Cement makers plan to raise prices again in Jan
Bharti plan among Rs 3115-cr FDI cleared
Dalmias not to rope in partner for Gesco bid
Sensex extends gains, up 55 pts
Incab heads for long legal battle, Arya plans suit
Ministry favours delinking FRAs from banking Bill
Ranbaxy to divest stake in venture with Eli Lilly
Zee to finalise sports initiative
Foreign Exchange, Bullion, Stock Indices

 
 
CEMENT MAKERS PLAN TO RAISE PRICES AGAIN IN JAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 28: 
Cement manufacturers are again planning to raise prices in the Mumbai region by Rs 3 per 50 kg bag from January 2. This will ratchet up prices to Rs 185-Rs 190 per bag in the territory. This will be the fourth hike within the span of a month in the region.

Industry circles do not rule out the possibility of cement prices going up in other parts of the country as a consequence of the move. Cement prices have shot up by over Rs 27 per 50 kg bag during this period. Mumbai is the country’s largest consumer of the commodity with a monthly consumption of 3 lakh tonnes a month.

News about the price hikes sparked fresh interest in the cement counters on the Bombay Stock Exchange today.

Reflecting the buying interest, shares of nearly all the companies flared up by 5-7 per cent. ACC, for instance, closed at Rs 158.55 after opening at Rs 150.15. Earlier in the day, it touched an intra-day high of Rs 159.25.

On the other hand, Gujarat Ambuja Cements Ltd (GACL) finished at Rs 158.25 after opening at Rs 154.60; Grasim was quoted at Rs 284.95 after opening at Rs 280 and Larsen & Toubro closed at Rs 191.95 after opening at Rs 184.40. Market circles point out that the buying interest is likely to continue in the immediate term despite fears in some quarters that the the Monopolies and Restrictive Practices Commission (MRTPC) may initiate against the industry for cartelisation.

Meanwhile, hit by the manufacturers’ move, the Builders Association of India are looking at the possibility of halting construction work all over the country “if the government does not undertake prosecution of the MRTP Act violators by January 7.”

At a meeting here today, the apex association, which has been formed by leading trade associations that govern builders, contractors, real estate developers, architects and civil engineers, also asked the Union government to declare cement as an essential commodity and lower import duty to a minimum.

It may be recalled that in November the cement industry decided to artificially jack up prices by controlling supply and shutting down their plants for routine maintenance work for more than the conventional 20-25 days. The move was seen as an answer to the problem of cut-throat competition and price undercutting at a time when demand for the commodity showed any significant improvements.

Consequently, the manufacturers resorted to a series of price hikes — on one occasion raising it by as much s Rs 15 per 50 kg bag.

Describing the situation, Niranjan Hiranandani, managing director of Hiranandani Constructions Pvt Ltd said cement prices in the city were ruling at Rs 120-140 per bag over the past two years. The cement producers have suddenly increased prices by about Rs 60 per bag.

Before the routine shutdowns, most cement plants were working below their optimum capacity. Despite this, most of the cement makers had either completed or outlined ambitious capacity expansion programmes. ACC has completed modernisation and expansion of its Chanda (Maharashtra) and Madukkalai (Tamil Nadu) plants, which now have a combined capacity of around one million tonnes.

A new-look plant at Wadi (Andhra Pradesh) with a capacity of 2 million tonnes per annum is under implementation. Gujarat Ambuja has also outlined an ambitious capacity expansion programme of 7.5 million tonnes at an estimated cost of Rs 1,320 crore.

   

 
 
BHARTI PLAN AMONG RS 3115-CR FDI CLEARED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 28: 
The government today cleared 57 proposals amounting to foreign direct investment worth Rs 3,115 crore, including a Rs 2,250 crore proposal of Digital Future Investment and more than Rs 130 crore proposal of the Bharti Group of companies.

The proposal of Digital Future for investing Rs 2,250 crore over a period of five years in the areas of telecommunication and broadcasting was cleared by commerce and industry minister Murasoli Maran on the recommendations of the Foreign Investment Promotion Board (FIPB).

According to an official release, the company is likely to construct, design, install, operate and maintain engineering facilities and provide third party technical services to duly licensed broadcasters, telecom operators and public authorities.

The government also approved a 50 per cent FDI proposal worth Rs 295 crore of Zuari Cement for manufacturing portland cement.

Bharti Aquanet’s proposal to infuse Rs 122.5 crore, with a 49 per cent FDI, for laying undersea optical fibre cables and a 10 per cent FDI proposal of Bharti Enterprises Ltd for promoting, investing and participating in telecom ventures in India were cleared by the government. In addition, a Rs 8.2 crore investment proposal of Bharti Telecom for manufacturing and marketing telecommunication equipment also received the government’s nod.

ICICI Infotech Services Ltd’s Rs 56.35 crore plan for software development and consultancy was cleared. A proposal involving 100 per cent FDI worth Rs 138 crore of the US-based Caterpillar Inc for manufacturing earthmoving products and a 49.9 per cent FDI investment of Rs 2.80 crore of Essel Packaging Ltd were other cases approved by the ministry.

Precision Interconnect India Pvt Ltd’s move to bring in 100 per cent FDI worth Rs 18.40 crore was also approved. Proposals in sectors including manufacture of drugs, consumer goods, paints and varnishes, textiles, tourism and management consultancy also received the green signal.

   

 
 
DALMIAS NOT TO ROPE IN PARTNER FOR GESCO BID 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 28: 
The AH Dalmia group revealed today that it had not tied up with a strategic investor to bank roll its takeover of Gesco Corporation, the real estate subsidiary of the Sheth-owned Great Eastern Shipping.

Abhishek Dalmia told The Telegraph that Renaissance Estates, which is spearheading the hostile bid,had dipped into its own resources and borrowed funds from the market to up the ante in the high stakes battle with its increased offer price of Rs 45 per share which was announced on Wednesday. The Dalmia offer tops the Sheth-Mahindra counter-offer by one rupee.

Abhishek Dalmia said Housing Development Finance Corproation (HDFC) had rejected his request for a credit facility to underpin his bid as had been extended to the Sheth-Mahindra combine. In a ‘politely worded letter to Renaissance Estates’, the housing finance major said it could not finance two competing offers at the same time.

Dalmia said there was no need to seek the help of a strategic investor to prop up its bid. “A strategic investor would be useful if we wanted to spread the risk and were short of funds. Neither situation exists at present,” he said.

HDFC chairman Deepak Parekh played a key role in getting Mahindras to team up with the Sheths of Gesco to fend off Dalmia’s hostile takeover gambit for their real estate firm. The Mahindras have their own interests in the real estate through Mahindra Realty, their fully owned subsidiary.

Parekh could not be contacted as he was out of town, but Dalmia said HDFC’s decision was purely a commercial one. “We have not approached any other financial institution for a similar line of credit. Our revised bid at Rs 45 per share of Gesco Corp will be financed from internal resources.”

A part of the Rs 58 crore required to pick up 45 per cent in Gesco Corporation will come from borrowings while the remaining will be raised from the company’s cash surplus, he said.

There was no word from the Mahindras and Gesco promoters, probably because today was a public holiday, but there are rumours swirling around that they will better the revised offer made by the Dalmias.

Since the difference in the counter-offer made by the Sheths-Mahindra duo and the revised offer made by the Dalmias is only a rupee, merchant banking circles expect the Gesco promoters to make only a marginal increase.

The Dalmias claim to hold 10.4 per cent in Gesco while the Sheths, along with the Mahindras, control 30 per cent. Financial institutions, with a 12 per cent stake in the firm, have already indicated that they would liquidate their holdings to the highest bidder.

   

 
 
SENSEX EXTENDS GAINS, UP 55 PTS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 28: 
Buying support in old economy stocks by operators and domestic institutions today lifted the BSE sensex by 55 points to finish at 3932.78. However, the rise of the benchmark index was limited as several technology shares witnessed profit booking at higher levels.

Today’s rise was attributed largely to strong purchases in many cyclicals which included ACC, MTNL, Bhel, Larsen & Toubro, State Bank of India (SBI), ITC, Reliance Industries Ltd among others, even as Hind Lever fell to Rs 206.65. Market circles say many of the old economy counters, perceived as defensive stocks, have witnessed buying interest lately due to apprehensions about the earnings of infotech companies.

However, some new economy shares witnessed hectic buying. Positive interest was seen in HFCL, Hughes Software, DSQ Software, Digital Equipment, SSI, Balaji Telefilms and Zee Telefilms among others.

   

 
 
INCAB HEADS FOR LONG LEGAL BATTLE, ARYA PLANS SUIT 
 
 
BY A STAFF REPORTER
 
Calcutta, Dec 28: 
Incab Industries looks destined for a long-drawn legal logjam with S P Arya, the city-based transport operator who claims to be the new owner, accusing Leader Universal Holdings and Leader Universal Hong Kong of not transferring shares despite a Rs 2-crore payment.

Arya claimed that Leader Universal Holdings of Berhad, Malayasia, had been directed by the sole arbitrator D. K. Singh to transfer the shares in his favour. However, his claim was contested last month by the Malaysian company, which said he had not met all obligations for the transfer to remain valid.

Arya produced documents to buttress his claim that the deal had been wrapped up, and that all conditions to ‘formally gain’ control of 51.16 per cent of Incab’s equity had been fulfilled.

He also claimed to have deposited Rs 5 crore in an escrow account to execute pending liabilities or debts. These were supposed to be adjusted in case he failed to meet Incab’s liabilities on account of salaries and PF contributions.

Arya, who shot to prominence in October after claiming that he had acquired 100 per cent of Leader Universal’s holding in Incab, said he was planning to lodge a suit in the Calcutta high court against Leader for breach of agreement.

Arya said his suit against Leader will be filed after another one, alleging he had not paid money under the agreement and taken away deeds of property, was disposed off.

“I will also press for an injunction against Leader to prevent them from interfering in the management of Incab after they have sold their stakes and transferred the shares in my name and my associates after January 4,” he said.

   

 
 
MINISTRY FAVOURS DELINKING FRAS FROM BANKING BILL 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Dec 28: 
The finance ministry favours delinking the setting up of financial reconstruction authorities (FRAs) from the controversial Banking Amendment Bill which was introduced in the winter session of Parliament.

The Bill, which had proposed diluting government’s equity to 33 per cent, was referred to the Standing Committee on Finance after it ran into strident opposition in the Lok Sabha.

A finance ministry group has been set up to draw up a viable scheme to recapitalise three weak public sector banks — Indian Bank, United Bank and Uco Bank.

However, the ministry officials say that besides drawing up the scheme for recapitalisation to the extent of Rs 5,500 crore, they needed to have enabling laws to set up FRAs which could be activated in case these banks failed to recover at all.

Hence, it favours bringing in a separate ordinance to set up the Financial Reconstruction Authorities.

The group is expected to give its report by the end of January or early February. It is considering various ways to raise the needed funds to recapitalise the three weak banks.

Through this ordinance, the government can empower itself with the right to throw out the board of any nationalised bank if it does not function properly or if its financial position turns bleak, or if the board acts against the interests of the bank’s depositors, or flouts the state’s banking policy.

The supersession can be up to three years on the advice of the Reserve Bank of India.

The FRAs can have between three to seven members from among those, who have knowledge and experience in banking, finance, economics, law, accountancy, administration or other similar disciplines. One of the members will be appointed as chairperson.

The government can also appoint an officer of the rank of joint secretary in the government or executive director in a bank or above that rank who will act as chief executive officer.

The CEO will take on the managing director’s job and be an ex-officio member of the FRA.

   

 
 
RANBAXY TO DIVEST STAKE IN VENTURE WITH ELI LILLY 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Dec 28: 
The board of directors of Ranbaxy Laboratories will meet on Friday, January 5, to approve the selloff of the domestic major’s stake in its joint venture with US-based pharmaceutical giant Eli Lilly.

It will also consider a proposal to buy up Gufic Pharma from its promoters. The company notified Bombay Stock Exchange today of the impending board meet, following recent market rumours that Eli Lilly was buying back Ranbaxy’s stake in the 50:50 venture.

However, Ranbaxy did not divulge the terms and conditions of the planned sale in its letter to the premier bourse.

The joint venture was formed about five years back to tap the fast expanding Indian pharmaceutical market.

Ranbaxy has major strengths in therapeutic segments of anti-infectives, dermatology, GI tract, NSAIDs, CNS, orthopedics and cardio-vascular.

It has been trying to globalise by expanding its business operations, setting up manufacturing bases in six other countries. Global sales today reportedly contributes 50 per cent of the company’s total sales.

In the Rs 13,000 crore Indian pharmaceutical sector, prices of over 60 per cent of the drugs and formulations are under government control.

In the domestic bulk drugs market, low entry barriers have resulted in over capacity and price wars.

But with India agreeing to bring in WTO norms on intellectual property rights, global giants like Eli Lilly are now increasingly interested in larger slices of the domestic market.

Ranbaxy also says it aims to become a global player with projected sales of $1 billion by 2004. It says its major markets will be in the US, Western Europe, Russia and China.

In India too it has been trying to consolidate its position through brand acquisitions and company takeovers.

It recently acquired the $ 4 million German generics business of Bayer AG besides striking a deal with Bayer to develop once-a-day Ciprofloxacin.

   

 
 
ZEE TO FINALISE SPORTS INITIATIVE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 28: 
The board of Zee Telefilms will meet tomorrow to review its strategy and investment in the sports business, the television media major said in a notice to the Bombay Stock Exchange today.

Earlier this month, global consulting firm AT Kearney had recommended that the Rs 800 crore Zee Telefilms should structure its business into four groups and focus on building new core competencies in the organisation.

Satish Menon who heads Zee Sports declined to comment on tomorrow’s meeting. It may be recalled that Zee Sports received a setback after the International Cricket Council, the London-based world body that controls the sport, spurned its top-dollar bid of $ 666 million and opted for the lower offer $ 550 million by World Sports Group (WSG) for telecasting rights.

At that time, Zee had alleged that the ICC decision was racially motivated. After the setback, Zee Sports had said it would announce some new decisions but has failed to do so till now.

The shares of Zee closed Rs 8.35 or 3.1 per cent higher at Rs 277.45 on the Bombay Stock Exchange today.

In accordance with the AT Kearney report, Zee has decided to aggregate and group the businesses under content, access, corporate and education. The report had asked Zee to lay down a more systematic resource-based management besides seeking alliances with new partners and collaborating with business constituents.

The first three lead businesses will have support functions like strategy, human resources, finance, legal , corporate communications and market research under the head of corporate services. The businesses will be directed by the four group heads. The content head will oversee all content-centric and content-driven businesses. This will include Zee network channels, portals, music, news and sports. The need for this move, the report said, is that the built-in synergies have not been fully tapped in the past.

As a corollary to the suggestion made by A T Kearney, R K Singh was appointed as the group head of corporate services; he will also oversee international businesses. The company’s education business will continue to be headed by Uma Ganesh. The company said each channel will have a dedicated brand channel with dual reporting to channel heads and group brand manager.

Alok Dutta, chief operating officer, will coordinate the content business. He will work under the Zee Network chairman’s strategic direction’s for the time being.

The access division will include home networking, direct-to-operators, direct to home, Internet ISP through cable and other internet and ISP driven businesses. This will also include present and future pay TV businesses across the world. Dev Naganand will head the access business.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.46.72	HK $1	Rs. 5.90*
UK £1	Rs.69.53	SW Fr 1	Rs. 28.25*
Euro	Rs.43.53	Sing $1	Rs. 26.65*
Yen 100	Rs.40.94	Aus $1	Rs. 25.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	 Rs.4605	Gold Std(10 gm)	Rs.4570
Gold 22 carat	 Rs.4350	Gold 22 carat	Rs.4225
Silver bar (Kg)	 Rs.7675	Silver (Kg)	Rs.7745
Silver portion	 Rs.7775	Silver portion	Rs.7750

Stock Indices

Sensex	  	3932.78		+55.23
BSE-100	  	1997.47		+33.70
S&P CNX Nifty	1248.95		+20.65
Calcutta	119.39		+1.17
Skindia GDR	NA		-
   
 

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