Receiver for Dabhol Power
SBI ready to open tap for project finance
Mass transfer at Balco sparks protests
PSU price preference stays for 2 more years
Maruti shares
Vigil on crude prices, no decision on excise cut
Data Access ISD debut on April 14
Sun Pharma to quit 4 bourses
Fast-track rail network to rival roads
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 2: 
The Mumbai high court today appointed a receiver to take charge of the Dabhol Power Company (DPC), clearing the way for lenders to seize its assets and secure some of the loans locked in the project.

“The court receiver has taken over assets of DPC today, and a decision on their seizure will be taken at the weekend meeting of lenders,” IDBI chairman and managing director P. P. Vora told reporters here today. All lenders to the Enron-promoted project will meet here for two days from April 8 to decide on taking over the plant’s assets — seen as the next step.

“More than 30 banks and financial institutions are part of the project. The meeting will discuss the possibility of enforcing the security of DPC’s assets,” Vora added.

P. Ajinkya, the official appointed by the court, went to Dabhol to take possession of the 2184 MW project today, accompanied by representatives of Indian financial institutions. The delegation was reportedly given a hostile reception from locals who had been employed in DPC, or were running businesses linked to it.

The receiver’s key responsibility in the coming days and months will be to ensure that DPC’s idle assets on the Konkan Coast is maintained properly. Officials who went there denied they were seizing assets.

IDBI and other financial institutions have lent Rs 6,200 crore to the Enron subsidiary, much of it through loans and counter-guarantees to foreign lenders.

Last month, the high court accepted a request by Indian creditors to appoint a receiver who would take care of the plant. It also barred DPC assets from becoming part of Enron’s bankruptcy proceedings in New York. The ruling came as a big relief to financial institutions, which would have been hit hard if DPC was dragged into Enron’s legal quagmire.

Domestic FIs sought legal recourse after a Mauritius-registered holding company, through which Enron owns a 65 per cent stake in DPC, filed for bankruptcy protection in a New York court late last month.

Last week, the Indian subsidiary of the fallen US energy giant, considered one of its core assets in Asia, was rocked by a wave of resignations by top-rung officials.

The first phase of the project, which could produce 740 MW of power, started operations in May 1999. The 1,444-MW second phase was almost complete last June, when construction was halted after $ 240-million worth of bills went unpaid by Maharashtra State Electricity Board—Dabhol project’s only customer.


Mumbai, April 2: 
Project finance is the big word at the State Bank of India (SBI) this fiscal. The country’s largest bank, whose prudential norms allow it to disburse 30 per cent of its total credit portfolio towards project financing, now plans to lend 30 per cent of its incremental growth in advances for the purpose this fiscal.

With the bank’s total credit portfolio put at Rs 1,20,000 crore, this figure would come to over Rs 35,000 crore, chairman Janki Ballabh said today. Ballabh made these comments in response to apprehension among companies that they would face a credit shortage for project financing.

Speaking at the Banking Summit organised by the Confederation of Indian Industry (CII), he also said that since project lending is not yet the forte of banks, they should place more emphasis on creating adequate skill and expertise while evaluating any funding proposal.

Later, speaking to The Telegraph, Ballabh said for the current year, on an incremental basis, the bank is looking at disbursing close to Rs 7,000 crore towards project financing. He admitted that the bank had witnessed a sluggish offtake with regard to the power sector, where most of its sanctions could not go through. “The loans were not disbursed and most of them have lapsed. However, there is a good offtake in the telecom and roadways sectors,” he added. The bank is looking at incremental advances growing by Rs 20,000 crore this fiscal.

Foreign debt

Meanwhile, Reserve Bank of India (RBI) governor Bimal Jalan today said that in line with its plans to achieve more stability on the external front, the Centre is looking at pre-paying a part of its external debt.

Speaking at the summit, Jalan said the RBI favoured maintaining adequate liquidity in the system and softer interest rates, while parrying questions on whether there would be a cut in the bank rate or the cash reserve ratio in the forthcoming monetary and credit policy.

Banking circles point out that the government’s plans to pre-pay a part of its external debt follows the record foreign exchange reserves which is now at over $ 53 billion.

“The rise in foreign exchange reserves shows the confidence in the Indian economy and the government was already looking at prepaying some of its overseas loans,” he pointed out. He then added that the nature of these loans to be pre-paid would depend on the composition of the debt.

Earlier, delivering the valedictory address at the summit, Jalan said the ability to take and absorb risks by the financial sector was significant and in this context, prudential norms were the touchstone for “sound banking”.


New Delhi, April 2: 
Sterlite-run Bharat Aluminium Company Ltd (Balco) has transferred some 169 employees in Delhi and three other metros to its plant in Korba.

The move—which union leaders feel is aimed at forcing resignations by white collar city-based employees ahead of the acceptance of requests for voluntary retirement with a golden handshake—has brought with it threats of a renewed strike.

Dubbing the mass transfer move illegal, P.N. Sharma, general secretary of Balco Employees Union, claimed that the move violated a shareholders’ pact that Sterlite had signed with the Union government while taking over Balco.

Sharma claimed that the new Balco management had told the workers that it would not be possible to fund the promised VRS as the company was upgrading and expanding the plant.

The union leader also termed claims by the government, which still retains a sizeable chunk of shares, that all was hunky dory in Balco as “patently wrong” and demanded that as part-owner it should intervene to sort out matters.

Balco announced a VRS programme last year, which promised two months’ salary for every year of service attracting roughly 1,500 employees. But till date it has not accepted any of the applications.


New Delhi, April 2: 
The Union Cabinet today approved a two-year extension of its price preference policy for government and PSU purchases of products and services from centrally owned public sector undertakings.

However, an earlier proposal to debar the PSU navratnas from this price preference scheme was scrapped at today’s meeting after objections were raised by various ministries.

As a compromise, it was decided that the price preference policy for public procurement would extended to all PSUs where the Centre has a stake of 51 per cent or more.

Those PSUs in which the government holds a stake of less than 51 per cent will be eligible for price preference only if the government has made a special dispensation allowing this.

“The scheme has been approved to make the PSUs more attractive to bidders. Any autonomous body or department that does not want to avail of the scheme will have to go back to the Cabinet,” heavy industry minister Manohar Joshi said.

“Our statistics show that in 2000-01, 51 companies received benefits under this scheme.

The policy will facilitate disinvestment and it is WTO compatible. Even the World Bank and other multilateral agencies give price preference to domestic companies over foreign companies,” Joshi added. He said the Parliamentary standing committee had also recommended the extension of this policy for two more years.

Citing the example of Bhel, Joshi said, “Although no decision has been taken on this company, the heavy industries ministry has suggested that the government retain a 51 per cent share out of the present 66 per cent it owns. The extended scheme will in such a case be applicable to this company also.”

Bhel had become a cause celebre about two years back. A row had flared up between the ministries of power and industry when Bhel bagged the contract to supply transformers for NTPC’s power projects.


New Delhi, April 2: 
A decision on fixing the share price and the control premium for selling the government’s stake in Maruti Udyog through the proposed Rs 400-crore rights issue is likely to be settled within a couple of months.

“We are close to a deal with Suzuki. Everything will be settled fast,” Joshi said.

The government will begin the process of disinvestment in the auto venture by not participating in the rights issue for consideration of control and renunciation premium.


New Delhi, April 2: 
On a day when crude flared up to a six-month high of $ 27 a barrel, the government said it was watching the escalation, and weighing the possibility of a cut in excise duties to contain retail prices.

“We are closely monitoring the situation developing in international oil market,” petroleum minister Ram Naik told reporters in Delhi. The government decontrolled the sector from April 1, allowing the small band of state-run oil firms to fix prices at which they will retail petrol and diesel to customers.

Asked about his proposal for cuts in excise duty to neutralise the impact of surging crude prices, Naik said it was under the consideration of the finance ministry. He did not say whether the idea would be accepted.

Petrol and diesel prices, pegged at Rs 26.54 and Rs 16.59 per litre (in Delhi), are based on a crude price of close to $20 a barrel. An increase of $1 should make a litre of petrol costlier by 55 paise and diesel by 45 paise, though that has not been happening because the government gives oil companies subsidies to sell oil cheaper.

Crude steadied at a new peak as some Muslim countries reacted cooly to Iraq’s threat to cut off supplies to the West to force Israel out of Palestinian territories. International benchmark Brent crude oil, opening for the first time after a four-day Easter holiday, caught up with a spike in US prices the day before and hit a six-month high of $26.88 per barrel, up 86 cents from Thursday’s close. There are fears of more spikes if Israel goes ahead with a plan to put Yasser Arafat in exile.

Amid speculation of a duty reprieve, Indian Oil today said it will not increase prices of petroleum products for the next three months. but would not prefer “cartelisation” of retail prices beyond that period.


New Delhi, April 2: 
Data Access—owner of the Now internet service brand—promises to provide ISD services from April 14 at half the price—Rs 20 per minute against a call cost of Rs 40 over the VSNL network.

The company has set up five gateways in Calcutta, Delhi, Mumbai, Chennai and Bangalore and claims to have finalised the interconnect agreement with Bharat Sanchar Nigam Ltd. This means that if a subscriber of Calcutta Telephones (BSNL) calls the US and wants to use the network of Data Access (assuming that per minute cost is lower than that offered by VSNL), BSNL will route the call through it.

Data Access will be the first international long distance (ILD) service provider to use the internet protocol (IP) technology for its services. “Remember 9/11 when the phone service in New York collapsed; only the VoIP lines worked on that day—that’s what prompted us to go for it,” says Data Access CEO Siddharth Ray.

IP telephony is an application which uses the voice over internet protocol (VoIP) technology that has the ability to assimilate the voice, data and video into one stream and then send them as packets. This is considered as an advanced technology over the existing time division multiplex (TDM) technology.

TDM is a technology that identifies each bit stream—voice, video and data—and sieves them into separate packets that are joined at the receiving end. The problem with TDM is that as the packets flit across the network there is a loss of bandwidth.

The buzz is that both Bharti and VSNL also plan to use IP technology. Sources in VSNL said, “A pilot project is already nearing completion and the board will decide shortly whether to accept or reject it.”

While the company is bullish about launching ILD services, it has yet to get the carrier access code from the Telecom Regulatory Authority of India.


Mumbai, April 2: 
The promoters of Sun Pharmaceutical Industries plan to make an open offer to shareholders in Bengal, Haryana, Delhi, Gujarat, Tamil Nadu and Pondicherry before delisting from four stock exchanges. If things go to script, the shares will not trade on Calcutta, Delhi, Ahmedabad and Chennai exchanges from July 1.

The open offer will be made at Rs 600 apiece, the company said in a communication to Bombay Stock Exchange (BSE). Analysts see the deal as unattractive because it marks a discount of 10.58 per cent to the market price.

This is the first time a company is making an offer to shareholders on a selective basis. “It is to be seen whether shareholders in these states bite the bait,” an analyst said.

The company intends to delist from regional bourses because its shares are actively traded on the National Stock Exchange and the Bombay Stock Exchange. The two bourses are adequately represented in states from where the stock is being pulled out.

The recent trend among companies to delist shares from regional bourses arise out of compulsions relating to listing rules, and the need to cut overheads like listing fees.

Sun Pharma is a leading Indian drug maker whose US subsidiary, Caraco Pharma, staged an impressive turnaround this year. Over the years, it has been injecting funds to invigorate its American arm, which has received a string of FDA approvals in recent months.


New Delhi, April 2: 
The railways are planning their Golden Quadrilateral which will mirror what the PM’s highways project plans to do—provide a high-speed transport corridor between the four metropolises. But this won’t be for Bullet trains—rather it will be for faster freight trains.

The railways are seeking multilateral funding for their Rs 12,000-crore proposal to beef up their infrastructure to ensure that they don’t start losing freight traffic to the roadways sector when the highways project is ready by December 2003.

Railway Board chairman Iqbal Inder Mohan Singh Rana today said, “We have sought a separate fund of Rs 12,000 crore from multilateral funding agencies to improve the golden quadrilateral network. A proposal will be sent to finance ministry which will decide whether the money has to come from Japanese bank, World Bank or Asian Development Bank.”

The Indian Railways, the world’s second largest railway system under a single management, carries 1.25 million tonnes of freight traffic and 12.53 million passengers daily. However, in the last couple of years, the railways’ distinction of being the lifeline of the nation is gradually fading due to constant loss of market share to road transport, declining budgetary support from the central government, slow modernisation and upgradation and unabated rise in expenditure.

In 1950-51, the railways had a impressive market share of 88 per cent as against 12 per cent by roadways in freight movement but by 1986-87 roadways had narrowed the difference. The roadways cornered 48.5 per cent market share while the railways just managed to stay ahead at 51.5 per cent by 1986-87. The difference dramatically changed in 1995-96 with roadways cornering 60 per cent traffic. Railways till today have not been able to increase their market share from that 40 per cent mark.

Commenting on the RailTel Corporation, Rana said investors are expected to be soon appointed, who will not only recommend the joint venture partners in RailTel corporation of Ltd but also the way and means to source the funds.

The business plan of RailTel Corp has already been approved and it proposes to enter into various telecom business like infrastructure provider, internet service provider and also as national long distance operator. The railways plan to exploit uninterrupted and seamless right-of-way along 62,800 kms track covering, 7,000 railway stations. Indian Railways also plans to raise Rs 5000 crore to build four mega bridges in the country. Two of the bridges will be in Bihar—one each in Assam and Jammu and Kashmir.

The railways would be able to undertake the target projects and has the funds to meet them. The railways’ plans are funded by internal revenue and market borrowings besides budgetary support. While market borrowings are used to procure rolling stock, gross budgetary support is used to create capital assets and internal resources are used for meeting the requirement of depreciation reserve fund and staff-related expenditure.



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