Gillette assessing Eveready value
Indo-US trade ties set to enter digital age
Zee Tele, Satyam fuel sensex rally
Unit Trust drive to securitise car loans
Small refineries to retain identity
BroadVision, Mastek in pact
Foreign Exchange, Bullion, Stock Indices

 
 
GILLETTE ASSESSING EVEREADY VALUE 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Aug 21: 
Gillette Company of the US has moved a step closer towards the takeover of the battery division of Calcutta-based Eveready Industries India Ltd (EIIL), the Rs 832 crore company belonging to the B.M. Khaitan group.

Gillette has appointed an “external firm” to carry out a detailed technical due diligence exercise. Gillette sources said the US multinational hopes to wrap up the takeover in the next three months. The firm, whose name has been kept a closely guarded secret, has already started the process of evaluating the assets of EIIL’s battery business; it is also assessing the “intrinsic value” of the Eveready brand.

The takeover price will be determined after the process of due diligence is completed. Sources said the US company would have to cough up in the region of Rs 500-600 crore to acquire management control of the country’s largest manufacturer of zinc-carbon batteries. Sources in EIIL said Gillette would either buy the entire assets of the battery division as a going concern or take majority control of the battery division after it is hived off into a new company. At present, the company has two divisions for the battery and tea businesses.

The EIIL board has decided to seek the shareholders’ approval to a resolution to this effect at the forthcoming annual general meeting on September 29.

The Khaitans have a 45.6 per cent stake in EIIL; the financial institutions hold around 22 per cent. The B.M. Khaitan group had acquired Eveready from Union Carbide in November 1994 at a cost of Rs 290 crore. In April 1995, the company was rechristened as Eveready Industries. The tea business came into its fold through a reverse merger with McLeod Russel, a Khaitan group company, a year later.

“In all likelihood, EIIL will hive off the battery business into a separate company in which Gillette will have majority control while the Khaitans might have a minority stake,” sources said.

The company has informed the Calcutta Stock Exchange about its business restructuring proposals that include the sale of the businesses relating to batteries, flashlights, carbon products, metals processing and electrolytic manganese dioxide.

The company board is seeking shareholders’ approval under section 293(1)(a) of the Companies Act 1956 to implement the restructuring.

Sources say the EIIL management has taken the decision to tide over the crisis stemming from a heavy interest burden that now stands at Rs 53 crore.

Sources say the Khaitans are now weighing their options for consolidating their tea business which are now run through several companies. However, there was no official confirmation in this regard. “Battery or its allied businesses do not have any synergy with the Khaitan group’s overall business interests. This is why the group is now planning to move out of this segment,” sources said.

The battery and allied products division has a manpower of roughly 4,000 and accounts for over 60 per cent of EIIL’s turnover. The rest comes from the 24 tea gardens in Assam and West Bengal.

Gillette has been strengthening its presence in zinc-carbon battery segment globally with its Duracell brand. Last year, the US company had acquired the Geep brand in India.

Sources say the Eveready brand will ultimately be controlled by the Gillette subsidiary, Indian Shaving Products (ISP). Two other Gillette subsidiaries — Duracell India and Wilkinson Sword — are in the process of being amalgamated with ISP.

In 1995, McLeod Russel had made a rights-cum-public issue to mop up Rs 302.6 crore in order to retire the high-cost debt, raised from the financial institutions.

The issue, one of the largest in the eastern region, failed to evoke the expected response from the investors and the company continued to shoulder a heavy debt. The company suffered a loss of Rs 11 crore during the first quarter of the current financial year.    


 
 
INDO-US TRADE TIES SET TO ENTER DIGITAL AGE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Aug 21: 
Information technology and telecommunications are the two sectors that will be the focus of Indo-US cooperation during Prime Minister Atal Behari Vajpayee’s visit to Washington next month.

This emerged during a meeting of a high level US business delegation with finance minister Yashwant Sinha today. The US delegation was led by Gene Sperling, who is the co-ordinator from the US side of the Indo-US coordinating group for trade and economic issues.

The meeting tried to work out a common business agenda for the Prime Minister’s visit.

Sperling said “We attach great importance to the Prime Minister’s visit to the US. India has enormous talent and potential and we have great admiration for the Indian high-tech sector.”

The US side apparently wants the summit discussions to also take up problems faced by multinational investors, opening up of new sectors and hiking of investment ceilings in several other areas.

Sperling said Vajpayee’s visit would provide an opportunity for the US business and investor community to understand and benefit from the economic opportunities in India.

Nasscom agenda

The National Association of Software and Services Companies has set a three-point information technology agenda for Vajpayee which includes slashing of double payment of social benefit taxes (totalisation) and increase in H-1B visas. It also called for a global internet law to tackle cross-border computer crimes, including the spreading of destructive viruses.

The software association has demanded that these issues should be taken up during Prime Minister’s Washington visit.

Nasscom also plans to appoint a lobbyist in the US by November which will keep the new administration (after the new US President takes charge) abreast of the Indian infotech scenario.

Nasscom president Dewang Mehta said, “We have requested the Indian government to take up three issues of non-tariff measures with the US administration during the forthcoming visit of the Prime Minister.

“India is low in the priority list of US trade department and it would take at least five years for them to become proactive to our cause. If the Prime Minister is unable to take the issue at his level we will have to wait for five more years.”

Mehta demanded that global annual visa cap for H-1B for the next three years should be increased to 1.95 lakh visas annually from existing 1.15 lakh visas.

According to the Information Technology Association of America (ITAA), the US will face a shortage of at least three lakh IT professionals in the next three years.

“If this limit is not increased, then as per US legislation the global H-1B annual cap in the financial year 2002 can revert to 65,000 visas. This would be dangerous,” Mehta said.

Nasscom has also demanded that the system of locational H-1B visas should be changed.    


 
 
ZEE TELE, SATYAM FUEL SENSEX RALLY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 21: 
A technology rally led by Zee Telefilms and Satyam Computer today lifted the 30-share BSE sensex by nearly 63 points to breach the crucial barrier of 4375 and finish at 4409.57.

Zee, which has taken quite a battering due to repeated FII selling in the recent past, today found favour with FIIs, rising by more than 9 per cent on heavy purchases by foreign investors and speculators. The counter also recorded the highest volumes on both the Bombay and the National Stock Exchanges with 18 million and over 19 million shares respectively.

The BSE 30-share sensitive index resumed strong at 4383.81 and moved in a narrow range of 48 points between 4426 and 4378 before closing at 4409.57, as against last Friday’s close of 4347.04, a gain of 62.53 points.

Brokers said that 22 of the 30 index-based shares were northward bound, including software war-horses like Satyam Computer, NIIT and Zee and some old-economy scrips. However, the euphoria was capped with heavyweights like Infosys and NIIT dropping later in the day on profit taking.

Mirroring the trend, 110 out of the 140 specified shares recorded sharp to moderate gains while 28 registered losses. Top gun Zee clocked the highest turnover of Rs 814.47 crore of the total business volume of Rs 5022.92 crore, a sharp increase from the previous turnover of Rs 4077.14 crore.

The other top traded shares were Satyam (Rs 716.44 crore), HFCL (Rs 555.66 crore), Infosys (Rs 467.68 crore) and Global Tele-systems (Rs 420.8 crore). While market leader Zee spurted by 38.85 to Rs 465, Satyam Computer rose by 38.45 to Rs 555.15, HFCL by 62.40 to Rs 1576.45, Infosys by 12.35 to Rs 7979.00 and Global by 41.40 to Rs 1073.05.

Meanwhile, in a thinly traded forex market on account of the Parsi New Year, the rupee finished higher at Rs 45.63/65 per dollar against its previous finish of Rs 45.79 per dollar. Dealers said that while the Indian currency opened at Rs 45.75/77 per dollar, wide quotes were witnessed during the day.

As the deadline fixed by the Reserve Bank of India (RBI) for EEFC account holders to reduce their dollar balances draws near, dealers aver that the Indian currency is in for further appreciation tomorrow..    


 
 
UNIT TRUST DRIVE TO SECURITISE CAR LOANS 
 
 
FROM SATISH JOHN
 
Mumbai, Aug 21: 
The Unit Trust of India (UTI) is in talks with Citibank to securitise car finance loans.

The mutual fund major is exploring possibilities of adding to its investment portfolio parcels of securitised loans from the car finance segment in an attempt to diversify its investments.

Incidentally, Citibank which is a leading player in the car finance industry has also in the past taken the lead in securitising portions of its vast portfolio of car loans.

For UTI, however, it is a maiden step. According to a senior UTI official, the mutual fund major is looking at actively entering the mortgage backed securities market. “Refinance of loans would be a niche which we will pursue very aggressively in the future,” he said. UTI is also eyeing home loan securitisation, he added.

According to an analyst, this will increase the depth of the debt market and mutual fund majors will get an excellent avenue for investment.

Earlier, National Housing Bank, the apex regulator for housing finance, had signed a memorandum of agreement with Housing Development Finance Ltd (HDFC) and LIC Housing Finance to securitise part of their loan portfolios.

As an initial step, National Housing Bank had said that it would securitise Rs 89.50 crore of HDFC loans and Rs 47.54 crore of LIC Housing Finance loans. The transaction involves the assignment of retail housing loans from the housing finance companies.

Securitisation of housing loans and car loans is expected to give a fillip to housing finance companies for mobilising resources for the sector. One of the major hurdles faced by the apex housing bank was the steep stamp charges prevailing in different states in the country.

Industry sources expect UTI to examine the prospects of similar avenues as they offer attractive risk free returns.

The recent interest rate hikes have provided UTI with an option to increase its weightage in the debt segment. Hence, UTI may focus more on the debt market.

Earlier, Deepak Parekh panel had recommended reduction in the equity component to 50 per cent for UTI’s flagship scheme, the Unit Scheme-64 (US-64).    


 
 
SMALL REFINERIES TO RETAIN IDENTITY 
 
 
FROM R. SASANKAN
 
New Delhi, Aug 21: 
Stand-alone refineries which are being merged with Indian Oil Corporation (IOC) and Bharat Petroleum Corporation (BPCL) will keep their separate identities and are likely to be governed by independent boards.

According to the merger proposals now awaiting Cabinet clearance, these refineries will continue to function like they did before, but government nominees on their boards will be replaced by representatives of owner companies. Put simply, the ownership will change from the government to Indian Oil and Bharat Petro.

The managements will continue to function without interference from owner companies, which will exercise their control only through the boards.

The ministry of petroleum and natural gas has recommended to the Cabinet that the Cochin and Numaligarh refineries be merged with BPCL while Indian Oil take over Chennai Petroleum Corporation (CPCL) and Bongaigaon Refinery and Petrochemicals (BRPL).This arrangement suits the managements of stand-alone refineries as it protects their freedom of operations.

Even after Cabinet clearance, it will take at least a year for the merger to be formalised. The biggest beneficiary of the arrangement will be Bharat Petro, which does not have enough refining capacity to sustain its large number of outlets. The capacity of its Mumbai refinery cannot be expanded significantly while its planned venture in collaboration with Shell in Uttar Pradesh did not get off the ground.

In a deregulated market, BPCL would have found itself in deep trouble without adequate refining capacity. Cochin Refineries will now bail it out. However, it had protested against the move to merge it with IBP. It has no objection to merging with BPCL, which has large number of retail outlets in the south. CRL has the reputation of being an efficiently run company.

In contrast, Chennai Petroleum was a problem-ridden company till recently. Its previous chairman-cum-managing director was removed and S. N. Mathur, the IBP chief, put in charge of the rescue operations. Official circles say that Mathur did a good job at Chennai Petroleum, which was earlier known as Madras Refineries. However, there were not many takers for his idea that both MRL and Cochin Refineries should go with IBP, the smallest marketing company.

The merger with Chennai Petroleum will make Indian Oil a truly national oil company. It did not have a refinery in the south so far, which would have been a major handicap for it in a deregulated market. Indian Oil even hopes to shore up its share prices on the strength of its southern addition.

The same is true of Bharat Petro. Its attempts to take over IBP may meet with stiff resistance from Reliance Petroleum.    


 
 
BROADVISION, MASTEK IN PACT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 21: 
Mastek Ltd today announced partnership with BroadVision, provider of personalised e-business applications. This alliance will offer global customers competitive advantages in new business development, customer satisfaction and customer retention.

Mastek will implement BroadVision One-To-One (tm) applications to assist in building eBusiness communities for its clients.

BroadVision develops and delivers an integrated suite of packaged.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 45.65	HK $1	Rs. 5.80*
UK Ł1	Rs. NA	SW Fr 1	Rs. 26.20*
Euro	Rs. NA	Sing $1	Rs. 26.30*
Yen 100	Rs. NA	Aus $1	Rs. 26.65*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4555	Gold Std (10 gm	4560
Gold 22 carat	Rs. 4300	Gold 22 carat	4220
Silver bar (Kg)	Rs.7850	Silver (Kg)	8000
Silver portion	Rs. 7950	Silver portion	8005

Stock Indices

Sensex	4409.57		+62.5
BSE-100	2218.39		+32.74
S&P CNX Nifty	1370.25		+12.20
Calcutta	121.13		+0.31
Skindia GDR	NA		-
   
 

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