Juggle option before Sinha to keep fiscal deficit in leash
United Bank VRS aims at 12% job cut
JB Chemicals gears up for two-way restructuring drive
Cosmo Films plans new unit

New Delhi, Dec 24: 
The government may well do with some largesse from Santa Claus this Christmas to set its account books right.

While the budget has targeted Rs 10,000 crore from disinvestment in 2000-01, the government has not sold its stake in any PSU this year, nor is the targeted amount likely to flow in by March next year. Under the present scenario, the proposed disinvestment of Air-India, Indian Airlines and Maruti Udyog seems unlikely to be completed before February 28, when the finance minister is scheduled to present the next Union budget.

However, the government is under pressure to conjure up a few thousand crore this year from the PSU disinvestment exercise.

Last year it was the then finance secretary Vijay Kelkar to the rescue. Kelkar managed an equity swap among national oil and gas companies in a desperate bid to rein in the fiscal deficit. The amount from this came to the central kitty only after March 31, but the finance minister took credit for this in his budget. A similar trick may be possible this year. The minister could show an anticipated amount from the proposed disinvestment to maintain the fiscal deficit very close to the targeted 5.1 per cent of the GDP.

The other option before the finance minister is to prune the Plan outlay. Unofficially, Plan outlays are pruned by withholding payments. This is a familiar manipulation which almost all his predecessors had resorted to. It is expected that there will be a saving of Rs 5,000-6,000 crore in the current year�s Plan outlay.

In the past, Plan assistance to states used to exceed the budget estimates. This year it is likely to be less than the budgeted amount. For instance, the budget estimate for central assistance to states in 1999-2000 was Rs 31,980 crore but in the revised estimates it went up to Rs 34,526 crore.

In 1998-99, the budget estimate was Rs 28,527 crore but in the revised estimate it rose to Rs 29,041 crore.A similar hike was there in 1997-98 as well. This was possible because under the Basic Minimum Series programme introduced by the Deve Gowda government, states had more discretionary powers to utilise the central assistance.

That has been done away with under the present dispensation. For instance, the Rs 2,500 crore earmarked as rural road fund under the Prime Minister�s Gramodaya Yojana remains unutilised. This could be a saving on Plan account.

Defence outlay, which comes under non-Plan expenditure, was stepped up in the current year�s budget due to the Kargil conflict. Defence capital has a fund of Rs 18,000 crore. As procedures for defence equipment purchase could not be finalised during the year, the finance ministry expects a saving of about Rs 6,000 crore from this fund. Thus, the total savings on Plan and non-Plan outlay is estimated around Rs 14,000 crore which could reduce the fiscal deficit by 0.6 per cent of the GDP.

However, the government�s main worry is that the budgeted disinvestment target is unlikely to materialise. This could mean a shortfall of Rs 2,000-3,000 crore in indirect tax collections. Thus the savings and shortfall should match almost, making it possible for the minister to keep his date with the fiscal deficit target.

The catch, however, lies in a hidden expenditure of about Rs 4,000-5,000 crore. The only saving grace for the finance minister will then be the anticipated funds from the yet-to-materialise PSU disinvestment. That is where he will need a bit of magic.


Calcutta, Dec 24: 
United Bank of India (UBI) today said it will introduce from January 1 a voluntary retirement scheme (VRS) which it expects will lead to a 10 to 12 per cent reduction in its employees, and cost Rs 200 crore.

�The bank, which is celebrating its golden jubilee this year, aims to achieve a Rs 46 crore net profit ,� chairman and managing director Biswajit Choudhuri told reporters.

Despite the outflow of funds to finance the early-retirement package, Choudhuri said his bank will be in a position to post a net profit of Rs 46 crore in the current financial year. �We have asked the government to provide funds for VRS but the government is yet to clear the proposal,� he said.

UBI, which has 21,000 employees, has asked for Rs 300 crore in recapitalisation funds to help it achieve a capital adequacy ratio of 10 per cent, in addition to the financial assistance it has sought for Rs 180-crore technology upgradation plan (TUP). �We have started implementing the TUP. We are raising the finances through our internal accruals,� Choudhuri said.

The city-based bank intends to close down 55 loss-making branches by 2003, of which 11 have already been wound up or merged with others.

Talking about the present performance, Choudhuri said the operating profit in the April-November period increased to Rs 81 crore compared with Rs 21 crore in the corresponding period of the previous year. Deposits at the end of November were 7.9 per cent higher over the same period last year.

Advances of the bank increased 17.3 per cent or Rs 6,500 crore between the end of March and last month. Net ratio of non-performing assets (NPAs) declined from 12.7 per to 9.6 per cent.

Dunlop meet

State finance minister Asim Dasgupta has convened a meeting of Dunlop India�s bankers � UBI is one of them �on December 26 to discuss the revival of the M. R. Chhabbria-controlled firm.

�We would like Dunlop to run smoothly. But as the principal banker, I want Dunlop to first repay its Rs 100 crore-loan that was diverted. Only then can we think about providing working capital. The company will have to prove that it has all the three C�s � character, competence and capacity �required to get credit facilities,� Choudhury said.


Mumbai, Dec 24: 
Pharmaceutical major J B Chemicals & Pharmaceuticals Ltd plans to restructure its operations and revamp its product portfolio to meet its target of reaching a turnover of Rs 500 crore by the year 2005.

Senior company officials told The Telegraph that J B Chemicals may also form a joint venture with international players for marketing its 13 patents registered in various countries.

With around 20 per cent of its sales coming from the Russian market, is now looking at growth opportunities in the US, UK and South Africa among other regions.

However, sources said while its branded formulations will be marketed in these regions, the issue of giving marketing and distribution rights to foreign partners will be taken up later.

Further, the company will concentrate more on its profitable products such as Doktor Mom, Metrogyl, Nicardia and Dicloran among others.

�We plan to introduce several products, bring out extensions of existing ones and increase sales promotions, apart from substantially hiking the field force in the next five years,� sources said.

Officials said J B Chemicals is likely to introduce formulations in the therapeutic segment where it has a strong presence.Sources also did not rule out the possibility of the company cashing in on the brand equity of some of its existing products to launch the new ones.

Earlier this year, in an intternal restructuring exercise within the group, the company acquired the pharma divisions of Unique Pharmaceuticals Laboratories and Ifiunik Pharmaceuticals.

Both had one manufacturing unit each in Ankleshwar, making tablets, liquids, ointments, injections and capsules. The pharma division of Unique owns the Metrogyl brand.

Post-restructuring, the Mody family tightened its hold on the company using the creeping acquisition route, which saw their stake rising to over 53 per cent.


New Delhi, Dec 24: 
Cosmo Films Ltd will invest Rs 50 crore towards setting up a new production line at their existing plant in Waluj, Maharashtra.

�The new production line, likely to be operational by August next year, will generate an additional capacity of 9,000 metric tonnes per annum (MTPA),� said Sushil K Mittal, executive director, Cosmo Films.

IDBI has provided Rs 30 crore term loan, Rs 10 crore will be generated through internal accruals and another Rs 10 crore will be raised through equity, he said. He, however, added that fund raised through equity may become less and internal accruals more, depending on the profit of the company by the close of the financial year.


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