Countdown to selloff in BSNL
Govt weighs Gail equity dilution
Durgapur project units go to Bengal power corp
Scalpel on drug brands
Derivative segment for CSE on the cards

New Delhi, Feb. 10: 
The communications ministry has started the process of downsizing its departments, which will eventually lead to the scrapping of the Telecom Commission and the simultaneous break up of Bharat Sanchar Nigam (BSNL) into separate profit zones or small companies.

Officials in the communications ministry said the move is a precursor to a divestment process in BSNL. “We have not been given any deadline. The top-brass has indicated to us that the whole process is likely to be completed by 2005. Initially, the non-profit making zones of BSNL are scheduled to be put on the block and the profit making zones will be dis-invested at a later stage.”

“The BSNL selloff process is in a preliminary stage but the directives were given to the DoT (Department of Telecommunications) soon after BSNL was corporatised. We expect a consultant to be appointed soon to undertake the assessment process,” officials added.

However, the issue that has created ripples in the Telecom Commission is the ministry’s overzealous approach to show that the downsizing exercise at the senior level will be completed at the earliest. Sources in the communications ministry said: “The issue is old. Even former communications minister Ram Vilas Paswan tried to initiate the process but no substantial progress has been made.”

During his tenure as communications minister, Paswan had asked the officials to start the process of reorganising and restructuring DoT, the telecom policy-making body, without resorting to job cuts.

The Telecom Commission consists of four full-time and four part-time members, who are all secretary-level officials. The DoT secretary heads the Telecom Commission with members in charge of finance, production, services and technology portfolios as full-time members.

The part-time members are secretaries for information technology, finance, Planning Commission, and industrial promotion and production.

The Telecom Commission was set up with necessary executive, administrative and financial powers to deal with various aspects of telecommunications.

However, after corporatisation of Department of Telecom services (DTS) and Department of Telecom Operations (DTO) as Bharat Sanchar Nigam Limited, the commission was left with the function of policy formulation, licensing, wireless spectrum management, administrative monitoring of public sector units, research and development and standardisation/validation of equipment.


Calcutta, Feb. 10: 
The government is considering a proposal to offload around 2.5 crore shares in Gas Authority of India Ltd (Gail) in favour of retail investors.

The divestment will bring down the government’s stake in the company to around 64 per cent, from 67 per cent at present. The move is aimed at shoring up the share price on domestic bourses. The current market price of the scrip is around Rs 79, but its intrinsic value is a few times over, sources said.

Confirming the move, Gail director (finance) J.K. Jain said the divestment, once it goes through, will help, at least in a limited way, to boost trading volumes in the scrip.

“Currently, volumes are very poor owing to the lack of floating stock in the domestic market. The strong fundamentals of the company would justify a higher market capitalisation that is much higher,” Jain said.

The public holds a 7 per cent stake PSU, the GDR holders control 15.33 per cent, 9 per cent is held by petroleum majors Indian Oil (IOC) and Oil and Natural Gas Corporation; FIs and banks have a little over 6 per cent.

According to sources, the possible equity dilution is a precursor to the company’s plan to issue fresh equity in the domestic market through a mega public issue.

“If the share price does not look up, the company will find it difficult expand its equity base so that a better debt-equity ratio can help it mobilise funds for future investment,” sources said.

The government divested 3.37 per cent of Gail’s equity to employees in 1997, and 3.62 per cent in the market two years later. The stake dilution planned this year will raise the floating stock to around 8.5 crore shares.

“The company has drawn up ambitious plans to diversify into telecom and petrochemicals, for which it needs to expand its capital base. A public issue is one of the ways of doing so,” they added. An investment of around Rs 3,200 crore will be made, in phases, to fund the telecom foray.

Jain refused comment on the issue, beyond saying his company has chalked out a plan to invest around Rs 1,500 crore in the next financial year to upgrade pipelines.


Calcutta, Feb. 10: 
The West Bengal government has decided to transfer power plants under Durgapur Projects Ltd (DPL) to West Bengal Power Development Corp (WBPDCL) as part of its reforms drive in the sector.

Sources said state power minister Mrinal Banerjee has already communicated to DPL employees about the move to dissociate the power plants.

DPL comprises a coke oven plant, by-products plant, gas grid project, thermal power plants and water works.

Confirming the move, senior power department officials said, “It is a judicious move to transfer the power plants of DPL to WBPDCL. This will enable DPL emphasise more on distribution and other activities. Moreover, these reforms have to be undertaken if we have to get funds under the accelerated power development programme.”

The government has adopted a similar course of action in the case of the West Bengal State Electricity Board (WBSEB), taking away the Santaldih and Bandel thermal power stations from its fold and transferring it to WBPDCL.

DPL is currently generating power from its six power units with an aggregate capacity of 395 MW and distributing the same to consumers of various categories located in its command areas at Durgapur, while the surplus power is transmitted to the West Bengal State Electricity Board’s grid. Out of the six power plants, two are 30 MW each, three are 77 MW each and one is of 110 MW.

The power plants have recently undergone a modernisation programme, funded by a Power Finance Corporation loan of Rs 286.86 crore.

The present capacity of DPL’s coke oven plant is 27,000 tonnes, which can be taken up to 40,000 tonnes.

“The plant is currently producing low metallurgical coke by using imported coal from Australia and China,” sources said. The by-product plant produces benzene, coal, gas and tar.

However, the employees fear they face an uncertain future if the power plants are transferred to WBPDCL. Umapada Jana of Intuc union said: “The government has failed to sort out the issue of how to handle the employees involved in the Santaldih and Bandel power stations. It has not yet spelt out how many people will remain with WBSEB and how many will be absorbed into WBPDCL following the transfer of the power plants. Therefore, the fate of DPL’s employees following the transfer of power plants to WBPDCL is also uncertain.”


Mumbai, Feb. 10: 
The trend of focussing on core strengths is fast catching up with pharmaceutical firms. The industry, which has seen a wave of consolidation through mergers and acquisitions, is now witnessing a trend towards disposal of marginal brands, with most players in the industry completing a segregation of their product portfolio on various therapeutic lines.

“Large companies that have too many brands in their portfolio are looking at disposing some products which have a negligible effect on their turnover. They are now focussing on how to unveil new brands, apart from giving a greater push to the ones that are already doing good in their respective therapeutic categories,” an analyst tracking the industry pointed out.

Sources said the trend has already begun, with giants like Glaxo India disposing of a few such brands. The largest pharma company in the country sold its liver tonic Livogen to E Merck India for a consideration of Rs 8 crore. The sale formed part of the company’s exercise to rationalise its product portfolio, that entails withdrawal from tail-end brands and the ploughing back the amount realised from disposal of these brands for investment in additional promotion of new products.

Besides this sale, Glaxo also sold its haemorrhoids ointment brand Anovate and skin ointment brand Derobin to US Vitamins for Rs 6 crore. The company had further sold Macraberin and Multivite FM, two other brands to Universal Medicare for Rs 10 crore. This followed its move to bring in a therapeutic focus into its product range by the creation of seven separate teams. It was only recently that Group Pharma sold six dental brands to the Hyderabad-based Dr Reddy’s Laboratories Ltd as it wanted to focus on its existing generic products apart from gynaecology and paediatric segments.


Calcutta, Feb. 10: 
The Calcutta Stock Exchange is close to finalising a draft plan for introducing a derivative segment on the bourse.

Officials said the exchange was giving final touches to the plan before submitting it to the Securities and Exchange Board of India (Sebi) for its approval.

CSE brokers have been demanding introduction of a derivative segment for long. The exchange had toyed with the idea of seeking membership of the derivative segment of the Bombay or National stock exchanges, but later abandoned it.

The exchange now intends to set up its own derivative segment for which it plans to seek Sebi’s approval to trade in individual stock futures and options.

“The question of trading in indices is ruled out because the exchange does not have an index worth its name,” a director of the exchange said.

There is some doubt still whether the market regulator will allow trading in options at the exchange as it involves greater risk. “But the exchange needs to introduce trading in stock futures to increase the depth of its cash market,” he said, explaining it would offer arbitrage possibilities between the two segments. The exchange will have to set up a separate settlement guarantee fund for the derivative segment. While there is a proposal to transfer some of the funds from the settlement guarantee fund of the cash market, but no final decision has been taken as yet.


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