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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (4280)	5/16/1999 3:25:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Indian Economy-FIIs (Foreign Institutional Investors) are cautiously optimistic. May 23, 1999 Economy watch FIIs cautiously optimistic-They see the economy making steady progress despite political instability By P.A. Seshan The happenings in the industrial sector and stock markets after the dissolution of the Lok Sabha have been entirely unexpected even while it is being debated how the caretaker government should function and how the tempo of economic development can be sustained. The Election Commission has indicated that logical administrative decisions can be taken as the interregnum between dissolution of the Lok Sabha (on April 26) and summoning of the new Lok Sabha (in the third week of October) will be the longest for any government in the post-independence period. The Charan Singh government functioned for 21 weeks and one day on a caretaker basis, the Chandra Shekhar government for 15 weeks and three days and the Gujral government for 16 weeks. The Vajpayee government will be in charge for nearly six months and it has to be ensured that during this period plan schemes are implemented expeditiously and automatic approvals for Foreign Direct Investment are speedily granted. There should not be any avoidable strain on the economy because of delays in clearances for infrastructure projects and the provision of credit for agriculture or exports. Surprisingly enough, the FIIs and foreign entrepreneurs have been taking a cautiously optimistic view on the economy in spite of the fact that political uncertainties will remain in evidence until a new government is formed at the Centre. It is now argued that the Indian economy has been progressing steadily notwithstanding the political instability in the past three years and the crisis in the Asean region. With the consistent creditable performance of the agriculture and services sectors and the over 5% growth in Gross Domestic Product (GDP) even in a confused situation, the Indian economy's capability to register a faster growth of 7-8% in GDP is recognised. The bumper harvest of food and cash crops in the 1998-99 rabi season has also been responsible for the GDP rising by 6% against the revised estimates of 5.8% and 5.3% in earlier months. The total output of 200.88 million tonnes of foodgrains in the current agriculture season against 192.43 million tonnes last year has given rise to expectation of a noticeable increase in disposable incomes in the rural and semi-urban areas. With exports picking up by 10.07% in March this year, there should be higher demand for manufactured goods in the current financial year. It is also visualised that the GDP will rise by 6% in 1999-2000 and even by 7% according to Planning Commission Vice-Chairman K.C. Pant. Inflation down The distinct improvement in supplies of food and cash crops has brought about a downtrend in prices of wheat, edible oils, cotton and pulses. As prices for manufactured goods also have been lowered in some directions, with adjustments in indirect taxes, the inflation rate has touched a low of 3.92% in the week ended April 24 against 4.02% in the previous week. The earlier low was 3.92% in the week ended November 15, 1997. With inflationary pressures under check and a continuing rise in forex reserves to $29.61 billion in the week ended April 29, the opportunity for increasing outlays on ongoing and new projects in the public and private sectors should be fully utilised. Boom in bourses Reports of a recovery in the Asean countries and in South Korea and confidence of FIIs in the Indian economy have been responsible for the virtual boom in the bourses. The BSE index rose to a new peak of 3820.25 on May 10 from 3378.40 on May 3, a rise of 13.08%. In the subsequent trading session on May 11, the index surpassed the 3900 mark at 3912 in spite of bull operators realising gains and the new developments on the Chinese front. The close was quite firm at 3900.49. The markets have not looked back during this period as FIIs have been making purchases on a large scale, and the operators and even small investors have been following their transactions. It is emphasised that there will not be any significant change in the policies pursued in earlier years and the economy is poised for sustained growth. But increase in agricultural production is likely to be less in percentage terms as compared to 1998-99, so industrial output will have to be higher by even 8% if a 6-7% rise in GDP is to be ensured. HINDALCO grows adityabirla.com adityabirla.com The batch of results for the year ended March 31, 1999 published by established companies makes excellent showing in many instances. The performance has been satisfactory in spite of lower world prices for aluminium until the closing months of 1998, a slower rise in cement off-take and a faster growth in output not to speak of the problems experienced by textile mills and others. The software, pharmaceutical and other industries turning out personal products, processed items and consumer electronic products have of course been fairing well. HINDALCO Industries has been consistently raising its output of aluminium and fabricated products with substantial expansion of capacity. New records were established in 1998-99 in production, sales and profits. The output of metal was higher by 20.28%; net sales have increased by 19.94% to Rs 1,766.99 crore from Rs 1,473.28 crore and the gross profit by 28.38% to Rs 777.52 crore from Rs 605.66 crore. Interest charges claimed a large chunk of Rs 83.63 crore (Rs 72.34 crore) as the expansion schemes were completed and the different units were commissioned during the year. The benefit of large expenditure may get reflected in the current financial year. The sum set aside for depreciation is also higher at Rs 124.60 crore (Rs 77.63 crore). The liability for taxation has nevertheless risen to Rs 147 crore (Rs 87 crore). The dividend has been stepped up to 65% from 52.5%. But it will absorb only a small portion of available profits. INDAL's new plans indalcarbon.com indalcarbon.com Indian Aluminium Company (INDAL) has improved profitability with strict control over inventories and a higher proportion of value added products. Sales and operating revenue were marginally lower by 0.90% at Rs 1,152.04 crore in 98-99 against Rs 1,162.53 crore. But the gross profit has risen by 10.64% to Rs 183.85 crore from Rs 166.17 crore in 1997-98 due to higher margins. Interest charges have declined slightly to Rs 39.68 crore (Rs 39.94 crore) even with higher output. The total equity dividend has been maintained only at 40%, with the announcement of a final dividend of 20%. The company has said a Rs 800-crore expansion scheme will be implemented for augmenting the capability of the Hirakud and Belgaum smelters. The paid-up capital is Rs 71.11 crore and reserves are Rs 656.42 crore. BPL India's rise BPL Digital digitalbpl.com Products -BPL Digital digitalbpl.com BPL Mobile bplmobile.com BPL Audio bplaudio.com BPL Systems bplsys.com BPL India established new landmarks in 1998-99 with sales of electronic products, washing machines and audio systems in the domestic and export markets. The turnover increased by 11.02% to Rs 2,047.08 crore from Rs 1,843.85 crore. Gross profit has risen more than proportionately (17.05%) to Rs 175.57 crore from Rs 150 crore following efforts to reduce cost and upgrade technology. Interest charges accounted for Rs 40.42 crore (Rs 42.39 crore) while depreciation is higher at Rs 21.18 crore (Rs 15.34 crore). The provision for taxation is Rs 11.50 crore (Rs 6.70 crore). A final dividend of 35% is to be paid, making with the interim, a total of 60% against 50% formerly. Reserves amount to Rs 433.69 crore against the enlarged paid-up capital of Rs 27.70 crore. It is hoped that domestic and export sales of various products will increase noticeably in 1999-2000. Tata Infotech's bonus tatainfotech.com Tata Infotech will be capitalising Rs 6.13 crore out of the reserves of Rs 144.16 crore for issuing 1:2 bonus shares. The working results for 1998-99 have been creditable with net sales rising by 21.13% to Rs 392.78 crore from Rs 324.26 crore and the gross profit by 29.68% to Rs 69.74 crore from Rs 53.78 crore in 1997-98. The paid-up capital will increase to Rs 18.38 crore as a result of the bonus issue while the residual reserves will be Rs 138.03 crore. In brief o HDFC's equity dividend raised to 85% from 75%. o The pharma division of Nicholas Piramal India (NPIL) has made profits in 1998-99 and the dividend has been raised to 55% from 45%. o Ingersoll-rand will be paying higher total dividend of 70% against 65% in 1997-98. o Raymond India has reported distinctly improved results for 1998-99. The dividend is being raised modestly to 20% from 15. o Finolex Cables will be issuing 1:1 bonus shares. The unaudited results suggest an improvement in margins even though sales have not risen noticeably. (Source:The Week - the-week.com )