VSNL puts cellular plans on hold
Consensus on selloff strategy
Sinha wants to push through insolvency law
More flights to HK, Russia
More stock options for NIIT employees
Bajaj reaffirms faith in scooters
Sensex leaps 73 points
Tata Tea third quarter net dips 24%
Hoteliers pressfor luxury tax exemptions
Foreign Exchange, Bullion, Stock Indices

 
 
VSNL PUTS CELLULAR PLANS ON HOLD 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 22: 
Videsh Sanchar Nigam Limited (VSNL) has deferred its plans to offer cellular services but will enter Direct-to-Home (DTH), domestic long distance and fixed telecom services.

The company is also preparing to harness the potential of internet telephony whenever the government decides to open up the sector.

VSNL had announced its plans for a cellular foray last year. But with the offer a “limited mobility” option to fixed-line telecom operators and Bharat Sanchar Nigam Ltd, it has decided to put these plans on hold.

Announcing the company’s third quarter results, VSNL chairman and managing director S.K. Gupta said, “The issue of limited mobility has forced us to re-assess the viability of the cellular project. But VSNL has started looking beyond 2002. It is changing its business profile from that of an international carrier to an integrated communications solutions provider. We are now chalking out plans for investment in newer services like DTH.”

Said Gupta, “If necessary we may use our strength as the largest internet service provider to enter fixed line telephony. We also hope to benefit when the government allows internet telephony.” According to an internal estimate, VSNL could lose more than Rs 100-200 crore in a month due to the illegal use of internet for making long distance calls.

“If a subscriber decides to route his calls through the Net for one hour everyday during the peak hours, we could lose more than Rs 200 crore. It would be more if we take into account the subscribers using IP telephony through connections of private internet service providers (ISP),” said a vigilance officer in VSNL.

However, VSNL is bullish about its DTH plans. Gupta said the company is “technically” well-equipped to offer DTH services. “Issues like development of content and others are being evaluated and a decision will be taken soon,” he added.

Q3 net jumps 34%

The company today announced a 34 per cent surge in net profit at Rs 400 crore in the third quarter of financial year 2000-2001 as against Rs 298 crore during the corresponding period last year.

The internet subscriber base grew by 73 per cent to 5.57 lakh during the third quarter as against 3.22 lakh during the same period last year.

VSNL’s total Q3 revenues grew by 23 per cent at Rs. 2,062 crore as against Rs. 1,682 crore during the corresponding quarter.

MTNL plans cash card

PTI adds: Mahanagar Telephone Nigam (MTNL) is planning to introduce a cash card for its cellular subscribers within two months of its operations from January 31, a top company official said. “We will introduce the cash card. First we want to see our billing operations after launching the services and then give our subscribers the option of cash card,” MTNL’s chief general manager (Delhi) K H Khan told reporters.

   

 
 
CONSENSUS ON SELLOFF STRATEGY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 22: 
Communications minister Ram Vilas Paswan and disinvestment minister Arun Shourie have, at last, reached a consensus on Videsh Sanchar Nigam Ltd (VSNL). Chances are bright that Paswan’s ministry will accept Shourie’s proposal of offloading seven per cent in VSNL to its employees and public in the first phase.

Paswan today said his ministry had accepted the divestment ministry’s proposal on VSNL and it would be taken up at the meeting of the Cabinet Committee on Disinvestment (CCD) on January 30. “We have more or less accepted the proposal. It is likely to be taken up at the CCD.”

At present, the government holds a 53 per cent equity stake in VSNL.

Speaking at the launch of ‘Business Partnership Initiative between India Post and IDBI here today’, Paswan said, “both ministries have reached a consensus on the issue. Another round of meeting should decide about the final outcome.”

IDBI pact with postal wing

The postal department and Industrial Development Bank of India (IDBI) Principal Asset Management Company today entered into a joint business partnership which will make available all current and future investment opportunities from IDBI to the Indian investors through the post offices across the country.

The postal department will also enter into an agreement with Western Union Financial Services International to provide international money transfer service.

A pilot project to provide e-mail facilities at the grassroots is being launched in six states at 200 locations. The expected revenue for the first year will be about Rs 100 crore.

   

 
 
SINHA WANTS TO PUSH THROUGH INSOLVENCY LAW 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Jan 22: 
Finance minister Yashwant Sinha today managed to persuade his colleagues to yield ground to allow a new insolvency law to be placed before the Cabinet which will permit quick windup of companies that renege on loans.

At a meeting of the group of ministers today, the industry and labour ministers resisted moves to rush through the piece of legislation. The industry ministry feels the law needs more safeguards and is likely to again oppose it at the Cabinet meeting.

The labour ministry has, however, reluctantly accepted a proposal that would give workers and the other creditors equal rights over the assets of firms being liquidated.

Sinha is keen to secure parliamentary approval for the legislation in the forthcoming budget session as it will help him revive nationalised banks which find Rs 54,000 crore of their money locked up in bad loans.

Over the past few months, the finance ministry has been pushing the government to extend insolvency or foreclosure laws (which cover only housing loans at present) to all loans either through a separate bankruptcy law or suitable amendments in the Companies Act.

Instead of going through the lengthy process of taking a company to the Board for Industrial and Financial Restructuring (BIFR) and drawing up a revival package once it turns sick and is unable to pay back loans, the finance ministry is suggesting a shorter mechanism that includes using foreclosure laws and a new authority in place of BIFR that would certify that a company is bankrupt.

The aim would be to encourage voluntary winding up and legal separation of two processes — sale of assets of a bankrupt company and the distribution of the sale proceeds among the creditors. While the first should be taken up by court liquidators, the second could be decided by the new authority.

Ministry officials said these steps were needed to help banks speed up claims on companies that have gone bust. The banking sector is currently saddled with a whopping Rs 53,600 crore in bad loans or non-performing assets in banking jargon, an increase of 5 per cent over 1999-2000. This is also over 14 per cent of gross advances made by state run banks.

Efforts to reduce this huge loan overhang have not succeeded so far.

   

 
 
MORE FLIGHTS TO HK, RUSSIA 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Jan 22: 
The government today announced fresh bilateral aviation pacts with Hong Kong and Russia, increasing the number of flights both ways. While another 1250 seats a week have been added either way on the India-Hong Kong route, some 250 seats have been added between India and Russia with the option to add another 250.

The new pact with the Chinese port city state also allows India the right to touch Hong Kong on flights to Seoul and use up its quota of flights through code share with third country carriers.

In return Cathay Pacific, Hong Kong’s designated carrier, has been allowed to touch Bangalore as well.

During the past few months, bilateral agreements have been signed with several countries including the United Kingdom, Austria, several Gulf states and Mauritius increasing the air seat capacity by over 17,000 seats a week.

Talks to allow India to fly on from Rangoon to Bangkok and to add more capacity on the Germany-India sector are also on the cards.

   

 
 
MORE STOCK OPTIONS FOR NIIT EMPLOYEES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan, 22: 
NIIT today approved a plan to issue an additional sweat equity worth 5 per cent of its capital, or 1.93 million shares, to its employees.

The IT major announced a 42.5 per cent dividend compared with 40 per cent last year at its 18th annual general meeting held here today. “The number of employees to be offered stock options will be decided this year. There were 4,603 staff on September 30 last year,” said Balwinder Singh Sodhi, head (investor relations).

Five per cent of the paid-up equity was issued to the staff in April last year. In all, 19,32,524 shares had been set aside for ESOS, of which 18,12,600, has already been given to 1,451 employees.

The company reported global revenues of Rs 1,237 crore and a net profit of Rs 224 crore for the financial year ended September 30, 2000. “NIIT aims to achieve an eight-fold increase in revenues at Rs 10,000 crore by the second half of the current decade,” chairman Rajendra S Pawar said.

To achieve the goal, the company has created four independent business units (IBUs) — knowledge solutions, software solutions, project K-12 and education and training. The pursuit of size will be balanced with the improvement of profitability as business focus is sharpened through a two-pronged strategy of instituting a rigorous portfolio management process at the corporate level and implementing structures which make the firm quick and nimble-footed.

   

 
 
BAJAJ REAFFIRMS FAITH IN SCOOTERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 22: 
Bajaj Auto will adopt a two-pronged strategy to sell scooters in a rapidly shrinking market. As part of it, it will offer products in the premium and popular slots.

The announcement is significant because it shows that the company feels the flagging scooter market can be revived with new products and improved features. “A scooter is valued in the rural and semi-urban markets even now. A market research study hired by us to ascertain the views of customers on a stripped-down version of a scooter came out with startling facts. For instance, many customers felt that a spare tyre (stepney) was not required,” said R L Ravichandran, vice-president business & product development.

Rahul Bajaj, chairman-and-managing director, attributed the poor performance in the current financial year to tepid scooter sales. Cheap products will hit the market along with premium four-stroke models, such as Saffire and Fusion.

“We have developed an economy version of Chetak Super, which will be available for Rs 23,500. It compares well with Bajaj Chetak Super, priced at Rs 28,000,” Ravichandran said.

A factor working to the advantage of Bajaj Auto’s is that no other Indian company is concentrating on scooters the way it is doing. Kinetic and LML (both scooter manufacturers) entered the motorcycle market with technological tieups with Korea firms Hyosung and Daelim respectively. Despite its problems, the company still commands a 72 per cent share.

Ravichandran said the Saffire model, priced at Rs 38,000, has received a good response. So have Spice and Spirit. The three models are expected to sell close to 72,000 vehicles by the next financial year. In the ungeared scooter segment, the company aims to sell 10,000 units per month, up from 2000.

In three-wheelers, the company has devised a new strategy by rolling out vehicles based on new fuels. The Delhi government’s move to encourage old auto-rickshaw owners to shift to new vehicles based on fuels such as CNG has come as a boon for Bajaj. The company has so far sold 9,000 CNG three-wheelers in the capital. Talks are under way with the Maharashtra and Karnataka governments to sell similar autos.

Cash pile

Bajaj Auto’s cash surplus at Rs 1,700 crore could be a mutual fund’s envy. After the recent stock slump, the company re-oriented its investment portfolio towards debt instruments. “We would like a 70:30 ratio in favour of debt securities. The current ratio is 62:38 in favour of debt,” says Sanjiv Bajaj, general manager (finance) who oversees the investments. “Our long-term strategy is to bring equity investment exposure to 30, or even lower to 25 per cent.”

   

 
 
SENSEX LEAPS 73 POINTS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 22: 
The BSE sensex today closed at 4267.11 in a 72.65-point gain fuelled by brisk buying in many old-economy shares by operators and foreign institutional investors (FIIs).

The purchases were limited to pharmaceutical and cement shares in the first few hours of trading, but the euphoria generated by it soon spread to other scrips.

However, shares of software firms came in for heavy selling, losing much of the impressive gains they had piled last week.

Brokers say the bulls are driving the markets now, but there are chances of a technical correction in the next few days.

“The undertone is definitely bullish. However, a technical correction should happen,” a broker said. Sources say the sensex will continue its upward march only if it can break through the resistance level of 4,274 points.

The 30-scrip index opened at 4247.45, moved in a range of 4278.55 to 4223.56 before closing at 4267.11 compared with Friday’s finish of 4194.46, thus recording a rise of 72.65 points.

Aggressive buying by foreign investors set the tone for buying by local operators. The level of buying by foreign funds has, so far, remained encouraging with figures showing their net investments in the region of Rs 3,000 crore so far.

The FII presence in key shares prompted operators to take a shine to cyclical stocks. Local institutions, however, booked profits in shares picked up earlier at bargain prices.

In the specified group, 110 counters, including 26 from the index, recorded sharp to moderate gains, while 30 others ended with modest losses. Himachal Futuristic clocked the highest turnover of Rs 986.59 crore followed by Satyam Computers (Rs 838.23 crore), Global TeleSystems (Rs 541.12 crore), Infosys (Rs 494.15 crore) and Zee Telefilms (Rs 368.57 crore).

Market leader HFCL was among the gainers today, rising by Rs 61.75 at 1273.05. Others included Satyam Computer, which went up by Rs 9.80 at Rs 428.05, Global by Rs 16.80 at Rs 750.85, Infosys by Rs 64.30 at Rs 6843.20, Zee Telefilms by Rs 6.70 at Rs 267.20, Bajaj Auto by Rs 20.25 at Rs 288.35, Bhel by Rs 3.90 at Rs 161.05 and Cipla by Rs 14.85 at Rs 1095.90.

The losers included ACC, which declined by Rs 1.10 at Rs 160.95, Castrol by Rs 4.20 at Rs 270.95, ITC by Rs 3.05 at Rs 913.70, NIIT by Rs 35.60 at Rs 1723.85 and Wipro by Rs 30.45 at Rs 2883.45.

   

 
 
TATA TEA THIRD QUARTER NET DIPS 24% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 22: 
In the third quarter of the current financial year ending December 31, Tata Tea’s net profit declined by 24 per cent to Rs 16.45 crore as against Rs 32.52 crore during the same period of the previous year.

The drop in profit came after a disappointing show in the topline. Income from operations declined 13 per cent to Rs 201.61 crore over Rs 233.01 crore. The other income, too, showed a fall to Rs 0.45 crore against Rs 12.52 crore in the previous year.

Despite these results, the company is optimistic of the future as tea prices in the north and south have registered an increase during the past few weeks, said the company.

Siemens net up 179%

Bolstered by its other income, Siemens Ltd recorded a 179 per cent rise in net profit for the first quarter of the financial year ending December 31. Net profit rose to Rs 15.87 crore compared with Rs 5.69 crore for the same period of the previous year.

However, turnover declined by around 6 per cent to Rs 214.5 crore against Rs 227.5 crore, lease and other income rose to Rs 23.46 crore against Rs 12.77 crore in the previous quarter.

Siemens pointed out that the automation, drives and industrial solutions and services business registered strong growth. The company received new orders valued at Rs 227.3 crore against Rs 242.2 crore, representing a decline of 6 per cent over the corresponding quarter. The unexecuted order value during the quarter stood at Rs 820 crore.

Indian Rayon Q3 net up

The A V Birla group company, Indian Rayon and Industries Ltd has posted a 15 per cent rise in net profit for the third quarter of the current year. Net profit increased to Rs 19.1 crore over Rs 16.6 crore in the same period of the previous year.

The turnover increased 51 per cent to Rs 380.3 crore over Rs 252.3 crore in the corresponding quarter of the previous year.

Madura Garments recorded a turnover of Rs 89.5 crore, up 15 per cent from the corresponding previous quarter. The rayon division of the company achieved an export of Rs 9 crore over Rs 3.7 crore in the corresponding previous quarter.

Orient Paper turnaround

Orient Paper and Industries Ltd, a Chandrakant Birla group company, today reported a net profit of Rs 3.51 crore during the third quarter of 2000-2001 against a net loss of Rs 20.85 crore in the same quarter of previous fiscal.

Net sales during the quarter increased to Rs 122.81 crore from Rs 114.23 crore while income from know-how and service fee amounted for Rs 4.11 crore (Rs 2.66 crore last year). Other income came down to Rs 0.73 crore from Rs 1.74 crore last year.

Ajanta Pharma net dips

Ajanta Pharma Ltd’s net profit declined by 33.25 per cent at Rs 1.50 crore for the third quarter ended December 31, 2000, compared to the same period of the previous year. Sales fell by 41.18 per cent at Rs 20.94 crore as against Rs 35.60 crore in the corresponding period of last year.

Zydus Cadila net zooms

Zydus Cadila Healthcare Ltd reported a 78.2 per cent rise in net profit at Rs 17.45 crore in the third quarter of this fiscal from Rs 9.79 crore in the corresponding previous quarter. It recorded sales of Rs 117.09 crore.

Clariant nets Rs 4.77 cr

Clariant India has recorded a net profit of Rs 4.77 crore during the quarter ended December 31, 2000, registering a marginal increase of Rs 0.38 crore from Rs 4.39 crore reported during the corresponding period of last year. The company posted a total income of Rs 75.60 crore in this quarter.

   

 
 
HOTELIERS PRESSFOR LUXURY TAX EXEMPTIONS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 22: 
The Hotel Association of India (HAI) has sought luxury tax exemptions on telephone charges, health club payments and laundry bills.

Some states levy the tax on gross collections made from these items. In its pre-budget memorandum, the association also says different definitions of luxury tax across states have to be streamlined. The memorandum points out that luxury tax rates vary from 10 to 25 per cent across states.

The association argues that luxury tax should be imposed only on the actual negotiated/discounted room rates, instead of the published rack rate. Pointing to the lack of uniformity in the way luxury tax is collected, the association said some states impose the levy on negotiated/discounted rack rates while others collect it on the published rack rate.

According to industry sources, the hotel industry offers various packages which extend discounts from time to time. These are much lower than the rack rates. If a luxury tax is levied on rack rates, it is not the real earning from room tariffs.

Another impost which the association wants abolished is the hotel expenditure tax (HAT.) HAT tax is collected from foreigners and Indians. According to the association, if abolishing it is not feasible, at least foreigners should be exempted. Also, the tax should be levied on room tariffs only, not on total bill.

The association has also called for an end to the service tax which was imposed in 1997 on ‘mandap’ keepers. “Holding a marriage party is part of the normal business activity of a hotel and is already covered by sales tax. Imposing a service tax is tantamount to double taxation,” HAI said.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.37	HK $1	NA
UK £1	Rs. 67.79	SW Fr 1	NA
Euro	Rs. 43.15	Sing $1	NA
Yen 100	Rs. 39.80	Aus $1	 NA

*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4505	Gold Std(10 gm)	4440
Gold 22 carat	Rs. 4255	Gold 22 carat	4110
Silver bar (Kg)	Rs. 7850	Silver (Kg)	7855
Silver portion	Rs. 7950	Silver portion	7860

Stock Indices

Sensex		4267.11		+72.65
BSE-100		2198.25		+16.16
S&P CNX Nifty	1348.00		+18.90
Calcutta	126.67		+1.05
Skindia GDR	NA		-
   
 

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