Sinha promises tax parity for insurance companies
Vijaya Bank looks for insurance partner
BASF acquires control of Pushpa Polymers
DCL, US firm in V-sat joint venture
Pizza majors toss up marketing recipes
Panel wants Trai armed with more powers
Exide to pick up stake in Chloride units
Ketan on Triumph board
Saregama tunes up growth plan
Foreign Exchange, Bullion, Stock Indices

 
 
SINHA PROMISES TAX PARITY FOR INSURANCE COMPANIES 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Nov 22: 
Union finance minister Yashwant Sinha today promised a uniform tax rate for private and state-owned insurance companies and predicted a burst of cash for investment in capital markets and infrastructure as a result of opening up the industry to the currents of competition.

“We have a committee working on tax rates. I would like to give an assurance of a level-playing field between private and public sector firms. Whatever the rates, it will apply to all,” Sinha told the Fifth Insurance Summit organised by the Confederation of Indian Industry (CII) here today.

The minister’s remarks assume significance at a time when Eradi Committee is expected to come out with its set of recommendations on ways to tax the life insurance business.

Earlier, Housing Development Finance Corporation (HDFC) managing director and chairman of CII’s Insurance Committee, Deepak Satwalekar, urged the government to set low tax rates for life insurance firms. He sought amendments in the Income Tax Act, which would benefit the insurer and the insured.

“With the new insurance companies setting up shop, a chunk of the funds will flow into the capital markets. Insurance and pension funds can enter infrastructure financing,” Sinha said.

According to him, one of the reasons why Indian stock markets were considered ‘thin’ was that there was not enough flow of public funds. “I am expecting that as you expand your business, funds will flow into the infrastructure sector on a scale that we have not seen in this country before,” he added.

Sinha sought to dispel the widely bandied theory that public sector insurance companies were ruffled by competition, saying GIC and LIC were prepared to see off the challenge posed by the new band of aggressive private sector adversaries. The government, he said, will ensure that they function as fully, autonomous board-managed entities.

The finance minister said there was a difference in opening up the insurance sector and the others in the economy. But he made it clear that private companies had not been allowed because the state-owned giants were faltering. On the contrary, LIC had recorded a consistent 40 per cent growth in its business, much of it from the rural areas. The government’s primary motive for the deregulation of insurance, Sinha said, was to create a social security net.

The reason the Centre wanted new companies to enter the sector after its deregulation was to mobilise rural savings. According to Sinha’s calculations, if this was done effectively, the share of the insurance business in the gross domestic product (GDP) will jump from 2 per cent at present to 5 per cent.    


 
 
VIJAYA BANK LOOKS FOR INSURANCE PARTNER 
 
 
BY A STAFF REPORTER
 
Calcutta, Nov 22: 
Vijaya Bank has been bitten by the insurance bug. The Bangalore-based bank, which recently took an in-principle decision to enter the insurance business, is presently scouting for a strategic partner for its foray.

Initially, the Vijaya Bank will market insurance products through its 841 branch network spread across the 28 states in the country.

“We are talking to a number of insurance companies to market their schemes through our network,” chairman and managing director S Gopalkrishnan told newspersons here today.

The bank’s board gave an in-principle approval to the proposal last Thursday, following which talks were initiated with some companies, Gopalkrishnan said today, after a formal briefing about the bank’s coming public issue to raise Rs 100 crore.

“We will soon submit the details to our board and then approach the Reserve Bank of India as well as the Insurance Regulatory and Development Authority for approvals,” he said.

The CMD said that Vijaya Bank was planning a strategic partnership scheme under which it would be free to market products of more than one insurance company. He said the bank was expecting a commission ranging between three and four per cent on such deals.

Commenting on the bank’s public issue of 10 crore equity shares, Gopalkrishnan said, “Our bank has a strong track record of making profits for the previous four consecutive financial years and a consistent reduction in non-performing assets. In fact, we could have easily charged a premium for the issue.’’

The issue will be open for public subscription from November 27 to December 4.

The bank’s gross profit rose to Rs 125.44 crore at the end of 1999-2000, against Rs 4.90 crore at the end of 1996-97.    


 
 
BASF ACQUIRES CONTROL OF PUSHPA POLYMERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 22: 
BASF AG, which has taken a majority stake in the Chatterjee group promoted Pushpa Polymers Pvt Ltd, has renamed the company as BASF Styrenics Pvt Ltd. BASF has assumed operational as well as management control of BASF Styrenics.

The European polystyrene major had, recently, formed a strategic alliance with the New York-based Chatterjee group for the manufacturing and sales of polystyrene in India.

“There exists a huge future potential of the Indian plastics market and styrenic polymers market in particular,” said Prasad Chandran, chairman and managing director of BASF India Ltd.

Addressing newspersons, Werner Praetorius, head of BASF’s styrenic polymers division said “With BASF Styrenics we will build up a strong and profitable position in one of the most important growth markets for polystyrene in Asia.” BASF BASF Styrenics has a capacity of 60,000 metric tonnes polystyrene in Dahej, Gujarat. However, BASF officials were not forthcoming with more details of the size of the investment and exact equity holding of the two partners.

The plant was shut down for the last two months. Reasons for the closure was not known and BASF officials were not willing to comment on this issue. The primary applications for polystyrene are packaging and disposable products, households appliances and housings for consumer electronics.

BASF has a worldwide capacity of 1.5 million metric tonnes polystyrene per year with world-scale plants in Europe, North and Latin America and Asia. The products range from rigid and transparent general purpose plastics to high impact-resistant grades that customers transform using injection moulding, extrusion and blow-moulding technology.

BASF AG sales in 1999 stood at $ 29.5 billion making it one of the largest petro-chemical company in the world having also interests in crop protection products and pharmaceuticals.    


 
 
DCL, US FIRM IN V-SAT JOINT VENTURE 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Nov 22: 
Development Consultants Ltd (DCL), the Rs 200 crore Calcutta-based project consultancy firm is diversifying into satellite communication business through a joint venture with a US-based company.

Confirming the move, DCL executive director Amitav Banerjee said the new business would be operated through its wholly-owned subsidiary Data-Core (India). Data-Core provides software consultancy.

Banerjee said the talks with the US company for the joint venture has reached a fairly matured level, only a few essentials are left to be addressed. Banerjee refused to divulge the name of the company which is headquartered in Sandiago.

The US company is likely to take up 49 per cent stake in the joint venture.

However, it could not be ascertained how much the US company would invest to take up the stake. Banerjee said the company would concentrate in V-sat-linked communication.

It will not venture into optic-fibre network due to the huge cost of such projects.

“We will source the technology from our US collaborator, which is one of the best companies listed on the Nasdaq,” he said.

Data-Core will work both as consultant and set up its own V-sat hub to lease out bandwidth to the users. It will also provide consultancy to clients who will set up captive V-sat hub.

The company has applied to the department of telecommunication for Ku Band licence. Banerjee said the investment, required for setting up earth stations would come initially from internal generation.

He said the major customers for such service would be government organisations, banks and corporates.    


 
 
PIZZA MAJORS TOSS UP MARKETING RECIPES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 22: 
What does it take to tickle tastebuds pampered by a phenomenal variety of cuisine, especially if they happen to be wary of change? For pizza chain outlets hoping to find favour with the Indian gourmet’s palate, the answer is indisputably a marketing blitzkrieg to draw the crowds.

With even the neighbourhood dhaba coming up with its own version of pizzas, carving out a separate identity for the brand and keeping the interest alive is the name of the game.

If it is direct mailers for Pizza Hut, it is a privilege card for regular customers of Pizza Pizza Express. At Rs 700 a year, the card entitles them to food and non alcoholic beverages at its outlets. Domino’s recently gave two pizzas for the price of one within five days of placing an order.

Pizza Hut is taking recourse to direct mailers for the first time. “Different markets need different strategies, this one seemed right for India,” said Batra. Obviously, Indian taste buds are yet to make a serious commitment to pizzas, notwithstanding the promotions galore.

Pizza Hut, which has 15 restaurants in nine Indian cities, has come up with a database of 75,000 thousand customers whom it will start sending direct mailers beginning December.

Pankaj Batra, senior marketing manager, Indian subcontinent, said the idea is to keep the customers abreast of the latest offerings and give them reasons to come back.

Wooing disparate taste buds also assumes different forms. While the Ahmedabad outlet of Pizza Hut is purely vegetarian, the one at Hyderabad does not use beef or pork    


 
 
PANEL WANTS TRAI ARMED WITH MORE POWERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 22: 
The Parliamentary committee on information technology has suggested empowering the Telecom Regulatory Authority of India (Trai) with penal powers to deal with defaulting service providers and make Trai responsible to the Parliament. It said the government had hastily promulgated the Trai Ordinance.

Somnath Chatterjee, chairman of the Standing Committee on IT (1999-2000), who presented the report on functioning of Trai to Lok Sabha today, said, “There was an unusual haste with which the Trai Amendment Ordinance was promulgated on January 24, even though Parliament was to meet soon in February for the budget session.”

The panel did not appreciate the fact that the ordinance was promulgated to make the private sector participation more vigorous. It concluded that the ordinance was issued without any justification.

Chatterjee said the committee was “disturbed” over limiting the powers of the Comptroller and Auditor General in matters of auditing some functions of Trai, like tariff setting and regulating revenue sharing.

“It means that the regulator would become non-accountable even to the Parliament. Such a manner of governance is against the spirit of the constitution and a retrograde step intended to weaken its very basis,” he said.    


 
 
EXIDE TO PICK UP STAKE IN CHLORIDE UNITS 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, Nov 22 : 
Exide Industries, the Rs 900 crore city-based battery maker, is planning to pick up a stake in the Singapore and Sri Lankan subsidiaries of Chloride Eastern, its Singapore-based parent company.

The move will provide a fillip to Exide Industries’ plan to emerge as a global player in automotive, industrial and solar battery businesses.

In a notice to the stock exchanges, the company said its board of directors will meet on Friday (November 24) to discuss the possibility of “acquiring a shareholding in two lead acid storage battery companies currently operating out of Singapore and Sri Lanka.”

Industry mavens said the two companies were Chloride Batteries South East Asia Pte Ltd and Associated Battery Manufacturers (Ceylon) Ltd of Sri Lanka.

Exide officials, however, refused to name the companies or specify the stake that the company intended to pick up in the two companies on the ground that the issue was “price sensitive’’.

If it goes through, the deal will help Exide gain access to a number of battery brands such Chloride, Dynex, and Jupiter. The arrangement could also give Exide access to Lucas automotive and motor-cycle battery brands which are marketed by Associated Battery of Sri Lanka.

Last April, Exide had decided to try and leverage its association with the Rajan Raheja-owned Chloride Battery South East Asia to route its batteries into the international markets. Exide, whose exports were confined largely to Russia, and West Asia until then, was hoping to capture a slice of the market in the US, Europe, Australia, New Zealand and China.

The present deal will further cement that association.

EIL is not only India’s largest automotive battery manufacturer but also holds the pre-eminent position as a maker of industrial batteries. Exide has eight factories in India and is putting up a ninth plant at Bawal in Haryana. It has already invested about Rs 80 crore to beef up its existing facilities. The company is expanding battery capacity at its Hosur plant from 450 million ampere-hours (Ah) to 550 million Ah in the next four months.The plant will focus on rechargeable lead acid batteries for which it has teamed up with Shin-Kobe and Furukawa Battery Co. Ltd. The plant will also produce batteries for electric car applications.

The Sri Lankan battery company’s factory at Ratmalana has recently been modernised with the installation of a Sri Lanka Rs 4 crore mill to produce 14 tonnes of lead oxide per day. But its domestic market share has come down from 80 per cent to 60 per cent after the import duty was reduced from 50 per cent to 20 per cent in 1996.    


 
 
KETAN ON TRIUMPH BOARD 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 22: 
Ketan Parekh, the Big Bull on the bourses, has joined the board of Triumph International Finance India Ltd, a company listed on the Bombay Stock Exchange.

Triumph is believed to be the first listed company that has inducted Ketan Parekh into its board of directors.

Recently, the company earned its spurs as a big shot merchant banker and broking firm having lead managed several Bollywood firms like filmstar Jeetendra-owned Balaji Telefilms that were coming out with public issues.

Triumph International also bagged a high profile client — ABC Limited, Amitabh Bachchan’s corporate venture.

It is in the process of finalising a restructuring package to revive ABCL’s fortunes. Triumph is expected to pump in funds and provide professional guidance to turnaround the ailing company.

It also played a key role in catalysing the merger of Balaji Telefims and Nine Network Ltd, the joint venture promoted by Himachal Futuristic Communications Ltd (HFCL) and Australian media tycoon Kerry Packer.

In fact, Triumph International is known in the stock markets as an affiliate of the Ketan Parekh group. Thus, the news of the big bull/one man army joining the board of the merchant banking outfit has not surprised broking circles.

By virtue of his bulge bracket operations in the stock markets, Parekh has earned several sobriquets, the latest being King Panther.

The Bombay Stock Exchange was informed today by Triumph International that its board met on November 18 to approve the issue of 25 lakh shares on a preferential basis.

The board also decided that the company would be jointly controlled by by Ketan Parekh and Kartik Parekh.

In the last fiscal, Triumph International earned a profit of Rs 19.3 crore against Rs 2.5 crore in the previous year.

The securities brokerage operations continues to be the core business where business income accounted for Rs 35.04 crore.    


 
 
SAREGAMA TUNES UP GROWTH PLAN 
 
 
FROM VIVEK NAIR
 
Mumbai, Nov 22: 
RPG group company Saregama India (Gramophone Company of India) has drawn up a multi-pronged sales-promotion strategy that focuses on increasing catalogue sales, providing content to new FM stations and leveraging its hamaracd.com and saregama.com portals.

In addition, the company is toying with the idea of merging its two overseas outfits, Saregama plc and RPG Global Music. While the stock markets are agog with reports about a fresh Saregama plc listing, the company made it clear that no such move is planned in the immediate future.

The parent’s holding 70 per cent in Saregama plc is pegged around 70 per cent, while it is 100 per cent in RPG Global Music.

Senior company officials told analysts here on Tuesday that catalogue sales — the kind where music is slotted into different genres — are expected to grow by more than 15 per cent in the current financial year.

The focus, though, will be on brand building to bolster sales. To achieve that goal, the company intends to use its vast library and come out with specific moods/titles to rev up sales.

The other area of opportunity is presented by the new private FM stations expected to go on air after the government allowed private companies into this highly popular segment of broadcasting. It will utilise its large repertoire of music rights to produce its own set of programmes, which will then be offered to the FM stations in a strategy the company expects will do wonders for its topline growth. A separate division has already been formed within the company to explore the opportunities in this area.

Officials were also upbeat on the response to hamaracd.com, its portal which enables music aficionados to build their own customised compact discs (CDs). The site allows one to listen to selected songs and then choose favourites. The facility is available for a fee of around Rs 375 per customised CD.

In the current year, the company racked up robust sales from its Mohabbatein, the chartbuster of the season. Saregama spent Rs 7.5 crore for the acquisition of the film’s music rights, and Rs 2.5 crore on its promos. It sold 35 lakh audio cassettes, 2 lakh less than the break-even level.

According to company sources, Mohabbatein producer Yash Chopra would share the revenues in a 50:50 ratio if audio cassette sales surpassed the 50-lakh mark under a deal reached earlier.

It is now looking forward to good sales from the forthcoming A R Rehman musical, One Two Ka Four.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.82	HK $1	Rs. 5.95*
UK £1	Rs. 66.45	SW Fr 1	Rs. 25.70*
Euro	Rs. 39.59	Sing $1	Rs. 26.35*
Yen 100	Rs. 42.70	Aus $1	Rs. 23.55*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4560	Gold Std(10 gm)	Rs. 4490
Gold 22 carat	Rs. 4305	Gold 22 carat	Rs. 4155
Silver bar (Kg)	Rs. 7725	Silver (Kg)	Rs. 7820
Silver portion	Rs. 7825	Silver portion	Rs. 7825

Stock Indices

Sensex		3862.39		-62.31
BSE-100		1994.59		-34.45
S&P CNX Nifty	1222.35		-12.65
Calcutta	107.77		-0.52
Skindia GDR	599.30		+8.06
   
 

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