Daily Excelsior...Business

Instanex Skindia DR index, premiums down......

APSTC to diversify into gems and jewellery promotion.....

China to postpone mango import on hygiene factor .....

State Govts Finance Secretaries cautioned against complacency .....

NEW DELHI, Aug 4: Public sector engineering major Bharat Heavy Electricals Ltd (BHEL) has bagged a Rs 400-crore order from Hindustan Zinc Ltd (HZL) for setting up a 154 Mw captive power plant in Chittorgarh, Rajasthan.

Outbidding Indian and multinational equipment suppliers, BHEL won the order for the 2 x 77 Mw plant which will provide uninterrupted power to HZL’s upcoming Chanderia lead zinc smelter plant.

While the first unit will be commissioned in 18 months, the project will be completed within 21 months, BHEL said in a statement here today.

BHEL’s scope of work envisages design, manufacture, supply, installation, erection, testing and commissioning of the power plant on Equipment Purchase Contract (EPC) basis.

BHEL’s Hyderabad plant will manufacture steam turbine generators for the project while its electronics division in Bangalore will supply the control system. The company’s Ranipet plant will provide auxiliaries.

Owned 67.72 per cent by the Government, BHEL has executed contracts for over 500 steam and gas turbine based power plants within the country and abroad. (UNI)

Nicotine-free ‘bidi’ launched

BANGALORE, Aug 4: Dalmia Consumer Care (DCC), part of the Rs 1,200 crore Dalmia group, today launched its ‘Vardaan’ brand of nicotine-free ‘bidis’ in Karnataka.

The launch was marked by the flagging off of the ‘Vardaan bidi chariot’ by former Bangalore Police Commissioner H T Sangliana here.

The ‘chariot’ will travel around Bangalore over the next 10 days and throughout the rest of Karnataka over the month of August to spread awareness about the ill-effects of tobacco and the promotion of the company’s product, DCC business head (south) Ravi Jain told a press conference.

Priced at Rs 4 for a pack of 10, the product mimicks the tobacco experience without any of the ills associated with tobacco, Mr Jain said.

"The product has been developed from Indian plants to give an alternative to smokers who are willing to quit but are not able to because of physical, psychological or physiological dependence," he added.

The Dalmia Centre for Research and Development, which developed the product, had filed for a world-wide patent, he said, adding that work was underway on plant-based formulations for respiratory diseases such as asthma and chronic obstructive pulmonary disease.(UNI)

Rupee ends firm on strong dollar inflows

MUMBAI, Aug 4: The rupee, joining the Asian currency rally, closed three-and-half paise stronger against the US dollar at 46.13/14 on bunched-up weekend dollar inflows and lack of follow-up demand at the Interbank foreign exchange (forex) market today.

The domestic currency opened on a firm note at 46.14/15 and further gained ground, supported by Robust dollar inflows, accumulated during the weekend holidays and thin import demand at the beginning of the month, a dealer at a public sector bank said.

The weakening dollar in overseas markets and absence of any active State-run bank intervention also helped the rupee to march upward, though some dollar buying by foreign banks at lower levels limited the rupee’s gain, he added.

The rupee closed at 46.13/14, off from its intra day high of 46.10/11, but three and half paise up from 46.1650/1750 of its August 1 close.

The Reserve Bank of India (RBI) today fixed the reference rate for US dollar at Rs 46.11, five paise lower than last Friday’s fix of Rs 46.16.

Premiums on forward dollar eased on fresh receiving after the spot rupee firmed up and dollar slipped in overseas markets.

The six-month annualised premium closed lower at 2.06 per cent as against 2.11 per cent of its August 1 close.

Cash/spot and cash/tom premium finished at 0.80-1.00 paise and 0.40-0.45 paise respectively.

The month-wise premium in paise were: August 8.5-9.5, september 19.5-20.5, October 25-26, November 31.5-32.5, December 40.5-41.5 and January 46.5/47.5.

In cross-currency trade, the rupee closed 62 paise weaker against the Euro at 52.18 (51.56), 12 paise down against the Japanese yen at 38.42 (38.30) and 40 paise lower against the pound sterling at 74.41 (74.01) as the dollar lost ground in global markets.

Reports from Singapore said Asian currencies made tentative gains against a weaker US dollar there today after a US employment report dulled expectations for a strong recovery in the US economy, but the yen’s resistance to strength, intervention talk in South Korea and Taiwan, and political risks in Philippines limited gains.

The Japanese yen was up by 0.38 per cent at 119.88, Singapore dollar up by 0.26 per cent at 1.7590, Indonesian rupiah 0.41 per cent up at 8490 and Korean won up at 0.25 per cent at 1181.10.

The Euro was little changed at USd 1.1273/76 compared with around USd 1.1280, while it was a little easier at 135.14/23 yen from around 135.40/48 yen. (UNI)

Oversupply torment for coffee farmers to last

LONDON, Aug 4: Reversing the world glut of coffee beans remains a dream for coffee producers. Three years of low prices have dragged many growers into poverty, poor husbandry and even the abandonment of their crops.

For most of the 1990s production was lower than consumption, keeping coffee prices relatively buoyant.

But that changed when Brazil, the world’s largest producer, sharply increased its output and newcomer Vietnam became a top producer. The resulting over supply in the coffee market caused world prices for beans to plunge, cutting incomes for thousands of small farmers in Latin America and Africa.

To some, a frost in Brazil looks like the only solution.

"Over supply in the Arabica (coffee) market looks likely to persist over the agronomic cycle unless severe weather problems in Brazil curb production," said Jonathan Parkman, coffee analyst with credit Lyonnais Rouse.

There are two economically important types of coffee. Around 70 per cent of global production is Aarabica, grown mainly in Latin America, East and Central Africa and India. It has less caffeine and is generally considered to be finer.

The rest is Robusta, used mostly in instant coffee and grown in West and Central Africa, Southeast Asia and to some extent in Brazil.

Since Brazil provides some 40 per cent of the world’s coffee, a frost or a drought hitting its crop would mean a significantly lower world harvest.

"Otherwise we will be destined for a period during which prices are below the cost of production in most major origins in order to correct the imbalance," Parkman said.

In 2001/02 output was around seven million bags higher than consumption, with production rising at an average annual rate of 3.6 per cent and demand by only 1.5 per cent, according to the International Coffee Organisation.

The world produced then 113 million 60-Kg bags, which is the standard unit to trade coffee, while it had stocks of 40 million bags and it consumed over 106 million.

A potential production deficit in the 2002/03 season is seen as temporary and the large coffee stocks accumulated during years of over supply will fill the gap.

"Supply and demand could fall back into balance, but there are huge stocks," said a Europe-based analyst.

"You would need prices to go much lower, probably to where they were a year ago or so ( 350 a tonne). Then you would might eventually see the sort of cutbacks in production that would be needed to lead to a big deficit and to eat into those stocks."

Prices touched record low levels in 2001/02 of about 50 cents a pound, compared with an average of 120 cents in the 1980s, but farmers proved to be loyal to their crops.

Coffee is the only crop many have known for decades and production costs on family-run farms are lower than the initial investment of planting the trees, so once a plantation is in place, they prefer to keep it running.

Trends helped growers survive, but for how long?

The differentiation of quality beans for Gourmet markets and premiums for coffees grown under ecological and social guidelines have also contributed to the farmers’ survival.

Sales of certified fairtrade beans, which guarantees a minimum price to cover at least costs of production, meant extra benefits for coffee farmers of over 30 million in 2002, according to fairtrade labelling organisations international.

"We don’t encourage them to produce more coffee but to work on quality so they are competitive in the market," Simen (EDs correct) Sandberg, product manager for fairtrade coffee told .

"And in the criteria that we have, we ask them to diversify their production, so they don’t only grow coffee but other plants they can export, sell or consume themselves."

Fairtrade coffee penetration goes from the 0.7 per cent of the coffee consumed in countries where the label is starting up to the 4.5 per cent drunk in Switzerland.

Coffee prices are currently around twice as high as the record lows, but they still keep thousands of coffee farmers living hand-to-mouth.

"The problem is that these prices do cover costs in Brazil and Brazilians have been making money for the last three years of over supply. The rest of coffee producers still have to get their heads around that," said a London-based trader.

Although coffee bars in the United States and Europe seemed to be popping up across every high street, the Cappuccino-and-Latte fashion is just stopping a sluggish consumption from dropping. New markets and a frost in Brazil are the most cherished producer dream.

But a crop-damaging frost in Brazil, which has repeatedly saved prices from the doldrums throughout the 20th century, looks increasingly unlikely because many plantations are now in warmer areas.

The higher prices a frost would bring are also likely to stop the market from solving the more basic problem: The world does not need so much coffee.

"Commodities markets are volatile because you get weather problems and people responding to prices by either planting or not planting, and then the cycle goes on. You tend not to get long periods of stable prices," the second analyst added.

Coffee farmer and business owner Jose Antonio Oloarte Atanasio, from cafe Las Truchas in the Mexican State of Veracruz, believes Mexican producers will fall into the age old trap of boosting production as soon as prices rebound.

"Right now people are still abandoning their plantations, but once the prices return, they will too and they will start planting again," Oloarte said.

Others think higher prices would mean better quality and not necessarily fresh planting.

"I think producers would be targeting better quality (in the event of better prices) and not higher production," said Colombian producer and exporter Oswaldo Acevedo.

After a long period of low prices, traditional coffee farmers could never again see the same kind of compensation for their beans they received years ago.

"In an agricultural commodity that goes through a prolonged period as long — I mean five or six years — as coffee might well end up doing, prices never recover to the same level as they were before. People learn to produce more efficiently," a trader said. (AGENCIES)

EMI not exploring going private :sources

LONDON, Aug 4: Going private is not an option EMI group PLC is currently exploring, sources familiar with the company said on Sunday, pouring cold water on a report the company was being serenaded by private equity firm blackstone.

Britain’s Sunday Times newspaper reported that EMI had held talks with US firm blackstone group about taking the British-based music company private in a deal worth more than 2.5 billion pounds ( 4.0 billion), including debt.

While the music company, which is home to chart-toppers Norah Jones and Coldplay, sometimes meets financial institutions to discuss its options, the sources said EMI was not being pursued by blackstone over a buy-out.

"Blackstone is not serenading EMI with a proposal to take EMI private," one source said.

An EMI spokeswoman declined to comment on the report, saying only that EMI remained focused on building a strong music group. A spokesperson for blackstone was not available to comment.

Like other music companies, EMI has been grappling with rampant piracy and falling music sales, forcing the London-based company to slash costs and reconsider its strategy.

The world’s third-largest music company held exploratory merger talks with rival music firms over the past year but they came to nothing, sources have said.

Previous attempts to merge with warner music and BMG were scuppered by regulators, making EMI reluctant to plunge into another lengthy regulatory investigation.

AOI time warner’s warner music and Bertelsmann’s BMG have since been holding talks over a joint venture of their recorded music businesses, sources close to the companies have said.

While some analysts say such a deal would be bad news for EMI, the British-based music company says it can survive perfectly well on its own.

Despite a gloomy outlook, EMI has had some successes to report of late. In May, it posted a 2002 profit and EMI is currently number one in terms of European album chart share with hits from radiohead, Robbie Williams, Coldplay and Norah Jones.

Its shares have risen from a low in March of 80 pence to 142-1/2 pence at the close on Friday, giving the company a market capitalisation of around 1.1 billion pounds. (AGENCIES)

Dollar slips as US data send shivers in summer lull

TOKYO, Aug 4: The dollar fell against the yen on Monday, retreating further from three-month highs hit last week after an employment report dulled expectations for a strong recovery in the US economy.

But trading was confined to narrow ranges as traders avoided taking large positions ahead of Japanese summer holidays next week and as many Japanese exporters have completed shedding dollar holdings for now.

"All eyes are on the US side now so it’s hard to move in Tokyo. Dealers will start taking holidays and companies will be on holiday, too," said a dealer at a major Japanese bank.

"On the (dollar’s) downside there are fears of intervention and on the upside dealers have confirmed that there’s a strong barrier, so dollar/yen will be sandwiched and stay rangebound."

The US Labour department surprised markets on Friday with news that nonfarm payrolls shed 44,000 jobs in July. A gain of 18,000 jobs had been expected.

The department also revised down overall payrolls for June to a drop of 72,000 from an initially reported 30,000 decrease, highlighting barren conditions in the job market.

The jobless rate slipped to 6.2 percent in July from 6.4 percent a month earlier, but that was seen due in part to job seekers becoming discouraged and abandoning their search.

"The job figures were pretty weak. They were in sharp contrast with recent signs of a strong performance in production and consumption," said Hiroshi Yokotani, economist at Tokio marine asset management.

As of 0541 GMT, the dollar was trading at 119.95/98 yen compared with 120.10 yen in late US trade last week.

On Friday, the greenback slipped from a three-month high of 120.69 yen, as traders who had bought dollars on expectations the jobs data would handily exceed forecasts rushed to sell.

The Euro was slightly weaker at 1.1272/77 compared with around 1.1280.

But the single currency kept a comfortable distance from a two-week low of 1.1135 hit on Friday before the US Jobs report.

It dropped to 135.20/31 yen from around 135.40 yen.

The dollar got little help from Friday’s US manufacturing report, which matched market expectations.

The institute for supply management said its manufacturing index rose in July, matching forecasts for a 51.8 reading. An index higher than 50 suggests expansion in the manufacturing sector.

"The worst for the US economy is clearly over. But market players don’t know if recovery is sustainable," said Kota Kimura, Assistant Forex Manager at Shinkin Central Bank.

Still, hopes for a US recovery remained solid and are likely to help the dollar in the near term.

"I think the jobs market will improve and catch up with production," said Yokotani of Tokio marine asset, pointing to the fact that weekly jobless claims were below the key 400,000 mark for the last two weeks.

"Auto sales data (released on Friday) was pretty strong in July at an annual rate of 17.3 million. This mean that retail sales in July also should be pretty strong" he added.

With no major economic indicators due for release this week, the market is expected to keep a close eye on the stock markets in New York and Tokyo. (AGENCIES)

Instanex Skindia DR index, premiums down

MUMBAI, Aug 4: The Instanex Skindia Depository Receipts (DR) index fell by 0.81 per cent to 638.01 points on last Friday from 643.25 of the previous session.

According to the daily update provided by Instanex Capital Consultants Pvt Ltd, the DR Index P/E also eased by 0.71 per cent to 12.93 points from 13.02 points, while the DR Index Premium dropped to 11.69 per cent from 11.92 per cent.

Of the 72 GDR/ADR scrips, eight gained, 13 lost, while 51 remained unchanged.

MTNL(ADR), VSNL (ADR) and GAIL (GDR) were the top gainers while DR Reddy (ADR), Rediff.Com (ADR) and Silverline Tech (ADR) were the major losers. (UNI)

APSTC to diversify into gems and jewellery promotion

VISAKHAPATNAM, Aug 4: Andhra Pradesh State Trading Corporation (APSTC) is to diversify into gems and jewellery promotion in Andhra Pradesh.

Talking to a group of reporters here today, Chairman and Managing Director of APSTC K Chandramouli said the corporation would hold a 11 per cent stake in a gem and jewellery park being set up in Hyderabad by a Malaysian company. He said the park would act as a single point clearance house for gems and jewellery export, with about 40 major global players in this field agreeing to set up shop there. Spread over an area of 50 lakh square feet, the Rs 40 crore-park is likely to be functional from May 2004 onwards, he revealed.

Chief Minister N Chandrababu Naidu had mandated the APSTC to act as a promoter of gems and jewellery in the State, with the main thrust on export, he said.

The import of quality timber from Myanmar proving lucrative, the APSTC has planned a quarterly import of one shipment, worth Rs 5.40 crore, Mr Chandramouli disclosed. He said the first import consignment had earned the corporation a profit of Rs 85 lakh.

The APSTC had even exported mangoes to Malaysia for the first time this season.

Mr Chandramouli said the corporation had plans to export goods such as rice to Africa and grapes, eggs, onions and red chillies to the Middle East. There were also plans to import garlic from China, he added. The APSTC had an export turnover of Rs 15 crore in the last year.

As the market leader in the State in the production of exercise note books, the corporation had made Rs 17 crore in the last four months and expected to make Rs three crore more in the remaining period of the current year, he said. The corporation had not hiked the price despite a rise in the raw material cost in notebook production, he proclaimed.

The APSTC, appointed as air cargo agents in the State by the Airports Authority of India, had made a huge profit of Rs five crore from the business last year, he said.

Mr Chandramouli said the APSTC had drawn up plans to enhance its business turnover to Rs 50 crore this financial year, as against Rs 32 crore in the last fiscal. (UNI)

China to postpone mango import on hygiene factor

LUCKNOW, Aug 4: The Uttar Pradesh Government’s efforts to export Saharanpuri mangoes to China have suffered a severe setback as Beijing has decided to postpone the import of two varieties following doubts about their "hygiene factor".

"Representatives from Beijing want to take personal stock of the hygiene factor in the State. They want to check cleanliness of the fruit," Agri Export Zone State Nodal Officer Dr R K Tomar told UNI.

A five-member delegation comprising two officials from Agricultural Produce Export Development Authrority (APEDA) and three exporters returned from Beijing last week.

They had carried along four tonnes of late variety Chausa and two tonnes of Langda from the Saharanpur mango belt. The mangoes sent to China were treated in hot water (48 degrees celsius) for one hour to kill possible germs.

The Chinese authorities have preferred to visit India to take stock of the hygienic condition even while they have evinced keen interest in the fruit.

Earlier, 10 tonnes of Chausa and four tonnes of Langda from Malihabad near the State capital were sent to China following signing of a bilateral agreement during Prime Minister Atal Bihari Vajpayee’s visit to that country in June.

The State Government is pushing hard to project Saharanpuri mango, besides the Malihabad variety, as it matures in July and is in market till August. Malihabad mango matures in June and stays in market till July.

If the Government succeeds, UP’s mangoes could remain in international markets for three months and exporters can easily use the ‘slower’ shipping route to send their consignments.

"It was said that Saharanpuri mangoes develop black patches, but we have picked up 100 tonnes of flawless mangoes for exports," Dr Tomar said.

In Uttar Pradesh, mango is cultivated on one lakh hectare land spread over 11 districts. To export the fruit, the State has been divided into two agri export zones in Lucknow and Saharanpur. (UNI)

State Govts Finance Secretaries cautioned
against complacency

MUMBAI, Aug 4: Reserve Bank of India (RBI) Governor Dr Bimal Jalan has cautioned the Finance Secretaries of the state Governments about their complacency over raising funds from the markets at a lower interest rates then in the past because such debt once incurred must be repaid on time.

Addressing the two-day meeting of the state Finance Secretaries with senior RBI officials here, Dr Jalan emphasised on the containment of the debt which was as important as reduction in the cost of debt.

Assuring the central bank support in the market borrowing programme of the state Government, Governor asked the Secretaries to pay serious attention to debt servicing of state guaranteed bonds—whether they be Statutory Liquidity Ratio (SLR) or non-SLR bonds — issued by the Public Sector Understandings. It was our collective responsibility to find a solution for the issue of servicing of debt, he observed.

Union Finance Secretary D C Gupta stressed the need for evolving a consensus solution and chalking out of a madmap for medium term reforms package at the state level. Stating that the states must prioritise their goals, he said, there should be no scope for back-sliding once the reform package was adopted and this needs self discipline in fiscal affairs.

RBI Deputy Governor Dr Rakesh Mohan who presided over the meeting, observed that besides expenditure containment, states should give equal importance of raising tax revenues to reduce the fiscal deficits. He emphasised the importance of improving the tax collection machinery to raise the tax-GDP ratio.

The meeting which deliberated on issues related to defaults in servicing of guaranteed bonds and their impact of state finances, also stressed the need to restructure and disinvestment of state enterprises.

The state representatives who attended the meeting felt that a consolidated approach to address the debt issue would be most effective because of the existence of legacy problems. They reaffirmed their commitment to fiscal discipline and concurred on the desirability of enacting fiscal responsibility legislation as had already been done by some states.(UNI)