Lafarge acquires Raymond cement unit for Rs 785 cr
IDBI net profit drops 25% to Rs 947 crore
ICICI net at Rs 1206 crore
Ericsson hooked to Net phones
CII initiative to reform Left crusaders
Nalco hopes to complete expansion in two years
Move to hike FDI limit to 74% in telecom opposed
Siemens turns around with Rs 35.7cr net

Mumbai, April 28 
Lafarge India, a subsidiary of the French global construction materials major, today announced an all-cash deal to acquire Raymond Ltd’s 2.4 million tonne capacity cement division for a sum of Rs 785 crore.

The acquisition will strengthen Lafarge’s presence in eastern India and raise its cement-making capacity from 2 million tonnes to 4.24 million tonnes from three cement units. Lafarge is acquiring the plant as a going concern.

The final agreement was signed yesterday by Raymond managing director Gautam Hari Singhania and Lafarge India CEO Thomas Farrell. The cement division of Raymond has a dry process cement plant with 2.24 million tonnes capacity located at Bilaspur in Madhya Pradesh.

This is Lafarge’s second major acquisition in the cement industry after the buyout of Tisco’s two million tonne cement operation in eastern India in November 1999.

Describing it as a “win-win deal” for both parties, Singhania said: “We have been working on the company’s restructuring for some time and this is a significant step”.

Farrell said: “Due to the proximity of Raymond’s cement plant to our key eastern India markets, this acquisition is an important strategic step for Lafarge in India, providing considerable synergies with our existing operations.

Lafarge will gain by virtue of the fact that its existing plant is just 100 kms from the Raymond’s plant. The acquisition will strengthen its position in the east. The acquisition is, however, more expensive than the Tisco deal because the cost works out to $80 per tonne as against $ 70-75 for the Tisco unit.”

Raymond, which paid the price for diversifying away from its core business by getting into sectors like cement and steel businesses, will use a portion of the funds to pre-pay some of its debts. “We will negotiate with financial institutions to pre-pay a portion of the debts”, said Pradeep Bhandari, a senior official at Raymonds. The total debt component of Raymonds is around Rs 764 crore.

The company will also use a portion of the funds to strengthen its presence in the textile, garments and retail distribution businesses. “We may also look at some acquisitions in our core business,” he added.

Lafarge chairman T Thomas rubbished reports in a section of the media that said the cement major was planning to mount a hostile bid for Associated Cement Companies (ACC).

“It’s very difficult for an MNC to make a hostile bid and we do not intend to make one at this juncture,” he said.

Lafarge claimed that it has been making profits from the very first day that it started operating the plant acquired from Tisco.

Raymonds also claimed that its cement division is in the black. It has a debt component of Rs 20 crore which the Indian company is likely to retain with itself. Kotak Mahindra Capital Company advised Lafarge on the acquisition.    

Mumbai, April 28 
The Industrial Development Bank of India (IDBI) has suffered a 25 per cent drop in net profit for the fiscal year ending March 2000 due to higher provisions made for the profit and loss account. Net profit declined to Rs 947 crore compared with Rs 1,259 crore in the previous year.

Provisions which were largely made for non performing assets (NPAs), according to chairman G.P. Gupta, rose to Rs 774 crore against Rs 311 crore in the previous year.

While gross NPAs shot up to Rs 9,700 crore against Rs 8,000 crore, net NPAs rose to Rs 7,700 crore from Rs 6,500 crore in the previous year.

Gupta said fresh NPAs to the tune of Rs 2,200 crore had been created this year and smal companies were largely responsible for this.

One of the strategies of IDBI this year would be check these burgeoning NPAs and the institution was actively looking at the possibility of merging such small companies or their acquisition by larger ones.

During the year, income from operations went up marginally to Rs 7619 crore from Rs 7291 crore recorded in 1998-99. The overall sanctions increased by 19.2 per cent to Rs 28,308 crore, as against previous year’s Rs 23,745 crore, whereas disbursements rose by 17.9 per cent to Rs 17,059 crore (Rs 14,470 crore).

The board of directors of IDBI, which met today, also declared a dividend of Rs 4.50 per share. The total assets of IDBI as on March 31, 2000 rose by 4.4 per cent to Rs 72,169 crore (Rs 69,143 crore). Its capital adequacy ratio on the other hand rose to 14.5 per cent (12.7 per cent).

IDBI has appointed two chartered accounting firms and merchant bankers for the valuation of its 51 per cent stake in the 100 per cent subsidiary, Small Industries Development Bank of India (SIDBI). While the chartered accounting firms would assign a value to IDBI’s stake, the merchant bankers would oversee the transfer of the stake, Gupta said.    

Mumbai, April 28 
ICICI Ltd has recorded a 21 per cent increase in net profits for the fiscal year ending March 31, 2000. Net profit shot up to Rs 1,206 crore over the previous corresponding figure of Rs 1,001 crore. The institution, which so far trudged along both the ‘click’ as well as ‘brick’ paths, will now blend the two into a ‘click-and-brick’ approach, K V Kamath, CEO and managing director said. In other words, it will now leverage its new economy initiatives to boost its old economy business.

“Click alone will not work, similarly brick by itself will lead to nowhere, so we are leveraging the click to build the bricks of our old economy business,” he stated.

Towards this end, he said that ICICI Ltd was looking at the possibility of listing ICICI Infotech and ICICI Web Trade, its two new economy ventures. “We will look at listing these companies during the year. However, the timing depends on various factors such as market conditions,” he added.

ICICI, he said, would follow a synergistic e-commerce approach whereby the institution would invest in start-ups in the dotcom world and technology companies, as well as consider new opportunities. However, the group’s positioning will include both the traditional and the new economy. Its traditional economy concerns comprise wholesale banking (corporate finance, project finance, commercial banking and investment banking) and retail banking (accounts, deposits & bonds, credit cards, mortgages & loans).

The financial institution has proposed a dividend of 55 per cent (Rs 5.50 per share of Rs 10 each for 1999-2000), including an interim dividend of 45 per cent declared on March 17, 2000.    

Calcutta, April 28 
L M Ericsson, which today announced a $ 686-million first quarter pre-tax profit in its worldwide operations , is poised to charge into internet telephony and turn it into its new focus area in India.

The move comes as the department of telecommunications (DoT) issued a letter of intent to Ericsson to implement the internet backbone project in 10 states.

The firms will provide remote-access servers on a multi-service platform, which will initially be used for internet access, but can be later extended to ADFL (broad band access) and subsequently to voice-over IP (internet protocol).

The Swedish cellular phone and telecom equipment maker generates 70 per cent of its revenues from non-handset related businesses.

In India, it has a large presence, having established 14 of the 41 GSM networks in India. With a 40 per cent market share, its geographical spread extends to more than 80 per cent of the GSM coverage, including the areas serviced by Bharti, JTM Hexacom and partly that of Orange, Reliance and Birla AT & T.

Ericsson has also drawn up strategies to regain its top slot in mobile communications from Finish major Nokia, which knocked it off the perch in the Indian market in 1995-96 by offering customers much sleeker cellular phones.

Today, Ericsson Communication launched T28 and T10 — mobile phones laced with accessories such as the plug-in radio-cum-portable handset, which switches off automatically when it detects an incoming call.    

New Delhi, April 28 
You could call it a temporary truce between the friends and foes of reforms. The Confederation of Indian Industry (CII) has taken up the cudgels of convincing an army of Left Front MPs — dyed-in-the-wool reform sceptics — that the path to country’s economic salvation lies in the way it keeps pace with the tide of globalisation.

It’s not an easy job, not when one remembers finance minister Yashwant Sinha’s oft-repeated refrains that the ‘consensus on reforms is on the retreat’. The chamber will hold a closed-door meeting with Parliamentarians from West Bengal in mid-May to sell the ideas that subsidies must be cut, public sector undertakings have to be privatised, affluent farmers should pay taxes and labour laws require changes.

But, why only the Left? Because these parties are known to have spearheaded the opposition to reforms and, right now, are leading the charge on the government to roll back the food subsidy cuts announced in the budget this year.

According to new CII president, Arun Bharat Ram, high on the agenda for the planned session is to build a consensus on denying income-tax payees access to the public distribution system altogether — not just sugar, as is the case now.

Other touchy subjects that could come up include the phasing out of subsidies on fertilisers, power, water and public transport, ensuring that trade unions support fair and transparent privatisation, designing a viable social safety net and retraining of workers in a variety of new skills.

“The government should look at the process of disinvestment to create corporate value and not to earn revenues,” Ram said. As a step in this direction, CII has asked for the privatisation of at least 74 per cent of the government’s equity in PSUs. Ram said his chamber was in favour of divesting at least 40 per cent in Air-India to a foreign airline. Maruti Udyog Limited is another company where it feels the selloff process can start as soon as possible.

The CII president said a major area of reform would be to constitute task forces in Andhra Pradesh, Delhi, Karnataka, Jammu & Kashmir, Maharashtra and West Bengal, which will suggest ways to improve their efficiency and attract investors.    

New Delhi, April 28 
Nalco, the Orissa-based aluminium major, plans to invest around Rs 1,232 crore in an on-going smelter capacity expansion programme which will eventually take the company’s capacity from 2.3 lakh tonnes a year to 3.45 lakh tonnes a year.

Nalco chairman P. Parvathisem said today that the total cost of the expansion programme would be Rs 3,700 crore, including mining expansion and the addition of 120 mw of power generation capacity. The entire programme would be completed by May 2002.

Nalco hopes to fund the entire capacity expansion out of its internal resources, “except a small portion of about Rs 400-500 crore for which we will be tapping credit against export orders.”

Export credit is considered a lower cost loan than most other options as this can be availed of at just 10 per cent interest rate.

Parvathisem said, “We are not only trying to expand but we are trying to shed our image of being a commodity producer to turn into a total aluminium products company.” As part of this move, Nalco recently bought out its partner’s stake in the Mukand-promoted International Aluminium Products Ltd, a downstream export oriented project to roll out aluminum sheets and strips.

Nalco is also setting up three small speciality projects—a 26,000 tonnes per year high grade special hydrate and alumina plant at Damanjodi at a cost of Rs 54.78 crore, a 10,000 tonnes per year detergent grade Zeolite plant at a cost of Rs 24.10 crore and a Rs 12.77-crore 950 kg per annum gallium extraction plant at Damanjodi.    

New Delhi, April 28 
The Telecom Commission is opposed to higher foreign direct investment (FDI) in the telecom sector as proposed by the commerce and industry minister Murasoli Maran.

In its submission to the Group of Ministers (GoM), the department of telecommunications (DoT) has opposed the proposed hike in FDI limit in telecom sector from 49 per cent to 74 per cent.

DoT secretary Shyamal Ghosh, who is also the chairman of the Telecom Commission, said, “Worldwide the countries allow FDI flow of 22-25 per cent in core sectors like telecommunications.” “How can we have such a high FDI in this sector?” he asked and added “the proposals of the communications ministry will be soon submitted to the group of ministers.”

Maran had proposed that FDI limits should be increased in those areas which were not a threat to security and were not politically or socially sensitive.

Officials in industry ministry said, “This will provide boost to the telecom sector and improved services to consumers at lower tariff.”

At present, the government has set a limit of 49 per cent for FDI in the telecom sector—fixed line telephony, cellular, paging, global mobile personal communications, Vsat services.

Inaugurating a telecom seminar organised by Nasscom here today, Ghosh said, “The convergence would lead to deregulation. Technology will necessitate to have a single licence for various services. But it is not an easy task.” “A spectrum is a vital resource and the optimum utilisation will be an important factor in convergence of telecom, information technology and broadcasting,” he added.

Speaking at the seminar, Mahendra Nahata, chairman of Himachal Futuristic Communications Ltd (HFCL), said telecom services cannot grow unless the government comes out with a policy for telecom equipment manufacturers.    

April 28 
Siemens bounced back into the black, reporting a net profit of Rs 35.71 crore during the first six months of financial year ended March 2000 as against a net loss of Rs 5.64 crore in the corresponding period of last year.

The power equipment major’s turnaround was attributed to robust growth in the second quarter during which net profit surged to Rs 30 crore from Rs 16.65 crore in the year-ago period.

Lower interest charges of Rs 1.70 crore during the first half as against Rs 12.71 crore in the same period last year helped improve the bottomline. Net sales were higher at Rs 494.20 crore compared with Rs 453.78 crore while operating profits jumped to Rs 52.7 crore from Rs 21.86 crore in March 1999. Second quarter net sales, however, fell to Rs 266.60 crore from Rs 288.88 crore but operating profits in this period jumped to Rs 38.14 crore from Rs 25.86 crore.

Grasim Industries Ltd has posted a 42 per cent rise in net profit for the fiscal ending March 31, 2000. Net profit rose to Rs 233 crore from Rs 164 crore in the previous year.

The company said that the major factors which contributed to its good performance include all-round growth by way of higher production and turnover volumes, savings in operating costs resulting from ongoing modernisation efforts and reduction in financing cost through restructuring of high cost debts and effective fund management.

The board of directors at its meeting held today, recommended a final dividend of 10 per cent. The total dividend for the year, thus works out to 70 per cent.

During the year, the net turnover of the company at Rs 4273 crore, was higher by 14 per cent as compared with the previous year’s figure of Rs 3757 crore. Gross profit was also up by 30 per cent to Rs 500 crore (Rs 386 crore).

Exide Industries Ltd today reported a 22.65 per cent higher net profit of Rs 48.89 crore during the 1999-2000 fiscal, against Rs 39.86 crore in the previous fiscal.

Net sales during the year increased to Rs 762.21 crore from Rs 655.32 crore and other income to Rs 2.64 crore from Rs 0.97 crore last year. Cost of raw materials also increased to Rs 384.34 crore from Rs 331.23 crore while staff cost increased to Rs 68.75 crore from Rs 59.08 crore. Other expenses also remained higher during this fiscal and despite that operating profit stood higher at Rs 148.37 crore against Rs 129.50 crore last year.

ICI India has recorded a turnover of Rs 905 crore for 1999-2000 against Rs 870 crore in 1998-99, a growth of 17 per cent.

Operating profit grew by 10 per cent and stood at Rs 98 crore. Earnings per share stood at Rs 15.8 compared with Rs 15 in the previous fiscal.

Profit before tax fell to Rs 64.33 crore in 1999-2000 as against Rs 75.88 crore in 1998-99.

The company has recorded an exceptional income through the sale of surplus properties of Rs 84.19 crore, sale of its explosives business at Rs 22.36 crore which is offset by provision for VRS (Rs 69.02 crore) and additional stamp duty of Rs 17.7 crore payable on disposal of the fertiliser business consequent to a Supreme Court order.    


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