Three Maruti models dearer
Sinha turns a deaf ear to Pant’s plea
CBI probes mess in SBI Home Finance
Gaz de France seeks local ally for DPC bid
Earnings leeway for exporters
Gillette closes Duracell unit, to get funds from parent
Indian Rayon Q3 net profit plunges 73%
Reliance dials long distance number
Vacations abroad, with lots to spare
Foreign Exchange, Bullion, Stock Indices

 
 
THREE MARUTI MODELS DEARER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 28: 
Maruti Udyog, the country’s largest car maker, today raised the prices of its popular models — the city runabout Maruti 800, the Omni van and the mid-size sedan Esteem — by Rs 2,307 to Rs 8,835.

The price hike, the third in the last 12 months, translates into an increase of 0.85 per cent to 3.87 per cent and comes into effect from tonight. The price increases have not been extended to its other models — Zen, Wagon R, Alto, Baleno and the recently launched Versa.

Maruti Udyog had signalled its intention to raise prices in early December and most had expected it to come through by the middle of this month.

“The volume models have to bear the brunt of the price increase because in a tight market, we cannot raise the prices of the high-cost cars. We also have to watch customers’ affordability. Our cost of raw materials has increased by 2-3 per cent. Despite mounting costs and the depreciating rupee, the effort has been to hold down the price hikes to the barest minimum. The company has, instead, implemented a wide range of measures to cut costs and enhance quality,” said a Maruti spokesperson.

The price of Maruti 800 standard variant has been raised by 1.7 per cent — by Rs 3,753 — to Rs 2.21 lakh (ex- showroom Delhi). The price of the ‘EX’ will now go up by Rs 8,677 to Rs 2.52 lakh.

The price of the Maruti 800 DLX price has been upped by Rs 8,835 taking the price to Rs 2.73 lakh. The price of the Omni five-seater variant has been raised by Rs 2,307 to Rs 2.26 lakh.

The models in the B segment, like Alto, Wagon R and Zen have not turned dearer after a marginal increase last August when the prices of Alto and Zen went up by Rs 300-Rs 500.

The prices of the two Esteem variants — LX and VX — have gone up by Rs 4,161 and Rs 4,696 respectively. The LX version will now carry a price tag of Rs 4.95 lakh, while the VX version will sport a sticker price of Rs 5.44 lakh.

The premium segment, offering Baleno, its station wagon cousin — the Baleno Altura — and the latest offering, Versa, have been left out of the recent increase.

The company first raised prices last May, by 0.1 per cent to 1.5 per cent. In the second round in August, the company increased the prices of all their models by 1-2 per cent, except Baleno, Altura and Esteem VX. The Versa had not been launched at that time. The prices in August went up by Rs 2,600-6,500 in Delhi (ex-showroom).

   

 
 
SINHA TURNS A DEAF EAR TO PANT’S PLEA 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Jan. 28: 
The Union Cabinet is likely to finalise a gross budgetary support between Rs 1,09,000 crore and Rs 1,13,000 crore for plan projects in the next financial year.

Although this is about 15-18 per cent higher than last year’s budgetary support figure, it still falls short of the Rs 1,30,000 crore that the Planning Commission has demanded of the finance minister by some Rs 17,000 crore to Rs 21,000 crore.

Plan panel deputy chairman K.C. Pant had held a series of meetings with finance minister Yashwant Sinha over the last week to persuade him to accede to the higher figure stressing that with low growth in the last two years, it was politically imperative that the BJP pump primes the economy ahead of next year’s elections to four states, including Delhi, Rajasthan and Madhya Pradesh.

Pant’s logic is simple—private sector investment is not forthcoming, especially in the key infrastructure sector. Hence, greater government spending was required to raise the growth rate, create fresh jobs and make the reforms a political success. With the axe of voluntary separation and industrial closure hanging over large tracts of industrial India, rumblings of discontent have been particularly sharp even within the ruling party. In fact, as the planners stressed at their meeting with finance ministry mandarins, the rate of growth in industrial credit, a key indicator of private sector investment, has been coming down over the past five years. It has tumbled from over 30 per cent in 1994-95 to less than 12 per cent his year.

The answer, they contend, is higher public investment through plan projects which would create its own demand pull in key sectors like cement, steel, and capital goods.

However, Sinha’s point is that he cannot pay for this pump priming to the extent that Pant and his aides want, partly because he has to contend with demands from the military machine, posted on the border with Pakistan, which is gobbling up huge amounts of non-plan funds. He also does not expect significantly higher tax collections in the coming year. In fact, tax collections this year are likely to be a disaster in terms of targets, falling short by as much as 20 per cent. Hence, it would be unrealistic to expect too much of an increase in outlay next year.

The finance ministry officials estimate the fiscal deficit is likely to balloon to an all-time high of about Rs 1,35,000 crore.

   

 
 
CBI PROBES MESS IN SBI HOME FINANCE 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Jan. 28: 
The Central Bureau of Investigation has launched an inquiry into how SBI Home Finance piled up massive non-performing assets (NPAs).

Senior State Bank officials confirmed the probe was under way, but remained tight-lipped about the details of what it was supposed to unearth. “I have not heard of such a thing. At least, we have not received any communication from CBI. So I cannot comment on the matter,” SBI chief Janki Ballabh told The Telegraph.

SBI Home Finance, he said, will soon get a new chairman after P.K. Sarkar, who was appointed to the top slot in June last year, leaves. “Sarkar has taken over as the executive director of Calcutta Stock Exchange. He cannot hold two jobs. We will be appointing a new chairman soon. The name will be announced in a week or two.”

Asked about the future of the Calcutta-based SBI subsidiary, Ballabh said a final decision on the company’s fate will be taken after reviewing its performance.

SBI Home Finance has decided to scale down operations because institutional shareholders have not infused much-needed fresh capital required to put the company on the road to revival.

The board’s January 8 meeting in Calcutta decided to suspend new loans, stop accepting fresh deposits and halt renewals. It has also resolved to consolidate the business activities, rationalise the branch network and focus on loan recovery. The company has 24 offices across the country ,including the head-office. “All these measures are aimed at beefing up the bottomline of the company. Let us see what happens,” Ballabh said.

SBI Home Finance was promoted by State Bank of India and HDFC in 1987. They hold 26 per cent and 14 respectively in the company. Other major institutional shareholders are the UTI, LIC, GIC and its subsidiaries. UTI controls 7.87 per cent while other FIs together have 9.9 per cent; 42.21 per cent is with the public.

   

 
 
GAZ DE FRANCE SEEKS LOCAL ALLY FOR DPC BID 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 28: 
Gaz de France today announced it intends to team up with a local partner to bid for Dabhol Power Company (DPC), Enron’s beleaguered subsidiary

The French major is keen on the project’s LNG unit. “We will participate in the bidding with an Indian partner,” Jacques Gautier, project director of Gaz de France, told reporters at the foundation-stone laying ceremony of a LNG import terminal at the Dahej port in Gujarat.

Six companies — three foreign and three Indian — are in the fray to buy DPC, which has a 2,184 MW Dabhol plant and an LNG facility at Dabhol in Maharashtra’s Ratnagiri district.

The bidding process for the power plant and liquefied natural gas (LNG) unit is expected to start in a few days.

Gaz de France will have to vie with Royal Dutch/Shell and European oil major TotalFina Elf to snap up Enorn’s stake. Prominent local bidders are BSES, Tata Power Company (TPC) and Gas Authority of India (Gail). Tata Power Company and Gail have already indicated that a joint bid for DPC is a possibility.

Senior officials of Gaz de France made it clear at Dahej today that their company was interested only in the LNG facility at Dabhol, saying the issue has been discussed with the Indian lenders to the project. “We have no intention to enter India’s electricity market,” Gautier said.

It is not known if the assets of DPC will be sold piecemeal. Industrial Development Bank of India (IDBI), one of the biggest Indian lenders to the project, has said it would like to hive off the plant as a single entity, instead of accepting separate bids for the power generation facility, LNG-landing jetty and storage depot.

Analysts say this cannot stop bidders from forming an alliance and splitting the operations after buying the project. The Dabhol unit has been lying idle since June 2001 due to a dispute over the cost of power sold to MSEB.

The second phase of the power project was almost complete when the controversy erupted. Enron owns a 65 per cent stake in Dabhol Power Company, General Electric Co and US-based contractor Bechtel Corp hold 10 per cent each, while MSEB controls the remaining 15 per cent.

Bids soon

Initial bids for Enron’s stake are likely to be invited in the next few days and the due diligence exercise for will start by the first week of February. Earlier, IDBI chairman P. P. Vora had said the entire process would be completed by end of the fiscal. Financial institutions have asked Rotschild, DSP Merill Lynch along with Suisse Securities to act as global advisors for the deal. The bids will be scrutinised by mid March, sources close to the process said.

   

 
 
EARNINGS LEEWAY FOR EXPORTERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 28: 
The Reserve Bank of India (RBI) today waived the rule that requires exporters to seek prior approval to bring back forex earnings after six months, provided they meet a set of new conditions.

Authorised dealers have been allowed to extend the period of realisation beyond six months from the date of export for invoices of $ 1,00,000 or less. However, exporters will have to declare that they will realise the amount in the extra time. Dealers will have to show “sufficient and reasonable causes” while asking for more time.

According to the central bank, an extension may be granted up to three months at a time. On extensions beyond a year from the date of export, dealers will have to ensure the amount is not more than 10 per cent of exporters’ average earnings in the preceding three years.

The ceiling of $ 1,00,000 will not apply where the exporter has filed a suit against the importer, and in such cases, the extension will have to be granted up to six months at a time, irrespective of the amount involved.

All cases not covered by the new rules will require prior approval. Extensions on export invoices over $ 1,00,000 under investigation by Enforcement Directorate/Central Bureau of Investigation or other agencies (except where there is a legal suit against the importer abroad) will still require prior clearance. While exporters welcomed the relaxation, some rued the fact that $ 1,00,000 was not large enough, and would only benefit smaller players.

   

 
 
GILLETTE CLOSES DURACELL UNIT, TO GET FUNDS FROM PARENT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 28: 
Gillette Company of the US has decided to infuse funds into its local subsidiary even though Gillette India today announced its decision to close the alkaline battery unit in Manesar near Gurgaon. This unit used to manufacture the Duracell range of batteries.

The decision to close the Manesar unit was primarily taken as growth within the Indian alkaline battery segment was below the projected rate.

While sources close to Gillette India did not divulge the details about capital grant, they said the proceeds will be used by the company in the current line of business. It has been done primarily to “strengthen the financial position of Gillette India and meet its long-term commitments,” they said.

According to sources, it is unlikely that the stake of the parent company would rise in Gillette India from the present 72 per cent.

As regards the alkaline battery unit, decision on which was taken earlier this month, sources said Gillette would henceforth source alkaline batteries from other Duracell world-wide facilities.

“Improved efficiencies at Duracell plants world-wide, coupled with highly competitive global market conditions, made it no longer cost effective to export from the Duracell India plant,” a press statement issued by the company added.

It was also found that maintaining production for the Indian market alone was not viable and placed severe financial constraints on the company.

The plant, which had a capacity of 140 million pieces, used to employ around 175 personnel. They have all been given voluntary retirement benefits.

The plant only manufactured AA size alkaline batteries, while other sizes were being imported. Plans are now on to source all alkaline batteries from other Duracell facilities world-wide.

Sources pointed out that while Gillette India is still in talks with its parent on the ways to deploy the machinery of the Manesar plant, it is likely that it will be shipped abroad.

Gillette Company is the world leader in male grooming, a category that includes blades, razors, and shaving preparations.

   

 
 
INDIAN RAYON Q3 NET PROFIT PLUNGES 73% 
 
 
OUR BUREAUX
 
Jan. 28: 
Indian Rayon & Industries Ltd has posted a sharp drop of 72.86 per cent in net profit for third quarter ending December at Rs 3.63 crore compared with Rs 13.09 crore in the corresponding period last fiscal.

Turnover was also marginally lower at Rs 372.7 crore as against Rs 380.3 crore last year, the company said in a statement.

Performance for the third quarter was affected by an illegal strike at Rayon plant at Veraval and voluntary retirement scheme at textile plant in Rishra, it said. The board also decided to further defer the buyback plan.

For the nine months-ended the net profit was down by 11 per cent at Rs 28.7 crore (Rs 32 crore) while turnover was slightly higher at Rs 1,078 crore (Rs 1,063.1 crore), it said.

Kesoram net plummets

The B K Birla Group flagship Kesoram Industries Ltd today announced that its net profit during the third quarter-ended December had come down to Rs 0.24 crore from Rs 3.01 crore in the corresponding quarter of last fiscal.

Net sales were down by Rs 6.26 crore to Rs 332.80 crore from Rs 339.06 crore while other income slipped to Rs 3.15 crore from Rs 5.62 crore in the same quarter of last fiscal, officials said after a board meeting here.

SSI net dips

Hit by the global slowdown in software business, especially in the US, SSI Ltd’s revenue nose-dived to Rs 66.08 crore in the quarter-ended December from Rs 115.43 crore in the corresponding previous quarter.

According to the unaudited figures released by the company, profit for the period dipped to Rs 1.74 crore from Rs 25.08 crore in the corresponding previous quarter.

Indo Gulf net up

The Aditya Birla Group’s Indo Gulf Corporation Ltd has posted a 36.25 per cent rise in net profit at Rs 88.17 crore for the third quarter ended-December compared with Rs 64.71 crore for the same period last fiscal.

Net sales for the period under review grew by 11.47 per cent at Rs 765.11 crore as against Rs 686.38 crore last fiscal, the company said in a release here today.

TVS Motor sales up

TVS Motor Co have announced a 10 per cent increase in turnover at Rs 522.76 crore compared with Rs 476.34 crore in the third quarter of last fiscal. Two-wheeler sales during the period rose to 2,34,055 units, an increase of 7 per cent over last year’s sale of 2,19,089 units.

The increase in sales have been a direct result of motorcycle sales which grew by 36 per cent over the corresponding previous period.

   

 
 
RELIANCE DIALS LONG DISTANCE NUMBER 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Jan. 28: 
Reliance today signed up for a national long distance (NLD) telephony licence, signalling its intention to become the second private player after Bharti group’s IndiaOne to offer STD services.

Sources said Reliance had paid the required Rs 100 crore fee for the licence and had backed it up with bank guarantees worth Rs 400 crore. However, Reliance officials refused to confirm this.

Bharti and state-run Bharat Sanchar Nigam Ltd are already locked in a price war over STD business with both trying to price out the other by offering steep discounts for STD phone calls made over their lines. Already, fixed line STD call prices have tumbled by as much as 60 per cent and cell-to-cell STD prices have also been brought down to the same levels following an interim order issued by Trai on the eve of the launch of IndiaOne’s service from January 26.

Earlier, IndiaOne had announced a tariff of Rs 12 per minute, 50 per cent lower than the existing levels of Rs 24 a minute. BSNL riposted by slashing its tariff by 62 per cent to Rs 9 per minute during the peak hours. The subsequent Trai order has created parity in the tariff charged by the two networks.

The price war kicked off by Bharti was largely viewed as a bid to call the shots in the market before Reliance entered the fray. Reliance is expected to kickstart its STD service sometime in the middle of this year. With Reliance entering the fray, the price war may well intensify.

Reliance has been late in finishing their nationwide telephone cable laying operation while Bharti has taken several shortcuts by renting several leased circuits from state-run organisations.

But in this war, BSNL will obviously hold the trump cards over Bharti and Reliance as the state-run giant has larger catchment areas for tapping STD callers as it operates basic and cellular services in more states.

Between Bharti and Reliance, the latter has a richer base for tapping STD calls for its long distance network. Other telecom companies too will be using these gateways, but the bulk of revenues from long distance calls is expected to come from group companies operating cell and basic phones in various states.

Besides biting into the Rs 7,000 crore-a-year STD market, Reliance and Bharti also stand to gain with larger number of STD calls originating from their cellular and basic circles.

Both Reliance and Bharti have announced their intention to bid for a controlling stake in the country’s sole international telephone call carrier — the state run Videsh Sanchar Nigam Ltd —and the winner is expected to reap big time profits as international telephony still remains the most profitable business within the telecom industry. VSNL’s monopoly on international telephony ends on April 1 this year.

   

 
 
VACATIONS ABROAD, WITH LOTS TO SPARE 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Jan. 28: 
Foreign travels may not remain a distant dream, not any more.

International tour operators, airlines and hotel chains have teamed up to offer packages that were unthinkable till a few months ago. In addition, there are attractive equated monthly installment (EMI) schemes being dangled by several tour operators which make foreign travel affordable even for the hoi-polloi.

“The September 11 terrorist attacks on the World Trade Center and its aftermath have had an adverse impact on international travel. But, on the other hand, the cost of travel has come down to levels that could prompt even a common man to plan a vacation abroad, family in tow,” says a senior official of SOTC, a travel house which has slashed prices of several packages by 50 per cent.

For instance, on a 14-day Europe tour, the company is offering a package of Rs 1.2 lakh for a couple and a child under 12; the package cost twice as much a few months back.

A 14-day tour of Australia with SOTC now comes at $ 2699 for a couple, instead of one person a few months back.

Prabbuddha Sen of SOTC said his company has been able to pare prices simply because airlines, hoteliers and sight-seeing operators abroad have done so. “We are only passing the benefits to customers,” he added.

Optimistic that the discount bonanza will put more people on the plane to overseas destinations, he said: “The business was far from encouraging last year because of the slowdown and terror attacks. However, we believe this year will turn out to be very good for us.”

What makes him more upbeat is the fact that the current year has been declared as the ‘year of International travellers. “We will see to it that the year is a grand success in terms of volume of traffic generated.”

SOTC has promised travellers will be flown by KLM airlines and put up at star hotels in the Europe package. Thomas Cook, another international tour operator, has come out with attractive packages to woo those with wanderlust.

For a 16-day tour of Europe, that covers almost all major cities along with a one-day halt in Dubai, the company is charging only Rs 1.15 lakh. According to says A Ray, a senior marketing executive, the package includes all expenses for food, lodging and sight-seeing.

The operators are also pulling out all stops to make sure money’s not a problem when it comes to a vacation. While Thomas Cook has tied up with Citibank for installment schemes, SOTC has roped in Kotak Mahindra Finance.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.36	HK $1	Rs.  6.10*
UK £1	Rs. 68.07	SW Fr 1	Rs. 28.05*
Euro	Rs. 41.81	Sing $1	Rs. 26.00*
Yen 100	Rs. 36.17	Aus $1	Rs. 24.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4745	Gold Std (10 gm)Rs. 4670
Gold 22 carat	Rs. 4480	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7350	Silver (Kg)	Rs. 7335
Silver portion	Rs. 7450	Silver portion	   NA

Stock Indices

Sensex		3317.64		-14.66
BSE-100		1581.26		- 9.96
S&P CNX Nifty	1071.35		- 8.75
Calcutta	 113.24		+ 0.03
Skindia GDR	 528.19		- 3.08
   
 

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