Mahindras buy IFC stake in Gesco at Rs 44 a share
Morgan Stanley status quo on India
Sterlite weighs selloff, tieup options for paper
Taxmen told to ferret out massive dues
Bill ready to allow transfer of CIL mines
Govt vows steps to check dumping from China
Big B cast in ICICI brand emissary role
Foreign Exchange, Bullion, Stock Indices

 
 
MAHINDRAS BUY IFC STAKE IN GESCO AT RS 44 A SHARE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 17: 
In a new twist to the battle for control of Gesco Corporation, the Mahindras today said they had snapped up 6.34 per cent in the realty firm from International Finance Corporation (IFC) — the World Bank arm that invests in private sector projects — at a price of Rs 44 per share.

In all, 18,23,059 equity shares changed hands in a Rs 8.03-crore negotiated deal that will force the Mahindras and Sheths — who made a counter-offer for Gesco Corp shares at Rs 36 — to pay at least Rs 44 for shares they purchase in future. A Mahindra spokesman said the deal has won RBI approval. The Gesco Corp share closed at Rs 45.05 on the BSE today.

Mahindra Realty and Infrastructure Developers bought the shares from IFC on behalf of the Mahindras, who decided to rescue the embattled Sheths — the promoters of Geco Corp — by joining forces to launch an open-offer to the one made by Abhishek Dalmia-controlled Renaissance Resorts.

Market observers say the deal with IFC gives the Sheths and Mahindras a decisive edge after a long time during which they had remained on the defensive in their efforts to stave off Dalmias’ bid.

If the price at which shares were bought from IFC is offered to financial institutions, they will find will find it hard to resist the temptation, a source said.

IFC, keen to sell its way out of Gesco, was believed to have approached both the Dalmias and the Mahindras with the offer, but it was the latter who ended up closing the deal.

The Dalmias had also sought a line of credit from HDFC to finance their acquisition of Gesco shares from the market, but the housing finance major was leery of committing funds.

HDFC chairman Deepak Parekh — who played a key role in bringing the Sheths and the Mahindras together for the counter-offer — today said his company examining the Dalmias’ creditworthiness.

“We want a consolidation of the real estate industry,” he told reporters at the launch function of HDFC Securities, a broking outfit of the group, here today.    


 
 
MORGAN STANLEY STATUS QUO ON INDIA 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 17: 
Morgan Stanley Capital International (MSCI) has not revised its weightage for India in its quarterly index rebalancing, which made some adjustments in Europe, increased Taiwan’s weightage, but left much of Asia unchanged.

According to an MSCI release, a number of adjustments were made to its standard indices, but there was no major changes for Asia. However, $ 120 billion was added to the MSCI All-Country World Index, which covers 48 developed and emerging markets.

Capital market observers said the decision not to touch India’s numbers removed some of the worries participants had on Thursday. Worries on this count had resulted in some nervousness in trading yesterday. As a result, the BSE sensex scored only marginal gains over its previous close.

MSCI’s quarterly rebalancing saw all 15 countries in MSCI Europe Index being reviewed. This pushed up the net market capitalisation of index by $ 85 billion, or 1.4 per cent, after the addition of 35 companies and 45 deletions. Changes were made in pharmaceuticals & biotechnology, telecommunication services, software, diversified financials and banks.

The rebalancing had generated some sort of speculation in the Indian capital market circles with one theory pointing out that one of the cement majors is likely to be dropped from the MSCI Indian index. This however, did not happen.

With no changes being made in the Indian index, the domestic bourses preferred to ignore the announcement. However, the 30-share BSE sensex closed with a minor gain today, following moderate buying in certain old economy and technology shares towards the latter part of trading today.    


 
 
STERLITE WEIGHS SELLOFF, TIEUP OPTIONS FOR PAPER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 17: 
Sterlite Industries is considering whether it should enter into a strategic tieup with global majors for its paper business, or sell it completely as part of a larger plan to narrow its focus to metals and telecommunications.

Sources close to the company said the decision to take a fresh look at the Rs 109-crore business comes in the wake of a Rs 49-lakh operating loss suffered by it for the period ended June 30.

The move to freeze fresh investments in paper — which was spun off into a subsidiary in June last year — is seen as a sign that the copper and aluminium major has made up its mind to pull out. No buyer has been identified, but the global uptrend in paper prices have raised hopes that the company will get a good deal. The company makes newsprint, writing and printing paper at its Surat plant, which has an annual capacity of 75,000 tonnes.

Its telecommunication business was recently spun off into a separate company, Sterlite Optical Technologies Ltd (SOTL), to help it emerge as a focused metals company. The aim is to be the largest domestic producer after its final de-bottlenecking and expansion to 1.50 lakh tonnes is completed.

Sterlite’s telecom arm largely makes jelly-filled telecommunication cables (JFTC), optical fibre cables (OFC) and optical fibre. However, optical fibre and cables are the real profit-drivers in the business. This means JFTC will account for a smaller portion of the overall revenue in the long term.

The optical fibre manufacturing capacity is being raised from 1 million kms to 5 million kms. With robust growth in global demand for fibres keeping prices at buoyant levels, sources said export is emerging as the mainstay of the business. There are expectations that sales abroad will account for over 40 per cent of the total turnover from the segment.

Earlier, its telecom business was spun off into a separate firm, and group company Madras Aluminium Company (MALCO) united with Sterlite, to create a leaner, non-ferrous mining and metals entity. The rejig was based on proposals which had been put forward by Arthur Andersen India.

The company says it intends to move up the telecom value-chain, instead of remaining a maker of optical fibres, optical fibre cables and jelly-filled cables.    


 
 
TAXMEN TOLD TO FERRET OUT MASSIVE DUES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 17: 
The government today has asked the income tax commissioners to step up efforts to recover unrealised tax demands worth a whopping Rs 51,000 crore.

Speaking at the All-India Conference of Chief Commissioners and Directors General of Income Tax, revenue minister G. N Ramachandran said the current 40.5 per cent growth in direct tax collections must be sustained to contain the budget deficit.

He said concerted efforts were required to tackle the rampant tax evasion and unhealthy tax avoidance. The department also must recover, to the maximum extent possible, the unrealised tax demands which amounted to a staggering Rs 51,000 crore at the end of August, Ramachandran said.

The government, he said, has already approved a ‘far-reaching’ scheme to restructure the income tax department to raise tax collections. Ramachandran said the number of tax payers has gone up substantially from 13 million in April 1998 to more than 22 million at present.

Ramachandran expressed concern that direct tax collection as a percentage of the gross domestic product (GDP) is only 3 per cent. Time-bound and concrete strategies need to be evolved to unearth people who enjoy taxable income but do not figure on the department’s records, he added.    


 
 
BILL READY TO ALLOW TRANSFER OF CIL MINES 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Nov 17: 
The government will introduce a legislation in Parliament next week that seeks to allow transfer of Coal India (CIL) mines to subsidiaries — an enabling condition seen as a prelude to these companies setting up joint ventures with private mining firms or offloading equity in the market.

At present, the state-owned monolith, Coal India, owns the mines and its subsidiaries, such as Eastern Coalfields.

Coal ministry officials confirmed they were busy giving finishing touches to the legislation which is supposed to be circulated within the government before Parliament reconvenes on Monday.

At the same time, a Parliamentary committee asked to vet a Bill — introduced earlier this year — aimed at throwing open the coal mining sector to private companies has approved it with minor changes.

Sources said the report is likely to be tabled in Parliament in this session and passed either now, or in the Budget session. Apparently, only the MPs of Left parties on the Parliamentary committee opposed the Bill while those of Congress and the BJP agreed with the main thrust of the legislation.

The Left is upset by the whole move, which, they say, is a sellout to private mining interests. CPM’s trade union wing has called for a three-day strike from November 20 to November 22. Though the protest was planned initially to press for higher allowances, CITU general secretary M. K. Pandhe said it will be used to build up resistance against the de-nationalisation efforts.

Analysts, however, say the twin measures can be expected to give a fillip to the economy of coal-rich eastern states. New and re-vitalised old mines could be expected to generate more jobs and spin off ancillary and downstream industries.

Till now, , the only private entities allowed to mine coal are power and steel companies, which do it for captive consumption.

Also, the government’s efforts to set up thermal power plants at coal pit heads will mean that many of these new mines will find buyers. But others will have to work out marketing strategies. This is where the better-managed nationalised coal companies could step in to forge marketing joint ventures, or even act as composite marketing agents for private mines.

But privatisation of the sector will also mean an end to the days when state electricity boards, Railways, steel plants and other government-owned bulk customers of coal could buy huge stocks and sit on payments for years on end.    


 
 
GOVT VOWS STEPS TO CHECK DUMPING FROM CHINA 
 
 
BY A STAFF REPORTER
 
Calcutta, Nov 17: 
India will take up the issue of dumping with the Chinese government, Union minister of state for commerce Omar Abdullah said today.

Abdullah, who met city industrialists and exporters during the day, said, “China has become synonymous with dumping complaints from the domestic industry.’’

However, he added that since China has already been accorded a ‘most favoured nation’ status, it was not possible to take measure specifically directed against it. Nevertheless, the Indian ambassador to Beijing would be asked to take up the issue with the Chinese government, the minister informed city-based engineering exporters today.

Addressing the award presentation function of the eastern regional wing of the Engineering Export Promotion Council and the Indian Chamber of Commerce, Abdullah said the commercial intelligence gathering system in Indian missions abroad would be strengthened to make the anti-dumping mechanism more effective. The commerce ministry has already held meetings with officials in Africa and west Asian regional mission heads to strengthen their economic information gathering network, he said.

Abdullah said that following a meeting with the Prime Minister earlier this week, the anti-dumping machinery within the commerce ministry will be strengthened to reduce the time frame for finalising anti-dumping measures to three months, from the present eight months. Usually, it takes a minimum of 60 days to complete the formalities, he noted.

Talking to newspersons here today, Abdullah said, “We are examining the extent of cheap imports from China and will soon devise ways to tackle it. The government will not allow the domestic industry to suffer.”

Abdullah was optimistic that the situation might improve once China becomes a full-fledged member of the World Trade Organisation. He added that non-tariff barriers such as compulsory quality markings and mentioning the ‘maximum retail price’ (MRP) for imported products would be introduced to curb cheap and spurious imports.    


 
 
BIG B CAST IN ICICI BRAND EMISSARY ROLE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 17: 
He is undoubtedly the greatest star to happen in a thousand years, the man with the Midas touch. Whether it is a small screen game show or a 70 mm mushy teenage musical, his mere presence has proved enough to set the cash registers on fire.

Especially after he and popular TV game show ‘Kaun Banega Crorepati’ happened to each other, the Big B’s popularity graph has hit dizzying heights.

Amitabh Bachchan — the biggest brand of all time — will now extend the magic of his name to promote ICICI Ltd and its four group companies.

And ICICI is hoping some of the magic rubs off on it. The financial institution, which is venturing into several areas, is clearly raising the stakes in the financial services sector. In fact, from a measly Rs 12 crore advertising budget for 1999-2000 to roping in the Big B himself as brand ambassador, ICICI has staged a neat coup of sorts.

“Bachchan’s universal appeal will help us to effectively communicate our brand message — that customers will find it safer, simpler and smarter to transact with ICICI — to a very diverse customer base comprising people from all sections,” officials said.

ICICI is understandably reluctant to spill the beans on how much it is shelling out to have its products endorsed by the famous baritone. However, industry sources say it could easily run into over Rs 10 crore. And with the superstar shining brighter thanks to his KBC halo, advertising circles say that will be a realistic sum.

Bachchan will endorse and promote the products and services offered by ICICI and its group companies for a period of two years.

This is the second occasion when Bachchan will play a brand ambassador. BPL, the consumer electronics major, had earlier signed him up for a two-year initial contract, for a consideration of Rs 6.5 crore. The investment paid off, for BPL was able to leverage his charisma to build itself into a national brand.

ICICI is also counting on the messiah of the masses to hardsell its products to his faithful flock. These include its Safety Bonds, ICICI Bank’s credit cards launched in January 2000 which has more than 90,000 customers already, home loans and car loans both of which have shown remarkable growth recently, insurance products — both life and general insurance policies — and ICICI’s e-trading venture.

At the signing ceremony, Bachchan said, “I look forward to the challenging task of communicating a financial brand message to the ICICI group’s diverse customer base of more than five million.”

ICICI aims to be the country’s leading financial services provider. And Bachchan’s mere presence is expected to provide further impetus “to the remarkable strides ICICI has taken in this sector in such a short time,” said Lalitha Gupte, joint managing director and COO, ICICI.

During his term as the brand ambassador, Bachchan will play a key role in all major brand and product communications by ICICI, endorsing the ICICI brand through corporate and product campaigns on television, print and outdoor media. Bachchan will also participate in select events such as new product launches and customer reward programmes.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.80	HK $1	Rs. 5.90*
UK £1	Rs. 66.63	SW Fr 1	Rs. 25.85*
Euro	Rs. 39.99	Sing $1	Rs. 26.45*
Yen 100	Rs. 42.99	Aus $1	Rs. 24.10*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4540	Gold Std (10 gm)4490
Gold 22 carat	Rs. 4285	Gold 22 carat	4155
Silver bar (Kg)	Rs. 7800	Silver (Kg)	7870
Silver portion	Rs. 7900	Silver portion	7875

Stock Indices

Sensex		3905.84		+3.94
BSE-100		2010.20		+4.77
S&P CNX Nifty	1236.00		+2.75
Calcutta	107.84		+0.35
Skindia GDR	NA		-	
   
 

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