Fresh Birla push for cement selloff
Telco raises prices of Indica, Sumo
WTO offers leeway
Sterlite net profit up 57% at Rs 38 crore
Fixed phone operators on the offensive
Gesco to buy 3 crude carriers for Rs 525 cr
Bengal snubs debtor CESC
Foreign Exchange, Bullion, Stock Indices

Calcutta, Jan. 11: 
The Birla satraps — Basant Kumar Birla, Sudarshan Birla and Chandrakant Birla — are likely to come together again to sell their major cement plants spread across the country under separate companies.

Sources close to the family say the Birlas have already had several “informal” discussions among themselves although a concrete plan has yet to emerge.

“The Birlas are taking a fresh look at the plan to pool their assets particularly in view of major developments in the global cement market including French major Lafarge’s move to take over Blue Circle of the UK,” they added.

Asked about the development, B.K. Birla said nothing could be said at this point of time.

“The cement market is looking up now with the offtake being increased substantially. Therefore, everything depends on what price we get for our assets in the cement divisions,” Birla said.

Earlier, the Birlas had put six of their major cement plants on the block and Blue Circle was reported to have been keen to acquire them.

S.K Birla’s Mysore Cement has two units (2.1 million tonnes per annum), B.K. Birla’s Kesoram Industries has three units ( 2.1 mtpa) and C. K. Birla’s Orient Cement has one unit with a capacity of 1.2 mtpa which were put up for sale.

“But Blue Circle walked away from the deal as it was undergoing restructuring. Since Lafarge is close to taking over Blue Circle (after its recent bid of $ 3.6 billion bid for the UK cement maker), fresh negotiations are likely to begin with the French cement maker,” sources said.

The cement plants of Century Textiles and Mangalam Cement, which are under B.K. Birla’s control, are not part of the deal.

Since Century is promoted by Pilani Investment, in which the Birlas have cross holdings, its assets could not be pooled with the others as part of the selloff exercise.

Lafarge has established a strong base in India after taking over the cement plants of Raymond and Tata Steel with an investment of over Rs 1300 crore.

Lafarge officials could not be contacted to confirm that the cement maker had initiated talks with the Birlas. However, sources said the French company was looking at all potential cement plants which are being put on the block.

“Lafarge does not have presence in several areas including South India where some of the Birla plants are located. But nothing can be said until the formal talks between the Birlas and Lafarge take place,” sources said.

While S.K. Birla and C.K. Birla could not be contacted, B. K. Birla said the cement industry in the country is poised for growth.

“We expect to see a spurt in cement sales until June. The growth is, in fact, long overdue,” Birla said. Although the cement industry in India is already in for a major consolidation, the Birlas are not keen to embark on a brand building exercise or a nationwide marketing drive.

“We are not a national player like ACC which has plants across the country. But we are traditionally strong in our local areas where we beat most of the leading cement brands, no matter which major stable they come from,” Birla said.


Mumbai, Jan. 11: 
Tata Engineering today confirmed that it has raised the prices of its small car Indica and multi-utility vehicle Sumo. The increase, which varies depending on the car model, will be in the range of Rs 5500-to-Rs 8500. For the Sumo, the price hike is in the range of Rs 5500.

A Tata Engineering spokesperson denied it was following a trend set by Maruti yesterday which raised prices of several of its car models. “We raised the prices from January 1,” he clarified.

Analysts tracking the sector say the costs of inputs have gone up considerably in the last half of the calendar year 2000. Moreover, the stringent emission norms have resulted in additional costs for the auto manufacturers.

Further, auto manufacturers generally hike prices before the Union budget, a trend that has been noticed for several years now. The fact that the market has become stagnant in the past few months had however forced manufacturers to postpone the hike.

Other manufacturers including Maruti Udyog, Hyundai Motors and Daewoo Motors have also increased prices of their small cars. Most car manufacturers insist that only part of the cost escalation has been passed on to the customers.

A majority of the car manufacturers have shown a slowdown in sales for the month of December. Sales of Tata Indica have mirrored the general trend prevailing in the industry. For the month of December, Tata Indica sold 2243 vehicles, down from the 2424 vehicles sold in November. In the first nine months of the current fiscal, Tata Indica sales were up marginally at 31,958 cars as against 31,834 cars sold in the same period of the last fiscal.

However, Telco said its market share in December 2000 stood at 17 per cent in the small car segment and 8 per cent in the total passenger car segment.

Tata Engineering is confident the Indica project will break even by the end of the current fiscal, despite the fact that the target has been sizeably scaled down from 90,000 to 70,000 vehicles.

Meanwhile, the Tatas and PSA Peugeot Citroen have recently announced a joint feasibility study for the manufacture of a sedan version. They will study whether a three-box model can be mounted on Peugeot’s PSA-2 series platform, which essentially is built for its hatchback versions.

The study will take six months to complete. A team comprising PSA Peugeot and Telco engineers will be set up soon to conduct the study.

However, the French car major’s likely re-entry into the Indian car market is not without controversy.

A section of the press has quoted sources in financial institutions as saying that they will try to persuade the Tatas to do a rethink on the subject.


Hyderabad, Jan. 11: 
The World Trade Organisation (WTO) is likely to provide more grace period to implement the new trade rules in an effort to soften the cultural shock and aberrations within the country.

WTO director-general Mike Moore, who was gheraoed and hassled by the CPM activists during his visit to Puttaparthi, said such concession is given on case by case basis. “It is nothing unusual, as many countries had taken longer period to straighten their legal and legislative procedures before seeking membership of the WTO,” he said.

He said the WTO could not make much progress in its endeavour without the participation of India and said the country’s national income will go up by 4.4 percent in the second round of reforms and liberalisation.

Moore said the negotiations for the WTO on the agricultural subsidies and services sector were due in March at Geneva. “We hope to sort out all injustices and imbalances in the application of article 24 on the issue of exports,” he said.


Mumbai, Jan. 11: 
Metals major Sterlite Industries (India) Ltd has reported a 57 per cent rise in net profit for the quarter ended December 31, 2000. Net profit rose to Rs 37.63 crore as against Rs 24.02 crore in the same period of the previous fiscal.

Sterlite said during this period, net sales increased from Rs 462.97 crore in the previous corresponding quarter to Rs 735.67 crore in the current year, up by around 59 per cent. Other income rose by 99.82 per cent from Rs 5.40 crore to Rs 10.87 crore.

Exports during the reporting quarter increased by 180 per cent at Rs 83.65 crore (Rs 29.88 crore in the second quarter of last year).

For the first half of current fiscal, the net profit was Rs 73.12 crore (Rs 45.19 crore) while income from operations stood at Rs 1,500.29 crore (Rs 871.37 crore), it said. Exports grew in the first half at Rs 174.79 crore (Rs 30.05 crore).

Meanwhile, the company’s board today approved its proposal to spin off the power transmission line aluminium conductor business into a 100 per cent subsidiary. This restructuring, which is subject to necessary approvals, will enable the new entity pursue its growth plans independently, the company said.

During the previous fiscal year, the sales volume of power transmission line aluminium conductors rose by nearly 5 times to 16,446 km, with the turnover increasing by 137 per cent to Rs 133.8 crore as against Rs 57 crore in the previous year. The company is optimistic about the demand for this commodity with the Power Grid Corporation planning to distribute 70,000 MW of power in the country in the next decade involving a total outlay of over Rs 39,000 crore. Sterlite now plans to enhance the product portfolio in related segments.

Sterlite is now a focussed non-ferrous metals and mining company. This follows the restructuring proposals submitted by Arthur Andersen which led to its telecommunication business being hived off into a separate company.


New Delhi, Jan. 11: 
A day after cellular operators threatened to freeze all future rollout plans and investments, fixed telecom operators have hit back, arguing the recent recommendations of the Telecom Regulatory Authority of India (Trai) on limited mobility will provide an impetus to foreign direct investment (FDI) in the telecom sector.

“With the introduction of wireless in local loop for limited mobility as recommended by Trai, basic services now provide an attractive investment opportunity for investors, both domestic and overseas,” said S. C. Khanna, secretary general of the Association of Basic Telecom Operators (ABTO).

ABTO said the regulator in its recommendations has accorded centre-stage to consumer interest. Limited mobility through WiLL for basic service operators is aimed at bringing in cheaper mobile telephony.

“Affordability will be the key driver of India’s telecom revolution and this recommendation is a step in the right direction. It will also provide an impetus to the implementation of the National Telecom Policy 1999,” said Khanna.

“Investment will not be a problem for this sector. Many telecom companies have finalised their plans to bid for offering fixed and cellular services. This segment of the telecom sector (fixed line) would see a spate of investments in the vacant and licensed circles once the policy guidelines detailing terms and conditions are announced by the department of telecommunications,” he added.

Basic services offered through WiLL handheld terminals differ from the presently available cellular mobile phones and will be primarily used for voice communication. Trai has recommended cheaper tariffs of Rs 1.20 for a three-minute call using WiLL connection, as applicable at present to fixed telephones, as against Rs 12 for cellular mobile phones.

“Essentially this would be a common man’s mobile phone whereas the cellular remains a premium mobile phone service. Thus the market segment addressed through WiLL limited mobile services will not be the prospective cellular phone users, but a niche market which will help increase teledensity and also rural teledensity,” said Khanna.

The Infrastructure Development and Financial Corporation (IDFC) has already supported the WiLL-based mobile phones.

Deepak Parekh, IDFC chairman said, “I am glad that somewhere along the way we have also developed considerable respect for technological realities. This is especially evident in the telecom sector. One instance is the recent re-thinking in the government that full mobility should be allowed for WiLL services being offered by the operators of fixed services.”


Mumbai, Jan. 11: 
Great Eastern Shipping Company Ltd (Gesco) has decided to acquire three new Aframaxes (crude carriers) at a cost of around $ 114 million (Rs 525 crore). This is expected to shore up the tanker earnings of the company.

The acquisition. which is part of the restructuring strategy to substitute older ships by younger ones, is likely to be financed by a mixture of debt and equity.

Speaking to The Telegraph, Balan Wasudeo, chief financial officer of Gesco, said ships with age of around 20 years will be phased out and substituted by relatively younger second hand ones.

Within its shipping division, the company has two segments—dry bulk carriers (for the transportation of iron ore and steel products) and tankers which includes crude and gas carriers.

According to sources, Gesco will focus more on tankers rather than dry bulk carriers.

Gesco, which is looking aggressively at transportation of liquefied natural gas (LNG) in the country, has formed a joint venture with Indian Oil Corporation (IOC) and Exmar of Belgium. The consortium has bid for the transportation of LNG to Petronet’s storage and regasification terminals.

Petronet, promoted by four public sector undertakings, is planning to set up receiving, storage and regasification terminals at Dahej and Kochi for LNG to be imported by it.

Petronet had earlier specified that the bids will be made only by consortiums formed by prequalified foreign companies along with domestic shipping companies. Wasudeo said the minimum investment required for transportation of LNG is likely to be around Rs 200 crore.

At present, the shipping industry is at its historical peak with tanker charges doubling in the space of 12 months.

According to company sources, as against an yield of $ 15,000 per day in April last year, the earnings have swelled to $ 35,000 per day now. The sharp hike in the crude carrier category has been attributed to the sudden swing in supplies and demand of crude oil. Further, the harsh winter seen in many developed countries has also added to the upswing.

Sources added that the current upswing is likely to continue till 2003 after which the shipping market is expected to soften.


Calcutta, Jan. 11: 
The West Bengal power department is getting tough with CESC. It has asked the power utility to source power from the National Thermal Power Corporation (NTPC) directly, rather than depending on West Bengal State Electricity Board (WBSEB).

Confirming the move, power secretary Asim Barman told The Telegraph, “CESC officials met me recently to discuss their outstanding dues to WBSEB. I have told them that if they fail to pay the SEB then they should directly buy power from NTPC.”

According to the existing formula, WBSEB buys power from NTPC and then sells it to CESC. The city-based power utility’s demand varies between 960-980 MW. It generates about 700 MW of power and procures the rest from WBSEB and Damodar Valley Corporation. In 1999-2000, CESC had bought 244 million units of power from DVC and 1332 million units from WBSEB and sold 4937 million units.

Barman said, “We have informed CESC that we will help them wheel (transmit and distribute) the power they will buy from NTPC through WBSEB’s transmission and distribution network. For this CESC will have to pay a wheeling charge to WBSEB.”

WBSEB has decided to restrict power supply to the extent of 210 MW to CESC. Earlier, it used to supply 280-290 MW to CESC in the peak time.

The power secretary said, “It has become important for us to pull WBSEB out of a severe financial crisis. We have to find ways and means to restore the financial health of the SEB.”

Senior CESC officials said, “We are exploring all possibilities.”

CESC has four generating stations at Mulajore (190MW), Titagarh (240 MW), southern generating station (135MW) and Budge Budge (500MW). Its transmission and distribution losses are at 22.57 per cent.

When contacted, WBSEB chairman G.D. Gautama said, “There is no fixed formula for determining the wheeling charge. But it is not a huge amount. It is inbuilt in the power purchase agreement that we have with CESC now.”

The outstanding receivables of WBSEB from CESC as on December 31, 2000, stood at Rs 963.54 crore inclusive of the accrued late payment surcharge of Rs 184.27 crore. In December last year, CESC paid only Rs 17 crore against the payable amount of Rs 27.07 crore. WBSEB is raising its claim strictly as per provisions of the power supply agreement.

Reacting to WBSEB’s stand to restrict power supply to CESC to the extent of the monthly payment made by the latter, Barman said, “We are following the same philosophy as practiced by NTPC.”

NTPC has adopted a similar stance with the SEB. Since WBSEB was not in a position to pay NTPC for the power it purchased, the central power utility decided to supply power to the extent of Rs 25 crore. WBSEB has a letter of credit of Rs 25 crore for buying power from NTPC.



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