Row over appointment of telecom advisors
SmithKline hare spurts on rumours of merger
Fiscal Responsibility Bill on way to Parliament
Tatas set to merge Jamshedpur Power
Videocon mulls twin plans for Bengal
M&M in alliance talks with Ford for Balero export
Visions of rural Eldorado
Tax relief on housing loan interest sought
Foreign Exchange, Bullion, Stock Indices

New Delhi, Dec 6: 
The plan to have four cellular operators in a circle has run into problems.

The department of telecommunications (DoT) has won the Telecom Commission’s approval to appoint SBI Caps and ICICI as the consultants which will draw up the road map to allow the fourth operator, but questions have been raised about the fact that the two agencies were appointed without open bidding.

Currently, there are two operators in 22 cellular circles. They were selected through an open bidding process in 1994-95. However, the National Telecom Policy, 1999 decided to allow two more operators to offer services in all the 22 circles.

One of the operators will be chosen from among the two state-owned companies — Mahanagar Telephone Nigam Limited (MTNL) or Bharat Sanchar Nigam Limited (BSNL). The fourth operator is to be inducted through a bidding process.

DoT officials claim that a decision to appoint a consultant was taken after the Telecom Regulatory Authority of India (Trai) recommended that the fourth cellular operator be selected through a ‘multi-stage informed ascending bidding process.’

“DoT has enough experience in the bidding process, but this is the first time that a new methodology will be adopted. So we decided to hire a consultant. They are supposed to help finalise the bid document and modalities for pre-qualification, short listing of bidders and the method of awarding the licence,” sources in the communications ministry said. “However, we have taken a decision to keep the consultants out of the bid-evaluation process,” the sources said.

There are indications that the Telecom Commission was itself a divided house when it decided to clear DoT’s move to hire consultants without going through the bidding process.

“The only justification given for the proposal to appoint the consultants right away is a shortage of support staff in DoT’s value-added services division.

There is no word, however, on the quantum of the shortage and the categories of the staff required,” a Telecom Commission member has observed in one of its annexes.

“In view of the facts stated above, I would suggest that the value-added services branch draw up a schedule of key activities to be undertaken. This should be accompanied by broad estimates about the cost and time required for the job, with and without taking external help,” the member said.

DoT has not only appointed a consultant without an open bid, it is yet to finalise the terms and conditions under which they will work. There are indications that these are likely to be crystallised after talks with SBI Caps and ICICI.

“It was decided after discussions that a consortium of ICICI and SBI-Caps can be retained. The terms and conditions should be finalised through mutual negotiations to save time,” a Telecom Commission note says.

“ICICI has being working on cellular projects for some time. It has invested significant amounts in telecom services, including cellular projects. In addition to that, it carried out a quick appraisal of cellular projects and submitted its report in June 1999,” the note added.

However, there were others, such as the Industrial Development Bank of India, and several private consultants, which have offered advised DoT on several projects taken up by DoT.

ICICI had undertaken the (quick appraisal) project to examine the viability of cellular projects and to determine whether they needed assistance from the government.

While ICICI had favoured financial assistance, dissatisfied with the recommendation, the government had asked Bureau of Industrial Cost and Prices (BICP) to re-examine the cellular projects. The bureau found it to be not only viable, but profitable as well.


Mumbai, Dec 6: 
The Bangalore-based SmithKline Pharma (India) Limited was in the limelight today in the stock markets following expectations of an impending merger with Glaxo India Limited.

As a result of the rumour, the scrip closed higher at Rs 193.80 after opening at Rs 178.35. It had touched an intra-day high of Rs 202. Thus the scrip flared up more than 10 per cent as compared to the previous close of Rs 174.6. SmithKline Pharma counter today witnessed over 4.38 lakh shares traded with a total turnover of Rs 8.50 crore.

While senior Glaxo officials said that there was no move at present to bring about the merger of both these companies, market circles expect some definitive moves towards such a process in the medium term.

Earlier this year, the parents of both these companies decided to merge into Glaxo, thus creating one of the world’s top pharmaceutical giant. However, in India, the process is expected to take off only after the completion of such a global merger.

SmithKline Beecham Pharma has a sizeable presence in the vaccine segment due to both Hepatitis-B (Energix B) and Hepatitis-A (Havirix) vaccines. Some time back, the company introduced Varilrix, a chicken pox vaccine.

Apart from the vaccine segment, the company has also got a significant presence in the OTC sector through Iodex. In the pharmaceutical segment, the major brands include Zevit (multi-vitamin), Zentel (deworming), Sefol-Z (used in pregnancy) and a high-end antibiotic Augmentin. In fact, eight brands including Varilrix, Engerix-B, Augmentin, Timentin, Bactroban, Zentel, Zevit and Sefol-Z accounts for over 70 per cent of SmithKline Pharma’s total sales.

Zinetac (gastroenterologicals) is a key product of Glaxo include. The other products include, Betnovate, Flutivate and Tenovate — a range of anti-inflammatory steroid products that are used to treat skin problems like eczema and psoriasis, the topical antibiotic preparations are T-bact and systemic anti-fungal preparation like Grisovin-FP in dermatologicals.


New Delhi, Dec 6: 
The Cabinet has approved the Fiscal Responsibility and Budget Management Bill 2000. The Bill is likely to be in Parliament.

The Bill will seek to effect a 10 per cent statutory cut on government expenditure and borrowing annually from the next financial year besides bringing down revenue deficit to zero level in three years.

The Cabinet has also decided that the report of the committee on Fiscal Responsibility Legislation would be placed in the House while introducing the Bill.

Union minister for parliamentary affairs, Pramod Mahajan, told reporters that the Bill, which contains several clauses, has been framed on the basis of the suggestions given in the report.

The government would like to have a wide-ranging debate before it is passed. Official sources said the Bill would seek to provide for setting up a high-power body headed by the Union finance minister Yashwant Sinha to control and monitor steps to curb expenditure and borrowing by both central and state governments.

The eight-member body, comprising experts in public administration, corporate sector and finance, would have overriding powers to monitor borrowings both from domestic and multilateral agencies, the sources said.

The Cabinet has also approved the rolling back of the retirement age from 60 to 58 years in Hindustan Steel Works Construction Ltd. Mahajan said the decision would help the company save Rs 28 crore in six years. Following this, 157 employees will retire, effecting a savings of Rs 2 crore in 2000-2001.

The Cabinet last night also approved the upward revision of rates of pension admissible to the non-official chairman and members of the Union Public Service Commission. The revision will come into effect from March 26, 1996.

He said the Cabinet also approved the resolution to be moved by the Union railway minister in Parliament for accepting the recommendations of the Railway Convention Committee’s first report.

A group of ministers headed by Sinha has been set up to deal with the problem of recurring drought across the country, said the parliamentary affairs minister.

Besides Sinha, it would comprise Union agriculture minister Nitish Kumar, rural development minister M Venkaiah Naidu, food minister Shanta Kumar, water resources minister Arjun Sethi and deputy chairman of Planning Commission K C Pant, said Mahajan.


Mumbai, Dec 6: 
The board of Tata Power Co will meet to consider a proposal to merge its wholly-owned subsidiary, Jamshedpur Power Co, with itself.

In a notice sent to the exchanges today, Tata Power informed that its board of directors would meet on December 14, to approve the merger.

Jamshedpur Power Co comprises Tisco’s plant which it acquired from the latter and the captive power unit of ACC at Wadi. It also operates ACC’s plants at Jamul and Kymore.

Tata Power operates as a bulk power licensee in Mumbai and it has hydel plants at Bhira, Bhivpuri and Khopoli and a thermal plant at Trombay with a capacity of over 1,788 mw.

The company would invest in independent power projects, captive plants and modernisation of its existing units. It has also unveiled plans to set up a 240 mw thermal plant at Jojobera, a diesel power plant at Belgaum and Wadi.

Earlier, Tata Power outlined capital investment plans for the next three years, which included Rs 2,830 crore worth of projects that were under execution and investment of over Rs 1,900 crore.


Calcutta, Dec. 6: 
The Dhoots of Videocon have commissioned a series of market and techno-economic studies to see if they can set up consumer electronics units in Durgapur and Siliguri. The studies expected to be completed by March, will help the company decide whether it can invest in Bengal in the next financial year.

In an exclusive interview with The Telegraph, Pradip Kumar Dhoot, president of the Rs 4,000-crore Videocon group, said: “I have brought in my team from Mumbai, which is conducting the study. Once it is finished, we will submit concrete proposals to the West Bengal government.”

Videocon has decided to raise the capacity of the Salt Lake unit it purchased from Philips India for Rs 9.6 crore. The company plans to use it as the group’s export base for shipments to Europe and Bangladesh.

The factory, with 210 employees on its rolls, manufactures 15,000 television sets every month. The unit will soon start manufacturing refrigerators, washing machines and air-conditioners. The infrastructure of Bengal, he said, is better than its reputation, and not as poor as it is often made out to be.

“It is better compared with many states in the country. I have come to know that the infrastructure in Siliguri and Durgapur is fairly impressive. So, I will not hesitate to invest in these areas if the group makes up its mind to do so,” Dhoot added.

Regarding Videocon’s foreign operations, Dhoot said they have set up a unit in Milan, Italy. “We will be setting up a plant in Bahrain within a year’s time. We also have plans to go to countries such as Thailand and Indonesia.”

Videocon, which has seven plants in the country, enjoys a 35 per cent marketshare in consumer electronics, which contributes an overwhelming 75 per cent to the group’s turnover.

It will start a computer-aided designing engineering training centre in Calcutta from April 1.

“We have already booked 8,000 square feet of space at Hazra. Pro-e of Japan, a specialist in this field, will train the students. We will place 60 students every year in the US and Europe,” Dhoot said.


Mumbai, Dec 6: 
Mahindra & Mahindra (M&M) is in negotiations with Ford Motor Company to forge an alliance for the export of Bolero, its upper-end range of multi-utility vehicles.

“We are in talks with Ford for the export of Bolero,” Anand Mahindra, the managing director of M&M, said here today. However, he made it clear that exports will start after some time because the company is working to meet local demand first.

Mahindra was speaking on the sidelines of a press conference organised to announce the launch of Designercars, a new range of custom-developed cars for the Indian conditions.

M&M already has a joint venture with the world’s second largest auto maker to make Ford Escort and Ford Ikon cars in India.

The Mahindras have, however, frozen their investments in Ford India Limited, the joint venture company.

If the alliance to export Bolero is sealed, it will help the Mahindras tap the expertise of Ford Motor Company, which is known to be strong in the area of multi-utility vehicles.

Bolero was widely seen as M&M’s answer to Toyota’s Qualis, which has tasted considerable success early this year.

In fact, the industry grapevine had suggested earlier that Telco is close to signing a deal with Daimler-Chrysler which would give it access to the German auto major’s formidable dealer network.

At its last annual general meeting, Telco chairman Ratan Tata had indicated that the possibility of forging a similar tieup with a foreign major for exporting its products was being explored. This, he said, will help it meet the demand at the lower end, while expensive models from its partners could be imported to cater to the niche-end of the local market.

According to industry sources, tieups like these will help foreign auto majors sell low-end vehicles abroad — helping them fill a major slot that is usually not tapped — even as those with higher price tags can be imported to India.

“With the launch of designer cars, we will be able to leverage further the strengths of our group and be in a position to provide innovative solutions to Indian customers,” Mahindra told reporters at the press conference. He said Voyager, a model for the young generation, will be re-launched soon.

Designer cars have been currently introduced in four versions. Bolero has been designed by Tarun Tahiliani, ace fashion designer. His conceived the Jungle theme for the cars’ interiors, and a hardy black exterior fitted with gunmetal painted alloy wheels.

Another model, called Voila, for the woman on the go, has been conceptualised by Sangeeta Ramachandran, a graduate from the National Institute of Fashion Technology.

Bolero Sportz, designed by J S Nanda of Mahindra Auto specialities, the car brings out the youthful spirit and energy of the Bolero with its metallic red paint.

And X-over (pronounced crossover), is India’s first purpose-built vehicle designed jointly by Manvendra Singh, chief designer, Mahindra Auto specialities and j Anand, managing director Jayem Automotives.


New Delhi, Dec 6: 
Insurance and financial services are the sunrise areas for rural marketing, says Pradip Kashyap, president of MART, a city-based rural market research and strategy agency which recently tied up with the Mumbai-based Sampark Marketing & Advertising Solutions.

While the ten-year-old MART is engaged in rural market research and strategy, Sampark has been actually conceiving and launching rural marketing campaigns for around 25 years.

Kashyap said products like edible oil, washing cake and bicycle have more of a rural market than urban, but indicated that there was a perceptible shift to consumer durable products.

Pressure cookers, for instance, are one of the highest selling products in the rural market, while colour TVs and mixies also breaking into rural households like never before, he said.

“If the consumer durables market is to develop, financial services have to be made available at the doorstep of rural folks. Since there are not too many players in the fray at present, there is a tremendous scope in this domain,” Kashyap said.

MART pointed out that in the case of edible oil, more than 60 per cent of the customers are in the rural areas; for bicycles, the figure is as high as 70 per cent.

According to the agency, other products that are a big draw in the rural market are dry cells for torches, match boxes, low-end biscuits and tea.

“Everybody knows there is a big rural market out there, but I think there is an inherent resistance on the part of the company executives to take up rural marketing vigorously since it involves travelling to inhospitable interiors,” he said.

So is it here where alliances like those of MART and Sampark can help them? “Not really,” says Kashyap, “we are there to show the road map and execute. But a high degree of corporate involvement is the key to the success of a project,” Kashyap said.

“So far however, I am disappointed with companies because I think they are yet to get their act together as far as rural marketing is concerned,” he said.

The MART-Sampark alliance is based on a profit-sharing business model designed after an agreement on cost structures, Kashyap said.

MART has worked on rural assignment for brands like Hindustan Lever, Marico, Grasim, Eicher, apart from international development agencies such as World Bank and UNDP.

Sampark, on the other hand, has bagged assignments from Tata Tea, Castrol, LIC, Colgate, RCF, IFFCO and Rallis.

Kashyap clarified that by government definition an area with a below 10 thousand population may be regarded as rural but most companies consider an area below one lakh as rural as most companies are yet to enter market below that level.


New Delhi, Dec 6: 
To give a boost to the construction industry, the Confederation of Estate Developers Association of India (Credai) has demanded full exemption of tax on housing loan interest.

The confederation wants the interest to be treated as revenue expenses so that double taxation could be avoided.

Credai chairman G.L. Raheja said, “This will be a boon for the vast salaried class who want to build houses.”

“Capital of an individual is formed out of income which is taxable. Interest being a revenue expense should be allowed to be set off against the income in the relevant years.”

“By restricting the total interest deduction to a notional figure, the individual lands up paying tax on such excess interest amounting to double taxation,” he added.

Raheja lamented that at present only up to Rs 1 lakh interest paid by house buyers is deducted and not the full interest. He said that full deduction of interest is an accepted practice world over and even in India this was the case before 1985.

“We would like to request the government to give this incentives to house buyers as we think that a boost to the construction industry will go a long way in achieving the economic growth of 8 per cent,” he said.

The confederation has joined hands with the National Housing Bank (NHB) and the Housing and Urban Development Corporation (Hudco) to host a three-day national convention on housing challenges and solutions that begins tomorrow.

“There is an urgent need to formulate plans to tackle the acute shortage of housing,” Raheja said.

According to a recent statement of urban development minister Jagmohan, shortage in housing units has crossed an alarming figure of 16 million units, requiring an expenditure of Rs1,21,371 crores in the Ninth Plan.

Commenting on the theme of the convention, Raheja said “the convention will provide a forum for discussion on reforms in real estates, mobilisation of financial resources, conceptualisation of real estate projects, new trends in real estate development and emerging marketing concepts.

The convention will also discuss the possibilities of low cost mass housing in the country.

Credai, with over 3000 members, is the umbrella organisation of state and local level associations of builders and developers across the country.



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