Reliance Petro move puts strain on ties with Indian Oil
Lever tops forecast with 29% spurt in net profit
Khaitans, Magors split
IFCI shown the market to meet funds need
Indal net at record Rs 116cr
Automobile makers hit the slow lane
AV Birla group to raise stake in Indian Rayon
Foreign Exchange, Bullion & Stock Indices

 
 
RELIANCE PETRO MOVE PUTS STRAIN ON TIES WITH INDIAN OIL 
 
 
FROM R. SASANKAN
 
New Delhi, April 24: 
The marketing agreement between Indian Oil Corporation (IOC) and Reliance Petroleum (RPL) is unlikely to last long.

Sources in the government and the industry say the agreement may have to be scrapped with RPL deciding to set up its own retail outlets. It will enjoy marketing rights in a deregulated market.

Since the administered pricing mechanism (APM) will continue till March 31 2002, the new players can buy certain products from PSUs and start marketing them. From April 1 next year, they can market all products.

The agreement gives IOC the right to market 52 per cent of RPL’s controlled products for a period of 10 years, which can be extended by another 10 years. They were to set up a joint venture for the remaining 48 per cent. Immediately after the agreement was signed, Reliance Petro applied for marketing rights even though direct retailing violates the agreement.

RPL never pursued the proposal for the joint venture. Instead, it now appears that it will launch its retail foray with 48 per cent of the products earmarked for the joint venture.

The government has decided that new retail outlets will be opened on the basis of refining capacity. With a refinery of 27 million tonnes, the country’s largest, is entitled to a 25 per cent share.

This will go up if the crude throughput capacity is taken into account. Reliance Petro has established a throughput capacity of 30 million tonnes per annum, which will go up by another five million tonnes per annum after a debottlenecking exercise. It is believed to be planning to raise the refining capacity to 50 million tonnes after 2004. Private players can take away some of the retail outlets which are now with PSUs. Social objective groups who have been financed and encouraged by the PSUs to set up retail outlets are under no obligation to remain with them. The 2,500 PSU outlets will switch over to private players like Shell ,RPL or Essar Oil if they are assured of better returns.

Industry sources say RPL will have the necessary infrastructure to market all its products in three to five years. This would mean the end of its marketing pact with IOC. The marketing battle will begin once the government decides on the strategic partner for IBP. Shell is an aggressive bidder. There are other national and multinational players. RPL will also make a serious bid. It is against its interest to allow a foreign oil company enter the domestic retail market.

   

 
 
LEVER TOPS FORECAST WITH 29% SPURT IN NET PROFIT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 24: 
Hindustan Lever (HLL) bettered market forecasts by unveiling a 29 per cent increase in its first-quarter net profit at Rs 339.53 crore and a 20.7 per cent leap in after-tax profit at Rs 316.94 crore.

The earnings came on a slender sales (net of excise) growth of 1.1 per cent at Rs 2,642.51 crore. What boosted the bottomline was a Rs 22.59-crore payout from the sale of its animal feeds business to Godrej.

The company said it will ask shareholders to approve its first-ever employee stock option scheme (Esop) for managers at its annual general meeting.

“Our objective is to improve the quality of our business and achieve sustainable growth. We have embarked on a three-pronged strategy of driving growth through a focus on 30 brands, improving the profitability of our foods business and securing the future of the non-FMCG businesses,” Lever chairman M S Banga said .

He said investments to improve product quality and provide brand support have gone up 15 per cent. The company plans to reinvest a part of the money raised from divesting non-core businesses to fortify its position in the FMCG sector, especially in personal, fabric wash and oral care.

Strategic initiatives to improve the portfolio mix, cost management and the benefits of previous restructuring led to an improvement of 1 percentage point in operating margins.

Other income, which accounted for almost a third of HLL’s net profit, grew from Rs 90.01 crore to Rs 102.20 crore, a sign that its treasury managed surplus funds efficiently.

The company said its first-quarter results included an estimated business restructuring cost of Rs 6.25 crore charged in the quarter compared with Rs 30 crore in the same quarter last year. The company said it would review such costs every quarter on the basis of estimated annual spends, and all adjustments necessary would be carried out.

Exports grew 22.7 per cent, driven by home and personal care. Estimates from non-core export categories, particularly traded marines, were scaled down because of low profitability.

IBL merger

The Lever board today proposed the merger of International Bestfoods , a subsidiary in which it holds 83.36 per cent, with itself from January 1. The company has fixed a swap ratio of two shares of HLL for three shares of IBL. HLL shares have a face value of Re 1 while IBL’s is Rs 10.    

 
 
KHAITANS, MAGORS SPLIT 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, April 24: 
The split between the Khaitans and the Magors was formalised today with the Magor-owned George Williamson (Assam) inducting a new slate of directors after accepting the resignations of B.M. Khaitan, Deepak Khaitan and J.M. Trinick. The resignation of P.K. Khaitan as an alternate director to R.B. Magor was also accepted.

B.M. Khaitan had been associated with the company since 1977 and Deepak Khaitan, his eldest son, from 1987.

In a related development, the Khaitan-owned Williamson Magor prepared to reshuffle a couple of top executives.

R. S. Jhawar, a director on the Eveready Industries board and a long-time associate of the Khaitans, is expected to take charge of the entire tea operations of the group, top-level Khaitan group sources said. Jhawar is also chairman of Indian Tea Association.

Sources said Supriyo Mukherjee, president (corporate affairs), who moved into the Williamson Magor group from India Foils following its takeover by Sterlite Industries, might be entrusted with additional responsibilities. Currently, he looks after the engineering division.

Sources added that George Williamson, to be rechristened as Williamson Tea, will move out of 4, Mangoe Lane to a new premises.

Earlier in the day, the board of George Williamson announced the appointment of S.K. Mitra as managing director, and Alok Vira and P. K. Gangulee as whole-time directors with effect from May 1.

Philip Magor, chairman of Williamson Tea, told The Telegraph, “We have not yet decided when we will acquire the Khaitans’ 10 per cent stake in George Williamson. No valuation has been carried out as yet. Today, we have reconstituted the board.”

The Magors hold 70 per cent in George Williamson; the financial institutions hold 9 per cent and small investors the rest.

Magor added that he maintains an excellent and amicable relationship with the Khaitans. “I met the Khaitans today and had discussions with them. However, they were not present at the board meeting of George Williamson since they had resigned. We will continue with our Indian operations and acquire more gardens. We have no plans to sell off our gardens.” The company has 17 tea estates that produce premium Assam teas.

In a press release, the board of George Williamson (Assam) Limited expressed its gratitude to B.M. Khaitan for his wise counsel and strength that had been so important to the company since its inception.

S.K. Mitra, the newly appointed managing director of the company, said, “I will carry out my future responsibilities as outlined by the UK parent.” He added that no employee of George Williamson would be asked to leave the company.

   

 
 
IFCI SHOWN THE MARKET TO MEET FUNDS NEED 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 24: 
A high-powered committee on financial institutions today decided that IFCI Ltd should go ahead and raise resources from the market for its immediate financial needs.

IFCI needs a Rs 400-crore capital injection to recapitalise itself besides dollar funds to pay off old foreign currency debts. The committee decided that IFCI could, if need be, securitise its assets to raise money.

The premier state-owned financial insititution, that ran into rough weather because of its exposure to the corporate sector, had sought a Rs 400-crore bailout package from the central government. However, no decision was taken on the issue.

Devi Dayal, special secretary (banking) said “IFCI has asked for a Rs 400-crore loan over a 20-year period from the government. We will consider the request.”

IFCI’s capital adequacy ratio (CAR) is at 8.8 per cent against the Reserve Bank of India requirement of a 9 per cent CAR.

Media reports had speculated that the meet would pave the way for a merger between the ailing IFCI and IDBI creating a mega-financial institution. But Dayal said after the meet “merger was not a part of the meeting’s agenda, it was not even discussed.”

Sources, however, said while IFCI had floated the idea of a merger, IDBI officials were vehemently opposed to it stating it would create an unwieldy entity involved in too many activities.

Dayal, however, admitted that “merger is one option to help IFCI. But for that we have to see many things like synergy between the two institutions.”

The banking secretary said today’s meeting had been called to evaluate IFCI’s performance and check on the implementation of the D. Basu committee report on the financial institution’s revamp.

“We have asked IFCI to step up its NPA recovery programme,” Dayal added.

IFCI was asked to move more towards retail business, instead of concentrating on high risk companies. It was also asked to hasten the retirement of high cost loans.

Among those who attended today’s meeting were IDBI acting chairman S.K. Chakravorty, IFCI chairman P.V. Narasimham, several executive directors of the two institutions and top finance ministry officials.

Rumours of merger saw the IDBI scrip dropping by 5 per cent on stock markets. The IFCI scrip, on the other hand, went up by 22.5 per cent.

   

 
 
INDAL NET AT RECORD RS 116CR 
 
 
FROM OUR BUREAUX
 
April 24: 
Indian Aluminium Company Ltd (Indal) has recorded a net profit of Rs 116 crore, its highest ever, for the year ended March 31, 2000, against the previous year’s Rs 83.94 crore, a 38 per cent increase.

Turnover increased 22 per cent to Rs 1283.4 crore, compared with Rs 1049.7 crore in March 1999. The Indal board, which met in Mumbai today, has recommended a 40 per cent dividend to its shareholders.

The five factors that contributed to the growth of the company were better capacity utilisation, product-mix, a thrust on exports, improved operating efficiencies and a significant reduction in working capital, Indal president and chief executive officer S. K. Tamotia said.

ABB net at Rs 5 cr

Asea Brown Boveri Ltd (ABB) has registered a net profit of Rs 4.72 crore for the quarter ended March 31, 2001, as compared with Rs 71.5 lakh in the same period last fiscal. The total income for the quarter stood at Rs 204 crore as compared with Rs 151.8 crore in the pervious corresponding quarter, up by 34.39 per cent, ABB said in a release today. The company’s provision for taxation in the reporting quarter was to the tune of Rs 1.3 crore, as against nil in the previous comparable quarter.

Sterlite Q3 net up 52%

Sterlite Industries (India) Limited has posted a 51.96 per cent increase in its net profit at Rs 32.1 crore during the third quarter, for the financial year ended March 31, 2001, up from Rs 21.13 crore in the previous comparable quarter. Sales saw an increase of 26 per cent at Rs 666.16 crore, as against Rs 527.93 crore in the third quarter last year.

Duncans Q4 net falls 90%

G. P. Goenka flagship Duncans Industries Ltd today reported a meagre Rs 53 lakh net profit during the fourth quarter ended March 31, 2000, a 90 per cent fall from Rs 5.12 crore in the previous corresponding quarter. “Tea prices remained depressed till mid-December 2000 and adversely affected profitability,” a company official said after a board meeting to consider the unaudited financial results.

Ashok Leyland net up

Ashok Leyland earned a net profit of Rs 91.68 crore during 2000-01 as against Rs 78.49 crore in the previous year, showing an increase of 16.8 per cent. On a turnover of Rs 2,607 crore during 2000-01 as against Rs 2,603 crore in the previous fiscal, the company’s gross operating profit had grown by 6.7 per cent to touch Rs 2,68.89 crore, R. Seshasayee, managing director of the company said.    

 
 
AUTOMOBILE MAKERS HIT THE SLOW LANE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 24: 
Automobile sales slipped 11 per cent in March, dashing hopes that finance minister Yashwant Sinha’s 8 per cent excise duty cut would help the industry hit the fast lane. Car sales in the last financial year declined 7.4 per cent at 5.9 lakh units from 6.38 lakh in 1999-2000.

Maruti sold 38,961 cars in March, down 6.7 per cent from 41,766 units in the same period last year. The company’s full-year sales fell 13.3 per cent at 3.44 lakh units against 3.97 lakh in 1999-2000. However, it claimed its market-share grew to 60 per cent from 54 per cent in the same period last year.

“Our market-share has grown but sales have decreased due to the depressed market conditions. It will pick up as soon as the demand strengthens,” a Maruti spokesperson said.

In the highly competitive B segment, the country’s largest car maker sold 1.04 lakh units in 2000-01, up 19.5 per cent over 87,180 in the previous year. The increase came despite flat sales in the industry. Its market share in the B segment rose from 31.2 per cent in 1999-2000 to 37.2 per cent in 2000-01.

Daewoo, Honda, Hindustan Motors and Mercedes Benz sold fewer cars in March but improved their year-end tallies over 1999-2000.

According to the monthly survey released by Society of Indian Automobile Manufacturers (SIAM) today, 65,107 passenger cars were sold in March 2001 against 73,089 in the same month last year.

Daewoo Motors India’s sales in 2000-01 stood at 42,960 cars, up from 40,217 in 1999-2000. Ford India sold 17,922, up from 8,023 and General Motors 8264, up from 3047.

Honda Siel’s sales in the last financial year stood at 10,011, up from 9698 in 1999-2000. Hyundai Motors sold 86,719 units compared with 75,895 during the same period last year.

Fiat India could sell only 9,370 units against 20,746 in 1999-2000. Telco sold 55,758 units, down from 44,545 in 2000-01. Hindustan Motors’ sales stood at 25,677 units, down from 26,860 in 1999-2000. Mercedes Benz India, which makes the premium-end Mercedes cars, sold 716 units compared with 893.

Two-wheeler sales fell 8.2 per cent at 37.45 lakh units from 37.76 lakh in 1999-2000. Scooter sales slipped 28 per cent year-on-year at at 9.01 lakh units compared with 12.53 lakh. However, motorcycles sales jumped 20 per cent in the last financial year at 21.56 lakh units from 17.96 lakh sold in 1999-2000.

Moped sales were down 31.4 per cent to 53,469 lakh units in the last financial year compared with 78,019 lakh in 1999-2000. Year-on-year moped sales went down 5.3 per cent at 6.87 lakh units against 7.26 lakh.

   

 
 
AV BIRLA GROUP TO RAISE STAKE IN INDIAN RAYON 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 24: 
The AV Birla group plans to hike its stake further in Indian Rayon Industries Ltd by opting for a share buy-back programme, the second one in its history, after the promoters had bought the company’s shares at a price of Rs 85 per share in late 1999.

Indian Rayon informed the stock exchanges today that its board will be meeting on April 26 to consider a proposal to seek shareholder approval for the buy-back of shares. Announcement of the buy-back programme immediately trigerred a buying interest in the Indian Rayon stock which closed at Rs 86.45, up from the previous day’s close of Rs 79.90.

Though company circles refused to divulge any details about the proposed buy-back, sources said it is an attempt at consolidating the promoters’ stake to thwart any possible takeover attempts. In fact, Abhishek Dalmia of Renaissance Estates is said to hold around 1 per cent equity stake in Indian Rayon. The company presently has an equity capital of over Rs 59 crore.

Recent reports had indicated that the Birlas had raised their stake by over 2.5 per cent using the creeping acquisition mode in the last few months.

On the BSE today, news about the buy-back saw the scrip surge to an intra-day high of Rs 87.40, after it had opened at Rs 80.70 and then dipped to an intra-day low of Rs 79.50.

The scrip finally finished at Rs 86.45, a rise of over 8 per cent. While stock market circles expect the scrip to attract buying interest, attention will be focussed at the price at which the buy-back is proposed to be made after the board meets on April 26.

Indian Rayon had earlier announced a share buy-back proposal of up to 25 per cent of its equity capital and fixed a price of Rs 85 per share.

The company then justified the buy-back programme, saying it was being done in view of its underutilised plant capacities and no major capital investment in the next couple of years.

   

 
 
FOREIGN EXCHANGE, BULLION & STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1 Rs. 46.83 HK $1 Rs. 5.95*
UK £1 Rs. 67.36 SW Fr 1 Rs. 27.10*
Euro Rs. 41.42 Sing $1 Rs. 25.55*
Yen 100 Rs. 38.50 Aus $1 Rs. 23.40*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta Bombay
Gold Std (10gm) Rs. 4400 Gold Std (10 gm)Rs. 4310
Gold 22 carat Rs. 4155 Gold 22 carat Rs. 3985
Silver bar (Kg)Rs.7475 Silver (Kg) Rs. 7475
Silver portion Rs. 7575 Silver portion Rs. 7480

Stock Indices

Sensex 3589.99 +2.98
BSE-100 1721.82 +14.74
S&P CNX Nifty 1146.30 -3.45
Calcutta 121.09 -0.36
Skindia GDR 625.48 +5.50
   
 

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