Williamson Magor prepares for retailing foray
RBI gets tough with eight co-op banks
Meet for Doha consensus
Ray & Ray probes 8 CSE brokers
PowerGrid plans $15bn investment
Lubricant makers wait for fortune to smile
Maxima eyes more market share via retail outlets
Mico flashes layoff alert

Calcutta, Aug. 18: 
The B.M. Khaitan-controlled Williamson Magor group has lined up plans to enter the retail garments arena and has also floated a subsidiary, Mangalam Fashions Ltd, for the purpose.

The group is planning a foray into franchising of various goods, for which it will set up departmental stores through another subsidiary, Woodside Fashions.

Besides, the group has constructed a commercial complex in the city, which is nearing completion. Portions of the complex have already been sold, with Pantaloons Retail (India) Ltd and Tata subsidiary Trent among the buyers.

The company has set up two subsidiaries — RBA Services and RSM Estates — for providing consultancy on various matters and to lease space to prospective users respectively.

“Since no major retailing chains are yet to come to the city and Trent coming only recently with its lifestyle store Westside, the retailing business has scope in this city,” senior Williamson Magor officials said.

Initially, these four subsidiaries were divisions of Woodside Parks Limited.

Woodside Parks Limited had earlier set up four divisions to take up franchising of various goods through departmental stores, retailing of garments, consultancy on various matters and leasing of space to prospective users.

However, to derive maximum benefits under the present market conditions, the group decided to set up four separate subsidiaries — Woodside Fashions Limited, Mangalam Fashions Limited, RBA Services Limited and RSM Estates and Consultants Limited.

The four divisions have been transferred respectively to these subsidiaries, following a scheme of arrangement between Woodside Parks Limited and the said subsidiaries duly approved by the Calcutta high court.

“Consequent upon the issue of requisite shares to Williamson Magor by these companies according to the scheme of arrangement they have become subsidiaries of it,” officials further added.

“Though these companies have come into existence in such a fashion but the group is seriously planning to take up retailing of garments as an area of business,” officials said.

Williamson Magor’s core areas of business are trading, investments, property owners and tea warehousing.

Meanwhile, Williamson Magor’s stake in Eveready Industries India Limited (EIIL) has shot up to 23.48 per cent from 1.27 per cent following the merger of Bishnauth Tea Company Limited with EIIL.

Prior to its merger, Bishnauth Tea was a subsidiary of Williamson Magor.


New Delhi, Aug. 18: 
With several urban cooperative banks going virtually bust recently, the Reserve Bank of India has decided to get tough with them. Eight urban cooperative banks (UCBs) have been classified as ‘weak’ and the riot act has been read out to them.

The central bank has labelled Visnagar Nagrik Sahkari Bank Ltd, Visnagar, Janata Sahakari Bank, Pune, Vasavi Cooperative Bank, Hyderabad, Sangli Cooperative Bank, Sangli, The Mapusa Urban Cooperative Bank of Goa, Mapusa, Bombay Mercantile Cooperative Bank, Mumbai, Madhavpura Mercantile Cooperative Bank, Ahmedabad and Charotar Nagrik Bank, Anand, as `weak banks’ which need to be nursed back to health.

Many of these banks which are mostly small in size, such as Visnagar, have suffered up to 85 per cent erosion of their net owned funds and have been besieged by customers scrambling to pull out their deposits, prompting the Reserve Bank to take the tough measures. These steps include changing their chief executives, enforcing stricter prudential norms, and infusion of fresh funds to be raised through bond issues.

Finance minister Yashwant Sinha has apparently assured RBI governor Bimal Jalan that the Centre will bear the major brunt of the recapitalisation move by picking up most of the bond subscriptions. However, as a general rule, the RBI has decided to bring a three-pronged approach to the task of governing the UCB sector till amendments are made to the RBI Act bringing them more fully under its control.

The RBI plans to introduce a system of offsite surveillance to complement on-site inspections for these banks from this financial year and to call chairmen and key directors of schedule urban cooperative banks to advise them to rectify any deficiencies that may have been found in them.

”Besides focusing on bank-specific issues, compliance with RBI inspection reports and other instructions will also be enforced,” officials said. “We will also be conducting annual inspections of all urban cooperative banks instead of once in two year inspections,” they added.

Officials said RBI inspections had revealed that most of the UCBs suffered from inadequate scrutiny of loan applications, especially on counts of credit worthiness.

“Many of these banks have also failed to take adequate safeguards while granting loans in the form of collaterals. Another common failing in most of these banks has been failure to maintain cash reserves and liquid assets as prescribed by the Banking Act,” they said.


New Delhi, Aug. 18: 
As a step to reach a consensus before the WTO meet at Doha, scheduled for November, the government is jointly sponsoring a conference attended by experts from nine nations.

To be held in the capital on August 20-21, the International Conference on World Trade Organisation concerns of developing nations will primarily deliberate on several issues concerning the strategy to be adopted by developing nations and India in matters relating to WTO.

Slated to be inaugurated by Prime Minister Atal Behari Vajpayee, it will be the first such exercise being conducted jointly by the Ministry of Commerce, the Institute of Chartered Accountants of India and United Nations Conference on Trade and Development.

According to Director General (Anti-dumping) and additional secretary in the commerce secretary L. V. Saptharishi, the seminar will serve a dual role of educating the participants and evolving a long-term strategic response to WTO-related issues.

”For the first time experts from various inter-related fields will come together to evolve a common consensus and this includes tax experts, accounting experts, bureaucrats, policy makers, analysts and specialists from this field, not only from India but also abroad, specially the developing countries,” he said.

Speaking on the occasion, ICAI president N. D. Gupta said prominent among the issues that will discussed will be relating to agricultural subsidies and issues related to other sectors like textiles, manufacturing, Trade Related Intellectual Property Rights and competition laws.


Calcutta, Aug. 18: 
The Calcutta Stock Exchange (CSE) has appointed an independent auditor, Ray & Ray, to probe into the books of eight members. For the first time since the scam, the exchange has appointed an independent agency for investigation. This probe is understood to have been mandated by the Securities and Exchange Board of India.

The eight brokers had bought 26.95 lakh HFCL shares from the exchange in March, to drive the bourse out of the payment crisis. The exchange sold the shares to these brokers at a discount of about Rs 100 per share to the existing market price of Rs 325. The aggregate discount was thus close to Rs 27 crore. The exchange is now investigating whether these brokers had profited by selling the shares in the market later.

The eight CSE members under scanner are Shyam Sundar Dalmia, Dalmia Securities, JVS Securities, Vishal J. Shah, K.K. Daga (former CSE vice-president), GKCL Stockbroking, Vinod Baid and Agbros Securities. Each of these brokers had earlier informed the exchange that no profit was derived from these shares. They claimed to have incurred loss on the deal.

These shares were originally bought by 10 CSE members who defaulted in March. Since they failed to pay up, the bourse sold the shares to clear the payout to the selling parties. The exchange tried to place the shares with Unit Trust of India, but it refused to buy HFCL shares even at a discount. Instead UTI bought 17.3 lakh DSQ Software shares from the exchange to bail it out.

A top level CSE official said: “We decided to appoint an independent auditor to investigate the matter to avoid any controversy.”


New Delhi, Aug. 18: 
PowerGrid Corporation of India Ltd (PGCIL) plans to invest $15 billion to construct an additional 60,000 circuit kilometres of transmission network by 2012.

The capacity for inter-regional transfer of power will go up to about 30,000 mw by 2012 when the national grid is established from its current capacity of about 5,000 megawatt.

Speaking at the international conference on global participation in Indian national grid, energy management and convergence, minister of state for power Jayawanti Mehta said, “The government would provide necessary support to establish the national grid and that a grid code has been notified by the central regulator which is the first step towards more disciplined and regulated working of the grid.”

Speaking at the conference, A.K Basu, secretary in the ministry of power, said transmission, energy management and convergence offer immense possibilities of private and foreign investments.

He said transmission has been regarded as distinct activity for which guidelines have already been announced for private sector participation.

This is being done either through the formation of joint venture by sharing equity with private investor or through independent power transmission companies (IPTC).

Mehta also said the International Institute of Energy Conservation (IIEC) based in Washington DC in the US has recently entered into a Memorandum of Understanding (MoU) with the Energy Management Centre (EMC) of the power ministry.

Under the MoU, IIEC will assist in the implementation of the mandates of the Energy Conservation Bill which is pending for passage before the Parliament.


Mumbai, Aug. 18: 
Lubricant manufacturers in the country are waiting for the rain gods to turn the tide in their favour.

A fall in consumption levels and a distortion in price structure has severely affected the hotly competitive sector, which is presently dominated by the public sector majors.

While raw material prices rose due to a spectacular rise in base oil prices (which followed a similar trend in crude oil prices), a corresponding rise in product prices could not be effected.

In fact, in the previous financial year the lubricant market is believed to have shrunk by 13 per cent, indicating lower consumption.

“One of the reasons that could explain the lower consumption is that higher grade lubericants were used,” says S Radhakrishnan, managing director of Bharat Shell Ltd.

Radhakrishnan said though the trend is slightly better in the current financial year, the industry demand is projected to grow at a snail’s pace of 1-2 per cent.

The total consumption of lubricants in the country stands at close to 1 million tonnes.

Sources point out that a positive factor in the present environment relates to the stability of crude oil prices.

This has resulted in base oil prices too coming down from a high of $ 350 per tonnne a few months ago to around $ 190 per tonne.

Though a few players led by Servo, the market leader from Indian Oil Corporation (IOC), hiked prices recently, industry circles say that any further rise in product prices is unlikely, nor are industry fortunes expected to look up.

This has been attributed largely to the prevailing slump in the industry that has caused demand to suffer.

“With the monsoon showing good signs, we have a faint sense of hope and expect that by the last quarter of this financial year, the entire sector should start looking up,” said a senior official from one of the private sector companies.

The sector has become crowded with over 30 players vying with each other to woo the retail customer.

While Servo has the largest market share of around 43 per cent, the private sector consists of players like Castrol and Shell among others.

The presence of too many players has resulted in a situation of supply often exceeding demand.

Sources felt in view of the tough competition among existing players and the public sector having a superior distribution reach, some of the lesser-known brands may perish.

In such a scenario, the established players are now focussing on brand positioning through improved customer service and enhanced direct distribution network.

They are also entering into strategic alliances with car makers, truck and two-wheeler manufacturers.


New Delhi, Aug. 18: 
Maxima Watches are planning to set up retail outlets across the country.

Launched in 1996, the company at present enjoys 12 per cent market share in watches. It is one of the top four players in the market after Titan, HMT and Timex.

Anuj Sharma, vice president marketing and sales, said: “We enjoy 75 per cent market share in the low-level volume sales segment. But we are also planning a foray into the high end segment.”

Maxima has 550 metal watches and 80 sport watches under its umbrella. It has invested Rs 6 crore to create a brand image of making lowly priced trendy watches.

“HMT made the mistake of not addressing the youth. We don’t want to make the same mistake. Today, we have watches ranging from Rs 350 to Rs 2,250. We will be looking at higher categories from now on but will never ignore the established category,” he said.


Bangalore, Aug. 18: 
Motor Industries Company Limited (Mico), which is part of the Germany-based multinational, Bosch Group, has not ruled out layoffs if the recessionary trend continues in the country’s economy.

The Bangalore-based company warned that the current situation is serious which may lead to a retrenchment drive in the company.

“It all depends on the market situation. We hope to see a turnaround by year-end. Otherwise, we will have to consider retrenchment,” said Andreas Nobis, managing director of Motor Industries.

“The automotive business in the country is in a crisis. All major manufacturers in this sector have registered heavy losses,” Nobis said.

The Indian subsidiary has requested the parent company to outsource its products for the global market from its facility in Bangalore.

“We have also received export orders from the US and Singapore market,” he said. “Our long term goal is to step up exports to 20 per cent of the total sales as against the current 12 per cent,” he said.

Motor Industries is the largest manufacturer of diesel injection equipment in the country. The company also manufactures spark plugs, auto-electricals, electric power tools and Blaupaunkt car audio systems.

The company, which has a workforce of 11,000, has been resorting to drastic cuts in production and inventory levels. The factory in Bangalore had closed down for nearly a week in May and June.

Motor Industries’ unit in Jaipur has been shut since the beginning of this year. This unit was commissioned in 1998 at a cost of Rs. 40 crore.

Nobis admitted that Motor Industries has registered a negative growth rate of minus 8 per cent during the second quarter of this financial year as against 6 per cent growth rate during the first quarter.


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