Tatas get cold feet on HPL
Derivatives hope for FIIs
RBI directive to supersede Krushi bank board
Bengal mulls special status for tea
Govt packages plastics in new jute order
Sterlite puts buyback plan on hold
Bajoria may make open offer for Kanoria Chem
Parke-Davis, Pfizer take first step to merger
ONGC in tie up with IOC for Bengal basin
Foreign Exchange, Bullion, Stock Indices

Mumbai, Aug.14: 
The Tata group has indicated that its interest in Haldia Petrochemicals Ltd (HPL) is waning because it does not fit into its core business. Group chairman Ratan Tata told shareholders of Tata Engineering (Telco) here today that Haldia Petrochemicals is a business the group will not retain in the long term.

Explained Telco’s recent investment in HPL, Tata said it was made because the petro-chemicals company was in need of funds. “However, we have an agreement whereby HPL will buy back our equity,” Tata said without giving details.

Officials of the state commerce and industry department said they had no information about the intention of Tatas. “We have not received any official communication. We have to see why they want to leave the project. However, the issue of the fourth equity partner is more pressing at the moment,” the officials said.

The HPL brass refused comment, saying it was not aware Ratan Tata’s remarks. Executives at The Chatterjee group said Ratan Tata’s the development was “interesting” but they would rather wait and see the events unfold.

Tata Engineering holds 7.21 crore HPL shares with a face value of Rs 72.14 crore in the petro-chemicals project. Already reeling under a lingering industry slowdown, it has committed an advance equity contribution of another Rs 17.85 crore.

Of the project’s Rs 1,010-crore equity, West Bengal Industrial Development Corporation (WBIDC) and The Chatterjee Group have contributed Rs 433 crore each while the Tatas have chipped in with Rs 144 crore. In addition, the three promoters of Bengal’s showpiece industrial venture have shovelled Rs 186 crore as advance equity — WBIDC Rs 100 crore, TCG Rs 50 crore and the Tatas Rs 36 crore.

Earlier, addressing shareholders at Telco’s 56th annual general meeting, Tata expressed his disappointment at the auto major’s performance. “When there is a downturn in the economy, we bear the brunt because the purchase of trucks is not discretionary, but a business proposition,” he said.

He said a company suffering a massive loss of Rs 500.34 crore in the previous financial year cannot pay a dividend under the laws.

Dwelling on what went wrong, Tata said sales of industrial vehicles dropped 19 per cent and commercial vehicles by 40 per cent. He blamed a contraction in demand for commercial vehicles, diesel price hikes, a rise in sales tax and the amortisation of the Indica plant as the main reasons.

No Indica hiveoff

On the Indica car project which closest to his heart, Tata ruled out any proposal to hive off the project.

The announcement was significant as market rumours surrounding the counter in recent days indicated that the Telco management would shortly come out with an announcement.

“History will show in the coming years that the investment is what moved Telco into the entire spectrum of vehicles,” he said. A single year is not a long time for the company. The automobile sector is the heart beat of the nation’s development, he added.


Mumbai, Aug. 14: 
The newly constituted advisory group on derivatives of the Securities and Exchange board of India (Sebi) has recommended that foreign institutional investors (FIIs) should be permitted to trade in all forms of derivative contracts.

FIIs are currently allowed to transact in index-based futures only and group members felt that their exposure limits linked to the cash segment have to be rationalised, Sebi executive director Pratip Kar told reporters here today.

The group, chaired by J.R. Verma, former Sebi member, has also recommended margins trading for providing better funding avenues in the capital market, he said.

The group was of the view that segregated short sales for institutional investors should be put in practice where they would be allowed to sell the securities in cash market in proportion to their exposure in the derivatives, he said.

The involvement of banks in this segment would provide more liquidity and reduce the barriers between various segments of the market, he added.

On margins trading, banks, subject to RBI clearance, could lend to exchanges which in turn would provide assistance to brokers. This way, the risk exposures would be limited for banks, Sebi chairman D.R. Mehta said.

In the meeting on demutualisation, the representatives of the small exchanges expressed their intention to merge with larger bourses, Mehta said. “We would support any such move, but then the exchanges will have to arrange the merger themselves,” Mehta added.

A number of models for demutualisation were discussed at the meeting today. “We can take the NSE model, but that would require infusion of funds by institutional promoters. This looks unlikely in the given scenario. The alternative is the NYSE/Nasdaq model. For that we will have to specify the role of the brokers in the management of the exchanges,” Mehta said.

However, in what could turn out to be a disappointment, the committee decided that at this stage, the list of stocks in which options could be allowed should not be expanded as it felt that introduction of options on more stocks may adversely affect the liquidity in the existing stock option contracts.

It also did not come up with any specific recommendation as regard individual stock futures.

The policy recommendations of the committee like the introduction of stock futures would be taken up by the Sebi board before its implementation.


Mumbai, Aug. 14: 
The Reserve Bank of India (RBI) today asked the Registrar of Co-operative Societies (RCS) to supersede the board of the Secunderabad-based Krushi Co-operative Urban Bank Ltd and decide on the liquidation or merger of the bank.

Senior RBI officials said it has also asked the RCS to ensure that directors of the bank are debarred from becoming members of any other co-operative bank.

RBI officials said it had scrutinised the accounts of the bank in March and had placed it under RBI direction in June. “We then issued necessary instructions to the bank to improve its financial health. We have now told the RCS to supersede the board of the bank,” a RBI official told The Telegraph.

The action comes in the wake of the bank facing a run on its deposits because of severe asset liability mismanagement, officials said.

The bank, registered on April 1, 1998, was given licences to carry on banking business on June 22 the same year.


Calcutta, Aug. 14: 
The West Bengal government is considering a proposal to grant special status to the tea industry, which will entitle it to a package of financial incentives. “We have reasons to believe that tea is a sunrise industry and central to Bengal’s economy. So, we are considering a special status for it,” state finance minister Asim Dasgupta told members of the Bengal Chamber of Commerce and Industry here today.

The minister had announced in his budget for 2001-02 additional incentives in the form of an extra 10 per cent interest subsidy for two years and full exemption from stamp duty and registration fees for industries in the areas of bio-technology, jute diversification, agricultural implements, tourism and hosiery.

“We are considering putting tea in that category,” the finance minister said. Tea industry officials are, however, not clear how incentives will help an old industry like tea.


New Delhi, Aug. 14: 
The government has cleared a new Jute Packaging Order, which, though reserving bulk packaging of foodgrains and sugar for the jute sector, permits limited plastic packaging.

The new order allows plastic packaging for consumer bags of rice, wheat and sugar, up to a weight of 10 kgs. Earlier, plastic was allowed to be used only to pack weights up to 5 kgs.

However, the Cabinet Committee on Economic Affairs (CCEA), which took the decision at a meeting held here yesterday, also resolved to constitute a four-member committee of ministers that will chalk out a future plan to dismantle the packaging order within the next 90 days.

The committee, to be chaired by textiles minister Kashi Ram Rana, will have food minister Shanta Kumar, heavy industries minister Manohar Joshi and agriculture minister Nitish Kumar as members.

The Jute Packaging Order is issued every year by the Union government on the basis of a law enacted in 1987, that sought to protect the ailing jute industry. However, the protection granted to the jute industry is the cause of much heartburn for the more cost-effective and powerful plastic sack-makers.

The decision on the new jute packaging order is, however, yet to be made public, possibly because the issue is considered sensitive and Parliament is still in session.

Prior to the decision, the government had to contend with hectic lobbying by rival groups which sought to load the order in their favour. Among others, Andhra Pradesh chief minister N. Chandrababu Naidu personally wrote to Prime Minister Atal Bihari Vajpayee earlier this year, asking him to relax the rules. Besides the Andhra supremo, Madhya Pradesh chief minister Digvijay Singh and Gujarat’s Keshubhai Patel have also favoured the dilution of the Jute Packaging Order, a move supported by about 200 members of Parliament. Naidu and others have pointed out that jute was often in short supply, more so at crucial times, such as when grain is reaped, making storage and distribution of grain difficult.

However, the jute industry has had a strong counter lobby in Trinamul leader Mamata Banerjee and Union minister of state for communications, Tapan Sikdar. Both Banerjee and Sikdar have repeatedly highlighted environmental concerns as well as the plight of jute farmers to try to win the case for jute.

Ramagundam scheme approved

The CCEA has also approved the scheme for strengthening the grid system and evacuation of power from Ramagundam stage-III, at an estimated cost of Rs 390.12 crore. The project is likely to be commissioned in 48 months.

Parliamentary affairs minister Pramod Mahajan also announced that the CCEA had approved doubling of the Rajatgarh-Barang branch line.


Mumbai, Aug. 14: 
Sterlite Industries (India) Ltd today announced that its buyback plans have been put on hold till certain issues raised by the Securities and Exchange Board of India (Sebi) was resolved.

Though the company did not provide information as to what these issues were, news about the postponement of the buy-back resulting in the scrip falling by over five per cent on the bourses today.

Earlier last month, Sterlite had announced its intention to buy back up to a maximum of 13.98 million shares through open market operations at a price not exceeding Rs 200 per share. The offer was scheduled to open on August 13. Following the announcement, the share price rose to a high of Rs 129. The scrip, which opened today at Rs 113.10 hit an intra-day low of Rs 107.45, soon after the announcement, a drop of more than 5 per cent. The scrip however, recouped some of the losses from this low, finally closing at Rs 111.65.


Calcutta, Aug. 14: 
Jute baron Arun Bajoria may make an open offer for Kanoria Chemicals to consolidate his holding in the Rs 380-crore company. Bajoria has already acquired close to 14 per cent stake in the company and intends to further shore up his holding.

Bajoria’s associates said: “We have acquired the stake over a long period of time, and now that it has nearly reached the 15 per cent threshold we may have to make an open offer so that we are able consolidate our holding in the company.”

There is, however, no question of Bajoria seeking management control of Kanoria Chemicals as the promoters already hold 60 per cent. The company’s chairman S.S. Kanoria has said that they are not threatened by Bajoria’s move. He may, however, seek a berth on the board of Kanoria Chemicals, sources said.

Marketmen feel, Bajoria’s open offer will not generate much response as only 25 per cent of the company’s stock is held by the public. He may, however, still go ahead with the open offer to comply with the Securities and Exchange Board of India (Sebi) takeover code.

Meanwhile, a fresh round of bickering has started between Bajoria and Nusli Wadia. Mega Resources, Bajoria’s broking outfit, has refused to disclose the exact holdings of the various entities with which the shares of Bombay Dyeing are parked. Bombay Dyeing has alleged in a letter to the stock exchanges that the disclosures made by Mega Resources are at variance with ones made by it earlier.

In its reply to the Bombay Dyeing letter seeking disclosure of holdings of the entities acting in concert with Bajoria, Mega Resources has said that it is not bound to reveal how the shares have been deployed.

“We have already disclosed Bajoria’s total holding in Bombay Dyeing once it exceeded the five per cent mark. The Sebi takeover code does not require us to give details of how we have deployed the shares,” a Mega Resources official said.

Bajoria acquired close to 15 per cent in Bombay Dyeing last year, but had reduced his stake to below five per cent. But since the end of July, he started shoring up his holding in the company, and now says, that he may again go up to 15 per cent. His holding is now close to 22 lakh shares.


Mumbai, Aug. 14: 
In what could be a prelude to the eventual merger of Parke Davis (India) Ltd with Pfizer (India) Ltd, Hocine Sidi Said, managing director of the latter, was today appointed as managing director, Parke Davis.

Pfizer Inc has a 40 per cent stake in Pfizer Ltd, while Warner-Lambert, acquired internationally by Pfizer Inc, owns 40 per cent in Parke-Davis India.

Notifying the board recast in a communication issued to the stock exchanges today, Parke Davis said that at their meeting held on August 13, Charles L Sarris was appointed as a director with immediate effect. R. A. Shah was appointed as alternate director to Charles L Sarris, and chairman of the board of directors of the company from August 15.

It added that Pramod H Lele has submitted his resignation as chairman and managing director of the company, as well as from its board of directors, which will be effective from the close of business today.

Hocine Sidi Said was also appointed as director with immediate effect.

Following the announcement, the Parke Davis scrip witnessed brisk buying. Opening at Rs 134.90, the scrip rose to Rs 136.95, before closing at Rs 136.45. The Pfizer scrip finished at Rs 422.25 after opening at Rs 412 and rising to an high of Rs 426.

In a press statement issued today, Parke Davis said the appointment of Hocine Sidi Said is a step towards the operational integration of Pfizer and Parke Davis in the country.


Calcutta, Aug. 14: 
Oil & Natural Gas Corporation Ltd (ONGC) has forged a strategic alliance with Indian Oil Corporation (IOC) to carry on off-shore exploration in the Bengal basin, under the New Exploration Licencing Policy (NELP).

The initial investment in the first two years, is expected to be around Rs 300 crore, which will be borne on a 50:50 basis by the two public sector oil majors.

ONGC regional director P. K. Adak further said the alliance may ultimately turn into a joint venture between the two companies, depending on the outcome of the present exploration.

“ONGC will look into the operation in this new field while IOC will remain as a major investment partner,” Adak said.

Outlining the potential of the off-shore block, Adak said the project requires massive investment.

“But we are very optimistic about the potential of the area,” Adak said.

Meanwhile, ONGC has tied up with Coal India (CIL) for coal- bed methane (CBM) exploration in the Ranigunj and Jharia coal belts.

Adak said the two companies have signed a memorandum of understanding in this regard and initial work has already commenced.

“We need to have an alliance with CIL because it has a mining lease in the area. In this project, too, ONGC will have the major operational responsibility,” Adak said.

However, ONGC, which has already done substantial work in the Ranigunj area, feels that gas production in the area is unlikely to be cost-effective.

It has a 240 sq. km area under exploration in Ranigunj, while in Jharia the total area under operation is about 63 sq. km.

“Jharia has much better prospects, and we have earmarked an investment of around Rs 100 crore in the first phase,” he said.

ONGC, which observed its incorporation day today, has also rolled out a corporate restructuring plan, based on recommendations of McKinsey.

Under the new plan, the central region, under which West Bengal comes, will be divided into three sectors led by three different heads. The three heads, possibly of the rank of executive directors, will directly report to the company’s headquarters.

The three will be granted more financial and administrative powers, so that they do not need to depend on the headquarters for every decision.



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