PowerGrid gets loan without surety
Sebi plans to license mutual fund agents
Legal anchor for Kulpi port project
Brick-and-click mantra for CII warhorses

New Delhi, April 30 
PowerGrid Corporation of India Limited (PGCIL) has secured a Rs 800-crore loan from German financial institution KFW, without any guarantees from the Centre or any commercial bank, to fund its 2,000-MW Talcher-II transmission project.

The loan will be used to purchase equipment from Siemens AG, Erlangen for the Talcher-II High Voltage Direct Current (HVDC) transmission line. It can be repaid over a period of 13 years and nine months, with a moratorium of 45 months, and the project will be completed in a little over 3 years.

The 500-kilo volt transmission line will link Talcher in Orissa to Kolar in Karnataka, covering a distance of 1,500 kilometres. It will evacuate power from National Thermal Power Corporation’s (NTPC) controversial Talcher power plant.

KFW will sanction loans in two parts. Around 85 per cent of the loan will be sanctioned under part A (‘Hermes covered loan’) while the balance 15 per cent will be extended on a commercial basis.

Under the export contract between Siemens AG, Eriangen and PowerGrid, 15 per cent of the amount will be settled in the form of interim and down payments, while 85 per cent will be given in proportion to the goods and services supplied against guarantees provided by the Federal Republic of Germany.

“This is the first major loan procured by any public sector company in India without a guarantee either from the central or state government, or from a commercial bank. It is a clear sign that projects can be taken up without bank guarantees or counter-guarantees on terms and conditions that suit the country.

In this contract, the responsibility of providing better equipment will be on Siemens (a German company). This reduces the risk factor for PowerGrid,” sources said.

PGCIL plans to invest about Rs 13,000 crore in transmission and distribution projects this year of the Rs 57,000 crore earmarked as the Ninth Plan outlay. However, this does not include transmission support to be offered to independent power producers (IPPs). “We need an additional Rs 5,000 crore to extend such support to IPPs,” sources said. PGCIL has already raised Rs 10,000 crore through loans from multilateral and bilateral financial institutions, domestic commercial borrowings and internal resources.

It has signed a memorandum of understanding with the government to achieve higher performance targets, including availability of over 98 per cent of the system for transmission of power during the current financial year. The MoU also envisages raising Rs 1,372 crore in loans to fund new projects.

The performance targets include the execution of major transmission projects, including the Talcher-II transmission, north-eastern HVDC back-to-back link and Nathpa-Jhakri transmission system (400 KV).    

New Delhi, April 30 
The Securities and Exchange Board of India (Sebi) is considering a plan to license mutual fund agents.

This is part of a larger effort aimed at laying down eligibility conditions and injecting the much-needed dose of professionalism in the way these agents — who unlike their trained counterparts in the insurance industry — go about their job.

“The education of agents is important and Sebi is working along with the Association of Mutual Funds of India (Amfi) to evolve a licensing system just as it is done in other countries,” Sebi executive director Ashok Kacker told a seminar on capital markets.

The market regulator, he said, is looking at ways to rectify the system which, in its current form, does not lay down any eligibility conditions for the appointment of these agents.

Though Sebi has not constituted a committee to go into the subject, its mutual funds division headed by Kacker is looking into the issue.

“Guidelines removing these loopholes will be issued in the course of time,” he added. Educating and training agents will, however, be a challenging task as the market has thousands of them selling mutual fund units.

Kacker said mutual funds must provide on-line net asset value (NAV) information, redress grievances, provide account statements and disseminate research information. He said the industry expects to mobilise resources of about Rs 1 lakh crore, which will have a market capitalisation of Rs 20 trillion when invested. Till March 2000, mutual funds had a market capitalisation of Rs 10.8 trillion.

Earlier, J Bhagwati, joint secretary in the ministry of finance, said there are areas of weakness in the capital markets such as inefficient price discoveries. Prices sometimes do not reflect the true value of the company. For instance, he said there is a mix-up between the cash and the carry-forward markets.

The different settlement periods on the National and Bombay Stock Exchanges have also been identified as areas of concern. The government, along with Sebi, was considering the option of introducing rolling settlement in liquid scrips.

Bhagwati also said though the markets have been volatile, they have behaved in tune with the international trends, but pointed out that manipulations in the market must be curbed.

The Delhi-based Praxis Consulting and Information Services’ Prithvi Haldea said there has been no actual revival in the primary markets. The present crash, however, presents a silver-lining in that it has prevented several fraud companies from tapping the IPO market.    

Calcutta, April 30 
The ministry of surface transport has prepared a draft notification which will empower the Calcutta Port Trust (CPT) to regulate the use of the waterfront along the river Hooghly as part of its efforts to clear the way for starting work on the much-delayed Kulpi port project.

Through the notification, the Centre will denotify the 3,000-hectare zone and help the state — which conceived the project — to start work. The move is being seen as a take-off sign for a project which has been delayed by nearly three years. The port will be built on the eastern bank of the Hooghly at Kulpi in South 24 Parganas district, 78 kms south of Calcutta.

Sources said the draft notification will have to be cleared by the law ministry. “The CPT’s board of trustees has given an in-principle clearance. Hitches can be sorted out later through discussions,” industry sources said. D.P. Patra, managing director of WBIDC, which holds an 11 per cent stake in the project, confirmed that moves were afoot to issue the notification and that the Centre’s approval is expected soon.

The state plans to carve out a port-based economic zone at Kulpi, comprising port facilities, an industrial park and a ship-breaking complex at an estimated cost of Rs 925 crore. It will be a joint effort of the state and Mukand-Keventer Consortium & Associates.    

New Delhi, April 30 
Confederation of Indian Industry (CII) president Arun Bharat Ram feels the only way the old brick and mortar companies can survive is by using the tools of the new economy to their advantage.

The CII, which draws its membership mostly from engineering companies, is caught up in the cross currents of the new and old economies and is trying to live with the times. Hence it is keen on its members using information technology-enabled services to restructure themselves. “We have to re-orient our companies in order to survive,” Ram says, but quickly adds, “the new economy also needs the old economy to be in business. If you don’t have the old economy, who will the new economy cater to.”

However, the CII president did not share the view that in the event of a shake-out in the dotcom industry, only those backed by a brick and mortar enterprise will survive.

“The success of such companies will not be determined by their financial clout but by their ideas,” he said.

Ram, who is part of the PM’s council on trade and industry, acknowledged that the consensus on reforms was on the decline but was not willing to give up on the reforms process altogether. “We have to sell a reform agenda acceptable to all. Hence, along with a good VRS package we are also talking about employee stock option schemes for public sector employees and a training programme that will equip them to be redeployed. But a few closures are imminent,” he added.

“There is no way India can stay away from the process. It has happened all over the world, it has to happen here,” he says.

The CII, he said, is keen to work on R&D. “We will form a task force in consonance with the Council for Scientific and Industrial Research (CSIR) and also fund good ideas,” he said. He said that GE is setting up a research centre in Bangalore.

However, Ram is not sure of the states and their commitment to ensuring fiscal discipline.    


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