Mobile, basic STD rates on par
Nicholas to buy ICI pharma unit for Rs 70 crore
ACC net rises 16% to Rs 17cr
L&T net profit spurts 63% at Rs 55 crore
Duncans clears demerger plan
Cash-strapped CESC to set its house in order
Saregama out of tune with FM
Sebi seal for new ED of CSE
Labour laws, not reforms hold back jobs: expert
Foreign Exchange, Bullion, Stock Indices

 
 
MOBILE, BASIC STD RATES ON PAR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 25: 
Mobile-to-mobile STD rates have been brought on a par with the tariff for fixed-long long distance calls under an order issued today by the telecom regulator that cleared the way for Bharti Telesonic to launch the country’s first privately-run STD service for cellular subscribers from Saturday.

Cellular subscribers will have to pay Rs 9 per minute for STD calls to other cellphone users, which is the same rate that state-run Bharat Sanchar Nigam charges its fixed-line subscribers at the peak hours.

Early this year, Bharti Telesonic had halved the mobile-to-mobile STD call rate by half to Rs 12 per minute from the existing level of Rs 24 when it announced plans to launch its IndiaOne service from January 26.

BSNL had riposted by slashing the STD rates for fixed-line subscribers by over 62 per cent to Rs 9 per minute from January 15, from the earlier level of Rs 24.

The Trai order, however, set a couple of capricious riders for the Mittal-owned IndiaOne telecom platform. It made it mandatory for Bharti Telesonic to route the calls over its IndiaOne network on one day and over the Bharat Sanchar Nigam’s network the next.

The launch of IndiaOne’s service is being keenly watched by other private players who are also planning to break into a field that has been a state-controlled monopoly until now.

IndiaOne has tried to sweeten the deal for cellular service providers by offering them a higher share of the revenue than they get from BSNL.

While Trai has permitted the Bharti group company to offer the revenue bait, it set a few other conditions. For instance, if a cellular subscriber makes a call to a state circle where the mobile operator has not signed on to join IndiaOne’s network, then the call will have to be routed over the BSNL network. “We are delighted that Trai has given private operators the access to carry long-distance traffic from all basic and mobile service providers,” Bharti sources said.

“It’s a crazy situation,” says a senior BSNL official. It is absurd to expect that we will just give away all our long distance calls to IndiaOne on one day and accept all their calls over our network the next. We do not have the necessary software. We do not see how we can accept the order. Customers could face various kinds of problems ranging from call drops to a situation where they are unable to access the called numbers.”

Spectrum allocation

The government today approved the national frequency allocation plan which will provide spectrum to GSM cellular system, limited mobility based wireless in local loop system, IT based applications, rural telecommunications system, train control and safety system and FM broadcasting.

   

 
 
NICHOLAS TO BUY ICI PHARMA UNIT FOR RS 70 CRORE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Mumbai, Jan. 25: 
Nicholas Piramal India is set to acquire ICI India’s entire pharmaceutical business for Rs 70 crore on a going concern basis. The acquisition would catapult NPIL to the topmost position in the domestic cardio vascular segment (CVS), overtaking Cipla Ltd.

The acquisition cost of Rs 70 crore also includes payment towards acquiring the net current assets of ICI’s pharma business , which is put at around Rs 14 crore. The paint major’s pharma business currently has a staff of 357 including a field force of 200.

“The all-cash deal will be funded through a combination of internal accruals and debt. We are not taking over any liabilities from ICI (India),” NPIL chairman Ajay Piramal said here today after the board meeting.

Apart from the leadership position in the CVS segment, the acquisition is set to aid NPIL in gaining a strong foothold in the export market for niche or speciality bulk drugs —Halothane and Monosulfiram— with almost no domestic competition and little international competition. “This is a very strategic acquisition for NPIL. It gives muscle to our already strong presence in CVS and will provide us an excellent platform to develop a base for focussed growth in critical care and exports,” Piramal said.

Though pharmaceuticals is only a peripheral business for ICI India—best known for its paints—the division remained with it even after the worldwide split of ICI in the early 1990s. The split saw the transfer of the drugs business in most countries to Zeneca Plc, which later became part of AstraZeneca plc, but the deal did not include the company’s Indian operations.

ICI India has been in talks with a number of pharma majors for sometime to sell its bulk drugs and formulations business it established in the country in 1978 with the setting up of its Ennore plant.

The pharmaceutical division’s products include cardio-vascular, epilepsy, animal health, anaesthesia, antiseptic and oncological preparations. The search for a buyer began in earnest last year when the company reportedly held talks with Pharmacia & Upjohn India and US Vitamins, an unlisted Mumbai-based company, and the Ahmedabad-based Intas Pharmaceuticals.

ICI UK holds a 51 per cent stake in the Indian subsidiary.

The ICI scrip closed at Rs 74.05 on the BSE today.

Meanwhile, Nicholas Piramal India reported a rise of 36.74 per cent in profit after tax at Rs 18.35 crore for the third quarter ended December 31, from the previous corresponding figure of Rs 13.42 crore.

Total income for the quarter ended December 31 amounted to Rs 1,717.5 crore compared with the previous corresponding figure of Rs 1,496.08 crore. Extraordinary items amounting to Rs 5.16 crore have been considered in the net profit of the current quarter. As a result, net profit has dipped to Rs 13.19 crore from Rs 13.42 crore in the quarter ended December 31, 2000.

   

 
 
ACC NET RISES 16% TO RS 17CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 25: 
Associated Cement Companies (ACC) today reported a 15.6 per cent increase in net profit at Rs 16.93 crore for the third quarter ended December 31 against Rs 14.64 crore in the same period last year.

The rise was fuelled by cost cuts and higher sales volumes. Net sales were pegged at Rs 814 crore, up 11.2 percent from Rs 732 crore in the corresponding quarter last year.

However, growth in earnings was hit by a provision of Rs 9.9 crore against deferred taxes during the quarter. In the same period last year, it did not have to make any provision.

Some analysts say the results were below expectations, especially if they are measured against the numbers reeled off by Gujarat Ambuja earlier this week.

The movement of the share on bourses mirrored the feeling of disappointment as it dipped by Rs 1.35 at Rs 163.70 on the Bombay Stock Exchange today.

The country’s second-largest cement maker, which commissioned its new 2.6 million tpa plant at Wadi in October, said focused on controlling costs and ensured better working capital management. This, along with improved sales volumes and higher realisations, contributed to higher profits in the face of rising input costs. Expenditure on power and fuel rose 15 per cent at Rs 85.77 crore, while coal and oil costs went up 22 per cent at Rs 78.45 crore.

ACC’s figures have come at a time when the industry logged a growth rate of 7.3 per cent in the nine months to December compared with a negative number for the year ended March 31, 2001. This growth rate is expected to further improve in the fourth quarter.

ACC said it sold 3.15 million tonnes of cement during the quarter, up 16 percent from the year earlier period.

The company said demand for cement would continue to grow because of sustained growth in the housing sector and higher government spending on infrastructure.

Nambiar stays

T. M. M. Nambiar has been re-appointed managing director of the company for six months to November 30. This is the second extension for him, the last one being in June.

The board has approved the change in designation of M. L. Narula, making him the chief operating officer.

A. K. Jain, marketing president, has been made a director for three years. Narula, a whole time director, will directly supervise the human resource and finance functions apart from his current functions, a release said.

   

 
 
L&T NET PROFIT SPURTS 63% AT RS 55 CRORE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 25: 
Lower interest charges helped Larsen & Toubro Ltd (L&T) post a 63 per cent rise in net profit for the third quarter of the current fiscal. Net profit spurted to Rs 54.51 crore as against Rs 33.29 crore in the same period of the previous year.

The rise in profits came even after a decline in the topline for the quarter. Net sales of the company during this period fell to Rs 1,923.03 crore against Rs 1,941.20 crore in the corresponding quarter last year. The fall in sales was largely in the engineering and construction segment, where it stood at Rs 3,013 crore for the nine-month period, a decline of 2 per cent.

L&T said this was primarily due to the lacklustre investment climate, low industrial growth and a negative growth in the capital goods sector. Export sales in this division, however, rose by 31 per cent to Rs 394 crore. The order backlog as on December 31, amounted to Rs 10,788 crore against Rs 8163 crore, an increase of 32 per cent. For the nine-month period, L&T’s sales and service income stood at Rs 5530 crore, a marginal rise of 3 per cent. The profit before tax and net profit at Rs 190.04 crore and Rs 160.04 crore respectively were higher by 173 per cent and 147 per cent respectively as compared with the same period in the previous year.

“The signs of recovery witnessed in the beginning of the year proved non-starters,” said L&T managing director and CEO, A.M. Naik. He added that barring road and telecom projects, the infrastructure sector saw meagre investment. Moreover, low industrial growth and a negative growth in the capital goods sector had a major impact on the company’s performance.

The engineering and construction major managed to reduce interest costs by restructuring the debt portfolio to take advantage of interest rate differentials across maturities and between currencies, besides exercising effective control on fund utilisation across various business units, L&T added. For the quarter, interest costs fell down to Rs 80.81 crore (Rs 120.82 crore).

For the nine-month period, cement and clinker sales amounted to Rs 1757 crore, posting an increase of 14 per cent over the corresponding period last year. In quantitative terms, domestic and export sales of cement and clinker amounted to 69.4 lakh tonnes and 17 lakh tonnes, higher by 4.5 per cent and 8 per cent respectively.

In the electrical and electronics business, the division recorded sales of Rs 492 crore, same as in the previous year. Operating margins were however, under pressure in the face of weak demand and aggressive competition.

Essar Shipping

Essar Shipping Ltd (ESL) has suffered a 27.55 per cent decline in net profit at Rs 14.51 crore in the third quarter ended December 31, 2001, compared with Rs 20.03 crore in the same period of the previous fiscal. Total income in the quarter under review increased to Rs 118.88 crore as against Rs 117.23 crore in the third quarter last year, the company said in a release here today.

   

 
 
DUNCANS CLEARS DEMERGER PLAN 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan. 25: 
The shareholders of Duncans Industries Limited (DIL) today approved the demerger scheme for its tea and fertiliser businesses.

Under the plan, the tea division will be first transferred to Santipara Tea Co Ltd (STCL) and will be later amalgamated with Shubh Shanti Services. Once merged, the tea operations will be renamed as Duncans Industries Ltd. STCL will be dissolved without winding it up. The paid-up capital of the tea business will be Rs 21 crore, of which the promoters will hold 73 per cent.

The fertiliser business will be renamed Duncans Fertiliser, with a paid-up capital of Rs 39.92 crore. G.P. Goenka’s stake in the venture will be 78 per cent.

Four shares of DIL will be swapped for one of Shubh Shanti Services; eight STCL shares will fetch one of Shubh Shanti. “Demerging tea and fertilisers will help us manage both in a more focused manner,” company chairman G.P. Goenka told shareholders.

He said the fertiliser and tea businesses are incompatible, and a demerger will ensure that the two lines of activity are carried on more conveniently and advantageously, under an independent management. Such separation of the tea business and fertiliser business will also facilitate alliances with suitable parties/investors as they would not be forced to participate in both businesses. The G.P. Goenka flagship manufactures urea at its factory at Panki, near Kanpur, which has an installed capacity of 6.75 tonnes per annum.

   

 
 
CASH-STRAPPED CESC TO SET ITS HOUSE IN ORDER 
 
 
BY PALLAB BHATTACHARYA & SUTANUKA GHOSAL
 
Calcutta, Jan. 25: 
CESC Ltd, the loss-making power utility of the RPG group, will soon embark on a financial restructuring exercise to cope with the unprecedented fund crisis facing it.

Sources said the restructuring will entail rescheduling of the company’s huge debt, part of which may also be proposed to be converted into equity.

The restructuring plan was discussed in the last meeting between CESC and its major creditor West Bengal State Electricity Board in the presence of state power minister Mrinal Banerjee.

Banerjee later said WBSEB and the government have asked the RPG outfit not to include its outstanding dues with the state power utility in the restructuring package.

“I have categorically told them (the CESC top brass) that they should not make their huge outstandings with the WBSEB a part of the restructuring,” Banerjee said.

Sources said the restructuring package will be finalised by an outside consultant with expertise in the power sector. However, no consultant has been appointed as yet.

The RPG group flagship is currently going through a bad patch because of a heavy interest and depreciation burden following the commissioning of its generation unit at Budge Budge.

While interest charges stood at Rs 427 crore last year, the depreciation was at Rs 308 crore.

The company has a secured loan of Rs 2,237 crore and Rs 749 crore in unsecured loans. Sources said besides these loans, some other debts too need to be quickly addressed by the company.

What has made things tougher for CESC is the adverse verdict by the West Bengal Electricity Regulatory Commission (WBERC) on its new tariff proposals.

While the company had sought an increase of 92 paise per unit, the commission has awarded merely a 9 paise hike.

“This is a great shock and the situation has come to such a pass that we are staring at a debt trap,” sources said.

The financial restructuring move is aimed at reducing the high-cost debt as well as balancing the debt-equity ratio, they added.

   

 
 
SAREGAMA OUT OF TUNE WITH FM 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan. 25: 
Saregama India will divest, fully or partially, its FM software business, which suffered losses of Rs 9.91-crore in the third quarter, and Rs 10.40 crore (Rs 7.21 crore) in the nine months to December 31.

“The launch of FM channels in different cities has been delayed further. The dynamics of the business have changed, as major players consolidate their positions and optimise on content through in-house production,” company managing director Abhik Mitra said.

Broadcasters are showing little interest in buying content. “We have suffered a loss of Rs 2 crore in the business in the first nine months. We are in talks with three companies for a complete selloff or a strategic partnership. The deal will be finalised within a month.”

The R. P. Goenka group firm has invested Rs 6 crore in the FM business, having set up four studios across four metros.

Commenting on the performance, Mitra said the third quarter was one of the worst for the music industry and Saregama.

“There were no major hits among new Hindi films. At the same time, declining prices pushed down the realisations from CDs. Things are not expected to look up much in the fourth quarter too.”

The company’s net sales declined to Rs 22.22 crore in the third quarter compared with Rs 41.68 crore in the corresponding period of the previous year. Interest expenses increased to Rs 69 lakh from Rs 24 lakh a year ago.

“In the current financial year, the company has been able to reduce operational costs by Rs 5 crore. We expect to save another Rs 5 crore next year,” Mitra said.

The company’s effort to enter into production of “mass music” with folk and devotional genres, paid off in the third quarter. “The initial response is encouraging and it is expected that the business will improve with significant value additions in the next quarter.”

   

 
 
SEBI SEAL FOR NEW ED OF CSE 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan. 25: 
The Securities and Exchange Board of India (Sebi) has approved the appointment of P.K. Sarkar—former deputy managing director of State Bank of India (SBI)—as the executive director of the Calcutta Stock Exchange (CSE).

Confirming the development, CSE vice-chairman Supriyo Gupta said Sarkar will be introduced to the board of the exchange formally when it meets on Monday.

On January 14, Calcutta Stock Exchange finalised Sarkar’s selection and the Sebi clearance came earlier this week.

   

 
 
LABOUR LAWS, NOT REFORMS HOLD BACK JOBS: EXPERT 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan. 25: 
If a large pool of labour force is your strength and you want to create more jobs, change your laws in a way that makes it easier for the employer to hire & fire employees.

That was the message from Ronald Jones, Xerox Professor of Economics at Rochester University, during his tete-a-tete with economic editors and business writers at the American Center here today.

Archaic and rigid labour laws, he said, will scare away prospective foreign investors. If the employer (read foreign capital) is confident of not facing labour problems, investment decisions become easier.

Jones felt that if a country has to take the advantage of globalisation, it must see to it that the areas of strength are fully utilised. For a country like India, where the services of workers are relatively cheap, the focus should be on labour-intensive industry so that enough jobs are created.

Jones, an expert on international trade, felt that globalisation is not a please-all process — while a large section of people are supposed to gain, there will be losers as well.

Citing real-life examples of benefits of globalisation, Jones said: “You walk into a Wal Mart shop. Pick up some garments, chances are that you will come up with a ‘Made in China’ or ‘Made in Taiwan’ tag. Seldom will you find something which sports a ‘Made in US’ label,” the professor said.

At the same time, Jones was quick to insert a caveat: globalisation should not be rushed through. It is a painstaking process and adequate time should be given to the people and the system to adjust to the changes.

Referring to the World Trade Organisation (WTO), Jones said the multilateral body is well-equipped to harmonise global commerce. Ruling out any conflict between WTO and regional trade blocs, he said all countries betray traits of regionalism.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.36	HK $1	Rs.  6.10*
UK £1	Rs. 68.55	SW Fr 1	Rs. 28.50*
Euro	Rs. 41.96	Sing $1	Rs. 26.00*
Yen 100	Rs. 35.89	Aus $1	Rs. 24.80*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4735	Gold Std(10 gm)Rs. 4660
Gold 22 carat	Rs. 4470	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7350	Silver (Kg)	Rs. 7465
Silver portion	Rs. 7450	Silver portion	NA

Stock Indices

Sensex		3332.30		- 25.49
BSE-100		1591.22		-  8.90
S&P CNX Nifty	1080.10		-  5.20
Calcutta	 113.21		-  0.48
Skindia GDR	 531.27		+  0.36
   
 

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