Bajaj Auto weighs share buyback
Raid-spooked brokers rush to pay taxes
Zee offers unlimited net access at Rs 499
Gramophone to market Pyramid titles
FIIs buy 40% stake in Ambuja Cement India
HM keen to export Lancer
Maran proposes tea futures
Foreign suitors ditch ONGC
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 22 
Bajaj Auto Ltd (BAL), the two-wheeler maker, today announced that it is considering a proposal to buy back its shares. The announcement made by the two-wheeler giant reflects its concern over the market’s poor valuation of the stock despite excellent fundamentals, say analysts. Very few companies have adopted this route, say marketmen. Recently, Indian Rayon and MICO had announced buy back offers.

Marketmen say the Bajaj Auto announcement is primarily designed to bolster the stock price. The stock is listed in the specified group section of the Bombay Stock Exchange.

In a notice to the premier stock exchanges here, the company said its board of directors will meet on March 28 to consider the buyback proposal.

As the news trickled into the dealing rooms, the Bajaj Auto scrip flared up with its share price closing at Rs 382 from yesterday’s close of Rs 354.10.

The share touched an intra-day low of Rs 360 and an intra-day high of Rs 383.10 before closing at Rs 382.

While Bajaj officials were quiet on the floor price of the buy back offer, marketmen allude that the buy-back may be at very attractive levels. According to them, it could be in the region of Rs 500 per share. However, this was not confirmed by the Bajaj officials.

Of late, marketmen have taken a shine to the stock. The share price started showing some vibrancy this fortnight after floundering below Rs 300 for some time.

The investor interest is ascribed to a series of investor-friendly moves made by the two-wheeler major by declaring a 100 per cent interim dividend last week.

The buyback announcement comes close after the announcement of an interim dividend.

Broking circles have been advocating a buy back scheme from Bajaj Auto for some time.

The company is known for its huge cash surplus which runs into over Rs 1500 crore.

Despite all this, the share was hammered in the market place as investor interest is focused on infotech scrips.

The company recently embarked on a Rs 365 crore capital expenditure programme to expand its existing manufacturing facilities at Akurdi near Pune and at Waluj in Aurangabad. An investment of another Rs 125 crore was made for its new plant as part of its first phase programme.

The Waluj and Akurdi plants have a capacity to make one million units each a year and the new Chakan plant has a capacity of five lakh vehicles which will be doubled in a few years’ time.

Incidentally, the announcements follow the recent surge in demand for Bajaj vehicles led primarily by its motor-cycle products.    

Mumbai, March 22 
Terrified over the prospect of raids by the taxman, stock brokers have been scrambling to pay up their advance taxes. Market covens say that Ketan Parekh, the Big Bull on the Mumbai bourse, and his group have together coughed up Rs 91 crore.

Khandelwal Securities, another upcoming broking house in the city, has made a payment of Rs 31 crore.

A leading merchant banking and financial institution whose identity was not known was a close third with a payment of Rs 30 crore.

IT officials are gung-ho over the record-busting advance tax payments by the broking community.

Says K V M Pai, chief commissioner of Income-tax (Mumbai) , “The increase in the payments this year is almost commensurate with the increased trading volumes registered by the BSE this year.”

According to IT authorities, the advance tax payments made by share brokers in the city have increased eight times year-on-year in fiscal 1999-2000.

Advance tax payments by brokers have surged to Rs 320 crore this fiscal from Rs 39 crore in 1998-99.

Earlier, the IT department had collected through the custodian an amount close to Rs 250 crore from Harshad Mehta. But the collections were for a period of two-to-three years.

Almost 65 per cent of the total advance tax payments made during 1999-2000 have been received in the last instalment of advance tax, and the payments have been actually received between March 10 and 15.

While the advance tax collected was as per the expectations of the tax authorities, they had to do some ground work to ensure compliance.

One may recall that the IT department had initiated some surveys on top brokers in the city. Ketan Parekh’s firm and his associate companies were among the offices surveyed.

This prompted many brokers to cough-up sizable sums as advance tax. In fact, Pai also addressed the stock exchange last fortnight to drive home the message, that the tax authorities are serious.

“A plea was made that the Income-tax department would like to avoid frequent visits to the brokers as that might seriously dampen market sentiment, hammer down share values and persuade FIIs to stay away from India, “ Pai told The Telegraph.

The chief income tax commissioner while talking about specific payments said: “It was pointed to the stock brokers that the surveys made by the department indicate that the share brokers were admitting only 25-30 per cent of their real incomes, and therefore, the brokers were advised to fully declare their income and clear all their tax liabilities. The brokers were told that if they did not make full disclosures, the IT department reserved its rights to open up further investigations.    

Mumbai, March 22 
Internet service provider EConnect India, an unit of Zee Telefilms, is offering unlimited access to the internet at Rs 499 per month

Company officials said the objective is to put the internet on par with cable television. “It is similar to cable TV in the sense you pay a specific amount per month for unlimited use of its service,” the officials said.

Sources said the service is already available to the select few in Bangalore, Delhi and Mumbai. It will be available to everybody from March 26 to be followed by phased launches in Chennai, Hyderabad and Pune.

The access service will initially be available via telephone lines and cable TV.

Sources said EConnect will leverage the strength of the Zee brand and ZTL’s powerful distribution reach to target 25 per cent of the internet subscriber population by 2003.

EConnect today also formally announced the launch of its portal, It is an horizontal portal which consists of over two dozen vertical portals covering various subjects such as news, current affairs, entertainment, lifestyle, travel, sports, fashion, finance, education, information technology.    

Calcutta, March 22 
The Gramophone Company of India Ltd (GCIL) has entered into a seven-year licensing agreement with Pyramid International Pte (PIPL) of Singapore for the exploitation of audio rights of the latter’s titles in the international market.

GCIL has entered into the agreement through its wholly-owned subsidiary RPG Global Music Ltd (Mauritius).

The tieup would help both the companies to work as a team in distribution of films and music in the overseas market, GCIL managing director K. Krishnan said.    

Mumbai, March 22 
In a complex equity rejig, Gujarat Ambuja Cement has offloaded a 40 per cent stake in Ambuja Cement India Ltd to foreign institutional investors while transferring 94 per cent of its stake in Ambuja Cement Eastern Ltd to Ambuja India.

The 40 per cent GACL stake in Ambuja India has been sold to three FIIs for Rs 370 crore. The three FIIs which have picked up the stake are: AIG Asian Institutional Fund II (AAIF II), GIC Special Investments Pte Ltd and the AIG Asian Opportunity Fund.

AAIF II, with $ 1.7 billion in commitments, makes equity and convertible securities investments in the infrastructure and infrastructure related sectors in India, China, Korea, the Philippines, Thailand and other Asian countries. GIC SI is the private equity arm of GIC, which is the largest global investment institution in Singapore.

On the other hand, GACL has transferred its 94 per cent stake in Ambuja Cement Eastern Ltd (formerly Modi Cements) to Ambuja India for Rs 415 crore.

Company sources said the amount raised by offloading the 40 per cent stake in Ambuja India would be used for “debt repayment”.

Ambuja India had earlier acquired a 7.2 per cent stake in ACC for Rs 455.10 crore.

According to the new scheme of things, Ambuja India is planning to develop a 2 million tonne greenfield cement plant in Andhra Pradesh which was earlier proposed to be implemented by Ambuja Cement.

“Ambuja India has been set up to augment cement capacities in India by way of developing new plants as well as expansion or existing capacities,” a press statement by GACL said.

On the sale of its stake in Ambuja Eastern, GACL said it comprises of 16,60,57,827 equity shares at a price of Rs 25 per share. The sale, it added, had resulted in a profit of Rs 249 crore for the company. With this transfer, Ambuja India will have a 1.5 million tonne cement plant in Raipur. The plant’s capacity is now being enhanced to 2 million tonnes.    

Calcutta, March 22 
Hindustan Motors is looking for export markets for Lancer, which the company is manufacturing in technical collaboration with Mitsubishi Motors of Japan. HM’s agreement with Mitsubishi stipulates that the Lancer can be exported only to Bangladesh, Sri Lanka, Nepal and Mauritius.

HM’s executive director A. Shankar Narayanan said initial marketing efforts towards exporting Lancer had already started.

Lancer, considered as the premium car in the mid-size segment, is currently available at an ex-showroom price of Rs 8.1 lakh for the SLX version. The HM official said that as the mid-size segment of the automobile market was growing slowly, the Lancer plant near Chennai was operating at 50 per cent of optimal capacity.    

New Delhi, March 22 
Commerce and industry minister Murasoli Maran has floated the idea of developing the forward and futures markets to ensure stability in tea prices.

Speaking at the inaugural function of the India International Millennium Tea Convention here today, Maran emphasised the need for evolving similar risk management tools used by other commodity markets like coffee, cocoa and sugar to deal with price uncertainties by tea traders and producers. The government will soon clear a proposal to allow foreign direct investment up to 74 per cent in the domestic plantation sector, he added.

“A note is being sent to the group of ministers to allow FDI up to 74 per cent in the plantation sector,” Maran said.

Currently foreign holding in the plantation industry including tea, rubber, coffee and cardamom, is not permitted beyond 24 per cent. Plantation companies had earlier passed a resolution supporting FDI up to 74 per cent in the plantation sector, saying plantation involved manufacturing processes necessitating heavy investments.

The Consultative Committee of Plantation Associations (CCPA) had, in a representation to Maran demanded removal of prevailing restrictions on FDI in plantation.

Stating that the tea industry the world over had witnessed tremendous uncertainty in recent years, giving rise to increasing price volatility, Maran said the industry should examine the possibility of introducing futures trading as an effective tool in curbing price fluctuations.

The minister today urged the tea industry to systematically go in for generic promotion of tea as it was facing stiff competition from coffee and carbonated drinks.

He said the time was ripe for “the entire tea fraternity to come above their brand loyalties for a while and whole-heartedly cooperate in the systematic generic promotion of tea.”

Emphasising the need to lay more thrust on marketing aspects of tea, Maran said, “Our focus is yet to fully shift to marketing, though today’s global tea trade scenario is indicative of a change in this pattern.”

He underlined the need for higher value addition in tea to ensure better returns.    

New Delhi, March 22 
After waiting for more than a year, foreign oil companies have almost totally shied away from associating themselves with the Oil and Natural Gas Corporation (ONGC) in deep water drilling even as the Union cabinet meets tomorrow to decide on the terms for the nominated deep water blocks.

The ONGC management has been pleading with the government to extend the concessional terms under the new exploration licensing policy(NELP) to the six deep water blocks it got on a nomination basis. The NELP offers tax free regime for the first seven years and significantly lower royalty rates.

ONGC had identified half a dozen potential partners for the deep water exploration blocks and companies such as Shell, Unocal, Petrobras and Total were very keen to participate since deep water drilling is a costly venture and global majors try to get partners to share the investment risks.

However the ministries of petroleum and natural gas and finance kept on postponing a decision on extending certain benefits to these blocks, which prompted most of the foreign oil companies to look for opportunities elsewhere.

According to sources, French company Total is the only one which is still interested in ONGC blocks, located in Kerala-Konkan, Krishna-Godavari and Cauvery.

Unocal has decided to wind up its upstream office in India with its focus shifting to the power sector. It will come back to India if either oil or gas is discovered in any of the blocks.

Shell at one stage offered to bring in Petrobras as well. However, it does not seem to be interested any longer. Total has a habit of backing out at the penultimate stage. It has been showing interest in almost every project, both upstream and downstream, but its involvement in India so far has been marginal.

Industry circles say an issue like this should not have taken such a long time. This is precisely what happened to IOC’s proposal to buy equity stake in Premier Oil’s oil production venture in Iran.

By the time, the government cleared the proposal, the oilfield changed hands and the new owner Elf of France was not keen to accommodate IOC.

Indian bureaucracy does not understand the nature of international business and takes its own sweet time.

The public sector bosses do not chase the files beyond a point for fear of incurring the wrath of the bureaucracy.    

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