TRYING TIMES AHEAD

Article Abstract:

The recent sanctions of USA and Japan on India will hike the cost of borrowings for the shipping industry. The Government of India had given some guidelines on external commercial borrowings (ECBs) in February 1995. According to the guidelines, the average maturity period of the loans up to and including $15 million are likely to be 3 years and for loans above $15 million the maturity period will be 7 years. The 7-year period was reduced to 5 years for shipping companies in 1997-98. A Draft Shipping Policy was made with the following recommendations in July 1997. It had suggested reserving transport of liquefied natural gas (LNG) and liquefied petroleum gas (LPG) for Indian shipping companies, infrastructure status for coastal shipping, export industry status to overseas shipping, reducing the maturity periods for ECBs and increasing the depreciation rate from 20 percent to 40 percent. The dry cargo freight markets reeled under the decreasing steel production and lower economic growth in western Europe. The Baltic Freight Index is an indicator of the dry bulk carrier's business in the world freight market. The growth of the dry bulk cargo business was affected by the south-east Asian crisis in the second half of 1997-98. The freight rates plummeted as the fleet size increased by 3 percent in 1997-98. The cost- plus formula was withdrawn from April 1998. The shipping companies had an assured 12 percent return on equity and interest costs for buying ships under the cost-plus formula. The world freight market for crude oil movement was better in 1996 than other years. The increase in refining capacity has helped the decline of freight rates for product tankers in 1997-98. This situation is likely to continue in 1998-99. The chartering of offshore vessels was earlier fixed on the cost plus formula bit it now done through tenders. (rk)

Comment:

India: Recent sanctions of USA and Japan on India will hike the cost of borrowings for the shipping industry

Deep Sea Foreign Transport, Deep Sea Freight Transportation, Marine transportation

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RAJINDER GROUP - STRATEGIC MISTAKES SPOIL DREAMS

Article Abstract:

The Rajinder Group, Kanpur, has failed to release public documents like the annual reports which indicates that the group may not have performed well in 1997-98. An analysis of the financial performance of the group has revealed that it has been affected by its decision to foray into hot rolled coils (HR). Its profitability has been affected since the implementation of the HR project began. The profitability of Rajinder Steels Ltd (RSL) which was stagnating during 1996, fell to Rs72.9 million during 1997. During the first half of 1998, RSL moved out of the dividend list as its profitability fell to Rs11.4 million. (ag) ------------------------------------------------------------ Rajinder Steels: Financial Results(Rs in million) ------------------------------------------------------------ Particulars 1996-97 Projections Actuals ------------------------------------------------------------ Net Sales 3845.90 3,950.50 ------------------------------------------------------------ Other Income - 57.60 ------------------------------------------------------------ Operating profit 949.30 719.40 ------------------------------------------------------------ Interest 263.00 298.70 ------------------------------------------------------------ Gross profit 678.70 420.70 ------------------------------------------------------------ Depreciation 192.80 341.50 ------------------------------------------------------------ Tax 149.70 0.00 ------------------------------------------------------------ Net Profit 336.20 79.20 ------------------------------------------------------------ Equity Capital 501.80 500.30 ------------------------------------------------------------ Earnings Per share (Rs) per annum 6.70 1.58 ------------------------------------------------------------ >EN

Comment:

Fails to release public documents like annual reports which indicates that the group may not have performed well in 1997-98

Primary Iron & Steel, Iron and Steel Mills and Ferroalloy Manufacturing, Rajinder Group

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SINGI GROUP - UNSCRUPULOUS PROMOTER

Article Abstract:

Mr GD Singi, the promoter of the Singi group has exploited his association with the Birla group company, Zenith to lure gullible investors to invest in Singi group companies. Public investment in the group has been eroded. The group companies include AVS Industries Ltd (AIL), Jay Iron & Steels Industries Ltd (JISIL) and SVL Capital. Both AIL and JISIL have raised funds mainly through the equity route which requires less scrutiny and commitment. AIL produces ERW black pipes and its manufacturing plant is located in Raigad district of Maharashtra. The company floated a public issue in November 1993 to raise Rs56.7 million for backward integration into galvanised steel pipes and cold rolled tubes. In February 1994, Mr Singi floated a public issue to raise Rs56.7 million for JISIL to double its capacity of steel ingots to 30,000 tonnes per annum. Both AIL and JISIL have failed to achieve pre-issue projections and post-issue financial projections since 1993-94. SVL Capital also tapped the capital market in 1993 to raise Rs9.6 million at par. The company has been making losses for the past two years. The scrips of AIL and SVL Capital are currently not traded. (uh)(vr)

Diversified Companies, Iron and Steel Mills, Cold Finished Steel, Rolled Steel Shape Manufacturing, Galvanized Pipe & Tube, Steel pipes, Galvanized steel, AVS Industries Ltd., Jay Iron and Steels Industries Ltd., SVL Capital Ltd. (India), Singi Group

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