Mafatlals offer Nocil stake to BPCL
Aut opolicy to set foreign investment floor, tieup norm
Maruti selloff gathers speed
Wipro Q2 net jumps 40% at Rs 216.5 crore
Rail faces cash crunch
Hint of petro price hike after budget
7 CIL arms to be merged
Planners stick to growth target
Foreign Exchange, Bullion, Stock Indices

 
 
MAFATLALS OFFER NOCIL STAKE TO BPCL 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Oct. 18: 
The Mafatlals have offered to sell their stake in National Organic Chemical Industries Ltd (Nocil) to Bharat Petroleum Corporation Ltd (BPCL).

Confirming the move, a BPCL director said the promoters had made overtures to offload their holding. The Mafatlals hold 33.53 per cent, banks and financial institutions 31 per cent and the public 35.30 per cent.

“A team within the company is looking into the idea. We will be interested if we are convinced that entering petrochemicals improves our cash flow,” the director said.

No formal presentation has been made to the state-owned oil major so far, even though unofficial talks are under way. Sources say a detailed proposal is likely to be sent soon.

The Nocil promoters were not available for comment, despite several attempts made by The Telegraph. However, company sources said the Mafatlals were, indeed, looking for a buyer. BPCL emerged as a potential buyer after Shell abandoned its plan to buy a majority in Nocil. Basell Polyolefins, a 50:50 joint venture between Shell and BASF, would have picked up 76 per cent, including the promoters’ stake.

Since a memorandum of understanding was signed in September 1998, a team from Shell had visited Nocil’s plant in Thane to get an insight into its operations.

Sources said Shell Chemicals & Montell Polyolefine were initially ready to buy 49 per cent in Nocil at a price of Rs 29 per share. The financial institutions, which hold more than 31 per cent, had agreed to sell their stake.

Subsequently, Montell merged with Elenac and Tragor to form a new company, Basell Polyolefins, which wanted to pick up 76 per cent in Nocil, but at a lower price.

Sources say Shell retracted on its plan because of poor conditions in the petrochemicals business. There are indications it wanted to buy the stake at a price much lower than Rs 29, given the slide in Nocil’s share. The stock closed at Rs 7.50 on the BSE today. The company posted a net profit of Rs 11 crore in 2000-01 on sales of Rs 1,024 crore.

The Nocil management intended to spin off its main product lines — rubber chemicals, plastics products and petrochemicals — into three companies as part of a restructuring drive. It is not known if the company will go ahead with the plan now.

Mafatlals’ attempt to move out of Nocil come at a time when BPCL is keen on diversifying into the petrochemicals, particularly those which gel with its core products. “We are not interested in producing synthetic yarn in Nocil’s unit,” the sources said.

   

 
 
AUT OPOLICY TO SET FOREIGN INVESTMENT FLOOR, TIEUP NORM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 18: 
The new automobile policy, which is expected to be cleared within the next two meetings of the Union Cabinet, will set a minimum investment limit for foreign carmakers who wish to invest in India.

“Norms for joint ventures and equity sharing will also be spelt out,” Manohar Joshi, minister for heavy industries, said at the Economic Editors’ Conference here today. Joshi said the government was keen to announce its long-awaited auto policy as quickly as possible. Several overseas car makers have been waiting in the wings to see the policy before they invest in car ventures in India.

The policy will be coming out at a time when the automobile industry—one of the key drivers of the economy—has been going through a slump because of falling demand. Consumers have been resisting all forms of blandishments and putting off car purchases for now.

“Directly or indirectly one crore people are associated with the automobile industry. We cannot ignore a comprehensive auto policy. Many parties had to be consulted while formulating it, so it took us some time. But we have placed it in front of the Cabinet and hope for a clearance within one or two meeting,” said Joshi.

Joshi said: “The new auto policy will be fully compatible with the WTO regime. The policy has been framed by keeping a few factors in mind—to make it an employment intensive sector, present India as a global source of automobile parts and make the industry globally competitive.”

He declared that the auto policy will give more importance to small cars that are less than 3.8 metres long.

“It has been noticed that these cars are highest in demand so a special provisions will be made for them. The assistance may not be in the form of monetary help but in policy—for instance, we may allow the import of second-hand small cars.” Joshi said there would be special rules relating to bodybuilding of cars to ensure safety of the passengers.

“Road infrastructure will be improved but we will also spell out safety standards for manufacturers.” The government plans to establish a Rs 750-crore project to ensure that manufacturers adhere to very strict tail-pipe emission standards.

“Three testing facilities have been cleared and Pune will house the first centre of its kind,” the minister said.

Joshi expressed concern about the minimal research and development investment by the Indian automobile companies.

   

 
 
MARUTI SELLOFF GATHERS SPEED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 18: 
The government has shortlisted six consultants to help prepare the groundwork for the divestment of its stake in Maruti Udyog Ltd. While these firms will be appointed as valuers, there will also be a global advisor to facilitate the disinvestment process.

Heavy industries minister Manohar Joshi said: “There are three Indian firms and three international firms on our list. One Indian firm and two international firms will be chosen from this list to help us with the divestment.” The shortlisted Indian firms are Bansi Mehta and Co, S.B. Billimoria and Co and C.C. Choksi and Co. The two international valuers will be chosen from KPMG, Ernst and Young, and Arthur Andersen.

“The government is going according to the original plan of selecting the valuers before coming out with an issue of rights shares which it will renounce in favour of financial institutions or some other party. The decision lies with the disinvestment ministry. But we hope everything will become clear soon,” he said.

   

 
 
WIPRO Q2 NET JUMPS 40% AT RS 216.5 CRORE 
 
 
OUR BUREAX
 
Oct. 18: 
Wipro today narrowly beat forecasts with a 40 per cent leap in net profit for three months to September at Rs 216.5 crore, and said earnings in the next two quarters would race ahead of the industry average.

The market, expecting a figure of Rs 210-220 crore, was cheered by the numbers, but many doubted if the scorching pace would be sustained at a time when software industry growth is expected to tail off at 25 per cent.

“We have grown at a rate higher than that of the software services industry, and believe we will continue to do so for the full year,” company chairman Azim Hasham Premji said after the announcement of results.

Second-quarter revenues were up 15 per cent at Rs 877.6 crore, while first-half net profit jumped 63 per cent at Rs 430.5 crore on a 21 per cent rise in revenues at Rs 1,676 crore.

The scrip closed at Rs 1091.65 on the Bombay Stock Exchange (BSE), down Rs 86.25 over its previous finish. The loss, despite a performance that was in line with expectations, was blamed on bouts of profit taking. Healthy billing rates drove sales in the quarter. On-site realisation jumped 4.6 per cent, while offshore rate was up 2.5 per cent.

Head-count drops

Pink slips have been handed to some employees during the second quarter. In all, 495 left the company, but officials did not specify how many lost their jobs due to the US slowdown. “Some are performance linked while others are voluntary,” Paul said. The 495 job losses in the second quarter (voluntary and others) took the decline in the number to 384 compared with the first quarter. Fresh recruitment stood at 113.

Spectramind stake

Wipro Ltd today invested $ 10 million in the Spectramind eServices Pvt. Ltd, a business process outsourcing and customer interaction services provider. Chrysalis Capital, the existing venture fund investor in the company, also increased its investment by another $ 4 million.

The Rs 48 crore investment by Wipro is by way of equity shares and convertible preference shares which, on a fully diluted basis, translates to an equity stake of more than 20 per cent.

The two companies also announced a strategic alliance to complement each other’s business and offer comprehensive IT and IT-enabled solutions to key customers globally.

   

 
 
RAIL FACES CASH CRUNCH 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 18: 
The railway ministry may ask the finance ministry to bail it out with additional budgetary support, if private investment under the build-operate-lease-and-transfer (BOLT) scheme does not come through.

The railway ministry had budgeted for Rs 900 crore under the BOLT scheme out of a total Plan outlay of Rs 11,090 crore.

“There has been no investment till date under the BOLT scheme, so we will have to approach the finance ministry for the funds,” railway officials said. Till August, the railways had incurred a net expenditure of Rs 989.28 crore from internal resources and Rs 1,259.30 crore from the general exchequer.

The Indian Railways Finance Corporation had invested about Rs 850 crore, while Rs 7.80 crore has come in through the own-your-wagon (OYW) scheme, bringing it to a total of Rs 3,206.45 crore.

In the absence of any of the three — railway minister Nitish Kumar and ministers of state O. Rajagopal and Digvijay Singh — at the Economic Editors’ conference, Rail Board chief R.N. Malhotra chaired the proceedings.

   

 
 
HINT OF PETRO PRICE HIKE AFTER BUDGET 
 
 
NAIK: TEMPORARY RELIEF
 
From Our Correspondent 
New Delhi, Oct 18: Prices of kerosene and LPG are likely to go up next year but not before the budget, petroleum and natural gas minister Ram Naik said today.

Addressing the Economic Editors’ Conference here today, Naik said the price increases would have to be effected because of the government’s commitment to reduce subsidies on kerosene to 33.3 per cent and LPG to 15 per cent. At present, kerosene carries a subsidy of 45 per cent and LPG 41 per cent. The subsidy cuts are in line with the decision to dismantle the administered price mechanism (APM) from March 31 next year.

The minister said the reduction in the subsidy on kerosene to 33.3 per cent would mean a price rise of Rs 1.20 per litre. While refusing to spell out the extent of the hike in LPG prices, Naik hinted it would be a pretty steep one. The current subsidy on LPG is about Rs 100 per 14.5 kg cylinder.

Naik is scheduled to meet finance minister Yashwant Sinha on Monday to discuss issues pertaining to the dismantling of the APM, including those related to subsidies, changes in taxation on petroleum products in the post-APM phase and freight problems pertaining to petroleum products.

Four inter-ministerial sub groups have been formed to chart the path for dismantling the APM and other related issues. Each group headed by the finance, revenue, expenditure and petroleum secretaries are slated to submit their report by October 19.

The decision to dismantle the APM was taken in 1997 after which aviation turbine fuel (ATF) was de-regulated in April. The four petroleum products now on the deregulation list are LPG, kerosene, diesel and petrol.

   

 
 
7 CIL ARMS TO BE MERGED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 18: 
The government plans to merge seven of the eight subsidiaries of Coal India Ltd, a move that will help CIL save Rs 1,000 crore by way of taxes.

The move is designed to help turnaround the loss-making CIL, coal minister Ram Vilas Paswan said at the Economic Editors’ Conference here today.

The seven subsidiaries are Eastern Coalfields Ltd (West Bengal), Bharat Coking Coal Ltd, Central Coalfields Ltd (Jharkhand), Northern Coalfields Ltd (Madhya Pradesh), Western Coalfields Ltd (Maharashtra), South Eastern Coalfields Ltd (Chattisgarh) and Mahanadi Coalfields Ltd (Orissa). The eighth subsidiary—Central Mines and Planning and Design India Ltd (Jharkhand)—is not involved in coal mining activity.

Paswan also hinted that the government planned to raise coal royalty and had constituted a high-powered committee to examine the issue.

“We are examining the issue of hiking royalty rates on coal and a standing committee under additional secretary has been set up to look into the matter,” Paswan said.

   

 
 
PLANNERS STICK TO GROWTH TARGET 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Oct. 18: 
The Planning Commission does not feel there is any need to revise the 8 per cent growth target it has projected in the 10th plan period (2002-07) in the light of the turmoil in the global economies after the September 11 attacks in the US.

“The present climate of war and uncertainty has sparked fears in several sectors of the economy, but we feel these will have a short-term impact. The planners tend to look at a longer perspective—medium- and long-term — and we don’t see anything yet that warrants a revision of our estimates,” said K.C. Pant, deputy chairman of the Planning Commission denying that these targets were now over-optimistic.

Pant, however, admitted that an important causal factor in the recent slowdown—which will probably exacerbate after September 11—has been the severe shortfall in public investment over the past three years.

“We cannot rely on private investment, particularly foreign direct investment, to pull us out,” he added. The September 11 attacks and the war in Afghanistan would scare investors away, at least for the time being, and it had therefore become even more expedient for the government to jump-start the economy with a strong bout of public spending. However, the government was conscious of the fact that growth imperatives would have to be balanced against the need for fiscal rectitude.

Pant said he intended to establish a mechanism to monitor international developments and suggest corrective steps that could be incorporated in the annual plans and budgets.

National slum policy

The ministry of urban development is in the process of coming up with a National Slum Policy to address the growing problem of shanty towns that sprout in the middle of metropolises. The policy will be placed before the parliament in the winter session.

Urban development minister Ananth Kumar said: “The policy will focus on provision of basic amenities to the people and employment opportunities to them. It will keep in mind that the local service providers are not taken away while rehabilitation.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.03	HK $1	Rs.  6.05*
UK £1	Rs. 69.32	SW Fr 1	Rs. 23.95*
Euro	Rs. 43.00	Sing $1	Rs. 26.15*
Yen 100	Rs. 39.68	Aus $1	Rs. 24.10*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4760	Gold Std (10 gm)Rs. 4690
Gold 22 carat	Rs. 4490	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs. 7510
Silver portion	Rs. 7500	Silver portion	   NA

Stock Indices

Sensex		2981.33		-62.52
BSE-100		1377.82		-28.96
S&P CNX Nifty	 972.05		-14.20
Calcutta	 102.24		- 2.01
Skindia GDR	 462.27		+ 9.31
   
 

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