"There are no visible signs of Finance Minister Yashwant Sinha’s budgetory proposals being implemented, nor is there any action so far on Prime Minister Atal Behari Vajpayee’s recent proposals to revive the economy," said ASSOCHAM president I. Lakshman.

With world trade shrinking and the competitive currency advantage enjoyed by Southeast Asian countries, he said, exports are unlikely to improve. However, the GDP growth in 1999-2000 is likely to be 6.5 per cent.

But in the current financial year, Mr Lakshman said the most optimistic outlook call for 1.5 per cent growth in agriculture, five per cent in industry and 8.5 per cent in services sector.

According to the ASSOCHAM president, the agriculture sector may grow by 2.5 per cent, industry by 7.5 per cent and service sector by 8.5 per cent in 1999-2000. The forecast predicts that exports would continue to be constrained by global recession and the management of fiscal deficit and the external sector will be the watchword. The long-term policy issues that need urgent attention of the Government, according to Mr. Lakshman, include a national policy for agriculture, infrastructure implementation plan with definite timelines, improving Centre- State co-ordination on macro and micro issues and labour markets.

He said the long-term fiscal policy should aim at reduction of fiscal defict to 3 per cent, a legislative cap on borrowings by the Government, financial discipline on the part of State Governments, aggressive privatisation of PSUs, investment in social sector and building political consensus on economic issues.

During 1998-99,ASSOCHAM estimates real GDP growth at 5.5 per cent and that would result in fiscal deficit exceeding the budget by around Rs 14,000 crore.

While the Government expects that the agriculture will achieve 2.5 per cent growth, ASSOCHAM said that it would be 1.5 per cent, industry will witness 5 per cent growth as against the Government expectation of 10 per cent and indeed the service sector will be 8.5 per cent as expected by the Government.

Mr Lakshman said the fiscal deficit during 1998-99 will be 6.5 per cent as against Government’s expectation of 5.6 per cent and inflation will be 8 per cent as against 7.5 per cent predicted by the Government. (PTI)

FIEO president Ramu S. Deora, in a statement issued here today, said considering steps announced in the policy, the share of export from Uttar Pradesh in the country’s export would increase substantially from its present level of six per cent.

The state has set an export target of Rs. 20,270 crore by the year 2001-2002.The FIEO chief has, in a letter, to Chief Minister Kalyan Singh assured the utmost co-operation from the chamber. He urged the State Central Government authorities concerning exports to extend all co-operation to the exporters in the state for achieving the target.

FIEO is of the view that if the procedural hassles, as is intended in the state’s export policy, are removed, exporters can pay more attention to their export promotion endeavour. In this context, Mr Deora complimented Mr Singh, that the state will suspend the trade tax check-posts with effect from April one 1999 to facilitate the exporting community to have timely availability of raw-materials for manufacturing exportable merchandise. The FIEO president also suggested that export should be exempted from all taxes of levies in order to make the products competitive in the global market.

In the context of the globalisation of international trade, the exporters have to be competitive in terms of quality and cost of the products. State Government plays a paramount role in helping the industrialists, businessmen and manufacture-exporters to make available quality as well as cost-effective exportable merchandise to be successful in the global market. The competitiveness call for urgent actions to improve the process of production as well as upgradation in the infrastructure. To help the state, FIEO president has ceaselessly been advocating that a certain percentage of foreign exchange earned through exports from the state should be allocated to the concerned state for upgradation of their infrastructural facilities and modernisation of factories/ offices concerning export/trade and industry.

He said the up export policy would have a ripple effect in other states and a new era of export climate will be ushered in all over India in the near future. (UNI)

In a discussion paper on the proposed modifications in the takeover code, the chamber has recommended that a code of conduct for financial institutions in the matter of takeover should be evolved. In our country, financial institutions are the major shareholders who can tilt the balance through their own holdings in any takeover bid, the paper added.

The chamber has stated that the emphasis of the code should be to ensure most attractive price to the shareholders. It feels that the long term interests of investors are best served by managements that are capable of sustaining efficient management of the company in the long run. As such shareholders need an opportunity to assess the capabilities of competent managements when the code stipulates disclosure requirements of track record of competing managements and their future plans for the company.

In case of first generation promoters, a cooling period of at least five-ten years should be provided so that they are not taken over by large corporate predators. In the absence of such a threshold period of exemption there is a likehood of successful project attracting hostile bids for takeover.

In the existing takeover code, only a category-merchant banker would have the wherewithal to ensure better diligence being exercised and administer the offer price. This needs to be reconsidered, the chamber has suggested.

In the event of public shareholding falling below ten per cent as a result of the public offer, the SEBI should clarify the listing status and acquirer’s position if the resident shareholders were to refuse to sell their stake and acquirer is not inclined towards making an offer for sale.

Since possibilities of takeovers can’t be avoided in a global competitive economy, some checks and balances are desirable. In UK, Under the Industry Act, 1975 and the Fair Trading Act 1973, the Government is empowered to prohibit any takeover which is against public interest or where any important manufacturing undertaking would pass on to a person resident outside the United Kingdom. (UNI)

Announcing the price at a news conference here, Mr Awasthi said

the company has decided against rolling out an economy or a standard model for India. Only one model, that is the deluxe model would be offered to the Indian consumers. It will be backed with all the power features like the power window, central locking, air conditioner and heating ventilation.’’

The Matiz is priced at five million won in South Korea.

The car in India would carry an ex-factory price of Rs 327630.

Mr Awasthi said Daewoo has decided to make India the second sourcing base for Matiz cars after Korea. This year 50 per cent of the Matiz production would be exported.

The company has entered into financial arrangements with countrywide and ICICI for private level financing of the Matiz. Besides, it has joined hands with six non-banking finance companies — American Express, Bank of America, Citi Bank, Kotak Mahindra, Standard Chartered and Sundaram Finance to maximise its reach.

According to Mr Awasthi the company would not be taking the booking route for Matiz. Direct order acceptance for the car would start on November 12 through the 102 Matiz dealers in 86 cities and deliveries would commence on November 16.

Daewoo would accept only 3000 orders initially. Once these are serviced the company would accept fresh orders.

With an installed capacity of 72,000 cars per annum at the plant, the company intends to sell 12,000 units of Matiz by March 1999 and 60,000 units in the next year. Beyond 2001, the company intends to sell one lakh cars per annum.

Riding on these sales targets, the company expects to get out of the red in the next fiscal. "We are trying hard to achieve break-even this year and next year, we will surely record profits."

According to Mr Awasthi, the start of production of Matiz goes with DMIL’s commitment to broadbase its product range and be present in all segments of the Indian car market.

India is one of the three manufacturing facilities worldwide and second only to Korea where production of the Matiz has begun. The third manufacturing base for the Matiz is East Europe.

According to plans, in addition to DMIL’s 200-strong dealer network, Matiz will be sold by direct marketing and through CD ROMs and Internet. To start with, the car would have close to 40 per cent local content level and will achieve 70 per cent localisation within six months of its launch. After this, most of the components will be manufactured in-house and by captive vendors.

A network of 100 dealers have been put in place to handle Matiz sales. In addition, there will be more than 100 authorised service centres across the country.

The car boasts of a fuel efficiency of 25 km to a litre of petrol under test conditions. Exhaustive test runs have been conducted across the country on the vehicle.

The results are as per the durability test conducted on the vehicle at Millbrook and mira proving ground in Britain. The total mileage accumulated was 1.8 million km.

Besides, different environment tests, dust intrusion and corrosion tests have also been carried out on the car, Mr Awasthi said.

Daewoo’s total worldwide production of Matiz is expected to reach four lakh units a year when all the plants are up and running. The Matiz is a 796cc petrol driven car which delivers a power of 52bhp at 6000rpm. The car is styled with a five door hatchback and is fitted with a dual collapsible steering.

The company is also looking at making India an export base for the Matiz.

However, the company has no immediate plans to introduce an automatic transmission driven vehicle for the Indian roads. Neither would a diesel heart be introduced on the small car, he added.

Daewoo Motor Company of Korea has created the Matiz within 29 months of the finalisation of the design. Around 1.6 million dollars have been spent so far on the research and development of the model.

The car had been adjusted in terms of ground clearance, suspension and adjustment to fuel conditions for meeting the Indian requirements and specifications. "However, the engine has not been downgraded a bit. It is the same that is being used at the other matiz manufacturing units," Mr Awasthi said.

The Korean company had taken the help of an engineering institute in Britain and a styling firm in Italy for finalising the car. (UNI)

The company sales for the first half increased by 32.87 per cent to Rs. 32.46 crore from Rs. 24.43 crore in the corresponding period last year. The expenditure rose to Rs.27.12 crore during the first half as opposed to Rs. 20.92 crore in the first half last year.

The interest cost of the company for the first half was Rs.0.74 crore as opposed to Rs.0.41 crore for the first half last year. The gross profit after interest but before depreciation and taxation of the company was Rs. 4.60 crore for the first half of the current year as against Rs. 3.10 crore in the corresponding period last year. An amount of Rs. Ten lakh has been provided towards depreciation for the first half as compared to Rs. Seven lakh for the corresponding period last year. (UNI)

India in no hurry for full currency float

PARIS, Nov 4: India is in no hurry to go for full float of the rupee, especially in view of the ongoing crisis in the South-East Asian economies which had introduced capital account convertibility to lure greater investments, Finance Minister Yashwant Sinha said here today.

"We will approach the full convertibility issue (on capital account) cautiously,"Sinha said in reply to a question from reporters.

Nobody talks of the need for India to go in for full convertibility these days after the world learnt its lessons from the recent financial crisis, Sinha said while breifing newsmen about the deliberations of the World Bank conference on private sector investment in Indian infrastructure.

Sinha said it was prudent financial management by the Government more than the absence of full capital account convertibility which had insulated India from the financial crisis.

To a question, Sinha said confidence reposed in India by foreign investors could be guaged from the fact that investment totalling nine billion US dollars continued to be in place in the country.

He, however, admitted that the Government’s role must be redefined so that it became a facilitator through appropriate policy formulations.

Government is taking steps to bring the supplier and consumer in direct contact rather than having intermediaries.

"There should be no difficulty in this matter. This is the direction in which we are moving," Sinha said.

In his closing remarks at the World Bank meeting, Sinha said many State Governments were giving up "populist methods" and becoming business entities by taking policy decisions on merit, Sinha said.

Sinha told over 200 representatives from the Indian and foreign companies and banks that his Government was in the process of changing policies and procedures.

We are also aware of the difficult task of changing the mindset of people, he said.

Encouraged by the response to the Paris meeting by foreign invesors to be part of India’s liberalisation process, Sinha suggested that this could be made an annual feature.

Sinha said a number of suggestions for action both by the Government and the private sector had emerged at the meeting covering the infrastructure sector.

Sinha said during his talks with his french counterpart dominique Straus-Khan it was felt that the private sector and the commercial public sector of the two countries should have greater contacts.

Asked for India’s views on the planned multilateral agreement on investments, Sinha said New Delhi will wait for the individual responses to the accord. (PTI)

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