Zee unveils $1.5 bn ADS issue plan
Sensex tumbles, Wipro market cap down 8%
Mamata outguns Ghani Khan
Industry slams freight hike
Private sector help sought for power
Higher procurement cheers wagon makers
Freight loading target set at 450 mt

 
 
ZEE UNVEILS $1.5 BN ADS ISSUE PLAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 25: 
Media moghul Subhash Chandra today signalled to the world that his ambitions are not confined to India alone when Zee Telefilms Ltd, his Rs 226 crore media powerhouse, announced that it will raise a mindboggling $ 1.5 billion (Rs 6,540 crore) through a fresh offering on the American markets, the largest-ever overseas float made by an Indian corporate.

The purpose behind the mammoth offer is to “develop the company’s leadership position by expanding the existing business lines and developing related business lines in Internet and new media sector,” B R Jaju, executive president (finance) told The Telegraph.

Jaju said the ZTL board had cleared today a proposal to raise up to $ 1.5 billion, or issue up to 40 million equity shares including a premium (whichever is higher), through an issue of American Depository Shares (ADS).

He said the offering would be made through a prospectus. Zee will convene an extra-ordinary general meeting of its shareholders on April 10 to seek their approval.

Jaju chose not to spell out what he meant by the “new media sector”.

Commenting on the issue, sources close to Zee said that in view of the size of the offering, ZTL may go in for a multiple offering on the US markets. “That is for our lead managers to decide,” Jaju said when asked to comment on such a possibility. “It would also depend on the regulatory approvals and the views of our shareholders.”

Jaju further divulged that consequent to the issue, Zee estimates its equity capital to increase by a maximum of 10 per cent. At present, the equity capital of the company stands around Rs 40 crore with shares of an equal amount (the par value of the Zee scrip is Re 1).

Analysts were stunned by the announcement and said the offering would significantly enhance the stature of ZTL not only on the domestic markets but also on the international markets. “They have a presence in several countries. With their brand equity among the South Asian community in these countries including the US and a media to Internet company, the issue would obtain a good response,” an analyst with a foreign brokerage said.

On the BSE today, the Zee scrip, however, closed lower at Rs 1430.65 as operators rushed to square off their positions. Opening at Rs 1585, it rose to an intra-day high of Rs 1603. The counter witnessed 33.49 lakh shares traded and the total turnover stood at Rs 504.29 crore. The scrip is now expected to touch Rs 2,000 in the immediate term.

In line with chairman Chandra’s plans, Zee has now planned to become the choice for South Asians across the globe. While Zee TV was launched in 1992, it began its operations in the UK in 1995. It went to Africa in 1996 and the US in 1998.

To cater to the South Asian audience, the company has also lined a strategic plan to enter the print medium in Europe. In the previous year, Zee Africa started beaming to Mauritius and it is now said to be focusing on the Canadian market.

ZTL, which earlier, this year had acquired the 50 per cent stake held by Rupert Murdoch’s Star TV in three joint ventures — ATL, PATCO and Siticable — is aggressively trying to tap the massive subscription market through the launch of its direct-to-operator (DTO) service. Subscription revenues is later expected to be a major revenue-earning stream for the company, overtaking advertising revenues.

The company is also looking aggressively at the Internet for which it has formed a separate subsidiary, Zeenext.com. It is planning to invest over Rs 800 crore over the next few years in this segment.    


 
 
SENSEX TUMBLES, WIPRO MARKET CAP DOWN 8% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 25: 
The market capitalisation of Wipro plunged a whopping Rs 13,734 crore today as the share was clobbered in an infotech selloff that sent the BSE sensex tumbling 187.09 points to 5623.08 over its previous finish of 5810.07 points.

Marketmen failed to understand the reason why investors dumped a company that had notched up a record market cap of Rs 2,04,209.31 crore only on February 18. Today, as the scrip lost the maximum permissible Rs 599.50 and remained locked in the lower-end circuit filter for most of the session, its market cap stood diluted by eight per cent at Rs 1,57,956.43 crore.

“Strange are the ways of the market,” said a dealer, unable to fathom the logic behind the abrupt loss of interest in the scrip. However, there were a few who said part of the losses could be attributed to the illiquid nature of the share.

The reasons for the hammering of software scrips in general were clearer. Many dealers said comments by Infosys chairman N R Narayana murthy and managing director Nandan Nilekani that software firms were ready to pay taxes triggered the selloff. “When we are making money hand over fists, the government need not forego a formidable source of taxes,” Narayana Murthy told a TV channel this morning.

The other reason could be the caution exercised by speculators ahead of the budget, even though badla rates were quoted lower between 50 and 55 per cent at the close of settlement on the Calcutta Stock Exchange on Thursday evening.

Earlier in the day, the 30-scrip index opened on a bullish note at 5840.25 but later met with resistance due to selling pressure and dipped to close at the day’s low of 5623.08 as against Thursday’s finish of 5810.17, down 187.09 points or 3.22 per cent. The BSE-100 index slumped 171.71 points to 3416.46 from its previous close of 3588.17.    


 
 
MAMATA OUTGUNS GHANI KHAN 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Feb 25: 
Railway minister Mamata Banerjee did what railway ministers usually do on a rail budget day - announced a series of sops for their home state.

But what stumped her detractors from the Left and made former Congress colleagues see red was her rather successful bid to upstage Bengal’s last Santa Claus at Rail Bhawan — A.B.A Ghani Khan Chowdhury.

Mamata today gifted five new projects to Bengal including a new bi-weekly Sealdah-New Delhi Rajdhani Express out of 19 for the whole country. The state also got seven out of the 14 track doubling projects, a Rs 695 crore project to extend the Calcutta Metro from Tollygunge to Garia, and a plan to take the city’s circular rail to Netaji Subhash Chandra Bose airport.

Barkatda as Chowdhury is popularly known had managed to give Bengal just three projects and electrification of five lines in his salad years as rail mantri, besides Rs 80 crore to be spent on the Metro project.

The veteran Congress leader knew when he was beaten. Soon after Mamata presented her budget, Ghani Khan Chowdhury walked across to congratulate his former junior in the Congress party.

“After a long time the Indian Railways under Mamata Banerjee has shown interest towards the long-pending projects in West Bengal,” Ghani Khan said later. “But I would have been happier if some of the old projects, about which Mamata appears to be in the dark, were included in the budget. They are an open-heart surgery unit at B.R. Singh Hospital, a cancer research centre named after actor Uttam Kumar in Tollygunge, and a kidney transplant unit and a burn unit at Garden Reach and Kharagpur railway hospitals respectively. I had laid the foundation stones of these projects in the early 1980s. If they are completed, the people of Bengal and Assam will benefit.”

Mamata has taken care to see to it that none in Bengal can complain even if there are problems elsewhere. Even the remote corners of West Bengal have been linked through four new train services — Howrah-Purulia Express (daily), Sealdah-New Jalpaiguri Express (tri-weekly), Shalimar-Bankura Express and Sealdah-Amritsar Superfast Express (weekly).

Another new Howrah-Digha Express will be introduced upon completion of new line construction between Digha and Tamluk. Investment on new lines have been stepped up considerably from a level of Rs 514 crore in the revised estimate this year to Rs 825 crore which includes Jogighopa-Maynaguri and Tarakeshwar-Bishnupur via Arambag.

With an eye on her personal constituency where refugees from East Bengal abound, Mamata also announced a rail link up to Petrapole, the border check post with Bangladesh. This is expected to eventually translate into a India-Bangladesh rail link.

Mamata took care to rub in the fact that she had done her bit for her state while the Left front-led West Bengal government was yet to deliver. She urged the ruling Left coalition to share the cost of expansion of the Calcutta metro railway from Tollygunge to Garia.

Later, Bengal chief minister Jyoti Basu said: “I have noted that some of the state’s proposals have been included in the announcements made about new trains and projects in this railway budget. These announcements should be implemented in a time-bound manner. The state government will provide necessary cooperation. We should keep in mind that the state of West Bengal contributes more than Rs 2,000 crore, in terms of freight alone, to the Indian Railways every year.”

Banerjee increased the frequency of the Pune-Howrah Azad Hind Express, extended the Howrah-Trichy express to Kanyakumari, Amritsar-Barauni express up to Katihar and Sealdah-Katihar express to Barauni.

Mamata also decided to gift the people of Darjeeling an upgrade in services and facilities in its famed Darjeeling Himalayan railway. Two “colourful diesel locomotives” will now add to the beauty of that rail service.

Electrification of Ranaghat-Bongaon (32 kms) line announced in 1997-98 budget will cost Rs 14.78 crore.

This is expected to be completed by March 2001. Similarly, the Ranaghat-Gede electrification route will cost Rs 32.35 crore. This was also part of the 1997-98 budget.

Barasat-Hasnabad included in 1998-99 budget, would cost Rs 37.70 crore, slated to be completed by March 2002.    


 
 
INDUSTRY SLAMS FREIGHT HIKE 
 
 
OUR BUREAU
 
Feb 25: 
The railway budget evoked mixed reactions from leading trade and industry chambers, as it sought to increase freight charges, even while trying to augment resources from non-traditional sources.

Industry leaders unanimously decried the budget for raising freight rates by about seven per cent as it would have a cascading impact on the general price level, while lauding it on other fronts.

While the Federation of Indian Chambers of Commerce and Industry (Ficci) reacted overwhelmingly to the budget for sparing the common man from active fare hikes and increasing freight charges moderately, Confederation of Indian Industry (CII) and the Associated Chambers of Commerce (Assocham) felt that keeping the passenger fares unchanged would adversely affect the Railways’ finances.

CII president Rahul Bajaj complimented the minister for launching a development-oriented budget, but added that the continued subsidisation of passenger fares will make the railways’ task of luring freight from the roadways more difficult. Assocham president Shekhar Bajaj lamented that the minister missed the opportunity to rationalise railway tariffs in the face of growing competition from the roadways. Ficci president G.P. Goenka said the railways should strive to achieve a higher freight loading target. “Care has to be taken that the freight charge increase across-the-board, barring certain essential commodities, does not result in cost-push inflation,” he added.

PHD Chamber of Commerce and Industry (PHDCCI) president K. S. Mehta said the freight hike should have been avoided for sending the right signals to trade and industry. The All India Association of Industries lauded the measures to mop-up additional resources through partial leasing (Rs 100 crore), leasing of right of way for laying optic fibres, telecom links (Rs 500 crore), commercial exploitation of land (Rs 150 crore) and advertising and publicity (Rs 100 crore). President of the Oriental Chamber of Commerce, Zubair Ahmed congratulated the railway minister for not increasing the fares of any class. The Bengal Chamber of Commerce & Industry president, B.D. Bose, welcomed the Budget stating that it has equal and objective benefits for all states. Merchants’ Chamber of Commerce president Ravi Todi was critical of the freight hike, which, he said, would hit industry very hard.    


 
 
PRIVATE SECTOR HELP SOUGHT FOR POWER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 25: 
In her maiden interaction with an industry chamber, railway minister Mamata Banerjee invited the private sector to partner the railways in power generation, to counter the high cost of power currently being supplied by state electricity boards (SEBs).

“We have decided to set up a corporation with private sector participation to bring down the high tariffs on power charged by state electricity boards,” Mamata said in a post-budget interaction organised by the Confederation of Indian Industry (CII) here.

She said the railways would also renegotiate the power purchase agreements entered by it in an attempt to reduce the burden on account of costly power.

The outstanding dues of railways to SEBs is to the tune of Rs 14,000 crore.

Responding to CII’s reaction on the cross subsidisation of passenger fares which has remained untouched, she said, “A passenger fare hike of 20 per cent hike would yield only Rs 400 crore, but the budgetary allocation has been hiked substantially to Rs 11,000 crore to take care of the resource crunch.” “If we do not provide amenities to common people, we have no right to increase passenger fares,” she added.

She said the railways should stand on its own. “We will utilise the huge untapped assets belonging to the railways to make it self-reliant. The railways are the lifeline of the nation. But it has to stand on its own,” she said.

The minister said the railways would enter into joint ventures to generate more income by offering its large network of optical fibre cables.    


 
 
HIGHER PROCUREMENT CHEERS WAGON MAKERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 25: 
Mamata Banerjee’s maiden railway budget is likely to cheer Bengal’s wagon makers who hope the proposal to purchase 23,000 wagons—up from 10,000 promised in 1999-2000—will breathe new life into an industry that is now operating at a third of its installed annual capacity of 36,000.

Banerjee said the 475 million tonnes target for freight traffic fixed for 2000-01 was 25 million tonnes higher than this year’s. As a result, more wagons are needed to meet the achieve that goal.

In Calcutta—where key wagon companies are based—the move evoked a mixed reaction. “The wagon industry will welcome this budget for higher procurement. It is a bold effort on the part of railway minister to announce an annual plan of Rs 11,000 crore, which marks an increase of 23 per cent over the previous year,” Texmaco executive president R.C. Maheswari said.

“She must be complimented for extracting higher budgetary support of Rs 3500 crore this year as against Rs 2500 crore last year,” he added.

He welcomed the move to raise the share of freight traffic to 50 per cent from the current year’s 40 per cent, saying it will save the country precious foreign exchange because the Railways is known to be six times more fuel-efficient than other modes of transport.

Maheswari, however, expressed disappointment over the continuing policy of cross-subsidising passenger fares, and the general increase of five per cent in freight charges.

Vikram Modi, whole-time director of HDC Ltd, welcomed the budget, saying the sick wagon industry could now look to a better future. “It is a pretty good budget, which has spared the passengers, without affecting the general economy.”

The CII’s Ascon report released in October 1999 had highlighted the poor performance of the wagon industry by pointing to the 48 per cent decline in production and sales. The main problem was that they did not receive sufficient orders from the Railways. The situation worsened when the Railway Board actually cut orders in January last year.

Delays in the supply of steel, bogies and couplers, liquidity crunch, transport bottlenecks and the need for 30-year bank guarantee were some of the other problems faced by the industry. The only silver lining appears to be an Ascon forecast that says production and sales will grow by 10-15 per cent in the next six months.    


 
 
FREIGHT LOADING TARGET SET AT 450 MT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 25: 
The railways have set a target of achieving a freight load of 450 million tonnes during 2000-2001 and plan to generate additional revenue through an increase in freight rates while desisting from a passenger fare increase.

The railway ministry also plans to focus on safety, environment, basic amenities and on the development of an integrated transport policy to recover its market share in freight movement.

The railways expect to generate about Rs 600 crore a year through the increase in freight tariff.

Addressing the post-budget press conference, Railway Board chairman V.K Agarwal said the immediate priority is to improve safety standards and increase its market share in freight movement.

A group headed by the Railway Board chairman, director general of police and the chief secretaries of two states will soon be formed to develop a system to ensure safety of the passengers. ‘’The railway protection force has a limited mandate and the committee will examine methods to set up a system with support from state governments,’’ said Agarwal.

The railways will soon source an indigenously developed security system from Konkan Railway. This will be installed on locomotives, brake vans, stations, level crossings and other vulnerable locations to avert a collision or reduce their impact, said Agarwal.

The railway ministry’s decision to increase the freight rates inspite of low freight traffic was inevitable, said Shanti Narayan, member (traffic) in the Railway Board.

‘’ The 7 per cent increase in the scale rates of parcel and luggage including motor car rates will not have much effect. Further the proposed increase on coal, livestock and oilseeds will not be more than 1 per cent,’’ said Narayan.

Later, railway minister Mamata Banerjee said the budget had been prepared keeping in mind the various inputs received from industry, Members of Parliament and individuals.

‘’I have tried to provide something to everyone and if there are any grievances they can approach me,’’ said Banerjee.

She said the revenue from passenger traffic has grown to Rs.7,800 crore till January 2000 which is about Rs 850 crore more than last financial year. ‘’On this basis, we expect to have a five per cent increase in the passenger traffic generating about Rs 10,148 crore during the next financial year. In addition, the earning from goods traffic are expected to be about Rs 23,000 crore,” said Banerjee.

The total working expenses budgeted at Rs. 28,411 crore in revised estimates were contained at Rs 27,835 crore in actuals. ‘’Last year’s financial setback was due to increased staff and pension expenditure after implementation of fifth pay commission and a shortfall in freight loading by 29 million tonnes as a result of recessionary trends in the economy,’’ said Narayan.

Last year’s budget borrowings also increased from Rs 2,900 crore in budget estimates to Rs 3,217 crore. This year the railway has set a borrowing target of Rs 3,668 crore.    

 

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