Eveready clears sale of tea gardens
Accor asked to limit job losses at Great Eastern
DCA fiat on pay packages
Bank unions stick to strike plan
Market gurus chant new mantra
Foreign Exchange, Bullion, Stock Indices

 
 
EVEREADY CLEARS SALE OF TEA GARDENS 
 
 
BY A STAFF REPORTER
 
Calcutta, Nov 10: 
The Eveready Industries India (EIIL) board today cleared the proposal to sell its tea gardens in Darjeeling and Dooars as part of a larger effort to slash by 25 per cent its interests cost which, at Rs 83.48 crore, amounted to a staggering 10 per cent of its Rs 832.92-crore turnover.

A five-member committee comprising four non-executive directors — Bhaskar Mitter, R. Srinivasan, Pintu Khaitan, Aditya Khaitan — and an executive director, R.S. Jhawar, has been constituted to identify the estates which can be divested. In addition, the panel will see which of the non-profitable gardens in Assam which can be put on the block.

An extraordinary general meeting of its board has been called on December 22 to seek shareholders’ approval for the move.

“We expect to raise Rs 100-150 crore from the sale of these gardens. This will enable us to retire a portion of the Rs 644.91-crore debt,” R. S. Jhawar, head of the company’s tea division, told reporters here today.

Eveready Industries runs 25 tea estates, of which 13 are in Assam and 12 in West Bengal. “We have not decided whether all the 12 gardens will be sold off. The committee will see how many. However, it is certain that we will be selling off all the four tea gardens in Darjeeling,” Jhawar said.

Eveready Industries produces 27 million kgs of tea every year. West Bengal gardens account for 6.5-7 lakh kgs. The Darjeeling estates are located in Glenburn, Lingia, Soom and Nagri Farm.

The company has already received a few offers. “The committee will examine these offers and give its final recommendations within a period of two weeks,” Jhawar said.

Jhawar said selling the gardens, many of which have been run for years, was necessary because of the changes in the market conditions that have made them unviable even as the market worth of these estates has changed considerably.

“Selling them will not only enable the company to prune its losses but will also generate surplus funds, which can be used to lighten the debt burden and slash interest costs,” he added.

In addition, the move will help strengthen and consolidate the tea business by improving the profitability from operations. Jhawar said the 20,000 workers in the company’s West Bengal gardens will be ‘treated sympathetically’.

However, Eveready Industries has no plans to sell off its battery business, in which it has a marketshare of over 40 per cent. The US-based Gillette Company had evinced interest in buying the division but the deal was called off after the two companies failed to agree on a price. This year, Jhawar said, the battery business will grow 10 per cent.

The Khaitans had acquired 1,65,84,750 shares of Eveready Industries in September 1994 at a premium of Rs 174 per share through McLeod Russel. In 1995, McLeod Russel had made a rights-cum-public issue of Rs 302.85 crore. The issue failed to evoked the desired response from investors, and saddled the company with a heavy debt burden.    


 
 
ACCOR ASKED TO LIMIT JOB LOSSES AT GREAT EASTERN 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Nov 10: 
The West Bengal government has asked Accor Asia Pacific, the company keen on buying the loss-laden Great Eastern Hotel, to retain more jobs so that the privatisation process is not stonewalled by employees.

Rajiv Sharma, Accor’s director (development), today met state tourism minister Manab Mukherjee and the four-member panel formed to carry forward the privatisation of the loss-making hotel. He was accompanied by Parasar Bose, a local architect, and Anil C. Kasturi, an advocate.

He held talks with the members of the committee, which included R. Mohapatra, director, West Bengal Tourism Development, D. P. Patra, managing director of West Bengal Tourism Development Corporation, U. C. Sen, member secretary of Great Eastern Hotel, and the principal secretary of the tourism department.

Tourism department sources said the committee has asked the Accor representative to take more employees on board when it acquires the hotel. “This is one of the most critical points. The privatisation plan had fallen through in 1996 due to an agitation by employees. We have asked the French firm to look into it more thoughtfully,” sources said.

Accor says it will spend Rs 15 crore on a separation package for the hotel’s 500 employees. It said a screening committee will interview those who are below 45 years of age to see who among them can be retained.

“If they are found suitable, they will be absorbed by the new company. The screening panel will comprise representatives of the union, tourism and finance ministry and Accor Asia Pacific,” sources said.

Of the 500 employees, only 170 are below 45 years of age and, therefore, eligible for the screening process.

The Accor Asia Pacific representative will discuss the issue, including the state government’s insistence on reducing layoffs, at the Bangkok head-office. “A draft memorandum of understanding will then be worked out, submitted to the state government and unions for their approval,” sources said. No date has been fixed for the next meeting.

“Other prickly issues were also discussed. The committee wanted to know the manner in which Accor would pay its lease rentals. The government feels it should do so annually,” a senior official in the state tourism department said.

Accor will invest Rs 100 crore to develop Great Eastern as a heritage five-star hotel. The government will hand over the lease of the hotel for a period of 30 years in the initial stages.    


 
 
DCA FIAT ON PAY PACKAGES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 10: 
The department of company affairs (DCA) has asked the corporate sector to adhere to the relevant provisions of the Companies Act, 1956, regarding payment of remuneration to managerial personnel, both in letter and in spirit, beginning this fiscal. In a circular issued to all chambers of commerce, regional directors, registrars of companies and the Institute of Company Secretaries of India, the government said if a company proposed to pay remuneration in excess of Schedule 13 of the Companies Act, it should be resolved at the board meeting.

The board resolution should give adequate reasons for payment of remuneration exceeding the amount indicated in the schedule.    


 
 
BANK UNIONS STICK TO STRIKE PLAN 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 10: 
The government’s effort to appease public sector bank employees hit a dead end today with the employees unions deciding to go ahead with their nationwide strike on November 15.

Finance minister Yashwant Sinha had called a meeting with the representatives of the United Forum of Bank Unions (UFBU) who were cut up by the government move to bring down its equity in public sector banks to 33 per cent. A Bill on stake dilution is supposed to be introduced in the winter session of Parliament.

Emerging from the meeting, Devi Dayal, special secretary banking, said, “the government has conveyed its point of view. The minister has explained the reasons for reduction in government equity and has tried to remove apprehensions.”

The public sector character of the banks would be maintained, he said and added that there would be no forcing of the voluntary retirement scheme (VRS) on the employees.

The bank unions, however, seemed to be unconvinced by the minister’s arguments and said the November 15 strike stands. “Another strike would be called when the Bill is introduced in Parliament. We will look at the movement of the Bill and then decide on an indefinite strike in banks,” said T. Chakraborty, general secretary, All India Bank Employees Association (AIBEA).

They argued that the basic reason why the government wants to dilute its equity is non-recovery of bad loans.

“The government wants to hand over banks to the very private sector who are responsible for the present situation in the banking sector,” Chakraborty said. If the loans are recovered there would be no problem in maintaining the capital adequacy ratio, he added.

According to the unions, once banks are privatised the public sector character cannot be retained.

“If private shareholding is more than 51 per cent how can it be in the public sector,” Chakraborty asked. The board would have more outside members and the government would have little say in the decision-making process.

The unions also felt that VRS is being forced on bank employees.    


 
 
MARKET GURUS CHANT NEW MANTRA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 10: 
“Markets are about people not geography.”

That is marketing maven Shunu Sen’s dictum for India Inc’s future managers.

Sen, CEO of Quadra Advisory, a strategic marketing consultancy, urged his audience at the Rural Marketing Convention 2000 to desist from labelling markets as urban or rural. “Look at consumers as customers and not as labels.”

The two-day convention is being organised by the Institute of Management Technology (IMT), Ghaziabad.

Sen said market research and feedback has turned most theories about market behaviour on their heads, with rural consumers known to buy products essentially perceived as urban. In fact, low-priced variants sold in small quantities were equally liable to succeed both in rural areas and in an urban slum, he said.

While the distribution and communication requirements of the brand may differ for the so-called rural markets, products need not be classified as rural and urban, Sen said. It is better to look at a product as serving a consumer need and then try to market it whether the consumer lives in a city or village, not the other way round.

Adopting a similar line, Pradip Kashyap, president, Marketing and Research Team (MART) said that rural and urban consumers had visibly different needs, which have to addressed accordingly. “For example, the need for a pressure cooker is three times higher in rural areas, yet one of the reasons why it is scarcely used is with the use of wood as a fuel, the consumer seeks a cooker with handles on two sides. It is needs like this that rural marketers have to tap,” he added.

Shunu Sen further added that straightjacketing can prove counterproductive in rural markets as they were hardly uniform in character, adding that villages equipped with proper infrastructure have the potential to gradually develop into big markets on the lines of their urban counterparts.

“The development of infrastructure and education will do more to open up the rural markets than any financing option for white goods,” he said.

S. Narendra, head, R.K.Swamy/BBDO pointed out that communication needs for rural markets also differed. While conventional media would do just fine for general brand awareness, when that awareness has to be converted into mass purchases, the message must be conveyed to the people at their level.

IMT is organising a student project in the rural areas of western Uttar Pradesh from November 12.

Companies will participate in the ‘haats’ that are to be set up, to carry out projects aimed at gauging the behaviour of the rural consumer and collecting feedback.

According to IMT, companies who have confirmed their participation in the event include Hindustan Lever, Smithkline Beecham, Britannia, Philips, Whirlpool and Agrotech Foods.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

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