.95 and Global Telesystems by Rs 100.50 at Rs 1419.80.

Among the PSUs, the major losers were engineering major Bhel, which fell by Rs 9.50 at Rs 130.40. Others who took it on their chin were Bank of Baroda, Bank of India, Cochin refineries, HPCL, IPCL, SAIL, IBP, CMC, and telecom majors MTNL and VSNL.    

Calcutta, June 23 
The West Bengal government is willing to provide concessions and tax holidays against a revival package for central public sector undertakings. Stating this here today, state finance minister Asim Dasgupta said that the West Bengal government has been extending these facilities to many of the PSUs. “There is no logic in closing down capital goods units which have the potential for revival,” Dasgupta said. He said that contrary to assurances, the Cabinet expert committee on disinvestment had no interaction with the state government before taking the decision to close down the PSUs.

“This is an expert committee with a death wish,” Dasgupta observed.

The minister pointed out that of the 22 state-run units in the state, five were now making profits. Dasgupta was in Delhi on Wednesday when news of the Cabinet’s decision to shut down five PSUs in West Bengal came in. “Even when I drew the attention of Prime Minister Vajpayee on the talks chef minister Jyoti Basu and I had with him last September when he had given an assurance of looking into each unit individually, I did not get any positive reaction from him,” Dasgupta said.    

New Delhi, June 23 
Maruti is fast losing the battle for roads.

Evidence that the country’s top car maker is being given a hot chase by young, more ambitious rivals like Telco, Daewoo and Hyundai comes in a fresh survey released by the Society of Indian Automobile Manufacturers (Siam) which puts its market-share at 52.3 per cent in May, the lowest ever. At the same time last year, things were better with the company sitting pretty with a 70.8 per cent share.

Maruti has been jolted even as overall passenger car sales raced 10.5 per cent to 52,593 units in May as against 47,566 units in the same month of the previous year.

The company’s sales plunged 25 per cent to 27,533 units in May compared with 33,680 units a year ago. Cumulative sales in the first two months have fallen 11.5 per cent to 57,549 units as against 65,031 units. In the mullet-utility vehicle (MUV) segment, Maruti sales dipped 73 per cent to 119 units in May 2000 from 442 units sold in the same month last year.

In contrast, the Korean Chaebols appear to be on a roll. Daewoo Motors’ sales zoomed 168.13 per cent to 6033 units in May compared with 2,250 units. Its market share rose from 4.7 per cent to 11.7 per cent.

Hyundai Motors’ market-share increased to 14.3 per cent. It sold 7,561 units in May, a growth of 67 per cent over 4,519 units in the same month of the previous year.

Telco also reaped the gains of an economic upturn, its sales leaping 113.7 per cent at 5,193 units as against 2,430 units sold during the corresponding period last year. At number three, it had a 9.87 market share, up from 5.10 per cent in May last year.

Ford India’s sales grew eight-fold to 1,592 from a meagre 180 units sold during the same month last year.

Cumulative sales in the first two months of the current financial year increased nine times to 3,184 units as against 345 units sold in the previous year.

General Motors’ sales increased three fold to 560 units compared with 180 units; cumulative sales during the first two months stood at 1133, up from 382 in April-May 1999.

The Indian subsidiary of Italian auto giant, Fiat Spa, was in reverse gear: Its sales dropped 3.18 per cent to 1,101 from 1,614 units picked up in May last year.

There was not much source of comfort for Luxury car major Mercedes Benz India. Its sales declined 58 per cent to 63 units from 151 sold in the same month of last year. In the first two months, its sales dipped 125 units from 220 units in the same period of the previous year.

The sale of Honda Siel cars grew 24.38 per cent to 903 units compared with 726 in May 1999. The tally for the first two months was up 39 per cent to 1826 units compared with 1314 units in the same period last year.

Mahindra and Mahindra’s MUV sales were down 3.8 per cent at 4995 units from 5192 units. In the first two months, the decline was 10 per cent.

Propelled by a robust 35.57 per cent growth in motorcycle sales, the two-wheeler industry posted a 13.36 per cent increase in sales at 3,12,710 units in May as against 2,75,832 units sold in the same month last year.

Scooters continued to have a rough ride. Sales dipped 13.6 per cent to 85,454 units from 98,947 units in May 1999.    

Calcutta, June 23 
Hindustan Motors (HM), the C.K. Birla flagship, is heading for a fresh crisis. Faced with plunging sales in the last few months, the company has decided to stop its car production at its Uttarpara factory for two days — on Sunday and Monday.

In a notice issued today to its 10,500 employees, the management said the two-day closure down was forced by poor demand for its cars. It is not clear whether the plant will remain closed on all Sundays and Mondays, until more buyers return to the showrooms.

According to the notice, the demand for HM’s vehicles has fallen sharply since April 2000. In the last two months, the demand has not even kept pace with the industry average.

The employees will sign the attendance register but they will not have to work. The company says the measure is being taken to ensure that operations at the plant remain viable Some of the emergency services will, however, remain open.

The company, saddled with losses of Rs 63 crore, has not declared a layoff or work suspension till now. In December 1998, the management had sought the West Bengal government’s permission for a three-day closure but the plea was shot down and the matter ended up in court. The company lost the case in the industrial tribunal and contested the ruling in court again. The issue is still unresolved.

Sources said it costs the company Rs 68.85 crore per month to run operations at Uttarpara. The decline in car sales has hit the company’s bottomline hard, they added. “It has become difficult to meet financial obligations in such a situation. The halt in production will help check costs.”

Sukhendu Biswas, general secretary of the Citu-affiliated Hindustan Motors and Hyderabad Industries Workers’ Union, said: “The company has issued this notice today. The sales of the company has not been picking up in the last few months. However, it is not a lay-off. The workers will get their salaries.”

Ajit Chakraborty, vice-president of the Intuc affiliated Hindustan Motors and Hyderabad Industries Employees Union, said: “We are watching the situation. We will decide our plan of action accordingly.”    

New Delhi, June 23 
The loss-making public sector enterprise Eastern Coalfields has filed a reference with the Board for Industrial and Financial Reconstruction (BIFR) to be declared as sick.

BIFR will hear the company’s application on June 30. The company, which is knocking BIFR’s doors for the third time, has reported negative net worth to the tune of Rs 49.35 crore as on March 31, 1999. It had first approached the board in 1995 following the erosion of more than 50 per cent of its net worth, but was however, not registered as a sick company.

In 1997, Eastern Coalfields again came to BIFR with a negative net worth.

As a result of the internal capital restructuring among the Coal India subsidiaries, an amount of Rs 1179.45 crore of Eastern Coalfield’s debt was converted to equity which rose from Rs 1039 crore to Rs 2218.45 crore and subsequently the company came out of the board’s purview. The company has its mines in the Raniganj coalfields in West Bengal and in Mugma and Rajmahal in Bihar.

Meanwhile, coal unions have decided to launch an agitation against the move next week.    

Calcutta, June 23 
Ford India Ltd, subsidiary of US-based Ford Motor Company is gearing up to introduce imported cars in the Indian market from next year.

“Initially we will import sport utility vehicles and specific models for the up-market customers,” said John Fink, vice-president, marketing sales and service of Ford India Ltd.

Ford India is all set to exploit the opportunity offered by the phasing out of quantitative restrictions on import from April, 2001. As the details of the government policies vis-a-vis World Trade Organisation regime are still pending, the company has decided to import specific sports utility vehicles and highly priced cars for the Indian market, he added.

Meanwhile, the company has started exporting completely-knocked-down (CKD) car component kits to its South Africa and South American outfits.

To facilitate the export, the company has established a unit at its suppliers’ park, adjacent to Maraimalai Nagar plant near Chennai.

The plant supplies Ford India’s export requirement exclusively by sourcing automobile components locally and assembling kits for overseas markets.

Ford India’s tie up with ICICI for selling cars to non-resident Indians through the internet has started yielding result. As many as six cars have been booked by the NRIs since the tieup on May 26. Fink, who was in the city to launch Ford’s latest model Ikon EXi, said the company hopes to capture 30 per cent of the mid-size luxury car market. The company targets selling 22,600 cars in the current calendar year. To achieve this the company plans to increase the number of dealers to 60 from the present 38.

With advance features such as power steering, windows, central locking, CFC-free air-conditioning, body-side protection moulding the ex-factory price of the vehicle is fixed at Rs 4.71 lakh.

On retail Ikon Exi would cost a customer Rs 5.62 lakh in Calcutta.

Ford India is also planning to export Ikon range of vehicles to the neighbouring countries. Currently, financial for the same are being worked out.

Fink said automobile dealers from the neighbouring countries were showing keen interest in the vehicles.    


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