Jindal gambit to gain lead in race for Salem Steel
Maruti to raise Rs 300 crore to fund expansion
Flip-flop on Telco, Daimler talks
Bruised rupee pounded to new low of 44.57
Eicher Motors to invest Rs 120 cr for HCV plans
Canara Bank plans IPO
Asian Paints net rises 26% to Rs 97 crore
Foreign Exchange, Bullion, Stock Indices

 
 
JINDAL GAMBIT TO GAIN LEAD IN RACE FOR SALEM STEEL 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, May 30 
The battle for control over Salem Steel is intensifying and SAIL’s sole stainless steel manufacturer may not come out of it without wear and tear.

Three Indian companies — Tata Iron and Steel, Jindal Strips and Shah Alloys — and two European steel-makers — SMS Demag of Germany and Avesta Sheffield of the UK — have been short-listed as potential joint venture partners for SAIL’s proposed divestment in Salem Steel. Even as these companies await clearance to start the process of due diligence of the plant, Jindal Strips is pursuing a separate proposal to use Salem’s excess capacity to roll their steel slabs into stainless steel ahead of the selloff.

SAIL’s top brass is obviously interested in the deal. When queried, a spokesperson for the Rs 19,000 crore company told The Telegraph cryptically: “The economics of the proposal are being considered.”

The need to be circumspect about the proposal is obvious. Salem’s unions and officers’ associations are up in arms against this proposed deal and rival bidders for the plant may not be too pleased about this separate business proposition.

“This (Jindal’s proposal to use Salem’s excess capacity) is nothing but pushing the Jindals through the back door in the name of utilising the idle capacity at Salem Steel’s hot rolling mill,” the unions have written in a letter to SAIL chairman Arvind Pande earlier this week.

“The aim is very obvious — to strengthen Jindal’s claim in the race to grab Salem Steel brushing aside all business norms,” the letter sent by all Salem unions jointly under the banner of ‘Save Salem Steel Committee’ claims.

SAIL’s commercial department is also opposed to the deal. Their point is that Jindals and Salem Steel are rivals in the marketplace and the advantage that Salem has on account of brand value and goodwill that its products enjoy will be eroded if the Jindals were able to claim their products are `Salem quality’.    


 
 
MARUTI TO RAISE RS 300 CRORE TO FUND EXPANSION 
 
 
FROM NITHYA SUBRAMANIAN & M. RAJENDRAN
 
New Delhi, May 30 
Maruti Udyog Ltd is planning to raise Rs 300 crore from the market to meet its capital requirement for expansion. Out of this, a sum of Rs 200 crore will be mobilised through the issue of long term non-convertible debentures and another Rs 100 crore through a commercial paper programme.

Maruti Udyog sources said: “With increased competition, we have to meet the growing demand of our consumers and the market. This calls for a higher level of investment than we have made so far every year. We may have to look for alternate sources of funding.” The company has already announced its plans to launch one new model each year from the Suzuki stable. Last year, it launched mid-size car Baleno and small car Wagon R.

The Investment Credit Rating Agency (Icra) has assigned highest safety to the borrowing programme taking into account Maruti’s dominant position in the domestic car market, with an established vendor base, diverse product portfolio and geographically widespread sales/service network.

Maruti has amortised its capital cost over large volumes funded its working capital out of the advances from customers and dealers and used internal generation for capacity expansion, new model launches and trade investment. This had resulted in the company having a large installed capacity funded mainly through internal accruals, which is largely depreciated, according to Icra.

The credit rating agency says that in future increased capital investments through borrowings to fund capacity expansion, new car launches and higher working capital requirements would impact Maruti’s profitability.

Competition has put pressure on realisations forcing Maruti to introduce stripped-down variants of existing models at lower prices and new models with a high import content adversely affecting margins.

The negative impact has been mitigated by reducing costs through continuous indigenisation. However, advances from customers have also been declining over the last few years due to faster delivery of vehicles. This had forced Maruti to borrow partially last year to meet working capital requirements.

According to Icra, competition will further intensify in future which could lead to a decline in Maruti’s market share and keep its margins under pressure.    


 
 
FLIP-FLOP ON TELCO, DAIMLER TALKS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 30 
After a day of strange disclosures and denials, the question on everyone’s lips was: will it or won’t it? Ratan Tata had stunned analysts earlier in the day when he revealed that Telco was was in talks with DaimlerChrysler for a possible alliance under which the world’s third largest automaker would hawk Indica cars in the Latin American markets.

“We are in talks with DaimlerChrysler for marketing Indica in the Latin American markets and also examining a product swap for the local markets,” Tata had said.

But late in the evening the Tatas put out a press communique contradicting what had been stated earlier. The statement said: “The company would like to clarify that what was stated today at an analysts meeting was the fact the company had been in talks with Chrysler in the past on the possibility of product swaps but it was categorically stated at the meeting that currently there was nothing on between the two companies.”

Tata said he was open to the idea of an eventual hive off of the car division. “We have no emotional attachment with the (car) project. If circumstances dictate and we find a suitable business proposition, we will consider it.” “The company is however not in talks with any company including Daimler Chrysler,” he hastened to add.

Senior vice-president (finance) P P Kadle said: “The company expects the car project to break even at 90,000 units per annum at current prices and at a 60 per cent capacity utilisation.”

Ravi Dube, in charge of marketing cars at Telco, said: “We will also look for alliances in mid-size car segment.” Tata said the launch of mid-size cars was two years away.    


 
 
BRUISED RUPEE POUNDED TO NEW LOW OF 44.57 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 30 
A battered rupee was knocked down to another new low of 44.56/57 at the close of trading today due to a sustained demand for dollars from importers. With today’s losses, the currency has hit new troughs in all sessions since Thursday last when it had plumbed an all-time low of 44.75.

Dealers attributed the demand for dollars, which remained strong for the best part of the day, to month-end considerations. However, more losses were prevented by State Bank of India (SBI) which stepped in to sell greenbacks when the rupee plunged to its intra-day low of 44.58/59.

The intervention by SBI has given rise to a belief that the Reserve Bank of India (RBI) is not in favour of a further depreciation in the value of the rupee. “Hopefully, we may see exporters finally repatriating their dollars earnings now being held abroad. These funds have been held abroad on the expectation that the rupee will decline further,” a dealer with a state-run bank said.

Opening at 44.49/52, the rupee dipped to its intra-day low of 44.58/59 after importers rushed to pick up greenbacks.

In addition, a public-sector oil firm was believed to have purchased dollars to the tune of around $ 50 million. It was SBI’s intervention which prevented the rupee’s fall beyond 44.59 and pushed up the currency to 44.56/57 at the close. This represented a loss of 7 paise over its previous finish.

In the forward market, the six-month premium on the dollar dipped at 2.63 per cent compared with Tuesday’s finish of 2.79 per cent.

Meanwhile, the RBI fixed the rupee-dollar reference rate at 44.58, down from Monday’s peg of 44.45.

While the RBI had last week announced various measures to halt the slide of the Indian currency, the central bank had also said it was not considering any monetary tightening. However, in a move that surprised money market circles today, the apex bank placed on its open market sale list the 10.95 per cent 2011 bond auctioned on Tuesday, apart from also putting several treasury bills on the sale list.

Sensex leaps 122 pts

Even as the rupee tested new lows, the BSE sensex extended its gains today, galloping past the 4300-mark to 4311.77 in a 121.92-point gain over its previous close of 4189.85.

Driving the rally was a fresh bout of buying in technology, media and telecommunication (TMT) shares — all of which have sharp reverses in the recent past. With today’s gain, the 30-share index has recovered by more than 378 points in the last four days, largely on the back of renewed buying by foreign funds and some short coverings by operators.

Index-based heavyweights like Infosys Technologies, Satyam Computer, Zee Telefilms, ITC, Novartis, Mahindra &Mahindra, Reliance, Ranbaxy and State Bank were big gainers today.    


 
 
EICHER MOTORS TO INVEST RS 120 CR FOR HCV PLANS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 30 
Eicher Motors India Limited (EML) is investing Rs 120 crore in its plant to focus on heavy commercial vehicles.

The company has also doubled its net profit by 103 per cent to Rs 15.86 crore, as against Rs 7.82 crore in the previous year.

It recorded a 32 per cent increase in its sales at Rs 352 crore for the financial year ending March 2000. The company has set a target of increasing its sales by 20-25 per cent in the next fiscal.

However Eicher Ltd, recorded only a two per cent growth in sales at Rs 653.1 crore for the year ended March 2000 as against Rs 638.7 crore for the year ended March 1999. While the net profit increased by 46.2 per cent at Rs 29.2 crore year ending 1999-as against Rs 15.7 crore for the financial year ending March 2000.

EML has already invested about 30 per cent of the total Rs 120 crore investment planned over a period of three years. The investmenet would be used for capacity expansion and upgrading the current machinery. EML will unveil its HCV 20.16 and upgraded 11.10 MCV launched in January this year.

Announcing the financial results of EML, S. Sandilya, group chairman and chief executive of the company said, “Our performance has improved because we worked towards reducing costs like interest through better working capital management, material cost with zero-based costing reviews and cutting down wastage.”

EML is also considering a plan to launch a CNG bus. However, Sandilya said, “Worldwide the CNG run vehicles have not shown major results as had been anticipated. We are currently evaluating and depending upon the demand we may introduce CNG buses.”

The company will also launch another variant of its Skyline range of buses.

EML has already employed information technology in its internal working plans to connect major dealers and suppliers to its network.

This network will later be expanded to bring in the network of Eicher Limited. EML has about 300 vendors while Eicher Limited has 500 vendors.

The company also announced that all vehicles from EML would meet Bharat Stage-II emission norms much before the deadline set by the government of year 2003.    


 
 
CANARA BANK PLANS IPO 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Bangalore, May 30 
Canara Bank plans to go in for its maiden public issue. Announcing the financial results of the bank, chairman and managing director R. J. Kamath today said, “We will come out with initial public offer (IPO) at the appropriate time.”

The bank has reported an increase in its net profit for the year 1999-2000 at Rs 236 crore, up from Rs 225 crore in the previous year. Operating profit stood at Rs 923 crore, from Rs 957 crore in the previous fiscal. The previous year’s figure included Rs 343 crore received as one-time settlement of Canbank Financial Services Ltd (Canfina) from three public sector undertakings, he added.

Kamath said the substantial rise in profits was due to several reasons, including overall improvement of asset quality, reduction of interest cost, effective asset liability management and aggressive recourse to swap transactions. Executive director Ranjana Kumar said the year marked cash recovery of Rs 509 crore and added that after a gap of five years, the gross NPA of the bank showed a reversal trend.    


 
 
ASIAN PAINTS NET RISES 26% TO RS 97 CRORE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 30 
Asian Paints (India) Ltd has registered a 26.6 per cent rise in net profit for the year ended March 31, 2000. Net profit rose to Rs 97.34 crore as against Rs 76.88 crore in the previous year.

At its board meeting held today, the directors also recommended a bonus issue in the ratio of 3:5. The announcement of bonus shares would take its equity capital to Rs 66.86 crore from the present Rs 40.12 crore.

Briefing newspersons here today, Ashwin Dani, vice-chairman and managing director Asian Paints, said that the company has charted out a vision to be one of the top five decorative paint manufacturers in the world. Towards this, it has placed a target of attaining a gross sales revenue of Rs 1335 crore for the present fiscal, which would rise to Rs 2100 crore for the financial year ending 2003.

Dani added that Asian Paints was also exploring several information technology initiatives apart from cost management measures and opportunities in emerging economies including Asia Pacific, Africa and West Asia. The company would additionally look at increased market share in the decorative segment by focusing on large user business and concentrating on new market segments.

During the year, gross sales of the company was at Rs 1341.64 crore compared with Rs 1128.01 crore, an increase of around 19 per cent while net sales stood at Rs 1066.17 crore, a rise of 19.2 per cent over the previous year. Of these, paint sales showed a growth of 18.10 per cent at Rs 1221.22 crore.

Life sciences major, Novartis India Ltd has posted a 38 per cent rise in net profit for the year ending March 31, 2000. Net profit rose to Rs 103.4 crore as compared with Rs 73.4 crore in the previous year.

During the year, the company reported a 10 per cent growth in sales to Rs 824 crore. Novartis said that a one-time revenue from sales of a major portion of its Panoli plant helped in the profit surge.

The company also announced that it is spinning off its agribusiness as a separate entity. It added that this restructuring was being done consequent to similar operations being conducted globally.

Riding on 14 per cent rise in net sales, Britannia Industries Limited today reported 29 per cent jump in net profit at Rs 51 crore during the fiscal 1999-2000 compared with Rs 39.60 crore in the previous fiscal.

Following the board of directors’ meeting today, the company said in a statement that bakery and dairy products business remained buoyant and as such net sales increased to Rs 1169.80 crore from Rs 1030.10 crore in 1998-99.

In the dairy business, apart from consolidating cheese and dairy whitener volumes, they had entered the ghee market and recently introduced ‘Milkman’ as an umbrella brand for its dairy range of products, it said. Biscuit volumes were up by 15 per cent after it recently launched ‘Junior’ and ‘Good Morning’ biscuits under the ‘Nutrichoice’ umbrella and introduced ‘VitalMarie Gold’ and ‘Tiger’ variants in the medium and mass market segments.

The capital expenditure of Rs 12 crore to upgrade manufacturing facilities with a focus on new products and modern packing systems during the year led to a higher provision of Rs 17.20 crore (Rs 15.90 crore) for depreciation. Interest charges also remained higher at Rs 7.30 crore against Rs 6.60 crore last year.

Profit before taxation and exceptional items of Rs 79 crore showed a rise of 37 per cent over the previous year’s Rs 57.60 crore.

Expenditure on exceptional items for proportionate VRS costs amounted to Rs 1.90 crore this year.

Colgate Palmolive (India) Ltd has recorded a 22.74 per cent rise in net profit for the year ended March 31, 2000. Net profit rose to Rs 51.8 crore as against Rs 45.7 crore in the previous year.

The company’s sales for the year, stood at Rs 1121 crore against Rs 998 crore in the previous year. Colgate added that robust unit volume growth and continuing cost cuts contributed significantly to the performance. In line with previously announced strategy and commitment to enhance oral care leadership, it said that a significant portion of the revenue of the year (17 per cent) was re-invested in marketing support programmes for new products and brand equity building.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
Foreign Exchange
US $1	Rs 44.57	HK $1	Rs 5.65*
UK £1	Rs 65.88	SW Fr 1	Rs 25.90*
Euro	Rs 41.79	Sing $1	Rs 25.30*
Yen 100	Rs 41.91	Aus $1	Rs 25.30*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay
Gold Std (10gm)	Rs 4440	Gold Std (10 gm)	Rs 4380
Gold 22 carat	Rs 4190	Gold 22 carat	Rs 4050
Silver bar (Kg)	Rs 7800	Silver (Kg)	Rs 7850
Silver portion	Rs 7900	Silver portion	Rs 7845

Stock Indices

Sensex	4311.77	+121.92
BSE-100	2101.58	+57.76
S&P CNX Nifty	1344.85	+33.80
Calcutta	123.98	+2.59
Skindia GDR	NA	NA
   
 

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