Zee overseas float gets go-ahead
Chat link puts Satyam atop AOL platform
5 states in talks with FLAG for bandwidth capacity
NSE starts derivatives trading
Andhra tobacco traders clamour for subsidy
PowerGrid hooked on telecom
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 12 
The Cabinet committee on economic affairs (CCEA) today cleared the $ 1.5 billion overseas equity issue of Zee Telefilms Ltd (ZTL), the largest foreign float by any Indian company. It also allowed Moser Baer India Ltd to issue equity shares and fully convertible debentures amounting to $ 90 million.

ZTL can issue American Depository Receipts/Share (ADR/ADS) up to 40 million shares or raise up to $ 1.5 billion, parliamentary affairs minister Pramod Mahajan said.

The $ 1.5 billion issue would comprise premium charged on its one rupee share and the green shoe option whereby the company can keep the oversubscribed portion, he added.

The increased equity will be utilised for software production, internet access, portals, education, upgradation of cable network and installation of an optical fibre network.

After the overseas flotation, the equity holding of the company will be ADR/ADS 17.09 per cent, public 16.77 per cent, overseas corporate bodies 39.17 per cent, foreign institutional investors 9.66 per cent and Indian companies 9.20 per cent. The remaining 8.11 per cent will be held by mutual funds, domestic financial institutions and banks.

Moser Baer is a 100 per cent export oriented unit manufacturing CD-Roms at Noida. It has an annual capacity of 33 million pieces which will be expanded to 760 million units. “IFC will invest $ 25 million while the remaining $ 65 million will be invested by others,” Mahajan said.

CCEA today also approved a proposal of Hinduja National Power Corporation to increase foreign equity from 99 per cent to 99.4 per cent. The proposed paid up capital of the company is revised from Rs 1,550.79 crore to Rs 1,618.26 crore. The project is being set up at a cost of Rs 5,896 crore in Visakahapatanm.

The Cabinet decided to extend to the four per cent interest subsidy scheme offered by Power Finance Corporation (PFC) to thermal generation project where the first unit will be completed by March 31, 2002 and in hydel projects where the same subsidy will be available till March 31, 2004. “Using this incentive, we will be able to add 980 mw of generating capacity,” said Mahajan.

The subsidy is also available for metering at sub-station level and consumer level. This decision was taken up to accelerate power generation and supply programme scheme.

PFC gives interest subsidy for renovation and modernisation, life extension and fast completion of ongoing projects.

The Cabinet approved the inclusion of the fourth unit of the 15 MW of the Kurichi Hydroelectric project situated in eastern Bhutan. The total cost has been revised to Rs 506 crore. The project deadline has been also revised to September 2001, as against the earlier deadline of September 2000.

The government also approved the setting up of 100 tonne per day de-inking plant at Kottayam, Kerala at Rs 52.2 crore with a foreign exchange component of Rs 16.29 crore.

The de-inking plant would remove ink from usable waste paper and create pulp and new paper from use of old newspaper and magazine. In the beginning old newspaper will be imported. Later a domestic system would be developed.

“Hindustan Newsprint Ltd located at Kottayam has a plant with a capacity of 105,000 tonnes per annum. It has been facing problem in procuring forest-based raw materials. Hence the new de-inking project,” said Mahajan.    

Chennai, June 12 
In one of the hottest alliances in recent times, Satyam Infoway has clinched an agreement that puts it right atop the bandwagon of America Online, the world’s largest internet access provider.

Under the agreement, which plonks the Hyderabad-based provider of Net services and e-commerce solutions into the US giant’s sprawling empire, Satyam Infoway will distribute a co-branded version of AOL’s instant messenger service (AIM) to subscribers of its portal, satyamonline.

For AOL, which coalesced into the biggest-ever merger with Time Warner to create a media behemoth early this year, the arrangement is the first it has forged with an Indian e-commerce company.

The messaging services will enable subscribers of satyamonline.com to chat with other users in real time. But the real coup de grace is that the agreement will link its subscribers with those of AOL, and with a host of others with whom the US media titan has collaborative arrangements. The service will also be available on the CD-ROMs of satyamonline internet access software.

Satyam users can chat not only with members who are part of the AOL Buddy List @ network but also with those who use the AIM service provided by companies like Arch Communications, Apple, DigitalWork.com, EarthLink, IBM’s Lotus — all of whom have agreements to distribute the messaging service.

“We are excited about working with AOL in bringing its popular instant messenger facility. This will allow users of satyamonline to communicate instantly with friends, family and colleagues around the world with easy-to-use, convenient, and the most secure real-time, messaging tool available,” Satyam Infoway managing director and CEO R. Ramaraj said here today.

“As a result of this agreement with AOL, we will be able to connect satyamonline’s growing customer base of over 1,50,000 with AIM users and members of AOL worldwide,” he added.

AOL’s instant messenger service, which recently surpassed the 50 million registered user mark, is the internet extension of the access provider’s Buddy List network. The Buddy List network has over 90 million AOL members and AIM users combined. In addition, there are localised versions of AIM as well, which can be downloaded by anybody who possesses an internet connection anywhere in the world.

AOL, the world’s largest internet access provider, has two services: the America Online with more than 22 million subscribers and CompuServe with 2.7 million users. Founded in 1985, it has seven major internet brands such as ICQ, Digital City, and AOL.com portals. Under a strategic alliance with Sun Microsystems, it develops and offers ready-to-deploy, end-to-end e-commerce and enterprise solutions.

Satyam Infoway, on the other hand, is a leading Net access provider to consumers and businesses in India. With 1,60,000 subscribers at the end of April, the company’s network spread across 43 locations services 220 cities in the country.

Satyam Infoway recently wrapped up a flurry of acquisitions, the most significant of which was the deal to buy out Cricinfo.com.

In a stroke, it gave Satyam’s subscribers instant access to the richest cricket content available in the country.    

Mumbai, June 12 
The four southern states — Andhra Pradesh, Karnataka, Tamil Nadu and Kerala — and Gujarat are talking to FLAG (Fibreoptic Link Around the Globe) for bandwidth access at a time when the group on convergence headed by Yashwant Sinha has ruled that VSNL has the exclusive right to resell FLAG’s bandwidth capacity.

Sources say the five states have begun talks with FLAG — the foreign bandwidth provider — in order to harness a part of the latter’s unutilised bandwidth capacity. Greater bandwidth enhances the speed of voice and data communications. Infotech companies and almost all the private internet service providers are also in talks with FLAG to increase their existing bandwidth.

The news is significant as the group on convergence allowed ISPs to access bandwidth directly from submarine cable providers without going through VSNL, but upheld the telecom major’s right to resell FLAG’s bandwidth capacity. FLAG has not been pleased with the order but has decided not to challenge it in courts. “We are not going to the courts”, said Neeraj Gupta, FLAG’s managing director. Sources say FLAG is not willing to take on the telecom major VSNL. Moreover, it finds the legal option is pointless because of the process of litigation in India is far too long.

However, FLAG expects state governments and infotech companies to exert pressure on the Union government to take a fresh look at the exclusivity clause in the agreement between VSNL and FLAG, say sources.

“Our stand is that there is no such exclusive right,” says Gupta. However, the group on convergence seems to have upheld VSNL’s contentions regarding its agreement with FLAG.

It also said that the decision of the group on convergence to allow ISPs to access bandwidth directly from submarine cable providers without going through VSNL would serve no purpose. This is because, technically, FLAG is the only submarine cable provider currently in India and setting up similar infrastructure would take hundreds of millions of dollars. The other, submarine cable provider SMW-3 is a club cable owned by the likes of VSNL.

FLAG owns and operates the world’s largest fibreoptic cable system stretching about 28,000 km from the UK to Japan.

The FLAG cable system was privately financed at a capital cost of $ 1.5 billion. With 16 landing points (including Mumbai) in 13 countries, the cable route spans many of the world’s fastest growing economies and connects 75 per cent of the world’s population.    

Mumbai, June 12 
The National Stock Exchange (NSE) today launched derivatives trading, the second bourse in the country to do so within the space of less than a week. The Bombay Stock Exchange (BSE) started the process last week.

The C&P CNX Nifty Index Futures was launched today but the at Rs 2.31-crore turnover on the NSE was lower than the futures segment of the BSE. In contrast, Bombay Stock Exchange had posted a turnover of Rs 3.83 crore on the first day of sensex-based futures trading on June 9.

“Around 65 users from six major centres across the country participated on the first day of trading in the index futures market,” a press release issued by the NSE said here today.

Trading was concentrated on near futures expiring on June 29. In all, 12,400 of the 15,800 futures traded belonged to this category and were valued at Rs 181.20 crore. For July, 2,800 futures valued at Rs 41.19 crore were traded. For August, only 600 futures with an aggregate value of Rs 8.8 crore were traded during the day.

The closing prices of June, July and August futures were Rs 1,452.75, Rs 1,478.00 and Rs 1,480 respectively, as against the opening prices of Rs 1,461, Rs 1,478 and Rs 1,480. There was brisk trading for the June contracts, as evident in the volume of 12,400 Nifties compared with the closing open interest of 4,000 Nifties (futures), the release said. The session closed with a total open interest of 7,400 futures — which is the outstanding position when trading resumes on Tuesday.    

Hyderabad, June 12 
Tobacco traders in Andhra Pradesh have sought a direct subsidy of Rs 5 per kg from the Centre, at par with the subsidies given to tea growers of Tamil Nadu and Assam.

Former Congress MP and tobacco exporter Rayapati Sambashiv Rao today said the farmers had already lost Rs 200 crore owing to the delay in marketing their produce. “Any further delay will ruin their livelihood,” he added.

The situation of tobacco farmers has worsened this year with a total of 175.95 million kgs of unsold tobacco, including the 61 million kgs of last year’s crop lying with the traders. “So far only 23.73 million kgs of tobacco were sold on the auction platforms since February,” a Tobacco Board official said.

The board has issued a directive to all financial institutions not to extend tobacco crop loans to farmers in Andhra Pradesh, Maharashtra and Orissa, where a crop holiday has been declared for this year. It has also directed the Central Tobacco Research Institute and the Indian Leaf Tobacco Ltd not to release any tobacco seeds to check illegal production of tobacco.

The board has also sought the assistance of the state government in implementing the crop holiday. “All extension officers of the Tobacco Board will assist tobacco farmers to raise alternative crops this year,” the official said.

A crop holiday is being observed in Andhra Pradesh, Maharashtra and Orissa. In Karnataka, however, the board has given an authorisation for 25 million kgs of flue cured Virginia (FCV) crop.

The STC has bought only 3.5 million kgs of FCV tobacco while manufacturers have bought 13.82 million kgs so far. “Only 50 buyers had entered the market this year so far against the 159 buyers last year,” the official said. The average price was Rs 38.83 per kg.

Balram Krishnamurthy, a TDP MP representing the farmers, said the farmers could not hold on to their stocks any more in anticipation of better prices. “The statement by Union minister Murasoli Maran asking for the cancellation of the crop holiday has upset the trade pattern in AP,” he said, adding that farmers wanted to get at least the 1999 average price for their produce.

With the onset of the monsoon, the tobacco farmers were in a hurry to dispose their FCV stocks which they feared would lose colour and flavour with the atmospheric moisture. But the absence of small traders has reduced the auctioning to a farce, as the bigwigs picked up minimum quantities of the crop, complaining about the irrationality of the prices fixed by the state government.    

Mumbai, June 12 
In line with the trend among power utilities in overseas countries to branch into telecom, the Power Grid Corporation of India Ltd (PGCIL) today revealed that together with private sector participation it has plans to invest Rs 5,000 crore in telecom over the next five years.

The public sector major will have 26 per cent equity stake in the project, and the private sector partner will hold the balance equity.

Speaking to newspersons on the eve of an international power conference to be held here tomorrow, PGCIL’s chairman and managing director R. P. Singh disclosed the plans.

Among the seven contenders vying for a partnership with PGCIL include Enron, Reliance, the Tatas, Larsen & Toubro, Videsh Sanchar Nigam Ltd, BSES and the BPL-Singapore Telecom consortium.

Singh added that only one company or a group comprising not more than two companies would be selected as a partner.

The telecom project will commence with an initial investment of Rs. 1,000 crore to be sourced from PGCIL’s internal accruals and the rest would in the form of loans from the World Bank, Asian Development Bank and Organisation for Economic Co-operation and Development of Japan, he said. The Rs 4,000 crore is expected to come in after the finalisation of the joint venture partner.

The power utility major intends to create a high capacity optical fibre network spanning a distance of 50,000 kms.

The corporation as a National long distance operator (NLDO) will initially put up a core network of optical fibre network covering 14,000 kms. This will go up to 50,000 kms of optical fibre, he added.

Earlier this year, PGCIL floated a global expression of interest. The joint venture will be finalised by December, 2000 subject to approvals, the chairman said.

The joint venture partner will exercise control over the newly formed company.

The international trend is that 25 per cent of the optical telecom network is established by power utilities, said Singh.

According to Jaywantiben Mehta, Union minister of state for power, the move by PGCIL will help both the company and the country to capitalise on the advantages of convergence of power and telecom.

The new optical fibre backbone is expected to help in the transmission of real-time voice and data to the secured network.

Officials of PGCIL have already held talks with the home and defence ministry in this regard. In fact, PGCIL has set up 2000 kms of optical fibre link, said Singh.

The corporation is looking for a technical partner with a sound financial background.    

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