ACC, Bridgestone pull away
Centre weighs freight levy on petro-products
Kinley leaves rivals high & dry
Bajaj miffed at share deal in ICICI merger
Electronic component exports up

Mumbai, Oct. 28: 
Associated Cement Companies Ltd is in talks with Bridgestone to pull out of Bridgestone ACC India Ltd, as part of the cement major’s plans to exit from its non-core businesses.

Confirming this, T.M.M. Nambiar, managing director of ACC, told The Telegraph: “We are holding talks with our Japanese partners for a possible exit since tyre manufacturing is not our core business activity.”

The move comes at a time when the radial tyre maker has made deep inroads as an original equipment manufacturer (OEM). It has considerably improved its market share in the face of an industry-wide recession, say analysts.

The talks with Bridgestone are still at a preliminary stage, Nambiar said. Bridgestone holds 64 per cent in the joint venture company while 26 per cent is held by ACC and Tata Engineering. The 10 per cent is held by a Japanese investor. Auto major Telco is also expected to divest its stake in the business as the company has already made moves to move out of non-core activities.

The Pithampur-based Bridgestone ACC is capable of manufacturing around 7,000 tyres and its production at present is said to be close to full capacity.

The company leads in the radial segment, industry circles said. It has an over 50 per cent market share in the OEM tyres and is making its presence felt in the replacement segment with the latest trends showing that it has captured almost 35 per cent of the market.

ACC had in the past toyed with businesses which were not in line with its core competencies.

The company had diversified into areas like diamond mining, glass manufacturing, castings and tyres and has now decided to make provisions to write-off such investments in its subsidiaries.

The company has now intensified its efforts to divest non-core businesses which will release both financial and human resources. The company has already exited from Floatglass India Ltd (FGIL), its joint venture with Asahi Glass Company, Japan, by selling its entire 13 per cent stake in the venture.

The company managed to realise Rs 10.50 per share for FGIL and will realise Rs 19.90 crore for its investment, inclusive of compensation pursuant to a “non-compete” clause and termination of the agreement. However, ACC had to book a loss of Rs 3 crore.

In ACC-Rio Tinto Exploration, a 50:50 venture with Rio Tinto RTZ, one the world’s largest exploration companies, the cement major has decided to cap its investment at Rs 7.5 crore.

It has allowed Rio-Tinto to increase its share and pay back ACC’s part of the investment whenever it makes profits.

In another subsidiary, ACC-Nihon Castings, the company has already made an additional provision of Rs 13 crore for depreciation in the value of investment.


New Delhi, Oct. 28: 
The government is weighing a plan to introduce a freight surcharge on petro-products, which will be used to maintain uniform petroleum prices throughout the country following deregulation of the sector in April.

Petro-products have traditionally been transport price-neutral, regardless of the distance from the source of supplies, thanks to doles from an oil pool account maintained by the government.

The account, whose main purpose is to subsidise petroleum products used by poorer sections of society, such as diesel, cooking gas and kerosene, is run by charging a premium on other petro-goods, including gasoline.

Moving away from this system, the government now plans to set up a transport subsidy fund which will address the same concern, but be funded from the surcharge on petro products.

Revenue department officials said they expect a surcharge of about 2 per cent on the retail price of petroleum products to be levied in the next budget to fund this transport subsidy.

The issue is likely to figure at a meeting to be held on October 31 between finance and petroleum ministry officials. “This move is especially necessary for the north eastern states which are farthest from the refineries located mostly on the west coast of the country,” officials pointed out. The northern and eastern states too are at a distance from the refineries and ports on the west where most oil supplies land and consequently they too would benefit from this move, they pointed out.

The uniform pricing of petro-products after April next year, when the sector will be deregulated and thrown open to market forces, has been a key concern for the government. However, the finance ministry is opposed to any form of price controls over petro-goods, arguing that competition will itself ensure fair and near equal prices by all petroleum distribution companies.

The freight equalisation policy is similar to that followed by the government for steel and coal through the 1970s till the early 1990s. The policy had seen steel-based units such as foundries, rolling mills and machinery manufacturing plants, coming up in western India where the market for such products was strong, and similar units in eastern India where steel and coal are produced, were dying an unnatural death. The government finally had to abandon the policy at the start of the 1990s at the instance of the then steel minister Santosh Mohan Deb and following criticism by both economists and politicians.


New Delhi, Oct. 28: 
After painting the town red with its colas, Coke is now adding fizz to the bottled water segment.

Coka Cola claims that its bottled water brand Kinley has captured a 29 per cent share of the Rs 30-crore Calcutta market by August-end, within three months of its launch in the city, making it the number two water brand here after Bisleri. Coke also claims that Kinley had grabbed a 22 per cent share of the retail pack segment in the country, estimated at Rs 600-800 crore.

According to industry analyst Sunil Ghorawat, content editor of ‘everything about’ — a water industry portal — about 50 per cent of the Rs 1,000-crore bottled water market in the country (including retail and bulk packs) is dominated by Bisleri.

Kinley comes second, with about a 15 per cent share of the overall bottled water segment, followed by Aquafina with about a 5-7 per cent market share, he said.

Pepsi’s bottled water brand Aquafina is present only in the retail pack segment but not in the bulk pack segment.

However, a Pepsi spokesperson put Aquafina’s overall market share in the retail pack bottled water segment at about 12 per cent. Pepsi admitted that Aquafina ranks third in terms of market share. “Aquafina is not interested in the bulk water segment, he said, adding that Aquafina is a premium product selling at Rs 12 for a 1-litre pack, whereas Kinley is priced at Rs 10.

“Kinley’s market share may have increased because of its recent strategic moves, which include buying out medium-sized bottlers in various regions to manufacture and distribute its brand and capture existing markets at one go,” said Ghorawat.

Coke recently snapped up the market for ‘Hello’ in Chennai by an arrangement with Hello’s bottler S.R. Mineral water to instead manufacture and distribute Kinley.

Further, the defection of the Goenkas to the Coke camp (from being Bisleri bottlers) has given a big boost to Kinley in the eastern region. Kinley is manufactured at two locations in Bengal, at Taratala and Domjur, outside Calcutta.

In Delhi, it had a similar arrangement with Nuchemware, bottlers of the ‘Crystal’ brand, for manufacturing Kinley.


Pune, Oct. 28: 
His voice, muffled in the applause that greeted ICICI’s planned merger with ICICI Bank last week, today found the right occasion and the pitch — Rahul Bajaj, the chairman of Bajaj Auto, which holds close to 5 per cent in the financial institution, said he was not happy with the swap ratio of 2:1 because it was loaded against shareholders like him.

The two-wheeler baron made it clear he had no problems with the amalgamation, but with the terms on which it would be accomplished. He, however, said ICICI chief K.V. Kamath had kept him posted on the plan.

An unhappy Bajaj said the ratio should have been 1.5:1 — 1.5 ICICI shares for each ICICI Bank stock — and questioned the wisdom of setting up of a special purpose vehicle (SPV) that would serve as a repository for the shares of FI till they are offloaded to strategic investor.

“I am for universal banking and the merger. I welcome it. However, the SPV concept for holding shares is the grey area. Whether it will help ICICI shareholders remains to be seen,” he said.

He did not conceal his fear about how the swap ratio would affect the shareholding pattern in the merged entity, saying Bajaj Auto’s stake could shrink to 2.5 per cent after the merger. He described the reserve norms that apply to banks as a “harsh”, but felt the Reserve Bank was the best judge.

Bajaj Auto, he said, was convinced it would not hike its stake in the merged outfit to retain its holding at 5 per cent, but it was not clear what it would do with the shares it holds now. “We will take a decision in the near future.”

The former CII chief was speaking at a function to mark the launch of life and general insurance policies products by joint ventures between Bajaj Auto and Allianz.

Bajaj Allianz General Insurance Company, with a having a Rs 110-crore paid-up capital, will offer schemes in general and health insurance.

Allianz Bajaj Life Insurance has a paid-up capital of Rs 150 crore, and though it started late, has lined up an aggressive rollout plan and multi-channel distribution system.

Henning Schulte-Noelle, chairman of Allianz management board, said: “We are proud to join hands with the Bajaj Auto group and are enthusiastic about our future together. We will ensure that all stakeholders will benefit from the know-how within Allianz.”

“The unique strength of our joint ventures lies in offering insurance solutions and taking their benefits to consumers,” Bajaj, the chairman of Bajaj Allianz General Insurance and Allianz Bajaj Life insurance, said.

Bajaj Auto, he said, faces a problem of plenty: where to park the Rs 1,600-crore surplus. “Earlier, we used to get a 16-20 per cent return. Now, it is difficult to get even 10-11 per cent. This is why we entered insurance.”


New Delhi, Oct. 28: 
Exports of electronic components posted a 52 per cent growth in 2000-01 over the previous fiscal, rising to Rs 1,828 crore last year from Rs 1,200 crore in the 1999-2000 fiscal.

According to data compiled by the Electronics and Computer Software Export Promotion Council (ESC), the average annual growth during the past five years works out to 28 per cent (20 per cent in dollar terms).

Major electronic components on the country’s export list include floppy diskettes, CD recordables, other semiconductor devices, solar cells, ferrites, connectors, circuit boards, parts of transformers, and colour picture tubes.

However, it was floppy disks that reigned at the top of the export charts during 2000-01, accounting for as much as Rs 185 crore, as against Rs 150 crore in 1999-2000.

Moreover, CD recordables, valued at Rs 149 crore, were exported for the first time this year.


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