Centre to pay Enron dues from Maharashtra kitty
Easier loan terms for Dabhol
Sloppy Duncan Goenka bosses in firing range
Gilts volatile on hopes of cut in interest rates
VSNL seeks licence to offer basic services
Satyam links up with ideaEDGE
Philips back into the red
Valentine puts a price on your love
Foreign Exchange, Bullion, Stock Indices

New Delhi, Feb. 9: 
The Centre has told the Maharashtra government that it would honour the counter- guarantee given to Enron by paying the defaulted amount, but would deduct a corresponding sum from the state’s share of plan assistance.

Maharashtra’s plan assistance for the current year, including its share in external assistance, is about Rs 2,000 crore. The actual central assistance on the basis of the Gadgil formula is Rs 800 crore. The plan assistance is released in 13 instalments during the financial year. More important, Rs 300 crore due for Maharashtra has still not been released.

The issue came up for discussion two days back with senior officials of Maharashtra. The Centre made it clear that the entire payment to Enron, whenever it is made, will be adjusted against the plan assistance. This would mean that the state will not get the remaining Rs 300 crore in 2000-01.

The Centre will have to shell out the Rs 79-crore bill for November, followed by payments for December and January. The amount above Rs 300 crore will be adjusted against next year’s plan assistance.

Had the Dabhol power plant operated at a capacity of 90 per cent, the cost of power would have been only Rs 4 per unit. However, it has been operating at a capacity of only 40 per cent as the state electricity board could not buy more power. The low capacity utilisation pushed up the cost to Rs 7 per unit. The situation will be worse for the state when Dabhol Phase-II — which will have a capacity of 1,400 MW compared with 700 in the first phase — is commissioned in May.

Officials concede that Maharashtra does not need power from Dabhol Phase II as the existing capacity is more than enough to meet its requirement. The state has an installed capacity of 7,000 MW per annum. The state electricity board will be incurring bigger losses if it buys power from Phase-II.


Mumbai, Feb. 9: 
The board of Dabhol Power Company (DPC) met here today under the shadow of a lingering impasse over unpaid bills, but the official word was that it was a ‘regular quarterly’ affair.

Today’s meeting, attended by the two representatives from the Maharashtra State Electricity Board (MSEB), ratified the appointment of Wade Kline as the new DPC managing director.

The other key decision taken by the board was to clear a scaling down of interest rates from 21 per cent to 16.5 per cent on domestic loans. The consortium of five lenders, comprising IDBI, ICICI, IFCI, State Bank and Canara Bank, have lent $ 1.2 billion (in rupee terms). Servicing this loan will become less onerous for the Enron-promoted company now.

Also, Indian Oil Corporation (IOC) has been selected as the canalising agency for fuel, replacing the UK-based Glencore.

The board was informed that the progress of Dabhol Phase II is better than expected: almost 82 per cent of the work is said to have been completed as against is targeted 77 per cent.

The meeting discussed the issue of the state government’s waiver of sales levied on MSEB Currently, the state power board pays a 5 per cent sales tax. However, according to back-of-the-envelope calculations, the impost serves to push up the cost of power by $ 3-4 over the international prices.

Review team

The experts group to take a fresh look at the DPC tariffs will be headed by former Union home secretary, Madhav Godbole.


Calcutta, Feb. 9: 
Duncan Goenka group chairman G. P. Goenka has started cracking the whip on top guns who do not perform. Two of them, the managing directors of Bakelite Hylam and Stone India, have just been given the marching orders.

R. C. Gupta, the CEO of Bakelite Hylam, has been replaced by Star Paper managing director Jasbir Singh Neerav. Stone India CEO V. K. Kakkar makes way for Amiyanath Ray, who was working for ABB Limited in Bangalore.

“Both have been asked to leave. The same fate will befall top officials and managing directors of other group companies if they fail to achieve performance targets,” Goenka told The Telegraph.

The decision to get rid of managing directors who are not showing good results was taken at the supervisory board meeting headed by Sumantra Ghosal on February 5 and 6. “We have drawn up an action-plan at the supervisory board meeting, proposing a result-oriented approach for managing directors. We are trying to achieve more efficiency in the overall performance of the group,” Goenka said.

According to Goenka, a managing director will be warned if he overshoots the expenditure budget in the first quarter. This will be repeated for two or more quarters. “If the situation continues in the fourth quarter, the managing director may be asked to go. The message is clear — do or die.”

“The matter will be placed before the Duncan Goenka board soon. After this, circulars will be sent to the managing directors of group firms,” he said.

The action-plan drawn up by the company envisages a reduction in surplus employees, the modalities for which are being worked out. “We will overhaul our human resources.”

The supervisory board meeting also ended with a decision that the group will pull out of firms which do not make money. “It will not be right for me to comment on the issue now. The proposal has not been placed before the board. I will be in a position to comment only after it is ratified,” Goenka said.

Observers say cement, paper, chemicals are businesses the group wants to exit so that it can sharpen focus on its core areas of tea and fertilisers. Finding buyers for these companies has been the main problem so far.

To beef up financial and accounting standards, Goenka has organised a two-day seminar at Bengal Chamber, which will give the heads of all companies a chance to interact with the some of the leading financial consultants of the country.


Mumbai, Feb. 9: 
Expectations of a reduction in key interest rates by the Reserve Bank of India (RBI), led to sharp fluctuations in the prices of government securities today.

While bond prices initially firmed up, the rally could not sustained as the much-awaited rate cut did not come through.

“The markets expected the central bank to announce a cut in rates a day before the new fortnight starts on Saturday. This firmed up bond prices. However, as the expected easing did not happen, prices came down,” said Suresh Prabhu, vice-president (treasury) and chief dealer at HDFC Bank.

The roller-coaster ride in the gilt market could be gauged from the fact that the 11.03 per cent 2012 bond rose to a high of Rs 104.90 from its overnight close of Rs 104.15, while the 11.30 per cent 2010 bond peaked at Rs 106.90 compared with its previous finish of Rs 106.45.

However, their prices eased to Rs 104.60 and Rs 106.64 respectively when the rate-cut hopes were dashed.

“The bond market did witness some kind of action today. Usually, the markets do not record a 30-paise movement during the day,” said a dealer working for a nationalised bank.

Bond prices, particularly those in the medium and long terms, have been rising in the past couple of days on mounting expectations that the Reserve Bank will lower interest rates.

This follows moves by the US Federal Reserve and the Bank of England to nudge key rates lower, and reports that the Japanese central bank was planning a similar move.

Analysts in the money markets were quite bullish, saying the expectations of a cut in the CRR and Bank Rate have had a salutary effect on trading in government securities.

Market watchers circles do not see a dramatic increase in the government’s borrowing programme for the next fiscal year in the budget, but a section expects a reduction in Provident Fund (PF) rates.

Most of them are betting that the finance minister will either stick to this year’s targeted figure of Rs 1,17,000 crore, or peg it at a level which is a shade higher.


Mumbai, Feb. 9: 
Videsh Sanchar Nigam Ltd (VSNL), the long-distance telephony and ISP major, today said it had filed an application for setting up basic services in the Delhi and Maharashtra circles. The application was filed on Thursday.

S. K. Gupta, chairman and managing director, said he expected the application to receive the government’s approval as some sort of a compensation for the premature end to VSNL’s monopoly on international telephony, slated for 2002.

So far, applications for licenses to operate basic services in the states of Delhi and Maharashtra have swelled to 10 and 9 respectively. The total number of applications has mounted to 111.

Basic licences have generated tremendous interest due to the prospect of providing limited mobility services through wireless in local loop (WiLL) technology, which enables basic players to tap the low-end market.

The investment in WiLL is expected to be around Rs 150 crore, Gupta said. On long-distance telephony, Gupta said his company was talking to several players and nothing concrete has emerged.

As far as VSNL’s plans of a foray into cellular operations are concerned, Gupta said the company was still evaluating the financial viability of the fourth slot.

VSNL is also considering to set up direct-to-home networks and is creating a platform where it would invite participation from various channels, including free-to-air ones.

Besides, it is on an overdrive to expand its reach as an internet service provider and proposes to cover three more towns by the end of February.


Hyderabad, Feb. 9: 
Satyam Computer Services and the US-based ideaEDGE Ventures today announced the formation of a joint venture Satyam ideaEDGE Technologies (SIT) to focus on business emerging from mobile internet convergence.

The 50:50 joint venture will cash in on Satyam’s large human resource to exploit a market expected to swell to a $ 15.75 billion by 2003, said Satyam managing director B. Rama Raju.

The joint venture will also forge collaborations with Ericsson, Gateway, McKinsey, Sun Microsystems and Apple Computers. “Though we start with a core team of five and another 25 software engineers, we are confident the we will grow to around 500 in three years,” Dilip Jha, the new chief executive officer of SIT.

SIT will service mobile internet convergence technology, which is the hottest area today, said Rick Lefaivre, CTO of IdeaEDGE. The venture will initially provide solutions to ideaEDGE Ventures and will strategically leverage Satyam’s resource base to launch services worldwide, Raju told a press conference after signing a deal with ideaEDGE chief Rick Lefaivre here today.


Mumbai, Feb. 9: 
Philips India Ltd has posted a disappointing performance for the financial year ending December 31, 2000, slipping back into the red with a loss of Rs 34.15 crore against a profit of Rs 28.14 crore in the previous year.

The drop in bottomline was accompanied by a similar show in topline performance with sales and income from operations declining to Rs 1506.60 crore from Rs 1744.6 crore in the previous year. With other income at Rs 1.76 crore (Rs 1.53 crore), the total income stood at Rs 1508.36 crore (Rs 1746.20 crore).

Philips India said the topline suffered mainly due to lower sales in consumer electronics, domestic appliances and the enabling technologies businesses. The consumer electronics and domestic appliances business were hit due to a slowdown in consumer demand and increase in price-based competition.

Admitting that the company’s performance during the financial year was much below expectations, Philips India managing director K Ramachandran said the company was not able to get its act together in the consumer electronics segment, particularly in the colour television business.

Admitting that Philips failed to communicate to the consumer that it had a “good product for value,” he said the company’s cost, price and volumes did not match. “We will get our act together in the next six months and results will be witnessed in the year 2002,” he averred.

In the consumer electronics segment, Philips is now taking a relook at its product portfolio by focussing more on India-specific products apart from concentrating on its entire supply chain.

Ramachandran said for the short term the company is planning to focus on profitability. He also disclosed that consequent to the recent open offer made by parent Royal Philips Electronics NV, the latter’s stake has gone up to 83 per cent from the existing 51 per cent.

For the year, the lighting division recorded an increase in sales and overtook the revenues of the consumer electronics sector. For the year, Philips also accounted for exceptional items to the tune of Rs 35.61 crore which included employees’ voluntary retirement scheme and profit on sale of property.


New Delhi, Feb. 9: 
Whoever said true love is priceless? On Valentine’s day circa 2001, it comes not only with a price tag, but is also gift-wrapped with a host of freebies thrown in for good measure.

Here’s a sample of what is on offer this year.

Cornetto is inviting participation from couples across the country in its ‘Cornetto Khao jodi banao’ contest. A couple needs to buy two ice-creams and affix the leads to the contest form, along with two pictures of themselves. Add a winning slogan and your labour of love could win you Compaq PCs, mobile phones, watches or even something more passe like Levi’s jeans.

According to J. R. Mehta, executive director of Hindustan Lever Ltd’s ice-cream business, “Cornetto has always been linked with romance, so we have decided to go for this kind of a promotion. HLL states that Cornetto’s association with romance is strong not only in India but also around the world.”

Cornetto is a Unilever brand which is a leading world player in the cone segment. The contest is open during the month of February.

Not all make purchases mandatory though. For Kempfort, the leading retail chain of toys Valentine’s day is yet another occasion to push the brand, stuffed toys being stuff that mushy love is made of. In all its 21 outlets across India, Kempfort is to run ‘Hoop the heart’ contest, where a guest needs to throw a ring around a heart, and gets a twinkling heart as a prize, if he is lucky.

The retail chain Ebony has also lined up to a host of games for couples, throughout the day, with the mandatory prizes and free gifts.

The five-star hotels, of course do it in their own distinct way. Le Meridien has come up with a pocket-friendly package for 14th February, which gives the couple a dinner at either of its two restaurants, Le Belvedre or Pierre, along with a bottle of wine and an entry to its discotheque CJ’s for Rs 2000. Amrit Borkakoty who is in charge of the hotel’s communications said last year also the hotel had a theme night at CJ’s.

Hyatt Regency is organising a ‘Be my Valentine eve on 13th.’ Entry is free and on first-come-first-served basis. Love messages would be delivered by the hotel (within Delhi), along with a box of Bailey’s chocolate. Apart from music and dance, there would be palmists and heart-shaped cakes from the hotel’s pastry shop.

Kanishka, however is not doing anything special this year, while Hotel Ashoka says it is still finalising some plans. A Kanishka spokesperson said that with the hotel up for sale, the mood is not very upbeat for Valentine’s.

Brand launches are also cashing in on the new phenomenon.

Gili has come up with its ‘Forever’ range on Valentine this year, priced between Rs 5,000 to Rs 20,000. Spectacular Jewellers has come up with its latest line of imported European designer jewellery, mainly comprising heart-shaped pendants available at various jewellery outlets in Delhi. The range which includes bracelets and necklaces is priced between Rs 600 to Rs 6000.

Oriflame too has jumped into the fray and has launched a Valentine’s day gift pack comprising a body spray priced at Rs 110 and a soap priced at Rs 18.

And once Valentine is over, marketing minds are sure to turn their attention to the next available event.



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