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K-10 STOCKS: Nine months after the Ketan Parekh scam rocked Dalal Street, K-10, the favourite stocks of the man are once again on a roll. Their present price points are still lower than their March 2000 peaks, but the Securities and Exchange Board of India has already instructed stock exchanges to watch them. It was in March this year that Parekh was arrested for defrauding the Bank of India to the extent of Rs 130 crore. Parekh, one theory went, had been funding his operation through the unique innovation of pay orders not backed by cash or adequate credit. He is also alleged to have got Madhavpura Mercantile Cooperative Bank to issue pay orders to him against the very shares whose prices he was ramping up-another innovation since pay orders are usually issued only against money paid upfront. The method worked as long as the prices of the shares he held continued to escalate. But when the NASDAQ crashed in April 2000, and the bears stepped in and hammered down the prices of the K-10, he was caught in a bind. -Roshni Jayakar KIDS: ...As in CEO-Kids, and 2001 was a mixed year for the lot.
-T.R. Vivek LEGISLATION: When five terrorists launched their daring assault on Parliament House, it wasn't just an attack on the Indian State. They also blasted any hopes of the passage of a slew of crucial economic legislation. As a result, in 2001, the government has only seven economic laws to show. There are 31 economic bills pending in the Lok Sabha and 39 in the Rajya Sabha. The Budget session had been a complete washout with a deluge of controversies-from Balco to l'affaire UTI. POTO (Prevention of Terrorism Ordinance), Defence Minister George Fernandes' reinduction into the Cabinet and the coffin scam had spelled finish to the winter session long before December 13. Its sole contribution was the ratification of the Companies (Amendment) Bill, which eased the norms relating to buyback of shares. Some productive work got done in the monsoon session, which saw the passage of the Trade Unions (Amendment) Bill that tightens registration norms for trade unions; the Protection of Plant Varieties and Farmers' Right Bill, and the Foreign Trade (Development and Regulation) Amendment Bill, which allows the levying of safeguard duties in case of a surge in imports. Other Bills included the Chit Funds (Amendment) Bill; the Taxation Laws (Amendment) Bill; the Electricity Regulatory Commission (Amendment) Bill, and the Energy Conservation Bill. One big failure for the government was the Fiscal Responsibility and Budget Management Bill, the provisions of which were drastically diluted by the standing committee. Other Bills still languishing before various standing committees are: The Banking Companies (Acquisition & Transfer of Undertaking) Bill, which seeks to reduce government holding in banks to 33 per cent; the Electricity Bill, the Competition Bill, the Convergence Bill, and two amendments to the Companies Act-one relating to bankruptcy provisions and the other allowing manufacturing cooperatives to be registered as companies. -Seetha MARKETS: Going by its behaviour in 2001, Dalal Street should change its name to Skid Row. The Bombay Stock Exchange (BSE) Sensex has dropped 683 points in 2001: from 4,018.8 on January 2, to 3,335.8 on December 18, 2001. This, despite net FII inflows into the market being the highest over the last three years at $2.7 billion. Still, 2001 could have been worse: the index dropped to 2,600-levels before recovering to 3,450. It was the stockmarket scam of March 2001 and the trouble with the country's largest mutual fund-UTI-that started the Sensex on its trip down south. From 4,056.94, on March 8, the Sensex plummeted as details of Ketan Parekh's machinations, and the extent of the damage he had wreaked became available. Things continued to be bad in April, and SEBI banned badla (carry-forward trading) and introduced rolling settlement from July 2. Contrary to what most brokers had warned would happen, share prices didn't collapse and the Sensex moved in a narrow range between 3,100 and 3,350. Old economy favourites in the cement, FMCG, petrochemicals, and pharmaceutical sectors became the market movers. However, blue-chip information technology stocks like Infosys, Wipro, and Satyam Computer continued to elicit investor interest. It was 9-11 that exacerbated an already bad year. The Sensex tumbled to touch its eight-year low of 2,594.87 on September 21, 2001-a day when stockmarkets across the world touched a nadir. Then came SEBI's announcement on trading futures in individual stocks and a hint of optimism emerged. In November and December, the Sensex has moved up 757 points to 3,335.8 (December 18, 2001), and the rally has been led by K-10 stocks. Volumes on Bombay Stock Exchange have shot up from Rs 833 crore on September 1, 2001, to Rs 2,026 crore on December 13. The most-heard whisper on the bourses concerns the return of Ketan Parekh. That isn't surprising: the market has recovered at a time when economic recovery still seems at least two or three quarters away. -Roshni Jayakar
MARKETING MILESTONES: There was enough marketing activity in 2001 to make, well, Digen Verma happy. Parle's teaser-driven campaign for Frooti helped the company relaunch the brand, although some felt it ended up making the name Digen (short for Digital Generation, according to some) more top-of-the-mind than the brand itself. While on the subject of relaunches, Hindustan Lever relaunched most of its tea brands and Cadbury's did 5 Star and Gems. And recognising that many Indian consumers use the same soap to clean body and soul, sorry, hair, HLL extended its brand Breeze to Breeze 2-in-1-perhaps a first for any company that operates in the Rs 4,200-crore soap market in the country. There were launches (as in just launches, not relaunches) too: eight new car brands hit Indian roads in 2001, with the Fiat Palio (1.2) at the low-end and the Mercedes C-Class at the other extreme. And the quest for profitable niches continued: with Titan and Timex's emphasis on a steel range (Rs 1,250-7,000) to Madura Garments' launch of a premium garment brand, Sartorial. However, the lead story of 2001 was the continuing focus of companies on promotions: across product categories and market segments, companies wooed diffident consumers with in-your-face offers. -Shailesh Dobhal NEWS MAKERS
-T.R. Vivek NGOS: Two non-governmental organisations, the Chennai-based M.S. Swaminathan Research Foundation (MSSRF) and the Delhi-based Development Alternatives bagged the prestigious Stockholm Challenge award, for the usage of it for rural empowerment this year.
MSSRF's experiment in 12 villages of Pondicherry uses a hub-and-spokes model of data-cum-voice communication within the villages to bridge the digital divide. The website www.mssrf.org has location specific information and also dynamic information on development programmes of the government, weather information for the fishermen, and topical inputs for the farmers. The villagers access information through the internet from the knowledge centres, which are managed by local women. Access is free and a population of nearly 10,000 benefits from the effort. ''We provide only the technology and ask the communities to sustain the project,'' says Swaminathan. Former Harvard physicist, Ashok Khosla's tarahaat uses a similar dotcom model for empowering rural communities in Bundelkhand and Punjab. tarakendras akin to Swaminathan's knowledge centres are run by young local entrepreneurs on a commercial basis. Another NGO that hit the headlines this year was Anil Agrawal's Centre for Science and Environment (CSE). For the last two years CSE has been Delhi's CNG-crusader. In November it came out with a ''Green Rating'' for automobile companies in India. The report earned the wrath of virtually every auto maker as it indicted most for not being up to the mark when it came to environmental standards. Still, it's all in a good cause. -T.R. Vivek NPA: If there is one thing 2001 will be remembered for-not very fondly, though-it is the virtual collapse of the Indian financial system. That the NPA (non-performing asset) cancer was eating into the very vitals of the FIs-courtesy, poor appraisal of reports, asset-liability mismatch, and high cost of borrowing-was generally known, but the real extent of the damage only became evident when IFCI failed to honour its interest payment obligations on Rs 220 crore worth of bonds in July 15 this year. Things came to a head when the institution was put on a rating watch for a possible downgrade by three credit agencies-Fitch, Moody's and ICRA-within a span of three days. The details: IFCI's net NPA's have increased from 20.04 per cent in 1997-98 to 21.49 per cent in 2000-01; and even these figures are been disputed by the Reserve Bank of India which claims that IFCI's actual net NPA is much higher at 32.36 per cent. The government has sought to gloss things over by working out a Rs 1,000 crore lifeline for IFCI; Rs 600 crore of this will come from its major shareholders: Industrial Development Bank of India (IDBI), State Bank of India, Life Insurance Corporation of India, and General Insurance Corporation of India. The catch? The share of IDBI, which has 31.71 per cent stake in IFCI, works out to Rs 200 crore. With non-performing assets of 14.8 per cent, such infusion will mean IDBI has to make additional provisions in its balance sheets. Now, it is IDBI's turn to ask for a relief package. -Ashish Gupta OLD ECONOMY: With the dotbomb blowing up and tech companies hitting the brakes, stodgy old-economy companies were back in favour. Investors on Dalal Street scurried for safety in old economy stocks in a bid to escape the software fallout. High on their pecking list were pharma companies like Dr Reddy's Lab, Cipla, and Ranbaxy, and some select cement manufacturers like Gujarat Ambuja and acc. The recession-proof Hindustan Lever was hot too. And in auto, Hero Honda and Bajaj Auto rode up. That did not mean cul de sac for top software scrips. Infosys and Wipro kept investor interest alive, thanks to their strong fundamentals and above-average returns. In fact, towards the end of the year, even the second-rung software stocks had started moving up.
With the economy slowing down, the more aggressive old economy majors took to spring cleaning with a vengeance. Manufacturing processes were put under the lens, as were headcounts. Even traditionally benevolent employers like Tata Engineering and Bajaj Auto retired surplus labour. Still, potential employees looked at manufacturing companies with a new-found respect, simply because of their more stable business models. All in all, 2001 was when sanity returned to the hype-struck investors. -Roshni Jayakar
POPULATION: Here's what happened on the population front: India added another Australia (2 crore people) in just 365 days. The latest tally? 1,027,015,247. Scary? You bet. So, what is India doing about it. On paper, there is a Family Planning scheme. The only hitch is that it doesn't seem to be working. Sure, there's been some improvement. Where the country had 40 children being born per 1,000 of population every year, the rate has now slowed to 25. But achieving the target of 21 children by 2010, seems near impossible. Some states like Kerala have managed their family planning programmes fairly well, lowering fertility rates to 2.1 per couple. But other states like Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Orissa, Chattisgarh, Uttaranchal, and Jharkhand, which account for 48 per cent of the country's population have made no progress. ''There is no dearth of funds, but the states have to be motivated,'' says C.P. Thakur, Union Minister for Health and Family Welfare. If they don't, India's population by 2005, will soar to 1,085,455,000. Think about it. -Vinod Mahanta
PRIVATISATION: If there's one minister in Team Vajpayee who'll be ending the year in good cheer, it is Disinvestment Minister Arun Shourie. The privatisation bus he's been driving for just about a year is coasting along merrily, after a series of false starts. Shourie and his D-company have privatised three companies and eight hotels this calendar year, netting Rs 997.24 crore for the government coffers (of which Rs 551.5 crore actually belongs to the last fiscal ending March 2001). It may be far short of the government's disinvestment target of Rs 12,000 crore, yet nobody is sneezing at Shourie's feat, considering that the government had only the privatisation of Modern Foods to show for the whole of 2000. Here's a quick look at Shourie's disinvestment report card: February 2001: October 2001: 74 per cent stake in Hindustan Teleprinters Ltd (HTL) sold to Himachal Futuristic Communication Ltd for Rs 74 crore. November 2001: Six of eight ITDC hotels were sold for Rs 60.23 crore. Sure, Shourie had his share of failures as well. Hindustan Zinc didn't get sold because of some pollution-related issues. Nor did the prime Ashoka Hotel, Delhi, reportedly because the asking price was too high. But the minister is confident that he will get some big ticket privatisations (like IBP and IPCL) out of the way before the end of this fiscal. That's one man in a hurry. -Seetha
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TODAY | INDIA
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ASHWIN MUTHIAH: The scion of the M.A.
Chidambaram group took over reins of flagship spic. However, for the
35-year-old Ashwin Muthiah, that has been the only piece of good news so
far-the debt-ridden spic's net profit fell 15 per cent in FY 2001. For
starters, he will have to spend more time at the spic's Chennai base
rather than in Singapore.
SIDDHARTH LAL: The 28-year-old who
took over as CEO of Royal Enfield this year has an unenviable task. He has
to convert the great brand that is Bullet into some ready cash for Eicher.
Lal is planning to roll out four new models in the next two years and is
seeking to grow the Bullet family with branded accessories. Being a bike
freak could help.
DILIP MODI: He was a CEO at 24, but
this year, at 27, he faces an existential dilemma. Modi, who sees himself
as the quintessential telecom exec, found his business slipping away. He
sold his Kolkata circle to Mittal. And his operations in Karnataka and
Punjab could go soon too. A 10-year licence to operate cellular services
in Nepal might be a consolation.
SULAJJA FIRODIA-MOTWANI: Kinetic
decided to make the shift from non-geared scooters to bikes. Spearheading
this change was Firodia-Motwani who oversaw the launch of the Challenger,
which didn't do too well. In a second attempt, Kinetic is now launching
the GF 125 with Korea's Hyosoung.
ANIL AGARWAL
SUNIL MITTAL
VENU SRINIVASAN
EKTA KAPOOR
