Divestment signal for Air-India
Sebi fiat pulls sensex down from new high
High tide in Haldia downstream
Maran stalls Unilever acquisition of Rossell
ED notice toDunlop brass
Unit Trust weighs VRS fund
Insurance pact with AMP likely
Foreign Exchange, Bullion, Stock Indices

 
 
DIVESTMENT SIGNAL FOR AIR-INDIA 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Feb 14 
The ministry of disinvestment has circulated a Cabinet note, proposing the sale of 51 per cent shareholding in national flagship carrier Air-India (A-I) to a strategic partner.

At civil aviation minister Sharad Yadav’s insistence, the note suggests throwing open the bidding to foreign companies, including airline corporations.

This is at sharp variance with a Cabinet decision, taken last month, not to let foreign companies and airlines bid for Indian Airlines (IA), which too has been put on the block with 26 per cent being offered to a strategic buyer and 25 per cent to employees, financial institutions and the public.

The Cabinet note is likely to be taken up later this month along with proposals to sell a 52.5 per cent stake in Pawan Hans Helicopter Ltd and 100 per cent stake in Hotel Corporation of India Ltd.

The disinvestment and civil aviation ministries wanted the issue of A-I selloff be taken up at tomorrow’s meeting of the Cabinet committee on disinvestment.

However, this will not be possible as several key ministries have yet to comment on the note.

Officials said they were keen to push the proposal quickly but were also anxious that there is unanimity among coalition partners on the issue. The sale of Air-India to a foreign airline might prove to be an emotive issue for many in the Cabinet, especially among former socialists.

The government is keen on pushing through the sale at the earliest because the airline needs an immediate funds infusion of Rs 1,000 crore to wipe out losses and for buying aircraft.

The best option is to bring a company which is financially strong, to save the airline from going bankrupt as well as having an experience in running global airlines. These two pre-qualifications automatically mean that foreign partners, especially airlines, are the right grooms for the ailing airline.

Officials said the government is offering a larger chunk of equity of A-I to attract “top of the line investors” “No one will come if we say we will give a small minority stake,” the officials said.

As a first step, Cabinet nod will be sought for an in-principle approval of the sale along with permission to appoint a global advisor to chalk out the details of the bidding process. The note also says that in the next stage the government will bring down its holding further by selling stakes to the public and Air India employees.

The civil aviation ministry, last year, drew up a plan to sell a 26 per cent stake in Air-India to a strategic buyer and another 14-25 per cent to employees, financial institutions and the public.

But this proposal never saw the light of day.    


 
 
SEBI FIAT PULLS SENSEX DOWN FROM NEW HIGH 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 14 
The Securities and Exchange Board of India (Sebi) today slammed a 5 per cent additional volatility margin on 10 hot scrips and, in an unprecedented move, decided to bring institutions under the purview of the margin system.

In other words, institutions will be treated like big brokers when they make heavy purchases in the stock market.

Zee Telefilms, Infosys, HFCL, Pentamedia, Silverline, NIIT, Satyam, Global Tele, Digital Equipment and DSQ Software will attract these margins, Sebi chairman D R Mehta told reporters after a meeting with stock exchange representatives. He made it clear the list of ten scrips would be modified from time to time by bourses. The market regulator has also called a meeting of institutions later this week to consider clamping additional margins on them.

The fresh round of measures, prompted by a stock boom that many find hard to explain, sent the BSE sensex plunging to 5924.31 at close after it scaled a new peak of 6150.69 points. At the end of the day, it was a modest gain of 9.25 points over Friday’s finish for an index that opened at a heady 6130.23 points.

As reports about the Sebi’s fresh moves to temper the stock surge came in, operators sold heavily, mainly in index-based scrips. The lack of support from foreign institutional investors (FIIs) ensured that the fall in values was sharper.

Barring Infosys and a few other infotech stocks, most shares were whipped in the wave of selloff as operators, stung by Sebi’s announcement, scrambled to cover their open positions.

The market was expecting a technical downward correction but the size of the fall — which saw several shares tumble from record highs — caught many in the trading ring off guard, dealers said.

Local institutions sold some heavy-weighted index-based shares like Bhel, ITC, L&T, MTNL and Telco. Infosys and SBI were major gainers while Zee Telefilms was the most traded scrip with a turnover of Rs 704.34 crore.

Earlier in the day, Sebi said the 10 stocks singled out for additional margins had fuelled the bull run on bourses in recent times. The margins, to be imposed from February 16, will be based on the daily net outstanding position of brokers.    


 
 
HIGH TIDE IN HALDIA DOWNSTREAM 
 
 
BY RENU M R KAKKAR
 
Calcutta, Feb 14 
Universal Cables is ready to set up a PVC resin plant with a capacity of over one lakh tonnes for more than Rs 300 crore in what is the biggest project proposal to have been submitted so far for Haldia Petrochemicals’(HPL) downstream sector.

This emerged after a high-level meeting between top state authorities and HPL officials to review preparations for the start of commercial production at the Rs 5,170-crore project. Convened by industry secretary Jawahar Sircar, it was attended by HPL director and MD-designate R.Saldanha, WBIDC managing director D. P. Patra, WBIDC chairman Somnath Chatterjee, HPL deputy chairman Subrato Ganguly and managing director A.K. Krishnamurthy.

Sources who attended the meeting said the government wanted to start negotiations aimed at roping in Marubeni India as a partner in the Universal Cables project. The Japanese major had, in the past, expressed its intention to set up a PVC plant with another partner.

Finance minister Asim Dasgupta had announced in December last year that the HPL project would go on stream on Feb 15. While company sources were not sure if the deadline will be met, they said the completion of the naphtha cracker unit meant that work could begin by February 20. However, the production schedule was not discussed at today’s meeting, which concentrated on downstream projects.

Top sources who attended the meeting said the following projects came up for discussion and their status reports were reviewed.

Work on Neelkamal Plastics’ Rs 20-crore project for consumable goods, being set up at Barjora, is under progress.

Kalpana Industries’ Rs 25-crore project for XLPE (PVC) has completed registration formalities and is in the process of building its unit in Bhasa Joka.

Supreme Industries’ Rs 25-crore project to manufacture crates and furniture in Durgapur: Land has been identified and construction is expected to begin by February 17.

TPI has expressed its intention to set up a HDPE packaging industry (jumbo bags). The company is looking at a 4-acre plot in the Uluberia growth centre.

Marcus Oil & Chemicals intends to build a polyethylene wax project at Haldia for Rs 40 crore; about 10 acres has been identified even though the company has not registered with the department of industries till now.

Bayer (India) had initially shown interest in setting up a Rs 500-crore polybutadiene rubber project at Haldia but has remained silent since. The government has written to Peter Schneider of Bayer (India) to enquire the status of the plan.

The status report discussed today says 52 units have been installed while work on 38 units was under way. The installed capacity of downstream industries is currently 17,700 MTA, but it is projected to rise to 19,2000 MTA by mid 2000.

HPL’s final products include polyethylene, polypropylene and other chemicals like benzene and butadiene.    


 
 
MARAN STALLS UNILEVER ACQUISITION OF ROSSELL 
 
 
FROM NANDITA ROY
 
New Delhi, Feb 14 
The Foreign Investment Promotion Board (FIPB) today deferred Unilever plc’s proposal to acquire 74 per cent stake in Calcutta-based Rossell Industries.

The decision was taken on directions given by commerce and industry minister Murasoli Maran who wants the Cabinet to first decide on foreign direct investment (FDI) in tea plantations before approving Unilever’s proposal.

Sources said the commerce ministry has no objection in allowing up to 74 per cent stake in tea plantations, but Cabinet approval is necessary as the case is a “sensitive” one.

Ownership of tea plantation by a multinational will violate Fera provisions. Moreover, Rossell has seven gardens in Assam which is a politically sensitive region.

Maran, who is out of the country, is expected to take the issue in the Cabinet after he comes back.

Unilever’s proposal has been in limbo for sometime, with the delay getting heightened due to lack of a clear policy in the tea plantation sector.

In its proposal to FIPB, Unilever said it wants to acquire 74,88,035 shares for Rs 129.5 crore in Rossell through its Netherlands-based subsidiary Unilever Overseas Holdings BV.

Rossell Industries which is co-promoted by the UK-based Jokai Tea Holdings and Y.K. Modi Associates has seven tea gardens in Assam with a planted area of 3,171 hectares.

While Jokai holds about 36.5 per cent in Rossell Industries , Y.K. Modi and Associates holds 28.47 per cent of the paid up equity capital of the company.

The Unilever subsidiary also proposes to acquire 8.97 per cent held by retail investors through a public offer.

Th rest of the retail holding in the company is proposed to be acquired by Unilever’s Indian subsidiary Hindustan Lever Ltd through the public offer route.    


 
 
ED NOTICE TODUNLOP BRASS 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Feb. 14 
The Enforcement Directorate (ED) has sent a call notice to key Dunlop India officials for a hearing on Tuesday over alleged violation of the Foreign Exchange Regulation Act (Fera). They will be appearing at a time when there are lingering concerns over the reopening of the Sahagunj unit.

The notice from the directorate (T-4/23-C/95 [S (N) has been sent to Dunlop India director N. S. Bedi, general manager R.K. Khosla and export manager K. Narain. It has been pasted on the walls of the company headquarters at Mirza Ghalib Street because the directorate says it has no idea about the whereabouts of officials wanted for questioning.

“Under Section 10 (c) of the Adjudication and Appeals Rules of 1974, a notice can be put up in this manner. Since we cannot trace the officials named in the notice, we have sent it to the Dunlop headquarters, their last-known address,” an ED source said

However, officials from the directorate refused to divulge the specific issues involved behind the decision to serve a notice. “They have been asked to appear personally for hearing on some old issues,” is all they would say when asked for details.

Shukla meets Basu

Even as the summons were served, company president M. D. Shukla and senior vice-president Prem Sharma met chief minister Jyoti Basu today to discuss the reopening of the Sahagunj factory.

“The chief minister asked us to reopen the unit before March 11. But, we told him that it would not be possible for us to resume operations earlier. We have finalised the date and are realigning our business plans accordingly,” Shukla told The Telegraph. He claimed the plant cannot be reopened earlier due to technical problems. “The plant is in a bad shape. It has to be restored to its original state. The contractors were supposed to start work on February 7. Now, I have to call them back again. We need this lead time. I have told the chief minister about it.” He also said funds to keep operations at the Ambattur unit going have already been tied up.    


 
 
UNIT TRUST WEIGHS VRS FUND 
 
 
BY A STAFF REPORTER
 
Calcutta, Feb 14 
Have you opted for a voluntary retirement scheme? Don’t know what to do with the bulging purse?

Nothing to worry. The Unit Trust of India may soon lighten your burden by introducing a fund exclusively for those who have opted for VRS in various industries.

Addressing a press conference here today, UTI executive director (business development & marketing) Brij Gopal Daga said VRS had become the order of the day with a large number of people opting for it across the country. “The fund will cater to these people who need to park their money for better returns,” Daga said.

VRS Fund, which is how the proposed scheme will be named, will have several ‘sub-sectors’ so that investors can gain the benefits of both short and long-term investments. Daga, however, said the fund was still at the conceptual stage, with various proposals being considered to add value to it.

Daga was here to launch another index fund based on the S&P CNX Nifty index. The open-ended Nifty Index Fund (NIF), Daga said, has been designed to enable investors gain the advantages of investing in the best 50 scrips in the National Stock Exchange (NSE), with a much lower risk.

The fund has a lock-in period of one month and a ‘default sales charge’ of one per cent if an investor retires from the fund within the first six months, Daga said.

Among the 50 companies of the Nifty, the software sector occupies a 23 per cent share, FMCG 21 per cent, petroleum 17 per cent, banks 9 per cent and the telecom sector 6 per cent.

Daga said the success of its earlier index fund based on the BSE sensex, known as Master Index Fund (MIF), inspired the launch of this fund. MIF, which has an asset base of Rs 200 crore, has only 30 basis points lower than the sensex while the globally permissible limit is one per cent.

The minimum investment one has to make is Rs 5000 in units of Rs 10 each at par. The sale of units under the plan will re-open from March 28.

UTI, which has mopped up over Rs 600 crore this year, is expecting a much better response from investors as the capital market is looking up after a long time.    


 
 
INSURANCE PACT WITH AMP LIKELY 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Feb 14 
The Unit Trust of India (UTI) is in talks with Australian insurance major AMP, to set up a joint venture for entering the insurance business. Daga said AMP, which is the largest insurance company in Australia, is keen on taking a 26 per cent stake in the proposed venture. UTI will hold the remaining 76 per cent.

Daga also did not rule out the possibilities of setting up two separate companies for the life and non-life insurance businesses.

“However,” he added, “we are more interested in the life insurance sector which has a huge potential, though we are also exploring the opportunities in the non-life segment.”    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
Foreign Exchange
US $1	Rs 43.62	HK $1	Rs. 5.55*
UK Ł1	Rs 69.42	SW Fr 1	Rs. 26.45*
Euro	Rs 43.21	Sing $1	Rs. 25.45*
Yen 100	Rs 40.32	Aus $1	Rs. 27.20*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay
Gold Std (10gm)	Rs 4815	Gold Std (10 gm)	Rs 4770
Gold 22 carat	Rs 4545	Gold 22 carat	Rs 4410
Silver bar (Kg)	Rs 8100	Silver (Kg)	Rs 8200
Silver portion	Rs 8200	Silver portion	Rs 8205

Stock Indices

Sensex	5924.31	-9.25
BSE-100	3468.38	+52.81
S&P CNX Nifty	1744.50	-11.50
Calcutta	145.02	-3.96
Skindia GDR	1723.09	+138.62
   
 

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