Indica break-even may be delayed
Sensex rallies 148 pts as FIIs renew buying
Telecom service wing to control phone giants
NHPC inks Rs 450cr loan pacts for Chamera-II
Insurance licences to be issued in October
After Zen, Publicis now sets sights on Maadhyam
Meagre rise in Grasim net profit

 
 
INDICA BREAK-EVEN MAY BE DELAYED 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 25 
Telco today said it would be able to produce 70,000 Indica cars this year, 20,000 short of the break-even level for the small car project which it had hoped to achive in the current discal.

The disclosure came on a day when directors of the auto major, slowed in its tracks by poor growth in the country’s automobile industry, sat down to consider its first-quarter loss of Rs 74.34 crore, up from Rs 33.53 crore a year ago.

Addressing shareholders at the company’s annual general meeting, executive chairman Ratan Tata said last week’s hike in interest rates will drive up costs across firms and slow down an economy on the road to recovery. Telco depends heavily on economy’s health to sell more vehicles.

Later, Rajiv Dube, general manager (commercial), said the company’s target continued to remain 90,000 cars and that the figure given out by Tata was the base level.

However, analysts were not buying the argument, saying the revision had more to do with the fact that Tatas, like many others in the country’s crowded car market, sold only 14,000 Indicas in the first quarter.

A recovery is a long way off, they say, arguing that high depreciation and amortisation in the Rs 1,700-crore car project will make the going tough.

Jolted by losses, Telco, meanwhile, shed 3,000 employees by offering them a VRS. In addition, close to 4,000 have been transferred to the newly formed companies which have sprung up when its gear and axle units, and the construction equipment division, were spun off into separate entities. Tata said the threat of easy imports under a WTO regime has thrown up the need for alliances with global car majors. “We will have alliances with others by selling their products in our name.”

He said two to three variants of Indica were in the works, which would be introduced in the next two years.

Talking about Mercedes Benz India, in which the Tatas hold a 14 per cent stake, sold only 800 cars last year, and its turnover was only Rs 200 crore, Tata said in response to a shareholder’s query.

Tata said he had not taken his compensation from Telco as its executive chairman because the laws do not permit a person to get salaries from more than one company.

“I am being compensated by Tata Sons.” He said he would assume the title of a chairman once Telco finds a managing director. Offering a consolation over the reduced dividend, Tata said even the executive board had foregone commissions and bonuses.

Telco posted a first-quarter loss (before depreciation, interest and amortisation) of Rs 133.66 crore compared with Rs 111.94 crore in the corresponding period of the previous year.

Total income stood at Rs 1,831.38 crore, up 16 per cent over Rs 1,583.94 crore in the same period of the previous year.

Exports were higher but commercial vehicle sales in the domestic market fell 4 per cent, largely due to the adverse impact of introducing an uniform floor rate of sales tax by all states.

The company attributed the increase in losses to the higher interest cost, depreciation and amortization of Indica project.    


 
 
SENSEX RALLIES 148 PTS AS FIIS RENEW BUYING 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 25 
Driven by a sense of relief over the release of Shiv Sena leader Bal Thackeray and renewed buying by foreign funds, the Bombay Stock Exchange (BSE) sensex today ended a roller-coaster session with a 147.86-point gain.

Infotech stocks led the rebound from Monday’s 275-point plunge, and from the day’s trough of 4097.22, in a session that saw the index fluctuate by an astounding 317 points. “Thackeray’s release gave the market the much-needed shot, dispelling the air of political uncertainty hanging over the Central government,” an analyst with a local brokerage firm said.

Another booster came from foreign institutional investors (FIIs), who were reported to have picked up shares worth a staggering Rs 200 crore during the day. Only last week, they had remained net sellers in a market that was groping for direction. Satyam Computers and Wipro, believed to have been their picks today, saw their share prices perk up.

Even local institutions, including UTI and others turned buyers, raising hopes in many sections of the market that the worst — the sensex lost more than 775 points since July 13 — was over.

The 30-share index opened weak at 4097.22, slipped to an intra-day low of 4052.61, but clawed back to close at 4336.20, up a sharp 3.53 per cent over Monday’s finish of 4188.34 points.

Himachal Futuristic was the top traded scrip with a turnover of Rs 822.29 crore on a total volume of Rs 5083.89 crore. However, it lost Rs 13.15 to close at Rs 1214.90.

The rupee, already under the kind of pressure which forced the Reserve Bank to mount a rescue bid, lost further ground today when it plumbed an intra-day low of 44.96/98. It recovered later, and closed at 44.90/91, a 17 paise decline over Monday’s finish of 44.74/75. Late-session dollar sales by State Bank and a few others helped trimmed the early losses.    


 
 
TELECOM SERVICE WING TO CONTROL PHONE GIANTS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 25 
The department of telecom services has retained the control of Mahanagar Telephone Nigam Ltd (MTNL), Videsh Sanchar Nigam Ltd (VSNL) and Telecommunications Consultants India Ltd (TCIL). The Department of Telecom Operations (DTO), on the other hand, has been allotted all matters related to non-policy and licensing issues.

Minister of state for communications Tapan Sikdar informed the Rajya Sabha members today that DTO would deal with all non-policy and licensing issues related to telephone, wireless, and data.

The DTS would handle issues related to corporatisation, besides dealing with problems related to human resources. It would also look into the corporatisaion and divestment of MTNL and VSNL.

Replying to a question posed by Rajya Sabha member and CPM leader Nilotpal Basu on the issue, Sikdar said DTO would also handle purchase and acquisition of land debitable to the capital budget pertaining to telecom.

However, after corporatisation, the issues which would be out of the preview of both DTS and DTO would be undertaken by department of telecommunication (DoT).

Meanwhile, R N Goyal, a 1963 batch Indian Telecom Service (ITS) official, has taken over as the secretary of DTO. Prior to his new assignment, he was member (production) in the Telecom Commission. He will continue to hold this post along with the new assignment.

The government today said it would provide bandwidth on demand up to district headquarters level by March 2001, in an attempt to facilitate availability of adequate bandwidth for internet requirements in the country.

“About 3,000 kms of SDH optical fibre network is likely to be commissioned by August 2000. By March 2001, DTS would commission another 32 rings of 2.5 Gigabits per second (Gbps) capacity,” an official release said here.

DTS has already commissioned 14,000 route kms of 2.5 Gbps optical fibre network as part of Sanchar Sagar Phase-I project encompassing 28 cities across the country.

The government would soon raise the cap for foreign direct investors to 100 per cent in the internet service providers (ISP) segment.    


 
 
NHPC INKS RS 450CR LOAN PACTS FOR CHAMERA-II 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 25 
National Hydroelectric Power Corporation (NHPC) today signed a Rs 450-crore loan agreement with five nationalised banks for its 300 megawatt Chamera-II hydro power project.

The five banks are, State Bank of India, State Bank of Hyderabad, State Bank of Patiala, Punjab and Sind Bank and Bank of India.

The loan agreements are part of the Rs 800-crore domestic term loan tied up by NHPC for the project in Himachal Pradesh.

NHPC had earlier tied up loans worth Rs 150 crore each with Punjab National Bank and Central Bank of India.

Under the agreement, SBI will give a loan of Rs 150 crore to NHPC, while Bank of India and Punjab and Sind Bank will give Rs 100 crore each. State Bank of Patiala and State Bank of Hyderabad will give Rs 50 crore each.    


 
 
INSURANCE LICENCES TO BE ISSUED IN OCTOBER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 25 
The insurance regulator has reiterated that registrations for new insurance companies will be granted by the end of October.

IRDA chairman N. Rangachary, today said that by the first week of August applications would be invited from new players. However, a time period of 10 to 12 weeks would be required to study the applications.

“If the requirements of the authority are met, IRDA would be in a position to process these applications as quickly as possible,” Rangachary said at a meeting organised by the Federation of Indian Chambers of Commerce and Industry. If possible the IRDA would cut short the time period for issuing licenses, he added.

So far, he said, the regulator had been able to stick to its announced time schedule. “We had said that IRDA would require three months to make the regulations and notify them. This has happened,” he said.

The insurance watchdog has already issued regulations on 10 areas. Regulations on accounting practices, brokers and surveyors, will be announced by the end of this month.    


 
 
AFTER ZEN, PUBLICIS NOW SETS SIGHTS ON MAADHYAM 
 
 
FROM NITHYA SUBRAMANIAN
 
New Delhi, July 25 
Publicis, the French advertising major, is on the prowl again. This time it is in talks with Maadhyam Advertising for a majority stake in the company.

Confirming that the talks have reached an advanced stage, officials of Maadhyam Advertising said, “We are talking to Publicis, and hope that the deal will be finalised in the next fortnight.”

They were, however, not willing to give specific details regarding the quantum of equity to be picked up by the foreign major or the new management structure that would take over.

If this deal comes through, Publicis will have another toehold in the country after Zen Communications. Recently the French ad company bought substantial equity in the Mumbai-based advertising firm.

In recent times, a number of small advertising agencies had been taken over by foreign advertising companies. Maadhyam will soon be one among those agencies.

Industry sources said, “Almost all the top agencies in the country have aligned themselves with some international company or the other. What is left for Publicis and other international agencies — planning to enter the domestic market — are the mid-sized and smaller ones.”

Agencies like Zen and Maadhyam are strong in a particular region. For example, Zen has a bigger presence in western India, while Maadhyam is well-known in the north, sources said.

Maadhyam recorded capitalised billings close to Rs 23 crore last year. Its clientele list includes Hero Honda, DLF, Eicher and KLM among others. The agency shot to fame with the Congress party’s advertising account in 1998.

According to industry analysts, Publicis decided to expand extensively after its merger with Saatchi & Saatchi. The capitalised billings of the combined entity is close to £ 6,309 million and have revenues of £ 1,062 million.

With a substantial presence in India, the French company will also be able to bring in its international practices. Publicis’ media buying outfit Optimedia is expected to be brought into the country later, sources said.    


 
 
MEAGRE RISE IN GRASIM NET PROFIT 
 
 
OUR BUREAUX
 
July 25 
Grasim Industries Ltd, the flagship company of the A V Birla group, has posted a marginal 1 per cent rise in net profit for the first quarter of the current fiscal year ending June 30. Net profit rose to Rs 59.43 crore compared with Rs 58.96 crore in the same period of the previous year.

During this period, Grasim recorded a turnover of Rs 1,212 crore, a 10 per cent increase over Rs 1,098 crore in the previous year. Gross profit was up at Rs 127 crore over Rs 122 crore.

Grasim said higher production and turnover volumes were the key contributing factors to its better performance during the quarter.

Eicher Motors Ltd has recorded a Rs 1.24 crore net profit for the first quarter of 2000-01, up 181 per cent from Rs 44 lakh a year ago. The company has registered a growth in gross sales of Rs 85 crore compared with Rs 58 crore in the same period last year, registering a growth of 46 per cent. The gross profit after interest, but before depreciation and taxation, has gone up to Rs 2.87 crore from Rs 1.65 crore a year ago.

Eicher attributed the growth in profits to aggressive marketing and cost saving brought about by cutting down on the interest cost and control of expenditure.

Warren Tea Ltd has reported a 44.35 per cent decline in net profit at Rs 49 lakh during the first quarter of 2000-01 against Rs 88 lakh in the corresponding quarter of 1999-2000.

Net sales during the period came down to Rs 11.53 crore from Rs 12.42 crore though expenditure was brought down to Rs 9.20 crore from Rs 9.95 crore last year.

According to company officials, depressed unit sale prices adversely affected the profitability during the current year. Interest charges shot up to Rs 61 lakh from Rs 46 lakh while provision for depreciation increased to Rs 1.35 crore from Rs 1.22 crore.

Punjab National Bank has achieved a net profit of Rs 140.46 crore at the end of June 2000 compared with Rs 121.14 crore in the corresponding period last year, recording a year-on-year growth of 15.9 per cent. Gross profit during the first quarter ended June 2000 was Rs 331.39 crore as against Rs 221.14 crore in the corresponding period last year, registering a growth of 49.9 per cent.

Total income increased from Rs 1,304.96 crore in the three months ended June 1999 to Rs 1,604.25 crore in the three months ended June 2000, registering a growth of 2.9 per cent. Interest income amounted to Rs 1,373.07 crore for the first quarter, registering a growth of 16.1 per cent over the corresponding period last year.

The board of directors of Hindustan Inks and Resins Ltd today declared an issue of one-to-one bonus share, with the company having recorded a 22 per cent growth in net profit for the first quarter of 2000-01. Net profit for the quarter this year stood at Rs 7.49 crore as against Rs 6.14 crore a year ago. Sales touched Rs 61.37 crore, up 41 per cent from Rs 43.60 crore last year, a statement issued here today said.    

 

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