The sight of a lucrative Indian car market had resulted in a crowd of foreign car-makers signing up without realising their dire implications. But the vastly different conditions now have obliged them to sing a different tune, having rendered the Indian operations of quite a few of these car- makers economically unviable. Thus relaxation of the indigenisation norms yet again seems to be another sop for car ventures. For the government, the objective is to use this ploy to ensure continued FDI commitments from all the foreign players and also try and entice some of the fringe players that are contemplating a decision to invest.

But even though the current relaxation in indigenisation norms is more practical in its approach, it still remains skewed and contains grey areas which are open for misinterpretation by manufacturers. As per the new norms, given that a vendor to a car project is importing less than 50 per cent of its inputs, the equipment supplied by the vendor will betreated as indigenous while calculating the indigenised content of the car- maker. The policy, however, is quiet about the treatment of critical components like engine parts imported by the vendor.

Would not an approach where the weighted import content of each vendor be assessed, clubbed together and factored into the import content of the car manufacturer to calculate his import content be more appropriate? What this would basically mean is that each ancillary vendor will have to declare the import content of his product, which would then be taken into account while calculating the net import content for a specific car project, thus rectifying the "indigenisation" anomaly once and for all. The policy, however, has chosen to finally lay to rest the problem regarding the applicability of these new norms on those car manufacturers that have already signed MoUs with the government, with the centre stipulating that MoUs already signed with car companies can be amended according to the new norms. But onceagain, the policy is silent about any kind of time frame for the adherence to the new guidelines by the older players.

The DGFT is also said to be contemplating the possibility of adopting a policy of different horses for different courses, which means allowing different indigenisation levels - export obligations, etc for different car models and companies. This questions the very existence of a uniform auto policy. As most of these car-makers operate in rigid car markets abroad, why should the centre bend over backwards to accommodate them in India?M

angalore Chemicals & Fertilisers

Negative contributions from the DAP business resulting from a weaker rupee have been adversely affecting profitabilities at Mangalore Chemicals & Fertilizers (MCF). The rupee has depreciated by over 12 per cent against the dollar in the past 12-13 months, resulting in a higher import bill for the company. Further, the main raw material for DAP manufacturers - rock phosphate, is not available locally. Though theinput costs have gone up, realisations from DAP sales have not improved. The firm also awaits the pending revision in government concessions, which will help in improving the situation.

During the first quarter of the current fiscal, MCF's performance has also been affected by incessant contract-labour agitations, which has resulted in a urea stock build-up of 13,000 tonnes in the silo thereby, affecting income from urea sales. It has also had an impact on DAP production, which has fallen below target level by 14,500 tonnes. As a result, operating profit for the first quarter has declined by 27.65 per cent, from the previous period's figure of Rs 4.81 crore. Interest costs have also gone up by 4.23 per cent to Rs 5.18 crore, and the company has thus posted a loss of Rs 2.94 crore during the period.

For the year ended March 1998, however, the company had posted encouraging results. Income from operations increased by 44.41 per cent to touch Rs 451.60 crore. Total expenditure increased less thanproportionately to Rs 407.40 crore, yielding an operating profit of Rs 44.20 crore (an increase of 74.43 per cent over the previous year). Cash profit was up from a mere Rs 7.68 crore to Rs 25.48 crore and the net profit had increased from Rs 18 lakh to Rs 17.33 crore. But this improved performance was mainly owing to the inclusion of subsidy arrears of Rs 24.74 crore in the net sales for the year. If this were not taken into account, the firm's performance would not have been much to talk about. MCF's fortunes are unlikely to take a turn for the better in the near future, especially with the rupee not showing any signs of improving, there being no end to the labour agitation which is yet to be tackled effectively and the government policy on fertiliser subsidies and concessions remaining fluid. Little wonder then MCF's stock has been trading at its historic low of about Rs 2.00

Indo Rama

Nothing seems to be going right for Indo Rama these days. After a disastrous performance in 1997-98, when thecompany reported a net loss of Rs 87 crore inspite of volume increase in sales, the management has declared a lockout in two of its five plants in Nagpur. One polyester-fibre plant and a texturising unit have been shut owing to the failure of talks between the management and union. With a production loss of 250 tpd of fibres, the losses for Indo Rama would be even higher in this half, as survival lies in volume sales. This is, however, good news for Reliance, which can now easily increase the prices for PFY and PSF.

(Contributions from Percy Dubash, Sarad Saraf & Manish Saxena)