Angst-ridden Nasscom heads for split
Hilton checks in at Gold Palms Resort in Bangalore
Reliance unveils plan to raise Rs 1000 crore
Film Roman walks out of deal with Pentamedia
Panel for higher tax-to-GDP ratio
Rs 5000-cr Reliance Petro GDR plan gets go-ahead
Purnendu sets up meet with Buddha
Samsung to invest Rs 700 cr in 5 years
Birla Corp plans to pull out of Bangla
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 21: 
The National Association of Software Services and Companies (Nasscom) is staring at a split with threats from several Delhi-based companies to walk out of the forum they say has been focusing too narrowly at their expense.

At the heart of the chasm within the apex organisation is an attempt by firms — most of them from the northern region — which have moved away from being software developers to other services to form a separate, rival association.

“Earlier, there was an element of coherence in whatever Nasscom did. Now, it has been targeting niche areas, and in the process, seems to have forgotten software and services firms. We may not contribute in a big way to software revenues, but our tally remains significant nevertheless,” said a chief executive officer of a Delhi-based software house.

The rumblings of discontent started while Dewang Mehta was at the helm of affairs. Many software firms, largely from the capital, had threatened to coalesce into a separate body.

Nasscom officials, however, say they are confident of resolving problems, quelling discontent and promoting the interest of members. “During the preparation of our pre-budget documents, only 100-150 of the 874 members respond. And once the document is prepared, firms feel their views have not been incorporated. We have deadlines to meet and cannot help if inputs are not sent on time,” they added.

The disgruntled lot of companies is also unhappy over the fact that Nasscom’s executive council has not been able to find a replacement for Mehta, who died on April 12 in Sydney, where he had gone as part of an industry delegation headed by Union information technology minister Pramod Mahajan.

The issue of finding a new chief is still alive. The interviews are slated for next month. The executive council has constituted a committee to select a head for Nasscom as well as a governance committee to make recommendations regarding the organisation’s structure, roles and responsibilities.

“The process of selecting Mehta’s successor will be completed in a short time. We are currently busy with the organisation of IT Enabled Services 2001, India’s largest annual national convention on IT Enabled Services (ITES), to be held on May 30-31 at Chennai,” a Nasscom spokesperson said. “IT-enabled services are extremely important for the Indian software sector, and the Chennai event will help companies in expanding their business horizons,” he added.

According to a recent survey conducted by the association, revenues in the county’s IT-enabled services sector zoomed by more than 70 per cent from Rs 2,400 crore in 1999-2000 to Rs 4,100 crore in 2000-01. A Nasscom–Mckinsey report predicts it will account for over 20 per cent of total revenues of IT software and services industry by 2008.

Customer-interaction services was the fastest growing IT segment, its sales leaping 112 per cent over 1999-2000 at Rs 850 crore, Phiroz Vandrevala, Nasscom chairman said. Revenues from back-office operations were up 42.1 per cent, from Rs 950 crore in 1999-2000 to Rs 1,350 crore in 2000-01 in a sector that beat job projections with more than 70,000 employees.

Nasscom is a non-profit organisation of 874 member-companies which contribute more than 95 per cent of the industry’s sales.


New Delhi, May 21: 
Hilton International has come back to India through its tieup with the Bangalore-based World Resorts Limited (WRL). The global hotel major has taken over the management operations of the famous Gold Palms Resort.

Owned by Bollywood filmstar Sanjay Khan, Gold Palms is one of the most modern and expensive health resorts in the country which will now be open to leisure travellers. Hilton International said today that it is close to finalising three deals with hotels in Mumbai, Delhi and Chennai.

“We are at an advanced stages of negotiations with three hotels in Mumbai, Delhi and Chennai which will be managed by Hilton International,” Koos Klein, Hilton’s president for Asia-Pacific, told reporters here today.

Hilton will only handle the management side of these hotels right now. But, it is also open to options like investments, equity participation, joint ventures, lease or contracts, he said.

“We do plan to invest in future but it should be the right opportunity at the right time,” Klein said without giving further details on investment plans.

Hilton would be picking up at least 26 per cent stake in case of equity participation in a property, he added. Elaborating on future plans, Klein said Hilton was eyeing to capture the Indian hotel market by opening one hotel every year which could be through contract or equity stake or venture.

Replying to a query whether Hilton would be willing to takeover state-owned hotels in the country, Klein said there were no such plans. Hilton had to wound up its India operation in 1998 when its partner, the Suri brothers of Bharat Hotels, cancelled the agreement in favour of Intercontinental.


Mumbai, May 21: 
Reliance Industries (RIL) is planning to raise Rs 1,000 crore through redeemable preference shares in a flotation that could be made in the country or abroad. The move comes close on the heels of group company Reliance Petroleum’s plan to raise money via the same route.

Industry watchers were not surprised, saying they had been expecting it from a company that has lined up high-stake forays in a host of industries from infocom to oil and gas.

Last week, the group said it intends to divest 13 per cent of Reliance Industries’ holding in RPL to fund its ambitious ventures. The petrochemical giant told shareholders the proceeds would be used to finance capital expenditure, meet working capital requirements, make strategic investments such as any mergers, acquisitions, and other efforts at reorganisation. It did not elaborate on these points.

Reports about the preference issue perked up the company’s scrip on Bombay Stock Exchange. The stock had initially opened lower as investors sold in reaction to the fall in company’s weightage to 9.5 per cent from 12.5 per cent in Morgan Stanley Capital International (MSCI) indices.

The share started the day at Rs 371.25, hit its low of Rs 370.25 before moderate buying sent it bouncing back to the day’s peak of Rs 381.35. It closed at Rs 376.35, up from Rs 373.90 on Friday.

Reliance has written to shareholders about its mega plans for investments to be made directly, or through associate companies, in a string of businesses, including oil and gas, petrochemicals, refining and marketing, telecom, infocom and power.

To raise resources for these initiatives, the company says it will have to consider various financing options so that it can raise capital at the lowest possible cost.

Sources said the preference issue could be made to ordinary shareholders, apart from the promoters, financial institutions, FIIs, venture capital funds, and other entities in various ways.

The company has said it wants to invest Rs 25,000 crore over the next three to five years through Reliance Infocom in fixed-line telephony, cellular ventures, national long distance and international long distance services apart from data-transmission facilities like call centres and web hosting. It also intends to offer broadband connectivity to high-end corporates and other kinds of business customers.

In oil and gas, the company wants to set up retail outlets once the administered price mechanism is dismantled and the sector fully decontrolled.


Mumbai, May 21: 
Film Roman, a Hollywood-based TV production company, has terminated the deal with Chennai-based Pentamedia Graphics Ltd alleging that the latter had committed “a material breach of the agreement”.

A Film Roman release said here today that the company had formally notified Pentamedia Graphics Ltd that the latter was in material breach of the stock purchase agreement signed on January 1 and also the memorandum of understanding between the two companies signed on April 24.

In a communication to the Securities and Exchange Commission (SEC) earlier, Film Roman said that it had terminated an agreement to sell an equity stake to Pentamedia.

“Film Roman has terminated the transaction between the two parties,” it stated.

News about the deal going sour had gathered credence since April when Film Roman first indicated to the SEC that the deal is being reviewed.

Reacting to Film Roman’s communiqué, a surprised Pentamedia said it has been “caught unawares with this development” and added that its legal counsels “are finding out the rationale.”

In a communication issued to BSE, Pentamedia said that as per the understanding reached between the top executives of both the companies, Pentamedia would issue 5 million GDRs at $ 2 each and Film Roman would issue 8.50 million shares at $ 1.17.

Thereby, Pentamedia would have paid $ 10 million to take 49 per cent stake in Film Roman. The company added that its intentions to honour the agreement is unaltered and it is prepared to complete the deal.

Pentamedia had entered into a deal in October last to acquire 60 per cent of Film Roman at a cost of $ 15 million in cash.

Film Roman is widely known for producing the animation used in “The Simpsons” among others. In April this year, Film Roman had indicated to the SEC that Pentamedia was unable to close the transaction on terms agreed by both the firms and approved by Film Roman shareholders.

Both the companies were unable to come to a logical conclusion since Pentamedia had called for restructuring the transaction.

In the BSE today, the Pentamedia scrip finished higher at Rs 84.95 after opening at Rs 82.30 and rising to a day’s high of Rs 86.85.


New Delhi, May 21: 
The Partha Shome Committee on taxation today suggested that the government target a 4 per cent increase in the ratio of tax to gross domestic product (GDP) to 17.8 per cent in five years by pushing sales tax reforms4, phasing out tax exemptions, including incentives on savings, and taxing services on par with goods at two rates.

It has recommended removal of tax sops for individuals, wants corporate tax rationalised at 30 per cent and the number of excise slabs reduced to two — 16 per cent and 32 per cent — which would be applicable to both services and goods. It also wants to bring down average customs duty rate to 20 per cent in two years and to 15 per cent by 2004-05 and says a uniform countervailing duty of 16 per cent should be levied.

The final report of the advisory group on tax policy and tax administration for the Tenth Plan was presented to the Planning Commission deputy chairman, K. C. Pant, by the chairman of the committee, Parthasarthi Shome, here today.

“We are looking at a 3.7 to 4 per cent growth in tax revenues to increase the tax-GDP ratio to 17.8 per cent by the end of Tenth Plan. This is necessary to achieve a 15 per cent nominal rate of growth, which would translate into the Prime Minister’s target of an inflation-adjusted 9 per cent rate of growth,” Shome said.

In his presentation before the plan panel, he said the Centre will have to increase its tax-GDP ratio by about 2.1 per cent while states will have to raise the figure by 1.6 per cent. The committee wants an end to deductions from taxable income of certain kinds of savings and, instead, advocates tax credits. It also wants roll-over provisions on capital gains to go. In a proposal that is bound to raise middle class hackles, it wants the standard deduction rate halved to Rs 15,000.

The panel says income from investments in mutual funds, which act as pass-throughs and are exempt from taxes, should be taxed at the lowest marginal rate of 10 per cent. Foreign incomes and remuneration must also be brought under the tax net.


New Delhi, May 21: 
The government today cleared 47 foreign direct investment (FDI) proposals worth Rs 6,020 crore, including Reliance Petroleum’s Rs 5,000-crore global depository receipt (GDR) issue for its petroleum refinery project.

Among the other major proposals cleared by the ministry of commerce and industry is the Rs 823-crore HDFC Bank Ltd’s ADR/GDR issue to expand its banking operations.

Infotech major Moschip Semiconductor Technology’s Rs 30.8-crore proposal to manufacture computer chips and semi-conductors has been approved.

This apart, Rediff Communications has been allowed ADR-linked stock option involving no fresh FDI.

The government also cleared the Rs 46-crore worth FDI proposal for 20 per cent equity stake in Mahindra Realty and Infrastructure Developers Ltd (MRIDL) for infrastructure projects like roads, highways, bridges, airports, rail, bus and truck terminals.

Malaysian company General Labels & Labeling (M) SDN BHD has been allowed to set up a wholly-owned venture to manufacture pre-printed paper and film-based self-adhesive and security labels.

ABB Holdings (south Asia) has been given the go-ahead to increase its equity stake in the investment holding company to 100 per cent from 51 per cent now; this involves FDI worth Rs 4.13 crore.

Sona Investment Ltd has been allowed to bring in almost Rs 19 crore FDI. Also, Madura Coats has been allowed to increase equity through the buyback route, involving no fresh FDI.

Among the other proposals cleared is Chinese major Konka Electronics’ amendment in the existing FC, involving no fresh inflow; Coronet Products’ Rs 2.55 crore proposal for manufacturing synthetic or monofilament yarn etc.

Shivalik Sugars’ Rs 13.95 crore proposal was cleared; so was Rane luK Clutch’s Rs 21 crore proposal for manufacturing auto spare parts.

The government also cleared the Rs 9.4 crore proposal of Casio India to manufacture and market radio pagers; of management consultants KPMG for addition in its activities and Apagu Trading’s Rs 1.15 crore proposal for exporting leather textile and garnet handicrafts.


Calcutta, May 21: 
With the sixth Left Front government firmly in the saddle, Purnendu Chatterjee, one of the promoters of Haldia Petrochemicals (HPL) with a Rs 450-crore investment, is expected to meet chief minister Buddhadeb Bhattacharjee this weekend to discuss the future the project and his Lake Land Village, a plan hanging fire for two years.

Though senior officials of The Chatterjee Group (TCG) said it is a ‘courtesy call’, sources said the discussion will centre on these projects.

“Let him come. We will discuss his projects. We want investments to come to the state,” the chief minister told The Telegraph.

HPL is expected to hold its board meeting around the time Chatterjee will be in the city, though no date has been finalised. “The board meeting is expected to be crucial in the light of the fact that Indian Oil Corporation (IOC) is yet to make up its mind on participating in the project. More than a month into the current financial year, the promoters will have to plan the future course of action,” sources said.

Senior HPL officials said KPMG Peat Marwick, which is carrying out the due diligence exercise of HPL on behalf of IOC, is yet to submit a report that should have been ready in eight weeks. “It is not clear when Indian Oil will approve its investment. Time is fast running out and the debt burden has been mounting,” senior HPL officials said.

Chatterjee’s Lake Land Village Project, spread over 5,000 acres off Eastern Metropolitan Bypass at a distance of 16 kms from downtown Calcutta, envisages setting up of a sprawling township with a global institute for science and technology apart from a host of subsidiary research centres.

The government is yet to exempt the project from the Land Ceiling Act and bestow on it the status of a township. The sources said Chatterjee has already pumped in Rs 10 crore. “If the government fails to give an exemption under the Land Ceiling Act, we will lose our money,” they added.

The institute, which will have six campuses across the country, has won a $ 300-million sponsorship from Silicon Valley entrepreneurs. The sponsors include Desh Deshpande of Sycamore Networks, Arjun Malhotra of HCL, Vinod Khosla of Kleiner Perkins and Vinod Gupta of InfoUSA, besides Purnendu Chatterjee of The Chatterjee Group (TCG).

The institute, having tied up with the University of California, Berkeley, will enlist the support of Massachusetts Institute of Technology (MIT) and the University of Stanford. Courses at the institute, which will have a visiting faculty from professors from abroad, will be in tune with international standards and will lead to bachelor’s, master’s and doctoral degrees.


Seoul, May 21: 
Samsung Electronics, the $ 27-billion South Korean transnational, has decided to invest Rs 700 crore in India over the next five years to set up manufacturing facilities for home appliances. The investment will be routed through the chaebol’s wholly-owned subsidiary Samsung India Electronics Ltd (SIEL).

To start with, SIEL is setting up a unit at Noida for airconditioners. The unit which will be ready by July is being built at an investment of Rs 20 crore. The initial capacity of the factory has been pegged at one lakh units which will be increased subsequently.

Unveiling the company’s strategy to the visiting Indian journalists, Samsung Electronics vice-president (global marketing operations) Seung Soo Park said the company has a very long-term view on India where its subsidiary is performing exceedingly well.

“India is a very strong market for us and our brand has already made a mark. With the setting up of manufacturing facilities for white goods, our presence will be strengthened further,” he said.

While Samsung will start with air conditioners, other major home appliances being lined up include refrigerators and washing machines. The Korean major plans to locally manufacture the entire range within three years. At present, the company imports refrigerators and washing machines to India from its factories in China and Korea.

“In global competition, it is very important to be closer to the market. This is why we have decided to broadbase our operations in India which is now a very good investment destination,” Park said.

Samsung holds the fourth position in global refrigerator market with volume sales of three million units. The company has set an ambitious target to reach the top of the list of refrigerator makers in five years, Park said. SIEL managing director, S.S. Lee said the airconditioner plant will start production in the last quarter of the current fiscal year.

The company, which expects a revenue of Rs 1650 crore from consumer electronics and home appliance business, currently enjoys a 15 per cent market share in the Indian airconditioner market.

SIEL has also started manufacturing microwave ovens in its Noida factory.

Apart from the home appliance segment, the Korean giant has decided to invest over Rs 200 crore in its colour monitor and colour television plants to raise their capacities by four times. At present both the units produce1 million units each.


Calcutta, May 21: 
Birla Corporation Ltd, an MP Birla group company, is planning to gradually withdraw from the Bangladesh market due to low price realisation and instead concentrate on West Bengal.

At present, the company exports around 60,000 tonnes cement to Bangladesh at $ 33 per tonne. Even a couple of years ago the company used to export 1.5 lakh tonnes cement annually to Bangladesh.

According to company officials, competition from China and Indonesia has lowered the cement price in Bangladesh. Due to their bulk supply through shipping route and lower production costs, these countries can cater to the Bangladesh market at a much cheaper rate.

However, for the cement maker a realisation ranging between Rs 1,500 and Rs 1,600 per tonne from export is much lower than the ruling domestic price of over Rs 2,800 per tonne.

Birla Corp is planning to increase its market share in West Bengal from 10 per cent to 13-14 per cent by March 2002, said P.S. Marwah, chief of the company’s Durgapur Cement Works.

The company has plans to build the brand image of Birla Cement in the state, he added.

Birla Corp today introduced Birla Premium, paper-packed cement to ensure pilfer-proof, zero seepage and moisture proof supply.

Birla Corp has a total installed capacity of 4.5 million tonnes with units spread in Madhya Pradesh (two), Rajasthan, Uttar Pradesh and West Bengal.



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