Daily Excelsior...Business

SC to hear cellular operators’ plea on Monday ......

Japan stocks down at midsession, no help from GDP .....

Instanex Skindia DR, P/E premium indices in limelight .......

US aerospace trade head criticises EU on steel -FT .....

Festival season brings cheers to Indian auto sales

NEW DELHI, Nov 14: Bouyed by the festival season and low interest finance schemes, the Indian automobile industry posted healthy growth figures in the month of October with passenger cars, motorcycles and commercial vehicles notching up higher sales.

Led by market leader Maruti Udyog Ltd and Hyundai Motors India, domestic passenger car sales jumped 24 per cent last month to 56,232 units against 45,325 units sold in October ’02.

Cumulative car sales for the April-October ‘03 period stood at 3,75,674 units, a growth of 23.76 per cent over 3,03,555 units sold in the same period last year, the Society of Indian Automobile Manufacturers (SIAM) said here today.

Two wheeler sales in October were also up 25 per cent at 5,55,806 units against 4,44,565 units sold in the same period last year.

Motorcycles were the main growth engines, witnessing a 30 per cent sales surge to finish the month at 4,38,991 units against 3,36,883 units sold in October ‘02.

Cumulative motorcycle sales for April-October ‘03 grew by 14.61 per cent to 24,02,725 units as compared to 20,96,505 units sold in the same period last year.

However, moped sales, which saw a minscule two per cent sales rise in October 29,074 units, declined by as much as 14.5 per cent in the April-October ‘03 period to 1,79,759 units in comparison to 2,10,367 units sold in the same period last year. The scooter/scooterettee segment saw October sales rise almost 11 per cent to 87,741 units, even though most of this was led by the fancy scooterettees, primarily of Honda Motorcycles and Scooter India (HMSI).

Sales in the traditional scooter section witnessed a decline with players like Bajaj Auto and LML Ltd witnessing a sharp fall in market demand.

On the commercial vehicles side, sales of buses and trucks in October were up 31 per cent at 22,015 units against 16,727 units in the corresponding month last year.

Both medium and heavy, and light commercial vehicle categories witnessed strong demand in the market.

In April-October ‘03, commercial vehicles sales rose by 32 per cent to 1,31,000 units over 99,833 units. The growth in this sector is fuelled by the massive infrastructural projects currently underway like the golden quadrilateral road project.

Despite a drop in sales of passenger carriers, three-wheeler sales moved up 10 per cent in October, led by good demand for the goods carriers. Total three-wheeler sales in the month stood at 23,563 units against 21,358 units in October last year.

Cumulative three-wheeler sales for the first seven months of this fiscal stood at 1,46,235 units, a growth of 9.88 per cent over 1,33,092 units sold in the same period last year, SIAM said. (UNI)

DSCL’s restructuring not to impact its credit rating

NEW DELHI, Nov 14: Credit rating agency ICRA has noted the impact of the restructuring exercise proposed by DCM Shriram Consolidated Ltd (DSCL), comprising an amalgamation of DSCL’s wholly-owned subsidiary, Ghaghara Sugar Ltd (GSL) into DSCL, and the de-merger of its energy services business, DSCL esco into a wholly-owned subsidiary.

In ICRA’s opinion, the rating of A1" assigned to rs One billion commercial paper/short term debt programme, of DSCL is not likely to be impacted due to this restructuring as while assigning the aforesaid rating of DSCL, ICRA had factored in the financial position of GSL.

GSL has been engaged in production of sugar with a combined capacity to crush 9,500 tonnes per day. In the past few years, it has been incurring losses or making marginal profits. DSCL esco, a division of DSCL, has been engaged in providing energy-related consultancy and other related services, and had a turnover of Rs 24 million in 2002-03, which is insignificant in relation to the overall size of the company.

DSCL’s prospects are expected to be stable in the short to medium term, since it has the advantage of a diversified business structure. Although there is uncertainty over the long term regarding the prospects in urea business, the Government’s urea policy for the short to medium term precludes any downside risk for efficient naphtha-based manufacturers like DSCL.

While the profitability of sugar business and subsidiaries is likely to remain constrained in the short to medium term, DSCL’s stable urea business, buoyant Chlor-Alkali market, a likely growth in its PVC volumes and substantial available working capital limits are expected to minimise any financial risk. (UNI)

Fiscal defecit can derail growth on long
term:Finance Ministry

NEW DELHI, Nov 14: The Finance Ministry is of the view that the robust growth rate of 6.5 to seven per cent likely to be achieved in 2003-04, will accelerate in the medium term but the pressure point remains the burgeoning fiscal deficit which needs to be brought down by five to six per cent over the next five to six years.

The much higher growth rate in the medium term would take place as the growth rate in the region of seven per cent this fiscal was attributable not just to good monsoons but more a result of the reforms carried out in recent years. "The growth is not due to just atmospherics but due to solid changes in the economy," the sources said.

"The higher growth is a response of better policies and better response to policies by the private sector," a Finance Ministry source said adding that this was getting manifested by way of expansion of capacities, setting up of new capacities, booming stock market, higher profitability of corporates particularly due to the low interest rate regime and improvment in the financial sector due to the reforms undertaken in recent years.

More importantly, the growth is broad based and taking place in the regions due the state’s going the way of the Centre in carrying out reforms and introducing legislation on the lines of the fiscal responsibility and Budget Management Act, which seeks to restrict the borrowings of the Government in a phased manner. The states which have passed similar legislation include Kerala, Karanataka and Maharashtra and Punjab will soon introduce a legislation in this regard.

The future reform agenda would focus on fiscal consolidation, furthering reforms in the infrastructure sector, such as power, increase in public expenditure on education, reduction in tariff rates and privatisation.

FDI flows have improved with 6.2 billion dollars having been brought into the country during the last four months.

The improvement in the fiscal deficit was expected not so much from compression in expenditure but more by way of increasing tax to GDP ratio.

The tax to GDP ratio in the medium term was expected to go up by three to four per cent due to modernisation of the tax administration and introduction of Value Added Tax in the next six months or so. Revenues were likely to go up as a result of the new tax regime in line with international experience and the earlier experience of cenvat, when the revenue curve steeply moved up.

The source, which admitted that even though no official estimates were available, said the black economy could be in the region of 25 per cent of the GDP and the size of this segment was more or less the same level as that of other countries.

Reforms will continue in direct and indirect taxes with custom duties being brought to single digit level in the next few years.

The improvement in the manufacturing sector, the sources noted, now also encompasses the public sector and was a result of corporate restructuring. An important element was improvment in the bottomlines due to reduction in costs largely a result of interest rate reduction by five to six per cent over the past few years.

"The profitability of the much maligned public sector had improved the evidence of this being that increase in equity prices of PSU stocks was higher than the increase in the BSE index," the source said.

The source said reforms had brought down poverty levels and employment was on the increase, even though more in the unorgansied sector than in the organsied sector. Another good news was that wage levels were on the increase.

The source said it was a misconception that the reforms has widended the gap between the better off and backward states as more and more State Governments are joining the advanced states. "More and more states are getting into the reform mode," the source said.

The national highway programme was a success story contributing to employment generation, rural connectivity and spread of growth. (UNI)

Inflation up at 5.01 pc

NEW DELHI, Nov 14: Inflation rate breached the 5.0 per cent mark during the week ended November 1, after a short span of 14 days, as food articles, fuel, and manufactured products became costly.

Rise in prices of essential items like wheat, jowar, maize, skimmed milk powder, edible oil, textile and paper pushed up the overall price level to 5.01 per cent during the week from 4.96 per cent in the previous week and 3.33 per cent a year ago.

Wholesale Price Index (WPI) based on all commodities, rose by 0.2 per cent to 176.1 points from 175.8 in the previous week and 167.7 a year ago due to the rise in primary articles by 0.4 per cent, fuel by 0.1 per cent and manufactured products by 0.1 per cent.

The final WPI stood at 175.4 in the week ended September six, as against the provisional figure of 174.9, while the final inflation rate was at 4.59 per cent as against the provisional figure of 4.29 per cent.

Primary articles group index surged to 183.6 from 182.8 in previous week due to rise in food article prices by 0.3 per cent even as non-food articles were costlier by 0.8 per cent.

Food articles group index rose to 185.9 from 185.7 due to rise in prices of ragi, eggs (3.0 per cent each), poultry chicken (2.0 per cent), wheat, fish marine, bajra and barley (1.0 per cent each).

However, prices of jowar fell by 2.0 per cent while moong and maize were cheaper by 1.0 per cent each.

Non-food articles index rose to 183.1 from 181.7 in the previous week on account of costlier soyabean, raw cotton (3.0 per cent each), tobacco, rape and mustard seed, gingelly seed and copra (1.0 per cent each). However, cotton seed was cheaper by 1.0 per cent.

Fuel, power, light and lubricants index rose to 253.3 from 253 in the previous week due to a 3.0 per cent rise in naphtha prices.

Manufactured products index went up to 156.3 from 156.1 in the previous week due to rise in prices of food products, tobacco products, textiles, paper, chemicals, leather and machines.

The group index for food products rose by 0.3 per cent to 167.1 from 166.6 due to rise in prices of skimmed milk powder (11 per cent), bran of all kinds (8.0 per cent), solvent extracted groundnut oil (5.0 per cent), rice bran oil (3.0 per cent), imported edible oil, khandsari and hydrogenated vanaspati (2.0 per cent each), atta, cotton seed oil, maida, sooji, coconut oil and soyabean oil (1.0 per cent each).

However, prices of ghee dipped by 3.0 per cent, oil cakes (2.0 per cent) and groundnut oil (1.0 per cent).

Indian made foreign spirit prices surged by 4.0 per cent to push up the beverages tobacco and tobacco products group index rose by 0.4 per cent to 208.2.

Textiles group index rose 0.5 per cent to 129.9 due to costlier polyester yarn (7.0 per cent), cotton grey cloth (2.0 per cent) and polyester staple fibre (1.0 per cent).

Paper, paper products group index rose by 0.1 per cent to 173.2 due to a 3.0 per cent rise in duplex board prices. (PTI)

Ministerial level talks on reopenoing trade with China

SILIGURI, Nov 14: The first ever ministerial level talk between West Bengal and Sikkim on reopening trade between China and India via Nathu La in Sikkim was described as encouraging, official sources said here today.

West Bengal Commerce and Industries Minister Nirupam Sen and Urban Development and Municipal Affairs Minister Ashok Bhattacharya, now on a two-day visit to Sikkim, had a fruitful meeting with Chief Minister Pawan Chamling in Gangtok last night on the issue of reopening trade route at 1400 feet in east Sikkim.

The visiting ministers, accompanied by Commerce and Industries Secretary Sabyasachi Sen and North Bengal Divisional Commissioner Balbir Ram, reached Gangtok yesterday and visited Nathu La today to make an on the spot study.

Nathu La, bordering Tibet remains under snow for more than eight months a year. It had been a busy trade route for centuries but trading came to halt in 1962 after China invaded India. However, the earstwhile mule route remained intact.

Mr Chamling had told a group of visiting journalists in Gangtok during the north eastern council conclave that he was keen to cooperate with West Bengal for creating infrastructural facilities in parts of North Bengal and Sikkim, anticipating high volume of trade with China once the route reopened.

Mr Chamling said Sikkim could play a pivotal role in enabling India reach about 15-billion-dollar trading by 2010. As a follow-up to the singing of agreement between India and China during Prime Minister Atal Bihari Vajpayee’s visit in Beijing, Sikkim constituted a committee Under Chief Secretary W T Tenzing to study all aspects of trade activities.

Mr Chamling said his Government had already taken initiatives for construction of requried infrastructural linkages, including warehouses, to bear the entire volume of trade that would flow after trading resumed.

The two Bengal Ministers also had talks with Sikkim officials and enquired about trading facilities via Nathu La (Pass).

Official sources here said the ministers, expected to be back here this evening,had informed the Chief Minister of the West Bengal Government’s plan and programme to build store houses in Siliguri and Jalpaiguri and widening of roads leading to Nathula.

It is expected that the two State Governments would request the Centre to provide finances and technical know-how. (UNI)

Multiplex owners for mix of entertainment and retail biz

NEW DELHI, Nov 14: Multiplex owners have called for a closer synergy between their business and the mushrooming malls to make the "one stop shop" concept more potent and growth-oriented.

Speaking at a CII-organised seminar "are multiplexes becoming family entertainment centres", major players advocated setting up of "complete entertainment centres" to bring in more consumers to the organised retail industry.

"People now don’t just go out to watch a movie, but need a place where they can also shop and eat and have a sort of complete experience," Inox Leisure Chief Executive Officer Shishir Baijal said.

He said the future lay in "a mix of retail and entertainment".

PVR cinemas managing director Ajjay Bijli, however, said that just having the combination of mall and multiplexes was not enough.

"Demographic set up of a area and even minor things like having adequate parking facility, location of the complex and other such things need to be considered prior to setting up the multiplex.

"It is very important to understand the market for multiplexes to succeed.

"With ticket pricing not moving, escalation of prices could lead to problem for malls and can even kill the retail boom," he said.

Taking cue, Mr Baijal said convergence of entertainment and retail malls must be planned at the conceptual stage, which would result in good returns for the huge investments made.

"The key factors are image/profile match between the multiplexes and the malls. Location of malls is also an important thing," he said.

Speaking about the synergy benefits, he said multiplexes helped bring in customers early into the complexes and facilitate impulse purchase.

"Multiplexes also create sustained noise levels thereby increasing footfalls in the malls," he said.

Satyam cineplex CEO Deven Chachra said returns in the mall business were not commensurate to investments and therefore it was important to take into account the conceptual design of a multiplex.

The Inox group-backed Inox Leisure Ltd, which has three multiplexes already operational in Pune, Vadodara and Kolkata, plans to invest Rs 200 crore for setting up a series of multiplexes across the country, including Mumbai, Kolkata, Bangalore, Hyderabad, Chennai and Gurgaon.

The group had tied up with companies like Coca-Cola, Mcdonald’s, Pantaloons, shoppers’ stop, BPL and Seagram as synergistic retail partners, for presence at its multiplexes sites across the country.

On the other hand, PVR’s bijli plans to open around 40 screens in five locations in the next eight months. By 2005, PVR cinemas hopes to be showing movies at 100 screens across the country.

Mr Deven Chachra, CEO of Satyam Cineplex, said multiplex not only provided people with a wider choice in terms of cinema but also helped in giving a boost to small budget movies.

"Small budget movies can also expect good business as multiplexes offer space for niche audience," he said.

Archies Managing Director Anil Moolchandani said that it was imperative that rentals came down. "High rentals are working as a major deterrent for malls to flourish," he said. (UNI)

Two wheeler sales up 25 pc in Oct

NEW DELHI, Nov 14: Two wheeler sales were up 25 per cent in October at 5,55,806 units against 4,44,565 units sold in the same period last year.

Motorcycles were the main growth engines, surging by 30 per cent to finish the month at 4,38,991 units against 3,36,883 units sold in October ‘02, the Society of Indian Automobile Manufacturers (SIAM) said here today.

Cumulative sales for April-October ‘03 grew by 14.61 per cent at 24,02,725 units as compared to 20,96,505 units sold in the same period last year. (UNI)

SC to hear cellular operators’ plea on Monday

NEW DELHI, Nov 14: The Supreme Court today fixed Monday for hearing cellular operators’ application seeking stay of the WLL operations in view of the Government’s decision to implement the controversial unified access licence regime, which they alleged would give fixed service providers like reliance the benefit of full mobility.

When the application by Cellular Operators Association of India (COAI) was mentioned by senior advocate Ram Jethmalani, a bench comprising Justice S Rajendra Babu and Justice G P Mathur posted it for hearing on Monday.

Seeking permission of the Court to bring on record recent developments after filing of their appeal challenging an order of Telecom Disputes Settlement Appellate Tribunal (TDSAT), which had been admitted by the Apex Court, the COAI has sought a direction to the Government to maintain status quo regarding the number and type of cellular mobile licences issued separately or along with any other type of licence.

Terming the unified access licence regime as "improper, incorrect, unreasonable and unfair", the COAI said that the decision has been carried out with a predetermined mind and with "unseemly haste" to benefit only one set of telecom operators.

They said the recent decision of the cabinet was violative of the National Telecom Policy -1999 as well as the contractual provisions of the agreement between the cellular operators and the Government. (PTI)

Japan stocks down at midsession, no help from GDP

TOKYO, Nov 14: Tokyo stocks ended Friday morning weaker, with solid japanese GDP data providing little help after the yen firmed, while a cautious holiday outlook from wal-mart weighed on US stocks and exporters like Sony.

Tokyo electron ltd and other chip equipment firms retreated on sluggish monthly sales figures after solid gains on Thursday, and some analysts said market participants were struggling to find reasons to buy ahead of the weekend.

The nikkei average ended the morning down 0.88 percent at 10,246.59, reversing gear after rising 1.09 percent on Thursday. The broader topix index was down 0.44 percent at 1,013.99.

Before the start of trade, Government data showed Japan’s economy expanded by a bigger-than-expected 0.6 percent in July-September from the previous quarter, helped by firm exports and healthy capital spending.

The figure was stronger than expected by economists, who had produced a median forecast of 0.3 percent quarterly growth.

"But the result is still largely within the realm of expectations, and I think the more pressing matters for the market are issues like the strength of the yen," said Ken Masuda, a senior dealer in equities at Shinko securities.

Several exporters were sluggish in early Friday trade with the dollar weakening to around 108 yen on geopolitical worries and other factors.

Japan’s top maker of chip-manufacturing equipment, Tokyo electron, fell 3.9 percent to 7,880 yen, while advantest corp T , Japan’s top maker of microchip-testing equipment, eased 1.68 percent to 8,180 yen.

Also weighing on the two firms’ sales were figures released after the end of Thursday trade by Semiconductor Equipment and Materials International (SEMI) that showed global sales of chip-making equipment fell 1.2 percent year-on-year in September.

Consumer electronics giant Sony corp dropped 3.05 percent to 3,810 yen after a cautious sales forecast from US retail giant wal-mart stores INC tempered investors’ hopes for a robust holiday shopping season in Japan’s most important export market.

The Christmas season will be crucial for growth in Japan given the importance to the economy of exports.

"Consumption was flat as expected, capex up as expected. So I think it’s still being driven basically by Capex and exports," said HSBC chief economist Peter Morgan of the GDP figures.

Trading volume perked up a notch, with 599.5 million shares changing hands on the first section, compared with 481.35 million on Thursday morning. Decliners outpaced gainers 691 to 668.

Notable losers in Friday morning trade included Japan’s top internet portal Yahoo Japan Corp and chip maker NEC electronics corp

Both shares had been pushed up in Thursday trade on speculation they might be included in Morgan Stanley Capital International’s (MSCI) rejig of its Japan index.

MSCI, a global share indices compiler, announced the results of its latest quarterly review on Thursday, with neither added.

Yahoo was down 4.73 percent at 1.41 million yen, while NEC electronics was down 5.49 percent at 8,600 yen.

Volatile shares in softbank corp were weighed down by the drop in Yahoo Japan, the crown jewel in softbank’s investment portfolio. Shares in the internet services firm were down 9.84 percent at 4,030 yen.

Other firms were hit by sluggish earnings forecasts.

Konica Minolta Holdings INC fell 8.05 percent to 1,234 yen after the camera and office equipment maker lowered its sales and profit estimates for the year to March, citing the rising yen and expectations digital camera prices will fall.

Some analysts noted that Japanese firms could also be facing a tougher operating environment in the second half.

"GDP looked positive, but we have to remember we are now facing a stronger yen than we were that quarter," said Koichi Ogawa, Chief Portfolio Manager at Daiwa SB Investments.

"Foreign buying in Tokyo is still relatively muted...And Iraq looks like it will continue to weigh down the dollar."

Corporate earnings will continue to be in focus later, with Japan’s top airline, Japan airlines system corp, and its largest food seasoning firm, Ajinomoto Co INC, among those set to report. (AGENCIES)

Instanex Skindia DR, P/E premium indices in limelight

MUMBAI, Nov 14: The Instanex Skindia Depository Receipts (DR) index yesterday saw a positive upward movement of 0.36 per cent to 889.58 points from the previous day’s close at 886.41 points.

According to the daily update provided by city-based Instanex Capital Consultants Pvt Ltd through a release, Instanex Skindia DR Index P/E hiked 0.45 per cent to 17.17 points from 17.09 points on the earlier day.

Similarly, the Instanex Skindia (DR) Index premium shot up by 10.21 per cent to end at 23.14 per cent from 21.00 per cent during the same period, the release stated.

Out of the 15 ADRs and GDRs, there were 5 (11) gainers and 10 (4) losers, while none of the scrips (nil) reamined unchanged.

State Bank of India (GDR), ITC (GDR) and HDFC bank (ADR) were the top gainers, while Wipro (ADR), Infosys tech (ADR) and VSNL (ADR) were the major 1osers, the release added. (UNI)

US aerospace trade head criticises EU on steel -FT

LONDON, Nov 14: The head of the leading US aerospace trade group has complained of European "belligerence" over steel tariffs, saying it could hurt commercial aviation trade, the Financial Times reported on Friday.

The newspaper quoted John Douglass, president of the Aerospace Industries Association, as saying that some people in the United States felt France and Germany, and occasionally Canada, exploited the US market.

"Our Government gives equal treatment to (European jet maker) airbus and they reap huge economic benefit from the US market, at the same time as (France and Germany) fight us in the UN and around the world. If that continues don’t you think trade would be affected by that, and sooner or later we could say we are not going to give them access?"

The World Trade Organisation’s highest court ruled on Monday that US steel import duties violated international trade laws, and the European union has threatened to retaliate by mid-December if Washington refuses to back down. Seven other trading partners could also retaliate against US exports.

Douglass’ comments reflect growing unhappiness in the u.S. Manufacturing sectors.

The aerospace industry, along with many other manufacturing sectors, has been hit hard by the downturn in recent years, with thousands of workers losing their jobs.

The newspaper also quoted Douglass as saying he hoped the US Government would give the aerospace industry more support. (AGENCIES)