IOC offer to Haldia Petro ties funds to naphtha co
Tight money regime to stay: Jalan
Dadiseth to head Lever’s personal care products
Authority to clean up FI bad loans proposed
Ministerial report on infotech tax sops soon
Gramophone plans mega brand launch
Foreign Exchange, Bullion, Stock Indices

 
 
IOC OFFER TO HALDIA PETRO TIES FUNDS TO NAPHTHA CO 
 
 
BY PALLAB BHATTACHARYA & BARUN GHOSH
 
Calcutta, Aug 4 
Indian Oil Corporation has suggested a quid pro quo deal to Haldia Petrochemicals Ltd: the Fortune 500 company will provide financial assistance to the cash-strapped project in exchange for conversion of its naphtha supplies at HPL’s cracker unit.

The public sector oil major has made it clear that the company is keen on investing in the Rs 5,100-crore petrochemicals project in Haldia because of the potential for “tremendous synergy” between the two companies.

“But we need to have our investment secured at the same time,” IOC director (business development) S. Raha said.

Raha said IOC was not interested in management control of Haldia Petro by virtue of its equity investment.

“We are ready to support HPL if the arrangement is mutually beneficial,” he said.

“We have made it clear that we are in a position to bring in money to help HPL to retire its high-cost debt. But we want to use its naphtha cracker facility to convert our naphtha,” Raha said.

According to Raha, the conversion arrangement for naphtha makes much more business sense for the oil company rather than try to sell it in the market.

Earlier IOC had proposed that the company was ready to invest Rs 140 crore in HPL provided the latter took its entire naphtha requirement from it. “Our proposal might not have evoked a positive response from the HPL promoters. This is the reason why we also could not pitch in with funds,” Raha said.

IOC also wants a thorough restructuring of the equity and asset base of HPL before it makes the investment. “We are ready to invest much more than we committed to the chief minister of West Bengal. A sum of Rs 140 crore is neither here nor there. But HPL has to assure us of good returns,” he added.

Raha has made it clear that the ball is now in HPL’s court. “The HPL promoters have to take a decision on our proposals,” Raha said.

Meanwhile, some HPL promoters have also approached chief minister Jyoti Basu to persuade the Indian Oil Corporation to pick up a stake in the company.

HPL’s co-promoter, The Chatterjee Group (TCG) supremo Purnendu Chatterjee called on Basu on Wednesday to apprise him of the current situation in the company.

Confirming the meeting, which was also attended by state finance minister Asim Dasgupta, Basu said the state government was looking into all aspects of HPL.

“We are making efforts to bring IOC back into the project,” he said.

The financial institutions, led by the Industrial Development Bank of India, are pressuring the Haldia Petro management to raise the unsubscribed portion of equity worth Rs 969 crore.

The three promoters of HPL, West Bengal Industrial Development Corporation, The Chatterjee Group and the Tatas have already subscribed to equity worth Rs 1010 crore. While WBIDC and TCG have invested Rs 433 crore each, the Tatas have poured in Rs 144 crore. The company, which has already started production, is currently weighing all options, including a public issue, to resolve its fund crisis.    


 
 
TIGHT MONEY REGIME TO STAY: JALAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 4 
Reserve Bank of India (RBI) governor Bimal Jalan today indicated that the cash-soaking measures announced last month to defend the rupee would continue.

The effects of the decisions, including the increase in cash reserve ratio (CRR) and Bank Rate, would play out over a period of time, he said. The objective of these moves was to change the relative cost of buying rupees vis-a-vis foreign currencies in the short run.

Addressing reporters for the first time since the liquidity-tightening measures were introduced and the recent hammering of the rupee, the RBI governor said the country could revert to a low-rate regime and a stable rupee if interest rates abroad decline and dollar inflows improve significantly.

The governor, however, gave no indication of any immediate intervention in the forex market. “Jalan’s statement that the measures would have their impact after some time will not help the rupee,” said a dealer in the inter-bank forex market.

Jalan said the apex bank was not targeting a particular exchange rate but it was reviewing the situation every day. The governor believed that the measures taken on July 21 would not put the brakes on industrial recovery, considering the fact that there was enough liquidity in the economy.

Asked whether it would be better for the market forces to determine the rupee-dollar exchange rate, he said there was no such thing as the rupee finding its own level. International experience, particularly in the emerging economies, showed that expectations played a key role in determining the value of currencies. “In such a case, we may have sustained depreciation. So there is no such thing as currency finding its own level in the emerging economies,” Jalan said.

The RBI governor refused comment on whether the measures taken on July 21 had the desired impact on the rupee. While the rupee continued to lose its value since the measures were announced, Jalan mentioned that they were taken to try and maintain orderly conditions in the market. Asked why the central bank had signalled a declining interest rate regime in April through cuts in Bank Rate and the CRR, and hiked them last month, Jalan said the shift was prompted by the need for a mid-way course correction, because of changed economic realities.

“Though there has been no automatic response to the international situation from us, the measures were taken when we thought there was too much liquidity and changes in the international interest-rate scenario.

Jalan felt that the recent spurt in demand for dollars could have come from importers. The other reasons could be hedging, forward cover and bunching of payments. The RBI, he said, was meeting the demand-supply mismatch. He, however, declined to quantify the amount of dollars the RBI had sold in order to stabilise the rupee. On full convertibility, Jalan said it was good that it had not been introduced because it would have led to greater volatility.

Rupee dips

The rupee closed at a new low of 45.40/42 after it hit an intra-day low of 45.44/45 on renewed demand for dollars from companies. Earlier, it scaled an intra-day high of 45.37/38 due to the repo auctions conducted by the RBI.    


 
 
DADISETH TO HEAD LEVER’S PERSONAL CARE PRODUCTS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 4 
Keki B Dadiseth, former chairman of Hindustan Lever Ltd, will head Unileve-r’s home and personal care division as part of the management changes effected by the Anglo-Dutch major today.

Announcing an “evolution of its top management structure creating improved alignment to fulfil its path towards growth strategy”, Unilever said the main changes are the formation of two global divisions — one for foods and the other for home and personal care — and straightening the group’s global innovation capabilities.

The responsibilities will take effect from January 1, 2001, said a statement issued by the company. Until then, Dadiseth will focus on the implementation of the new structure.

In May, Dadiseth took over as a director at Unilever Plc after a successful tenure as the chairman of Hindustan Lever, Unilever’s largest subsidiary.

Patrick Cescau, finance director, will become director in the foods division. He will be responsible for Unilever’s worldwide foods business. Alexander Kemner, foods category director, will support the integration process until his planned retirement in May 2001.

Unilever said the two directors will be appointed with executive authority and profit responsibility for the worldwide operations.

Q2 results

Unilever reported a second quarter drop in pre-tax profits. Net profit before exceptional items and against constant exchange rates rose 3 per cent to 592 million euros ($ 536 million) in the quarter.

Pretax profit was hit by restructuring charges of 267 euros million ($ 242 million) and fell 14 per cent to 928 million euros ($ 841 million).

Unilever plans to cut the number of brands in its stable to 400 from 1,600. The 400 make up 77 per cent of total revenues.    


 
 
AUTHORITY TO CLEAN UP FI BAD LOANS PROPOSED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug 4 
The government is formulating a new corporate debt restructuring mechanism to clean up the bad debts that banks and financial institutions (FIs) are now saddled with.

The new mechanism, envisaged as an alternative to the Sick Industrial Companies Act (Sica) that the government wants to phase out, will cover FIs and other lenders. It is part of the government’s efforts to reduce mounting non-performing assets.

The financial institutions, along with the Reserve Bank of India (RBI), are working on creating a new authority whose decisions will carry legal force. To be set up by financial institutions, the body’s decisions will be legally binding on borrowers. The restructuring will carried out through the participation of banks and FIs, rather than the BIFR.

Special secretary (banking) in the finance ministry, Devi Dayal, told reporters after a meeting between finance minister Yashwant Sinha and chiefs of financial institutions here today that a new mechanism to solve the problem of bad loans was required because Sica will soon be phased out.

“The new authority may not need a new legislation, but it would certainly require some form of legal force.”

The meeting discussed the rise in non-performing assets of FIs. While there has been little growth in the bad loan of banks, it has increased in the case of the institutions.

FIs, Dayal said, would have to restructure their bad loans in one-time settlements by October 31. In cases where this is not possible, suits would have to be filed with the Debt Recovery Tribunals.

The combined net NPAs of IDBI, IFCI and ICICI stood at Rs 15,833 crore in March this year, up from Rs 7,744 crore in March 1996. The growth has jumped from 11.5 per cent to 12.2 per cent in the period.

Dayal also said the issue of group approach to lending, and takeover of local firms by foreign companies with FI funds, were also discussed at the meeting. “The institutions should act in tune with their commercial decisions and the economic interests of society,” Dayal said.

Other issues that figured at the meeting were the sanction of loans, issue of co-ordination between banks and FIs to set lending parameters and treatment of NPAs. RBI governor Bimal Jalan will meet the FI chiefs next week to discuss these issues in greater detail.

Meanwhile, the FI chiefs said lending to the housing sector should be stepped up as growth in this sector would help boost other sectors such as cement, steel and transport.

Power clearance

Power minister P. Rangarajan Kumaramangalam reviewed the progress in setting up of power projects by private companies, and promised to remove all administrative bottlenecks.

The minister was one of those present at the meeting between FI chairmen and the finance minister.

The government would review the projects which already have the counter-guarantee and said he would hasten the necessary approvals.

“A high level committee will review the progress of the counter-guaranteed projects to find out the final stand which has taken by states,” Dayal said. The power ministry has indicated that it would ask state governments to process these projects quickly, or drop them.

Four of the eight fast-track power projects are yet to make any progress, as they are awaiting clearances from the various departments.    


 
 
MINISTERIAL REPORT ON INFOTECH TAX SOPS SOON 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug 4 
The ministry of information technology (MIT) will soon submit a report on the exemptions from sales tax and other state levies for infotech companies.

“We have met the chief ministers of many states. The report on tax-related issues, which was announced as part of the common action plan after the state infotech ministers’ conference, will be submitted within two to three weeks,” P. V. Jayakrishnan, secretary in the ministry, said here today.

The common action plan had proposed complete exemption from sales taxes and other state levies for the next three to five years. A report, it was decided, would be prepared with the consultation of all states, which will detail the exemptions that would be sought for the infotech industry.

On its part, the Centre agreed to reduce customs and excise duties on optical fibre, hardware, set-top boxes, internet-access devices and TV sets used in distance education.

In the first initiative of its kind to take infotech to the grassroots, minister of information technology, Pramod Mahajan, will inaugurate the first Community Information Centre in Shillong on August 12. This will be the first of the 30 such block-level centres, which will be developed in Meghalaya.

“The infotech minister would visit the north-east next week to promote infotech usage. The Community Information centre, to be inaugurated by the minister, will have give people exposure to infotech and back it up with adequate lessons in theory to the community on the use of computers,” Jayakrishnan told an annual session of Manufacturers Association of Information Technology (MAIT).

Earlier, Hemant Bharat Ram, president, MAIT said: “We will not have an IT revolution in India unless it reaches the masses. We need to do away with taxes which only add up to the cost and have to be ultimately borne by the user.”    


 
 
GRAMOPHONE PLANS MEGA BRAND LAUNCH 
 
 
BY A STAFF REPORTER
 
Calcutta, Aug 4 
Gramophone Co India Ltd (GCIL), an RPG group firm, will launch a mega brand by the end of September to peddle Indian music. At present, the brand will co-exist with HMV, which GCIL is allowed to use under a licensing agreement with the UK-based EMI.

“We plan to gradually phase out the HMV brand and develop Gramophone’s own brand,” Gramophone managing director K Krishnan told The Telegraph.

“As per the agreement with EMI, we can use the HMV brand for all our old catalogues for 25 years and for new catalogues for 10 years,” he said.

Speaking on the company’s plans about the proposed megabrand, Krishnan said, “We would like to develop the brand in such a fashion that after eight years we may not use the HMV brand for our new catalogues and after 23 years for old catalogues.”

However, he denied any move by Gramophone to wriggle out of the agreement with EMI before it expires.

Earlier in the day, Sanjiv Goenka, vice-chairman of RPG Enterprises, said that the logo and the colours of the new brand have been developed. “It will be a brand which the entire world will realise,” Goenka said.

Sources said that the company plans to market this brand in the West through Saregama Plc and through RPG Music International Ltd, Singapore in Asia. RPG Music International will market the products in West Asia, Malaysia and other countries in the region. The company will, however, continue with its Gramophone brand which has become a household name in Indian concerts and special Indian music.

Music World Entertainment Ltd, a RPG company, has launched its own brand — Musicworld. “We would like to develop this brand too,” said Goenka.

Gramophone, currently, enjoys 20 per cent market share in the Indian music industry.

Goenka is also upbeat about the company’s new music number of the film ‘Mohabbatein’ directed by Aditya Chopra.

“On an average we launch 5 lakh music cassettes for a new film. But for Chopra’s film we will be launching 25 lakh cassettes,” he said.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.45.42	HK $1	Rs. 5.75*
UK £1	Rs.68.13	SW Fr 1	Rs. 26.15*
Euro	Rs. 41.11	Sing $1	Rs. 25.90*
Yen 100	Rs. 41.87	Aus $1	Rs. 26.10*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4505	Gold Std (10 gm	NA
Gold 22 carat	Rs. 4255	Gold 22 carat	NA
Silver bar (Kg)	Rs.7950	Silver (Kg)	NA
Silver portion	Rs. 8050	Silver portion	NA

Stock Indices

Sensex	4186.16	-21.87
BSE-100	2075.15	-34.61
S&P CNX Nifty1318.56		-2.70
Calcutta	122.16	+1.59
Skindia GDR719.37	-6.32	
   
 

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