Securitisation of power dues cleared
Group insurance for the poor
Two-day meet to pick Air-India selloff advisor
Caltiger plans $ 100m IPO
Silverline debuts on Wall Street
Pharma shares help sensex gain 26 pts
Duncans removes Nag in tea division shakeup

New Delhi, June 20 
The government today approved a scheme for securitisation of the dues of state electricity boards (SEBs) that are payable to central public sector units under the ministry of power and the department of coal.

The cabinet committee of economic affairs (CCEA) today approved the proposal under which SEBs will be allowed to issue bonds to power and coal PSUs like National Thermal Power Corporation and Coal India Ltd to liquidate their principal dues up to December 31, 1999.

The SEBs have an outstanding dues of more than Rs 10,000 crore to power and coal PSUs till date.

The bonds issued by SEBs would be backed by state government guarantees with specific allocation in the budget to service the bonds in the event of SEBs fail to pay up their dues.

Under the scheme, the bondholders will derive a measure of comfort from the fact that the Central government will be empowered to dock up to 15 per cent of the states’ share of central plan allocations if the guarantee obligations are not met.The tax-free bonds would carry an interest of 10 per cent.

The scheme is designed to unlock the unpaid dues of SEBs so that the public sector units get the money that can be funnelled into new areas of investment.

The approval will particularly help agencies like the West Bengal State Electricity Board which has been under pressure from NTPC to issue bonds to cover a portion of its Rs 1100 crore dues. The SEB has been planning to issue bonds worth Rs 200 crore to NTPC.

The CCEA also cleared a proposal to raise the foreign stake in Birla AT&T Communications — a private telecom service provider in Maharashtra and Gujarat — to 49 per cent amounting to Rs. 1,604.75 crore and and the enhancement of the paid-up capital to Rs 3,275 crore.

The proposal was originally accepted in 1995. At that time, the equity capital was was Rs 525 crore out of which AT&T held equity worth Rs 257.25 crore. In 1996, the paid-up capital was raised to Rs.1,200 crore, out of which AT&T had Rs 588 crore.

The CCEA also approved a proposal of investment in the $ 969 million in Oman India Fertilizer project. The debt-equity ratio of the project is 67:33. The total debt will be $649 million. Iffco’s equity equity in the project will be 25 per cent amounting to $ 80 million. IFCO replaces RCF as the partner with Oman Oil company in the project. Oman Oil Company will have a 50 per cent equity in the project amounting to $160 million.

However, the clearance appears to have come a little late in the day. Quoting highly placed sources, PTI reported earlier in the day that the Oman government had cancelled the agreement for setting up the prestigious Rs 4,500 crore joint venture urea project because of the tardy decision-making.

“In view of delays in decision, all agreements between India and Oman (on the JV to be set up in Oman) may be treated as cancelled,” Omanese minister of commerce and industry MAB Sultan said in a communication to the fertiliser ministry.

The Oman government, however, said the Indian partners were welcome to make fresh offers in case they were still interested to participate in the project which was conceived about seven years ago.

The CCEA also approved the policy for upgradation and modernisation of infrastructure for storing and transporting foodgrain. The state government will help in allocating loans for the project. Under the project, house-hold level storage will be encouraged through various schemes like storage in metal bins and construction of RCC bins at community level.    

New Delhi, June 20 
The BJP-led government today introduced a social security net for the poor by approving the Janshree Bima Yojana, a new group insurance scheme for people below the poverty line (BPL).

The Life Insurance Corporation of India (LIC) will pick up a part of the tab for this grand scheme. Pramod Mahajan, parliamentary affairs minister, said the scheme would cover all those between 18 and 60 years of age and living below the poverty line. Groups of 25 persons will be eligible for the scheme. The annual premium will be Rs 200 per person of which a sum of Rs 100 will be borne out of LIC’s Social Security Fund. The rest will be paid by the beneficiary.

LIC’s social security fund was created in the late 1980s, by setting aside one per cent of its profits every year. Today the fund has a corpus of Rs 302 crore. Mahajan said the scheme is expected to cost the government Rs 150 crore in the first year itself. “With a corpus of Rs 302 crore, the fund will last for two years. By then other new sources of funding will be identified,” he added.

Mahajan said the states were free to contribute its share to reduce the premium burden on the beneficiaries. “The Centre will continue to contribute its share, while state funding would reduce the burden on beneficiaries. Beneficiaries now have to pay around Rs 8.50 a month. But if states decide to subsidise, the premium to be paid by beneficiaries, will go down further,” Mahajan added.

As per the scheme, the beneficiaries will get up to Rs 20,000 for natural death, Rs 25,000 for partial permanent disability due to accidents and Rs 50,000 for death or total permanent disability in accidents. Mahajan said other details of the scheme were being worked out. The Janshree Bima Yojana was part of Yashwant Sinha’s budget announcement. But a government facing a huge fiscal deficit is not in a position to fund the project.    

Mumbai, June 20 
The top-level committee on Air-India Ltd (AI) disinvestment will meet on June 29 and 30 to appoint a global advisor to advise the government on the selloff of its 74 per cent stake in the national carrier.

The committee will meet in New Delhi and has decided on back-to-back dates as it anticipates a tremendous response from internationally reputed merchant/ investment banks, consulting firms and financial institutions. “We have allocated two days for the presentations to deal with the rush of mandate-seekers,” said a government official.

The five-member committee will comprise Pradip Baijal, disinvestment secretary, Sanat Kaul, civil aviation secretary, S. Talwar, joint secretary in the department of public enterprises, S Behura, joint secretary, department of economic affairs, and Michael Mascarenhas, managing director of Air-India.

According to sources, the committee will finalise the appointment of the global advisor in the first fortnight of July.

Merchant banking circles say that internationally renowned bankers are already in town to do their homework before their presentations. The bids have to be submitted before 1700 hours on June 26. Sources from the merchant banking circles aver that Udyan Bose along with an entourage of bankers from Lazard Brothers of the UK were in the city.

While Jardine Fleming is also expected to make a bid, it is said that the bid will be made through its local merchant banking venture. However, to aid the local outfit, the HongKong based outfit has flown in a few aviation experts from HongKong, having some previous experience in the aviation sector.

Sources say Lazard Brothers gained crucial experience from the UK government’s selloff of its stake in British Airways in the eighties while the Jardine group has finalised deals for its local airline in HongKong — Cathay Pacific.

The department of disinvestment had put out advertisements in leading business dailies and the leading British weekly The Economist seeking bids for the post of global advisor to the A-I selloff.

The offer document has called for internationally reputed merchant/investment banks, consulting firms and financial institutions with expertise in privatisation.

The responsibilities of the global advisor would involve preparation of a detailed operational scheme for disinvestment and would include advising and assisting in the disinvestment of A-I, assessment and valuation of A-I, drafting the shareholders agreement, and preparing the sale agreement for the various phases of disinvestment.

Air-India is a 100 per cent government-owned company with an annual turnover of over Rs 4000 crore.    

Calcutta, June 20, the Calcutta-based internet service provider, is planning to raise $ 100 million through an initial public offering to be launched in October.

The company, the first city-based dotcom company to have lined up plans to tap the overseas equity markets, is weighing options to raise 50 per cent of the amount from the Nasdaq or London Stock Exchange while the remaining portion will be mopped up through a domestic issue.

Addressing a press conference here today, Caltiger chairman Joe Silva said the funds raised through the issue will be used to part-finance the company’s plan to set up a 3,000-square kilometre optic-fibre network in the country. Work on the network, to be laid in the coastal areas at an estimated cost of over Rs 500 crore, will be completed in two years.

However, the maiden offering will dilute promoters’ holding in the company to 35 per cent from the existing 58 per cent. Silva refused to comment on the pricing of the issue, but said talks were under way with merchant bankers for carrying out a due diligence exercise on the company. The time and pricing of the issue will be finalised once the evaluation process is completed, Silva said.

The company, which has a paid-up capital of Rs 35 crore, will raise its capital base to Rs 50 crore through a rights issue — the increase is required to fulfil Nasdaq’s listing norms.

Caltiger, which claims to have a subscriber base of two lakh, has drawn up plans to branch out to 10 countries as a solutions provider.

The company aims to have a presence in more than 100 cities of India, and is in the process of setting up its own internet gateway. The company has 60 Alpha servers across the country, which give it a capacity to handle one million subscribers. is looking to earn 25 per cent of its revenues from advertisements, 35 per cent from providing internet solutions and 20 per cent from e-commerce.

Company CEO P. K. Vijaykumar said e-commerce and the internet solutions will contribute more to his company’s topline.    

Mumbai, June 20 
Silverline Technologies Ltd, the Mumbai-based software services company, has priced its $ 125 million American Depository Shares (ADS) at $ 25 a share. This represents a premium of around 27 per cent over its prospectus price of $ 19.68 a share.

The issue comprises 4.35 million primary ADS and a greenshoe option to issue an additional 650,000 ADS. Each ADS represents two underlying shares listed on the Indian markets. The issue will be listed on the New York Stock Exchange (NYSE) under the symbol SLT.

With the listing, Silverline will become the first Indian technology company to list on the NYSE. The company’s initial public offer was led by Salomon Smith Barney, ABN Amro, Jeffries and Credit Lyonnais.

On the BSE today, the Silverline scrip witnessed lot of activity. The scrip which opened at Rs 629.70, tumbled from its intra-day high of Rs 667 after announcement of the pricing. It closed the day at Rs 637.95.

Silverline Technologies earns the bulk of its turnover from exports was earlier developing software primarily for the export markets for the telecom and financial sectors. It is now, however, moving up the value chain by focusing on projects in areas such as web-based applications and e-commerce applications. The company recently commissioned its software development centre in Mumbai which is expected to contribute to its offshore and project consultancy income during the current fiscal. It has a similar centre in Chennai.

The company has also struck alliances with various global players to consolidate its holding in the software services market. It has tied up with Siebel Systems which is engaged in web-based CRM software and Platinum Technology which is involved in enterprise infrastructure software.

Earlier, known as Silverline Industries Ltd, the name was changed to reflect its focus on technology services.

Apart from offering information technology solutions in segments such as telecom, financial services, banking, the company has also decided to tap the new software application areas such as Siebel.    

Mumbai, June 20 
The Bombay Stock Exchange (BSE) sensex today surged past the 4,900-mark but closed a shade lower at 4834.79 in a 26.66-point increase fuelled by some late-session buying in shares of key pharmaceutical companies.

The 30-share sensitive index opened strong at 4891.23 and shot up to an intra-day high of 4919.63. While profit booking by operators pulled it down to 4834.79, it was lifted again by pharmaceutical shares at the close of the trading session.

The 116-point gain in the Nasdaq composite index on Monday inspired some buying in technology scrips early in the day. With today’s gain, the index has put on 248.77 points in the last five successive sessions. The upsurge has been attributed to renewed buying by domestic operators and FIIs.

However, some foreign funds are reported to have booked positions in frontline infotech stocks such as Infosys, HFCL, Global Telesytems, DSQ Software among others. Local institutions and mutual funds were also seen booking profits in shares of Satyam Computer, NIIT, SSI Ltd. A handful of old-economy stocks, which gained early in the day, lost them in the selloff.

Of the 92 gainers from specified group, five shares closed at their 12 per cent upper-end price bands. Satyam Computer was the top traded scrip with a turnover of Rs 654.76 crore on a total volume of Rs 5236.72 crore bit it lost Rs 33 to close at Rs 3359.80.    

Calcutta, June 20 
Duncans Industries has replaced its senior vice-president (packet tea division) Prosenjit Nag with Amit Shukla of United Breweries (UB) in a top-rung shake-up aimed at stemming its losses and toning up its performance.

Shukla was earlier serving the UB group as its general manager (beer sales). Nag is expected to join Bakelite Hylam in a position similar to the one he held in the tea division. “I have not decided where I will place Nag. But, most probably, he will be joining Bakelite Hylam,” G.P. Goenka, chairman of the Duncan Goenka group, told The Telegraph here today.

Duncans’ net profit plunged 88.60 per cent in 1999-2000 to Rs 31.94 crore compared with Rs 60.24 crore in the previous year.Goenka attributed the dramatic fall in profits to high interest payments and lower sales realisations from the tea and fertiliser businesses. The reshuffle is in line with proposals made by Anderson Consulting, which has been appointed by the company to study its tea business and suggest ways to improve packet tea sales.

“We are acting according to their suggestions. DIL will effect major changes soon, all of which will be aim at cost optimisation and increasing volumes in the high-growth packet tea segment. We will bolster supply-chain management and devise a new strategy,” said Goenka, whose company has set a target of grabbing a 12 per cent market-share by 2001.

“We will work according to Anderson Consulting’s recommendations. We have to improve the efficiency and look for consolidated growth rather than a rapid one,” Shukla said.    


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