|
PLANNING YOUR RUPEE
The choice that an individual investor faces today is, more often than not, bewildering. Keeping this in mind. India Today commissioned Mumbai based Kotak Mahindra Finance Limited, a major finance and stock-brokerage and advisory group to develop a reader-friendly, incisive and insightful package with investment guidelines for equity and fixed income options, with exclusive post-budget stock market analyses and a personal portfolio profile.
The Investment Framework It is easy to get carried away by the hype surrounding financial products. While those hawking these products highlight the gains, it is necessary for investors to appreciate the pitfalls. In the following pages, an attempt has been made to point out what exactly the investor can expect from various investment avenues – equities, fixed income securities, mutual funds and other instruments —and more importantly, the parameters to consider before taking a decision. We have excluded from our investment model avenues such as real estate and art for two reasons. First, because the investment amounts involved are large and therefore exclude the amateur investor and second because without a real estate or an art index we have little ability to substantiate our best bets. It is for the same reason that we have also excluded investment in vegetable farms, teak plantations, nidhis and chit funds. While they might hold potential for substantial gains, as of now, there is no regulator or a sustained and easily verifiable proof of claim.
EQUITIES Unlike Fixed Income options, Investments made in stocks of a Company casts no obligation on the company to either redeem it for the value the investor has paid for it or pay a regular return on the investment. Though most companies do pay dividend to shareholders when they earn profits, it is not obligatory. And even when dividend is paid it rarely exceeds an average of 4 percent of the market price of the share at that time. This basically means that unlike other options the investor is dependent or the market price at which the share is traded to obtain his investment return, especially in the short to medium term. Therefore, it becomes important to assess the likely price at which the stock will be traded at a future date. For the investor who does not want to go through the troubles of trading in the secondary market, the primary or new issues market offers an easier option. Normally, scrips are available at much lower price-earnings multiple during an issue and the possibility of price appreciation is much stronger. However, whether one buys stocks in the primary or secondary market. One has to pick the right stocks and sell at the right time—skills that take time to learn.
The Investment Approach We believe in taking a top-down approach. In other words, the prospective investor should first look at the overall economic scenario, and then look at specific industries that are growing more rapidly than others and face a favourable demand-supply situation. The investor can then set about selecting the particular company that he should invest in within that industry. This approach helps, for instance, in eliminating certain industries with weak growth prospects or unfavourable demand-supply situation from consideration and in concentrating only on industries with good growth potential. This applies equally to companies offering new, or primary, shares as well as those that are already listed in the stock market. Investors must understand the importance of assessing favourable demand-supply situations and not concentrate on growth prospects alone, as only if demand exceeds supply can companies in an industry obtain pricing flexibility and earn fair margins. If supply exceeds demand, competitive pricing will drive down margins and profits of companies in the industry. A good example of this is the domestic airline industry, which has seen very attractive growth in the last one year, but because of competition, most companies in the industry have fared very poorly financially. Stocks of companies in this industry have been amongst the worst performers in the market in the past one-year.
Stock Selection Having determined the sectors or industries with promise, the investor should try to identify the stocks within the sector that offer better value for investments. For doing this he must pay attention to both the quality of the company and the share price. The following yardsticks though by no means exhaustive are worth keeping in mind:
1) What is the size of the company and its relative position in the industry? As a general rule it is better to stay away from very small companies or companies that are not the leaders in the industry in which they operate. As a simple rule, the investor could concentrate on the top few companies in the industry.
2) What is the quality of the company'’ management? Investors should stay away from companies whose management quality is considered poor. In assessing the quality of management their financial resources, ability in business management, long-term track record, integrity, reliability of corporate communication, fairness in dealing with minority shareholders and so on should be evaluated. Another way in which the quality of the management can be evaluated is to read through prospectuses/offer documents issued by the company in the past. This should be coupled with director’s reports on operations of earlier years and see whether the company s performance has lived up to the promises made in these documents.
3) What are the investment programmes and financing plans of the company? The investor should assess the size and nature of the investment programmes of the companies considered for investment and also try to assess how these investment programmes will be financed. Investors should stay away from companies that have very large investment programmes in relation to their current size, particularly if these involve issue of large quantity of additional shares. Here the investor runs the risk of investing in a company that is struggling to get new projects off the ground and whose stock price is depressed because of large additional issue of capital. On the other hand, companies that have no investment programmes at all may have reached a saturation level in their business and may not grow well in the future. Ideally, the investor should focus on companies that have reasonable fixed investment programmes for adding capacities, which can be financed by funds generated by current operations and reasonable additional borrowings.
4) What is the track record of the company? Track record of financial performance is very important to gauge the quality of a company. Ideally, the investor must look at the financial performance of the company for at least the past five years and assess whether this reflects the following attributes:
5) What is the financial position of the company? The company must have a sound balance sheet as indicated by various ratios. Important among them is the ratio of total borrowing to total funds employed which indicates how much of the resources required to run the business are raised by borrowings. Anything over 50 per cent is risky. The investor may also want to look at interest cover (profit before interest/interest). Other indicators of sound financial position are proportion of quick assets (cash and 'near cash', or those with easy liquidity and assets) compared to short-term financial liabilities. Often, a potential investor may not be to a position to assess the financial soundness through a company's balance sheet—or any other yardstick. Combining media reports with consulting a chartered accountant is often a good way out. Attending the annual general meetings of companies can also give investors a first-hand feel of the company’s management. While all this may sound esoteric and discouraging to a lay investor, all it needs is some willingness to accept one thing: better understanding can lead to better savings and return on investment.
6) What are the growth prospects of the company? The investor must assess the growth prospects of the company. Reviewing the capacity, cost of setting up additional capacity, plans to introduce new products and availability of funds to finance new capacities or new plants can do this. For new issues, a rosy future is generally painted to lure investors. Also, companies, which tap the capital market frequently, enjoy a poor discounting in the market. Further. These funds may not be deployed in their core business and could fin their way into group companies or stock markets, The two schedules of ‘investments’ and ‘loans and advances’ given in the company's unabridged balance sheet are clear indicators of such practices, In a number of cases, the market reacts before the company's results are announced, The directors / chairman's speech at the annual general meetings published to newspapers and in the annual report, along with the interim results generally act as trigger points for the stock's future price movement,
7) What is the valuation of the company's stock? This is the trickiest part of the investment decision as the price of a stock fluctuates from day to day along with the moods of the market. The task of valuation can be made relatively simple if the investor bears in mind that the price of the stock is affected not only by the underlying worth of the company but also by market sentiment. So the market price of a stock is often either an overvaluation of its true price or an under valuation. The investor's objective should be to buy a stock when it is trading at a price that represents an under valuation of its true worth The ‘value’ of the stock is expressed in terms of a multiple of net profit per share. For example, a company that has 10 crore issued shares of Rs 10 each (capital of Rs 100 crore) earns Rs. 5 per share if it makes a net profit of Rs. 50 crore. Having calculated its earnings per share (EPS) it is simple to compute the valuation by dividing the market price of the share by the per share earning (Market Prices / EPS). In the above instance, if the market price of the share is Rs 75, we can say that the share is trading at 15 times its earning. This is a simple way to express the valuation of a company's stock and compare it with valuation of other shares or with, past trends of the same share, from which an average can be drawn to see whether the share is currently over or under priced.
COMPARITIVE ADVANTAGES
Mutual funds could be open-ended or close-ended. The tenure would vary depending on the nature of the fund.
INVESTMENT GRADES CARE (Credit Analysis & Research Ltd)
ICRA (Indian Credit Rating Agency)
SHORT TERM Including Commercial Paper
CRlSIL (Credit Rating & Information Service of India Ltd.)
SHORT TERM INSTRUMENTS
Note:
MUTUAL FUNDS The concept of mutual funds is simple. Small investors invest their money into a common pool or fund and hand over the investment decision to professionals. This is expected to have several advantages for the small investor: no more searching for good buys or relying on the neighbourhood sub-broker for advice or even waiting anxiously for the allotment. All this is taken care of by the cumulative bargaining power of the fund, which has trained professionals managing it. In practice, the argument is far from flawless, as investors who have burned their fingers will testify. Professionals lose money and offer sub-standard returns. Investors then have to be very discriminating. Mutual fund schemes generally fall into one of the four broad categories:
These schemes can be further classified as open-ended or close-ended. Open-ended funds are those where the investor can buy and sell the units from the fund on an ongoing basis. Typically, open-ended funds have no fixed tenure and are thus deemed to be ‘open’. Close-ended funds, on the other hand, sell units during a specific period and then, after a fixed tenure offer to redeem the units. They may offer a partial redemption or buy-back before the completion of the tenure.
What to consider:
A. While buying a fresh issue
This is only half the story. One also needs to discriminate between good and bad funds. Past performance of the fund should be the main criterion here. Big names alone do not matter. Good funds or good fund management means that the schemes should out perform the market. In other words if the market moves up by 20 per cent the Net Asset Value (NAV) should increase by a higher margin. But if the market moves down, the NAV of the fund should decrease (if at all) by a lesser percentage than the market.
B. While buying from the market To what extent is the buying price at a discount to NAV?
If it is a close-ended scheme it is wise to consider buying it close to redemption. HOW TO EVALUATE A FUND
(This evaluation is only an Indicator of whether the fund is performing better than the market or not. This is not an indication of the actual returns.) FIXED INCOME OPTIONS The last few years and especially the preceding year have seen a multitude of fixed income options being offered by banks and companies. More than 400 public limited companies, a multitude of lesser-known companies and all banks (private and public sector) offer fixed-tenure, fixed-return deposit schemes. Therefore, the need to have a closer look at this broad subset of investment options is imperative. Especially as fixed deposits are totally unsecured deposits—this means that if the company or bank concerned goes bankrupt, the claims of the fixed deposit holders have the last priority under law while settling dues.
Saving Deposits Targeted at small savings. Offered by all banks and post offices. There is no lock-in period and Money can be withdrawn whenever the need arises. What to consider: Since the returns are relatively lower, the deposit amount should not typically exceed household requirements for one month.
Company Fixed Deposits As of now the maximum interest that can be offered by companies is 15 per cent. But non-banking finance companies (NBFC’s) unlike manufacturing companies have to get their fixed deposit schemes rated by credit rating agencies. Currently there are three such agencies—ICRA, CARE, and CRISIL. Details of rating are given elsewhere in this note. The tenure can be of six months and over in the case-of manufacturing companies and 12 months and over in the case of NBFC’s. Loan facilities could be available, but are not automatic—as in the case of some banks. However, premature withdrawal facility subject to reduction in interest rate at the discretion of the company is available. What to consider:
Bank Deposits Tenures generally vary from 30 days to five years. Banks can offer a maximum of 11 per cent on deposits up to one year, with no interest-rate ceiling on deposits for a longer duration. Tenure of less than one year. What to consider:
Tenure exceeding one year What to consider:
Fixed Income Instruments These normally have a fixed tenure and carry a fixed return, but are different from fixed deposits in that they are listed on stock exchanges and can be traded. The issue period is limited and they cannot be purchased from the company after issue closes. When of offered by government institutions, public sector units and other quasi government bodies, these are called bonds, and when offered by private sector corporate, debentures. There is currently no ceiling on the interest rate or the coupon rate as it's called for such instruments that can be offered. The tenure and the periodicity of returns can vary for different instruments issued. The returns can also vary depending upon when and what price they are bought and when sold. It is relevant to mention here that though these instruments are traded on the stock exchanges, the trading is largely institutional with transactions usually amounting to more than Rs. 1 crore. Thus, buying and selling these instruments on the secondary market for attractive yields is out of reach of the retail investor as of now. There are also special types of bonds called tax-free bonds, which offer a maximum of 10.5 per cent return. This return is totally exempt from tax. These are particularly attractive for individuals in the high income-tax bracket. For Individuals who are paying tax at the rate of 40 per cent the return works to 17.5 per cent. When investing in fixed income instruments it is worthwhile to evaluate risk on the same parameters as fixed deposits. All bonds and debentures of more than 18-month tenures have to be rated by credit rating agencies. What to consider:
Selection Parameters Age Group: In our investment framework we have taken a life-cycle approach while keeping in mind the tax liabilities of a salaried person. The framework was constructed keeping in mind the requirements of an average salaried person but could be modified depending on the risk profile of the individual investor. We assumed five phases in a person's investing life. The first segment (24 to 35 years) is usually starting out professionally. Hence, the emphasis is on building solid assets and / or getting solid, risk-free returns. The second segment (36 to 45 years) has already built a financial base and can afford to take a little more risk. The third segment (46+ years) is fast approaching the end of his / her career and ought to look at investments which offer high returns with little risk. These are assumptions based on average models. Investible surplus: As the amount increases, there is greater leeway to invest in higher risk—and consequently higher returns. Therefore, a higher proportion of the portfolio would be in high risk-return opportunities. The investible surplus options have been provided for easy reference. These are indicative, and one parameter can be taken to stretch to another i.e. the investible surplus of Rs. 25000 could be taken to mean Rs. 25000 to Rs. 50000 and so on up the scale. Strategy: In the first phase the investor should take full advantage of tax exemptions. There are several such schemes the most popular being the Public Provident Fund (PPF), National Savings Scheme (NSS) and National Savings Certificate (NSC). After the investor has exhausted his limit for claiming tax deductions he can look out mutual funds where capital gains exemption is available. The third phase is when he can consider investing in fixed-return investments. Finally, the average investor is ready to take more risk and try investments such as equities and real estate where price appreciation is the name of the game. Bullion: Bullion is a segment which carries a low downside—as well as a low upside—which makes it a relatively safe investment with age. Typically also, the social need for investing in this avenue increases with age.
HOW TO INVEST
CALCULATING YIELD Returns from a fixed income option are expressed differently as either ‘interest rate’ or ‘yield’. These are however, two different concepts. While interest rate only denotes the rate at which interest is paid on the face value (in the case of instrument) or the principal amount (in case of deposits), ‘yield’ signifies the actual return on the investment. For example, consider a debenture (face value Rs. 100) with a maturity of one year which carries an interest rate of 15 per cent payable at the end of the year. If one buys the debenture for Rs. 100 at the public issue the yield is 15 per cent. However, if the interest is paid monthly (at Rs 1.25 a month), then the yield will be higher although the actual interest received during the year is the same. This is because the interest received monthly is also assumed to have earned interest at the same rate as the debenture. Thus the yield in this case will be 16.075 per cent. Similarly, depending upon the period of payment of interest, there can be different yields. The simple way to calculate yield or compound interest is: Yield = Principal x (1+r) n /100 Where r = rate of interest, n = number of years If the compounding is at a frequency of more than once a year, then the formula is: Yield = Principal x (1+r/m) nxm /100 Where r = rate of interest, n = number of years, m = frequency of compounding If the debenture has been picked up from the secondary market at say Rs. 90 then the yield will be 16.67, percent. This is because the interest is paid on Rs. 100, the face value, while the actual investment is Rs. 90. If the maturity exceeds one year then the concept remains the same. However, the calculations become more complex. In the case of corporate fixed deposits, many schemes claim to offer more than 20 per cent return over a five-year period. In effect, they offer an interest rate of 15 per cent compounded monthly. This gives a yield of 16.075 per cent for the deposit. Effectively, the amount in the deposit at the end of the first year (principal amount + 16.075% interest on it) is again eligible for interest at 16.075 for the second year. This results in a higher amount at the start of the third year, which again earns an interest of 16.075 % for the third year and so on till the end of the fifth year. Therefore, the total amount in the deposit at the end of the fifth year would be Rs. 210.07 for every Rs.100 invested. This is incorrectly touted as 22 per cent return per year. The yield remains 16.075 per cent. Yield, then is, the true representation of the return on investment.
PERSONAL PORTFOLIO* The When and How of Savings
Age: 24 to 35 years (Investible Surplus in Rs.)
Age: 36 to 45 years (Investible Surplus in Rs.)
Age: 46 years + (Investible Surplus in Rs.)
* PERSONAL PORTFOLIO � INDIA TODAY 31st August 1996. It is clearly understood that the above is only a broad guideline and neither INDIA TODAY nor Kotak Mahindra (who have prepared this chart) will accept responsibility for any losses arising out of these advisories, which are in the nature of general suggestions.
Stock Markets: Options and Outlook The economic outlook and investment analysis teams at Kotak Mahindra put together the current, post-Union budget overview of a few key industry areas. Though the approach is designed to appeal to the lay reader and potential investor, the advisory is backed with the same research parameters applied to Kotak's core institutional investment business. However, the suggestions are broad trends, and are best updated with future developments and broker advice. The industry trends have been mapped with a maximum of three years in mind. Rapid changes in economic policy and increasing competition—both local and global—make it impractical to project any further. STEEL In the short term factors like reduced government spending, infrastructure constraints, liquidity crisis and softening of international steel prices will have a negative effect on the steel industry with reduction in demand in the first case and margins in the second, getting squeezed for producers. In the long term, till the next three years, a situation of oversupply would ensure that only the most competitive producers are able to survive. PHARMACEUTICALS In general, profits of Indian pharmaceutical companies, unlike multinationals, have been achieved through tax-saving measures and a substantial increase in non-operating income. These companies will reduce the proportion of non-operating income as a percentage of net profits only when they deploy surplus funds in core business this is likely to happen, and the returns will not be immediate. Many multinational companies are also currently restructuring their operations, the benefits of which will be derived after a few years. With tax incentives likely to be withdrawn in phases, we would place our bets on multinational companies. For a variety of reasons: their greater ability to introduce new products in the post-GATT era, technological edge, efficiency; and marketing reach. SOFTWARE Depreciation of the rupee should benefit software exporters. Outsourcing by multinationals should result in rapid revenue generation. However, the future growth of existing listed companies will depend on their ability to develop and market new products and move up the value-added chain. Manpower shortage and rising manpower costs will otherwise prove counter-active. Tax incentives for the industry are also likely to be reviewed. Currently, though, if the industry plays it sensibly long-term outlook can be engineered to look better. Besides, the language advantage of English and the relatively low cost of skilled manpower, by the end of this fiscal year as many as 82 companies will have the ISO 9000 certification of quality. More, prohibitively high cost of mainframes resulted in Indian software professionals developing expertise in the client server environment. To the advantage of the Indian professionals, world over there is a gradual shift from mainframes towards client server systems creating a good potential for Indian software exports. FERTILISERS The strong cash flows of nitrogenous fertiliser companies under the Administered Pricing mechanism and the demand-supply gap are expected to persist over the next few years. This makes the sector attractive. There is some indication that the sector may be decontrolled given the fiscal pressure on the Government and the skewed usage pattern following partial decontrol. Although industry sources believe a gradual phasing out of subsidies, going by the Government's past track record of knee-jerk reaction, could take a while. Phosphate-based fertiliser manufacturers, on the other hand, face another tough fiscal 1996. Slower off take; increase in raw material costs on account of rupee depreciation and competition from imports will affect bottom line. Earnings are expected to be flat, or lower than the previous year. Higher inventories would also affect revenue through much of 1997. PETROCHEMICALS' Prices have been declining since May-June 1995 following the international trend, though they have been somewhat arrested in the past few months in India, thanks to slower decline in world prices, which are now at the lower end of the cycle. Local prices are now roughly 10 per cent lower than prices at the same time last year. Following the customs duty reduction in the Budget, prices have declined further by 3-5 per cent. Fresh capacities are being commissioned later in the year and in the next few years. This would ease supplies causing prices to soften during 1997 and 1998. This will increase supply, which may cause prices to drop. Certain sectors such as polyethylene and polypropylene are growing even faster at 15 per cent annually in India and at 10 per cent in Asia. We expect demand to match supply, but with a lag. The Indian Government is gradually reducing tariffs and this is expected to continue for the next two years. This duty reduction combined with lower prices will increase competitive pressures. Safer bets are with larger integrated companies, with better access to port and other infrastructure facilities. And those with plans to. REFINING The companies have assured returns of 12 per cent a year after taxes under the current pricing scheme, with scope for incentives. Hence, actual return on net worth of some of the companies dominated by the public sector is over 20 per cent. Decontrol is being actively considered though the timing and scope is still under discussion. The current status is steady returns with practically no downside, a strong upside on decontrol of the sector. OIL AND GAS EXPLORATION Realisation on crude oil are government determined resulting in steady returns, strong demand growth, increasing demand-supply gap, which are all positive. The Government is considering decontrol of the industry. However, the gains will be gradual, as massive windfall profits from deregulation would be politically touchy and therefore unlikely. AUTOMOBILES For transport manufacturers, demand to grow at a very healthy rate, as railways are not in a position to meet the demands. Growing middle class and increasing FDI augurs well for personal vehicles both four and two wheelers. Expected growth rates over the next three years in volume terms in key segments are as follows Utility vehicle 20%, Two wheelers 13-15%, Commercial vehicles 20%, Passenger cars 30%. COTTON TEXTILES Cotton prices are lower by 15 per cent compared to last year. Due to the tight liquidity conditions, only cash-rich companies will be able to benefit. The outlook is selectively bullish on cotton users, mainly those with clear-cut reorganisation plans and marketability. However, Looming over capacity in cotton yarn would start affecting margins of domestic and exporting units in the medium term.
AUTO ANCILLARIES The biggest beneficiary of growth in the auto sector. Further, likely to increase its status as a source base for global majors in the foreseeable future. Though this sector is still dependent on the domestic auto industry, the adverse impact on account of a downswing in the domestic sales will be lower as many of these companies export and have an established and flourishing after-sales market. However, one of the main impediments to investing in the sector is that most of the listed companies are relatively small in terms of sales turnover, market capitalisation and availability of shares. Out of a sample of 87 listed auto component companies only nine had a sales turnover exceeding Rs. 100 crore for fiscal 1995. POLYESTER Looming over-capacity has begun to affect margins. The situation is expected to get worse over the medium term. The outlook over the long-term appears to be equally bleak. With small and medium-scale manufacturers also increasingly in the fray, it will need two to three years to balance out supply and demand. HOTELS Rupee depreciation, increase in tourism (currently. the growth in domestic tourism is higher than that of the overseas tourist segment) and a healthy growth in the business travel segment augur well for the future of this industry in general and that of the hotels in business centres in particular. Second and third level chains in mini-metros and industrial zones are also safe bets in the future. PAPER Oversupply in the domestic market currently caused by lower exports and higher imports. Global scene slowly turning positive with signs of falling inventories and rising prices. If trend continues, exports will pick up and ease oversupply. BANKING AND FINANCE Good loan and deposit growth prospects and the lowest financial dis intermediation levels (meaning good intermediation role of banks between borrowers and lenders) make the banking sector look attractive. For financial institutions, improving liquidity conditions should help them to raise resources at lower costs. This coupled with good loan prospects, make the area attractive. The (government has been gradually easing up on its restrictions—on interest rates, reserve ratios and to a degree red-tape and this can only boost the sectors. CAPITAL GOODS Although the current level of economic growth will create a sustained demand for capital goods this is likely to be met by imports. Export-related imports of capital goods are subject to a concession duty structure making it difficult for Indian producers to remain competitive. CONSUMER ELECTRONICS Competition has intensified with the entry of several leading international players and this has driven profit margins down and reduced the market share of Indian manufacturers. Even with multinational ventures, as they are new, even if they choose to finance some projects through the domestic market—as of now, though, this option seems unlikely - the near future will be for setting up bases, heavy marketing and advertising, heavy expenses aimed at future profit. PESSIMISTIC PROJECTIONS While the ink on the budget papers is barely dry, investors have begun doubting the Governments capability to cap its fiscal deficit at 5 per cent of the GDP. Jardine Fleming India, says that tax revenues are likely to fall short by Rs. 4000 crore as industrial growth will be a third lower than last year's 12 per cent. It states that unless hikes are made in PDS prices, the food subsidy could exceed the target by Rs. 1000 crore to Rs. 1500 crore. In the event, Fleming estimates the deficit will be 6 per cent. ICICI Securities' report last fortnight expresses similar fears, and states that the deficit will be higher by 0.5 to 0.8 per cent of GDP. Clearly, the finance minister has a tough job convincing investors he means business. RETURN OF THE INVESTORS Contrary to popular perception, domestic investors are once again coming back to the stock markets. According to a study by Morgan Stanley, net deliveries of shares, both on the Bombay Stock Exchange as well as on the National Stock Exchange have risen steadily since the beginning of the year, when the sensex bottomed out at 2820 points. From a low of just around Rs. 1100 crore in January 1996, domestic investors took delivery of over Rs. 2900 crore worth of shares in June. While this is far from a recipe for a Bull Run, it does mean that the investor support for the markets could be getting slightly broader based. IMPACT OF FREE TRADE Until barely a year and a half left for the WTO, treaty to come into effect, the Government is taking a serious look at its possible impact. The Ministry of Commerce has roped in three research institutes to do a detailed analysis. While the NCAER will analyse the impact on agricultural exports, the Indian Council for Research on International Economic Relations will study the effect on services exports and the Research and Information Systems for the non-aligned and other Developing Countries will look at the impact on manufactured product exports. Based on these reports the ministry intends to propose schemes to boost trade in each area. DEVELOPING CIRCUITS The Rs. 511 Crore Usha India Ltd. has entered into a joint-venture agreement with GEC Plassey Semiconductors, part of the US-giant General Electric Company, to design and develop integrated circuits and related software. The initial investment is expected to be Rs. 35 crore with sales of Rs. 75 crore in the first two years. INWARD BOUND With the competition in international markets getting fiercer, the Public-sector State-trading Corporation has decided to pay more attention to the domestic market. STC is planning to develop its own brand names for the sale of rice, tea, edible oil and pulses. It hopes to achieve sales of Rs. 150 crore from this area alone in the current year—including Rs. 70 crore from trading in edible oils and Rs. 10 crore from tea. DRILLING COLLABORATION The Oil And Natural Gas Corporation (ONGC) is holding negotiations with the Brazilian national oil company, Petrobras, for joint deep-water (more than 400 m deep) oil exploration. Petrobras is a pioneer in retrofitting available ships and equipping them with deep water drilling facilities. If it is able to tie up With the Brazilian firm, ONGC plans to negotiate with the Shipping Corporation of India to lease vessels from it, and convert these to meet its requirements. This will help ONGC to lower its operational costs considerably. � India Today 31st August 1996 � Kotak Mahindra Finance Ltd. � Licensed user V. Sudarshan |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||