Reliance buys Enron data hubs
ONGC can bid for HPCL, Bharat Petro
Promoters increase Sterlite stake to 43%
Trai releases consultation paper on connectivity
Lever bonus debenture plan on course
Uniform coal prices on cards
Tisco loses taste for telecom
Calcutta triumphs in cola war
PM leads India Inc to Singapore
Foreign Exchange, Bullion, Stock Indices

 
 
RELIANCE BUYS ENRON DATA HUBS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 5: 
Enron Corp, the bankrupt US energy trader, has sold its broadband solutions venture in India to Reliance Infocom, a subsidiary of Reliance Industries.

Details of the transaction are not known. Sources close to the deal said confidentiality clauses in the agreement prevented them from disclosing the numbers. Enron was setting up data centres in India before events in the US sank the beleaguered energy giant, and halted the expansion of the business here in its tracks.

The acquisition is a win-win deal for Reliance Infocom, which gets infrastructure that will help it enlarge its presence in data-centres— one of the core areas in its infocom business. The company already has a data-centre functioning in the suburbs of Mumbai.

While industry sources confirmed the development, there was no word from Enron, which does not have many employees left here. Its data-centre also had only two or three heads on board, sources said.

The deal comes a day before financial institutions meet to discuss issues related to Dabhol Power Company (DPC).

Whether the assets of data-centre are a property of Enron, the US or DPC is still unclear — an ambiguity that might lead to a controversy in future, sources said.

There are reports, though, that the data-centres had been set up by a company registered in Mauritius.

Enron’s broadband foray was led by a data-centre it set up in the city with an estimated investment of Rs 100 crore.

Eventually, it aimed at spreading its network to infotech hubs like Bangalore, Hyderabad and New Delhi, former employees in the company said.

Enron had leased 70,000 square feet of prime commercial property in the Lower Parel, Mumbai’s one-time textile nerve-centre that is now turning into the most preferred address for new-economy businesses.

The property deal had created ripples in Mumbai’s real estate market. The annual lease rent to be paid by the company alone was in the region of Rs 6.72 crore, sources said. Enron’s venture planned to grab businesses that earlier used to go to US-based companies. “It will save time and foreign exchange for local dotcom outfits,” an industry source said.

The new venture was directly under Enron India, which was then headed by its high-profile chief, Sanjay Bhatnagar. He had later resigned from the company before the DPC-MSEB controversy came to a head.

Enron struck the bulge bracket real estate deal that was the talking point for realtors in the commercial capital.

The company also leased 90,000 square feet of office space in pharmaceutical company Wockhardt’s spanking new headquarters in the Bandra-Kurla office complex, situated in the north-western suburbs of the city.

On a global scale, Enron made a strategic shift from a traditional “brick-and-mortar” company to an infotech firm. In the US, the company had already set up Enron Intelligent Network, a new-world network built on state-of-the-art optical technology to meet business needs.

To implement its new plans, the company had formed strategic alliances globally with Cisco Systems, Ciena Corporation and Sun Microsystems all leaders in network technology.

Enron by offering virtually unlimited bandwidth and built-in intelligence, the Enron Intelligent Network bridged the gap between very expensive dedicated (virtual private) networks and public network.

   

 
 
ONGC CAN BID FOR HPCL, BHARAT PETRO 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 5: 
Decks have been cleared for the participation of Oil and Natural Gas Corporation (ONGC) in the privatisation of Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL).

Ram Naik, minister of petroleum and natural gas, today said all oil PSUs, except Indian Oil, were free to vie for the government’s stake in the two companies. Talking to reporters on the sidelines of a seminar organised by Maharashtra Economic Development Council on the Emerging Oil Scenario, the minister said the upstream major can table its bids for HPCL and BPCL.

The statement is important because many believe ONGC, which does not market petroleum products, will would gain a decisive edge over other suitors in the race for the two companies, which large retail chains.

Some even see the move as a back-door entry for IOC, which holds a 10 per cent stake in ONGC. There are also reports that the government is considering a three-way merger between IOC, ONGC and Gas Authority of India (Gail) in the medium term. However, on being asked about the possibility of such a link-up, Naik denied the plan was on the table at this point of time.

Talking about the flare-up in crude prices, Naik said he will meet Union finance minister Yashwant Sinha next week to discuss the steps that can be taken to minimise the impact of the escalation on retail customers.

A reduction in excise duty as a means of compensating the oil majors, which have decided not to hike prices of various products for the next three months, will be among the set of measures to be explored.

If the retail charges were fixed on the basis of the current crude prices, Naik said a litre of petrol would cost Rs 3.50 more and a litre of diesel Rs 2.50 more for customers.

Naik said a Bill providing for the establishment of a Petroleum Regulatory Board will be introduced in the next session of Parliament, beginning April 15.

He disclosed that the oil pool deficit was to the tune of Rs 40,000 crore as on April 1.

He criticised Maharashtra and Madhya Pradesh for increasing sales tax on petrol and diesel, saying it ran counter to excise duty cuts in the budget.

Reliance eligible

Attorney general Soli Sorabjee is understood to have told the government that Reliance’s eligibility to participate in disinvestment of PSUs is not impaired by a CBI complaint, which is different from a chargesheet.

   

 
 
PROMOTERS INCREASE STERLITE STAKE TO 43% 
 
 
BY A STAFF REPORTER
 
Calcutta, April 5: 
The promoters of Sterlite Industries have increased their stake by close to 4.5 per cent during the last one year, even as the foreign institutional investors and the mutual funds have exited en masse.

The promoters’ holding in Sterlite Industries rose from 38.5 per cent to 42.96 in the last 12 months, an increase of 25.26 lakh shares. During the period, the company’s equity base expanded by 80,000 shares—or Rs 8 lakh—to Rs 55.99 crore.

The foreign institutional investors, on the other hand, reduced their stake by 8.37 per cent. The foreign institutions together hold 3.74 per cent in the company now, as against 12.11 per cent a year ago.

The mutual funds too have been selling the Sterlite Industries scrip during the year. The combined holding of the mutual funds stand at 1.42 per cent now, compared with 8.74 per cent a year ago—a fall of 7.32 per cent.

The banks and financial institutions, however, have marginally increased their stake in the company. Their combined control has increased from 4.21 per cent to 6.27 per cent.

The public holding in Sterlite Industries has increased substantially. About 44.21 per cent of the company’s equity is widely held now, as against 34.81 per cent in April 2001—an increase of 9.4 per cent.

The increase in promoter holding in the Rs 3,093-crore Sterlite Industries coincides with the company’s aggressive expansion in the field of non-ferrous metals. The company, which had interests in copper and aluminium until now, is now trying to complete the non-ferrous circle by including zinc and lead as well in its portfolio.

Sterlite Industries recently acquired a 26 per cent stake in Hindustan Zinc from the government, beating AV Birla group company Indo Gulf with a bid of Rs 445 crore. In another six months, Sterlite Industries is likely to acquire 25 per cent more in Hindustan Zinc from the government, and will also make an open offer for a 20 per cent stake in the company.

Analysts expect Sterlite Industries to bid for the government’s stake in National Aluminium (Nalco) and Hindustan Copper as well. Earlier on, Sterlite Industries had acquired the government’s stake in Bharat Aluminium (Balco).

   

 
 
TRAI RELEASES CONSULTATION PAPER ON CONNECTIVITY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 5: 
Telecom Regulatory Authority of India today released the interconnect consultation paper, based on the inputs from telecom service providers and the public. Trai will finalise a set of guidelines for telecom companies which ‘may’ be used by them to interconnect their networks with each other.

Based on the suggestions, the regulator will finalise a Reference Interconnect Offer (RIO) that the telecom service providers will have to use to prepare their own RIOs.

The regulator has suggested that the dominant operators like Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd will have to finalise their own RIOs and get them approved by Trai.

Service providers seeking to interconnect with their networks will be able to get interconnection on the terms and conditions made public in the offer by the dominant operators.

Trai has released on its website, for comments by the stakeholders and general public, the draft of a document which will form the basis for interconnection agreement between the different telecom service providers.

Lack of agreement on terms for interconnection and the resultant lack of signing of formal agreements between two telecom operators has been one of the main reasons for the delay in introduction of new services and has in fact been standing in the way of increased competition in this sector.

The RIO will thus be a document detailing standard terms and conditions on the basis of which interconnection can be established with the offerer.

This will cover basic, cellular mobile and national and international long distance operators.

   

 
 
LEVER BONUS DEBENTURE PLAN ON COURSE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 5: 
Hindustan Lever Limited (HLL) today clarified that it has no plans to abandon the proposal to issue bonus debentures, adding that it would go back to seek shareholders’ approval if there are any changes in tax laws.

“We had indicated earlier that we will await the finalisation of the proposal relating to deduction of tax on dividends, given the current proposal of the Finance Bill 2002, following which appropriate action will be taken by the company on its debentures scheme, now pending before the Mumbai high court,” the suo motu statement from HLL said.

“It is important to have clarity on tax deductions on dividends, since ‘bonus debentures’ are construed for tax purposes as ‘deemed dividend’ and need to be taxed accordingly,” HLL added in a late evening press communiqué.

“If a material change is required in the scheme due to changes in tax laws or otherwise, then the company will go back to the shareholders to seek their approval for such changes,” it said.

HLL further clarified that the auditors have no role at present in the debenture matter. The outflow on the proposed debentures may become part of “accounts” only when the scheme is executed, after the approval of the Mumbai high court.

The issue of bonus debentures, which was approved by the company’s board of directors, has been overwhelmingly approved by HLL’s shareholders at the extraordinary general meeting held on December 12, 2001.

The role of the auditors in bonus debentures will be restricted to commenting on proper accounting as and when the scheme is executed after judicial approval, the company said.

The proposed bonus debenture issue was supported by 87.27 per cent of the shareholders present at the meeting and holding 112.32 crore shares, representing 99.99 per cent of the value of shares on which the poll was held.

   

 
 
UNIFORM COAL PRICES ON CARDS 
 
 
BY A STAFF REPORTER
 
Calcutta, April 5: 
The Centre is in the process of formulating a uniform price policy for the coal sector and scrapping the existing flawed sales mechanism, minister for coal and mines Ram Vilas Paswan said.

Paswan, who was here today to announce Coal India’s annual results, hinted that the uniform pricing system may affect the core sector to some extent, and will eliminate corrupt practices while benefiting the consumers.

Paswan also pointed out that 80 per cent of the coal linkages that have been operational for a long time are bogus. While they obtain coal at subsidised prices, most of them sell the coal in the open market at a much higher rate, he said.

Earlier, he asked chief ministers of all states to arrange for proper verification of such linkages. Out of 4,781 linkages, 3,462 have so far been verified by both the concerned state governments and CIL’s internal vigilance team. The coal major has already discontinued supply to 340 consumers who have been caught as “fake”.

Paswan met Bengal chief minister Buddhadeb Bhattacharjee to discuss the proposal to close 22 mines of Eastern Coalfields, privatising non-core operations, the coal nationalisation amendment Bill, apart from the issue of ‘fake’ consumers.

Back in the black

CIL has posted a profit of Rs 1,400 crore for the year ended March 31, 2002, against a loss of Rs 1,414 crore in the previous year. The total production stood at 280 million tonnes against 268 million tonnes in 2000-01. “We have sought support from the state government and the unions on the closure of unviable mines in ECL,” Paswan said.

   

 
 
TISCO LOSES TASTE FOR TELECOM 
 
 
BY A STAFF REPORTER
 
Calcutta, April 5: 
Tata Iron and Steel Company ( Tisco) will stay away from the group’s foray into the telecom sector. Contrary to earlier plans of chipping in funds for the group’s take-over of the public sector telecom giant Videsh Sanchar Nigam Ltd (VSNL), managing director B. Muthuraman said today that Tisco has decided against investing in telecom ventures.

Instead, it will take up steel-related diversification and expansion, brand building, and add more value to its product mix to increase shareholder value, Muthuraman said at a press conference here today.

With regard to diversification, he said there were many areas Tisco was looking at and “something will emerge soon”. The company has also sought lease of land in areas rich with titanium deposits as part of its steel-related diversification drive.

Moreover, Tisco was also open to consolidation in the steel sector and was still interested in the public sector alloy and speciality steel plant at Salem in Tamil Nadu, he said.

“Apart from investing cautiously, we will increase sales of branded products, which showed a 16 per cent growth last year and are expected to be higher this fiscal,” he said, adding, “branded items always get a better price’’.

The steel giant has drawn up a strategy labelled ‘winning in a downturn’ to create shareholder value during the next four years.

   

 
 
CALCUTTA TRIUMPHS IN COLA WAR 
 
 
FROM RAJA GHOSHAL
 
New Delhi, April 5: 
Calcuttans will benefit most from the bruising battle between the cola majors ahead of what promises to be a torrid summer — they will be able to buy a 300-ml bottle of Coke or Pepsi for Rs 8 while the rest of the country continues to pay Rs 10.

The pricing game in Calcutta began when Coca Cola recently rolled out its 200 ml Thums UP brand in the city priced at Rs 6, about a week ago. Wherever Coke launches a 200 ml bottle, it is Coke’s policy to extend that volume pack to the rest of the brands in its portfolio, a Coca Cola spokesperson said.

Pepsi riposted by pricing its 300 ml bottle at Rs 8 — on the very day that Coke introduced its 200 ml Thums Up in Calcutta.

Calcutta is Thums Up country — with about 55 per cent of the 10 million case Calcutta market. Second-placed Pepsi has been trying hard to dislodge the acquired brand in Coke’s stable by pushing hard on the pricing points. Coke has matched Pepsi by reducing the 300 ml bottle to Rs 8 too.

According to a Pepsi spokesperson: “Calcutta is among the fastest growing markets and we are pursuing a very aggressive marketing policy. Last summer, we had offered a similar price point. It is all meant to shore up the consumer base.”

Industry watchers say it is the growing market share of Thums Up which promoted Pepsi to cut the price. Moreover, , Pepsi does not have a 200 ml presence in Calcutta. Calcutta accounts for about 80 per cent of the West Bengal market and is considered a very price sensitive one.

Pepsi said that it does not intend to extend the price cut in 300 ml to any other place. Pepsi does not have much plans for 200 ml bottle sizes, which it markets selectively in hinterland areas. However, to combat Coke’s Limca brand, it is interested in introducing a 200 ml bottle for Lemon Mirinda. It also sells 200 ml pack sizes for Rs 5 in Rajasthan and Goa.

Coke is in the process of rolling out its 200 ml pack sizes aggressively this year throughout the country as it sings the new affordability mantra.

However, a Coke spokesperson said that areas where the 300 ml size is doing well, it would be of less importance to introduce 200 ml. Coke said that it may reduce 300 ml prices in other markets too if the competition so demands.

Earlier in the summer season, Coke had slashed the prices for its PET bottles across India for the 1.5 litre and 2 litre sizes. The price of the 1.5 litre PET bottle was cut from Rs 43 to Rs 38 and that of the 2 litre bottle from Rs 50 to Rs 43. Pepsi was earlier selling the 2 litre at Rs 43 with an ad plug that said “1.5 litre plus 33 per cent free”.

   

 
 
PM LEADS INDIA INC TO SINGAPORE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 5: 
The Gujarat ordeal is over and done with — after his long-delayed visit to the riot-riven state and making the clucking sounds that politicians always make, Vajpayee is back to business.

Vajpayee, who told the victims of Gujarat carnage on Thursday that he was so ashamed by the riots that he wouldn’t be able to show his face abroad, is going to have to put on a brave face in Singapore where he is leading a large team of 35 industrialists to try and swing a couple of deals for India Inc.

The three-day trip to the island nation begins on Monday and Vajpayee will talk business with Singapore Prime Minister Goh Chok Tong before the two address a joint business meet organised by Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry, Singapore Business Federation, Singapore Chinese Chamber of Commerce and Industry, Confederation of Singapore Industry, Singapore Indian Chamber of Commerce and Industry and the Singapore International Chamber.

“The objective of the CEO’s mission would be to strengthen India’s partnership with both the government and the industry of Singapore and build relationship with other sectors of the economy,” a CII official said.

Ficci will be signing an MoU with the Economic Development Board of Singapore to set up formal institutional arrangements for promoting two way investments.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.84	HK $1	Rs.  6.20*
UK £1	Rs. 70.03	SW Fr 1	Rs. 28.90*
Euro	Rs. 42.93	Sing $1	Rs. 26.25*
Yen 100	Rs. 36.98	Aus $1	Rs. 25.55*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5130	Gold Std (10 gm)Rs. 5000
Gold 22 carat	Rs. 4845	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7950	Silver (Kg)	Rs. 7905
Silver portion	Rs. 8050	Silver portion	   NA

Stock Indices

Sensex		3500.57		-11.98
BSE-100		1745.66		- 2.65
S&P CNX Nifty	1141.95		- 3.95
Calcutta	 119.83		+ 1.17
Skindia GDR	   NA		   —
   
 

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