Fake notes swamp RBI
Castrol buyout stirs up local lubes market
Sinha slams industry plea for tax rollback
Monsanto agri business brought under one roof
Caltiger to offer free internet access
Elders clear Trai Bill
Modicom in licence fee knot
Foreign Exchange, Bullion, Stock Indices

New Delhi, March 15 
The bank of last resort is fast turning out to be the last stop on the fake-note trail. Counterfeit currency is spilling out of the coffers of the Reserve Bank of India’s (RBI) Delhi office in volumes so large that the mother of all banks in the country does not have enough hands to count them, much less identify them.

What has heightened suspicions — and stakes — in this murky saga is that most of these fake notes have been received from commercial banks and government departments as deposits. At last count, the number of these notes was put at 1,843 — almost all of it in denominations of Rs 500 and Rs 100.

Worse, the extent of the counterfeit currency discovered so far is only the tip of the iceberg: The RBI is sitting on used notes worth Rs 155.54 crore deposited by banks, and most of it lying unexamined in its coffers at the Delhi office alone. Apparently, a shortage of checking staff has meant that the much of the money being deposited by banks is not being checked, nor counted. In such a situation, the central bank is simply issuing credit notes against the unchecked money in the form of guarantee bonds.

The RBI is supposed to have 420 employees to count and verify money deposited with it at its Delhi office, but it actually has just half that number. The acute shortage of hands in key departments, like the ones which oversee currency circulation, is the result of a ten-year-old policy of freezing fresh recruitment.

All the RBI’s 22 centres across the country have been receiving fake notes in the deposits made by banks and government offices. Banks have to statutorily keep a part of the money they receive from customers with the central bank while some of the bigger government departments like the Railways and Posts and Telegraph bank only with the RBI.

With the number of uncounted currency notes increasing to an alarming 1.83 lakh, the RBI is even toying with the bizarre idea of simply destroying lower denomination uncounted money and replacing them with new notes!

RBI sources say a lot of fake notes are coming from banks which have automated their note-counting or receiving functions — mostly foreign and private banks.

“Note-counting machines cannot differentiate between fake and real money if they are of the same thickness, size and smoothness,” bank officials explained.

The menace has set alarm bells ringing in the corridors of the North Block. After consultations between RBI, finance and home ministries, the government has ordered setting up of special police cells in the 22 cities where Reserve Bank has its offices. All fake notes detected by the RBI are sent to these cells with the names of depositors for a probe.

Investigations into fake notes will now be monitored and controlled by an inter-ministry panel drawn from the home and finance ministries, the RBI and intelligence agencies.    

Mumbai, March 15 
The domestic lubricants industry has been thrown into a tizzy following global oil major BP Amoco’s $ 4.7 billion all-cash offer for 100 per cent of UK-based lubricants giant Burmah Castrol’s shares.

Industry circles say that the merger will have an impact in India as Burmah Castrol owns 51 per cent of Castrol India and BP-Amoco has a joint venture with the Tatas.

However, officials of the two companies here are tightlipped. “It’s too premature to comment”, they said on being asked about the impact that the global merger will have on the local operations.

A BP Amoco spokesperson said: “It is too early to speculate how we expect the full benefits of the agreement between Burmah Castrol and BP Amoco to affect our global business.”

In India, Castrol’s very successful track record will provide BP Amoco with new opportunities in a fast-growing market where it already has a presence through Tata -BP Lubricants.

The Tata-BP entry into the Indian lubricants market was characterised by a focused entry into the diesel engine oil sector. “This is one of our most successful new market entries,” BP Amoco said.

Jeremy Bowen, general manager of BP Amoco lubricants for middle east and south Asia said: “The Tata-BP growth strategy in the diesel engine oil market continues with exciting plans to be implemented in 2000. We are excited by the additional market presence and brand which the Burmah Castrol acquisition will give BP Amoco in India.”    

New Delhi, March 15 
Smarting under India Inc’s fusillade of criticism against his budget, finance minister Yashwant Sinha today lashed out at the industry for maintaining double standards by demanding a rollback of the hike in dividend tax.

“If I roll back the dividend tax as demanded by you, there is no reason why I shouldn’t do the same on the cuts in food and fertiliser subsidies sought by some political parties,” a visibly piqued Sinha told a congregation of industrialists at a meeting organised by the Associated Chambers of Commerce and Industry (Assocham). He came down heavily on companies for placing demands on the government that were divorced from reality. “You cannot preach to the political parties to maintain a healthy attitude on subsidies and then ask for a roll back of the dividend tax hike. If I withdraw the increase, there is no reason why I should not take back the cuts in food and fertiliser subsidies.”

He also told industry bodies not to go by the behaviour of the stock markets. “You are captains of the industry, not brokers,” he said in remarks that seemed to suggest the fundamentals of the economy were not always manifested in the stock markets.

Reacting to the oft-repeated refrain from the industry that the budget lacked hard decisions, Sinha accused his critics of ignoring ground realities and harbouring a distorted interpretation of the words, hard budget, to mean that it should be harsh on others.

“Those who criticise me are not rooted in reality. I could not take decisions divorced from reality otherwise I would have landed myself in bigger trouble. Perhaps, hard decisions are hard as long as others are clobbered,” the minister said.

Defending his decision of not taxing farm incomes, Sinha said the Constitution prevents the government from taxing agriculture since it is a state subject. “With about 40 per cent of the GDP outside the tax, there was little option but to look for revenue sources elsewhere,” he said.

Allaying fears that the economy was facing a crisis, the minister said it was in the ‘pink of health’ with low inflation, buoyant industrial growth and comfortable foreign exchange reserves.

He pointed to the fact that there has been no adverse impact on the country from the spurt in global crude prices to pre-1991 levels, saying this was evidence that the economy was in fine fettle.    

Mumbai, March 15 
In a complex restructuring process, Monsanto Company of the US today integrated the group’s agriculture business with Monsanto Chemicals of India Ltd (MCIL). It would also lead to the parent company’s stake in MCIL going up to 72 per cent from 40 per cent.

The entire deal, which involves issuing preference shares to three group companies—Monsanto Technologies Ltd (MTIL), Monsanto Enterprises Ltd (MEL) and Monsanto India Ltd (MIL)—is valued at Rs 342 crore.

While Monsanto Chemicals will acquire the entire shareholding of MTIL, formerly known as Cargill India Ltd, it will integrate the agriculture business and related assets of Monsanto Enterprises Ltd (MEL) and Monsanto India Ltd (MIL) with itself.

MCIL will be buying the entire MTIL shareholding from Bretco, the Mauritius-based holding company for Rs 208 crore.

Apart from information technology and software related assets, MCIL will acquire all other assets of MIL which have been valued at Rs 32 crore.

Monsanto Chemicals will issue preferential shares to these group companies at a price of Rs 1,480 per share, which is a premium of around 59 per cent over the closing price of MCIL on the Bombay Stock Exchange (BSE). On the BSE today, the Monsanto scrip closed higher at Rs 926, after opening at Rs 891 and touching an intra-day high of Rs 950.

MCIL chairman and director of Monsanto’s south Asia business Terry Bunn said, “This will strengthen existing MCIL operations by leveraging synergies and economies of scale.”

MCIL would also acquire the marketing infrastructure and distribution setup of MEL, a group company. Bunn said all the distribution rights that MEL enjoyed would be transferred to MCIL. The transfer would also include all rights to marketing and sale of wheat herbicide. The book value of this transaction alone has been placed at Rs 102 crore.    

Calcutta, March 15 
Caltiger, the city-based internet service provider, is set to offer free internet connections.

The ISP will launch the free service in the city on March 20 and in Mumbai and Bangalore on March 25.

Announcing this here today, Joe Silva, president of Caltiger.com, said the ISP would cover 30 cities by April this year with its free internet services and has set a target of covering 200 cities by the end of December 2000.

By then, it will instal eight hosting servers in strategic cities, for connecting all the cities, Silva said.

The ISP has also chalked out an ambitious plan to invest around Rs 800 crore during 2000-01 to build up infrastructure based on optical fibres.

Ruling out any borrowings, Silva said the investment plan would be financed by diluting the promoter’s stake and also from the revenue it generates through advertisements.

The company, which expects to earn Rs 50 lakh per day from advertisements, has also kept its options open on a public issue.

“We are currently mobilising equity on a private placement basis, but we may consider a public issue as and when necessary,” Silva said.

While declining to divulge the prices for its shares garnered through private placement, Silva said it is commanding a hefty premium.

For the free internet service, potential subscribers will have to access www.caltiger.com and download the free installer. The software will be installed automatically and subscribers can surf the Net with no subscription fee, paying only the local telephone charges.

Caltiger, which is second to offer free internet access after AirTel’s Mantrafreenet in Madhya Pradesh, also plans to go a step further by introducing toll-free telephone calls for three hours of surfing every day.

However, to avail of this service, a customer will have to shell out Rs 5000 per annum as membership charges.    

New Delhi, March 15 
The BJP-led coalition government today managed to steer the Telecom Regulatory Authority of India (Amendment ) Bill 2000 passed through the Rajya Sabha with the tacit support of the Congress.

After joining other opposition parties in protests against the Bill, the Congress remained silent when the Bill was put to vote. The Congress’ backing was essential to steer the Bill through a house where the BJP alliance does not have a majority.

However, some members of BJP and Telegu Desam Party (TDP) said certain clauses in the legislation need to be reconsidered, even as they extended their support.

The minister of state for communications, Tapan Sikdar, was assigned the job of talking to Congress leaders Pranab Mukherjee and Manmohan Singh to ensure that their party stands behind the Bill by remaining silent in the crucial minutes of voting. After the Bill was passed, a grateful Sikdar went out of his way to thank Mukherjee for Congress’ ‘neutral stand’.

Earlier, independent MP Balwant Singh Ramoowalia (independent) led the Opposition charge against the Bill by saying the amendment would undermine the independence of Trai and make it subservient to the government. He accused the government of acting in haste by issuing the Ordinance days before the Parliament was supposed to convene.

CPM MP Nilotpal Basu sought to buy time by demanding that the Bill be referred to the Parliamentary Standing Committee on Communications, saying the matter was of critical importance to the country’s telecom sector. He argued that a consensus between all members will ensure that the Bill leads to a situation in which Trai emerges more efficient and independent.

Kapil Sibal of Congress alleged that original Bill under which Trai had been working independently as a referee between telecom players and the government was being amended because it allowed little room for government interference.

However, a common ground was seen in the all-round opposition to the proposal to put Trai out of the purview of Comptroller and Auditor General’s (CAG) scrutiny.

Moving the resolution, communications minister Ram Vilas Paswan justified the need for an Ordinance.    

New Delhi, March 15 
The communications ministry has recommended cancellation of Modicom’s licence for the cellular circles in Punjab and Karnataka, if the company fails to pay up its licence fee by tomorrow.

Modicom officials claimed the B.K. Modi company was still trying to work out something. “The company has not reached any final decision as yet.”

The company’s top brass has been lobbying for a fortnight’s extension, or at least a permission to pay up part of the dues now and the rest within a fortnight.

Sources said the company is hoping that the communications minister would bail it out for a few more days. “The company has cited the example of Fascel where the department of telecommunications (DoT) had accepted the major part of the licence fee and gave them about 10 days time to pay the outstanding amount.

The minister will have to take a decision in this matter. B.K Modi, chairman of the Modi group was closeted along with senior officials in DoT in the evening,” they said.

The government had set a deadline of March 15 for all basic and cellular telecom service providers to pay up their licence fee to migrate from the licence fee system under the 1994 National Telecom Policy (NTP) to a revenue sharing arrangement under NTP 1999.

Modicom has to pay arrears of about Rs 273 crore, including a 4.5 per cent interest for not enhancing the bank guarantee. Earlier, the company had offered a corporate guarantee to enhance the bank guarantee for its cellular licence, which was turned down by DoT.

Modicom operates cellular services under the Spice brand name in Punjab and Karnataka and has laid out an optic fibre network in the latter. The two circles have a combined base of over 1,40,000 subscribers. Spice Punjab covers 45 cities and towns accounting for 93 per cent of the urban population, while Spice Karnataka extends to 34 key cities accounting for 64 per cent of the state’s urban population.

Meanwhile the communications ministry has decided to refer restoration of Koshika Telecom’s licence to the Cabinet.

DoT had not sent letters to Koshika for migration from the licence fee system to the revenue sharing system, since its licence was cancelled by the government.

“We have decided to take a policy decision regarding Koshika’s case,” DoT secretary Shyamal Ghosh said.

Koshika had a licence to offer cellular services in Bihar, Orissa and east Uttar Pradesh.    

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