Sinha wants co-operative banks to come under RBI
26.6% rise in first-quarter tax mop-up
Allies at odds over MRPL
Sonata to split stock, spin off Indian operations
Industrial growth slows down to 5.5% in May
Computer sales grow 37%
Konka goes on the backfoot
City on two hotel majors’ menu

 
 
SINHA WANTS CO-OPERATIVE BANKS TO COME UNDER RBI 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 12 
The finance ministry wants cooperative banks to come under the exclusive control of the Reserve Bank of India (RBI) which, it feels, should be given the necessary powers to supersede their boards, clear restructuring programmes and intervene in other key matters.

However, the Centre will have to secure the approval of state governments before it can implement the proposal. At present, co-operative banks function under a dual regulatory regime whereby the strings of control are vested in the hands of two separate, and independent, agencies: the RBI and the registrar of cooperatives. While the former issues operational directions, the latter oversees all other matters.

“We feel there should be a single authority controlling cooperative banks. They should not be subject to dual controls,” finance minister Yashwant Sinha told a gathering of cooperative bank officials at a function organised by the National Bank for Agriculture and Rural Development (Nabard) here today.

Ministry officials said bringing cooperative banks under the Reserve Bank’s supervision will require their inclusion in the Banking Regulation Act. “Control over these cooperative banks could either be exercised directly by the Reserve Bank, or through Nabard,” a senior official in the banking division of the finance ministry said.

Making RBI the sole guardian of co-operative banks is expected to free them from meddlesome state governments, which are known pack their boards with bureaucratic or political cronies. They are also notorious for subverting banking procedures by writing off loans or forcing loan melas.

The finance minister’s proposal may have set the cat among the pigeons. States, which would be loathe to lose control over an institution used to curry favours and patronage, are likely to pan the idea.

Cooperative banks, he said, should adopt the formula adopted by public sector banks to reduce their non-performing assets. PSU banks have agreed to either settle their dues with defaulters or to initiate legal action against them after September. “Filing of court cases will automatically reveal the identity of these defaulters,” the finance minister said.

Moves to end the dual control mechanism come at time when their losses in the last three years increased 25 per cent to Rs 4,275 crore.

Meanwhile, Sinha said the government is planning to ask commercial and cooperative banks to extend loans to farmers against their food stocks. This is expected to cushion the impact of a price plunge by deferring sales till the time prices stabilise.    


 
 
26.6% RISE IN FIRST-QUARTER TAX MOP-UP 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 12 
Total collection of taxes touched Rs 16,392.67 crore, a 26.59 per cent growth for the first quarter of the current financial year as against Rs 12,949.79 crore for the same period last year.

On a cumulative basis for the period up to June 2000, tax collections stood at Rs 37,496.06 crore compared with Rs 30,285.94 crore during the same period last year, an increase of 23.81 per cent.

Total direct tax collections up to June 2000 stood at Rs 10,712.05 crore as against Rs 6,424.81 crore up to June 1999, showing an increase of 66.73 per cent.

Indirect tax collections during June 2000 stood at Rs 9,761.94 crore as against Rs 8,528.31 crore during the same month last year, representing an increase of 14.47 per cent. Indirect tax collections during April-June 2000 period stood at Rs 26,784.01 crore compared with Rs 23,861.13 crore last year.    


 
 
ALLIES AT ODDS OVER MRPL 
 
 
FROM R. SASANKAN
 
New Delhi, July 12 
Simmering differences between the Aditya Birla group and the management of Hindustan Petroleum Corporation (HPCL) over the future of their Mangalore Refinery and Petrochemicals (MRPL) joint venture may snowball, industry sources say.

MRPL is promoted by the Aditya Birla group and HPCL with both companies holding 26 per cent each, and the rest being held by the public.

The joint venture is in serious financial trouble — its losses last year were estimated at Rs 300 crore — and the management has to take imaginative measures to make it strong enough to compete in a domestic market which will be deregulated completely in two years.

The Aditya Birla group feels HPCL has not been backing the venture fully. This has prompted it to look for a cash-rich strategic partner. International oil companies such as Saudi Aramco and Kuwait Petroleum are keen, largely because they feel this will give them an entry into petroleum retailing.

MRPL is entitled to marketing rights after the deregulation of the petroleum sector in April 2002. If Reliance Petroleum succeeds in advancing the deadline for securing marketing rights, MRPL will also be given the same benefit.

For the Aditya Birla group, investment in MRPL was attractive as along as refineries were under the retention-pricing mechanism (RPS). In recent years however, refinery margins have turn negative; higher the capacity, bigger the loss.

MRPL’s annual capacity was recently expanded to 9 million tonnes from 3.6 million tonnes, even though it has been operating only at the rate of 7 million tonnes per annum. Since the glut of petroleum products is expected to persist, it will be a long way off before the company can optimise capacity.

MRPL recently made a presentation before the government to justify its case for an independent marketing network.

A Hindustan Petroleum representative, present at the meeting, did not comment on the presentation.

The Aditya Birla group’s search for a strategic partner cannot succeed without the support of HPCL, though there is no indication so far that it will be forthcoming. Seven years ago, the government rejected an offer from Aditya Birla to buy out HPCL’s stake in MRPL. It is not clear if the group will renew the offer. If it does not, industry circles say HPCL can launch a counter-offer.    


 
 
SONATA TO SPLIT STOCK, SPIN OFF INDIAN OPERATIONS 
 
 
OUR BUREAUX
 
July 12 
Sonata Software today said it would spin off its Indian operations into a new subsidiary, and split its Rs 10-share into 10 equity shares with a face value of Re 1 each. Both decisions will have to be ratified by shareholders at an extra-ordinary general meeting which will be convened soon.

The Indian operations, which comprise product reselling, consulting and business solutions, will be taken over by the company’s subsidiary, Sonata Information Technology.

Sonata president and managing director, B Ramaswamy, said the spinoff was necessary because the company’s global and international operations, both of which have grown manifold, require different sets of strategies.

Against the backdrop, the board felt it was better to operate these businesses independently to ensure sharper focus and to develop their special strengths.

The company’s first-quarter net profit zoomed 85 per cent at Rs 7.92 crore from Rs 4.28 crore during the corresponding period of the previous year. Turnover jumped 13 per cent at Rs 40.74 crore while revenues from international operations surged by 99 per cent at Rs 12.93 crore.    


 
 
INDUSTRIAL GROWTH SLOWS DOWN TO 5.5% IN MAY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 12 
Industrial growth dropped to 5.5 per cent in May this year from 12.2 per cent in the previous month. It had posted a growth of 7.6 per cent in May 1999. The manufacturing sector, which accounts for nearly four-fifths of the total weight of the index for industrial production (IIP), registered a lower growth rate of 5.8 per cent in May this year, compared with 8.9 per cent in May 1999.

According to quick estimates of the IIP released by the Central Statistical Organisation (CSO) today, cumulative growth rate during the first two months of the current fiscal was marginally low at 5.5 per cent, as against 5.6 per cent registered during April-May 1999.

One of the reasons for the deceleration in industrial production could be the changes incorporated in the IIP basket and growth rates in the case of certain industry segments have accordingly undergone some changes, the CSO said. The manufacturing sector grew by 5.9 per cent as against a 7.1 per cent growth registered in the same period last year.

Industrial growth slumped despite better performance in the mining sector, which grew by 2.3 per cent in May this year, compared with 0.3 per cent last year, while the electricity sector registered a higher growth rate of 5.4 per cent this year compared to 3.3 per cent in the previous comparable period.

The cumulative growth in mining during the first two months of the current fiscal was 3.6 per cent, as against a negative growth rate of 0.9 per cent in April-May 1999.

In the electricity sector, the cumulative growth declined to 4.5 per cent from 4.7 per cent in 1999. The consumer goods segment registered a growth rate of 10 per cent in May this year as against 2.9 per cent in the same month last year.    


 
 
COMPUTER SALES GROW 37% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 12 
Assembled personal computers, including lesser known regional brands and unbranded systems, continued to dominate the Indian PC market, accounting for 58 per cent of total PC sales in 1999-2000.

According to the annual industry performance review undertaken by the Manufacturers Association of Information Technology (MAIT) for 1999-2000, sales of all PCs taken together — both of the branded and locally assembled variety — grew by 37 per cent. However, branded PCs did not fare as well as their assembled counterparts. While the market share of MNC brands increased from 22 per cent to 23 per cent, the share of Indian brands fell from 25 per cent to 19 per cent during 1999-2000.

Based on the current year’s performance which saw sales of 1.4 million PCs, as well as the feedback of end users, it is estimated that PC sales will cross the 1.9 million mark in 2000-01. This will be a growth of 35 per cent over the previous year, according to the survey.

The assembled market has more than doubled in the last two years, growing from 3.7 lakh units in 1997-98 to more than eight lakh units in 1999-2000, with market share up to 58 per cent in 1999-2000 from 53 per cent in 1998-99.

Announcing the results of the survey, Vinnie Mehta, director MAIT said, “The market share of assembled PCs has been consistent at 58 per cent for two consecutive years, from October 1998 to March 2000, which is a major cause of concern.”

MAIT, the apex body representing the hardware, training and services sectors of the information technology industry in the country, has identified the internet as the driving force behind PC sales.

About 50 per cent of business customers and 60 per cent of domestic buyers went in for a PC to gain access to the internet, it observes.

Since the internet has been found to be driving PC sales, a new section has been introduced in the study to correlate the PC sales to those of the internet connections.

The study reveals that 52 per cent of first time buyers in the business segment and 60 per cent of the first time buyers in the household segment bought a PC along with an internet connection.    


 
 
KONKA GOES ON THE BACKFOOT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 12 
Chinese electronics major Konka Electronics (India) has decided to postpone setting up a manufacturing unit in the country.

R. B. Tandan, vice president, sales and marketing said: “We will set up a plant only when we have high volumes. It is not viable to have a manufacturing base without achieving volumes. Although we have not decided to shelve any plans of setting up the manufacturing facility.”The company had earlier decided to invest close to Rs 200 crore in setting up the facility in Noida, near Delhi.

The company had in its proposal to the foreign investment promotion board (FIPB) last year announced the setting up of an integrated manufacturing facility with a township for employees — a model followed by companies in China. It currently imports colour televisions as CKDs and SKDs which are assembled in India.

Konka’s delay in hitting the Indian market with other products besides colour televisions has been mainly due to delay of its break-up with Hotline. Earlier, the company was a three-way venture with Hotline, Konka and Wittis of HongKong.

After Hotline pulled out, Konka approached the government with a fresh proposal. “Now Konka is a 80:20 venture between the Chinese parent and Wittis,” said Tandan.

The company had earlier planned to launch its televisions, digital video disks by August 1999 and intended completing a national launch by February last. It had also proposed launch of its washing machines by October 1999, followed by refrigerators and air-conditioners. However, plans have been postponed. The company intends to launch new television models and washing machines in the next few months. Refrigerators, air-conditioners, fixed and cellphones would have to wait. “We have no immediate plans of launching them. Colour television is our strength and we want to establish our presence in that market first,” he added.    


 
 
CITY ON TWO HOTEL MAJORS’ MENU 
 
 
BY PALLAB BHATTACHARYA & ANIRBAN SENGUPTA
 
Calcutta, July 12 
GGL Hotel & Resort Company (GGL), a wholly-owned subsidiary of Gujarat Ambuja group, is in talks with US-based Mariott and Inter-continental Hotels for a joint venture to set up two hotels in Calcutta.

While one hotel will be set up on the eastern fringe of the city at Salt Lake, the other one — conceptualised as an ‘apartment hotel’ — will be constructed near Bengal-Ambuja housing project at Santoshpur in south Calcutta.

Delegations from both Mariott and Inter-continental have visited the sites where GGL is planning to set up the two hotels.

Confirming the talks, GGL president Mandeep S Lamba said the company is looking for “strategic partners” to provide fund as well as technical expertise for these two projects.

The Salt Lake project, a 150-room complex, needs an investment of Rs 60 crore. While the 60-room apartment hotel in Santoshpur requires a Rs 15 crore investment.

“Both the hotels will be in the medium price band, although they will have the best comforts and facilities,” Lamba said.

Lamba is optimistic that the company will be able to clinch a deal with either of the global hotel majors for these two projects within a year.

GGL is also believed to have been looking for a “strategic partner” for its maiden hotel — Ffort Radisson —- at Raichak, two hours drive from Calcutta.

Harsh Neotia, managing director of Bengal-Ambuja Housing and a director of the Ambuja group, however, denied any such development.

“Ffort Radisson is our pet project which we are trying to expand,” he said.

Lamba said the 60-room hotel, which was set up with an initial investment of Rs 30 crore, is expected to break-even by March 2001.

The company had a borrowing of Rs 20 crore from a public sector bank for the Raichak hotel project. It has been paying an interest of Rs 2 crore every year. Commissioned in 1997, the hotel has accumulated a loss of Rs 8 crore so far.

Indicating a minor increase in tariff structure in order to get out of the red, Lamba said the occupancy level is increasing. In the first quarter of the current financial year the occupancy level rose to 52 per cent.

GGL has a 10-year tieup with Radisson for technical and marketing assistance. Radisson, which takes 5.5 per cent on earnings from room rentals as royalty, does not have any financial stake in the project.

Meanwhile, GGL has also introduced time share in collaboration with RCI of the US. The time share, which is being sold at an average price of Rs 1 lakh, will give a shareholder one week accommodation in Ffort Radisson or in any of the 3,200 hotel affiliates of RCI.

The company has already registered 350 members for this scheme and it has set a target of 1,000 by the end of this financial year.    

 

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