RIL sets buyback price at Rs 303
Zee to pick up 51% in Asianet for Rs 400 cr
Pulses import to check prices
No ceiling on foodgrain stock
Govt seals oil hunt deal for 25 blocks
Grasim cement plant in TN goes on stream
Singapore for more Singapore for more flights from
Indo Gulf net up 29% to Rs 212 cr
MTNL prefers to rely on WiLLpower
Foreign Exchange, Bullion, Stock Indices

 
 
RIL SETS BUYBACK PRICE AT RS 303 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 12 
Reliance Industries (RIL) today announced a share buyback programme for a whopping Rs 1,100 crore at a price of Rs 303 each in a purchase plan that is the largest ever in corporate India.

Company managing director Anil Ambani said the move is intended to tackle the volatility in the stock and send a clear message to speculators that the company will not allow its share to be ‘used as a hedge stock’.

“We will endeavour to protect the interests of our long-term shareholders and neutralise the impact of speculative forces by using buybacks judiciously. This will also help maximise overall shareholder value,” Ambani told reporters here today.

However, the buyback price of Rs 303 disappointed marketmen, who were looking at a range of Rs 350 to Rs 400. Rumours that the company would announce a price lower than what the market expected prompted brokers to hammer the scrip by 6 per cent to Rs 334. The pressure on the scrip is expected to increase in Thursday’s trading.

Outlining the objectives of the buyback, Ambani said the move will help attract long-term investors and create a floor price for a share buffeted by unprecedented bouts of volatility in the recent past.

Describing just how speculation had affected the Reliance share, Ambani said the past 20 trading sessions saw the scrip gyrate between Rs 190 and Rs 350 even though there were no changes in the fundamentals of the company’s business.

Reaffirming his pledge to protect the interests of long-term shareholders, Ambani cited the case of financial institutions such as LIC, UTI and GIC, which doubled their Rs 945-crore investment made in a private placement five years ago.

“We want to achieve higher all-round valuations so that the Reliance stock serves as a long-term currency for acquisitions. Through the buyback, we also want to send a strong signal about the degree to which the company is under-valued, and to get a revised rating for the stock,” Ambani said.

The Reliance MD said the shares will be bought back from the open market — instead of the book-building or tender price methods. He pointed out that the company chose the open market route over the tender offer mechanism under which promoters can participate in the buyback. In any case, the promoters of the company have already declared their intention to increase their shareholding through the creeping acquisition route, Ambani said.

He justified the premium implicit in the buyback price, saying the Reliance board had fixed it after taking a long-term perspective of over a year. When asked why the company decided to go in for a buyback — after ruling it out over a year back — he said the key question was whether shareholders and the company ‘can keep waiting for ever’.

Ambani today laid to rest the speculation about a merger of Reliance Petroleum (RPL) with Reliance industries, saying the move was not on, at least in the next three years. He said the existing buyback regulations do not permit the merger of any company with RIL because no new shares can be issued. The denial comes after a prolonged period of rumours in the stock markets and the industry that a merger of Reliance group companies was imminent.    


 
 
ZEE TO PICK UP 51% IN ASIANET FOR RS 400 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 12 
Zee Telefilms (ZTL) is set to pick up a 51 per cent stake in Asianet for Rs 400 crore in an all-share transaction that will give the Subhash Chandra-owned holding company a sweeping countrywide presence in television.

A late-night Zee release said the company had signed a memorandum of understanding to forge a strategic alliance with Asianet Communications, a leading Malayalam television channel based in Kerala. The payment will be made by issuing ZTL shares.

The linkup will give Zee the all-important head-start in consolidating its entry into the south Indian regional language channels. Apart from its Malayalam channel, Asianet Communications plans to launch Kannada, Tamil and Telugu language channels soon. These are expected to come up within the next six months.

According to the understanding reached between the two sides, ACL chairman and managing director Raji Menon will get a representation on the Zee board while Subhash Chandra has been given a place on the Asianet board.

However, Zee has made it clear that the management of Asianet will continue to rest with Menon who will be exclusively in charge of promoting the business interests of Asianet in the South Indian regional languages. This will be ensured through a non-compete agreement signed between the companies.

Asianet is emerging as a major television brand south of the Vindhyas, and in the countries of West Asia with a sizeable south Indian population.

After having established itself in Malayalam, Asianet is now entering Karnataka with a free-to-air channel TV channel soon. Zee has 10 pay channels in all major languages, apart from south Indian languages.

The alliance is expected to offer Zee and Asianet all the benefits that accrue from promoting each other in boosting the viewership of their respective channels, the release said.

Analysts say the tieup will help Zee capture audiences in areas where it has so far had no presence. On the other hand, it will give Asianet, already worried by rival Sun TV’s Malayalam and Kannada forays, a potentially strong partner.    


 
 
PULSES IMPORT TO CHECK PRICES 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 12 
Worried over rising prices of pulses, the Union cabinet is planning to give the go-ahead for the import of one lakh tonnes of pulses.

The cabinet is likely to take up the issue later this week. Pulses production has been 13 lakh tonnes below last year’s output of 145 lakh tonnes and this has sent prices through the roof—a rise of Rs 200 a quintal in just the last fortnight.

Food prices have always been a politically sensitive issue in the country where governments have often seen their majority in Parliament thinning merely because of public angst over higher prices.

Foodgrain and cereal prices had been rising over the last two years much to the consternation of the BJP government.

Though the government has, so far, maintained a brave face, it now feels that the issue should be discussed threadbare at this week’s cabinet meeting.

Foodgrain production has been robust this year but by announcing higher procurement prices the government has triggerred a move to raise food prices once again.

The high powered price monitoring board headed by the Cabinet secretary has already taken note of higher food prices and will present its report to the cabinet.

Economists estimate that the recent hike in oil prices combined with a high dose of spending by both the government and private consumers could see the wholesale price index going up considerably.

The worrying point is that most of the fiscal deficit is being funded through market borrowings. This means the government sector is sapping away the credit which otherwise would have flowed to private industry to expand its supply of goods and services.

In a situation where the country is suffering from an inflationary spiral, larger volumes of goods released in the market can help dampen prices. But with few expansions or new projects in the pipeline, the supply of goods will remain constricted which obviously will stoke inflationary trends.    


 
 
NO CEILING ON FOODGRAIN STOCK 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 12 
The government has decided not to put a ceiling on foodgrain stock or restrict inter-state trade of such items during the year. Talking to reporters, M.D. Asthana, secretary in the ministry of consumer affairs and public distribution, said, “The whole idea is to allow free trading.”

Even if unscrupulous traders resorted to hoarding, the government had sufficient stocks to prevent any untoward rise in prices, he added.

Asthana said the decision to put a ban on the movement of foodgrain or put a ceiling on stocks is taken by state governments with the approval of the Centre. “But the Centre will not agree to state government’s plea on any of these issues.”

He said the government was planning to follow just one price structure instead of two like common rice and grade A rice.

“We are planning to procure only one type that is common rice due to high yield and productivity.”

The secretary said the rice to paddy ratio was 67 per cent while in other countries it was 73 per cent. He said the government would embark on a project to modernise the rice mills throughout the country. He said incentives will be given to industry for this purpose.

In this context, he pointed out that Markfed in Punjab had already bought six machines from Korea. He said a committee consisting of secretaries of all states will be formed shortly to determine the quality of rice that states would like to have.    


 
 
GOVT SEALS OIL HUNT DEAL FOR 25 BLOCKS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 12 
The government today signed production sharing contracts (PSCs) for 22 exploration blocks under the new exploration licensing policy (NELP) and for three blocks under the earlier round of bidding.

The signing took place at a function in Ashoka Hotel, attended among others by Ram Naik, minister for petroleum and natural gas.

The NELP blocks include seven deep water blocks, 14 shallow water and one onshore block. Though the round was considered a disappointment in the sense that no major international oil company came forward to sign the contract, the government can claim credit for reducing the time frame for finalising the contracts. The previous bidding rounds used to take three to five years for finalisation.

The round was announced at a time when oil prices touched a low of $ 10 per barrel.

The justification for announcing the round at that time was that oil prices would not look up for the next three years.

But six months later prices began to climb up. At one stage, the government thought of cancelling the round.

Numerically, the NELP round could result in the largest number of contracts though almost all players remain either medium or small.

The estimated investment in the 22 blocks is about $ 240 million in the phase-I of exploration which is the minimum work commitment from the companies. Reliance emerged the single biggest winner, getting as many as 12 blocks. These blocks are considered geologically attractive.

Meanwhile, Naik ruled out reduction in prices of kerosene and LPG in view of the falling prices of crude in the international market. He said this (the fall in international prices) was not enough to help India reduce its oil pool deficit.    


 
 
GRASIM CEMENT PLANT IN TN GOES ON STREAM 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 12 
Extending its reach in south India, Grasim Industries today announced the commissioning of its 9,30,000 tonne per annum cement plant at Trichy in Tamil Nadu.

The new plant is expected to strengthen the company’s competitive position in the southern market, providing as it does strategic advantages to its cement business, in terms of a major presence in Tamil Nadu and Kerala.

The company’s current market share in Tamil Nadu stands at 2 per cent and is at 1.5 per cent in Kerala. Following the commissioning of this plant, Grasim’s market share will go up by 9-10 per cent in Tamil Nadu and 4-5 per cent in Kerala.

At present, Grasim supplies cement to these markets from its plant in Karnataka. The proximity of the new plant to the market would enable Grasim serve its customers better with timely deliveries.

The new plant is expected to achieve about 75 per cent capacity utilisation in the first year.    


 
 
SINGAPORE FOR MORE SINGAPORE FOR MORE FLIGHTS FROM 
 
 
FROM JAYANTA ROY CHOWDHURY
 
Singapore, April 12 
Singapore Airlines is keen to increase the number of flights to Calcutta from three a week to one everyday as it feels there is sufficient business potential in that city.

Singapore also wants to operate to new points like Bangalore, Hyderabad and Cochin. It also wants to add more capacity to its services to Delhi, Chennai and Mumbai.

Singapore International Airlines wants to add flights to Hyderabad and Bangalore while its subsidiary SilkAir which already flies to Trivandrum wants to take on the Cochin market too.

SIA’s executive vice-president (commercial) Michael Tan told a group of visiting Indian journalists “We have exhausted our existing entitlements and have requested the Singapore authorities to invite the Indian aeronautical authorities for talks with a view to begin increasing capacities later this year.”

Bilateral negotiations on civil aviation services between India and various governments are likely to resume in August.

Tan added, “We would like to see a more liberal aviation environment. From our standpoint, a more liberal approach would be helpful to cater to the high demand.”

India has already agreed to hike Thailand’s flight capacity to India. Sources said India has agreed to increase it from 1,500 seats to 4,000 seats a week besides giving Thai Air a new destination — Mumbai.    


 
 
INDO GULF NET UP 29% TO RS 212 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 12 
Indo Gulf Corporation Ltd, the A V Birla group company, has posted a 29 per cent rise in net profit for the financial year ending March 31, 2000. Net profit rose to Rs 212.21 crore against Rs 164 crore in the previous year.

D. Bhattacharya, managing director, Indo Gulf said today that the company is setting up a 4 lakh tonne di-ammonium phosphate (DAP) plant and a gold and silver refinery at Dahej. Though he did not reveal the investment to be made in the DAP unit, Bhattacharya said the precious metal refinery would involve an investment of Rs 120 crore.

While both these plants are at an advanced stage of completion, the refinery is expected to add around Rs 250 crore to the topline of Indo Gulf in the next fiscal.    


 
 
MTNL PREFERS TO RELY ON WILLPOWER 
 
 
FROM M RAJENDRAN
 
New Delhi, April 12 
In the battle between corporates backing the two telephone technologies — wireless in local loop (WiLL) and satellite telephony — those supporting WiLL seem to have won the day.

Not only has Mahanagar Telephone Nigam Ltd (MTNL) decided in favour of the WiLL technology to wipe out a waiting list of 81,000 for telephones in Delhi and Mumbai, but the department of telecommunications (DoT) is also expected to follow suit.

It will announce a tender for procurement of WiLL-based Core-Dect technology to be installed under the Village Public Telephone (VPT) scheme. WiLL-based telephones are expected to be a less expensive alternative to satellite-based telephones.

MTNL has placed orders for procurement of 50,000 fixed wireless telephone sets from the US telecom equipment manufacturer Motorola. Other companies manufacturing WiLL-based telecom equipment include Qualcomm and Indian telecom manufacturer Himachal Futuristic Communications Ltd (HFCL), which has the right to manufacture WiLL-based Core-Dect technology.

MTNL chairman and managing director, S. Rajagopalan clarified, “WiLL-based phones are not cellular phones. WiLL technology uses small dishes to provide the connectivity in areas where optical fibres cannot be laid. We have received 70,000 application for telephones from these ‘technically non feasible’ (TNF) areas.”

The demand for telephones both in Mumbai and Delhi increased after MTNL reduced the registration fee from Rs 3,000 to Rs 1,500.

“We had reduced the registration fee which resulted in an increased waiting list. We intend to wipe out the waiting list by June 2000. All those who have applied for telephones till October 1999 will get their phones installed by June,” Rajagopalan said.

He added that the technology would be used in future to expand fixed telephone services in the north-east and other TNF areas.

Technical experts sounded a note of caution. “This technology is good only for providing voice and cannot be used for internet and high capacity services. The cases of call drops are maximum in such a technology,” they said.

However, Rajagopalan said, “There may be problems initially, but the service would be as good as the wireline telephone service.”

Meanwhile, DoT will also soon finalise plans to procure a similar technology based on code division multiple access (CDMA) to increase the VPTs. Communications minister Ram Vilas Paswan had recently pulled up DTS secretary P. S. Saran for failing to decide quickly on the technology to be used for increasing the number of VPTs.

Sources in DoT said, “The minister has asked the DTS secretary to speed up the installation of VPTs and basic telephones. At a recent meeting of the Telecom Commission, the minister was upset with the functioning of the DTS, particularly in matters relating to tendering of equipment, and in the selection of technology for VPT.”

Minister of state for communications Tapan Sikdar has already announced that DTS would use the WiLL technology in most parts of the country to meet VPT targets. However, while WiLL technology has several different uses, the telecom manufacturers specialise only in one technology.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
Foreign Exchange
US $1	Closed	HK $1	Rs 5.55*
UK £1	Closed	SW Fr 1	Rs 26.20*
Euro	Closed	Sing $1	Rs 25.05*
Yen 100	Closed	Aus $1	Rs 25.65*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay
Gold Std (10gm)	Rs 4540	Gold Std (10 gm)	Rs 4500
Gold 22 carat	Rs 4285	Gold 22 carat	Rs 4160
Silver bar (Kg)	Rs 7925	Silver (Kg)	Rs 8090
Silver portion	Rs 8025	Silver portion	Rs 8095

Stock Indices

Sensex	5426.82	-114.72
BSE-100	2965.80	-78.97
S&P CNX Nifty	1592.70	-31.95
Calcutta	130.58	-3.82
Skindia GDR	1292.81	+23.38
   
 

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