ACC to cement its leadership
BPL set to buy majority stake in Spectranet
London helpline for bourses
CSE may hire auditor from outside
Colgate net up 21% at Rs 62.5 crore
HDFC tightens grip on group firms
Honda makes scooter debut with Activa
REC pulls the plug on loans to Bengal
Regulati]ons on import of foodstuff tightened
Foreign Exchange, Bullion, Stock Indices

 
 
ACC TO CEMENT ITS LEADERSHIP 
 
 
FROM SATISH JOHN
 
Mumbai, June 18: 
Associated Cement Companies (ACC), the industry Big Daddy with a capacity of 15.3 million tonnes, has decided to generate more captive power, prune jobs and streamline the way it distributes products as part of a ten-point plan to sharpen focus on its core business.

The blueprint it has drawn up envisages a leaner, more nimble monolith that can leverage its size, geographical network and other strengths in a better way in the coming years.

The last financial year was an eventful one in which the company shook off losses and bounced back with a net profit of Rs 47.48 crore compared with a loss of Rs 58.85 crore in 1999-2000. It also marked the exit of Tatas when they sold off their entire stake to Gujarat Ambuja Cements.

The company intends to depend more on captive power to achieve cost savings in running its plants, and scale down purchases from the state grids. Behind the move is a realisation that the revamp of loss-laden state electricity boards will push up tariffs, and therefore, it would be prudent to install more captive units to insulate itself from the increase.

However, the company reckons that it cannot go as far as it would like to on this front because of a policy under which state governments discourage the use of power from captive units. It reckons that some of its regular power requirements would have to be met from the state power boards.

So far, it has managed to minimise the impact of disruptions in power supply by generating around 75 per cent of its power internally. The company is in the process of increasing its thermal captive power capacity by another 37.5 MW at Wadi and by 15 MW each at Chanda and Madukkarai.

The induction of Sekhsaria nominees on the ACC board has sparked speculation about a ‘fair reduction in the wage bill’. The company had 14,714 employees in 1996-97, but it trimmed that number to 9991 at the end of 2000-01. It has kept the voluntary separation scheme open and expects a further reduction in manpower as a result of it, a senior ACC official said.

ACC says in its annual report that it will lay greater emphasis on better supply management and streamline distribution logistics. The company expects the measures to yield substantial gains due to the freight-intensive nature of its business. It will continue to use road and rail to transport its products but will mix the two in an optimal manner.

In an attempt to increase its price realisations, ACC plans to promote strong brands so that it can fetch a premium on its products. Efforts to promote blended cements have paid off with its share going up by 7 per cent during 2000-01 to 77%. The production of blended cements is economically attractive because it enhances the production capacity.

   

 
 
BPL SET TO BUY MAJORITY STAKE IN SPECTRANET 
 
 
FROM SUJAN DUTTA & M RAJENDRAN
 
New Delhi, June 18: 
It was the rave at India Internet World, the huge expo of Indian dotcommers and netizens earlier this year, with its post-modern stall selling the “always-on” concept—offering a gateway to the Net and superspeed surfing without having to dial up. It will be as easy to get into the Internet, Spectranet promised, as switching on the light in your bedroom.

And now the Punj-Lloyd outfit, India’s pioneer in broadband networking, is selling out to BPL. The BPL subsidiary—BPL Broad Band Networks—is all set to pick up a majority stake in Spectranet.

Spectranet has been wiring up New Delhi with fibre optic cables capable of carrying television pictures, voice and data to thousands of homes. Internet on television is a reality, Spectranet showed India, and sent a chill down the collective spine of cable television operators.

Since it began work last year, however, the shakeout in the dotcom world and the price sensitivity of the Indian market to broadband ideas has forced Spectranet to go slow even after importing and installing sophisticated equipment.

Spectranet is not alone here. Even BPL—to which it is selling out—burnt its fingers with its own broadband experiment in Coimbatore. Industry sources now say, though, that it is doing better in Kerala.

The official spokesperson of Spectranet said, “We have been talking to BPL in this regard (to pick up a stake in Spectranet), however, the shape and direction of alliance are yet to be worked out.”

Senior executive in BPL Broadband Networks Pvt. Ltd said, “The process is on (take over or a majority stake); further fine tuning is to be undertaken, we cannot say how much time it will take.”

Earlier, the Punj Lloyd group had attempted to sell Spectranet to the Bharti group. However, the talks failed because Bharti thought Spectranet was overpriced by its owners. Sunil Mittal, Bharti group chairman and managing director, had said, “Our assessment on the valuation was significantly lower than Spectranet’s expectations. Hence, for all current purposes, its discussions with Spectranet has now been terminated.”

Industry sources said the group had evaluated the project on several key technical and financial parameters, but did not find it appropriate for investment. Sources said Bharti had offered about Rs 2000-2500 crore to take over Spectranet.

Spectranet is a $ 111 million Punj Lloyd Group Company—with interests in internet infrastructure, e-commerce, e-business and multimedia—was set up to provide broadband technology to businesses and homes. Their optic fibre-based broadband services are already available in a large part of Delhi and the National Capital Region.

Spectranet’s Delhi-Gurgaon backbone, BPL’s backbone connecting Bangalore, Chennai and Pune and Worldtel’s fibre-optic network in Tamil Nadu are already in place. Spectranet is laying a 170 km optic fibre cable backbone in Delhi-Gurgaon worth Rs. 100 crore. It has plans to expand this to 40 cities at an investment of Rs 2000 crore.

In Kerala, BPL Broadband Networks Pvt. Ltd, a company under the BPL Innovision Business Group, is building a broadband network to provide the internet over cable service within the next four years. BPL will invest Rs 500 crore for laying a fibre-optic cable network in the state.

BPL Innovision Business Group is a division of Bangalore-based electronics major BPL. It has set aside Rs. 1500 crore on to invest in laying high-speed fibre optic networks over the next 18 months in different parts of India.

The network, comprising aerial fibre-optic cables, will be used to deliver high-quality cable TV and internet services to subscribers.

   

 
 
LONDON HELPLINE FOR BOURSES 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, June 18: 
The backroom boys from the London Stock Exchange have been called in to examine the surveillance systems at the two premier bourses — the Bombay Stock Exchange and the National Stock Exchange — and suggest ways to remove the glitches.

“A team of senior officials from the LSE is now at BSE and NSE to carry out a detailed study of their surveillance systems,” LSE’s deputy chairman Ian G. Salter told The Telegraph.

The Indian authorities have asked the World Bank to write a report on equity market development and the LSE has been asked to be one of the external consultants along with Nasdaq and SEC to contribute to the report.

LSE’s bailiwick is the development of the policy agenda related to issues in market surveillance. They have also been asked to contribute to the development of enforcement and prevention and disclosure and transparency. Salter and Caroline Goodman, head of international business development at LSE, today met Tapas Datta, executive director of the Calcutta Stock Exchange.

Salter said that Datta had discussed how the LSE has shifted from a T+5 settlement system (delivery of shares within five days of the execution of the trade) to a T+3 system.

“We discussed how LSE had made the transition from one system to the other. We are also open to idea of imparting training on settlement issues if CSE needs it.” Along with the other bourses, CSE will start rolling settlement from July 2.

The LSE team was in the city to woo companies to list on the LSE. “We interacted with 20 companies. All of them are IT companies. In fact, this is the fourth time that I am interacting with them this year,” Goodman said.

“We reckon that at least two of them will decide to list with us within 12 months’ time,” Salter said. Caltiger is one of the companies that LSE has been in talks with. However, refused to confirm that. “Sorry, I cannot disclose the names of my prospective clients,” he added.

In fact, LSE has set up Tech-Mark in November 1999 which is solely dedicated to the listing of IT companies. Nineteen companies from India are already listed on LSE and have raised a total of $2.8 billion including SBI, East India Hotels, Aptech, BSES and Himachal Futuristic.

Asked if this was the right time to list on the LSE, Salter said, “Stock exchanges all over the world have remained quiet for some time now. People have sufficient funds but they are not confident about where they should invest. In this situation, if any Indian company seeks listing on the LSE, it is sure to become successful.”

   

 
 
CSE MAY HIRE AUDITOR FROM OUTSIDE 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, June 18: 
The crisis ridden Calcutta Stock Exchange (CSE) is planning to carry out an “independent system audit” by hiring an outside agency having expertise in information technology. The proposal is being weighed following the recommendations made in this regard by the investigating team of the Securities and Exchange Board of India (Sebi).

Calcutta Stock Exchange (CSE) executive director Tapas Dutta said the idea of appointing an outside agency for such an audit may be forwarded to the board when it meets next month.

“We have not yet received any instruction from Sebi in this regard. But we are looking into this aspect,” Dutta said.

Incidentally, the Sebi team, that inspected the payment shortfall crisis on the CSE found some loop-holes in the bourse’s system which was unable to record transactions beyond Rs 2.1 crore in a particular scrip. As a result, there had been a major shortfall in margin collection resulting in some brokers piling up stocks in a big way.

“The shortcomings in the CSE’s surveillance system were spotted during our investigation and we have recommended an immediate correction as well as a rigorous inspection by an outside agency which is capable of undertaking such job,” a senior Sebi official said on condition of anonymity.

The CSE executive director, however, said the authorities have already taken some measures to plug the loop-holes so that proper records are maintained on each transaction.

Sebi has also taken a strong exception to the entire risk management system of the bourse, which is said to be liable for the unprecedented crisis on CSE.

“Although the crisis has to be looked into in its totality, there is every reason to suspect the human failure of the surveillance system of CSE,” the official said.

Sebi is of the view that the CSE surveillance department is not manned by adequately trained people.

“Not only were the junior level employees entrusted with this very vital job, but they were not vested with the required powers also. Hence they had been susceptible to influence,” the official said.

Dutta said the exchange is revamping the entire surveillance department in order to strengthen the risk management system.

   

 
 
COLGATE NET UP 21% AT RS 62.5 CRORE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 18: 
Colgate Palmolive (India) Ltd has posted a 21 per cent rise in net profit at Rs 62.5 crore for the financial year ended March 31, 2001, compared with Rs 51.8 crore in the previous fiscal.

The board has recommended a 17 per cent increase in dividend to 35 per cent for 2000-01, the company said in a release here today.

Net sales in 2000-01 were higher by eight per cent at Rs 1,176.9 crore (Rs 1,089.6 crore in 1999-2000), while other income increased to Rs 29.5 crore (Rs 22.9 crore), it added.

Net profit for the year includes a non-recurring gain of Rs 5.5 crore on sale of real estate, excluding this amount, the net profit increased by 10 per cent over the previous fiscal, it said.

The company’s marketing and sales initiatives during the year focused on increasing its dominant dentifrice market shares, the release added.

   

 
 
HDFC TIGHTENS GRIP ON GROUP FIRMS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 18: 
Housing Development Finance Corporation Ltd (HDFC), having diversified into insurance, broking and asset management, boosted its investment in subsidiaries and associate companies to Rs 276 crore from Rs 135 crore in 2000-01.

It hiked its holding in HDFC Investments and Gruh Finance by acquiring 8.20 lakh and 68.90 lakh shares respectively during 2000-01. The stake hike in HDFC Investments was the result of share allotment at a premium of Rs 50 each for Rs 4.92 crore. The money was used by the arm to make investments in the Sri Lanka-based NDB Housing Bank.

In the case of Gruh Finance, HDFC acquired shares from Gujarat Ambuja Cements in a deal that raised its stake to 55 per cent. The housing finance major holds 100 per cent in HDFC Developers, HDFC Investments, HDFC Holdings Ltd, HDFC Asset Management Company Ltd and HDFC Trustee Company Ltd. It has over 71 per cent in its insurance joint venture, HDFC Standard Life Insurance Company.

However, its holding in HDFC Bank, a leading private sector bank, declined to 28.3 per cent, largely because it sold 20 lakh shares. As a result, its investment in HDFC Bank stood at Rs 25.55 crore on March 31, 2001, down from Rs 27.55 crore a year back. The composition of investments signify the nature and degree of diversification for a company that began as a housing finance firm, but has now branched into information technology in an alliance with Tata Consultancy Services (TCS).

HDFC said while housing will remain its core business and the focus will be on expanding the home loan portfolio, group firms with strong synergy will enable it to offer a wide gamut of financial services and products to consumers.

Its IT joint venture, Intelnet Global Services Ltd, will provide IT-enabled services to international clients.

The company is planning to offer various services which will include on-line information and support through call centres, relationship management and back-office data processing.

HDFC’s loan portfolio stood at Rs 13,224.67 crore for the year ended March 31, 2001. The company said its outstanding investments in preference shares and debentures of companies that finance housing and real estate projects declined to Rs 789.53 crore. The decline was attributed to a rush for redemption of preference shares by companies after the tax on dividend was raised during the previous financial year.

HDFC Trustee, which acts as the trustees to HDFC Mutual Fund, was the only group firm to have suffered a loss in 2000-01.

   

 
 
HONDA MAKES SCOOTER DEBUT WITH ACTIVA 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Bangalore, June 18: 
Honda today unveiled Activa, its mid-sized scooter designed exclusively for the Indian roads. Powered by a 102 cc, four-stroke engine with automatic ignition , it is the first two-wheeler in India to be fitted with the original Tuffup Tube, which helps in preventing punctures.

At 50 kms a litre, the scooter, available in five colours, is the vehicle for the Japanese auto giant’s independent entry into the Indian scooter market. So far, the company, along with others like Suzuki, have hit the roads here through joint ventures with local partners like Hero and Kinetic. Activa will cost Rs 35,628 in Delhi and Rs 38,684 in Bangalore

“This is the first of the many scooters to be launched in India by us. Every year, there will be a new model. We are looking at taking a strong position in the mid-size segment,” Haruo Takiguchi, president and CEO of Honda Motorcycle and Scooter India, a wholly owned subsidiary of Honda Motor Company, told reporters at the launch function here today.

The mid-size segment is a niche that has been growing steadily rate over the past few years even as the overall scooter market has been shrinking. Sales of automatic scooters bucked the industry downtrend and edged up 20 per cent last year.

“It is imperative that scooter makers in India deliver innovative models with attractive features. This needs to be enhanced further and at frequent intervals to cater to changing lifestyles and customer needs. The introduction of new-generation Activa is an important step in that direction,” Takiguchi said.

According to Honda, the mid-size scooter market in India is growing at the rate of 10 per cent annually. Takiguchi said it was the lack of contemporary models that had prompted potential buyers in India to switch to bikes. He hoped that Activa will help stop the scooter market from shrinking further.

“Indian roads demand vehicles which have a high degree of manouvreability, which is often perceived to be low in the case of scooters because of lower ground clearance compared with motorbikes. The Honda Activa meets all these needs,” he added.

Under a staggered launch programme, Activa will make its debut in South India on July 1, in the western region on July 21 and north on August 17; the north-east launch is slated for August.

The company’s manufacturing facility at Gurgaon can roll out 50,000 scooters in the first year, but it has set a target to sell 40,000 units.

   

 
 
REC PULLS THE PLUG ON LOANS TO BENGAL 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, June 18: 
The Rural Electrification Corporation (REC) has decided to stop loans to West Bengal for its failure to clear dues, including interest, worth Rs 400 crore owed by the state electricity board.

The corporation, which had earlier offered to reschedule the loan-repayment package over 10 to 12 years, has now opened discussions with the state government for the recovery of outstanding arrears, sources said. “However, the proposal has evoked a lukewarm response from the West Bengal government. This is very unfortunate,” they added.

Madhya Pradesh, Uttar Pradesh and Bihar have also been stripped of REC’s loan facilities. With Bengal, the four states have run up dues of Rs 2,400 crore, which includes interest that has to be paid on the loans. The corporation has moved the debt recovery tribunal for recovering its credit.

Commenting on the development, state power secretary Asim Barman said the government has already held talks with REC to resolve the dispute. He pointed out that the bulk of the arrears are made up of unpaid interest that have piled up for years, and that the principal amount is not significant.

“Among various proposals being considered, the securitisation of the loan is currently one of the options. However, it will take some time to come out with a concrete proposal on the securitisation of the loan arrears,” Barman said.

The power secretary hinted that the state government is considering floating a bond issue in favour of REC and some other lending institutions which have big outstandings. “The time and size of the issue is yet to be decided,” he added.

However, the newly appointed chairman of the West Bengal Rural Electricity Development Commission (WBREDC), Sujan Chakraborty, shrugged off the REC decision. “We have a monumental task ahead to provide electricity in a large number of villages. But we don’t feel there will be a problem if funds are not available from REC,” Chakraborty said.

WBREDC chairman has also pointed out that the commission will not seek fresh loans from REC for its rural electrification projects.

“Ours is a new organisation, but we have already set up lines over 5000 kms. We hope to achieve our target with the support from the state government,” Chakraborty said.

   

 
 
REGULATI]ONS ON IMPORT OF FOODSTUFF TIGHTENED 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, June 18: 
The government has abolished the system of Port Health Office Bond (PHO Bond), a channel that allowed import of food articles, and instead imposed rigorous norms to check the volume and quality of consignments after the end of most quantitative restrictions.

Even the Mother Teresa-founded Missionaries of Charity, which receives milk powder and other food items sent as donations from abroad, has been told to obtain a Central Food Laboratories clearance that their products meet provisions of the Prevention of Food Adulteration Act (PFA) and the parameters laid down by the Bureau of Indian Standards (BIS).

The PHO Bond system allowed an importer to market food items after sending the results of a sample test on the consignment along with an undertaking to the port health officer.

Central Food Laboratories (CFL) will allow well-equipped laboratories to function as its affiliates to facilitate the testing process, while its own labs in port towns will serve as an appellate body to interpret and confirm PFA regulations.

This was part of a package of new norms on food imports which was discussed at a ‘sensitisation programme’ for trade and government departments at the customs office here recently. It assumes significance in the light of the end of import curbs.

Senior officials from the Union commerce, health and revenue ministries, local customs and port, representatives of the Missionaries of Charity, clearing agents and importers attended the meeting. Confederation of Indian Food Trade and Industry, (CIFTI), a specialised body of Ficci, also participated. Sister Christy of Missionaries of Charity confirmed her organisation’s presence at the meeting but refused comment.

According to estimates, food articles constitute 20 per cent of 714 items on which quantitative import curbs were lifted as part of commitments made to World Trade Organisation (WTO).

Those who attended the meeting were told that selling imported food items without PFA clearance would be a non-bailable offence under the new set of regulations.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.98	HK $1	Rs.  5.95*
UK £1	Rs. 65.98	SW Fr 1	Rs. 26.10*
Euro	Rs. 40.39	Sing $1	Rs. 25.55*
Yen 100	Rs. 38.12	Aus $1	Rs. 24.35*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4505	Gold Std(10 gm)	N.A.
Gold 22 carat	Rs. 4255	Gold 22 carat	N.A.
Silver bar (Kg)	Rs. 7375	Silver (Kg)	N.A.
Silver portion	Rs. 7475	Silver portion	N.A.

Stock Indices

Sensex		3353.11		- 19.83
BSE-100		1633.00		-  9.94
S&P CNX Nifty	1078.30		-  9.45
Calcutta	 113.87		-  1.32
Skindia GDR	 611.29		- 22.13
   
 

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