Petroleum decontrol pace slackens
Govt set to export 3 mt of rice
UTI Bank again in search of a strategic ally
VST offers get carry-on signal
Telecom watchdog deals hard blow to cellular firms
Rush to offload long positions
Wipro ready to charm FMCG segment
AllBank plan to meet wage bill
Indian Rayonto expand garments range
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 11: 
The government seems to be dragging feet on its resolve to totally decontrol the petroleum sector by next April.

If the government is serious about implementing its commitment, it should have appointed a regulator at least a year in advance. It has not even thought of introducing a legislation to this effect.

The oil pool account has a huge deficit of over Rs 19,000 crore. The prevailing prices of crude in the international market are still on the higher side. These unfavourable factors are tempting the government to have second thoughts on the issue of deregulating the cash-rich petroleum sector.

The decision to dismantle the administered pricing mechanism and deregulate the petroleum industry in phases was taken way back in 1997 by the Deve Gowda government. Accordingly, quite a few products were decontrolled.

The refinery sector was delicensed and marketing is to be opened to private players after next April if they invest a minimum of Rs 2000 crore either in a refinery or in creating petroleum infrastructure.

Although the government is a bit slow in phasing out the subsidy on kerosene and liquefied petroleum gas (LPG), it remains committed to pass on the remaining subsidy to the general budget. Finance minister Yashwant Sinha, in his latest budget speech, reiterated the government’s resolve to deregulate the petroleum sector on April 1, 2002 as scheduled.

Industry circles acknowledge that the huge deficit in the oil pool account and the continued firmness in global crude prices are major factors that the government will have to take into consideration before dismantling the administered pricing mechanism. Deregulation in a bullish market could send the domestic prices through the roof which, in turn, could destabilise the political combination in power.

It was precisely to stave off such a situation that the government in 1997 decided to set domestic diesel prices on a par with the international rates. Diesel accounts for nearly 50 per cent of the total consumption of petroleum products.

The arrangement worked well for the first few months with the domestic prices of diesel fluctuating according to the movements in the international market.

The Gujral government undermined the arrangement by refusing to raise the prices of diesel when international prices went up. The subsidy in the oil pool account kept on mounting. The Vajpayee government also refused to restore the arrangement. Last year, the government was not confident that it could go ahead with the plan to totally regulate the petroleum sector.

The increase in the prices of petroleum products in the last quarter of 2000 created an impression that deregulation was possible. There were indications that crude prices could crash to a level below $ 20 a barrel. That may still happen. But unless it happens at least by the end of the current year, the government may use it as an excuse to put off total decontrol of the petroleum sector.

Politically, it is unwise to decontrol this sector. Deregulation would leave the minister and the bureaucrats powerless. The ministry of petroleum and natural gas has cash-rich public sector units (PSUs) under its administrative control. The delay would also help the private players to catch up with the PSUs and compete on a position of strength.


New Delhi, June 11: 
The government has decided to export 30 lakh tonnes ( 3 million tonnes) of rice from the central pool during the current financial year, Union minister for consumer affairs, food and public distribution Shanta Kumar said here today.

The export prices of raw rice and parboiled rice have been fixed at Rs 5,650 per tonne and Rs 6,000 per tonne respectively.

The price of wheat for export has been fixed at Rs 4,360 per tonne. The rates are effective from April 1 this year.

The Food Corporation of India (FCI) will make rice and wheat available to private parties and public sector undertakings for export.

The minister said that since December, the total quantity of wheat contracted for export was 32,27,217 tonnes.

Out of this 26,87,562 tonnes has been actually lifted by the exporting agencies from FCI godowns. Up to May 23,44,555 tonnes of wheat have been shipped.

According to Kumar, the government is also considering a request by state governments to reduce foodgrain prices for above the poverty line families (APL) in order to increase the offtake from the central pool.

“Given the low offtake of foodgrains from the central pool and the burgeoning stocks, the government is considering lowering the price at which they are provided to the APL families under the public distribution system,” he said.

Referring to the rejection of three consignments of wheat by Iraq, Kumar said that the Indian exports confirmed to international Codex standards that provides for inorganic foreign matter like sand and stone up to 0.5 per cent.

He said that as per the Iraqi definition confirmed in writing, Iraqi authorities do not count sand particles under foreign matter.

The minister also announced that cleaning facilities will soon be set up in order to boost wheat exports.

To begin with, the facilities will be available at two to three ports. Kandla in Gujarat, and Kakinada and Vishakapatnam in Andhra Pradesh are being considered for this purpose.

The three central public sector undertakings exporting wheat — STC, MMTC, and PEC — have also been advised to set up similar facilities. Some private parties have also proposed to install such facilities, he added.

Referring to the problem of poor offtake of subsidised grain in the states, the minister announced formation of a consultative committee in the states. The president of the state consultative committee will be a member of the parliament, he said.

Kumar said the states’ offtake of subsidised grain meant for below poverty level families was 55 per cent. In case of the mid-day meal scheme — where the government is providing free more than 24 lakh tonnes grains — the offtake by states was only 30 per cent, he added.


Mumbai, June 11: 
Recuperating from the aborted merger with Global Trust Bank, UTI Bank now plans to rope in a strategic partner to bring down the promoters’ stake in the bank to 40 per cent, in consonance with the Reserve Bank of India’s (RBI) regulations.

Sources close to the bank said it is in discussions with potential investors to bring down the promoters’ stake. However, they did not reveal whether the promoters’ stake will be brought down by a fresh issue of shares or by the promoters divesting their stake in favour of the partner. Speculations, are however, rife that the foreign strategic partner is also likely to partner the bank in other areas, including insurance. The bank’s paid-up capital stands at Rs 131.9 crore.

The bank has been promoted by UTI, LIC and GIC, with UTI holding the lion’s share of around 61 per cent.

Officials, however, clarified the bank was not considering a merger with another bank as all its efforts were presently on identifying a strategic investor apart from expanding the branch network.

The RBI had stipulated that promoters’ stake in private sector banks should be brought down to 40 per cent by March this year. However, a few private sector banks, which have yet to comply with this requirement, had subsequently approached the central bank seeking an extension of this time limit.

A senior RBI official here told The Telegraph that the central bank had asked these banks to present a time-bound programme by which the promoters’ stake would be brought down to the stipulated level.

Of these banks, while ICICI Bank has already initiated the process of bringing the promoters’ stake below 40 per cent by selling some shares to foreign portfolio investors, IDBI Bank recently indicated it was also weighing various means to do the same. The bank is, however, yet to identify how this will be achieved.

UTI Bank officials said the bank was planning to add 15 more branches to its existing 89 apart from setting up more ATMs. “With the failed merger behind us, we now plan to extend our branch network and other facilities for the retail customer,” the official said. The bank’s ATM network now stands at over 300, from 69 a year ago.

UTI bank posted a 69 per cent rise in net profit to Rs 86.12 crore for the year ended March 31, 2001. However, net profit growth was flat for the fourth quarter, which the company attributed to certain equity investments in its portfolio that showed a depreciation.


Mumbai, June 11: 
In a fresh twist to the tussle over VST Industries Ltd which is racing towards its climax in two days time, the Securities and Exchange Board of India today allowed both parties to accept shares till the June 13 deadline.

However, Sebi added that the actual transfer of shares will take place only after the case pending in the courts was disposed off. The clarification was in response to a Andhra High court notice which issued notices staying the open offers.

Confirming this, Dharmista Raval, executive director (legal affairs) at Sebi told The Telegraph, “Shares can be tendered by VST shareholders but cannot be accepted by the two parties till the stay order is vacated.” Sebi officials also confirmed that the market regulator was probing allegations of price rigging in the VST counter.

Meanwhile, both suitors for the Hyderabad-based cigarette maker seem poised for a fight to the finish, in what is turning out to be one of the most interesting battles in Indian corporate history, pitting an intrepid investor against global major BAT Plc.

However, ASK Raymond James, lead managers to the Bright Star offer, today decided not to contest the Sebi verdict denying permission to shareholders who already accepted the Russell Credit offer, which is Rs 26 lower than the competing offer.

“We believe that Sebi is the final authority on matters relating to the take-over code and we will not seek redressal from any other forum,” CEO John Band said.

Besides, ASK Raymond also hit back by alleging “untruthful and defamatory” litigation by shareholders who have filed suits in the Andhra Pradesh high court.

The litigants who filed the cases in the AP high court held only 400 shares of VST between themselves.

Mirroring the turmoil, the VST counter witnessed intense gyrations as the share opened at Rs 152 and rose to Rs 152.10, before diving to Rs 143. The scrip finally closed at Rs 148.25.

However, the shroud of uncertainty over who was likely to win the bride persisted, as the financial institutions, who hold the keys to the castle, preferred to keep their cards close to their chest till the last minute.

The Damanis had exceeded ITC subsidiary Russell Credit’s offer of a 20 per cent stake for Rs 125 per share by offering to buy 30 per cent of VST at Rs 151 per share. The Damanis’ offer will cost them Rs 70 crore.


New Delhi, June 11: 
Cellular operators today received another body blow from the Telecom Regulatory Authority of India (Trai) which directed them to refund to their subscribers the excess charges they have levied for international calls made on Sundays and national holidays. The operators are to implement the directive by June 30.

Trai’s directive has incensed the Cellular Operators’ Association of India (COAI), the apex forum that represents the service providers.

“We will have to take up this matter with the companies and also with Trai. It would not be proper to comment on this issue at this time,” said a senior COAI executive.

Trai received a complaint that subscribers were being charged tariff at peak rates for ISD calls made on Sundays and national holidays. The Telecommunication Tariff Order, 1999 (TTO) notified by the authority lays down the rule that the cellular operators should charge only off-peak rates on Sundays and national holidays (January 26, August 15 and October 2).

Thus, effective from May 1, 1999, charges for international calls applicable on Sundays and national holidays should be at off-peak rates for all the 24 hours. On investigating a complaint lodged by a subscriber against a service provider, Trai discovered that the cellular operator are charging peak hour pulse rates on Sundays and national holidays in violation of the provisions of the TTO 1999.

Trai sources said, “Initially, two metro operators were found to be charging on Sundays and national holiday. But on investigation, we found that even a few circle operators were charging peak hour rates on these days. This violates the Trai directives, so we have asked them to refund. No penal action has been decided, but we may have to impose it after hearing from cellular operators.”

It is difficult to assess how much the cellular operators would have to refund. It is not even clear whether the cellular operators have the records of all the calls made on Sundays and national holidays by their subscribers over the past two years.


Mumbai, June 11: 
As the July 2 deadline draws near, operators are seen fast squaring off their net long positions on the stock markets. The Securities and Exchange Board of India (Sebi) had already announced that from July 2 all forms of carry-forward trading will be banned.

Recent figures released by the exchanges show that net long positions in most of the scrips have declined. The net outstanding position for the week-ended June 9 stood at over Rs 627 crore, a fall of over Rs 245 crore when compared with the figures for the week-ended June 2.

“Thus it shows that there is still an outstanding position of over Rs 600 crore waiting to be liquidated to comply with the Sebi ruling,” says an observer. Some of the stocks that still have huge outstanding positions include Tata Steel (with net outstanding of around Rs 28 crore and total outstanding of 22 lakh shares), Reliance Industries (Rs 19 crore), Pentamedia Graphics (Rs 15 crore), Larsen & Toubro (Rs 18 crore), HFCL (Rs 23 crore) and ACC (Rs 27 crore).

Sources said that even as the outstanding positions of many of these front-line technology and old economy stocks have declined sharply from their earlier positions, a further fall is imminent considering the July 2 deadline. The outstandings have declined steeply in the stocks of ACC, Global Tele-Systems, Pentamedia Graphics, Satyam Computers, Zee Telefilms, ITC, Infosys, Hero Honda, Bajaj Auto among others.

Earlier in May, Sebi had announced the end of the badla system, when it decided that carry-forward or use of any such deferral products would be banned from July 2. The deferral products allow an investor to carry forward his position from one settlement to the next.


Mumbai, June 11: 
Wipro Ltd, the edible oil, FMCG and infotech giant, ranked among the top 100 IT companies by a recent survey, is taking a fresh look at its much-neglected FMCG business.

Though the infotech business is Wipro’s prime focus, the company is currently on an overdrive, launching products and in certain cases, relaunching existing products in the consumer goods business.

Wipro, which was ranked 87th among the top 100 IT companies in the world by BusinessWeek, has now decided to leverage its Santoor and Wipro brands to extend its magic to the consumer goods market.

The consumer goods business, which aggregated just 11 per cent of Wipro’s total income last year, was the company’s main breadwinner in the last decade.

While Santoor will cater to the premium segment in the toiletries and talcum powder market, Wipro Active will eye the popular segment in the same market.

By positioning two brands in the same market catering to different price segments, the company hopes to have a presence across all categories in the consumer health care market.

“We plan to position ourselves with two variants in toiletries and talcum powder segment and thus dominate the share of the shelf,” a senior official at Wipro told The Telegraph.

The company also plans to launch diapers in the baby-care segment under its Wipro Baby Soft brand.

The talcum powder market in the country is said to be valued at Rs 700 crore, with Wipro having just 4 per cent. Similarly, Wipro has a mere 5 per cent share of the Rs 300 crore baby-care market.

Wipro expects its market share to go up with the new launches.

It posted a 150 per cent rise in net profit to Rs 217.5 crore for the fourth quarter ended March 31, 2001, against Rs 86.8 crore in the previous comparable period.

For the year ended March 31, 2001, net profit soared to Rs 667.9 crore as against Rs 248.3 crore, a massive increase of 168 per cent. On the other hand, sales stood at Rs 3053.9 crore as compared with Rs 2273.6 crore and other income was at Rs 38.3 crore (Rs 18.5 crore). Total revenues were placed at Rs 3092.2 crore.

The Bangalore-based company has also put an optimistic outlook for the current year, stating it would surpass the industry growth rate, which, according to Nasscom estimates, is between 40-45 per cent.


Calcutta, June 11: 
The city-based Allahabad Bank aims to increase its non-fund non-interest income to Rs 250 crore in the current fiscal to meet at least 50 per cent of the salaries of its 20,000 strong workforce.

Besides, the bank has also targeted a Rs 35,000 crore business in the 2001-02 fiscal, with deposits at Rs 23,000 crore and loans at Rs 12,000 crore.

Speaking to The Telegraph, chairman and managing director B. Samal, said: “Last year we had earned Rs 176 crore from our bill, remittance and letter of credit businesses. This year we are targeting a Rs 250 crore business in this area to meet a portion of our Rs 450-crore salary bill.”

Regarding credit offtake, Samal said the bank is looking to advance Rs 700 crore in retail products. It has already opened 100 retail boutiques and wants to add another 100 in the current year.

“We are interested in infrastructure financing and will fund good projects,” he said.

Last year the bank did a business of Rs 26,525 crore, with advances at Rs 10,925 crore and deposits in the region of Rs 19,975 crore.

Allahabad Bank has also undertaken a computerisation drive. At present, 540 branches have been computerised and it proposes to take the number to 730 by the end of the current financial year. The bank also plans to increase the number of ATMs from 25 to 45 by the end of the year.

It has initiated a programme for bringing in the three-tier system according to the reorganisation plan submitted by Arthur Anderson.

“After the voluntary retirement scheme, all branches are facing a shortage of staff, a problem which will have to be resolved immediately. This year the focus will be on consolidation and we do not have any plans to open more branches,” Samal said.

Allahabad Bank has granted VRS to 1,600 employees, which has cost it Rs 150 crore.

Commenting on the bank’s non-performing asset recovery drive, Samal said the target is to bring down non-performing assets of Rs 1,690 crore by Rs 500 crore.

The bank was able to recover Rs 110 crore by December 31 last year. “I cannot disclose the present NPA figure now. But our recovery drive is going strong and a substantial sum has been recovered by March 31,” he said.


Calcutta, June 11: 
Indian Rayon plans to expand its repertoire of ready-made brands, to boost its market share in the garments industry.

The garments business has been singled out as the fastest growth engine in the Aditya Birla group company’s versatile businesses, ranging from viscose filament yarn and garments to insurance.

Indian Rayon chairman Kumarmangalam Birla said in the company’s latest annual report that the perceptible shift in consumer preference from tailor-made clothes to ready-made garments has opened up a huge potential for the garment industry, which the company is trying to tap.

The company’s growth prospects have further brightened because of changing consumer aspirations, better purchasing power, a rising standard of living as well as the emergence of large scale retailing throughout the country.

According to Birla, the shift in preference will certainly augur well for Madura Garments, which is the market leader in branded menswear.

Apart from gearing up the distribution channel, the company is also improving efficiency and optimising costs.

Besides strengthening its position in the domestic market, the company has also drawn up a strategy for making inroads into the international garment business with its brands acquired from Coats Viyella plc of the UK.

Indian Rayon’s brand portfolio comprises Louis Philippe, Allen Solly and Peter England.

The viscose filament yarn is still a major contributor to the company’s turnover while earnings from the carbon black business are now witnessing an upturn after a phase of slowdown.

Diversifying further, the company has promoted a joint venture — Birla Sun Life Insurance — with Sun Life Insurance of Canada.

Indian Rayon expects the insurance premium market to grow by 18 per cent annually, and is optimistic of a huge potential for the joint venture.



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