ACC, Ambuja reinforce ties
Sensex sheds 118 points on resignation jitters
Vajpayee blocks Jaitley bid for more power
Tisco net profit up 300% at Rs 101 crore
HPL seeks advice on financing pattern
Webel to make Konka TVs
Merger-shy Chennai Petro wants tieup

Mumbai, July 19 
Associated Cement Companies (ACC) and Gujarat Ambuja Cement (GACL) today announced a strategic alliance which they said would pool their strengths and protect them from being swallowed by acquisition-hungry global giants.

Speaking at his first AGM after he took over as the ACC chairman from Pallonji Mistry, Tarun Das said the alliance will make both companies more competitive at a time when the industry is changing at a faster rate than ever before.

Das said GACL had developed a sound business model which has delivered excellent performance in terms of profitability, brand management, good project execution and optimal distribution costs. These factors, he said, have made Gujarat Ambuja ‘one of the least-cost cement producers with strong finances and a sound management team’.

Listening to him in rapt attention were Narottam Sekhsaria, chairman of GACL and vice-chairman of ACC, and A L Kapur, whole-time director of GACL and an ACC director. Nani Palkhivala, the chairman emeritus of ACC, could not make it to the meeting because he was not well.

Das said the alliance would open the way for greater interaction between what he called ‘twin companies’. “Already, GACL officials are helping ACC increase the capacity utilisation of its plants, and set up new ones,” said Das, who is also the director general of Confederation of Indian Industry.

The ACC chairman, who sensed that the minority shareholders were not happy over being ignored in the deal between ACC and GACL, tried to convince them that it was a win-win situation for both companies.

A shareholder said the deal between the two companies, though above legal scrutiny, was not done in the right spirit. “At least, we should have been given a exit route,” he complained.

Another shareholder, pointing towards N A Soonawala, who continues on the ACC board, called him ‘the last of the Romans’. Mistry and the other Tata nominees have already resigned. In the end, all resolutions were passed unanimously.

Das said all ACC board meetings in future will review the progress made in pulling out from none-core activities. These include its subsidiaries in the agro-tech, refractory and engineering industries.

Meanwhile, the company’s first-quarter cement production increased 7 per cent to 2.76 million tonnes compared with 2.58 million tonnes in the year-ago period. Sales jumped 12 growth to 2.81 million tonnes from 2.50 million tonnes.

This was the first time ACC addressed its minority shareholders after the Tatas pulled out from the company in favour of Gujarat Ambuja.    

Mumbai, July 19 
The resignations of three Union ministers today sent the stock markets into a tailspin, and set the tone for a 118.79-point slide in the Bombay Stock Exchange (BSE) sensex.

Operators, already low on confidence after the sustained selling by foreign institutional investors (FIIs) over the last few days, reacted to the political tremors by offloading pivotals.

Reflecting the bearish undertone, the 30-scrip index opened weak at 4672.19, but scaled its intra-day high of 4721.85 within the space of a few minutes. However, the gains evaporated when heavy selling drove it down to its intra-day low of 4604.54 before closing at 4616.01, down from Tuesday’s finish of 4734.80.

Broking circles said the market sentiment was weak because FIIs had sold shares worth more than Rs 650 crore in the past few days. The jitters were aggravated when reports of resignations of the three ministers Shiv Sena ministers in the Union Cabinet began to pour in a little after noon.

That 28 of the 30 shares in the sensex ended the day with steep losses was evidence of the mood in the market. Last night’s fall of over 97 points in the Nasdaq Composite Index also had its impact, especially on shares of technology companies.

Dealers voiced fears that the bearish sentiment will keep the market on tenterhooks over the next few days. “The sentiment is bearish. The resignations might lead to some doubts over political stability, and trigger FII sales. This could bring down the markets further,” a broker said.

Old-economy scrips declined with the ICE stocks as institutional investors kept off. “There was selling but no buying to offset it,” an operator said. Of 140 specified scrips, 129 registered sharp to moderate losses, eight closed with gains and two held steady.

Himachal Futuristic was the most active share. It was followed by Satyam, Zee, Infosys Technologies, and Global Telesystems.

HFCL declined by Rs 23.55 at Rs 1354.15, Satyam Computer by Rs 41.10 at Rs 2768.95, Zee Telefilms by Rs 19 at Rs 503.70, Infosys by Rs 179.70 at Rs 7296.45, Global Telesystems by Rs 59.20 at Rs 1069.15 and ACC by Rs 5.45 at Rs 132.10.

Rupee dips anew

The rupee closed at a new low of 44.77/78 compared with its overnight finish of 44.74/75 as a result of heavy demand for greenbacks from corporates and importers.    

New Delhi, July 19 
Prime minister Atal Behari Vajpayee today jettisoned disinvestment minister Arun Jaitley’s bid to arm himself with more powers to speed up the sale of public sector units (PSUs).

Jaitley wanted the Cabinet to set a rule whereby if the disinvestment ministry was merely reiterating a selloff recommendation of the Disinvestment Commission then he (Jaitley) would not need to consult the administrative ministry controlling the PSU concerned.

Though Jaitley had managed to secure the support of finance minister Yashwant Sinha and Planning Commission deputy chairman K.C. Pant, most of the other ministers, led by petroleum minister Ram Naik, had vehemently opposed it in pre-Cabinet exchange of notes.

Being an astute diplomat, Vajpayee coolly told the meeting that the present system being followed was fine and should continue though some procedures could be fine-tuned.

The anxious ministers managed to block another decision which empowered Jaitley to sort out all problems with the administrative ministries before forwarding a divestment proposal to the Cabinet.

This was obviously a fallout of Jaitley’s earlier problems in getting Ram Naik to agree to the sale of public sector oil companies. Naik has insisted that these are of “strategic” interest to the nation and the government should retain majority shares in them. Couple of months back, Jaitley had a tough time getting civil aviation minister Sharad Yadav to agree to the Air-India selloff proposal.

Jaitley’s move was really a sensible one which was based on practical experience that no administrative ministry was willing to give up control of any public sector unit under its control.

In drawing up his strategy paper, Jaitley was merely following the example set by Germany which had set up an agency called Treuhand to sell all state-owned companies of the former east Germany.

Strategic sales

The Cabinet committee on disinvestment today approved strategic sale of Hindustan Organics Corporation Ltd and Metal Scrap Trading Corporation.

Briefing newspersons at the end of the meeting, disinvestment minister Arun Jaitley said the CCD had given approval to reduce government’s equity in HOCL to 26 per cent from the present 58.61 per cent and to sell the government’s entire stake of more than 90 per cent in MSTC.

HOCL, a 40-year-old company produces bulk organic chemicals and is considered a potential good pick by the market despite losses posted in the past few years.

MSTC is considered to be a company with low business potential and profitability. Besides nearly 80 per cent of its net worth is locked up in unrealisable debtors.    

Calcutta, July 19 
The Tata Iron & Steel Company (Tisco) has recorded a massive 309.03 per cent jump in net profit at Rs 101.40 crore for the first quarter ended June 30 2000, compared with Rs 24.79 crore posted in the previous corresponding period.

Net sales rose by 21.08 per cent at Rs 1728.27 crore as against Rs 1427.34 crore in the previous corresponding quarter.

Production of steel rose to 8,34,906 tonnes, as against 7,48,253 tonnes in the first quarter of the previous year.

Interest costs, however, went up from Rs 85.84 crore to Rs 103.11 crore, while depreciation rose to Rs 112.15 crore during the reported quarter, from Rs 104 crore in the same quarter the previous year.

The company, which has launched a voluntary retirement scheme, maintained its staff cost at Rs 239.32 crore, marginally higher than the previous year’s Rs 235.94 crore.

Like the domestic market, the export market has also looked up for the private sector steel giant. Tisco’s exports stood at Rs 177.42 crore for the quarter, against Rs 126.37 crore in the previous corresponding quarter.    

Mumbai, July 19 
Haldia Petrochemicals Ltd (HPL) has appointed a set of merchant bankers to advise it on the issue of structuring the company’s future financing pattern. They would also look into the issue of bringing in a strategic investor into HPL.

The appointment of these merchant bankers, according to senior officials from financial institutions, comes at a time when the company was unable to go ahead with a Rs 900 crore public issue mooted in the previous year. Speaking to The Telegraph, sources from one of the institutions said the brief given to the merchant bankers was to ``structure an appropriate financing pattern, taking into account the present performance and future profitability of the company’’.

Haldia Petro, it may be recalled, had announced that it was on the look-out for a strategic partner who would be offered an equity stake in the venture. The discussions with Indian Oil Corporation (IOC), in this regard, did not reach a positive end. The merchant bankers would also look at the possibility of roping in a multinational partner for this purpose. Sources said a detailed report prepared by the merchant banking division of Industrial Development Bank of India (IDBI) ,which is one of the participants, would be submitted to the financial institutions at a later date.

One of the largest integrated petrochemical complexes in the country, Haldia Petro was commissioned on April 2 this year. The complex produces ethylene, propylene and associated liquid stream products for downstream processing into polymers and chemicals.    

Calcutta, July 19 
The $ 2-billion Konka group of China has entered into an arrangement with the West Bengal Electronic Industry Development Corporation (Webel), for manufacturing its Konka brand of colour television sets at the latter’s facilities in the city.

The Chinese company provides locally procured cabinets and colour picture tubes, as well as imported components in semi-knocked down (SKD) and completely knocked-down (CKD) condition, to Webel for final assembling.

The Webel factory made its mark in the eastern region market in the eighties with the Webel-Nicco brand of televisions.    

New Delhi, July 19 
The Chennai Petroleum Corporation (CPCL) is resisting the government’s move to merge it with Indian Oil Corporation (IOC).

Even as the ministry of petroleum and natural gas examines the modalities of the merger, the management of CPCL has come out with a proposal to tie up with IOC for marketing petroleum products. However, Cochin Refineries (CRL), another stand-alone refinery in the south, has left the decision up to the Centre. At one stage, it also preferred a marketing tie-up to a full-blown merger.

The Sengupta committee on stand-alone refineries had recommended the merger of CRL with Bharat Petroleum Corporation (BPCL), and CPCL — formerly known as Madras Refineries Ltd (MRL) —with either BPCL or IOC. The ministry has taken an in-principle decision to merge CRL with BPCL, which does not have enough refining capacity.

In a deregulated petroleum market, BPCL will not be able to sustain its marketing network without increasing its refining capacity. CRL prefers to go with BPCL, if not allowed to stand alone.

Indian Oil has acquired the image of being a north Indian company, more so because it does not have a refinery in the south. CPCL, which will have a 9.5 million tonne capacity after its expansion, will give IOC a national presence. However, it is possible that the move may be resisted by the ruling DMK government in Tamil Nadu.

The immediate provocation for making an offer for a marketing tieup at this stage has sent an impression that there is pressure on the management to keep CPCL as a separate company. The minister of state for petroleum and natural gas, PMK’s Ponnuswamy, comes from Tamil Nadu and is in charge of both CPCL and CRL.

He had gone on record to say there was no proposal before the government to merge the stand-alone refineries with the marketing companies. However, he was contradicted by Union petroleum minister Ram Naik, who was emphatic that these refineries would be merged with the marketing companies.

With Naik taking interest in policy matters, albeit belatedly, his view will ultimately prevail over the future of these companies. He has already taken the stand that further disinvestment of the government stake’s in Indian Oil should only be done after the proposed merger of CPCL. This, he feels, will push up the market value of IOC shares. Similarly, IOC is short of retail outlets in comparison with its downstream market share. This could be a major weakness in a deregulated market.

IOC is keen to takeover IBP to meet the shortage. IBP has a 4 to 5 per cent share in the downstream market, but that too in the north and north east where IOC’s presence is negligible. Naik is expected to back IOC in taking over IBP. Reliance Petroleum is also keen to bid for IBP.    


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