Soft polymer prices strain Reliance growth
BSNL cautioned on rate hike
Stanchart on recruitment drive
Tea Board shortlists three to chart export strategy
Kesoram to buy back 15% equity
Jay Shree Tea plan cleared
Nepal pins hopes on Indian tourists
Fiat cautious on India investments
Shippers seek lower handling charges
Foreign Exchange, Bullion, Stock Indices

 
 
SOFT POLYMER PRICES STRAIN RELIANCE GROWTH 
 
 
FROM VIVEK NAIR
 
Mumbai, May 4: 
Reliance Industries, buffeted by a turbulent fourth quarter in the last financial year, faces a bottomline squeeze due to weak international prices and constraints that prevent it from nudging up polymer and fibre prices. According to analysts and industry observers, partially oriented yarn (POY) is the only product where it can ask customers to pay more. In most others, there is little room for any significant upward revision in the near term. Polyesters, polymers and fibre intermediates account for the bulk of the company’s turnover.

It can raise prices in the case of POY largely because anti-dumping duties levied by the government on imports of the commodity from Asian countries have given it enough leverage. The price chart for May is evidence that the country’s best-known conglomerate sees difficult times ahead.

Reliance has been able to risk a price increase only in POY, which costs Rs 65 a kg in May, up from Rs 62 in the previous month. Its prices have inched up steadily from Rs 61.50 per kg in March. Industry watchers say the imposition of anti-dumping duty could lead to further hikes in future. However, in case of all the other products, it can either manage to hold on to the April prices — or worse, be forced into sharp cuts. For instance, prices of polyethylene have dipped to Rs 41.8 per kg (Rs 43.80), MEG to Rs 30 per kg (Rs 34.300), while those of PSF, PET and LAB have remained unchanged. The international prices have softened to $ 430 ($ 465) for every tonne of PTA, and to $ 465 for a tonne of MEG

On the other hand, prices of naphtha — the key feedstock — have surged on the back of increase in the cost of crude. According to reports, Reliance will have to pay $ 28.26 for a barrel of crude to be delivered in June, while the price of naphtha in the first half of July is over $ 272 per tonne. Sources said it is too early for them to say whether a rise in product prices will follow the surge in crude, but any decision to pass on the burden to customers will come with a lag.

Concerns over growth was sparked by the stunning 2 per cent drop in its topline for the fourth quarter of the fiscal year ended March 31. Analysts say Reliance would be skating on thin ice in the first quarter of the current financial year if product prices continue to trail those of naphtha. The company attributed the drop in sales at Rs 6,444 crore to the Gujarat earthquake which crimped production schedules. “There will be no significant growth in volumes because most of the company’s plants are already working full throttle. It may not post significant growth rates in the first two quarters, but may bounce back later,” an analyst said.

   

 
 
BSNL CAUTIONED ON RATE HIKE 
 
 
FROM M RAJENDRAN
 
New Delhi, May 4: 
The communications ministry has asked Bharat Sanchar Nigam (BSNL) not to introduce new interconnection charges without holding consultations with private basic operators. These companies are up in arms over revised interconnection charges that BSNL intends to levy on local, STD and ISD calls which are made from private fixed line networks to its subscribers.

A senior communications ministry said the government wants Bharat Sanchar to retain its existing customers who could switch to new private national-long distance operators — many of whom have recently been issued licences — if they are offered a better deal. “We will meet the Association of Basic Telecom Operators (ABTO) next week to discuss the issue. We do not intend to implement the new rates without hearing them. After all, they are our esteemed customers,” the official said.

He said there is time to discuss all issues on which there are disagreements with private operators until June 1, the day the new access and interconnection are supposed to take effect. “We hope to hold talks with BSNL officials on the inter-connectivity issue soon,” ABTO officials said.

BSNL had written to private fixed-line telecom operators last month, saying it wants to review the interconnection charges which are based on an agreement that was signed between the two sides in 1997. The tariffs were revised following Telecom Regulatory Authority of India’s (Trai) 1999 tariff order.

“You are aware that the arrangement for payment of access charges for local, STD and ISD calls was offered by DoT at the time of bidding for licences as a promotional measure to attract private sector into basic telecom services,” the government-owned telecom company said in its letter to basic operators.

However, the state-owned company said it cannot be burdened with more losses in carrying local, STD and ISD calls made from the subscribers of private operators over its local and long distance networks.

At present, private operators do not pay anything for a local call made from their network to BSNL’s. They fork out 48 paise for a three minute STD call, which is 40 per cent of Rs 1.20; they pay 66 paise for an ISD call, which amounts to 55 per cent of Rs 1.20. Under the proposed access charges, they will pay 60 paise for a local call, 84 paise for an STD call and 96 paise for an ISD call.

   

 
 
STANCHART ON RECRUITMENT DRIVE 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, May 4: 
Standard Chartered Bank, which has been cutting jobs over the past the past three years, will recruit 1,000 employees at its global technological hub coming up in Chennai.

The centre, which is now under construction, will be ready by the end of 2002 or in the first quarter of 2003. “We have already invested $ 15-20 million. The total investment will be to the tune of $ 200 million,” a senior official of the bank said.

The banks’ hub is one of the two it is setting up — the other is in Malaysia — to conduct online transactions worldwide, including credit card business, but they will not be inter-connected.

The Chennai centre will not only handle transactions in India but also those in Africa, West Asia and South Asia and Thailand.

Stanchart, one of the world’s leading bank with a big presence in the emerging markets, has 32,000 employees spread across 615 offices in 56 countries, primarily in Asia, the Indian sub-continent, West Asia, Africa and Latin America. In India, it has 4,340 people on its rolls.

“We have recruited 100 people to run our electronic messaging operations in Chennai. They are all infotech professionals between 25 and 30 years of age,” the official said. More jobs are expected to be generated in the coming months.

“In the past three years, we had to trim our workforce because we felt it was necessary to make us competitive. Now, we are in a position where we can hire people,” the official further added.

The hubs will be entrusted with back-office jobs which are now performed by employees in local branches. “The idea is to bring in 60 per cent of the routine work in the hub while 40 per cent will remain with the branches,” the official said.

Talking about the bank’s merger with ANZ Grindlays Bank, the official said the integration will be completed by 2002. “There are a few procedural matters which have to be sorted out. Once that is done, the process will be complete,” the official said.

Sir Patrick Gillam, chairman of Standard Chartered Plc, told the bank’s annual general meeting held in London that the acquisition of Grindlays will make India as important as Singapore and Malaysia in terms of the business generated.

It also makes the combined entity the leading international bank in Bangladesh, Sri Lanka and Pakistan, and strengthens its position in the Gulf. At present, the bank services 2.2 million retail clients of whom 1,200 are corporates.

   

 
 
TEA BOARD SHORTLISTS THREE TO CHART EXPORT STRATEGY 
 
 
BY A STAFF REPORTER
 
Calcutta, May 4: 
The Tea Board of India has shortlisted three international consultants—McKinsey, PricewaterhouseCoopers and Accenture (formerly Andersen Consulting) —to work out a mid-term export strategy for the Indian tea industry.

Talking to reporters after the 111th annual general meeting of the Calcutta Tea Traders Association (CTTA), N. K. Das, Tea Board chairman said: “About 12 consultants made representations to us, of which we have shortlisted three. We are now negotiating with them and will be able to select one out of the three within a week’s time.”

Das said in the last financial year, India imported about 10 million kgs of tea.

“The industry has raised questions about the quality of tea that has entered India. We are going to take up the matter with the customs authorities and demand that the imports should pass the PFA test.”

Replying to queries raised by CTTA members, Das said the Tea Board had a meeting with commerce secretary Prabir Sengupta on April 30 on the exports and auction system. The meeting, also attended by merchant exporters, discussed the need to take a relook at the auction system. “We have decided to set up a professional body who will examine the present auction system and come up with suggestions,” Das said. Further, the need to aggressively promote Indian tea in international markets also featured in the discussions.

The Tea Board chairman said they have identified several areas which will have to be given special attention—rejuvenation of plantations, increasing exports, which have dwindled from 41 per cent in 1950 to 14 per cent now, the small growers welfare scheme, emphasis on irrigation, drainage and R&D, value-addition and quality upgradation.

“We will include these in the Tenth Five-Year Plan,” he said.

CTTA’s previous chairman, D. L. Thapar, said clause 17 of the Tea Marketing Control Order has been amended in January this year and it is no longer obligatory for tea producers to sell 75 per cent of their production through the public auction system.

He said the public auction system will be attractive both to the seller and the buyer if it is able to handle teas in an efficient manner.

   

 
 
KESORAM TO BUY BACK 15% EQUITY 
 
 
BY A STAFF REPORTER
 
Calcutta, May 4: 
Kesoram Industries, the Basant Kumar Birla group flagship, has decided to buy back 15 per cent of its equity, amounting to 78,42,280 shares, from the market.

Kesoram’s board of directors, which met here today, also approved the merger of Hindustan Heavy Chemicals and Birla Century Finance Ltd with the company, in line with the recommendations made by PricewaterhouseCoopers.

Following the buyback, Birla’s share in the company will rise from 38 per cent to roughly 45 per cent on a reduced paid-up capital.

The company has set a maximum price of Rs 40 for the buyback, S. K. Parik, director, Kesoram, said.

Regarding the reasons behind the buy-back decision, a senior company official said Kesoram has been a target of several vested interests in recent times.

“It is important to consolidate our base to ward off raiders,” he said.

Birla, who has already increased his stake in the company by at least 10 per cent over the last couple of years, will also acquire another 5 per cent in the current financial year through the creeping acquisition route.

“This will give Birla and his associates a complete control over the company, which is currently performing very well,” the official said.

The Kesoram scrip, which was languishing at a miserable Rs 19 a few weeks back, has shot up to Rs 28 at Bombay Stock Exchange today after the company announced its intention of buy back.

Incidentally, the scrip spurted to a high of Rs 65 in February on the Calcutta Stock Exchange (CSE) on reports of a huge cornering of the company’s shares by a Dubai-based non-resident Indian. Parik said the report of stock-piling by the NRI was found to be baseless.

Regarding the merger of the two companies with Kesoram, Parik said HHCL shareholders will get one equity share of Kesoram for every five shares held.

BCFL’s shareholders, however, will be offered Kesoram’s secured debentures of Rs 105 each, for every 10 BFCL shares of Rs 10 each.

Parik said the secured debentures to be issued to BCFL shareholders will carry an interest rate of 12 per cent per annum and will be redeemable preferably within a year.

The amalgamations, he said, will not have much impact on the company’s paid-up capital, though its net worth will go up substantially.

   

 
 
JAY SHREE TEA PLAN CLEARED 
 
 
BY A STAFF REPORTER
 
Calcutta, May 4: 
Shareholders of Jay Shree Tea and Industries Ltd (JTIL), a B K Birla group company, today approved a proposal to buyback 11,07,000 equity shares (Rs 10 face value) at a maximum price of Rs 75 per share aggregating Rs 8.30 crore.

Shareholders gave the nod to buyback 10 per cent of JTIL’s paid-up capital at its extra-ordinary general meeting held today, the company said in a notice to the Bombay Stock Exchange.

The board decided to acquire shares from the open market through stock exchanges, it said.

   

 
 
NEPAL PINS HOPES ON INDIAN TOURISTS 
 
 
FROM RAJA GHOSHAL
 
Kathmandu, May 4: 
The Indian tourist, bitten by the travel bug and with oodles of cash to blow up, is a coveted guest, especially in neighbouring Nepal.

The Himalayan kingdom is keen to roll out the red carpet for the Indian tourist, and is remove all obstacles that deters Indian tourists from visiting the country.

“The home secretaries of India and Nepal are likely to meet after May 14 to review the travel documents issue between the two countries,” said Pradeep Raj Pandey, CEO, Nepal Tourism Board (NTB). The NTB is targeting around 1.5 lakh Indian tourists in the year 2001. In 1999, 1.4 lakh Indians visited Nepal. Last year, however, this number fell by about 32 per cent. “We are trying to get back to the 1999 figures,” Pandey said .

At present, the Indian tourist has to produce three kinds of documents to enter Nepal, the first two being the passport and voter identity card. Pandey said some clarifications are necessary on the third category, which stipulates ‘any identification by the central and state governments.’ What is not clear, he said, was if Indians can be allowed entry on producing ration cards or driving licenses. A simplification of the norms will probably translate into an increase in the influx of Indian tourists into Nepal, he said.

Further, under the present norms, children up to the age of 10 years will not require these documents. “But what will happen to children between 12 to 18 years of age,” asks Pandey. “At our end, we do not want Indian tourists to skip Nepal because of these hassles,” Pandey said. Nepal is the only country which Indian citizens can visit without a visa.

Interestingly, documents are necessary only for those who enter Nepal by air. Kali Bahadur Adhikari, member NTB, said, “Since the tourist coming by air has more spending power, there’s more reason not to lose them.”

Another roadblock which the NTB would like to see removed is the norm which makes it illegal to bring Indian currency notes of high denominations like 500 and 1000 into Nepal. The norm acts as a deterrent for tourists from India, who are considered heavy shoppers and high spenders, Adhikari said.

   

 
 
FIAT CAUTIOUS ON INDIA INVESTMENTS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 4: 
Fiat SpA. is adopting a cautious approach to investing in India. It prefers to wait for an improvement in the economic scenario before foraying into the insurance sector and also before pumping in more into its automobile business.

“We will not make any further investments in our automobile business since we have put in whatever we had announced and are now waiting for the returns to start coming in,” said Gualberto Ranieri, vice-president, corporate communications (international) Fiat SpA.

He said insurance is an important area where Fiat plans to invest in the country. Last year, the company had evinced keen interest in the sector and said it will scout for partners once the policy is in place. “The insurance project is not on hold—it is alive, but recent changes in the economic scenario world-wide, including in India, have led us to monitor it more closely. It is difficult to set a deadline in this scenario.”

However, he added, Fiat is serious about its automobile business in the country. The Indian subsidiary, Fiat India Auto Limited, will launch the hatchback Palio by the year-end, which will take the number of offerings from FIAL to four.

   

 
 
SHIPPERS SEEK LOWER HANDLING CHARGES 
 
 
BY A STAFF REPORTER
 
Calcutta, May 4: 
The Eastern India Shippers Association (EISA), the city-based apex body of exporters in the eastern region, has sought the Union commerce ministry’s intervention to bring down the terminal handling charges (THC) at the Calcutta and Haldia ports.

The EISA noted that exports of all traditional items such as jute, tea, engineering goods and shellac will become uncompetitive in the international market, with additional THC in certain cases going up by over 100 per cent in certain cases from April 24.

The Association of Shipping Interests in Calcutta (AISC), the body of shipowners and their agents, which had effected an increase in the THC, however, defended the revision in the rates, saying it was done primarily to recover a part of the enhanced costs.

“We are prepared to explain to the EISA the reason for the increase in THC. We will reply to their letter,’’ said H. P. Nopany, a past president of the AISC.

The EISA pointed out that with an over 100 per cent increase in THC for warehouse-stuffed containers, jute goods exports, which already suffered from a freight disadvantage, would be further marginalised. Indian tea will also lose its competitive edge vis-a-vis those from east Africa. Further, it said the THC increase would sound a deathknell for shellac exporters.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.46.82	HK $1	Rs. 5.95*
UK £1	Rs. 67.13	SW Fr 1	Rs. 26.65*
Euro	Rs. 41.79	Sing $1	Rs. 25.40*
Yen 100	Rs. 38.56	Aus $1	Rs. 23.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4410	Gold Std (10 gm)Rs.4330
Gold 22 carat	Rs. 4165	Gold 22 carat	Rs.4005
Silver bar (Kg)	Rs.7400		Silver (Kg)	Rs.7390
Silver portion	Rs. 7500	Silver portion	Rs.7395

Stock Indices

Sensex		3514.59		+20.11
BSE-100		1710.82		+17.01
S&P CNX Nifty	1130.05		+ 8.00
Calcutta	 119.07		+ 0.69
Skindia GDR	 635.95		- 4.49
   
 

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