Tata, SIA reunite for Air-India
Banks warned against hiring deposit agents
Kanika Info plan ready for UK subsidiary
Siemens ends dividend drought
Bulk call tariffs revised
Australian company on Asian Paints canvas
Daewoo’s plight not to dent local unit
Foreign Exchange, Bullion, Stock Indices

Mumbai, Nov 9: 
Two years after they abandoned their plans to establish a domestic airline, the Tatas today announced that they will lead a consortium with Singapore Airlines to bid for the 40 per cent stake in Air India, the country’s flag carrier, that the government is putting on the block.

The Tata group, through its companies Tata Sons Ltd and its Indian affiliates, will form the critical part of the Indian side of the venture. The Tatas pioneered civil aviation in Indian skies under the leadership of the late J R D Tata, the founding chairman of Air India, a position he held for 31 years.

Explaining the group’s choice of Singapore Airlines as its partner, Ratan Tata, chairman of Tata Sons, said: “Singapore Airlines is a global player with impeccable credentials that has grown over the last 28 years to become a universally respected, world class airline”.

“Its airline operating competency will be a significant asset to the consortium and will be critical in ensuring the success of Air India in the international market place,” he added.

Cheong Choong Kong, deputy chairman and chief executive officer of Singapore Airlines, expressed his happiness at Singapore Airlines joining the Tata -led Indian consortium. Dr Cheong said, “We share a common commitment to the highest standards of quality, service and corporate values and would happily accept the opportunity, if given, to work with the Tata group and Air india to take the Maharajah to greater heights.”

Singapore Airlines operates a 92-aircraft fleet with an average age of 5.6 years including latest aircraft like the B 777s, the B 747-400s, and the A340s. It recently announced the purchase of 25 very large aircraft (VLA) from Airbus Industrie to augment its B747-400 fleet of aircraft. The group revenues of Singapore Airlines in 1999-00 were S$ 8.9 billion (approximately US $ 5.0 5 billion).

The Tata group is India’s most respected business house with a group turnover of Rs 38,678 crore in 1999-2000.

Earlier, the government allowed local bidders for Air-India, which were struggling to find foreign airlines as partners, to submit individual expression of interest.

The Union government’s first major disinvestment proposal which is being followed closely by global airline majors formally took shape when it called for an “expression of interest” on September 28, 2000 from prospective suitors for picking up 40 per cent stake in Air-India. The bids close tomorrow.

Interested parties that qualify and sign a confidentiality agreement will be provided a package comprising an information memorandum, agreements and terms of reference. The shortlisted bidders will then be required to submit the initial technical proposal which will require the bidders to comment on the business plan being developed by Air India and identify areas where they can add value.

An evaluation will be done of the value that the bidders can add after which a shortlisting process may be undertaken.

The shortlisted parties will be allowed access to the data rooms and will be required to submit a final technical and financial bid.    

Calcutta, Nov 9: 
The Reserve Bank of India (RBI) has come down heavily on banks that employ external agents to collect deposits and sell deposit-linked financial products.

The central bank has reminded them in a circular that they are not allowed to engage agents who mobilise deposits from the public. Senior RBI officials said they have information that some banks have entered into agreements with direct sales agents through an arrangement forged with several companies.

“The agents solicit new depositors, completing account-opening formalities and other related activities. A few banks are giving agents high brokerage fees in various forms on the deposits collected by them. This is happening despite the bar on paying brokerage on deposits in any form to individuals, companies, associations and institutions,” they said.

Senior bankers say foreign and private banks give lucrative commissions to their agents to collect deposits or sell their products.

Allahabad Bank chairman and managing director B. Samal welcomed the Reserve Bank’s clamp-down, saying the state-run banks have been at the receiving end of this scramble for deposits. “Nationalised banks had been complaining to RBI about this for some time. It has now come out with a tough set of rules. I hope this will stop the unhealthy competition for deposit mobilisation among banks,” he added.

“We have examined the mater and advise that it would not be in order for banks to employ/engage outside persons even through firms/companies for collection of deposits including non-resident deposits or for selling any other deposit-linked products on payment of fees/commission in any form or manner,” the RBI circular states.

The agents lure customers to keep deposits with banks, resulting in an unhealthy competition. “It has been noticed that the rate of deposit mobilisation by private banks is higher compared with those of nationalised banks. This is one of the few reasons for the differences in growth rates,” bankers said.

According to RBI officials, agents hold out the promise of loan facilities if customers agree to keep deposits with the bank. “Most of these loans turned out to be non-performing assets (NPAs). This has worried the central bank,” they said.

Also, the source of the money that flows into banks’ deposits through this channel is not always clear. Bankers say the route is often used to funnel black money, something that forced the Reserve Bank to crack down on the practice as part of its larger drive to spring-clean the financial system.    

Calcutta, Nov 9: 
Kanika Infotek, a city-based software firm, is setting up a wholly-owned subsidiary in the United Kingdom at an investment of £ 1.5 lakh.

Managing director S. K. Mall said his company had already received approvals from the Reserve Bank of India (RBI). “We are hopeful that the new subsidiary will emerge in the next few weeks,” Mall said. The UK outfit will be the company’s third subsidiary, besides those in US and Singapore. The two subsidiaries were set up three months after Kanika Info came out with its maiden public issue in July, he added.

Mall said his company expects 90 per cent of the business to come from foreign countries, a reason why it has floated firms in potential markets overseas. The company plans to set up a state-of-the-art development centre in the US in the current financial year.

The company, he said, has achieved a turnover of Rs 1.83 crore for the half year ended September 30 compared with Rs 19 lakh for the corresponding period of last year.

“We are in a position to achieve a turnover of around Rs 6 crore this fiscal. We have set a target of Rs 16-18 crore by March 2002,” he said.

At the same time, there are plans to increase workforce by 60 per cent from the 124 at present in this financial year, Mall said.

“We have also tied up with Park Computer Systems Inc, as well as American Systems Group for joint development of products, which will boost the company’s operation in the US,” Mall said.    

Mumbai, Nov 9: 
Buoyed by a 140 per cent rise in net profit at Rs 84 crore, Siemens announced a 65 per cent dividend for the year ended September 30 after three years of painful restructuring. That included a one-time special 30 per cent payout.

Net sales were up 3 per cent at Rs 1,083.27 crore from Rs 1,050.58 crore in the previous year. The company wrote back tax adjustments to the tune of Rs 10.60 crore. “Despite the tough market conditions, we were able to achieve quality results. We will go for another run in 2001,” Juergen Schubert, the managing director, said in a tone that reflected his cautious optimism about the outlook for the year ahead.

“This does not mean that we are out of the woods. He referred to some segments of the company which have not recovered so far,” he said in an apparent reference to the switchboard business.

The company said it had anticipated the negative trends, and steered its businesses on the assumption of a flat market. This was reflected in the fewer orders and lower turnover, both of which mirrored the sluggish market conditions.

Addressing reporters here today, Wolfgang A Kroll, executive director at Siemens, said the impressive profit was the result of a focus on the internal processes and the overall cost position. This helped the company deploy its resources in an optimal manner. “The internal alignment is reflective of the profitability, which has now achieved a healthy jump,” he added.

New orders for the power generation business declined 33 per cent over the previous year, dragging down turnover by 14 per cent. However, the division has posted a quantum increase in profitability, largely due to the good performance of the services and automation division.

The power transmission and distribution (PTD) business registered a satisfactory growth of 25 per cent in new orders and 27 per cent in sales, despite the sluggish market conditions in the transmission and distribution sector. Margins, however, were squeezed by the steep price erosion and high cost structure.

The standard products business, comprising motors and switchgear, the automation and power electronics segments, were healthy enough with orders increasing 11 per cent.    

New Delhi, Nov 9: 
The Telecom Regulatory Authority of India (Trai) today revised the rentals and call charges for franchised Group PBX, or PABX and EPABX with Direct Inward Dialing (DID) facility. The facility is offered to multi-storeyed buildings and co-operative housing societies. The monthly rentals have been revised from Rs 125 to Rs 100 per month. Under the revised structure, charges will be calculated per metered call unit. Up to 500 metered call units per month, the customer will pay at the rate of 90 paise per three minutes compared with Rs 1.20 earlier. For calls above 500 metered call units per month, three minutes will cost Rs 1.10.

The tariff for extension users of DID Franchisees was fixed in TTO, 1999 after taking into account the standard tariff package. According to Trai, the extension user of DID has an easier access to a DID franchisee than corresponding user of DEL has to his service provider.    

Mumbai, Nov 9: 
A day after commissioning a plant in Oman as a joint venture partner, Asian Paints (India) Ltd (APIL) today acquired the entire paints business of Pacific Paints Co Pty Ltd of Australia for over Rs 9 crore (Australian $ 375,000).

The acquisition was made through its subsidiary in Australia. “This will boost our existing operations in that country and the Australian unit will be able to leverage the acquired company’s brands. Pacific Paints’ brands are quite popular in Queensland which has a Australian $ 231 million market,” Ashwin Dani, vice-chairman and managing director of Asian Paints said.

Pacific Paints, although a very small player, has some brands which are popular in the state of Queensland, Australia.

“Asian Paints is already the leader in four other South Pacific countries and the acquisition is a step to becoming a paint powerhouse in the region,” Dani added.

This is the paint major’s second overseas acquisition in a year. Recently, the company acquired the second largest paint maker in Sri Lanka. Within a year-and-a-half, Asian Paints has already entered three new markets and has strengthened itself in Australia through this recent acquisition.

In 1998, post-restructuring, Asian Paints embarked on an ambitious plan to emerge as one of the top five decorative coatings companies in the world and to be the leader in emerging markets by 2007.

Pacific Paints Co. Pty Ltd is a family-owned company which operates from North Brisbane, Australia. The company has carved a niche for itself in the Brisbane market and its brands have achieved success among the trade and retail segments. It has been in operation for nearly a decade and manufactures various types of water-based emulsion paints.

Asian Paints, which entered the global market with its products over 30 years back, is India’s largest exporter of paints, exporting to 22 markets in the Asia-Pacific region, West Asia and Africa.    

New Delhi, Nov 9: 
Daewoo Motor Corporation’s bankruptcy will not affect the fortunes of its Indian subsidiary, Daewoo Motors India (DMIL).

“It is insulated from developments in Korea,” DMIL managing director and chief executive officer, Young-Chang Kim, said. He pointed out that the firm has been operating independently of its parent with no fresh cash infusion.

Daewoo Motors India has positive cash flows from domestic operations, and expects it to continue in the remaining months of the year. The optimism springs from the 135 per cent increase in sales to 48,568 units between January and October from 20,725 units during the same period last year.

“In order to secure the Indian operations, we have prepared ourselves well in advance. We took timely decisions on the procurement of parts and knocked-down kits. More important, production will continue even in Korea even as court proceedings go ahead,” Kim said, adding it was the Indian subsidiary which was helping its parent by placing orders for spares and kits.

Daewoo Motors was declared bankrupt on Wednesday by its creditor banks after it failed to meet payments of $ 39 million for two consecutive days. The crunch came after its union refused to accept the 3,500 job cuts that would have kept the company going.

Kim said Daewoo Motors India has procured parts and kits to last it for the next four months, although industry watchers say is not a comfortable position for input supplies.

“We are in a good position to meet the requirements of all existing and future Daewoo car owners and to clear any doubts on Daewoo India’s service abilities in future,” he said.

“Since October 8, our orders have increased 5 per cent. We will continue to raise production, expand our dealership network aggressively, set up more after-sales service outlets and launch new marketing initiatives in anticipation of an increase in demand for Daewoo cars in India,” he added.

Kim said the labour union in Daewoo India has co-operated fully in the ongoing restructuring efforts of the company.

Contrary to fears, the Daewoo Motors India chief said developments in Korea might actually facilitate a takeover.

“Court proceedings are aimed at restructuring to revive a company, not to close it down. Kia Motors and Samsung motors are the most recent examples of companies that were taken over during reorganisation proceedings,” he said.    


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