Package to stimulate exports
TVS buys out Suzuki for a song
Haldia Petro in futile IOC chase
B.G. Daga calls it a day at UTI
Tata Tea, Tetley integration soon
Mahajan moots merger of two ministries
Foreign Exchange, Bullion, Stock Indices

 
 
PACKAGE TO STIMULATE EXPORTS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Sept. 27: 
Spooked by recessionary trends worldwide, the government is working out a special package to spur export growth. Alongside it is drawing up plans to boost key sectors such as automobiles, steel and cement.

Finance minister Yashwant Sinha, who disclosed this at an interaction with journalists here, said: “We are in talks with the commerce ministry and are working out a special package to boost export growth. We are working on incentives, including new duty drawback rates and duty entitlement packages.”

According to Sinha, stock markets, oil prices, foreign direct investment flow and exports are the four areas which have been hit as a result of the terrorist attack on the US.

In this context, the finance minister said the government is looking into the possibility of permitting individual stock futures to give the stock market a boost.

Sinha said war fears and a slowdown in the West had led to a dip in the country’s exports. Exports are expected to grow by a mere 2.7 per cent and the lower foreign exchange earnings as a result could worsen the country’s trade balance.

The finance minister also said that a process of consultation with key sectors had been completed and packages for three areas which he considered key to the domestic economy—steel, automobiles and cement—were being worked out.

“These are areas where we could take steps to spur growth.”

Sinha was, however, confident of tiding over the slowdown and asserted that the economy has started looking up with growth rate expected to be better in the third quarter.

“We are hoping that as we go along things should start looking up. I am not saying that we will immediately be able to get out of the slowdown phase. Perhaps it (third quarter) will not be as bad as it has been in the first or second quarter," Sinha said.

He also said second generation reforms, including labour and financial reforms, would go ahead. Among other things, “we will look into the possibility of increasing the foreign holding cap of 20 per cent in State Bank of India to 49 per cent.

While the government had earlier allowed foreign holdings of up to 49 per cent in all other banks it had imposed a cap of 20 per cent for SBI.

Sinha said he did not anticipate any major flight of capital with the recent liberalisation of investment regime for foreign institutional investors to boost sentiments and liquidity in the capital market.

“The FIIs, who operate in India, are not necessarily fly-by night operators to anticipate some trouble,” he said.

Sinha, however, made it clear that though a roadmap for introducing full convertibility had been accepted by the government, recent global happenings would delay implementing it fully.

On interest rates, the finance minister said “the interest rate regime here is soft...the government has earlier stated it is in favour of soft regimes...but it’s for the RBI to take any decisions on this.”

   

 
 
TVS BUYS OUT SUZUKI FOR A SONG 
 
 
OUR BUREAUX
 
Sept. 27: 
A day after announcing its intention to part ways with Suzuki Motor, the Chennai-based TVS group today came out trumps by wangling out the best possible deal of the Japanese auto major.

According to the scheme of things that had been worked out, the TVS group will pick up the 25.97 per cent stake of Suzuki at Rs 15 per share, a stunning 82 per cent discount to today’s closing price of the TVS scrip on the Bombay Stock Exchange. The scrip closed at Rs 87.35 though only yesterday it was hovering around Rs 73.

The Japanese auto giant would get about Rs 9 crore as part of an exit agreement reached between the two partners to enable them pursue their respective “business interests”, TVS-Suzuki managing director V. Srinivasan told reporters after the meeting of the board in New Delhi.

SMC representatives at the board declined to comment on the agreement and refused to answer queries as to why it was selling its stake way below the market price.

At the meeting it was agreed that Suzuki would pull out both as a shareholder and a licensor.

The over Rs 1,800 crore TVS-Suzuki enjoys a 23 per cent market share in the domestic two-wheeler market.

The Indian company could retain Suzuki brand name on its range of motorcycles for the next 30 months as per the agreement, he said, clarifying that during this period SMC would not manufacture or sell its two-wheelers independently or through third party in the Indian market.

Srinivasan said TVS stake would rise to 58 per cent after the group company Sundaram Clayton and its subsidiaries bought about 6 lakh SMC shares in the joint venture by November 15.

Asked whether there were any differences between the two companies, Srinivasan said: “It was an amicable settlement. It is a question of each of the two partners who felt it is time to pursue their own business interests.”

“They (SMC) felt that they would have the same freedom and pursue the same interests to develop new products for the Indian market like us,” he said. TVS-Suzuki’s name would soon be changed but the company would continue to pay royalty to SMC during the 30 months period, Srinivasan said.

   

 
 
HALDIA PETRO IN FUTILE IOC CHASE 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Sept. 27: 
Haldia Petrochemicals (HPL) has rechristened Haldia Infrastructure (HIL) as Haldia Cracker Complex in expectation of Indian Oil’s entry. Even as the serenade was stepped up, none of the promoters who hunkered down for Friday’s crucial annual general meeting knew whether the state-owned oil major would actually come on board.

HIL, a subsidiary of the project, was floated to provide infrastructure services, but it diversified into other areas after the management discovered it did not have much to do. R.B. Saldanha, who is the company’s chairman, says in the directors’ report that the name has been changed in the wake of HPL’s recast programme. “In view of the restructuring plan and IOC’s proposed participation, the name has been changed from HIL to Haldia Cracker Complex. It has been done to carry on with the activities of the naphtha cracker unit.”

There is also confusion over the next HPL chairman. The notice sent to the three shareholders says the AGM will “appoint a director in place of Tapan Mitra, who retires by rotation and, being eligible, offers himself for reappointment.” It does not say if Mitra has expressed his desire to relinquish the top post. “The chairman is due to retire at the AGM. The name of the new incumbent will be announced after the meeting,” Saldanha said

There are two possibilities before HPL now. One is that the board appoints someone who is close to the state government and liked by all promoters; the second is to accept a person of Purnendu Chatterjee’s choice.

Many say the state government may hand the baton to the chief secretary. In the past, chief secretaries such as N. Krishnamurthy and Anish Majumdar were appointed as the chief of HPL. A section of the government believes that Mitra will be asked to continue because of his proximity to Writers’ even though he has put in his papers. Purnendu had asked Buddhadeb Bhattarcharjee to remove Mitra, a proposal the chief minister accepted.

“The selection of the chairman will show how the state government intends to run the project. Everybody expects that the person who is brought in will be someone who has the confidence of all promoters, including Purnendu Chatterjee,” senior HPL officials said.

Meanwhile, Ratan Tata, in the city to attend Tata Tea’s AGM, held closed-door discussions with the TCG chief on the situation in Haldia. He also met state finance minister Asim Dasgupta, who asked the Tatas to stay on in the project.

“We will eventually come out of the project. However, I cannot say when. It depends on the debt restructuring and a host of other things,” Tata told The Telegraph.

   

 
 
B.G. DAGA CALLS IT A DAY AT UTI 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 27: 
B. G. Daga, executive director of Unit Trust of India (UTI), today put in his papers. He said he is leaving the mutual fund major to take over as the managing director of the Central Depository Services India (CDSL) for a five-year term. His voluntary retirement from the Trust will be effective from December 31.

His departure comes at a time when most sensitive portfolios in UTI have been vested in D.S.R. Murthy, also an executive director.

Murthy oversees international finance and is responsible for all equity investments made by the mutual fund. In addition, he heads the department in charge of venture capital funds.

UTI, which manages Rs 57,500 crore in assets and accounts for two-thirds of the funds mobilised by the mutual fund industry, was jolted by heavy redemptions earlier this year after it ran up huge stock losses.

It has been going through a turbulent year that saw M. Damodaran taking over as the chairman from P.S. Subramanyam, who resigned under a cloud from the top post after the lid was blown off UTI’s murky share placements.

Daga has been associated with UTI for more than 15 years. He joined the mutual fund as deputy general manager from Reserve bank of India and was the official spokesperson for the organisation during the current controversy. He was managing the equity investments of US-64- its flagship scheme during G P Gupta’s tenure as chairman and was later shifted to marketing the UTI schemes when Subramanyam took over as chairman.

While it is considered as a promotion for Daga when compared to his current responsibilities, CDSL is seen to be struggling to keep its head above water.

   

 
 
TATA TEA, TETLEY INTEGRATION SOON 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 27: 
Tata Tea today said it will appoint an international consultant within a fortnight to draw up the roadmap for the integration of Tetley with itself. Two international consultants, said vice-chairman R. K. Krishnakumar, have already been identified. “We recognise that with the acquisition of Tetley, there is a need to synchronise operations. The consultants will map out a blueprint that will help us with logistics and marketing plans that keep both identities intact.” However, there is no plan to merge Tata Tea with Tetley.

The company is also looking for acquisition of tea gardens in Kenya and Sri Lanka. “We will not acquire anything in India. We are looking at acquisitions in Kenya since the gardens are more economical. We are also looking at Sri Lanka where we already have presence through Watawala Plantations. We may also market Indian blends in Sri Lanka,” said H.R. Khusrokhan, managing director of Tata Tea.

The company will soon be launching the Tetley brands in early part of next year. “We will be first launching a premium international blend in the Indian market. “This will help us to address the premium segment of the market. The company currently enjoys 22 per cent market share in the packet tea segment. We expect to increase it by another five per cent in the coming three years time,” Khusrokhan said.

Tata Tea is also planning to sell one million kg of tea to Tetley in the current year. Tetley lifts 8 million kg of Indian tea. “We buy tea from Africa mostly. The company procures 50 million kg of tea for its packets,” said K. Pringle.

Talking about the justification of investing £ 30 million in Tata Tea (GB) Limited, the special purpose vehicle created to acquire Tetley Krishnakumar said that it was done to check the debt equity ratio of the company. “When we acquired Tetley there was£ 30 million shortfall in its equity and it was met through debt route. Tatas then decided to get rid of this debt and so Tata Sons brought in £ 20 million and Tata Tea £ 10 million to meet the gap,” he added.

   

 
 
MAHAJAN MOOTS MERGER OF TWO MINISTRIES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 27: 
The government plans to merge the infotech and communication ministries before introducing an omnibus Convergence Bill that will regulate the two areas, besides information and broadcasting.

The announcement, made by the minister for infotech and communication, Pramod Mahajan, was expected, but many were surprised that it came from a man who was opposing the proposal until a few months back.

Mahajan had earlier objected to the merger, saying there were no administrative or technical synergies between the ministries. He had stuck to his guns even after the draft of the Convergence Bill had been finalised.

The reason for his somersault now: the merger of ministries of information technology and telecommunications will clear the way for convergence. Today, inaugurating the Global Telecom Summit 2001: Connecting India, he said it would happen in a week. The new ministry will have three departments — telecommunications, infotech and posts — a national advisory committee and a consultative panel.

“The proposal has been sent to the Cabinet secretariat, which will put it up before the President for his approval. We have also told the Prime Minister that the merger is necessary in the era of convergence.”

Once a combined ministry is set up, Mahajan will earn the distinction of being the country’s first and last infotech minister. The ministry was created two years back, even though the industry opposed it tooth and nail. Industry leaders said government interference would queer the pitch for an industry that had flourished without state meddling.

On the controversy over voice-over-telephony, Mahajan said: “We will pursue the policy of improving the country’s tele-density through technology-neutral initiatives. We are aware voice-over-telephony cannot be stopped.

He asked telecom companies to stop harping on the demand for a level-playing field because he said Bharat Sanchar Nigam and other state-owned firms could do the same when it came to installing village phones.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.86	HK $1	Rs.  6.05*
UK £1	Rs. 70.56	SW Fr 1	Rs. 29.45*
Euro	Rs. 44.10	Sing $1	Rs. 26.75*
Yen 100	Rs. 40.16	Aus $1	Rs. 23.00*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4855	Gold Std (10 gm)Rs. 4750
Gold 22 carat	Rs. 4535	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7625	Silver (Kg)	Rs. 7650
Silver portion	Rs. 7725	Silver portion	NA

Stock Indices

Sensex		2715.50		+48.16
BSE-100		1271.07		+ 5.77
S&P CNX Nifty	 890.00		+16.30
Calcutta	  92.36		+ 2.82
Skindia GDR	 406.54		+14.23
   
 

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