VSNL drama leaves only Reliance, Tatas on stage
Parekh spills the beans
Gail plans to spend Rs 3200cr on telecom
Rs 1500-cr Bengal pipeline project
ING move to gain control of Vysya Bank
PowerGrid, Tatas in transmission agreement
Three sign pact for Dabhol due diligence
Super deluxe Versa to hit the road soon
Foreign Exchange, Bullion, Stock Indices

 
 
VSNL DRAMA LEAVES ONLY RELIANCE, TATAS ON STAGE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 1: 
It has turned into a two-horse race with the Tatas and Reliance the only contenders that will battle it out in the Selloff Derby for Videsh Sanchar Nigam Ltd, the state-run telecom giant in which the government plans to offload a 25 per cent stake.

The bids for VSNL closed today but not before some high-voltage drama with the Tatas and Sterling—the third contender that eventually dropped out of the race—pressing the government to extend the deadline for the bids.

Sterling scurried about till the very last minute to persuade the government to extend the deadline to enable it to knock together its bid but the informal verbal request was turned down.

By evening, the government received bids from the Tatas and the Reliance group.

The total valuation of VSNL and the bid prices were not known. VSNL sources said: “We are not aware of the offer price for the 25 per cent stake in VSNL. Going by the current market value, it would be more than Rs 2,500 to Rs 3,000 crore.” However, the buzz in the corridors of power—which could not be confirmed—was that the Tatas had put in a slightly higher bid than Reliance.

The government is offloading 25 per cent of its 53 per cent stake in the telecom monolith to a strategic partner and will cede management control. Another 1.9 per cent of the equity will be offered to the employees. The department of disinvestment had proposed the selloff of the government’s stake in phases.

Sources in the department of disinvestment said, “We were informed by Sterling that they would not participate in the bidding as the government refused to grant them more time to submit their bid. They tried to get in touch with all those involved in the disinvestment process at the commerce ministry but decided to pull out only around evening.”

The disinvestment ministry will now place the two bids before the core group of secretaries on Monday after completing the evaluation. The Cabinet committee on disinvestment will pick the strategic partner for VSNL on February 5.

VSNL shares closed on the Mumbai stock exchange today at Rs 156.55 while Reliance Industries was traded at Rs 299.95.

Official spokespersons for Reliance and Tata confirmed their participation in the bid for management control in the VSNL. SBI Capital Markets and Credit Suisse First Boston are the advisors for the VSNL disinvestment process.

The last hurdle to the VSNL selloff process was removed on Thursday after Delhi high court issued an order rejecting Modi Corporation’s petition to be allowed to submit a bid. In April last year, major telecom companies like Reliance telecom, Tata Telecom, Bharti Televentures, SingTel, Sterlite and BPL submitted expression of interest letters to pick up the VSNL stake. But in July, the Bharti-SingTel consortium dropped out of the race.

   

 
 
PAREKH SPILLS THE BEANS 
 
 
FROM DEVLIN ROY
 
New Delhi, Feb. 1: 
The ICE-man has finally wilted in the heat of intense grilling. Ketan Parekh, the rogue investor who has been in the eye of the storm ever since the stock markets collapsed last March, has admitted that his group companies took Rs 653.99 crore from the Zee group and Himachal Futuristic Communications Ltd (HFCL) to pick up strategic stakes in a clutch of companies early last year.

In a 31-page deposition to the joint parliamentary committee (JPC) which is investigating the securities scam that short-circuited another infamous bull run, Parekh said he had received Rs 215 crore from the Zee group and Rs 438.99 crore from the HFCL group.

Sebi had charged Parekh with taking over Rs 425 crore from HFCL and in excess of Rs 340 crore from the Zee group. While admitting that he received slightly more from the HFCL group than charged by the market regulator, Parekh says he received far less from the Zee group.

In his deposition, Parekh has claimed that he is not a stockbroker but a large investor while denying the charge that he manipulated the markets through circular trading.

“Dealing through various brokers in the market, or by non-broking entities, is not indicative of any attempt to circumvent the restrictions by Sebi but merely the prudence of any large investor in the market,” he said while adding that the market had yet to define what circular trading actually meant.

Parekh said the agreements between Zee and HFCL with his group companies were contractual in nature. Since the market collapse, the Zee group has initiated recovery proceedings against some of the KP group entities.

The Zee group had entered into contractual agreements with KP group entities like Saimangal Investrade and Panther Investrade to pick up a stake in B4U, ABCL (formerly Amitabh Bachchan Corporation Ltd), Shonkh Technologies, Mascon Global and Crane Software.

HFCL, the telecom equipment maker, funnelled funds to KP entities to acquire strategic stakes in ABCL, Global E-commerce and Shonkh Technologies.

Under an agreement dated January 19, 2001, Ganjam Trading Company (a Zee group entity), paid Rs 25 crore to KP-controlled Panther Investrade to buy 6.25 lakh shares of B4U International.

“On the same day, Saimangal Investrade entered into agreement with Prajatma Trading (another Zee entity) for the purchase of 3.35 lakh shares of Mascon Global and 5.08 lakh shares of Shonkh for a total sum of Rs 25 crore by Prajatma,” Parekh said in his written statement to JPC.

On January 23, 2001, Panther Investrade entered into an agreement with Churu Trading for the sale of 12 lakh shares of Crane Software, 64,000 shares of Mascon Global, and 4.46 lakh shares of flamboyant filmmaker Subhash Ghai’s Mukta Arts for a consideration of Rs 20 crore.

Saimangal subsequently entered into an agreement with Churu Trading for the sale of 5.81 lakh shares of Mascon Global for Rs 20 crore. “The total amount of Rs 90 crore was received by Panther Investrade and Saimangal in the said period,” Parekh said.

On March 9, 2001, Classic Credit entered into an agreement with Briggs Trading for the sale of a 20.75 per cent stake of ABCL for Rs 75 crore while Panther Fincap entered into an agreement with Prajatma for the sale of 10.25 lakh shares of Shonkh Technologies, 5.55 lakh shares of Ramesh Taurani-owned music cassette maker Tips Industries, and 7.75 per cent stake of ABCL for a total sum of Rs 50 crore.

“Although the shares to be given to Zee group entities pursuant to these agreements were owned by the entities mentioned, these shares were pledged and the same therefore remains to be delivered to the relevant Zee entities. Further recovery proceedings have been initiated by Zee group entities against Panther Fincap, Saimangal Investrade, Classic Credit and Panther Investrade,” Parekh said.

Parekh said HFCL had indicated a desire to acquire strategic stakes in ABCL, Global E-commerce and Shonkh Technologies in 2000. Consequently, HFCL Trade-invest and Burlington Finance (both HFCL group companies) entered into an agreement with Classic Credit on September 12, 2000 to buy one crore shares of Global E-commerce Services for Rs 265 crore, which was subsequently reduced to Rs 240 crore by mutual agreement.

On February 7, 2001, HFCL Trade-Invest entered into an agreement with Classic Credit to buy a 28.5 per cent stake in ABCL for Rs 165 crore and 25 lakh shares of Shonkh Technologies for Rs 90 crore. “The total funds actually received from HFCL Trade-Invest was Rs 240 crore with Rs 198.99 crore coming from Burlington Finance,” Parekh has admitted to JPC.

Parekh claims that he saw the ICE boom before anyone else. Later, every one jumped on to his bandwagon in 2000 and rode their fortunes while the market boomed.

“In the hope that my bullishness for India and Indian technology companies will come true, I crossed the principles of risk management and failed miserably,” Parekh said.

“I was a large investor and had grossly over committed myself to the market. Many market players started taking advantage of the situation. Although I do not make them directly responsible, their rumour mongering, spreading negative reports on myself with help of some quarters of the media were also partly the cause of the crisis,” he said.

“In order to honour my commitments, I raised resources from bank by pledging assets from corporates by selling my investments and from market intermediaries etc which, instead of reducing my financial burden, actually deepened the crisis,” he said.

The crisis escalated after Income Tax and Sebi raids on various stock broking entities which sent the situation spiralling out of control.

   

 
 
GAIL PLANS TO SPEND RS 3200CR ON TELECOM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 1: 
Gas Authority of India Ltd (Gail) will invest Rs 3,200 crore in its telecom operations, for which it plans to set up a separate joint venture company.

Gail expects its telecom business to contribute 3-5 per cent of its total kitty. In the first phase, the company plans to invest about Rs 800-1,000 crore, which will go up each year till 2010 when the total investment will hit the Rs 3,200 crore target.

Plans for a joint venture with PowerGrid Corp to launch a telecom infrastructure company have also been put in cold storage.

Gail today signed the country’s first long-term exclusive service level agreement with Escotel Mobile Communications Ltd and Escorts Telecom Ltd for the sale of bandwidth through its optical fibre network (OFC). The public sector major is also in advanced talks with several telecom majors like HFCL, Reliance, Tata Power, Tata TeleServices, Fascel, BG Broadband, Shyam Tele, Dishnet, MTNL, VSNL, HCL, Satyam and Birla AT&T, which have evinced interest in leasing capacity from it.

Gail will provide bandwidth capacity to Escotel in western Uttar Pradesh and to Escorts Telecom Ltd in the two circles of eastern Uttar Pradesh and Rajasthan on an exclusive basis for the next five years, which can be extended further.

Unveiling Gail’s telecom business plans, chairman and managing director Prashanto Banerjee said the company will also seek an ISP licence to provide internet protocol-based services to corporate clients. Further, it has long-term plans to set up internet data centres and bandwidth capacity exchanges at major commercial centres across the country.

Gail entered the telecom sector in January last as an infrastructure provider and leased bandwidth operator through the first service-level agreement with Bharti Telesonic.

It has more than 1,500 kilometres of optical fibre network in Haryana and Uttar Pradesh, which is expected to increase to more than 2,500 kms by this year. It has started the process of creating a 10,000 km north-west-south telecom network interconnecting 97 cities in this region by this year.

   

 
 
RS 1500-CR BENGAL PIPELINE PROJECT 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Feb. 1: 
Gas Authority of India Ltd (Gail) plans to set up a joint venture with the Greater Calcutta Gas Supply Corporation (GCGSC) to connect all industrial centres in West Bengal. The project is estimated to require an investment of around Rs 1,500 crore.

Confirming the development, GCGSC managing director P.K. Roy said Gail has already submitted an expression of interest. Gail chairman P. Banerjee had met chief minister Buddhadeb Bhattacharjee and discussed the feasibility of the project.

The Gail board will discuss the issue and take a final decision, Roy said.

According to Roy, Gail officers have studied the project, prepared by GCGSC, to lay pipelines throughout the state.

“The state is very strategically located as far as gas sources are concerned. Work on several projects is currently on in Bangladesh, Myanmar and Tripura. Once the negotiations between the governments concerned and companies like Unocal and Gail are over, gas can be brought into the state,” explained Roy.

Meanwhile, British Gas is also in talks with the GCGSC to set up a similar joint venture, while Unocal wants the company to become the distributor of gas proposed to be brought from Bangladesh.

On the other hand, Gail is working on a gas reserve 300 km away from the Digha coast.

“Moreover, there is huge potential for coal bed methane gas available in the Raniganj-Asansol coal belt. Therefore, gas-based industries will have great potential in the state in the years to come,” Roy said. He noted the state-wide pipeline will be completed in phases over a period of 10-15 years. The project will enable GCGSC distribute 50 million cubic feet of gas per day. The company also plans to connect over 1 lakh households in the next few years.

   

 
 
ING MOVE TO GAIN CONTROL OF VYSYA BANK 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 1: 
In what could be the first instance of a foreign bank eyeing a domestic private sector bank, Bank Brussels Lambert (BBL), part of the Dutch financial group ING, dropped a bombshell today, announcing plans to increase its stake in Vysya Bank and acquire management control. At present, BBL holds a 20 per cent stake in the Bangalore-based bank.

The rather bold step that took bankers by surprise, came even as doubts persist whether the group would actually be successful in the effort. As of now, a foreign bank is permitted to hold a maximum of 20 per cent in a domestic private sector bank.

Though senior Vysya Bank officials, including managing director K Balasubramanian, were not available for comment despite repeated attempts made by The Telegraph, it is understood that the Indian promoters—the G M Rao group—are in favour of selling their 28 per cent stake to BBL.

However, bankers aver that even if the Indian promoters wished to abdicate in favour of the Belgian bank, grey areas continue to persist over the amount of equity that a foreign bank can hold in a domestic one. Confusion on this issue persists despite a clarification by the Union government last year that foreign banks can hold up to 49 per cent in an Indian bank. The doubts are whether this 49 per cent only includes the FDI limit or it also includes FII, NRI and OCB holdings.

“There is confusion on how much a foreign bank can own within the 49 per cent. Currently as per the sub-limits, they can own around 20 per cent. The key question, which is yet unanswered by the government, is whether they can cross this 20 per cent mark,” averred a senior banker from a private sector bank.

Sources said BBL is now likely to approach the Reserve Bank of India (RBI) seeking its permission to raise its stake above 20 per cent. It is also likely to approach the Centre for further clarifications in this regard.

In a communication issued to the stock exchanges today, Vysya Bank said BBL plans to hike its stake subject to requisite approvals. The notice added that Bank Brussels also wanted to acquire management control from the current management group. This is in fact the first instance where a foreign bank is seeking management control in a private sector bank.

BBL initially picked up 5 per cent in the bank, which was later raised to 20 per cent through a preferential allotment

On the BSE today, the Vysya Bank scrip closed nearly 2.7 per cent higher at Rs 154.20.

   

 
 
POWERGRID, TATAS IN TRANSMISSION AGREEMENT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 1: 
Tata Power Company and Power Grid Corporation of India today signed an agreement for an inter-state transmission project that will start commercial operation by 2005.

Tata Power and its associates will own a 51 per cent stake in the joint venture while PowerGrid will pick up the remaining stake. The joint venture is expected to involve an investment of Rs 1100 crore, 70 per cent of which will be funded by debt and 30 per cent through equity.

Tata Power is expected to invest close to Rs 200 crore in the project, company officials said.

This is the first time a private sector company is being allowed inter-state transmission of power. Private firms had, so far, been allowed entry into generation and lately into distribution.

The joint venture project involves lining 1,200 km of 400 KV transmission lines from the Himalayan nation of Bhutan, where the 1,020 MW Tala hydroelectric project has surplus power.

Speaking on the occasion, PowerGrid chairman and managing director R.P. Singh said more private participation in transmission projects will be sought in future. The lines will carry surplus power from the eastern grid to the power-starved northern grid, which includes New Delhi, where power failures are frequent.

   

 
 
THREE SIGN PACT FOR DABHOL DUE DILIGENCE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 1: 
The race for acquiring the beleaguered Dabhol Power Company (DPC) was kicked off today with three bidders evincing interest and signing confidentiality agreements to carry out due diligence. IDBI chairman and managing director P.P. Vora said a fourth player may sign the pact later.

Though Vora refused to name the bidders, it is believed that the three players who have submitted their interest include Tata Power, BSES and Gas Authority of India Ltd (Gail). Apart from these companies, foreign majors, including Gaz de France, TotalFina Elf and Shell are also believed to be in the race for acquiring the power plant.

The entire process is scheduled to be completed in six to eight weeks with the first batch of bidders proceeding to the London data room for conducting due diligence, Vora said and added that final bids would be invited next month.

The lenders’ consortium is also planning to appoint a financial advisor to aid the financial restructuring of DPC as well as assist in the bidding process.

Vora said that the lenders are working on a package to “restructure the loans” by reducing the interest on rupee and foreign currency loans and convert foreign currency loans into rupee loans to avoid currency depreciation risk. Further, the institutions would also look at some assurance regarding offtake of power from the state government.

IDBI sources said the total loan in the books of DPC is around Rs 8,000 crore. A large portion of this is foreign currency loans. The rupee loans were disbursed at an interest rate of 16.5 per cent.

While highlighting the importance of the bidding process Vora said, “Assets of around Rs 11,000 crore are available and this is an opportunity for lifetime in one go.”

   

 
 
SUPER DELUXE VERSA TO HIT THE ROAD SOON 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 1: 
Maruti Udyog will unveil a super deluxe version of its multi-purpose vehicle, Versa. The top end variant, Versa SDX will have adjustable tilt steering for comfortable driving, bucket seats that are both reclining and sliding, twin air conditioners, a flip-folding back seat, alloy wheels, rear spoiler with stop lamp, an instrument panel with a silver finish, rear wiper and washer and a leather steering wheel cover.

The car, priced at Rs 5.80 lakh, is Rs 35,000 costlier than the Versa DX2.

“The back seat will be equipped with greater flexibility in terms of adjustment of the available space either in the middle or in the rear row. It can be slid back to provide more legroom for the middle row or slide forward to provide more legroom for the people in the rear seat,” company sources said.

The car will also have an overhead box to keep all knick knacks and a special spectacle holder for sunglasses.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.53	HK $1	Rs.  6.15*
UK £1	Rs. 68.40	SW Fr 1	Rs. 27.90*
Euro	Rs. 41.75	Sing $1	Rs. 26.10*
Yen 100	Rs. 36.26	Aus $1	Rs. 24.35*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4780	Gold Std (10 gm)Rs. 4695
Gold 22 carat	Rs. 4515	Gold 22 carat      NA
Silver bar (Kg)	Rs. 7300	Silver (Kg)	Rs. 7395
Silver portion	Rs. 7400	Silver portion     NA

Stock Indices

Sensex		3333.92		+22.89
BSE-100		1602.61		+10.34
S&P CNX Nifty	1081.65		+ 6.25
Calcutta	 112.55		+ 1.55
Skindia GDR	 527.44		- 1.77
   
 

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