Govt surrenders five fiefs
UTI strives to look young
Maruti gets rid of the bugbear
TVS drops Suzuki suffix
Move to put value to intangibles
CMIE lowers growth forecast
Lilly sale boosts Ranbaxy net
Hughes Soft Q2 net down
Foreign Exchange, Bullion, Stock Indices

 
 
GOVT SURRENDERS FIVE FIEFS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 11: 
In a bid to spur its privatisation drive, the department of company affairs today totally scrapped the government’s monopoly over five key sectors — coal, minerals, metals, petroleum, and petrochemicals products.

The department of company affairs today issued a notification amending schedule XV of the Companies Act, 1956, omitting these sectors from government control.

The sectors deleted from the schedule cover coal and lignite, mineral oils, mining of iron ore, manganese ore, chrome ore, gypsum, sulphur, gold, and diamond as also mining of copper, lead, zinc, tin, molybdenum and wolfram.

A separate legislation allowing private sector entry into coal and lignite mining has also been moved in Parliament. According to DCA officials, the move will enable “the government to meet the challenges of the emerging globalisation of economy by divesting public holdings in the five sectors.”

A DCA spokesperson said the notification would facilitate disinvestment in companies like Hindustan Zinc Limited, Hindustan Copper, Kudremukh Iron Ore Company, and eventually even the coal and petroleum monopolies that the government runs.

The move reduces the list of areas reserved for the public sector to just three strategic ones from the huge two-page list when industrial licensing came into being in 1956. Schedule XV now contains: (i) arms and ammunition and allied items of defence equipment, defence equipment and warships (ii) atomic energy, minerals specified in the schedule to the Atomic Energy Order, 1953 and (iii) railway transport.

The notification deleting the five sectors has been issued under sub-section (1) of the section 641 of the Companies Act, read with clause (b) of sub section (2) of section 1088 of the Companies Act.

With the deletion of these sectors from the reserved list in the Companies Act, the government has also removed the restrictions on changing the board of directors and of transfer of shares in companies in these areas. According to section 108b 2b of the Companies Act, there were curbs on the change of the board, with the transfer of shares in an industry mentioned in the schedule XV of the Companies Act on the ground that it may be prejudicial to the interests of the company or to public interest.

The move comes in the wake of anxiety within the government over meeting an ambitious disinvestment target of Rs 12,000 crore this year.

Big-ticket divestments like those of Air-India and VSNL seem to have got stuck due to various reasons and the government is keen that procedural hurdles are cleared so that moves to sell off other PSUs are not stymied.

   

 
 
UTI STRIVES TO LOOK YOUNG 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 11: 
The board of the Unit Trust of India today lowered the retirement age for its officers from 60 to 58 years, in an organisation with an average age of 35 years. Further, it decided to prepare a paper on a voluntary retirement scheme for employees as part of a restructuring exercise. The UTI board at its meeting today also adopted the audited accounts of all its 85 schemes.

Briefing the press, executive director Brij Gopal Daga said the decision to bring down the retirement age by two years was in line with the practice at other public sector organisations.

Only two EDs will be affected by the new norms—K G Vassal and Daga. Daga has already tendered his resignation, effective from the end of this year, following his appointment as chairman and managing director of Central Depository Services Ltd. That makes Vassal, appointed acting chairman immediately after the exit of former chief P S Subramanyam, the only head to roll by virtue of today’s decision. Observers say the moves are part of Damodaran’s efforts to infuse new blood into the organisation. He has already declared that private sector fund managers will be put in charge of a few funds.

The total employee strength of the country’s largest mutual fund management organisation stands at 2,400, with officers constituting over 50 per cent of its staff strength.

However, the meeting, which started at 11 am and continued till late in the evening, saw no major announcement. Sources say all UTI members except Khetrapaul of the RBI were present at today’s meeting, including Jamini Bhagwati, joint secretary, finance ministry, P. P. Vora, the new IDBI chairman and State Bank of India chairman Janki Ballabh.

Regarding the Y. H. Malegam Committee report on corporate repositioning, Daga said the board will get the draft report in a day or two.

US-64 losses

UTI informed the Joint Parliamentary Committee that its flagship US-64 scheme lost over Rs 3,700 crore to severe erosion in prices of 810 active scrips after the market started sliding since March, even as its woes were compounded by 85 fly-by-night operators and 169 non-traded firms.

that it suffered about a Rs 120-crore erosion in its investments in 85 “non-existing companies in the Bombay Stock Exchange,” which vanished after raising funds from the public, sources said.

UTI is also believed to have written off its entire investment in 169 “non-traded” companies in the US-64 portfolio at an abysmally low price of Re 1 for each of the companies, or a meagre Rs 169, by June this year. Further, at least 810 actively traded companies in the US-64 portfolio depreciated by over Rs 3,700 crore till June. The market slid more since the September 11 terrorist attacks in the US and losses now were likely to be much higher.

Some of the prominent names of the 810 that did US-64 in include ACC, Arvind Mills, Ashok Leyland, Ballarpur Industries, Bhel, BPCL, BPL, Bombay Dyeing, CESC, Colgate Palmolive, Escorts, Essar Steel, Gail, Grasim, Gujarat Ambuja, HDFC, HDFC Bank, HPCL, ICICI, IDBI, Indal, IPCL, Indian Rayon, Jaiprakash Industries, Kesoram Industries, Kinetic Engineering, L&T, Mahindra & Mahindra, NIIT, Siemens, SBI, Sterlite, Telco, Tisco, Videocon International and VSNL.

However, some scrips in the US-64 kitty, such as Reliance Industries, Dr Reddy’s Labs, Moser Baer, Nalco and Nestle, saw a rise in values.

Apart from the actively traded scrips, US-64 virtually lost Rs 120 crore as 85 companies either vanished after raising funds from the market or delisted themselves.

Some of the non-traded companies where UTI had to write-off its investments are AP Scooters, Alstom Power Boilers, Andhra Pradesh Steel, Bengal Potteries, Bengal Coal, Bengal Paper Industries, Bharat Pipes and Fittings, Braithwaite Company, Burn Standard, East India Coal, Hindustan Tractors, Indian Bank, Jessop & Co, Mafatlal Engineering, Modi Industries, Thapar Agro Chem and Titagarh Industries.

   

 
 
MARUTI GETS RID OF THE BUGBEAR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 11: 
Maruti Udyog has got rid of its biggest troublemaker—Mathew Abraham—the union leader who led the three-month-old strike at the country’s largest automaker which ended in January this year.

Company sources claim this was a natural dismissal following the labour strife at the company but Mathew claimed that Maruti was trying to force the workers to accept its voluntary retirement scheme which he had opposed.

“The enquiry against me was conducted by the company flouting all lawful procedures. I was dismissed on the day I was re-elected as the general secretary of the labour union. On October 5, I was told to pack my bags,” Mathew told The Telegraph.

“The dismissal order has nothing to do with the VRS offering,” said Maruti sources. “It was the decision of the management taken separately in a lawful way.”

Mathew said, “I went to civil court for a stay against the order, but the management had already gone there and the court ruled in its favour saying that no stay could be given in this case. I will take recourse under the Industrial Disputes Act. But the only problem is that you don’t get remedy quickly here. So I will also file a case with the Haryana Labour Department.”

He said the VRS scheme was a fraud and that workers were accepting it after being threatened with dismissal. “Some other members of the union along with me had filed a suit against the VRS in a civil court,” he said.

Under the terms of the agreement signed between the Maruti management and the union in January, 39 of the 80 employees who were dismissed during the strike would not be taken back and that the law would take its course. Mathew was one of them.

The remaining, 41 employees, including 21 trainees, had signed an individual bond of good conduct before they were allowed in.

The agreement at that point ended a prolonged period of unrest in Maruti, during which the workers’ union demanded that the management review its incentive scheme, revoke all suspensions and dismissals, and allow workers to enter the factory premises without having to sign an undertaking of good conduct.

   

 
 
TVS DROPS SUZUKI SUFFIX 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 11: 
The marriage with Suzuki now officially over, the board of directors of TVS-Suzuki Ltd today decided to rechristen the troubled two-wheeler maker as TVS Motor Co Ltd

In a deal valued at Rs 90 crore, the Japanese automaker had agreed to sell its 60,00,000 shares with a face value of Rs 10 each to Sundaram Clayton Ltd (SCL) or its associates, through whom the TVS Group holds a 32.47 per cent stake.

The company reported dismal figures for the second quarter ended September 30, with net profit down almost 50 per cent at Rs 10.39 crore from the level of Rs 20.24 crore in the year-ago period.

Sales also fell in the July-September quarter to Rs 428.25 crore from Rs 460.12 crore in the same period last year. Staff costs rose from Rs 15.94 crore in the second quarter last year to Rs 18.56 crore this year. Earnings per share also went down 50 per cent from Rs 8.76 to Rs 4.50.

Suzuki Motors initially had a technical and financial partnership with TVS till the year 2007 for motorcycles. Under the terms of the deal, TVS will use the brand name TVS-Suzuki for 30 months from now and Suzuki will not be able to enter the country’s two-wheeler market during that period.

It will also continue to source technology and variants for the Fiero from Suzuki till that time.

TVS-Suzuki at present has a 13.5 per cent market share in the motorcycle segment, with a 17.2 per cent share in scooters and 56.2 per cent in mopeds.

   

 
 
MOVE TO PUT VALUE TO INTANGIBLES 
 
 
FROM DEVLIN ROY
 
New Delhi, Oct. 11: 
The Institute of Chartered Accountants of India (ICAI) is working towards the introduction of mandatory accounting standards for intangible assets, which will determine how proprietary assets like intellectual property rights, copyrights and patents will be valued.

The accounting standard will, for the first time, lay down the official guidelines on how to value these assets, which has been the major bone of contention amongst investors, creditors, customers and buyers, particularly in new-economy companies which have a strong portfolio of such assets.

In a bid to improve disclosure and transparency in the corporate sector, the nodal audit body for companies is also in the process of preparing financial reporting of interest in joint-ventures and for impairment of assets.

“The ICAI has initiated the issue of exposure draft for the three standards as a first step towards formulation of comprehensive accounting standards on the three issues. These mandatory standards are likely to be introduced formally in three months’ time,” ICAI president N.D. Gupta told The Telegraph.

Financial reporting of interest in joint ventures will spell out the details in case of a 50:50 holding. This will have to be done segment and company-wise and in a consolidated form to remove chances of faulty reporting and non-disclosure of crucial information by the partners.

The accounting standards for intangible assets, on the other hand, will look into valuation of items like licence values, proprietary assets, and more important, intellectual property rights. The accounting standards for impairment of assets will deal with impairment of goodwill, intangible assets and property, plant and equipment.

The standards include requirements for identifying an impaired asset, measuring its recoverable amount, recognising or reversing any resulting impairment loss, disclosing information on impairment losses or reversals of impairment losses.

   

 
 
CMIE LOWERS GROWTH FORECAST 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 11: 
The Centre for Monitoring Indian Economy (CMIE) has scaled down the gross domestic product (GDP) projection for this fiscal to 6 per cent from the earlier 6.3 per cent.

It also lowered its growth estimates for services, agriculture and export.

CMIE said the downward revision in GDP follows the impact of poor monsoon in south India on agricultural growth and the effect of the September 11 terrorist attack in the US on the services sector.

“While we expect a healthy economic growth in 2001-02, we fear that this growth is not sustainable in coming years,” the agency said.

Growth in agriculture has been scaled down from 7 per cent to 6.5 per cent while services are expected to grow at 6.6 per cent (earlier 7 per cent).

The industrial sector’s forecast remains unchanged at 4.6 per cent, CMIE projected.

“Post September 11, prospects of exports growth have worsened. As a result, our forecast for exports growth this year stands revised to one per cent from seven per cent,” it said. This would be a major fall from the 21 per cent growth recorded in 2000-01, CMIE added.

CMIE said net capital flows may also be lower at $ 5 billion ($ 9 billion). The rupee was also expected to depreciate during the remaining months of the fiscal. It added that the index of industrial production (IIP) grew by 2.3 per cent during the first four months of 2001-02.

“We expect the IIP to recover in the coming months. Early signs are evident in recovery of consumer durables and sales of two wheelers and colour TVs. The recovery in agricultural sector is also expected to aid this process,” it said.

However, the industrial sector’s likely recovery in the second half was in no way an indication of a sustainable recovery in this sector.

The industrial sector was hurtling towards a larger crisis in coming years and the current year’s slowdown was the fourth consecutive year of decline in production of capital goods.

The lack of growth in investments makes this fiscal’s growth in industrial production unsustainable, CMIE pointed out.

“There was no indication of increase in government spending as per data available till August and we believe that the limited spending initiatives taken by the government may have little or no impact on growth prospects,” the monitoring agency said.

The current account deficit was expected to go up to $ 3.5 billion from $ 2.6 billion in last fiscal, it said adding, net invisibles are projected to take a hit due to expected fall in software exports and tourism earnings.

During April-July this year, foreign direct investment flows at Rs 3,528 crore were roughly the same as it was in the corresponding period last year, it added.

Commenting on the monsoon, CMIE said the south-west monsoon was poor at 93 per cent of the long-term average, although the distribution was better than last year.

Only 10 per cent of the gross cropped area received deficient rains compared with 30 per cent in 2000. While area under cultivation in the kharif season declined by 2.3 per cent and cropping patterns have undergone changes, foodgrains production is projected to reach 210 million tonnes, marking a 7.4 per cent increase and oilseeds are expected to 19 per cent and cotton by 31 per cent.

   

 
 
LILLY SALE BOOSTS RANBAXY NET 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 11: 
Ranbaxy Laboratories has reported a 68 per cent rise in net profit in the third quarter ended September 30 of this year at Rs 89.1 crore as against Rs 53.1 crore in the corresponding period last year.

The board of directors today passed the unaudited accounts for the quarter which showed a 16 per cent rise in sales at Rs 538.3 crore against Rs 464.1 crore in the year-ago period.

Domestic sales increased 9 per cent to Rs 275.8 crore (Rs 253 crore). Export sales jumped 24 per cent to Rs 262.5 crore (Rs 211.1 crore). Operating profit before tax stood at Rs 58.5 crore (Rs 46 crore).

Net profit looked because of the profit that accrued from the sale of equity shares in Eli Lilly Ranbaxy Ltd which netted Rs 72.7 crore, interest income of Rs 1.3 crore and other income of Rs 0.7 crore. However, there was one downside—the provision of Rs 30 crore for the loss of investment in its subsidiary Vidyut Investments.

The board also took on record the unaudited financial results for the nine-month period January-September 2001. The company recorded sales of Rs 1483.3 crore (Rs. 1263.3 crore), reflecting a growth of 17 per cent.

Operating profit before interest and depreciation was Rs 232.9 crore (Rs 185.6 crore), an increase of 25 per cent. Profit after tax was Rs 189.8 crore (Rs 132.6 crore).

Ranbaxy aims to become $ 1 billion company by 2004.

   

 
 
HUGHES SOFT Q2 NET DOWN 
 
 
OUR BUREAU
 
New Delhi, Oct. 11: 
Hughes Software Services (HSS) today reported a 52 per cent drop in net profit at Rs 6.3 crore for the second quarter ended September 30 compared with Rs 13.1 crore during the same period of the previous year.

The company’s half yearly net profit, however, increased by 11.60 per cent to Rs 25 crore against Rs 22.4 crore in the corresponding period of previous fiscal.

Total income for the quarter increased 20.3 per cent to Rs 57.4 crore compared with Rs 47.7 crore in the same period in 2000-01.

For the first half, total income was pegged at Rs 124 crore as against Rs 86 crore in the first half of 2000-01, reflecting a 44 per cent rise.

Speaking to reporters after announcing the results, Arun Kumar, president and managing director of HSS said “the deterioration in the global economic environment has resulted in downsizing and lower business forecasts from communication companies worldwide.

He reiterated HSS’s guidance given last month where it had indicated the forecast for income growth to be in the range of 25-35 per cent. Profit after tax was expected to be in mid-20s for 2001-02.

He also announced the company’s forays into broadband applications, peer-to-peer solutions, mobility based packages and XML based content routing.

During the quarter, HSS’s parent Hughes Network Services contributed 46 per cent revenue on the services side and 13 per cent on the products segments while 41 per cent came from others.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.04	HK $1	Rs.  6.10*
UK £1	Rs. 69.69	SW Fr 1	Rs. 29.15*
Euro	Rs. 43.62	Sing $1	Rs. 26.10*
Yen 100	Rs. 39.75	Aus $1	Rs. 23.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4750	Gold Std (10 gm)Rs. 4685
Gold 22 carat	Rs. 4485	Gold 22 carat	    NA
Silver bar (Kg)	Rs. 7550	Silver (Kg)	Rs. 7575
Silver portion	Rs. 7650	Silver portion	    NA

Stock Indices

Sensex		2943.69		+47.09
BSE-100		1352.98		+20.52
S&P CNX Nifty	 954.90		+14.55
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