Tata meets Buddha, to stay at Haldia
Govt in a flap over Air-India valuation
Oberois claim ITC stake pile-up to 10%
Bharti lines up Rs 1500cr cellular upgrade plan
Maruti face-saver for slow car sales
Premium Palio in Sept
IFC to invest in Srei unit
JK Tyres slashes ad budget by 20%
Alstom to focus on captive plants
Foreign Exchange, Bullion, Stock Indices

 
 
TATA MEETS BUDDHA, TO STAY AT HALDIA 
 
 
BY A STAFF REPORTER
 
Calcutta, Aug. 20: 
Ratan Tata, chairman of the Tata Sons, today assured Bengal his company will not quit Haldia Petrochemicals (HPL), the state’s showpiece industrial venture.

Accompanied by Firdose Vandrevala, deputy managing director of Tata Steel, the Tata helmsman met chief minister Buddhadeb Bhattacharjee and finance minister Asim Dasgupta to discuss their role in the project at Writers’ Buildings here today.

Talking to the reporters after emerging from the 90-minute meeting, Tata said: “We held general discussions about the status of our partnership in Haldia Petrochemicals. We have no plans to exit.”

He, however, refused to provide more details on the specific issues raised during his talks with the state top-brass.

Today’s meeting was seen as a turning point in the fate of the Rs 5,170-crore project after Tata told an annual general meeting of Telco on August 14 that his group might pull out of Haldia because it was not part of the group’s core concern. “This is not the business we will continue to be in,” he had said.

An alarmed state government then decided to call a meeting to persuade the Tatas to stay with HPL, Writers’ Building sources said. The chief minister said he had received an assurance from Tata today that the group would not quit the venture. “They have assured us about their partnership in the project.”

The corridors of Haldia Petro have been abuzz with rumours that Purnendu Chatterjee, chief of The Chatterjee Group, will pick up the entire stake of Tatas if they sold it. A top-level official of state commerce and industry department said: “Purnendu has always been eager to increase his stake in the company. But he has not got any offer either from the state government or from the Tatas.”

A clearer picture of the state government’s intention will emerge when Bhattacharjee meets the TCG boss on Wednesday to discuss the future of Haldia Petro. Later, the three promoters will meet on August 31 to reach an understanding on the future shareholding pattern of the project.

HPL, the biggest petrochemical project in eastern India has been promoted by the West Bengal Industrial Development Corporation, The Chatterjee Group and the Tatas.

The plant started commercial production only on August 1 but was suffering heavy losses due to spiralling naphtha prices and heavy interest burden.

The latest developments about HPL came in the wake of the efforts made by the state government to rope in Indian Oil Corporation (IOC).

Talks with IOC has not yielded positive results as the public sector oil giant has valued HPL much lower than what the company expected. “Pricing of the company’s shares is the most crucial thing,” HPL officials said.

Haldia Petrochemicals is in dire need of fresh funds in the form of equity to reduce its high-cost borrowings pegged at Rs 4,120 crore.

The three promoters will chalk out an alternative plan to reduce the debt burden when they meet at the end of this month.

TCG and West Bengal Industrial Development Corporation hold 43 per cent each while the Tatas control the remaining 14 per cent.

   

 
 
GOVT IN A FLAP OVER AIR-INDIA VALUATION 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Aug. 20: 
The government today flew into a major brouhaha over Air-India’s valuation and bona-fides of shortlisted buyers for the national flagship carrier in the Rajya Sabha today.

Disinvestment minister Arun Shourie had to admit on the floor of the house that he had no information of Sebi’s indictment of merchant bankers — J.M.Morgan Stanley — who are advising the government on Air India’s sell off , in the recent stock market scam.

Responding to CPM MP Nilotpal Basu’s question on how the government could violate its own rules on taking on scam-tainted advisors, Shourie was forced to state” we will be ruthless” if the government discovers this to be a fact.

Morgan Stanley and Credit Suisse First Boston were both recently indicted for their role in a major stock market scam by the Securities and Exchanges Commission of India.

To make Shourie’s embarrassment more acute, Basu then picked up a The Telegraph story to question the minister on why a small time income tax valuer V.K.Kharbanda & Associates has been asked to value the airline’s properties for a paltry fee of just Rs 3 lakh. “The extent they (the valuers) have underpriced the bid” is an indication that “they may have complicity with potential bidders” who might be paying kickbacks, Basu charged.

Kharbanda & Associates were appointed after J.M.Morgan Stanley, the government’s advisors for the sale, had, in a confidential letter asked Air India to put on hold technical and financial bids submited by four internationally renowned valuers — Cushman & Wakefield, Colliers Jardine India, Jones Lang Lassalle and Richard Ellis Ltd — to value Air India’s properties in India and abroad.

Instead the government appointed Kharbanda & Associates to asses the value of Air India’s properties in India for a meagre fee of Rs 3 lakh and asked Indian embassies and Air India station managers posted abroad to value properties in foreign cities.

   

 
 
OBEROIS CLAIM ITC STAKE PILE-UP TO 10% 
 
 
BY ANIEK PAUL
 
Calcutta, Aug. 20: 
The spat between EIH Ltd and ITC Ltd has erupted again over the tobacco-to-hotel giant’s investments in the company that owns the Oberoi chain. EIH is claiming that three investment companies associated with ITC have built up a stake of 10.4 per cent.

An ITC spokesman declined comment but a source in the three investment companies denied that their shareholding in the Oberoi company had shot up beyond 10 per cent. He said the three investment companies — New Deal, Peninsular and Megatop — have a holding of 5.66 per cent in EIH.

EIH’s claim is based on the beneficiary position — shareholding pattern — as of August 17 it has obtained from the National Securities Depository (NSDL). All companies depend on NSDL statistics to determine the exact ownership of shareholders.

The Oberoi company says the combined holding of the three investment firms is 54,50,783 shares. But the ITC trio puts its aggregate holding at 29,67,565 shares. Promoters of EIH have increased their holding by over 3 per cent in the last financial year, taking their stake to 39.15 per cent.

The development occurs in the backdrop of the same three ITC investment companies notifying — as required under rules — EIH about a year ago that they had bought over 5 per cent.

Amid speculation that ITC was eyeing EIH, the Y.C. Deveshwar-led management had denied any such motive, saying that the acquisition was made simply for investment purposes. Alarm bells had started ringing at the EIH headquarters here, nonetheless. Subsequently, however, ITC cut its stake below 5 per cent.

With the holding now going up to 10.4 per cent, according to EIH, a top-level official of the hotel group said: “The move is aimed at destabilising a well-managed company.” ITC has kept EIH posted on its purchases at every point it is required to under norms framed by the Securities and Exchange Board of India. For instance, when its holding topped 5 per cent again some months back, it informed EIH.

Under the Sebi takeover code, ITC investment firms can continue to increase their holding in EIH up to 14.99 per cent, without making any open offer, or informing the company.

On reaching the 15 per cent level, they will not only have to inform EIH of the acquisition, but also make an open offer to the public. Recently, EIH had to withdraw a resolution — that was to be moved at its annual general meeting scheduled tomorrow — to issue fresh equity after two shareholders went to court opposing the proposal. Fresh revelations about ITC’s holding, though denied, might trigger enquiries from shareholders at tomorrow’s AGM.

   

 
 
BHARTI LINES UP RS 1500CR CELLULAR UPGRADE PLAN 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 20: 
Bharti Enterprises today unveiled a strategic roadmap for providing cellular services across India with an initial outlay of Rs 1,500 crore for the eight new circles including upgradation of the network in the recently acquired Calcutta circle.

The funding for these projects will largely come out of equity already floated and debt which is being arranged.

Bharti Enterprises’ chairman and group managing director Sunil Bharti Mittal said, “The strategic roadmap and restructuring in mobility is designed to make Bharti a pan-India mobile leader.

At the business level, a larger footprint makes for a larger geographical market that each business leader can address, enabling him to plan for greater synergies and economies of scale.”

He added, “The restructuring into region and hubs will ensure that our resources are more efficiently allocated across geographically contiguous areas or proximate markets. I am also particularly pleased to share that for all members of the Bharti team, this will further provide several strong growth avenues across the group.”

This move follows the successful bids for the fourth cellular licence in Mumbai, Maharashtra, Gujarat, Haryana, UP (West), Madhya Pradesh, Kerala and Tamil Nadu. With the acquisition of Calcutta and existing operations in Delhi, Karnataka, Andhra Pradesh, Himachal Pradesh, Chennai and the eventual settlement of Punjab, Bharti will have the widest footprint covering 1.8 million square kilometres in 15 states covering a total population base of around 700 million people.

The company has created the first major region in the west and five ‘Hubs of Business Excellence’ across the country as operational clusters.

Its mobile operations will be restructured into one major region in the west and five hubs for greater regional and operational synergies. The creation of a major region in the west as against hubs across India underlines Bharti’s strategic thrust to the western region. The region and hubs have been created for synerging management and operational needs.

This restructuring will hence ensure that key decision making is decentralised to the head of the region and hub to ensure greater customer focus.

This will result in management of larger business areas with greater operational efficiencies and flexibility.

The Calcutta hub of excellence will be headed by Deepak Gulati, who was earlier chief operating officer (COO) of Bharti’s Karnataka mobile operations. He will now take over as the chief executive of Bharti’s Calcutta operations.

While the current and new CEOs have been given larger roles in terms of size and scale of business operations, existing functional heads take on larger responsibilities as operating heads.

   

 
 
MARUTI FACE-SAVER FOR SLOW CAR SALES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 20: 
Car sales rose by a piffling 1 per cent year-on-year in July on the back of a strong showing by Maruti, Ford and Telco. According to the data released by the Society of Indian Automobile Manufacturers (Siam), a total of 48,481 cars were sold in July 2001 against 48,082 units in the same month a year ago.

Cumulative sales (April-July 2001-02) stood at 1.96 lakh cars, up 2.8 per cent over 1.91 lakh units sold last year.

The passenger car segment is led by Maruti Udyog which posted a 9.0 per cent increase in sales with 30,168 cars sold in July 2001 compared with 27,665 units sold in July 2000.

Ford India Limited has clocked a sparkling growth of 130 per cent with sales of 3,463 cars as compared with 1,502 cars in July last year. Car makers like Hyundai and Hindustan Motors posted negative growth in sales while troubled Daewoo Motors India did not reveal its sales figures for the month.

Inventory overhang

For the first time in this fiscal which began in April, the Siam figures show an inventory overhang: this is because car production at 50,495 units outstripped sales of 48,481 units.

In June 2001, production was at 39,620 units while sales totalled 48,243 units.

In May, sales was higher at 54,202 units against production of 51,382 units. In April, when sales touched a nadir of 45,550 units, production was only 43,059 units.

Motor cycles, scooters and multi utility vehicles (MUVs) are the other segments which has registered positive growth.

The sales of motorcycles rose by 30.97 per cent for the month of July 2001 as compared with July 2000.

With two new entrants in the field — Kinetic Engineering Ltd and LML Limited, total sales rose to 208,047 units from 158,850 units in July 2000.

Hero Honda Motors Limited leads the segment with sales of 1103,245 bikes with the nearest competitor being Bajaj Auto Ltd which sold 56,561 bikes.

Commercial vehicles, mopeds and three-wheelers continued to remain in the negative territory. Sales of commercial vehicles, a good indicator of economic growth, fell 1.9 per cent month-on-month at 10,195 units against 10,397 units.

MUV sales rose 9 per cent at 10,069 units in July 2001 over 9,237 units in the same month last year. Scooter sales grew marginally by 0.05 per cent at 73,082 units.

Sales of mopeds fell 25.2 per cent at 46,551 units against 62,289 units sold in July 2000. Three-wheeler sales also dipped by 6 per cent at 18,801 units over 20,002 units.

   

 
 
PREMIUM PALIO IN SEPT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 20: 
The Italian car giant, Fiat Auto is planning to launch Palio, a hatchback by the end of September. Targeted at the top end category, Palio is looking at clocking volumes of 50,000 cars by next year.

M P Bianchi, managing director of Fiat India, pointed out that Palio will have a local content of 75 per cent and it will feature both 1.2 litre and 1.6 litre torque engines. While Bianchi did not reveal the price, it is believed to be priced around Rs 4.5 lakh. “We have set a target of selling about 50,000 cars in 2002,” he said.

Officials said that the 1.6 litre torque engines will deliver a 100 bhp which make the Palio 1.6 GTX model faster than any other mid-sized car in the domestic market. They further claimed that the Palio would for the first time in the domestic market, bring in all the features into the hatchback found in the category of Rs 5 lakh and above.

The company had earlier announced the signing of Sachin Tendulkar as brand champion for the vehicle. Fiat Auto is manufacturing the Palio in nine countries and sells over 7 lakh units in over 40 countries. Palio meets all current European and American crash test norms and it will offer anti-lock brakes and airbags as an option in its class.

   

 
 
IFC TO INVEST IN SREI UNIT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 20: 
International Finance Corporation (IFC) is investing $10 million in Indian Infrastructure Equipment Limited (IIEL) which is setting up a construction equipment rental service launched by it under the brand ‘Quipo’.

IFC today signed an agreement for financial participation with IEEL, which is promoted by SREI International Finance. IEEL is being set up at an investment of Rs 200 crore.

FMO of the Netherlands will be investing $7 million in IEEL’s equity while DEG of Germany will contribute Euro 5 million as debt. IEEL will have a total equity of Rs 75 crore out of which SREI will put up Rs 25 crore, amounting to a nearly 34 per cent stake. The rest of the equity is being subscribed by domestic and international financial institutions.

The $10 million being invested by IFC will come in the form of an equity infusion of $3.2 million with the remaining $6.8 million coming by way of debt.

”We have already tied up around Rs 155 crore of the total investment of Rs 200 crore with banks and prominent financial institutions. A sum of Rs 30 crore has come in from Infrastructure Finance and Development Corporation (IDFC),” IIEL chairman and managing director Sunil Kanoria said.

He said other international institutions are also participating in the venture by subscribing to debt. IIEL has already done business worth Rs 20 crore with Tehri Hydro Development Corporation and is in talks with private players and also government-owned national Highways Authority of India (NHAI) for supplying equipment for various road projects.

“We are in talks for supplying equipment on rent for the Golden Quadilateral project to the NHAI,” Kanoria said, adding that the company had set up four major centres all over India for marketing its services, which include Pune, Delhi, Chennai and Bhubaneswar.

Construction equipment worth Rs 35,000 crore is lying idle in India and, even if 5 per cent of this is utilised, it will unlock immense potential for the infrastructure sector.

   

 
 
JK TYRES SLASHES AD BUDGET BY 20% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 20: 
JK Tyre, the flagship company of JK Industries Ltd, has cut its advertising budget by 20 per cent this year, said Raghupati Singhania, managing director JK Industries Ltd here today. He said that the advertising budget this year is Rs 20 crore as against Rs 25 crore last year.

Singhania also said JK Tyres, which outsourced tyres worth $ 40 million from China in the last year is likely to increase it to $ 60 million in this financial year. Singhania was speaking on the occasion of the launch of the JK Tyre National Go Karting championship 2001, sponsored by it along with co-sponsors at a total cost of Rs 2 crore.

According to Singhania, JK will be increasingly look at promotions and events for publicity of its brand. It is also looking more into the arena of below-the-line advertising. The net profit of JK Industries almost halved in the March 2001 year ending (Rs 16.59 crore as against Rs 32.75 crore in the previous year.) The Go Karting championship begins at Bangalore on September 2 and the final is at Delhi on December 23.

JK began its association with Go Karting in 1997 and last year it held the first Go Karting National Championship. The co-sponsors for the event this year are Caltex lubricants, now ISP and SEGA. Ford Ikon is the presenting sponsor of the event. The launch was attended by last year’s champion Narayan Karthikeyan.

Singhania said that in the last five years, JK Tyre has invested over Rs 15 crore to support its several motorsport initiatives. JK has also associated its brand with car rallying championships in the past.

Philip Spender, president and managing director of Ford India Limited, who was also present on the occasion said on the sidelines that Ford Ikon which sold 17,500 units this year targets 20,000 units this year.

On the export front, he said the company is targeting a massive increase in its exports from its production facility in Maraimalai Nagar near Chennai. “We intend to export 25,000 units this year, as against exports of 6,500 units last year”.

   

 
 
ALSTOM TO FOCUS ON CAPTIVE PLANTS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 20: 
Alstom Power India Ltd will focus on supply of equipment to captive power plants to sustain its operations in India and will also recruit 30-40 professionals in the current financial year.

The company recorded a net profit of Rs 10.54 crore during the first half of the current financial year ended June 2001 as against Rs 4.37 crore during the same period last year.

APIL notched up sales of Rs. 318.5 crore as against Rs 81.7 crore during the corresponding period of 2000 and sales of Rs 273.8 crore during the 12 months of 2000. Profit before tax amounted to Rs. 11.4 crore for the half-year ended June 2001 as against a loss of Rs 4.4 crore in the corresponding period in 2000 and a profit of Rs 11.9 crore for the 12 months of 2000. Krishna Pillai, country president of Alstom India, said, “The increase is due to to the substantial revenue streams now flowing from the order backlog .

The back log projects under implementation are Neyveli (Rs.134 crore), Korba (Rs 35 crore) and Hazira (Rs 96 crore).

Pillai said the company’s cash position is strong and virtually no borrowings were required. ICDs amounting to Rs 90 crore were placed with Alstom group companies and about Rs 5 crore were placed as fixed deposits with banks. While delays in projects or in payments due always pose a potential risk, the working capital position of the company is not expected to be under any pressure over the rest of the year.

In spite of the stagnant market with respect to large power plants, the company managed to an order intake of Rs 300 crore.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.13	HK $1	Rs.  5.95*
UK £1	Rs. 68.09	SW Fr 1	Rs. 28.10*
Euro	Rs. 43.10	Sing $1	Rs. 26.45*
Yen 100	Rs. 39.15	Aus $1	Rs. 24.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	  	Rs.4560		Gold Std(10 gm)	Rs. 4550
Gold 22 carat		N.A.		Gold 22 carat	N.A.
Silver bar (Kg)		N.A.		Silver (Kg)	Rs.7225
Silver portion		N.A.		Silver portion	N.A.

Stock Indices

Sensex		3278.92		- 17.79
BSE-100		1544.49		-  7.27
S&P CNX Nifty	1063.75		-  5.45
Calcutta	 113.30		-  0.01
Skindia GDR	 557.27		-  6.30
   
 

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