Slipup in selloff target likely, mode of divestment blamed
Bumpy roads slow reforms
5 vie for stake in L&T Cement
Re at new low, sensex up 101
Basic firms may get okay for WLL telephony
Grasim to hive off software wing
Many dark horses in ONGC race
Foreign Exchange, Bullion, Stock Indices

New Delhi, Nov 27: 
The government is unlikely to meet the disinvestment target set for the current financial year because strategic sale, rather than sale of shares in the open market, was the preferred method that takes longer to be completed.

Pradip Baijal, secretary in the ministry of disinvestment, said this while addressing the India Economic Summit 2000 organised by the Confederation of Indian Industry(CII) in association with the World Economic Forum (WEF) here today.

“We will do badly this year in terms of the Rs 10,000 crore target set for disinvestment,” he said. Baijal urged business not to read too much into the fact that the budgetary target for selloff in public sector companies are not achieved.

These figures, he said, do not reflect accurately the co-relation between the procedures adopted by the disinvestment ministry, and the actual performance at the close of a year. He said a larger amount could be expected from privatisation next year.

“The budget had to have figures. It is disinvestment which is more important than the targets. Any haste in the process is likely to spell disaster for economic reforms,” Baijal added.

He said profit or loss has never been the prime issue when it came to disinvesting.

The objective is to change the complexion of public sector management. He sought to make a distinction between ownership and transfer of management.

Baijal said the government is in discussions with Suzuki Motors for the divestment in Maruti Udyog. The committee of secretaries set up to suggest ways for the selloff will submit a initial report within the 15 days it has been given for the job.

The privatisation process in Air-India and Indian Airlines is in the final stage, while the selloff in Indian Petrochemicals Corporation (IPCL) will be wrapped up before the end of the financial year despite reservations expressed by the petrochemicals ministry, Baijal said. The number of companies slotted for selloff will be increased next year from the 30 that were identified in the current fiscal.

Baijal had to reckon with several sceptics. Many, like WEF managing director Claude Smajda, felt disinvestment was synonymous with delay in India. “Ministries cling to PSUs or gang up with unions to stall disinvestment,” he lamented.

ADR fungibility

The New York Stock Exchange today said it was talking to Reserve Bank of India to allow conversion of American Depository Receipts listed on its floor into shares which could be traded on Indian bourses.

“We held talks with the Reserve Bank for a regulatory framework in which the fungibility of ADRs could be achieved in a manner,” NYSE group executive vice-president Georges Ugezax said on the sidelines of the India Economic Summit.    

Mumbai, Nov 27: 
If it was Rahul Bajaj yesterday, it was Claude Smadja today at the World Economic Forum. And both were competing for the title of “baddest guy for the government.”

The managing director of the World Economic Forum in his traditional briefing on the Indian economy today found little that was right with the Centre in implementing the reform package.

Smadja said India’s fiscal deficit was still large. The target of keeping the deficit within 5.1 per cent of the GDP was unlikely to be met. Combined with the states’ fiscal deficit, the gap was likely to be at around 11-12 per cent of GDP. On the revenue side, Smadja said there the government was retreating on subsidies whenever “anti-reformist” forces confronted it. The rollback in the prices of kerosene and LPG would burn a hole in the budget that will be impossible to manage.

In infrastructure, the only bright spot was telecom where the government was pushing ahead with reforms. Roads were still bad. “It still takes eight days for a truck to go from New Delhi to Mumbai. It still takes three to four days for a ship to turn around in Mumbai port compared with Malaysia where it takes less than a day,” Smadja said.

Reviewing the record of the government in the last 12 months, Smadja said there were positive pronouncements but the slow pace of reform will mean that India will not be able to achieve the 8-9 per cent GDP growth per year in the next decade — a target set by the Prime Minister.

He said the government must now consciously move from “disinvestment” to “privatisation”. So far privatisation was still considered taboo within the government. “It has been a history of failures and, in the last nine years, only a total of $ 4 billion has been raised through the disinvestment process,” he said.    

Mumbai, Nov 27: 
Five leading players from the cement industry, including three MNCs and two domestic cement majors, are keen on picking up a stake in the 14-million tonne L&T Cement (LTCL), a subsidiary of Larsen & Toubro.

What has raised eyebrows however, is the presence of two Indian cement companies among the bidders. There is speculation in the industry that the A V Birla group flagship, Grasim Industries, and India Cements, the south-based cement major, are the ones who have thrown their hats in the ring.

The question on everybody’s mind is — Do they stand a chance? Especially, when they are pitted against several global majors who are racing against each other to get a stake in the engineering and construction giant’s cement subsidiary.

The buzz in the market suggests that L&T has kept channels open for communication with several cement players through its merchant bankers, including French giant Lafarge and Mexico’s Cemex. However, Holderbank, the Dutch cement firm with a global presence, is believed to be ahead of the pack.

However, L&T. A M Naik managing director denies a deal is close. “It is not expected to be finalised before March,” he said. However, he conceded that five companies, including two from within the country, were in the fray.

According to industry circles, Grasim and India cements will look at L&T Cement because of the capacity it offers. Even picking up 25 per cent will give them the ability to produce more, apart from the economies of scale in marketing and manufacturing.

After Gujarat Ambuja bought less than 15 per cent in ACC from the Tatas, analysts say a deal that gives the two hopefuls even 25 per cent looks like a profitable proposition. As a bonus, it will slam the doors on foreign majors.

An equity alliance with L&T Cement will help a company take on Gujarat Ambuja Cements, whose capacity has increased to 24 million tonnes after it picked up a stake in ACC.

L&T first announced it would spin off its cement business into a separate company, in which a strategic investor would hold 25 per cent. The company had said it will finalise the selection process and ways of due diligence by the acquirer.

The deal is about to be sealed at a time when the industry is crawling out of a long slump. The recent price spurt is seen as an indication of this.

Cement manufacturers led by ACC have raised Mumbai prices by Rs 10 per bag to around Rs 150.    

Mumbai, Nov 27: 
The Bombay Stock Exchange (BSE) sensex raced 100.86 points to 3969.20 as a result of brisk institutional buying on a day when strong month-end demand for dollars sent the rupee sliding to 46.87/88, its lowest close ever. The rupee opened at 43.83/85 and declined rapidly as overseas debt payments and imports for major oil companies led to a spurt in dollar demand. It had plumbed a record closing low of 46.85/87 on October 31, but had tested a historic trough of 46.91/93 in nitre-day deals on October 30. Today’s finish represents a four-paise decline over Friday’s close of 46.83/84.

On Dalal Street, operators and institutional investors were buoyed by reports that Republican George W Bush — a Wall Street favourite — had won Florida’s 25 electoral college votes and was, therefore, headed for the White House.

According to dealers, speculators were cautious, hesitant to commit themselves into new deals because they fear a welter of lawsuits from Democratic Party rival, Al Gore, which could cast another veil of uncertainty over the Presidential ballot.

The highlight of the day was the smart gains notched up by the PSU telecom majors, VSNL and MTNL. VSNL gained 9.4 per cent while MTNL was stronger 7 per cent at the close.

The gains were seen across the board — 29 of the 30 sensex shares ended in positive territory. The buoyancy in the market was spread evenly, from new to old economy shares. The 30-scrip index opened stronger at 3,930.96 compared with last Friday’s finish of 3,868.34. It fluctuated in a range of 3972.48 to 3902.10 for the best part of the day before closing at 3969.20, logging a handsome gain of 100.86 points or 2.61 per cent.

Heavy buying in old-economy counters such as Larsen & Toubro, ACC, Castrol, Grasim, MTNL, State Bank, Gujarat Ambuja and tech stocks like Infosys and Satyam was seen in the last minutes of the session. Cement stocks, especially L&T, also notched up good volumes.

After getting battered for days, the 149-point gain in the Nasdaq Composite Index on Friday, and gains on the Hong Kong and Tokyo stock markets earlier in the day, boosted the sentiment.

Breaking a long lull, foreign institutional investors (FIIs) made selective purchases across the board while local institutions and funds were buyers in old-economy stocks.

Sebi will allow FIIs to complete the transaction for their clients before registering them. “FIIs can go ahead with clients’ orders, and complete their registrations in a day or two,” executive director O P Gherotra told reporters after a meeting with representatives of FIIs and custodians here today. He said the simplification covers new and existing clients. When FIIs want to open a second account for an existing customer, it will have to be done with the same custodian.    

New Delhi, Nov 27: 
The government is in favour of permitting private sector basic and long distance operators to sell wireless in local loop(WLL)-based cell phones to customers.

N.K.Singh, secretary in the Prime Minister’s Office today said on the sidelines of a seminar here, “Both of them will be allowed to give WLL cellphones to help them connect up with their subscribers.”

The statement is significant as a battle royale is currently raging between cell-phone companies and basic or fixed line telephone companies over this issue before the TRAI.

Cellphone operators naturally resent attempts by fixed line phone companies to muscle into their market by selling WLL cell phones.

While basic phone companies say they need this service to connect up subscribers who don’t wish to or can’t otherwise use state-run telephone lines.

Their point is that WLL phones have limited range and for local use only. Cell operators, on the other hand, say that this is a backdoor entry into a market where they gained a foothold by either paying high fees and/or by agreeing to share a high percentage of their revenues with the government.

Singh, however, made it clear that though government favoured this, it will be TRAI which will set the tariff rates and the entry fees if any. “That’s their job absolutely,” he said.    

Mumbai, Nov 27: 
The A. V. Birla group flagship Grasim Industries Ltd is hiving off Birla Consultancy and Software Services (BCSS) into a separate company.

BCSS is Grasim’s software division and it could signal the group’s increased thrust in the knowledge-based industry where software has been identified as a major area.

Grasim informed the stock exchanges that its board will be meeting on Wednesday to consider the issue.

BCSS provides both onsite and offshore software consulting and outsourcing services to organisations in the developed markets. As of March 2000, the division contributed less than 11 per cent of its turnover of Rs 4,273 crore.

The Grasim scrip today soared on the bourses and closed at Rs 248.55 after opening at Rs 237 and rising to an intra-day high of Rs 251.10. The counter witnessed 6,572 trades with a total turnover of Rs 20.46 crore.

Market circles, however, said the rise in the scrip was part of the overall bullishness in cement stocks witnessed in recent times. Cement contributes to over 31 per cent of the company’s revenues.

In January, the Lawson Competency Centre was set up as a division of BCSS following a tieup with the US-based company. The centre markets a range of e-business applications and e-business advanced technology for business-to-consumer and business-to-business solutions.

The other services offered by BCSS include software development, large and medium size software developments in manufacturing, finance, telecom using client server architecture and multimedia.

The division is also into multimedia applications, web/Intranet solutions, devising web strategy, application solutions and module design.

BCSS has a team of over 200 software professionals of which 150 of them specialise in client-server.

Within BCSS, the tieup with Lawson was part of the group’s thrust in the services sector. This was part of an effort to focus on knowledge-based industry. The other areas targeted by the group includes financial services and retail brands.

Lawson, which is headquartered in the US, posted a turnover in excess of $ 270 million. Its client list include Fortune 500 companies such as McDonald’s, Warner Brothers, British Gas, Ralph Lauren Inc and Johnson & Johnson.

Grasim had then announced that the competency centre would also provide support services to the Lawson’s subsidiaries, affiliates and customers initially Asia Pacific, with plans to extend globally within their areas of cooperation.

Under the agreement, BCSS will deliver to Lawson various other applications which included e-procurement, e-supply chain, e-human resource and e-customer relationship management.

Following the tieup, Ashok Sand was named as the CEO of BCSS. Since then, Sand has been overseeing the operations of Lawson Products Competency Centre.    

New Delhi, Nov 27: 
The final list of candidates to be interviewed for the post of chairman and managing director of Oil and Natural Gas Corporation (ONGC) may spring a few surprises.

The present incumbent B.C. Bora’s tenure will end in mid-April next year.

According to official sources, Najib Jung, a former joint secretary in the ministry of petroleum and natural gas who quit IAS after a stint with the Asian Development Bank, is likely to appear for the interview. Jung is now in London, working on a research project related to the gas sector.

He was with the ministry in mid-nineties, in charge of the upstream sector and negotiated the sale of proven oil and gas fields such as Panna, Mukta and Tapti. Jung was not popular with senior executives of public sector oil and gas companies as he was perceived to be arrogant.

However, he is a mellowed man these days. His job at ADB, and his international exposure, appear to have brought about the change. He no longer appears to be an admirer of the IAS and the Indian bureaucracy.

In the capital a couple of months ago, Jung has strong views on the ills that plague the oil sector. S. N. Mathur of IBP and Subir Raha of Indian Oil were considered at one stage, but it is unclear if they will be called for the interview now.

Their expertise, essentially in the downstream sector, could help them. The candidates from within the ONGC are, I. N. Chatterjee, director (finance), Atul Chandra, CMD, ONGC-Videsh, who is also a director on the board of ONGC, R. C. Gourah, director (technical) and Jauri Lal, director (personnel). Avinash Chandra, the head of the Directorate of Hydrocarbons, is also likely to be interviewed.

Investment plan

ONGC today announced an investment of up to Rs 4,000 crore for exploration of crude by March 2002 and said that it would also invest close to two billion dollars for reviving its Mumbai high oil fields, reports PTI. “Exploration is high on our agenda and we will invest Rs 2,000 crore each in the current and next fiscal,” ONGC chief Bikash C Bora told reporters at the end of the three-day Conference on Exploration in the Afro Asian Region.

Tieup with Reliance

ONGC and Reliance have joined hands with Algeria’s Sonatrach to secure an oil field in Iraq for production of crude.

ONGC’s overseas subsidiary ONGC Videsh (OVL) has sought to form a joint venture with other two partners for production of crude from Tuba oil field in case it got all necessary clearances from the government in the wake of UN sanctions against Iraq.

OVL and Reliance would hold 30 per cent each in the project while Sonatrach would take the remaining 40 per cent in the project, OVL managing director Atul Chandra said.

When contacted, a Reliance spokesman declined to comment on the issue.    


Foreign Exchange

US $1	Rs. 46.88	HK $1	Rs. 5.95*
UK £1	Rs. 65.86	SW Fr 1	Rs. 25.65*
Euro	Rs. 39.38	Sing $1	Rs. 26.30*
Yen 100	Rs. 42.10	Aus $1	Rs. 24.05*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4540	Gold Std(10 gm)	Rs. 4480
Gold 22 carat	Rs. 4285	Gold 22 carat	Rs. 4145
Silver bar (Kg)	Rs. 7725	Silver (Kg)              Rs. 7790
Silver portion	Rs. 7825	Silver portion	Rs. 7795

Stock Indices

Sensex	 	3969.20		+100.86
BSE-100         2068.88		+64.32
S&P CNX Nifty	1252.90		+27.70
Calcutta	110.16		+2.44
Skindia GDR	588.72		+3.77

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