Dabhol may take backseat
L&T share spike belies fears of selloff
Debut at premium for MTNL on Wall Street
Futures launch today
Wakeup call for Calcutta port
Mondeo awaits govt signal
BSNL Uturn on purchase plan

 
 
DABHOL MAY TAKE BACKSEAT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov. 8: 
The local contenders for Dabhol Power Company (DPC), the Indian subsidiary of the beleaguered Enron Corp,may have to brace for a long winter ahead before the fog over Houston. head quarters of the global energy major.shows any signs of clearing.

With the action having now shifted to Enron’s headquarters, as names of new suitors crop up every day for the oncemighty energy major itself, bidders for its subsidiary may now have to take a backseat. .A change in the ownership of Enron Corp may reduce the speed at which the local subsidiary changes hands,. observed a senior merchant banker.

Earlier, two Indian power majors . Tata Power and BSES . had indicated their interest in acquiring a controlling stake in DPC. In fact, while one of the companies was also rumoured to have been willing to acquire the American firm’s stake at a discount of 50 per cent, Enron was willing to give a discount of only 30 per cent.

.The foreign promoters may change, but the trou bles at home, such as the mounting differences with the state government which have spilled over to the courts will remain.The Indian subsidiary may not be a priority for the new owners,. he added.

This will spell more trouble for the Indian lenders who have almost a 70 per cent debt exposure to the 2183 MW power project.

In fact, the news of Dynegy Inc.having tentatively approved a deal last night to acquire the mighty ener gytrading company did the rounds of the foreign media today. Earlier reports had suggested that Dutch energy major Shell was keen on acquiring Enron.

If completed, a takeover by Dynegy, a company only about onequarter of its size in revenue, would represent a remarkable humbling of Enron, the na tion’s biggest buyer and seller of natural gas and electricity. Enron had $ 139.7 billion in revenues for the first nine months of the year.

Centre optimistic

The Centre today expressed hope that an .amica ble. solution would be found to DPC’s problems at the twoday meeting between the troubled power compa ny and Indian and foreign lenders in Singapore.

FI sources said the meeting finally took place today, after doubts were initially expressed on whether it will take place at all.

.We are hopeful that an amicable solution, accept able to all, will emerge from the deliberations at Sin gapore,. power ministry sources said in New Delhi.

   

 
 
L&T SHARE SPIKE BELIES FEARS OF SELLOFF 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov. 8: 
Fears of a sell ing avalanche after Wednesday’s rating rap were overwhelmed by optimism about the future as L&T soared on stock exchanges today amid speculation that the compa ny had grabbed a Rs 4,000crore power plant construction deal.

Also helping the surge was the hope that its cement division would be demerged soon. The spike in the price trapped bears who had expected the share to take a beating.

The buzz is that L&T is close to winning a construction contract in Tamil Nadu. Many saw it as a spinoff from Prime Minister Atal Bihari Vajpayee’s Russia visit. Company officials later pricked the balloon, saying no bids for a building project have been floated by the government; nor is the ce ment unit’s hiveoff imminent.

The scrip opened at Rs 173.70, but dipped to Rs 170 in the early hours as investors fretted about the impact of the downgrade. However, it recovered when short sellers, who were caught off guard, made a dash for the share. At the end of the day, it closed at Rs 192.05 in a gain of 10 per cent. In all, 51.33 lakh shares changed hands in 24,270 transactions val ued at Rs 94.84 crore.

Market sources predict a slide on Friday as operators discover that their hopes have been mis placed. On Wednesday, Crisil downgraded the company’s debentures to AA+ from AAA, cit ing adverse impact on its financial risk profile from unfavourable business conditions. The agency said revenues were unlikely to im prove debt position in the short to medium terms.

While the company continues to retain a strong market position in the Indian engineering and con struction market, the subdued in vestment activity of the last few years coupled with the increased presence of overseas construction majors in the Indian market has led to a decline in the operating margin, Crisil said.

   

 
 
DEBUT AT PREMIUM FOR MTNL ON WALL STREET 
 
 
OUR BUREAUX
 
Nov. 8: 
Mahanagar Telephone Nigam (MTNL) today made its debut on the New York Stock Ex change (NYSE) when its Ameri can Depository Receipt (ADR) was listed at $ 5.85 each. The figure marks a premium of 1.6 per cent on Rs 138.15 . the price at which its share closed on the Bombay Stock Exchange on Thursday; its GDR had ended at $ 5.90 on Wednesday.

Over 31,100 ADRs, converted from global depository receipts (GDRs), had changed hands at $ 5.90 in the first hour. Chairman Narinder Sharma struck the fa bled opening bell on the Big Board and, minutes later, the telecom major’s stock was flashed on the trading screens.

The listing makes MTNL the ninth Indian company to be listed on Wall Street, the second public sector company and the fourth this year . after Dr Reddy’s Labo ratories, Satyam Computer Ser vices and HDFC Bank.

MTNL had first tapped the overseas markets with a $ 30 mil lion GDR issue in 1997. The telecommunication major was keen on tapping the international markets again with a $ 19million GDR in November 1999. It was ad vised not to do so by its merchant bankers, who feared adverse mar ket conditions could scuttle the issue. It filed a prospectus with the NYSE last month after securing a clearance from the US Securities and Exchange Commisison (SEC) for a plan to list the existing GDRs.

Asked whether his company had drawn up plans to enter the US market directly by issuing fresh ADRs, Sharma said he would look at that option in the next two to three years. .The US market is bigger and it has specif ic funds allocation for the telecom sector and regions. In case we do need to come here, there will be a greater response from American investors,. Sharma told reporters.

The government had divested around 275.6 million shares (in cluding 70 million shares through GDRs) up to March 2001, and now owns 56.25 per cent of the compa ny.. The Delhibased MTNL is the only provider of fixedline telecommunications services in the capital, and operates approxi mately 99 per cent of basic phones in Mumbai. The company recent ly announced a tariff package for Dolphin, its lowprice cellular service.

   

 
 
FUTURES LAUNCH TODAY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov. 8: 
The two pre mier bourses . the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) . will launch .single stock futures. on Friday, in line with the recom mendations of the Sebi Advisory Committee.

The single stock futures con tract will be available on 31 stocks permitted by the Securities and Exchange Board of India (Sebi), where option contracts are al ready trading. These contracts will be available for a period of one, two and three months maturi ty and they will be cash settled.

Significantly, the two arch ri vals launched stock futures simul taneously in a bid to ensure that they were not caught napping in the race to launch the new deriva tive product.

The market lot for single stock futures will be the same as in case of stock options.

   

 
 
WAKEUP CALL FOR CALCUTTA PORT 
 
 
BY A STAFF REPORTER
 
Calcutta, Nov. 8: 
The era of subsidies seems to be drawing to a close for the different ports of the country and Calcutta Port Trust is likely to be the worst sufferer. The country’s oldest riverine port receives an annual subsidy of Rs 300 crore for dredging purposes.

Pointing out that subsidies have lost their relevance today, Union minister of shipping Ved Prakash Goyal said ports have to stand on their own feet, for which all kind of measures, even harsh ones, have to be taken.

However,CPT chairman H.P.Roy said the port authorities are not re sponsible for dredging, as it is a natural phenomenon. .We are here to provide portrelated services, not to clean up the river,. he said.

Despite the move to stop subsidies, the government has cleared a grant of Rs 385 crore for the river rejuvenation programme, which will be released shortly. Under the programme, dredging expenses have to be met from this fund, but the CPT has to pay back the government an addi tional Rs 40 crore every year from the extra business generated by this project. Incidentally, CPT had proposed a structure whereby it would pay a proportion of the extra business generated by this exercise.

Goyal said a monitoring committee will be formed for the dredging work to prevent misuse of funds. The minister also said the port will be allowed to sell off its surplus land for generating income. CPT recently increased the lease rentals for occupants.

The port trust slipped into the red due to heavy siltation in the Hooghly river and operational inefficiency. The port has, however, pro jected an over 100 per cent growth in the next three years, from 32 million tonnes targeted in 200102 to 71 million tonnes in 200405.

   

 
 
MONDEO AWAITS GOVT SIGNAL 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov. 8: 
Ford India has pulled the wraps off its latestluxury offering . the Mondeo . but has yet to secure government clearance to sell it in the country.

.The government is not opposed to our plans, but some details have to be worked out. I think there will be no conflict on the matter,. David E. Friedman, managing di rector and president of Ford India Limited said.

Ford officials later said they anticipated no prob lems in securing the approvals.

While Ford’s proposal of bringing in completely builtunits was taken up for the Foreign Investment Promotion Board’s (FIPB) approval after a goahead from the department of heavy industries, it has now been deferred indefinitely.

But even though the government has not formu lated rules relating to the retailing of imported cars, Ford has gone ahead and unveiled the Mondeo in the hope that the FIPB clearance will come through by midDecember and the new auto policy will be an nounced around the same time.

Sources in General Motors said they had received clearance for CBU imports and Ford expects this to pave the way for its own proposals.

.Managerial changes in the US will not affect the Indian operations. In fact,we are looking at India as a good source to build up exports. If the Indian policy fall in place, bookings for the Mondeo will start in December and delivery will commence by the monthend,. Friedman said.

Mondeo, launched in both petrol and diesel ver sions will be priced at around Rs 16 lakh, depending on the import duties. It is supposed to compete with Hyundai’s Sonata which is priced at Rs 13.30 lakh and Honda’s Accord at around Rs 14 lakh.

Loaded with luxury features, the Mondeo is the .safest and toughest car built for Indian roads,. claimed Randy Shockley, Ford’s director (marketing sales and service).

   

 
 
BSNL UTURN ON PURCHASE PLAN 
 
 
FROM M RAJENDRAN
 
New Delhi, Nov 8: 
Bharat Sanchar Nigam Ltd is likely to revoke the advance purchase orders awarded to Lucent, Motorola and Ericsson for procuring 40 lakh mobile equipment based on GSM technology at a cost of Rs 1,800 crore.

BSNL officials said the purchase orders came up for scrutiny since the cost of project has gone up to Rs 2,800 crore. The three foreign telecom equipment manufacturers had bid to provide cellular telephones lines based on global system for mobile (GSM) communica tions technology in the north, south, east and west zones, covering 1021 cities. Alcatel is the fourth bidder in the north and south zones.

.An internal committee was set up at the in sistence of communications minister Pramod Mahajan, to examine the bids awarded to these three companies, following objections raised by BSNL’s finance department,.BSNL sources said.

The committee, in its report submitted re cently observed, .It is not understood from the file whether the BSNL board’s approval was obtained and the related finance section was consulted before floating the tender..

Noting that the cost of the project was about Rs 1,800 crore,whereas the budget provi sion for the year was only Rs 780 crore, the panel raised doubts how the shortfall will be made good if the project is to be completed within the current year.

This was one of the largest exercises car ried out by BSNL after it was spun off as a sep arate entity from the department of telecom munications (DoT).

BSNL had set a target of providing cellular phone services in a select few towns by August 15. .The network would have been put up by Julyend and we could have launched the serv ice in a few towns and in all the four zones by the yearend or by early next year. But the whole process has now been put on hold,. sources said.

Excluding the two metropolises of Delhi and Mumbai, BSNL will offer fullfledged mo bile service in 600 cities.

BSNL sources said it may ask the three companies to rework the price, adding the tele com major was keen to meet targets. .BSNL is committed to offering the best services at af fordable prices. Any hike in project cost would automatically affect the balance sheet of the company and also the service cost,. sources added.

   
 

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