Bharti crowned cellular czar
Reliance beats forecasts, net profit up 14%
UTI calms taut nerves on eve of redemption
RINL hopes to make profit in next fiscal
BK Modi’s powers restored
SAIL loss in first quarter at Rs 376 cr
Foreign Exchange, Bullion, Stock Indices

 
 
BHARTI CROWNED CELLULAR CZAR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 31: 
Sunil Mittal-promoted Bharti Group today established itself as the cellular company with the largest footprint in the country, having bagged licences as the fourth cellular operator in eight of the 17 circles for which bids were opened today.

The government is all set to pocket Rs 1632.63 crore, which will be the total one-time licence fee (or entry fee) payable by the successful bidders.

At the end of the first round, the government had received financial bids worth Rs 2,229.93 crore for the 17 circles from seven companies.

While Reliance-promoted Reliable Internet Service Ltd will be the fourth cellular operators in Calcutta, Birla AT&T will be the fourth operator in Delhi. Hutchison-backed Barakambha Sales and Services Ltd has won the bid for Chennai, Andhra Pradesh and Karnataka. Escorts Communications Ltd will be the fourth operator in Punjab, Himachal Pradesh, Uttar Pradesh (east) and Rajasthan circles.

Bharti Cellular which has bagged eight circles — Mumbai, Maharashtra, Gujarat, Tamil Nadu, Haryana, Kerala, Uttar Pradesh (west) and Madhya Pradesh — will pay Rs. 690.63 crore as entry fee.

Under the tender conditions, the successful bidders will have to deposit 20 per cent of the bid amount by August 2, which is the entry fee quoted by the company. They will have to pay the remaining 80 per cent by August 10. The letter of intent will be issued the next day and they will get 30 days to sign the licence agreements along with performance bank guarantee.

The licences will be granted after the third round of bidding on a non-exclusive basis for a period of 20 years and will be further extendable by 10 years.

However, the letter of intent will not be issued to those companies which have to clear outstanding dues.

The guidelines for fourth cellular operator, in addition to the one-time licence fee, stipulate that the licensee will pay a 17 per cent revenue share to the government. The government expects to complete the process of issuing licences by mid-September.

The companies will also be required to submit a financial bank guarantee of Rs. 50 crore for category A, Rs. 25 crore for category B and Rs. 15 crore for category C before the date of signing the licence agreement.

The companies will have to submit a performance bank guarantee of Rs. 20 crore, Rs. 10 crore and Rs 2 crore for category A, B and C telecom circles.

Appropriate frequency spots in GSM band of 890-915 MHz paired with 935-960 MHz will be assigned to operators selected for vacant slots and 1710-1785 MHz paired with 1805-1880 MHz will be assigned to the fourth cellular operator.

Earlier in the day, the Madras high court vacated its stay order and allowed the Centre to go ahead with the bidding fourth cellular mobile telephone operator in the country.

   

 
 
RELIANCE BEATS FORECASTS, NET PROFIT UP 14% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 31: 
Defying pessimistic forecasts, Reliance Industries Ltd (RIL) turned out a 14 per cent growth in net profit for the first quarter of the current fiscal ending June 30. Net profit rose to Rs 618 crore, as against Rs 543 crore in the first quarter of the previous year.

Managing director Anil Ambani told a gathering of newspersons and analysts here today that the rise in profit was due to a variety of factors, including high capacity utilisation leading to volume growth, increased domestic sales, interest cost savings owing to lower debt and refinance of existing debt, apart from a Rs 16-crore contribution of dividend income from Reliance Petroleum Ltd.

Most industry analysts had predicted a drop in net profits to Rs 520-550 crore, following the tough times faced by the petrochemical industry.

However, the impact of softening product prices was reflected in RIL’s topline, which rose only 4 per cent to Rs 6,390 crore, against Rs 6,136 crore in the previous corresponding period.

Commenting on the results, Ambani said, “We are encouraged by Reliance’s strong financial performance at a time when the global petrochemicals industry is facing the most challenging conditions.”

While raw material prices during the quarter declined by 1 per cent, product prices fell in the region of 1-29 per cent. The sales growth of 4 per cent during the quarter, RIL said, comprised a positive impact of 6 per cent from volume growth and 2 per cent from the decrease in product selling prices.

During the period, total production volume touched 2.81 million tonnes and capacity utilisation was at 103 per cent.

Predicting an optimistic, but cautious outlook for the remaining quarters, Ambani added though operating margins in the petrochemical industry are likely to remain under pressure, its investments in RPL and “other mature investments will generate significant returns.”

Meanwhile, RIL today pointed out that the Unit Trust of India, Life Insurance Corporation of India, and the General Insurance Corporation have made a combined profit of Rs 900 crore in a private placement deal with the company done on October 1994. He said UTI, LIC and GIC have earned total returns of Rs 889 crore over market returns, on their original investment of Rs 945 crore. While the placement was for Rs 945 crore, the current value of RIL shares (4.9 crore shares at Rs 313 per share) is Rs 1,536 crore. With the income from dividends including reinvestments, at Rs 150 crore, the total profit earned by the FIs till date, he said, was Rs 741 crore.

Ambani also said discussions are now on to synergise business activities between BSES and RIL to enhance the “overall value between both the companies.”

While RIL has an over 30 per cent stake in BSES, Ambani added the group was willing to acquire holdings of financial institutions in the company, if the FIs expressed their intention to sell their stake. This, he added, would however, depend on both the groups reaching an agreement on the price front.

Further, Ambani said the company has no plans to takeover the troubled Dabhol Power Company’s (DPC) 2,184 MW power project in Maharashtra, set up by US energy major Enron.

“Reliance is not interested in Dabhol,” he said.

   

 
 
UTI CALMS TAUT NERVES ON EVE OF REDEMPTION 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 31: 
The Unit Trust of India (UTI) said it was confident it would retain investors’ loyalty, a day before the freeze on the repurchase and sales of US-64, its flagship scheme bedevilled by bad funds management, is lifted partially.

The country’s largest mutual fund marshalled a battery of financial analysts to peddle the theory that everything was hunky-dory with the scheme, and to squelch the negative publicity which greeted the July 2 announcement on the halt in US-64 sales and repurchases. “Small investors will remain with us,” UTI chief M Damodaran told reporters here today.

Financial analysts, he said, have advised people to remain invested in the scheme — unless the need for funds for funds is too pressing — because there are no safe options at present which can turn Rs 10 invested in August 2001 into Rs 12 in May 2003. “In a market scenario where many investments have fared poorly, US-64’s performance has been relatively better with a dividend of 10 per cent this year,” UTI said.

Calling on investors to stay with US-64, Damodaran sought to allay their fears by saying adequate funds have been arranged from banks to face the worst-case scenario. “However, we are sure such an eventuality will not arise at all.”.

The UTI chairman did not say how much had been borrowed from banks, but asserted that the amount would be enough to meet expected redemptions of Rs 5000-6000 crore. “The line of credit from banks far exceeds our requirements.”

He attributed the crisis to a liquidity problem arising from the difference in the NAV of US -64 and the guaranteed repurchase price. Nineteen banks have committed loans, but the Trust urged to investors to hold on with a promise of higher assured returns over the next 20 months.

Damodaran cited the better-than-expected corporate earnings and the good monsoons as factors which could give the economy a fillip and the markets a boost in the months ahead — all of which would translate into a boost for US-64.

“We have made arrangements with banks which will extend credit at below prime lending rates to meet any pressure arising from redemptions up to 3,000 US-64 units per investor. There are no problems about solvency. All Unit Trust needs, is credit,” a confident Damodaran told reporters.

UTI defended the decision taken under former chairman P. S. Subramanyam to discontinue sale and repurchase of US 64 units, saying the move was prompted by several considerations aimed at protecting the interest of unit holders.

Shrugging off fears of a rush for redemptions, Damodaran said UTI’s exit window will be open up to May 2003, starting with assured price of Rs 10 per US-64 unit for August.

   

 
 
RINL HOPES TO MAKE PROFIT IN NEXT FISCAL 
 
 
FROM PALLAB BHATTACHARYA
 
Visakhapatnam, July 31: 
Rastriya Ispat Nigam Ltd (RINL), the sick public sector steel company, expects to post its maiden net profit by the year ending March 2003.

The company, which has an accumulated loss of Rs 3984 crore, has doubled its operating profit to Rs 511 crore during the last fiscal, as against a meagre Rs 252 crore in the previous fiscal.

RINL chairman and managing director B. N. Singh said the company has broken all previous performance records and touched a turnover of Rs 3436 crore.

“We are expecting around a 20 per cent growth this year too. Unless there is a sudden fall in the demand for long products, there is no reason why we can’t register a net profit in two years’ time,” he said.

The company’s cash profit has shot up to Rs 160 crore against a cash loss of Rs 130 crore in the previous financial year.

“Since steel prices are growing at an annual rate of seven per cent to eight per cent, we are quite optimistic about meeting our targets,” Singh said.

The company, which was almost written off by everybody due to the consistently heavy losses, is now confident it will be able to raise production to its rated capacity of 3.4 million tonnes.

The company is giving its workers an average of Rs 4000 per month as incentives, in addition to their salaries. The incentives account for 16 per cent of the company’s current wage bill, which now stands at around Rs 20 crore, he said.

RINL has also approached the government to set off its accumulated losses with the current equity.

   

 
 
BK MODI’S POWERS RESTORED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 31: 
The board of directors of Modi Rubber Ltd (MRL) today restored the executive powers of managing director Bhupendra Kumar Modi at a meeting held in Hyderabad.

Modi had been stripped of his powers at a board meeting held on June 28 which were then handed over to his brother, Vinay Kumar Modi, at the height of a fractious battle with the financial institutions.

MRL chairman T. Panduranga Rao, who is the nominee of the Unit Trust of India, said the board decided to hand back all the powers that were taken away from B.K. Modi “in the best interests of the company”. Rao said the decision was taken with great deliberation and after taking into consideration all the events in the recent past.

“We took into account all the matters that have taken place in the past, including the representations made by the Modis and the results of the open offer. After discussing the issue, we decided to hand back the executive powers to B.K. Modi,” Rao said. The meeting also discussed the first quarter results.

Reacting to the decision taken by the board where the Modis were not present, B.K. Modi said that the decision has been taken in the best interest of the shareholders. Modi refused to term it as a personal victory. “I would say the shareholders’ agreement has been upheld,” he said.

Meanwhile, the Securities Appellate Tribunal today set aside the Sebi order restraining Modipon from participating in the open offer for MRL. “Sebi’s finding that Modipon is a promoter of MRL is tenable but it cannot be held that the appellant (Modipon) is an acquirer or a person acting in concert or deemed to be acting in concert with acquirers and thereby ineligible to participate in the public offer,” the tribunal said in its order.

   

 
 
SAIL LOSS IN FIRST QUARTER AT RS 376 CR 
 
 
OUR BUREAUX
 
Calcutta, July 31: 
The Steel Authority of India Ltd (SAIL) has reported an all-round negative performance for the first quarter ending June, despite receiving a very liberal restructuring package from the government.

The loss in the first quarter went up to Rs 376 crore, from Rs 231 crore during the same period last year. The sales turnover dipped to Rs 3283 crore, as against the previous corresponding figure of Rs 3554 crore. The company said the lower turnover was due to a poor sales realisation, owing to a depressed market, especially for flat products, both in India and abroad. The company, however, reiterated that it has made all efforts to cut down expenditure, which stood at Rs 3064 crore during the quarter.

“We have just overcome one of the most difficult quarters. The effect of the market reversal will be set off by asset restructuring and thrust on operational improvements in the coming quarters, to yield an improved performance,” chairman Arvind Pande said.

ITC Hotels net up

ITC Hotels Limited registered a 37.93 per cent increase in net profit during the first quarter of 2001-2002 to Rs 0.80 crore from Rs 0.58 crore during the previous corresponding quarter. Total income increased to Rs 23.49 crore from Rs 22.42 crore, including an other income of Rs 1.14 crore, which was lower at Rs 0.90 crore in the first quarter of the previous fiscal.

The encouraging increase in net profit was largely on account of a lower provision of Rs 0.05 crore for taxation, as against Rs 0.60 crore in the previous comparable quarter.

HFCL net drops

Himachal Futuristic Communications Ltd (HFCL) has reported a 67 per cent drop in its net profit for the quarter ended June 30 at Rs 20.52 crore against Rs 61.72 crore during the corresponding quarter last fiscal, a company statement said today.

HFCL’s net turnover for the quarter has dropped by 37 per cent at to Rs 160.29 crore against Rs 253.87 crore for the corresponding period last year.

M&M loss

Mahindra & Mahindra (M&M) today reported a net loss of Rs 29.61 crore for the first quarter ended June 30, 2001, compared with a net profit of Rs 34.27 crore in the same period of the previous fiscal following a decline in demand in the auto industry.

Net sales and income from operations for the reporting quarter declined sharply to Rs 685.87 crore as against Rs 848.49 crore in the previous corresponding quarter.

Other income was also lower at Rs 13.66 crore, compared with Rs 22.01 crore in the previous corresponding quarter, M&M said in a release.

The company sold 12,149 vehicles in the first quarter as against 13,624 vehicles in the previous quarter in the previous fiscal, in the domestic utility vehicle market, it said.

Grasim shines

Grasim Industries Ltd has posted a net profit of Rs 102.24 crore for the quarter ended June 30 compared with Rs 59.43 crore in the corresponding period last fiscal.

Turnover for the quarter was Rs 1184.2 crore as against Rs 1195.9 crore in the quarter ended June 30, 2000.

MTNL net rises

Mahanagar Telephone Nigam Ltd has posted a net profit of Rs 377.31 crore for the quarter ended June 30 compared with Rs 369.10 crore for the quarter ended June 30, 2000.

Total income for the quarter is at Rs 1547.43 crore compared with Rs 1446.86 crore in the year-ago period.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.14	HK $1	Rs.  5.95*
UK £1	Rs. 67.23	SW Fr 1	Rs. 27.00*
Euro	Rs. 41.31	Sing $1	Rs. 25.85*
Yen 100	Rs. 37.77	Aus $1	Rs. 23.45*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4420	Gold Std (10 gm)Rs. 4360
Gold 22 carat	Rs. 4175	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7125	Silver (Kg)	Rs. 7200
Silver portion	Rs. 7225	Silver portion	   NA

Stock Indices

Sensex		3329.28		+43.39
BSE-100		1564.46		+19.92
S&P CNX Nifty	1072.85		+11.40
Calcutta	 121.37		 +2.13
Skindia GDR	 554.26		 +5.63
   
 

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