HPL panel to initiate talks with IOC
Cellular firms threaten to move court
28 hopefuls in race for Hotel Corp properties
Indian Rayon bags three brands
Aventis moves to take control of Rhone Poulenc arm
Move towards full-scale Cenvat
Foreign Exchange, Bullion, Stock Indices

Calcutta, Dec 21: 
The board of directors of Haldia Petrochemicals Limited today formally approved the participation of Indian Oil Corporation (IOC) in the company and directed the management to start negotiations with the state-owned oil giant. A committee will be formed to initiate the negotiations with IOC.

Sources said all three options were on the table: the first is to invite IOC to run the naphtha cracker which will be spun off into a new company in which IOC will be offered a 49 per cent stake while HPL will hold 51 per cent. This is the best option as it will enable HPL to slough off a substantial portion of its Rs 4200 crore debt.

The second option is to enter into a processing deal with IOC for the naphtha cracker plant for which a revenue sharing arrangement will be worked out. The third option is to enter into a marketing tieup with the oil giant to hawk HPL’s products.

“IOC will scrutinise all options and adopt the one that suits its interests. The IOC board is meeting tomorrow to weigh the options. A final decision will emerge later,” sources said.

the options emerged after a five-member working group comprising representatives from three promoters (West Bengal Industrial Development Corporation, The Chatterjee Group, and the Tatas), IDBI and IOC met thrice to see how IOC can be accommodated in HPL.

At the end of the marathon five-hour meeting, HPL managing director Richard B. Saldanha said, “The meeting was good. We cannot comment further.” Purnendu Chatterjee, one of the major promoters of HPL, echoed the same view.

The meeting was also attended by IDBI nominee S.H. Khan, state finance and industry secretaries.

Industry watchers feel that the meeting of Purnendu Chatterjee with state Chief Minister Buddhadeb Bhattacharya on Tuesday morning paved the way for the board’s ratification of the proposal seeking IOC’s participation in the project.

Sources said it will also help HPL get a financial breather as it will endeavour to pay back bridge loans worth Rs 962 crore that it took from IDBI to tide over its financing problems. HPL has already approached IDBI for a debt reschedulement and interest waiver. “The FIs were reluctant to make any concessions until the three promoters — who have been acting at cross purposes for some time — were able to get their act together, which we have now done,” sources said.

HPL’s project cost has been pegged at Rs 5,170 crore. The equity of the project was pegged at Rs 2000 crore. It was decided that the three promoters would initially bring in Rs 1010 crore and another Rs 969 crore was to have been mopped up through an initial public offering (IPO).

The debt component of the project was pegged at Rs 3,170 crore.

But due to the sluggish market, HPL failed to come up with the IPO and instead secured a Rs 962 crore loan from IDBI. This enhanced the debt burden of the company to Rs 4000 crore and changed the debt-equity ratio from 1.6:1 to 4.2: 1.

It was decided at its board meeting in early September that the three promoters of the project would provide Rs 500 crore in two tranches to ease the loan burden of HPL.

WBIDC had already put up a sum of Rs 107 crore and the Tatas have chipped in with Rs 36 crore as part of the second round of equity funding. The Chatterjee group is yet to make its contribution.


New Delhi, Dec 21: 
Cellular operators today threatened to seek arbitration if government-owned Bharat Sanchar Nigam Ltd or any other fixed telecom licensee is allowed to offer mobile service using the wireless in local loop (WLL) system without a cellular licence.

The threat by cellular operators could jeopardise BSNL and fixed telephone operator’s proposal to offer mobile phone services at Rs 1.20 paise per three minute per call.

Pre-empting the recommendations of Telecom Regulatory Authority of India (Trai) on the issue, private cellular operators today accused the telecom regulator of ignoring all issues on the introduction of limited mobile services by fixed mobile operators at its open house sessions and threatened to seek arbitration if WLL was allowed.

Such a course of action would precipitate a fresh round of litigation. As part of migration package under the National Telecom Policy 1999, telecom operators had withdrawn all their cases pending in courts in the country.

Escorts group chairman Rajan Nanda said, “We will take recourse to arbitration if WLL becomes a standard (for BSNL/fixed operators to offer mobile service).”

“Serious anti-competitive issues arise if BSNL is allowed to offer nationwide limited mobility services,” said COAI director-general T.V. Ramachandran.

Trai is likely to give its recommendations by the month-end on use of wireless in local loop using code division multiple access technology (CDMA) by basic fixed line operators to offer mobile telephony at cost of a fixed phone call.

The government will have the final word on the issue, irrespective of recommendations made by Trai as per the NTP 1999.

Ramachandran said, “The terms of reference issued by the Department of Telecommunication (DoT), and the consultation process initiated by Trai, clearly demonstrate a pre-determined mind as the introduction of limited mobility services by FSPs is taken as a foregone conclusion.”

Cellular operators were present in full force here today with Sunil Bharti Mittal, chairman and managing director of the Bharti Group, B K Modi, chairman of the Modi Group, Rajan Nanda, Escorts group chairman, Vinay Rai, Usha Group chairman and managing director, Ravi Ruia, Essar group chairman, Dilip Modi, Modi Group director, Prashant Ruia, Essar group director, and Sanjeev Aga of AT&T.

Cellular operators argue that fixed line service providers (FSPs) have been given a specific licence only to provide fixed services which did not include offering mobile services.

COAI chairman Vinay Rai said, “The mobility services by FSPs was a violation of the current license terms and tantamount to a backdoor entry into mobile services, without a mobile license and on significantly more beneficial terms than the Cellular Mobile Service Providers.”


Mumbai, Dec 21: 
Hotel Corporation of India (HCI), Air-India’s wholly owned hotel subsidiary which runs the Centaur group of hotels, will have to chose from a winnowed-down retinue of 28 suitors for selling its properties after nine firms that failed to meet the minimum criteria specified in the expression of interest were thrown out of the race.

The successful bidders will have to enter into confidentiality agreements before they are allowed to scan the information available at the data centres specially set up by Hotel Corporation to scrutinise the credentials of the bidders. “The shortlisting was done primarily on the basis of the financial strength of companies and their expertise in the industry,” said officials working on the disinvestment of HCI.

Among the 28 bidders which have evinced expressions of interest are large Indian hotel chains like the Tatas-owned Indian Hotels, East India Hotels (the Oberoi group), ITC’s Welcomgroup, Asian Hotels and Kamat Hotels and a few others.

The foreign bidders is a list of veritable who’s who in the global hotel industry. Most leading chains such as Accor, Hilton, Raffles of Singapore have thrown their hats into the ring. While some bidders have shown interest in the entire package, others have bid piecemeal for select properties. Hotel Industry circles say most bidders are keen on the two prime Centaur properties in Mumbai — a 288-room property at Mumbai airport and 365-room hotel on Juhu beach — which account for more than 60 per cent of Hotel Corp’s total turnover.

“We will find the combination which will give the maximum value,” the source said. Merchant banking circles expect Hotel Corp’s selloff will be completed this year, before A-I’s partial disinvestment goes through. Jardine Fleming has the mandate for the disinvestment and is now shortlisting bidders.

Meanwhile, the inter-ministerial group will decide on the A-I disinvestment next week. The meeting will finalise the draft of the shareholders’ agreement and the shareholders’ purchase agreement.


Mumbai, Dec 21: 
The A V Birla group company, Indian Rayon and Industries, today announced the acquisition of global rights for Louis Phillipe, Allen Solly, Peter England from Coates Viyella, UK, for a total consideration of $ 2.26 million.

The brands have been acquired by the Aditya Vikram Global Trading House, the wholly owned overseas subsidiary of India Rayon, in a deal signed at Coates Viyella’s UK office.

The brands were snapped up exactly a year ago when Indian Rayon took over Madura Garments, the Indian arm of the UK-based company, along with the brand rights for various regions. The brand rights, and technology for various countries, were purchased for over Rs 47 crore as part of a Rs 236-crore deal. However, today’s acquisition of rights does not cover Van Heusen, Byford and Sanfrisco. According to sources in the group, Indian Rayon will continue to hold the rights for the Indian and Saarc regions in the case of these three brands..

Commenting on the development, Prakash Nedungadi, President, Madura Garments said: “Madura Garments is now well positioned to captitalise on the significant growth opportunities which have opened up world wide for these well established menswear brands. More important, it will turn Indian Rayon into a global player in menswear brands.”

According to Indian Rayon officials, this is the second major market-expanding move after their company acquired a slew of brands for India and South Asia, along with the licence for exports to West Asia, which was secured earlier.

The new territories added to its fold are Europe, Far East, Africa, West Asia, apart from the conversion of the existing limited rights in the West Asia into complete ownership. “The deal will boost the revenues and earnings of Madura Garments in future,” the company said in a statement issued today.

Madura Garments constitutes more than 24 per cent of Indian Rayon’s business. Its turnover for the first half was Rs 683 crore, of which Madura Garments contributed Rs 164 crore.

This is expected to improve dramatically in the coming years as a result of the acquisition of world rights of these three brands.

On the BSE, the Indian Rayon scrip finished steady at Rs 81 today after opening around the same level. The share scaled an intra-day high of Rs 82.25 after which it had touched a low of Rs 80. The counter witnessed 12,858 shares traded with a total turnover of Rs 10.38 lakh.

Madura Garments’ annual sales were pegged at Rs 250 crore in the last financial year. With a robust sales growth of over 40 per cent in the last five years, the company had a strong national distribution network comprising 100 exclusive showrooms and over 3,000 retail outlets.

The Indian ready-made garments industry has been growing at 20-25 per cent in the past few years.


Mumbai, Dec 21: 
Hoechst Marion Roussel Ltd is acquiring over a 49 per cent stake in Rhone-Poulenc Rorer India (RPR) from Rhone-Poulenc India (RPI) for a price of Rs 15 per share. The deal will cover 29,55,608 equity shares, involving a total consideration of Rs 4.43 crore.

While Rhone-Poulenc Rorer is a subsidiary of RPI, Aventis Pharma has a 51 per cent stake in the company. The acquisition will result in the group having total control over the RPI subsidiary.

The acquisition of this stake is significant considering the fact that Aventis is selling off its stake in RPI. Pharmaceutical industry circles said that the buyout of RPR was important as it held some crucial anti-cancer brands, Taxotere being one among them. This had given rise to speculation that Aventis would either buy these brands or acquire Rhone Poulenc’s stake in RPR before hawking off its stake to another company.

In a communication sent to the stock exchanges today, Hoechst said that apart from the acquisition of 41 per cent in RPR, the board has also approved of the company granting a loan of Rs 16 crore to Rhone-Rorer India Ltd to enable it to repay its outstanding debt to Rhone-Poulenc India Ltd.

Aventis Pharma, formed by the global merger of Hoechst AG and Rhone Poulenc SA, had recently indicated that it would sell its 40 per cent stake in Rhone Poulenc India, adding that it would operate in the country through Hoechst Marion Roussel. Among the companies believed to be in the foray for Aventis’ stake in RPI are Wockhardt, Pharmacia & Upjohn, Zydus Cadila and Nicholas Piramal.

RPIL’s therapeutic range includes cough medication, anti-protozoal, anti-emetic, macrolide, anti-malarial and anti-epileptic products. It had a joint venture with RPR to market medicines in the high margin areas of cardiovascular, oncology, anti-cancer, chemotherapy among others.

On the other hand, Hoechst in India is well-entrenched in segments like anti-diabetes with its blockbuster product, Daonil where it has a 21 per cent market share. It has a good presence in the anti-allergy area through Avil and in the vaccine category with Rabipur. It also has products in the cardio-vascular category.


New Delhi, Dec 21: 
The finance ministry is planning to move towards a full-fledged Central Value Added Tax (Cenvat) and will be initiating a number of steps to achieve this in the forthcoming Union budget.

It had initiated moves towards Cenvat in the last budget but these were considered too preliminary. The ministry has in a note now proposed that a comprehensive and universal Cenvat be applied so that every producer pays Cenvat duty on his total output of goods and services and so does every importer, though in his case the calculation will be different.

This will also take care of swadeshi demands for a level playing field. Exports will be zero-rated and exporters will be entitled to a refund of the Cenvat paid.

Cenvat paid on all inputs used in the production or marketing of goods or services whether they are consumables or services can be deducted from Cenvat paid on the final output. Wholesalers would act as pass-through-agents to complete the VAT chain.

There would be a single basic Cenvat rate applicable to all manufactured intermediate, capital and consumer goods and services. This rate is likely to be around 15-16 per cent. However merit goods such as food products, drugs, pharmaceuticals, medical equipment and environment- friendly products would either be exempt from or attract a lower Cenvat rate.

Besides, the note states, there would be special excise duties on a range of final consumer goods which would not be eligible for Cenvat credit or deduction. De-merit goods such as pan masala, tobacco, luxury cars and petrol would attract a 24-25 per cent special excise on top of the normal Cenvat, making them extremely expensive, with 40 per cent or more total excise slapped on them.

Small cars, air conditoners and cosmetics among other things could attract lower SED at 15-20 per cent. Other products such as scooters, motorcycles would attract an even lower SED of 10-12 per cent.

The note provides that small industry could be granted Cenvat exemption up to a certain limit.



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