Cabinet hastens death of VSNL monopoly
$ 500 m Wipro ADR cleared
Govt holds outGovt holds outhope for IA, A-I suito
Hind Motors Uttarpara unit comes to a halt
AT Kearney to help in Zee recast
Platinum to dim gold glitter
Foreign Exchange, Bullion, Stock Indices

 
 
CABINET HASTENS DEATH OF VSNL MONOPOLY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept 6 
Keen to convince investors sceptical about the pace and future of economic reforms in India, the Cabinet today cleared a proposal that ends Videsh Sanchar Nigam’s (VSNL) monopoly over international telephone traffic in March 2002 — two years ahead of a time-table drawn up earlier.

The proposal, rushed to the Cabinet Committee on Economic Affairs (CCEA) hours before the Prime Minister takes off for a momentous but truncated visit to the US, was not on the agenda of today’s meeting of the high-powered body. The last-minute scramble makes it clear the government wants to peddle the decision as evidence before the American investors that it remains committed to the process of liberalisation.

The US administration has long been urging New Delhi to open up the country’s narrow telecom sector, and to cut charges on calls that flow between the two countries. Prime Minister Atal Behari Vajpayee will persuade US investors that other reform measures, such as the opening up of the insurance market, are proof of his government’s commitment to liberalisation.

Communications minister Ram Vilas Paswan told reporters after the CCEA meeting that VSNL would be compensated for the loss of its monopoly with a package that would include allowing the company entry into long-distance telephone and internet services across the country.

The public sector telecom giant currently has the rights to offer Net services in only six cities, but the package will allow it unrestricted expansion. The government will also waive bank guarantees for VSNL’s entry into domestic STD services. The STD service norms require long-distance telephone operators to share 15 per cent of their revenues with the government.

However, VSNL will have to fork out Rs 100 crore as entry fee if it wants to offer long-distance telephone services. In addition, the company will have to share its revenues with the government, telecom secretary Shyamal Ghosh said.

According to him, VSNL will be compensated for the fees and revenue shares paid for a period of five years, starting 2001. “The government would offer an amount equivalent to the entry fee and the revenue share as compensation,” Ghosh said.

If the compensation package is found inadequate, the government will work out fresh formulas, based on assessments made by Solomon Brothers, the consultant told to suggest ways to end VSNL’s stranglehold on international telephony.

“If the package falls short of requirements, more sops will be given to VSNL. For instance, a part of the licence fee charged from private ISD operators could be transferred to it for a period of two years, from April 1,2003 to April 1 ,2005,” Ghosh said.

However, international traffic generated by state-owned Mahanagar Telephone Nigam (MTNL) and Department of Telecom Operations will continue to be routed through VSNL, but there will be a condition that it offer ‘quality service’.    


 
 
$ 500 M WIPRO ADR CLEARED 
 
 
 
New Delhi, Sept 6: 
Infotech major Wipro today, received the final government nod to mop up $ 500 million from the American market. Within a few hours the company said it would launch its road show in the United States tomorrow. The clearance for one of the largest American Depository Receipt (ADR) by any Indian company was given to Wipro by the Cabinet Committee of Economic Affairs (CCEA) chaired by prime minister Atal Behari Vajpayee, hours before his scheduled departure to the US for an official visit. The Foreign Investment Promotion Board had earlier cleared the issue. However, it required CCEA nod as it involved foreign fund raising over Rs 600 crore. As per the clearance given by the highest economic decision making body, Wipro will have a ‘green shoe option’ to issue an additional 2 per cent equity depending on the market response, an official spokesperson told reporters. Permission has also been granted to issue ADR-linked employees stock option plan (ESOP) up to $ 150 million. A Wipro spokesman said that the company would launch the month-long road show tomorrow in the United States to mop up the amount for funding its plans of acquisition and expansion. Morgan Stanley is the advisor for the issue.

CCEA approval for the ADR issue is conditional that the non-resident Indians’ (NRI) holding after the ADR issue including ESOP should not exceed 10 per cent of the paid-up capital. The board of directors of Wipro Ltd had passed an enabling resolution to issue ADRs in March this year.    


 
 
GOVT HOLDS OUTGOVT HOLDS OUTHOPE FOR IA, A-I SUITO 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept 6: 
The government today indicated that it may relax the bidding norms to allow companies such as Reliance and ITC, that do not have any experience in aviation, to join the race for Air-India and Indian Airlines selloff.

According to divestment minister Arun Shourie, an inter-ministerial group will meet tomorrow to finalise pre-qualification norms for bidders targeting Air-India and Indian Airlines.

Speaking at a Ficci seminar on ‘Disinvestment of PSUs: The Road Ahead’, Shourie said the Indian industry wanted relaxation of norms to allow new companies to enter the bidding frays for PSUs put up for sale.

The minister said Reliance Ltd’s joint managing director Anil Ambani had met him to discuss the parameters for the selection of strategic partner in the two airlines.

Ambani raised the question whether “we would not consider Reliance because it has no experience in running an airline.”

“Anil’s argument was that five years back Reliance did not have experience in refinery and still it had set up a Rs 35,000-crore refinery in a record period of two and half years.”

Shourie sought industry’s views on privatisation of two airlines and said that the issues raised by the Ambanis and others would be duly addressed in the bid documents.

Advertisements to sell the two airlines will be issued next week while those to sell ITDC and National Fertilisers Ltd will be put out in the subsequent two weeks.

The government has decided to bring down its equity in Indian Airlines to 49 per cent and offer 26 per cent stake to a strategic partner. In case of Air-India, where the government would lower its stake to 40 per cent, strategic partners are being offered 40 per cent holding, including 26 per cent for a foreign partner.

Reliance is not the only non-aviation company trying for the Air-India’s controlling stake. Cigarette-to-hotels major ITC Ltd is also in the race for running the national carrier.

Shourie said the government is keen to expedite the divestment process. The next cabinet committee meeting on disinvestment is slated for September 26, where an options paper on various issues would be discussed. Among other things, the meeting is likely to study a proposal to fund revival packages for PSUs through disinvestment bonds.

On the Cabinet’s recent decision to merge the four stand-alone refineries with public sector oil companies, Shourie said the global trend is towards consolidation in the oil sector. “This is part of a strategy for the sector as a whole. Currently, Reliance has nearly 40 per cent of the refining share,” said Shourie, “we want to strengthen public sector companies too. The valuations would be decided by the finance ministry and the petroleum ministry.”

The minister added that the government would focus on strategic sales and not on sale of minority stake, especially in the non strategic sector.    


 
 
HIND MOTORS UTTARPARA UNIT COMES TO A HALT 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Sept 6: 
The old war-horse is down again. Production of the Ambassador car has come to a halt at Hindustan Motors’ (HM) Uttarpara factory from September 4, following some technical problems at its primer mixing booth (paint shop).

Production has been totally suspended in the last three days and the management today issued a notice stating that production of Ambassador cars had to be stopped despite existing demand, due to problems at the paint shop.

“We are trying to resume production within September 8,” the notice added.

Sources said that the management has already roped in senior ICI officials for solving the problem. “But they were unable to detect the problem. It is learnt that the company is trying to bring in technical experts from Hyderabad to set it right,” sources said.

The notice issued by the factory manager D. Munshi further added that employees will get their weekly off tomorrow, instead of the usual Saturday.

The company has modernised the plant at a cost of Rs 75 crore. The paint shop has also been revamped.

According to sources, the problem arose as the colours did not spread properly on the cars, forcing the company to stop production. The cars have to be immediately dipped in colour once the body is fully prepared.

The company had produced 61 cars on September 3 last. “Ceasing production suddenly will hamper sales which were gradually picking up,” said a senior official from the Uttarpara factory.

The company had set a target of producing 2,400 cars this month. “The factory was producing 80-85 cars per day. But with this unexpected shut down it will be difficult to achieve the target,” sources said.

The company also has an ambitious target of producing 24,000 cars this year at the factory.    


 
 
AT KEARNEY TO HELP IN ZEE RECAST 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept 6 
Zee Telefilms (ZTL) today said it had hired A T Kearney, the global management consulting firm, to review and refine its organisation structure and management systems. The consultant will advise the entertainment major on ways to harness the wealth of opportunities thrown up by the unprecedented expansion in its media and information businesses.

The A T Kearney team working closely with the management and employees to identify and implement improvements to Zee’s organisation structure and corporate governance systems.

The objective is to optimise performance through effective decision making, efficient operations, leveraging synergy between divisions and creating full development and recognition of employee talents, a Zee Telefilms release said here today.

The growth of the company in the last few years, ZTL says, has attracted new talent at all levels of the organisation. It also led to the formation and reconstitution of several business divisions. “To ensure that the synergy between group businesses and the combined talents of its people are fully leveraged, the ZTL management has decided that this is an opportune time to review its current structure and processes to lay the strongest possible foundation for future growth and value creation,” the company said in its release.

Kearney’s appointment came after the evaluation of proposals from leading consultancy firms. The company, which is said to be one of the world’s oldest and largest management consulting firms with operations spread across 35 countries, covers a large spectrum of all industries and functional areas. One of its key functions is to assist companies that are keen on organisational transformation.

Zee Telefilms chairman Subhash Chandra said continuous review and refinement of internal systems and processes is essential to foster continued dynamism and vitality to the company’s business. The entertainment major has, in the recent past, identified internet as a focus area, and has drawn up plans to use TV cables as the primary carriers of next-generation broadband.

The company, which has floated a separate subsidiary for the purpose, is initially planning to invest over $ 200 million for transforming its existing cable systems into digital-fibre networks. In addition, it intends to pump in close to $ 100 million in the internet business — both to provide access services, and to strengthen its existing portal.

Apart from the huge investments in hybrid co-axial cables (HFC), Zee is also planning to invest over Rs 350 crore in direct to operator (DT) service and Rs 50 crore in direct to home (DTH) segment. Another Rs 855 crore is expected to be invested in the content business.

The company expects its revenues to exceed Rs 10,000 crore by the year 2005. Chandra’s vision is to project Zee Telefilms neither as an infotech or media company by expanding its content business, but to diversify it through multiple distribution platforms.    


 
 
PLATINUM TO DIM GOLD GLITTER 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Sept 6: 
Admen and marketing wizards are out to do what the gods have abandoned — find the key to a woman’s heart. They are looking for means to make the new upwardly mobile Indian woman give up her traditional favourites of gold and silver and go in for futuristic platinum jewellery.

But will she, or won’t she? That’s the million dollar question on the mind of James Courage, CEO Platinum Guild International (PGI) USA.

PGI, which is the marketing arm for the worldwide platinum industry is here to market the precious white metal in India. PGI hopes that the discerning Indian woman won’t let them down.

PGI’s major financier is the South African Platinum Producers’ Association. The country produces about 80 per cent of the world’s platinum. The product is aspirational. An ounce of the precious white metal costs a cool $ 600. That’s almost double the price of the yellow metal. But then ten tonnes of ore have to be mined to churn out a single ounce of platinum, the process taking around eight weeks.

It is clearly a product with an attitude — one that stands for exclusivity among the well-heeled.

James Courage adds, “By and large our clientele already have their collection of gold and diamond jewellery and are looking for something new.”

He adds that their research has shown that women from the top socio-economic strata here are aware of the metal but are deterred by scarce availability of quality stuff.

So how much do they plan to sell in the first year? “All we can say is that in the next 4-5 years we plan to sell between 5 and 15 tonnes. This would be 1-2 per cent of the gold market but if we achieve that India would be our fourth largest market,” he said.

The product will initially be marketed through 10 retail outlets each in Mumbai and Delhi.

Platinum is making its way to the Indian woman’s heart via a print campaign prepared by creative hotshop Chaddha Dhar and Hoon (CDH), which, interestingly enough, doesn’t use any model. All it shows is a majestic cat in a surreal magical environ.

Says Ajit Hoon of CDH, “The cat is a metaphor for the free spirited style of the Indian urban woman. She doesn’t follow the herd mentality. She buys jewellery for herself and for her own gratification.”

All geared to bell the cat. But the World Gold Council is not about to let go in a hurry.

So, will she or won’t she?    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 45.62	HK $1	Rs. 5.80*
UK £1	Rs. 66.50	SW Fr 1	Rs. 25.80*
Euro	Rs. 40.29	Sing $1	Rs. 26.10*
Yen 100	Rs. -	Aus $1	Rs. 25.55*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4585	Gold Std (10 gm	4520
Gold 22 carat	Rs. 4330	Gold 22 carat	4180
Silver bar (Kg)	Rs.8000	Silver (Kg)	8115
Silver portion	Rs.8100	Silver portion	8120

Stock Indices

Sensex	4606.35	+7.70
BSE-100	2372.00	+5.14
S&P CNX Nifty1435.35	+7.10	
Calcutta	125.83	+1.19
Skindia GDRNA	-	
   
 

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