Move to create selloff trust
Higher kharif support prices for farm items
Ministry to use IA to limit fare hike to 15%
VSNL software parks to dot infotech landscape
Govt assures job security to telecom employees
Silverline in $12.5m stake pact with TIS Worldwide
4 more PSUs on the block
Honda sports car joins the auto race
Foreign Exchange, Bullion, Stock Indices

Move to create selloff trust 
Calcutta, Aug. 29: 
The finance ministry has made a proposal to transfer public sector companies earmarked for sale to a ‘privatisation trust’ with complete managerial and decision-making powers.

Officials say they will discuss the idea at a meeting of the committee of secretaries expected to be held soon. The ministry says setting up a trust will cut down delays in selloff process.

Under the present system, once the Cabinet approves putting a PSU on the block, a global advisor is appointed and an inter-ministry group is formed to oversee the sale. However, managerial control and the actual implementation of the sale remains with the administrative ministry concerned.

The fresh proposal, which will have to be cleared by the Cabinet, is likely to be resisted fiercely by ministries reluctant to give up control over companies under their domain. The disinvestment ministry, fearing the creation of a trust may lead to undesirable overlapping of functions, may also chafe at the idea.

Earlier, former disinvestment minister Arun Shourie had tried to assume the same powers that the finance ministry is now asking for the trust, but the proposal was spiked by the Prime Minister’s Office (PMO) and the Cabinet secretary.

The finance ministry’s note has coined a new term, peoplisation, for PSU share sales to blunt political objections from within and without the government. According to it, ‘peoplisation’ is the only method of liberating potentially efficient enterprises from incentive-distorting shackles of government control’.

The finance ministry says it wants a secretary-rank official as a secretary of the trust, and a politician as its chairman. The trust’s mandate will be confined to carrying out the selloff and running the company till the time it changes hands. Routine decisions, for instance those related to sales and production, would remain with the government.

In addition, the ministry feels the trust can monitor the existing backlog of sale recommendations made by the Cabinet that have not been put into effect.

The second part of the ministry’s note, which suggests that a part of public debt be transferred to the trust and the amount be amortised from its earnings, is likely to raise more hackles. The opposition has been accusing the BJP-led government that it is trying to sell PSUs — the family silver — to pay for its current debt burden and fiscal profligacy.    

New Delhi, Aug 29 
The Cabinet Committee on Economic Affairs today hiked the minimum support price (MSP) for the kharif season by up to Rs 110 per quintal for agricultural produce including foodgrains, pulses and oilseeds.

It also gave its nod to BPL Communications for its proposed overseas float amounting to $ 200 million. Further, the CCEA revised the rates of royalty and dead rent for various metals and minerals.

After the meeting, agriculture minister Nitish Kumar said, “The MSP for paddy (common variety) has been fixed at Rs 510 per quintal as against Rs 490 fixed last year. Grade A variety paddy will be procured at Rs 540 per quintal.”

The maximum hike has been in the price of nigerseed which has been fixed at Rs 1025 per quintal, an increase of Rs 115 per quintal.

The MSP for coarse cereals like jowar, bajra, maize and ragi has been fixed at Rs 445 per quintal as against Rs 415 per quintal fixed the earlier season. MSP for pulses such as arhar, urad and moong has been fixed at Rs 1200 per quintal, up from last year’s price of Rs 1105 per quintal.

The upward revision in MSP was necessary, said Kumar, following the increase in the prices of diesel, electricity and fertilisers.

The government has also decided to revise the rates of royalty for major minerals other than coal, lignite and sand for stowing. The new rates would, however, not be applicable to West Bengal, which continues to collect cess and other taxes on minerals through a stay obtained from the Supreme Court. The proposed revision is expected to result in a 21.25 per cent increase in royalty accruals.

CCEA also approved the proposal of coal and lignite promotional exploration programme for the Ninth Plan. The promotional exploration programme for coal and lignite being taken up during the Ninth Plan for drilling of 7.20 lakh meter (4.0 lakh meter in coal and 3.20 lakh meter in lignite) at a cost of Rs 147 crore.

The CCEA today approved the Railways’ proposal for electrification of the Ernakualm-Trivandrum railway line at a cost of Rs 147.87 crore. It also approved the proposal to avail of direct power supply from the National Thermal Power Corporation in Bilaspur division of South Eastern Railway. This would cost about Rs 128.73 crore and the funding would be generated through internal resources.    

New Delhi, Aug 29 
The Union civil aviation ministry plans to use its influence to check planned hikes in air fares.

Top civil aviation ministry officials said they would use their influence over the national carrier Indian Airlines to act as a countervailing force in the aviation market. “We will see to it that IA does not increase its fare beyond a 10-15 per cent range.”

They were reacting o reports that Jet Airways planned to raise its fares by 18-22 per cent from the middle of next month. “IA is still the single biggest player in the domestic market. If it decides on a certain tariff structure then others cannot really afford a fare war with it. This has been proven over time.”

Jet says it needs to raise its prices as input costs have gone up by as much as 22 per cent.

When contacted Sahara Airlines officials said “we are still waiting and watching.”

The Indian Airlines board which met today to discuss plans to dry lease planes and to review progress in long-term plans to buy new planes.

Fare increases were not on its agenda but the subject cropped up for general discussion, IA officials said.    

Calcutta, Aug 29 
Videsh Sanchar Nigam Ltd (VSNL) is setting up 15 software parks in the country with an investment of Rs 200 crore.

A senior VSNL official said the software parks which will come up shortly, would be equipped with a full range of facilities pertaining to information technology.

“These software parks will be the most modern and equipped internet facilitators in the country,” the official said.

The company is currently in the process of identifying the cities where these software parks will be set up.

“At least half of these parks would be set up during the current financial year itself,” the official said.

These parks will contain all facilities required for software development.

“The software parks, for which an internal committee has been set up, will also provide international private lease lines to those who apply. Moreover, the people setting up centres in these parks will also receive the best possible technical and infrastructural support from VSNL,” he added.

VSNL has also decided to acquire an additional 400 mbps of bandwidth at an investment of around Rs 250 crore. VSNL director Amitabh Kumar said the investment would be made to acquire additional capacity owing to the tremendous demand for bandwidth emerging in the country.

“We are expecting a further growth in demand and failure to be equipped with adequate capacity will result in a very large demand-supply gap,” he said.

The company, which is the only public sector enterprise to be enlisted on an American bourse, has also decided to invest around Rs 150 to Rs 200 crore towards forming capital assets including earth stations.

“We need to invest around Rs 15 to Rs 20 crore for each earth station. While the funds are not a problem, we are in the process of ascertaining the demand, on the basis of which we will make the investment,” Kumar said.

However, he added that the company did not have any plans to source funds from outside.

“We have adequate cash flows and we don’t need outside funds, at least for the current investments,” he said.

The company recently hiked its bandwidth capacity by over 100 per cent with an investment of over Rs 250 crore.

Sources said VSNL was making every effort to make it less lucrative for private internet service providers to source bandwidth from the international circuit by setting up private gateways.

The company is also considering a sharp reduction in bandwidth tariff besides an over-the-counter sale of bandwidth, they added.    

New Delhi, Aug 29 
Union communications minister Ram Vilas Paswan today allayed fears of the telecom employees regarding their possible retrenchment following corporatisation of Department of Telecom Services and Department of Telecom Operations.

Paswan assured the employees that their job security will be ensured. The exponential expansion of the telecom network would require the services of the existing employees. The minister’s assurance came as a response to the charter of demands placed by the National Federation of Telecom Employees, the Federation of National Telecom Organisation and the Bharatiya Telecom Employees Federation.

The federations had expressed apprehensions with regard to the financial viability of the proposed corporatisation, payment of pension, job security etc.

Paswan also assured that the pension benefits and terminal benefits to the staff on retirement would remain ensured even after corporatisation. Such benefits would be on par with the current levels, he added.

One of the demands concerned the reimbursement of losses due to privatising long distance telephony. Paswan said that the move is in line with the government policy. The DTS and DTO are exempted from entry fee while the private telephone operators would pay the requisite entry or licence fee for providing the services, he added.

The government policy stands fully committed to the objectives set out in the National Telecom Policy-1999 as well as identifying supporting funds to meet the targets, reiterated Paswan.

Government is actively considering the proposals in this regard. While the overall approach is to protect the income of the corporate entity, government will encourage new and profitable ventures.

He said that the federations, therefore, should not have any apprehension on the financial viability of the corporation.    

Mumbai, Aug 29 
Silverline Technologies today said it will enter into a strategic alliance with TIS Worldwide under which it will invest $ 12.5 million to pick up a 6 per cent stake in the US-based e-business solutions integrator company.

The move comes a day after the company board deciding to defer its much-awaited acquisition of a US-based software company. Reports about the planned acquisition, believed to be worth more than $ 100 million, had generated a lot of interest in the Silverline share and sent it soaring.

Silverline said it will hold a minority stake, but will join Goldman Sachs as a member on the TIS board of directors. Silverline will distribute TIS’ exclusive software solutions in India, while the US firm will benefit from global developmental capabilities. The value of the agreement to Silverline is expected to be $ 25 million, which it will realise over three years.

At a later stage, TIS will expand its FLITE e-business development labs outside the US to India by opening two labs at Silverline’s development centres by the year-end. These labs, in Mumbai and Chennai, will enable the rapid prototyping development testing and implementation of e-business solutions.

With the new FLITE labs, TIS will be able to offer customers a wider range of enterprise services, including e-business applications maintenance and better customer support.

Silverline, a software solutions provider, also provides infotech solutions and outsourcing services. It specialises in the areas of e-business, CRM and application maintenance.

On the other hand, TIS Worldwide is an e-business solutions integrator that delivers internet-based applications to help corporations increase sales and improve customer service. The focus is on e-business strategies, solutions development, interactive web design and usability and recruiting/placing of technology specialists.

Reacting to the reports about the alliance, the Silverline scrip finished higher at Rs 421.10 on the BSE. It had opened at Rs 420 and scaled an intra-day high of Rs 423. Earlier, in the day, it had hit a low of Rs 401.50 as marketmen cringed at the news that the company had deferred its acquisition in the US.    

New Delhi, Aug 29 
The Cabinet Committee on Disinvestment (CCD) today gave its approval for strategic sale in four public sector units — Hindustan Insecticides Ltd, Sponge Iron India Ltd, Minerals Exploration Corporation and Hindustan Zinc Ltd.

Disinvestment minister Arun Shourie said, “We will meet again on September 26 to take up other companies. After meetings with petroleum minister Ram Naik and heavy industries minister Manohar Joshi, we will come up with joint proposals.”

Pradeep Baijal, secretary, disinvestment ministry said the government holds 97 per cent in Sponge Iron India while the Andhra Pradesh government holds the remaining 3 per cent. The govermnet will go in for a strategic sale offloading a majority stake in the company. In the case of Mineral Exploration Corporation, the CCD has decided to ask the company to apply for prospecting licenses too. “This would improve the value of the company, and disinvestment would take place only after two years,” he added. The government will not only go in for a strategic sale, but will also transfer the management.

The disinvestment of 26 per cent to a strategic partner in Hindustan Zinc Ltd has also been approved by the CCD. Baijal said the government will first bring down its 75 per cent stake in the company to 49 per cent. Later, government equity will be further brought down to 26 per through a public offering. The government also decided to lower its stake in Hindustan Insecticides to below 50 per cent. The government currently holds 100 per cent equity in the company.

Baijal said, “The government has decided to go in for strategic sale which needs changes in policy matters and is a more time consuming procedure leading to some delays.”    

New Delhi, Aug 29 
Honda Siel Cars India Ltd today launched two models — Honda City VTEC a sports model, and a new variant of its existing Exi model.

The Honda City VTEC will be available for Rs 9.23 lakh (ex-showroom Calcutta). The sports model fitted with variable valve timing and lift electronic control (VTEC) engine combines two different combustion environments, one similar to a racing car engine with high rpm and the other of a standard passenger car engine with low rpm.

The company stated that the VTEC engine comes with a mechanism which makes it possible to simultaneously change the timing as well as the degree of lift of the engine intake and exhaust valves.

“Simply put, it means the driver gets the best performance whether on a busy road or on a highway. In fact, it combines high performance with low fuel consumption,” said a senior executive in Honda Siel.

The 1.5 Honda City VTEC with a 1493cc SOHC VTEC engine and enhanced 106 horsepower at 6,800 rpm, weighs only 985 kgs. The car flaunts larger tyres with size of 175/65R14.

The sports car comes fitted with an alpine stereo with a remote and sporty, cozy interiors.

Honda Siel also launched another variant of its existing Honda City Exi which would be available for Rs 8.69 lakh (ex-showroom Calcutta). The new variant Honda City Exi-S is targeted at the upmarket segment and will be positioned between the existing Honda City Exi and the new City VTEC.

The four-spoke steering wheel, front centre armrest as well as the gear-shift knob have been changed to leather finish to give the car an all-leather finish interiors.

Honda now has four variants in the market in the 1.5 range — the Exi, Exi(automatic), Exi VTEC and EXi-S.

The company also announced that it will launch another upmarket model, the Honda Accord, by next year. Besides, it is examining the possibility of launching a sports utility vehicle and other models and has conducted a market study in India.

“We have decided to launch the Accord in India next year, but the decision will depend upon the new auto policy. We have done the market survey and other necessary market studies, but we have yet to take a final decision about the time of launch,” said T. Fujisaki, president and CEO, Honda Siel Cars India Ltd.

The company has set a target of selling 12 units during the financial year 2000-2001 as against 9631 units sold during 1999-2000.

Meanwhile Honda Siel chairman Siddharth Shriram, reiterated that his company would not increase its stake in the joint venture from the current five per cent to 20 per cent, which it can as per the agreement.

“We have a five per cent share which comes to about Rs 18 crore in the Honda Siel, but our company’s situation has not improved so we have no proposal to increase it,” said Shriram.    


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