TPE ends due diligence on Indian Iron & Steel
World Bank aid for telecom project
DVC pay-up pressure on Bengal SEB
State power board asked to streamline finances
Peter England dons trousers

 
 
TPE ENDS DUE DILIGENCE ON INDIAN IRON & STEEL 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, March 25: 
A team from Tyazpromexport (TPE), the Russian engineering company keen on taking over the Indian Iron and Steel Company (IISCO), completed a due diligence on the ailing SAIL subsidiary last Wednesday.

TPE, Japanese trading house Mitsui and Australian mining major Broken Hill Proprietary (BHP) have been shortlisted as suitors for IISCO. A team from BHP is expected to visit the plant next week to conduct a similar exercise.

SAIL remains confident about selling IISCO to reduce its massive debt burden but steel ministry officials are worried that none of the shortlisted bidders have any experience in running steel mills. Also, two of them appear to be more keen on the huge iron ore reserves at IISCO’s Chiria mine.

The officials also fear political problems given that the IISCO unit is located in an area where both the Left and Trinamool Congress are desperate to score electoral gains, and will not hesitate to provoke an agitation against the selloff.

The controversy over the Balco sale — where the pricing remained the most sensitive issue — is an indication that the IISCO deal may run into similar problems if it is seen as being under-valued.

In 1992, the government had almost handed over the unit to the Viren Shah-controlled Mukand Iron, but allegations of a scam from political parties, which included the BJP, nixed it.

The new TPE bid for Rs 800 crore is a scaled down version of its June 1997 plan to modernise IISCO at a cost of Rs 2,017 crore. It fell through because the Centre did not allow the firm to use Russia’s rupee-denominated credit fund for the deal.

The new plan wants IISCO’s accumulated debt written off from the Steel Development Fund, besides several income and sales tax sops from the Centre and state government. IISCO will be handed over to the new joint venture along with assets, including its iron-rich mines and collieries.

TPE will pump in Rs 400 crore as equity while Rs 200 crore will be poured in as debt from the rupee fund available to Russia; an equal sum will be raised from the domestic debt market.

It intends to build a new sinter mill, a twin hearth furnace and upgrade the existing wire-rod mill at the Burnpur plant. The company believes IISCO can earn a 19 per cent rate of return on investment after the modernisation is complete.

IISCO suffered a net loss of Rs 210.37 crore on a turnover of Rs 918.06 crore in 1999-2000. Technically, it remains sick in spite of the fact that it makes operating profits and has had much of its past loans written off through an executive fiat.

The 125-year-old company was taken over by the government in 1972 and attached to SAIL as its subsidiary six years later.

The government has considered 11 proposals to modernise the 75-year-old Burnpur steel plant, none of which have taken off due to political indifference and bureaucratic apathy.

   

 
 
WORLD BANK AID FOR TELECOM PROJECT 
 
 
FROM M RAJENDRAN
 
New Delhi, March 25: 
The World Bank will provide a $ 62 million assistance to a communications ministry project for modernising spectrum management. The central government will also provide $ 10 million to the project.

The technical assistance project will be implemented by the ministry’s Wireless Planning Coordination (WPC) wing.

The project will implement the National Radio Spectrum Management and Monitoring System, which includes an Automated Spectrum Management System for the WPC and a National Spectrum Monitoring System for the wireless monitoring body.

The WPC is an independent authority set up in 1952 for frequency allocations and authorisation, and for identifying vacant spots from the National Frequency Register. The WPC is also the national radio regulatory authority to ensure orderly utilisation of radio frequency spectrum and geostationary orbit (GSO). It is supported by the Wireless Monitoring Organisation (WMO).

The total project is expected to cost about $ 65.11 million. The project is focussed on modernisation of spectrum management functions to manage the ever increasing demand for spectrum in the country, generated by the opening up of telecom sector and introduction of more telecom operators.

The approved plan outlay for the project during 2000-01 was Rs 1.50 crore and is Rs 95 crore for the year 2001-02. The final phase of the project is expected to be completed by December 2004.

“This project will focus on modernisation of spectrum management function. It envisages procurement of state-of-the-art equipment for efficient management and monitoring, including software to enhance productive use of the spectrum,” communications ministry sources said.

“It will help in initiating a long-term program to codify the process and method for policy development, technical planning and coordination and maintenance practices,” they added.

The project is aimed at accelerating the spectrum management and radio regulatory process to help the development of wireless communication infrastructure in the country. It will determine appropriate frequencies for new applications and networks with the help of modern tools of spectrum management and minimise radio interference.

“The project will also help reduce investment and make the whole system automated with on-line connectivity for spectrum co-ordination,” a senior communications ministry official said.

   

 
 
DVC PAY-UP PRESSURE ON BENGAL SEB 
 
 
BY A STAFF REPORTER
 
Calcutta, March 25: 
Damodar Valley Corporation (DVC) plans to initiate action against the West Bengal State Electricity Board (WBSEB) for failing to clear its dues which have risen to Rs 800 crore.

“We will soon initiate action against the state-owned power utility to recover our dues. WBSEB is not only putting the DVC to unavoidable financial crunch, but also indirectly jeopardising the cash-flow mechanism of the corporation by not paying the current dues and the arrears,” a top DVC official said. However, he remained tight-lipped about the future course of action.

Sources said state power secretary Asim Barman has urged DVC to reconsider the case before taking any serious step. “The power secretary has already met top officials of DVC twice,” sources said.

WBSEB also failed to pay its monthly power supply bill, which is about Rs 16 crore. “The payment has never crossed Rs 5 crore,” DVC officials said.

Recently, both power utilities were at loggerheads over power supply in Burdwan district.

Since the post-independence era, DVC has maintained generation, transmission and distribution up to the 33KV level. Distribution of power below 33KV in Burdwan district was given to Dishergarh Power Supply Company as licencee. The area was being backed up by DVC power supply not only from the 132KV Kalipahari sub-station, but also from its 220KV Kalyaneswari sub-station.

In December 2000, DVC came to the SEB’s rescue, keeping the commitment it had given to the West Bengal power department by installing a 31.5MVA transformer, besides two 50MVA transformers in operation at the Kalipahari sub-station for maintaining unrestricted power supply.

“The demand for power from WBSEB is rising whereas they are not paying their dues,” said a DVC official. Further, the region beyond Burdwan, up to the Kharagpur sub-station falls outside the valley of DVC, but, empowered by the DVC Act, it extended the transmission network to sell power in these areas.

DVC has always insisted WBSEB either takeover the load to meet the growing demand from their own installations or permit DVC to invest more in the sub-station and to sell power directly to the consumers for proper realisation against its power bills.

WBSEB instead is drawing around 200MW to meet the demand from the region outside the valley, which falls in its distribution area, without making any payment to the DVC.

   

 
 
STATE POWER BOARD ASKED TO STREAMLINE FINANCES 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, March 25: 
Hagler Bailly of UK, which recently submitted its report on the West Bengal State Electricity Board (WBSEB), has suggested the power utility change the way it manages its finances.

The WBSEB plans to set up six distribution profit centres (DPCs). The central government had directed all state electricity boards to become profitable by setting up distribution profit centres.

Hagler Bailly, which was appointed by the Asian Development Bank (ADB), has pointed out major loopholes in the financial management of WBSEB. The consultant observed that the actual situation for the accounting year 1999-2000 reveals a severe problem with the management of current assets — accounts receivables and inventory.

Total assets are Rs 7,769.40 crore. However, current assets are Rs 3,018.57 crore or 39 per cent of total assets. Normal levels for a power utility are 10-15 per cent. In addition, 22 per cent of the total assets are accounts receivables, which should be 6-8 per cent.

These figures demonstrate two problems — receivables are not being collected well enough and the bad debt policy of 2.5 per cent fails to reflect the actual level of realisation of debts.

Moreover, payments made by customers at the subdivision office are deposited with a local bank, which automatically transfers the money to the WBSEB’s corporate account. Hagler Bailly suggested that to ensure the DPC has sufficient cash, an intermediary account belonging to the DPC should be set up and all transfers from the sub-division accounts should first be deposited into this account.

In effect, the DPC would receive an escrow, and any balance of the revenues would be automatically transferred to the corporate account. The escrow funds will be available to the DPC and will be spent according to the DPC manager’s discretion, taking into account its financial performance.

“The UK consultant has made a presentation to us. The matter is currently being discussed by board members before the recommendations are implemented,” a senior SEB official said.

   

 
 
PETER ENGLAND DONS TROUSERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 25: 
It’s not only the shirt, the trousers are also going honest. Madura Garments has extended its Peter England label — the brand known for the ‘honest’ shirt — to trousers as well.

Launching the Peter England trousers recently, Prakash Nedungadi, president, Madura Garments, said it will be introduced in other major cities within the next few months.

Four years after the introduction of Peter England shirts in the mid-price segment, Peter England trousers, positioned in the same price segment, incorporates a range of formals and semi-formals in a range of fabrics including polyester viscose, polyester cotton and 100 per cent wrinkle-free trousers. The trousers are priced between Rs 545 to 845.

Nedungadi said that the medium-price segment of ready-made trousers (approximately between Rs 500-700) has a market of 6 million pieces a year. “We want to capture 10 per cent of that market.”

He claimed that Peter England shirts have a 12 per cent market share of the mid-price ready-made shirt segment, which sells 20 million pieces a year.

The turnover of Madura Garments was Rs 248 crore last year.

   
 

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