Mandatory sale of 75% tea via auction scrapped
Cheap MTNL tariff to ring in cellular rate war
CESC accuses power board of padding bills
Command to have more base stations
Mastek net dips
Tata move to pick up full TAML stake
Bates to prepare brand strategy to market Bengal
Computer sales blink, target pruned
Clamour for duty cut
Foreign Exchange, Bullion, Stock Indices

Calcutta, Jan. 12: 
The government today scrapped the provision that requires tea producers to sell 75 per cent of their output through the tea auctions.

The decision to dump clause 17 of the Tea Marketing Control Order 1984 will give tea producers the freedom to cut deals directly with tea buyers.

The commerce ministry communicated the decision to Indian Tea Association chairman R.S. Jhawar this afternoon. “With this amendment, a long-standing demand of the industry has been fulfilled. Tea producers will now have the choice to sell tea either through auctions or privately,” commerce and industry minister Murasoli Maran said in the statement.

The tea industry had been urging the government for quite some time to jettison the directive that makes it mandatory for them to route 75 per cent of their teas through the auctions.

The producers were jubilant over the announcement though they felt that it would not have an immediate impact on the time-tested auction system.

However, other clauses like licensing of brokers/auction committees to bring about an improvement in the auction system and the registration of tea producers with the Tea Board of India remain in place.

Aditya Khaitan, who handles the tea operations of the Williamson Magor group, said, “This will give tea producers greater flexibility. They will now have the option to route teas through the auctions or sell it directly to the private parties. But as far as our group is concerned, we will obviously sell our teas through the auctions. I think all the big houses will route their teas through the auctions.”

Industry officials said the directive had lost a lot of its relevance as the big producers were not selling more than 55 per cent of the total production through the auctions.

“They have never gone beyond that level,” they said.

Reacting to the government move, P.K. Sen, chairman of Carritt Moran Company, one of the major auction houses in the country, said, “I have not yet received a copy of the order. I have heard about it. I personally feel that the auction system will not be immediately affected. The committed producers will continue to sell their teas through auctions.”

Khaitan also said it will have no immediate impact on the flow of tea through the auctions.

The industry agreed that payment was secure at the auctions. “The producers might burn their fingers by placing teas with private parties,” a senior official of Assam Company said.

A senior official of Calcutta Tea Traders Association (CTTA) added that the auction system has a lot of merit and that has been proved several times. “There is transparency in the mode of payment in the auctions. The payment is guaranteed,” he said. The small growers will have to depend on the auction. They will not prefer to take the risk of selling tea directly to the private parties.

The tea industry faces increasing competition from other beverages. Demand for tea in the urban markets has slowed with consumer preferences shifting to other beverages following an increase in income levels.

“The removal of the directive will enable us to market teas in a more profitable manner,” the Assam Company official said.

Gautam Bhalla, the chairman of the export sub-committee of Consultative Committee of Planters’ Association, said, “There may be some impact on the auction system three or four years down the line.”

Year-on-year tea production till November 2000 rose by 34 million kg over the corresponding month in 1999.


Mumbai, Jan. 12: 
Mahanagar Telephone Nigam Ltd (MTNL) today caught the private cellular operators on the wrong foot by unveiling a tariff plan that is much cheaper than what is offered by them. But not to be put off by the public sector phone major’s challenge, AirTel, the cellular service provider in Delhi, announced that it is slashing its rates to match MTNL’s offer.

Union communications minister Ram Vilas Paswan today announced the rates for MTNL’s cellular phone service, ‘Dolphin,’ at Rs 1.50 per minute for incoming calls and Rs 2.70 per minute for outgoing ones.

“Monthly rentals for the mobile phone will be Rs 400, and registration for the service will begin on January 15 and February 15 in Delhi and Mumbai respectively,” Paswan told newspersons here today.

Paswan said MTNL will commence its cellular services from January 26 in Delhi and February 28 in Mumbai.

The minister’s announcement sent private cellular operators into a huddle soon after.

Terming MTNL’s tariff plan as aggressive, AirTel’s chief executive officer Sanjay Kapoor said, “We would do everything to retain our customers,” adding, “We will make our tariff comparative to MTNL but we will not adopt a strategy to match our tariffs penny-by-penny.”

The AirTel cellular service run by the Sunil Mittal-promoted Bharti Group, claims a subscriber base of more than 2.5 lakh.

The Cellular Operators Association of India (COAI) said lower cellular tariffs by MTNL would increase the period of losses for the private operators.

“Private operators will have to match MTNL’s tariff and this will result in increasing the period of loss for private operators as this will not be a cost-based tariff for for us,” COAI director general T V Ramachandran said.

Speaking to The Telegraph, Asim Ghosh, managing director and chief executive officer at Hutchison Max, the country’s leading cellular phone operator said, “We are studying their offer.”

“We are committed to providing affordable services to our customers. From Rs 16.80 per minute when we first launched our service to the current rate of Rs 3.60, it has been our policy to aggressively price our service,” Ghosh added.

In the first phase, MTNL will cater to one lakh customers, increasing the number to three lakh users in the second phase, the minister said. Subscriptions will be on first-come-first-served basis, the minister said, adding one-third of subscriptions will be reserved for women.

Mobile phone services will be internet compatible, with features like wireless application protocol and messaging, S Ramini Iyer, MTNL chief general manager (Mumbai) said.

“We expect a minimum utilisation of 300 minutes during the first phase in Mumbai,” Iyer said.

Regarding the use of wireless in local loop (WiLL) technology for land lines, Paswan said tenders for introducing the service in basic telephony have been finalised.

The government has permitted VSNL to enter the direct-to-home business he said, adding, “It already provides uplinking facilities for television broadcasting.”

VSNL chairman and managing director S C Gupta, said the corporation was finalising details for rolling out DTH services and is in talks with financial institutions to lease equipment for the same.


Calcutta, Jan. 12: 
The war of words has escalated between CESC and the state-owned West Bengal State Electricity Board (WBSEB) with the RPG-owned power utility contesting the power purchase bill furnished by the state-owned agency and disputing the figures. In a note sent to the state power department on Thursday, CESC said WBSEB’s claims relating to current and outstanding dues is incorrect.

The move comes in the wake of WBSEB’s decision to slash power supply to CESC to 210 MW against the normal level of 280-300 MW.

CESC says the Rs 27 crore bill for December 2000 comprises Rs 19 crore for power purchase and the remaining Rs 8 crore is for past interest charges which are under dispute. Therefore, the power purchase amount is Rs 19 crore and not Rs 27 crore.

Even the Rs 19 crore bill for power purchase has a disputed sum of Rs 3 crore leaving a net payable amount of Rs 16 crore against which CESC has paid Rs 17 crore. CESC claims that the dispute of Rs 3 crore in December arises on two counts — tariff dispute and transmission losses.

The company has informed the state power department that when the CESC tariff was revised in October 1998, Rs 96 lakh per month was provided by the power department to cover the prospective WBSEB tariff increase. But when the WBSEB tariff revision was implemented, the actual increase was much higher at Rs 3.7 crore a month, the company claims. CESC decided to pay WBSEB only to the extent provided by the power department in its tariff revision — that is, Rs 96 lakh. CESC has also argued that SEB provides bulk power to it at 132 KV and the transmission loss is 3-4 per cent. The company claims that SEB is charging them for a 20 per cent transmission loss.

The company claims that in April-December last year, WBSEB has billed Rs 245 crore out of which a sum of only Rs 195 crore related to power purchase. This amount contained Rs 33 crore relating to overcharging of tariff and T&D loss. The power purchase bill is Rs 162 crore and the company says that it has paid Rs 157 crore out of that and there is a shortfall of only Rs 5 crore. The company argued that the interest calculation by WBSEB was grossly fallacious since it is based on an inflated principal amount and calculated on a compound basis.

According to WBSEB’s calculation, the outstanding dues of CESC as on December 31, 2000 is Rs 963.54 crore, out of which Rs 600 crore is the principal amount. But the company rubbishes the claim and says the principal amount is Rs 360 crore only.


Calcutta, Jan. 12: 
Usha Martin Telecom, which provides cellular services in the city under the Command brandname, will invest Rs 60 crore by June this year to set up 45 additional base stations.

The company has invested around Rs 25 crore over the last few months to add 13 new base stations, taking the total number to 55.

Chief operating officer Rajiv Sawhney said the investment is not only expected to rev up capacity to enable the company handle more traffic, but will also raise the quality of its services to international levels.

“The cell-phone industry is poised for cut-throat competition with several new players coming in. So, it is the quality of service which will matter in future,” says Sawhney.

With the expansion of its network, the company also plans to raise its voice-carrying capacity using a technique called synthesised frequency hopping.


Mumbai, Jan. 12: 
Mastek Ltd today reported a 54 per cent drop in net profit for the quarter ended December 31, 2000. Net profit plummeted to Rs 2.80 crore as against Rs 6.10 crore in the corresponding period of the previous year. Income from operations during this period went down to Rs 20.90 crore against Rs 22.43 crore in the same previous period.    

Mumbai, Jan. 12: 
In yet another sign of consolidation within the Tata group, Tata Industries Ltd today made an open offer to the shareholders of Tata Advanced Materials Ltd (TAML) to acquire its entire remaining shareholding, comprising 52,98,884 equity shares of Rs 10 each, at Rs 15 per share payable in cash.

In a communication sent to the stock exchanges today, the Tatas said this decision was taken by the committee of directors, appointed by the company’s board, at a meeting held today.

As per the company’s shareholding pattern on March 31, 2000, while Tata Industries holds over 49 per cent in TAML, 48 per cent is with the public, the rest being held by foreign investors and local financial institutions.

On the BSE today, the scrip closed at Rs 7 after opening at Rs 7.05, registering only two trades of 200 shares.

TAML manufactures various products for the defence sector, including bullet proof jackets, armoured vehicles, antenna reflectors among others. Recently the company bagged an order over Rs 16 crore from the ministry of defence.

Incorporated on November 1989 as Matrix Materials Ltd, it was rechristened TAML with effect from November 18, 1992. The company had earlier announced its decision to set up a project for manufacturing composite products like polymers, ceramics and metals.

TAML had earlier faced severe pressure on both its topline and bottomline and was put under provisions of the Sica Act, 1985. The Board of Industrial and Financial Reconstruction (BIFR) had in this direction, appointed the Industrial Development Bank of India (IDBI) as an operating agency and authorised it to prepare a revival plan. During the 18-month period ended March 31, 2000, the turnover of the company declined to Rs 3.31 crore against Rs 9.77 crore while the loss stood at Rs 7.91 crore.

However, during September this year, the company was declared to be outside the provisions of the Sica Act by the Appellate Authority for Industrial and Financial Reconstruction, following approval of a revival scheme proposed by the company. Consequently, AAIFR directed TAML to convert its ICDs of Rs 15 crore given by Tata Industries into equity shares.


Calcutta, Jan. 12: 
What Alyque Padamsee has done for Andhra Pradesh, CEO and managing director Madhukar Kamath of Bates India (formerly Clarion Advertising) hopes to do for West Bengal.

State commerce and industry minister Bangsagopal Chowdhury has asked Kamath to prepare a brand strategy for Bengal as part of an effort to woo investors to the state.

“We will immediately send him an approach paper. It will be an interesting exercise to develop a state as a brand,” said Kamath. Chowdhury commissioned the exercise on Friday.

Bates has carried out a similar exercise for the Maharashtra tourism department but this opportunity presents a much larger canvas.

Kamath told The Telegraph that, “The brand strategy is very important — as much for a state as for fast moving consumer goods. In the case of West Bengal, the success of the strategy will depend on how you highlight the positive side of the state to make it a favoured destination for investors.”

Andhra chief minister Chandrababu Naidu, who likes to call himself the state’s CEO, has already appointed Alyque Padamsee as the communication consultant to the state. Kamath said West Bengal should be developed as a brand which will attract investors. The Bates CEO has already sought the study papers prepared by McKinsey on West Bengal.

Kamath was present at Bengal Chamber of Commerce & Industry to listen to Chowdhury’s address.

The industry minister invited private partners for the Rs 300 crore statewide optical network project. “We want Rs 100 crore from the private partner,” he said. He also sought private funding to computerise 10,000 schools in the state over the next three years.

The BCCI members said an attitudinal change was required at all levels of the state government.

Reacting to a question raised by Bhaskar Banerjee, senior managing director of Duncans Industries, Choudhury said the recommendations of the task force are being implemented. “It may take time but we are doing it,” he said.

He said a land bank was being created out of the surplus land available with the sick industries located at Howrah, Hooghly, North 24 and south 24 parganas. A committee has also been set to settle land disputes.

The BCCI members drew the minister’s attention to the poor infrastructure in Haldia and other parts of the state.


New Delhi; Jan. 12: 
Is the boom in the personal computer market set to go the dotcom way? At least cold figures for the first half of 2000-01 indicate that all is not hunky dory with this new age sector in India.

The gloom seems to have engulfed the Manufacturers Association for Information Technology (MAIT) which has scaled down the PC sales target from 19 lakh units to 17.4 lakh units for the current year.

During the first half of 2000-01, MAIT said, PC sales grew by 26 per cent as against the targeted 40 per cent. In 1999-2000, PC sales grew by 37 per cent.

According to MAIT statistics, assembled personal computers, including lesser known regional brands and unbranded systems, continued to dominate the Indian market and accounted for 59 per cent of total PC sales. In fact, the share of the assembled brands has remained consistent at 58 per cent for the last consecutive four ‘half years’ (October 1998 to September 2000). During the first half of 2000-01, the market share of multinational brands increased from 22 per cent to 24 per cent, while that of Indian brands fell from 21 per cent to 17 per cent.

The desktop PC market crossed 8.3 lakh units, registering a growth of 26 per cent over the same period last year and 12 per cent over the second half of 1999-2000.

MAIT’s industry performance review, conducted by the Indian Market Research Bureau, is bi-annual and aims to address the hardware sector’s efforts to manage the business environment, gauge the market potential and consumer trends. The study encompasses four broad product segments—computers, networking products, printers and other peripherals.

PC sales in the business segment grew by 19 per cent while in households it grew by 53 per cent, MAIT said. The business segment continued to account for the major chunk of the market—76 per cent.

The smaller sized establishments registered a growth of 50 per cent during 1999-2000 accounting for over 25 per cent of the total PC sales. The overall size of the small and medium enterprises has come down from 58 per cent in first half of 1999-00 to 51 per cent in the same period of 2000-01.

The networking market witnessed an impressive growth. Over 4.4 lakh NIC (network interface cards), over 80,000 hubs and 3.23 lakh modems were sold in the first half of 2000-01 registering a growth of 26 per cent, 36 per cent and 51 per cent respectively.

Interestingly, the household segment accounted for 43 per cent of the modem market in 1999-2000. The high rate of growth in the modems can be attributed to the fast growing internet penetration in the country.


New Delhi, Jan. 12: 
The infotech hardware industry today asked the government to remove customs duty on all imported IT parts and components, abolish special additional duty (SAD) and reduce local levies to make personal computers and its parts affordable for the common man.

In its recommendation to the government for the forthcoming Union Budget 2001-2002 and the Export-Import Policy (Exim) MAIT, the apex association of IT hardware manufacturers, has asked for zero customs duty on all imported parts and components, especially items of dual usage—which can be used both for IT and telecom sectors.

It has suggested the setting up of special economic zones (SEZs) for IT hardware as a possible solution. MAIT has also sought a minimum 10 per cent duty differential between input parts/components and finished goods.

It has requested the government to simplify procedures to increase the velocity of business through the process of ‘self-declaration’ based clearance for all IT imports and exports. MAIT also urged the government to abolish special additional duty (SAD) on all IT products; reduce local levies like excise duty to 8 per cent and sales tax to nil to make IT affordable to the masses.

Striking a swadeshi cord, MAIT has sought exemption for the products/technology developed and exported from India. The hardware association has sought exemption of corporate tax on earnings from IT technology exports and amendment to the bilateral treaties to exempt withholding tax.



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