Sinha hints at rollback
Veiled warning to weak banks
Fitch gives India BB+ rating
Iran offer to rope in ONGC, Indian Oil
Man behind Indica quits Telco
Aptech weighs overseas float
Webel set for operational rejig

New Delhi, March 8 
Amid mounting pressure from the BJP’s allies, finance minister Yashwant Sinha today appeared to set the stage for a rollback of the budgetary cuts in food and fertiliser subsidies.

At a seminar organised by the CII here today, Sinha said he was willing to “change and modify things which are genuine and don’t appear to serve their purpose”.

“I am not a repository of all wisdom. I am prepared to address the concerns that are genuine and don’t appear to serve what they are meant for,” he told the congregation of corporate chieftains.

“I am not going to categorically say whether I will roll back the subsidy cuts or not,” Sinha said.

Sinha’s statement indicating a rethink came hours before a delegation of leaders from the Janata Dal (United), Trinamul Congress, Telugu Desam, Shiv Sena and the Samata Party called on him with a memorandum demanding that he alter his decision.

The NDA partners had submitted a similar memorandum to Prime Minister Atal Behari Vajpayee on Monday. The Dal, which has been the most vocal among the allies, has even threatened to move a cut motion on the subsidy cuts, which are to save the exchequer Rs 6,000 crore.

“I have explained the fiscal situation and am willing to confront friends and foes alike and expect them to appreciate what I have done,” Sinha told the industry bosses.

The finance minister made it clear to the corporate captains there would be no review of the increase in the dividend tax to 20 per cent from 10 per cent earlier, which had sent a frisson through the stock markets.

However, later in the day, finance secretary Piyush Mankad told the meeting that the government was ready to look into the possible cascading effect of the proposals relating to dividend taxation, which seemed to fly in the face of Sinha’s assertion. A CII release said Mankad had invited suggestions from industry to overcome the problem.

While ruling out a rollback of the dividend tax hike, Sinha had argued that the opposition to the subsidy cut would have been even more strident had he not distributed the burden equally by increasing the cess on corporates.

“Please live with it. There’s no way I can roll back this one and maintain budget credibility at the same time,” the minister said.

The finance minister earned the sobriquet of “rollback Sinha” after the 1998-99 budget when he was forced to rescind several decisions, including the increase in urea prices by Re 1 following an outcry from the Akali Dal.

Trying to live down the moniker, Sinha said: “I’m only a little worse off than my predecessors with regard to budgetary rollbacks.”

Meanwhile, Mankad further sought to allay the industry’s fears relating to the switchover to transaction value for assessment in excise from the present practice of normal price stating that their concerns would be looked into.    

New Delhi, March 8 
The government will be forced to hand over the management of weak banks to the proposed Financial Reconstruction Authority (FRA) if they failed to work out credible turnaround and recapitalisation plans, finance minister Yashwant Sinha has warned.

“We must have credible revival plans that satisfy the Reserve Bank and the government. If the strategies do not convince us, we will appoint authorities to manage these faltering banks,” Sinha told a post-budget seminar organised by the Confederation of Indian Industry (CII) here today.

The concept of an FRA was mooted in the budget as a body that would run weak banks if their boards were unable to restructure them effectively.

The government will, however, have to amend statutes governing banks so that it can constitute the FRA and give it special powers, including those exercised by the boards. The FRA will comprise largely of experts and professionals drawn from the financial services sector.

The M S Verma Committee report had estimated that the three weak banks — Indian Bank, United Bank and Uco Bank — require Rs 5,500 crore worth of recapitalisation funds. The government is currently working out the ways in which these banks can be recapitalised.

Sinha also said a Bill that provides for a reduction of the government’s stake in nationalised banks to 33 per cent will be introduced, but he made it clear that their public sector character will not change, and that they will still be answerable to Parliament.

On the issue of reduction in interest rates, Sinha said the government had already paved the way for it by announcing cuts in the small savings and general provident fund (GPF) rates.    

Mumbai, March 8 
International rating agency Fitch IBCA has assigned a long-term foreign currency rating of BB+ to India.This rating will apply to all senior unsecured sovereign foreign currency debt issues.

The country has been assigned a short term foreign currency rating of B which will apply to issues with a maturity of up to one year.

A long term local currency rating of BBB has been given to domestic sovereign debt issues.

“We think the situation is positive,’’ Paul Rawkins, senior director, sovereign & subnationals of Fitch said here today.

Rawkins said the ratings will be reviewed if economic reforms are implemented in many sectors along with a decline in the public deficit.

The long-term foreign currency rating of BB+ is based on sustained improvements in external solvency and liquidity and unblemished sovereign debt service record of the country.

The comfortable majority enjoyed by the BJP-led coalition in the Lok Sabha offers India its best hope of reform in some years, Fitch said.

The rating agency said governments, both at the state and Centre, must manage their finances efficiently to ensure economic growth at a fast clip.

Fitch, which has a tie up with the Indian agency Credit Analysis & Research Limited (CARE), said the level of private saving in India is comparable with the more successful developing countries of Asia.    

New Delhi, March 8 
Iran has offered equity stakes to Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC)in its first-ever liquefied natural gas (LNG) venture at Assaluye in the southern part of the country.

Sitting on the largest gas reserves in the world and keen to tap the global LNG market, Iran has also identified Petronas of Malaysia and BHP of Australia as the other equity partners.

Official circles say the offer to accommodate IOC and ONGC was made by M Hashemi, director, (international affairs ) of the National Iranian Gas Company in a letter to the petroleum and natural gas secretary, S. Narayanan.

Prior to this offer — which sources say has possible upstream connections as well — ONGC chairman B C Bora and IOC chief executive M.A. Pathan had visited Tehran for preliminary talks.

Assaluye has been declared a special zone, which means industries are entitled to tax concessions. Petronas, already a major LNG producer, is keen to join the Iranian venture for strategic reasons. The company can meet the demand of its European customers from the planned LNG project in Iran while its existing plants in Malaysia can cater to the emerging markets of the region.

India has excellent political relations with Iran. Both countries wasted several years examining the feasibility of laying a pipeline to transport gas to India. After Petronet LNG signed up with Ras Gas of Qatar, Iran has been inviting India to enter into collaborations for setting up an LNG plant.

The advantage of involving India is that it is the largest market for gas in this part of the world. More important, Indian companies like Reliance and Gail have evinced interest in bringing gas from Iran to India.

All LNG players are eyeing India’s west coast for setting up their terminals because of its proximity to the potential markets of Gujarat and Maharashtra. Petronet LNG did precious little in the first two years, which virtually gave a head start to Enron.

Enron does not have a gas field in Asia. After its plan for a LNG plant in Qatar was frustrated by rivals, it tied up supplies with Oman and UAE for its Dabhol power company, which needs around 2 million tonnes per annum. It also entered into an understanding with Petronas for the supply of gas.

The terminal at Dabhol puts Enron in a position where it can upstage Petronet by supplying gas at cheaper rates. The power company will absorb a substantial portion of the cost incurred on setting up the terminal. Still, it has to lay a long pipeline to transport gas to industries located in the western states.

However, Enron may find the going tough if the petroleum and natural gas secretary S. Narayanan is allowed to guide the affairs of Petronet LNG.

He has already assumed charge as chairman of the company and is keen that Petronet LNG should be the first to supply imported gas to customers on the west coast.    

Mumbai, March 8 
In a surprise development, the Tatas today announced the early retirement of V M Raval, executive director (automobiles) & member of the board of Telco.

Raval was the man responsible for the successful launch of Indica. “Raval has been granted early retirement with effect from April 4, 2000,” said a terse Tata communique.

The statement said, “Raval had requested for early retirement on health grounds.” He was due to retire on February 3, 2001. “Raval has proceeded on sick leave,” the statement added.

The news has raised eyebrows in the automobile industry, as this follows J Consiglio, technical consultant who also last month relinquished his post before his contract expired.

According to them, “Raval has had an history of cardiac problems and his doctors have advised him to take it easy”.

Incidentally, Consiglio, an ex-Chrysler man who was responsible for productionising Indica. He was replaced by A Vivek, as vice-president production who was earlier in charge of commercial operations at Jamshedpur.    

Mumbai, March 8 
Aptech plans to launch an overseas issue and seek shareholder approval to raise the ceiling on FII investment in the company from 30 per cent to 40 per cent.

The software education major today informed stock exchanges that its board will meet on March 11 to consider the overseas listing, apart from the increase in FII investment cap. The meeting will also discuss a private placement of shares.

An Aptech spokesperson said the proceeds from the overseas issue will be used to part-finance aggressive plans not only in the area of education, but in the fast-growing segments of software and e-commerce as well.

“We have massive expansion plans for various areas. Money from the issue will be used to implement them,” the spokesperson said.

The Aptech scrip closed higher at Rs 2352 on the Bombay Stock Exchange (BSE) after volatile trading in the course of which it hit a peak of Rs 2410 and a trough of Rs 2240.

FIIs currently hold 23 per cent in the company’s Rs 12.5 crore equity capital. This is expected to increase to Rs 25 crore after investors subscribe to a 1:1 bonus declared on January 24.

The resolution on raising the FII limit, once passed, will make Aptech the first company to do so after finance minister Yashwant Sinha’s budget allowed foreign funds to hold up to 40 per cent in local firms, up from 30 per cent earlier.

Other companies expected to follow suit include Satyam Computers and Housing Development Finance Corporation (HDFC).

Aptech recently announced the formation of a separate company to push its initiatives in the e-commerce. It already has a software and consulting division that offers solutions in the areas of e-business, business intelligence, enterprise resource planning (ERP), apart from supply-chain and customer relationship management.

The company recently bagged two contracts for e-commerce portal development worth more than $ 2 million.

While the first is for setting up a trade e-market portal for the UK’s pharmaceutical industry, the second one is a click-and-mortar portal for a US-based venture capital firm.    

Calcutta, March 8 
The West Bengal Electronics Industry Development Corporation (Webel) will restructure its loss-making subsidiaries in the manufacturing sector while consolidating its presence in the service sector in the role of a “facilitator”.

The restructuring plan has been sent to the state government for its approval, Webel managing director S.K. Mitra told The Telegraph. “We have decided to focus on the service sector where our core competency lies,” Mitra said.

Webel will also restructure its loss-making joint ventures which are putting a tremendous pressure on its bottomline.

Mitra, while refusing to divulge any further details, said the restructuring was required to give Webel a strong presence in the electronics and information technology sectors.

Webel chairman S. Ganguly said the proposed venture capital fund with a corpus of Rs 20 crore would be operational by April this year.

Speaking at the inauguration of the three-day Knowledge Summit 2000, organised by the Bengal Chamber of Commerce and Industry, Ganguly said Webel would soon start internet services in and around Calcutta.

The company will also act as an internet service provider in Midnapore and Burdwan.

The company has developed a vernacular interface software with specially designed keyboard which can work on the MS Office platform.

Salt Lake, the electronic hub of the state, is currently housing a host of companies in the information technology sector.

Ganguly said some other knowledge-based industries particularly in the fields of bio-technology and medicines were also in the process of setting up units at Salt Lake.

Two research organisations, Kem Biotech and the Institute of Molecular Medicine, are in the process of setting up units at Salt Lake for advance research on applied and fundamental sciences.

Addressing the seminar, state minister for industry and commerce Bidyut Ganguly said the government and BCCI would prepare an action plan for the growth of knowledge-based industry in West Bengal.

Admitting that there has been a lag in marketing the state’s potential in the infotech sector, the minister said a long-term action plan would soon be evolved.

Ganguly further stressed the need for promoting e-governance in the state so that the people will get greater access to various government departments.    


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