This is a brief summary of the highs and lows in different sectors of the Indian industry.Agriculture

Perhaps the sector that was worst affected last year is agriculture. Not only was agricultural production affected by unseasonal rains, floods and cyclones, the year was also characterised by a severe shortage of the most popular phosphatic fertiliser, di-ammonium phosphate (DAP). The saga of the onion shortage which led to soaring prices is only too well known. Sporadic price rises were also felt in other vegetables. The dropsy episode which led various state governments to ban the sale of mustard oil led to its own set of problems. As farmers found it difficult to sell their produce, several of them decided to shift to other crops and the effects will be seen this year.

Automobiles

The year 1998 would undoubtedly be remembered in the auto sector, as the year of the "small car". Given that the second half of the year was witness to the entry of threenew pretenders to MUL's crown. Hyundai, Daewoo and Telco, all finally put their cards on the table with their versions of the small car. But perhaps saving the best for last, was the start of an all out "price war", where in MUL announced price cuts for some of its vehicles. Honda and Mitsubishi made entries into the mid-size car segment. But perhaps the most wretched conditions, were faced by the commercial vehicle makers. A fact reflected in the enforced slowdown to a three-day production week.

Aviation

In the aviation circles 1998, would truly be remembered as a year that further exemplified the mockery that was the "Open Skies Aviation Policy". A successful turnaround of both the state-owned airlines namely--AI and IA, gained precedence due to the disinvestment programme. Given the precarious financials of both the carriers, swift action has been the need of the hour. Which is exactly the area where-in the centre has been found wanting once again. But perhaps, the most forgetable incident inthe aviation sector, was the tangled web of bureacracy woven to ensure the failure of the Tata Airline project.

Banking & finance

The year 1998 will go down, as the year when the banking sector braced itself for tougher prudential and disclosure norms as the RBI started implementation of the second Narasihmam Committee report. The non-banking sector was almost stifled to death, in the beginning of the year but timely measures by the RBI at the end of the year saw some life being pumped into this important sector. However, the year undoubtedly belonged to the volatile "rupee" as it plummeted to new lows and touched 43.70 against the dollar in August as an aftermath of the nuclear tests and the subsequent downgrades by the international rating agencies. Last but not the least, was the success of the RIB which mopped up $4.21 billion, at a time when most east Asian countries were floundering.

Cement

It was the sector of the year. Lafarge became the first foreign cement player to acquiremanufacturing unit in India. Another international major, FL Smidth, hiked stake in Saurashtra Cements. One hostile bid was successful-ICL took over Raasi Cement- and one for all practical purpose failed-Saurashtra-Autoriders. Grasim besides acquiring Dharani and Digvijay also acquired Indian Rayon's cement unit. ACC preferential issue to Tatas generated needless controversy. Prices for one quarter, touched 8-year low in Gujarat and south witnessed formation and break-down of at least two cartels.

Companies Act

The Act was amended to permit buy-back of shares. The prior approval of central government for inter-corporate investment exceeding the prescribed ceiling was done away with and nomination facility for shares/debentures and deposits was introduced. Accounting standards were made mandatory and National Advisory Committee was formed to pick and choose the standards of ICAI.

Fertiliser

For fertilizers, 1998 was plagued with controversies and back-tracking. It all started with thebudget, where the finance minister announced a Re 1 per kg hike on the controlled farm-gate price of urea. On an uproar by the parliamentarians prices were initially rolled back by 50 paise and later it was completely withdrawn. The much awaited Hanumatha committee report was announced during the year. All the report managed to do was unite the various factions against the recomendations. But what really took the cake was that subsidy for decontrolled fertilisers for the kharif season were announced half way through the rabi season. This resulted in shortage of DAP, which is likely to affect agriculture production.

Non-ferrous metals

Although the prices of all the non-ferrous metals have slid to their historical decade low prices, the fortunes of domestic non-ferrous players were not so grim. Partly they were helped by special import duties imposed by the government at the time of budget and partly because some of industry players could not produce due to operational failure. The smelter of Nalcowas closed in first quarter which resulted in higher aluminum prices for other players. In the second half of last year, one lakh tonne per annum plant of Birla Copper commenced production. Hindustan Copper has been allowed hedge in LME, which would reduce their risks.

Oil & refineries

The year 1998 will go down in the history of the oil and petrochemical industry of the country as the year when decontrol of the sector commenced. The administered price mechanism which assured a 12 per cent post tax return has been done away with. The most important development during the year for the oil sector was issuance of oil bonds in lieu of the companies deficit in the oil pool account. Another important development was the formation of Petronet India, the pipeline holding company formed with equity participation of the national oil companies. The government is even considering opening up of the pipeline sector to private players and has announced the launching of the Nelp (new exploration and licencingpolicy).

Power

As a year, 1998 was hardly any different from 1997 or for that matter for any year from 1991. The willingness of government to get things going is reflected in AES-OPGC deal which at Rs 603 crore is the largest acquisition in corporate India but more than six months after the deal, the FIPB is yet to clear the deal. Lot of heat was generated because Regulatory Commissions were mandatory for states but was almost immediately made voluntary. Policy for mega power projects was announced and except Orissa, all states paid lip service to sectoral reforms. For the first time in history, an SEB-GEB decided to exit from generation and concentrate on T&D.

Steel

News readers would have heaved a sigh when the ministry of commerce set the floor price for imports of various prime and second grade material steel. For the whole of last year the entire media, FIs bankers went clamoring for protection of the margins of local industry without a scant look at the deep routed fundamental woesfacing the sector. The exercise started with the budget wherein the higher import duties for CR were imposed. Later the special import duty for raw material required for steel production were removed and finally the floor price were imposed. But at the fag end of the year there were reports suggesting that FIs have decided to act tough on promoters who have suppossedly diverted funds and understated the project cost.

Sugar

1998 was not too good a year for the sugar industry. Excess production and higher inventories carried forward from the previous year kept sugar prices low. Growing imports from other sugar producing countries became a serious concern for the indigenous producers, who have been demanding higher duties on imported sugar. However, the government, fearing a rise in sugar prices in a scenario of increasing prices of agricultural commodities, did not concede to their demands. Imports, therefore, continue unabated and it has been pointed out that countries like Pakistan have beensubsidising their exports, substantially. At the same time the government appears to be considering an enhancement of the 40 per cent levy on sugar units.

Telecom

After four years of teething trouble, to say that 1998 was an eventful year for the telecom sector, would be an understatement. Importantly, there were two firsts in the year. The first being Bharati Telecom's path-breaking launch of its basic telephony services in Indore and Madhya Pradesh. The other was undoubtedly the revolutionary Internet policy, which paved the way for private internet service providers (ISPs) to enter the fray. A consequence of which was the recent commencement of services by Satyam Infoway, which has for the first time made VSNL feel the heat of competition. But perhaps the year would be most remembered, for the fact that the powers that be, realised the importance of converging technologies.