Knockout drill for 4th mobile player
MTNL to launch GSM in Delhi from January 31
Interest rate surcharge on imports off
Bid packs issued for Air-India, IA
Raymond plans share buyback
Unions seek funds for sick unit revival
Gillette set to sell Luxor stake
Ranbaxy buy, sale plans cleared
Foreign Exchange, Bullion, Stock Indices

New Delhi, Jan 5: 
The government today announced a transparent three-stage bidding process to select the fourth cellular operator with safeguards aimed at preventing a repeat of the 1995 fiasco when several firms failed to meet their commitments after quoting astronomical amounts in bold bids for the first set of licences.

The guidelines will govern the issue of licences in 17 telecom circles and four metros — Delhi, Calcutta, Mumbai and Chennai.

“We wanted to announce the guidelines for basic and cellular services together. But we are still waiting for Telecom Regulatory Authority of India’s (Trai) recommendations on the issue of limited mobility for fixed-line operators. They are expected soon,” communications minister Ram Vilas Paswan said.

The fourth cellular operator will pay 17 per cent of its revenues to the government. Licences will be issued for 20 years, which can be extended by 10 years. Only Indian companies, registered under the Companies Act 1956 with experience in the telecom sector, are allowed to enter the fray.

Foreign equity has been capped at 49 per cent, a level which has to be maintained during the entire licence period. It will include investment by NRIs, overseas corporate bodies and international agencies.

Successful bidders will have to deposit at least 20 per cent of the bid amount within a day, and the balance within 10 days of opening of the final bid. They will have to furnish financial bank guarantees of Rs 50 crore for category A circles, Rs 25 crore for category B circles and Rs 15 crore for category C circles before signing the licence agreement.

These must be backed up by performance guarantees of Rs 20 crore, Rs 10 crore and Rs 2 crore for A, B and C circles respectively.

The minimum net worth has been set at Rs 100 crore for firms which bid for A category circles, Rs 50 crore for category B circles and Rs 30 crore for category C circles. Promoters must own at least 10 per cent of the company’s paid-up equity.

There will be no limit on the number of circles for which a company can bid. Nor will there be a restriction on number of licences it can pick up. However, existing players cannot vie for the fourth licence in their existing service areas.

The bidding, called the Multi-Stage Informed Ascending Bidding Process, will comprise a pre-qualification round, which will be followed by three rounds of financial bidding. The government expects to start the process by the end of this month, and the first set of licences could be handed by July. The highest price quoted by the pre-qualified bidders in the first round shall be treated as the reserve price for the subsequent one.

The process of elimination shall be repeated in the first and seconds rounds. The lowest bidder in the first round shall not participate in the second if there are four or more firms left in the fray; the lowest bidder in the second round shall not enter the third if three or more remain in the race.

Companies will be free to adopt any digital technology which is either approved by the Telecom Engineering Centre (TEC), or is being used to service a customer base of a lakh or more anywhere in the world for at least an uninterrupted year.

In another significant measure which will take mobiles to the masses, all cellular operators have been allowed to set up Mobile Community Phone Service. This facility makes handset available to those who do not have one of their own.

Appropriate frequency spots in GSM band of 890-915 MHz paired with 935-960 MHz will be assigned to operators selected for vacant slots and 1710-1785 MHz paired with 1805-1880 MHz will be assigned to the fourth cellular operator.

COAI director general T. V. Ramachandran welcomed the guidelines, and said his association will send in its suggestions within a fortnight. “We hope the government will provide investors a chance to offer comments before finalising the tender document, as was done in the 1994-95 bidding.”

Talk cheaper

Bharat Sanchar Nigam has raised monthly rentals by Rs 30 for rural telephones and Rs 70 for low-calling urban subscribers.

The duration of a call has been increased from 15 seconds to 3 minutes if it is made to a destination between 51 kms and 100 kms — which means it becomes a local call for all practical purposes. For calls made between 101 kms and 200 kms, the pulse rate will be 30 seconds (instead of 15 earlier).

The new package is expected to further strain the revenues of BSNL, which is already under financial pressure. The company expects to offset the loss partially from the hike in rural rentals.

“BSNL is expected to lose Rs 700-Rs 800 crore due to increase in duration of a call. But we are expected to garner about Rs 600-Rs 650 crore with the rise in rentals, which is still lower than those recommended by Trai.”

The new scheme will enable customers who do not have an STD facility to make calls up to 200 kms. Paswan said the call charges in the distance slab of 50 to 100 kms are being reduced to 1/8th compared with the current rate.


New Delhi, Jan 5: 
Mahangar Telephone Nigam Limited (MTNL) will launch its cellular service, based on global system for mobile communications (GSM) technology, in Delhi on January 31 and in Mumbai on February 28.

Communications minister Ram Vilas Paswan today unveiled the schedule for rollout of GSM mobile phones from MTNL in the two cities and promised competitive air-time rates.

The registration in Delhi for one lakh mobile cellular phones will start on first-come-first-served basis from January 15 and the service will start on January 31.

In Mumbai, the registration will begin on February 15 and the service will be launched on February 28.

“The tariffs will be announced after taking approval from Trai. Tariffs will meet people’s expectations,” Paswan said.

“The MTNL tariff will force other cellular operators to bring down the air time cost for consumers which they had promised. While migrating to national telecom policy they had promised the government to bring down air time cost. Our tariff would force them to keep their own promise,” sources MTNL said.


Mumbai, Jan 5: 
The Reserve Bank of India (RBI) has decided to roll back the interest rate surcharge on imports as also the prescribed minimum interest rate on overdue bills. The decision, which will take effect tomorrow, is an indication that the central bank is comfortable with the current foreign exchange reserves and the value of the rupee.

The interest rate surcharge of 50 per cent on import finance was in force since May 26 last year.

On the interest rate on overdue export bills, the RBI, in a statement, said the stipulation by banks, which were required to charge a minimum rate of 25 per cent interest on overdue export bills since May 26, was also being withdrawn with effect from tomorrow.

While existing regulations require that exporters need to remit their proceeds within six months, time to time exporters had sought extensions from the central bank. This had resulted in export proceeds getting delayed which compelled the central bank to take this decision in May last year.

Henceforth, banks would have the freedom to decide the appropriate rate of interest on overdue export bills, the RBI statement.

However, the present procedure to ensure that there was no deliberate attempt to delay repatriation of export receipts would remain in force, the central bank added.

Reacting to the RBI move, bankers felt that with the surcharge on import finance lifted, the current rate would stand at a minimum of 9 per cent.

Both the measures were introduced by the RBI to check the slide of the rupee, which was then under pressure.

In May last year, the rupee plunged by a whopping 60 paise to touch an intra-day low of 44.74 against the dollar. The rapidly declining value of the Indian currency had then forced the central bank to announce these measures.

Welcoming the RBI move, exporters said it was expected since the current forex position was comfortable and value of the rupee was steady. “It certainly is a step in the right direction. The interest rate surcharge charged on import finance was a harsh measure against the exporting community which was uncalled for,” Ramu Deora, past president of FIEO told The Telegraph.


New Delhi, Jan 5: 
The government today issued bid packs to the qualified interested parties for Air-India and Indian Airlines. These bid packs include information memorandum, initial draft shareholders agreement, initial draft share purchase agreement and request for proposal.

The bidders have been asked to finalise their partners if they have not done so already and to give details of the consortium, source of funds, and also to submit their initial technical bids.

The technical bids will then be screened, which will include security clearance of the consortium parties before the bidders are allowed entry to the data room to carry out further due diligence exercise and the finalisation of the share purchase agreement/shareholders agreement and other documents by the government.

With the issue of bid packs, the government has invited the bidders to participate further in the strategic sale process.

The government had decided to bring down its equity in A-I by disinvesting 40 per cent in favour of a strategic partner and 20 per cent in favour of A-I employees and financial institutions.

However, it has stipulated that of the 40 per cent disinvestment to the strategic partner, foreign holding cannot be more than 26 per cent.

In Indian Airlines, the government plans to bring down its shareholding to 49 per cent by disinvesting 26 per cent equity to a strategic partner and 25 per cent to employees and financial institutions.


Mumbai, Jan 5: 
Flush with cash from the sale of two units, Raymond Ltd joined the buy-back bandwagon, announcing that its board will meet on January 15, to consider a proposal to buy back its shares.

The buy-back announcement confirms market rumours of an impending buyback circulating for some time.

Analysts say the buyback proposal was made possible by the two tranches of cash infusion which will help Raymond to finance the buy-back of its equity.

The news propelled the Raymond scrip to a close of Rs 129.95 from its last close of Rs 121.

The buy-back, if approved will also help the Singhania group hike its stake from the existing level of around 25 per cent.

Raymond recently struck two deals with Lafarge of France and Thyssen AG for disposing of its cement and steel units respectively. While the woollen textiles major has received a cash bounty from Thyssen AG for its steel unit, it is awaiting the Rs 785 crore payment from French cement giant Lafarge for the Bilaspur cement plant.

Raymond divested its steel undertaking to EBG, a subsidiary of ThyssenKrupp Stahl for a total consideration of Rs 412.26 crore. This involves a cash payment of Rs 386.86 crore.

As per the terms of the agreement, the steel undertaking will be transferred to a new company, EBG India Pvt Ltd, in which EBG will hold a 76 per cent controlling interest and Raymond will hold the remaining 24 per cent. Out of the total consideration, the remaining Rs 25.40 crore will be issued in terms of 2.54 crore shares of Rs 10 each of EBG India to Raymond.

While Raymond received the cash payment for the steel unit, Gautam Singhania, chairman and managing director, Raymond, had then hinted at the possibility of the company completely exiting the joint venture at a later stage. He however, said that though the option for sale of this 24 per cent is open, Raymond has, for the time being, decided to retain the stake for a period of 5 years.

However, a senior official from Raymond confirmed that the consideration for the cement unit sale is expected within a month.

“We have to get some paper work done from our side and as soon as it is complete, we will approach Lafarge for payment,” he said.


New Delhi, Jan 5: 
Trade union leaders today asked finance minister Yashwant Sinha to set up a fund for rehabilitating sick industries.

In a pre-budget meeting with the finance minister, the trade union leaders expressed concern about the increasing incidence of industrial sickness and the failure of the Bureau of Industrial and Financial Restructuring (BIFR) to find a solution.

Union leaders said small scale industries (SSIs) were hard hit by cheap imports of consumer goods, which is proving to be a major deterrent for the domestic industry to invest in research and development (R&D) to improve quality.

Protection and creation of employment opportunities is more important than increases in wage structures, they added. The meeting was attended by representatives of Bharatiya Mazdoor Sangh, Centre of Indian Trade Unions, Indian National Trade Union Congress, Hind Mazdoor Sabha and All India Trade Union Congress.

Sinha said, “The last budget had provided significant financial incentives for the housing industry. Projects like National Highway Development will also provide many job opportunities.”


Calcutta, Jan 5: 
Gillette India, a subsidiary of the Boston-based multinational Gillette, has decided to sell its entire 50 per cent stake in Luxor Writing Instruments to the $ 6.3 billion US firm Newell Rubbermaid.

The sale will give Rubbermaid a foothold in the Indian writing instrument market. Luxor manufactures and sells Gillette’s global brands — Parker, PaperMate and Waterman.

A senior Gillette India official, while confirming the development, said both companies are currently working out the modalities for the sale.

The official said the transfer of Gillette’s share in Luxor to Rubbermaid will be completed shortly. However, he did not reveal the price of the transfer.

Rubbermaid is also in the process of applying to the Foreign Investment Promotion Board (FIPB) for its approval.

Rubbermaid acquired the entire stationery division of the US multinational on Tuesday.

Newell Rubbermaid vice-chairman and CEO William P. Sovey said, “We are excited about the opportunity to leverage these highly recognised brands.”

Sovey further pointed out “The strong international presence of these brands further broadens our existing product offering and optimises our global distribution channels.”

Sources close to Gillette Co said the global FMCG major was looking for a buyer for its stationery division which has suffered a persistent decline in sales and profits over the last two years.

The sales of the stationery division recorded a 13 per cent negative growth last year and stood at $ 743 million compared with $ 856 million in 1998 and $ 924 million in 1997.


New Delhi, Jan 5: 
The Delhi-based Ranbaxy Laboratories Ltd has decided to divest its 50 per cent stake in Eli Lilly Ranbaxy Ltd and will acquire around 3,600 fully-paid equity shares of Rs 100 each, representing 100 per cent of the paid-up equity capital of Gufic Pharma Ltd, an unlisted company.

These decisions were taken at a board meeting of the pharmaceutical major in the capital today. Ranbaxy, in a communication sent to various stock exchanges, said the board approved the divestment of 7.2 million shares of Rs 10 each held by it in the joint venture. This represents 50 per cent of the equity capital of the joint venture and Ranbaxy’s equity stake will be sold in one or more tranches to Eli Lilly Netherlands BV and/or its affiliates/nominees subject to requisite approvals, the company added.

In a statement, Ranbaxy also said that it will make a formal announcement on the milestone payment it would be receiving from Bayer India. The company was slated to receive a payment of around $ 5 million from Bayer. Ranbaxy added the announcement is scheduled to be made along with its forthcoming third quarter results.

Both these announcements saw the Ranbaxy scrip flaring up on the bourses today. Opening at Rs 628.90, the scrip zoomed to an intra-day high of Rs 670, before closing slightly lower at Rs 661.20. Over 18 lakh shares were traded on the counter, resulting in a turnover of Rs 118.20 crore. Market circles said the reason behind the good buying in the counter was positive expectations from the Bayer deal.

Pharmaceutical analysts told The Telegraph that Ranbaxy is likely to receive around Rs 15 crore for the sale of its stake in the joint venture with Eli Lilly.

However, they added the company was unlikely to announce spectacular third quarter results due to the lackadaisical performance of the domestic sector in segments like antibiotics and anti-infectives so far. The joint venture with Eli Lilly, a US-based giant was marketing a range of formulations like Illetin, Humalog and Himinsulin for diabetes, besides Gemcite. It was formed in 1995 to manufacture bulk drugs for the US market. The company was at one stage, even working on clinical trials on a new human insulin combination used in the treatment of diabetes. For the financial year ended March 31, 2001, the joint venture reported a turnover of around Rs 63 crore.

Recently, however, both partners witnessed some strains in their relationship with the venture even calling off plans to undertake manufacturing activities that were envisaged to position the venture among the top 30 players in the country. Both companies had also called off another joint venture Lilly Ranbaxy Pharmaceuticals Ltd scheduled to be based in the US.

Earlier, Nicholas Piramal had acquired four brands — Mucokef, Zidime, Keroxime and Lovir — which were marketed by the joint venture.



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