Buddha signals HPL pullout
Home loans get cheaper
Tatas chart CMC growth plan
Car sales stay in slow lane
Hero Honda to pay 250%
Hind Motor workers on warpath
Daewoo India plans to go for a drive with GM
Maran spells doom for gloom
Road toll to net Rs 1000cr
Foreign Exchange, Bullion, Stock Indices

 
 
BUDDHA SIGNALS HPL PULLOUT 
 
 
BY A STAFF REPORTER
 
Calcutta, Oct. 17: 
Chief minister Buddhadev Bhattacharjee today flashed the first faint, but unmistakable, signal that the state would like to step out of Haldia Petrochemicals (HPL), saying the government should not hold such a high stake in an industrial venture. “No government should have a huge equity exposure in a single project,” Bhattacharjee told reporters at Writers’ Buildings.

The state has invested Rs 433 crore to pick up 43 per cent in the project through West Bengal Industrial Development Corporation (WBIDC), while Purnendu Chatterjee holds an equal stake; the Tatas control the rest.

HPL has a paid-up capital of Rs 1,010 crore and an authorised share capital of Rs 2,000 crore. The gap has been closed with a bridge loan of Rs 500 crore from Industrial Development Bank of India (IDBI), Rs 275 crore worth of optionally convertible debentures and advance against equity from the Tatas and WBIDC.

Asked whether the government was in talks with other oil companies because of the delay in Indian Oil’s entry, Bhattacharjee said: “We are holding talks with IOC only.”

The chief minister’s remarks came on a day Tarun Das, the new HPL chairman, formally stepped into his new shoes with an assurance that issues dogging the project would be resolved by March 31.

Problems expected to be resolved within the new deadline include the key question of IOC’s entry as the fourth equity partner, and the debt recast. Purnendu Chatterjee had sought time until November 30 to settle problems at the September 28 board meeting.

“I have to learn a lot. But I am confident of sorting out all issues in the current financial year,” the 62-year-old Das, who succeeded Tapan Mitra in the top job, said. The three-hour meeting discussed IOC’s proposal and the debt-restructuring plan sent to IDBI, but failed to reach a conclusion.

Das said what the project needs immediately is a cash injection. “We have to see where the funds will come from. The board is examining IOC’s proposal. As of now, there is no other alternative before it.”

The state-owned oil major wants majority control and the privilege of buying HPL shares at par. It is also insisting that the company’s equity be scaled down from Rs 2,000 crore to Rs 1, 400 crore, and project cost be reduced to Rs 4,800 crore from Rs 5,600 crore. The proposal has been opposed by Chatterjee, who has welcomed IOC, but says it should come in on terms acceptable to all promoters.

Das said he has held no meetings with Indian Oil and IDBI so far. “I have to know the company well before holding meetings. I have to go to Haldia and see the plant first. I will travel to Calcutta frequently. I am coming in early November for more talks with the board.”

Speaking highly of the board, he said it was run by professionals who have steered the company to higher levels of operational efficiency. “My motto will be to drive the company towards future profitability and viability.”

Asked how he would run the show, Das dwelt on his days as the chairman of ACC to say he would adopt a similar approach. “As the ACC chairman, I used to involve all board members in fostering overall growth and sought support of employees. I will try to do the same in HPL to make it the state’s showcase project in the true sense.”

   

 
 
HOME LOANS GET CHEAPER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 17: 
Home’s closer than you think — that’s the message Housing Development Finance Corporation (HDFC) and ICICI sent to borrowers today by slashing interest on loans within hours of each other.

Neither wanted to risk losing rate-sensitive customers. HDFC, the home-loan Colossus, announced a 25 basis point reduction to mark its 25th year in business. ICICI Home Finance followed soon after, with a similar cut.

ICICI will now charge 10.5 per cent for loans from 1-5 years, 12 per cent for 6-10 years, 12.25 per cent for 11-20 years, and 12.50 per cent for 21-30 years.

HDFC has fixed maturity-linked rates for loans of Rs 2 lakh: 10.50 per cent up to 5 years, 11.25 per cent from 6-10 years and 11.5 per cent from 11-15 years; loans above Rs 2 lakh for 11-15 years will now be available at 12.25 per cent.

The cuts come at a time when several banks, such as State Bank of India, have jumped into the fray in an attempt to grab a slice of a business dominated by HDFC. More rate reductions, this time by smaller players, are expected over the next couple of days.

HDFC took the turf-battle further, announcing a special discount of 1 per cent on the processing and administration fee, which will be only 0.8 per cent for applications processed from October 17 to November 16.

In a balancing act, it brought down interest on its deposit rates by 25 basis points. HDFC managing director Keki Mistry said today’s reductions have taken his company’s interest rates to an 18-year low.

He exuded confidence that growth rates will be encouraging despite competition from banks and other rivals.

Meanwhile, HDFC intends to raise its FII limit to 74 per cent from 49 per cent. Mistry said doing so would give his company a higher weightage — possibly by 1 percentage point — in the Morgan Stanley index on stocks.

The rate cuts coincided with the announcement of a 17 per cent rise in first-half net profit at Rs 252.55 crore against Rs 216.79 crore in the same period last year. Its loan portfolio on September 30 stood at Rs 15,972 crore, up 31 per cent over Rs 12,167 crore.

   

 
 
TATAS CHART CMC GROWTH PLAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 17: 
The Tatas have drawn up a plan that envisages an impressive annual growth of 30-35 per cent for CMC Ltd, the public sector computer major recently acquired from the government.

Confirming this at a press briefing, CMC’s new chairman, S. Ramadorai, who also heads TCS Ltd, the Tatas’ infotech flagship said: “There are indications that the domestic IT services sector is expected to grow at a compounded annual growth rate of 25 per cent till the year 2004.”

To facilitate CMC’s new growth strategy, Ramadorai indicated that several officials from TCS will be drafted into CMC. The existing senior management of CMC will continue and the team will be strengthened with key TCS personnel. R. Ramanan, head of TCS’ Bangalore office, has been nominated as executive director on the CMC board. The CMC board will consist of 10 members, with Tata Sons nominee directors accounting for four members, and four independent directors and two government nominees.

Ramadorai also quelled fears of any immediate layoffs. CMC has 3,100 employees compared with TCS’ 18,000. But he stressed that performance is a global benchmark and CMC will be no exception to that. The new chairman also emphasised that CMC will remain an independent entity in the group, managed by TCS.

When asked whether the Tatas propose to rechristen CMC, Ramadorai quipped that the only change the company would witness was removal of the “Government of India Undertaking” tag.

   

 
 
CAR SALES STAY IN SLOW LANE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 17: 
Car sales were on a downward spiral for the second successive month, registering a 22.3 per cent drop in September. Growth in August was a negative 7.2 per cent.

Car sales in the first half (April-September) fell 6.1 per cent to 2.77 lakh cars from 2.95 lakh cars in the year-ago period.

Total passenger car sales stood at 46,080 cars, against 59,372 cars in the same month last year according to data compiled by the Society of Indian Automobile Manufacturers (Siam).

With all auto majors, including Maruti Udyog Ltd, Hyundai Motors and General Motors showing a dip in sales for September, Telco was the only to buck the trend with sales of 5,408 units in September this year, compared with 3,602 units last year. Fiat India Automobiles Ltd and Honda Siel also achieved marginal growth.

In the first half, only four carmakers posted a rise in sales—Maruti Udyog, Hyundai Motors, Mercedes Benz and Telco. Maruti’s sales rose 5.34 per cent to 1,69,888 units from 1,61,266 units in the year-ago period.

The company also appeared to be consolidating its position in a falling market, with market share rising to 61.25 per cent from 54.58 per cent in the previous comparable period.

Mercedes Benz reported the sharpest rise — 105.8 per cent — as sales rose to 809 units from 393 last year. Telco saw sales go up 9.93 per cent to 27,583 units in the first half from 25,091 units in the previous corresponding period. Hyundai Motors’ sales went up marginally — 0.49 per cent — to 43,034 units from 42,820 units in the year-ago period.

Sales of multi-utility vehicles fell marginally by 5.8 per cent at 10,003 units in September compared with 10,620 units in the same month last year.

Sales have, however, risen in all the two-wheeler categories — scooters, motorcycles and mopeds.

Motorcycle sales zoomed 27.2 per cent at 2.34 lakh units, compared with 1.84 lakh units sold in September 2000.

Scooter sales went up 13.8 per cent at 74,103 units in September this year, as against 65,081 units in the same month a year ago. Sales of mopeds and three-wheelers also rose 29.6 per cent and 3.4 per cent at 47,419 units and 17,809 units respectively.

Sales of commercial vehicles, a key indicator of economic growth, dropped 3.8 per cent with the sale of 11,842 units of cars in September from 12,319 units in the year-ago period. This was due to a 22.7 per cent drop in light commercial vehicles sales even as the medium and heavy vehicles segment recorded a 10.2 per cent growth.

   

 
 
HERO HONDA TO PAY 250% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 17: 
Hero Honda has declared a special dividend of 250 per cent, more than fulfiling its commitment to maximise returns to its shareholders. The company is offering the special dividend at a rate of Rs 5 per share with a face value of Rs 2.

The special dividend will involve a payout of almost Rs 100 crore, with the Munjals and Honda Motor Co of Japan, who hold 23 per cent each in the company, slated to get Rs 23 crore each.

“It is a sign of a well-to-do company. Our company has been doing very well—so for we have carried forward a huge cash balance of Rs 50 crore as of March 31, 2001. The balance has increased over the last six months,” said Ravi Sood, vice-president finance.

“We are not offering this as a perk, but the money left after expansion plans definitely belongs to the shareholders. In our case, the major shareholders are the Munjals and Honda of Japan. Last year also we offered a 150 per cent special dividend. So this is nothing new for us,” Sood said.

   

 
 
HIND MOTOR WORKERS ON WARPATH 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct. 17: 
The 9,500 odd employees at Hindustan Motors’ Uttarpara plant are on the warpath over the freeze on dearness allowance.

HM chief C. K. Birla has already communicated to the state commerce and industry minister Nirupam Sen and labour minister Mohammed Amin that the company will freeze dearness allowance from the third quarter. Birla met both ministers last Monday and expressed his inability to give DA starting from September and a 20 per cent bonus.

HM employees have not received their salaries on time for more than one-and-a-half years, and got salaries for August only early this month. With the festive season round the corner, they had demanded that the salary for the month of September, along with the bonus, be cleared before the Pujas. But Birla has told the state government that the salaries will be given only in the first week of November. Writers’ Building sources said both ministers have told Birla that since the lay-off case is pending before the court, they cannot take any decision on adjusting leave against non-production days.

   

 
 
DAEWOO INDIA PLANS TO GO FOR A DRIVE WITH GM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 17: 
Daewoo Motors India Limited (DMIL) is trying to work out an arrangement with GM of the US under which it can offer the use of its surplus capacity to make cars under a common marque.

“We reckon we will be able to work on a closer platform should the need arise. If required, we may even request the use of their production facility in India and they can also use ours. But this sort of arrangement will be completely independent of the negotiations with GM on the possibility of picking up a stake in DMIL,” said Young-Tae Cho, managing director and CEO of DMIL.

“The signing of a binding contract will need more time. Although they have already come to India, checked our production facility and have shown interest in DMIL, we do not know our ultimate fate. Till then, I will strive to make DMIL a profitable company,” Cho explained.

At the moment, the prospects for a cross-sharing arrangement between GM and Daewoo platforms looks pretty bleak with cars sales tumbling in the months of August and September with customers putting off purchases despite the attractive inducements being offered by carmakers.

“DMIL plans to launch the first car off the GM-Daewoo platform—the T200 or the Kalos as it is called,” says Anil Mediratta, head of sales in DMIL. “The world launch of the car is slated for February. It will be launched in India next July. We have not shelved plans to launch Nubira or Lanos, but the ultimate decision has not been taken yet.”

GM had cut DMIL out of the $ 400 million deal reached last month under which the world’s largest carmaker is set to pick up a 67 per cent stake in a new company that will take over the assets of four Daewoo Motor Company plants.However, under the terms of the memorandum of understanding between Daewoo Motor Co and GM, the Indian plant will be able to source spare parts from GM.

The Indian plant is the fourth largest of all Daewoo plants with the capacity to make 72,000 cars a year. Production at present has fallen sharply at DMIL with the uncertainty over its fate affecting operations. The company has stopped reporting its production and sales figures to the Society of Indian Automobile Manufacturers (Siam) for the past three months. Daewoo officials are chary of sharing these details with the press.

Reports from Korea indicate that GM is still interested in Daewoo’s plants in India because of its growth potential and market size. However, talks have got bogged down because Daewoo Motor’s creditors in Korea have to resolve the conflict of interest over their shareholding in the Indian plant before the deal can be closed. ”DMIL belongs to Daewoo Corporation. The legal transfer of ownership from Daewoo Corporation to Daewoo Motor Company has already begun. GM will be able to sign a binding contract only after this transfer is completed,” said Cho.

Meanwhile, Cho elaborated that DMIL is working on sprucing up the company. “I am only interested in making it profitable. A big car company never vanishes, only the ownership may change,” he said.

Cho said a new Matiz model will hit the roads next January. “We are carrying out our research on various models and we will remain very busy next year.”

Sources said the company had embarked on an aggressive cost-cutting drive -- the target has been revised from Rs 105 crore to Rs 150 crore.

In a bid to boost sales, DMIL is coming out with a limited edition model of Matiz and Nexia and will soon embark on a major marketing thrust.

   

 
 
MARAN SPELLS DOOM FOR GLOOM 
 
 
OUR BUREAU
 
New Delhi, Oct. 17: 
Shrugging off fears that the economy would take a beating from the September 11 attacks on the US, commerce and industry minister Murasoli Maran said the country was on course to achieve a growth of more than 5 per cent — making it one of the few regions that have kept up such a blistering pace.

Addressing the economic editors’ conference here today, Maran said fundamentals of the economy were quite stable and foreign direct investment (FDI), having surged 33 per cent at $ 3.19 billion in January-August, would continue to pour in. The government’s six-point strategy would take care of possible contraction.

“There is really no cause for alarm,” Maran told editors. The medium-term export strategy, he said, has been delayed by a few weeks to factor in the post-September 11 global reality. Ruling out any downward revision in the 12 per cent export target for the current financial year, he said the present negative trend was merely a reflection of the downturn in the global economy.

He held out hope of an upturn in exports, saying the US economy would be resilient enough to bounce back like it had done in the past — and keep India’s shipments flowing.

Maran announced setting up of a high-level committee to frame the next five-year exim policy, which will run in tandem with the Tenth Plan (2002-07).

“The committee will review policy instruments and package of export-promotion schemes, besides procedures for exports. It will suggest steps to rationalise them,” he said, adding it would be accompanied by short and long-term plans to boost exports.

The 12-member committee, headed by former commerce secretary P.P. Prabhu, will include representatives from export promotion councils, trade and industry.

Coming down heavily on the developed nations for trying to “bring every economic activity under the umbrella of the World Trade Organisation (WTO), commerce and industry minister Murasoli Maran said the 142-member body “is not rule-oriented, but power driven”.

Textile exports

A crisis management cell is being set up in the ministry of textiles within two days to check the decline the textile exports, minister Kanshiram Rana said at the Economic Editors’ conference.    


 
 
ROAD TOLL TO NET RS 1000CR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 17: 
The ministry of roads and highways plans to generate Rs 1,000 crore annually from the toll fee to be levied on national highway roads being built by National Highway Authority of India (NHAI), covering a 13,351-kilometre route.

The ministry plans to invest the money collected from the toll fee in maintenance and for value additions on the highways. NHAI is examining ways and means to set up toll collection centres at various places.

Speaking at the ongoing Economic Editors’ conference, minister for roadways and highways Maj Gen (Retd) B.C. Khanduri said four-laning of roads and connecting the four major metros—Delhi, Mumbai, Calcutta and Chennai— has been advanced to 2003 from 2004.

Khanduri said, “We have planned to raise about Rs 8,000-10,000 crore for the project during 2002-2003. About Rs 4,000-5,000 crore will come from a cess on diesel and the rest would be generated from the market. We have also asked LIC and other institutions also to invest in the project.”

Officials in the ministry of roads and highways said in addition to the toll imposed by the Centre, the state government can impose a road toll.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.00	HK $1	Rs.  6.05*
UK £1	Rs. 69.40	SW Fr 1	Rs. 28.95*
Euro	Rs. 43.36	Sing $1	Rs. 26.00*
Yen 100	Rs. 39.46	Aus $1	Rs. 24.40*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4740	Gold Std(10 gm)	Rs. 4670
Gold 22 carat	Rs. 4475	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7425	Silver (Kg)	Rs. 7520
Silver portion	Rs. 7525	Silver portion	NA

Stock Indices

Sensex		3043.85		+ 51.39
BSE-100		1406.78		+ 27.05
S&P CNX Nifty	 986.25		+ 15.00
Calcutta	 104.25		+  1.92
Skindia GDRNA	 452.96		+  7.58
   
 

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