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For the week of July 26 to August 1, 1999
Index
World Bank, IDA
lending to India declines due to US pressure
World Bank, IDA lending to India declines due to US pressure
Under pressure from the United States and its allies over the Pokhran nuclear tests, World Bank lending to India registerd a massive decline from 1,068 million dollars in 1998 to 400 million dollars for the fiscal 1999, according to the latest WB figures. The International Development Association (IDA) lending to India also declined sharply from 1,073 million dollars in 1998 to 654 million dollars for the fiscal year ended June 30, 1999. Lending from the two international agencies put together showed a decline of a whopping 1,087 million dollars between 1998 and 1999. The two are associate institutions. In fiscal 1999, the Bank and IDA commitments to India were for a total 1,054 million dollars even after the US chose to exempt "basic human needs" from its embargo on the two international lending agencies. By contrast, in 1998, World Bank lending to India was 1,068 million dollars and IDA lending 1,073 million dollars, a total of 2,141 million dollars. The normal level of lending from the Bank and IDA has been around 2,000 million dollars a year for quite some time. Under its charter, the Bank is an apolitical body "deciding on projects without political influence brought to bear by member-states". However, the figures show the gap between theory and reality. (One billion = 1,000 million).
No post-Kargil proposal to withdraw Pak's MFN status
India will not withdraw the Most-Favoured Nation (MFN) status to Pakistan in the wake of infiltration in Kargil by the latter, federal Commerce Minister Ramakrishna Hegde has said. "We do not have any proposal to withdraw the MFN status to Pakistan," Hegde said. Pakistan is still to reciprocate though India had given MFN status to it several years ago, he said adding "We would still prefer to wait." India has consistently maintained that it is against precipitating the MFN issue or dragging Pakistan to WTO despite provisions that all members would have to reciprocate the MFN status with their trading partners.
Indian Government appoints taskforce for MTNL divestment
The Indian government has constituted a high level task force to work out modalities for the proposed disinvestment of about five per cent of its stake in the state-owned Mahanagar Telephone Nigam Ltd (MTNL). The task force will work out various modalities including selection of bankers and time frame for disinvestment, which will bring down the government's share in the telecom bluechip company to 51 per cent. The cabinet, had, earlier this month, decided to divest up to 19 million shares in MTNL through an institutional offering in Global Depositary Receipt (GDR) or in the domestic market with an expected revenue in the range of Rs 400 crore. MTNL had last hit the GDR market in 1997.
Indian Cabinet to consider leasing four airports
The Indian government will consider leasing airports in the four metros to private entities, reversing its earlier decision of corporatisation for developing airport infrastructure expeditiously. "A cabinet note on giving the airports at Delhi, Mumbai, Calcutta and Chennai on long term lease has been circulated by the Civil Aviation ministry", according to the Planning Commission deputy chairman K C Pant. The note had been circulated as the Cabinet had earlier cleared a proposal to corporatise these airports. At present, the Re one each cess collected from a litre of petrol and diesel accrues to the Consolidated Fund of India.
Indian Govt to reduce open market wheat sale prices
Wheat prices for open market sale is likely to be slashed in India in a bid to reduce the overflowing buffer stock of the foodgrain. Several measures are being considered by Food ministry which include lowering of offer prices and sale of wheat to all interested parties as against the current stipulation of selling it only to genuine roller flour millers. Food ministry had earlier allowed the Food Corporation of India (FCI) to sell a maximum of one million tons of wheat only to genuine roller flour millers at prices fixed by it.
SEBI Panel decides against compulsory market making for IPOs
The G P Gupta Committee appointed by stock market regulator Securities and Exchange Board of India (SEBI) has dropped its plans to make it mandatory for Initial Public Offerings (IPOs) to appoint market makers to offer buy and sell quotes. Market making would be optional for IPOs. Earlier, a draft report circulated by the committee, had recommended compulsory market making for initial public offers (IPOs) for a period of one year. The committee, which met in Mumbai recently, also came to an agreement that the market makers, who would provide sell and buy quotes on a regular basis at the stock exchanges on illiquid scrips, be appointed by the bourses rather than the companies themselves. The committee was also of the view that market makers could be appointed on those scrips which does not generate volumes above Rs 0.1 million per settlement period consistently over a period of one year.
Inflation drops to a two-decade low of 1.62%
Inflation rate in India fell to a two-decade low of 1.62 per cent for the week ended July 17, despite a marginal rise in the Wholesale Price Index (WPI). The fall in the annual rate of inflation is mainly on the account of a higher base last year due to an abnormal increase in vegetable prices. For example, the index for vegetables during the current week is 456.0 compared to 732.1 in the same period last year. During the reference week, rate of inflation fell by 0.23 percentage points to 1.62 per cent (Provisional) from 1.85 per cent (P) the week before. In comparison, inflation rate was higher at 8.22 per cent during the corresponding week of last year. The Wholesale Price Index for 'All Commodiies' (base: 1981-82=100) during the current week rose by 0.1 per cent to 357.3 (Provisional) as against 357.0 (P) for the previous week. Prices of agricultural produce are moving up at a much slower rate than last year due to a bumper foodgrain production this year. In comparison, prices of agricultural products were skyrocketting around this time last year. A slackness in demand for industrial products, which accounts for 57 per cent of the weight in the Index, also helped the southward movement in the inflation rate.
India to export one million ton petrol during current fiscal
Faced with problem of excesses due to commissioning of new refineries, India will export about one million tons of petrol to neigbhouring Bangladesh and Nepal during 1999-2000, besides other petroleum products. The Ministry is already in talks with Bangladesh government for finalising the details of exporting petrol to Dhaka.
Western region corners nearly half of domestic funds
India's western region of the country cornered about half of the total direct financial assistance sanctions of over Rs 750 billion by All India Financial Institutions (AIFIs), according to a new study. The western region enhanced its share of sanctions by AIFIs to 47 per cent at Rs 375.469 billion in 1997-98 from 32.2 per cent at Rs 7.4407 billion in 1980-81. Eastern region, which attracted 11.2 per cent of the total funds sanctioned by financial institutions in 1980-81 could corner only 7.9 per cent of the funds in 1997-98. Similarly north's share in funds from domestic institutions have declined to 26.1 per cent 1980-81 to 12.9 per cent in 1997-98. However, the slide in fund inflow to the Southern region has been less pronounced as it dropped only marginally from 28.3 per cent in 1980-81 to 23.3 per cent in 1997-98.
India, Qatar finalise giant gas deal
Qatar's Ras Laffan LNG Co. (Rasgas) has finalised an energy deal with India's Petronet, covering the annual purchase of 7.5 million tons of liquefied natural gas (LNG) for 25 years, Rasgas has said. Rasgas said the sales and purchase agreement was signed here yesterday and schedules the first deliveries to Petronet in July 2003.
It follows a heads of agreement signed in New Delhi in December last year, which gave the start date of deliveries as 1999. Five million tons of the LNG will go to the Indian oil and gas giant's Dahej terminal in Gujarat (west), and the rest to Cochin in Kerala (south). The value of the deal was not announced, but it marks India's first import of LNG from Qatar, which boasts the world's largest gas field. Petronet LNG Ltd. is a joint venture company specifically set up to handle the Qatar deal. Four Indian petroleum companies hold a combined 50 percent share in the company, with the balance taken up by financial institutions and private parties. The news came as Rasgas's other main client, the Korea Gas Corp. (Kogas), on Saturday pledged not to cut back on its massive long-term deal despite concerns about demand.
Russia to set up JVs to manufacture aircraft with India
Russia has proposed to set up joint ventures (JVs) to manufacture and modernise aircraft with India using New Delhi's outstanding Rupee debt with Moscow. Russia wanted to utilise India's rupee debt for modernisation and upgradation of India's civilian fleet and had held discussions with the host country for joint projects in this sector, according to the Russian Federation first deputy Prime Minister V B Khristenko. "We also want to explore the possibility of leasing aircraft to India for short and long haul flights," Khristenko said. Other promising projects were rebuilding of power plants set by the erstwhile Soviet Union in India in the 50s, he said, adding that upgradation of the Koodankulam plant in Tamil Nadu would be the first step in that direction. The revival of IISCO's plant in Burnpur and modernisation of coal mines originally developed by Russia would also be financed from India's rupee debt. Calling for diversification of products targetted for the Russian market, he said Moscow was commited to increasing Indo-Russian trade to four times its present value by 2005. Flexibility in insurance and credit provisions relating to trade and joint projects and adoption of global standards in the financial sector could also help boost trade and cooperation.
India to double its investment Sri Lanka
India is planning to hike its investment in Sri Lanka to $US 100 million by next year, doubling its present investment. The Indian investment will be mainly in the areas like textiles, cement, leather, plastic and dairy products. At present 42 Indian projects with a total investment of $US 28 million have been completed while 10 more projects at a cost of $US 23 million are under construction. The two countries have agreed to open their economies by the year 2005 under the World Trade Organization (WTO). Fifty per cent of India's joint ventures and wholly-owned subsidiaries in South Asia are in Sri Lanka.
Motorola to exit from India's modicom
Foreign Investment Promotion Board (FIPB) in India on Monday allowed Distacom to buy out the 10 per cent stake of US multinational Motorola in Modicom Network Pvt Ltd, the cellular service operator in the southern state of Karnataka.
The board permitted UK-based Great Indian Railway Company to operate luxury trains in India, making it the first private company to operate rail services in the country.
These were among the 38 foreign direct investment (FDI) proposals worth Rs 1.77 billion cleared by the board. However, the high-powered board deferred for two weeks proposal of Reliance Capital Asset Management Ltd to allow international multilateral agencies to invest in two of its mutual fund schemes. It also deferred proposal of multinational pharmaceutical giant Pfizer Corp of the USA to set up a 100 per cent subsidiary in India.
The sources said FIPB also allowed Modicom Network to increase its paid up capital to Rs 5.52 billion from the existing Rs 4.65 billion. Distacom would bring in an FDI of about Rs 430 million to buy the stake of Motorola and to subscribe to the increased paid up capital. The total foreign equity would remain within the 49 per cent allowed for telecom ventures.
CCFI allows Fiat auto to raise equity in Indian ARM
The Cabinet Committee on Foreign Investment (CCFI) has allowed Italian automobile giant Fiat to increase equity in its Indian subsidiary Fiat India Auto Limited (FIAL) to Rs 20 billion from the present Rs 9.1 billion. CCFI cleared the proposal as no foreign exchange outgo was involved in raising the equity as FIAL was a 100 per cent subsidiary of the Italian company.
Indian exports up by 11.4 per cent in June 1999
India's exports recorded a 11.14 per cent growth rate in June 1999 at $US 2.6 billion
even as trade deficit widened to $US 2.36 billion in the first quarter of 1999-2000.
However, oil imports is estimated to have registered a sharp rise of 53.44 per cent at $US
2.02 billion in April-June 1999 even as non-oil imports during the period declined by 3
per cent at $US 8.3 billion. Cumulative exports in the first quarter of the current fiscal
grew by 6.5 per cent at $US 7.9 billion against $US 7.49 billion in April-June 1998, the
monthly trade data released by the Government said.
This is the second month in a row that exports had witnessed a double digit growth. In May
1999 the growth rate rose to 11.68 per cent. In rupee terms, exports grew by 12.09 per
cent in the first quarter. Imports during June represented a growth of 21.81 per cent at
$US 3.64 billion against $US 2.98 billion in the same period last year.
India's imports in the first quarter are estimated $US 10.35 billion, an increase of 4.52
per cent that the level of $US 9.9 billion in the same period last year.
Indian bourses outperform emerging markets
Notwithstanding Kargil, Indian stocks markets outperformed all the emerging markets in
South-East Asia in July with the major stock indices in the country rising at a time when
majority of the markets in the region had negative returns. The domestic market did well
compared to even developed markets like U.S., Japan and Hong Kong.
In July, Bombay Stock Exchange (BSE) 100 index (National index) increased by 11 per cent
from 1,791 to 1,988.06, S&P CNX Nifty at National Stock Exchange (NSE) was up by 10.28
per cent to 1,310.15 from 1,188 at the beginning of the month. While BSE Sensex, which
touched its all-time high of 4,810 on July 15, gained 9.69 per cent to 4,542.34 from
4,141n points during the month. In comparison, Bangkok SET Index dropped from 552 to
456.81 points, a decline of 17.24 per cent, Jakarta (Indonesia) stock exchange index
dropped by 9.68 per cent from 662 to 597.87 points. The other markets in the region,
Manila composite index lost 5.76 per cent and closed at 2,342.81 over the month's opening
level of 2,486 points and Malaysia's Kuala lumpur composite index fell by 5.21 per cent to
768.69 from 811 points at the beginning of July.
Indian Mutul Fund industry records 115 % growth in sales
The gross mobilisations by the mutual fund industry have grown 115 per cent during the first quarter of the current fisal to Rs 87.62 billion from Rs 40.75 billion in the corresponding quarter of the previous year, according to the Association of Mutual Funds in India (AMFI). The first quarter witnessed the launch of as many as 18 schemes of which 11 were equity oriented. Redemptions at Rs 43.62 billion was almost the same as that of the previous quarter, however, as a result of the larger net inflow total assets under management rose to Rs 777.97 billion during the quarter as against Rs 684.72 billion on March 31, 1999. During 1998-99, 40 new schemes were launched which together mobilised Rs 96.57 billion accounting for 45 per cent of the total mobilisation of Rs 213.77 billion which was 14 per cent higher than the previous year's mobilisation of Rs 187.01 billion. The year witnessed the launch of various new schemes including gilt funds, liquid funds, sector specific funds, umbrella funds, index funds and money market funds which were introduced for the first time.
India's fertiliser production up by 10 p.c. in Q1
India's fertiliser production has gone up by 9.6 per cent to 3.235 million tons (MT)
during the first quarter of the current fiscal against 2.952 MT in the same period last
year. During the quarter, estimated production of nitrogenous fertilisers was 8.2 per cent
higher at 2.496 MT compared to 2.306 MT in April-June last fiscal.
Production of Phosphatic fertilsiers also went up by 14.4 per cent to 0.739 MT during the
review period from 0.646 MT recorded in the corresponding period of1998-99. The estimated
production of fertilisers during June 1999 was 0.920 MT of nitrogen and 0.259 MT of
phosphate against target of 0.901 MT and 0.266 MTH tons respectively.
During June, 1.818 MT of urea was dispatched to states against a target of 1.65 MT,
according to an official statement said, adding availability of urea upto June 1999 has
been 6.55 MT. However, sales of urea was 36 per cent lower during April-May this year at
1.598 MT compared to 2.485 MT in the correspnding period last year.
Corporate News
Videocon to set up production center in Gulf
Indian consumer durables major Videocon group will pump in $US 30 million to set up a
manufacturing facility in the Gulf as part of its overseas expansion drive. The company
will set up a manufacturing facility in the Gulf by the end of this year at a cost of
about Rs 1.25 billion to cater to the vast market in the Middle East, Gulf and North
Africa.Videocon, which claims 33 per cent market share in the domestic market, has been
exporting its products to the Gulf from 1993 and its sales from the region has already
crossed the mark of Rs 12 million per annum, he said.
The facility would manufacture Colour TVs, refrigerators, air-conditioners, home
appliances and washing machines.
AMBANI most admired CEO in India
India's fast-moving consumer goods (FMCG) major Hindustan Lever Ltd (HLL) has been rated as the most admired corporation in the country, according to a survey. The blue chip company Reliance Industries Ltd (RIL) chairman Dhirubhai Ambani has taken the slot as the most admired Chief Executive Officer (CEO) while the Tata Group has emerged as the most respected business house, according to a survey by Taylor Nelson Sofres-Mode.
BAJAJ, LML register negative growth in Q1
Despite signs of revival in the Indian automobile sector in April-June 1999-2000,
two-wheeler majors Bajaj Auto and LML Ltd failed to keep pace with the growing market
while motorcycle majors like Escorts Yamaha and Hero Honda witnessed impressive growth
trends.Segments such as two-wheelers, three-wheelers and commercial vehicles registered a
positive growth in the first quarter of the current fiscal, indicating reversal of the
negative growth trends prevailing in the automobiles sector in the past several quarters.
According to data compiled by the Society of Indian Automobile Manufacturers (SIAM),
two-wheelers segment grew by seven per cent, three-wheelers by 1.4 per cent and commercial
vehicles by 24 per cent during April-June of the current fiscal agasinst same period last
fiscal.
Sales of Bajaj scooters declined by 20 per cent to 130,32 units in the first quarter of
1999-2000 against 163,119 units sold in the correspond-ing period in the previous fiscal.
LML Ltd and Maharashtra Scooters Ltd also witnessed a negative growth of 14 per cent and
20 per cent during the review period as their scooter sales declined to 74124 units and
38,176 units respectively as compared to 86,584 and 47,581 units sold in the same period a
year ago.
Hindustan Lever Net profit for Q2 grows by 24.9 PC
Hindustan Lever Ltd's (HLL), Indian subsidiary of global FMCG major Unilever Plc net profit for the second quarter ended June 30, 1999 grew by 24.9 per cent to Rs 2,267.9 million compared to the corresponding period of 1998. The 1999 first half net profit was up by 24.6 per cent at Rs 4,396.2 million. The first half sales turnover was up by 7.4 per cent to Rs 55.9088 billion, whereas it increased by 10.1 per cent to Rs 2,958.49 crores in the second quarter. The HLL board of directors has announced an interim dividend of Rs 12 per share, an increase of 25 per cent over last year's.
Hero Honda aims to capture 40% share
Hero Honda Motors Ltd (HHML), the leading two-wheeler manufacturer in the country has targeted to capture 40 per cent marketshare in the motorcycles segment in the next three years by launching new models and expanding its marketing network. Hero Honda, market leader in the motorcycles segment with 37.6 per cent marketshare in the last fiscal, plans to launch two new bike models in the next few years and also plans to expand the number of dealers and service points by about 50 per cent. The company, a joint venture between Honda Motor Company of Japan and Hero group of India to produce four-stroke motorcycles, also aims to increase its share by one per cent to 38.6 per cent during the current fiscal, officials said.
GAIL to invest Rs 3 billion to strengthen KG basin pipeline
India's state-owned Gas Authority of India (GAIL) would pump in about Rs three billion during the current fiscal in its Krishna-Godavari (K.G) pipeline network in Andhra Pradesh to more than double its capacity to 8.4 million cubic meters per day (MCMD). The investment has been necessiated in the wake of increased gas from the K.G.Basin for which there is extensive demand. Increased gas has already been alloted to various power and fertiliser companies in the southern state of Andhra Pradesh including that of the GVK spectrum power plant and the Nagarjuna Fertliser plant. The natural gas production at the Cauvery Basin had also increased from 0.2 MCMD to 1.2 MCMD and the pipeline system to augument the increased capacity of gas would also be enhanced. The company is also planning to enhance the capacity of its Hazira-Bijapur-Jagdispur (HBJ) pipeline from the present 34 million tons per annum to 60 million tons per annum in the wake of the proposed Liquified Natural Gas (LNG) terminal of Petronet LNG coming up at Dahej in Gujarat.
Polaris in pact with NIPPON for $US 83 million US banking project
The Chennai-based Polaris Software Lab Ltd, has forged an alliance with Japanese multinational Nippon Electronics Corporation (NEC) for its $83 million dollar project for evolving a new generation banking solution in the United States. As per the agreement Polaris, along with three other companies will work out the architecture for a new generation banking program set to revolutionise the present system.NEC has virtually assured the Indian company a major chunk of the development part of project. Polaris is already a business solution provider for CITI bank finance corporation and is planning to expand its reach to Europe and Japan after their Initial Public Offer (IPO) to be opened on August four aimed to raise Rs 916.8 million.
Thapar GP appoints ABN AMRO to find buyer for cellular venture
Thapar group-held Crompton Greaves has appointed merchant banker ABN Amro as the global advisor to sell its 40.5 per cent stake in its Chennai cellular project, Skycell. The five-year lock-in period for transferring equity in Skycell will be over by October next. As per the mandate, ABN Amro would find a buyer for the 40.5 per cent Skycell venture for which the company has invested Rs 252 million since 1994. The company has been looking for a buyer for some time, but no deal could be clinched so far as the price offered was not matching with the company's expectations.
- Globoil India '99, the third annual international conference and exhibition on vegetable oil, feed, feed ingredients, oilseeds related industries and services will be held in Mumbai from September 19 to 20, 1999.
- The six-day International Fair for Lighting Industry "Prakash '99" begins on October 29, 1999 in New Delhi.
- The five-day Indian Trade Exhibition "Indexpo '99" begins on August 11, 1999 in Mauritius.
- The two-week India International Trade Fair'99 begins on November 14, 1999 in New Delhi.