Startup deadline for power projects
Govt refuses to cover Reliance Petro export loss
Propack dealmakes Essel leader in lamitubes
RBI supports plan to lower govt stake in public sector banks
Strike cripples banks
LIC hikes bonus rates
Motorola-Cisco push to Invisix
Bengal power corp lines up coal-fired unit
UTI Bank, L&T tie up for Net trading
Foreign Exchange, Bullion, Stock Indices

 
 
STARTUP DEADLINE FOR POWER PROJECTS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 15: 
Fast-track power projects have been slotted into three categories depending on their level of progress in execution at a high-level inter-ministerial meeting held here today.

Designated as A, B and C groups, the move is the government’s response to threats from World Bank president James D. Wolfensohn to stall fresh power loans until a review explained why several projects for which funds were sanctioned by the institution in the past remained in limbo.

Today’s meeting was chaired by power minister Suresh Prabhu, who sought loans worth $ 4 billion to revamp the stodgy state power boards during his talks with Wolfensohn earlier in the day. A group of ministers will review the issue later this month.

Category A will include power projects which have tied up funds and received various clearances. Their promoters will be asked to start work by the end of this financial year. Seven of them, with a total capacity of 2,814 MW, are expected to achieve financial closures by the close of this year.

Category B projects, those which have slight problems, will be given more time to tie up the loose ends, but will be given individual time limits to get their plans off the ground.

The last category will cover those which have been delayed inordinately. Their promoters will be asked to explain the delay, and they may have their clearances revoked if they fail to offer good reasons.

Most fast-power projects had been envisaged by the Narasimha Rao-government as part of the first economic reforms phase. But red tape and, incompetence on the part of a few business groups which ventured into the area, ensured that most of the projects remained on the drawing board.

Today’s meeting was attended by representatives of the ministries of power, finance, Planning Commission, state governments and financial institutions. It discussed the progress of projects in the states of Andhra, Madhya Pradesh, Karnataka, Orissa, Tamil Nadu, Gujarat and Maharashtra.

These are the states which have launched plans to reform and restructure their electricity boards.

The power and finance ministries will separately study the reform packages. However, officials said the thrust will no longer be on only replicating the World Bank-dictated — which later turned out to be unworkable — Orissa privatisation model.

Orissa had trifurcated its state electricity board and corporatised them. In the process, Gridco, the main firm was, saddled by all the losses.

New models will now be worked out, which will include suitable plans to amortise past losses.    


 
 
GOVT REFUSES TO COVER RELIANCE PETRO EXPORT LOSS 
 
 
FROM R. SASANKAN
 
New Delhi, Nov 15: 
The minister for petroleum and natural gas, Ram Naik, has rejected Reliance Petroleum’s proposal that the government bears the losses suffered by it in the export of petroleum products.

This is the second time the proposal came up for consideration. Normally, a proposal of this nature, once rejected, is not entertained by the ministry.

It was first submitted when Vazhapadi Ramamurthy was the minister for petroleum and natural gas in the previous government headed by A. B. Vajpayee. Ramamurthy almost endorsed it. However, the erstwhile secretary in the ministry, T. S. Vijayaraghavan, intervened, and told the minister about the consequences if such a decision was taken.

Ramamurthy agreed with his secretary, and ruled out the question of government bearing export losses of any company. With the domestic petroleum market facing an unprecedented demand slump, not only Reliance Petro but PSU refineries are also under pressure to export products. Reliance Petro is the worst victim of the glut as its refinery is located in the western region, which has a surplus in petroleum products.

The persisting glut has forced Reliance Petro to look for export markets in a big way. It already exported a few cargoes of petrol and diesel, and is in the process of negotiating more such deals. Given the current prices in the international market, it is difficult to make profit out of exporting. The question before oil companies is how to minimise the losses. It is against this background that RPL revived the earlier proposal for government meeting the export losses.

Last time, it was the bureaucracy which scuttled its proposal. Surprisingly, this time, it had the support of the bureaucracy. However, Naik, who was perceived to be sympathetic to the Reliance group by virtue of his political base in Mumbai, did not take much time in rejecting the proposal. Sources say Naik understood the financial implications of such a decision better than his predecessor.

There are other companies which are willing to export their products. Cochin Refinery received the government’s approval to export diesel. So did Bharat Petroleum. The joint sector Mangalore Refineries and Petrochemicals will be forced to export if it decides to utilise its full capacity. A policy decision of this nature cannot be limited to Reliance alone.    


 
 
PROPACK DEALMAKES ESSEL LEADER IN LAMITUBES 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 15: 
Subhash Chandra’s Essel Packaging today announced a merger with Propack group in a $ 11-million deal that will make it the largest player in lamitubes.

American National Can Company was knocked to the second, and Courtaulds, to the third position.

Earlier, Essel Packaging was the second-largest player and Propack Holdings was the fourth biggest in the segment.

Essel has been expanding its operations over the last few years, establishing bases in Germany, Nepal, Egypt and China. The company has a 100 per cent subsidiary in China, where Propack is the market leader. Company officials say that its Chinese subsidiary has been recording good growth. Propack has a global market share of 8 per cent, and analysts have estimated its turnover at Rs 200 crore.

Essel will pay $ 11 million (Rs 50 crore) in cash for the assets of Propack, which will hold 22 per cent in the new company, likely to be christened Essel Propack. The board has given its in-principle approval authorised Cyrus Bagwadia, Essel Packaging managing director, to negotiate the terms and conditions of the deal, the company said.

According to analysts, the total price of transaction works out to around Rs 200 crore, based on current valuations.

The board of Essel Packaging has convened an extra-ordinary general meeting on November 18 to consider an increase in the authorised capital and to invest in the equity of Propack Mauritius. It will also consider a proposal to make a preferential offer for 6.90 million equity shares to Propack shareholders.

Meanwhile, Essel Packaging posted a net profit of Rs 12.57 crore for the quarter ended September 30 compared with Rs 11.41 crore in the corresponding period last fiscal.

The company’s net sales stood at Rs 59.25 crore as against Rs 55.81 crore in the corresponding quarter of the previous year.

Propack chairman Bernhard Schwyn, who signed the deal this morning, said it was a merger of unique strengths in global management, innovations and technology.    


 
 
RBI SUPPORTS PLAN TO LOWER GOVT STAKE IN PUBLIC SECTOR BANKS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 15: 
The Reserve Bank of India today argued in favour of the government reducing its equity stake in public sector banks. On a day when bank employees went on a nationwide strike to protest against the Union government’s plan to bring down its stake in state-owned banks to 33 per cent, the apex bank argued in favour of a dilution in the government’s equity stake. Releasing its report on the trend and progress of banking during the fiscal year 1999-2000, the RBI said, “On balance, there seems to be a strong case for raising the legislative ceiling for market participation in the equity capital of public sector banks”. “In this context, the pronouncement in the Union Budget 2000-01 that the Government would reduce its holdings in public sector banks to 33 per cent while ensuring that banks retain their public sector character, assumes importance”. The central bank explained its stand by reasoning that the new capital adequacy norms proposed in June 1999, if implemented, are likely to be stricter than those prevailing at present. “The new norms with its explicit emphasis on ratings, internal and external, are likely to have implications for the required levels of capital. These issues gain in importance in view of Government ownership of banks and the ability of the public sector banks to raise capital either internally or from the market”, the central bank reasoned in its report. In this situation, RBI warned that an issue that would require critical attention and would need to be resolved is whether this gap should be filled by contribution from the owners/shareholders or whether legislative ceiling for capital to be subscribed by the public should be raised. The provision of banks’ capital by the Reserve Bank would tantamount to monetisation with inflationary implications, while contribution to additional capital by the government will adversely impact the fiscal situation. According to the Reserve Bank, even after allowing for additional infusion of capital through internal generation and access to subordinated debt, the gap between the additional capital requirement and the leeway available to raise capital from the market is likely to remain sizeable. The report also revealed that inspite the mammoth Rs 60,841 crore non-performing assets, scheduled commercial banks continued to witness an impressive growth of 16.8 per cent in 1999-2000. The report said the share of investments and loans and advances in total assets rose substantially to 37.3 and 49.9 per cent respectively but deposits exhibited a lower growth of 13.9 per cent at Rs 99,319 crore during the year. Despite the lower deposit growth bank credit, however, recorded higher expansion of 18.2 per cent at Rs 67,121 crore during the year following reductions in reserve requirements. Expansion in food credit was by Rs 8,875 crore in 1999-2000 which was more than double that of Rs 4,331 crore in 1998-99. Bank group-wise analysis indicated that the new private banks recorded highest growth rate of 43.5 per cent followed by old private banks at 31.7 per cent. The worrying factor was the NPAs which increased to Rs 60,841 crore by March 2000 compared with Rs 58,722 crore in the corresponding period in the preceding year.    

 
 
STRIKE CRIPPLES BANKS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 15: 
Banking operations across the country were paralysed today as more than 13 lakh officers and employees went on a day’s strike, opposing the government’s move to privatise nationalised banks.

Union leaders alleged that privatisation was a ploy to hand over the management of banks to big industrial houses, especially to the defaulters who are responsible for the present ills of the banking sector.

Harvinder Singh, spokesperson of the All India Bank Officers’ Confederation said the unions would not allow the move to succeed.

Criticising the statements made by finance minister Yashwant Sinha, the unions said, that the finance minister had failed to explain why the public sector banks were being privatised when 17 private sector banks had become bankrupt in the last three years and have been merged with nationalised banks.

The United Forum of Bank Unions (UFBU), an umbrella body of nine unions will go on a token strike the day the privatisation Bill will be tabled in Parliament. While a gherao of Parliament is planned on November 28, an indefinite strike is scheduled thereafter. “We are against the efforts of the government to de-nationalise the banking sector and today’s strike should serve as a warning on the shape of things to come if the Centre goes ahead with its anti-employees policy,” the Delhi convenor of UFBU, V. K. Gupta said.

However, transactions at the Reserve Bank of India largely remained unaffected though the employees union observed a lunch hour demonstration in support of the public sector bank employees.

The secretary of the Reserve Bank Employees Association (RBEA) Delhi, K.K. Sharma, did not rule out the RBI joining the strike if the UFBU demand remained unresolved.

However, foreign banks completely kept off the strike.

In Mumbai, about 5000 employees gathered at the local headquarters of the State Bank and raised slogans against the government’s anti-labour policy and its decision to reduce its equity in banks from over 51 per cent at present to 33 per cent.

The strike was reportedly complete in Calcutta, with the general secretary of the All India Bank Employees Association (AIBEA), Tarkeswar Chakraborti, asking employees to be prepared for a prolonged agitation if the Centre did not reverse its stand.

The strike also affected the interbank foreign exchange market in Mumbai where the rupee showed a marginal depreciation against the US dollar due to thin trading. It was quoted at Rs 46.81/82 per dollar in late morning deals, as against the overnight close of Rs 46.7850/7900.    


 
 
LIC HIKES BONUS RATES 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 15: 
The Life Insurance Corporation of India (LIC) has hiked the bonus rates for the year 1999-2000 for long-term insurance policies. Bonus rates for the year 1999-2000 for whole life type policies range from Rs 95 to Rs 106 as compared with last year’s rates of Rs 93 to Rs 104.

For endowment type policies, the bonus rates range from Rs 56 to Rs 89 as against the previous years slab of Rs 58-87. In a press statement, the insurance major stated that bonus rates for money-back anticipated endowment range from Rs 53 to Rs 72 for the current year, as against Rs 53 to Rs 79 in the previous year. The bonus for Jeevan Surabhi policies ranges from Rs 56 to Rs 80 against Rs 58 to Rs 75 announced last year.

Jeevan Mitra, Jeevan Sathi and limited endowment policies range from Rs 67 to Rs 91. There are no comparative figures for the last year as the policies were introduced in the year under review.

In addition to these simple revisionary bonus rates, additional bonus rates were also announced for policies fulfiling the stipulated conditions depending upon the term and sum assured for the policy.    


 
 
MOTOROLA-CISCO PUSH TO INVISIX 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 15: 
Motorola and Cisco will invest $ 1 billion in Invisix, a joint venture company which will develop Aspira, a communications architecture for 3G technology.

Aspira will provide telecom service providers the flexibility to offer voice, data and multimedia in one broadband, internet protocol-based network. This total communications solution encompasses access networks, applications, services and end-to-end point devices. It will enable cellular calls to go through from any location to any other location on the globe.

The Aspira project is being undertaken in UK and Japan. The $ 1 billion investment will be made over a two-year period.

“Operators can choose how and what speed they should deploy 3G systems, services and capabilities without disruption. By 2003 it is estimated that more than one billion people will have wireless access to web,” said Steve Dubberstein, director of 3G Engineering, Asia Pacific Telecom, Carrier Solutions Group, Motorola.

“Ultimately this will provide consumers with a host of new features and services to help them master time, enhance relationships or work together and help build revenue for service operators,” he added.

The Aspira communications architecture is based on three key network elements — radio access network, core network and end user services network. While the radio access network provides communications between end users, core network comprises routers and switches. The end user services network delivers internet and other applications and content to consumers.

However the scarcity of spectrum could play spoil sport in use of the 3G technology. The US government has already asked officials through an executive order to allocate spectrum for the 3G technologies.

“In US the existing spectrum has been exhausted and there is a major demand for spectrum for operating 3G equipment, including mobile phone handsets. However, telecom equipment manufacturers are exploring the possibilities of using 3G technologies in the existing spectrum available world wide,” said Dubberstein.

Among other new products Motorola is working on include a cellular mobile phone with camera attached to it. The company plans to launch this product worldwide by the end of 2001.

“The product is presently being tested. It can be used for live video-conferencing. The service providers would be able to offer a videoclip service of your favourite game, similar to the short messaging services offered by them,” said Dubberstein.    


 
 
BENGAL POWER CORP LINES UP COAL-FIRED UNIT 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Nov 15: 
The West Bengal Power Development Corporation (WBPDCL) is planning to set up a 1,000 MW coal-based thermal power project in the Ranigunj-Asansol industrial belt.

A senior WBPDCL official said the project has been conceptualised as a source from where power would be exported to states that have a shortage of it, including those in the north.

The corporation has held ‘informal’ talks with Power Trading Corporation (PTC) to step into the project as a joint venture partner. A formal dialogue will begin once the requirements of various regions are known. “Moreover, we have to determine the cost of evacuating power from the region and the infrastructure needed for it,” the official said.

Though the quantum of investment has not been determined so far, an amount exceeding Rs 5,000 crore is considered the ballpark figure for the power project. With this scale of investment, the project could be the second largest after the Haldia Petrochemicals.

WBPDCL is in the process of carrying out a ‘pre-feasibility’ study for the project. “We shall appoint a consultant to draw up a detailed report after we have held negotiations with Power Trading Corporation,” the official said. In another significant development, the corporation is in talks with UAE’s Al Manhal International group (AMIG) for a 1,000 MW gas-based power plant in Benga l. The project is estimated at Rs 3,500 crore, which will be the second highest investment in the state after Haldia Petrochemicals.

A high-level AMIG delegation is reported to have made a detailed presentation on the project. Liquefied natural gas (LNG) will be brought by the company through a planned pipeline.

Meanwhile, AMIG and its associate, Vavasi Oil & Gas Pvt Ltd (VOGPL), will set up a 2,500 MW gas-based project in Orissa. They said it would take a guaranteed sale of around 2.5 to 3 million tonnes of LNG if the is routed through West Bengal.

“The plant will absorb around 1 million tonnes of LNG annually. We are exploring other areas where the gas could be used,” a senior WBPDCL official said.

The project, if approved, will replace the 2,000 MW coal-based Sagardighi power project, now being shelved.

The official said Sagardighi was a good choice to set up a gas-based power plant because of its proximity to Bangladesh, a country known to be sitting atop big gas reserves.    


 
 
UTI BANK, L&T TIE UP FOR NET TRADING 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 15: 
UTI Bank and L&T Trade.com Ltd today signed a memorandum of understanding to provide an internet trading platform to brokers.

The joint venture will compete with the internet platforms of the National Stock Exchange and the Bombay Stock Exchange.

While BSE has a tieup with Tata Consultancy Services, NSE’s venture is with I-Flex—a software major promoted by CitiBank.

Y M Deosthalee, senior vice-president of L&T said, “The technical and internet expertise of L&T Trade.com, combined with UTI Bank’s large network, will help us provide value to brokers.”

UTI Bank chief P J Nayak said, “UTI Bank has identified capital market related banking business, including support for trading, as a strategic business area.”    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.76	HK $1	CLOSED
UK £1	Rs. 66.82	SW Fr 1	CLOSED
Euro	Rs. 40.21	Sing $1	CLOSED
Yen 100	Rs. 43.11	Aus $1	CLOSED
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4525	Gold Std (10 gm	4470
Gold 22 carat	Rs. 4275	Gold 22 carat	4135
Silver bar (Kg)	Rs.7850	Silver (Kg)	7875
Silver portion	Rs. 7950	Silver portion	7880

Stock Indices

Sensex	3946.53		+2.99
BSE-100	2016.03		+8.18
S&P CNX Nifty	1247.05		+4.20
Calcutta	108.77		+0.62
Skindia GDRNA	605.83		+29.07
   
 

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