PM wants selloff red tape sliced
States throw a spanner in new oil hunt round
DuPont seeks easier exit policy
Sebi dispels rumours over rolling settlement
Chandra hikes stake in Essel Packaging
Tatas file for insurance licence
SC widens scope of ‘industry’ in Disputes Act
Audit plug on power theft
Toys Kemp coming to town
Foreign Exchange, Bullion, Stock Indices

New Delhi, Oct 6: 
Prime Minister Atal Behari Vajpayee has directed the department of disinvestment (DoD) to expedite the disinvestment procedure by doing away with the process of multiple consultations and repeated references to the committee of secretaries.

Disinvestment minister Arun Shourie said, “The Prime Minister expressed concern over the delays in the divestment process and asked the DoD to reduce procedural delays. Currently, there are about 20 procedures which are followed by DoD, which will be brought down to three.”

“The results should be reflected by the first week of November when the Cabinet committee on disinvestment (CCD) is expected to take a few more decisions regarding various sectors. The new procedure would be intimated to all concerned,” said sources in DoD.

The procedures would be streamlined to hasten the process of disinvestment.

Under the new dispensation, DoD would prepare a note which would be sent to the concerned ministries for comment. The committee of secretaries would then deliberate on the issue and make recommendations to the DoD. The department will then seek final approval from the CCD.

“The committee of secretaries would be consulted on the issue of appointment of advisors and evaluation of price bids,” said Shourie.

Meanwhile the government today approved the proposal to divest its 33.59 per cent stake in IBP to a strategic partner through international competitive bidding which would bring down government holding in the company to 26 per cent from the present 59.59 per cent.

Disinvestment minister Arun Shourie said, “IBP will be the first oil company to be divested.”

The government’s stake in IBP would come down to 26 per cent with induction of a strategic partner.

Currently banks and financial institutions hold 23 per cent and rest 17.4 per cent is with employees, NRIs and others. IBP has 1,500 retail outlets, mostly in northern India, valued at around Rs 3,500 crore.

The CCD, which met here today, also approved the proposal to bring down the government’s holding in in two-star trading houses Metals and Minerals Trading Corporation and State Trading Corporation (STC) to 26 per cent.

Currently, the government holds 99 per cent stake in MMTC and 91 per cent in STC. Shourie said that from the 26 per cent stake in both companies, 10 per cent will subsequently be divested in favour of employees, under an Employee Stock Option (ESOP) at a concessional price to be determined later.

The disinvestment will be through international competitive bidding.

The government has also decided to withdraw completely from Bharat Brakes and Valves Ltd. The government today approved the proposal to completely offload its equity to two bidders which had already evinced interest and also to others through a bidding process.

The Cabinet also approved an agreement with Ghana, Laos, Hungary and Russia for bilateral co-operation in the agriculture sector.    

New Delhi, Oct 6: 
The second round of bidding under the new exploration licensing policy (NELP) has run into problems due to opposition from oil-producing states such as Gujarat and Assam.

Their opposition is not to the exploration acreage round as such, but to the new formula for royalty payments.

The NELP links the quantum of royalty to the price of oil. States are entitled to royalty payment for crude produced onshore. This has been a major source of revenue for states such as Gujarat and Rajasthan.

The new formula is perceived to be against the interests of these states because they stand to suffer revenue losses if oil prices go down. The formula is applicable only in the case of production-sharing contracts for blocks awarded under the NELP.

The states have been pressing for a higher rate of royalty over the years and, to accommodate their demands, the rates were revised on a few occasions.

The rate, which was Rs 578 per tonne, was revised to Rs 750 first, and to Rs 800 later. States would like the present system to continue even under the NELP.

The Centre opted for the new formula to make the exploration acreage round more attractive for bidders. The ministry of petroleum and natural gas recently met senior bureaucrats of these states to find a mutually acceptable solution. The ministry pleaded with them that the issue could be taken up with the finance ministry and, pending a decision, the second round of bidding could be announced.

This was not acceptable to states. They are pressing for an immediate decision, failing which the Centre could agree to part with a share from its profits.

The central government is entitled to a share in profits in all production-sharing contracts. The states are asking for a share in this pie. The ministry of petroleum and natural gas is not in a position to make any commitment as the profits go to finance ministry.

However, the petroleum ministry is keen to announce the bidding round at the earliest to take advantage of the favourable conditions in the oil market. The first round was announced when the market was depressed.

The 48-odd blocks offered did not attract even a single oil major. At one stage, the ministry even thought of cancelling the round.

The erstwhile minister for petroleum and natural gas, V. K. Ramamurthy, cleared the round on the advice that oil market would remain depressed at least for the next two to three years. But, prices began to rise within six months of the announcement of the round. The round was bailed out by Indian companies, particularly Reliance.

The ministry is now planning to offer 30-35 blocks, both onshore and offshore, including certain deep-water areas. The announcement of the round had been virtually blocked by oil-producing states.    

New Delhi, Oct 6: 
Policies that limit a company’s performance with regard to speed and flexibility are major stumbling blocks for foreign investment, George F MacCormack, group vice- president of DuPont said here today.

At a three-day international conference on chemicals, petrochemicals, pharmaceuticals and process plant machinery,

MacCormack said, “Like DuPont, India will have to take daring leaps to achieve its potential in the rapidly globalising market. We at DuPont look forward to participating in India’s progress.”

DuPont today said that it would play a major role in developing the domestic chemical industry and making it a global player.

Though India is the fifth largest economy in size, MacCormack said that it had just a 1.5 per cent share of the world chemicals market.

He pointed out that India could restructure its entry and exit policies to facilitate quick investment and pullout of companies, based on sound business rationale alone.

He added that policies that result in quick approvals of mergers and acquisitions, alliances and demergers, would create a more welcome environment for investment.

Also, the commercial value of knowledge assets is of increasing importance to high technology companies, he said.

MacCormack said companies like DuPont were looking to operate in countries which had a comprehensive intellectual property rights infrastructure in place.

Global companies are increasingly attracted to locations where regulatory standards are high and regulatory structures are evenly and effectively administered.

He added that there is a need to improve infrastructure to attract investment.    

Mumbai, Oct 6: 
The Securities and Exchange Board of India (Sebi) today put the controversy on the status of rolling settlement to rest but did not say when it will implement the system.

In a press statement issued here today, the capital market watchdog said it is committed to the introduction of rolling settlements and increasing the number of scrips in a phased manner. However, it has not drawn up a list of scrips that will be put in the next phase of compulsory rolling settlement.

The clarification comes after market rumours over whether rolling settlement will be introduced. The market regulator pointed out that while all stock exchanges have been advised on the parameters of the introduction, the risk-containment measures that must accompany the facility are still being finalised by the risk-management group in consultation with stock exchanges and other market participants.

“Thereafter, a list of scrips, including those in the A group in which dematerialisation is a must, will be announced for compulsory rolling settlement. This will done after giving sufficient notice to market participants on the actual date of shifting,” Sebi said in a press statement issued today. It added that the switchover will be done in a phased manner.

Sebi has already announced compulsory rolling settlement in 163 scrips, which are in the compulsory dematerialised settlement. The regulator said before increasing the list of scrips for compulsory rolling settlement (including the A group scrips) any further, it is necessary to introduce the facilities of continuous net settlement (CNS), daily and weekly modified carry forward system and ALBM.

These facilities are expected to help in dealing with the problem of liquidity in the scrips that are put on compulsory rolling settlement. Stock exchanges have informed the market regulator that the software changes required for the introduction of these facilities would be in place by November.

Recent reports had indicated that the deadline given by the market regulator for the introduction of rolling settlement in carry forward scrips is likely to be delayed beyond November as many of the exchanges were believed to be not ready with the software to carry out forward trading in this system and CNS.

The BSE was supposed to be one of the exchanges but it was not ready due to some difficulties in software such as drawing business requirement specifications and development of software at the exchange and broker-level back offices.

However, the exchange had subsequently denied any such development and said that the rolling settlement will be introduced on schedule.    

Mumbai, Oct 6: 
The Essel group, owned by media baron Subhash Chandra, is hiking its stake in group company, Essel Packaging Ltd, using the creeping acquisition route. The group raised its stake in Essel Packaging by 3 per cent this month, increasing its holding to over 44 per cent.

Essel Packaging has informed the stock exchanges about the purchases, which were undertaken through open market operations by group concern Churu Trading. Churu Trading bought around 4.5 lakh shares between September 22-26 for around Rs 396 and Rs 407 per share.

Speaking to The Telegraph, senior company officials said that the group is likely to acquire the entire 5 per cent as permitted by the Securities and Exchange Board of India (Sebi), through the creeping acquisition mode.

This would be the second attempt by group chairman Chandra to raise his stake in Essel Packaging.

Essel had earlier identified the buyback of shares as one of the vehicles to reduce capital employed and improve the rate of return and shareholder value. Though the company had initially decided to buyback the equity shares within a price band of Rs 250 to Rs 300 per share, with share prices of the company ruling above Rs 300 it felt a buyback at such prices would not serve the purpose for which it was intended.

Market circles do not rule out the possibility of the group again taking recourse to the creeping acquisition route to raise its stake in Essel.

Essel Packaging, which was incorporated in 1982, manufactures laminated tubes used in packaging toothpastes, food & dairy products, cosmetics, toiletries etc.

The company has three foreign ventures in China, Egypt and Germany. Further, it has invested over Rs 4.8 crore in Essel Packaging (Nepal) Pvt Ltd, its 100 per cent subsidiary.    

New Delhi, Oct 6: 
The Tata group and $ 40 billion American International Group (AIG) today filed applications with the Insurance Regulatory and Development Authority (IRDA) to secure licences for the life and non-life insurance segments. Addressing reporters here, chairman of Tata Sons, Ratan Tata said, “The paid up capital for each company is Rs 125 crore. We will increase the capital as and when required.” The authorised share capital of each company will be Rs 250 crore each. The paid up capital for the two insurance ventures is slightly higher than the IRDA prescribed Rs 100 crore. Either Tata Sons alone or along with its affiliates would hold 74 per cent in the insurance joint ventures, added Tata. It will be decided in the next few days. Regarding the management structure of the joint ventures, he said, the insurance related decisions would be taken by the foreign collaborator, “while the strategic decisions would be jointly chalked out by the two partners.” The targeted premium from the non life business is Rs 600 crore in the fifth year, while the same for the life insurance business is Rs 400 crore in the fifth year. The company hopes to register some profits for its non life insurance business in the fourth year of operations. No profit targets were mentioned for the life insurance venture as this is a long term business. Frank G Wisner, vice chairman of AIG said, the insurance companies would not confine itself to the urban region, but would “take products to the rural parts as well.” He added that the prices of the products would be competitive. “The Tariff Advisory Committee of the IRDA would fix tariffs for certain products like automobile insurance, property, energy and petrochemicals for which there will be no leeway,” said Dalip Verma, chief executive — India, AIG. For other products, the prices will be competitive. Tatas would introduce new range of products. In the life insurance sector, products for individual, groups, pensions and savings would be introduced while in the non-life insurance, products for corporate, personal accidents, health, overseas travel, marine would be launched. Life insurance products would be distributed through agents while non-life insurance products would be distributed through tie-ups with banks and direct marketing companies. An alliance with HDFC has been inked for distributing non-life products. Internet would be an important medium for distributing the products. Tata Consultancy Service is setting up a software centre for various insurance related activities in Chennai which will be later on transferred to AIG for their worldwide use, said Frank Wisner.    

New Delhi, Oct 6: 
Giving a wider interpretation to the term “industry” than is defined in the Industrial Disputes Act, 1947, the Supreme Court has held that a unit which does not ostensibly have a profit-making motive would also come within the ambit of the definition of the term “industry”.

A division bench of Justices A.P. Misra and Y.K. Sabharwal in a judgment rejected an argument to include bodies performing “functions which are sovereign in character” from the provisions of the Act. The judges held that the Agriculture Produce Market Committee was “industry” and the employees were “workmen” under the Act. They rejected the argument that the committee was discharging sovereign functions of the state.

“Sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primarily inalienable functions which only the State can exercise”, the judges pointed out while holding “even in subject on which the State has the monopoly may also be non-sovereign in nature”.“Even after the passage of more than 50 years, the issue (of defining ‘industry’ under the 1947 Act) remains in the fertile field yielding fresh crops time and again because of wide vapourous definition of the word ‘industry’ under the Act”, the judges said.

“The wide definition has given an opportunity to employer and employee for raising issues, one trying to pull out of this definition, to be out of the clutches of the Act, and the other trying to stay within it, to receive benefit under it,” they said.

“In view of the preamble, objects and reasons and the scheme of the Act”, the judges said, even functions like “control and regulation” of trading of agricultural produce, as in the instant case, would include the body in the definition of ‘industry’.

The judges said many of the sovereign functions of the State could be undertaken even by private persons and “thus the appellant (the Committee) would fall within the definition of industry under section 2(j) of the Central Act (the 1947 Act)” , while upholding the employees as ‘workmen’ under the definition of the term.    

Calcutta, Oct 6: 
The Central Electricity Authority (CEA) has directed all the state electricity boards (SEBs) to conduct an energy audit and submit the reports by March 31 next year.

Sources say CEA wants to determine the actual transmission and distribution (T&D) losses of the SEBs. “The CEA and the Union power ministry are worried about the mounting financial losses of the SEBs. They want to put things in order; one way to do that is to clamp down on the actual T&D losses of the SEBs,” sources say.

CEA also wants to find out whether the SEBs bill their consumers for all the power they consume. Power thefts and underbilling have gouged a hole in the finances of most SEBs.

G.D. Gautama, chairman of West Bengal State Electricity Board (WBSEB), confirmed the CEA initiative which he said was a follow-up of the power ministers’ conference held in February. He said the board has already started working on the energy audit.

Sources said though the SEBs quote 22 -26 per cent T&D losses, the figure is much higher. “It hovers around 40 to 45 per cent in most of the states.”

For example, the sample energy audits which have been conducted by World Bank for the Orissa and Rajasthan state electricity board have revealed that the T&D losses are nearly 40 per cent.

Arresting T&D losses has become a major area of concern in those states where reform process has already been initiated like West Bengal, Orissa, Andhra Pradesh, Uttar Pradesh, Haryana and Rajasthan.

Gautama said the CEA was expected to come out with proper guidelines to arrest T&D losses once the energy audits are submitted.

Power pilferage has become a major area of concern for all the SEBs. “The modus operandi and methodology adopted by consumers and non-consumers for power pilferage are varied and ingenious,” sources said.

Bonafide consumers including bulk and industrial consumers use ingenious methods to steal electricity.    

New Delhi, Oct 6: 
Selling toys is no child’s play for Ravi Melwani, managing partner of Kemp Fort.

Melwani will be putting together a huge retail network of 500 Toys Kemp stores spread across the country over the next three years.

“Calcutta is going to have a ‘Toys Kemp’ before the year ends,” said Melwani.

Speaking on the launch of the ‘Toys Kemp’ in New Delhi, Melwani said his chain of exclusive toy retail outlets expects to notch up a sales turnover of Rs 500 crore in two years.

As of now ‘Toys Kemp’ includes 13 outlets, one each in Delhi, Indore and Coimbatore, three in Chennai and six in Bangalore. According to Melwani, Kemp Fort Bangalore is still India’s largest store with a floor space of 3 lakh square feet.

‘Toys Kemp’ was set up as part of Kemp Fort Group, Bangalore three years ago.

Apart from toys, Kemp Fort stocks fashion wear for men, women and children, international cosmetic brands, perfumes, watches, jewellry and crockery.

This year Kemp Fort expects a turnover of Rs 100 crore.

Sixty five per cent of toys at Toys Kemp are going to be imported and the rest will be sourced from domestic manufacturers, said Melwani.

The toys are priced as low as Rs 25 and go on to a pretty steep Rs 25,000.

“However, a large section of our toys are within Rs 500 as our research has shown that parents in India do not spend exorbitant sums on toys”, said Melwani.

And the toys? Well it is quite a wonderland.An apparent Pepsi can turns out to be a camera in disguise.Two beer bottles turn out to be a pair of binoculars.

There is a Barbie point of sale cash register where credit cards can be cashed and scanned respectively.

There is a Barbie phone which resembles a regular EPABX system. Cameras, tape recorders, binoculars,EPABX, CD-Roms...are we talking of toys? Well it is the age of convergence, you see.

Some of the international brands at ‘Toys Kemp’ includes Mattel, Barbie, Hot Wheels, Fisher Price, Hasbro, Tiger, Lego, and Binny & Smith.

Toys Kemp includes wares in 15 sub Kemps. Some of these are Action Kemp, Magic Kemp, Tinsy Kemp, Pre-school kemp and Remote control car Kemp toys.

The Delhi outlet is 800 square feet but it soon plans to expand to 15,000 square feet.The Mumbai outlet will open next week.

“We are dependent on our franchisee partners for the real estate,” says Melwani.

The company has no plans to enter manufacturing. Melwani takes pride in the fact that his company had launched the retailing revolution for children with ‘Big Kids Kemp, the mega store for kidswear.    


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