Govt tries to broker peace at Maruti
Dalmia rules out hike in Gesco offer size
Grasim board clears software unit spinoff
ADRs of Reddy’s, HCL Tech cleared
IDBI staff wage revision delayed
Peerless severs links with 14 subsidiaries
Govt to review navratna PSUs
Chinese patent busters nick blade maker
CPT seeks greater say in Haldia
Foreign Exchange, Bullion, Stock Indices

New Delhi, Nov 29: 
The government has claimed it has brokered a formula for peace between embattled carmaker Maruti Udyog Ltd and the agitating unions by persuading the management to stop insisting that workers sign a good conduct undertaking while asking unions to drop their demand for higher incentives.

While issuing a statement in the Lok Sabha in response to a calling-attention motion here today, heavy industry minister Manohar Joshi ruled out the withdrawal of the termination or suspension orders against errant employees. He urged the unions to agree to “disciplinary action against workers for alleged misconduct.”

Joshi’s statement sparked off a verbal duel with opposition MPs who, with the exception of the Congress party, walked out in protest against the government’s “anti-worker” attitude.

The minister also admitted in Parliament that though Maruti management supported the peace formula, the unions had yet to accept it.

However, Mathew Abraham, general secretary of the Maruti Udyog Employees’ Union, said, “We are willing to join work if the management lets us enter without asking us to sign the good conduct undertaking. We will have to negotiate on all other issues including dismissals and the incentives scheme.”

Maruti’s output has been hit by labour unrest since September over workers’ demands for a higher productivity incentive. Less than a third of the over 4500 Maruti workforce are reporting for work.

As a punitive measure, Maruti Udyog had thrown out some 44 workers and 21 trainees and suspended another 10 workmen since the start of the agitation.

The carmaker, a 50:50 joint venture between Suzuki Motors of Japan and the Indian government, has taken an aggressive stance to resolve its labour trouble and had even asked workers to sign a “good conduct undertaking” that they would not take part in any agitation in the future before allowing them to come back to work. Labour leaders like former CPI MP Gurudas Dasgupta have termed Maruti’s stand as “illegal.”

“It is important that discipline in the factory is maintained and profitability of the enterprise is not impaired particularly in the face of fierce competition that exists today in the market,” Joshi said though he added that it was important that rights of workers were protected.

Joshi made it clear even though the workers would not be asked to sign the “good conduct” pact, the unions would have to promise on the workers’ behalf to abide by the company’s standing orders which, in effect imply, similar conditions.

He also said the unions would also have to accept the incentive scheme which the Maruti management was offering.

Joshi also condoled the deaths of two Maruti workers during the strike.

“The Maruti Unions had alleged high handedness on the part of the management had led to the two incidents while the management had claimed they had nothing to do with it,” he said.

The peace formula offered by the government comes after several hectic rounds of talks between the government and union representatives as well as between the government and Maruti Udyog. Left MPs and even Congress chief Sonia Gandhi had written to the government seeking an early end to the imbroglio.    

New Delhi, Nov 29: 
The A H Dalmia group, which has mounted a hostile bid for Gesco Corp, today denied they had plans to enlarge the size of their open offer from 45 per cent to 70 per cent.

The disclaimer comes in the wake of reports which suggested that they intend to bid for a larger slice of the equity.

“No decision has been taken, either on changing the size or the price of the open offer price for Gesco shares,” Abhishek Dalmia said.

A section of the press in which the reports to this effect appeared said the bigger offer would be made at a price lower than the one announced by the Sheth-Mahindra combine.

Abhishek swatted suggestions that the financial institutions were not ready to sell their Gesco stake to his company, Renaissance Estates. He said there was no intimation from institutions — which hold a combined stake of 12 per cent — about their unwillingness to part with their shares. At the same time, Abhishek conceded that his talks with them have not led to an outcome that could strengthen his position.

The report said a larger offer would give shareholders an assured exit route. The Sheth Mahindra combine hold 19 per cent stake in Gesco now while Dalmia controls 10.4 per cent.

The Sheth-Mahindra counter offer now stands at 44 after they snapped up International Finance Corporation’s (IFC) 6.34 stake at that price. They had made an initial counter-offer at a price of Rs 36 for a 33.5 per cent stake in Gesco.

The saga began on October 21, when the Dalmias made a hostile bid for Gesco by launching an open offer — which opened last Friday — at Rs 27 a share. They revised their offer price once, from Rs 23 to Rs 27, after the Gesco stock soared on bourses. Abhishek had indicated in the past that his group was in a position to raise the offer price if a revision was necessary.

Renaissance Estates had set aside Rs 70 crore to finance the acquisition when it made the hostile bid for Gesco Corp. For Sheth-M&M combine, it was HDFC chief Deepak Parekh who played a key role by bringing the two sides together and extending credit to help the Sheths see off the challenge.    

Mumbai, Nov 29: 
Grasim Industries Ltd, the flagship company of the A V Birla group, today decided to hive off its software division, Birla Consultancy Software Services (BCSS), as a going concern into a separate wholly-owned subsidiary company.

The business of Grasim’s software division, christened Birla Technologies Ltd (BTL), has been valued at Rs 29.4 crore as a going concern by Bansi S Mehta and Company.

It is proposed to be paid in the form of equity shares to Grasim. The paid-up capital of Birla Technologies will be Rs 9.8 crore, with a share premium of Rs 19.6 crore which will be held by Grasim.

The resolution, which was approved at a meeting of the Grasim board here today, is part of the restructuring process, aimed at enhancing shareholder value, through greater focus on its two main business segments — viscose staple fibre and cement.

The subsidiary company will focus exclusively on the information technology business to ensure long-term growth in the industry, Grasim added.

Birla Technologies will offer specialised end-to-end solutions in web technologies, e-business applications and e-learning. Its intent, the company said, is to be a niche player in key service sectors such as financial services, mobile and e-commerce and telecom.

Grasim will seek shareholder approval for transferring this business at an extraordinary general meeting to be held on January 6.

The turnover of the software division of Grasim was Rs 28 crore for the fiscal year 2000, with negligible profit.

All the strategic alliances that Grasim’s software division entered into will also be transferred to the proposed subsidiary. These include Lawson Software for business engines, for mobile solutions and Knowledge Mechanics for e-learning. Its technology partners, including Microsoft, IBM, Sun and Oracle, will move to the new subsidiary.

BCSS currently has offices in Mumbai, London and Dallas in the US and a major development centre. The company is now planning to grow through aggressive marketing, organic growth and strategic alliances.    

New Delhi, Nov 29: 
The Cabinet Committee on Economic Affairs (CCEA) today approved proposals from software major HCL Technologies and pharmaceutical giant Dr Reddy’s Labs to issue ADRs worth about $700 million.

While HCL Technologies has been allowed to issue ADRs worth $500 million, Dr Reddy’s was permitted to float ADRs worth $200 million. Parliamentary affairs minister Pramod Mahajan told reporters here today that the issue of HCL Technologies would be permissible only to non-resident and resident permanent employees of the company or its subsidiary company incorporated in India or outside.

Funds raised through the ADR route will be used by HCL Technologies to acquire companies worldwide or enter into joint ventures with overseas partners and set up software development centres in India and abroad. Business acquisitions through issue of ADR-linked stock options to alliance partners or customers would however not be permitted.

The minister said the conversion of rupee-denominated stock options into ADR-linked stock option will not be permissible for HCL. After the ADR issue, the foreign equity in the company should not exceed 49 per cent.

Dr Reddy’s Laboratories will use the ADRs to expand its activities and for research and development. The ADRs will be issued to persons resident outside India who shall include among others NRIs, overseas corporate bodies, foreign institutional investors, foreign venture capitalists and eligible foreign funds.

Mahajan also announced that the CCEA had approved the continuance of the scheme for investment in debentures of State Land Development Banks or State Cooperative Agriculture and Rural Development banks during the ninth plan. The programme has an outlay of Rs 595 crore.

CCEA has also approved the revised cost estimates for four laning of the Mumbai-Ahmedabad section of National Highway 8. The revised cost estimate of 253.47 as against the original sanction of Rs 115 crore was ascribed to “tender rates being higher than the sanction estimates”. The original sanction was accorded in June 1993.    

Mumbai, Nov 29: 
The board of Industrial Development Bank of India (IDBI) today deferred a decision on an across-the-board hike in salaries of its staff. Senior IDBI officials, while pointing out that the issue would be taken up later, said it could not be discussed as one of the board members was not present.

The board cleared few funding proposals, including a Rs 75 crore assistance to BPL Power. “There was a slight gap in funding for the company from the institution. This was cleared today,” the official added.

The board was expected to deliberate on the recommendations of the salary structure review committee. The committee was appointed following widespread discontent among IDBI staff regarding the differences in their salaries vis-a-vis rivals such as ICICI Ltd.

The All India IDBI Officers Association had pointed out that the differences was restricted not only to the general manager and senior general manager posts, but also at the chairman level. While IDBI chairman G.P. Gupta drew an annual salary of Rs 4.15 lakh, the gross package of K.V. Kamath of ICICI stood at over Rs 89 lakh. Similarly, while a senior general manager at ICICI drew a gross annual package of Rs 40 lakh, that at IDBI was around Rs 3 lakh.

Consequent to this appeal, a committee was appointed which recommended a 50-100 per cent hike in salaries across the board. The committee also recommended a performance-linked bonus and said salaries should be reviewed every year.    

Calcutta, Nov 29: 
Peerless General Finance & Investment Company (PGFICL) has snapped links with 14 of its 23 subsidiaries and associated companies, choosing to retain only four of them in an effort to shore up its feeble finances.

The largest residuary non-banking finance company (RNBC) with a deposit base of Rs 7,500 crore is scouting for buyers for two subsidiaries — Peerless Abasan, the housing finance arm, and Peerless Developers, its real estate development outfit.

Addressing a press conference here today after the company’s 67the annual general meeting, chairman D. N. Ghosh said only Peerless Hospital and Research Centre, Peerless Hotels, Peerless Securities and Bengal Peerless (in which PGFICL holds 49 per cent) will remain within the fold. Peerless Hospital broke even in 1999-2000 while Peerless Hotels turned in a net profit. Divestment of stake, wind-up proceedings and departure from the management were the methods used by Peerless to pull out of the 14 subsidiaries and associated companies.

Ghosh said his company has set a Rs 470-crore deposit-collection target this year, but indicated that poor mopup in the last two months may prevent it from achieving that goal. “There was hardly any collection in the last two months due to the turmoil in the company over the voluntary retirement scheme. The devastating floods also hit the collection drive.”

Of the 4,298 employees, 2762 (over 35 per cent) have opted for the VRS. This, Ghosh said, will save the company Rs 40 crore in salaries over three and a half years. “The task of accelerating the restructuring process and coping with the rigours of competition will become easier,” he added.

At the same time, the company intends to close down 60 of its 140 branches, and open extension counters and service centres. “We now need to hard sell our products,” he said.

Peerless managing director S. K. Roy said Rs 128 crore worth of non-performing assets have been recovered since April 1996. Decrees involving Rs 250 crore are being executed. The current level of NPAs are pegged at Rs 427.70 crore.

Most states which borrowed from the company have repaid their loans, which were as high as Rs 1,500 crore at one point of time. Assam, Haryana, Kerala, Andhra Pradesh and West Bengal have paid up while the Andhra Pradesh government has converted its Rs 400-crore loan into bonds.

The management, Ghosh said, is confident of a positive net worth by March 2003.    

New Delhi, Nov 29: 
Prompted by the poor performance of state-run majors, Steel Authority of India Ltd (SAIL) and Indian Petrochemicals Ltd (IPCL), the government has decided to review the navratna and mini-ratna status it has granted to a select group of public sector companies.

A note circulated for the cabinet on the issue points out that certain PSUs have turned complacent ever since they received this status which grants them a great deal of autonomy and a system of constant review has to be brought in to take care of this problem.

The Cabinet is likely to delegate the responsibility for this to heavy industries’ minister Manohar Joshi. “This way Joshi, who has for long been complaining that his powers are being pruned, will have some meaningful work,” an official invloved in drafting the note said.

Apparently, the Shiv Sena minister has been on the warpath against the BJP-led government for diluting his powers and conferring it to the newly-created department of disinvestment. The Prime Minister’s Office feels this will be a good way to keep Joshi happy.

The note says the minister, after consulting a committee of secretaries headed by the cabinet secretary, will strip any navratna of its status if he finds it has been a laggard in performance and has little hopes of tightening its belt and improving its state of affairs.

Besides SAIL and IPCL, there are seven top PSUs listed as navaratnas — Bharat Heavy Electricals Ltd (Bhel), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation Ltd (HPCL), Indian Oil Corporation (IOC), National Thermal Power Corporation (NTPC), Oil and Natural Gas Commission (ONGC) and Videsh Sanchar Nigam Ltd (VSNL). There are also 46 mini-ratnas. The note is harsh on SAIL singling it out for having posted losses for two years running.

SAIL had run up a loss of Rs 1,573.66 crore in 1998-99 and a loss of Rs 1,720 crore during 1999-2000 fiscal year despite a round of complicated book adjustments which wrote down assets and waived loans and interest payouts.

Without the financial adjustments, the steel behemoth would have closed the year with a loss of Rs 2,477 crore on a turnover of Rs 16,722 crore.    

Calcutta, Nov 29: 
Even as Indian manufacturers cry foul over the dumping of cheap substitutes by Chinese companies, the latter are now taking the battle to the international turf.

City-based razor blade maker Harbans Lal Malhotra and Sons, has been hit hard by Chinese manufacturers who had set up shop only to make spurious ‘Topaz’ and ‘Laser’ brand blades to cater to the international markets which the Malhotras had developed over the past few decades.

While the company saw its export earnings come down to Rs 19 crore in 1999-2000 from nearly Rs 25 crore in the previous year, there was no dearth either in the availability or demand of the group’s major brands.

Finally, the company appointed market intelligence agency China Trademark and Patent Law Office, which took up the issue with the officials of the Intellectual Property Branch of the Chinese Export Commodity Fair.

This resulted in legal action against 12 companies for infringement of the Topaz and Laser brands of razor blades. While the Laser trademarkisnowregistered in 54 countries, Topaz is registered in 43 countries.

Following a series of raids on the companies at an expo of Chinese products sponsored by the Chinese Export Commodities Fair at Guangzhou between October 14 and 24, the 12 shops which displayed the products were asked to withdraw the blades pending further action.

Not only were these brands being sold at much cheaper rates than the export price of the blades, but the Chinese companies use carbon steel as against the superior quality stainless steel used in the original blades.

According to Raman Khurana, director of Malhotra Global Eximp, the international trade outfit of the group, the company has already written to the Union government and the Engineering Export Promotion Council, to follow up the issue with the Chinese authorities.    

Calcutta, Nov 29: 
The Calcutta Port Trust has decided to seek the approval of the ministry of surface transport (MoST) to exercise its statutory powers under the Major Port Trust Act.

The CPT board, which met on Tuesday, has expressed anguish for not being consulted by the MoST while taking decisions and issuing orders on vital subjects concerning the Calcutta and Haldia ports.

The board, which also considered the Gopalan committee recommendations and agreed in principle to accept most of them, has alleged that four of the five orders issued by the MoST in September were not in line with the committee’s recommendations. The four orders relate to the release of dredging subsidy direct to Haldia Dock Complex, apportionment of pilots between Calcutta Dock System and HDC, allowing the deputy chairman of HDC to exercise full powers in regard to appointment and setting up of a ship calling committee at Haldia.

A CPT release said the Trust was not consulted by the MoST on equitable and rational apportionment of common expenses between the CDS and HDC, reflection of surplus earned by HDC in respective account, reduction of operation and maintenance expenditure in Haldia and setting up separate legal and design cells at HDC. “CPT has already implemented the recommendations of the Gopalan committee regarding the career progression of HDC officials,” it added.

The CPT board claimed that even the Gopalan committee, in its report submitted to the government in June 1995, concluded that “CDS and HDC were integral parts of the one parent body....” and that Haldia should not be delinked from the CPT....”

The board of trustees, led by the chairman, should be fully at liberty to deal with the revenue and expenditure relating to CDS and HDC in the way they consider appropriate in the best interest of the CPT, the release added.    


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