Reliance likely to replace Enron in oil hunt ventu
IDBI defers decision on Essar
L&T board to weigh cement wing hiveoff
Yahoo makes India debut
Caltiger snaps up Rajkot ISP
Eveready net down 75% at Rs 8.5 crore
Global database to control telecom network on card
Profit-happy Uco awaits recast nod

 
 
RELIANCE LIKELY TO REPLACE ENRON IN OIL HUNT VENTU 
 
 
FROM R. SASANKAN
 
New Delhi, June 29 
Reliance may replace Enron as the operator of oil and gas fields such as Panna, Mukta and mid-and south Tapti.

According to highly-placed industry sources, both partners differ sharply in their perceptions about the operation of these fields and development plans for them. Enron and Reliance hold 30 per cent equity each in these joint ventures, while Oil and Natural Gas Corporation (ONGC), which holds 40 per cent is practically a silent partner.

These fields were awarded to the Enron-Reliance consortium as part of the World Bank-influenced government policy to inject private capital into the oil sector.

While Enron is not a major player in the upstream oil sector, it qualified for being the operator, as Reliance had no experience whatsoever when the contract was awarded five years ago. Hence initially, it was Enron which called the shots. Both Reliance and ONGC did not interfere with the operation of the fields. The situation has changed dramatically with Reliance now gaining confidence to operate the fields. It has hired experienced technical hands from public sector units and is into exploration in a big way. In fact, it is already the second biggest player in the downstream sector.

According to sources, in recent meetings of the joint venture partners, Reliance differed with Enron on the development plans submitted by it. While differences are not unusual in such joint ventures, the confidence with which Reliance articulated its differences gave the impression that it would soon stake its claim to be the operator.

The Enron-Reliance partnership did not extend to exploration. They are not together in the liquefied natural gas business either. While Enron is desperately looking for partners to expand its LNG business. Reliance preferred to go with National Iranian Oil Co in setting up a LNG joint venture in Iran. It also has ambitious plans to bring Iranian gas to India. Slowly, they are emerging as business rivals.

Enron has been in a hurry to step up gas production from the mid-and south Tapti fields, which had more reserves than estimated by ONGC. It proposed to hike the rate of production from the planned 4 million cubic metres a day to 16 million cubic metres, though both ONGC and Reliance opposed the move.    


 
 
IDBI DEFERS DECISION ON ESSAR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 29 
The Industrial Development Bank of India (IDBI) today deferred a decision on funding Essar Oil Ltd’s upcoming 10.5 million tonne refinery at Vadinar in Gujarat.

The board of the premier institution, which met here today till late night, has instead sought information from the company about the progress made in its efforts to find a strategic partner.

It may be recalled that Essar Oil is planning to place around 26 per cent of its equity with a strategic partner as one of the means to raise funds for its refinery. While it was engaged in discussions with BPCL at one point of time, the public sector oil giant later withdrew from the race.

Senior IDBI officials told The Telegraph that while the board did consider a proposal to fund the refinery, “certain loose ends had yet to be tied up.”

“It may be sanctioned in due course but that would depend on how fast it ropes in a partner for the project,” they added.

While IDBI’s share in the Essar Oil consortium led by ICICI is said to be close to Rs 350 crore, the institution is also considering funding the establishment of a terminal adjacent to the refinery.

The refinery, with a total project cost of Rs 7,500 crore, is expected to go on stream by the last quarter of 2001.

The Ruias had decided to foray into the refining business in 1993 when the government allowed private sector participation in this industry. Since then the refinery has witnessed numerous time and cost overruns.

While the promoters are believed to have made an investment of Rs 4,700 crore into the project so far, they are also banking on a strategic sale of 26 per cent of its equity to a partner.

Negotiations with Oman Oil Company are reported to have reached an advanced stage. Sources close to the group said that with the setting up of the refinery, it would become an integrated player in the oil industry.    


 
 
L&T BOARD TO WEIGH CEMENT WING HIVEOFF 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 29 
The board of Larsen & Toubro Ltd (L&T), the engineering, procurement and construction major, is likely to consider at its meeting on July 4 the long-standing proposal to hive off its cement division into a wholly-owned subsidiary.

Informed sources say L&T will start looking for partners once the board clears the proposal. A company official did not deny the hive-off move and the plan to seek a joint venture partner for its cement business which has a capacity of 12 million tonnes annually.

“There’s a possibility that the board may discuss this proposal”, he told The Telegraph. The Boston Consulting Group, the management consultancy, had suggested the hive off of the cement business.

The buzz on the street sent the L&T scrip rocketing to Rs to Rs 265.70, a gain of Rs 27.75. Marketmen say the cement division hive-off will add value to the company and also make it more focused in the engineering and construction businesses. Aimed at transforming the company into a knowledge-based conglomerate, the plan involves spinning off the cement business into a separate company and entering the fast-growing internet and telecom businesses.

Based on the Boston Consulting Group (BCG) recommendations, the blueprint foresees that in the long-term, L&T’s portfolio will consist of an “engineering core and two thrust areas — cement and information technology & communication’’.

While cement and informaton technology have been identified as thrust areas, the construction, engineering projects, heavy engineering and electrical & electronic businesses have been identified as core areas. The restructuring process also involves the company looking very closely at small businesses which contributed less than 10 per cent of the company’s turnover.

At present, L&T has an 100 per cent subsidiary in information technology through LTITL. An initial public offering of the infotech business has been slated for 2001. However, the company is yet to decide on whether it should look at an international listing or tap the domestic markets.    


 
 
YAHOO MAKES INDIA DEBUT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 29 
Yahoo Inc today made its much awaited debut in the Indian internet arena with the launch of Yahoo!India (www.yahoo.co.in), with co-founder Jerry Yang pointing out that the network’s biggest challenge would be to make it as a local brand, despite establishing itself as a leading global brand.

The $ 589 million giant is now planning to invest in the local marketplace for building the Yahoo brand, apart from assembling local themes to achieve this objective.

“We have a very good brand and a great product. With these investments, we want to be a part of the internet landscape in the country,” Yang told The Telegraph.

However, he did not reveal either the investment that would be made by the multinational or its business plan for the country.

Yahoo!India will be based in Mumbai. The company, which has followed the principle of offering localised content, has in this regard decided to have a local team apart from aggregating local content, for which it has tied up with over 40 content partners in the fields of entertainment, sports, finance and news.

Yang said that Yahoo has started off with the advantage of having over 4 million mail users from India for its recognised portal yahoo.com. “With this, we have captured a large population from India. We have now to convert this into local usage,” he said.

Outlining his idea for the country, he stated that while Yahoo is “here for a long haul,” it would do so by making local commitments.

The local portal, according to officials, would offer users an easy way to locate useful internet content through its powerful search engine, for which it recently tied up with Google. They added that the portal featured a directory of web sites organised by a team of web surfers into 14 easy-to-use categories.

To meet the needs of local consumers, Yahoo!India offers comprehensive local and global programming in news, finance, cricket, movies, greetings and weather. In addition to these facilities, the site also provides various communication tools and services that included e-mail through a local ‘yahoo.co.in’ address, chat and other messenger features.

Speaking to newspersons today on the occasion of its launch, Yang said that India is a strategic market for the network, even as its entry into the country was long overdue. “We are excited about the growth potential in this market and the user base,” he added.    


 
 
CALTIGER SNAPS UP RAJKOT ISP 
 
 
FROM OUR CORRESPONDENT
 
Calcutta, June 29 
Caltiger.com, the city-based internet service provider (ISP) has acquired the Rajkot-based ISP, Sun Infoway in the first-ever buyout of a domestic Net access company by another. The deal was sealed at the rate of $ 1,000 per subscriber, but there is no word on the total value.

“Since setting up of infrastructure in all cities will take a long time, the idea of acquiring up-and-running internet service providers has struck us as a good one. Rajkot is the 14th city where Caltiger will provide services. We plan to cover 25 cities by the end of July,” Caltiger president Akshay Kumar said.

The company has a subscriber base of over 2,00,000 and is aiming to take that figure to a million. The company uses state-of-the-art technology with 60 alpha servers spread across the country that give it a capacity to handle a million subscribers.

Recently, the company announced plans to raise $ 100 million through initial public offering in October. Of this, 50 per cent will be raised Nasdaq or London Stock Exchange while the rest will be mopped up through a domestic issue. The IPO would dilute the promoters holding in the company from 58 per cent to 35 per cent.

Caltiger also plans to lay a 3,000 square km optic-fibre network in the country. The cost of the project is estimated at over Rs 500 crore.    


 
 
EVEREADY NET DOWN 75% AT RS 8.5 CRORE 
 
 
BY A STAFF REPORTER
 
Calcutta, June 29 
Eveready Industries, the B.M. Khaitan group company has registered a 75 per cent reduction in its net profit to Rs 8.51 crore for the year ended March 31, 2000, as against Rs 34.84 crore in the previous year.

Net sales of the company, which deals in tea and batteries has rose by a paltry 4.7 per cent to Rs 832.92 crore as against Rs 795.39 crore in the previous year.

According to the company, the unprecedented drought conditions in the north eastern region in the early part of the year adversely affected the tea crop, in turn affecting the company’s profitability.

The earnings per share of the company have gone down from Rs 9.63 to Rs 2.35. The company has declared a final dividend of 20 per cent for 1999-2000.

The interest outgo of the company has increased by 20 per cent from Rs 44.61 crore to Rs 53.76 crore in 1999-2000.

The consumption of raw materials has increased to Rs 224.31 crore from Rs 182.59 crore.

The company said that with regard to the tea business, the value of consumption of raw materials represents only green leaf purchased from third parties. As the production of green leaf from the company’s own estates involves an integrated process, their values at the intermediate stage could not be ascertained, it added.    


 
 
GLOBAL DATABASE TO CONTROL TELECOM NETWORK ON CARD 
 
 
FROM M RAJENDRAN
 
New Delhi, June 29 
The department of telecommunications (DoT) will soon develop a global database (GDS) to monitor the country’s telecommunication network effectively. The project will also help collect and disseminate information on new technologies being used in telecommunications and infotech world wide.

The DoT’s information technology cell recently held a meeting which explored ways to build the database and to find a mechanism to update it. The department decided to appoint a consultant who will provide technological support to the project.

“The Telecom Commission will soon discuss the issue and is likely to finalise the mode of selection for the consultant,” sources in DoT said. The deputy director general (information technology) will be the nodal officer for the project.

“We have asked the senior DDGs to provide the basic information so that the structure of the database can be built immediately. A core group dedicated to the plan is expected to be set up, which would be responsible for the creation, development and maintenance of GDS,” the sources said.

The number of members, and the terms of reference for the core group will be finalised soon.

The database would be connected through a network of powerful high-speed servers and routers. A high bandwidth leased line is likely to link it with telecommunication offices in states.

“We are examining the possibility of setting the GDB at Sanchar Bhawan in Delhi. The other location under consideration is in Uttar Pradesh, where we have an Advance Level Telecom Training Centre (ALTTC),” the sources said.

Meanwhile, government today announced the setting up of a standing committee to study leased circuits and bandwidth requirements of the department of telecom services (DTS), Mahanagar Telephone Nigam Limited (MTNL) and private telecom operators.    


 
 
PROFIT-HAPPY UCO AWAITS RECAST NOD 
 
 
BY A STAFF REPORTER
 
Calcutta, June 29 
Uco Bank, which today announced a profit of Rs 37 crore for the first time in 11 years, will know on July 3 whether its medium-term restructuring plan (2000-2003) is accepted by the finance ministry.

The bank had submitted a five-pronged restructuring plan to the government. It had sought Rs 250 crore in recapitalisation funds to maintain its capital adequacy ratio (CAR) at 10 per cent. The bank’s current CAR is 9.16 per cent.

Under the restructuring plan, the city-based bank plans to put in place a three-tier decision-making hierarchy, make greater use of technology, introduce new products, lay more emphasis on raising branch-level profitability and implement measures which foster a performance-oriented work culture.

Also, it plans to raise its tier-II capital by Rs 250 crore through a bond issue for which it has sought permission from the government.

According to the business projections outlined in the plan, Uco will achieve a net profit of Rs 319 crore and increase its deposit base to Rs 27,211 crore over a period of three years.

At the same time, advances are expected to touch Rs 13,254 crore from the current level of Rs 8,597 crore. Investments are expected to rise to Rs 15,561 crore from Rs 9,938 crore.

More important is the plan to prune its existing work-force by 4,000 over the next three years through a voluntary retirement plan now being drawn up by the finance ministry.

At present, Uco has 31,400 employees, of which 2,000 will retire over the three-year period. At the same time, the bank has sought permission to recruit 1,500 officers and other professionals.

The bank will enter into a memorandum of understanding with employees to introduce a performance-based work culture in an effort to raise business per employee from the current level of Rs 89 lakh.

Also, it intends to merge 75 branches, other than the 31 that have already been amalgamated.

Addressing a press conference here today, V. P. Shetty, executive director of the bank, said Uco hopes to attain a net profit of Rs 79 crore in the current financial year. This will be achieved even after paying the revised wages to employees, which is around Rs 4 crore per month.

Overseas operations will contribute Rs 40 crore to the projected profit, up from Rs 29.49 crore in the financial year ended March 31,2000.

The bank’s four-tier set-up will be reduced to a three-layered one. The zonal manager slot is being abolished and its powers will be delegated to the branches.

Talking about non-performing assets (NPAs), Shetty said a revised policy to tackle the problem of bad loans was introduced last year as part of which 4,914 recovery camps were held.

NPAs worth Rs 192 crore were recovered in 1999-2000 compared with Rs 149 crore in the previous year. The ratio of net NPAs to net advances has come down to 8.75 per cent in the last financial year as against 10.83 per cent in 1998-99. The absolute level of NPAs has also been reduced by Rs 64.77 crore.

Gross NPAs now stand at Rs 1650 crore while net NPAs are pegged at a little below Rs 700 crore. The mid-term plan envisages that the level of gross NPAs will come down to Rs 1352 crore at the end of 2003 while net NPAs will be Rs 629 crore.

The bank’s operating profit of Rs 177 crore this year follows a net loss of Rs 68 crore it suffered last year. Net interest income has risen by 23.76 per cent from Rs 446 crore to Rs 553 crore while non-interest income has jumped by 32.29 per cent from Rs 187 crore to Rs 249 crore. The accumulated losses of the bank now stand at Rs 1797 crore.    

 

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