Trip down memory lane in Volkswagen’s Beetle
Provident fund rate remains at 9.5%
Profit spike masks flat sales at Hind Lever
Lot of depth in water
Sinha hints at 20% peak customs duty
Telco halves loss in third quarter
Bank recruitment panel buried
Plantation firms in the dock
Whiff of fresh air for Indian roads
Foreign Exchange, Bullion, Stock Indices

 
 
TRIP DOWN MEMORY LANE IN VOLKSWAGEN’S BEETLE 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, Jan. 22: 
Get ready to be bitten by the Bug — the Volkswagen Beetle. The car, which was designed by the legendary Ferdinand Porsche with design inputs for pre-war Germany’s people’s car from none other than Adolf Hitler, will hit the Indian roads by May.

Kashyap Motors, the official dealer for BMW cars in Delhi, is setting up a subsidiary that will bring in the Beetle as a completely built unit (CBU).

The subsidiary—called Kashyap Vehicle Works—will introduce the New Beetle, a redesigned version of the popular bug of the 60s and 70s, that Volkswagen launched worldwide in 1998.

Powered by a 1.8 litre turbo diesel engine with a maximum output of 150 horse power, the variant for India will come in two jazzy colours—Snap Orange and Double Yellow.

Complete with a sunroof, a 200-watt music system, 17-inch alloy wheels and heated washer nozzles, it will be another retro model to hit Indian roads after our very own Amby.

But with a sticker price of about Rs 23 lakh, it won’t be cheap. “Demand will be limited as the cost is too high. There will be a 120 per cent duty above the international price of $ 22,000,” said Anita Kashyap Monne, director marketing of Kashyap Motors Pvt Ltd.

“We have received several enquiries about this Volkswagen model. We have decided to bring in the Beetle in another three months—the time required to secure the import licences. We have already received 63 confirmed inquiries—a dozen of them are ready to pay in advance,” she said.

Volkswagen was one of the first automakers to actively pursue a retro look for its models. In the mid-90s, it stunned the auto world with its Concept One, hinting that it could update the ‘60s icon.

It delivered on that promise in 1998 with its New Beetle, a round-roofed small car with single round front and rear lights and a smiling hoodline that connected with all age groups. However, there was one crucial difference: the engine was no longer placed in the boot of the car, but under the bonnet as everyone else.

There’s an interesting story on why Piech put the engine in the back. Hitler had wanted a car that could carry five to seven people, travel at over 60 miles an hour and be priced at an equivalent of around £ 86.

After juggling with various permutations, Piech apparently found that he could hold down the price if he put the engine in the boot. Piece of apocrypha or a little tidbit from auto history, take your pick.

The New Beetle is based on the front-drive, transverse platform of the Golf, which has more interior room, is liquid cooled, and has a front side engine.

In addition, the New Beetle offers features unheard of in the original Beetle such as air conditioning, airbags, a sound system with a CD player, power steering, power windows and brakes.

Meanwhile, Kashyap Motors is planning a third arm—Auto Kashyap India—dealing solely in Peugeot models. “The decision to set up an independent arm comes after taking into account growth prospects for the car market in the country, though we haven’t decided on the models yet. But there will always be a demand for these niche products, recession or not,” Kashyap Monne said.

At present, Kashyap Motors deals in BMW cars, offering customised products. The BMW cars offered in India include the BMW 3 series Saloon, 3 series Coupe, 3 series Convertible, 5 series Saloon, 7 series Saloon, BMW X5 and Z3 Roadster.

For now, Monne is hoping that the demand for the New Beetle will catch on in India. “It is pure nostalgia. A car made so many years ago has been brought back into production. Indians also want to be a part of this history. We will try to speed up the launch of the car,” she said.

Its turbocharged 1.8 litre, 150 horsepower engine, is a great improvement from the original Bug. The aerodynamic design, and sharp curves, suggests a sports like appeal, despite the absence of a sports coupe shape. Moreover, the trunk and interior space are surprisingly large.

   

 
 
PROVIDENT FUND RATE REMAINS AT 9.5% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 22: 
The Central Board of Trustees of Employees Provident Fund (EPF) today kept the interest rate on PF deposits unchanged at 9.5 per cent for the financial year 2002-03.

Announcing the decision after presiding over the 156th meeting of the board, Union labour minister Sharad Yadav said the recommendation of the board was only interim in nature and further meetings are scheduled to be held with the finance ministry and the Reserve Bank of India on this issue.

The PF authorities have found harder to justify a high 9.5 per cent interest at a time when all other interest rates have been heading south.

The finance and investment committee (FIC) of the EPF has favoured an interim rate of 9.5 per cent till the government mulls over its recommendations which include an increase in the rate of interest to 12 per cent for the monthly running balances of the fund.

The FIC has also recommended takeover of the Central Board of Trustees of EPF by the RBI with an inflation-linked rate of return of 6 per cent.

It has also called for a tripartite meeting of the employees, employers and the representatives of the finance ministry to look into the issues of administered interest rate structure, investment pattern and guidelines for CBT/EPF and rate of interest being declared for the EPF subscribers.

Meanwhile, the government today said it was planning to expand the scope of provident fund scheme in the unorganised sector, including migrant construction workers, by making the required legislative amendments.

“The executive committee of the EPF will look into the issue of simplifying norms for bringing more employees of the small sector into its fold and expanding the total membership to 10 crores in 16 years,” Yadav said.

He said the committee would make an in-depth study before suggesting amendments to the employees provident fund and Miscellaneous Provision Act 1952.

He said of particular concern was to increasingly bring migrating construction workers under the EPF scheme by simplification of norms.

Some of the suggested changes which came up for discussion were empowering government to reduce the threshold limit of employees for the coverage incrementally taking into account the handling capacity of EPF.

   

 
 
PROFIT SPIKE MASKS FLAT SALES AT HIND LEVER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 22: 
Driven by a 6.5 per cent growth in power brands, Hindustan Lever (HLL) today said its topline swelled by a modest 3.5 per cent, while net profit vaulted 25.3 per cent at Rs 1641 crore (Rs 1341 cr) in 2001.

Heartened by a buoyant bottomline, the board has proposed a final dividend of Rs 2.50 per share of Re 1, taking the total dividend to Rs 5.00 each — 500 per cent annually.

The numbers failed to cheer investors, who sent the company’s scrip sliding by Rs 1.65 to Rs 211.20 on the Bombay Stock Exchange (BSE). “In 2001, we relentlessly pursued our strategy of focusing on growing our power brands in the face of intense competition, a depressed economy and declining market,” Lever chairman M. S. Banga told reporters after the results.

“Our FMCG top-line growth jumped 7 per cent in the second half compared with 3 per cent in the first. Power brands have grown 9 per cent in the second half, helped by a 12 per cent increase in the sales of home and personal care products,” the Lever chief said.

The emphasis on enhancing the profitability of foods business, he said, helped boost gross margins by five percentage points. “At the same time, we have divested our holding, partially or fully, in several non-FMCG businesses and reinvested some of those proceeds into strengthening the foods portfolio,” Banga said.

The company wrote off fixed assets to the tune of 43 crore in the ice-cream business, and Rs 19 crore in the culinary segment. Business restructuring cost the company Rs 48 crore in 2001 compared with Rs 109 crore in the previous year; the figures on this head were Rs 14 crore for the quarter ended December against Rs 27 crore in the corresponding period of last year.

Profits from the food and beverages business surged as the company planned to offer “a number of value-added ready-made foods. For instance, test-marketing of ready-to-eat chapatis made out of wheat has already started in many cities. “We are also test-marketing the Knorr brand of rice and spreads,” he added.

On ice-cream, Banga said his company had been losing money for a long time in a market that has not been growing, and worse, bristling with “pernicious low-cost competition”. “But it’s not a market the fast moving consumer major is ready to give up,” he added.

Relying on its massive distribution reach, the company intends to turn around its ice-cream business by focusing on best-selling brands in large markets. Banga said he did not expect a break-even in the business this year.

During the year, Lever increased its spends on advertising and promotions (A&P) 18 per cent to Rs 824 crore from last year.

   

 
 
LOT OF DEPTH IN WATER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 22: 
Soaps, ketchups and toothpaste — if that’s what you identified Hindustan Lever with, here’s something more ubiquitous the company could now symbolise — water.

Following the foot-steps of parent Unilever, HLL will offer branded water, which will be first test-marketed in either Calcutta or Chennai sooner than you think.

The top-brass is tight-lipped on the specifics, though it concedes that the idea has struck them after several companies have swamped the market with mineral water brands.

But Lever will give the business a new dimension: it will supply high-quality purified water to households — even skipping municipal bodies.

“Water business has immense potential in India, where even the water available in five-star hotels is not considered safe. At the right price, I am sure it could be a big business in the next few years,” Banga said.

   

 
 
SINHA HINTS AT 20% PEAK CUSTOMS DUTY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 22: 
Finance minister Yashwant Sinha today hinted at bringing down peak customs duty in the coming budget besides unleashing a slew of measures to make Indian industry competitive, including labour reforms.

Addressing the India Today conclave here, Sinha said the government stood committed to lower the peak customs duty rate to 20 per cent in three years’ time from the present level of 35 per cent.

“Our stated objective is to reduce peak import duty to 20 per cent. However, this has no relation to the current budget,” Sinha said, adding it was time that tariff and non- tariff barriers were brought down.

Emphasising that 10 years was sufficient time for India to become competitive, Sinha said the industry should be able to stand up to competition to meet the challenges of globalisation by moving away from the era of protectionism.

“The only mantra for Indian industry is to be efficient, Sinha said, adding it should perform so that people got a “better deal” as in the rest of the world.

“Post-independence we Indians have cultivated the policy of self-interest groups which create pressure. The labour unions blame the industry, the small industries blame the big ones, the big industries blame the small and agricultural sector and so on. This has to stop,” he said.

On the need to increase defence allocation, Sinha said ideally he would prefer to spend more on developmental needs, but no country could afford to sacrifice national security. “It is in the interest of all of us to avoid a war. But if war is thrust upon us we would not shy away from it,” Sinha said.

“Left to myself I would like to spend on development needs. But till the regional and security situation improves, we will have to spend on defence,” he said.

Stressing the need for evolving a consensus to shun populism, Sinha said it was time that political parties came together to take a united stand. “Gone are the days when elections were held once in five years,” Sinha said, adding there are elections every six months and politicians both from the ruling and opposition parties should join hands to say “thus far and no more”.

Contract labour Act

The government said today said the Contract Labour (regulation and abolition) Act was structurally against growth while the labour reforms initiated by it was promoting more employment.

“The way some labour laws have been structured has not favoured growth and the Contract Labour Act is structurally anti-growth,” law minister Arun Jaitley said at the conclave.

He said the labour law reforms pursued by the government was pro-employment.

The oversized organisations would tend to become inefficient and would not generate employment, the minister said, and added that “it is time that trade unions realised this.”

Noting that 990 companies of the 1,040 state-owned companies were in the red, Jaitley said the disinvestment process had been going on well.

   

 
 
TELCO HALVES LOSS IN THIRD QUARTER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 22: 
Tata Engineering & Locomotive Company (Telco) has pruned its third-quarter loss by more than half at Rs 55.54 crore compared with Rs 121.44 crore in the corresponding period of the previous year.

The recovery has helped trim nine-month losses to Rs 216.27 crore from Rs 353.79 crore in the same period last year. Telco said the performance is significant given that it has been achieved despite an economic slowdown.

During the quarter, net sales surged 18 per cent at Rs 2080.27 crore from Rs 1762.02 crore in the same period last year. For the nine-month period, sales stood at Rs 5832.13 crore compared with Rs 5459.24 crore.

Vehicle sales in the third quarter, including exports, rose to 42,831 against 35,908. Of this, commercial vehicles accounted for 20,479 (18,698), passenger cars & utility vehicles 19,001 (12,889); 3,481 units were sold abroad.

The operating profit for the third quarter more than doubled to Rs 176.53 crore from Rs 77.42 crore. With the sustained thrust on cost-reduction measures, the operating profit margin also doubled to 8.49 per cent compared with 4.39 per cent in the same quarter last year.

Nine-month operating profit rose to Rs 447.84 crore from Rs 305.16 crore, helped by cost savings, manpower rationalisation and financial restructuring. The company achieved cost savings worth Rs 159 crore in this period and, as a part of its continuous drive towards rationalisation of manpower, reduced 1,500 employees.

After taking into account a fall in other income, higher depreciation, amortisation and extraordinary charges, net loss in the nine months ended December came down to Rs 216.27 crore from Rs 353.79 crore in the year-ago period.

Telco said improved marketing efforts and better product offerings helped push up its market-share in the medium/heavy commercial vehicle segment to 67.7 per cent.

Its small car, Indica, has grabbed 21.6 per cent of the market in the nine months ended December, up from 17.7 per cent in the same period last year. The company sold 41,381 units in the period, up from 32,123 in April-December 2000.

The project had made cash profits in the third quarter and expects a profit if sales cross 60,000 units.

Telco executive director (finance and corporate affairs) Praveen Kadle said his company was still looking for a strategic partner for joint production, marketing and product development of the small car business.

   

 
 
BANK RECRUITMENT PANEL BURIED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 22: 
The government today formally decided to decentralise the recruitment of officers in the banking industry by scrapping the Banking Services Commission.

A Bill is likely to be introduced in the Budget session to repeal the 1984 legislation under which the commission was set up. The commission was initially set up to conduct examinations for the officers’ cadre of public sector banks. The move, which has been in the offing for quite sometime, will give banks the freedom to hold individual recruitment exams based on their requirements. The modified system is aimed at reducing the regional imbalances that creep up under a common recruitment examination.

Reacting to the decision, Indian Banks Association (IBA) chairman Dalbir Singh said the scrapping of the commission would encourage professionalism in most public sector banks. “Most PSU banks have already opted for a voluntary retirement scheme (VRS) and so there may not be any immediate need for recruitment of general staff. However, experts from specialised fields like agriculture, information technology and communications are needed and the freedom to recruit on their own will help the banks in improving their core of professionals,” Singh said.

He said the government has already asked banks to formulate their individual recruitment policies so that they could be ratified by the respective bank boards and put into practice.

Welcoming the move, Bank of Baroda chairman P. S. Shenoy said: “The demands of the new economy is for people from specialised fields. Now banks will be able to recruit professionals as per their requirements,” he said.

The Cabinet has also approved a relaxation in the criteria for releasing central loan assistance under the accelerated irrigation benefits programme to usher in reforms in the irrigation sector. The states that agree to undertake reforms by rationalising their water rates over a specified period of five years will be given central assistance on liberal terms.

   

 
 
PLANTATION FIRMS IN THE DOCK 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 22: 
In a far-reaching order that signals the denouement of one of the biggest stock market scams of the early nineties, the Delhi high court today froze the bank accounts of 513 plantation companies who have been accused of cheating thousands of people of hundreds of crores of rupees across the country through dubious investment schemes.

A bench, comprising Justice Anil Dev Singh and Justice Madan Lokur, ordered the freeze of their bank accounts after the Securities and Exchange Board of India (Sebi) informed the court that most of the companies had not responded to its notices. It fixed the matter for final argument for March 6.

Nine Calcutta-based companies figured on the list of over 600 companies to whom Sebi had sent out the notices.

They included Esskayjay Plantations, Basundhara Agro-Environment and Development, Rose Valley Resort and Plantations, Sonali Agro Industries, Sree Agro Industries, Sun Plant Agro Finance, Rainbow Green Fields, Haritima Agro Development and Resort and Fortuna Agro Plantations Ltd. The list also includes Tulip Agromed of Howrah, MPS Greenery Developers of Jhargram and Teak Talk Plantation and Penacia Plantation from 24 Parganas.

Sebi counsel N.K. Kaul and Alpana Poddar told the court that the market regulator had sent out repeated notices to the errant companies. Over 300 notices were returned undelivered and more than 150 others had not bothered to reply. “Only eight companies had filed applications for registration with Sebi, which were rejected. Over 30 companies had responded to the notice, but not filed any statement,” the Sebi counsel said.

The matter was brought before the court in a PIL, seeking action against over 600 companies for “cheating” investors by offering high rates of interest.

Senior advocate Keshav Dayal, appearing for petitioner S.D. Bhattacharya, also requested the court to issue some direction to the authorities, including Sebi, to take action against these companies.

   

 
 
WHIFF OF FRESH AIR FOR INDIAN ROADS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 22: 
Smoke-filled Indian roads may soon be swept away by a breath of fresh air, if a Yankee bid to sell equipment that can extract environment-friendly ethanol fuel from molasses, takes off. Delta-T Corporation, a Virginia-based $ 40-million firm, has joined hands with Pune-based PRAJ Industries to manufacture and sell advanced molecular sieve dehydration plants. The equipment dehydrates water from the alcohol supplied by distilleries to extract the driest form of ethanol. The company claims that up to 99.8 per cent ethanol derived through the process can be used as an auto fuel.

Pramod Chaudhuari, chairman and managing director of PRAJ Industries said, “The country’s molasses production during 2000 was about 8.5 million tonnes. This can yield about 2,000 million litres of ethanol.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.28	HK $1	Rs.  6.10*
UK £1	Rs. 69.04	SW Fr 1	Rs. 28.65*
Euro	Rs. 42.67	Sing $1	Rs. 25.95*
Yen 100	Rs. 35.99	Aus $1	Rs. 24.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4800	Gold Std (10 gm)Rs. 4720
Gold 22 carat	Rs. 4530	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7450	Silver (Kg)	Rs. 7530
Silver portion	Rs. 7550	Silver portion	   NA

Stock Indices

Sensex		3368.28		-14.01
BSE-100		1609.04		- 4.46
S&P CNX Nifty	1092.85		+ 1.50
Calcutta	 113.38		- 0.36
Skindia GDR	 543.85		+ 0.99
   
 

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