Angry buzz over WiLL payout
Dunlop rolls towards uncertainty
Haldia Petro maiden turnover at Rs 1400 crore
Broker suicide shocks Dalal Street
Intel hub among 28 FDI plans cleared
NHPC report on Bengal projects by month-end
Kuoni on the prowl again
Indian Oil, IPCL close to deal
Balco hopes to resume output in five days
Foreign Exchange, Bullion, Stock Indices

 
 
ANGRY BUZZ OVER WILL PAYOUT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 9: 
Private fixed line telecom operators today strongly opposed the new revenue-sharing formula for wireless in local loop (WiLL) mobile phones proposed by the Group on Telecom and Information Technology (GoT-IT).

Besides, the companies also objected to the stipulation that they meet roll-out obligations in order to get spectrum allocations.

The Association of Basic Telecom Operators (ABTO), the apex body of basic service providers, also sought a waiver of licence fees for a limited period of four years for all six existing licensees—Reliance Telecom, Bharti Telecom, Hughes Telecom, Shyam Telecom, Himachal Futuristic Communications Ltd and Tata Telecom.

GoT-IT, in its proposal, had suggested that the revenue share of long-distance calls for basic service operators be reduced from 60 per cent to 5 per cent to provide a level playing field to cellular mobile operators.

In a 13-page letter addressed to telecommunications secretary Shyamal Ghosh, the basic operators argued that the issue of revenue-sharing lies within the purview of the Telecom Regulatory Authority of India.

“GoT-IT itself recognises that its revenue-sharing formula is recommendatory in nature and that only Trai has the jurisdiction to determine the issue,” the ABTO claimed.

“We strongly feel this is not justified in any way, as the tariff structure for cellular mobile operators and basic service operators are entirely different,” the letter said.

The ABTO further argued that “the tariff structure for cellular mobile operators is ‘cost plus’, based on monthly rentals and also the charges payable for originating and terminating calls. However, tariffs of basic service operators are based on the principle of affordability and monthly rentals and local call charges are fixed keeping this important factor in mind.”

The association has liberally quoted the Trai recommendations to support its claims. It argued that even the existing 60 per cent revenue share centred on the cost-based structure, monthly rentals and local call charges, do not make basic services viable for the companies.

“ABTO urges you to ensure that the 60:40 revenue sharing regime as determined by Trai needs no change for all types of services offered by basic operators. Any attempt to reduce the existing arrangement for WiLL limited mobility calls will defeat the very purpose and objective of the NTP 1999 to provide universal and affordable telecom services,” the letter said.

The association also claimed that the operators are not obliged to fulfil the roll-out obligations—to provide telephones as agreed under the licence fee regime—within a given period. ABTO has pointed out while the companies had agreed to unconditionally accept whatever was placed before them to migrate to the revenue-sharing regime under NTP-99, the government has not reciprocated.

The basic operators claimed that “as per the unconditional acceptance, the earlier roll-out obligations given under the duopoly regime cannot be sustained in the present situation with several players. The two are inconsistent and will seriously disturb the level playing field.”

While requesting the government not to change the 5 megahertz spectrum to be allocated to operators, the basic operators also sought direct connectivity with Videsh Sanchar Nigam Ltd (VSNL).

   

 
 
DUNLOP ROLLS TOWARDS UNCERTAINTY 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, May 9: 
The Manu Chhabria-controlled Dunlop India Limited (DIL) has stopped holding operations — the term it used to describe a situation in which critical elements of the production process are kept running — at its Sahagunj factory.

Work at the unit has been halted at a time when the state government is yet to release Rs 10 crore in loans against the mortgage of two company buildings at 57B and 63A Mirza Ghalib Street. Employees in the last few weeks have walked in, recorded attendance and left after spending some time at the factory.

Efforts to contact T.C. Goel, the newly appointed chief executive officer (CEO) and president of the company, proved futile. According to his secretary, he was busy in meetings.

Sunita Budhiraja, the official spokesperson of the Chhabria group, said HRD chief S. Bhaduri was overseeing the affairs at Sahagunj and, therefore, it was he who would be able to comment. “I cannot help you. Get in touch with with S. Bhaduri. He is looking after the entire thing,” she told this correspondent.

However, Bhaduri said he had joined the company only on Tuesday and did not have the facts before him to open up on the issue.

Officials at the factory were cagey, saying everyone had cleared out ahead of Thursday’s assembly election. “The holding operations have been stopped. The management has told us that unless it receives the Rs 10 crore from the state government against the mortgage of the two buildings, it will be unable to carry on work,” Intuc’s Ranjit Neogi said.

Senior officials of the state’s industrial reconstruction ministry said the file on payments to be made to Dunlop has been sent to the finance department.

“We had requested the West Bengal Industrial Development Corporation to disburse a portion of the amount, but that did not happen. A decision on the matter will have to be taken after the election.”

However, Neogi alleged that senior MP and WBIDC chairman Somnath Chatterjee told people during the election campaigns that the ailing tyre-maker has already been given Rs 10 crore, and that more funds would be released if required.

The Board for Industrial and Financial Reconstruction (BIFR) had, in its latest order, capped the interest on loans against property mortgage at 18 per cent.

Sources say Dunlop has already submitted a draft revival scheme it was required to under directions from the board. Industrial Development Bank of India, the operating agency, has called a meeting of parties involved in the scheme on May 16.

   

 
 
HALDIA PETRO MAIDEN TURNOVER AT RS 1400 CRORE 
 
 
BY A STAFF REPORTER
 
Calcutta, May 9: 
The Rs 5,170-crore Haldia Petrochemicals project has registered a turnover of Rs 1,400 crore in its first year of operations ended on March 31, 2001. The turnover from the state government’s pet project stood at a significantly higher level though the company is yet to commence commercial production. A senior HPL official said the turnover would have been much higher, had all the plants in the HPL factory at Haldia operated at 100 per cent capacity throughout the year.

“We recorded optimum production from the units since September last year. So the financial results reflect only six to seven months of production,” he said.

The company achieved sales of 4 lakh tonnes of polymers and chemicals last year. “In the fourth quarter, we sold around 1.52 lakh tonnes of our products,” the official said.

The official further added that despite hostile market conditions and under-utilisation of capacity, the company has a 14 per cent market share of the country’s Rs 11000-crore petrochemicals market. In the eastern region, the company has achieved a market share of 40 per cent.

Production was however hampered because of the shortage in supply of raw materials, particularly that of naphtha.

“Initially, we faced bottlenecks in some of our units. But at a later stage, it was the shortage of naphtha that slowed down our production,” the official said.

Meanwhile, KPMG is carrying out a due diligence in HPL on behalf of Indian Oil Corporation. The US consultant has made visits to the HPL factory at Haldia and held a number of discussions both with the company’s operational staff as well as the management officials. KPMG is expected to submit its report to Indian Oil very soon. The public sector oil major is considering various options to participate in HPL’s equity.

One of the possibilities before Haldia Petrochem is to ultimately hive off its naphtha cracker unit into a separate company, where Indian Oil will hold a majority stake. The cash-strapped company has also embarked on a financial restructuring exercise with assistance from the Industrial Development Bank of India (IDBI), which is the lead financial institution for the project. The official said the financial restructuring is expected to be completed soon, which will have a great impact on the company’s huge interest burden.

   

 
 
BROKER SUICIDE SHOCKS DALAL STREET 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 9: 
The tragic trail of the post-budget bloodbath spread wider when Bimal S Gandhi, a 40-year-old broker who had staked out close to Rs 100 crore in audacious stock bets, hung himself to death from a ceiling fan at his home in downtown Colaba late on Tuesday.

His death has jolted the market out of its short-lived euphoria which has been generated by the slow but steady gains recorded on bourses across the country in recent weeks.

A prominent broker with rights to trade on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE), Gandhi left behind no clues about the reasons for ending his life, though sources close to his brokerages said the market crash immediately after the budget left him devastated.

He floated the El Dorado Group, a BSE and NSE-affiliated brokerage which traded in equity shares, and Dil Vikas Securities, a broking outfit that focused on the debt segment of NSE. El Dorado specialised in retail broking while DIL Vikas focused on trading in government securities and other debt instruments. In addition, he held a card for trading on Dalal Street.

Gandhi, who was known to be a hard-working individual and a party animal who enjoyed late-night blasts with his friends, was part of the breed of younger, more aggressive brokers on BSE.

Strangely enough, El Dorado’s exposure on the BSE is believed to be a modest Rs 50 lakh. Even Gandhi’s bank guarantees and other securities were three times more than what he was required to maintain under the exchange’s rules. However, there are reports that he gambled heavily in vyaj badla transactions — a trading mechanism that allows rollover of speculative positions from one settlement to the other.

The market, awash with rumours about what drove Gandhi to death, lent a keen ear to stories which said he piled up a massive buy position in Amara Raja Batteries, whose share recently plunged below Rs 100 after hitting a high of over Rs 300. Brokers say his broking outfits will remain closed for three days from Wednesday.

Parekh kin gets bail

A special court today granted bail to Kartik Parekh, a cousin of Big Bull Ketan Parekh, in the Rs 137-crore pay order scam. He was released today from CBI custody against a personal bond of Rs 5 lakh with a surety of an equal amount.

However, Ketan Parekh and the manager of Madhavpura Mercantile Co-operative Bank’s Mandvi Branch, J B Pandya, were remanded to judicial custody till May 21. Kartik has been told to report to the investigating agency’s office twice a week.

   

 
 
INTEL HUB AMONG 28 FDI PLANS CLEARED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 9: 
The government today cleared a Rs 99-crore Intel software development centre as part of 28 foreign direct investment (FDI) proposals valued at Rs 226 crore. The plans, which were approved by commerce and industry minister Murasoli Maran after recommendations from the Foreign Investment Promotion Board (FIPB), covered the areas of software development, engineering, consultancy and non-banking financial companies (NBFCs).

mdoffices.com, a company based in the US, won a clearance for a Rs 94-crore proposal to set up a 100 per cent subsidiary which it says will be in a position to develop high-end software for the healthcare industry in the next five years. Compaq Financial Service’s plan to acquire 75 per cent equity in a subsidiary which finances and leases out products and solutions to consumers in the country has passed the muster.

A Rs 2.70-crore proposal of the Singapore-based Luxasia Investment to set up a wholly-owned subsidiary which will conduct wholesale trading in branded cosmetics has been approved by the government. A proposal by management consultancy firm eduquity.com Pvt Ltd to offer 60 per cent of its equity worth Rs 1.35 crore to foreign investors was also okayed. There were two auto firms on the list of FDI approvals. Hongo India Pvt Ltd, a company which manufactures automobile components, has been allowed to increase foreign equity up to 95 per cent in a move which will help it garner an additional foreign investment of Rs 1.17 crore. C G Igarshi Motors has been permitted to increase foreign equity from 40.15 per cent to 44.98 per cent in a move expected to fetch it Rs 57 lakh in investment dollars.

The government has also given its assent to changes that have been proposed in a few foreign-collaboration pacts, many of them in the petroleum and gas sectors — without any fresh inflow of funds — were approved on the recommendations of FIPB.

The Singapore-based British Gas Asia Pacific Holding Pte’s proposal for transportation, distribution and supply of natural gas, bottling and marketing of LPG, has passed the muster. BHP Petroleum India’s proposal to set up a special purpose holding company which will make downstream investments in the petroleum and natural gas sector will be revamped.

Mahanagar Gas’ has been allowed to invite foreign investment for a project under which it will distribute natural gas to domestic industrial units and consumers. Other plans which were cleared by the government today included those of HDFC, Levi Strauss India Pvt Ltd and Shaffer India.

The validity of Indo Cale Power Ventures Pvt Ltd proposal to set up combined cycle power plant based on naphtha, and NEI Properties’ plan to promote trade between India and CIS, were extended.

   

 
 
NHPC REPORT ON BENGAL PROJECTS BY MONTH-END 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 9: 
National Hydro-electric Power Corp Ltd is likely to complete the feasibility report for two projects in West Bengal by the month end.

The projects—the 100 megawatt Teesta low dam stage III and 125 megawatt Teesta stage IV projects are expected to help the power-starved north to get clean power, which will be evacuated by Powergrid Corporation of India Ltd.

Further, in a major financial boost to NHPC, Life Insurance Corporation (LIC) has extended a Rs 2,500 crore line of credit, for execution of various projects to be entrusted to the corporation during the next five years at Rs 500 crore per year. The line of credit will be for a period of 17 years with a moratorium of five years.

“We will not have any shortage of funds to undertake the projects. We are also negotiating with a few other multilateral lending agencies, to generate more funds,” said Yogendra Prasad, chairman and managing director, NHPC.

The public sector hydro-power company plans to plough back Rs 60 crore for expanding the hydroelectric projects, which it plans to generate through the 5 per cent cess to be levied on power generation.

“The Central Electricity Regulatory Authority of India has already issued orders for a 5 per cent cess and the amount generated would be used for expanding the hydro power projects,” Prasad said.

NHPC registered a 10.47 per cent growth in net profit at Rs 443.19 crore during 2000-01, as against Rs 401.2 crore in the previous year. The company has already informed the government that it will pay a fixed dividend of Rs 15 crore annually, irrespective of the profit it generates.

“This is a proposal we have sent to the finance ministry. We are yet to get a reply from them. It is important that we pay only a fixed dividend, which would help us divert our resources to the development of hydro power in the country,” said a senior NHPC official.

NHPC also substantially improved realisation of its outstanding dues from the beneficiary states.

   

 
 
KUONI ON THE PROWL AGAIN 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 9: 
Swiss travel major Kuoni is scouting for further acquisitions in India and has earmarked an initial corpus of about Rs 60 crore for the purpose. It already has SOTC and SITA World Travels in its fold.

The new acquisitions will be finalised within 60 days, said Arjun Sharma, chief operating officer, SITA World Travel Inbound, a division of Kuoni India. The Swiss travel major entered India about three years back with the acquisition of SOTC.

Sharma said Kuoni is identifying companies that match its product profile, but refused to divulge the names of the companies in the reckoning. Kuoni India also plans to go public soon, but will wait for the sensex to stabilise at a level of 4800 for about 8-12 weeks, before coming out with the IPO.

SITA World Travel Inbound division, today launched a strategic business unit — e-holidays — with its site www.sitaindia.com going totally online. “E-holidays is not a dotcom per se, looking for eyeball or page views, but it is the marketing arm of the inbound division,” said Sharma.

The sitaindia site now exists as an HTML brochure-based site. “By going totally online, e-holidays will provide call centre facilities for both the B2B—the travel agents—as well as the B2C clientele—the individual consumer. The B2B to B2C ratio for the online project is 60:40.

Through sitaindia.com, the inbound division of SITA Travels seeks to generate business to the tune of $ 2 million this year. The site has so far generated a revenue of $ 1 million and serviced 1800 customers, said Prabhat Verma, head, e-holidays. The company has invested about Rs 35 lakh in its dotcom initiative. Sharma said the site is also exploring tieups with some horizontal portals as travel channel partners.

SITA Inbound is projected to handle 1 lakh foreign tourists, with foreign exchange earnings of Rs 150 crore in 2001. Sharma said SITA Inbound has 25 per cent of the organised market share.

   

 
 
INDIAN OIL, IPCL CLOSE TO DEAL 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 9: 
Negotiations between Indian Oil Corporation (IOC) and Indian Petrochemicals Corporation Ltd (IPCL) over the valuation of the latter’s Vadodara unit have reached a decisive phase, with a settlement expected within a fortnight.

Highly placed sources connected to the entire process said while IOC is sticking to its earlier stand that the initial valuation of the unit by Deloitte, Haskins and Sells was way too high, IPCL is showing some signs of relenting from the initial price determined by the consultant.

The Centre had earlier cleared IPCL’s restructuring proposal, whereby its Vadodara unit would be sold to IOC. IPCL had also decided to float fresh tenders for its facilities at Nagothane in Maharashtra and at Gandhar in Gujarat. This was to be preceded by a de-merger of the two plants, following which, the government was to invite international bids for disinvestment of a 25 per cent stake to the strategic partners.

However, when the Cabinet Committee on Disinvestment cleared the sale of the Vadodara unit in November last year, IOC officials had subsequently pointed out it would be interested in the unit only if the price was right.

What surprised many was the initial valuation suggested by Deloitte, Haskins and Sells, which put the unit’s price at a whopping Rs 3,400 crore. IOC, apparently disappointed by the high valuation, subsequently went in for an independent diligence, roping in Bank of America apart from Kemps Systems.

Though details of the valuation conducted by IOC are not known, officials from the corporation confirmed that there was a “big difference” between the two.

“At this stage, it is not prudent to give the figures as both are working on an agreement and are discussing various issues on the pricing front,” a senior IOC official told The Telegraph.

Rumours of both companies finally agreeing on a price have seen the IPCL scrip firming up on the bourses in the past few days. However, in today’s trading, the scrip met with some selling to finish lower at Rs 54.80, after opening at Rs 55.80 and rising to an intra-day high of Rs 56.50.

Though the negotiations are expected to show some results soon, industry circles feel Indian Oil is likely to strike a hard bargain, considering its plans for the unit after its take-over. IOC plans to virtually scrap the entire plant and replace it with a 4-lakh tonne cracker unit, apart from offering a voluntary retirement scheme to nearly half of its workmen. The projected investment on this front is put at over Rs 3,000 crore.

   

 
 
BALCO HOPES TO RESUME OUTPUT IN FIVE DAYS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, May 9: 
Balco expects to resume production in four to five days at its plant in Chattisgarh following a pact with the unions ending a two-month-old strike against the BJP government’s sale of a 51 per cent stake in the aluminium major to Sterlite Industries.

Balco officials, however, cautioned that operations would really be back to normal after about a month. “As most of the pots have cooled down, we have to re-heat them and that takes time,” they said.

However, union officials said their fight against Sterlite would continue, at least, in the courts of law. “The unions’ fight in the Supreme Court against the selloff continues; that is independent of the industrial dispute. The next hearing is in July,” said Sanjay Sen, lawyer for the Balco unions.

Balco’s nearly 7,000 workers agreed late yesterday to end their strike but the decision seems to have riven the ranks of union leaders . Not all union leaders are happy with the decision to go back to work. They feel it would weaken their fight to throw out Sterlite.

The stock market seemed to agree with the dissenting union leaders. Sterlite’s stock prices jumped nearly 10 per cent to hit an intra-day trading high of Rs 143.80. This happened despite market analysts’ belief that Sterlite has lost about Rs 150 crore because of the strike at Balco.

Balco’s output during the just concluded 2000-2001 fiscal year fell by nearly 8,000 tonnes to 86,670 tonnes because of the strike. The 35-year-old aluminium plant has a one lakh tonne capacity smelter and normally performs at over 95 per cent capacity.

Sterlite’s Rs 155 crore buyout of Balco is being challenged on several counts. It is being alleged that the firm is worth far more and that it is located on tribal land which legally cannot be transferred to a private entrepreneur. There is also a charge the aluminium major should not be sold to a private company as it manufactures strategic allow shields for India’s nuclear and rocketry programmes under a secret deal with the defence ministry.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.83	HK $1	Rs.  5.95*
UK Ł1	Rs. 66.73	SW Fr 1	Rs. 26.50*
Euro	Rs. 41.35	Sing $1	Rs. 25.35*
Yen 100	Rs. 38.49	Aus $1	Rs. 23.95*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4405	Gold Std(10 gm)	Rs.4330
Gold 22 carat	Rs. 4160	Gold 22 carat	Rs.4005
Silver bar (Kg)	Rs. 7325	Silver (Kg)	Rs.7335
Silver portion	Rs. 7425	Silver portion	Rs.7340

Stock Indices

Sensex		3586.58		+  6.21
BSE-100		1734.50		- 21.36
S&P CNX Nifty	1149.25		+  0.30
Calcutta	 121.06		+  0.62
Skindia GDR	 659.87		+ 19.82
   
 

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