Plan to squeeze steel output falters
Sebi calls for details of deals in ACC share
Foseco in open offer sight
Air-India, AAI, settle row over Hotel Corp properties
Sebi panel sets time for result declaration
HK company takes control of Gujarat PowerGen
Land, asset sale in ailing PSUs to pay up employees
Bengal SEB to rationalise staff
Foreign Exchange, Bullion, Stock Indices

 
 
PLAN TO SQUEEZE STEEL OUTPUT FALTERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 7: 
A move by domestic steel manufacturers to regulate production appears to have been nipped in the bud with leading producer Tata Iron and Steel Company (Tisco) deciding against participating in the proposed output cut.

Sources close to the steel behemoth told The Telegraphthat the company was not participating in the production cuts, and indicated that it would stick to its present schedule.

The company, which has been posting impressive financial performances than its peers in recent times, will continue to rely on cost-cutting measures apart from attaining better product mix and sales realisation, instead of cutting production to beat the downtrend in international and domestic steel prices.

Recent reports suggest that steel producers are contemplating production cutbacks in the range of 20 per cent in an effort to tackle the trend of declining prices. International prices of the commodity is currently ruling at around $ 190 per tonnes from a level of around $ 330 per tonne as of June this year. Similarly, the domestic prices have also taken a beating to Rs 15,500 per tonne from an average level of Rs 16,500 per tonne prevailing earlier this year.

Interestingly, the move to cut production by domestic steel companies follows a similar decision taken by cement producers to limit dispatches and increased plant shutdowns. The decision, surprisingly, evoked support from all the companies, and drove up prices in markets such as Mumbai.

Tisco officials refused to make categorical comments on whether it plans to participate in the production cut, but senior Essar Steel officials said their company will take a decision at a later stage. “We are watching the decision and we will take a decision that is appropriate in the circumstances,” an official said.

During the previous financial year, the company, which is the second largest manufacturer of steel in the country, produced over 3.29 million tonnes of saleable steel. The output from its hot strip mill surpassed over 2 million tonnes. Recently, Tisco commissioned its 1.2-million tonne cold rolling mill at Jamshedpur within an investment of Rs 1,600 crore.

The cold rolling mill is expected to further improve the company’s product mix and thus move up the value chain. As per company forecasts, the cold rolling mill is expected to achieve a turnover of Rs 3,000 crore at its full capacity. In the current financial year itself, the division is expected to add over Rs 300 crore to the company’s topline.

Tisco, which displayed good performance for the fiscal year ending March 2000, has continued the tempo so far in this year. During the first half, its profit rose by around 140 per cent to Rs 216.43 crore against Rs 90.18 crore in the previous year. Similarly, net sales were placed at higher at Rs 3,598.61 crore as against Rs 3,134.79 crore in the same period of the previous year.

The company, which has targeted to grow through organic growth, has also said in the past that it would be also be looking at strategic acquisitions that would add value to its existing steel business.

Tisco is now also eyeing the new economy sector by planning to invest in the software and telecom sectors for which a new centre of focus has been set up within the company.

   

 
 
SEBI CALLS FOR DETAILS OF DEALS IN ACC SHARE 
 
 
FROM SATISH JOHN
 
Mumbai, Dec 7: 
The recent spurt in volumes in the ACC share has come under the glare of regulators. The Securities and Exchange Board of India (Sebi) today sought trading details from the Bombay and National Stock Exchanges about the bulk deals — or bulge bracket trades as they are called in market parlance — to see if there has been a manipulation in prices.

“The exercise is at a preliminary stage. We will widen the scope of the scrutiny into a full-fledged investigation if our preliminary findings reveal anything dubious. However, the present level of securing information cannot be termed as an investigation,” a Sebi source said. Sebi chairman D R Mehta declined to comment on the issue, saying any unusual volatility in price and volumes is scrutinised by the watchdog. In any case, stock exchanges are the first to check price movements through their inhouse surveillance departments, Sebi sources said.

The scrip was volatile even today. The share opened at Rs 149.10, hit an intra-day high of Rs 157.70, a low of Rs 149.05 before closing at Rs 157.05 on the BSE, reflecting an impressive gain of Rs 6.55 compared with Wednesday’s finish of Rs 150.40.

In all, 82.57 lakh shares changed hands in only 19,441 deals. Rumours are rife that a Lucknow-based financial is buying heavily at the ACC counter. To add grist to the mill, there are unconfirmed reports that a French cement maker could make a bid for the cement company. Another rumour swirling on bourses is that Gujarat Ambuja, a company which already holds the 15 per cent stake it acquired from the Tatas, may raise its holding to a more comfortable level.

However, ACC officials at Cement House have no clue about the frenzied trading in the stock, much of it due to heavy buying by mystery buyers. The Telegraph had earlier reported that unidentified investors accounted for more than 5 per cent of the equity of Associated Cement Companies (ACC).

The shareholding pattern of ACC made available to the Telegraph shows that 2.72 per cent shares have been dematerialised but not identified in NSDL.

   

 
 
FOSECO IN OPEN OFFER SIGHT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 7 : 
The decision by oil giant B P-Amoco and Castrol of UK to acquire 20 per cent in Castrol India through an open offer has fuelled expectations of a similar move in its other subsidiary, Foseco India.

The stock markets were rife today of an open offer in the company. Castrol India scrip closed higher at Rs 68.40 after opening at Rs 63.50. It witnessed 180 trades with 18,070 shares traded, resulting in a total turnover of Rs 12.15 lakh. The scrip thus flared up by around 8 per cent as compared to the previous finish of Rs 63.35.

BP-Amoco, which has taken over Burmah Castrol globally, yesterday announced a 20 per cent open offer in Castrol India at a price of Rs 312 per share. The acquirers are planning to buy up to 2.47 crore shares, of the issued capital of Rs 123.5 crore. The offer price was at a good premium of 34 per cent than yesterday’s closing price at the BSE.

Reports about the open offer which was anticipated by the markets today resulted in the Castrol scrip registering a sharp rise in the BSE today. The scrip finished at Rs 271.65 after opening at Rs 238.95, thus hitting the upper circuit filters.

Based on the premium offered for Castrol India shares, market expects the UK-based parent to come up with a “decent premium” in the case of Foseco India as well.

Burmah Castrol holds over 58 per cent in Foseco India.

   

 
 
AIR-INDIA, AAI, SETTLE ROW OVER HOTEL CORP PROPERTIES 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Dec 7: 
Air-India (A-I) and Airports Authority of India (AAI) today decided to settle their row over the national carrier’s proposed sale of Hotel Corporation of India (HCI) properties in Delhi and Mumbai and its flight catering unit, Chefair, by agreeing that new owners of these properties will pay an annual royalty of 6 per cent of their turnover to AAI.

The authority owns the land on which these hotels and catering units are built but A-I owns the hotels and the flight-catering service. When the loss-making carrier decided to improve its financial position by selling off HCI and Chefair, it laid the seeds of a bitter dispute which threatened to jeopardise not only this sale but the eventual sale of Air-India to new owners.

Last-minute lobbying by the civil aviation ministry helped head off a clash between the two high-profile state-run aviation companies with a compromise solution. At one stage in the past, the Airports Authority had even thought of asking for market rates for the land it had leased to Air-India at highly subsidised rates to set up its hotels. The demand, if conceded, which would have meant that virtually the entire chunk of earnings from sale of these properties would have been lost to the national carrier.

Air-India, in fact hopes to earn as much as Rs 1,000 crore from this sale. But this belated decision will now have to be factored in by prospective buyers of HCI and Chefair as they will have to fork out 6 per cent of revenues every year regardless of loss or profit.

Bidders for HCI include Singapore based Raffles, Oberoi group, Tatas and ITC from India, French hotel chain Accor and US based Hilton. Jet Airways and Cathay Pacific are reported to have bid for Chefair properties.

Hotel Corporation of India, which besides hotel and flight catering units at Delhi and Mumbai airport also runs hotels at Juhu, Mumbai and at Srinagar, is estimated to be worth about Rs 2,500 crore.

Hotel Corp, saddled with some 4,000 employees, has been doing badly for some time. To make the sale look attractive it has been renovating some of the nearly 1,000 rooms with it.

A-I plane sale

The civil aviation ministry has approved the sale of Air-India’s three Airbus A300-B4 aircraft to Indian Airlines for $ 9 million (about Rs 42 crore) payable in rupees, says PTI. The first aircraft will to be sold on December 15. A-I had been planning for quite some time to sell its three A300 aircraft but the financial bids received were not ‘ up to the mark’.

A-I last week received a letter from the ministry, approving the proposal for the sale against a cash deal, airline sources said today, adding further negotiations are to be held on the sale of spares and engines. Negotiations were taken up with IA and the ministry finally giving its seal of approval for a deal in rupees, sources said.

   

 
 
SEBI PANEL SETS TIME FOR RESULT DECLARATION 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 7: 
A Securities and Exchange Board of India (SEBI) panel today suggested that companies disclose financial results to stock exchanges within 15 minutes of the end of a board meeting.

This suggestion was a significant addition to the existing recommendations made by the committee headed by S S Tarapore, which had proposed that companies declare dividends and bonus within 15 minutes of the end of the board meeting.

Sebi’s Accounting Standards Committee under the chairmanship of Y H Malegam met here today and underlined the need for safeguards should be put in place to ensure that all the exchanges and common investors get the information quickly.

The committee today upheld the Tarapore Committee recommendations, which called for abolition of the no-delivery period on account of book closure/record dates and reduction of the minimum gap of 90 days between two book closures and record dates to 30 days.

   

 
 
HK COMPANY TAKES CONTROL OF GUJARAT POWERGEN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 7 : 
In a deal consummated overseas by two global energy majors, the ownership of Gujarat PowerGen Energy Corp changed hands. HongKong-based power company, CLP Power International (CLP-PI) today announced acquiring a controlling interest in Powergen’s Paguthan power station in Gujarat.

CLP-PI will effectively own 70 per cent of the 655 MW gas and naphtha fired power station, Gujarat PowerGen Energy Corporation (GPEC) at Paguthan in Gujarat.

CLP-PI’s ownership will be through a joint venture where CLP-PI would hold 80 per cent and 20 per cent by Powergen. The joint venture would acquire Powergen’s existing 88 per cent share in the project.

Today’s announcement increases CLP-PI’s presence in India. Earlier, this year CLP-PI acquired Cogentrix’s stake in the Mangalore power project.

The announcement comes on the back of media reports stating Tata Power as one of the front runners for acquiring the Paguthan plant.

It is viewed as a setback for Tata Power who bid separately. However, Tata Power gains as CLP partners Tata Power for power project based in Mangalore.

The new joint venture structure will also give CLP-PI the rights to develop other projects in India, thereby establishing a pipeline of attractive private sector opportunities.

PowerGen Plc sold a group of Asian assets put up for sale earlier this year for a total of 458 million pounds (US $ 662 million pounds) including debt.

The assets were sold to companies managed and 80-per cent owned by a subsidiary of HongKong-based power group, CLP Holdings Ltd, formerly China Light and Power.

Kenneth W Oberg, managing director of CLP-PI said: “CLP-PI has been active in the Indian power sector for some years. The acquisition of a high quality-operating asset will substantially strengthen our position. CLP-PI aims to become the leading regional private sector company..”

   

 
 
LAND, ASSET SALE IN AILING PSUS TO PAY UP EMPLOYEES 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Dec 7: 
A group of ministers that met today on the fate of sick state run firms decided in principle to sell land and assets of sick PSUs which are considered unviable. The money raised from the selloff will be used to pay employees and other creditors their dues while giving away residential properties owned by these companies as part of golden handshake packages to employees.

However, the group of ministers would have to seek permission from state governments who had given the land on long term lease to these companies at concessional rates but with strings attached.

The GoM, headed by planning commission deputy chairman K C Pant, also decided to draw up two separate lists in consultation with individual ministries — one of those units which are perennially sick and cannot be turned around. Another list of sick or nearly sick companies selected for special ‘nursing care’. Top finance ministry officials said “any PSU with negative returns on capital employed will qualify for this package and not just loss making companies.”

The government wants to be pro-active and take steps before a company turns sick. It wants to re-evaluate its gains from PSUs as a shareholder. Hence, the government will be focusing “more on shareholder value” and not merely revamp the firms in an ad-hoc manner.

The revival packages would no longer involve just financial restructuring and cuts in labour force, but management and technology changes, de-mergers and mergers, contraction of capacity, closure of product lines, entry into new business areas, marketing alliances etc.

PSU revival packages have till now focused merely on debt relief, incentives, and capital infusions, these have sadly never been enough to bring any company back to good health, officials said.

SAIL which faces a loss of Rs 1,200 crore this year, is a specific example where severe restructuring decisions in all management spheres have to be taken quickly to help it back on its feet. Finance ministry officials said PSUs will have to be classified in four to five categories for this purpose. Category one will comprise sick but viable PSUs.

The second would include chronically sick units which have to be shut down. Sick unit with divisions or subsidiaries which can be revamped while those that cannot be revamped would form another category. Loss-making and potentially loss-making units in certain sectors have to be closed down while those that could be retained will form a fourth category.

   

 
 
BENGAL SEB TO RATIONALISE STAFF 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Dec 7: 
The West Bengal State Electricity Board (WBSEB) is planning a rationalisation of its 38,000-strong workforce.

The issue was discussed at a meeting convened by K.P. Sinha, chief personnel manager of the board, recently. The heads of the personnel department of all units within WBSEB have been asked to identify surplus manpower within the organisation.

“A joint management committee meeting was held on the issue. But no concrete decision has been taken. We are currently working on it. A final picture will emerge only after a week,” G .D. Gautama, chairman of WBSEB, told The Telegraph here today. “We may not announce a voluntary retirement scheme for surplus employees. They may be redeployed in areas where there is a shortage of manpower. But, whatever the case, the board has not yet taken a final decision on the issue,” he added

At the meeting of the joint management committee, discussions were held on the variety of voluntary retirement schemes (VRS) which are now being offered by state and central government agencies. In more specific terms, the problems and methods of offering the package were debated.

However, there is a feeling among a section of the employees that the board has already initiated the work of identifying excess manpower even though the WBSEB chairman himself denies that any exercise like that has been started.

The state power board also reviewed its financial position at a recent meeting. It has projected the deficit between cash receipt and the corresponding payment liability to the tune of Rs 764.51 crore for the current financial year. The projection for the next financial year is Rs 703.92 crore.

“The gap could not be bridged completely through tariff revisions because the increase in expenditure was much too high. On the one hand, tariffs have not always covered the cost. On the other, there have been indications of slippage in revenues, partly due to the shortcomings of its employees, and partly due to problems such as illegal, unauthorised consumption of power carried out hooking and tapping,” says a report made on the financial condition of WBSEB.

Due to the deficit, WBSEB is not able to meet fully its payment obligations to various creditors. There are sizeable arrears that it owes the National Thermal Power Corporation, Power Grid Corporation of India and Damodar Valley Corporation. These are companies from which it purchased bulk power. It has not been able to clear Eastern Coalfields’ dues either. The cumulative dues to trade creditors and financial institutions were pegged at Rs 3980.48 crore on September 30.

Apart from submitting a tariff petition to State Electricity Regulatory Corporation, WBSEB has given a four-point task to its revenue managers - physical reading of 100 per cent consumers, actual billing of 100 per cent consumers, issuing of disconnection notices to all defaulting consumers and physical disconnection of all defaulting consumers. The board has also taken a drive to recover government dues for low and medium voltage supplies to the installations throughout the state which are usually not paid on monthly basis. Part of the dues gets liquidated towards the end of the financial year.

Power theft

WBSEB has conducted raids in Murshidabad, Burdwan, North and South Dinajpur, Malda and South 24-Parganas to check power thefts. During the course of the swoop, it disconnected 5,126 illegal connections and arrested 16 persons.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.46.76	HK $1	Rs. 5.90*
UK £1	Rs. 67.52	SW Fr 1	Rs. 27.15*
Euro	Rs. 41.91	Sing $1	Rs. 26.50*
Yen 100	Rs. 42.36	Aus $1	Rs. 25.30*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4605	Gold Std(10 gm)	Rs.4565
Gold 22 carat	Rs. 4350	Gold 22 carat	Rs.4220
Silver bar (Kg)	Rs. 7825	Silver (Kg)	Rs.7910
Silver portion	Rs. 7925	Silver portion	Rs.7915

Stock Indices

Sensex		4124.91		+16.48
BSE-100		2154.65		+8.16
S&P CNX Nifty	1302.50		+3.95
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