Khaitans, Magors part ways
Noose on bank investments to be tightened
Mega Spice plan for basic foray
FIIs drive sensex up 126 points
Mehta under CVC watch
India Inc ready for life after QR phaseout
Bajaj beats Hero Honda in photo-finish
Hind Paper arm gets Rs 52-cr project boost
DoP, Western Union to expand service
Foreign Exchange, Bullion, Stock Indices

 
 
KHAITANS, MAGORS PART WAYS 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, April 18: 
The B.M Khaitan group and the Magors of London are breaking up their 40-year-old partnership under which they managed their sprawl of tea businesses from Darjeeling to Assam.

The two partners will unscramble their holdings in their various tea companies: the Magors who hold around 70 per cent in George Williamson will control the tea estates of the company which are largely spread across Assam, while the Khaitans will control the 40 tea estates belonging to Eveready and Bishnauth Tea.

The two promoters are parting ways after a bitter wrangle outside the public gaze over the management of Williamson Magor, its subsidiaries and associate companies.

Relations soured even further after talks between the two families over the Magors’ takeover of a few gardens belonging to Eveready Industries and Bishnauth Tea fell through last November.

None of the Khaitans, however, were available for comment. While the group chairman B.M. Khaitan and Eveready’s managing director Deepak Khaitan were “out of station”, Aditya Khaitan could not be contacted despite several attempts. A senior company official said, “We have heard of it but I am not in a position to comment. I am neither a Khaitan nor a Magor man. All I can say is that there could be some problems between the two.”

The Magors hold over 26 per cent in Williamson Magor while the Khaitans have over 50 per cent. The Khaitans also hold 10 per cent in George Williamson.

Williamson Magor’s principal activities range from trading and investments to real estate and tea warehousing.

The problems for the cash-strapped Khaitans started with the acquisition of Eveready Industries with an investment of Rs 290 crore in November 1994 from the ill-starred US multinational Union Carbide.

In 1995, McLeod Russel, through which Khaitans had acquired Eveready, made a rights cum public issue to mop up Rs 302.6 crore in order to retire the high-cost debt, raised from the financial institutions.

The issue, one of the largest from this region, failed to evoke the expected response from the investors resulting in a heavy debt burden on the company.

As a result, Eveready started becoming sick and incurred a heavy interest burden.

In order to save the situation, the Khaitans planned last year to bring the tea business under one umbrella while they started looking for a buyer for the battery business of Eveready.

The combined operation will have a business well over Rs 500 crore from 40 tea estates.

The decision to sell off at least nine tea companies was also taken to raise fund in order to avoid a debt trap. EIL also weighed a proposal to sell its real estate in Delhi and Bhopal in order to raise around Rs 60 crore.

The Khaitans, who hold around 44 per cent in EIL and 50 per cent in Bishnauth Tea, are planning to move out of the battery and lighting business which they had entered with great fanfare five years back.

   

 
 
NOOSE ON BANK INVESTMENTS TO BE TIGHTENED 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 18: 
The monetary and credit policy to be presented by Reserve Bank of India (RBI) governor Bimal Jalan tomorrow is likely to make export credit cheaper, but this could be overshadowed by initiatives to tighten exposure limits and a raft of new risk-management systems for banks.

The policy, being unveiled in the shadow of the recent market mayhem, will address issues such as the pay-order scam, unsecured loans to capital market intermediaries and flaws in the co-operative banking sector. “In a nutshell, it will be a policy that will address the problems which led to recent scams by adopting stiff prudential norms. Besides, there may be a revision in export credit rates and a few other steps to deepen the debt market,” a senior banker said.

Jalan’s comments ruling out reductions in the cash reserve ratio (CRR) and Bank Rate, coupled with adequate liquidity, have snuffed out hopes of lower rates. However, the central bank is expected to be restore the export refinance limits scaled down in July last year to boost a sagging rupee. Export finance rates, which are now hovering around 10 per cent, could be nudged down by 1 to 2 percentage points.

“The restoration of limits to last year’s levels could infuse more liquidity into the market,” says Sanjit Singh, senior debt analyst at ICICI Securities. Market watchers say any move that makes it easier banks to finance exports will push up prices of government securities — and bring down yields. Returns on gilts dipped 4 basis points today in anticipation.

The focus of the package will be on prudential measures. There are growing expectations that the central bank will revise limits on how much banks can lend to companies and groups. Current norms cap such exposures at 20 per cent of a bank’s net worth.

Banks are looking forward to revised limits on investments in a group, and the list of areas where they have to reduce exposures. “The central bank is likely to tighten the risk-management guidelines or the micro-level risk exposures,” says K C Chakravorthy, general manager, Bank of Baroda (BoB).

Bankers agree that there will be no change in the rule that allows them invest 5 per cent of the previous year’s outstanding advances in stock markets — something that was endorsed recently by a joint committee of Sebi and RBI officials. There are some who feel provisioning requirements and asset-classification regulations will be tightened.

Co-operative banks, seen as weakest link in the financial system after they were found embroiled in a string of scams, may see their capital adequacy ratios raised and the statutory liquidity ratio (SLR) requirements revised. The present norm, which allows co-operative banks to treat their deposits in similar banks, as part of SLR could be scrapped.

   

 
 
MEGA SPICE PLAN FOR BASIC FORAY 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, April 18: 
Spice Telecom, one of the cellular service providers in the Calcutta circle, has chalked out a Rs 2,400-crore plan for its proposed foray into basic and long-distance telephony and to set up call centres and international data centres (IDC).

“Spice has applied for basic services licences in 10 circles and will offer wireless in local loop (WiLL) services in all of them,” R. Mahesh, vice-president marketing said, adding, “We expect to receive the first license for West Bengal in May.”

The Modi Corp subsidiary claims it will be ready to roll-out services within 90 days of receiving the licence.

Spice will invest around Rs 700 crore in West Bengal, Punjab and Karnataka — the three circles in which it currently provides cellular services. Other circles where the company has applied for licences are Andhra Pradesh, Delhi, Gujarat, Maharashtra, Tamil Nadu, Haryana and Rajasthan. “This covers almost 70 per cent of potential WiLL subscribers,” Mahesh said.

“The main intention of diversifying into WiLL services is to protect our GSM services business. Also, if spectrum is going to be made available at cheap rates, it would be a good idea to participate in the game.”

Modi Corp has also entered into a strategic alliance with Singapore Technologies Telemedia (STT) to form a joint venture for call centres and IDCs. STT has already acquired a 20 per cent stake in Modi Corp and plans to invest around Rs 125 crore. Modi Corp has also finalised an alliance with Cisco Systems for equipment and end-to-end solutions for the IDC.

Spice Telecom has shifted its focus, after strengthening its network base, to customer services. Recently, it was the first operator in the country to introduce a ‘Bill of Rights’ for its customers in Calcutta, which allow Spice subscribers the right to compensation on failure to provide the desired services.

   

 
 
FIIS DRIVE SENSEX UP 126 POINTS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 18: 
The Bombay Stock Exchange (BSE) sensitive index rose for the third straight day, soaring 126.46 points after bargain hunters rummaged for promising shares which have been savaged by the recent tech typhoon.

The rally was driven by foreign institutional investors (FIIs) who are believed to have pumped in a staggering Rs 1020 crore in the fortnight ended April 16.

Investors, skittish after global technology titans and software stars at home said growth in the current would tail off, were buoyed by a comment from Intel, the world’s largest chip-maker, that it had seen signs of a pickup in demand.

That sent most software shares, including Ketan Parekh’s 10 picks, surging to the highest possible 16 per cent. The list included Satyam, Zee Telefilms, NIIT and Wipro. Others which hit the upper-end circuit filter were Hughes Software, HCL Tech, Himachal Futuristic, Global Tele-systems, Digital Equipment, SSI, Polaris Software, Aptech, DSQ Software, Mastek, Pentamedia, Rolta India and Silverline.

The 30-share index closed at 3438.75 points, gaining close to 8 per cent in the last three sessions. The NSE index was up 36.4 points at 1,103.40.

FIIs such as the Government of Singapore, Morgan Stanley Capital International, Zurich and Battery March made heavy purchases, prompting a section of brokers to say that the market has been driven to an oversold territory after the recent tech selloff.

A surprise loser was Tata Finance, which was punished by investors after Sebi asked it to furnish details of losses suffered in recent share purchases before shareholders subscribed to a rights issue. The firm confessed its investments in Global Tele-Systems and Vakrangee Software, made through a subsidiary, have not paid off. The scrip lost 0.71 per cent at Rs 34.75.

Life Insurance Corporation reportedly picked up a sizeable chunk of shares in old-economy companies. Corporation Bank, in which the insurance major said it had picked up 12 per cent, saw its share shoot up 16 per cent.

Volumes at Rs 1450.44 crore were higher than Tuesday’s Rs 1286.35 crore.

BSE sacking

The BSE governing board has tentatively recommended termination of service of its finance director, A A Tirodkar, citing loss of confidence following allegations of his involvement in leaking market sensitive information. It will allow him to explain his case on at its next meeting on May 3.    


 
 
MEHTA UNDER CVC WATCH 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 18: 
Central Vigilance Commissioner (CVC) N. Vittal said today the commission is looking into the complaint of a Securities and Exchange Board of India (Sebi) official against its chairman D.R. Mehta but added that he did not doubt Mehta’s integrity.

“We are looking into the D.R. Mehta case. Sebi deputy general manager G.S. Reddy gave us some information about Mehta two days ago. We have asked for his (Mehta’s) comments,” Vittal told reporters on the sidelines of a conference organised by the Confederation of Indian Industry (CII).

Vittal, however, clarified that it could not be construed as a probe as the matter was being looked into just because a Sebi official had given some information against Mehta.

   

 
 
INDIA INC READY FOR LIFE AFTER QR PHASEOUT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 18: 
There was a sense of triumph when a motion — Indian industry will continue to be non-competitive — was defeated at a debate organised the Confederation of Indian Industry (CII) to see just how well India Inc can cope with the end of quantitative restrictions on imports.

Industry movers and shakers, policy wonks, economic experts and finance wizards were pitted against each other in a battle of wits that showed who can stay afloat and who can’t.

Speaking for the theme, Dhruv M Sawhney, chairman and managing director of Triveni Engineering and Industries, said companies wanted to hide behind high walls of protection even as they swore allegiance to the holy grail of reforms.

“India has made reactive changes, not proactive ones that we need at this stage of our development. WTO may bring about changes, but the world will move faster, and leave India behind in the race for prosperity. It is the domestic environment and the mental makeup that makes the difference,” he added.

P.N. Vijay, who heads a financial services firm named after him, said years of protection had not given the country the ability to focus on brand building while the lack of professional management has made corporate restructuring meaningless.

“The notion that families should be on the boards of companies, not in the management, can do a world of good to Indian companies if implemented,” he said, adding the poor quality of education in the country could saddle firms with sloppy employees.

Surinder Kapur, chairman and managing director of Sona Koya Steering Systems, said it will be difficult for India to catch up with the world after having lived a sheltered life for long.

Omkar Goswami, CII’s chief economist, pointed to the high cost of capital, saying a 16 per cent rate of interest still hobbles the industry. Central Vigilance Commissioner N Vittal disagreed, arguing that negative thinking of this kind was a recipe for failure.

“The spirit the industry is changing. Ideas are the new capital. Companies will turn around,” Shardul S Shroff, senior partner, Amarchand & Mangaldas & Suresh, A Shroff and Co, said.

   

 
 
BAJAJ BEATS HERO HONDA IN PHOTO-FINISH 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 18: 
Two-wheeler major Bajaj Auto Ltd (BAL) is making a desperate bid to regain lost ground from arch rival Hero Honda and retain leadership of the two-wheeler sector for the 2000-01 financial year.

The Pune-based Bajaj Auto has steadily conceded ground in the two-wheeler market, from September 2000 to February 2001, to the Chandigarh-based motorcycle maker.

But as far as the 2000-01 fiscal is concerned, Bajaj is maintaining that it is leading the pack.

“Industry leadership was largely due to its highest ever motorcycle sales which, at 422,016 units represented a growth of 65 per cent against an industry growth of 26 per cent,” said Rajiv Bajaj, president, Bajaj Auto.

He said for the 2000-01 fiscal, Bajaj Auto retained its top position in the two-wheeler industry with sales of 105,3901 units. Total sales, he said including that of 1,55,177 three-wheelers, were at 1,209,078 units.

However, analysts feel the topline and bottomline numbers would find Hero Honda overtaking Bajaj Auto for the year 2000-01 by a more than a mile.

In fact, Hero Honda is expected to hearten its shareholders with a much superior and higher sales turnover and net profit growth, brushing past Bajaj Auto in the last mile.

Hero Honda still retains its leadership in the motor-cycle segment, the sole product category that it is present, while Bajaj Auto has a wide presence, from scooterettes to mopeds, and scooters to motorcycles.

A large percentage of Hero Honda’s sales is derived from ‘Splendor,’ its best selling product, which adds up to almost 65-70 per cent of its sales.

On the other hand, the best selling product in the Bajaj stable till recently, was the old-fashioned scooter. Scooters made way to motorcycles in the last couple of years as customer preference leaned towards fuel-efficient vehicles.

Nevertheless, there is till hope for the old warrior, thanks to a recent comeback of sorts staged by the scooter, aided by aggressive price positioning that saw sales pole-vault by 30 per cent in the last quarter.

R. L. Ravichandran, vice-president (marketing) at BAL said new products in the coming months will further help the company strengthen its leadership position.

“BAL will launch two scooters in the four-stroke category which will have a fuel efficiency that matches four-stroke motorcycles. We will try to wean away customers who shifted to motorcycles purely on the basis of superior fuel economy,” he said.

   

 
 
HIND PAPER ARM GETS RS 52-CR PROJECT BOOST 
 
 
BY A STAFF REPORTER
 
Calcutta, April 18: 
The public sector Hindustan Paper Corporation has drawn up a Rs 52.2 crore deinking project for its subsidiary Hindustan Newsprint Ltd to produce newsprint using recycled paper.

The 100 tonne-per-day project will use 40 per cent recycled paper as input, which will mean a huge saving on natural resources. The company will soon float a global tender for plant and machinery.

The public sector paper company is also working on creating a network for collection of suitable grades of waste paper, mainly quality newspaper, suitable for use in a deinking plant.

Further, HPC, which is on a profit track for the last five years, has sought the central government’s assistance to carry out a financial restructuring programme in the current fiscal. The restructuring will enable it to clean up its balance sheet and also pay dividend from next year, chairman and managing director, Raji Philip said.

Hindustan Paper, which owes Rs 442 crore to the government on account of interest, including penal interest worth Rs 140 crore, is looking for a waiver of the sum to clean up its balance sheet.

HPC had taken loans from the government for modernisation programmes for its three functional units.

It owns two 1 lakh-tonne bamboo and wood-based writing and printing paper units in Assam, located at Nagaon and Cachar, both of which have recorded 100 and 90 per cent capacity utilisation last year. Its subsidiary, HNL, has also been producing around 105,000 tonnes of paper against a 1 lakh-tonne capacity. He said the government was considering a move to write off the entire accumulated penal interest after a general growth shown by the company.

Sales turnover of Hindustan Paper during 2000-01, stood at Rs 780.32 crore, including the sales figure of Rs 252.76 crore of its subsidiary Hindustan Newsprint Limited. The post-tax profit of the company last year stood at Rs 40.82 crore, which was 93 per cent higher than the previous year’s Rs 17.40 crore. It is targeting a turnover of Rs 890 crore for the 2001-02 fiscal.

   

 
 
DOP, WESTERN UNION TO EXPAND SERVICE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 18: 
The department of posts (DoP) has entered into an agreement with the Western Union Financial Services International of the US to expand the scope of its money transfer business.

The service will be launched tomorrow by communications minister Ram Vilas Paswan.

The Western Union Money Transfer Service will enable people residing in 185 countries across the world to send money to anyone in India within 10 minutes.

The service is expected to benefit non-resident Indians, international tourists and international students living in India.

The sender has to simply approach any Western Union agent worldwide and fill in a form. Thereafter, the recipient in India is informed, who then has to go to the nearest post office, fill in another form to establish his identity and receive the money.

Initially, head post offices in all state capitals and capitals of union territories will provide the service and by the year-end it will be extended to all districts in the country.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.86	HK $1	Rs.  5.95*
UK £1	Rs. 66.90	SW Fr 1	Rs. 26.70*
Euro	Rs. 41.23	Sing $1	Rs. 25.60*
Yen 100	Rs. 38.02	Aus $1	Rs. 23.15*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4350	Gold Std(10 gm) Rs.4260
Gold 22 carat	Rs. 4105	Gold 22 carat	Rs.3940
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs.7375
Silver portion	Rs. 7500	Silver portion	Rs.7380

Stock Indices

Sensex		3438.75		+126.46
BSE-100		1636.29		+ 76.00
S&P CNX Nifty	1103.40		+ 36.40
Calcutta	 116.79		+  2.33
Skindia GDR	 582.79		+  6.46
   
 

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